Wednesday, February 16, 2011

Home Loan: ICICI vs SBI

When I planned to take house loan last year, got advice from everyone to take it from nationalized financial entity and not from private banks. People supported blindly that nationalized banks are always good. But despite all the recommendations I went ahead with ICICI, because when I did all calculations it worked cheaper for me in coming 3 to 5 years, which mattered more for me, as I feel after 5 years I will be financially more secured than today. I gave all the possible documents required, the representative came home and when I had to enquire anything in branch there was one inside my office campus. Though it took almost a month to get the loan sanctioned, but this was due to the reason I wanted to get interest rate of previous month as exception, this has to get signed by senior authority.

Recently, my brother also decided to buy a house in pune and hence taking a home loan and he followed to societal advice and went ahead with SBI home loan. They had an offer till Dec 31st 2010 where theywere giving some  rebate on interest rate and loan pre closure. He applied well before time, but he dint got the offer. Not because of his mistake but because his file got lost somewhereduring the process. He had to go to local and main branch for every single enquiry. There was no assistance from bank in filling up the form, he had to resorted to outsiders for working on how to fill up applications etc. He provided all the document sought by them, but still they keep asking them for one thing or another. At the end they pushed an insurance with one time premium of 45000 Rs for 17 Lakhs. And additional 8 thousand worth insurance against house property. All these conditional add on’ he had been given no choice. If I can count my brother has taken at last 5-6 full day leave excluding saturdays to run after them. They have not even offered an apology for the delay or losing the file they shouted "Take it or leave it" statement. And he has to pay 0.5% more than he initially agreed for.

I can see the only advantage with nationalized banks is that during the time of crisis it will bother you less. For example when the market goes bad the difference between Private and public sector interest rate will be more. However, with such high inflation and interest rate in current market the private companies playing even with their nationalized counterpart.

I fail to understand that despite all the convenience and fast processes provided by private players and months of difficulties and negligence offered by our sponsored public institutions. Why citizens choose the later. Almost all the top economist says economy is driven by private players in India. This will only improve more when we stop relying on BSNL, Indane, SBI, Post Office, PPF and likes.

We shout for service quality to any private company, but we will say "this is the way it works" for public sector. Why do we want better service only from private sector. The Quality of public sector will only increase when, we started asking for it and live with "NAHI CHALTA HAI"


  1. Adding one more point:
    In govt banks 'Pre-Pay penalty' is negligible in comparison to private banks & more over Govt banks reduces principal amount also in early payment but private banks don't. I think Pre-pay payment options should be discussed with the banks.

  2. yes thats correct point, but these days there are lots of offer by private banks which allows no penalty for prepayment, like in my case i dont have to pay prepayment penalty to icici bank. where as amit in pune have to bear prepayment charges to SBI. so its not the face value but the actual terms n offer.