A

Project Study Report

On
COMPARATIVE STUDY OF HOME LOAN AND PERSONAL
LOAN OF ICICI BANK
Submitted in partial fulfillment for the
Award of degree of
Master of Business Administration

MASTER OF BUSINESS ADMINISTRATION

Submitted To :

Submitted By

The Director

Rahim Chopdar

JAIPUR ENGINEERING COLLEGE AND RESEARCH CENTER,

JAIPUR

Declaration
I Rahim Chopdar declare that the project report title COMPARATIVE STUDY
OF HOME LOAN AND PERSONAL LOAN OF ICICI BANK WITH SBI &
OTHER BANKS is based on my project study. This project report is my
original work and this has not been used for any purpose anywhere.

Rahim Chopdar
M.B.A. iv Sem.

PREFACE
As we know that M.B.A programme is more concern with the practical aspect of the business world.
The M.B.A students need to gain more and more practical experience. It is not possible for them to
have this from classroom lectures only. So in the Fourth Semester the students have to undergo
with the Project Report.
As banking sector is one of the booming sector in current market and in this sector the name ICICI
occupies its own space and doing project with this would provide us with knowing of the banking
sector as a whole and in this we shall know about the banking transaction their procedure of
opening the account, how the marketing helps in this sector and how can we describe our
knowledge either that we achieved after doing the study of this sector. Thus as per syllabus we have
to take project. This project has helped us a lot to gather much practical knowledge about banking
and other functional areas.
In our curriculum we have to cover four area of the company and to gather the information related to
those areas like general information, personnel department, marketing department and finance
department. Being a service firm bank has somewhat different working. And so as per the working
areas of company we have covered this information.
So whatever information we have covered is as per our knowledge and experience with the bank. It
had given added advantage to us by making us aware this new immerging concept of the
investment. During project we have gone through this concept in glance.

Acknowledgement
I express my sincere thanks to my project guide, Mr.Navneet Sharma I.C.I.C.I.Incharge Training for
guiding me right from the inception till the successful completion of the project. I sincerely
acknowledge him for extending their valuable guidance, support for literature, critical reviews of
project and the report and above all the moral support he had provided to me with all stages of this
project.
I would also like to thank the supporting staff for their help and cooperation throughout our
project.

Khushbu Trivedi

EXECUTIVE SUMMARY
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above
all gathering funds little by little to afford ones dream. Home is one of the things that everyone one
wants to own. Home is a shelter to person where he rests and feels comfortable. Many banks
providing home loans whether commercial banks or financial institutions to the people who want to
had a home. The housing sector plays an important role in the economic development of the
country.
My project title is COMPARATIVE STUDY OF HOME LOAN AND PERSONAL LOAN OF ICICI
BANK WITH SBI & OTHER BANKS.
. I selected this topic because The Indian housing finance industry & personal loan has
grown by leaps and bound in few years. Total home loans disbursements by banks have raised
which witnesss phenomenal growth from last 5 years. There is greater number of borrowers of
home & personal loans. So by this study we can find out satisfaction level of customers and
problems faced by them in obtaining home loans & personal loans.
My objectives of study are To make comparative study of Disbursement of home loans & personal loans by commercial
banks.
To study the satisfaction level of customers about home loans & personal loans.
To study the problems faced by customers in obtaining the home loans & personal loans.
In the research methodology I had taken primary data. In the primary data I had make a
questionnaire to check the satisfaction level of customers about home loans & personal loans.
For the first objective I had collected the information about the number of account holders of
specified banks, no of disbursement of home loans and recovery of these loans.

CONTENTS
S.no.

Particulars

Page No.

1.

Introduction to the Industry

7 40

2.

Introduction to the Organization

41 96

3.

Research Methodology

97 100

4.1 Title of the Study

4.2 Duration of the Project
4.3 Objective of Study
4.4 Type of Research
4.5 Sample Size and method of selecting sample
4.6 Scope of Study
4.
5.
6.
7.
8.
9.
10.

4.7 Limitation of Study

Facts and Findings
Analysis and Interpretation
SWOT
Conclusion
Recommendation and Suggestions
Appendix Questionnaire
Bibliography

101 104
105-120
121-122
123
124-125
126- 128
129

1. INTRODUCTION TO THE INDUSTRY:Indian banking system:

Organized banking was active in India since the establishment of the general bank of India in
1786. After the independence, the reserve bank of India RBI was established as the central bank
and in 1955, the imperial bank of India the biggest bank at the time ,was taken over by the
government to from state owned state bank of India . RBI had undertaken an exercise to merge
weak banks to strong banks and the total number of banks, thus reduced from 566in 1951 to 85 in
1969.
With the objective of reaching out to masses and meeting the credit needs of all sections of
people, the government nationalized 14 large banks in 1969 followed by another 6 banks in 1980.
This period saw enormous growth in the number of the branches and the banks branches network
become wide enough to reach the weakest sections of the society in a vast country like India. SBIs
network of 9033 domestic branches and 48 overseas offices is considered to be one of the largest
for any banks in the world
The economic reforms unleashed by the government in early nineties included banking
sector too, to a significant extant. Entry of new private sector banks was permitted under specific
guidelines issued by RBI. A number of liberalization and deregulation measures aimed at
consolidation, efficiency productivity, asset quality capital adequacy and profitability have been
introduced by the RBI to bring Indian banks in line with international beat practices.

Banks are prone to crisis:

The traditional bank has an inherent tendency to crisis. This is because the bank borrows
short terms and lends leveraged long term. The sum of deposits and the banks capital will never
equal more than a modest percentage of the loans the bank has outstanding.
Even if liquidity is not a concern, if there is no run on the bank, banks can simply choose a
ban portfolio of loans, and lose more money than they have. The US Savings and Loan Crisis in the
late 1980s and early 1990s is such an incident.

Role in the money supply:

A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or
issuing financial instruments in the money market or a securities market. The bank then lends out
most of these funds to borrowers. However, it would not be prudent for a bank to lend out all of its
balance sheet. It most keeps a certain proportion of its funds in reserve so that it can repay
depositors who withdraw their deposits. Bank reserves are typically kept in the form of a deposit
with a central bank. This behavior is called fractional-reserve banking and it is a central issue of
monetary policy. Some government (or their central banks) restrict the proportion of a banks
balance sheet that can be lent out, and use this as a tool for controlling the money supply. Even
where the reserve ratio is not controlled by the government, a minimum figure will still be set by
regulatory authorities as part of banking supervision.

Social control of banks:

Indian banking structure has grown considerably in strength and stability due to the vigorous
control and effective monitoring by reserve bank of India. However, Order to remove the deficiency
pointed above, the Government introduced a scheme of social control of banks. According to the
Banking Commission (1972), the social control scheme was introduced with the main objective of
achieving a wider spread of bank credit flow to priority sectors and making it a more effective
instrument of development.

Structure of the indian banking industy

The Indian Banking industry, which is governed by the Banking Regulation Act of
India,

1949 can be broadly classified into two major categories Non-Scheduled Banks and

Scheduled Banks. Scheduled banks comprise commercial banks and the co-operative banks. In
terms of ownership, commercial banks can be further grouped into nationalized banks, the Stat
Bank of India and its group banks, regional rural banks and private sector banks these banks have
over 67,000 branches spread across the country.
The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969
and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant
growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage
of their loan portfolio to sectors identified as priority sectors. The manufacturing sector also grew
during the 1970s in protected environs and the banking sector was a critical source. The next wave
of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of
scheduled commercial banks increased four-fold and the number of bank branches increased eightfold.
After the second phase of financial sector reforms and liberalization of the sector in the early
nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private
sector banks and the foreign banks. The new private sector banks first made their appearance after
the guidelines permitting them were issued in January 1993. Eight new private sector banks are
presently in operation. These banks due to their late start have access to state-of-the-art
technology, which in turn helps them to save on manpower costs and provide better services.

BANKING STRUCTURE

RESERVE BANK OF INDIA

Central Bank and Supreme Monetary Authority

Scheduled of Banking Sector

COMMERICAL BANKS

Foreign Banks

Public Banks

Regional
Rural Banks

Urban cooperative
Banks

Private Banks

OLD BANKS

State Banks of
India & Other
Banks

CO-OPERATIVE BANK

New Banks

Other Nationalized Banks

10

State cooperative
Banks

1.4. Structure of Indian Banking Industry

Organized banking was active in India since the establishment of the General Bank of India in 1786.
After independence, the Reserve Bank of India (RBI) was established as the central bank and in
1955, the Imperial Bank of India, the biggest bank at the time, was taken over by the government to
form state-owned State Bank of India (SBI). RBI had undertaken an exercise to merge weak banks
to strong banks and the total number of banks thus reduced from 566 in 1951 to 85 in 1969.
With the objective of reaching out to masses and meeting the credit needs of all sections of people,
the government nationalized 14 large banks in 1969 followed by another 6 banks in 1980. This
period saw enormous growth in the number of branches and the banks branch network became
wide enough to reach the weakest sections of the society in a vast country like India. Sibs network
of 9033 domestic branches and 48 overseas offices is considered to be one of the largest for any
bank in the world.
The economic reforms unleashed by the government in early nineties included banking sector too,
to a significant extent. Entry of new private sector banks was permitted under specific guidelines
issued by RBI. A number of liberalization and de-regulation measures aimed at consolidation,
efficiency, productivity, asset quality, capital adequacy and profitability have been introduced by the
RBI to bring Indian banks in line with International best practices. With a view to giving the stateowned banks operational flexibility and functional autonomy, partial privatization has been
authorized as a first step, enabling them to dilute the stake of the government to 51 per cent. The
government further proposed, in the Union Budget for the financial year 2000-01, to reduce its
holding in nationalized banks to a minimum of 33 per cent on a case by case basis.
The banking system can be broadly classified as organized and unorganized banking system. The
unorganized

banking

system

comprises

of

moneylenders,

indigenous

bankers,

lending

pawnbrokers, landlords, traders, etc. Whereas the organized banking system comprise of
Scheduled Banks and Non-Scheduled Banks that are permitted by RBI to undertake banking
business.

1.4.1. Types of Banks

A. 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 (6 of the Act).

11

1. The bank is dealing in banking business in India only.

2. The paid up capital and total funds of the bank should not be less than five lakh rupees.
3. It should convince RBI that its activities would not be against the interest of investors.
4. The bank must be:
(a) State cooperative bank, or
(b) A company according to the definition of the companies Act1956, or
(c) An institution notified by the central government, or
(d) A corporation or a company incorporated by or under any law in force in any place
outside India.
Thus,
(I) Indian Commercial Banks
(II) Foreign Commercial Banks, and
(iii) State Cooperative Banks fulfilling the above condition are considered as
scheduled banks.
Moreover under the RBI Act section 42, the Central Government has declared the
following banks as scheduled banks.
(i)

State Bank of India and its seven subsidiary banks,

(ii)

Twenty nationalized banks, and

(iii)

Urban Banks.

In June 1980 there were 149 scheduled banks which included

(i)

Public Sector Banks

(ii)

Private sector Banks,

(iii)

Foreign Exchange Banks and

(iv)

State Cooperative Banks.

A bank which wants to register its name as scheduled bank has to apply to the Central Government.
On receiving such application, the central government orders RBI to investigate the banks
accounts. If RBI gives favorable reports, the central government sanctions its proposal, and the
bank is listed under schedule annexure II and is considered as a scheduled bank.
Some co-operative banks come under the category of scheduled commercial banks though not all
co-operative banks.

12

 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 Allahabad 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.

PRIVATE SECTOR BANKS

Private Banks are essentially comprised of two types:
Old banks and new banks
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., IndusInd
Bank Ltd. and UTI Bank Ltd.

13

 CO-OPERATIVE BANKS
Co-operative banks act as substitutes for moneylenders, and offer timely and adequate
short-term and long-term institutional credit at reasonable rates of interest. Co-operative
banks are relatively similar in terms of functions to the other banks except for the following:

a) They are organized and managed on the principal of co-operation, self-help, and
mutual help.
b) They operate under the rule of "one member, one vote".
c) Operate on "no profit, no loss" basis.
d) Co-operative bank conducts all the main banking functions of deposit mobilization,
supply of credit and provision of remittance facilities. Co-operative banks offer limited
banking products and are functionally specialists in agriculture-related products, and
even in providing housing loans of late. Urban Co-operative Banks offer working capital
loans and term loans as well.
e) Co-operative banks primarily operate in the agriculture and rural sector. However,
UCBs, SCBs, and CCBs function in semi urban, urban, and metropolitan areas too
f)

Co-operative banks are probably the first government sponsored, governmentsupported, and government-subsidized financial agency in India. They get
financial and other aid from the Reserve Bank of India NABARD, central
government and state governments. They are the "most favored" banking sector
with risk of nationalization.

g) Co-operative banks normally concentrate on "high revenue" niche retail segments.

DEVELOPMENT BANKS
Development banks are primarily intended to encourage industrial development by providing
adequate flow of funds to industrial projects. In other words, these institutions undertake the
responsibility of aiding all-round development in the countrys economy by promoting new
industrial projects, and providing financial assistance for the expansion, diversification, and
up gradation of the existing units. Development Banks may be classified as All India
development banks and Regional development banks. While All India development banks
include Industrial Development Bank of India and Industrial Finance Corporation of India,
examples of Regional development banks include State Financial Corporation and State
Industrial Development Corporation.

14

B.

NON-SCHEDULED BANKS:
The banks, which are not included in the second schedule of RBI Act, 1934, are known as
non-scheduled banks. Such banks total share capital is less than five lakh. These banks are
not governed according to the RBI Act and they receive no benefits from the RBI. These
banks have no place in the list of recognized banks of the RBI. These banks are not much
trusted by the people and they do not get handsome deposits. Since 1951 the numbers of
such banks have been gradually decreasing. In 1979 there were only five non-scheduled
banks.
Generally now days we found many cooperative banks which are belongs to the nonschedule co-operative banks. Following are the types of non-schedule banks they are work
like the schedule banks but here difference in its status and it not having the status of the
schedule banks.
a.

Deposits Banks

b.

Cooperative Banks

c.

Central Banks

d.

Exchange Banks

e.

Investment or Industrial Banks

f.

Land Development Banks

g.

Savings Banks

(a) Deposits Banks:

Generally, banks which provide short-term loans to business and industrial units and which
mobilize savings of people as deposits are called deposit banks. Deposit banks accept deposits
from people, and provide short-term advances. They provide overdraft and cash credit facilities
to merchants. To meet the long-term requirement of industrial units is not possible for these
banks. They accept three types of deposits- saving bank deposits, fixed deposits and current
account deposits. They accept these deposits which are payable on demand or on short notice,
and provide funds to trading and commercial units for short durations.

(b) Cooperative Banks

Cooperative banks meet the short-term financial needs of farmers. Agriculturists, petty farmers
and artisans organize themselves on cooperative principles and form cooperative societies and
banks. Cooperative banks raise funds through various means, besides receiving all kinds of

15

deposits to make them available as lend able funds to its members. In India developed
cooperative banks supply finance for agriculture and non-agriculture activities.

(c) Central Banks

A central bank is a special institution which controls and regulates the entire banking structure of
country. It also strives to maintain monetary stability of the country. Central bank is also known
as the apex bank of a country. Since it functions in the best interest of the country and making
profits is unknown to it, it is entrusted the right it issue currency notes. No other bank is allowed
this right. It operates in close cooperation with the government of implementing economic
policies, thereby promoting economic development.
(d) Exchange Banks:
There is a difference in financing of foreign trade and financing of internal trade. Generally a
person carrying on international trade requires foreign currencies to meet his obligation. It is
here that exchange banks play the role of financing the dealer for setting transactions involved
in foreign trade, there are specialized banks for exchange business. In India, there is an ExportImport Bank (EXIM).

(e) Investment or Industrial Banks:

Investment banks provide long-term credit to industries. They raise their funds by way of share
capital, debentures, and long-term deposits from the public. They also raise funds by the issue
of bonds for business operations and government agencies. Usually they underwrite fresh issue
of shares and debentures of companies. Such banks also buy the entire issue of new
securities of public limited companies and try to get them subscribed at a higher price by the
public.

16

(f) Land Development Banks:

Land development banks were earlier known as land mortgage banks. In India, there is limited
number of such banks. There are special institutions providing long-term loans to agricultures
and farmers. They provide loans on security of land and other immovable properties. They
supply long-term funds for periods exceeding six years. Agriculturists and farmers need such
funds for making permanent improvements to land and for buying farming machinery and
equipment.

(g) Savings Banks:

Savings Banks are specialized institutions, which encourage general public to save something
from their earnings. In other words such banks pool the small savings of middle and lower
income sections of society. They are the banks in the true sense of the term and their main aim
is to promote and collect of the public. Not only the depositors are given interest, but also they
are allowed to withdraw in times of need. The numbers of withdrawal are, however, restricted.
Separate savings banks are organized in various nations. The government can also run a
savings bank. In India the postal department runs the postal saving bank all over the country. It
is very popular in rural areas where no branches where no branches of established commercial
bank operate. In urban areas, commercial bank handles savings business

17

FOREIGN BANKS :Foreign banks have brought latest technology and latest banking practices in India. They
have helped made Indian Banking system more competitive and efficient. Government has come up
with a road map for expansion of foreign banks in India.
The road map has two phases. During the first phase between March 2005 and March 2009,
foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or
conversion of existing branches into a WOS. The second phase will commence in April 2009 after a
review of the experience gained after due consultation with all the stake holders in the banking
sector. The review would examine issues concerning extension of national treatment to WOS,
dilution of stake and permitting mergers/acquisitions of any private sector banks in India by a foreign
bank.

MAJOR FOREIGN BANKS IN INDIA ARE:

ABN-AMRO Bank

Abu Dhabi Commercial Bank Ltd.

American Express Bank Ltd BNP Paribas

Citibank

HSBC Ltd

18

PUBLIC BANKS IN INDIA:

The Banking System in India is dominated by nationalized banks. The Nationalization of Banks in
India took place in 1969 by Mrs. Indira Gandhi the then Prime Minister. The major objective Behind
Nationalization Banks was to spread banking Infrastructure in Rural areas and make available
cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. These Banks were
Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI was
nationalized in 1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks
took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores.
Some of the following public sector banks in India are listed below.

LIST OF PUBLIC SECTOR BANKS IN INDIA IS AS FOLLOWS:

Allahabad Bank

Andhra Bank

Bank of Baroda

Bank of Maharashtra

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

Oriental Bank of Commerce

Punjab National Bank

State Bank of Bikaner & Jaipur

State Bank of India (SBI)

19

PRIVATE BANKS IN INDIA:

All the banks in India were earlier private banks. They were founded in the preindependence era to cater to the banking needs of the people. But after nationalization of banks in
1969 public sector banks came to occupy dominant role in the banking structure. Private sector
banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up of
private banks as part of its policy of liberalization of the Indian Banking Industry. Housing
Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle'
approval from the Reserve Bank of India (RBI) to set up a bank in the private sector.
Private Banks have played a major role in the development of Indian banking industry. They
have made banking more efficient and customer friendly. In the process they have jolted public
sector banks out of complacency and forced them to become more competitive.

MAJOR PRIVATE BANKS IN INDIA ARE:

Bank of Rajasthan

Centurion Bank of Punjab

UTI Bank

YES Bank

Federal Bank

HDFC Bank

ICICI Bank

IDBI Bank

ING Vysya Bank

20

INTRODUCTION OF NEW PRODUCTS AND SERVICES

Banks in India have traditionally offered mass banking products. Most common deposit
products being Savings Bank, Current Account, Term deposit Account and lending products being
Cash Credit and Term Loans. Due to Reserve Bank of India guidelines, Banks have had little to do
besides accepting deposits at rates fixed by Reserve Bank of India and lend amount arrived by the
formula stipulated by Reserve Bank of India at rates prescribed by the latter. PLR (Prime lending
rate) was the benchmark for interest on the lending products. But PLR itself was, more often than
not, dictated by RBI. Further, remittance products were limited to issuance of Drafts, Telegraphic
Transfers, Bankers Cheque and Internal Transfer of funds.
Banking products structure has undergone a major change. As part of the economic reforms,
banking industry has been deregulated and made competitive. New players have added to the
competition. IT revolution has made it possible to provide ease and flexibility in operations to
customers. Rapid strides in information technology have, in fact, redefined the role and structure of
banking in India. Further, due to exposure to global trends after Information explosion led by
Internet, customers - both Individuals and Corporate - are now demanding better services with more
products from their banks. Financial market has turned into a buyer's market. Banks are also
changing with time and are trying to become one-stop financial supermarkets. Market focus is
shifting from mass banking products to class banking with introduction of value added and
customized products.
A few foreign & private sector banks have already introduced customized
banking products like Investment Advisory Services, SGL II accounts, Photo-credit cards, Cash
Management services, Investment products and Tax Advisory services. A few banks have gone in to
market mutual fund schemes. Eventually, the Banks plan to Market bonds and debentures, when
allowed. Insurance peddling by Banks will be a reality soon. The recent Credit Policy of RBI
announced on 27.4.2000 has further facilitated the entry of banks in this sector. Banks also offer
advisory services termed as 'private banking' - to "high relationship - value" clients.
Properly and also take your passport-sized photo. Home banking has already become
common, where you can order a draft or cash over phone/internet and have it delivered home. ICICI
bank was the first among the new private banks to launch its net banking service, called Infinity. It
allows the user to access account information over a secure line, request Cheque books and stop
payment, and even transfer funds between ICICI Bank accounts. Citibank has been offering net
banking to its Suvidha program to customers.

21

Products like debit cards, flexi deposits, ATM cards, personal loans including consumer loans,
housing

loans

and

vehicle

loans

have

been

introduced

by

number

of

banks.

Corporate are also deriving benefit from the increased variety of products and competition
among the banks. Certificates of deposit, Commercial papers, Non-convertible Debentures at can be
traded in the secondary market are gaining popularity. Recently, market has also seen major
developments in treasury advisory services. With the introduction of Rupee floating rates for deposits
as well as advances, products like interest rate swaps and forward rate agreements for foreign
exchange, risk management products like forward contract, option contract, and currency swap are
offered by almost every authorized dealer bank in the market. The list is growing.
Public Sector Banks like SBI have also started focusing on this area. SBI plans to open 100 new
branches called Personal Banking Branches (PBB) this year. The will also market SBI's entire
spectrum of loan products: housing loans, car loans, personal loans, consumer durable loans,
education loans, loans against share, finance against go banks.

LOAN PRODUCTS OF THE BANKING INDUSTRIES:

A loan is a type of debt. This article focuses exclusively on monetary loans, although, in
practice, any material object might be lent. Like all debt instruments, a loan entails the redistribution
of financial assets over time, between the lender and the borrower.
The borrower initially does receive an amount of money from the lender, which he has to pay
back, usually but not always in regular installments, to the lender. This service is generally provided
at a cost, referred to as interest on the debt. A loan is of the annuity type if the amount paid
periodically (for paying off and interest together) is fixed.
A borrower may be subject to certain restrictions known as loan covenants under the terms of
the loan.
Acting as a provider of loans is one of the principal tasks for financial institutions. For other
institutions, issuing of debt contracts such as bonds is a typical source of funding.
Legally, a loan is a contractual promise between two parties where one party, the creditor,
agrees to provide a sum of money to a debtor, who promises to return the money to the creditor
either in one lump sum or in parts over a fixed period in time. This agreement may include providing
additional payments of rental charges on the funds advanced to the debtor for the time the funds
are in the hands of the debtor (interest).

22

Types of loans:
A. Secured
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as
collateral for the loan.
A mortgage loan is a very common type of debt instrument, used by many individuals to
purchase housing. In this arrangement, the money is used to purchase the property. The financial
institution, however, is given security a lien on the title to the house until the mortgage is paid
off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the
house and sell it, to recover sums owing to it.
In some instances, a loan taken out to purchase a new or used car may be secured by the car,
in much the same way as a mortgage is secured by housing. The duration of the loan period is
considerably shorter often corresponding to the useful life of the car. There are two types of auto
loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer.
An indirect auto loan is where a car dealership acts as an intermediary between the bank or
financial institution and the consumer.
A type of loan especially used in limited partnership agreements is the recourse note.
A stock hedge loan is a special type of securities lending whereby the stock of a borrower is
hedged by the lender against loss, using options or other hedging strategies to reduce lender risk.[
A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based on the
merit and awardable amount in a lawsuit case. Only certain types of lawsuit cases are eligible for a
pre-settlement loan. This is considered a secured non-recourse debt due to the fact if the case
reaches a verdict in favor of the defendant the loan is forgiven.

Home loans: a route to home sweet home:

The last few years have seen a rise in the income of the people. As a result of this, many people
have moved up on the income ladder. With the increase in income, there has been seen an
increase in demand. One of the core necessities of human beings is a house of their own. The
increase in the demand for houses, flats and properties has lead to an altogether new dimension.
Just like a demand needs to equal supply to reach at the point of equilibrium, the increase in the

23

demand for finances for the new homes has lead to home loans. It is not a new sector, but home
loans were a proposition which wasnt considered by the Indian consumers till even a decade back.
The banks present in India were very quick to assess the retail and property boom prevalent in the
economy. This has lead to new bank loan schemes in India. In India, banks alone do not lend
money to people, apart from them, public sector housing finance or private financial
institutions are also main sources of home loans. Hence, now the dreams of owning a home can
be materialized just by considering the different home loans options available in India. These home
loan schemes are gaining popularity because of the cheap interest rates they charge and other
features of simplicity. A large number of choices for loansgive you the opportunity to borrow loans
according to your necessity and earning ability.
The home loans issued by the housing finance companies allocate funds up to 80-85% of the
total flat or plot cost. The approved loan amount is generally transferred to the given account or a
cheque is handed over to the borrower. After this the borrowers are free to make use of the amount
according to their own requirement. An advantage of these sorts of loans is that they follow long
repayment to all categories of people can use the benefits of a home loan, like self-employed,
salaried individuals, housewives, business professionals, retired persons and farmers. The scheme
also works for NRIs.
As mentioned earlier, there are a variety of options to choose from in the home loans sector.
India has no scarcity of home loan lenders or home loans schemes. What is important for
candidates is to not decide on a home loan without seeing the other options available in the market.
The most important criteria while deciding a home loan is the interest rate that the rms and
candidates can repay them in easy installments.
Home loan charges. These interest rates matter a lot and influence your monthly
installment burden. Hence, it is very important to choose that home loan which offers the best deal
of interest rate to you.
The internet works as an excellent tool in helping people not only choose from the different
home loan schemes being offered by the various banks, but also allows one to obtain a detailed
comparison of all those home loan schemes. These days, people can also purchase home loans
online, instead of physically going to banks. This has helped in saving the time and energy of the
borrowers.
The process of approval of home loans in India is simple. The applicant can credit his/her
property against the loan or if applicant is a salaried individual then he/she should enclose

24

documents proving his/her earnings. The other related identification proofs vary from lender to
lender.
As a last piece of advice, one must always remember to go thorough with all terms and
conditions mentioned in the home loans document. The home loans market is one which one can
enter very easily. However, a little amount of intelligence and awareness can help an individual get
the best deal available in the market. So, pick up a pen and a paper and choose the loan that will
get you the home of your choice.
A boom in the retail sector has seen an immense increase in the home loan interest rates over
the past 4 years. Home loan rates have doubled over the past 4 years. The present problem of
inflation has also had a negative effect on the consumers as the fixed and the floating rate of
interests have soared to an alarming degree. This in turn has certainly affected the loan eligibility for
home loans in India. This has also lead to loan borrowers re-evaluating their options to avail new
eligibility criteria.

At this time, it is important to understand how to enhance ones

home loan eligibility. Given below are some ways which can help in this
Endeavour:

Increasing the home loan tenure:

The easiest method available to increase ones home loan eligibility is by taking home loans for the
Maximum Tenure. As an example, let us consider an individual who earns a monthly salary of Rs
60,000. He decides to purchase a house, and for that he buys a home loan. After deducting a
monthly expenditure of Rs 35,000, the individual is able to save Rs 25,000. Undoubtedly, he will use
his savings for repaying the loan in the form of equated monthly installments (EMI).
Now, lets consider that the installments for a home loan of Rs 1 lakh come at an interest rate of
12.5%. If the loan is taken for tenure of 15 years, the EMI calculated stands at Rs 1,232.50. For this
data, his home loan eligibility will be 20.3 lakh.
However, it is possible for the same individual to increase his home loan eligibility by around Rs 2
lakh if he can extend his tenure to 20 years. Assuming the same rate of interest i.e. 12.5% and now
20 year tenure on Rs 1 lakh loan, the EMI turns out to be Rs 1,136. Consequently, the home loan
eligibility comes to Rs 22 lakh.

25

Dont rush towards a home loan:

Less information is as harmful as wrong information.

The importance of this statement lies in the fact that today there are many banks offering different
varieties of home loans to individuals. Nowadays, almost every bank is offering a home loan with
the repayment period of maximum 20 years. The next important thing to consider after the tenure is
the rate of interest. For that reason, it is always advised, never to rush to purchase a home loan.
It is better to carry out a research regarding the available home loan schemes and to study the
market meticulously to make the best use of what many banks and housing finance companies are
willing to lend before making a choice
The next decision that an individual needs to make is to choose between floating and fixed interest
rate on home loan, which is largely based on ones personal preference and knowledge about the
both. However, the floating rate home loans are available for anywhere between 11.5-13%.
Also, it might not be necessary that the first scheme being presented by a bank employee would be
the best for an individual.
Hence, always ask questions and enquire about the various schemes available with the bank, and
then make the final call.

Repay

all outstanding loans:

A good report card always helps.

It is highly advised by bankers that before going to purchase any bank loan, an individual should
repay all the other pending outstanding loans. Any loan taken by an individual like car loans or
personal loans, taken on any bank, needs to be paid up to date. This adds to the ability to repay of
the individual and the lending institution takes a greater interest in issuing a home loan. Also, these
days, any bounced cheque of any late payment, is not missed by banks. Hence, its important to be
thorough with the repayments.

26

 When

in need go for a joint loan:

If one spouses income comes short of the required amount set by the bank to issue a loan, then
several banks and HFCs have come up with a joint loan option. This option guarantees a loan for
both the husband and wife earning a combined income of Rs 1 lakh per month. The choice for a
greater loan is available with either husband or wife earning Rs 60,000 per month.
These are simple to follow tips, and can go a long way in increasing the home loan eligibility of an
individual. So, buckle up and get ready to purchase your home loan smartly.

B. Unsecured:
Unsecured loans are monetary loans that are not secured against the borrower's assets. These may
be available from financial institutions under many different guises or marketing packages:

credit card debt

personal loans

bank overdrafts

credit facilities or lines of credit

corporate bonds

The interest rates applicable to these different forms may vary depending on the lender and the
borrower. These may or may not be regulated by law. In the United Kingdom, when applied to
individuals, these may come under the Consumer Credit Act 1974.

What to look for while taking a personal loan:

Are you in need of cash but do not have any solid assets against which you could take a loan? Then
you have an option to rely upon that has been designed specially for this purpose. Personal loans
can be availed for any purpose and thus they are of great help at any point you do not have cash.
However it is important for us to deeply examine any loan offer and make the right choice.
So following are few facts that help you decide if you want to avail a personal loan.

27

Examine your personal loan:

Today all banks and financial institutions are offering personal loans to the borrowers but it is
important to note down few tips before you finalize your personal loan lender.
You should do a detailed market survey of the various options like the interest rates offered, prepayment charges levied and terms & conditions laid down by the lender.
Interest rate is the most critical component of all the costs that you pay on your personal loan, so
make sure that you grab on the cheapest available option in the market. Some banks calculate
interest on monthly reducing basis while others evaluate it on annual basis. It is advisable to ensure
that the interest rate is calculated on a monthly reducing basis because the moment you pay your
installment, the next month's interest rate is calculated on the reduced amount.
Equated Monthly Installments (EMIs) sometime come out to be a lot more than what you can
afford on a monthly basis. So keep in mind that a lower loan amount will reduce the tenure and also
make the EMI fall in your budget. The best way to find out a reasonable option is to get your EMI
calculated before you buy the loan and then check the repayment tenure. Banks normally limit the
maximum number of years for which a loan is given. Moreover the maximum number of years may
be different for salaried individuals, self-employed individuals and self-employed professionals. At
the same time the minimum and maximum loan amount that can be availed by an individual is also
categorized in the same manner.
Make sure that other costs such as processing charges, foreclosure charges, service charges and
other charges are all worked out before considering the loan. You should look for zero processing
fees and zero-penalty for foreclosure option but if it not available then hunt for the lowest option.
All deals and offers agreed upon should be taken on fine print to avoid future hassles.
Although a personal loan is a friend in need but it should be ensured that it is not availed for a luxury
that becomes a burden in the future. Where by bet on the lowest EMI.

Advantages:
Personal loans do not require you to produce any collateral or security, like other loans.
There is no agent or middleman while obtaining a personal loan.

28

 Banks are always ready to offer this loan.

You may avail personal loans according to your eligibility ranging anywhere from Rs. 15,000 to
Rs. 10, 00,000.
Paper work to get the loan sanctioned is less.
The payment period is up to a maximum of 60 months.
It is better to avail a personal loan than to borrow cash on your credit card in terms of the interest
rates charged on both.
You can use a personal loan for whatever purpose you want.

Disadvantages:
The eligibility criteria are stricter in case of personal loans, since there is no security required and
the paper work is also less.
The bank checks on your capability to repay more than any other loan due to the same reason.
Only an approved category of borrowers are given personal loans because of the higher amount
risk associated with them.
Personal loan rates are high as compared to the interest rates charged on home loans, loans
against property or loans against shares. They could range from 12% to 30%. Even the service
charges and prepayment penalty are very high
So given the pros and cons of personal loans one should be cautious while he goes shopping for
such a loan. He should know what exactly to look for in the market.

Getting the best rates on your personal loans in India:

Personal loans provide vital financial support for any reason within a short period of time. The
convenience offered by personal loans is not without the associated costs. The interest rates,
processing fees, prepayment penalty, administrative charges, document charges, verification
charges and other fees make them a pretty costly way to get instant money.
How do we get the best rates for our personal loans? What is the process by which we can save
money on interest rates, other fees and associated charges on our personal loans? This question
bothers almost everyone who wants or has taken a personal loan. Here are few things, which if
taken into consideration while applying for a personal loan can save a
The basic of getting any loan applies to personal loans as well. For all loans if the bank thinks that
you are a worthy customer who shows promise by your repayment capacity and fulfills other
eligibility requirements completely, they will try to offer the best rates. On the other

29

Hand if they find that something which is required is missing from your profile they might impose
higher terms, which could increase the cost of your personal loan drastically.

30

Benefits and drawbacks of personal loans in India:

Personal loans are a panacea for any urgent cash crunch. A medical emergency, payments for a
laptop, funding a vacation, quick cash for marriage- whatever the need, personal loans are here to
help. Banks in India are more than willing to give a personal loan to the right applicant, but before
jumping on the bandwagon it would be good if a borrower knows the benefits and drawbacks of
taking a personal loan.

31

Benefits of a personal loan in India:

1. No questions asked about the end use of the money:
Banks will simply give the cash and it's up to the borrower, where to use it and how to use it. So, it is
a very convenient monetary help.

2. No collateral, security or guarantor requirements:

Personal loans are solely granted on the basis of an individual's credit-worthiness. Banks do take
into account the income, employment, continuity of business and other factors so as to establish the
fact that the borrower will be able to repay the personal loan with interest in due time. No collateral
or security requirements are put forth by the banks for issuing a personal loan. This saves a lot of
embarrassment and hassles.

3. Total confidentiality:
Since there are no security or collateral requirements, personal loans can remain a secret between
you and the bank. Moreover every bank has some privacy policies, which ensures adequate
confidentiality.

4. Easy repayment:
Banks provide personal loans for 12 to 60 months. Varying from bank to bank, these tenures allow
easy repayment options to the borrower. The borrowed amount along with the interest rate is
calculated for the entire ten has to pay every month. Personal loans also come with a prepayment
clause are of the loan and a EMI is calculated which the borrower

5. Simple documentation:
With minimal eligibility and nil collateral requirements, the personal loans from banks in India require
minimal documentation. A proof of identity, income proof and residence proof will suffice in most
cases.

32

6. Big loan amounts:

Depending on a borrower's repayment capacity, banks in India are willing to give a personal loan
ranging from Rs. 25000 to Rs. 2000000. This makes a personal loan an ideal choice to meet big
budget requirements.

33

Drawbacks of Personal Loans in India:

1. High interest rates:
Personal loans are unsecured loans. In most of the cases banks won't ask for a collateral, security
or guarantee before issuing any personal loan, so it becomes a risky proposition for banks. To offset
this risk, banks provide personal loans at higher interest rates. Secondly, personal loan interest
rates also vary from person to person. How much of a risk banks consider you will determine the
terms and interest rates on your personal loan. A person with good existing loan repayment record,
serving in a reputed public sector, government, MNC, or blue chip company is more likely to get a
low interest rate personal loan than one who deviates from the standard norms. A low risk borrower
can get a personal loan at 16% interest rates while it can climb up 30% or more for others.

2. Not available to everyone:

Banks enforce strict employment, income and residence criteria before issuing any personal loan.
They'll only put their money where they find that the risk involved is minimal. So, a larger
percentage of applicants are rejected in case of personal loans.

34

3. No part prepayments:
Prepayment of personal loan can be done as a whole. Banks in India generally do not allow part
prepayment of any personal loan. Moreover, there is a prepayment penalty of 2-5 percent on the
outstanding amount, which has to be paid to the bank while making any prepayments.

BANKING SERVICES IN INDIA

CHECKIN
G

ACCOUN
T
BROKER

FIXED
DEPOSIT
E

SAVING
ACCOUN
T

BANKING
SERVICE
S

DEBIT
HELP

LIFE
INSURANC
E

CREDIT
LOANS

POLICY
LOAN

35

Indian banking sector analysis

The Indian banking sector is the growing banking industries. Their product quality and their
services in India. This report helps clients to analyze the leading-edge opportunities critical to the
success of the banking Industry in India. Detailed data and analysis helps an investor, financial
service providers, and global banking players navigate the evolving market of banks in India.

These are the some important point regarding the Indian banking sector
analysis are listed below:
The nationalized banks have more branches than any other types of banks in India. Now
there are about 33,627 Branches in India, as on March 2005.0
The Investments of scheduled commercial banks also saw an increase from Rs 8, 04,199
crore in March 2005 to Rs 8,43,081 crore in the same month of 2006
India's retail-banking assets are expected to grow at the rate of 18% a year over the next
four years (2008-2012).
The retail loan to drive the growth of retail banking in future.
The housing loan account for major chunk of retail loan.

36

37

KEY PRODUCT ANALYZED

Deposits

Internet

Retail
Credit

Banking
Key
product
Analyzed

Credit
Cards

Debit
Card

NOTE. This diagram is showing the Banking Key Products such as

Deposits, Retail credit, Credit card, Debit card, Internet banking.

38

Banking in India today:The entire banking sector has undergone a restructuring during recent years as a result of recent
development. The new technologies have added to the competition. The IT revolution has made it
possible to provide easy and flexibility in operation to customer thus making life simpler and easiest.
The rapid strides in information technology have, infect, redefined the role and structure of banking
in India. Further, due to the exposure to global trend s after information explosion lead by more
products from their bank. The financial market has turned in to a buyers market. Banks are also
coping and adapting with time and are trying to become one stopped financial super market.
Private sector Banks have pioneered internet banking, phone banking, anywhere banking,
mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other
services and integrated them into the mainstream banking arena, while the Private Sector Banks
are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also,
following Indias commitment to the WTO agreement in respect of the services sector, foreign
banks, including both new and the existing ones, have been permitted to open up to 12 branches a
year with effect from 1998-99 as against the earlier stipulation of 8 branches .Meanwhile the
economic and corporate sector slowdown has led to an increasing number of banks focusing on the
retail segment. Many of them are also entering the new vistas of Insurance. Banks with their
phenomenal reach and a regular interface with the retail investor are the best placed to enter into
the insurance sector. Banks in India have been allowed to provide fee-based insurance services
without risk participation invest in an insurance company for providing infrastructure and services
support and set up of a separate joint-venture insurance company with risk participation.
The Indian has finally worked up to the competitive dynamics of new Indian market and is
addressing the relevant issues take on the multifarious challenges of globalization. Bank that
employ IT solutions are perceived to be futuristic and proactive players capable of meeting the
multifarious requirement of large customer base. Private Banks have been fact on the uptake and
are reorienting their strategies using the Internet as a medium.
The Indian banking has come from a long from being a sleepy business institution to a highly
proactive and dynamic entity this transformation has been largely brought by the large dose of
liberalization and economic reforms that allowed exploring new business opportunities rather than
generating revenues form conventional streams.
The Indian Industry has confidently hit the growth trial that pick in activity is best reflected in the
banking sector which after all is as candid a mirror of a countrys economy as you could ever find.

39

Most of the Indian financial intermediaries have been keeping pace with the deepening market
economy, riding the opportunity that come along with reforms even as they brace themselves for
increased competition both foreign and private by strengthening prudential norms and leveraging
technology to ensure that growth engine hums smoothly along.
The essential function of a bank is to provide services related to the storing of value and the
extending credit. The evolution of banking dates back to the earliest writing, and continues in the
present where a bank is a financial institution that provides banking and other financial services.
Currently the term bank is generally understood an institution that holds a banking license. Banking
licenses are granted by financial supervision authorities and provide rights to conduct the most
fundamental banking services such as accepting deposits and making loans. There are also
financial institutions that provide certain banking services without meeting the legal definition of a
bank, a so called non-bank. Banks are a subset of the financial services industry.
The word bank is derived from the Italian bank, which is derived form German and means bench.
The terms bankrupt and broke are similarly derived from banker Rota, which refers to an out of
business bank, having its bench physically broken. Money lenders in Northern Italy originally did
business in open areas, or big open rooms, with each lender working from his own bench or table.
Typically, a bank generates profits from transaction fees on financial services or the interest spread
on resources it holds in trust for clients while paying them interest on the asset.

Branches of various banking:

State bank of India branches:

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of
over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits
and loans of all scheduled commercial banks in India.

I.C.I.C.I. bank branches:

ICICI Bank is India's second-largest bank. The Bank has a network of about 573 branches and
extension counters and over 2,000 ATMs. ICICI Bank was originally promoted in 1994 by ICICI
Limited, an Indian financial institution, and was its wholly-owned subsidiary

40

Hdfc bank branches:

Hdfc bank branches was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. The Bank commenced operations as a Scheduled Commercial
Bank in January 1995.
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an
'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as
part of the RBI's liberalization of the Indian Banking Industry in 1994.
Headquartered in Mumbai, HDFC Bank, has a network of over 531 branches spread over 228 cities
across India. All branches are linked on an online real-time basis. Customers in over 120 locations
are serviced through Telephone Banking. The Bank also has a network of about over 1054
networked ATMs across these cities. HDFC Bank's ATM network can be accessed by all domestic
and international Visas / MasterCard Punjab National Bank was established in 1895 at Lahore. PNB
has the distinction of being the first Indian bank to have been started solely with Indian capital. In
1969, Punjab National Bank was nation

Impact of globalization on banking service in india

Business environment of global bank:
Global Bank has undergone a series of substantial changes in the last 10 years, starting with
the deregulation of the U.S. financial services industry in the late 1990s. Seeking to rapidly expand
its portfolio, the bank undertook a series of mergers and acquisitions. Global Bank now has over
200 branches across the western United States, and offers a complete line of integrated financial
services, including:

Lending.

This includes credit cards, consumer loans (such as, auto and line of credit),

mortgage, and home equity.

Investing. This includes certificates of deposit, trust services, brokerage services (including
securities), annuities, individual retirement accounts, and mutual funds.

Financial planning.

This includes comprehensive financial planning services, including

retirement, education, tax, and estate planning, including both future planning and plan
execution services.

41

Technical environment of global bank

In the mid-1980s Global Bank had a single mainframe system, accessed through IBM 3270
terminals in each branch. Due to numerous acquisitions, the fragmentation of technology within its
divisions, and the natural evolution of technology, the technical environment at Global Bank have
changed substantially since then. It now consists of multiple different back-end systems, with a
middleware component to facilitate communication between them. The 3270 terminals have been
replaced with personal computer clients that run multiple applications and perform terminal emulation
to communicate with the back-end systems. During this time, Global Bank also invested heavily in
technology to provide additional Channels for customer communication, including Automated teller
machines , Telephone banking services, Internet banking

Global Bank networking environment

42

2. INTRODUCTION TO THE ORGANIZATION:-

COMPANY PROFILE
ICICI Bank is India's second-largest bank. The Bank has a network of about 573 branches and
extension counters and over 2,000 ATMs. ICICI Bank was originally promoted in 1994 by ICICI
Limited, an Indian financial institution, and was its wholly-owned subsidiary.ICICI was formed in
1955 at the initiative of the World Bank, the Government of India and representatives of Indian
industry. The objective was to create a development financial institution for providing medium-term
and long-term project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution offering only
project finance to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.
In 1999, ICICI become the first Indian company and the first bank or financial institution from nonJapan Asia to be listed on the NYSE. In 2001, ICICI bank acquired Bank of Madura Limited
ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of
clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank
currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and
Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh
and South AfricaToday, 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 and asset management.
ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion (US$ 77 billion) at
December 31, 2008 and profit after tax Rs. 30.14 billion for the nine months ended December 31,
2008. The Bank has a network of 1,438 branches and about 4,644 ATMs in India and presence in
18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialized subsidiaries

43

and affiliates in the areas of investment banking, life and non-life insurance, venture capital and
asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance Centre and representative offices in United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches
in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York
Stock Exchange (NYSE).

ABOUT ICICI BANK:

ICICI was established by the Government of India in the 1960s as a Financial Institution (FI, other
such institutions were IDBI and SIDBI) with the objective to finance large industrial projects. ICICI
was not a bank - it could not take retail deposits; and nor was it required to comply with Indian
banking requirements for liquid reserves. ICICI borrowed funds from many multilateral agencies
(such as the World Bank), often at concessional rates. These funds were deployed in large
corporate loans.
At the time of the reverse merger, there were rumours that ICICI had a large proportion of Non
Performing Loans ("NPA", as they are known in India) on its books - in particular to the steel
industry. Since 2002, there has been a general revival in Indian industry (and metal based industry
in particular). It is widely believed that the All this changed in 1990s. ICICI founded a separate legal
entity - ICICI Bank which undertook normal banking operations - taking deposits, credit cards, car
loans etc. The experiment was so successful that ICICI merged into ICICI Bank ("reverse merger")
in 2002.proportion of NPAs has come down to prudent levels (even if it were high earlier).
ICICI Bank now has the largest market share among all banks in retail or consumer financing. ICICI
Bank is the largest issuer of credit cards in India It was the first bank to offer a wide network of
ATM's and has a large network of ATM's.
ICICI Bank now has the largest market value of all banks in India, and is widely seen as a
sophisticated bank able to take on many global banks in the Indian market.
The Bank is expanding in overseas markets and has the largest international balance sheet among
Indian banks. The international banking business was set up in 2002 to implement a focused
strategy for the overseas market. The Bank now has wholly-owned subsidiaries, branches and

44

representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly
owned subsidiaries in UK, Canada and Russia, offshore banking units in Singapore and Bahrain;
advisory branch in Dubai, branches in Sri Lanka, Hong Kong and Belgium; and rep offices in the
US, China, United Arab Emirates, Bangladesh, South Africa, Indonesia, Thailand and Malaysia. The
bank is targeting the NRI (Non Resident Indian) population for expanding its business.
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 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 finance 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
Ahmadabad 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.

45

FOREWORD:
Liberalization and Globalization have shrunk the world into a global village. Rapidly moving world
economy has intertwined the geographically divided countries into single thread. Opening up of the
economy for the rest of the world would shape our industries and companies by the same economic
forces as else where in the world. Industries and companies thus have to work in a competitive
market place, where there is no guarantee that every business must make money. Dynamic market
condition and global economic slowdown have forced an individual to become more cautious about
investment of each penny saved.
In such time of uncertainty and insecurity, banks come to investors rescue by offering safe and
revenue yielding investment avenues. Modifying their deposit products and developing new and
innovative schemes with advanced services modern banks have there by made banking more
closer and easier in individuals life.
Privatisation waves in last decade of twentieth century have changed the face of baking in service
industry. Plethora of private banks flooded in to the market. ICICI bank one, amongst them, come
up ahead leaving other private banks one, amongst them, come up ahead leaving other private
banks behind by serving e-age-banking of customers. This report unveils the growth story of ICICI
bank, throws light on unknown aspects of banking and would unfolds the hidden facts about the
bank.
This report served as a mean to share our personal experiences while working on this project, which
provided us platform where we were face-to face to practical aspects of theoretical knowledge
gained so far.

46

ICICI BANK - THE UNIVERSAL BANK

Assets
> Rs.1, 25,000
Crores

Second largest
Bank in India

Rated by
Moodys
above
sovereign
rating

Globally held
(ADR, FII
stake)

First Indian
Bank to be
listed on NYSE

47

Icici bank history:

Industrial Credit and Investment Corporation of India) India's largest private sector bank in market
capitalization and second largest overall in terms of assets. ICICI Bank has total assets of about
USD 79 Billion (end-Mar 2007), a network of over 950 branches and offices, about 3500 ATMs, and
24 million customers (as of end July '07). 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 specialised subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. ICICI Bank's equity shares are listed in India on
stock exchanges at Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock
Exchange of India Limited and its ADRs are listed on the New York Stock Exchange (NYSE).
The World Bank, the Government of India and representatives of Indian industry form ICICI
Limited as a development finance institution to provide medium-term and long-term project
financing to Indian businesses in 1955.
1994 ICICI establishes ICICI Banking Corporation as a banking subsidiary.ICICI Banking
Corporation is renamed as 'ICICI Bank Limited'
1999 ICICI becomes the first Indian company and the first bank or financial institution from nonJapan Asia to list on the NYSE.
2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had
acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.
2002 The Boards of Directors of ICICI and ICICI Bank approve the merger of ICICI, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. After
receiving all necessary regulatory approvals, ICICI integrates the group's financing and banking
operations, both wholesale and retail, into a single entity. Also, ICICI Bank bought the Shimla
and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays
Bank.
2002 ICICI establishes representative offices in NY and London.
2003 ICICI opens subsidiaries in Canada and the United Kingdom (UK), and in the UK it
establishes alliance with Lloyds TSB. It also opens an Offshore Banking Unit (OBU) in
Singapore and representative offices in Dubai and Shanghai.
2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country,
India and South Africa.
2005 ICICI acquires Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in
assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI

48

Bank offers a high-interest (5.4% gross) internet savings account to UK customers. Also, ICICI
establishes a branch in Dubai International Financial Centre and in Hong Kong.
2006 ICICI Bank UK opens a branch in Antwerp, in Belgium. ICICI opens representative offices
in Bangkok, Jakarta, and Kuala Lumpur.
2007 ICICI amalgamates Sangli Bank, which is headquartered in Sangli, in Maharashtra State,
and which has 158 branches in Maharashtra and another 31 in Karnataka State. ICICI also
received permission from the government of Qatar to open a branch in Doha.

Business Overview:
ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659 crore at March 31,
2006 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2006 (Rs. 1740 crore in
fiscal 2004). ICICI Bank has a network of about 570 branches and extension counters and over
2200 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 and
asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the
cross border needs of clients and leverage on its domestic banking strengths to offer products
internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and Russia,
branches in Singapore and Bahrain and representative offices in the United States, China, United
Arab Emirates, Bangladesh and South Africa.
ICICI Bank's equity shares are listed in India on 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).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and
Ethics for its directors and employees.
At April 4, 2006 ICICI Bank, with free float market capitalization* of about Rs. 308.00 billion
(US$ 7.00 billion) ranked third amongst all the companies listed on the Indian stock
exchanges.
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

49

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 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 finance 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 Ahmadabad 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. *Free float
holding excludes all promoter holdings, strategic investments and cross holdings among public
sector entities.

50

Vision
To be the preferred brand for total financial and banking solutions for both
corporate and individuals
ICICI Bank is Indias largest private sector bank with a legacy of over 50 years.

We have a wide customer base and a leading global presence.

Our Small & Medium Enterprises Group (SMEG) caters to the SME segment and offers
banking solutions to sole proprietorship, partnership firms and companies. Our extensive
trade related expertise, widespread local network and global alliances enable us to provide
value-added service. SMEs trust us for information, assistance, and advice and customized
banking solutions.

Mission

To identify and support initiatives which are designed to improve the capacity of the poorest of
the poor to participate in the larger economy.

These initiatives must be cost effective, capable of large-scale replication and should have the
potential for both near and long-term impact.

To leverage technology in order to overcome constraints and enhance the effectiveness of

various social initiatives.

51

COMPANY INFORMATION
BOARD OF DIRECTORS
Mr. K.V. Kamath, Managing Director & CEO
Ms. Chanda Kochhar, Deputy Managing Director
Mr. Sridar Iyengar
Mr. Lakshmi N. Mittal
Mr. Narendra Murkumbi
Mr. Anupam Puri
Mr. Vinod Rai
Mr. M.K. Sharma
Mr. P.M. Sinha
Prof. Marti G. Subramanian
Mr. T.S. Vijayan
Mr. V. Prem Watsa

CHAIRMAN
Narayanan vaghul

CFO AND TREASURER

N.S. Kannan

MAJOR COMPITITORS
HSBC Holding
Standard Charted
State Bank Of India
HDFC Bank

52

ICICI GROUP

ICICI Bank
ICICI Home
Finance

ICICI Infotech

ICICI Pru Life

Insurance

Pru - ICICI
AMC

ICICI Venture
Capital

ICICI
Securities
ICICI Lombard

ICICI GROUP TODAY

53

Strategy of the icici bank

1. IDENTIFY AND SUPPORT PROJECTS AND PROGRAMMES THAT ARE WITHIN
AREAS AND,

Have a large- scale and measurable- impact;

Are replicable in a cost effective manner; and

Are time-bound.

ITS FOCUS

2. IDENTIFY AND SUPPORT PILOT PROJECTS WITHIN ITS FOCUS AREAS.

3. CONTRIBUTE TOWARDS IMPROVING THE EFFICACY OF ASSISTED ORGANIZATIONS

THROUGH:
capacity building;

Providing access to research and information; and providing platforms for an effective
exchange of ideas, thoughts and experiences.

Subsidiaries and other group companies

Icici bank has 14 subsidiaries:

ICICI Securities limited.
ICICI brokerage services limited
ICICI securities holdings limited
ICICI securities insurance limited
ICICI prudential life insurance company limited
ICICI Lombard general insurance company limited
ICICI venture funds Management Company limited
ICICI home finance company limited
ICICI bank UK limited
ICICI bank Canada
ICICI international limited.
ICICI trusteeship service limited
ICICI investment Management Company limited
ICICI distribution finance private limited

54

ICICI has the following other group companies with in the meaning of the Securities exchange
board of India (SEBI) guidelines:
Prudential ICICI assets Management Company limited
Prudential ICICI Trust limited

In addition, ICICI is the sponsors or co sponsors of prudential ICICI mutual funds, the assets
management company of which is prudential ICICI assets Management Company limited and the
trustee of which is prudential ICICI trust
ICICI securities fund, the assets management company of which is ICICI investment Management
Company limited. None of its subsidiaries or other group companies has any shares listed on any
stock exchange

OVERVIEW OF THE ICICI BANKS OPERATIONS

ICICI bank offer products and services in the area of commercial banking to corporate and retail
customer, both domestic and international. ICICI bank also under tokens treasury operations and
offer treasury elated products and services to its customers.

COMMERCIAL BANKING PRODUCTS AND SERVICES FOR RETAIL

CUSSTOMER:
ICICI bank has capitalized on the growing retail opportunity in India and it India it has emerged as a
market leader in credit on an incremental basis, with an outstanding retail finance portfolio of Rs
33424 crore at March 31, 2004. The key dimensions of its retail strategy are;
Innovative products
Parity pricing
Customer convenience
Wide distribution
Strong process
Customer focus

55

Cross selling of the entire range of credit and investment products and banking services in the
customer is a critical aspects of ICICI banks retail strategy .ICICI Bank offers a wide range of
Varity of consumers credit products such as.
Home loans
Automobile loan
Commercial vehicle loan
Personal loans
ICICI Bank commercial banking operation for retail customer also consists of raising deposits for
retail customer it offer retail liability products in form of variety of unsecured redeemable bond.

GENERAL
Retail lending Activities
Home Finance
Automobiles Finance

COMMERICIAL BUSINESS
Personal loans
Credit cards
Dealer financing
Retail Deposites
In additions to conventional deposit products ICICI Bank offers a variety of SPECIAL VALUE
ADDED PRODUCTS AND SERVICES.

Such as special products for different categories of

customer depending upon their age and occupation, which seek to cater to their ICICI Bank, offer
different liability products to various categories of customer depending on their age group such as;

56

PRODUCTS AND SERVICES OFFERED BY THE ICICI BANK

INVESTMENT
SERVICES

LIABILITIES
PRODUCTS

Products
&
Services

ASSET
PRODUCTS

57

58

LIABILITY PRODUCTS
Salary Account
Saving Account
Auto Invest Account
Welcome kit
Senior Citizen Services
Fixed Deposits
Term Deposits

ASSET PRODUCTS
Credit Cards
Home Loans
Personal loan
Two wheeler loan

INVESTMENT SERVICES
ICICI Direct .Com
Demat Account
Mutual Fund
Insurance

59

Loan products of ICICI Bank

Bank Home loans provide not just the most competitive interest rates & best level of service, but
also products designed to cater to the specific needs of consumer. New products / New features in
existing products are introduced based on customer feedback. Choose the ICICI Bank Home Loan
that suits your needs

Best Deals on Home Loan for You

We, at ICICI Bank Home Loans, offer unbeatable benefits to ensure that you get the best deal
without any hassles.
As one of the leading home loan provider, ICICI Bank understands how special building a new
home is for you and our Home Loan help you lay the foundation for your dream home.
ICICI offers you the most convenient home loan plans to suit your needs. With so many attractive
features in every type of home loan we offer, creating the home you always wanted is no longer a
distant dream. Some of our key benefits are:

Guidance through out the process

Home loan amounts suited to your needs

Home Loan tenure upto 20 years

Simplified Documentation

Doorstep Service

Attractive interest rates

Sanction approval without having selected a property.

Free Personal Accident Insurance (Terms & Conditions)

Insurance options for your home loan at attractive premium

No matter what the requirement, we have an appropriate plan for you.Get the best deals, and
finance your perfect home, only from ICICI Bank.

60

Home Loans
Home Loans are provided to individuals to own a residential property.
ICICI Bank offers easy home loans for

First Purchase in ready construction

Under construction property

Purchase in re-sale

Self construction - extension of existing living space

The following are the features of ICICI Bank Home Loans

Home loan amount can be chosen to suit specific needs.

One can avail of a loan up to 80% of Cost of Property.

Conveniently pay off the loan over a period of up to 25 years.

It can be availed at the Floating rate of Interest or at the fixed rate of Interest or at the
combination of both Fixed & Floating rates.

Faster repayment as principal repayment in on monthly rest.

Eligibility Norms for Home Loans.

Home Loans can be availed by Resident Indian whether salaried or Self-Employed and also by
Non- Resident Indian who are Salaried. For resident Indians the following are the eligibility norms

You must be at least 21 years of age when the loan is sanctioned.

The loan must terminate before or when you turn 65 years of age or before retirement,
whichever is earlier.

You must be employed or self-employed with a regular source of income.

61

Types of home loans: Housing loans offered by banks are of different types:

Home Purchase Loans

Home Construction Loans

Home Improvement Loans

Home Extension Loans

Home Conversion Loans

Land Purchase Loans

Stamp Duty Loans

Bridge Loans

Balance Transfer Loans

Refinance Loans

Loans to NRIs

Home purchase loans:This is the basic home loan for the purchase of a new home. If you want to buy a flat in
some society or some already built house, banks and HFCs sanction you home purchase loans for
this process.
Home construction loans:This loan is available for the construction of a new home on a said property. The documents
that are required in such a case are slightly different from the ones you submit for a normal Housing
Loan. If you have purchased this plot within a period of one year before you started construction of
your house, most HFCs will include the land cost as a component, to value the total cost of the
property. In cases where the period from the date of purchase of land to the date of application has
exceeded a year, the land cost will not be included in the total cost of property while calculating
eligibility.
Home improvement loans:These loans are given for implementing repair works and renovations in a home that has
already been purchased, for external works like structural repairs, waterproofing or internal work like
tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility of a
home improvement loan, after obtaining the requisite approvals from the relevant building authority.
the following are coming under the home improvement loans:

62

External repairs

Tiling and flooring

Internal and external painting

Plumbing and electrical work

Waterproofing and roofing

Grills and aluminum windows

Waterproofing on terrace

Construction of underground/overhead water tank

Paving of compound wall (with stone/tile/etc.)

Borewell.

Home extension loans:An extension loan is one which helps you to meet the expenses of any alteration to the
existing building like extension/ modification of an existing home; for example addition of an extra
room etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite
approvals from the relevant municipal corporation.
Home conversion loans:This is available for those who have financed the present home with a home loan and wish
to purchase and move to another home for which some extra funds are required. Through a home
conversion loan, the existing loan is transferred to the new home including the extra amount
required, eliminating the need for pre-payment of the previous loan.
Land purchase loans:This loan is available for purchase of land for both home construction or investment
purposes.
Stamp duty loans:This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase
of property.
Bridge loans:-

63

Bridge Loans are designed for people who wish to sell the existing home and purchase
another. The bridge loan helps finance the new home, until a buyer is found for the old home.

64

Balance- transfer loans:Balance Transfer is the transfer of the balance of an existing home loan that you availed at a
higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate
of interest.
Refinance loans:Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI
you have taken drops over the years and you stand to lose. In such cases you may opt to swap
your loan. This could be done from either the same HFI or another HFI at the current rates of
interest, which is lower.
NRI home loans:This is tailored for the requirements of Non-Resident Indians who wish to build or buy a
home or property in India. The HFCs offer attractive housing finance plans for NRI investors with
suitable repayment options.
On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs 1 crore, based
on the repayment capacity, previous credit history and the cost of the property. The bank may
provide a maximum of 85% of the cost of the property or the cost of construction as applicable and
75% of the cost of land in case of purchase of land. The repayment capacity is calculated taking into
account factors such as:

Age

Income/Salary

Qualifications

Dependant/(s)

Assets/Liabilities

Credit History

Stability / continuity of your employment/business

Income of co-applicant/(s)

Taking home loans these days has become simpler. With the RBI regularly bring down interest
rates; taking home loans have become extremely easy. Housing loans which were 16.5% to 18% a
few years ago fell by 11.5% to 13%. With interest rates going down, people increasingly number
apply to take these loans. Some of the leading banks offering home loans in India, including ICICI
Bank, IDBI Bank, HDFC Bank State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered
Bank and Axis Bank.

65

Types of icici home loan:

1. Land Loans:
Land loans give an opportunity for individual customer to purchase a residential plot
of land to do self- construction. Thus, customer can invest now in a plot of land &
build in future. The Land loan can be financed only within municipal limits of HUB
locations or in case of direct allotment outside municipal limits by DA.
Land Loan can be availed by Resident Indian whether Salaried or Self-Employed and
also by Non- Resident Indian.

2. Home Improvement Loans:

Home Improvement Loan is offered to facilitate improvement of a self-owned dwelling unit to
existing or new customer. HIL considers a range of facilities internal or external to the structure
without increase in the living pace. Thus, a customer can add or improve facilities to his dwelling
unit

with

loan

at

Home

Equity

Loan

rate

of

interest

Home Improvement Loan can be availed by Resident Indian whether salaried or Self-Employed.

3. Office Premises Loans:

Office Premises Loan can be used for purchase, construction, extension & also for improvement (at the
time of acquisition of office premises. It creates an opportunity to extend loans to self-employed individuals to
house their profession or business giving a permanent address for generating steady flow of income. The
product can also include the estimate of renovation at the time of purchase of the property. This loan is
especially

meant

for

self-employed

professionals

like

Doctors,

Architects

etc.

Home Loans can be availed by Resident Indian who are Self-Employed and also by Non- Resident Indian
who are Salaried.

EMI under Construction:

EMI under Construction is offered for structuring a home loan to enable individuals to commence his
EMI in a partly disbursed under construction project. Commencement of EMI ensures re-payment
towards principal amount leading to savings in interest and faster repayment of the loan. The EMI
paid is as per the sanctioned loan amount and remains constant during the tenure of the loan. The
tenure

of

the

loan

keeps

moving

up

with

66

additional

amount

being

disbursed.

EMI under Construction can be availed by Resident Indian whether Salaried or Self-Employed and
also by Non- Resident Indian.

Balance Transfer:
Balance Transfer is a facility offering the customer a choice to transfer the outstanding balance of
the loan availed for better terms & conditions. Balance Transfer helps to move from higher rate of
interest to lower rate of interest or increase in loan component as Top up. BT is possible only from
loans taken from HFCs approved by NHB for refinance, Banks or employer Loans taken from
Central or State Government.

4. Top Up Loan:
Top up Loan can be availed time and again for various personal requirement based on value of the
property. It offers the customer additional funds against the security of the same property. To avail
Top Up loan, the vintage of at least six months is required for the loan availed. The basic eligibility
emerges with good repayment track record. The end use letter is essential to be collected.
The End use of Top Up Loans can be

Furnishing of home

Consumer durable

Childs education

Daughters marriage

Family holiday

Vehicle

Any other personal requirement of the borrower provided it is not speculative or illegal in nature.
This product is applicable to fully disbursed cases with no post- disbursement document pending.
This product is priced more than base home loan rates but lower than any personal loan rates. Top Up
Loan can be availed by Resident Indian whether Salaried or Self-Employed.

5. Loan on Phone:
Loan On Phone is a pre-sanctioned loan. Its is based on the existing relationship of the customer
with ICICI Bank. The biggest advantage is that the customer can get the loan with minimum
documentation. Good banking transactions and repayment records becomes a strength for availing
loans in future.
Loan on Phone can be availed by Resident Indian whether salaried or Self-Employed

67

6. Home Equity Loan:

Loan against property gives the owner of residential or commercial premises to leverage on the
value of the property. It offers the ability to unlock funds gives the advantage of looking at the asset
as a source of security bringing liquidity and retaining ownership. In case of HEL the property should
be self occupied by one of income considered applicants. The security of the property ensures
competitive rate of interest. The interest component of the EMI paid by SEP / SENP can be booked
as expenses in their P & L
Home Equity Loans are provided for many personal requirements of the customer viz.

Marriage

Child Education

Business

Purchase of Property (Where mortgage is not possible)

Improvement of Property

Medical Treatment

Home Equity Loans can be availed by Resident Indian who are Self-Employed and also by NonResident Indian who are Salaried.

Property Overdraft:
The overdraft facility from ICICI Bank Home Loans allows you to borrow money against your selfoccupied property. The overdraft facility comes with a multi-city cheque book and phone banking
facility. The customer is charged interest only for the amount that he withdraws from the account.
Whenever he deposits funds into the account, they go towards reducing the outstanding balance in
the account.
It offers the following benefits:

Generating capital against property (R) or ( C) for business or personal use

Convenience of Pre - Sanctioned limit and draw as you need

Pay interest on the amount drawn and for days utilized

Convenience of depositing & withdrawing like any Current Account

Benefit of Cheque Book & Phone banking

Fast Processing and door-step service

Multi-city cheque book and phone banking facility

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Lease Rental Discounting:

Lease Rental Discounting helps to raise funds against the future expected rentals of self owned
commercial property. The property should be occupied by the Lessee. Similar to Home Equity
Loans, LRD can be provided for any personal requirements of the customer viz.

Marriage

Child Education

Business

Purchase of Property (Where mortgage is not possible)

Improvement of Property

Medical Treatment

Factors affecting your Loan Amount:

With ICICI Bank Home Loans, you can get a home loan suited to your needs. 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 cost of construction as applicable. A number of factors are taken into account
when assessing your repayment capacity. Repayment capacity takes into consideration factors such
as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability,
continuity of occupation and savings history.
However, there are ways by which you can enhance your eligibility.
If your spouse is earning, put him/her as a co-applicant. The additional income shall be included to
enhance your loan amount. In case of any co-owners they must necessarily be co-applicants.
The final amount to be sanctioned will depend on your repayment capacity. However, what you
ultimately are entitled to will have to conform within the limits fixed for each loan.
Also, when the company looks at the total cost, registration charges, transfer charges and stamp
duty costs are included.

Repayment Terms of your Home Loan

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

69

What is the repayment tenure?

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 25 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.

What if a 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 pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after
which the EMIs would commence.

70

Application Process of your Home Loan

Your search for the perfect home loan ends here at ICICI Bank Home Loans, even before your
have found the perfect property.
The moment you decide to buy a home, you can put in your application for a home loan. Yes, you
can apply for a home loan even before you have selected the property.
The property need not even be in the same city where you are residing. The only condition being
that ICICI Bank has Home Loans operations in both the cities.
Should there be a change in your financial status or plans, you can withdraw your sanction within 6
months of approval of your home loan.
However, we are always ready to assist our customers in the event of legitimate problems. And, we
might reconsider this if we find that there are satisfactory reasons for the delay.
And, neither would we charge you extra for this delay.
If it is refinancing you are interested in, it is possible within 6 months from the date of purchase of
property.

Changes in Floating Reference Rate (FRR)

Interest rate on ICICI Bank Home Loans is linked to the ICICI Bank Floating Reference Rate
(FRR/PLR). ICICI Bank FRR has been reduced by 50 basis points (i.e. 0.50%) with effect from April
22, 2009. Thus the FRR has been reduced from 13.75% to 13.25%. ICICI Bank PLR has also been
reduced by 50 basis points (i.e. 0.50%) with effect from April 22, 2009. Thus the PLR has changed
from15.75% to 15.25%.
Accordingly, the Home Loan floating rate of interest has been reduced by 0.5% (50 basis points).
Interest paid on the home loan:
As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 towards the total
interest payable on the home loan towards purchase / construction of house property can be
claimed while computing the income from house property. (The deduction stands reduced to Rs

71

30,000 in case of loans taken prior to March 1, 1999). The interest payable for the pre-acquisition or
pre-construction period would be deductible in five equal annual installments commencing from the
year in which the house has been acquired or constructed. This deduction is allowed only for self occupied property.
The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction
of house property is eligible for deduction under section 24(b).
Principal repayment of the home loan:
As per Section 80C r of the Income Tax Act, 1961 the principal repayment up to Rs. 100,000 on your
home loan for purchase or construction of a residential house property will be allowed as a
deduction from the gross total income subject to fulfillment of prescribed conditions. Let us consider
a hypothetical example.
Youre taxable Income: Rs 5, 50,000
Principal repayment for the same year: Rs 1, 10,000 and Interest payable for the year: Rs 1, 60,000
Total Deductions allowed: Rs 2,50,000 (Rs 1,50,000 towards interest payable & Rs 1,00,000 for
principal repayment of the loan)
Thus, your taxable income will reduce to Rs 3, 00,000 (Rs 5, 50,000 - Rs 2, 50,000).
ICICI Bank home loan does a complete Legal and Technical verification of the property that you
intend

to

buy.

This

ensures

the

safety

of

the

purchase

for

the

customer

Legal Verification
The customer would need to submit the original property documents as per the indicative list given
by ICICI Bank along with the letter from the registrar for pending documents if any and NOC from
the landowner. The copies of the same are forwarded to an empanelled lawyer who has to peruse
the document, provide a legal opinion and a title clearance certificate to ensure a clear and
marketable legal title.
Technical Appraisal
This appraisal serves the following purpose

It confirms that the property really exists

It is an assess of the available infrastructure

72

It checks the quality and speed of construction

73

Personal Loans
Thinking of renovating your house? Yearning to buy a new Laptop? Need financial assistance with
marriage related expenses or your child higher education? An ICICI Bank Personal Loan is your
One-stop-shop for all your financial needs to fulfill any of your desires.
Key Benefits of ICICI Bank Personal Loan:
Loan up to 15 lacs
No security/guarantor required
Faster Processing
Minimum Documentation
Attractive Interest Rates
12-60 Months repayment options
ICICI Personal Loans is provided only to an existing ICICI Bank customer:
With the "Loan on Phone" facility, it is possible to secure a loan even without having to visit your
bank branch. If you have been an ICICI Bank customer for the past 9 months, you might have a preapproved loan offer waiting for you. All you need to do is:

Login to icicibank.com using your user ID and password and know your offer

Speak to our phone banking officers and quote your relationship number. For phone banking
numbers.

Walk into any ICICI Bank branch

74

Eligibility Terms for your Personal Loan

You can avail of an ICICI Bank Personal Loan if you are an existing ICICI Bank customer and if you
meet the following criteria:

Criteria

Salaried

Age

25 yrs. - 58 yrs.

Net Salary Net annual income - Rs. 1,44,000 p.a

Eligibility

Employees of Public Ltd. companies, Private Ltd. companies,

Government companies or MNCs

Years in
current
1 Year
job /
profession
Years in
current
residence

1 Year

Documents required for your Personal Loan:

ICICI Bank provides you with personal finance to fulfill any of your desires with minimum
documentation:
Documents ( Pre Sanction)

Salaried

Latest 3 months Bank Statement (where salary/income is

credited)

Yes

3 Latest salary slips

Yes

Proof of Continuity current job (Form 16 / Company

appointment letter )

Yes

Proof of Identity (any one)Passport / Driving License /

Voters ID / PAN card / Photo Credit Card / Employee ID
card

Yes

Proof of Residence (any one) Ration Card / Utility bill / LIC

Policy Receipt

Yes

Proof of Qualification Highest Degree (for Professionals /

Govt employees)

Yes

75

Service Charges for your Personal Loan

Enclosed find the service charges for an ICICI Bank Personal Loan

Prepayment of the loan is possible after 180 days of availing the loan.
Foreclosure charges as applicable would be levied on the outstanding loan.
Part pre-payment is not allowed.
No other fees or commitment charges are levied.

Description of Charges

Personal Loans

Loan Processing Charges /

2% or 3 % depending on the location of loan amount

Origination Charges
Lower of the two amounts given below. 1. 5% of principal
Prepayment Charges

outstanding or 2. Interest outstanding for unexpired period of

the loan.

Charges for late payment

2% per month

Cheque Swap Charges

Rs. 500/- per transaction

Cheque bounce charges

Rs. 200/- per bounce

Statement of Account Charges Rs. 200/- per statement

Foreclosure Statement
Charges
Duplicate NOC Charges

Rs. 100/- per statement

Rs. 500/- per NOC

Duplicate Repayment /
Amortization Schedule

Rs. 200/- per schedule

Charges

Notes:

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1. Service Tax and other govt. taxes, levies, etc. applicable as per prevailing rate will be
charged over and above these charges at the discretion of ICICI Bank.
2. The charges or fees given in above table are subject to change and the one recorded in
agreement will be binding over this site.

Application Process
You have the option of applying online for a personal loan.
An ICICI Bank Ltd. representative will contact you to service your loan requirements.
On receiving the completed application form with the requisite documents, we shall process
your loan within 3 working days.
Please do not send any payment via cash/ cheque with your application. Kindly ensure that
all Post Dated Cheques are Drawn in favor of "ICICI Bank Limited", duly filled in all respects
and endorsed "Account Payee only".

77

Attraction of the icici bank

Convenience banking
8 TO 8 BANKING AT BRANCHES
Anywhere banking
Fast and efficient account opening process

Large AT networking

Advantage employees
Welcome kit
Value added saving
Free anywhere banking
Debit card
Free internet banking
Online fund transfer
Mobile banking
Phone baking
Free utility Bill payments
Overdraft facility
SMS alert
Free bank statement
Access to non ICICI Bank ATM

Universal banking
Loan and credit card
Investment and services

Employee reimbursement account

78

79

Sbi bank profile:Spreading its arms around the world, the SBIs International Banking Group delivers the full range of
cross-border finance solutions through its four wings the Domestic division, the Foreign Offices
division, the Foreign Department and the International Services division.
The Domestic wing provides services like merchant banking, shipping finance and project export
finance. The Foreign Offices wing offers the entire range of international trade and industrial finance
products, while the Kolkatta-based Foreign Department undertakes treasury and currency
operations.
The International Services division renders specialized services like correspondent banking, global
link services and country and bank risk exposure monitoring. Being Indias largest and most trusted
commercial bank, the SBI offers you a network of relationships unmatched in strength and span by
any other Indian financial entity.
The bank has a network of 66 offices/branches in 29 countries spanning all time zones. The SBIs
international presence is supplemented by a group of Overseas and NRI branches in India and
correspondent links with over 522 leading banks of the world. SBIs offshore joint ventures and
subsidiaries enhance its global stature.
The bank has carved a niche for itself in Euroland with branches strategically located in Paris,
Frankfurt and Antwerp. Indian banks and corporate are able to avail single-window Euro services
from SBI Frankfurt.
These strengths are reinforced by a dedicated and highly skilled team of professionals deployed by
the bank in each specific segment. The Bank is actively involved since 1973 in non-profit activity called
Community Services Banking.
All our branches and administrative offices throughout the country sponsor and participate in large number of
welfare activities and social causes. Our business is more than banking because we touch the lives of people
anywhere in many ways.

Investor relations:
State Bank of India, the countrys largest commercial Bank in terms of profits, assets, deposits,
branches and employees, welcomes you to its Investors Relations Section. SBI, with its heritage
dating back to the year 1806, strives to continuously provide latest and upto date information on its
financial performance. It is our endeavor to walk on the path of transparency and allow complete
access to all the stakeholders enabling total awareness about the Bank. The Bank communicates
with the stakeholders through a variety of channels, such as through e-mail, website, conference
call, one-on-one meeting, analysts meet and attendance at Investor Conference throughout the
world.

80

Please find below Banks financial results, analysis of performance and other highlights which will
be of interest to Investors, Fund Managers and Analysts. SBI has always been fundamentally strong
in its core business which is mirrored in its results year after year.

Evolution of sbi:

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the
establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank
received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique
institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal.
The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of
Bengal. These three banks remained at the apex of modern banking in India till their amalgamation
as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result
of the compulsions of imperial finance or by the felt needs of local European commerce and were
not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was,
however, shaped by ideas culled from similar developments in Europe and England, and was
influenced by changes occurring in the structure of both the local trading environment and those in
the relations of the Indian economy to the economy of Europe and the global economic framework
The three banks were governed by royal charters, which were revised from time to time. Each
charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned
by the provincial government. The members of the board of directors, which managed the affairs of
each bank, were mostly proprietary directors representing the large European managing agency
houses in India. The rest were government nominees, invariably civil servants, one of whom was
elected as the president of the board.
Business
The business of the banks was initially confined to discounting of bills of exchange or other
negotiable private securities, keeping cash accounts and receiving deposits and issuing and
circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation
confined to three months only. The security for such loans was public securities, commonly called
Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no
interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo,
salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such
finance by way of cash credits gained momentum only from the third decade of the nineteenth
century. All commodities, including tea, sugar and jute, which began to be financed later, were either

81

pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in
favor of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks
or on the mortgage of houses, land or other real property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business of
discounts on private as well as salary bills was almost the exclusive monopoly of individuals
Europeans and their partnership firms. But the main function of the three banks, as far as the
government was concerned, was to help the latter raise loans from time to time and also provide a
degree of stability to the prices of government securities.

History of state bank of India:

The origin of the State Bank of India goes back to the first decade of the nineteenth century with
the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank
received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique
institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal.
The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of
Bengal. These three banks remained at the apex of modern banking in India till their amalgamation
as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result
of the compulsions of imperial finance or by the felt needs of local European commerce and were
not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was,
however, shaped by ideas culled from similar developments in Europe and England, and was
influenced by changes occurring in the structure of both the local trading environment and those in
the relations of the Indian economy to the economy of Europe and the global economic framework.

82

Bank of Bengal H.O.

Establishment:
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in
India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to
issue notes, which would be accepted for payment of public revenues within a restricted
geographical area. This right of note issue was very valuable not only for the Bank of Bengal but
also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the
banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit
banking was also an innovation because the practice of accepting money for safekeeping (and in
some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as
a general habit in most parts of India. But, for a long time, and especially up to the time that the
three presidency banks had a right of note issue, bank notes and government balances made up
the bulk of the investible resources of the banks.
The three banks were governed by royal charters, which were revised from time to time. Each
charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned
by the provincial government. The members of the board of directors, which managed the affairs of
each bank, were mostly proprietary directors representing the large European managing agency
houses in India. The rest were government nominees, invariably civil servants, one of whom was
elected as the president of the board.

83

Business:
The business of the banks was initially confined to discounting of bills of exchange or other
negotiable private securities, keeping cash accounts and receiving deposits and issuing and
circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation
confined to three months only. The security for such loans was public securities, commonly called
Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no
interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo,
salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such
finance by way of cash credits gained momentum only from the third decade of the nineteenth
century. All commodities, including tea, sugar and jute, which began to be financed later, were either
pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in
favor of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks
or on the mortgage of houses, land or other real property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business of
discounts on private as well as salary bills was almost the exclusive monopoly of individuals
Europeans and their partnership firms. But the main function of the three banks, as far as the
government was concerned, was to help the latter raise loans from time to time and also provide a
degree of stability to the prices of government securities.

Major change in the conditions:

A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras
occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of
the presidency banks was abolished and the Government of India assumed from 1 March 1862 the
sole power of issuing paper currency within British India. The task of management and circulation of
the new currency notes was conferred on the presidency banks and the Government undertook to
transfer the Treasury balances to the banks at places where the banks would open branches. None
of the three banks had till then any branches (except the sole attempt and that too a short-lived one
by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority.
But as soon as the three presidency bands were assured of the free use of government Treasury
balances at places where they would open branches, they embarked on branch expansion at a
rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks
covered most of the major parts and many of the inland trade centres in India. While the Bank of
Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the
Banks of Bombay and Madras had fifteen each.

84

Presidency Banks Act:

The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency
banks under a common statute with similar restrictions on business. The proprietary connection of
the Government was, however, terminated, though the banks continued to hold charge of the public
debt offices in the three presidency towns, and the custody of a part of the government balances.
The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into
which sums above the specified minimum balances promised to the presidency banks at only their
head offices were to be lodged. The Government could lend to the presidency banks from such
Reserve Treasuries but the latter could look upon them more as a favor than as a right.
The decision of the Government to keep the surplus balances in Reserve Treasuries outside the
normal control of the presidency banks and the connected decision not to guarantee minimum
government balances at new places where branches were to be opened effectively checked the
growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell
sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of
that bank were mainly derived from trade dispersed among a number of port towns and inland
centers of the presidency.
India witnessed rapid commercialization in the last quarter of the nineteenth century as its railway
network expanded to cover all the major regions of the country. New irrigation networks in Madras,
Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a
portion of which found its way into the foreign markets. Tea and coffee plantations transformed large
areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par
excellence. All these resulted in the expansion of India's international trade more than six-fold. The
three presidency banks were both beneficiaries and promoters of this commercialization process as
they became involved in the financing of practically every trading, manufacturing and mining activity
in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large
modern manufacturing industries, the Bank of Madras went into the financing of large modern
manufacturing industries; the Bank of Madras went into the financing of small-scale industries in a
way which had no parallel elsewhere. But the three banks were rigorously excluded from any
business involving foreign exchange. Not only was such business considered risky for these banks,
which held government deposits, it was also feared that these banks enjoying government
patronage would offer unfair competition to the exchange banks which had by then arrived in India.
This exclusion continued till the creation of the Reserve Bank of India in 1935.

85

First Five Year Plan:

In 1951, when the First Five Year Plan was launched, the development of rural India was given the
highest priority. The commercial banks of the country including the Imperial Bank of India had till
then confined their operations to the urban sector and were not equipped to respond to the
emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the
economy in general and the rural sector in particular, the All India Rural Credit Survey Committee
recommended the creation of a state-partnered and state-sponsored bank by taking over the
Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An
act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted
on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed
under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was
passed in 1959, enabling the State Bank of India to take over eight former State-associated banks
as its subsidiaries (later named Associates).
The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices
comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank.
The concept of banking as mere repositories of the community's savings and lenders to creditworthy
parties was soon to give way to the concept of purposeful banking subserving the growing and
diversified financial needs of planned economic development. The State Bank of India was destined
to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of
national development.

RBI survey lowers GDP growth forecast to 5.7%

Personal loans grew at just 8.5 per cent in the last one year compared with 13 per cent growth
registered in the previous year.

Our Bureau
Mumbai, April 20 The median forecast of real GDP growth, according to the Reserve Bank of Indias
latest professional forecasters survey, for 2009-2010 has been revised downwards to 5.7 per cent
from 6 per cent.

86

The central bank, in its report on the Macroeconomic and Monetary Developments in 2008-2009,
said that the various surveys of economic activity point towards prevalence of less-than-optimistic
sentiment for the outlook of the economy in the coming months.
Between the sixth round survey conducted in December 2008 and seventh round survey in March
2009, median forecast of real GDP growth for 2008-09 was revised downwards to 6.6 per cent from
6.8 per cent.
According to the report, for the April-June 2009 quarter, the overall net sentiment for all industries,
except textiles, is positive. Moderate growth is expected across the various companies in the first
quarter. However, the expectations are less optimistic for smaller companies compared with their
bigger counterparts.

Inflation:
On the inflation front, the report underscored the fact that unlike the wholesale price index based
inflation, consumer price index based inflation in India remains high, with recent evidence of very
slight moderation. The transmission process of lower inflation at the wholesale level to inflation at
the retail level has emerged as an important issue in the conduct of RBIs monetary policy, the
report said.
The WPI-based inflation eased to 0.18 per cent for the week ended April 4 from 0.26 per cent for the
previous week. Various measures of consumer price inflation, though started declining, still
remained high in the range of 9.6-10.8 per cent during January/ February 2009.
The higher level of consumer price inflation (CPI) as compared with WPI inflation , in recent months,
could be attributed to higher prices of food articles, which have higher weight in CPI.
Scheduled commercial banks (SCBs) investment in statutory liquidity ratio (SLR) securities as a per
cent of their net demand and time liabilities (NDTL) increased at end-March 2009 to 28.1 per cent,
from 27.8 per cent a year ago.
However, adjusted for Liquidity Adjustment Facility collateral securities on an outstanding basis,
SCBs holding of SLR securities amounted to Rs 11,10,156 crore or 26.7 per cent of NDTL at endMarch 2009 implying an excess of Rs 1,13,817 crore or 2.7 per cent of NDTL over the prescribed
SLR of 24 per cent of NDTL.

87

The lower expansion in credit relative to the expansion in deposits resulted in a decline in the
incremental credit-deposit ratio (y-o-y) of SCBs to 64.4 per cent at March-end 2009 from 73.6 per
cent a year ago.

88

Personal loans:
Our Chennai Bureau reports: The latest confirmation of a slowdown in the personal loans segment
comes from the Statement on Macroeconomic and Monetary Developments put out by the Reserve
Bank of India. Personal loans (inclusive of housing, credit cards, educational loans, consumer
durable loans etc.) at Rs 5, 55,392 crore account for about 22 per cent of the total loans outstanding
as of end February 2009. Personal loans grew at just 8.5 per cent in the last one year compared
with 13 per cent growth registered in the previous year.
Loans for housing, which constitute about half the personal loan segment, were at Rs 272,376
crore. They grew at just 7.5 per cent last year compared with 13 per cent in the previous year (200708) and 26 per cent in the year 2006-07. Credit card outstanding also grew at a mere 8 per cent
compared to about 51 per cent in 2007-08 and 46 per cent in 2006-07.
Despite oft-repeated complaints that the real estate sector was credit starved, statistics provided by
the RBI show that real-estate loans grew 61.4 per cent last year to Rs 9,0765 crore compared with
a 27 per cent growth in 2007-08.
Similarly, loans to NBFCs also grew by 42 per cent during the last year to Rs 90,521 crore.

Loan product of state bank of india

State Bank of India Home Loan:
Introduction:
There are number of finance companies offering cheap home loans. State Bank Of India is one
such government bank, which understands your needs and helps you to purchase the homes of
your dreams. A lot of hard work goes into building a home, owning it and then decorating it. State
Bank Of India understands your efforts and for that matter they have designed their Home Loan
schemes in a way to make the process hassle free and full transparency has been offered. The
Unique Features of their Home Loan Schemes are no cap on maximum loan amount for purchase
or construction of house or flat. They give an option to club the income of your partner and children
to compute eligible loan amount. You can repay the loan up to 70 years of age. The home loan
schemes also have free personal accident insurance cover. They charge no administration fee or
application fee. Provision for downward refixation of EMI in respect of floating rate borrowers who

89

avail Housing Loans of Rs.5 lacs and above, to avail the benefit of downward revision of interest
rate by 1% or more.
They provide Home Loans for various purposes such as: for the purchase or construction of a new
house or flat, purchase of an already built house or flat and if you want to buy a plot of land for
construction of house. Finance for home is also provided if you want to undertake extension, repair,
renovation, and alteration of an existing house or flat, if you wish to buy furniture, furnishings and
other commodities for your home.
You are Eligible for taking Home Loan if you have a minimum age of 21 years as on the date on
which your loan is sanctioned. They charge a processing fee that comes to 0.50 % of loan amount
including service tax.
Their Interest Rate amount is of two types- Floating Interest Rate and Fixed Interest Rate. Floating
Interest Rate is linked to State Bank Advance Rate- SBAR. The interest rate under Floating Interest
Rate is 10.75% and on Fixed Interest Rate it is 9.50% upto first five years then 9.75% above five
years and upto ten years.
The most important aspect is that you need to submit duly filled documents as mentioned in their
schemes. You need to complete application form, passport size photograph, a proof of identity, proof
of Residence, proof of business address and all documents relating to sale deed or agreement
deed, tax paid receipt, statement of bank account etc.
State Bank of India has four types of Home Loan schemes under which they provide finance:

'SBI-Flexi' Home Loans

'SBI-Maxgain' Home Loans

'SBI-Realty' Home Loans

'SBI-Freedom' Home Loans

they have a package for exclusive benefits like complimentary international ATM- Debit card. They
provide complimentary SBI Classic and International Credit Card with waiver of joining and first
year's fees. State Bank Of India provides an option for E- Banking. There is a confessional package
for car home loan borrowers.
SBI has been awarded The Most Preferred Home Loan Provider by AWAAZ Consumer Awards.
SBI home loans give concession on interest rates on GREEN HOMES under its environment
protection program. SBI has different options for loan borrowers such as SBI Flexi home loans
provides borrowers a one time irrevocable option to choose one of the three combinations of fixed
and floating interest rates and also to choose the order in which the fixed and floating rate will be
availed. The other is SBI- Maxgain home loans - earn optimal yield on savings and minimize

90

interest burden on home loans, with no extra cost. SBI Realty Home loans - purchase a plot of
land for house construction. SBI Freedom Home loans who want to invest in a property without
mortgaging the same. SBI offers SBI Optima additional home loans and SBI Homeline special
personal loans for existing home loan borrowers who have a repayment record of 3 years, etc.

SBI Home Loan:

Features:
Some of the unique features of SBI home loans are:

Provision for on the spot "In principle" approval.

Loan sanctioned within 6 days of submission of required documents.

Option to avail Home Loan as a Term Loan or as an Overdraft facility to save on interest and
maximise gains (see SBI MaxGain in the following sections)

Option to club income of your spouse and children to compute eligible loan amount

Provision to club depreciation, expected rent accruals from property proposed to compute
eligible loan amount

Provision to finance cost of furnishing and consumer durables as part of project cost

Repayment permitted upto 70 years of age

Free personal accident insurance cover

Optional Group Insurance from SBI Life at concessional premium (Upfront premium financed
as part of project cost)

Interest calculated on daily reducing balance basis, and starts from the date of
disbursement.

Plus schemes which offer attractive packages with concessional interest rates to Govt.
Employees, Teachers, Employees in Public Sector Oil Companies.

Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban
Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat

Option to avail loan at the place of employment or at the place of construction

Eligibility:
SBI home loans are available for purchase or construction of house or flat; purchase of a plot of
land for construction of house; extension, repair, renovation, alteration of an existing house or flat;
purchase of furnishings and consumer durables as a part of the project cost, takeover of an existing
loan from other banks or housing finance companies.

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Age:
Minimum age of applicant is 18 years as on the date of sanction and maximum age limit for a home
loan borrower is 70 years, i.e. the age by which the loan should be fully repaid.

Loan Amount:
Applicants aged between 18 and 45 years, can get 60 times Net Monthly Income (NMI) or 5 times
Net Annual Income (NAI) and for applicants aged over 45 years of age; it is 48 times NMI or 4 times
NAI.
This will be subject to a maximum EMI/NMI ratio as under:

Net Annual Income

EMI/NMI Ratio

Upto Rs.2 lacs

40%

Above Rs.2 lac to Rs. 5 lacs

50%

Above Rs. 5 lacs

55%

Margin:
The SBI home loan borrower should pay 20% of the cost of home for loans up to Rs 1 crore and
25% for loans above Rs 1 crore.

Repayment Period:
The maximum repayment period for home loan is 20 years for applicants below 45 years and 15
years for applicant above 45 years.

Documents Required:
1. Completed application form
2. Passport size photograph
3. Proof of Identity PAN Card/ Voters ID/ Passport/ Driving License
4. Proof of Residence Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/
Voters ID
5. Proof of business address in respect of businessmen/ industrialists

92

6. Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance certificate, Land/
Building Tax paid receipt etc. (as applicable and subject to satisfaction report from our
empanelled lawyer)
7. Copy of approved plan and approval from the Local Body
8. Statement of Bank Account/ Pass Book for last 6 months
Highlights:
Interest Rate

11.25%

Loan Amount

Min. - Rs 100000
Max. - Rs 20000000

Tenure

Min. - 5 Yrs.
Max. - 20 Yrs.

Time to Process Loan

7 days
Interest Rates

Tenure

Interest Type

Interest Rate

20 - 25 Yrs.

Floating

11 %

15 - 20 Yrs.

Floating

11 %

10 - 15 Yrs.

Floating

10.75 %

5 - 10 Yrs.

Floating

10.75 %

1 - 5 Yrs.

Floating

10.5 %

5 - 10 Yrs.

Fixed

12.75 %

1 - 5 Yrs.

Fixed

12.75 %

Offer

Security:
Equitable mortgage of the property
Other tangible security of adequate value like NSCs, Life Insurance policies etc., if the property
cannot be mortgaged

Maximum Repayment Period:

For applicants upto 45 years of age: 25 years
For applicants over 45 years of age: 15 years

Moratorium:
Up to 18 months from the date of disbursement of first installment or 2 months after final
disbursement in respect of loans for construction of new house/ flat (moratorium period will be

93

included in the maximum repayment period)

Disbursement:
In lump sum direct in favour of the builder/ seller in respect of outright purchase
In stages depending upon the actual progress of work in respect of construction of house/ flat
etc.

Documents:
Completed application form
Passport size photograph
Proof of Identity PAN Card/ Voters ID/ Passport/ Driving

License

Proof of Residence Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/ Voters
ID
Proof of business address in respect of businessmen/ industrialists
Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance certificate, Land/ Building
Tax paid receipt etc. (as applicable and subject to satisfaction report from our empanelled lawyer)
Copy of approved plan and approval from the Local Body
Statement of Bank Account/ Pass Book for last 6 months

SBI-Flexi Home Loans:

A customized product designed to enable borrowers to hedge their Home Loan against unfavorable
movement in interest rates. The product gives you a one time irrevocable option to choose one of
the three customized combinations of fixed and floating interest rates and also to choose the order
in which the fixed and floating rate will be availed.
Minimum Loan Amount: Rs.5 lacs
(Other terms and conditions as applicable to regular Home Loans)

SBI-Maxgain Home

Loans:

An innovative and customer-friendly product to enable you to earn optimal yield on your savings and
minimize interest burden on Home Loans, with no extra cost.
The loan is granted as an Overdraft facility with the added flexibility for you to operate your Home
Loan Account like your SB or Current Account.

94

The product serves to minimize your interest cost by enabling you to park your surplus funds in
SBI-Maxgain (with the benefit to withdraw the surplus funds whenever you require), specially in the
wake of low yields from other deposit/ investment avenues.
Minimum Loan Amount: Rs.5 lacs
(Other terms and conditions as applicable to regular Home Loans)

SBI-Realty Home

Loans:

A unique product if you are on the look out for a loan to purchase a plot of land for house
construction. The loan is available for a maximum amount of Rs.20 lacs* and with a comfortable
repayment period of upto 15 years.
You are also eligible to avail another Housing Loan for construction of house on the plot financed
above with the benefit of running both the loans concurrently.
(House construction should commence within 2 years from the date of a ailment of SBI-Realty
Housing Loan)
(Other terms and conditions as applicable to regular Home Loans)
(* relaxation considered on case to case basis)

SBI-Freedom Home Loans:

A revolutionary product designed for customers who are on the look out for a source of finance for a
property they want to invest in without mortgaging the same. All you have to do is pledge any
financial security that you have and you will get a Home Loan for your dream home.
A must-take for those who do not want to pay stamp duty for mortgage of their property or go
through the hassles of creation of mortgage.
You also have an option to take the loan by way of mortgage of the property and pledge financial
securities in lieu of margin money.
Repayment is highly customized, giving you the option to repay through regular EMIs or through
maturity proceeds of the securities pledged.

95

(Other terms and conditions as applicable to regular Home Loans)

SBI-OPTIMA ADDITIONAL HOME LOANS:

Innovative and value added products extended to existing Home loan borrowers with a satisfactory
repayment record of 3 years and whose loan is Standard Asset, with a view to reinforce the
customer loyalty and to maintain long term relationship with the borrowers. In case of take-over of
Home Loans from other Banks/HFCs, the borrower should have fulfilled the above conditions with
the present Bank/HFC.
Purpose:
to meet expenditure towards major repair,
SBI-Optima Additional Home Loans

renovation, addition to their house/flat, purchase of

furniture, fixtures and consumer durables

SBI-Homeline Special Personal Loans

General purpose loan to meet expenditure to meet

foreseen/unforeseen contingencies

Eligibility:
18 times NMI (for salaried borrowers)/
SBI-Optima Additional Home Loans

1 times NAI ( for others) or

(i)25% of the original project cost of house/flat (ii)
85% of the cost of repairs etc. or (iii) gap between
85% of the current market price of flat/house and
actual outstanding loan dues ,
Which ever is lower (EMI/NMI ratio of all loans
should not exceed 60%)

SBI-Homeline Special Personal Loans

18 times NMI (for salaried borrowers)/

1 times NAI (for others)

Interest Rates/processing fee:

As applicable to Home Loans
SBI-Optima Additional Home Loans

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Interest rates 50 bps above rates applicable to the

SBI-Homeline Special Personal Loans

repayment tenure (floating rates only)

Processing fee : 0.50% of the loan amount (including
service tax)

Other Salient Features:

Inbuilt provision for availment of the loans on the expiry of each bloc of 5 years, the first bloc
commencing on the expiry of 5 years from the date of sanction of original Home Loan.

Original Home Loan and all SBI-Optima Home Loans/SBI-Home Line Personal Loans can run
concurrently

Comfortable repayment obligations Tenure of the loans equal to the residual maturity of the
original Home Loans PRASHASAN PLUS, TEACHER PLUS AND OIL PLUS:
The above plus schemes offer concessional interest rate of 0.25% below the applicable interest
rates on Home Loans to niche client groups like Government Employees, Teachers, employees of
public sector oil companies etc

SBI Special Home Loan Scheme

(w.e.f. 16.12.2008 and valid up to 30th June 2009)
For Loans up to Rs.5 Lac 8.5% p.a. fixed rate with reset every 5 years* from the date of
disbursement of first installment.
For Loans above Rs.5 Lac and up to Rs.20 Lacs 9.25% p.a. fixed rate with reset every 5 years*
from the date of disbursement of first installment.
*Option to customer at the end of 5 years to convert into floating rate. Reset or conversion will be at
the rates prevailing at the time of reset.
SBI Happy-Home Loan Offer for new loans sanctioned on or after 2nd February 2009 and at least
partially disbursed on or before 30th April 2009
Interest rate 8% p.a. (Frozen) for a period of one year. Interest rate will be reset after one year as
per contracted rate at the time of sanction of loan as under-

97

Interest Rates w.e.f. 01.01.2009

a) Floating Rates linked to SBAR:
SBAR w.e.f. 01.01.2009 = 12.25 % p.a.
Loans (i.e. Sanctioned limits) up to Rs.30 Lacs
Loan amount

Loan Tenure ->

Up to 5

Above 5 Yrs Above 15 Yrs

Yrs

& up to 15

& up to 25

Loans up to Rs.30 lacs Linkage with SBAR in the loan

2.25%

Yrs
2.00 below

Yrs
1.75% below

for new loans

below

SBAR

SBAR

SBAR,
0.25%

0.25%

0.25%

document

sanctioned on or after
01.01.2009

Special product level discount

which may be withdrawn/revised
solely at the discretion of the
Bank.
Effective

9.75% p.a. 10.00% p.a. 10.25% p.a.

Rate
Loans (i.e. Sanctioned limits) above Rs.30 Lacs and up to Rs.75 Lacs

Above Rs.30 lacs and up to

Loan Tenure Up to 5 Yrs

Above 5 Yrs

Above 15 Yrs

->
Linkage with

2.00% below

& up to 15 Yrs
1.75% below

& up to 25 Yrs
1.50% below

SBAR

SBAR

SBAR

10.25%p.a.

10.50% p.a.

10.75% p.a.

Rs.75 Lacs w.e.f. 01.01.2009 SBAR

Effective
rate

Loans (i.e. Sanctioned limits) above Rs.75 Lacs

Above Rs.75 Lacs w.e.f.

Linkage with

2.00% below

1.75% below

1.25% below

01.01.2009

SBAR

SBAR

SBAR

SBAR

10.25% p.a.

10.50% p.a.

11.00% p.a.

Effective rate
B) Fixed rates - Re-payment Up to 10 Years
(w.e.f. 01.01.2009):

Fixed rates (subject to force majeure clause and interest rate reset at the end of every two years on
the basis of fixed interest rates prevailing at that time)
Up to Rs. 30 Lacs

98

11.25% p.a.

Above Rs. 30 Lacs

12.25% p.a.

c) Loans for deposit of earnest money for allotment of a plot / house / flat
(Floating rates only)- W.E.F. 01.01.2009 - 1% above SBAR, Min. 13.25% p.a.
Loan amount

Margin

Up to Rs.30 Lacs

20%

Above Rs.30 Lacs and up to Rs.75 Lac

20%

Above Rs.75 Lac

25%

State Bank of India Personal Loan:

Introduction:
SBI Personal Loans also known as State Bank of India personal finance schemes, aim to provide
the necessary financial assistance to as many people as possible to help them realize their dreams
or come out of situations of financial need. State Bank of India being India's largest bank is a trusted
name and the SBI personal loan rate of interest are kept at the most competitive level to make a
personal

loan

as

approachable

as

possible.

SBI provides SBI Saral personal loan to help you in meeting any kind of personal expenses
whenever you need it to meet your requirements. Loan is provided at low interest rates, no hidden
costs or administrative charges, no prepayment penalties and comfortable repayment tenure.

Highlights
Salaried

Self Employed

Loan Scheme

Saral Personal Loan

Saral Personal Loan

Loan Type

Term Loan

Term Loan

Loan Amount

Max Loan: 12 times the

monthly income

Max Loan: 12 times the

monthly income

Tenure

Min. - 12 Yrs.

Min. - 12 Yrs.

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Interest Rate

Min. - 16.5 %
Max. - 16.5 %

Min. - 16.5 %
Max. - 16.5 %

Time to Process Loan

2 days

2 days

PERSONAL LOAN AGAINST THIRD PARTY SECURITY:

w.e.f. 01.01.2009 (SBAR 12.25%)
Personal Loan against Third Party Security of NSC/ IVP/ RBI Relief Bonds etc.
Tenure

Rate of Interest

Up to 3 years

1.00% above SBAR i.e. 13.25% p.a.

Above 3 years up to 6 years

0.25% above SBAR i.e. 12.50% p.a.

NOTE: ALL INTEREST RATES ARE SUBJECT TO CHANGE, WITHOUT NOTICE.

SBI SARAL PERSONAL LOAN:
Do you want funds readily available to you whenever you desire or need, be it a sudden vacation
that you plan with your family or urgent funds required for medical treatment? SBI Saral - Personal
Loan is the answer to your questions.
Access this facility from over 3000 branches across the country and confidently face the challenge
of meeting any kind of personal expenses!

The Scheme:
Purpose:
The loan will be granted for any legitimate purpose whatsoever (e.g. expenses for domestic or
foreign travel, medical treatment of self or a family member, meeting any financial liability, such as
marriage of son/daughter, defraying educational expenses of wards, meeting margins for purchase
of assets etc.)

Eligibility:
you are eligible if you are a salaried individual of good quality corporate, self employed engineer,
doctor, architect, chartered accountant, MBA with minimum 2 years standing.

Salient Features:
Loan Amount:
Your personal loan limit would be determined by your income and repayment capacity.
Minimum: Rs.24, 000/- in metro and urban centres

100

Rs.10, 000/- in rural/semi-urban centres

Maximum: 12 times Net Monthly Income for salaried individuals and pensioners subject to a
ceiling of Rs.10 lacs in all centres

Documents Required:
important documents to be furnished while opening a Personal Loan Account:
For existing bank customers:
Passport size photograph
From salaried individuals:
Latest salary slip and Form 16

Margin:
we do not insist on any margin amount.
Interest Rates:
4.25% above SBAR Floating i.e. 16.50% p.a. (w.e.f. 01.01.2009)
Repayment:
The loan is repayable in 48 EMI. You are allowed to pay more than the EMI if you wish to, without
attracting any prepayment penalty.

Security:
NIL
Processing Fee:
Processing charges are 2-3% of the loan amount. This is amongst the lowest fees in the industry.
Processing fees have to be paid upfront. There are no hidden costs or other administrative charges.
Enjoy the SBI Advantage:

Low interest rates. Further, we charge interest on a daily reducing balance!!

Low processing charges; only 2%-3% of loan amount
No hidden costs or administrative charges.
No security required which means minimal documentationsomething that you had always
wanted.

101

No prepayment penalties. Reduce your interest burden and optimally utilize your surplus funds
by prepaying the loan (1% of the loan amount will be charged if you repay the loan before 6

months)
Long repayment period of up to 48 months.

SBI cuts home, personal loan rates for festive season:

State Bank of India has slashed its interest rates on home loans, auto loans and personal loans.
Thats a big relief for first time buyers.
The interest rate cut on new home loans will be between 0.50 per cent to 1 per cent depending on
loan maturities and amount.
Its almost the festive season and India's biggest lender has also announced interest rate cuts on
auto and personal loans.
Where as interest rates on new car and two-wheeler loans have been reduced by up to 1 per cent,
the personal loans are cheaper by 0.50 per cent to 1 per cent.
The rate cut on retail loans will be applicable on all new loans from October 8 to December 31,
while the reverse mortgage scheme for senior citizens above 60 years will be offered at all SBI
branches from October 12.
Simultaneously, SBI also reduced interest rates on deposits under two special schemes by 0.25 per
cent to 9 per cent with effect from October 8.
"We reduced interest rates on Smart Deposit Scheme of 550 days and on Super Saver Term
Deposit of 4-5 years duration by 0.25 per cent to 9 per cent," PTI quoted SBI CGM Personal
Banking Sangeet Shukla as saying.
For senior citizens too, it was good news as SBI announced its entry into reverse mortgage, through
which they can avail loan, released in monthly or quarterly installments or as a lump sum payment
at the beginning, against the security of the house they own and live in.

3. RESEARCH METHODOLOGY:102

Introduction:
Research in Common parlance refers to search for Knowledge. Its a scientific and systematic
search for pertinent information on specific topic. Research is an art of Scientific investigation its
mean Systematized effort to gain new Knowledge.
According to Clifford woody Research Comprises defining and redefining problem formulating
hypothesis or suggested solution Collecting, Organizing and evaluating data making deductions and
reaching Conclusion at Carefully testing the Conclusion to determine whether they fit the
formulating hypothesis.
In Short the Search for Knowledge through Objective and systematic method of finding solution to a
problem is research its refer to the systematic method Consisting enunciating the problem,
formulating a hypothesis, Collecting the fact or data analysis the fact and reaching Certain
Conclusion in the form of Solution.

3.1 Title of the project:- comparative study of home loan and personal loan of
ICICI Bank with SBI Bank

3.2 Duration of the project:-

15 Days

3.3 Objective of the study:The Purpose of research is to discover answer to question through the Application of scientific
procedure. The main aim of research is to find out the truth which is hidden and which has not been
discovered as yet.
To know and apply different market research techniques in our study as follows:
o

Sampling Design

Research Methodology

Questionnaire Design

To highlight the satisfaction level regarding products.

To know the perception regarding ICICI and SBI products and services.

To gain familiarity with a phenomenon or to achieve new insights into it (Studies with this object
in view are termed as exploratory or formulate research studies)

103

 To portray accurately the characteristics of a particular individual Situation or a group (Studies

with this object in view are know as descriptive research studies).

3.4 Type of research:THERE ARE TWO TYPE OF RESEARCH DESIGN ARE FOLLOWING: DESCRIPTIVE RESEARCH DESIGN
QUANTITATIVE RESEARCH DESIGN
DESCRIPTIVE RESEARCH DESIGN:
Descriptive research includes survey and fact finding enquiries of different Kinds. The major
Purpose of descriptive research is description of State affairs as it exists in present. In social and
business research we quite often use. We have done Survey found fact by personal interview so it
is descriptive.
QUANTITATIVE RESEARCH DESIGN:

Quantitative research is based on the measurement of quantity or amount. It is applicable to

phenomena that can be expressed in term of quantity. We have also found requirement in quantity
so its the quantitative research.

3.5 Sample design:-

Sample design refers to the technique or the procedure the researcher would adopt in selecting
item for the Sample. Sample design may be well lay down the number of items to be included in the
sample that is the size of the sample design is determined before data are collected. There are
many Sample designs from which a researcher can choose some designs are relatively more
precise and easier to apply than other researcher must select a sample design which should be
reliable and appropriate for his research study.
Here we have used random sampling and the sample size was 50. We have made a
questionnaire through personal interview filled the questionnaire.

104

3.6Scope of Study:To serve the objective and study the scope banks we have designed two set of questionnaires.
1. The first questionnaire was developed to study the product offering and facilities of different
banks so as to check the level of competition in the market for multinational banks. Nationalized
banks

NATIONALIZED BANKS
PRIVATE BANKS
MULTINATINATIONAL

:
:
:

Consisting of SBI bank

Consisting of ICICI,
Other banks and NBFCS

For the comparison of various banks we have taken a sample size of 8 with non probability
sampling
2. The second quest was developed to check the level of satisfaction the people after getting loan
from their favorable institutions and the factors they consider important while selecting a bank
to getting the home loan and personal loan And what facilities they require from their bankers or
their grievances arising due to non fulfillment of their needs and what is their opinion regarding
different categories of banks
Data collection

Basically there are two main method of data Collection primary data and Secondary data. Primary
data are those which are Colleted freshly and the first time and thus happen to be original in
character. Other hand Secondary data are those which have already been collected by someone
else and which have already been passed through the Statistical granting.

105

Primary data

Questionnaire method: This method of data collection is quite popular, particularly in case of big enquiries. It is being
adopted by private individuals, research workers private and public organization and even by
governments in this method a questionnaire Consists of a number of question printed or typed in
definite order on a form or set of form I have made a Questionnaire for Survey. The inquiry was
done of the respondents through questionnaire in which the same set of questions were asked to
the very respondents falling within out sample. The advantage is that it is simple to administer easy
to tabulate and analyse.

Personal interviews:
The interview method of collecting data involves presentation of oral verbal stimuli and reply in term
of oral verbal responses. We have used this method through personal interview.

3.7 Limitations: Due to the financial & time constraints the study was limited to our place thus the conclusion
arrived in the end rely in short term experience.
Being an opinion survey the personal bases of the respondents might have entered into their
responses.
Time constraints resource constraints were some of the limitations.
The selected sample might have affected the results of the study therefore the findings &
conclusions of the study are only suggestive & not conclusive.
Sample was chosen according to convenience & judgment sampling & not according to random
sampling.
The sampling error that appeared due to the kind of sampling technique adopted.
Indifference and lack of interest disposed by a few respondents leading to unauthentic
responses.
Time proved to be a major constraint as far as collection and analysis of data was concerned.

106

To overcome the above limitations and to minimize their impact on the findings of my report I had to
meet more respondents than my actual sample size.

107

4. FACTS &FINDINGS:As part of the project we had make a survey with the help of questionnaire that has to taken to
different people to get perception towards ICICI and SBI product the questionnaire is passed on the
general public and requested to give their opinion toward ICICI and SBI product the questionnaire
Consists of both open and close ended question the main motto behind the Study is to find out how
people react against the ICICI and SBI Home Loan And Personal Loan products and aware about
the benefits of these products.
In research methodology we have used random sampling and sample size was 50. Simple
random sampling method is followed where every member of population have equal chance of been
selected. The questionnaire is administrated on sample to find out their perception to wards ICICI
and SBI Banking loan product and benefits of product. After analysis of questionnaire Conclusions
were made based on finding from pie charts.
After analysis I came to following findings
In the comparative study of specified banks its found that
ICICI Bank is having large number of customer base with high loan disbursement and recovery
of loans.
The SBI bank showed less outstanding balance which presented in percentage form in the

diagram.
In case of second objective i.e. customer satisfaction level it is found that

On the basis of data the ICICI is emerging at higher position a Compare to SBI bank and other
public sector banks on Ground of professionally managed services, reliable & transparent
System, easy query handling etc.

And problems face by customers in obtaining home loans is

The customer does not have proper knowledge about different Home loan products so they
face problem in making a good deal.

There are procedural delays, which harass the customers lot this will crush the curtsy of
customers to avail the home loan.

108

The attitude of bank employees sometimes non cooperative and it creates a hurdle in
building trust and Confidence among customers about banks.

The banks do not take into account the paying capacity of customers. So some customers
are not able to get amount of Loan needed by them.

Finally the whole research was carried out in a systematic way to reach at exact results. The whole
research and findings were based on the objectives some of the limitation faced in collecting the
data were Lack of time, lack of data, non-response, reluctant attitude and illiteracy of respondents,
which posed problems in carrying out the research.

109

COMPARATIVE ANALYSIS
ICICI Bank V/S HDFC Bank
Content
Feature

ICICI BANK
Free Internet Banking

HDFC BANK
Free email statement
facility

Any where Banking

avail of facilities like safe

Nomination facility

deposit locker

8 Am to 8 Pm Banking

Free payable at par

Largest Network

Cheque book.

Second largest bank in

ATM Network

the country.
Interest
rate

Home loan interest rate is

Home loan interest rate is

up to 12.25%-13.25%

up to 12.50%-13.50%

Personal loan interest

Personal loan interest rate

rate is up to12.50%Benefits

is up to 13%

13.25%
Use your ICICI Bank ATM
Cum debit card for free

Free Transaction on SBI/

Andhra Bank per month in
three times.
Shopping used your
international debit card.

ICICI Bank providing better services compare to HDFC Banks Because

of
Second largest bank in the country.
Largest ATM Networking & Branches.
Up to.25% lower rate on home loan and personal loan

110

COMPARATIVE ANALYSIS
ICICI Bank V/S STATE BANK OF INDIA
Content
Feature

ICICI BANK
Free Internet Banking

STATE BANK OF INDIA

25 cheque free in a year
Nomination facility
available
Transfer of accounts
between our wide
networks of branches
without any charge.

Any where Banking

Nomination facility
8 Am to 8 Pm Banking
Largest Network
Second largest bank in
Interest
rate

the country.
Home loan interest rate is

Home loan interest rate is

up to 12.25%- 13.25%

up to 11.25%-12.25%

Personal loan interest

Personal loan interest rate

rate is up to12.50%-

is up to12.25%-13.25%

13.25%
Benefits

Use your ICICI Bank ATM

Cum debit card for free

. Presently at CBS
Branches
Easy and Wide
Accessibility

ICICI Bank providing better products & services compare to SBI Banks Because
of.
Fast and efficient lending process
Anywhere banking , mobile banking, Largest ATM Networking
Up to.50% higher rate on home loan products.

111

5. DATA ANALYSIS & INTERPRETATION:Occupation

Occupation
50%
40%
30%
20%

44%
28%

10%

20%

8%

0%
Service

Business
Service

Others

Business

Others

Student
Student

Interpretation:This bar diagram clearly reveals that service holders have occupied a major chunk of it
reason for this could be as ICICI gives the facility of Anywhere Banking which suits them.
Businessman has also liked it but their contribution in this bar, could be said satisfactory
reason for this could be attributed to availability of another product, which really suits them,
is home loan.

112

Age Group

Interpretation:After looking this bar, it can be said the middle aged group are the main customer of the bank as
they have occupied almost 75% of this graph. It means they have more access on the all features,
which are really useful for them. the young and old age group people have been less attractive on
this leading product of ICICI Bank and SBI bank, Which is fast area of concern. So collectively it can
be said a huge potentiality, is still available for this product.

113

Income level (monthly)

Interpretation:Here we can see by this graph that income level of the peoples mainly 42% is 10000-40000
monthly. Whose wants to take loan from different public and private Banks.

114

Do you want to take loan?

Interpretation:In this survey I found that 78% respondents who want to take the loan whereas 22% respondents
do not want to take the loan from any others institutions.

115

What is future loan requirement?

Interpretation:This table represents that future loan requirements for the respondents from 34% in personal loan,
22% from the home loan and 28% from other instruments and 16% respondents which have not
give any response.

116

From where you would like to take loan?

Interpretation:In survey I found that most of the respondents want to take the loan from government banks,
whereas 38% respondents want to take loan from the private banks. 4% respondents want to take
loan from NBFCS and 4% from Gramine banks and 2% from other institutions.

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Before taking a loan from a particular bank, you look for?

Interpretation:When a customer visits any bank the first and foremost thing he looks; how quickly he is served
and how his problem is entertained by the bank employee that is why in this bar most of customer
prefer quick service. Second thing customer wishes to have proper information regarding their
queries. One thing in this bar also really significant is, factors like, less formalities of document while
taking loan, variety of product do not make a big impact on customer behavior for getting loan in
any bank if its service is efficient. But on the other hand bank cant ignore relationship, as in this bar
customer have erred it. So service sector like banking preference should be given to make a prompt
and customer friendly service channel. For this focus must be given to make a prompt and
customer-friendly service channel. For this focus must be given to make well informed and proactive employee along with work should be executed technologically rather than manually.

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How much amount of loan you would like to take?

Interpretation:In this survey I found that 8% respondents interested up to 50000, 10% respondents interested up
to 100000, 18% respondents interested between 100000-150000, 22% respondents interested
between 150000-200000, and 42% respondents which want to take loan above 200000.

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Have you ever taken loan from any of the following banks?

Interpretation:This graph represents that 26% respondents take loan from state bank of India, 28% take loan from
ICICI bank, 12% takes loan from state bank of Bikaner and Jaipur , 10% takes loan from Bank of
India , and 24% takes loan from others.

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In comparison to other bank how would customer rate ICICI Bank

50%
40%
30%
20%

44%
24%

10%

20%
8%

4%

Can't Say

Poor

0%
Good

Average
Good

Excellent

Average

Excellent

Can't Say

Poor

Interpretation:Rating of any bank loan on its overall performance in the eyes of the people. This bar is vividly
showing that the performance of ICICI Bank has been good because in such a short span of its
existence in this city with strong competition from major public sector bank like SBI and other private
banks. Reason for this could be, it has occupied a different position in the people mind with its
customer friendly products and to serve them a efficient and prompt banking system.

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Do you know about the credit norms of the banks?

Interpretation:This chart represent that how much of customers know about the credit norms of banks yes and no.
76% respondents know about the credit norms and 24% respondents not know about the credit
norms.

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How you know about the credit norms?

Interpretation:In this survey I found that know about the credit norms of the banks by the help of advertisement
26%, by friends 36% and others sources like bank employee, agents, sales persons 38%.

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Comparative study of disbursement of home loans by commercial

banks:8.1 - Disbursement of Home loans by different banks:ICICI BANK:Years

No. of

Home loan Disbursed

Home
loan

(in crores Rs.)

Recovered

Distributed

Balance

account
2007-08

holders
650

104.33

98.12

6.21

2008-09

853

123.24

105.00

18.24

2009-10

1019

150.65

133.46

17.19

2010-11

1132

176.75

144.65

32.10

2011-12

1434

224.00

209.16

14.84

Interpretation :The amount reveal that there is tremendous increase in Home loan accountholders. The
amount distributed as home loan is also increased from Rs. 104.33 in 2007-08 to Rs. 224 crore in
2011-12. But the recovery mechanism of the Bank is not so good thats why the outstanding amount
shows fluctuating trend.

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HDFC LTD :Years

No. of Home

Home loan Disbursed

loan

(in crore Rs.)

account
holders.

Distributed

Recovered

Balance

2007-08

700

90.07

63.05

27.02

2008-09

950

120.00

91.20

28.8

2009-10

1130

144.67

127.31

17.36

2010-11

1435

180.33

165.90

14.43

2011-12

1594

240.00

228.12

11.88

Interpretation:On the above table, it is evident that there are increase in No. of account holders from 700 to
1594 in the year 2008-09. The loan amount distributed among home loan account holder has also
increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in 2008-09. The recovery procedure for
home loans is also strengthening due to increment in recovered amount, i.e. Rs.63.05 crore to
Rs.288.12 crore. So it nut shall there are upward trend in number of accountholders and
disbursement of home loans.

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Punjab National Bank :Years

No. of Home

Home loan Disbursed

loan account

(in crores Rs.)

Recovered

holders.

Distributed

Balance

2007-08

810

120.15

97.28

22.87

2008-09

950

183.26

150.00

33.26

2009-10

1120

213.65

185.86

28.05

2010-11

1433

240.87

231.07

9.80

2011-12

1500

265.15

265.05

9.10

Interpretation:The Punjab National Bank is Public sector Bank. It comes second after State Bank of India
in its branch location and expansion. From the Table, the figures show that there are increasing
trend in customer base from 810 in the year 2004-05 to 1500 in the year 2008-09. The bank also
show enhancement in loan amount up to Rs.265.15 crore in the year 2008-09. The recovery
process of loans in past is slow but now it is increasing.

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Standard Chartered Bank :No. of Home

Years

Home loan Disbursed

loan

(in crores Rs.)

Recovered

account

Distributed

Balance

2007-08

holders
106

6.21

5.27

0.94

2008-09

130

11.55

10.16

1.38

2009-10

154

17.06

14.35

2.70

2010-11

180

20.09

18.68

1.41

2011-12

260

24.10

23.91

0.48

Interpretation:The standard chartered bank is a private sector bank. It has also upgraded its position in
banking sector in DEHRADUN. The figures shown in table reveals that there is upward shift in
customer base of Bank from 106 customers to 260 customers. The bank has also increased its
share in housing finance by distributing Rs. 24.10 crores in 2008-09. The recovery procedure of
Home loan is very sound.

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6. SWOT ANALYSIS:ICICI BANK

STRENGTHS:

All the branches are interconnected which give the unique facility of anywhere banking.

All operations of the bank are carried on with the help of computers thus transaction are
carried with greater efficiency.

ICICI bank provide after loan services for the customers.

Employees of ICICI Bank make good relationship with the customers.

Documentations process of loan is easily other banks.

High number of executives which make the work of customers very convenient.

Maximum customer base in Jaipur; as compared to any of the bank.

WEAKNESS:

Less awareness among general masses about the different LOAN PRODUCTS provided by
bank.

Peoples faith in private banks is still not very high.

Dissatisfaction among customers due to improper and lack of after sales services.

Exchange rates of demand draft are high

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OPPORTUNITIES:

Peoples dissatisfaction towards nationalized banks in terms of services has turned to be

blessing for private banks.

Among the private players ICICI Bank have the excellent brand image.

There lies a great scope in forex department which is unutilized to a greater extent can yield
much better results by which the bank can increase its volume.

Special services can be provided to women as the womens role is becoming prominent.

The trust of people is increasing on the banks rather then going for financial institution.

There is vast untapped opportunity which lies for every bank in the rural areas.

THREATS:

Reorganization of PSUs. The all PSUs have started to redefine their services to attract
customers attention.

A few foreign banks have been permitted to increase their number branches and its entry
has taken away some business of the existing banks.

Stringent norms by RBI in any time in future can be a threat to private banks as their
activities can be adversely affected.

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7. CONCLUSION:
The products of ICIC bank are no doubt very good and it provides the customized solution to its
customer the products offerings are made so very flexible and adaptable in order to get with the
customer requirements. All the products and the special offering at ICICI Bank loaded with lot of
benefits for the customer. ICICI bank is always there to serve its customers with great speed. ICICI
Bank has a wide network of branches and largest number of ATM amongst the private sector bank
to services its customer efficiently.
Today ICICI Bank hold largest market shares in private sector bank in India. This is possible all
because of its products and services.

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8. RECOMMENDATION AND SUGGESTIONS: Banks should have extensive advertising to attract potential Customers.
Adequate training improves the skill of employee.
Company should put stress on market Capture.
Adequate transparency in product plan and policies
Maintain proper Customer relationship
Company should publish its weekly review of internal or external Competitive business.
There must be proper management information system in Banks
Monthly NAV statement to provide to the customer.
Time to time banks launched new loan products for the customers with extra unique
features.
Some of the other suggestions are

To increase their customers, the banks should provide specialized services in this sector.
These services can be such as proper guidance to the Customer regarding the processing of
loans, especially for the customers who are illiterate.

To satisfy their customers and for good dealings in future, the banks should make prompt
disbursement of loan amount to the customers so that they can buy or construct their dream
home as early as possible.

The Banks should use easy procedure, or say, less lengthy procedure for the sanctioning of
loan to the customer. There should be less number of legal formalities, in case this exists,

131

then, these should be completed in less time. This will be helpful in attracting more
customers.

Although the interest rates on specific norms, yet customers seek less interest rate which
can lower their cost of house. So banks should try to lower their interest rates. Needles to
say, that the bank which having lower interest rates, have the maximum clients for loans.

The public sector banks should improve their overall services to increase the number of
customers for home loans. They should recruit professionals to provide such services and to
satisfy the customers.

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9. APPENDIX:-

Questionnaire
Dear Sir/Madam,
I am the student of Maharshi Arvind Institute of Engineering & Technology , Jaipur. As part of
the requirements for my project study I am required to do a research based project on
COMPARATIVE STUDY OF PERSONAL AND HOME LOANS OF ICICI V/S STATE BANK OF
INDIA Kindly spend a few minutes of your valuable time and fill in this questionnaire. Every
information given by you will be only for Academic purpose.

NAME OF RESPONDENT___________________________________________
ADDRESS______________________________________________________________________
________________________________________________________

Q.1 what is your occupation?

a) Student

b)

service

c) Business

d)

Others

Q.2What is your Age Group?

a) <20

b)

20-25

c) 30-35

d)

35-45

e) Above 45 years

Q.3 What is your income level?

a) 5000 10000
c)

b)

40000-100000 d)

10000-40000
above 100000

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Q.4Do you want to take loan?

a) Yes

b) No

Q.5 What is your future loan requirement?

a) Personal loan

b) Home loan

c) Any other

d) No requirement

Q.6From where you would like to take loan?

a) Private Bank

b)

c) Government Bank d)

NBFCS
Gramine Bank

e) Any other, please specify_________________________________

Q.7Before taking a loan from a particular Bank, you look for?

a) Interest rate

b)

c) Unique feature d)

Services
Relationship with the customers

e) Any other, please specify_________________________________

Q.8How much Amount of loan you would like to take?

a) 50,000

b)

1, 00,000

c) 1, 00,000-1, 50,000

d)

1, 50,000-2, 00,000

e) Above 2, 00,000

Q.9Have you ever taken loan from any of the following institutions?
a) SBI

b)

ICICI BANK

c) SBBJ

d)

BANK OF INDIA

e) Others (Please specify)____________________________________

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Q.10Do you think about Private sector loan is better than Public sector loans?
If Yes: Why, If No Why?

Q.11Do you know about the credit norms of the Banks?

a) Yes

b)

No

Q.12How you know about the credit norms of the above specified Banks?
a) Advertisement

b)

friends

c) Others (please specify)__________________________________

Q.13what suggestions you want to give for Bank to improve their services?
_________________________________________________________________________
_________________________________________________________________________
________________________________________

Thank You

135

10.BIBLIOGRAPHY:Text books:
Research Methodology By C.R.Kothari.

News Papers:
Economic times
Business standard
Business line
Financial express

WEBLIOGRAPHY:http://www.icicibank.com
http://www.rbi.org.in
http://www.indiainfoline.com
http://www.wikipedia.com
http://www.apnaloan.com
http://www.google.com

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