STUDENT DECLARATION
My self BHAWANA student of BBA here by declared that the research report entitled ‘A MARKET SURVEY OF HOME LOAN WITH
SPECIAL REFERENCE TO ICICI BANK” is completed and submitted under the guidance of Mr. Amit faculty of management is my original work. The imperial finding in this report is based on the data collected by me. I have not submitted this project report to
Pt.DDUMC,Meerut or any other University for the purpose of compliance of any requirement of any examination or degree.
BHAWANA
BBA VI SEM
ROLL NO.9732548
1 2 PREFACE
Marketing is a social & managerial process by which an individual and group obtain what they need and want through creating offering and exchanging products of value with others.
Marketing is getting the right good and services to the right people to the right place, at the right time at the right place with the right communication and promotion. It is the art of creating and satisfying customer at a profit.
Advertising is one of the major tools of companies to direct pervasive communication to target buyers and publics. An identified sponsor defines it as any paid from and non personal presentation and promotion of ideas, goods or services.
Advertising is a cost effective way to disseminate message whether it is to saving account of ICICI bank and give best service in Loan.
3 4 ACKNOWLEDGEMENT
Presenting a Summer Training project of this type is an arduous task, demanding a lot of time. I cannot in full measure appreciate and acknowledgement the kindness shown and help extended by various persons in this endeavor. I will remember all of them with gratitude.
I must, however, especially Render & My special sincere thanks towards
Mr. AVNISH SRIVASTAVA (Regional Credit Manager), for giving me a chance to take this project and for his valuable guidance, which helped me on all those points, which I needed to include in, with full intensity.
My sincere thanks are also due to Mr.Amit Faculty of Management , & for their significant help extended for the successful completion of the project. I highly the help I got from them in providing me and lot of information regarding the functioning of this organization.
I am really appreciative this organization (ICICI Bank, including all employees) for full co- operation, support and motivation that they extended to me in completing my project here.
I am always beholden to my God, for always being with me and showing me the right ways, my family, for always doing favors to me and my friends and colleagues consistently helped with encouragement and criticism throughout the project work, for always lifting my sights to higher vision, raising my personality beyond normal limitation
5 and for realizing me my strengths and potential, as I did not always welcome her exhortation, “try again; you can do better.” But this project owes a great deal to it – and so do I.
BHAWANA
6 CONTENTS
• INTRODUCTION 8
• COMPANY PROFILE 22
• HISTORY OF THE COMPANY 27
• PRODUCT PROFILE 33
• HOME LOAN IN ICICI BANK 56
• RESEARCH METHODOLOGY 75
• OBJECTIVE OF THE STUDY 77
• COLLECTION OF DATA 84
• DATA ANALYSIS 87
• FINDINGS 97
• RECOMMENDATIONS AND SUGGESTIONS 99
• LIMITATIONS 102
• BIBLIOGRAPHY 104
• QUESTIONNAIRE 105
7 8 INTRODUCTION
Banking is the backbone of a modern economy. Health of banking industry is one of the most important pre-conditions for sustained economic progress of any country. The world of banking has assumed a new dimension at the dawn of the 21st century with the advent of tech banking, thereby lending the industry a stamp of universality. In general, banking may be classified as retail and corporate banking. Retail banking, which is designed to meet the requirements of individual customers and encourage their savings, includes payment of utility bills, consumer loans, credit cards, checking account balances, ATMs, transferring funds between accounts and the like. Corporate banking, on the other hand, caters to the needs of corporate customers like bills discounting, opening letters of credit and managing cash.
The Indian banking scene has changed drastically with the private sector making inroads in an area hitherto dominated by large public sector banks. Growing disinvestment is likely to impact the banking industry as well. There is every possibility of privatization of public sector banks, leading to greater operational autonomy.
The development of the Indian banking sector has been accompanied by the introduction of new norms such as Income Recognition and Capital Adequacy, by the government. The latter implies that banks can lend on the basis of their respective capital base. These norms have caused banks to construct equity on their own, before going in for debt. Disintermediation is a real threat for banks. Of late, banks are adopting the EVA (Economic Value Added) concept wherein revenues are viewed in the context of the risk associated with them.
9 The New World order has ensured "Survival of the Fittest". New services are the order of the day, in order to stay ahead in the rat race. Banks are now foraying into net banking, securities, consumer finance, housing finance, treasury market, merchant banking and insurance.
10 BANKING STRUCTURE
The Indian banking industry, which has Reserve Bank of India as its regulatory authority, is a mix of the public sector, private sector, and foreign banks. The private sector banks are again split into old banks and new banks.
SCHEDULED BANKS
Scheduled commercial banks are those that come under the purview of the Second
Schedule of Reserve Bank of India (RBI) Act, 1934. The banks that are included under this schedule are those that satisfy the criteria laid down vide section 42 (60 of the Act). Some co- operative banks come under the category of scheduled commercial banks though not all co- operative banks.
PUBLIC SECTOR BANKS
Public sector banks are those in which the Government of India or the RBI is a majority shareholder. These banks include the State Bank of India (SBI) and its subsidiaries, other nationalized banks, and Regional Rural Banks (RRBs). Over 70% of the aggregate branches in
India are those of the public sector banks. Some of the leading banks in this segment include ICICI
Bank, Canara Bank, Bank of Maharashtra, Central Bank of India, Indian Overseas Bank, State
Bank of India, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Travancore,
Bank of Baroda, Bank of India, Oriental Bank of Commerce, UCO Bank, Union Bank of India,
Dena Bank and Corporation Bank.
11 PRIVATE SECTOR BANKS
Private banks are essentially comprised of two types: the old and the new. The old private sector banks comprise those, which were operating before Banking Nationalization Act was passed in 1969. On account of their small size, and regional operations, these banks were not nationalized.
These banks face intense rivalry from the new private banks and the foreign banks. The banks that are included in this segment include: Bank of Madura Ltd. (now a part of ICICI Bank), Bharat
Overseas Bank Ltd., Bank of Rajasthan, Karnataka Bank Ltd., Lord Krishna Bank Ltd., The
Catholic Syrian Bank Ltd., The Dhanalakshmi Bank Ltd., The Federal Bank Ltd., The Jammu &
Kashmir Bank Ltd., The Karur Vysya Bank Ltd., The Lakshmi Vilas Bank Ltd., The Nedungadi
Bank Ltd. and Vysya Bank. The new private sector banks were established when the Banking
Regulation Act was amended in 1993. Financial institutions promoted several of these banks. After the initial licenses, the RBI has granted no more licenses. These banks are gearing up to face the foreign banks by focusing on service and technology. Currently, these banks are on an expansion spree, spreading into semi-urban areas and satellite towns. The leading banks that are included in this segment include Bank of Punjab Ltd., Centurion Bank Ltd., Global Trust Bank Ltd., HDFC
Bank Ltd., ICICI Banking Corporation Ltd., IDBI Bank Ltd., Induced Bank Ltd. and UTI Bank
Ltd.
FOREIGN BANKS
The operations of foreign banks, though similar to that of other commercial Indian banks, are mainly confined to metropolitan areas. Foray of foreign banks depends on reciprocity, economic and political bilateral relations. An inter-departmental committee has been set up to
12 endorse applications for entry and expansion. Foreign banks, in the wake of the liberalization era, are looking to expand and diversify. Some of the leading foreign banks that operate in India are
Citibank, Standard Chartered Grindlays Bank, Hong Kong Shanghai Banking Corporation, Bank of America, Deutsche Bank, Development Bank of Singapore and Banque National De Paris.
PUBLIC SECTOR BANKING – AT A DISADVANTAGE
Functioning of Public Sector Banks (PSBs), which are yet to achieve computerization across the board, is at a relative disadvantage when compared to the private sector, which is offering state-of-the-art facilities such as ATMs, doorstep banking, banking on phone, and net banking. PSBs also suffer from huge costs of labor and low levels of automation. At this rate, it may not be long before new channels devised by private banks effectively surpass the number of branch networks offered by the PSBs.
This apart, the problems which have assumed enormous proportion today as far as Public
Sector banks are concerned are ballooning NPA levels, declining margins, poor credit off-take, high overheads, and lack of good quality assets. Banks are sticking to reliable borrowers for fear of bad debts. In fact, banks largely invest in government securities, which have zero risk. With GOI being the single largest borrower, the yields on these securities determine the interest rates.
The government aims to decrease its shareholding in PSBs to 33%, however, at the same time it also wants to retain the controlling stake. This, it is feared, is not going to solve the problems which PSBs are coping with now.
13 PRIVATE SECTOR BLOOMS
Corporate governance and self-regulation are the ground rules for the private sector.
Government interference is not preferred. While some private banks such as ICICI Bank, UTI
Bank and IDBI Bank have financial institutions backing them, others are opting for foreign partnerships for technology and monetary resources.
Private banks have emerged relatively strong, with about 60% growth reported in net profits in the year ended March 2000. With a net profit of Rs.120 crores (+46%), HDFC was the clear leader. IDBI Bank, however took the cake by doubling its net profit, which reached Rs.60.99 crores in March 2000.The jump in profits can mainly be attributed to non-traditional sectors such as commission, exchange, brokerage, and profit on sale of investments.
14 RBI POLICIES
The RBI does not interfere in determining the prime lending rates for commercial banks.
The onus is on banks to do so. RBI regulates interest rates on savings accounts, export credit, and credit for small and tiny sectors. The rates fixed by RBI are quite low at 7%, 5%, and 4% respectively for Bank Rate, Repo Rate, and savings account rate. Fixing rates on bank credit is the discretion of the banks. Though banks are allowed to offer variable interest rates on longer-term deposit rates, they continue to offer fixed deposit rates.
Current account transaction norms eased
Norms on current account transactions were eased, in line with the Foreign Exchange
Management Act (FEMA). The Basic Travel Quota (BTQ) has been raised from US$3,000 to
US$5,000, without the need for central bank’s approval. Capital account restrictions related to dealing in assets with residents and non-residents have also been relaxed.
RBI to launch liquidity adjustment facility
The Reserve Bank of India (RBI) is launching its new liquidity adjustment facility (LAF), effective June 5. The first phase would see the withdrawal of additional collateralised lending facilities, and Tier-II refinance to banks. The 5% fixed rate Repo will also be withdrawn. The facilities of collateralised lending and Tier-I refinance facilities will continue.
The Central government has granted approval to banks during the current financial year to make a foray into forward trading in gold by including gold on the list of commodities eligible for hedging under the Forward Contract (Regulation) Act, 1952.
15 MEASURES ADOPTED BY RBI
Measures to increase liquidity and decrease the cost of funds to banks
• Bank rate cut by 1% from 8% to 7%
• CRR cut by 0.5%, from 8% to 7.5%
• Repo rate cut by 1%, from 6% to 5%
Savings deposit rate for scheduled commercial banks cut from 4.5% to 4.0%
16 MAJOR COMPETITORS
STATE BANK OF INDIA
It is India's largest bank with assets worth Rs.2, 615 billion. SBI also has the distinction of having the world’s largest branch network of 9,000 branches. The bank has a share of about 22% of
India's loans and deposits, and is a top player in trade finance and forex. Through its subsidiaries,
SBI is also a leading provider of other financial products like mutual funds, investment banking, housing finance and factoring. SBI has a market share of one-fifth of the banking sector in India.
Nationalized banks and SBI and its subsidiaries form the heart of the Indian banking system. These two entities operate 70% of the total branches spread across the length and breadth of India.
BANK OF INDIA
As one of the leading public sector Indian banks, Bank of India has the distinction of being the first bank to open a branch outside India. The bank, which currently has overseas operations in about 10 countries, is one of the leaders in financing foreign trade. It is one of the few Indian banks that provide tele-banking facilities, Remote Access Terminals for corporate clients, and Signature
Retrieval System. Some of the recent forays made by the bank in terms of its business operations include bullion business and demat services.
SYNDICATE BANK
It is a pioneer in terms of the introduction and adoption of a model banking policy that suits India and other developing countries. The bank, which is synonymous with progressive banking in India, has a strong presence in rural India. The bank was nationalized in 1969. Syndicate Bank has
17 correspondent relations with 400 banks from all over the globe. The bank is also one of the leading players in the foreign exchange market.
Citibank, idbi, hdfc,hsbc
18 CHALLENGE FOR THE INDIAN BANKING SECTOR
Indian banks have a long way to go before they reach the size of their international counterparts.
Even the biggest Indian bank, State Bank of India, is nowhere on the international scale, with assets in the range of $50billion. Absence of significant scale benefits and higher implicit costs of several services are perpetuating the poor ranking of Indian banks in the international league tables.
Shareholding structure, government regulations and sheer size of the country ensure that the existence of Indian banks is not at stake at this stage. What is at stake is the banking support that is available for Indian economic activity, and thereby the international competitiveness of various sectors. What is also at stake is the scope for the banking industry to earn superior returns through differentiated wider services.
Further, it is quite conceivable that with passage of time, as government holding in banks is progressively divested, regulatory authorities will be unable to hold back the international giants from buying out Indian banks. Even economies with a "domestic mindset", such as France and
Germany, have been forced to bow before the international capital market forces.
It would be a shame if painstakingly built retail strength is offered on a platter to some predator.
The challenge can be met through some concerted action -
Government
The Government needs to do away with artificial fragmentation of the financial sector. A case in point is the segregation of banks and financial institutions induced by policy. If this is changed, we may well see mergers between the two sectors to create
19 organizations of size. Why not a merger of Industrial Development Bank of India with
Bank of Baroda, or even better with State Bank of India? This would definitely lead to a merger between ICICI and ICICI Bank and for that matter between HDFC and HDFC
Bank. The possibilities are interesting and numerous.
Domestic Banks
Domestic Banks - private as well as public - need to continuously explore options to acquire or merge with other institutions to enhance their size, service or skill-set. This could also mean looking beyond the national boundaries as truly global corporations do.
New Initiatives
The recent crisis in the Far East has demonstrated the need for a robust banking sector. Therefore the whole structure of Regional Rural Banks (RRBs) and Urban Co- operative Banks (UCBs) needs to be strengthened. The focus that FMCG companies such as Hindustan Lever have given to the rural sector proves that private sector interest is not limited to the cities and major towns. Technological changes (such as wireless communication, net etc.) have drastically changed the communications scenario. This may be the time to come out with interesting initiatives with regard to structure of RRBs and
UCBs so that private sector organizations - banks as well as non-banks - play a greater role in meeting the needs and aspirations of hitherto neglected parts of the country.
20 Social considerations
The full benefit of mergers can only be realized if they are followed up with some hard measures such as re-location / closure of branches, rationalization of employee strength etc. It would be a welcome change if the management and unions collaborate in seeking appropriate social security from the Government - financed out of the divestment of stake in these banks.
Indian banking has to operate with a global mindset even while fulfilling local banking requirements. By joining in the effort to make this happen, we will get the banking service we need. Else, we will deserve the banking service we get.
21 22 COMPANY PROFILE
ICICI Bank is India's second-largest bank with total assets of about Rs. 1 trillion and a network of about 540 branches and offices and over 1,000 ATMs. 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 non-life insurance, venture capital, asset management and information technology. ICICI
Bank's equity shares are listed in India on stock exchanges at Chennai, Delhi, Kolkata and
Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. 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
23 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. The merger would enhance value for
ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of
ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finances subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High
Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.
24 BOARD MEMBERS:
MR. N. VAGHUL, CHAIRMAN
MR. UDAY M. CHITALE
MR. P.C. GHOSH
DR. SATISH C. JHA
MR. L. N. MITTAL
MR. ANUPAM PURI
MR. VINOD RAI
MR. SOMESH R. SATHE
MR. P.M. SINHA
MR. R. SESHASAYEE
MR. M.K. SHARMA
PROF. MARTI G. SUBRAHMANYAM
MR. K.V. KAMATH, MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
MS. LALITA D. GUPTE, JOINT MANAGING DIRECTOR
MS. KALPANA MORPARIA, EXECUTIVE DIRECTOR
25 MR. S. MUKHERJI, EXECUTIVE DIRECTOR
MS. CHANDA KOCHHAR, EXECUTIVE DIRECTOR
DR. NACHIKET MOR, EXECUTIVE DIRECTOR
26 27 HISTORY OF COMPANY
1994
The Bank was incorporated on 5th January at Baroda. ICICI Bank was promoted by ICICI and erstwhile SCICI Ltd. and received the Certificate for Commencement of Business on 24th
February. It does banking business of all kinds. It was founded as an institution to provide quality- banking services using state-of-the-art technology.
1996
The deposit products and other services of the bank were branded with names such as
`Maxicash' for services accounts, `Money Plus' for Current Account, `Quantum' for fixed deposit account, `Power Pay' for payroll accounts treasure chest for locker facilities and `Trice' for automated teller machine facility.
The Bank had, in compliance with a directive issued by RBI, deposited in aggregate Rs 88.16 crores with small Industrial Development Bank of India and National Bank for Agricultural &
Rural Development.
The `B' category branches were authorised to handle full range of foreign exchange transaction of customers and five other branches were placed in `C' category to handle limited foreign exchange transactions.
Seven branches of the bank with substantial foreign exchange business were linked to the society for worldwide Interbank Telecommunication (SWIFT) network which enables them to transmit Letter of Credit and fund transfer messages promptly world wide.
28 700 No. Of equity shares subscribed for by signatories to the Memorandum of Association.
1500,00,000 No. Of equity shares allotted to ICICI Ltd.
1997
The bank introduced electronic funds transfer facility. The bank has a full-fledged vigilance and inspection department.
The Bank offered 150,00,000 No. Of equity shares of Rs 10 each at a prem., of Rs 25 per share to ICICI.
The Bank offered for sale 412,50,200 No. Of equity shares of Rs 10 each at a price of Rs 35 per share.
Sicom Ltd. has entered into an agreement with ICICI Bank and Dresdner Bank for providing a counter guarantee against letters of credits (LCs) opened by its clients.
The merger of SCICI with ICICI effective from April 1, the bank has become a wholly owned subsidiary of ICICI.
ICICI Banking Corporation, a fully-owned subsidiary of Industrial Credit & Investment Corp of
India Ltd, has finalized an offer for sale of 4 crore equity shares of Rs.10 each at a premium of
Rs.30 per share, according to merchant banking sources.
1998
ICICI Bank, which introduced Internet banking in India, is set to launch various technology- based new services in the near future. Some of the new services include setting up of call centres and the introduction of fund transfers between own accounts in its branches.
29 ICICI Banking Corporation Ltd, the first bank in the country to go in for Internet banking, is now all set to provide its account-holders with the facility of transferring funds across their accounts on the Net.
1999
ICICI Bank has signed an agreement to use the NCR switchmark technology for online- networking all its ATMs, the officials said they network would come into place in September.
ICICI Bank recently restructured its organizational structure by setting up strategic business units for retail banking, corporate banking and forex and treasury operations, as independent profit centres.
ICICI is all set to launch a 60-second television commercial on August 15, 1999.
30 2000
ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its $175- million American depository shares issue generating a demand book 13 times its size at $2.2 billion.
The Bank proposes to bring credit cards to the "large, underserved population" in rural and semi-urban areas.
SkyCell Communications Ltd, one of the two cellular service providers in Chennai, has launched `Sky Banking', for which the company has tied up with ICICI Bank and HDFC Bank.
The ICICI has announced the launch of mobile banking services for its customers, using the wireless application protocol (WAP) technology.
Ford India has tied up with ICICI Bank to introduce a scheme, enabling non-resident Indians
(NRIs) to purchase a Ford Ikon car for their friends and relatives in India.
ICICI Bank has set up an ATM facility at an Indian Oil Corporation petrodiesel outlet at
Chennai.
ICICI Bank has tied up with Chennai Telephones to provide Internet bill payment facility to its customers.
31 CEO’s DESK
During the year, ICICI Venture has successfully laid the foundation to emerge as one of the most successful private equity players in India. Through a series of strategic measure, the company has been modeled on the lines of international private equity players and is on a sound platform to gain a dominant presence in VC and PE business in the current year.
The company focussed on realizing value in each of its portfolio companies in a manner that maximized gains for all stakeholders. This was achieved through consolidation within the portfolio, proactive exits, additional funding support and improved corporate governance. The
Company also internally reorganized itself to create two separate teams - one to manage past funds and the other to build sector expertise and identify attractive investment opportunities in private equity. Special emphasis was put on managing investor expectations in terms of timely reporting, transparency, audit etc.
These efforts have been applauded both by domestic and international investors.
Reckoned, as a pioneer for Venture Capital in India, the opportunity and timing today is right for ICICI Venture to affirm its presence in Private Equity as well. The company has now launched 'India Advantage Fund'
The Fund's investment philosophy is to pursue transactions with established companies that are leaders in their own right and where there is a clear proposition for value creation. The Fund will provide expansion capital, acquisition finance and funding for buy-out of restructured assets/spin-off. The Fund also intends to selectively pursue opportunities arising out of
Privatization initiative of the Government.
32 33 PRODUCT PORTFOLIO
CORPORATE BANKING RETAIL BANKING
Corporate Solutions Home Loans
Government Solutions Car & Two Wheeler Loans
Capital Market Services Consumer/Personal Loans
Agriculture Finance Saving & Term Deposit
Structured Finance Salary Account
Project Finance Roaming Current Accounts
Infrastructure Finance Investment Products
Term Loans Private Banking
Working Capital Finance NRI Services
Cash Management Services Demat Services
Trade Finance Services Credit & Debit Cards
International Banking Smart Cards
Treasury Services Bill Payment Services
Corporate Internet Banking E-Cheques
34 Corporate Advisory Branches
Custodial Services ATMs
Professional Clearing Internet Banking
Membership Services Phone Banking
Youngstar account
35 PROMOTION
What's on offer
Hello ICICI brings you a host of services at your fingertips 365 days a year. A user friendly automated service menu offers you convenient access to your account coupled with security as, all your transactions are protected by a TPIN - The Personal password to your account. But if you do need any assistance our officers will be glad to help you.
Whats more... this facility comes to you totally free of charge! Some of the services offered are listed below
Savings account :
o Balance Enquiry Statement of account
o Cheque status enquiry Stop Payment
o Cheque book request
o Dial-a- draft/payorder
o ATM lost card reporting
o Request for a new ATM PIN
Fixed Deposits:
o Opening a Fixed Deposit
o Checking Fixed Deposit details
36 o Request for TDS statement
Credit Cards:
o Balance and account related inquiries Statement of account
o Dial a draft/payorder
o Lost/Replacement card
o ATM pin re-issue
o Payment instructions (maybe through a letter to the Call Centre)
Others:
o Standing Instructions
o Complaints and suggestions
o Inquire about any ICICI retail product
37 RISK MANAGEMENT
Risk is an integral part of the banking business and ICICI Bank aims at the delivery of superior shareholder value by achieving an appropriate trade-off between risk and returns. ICICI
Bank is exposed to various risks, including credit risk, market risk and operational risk. Our risk management strategy is based on a clear understanding of various risks, disciplined risk- assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. A comprehensive range of quantitative and modelling tools developed by a dedicated risk analytics team supports the risk management function at ICICI Bank.
The Risk, Compliance & Audit Group (RCAG) is responsible for assessment, management and mitigation of risk in ICICI Bank. This group, forming a part of the Corporate Centre, is completely independent of all business operations and accountable to the Risk and Audit
Committees of the Board of Directors. RCAG is organised into six sub-groups: Credit Risk
Management Group, Market Risk Group, Credit Policies Group, Internet Audit Group, Retail Risk
Group and Risk Analytics Group.
38 CREDIT RISK
Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. ICICI
Bank measures, monitors and manasgers credit risk for each borrower asnd also at the portfolio level. ICICI Bank has a standardised credit approval process, which includes a well-established procedure of comprehensive credit appraisal and rating. ICICI Bank has developed internal credit rating methodologies for rating obligors as well as for rating. ICICI Bank has developed internal credit rating methodologies for rating obligors as well as for product / facilities. The rating factors in quantitative and qualitative issues and credit enhancement features specific to the transaction.
The rating serves as a key input in the sanction as well as post-sanction credit processes. Credit rating, a as concept, has been well internalised within the Bank. The rating for every borrower is reviewed as least annually and for higher risks credits and large exposures at shorter intervals.
Sector knowledge has been institutionalized across ICICI Bank through the availability of sector- specific information on the Intranet. Industry knowledge is constantly updated through field visits, interactions with clients, regulatory bodies and industry experts. In respect of the retail credit business, ICICI Bank has a system of centralized approval of all products and policies and monitoring of the retail portfolio. We continuously refine our retail credit parameters based on portfolio analytics.
39 MARKET RISK
Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity prices. ICICI Bank’s exposure to market risk a function of its trading and asset and liability management activities and its role as a financial intermediary in customer-related transactions. The objective of market risk management is to minimize the impact of losses due to market risks on earning and equity capital.
Market risk policies include Asset-Liability Management (ALM) policies and policies for the trading portfolio. The Asset-Liability Management Committee (ALCO) of Board of Directors approves ALM policies. ALCO’s role encompasses stipulating liquidity and interest-rate risk limits, monitoring risk levels by adherence to set limits, articulating the organization’s interest rate view and determining business strategy in the light of the current and expected business environment. These sets of policies and processes are articulated in ALM policy. A separate set of policies for the trading portfolio address issues related to investments in various trading products and are approved by the Committee of Directors (COD) of the Board. RCAG exercises independent control over the process of market-risk management and recommends changes in processes and methodologies for measuring market risk.
40 MIDDLE OFFICE GROUP
ICICI Bank has a separate Middle Office Group to monitor both credit and treasury-related compliance. The Credit Middle Group monitors compliance with policies and terms of sanction of credit proposals.
The Treasury Middle Office Group monitors the asset-liability position under the supervision of the ALCO. It also monitors treasury activities, including determining compliance with various exposure and dealing limits, verifying the appropriateness and accuracy of various transactions, processing these transactions, tracking the daily funds position and all treasury related management and regulatory reporting.
Interest rate risk is measured through the use of re-pricing gap analysis. Liquidity risk is measured through gap analysis. ICICI Bank ensures adequate liquidity at all times through systematic funds maintenance of liquid investment as well as by focusing on more stables funding sources such as retail deposits. ICICI Bank mitigates its exposure to exchange rate risk by stipulating daily stop-loss limits and position limits.
41 OPERATIONAL RISK
Operational risk can result from a variety of factors, including failure to obtain proper internal authorization, improperly documented transactions, failure of operational and information security procedures, computer systems and software or equipment, fraud, inadequate training and employee errors. We attempt operational risk by maintaining a comprehensive system of internal controls, establishing systems and procedures to monitors transactions, maintaining key back-up procedures and undertaking regular contingency planning. The Middle Office Group monitors adherence to credit procedures. The International Audit Group undertakes a comprehensive audit of all business group and other functions, in accordance with a risk-based audit plan. This plan allocates audit resources based on an assessment of the operational risks in the various businesses.
ICICI Bank has been a pioneer in the implementation of a risk-based audit methodology in the
Indian banking sector. The International Audit Group conceptualizes and implements improved system of internal controls to minimize operational risk.
42 FUTURE PROSPECTS OF ICICI BANK
Future expectations
We soon plan to introduce:
• payment services to certain standard utilities
• Demat-related information
• own accounts funds transfer
• ICICI will also use WAP technology for undertaking on-line transactions
If you have an ICICI Phone Banking Relationship Number (under which your accounts are linked to the ICICI Call Centre for ICICI Phone Banking), the same accounts will be linked for
Mobile Commerce. If you do not have an ICICI Phone Banking Relationship Number, you can specify the account number(s) and your ICICI Credit Card Number to be linked for SMS.
43 ICICI BANK NAMES CONSULTANT FOR GOVT
BUSINESS
ICICI Bank has appointed international consultancy major monitor group to help the bank in identification of business prospects in the government sector which has recently been identifies as a focus area.
Monitor will help ICICI get business from the government sector, particularly the infrastructure sector mandates. The bank did not consider government business a focus area till sometime back. Now, Monitor Group will study investment prospect of tourism in Rajasthan, opportunities for the government of Andhra Pradesh and investment prospects for the bank through the government in cities such as Pune and Kolkata.
“We are trying to find out how ICICI Bank can be a partner to the government in development plans and projects. The bank has initiated fresh focus towards the government which is a major source of business and we would like to increase relationship with government agencies,” ICICI officials said.
Monitor Group will find out ways and means for ICICI Bank through which the latter “Can solve government fund flow problems and how ICICI Bank can play a role in the projects,” bank officials said.
This is a test study and if there is a positive response from the government then more such specific developmental studies will be taken up by the bank as partners to development.
-ECONOMICS TIMES.
44 1/11/03 ICICI Bank clocks 110% growth in retail portfolio in Q2
Mumbai: The retail portfolio of ICICI Bank grew by 110 per cent to Rs 25,205 crore (Rs 12,021 crore) in the second quarter. Retail assets constituted 39 per cent of the bank's customer assets.
While leveraging and enhancing its position as the original lender, the bank also continued to focus on securitisation of its customer assets. This had enabled the bank to optimize resources and capital utilization and diversify the composition of its asset portfolio.
During the first half of this financial year, the total sell down and securitisation of assets was around Rs 5,300 crore. According to the bank, its net restructured loans declined to Rs 7,856 crore
(Rs 10,491 crore). Net NPAs were at Rs 3,128 crore, constituting 4.8 per cent of its customer assets. Deposits grew by 18 per cent to Rs 56,880 crore (Rs 48,169 crore). As on September 30,
2006, the deposits constituted 58 per cent of the bank's funding against 42 per cent in the corresponding period of the previous year. The capital adequacy as on September 30, 2006 was at
11.5 per cent.
45 ACCOUNTS IN ICICI BANK
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.
Senior Citizen Services
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.
46 Young Stars
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.
Fixed Deposits
Safety, Flexibility, Liquidity and Returns!!!! A combination of unbeatable features of the Fixed
Deposit from ICICI Bank.
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.
47 IV. ICICI Bank Salary Accounts
1.1 It is the responsibility of the customer to ensure that he has read and understood the "terms and conditions" under which the Salary Accounts scheme is offered to the corporate
1.2 The employer has full right to reverse any instruction given by him to credit the customer's account for any amount within a period of 3 working days and the account holder will not dispute or hold the bank responsible for any such debits in the customer's account.
1.3 It is the responsibility of the customer to inform ICICI bank immediately on termination of his employment with the current employer whereupon he will cease to enjoy any/all benefits under
Salary Accounts scheme
1.4 If no credits are made to the account for a continuous period of 6 months, ICICI Bank reserves the right to change the status of the Salary account to ICICI bank saving account without any intimation to the account holder and the terms and conditions as applicable to the ICICI bank saving account shall apply to this account from the date of change of the status.
1.5 In case of a joint account, both the applicant and joint applicant are singly and jointly liable for
Overdraft if any, even if the application cum demand promissory note is signed by the applicant alone.
V. Terms and conditions for the issue and use of ICICI Bank ATM cards.
1. Meaning of certain terms : The term "Bank" refers to "ICICI Bank Ltd." "ATM" refers to
the Automated Teller Machines installed by the Bank "Card holder" refers to an account
who has been issued an ICICI Bank ATM Card.
48 2. ICICI Bank ATM Card Issuance : An account holder may be issued an ICICI Bank ATM
Card by the bank at its discretion, if he/she has satisfactorily conducted savings and/or
current account and/or any other type of account so designated by the Bank to be eligible
account(s) for operations through the use ICICI Bank ATM Card. The account holder shall
give his/her preference of such account(s) held by him in writing in the Relationship form
for issue of ICICI Bank ATM Card. A Minor's account or an account in which a minor is a
joint account holder, is not eligible for issuance of ICICI Bank ATM Card.
There may be more than one such account in which case one account shall be designated as
" Primary Account", and the others as "Secondary Account 1" and " Secondary Account 2"
at the option of the Cardholder.
3. ICICI Bank ATM Card : ICICI Bank ATM Card shall be issued to an approved account
holder in respect of his account to enable him to operate the ATM.
4. ATM-Facilities: The facilities offered under ATM facility will include withdrawal of cash
by the Cardholder from his account up to a stipulated amount limit only during a cycle of
24 hours deposit of cash and cheques in the account enquiry about the balance in the
account(s), cash/cheque deposits requisition for a statement of account, request for changed
PIN number, request for issue of cheque-books, request for transfer of amount from the
Primary Account to the Secondary Account(s) or vice-versa and such other facilities as the
Bank may decide to provide, from time to time.
5. Minimum Balance in Primary Account : The Cardholder shall maintain, at all times,
such minimum balance in his account, as the Bank may decide from time to time and the
Bank may at its discretion levy such penal or service charges as per the Bank's rules from
49 time to time, or withdraw the ATM facility, if at any time the amount of deposit falls short
of the required minimum as aforesaid, without giving any further notice to the
Cardholder(s) and/or without incurring any liability or responsibility whatsoever by reason
of such withdrawal.
6. Fees: Currently, the ATM card is issued free of cost to customers. Also no charges are
levied for transactions made through the ATM. However, the Bank reserves the right to
charge fees for the ATM facilities in future with prior intimation to customers.
7. Bank's Lien : The Bank shall have the right of set-off and lien, irrespective of any other
lien or charge, present as well as future on the deposits held in the Cardholder's Primary
Account and/or, Secondary Account(s) or in any other account, whether in single name or
joint name(s), to the extent of all outstanding dues, whatsoever, arising as a result of the
ICICI Bank ATM card services extended to and / or used by the Cardholder.
8. Multiple Cards : In case of joint account(s) Either or Survivor /anyone or Survivor where
more than one person has been issued ICICI Bank ATM Card, all the Card-holders put
together, shall withdraw only upto the permissible limit allowed to single card account(s),
within the cycle time of 24 hours.
9. Joint account : In case of joint accounts where only one card is issued to a joint account
holder, the other joint account holder(s) shall expressly agree with and give his/her consent
on the application form for issue of ICICI Bank ATM card. In case any of the joint account
holder(s) gives "stop payment stop transactions" instructions in respect of operations
through the use of ICICI Bank ATM card, on any of the accounts held jointly by them, no
operations will be allowed on such account(s) through the use of ICICI Bank ATM card.
50 The "stop payment stop transactions" instruction can be given only in respect of such
accounts in which he/she is a joint account holder.
10. Non-Transferability : ICICI Bank ATM card is not transferable under any circumstance
and shall be used only by the Cardholder.
11. Personal Identification Number : Each Cardholder will be issued a sealed envelope
containing a four digit number called Personal Identification number (PIN) to gain access
to the ATM services. This number can be changed to any other convenient four digit
number by the cardholder, at the ATM. The PIN shall under no circumstances be revealed
to any third party. The Cardholder shall be solely responsible for the consequences arising
out of the disclosure of his PIN and/or unauthorised use of ICICI Bank ATM card and shall
be liable for any increased liability which he may incur on account of unauthorised use of
the PIN and ICICI Bank ATM card.
If the Cardholder forgets the PIN, he/she should make an application in writing for a fresh
PIN. The selection of a new Personal Identification Number and/or the replacement of
ICICI Bank ATM card shall not be construed as the commencement of a new contract.
12. Funds in the accounts: The Cardholder should not use or attempt to use ICICI Bank ATM
card without sufficient funds in the account he wants to operate through the card.
13. Loss/ Theft of Cards : The Cardholder shall be responsible for the safe custody of ICICI
Bank ATM card. In case of loss or theft of the ICICI Bank ATM card, the Cardholder shall
advise any of our branches, preferably the ICICI Bank ATM card issuing branch as
promptly as possible in writing, of the loss of ICICI Bank ATM card, however occuring.
Cardholder shall however be responsible and liable for all transactions effected by the user
51 of the Card until it is confiscated / cancelled. Another ICICI Bank ATM card will be issued
to the Cardholder, in lieu of lost / stolen ICICI Bank ATM card, upon request in writing
and payment of issue fee.
14. Authority to debit the account : The Cardholder along with the joint account holder(s), if
any, shall authorise the Bank to debit the account(s) with the amount of withdrawals, or
transfers effected by the use of ICICI Bank ATM card, as per the Bank's records. The
Bank's record for transactions processed by the ATM machine shall be binding on all the
joint account holders, jointly and severally.
15. Deposits : The amount of cash/cheque deposits shall be verified by two members of the
Bank's staff, one of whom will be an officer. The amount verified by the Bank shall be
deemed to be correct amount deposited by the Cardholder. The statement issued by the
ATM at the time of deposit only represents what the Cardholder purports to have deposited
and will not be binding on the Bank. If there are soiled, mutilated notes in such deposits,
the acceptance of such deposits shall be subject to final acceptance and reimbursement by
RBI as per the Note Refund Rules. Cheques will be accepted for collection only and the
proceeds will not be available until they have been cleared. Deposits of foreign currency
cash/cheques /soiled and mutilated notes or any other deposits which are unacceptable,
shall be returned, at the Cardholders cost, risk and responsibility.
16. Responsibility for all transactions processed through the ATMs : Operations through the
ATM facility on the Cardholders account(s) can only be through the use of ICICI Bank
ATM card on the machine. The Cardholder shall in all circumstances, accept full
responsibility for all transactions processed by the use of his/ her ICICI Bank ATM card,
52 whether or not processed with the Cardholder's knowledge or authority, express or implied.
The printed output that is produced at the time of operation of the ATMs are a record of the
operation of the ATMs and shall not be construed as the Bank's records. The Bank's
records of transactions shall be accepted as conclusive and binding for all purpose.
17. Closure of account(s) : If the Cardholder desires to close his account(s) or withdraw any
ICICI Bank ATM card linked deposit, or even otherwise decides to terminate the use of the
ICICI Bank ATM card facility, he shall give a written notice of at least two days and
surrender ICICI Bank ATM card to the Bank. The Cardholder shall also pay dues, if any,
payable to the Bank in connection with the ATM facility.
18. Change of terms and conditions : The Bank has the absolute discretion to withdraw ICICI
Bank ATM card, the service thereby provided, or amend or supplement any of the above
terms and conditions at any time without prior notice to the Cardholder.
19. Honouring the Card : The Bank shall in no circumstances be held liable to the Cardholder
if ICICI Bank ATM card is not honoured in the desired manner for whatsoever reason, or if
the ATM is destroyed or not functioning due to power failure, temporary insufficiency of
cash in the ATM or any other reason. The Bank will not be liable for any consequential or
indirect loss or damage arising therefrom.
20. Ownership of ICICI Bank ATM card: ICICI Bank ATM card shall be the property of the
Bank and will be surrendered to the Bank on request or in the event of the Cardholder no
longer requiring the service. The Bank reserves the right to disclose, in strict confidence, to
other institutions, such information concerning the Cardholder's account as may be
53 necessary or appropriate in connection with its participation in any ATM or Electronic
Fund Transfer Network.
ATM USAGE: The Card is operable with the help of the confidential PIN at ATM locations. All
Transactions conducted with use of the PIN will be the Cardholder's responsibility. The Cardholder agrees that he will be allowed to withdraw/ purchase only a certain amount of cash everyday irrespective of the credit balance in the Account(s).
DETAILS OF APPLICABLE FEES AND CHARGES
• Annual Fee for Debit Card: Rs. 99/-
• Transaction Charges at ICICI Bank ATMs: Nil.
• Cash Withdrawal Charges at VISA ATMs, in India: Rs. 50/- per cash withdrawal.
• Balance Enquiry at VISA ATMs in India: Rs. 25/-.
• Cash withdrawal charges at VISA ATMs abroad in US Region: $1 per cash withdrawal
plus 2% currency conversion charges.
• Cash Withdrawal Charges at VISA ATMs abroad in non-US regions: $ 2.25 per cash
withdrawal plus 2% currency conversion charge.
• Merchant Transaction abroad will attract 2% currency conversion charges.
• Transactions at Railway counters will attract a service charge of 2.5% on the transaction
amount as per VISA regulations.
54 • Transaction at petrol pumps will attract a service charge of 2.5% or Rs. 10/- (whichever is
higher) as per VISA regulations.
• Card Reissue Fee: Rs. 200/-.
TERMS AND CONDITIONS: The Cardholder shall be deemed to have unconditionally agreed to and accepted these Terms and Conditions by signing the Card application form, or acknowledging receipt of the Card in writing, or by signing on the reverse of the Card, or by performing a transaction with the Card or by requesting activation of the Card to the ICICI Bank
24-Hour Customer Care Centre or after 10 days have elapsed since the Card was dispatched to his address on record. These Terms and Conditions will be in addition to and not in derogation of the
Terms and Conditions relating to any account of the cardholder. The Bank may also make a change without notice if the change is necessary to maintain or restore the security of the electronic system or equipment used for the Card Transactions, The Cardholder will be notified within 30 days if such a change is made, unless disclosure would jeopardize the security of the electronic system or equipment.
55 56 LOANS AND ADVANCES
Lending of funds to the constituents, mainly traders, business and industrial enterprises, constitutes the main business of the banking company, The major portion of a bank’s funds is employed by way of loans and advances, which is the most profitable employment of its funds. The major part of bank’s income is earned from intrest and discount on the funds so lend.
BASIC PRINCIPLES OF SOUND LENDING
The business of lending, which is main business of the banks, carry certain inherent risk and bank cannot take more than calculated risk whenever it wants to land. It has to follow a cautious approach based on certain principle which include.
Principle of safety of funds: Safety of funds means that whenever is lend should come back through repayment of the loan. To ensure safety the bankers must take into account the willingness, honesty, integrity, character and financial standing of the borrowers.
Principle of Profitability: While granting loans, it must be borne in mind that whatever loan is given it should generate income to the bank in the form of profit (which means it should cover the cost of funds, cost of its administration and risk cost). Hence the price of the loan products i.e. interest and other charges , should be such that it should amount to products.
57 Principle of Liquidity: The money lent should come back as stipulated in the repayment fixed at the time of sanction of the loan.
Principle of purpose: The loans given for production purpose help generate additional or incremental income which works like an incentive to pursue the financed activity.
Principle of risk spread: The loans should be spread over a number of economic activities or industries rather then only one of the few activities.
Principle of security: Loans given by bank should be secured ones so that in case of need the bank should fail back upon for repayment by enforcing the securities available to it.
58 CLASSIFICATION OF PRIORITY SECTOR
ADVANCES:
At present, priority sector broadly comprises the agriculture, small scale industries and
other activities / borrowers.
• Agriculture
• Small scale industries
• Other priority sector activities
o SRWTO
o Small business
o Education
o Housing loan
o Personal loan
o Software industry
o Consumption loan
59 ICICI HOME LOAN
Since making its maiden venture in the home loan segment in 1999, ICICI Bank has been breathing down the neck of market leader HDFC with its aggressive marketing strategy. Quality and value-added service - rather than interest rate - have been the hallmark of ICICI with the company capitalizing on the absence of `door delivery' for housing loans. In a marked shift from the existing industry norms, ICICI carved a niche for itself by going to the potential borrower rather than waiting for him to come to them.
ICICI Bank offers home loans for purchase or construction of house and the loan amount can be up to 85% of the cost of the property. The loan must terminate before or when the borrower turns 65 years of age or before retirement, whichever is earlier. ICICI home loans come with benefits like easy interest rates, simplified documentation, doorstep service and free personal accident insurance.
ICICI Max Money Home Loans offer the unique advantage of higher loan eligibility with a lower initial installment. One can get up to 30% higher amount against one's current income and the installment amount gets stepped up over the years.
ICICI Smart Fix Home Loans combine the safety of fixed rates plus the advantages of floating rates. For the first 3 years the borrower gets a fixed interest rate and the fourth year onwards, the loan gets switched to the prevailing floating interest rate.
60 ICICI Bank offers Home Improvement Loans for renovation /refurbishment of one's home. One can avail of loan up to Rs. 50 Lakhs and the interest rate is same as that of the Home Loans. The loan covers up to 70% of the cost of improvement and the repayment period is 15 years.
61 ICICI BANK HOME LOAN
ICICI Bank, one of India's leading home loan providers, on Monday announced a reduction in interest rates on its adjustable (floating) rate home loan products.
With this, adjustable rate home loans with maturity up to five years would be available at the rate of 7.50 per cent and home loans with maturities of 6-20 years at the rate of 7.75 per cent, making them among the most cost effective offerings in the country.
The new rates will be effective from November 11, 2003.
The new floating home loan rates effective from November 11, 2003:
The Bank has also announced a 0.5 per cent reduction in the ICICI Home PLR.
Tenure Rate EMI per lakh
Up to 5 years 7.50 per cent Rs 2,004 for 5 years
6-20 years 7.75 per cent Rs 821 for 20 years
This ensures that the benefit of reduced rates will be available not only to new customers, but also to existing customers who have taken floating rate home loans earlier from ICICI Bank.
"With the ongoing reduction in our cost of funds and the continuing soft interest rates in the system, we are pleased to offer a corresponding benefit to both our existing and new customers.
We will continue to serve our customers by offering transaction convenience and competitive product features," said Chanda Kochhar, executive director, ICICI Bank.
62 The above rates would also be available on balance transfer schemes in force. Customers with existing home loans can benefit substantially by transferring their loans to ICICI Bank and enjoy these new rates.
As a special festival offer, ICICI Bank's adjustable rate home loans will be available at a uniform interest rate of 7.5 per cent for all tenors till November 26, 2003.
Customers availing the Bank's Balance Transfer scheme during this period will also benefit from zero fees for home loans transferred to ICICI Bank from their existing bank/ housing finance company.
63 However, special facility is also available as under
a. Repayment Option for salaried persons desirous to extend the repayment period beyond the
date of retirement under Public Housing Loan Scheme of the Bank will be eligible up to 5
years after the date of retirement.
b. Availability of Progressive monthly installments (PMI) options under public housing loan
scheme.
Nature of Loan: Term Loan
Loan amount:
a. In case of salaried persons: The loan amount will be restricted to 60 times of monthly
gross salary last drawn subject to the condition that it is within the project cost less
stipulated margin and Total deductions including EMI of proposed loan should not exceed
40% of the Gross monthly salary of the applicant.
b. In case of others: The loan will be restricted up to 4 times of gross Income average shown
in last 3 years Income Tax Assessment Order/ acknowledged copy of income tax return
subject to the condition that it is within the project cost less stipulated margin and Total
deductions including EMI of proposed loan should not exceed 40% of the Gross monthly
income of the applicant as per IT Returns.
Income Tax returns will be got verified by engaging services of Chartered
Accountant.
64 For repairing/furnishing of house/flat: Maximum loan for Repairing/ Furnishing of
existing House/ Flats will be 75% of the estimated expenses or Rs 3, 00,000 which ever is
low subject to the condition that borrower has sufficient repaying capacity as per income
criteria given hereunder: The minimum take home monthly salary/income taking into
account all deductions (including EMI of proposed loan) should not be less than 40% of
last month's gross salary in case of salaried persons & 50 % of average gross monthly
income as per average of last three years IT Return in case of others.
4.3 For application money raised by Housing Boards/ Development Authorities:
Permissible Loan amount for Application Money raised by local Housing Boards/
Development Authorities will be 75% of application amount or Rs 3,50,000/- which ever is
lower subject to the condition that the borrower has capacity to repay the loan within
stipulated repayment period.
4.4. For Joint Borrowers: While computing repaying capacity in case of joint borrowers*,
income of all borrowers may be clubbed. Joint borrowers may be the co-owner of the
property or they may not be co owner (but must be legal heirs of owner of the property / PF
nominee / Spouse having future interest in the property) but their income is to be
considered as one of the source of loan repayment. (*However, Income of Co- borrower /
(s) will be clubbed only if source of income of co-borrower is salary and co-borrower / (s)
is a permanent employees of Government / Semi Government / Public Sector Unit/
Multinational Corporate Houses/ Blue Chip Companies / reputed companies.)
Note: Income Tax return must be obtained in all cases including salaried persons.
65 Margin:
• 15% of project cost in case of salaried person
• 25 % of project cost for others
• in case of repairing / furnishing 25% in all categories (including salaried class)
Project cost will consist of -
• Purchase price of land/ house/ Flat, plus
• Cost of construction/ renovation/ extension (if applicable) plus
• Stamp duty and registrations charges, as applicable plus Accrued Interest amount of
moratorium period, if proposed to be capitalized
• It will be ensured that margin at all stages has been contributed by the borrower
upfront where disbursement is to be made in phases.
66 Rate of interest
Partuculars Revised rates
Floating Fixed i) Up to 5 years PLR-1.75 12.25% iI) Up to 5 years to 10 years PLR-1.50 12.50% iII) Up to 10 years 15 years PLR-1.25 12.75% iV) Up to 15 years 20 years PLR-0.75 13.25%
(** For housing loans having above Rs. 20.00 lacs the Interest Rate will be 0.50% more than the rates applicable in each slabs.
** If the borrower opts for fixed rate option, interest rate will be increased by 1.50% on each slab as per existing structure. The rates prescribed under fixed rate option are indicative, taking in view of the present PLR.)
• Subject to "interest rate reset" clause in terms of which fixed rates may be reset at the end
of every three years on the basis of interest rate prevailing at that time.
• Subject to "force measure" clause in terms of which Bank is authorized to revise fixed
interest suitably and prospectively in the event of major volatility in interest rates.
• Borrower of housing loan may exercise the option to switch over at any point of time from
floating to fixed or vice versa on the condition that borrower has to pay as under:
From Fixed to Floating- 2% of outstanding balance for exercising the option
From Floating to fixed- 0.50% of outstanding balance for exercising the option
67 Security:
I. Primary:
a. Equitable/ Registered mortgage of the property or
b. Pari- passu charge over the property if the borrower (salaried person) has already
availed loan from his organisation.
II. Collateral Security:
i. Personal Guarantee of one person of means and standing acceptable to the Bank
will be taken in all cases. However, in case of delay in creation of mortgage
Personal Guarantee of two person of means and standing will be taken, where delay
over 6 months in creation of equitable mortgage of the property to be financed by
the Bank is expected. In case of delay in creation of equitable mortgage of the
property beyond 6 months, collateral security to the extent of loan amount in the
shape of immovable property or financial securities or personal guarantee of two
persons of means & standing acceptable to the Bank will be taken. However, the
same will not be needed where a property is being purchased from seller/builder as
mentioned hereunder:
. Housing Board/ Development Authority /Govt agency
. Good rated /reputed housing company / builder/developer well known at
national / state level (VIZ: Ansal, Gujarat Ambuja, Bengal Ambuja, Bengal
Peerless, Sahara Housing). List of such reputed housing companies/
68 developers will be circulated by respective Zonal Offices after its careful
scrutiny and a copy will be endorsed to Retail Credit Section, Head Office.
. Approved Housing Societies notified by Zonal Offices.
. Builders/Developers whose project has been approved by the Bank as per
bank's guidelines. (Approval of housing projects for the purpose of tie-up
arrangement for loan to their prospective buyers where builder/developer is
not seeking finance from the bank for the housing project may now be
accorded by the Zonal Head).
Documentation: In a booklet form complete in all respect.
Processing Fees: 0.50% of loan amount, Maximum Rs. 10,000/-
Documentation Charge: Actual expenses / charges incurred for creation of mortgage.
Disbursement:
In case of purchase of flat / House payment should be made direct to seller / promoters / societies by DD/ Banker's cheque and should be issued in the name of builders with Bank account number on it. Bank's official should be sent for delivering the cheque / draft to the builders / sellers property at the registered addressed mentioned in the title deed.
In case of construction of new house / flat, loan will be disbursed in a phased manner, in 4 or more installments. Each such installment will be released only after verification of end use of funds already released by the bank.
69 Repayment Period & Moratorium: a Repayment Period:-
i. For construction of House &/ or Purchase of House/ Flat/Residential Plot: For salaried
Persons-- Maximum 20 years or length of remaining service, whichever is less. For Others
-- Maximum 15 years or remaining period in attaining an age of 65, which ever is earlier.
ii. For Repairing/ Furnishing of House/ Flat: For salaried Persons-- Maximum 7 years or
length of remaining service, whichever is less.For Others -- Maximum 7 years or remaining
period in attaining an age of 65, which ever is earlier. iii. For Application Money raised by Housing Board/ Development Authority:12 Months or
receipt of refund order, which ever is earlier.
iv. Other Norms on Repayment Period: Repayment period will be exclusive of moratorium
period.
v. If the borrower desires to repay the loan in shorter period, he/she may be allowed to do so
and monthly installment will be fixed accordingly. Interest will be realised on monthly
basis during the moratorium period. However, in case of salaried persons the interest
amount may be capitalised (i.e. included in project cost) on request of the borrower.
70 i) Loan Repayment Options is available. a) Repayment option for salaried persons desirous to extend the repayment period beyond the date of retirement under Housing Loan Scheme:
• To extend repayment period of housing loan to salaried persons upto 5 years after the date
of retirement subject to the condition that EMI will be within 60% of their estimated post
retirement monthly earnings (pension plus ascertainable other income such as rental
earnings, income from investment in securities/LIP/NSC etc.., if any) as also existing net
take home salary after taking all deductions will not be below 40% of gross salary.
• There will also be flexibility to consider some lump sum / bullet payment of full or part of
the loan outstanding out of future sources of fund and draw the repayment schedule
accordingly.
• If post retirement EMI is more than stipulated norms, pre-retirement EMI may be
proportionately increased with borrower's consent. b) Offering progressive monthly installments (PMI) options
• Under the plan, the initial monthly installments for the first 5 years shall be kept lower i.e.,
80% of normal EMI and it will gradually go up to 90% of EMI plus whatever shortfall
during the first 10 years shall be realized after 10th year of loan. Accordingly, a three-tier
repayment schedule will be drawn up.
• Borrowers will have also option for 2 tier repayment structure (with first tier not above one
third of repayment period)
71 • Borrowers may also get higher amount of progressive monthly installments (PMI) than the
above norms by opting higher %of EMI for PMI calculation.
Existing borrower or Bank's employees also can exercise options (a) & (b).
• Minimum 24 PDCs will be obtained before releasing of fund except salary tied-up cases.
Prepayment Penalty
• If liquidated within 1 year: 2% of outstanding balance· If liquidated after 1 year: 1.50% of
outstanding in case of takeover.
Accepted as both Identity and Address proof
(Any one of the following)
Passport
Arms License issued by State/Central Government of India authorities
Freedom fighter's pass issued by Ministry of Home affairs, Government of India with photograph of applicant
Pension payment order/book/Card issued by State/Central Government of India.
Printed Ration Card with Photograph of applicant.
House hold Card with photograph issued by Govt of Andhra Pradesh
ID card with photograph issued by Govt of Jammu and Kashmir
Bank Pass Book with photograph issued by SBI and its subsidiaries or Nationalised Banks
Photo Social Security Card (Smart Card) issued by Central/State Govts or Union territories.
72 73 74 OBJECTIVE OF THE STUDY
The study undertaken includes the study of home loan , it’s recent growth with a special focus on scope of home loan.
Along with all this the basic objectives of the study undertaken are as follows:
1. To find out the growth of home loan in Basti in last one year.
2. To find out the growth of home loan in Basti to know the customers preference for various
bank.
3. To know the customer choices for various schemes of home loan.
4. To find out the attribute emphasize by ICICI bank to do well in Basti.
75 76 RESEARCH METHODOLOGY
Research methodology is a systematic way, which consists of series of action steps, necessary to effectively carry out research and the desired sequencing to these steps. The marketing research is a process of involves a no. of inter-related activities, which overlap and do rigidly follow a particular sequence. It consists of the following steps:-
• Formulating the objective of the study
• Designing the methods of data collection
• Selecting the sample plan
• Collecting the data
• Processing and analyzing the data
• Reporting the findings
Objective of Study
Research Design
Sample Design
Data Collection
Data Analysis
Report of findings
77 RESEARCH DESIGN
Research design specifies the methods and procedures for conducting a particular study.
A research design is the arrangement of conditions for collection and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in procedure.
Research design is broadly classified into three types as
• Exploratory Research Design
• Descriptive Research Design
• Causal Research Design
I have chosen the descriptive research design.
78 DESCRIPTIVE RESEARCH DESIGN:
Descriptive research studies are those studies which are concerned with described the characteristics of particular individual.
In descriptive as well as in diagnostic studies, the researcher must be able to define clearly, what he wants to measure and must find adequate methods for measuring it along with a clear cut definition of population he want to study. Since the aim is to obtain complete and accurate information in the said studies, the procedure to be used must be carefully planned. The research design must make enough provision for protection against bias and must maximize reliability, with due concern for the economical completion of the research study.
SAMPLE DESIGN
A Sample Design is a definite plan for obtaining a sample from a given population. It refers to the technique to the procedure adopted in selecting items for the sampling designs are as below:
79 SAMPLE SIZE
• Sample method
• Survey period
SAMPLE SIZE: The substantial portions of the target customer that are sampled to achieve reliable result are 50.
The cost and time limitation completed me to select 50 respondents as sample size
SAMPLING METHOD:
• In this marketing research project, I am using
• Random sampling method
SAMPLE DESIGN
As complete enumeration of all the members of the population (Member and Non-member) I have understate sampling technique.
SAMPLE SIZE
200 Customers
SAMPLE TYPE
AREA SAMPLING
Sample area
• Basti
80 SAMPLE SELECTION
Simple random selection sampling
SAMPLE TECHNIQUE
I have taken the Statistical tool of percentage method to analysis and interpretation of the collected data.
RANDOM SAMPLING:
A random sample gives every unit of the population a known and non-zero probability of being selected. Since random sampling implies equal probability to every unit in the population, it is necessary that the selection of the sample must be free from human judgment.
There is some confusion between the two terms ‘random sampling’ and ‘unrestricted’ random sampling. In the latter case, each unit in the population has an equal chance of being selected in the sample. Such a sample is drawn ‘with replacement’, which means that the unit selected at each draw is replaced into the population before another draw is made from it, ‘As such, a unit can be included more than once in the sample. Most statically theory relates to ‘unrestricted random sampling. In order to distinguish between these two sample. I.e. sample, without replacement and sample with replacement, the terms ‘sample random sample’ and ‘unrestricted random sample’ are used. If the latter is devised in such a manner that no unit can be included more than once, it will then be known as the simple random sampling.
It may be noted that while both sample random sampling and unrestricted random sampling give an equal probability to each unit of the population for being included in the sample, there are other
81 sample design too which provide equal probability to the units. The process of randomness is the very core of simple and unrestricted random sampling. The selection of a sample must be free from bias, which can be ensured only when the process of selection is free from human judgment.
82 COLLECTION OF DATA
DATA COLLECTION
The study was conducted by the means of personal interview with respondents and the information given by them were directly recorded on questionnaire.
For the purpose of analyzing the data it is necessary to collect the vital information. There are two types of data, this are-
• Primary Data
• Secondary data
PRIMARY DATA:-
Primary data can be collected through questionnaire. The questionnaire can be classified into four main types.
• Structured non disguised questionnaire
• Structured disguised questionnaire.
• Non structured non disguised questionnaire
• Non –structured disguised questionnaire.
83 For my market study, I have sleeted structured non-disguised questionnaire because my questionnaire is well structured, listing of questions are in a prearranged order and where the object of enquiry is revealed to the respondents.
To making a well-structured questionnaire, we have adopted three type of questions-
• Open ended question
• Dichotomous questions
• Multiple choice questions
These types of questions are easy to understand and easy to give required answers.
SECONDARY DATA:-
Secondary data means data that are already available i.e. they refer the data which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, than he has to look into various sources from where h e can obtain them, in this case he is certainly not confronted with the problems that are usually associated with the collection of original data.
Secondary data may either be published data or unpublished data. Usually published data are available in:
• Various publications of the central, state and local government;
• Various publications of foreign government or of international bodies and their subsidiary
organizational;
• Technical and trade journals;
• Books, magazines and newspapers;
• Reports and publications of various associations connected with business san industry,
stock exchanges etc.;
84 • Reports prepared by research scholars, universities, economists etc;
• Public records and statistics, historical document and other source of published
information.
The source of unpublished data are many; they may be found in diaries, letters, unpublished biographies and autobiographies and also may be available with scholars and research workers, trade associations, labor because and other public private individuals and organization.
COLLECTION TECHNIQUE:
Questionnaire method is used in collection the data.
85 86 DATA ANALYSIS
DATA PROCESSING AND ANALYSIS
Processing & Analysis the collected data: - once the field survey is over and questionnaire have been received, the next task is to aggregate the data in a meaningful manner. A number of tables are prepare to bring out the main characteristics of the data. The researcher should have a well thought out framework for processing and analyzing data, and this should be done prior to the collection. it includes the following activities—
(i) Editing: the first task in data processing is the editing. Editing is the process of examining errors and omissions in the collected data and making necessary corrections in the same.
(ii) Coding: coding is the procedure of classifying the answer to a question into meaningful categories. Coding is necessary to carry out the subsequent operations of tabulating and analyzing data. If coding is not done, it will not be possible to reduce a large number of heterogeneous responses into meaningful categories with the result that the analysis of data would be weak and ineffective, and without proper focus.
(iii)Tabulation: tabulation comprises sorting of the data into different categories and counting the number of cases that belong to each category. The simplest way to tabulate is to count the number of responses to one question. This is also called universal tabulation. The analysis based on just one variable is obviously meager. Where two or more variables are involved in tabulation, it is called bivariate or multivariate tabulation.
87 (iv) Analysis: after the all three above steps, the most important step is analysis of the data.
Under this step, they can use the various tools of the analysis such as Central Tendency,
Dispersion, Correlation co-efficient, Regression Analysis, Test of Hypothesis etc.
88 DATA ANALYSIS
FIG NO 1
CASH AND FINANCED RATIO OF HOME LOAN MARKET IN BASTI
(Last 2 years sales)
InIN 2003-04 2009-10
30% Financed Cash 70%
InIN 2004-05 2010-11
31% Financed Cash 69%
The above graphs are showing the percentage of financed sales ratio of Home loan have increased in 2010-11 as compared to 2009-10 in Basti.
89 FIG NO 2
TOTAL SALES OF HOME LOAN COMPANIES IN BASTI
Sales in 2009-10
7530 8000 7000 6000 5000 4000 2600 Series1 3000 24002150 1500 2000 800 1000 400 167 0 0
j a a c o a d L ja d d S ti r h l a n n V e e a ie M B o o T n H f L H H i m n K a E H Y R
Sales in 2010-11
8000 6822 6000 S E L 4000 2300 2400 2400 Series1 A
S 1400 850 850 2000 600 287 0
j a a c o a d L ja d d S ti r h l a n n V e e a ie M B o o T n H f L H H i m n K a E H Y R COMPANIES
The above graphs are showing the total sales of Home loan companies in Basti in year 2009-10 and
2010-11
90 FIG NO 3
SALES GROWTH OF HOME LOAN COMPANIES IN BASTI
S No. COMPANY SALES OF SALES OF SALES
2009-2010 2010-2011 GROWTH IN
% 1 PNB 7530 6822 -9.40 2 Citi bank 2600 2300 -11.54 3 HDFC 2400 2400 STABLE 4 ICICI 2150 2400 +11.63 5 Allahabad 1500 1400 -6.67 6 Punjab and Sindh 800 850 +6.25
The above table is showing the percentage of sales growth of home loan bank in Basti in last one year.
FIG NO 4
CASH AND FINANCED RATIO OF HOME LOAN MARKET (last 2 year sales)
CASH AND FINANCED % IN 2009-10
91 Cash 31% Financed Cash Financed 69%
CASH AND FINANCED % IN 2010-11
Cash 28% Financed Cash Financed 72%
The above graphs are showing the percentage of cash and financed ratio of home loan in Basti.
92 DO YOU KNOW ABOUT HOME FINANCE
Yes 180
No 20
Sample Size: 200
10%
Yes No
90%
Interpretation
In the survey I find they have no knowledge about Home finance 90% respondent know about for
Home finance and 10% respondent not know about for home finance.
93 FROM WHICH COMPANY HAVE YOU HOME LOAN
ICICI 2
HDFC 7
P N B 2
Allahabad 1
P & S B 5
SBI 3
Sample Size: 20
10% 15%
ICICI HDFC PNB 25% 35% Allahabad P & SB SBI 5% 10%
Interpretation
In the survey I find more 35% have HDFC and rest more 25% P and Sindh Bank and 15% have
SBI.
94 FROM WHICH CHANNEL HAVE YOU HOME FINANCE?
AGENT 18
DSF 0
OTHERS 2
Sample Size 20
0%2%
Agent DSF Other
98%
Interpretation:
In the survey I find more than respondent has finance from bank agent and just only 2% person has finance from other.
95 96 FINDINGS
1. Home loan market are rising in Basti because of stiff competition between home loan bank.
Every company is launching new model with attractive prices and with latest technology in
order to capture the market.
2. Total sales of most Home loan companies are increasing.
3. Home loan bank like ICICI, PNB, HDFC are doing well in the market of Basti.
4. More than 2% of loan has gone up in Basti in last one year.
5. Home loan market is also rising in Basti because of easy finance options provided by
various financial bank.
6. Almost all home loan bank sales have increased in last one year.
97 98 SUGGESTIONS AND RECOMMENDATIONS
1. As the market is growing in Basti so there is a lot of scope for vehicle finance in Basti so
ICICI bank should keep this thing in mind and makes the home loan more comfortable for
customer.
2. ICICI Bank should cover all loans in Basti.
3. ICICI Bank should make home loan easier and hassle free to customer.
4. As people still don’t know about the schemes of ICICI Bank in Basti so ICICI Bank should
do campaigning at different locations at Basti to increase awareness about the bank
existence.
5. ICICI Bank should focus on better communications between loan agent and the bank to
maintain good relationship.
6. ICICI Bank should make people aware about their loan schemes to people of Basti to
attract more customers.
7. ICICI BANK should pay attention towards these vehicle dealers which are doing well in
Basti.
99 8. ICICI bank should go for more eye catching advertisement programmers and roadside
hoardings.
9. ICICI BANK should introduce new and attractive home loan schemes like minimum
interest schemes on some special occasions.
10. ICICI BANK should develop a healthy competition between the home loan agents
through various incentives schemes.
11. ICICI BANK should advertise about their schemes in leading news paper of Basti like
Amar Ujala, Danik Jagran, Times of India etc.
100 101 LIMITATIONS OF SURVEY
1. In our customer survey some people was not ready to fill the questionnaire.
2. Sometimes due to lack of respondent’s support it has become difficult to get required
information.
3. The data collected is approximate as it is obligatory for every company to disguise its
actual data.
4. The tool we used for the study was the structured questionnaire which is itself has narrow
scope.
5. The analysis done has got limited scope.
102 103 BIBLIOGRAPHY
REFERENCE BOOK:
• Marketing Research (Author- G C Beri)
(Publish by Tata McGraw Hill Publishing Co. LTD., New Delhi)
Third Edition (2002)
• Marketing Management (Author- Rajan Sexana)
(Publish by Tata McGraw Hill Publishing Co. LTD, New Delhi)
Second Edition (2001)
• Marketing Management (Author- R S Sexana)
(Publish by Himalaya Publication, New Delhi)
Ninth Edition (2000)
• Marketing Management (Author- Philip Kotler)
(Publish by Pren Tice-hall of India PVT. LTD., New Delhi)
Ninth Edition (2002)
• Research Methodology (Author- Bhandrai)
Print 2005, second edition
104 QUESTIONNAIRE
Q-1: DO YOU KNOWN ABOUT HOME LOAN
Yes No
Q-2: ARE YOU HAVE HOME LOAN
Yes No
Q-3: FROM WHICH BANK HAVE YOU HAVE HOME LOAN
HDFC Bank P N B
Syndicate bank Union bank
HDFC SBI
Q-4: FROM WHICH CHANNEL HAVE YOU ACQUIRED THE HOME LOAN?
AGENT DSF OTHERS
Q-5: YOU WANT TO HAVE HOME LOAN FOR FURTHER PLANNINGS?
Yes No Can’t say
105