PROJECT REPORT ON HOME LOANS IN ICICI

Project Report Submitted Towards The Partial Fulfillment For Award Of The Degree Of Masters of Business Administration
(2011-2013)

Submitted To

Submitted By
GAGAN DEEP MBA(HONS)-3 Sem
th

CONTENTS

Acknowledgement

Executive Summary

Chapter 1 Introduction

Chapter 2 Products

Chapter 3 Objectives and Rationale of the Project

Chapter 4 Review of Literature

4.1 Property Documentation

4.2 Repayment Track Record based lending

Chapter 5 Research Methodology 5.1 Research Design

5.2 Sample Design 5.3 Research Tools and Questionnaire 5.4 Analysis a) Porters five forces

model B) SWOT Analysis

c) Comparative study of ICICI Bank Ltd and HDFC

Chapter 6 Research Findings

Chapter 7 Summary and Conclusion

Bibliography

ACKNOWLEDGEMENT

I am obliged to all the people which includes my managers and mentors and my colleagues for co-operation during the internship. My increased spectrum of knowledge in this field is the result of their content supervision and direction that has helped me to absorb relevant and high quality information. I would like to thank my faculty guide Ms. Durga Sharma for her guidance and enriching my thoughts in this field from different perspectives. I would like to thank all my respondents without whose cooperation my study/project would not have been possible/complete. Last but not the least, I feel indebted to all those persons and organizations who/which have provided helped me directly or indirectly in successful completion of this study.

Gagan Deep

Executive Summary
Against the milieu of rapid urbanization and a changing socio-economic scenario, the demand for housing has grown explosively. The importance of the housing sector in the economy can be illustrated by a few key statistics. According to the National Building Organization (NBO), the total demand for housing is estimated at 2 million units per year and the total housing shortfall is estimated to be 19.4 million units, of which 12.76 million units is from rural areas and 6.64 million units from urban areas. The housing industry is the second largest employment generator in the country. It is estimated that the budgeted 2 million units would lead to the creation of an additional 10 million man-years of direct employment and another 15 million man-years of indirect employment. Keeping the above philosophy in mind, this project is carried out with anobjective to identify the basic needs of the applicants and the process of Home Loans in ICICI Bank Lt

The final outcome of the report is to find out the number of the applicants who have applied for bank loans in the month of June and the analysis of the population applying for Home Loans through the sample size 40. The report includes the various products that are introduced by the bank such as Home Loans, Loan against property. It consists of questionnaire which helped to analyze the final outcome of the report.

Introduction
ICICI Bank is Indias No. 1 Home Loans Provider. At ICICI Bank Home Loans, it offers unbeatable benefits to ensure that the customers get the best deal without any hassles. And ICICI Bank makes it extremely easy for them by offering

Attractive loan interest rates Home loan amounts starting from Rs.2 lakhs Term loans up to 20 years Free Personal Accident Insurance Insurance options for your home loan at attractive premium

With varied offering of house loans and home finance, ICICI Bank Home Loans gives an opportunity to select the perfect loan as per the needs of the customers who can choose from:

Adjustable Rate Home Loan Fixed Rate Home Loan Part fixed, Part Floating Rate Home Loan Smart fix Home Loan

ICICI Bank

RCLG (Retail Customer Liability Group)

RAPG (Retail Assets Product Group)

RCLG deals in Accounts i.e., Current, savings and fixed.

It looks after the liability side of the bank that constitutes the withdrawals and deposits of the customer.

Sales department

Credit Department

Operations Department

Collection Department

Sales Manager Credit Manager Area Operations Manager Collection DMA / DSA CPA (Credit Customer Account Manager Manager (Direct marketing Processing Analyst DEO (Data Entry Operator) Agency/ direct sales Agent) Sales Department It basically search the customer who is in need of loan and pitches the different kinds of customer accordingly.

Credit Department It is responsible for Credit Documentation, Profile check, Legal and Technical reports of the customer and his property.

10

Operations Department It is responsible for punching end to end. It does NDC according to the RBI norms and performs after sales services. It collects the Post Dated Cheques.

Collection Department It functions at the time when any customer is in default.

19 February 1999The launch of ICICI Bank Home Loans Scenario then New to the business Formidable competition End to End delivery of the product through the DMA being done for the first time Ambitious growth plans.

th

12 13

14

15

Home Loans : Key Features

Purpose : To purchase, construct or extend new or existing flat / house Loan to value (LTV) ratio is 85 %. This includes stamp duty, registration charges and amenities.
Amenities on Stamp paper : We can add Maximum of 20% of Agreement. Maximum Tenor : 20 years (15 years for SENP retail & non retail)

Only for first sale builder properties. Loan amount : From Rs.2 lac to Rs. 3 Crore Validity of Loan Approvals : 6 months from the date of Sanction Letter.

LTV Norms

In case of Resale : A) If COP = MV, Loan Amount = 85% of COP (LTV 85%)
B) If COP > MV, Loan Amount = 85% of MV (LTV 85%) Example : COP : Rs.25 Lacs & MV : Rs.20 lacs

Loan Amount : Rs.17 lacs C) If COP < MV, Loan Amount = 80% of MV subject to 100% of COP Example : COP : Rs.20 lacs & MV : Rs.25 lacs Loan Amount : Rs.20 lacs

Director's Profiles

Chanda Kochhar Managing Director and Chief Executive Officer

N.S. Kannan Executive Director & CFO

K. Ramkumar Executive Director

Rajiv Sabharwal Executive Director

Awards

Ms. Chanda Kochhar awarded the 3rd Asian Corporate Director Recognition Award 2012 by Corporate Governance Asia. ICICI Bank awarded the Best Trade Finance bank in India by GTR Asia Leaders in Trade Awards 2012.

Board Members Mr. K. V. Kamath, Chairman .................................................... Mr. Sridar Iyengar .................................................... Dr. Swati Piramal .................................................... Mr. Homi R. Khusrokhan .................................................... Mr. Arvind Kumar ................................................. Mr. M.S. Ramachandran .................................................. Dr. Tushaar Shah .................................................. Mr. V. Sridar

Ms. Chanda Kochhar, Managing Director & CEO ......................................................... Mr. N. S. Kannan, Executive Director & CFO ......................................................... Mr. K. Ramkumar, Executive Director .........................................................

Mr. Rajiv Sabharwal, Executive Director

Icici home loans Building your own home is special. As one of the leading home loan providers, ICICI Bank Home Loans is here to help you lay the foundation for your dream home. With the experience of sharing the dream of millions of our customers, we offer you the most convenient home loan plans to suit your needs.

Advantages

Guidance through out the process making home buying hassle free Doorstep service at your comfort Simplified documentation Sanction approval without having selected a property. Flexible repayment options With a network of 2500 branches we are always close to you Over 900 Bank Branches pan India for servicing of your loans Free Personal Accident Insurance (Terms & Conditions) Insurance options for your home loan at attractive premium Features of ICICI Bank Home Loans: Your every need requires special care and attention. With ICICI Bank Home Loans, you will not only own your dream home but also enjoy protection from unwanted events in the future. When it comes to your dream home, you would not like to settle for anything but one that suits your need. Enjoy your dream home with the features of ICICI Bank Home Loans. Adva ntage s

Home Loan Amount The home loan amount depends on your repayment capability and is restricted to a maximum of 80% of the cost of the property or the

Doorste p service at your comfort Simplifi ed docume ntation

cost of construction as applicable.

Eligibility for Home Loan Every customer's eligibility is different. Access your eligibility with our simple calculator. Home loan Eligibility calculator to check your eligibility. ICICI Bank offers Home Loans to Resident as well as Non Resident Indians

You must be at least 21 years of age on sanction of the loan The loan must terminate before or at 65 years of age or age of retirement, whichever is earlier. You must be salaried or self-employed with a regular source of income Minimum age of co-applicant should be 18 years

How to enhance your eligibility

Free Persona l Acciden t Insuran ce (Terms & Conditi ons) Insuran ce options for your home loan at attractiv e premiu m

If your spouse is an earning member, you can make him/ her the co-applicant. Their income will be considered to enhance the eligibility In case of co-owners, they must necessarily be co-applicants

Documents required for the Sanctioning of Home Loan Salaried Customers Application form with photograph Self Employed Professionals Application form with photograph duly Self Employed Non Professional Application form with photograph duly

duly signed by all applicants Identity, residence and age proof Last 3 months Salary-slips

signed by all applicants Identity, residence and age proof

signed by all applicants Identity, residence and age proof

Education Proof of business qualification existence certificate and proof of business existence Last 3 years Income Tax Returns with computation of Income Business profile

Form 16 / Income Tax Returns

Last 6 months bank statements

Last 3 years CA Certified / Audited Last 3 years CA Balance Sheet and Profit & Loss Account Certified/ Audited Balance Sheet and Profit and Loss Account Last 6 months bank statements

Last 3 years Income Tax Returns with computation of Income

Processing fee cheque Processing fee cheque

Last 6 months bank statements (self and business) Processing fee cheque

Home Loan Interest Rates effective from April 23, 2012

One year fixed rate Ticket size slab HL <= Rs. 3.0 million HL > Rs. 3.0 million and <= Rs. 7.5 million HL > Rs. 7.5 million Two year fixed rate Ticket size slab HL <= Rs. 3.0 million HL > Rs. 3.0 million and <= Rs.7.5 million HL > Rs. 7.5 million Three year fixed rate Ticket size slab HL <= Rs. 3.0 million HL > Rs. 3.0 million and <= Rs. 7.5 million HL > Rs. 7.5 million ICICI Bank floating rate: Ticket size slab HL <= Rs. 3.0 million HL > Rs. 3.0 million and <= Rs. 7.5 million HL > Rs. 7.5 million Fixed rate for the first 36 months 10.75% 11.25% 11.75% Fixed rate for the first 24 months 10.75% 11.25% 11.75% Fixed rate for the first 12 months 10.50% 11.00% 11.50%

Floatin o

Float o

Floati o

Floating rate pricin 10.50% 11.00% 11.50%

All ICICI Bank floating rate home loan is benchmarked to I-Base. Effective April 23, 2012 I-Base wil Administrative fee is 0.5% of the loan amount and applicable service tax will be levied. The above rates are subject to change without notice.

Applying for home loan is very easy. 1. Click here to apply online and track your application online 2. Click here to apply and get a call from us at your preferred time. 3. SMS home to 5676766 4. Click here to call us and speak with our executive. 5. Walk in to your nearest ICICI Bank branch. Click here to locate your nearest ICICI bank branch

Home Loan Repayment Terms In our endeavor to make taking a Home Loan an easy process for you, we at ICICI Bank address all your queries about the repayment terms of Loans with respect to tenure, home loan EMIs, methods of home loan EMI payments and pre-EMI interest.

What is the repayment tenure? How is the loan repaid? What is an EMI? When does the repayment start? How is the EMI paid? What if a PDC bounces? What is pre-EMI interest? When do I pay PEMIs? is the repayment tenure?

What

Repayment tenure is the tenure for the number of year for which the loan gets sanctioned. We offer you a wide range of options for the tenure of the loan. You can take a home loan for up to 20

years provided you do not reach the age of 65 years or retire within that period.

How

is

the

loan

repaid?

All loan repayments are done via equated monthly installments (EMI).

What

is

an

EMI?

An EMI refers to an equated monthly installment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.

When

does

the

repayment

start?

EMI payments start from the month following the month in which the full disbursement has been made.

How

is

the

EMI

paid?

The EMI is to be paid every month through post-dated cheques (PDCs) or Electronic Clearing System (ECS)*. If you are opting for PDCs, then you will have to provide 36 PDCs upfront. The PDCs are to be dated on the 1st of every month. However, if you receive your salary a few days later, we provide the flexibility of dating the cheques for the 10th of the month. In case you have an ICICI Savings account you can also go in for the facility of Auto Debit. * ECS facility is available in selected cities only

What

if

PDC

bounces?

In the case of a bounced cheque or delayed payment, charges and outstanding dues will be charged as per the prevailing company policy. You can replace old PDCs with new ones within 5 - 7 working days.

What

is

pre-EMI

interest?

In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called preEMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the EMIs would commence.

When

do

pay

PEMIs?

The first PEMI is payable by cheque by the end of the month in which the disbursement is made and each subsequent PEMI at the end of every month till the commencement of EMI. In case you have an ICICI Savings account you can also go in for the facility of Auto Debit.

Home Loan Insurance Plans in India Introducing exclusive Home Insurance plans for home loans in India, that can provide cover to your Home loan in the face of any unforeseen event happening to your life. In case of any of these happenings, your family will have the support of the insurance cover to pay for the outstanding Home loan, without being burdened by the loan EMI's.

ICICI Bank Home Loans presents "Home Safe Plus" & "Home Assure" two exclusive and innovative insurance plans to insure your Home Loan. Home Safe Plus*

Key Benefits of Home Safe Plus:

No medical checkup upto 3 crores premium. Comprehensive insurance plan for individual, home and its contents. Single premium long-term insurance plan. In the event of PA & permanent or total disability claims, monthly payment of sum insured (Rs. 25000 for next 60n months). Multiple applicants can be covered under the same loan. Premium paid for the Critical Illness cover is eligible for tax benefits u/s 80D of the Income Tax Act. Sum Insured remains constant throughout the policy period (loan O/S amount to come to bank, rest goes to individual). Assure#

Home Key Benefits of Home Assure:

Life Cover from Home Assure for the entire home loan tenure. Provides reducing cover to the loan borrower for the tenure of the loan; from the date of availing the cover. Special non-medical limits only for ICICI Bank Home Loans customers. In case of death of the loan borrower, the benefit, which is as per the original loan schedule and the specified moratorium period, would be used towards paying your outstanding loan amount to ICICI Bank. Provides cover for the loan borrower for the entire loan amount during the under construction period. Availability of joint life coverage. Tax Benefit on premium paid under Sec 80 C.

Simplified claim procedure.

*Insurance cover for Home Safe Plus provided by ICICI Lombard General Insurance Company. #Insurance cover for Home Assure provided by ICICI Prudential Life Insurance Company. Please refer the Home Safe Plus and Home Assure brochures for more details. Insurance is a subject matter of solicitation. Customers have the option of taking insurance from any other insurance company.

Home Loan Calculator Tools ICICI Bank Home Loans, strive to assist you in every possible way at every step. Hence, for your convenience, we have provided some useful tools below that will help you in deciding on your home loan.

Adjustable Home Loan Rate EMI Calculator: If you want to apply for an Adjustable Rate home loan, this tool will enable you to calculate your Equated Monthly Installment (EMI ) if you know the loan amount you require, term for which you want to take the loan & the rate of interest that is applicable. You can check the EMIs for different loan tenures to decide which would be most suitable for you.

Fixed Home Loan Rate EMI Calculator: You can use this tool to calculate your EMI in case you wish to opt for aFixed Rate home loan. The tool will allow you to see the EMI for the loan amount you require.

Board Committees Board Governance, Remuneration & Nomination Committee Mr. Sridar Iyengar, Chairman Mr. K.V. Kamath Mr. Homi Khusrokhan

Audit Committee Mr. Sridar Iyengar, Chairman Mr. Homi Khusrokhan, Mr. M.S. Ramachandran Mr. V. Sridar

Corporate Social Responsibility Committee Mr. M.S. Ramachandran, Chairman Mr. Arvind Kumar Dr. Tushaar Shah Ms. Chanda Kochhar

Customer Service Committee Mr. K.V. Kamath, Chairman Mr. M.S. Ramachandran Mr. V. Sridar Ms. Chanda Kochhar Fraud Monitoring Committee Mr. V. Sridar, Chairman Mr. K.V. Kamath Mr. Homi Khusrokhan Mr. Arvind Kumar Ms. Chanda Kochhar Mr. Rajiv Sabharwal Risk Committee Mr. K.V. Kamath, Chairman Mr. Sridar Iyengar Mr. Arvind Kumar Mr. V. Sridar Ms. Chanda Kochhar Committee of Executive Directors Ms. Chanda Kochhar, Chairperson

Credit Committee Mr. K.V. Kamath, Chairman Mr. M.S. Ramachandran Mr. Homi Khusrokhan Ms. Chanda Kochhar

Information Technology (IT) Strategy Committee Mr. Homi Khusrokhan, Chairman Mr. K.V. Kamath Mr. Sridar Iyengar Ms. Chanda Kochhar

Share Transfer & Shareholders'/ Investors' Grievance Committee Mr. Homi Khusrokhan, Chairman Mr. V. Sridar Mr. N.S. Kannan

RESEARCH METHODOLOGY
Research Design: The Research Design can be grouped under 2 sectors i.e., Primary source and secondary sources.

Research Design

Primary Source

Secondary Source

Interviews With customers / DMAs Questionnaire

Websites and Intranet of ICICI Bank Ltd.

Other than these primary and secondary sources the study of various cases of the applicants by going through the files guided to make an analysis and findings regarding the status of Home Loans in the current scenario. Even by assisting the Credit Processing Analyst, the analysis and findings were approved by them.

Sample Design: The data collected from the questionnaire is of sample size 40. The questionnaires have been filled by the customers through Direct Marketing Agencies of ICICI Bank Ltd. and their Direct Sales Agent. The questionnaires were distributed equally among 4 DMAs equally and the response collected through them was of great use.

Research Tools and Questionnaire:

QUESTIONAIRE:

1. NAME OF THE APPLICANT:

AGE:

2. PROFESSION:

3. LOAN AMOUNT:

4. TENURE:

5. PRODUCT APPLIED FOR:

6. MODES OF PAYMENT: (a) ECS (b) PDCs (c) DAS (d) SI (e) Any other

7. PROPERTY MORTGAGED:

8. ANY OTHER LOAN TAKEN ON SAME PROPERTY:

9. PREFFERED BANK FOR HOME LOANS: (a) ICICI (b) HDFC (c) SBI (d) PNB (e) Allahabad Bank

10. LOAN TAKEN FROM ANY OTHER BANK, IF YES WHICH BANK AND FOR WHAT PURPOSE:
11. SOURCES OF INFORMATION FOR THE VARIOUS HOME LOANS PLANS: (a) NEWSPAPER (b) BANK (c) DIRECT MARKETING AGENCY / DSA

12. ARE U SATISFIED WITH THE SERVICES PROVIDED BY ICICI? (a) YES (b) NO

97

Analysis:
In last 10 years the rate of growth in the number of applicants have been at a faster pace because the individuals have vast knowledge about the benefits of Home Loans.

Year 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11

No. of Applicants 7,73,562 9,65,291 13,42,097 15,27,945 17,95,048 19,84,164

(These figures are of a particular state)

Secondly, the applicants applying for Home Loans were of young age as compared to past 10 years. Then the applicants ranging above 45 years were more in number applying but now there are applicants of even 25-30 years. The tenure to repay the loan has also decreased because of the increase in Income Obligation ratio.
But since last 1-2 years there is a stable percentage of individuals applying for it because of the increase in the rate of interest and strict norms of RBI. They are as follows:

a) Rate of Interest will be less for people in minority. b) Applicants applying for more than 50 lacs who are High Net Individuals (HNI) are provided with some percentage of rebate. c) Applicants taking loan for the second time for Home loans are under strict supervision and verification. This is done because the customers take loans for investing money by taking HL and enjoying the redemption and deductions. Bank has even introduced Know Your Customer (KYC) documents which constitutes of all the personal and professional details of the applicants and the co-applicants applying for home loans which helps the bank to get the information about the customers and judge the purpose of applying for HL.

98

FIVE FORCES OF PORTERS MODEL OF ICICI

SUPPLIERS POWER

BARRIERS TO ENTRY

RIVALRY

THREAT OF SUBSTITUES

BUYERS POWER

DEGREE OF RIVALRY

Supplier Power Increased Dependence on IPOs There is a growing dependence of corporates on broking houses with the rising number of IPOs coming to the market. Buyer Power Lack of Expertise Curtails Bargaining Power Retail investors often lack the knowledge and expertise in the financial sector that calls them to approach the broking houses. Low Product Differentiation Proves Beneficial The retail broking services provided by the various companies is homogeneous with very low product differentiation. This allows customers to enjoy a greater bargaining power. Degree of Rivalry Move towards consolidation Lot of brokerage companies are moving towards consolidation with the smaller ones becoming either franchisees for the larger brokers or closing operations. Increased Focus of Banks in Retail Broking Various foreign banks like ABN Amro and others are planning to enter the Indian retail brokerage industry. Online Trading Competes with Traditional Brokerage There is an increasing demand for online trading due to consumers growing preference for internet as compared to approaching the brokers.

Barriers to Entry Entry of Foreign Players New forms of trading including T+2 settlement system, dematerialization etc are strengthening the retail brokerage market and attracting foreign companies to enter the Indian industry. Threat of Substitutes Alternative Investment Options Various alternative forms of investment including fixed deposits with banks and post offices etc act as substitutes to retail broking products and services.

100

SWOT ANALYSIS
Strength Advanced Technology Providing innovative products and technology Leverage technology to satisfy customer demands. Add value to share holders. Weakness: Too many subsidiaries High cost of funds Opportunities: Higher capital base First mover advantages Threats: Competition from other industry rivals like HDFC. Concern over NPA despite provisioning Thus, ICICI has been able to use technology to provide value added service to its customers during the last few years. For ICICI, technology is an integral part of their business. However, their overall progress could have been smoother but for certain internal and extraneous factors and also a pressure on spreads due to a competitive market.

Comparative study of ICICI Bank Ltd. and HDFC Bank

Even their offices reflect their attitudes. ICICI Bank's headquarters in suburban Mumbai is a huge, imposing edifice in glass and granite. HDFC Bank's office in central Mumbai is comparatively smaller and more sedately furnished. The two banks have carried forward their style statement in their approach to business. ICICI Bank thinks big, is all for growth and hungry for market share. HDFC Bank is more conservative and cautious, grows at a measured pace, without taking any undue risks. ICICI Bank's assets in the retail space stand at Rs 56,000 crore (Rs 560 billion). In comparison, the tally for HDFC Bank is Rs 18,000 crore (Rs 180 billion). ICICI Bank also leads HDFC Bank in almost every segment they are present in. But that's just the current update. The DNA of the strategy ICICI Bank began its retail banking venture in mid-1999. By January 2000, it had moved on to introducing home loans, car loans, personal loans and credit cards. Realising the need for a bigger retail deposit base, the bank started building a branch and an ATM network. The acquisition of Bank of Madura in March 2001 added 263 branches, many of them in cities where ICICI Bank did not have a presence. The merger of the erstwhile financial institution ICICI Limited with the bank in April 2002, gave it a ready-made corporate clientele. The flip side was that ICICI Bank had Rs 10,000 crore (Rs 100 billion) of restructured assets for which it had to make provisions. On the other hand, HDFC Bank kick started its operations in 1995 with a focus on corporate banking, targeting the top-end of the market.HDFC Bank ventured into retail lending in 1998, a year before ICICI Bank. But in products like credit cards, it was slow to get off the mark. For instance, its credit cards were launched only two years ago. By then ICICI Bank had been present in the credit card business for nearly three years. However, HDFC Bank was handicapped because it could not sell home loans (because its parent HDFC was in the business), though it has been originating them in the past one-and-a-half years. For ICICI Bank, home loans are 46 per cent of its retail assets. A banking consultant observes that ICICI Bank is far more aggressive. Though ICICI executives do not admit it, industry sources observe that ICICI's pricing has been far more competitive, which probably brought it more customers. According to some industry experts, growth for ICICI Bank may have come at the cost of quality. ICICI Bank denies this.

Calling the customer Both players targeted the same customer -- the upper-middle class. The marketing channels used by both, including direct sales agents (DSAs), were the same. Yet, there was a difference. In the past two years, the bank has spent less than Rs 100 crore (Rs 1 billion) on advertising and publicity (In comparison, ICICI has spent Rs 185 crore). HDFC Bank says that its spends have always focused on other channels such as direct sales and phone banking rather than mainstream advertising.

102

Better pick-up The numbers tell the story. ICICI Bank's retail deposits are nudging Rs 60,000 crore (Rs 600 billion) and in FY06, it grew its deposits by 47 per cent compared with the industry deposit growth of 14 per cent. HDFC Bank's retail deposits are about Rs 23,000 crore (Rs 230 billion). Even in home loans, ICICI Bank commands 30 per cent of the market, having eaten into housing finance pioneer, HDFC's share. Share of the wallet HDFC Mar-05 Branches ATMs Cities Retail assets (Rs crore) Deposits (Rs crore) Car loans (Rs crore) Credit cards (Mn) Retail customers (Mn) Cost of deposits (%) Net interest margin (%) Net NPLs (%) Bank 467 1,147 211 18,000 38,000 2,500 1.3 6.4 3.2 3.2 0.2 Bank 565 2,000 371 56,000 99,800 11,500 3 13.7 4.5 2.4 2 ICICI

Even in the number of customers ICICI Bank leads by a distance (See table: Share of the wallet). Nearly 14 million customers bank with ICICI Bank, while the number for HDFC Bank is less than half (6.4 million). ICICI Bank has issued 3 million credit cards -- that is more than twice the number of HDFC Bank's credit card users. However, industry observers point out that ICICI Bank's effective users for credit cards may not be high. Nonetheless, they concede that even with a discounted customer base, the numbers will still be strong. Even in businesses like online trading where the risks are relatively low, ICICI Bank commands a two-thirds marketshare. 'Tell all' street The stock market has always valued HDFC Bank at a huge premium -- at the current price of Rs 585, HDFC Bank is valued at 3.5 times price to forward book (valuation based on estimated book value in FY 06 of Rs 165). The multiple for ICICI Bank that quotes at Rs 415, is just 2.1 (estimated book value Rs 194).

The reason: the impeccable quality of HDFC Bank's balance sheet. With NPLs of less than 0.2 per cent, compared with 2 per cent for ICICI Bank, its books are definitely in far better shape. HDFC Bank's operations are also more profitable -- its net interest margin at 3.2 per cent is way higher than that of ICICI Bank's 2.4 per cent. Also, it is able to access deposits at a lower cost. On an average, it pays an interest of 3.2 per cent while ICICI Bank shells out 4.5 per cent. But round one of the banking sweepstakes has clearly gone to ICICI Bank.

RESEARCH FINDINGS:
The data collected through questionnaires with the help of Direct Sales Agent and Direct Marketing Agencies has been of great importance to analyze many details regarding all the captions that are there in the questionnaire of sample size 40. They are as follows:

Age: The applicants ranging between the age of 30 - 45 years are the ones who have applied for Home Loans large in number, it is because they are financially stable and sound. But now a days customers ranging between 25 30 are even applying for Home Loans because they are aware of the benefits that can be availed by applying for Home Loans.

Profession: Mostly, the Self Employed Non Professionals i.e., business persons who are involved in their family business apply for Home Loans. Salaried are less in number.
Tenure & Loan Amount: The tenure which the bank and the customer finally arrives at is according to the eligibility of the applicant in consideration to his a) Age As the bank itself assumes that is the person capable enough physically and financially that hell be able to repay the loan in the fixed tenure.

b) Profession either the person is salaried which shows he has a fixed income per month and thus the installments will be on time, if the applicant is SEP or SENP then there can be any gain or loss and so the tenure and amount of loan is fixed accordingly. Product applied for: The most preferred products in Home Loans are: Home Loan It is specially for the purpose of construction and purchase. Benefits of Home loans Cheaper Rates RBI has given a margin of 0.75% which deducts from the current prevailing rates.

Easily granted. Amount of loan granted 50% of the salary in case of salaried class. Rebate / deduction in Income Tax. Land Loan It is normally given for the purpose of purchase of land for Investment for future. Benefits of Land Loans Normal rates As it is granted for the purpose of investment so RBI has not given any deduction of margin because it is not beneficial for the government and is merely for the personal benefit of the customer.

There is no rebate in Income Tax. LAP (Loan Against Property) It is given for different purposes against any property which is mortgaged with the bank and is released when the loan is over. Benefits of LAP Rates at which the loan is granted is above margin It is also known as Mortgage Loan.

Modes of Payment: After the whole analysis, the final conclusion is that more than 60% of the applicants repay the loan through PDCs.

Property Mortgaged: Applicants can mortgaged any free property which they own. Free property includes: Residential ( commercial and non-commercial) Commercial Any other loan taken for the same property: Out of sample size 40, mostly have not applied for any other loan simultaneously but through Credit Information Bureau of (India) limited (CIBIL) and DEDUP records show that at time of applying for HL customers itself take a check that they have already repaid their dues of other loans.
Preferred bank for Home Loans: According to the survey through questionnaire shows that ICICI Bank Ltd. is the most preferred bank but this is because questionnaires have been filled by the applicants applying in ICICI.

Otherwise, HDFC is second market leader in Home Loans.

Loan from any other bank: Out of sample size of 40 customers mostly have not applied in any other bank but some number of applicants are customers of any other bank.
Sources of information for the various home loan plans: Features launched by the bank in different plans of HL is outsourced through Direct Sales agents and agencies. And even some customers or can say general public prefers bank as the most reluctant source of availing information.

99% of the applicants in sample size are satisfied by the services provided by ICICI Bank Ltd.

SUMMARY AND CONCLUSION:

The report made on ICICI Home Loans concludes by findings of various benefits to the customer, government, builders and HFCs / Banks. There is a growing tendency of investing at a younger age, increase in NRI demand in real estate, increased urbanization, owning property now more economical than renting. Government committed to simplifying Mortgaged Backed Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002. There is tax benefit to the customers and rationalization of stamp duty. Builders are now a days focusing on end users rather than Investors and there is improvement in quality of constructions. The final outcome of the report gives the following data: JUNE 2008 FILES LOGIN 100( Ist Disbursement) 49 ( Sub Disbursement) 52 ( Final Disbursement) FILES CLEAR 46 ( Ist Disbursement) 26 ( Sub Disbursement) 47 ( Final Disbursement)

The graphs below shows the market leadership of ICICI as compared to HDFC and SBI.

Market leadership
Sanctions (in Rs.Crore)
30000 25000 20000 15000 10000 5000 0 2004 2005 2006 2007 ICICI HDFC SBI

2005

2006

2007

2008

Market leadership
Disbursement (in Rs.Crore)
20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2004 2005 2006 2007

ICICI HDFC SBI

2005

2006

2007

2008

Market share of ICICI

Year 2003 04: 25000 crore Year 2004 05: 41000 crore Year 2005 06: 53000 crore Year 2006 07: 65000 crore

Year 2007 08: 85000 crore ( projected)

Market Share
SBI 2007
2008

OTHER PSBs LIC OTHER HFCs

2007 2006 2005

FBs Pvt Bks HDFC ICICI StanChart 50% 100% Citi

Bibliography:
Pandey I.M., Financial Management Chandra P., Financial Management Khan & Jain, Financial Management V.Sharan, Financial Institution & Services Induction program book of ICICI Bank Ltd. www.ICICIBank.com www.homeloans.com