project icici homeloan

8/12/2019 Project Icici Homeloan

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EXECUTIVE SUMMARY

Housing, being one of the basic needs of making in terms of safety, security,

self-esteem, social status, cultural identity, satisfaction and achievement, is

one of the major determinants of economic well being.

The social structure of the Indian families is going through a sea change as

the joint family is fast giving way to the nuclear family concept. The pressure

to have ones own home is high among these families. It is believed that thesatellite towns that are being developed in many parts of the country will drive

the demand for housing needs. The phenomena being witnessed in the stock

market are leading people to believe that the time tested avenues of

investment like real estate with significant appreciation over the years are a

safer bet and a safer hedge against inflation. The government of India had

recently made the development of the housing sector a priority both from the

demand and the supply side by fiscal concessions to the providers of the

house and to the borrowers.

The players in the housing finance field include housing finance companies

H!"s#, cooperative housing finance societies, which are under the purview

of $ational Housing %ank $H%#, while nationali&ed banks and the other co-

operative banks, which are under the purview of 'eserve %ank of India '%I#.

Housing finance is available to individuals for various purposes like(

construction of a house, construction or purchase of a flat, e)tension or

renovation of an e)isting house or flat, purchase for the site construction of a

house etc. H!"s and banks also e)tend finance to corporate for funding their

staff housing schemes* onward lending to the employees, ac+uisition of staff

+uarters etc. and to builders*developers*evelopment uthorities*tate

Housing %oards etc. for their various housing projects.

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host of factors have contributed to the buoyancy in the housing sector apart

from the ta) sops, such as increasing number of dual income familiar, high

salaried employees with high purchasing and borrowing powers, bottoming

pout of property prices, decreasing interest rates tie-ups of builders with

H!"s, +uicker and transparent system of working of H!"s, easy availability

of home finance etc. !urther, with the stock markets showing the signs of

depression, may feel is an opportune time for investing in properties.

The e)isting players in the housing finance market became more aggressive

as anew players entered the scene. "ompetition got stiffer with the interest

rate and softer terms being used as tools to mobili&e business.

There are a few factors, which are of major concern to the H!"s. The major

issue in the development of the housing finance sector in the country is the

availability of long-term resources. /ther issues of concern include( mortgage

securiti&ation, ever-thinning spreads, falling interest rates and risk of pre-

payment of long-term loans.

Housing finance sector is considered as priority sector due to its linkages with

other sectors. The sector can further grow provided due diligence and

prudences shown in disbursements. s the competition is high and li+uidity in

the system is abundant, all the players need to act with precision.

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HOUSING IN INDIA

Housing being one of the basic needs of making in terms of safety,

security, self-esteem, social status, cultural identity, satisfaction and

achievement, is one of the major determinants of economic well-being. The

housing problem, though universal, is much more acute in developing

countries like India. Housing in India may be defined as any structure with four

walls and a roof, but the seventh five year plan states that 0in fulfilling the

basic needs of the population, housing ranks ne)t only to food and clothing in

importance.

The social structure of the Indian families is going through a sea

change as the joint family is fast giving way to the nuclear family concept. The

pressure to have ones own home is high among these families. It is believed

that the satellite towns that are being developed in many parts of the country

will drive the demand for housing needs. The phenomena being witnessed in

the stock market are leading people to believe that the time tested avenues of

investment like real estate with significant appreciation over the years are a

safer bet and a safer hedge against inflation. The government of India

recently made the development of the housing sector a priority both form the

demand and the supply side by fiscal concession to the providers of the

house and the borrowers.

certain minimum standard of housing is essential for healthy and

civili&ed e)istence. The 1221 population census of India provides that less

than 3.4 percent of rural households are totally houseless. s per the

available figures in 1251 the housing shortage in India was 2.6 millions and

as per estimates of national building organi&ation, it may increase to 71.6

million units by 8331. There is a gap between demand and supply of housing

in India. The 9nited $ations estimates that the least developed countries will

have to construct at least ten houses per 1333 population to solve the shelter

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problem by the end of century. %ut in India we construct hardly two houses

per 1333 population per year.

HOW HFCs HAS DEVELOPED?

mong the most important reasons for sound base on which a H!"

rest is the uni+ue nature of end product for which a H!" performs the task of

financial intermediation. Housing may be characteri&ed, as a basic necessity

for which there is a perennial demand.

critical factor in determining the demand for a housing loan is the

ability of a borrower to comfortably repay the installments on the borrowed

amount.

t the moment, the ability of a typical borrower to afford a housing loan

is higher than it was in the last 8 decades. The cost of the house, when

e)pressed as a multiple of a borrowers annual income: has come down from

about 18 times the annual income in the early 1263s to just four times now.

s a conse+uence of the general rise in income out stripping the rise in

the cost of the housing, the potential market si&e for H!"s have grown

enormously, while simultaneously reducing the risk attached a housing loan.

It is not just rising annual incomes but have raised the levels of affordability,

the series ta) benefits handed out in the budgets over the last three years

have gone a long way in making a housing loan affordable. In this backdrop,most H!"s and housing finance divisions of financial intermediaries are

upbeat about the growth in the market for housing loans.

The players in the Housing !inance field include H!"s, "o-operative

Housing !inance society which are the purview of $ational Housing %ank,

while nationali&ed bank and other co-op banks, which are under the purview

of '%I. Housing !inance is available to the individual for various purposes

like(

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construction of house, construction or purchase of a flat, e)tension or

renovation of e)isting house or a flat, purchase for the site construction of the

house, etc. H!"s and banks e)tend finance to corporate for funding their staff

housing schemes* onward lending to employees, ac+uisition of the staff

+uarters, etc. and to builders*developers*development authorities*state

housing boards etc. for their various housing projects.

The e)isting players in the housing finance became more aggressive

as a new players entered scene. "ompetition got stiffer with the interest rate

and softer terms being used as tools to mobili&e the business.

There are few factors, which are major concerned to H!"s. The major

issue in the development of housing finance sector in the country is the

availability of long-term resources. /ther issues of the concern include(

mortgage securiti&ation, ever-thinning spreads, falling interest rates and risk

of pre-payment of long terms loans.

Housing finance sector is considered as priority sector due to its

linkages with other sectors. The sector can further grow provided due

diligence and prudences is shown in disbursement. s the completion is high

and li+uidity in the system is abundant all the players need to act with

precision.

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GROWTH TRENDS OF HFCs

Growth in is!"rs#$#nt%

The following figure bellow is a self-evident graph that from 8331-8338

there was a robust growth in the disbursement. It is around ;5< growths in

that year. The housing finance industry is e)pected to grow at a 43 percent

annually.

&

'&&&&

(&&&&

)&&&&

*&&&&

+&&&&

,&&&&

'---.(&&& (&&&.(&&' (&&'.(&&( (&&(.(&&)

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FACTORS THAT DROVE GROWTH

The robust growth e)perienced by the industry in the last few years has

been triggered by a number of factors, some of which are listed below and

e)plained further(-

Ta) rebates on housing loans announced in the recent budgets.

=owering of real estate prices to affordable levels.

>reater amount of professionalism being e)hibited by developers and

builders who are today ac+uiring clearer titles and are doing more

timely completion of projects.

Investment options have been dried up with lower interest rates and

due to the ta)es applicable.

Housing finance received a boost

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INDUSTRY ANALYSIS OF HFCs

CUSTOMERS /ARGAINING POWER%

9ntil recently i.e. ? years back this phenomenon was absent entirely,

there were some housing finance companies servicing people in its own way

with very high interest rates, standardi&ed product with all other inefficiency of

no competition market.

%ut the entry of host of banks and other private housing finance

companies has lead to a very aggressive combat in the market and hence the

customers have gained tremendous amount of bargaining power. %ut in most

of the case the interest rate factor goes without any spice as everybody

matches the lowest one, so again customers dont have any choice.

%ut this competition has certainly leaded to improve level of services.

@any of the players have come up with various innovative and fle)ible

products, suiting the needs and preferences of various different types of

people.

"ompanies are wooing the customers on the basis of various frills

added to their offerings. ifferentiation is the only way to attract the customers

and make them feel good. spects like brand and +uality have come up.

In all now customer has some value in the market or great value.

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SUPPLIERS /ARGAINING POWER

!or the industry like housing finance identifying the supplier is very

tricky and difficult. The lenders to the H!"s in the form of bonds and other

instruments can be termed as one of the suppliers of funds. !or banking H!"

it is the retail saving account deposit and all other term deposit is the source

of funds. $H% can form a major part of this funding because of their refinance

schemes available only to the H!"s.

The other factor that can be considered is services obtained by H!"s

from industries like construction, information, technology and marketing

support in terms of direct marketing channels.

=ets take each one in detail and try to assess the ability and power to

influence the industry.

L#n#r to th# HFCs in t#r$s o0 /on 1 oth#r instr"$#nt ho2#rs % These

investors holds very low amount of power in influencing the players as they

subscribe to what these players sharp fall in the interest rates in Home loan

segment, that intern s+uee&e the option of issuing high rate bonds, so low

attractiveness for investors. The other factor is of increased investors

awareness about various investments instrument.

S34in5 3n T#r$ D#6osits with /3n7% They really dont have any

bargaining power as such in most of the cases the interests on such depositsare fi)ed and the investor cant do anything about it.

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NH/ R#0in3n8#%$H% hold some power in influencing the industry through its

refinance activity, where $H% is deciding factor about the rate at which it will

refinance the e)isting loans, but governments commitment towards servicing

the industry to fulfill its social objectives reduces its impact.

THREAT OF SU/STITUTE

The market can face stiff competition from the good rental house

sector. %ut today it is struck into a lot of legal and structural problems. Aeople

are not willing to rent their properties.

The other factor which reduces the threat of substitute is the Indian

social re+uirement where owing a house is a sense of pride rather then living

in a rented house.

The other substitute can be in terms of reducing price level of real

estate. %ut the continuous growth in the industry depicts very low chances of

this phenomenon coming in force.

In all if the affordability of housing becomes easier and cheaper to

people it will pose a threat to the industry depicts very low chances of this

phenomenon coming in force.

/verall threat of a substitute is very low in the industry with high level

of growth in market fueling the industry towards one of the economic

accelerator.

THREAT OF NEW ENTRANT

The industry does not pose much threat from new entrants: as far asthe entry re+uirement is concerned. It is not problem factor for somebody to

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enter in the market, but the market forces like cut throat competition and very

high level of market penetration by the current players has left very low place

for any new entrance to come in.

The threat of new players can also be faced from the various players

which are living in the dormant phase and are not so active in market for

e)ample almost all the banks have there set up for housing loan but are not

aggressively selling it.

The only big matter of concern is aggressive nature of multinational

banks such as "itibank etc which has recently joined the industry and there

are still various international banks which are evaluating the option of entering

the Indian market and they might pose a very big threat to the industry as they

have access to low cost funds and their deep pockets to continue to hold in

the market for longer run.

o in all the industry is pretty secured from the new entrant threat and

again the market growth will give a lot of time to all players to settle down as

demand is high, the players can very well move in the market.

COMPETITION IN THE INDUSTRY

"ompetition in the housing finance industry has taken a new height. If

we go back in 1223 there was almost no competition in the industry and

market was dominated by H!"s like H!", =I"H!= with some A9 banks in

the market with very low amount of direct competition. @ost of the player were

largely servicing to their customers with very low e)posure to others.

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%ut now the case is opposite with lots of private players and foreign

banks in the market.

Home loan now comes with lots of other things form advisory about the

property to be bought to various other plans for the connivance of the

customers.

!oreign banks with their low cost funds have given market a whole new

dimension, where in players are providing loans to customers at sub A='

levels. nd the interest rates are at their minimum level and there is

e)pectation of its going up.

o in all competition is at its peak in the market and every player is

fighting for its pie in the market. The players which are reluctant to change in

the market are facing a situation where are dieing day by day, hence

differentiation and innovation holds the key in the market.

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INDUSTRIAL CREDIT AND INVESTMENTCORPORATION OF INDIA

The Industrial "redit and Investment "orporation of India =imited now

known as I"I"I =td. was founded by the Borld %ank, The >overnment of

India and representatives of private industry on Canuary 5, 1255. The

objective was to encourage and assist Industrial development and Investment

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in India. /ver the years, I"I"I has evolved into a diversified financial

institution. I"I"IDs principal business activities include

Aroject !inance Infrastructure !inance

"orporate !inance

ecuriti&ation

=easing

eterred "redit

"onsultancy services

I"I"I %ank is IndiaDs second-largest bank with total assets of about

's.118, 387 crore and a network of about 753 branches and offices and about

1;53 T@s. I"I"I %ank offers a wide range of banking products and financial

services to corporate and retail customers through a variety of delivery

channels and through its speciali&ed subsidiaries and affiliates in the areas of

investment banking, life and non-life insurance, venture capital, assetmanagement and information technology. I"I"I %ankDs e+uity shares are

listed in India on stock e)changes at "hennai, elhi, Eolkata and Fadodara,

the tock G)change, @umbai and the $ational tock G)change of India

=imited and its merican epositary 'eceipts 's# are listed on the $ew

ork tock G)change $G#.

I"I"I %ank was originally promoted in 1227 by I"I"I =imited, an Indian

financial institution, and was its wholly-owned subsidiary. I"I"IDs shareholding

in I"I"I %ank was reduced to 7?< through a public offering of shares in India

in fiscal 1226, an e+uity offering in the form of 's listed on the $G in

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fiscal 8333, I"I"I %ankDs ac+uisition of %ank of @adura =imited in an all-stock

amalgamation in fiscal 8331, and secondary market sales by I"I"I to

institutional investors in fiscal 8331 and fiscal 8338. I"I"I was formed in 1255

at the initiative of the Borld %ank, the >overnment 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 1223s, I"I"I transformed its

business from a development financial institution offering only project finance

to a diversified financial services group offering a wide variety of products and

services, both directly and through a number of subsidiaries and affiliates like

I"I"I %ank. In 1222, I"I"I become the first Indian company and the first bank

or financial institution from non-Capan sia to be listed on the $G.

fter consideration of various corporate structuring alternatives in the

conte)t of the emerging competitive scenario in the Indian banking industry,

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and the move towards universal banking, the managements of I"I"I and

I"I"I %ank formed the view that the merger of I"I"I with I"I"I %ank would be

the optimal strategic alternative for both entities, and would create the optimal

legal structure for the I"I"I groupDs universal banking strategy. The merger

would enhance value for I"I"I shareholders through the merged entityDs

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 I"I"I

%ank shareholders through a large capital base and scale of operations,

seamless access to I"I"IDs 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 I"I"I and its subsidiaries. In /ctober 8331, the %oards of

irectors of I"I"I and I"I"I %ank approved the merger of I"I"I and two of its

wholly-owned retail finance subsidiaries, I"I"I

Aersonal !inancial ervices =imited and I"I"I "apital ervices =imited, with

I"I"I %ank. The merger was approved by shareholders of I"I"I and I"I"I

%ank in Canuary 8338, by the High "ourt of >ujarat at hmedabad in @arch

8338, and by the High "ourt of Cudicature at @umbai and the 'eserve %ank

of India in pril 8338. "onse+uent to the merger, the I"I"I groupDs financing

and banking operations, both wholesale and retail, have been integrated in a

single entity.

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MISSION 1 VISION

Mission

/ur dealings with our customers, public, shareholders, employees shall reflect

honesty and openness. "ollectively we shall establish a standard in banking

through outstanding performance, courteous service high ethical benchmark.

Vision

To be the preferred brand for housing and property loans, to individuals,

builders and corporate.

ICICI GROUP

Th# ICICI Gro"6 8o$63ni#s%

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1. ICICI /3n7 2t% commercial bank that provides both retail

wholesale products.

8. ICICI S#8"riti#s 1 Fin3n8# Co9 Lt9 :ICICI S#8"riti#s;% are

investment bank that offers a wide range of fee based services with

the support of I"I"I %rokerage ervices =td. I"I"I %rokerage#

4. ICICI Cr#it 8or6or3tion Lt9 :ICICI Cr#it;% a non banking

finance co that provides a retail distribution channel for the groups

retail products, supported by I"I"I capital services =td.I"I"I

"apital#

7. ICICI In4#stors S#r4i8#s Lt9 :ICICI S#r4i8#s;


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'G>9=T/'

G$FI'/$@G$T

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'9 M3r7#t A88#ss

'9'9 R#5"23tions 5o4#rnin5 ho"sin5 s#8tor

The entry of foreign players in the housing finance as well as the larger

financial services sector is governed by specific norms that have been

evolving towards progressive liberali&ation during the last decade.

In the conte)t of the housing finance sector, the federal government allows

133 percent foreign direct investment with some capital ade+uacy

re+uirements(

If the foreign direct investment !I# is less than 51 percent, J 3.5

million must be brought in up front

If !I is between 51 percent and ;5 percent, J 5.3 million is re+uired

up front

If !I e)ceeds ;5 percent, J 53 million is needed, out of which J ;.5million must be brought up front and the balance invested within two

years.

!oreign irect Investment !I# in the $%!" sector is put on automatic route

subject to compliance with guidelines of the 'eserve %ank of India. The '%I

would issue appropriate guidelines in this regard.

!or foreign banks, the federal government permits mergers and ac+uisition.

72 percent limit e)ists on foreign e+uity in Indian banks. !oreign banks are

given automatic approval to open branches in India. ince Culy 1224, the 75-

odd foreign banks about 163 branches# have been re+uired to make 48

percent of their loans to priority sectors. Bithin the overall threshold of 48

percent, two sub-limits for loans to the small-scale sector minimum of 13

percent# and e)porting ventures minimum of 18 percent# have been fi)ed. s

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of @arch 8333, the total priority sector lending by these banks is 47.5 percent

out of the net bank credit provided by these banks.

ccording to "itibank, with reference to the housing finance and

construction# sector, mortgage and other property related the Indian "ontract

ct governs by the Transfer of Aroperty ct and issues. The following are

important elements that drive this business in India.

=and records( =and records are maintained at the office of the sub-

registrar of assurances. Kuality of record keeping and accessibility of

the land records vary. ome provide history of mortgages or

encumbrances while others do not. This difference is driven by the

Indian constitution that divides roles between the federal and the state

government. =and record is a state subject.

'egistration and tamp costs( ll property transactions including

creation of certain type of mortgages# must be stamped, and registered

with the sub registrar of assurances. tamping and registration costs

tend to be high 6 to 17 percent of transaction value#. High transaction

costs have led to issues pertaining to under-reporting of transaction

values that in turn leaders to corruption at the offices of the sub-

registrar. !oreclosure normally results in a court-induced sale#

process is divided into various steps.

L#n#r For#82os"r# 6ro8#ss

%anks*$otified !inancial Institutions Through ebt 'ecovery Tribunal for

loans in e)cess of 9 J 83,333.

@ortgage suit in civil court. If the value

e)ceeds 9 J 533,333, then the high

court is the authority

/ther lenders Through a mortgage suit in a civil

court. If the value e)ceeds 9 J

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533,333, high court is the authority

The Indian legal system is slow. teps to reform the legal process have

started. These include setting up of the ebt 'ecovery Tribunals - to manage

debt owed to the banking system. In addition, specialist tribunals have also

been established for trail of mortgage loans given by the $H% to housing

finance companies.

The most eagerly awaited changes pertain to securiti&ation. There are no

laws governing securiti&ation transactions in India. @ajor restructuring of

regulations needs to be done on this front. The government of India

constituted a working group on asset securiti&ation in Culy 8333. This group

submitted a comprehensive draft securiti&ation bill to the federal government.

The bill has not been tabled in the parliament. number of factors, mainly

legal and regulatory, need to be addressed to ensure healthy development of

the Indian securiti&ation market.

)9'9( Distri!"tion@/"sin#ss 6r38ti8#%

o far, the preferred channel for reaching the end-users is through the offices

of the housing finance companies or the commercial banksD branches. ome

institutions do deploy representatives and agents. The role of outside

agencies is bound to increase once the market matures. In more developedmarkets the originator and the distributor of mortgages are separate entities.

This has yet to become the accepted norm of mortgage business in India, at

least in the housing finance sector.

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REGULATORY ENVIRONMENTN3tion32 ho"sin5 /3n7 :NH/;

'; Vision%

0$H% ensures a sound and healthy housing finance system in India through

effective regulation and supervision of housing finance institutions. s a

financial institution, $H% is known for its commitment, innovation and +ualityof service offering a broad spectrum of financial products to address the

needs of the housing sector with motivated employees working in a congenial

and participative work environment.

Bhen people think of financial services related to housing, they think of $H%.L

(; Th# O!#8ti4#s o0 NH/ %

The $ational Housing %ank $H%# was established on 2 thCuly 1266 under an

ct of the Aarliament vi&. the $ational Housing %ank ct, 126; to function as

a principal agency to promote Housing !inance Institutions and to provide

financial and other support to such institutions. The ct, inter alia, empowers

$H% to(

Issue directions to housing finance institutions to ensure their growth

on sound lines

@ake loans and advances and render any other form of financial

assistance to scheduled banks and housing finance institutions or to

any authority established by or under any "entral, tate or Arovincial

ct and engaged in slum improvement and

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!ormulate schemes for the purpose of mobili&ation of resources and

e)tension of credit for housing.

In terms of the $ational Housing %ank ct, 126;, $ational Housing %ank is

e)pected, in the public interest, to regulate the housing finance institution

being conducted in a manner detrimental to the interest of the depositors or in

a manner prejudicial to the interest of the housing finance institutions. !or this,

$ational Housing %ank has been empowered to determine the policy and give

directions to the housing finance institutions and their auditors. %esides the

regulatory provisions of the $ational Housing %ank ct, 126;, $ational

Housing %ank has issued the Housing !inance "ompanies $H%# irections,

8331 as also >uidelines for sset =iability @anagement ystem in Housing

!inance "ompanies. These are periodically updated through issue of circulars

and notifications.

s part of the supervisory process, an entry-level regulation is ought to be

achieved through a system of registration of housing finance companies.

$ational Housing %ank supervises the sector through a system of on-site and

off-site surveillance.

); R#5"23tions%

R#5istr3tion o0 Ho"sin5 Fin3n8# Co$63ni#s "@S#8tion (-A o0 th#

N3tion32 Ho"sin5 /3n7 A8t> '-B

Till the end of Cune 8337, the %ank had received 1?5 application from H!"s

for granting of "ertificate of 'egistration "/'#. /f this, 7? H!"s have been

granted "/' and applications received from 13? H!"s were rejected. In

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another ? cases, show cause notices have been issued as to why their

applications should not be rejected. In ; cases, the "/' granted earlier were

cancelled as these H!"s either went out of the housing finance business or

due to non compliance with the conditions subject to which the "/' were

issued.

A$#n$#nts to Ho"sin5 Fin3n8# Co$63ni#s :NH/; Dir#8tions> (&&'

Having considered it necessary in public interest and for the purpose of

regulating the housing finance system, the %ank issued the following

irections to the housing finance companies, during the year.

To maintain uniformity in the interest rate payable on repartiable

deposits accepted from the non-resident Indians by the various players

in the financial system, the %ank advised H!"s in eptember 8334 that

the interest rate payable by them on such deposits should be the same

as is payable by the scheduled commercial banks on these deposits

from time to time.

"onsidering the fact that financing of real estate forms an integral part

of the business of a H!", the ceiling on investments by a H!" in real

estate e)cept for its own use was raised from 13< of a H!"s owned

fund to 83< of a H!"s capital fund as on @arch 41 of the previous

year subject to the stipulation that the additional limit would be

permissible only for investments in residential units.

In order to align the investment classification and inter-class transfer

norms of H!"s with those applicable to the non-banking financial

companies $%!"s#, the %ank amended the Housing !inance

"ompanies$H%# irections 8331 regarding the prudential norms

relating to classification and valuation of investments. This amendment

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interalia specifies that the investments in securities shall be classified

into current and long term at the time of making each investment and

that there shall be no inter-class transfer from current to long term or

vice versa on ad-hoc basis and if warranted, the inter class transfer can

be effected only at the beginning of each half year.

uring the year, the %ank also advised H!"s that they should not

sanction loans to state >overnment 9ndertakings*pecial Aurpose

Fehicles AFs# for any project solely on the basis of guarantees

e)tended by the state >overnments and instead sanction loans only

after a through appraisal of the project regarding identification of risks,

risk mitigation measures, financial viability of the project and the

creditworthiness of the borrower etc. imilarly, in respect of the

housing*infrastructure projects, H!"s have been advised to undertake

due diligence on the viability of the viability of the projects.

*; Ho"sin5 Fin3n8# Co$63ni#s Pro$otion

E"it P3rti8i63tion ! NH/

t the beginning of the year, the %ank had e+uity participation in five H!"s.

However, continuing the last years trend of merger of bank sponsored H!"s

with their parent organi&ations, $H% divested its entire holding in Fibank

Housing !inance =imited, conse+uent to its plans of merger with Fijaya %ank.

There was no fresh e+uity participation by the bank during the year.

S#ttin5 "6 o0 Fr3" 8#22

In order to identify the causative factors behind frauds of housing loans in

H!"s, $H% has set up a M!raud "ell to collected on a regular basis. The

information collected is analy&ed and inferences regarding the causative

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factors are shared among all H!"s and also with '%I as a part of preventive

measure.

+; Fin3n8i32 S#r4i8#s

Pro#8t Fin3n8#

$ational Housing %ank offers project loans to public agencies for different

types of projects, as under(

Township cum Housing evelopment

"onstruction of housing on individual plots of group housing

=and ac+uisition for the purpose of housing and housing development

=and development for housing including provision of facilities like

roads, water supply, storm water drains, sewerage system, etc.

evelopment of land into buildable plots

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R#s#3r8h Pro8#ss

D#0inin5 th# R#s#3r8h Pro!2#$

It is one of the most important part of the project, as the whole

research is based on this problem formulation. It is also known as

opportunity identification, as in unknown problem there may be

opportunities for companies.

Two steps are involved in formulating the research problem, vi&.,

understanding the problem thoroughly, and rephrasing the same into

meaningful terms from an analytical point of view.

I"I"I H!" has a large database of the customer . I have

conducted a survey of 133. and check the satisfaction level of e)isting

customer.

Lit#r3t"r# s"r4#

S#8on3r 2it#r3t"r# s"r4# %.

I have checked some records of the customer in I"I"I H!".

The secondary data was colleted from the past survey which

was earlier conducted.

D#4#2o6$#nt o0 wor7in5 H6oth#sis %.

Borking hypothesis is tentative assumption made in order to

draw out and test it logical or empirical conse+uences. s such the

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manner in which research hypotheses are developed is particularly

important since they provide the focal point for research.

I also test some of the important +uestions using chi-s+uare 8#

test of +uantitative methods by various hypotheses for chi-s+uare 8#

are as under

Ho (- There is no relation between rate and satisfaction level

Ho (- There is no possibility for further loan due to the satisfaction.

Ho (- There is no positive relation between recommendation and

satisfaction.

R#s#3r8h #si5n %

I follow escriptive research design

S3$62in5 #si5n %

The sampling design is +uota and judgmental. I have

also follow restricted sampling under selectiontechni+ue.

ampling unit (- The unit selected where the customer

who has taken loan from I"I"I H!".

ampling si&e (- The ampling si&e was 133 customer.

D3t3 8o22#8tion% .

There are various methods are available for collection of data. I follow

personal interview and telephonic method of data collection because itis best suitable method of data collection according to research I take

records of customers from bank.

H6oth#sis t#stin5

Hypothesis

Int#r6r#t3tion

- atisfaction level Is high.

- They are also satisfy with the rate of I"I"I H!".- They can also provide reference to others.

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- They can take loan again from bank in future.

R#s#3r8h Instr"$#nt %

'esearch Instrument used here is structured +uestionnaire and

most of the +uestion here are of multiple-choice +uestion but openended +uestion are also included.

Li$it3tion%

The following are the limitation which are faced during the

research.

elected sample si&e is 133 customer so study could be

relatively justify on that ground.

'espondent %ias.

The project is done for I"I"I H!" 'ajkot %ranch only so

scope of research is limited to 'ajkot %ranch.

Chi.s"3r# !#tw##n s3tis038tion 2#4#2 3n r3t# o0

int#r#st o0 ICICI ho$# 2o3n9

H o( There is no relation between rate satisfaction level

H ( There is a relation between rate satisfaction level

O!s#r4# Fr#"#n8

S3tis038tion

R3t# es $o Total

es ?3 18 ;8

$o 16 13 86

Total ;6 88 133

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E6#8t# Fr#"#n8

S3tis038tion

R3t# es $o Total

es 5? 1? ;8

$o 88 ? 86

Total ;6 88 133

Chi.s"3r# t3!2#

/bserved

!re+uency

/i

G)pected

!re+uency

Gi

/iNGi# /i-Gi#8 /i- Gi#8

*Gi

?3 5? -7 1? 3.865;18 1? 7 1? 1.333316 88 7 1? 3.;8;413 ? 7 1? 8.?;33

7.?;2;

8value O 5< level of significant at d.f. P c N1# r N1#

P 8-1# 8-1# P1 is 4.671

H / P rejected

H P accepted

Con82"sion(

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H accepted it means there is a positive relation between rate and

satisfaction level. It means satisfaction of customer will effecting the

change in rate of interest.

Co.r#23tion !#tw##n r3t# 1 s3tis038tion 2#4#2

8o.r#23tion t3!2#

Q Q

8

8

Qy;8 ;6 5167 ?367 5?1?

86 88 ;67 767 ?1?

133 133 52?6 ?5?6 ?848

' P2 2

100(6232) (100)(100)

100(5968) (100) 100(6568) (800)

P623200 10000

596800 10000 656800 10000

P613200

596800 656800

P613200

616070

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P 3.225

Con82"sion %

There is high level of co-relation between rate of interest satisfaction

level of customer.

8hi.s"3r# !#tw##n 0"rth#r 2o3n 3n s3tis038tion

2#4#2 o0 th# 8"sto$#r9

H o ( There is no possibility for further loan due to the satisfaction.

H ( There is possibility of further loan and satisfaction

O!s#r4# 0r#"#n8

S3tis038tion

F"rth#r 2o3n es $o Total

es ;5 18 6;

$o 4 13 14

Total ;6 88 133

E6#8t# 0r#9

S3tis038tion

F"rth#r 2o3n es $o Total

es ?6 12 6;

$o 13 4 14

Total ;6 88 133

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8o.r#23tion !#tw##n 0"rth#r 2o3n s3tis038tion 2#4#2

o0 th# 8"sto$#r

Q Q8 8 Qy

;6 6; ?367 ;5?2 ?;6?

88 14 767 1?2 86?

133 133 ?556 ;;46 ;3;8

' P2 2

100(7072) (100)(100)

100(6558) (100) 100(7738) (100)

P707200 10000

655800 10000 773800 10000

P697200

645800 763800

P697200

702326

P 3.228;

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Con82"sion %

There is high degree of co-relation between satisfaction further loan.

Chi.s"3r# !#tw##n r#8o$$#n3tion 3n

s3tis038tion9

H o ( There is no positive relation between recommendation and

satisfaction.

H

( There is positive relation between recommendation and satisfaction .

O!s#r4# 0r#"#n8

S3tis038tion

R#8o$$#n3tio

n

es $o Total

es ?6 11 ;2$o 13 11 81Total ;6 88 133

E6#8t# 0r#"#n8

S3tis038tion

R#8o$$#n3tion es $o Totales ?1 16 ;2$o 1; 7 81Total ;6 88 133

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/bserved

!re+uency

/i

G)pected

!re+uency

Gi

/iNGi# /i -Gi#8

/i- Gi#8 *

Gi

?6 ?1 ; 72 3.6344

11 16 -; 72 8.;88811 7 -; 72 8.668711 7 ; 72 18.8533

16.?5;2

"hi-s+uare value O 5< level of significant with d.f P 1 is 8.671

H i( 'ejected

H ( accepted

Con82"sion %

H is accepted so, there is positive relation between recommendation and

satisfaction level of customer.

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Co.r#23tion !#tw##n r#8o$$#n3tion 3n

s3tis038tion

Q Q8 8 Q;6 ;2 ?367 ?871 ?1?888 81 767 771 7?8133 133 ?556 ??68 ??87

r P2 2

100(6624) (100)(100)

100(6558) (100) 100(6682) (100)

P662400 10000

655800 10000 668200 10000

P

652400

645800 658200

P652400

652475

P 3.2226

Con82"sion %

There is high degree of "o-relation between recommendation satisfaction level.

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PROCESS OF HOME LOAN

There are basically two phases in the home loan process(

The following diagram displays the whole sanction process disbursement

process(

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HOME LOAN PROCESS

SANCTION

PHASE

DISBURSEMENT

PHASE


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N

DMA/

DSA

BASIC

DOCUMENTS

FROM

CUSTOMER

CREDIT

MANAG

ER

TEAM

CHE

CKSIFCUTOMER

APPEARSIN

DEDUP

DATABASE

DOE

SIT

APP

EARS

DEDUPD/B

RELAT

ED

ACTIONT

AKEN

RCU

UNIT I

FRCU

REPO

RT

PNEG

ATIVE

SENDS

FIREQUEST

TOFI

AGENCY

FIAGENCY

DOES

THEFI

VERIFACTION

CREDIT

MANAG

ER

TEAM

Y

N

RELATED

ACTION

TAKEN

Y


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SCRUTINNIZESTHE

COMPLETENESSOFTHE

DOCUMENTS

P

REP

ARATI

ON

OF

C

AM

SH

EET

ANY

DEVI

AT

ION

APPROVALTAKEN

CR

EDI

T

MA

NA

GER

APPROVESCAM&

PREPARESANCTION

LETTER

APPROVED

LOAN

FILE

BRANCH

OPERATION


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DIS/URSEMENT PROCESS

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HNSCMS 48

DMA/DSA

PROPERTY

DO

CUMENTS&

DR

FFROMT

HE

CUSTOMER

CREDIT

MANAGE

R

TEAM C

HECKSIFCUT

OMER

DOCUMENT

S

ARE

THERE

ANY

DEVIATI

ON

SENDSPROPERTY

DOCUMENTSTO

LEGALAGENCY

LEGAL

AGE

NCY D

OESTHE

LEGAL

VERIFACTION

N

APPROVAL

TAKEN

Y

SCRUTINNIZE

STHE

COMPLETENESSOFTHE

DOCUMENTSAS

PER

P&D

SENDSTE

CHNICAL

VERIFIC

ATION

REQUE

STTO

TECHNICAL

AGENCY

TECHNI

CAL

AGENC

YDOESTHE

TECHNICAL

VERIFACTION


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HNSCMS 49

PREPARATI

ONOFDM

APPROVALTAKEN

CREDI

T

MANA

GER

APPROVESDM

DISBURSEMENT

MEMO

BRANCH

OPERATION

FI

(FIPV)

CHECKTHEEXISTENCEOF

PROPERTY&

APPROACABILITY

ISTHE

FIPV

REPO

RT

NEGA

TIVE

Y

N


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GLOSSARY

'9 APF%

dvance processing facility is the field that helps to customer for speed in the

process of loan sanctioned and to the builder by the investment of project.

The process of A! is start by the builder: the builder gives its all project file

to the bank and bank verifying this project by their technical and legal. fter

the verifying of project, the bank gives the letter of proof, which is called A!

letter. $ow when any customer who is interested in house of project of builder

and also re+uire loan from I"I"I Home !inance, the letter of A! get by the

bank from the builder via customer.

(9/ALANCE TRANSFER%

%alance transfer is the product in which the customer can terminate loan to

the other bank. The balance transfer is possible if the outstanding balance isaccording balance is according to bank. The tenure of the loan should be up

to or more than si) installments.

)9 CAP%

ceiling on the interest rate on a floating-rate note.

*9 Co 3662i83nts a customer you have an option of having a co - applicant to your loan. The

co - applicant cannot be a minor and most H!"s allow for only brother -

brother, parent - son and husband - wife combination for a co N applicant.

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+9 COLLATERAL%

n asset such as a car or a home# that can be used to guarantee the

repayment of a loan. The borrower risks losing that asset pledged as

collateral if the loan amount is not repaid in a timely fashion.

,9 DEMAT%

G@T account service, which provide by the bank in which the person can

direct deal with the stock market and can know the updates of the market.

9 DIS/UREMENT%

isbursement is the process in which your loan will be disbursed after you

identify and select the property or home that you are purchasing and on your

submission of the re+uisite legal documents.

B9 DST%

irect sales team is the team of the direct consult to the customer. Ts are

in the job of marketing and selling of different products of the bank.

ometimes Ts also called the e)ecutive.

-9 E2i5i!i2it%

This is the loan amount that you are eligible to based on your repayment

capacity. our eligibility depends on the norms set by the H!"s. Typically, the

eligibility computed would be lower of the =oan to value ratio =TF#,

Installment to Income 'atio II'# and !i)ed /bligation to Income 'atio !/I'#

as per the norms of the H!".

'&9 EMI%

G+uated @onthly Installment , in which the customer has to repay the loan.

ctually, the amount of G@Is is calculated on the rates and tenure of the loan.

The income of the customer is main factor in this calculation.

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''9 FOIR%

!i) /bligatory Income 'atio is the ratio of the income and loan amount. !/I'

is varied with the criteria, which is salaried. GAs and G$As. !/I' is the

most important in the calculation of loan amount.

'(9 FRR%

!loating 'eference 'ate is varied with the change in policy of bank. !'' is

also known as a adjustable rate that the interest rate is linked to the I"I"I

%ank !loating 'eference 'ate !''#.

')9 G"3r3nt##%

promise by one party to pay a debt or perform an obligation contracted by

another if the original party fails to pay or perform according to a contract. The

party that promises to do so is called guarantor.

'*9 Lo3n T#n"r# %

The time duration for which loan has been provided.

'+9 LOAN TRANSFER%

=oan transfer is the product in which bank facilitates to the customer to

transfer loan from other bank. The outstanding amount of loan is the main

factor In transfer and how many G@I has been paid.

',9 MORTGAGE%

pledge of specific property offered as security for a loan.

'9 NATIONAL HOUSING /AN= ACT> '-B%

I"I"I Home !inance "o. =td. was set up with the objective of providing long-

term housing loans to individuals and corporate. The "ompany was registered

on @arch 43, 8333 with $ational Housing %ank $H%# under $ational

Housing %ank ct, 126;.

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'B9 O/LIGATION%

This term indicates the running G@Is of any loan in any bank or institution.

The loan amount is depended up on the obligation.

'-9 PART PREPAYMENT%

The administration and other charges for loan are known as prepayment. The

customer is paid when the loan is sanctioned and this payment is only in

che+ue.

(&9 PDC%

The bank takes the Aost ated "he+ues in advance from the customer.

These che+ues are G@Is of the customer, which is given in advance to the

bank.

('9 PEMI%

AG@I is payable by che+ue by the end of the month In which the

disbursement is made and each subse+uent AG@I at the end of every month

till the commencement of G@Is.

((9 PF STATEMENT%

Arovident fund statement is the statement In which the salaried the detail of

the salaried and ensure that if salaried customer is eligible for the payment or

not. A! statement re+uires only in the case of salaried customer is eligible for

the payment or not. A! statement re+uires only in the case of salaried

customer.

()9 RTR%

'epayment Track 'ecord is the product in which customer is facilitated to

apply for loan only based on documents of early or running loan record. If the

credit of the customer is good, can get loan.

(*9 SEP%

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elf Gmployed Arofessional is the criteria for loan. Arofessionals like doctor,

engineer, advocate practice# and chartered accountant. These all are called

GA case in loan process.

(+9SENP%

elf Gmployed $on Arofessional is the criteria for loan. $on- professional is

any businessperson like traders, manufacturer, brokers, dealers, merchants.

These all are called G$A case in loan process.

(,9 SU/SIDIARY COMPANY%

The company owned by other company that controls more that 53< of the

voting stock.

(9 TERMINAL VALUE%

The value of a property at some point of time in future. This valuation is based

on the report of legal and technical.

(B9 TOP UP%

Top up is the product in which the bank facilitates to the customer for remain

loan amount that the person was re+uired. In this product the bank, provide

funding on the loan amount, which was not able to provided to customer

based on above loan.

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UESTIONNAIRE

J RESEARCH ON SATISFACTION OF EXISTING CUSTOMER

OF ICICI HOME LOANK

I am conducting a research to find out the e)isting customer satisfaction

from I"I"I H!" =T. I will be very grateful if you could spend sometime in

going through the +uestionnaire and filling it up. I assure you that the

responses shall be treated confidentially.

In anticipation.

THI$EI$> /9 !/' /9' "//AG'TI/$

1# $ame

8# dd

4# Ahone no.

7# /ccupation( R S ervice R S %usiness R S /ther

5# Bhy do you prefer I"I"I Home =oan

R S =ow interest R S oor step services

R S $o hidden charges R S Gasy procedure

R S %rand name R S =iberal in penalty charges

?# re you satisfied with the rate of I"I"I Home =oan

R S es R S $o.

;# Bill you consider I"I"I for further loan

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R S es R S $o

6# re you recommended to your friends and relatives for I"I"I home

loan

R S es R S $o.

2# our recommendation *suggestion * complaints for I"I"I home loan.

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project icici homeloan

Documents