PROJECT REPORT ON STUDY ON HOME LOANS OF ICICI BANK IN PARTIAL FULFILLMENT FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION
Master of Business A !inistration
DECLARATION
I hereby declare that the project report entitled "STUDY ON HOME LOANS# at ICICI Ban$ ha been co!pleted "cce #"lly and thi project report "b!itted to$ard the partial #"l#ill!ent o# the re%"ire!ent #or the a$ard o# the de&ree o# MASTER OF BUSINESS ADMINISTRATION $ith peciali'ation in #inance( Thi project report ha not been "b!itted to any other "ni)er ity or in tit"tion #or a$ard o# de&ree(
*++++,
ACKNOLED%EMENT
The pre entation o# thi project ha &i)en !e the opport"nity to e-pre to all tho e $ho ha)e !ade it po ible #or !e to acco!pli h thi project( I than. ICICI BANK !ana&e!ent #or &i)in& !e thi opport"nity to "nder &o a project t"dy pro&ra! in their e tee!ed or&ani'ation( I a! than.#"l to Mr(/rini)a 0 Mana&er0 project $or.( I $o"ld li.e to than. to !y& ''''& I e-pre !y &ratit"de to the (ro)e*t +ui e& ''''& senior fa*u,t- #or hi )al"able pecial than. to !y project &"ide !y &ratit"de
Mr(1en.anna0 Loan O##icer0 ICICI BANK #or &i)in& an Opport"nity to do thi
&"idance and a i tance in ta.in& !e thro"&h the project(
.''''/
CONTENTS
S,0No 2( INTRODU3TION • • • Need #or t"dy Ho" in& Finance E)al"ation /ynop i o# the project
PA%E NO1 245
5( /cope o# the t"dy 6( Objecti)e o# the t"dy o# Ho!e Loan 7( A pro#ile o# I3I3I 8an. 9( Ho!e loan che!e and it E-ten ion
6 7 94: ;
Eli&ibility 3riteria #or Ho!e loan ;( Doc"!ent in)ol)ed in e)al"ation o# Ho!e loan
<4= 2>429
<( The para!eter in)ol)ed in Ho" in& loan e)al"ation • • • • • • Ten"re A!o"nt paid by the #inancer Intere t rate Mi cellaneo" char&e A!orti'ation Re4pay!ent #acility
2:45>
=( The loan proced"re #ollo$ed at I3I3I 2>( /cr"tiny o# the doc"!ent 22( The inno)ati)e loan concept 25( The #"t"re o# Ho!e loan 26( The #"t"re o# Mar.et player 27( li!itation o# the t"dy 29( concl" ion 2 8iblio&raphy
52457 5945= 6>467 69 6:46; 6< 6= 7>
INTRODUCTION
Nee for t2e stu -1 Retail ban.in& ha been pop"lar e&!ent to enter into #or !any ban. ( In the retail ban.in&0 ho" in& ector ha been !o t pro!i in& e&!ent $hich i pro!i in& a 3o!prehen i)e &ro$th rate o# abo"t 6> per cent #or the ne-t #i)e year ( With the &o)ern!ent .een on in#ra tr"ct"re de)elop!ent and anno"ncin& )ario" ta- /op ho" in& loan e&!ent ha been a te!pted area #or !any ban. to enter into ho" in& ector can be bi#"rcated into or&ani'ed and "nor&ani'ed "nor&ani'ed con tr"cted( D"rin& the pa t 7 ? 9 year the ho" in& ector helped by the &ro$in& ho" in& #inance ind" try ha $itne ed i&ni#icant de)elop!ent ( Housin+ Finan*e E3a,uation1 Ho" in& De)elop!ent Finance 3orporation *HDF3, $a the #ir t ho" in& #inance 3o!pany to et"p operation in India in 2=;;( A#ter the National Ho" in& 8an. Act0 2=<;0 $a pa ed NH8 ca!e into e-i tence a a /"b idiary o# the Re er)e 8an. o# e&!ent e&!ent $ith the acco"ntin& #or o)er ;9 per cent o# the ho" in& "nit
India *R8I, to re&"late ho" in& #inance co!panie and pro)ide the! $ith re#inancin& to "pple!ent their #"nd re%"ire!ent ( P"blic ector ban. $ere allo$ed to pro)ide ho" in& loan directly to retail client only in 2=<<(
SYNOPSIS ON THE STUDY OF HOME LOANS
The ho!e loan che!e o# the I3I3I ban. i na!ed @I3I3I Ho!eA and #or /alaried per on @Briha /e$aA( It ha been a "cce #"l prod"ct la"nched by ban.C retail a et di)i ion( The ho!e loan di b"r e!ent proced"re #ollo$ed by the ban. ha been "nderta.en( The )ario" doc"!ent in)ol)ed and the intricacie in ta.in& a ho!e loan ha)e al o been hi&hli&hted a a part o# !y t"dy( The ho!e loan e&!ent ha n"!ber o# added e-ten ion to it port#olio beca" e o# increa ed co!petiti)ene a!on& the HFI ( An atte!pt ha been !ade to "nder tand the )ario" e-ten ion and ne$ concept and the bene#it e-tended by the ban. (
/cope o# t"dy
• • • • The t"dy co)er a period o# #i)e year #ro! 5>>6 to 5>><( There are e)eral rea on #or electin& thi period( D"rin& the pa t 9 year the 8an. ha &one &lobal a a re "lt the co!pany ha $itne ed !any econo!ic and political chan&e ( 3o!pany ha "nder&one rapid chan&e in the pa t 9 year d"e to !any policy deci ion relatin& to capital !ar.et 0 ban.in& ector D licen in& policy( The t"dy i li!ited to only I3I3I 8an. Thi drea! ( • The t"dy i !ainly related to all the loan pro)ided by I3I3I ban. only( t"dy i !ainly related to the indi)id"al $ho are intere ted in ta.in& ho!e loan #ro! ban. to #"l#ill their
OBJECTI4E OF THE STUDY OF HOME LOANS
•
The t"dy $a !ainly cond"cted to "nder tand the concept o# ho!e loan che!e and the eli&ibility criteria o# the c" to!er (
•
The t"dy i done to "nder tand the doc"!ent in)ol)ed in the ho!e loan che!e and the repay!ent !ethodolo&y adopted by )ario" ban. and the HF3E *Ho" in& Finance 3orporation ,(
•
The inno)ati)e ho!e loan che!e and the ri . capt"rin& !echani ! adopted by the HFI and the #"t"re o# the ho!e loan e&!ent ha been "nderta.en a a part o# thi t"dy
PROFILE OF ICICI BANK
I3I3I ban. i IndiaC
econd4lar&e t ban. $ith total a et o# abo"t R (50 926(<=
billion *U/F 96 billion, at March 620 5>>: and pro#it a#ter ta- o# R (59(7> billion *U/F9:=!illion, For the year ended March 620 5>>:*R (5>(>9 billion *U/F77=!n, #or the year ended March 620 5>>9,(I3I3I 8an. ha a net$or. o# abo"t :27 branche and e-ten ion 3o"nter and o)er 505>> ATM ( I3I3I 8an. o##er a $ide ran&e o# ban.in& prod"ct and #inancial er)ice to corporate and retail c" to!er thro"&h a )ariety o# deli)ery channel and thro"&h it peciali'ed "b idiarie and a##iliate in the area o# in)e t!ent ban.in&0 li#e and non4li#e in "rance0 )ent"re capital and a et !ana&e!ent( I3I3I 8an. et "p it international ban.in& &ro"p in #i cal 5>>5 to cater to the cro boarder need o# client and le)era&e on it do!e tic ban.in& tren&th to "b idiarie in the United o##er prod"ct internationally(I3I3I 8an. c"rrently ha
Gin&do!( R" ia and 3anada0 branche in /in&apore0 8ahrain0 Hon& Gon&0 /ri Lan.a and D"bai international Finance centre and repre entati)e o##icer in the United /tate 0 United Arab E!irate 0 3hina0 /o"th A#rica and 8an&lade h( O"r UG "b idiary ha e tabli hed a branch in 8el&i"!( I3I3I 8an. i the !o t )al"able ban. in India in ter! o# !ar.et capitali'ation( I3I3I 8an.C e%"ity hare are li ted in India on the 8o!bay toc. E-chan&e and the National toc. E-chan&e o# India Li!ited and it A!erican Depo itary Receipt *ADR , are li ted on the Ne$ Hor. toc. E-chan&e *NH/E,( I3I3I 8an. ha #or!"lated a 3ode o# 8" ine 3ond"ct and Ethic #or it
director and e!ployee ( *3lic. here to )ie$ a copy o# the code,(
At I"ne 90 5>>:0 I3I3I 8an.0 $ith #ree #loat !ar.et capitali'ationJo# abo"t R (7<>(>> billion *U/F 2>(< billion, ran.ed third a!on& t all the co!panie li ted on the India toc. e-chan&e ( I3I3I 8an. $a ori&inally pro!oted in 2==7 by I3I3I Li!ited0 an India #inancial in tit"tion0 and $a it $holly4o$ned "b idiary( I3I3IC hareholdin& in I3I3I 8an. $a red"ced it 7:K thro"&h a p"blic o##erin& o# hare in India in #i cal 2==<0 an e%"ity o##erin& in the #ro! o# ADR li ted on the NH/E in #i cal 5>>>0 I3I3I 8an.C ac%"i ition o# 8an. o# Mad"ra Li!ited in an all4 toc. a!al&a!ation in #i cal 5>>20 and econdary !ar.et ale by I3I3I to in tit"tional in)e tor in #i cal 5>>20 and 5>>5(I3I3I $a #or!ed in 2=99 at the initiati)e o# the $orld 8an.0 the Bo)ern!ent o# India and repre entati)e o# India ind" try( The principal objecti)e $a to create a de)elop!ent #inancial in tit"tion #or pro)idin& !edi"! ter! and lon&4 ter! project #inancin& to India b" ine e ( In the 2==> 0 I3I3I tran #or!ed it 8" ine #ro! a de)elop!ent #inancial in tit"tion o##erin& only project #inance to a di)er i#ied #inancial er)ice &ro"p o##erin& a $ide )ariety o# prod"ct and er)ice 0 both directly and thro"&h a n"!ber o# "b idiarie and a##iliate li.e I3I3I 8an.( In 2===0 I3I3I beco!e the #ir t India 3o!pany and the #ir t ban. or in tit"tion #ro! non4Iapan A ia to be li ted on the NH/E( A#ter con ideration o# )ario" corporate tr"ct"rin& alternati)e in the conte-t o# the e!er&in& co!petiti)e cenario in the India ban.in& ind" try0 and the !o)e to$ard "ni)er al ban.in&0 the !ana&e!ent o# I3I3I and I3I3I 8an. #or!ed the )ie$ that the !er&er o# I3I3I $ith I3I3I 8an. $o"ld be opti!al trate&ic alternati)e #or both entitie 0 and $o"ld create the opti!al le&al tr"ct"re #or the I3I3I &ro"pC "ni)er al ban.in& trate&y( The !er&er $o"ld enhance )al"e #or I3I3I hareholder thro"&h the !er&ed entityC to acce to lo$4co t depo it 0 &reater opport"nitie #or earnin& #ee4ba ed inco!e and the ability to participate in the pay!ent y te! and pro)ide tran action4ban. er)ice ( The !er&er $o"ld enhance )al"e #or I3I3I 8an. hareholder thro"&h a lar&e capital ba e and cale o# operation ea!le acce to I3I3IC tron& corporate relation hip b"ilt "p o)er #i)e decade 0 e&!ent 0 to the )a t talent pool o# I3I3I 8an. and entry into ne$ b" ine it e&!ent 0 hi&her !ar.et hare in )ario" b" ine
partic"larly #ee4ba ed er)ice 0 and acce
"b idiarie ( In October 5>>20 the 8oard o# Director o# I3I3I and I3I3I 8an.
appro)ed the !er&er o# I3I3I and t$o o# $holly4o$ned retail #inance "b idiarie 0
I3I3I per onal #inancial er)ice Li!ited and I3I3I 3apital er)ice li!ited0 $ith I3I3I 8an.( The !er&er $a appro)ed by hareholder o# I3I3I and I3I3I 8an. in Ian"ary 5>>50 by the Hi&h 3o"rt o# B"jarat at Ah!edabad in March 5>>50 and by the Hi&h 3o"rt o# I"dicat"re at M"!bai and the Re er)e 8an. o# India in April 5>>5(
HOME LOAN SCHEME AND ITS E'TENSIONS
A ho!e loan che!e i &enerally o##ered to the per on to acco!!odate #inance #or p"rcha in& the ho" e or #or reno)ation or e-ten ion o# the e-i tin& ho" e( The )ario" e-ten i)e che!e 0 $hich are incl"ded in the ho!e loan port#olio0 areL Ho!e Pur*2ase LoanL Thi i the ba ic ho!e loan #or the p"rcha e o# a ne$ ho!e( Ho!e I!(ro3e!ent LoansL The e loan are &i)en #or i!ple!entin& repair $or. and reno)ation in a ho!e that ha already been p"rcha ed by yo"( Ho!e Constru*tion LoanL Thi loan i a)ailable #or the con tr"ction o# a ne$ ho!e( Ho!e E5tension Loan1 Thi i &i)en #or e-pandin& or e-tendin& an e-i tin& ho!e( For e+L addition o# an e-tra roo! etc( Ho!e Con3ersion Loan1 Thi i a)ailable #or tho e $ho ha)e #inanced the pre ent ho!e $ith a ho!e loan and $i h to p"rcha e and !o)e to another ho!e #or $ith o!e e-tra #"nd are re%"ired( Thro"&h ho!e con)er ion loan0 the e-i tin& loan i tran #erred to the ne$ ho!e incl"din& the e-tra a!o"nt re%"ired0 eli!inatin& the need o# pre4pay!ent o# the pre)io" loan( ICICI offers1 • • • • Attracti)e loan intere t rate ( Ho!e Loan a!o"nt tartin& #ro! R (5 lac. and end "p to 5>la.h .
Tern loans up to 20 years. Free personal Accident Insurance (Terms & Conditions).
• •
Insurance options for your home loan at attractive premium. Special 00! fundin" for select properties.
ELIBI8ILITH 3RITERIA FOR HOME LOAN/
Ho6 !u*2 *an -ou 7orro68 Briha Ho!e Loan ran&e #ro! R (2la#h to $s. %0la#hs. &our repayment period can
vary from year to 20 years dependin" upon your capacity to repay.
E,i+i7i,it-1 A+e1 ' (in) &ou should *e at least 2 years of a"e. Ma-L At the ti!e o# loan !at"rity0 yo" ho"ld not e-ceed :9 year or yo"r retire!ent a&e0 $hiche)er i earlier( In i3i ua,s)
&ou should have completed a minimum of 2 years of service (+ith a minimum of year in the current ,o*)
Business(ersons9Se,f:e!(,o-e (rofessiona,s)
&ou must have an esta*lished *usiness or professional practice of not less than years. +ith a positive net +orth and must have posted a net profit for the last 2 years.
Note) (inimum net ta#e home salary of $s. /0000' p.m. for salaried employees
or annual income of not less than $s. income computation). .20la#h for *usinesspersons0 self' employed professionals. (Spouse0co'applicant1s income can *e included in the
2( Indi)id"al $ho are alaried or el# e!ployed0 pro#e ional 0 b" ine !en are eli&ible( Proprietary concern 0 HUF0 partner hip #ir! or li!ited co!panie are not eli&ible #or thi loan0 $here partner at their indi)id"al capacity are #ree to a)ail thi loan( 5( A a c" to!er to enhance the loan eli&ibility0 all HFI lay do$n condition to $ho be co applicant 0 al co o$ner to the property ho"ld nece arily be co4applicant(
Inco!e o# the co o$ner can be cl"bbed toðer to &et hi&her loan eli&ibility( Minor are not eli&ible to beco!e co o$ner 0 a al o #riend and relati)eC only blood relati)e are eli&ible to ta.e a property jointly( /o!e o# the acceptable relation hip $here loan cl"bbin& i po ibleL In*o!e *,u77in+ of *o ; a((,i*ants 3o!bination H" band ? $i#e parent ? /on Parent ? Da"&hter 8rother4 8rother 8rother ? /i ter /i ter ? /i ter Parent ? Minor child Inco!e cl"bbin& HE/ HE/ *i# only on, HE/ *I# only child, HE/ *i# c"rrently
tayin& toðer and
intend tayin& toðer in the ne$ property, NO NO Not eli&ible #or loan
6( The !ini!"! a&e #or the applicant and the co applicant to beco!e eli&ible #or the co!!ence!ent o#t eh loan i 56 year 0 and co applicant can be o# 2< year o# a&e i# their inco!e i not cl"bbed to calc"late the loan eli&ibility( 7( The !a-i!"! a&e at the ti!e o# loan !at"rity #or applicant or co4applicant i :> year or the retire!ent a&e $hiche)er i earlier(
DO3UMENT/ IN1OL1ED IN E1ALUATION OF HOME LOANL
The doc"!entation re%"ire!ent #or )ario" cate&orie o# applicant depend on their tat" ( For thi p"rpo e all HFI They areL • • /alaried Pro#e ional or 8" ine !an e&re&ate their e!ployee in di##erent cate&orie (
The criteria o# e)al"ation chan&e accordin& to their tat" ( The &eneral doc"!ent 0 $hich re!ain a!e #or all the cate&orie 0 are a #ollo$ L 2( Proo# o# a&e Any one o# the #ollo$in& i con idered #or proo# o# a&e0 they areL • • • • • • • Pa port 1oterC ID card PAN card Ration card E!ployerC identity card /chool lea)in& 3erti#icate 8irth 3erti#icate
5( 3opy o# ban. tate!ent #or the la t i- !onth L 8an. tate!ent #or the la t i- !onth o# all operatin& and alary acco"nt ( 8an. tate!ent #or the la t i- !onth o# all c"rrent acco"nt 0 i# el# e!ployed( Any other photocopie o# in)e t!ent held0 i# re%"ired by the HFI 6( 3opy o# late t credit card tate!ent( 7( Pa port i'e photo&raph 9( /i&nat"re )eri#ication by yo"r ban.er ( Proo# o# re idenceL • • • • • Ration 3ard PAN 3ard Pa port Rent a&ree!ent i# any0 i# yo" are c"rrently tayin& on rent( Allot!ent letter #ro! yo"r co!pany i# yo" are re idin& in co!pany M"arter (
T2e o*u!ents re<uire to 7e (ro3i e 7- t2e sa,arie *,ass are as fo,,o6s1 • • • • • /alary lip #or the la t one !onth( Appoint!ent letter /alary certi#icate Retainer hip a&ree!ent0 i# appointed a con "ltant( Fro!42: i "ed by the e!ployer in yo"r na!e(
Proof of E!(,o-!ent1 The proo# o# e!ploy!ent i )eri#ied by the • • Identity card i "ed by the e!ployer 1i itin& card(
E!ployerC detail *in ca e o# pri)ate li!ited co!panie ,L The e!ployerC detail are to be pro)ided in addition to the abo)e doc"!ent #or doc"!ent #or a pri)ate ector e!ployee0 they areL • • • • • • • Na!e o# pro!oter N Director 8ac.&ro"nd o# pro!oter N Director N"!ber o# e!ployee Li t o# branche N #actorie Li t o# client N 3" to!er T"rno)er o# yo"r e!ployer Ann"al report o# yo"r e!ployer #or the la t t$o to three year (
Criteria *2osen 7- ICICI Ban$ for *ate+ori=in+ t2e 3arious e!(,o-ees1
E!ploy!ent 3ate&ory Nor!
Mini!"! period o# er)ice *in year , Total 3"rrent E!ploy!ent *3on#ir!ed er)ice,
Bo)t( /ector *3entralN/tate, P"blic ector Underta.in& *or, M"a i Bo)t(
Any Or&ani'ation
5
2
/ho"ld pro#it !a.in& and not in the ne&ati)e li t
5
2
T2e *riteria 6it2 res(e*t to t2e (ri3ate se*tor e!(,o-ees an 7e,on+in+ to t2e (u7,i* ,i!ite *o!(anies is 7it !ore strin+ent
e!(,o-ees
3riteria
Nor!
O 9 year E-i tence R ( 6 crore p(a T"rno)er Net $orth Pro#it For 5 year to be "b!itted Financial Thro"&h ban. credit /alary 5> Min( n"!ber o# E!ployee PF tate!ent a proo# PF ded"ction i A M" t Whether Li tedN"nli ted 444444 Po iti)e 6 year $ith a Ri in& trend
O7 year R ( 6 crore p(a Po iti)e 5 year $ith a ri in& trend For 5 year to be "b!itted Thro"&h ban. credit 5>
PF tate!ent a proo# 5 year ann"al report to be "b!itted(
T2e o*u!ents re<uire to 7e su7!itte 7- t2e 7usiness!en as fo,,o6s1 a( b( c( La t three year Pro#it D Lo 3harted Acco"ntant La t three year 8alance /heet d"ly atte ted by a 3hartered Acco"ntant La t three year Inco!e Ta- Ret"rn d"ly #iled and certi#ied by Inco!e Ta- a"thoritie Proof of In3est!ents1 2( 8an. tate!ent #or the la t i- !onth o# all c"rrent acco"nt ( 5( Any other photocopie o# in)e t!ent held0 a re%"ired by the HFI( The abo)e are the )ario" doc"!ent re%"ired by the b" ine !an in addition to the doc"!ent 0 $hich are co!!on to the entire cate&ory( The b" ine !an i al o j"d&ed on the ba i o# the b" ine 8" ine cond"cted by hi!0 i# hi Acco"nt /tate!ent d"ly atte ted by a
pro#ile i in the ne&ati)e li t0 he $ill be thoro"&hly con idered #or hi
credibility be#ore di per in& loan0 the or&ani'ation and property location ho"ld not be in the ne&ati)e li t( The e are the additional doc"!ent $hich are re%"ired to be loo.ed at be#ore &oin& on #or co!pletin& the pre anction #or!alitie $ith re pect to di per in& o# the ho!e loan to the b" ine cla (
THE PARAMETERS IN4OL4ED IN HOUSIN% LOAN E4ALUATION There are a n"!ber o# para!eter on $hich the ho" in& loan are b"iltL They areL >0 TENURE The ten"re o# the ho!e loan re#er to the ti!e li!it #or a c" to!er to repay the loan Benerally0 the !a-i!"! ten"re o# ho!e loan i 5> year 0 $ith a #e$ lender o##erin& ten"re o# 5> year or !ore *I3I3I ha recently la"nched a 6> year loan,( The lon&er the ten"re0 !ore a c" to!er pay in total intere t0 b"t !onthly pay!ent $ill be le ( /o dependin& on the earnin& potential and ban. balance o# the c" to!er0 an appropriate can be cho e( An i!portant re%"ire!ent o# !o t ban. N HFI i that they pay "p the entire loan be#ore yo" retire( The c" to!er can al$ay prepay the entire loan a!o"nt be#ore it i d"e( A lon& a the ten"re &oe "p a c" to!er pay !ore intere t $hich i "p to >(59 ? >(9K0 &enerally abo)e the ho!e loan rate ( ?0 AMOUNT PAID BY THE FINANCER9 MAR%IN RE@UIREMENTS The #inancer doe not pay the entire a!o"nt o# the loan0 they re%"e t the c" to!er to !aintain !ar&in0 !o t ban. &o in #or a <9K #"ndin& o# the property )al"e incl"din& the ta!p d"ty and char&e 0 it ho$e)er )arie a!on& )ario" ban. ( Thi i al o treated a the !ar&in !oney or o$n contrib"tion re%"ired to be p"t by the pro pecti)e loan ee.er a the contrib"tion to$ard the p"rcha e o# the ho" e( Mo t HFI belie)e the a!o"nt paid i "p#ront be#ore they relea e any di b"r e!ent( A a r"le o# th"!b0 dependin& "pon the HF30 the pro pecti)e loan ee.er ha to co"&h "p 29K 4 5>K o# the loan a!o"nt a a do$n pay!ent( For !aller a!o"nt 0 thi !ay not be !"ch( 8"t #or #i&"re r"nnin& into lac. 0 thi co"ld !a.e load o# di##erence( For e-a!pleL An apart!ent co tin& R ( 2>lac !ay &et <9 per cent #inancin&( /o0 c" to!er ha to arran&e #or the re!ainin& R 2(9lac ( /o!e ban. ho$e)er !a.e $ay #or the pay!ent #or =>K o# #inancin& and abo"t 2>>K #inancin& #or o!e ne$ project 0 ho$e)er they are "bjected to a lar&e n"!ber o# #actor and con train (
A0 INTEREST RATES Witho"t do"bt the !o t i!portant para!eter to #actor into ho!e loan calc"lation ( The intere t rate !ay )ary #ro! in tit"tion to in tit"tion and &enerally ran&e #ro! abo"t ;(59K 4 ;(;9K to aro"nd =K Repay!ent i in the #or! o# EMI *E%"ated Monthly in tall!ent ,( The lon&er the ten"re0 the !ore yo" pay in intere t0 b"t yo"r !onthly pay!ent $ill be le ( The t$o .ind o# intere t rate a)ailable to a c" to!er areL • • Fi-ed intere t rate Floatin& intere t rate
Fi-ed intere t rate re!ain #i-ed o)er the ten"re o# the loan( Floatin& intere t rate are a##ected by the rate in the !ar.et0 they #l"ct"ate accordin& to the rate i "ed or chan&ed by the R8I #ro! ti!e to ti!e( The #inance !ini terC di.tat on ho!e loan doe not hold #or pri)ate ban. ( IndiaC lar&e t ho!e loan pro)ider and econd lar&e t ban. P I3I3I 8an. Pon T"e day hi.ed it ho!e loan by 2K( The ban. ha al o increa ed it depo it rate (
A per the ne$ rate tr"ct"re0 c" to!er $ill ha)e to pay 2>(9K on the ho!e loan $ith a #loatin& rate0 $hile the #i-ed ho!e loan $ill no$ in)ite an intere t o# 25(9K( With thi increa e0 the !onthly in tall!ent on an R (2la.h loan #or 5> year &oe "p by R ;>( /o!e p"blic ector ban. do o only once in 25 !onth $hile o!e pri)ate ector lender do it a #re%"ently a a %"arter( Tho"&h the c"rrent intere t rate %"ote !aybe lo$er0 o)er the li#e o# the loan0 a c" to!er $ill be able a)ed !ore in the ca e o# a lender $ho re et yo"r #loatin& rate !ore #re%"ently( The in)e tor are al o &i)en the option o# chan&in& their option #ro! #i-ed rate loan to a #loatin& rate loan0 o# co"r e by payin& a penalty(
B0 MISCELLANEOUS CHAR%ES1 All ban. char&e certain a!o"nt o# proce in& #ee $hich cannot be i&nored0 it ho"ld be "nder tood that alon& $ith !onthly pay!ent 0 the c" to!er ho"ld al o en "re that he ha to pay the e char&e 0 o he ho"ld care#"l in choo in& hi HF3( Mi cellaneo" char&e &enerally ran&e aro"nd 5(9K to 6K( A 2K ad!ini tration #ee and >(<K proce in& #ee on0 ay R/( 90 >>0>>> loan0 $o"ld a!o"nt to R/ 2>(>>>( Other ti!e 0 it co"ld be j" t one #ee *either ad!ini tration or proce in&, b"t co"ld yet $or. o"t to be !"ch !ore i# it i con iderably hi&her at0 ay0 5(9 per cent or 6 per cent( The )ario" other #ee 0 $hich yo" are re%"ired to be paid alon& $ith the !ar&in a!o"nt0 areL a/ Pro*essin+ fee1 ItC a #ee payable to the lender on applyin& #or a loan( It i either a #i-ed a!o"nt not lin.ed to the loan or !ay al o be a percenta&e o# the loan a!o"nt( The loan a!o"nt recei)ed by c" to!er can be le the application #or!( 7/ Pre(a-!ent Pena,ties1 When a loan i paid bac. be#ore the end o# the a&reed d"ration a penalty i char&ed by o!e ban. Nco!panie 0 $hich i " "ally bet$een 2K and 5K o# the a!o"nt bein& pre paid( */ A !inistrati3e Fees1 An ad!ini trati)e #ee i char&ed by the HFI on the loan a!o"nt anctioned to c" to!er( Thi #ee i nor!ally payable at a ti!e o# acceptin& the o##er letter( It i char&ed !ainly to !eet the operatin& e-pen e o# the loan a!o"nt o# the entire ten"re( / Ot2ers1 It i %"ite po ible that o!e lender !ay le)y a doc"!entation or con "ltant char&e( In ca e o# I3I3I 8an. the proce in& #ee i >(59K o# the loan a!o"nt and the ad!ini trati)e #ee i appro-i!ately >(9>K o# the loan a!o"nt( than the proce in& #ee( It i char&ed at the "b!i ion o# the application #or! and co)er e-pen e inc"rred #or proce in&
C0 AMORTISATION It !ean the !ethod or the calc"lation by $a o# $hich the entire Principal a!o"ntNloan a!o"nt i paid thro"&h the ten"re o# the loan( Thi help the c" to!er to .no$ $hat hi o"t tandin& principal i at any point o# ti!e( There are t$o !ethod &enerally #ollo$edL • • Ann"al re t Monthly re t
Annua, rests1 Thi i !ore co!!only .no$n a ann"al red"cin& balance o# the principalNloan a!o"nt lent to yo"( In an ann"al re t the EMI *#i-ed !onthly pay!ent #or the di per al o# the loan a!o"nt, are calc"lated on a ann"al ba i ( The co!ponent o# intere t i hi&her in the initial year and later on the co!ponent o# principal increa e and the intere t .eep red"cin& year a#ter year ( In other $ord 0 the intere t in the EMI $ill .eep red"cin& year a#ter year and the principal co!ponent .eep increa in&( Mont2,- rests1 Thi i called !onthly red"cin& balance or principal( The calc"lation in the abo)e !ethod re!ain the a!e a o# the abo)e e-cept that the balance i calc"lated on a !onthly ba i and the EMI i bro.en "p e)ery !onth to arri)e at the openin& balance o# the principal #or the ne-t !onth( It i al$ay better #or a c" to!er to ee. an HFI0 $hich &enerally ha !onthly re t 0 ba ed y te!Q thi $ill red"ce the a!o"nt o# intere t paid by the c" to!er( Many ban. ha)e adopted to the !onthly re t y te!( D0 REPAYMENT FACILITY The ban. ha &i)en three option #or repay!ent o# the loan to "it the con)enience o# 8orro$er( E%"ated Monthly In tall!ent *EMI, "ni#or! !onthly in tall!ent0 incl" i)e o# intere t0 #or the entire repay!ent o# only intere t #or the #ir t #i)e year 0 and therea#ter in EMI #or the ne-t 2> year (
Repay!ent o# only intere t in the #ir t #i)e year 0 6>K principal pl" intere t in the ne-t #i)e year 0 and balance ;>K pl" intere t in the re!ainin& period( Repay!ent to tart on co!pletion o# con tr"ction0 b"t not later than 2< !onth #ro! #ir t di b"r e!ent and in ca e b"ilt "p ho" e a#ter one !onth #ro! di b"r e!ent( Intere t d"rin& &e tation hall be paid a D $hen d"e( The repay!ent not to e-tend beyond the a&e o# retire!ent o# the borro$er or ;> year $hiche)er i earlier0 ho$e)er $here co4borro$er i ta.en0 a !a-i!"! repay!ent period o# 5> year !ay be con idered pro)ided the loan i li%"idated $ithin the a&e o# ;> year o# the borro$erN co4borro$er ha)in& capacity to er)ice the loan(
THE LOAN PROCEDURE FOLLOEED AT ICICI BANK The proced"re in)ol)e in the di b"r e!ent o# ho!e loan by any ban. entail the #ollo$in& tep L • Ho!e loan application #or! i co)erin& all detail ( • 3hec.li t o# re%"ire!ent i re%"e ted #or #ro! the c" to!er0 and all doc"!ent are re%"ired to be "b!itted *copie ,0 they are then )eri#ied $hether the detail are #ailed in correctly and $hether all the doc"!ent are "b!itted( • Additional loan 0 i# any are applicable( Many ban. pro)ide #or "pple!entary loan a a part o# their co!prehen i)e ho!e loan che!e( #ir t "b!itted by the c" to!er
T2e fo,,o6in+ ia+ra! in i*ates t2e ,oan (ro*e ure at t2e 7an$
3" to!er
For lar&e borro$ 8ranch !ana&er
Loan Depart!ent
8ranch !ana&er
Re&ional O##icer
Le&al opinion0 )al"ation And Technical
RISK CAPTURIN% MECHANISM One o# the i!portant a pect in the ho!e loan #inancin& i to en "re that the loan ee.er i $orthy and credible( I3I3I #ollo$ the credit core !odel to !ale ho!e loan di b"r e!ent ( 3redit core !odel i a ri . capt"rin& !echani !0 $hich i " ed to a e per pecti)e o# the loan ee.er ( The pro pecti)e loan ee.er i a e ed on a n"!ber o# para!eter $hich help in the e)al"ation o# hi pro#ile and each para!eter i a i&ned a core ba ed on $hich the deci ion i ta.en( A core o# 2>> i #i-ed0 and a core o# ;9 i con idered to be &ood0 core o# 99 i con idered abo)e a)era&e and core o# 59 to be a)era&e( The pro pecti)e loan ee.er on a cale o# 2>> i e-pected to &et 99 a)ail the ho!e loan( the ri .
The para!eter on $hich ri . i a e ed areL
>0 DEMO%RAPHIC PROFILE The de!o&raphic pro#ile incl"de a n"!ber o# "b4para!eter they are ba icallyL • • • • A&e Ed"cational M"ali#ication N"!ber o# Dependent Marital tat"
The de!o&raphic pro#ile o# the loan ee.er i allotted a !a-i!"! core o# 29( ?0 RELATIONSHIP EITH ICICI BANK The relation hip $ith the ban. i al o con idered #or the bene#it o# it c" to!er ( The "b4para!eter con idered here areL • • 1al"e o# relation hip *in ter! o# depo it , N"!ber o# year
The relation hip $ith the ban. i &i)en a $ei&ht o# 2> on the total core o# 2>>( A0 INCOME MODEL The inco!e !od"le o# the ban. incl"de para!eter • • • • Bro Eli&ible Monthly Inco!e "ch a L
IRR * Inco!e to In tall!ent Ratio, FOIR *Fi-ed obli&ation to inco!e ratio, Net ta.e ho!e
The inco!e !odel i &i)en the hi&he t core o# 9> point ( B0 STABILITY AND CONTINUITY The tability and contin"ity #actor are ba ed on • • Or&ani'ation Pro#ile L Bo)t( N p"blic ector co!panie N p"blic li!ited or pri)ate li!ited co!panie or partner hip or other Len&th o# er)ice in Pre ent job N or&ani'ation(
Thi !od"le i pro)ided $ith !a-i!"! core o# abo"t 29 point (
C0 ASSET MODULE The a et !od"le incl"de #actor li.e • • Mar&in Net4Worth * Total a et ? Total Liabilitie ,
The a et !od"le i &i)en a $ei&ht o# 2> on a cale o# 2>>( T2e 3arious (ara!eters of t2e *re it s*ore !o e, an t2eir res(e*ti3e 6ei+2ts are e(i*te in t2e fo,,o6in+ *2art0
Param eters in the model
AM 10%
SC 15% DM 15%
IM 50%
Ricici 10%
The abbre)iation o# the abo)e ter! areL DM IM /3 ? De!o&raphic pro#ile ? Inco!e Mod"le ? /tability and 3ontin"ity RI3I3I ? Relation hip $ith the I3I3I
SCRUTINY OF THE DOCUMENTS The retail proce in& i a proced"re0 $hich in)ol)e care#"l cr"tiny o# acco"nt ( I3I3I 8an. " e a peciali'ed y te! to &o thro"&h the acco"nt 0 be#ore di per in& the loan to the c" to!er( The ba ic &ro"p areL et "p in the proce o# loan application
RETAIL MANA%ER ENTERER %ROUP1 Thi &ro"p doe the data entry( Upon co!pletion o# the data entry the &ro"p #or$ard the a!e to the RM 1eri#ier &ro"p to )eri#y and re end it to the #or!er in ca e o# tiny di crepancie #or editin&( The Loan o##icer enterer &ro"p and the RM 1eri#ier &ro"p ho"ld en "re0 con#ir! and )eri#y the #ollo$in&L • • • The or&ani'ation i in the appropriate li t( The or&ani'ation i not in the ne&ati)e li t The property location i not in the ne&ati)e li t(
Applicant Detail L • • • Na!e and the per onal detail Identity detail Addre E!ploy!ent detail ? alaried
• • •
Financial detail L Inco!e a et o$ner hip0 E-i tin& ban. acco"nt detail and credit card detail E!ploy!ent detail L 8" ine Financial detail L E-i tin& ban. acco"nt and credit card detail (
E5istin+ Loan etai,s1 The na!e o# the #inancial in tit"tion *in ca e o# ta.e o)er, type o# loan0 p"rpo e o# loan a!o"nt etc0 a per the ho!e loan application #or!( Loan re%"e tL Incl"din& the di b"r e!ent detail ( Ac%"i ition detail L Bee detail 0 loan a!o"nt reco!!ended0 na!e o# the c" to!er pre#erred branch(
Re#erence detail L Entry o# at lea t one re#erence i !andatory( Property detail L The RM enterer &ro"p and the RM 1eri#ier &ro"p hall a##i- their initial on the ho!e loan proce note(
Upon co!pletion o# the abo)e acti)itie 0 the #ield in)e ti&ation0 le&al opinion and the technical apprai al proce hall be initiated by the RM(
The ba ic cr"tiny chec. #ollo$ed by the ban.L • Field in)e ti&ation t"dy( • Technical Fea ibility • Le&al Fea ibility Fie, In3esti+ation Stu -1 The !ana&er RM hall &o thro"&h the doc"!ent and in#or! the a!e to the #ield in)e ti&ation a&ency the detail L
a, Field In)e ti&ation ReportL • • • • Re idence and Re#erence *Tele ? 3hec., Na!e0 Addre 0 O##ice or 8" ine applicant and 3o4applicant( Inco!e Ta- ret"rn( telephone n"!ber o# the
The report are to &i)en on the letterhead o# the re pecti)e appro)ed a&ency by their a"thori'ed e!ployee $ith a&encyC r"bber ta!p( The RM ho"ld en "re #ro! the #ield in)e ti&ation a&ency in ca e o# Re idence and re#erence *Tele4chec., The detail in the report ho"ld !atch $ith the in#or!ation &i)en in the ho!e loan application #or!( IT:Return1 It ho"ld be tallied a per the o##ice record ( The !ana&er RM hall !a.e a tele4chec. to cro )eri#y the in)e ti&ation !ade by the a&ency in ca e0 #or the alaried applicant $here the di b"r e!ent i &reater than 2> lac. and in ca e o# the b" ine !an $here the di b"r e!ent i &reater than 2> lac. ( ?0 LE%AL FEASIBILITY The ban. ho"ld arran&e #or the le&al opinion( The !ana&er RM ho"ld #or$ard it to the ban.C e!panelled la$yer )ario" doc"!ent #or cr"tiny( /o!e o# the doc"!ent re%"ired #or the cr"tiny by the la$yer areL • • • • • /ale a&ree!ent d"ly re&i tered O$n contrib"tion receipt Allot!ent letter Land doc"!ent indicatin& o$ner hip0 i# applicable re&i tration receipt Po e ion letter
• • •
Lea e a&ree!ent0 i# applicable *Property bo"&ht #ro! a de)elop!ent a"thority, No objection certi#icate #ro! the de)eloper0 ociety or de)elop!ent a"thority( In ca e o# the con tr"ction o# the ho" e the a&ree!ent o# con tr"ction o# the ho" e bet$een the land o$ner and the contractor(
The abo)e are the li t o# doc"!ent to be re#erred to by a la$yer( The !an&er ha to pro)ide the copie o# the doc"!ent ho"ld be pro)ided by d"ly peci#yin& the na!e o# the applicant0 partic"lar o# property and li t o# doc"!ent attached( All corre pondence $ith re&ard to the le&al opinion !" t be carried #or$ard bet$een the la$yer and the RM only(
A0 FINANCIAL SCRUTINY Prior to di b"r e!ent0 the HFI al o cond"ct a ite )i it to the c" to!erC property to en "re the #ollo$in&L In *ase of un er *onstru*tion (ro(ert-1 • • • • • /ta&e o# con tr"ction i the a!e a that !entioned in the pay!ent notice &i)en to the b"ilder( M"ality o# con tr"ction /ati #actory pro&re o# $or.(
Lay o"t o# the #lat and area o# property i $ithin the per!i ion &ranted by the &o)ernin& a"thority Re%"i ite certi#icate ha)e been recei)ed by the b"ilder to tart the con tr"ction at the ite(
In *ase of rea - 9 Resa,e *onstru*tion1 • E-ternal !aintenance o# the property(
• • • • •
Internal !aintenance o# the property( A&e o# the b"ildin& Whether the b"ildin& $ill la t the ten"re o# the loan M"ality o# con tr"ction There i no e-i tin& lien or !ort&a&e on the property
The li t o# )al"ation en&ineer e!panelled by the ban. need to ta.e "p the e )ario" doc"!ent and en "re that the report i #"rni hed in the pre cribed #or!at and that loan a!o"nt re%"e ted by the applicant i "##icient to co!plete the project( The detail in the property report &i)en by the technical ter! and co!pare it $ith the le&al opinion and application and en "re that there are no di crepancie ( A#ter co!pletion o# the abo)e chec. and cr"tiny the !ana&er RM !" t #or$ard the ho!e loan proce not alon& $ith the ho!e loan application and other enclo "re Le&al opinion0 technical apprai al report0 #or #"rther proce in& to the Loan Mana&er ter!0 a#ter retainin& in the c" to!erC #ile0 copy o# the #ollo$in& paper L • • • Ho!e loan application Le&al opinion $ith all enclo "re Technical apprai al report
Loan Depart!ent ha to end the doc"!ent and paper to the RM #or #"rther cr"tiny and proce in& o# the propo al ( Thi $o"ld increa e the t"rnaro"nd ti!e0 o# proce in& and al o additional char&e to$ard the co"rier char&e and al o lo in& the doc"!ent in tran it0 In order to a)oid the abo)e di crepancie the doc"!ent are )eri#ied by the doc"!ent i!a&in& y te!( Ne$&en doc"!ent i!a&in& y te! i introd"ced to #acilitate electronic tran !i ion o# doc"!ent #or proce in& o# propo al by RM( • • • • It #acilitate cannin& and !aintenance o# canned i!a&e (
It al o pro)ide the pro)i ion o# lin.in& the doc"!ent i# the a!e doc"!ent i re%"ired #or !"ltiple loan Pro)i ion to !a.e re!ar. 0 on the doc"!ent $itho"t di t"rbin& the ori&inal( /canned i!a&e can be attached to any !ail
Thi #acilitate ea y tran !i ion o# data and other doc"!ent and al o pro)ide the #le-ibility in loan proce in& and help in #a t tran !i ion o# data0 the e all ad)anta&e help in ea y di b"r e!ent o# loan (
THE INNO4ATI4E LOAN CONCEPTS
>0 THE CONCEPT OF SURF The ne$ concept o# /URF i the tep "p repay!ent #acility0 it i a che!e pro)ided to yo"n& pro#e ional $ho ha)e j" t be&"n their career 0 con iderin& that their repay!ent capacity $ill increa e teadily in the near #"t"re(
The che!e increa e the repay!ent capacity o# a c" to!er0 hi loan eli&ibility increa e a it con ider the increa e in inco!e o# the c" to!er o)er the ne-t #e$ yea ( 3orporation ban. ha introd"ced thi /URF concept in it ho!e loan che!e( 3orporation 8an. ha introd"ced E3orp Fle-i Ho!e LoanC a )ariant o# the ho" in& loan $ith attracti)e #eat"re o# Pro&re i)e Monthly In tall!ent *PMI, i(e( Repay!ent lin.ed to increa e in #"t"re alary earnin& ( The che!e pro)ide #or @ tep4"p in tall!ent #acilityA "nder 3orp Ho!e /che!e( The 3orp4Fle-i che!e i o##ered $ith t$o option (
Option2L The borro$er can opt #or hi&her %"ant"! o# loan *26>K o# eli&ible a!o"nt "nder the nor!al che!e, a per the pre ent inco!e criteria $ith a pro)i ion to pay the in tall!ent ba ed on c"rrent inco!e initially and &rad"ally increa e o)er the latter part o# repay!ent period( Option 5L The loan hall be con idered a per applicantC nor!al eli&ibility $ith a pro)i ion to pay lo$er in tall!ent initially *;>K o# the nor!al EMI, and in tall!ent are tepped "p in the later part o# the repay!ent period(
?0 THE HOME SA4ER LOANS Ho!e /a)er i a re)ol"tionary ne$ concept in ho!e loan de i&ned to a)e yo" intere t thereby lettin& yo" pay o## yo"r loan #a ter( The /tandard 3harted ban. o##er a pecial ho!e loan na!ed the @ho!e a)er ad)anta&eA0 the ho!e a)er ad)anta&e0 $here the intere t rate )ary #ro! ;(;9 per cent to < per cent( E)ery !onth0 all yo" need to do i depo it yo"r "rpl" #"nd 0 be it yo"r alary or other a)in& into Ho!e /a)er0 in tead o# lettin& the! lie idle in di##erent acco"nt ( All thi !oney then $or. to$ard red"cin& yo" intere t payable beca" e the depo it a"to!atically red"ce the balance o"t tandin& on $hich the intere t i calc"lated on a daily ba i ( /o0 !ore the n"!ber o# day yo" place yo"r a)in& into Ho!e /a)er0 &reater i the intere t a)in&( There i al o contin"o" acce to yo"r #"nd 57 ho"r a day $ith the &lobally )alid ATM c"! debit card( The loan ta.er ho"ld !aintain a depo it acco"nt $ith the ban. to a)ail the ho!e a)er ad)anta&e( Uni<ue Features of t2e 2o!e sa3er1
• • •
Freedo! to a)e !ore Freedo! to red"ce yo"r loan period Freedo! to acce yo"r !oney ? anyti!e0 any$here
Ho!e /a)er i c"rrently a)ailable in 8an&alore0 3hennai0 and Delhi0 Gol.ata0 M"!bai and p"ne( Free o! to sa3e !ore1 With Ho!e /a)er0 there i !ore to a)e than a nor!al lo$4co t ho!e loan( 8eca" e intere t i calc"lated on yo"r daily balance0 yo" can red"ce yo"r intere t con "b tantially e)en i# yo"r "rpl" a)in& are in the acco"nt #or only a day( For each day that yo"r o"t tandin& balance red"ce 0 yo" pay le intere t #or that day( /ince thatC intere t a)ed not earned0 yo" a)e on ta-e that yo" $o"ld other$i e pay on yo"r intere t earnedR Free o! to re u*e -our ,oan (erio 1 Ho!e /a)er &i)e yo" the #le-ibility and #reedo! to !a.e e-ce pay!ent o that
yo" can red"ce the d"ration o# yo"r loan anyti!e0 $itho"t penaltie ( Free o! to a**ess !one- ; An-ti!e& An-62ere1 Ho" ha)e the #le-ibility o# depo itin& and $ithdra$in& ca h j" t a yo" $o"ld yo"r nor!al ban. acco"nt( Ho!e /a)er co!e $ith a &lobally )alid ATM4c"!4Debit card0 $hich allo$ yo" #ree to acce co"ntry Anyti!e Any$here( to yo"r !oney #ro! o)er 5>>> ATM acro the
FLE'I:SA4IN%S ACCOUNT
3itiban. al o o##er a #le-i4 a)in& acco"nt to red"ce yo"r co t o# borro$in&( The ban. $ill a"to!atically open a /a)in& Acco"nt #ro! $hich yo" can &i)e tandin& in tr"ction to ded"ct the EMI pay!ent #or the loan( Ho" can then prepay the loan at any point in ti!e and be &i)en in tant credit #or the a!e0 in ca e yo" &et a lar&e l"!p4 "! ann"al bon" #ro! yo"r e!ployer( /ho"ld yo" re%"ire !oney in an e!er&ency at any point yo" can a)ail o# a o)er dra#t on thi a)in& acco"nt at an intere t rate that i the a!e a that on yo"r Ho!e loan( Thi $or. o"t !"ch cheaper than ta.in& an o)er dra#t on a nor!al a)in& acco"nt(
CUSTOMIFED REPAYMENT SCHEMES
HDF3 $hich ha been in the ho!e loan e&!ent ince 2=;; ha al o introd"ced a ho t o# ne$ #eat"re to it ho!e loan port#olio( HDF3 o##er Fle-ible *3" to!i'ed, Repay!ent /che!e 0 .eepin& in !ind the #act that each indi)id"al ha a "ni%"e proble! re%"irin& "ni%"e ol"tion (
HDF3 ha de)eloped )ario" repay!ent option li.eL • • • /tep Up Repay!ent Facility Fle-ible Loan In tall!ent 8alloon Pay!ent /che!e0 Where the pay!ent in the initial year i le the later year are !ore( Pari Pa "N/econd Mort&a&e Arran&e!ent L HDF3 ha a tie4"p $ith a lar&e n"!ber o# P"blic /ector Or&ani'ation and ban. $hich enable " to o##er loan to loan ee.er $ith the #le-ibility o# their po" e al o ha)in& a loan #ro! hi Nher o$n e!ployer( 6( INCREASE IN THE TENURE PERIOD OF THE HOME LOANS The ho!e loan are pro)ided #or the period o# 9 year to 5> year period( I3I3I i the #ir t o# it .ind to introd"ce the ho!e loan che!e #or a 5>4year period( I3I3I ha been the lar&e t pri)ate ector ban. o# the co"ntry( It ha introd"ced the concept o# pro)idin& ho!e loan #or a 5>4year ten"re( Thi 5>year ten"re ho!e loan i a)ailable at only #i-ed rate o# intere t( Thi intere t rate tr"ct"re #or the 5>4year ten"re period #or I3I3I ho!e loan i a #ollo$ L and
Tenor Ho!e Loans Ban A B > to C -ears A7o3e C -ears& 7ut ,ess t2an >G -ears
F,oatin+ Rates U(to Rs0>G ,a$2s ;(59K ;(;9K
Fi5e Rates U(to Rs0>G ,a$2s <(59K <(;9K
C
A7o3e >G -ears& 7ut ,ess t2an ?G -ears
<(>>K
=(>>K
HOME LOAN FACILITIES EITH 4ARIOUS ADD:ON BENEFITS The ban. ha)e b"c.led #or the co!pletion o# the ho!e loan prod"ct by pro)idin& )ario" add4on bene#it 0 $hich ha al o beco!e a .ey #actor in the co!petiti)e era o# ho!e loan ( The ban. ha)e al o tied "p $ith )ario" property in "rance co!panie in order to !a.e their ho!e loan co!petiti)e( The A8N4AMRO ban. $hich ha entered the ho!e loan e&!ent in October 5>>60 la"nched it prod"ct @All /!ile Ho!e Loan A $ith the lo$e t intere t rate o# : percent in the #ir t year and9 per cent in the econd year ha added a n"!ber o# )al"e added er)ice li.eL • • /M/ alert to help the c" to!er .eep trac. o# their loan anction and di b"r e!ent tat" ( The ban. al o o##er it !art Bold credit card to the borro$er and conce ional rate on per onal loan and a"to loan ( BI3 ho" in& #inance li!ited ha o##ered the con "!er loan #or the p"rcha e o# ho!e e%"ip!ent at the a!e rate o# intere t at the o# the ho!e loan and lo$er than the other con "!er loan ( The ten"re o# con "!er loan i re tricted to the ten"re o# 9 year ( Many ban. ha)e al o done a$ay $ith the &"arantor #or pro)i ion o# ho!e loan #or a!o"nt le than R/(2> la.e 0 li.e H/83 ho" in& loan che!e0 I3I3I ban.(
THE FUTURE OF HOME LOANS
OUTLOOK1 In the la t 647 year the retail #inance di b"r e!ent are e ti!ated to ha)e increa ed at 3ABR o# o)er 6> per cent to R/( 59> !illion in the year o# 5>>24>5( The yield in the ho" in& #iancS i e ti!ated at abo"t 22425 per cent( With the operatin& co t and credit lo e o# >(94>(< percenta&e point and >(2 ? >(9 percenta&e point re pecti)ely( The net !ar&in in the b" ine i e-pected to be at aro"nd 242(9 per cent(
Total direct ho" in& di b"r e!ent i e-pected to &ro$ at a 3ABR o# 57>2 per cent d"rin& the period 5>>24>5 to 5>>:4>; period0 to R/( ;67(=5 billion( The !ar.et hare o# HF3 i cent d"rin& the period( et to decline #ro! 9=>5 per cent to 97>2 per cent( The
!ar.et hare o# the ban. are e-pected to increa e #ro! 67>< per cent to 72(7 per
THE FUTURE OF MARKET PLAYERS The !ajor player in the ho!e loan !ar.et are HF3 and the co!!ercial ban. and the ched"led co!!ercial ban. ( In 5>>24>50 the incre!ental di b"r e!ent o# ho" in& #inance co!panie i e ti!ated ha)e increa e by o)er 2;(6 per cent( The di b"r e!ent o# leadin& HF3 ha increa ed o)er the pre)io" year li.e HDF30 3an #in ho!e 0 o)er the pre)io" year( Ho$e)er the incre!ental di b"r e!ent o# !aller and !edi"! i'e HF3 ha)e declined by 6(= percent0 d"e toL • • • Increa ed co!petition #ro! the ban. Lo$er a)ailability o# lo$ co t #"nd Ti&htenin& intere t pread
The ban. a&&re&ate !ar.et hare o# all the ban. 0 in incre!ental direct di b"r e!ent ha increa ed by 2>(2 per cent0 to 67(< per cent(
The &ro$th ha been lar&ely dri)en by the co t ad)anta&e o# ban. o)er HF3 and lo$er credit o##4ta.e #ro! the corporate e&!ent The ban. ha)e the ad)anta&e o)er the HF3 beca" e o# the Acce to lo$er co t retail #"nd * a)in& depo it ,
The ban.in& ector e)ery year &et abo"t 7>> ? 79> billion in a)in& and de!andNc"rrent depo it 0 o"t o# $hich aro"nd ;94<> percent i con idered core #loat and are lar&ely lon& ter! in nat"re( Thi indicate the cope o# increa e in di b"r e!ent by the ban. $itho"t i&ni#icant !at"rity !i !atch ri . in co!pari on to the di b"r e!ent by the ho" in& #inance ind" try(
CHAN%ES IN THE TREND T2e !ar$et s2are of t2e HFCs an t2e 7an$s in ?GGG:G> 6as HFCs 2o, in+ a7out CD (er *ent an t2e 7an$s a7out BB (er *ent0
HFCs 56%
Banks 44%
Current,- t2e 7an$s 2o, a7out CH (er *ent an t2e HFCs 2o, a7out B> (er *ent
HFCs 41% Banks 59%
Li!itations of stu -1
• The t"dy $a re tricted in "nder tandin& the ho!e loan a concept o the practical i!plication o# the t"dy ha)e been di##ic"lt( • The inno)ati)e #eat"re o# the )ario" HFI a part o# their ho!e loan che!e b"t i not a co!prehen i)e t"dy o# their ho!e loan che!e ( • The Ta.e O)er ho!e loan o# hi&h intere t rate #or lo$ intere t rate and their inherent ri . on the ban. lendin& pro#ile ha not been "nderta.en in the t"dy( • The !ort&a&e ho!e loan and it e&!ent( cope on the ho!e loan lendin& port#olio
$ere not t"died a thi $o"ld lead into a relati)ely ne$ .ind o# ho!e loan
CONCLUSION
2( The ho!e loan e&!ent can be e-tended to the l"crati)e NRI e&!entQ thi $o"ld pro)ide the ban. a c"ttin& ed&e and lar&er hare o# the ho!e loan !ar.et( 5( The ban. can pro)ide the bene#it li.e /M/ alert and other #eat"re the ho!e loan !ore attracti)e( 6( The ban. can conte!plate on decentrali'in& the operation ho$e)er ta.in& into con ideration the e-perience and e-perti e o# the !e!ber at Loan Depart!ent enter ( o a to !a.e
BIBLIO%RAPHY
2( 8an.in& and Financial /y te! G(Lalitha 5( Financial /er)ice 0 A(G(Ghan 6( $$$(iciciban.(co!
by A(1(Ran&anathachary0 G(Anjaney"l"0
7( httpLNN$$$(iciciban.(co!Np# " erNloan Nho!eloan Nhlho!epa&e(ht! 9( Online Ho!e ,oan( inNICICI 8an.
doc_226292372.doc
Master of Business A !inistration
DECLARATION
I hereby declare that the project report entitled "STUDY ON HOME LOANS# at ICICI Ban$ ha been co!pleted "cce #"lly and thi project report "b!itted to$ard the partial #"l#ill!ent o# the re%"ire!ent #or the a$ard o# the de&ree o# MASTER OF BUSINESS ADMINISTRATION $ith peciali'ation in #inance( Thi project report ha not been "b!itted to any other "ni)er ity or in tit"tion #or a$ard o# de&ree(
*++++,
ACKNOLED%EMENT
The pre entation o# thi project ha &i)en !e the opport"nity to e-pre to all tho e $ho ha)e !ade it po ible #or !e to acco!pli h thi project( I than. ICICI BANK !ana&e!ent #or &i)in& !e thi opport"nity to "nder &o a project t"dy pro&ra! in their e tee!ed or&ani'ation( I a! than.#"l to Mr(/rini)a 0 Mana&er0 project $or.( I $o"ld li.e to than. to !y& ''''& I e-pre !y &ratit"de to the (ro)e*t +ui e& ''''& senior fa*u,t- #or hi )al"able pecial than. to !y project &"ide !y &ratit"de
Mr(1en.anna0 Loan O##icer0 ICICI BANK #or &i)in& an Opport"nity to do thi
&"idance and a i tance in ta.in& !e thro"&h the project(
.''''/
CONTENTS
S,0No 2( INTRODU3TION • • • Need #or t"dy Ho" in& Finance E)al"ation /ynop i o# the project
PA%E NO1 245
5( /cope o# the t"dy 6( Objecti)e o# the t"dy o# Ho!e Loan 7( A pro#ile o# I3I3I 8an. 9( Ho!e loan che!e and it E-ten ion
6 7 94: ;
Eli&ibility 3riteria #or Ho!e loan ;( Doc"!ent in)ol)ed in e)al"ation o# Ho!e loan<4= 2>429
<( The para!eter in)ol)ed in Ho" in& loan e)al"ation • • • • • • Ten"re A!o"nt paid by the #inancer Intere t rate Mi cellaneo" char&e A!orti'ation Re4pay!ent #acility
2:45>
=( The loan proced"re #ollo$ed at I3I3I 2>( /cr"tiny o# the doc"!ent 22( The inno)ati)e loan concept 25( The #"t"re o# Ho!e loan 26( The #"t"re o# Mar.et player 27( li!itation o# the t"dy 29( concl" ion 2
8iblio&raphy52457 5945= 6>467 69 6:46; 6< 6= 7>
INTRODUCTION
Nee for t2e stu -1 Retail ban.in& ha been pop"lar e&!ent to enter into #or !any ban. ( In the retail ban.in&0 ho" in& ector ha been !o t pro!i in& e&!ent $hich i pro!i in& a 3o!prehen i)e &ro$th rate o# abo"t 6> per cent #or the ne-t #i)e year ( With the &o)ern!ent .een on in#ra tr"ct"re de)elop!ent and anno"ncin& )ario" ta- /op ho" in& loan e&!ent ha been a te!pted area #or !any ban. to enter into ho" in& ector can be bi#"rcated into or&ani'ed and "nor&ani'ed "nor&ani'ed con tr"cted( D"rin& the pa t 7 ? 9 year the ho" in& ector helped by the &ro$in& ho" in& #inance ind" try ha $itne ed i&ni#icant de)elop!ent ( Housin+ Finan*e E3a,uation1 Ho" in& De)elop!ent Finance 3orporation *HDF3, $a the #ir t ho" in& #inance 3o!pany to et"p operation in India in 2=;;( A#ter the National Ho" in& 8an. Act0 2=<;0 $a pa ed NH8 ca!e into e-i tence a a /"b idiary o# the Re er)e 8an. o# e&!ent e&!ent $ith the acco"ntin& #or o)er ;9 per cent o# the ho" in& "nit
India *R8I, to re&"late ho" in& #inance co!panie and pro)ide the! $ith re#inancin& to "pple!ent their #"nd re%"ire!ent ( P"blic ector ban. $ere allo$ed to pro)ide ho" in& loan directly to retail client only in 2=<<(
SYNOPSIS ON THE STUDY OF HOME LOANS
The ho!e loan che!e o# the I3I3I ban. i na!ed @I3I3I Ho!eA and #or /alaried per on @Briha /e$aA( It ha been a "cce #"l prod"ct la"nched by ban.C retail a et di)i ion( The ho!e loan di b"r e!ent proced"re #ollo$ed by the ban. ha been "nderta.en( The )ario" doc"!ent in)ol)ed and the intricacie in ta.in& a ho!e loan ha)e al o been hi&hli&hted a a part o# !y t"dy( The ho!e loan e&!ent ha n"!ber o# added e-ten ion to it port#olio beca" e o# increa ed co!petiti)ene a!on& the HFI ( An atte!pt ha been !ade to "nder tand the )ario" e-ten ion and ne$ concept and the bene#it e-tended by the ban. (
/cope o# t"dy
• • • • The t"dy co)er a period o# #i)e year #ro! 5>>6 to 5>><( There are e)eral rea on #or electin& thi period( D"rin& the pa t 9 year the 8an. ha &one &lobal a a re "lt the co!pany ha $itne ed !any econo!ic and political chan&e ( 3o!pany ha "nder&one rapid chan&e in the pa t 9 year d"e to !any policy deci ion relatin& to capital !ar.et 0 ban.in& ector D licen in& policy( The t"dy i li!ited to only I3I3I 8an. Thi drea! ( • The t"dy i !ainly related to all the loan pro)ided by I3I3I ban. only( t"dy i !ainly related to the indi)id"al $ho are intere ted in ta.in& ho!e loan #ro! ban. to #"l#ill their
OBJECTI4E OF THE STUDY OF HOME LOANS
•
The t"dy $a !ainly cond"cted to "nder tand the concept o# ho!e loan che!e and the eli&ibility criteria o# the c" to!er (
•
The t"dy i done to "nder tand the doc"!ent in)ol)ed in the ho!e loan che!e and the repay!ent !ethodolo&y adopted by )ario" ban. and the HF3E *Ho" in& Finance 3orporation ,(
•
The inno)ati)e ho!e loan che!e and the ri . capt"rin& !echani ! adopted by the HFI and the #"t"re o# the ho!e loan e&!ent ha been "nderta.en a a part o# thi t"dy
PROFILE OF ICICI BANK
I3I3I ban. i IndiaC
econd4lar&e t ban. $ith total a et o# abo"t R (50 926(<=
billion *U/F 9
6 billion, at March 620 5>>: and pro#it a#ter ta- o# R (59(7> billion *U/F9:=!illion, For the year ended March 620 5>>:*R (5>(>9 billion *U/F77=!n, #or the year ended March 620 5>>9,(I3I3I 8an. ha a net$or. o# abo"t :27 branche and e-ten ion 3o"nter and o)er 505>> ATM ( I3I3I 8an. o##er a $ide ran&e o# ban.in& prod"ct and #inancial er)ice to corporate and retail c" to!er thro"&h a )ariety o# deli)ery channel and thro"&h it peciali'ed "b idiarie and a##iliate in the area o# in)e t!ent ban.in&0 li#e and non4li#e in "rance0 )ent"re capital and a et !ana&e!ent( I3I3I 8an. et "p it international ban.in& &ro"p in #i cal 5>>5 to cater to the cro boarder need o# client and le)era&e on it do!e tic ban.in& tren&th to "b idiarie in the United o##er prod"ct internationally(I3I3I 8an. c"rrently haGin&do!( R" ia and 3anada0 branche in /in&apore0 8ahrain0 Hon& Gon&0 /ri Lan.a and D"bai international Finance centre and repre entati)e o##icer in the United /tate 0 United Arab E!irate 0 3hina0 /o"th A#rica and 8an&lade h( O"r UG "b idiary ha e tabli hed a branch in 8el&i"!( I3I3I 8an. i the !o t )al"able ban. in India in ter! o# !ar.et capitali'ation( I3I3I 8an.C e%"ity hare are li ted in India on the 8o!bay toc. E-chan&e and the National toc. E-chan&e o# India Li!ited and it A!erican Depo itary Receipt *ADR , are li ted on the Ne$ Hor. toc. E-chan&e *NH/E,( I3I3I 8an. ha #or!"lated a 3ode o# 8" ine 3ond"ct and Ethic #or it
director and e!ployee ( *3lic. here to )ie$ a copy o# the code,(
At I"ne 90 5>>:0 I3I3I 8an.0 $ith #ree #loat !ar.et capitali'ationJo# abo"t R (7<>(>> billion *U/F 2>(< billion, ran.ed third a!on& t all the co!panie li ted on the India toc. e-chan&e ( I3I3I 8an. $a ori&inally pro!oted in 2==7 by I3I3I Li!ited0 an India #inancial in tit"tion0 and $a it $holly4o$ned "b idiary( I3I3IC hareholdin& in I3I3I 8an. $a red"ced it 7:K thro"&h a p"blic o##erin& o# hare in India in #i cal 2==<0 an e%"ity o##erin& in the #ro! o# ADR li ted on the NH/E in #i cal 5>>>0 I3I3I 8an.C ac%"i ition o# 8an. o# Mad"ra Li!ited in an all4 toc. a!al&a!ation in #i cal 5>>20 and econdary !ar.et ale by I3I3I to in tit"tional in)e tor in #i cal 5>>20 and 5>>5(I3I3I $a #or!ed in 2=99 at the initiati)e o# the $orld 8an.0 the Bo)ern!ent o# India and repre entati)e o# India ind" try( The principal objecti)e $a to create a de)elop!ent #inancial in tit"tion #or pro)idin& !edi"! ter! and lon&4 ter! project #inancin& to India b" ine e ( In the 2==> 0 I3I3I tran #or!ed it 8" ine #ro! a de)elop!ent #inancial in tit"tion o##erin& only project #inance to a di)er i#ied #inancial er)ice &ro"p o##erin& a $ide )ariety o# prod"ct and er)ice 0 both directly and thro"&h a n"!ber o# "b idiarie and a##iliate li.e I3I3I 8an.( In 2===0 I3I3I beco!e the #ir t India 3o!pany and the #ir t ban. or in tit"tion #ro! non4Iapan A ia to be li ted on the NH/E( A#ter con ideration o# )ario" corporate tr"ct"rin& alternati)e in the conte-t o# the e!er&in& co!petiti)e cenario in the India ban.in& ind" try0 and the !o)e to$ard "ni)er al ban.in&0 the !ana&e!ent o# I3I3I and I3I3I 8an. #or!ed the )ie$ that the !er&er o# I3I3I $ith I3I3I 8an. $o"ld be opti!al trate&ic alternati)e #or both entitie 0 and $o"ld create the opti!al le&al tr"ct"re #or the I3I3I &ro"pC "ni)er al ban.in& trate&y( The !er&er $o"ld enhance )al"e #or I3I3I hareholder thro"&h the !er&ed entityC to acce to lo$4co t depo it 0 &reater opport"nitie #or earnin& #ee4ba ed inco!e and the ability to participate in the pay!ent y te! and pro)ide tran action4ban. er)ice ( The !er&er $o"ld enhance )al"e #or I3I3I 8an. hareholder thro"&h a lar&e capital ba e and cale o# operation ea!le acce to I3I3IC tron& corporate relation hip b"ilt "p o)er #i)e decade 0 e&!ent 0 to the )a t talent pool o# I3I3I 8an. and entry into ne$ b" ine it e&!ent 0 hi&her !ar.et hare in )ario" b" ine
partic"larly #ee4ba ed er)ice 0 and acce
"b idiarie ( In October 5>>20 the 8oard o# Director o# I3I3I and I3I3I 8an.
appro)ed the !er&er o# I3I3I and t$o o# $holly4o$ned retail #inance "b idiarie 0
I3I3I per onal #inancial er)ice Li!ited and I3I3I 3apital er)ice li!ited0 $ith I3I3I 8an.( The !er&er $a appro)ed by hareholder o# I3I3I and I3I3I 8an. in Ian"ary 5>>50 by the Hi&h 3o"rt o# B"jarat at Ah!edabad in March 5>>50 and by the Hi&h 3o"rt o# I"dicat"re at M"!bai and the Re er)e 8an. o# India in April 5>>5(
HOME LOAN SCHEME AND ITS E'TENSIONS
A ho!e loan che!e i &enerally o##ered to the per on to acco!!odate #inance #or p"rcha in& the ho" e or #or reno)ation or e-ten ion o# the e-i tin& ho" e( The )ario" e-ten i)e che!e 0 $hich are incl"ded in the ho!e loan port#olio0 areL Ho!e Pur*2ase LoanL Thi i the ba ic ho!e loan #or the p"rcha e o# a ne$ ho!e( Ho!e I!(ro3e!ent LoansL The e loan are &i)en #or i!ple!entin& repair $or. and reno)ation in a ho!e that ha already been p"rcha ed by yo"( Ho!e Constru*tion LoanL Thi loan i a)ailable #or the con tr"ction o# a ne$ ho!e( Ho!e E5tension Loan1 Thi i &i)en #or e-pandin& or e-tendin& an e-i tin& ho!e( For e+L addition o# an e-tra roo! etc( Ho!e Con3ersion Loan1 Thi i a)ailable #or tho e $ho ha)e #inanced the pre ent ho!e $ith a ho!e loan and $i h to p"rcha e and !o)e to another ho!e #or $ith o!e e-tra #"nd are re%"ired( Thro"&h ho!e con)er ion loan0 the e-i tin& loan i tran #erred to the ne$ ho!e incl"din& the e-tra a!o"nt re%"ired0 eli!inatin& the need o# pre4pay!ent o# the pre)io" loan( ICICI offers1 • • • • Attracti)e loan intere t rate ( Ho!e Loan a!o"nt tartin& #ro! R (5 lac. and end "p to 5>la.h .
Tern loans up to 20 years. Free personal Accident Insurance (Terms & Conditions).
• •
Insurance options for your home loan at attractive premium. Special 00! fundin" for select properties.
ELIBI8ILITH 3RITERIA FOR HOME LOAN/
Ho6 !u*2 *an -ou 7orro68 Briha Ho!e Loan ran&e #ro! R (2la#h to $s. %0la#hs. &our repayment period can
vary from year to 20 years dependin" upon your capacity to repay.
E,i+i7i,it-1 A+e1 ' (in) &ou should *e at least 2 years of a"e. Ma-L At the ti!e o# loan !at"rity0 yo" ho"ld not e-ceed :9 year or yo"r retire!ent a&e0 $hiche)er i earlier( In i3i ua,s)
&ou should have completed a minimum of 2 years of service (+ith a minimum of year in the current ,o*)
Business(ersons9Se,f:e!(,o-e (rofessiona,s)
&ou must have an esta*lished *usiness or professional practice of not less than years. +ith a positive net +orth and must have posted a net profit for the last 2 years.
Note) (inimum net ta#e home salary of $s. /0000' p.m. for salaried employees
or annual income of not less than $s. income computation). .20la#h for *usinesspersons0 self' employed professionals. (Spouse0co'applicant1s income can *e included in the
2( Indi)id"al $ho are alaried or el# e!ployed0 pro#e ional 0 b" ine !en are eli&ible( Proprietary concern 0 HUF0 partner hip #ir! or li!ited co!panie are not eli&ible #or thi loan0 $here partner at their indi)id"al capacity are #ree to a)ail thi loan( 5( A a c" to!er to enhance the loan eli&ibility0 all HFI lay do$n condition to $ho be co applicant 0 al co o$ner to the property ho"ld nece arily be co4applicant(
Inco!e o# the co o$ner can be cl"bbed toðer to &et hi&her loan eli&ibility( Minor are not eli&ible to beco!e co o$ner 0 a al o #riend and relati)eC only blood relati)e are eli&ible to ta.e a property jointly( /o!e o# the acceptable relation hip $here loan cl"bbin& i po ibleL In*o!e *,u77in+ of *o ; a((,i*ants 3o!bination H" band ? $i#e parent ? /on Parent ? Da"&hter 8rother4 8rother 8rother ? /i ter /i ter ? /i ter Parent ? Minor child Inco!e cl"bbin& HE/ HE/ *i# only on, HE/ *I# only child, HE/ *i# c"rrently
tayin& toðer and
intend tayin& toðer in the ne$ property, NO NO Not eli&ible #or loan
6( The !ini!"! a&e #or the applicant and the co applicant to beco!e eli&ible #or the co!!ence!ent o#t eh loan i 56 year 0 and co applicant can be o# 2< year o# a&e i# their inco!e i not cl"bbed to calc"late the loan eli&ibility( 7( The !a-i!"! a&e at the ti!e o# loan !at"rity #or applicant or co4applicant i :> year or the retire!ent a&e $hiche)er i earlier(
DO3UMENT/ IN1OL1ED IN E1ALUATION OF HOME LOANL
The doc"!entation re%"ire!ent #or )ario" cate&orie o# applicant depend on their tat" ( For thi p"rpo e all HFI They areL • • /alaried Pro#e ional or 8" ine !an e&re&ate their e!ployee in di##erent cate&orie (
The criteria o# e)al"ation chan&e accordin& to their tat" ( The &eneral doc"!ent 0 $hich re!ain a!e #or all the cate&orie 0 are a #ollo$ L 2( Proo# o# a&e Any one o# the #ollo$in& i con idered #or proo# o# a&e0 they areL • • • • • • • Pa port 1oterC ID card PAN card Ration card E!ployerC identity card /chool lea)in& 3erti#icate 8irth 3erti#icate
5( 3opy o# ban. tate!ent #or the la t i- !onth L 8an. tate!ent #or the la t i- !onth o# all operatin& and alary acco"nt ( 8an. tate!ent #or the la t i- !onth o# all c"rrent acco"nt 0 i# el# e!ployed( Any other photocopie o# in)e t!ent held0 i# re%"ired by the HFI 6( 3opy o# late t credit card tate!ent( 7( Pa port i'e photo&raph 9( /i&nat"re )eri#ication by yo"r ban.er (
Proo# o# re idenceL • • • • • Ration 3ard PAN 3ard Pa port Rent a&ree!ent i# any0 i# yo" are c"rrently tayin& on rent( Allot!ent letter #ro! yo"r co!pany i# yo" are re idin& in co!pany M"arter (T2e o*u!ents re<uire to 7e (ro3i e 7- t2e sa,arie *,ass are as fo,,o6s1 • • • • • /alary lip #or the la t one !onth( Appoint!ent letter /alary certi#icate Retainer hip a&ree!ent0 i# appointed a con "ltant( Fro!42: i "ed by the e!ployer in yo"r na!e(
Proof of E!(,o-!ent1 The proo# o# e!ploy!ent i )eri#ied by the • • Identity card i "ed by the e!ployer 1i itin& card(
E!ployerC detail *in ca e o# pri)ate li!ited co!panie ,L The e!ployerC detail are to be pro)ided in addition to the abo)e doc"!ent #or doc"!ent #or a pri)ate ector e!ployee0 they areL • • • • • • • Na!e o# pro!oter N Director 8ac.&ro"nd o# pro!oter N Director N"!ber o# e!ployee Li t o# branche N #actorie Li t o# client N 3" to!er T"rno)er o# yo"r e!ployer Ann"al report o# yo"r e!ployer #or the la t t$o to three year (
Criteria *2osen 7- ICICI Ban$ for *ate+ori=in+ t2e 3arious e!(,o-ees1
E!ploy!ent 3ate&ory Nor!
Mini!"! period o# er)ice *in year , Total 3"rrent E!ploy!ent *3on#ir!ed er)ice,
Bo)t( /ector *3entralN/tate, P"blic ector Underta.in& *or, M"a i Bo)t(
Any Or&ani'ation
5
2
/ho"ld pro#it !a.in& and not in the ne&ati)e li t
5
2
T2e *riteria 6it2 res(e*t to t2e (ri3ate se*tor e!(,o-ees an 7e,on+in+ to t2e (u7,i* ,i!ite *o!(anies is 7it !ore strin+ent
e!(,o-ees
3riteria
Nor!
O 9 year E-i tence R ( 6 crore p(a T"rno)er Net $orth Pro#it For 5 year to be "b!itted Financial Thro"&h ban. credit /alary 5> Min( n"!ber o# E!ployee PF tate!ent a proo# PF ded"ction i A M" t Whether Li tedN"nli ted 444444 Po iti)e 6 year $ith a Ri in& trend
O7 year R ( 6 crore p(a Po iti)e 5 year $ith a ri in& trend For 5 year to be "b!itted Thro"&h ban. credit 5>
PF tate!ent a proo# 5 year ann"al report to be "b!itted(
T2e o*u!ents re<uire to 7e su7!itte 7- t2e 7usiness!en as fo,,o6s1 a( b( c( La t three year Pro#it D Lo 3harted Acco"ntant La t three year 8alance /heet d"ly atte ted by a 3hartered Acco"ntant La t three year Inco!e Ta- Ret"rn d"ly #iled and certi#ied by Inco!e Ta- a"thoritie Proof of In3est!ents1 2( 8an. tate!ent #or the la t i- !onth o# all c"rrent acco"nt ( 5( Any other photocopie o# in)e t!ent held0 a re%"ired by the HFI( The abo)e are the )ario" doc"!ent re%"ired by the b" ine !an in addition to the doc"!ent 0 $hich are co!!on to the entire cate&ory( The b" ine !an i al o j"d&ed on the ba i o# the b" ine 8" ine cond"cted by hi!0 i# hi Acco"nt /tate!ent d"ly atte ted by a
pro#ile i in the ne&ati)e li t0 he $ill be thoro"&hly con idered #or hi
credibility be#ore di per in& loan0 the or&ani'ation and property location ho"ld not be in the ne&ati)e li t( The e are the additional doc"!ent $hich are re%"ired to be loo.ed at be#ore &oin& on #or co!pletin& the pre anction #or!alitie $ith re pect to di per in& o# the ho!e loan to the b" ine cla (
THE PARAMETERS IN4OL4ED IN HOUSIN% LOAN E4ALUATION There are a n"!ber o# para!eter on $hich the ho" in& loan are b"iltL They areL >0 TENURE The ten"re o# the ho!e loan re#er to the ti!e li!it #or a c" to!er to repay the loan Benerally0 the !a-i!"! ten"re o# ho!e loan i 5> year 0 $ith a #e$ lender o##erin& ten"re o# 5> year or !ore *I3I3I ha recently la"nched a 6> year loan,( The lon&er the ten"re0 !ore a c" to!er pay in total intere t0 b"t !onthly pay!ent $ill be le ( /o dependin& on the earnin& potential and ban. balance o# the c" to!er0 an appropriate can be cho e( An i!portant re%"ire!ent o# !o t ban. N HFI i that they pay "p the entire loan be#ore yo" retire( The c" to!er can al$ay prepay the entire loan a!o"nt be#ore it i d"e( A lon& a the ten"re &oe "p a c" to!er pay !ore intere t $hich i "p to >(59 ? >(9K0 &enerally abo)e the ho!e loan rate ( ?0 AMOUNT PAID BY THE FINANCER9 MAR%IN RE@UIREMENTS The #inancer doe not pay the entire a!o"nt o# the loan0 they re%"e t the c" to!er to !aintain !ar&in0 !o t ban. &o in #or a <9K #"ndin& o# the property )al"e incl"din& the ta!p d"ty and char&e 0 it ho$e)er )arie a!on& )ario" ban. ( Thi i al o treated a the !ar&in !oney or o$n contrib"tion re%"ired to be p"t by the pro pecti)e loan ee.er a the contrib"tion to$ard the p"rcha e o# the ho" e( Mo t HFI belie)e the a!o"nt paid i "p#ront be#ore they relea e any di b"r e!ent( A a r"le o# th"!b0 dependin& "pon the HF30 the pro pecti)e loan ee.er ha to co"&h "p 29K 4 5>K o# the loan a!o"nt a a do$n pay!ent( For !aller a!o"nt 0 thi !ay not be !"ch( 8"t #or #i&"re r"nnin& into lac. 0 thi co"ld !a.e load o# di##erence( For e-a!pleL An apart!ent co tin& R ( 2>lac !ay &et <9 per cent #inancin&( /o0 c" to!er ha to arran&e #or the re!ainin& R 2(9lac ( /o!e ban. ho$e)er !a.e $ay #or the pay!ent #or =>K o# #inancin& and abo"t 2>>K #inancin& #or o!e ne$ project 0 ho$e)er they are "bjected to a lar&e n"!ber o# #actor and con train (
A0 INTEREST RATES Witho"t do"bt the !o t i!portant para!eter to #actor into ho!e loan calc"lation ( The intere t rate !ay )ary #ro! in tit"tion to in tit"tion and &enerally ran&e #ro! abo"t ;(59K 4 ;(;9K to aro"nd =K Repay!ent i in the #or! o# EMI *E%"ated Monthly in tall!ent ,( The lon&er the ten"re0 the !ore yo" pay in intere t0 b"t yo"r !onthly pay!ent $ill be le ( The t$o .ind o# intere t rate a)ailable to a c" to!er areL • • Fi-ed intere t rate Floatin& intere t rate
Fi-ed intere t rate re!ain #i-ed o)er the ten"re o# the loan( Floatin& intere t rate are a##ected by the rate in the !ar.et0 they #l"ct"ate accordin& to the rate i "ed or chan&ed by the R8I #ro! ti!e to ti!e( The #inance !ini terC di.tat on ho!e loan doe not hold #or pri)ate ban. ( IndiaC lar&e t ho!e loan pro)ider and econd lar&e t ban. P I3I3I 8an. Pon T"e day hi.ed it ho!e loan by 2K( The ban. ha al o increa ed it depo it rate (
A per the ne$ rate tr"ct"re0 c" to!er $ill ha)e to pay 2>(9K on the ho!e loan $ith a #loatin& rate0 $hile the #i-ed ho!e loan $ill no$ in)ite an intere t o# 25(9K( With thi increa e0 the !onthly in tall!ent on an R (2la.h loan #or 5> year &oe "p by R ;>( /o!e p"blic ector ban. do o only once in 25 !onth $hile o!e pri)ate ector lender do it a #re%"ently a a %"arter( Tho"&h the c"rrent intere t rate %"ote !aybe lo$er0 o)er the li#e o# the loan0 a c" to!er $ill be able a)ed !ore in the ca e o# a lender $ho re et yo"r #loatin& rate !ore #re%"ently( The in)e tor are al o &i)en the option o# chan&in& their option #ro! #i-ed rate loan to a #loatin& rate loan0 o# co"r e by payin& a penalty(
B0 MISCELLANEOUS CHAR%ES1 All ban. char&e certain a!o"nt o# proce in& #ee $hich cannot be i&nored0 it ho"ld be "nder tood that alon& $ith !onthly pay!ent 0 the c" to!er ho"ld al o en "re that he ha to pay the e char&e 0 o he ho"ld care#"l in choo in& hi HF3( Mi cellaneo" char&e &enerally ran&e aro"nd 5(9K to 6K( A 2K ad!ini tration #ee and >(<K proce in& #ee on0 ay R/( 90 >>0>>> loan0 $o"ld a!o"nt to R/ 2>(>>>( Other ti!e 0 it co"ld be j" t one #ee *either ad!ini tration or proce in&, b"t co"ld yet $or. o"t to be !"ch !ore i# it i con iderably hi&her at0 ay0 5(9 per cent or 6 per cent( The )ario" other #ee 0 $hich yo" are re%"ired to be paid alon& $ith the !ar&in a!o"nt0 areL a/ Pro*essin+ fee1 ItC a #ee payable to the lender on applyin& #or a loan( It i either a #i-ed a!o"nt not lin.ed to the loan or !ay al o be a percenta&e o# the loan a!o"nt( The loan a!o"nt recei)ed by c" to!er can be le the application #or!( 7/ Pre(a-!ent Pena,ties1 When a loan i paid bac. be#ore the end o# the a&reed d"ration a penalty i char&ed by o!e ban. Nco!panie 0 $hich i " "ally bet$een 2K and 5K o# the a!o"nt bein& pre paid( */ A !inistrati3e Fees1 An ad!ini trati)e #ee i char&ed by the HFI on the loan a!o"nt anctioned to c" to!er( Thi #ee i nor!ally payable at a ti!e o# acceptin& the o##er letter( It i char&ed !ainly to !eet the operatin& e-pen e o# the loan a!o"nt o# the entire ten"re( / Ot2ers1 It i %"ite po ible that o!e lender !ay le)y a doc"!entation or con "ltant char&e( In ca e o# I3I3I 8an. the proce in& #ee i >(59K o# the loan a!o"nt and the ad!ini trati)e #ee i appro-i!ately >(9>K o# the loan a!o"nt( than the proce in& #ee( It i char&ed at the "b!i ion o# the application #or! and co)er e-pen e inc"rred #or proce in&
C0 AMORTISATION It !ean the !ethod or the calc"lation by $a o# $hich the entire Principal a!o"ntNloan a!o"nt i paid thro"&h the ten"re o# the loan( Thi help the c" to!er to .no$ $hat hi o"t tandin& principal i at any point o# ti!e( There are t$o !ethod &enerally #ollo$edL • • Ann"al re t Monthly re t
Annua, rests1 Thi i !ore co!!only .no$n a ann"al red"cin& balance o# the principalNloan a!o"nt lent to yo"( In an ann"al re t the EMI *#i-ed !onthly pay!ent #or the di per al o# the loan a!o"nt, are calc"lated on a ann"al ba i ( The co!ponent o# intere t i hi&her in the initial year and later on the co!ponent o# principal increa e and the intere t .eep red"cin& year a#ter year ( In other $ord 0 the intere t in the EMI $ill .eep red"cin& year a#ter year and the principal co!ponent .eep increa in&( Mont2,- rests1 Thi i called !onthly red"cin& balance or principal( The calc"lation in the abo)e !ethod re!ain the a!e a o# the abo)e e-cept that the balance i calc"lated on a !onthly ba i and the EMI i bro.en "p e)ery !onth to arri)e at the openin& balance o# the principal #or the ne-t !onth( It i al$ay better #or a c" to!er to ee. an HFI0 $hich &enerally ha !onthly re t 0 ba ed y te!Q thi $ill red"ce the a!o"nt o# intere t paid by the c" to!er( Many ban. ha)e adopted to the !onthly re t y te!( D0 REPAYMENT FACILITY The ban. ha &i)en three option #or repay!ent o# the loan to "it the con)enience o# 8orro$er( E%"ated Monthly In tall!ent *EMI, "ni#or! !onthly in tall!ent0 incl" i)e o# intere t0 #or the entire repay!ent o# only intere t #or the #ir t #i)e year 0 and therea#ter in EMI #or the ne-t 2> year (
Repay!ent o# only intere t in the #ir t #i)e year 0 6>K principal pl" intere t in the ne-t #i)e year 0 and balance ;>K pl" intere t in the re!ainin& period( Repay!ent to tart on co!pletion o# con tr"ction0 b"t not later than 2< !onth #ro! #ir t di b"r e!ent and in ca e b"ilt "p ho" e a#ter one !onth #ro! di b"r e!ent( Intere t d"rin& &e tation hall be paid a D $hen d"e( The repay!ent not to e-tend beyond the a&e o# retire!ent o# the borro$er or ;> year $hiche)er i earlier0 ho$e)er $here co4borro$er i ta.en0 a !a-i!"! repay!ent period o# 5> year !ay be con idered pro)ided the loan i li%"idated $ithin the a&e o# ;> year o# the borro$erN co4borro$er ha)in& capacity to er)ice the loan(
THE LOAN PROCEDURE FOLLOEED AT ICICI BANK The proced"re in)ol)e in the di b"r e!ent o# ho!e loan by any ban. entail the #ollo$in& tep L • Ho!e loan application #or! i co)erin& all detail ( • 3hec.li t o# re%"ire!ent i re%"e ted #or #ro! the c" to!er0 and all doc"!ent are re%"ired to be "b!itted *copie ,0 they are then )eri#ied $hether the detail are #ailed in correctly and $hether all the doc"!ent are "b!itted( • Additional loan 0 i# any are applicable( Many ban. pro)ide #or "pple!entary loan a a part o# their co!prehen i)e ho!e loan che!e( #ir t "b!itted by the c" to!er
T2e fo,,o6in+ ia+ra! in i*ates t2e ,oan (ro*e ure at t2e 7an$
3" to!er
For lar&e borro$ 8ranch !ana&er
Loan Depart!ent
8ranch !ana&er
Re&ional O##icer
Le&al opinion0 )al"ation And Technical
RISK CAPTURIN% MECHANISM One o# the i!portant a pect in the ho!e loan #inancin& i to en "re that the loan ee.er i $orthy and credible( I3I3I #ollo$ the credit core !odel to !ale ho!e loan di b"r e!ent ( 3redit core !odel i a ri . capt"rin& !echani !0 $hich i " ed to a e per pecti)e o# the loan ee.er ( The pro pecti)e loan ee.er i a e ed on a n"!ber o# para!eter $hich help in the e)al"ation o# hi pro#ile and each para!eter i a i&ned a core ba ed on $hich the deci ion i ta.en( A core o# 2>> i #i-ed0 and a core o# ;9 i con idered to be &ood0 core o# 99 i con idered abo)e a)era&e and core o# 59 to be a)era&e( The pro pecti)e loan ee.er on a cale o# 2>> i e-pected to &et 99 a)ail the ho!e loan( the ri .
The para!eter on $hich ri . i a e ed areL
>0 DEMO%RAPHIC PROFILE The de!o&raphic pro#ile incl"de a n"!ber o# "b4para!eter they are ba icallyL • • • • A&e Ed"cational M"ali#ication N"!ber o# Dependent Marital tat"
The de!o&raphic pro#ile o# the loan ee.er i allotted a !a-i!"! core o# 29( ?0 RELATIONSHIP EITH ICICI BANK The relation hip $ith the ban. i al o con idered #or the bene#it o# it c" to!er ( The "b4para!eter con idered here areL • • 1al"e o# relation hip *in ter! o# depo it , N"!ber o# year
The relation hip $ith the ban. i &i)en a $ei&ht o# 2> on the total core o# 2>>( A0 INCOME MODEL The inco!e !od"le o# the ban. incl"de para!eter • • • • Bro Eli&ible Monthly Inco!e "ch a L
IRR * Inco!e to In tall!ent Ratio, FOIR *Fi-ed obli&ation to inco!e ratio, Net ta.e ho!e
The inco!e !odel i &i)en the hi&he t core o# 9> point ( B0 STABILITY AND CONTINUITY The tability and contin"ity #actor are ba ed on • • Or&ani'ation Pro#ile L Bo)t( N p"blic ector co!panie N p"blic li!ited or pri)ate li!ited co!panie or partner hip or other Len&th o# er)ice in Pre ent job N or&ani'ation(
Thi !od"le i pro)ided $ith !a-i!"! core o# abo"t 29 point (
C0 ASSET MODULE The a et !od"le incl"de #actor li.e • • Mar&in Net4Worth * Total a et ? Total Liabilitie ,
The a et !od"le i &i)en a $ei&ht o# 2> on a cale o# 2>>( T2e 3arious (ara!eters of t2e *re it s*ore !o e, an t2eir res(e*ti3e 6ei+2ts are e(i*te in t2e fo,,o6in+ *2art0
Param eters in the model
AM 10%
SC 15% DM 15%
IM 50%
Ricici 10%
The abbre)iation o# the abo)e ter! areL DM IM /3 ? De!o&raphic pro#ile ? Inco!e Mod"le ? /tability and 3ontin"ity RI3I3I ? Relation hip $ith the I3I3I
SCRUTINY OF THE DOCUMENTS The retail proce in& i a proced"re0 $hich in)ol)e care#"l cr"tiny o# acco"nt ( I3I3I 8an. " e a peciali'ed y te! to &o thro"&h the acco"nt 0 be#ore di per in& the loan to the c" to!er( The ba ic &ro"p areL et "p in the proce o# loan application
RETAIL MANA%ER ENTERER %ROUP1 Thi &ro"p doe the data entry( Upon co!pletion o# the data entry the &ro"p #or$ard the a!e to the RM 1eri#ier &ro"p to )eri#y and re end it to the #or!er in ca e o# tiny di crepancie #or editin&( The Loan o##icer enterer &ro"p and the RM 1eri#ier &ro"p ho"ld en "re0 con#ir! and )eri#y the #ollo$in&L • • • The or&ani'ation i in the appropriate li t( The or&ani'ation i not in the ne&ati)e li t The property location i not in the ne&ati)e li t(
Applicant Detail L • • • Na!e and the per onal detail Identity detail Addre E!ploy!ent detail ? alaried
• • •
Financial detail L Inco!e a et o$ner hip0 E-i tin& ban. acco"nt detail and credit card detail E!ploy!ent detail L 8" ine Financial detail L E-i tin& ban. acco"nt and credit card detail (
E5istin+ Loan etai,s1 The na!e o# the #inancial in tit"tion *in ca e o# ta.e o)er, type o# loan0 p"rpo e o# loan a!o"nt etc0 a per the ho!e loan application #or!( Loan re%"e tL Incl"din& the di b"r e!ent detail ( Ac%"i ition detail L Bee detail 0 loan a!o"nt reco!!ended0 na!e o# the c" to!er pre#erred branch(
Re#erence detail L Entry o# at lea t one re#erence i !andatory( Property detail L The RM enterer &ro"p and the RM 1eri#ier &ro"p hall a##i- their initial on the ho!e loan proce note(
Upon co!pletion o# the abo)e acti)itie 0 the #ield in)e ti&ation0 le&al opinion and the technical apprai al proce hall be initiated by the RM(
The ba ic cr"tiny chec. #ollo$ed by the ban.L • Field in)e ti&ation t"dy( • Technical Fea ibility • Le&al Fea ibility Fie, In3esti+ation Stu -1 The !ana&er RM hall &o thro"&h the doc"!ent and in#or! the a!e to the #ield in)e ti&ation a&ency the detail L
a, Field In)e ti&ation ReportL • • • • Re idence and Re#erence *Tele ? 3hec., Na!e0 Addre 0 O##ice or 8" ine applicant and 3o4applicant( Inco!e Ta- ret"rn( telephone n"!ber o# the
The report are to &i)en on the letterhead o# the re pecti)e appro)ed a&ency by their a"thori'ed e!ployee $ith a&encyC r"bber ta!p( The RM ho"ld en "re #ro! the #ield in)e ti&ation a&ency in ca e o# Re idence and re#erence *Tele4chec., The detail in the report ho"ld !atch $ith the in#or!ation &i)en in the ho!e loan application #or!( IT:Return1 It ho"ld be tallied a per the o##ice record ( The !ana&er RM hall !a.e a tele4chec. to cro )eri#y the in)e ti&ation !ade by the a&ency in ca e0 #or the alaried applicant $here the di b"r e!ent i &reater than 2> lac. and in ca e o# the b" ine !an $here the di b"r e!ent i &reater than 2> lac. ( ?0 LE%AL FEASIBILITY The ban. ho"ld arran&e #or the le&al opinion( The !ana&er RM ho"ld #or$ard it to the ban.C e!panelled la$yer )ario" doc"!ent #or cr"tiny( /o!e o# the doc"!ent re%"ired #or the cr"tiny by the la$yer areL • • • • • /ale a&ree!ent d"ly re&i tered O$n contrib"tion receipt Allot!ent letter Land doc"!ent indicatin& o$ner hip0 i# applicable re&i tration receipt Po e ion letter
• • •
Lea e a&ree!ent0 i# applicable *Property bo"&ht #ro! a de)elop!ent a"thority, No objection certi#icate #ro! the de)eloper0 ociety or de)elop!ent a"thority( In ca e o# the con tr"ction o# the ho" e the a&ree!ent o# con tr"ction o# the ho" e bet$een the land o$ner and the contractor(
The abo)e are the li t o# doc"!ent to be re#erred to by a la$yer( The !an&er ha to pro)ide the copie o# the doc"!ent ho"ld be pro)ided by d"ly peci#yin& the na!e o# the applicant0 partic"lar o# property and li t o# doc"!ent attached( All corre pondence $ith re&ard to the le&al opinion !" t be carried #or$ard bet$een the la$yer and the RM only(
A0 FINANCIAL SCRUTINY Prior to di b"r e!ent0 the HFI al o cond"ct a ite )i it to the c" to!erC property to en "re the #ollo$in&L In *ase of un er *onstru*tion (ro(ert-1 • • • • • /ta&e o# con tr"ction i the a!e a that !entioned in the pay!ent notice &i)en to the b"ilder( M"ality o# con tr"ction /ati #actory pro&re o# $or.(
Lay o"t o# the #lat and area o# property i $ithin the per!i ion &ranted by the &o)ernin& a"thority Re%"i ite certi#icate ha)e been recei)ed by the b"ilder to tart the con tr"ction at the ite(
In *ase of rea - 9 Resa,e *onstru*tion1 • E-ternal !aintenance o# the property(
• • • • •
Internal !aintenance o# the property( A&e o# the b"ildin& Whether the b"ildin& $ill la t the ten"re o# the loan M"ality o# con tr"ction There i no e-i tin& lien or !ort&a&e on the property
The li t o# )al"ation en&ineer e!panelled by the ban. need to ta.e "p the e )ario" doc"!ent and en "re that the report i #"rni hed in the pre cribed #or!at and that loan a!o"nt re%"e ted by the applicant i "##icient to co!plete the project( The detail in the property report &i)en by the technical ter! and co!pare it $ith the le&al opinion and application and en "re that there are no di crepancie ( A#ter co!pletion o# the abo)e chec. and cr"tiny the !ana&er RM !" t #or$ard the ho!e loan proce not alon& $ith the ho!e loan application and other enclo "re Le&al opinion0 technical apprai al report0 #or #"rther proce in& to the Loan Mana&er ter!0 a#ter retainin& in the c" to!erC #ile0 copy o# the #ollo$in& paper L • • • Ho!e loan application Le&al opinion $ith all enclo "re Technical apprai al report
Loan Depart!ent ha to end the doc"!ent and paper to the RM #or #"rther cr"tiny and proce in& o# the propo al ( Thi $o"ld increa e the t"rnaro"nd ti!e0 o# proce in& and al o additional char&e to$ard the co"rier char&e and al o lo in& the doc"!ent in tran it0 In order to a)oid the abo)e di crepancie the doc"!ent are )eri#ied by the doc"!ent i!a&in& y te!( Ne$&en doc"!ent i!a&in& y te! i introd"ced to #acilitate electronic tran !i ion o# doc"!ent #or proce in& o# propo al by RM( • • • • It #acilitate cannin& and !aintenance o# canned i!a&e (
It al o pro)ide the pro)i ion o# lin.in& the doc"!ent i# the a!e doc"!ent i re%"ired #or !"ltiple loan Pro)i ion to !a.e re!ar. 0 on the doc"!ent $itho"t di t"rbin& the ori&inal( /canned i!a&e can be attached to any !ail
Thi #acilitate ea y tran !i ion o# data and other doc"!ent and al o pro)ide the #le-ibility in loan proce in& and help in #a t tran !i ion o# data0 the e all ad)anta&e help in ea y di b"r e!ent o# loan (
THE INNO4ATI4E LOAN CONCEPTS
>0 THE CONCEPT OF SURF The ne$ concept o# /URF i the tep "p repay!ent #acility0 it i a che!e pro)ided to yo"n& pro#e ional $ho ha)e j" t be&"n their career 0 con iderin& that their repay!ent capacity $ill increa e teadily in the near #"t"re(
The che!e increa e the repay!ent capacity o# a c" to!er0 hi loan eli&ibility increa e a it con ider the increa e in inco!e o# the c" to!er o)er the ne-t #e$ yea ( 3orporation ban. ha introd"ced thi /URF concept in it ho!e loan che!e( 3orporation 8an. ha introd"ced E3orp Fle-i Ho!e LoanC a )ariant o# the ho" in& loan $ith attracti)e #eat"re o# Pro&re i)e Monthly In tall!ent *PMI, i(e( Repay!ent lin.ed to increa e in #"t"re alary earnin& ( The che!e pro)ide #or @ tep4"p in tall!ent #acilityA "nder 3orp Ho!e /che!e( The 3orp4Fle-i che!e i o##ered $ith t$o option (
Option2L The borro$er can opt #or hi&her %"ant"! o# loan *26>K o# eli&ible a!o"nt "nder the nor!al che!e, a per the pre ent inco!e criteria $ith a pro)i ion to pay the in tall!ent ba ed on c"rrent inco!e initially and &rad"ally increa e o)er the latter part o# repay!ent period( Option 5L The loan hall be con idered a per applicantC nor!al eli&ibility $ith a pro)i ion to pay lo$er in tall!ent initially *;>K o# the nor!al EMI, and in tall!ent are tepped "p in the later part o# the repay!ent period(
?0 THE HOME SA4ER LOANS Ho!e /a)er i a re)ol"tionary ne$ concept in ho!e loan de i&ned to a)e yo" intere t thereby lettin& yo" pay o## yo"r loan #a ter( The /tandard 3harted ban. o##er a pecial ho!e loan na!ed the @ho!e a)er ad)anta&eA0 the ho!e a)er ad)anta&e0 $here the intere t rate )ary #ro! ;(;9 per cent to < per cent( E)ery !onth0 all yo" need to do i depo it yo"r "rpl" #"nd 0 be it yo"r alary or other a)in& into Ho!e /a)er0 in tead o# lettin& the! lie idle in di##erent acco"nt ( All thi !oney then $or. to$ard red"cin& yo" intere t payable beca" e the depo it a"to!atically red"ce the balance o"t tandin& on $hich the intere t i calc"lated on a daily ba i ( /o0 !ore the n"!ber o# day yo" place yo"r a)in& into Ho!e /a)er0 &reater i the intere t a)in&( There i al o contin"o" acce to yo"r #"nd 57 ho"r a day $ith the &lobally )alid ATM c"! debit card( The loan ta.er ho"ld !aintain a depo it acco"nt $ith the ban. to a)ail the ho!e a)er ad)anta&e( Uni<ue Features of t2e 2o!e sa3er1
• • •
Freedo! to a)e !ore Freedo! to red"ce yo"r loan period Freedo! to acce yo"r !oney ? anyti!e0 any$here
Ho!e /a)er i c"rrently a)ailable in 8an&alore0 3hennai0 and Delhi0 Gol.ata0 M"!bai and p"ne( Free o! to sa3e !ore1 With Ho!e /a)er0 there i !ore to a)e than a nor!al lo$4co t ho!e loan( 8eca" e intere t i calc"lated on yo"r daily balance0 yo" can red"ce yo"r intere t con "b tantially e)en i# yo"r "rpl" a)in& are in the acco"nt #or only a day( For each day that yo"r o"t tandin& balance red"ce 0 yo" pay le intere t #or that day( /ince thatC intere t a)ed not earned0 yo" a)e on ta-e that yo" $o"ld other$i e pay on yo"r intere t earnedR Free o! to re u*e -our ,oan (erio 1 Ho!e /a)er &i)e yo" the #le-ibility and #reedo! to !a.e e-ce pay!ent o that
yo" can red"ce the d"ration o# yo"r loan anyti!e0 $itho"t penaltie ( Free o! to a**ess !one- ; An-ti!e& An-62ere1 Ho" ha)e the #le-ibility o# depo itin& and $ithdra$in& ca h j" t a yo" $o"ld yo"r nor!al ban. acco"nt( Ho!e /a)er co!e $ith a &lobally )alid ATM4c"!4Debit card0 $hich allo$ yo" #ree to acce co"ntry Anyti!e Any$here( to yo"r !oney #ro! o)er 5>>> ATM acro the
FLE'I:SA4IN%S ACCOUNT
3itiban. al o o##er a #le-i4 a)in& acco"nt to red"ce yo"r co t o# borro$in&( The ban. $ill a"to!atically open a /a)in& Acco"nt #ro! $hich yo" can &i)e tandin& in tr"ction to ded"ct the EMI pay!ent #or the loan( Ho" can then prepay the loan at any point in ti!e and be &i)en in tant credit #or the a!e0 in ca e yo" &et a lar&e l"!p4 "! ann"al bon" #ro! yo"r e!ployer( /ho"ld yo" re%"ire !oney in an e!er&ency at any point yo" can a)ail o# a o)er dra#t on thi a)in& acco"nt at an intere t rate that i the a!e a that on yo"r Ho!e loan( Thi $or. o"t !"ch cheaper than ta.in& an o)er dra#t on a nor!al a)in& acco"nt(
CUSTOMIFED REPAYMENT SCHEMES
HDF3 $hich ha been in the ho!e loan e&!ent ince 2=;; ha al o introd"ced a ho t o# ne$ #eat"re to it ho!e loan port#olio( HDF3 o##er Fle-ible *3" to!i'ed, Repay!ent /che!e 0 .eepin& in !ind the #act that each indi)id"al ha a "ni%"e proble! re%"irin& "ni%"e ol"tion (
HDF3 ha de)eloped )ario" repay!ent option li.eL • • • /tep Up Repay!ent Facility Fle-ible Loan In tall!ent 8alloon Pay!ent /che!e0 Where the pay!ent in the initial year i le the later year are !ore( Pari Pa "N/econd Mort&a&e Arran&e!ent L HDF3 ha a tie4"p $ith a lar&e n"!ber o# P"blic /ector Or&ani'ation and ban. $hich enable " to o##er loan to loan ee.er $ith the #le-ibility o# their po" e al o ha)in& a loan #ro! hi Nher o$n e!ployer( 6( INCREASE IN THE TENURE PERIOD OF THE HOME LOANS The ho!e loan are pro)ided #or the period o# 9 year to 5> year period( I3I3I i the #ir t o# it .ind to introd"ce the ho!e loan che!e #or a 5>4year period( I3I3I ha been the lar&e t pri)ate ector ban. o# the co"ntry( It ha introd"ced the concept o# pro)idin& ho!e loan #or a 5>4year ten"re( Thi 5>year ten"re ho!e loan i a)ailable at only #i-ed rate o# intere t( Thi intere t rate tr"ct"re #or the 5>4year ten"re period #or I3I3I ho!e loan i a #ollo$ L and
Tenor Ho!e Loans Ban A B > to C -ears A7o3e C -ears& 7ut ,ess t2an >G -ears
F,oatin+ Rates U(to Rs0>G ,a$2s ;(59K ;(;9K
Fi5e Rates U(to Rs0>G ,a$2s <(59K <(;9K
C
A7o3e >G -ears& 7ut ,ess t2an ?G -ears
<(>>K
=(>>K
HOME LOAN FACILITIES EITH 4ARIOUS ADD:ON BENEFITS The ban. ha)e b"c.led #or the co!pletion o# the ho!e loan prod"ct by pro)idin& )ario" add4on bene#it 0 $hich ha al o beco!e a .ey #actor in the co!petiti)e era o# ho!e loan ( The ban. ha)e al o tied "p $ith )ario" property in "rance co!panie in order to !a.e their ho!e loan co!petiti)e( The A8N4AMRO ban. $hich ha entered the ho!e loan e&!ent in October 5>>60 la"nched it prod"ct @All /!ile Ho!e Loan A $ith the lo$e t intere t rate o# : percent in the #ir t year and
9 per cent in the econd year ha added a n"!ber o# )al"e added er)ice li.eL • • /M/ alert to help the c" to!er .eep trac. o# their loan anction and di b"r e!ent tat" ( The ban. al o o##er it !art Bold credit card to the borro$er and conce ional rate on per onal loan and a"to loan ( BI3 ho" in& #inance li!ited ha o##ered the con "!er loan #or the p"rcha e o# ho!e e%"ip!ent at the a!e rate o# intere t at the o# the ho!e loan and lo$er than the other con "!er loan ( The ten"re o# con "!er loan i re tricted to the ten"re o# 9 year ( Many ban. ha)e al o done a$ay $ith the &"arantor #or pro)i ion o# ho!e loan #or a!o"nt le than R/(2> la.e 0 li.e H/83 ho" in& loan che!e0 I3I3I ban.(THE FUTURE OF HOME LOANS
OUTLOOK1 In the la t 647 year the retail #inance di b"r e!ent are e ti!ated to ha)e increa ed at 3ABR o# o)er 6> per cent to R/( 59> !illion in the year o# 5>>24>5( The yield in the ho" in& #iancS i e ti!ated at abo"t 22425 per cent( With the operatin& co t and credit lo e o# >(94>(< percenta&e point and >(2 ? >(9 percenta&e point re pecti)ely( The net !ar&in in the b" ine i e-pected to be at aro"nd 242(9 per cent(
Total direct ho" in& di b"r e!ent i e-pected to &ro$ at a 3ABR o# 57>2 per cent d"rin& the period 5>>24>5 to 5>>:4>; period0 to R/( ;67(=5 billion( The !ar.et hare o# HF3 i cent d"rin& the period( et to decline #ro! 9=>5 per cent to 97>2 per cent( The
!ar.et hare o# the ban. are e-pected to increa e #ro! 67>< per cent to 72(7 per
THE FUTURE OF MARKET PLAYERS The !ajor player in the ho!e loan !ar.et are HF3 and the co!!ercial ban. and the ched"led co!!ercial ban. ( In 5>>24>50 the incre!ental di b"r e!ent o# ho" in& #inance co!panie i e ti!ated ha)e increa e by o)er 2;(6 per cent( The di b"r e!ent o# leadin& HF3 ha increa ed o)er the pre)io" year li.e HDF30 3an #in ho!e 0 o)er the pre)io" year( Ho$e)er the incre!ental di b"r e!ent o# !aller and !edi"! i'e HF3 ha)e declined by 6(= percent0 d"e toL • • • Increa ed co!petition #ro! the ban. Lo$er a)ailability o# lo$ co t #"nd Ti&htenin& intere t pread
The ban. a&&re&ate !ar.et hare o# all the ban. 0 in incre!ental direct di b"r e!ent ha increa ed by 2>(2 per cent0 to 67(< per cent(
The &ro$th ha been lar&ely dri)en by the co t ad)anta&e o# ban. o)er HF3 and lo$er credit o##4ta.e #ro! the corporate e&!ent The ban. ha)e the ad)anta&e o)er the HF3 beca" e o# the Acce to lo$er co t retail #"nd * a)in& depo it ,
The ban.in& ector e)ery year &et abo"t 7>> ? 79> billion in a)in& and de!andNc"rrent depo it 0 o"t o# $hich aro"nd ;94<> percent i con idered core #loat and are lar&ely lon& ter! in nat"re( Thi indicate the cope o# increa e in di b"r e!ent by the ban. $itho"t i&ni#icant !at"rity !i !atch ri . in co!pari on to the di b"r e!ent by the ho" in& #inance ind" try(
CHAN%ES IN THE TREND T2e !ar$et s2are of t2e HFCs an t2e 7an$s in ?GGG:G> 6as HFCs 2o, in+ a7out CD (er *ent an t2e 7an$s a7out BB (er *ent0
HFCs 56%
Banks 44%
Current,- t2e 7an$s 2o, a7out CH (er *ent an t2e HFCs 2o, a7out B> (er *ent
HFCs 41% Banks 59%
Li!itations of stu -1
• The t"dy $a re tricted in "nder tandin& the ho!e loan a concept o the practical i!plication o# the t"dy ha)e been di##ic"lt( • The inno)ati)e #eat"re o# the )ario" HFI a part o# their ho!e loan che!e b"t i not a co!prehen i)e t"dy o# their ho!e loan che!e ( • The Ta.e O)er ho!e loan o# hi&h intere t rate #or lo$ intere t rate and their inherent ri . on the ban. lendin& pro#ile ha not been "nderta.en in the t"dy( • The !ort&a&e ho!e loan and it e&!ent( cope on the ho!e loan lendin& port#olio
$ere not t"died a thi $o"ld lead into a relati)ely ne$ .ind o# ho!e loan
CONCLUSION
2( The ho!e loan e&!ent can be e-tended to the l"crati)e NRI e&!entQ thi $o"ld pro)ide the ban. a c"ttin& ed&e and lar&er hare o# the ho!e loan !ar.et( 5( The ban. can pro)ide the bene#it li.e /M/ alert and other #eat"re the ho!e loan !ore attracti)e( 6( The ban. can conte!plate on decentrali'in& the operation ho$e)er ta.in& into con ideration the e-perience and e-perti e o# the !e!ber at Loan Depart!ent enter ( o a to !a.e
BIBLIO%RAPHY
2( 8an.in& and Financial /y te! G(Lalitha 5( Financial /er)ice 0 A(G(Ghan 6( $$$(iciciban.(co!
by A(1(Ran&anathachary0 G(Anjaney"l"0
7( httpLNN$$$(iciciban.(co!Np# " erNloan Nho!eloan Nhlho!epa&e(ht! 9( Online Ho!e ,oan( inNICICI 8an.
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