A SYNOPSIS ON

“HOME LOANS”
AT
“ICICI BANK LIMITED”
BY
PEDHAPINKI DURGA
(HALL TICKET NO: 2129-21-672-034)
Synopsis for project to be submitted for the award
of the degree of
MASTER OF BUSINESS ADMINISTRATION
OSMANIA UNIVERSITY

2021-2023

AURORA’PG COLLEGE, NAMPALLY

 INTRODUCTION

A home loan is a type of loan in which the borrower uses the equity of his or her

home as collateral. The loan amount is determined by the value of the property, and the value

of the property is determined by an appraiser from the lending institution. Home equity loans

are often used to finance major expenses such as home repairs, medical bills, or college

education. A home equity loan creates a lien against the borrower's house and reduces actual

home equity.

House is a necessity to all human beings and owning a house is a dream for everyone. Earlier

only a few people had the privilege to have an own house but now with the availability of

house loans provided by banks many people’s dreams has come true. These are loans which

are provided either to buy an already built ready to occupy a house or a flat or to construct a

house. A Home Loan is taken out from a bank or financial company in order to

purchase/construct a new house or reconstruct an existing mortgage. There are several

different ways in which an individual can get a home loan mortgage. Over the past few years,

many new banks and housing finance companies have opened up and are providing attractive

and low lending rates. There are many housing finance lenders which we work with who are

ready to give you the latest information about the bank of mortgage rates.

An individual who is looking for housing loans should be aware of all his requirements and

then he/she can search for housing finance services in India. Without knowing the

requirements, it is difficult to understand the process of a home loan. A borrower who is

ready to go for house loans should check their monthly incomes and the location of the

borrower. You will also want to look into getting home insurance quotes for your new home.

Given the present economic conditions, the prices of properties are rapidly on the rise

especially in the major cities across India. This is making it difficult for middle class families
to afford these huge investments. Keeping this fact in mind, bank of mortgage services in

India considered these facts and came up with attractive mortgage interest rates so that the

middle-class families can take a home lending bank loan. Borrowers should consider each

and every aspect of home lending from selecting the property to closing the finance loan

amount.

Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above

all gathering funds little by little to afford one’s dream. Home is one of the things

that everyone one wants to own. Home is a shelter to person where he rests and feels

comfortable. Many banks providing home loans whether commercial banks or financial

institutions to the people who want to have a home. ICICI LIMITED- (ICICI) Home Loan,

India have been serving people for three decade and providing various housing loan

according to their varied needs at attractive & reasonable interest rates. Owing to their wide

network of financing, ICICI LIMITED Housing Loans provides services at your doorstep and

helps you find a home as per your requirements. Many banks are providing home loans at

cheapest rate to attract consumers towards them.

In view of acute housing shortage in the country, and keeping in mind the social- economic

role of commercial banks in the present times, the RBI advised banks to encourage the flow

of credit for housing finance. With the RBI reducing bank rate, the home loan market rates

nose-diving by 50 basis points. The ICICI LIMITED and Standard chartered bank has

become the first player in this sector to announce a housing loan for a 20 years period.
1.1 NEED FOR THE STUDY

In the era of growing importance of financial status, there is an increased importance for

various financial institutions which provide such loans.The main objective of the study of the

loans and advances is to understand the lending policies and the various schemes of financial

assistance provided by the bank. The bank works comparatively different from other financial

institutions and banks as it works according to the rules and regulations and the guidelines by

the RBI. In the post reforms period, banks are facing tough competition due to interest rate

regime. In today’s buyers’ market, banks are facing cutthroat competition. Hence, they are

introducing new loan products to meet the requirements of the various segments of the

society to know the importance of the retail lending in banks. In this background the topic of

personal lending schemes of ICICI BANK LTD is chosen as the subject matter of this

project. The findings of the project may be considered by ICICI BANK LTD while

formulating the policies for increasing the volume of personal lending schemes. As the

country is witnessing globalization, privatization and liberalization wave with a strong

influence in culture and its implication, the need for loan have become inevitable at present

scenario, hence there is a need to study the progress and trends. Since more and more

competitors have entered the market with many features in their services. The study is also

required to analyse the views of the borrowers and to analyses the satisfaction level of

customers. It helps to know in detail the Loans and Advances provided by the bank, right

from its inception stage, growth and future prospects.

1.2 OBJECTIVESOF THE STUDY

The following are the objective of the present study:

 To know the customer perceptions about home loans of (ICICI).

 To find out the sources of borrowing and mobilization of loans.

 To analyze the loan giving aspect of ICICI BANK

 To study in detail about the different types of loans offered by ICICI BANK.

 To know the context of purpose, eligibility, interest, etc.

 To study and understand the home loan scheme.

 To study in detail about the repayment methodology

1.3 SCOPE OF THE STUDY

The study is undertaken at ICICI BANK LTD The scope is limited to the extent of details

study of various lending schemes at ICICI BANK LTD Disbursement analysis is done in case

of important lending schemes for the past 5 YEARS. The study is mainly concentrated on the

lending practices pattern and influence in the organization’s performance. To know more

about the loans and advances which help us to explore future prospects. To study the

precautions to be taken while advancing the loans. To analyse the profit sources for a bank by

providing loans and advances. To evaluate customer’s eligibility, procedure involved for the

sanction of loans and advances and the customer’s mode of repayment. The operational

jurisdiction of the research is limited to ICICI BANK LTD The scope covers all loan

schemes of ICICI BANK LTD

1.4 IMPORTANCE OF THE STUDY

The need for home loans arises not because property prices are heading upwards all the time

but because home loans make great sense from a long-term savings perspective. Not only are

home loans a handy tool for the common man to own a roof over his head but they also help

to save money in the long run. With skyrocketing real estate prices, people are increasingly

opting for housing loans to acquire their dream home. Interest rates are coming down all the

time and the banks and the housing finance companies are literally falling over each other to

lure the prospective home-seekers. Notwithstanding the tax breaks and generous lending

rates, a lot of people still cannot arrange resources for the down-payment, which comes out to

be at least 15 per cent of the property value. Taking cognizance of the situation, Banks are

coming up with home loan.

1.5 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It is a way of

written game plan for conducting research. The project was undertaken in ICICI BANK to

study the organization, its function, measures taken to arrest HOME LOANS in isbursements

of funds. The methodology followed in collection and processing of data includes.

For this study, Descriptive research has been used; it involves surveys and fact – findings

enquiries of different kinds. It describes the characteristics of the population or phenomenon

that is being studied. The major purpose of descriptive research is the description of the state

of affairs, as it exists at present. The main characteristics of the method are that the researcher

has no control over the variables; he/she can only report what has happened or what is

happening.
SOURCE OF STUDY

To fulfill the informationof the study. The data is collected from primary as well as

secondary sources

 Primary Data: For the collection of primary data, researcher constructed and

administered a pretested structured questionnaire from the borrowers and officers’

executives of the selected banks and also conducted survey we had selected a

questionnaire method for taking customer view of our subject & survey purpose. We

conducted 100 sample of survey in our project to judge, the satisfaction level of

customers which took home loan.

 Secondary Data: For the secondary data, the pamphlets, Annual reports, Articles,

Newspapers books and Websites of various schemes from different banks have been

obtained.

1.6 TOOLS AND TECHNIQUES

Data has been presented with the help of bar graph, percentages

1.7 GEOGRAPHIC LOCATION

Based on the survey conducted, the data was collected from the customers in the places of SR

Nagar, Hyderabad.
1.8 LIMITATIONS OF THE STUDY

This study also includes some limitations which have been discussed as follows:

 The sample size of 100 customers might prove a limitation because of difficulty in

generalization of results.

 To collect the data from various ICICI BANK was quite difficult due to some reasons

 To access such a large number of customers was difficult because of non-cooperative

attitude of respondents.

 Lack of data was also the other limitation of the study as some of banks do not have

proper data on topic.

 There was limitation of time to conduct such a big survey in limited available time.

 Ignorance and reluctant attitude of customers was also a major limitation in this study.
 THEORETICAL REVIEW

LOANS: when a bank makes an advance in lump-sum against some security it is called a

loan. Here, a specified amount is sanctioned by the bank to the customers. The loan amount

so sanctioned is paid to the borrower either in cash or by credit to his account. A certain

amount of interest has to be paid by the borrower for the loan that has to be borrowed. A loan

can be repaid in lump-sum or in installments.

ADVANCE: An advance payment, or simply an advance, is the part of a contractually due

sum that is paid or received in advance for goods or services, while the balance included in

the invoice will only follow the delivery. It is called a prepaid expense in accrual accounting

for the entity issuing the advance.

Important Components of Loans and Advances:

Some of the important components of loans and advances are:

 Deposits or Down payment

 Installments

 Interest

General principles of sound lending:

1. Safety : Safety first should be the guiding principle to be followed in granting loans and

advances. Since banks deal with money of their customers. They have to ensure the safety of

the funds lent. Safety means the borrower must be in a position to repay what is due to him.

The former depends upon his tangible assets and the success of his business if he is

successful in his efforts. He earns profits and can repay the loan properly. Otherwise the loan

is recovered out of the sales proceeds of the borrower. The bank takes care of the business of

which the loan has to be given.

2. Liquidity: It is the ability of the banker to convert the loan into cash. Without much loss in

its value. Money granted for loans period are less liquid than for short period of time.

3. Profitability: A banker cannot run the institution without profits. It is essential to meet the

daily expenses of the bank to pay the interest on deposits. The rate of interest charged in the

past where primarily depended on directives issued by the reserve bank. Now banks are free

to determine their own rate if interest on advances above 2 lakhs.

4. Security: No banker sees the horoscope of the customer while giving him the loan or an

advance. He calculates his lending risk and lends the loan.

5. Purpose of the loan: Repayment of the loans is mainly done on the purpose for which it is

needed. Loans are provided with the productive purposes which would enhance the earning

capacity of the borrower. Loans are not given for speculative purposes.
 2.2 REVIEW OF LITERATURE

SURVEY 1:

REFUND ANTICIPATION LOANS

Refund anticipation loans are quick and are often costly. They run between 67% and 74%

annual percentage rate. Lenders don’t tell you that a lower percentage assumes the loan is for

the entire year rather than two weeks it typically takes to get a refund. People are increasingly

relying on short term advances.

With high percentage rates processing fee and high service deductions many of these refund

anticipation loans take a significant bite out of the refunds. People often see cash

advancement as a way to get fast money.

In 2012, nearly 60 % of all refund anticipation loans 7 million went to households that were

eligible to the earned income tax credit. Geared towards easing the tax burden faced by low

income Americans. The survey found that 80 % recipients earned a yearly income of $ 7500

or less.

To combat deceptive loans the government produced the refund anticipation loans to fully

disclose fee associated with them.

SURVEY 2:

Title: Increased Loan Demand

Source: www.federalreserve.gov

Federal Reserve Board, (U.S.A) senior loan officer conducted a survey on increasing demand

for loans. The survey found that about 25% of banks reported increase demand for

commercial and industrial loans from large and middle market firms. About 10% reported

stronger loan demand from small business.

The credit quality of potential business borrowers also improved. More than half of domestic

banks said the credit quality of large and middle market loan applicant had improved while

35% said the credit quality of potential small business borrowers had improved.

Through the first seven months of fiscal year, 7(a) loan program was introduced and was

soon up by 53% when compared with the same period a year ago. In the fiscal year, more

than $17 billion 7(a) loans had been approved and it is also expected that program could hit

the authorized limit of $19.5 billion before the end of fiscal year. Therefore as a result it was

found that here was an increasing demand for loans.

SURVEY 3:

GLOBAL ECONOMIC FREEDOM ADVANCES

Washington November 30, 2090 the heritage foundation and the wall street journal report in

their annual index of economic freedom. Of the 181 countries rated, 57 granted their citizens

more economic growth and are prosperous those with less economic freedom.

The 2000 index shows that scores for three regions north American and Europe, Latin

America and the Caribbean and the north America and middle east improved. Scores for the

remaining two regions – asia pacific and sub Saharan Africa.

Despite these gains 2000 index reports that reports the most of the world’s economies remain

unfree. Ratings are based on analysis of 50 different economic variables, grouped into 10

broad categories banking, capital flows and foreign investment, monetary policy, fiscal

burden of govt, trade policy , wages and prices, govt intervention in the economy, property

rights, black market activity.

Article 1: Distinctive demand and risk characteristics of residential housing loan market in

India

Author: Arindam Bandyopadhya and AsishSaha

Journal: Journal of Economic Studies, vol. 38 no. 6

Published Date: 1 November 2011

Abstract:

The primary objective of the paper is to demonstrate the importance of borrower‐specific

characteristics as well as local situation factors in determining the demand prospect as well as

the risk of credit loss on residential housing loan repayment behavior in India. Using 13,487

housing loan accounts (sanctioned from 2093-2007) data from Banks and Housing Finance

Cos (HFCs) in India, this paper attempts to find out the crucial factors that drive demand for

housing and its correlation with borrower characteristics using a panel regression method.

Article 2: Formal housing finance outreach and the urban poor in India

Author: Kiran Sandhu

Journal: International Journal of Housing Markets and Analysis, vol. 6 no. 3

Published Date: 26 July 2013

Abstract:

Access to housing remains high on the agenda of the governments in the developing

countries. One of the responses to low income housing access is by making the housing

finance conduits reachable to the poor. Based upon a comprehensive review of literature in

terms of work of other authors, reports and documents, the paper generates evidence and

critically examines the context of housing finance provision for the urban poor in India.

Article 3: Housing attributes affecting buyers in India, Analysis of perceptions in the context

of EWS/LIG consumers view

Author: Pavan Namdeo, Ghumare, Krupesh, A. Chauhan and Sanjay Kumar M. Yadav

Journal: International Journal of Housing Markets and Analysis

Published Date: 18 November 2020

Abstract:

The purpose of this paper is to provide affordable housing to low- and middle-income groups.

The gravity of India’s housing affordability problem has led us to study and analyse the

attributes hindering affordable housing for economically weaker section (EWS) and low-

income group (LIG). The judgment sampling is used among housing and planning

professionals working in five different sectors, including local authorities, housing

developers, housing sectors, town planning and property/affordable housing consultant.

Article 4: Operational guidelines for sustainable housing micro‐finance in India

Author: T.S. Anand Kumar, V. PraseedaSanu and Jeyanth K. Newport

Journal: International Journal of Housing Markets and Analysis, vol. 1 no. 4

Published Date: 21 November 2008

Abstract:

Housing microfinance is emerging globally as an important financial activity to help alleviate

the housing needs of economically vulnerable people. Micro‐finance institutions (MFIs)

planning to include housing product must carefully assess whether they have the management

and technical capacity to do so. It finds that MFIs should also ensure that housing micro‐

finance suits their strategy from institutional and financial perspectives.

Article 5: A study on the mediating effect of residential loans in India

Author: Tanu Aggarwal and Priya Solomon

Journal: Journal of Property Investment & Finance, vol. 37 no. 5

Published Date: 5 August 2020

Abstract:

The residential loans as a mediator have been used to know the mediation effect between

commercial and total real estate loans of banks in India. The residential loans as a mediator

govern the relationship between commercial loans and total real estate loans in India. Real

estate sector development is a lucrative opportunity for India. The real estate sector plays a

major role in shaping economic conditions of the individuals, firms and family. The outcome

of the structural model that is bootstrapping technique shows that there is an impact of

residential and commercial loans by public and private sector banks on total real estate sector

development in India.

Article 6: Current Challenges for Home Loans in India

Author: Neeta Maheshwari, Rajeev Biyani

Journal: Indian journal of finance vol 5

Published Date: 3 March 2011

Abstract:

The major objective of this paper is to provide crucial information for getting home loans for

housing in our country and improve the living standard of communities. This task is very

important in several aspects, for example, it sheds light on the issue of affordability of a

house as a major aspect of the overall poverty problem and ways to combat it; and, it enables

us to stress on the importance of the need for more flexible lending practices among banks.
Article 7: Housing Finance Snags Faced by Indian Home Loan Mortgagors

Author: D. Srinivasa Kumar

Journal: Indian journal of finance vol 11

Published Date: 11November 2018

Abstract:

Housing is an essential need in each economy and it is a fundamental pointer for the financial

improvement of the nation. This study distinguished the problems faced by home loan

borrowers from the application stage to the last stage of loan repayment and examined how

their socio - financial profile impacted their perceptions of the problems faced by them while

availing home loans. This paper revealed that the salaried class faced problems like the

documents needed for screening, rate of interest, and time gap between loan applied and

sanctioned

Article 8: Home Loan Portfolio

Author: Patnaik B.C.M

Journal: International Journal of Current Advanced Research Vol 6,

Published Date: 28September, 2018

Abstract:

The present paper is an initiative to understand the various dynamics related to home loan

portfolio and to undertake empirical study related to home loan. In this regard secondary data

is considered. The various variables identified are financial basics are behind drop in home

cost, interest rate plays an important role, paper work, decrease in profitability,

awareness among the prospective customers, poor are not getting the budgetary help, re-

arrangement of housing policy of government, service quality, speed of providing services

and implementations of schemes should match the economic profile of the borrowers

Article 9: An Empirical Analysis of the Demand for Home Loans in Urban India
Author: Archana Fulwari, Jayant Kumar

Journal: journal of economics and research vol 5

Published Date: 2 April 2017

Abstract:

Housing aspirations of households in India have been on a rise, particularly in the post

reforms period, and the role of home loans in meeting these needs cannot be overemphasized.

The entry of private financial institutions and banks in a big way after the introduction of

economic reforms in India and their aggressive posturing have added further fuel to the

demand for housing. The post reforms period has witnessed higher personal disposable

incomes, lower inflation rates, lower interest rate regime, and an increased thrust on retail

lending by the financial institutions, contributing to the expansion of the housing finance

sector.

Article 10: Housing Finance in India and Appraisal Process of Home Loans with Specific

Reference to Indian Overseas Bank

Author: Souvik Ghosh

Journal: International Journal of Science and Research

Published Date: 8 August 2015

Abstract:

Owning a home is one of life’s biggest aspirations of a person. Home loans are the most

easily accessible financial Supplement to purchase a person’s dream home..Once the

maximum amount to put into the property has been decided, the Housing Finance Institutions

or Banks will let the customer know that how much he/she is eligible for and this helps to

plan out the budget. Each HFC has its own norms and standard to evaluate borrower’s ability

to repay the loan and the credit worth of costumer eligible.

 INDUSTRY PROFILE

A bank is a financial institution that accepts deposits and channels those deposits into

lending activities. Banks primarily provide financial services to customers while enriching

investors. Government restrictions on financial activities by banks vary over time and

location. Banks are important players in financial markets and offer services such as

investment funds and loans. In some countries such as Germany, banks have historically

owned major stakes in industrial corporations while in other countries such as the United

States banks are prohibited from owning non-financial companies. In Japan, banks are

usually the nexus of a cross-shareholding entity known as the keiretsu. In France,

bancassurance is prevalent, as most banks offer insurance services (and now real estate

services) to their clients.

Introduction

India’s banking sector is constantly growing. Since the turn of the century, there has been a

noticeable upsurge in transactions through ATMs, and also internet and mobile banking.

Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament in

2018, the landscape of the banking industry began to change. The bill allows the Reserve

Bank of India (RBI) to make final guidelines on issuing new licenses, which could lead to a

bigger number of banks in the country. Some banks have already received licenses from the

government, and the RBI's new norms will provide incentives to banks to spot bad loans and

take requisite action to keep rogue borrowers in check.

Over the next decade, the banking sector is projected to create up to two million new jobs,

driven by the efforts of the RBI and the Government of India to integrate financial services

into rural areas. Also, the traditional way of operations will slowly give way to modern

technology.
3.2 COMPANY PROFILE

Digital banking is part of the broader context for the move to online banking, where banking
services are delivered over the internet. The shift from traditional to digital banking has been
gradual and remains ongoing, and is constituted by differing degrees of banking service
digitization. Digital banking involves high levels of process automation and web-based
services and may include APIs enabling cross-institutional service composition to deliver
banking products and provide transactions. It provides the ability for users to access financial
data through desktop, mobile and ATM services.

A digital bank represents a virtual process that includes online banking and beyond. As an
end-to-end platform, digital banking must encompass the front end that consumers see, back
end that bankers see through their servers and admin control panels and the middleware that
connects these nodes. Ultimately, a digital bank should facilitate all functional levels of
banking on all service delivery platforms. In other words, it should have all the same
functions as a head office, branch office, online service, bank cards, ATM and point-of-sale
(POS) machines.

The reason digital banking is more than just a mobile or online platform is that it includes
middleware solutions. Middleware is software that bridges operating systems or databases
with other applications. Financial industry departments such as risk management, product
development and marketing must also be included in the middle and back end to truly be
considered a complete digital bank. Financial institutions must be at the forefront of the latest
technology to ensure security and compliance with government regulations.

History of Digital Banking[edit]

The earliest forms of digital banking trace back to the advent of ATMs and cards launched in
the 1960s. As the internet emerged in the 1980s with early broadband, digital networks began
to connect retailers with suppliers and consumers to develop needs for early online catalogues
and inventory software systems.[2]

By the 1990s the Internet became widely available and online banking started becoming the
norm. The improvement of broadband and ecommerce systems in the early 2000s led to what
resembled the modern digital banking world today. The proliferation of smartphones through
the next decade opened the door for transactions on the go beyond ATM machines. Over 60%
of consumers now use their smartphones as the preferred method for digital banking.[3]
The challenge for banks is now to facilitate demands that connect vendors with money
through channels determined by the consumer. This dynamic shapes the basis of customer
satisfaction, which can be nurtured with Customer Relationship Management (CRM)
software. Therefore, CRM must be integrated into a digital banking system, since it provides
means for banks to directly communicate with their customers.

There is a demand for end-to-end consistency and for services, optimized

on convenience and user experience. The market provides cross platform front ends, enabling
purchase decisions based on available technology such as mobile devices, with a desktop or
Smart TV at home. In order for banks to meet consumer demands, they need to keep focusing
on improving digital technology that provides agility, scalability and efficiency.