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

Chapter 1:

Introduction

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

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

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

Scope of the study:

Home loans are provided based on the market value, mainly estimation
given by banks or the registration value of the property. Home loan is not a
one-time decision; do review the market periodically before availing them.
Customers tend to make mistakes while entering into deals, which may not
be beneficial for them, so better compare all the variables before signing a
loan agreement by different banks.

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There exist various parameters that we need to compare on selection of
Home loan from a particular bank. They are as follows:

1. Eligibility
2. Interest rates best suited.
3. Fixed interest loans or Floating.
4. Other costs.
5. Documents required.
6. Penalties.

Objectives of the study:

• To study the Home loan provided by SBI and ICICI

• To analyse the home loan interest rates of SBI and ICICI
• To know which bank provides better home loan products and schemes

Statement of the Problem:

This project is done so as to study the various aspects of Home loan of SBI
and ICICI. Both being considered as major banks in India, one can find it
difficult to choose between these two banks. This project is an attempt to
find out which bank provides the best deal for home loan. This is done by
studying the various schemes, comparison of the Interest rates of SBI and
ICICI, etc.

Research methodology:

This research is based on secondary data. The data is collected from the
official websites of SBI and ICICI bank. Data is also collected from various
websources providing information about the Home loan and the interest rate
charged on it. Different websources such as Equitymaster, Deal4loans, etc
are also used in this research. These are used so as to know the fixed and
floating rates of interest on Home loans, to know which bank provides better
home loan as compared to another, etc.

Chapter 2

Industry profile:

Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India, which started in 1786, and Bank of
2
Hindustan, which started in 1790; both are now defunct. The oldest bank in
existence in India is the State Bank of India, which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being
the Bank of Bombay and the Bank of Madras, all three of which were
established under charters from the British East India Company. For many
years the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank of
India, which, upon India's independence, became the State Bank of India.

The Indian Banking industry, which is governed by the Banking Regulation

Act of India, 1949 can be broadly classified into two major categories, non-
scheduled banks and scheduled banks. Scheduled banks comprise
commercial banks and the co-operative banks. In terms of ownership,
commercial banks can be further grouped into nationalized banks, the State
Bank of India and its group banks, regional rural banks and private sector
banks (the old/ new domestic and foreign). These banks have over 67,000
branches spread across the country.

The first phase of financial reforms resulted in the nationalization of 14 major

banks in 1969 and resulted in a shift from Class banking to Mass banking.
This in turn resulted in a significant growth in the geographical coverage of
banks. Every bank had to earmark a minimum percentage of their loan
portfolio to sectors identified as “priority sectors”. The manufacturing sector
also grew during the 1970s in protected environs and the banking sector was
a critical source. The next wave of reforms saw the nationalization of 6 more
commercial banks in 1980. Since then the number of scheduled commercial
banks increased four-fold and the number of bank branches increased eight-
fold. After the second phase of financial sector reforms and liberalization of
the sector in the early nineties, the Public Sector Banks (PSB) s found it
extremely difficult to compete with the new private sector banks and the
foreign banks. The new private sector banks first made their appearance
after the guidelines permitting them were issued in January 1993. Eight new
private sector banks are presently in operation. These banks due to their late
start have access to state-of-the-art technology, which in turn helps them to
save on manpower costs and provide better services.

Company profile:

State Bank of India is the largest state-owned banking and financial services
company in India. The bank traces its ancestry to British India, through
the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta,
making it the oldest commercial bank in the Indian Subcontinent. Bank of

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Madras merged into the other two presidency banks, Bank of Calcutta and
Bank of Bombay to form Imperial Bank of India, which in turn became State
Bank of India. The government of India nationalized the Imperial Bank of
India in 1955, with the Reserve Bank of India taking a 60% stake, and
renamed it the State Bank of India. In 2008, the government took over the
stake held by the Reserve Bank of India.

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

branches in India and overseas, including products aimed at non-resident
Indians (NRIs). The State Bank Group, with over 16,000 branches, has the
largest banking branch network in India.Its also considered as the best bank
even abroad ,having around 130 branches overseas [including 1 ADB]and
one of the largest financial institution in the world . With an asset base of
$352

billion and $285 billion in deposits, it is a regional banking behemoth. It has a

market share among Indian commercial banks of about 20% in deposits and
advances, and SBI accounts for almost one-fifth of the nation's loans.[

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

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

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

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

4
of Saurashtra, one of its associate banks, merged with the State Bank of
India.

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

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

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

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

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

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

The Bank is expanding in overseas markets and has the largest international
balance sheet among Indian banks. ICICI Bank now has wholly owned
subsidiaries, branches and representatives offices in 19 countries, including
an offshore unit in Mumbai. This includes wholly owned subsidiaries in
Canada, Russia and the UK (the subsidiary through which the HiSAVE savings
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brand is operated), offshore banking units in Bahrain and Singapore, an
advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka,
and representative offices in Bangladesh, China, Malaysia, Indonesia, South
Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is
targeting the NRI (Non-Resident Indian) population in particular.

ICICI reported a 1.15% rise in net profit to 1,014.21 crore on a 1.29%

increase in total income to 9,712.31 crore in Q2 September 2008 over Q2
September 2007. The bank's CASA ratio increased to 30% in 2008 from 25%
in 2007

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

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

Chapter 3: Literature Survey

Conceptual and theoretical review:

ICICI Bank Home Loans, offer unbeatable benefits to ensure that we get the
best deal without any hassles. As one of the leading home loan provider,
ICICI Bank understands how special building a new home is for us and our
Home Loan help you lay the foundation for the dream home.

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

Eligibility:

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

Employed and also by Non- Resident Indian who are Salaried. For resident
Indians the following are the eligibility norms:

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 • You must be at least 21 years of age when the loan is sanctioned.
• The loan must terminate before or when you turn 65 years of age or
before retirement, whichever is earlier.
• You must be employed or self-employed with a regular source of
income.

Loan Amount:

With ICICI Bank Home Loans, we can get a home loan suited to our needs.
The home loan amount depends on our repayment capability and is
restricted to a maximum of 80% of the cost of the property or the cost of
construction as applicable. A number of factors are taken into account when
assessing our repayment capacity. Repayment capacity takes into
consideration factors such as income, age, qualifications, number of
dependants, spouse's income, assets, liabilities, stability, continuity of
occupation and savings history.

However, there are ways by which you can enhance your eligibility.

If your spouse is earning, put him/her as a co-applicant. The additional

income shall be included to enhance your loan amount. In case of any co-
owners they must necessarily be co-applicants.

The final amount to be sanctioned will depend on your repayment capacity.

However, what you ultimately are entitled to will have to conform within the
limits fixed for each loan.

Also, when the company looks at the total cost, registration charges, transfer
charges and stamp duty costs are included.

Disbursement of your ICICI Bank Home Loan:

At ICICI Bank Home Loans, they disburse the loan amount after you identify
and select the property or home that you are purchasing and submit the
requisite legal documents.

While you may be under the impression that the list of documents asked for
is rather extensive, please note that it is for your own good. Each and every
single document asked for will be verified and checked to ensure your safety.

This may take some time but we want to ensure a clear title and will
complete all the legal and technical verifications to ensure that you have full
rights to your home.

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Your loan will be disbursed after you identify and select the property or home
that you are purchasing and on your submission of the requisite legal
documents.

The 230 A Clearance of the seller and / or 37I clearance from the appropriate
income tax authorities (if applicable) is also needed.

On satisfactory completion of the above, on registration of the conveyance

deed and on the investment of your own contribution, the loan amount (as
warranted by the stage of construction) will be disbursed by ICICI Bank.

• Property documents (as per P&D for respective states and as asked by
empanelled lawyers for individual cases).

• Facility Agreement.

• Disbursal Request Form.

• Cheque Submission Form - for Pre EMI and EMI cheques.

• ECS or Auto Debit for ICICI Bank account holders or Post Dated
Cheques for EMI / Pre EMI.

• Personal Guarantor's Documents (PG Form, Photograph, Identity Proof,

Address Proof, Signature Verification and Income documents, if
applicable).

In case of property is owned by a company

• Memorandum of Entry.

• Form 8.

• NOC.

The Current Home Loan Interest Rates of ICICI Bank Home Loan:

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

Schemes Lacs Lacs Lacs Lacs
ICICI Bank
9.50% 9.75% 10% 10.25%
Home Loan
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Interest rate on ICICI for Home loan amount upto Rs.20lakhs is 9.50%

For the amounts between 20-30lakhs, the interest rate is 9.75%

For the amount from 30-75lakhs, interest rate is 10%, while it is 10.25% for
the loan amount above Rs.75lakhs

--Repayment Terms of Home Loan:

Repayment tenure is the tenure for the number of year for which the loan
gets sanctioned. We offer you a wide range of options for the tenure of the
loan. You can take a home loan for up to 20 years provided you do not reach
the age of 65 years or retire within that period. ICICI Bank Home Loans
address all your queries about the repayment terms of Home Loans with
respect to tenure, home loan EMIs, methods of home loans EMI payments
and pre-EMI interest.

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

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

ECS facility is available in selected cities only

In the case of a bounced cheque or delayed payment, charges and

outstanding dues will be charged as per the prevailing company policy. You
can replace old PDCs with new ones within 5 - 7 working days.

In the case of part disbursement of the loan, monthly interest is payable only
on the disbursed amount. This interest is called pre-EMI interest (PEMI) and is
payable monthly till the final disbursement is made, after which the EMIs
would commence.

New Base Rate:

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Till now all floating rate lending used to happen with reference to each banks
individual benchmark rate.

As per the new guidelines laid down by RBI, all Banks have to replace the
existing benchmark rate (prime lending rate (BPLR) & Floating Reference
Rate (FRR) in case of ICICI Bank) with the Base Rate. This is the minimum
rate that banks can charge to its customers. This new base rate will be
applicable for all new loans from July 1, 2010.

Banks may determine their actual lending rates on loans and advances with
reference to the Base Rate.

Final Lending rate to customer = Base rate + Margin.

The ICICI Bank new benchmark base rate is called I-Base.

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

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

Application Process of Home Loan:

Your search for the perfect home loan ends here at ICICI Bank Home Loans,
even before your have found the perfect property.

The moment you decide to buy a home, you can put in your application for a
home loan. Yes, you can apply for a home loan even before you have
selected the property.

The property need not even be in the same city where you are residing. The
only condition being that ICICI Bank has Home Loans operations in both the
cities.

Should there be a change in your financial status or plans, you can withdraw
your sanction within 6 months of approval of your home loan.

However, we are always ready to assist our customers in the event of

legitimate problems. And, we might reconsider this if we find that there are
satisfactory reasons for the delay.

And, neither would we charge you extra for this delay.

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If it is refinancing you are interested in, it is possible within 6 months from
the date of purchase of property.

Tools you can use:

We, at ICICI Bank Home Loans, strive to assist you in every possible way at
every step. Hence, for your convenience, we have provided some useful
tools below that will help you in deciding on your home loan.

Adjustable Rate Home Loan EMI calculator:

If you want to apply for an Adjustable Rate home loan, this tool will enable
you to calculate your Equated Monthly Installment (EMI ) if you know the loan
amount you require, term for which you want to take the loan & the rate of
interest that is applicable. You can check the EMIs for different loan tenures
to decide which would be most suitable for you.

Fixed Rate Home Loan EMI calculator:

You can use this tool to calculate your EMI in case you wish to opt for aFixed
Rate home loan. The tool will allow you to see the EMI for the loan amount
you require.

Insurance Plans for Home Loan:

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

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

Key Benefits of Home Safe Plus:

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

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

ICICI Bank Home Loan offers you Home Loan for following purposes

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

2. Home Improvement Loan- is offered to facilitate improvement of a self-

owned dwelling unit to existing or new customer. HIL considers a range of
facilities internal or external to the structure without increase in the living
pace. Thus, a customer can add or improve facilities to his dwelling unit with
a loan at Home Equity Loan rate of interest.

Home Improvement Loan can be availed by Resident Indian whether Salaried

or Self-Employed.

3. Land loans- They give an opportunity for individual customer to purchase

a residential plot of land to do self- construction. Thus, customer can invest
now in a plot of land & build in future. The Land loan can be financed only
within municipal limits of HUB locations or in case of direct allotment outside
municipal limits by DA.

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

Employed and also by Non- Resident Indian.

4. EMI under Construction- It is offered for structuring a home loan to enable

individuals to commence his EMI in a partly disbursed under construction
project. Commencement of EMI ensures re-payment towards principal
amount leading to savings in interest and faster repayment of the loan. The
EMI paid is as per the sanctioned loan amount and remains constant during
the tenure of the loan. The tenure of the loan keeps moving up with
additional amount being disbursed.

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EMI under Construction can be availed by Resident Indian whether Salaried
or Self-Employed and also by Non- Resident Indian.

5. Balance Transfer- ICICI Bank Home Loan gives you facility to transfer your
running loan from an other Bank. Balance Transfer is a facility offering the
customer a choice to transfer the outstanding balance of the loan availed for
better terms & conditions. Balance Transfer helps to move from higher rate
of interest to lower rate of interest or increase in loan component as Top up.
BT is possible only from loans taken from HFCs approved by NHB for
refinance, Banks or employer Loans taken from Central or State Government.

Balance Transfer can be availed by Resident Indian whether Salaried or Self-

Employed

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

Eligibility criteria and Documentation required for ICICI Bank Home Loan:

Salaried Self employed

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

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SBI Home Loan process overview:

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

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

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

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

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

Eligibility:

• Minimum age: 18 years as on the date of sanction

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

Loan Amount:

Actual loan amount will be determined taking into consideration such factors
as applicant’s income and repaying capacity, age, assets and liabilities, cost
14
of the proposed house/flat etc. To enhance loan eligibility you have option to
add:

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

Security:

Equitable mortgage of the property

Margin/ LTV Ratio:

Loan Amount Margin (Min.) Maximum LTV Ratio (Max.)

Upto Rs. 20 Lacs 10% 90%

Above Rs. 20 20% 80%

Lacs.

*LTV ratio - Loan to value ratio.

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

Home loan Products:

SBI Easy Home Loan:

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

(Upto Rs.30 Lacs)

(Base Rate: 8.25% p.a.)

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

b) SBI Advantage Home Loan:

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

(Base Rate: 8.25% p.a.)

Name SBI Advantage Home Loan

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

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

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c) SBI Premium Home Loan:

(Above Rs.75 Lacs to 5 crores)

(Base Rate: 8.25% p.a.)

Name SBI Premium Home Loan – Above Rs.75 Lacs

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

Concessions including discretionary concessions will be available

over the tenor of the loan

No Fixed Interest Rate option.

d) SBI Premium Plus Home Loan

(Above Rs.5 Crore)

(Base Rate: 8.25% p.a.)

Name SBI Premium Home Loan – Above Rs.5 Crore

Facility Term Loan
Type
Loan For Home Loans above Rs 5 Crore
amount
Interest Card Rate applicable over the tenor of the loan is 2% over the Base
rate Rate, present effective rate being 10.25% p.a.

Concessions including discretionary concessions will be available

over the tenor of the loan

No Fixed Interest Rate option.

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Processing Fee:

Loan Amount Processing Fee

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

NOTE:
1) 75 % of the processing fee may be refunded in the following cases:

(a) Rejection of loan application on account of unsatisfactory pre-sanction

survey report.

(b) Rejection of loan application on account of unsatisfactory legal/valuation

reports.

In cases where applications are sanctioned or rejected after complete loan

processing, fee will not be refunded.

2) Actual charges for the following will be payable by the customer in

addition to the processing fee:

a) Pre-sanction

(i) Advocate's fee for property search and the title investigation report.

(ii) Valuer's fee for valuation report.

18
b) Post-sanction

(i) Stamp duty payable for Loan agreement & mortgage.

(ii) Property insurance premium.

Pre-closure Penalty:

No penalty if the loan is pre-closed from own savings/windfall gains for which
documentary evidence is produced by the customer.

Repayment

In 60 Equated Monthly Instalments. Our repayment terms are amongst the

most flexible in the market. Depending on your age and capacity to repay,
you could pay back the loan in easy installments. You may prepay at will
without attracting any penalty, or pay more than your stipulated monthly
installment at any time, depending upon availability of funds with you.
However, in case of takeover of loan by other banks/finance companies,
prepayment penalty of 2% may be levied.

Repayment period: Maximum 25 years (or) Up to the age of 70 years (the

age by which the loan should be fully repaid) of the borrower, whichever is
early.

Moratorium period (Repayment holiday: The moratorium period is included

within the maximum repayment period.

HOME LOAN PRODUCT VARIANTS:

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

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

yield on our savings and minimize interest burden on Home Loans, with no
extra cost.

The loan is granted as an Overdraft facility with the added flexibility for us to
operate your Home Loan Account like your SB or Current Account.

The product serves to minimize your interest cost by enabling you to park
your surplus funds in ‘SBI-Maxgain’ (with the benefit to withdraw the surplus

19
funds whenever you require), specially in the wake of low yields from other
deposit/ investment avenues.

• Minimum Loan Amount: Rs.5 lacs

• Maximum Loan Amount:Rs.1 Crore

ii) SBI Realty :

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

CONSTRUCTION OF A DWELLING UNIT

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

House construction should commence within 2 years from the date of

availment of ‘SBI-Realty’ Housing Loan

Customers are also eligible to avail another Housing Loan for construction of
house on the plot financed above with the benefit of running both the loans
concurrently.

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

ii) SBI Home Plus

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

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

iv) Gram Niwas:

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

The Scheme covers all rural and Semi-urban centres. “Rural Area” for the
purpose of the Scheme is the area comprised in any village including the
area comprised in any town, the population of which does not exceed 50000
20
as per 2001 census. The scheme seeks to provide home loans to farming and
poorest of the poor in rural areas for the purpose of purchase or construction
of a house, repairs and renovation, purchase of plot for the purpose of
construction of a house/shed etc.

v) Sahyog Niwas:

RURAL HOME LOANS TO SELF HELP GROUPS:

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

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

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

vi) SBI Green Home Loan:

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

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

vii) NRI Home Loans

Home Loans to Non Resident Indians (NRIs) and persons of indian origin
(PIOs holding a foreign passport)

Eligibility:

Individual(s) over 18years of age with a steady source of income who

21
 • Are Non Resident Indians (NRIs) holding a valid Indian passport.

• Are persons of Indian Origin(PIOs) holding a foreign passport.

• Minimum employment tenure in India/abroad not less than 2 years.

Loan Amount:

The loan amount is to be determined on the basis of repayment capacity

taking into account income, age, assets and liabilities, qualifications, stability
of occupation, and employment prospects on return. The loan amount is
subject to the following:

Minimum: Rs. 3 lacs

Maximum: Maximum permissible loan amount would be determined by

EMI/NMI ratio criteria as applicable to regular Home Loans scheme for
Resident Indian customers, which is 30% for Net Annual Income (NAI) upto
Rs.2 Lac, 50% for NAI above Rs.2 Lac and upto Rs.5 Lac, 55% for NAI above
Rs.5 Lacs and upto Rs.10 Lacs, 65% for above Rs.10 Lacs.

viii) SBI Tribal Plus

SPECIAL HOME LOAN SCHEME FOR HILLY/TRIBAL AREAS

'SBI-Tribal Plus' Home Loans, a Special Scheme designed for Hill/Tribal areas
for extending financial assistance to individuals in such areas to:

• Purchase or construction of a new house / flat (without mortgage of

land)

• Purchase of an existing (old) house / flat which is not more than 10

years old.

• Repair /Renovation/extension of an existing house or flat.

• Loans given against Third Party Guarantee

• Maximum loan Rs.10 lacs

• Maximum Loan Term 15 years

22
New Products:

i) SBI Surakshit Home Loan

Home Loans with Life Cover.

Other features like tenure, Loan To Value(LTV), eligibility are as per the
standard schemes.

Life Insurance Premium can be added to the Project Cost.

ii) SBI Yuva Home Loan

Eligible: Salaried employees of Companies from the private sector, MNCs,

Government undertakings, PSUs, Government employees.

Age: Between 21 years to 35 years

Minimum Net Monthly Income: Rs.50,000

Loan Term : Maximum 300 months.

Permissible loan amount : 20% higher

Repayment : First 36 months – Only the interest applied during the month
will be recovered.

37th month onwards – 204 EMIs

Loan to Value(LTV): Minimum 20%

Type of Loan : Term Loan Only

Features, other than those mentioned above will be the same as those
applicable to SBI Home Loan scheme.

iii) SBI Home Loan PAL (Pre-Approved Limit )

Benefits of this product:

(1) Under this, your Eligible Loan Amount is assessed before finalization of
property deal and a Pre-Approved Loan Arrangement Letter (PLAL) is issued
to you.

(2) Customer can confidently negotiate with the builder/seller after getting a
sanction.

The Modalities are as under:

23
 1. All the documents prescribed for Home Loan, except property
documents will be collected from the applicant along with the
application form.

2. The loan eligibility will be assessed on the basis of income details of

the applicant and PLAL issued.

3. Non-refundable processing fee as applicable to the Home Loan will be

collected upfront.

4. PLAL will be valid for a period of 2 months. Property papers will be

required to be submitted by the borrower within the validity of
PLAL. Processing fee will not be levied again.

5. Pre-approved loan arrangement letter (PLAL) will carry the eligible loan
amount calculated on the basis of prevailing interest rates. Loan
amount calculated on the basis of prevailing interest rates will be valid
for a period of 1 month (If the interest rate is revised downwards within
a period of 1 month, then the borrower will be given the benefit of such
downward revision.). Thereafter the interest rates applicable on the
date of sanction of Home Loan will be applicable.

6. Minimum Loan amount: Rs.10 Lacs.

7. Other features like tenure, Loan To Value (LTV), eligibility are as per
the standard schemes.

Home loan TOP-UP product:

SBI Home Plus:

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

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

RELATED HOME LOAN PRODUCTS:

24
i) Earnest Money Deposit (EMD) Scheme:

Many Government agencies, like Urban Development Authorities and

Housing Boards, periodically come out with schemes for sale of plots/houses,
wherein applicants have to submit 10-20% of the cost of plot/house as
Earnest Money Deposit (EMD) and allotments are made by draw of lots.

The SBI EMD scheme is designed for financing against earnest money for
allotment of a house/plot. Individuals above 21 years of age and with a
steady source of income are eligible to avail loans under this scheme.

Salient Features of the Scheme:

-No minimum income criteria.

-Margin waived in al cases.

-Eligible for 100% of application money, subject to maximum loan amount of

Rs.10 Lacs.

-Waiver of security in all cases irrespective of the loan amount.

The above mentioned features of the scheme are applicable subject to the
following conditions:

-Allotment letters/refund orders should be routed through SBI.

-Lump sum amount equal to 6 month’s interest to be taken upfront.

-PDCs one for the principle amount of EMD and another towards interest for
the next 6 months should be taken to meet the eventuality of refund getting
delayed.

ii) SBI Reverse Mortgage Loan

LOAN FOR WELFARE OF SENIOR CITIZENS IN INDIA:

SBI Reverse Mortgage Loan Enables house-owning Senior Citizens having

inadequate income to meet their financial needs for renovation/repairs to
house, medical & other personal purposes. There is no compulsion for the
borrower to repay a RML during his or her lifetime or till such time he or she
continues to stay in the house.

The borrower continues to retain ownership of the house. Also, the borrower
will have the option to prepay the loan at any time during the loan tenure
and there will be no pre-payment penalty.

25
Loan Amount:

While there is no ceiling to the amount of loan we sanction the actual loan
amount is determined on the basis of repayment capacity taking into
account your income, age, assets and liabilities. As a rule of thumb - Upto 60
times the net monthly income will be sanctioned depending upon your age.
Usually, your spouse's income and the expected rental would also be taken
into account.

Interest:

Avail of the lowest interest rates in the market. We give you the option of
locking in the low interest rates for the full tenure of the loan or keeping your
interest option open by linking it to the Bank's Term Lending rate. Therefore,
you could either avail the loan at a fixed rate of interest, which stays
constant throughout the loan period, or at a floating rate of interest where
the interest changes (increases or decreases) depending on changes in the
Bank's Term Lending Rate.
Repayment:

In 60 Equated Monthly Instalments.Our repayment terms are amongst the

most flexible in the market. Depending on your age and capacity to repay,
you could pay back the loan in easy installments.You may prepay at will
without attracting any penalty, or pay more than your stipulated monthly
installment at any time, depending upon availability of funds with you.
However, in case of takeover of loan by other banks/finance companies,
prepayment penalty of 2% may be levied.

Take Over of Loan:

If you have already taken a housing loan from any other bank/financial
institution and wish to benefit from our low rates of interest, we can take
over your existing loan.

Eligibility Criteria & Documentation required for SBI Home Loan:

Salaried Self employed

Age 21years to 60years 21years to 70years

26
Income Rs.1,20,000 (p.a.) Rs.2,00,000 (p.a.)
Loan Amount
5,00,000 – 1,00,00000 5,00,000 - 2,00,00000
Offered
Tenure 5years-20years 5years-20years
Current
2years 3years
Experience
1) Application form with
1) Application form with photograph
photograph 2) Identity & residence proof
2) Identity & residence 3) Education qualifications
proof certificate & proof of business
3) Last 3 months salary existence
Documentation
slip 4) Business profile,
4) Form 16 5) Last 3 years profit/loss &
5) Last 6 months bank balance sheet
salaried credit statements 6) Last 6 months bank
6) Processing fee cheque statements
7) Processing fee cheque

In addition to the above mandatory documents, you are also required to

furnish one or more of the following documents wherever applicable:·

Letter of allotment from the housing board or society

Copy of the approved plan

Permission for construction

Copy of the relative order in the case of conversion of agricultural land. (not
required where the house/flat has been constructed by an approved builder)

In the case of an old existing house, you will need to get a valuation
certificate from approved valuers as well as a certificate from a government
approved architect /structural engineer regarding the condition of the
flat/house as well as its remaining life. This will give you the comfort of
knowing that the property you are purchasing is of sound construction.

Chapter 4

Data Analysis and Interpretation:

PART I:

27
The data analysis is done on the basis of the home loan interest rate and key
benefits of SBI and ICICI

There are two types of interest rates on Home loan:

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

predetermined for entire term of Home Loan..

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

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

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

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

Bank
Floating Interest rate Processing Fee Prepayment Charges
Name
8.75% (1st yr),
9.50%(2nd and 3rd
State
yr),9.75%(after 3
Bank of 0.25% of loan N.A
years) (for 20 years
India
upto 30lakhs) then
10%
Rs.10,000/- above 1 crore
9.50% (for 20 years
ICICI If Full Payment - 2% of
upto 20Lakhs), then 0.50% of loan
Bank outstanding amount If Part
10%
Payment - No Penalty

 Floating interest rate of SBI is 8.75% for the 1st year, 9.50% in the 2nd
while it goes to 9.75% after 3 years for the amounts upto Rs.30lakhs.

 On the other hand, ICICI floating interest rate is 9.50% for the amount
of Rs.20lakhs. For 20-30lakhs it is 9.75%. The tenure is of 20 years.

28
  SBI provides cheap rates in the initial years but after 3 years, the
interest rate goes up to 9.75%.

 ICICI interest rate is 9.50% for the whole of 20 years for the amount
upto Rs.20lakhs

 Both SBI and ICICI interest rate for home loan amount exceeding Rs.
30lakhs is 10% and increasing as per the amount.

State Bank of India Home Loan:

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

1. SBI Easy Home Loan

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

Features and Benefits of SBI Home Loan:

• Purchase/ Construction of House/ Flat
• In-principle approvals based on your income and capacity to repay, to
enable you to identify a house/ flat with full confidence.
• Lowest Home Loan Interest Rate..
• Extension/ repair/ renovation/ alteration of an existing House/ Flat
• Purchase of Furnishings and Consumer Durables as a part of the project
cost.
• Takeover of an existing loan from other Banks/ Housing Finance
Companies.
• Interest charged on the daily reducing balance
• No penalty on prepayments of home loan. Reduce your interest burden and
optimally utilize your surplus funds by prepaying the loan.
• No hidden costs
• Option to club income of your spouse and children to compute eligible loan
amount
• Provision to club depreciation, expected rent accruals from property
proposed to compute eligible loan amount

29
• Provision to finance cost of furnishing and consumer durables as part of
project cost.

Over 13,700 branches nationwide, you can get your Home Loan account
parked at a branch nearest to your present or proposed residence.

ICICI Bank Home Loan:

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

Features & Benefits of ICICI Bank Home Loan:

• Guidance through out the process
• No charges on part pre-payment of your Home Loan
• Top Up & Home Improvement Loan facility available on existing Home
Loan
• Home loan amounts suited to your needs
• Home Loan tenure upto 20 years
• Simplified Documentation
• Doorstep Delivery of home loan papers
• Sanction approval without having selected a property.
• Free Personal Accident Insurance policies (Terms & Conditions)
• Insurance options for your home loan at attractive premium

Data Analysis and Interpretation:

PART II:

The data analysis is done on the basis of the Equated monthly installments
(EMI) to be paid for the customers choosing SBI or ICICI. Analysis includes
comparison of EMI of the banks, processing fee charged, Total amount to be
paid as interest as well as total amount to be repaid for a home loan taken.
This is done with the help of the following example:

SBI

Loan Amount: Rs.20,00,000

Loan Tenure :20 years

30
Product name SBI Home Loan
Interest rate 9.75%
Processing Fee 0.25%
EMI Rs. 18,970
Number of EMI 240
Total interest to Rs. 25,52,881
be paid
Total amount to Rs. 45,52,881
be repaid
Exclusive 1. Complimentary international ATM-Debit card
Features 2. Complimentary SBI Classic/ International
Credit Card.
3. Option for internet-banking.
4. Concessional package under Credit Khazana
for prospective Auto Loan, Student Loan,
Personal Loan borrowers whose accounts are
conducted satisfactorily.
5. 50% concession in charges in respect of all
personal remittances/ collection of outstation
cheques.
6. Personal loan at attractive rates under SBI
Home Cash scheme tailored exclusively for SBI
Home Loan customers.
Occupation Salaried
Prepayment No penalty if the loan is preclosed from own
charges savings/windfall gains for which documentary
evidence is produced by the customer.

In case, such proof is not produced by the

borrower, penalty @2% on the amount prepaid
in excess of normal EMI dues shall be levied if
the loan is preclosed within 3 years from the
date of commencement of repayment
Repayment Multiple Repayment options: 1. Step up
details Repayment Facility 2. Flexible Loan Installment
Plan 3. Tranche Based EMI 4. Accelerated EMI
scheme

ICICI
31
Loan Amount: Rs.20,00,000
Loan Tenure :20 years

Product name ICICI Home Loan

Interest rate 9.50%
Processing 0.5%
Fee
EMI Rs. 18,643
Number of EMI 240
Total interest Rs. 24,74,230
to be paid
Total amount Rs. 44,74,230
to be repaid
Exclusive 1. Home loan amount can be chosen to suit
Features specific needs.
2. One can avail of a loan up to 85% of Cost
Of Property.
3. Conveniently pay off the loan over a period
of upto 25 years.
4. It can be availed at the Floating rate of
Interest or at the Fixed rate of Interest or at
the combination of both Fixed & Floating
rates.
5. Faster repayment as principal repayment in
on monthly rest.
Occupation Salaried
Prepayment 2% on the principal outstanding on full
charges prepayment
Repayment Multiple Repayment options: 1. Step up
details Repayment Facility 2. Flexible Loan
Installment Plan 3. Tranche Based EMI 4.
Accelerated EMI scheme

 The above is the comparison of Home loan of SBI and ICICI. In both the
cases, the Loan amount is Rs.20 lakhs while its tenure is 20years.

 In this case, the interest rate for SBI is 9.75%. It is 0.25% more than
ICICI’s interest rate which is 9.50%.

 The processing fee for SBI is 0.25% while that of ICICI is 0.5%.

32
  The EMI for SBI comes to Rs.18970, and for ICICI it is Rs.18643. EMI for
ICICI is thus less. Number of EMI for both the banks is 240.

 Total interest to be paid on loan for SBI is Rs.25,52,881 and for ICICI is
Rs.24,74,230.

 Hence, the total amount to be repaid in case of SBI is also more than ICICI. For
SBI it is Rs.45,52,881 and for ICICI it is Rs.44,74,230. This can be shown with
the help of the following graph.

5000000
4500000
4000000
3500000
3000000
2500000 ICICI
2000000
SBI
1500000
1000000
500000
0
Interest Total
amount

The above graph shows that both the interest and the total amount to be
repaid on Home loan is a little more in case of SBI than ICICI as per the
example taken.

Chapter 5

Findings:

 In the example taken above about the comparison of SBI & ICICI Home
loan, it is found that the interest rate for ICICI is less than that of SBI.

 EMI for ICICI is also less than SBI (as per the example)

 Processing fee for SBI Home loan is less than ICICI

 Total amount to be repaid for a customer taking a Home loan from SBI
is more than that of ICICI (as per the example)

33
  But for the amounts exceeding Rs.30lakhs, the interest rate for both
SBI and ICICI is 10%.

 SBI is “THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ

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

 Home loan schemes provided by SBI are better than ICICI. SBI provides
better schemes for a huge amount.

 A wide range of Home loan products and its variants are offered by SBI

 There exist very little difference in the interest rates of SBI and ICICI.
SBI is a nationalized bank while ICICI is a private bank.

 It is found that ICICI focuses more on a smaller amount of Home loan

(generally below Rs.30lakhs) while SBI focuses more on Huge Home
loan amounts.

 ICICI focuses on small Home loan amount so as to increase their

market share as compared to SBI which is regarded as the Top bank in
INDIA.

Recommendations:

1. As per the example taken above, for a tenure of 20years and amount of
Rs. 20lakhs, ICICI home loan is recommended as it has lower interest rates.

2. ICICI has the Lowest Equated Monthly Instalments (EMI) as compared to

SBI. EMI is a decisive factor for a customer who analyses the options for a
Home loan. A Bank with lower EMI is always favoured.

3. But for the amount above Rs.30lakhs, SBI Home loan must be preferred
because of its features, low processing fee, and various schemes.

4. SBI Home loan must be chosen for huge amounts as it does not have any
hidden costs or administrative costs

5. SBI can be chosen as it provides excellent service at lower costs.

6. One of the advantage of choosing SBI Home loan is that it gives in-
principle approval given prior to our identifying a house/flat, giving us a
flexibility in choice.

34
7. SBI Home loan must be preferred for huge amounts as it provides
attractive schemes at a fair interest rate.

8. Complete transparency – According to SBI, SBI rate of interest for example

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

9. In SBI, there exist no prepayment penalties. This reduces the interest

burden and optimally utilize the surplus funds by prepaying the loan.

10. It is thus recommended that SBI must be chosen for huge amounts
generally above Rs.30lakhs while ICICI can be chosen for home loan of small
amount upto Rs.20lakhs.

Bibliography:

Websources:

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

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