Retail Asset Management-Home Loans

Submitted in partial fulfillment of PGDM

PGDM BATCH 2010-12

Submitted By Vikash Jhunjhunwalla

Faculty Guide Prof. Jagdish Reddy

Director Academics Dr. Sabyasachi Rath

INSTITUTE OF SYSTEMS & MANAGEMENT

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Declaration

I Vikash Jhunjhunwalla, hereby declare that the project title Retail Asset Management-Home Loans is an original work carried out under the guidance of Prof.Jagdish Reddy. The report submitted is bonafide work of my own effort and has not been submitted to any institute or published before.

(Vikash Jhunjhunwalla)

Date: 23rd June, 2011 Place: Dhanbad

Faculty Guide Certificate

I Prof. JAGDISH REDDY certifies Mr. VIKASH JHUNJHUNWALLA that the work done and training undertaking by him is genuine to the best of my knowledge and acceptance.
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(Prof. JAGDISH REDDY) Date:

Acknowledgement

I express my gratitude to Dr.SABYASACHI RATH Director of VISHWA VISHWANI INSTITUTE OF SYSTEM AND MANAGEMENT. I would also remember and acknowledge the continual support and guidance of Prof. JAGDISH REDDY our faculty member and project guide at college. I would like to take the opportunity to express my profound gratitude to Mr. RAKESH KUMAR, for giving me the opportunity to do project entitled RETAIL ASSETS MANAGEMENT-HOME LOANS in IDBI BANK Limited (RAC). Finally I express my sincere thanks to my family, friends & others without whose help it would have been impossible to complete my study.

(Vikash Jhunjhunwalla)

Date: 23rd June, 2011 Place: Dhanbad

INDEX

Chapter No Chapter 1

Content Introduction

Page No 6-7

Chapter 2

Industry Profile Company Profile Literature Review

8-11 12-27 28-34

Chapter 3

Research Methodology

35-38

Chapter 4

Data Collection Analysis & Interpretation

39-53

Chapter 5

Finding Conclusions Recommendations

54 55 56

Chapter 6

Books / Articles referred Website referred Questionnaire

57

58-59

CHAPTER 1 INTRODUCTION
Banking Industry which is basically my concern industry around which my project has to be revolved is really a very complex industry. And to work for this was a comfortable task and few times I felt that it is really very easy to carry on with the banking transaction. Challenges which I faced while doing this project were following Banking sector was quite similar in offering and products and because of that it was very difficult to discriminate between our product and products of the competitors. Target customers and respondents were too busy persons that to get their time and view for specific questions was very difficult. Sensitivity of the industry was also a very frequent factor which was very important to measure correctly. Area covered for the project while doing job also was very large and it was very difficult to correlate two different customers/respondents views in a one. Every financial customer has his/her own need and according to the requirements of the customer product customization was not possible. So during my training the things which came across to me are as follows: What are the financial aspects of sanctioning a loan to the customer by the bank? The bank has to go through many procedures while disbursing any loan to the customers. Even with this I applied some marketing concept of visiting some builders as well as some good institution for the tie-ups with the bank. As the IDBI bank RAC Center in which I did my training was a newly opened branch thus the branch is presently dealing with the products like HOME LOAN, EDUCATION LOAN and AUTO LOAN

Topics covered in the project

To determine the home loan and its type available in the market. To analyze Indian home loan market and its growing trend. To determine different banks providing home loans and its structure. To analyze modus operandi of home loans. To analyze different steps in getting home loans.

Definition
A "home loan" is a credit to a consumer for the purchase or transformation of the private immovable property he owns or aims to acquire secured either by a mortgage on immovable property or by a surety commonly used in a Member State for that purpose.

A home loan requires you to pledge your home as the lender's security for repayment of your loan. The lender agrees to hold the title or deed to your property until you have paid back your loan plus interest.

Thus in the simplest terms home loan is the loan taken from any financial institution for the purchase of newly home by paying interest as agreed during the deal. Thus the rate of interest depends on the bank as also it differs from banks to banks. Some banks may charge higher price where as some banks charge low price.

Typically, banks and HFCs offer up to 85 per cent of the property cost as housing loans. The total cost of the property include various charges as acceptable to the HFCs, such as agreement value of the property, stamp duty and registration charges, society transfer charges, garage charges for parking cars, electricity and water connection charges, as well as cost of additional furnishings done by the developer or builder, for which an amenities agreement has been entered into between the customer and developer that has been duly stamped and registered. However, there are selected banks that offer 100 per cent or even more financing for your dream home without any extra efforts from your side. You just need to ask the representatives of these banks or their authorized agents for these offers. On standard home loan products, Citibank claims to offer home loans up to 90 per cent of the property value, the highest from any bank . Lately, Citibank has come up with a new home loan product that it calls "zero down payment loan. According to a loan calculator provided by the bank on its website, a person with monthly income of Rs 30,000 is eligible for a dream home for up to Rs 16, 28,372 with a 15-year loan under this zero down payment plan. Incidentally, the loan amount is same under the bank's standard home loan plan on similar metrics, according to the web-based calculator ICICI Bank, a major player in the housing finance market, also offers Special 100 per cent funding for select properties , claims the bank's website. However, the bank offers only 85 per cent of the

property cost as home loans under its standard plans. The bank sources admit, however, that 100 per cent financing is considered in special cases.
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CHAPTER 2
INDUSTRY PROFILE
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 in every city and villages of all nook and corners of the land.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. And that was not the limit of growth. 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 stateof-the-art technology, which in turn helps them to save on manpower costs.

During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period. The share of foreign banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the year 2000.about the detail of the current scenario we will go through the trends in modern economy of the country.

Current Scenario
The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system, are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (NPA) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions. PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, HDFC Banks merger with Times Bank ICICI Banks acquisition of ITC Classic, Anagram Finance and Bank of Madurai. Centurion Bank, IndusInd Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a Pandoras box and brought about the realization that all was not well in the functioning of many of the private sector banks. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, and mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias commitment to the W To 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. Tasks of government diluting their equity from 51 percent to 33 percent in November 2000 have also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing Indian partners. 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.

Aggregate Performance of the Banking Industry

Aggregate deposits of scheduled commercial banks increased at a compounded annual average growth rate (CAGR) of 17.8 percent during 1969-99, while bank credit expanded at a CAGR of 16.3 percent per annum. Banks investments in government and other approved securities recorded a CAGR of 18.8 percent per annum during the same period.

In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0 percent as against the previous years 6.4 percent. The WPI Index (a measure of inflation) increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by around 16.2 percent as against 14.6 percent a year ago. The growth in aggregate deposits of the scheduled commercial banks at 15.4 percent in FY01 percent was lower than that of 19.3 percent in the previous year, while the growth in credit by SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago. The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75 percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of 2000-2001. On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it was a feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is likely to be hiked to 12.0 percent by the year 2004 based on the Basle Committee recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at the same time so that its capital as a percentage of the risk-weighted assets is maintained at the stipulated rate. While the IPO route was a much-fancied one in the early 90s, the current scenario doesnt look too attractive for bank majors. Consequently, banks have been forced to explore other avenues to shore up their capital base. While some are wooing foreign partners to add to the capital others are employing the M& A route. Many are also going in for right issues at prices considerably lower than the market prices to woo the investors. The two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has however remained more or less insulated. The past 2 years in our country was characterized by a mounting intention of the Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing differential between global and domestic rates.

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The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee against the dollar. The steady fall in the interest rates resulted in squeezed margins for the banks in general.

Governmental Policy:
After the first phase and second phase of financial reforms, in the 1980s commercial banks began to function in a highly regulated environment, with administered interest rate structure, quantitative restrictions on credit flows, high reserve requirements and reservation of a significant proportion of lendable resources for the priority and the government sectors. The restrictive regulatory norms led to the credit rationing for the private sector and the interest rate controls led to the unproductive use of credit and low levels of investment and growth. The resultant financial repression led to decline in productivity and efficiency and erosion of profitability of the banking sector in general. This was when the need to develop a sound commercial banking system was felt. This was worked out mainly with the help of the recommendations of the Committee on the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a number of structural measures. Interest rates have thus been steadily deregulated in the past few years with banks being free to fix their Prime Lending Rates (PLRs) and deposit rates for most banking products. Credit market reforms included introduction of new instruments of credit, changes in the credit delivery system and integration of functional roles of diverse players, such as, banks, financial institutions and non-banking financial companies (NBFCS). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the markets to shore up their Cars.

Implications of Some Recent Policy Measures:

The allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater autonomy to the industry. In order to lend more depth to the capital markets the RBI had in November 2000 also changed the capital market exposure norms from 5 percent of banks incremental deposits of the previous year to 5 percent of the banks total domestic credit in the previous year. But this move did not have the desired effect, as in, while most banks kept away almost completely from the capital markets, a few private sector banks went overboard and exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a comeback to the stock markets are therefore quite unlikely in the near future. The move to
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increase Foreign Direct Investment FDI limits to 49 percent from 20 percent during the first quarter of this fiscal came as a welcome announcement to foreign players wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of net worth to meet CAR norms. Ceiling for FII investment in companies was also increased from 24.0 percent to 49.0 percent and have been included within the ambit of FDI investment.

COMPANY PROFILE
The economic development of any country depends on the extent to which its financial system efficiently and effectively mobilizes and allocates resources. There are a number of banks and financial institutions that perform this function; one of them is the development bank. Development banks are unique financial institutions that perform the special task of fostering the development of a nation, generally not undertaken by other banks. Development banks are financial agencies that provide medium-and long-term financial assistance and act as catalytic agents in promoting balanced development of the country. They are engaged in promotion and development of industry, agriculture, and other key sectors. They also provide development services that can aid in the accelerated growth of an economy. The objectives of development banks are: To serve as an agent of development in various sectors, viz. industry, agriculture, and international trade To accelerate the growth of the economy To allocate resources to high priority areas To foster rapid industrialization, particularly in the private sector, so as to provide employment opportunities as well as higher production To develop entrepreneurial skills To promote the development of rural areas To finance housing, small scale industries, infrastructure, and social utilities.

In addition, they are assigned a special role in: Planning, promoting, and developing industries to fill the gaps in industrial sector. Coordinating the working of institutions engaged in financing, promoting or developing industries, agriculture, or trade, rendering promotional services such as discovering project ideas, undertaking feasibility studies, and providing technical, financial, and managerial assistance for the implementation of projects.
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Industrial development bank of India

The industrial development bank of India(IDBI) was established in 1964 by parliament as wholly owned subsidiary of reserve bank of India. In 1976, the banks ownership was transferred to the government of India. It was accorded the status of principal financial institution for coordinating the working of institutions at national and state levels engaged in financing, promoting, and developing industries. IDBI has provided assistance to development related projects and contributed to building up substantial capacities in all major industries in India. IDBI has directly or indirectly assisted all companies that are presently reckoned as major corporate in the country. It has played a dominant role in balanced industrial development. IDBI set up the small industries development bank of India (SIDBI) as wholly owned subsidiary to cater to specific the needs of the small-scale sector. IDBI has engineered the development of capital market through helping in setting up of the securities exchange board of India(SEBI), National stock exchange of India limited(NSE), credit analysis and research limited(CARE), stock holding corporation of India limited(SHCIL), investor services of India limited(ISIL), national securities depository limited(NSDL), and clearing corporation of India limited(CCIL) In 1992, IDBI accessed the domestic retail debt market for the first time by issuing innovative bonds known as the deep discount bonds. These new bonds became highly popular with the Indian investor. In 1994, IDBI Act was amended to permit public ownership up to 49 per cent. In July 1995, it raised over Rs 20 billion in its first initial public (IPO) of equity, thereby reducing the government stake to 72.14 per cent. In June 2000, a part of government shareholding was converted to preference capital. This capital was redeemed in March 2001, which led to a reduction in government stake. The government stake currently is 51 per cent. In august 2000, IDBI became the first all India financial institution to obtain ISO 9002: 1994 certification for its treasury operations. It also became the first organization in the Indian financial sector to obtain ISO 9001:2000 certifications for its forex services.

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Milestones
July 1964: Set up under an Act of Parliament as a wholly-owned subsidiary of Reserve Bank of India. February 1976: Ownership transferred to Government of India. Designated Principal Financial Institution for co-coordinating the working of institutions at national and State levels engaged in financing, promoting and developing industry. March 1982: International Finance Division of IDBI transferred to Export-Import Bank of India, established as a wholly-owned corporation of Government of India, under an Act of Parliament. April 1990: Set up Small Industries Development Bank of India (SIDBI) under SIDBI Act as a wholly-owned subsidiary to cater to specific needs of small-scale sector. In terms of an amendment to SIDBI Act in September 2000, IDBI divested 51% of its shareholding in SIDBI in favour of banks and other institutions in the first phase. IDBI has subsequently divested 79.13% of its stake in its erstwhile subsidiary to date. January 1992: Accessed domestic retail debt market for the first time with innovative Deep Discount Bonds; registered path-breaking success. December 1993: Set up IDBI Capital Market Services Ltd. as a wholly-owned subsidiary to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services. IDBI Capital is currently a leading Primary Dealer in the country. September 1994: Set up IDBI Bank Ltd. in association with SIDBI as a private sector commercial bank subsidiary, a sequel to RBI's policy of opening up domestic banking sector to private participation as part of overall financial sector reforms. October 1994: IDBI Act amended to permit public ownership upto 49%. July 1995: Made Initial Public Offer of Equity and raised over Rs.2000 crore, thereby reducing Government stake to 72.14%. March 2000:Entered into a JV agreement with Principal Financial Group, USA for participation in equity and management of IDBI Investment Management Company Ltd., erstwhile a 100% subsidiary. IDBI divested its entire shareholding in its asset management venture in March 2003 as part of overall corporate strategy.

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March 2000: Set up IDBI Intech Ltd. as a wholly-owned subsidiary to undertake IT-related activities.

June 2000: A part of Government shareholding converted to preference capital, since redeemed in March 2001; Government stake currently 58.47%.

August 2000: Became the first All-India Financial Institution to obtain ISO 9002:1994 Certification for its treasury operations. Also became the first organisation in Indian financial sector to obtain ISO 9001:2000 Certification for its forex services.

March 2001: Set up IDBI Trusteeship Services Ltd. to provide technology-driven information and professional services to subscribers and issuers of debentures.

February 2002: Associated with select banks/institutions in setting up Asset Reconstruction Company (India) Limited (ARCIL), which will be involved with the Strategic management of non-performing and stressed assets of Financial Institutions and Banks.

September 2003: IDBI acquired the entire shareholding of Tata Finance Limited in Tata Home finance Ltd, signaling IDBI's foray into the retail finance sector. The housing finance subsidiary has since been renamed 'IDBI Home finance Limited'.

December 2003: On December 16, 2003, the Parliament approved The Industrial Development Bank (Transfer of Undertaking and Repeal Bill) 2002 to repeal IDBI Act 1964. The President's assent for the same was obtained on December 30, 2003. The Repeal Act is aimed at bringing IDBI under the Companies Act for investing it with the requisite operational flexibility to undertake commercial banking business under the Banking Regulation Act 1949 in addition to the business carried on and transacted by it under the IDBI Act, 1964.

July 2004: The Industrial Development Bank (Transfer of Undertaking and Repeal) Act 2003 came into force from July 2, 2004.

July 2004: The Boards of IDBI and IDBI Bank Ltd. take in-principle decision regarding merger of IDBI Bank Ltd. with proposed Industrial Development Bank of India Ltd. in their respective meetings on July 29, 2004.

September 2004: The Trust Deed for Stressed Assets Stabilization Fund (SASF) executed by its Trustees on September 24, 2004 and the first meeting of the Trustees was held on September 27, 2004.

September 2004: The new entity "Industrial Development Bank of India" was incorporated on September 27, 2004 and Certificate of commencement of business was issued by the Registrar of Companies on September 28, 2004.
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September 2004:Notification issued by Ministry of Finance specifying SASF as a financial institution under Section 2(h)(ii) of Recovery of Debts due to Banks & Financial Institutions Act, 1993.

September 2004:Notification issued by Ministry of Finance on September 29, 2004 for issue of non-interest bearing GOI IDBI Special Security, 2024, aggregating Rs.9000 crore, of 20-year tenure.

September 2004: Notification for appointed day as October 1, 2004, issued by Ministry of Finance on September 29, 2004.

September 2004: RBI issues notification for inclusion of Industrial Development Bank of India Ltd. in Schedule II of RBI Act, 1934 on September 30, 2004.

October 2004: Appointed day - October 01, 2004 - Transfer of undertaking of IDBI to IDBI Ltd. IDBI Ltd. commences operations as a banking company. IDBI Act, 1964 stands repealed.

January 2005: The Board of Directors of IDBI Ltd., at its meeting held on January 20, 2005, approved the Scheme of Amalgamation, envisaging merging of IDBI Bank Ltd. with IDBI Ltd. Pursuant to the scheme approved by the Boards of both the banks, IDBI Ltd. will issue 100 equity shares for 142 equity shares held by shareholders in IDBI Bank Ltd. EGM has been convened on February 23, 2005 for seeking shareholder approval for the scheme.

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IDBI Bank Business Chart

IDBI BANK

RETAIL BANKING

DEVELOPMENT BANK.

SAVING ACCOUNT

CURRENT ACCOUNT

INVESTMENT

PERSONAL SAVING

CORPORATE SAVING

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IDBI Bank Organizational Chart

Chairman

President

Vice president Finance

Vice president H. R.

Vice president Marketing

Vice president Operations

Regional Head

Zonal Head

Divisional Sales Manager

Territory In charge

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PRODUCT DESCRIPTION HOME LOAN

Home, sweet home, built out of your dreams. A place where you return after a hard day's work and relax, a place where you share precious moments with your family. A place that gives you a sense of belonging. IDBI Bank helps you realize your long cherished dream of owning your home through hassle free and customer friendly home loans. Presenting IDBI Bank's ultra flexible home loan you have been looking for. We realize what owning your home means to you and your family. You can avail of the Home Loans for constructing a home, purchasing a ready built house / flat, residential plot and even for re-financing existing loans you may have availed from other banks or housing finance companies.

Advantages of IDBI Bank Ultra Flexible Home Loans

Maximum Funding Flexibility of choosing between Floating or Fixed interest rate Attractive rate of interest EMI on daily reducing balance Personalized doorstep service Simple documentation Legal and technical assistance Balance transfer facility Reassessment and adjustment of applicant's loan eligibility in case of change of income and residence status

Features
Tenor of a home loan can be up to 25 years for a resident individual whereas for NRIs the maximum tenure is 15 years subject to maximum age of 60 years at maturity. Loan can be applied for a maximum of 90% of the property value subject to credit discretion. Security for the loan is a first mortgage of the property to be financed, normally by way of deposit of the title deeds or such collateral security as may be necessary. Title to the property should be clear and free from encumbrance, i.e., without any pending legal litigation adversely affecting the ownership of the property.
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Other parameters considered include an account of your age, income, number of dependents, financial stability and co-applicants income.

Tax Benefits
As per the current finance bill you can get: A maximum deduction of Rs. 1,50,000 on your income towards interest paid on your home loans u/s 24 A maximum deduction of Rs. 1,00,000 on the principal repaid u/s 80 CCE The above benefits are available subject to you fulfilling certain conditions, for which you should refer the IT Act 1961

LOAN AGAINST PROPERTY

We, at IDBI Bank realize how important it is to raise money in the face of exigencies. We help you through these difficult situations through our customer friendly Loans against property (Residential & Commercial) product. Loans could be used for: Education Business Marriage Purchase or improvement of property Medical treatment or any other personal need.

Maximum amount possible is Rs 500, 00,000 subject to repayment capacity and value of property. Check the FAQs for more details. The IDBI Bank Advantage Tenor up to 15 years Attractive Rate of Interest Maximum Funding Interest rate on daily reducing balance Fixed and floating interest rate options Simple documentations Personalized doorstep services Free legal and technical assistance
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AUTO LOAN
Getting to drive your dream vehicle can make life seem so much better. Which is why, at IDBI Bank, we offer you Express Auto Loans, with the single minded aim of getting the vehicle you desire. Easy and quick, these loans make sure you take on the roads the way you want to. So, what are you waiting for? Just rush to book your dream machine, while we take care of your loan requirement

Features and Benefits

Maximum Funding Covers wide range of vehicles and high end bikes Repayment period up to 60 months. Repay with easy EMIs. Hassle-free documentation. Attractive Interest rates. Tie-ups with Dealers and Manufacturers

EDUCATION LOAN
Education loans from IDBI Bank aim at providing financial support to deserving / meritorious students for pursuing higher education in India and abroad. With an array of courses to choose from and easy repayment options, IDBI Bank makes sure you get complete financial backing.

An installment based loan for all courses mentioned below:

Studies in India
Graduation courses: BA, B.Com., B.Sc., etc Post Graduation courses: Masters & PhD Professional courses: Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university Courses like ICWA, CA, CFA etc
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Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc Courses offered in India by reputed foreign universities Evening courses of approved institutes Other courses leading to diploma / degree etc. conducted by colleges / universities approved by UGC / Govt. / AICTE/ AIBMS / ICMR etc

Courses offered by National Institutes and other reputed private institutions. Banks may have the system of appraising other institution courses depending on future prospects/ recognition by user institutions.

Studies abroad
Graduation: For job oriented professional / technical courses offered by reputed universities. Post graduation: MCA, MBA, MS, etc. Courses conducted by CIMA- London, CPA in USA etc.

Special Courses
Regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc., approved by Director General of Civil Aviation/Shipping. In case the course is pursued abroad, the competent local aviation/shipping authority should recognize the Institute.

Loan Amount
Maximum loan amount: Study in India-Rs.10 lakhs Study Abroad -Rs.20 lakhs

Loan Margin: Upto Rs. 4 lac - Nil Above Rs. 4 lac -

- Studies in India - 5% of the total course expenditure - studies abroad - 15% of the total course expenditure

Expenses Covered under Loan

Fee payable to college / school/ hostel Examination / Library / Laboratory fee Purchase of books / equipments / instruments / uniforms
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Caution deposit / building fund / refundable deposit supported by Institution bills / receipts Travel expenses / passage money for studies abroad Purchase of computers - essential for completion of the course Any other expense required to complete the course - like study tours, project work, thesis, etc.

Insurance premium for student borrower

Repayment terms
The repayment of loan to begin after the course period + 1 year or 6 months after getting a job, whichever is earlier. The loan to be repaid within 5-7 years (maximum tenor 84 months) after commencement of repayment.

Rate of Interest
Base Rate = 10.00% p.a. (w.e.f. April 05, 2011) Up to Rs. 4 lakhs Above Rs. 4 lakhs For the students of IIT,IIM and ISB (up to Rs 20 lakhs ) 12.75% 13.00% 12.00%

Simple interest to be charged during repayment holiday and moratorium Accrued interest during the repayment holiday period should be added to the EMIs. Where the borrower has not opted for the repayment holiday or is willing to service the interest during the repayment holiday (for principal) the interest rate should be 1% lower than the applicable rate. 50 basis points reduction for girl applicants 50 basis points reduction for physically challenged applicants (subject to submission of certificate from a medical practitioner)

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Repayment holiday / moratorium:

Duration of the course period + 1 year / 6 months after getting a job, whichever is earlier. The loan to be repaid in 5-7 years (maximum tenor 84 months) after commencement of repayment. Collateral Security Up to Rs 4 lacs Above Rs 4 lacs and up to Rs. 7.5 lacs Above Rs 7.5 lacs No security Collateral in the form of a third party guarantee Collateral security in the form of Land/ building, (The minimum value shall be 1.33 times the amount of loan sought). Govt. securities/ Public Sector Bonds/ Units of UTI, NSC, KVP, LIC policy, gold, shares/ debentures, bank deposit in the name of parent/ guardian or in the name of the co-applicant (The minimum value shall be 1.1 times of the amount of loan sought).

Wherever the land/ building are already mortgaged, the unencumbered portion can be taken as security on IInd charge basis provided it covers the required loan amount. In case the loan is given for purchase of a computer the same to be hypothecated to the Bank.

PERSONAL LOAN
A Loan designed to meet various personal requirements of the salary holders with IDBI Bank Ltd. Loan Amount: Minimum : Rs. 25000 Maximum : Rs. 500000 (Based on the classification of cities) Minimum Net Salary: Minimum : Rs. 15000 Maximum : Rs. 25000 (Based on the classification of cities) Prepayment Charges: Nil
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Tenor: Minimum 12 Months Maximum: 36 months

Home Loans (Floating) Rate of Interest: With Collateral Security: 13% (Fixed) p.a. Collateral Security means: Govt. Securities/ Public Sector Bonds/ Units of UTI, NSC, KVP, LIC policy (Surrender Value), Bank Deposit (The minimum value should be at least equivalent of the loan amount sought). Without Collateral Security: 15% (fixed) p.a

LOAN AGAINST SECURITIES

Now no need to keep your long term investments locked. Get Liquidity against your long term investments to maximize your returns. It is also a need of the hour to maximize the returns on investments made by generating cash flow against the securities held, taking further investment calls. Besides, exigencies in life could crop up at the most unexpected time. As an investor you would have invested in Securities with a long-term perspective in mind but are left with no other option than to sell the Securities to meet your urgent financial requirements. Stop worrying-IDBI Bank offers Loan against Securities, which provides liquidity to your Securities without having to sell them. Loan against Securities is provided in the form of an overdraft facility. Pledge your securities in favor of the Bank and the Drawing Power (DP) is calculated based on the applicable margins as given below. Facility is renewable depending on the performance of the account. What makes it more attractive is that you pay interest only on the amount utilized.

Features and Benefits.

Can enjoy the benefits of your securities and still avail a loan on the same No EMIs No Post Dated cheques No Pre payment charges Interest charged only on utilized amount Simple and speedy processing
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REVERSE MORTGAGE LOAN

Senior Citizens are an imperial component of the Indian society. There is significant increase in cost of good health care facilities along with little social security. Senior Citizens require a regular cash flow stream for supplementing pension/other income and addressing their financial needs. Reverse Mortgage seeks to monetize the house as an asset and specifically the owners equity in the house. The scheme involves the Senior Citizen borrower(s) mortgaging the house property to IDBI Bank, in return of periodic payments to the borrower(s) during the latters lifetime to help them in sustaining themselves.

The IDBI Bank Advantage

Maximum Funding Services at doorstep Simple documentation Personalized services Free legal and technical assistance Attractive rate of interest

Applying for a Reverse Mortgage Loan against Home is absolutely simple. Just call our Phone Banking numbers and our representative will contact you at the earliest

Features
Eligibility The residential house/flat owner, who is resident of India, of the age of 60 years & above, is eligible to raise the loan under this Scheme. Tenor The Maximum Tenor of the loan shall be up to 20* Years. Security Borrower owned Residential Property should be used as collateral by way of equitable Mortgage in favor of the IDBI Bank.

26

Prepayment/foreclosure The borrower(s) will have option to prepay the loan at any time during the loan tenor. There will not be any prepayment levy/penalty/charge for such prepayments.

Right of Rescission After the loan is sanctioned senior citizen borrower(s) shall be given up to 10 days time to re-look into his requirements and if he so wishes to cancel the transaction for any reason whatsoever

CORPORATE LOAN
In its continuing endeavor to effectively meet the requirements of different Groups of Corporate Clients, IDBI Bank Ltd. has organized its Corporate Banking Wing based on client's turnover besides creating a separate specialized cell and Group each to cater to Corporate in Film Sector and Infrastructure Sector respectively. Based on scale, Corporate with turnover of more than Rs. 100 crores but up to Rs. 500 crore are looked after by Mid Corporate Group (MCG) while Corporate with turnover of more than Rs. 500 crore are looked after by Large Corporate Group (LCG). However, as stated earlier, with a view to effectively manage the peculiar requirements of Film Finance, a specialized cell has been set up in LCG to cater to Corporate in Film Sector regardless of their turnover.

Special focus for Infrastructure Financing

Further, considering the significance of the infrastructure sector in the countrys development, a specialized Group, namely Infrastructure Corporate Group (ICG) has been created which deals with Corporate from infrastructure, Industries accorded infrastructure status by RBI, regardless of their turn over. Since inception in 1964 [formerly as Industrial Development Bank of India], IDBI Bank has been assigned to play a distinctive role in the promotion of industrial development of the country. It has provided financial assistance towards setting up of industrial estates. Being a prominent player in financing infrastructure projects, IDBI Bank actively participates in addressing policy-related issues in various forums including the Committees constituted by the Government of India. Finalization of model Power Purchase Agreement and Model Concession Agreement in road sector are some of the significant contributions made by IDBI Bank in the development of this sector. It has financed landmark first-of-its-kind projects in the infrastructure sector such as Independent power project, fixed and mobile telecom, port, road and airports in India.

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LITERATURE REVIEW
WHY TAKE A LOAN TO INVEST IN HOME
Besides the obvious answer that goes because I cannot afford to buy a shelter over my head outright", there are several other reasons why a Home Loan makes sense from a long term Savings perspective. Your grandfather may have told you Son, dont take any loans, they are only trouble" but this is no longer true in the New World. You may have also heard the saying that "Wealth begets Wealth". However, great many of us cannot put up that initial capital to kick-start the wealth creation process. Assume that you have identified a Gemstone that can be bought for about Rs. 2 lacs today but would be worth Rs. 31 lacs in 15 years (a compounded return of 20% over the 15 year period). You would have grabbed the offer but for the fact that you have a bank balance of just Rs. 50,000. A friend comes along and offers to loan you Rs. 1.5 lacs but at an interest of 10%. You will immediately buy the Gemstone as you calculate that the return from the investment in the Gemstone is far higher than the interest cost that you have to pay your friend. We put the same principle to work for you while taking a housing loan. Just substitute "Home" instead of "Gemstone" and " Housing Finance Company" in place of "Friend in the previous example and you will see why. The long term average return in investing in a home is about 20% p.a. while the average cost of borrowing funds in the market today is about 10% p.a. (after considering all tax breaks). As long as the cost of financing the home is less than about 20% it makes sense to borrow and buy. There is one key difference howeveryou can live in the Home as well

CHOOSING A LOAN
There are several features of a Home loan that you must consider based on an analysis of your specific needs.

How much can you afford?

As the investment in a home does not yield any monthly income, (unless you have rented out the home) your ability to repay the loan depends entirely on your salary or regular income from a stable business. Finance companies would normally give you a loan to the extent that your monthly repayments are less than 35-50% of your gross monthly salary. AbodesIndia.com gives you the ability to find the Maximum loan that you can afford among the companies in the database.
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How much must you leverage?

Having found a Rs. 10 lac property that you want to buy, you must decide how much of the cost can be funded by a loan. Normally Housing Finance Companies will loan you about 80-85% of the property value. You need to make a minimum down payment of 15-20% of the property value. Please also remember that you have to normally bear the following fixed costs before your loan is disbursed: 1. Processing and administrative fee (1.5-2% both included) 2. Legal fees 3. Stamp duty charges (for resold property) 4. Property insurance premium 5. Accident insurance premium Make sure that you have an asset base that is easily converted to cash (e.g. cash in a Bank FD etc.) to cover all charges including down payment. As the value of the loan amount increases, the interest rate charged usually also increases. You may feel tempted to take a smaller loan by funding the large down payment (the difference between the value of the property and the loan you have applied for), by withdrawals from other investments. If your investments are in Fixed Deposits that are giving you about 11% p.a (about 7.4% p.a. after tax) and the effective post tax cost of you Home Loan is 10% (about 15% before tax) then this is a good idea. However, if you expect to make over 20% p.a. (about 13.5% post tax) by investing in shares or in a business, then you must borrow as much as you can on the Home Loan and not withdraw money from your other investments. Another important consideration is your tax bracket and the extent of using available tax breaks. The tax breaks are directly related to the level of interest and principal repayments made each year, with an over all upper limit. You may not qualify for the full tax break if your loan is relatively small. Also remember that the government is keen to give more concessions to the housing sector and the overall cap on tax breaks will go up in the future. It is prudent to lock into a large loan today rather than a smaller one. If you have identified other profitable avenues of savings that are expected to give you 15-20% returns p.a, you can use the Home Loan as a way of getting a cheap loan. In this case borrow up to the limit of 80-85% of the property value rather than withdraw cash from the other savings to make the down payment on the loan.

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What is the tenure of the loan?

Loans are usually for a maximum period of 15 years (which may go Upto 20 years in some cases). Longer tenure loans have smaller monthly installments. You can still get a large loan on a relatively small monthly salary by choosing to take a longer period loan. However, longer period loans maybe more expensive (higher rate of interest) even though the monthly installment payment is lower. Convenience always comes at a cost! Statistical evidence also shows that most people take a longer tenure loan of 1015 years but end up prepaying the same in 5-6 years. This happens because salaries invariably improve with time. There are two costs that could have been avoided through better planning. The first is the Prepayment penalty of 1-2 % and the second is the higher interest rates quoted on longer tenure loan (especially over 20 years). In this example, both costs could have been avoided by taking just a 5-6 year loan. Further, if you intend to sell the home after about 510 years, take a 5-10 year loan only. There is no point paying a higher interest rate for a longer tenure loan of 15-20 years, if you intend to PREPAY the loan in 5-10 years.

How will interest rates move?

Till recently you did not have to make this decision as all loans were given on a FIXED RATE basis. This means that the interest rate is fixed for the full tenure of the loan and so is your monthly repayment amount. Life was simple. You could easily plan for the future as your cash flows each monthly after the loan repayments were very predictable. However, interest rates in the economy, changes depending on the demand and supply of money. When industry is booming and everyone needs money to do business, interest rates move up and vice versa. Home loan customers became unhappy about having to pay a very high interest rate that they were locked into, when rates subsequently fell. For the customers convenience, FLOATING RATE loans were recently introduced. The interest rate on these loans changed every time the interest rate in the financial system changed. The monthly installment falls if interest rate in the economy falls (HSBC home loan product). With other companies the monthly installment amount was kept fixed but the tenure of the loan reduces if interest rates in the economy falls (e.g. HDFC floating rate loans). Normally, floating interest rates are quoted in the form of "PLR plus premium". The PLR (Prime Lending Rate) varies from company to company and changes as frequently as once in 3 months.

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Example
A floating rate quote of PLR+0.5% means that interest rate on the loan will change from 14.5% to 15.5% if PLR goes up from 14% to 15%. Also a PLR +0.5% quote from one bank is very different from a PLR +0.5% quote from another as the PLR levels for each may differ. In a floating rate loan, the customer gains if interest rates fall, but will take a severe beating if interest rates rise. In order to reduce this disadvantage of the floating rate loan some progressive banks like HSBC have introduced a HYBRID LOAN. In this case a person can decide to fix the interest rate on his loan for periods of 1, 2 or 3 years on a long tenure loan and subsequently decide to float his loan.

Example
We can take a 15 year loan specifying that you will have a fixed interest rate for the first 3 years, after which you have the option to convert to a floating rate loan. If you think that interest rates are about to fall them you will opt for a floating rate loan after 3 years. If interest rates were to rise during the 3-year period you are fully protected as you had locked in a rate for 3 years. We will want to stay on with a Floating rate loan as long as you feel that interest rates are expected to fall further. The moment you expect interest rates to start rising, switch immediately to a fixed rate loan. As these changes never happen overnight, you will have enough time to make the move provided you watch interest rates carefully. This additional flexibility can be capitalized to substantially lower the cost of the loan, often saving as much as 50% of the total interest you may have paid on a simple Fixed rate loan. But there is a cost the trouble of tracking interest rates and taking a forward looking view on interest rates.

Are there any prepayment penalties?

Each monthly installment consists of a portion that goes towards repaying the original loan principal and the balance going towards interest on the outstanding loan. If you pay anything over the amount that would go towards principal repayment, the excess amount is construed to be a loan prepayment. Most Housing Finance companies charge a fee of 1-2% on the amount being prepaid. This can be a big disadvantage in several cases. 1.Your earning capacity will normally increase with age and a prepayment fee deters you from completely retiring your debt before time. 2. Your ability to refinance the loan if interest rates subsequently fall gets constrained.
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3. You may want to sell the home during the tenure of the loan and you find prepayment costs are an unnecessary burden. If you may need to do any of the above, choose a loan with no prepayment fees.

The Total Effective Interest Rate (TEIR) versus the EMI comparisons
It is very important for you to understand the total cost of the loan and try to minimize this cost to the extent possible. As home loans are of a long duration even a 0.5% difference in interest rates can cost you a lot of money over time.

Example
If you had taken a taken a 15 year loan of Rs. 5 lacs at 15% p.a you would have paid Rs. 31000 less than a 15 year loan of Rs 5 lacs for 15.5%. Most of us compare the cost of the loan by comparing the EMIs (Equated Monthly Installments). This can be misleading as you are ignoring the "time value of money" which means that you need to look at when the EMI is being paid. This is because the value of One Rupee today is vastly different from the value of a Rupee 10 years ago. Using a Discounted Cash flow Model that calculates the Effective interest cost depending on when the EMI amounts are being paid solves this problem. Thus these are the most important factors to be considered while planning for a home loan.

CHOOSING A HOUSING FINANCE COMPANY

Remember that you are entering into a long-term relationship with the lender when you take a home loan. Choose a flexible home loan product that gives you the leeway to switch between fixed and floating rates at no additional cost. For short-term loans (less than 5 years) and for small loan amounts (less than Rs. 5 lacs); the Total Effective interest rates can vary widely between Finance Companies. However, for the more common, long tenure loans the interest rate differences between companies are small. In that case, Companies that have lower documentation requirements and those who are able to better customize the loan must be approached. Responsiveness to queries and the average speed in processing loan applications are the criteria used to judge service standards. Home Loan Companies quotes interest rates based Daily/Annual/Monthly rest. This can be confusing for customers. Abodes India.com simplifies this by calculating all quoted interest rates on a common basis. For comparison purposes all interest rates quotes are converted into an effective Monthly Rest basis. That quote on a (M.R) Monthly Rest basis normally provides the lowest cost loans A member of hidden costs needs to be explored. Most Companies doesnt pay for the technical valuation report of the property other insists on a registered Mortgage that will increase costs of taking the loan. But one of the most
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expensive hidden costs takes the form of a prepayment penalty. Avoid Housing Companies that charge these penalties if you hope to retire the loan before are full period (or sell the home). Though people take a 1015 year loan, improving cash inflows (from a bonus or job promotion) invariably results in prepayment of the loan in 5-7 years.

STEPS INVOLVED IN GETTING A HOME LOAN

1. Submit an Application form along with relevant documents the finance company will process your application to check your loan eligibility based on your income and personal profile. Usually an up front (non refundable fee) of about 0.5-1% of the loan amount must be paid before processing begins. 2. Verification of the property and supporting documents A company representative may visit the property as well as your residence to vary information submitted in your application form. Further, a property valuation maybe carried out by the company to determine the maximum amount they are willing to lend you. Any references submitted by you in the Application Form may also be contacted. You may be personally interviewed and any further clarifications in the documents submitted maybe sought. 3. Sanction of the loan A sanction letter is issued which you will have to sign. This letter will contain the amount and the terms of the loan. Some companies specify the period for which the loan sanction is valid. You will have to pay a Commitment fee (normally 1% of the unutilized loan amount) if you do not draw on the ENTIRE sanctioned amount before that period. 4. Submission of the original Property documents and signing the loan Agreement You will be required to leave the title deed of the property with the company as a security for the loan. You will be required to go to the companys office to execute the legal loan papers. 5. Disbursal of the Loan Cheque You can draw the loan in parts depending on the stage of construction of the building. Until such time that the entire sanctioned amount is NOT drawn, you will pay a simple interest on the Actual Amount drawn (without any principal repayments). The EMI payments will commence only after the entire Sanctioned Loan Amount is drawn.

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WHEN TO REFINANCE THE LOAN

Refinancing means repaying an existing home loan before its tenure with the money from a new loan taken under new terms and conditions. The following circumstances may trigger refinancing: 1. Interest rates in the economy have fallen and it makes sense to retire the old high cost fixed rate loan with a new fixed rate loan at the lower rate. You can do this provided rates have fallen enough to cover your prepayment penalty and the up front costs of initiating a new loan (like processing fee, administrative fee etc.). 2. If you plan to sell the home during the tenure of the original loan you will need to terminate the loan borrowing the remaining principal amount against the home equity or from the potential buyer. 3. Switch from a Fixed rate loan to a more flexible Floating rate / Hybrid product You may want to switch from a Floating rate loan to a fixed rate loan if interest rates start to move up. 4. You can lower your monthly installment payments by extending the tenure of the new loan. In order to improve your monthly cash flows you can prepay an existing loan with 5 years to go by taking a new 15-year loan for the remaining principal amount

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CHAPTER 3 Research Methodology

Objective of the study
Project study which is being conducted by me for the last 1 and half month is not only a formality for the fulfillment of the two year full time Post Graduate Diploma in Business Management. But being a management student I tried my best to extract best of the information available from the organization and the market for the use of society and people. The objectives have been classified by me in this project form personal to professional, but here I am not disclosing my personal objectives which have been achieved by me while doing the project. Only professional objectives which are being covered by me in this project are as following To know about environmental factors affecting IDBI Banks (RAC) performance. To analyze the role of advertisement for bank performance. To know the perception and conception of customers towards banking products and specially focused for IDBI Banks product. To know how many builders are ready for tie-ups with the bank for the sanctioning of the loan.

Scope of the Study

Each and every project study along with its certain objectives also has scope for future. And this scope in future gives to new researches a new need to research a new project with a new scope. Scope of the study not only consist one or two future business plan but sometime it also gives idea about a new business which becomes much more profitable for the researches then the older one. Scope of the study could give the projected scenario for a new successful strategy with a proper implementation plan. Whatever scope I observed in my project are not exactly having all the features of the scope which I described above but also not lacking all the features. Research study could give an idea of network expansion for capturing more market and customer with better services and lower cost, without compromising with quality. In future customer requirements could be added with the product and services for getting an edge over competitors. Consumer behavior could also be used for the purpose of launching a new product with extra benefits which are required by customers for their account (saving or current ) and/or for their investments.
35

Factors which are responsible for the performance for bank loans can also be used for the modification of the strategy and product for being more profitable. Factors which I observed while doing project study are following-

Competitors Customer Behaviors Advertisement/promotional activities Attitude of manpower and Economic conditions Responses provided by the builders and developers These all could also be interchanged with each other for each other in banks strategies for making a final business plan to affect the market with a positive way without disturbing a lot to market, customers and competitors with disturbance in market shares.

Tools and Techniques

As no study could be successfully completed without proper tools and techniques, same with my project. The below charts were taken into consideration for completing my project: - Bar Charts - Pie charts - Tables Bar charts and pie charts are really useful tools for every research to show the result in a well clear, ease and simple way. Because I used bar charts and pie charts in project for showing data in a systematic way, so it need not necessary for any observer to read all the theoretical detail, simple on seeing the charts anybody could know that what is being said. Technological Tools Ms- Excel Ms-Access Ms-Word Above application software of Microsoft helped me a lot in making project more interactive and productive. Microsoft-Excel had a great role in my project, it created for me a situation of you sit and get. I provided it simply all the detail of data and in return it given me all the relevant information..
36

Microsoft-Access did the performance of my personal assistant who organizes my all the details of document without disturbing them even a single time in all the project duration. And in last Microsoft-Word did help me for the documentation of the project in a presentable form.

Applied Principles and Concepts

While I started to do the project the main thing which was the matter of concern was that around what principles I have to revolve my project. Because without having any hypothesis and objective we cannot determine that what output or result we are expecting form the project. And second thing is that having only tools and techniques for the purpose of project is not relevant until unless we have the principals for which we have to use those tools and techniques. Mathematical Averages Standard Deviation Correlation

Sources of Primary and Secondary data:

For the purpose of project data is very much required which works as a food for process which will ultimately give output in the form of information. So before mentioning the source of data for the project I would like to mention that what type of data I have collected for the purpose of project and what it is exactly.

Primary Data:
Primary data is basically the live data which I collected on field while doing cold calls with the customers and I shown them list of question for which I had required their responses. In some cases I got no response from their side and then on the basis of my previous experiences I filled those fields.

Source: Main source for the primary data for the project was questionnaires which I got filled
by the customers or sometimes filled myself on the basis of discussion with the customers.

Secondary Data:
Secondary data for the base of the project I collected from intranet of the Bank and from internet, RBI Bulletin, Journal by ICFAI University.

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Statistical Analysis
In this segment I will show my findings in the form of graphs and charts. All the data which I got form the market will not be disclosed over here but extract of that in the form of information will definitely be here.

Detail:
Area Type of Data : Dhanbad district : 1. Primary 2. Secondary Industry Respondent : Banking : Customers and Builders

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CHAPTER 4 DATA COLLECTION, ANALYSIS & INTERPRETATION

Table1: Correlation between awareness of customers about IDBI bank(RAC) home loan products & their Age
AGE 20-25 25-30 30-35 35-40 40-45 45-50 50-60 60-ABOVE NO. OF RESPONSE 25 46 34 23 21 22 24 55

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60 R E S P O N S E S 50 40 30 20 10 0 20-25 25-30 30-35 35-40 40-45 45-50 50-60 60-ABOVE AGE GROUP NO. OF RESPONSE

40

TABLE 2: PERCEPTION OF IDBI AS A BANK

TYPE OF BANK PRIVATE PUBLIC PRIVATE/PUBLIC DON'T KNOW

RESPONSES 50 45 100 55

41

TABLE 3 : RATING OF CUSTOMERS FOR IDBI BANK(RAC) AS A GOOD BANK

PARAMETER RESPONSES 75% 25% 95% 33% 22%

EFFICIENCY INTERNET BANKING/ATMs PRODUCT RANGE NETWORK PHONE BANKING

RESPONSES
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

RESPONSES

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TABLE

4:

MARKET

SHARES

IN

DHANBAD

IN

COMPARISION

TO

COMPETITORS
BANK NAME % OF SHARE 30% 15% 25% 10% 5% 5% 10%

SBI IDBI ICICI PNB HDFC HSBC OTHERS

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TABLE

5:

FACTORS

RESPONSIBLE

FOR

PERFORMANCE

OF

IDBI

BANK(RAC) IN DHANBAD
PARAMETERS % OF SHARE 50% 5% 25% 2% 5% 10% 3%

PRODUCT ADVERTISMENT MANPOWER NET-BANKING PHONE BANKING INVESTMENT SCHEME NETWORK

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TABLE 6: RATING OF BUILDERS FOR IDBI BANK AS A GOOD BANK OUT OF 10

PARAMETER Radha Soami Developers Shree Ram Developers Urmi Tech Developers Balajee Infratech Feacon Developers Nalanda Developers R.K Builders and Developers Trimurthi Developers Narayan Builders Om Builders and Developers 8 5 9 6 7 8 9 7 8 8 RESPONSES

RESPONSES
Radha Soami Developers Shree Ram Developers Urmi Tech Developers Balajee Infratech Feacon Developers

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COMPETITOR ANALYSIS IDBI BANK

Buying a home of one's own is every individual's first stop in life. Which is precisely why, IDBI bank have pulled out all the stops to sew together a home loan product that has flexibility as its very foundation. They have created a product that is competitively benchmarked, that is amply affordable and one that is customer-sensitive. Only because when it comes to buying a house, the first thing you need to do is to feel at home with your bank. IDBI bank offers you only Floating rate home loans. Under the floating rate option, interest rate varies from time to time, increase or decrease as applicable SALARIED TENURE (YEARS) UPTO 5 10 15 20 INTERESE RATE (p.a) 10.25% 10.25% 10.25% 10.25% SELF EMPLOYED INTERESE RATE (p.a) 10.25% 10.25% 10.25% NA

Eligibility criteria
The bank will decide the loan amount based on your repayment capacity taking into consideration factors such as your income, age, qualifications, number of dependants, spouse's income, assets, liabilities, savings history, stability and continuity of occupation etc. however, the maximum loan amount shall not exceed 85 per cent of the cost of property which includes costs of property which includes costs towards registration, stamp duties, amenities, utilities as applicable. SALARIED AGE LIMIT Minimum Maximum LOAN AMOUNT (RS) Minimum Maximum INCOME p.a (RS) Minimum Work Experience
46

SELF EMPLOYED 24 years 58 years 2 lakhs 3 crores 1.20 lakhs 2 years Minimum Maximum Minimum Maximum Net Income 24 years 65 years 2 lakhs 3 crores 1.00lakhs 2 years

Gross

OTHER CHARGES MOF CHARGES ADMIN CHARGES PREPAYMENT(FLOATING) GUARANTOR PROCESSING CHARGE NIL 0.75% NIL NIL NIL

ICICI BANK
ICICI Home Finance Company Limited was incorporated on May 28, 1999 as 100% subsidiary of ICICI Personal Financial Services Limited (ICICI PFS). ICICI Home Finance Company Limited, was set up with the objective of providing long term housing loans to individuals and corporate. The Company was registered on March 30, 2000 with National Housing Bank (NHB) under National Housing Bank Act, 1987 in terms of Housing Finance Companies (NHB) Directions, 1989. With effect from May 3, 2002, ICICI Home Finance has become a 100% subsidiary of ICICI Bank Limited. ICICI Home Loans are at present available to customers in 150 cities/towns across the country. Loans are offered for purchase of new homes, purchase of resale homes and home improvement. Besides, the company also offers loans for commercial property and loans against existing property. The loans are offered for tenors up to 30 years. The company has also introduced several customer friendly services such as 'door-step' service, 'know your loan on phone' facility and 'ICICI Home Search' - free property brokerage services. The current ICICI Home Loan rates are as follows: Adjustable rate Home Loans Tenure (Yrs) Home Loans 1-5 6-20 New Rate (% per annum) 10.50 11.00

Fixed rate Home Loans Tenure (Yrs) Home Loans 1-5 6-10
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New Rate (% per annum) 11.00 11.50

10-20 21-30

11.50 12.00

STANDARD CHARTERED
Standard chartered home loan offers you variety, flexibility and great savings. And its hassle-free.

Flexible interest rates

We can choose between fixed and floating rates of interest. You can also shift between the two options during the loan period SALARIED TENURE (YEARS) UPTO 5 10 15 20 INTERESE RATE (p.a) 10.75% 10.75% 10.75% 10.75% SELF EMPLOYED INTERESE RATE (p.a) 10.75% 10.75% 10.75%

ELIGIBILITY CRITERIA
SALARIED AGE LIMIT Minimum Maximum LOAN AMOUNT (RS) Minimum Maximum INCOME p.a (RS) Minimum Work Experience Gross 23 years 58 years 6 lakhs NO LIMIT 1.32 lakhs 3 years SELF EMPLOYED Minimum Maximum Minimum Maximum Net Income 23 years 65 years 6 lakhs NO LIMIT 1.00lakhs 3 years

OTHER CHARGES
MOF CHARGES ADMIN CHARGES PRENIL NIL NIL

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PAYMENT(FLOATING) GUARANTOR NIL

PROCESSING CHARGE 0.50%1%

Amount and Tenure

Only Loans for Homes offers you the options and flexibility to choose the loan that's just right for you. Consider the 85% finance options for construction renovation and extension. Or the largest loan amount of Rs 1 crore. And a loan period of up to 15 years. A look at the table will tell you how much you can benefit from Loans for Homes. LOAN LOAN TO VALUE (UPTO) SELF CONSTRUCTION HOME RENOVATION HOME EXTENSION HOME BUYING 85% 85% 85% 25 LAKHS 1 CRORES 1 CRORES 15 15 20 85% UPPER LIMIT OF LOAN (RS) 1 CRORES MAX. TENURE OF LOAN (YEARS) 20

Conditions
1. Finance up to maximum of 85% of the price of property or the cost of construction is provided.

2. Applicant should be buying a house and must be residing within the city limits of areas where Standard Chartered operates. Types of loans by standard chartered Standard Chartered Grind lays offers the worlds most complete home loan for Homes. We can avail of a loan for any of the following purposes: 1) Buying a home under construction 2) Purchasing a constructed home 3) Constructing a home on a plot of land owned by you or your spouse 4) Extending your existing home 5) Renovating your existing home
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Loan Repayment Determining Repayment Capacity

Repayment capacity is assessed by considering age, income, assets, liabilities and employment.

Repayment of Loan
Repayment of loan will be in Equated Monthly Installments (EMIs), comprising principal and the interest. The (EMIs) will commence from the month following full disbursement. The EMIs are payable every month and the date of payment depend on the date of final disbursement. Postdated cheque towards the EMIs will be collected at the time of disbursement.

UTI BANK
SALARIED TENURE (YEARS) UPTO 5 10 15 20 INTERESE RATE (p.a) 10.75% 10.75% 10.75% 10.75% SELF EMPLOYED INTERESE RATE (p.a) 10.75% 10.75% 10.75% 10.75%

ELIGIBILITY CRITERIA
SALARIED AGE LIMIT Minimum Maximum LOAN AMOUNT (RS) Minimum Maximum INCOME p.a (RS) Minimum Work Experience Gross 24 years 58 years 1 lakhs 50 LAKHS 90000 3 years SELF EMPLOYED Minimum Maximum Minimum Maximum Net Income 24 years 65 years 1 lakhs 50 LAKHS 1.50lakhs 3 years

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OTHER CHARGES
MOF CHARGES ADMIN CHARGES PREPAYMENT(FLOATING) GUARANTOR NIL NIL NIL NIL

PROCESSING CHARGE UPTO 1%

KOTAK MAHINDRA BANK

SALARIED TENURE (YEARS) 3-5 10 15 20 INTERESE RATE (p.a) 11% 11% 11% 11% SELF EMPLOYED INTERESE RATE (p.a) 11% 11% 11%

ELIGIBILITY CRITERIA
SALARIED AGE LIMIT Minimum Maximum LOAN AMOUNT (RS) Minimum Maximum INCOME p.a (RS) Minimum Work Experience Gross 21 years 58 years 5 lakhs 2 CRORES 1.50lakhs 2 years SELF EMPLOYED Minimum Maximum Minimum Maximum Net Income 21 years 65 years 5 lakhs 2 CRORES 1.50lakhs 3 years

51

OTHER CHARGES
MOF CHARGES ADMIN CHARGES PREPAYMENT(FLOATING) GUARANTOR NIL NIL NIL NIL

PROCESSING CHARGE 0.50%0.75%

52

HOUSING LOAN RATES AS PRESCRIBED BY PUBLIC SECTOR UNITS

With the RBI reducing the Bank rate, the housing sector of late witnessed the loan rates nosediving by 50 basis points. Also, ICICI has become the first player in this sector to announce a housing loan for a 30-year period. While this will increase the end cost of the house, it will facilitate people to plan their house over a longer duration. With the rates moving southwards diving and the repayment period going north side, it is now easy for you to buy that dream house you thought of all along Interest rate for public sector HFCs SLAB S Less than 1000 0
BOB Finance Can Fin Homes Cent Bank Home Corp bank Homes GIC Housing Finance Hudko Niwas

1000 0

2500

5000

7000

1.50

2.01 L to 3L

3.01 L to 5L

5.01 L to 8L

8.01 L to 10 L

10.01 L to 15 L

15L and abov e

to 1

to 1

to 1

to L to 2L

2500 0

5000 0

7000 0

1.50 L 12.75 13.25 12.25

12 13.25 12.25

12 13.25 12.25

12 13.25 12.25

12.75 13.25 12.25

12.75 13.25 12.25

12.75 13.25 13

12.75 13.25 13

12.75 13.25 13

12.75 13.25 13

13.25 13.25 14

13.25 13.25 14

13.50

13.50

13.50

13.50

13.50

13.50

13.50

13.50

13.50

13.50

13.50

13.50

11.75

11.75

11.75

13.25

13.25

13.25

13.25

13.25

13.25

13.25

13.25

13.25

11.5 12

11.5 12

11.5 12

12.75 13.50

12.75 13.50

12.75 13.50

13 13.50

13 14

13 14

13 14

13 14

13 14

Ind Housig
LIC Housing Finance PNB Housing Finance SBI Finance Vibank Finance

12

12

13

13

13

13

13

13

13

13

13

13

NIL

NIL

NIL

13

13

13

13

13

13

13

13

13.5

13 12.25

13 12.25

13 12.25

13 13

13 13

13 13

13 13

13 13

13 13

13 13

13 13.5

13.25 14

53

CHAPTER 5 FINDINGS
The credibility of IDBI bank is good in comparison to its competitors as GOI (Government of India) is a major share holder in the company. IDBI bank has a potential tapped market in DHANBAD in region and hence has an opportunity for growth. The products of IDBI bank have good credibility in the region compare to its competitors. The advertisement of the bank was very effective from the first day of the opening of new branch and since that day it is increasing the awareness of its product in the market. The initial processing fee is Rs 2500/same. Compared to other competitors IDBI Bank (RAC) Center has a very fast way to provide loans to its customers. It just takes for the bank 3 days to sanction a loan to its customers which is a strong positive aspect of the bank. The executives appointed by the bank are hard working and have a strong networking with the builders so that the customers may approach the bank for the loans. The bank has 3 NPA account till date. The working culture within the organization was very good as the employees were friendly to me and never let me feel that I was new to this organization. As a management trainee my corporate guide was even very interactive with me discussing various concepts of banking industry. The bank also has Advance Disbursement Facility (ADF) and Advance Processing Facility (APF). The lawyer and the explaining their work. The person engaged in working for Risk Control Unit (RCU) helped me out in knowing the process and the way they run their F I agencies for the proper verification of the clients. technical valuer appointed by the bank also helped me a lot in and thats why people are reluctant in paying the

54

Conclusions
Consumers of Dhanbad have good awareness level about IDBI bank as well as about its services and products. The advertising campaign has successfully been able to increase the market share of IDBI in Dhanbad. The modern days technology like canopy presentation, used by IDBI Bank (RAC) Center for providing banking services has sent positive signals in the mind of consumes. The network of IDBI in Dhanbad is the best among the other competitors like SBI bank and LIC HFCs and ICICI. It can be distilled from data that IDBI bank has good market share as compared to its competitors considering the amount of resources deployed by them in the market.

55

Recommendations
Since there is only ONE branch of IDBI RAC CENTER in DHANBAD, so it is necessary for IDBI bank to increase the vast market of Dhanbad especially by employing more of employees specially for marketing the products outside. More resources should be allocated in the market of Dhanbad as there is big untapped market in Dhanbad, so it becomes necessary for IDBI bank for taking an edge over the competitors. A short advertising campaign in Dhanbad has produced good results in a short span of times, so to gain long term benefits is very necessary for IDBI bank to carry on this campaign with more intensity. As Government is the majority share holder in the shares of IDBI bank, which makes this bank more reliable than other private banks, this thing can be used in the favor of IDBI bank by making people aware about this fact and winning their faith.

56

CHAPTER 6 BIBILOGRAPHY
Website
www.idbibank.com www2.idbibank.com www.google.com www.thinkglink.com (article.asp?Title=When_To_Refinance.htm&ID=723) www.hdfc.com www.homeloans.va.gov www.apnaloan.com www.indiainfoline.com/pefi/apply/hlon/ibnk/w www.icicibank.com/pfsuser/ loans/homeloans/hlhomepage

Books
Finance & investment Close to home Home loans - John Downes -vandana shiva -Times publication

Reports
National housing finance report Report on home loans by GOI

News Papers
Times of India Economics times Business standard

57

QUESTIONNAIRE
NAME AGE. SEX: MALE/FEMALE

ADDRESS:... CITY PIN CODE.... CONTACT NO. 1. DO YOU KNOW ABOUT IDBI BANK LTD (RAC) CENTER.?

YES 2. IDBI BANK IS A PRIVATE BANK PUBLIC BANK

NO

PRIVATE/PUBLIC BANK DONT KNOW AND 5 FOR

3. RANK THE IDBI BANK ON THE FOLLOWEING FEATURES (RANK 1 FOR BEST WORSE ON 1 TO 5 SCALE) EFFICENCY INTERNET BANKING/ATMs PRODUCT RANGE MANPOWER NETWORK PHONE BANKING

4. YOU WOULD LIKE TO BE A CUSTOMER OF BANK BECAUSE 5. YOU WOULD NOT LIKE TO BE A CUSTOMER BANK BECAUSE6. NAME THE BANK WHICH COMES IN YOUR MIND AT VERY FIRST AND WHY? . 7. DO YOU THINK IDB IBANK IS A SAFE PLACE FOR YOUR MONEY? YES NO

8. DO YOU THINK IDBI BANK NEED MORE ADVERTISMENT? YES NO

58

9. YOUR LEVEL OF SATISFACTION WITH IDBI BANK1)VERY SATISFIED 2)SATISFIED 3)NORMAL 4)DISSATISFIED 5)VERY DISAT.

10. IF YOU WILL HAVE OPTION AGAINEST IDBI BANK YOU WILL GO FOR SBI LIC HFC ICICI ABNK OTHER

11. DO YOU REMEMBER THE COMMERCIAL OF IDBI BANK? YES NO

12. WHEN DID YOU LAST SEE THE ADVERTISEMENT OF IDBI BANK? 0-5 DAYS BACK 11-15 DAYS BACK 6-10 DAYS BACK MORE THAN 15 DAYS BACK

13. DO YOU KNOW WHERE THE BRANCH OF IDBI LOCATED IN DHANBAD IS? 14. IDBI BANK LTD. IN DHANBAD IS EFFECTIVE BECAUSE. 15. IDBI BANK LTD. IN DHANBAD IS NOT EFFECTIVE BECAUSE. 16. IDBI BANK LTD. IS A GOOD BANK FORSERVICE PEOPLE POLITICIANS ALL OF ABOVE 17. NAME IDBI BANK LTD. GIVE BLUE-PRINT IN YOUR MIND OFHIGH NETWORK HI-TECH BANK FINANCILALLY EFFICIENT BANK CUSTOMER FRIENDLY BUSINESS PERSONS GENERAL PUBLIC

OTHER (PLEASE SPECIFY)

59