Idbi Final Project

8/2/2019 Idbi Final Project

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Retail Asset Management-Home Loans

Submitted in partial fulfillment of PGDM

PGDM BATCH 2010-12

Submitted By

Vikash Jhunjhunwalla

Faculty Guide Director Academics

Prof. Jagdish Reddy 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


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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.

.

(Prof. JAGDISH REDDY)

Date:


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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


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INDEX

Chapter No Content Page No

Chapter 1 Introduction 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

57

Questionnaire 58-59


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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 tomeasure 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 likeHOME 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.


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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 state-

of-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.


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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 ICICIBanks 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


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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 percentin 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 bankingsector 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 makinga 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 asa 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 standsrepealed.

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

INVESTMENTCURRENT ACCOUNTSAVING ACCOUNT

DEVELOPMENT BANK.RETAIL BANKING

CORPORATE SAVINGPERSONAL SAVING


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IDBI Bank Organizational Chart

Chairman

President

Vice president

Finance

Vice president

Marketin

Vice president

O erations

Vice president

H. R.

Divisional Sales Manager

Zonal Head

Territory In charge

Regional Head


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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 pendinglegal 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 12.75%

Above Rs. 4 lakhs 13.00%

For the students of IIT,IIM and ISB (up to Rs 20

lakhs )

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 No security

Above Rs 4 lacs and up to Rs. 7.5 lacs Collateral in the form of a third party guarantee

Above Rs 7.5 lacs 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 givenfor 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 optionthan 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.


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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 thecountry. 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 headoutright", 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 otherinvestments. 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 loanonly. 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 cashflows 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 loanprincipal 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, youwill 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.


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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..


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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 : Dhanbad district

Type of Data : 1. Primary

2. Secondary

Industry : Banking

Respondent : 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

NO. OF RESPONSEAGE

2520-25

4625-30

3430-35

2335-40

2140-45

2245-50

2450-60

5560-ABOVE


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0

10

20

30

40

50

60

20-2525-3030-3535-4040-4545-5050-6060-ABOVE

AGE GROUP

NO. OF RESPONSE

R

E

S

P

O

N

S


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TABLE 2: PERCEPTION OF IDBI AS A BANK

TYPE OF BANK RESPONSES

PRIVATE 50

PUBLIC 45

PRIVATE/PUBLIC 100

DON'T KNOW 55


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

PARAMETER RESPONSES

EFFICIENCY 75%

INTERNET BANKING/ATMs 25%

PRODUCT RANGE 95%

NETWORK 33%

PHONE BANKING 22%

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

100%

RESPONSES

RESPONSES


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TABLE 4: MARKET SHARES IN DHANBAD IN COMPARISION TO

COMPETITORS

BANK NAME % OF SHARE

SBI 30%

IDBI 15%

ICICI 25%

PNB 10%

HDFC 5%

HSBC 5%

OTHERS 10%


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TABLE 5: FACTORS RESPONSIBLE FOR PERFORMANCE OF IDBI

BANK(RAC) IN DHANBAD

PARAMETERS % OF SHARE

PRODUCT 50%

ADVERTISMENT 5%

MANPOWER 25%

NET-BANKING 2%

PHONE BANKING 5%

INVESTMENT SCHEME 10%

NETWORK 3%


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

10

PARAMETER RESPONSES

Radha Soami Developers 8

Shree Ram Developers 5Urmi Tech Developers 9

Balajee Infratech 6

Feacon Developers 7

Nalanda Developers 8

R.K Builders and Developers 9

Trimurthi Developers 7

Narayan Builders 8Om Builders and Developers 8

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 SELF EMPLOYED

TENURE (YEARS) INTERESE RATE (p.a) INTERESE RATE (p.a)

UPTO 5 10.25% 10.25%

10 10.25% 10.25%

15 10.25% 10.25%

20 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.


AGE LIMIT Minimum 24 years Minimum 24 years

Maximum 58 years Maximum 65 years

LOAN AMOUNT (RS) Minimum 2 lakhs Minimum 2 lakhs

Maximum 3 crores Maximum 3 crores

INCOME p.a (RS) Gross 1.20 lakhs Net Income 1.00lakhsMinimum Work Experience 2 years 2 years


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OTHER CHARGES

MOF CHARGES NIL

ADMIN CHARGES NIL

PRE-PAYMENT(FLOATING)

NIL

GUARANTOR NIL

PROCESSING

CHARGE

0.75%

ICICI BANKICICI 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) New Rate (% per annum)

Home Loans 1-5 10.50

6-20 11.00

Fixed rate Home Loans Tenure (Yrs) New Rate (% per annum)

Home Loans 1-5 11.00

6-10 11.50


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10-20 11.50

21-30 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



UPTO 5 10.75% 10.75%

10 10.75% 10.75%

15 10.75% 10.75%

20 10.75%

ELIGIBILITY CRITERIA



Maximum 58 years Maximum 65 years


Maximum NO LIMIT Maximum NO LIMIT

INCOME p.a (RS) Gross 1.32 lakhs Net Income 1.00lakhs

Minimum Work Experience 3 years 3 years

OTHER CHARGES

MOF CHARGES NIL

ADMIN CHARGES NIL

PRE- 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)

UPPER LIMIT OF

LOAN (RS)

MAX. TENURE OF

LOAN (YEARS)

SELF

CONSTRUCTION

85% 1 CRORES 20

HOME RENOVATION 85% 25 LAKHS 15

HOME EXTENSION 85% 1 CRORES 15

HOME BUYING 85% 1 CRORES 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



UPTO 5 10.75% 10.75%

10 10.75% 10.75%

15 10.75% 10.75%

20 10.75% 10.75%




Maximum 58 years Maximum 65 yearsLOAN AMOUNT (RS) Minimum 1 lakhs Minimum 1 lakhs

Maximum 50 LAKHS Maximum 50 LAKHS

INCOME p.a (RS) Gross 90000 Net Income 1.50lakhs



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OTHER CHARGES

MOF CHARGES NIL

ADMIN CHARGES NIL

PRE-

PAYMENT(FLOATING)

NIL

GUARANTOR NIL

PROCESSING CHARGE UPTO

1%

KOTAK MAHINDRA BANK



3-5 11% 11%

10 11% 11%

15 11% 11%

20 11%



AGE LIMIT Minimum 21 years Minimum 21 yearsMaximum 58 years Maximum 65 years


Maximum 2 CRORES Maximum 2 CRORES

INCOME p.a (RS) Gross 1.50lakhs Net Income 1.50lakhs



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OTHER CHARGES

MOF CHARGES NIL

ADMIN CHARGES NIL

PRE-

PAYMENT(FLOATING)

NIL

GUARANTOR NIL

PROCESSING CHARGE 0.50%-

0.75%


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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 nose-

diving 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

1000

0 to

2500

0

2500

1 to

5000

0

5000

1 to

7000

0

7000

1 to

1.50

L

1.50

L to

2 L

2.01

L to

3 L

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

BOBFinance

12 12 12 12.75 12.75 12.75 12.75 12.75 12.75 12.75 13.25 13.25

Can Fin

Homes

13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25

Cent

Bank

Home

12.25 12.25 12.25 12.25 12.25 12.25 13 13 13 13 14 14

Corp

bank

Homes

13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50

GIC

Housing

Finance

11.75 11.75 11.75 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25

Hudko

Niwas

11.5 11.5 11.5 12.75 12.75 12.75 13 13 13 13 13 13

Ind

Housig

12 12 12 13.50 13.50 13.50 13.50 14 14 14 14 14

LIC

Housing

Finance

12 12 13 13 13 13 13 13 13 13 13 13

PNB

Housing

Finance

NIL NIL NIL 13 13 13 13 13 13 13 13 13.5

SBI

Finance

13 13 13 13 13 13 13 13 13 13 13 13.25

Vibank

Finance12.25 12.25 12.25 13 13 13 13 13 13 13 13.5 14


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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/- and thats why people are reluctant in paying the

same.

Compared to other competitors IDBI Bank (RAC) Center has a very fast way to provideloans 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 technical valuer appointed by the bank also helped me a lot in

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.


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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.


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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.


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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 -John Downes

Close to home -vandana shiva

Home loans -Times publication

Reports

National housing finance report

Report on home loans by GOI

News Papers

Times of India

Economics times

Business standard
http://www.idbibank.com/http://www.google.com/http://www.thinkglink.com/http://www.hdfc.com/http://www.homeloans.va.gov/http://www.apnaloan.com/http://www.apnaloan.com/http://www.homeloans.va.gov/http://www.hdfc.com/http://www.thinkglink.com/http://www.google.com/http://www.idbibank.com/


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QUESTIONNAIRE

NAME

AGE. SEX: MALE/FEMALE

ADDRESS:...

CITY

PIN CODE....

CONTACT NO.

1. DO YOU KNOW ABOUT IDBI BANK LTD (RAC) CENTER.?

YES NO

2. IDBI BANK IS A

PRIVATE BANK PRIVATE/PUBLIC BANK

PUBLIC BANK DONT KNOW

3. RANK THE IDBI BANK ON THE FOLLOWEING FEATURES (RANK 1 FOR BEST AND 5 FOR

WORSE ON 1 TO 5 SCALE)

EFFICENCY MANPOWER

INTERNET BANKING/ATMs NETWORK

PRODUCT RANGE PHONE BANKING

4. YOU WOULD LIKE TO BE A CUSTOMER OF BANK BECAUSE

5. YOU WOULD NOT LIKE TO BE A CUSTOMER BANK BECAUSE-

6. NAME THE BANK WHICH COMES IN YOUR MIND AT VERY FIRST AND WHY?

Documents

Idbi Final Project