In a bid to deal with the slowdown in credit growth seen among lenders and increase market share, leading private sector lender ICICI Bank has announced the launch of a cashback feature for its home loans that entitles borrowers to an amount equivalent to 1 per cent of their annual repayment or EMIs. The cashback for the first three years will be paid at the end of the third year and every year thereafter.
The facility, similar to what has largely been limited to e-commerce shopping, comes as year-on-year loan growth stood at 6.9 per cent as on September 15. Data released by the Reserve Bank of India (RBI) showed that in the first four months of FY18 up to July, home loan growth slowed down to 0.4 per cent with the housing portfolio of banks increasing by a mere Rs 3,600 crore to Rs 8.64 lakh crore.
ICICI Bank said the cashback feature will be made available on all new home loans - both by resident as well as non-resident borrowers. "This new home loan empowers borrowers to select their preferred mode of cashback. They can choose to utilize the cashback to prepay the principal outstanding of their home loan or take credit in their ICICI Bank account," the bank said in a statement.
A borrower who avails a Rs 30 lakh loan for 30 years will be paying an EMI of Rs 22,749 annually. At the end of the third year he will get a combined cashback of Rs 8189 for the first three years and Rs 2,720 every year thereafter. The cashback will not be available to defaulters.
"We have the largest mortgage portfolio among private sector banks in the country. We foresee that a combination of young population and rapid urbanization will lead to the emergence of growing demand for housing in the country. We believe that this proposition will propel customers to fulfil their aspirations of owning a home,", executive director, ICICI Bank, Anup Bagchi said in the statement.
The feature is available for loans of any amount for tenure ranging from 15 - 30 years. Those who have loans with other institutions can get the cashback loan if they choose to refinance with ICICI Bank. The cashback will start to accrue from the first EMI (equated monthly instalment) itself.
It will first get credited to the customer after completion of 36th EMI. Subsequently, after every 12th EMI, it will get credited to the customer. This new offer is also available for other mortgage products like loan against property, lease-rental discounting and top-ups on existing mortgage loans.