A STUDY OF HOME LOAN WITH SPECIAL REFERENCE TO ICICI AND SBI

Chapter 1:

Introduction

This project is done to study the Home loan and the Interest rates on it
provided by the top banks in India namely SBI and ICICI. SBI is a nationalized
bank while ICICI is a private bank. The project is done to study as well as
compare the home loan rates of these two banks.

Home loans work like any other debt. That is, loans are simply specific
money that we borrow from a bank, a private lender, or some other type of
lender. Afterwards, we must repay our debts with interest. However, unlike
other types of loans, home loans are different in several respects. Owning a
piece of land or property is a lifetime dream for every individual. There are
many home loan providers in the market.

Interest rate on home loan is something that one has to pay in lieu of the
loan provided by the bank/financial institution. Home loan Interest rate is
very important element when it comes to choosing a home loan for a
customer & it also helps the customer on taking right decision or on pinning
down that through which bank or financial institution he can go for.
Depending on this interest rate, the loan amount and the tenure of the loan,
EMI is calculated which is how you repay your loan to the bank. In case the
interest rate is higher, the EMI would be higher and in case the interest rate
is lower, the EMI would be lower. Thus by choosing a bank with a lower
interest rate, you can certainly increase your monthly savings. But interest
rate is not the only criteria to choose a loan. There are various other
parameters as well. The EMI is calculated on a monthly reducing balance
method.

Objectives of the study:

• To study the Home loan provided by SBI and ICICI

• To know that which bank provides better home loan schemes
• To analyze the home loan scheme of ICICI and SBI
Chapter 2

Industry profile:

Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India, which started in 1786, and Bank of
Hindustan, which started in 1790; both are now defunct. The oldest bank in
existence in India is the State Bank of India, which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being
the Bank of Bombay and the Bank of Madras, all three of which were
established under charters from the British East India Company. For many
years the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank of
India, which, upon India's independence, became the State Bank of India.

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 State
Bank of India and its group banks, regional rural banks and private sector
banks (the old/ new domestic and foreign). 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 eight-
fold. 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.
Company profile:

• STATE BANK OF INDIA:

State Bank of India is the largest state-owned banking and financial services
company in India. The bank traces its ancestry to British India, through
the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta,
making it the oldest commercial bank in the Indian Subcontinent. Bank of
Madras merged into the other two presidency banks, Bank of Calcutta and
Bank of Bombay to form Imperial Bank of India, which in turn became State
Bank of India. The government of India nationalized the Imperial Bank of
India in 1955, with the Reserve Bank of India taking a 60% stake, and
renamed it the State Bank of India. In 2008, the government took over the
stake held by the Reserve Bank of India.

SBI provides a range of banking products through its vast network of

branches in India and overseas, including products aimed at non-resident
Indians (NRIs). The State Bank Group, with over 16,000 branches, has the
largest banking branch network in India.Its also considered as the best bank
even abroad ,having around 130 branches overseas [including 1 ADB]and
one of the largest financial institution in the world . With an asset base of
$352 billion and $285 billion in deposits, it is a regional banking behemoth. It
has a market share among Indian commercial banks of about 20% in
deposits and advances, and SBI accounts for almost one-fifth of the nation's
loans.[2]

The State Bank of India is the 29th most reputed company in the world
according to Forbes. Also SBI is the only bank to get featured in the coveted
"top 10 brands of India" list in an annual survey conducted by Brand Finance
and The Economic Times in 2010.

The roots of the State Bank of India rest in the first decade of 19th century,
when the Bank of Calcutta, later renamed the Bank of Bengal, was
established on 2 June 1806. The Bank of Bengal and two other Presidency
banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and
the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies, and were the result of the royal
charters. These three banks received the exclusive right to issue paper
currency in 1861 with the Paper Currency Act, a right they retained until the
formation of the Reserve Bank of India. The Presidency banks amalgamated
on 27 January 1921, and the reorganized banking entity took as its
name: Imperial Bank of India. The Imperial Bank of India remained a joint
stock company.

Pursuant to the provisions of the State Bank of India Act (1955), the Reserve
Bank of India, which is India's central bank, acquired a controlling interest in
the Imperial Bank of India. On 30 April 1955, the Imperial Bank of India
became the State Bank of India. The government of India recently acquired
the Reserve Bank of India's stake in SBI so as to remove any conflict of
interest because the RBI is the country's banking regulatory authority.

In 1959, the government passed the State Bank of India (Subsidiary Banks)
Act, enabling the State Bank of India to take over eight former state-
associated banks as its subsidiaries. On 13 September 2008, the State Bank
of Saurashtra, one of its associate banks, merged with the State Bank of
India.

The State Bank of India is the largest of the Big Four of India, along with ICICI
Bank, Punjab National Bank and HDFC Bank—its main competitors.

• ICICI:

ICICI Bank (Industrial Credit and Investment Corporation of India) is a major

banking and financial services organization in India. In 1955, The Industrial
Credit and Investment Corporation of India Limited (ICICI) was incorporated
at the initiative of World Bank, the Government of India and representatives
of Indian industry, with the objective of creating a development financial
institution for providing medium-term and long-term project financing to
Indian businesses. In 1994, ICICI established Banking Corporation as a
banking subsidiary.

ICICI is the second largest bank in India and the largest private sector bank
in India by market capitalization. The bank also has a network of 2,016
branches (as on 31 March 2010) and about 5,219 ATMs in India and presence
in 18 countries, as well as some 24 million customers (at the end of July
2007). ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery
channels and specialization subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset
management. (These data are dynamic.) ICICI Bank is also the largest issuer
of credit cards in India.

ICICI Bank's shares are listed on the stock exchange at BSE, NSE,
Kolkata and Vadodara (formerly Baroda) ; its ADRs trade on the New York
Stock Exchange(NYSE).

The Bank is expanding in overseas markets and has the largest international
balance sheet among Indian banks. ICICI Bank now has wholly owned
subsidiaries, branches and representatives offices in 19 countries, including
an offshore unit in Mumbai. This includes wholly owned subsidiaries in
Canada, Russia and the UK (the subsidiary through which the HiSAVE savings
brand is operated), offshore banking units in Bahrain and Singapore, an
advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka,
and representative offices in Bangladesh, China, Malaysia, Indonesia, South
Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is
targeting the NRI (Non-Resident Indian) population in particular.
ICICI reported a 1.15% rise in net profit to 1,014.21 crore on a 1.29%
increase in total income to 9,712.31 crore in Q2 September 2008 over Q2
September 2007. The bank's CASA ratio increased to 30% in 2008 from 25%
in 2007

ICICI Bank is one of the Big Four banks of India, along with State Bank of
India, Punjab National Bank and HDFC Bank—its main competitors.

Chapter 3:

Literature Survey:

Conceptual and theoretical review

ICICI BANK

ICICI Bank Home Loans, offer unbeatable benefits to ensure that we 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 us and our
Home Loan help you lay the foundation for the dream home.

ICICI offers the most convenient home loan plans to suit our needs. With so
many attractive features in every type of home loan they offer, creating the
home you always wanted is no longer a distant dream. No matter what the
requirement, ICICI has an appropriate plan for us. Some of the key benefits
are:

• Guidance through out the process

• Home loan amounts suited to your needs
• Home Loan tenure upto 20 years
• Simplified documentation
• Doorstep delivery of home loan papers
• Sanction approval without having selected a property.
• Free Personal Accident Insurance (Terms & Conditions)
• Insurance options for your home loan at attractive premium

Eligibility:

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.
Loan Amount:

With ICICI Bank Home Loans, we can get a home loan suited to our needs.
The home loan amount depends on our 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 our 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 Home Loan:

Repayment tenure is the tenure for the number of year for which the loan
gets sanctioned. We offer you a wide range of options for the tenure of the
loan. You can take a home loan for up to 20 years provided you do not reach
the age of 65 years or retire within that period. 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.

Repayment tenure is the tenure for the number of year for which the loan
gets sanctioned. We offer you a wide range of options for the tenure of the
loan. You can take a home loan for up to 20 years provided you do not reach
the age of 65 years or retire within that period.

All loan repayments are done via equated monthly installments (EMI). The
EMI is to be paid every month through post-dated cheques (PDCs) or
Electronic Clearing System (ECS). EMI payments start from the month
following the month in which the full disbursement has been made. If you are
opting for PDCs, then you will have to provide 36 PDCs upfront. The PDCs are
to be dated on the 1st of every month. However, if you receive your salary a
few days later, we provide the flexibility of dating the cheques for the 10th of
the month. In case you have an ICICI Savings account you can also go in for
the facility of Auto Debit.
ECS facility is available in selected cities only

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.

(I-Base Rate has increased by 50bps i.e. Base rate at 8.25% increased to
8.75% from Feb 24, 2011. Thus, the rate of interest for Existing Customers
on I-Base benchmark will increase by 0.5%.)

(PLR and FRR has increased by 50 bps. New PLR is 16.50% and FRR is
14.50%. This change in PLR and FRR will increase the interest rate of those
loans whose loan is benchmarked to FRR/PLR by 0.50%.

Insurance Plans for Home Loan:

This provides cover to Home loan in the face of any unforeseen event
happening in life. In case of any of these happenings, a family will have the
support of the insurance cover to pay for the outstanding Home loan, without
being burdened by the loan EMI's. Customers have the option of taking
insurance from any other insurance company

"Home Safe Plus" & "Home Assure/Health Assure" are two exclusive and
innovative insurance plans to insure the Home Loan:

Key Benefits of Home Safe Plus:

• No medical checkup
• Comprehensive insurance plan for individual, home and its contents
• Single premium long-term insurance plan
• Premium paid for the Critical Illness cover is eligible for tax benefits u/s
80D of the Income Tax Act
• Sum Insured remains constant throughout the policy period (loan O/S
amount to come to bank, rest goes to individual)
• Multiple applicants can be covered under the same loan
• Simple application form

Key Benefits of Home Assure/Health Assure:

• Life Cover from HomeAssure for the entire home loan tenure
• Critical Illness cover from life threatening illnesses like cancer,
coronary artery bypass, heart attack, kidney failure, stroke, major
organ transplant
• Special non-medical limits only for ICICI Bank Home Loans customers
• Dual benefit to customers, Life Cover from HomeAssure and Critical
Illness -Cover from HealthAssure
 • Dual tax benefits, Section 80C benefits under HomeAssure, Section
80D benefits under HealthAssure
• Simplified claim procedure

Land Loan:

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 Loans can be availed by Resident Indian whether Salaried or Self-

Employed and also by Non- Resident Indian.

Home Improvement Loan:

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 a loan at
Home Equity Loan rate of interest.

Home Improvement Loan can be availed by Resident Indian whether Salaried

or Self-Employed.

Office Premises Loan:

A self-employed businessman or professional needs a permanent address to

set up his business. With ICICI Bank's Non-Residential Premises Loans you
can do that, easily and conveniently. These loans cover purchase,
construction, extension and improvement of office premises. The loan may
also be packaged to include the estimated renovation expenses.
 STATE BANK OF INDIA

SBI Home Loan process:

“THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer

Awards along with the MOST PREFERRED BANK AWARD in a survey
conducted by TV 18in association with AC Nielsen-ORG Marg in 21 cities
across India.

SBI HOME LOANS now offers Interest Rates concessions on GREEN HOMES in
accordance with SBI's commitment to Environment protection.

SBI Home Loans come to you on the solid foundation of trust and
transparency built in the tradition of State Bank of India.

Best Practices followed in SBI mentioned below will tell you why it makes
sense to do business with State Bank of India.

Eligibility:
 • Minimum age: 18 years as on the date of sanction
• Maximum age: 70 years. i.e. the age by which the loan should be fully
repaid, subject to availability of sufficient, regular and continuous
source of income for servicing the loan repayment.

Loan Amount:

Actual loan amount will be determined taking into consideration such factors
as applicant’s income and repaying capacity, age, assets and liabilities, cost
of the proposed house/flat etc. To enhance loan eligibility you have option to
add:

• Income of your spouse/ your son/ daughter living with you, provided
they have a steady income and his/ her salary account is maintained
with SBI.
• Expected rent accruals (less taxes, cess, etc.) if the house/ flat being
purchased is proposed to be rented out.
• Depreciation, subject to some conditions
• Regular income from all sources.

Security:

Equitable mortgage of the property

SBI Home Loans Unique Advantage:

1. Package of exclusive benefits.

2. Low interest rates. Further, we charge interest on a daily reducing
balance!!
3. Low processing charges.
4. No hidden costs or administrative charges.
5. No prepayment penalties. Reduce your interest burden and optimally
utilize your surplus funds by prepaying the loan.
6. Over 13,700 branches nationwide, you can get your Home Loan
account parked at a branch nearest to your present or proposed
residence.

(Base Rate revised upwards by 25 bps from 8.00% p.a. to 8.25% p.a.
w.e.f 14.02.2011)

SBI Easy Home Loan:

Getting a dream home has become easier with SBI Easy Home Loan. With
low interest rates for home loan under Rs. 30 lakhs category, SBI Easy
ensures that we are not burdened with high interest for home loan. Plus with
over 13700 SBI branches nationwide we can get our Home Loan account
parked at a branch nearest to your present or proposed residence.

(Upto Rs.30 Lacs)

(Base Rate: 8.25% p.a.)

Name SBI Easy Home Loan

Facility Term Loan or OD as in SBI MaxGain. (OD facility will be available
Type for loans above Rs.5 Lacs.)
Loan Upto (and including) Rs.30 Lacs
amount
Interest Card Rate applicable for the tenor of the loan – 1.50% above
Rate Base Rate, Present effective rate being 9.75% p.a.
Ist Year 1% discount over Card Rate, present effective rate being 8.75%
p.a.
2nd and 0.25% discount over Card Rate, present effective rate being
3rd year 9.50% p.a.
4th year Card Rate
onwards
No Fixed Interest Rate option.

b) SBI Advantage Home Loan:

(Above Rs.30 Lacs and upto Rs.75 Lacs)

(Base Rate: 8.25% p.a.)

Name SBI Advantage Home Loan

(Above Rs.30 Lacs and upto Rs.75 Lacs)

Facility Term Loan or OD as in SBI MaxGain.
Type
Loan For Home Loans above Rs 30 lacs and upto Rs. 75.00 Lacs
amount
Interest Card Rate applicable for the tenor of the loan – 1.75% above
Rate Base Rate, Present effective rate being 10.00% p.a.
Ist Year 1.25% discount over Card Rate, present effective rate being
 8.75% p.a.
2 and
nd
0.50% discount over Card Rate, present effective rate being at
3rd year 9.50% p.a.
4th year Card Rate
onwards
No Fixed Interest Rate option.

c) SBI Premium Home Loan:

(Above Rs.75 Lacs to 5 crores)

(Base Rate: 8.25% p.a.)

Name SBI Premium Home Loan – Above Rs.75 Lacs

Facility Term Loan or OD as in SBI MaxGain upto Rs.1 Crore.
Type
Loan For Home Loans above Rs 75.00 lacs
amount
Interest Card Rate applicable over the tenor of the loan is 1.75% over the
rate Base Rate, present effective rate being 10.00% p.a.

Concessions including discretionary concessions will be available

over the tenor of the loan

No Fixed Interest Rate option.

d) SBI Premium Plus Home Loan

(Above Rs.5 Crore)

(Base Rate: 8.25% p.a.)

Name SBI Premium Home Loan – Above Rs.5 Crore

Facility Term Loan
Type
Loan For Home Loans above Rs5 Crore
amount
Interest Card Rate applicable over the tenor of the loan is 2% over the Base
rate Rate, present effective rate being 10.25% p.a.

Concessions including discretionary concessions will be available

over the tenor of the loan
 No Fixed Interest Rate option.

Processing Fee:

Loan Amount Processing Fee

Upto Rs.5 Lac Rs.1000/-
Above Rs.5 Lac and upto Rs.10 Lac Rs.2000/-
Above Rs.10 Lac and upto Rs.20 Rs.5000/-
Lac
Above Rs.20 Lac and upto Rs.50 Rs.7,000/-
Lac
Above Rs.50 Lac and upto Rs.1 Cr Rs.8,000/-
Above Rs.1 Cr and upto Rs.5 Cr Rs.10,000/-
Above Rs.5 Cr Rs.20,000/-

HOME LOAN PRODUCT VARIANTS

i) SBI Maxgain (Home Loan as an overdraft) :

An innovative and customer-friendly product to enable us to earn optimal

yield on our 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 us to
operate your Home Loan Account like your SB or Current Account.

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

 • Maximum Loan Amount:Rs.1 Crore

ii) SBI Realty :

HOME LOANS FOR PURCHASE OF PLOT OF LAND FOR THE PURPOSE OF

CONSTRUCTION OF A DWELLING UNIT

A unique product if you are on the lookout for a loan to purchase a plot of
land for house construction. The loan is available for a maximum amount of
Rs.1 crore and with a comfortable repayment period of upto 15 years.

House construction should commence within 2 years from the date of

availment of ‘SBI-Realty’ Housing Loan

Customers 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.

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

iii) SBI Home Plus

SBI Home plus is scheme is launched for granting personal loans to the
banks home loans customers against the security of their house property. All
home loans customers with a satisfactory repayment record of at least one
year and who maintain a Savings bank or current account with us.

The loan can be used for any purpose, viz. extension/repair of house,
purchase of car/ consumer durables, education / medical expenses of family
members, personal expenses, etc. There will be no need to obtain
documentary evidence for the end-use of funds. However a certificate from
the customer in the application to the effect that the loan will not be used for
speculative purposes would be obtained.

iv) Gram Niwas:

HOME LOANS TO FARMING AND POOREST OF THE POOR IN RURAL AREAS:

The Scheme covers all rural and Semi-urban centres. “Rural Area” for the
purpose of the Scheme is the area comprised in any village including the
area comprised in any town, the population of which does not exceed 50000
as per 2001 census. The scheme seeks to provide home loans to farming and
poorest of the poor in rural areas for the purpose of purchase or construction
of a house, repairs and renovation, purchase of plot for the purpose of
construction of a house/shed etc.

v) Sahyog Niwas:

RURAL HOME LOANS TO SELF HELP GROUPS:

The Sahyog Niwas scheme has been instituted to finance the self help
groups with a good track of payment record for 2 years, for on lending to
members for housing in rural areas, covering the following purposes.

• For the purchase or construction of a house exclusively or including the

housing needs of activities carried by them. (Dairy shed, tailoring
shed/shop, grocery stores etc.)
• For the renovation or repair of an existing house / shed
• For the purchase of a plot of land for the purpose of house
construction.
• For the extension of existing house / work space to existing house /
shed.

viii) SBI Green Home Loan:

State Bank of India has adopted a Green Banking Policy with an objective of
contributing towards the fight against the adverse climate change. One of
the initiatives approved by the Board for this purpose is incentivizing
customers who go in for Green Projects, i.e. those projects which reduce
Carbon Emissions and promote Renewable Energy. “Green Housing” or
“Green Home” is one of the types of projects identified for this purpose.

At present State Bank of India the only Bank in the country supporting the
cause of Green Buildings by offering 0.25% concession in interest rate and
waiver of processing fees, on the existing home loan products to customers
who go in for Green Projects.

SBI Home Loans Unique Advantage

• Package of exclusive benefits.

• Lowest interest rates. Further, we charge interest on a daily reducing
balance!!
• Low processing charges.
 • No hidden costs or administrative charges.
• No prepayment penalties. Reduce your interest burden and optimally
utilize your surplus funds by prepaying the loan.
• Over 12000 branches nationwide, you can get your Home Loan
account parked at a branch nearest to your present or proposed
residence.

Chapter 4

Data Analysis and Interpretation:

1. Fixed Interest Rate : A rate which is set In-advance or which is

predetermined for entire term of Home Loan..

Most of the fixed home loan interest rates products available in the market
are not fully fixed. Most of them come with a reset clause of 3 to 5 years.
This means that the interest rates can be reset after a period of every 3 to 5
years (as mentioned in the loan document).

2) Floating Interest Rate : A rate which is linked to a benchmark rate or the

base rate of the bank or the financial institution. The floating home loan
interest rate will change as and when the bank will change its benchmark
rate or the base rate.

Generally, the interest rates for floating rates for home loans are cheaper
than interest rate for fixed rates for home loan. The Floating interest rates of
SBI and ICICI are as follows:

Bank
Floating Interest rate Processing Fee Prepayment Charges
Name
8.75% (1st yr),
9.50%(2nd and 3rd 0.50% of loan
State
yr),10%(after 3 years) amount with a
Bank Of N.A
(9.88% average cap of Rs.10,000
India
floating rate upto 20 + service tax
years)
ICICI 9.50% (Upto 25Lacs), 0.50% of loan Rs.10,000/- above 1 crore
Bank Then 10% amount upto 1 If Full Payment - 2% of
crore outstanding amount If Part
 Payment - No Penalty

State Bank of India Home Loan:

The Most Preferred Home Loan provider SBI Bank offers a Home Loan with
Attractive Interest Rates with Latest Schemes and Benefits. SBI also provides
a Housing loan with different schemes. Schemes Are:

1. SBI Easy Home Loan

2. SBI Advantage Home Loan
3. SBI Housing Finance Scheme
4. SBI Happy Home Loans
5. SBI Life Style Loan
6. SBI Green Home Loan
7. SBI Home Plus
8. SBI MY HOME CAMPAIGN

Features and Benefits of SBI Home Loan:

• Purchase/ Construction of House/ Flat
• Purchase of a plot of land for construction of House
• Lowest Home Loan Interest Rate..
• Extension/ repair/ renovation/ alteration of an existing House/ Flat
• Purchase of Furnishings and Consumer Durables as a part of the project
cost.
• Takeover of an existing loan from other Banks/ Housing Finance
Companies.
• Interest charged on the daily reducing balance
• No penalty on prepayments of home loan
• No hidden costs
• 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

Eligibility Criteria & Documentation required for SBI Home Loan:

Salaried Self employed

Age 21years to 60years 21years to 70years
Income Rs.1,20,000 (p.a.) Rs.2,00,000 (p.a.)
Loan Amount
5,00,000 - 1,00,00000 5,00,000 - 2,00,00000
Offered
Tenure 5years-20years 5years-20years
Current
2years 3years
Experience
1) Application form with
1) Application form with photograph
photograph 2) Identity & residence proof
2) Identity & residence 3) Education qualifications
proof certificate & proof of business
3) Last 3 months salary existence
Documentation
slip 4) Business profile,
4) Form 16 5) Last 3 years profit/loss &
5) Last 6 months bank balance sheet
salaried credit statements 6) Last 6 months bank
6) Processing fee cheque statements
7) Processing fee cheque

ICICI Bank Home Loan:

One of the largest Home Loan financing company is ICICI Bank Home Loan.
The attractive rate of interests, simple documentation & fast processing
makes the customer to take the Home loan from them

ICICI Bank Home Loan offers you Home Loan for following purposes

1. Home Loan- If you want to purchase a new home then you can apply
individually or jointly.

2. Home Improvement Loan- For your home improvement you can take the
Home Improvement Loan from ICICI Bank.

3. EMI Under Construction- EMI Under Construction helps you to make

payments in EMI, in a partly sanctioned loan for an under construction
project.

4. Balance Transfer-ICICI Bank Home Loan gives you facility to transfer your
running loan from an other Bank

5. Top-Up Loan- ICICI Bank Home Loan facilitates the Top-Up Loan, an
additional funding against the security of your property.

Features & Benefits of ICICI Bank Home Loan

• Attractive Home Loan Rates
• No charges on part pre-payment of your Home Loan
• Top Up & Home Improvement Loan facility available on existing Home Loan
• Home loan amounts suited to your needs
• Home Loan tenure upto 25 years
• Simplified Documentation
• Doorstep Delivery of home loan papers
• Sanction approval without having selected a property.
• Free Personal Accident Insurance policies
• Insurance options for your home loan at attractive premium

Documentation required for ICICI Bank Home Loan

Salaried Self employed

Age 21years to 65years
Income Rs.1,44,000 (p.a)
Loan Amount
2,00,000 - 1,00,00000
Offered
Tenure 5years-20years
Current
1years
Experience
0.5% of loan amount as
Processing FeeAdministrative Fee or Rs.
2,000, whichever is higher
1) Application form with
photograph
2) Identity & residence proof
3) Latest salary slip
Documentation 4) Form 16
5) Last 6 months bank
statements
6) Processing fee cheque
21years to 65years
Rs.1,50,000 (p.a)
2,00,000 - 2,00,00000
5years-20years
3years
0.5% of loan amount as
Administrative Fee or Rs.
2,000, whichever is higher
1) Application form with
photograph
2) Identity & residence proof
3) Proof of business existence
4) Profile of the Business
5) Last 3years ITR
6) Last 6 months bank
statements
7) Processing fee cheque

Current Home Loan Interest Rates of ICICI Bank Home Loan:

Loan Up to 20 From 20Lacs to 30 From 30 Lacs to 75 Above 75

Schemes Lacs Lacs Lacs Lacs
ICICI Bank
9.50% 9.75% 10% 10.25%
Home Loan
Chapter 5:

Findings and Recommendations:

ICICI BANK
ICICI Bank is amongst the few Indian banks that actually reduced their share
of India's total non-food credit disbursements from 9.6% in FY08 to 6.6% in
FY10. Being the second largest bank in the country after SBI in terms of
asset size, the bank had a franchise of over 5,220 ATMs and 1,707 branches
at the end of March 2010. Retail assets constituted 44% of advances in FY10,
down from 59% in FY08.

SBI
SBI is India's largest banking comp+any in the country with an asset size of
over Rs 9 trillion (Rs 9,000 bn). Although the bank's loan book is largely
skewed towards corporate (52% of total advances in FY10), the retail side is
also fast catching up. SBI has a network of over 12,600 branches and 16,300
ATMs across the country.

Some reasons for opting housing loan from State Bank of India:

Excellent service and lower costs:

A quick survey of similar schemes available elsewhere and you will find that
SBI housing loans offer you the:

1. Lowest Base interest rates, currently between 8.25%p.a. on daily reducing

balances

2. Lowest Equated Monthly Instalments (EMI)

3. A nominal processing fee of 0.25% will be charged. Compare this with the
1.5% - 2% charged by others

4. No hidden costs or administrative costs

5. In-principle approval given prior to your identifying a house /flat, giving

you flexibility in choice.

6. Complete transparency - SBI rate of interest for example is 8.75% p.a. we

pay only 8.75%. When others say 8.75%, we may be paying even 10% p.a.,
as interest may be levied even on the amounts you have already repaid. This
is because we apply interest on a daily reducing balance while housing
finance companies/ other banks mostly apply interest on annual reducing
balance.
Bibliography:

• www.statebankofindia.com
• www.icicibank.com
• www.scribd.com
• www.equitymaster.com
• www.deal4loans.com