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INDUSTRIAL PROFILE
Introduction
The Financial services industry includes firms that deal with the management,
investment, transfer, and lending of money. Though every company handles money
in the course of doing business, financial institutions actually make money their
business; rather than selling a line of physical products, they offer customers their
fiscal expertise. The industry itself is very large, encompassing everything from
small, local banks to the multinational investment banks regularly featured in news
headlines.
Financial system and markets in India Government of India, Ministry of Finance at
the helm, statutes, statutory authorities, financial intermediaries, other financial
institutions, agents who operate in the markets etc.
Financial Management is an integral part of Business Management. Finance is one of the
key functions in an organisation. The other key functions in an organisation are:
1. Production
2. Human Resources
3. Marketing
Some of the key finance functions are:
1. Financial planning and estimation of finance required for the organisation
2. Mobilisation of financial resources required as above
3. Ensuring that the funds are available in adequate quantity at appropriate time
and at an affordable cost
4. Management of cash in the organisation through cash flow statement
5. Management of investment outside the business enterprise in other
organisations
6. Management of risk in dealing with foreign exchange for imports and export
Short-term and long-term objectives of Financial Management
Short-term objective
The short-term objective of Financial Management is to procure financial resources
at an affordable cost thereby increasing the return to the shareholders in the form of
Earnings PerShare (EPS). EPS comprises two elements namely Dividend per share
(DPS) and Retained Earnings per share (REPS or Reserves per share). This
objective is often times referred to as profit maximisation. This is known as the
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short-term objective as it is done on a continuous, year-to-year basis. One or more of
the following measures can achieve this:
1. Monitoring of costs on a continuous basis through budgets
2. Suitable cost reduction techniques wherever the costs are high
3. Minimisation of cost of borrowed capital from outside through financial
discipline
4. Proper mix of equity and debt (known as financial leverage
Long-term objective
The long-term objective of financial management is to increase the wealth of the
shareholders. The term wealth refers to various business assets of the enterprise
that are free of debt. This means that this wealth belongs to the equity shareholders.
It is often reflected in the book value of the share as reflected in the balance sheet.
Equity share capital + Reserves and Surplus
INDIAN BANKING SYSTEM:
Organized banking was active in India since the establishment of the general bank of
India in 1786. After the independence, the reserve bank of India RBI was established
as the central bank and in 1955, the imperial bank of India the biggest bank at the
time ,was taken over by the government to from state owned state bank of India .
RBI had undertaken an exercise to merge weak banks to strong banks and the total
number of banks, thus reduced from 566in 1951 to 85 in 1969.
With the objective of reaching out to masses and meeting the credit needs of all
sections of people, the government nationalized 14 large banks in 1969 followed by
another 6 banks in 1980. This period saw enormous growth in the number of the
branches and the banks branches network become wide enough to reach the
weakest sections of the society in a vast country like India. SBIs network of 9033
domestic branches and 48 overseas offices is considered to be one of the largest for
any banks in the world
The economic reforms unleashed by the government in early nineties included
banking sector too, to a significant extant. Entry of new private sector banks waspermitted under specific guidelines issued by RBI. A number of liberalization and
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deregulation measures aimed at consolidation, efficiency productivity, asset quality
capital adequacy and profitability have been introduced by the RBI to bring Indian
banks in line with international beat practices.
Banks are prone to crisis:
The traditional bank has an inherent tendency to crisis. This is because the bank
borrows short terms and lends leveraged long term. The sum of deposits and the
banks capital will never equal more than a modest percentage of the loans the bank
has outstanding.
Even if liquidity is not a concern, if there is no run on the bank, banks can simply
choose a ban portfolio of loans, and lose more money than they have. The US
Savings and Loan Crisis in the late 1980s and early 1990s is such an incident.
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STRUCTURE OF THE INDIAN BANKING INDUSTRY
The Indian Banking industry, which is governed by the Banking Regulation Act of
India, 1949 can be broadly classified into two major categories Non-Scheduled
Banks and Scheduled Banks.Scheduled banks comprise commercial banks and
the co-operative banks. In terms of ownership, commercial banks can be further
grouped into nationalized banks, the Stat Bank of India and its group banks, regional
rural banks and private sector banks these banks have over 67,000 branches spread
across the country.
The first phase of financial reforms resulted in the nationalization of 14 major banksin 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, whichin turn helps them to save on manpower costs and provide better services.
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STRUCTURE OF THE INDIAN BANKING
5
RESERVE BANK OF INDIA
Central Bank and Supreme Monetary Authority
Scheduled of Banking Sector
COMMERICAL BANKS CO-OPERATIVE BANK
Foreign
Banks
Regional
Rural
Banks
Urban
cooperative
Banks
Public Banks Private Banks
OLD BANKS New
Banks
State Banks of
India &
Other Banks
Other Nationalized
Banks
State
cooperative
Banks
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MAJOR FOREIGN BANKS IN INDIA ARE:
ABN-AMRO Bank
Abu Dhabi Commercial Bank Ltd.
American Express Bank Ltd BNP Paribas
Citibank
HSBC Ltd
PUBLIC BANKS IN INDIA:
The Banking System in India is dominated by nationalized banks. TheNationalization of Banks in India took place in 1969 by Mrs. Indira Gandhi the then
Prime Minister. The major objective Behind Nationalization Banks was to spread
banking Infrastructure in Rural areas and make available cheap finance to Indian
farmers. Fourteen banks were nationalized in 1969. These Banks were
Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI
was nationalized in 1955 under the SBI Act of 1955. The second phase of
nationalization of Indian banks took place in the year 1980. Seven more banks were
nationalized with deposits over 200 crores. Some of the following public sector
banks in India are listed below.
LIST OF PUBLIC SECTOR BANKS IN INDIA IS AS FOLLOWS:
Allahabad Bank Andhra Bank
Bank of Baroda
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
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Oriental Bank of Commerce
Bank Of Baroda
State Bank of Bikaner & Jaipur
State Bank of India (SBI)
MAJOR PRIVATE BANKS IN INDIA ARE:
Bank of Rajasthan
Centurion Bank of Punjab
UTI Bank
YES Bank
Federal Bank
HDFC Bank
ICICI Bank IDBI Bank
ING Vysya Bank
Types of loans:
A. Secured
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or
property) as collateral for the loan ..A mortgage loan is a very common type of debt
instrument, used by many individuals to purchase housing. In this arrangement, the
money is used to purchase the property. The financial institution, however, is given
security a lien on the title to the house until the mortgage is paid off in full. If the
borrowerdefaults on the loan, the bank would have the legal right to repossess the
house and sell it, to recover sums owing to it.
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In some instances, a loan taken out to purchase a new or used car may be secured
by the car in much the same way as a mortgage is secured by housing. The duration
of the loan period is considerably shorter often corresponding to the useful life of
the car. There are two types of auto loans, direct and indirect. A direct auto loan is
where a bank gives the loan directly to a consumer. An indirect auto loan is where a
car dealership acts as an intermediary between the bank or financial institution and
the consumer.A type of loan especially used in limited partnership agreements is the
recourse note.
A stock hedge loan is a special type ofsecurities lendingwhereby the stock of a
borrower is hedged by the lender against loss, using options or otherhedging
strategies to reduce lender risk.
A pre-settlement loan is a non-recourse debt this is when a monetary loan is given
based on the merit and awardable amount in a lawsuit case. Only certain types of
lawsuit cases are eligible for a pre-settlement loan. This is considered a secured
non-recourse debt due to the fact if the case reaches a verdict in favor of the
defendant the loan is forgiven.
Home loan charges.
These interest rates matter a lot and influence your monthly installment burden.
Hence, it is very important to choose that home loan which offers the best deal of
interest rate to you.
The process of approval of home loans in India is simple. The applicant can credit
his/her property against the loan or if applicant is a salaried individual then he/she
should enclose documents proving his/her earnings. The other related identification
proofs vary from lender to lender.
As a last piece of advice, one must always remember to go through with all terms
and conditions mentioned in the home loans document. The home loans market is
one which one can enter very easily. However, a little amount of intelligence and
awareness can help an individual get the best deal available in the market. So, pick
up a pen and a paper and choose the loan that will get you the home of your choice.
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A boom in the retail sector has seen an immense increase in the home loan interest
rates over the past 4 years. Home loan rates have doubled over the past 4 years.
The present problem of inflation has also had a negative effect on the consumers as
the fixed and the floating rate of interests have soared to an alarming degree. This in
turn has certainly affected the loan eligibility for home loans in India. This has also
lead to loan borrowers re-evaluating their options to avail new eligibility criteria.At
this time, it is important to understand how to enhance ones home loan eligibility.
Given below are some ways which can help in this Endeavour:
Increasing the home loan tenure:
The easiest method available to increase ones home loan eligibility is by taking
home loans for the Maximum Tenure. As an example, let us consider an individual
who earns a monthly salary of Rs 60,000. He decides to purchase a house, and for
that he buys a home loan. After deducting a monthly expenditure of Rs 35,000, the
individual is able to save Rs 25,000. Undoubtedly, he will use his savings for
repaying the loan in the form of equated monthly installments (EMI).
Now, lets consider that the installments for a home loan of Rs 1 lakh come at an
interest rate of 12.5%. If the loan is taken for tenure of 15 years, the EMI calculated
stands at Rs 1,232.50. For this data, his home loan eligibility will be 20.3 lakh.
However, it is possible for the same individual to increase his home loan eligibility by
around Rs 2 lakh if he can extend his tenure to 20 years. Assuming the same rate of
interest i.e. 12.5% and now 20 year tenure on Rs 1 lakh loan, the EMI turns out to be
Rs 1,136. Consequently, the home loan eligibility comes to Rs 22 lakh.
Dont rush towards a home loan:
Less information is as harmful as wrong information.
The importance of this statement lies in the fact that today there are many banks
offering different varieties of home loans to individuals. Nowadays, almost every
bank is offering a home loan with the repayment period of maximum 20 years. The
next important thing to consider after the tenure is the rate of interest. For thatreason, it is always advised, never to rush to purchase a home loan.
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It is better to carry out a research regarding the available home loan schemes and to
study the market meticulously to make the best use of what many banks and
housing finance companies are willing to lend before making a choiceThe next
decision that an individual needs to make is to choose between floating and fixed
interest rate on home loan, which is largely based on ones personal preference and
knowledge about the both. However, the floating rate home loans are available for
anywhere between 11.5-13%.Also, it might not be necessary that the first scheme
being presented by a bank employee would be the best for an individual. Hence,
always ask questions and enquire about the various schemes available with the
bank, and then make the final call.
Whenin need go for a joint loan:
If one spouses income comes short of the required amount set by the bank to issue
a loan, then several banks and HFCs have come up with a joint loan option. This
option guarantees a loan for both the husband and wife earning a combined income
of Rs 1 lakh per month. The choice for a greater loan is available with either husband
or wife earning Rs 60,000 per month.
B. Unsecured:
Unsecured loans are monetary loans that are not secured against the borrower's
assets. These may be available from financial institutions under many different
guises or marketing packages:
credit card debt
personal loans
bank overdrafts
credit facilities or lines of credit
corporate bonds
The interest rates applicable to these different forms may vary depending on the
lender and the borrower. These may or may not be regulated by law. In the United
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Kingdom, when applied to individuals, these may come under the Consumer Credit
Act 1974.
BANKING SERVICES IN INDIA
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KEY PRODUCT ANALYZED
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NOTE. This diagram is showing the Banking Key Products such as Deposits,
Retail credit, Credit card, Debit card, Internet banking.
BRANCHES OF VARIOUS BANKING:
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STATE BANK OF INDIA BRANCHES:
State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic
network of over 9000 branches (approximately 14% of all bank branches) and
commands one-fifth of deposits and loans of all scheduled commercial banks in
India.
ICICI BANK BRANCHES:
ICICI Bank is India's second-largest bank. The Bank has a network of about 573
branches and extension counters and over 2,000 ATMs. ICICI Bank was originally
promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-
owned subsidiary
HDFC BANK BRANCHES:
HDFC Was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. The Bank commenced operations as a Scheduled
Commercial Bank in January 1995. The Housing Development Finance Corporation
Limited (HDFC) was amongst the first to receive an 'in principle' approval from theReserve Bank of India (RBI) to set up a bank in the private sector, as part of the
RBI's liberalization of the Indian Banking Industry in 1994.
Headquartered in Mumbai, HDFC Bank, has a network of over 531 branches spread
over 228 cities across India. All branches are linked on an online real-time basis.
Customers in over 120 locations are serviced through Telephone Banking. The Bank
also has a network of about over 1054 networked ATMs across these cities. HDFC
Bank's ATM network can be accessed by all domestic and international Visas /
MasterCard Bank Of Baroda was established in 1895 at Lahore. BOB has the
distinction of being the first Indian bank to have been started solely with Indian
capital. In 1969, Bank Of Baroda was nation
IMPACT OF GLOBALIZATION ON BANKING SERVICE IN INDIA
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BUSINESS ENVIRONMENT OF GLOBAL BANK:
Global Bank has undergone a series of substantial changes in the last 10 years,
starting with the deregulation of the U.S. financial services industry in the late 1990s.
Seeking to rapidly expand its portfolio, the bank undertook a series of mergers and
acquisitions. Global Bank now has over 200 branches across the western United
States, and offers a complete line of integrated financial services, including:
Lending. This includes credit cards, consumer loans (such as, auto and line ofcredit), mortgage, and home equity.
Investing. This includes certificates of deposit, trust services, brokerageservices (including securities), annuities, individual retirement accounts, andmutual funds.
Financial planning. This includes comprehensive financial planning services,including retirement, education, tax, and estate planning, including both future
planning and plan execution services.
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16
HOME LOAN INDUSTRY
OUR FOUNDER and CEO
Home Loan is committed to helping our customers navigate through all of life'sfinancial challenges.
John Murphy
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17
IMPORTANT DATES IN HOME LOAN'S HISTORY
John Murphy acquires Bank charter and begins buildingHome Loan Investment Bank
Home Loan Investment Bank opens first headquarters in
Providence, Rhode IslandResidential lending expands to mid-Atlantic
Assets exceed $60 million. Home Loan Investment Bankbecomes the first mortgage originator to sell a pool of homeequity loans to Freddie Mac and the second to Fannie Mae
Assets exceed $100 million
FDIC deposit insurance granted
Assets exceed $200 million
Home Loan Investment Bank completes first loansecuritization, and also reactivates SBA Lending Program
Assets exceed $250 million. Home Loan Investment Bankopens corporate headquarters at 2 Altieri Way in Warwick,Rhode Island
Home Loan Investment Bank receives Federal Savings Bankstatus
Home Loan Investment Bank opens state-of-the-art callcenter
Residential lending expands to the west coast
Home Loan Investment Bank receives SBA "PreferredLender" status in Rhode Island, Massachusetts, NewHampshire and New York
Home Loan Investment Bank receives "outstanding" rating forCommunity Reinvestment for the 10th consecutive year
Commercial lending expands into mid-Atlantic states. Bank
begins offering USDA loansHome Loan Investment Bank surpasses $10 billion inmortgage originations
Home Loan Investment Bank is recognized as one of FreddieMac's top 150 lenders in the country
Home Loan Investment Bank website revamped to betterserve customer needs
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Home Loans in India
Housing loan is the finance taken for buying/modifying a real estate property. HomeLoans, Home extension loans, home improvement loans, NRI loans and home equityloans fall under the category of housing loans.
.
Any Resident or Non-resident individual who is planning to buy a house in India can
apply for a Home loan. If you have decided to buy a property in the near future you
can even apply for a loan before you select your property. Once you decide the
maximum amount that you can put into the property, all Housing Finance Institutions
let you know how much you are eligible for and this helps you plan out your budget.
The Home loan sector in India is the pivotal role player in the growth of the real
estate scenario in India. With tax incentives given to the housing finance sector inthe annual budget of 2001, transactions related to buying and selling of residential
properties increased considerably and was much higher as compared to previous
years.Since the new class of buyers are relatively younger set of customers who are
more aware about legal documentation and approvals, buyers are now more 'end-
users' rather than investors; the property market in Indiaundergoes transformation to
align itself with global standards with an increased emphasis on quality & cost
control and documentation methods. In the current economy of India, the real estatesector has the maximum propensity to generate income and demand for materials,
equipment and services. It can be said that housing finance companies were formed
for co-existing with buyer's requirements of housing loans for investing in properties.
Home loans are made available by financial institutions to both Indian and NRI
customers at floating and fixed rate of interest and also at attractive EMI options.
For construction or buying a new home
For home repairs and renovations
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For purchase of plots
Against mortgage of property
No tax benefits are available for NRI customers unless you file returns and therebybecome eligible to avail of the tax benefits. Besides home loans, Commercial
property loans are also available and different financial institutions in India provide
commercial loans at different rates and different upper limits.
Real estate loans are available to builders, promoters and real estate developers.
The experience and financial standing of the builders is taken into account before the
loan is granted which is to be returned with the minimum installments. Today, the
amount of money that a city dweller spends on rent is roughly the same, or only
slightly less than the amount he pays as an EMI on a housing loan. Earlier the home
loan sector in India was solely dependent on nationalized and public sector banks,
but the entry of public sector banks into the housing finance business marked the
beginning of the first round of interest rate cuts. And this reduction in interest rates
has enhanced the borrowing power of customers. Moreover, HFCs are offering
incentives to attract investors like
Some companies sanction the housing loan without requiring you to identify
property as a pre-requisite for eligibility.
Free accident insurance & property insurance
Waiving of pre-payment penalty
Waiving of processing fee
There are a few documents which the finance companies require for setting up
criteria for eligibility of Home loans.
Salaried Employee Self-employed
The latest salary slip showingstatutory deductions
Computation of income for theprevious two years, certified by aChartered Accountant
Form 16 (showing tax deducted at
source by employer)
Profit & Loss Account and Balance
Sheet for the previous two years,certified by a Chartered Accountant
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Proof of age (birth certificate/voteridentity card/passport/school-leavingcertificate/valid driving license
Proof of age (birth certificate/voteridentity card/passport/school-leavingcertificate/valid driving license)
Proof of residence (phone
bill/electricity bill/ration card).
Proof of residence (phone
bill/electricity bill/ration card).
The realty boom in India has given a new dimension to the finance sector in India -
both in Home Loans and Home Insurance segments. This has not only given a
competitive edge to the finance companies to provide attractive options to customers
but has also contributed to the increased investments in the real estate sector. This
has resulted in 13 new institutions foraying into the housing finance business in the
last three years.
Major Home Loan Providers
Banks & PublicSector HousingFinanceCompanies
State Bank of India, Corporation Bank, Bank Of Baroda,Central Bank, Dena Bank, Allahabad Bank, Bank ofMaharashtra, Bank of Baroda Housing Finance, Can FinHomes, GIC Housing Finance, LIC Housing Finance,BOB Housing Finance, SBI Home Finance, Cent bankHome Finance, HUDCO, LIC, etc.
Financial
Institutions
HDFC, ICICI Ltd, M&MFL, HSBC, Standard Chartered-
Grindlays, IDBI Bank, etc
Home Loan Interest Rates
Interest Rates for Home Loans are undoubtedly the most important parameter to
factor into your calculations. And in most cases is the decisive factor for an investor
to narrow down on a certain Housing Finance Company's home loan offer. The
interest on housing loans in Indiais usually calculated either on monthly reducing or
yearly reducing balance basis.
Comparative Chart on Home Loan Interest Rates
Financial Institutions Tenure (inyears)
Rate of InterestFixed
Rate of InterestFloating
ProcessingCharges
State Bank of India Up to 5years
12.25% 10.75% 0.50% of loanamount
5-20 years 12.25 % 11.25 % -
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ICICI 0-20 years 10.5% 9.5% 1% of loan amount
LIC Housing FinanceLtd.
0-20 years 10.5%- 11% 9.5% 0.5 per cent of theamount (max. Rs.
5000)
M&MFL 0-20 years 13.25% 11.25% 1% of the loanamount +applicable
service taxes andcess)
HDFC 0-20 years 10.75% - 1% of loan amount
Citibank 0-20 years 9.75% 9.00% 1% of loan amount
Canara Bank Up to 5years
10.75%- -
Above 5yrs up to10 yrs
11.00%- -
Standard CharteredBank
0-20 years 10.5% 9.25% 1.25 % of loanamount
Canfin Homes Ltd 0-20 years 9.25%-12% - -
IndusInd Bank 0-20 years 10.5 % (for 20
9.25 % (for 20 Lakhs)
1.25% of loanamount
Saraswat Bank 0-20 years 11 10 -
HUDCO 0-20 years 10 % (< 10 lacs)
10.5% (>10 lacs)
9% (< 10 lacs)
9.5% (>10 lacs)
0.5 % of loan
amount(Max. Rs.250)
Most HFCs follow the yearly reducing-balance method, which accounts for your
principal repayments only at the end of their financial year. Thus, you pay interest on
the principal that you have already returned to the HFC. The effective interest rate is
thus higher than the quoted interest rate by around 0.7%. Banks and some HFCs, on
the other hand follow the daily or monthly reducing-balance method, by which the
principal on which you pay interest reduces every month as you pay your EMIresulting in a lower interest burden. Thereby, the EMI for the monthly reducing
system is effectively lesser than the yearly reducing system of calculating interest.
Moreover, there are two kinds of interest rates for housing finance in India - Fixed
rate and Floating rate interests. Some HFC's have fixed rate of interest which means
that the interest rates remain unchanged for the entire duration the loan. This
basically means that you do not benefit, even if the rates of interest drop in the
market while the floating rate interest fluctuates according to the market lending rate.
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The interest rates may vary from institutions to institutions and generally range from
about 12.5% to around 16%. Repayment is in the form of EMI's (equated monthly
installments) so, longer the tenure, the more you pay in interest, but your monthly
payment will be less. Generally, the maximum tenure of home loans is 15 years, with
a few lenders offering tenure of 20 years or more (ICICIhas recently launched a 30
year loan).
Types of Home Loans
A person seeking investments for house or a property opts for Home Loans for a
variety of purposes ranging from construction to renovation. The Housing Finance
Companies (HFCs) now offer individuals with various alternatives to choose from
while buying a home loan. And the availability of Home Loans offered is as varied as
their requirements.
Home Purchase Loans
Home Construction Loans
Home Improvement Loans
Home Extension Loans
Home Conversion Loans
Land Purchase Loans
Stamp Duty Loans
Bridge Loans
Balance Transfer Loans
Refinance Loans
Loans to NRIs
Home Purchase Loans:
This is the basic home loan for the purchase of a new home.
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Home Conversion Loans:
This is available for those who have financed the present home with a home loan
and wish to purchase and move to another home for which some extra funds are
required. Through a home conversion loan, the existing loan is transferred to the
new home including the extra amount required, eliminating the need for pre-payment
of the previous loan.
Land Purchase Loans:
This loan is available for purchase of land for both home construction or investment
purposes
Stamp Duty Loans:
This loan is sanctioned to pay the stamp duty amount that needs to be paid on the
purchase of property.
Bridge Loans:
Bridge Loans are designed for people who wish to sell the existing home and
purchase another. The bridge loan helps finance the new home, until a buyer isfound for the old home.
Balance-Transfer Loans:
Balance Transfer is the transfer of the balance of an existing home loan that you
availed at a higher rate of interest (ROI) to either the same HFC or another HFC at
the current ROI a lower rate of interest.
Re-finance Loans:
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Refinance loans are taken in case when a loan for your house from a HFI at a
particular ROI you have taken drops over the years and you stand to lose. In such
cases you may opt to swap your loan. This could be done from either the same HFI
or another HFI at the current rates of interest, which is lower.
NRI Home Loans:
This is tailored for the requirements ofNon-Resident Indianswho wish to build or
buy a home or property in India. The HFCs offer attractive housing finance plans for
NRI investors with suitable repayment options.
Tax Benefits on Home Loans
As the Indian real estate marketmakes an upward swing, and investors opt forhousing
finance orhome loans, tax benefits obtained from them is a lucrative option. Customers
availing ofHome Loans can claim a certain portion of the interest and principal that they
pay towards the loan installments for reducing tax liability. Resident Indians are eligible
for certain tax benefits on principal and interest components of a loan under the Income
Tax Act, 1961. Moreover, an added tax benefits under Sec 80 C on repayment of
principal amount up to Rs. 1,00,000 p.a. can be availed that can further reduce your tax
liability by about Rs. 30,000 p.a. Tax benefits can be claimed on both the principal and
interest components of the home loan as per the Income Tax Act, 1961. These
deductions are available to assesses, who have taken a loan to either buy or build a
house, under Section 24(b). Interest on borrowed capital is deductible up to Rs 150,000
if the following conditions are satisfied:
Capital is borrowed on or after April 1, 1999 for acquiring or constructing a
property.
The acquisition/construction should be completed within 3 years from the end of
the financial year in which capital was borrowed.
The person, extending the loan, certifies that such interest is payable in respect of
the amount advanced for acquisition or construction of the house.
A loan for refinance of the principle amount outstanding under an earlier loan
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taken for such acquisition or construction.
If the conditions stated above are not fulfilled, then the interest on borrowed capital is
deductible up to Rs 30,000 though the following conditions have to be satisfied:-
Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction
repairs or renewal of a house property.
Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or
renewals of a house property.
If the capital is borrowed on or after April 1, 1999, but construction is not
completed within 3 years from the end of the year, in which capital is borrowed.
In addition to the above, principal repayment of the loan/capital borrowed is eligible for a
deduction of up to Rs 100,000 under Section 80C from assessment year 2006-07.
Home Loan Providers in India
Real estate in India is currently one of the hottest investments options in Asia. A recent
survey of the real estate scenario acknowledge the Indian metropolis of Mumbai,
Bangalore and New Delhi as the top three investors' choices for real estate investment in
Asia. But there were concerns mainly related to the availability of necessary funds for
investment and in the more recent times, the boom in the real estate market opened the
doors for a host of realty funds from financial institutions. Prior to five years, the real
estate segment in India was neither organized nor were there too many large institutions
in the construction industry. But now with an organized finance sector and with the
increase in transparency levels, it has become easier to create financing vehicles.
The decrease in housing loan interest rates and an increase of disposable income has
contributed largely to an increased demand in the residential segment. In spite of a rise
in home loans interest rates and qualitative sanctions being levied by the RBI on banks,
buying interest has not waned because home loans are still cheaper than ten years ago.
The retail markets are also undergoing a defining change with the introduction of larger
retailing formats. The financial institutions also wasted no opportunity in tapping the fundrequirement catering to the inflow of potential buyers in the retail sector. While most
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funds were initially floated by financial Institutions or banks such as HDFC, ICICI Bank
and IDBI Bank to name a few, real estate developers like DLF Universal and even
retailers such as Pantaloons Retails (India) have now entered the real estate sector for
creating more retail facilities and have been hugely successful.
As the realty prices in India skyrockets, housing complexes mushrooming and city
landscapes becoming unrecognizable, the growth across all real estate segments and
experts estimate that demand will remain steady at the currently high levels because of
the improving economic environment and the real estate sector is expected to grow 30%
every year. This rising property prices encourage banks and financial institutions to lend
more with the increase in collateral values. Although the home loan providers have hiked
their rates twice in less than three months, home loanscontinue to be nearly 45 per cent
cheaper than what they were in early 2001. Because if statistics are referred to, the
interest rates which now range between 9-10 per cent, are still much lower than what
they were ten years ago, at 16-17 per cent.
Cars by Price Range
Under Rs. 3Lakhs
Maruti 800, Maruti Alto,Omni
Reva
Tata Nano
Rs. 3-5Lakhs
Ambassador
Chevrolet Aveo U-VA,Chevrolet Spark, Chevrolet OpelCorsa
Fiat Palio, Fiesta, Ford Icon
Hyundai Santro, Hyundai i10,Hyundai Getz
Maruti Zen, Maruti Wagon R, Maruti Versa, Maruti
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Esteem, Maruti Gypsy, Maruti Suzuki A-Star, MarutiSuzuki Zen Estilo, Maruti Suzuki Swift, Maruti SuzukiRitz New, Mahindra Logan
Indigo XL, Indigo Marina
Tata Indica, Toyota Qualis, Tata Indigo CS
Rs. 5-10Lakhs
Chevrolet Swing, Chevrolet Aveo, Chevrolet Tavera,Chevrolet Optra Magnum
Fiat Linea, Fiat Adventure, Fiat Grande Punto, FordFusion
Hyundai Accent, Hyundai Elantra, Hyundai i20, HyundaiVerna, Hyundai Sonata Embera, Honda City ZX, HondaJazz New
Maruti Baleno, Maruti Suzuki Sx4, Maruti Suzuki SwiftDzire, Mahindra Scorpio, Mitsubishi Lancer,MitsubishiCedia, Mahindra Bolero
Toyota Innova, Tata Sumo Victa, Tata Sumo Grande,Tata Safari
Skoda Fabia
Rs. 10-15Lakhs
Chevrolet Forester
Ford Mondeo & Ford Endeavour, Ford Focus
Honda Civic
Skoda Octavia & Combi
Toyota Corolla, Toyota Corolla Altis
Volkswagen Jetta
Rs. 15-30Lakh
Audi A4
Chevrolet Captiva
Honda CR-V,Honda CRV 2008,Honda Civic Hybrid,Honda Accord
Maruti Suzuki Grand Vitara, Mitsubishi Pajero, MercedesC Class
New Skoda Superb New
Opel Vectra
Skoda Laura
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brid.htmlhttp://www.surfindia.com/automobile/honda-accord.htmlhttp://www.surfindia.com/automobile/new-skoda-superb.htmlhttp://www.surfindia.com/automobile/skoda-laura.html7/28/2019 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Toyota Camry, Ford Endeavour Thunder Plus, Terracan& Tucson, Toyota FortunerNew
Volkswagen Passat , Volkswagen Jetta
Rs. 30-90Lakhs
Audi A6, A8 &Audi TT,AUDI Q7
BMW X5, 5 Series & 7 Series
Mitsubishi Montero,Mercedes Benz S-Class, MercedesE Class, S Class, SLK, SL & CLS-Class
Porsche Boxster, Cayenne, 911 Carrera & Cayman S
Toyota Prado
Volvo Xc90, Volvo S80
Above Rs. 1 Crore
AUDI R8
Bentley Arnage, Bentley Continental GT & Flying Spur,Bentley Azure
Maybach
Rolls Royce Phantom
.
Auto Finance
Auto Finance Companies are aggressively marketing their product by offering
innovative and alluring offers to the customers.
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Buoyant & robust economy and huge disposable incomes of youths have
made way to easy auto finance by banks and non-banking finance companies.
The growing auto market of India has opened doors for number of Auto Finance
Companies to provide hassle free auto finance. In India leading banks and non-
banking finance companies (NBFCs) offers auto finance. Multi-national companies
(MNCs) have also entered the finance market, parallel to other auto loan companies,
to grab their share. The market is very competitive and these finance institutions has
come out with innovative offers for customers. The following are the names of
leading banks and other institutions that provide auto finance.
ICICI Bank
Bank of Baroda
HDFC Bank
State Bank of India
Bank of India
Mahindra Finance
Union Bank of India
Standard Chartered
Auto finance is now available from both, banks and non-banking finance companies
(NBFCs). A large number of financing agencies are entering the Indian auto finance
market. Most NBFCs have also arranged tie-ups with dealers and manufacturers. All
these financial agencies together has created purchasing power of customers.Getting auto loans has become quite easy. The finance agencies has come of age
and companies are aggressively marketing different auto loan schemes by offering
innovative and alluring offers to the customers.
Features of Auto Finance
Upton 90% is financed.
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The finance period is between 1 to 5 years.
The interest is calculated on the basis of compound interest.
Equated Monthly Installment (EMI) is worked out for repayment.
Early settlement of the full amount charges a penalty.
Documents Required
Bank statement for the last 6 months
Two passport size photographs
For salaried, latest salary slip and Form 16.
For self employed individuals and professionals, IT returns for the last two
financial years.
CAR FINANCE
Research say that 75% of the total vehicles purchased in the last decade were
financed/ purchased through auto loans.
Financing a dream car has become very simple and easy method. Thanks to multi-
national companies (MNCs) and other private sector banks. All banks and financial
institutions are aggressively marketing their products with innovative service
offerings and incentives. A wide range of flexible and customized financing options
for the purchase of both new and second hand cars are available throughout the
country.
Features of Car Finance
Banks pay up to 90% of the cost of the new vehicle.
In case of used vehicles, banks finance up to a maximum of 85% of the value
of the car.
Generally public sector banks offer lower rate of interest than the non-banking
finance companies.
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Usually the interest is calculated on a monthly reducing balance.
The banks offer repayment tenure of 12 to 60 months.
Few institutions even offer 7 years repayment period.
A salaried person can borrow up to 3 times of the annual salary.
Self employed individuals can borrow up to 6 times of the annual income.
Documents Required
Application Form
Photographs
Proof of income of last two years
Proof of Residence
Proof of identity
Take Note
The income of spouse can be clubbed to increase the loan amount.
Terms and conditions for prepayment of the amount need to be clarified
before agreement
Try to consider taking loan where there is no penalty of prepayment.
List of Companies offering Car Finance
Mahindra Finance
Bajaj Auto Finance
Kotak Mahindra Primus
Sundaram Finance
KTDFC
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WE UNDERSTAND YOUR WORLD
The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name
of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.
HDFC is Indias premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well
over a million dwelling units. HDFC has developed significant expertise in retail
mortgage loans to different market segments and also has a large corporate client
base for its housing related credit facilities. With its experience in the financial
markets, a strong market reputation, large shareholder base and unique Consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
HDFC Bank began operations in 1995 with a simple mission: to be a World Class
Indian Bank. We realized that only a single minded focus on product quality and
service excellence would help us get there. Today, we are proud to say that we are
well on our way towards that goal.
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MANAGEMENT
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr.
Capoor was a Deputy Governor of the Reserve Bank of India. The Managing
Director, Mr. Aditya Puri, has been a professional banker for over 25 years and
before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking.
Senior executives representing HDFC are also on the Board. Senior banking
professionals with substantial experience in India and abroad head various
businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting
and retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.
BRANCHES
As of March 31, 2008, the Banks distribution network was at 761Branches and 1977
ATMs in 327 cities as against 684 branches and 1,605 ATMs in 320 cities as of
March 31, 2007.
33
March 2006 March 2007 March 2008
Citied 228 316 327
Branches 535 684 761
ATMs 1323 1605 1977
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PERSONAL BANKING
Loan Product Deposit Product Investment & Insurance
Auto Loan
Loan AgainstSecurity
Loan AgainstProperty
Personal loan
Credit card
2-wheeler loan
Commercialvehicles finance
Home loans Retail business
banking
Tractor loan
Working CapitalFinance
ConstructionEquipment Finance
Health CareFinance
Education Loan
Gold Loan
Saving a/c
Current a/c
Fixed deposit
Demat a/c
Safe DepositLockers
Mutual Fund
Bonds
Knowledge Centre
Insurance
General and HealthInsurance
Equity and Derivatives
Mudra Gold Bar
Cards Payment Services Access To Bank
Credit Card
Debit Card
Prepaid Card
--------------------------------Forex Services
-------------------------------- Product & Services
Trade Services
Forex serviceBranch Locater
RBI Guidelines
Net Safe
Merchant
Prepaid Refill
Bill pay
Visa Bill pay
InstaPay Direct Pay
Visa MoneyTransfer
eMoniesElectronic FundsTransfer
Online Payment ofDirect Tax
Net Banking
One View
InstaAlertMobile Banking ATM
Phone Banking
Email Statements
Branch Network
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WHOLESALE BANKING
Corporate Small and MediumEnterprises
Financial Institutions andTrusts
Funded Services
Non FundedServices
Value AddedServices
Internet Banking
Funded Services
Non Funded Services
Specialized Services
Value added services
Internet Banking
BANKS
Clearing Sub-Membership
RTGS sub membership
Fund Transfer
ATM Tie-ups
Corporate Salary a/c
Tax CollectionFinancial Institutions
Mutual Funds
Stock Brokers
Insurance Companies
Commodities Business
Trusts
Investment & Insurances Loans
Mutual Funds
Insurance
Private Banking
Portfolio Investment Scheme
Home Loans
Loans Against Securities
Loans Against Deposits
Gold Credit Card
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Loans are extended for the purchase of:
Commercial Vehicles - Loans for commercial vehicles (this includes buses, trucks,
Tempos, tippers), LCVs (light commercial vehicles, HCVs (heavy commercialvehicles), MCVs (medium commercial vehicles) and three wheelers. Company
provides funding for all models of Telco, Ashok Leyland, Swaraj Mazda, Eicher, Bajaj
Tempo, Volvo etc. The choice is entirely yours.
TYPES OF LOAN
New Vehicles
Used Vehicle / Refinance
Balance Transfer
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ADVANTAGES
o Up to 100% financing.
o Up to 48 months tenor.
o Simpler documentation.
o Quick processing.
o Customized EMI structure.
Single owner
Good average
and within your budget
HDFC Bank's Used Car Loan will put you in the driver's seat. What's more, HDFC Bank also helps you
select good quality used cars and even value them.
Features & Benefits
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Choose any car manufactured in India within a certain age*.
Borrow up to 80% of the value of the car.
Flexible repayment options, ranging from 12 to 60 months.
Borrow up to 3 times your annual salary (for salaried professionals) and 6 times
your annual income (for self employed professionals).
Available for almost all car models at attractive interest rates.
Repay with easy EMIs.
Attractive car loan plans - To Fastrack your loan, just choose the plan that is
right for you.
Additional loan on existing loan - If you are a existing HDFC Bank Auto loan
customer with a clear track record of 12 months or more, then you can get an
additional loan to the extent of your existing loan amount at attractive rate of
interest.
Customer Privileges
Special benefits for HDFC Bank account holders.
If you have had a Preferred Account or a Corporate Salary Account with HDFC
Bank for more than six months, you can get fast approvals on your loans with
minimal documentation.
* Age of Car at loan maturity should not cross 10 years subject to maximum loan tenure of 60 months.
**This would also vary with higher loan value
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Small car
Family car
or sheer luxury on wheels
Features & Benefits
Covers the widest range of cars and multi-utility vehicles in India.
Avail 100% finance on your favorite car.
Flexible repayment options, ranging from 12 to 84 months.
Borrow up to 3 times your annual salary (for salaried professionals) and 6
times your annual income (for self employed professionals).
Speedy processing - within 48 hours.
Repay with easy EMIs.
Attractive car loan plans - To Fastrack your loan, just choose the plan that
is right for you.
Attractive Interest rates
Hassle-free documentation.
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Customer Privileges
If you are an HDFC Bank account holder, we have special rates for you.
If you have had a Preferred Account or a Corporate Salary Account with
HDFC Bank for more than six months, you can get fast approvals on your
loans with minimal documentation.
Fee & Charges for New Car loans
Description of charges New Car Loans
Cheque bouncingcharges
Rs. 450
FC Charges
6 % of POS for preclosures within 1year from 1st EMI5% of POS for preclosures within 13-24months from 1st EMI3% of POS for preclosures post 24months from 1st EMINo foreclosure allowed within 6 monthsfrom date of availing the car loan
Stamp Duty At actual
Late Payment Penalty
2% per month
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Processing fees Up to 2.5Lakhs : Rs.2000/-
2.51 to 4Lakhs : Rs.3000/-> 4Lakhs :Rs. 3500/-
Agri /PSL Charges
Rs 2000 Cheque swapping
charges Rs 500/-
Loan cancellation / re-booking charges
Rs 1000/-
Bounce ChequeCharges
Rs 450/-
Statement Charges (per
statement)
Rs 500/-
Duplicate RepaymentSchedule charges
Rs 500/-
Legal, Repossession &Incidental charges
At actual
Duplicate no duecertificate / NOC
Rs 500/-
Transaction fees Rs 500/- per case
Overview
ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion
(US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.14 billion for the
nine months ended December 31, 2008. The Bank has a network of 1,438 branches
and about 4,644 ATMs in India and presence in 18 countries. ICICI Bank offers a
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wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. The Bank currently has
subsidiaries in the United Kingdom, Russia and Canada, branches in United States,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established
branches in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
2002.ICICI was formed in 1955 at the initiative of the World Bank, the Government of
India and representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium-term and long-term project
financing to Indian businesses. In the 1990s, ICICI transformed its business from a
development financial institution offering only project finance to a diversified financial
services group offering a wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI
ICICI Bank, with market capitalization of about Rs. 480.00 billion (US$ 10.8 billion),
ranked third amongst all the companies listed on the Indian stock exchanges in
June 2006. ICICI Bank's stock was listed on both BSE and NSE.
The bank is offering various services in:
Personal banking
NRI banking
Corporate banking
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ICICI Bank Rank - 4
2004-05 2005-06
No. of Offices 515 563
No. of Employees 18029 25479
Business per Employee(inRs. Lakhs) 880 905
Profit per Employee( in Rs.Lakhs) 11 10
Investments( in Rs. Crore) 50487 71547
Financial Highlights
Fiscal Year End: March
Revenue (2008): 15073.30 M
Revenue Growth (1 yr): 54.10%
Employees (2008): 84,134
Employee Growth (1 yr): 36.40%
COMPANY INFORMATION
BOARD OF DIRECTORS
Ms. Chanda Kochhar, Deputy Managing Director
Mr. Sridar Iyengar
Mr. Lakshmi N. Mittal
Mr. Narendra Murkumbi
Mr. Anupam Puri
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Mr. Vinod Rai
Mr. M.K. Sharma
Mr. P.M. Sinha
Prof. Marti G. Subramanian
Mr. T.S. Vijayan
Mr. V. Prem Watsa
CHAIRMAN
Narayanan vaghul
CFO AND TREASURER
N.S. Kannan
MAJOR COMPITITORS
HSBC Holding Standard Charted
State Bank Of India
HDFC Bank
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45
ICICI GROUP
ICICI Pru Life
Insurance
ICICI Infotech
ICICI Bank
ICICI Home
Finance
ICICI
Securities
Pru - ICICI
AMC
ICICI Lombard
ICICI Venture
Capital
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HOME LOANHome Loans are provided to individuals to own a residential property.
ICICI Bank offers easy home loans for
First Purchase in ready construction
Under construction property
Purchase in re-sale
Self construction - extension of existing living space
The following are the features of ICICI Bank Home Loans
Home loan amount can be chosen to suit specific needs.
One can avail of a loan up to 80% of Cost of Property.
Conveniently pay off the loan over a period of up to 25 years.
It can be availed at the Floating rate of Interest or at the fixed rate of Interest
or at the combination of both Fixed & Floating rates.
Faster repayment as principal repayment in on monthly rest.
Eligibility Norms forHome Loans
Home Loans can be availed by Resident Indian whether Salaried or Self-Employedand 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.
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AUTO LOANS
ICICI AUTO LOANS
Eligibility Terms for YourCar Loan
With ICICI Bank Car Loans, you can avail of car loans as per your needs.Car Loans
ParticularsSalaried
IndividualSelf-
EmployedIndividual
PartnershipFirm
Private /Public Ltd
Co
Age Criteria The
applicant
should be
at least 21
years old
at time of
application,
and below
59 years of
age at time
of maturity
of the loan
Any
Proprietor,
partner,
professional
or director
above 21
years of
age but
below 64 at
the time of
the loan's
maturity
-
Limited
companies
should
have been
in
existence
for at least
2 years
Income Criteria Gross
annual
salary of atleast Rs.
1.5 Lakhs
per annum
Gross
annual
income of atleast Rs.
1.25 Lakhs
per annum
Firm shouldhave a
minimumPAT (profitafter tax) ofRs. 1.25Lakhs
Minimum
PAT (profit
after tax)of Rs. 1.25
Lakhs
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Documents required for
Income proof:
Salaried individuals Latest Salary slip or salary certificate. Form 16 of the previous
Financial Year or latest Income Tax Returns.
Self-Employed individuals:
Income Tax Returns of 2 previous financial years.
Partnership Firms, Societies & Companies :
Income Tax Returns of 2 previous financial years along with Profit & Loss Account
Statements and Balance Sheets of both years.
Documents supporting customer information :
Identity Proof, Signature Proof and Address Proofs as per ICICI Bank norms (Ourrepresentative will help you choose suitable documents).
Other documents:
Partnership Firms: Partnership deed and Letter signed by all partners authorizing
one partner to execute the required Car Loan.
Societies and Companies: Resolution by Board of Directors (or such managing
body) & Memorandum & Articles of Association (or Society/Trust deed).
Our representative will help you with the formats of documents and the information
required.
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Car Loans
Repayment tenure ranges from 1 year to 6 years for new car loans.
You may change the tenure of the loan before the loan is disbursed.
The interest rate & EMI would change accordingly.
The repayment due dates for the loan are 1 st and 15thof every month
and would depend on the date of disbursement. Payment due dates
cannot be changed.
You can make the Payments through post-dated cheques (PDCs)
Repayment option through Direct Debit Mandates is also available or
all ICICI Bank account holders.
Note: All charges are subject to Service Tax as applicable
Rs.1,350/- + Service Tax & Education Cess
49
Option of repaying through ECS is also available in select cities.
Payments through cash or credit cards are not accepted.
You may change the PDC's in case your Bank Account is changed.
However, we would require verification of signatures by new banker.
A nominal fee of Rs.500/- (Swap Charges) would be charged for
exchange of cheques.
A full pre-payment of the loan is accepted. Part pre-payment is not
allowed.
We charge Rs.200/-per bounced cheque.
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OVERVIEW
The State Bank of India was established in 1806. It has a branch network of over
9000 branches and holds 30 percent of the market share in banking with an
aggregate deposit base of about Rs 19,6821 crore. Today, it has a branch network
of over 9000 branches, an aggregate deposit base of nearly Rs196821 crore
(US$45,121mm) and a total balance sheet size of Rs.261504 crore (US59,950 mm).
Together with its 7 Associate Banks, SBI commands about 30% of the market share
in banking. State Bank of India (SBI) is the largest commercial bank in India in terms
of profits, assets, deposits, branches and employees. State Bank of India was
constituted through an act of Parliament in 1955. In October 1996, the bank
successfully floated the first GDR issue of any commercial bank in the country and
raised USD 369 million, including the green shoe option.
SBI is the only bank in India to be ranked among the top 100 banks in the world and
among the top 20 banks in Asia in the annual survey by The Banker. SBI has eight
business units, namely corporate banking; international banking and domestic
banking for concentrating on core areas; associate banks division for looking after
the working of these banks; credit division to monitor the overall credit; and three
other business units, namely finance, corporate development, and inspection for in-
house work.
The bank has a network of 66 offices/branches in 29 countries spanning all time
zones. The SBI`s international presence is supplemented by a group of overseas
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and NRI branches in India and correspondent links with over 522 leading banks of
the world. SBI`s offshore joint ventures and subsidiaries enhance its global stature.
Keeping in view the exponential growth achieved in self help group (SHG) financing
in the recent past and good repayments (over 90%) under the scheme, the bank has
decided to credit link 1,000,000 SHGs by the end of March 2008.
Financials
The bank reported a substantial rise in standalone net profit for the quarter ended
December 2008. During the quarter, the profit of the company rose 37.03% to Rs
24,784.20 million from Rs 18,086.40 million in the same quarter last year. Interest
earned for the quarter jumped 42.34% to Rs 180,303.40 million, while total income
for the quarter rose 38.35% to Rs 212,559.00 million, when compared with the prior
year period. It reported earnings of Rs 39.04 a share during the quarter, registering
13.59% growth over previous year period.
HOME LOAN
THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer
Awards along with the MOST PREFERRED BANK AWARD in a survey conducted
by TV 18 in association with AC Nielsen-ORG Marg in 21 cities across India.
SBI HOME LOANS now offers Interest Rates concessions on GREEN HOMESin
accordance with SBI's commitment to Environment protection.
SBI Home Loans come to you on the solid foundation of trust and transparency builtin 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.
Best practices followed in SBI
People dealing withyou
End to End service by Permanent employees of SBI who areaccountable to you.
Place SBI branch of your choicewill service your loan account. You
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can always meet our employees face to face.
PriceComplete transparency.Interest charged on the daily reducing balance.
Prepayment
charges
No penalty for prepayments made, out of bonafide savings or
windfall gains for which evidence is produced.Costs hidden in fineprint
No hidden costs
TransparencyComplete transparency. All the features of our product, includinginterest rates, are in the public domain.
Unique features:
1. Provision for on the spot "In principle" approval.
2. Loan sanctioned within 6 days of submission of required documents.
3. Option to avail Home Loan as a Term Loan or as an Overdraft facility to save
on interest and maximize gains (see SBI MaxGain in the following sections)
4.Option to club income of your spouse and children to compute eligible loan amount
5.Provision to club depreciation, expected rent accruals from property proposed to
compute eligible loan amount.
6. Provision to finance cost of furnishing and consumer durables as part of project
cost.
7. Repayment permitted up to 70 years of age
8.Free personal accident insurance cover up to Rs.40 Lac.
9. Optional Group Insurance from SBI Life at concessional premium (Upfront
premium financed as part of project cost)
10.Interest calculated on daily reducing balance basis, and starts from the date of
disbursement. Plus schemes which offer attractive packages with concessional
Interest rates to Govt.
11. Employees, Teachers, Employees in Public Sector Oil Companies.
12. Special scheme to grant loans to finance Earnest Money Deposits to be paid to
Urban Development Authority/ Housing Board, etc. in respect of allotment of sites/
house/ flat
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13.Option to avail loan at the place of employment or at the place of construction
Purpose
Purchase/ Construction of House/ Flat
Purchase of a plot of land for construction of House
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.
Eligibility
Minimum age 18 years as on the date of sanction
Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. the age by
which the loan should be fully repaid. Availability of sufficient, regular and
continuous source of income for servicing the loan repayment.
Loan Amount
40 to 60 times of NMI, depending on repayment capacity as % of NMI as under
Net Annual Income EMI/NMI Ratio
Up to Rs.2 lacks 40%
Above Rs.2 lacks to Rs. 5 lacks 50%
Above Rs. 5 lacks 55%
To enhance loan eligibility you have option to add:
1. 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.
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2. Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased
is proposed to be rented out.
3. Depreciation, subject to some conditions.
4. Regular income from all sources.
Margin
Purchase/ Construction of a new House/ Flat/ Plot of land:20% for loans up to Rs.30 Lacks,20% for loans above Rs.30 lacks and up to Rs.75 lacks.25% for loans above Rs.75 lacks.
(w.e.f. 01.01.2009)
INTEREST
Interest Rates w.e.f. 01.01.2009
a) Floating Rates linked to SBARSBAR w.e.f. 01.01.2009 = 12.25 % p.a.Loans (i.e. Sanctioned limits) up to Rs.30 Lacks
Loan amount Loan Tenure -> Up to 5Yrs
Above 5Yrs & upto 15 Yrs
Above 15Yrs & up to25 Yrs
Loans up toRs.30 lacks fornew loans
sanctioned on orafter 01.01.2009
Linkage with SBAR in theloan document
2.25%belowSBAR,
2.00 belowSBAR
1.75%belowSBAR
Special product leveldiscount which may bewithdrawn/revised solelyat the discretion of theBank.
0.25% 0.25% 0.25%
EffectiveRate
9.75%p.a.
10.00%p.a.
10.25% p.a.
Loans (i.e. Sanctioned limits) above Rs.30 Lacks and up to Rs.75 Lacks
LoanTenure ->
Up to 5 Yrs Above 5 Yrs& up to 15
Yrs
Above 15 Yrs& up to 25
YrsAbove Rs.30 lacks Linkage with 2.00% below 1.75% below 1.50% below
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and up to Rs.75Lacks w.e.f.01.01.2009
SBAR SBAR SBAR SBAR
Effectiverate
10.25%p.a. 10.50% p.a. 10.75% p.a.
Loans (i.e. Sanctioned limits) above Rs.75 LakhsAbove Rs.75 Lakhsw.e.f. 01.01.2009
Linkage withSBAR
2.00% belowSBAR
1.75% belowSBAR
1.25% belowSBAR
Effectiverate
10.25% p.a. 10.50% p.a. 11.00% p.a.
b) Fixed rates - Re-payment Up to 10 Years(w.e.f. 01.01.2009):
Fixed rates (subject to force majeure clause and interest rate reset at the end
of every two years on the basis of fixed interest rates prevailing at that time)Up to Rs. 30 LakhsAbove Rs. 30 Lakhs
11.25% p.a.12.25% p.a.
c)Loans for deposit of earnest money for allotment of a plot / house / flat
(Floating rates only)- W.E.F. 01.01.2009 - 1% above SBAR, Min. 13.25% p.a.
Loan amount Margin
Up to Rs.30 Lakhs 20%Above Rs.30 Lakhs and up to Rs.75 Lac 20%Above Rs.75 Lac 25%
Processing Fee
0.50% of Loan amount with a cap of Rs.10,000/-(including Service Tax)
Pre-closure Penalty
No penalty if the loan is preclosed from own savings/windfall gains for which
documentary evidence is produced by the customer. In case, such proof is not
produced by the borrow