ICICI Bank Home Loan 1% Cashback Offer

icici bankICICI Bank has recently launched a scheme where new home loan borrowers will get 1% of EMI as cash back. Most of us would associate cash backs with credit card or online purchases. However, as banks try to find competitive advantage in relatively commodity like home loan market, cash back has found its way into plain vanilla home loan products too. On this website, we have discussed EMI waiver scheme from Axis Bank and step-up loan products from State Bank of India and ICICI Bank.



In this post, I will discuss the cashback offer from ICICI Bank and see how it works.

Salient Features and Eligibility: ICICI Bank Home Loan 1% CashBack Offer

  • Cashback Benefit is available for loan tenure of 15 to 30 years.
  • Available for both constructed and under-construction properties.
  • For under-construction property, the cashback will begin only after commencement of full EMI. This means Pre-EMI interest is not eligible for cashback.
  • Cashback offer is NOT Available for SARAL Home Loans, Flexible Loan Installment Plan (FLP) and Home Overdraft.
  • You can get the cashback amount in your bank account or use it to set off against your outstanding principal amount.
  • Balance transfer facility is available. i.e., you can transfer your existing home loan from another bank/HFC to ICICI Bank to avail this facility.
  • The cashback amount will NOT be credited every month. The cashback will be accumulated on all EMIs for the first 36 months and credited to your bank account (or set off against outstanding principal depending upon your choice) at the end of 3 years.
  • Subsequently, the cash back will be accumulated and credited on an yearly basis. i.e., every 12 months
  • Clearly, if you foreclose the loan within 3 years (36 months), there will not be any cashback benefit.
  • If you close the loan after 36 months, the cashback will be equal to actual EMI payments made during the year.
  • Cashback is not applicable on prepayments. It is applicable only on EMI payments.
  • Prepayment does not make you ineligible for cashback benefit.
  • At the time of computation of cashback (at the end of 36 months, 48 months, 60 months and so on), there shall be no overdues. In case there are overdues, you will miss cashback for the period. You will not get the cashback (missed cashback) even if you settle the dues later.
  • However, a missed cashback does not make you ineligible for cashback for subsequent periods.

Go through Cashback offer FAQ on ICICI Bank website.

Illustration

Let’s assume you take a loan of Rs 50 lacs for 20 years at 9% per annum. Your EMI will be Rs 44,986. Let’s further assume that the interest rate does not change during the loan term and the EMI stays constant during the entire loan term. I assume the cashback is utilized towards prepayment of home loan. 1% of EMI, i.e., Rs 449.86 will be offered to you as cashback. As you can see, first cashback gets credited to your bank account at the end of 36 months. The cashback will be equal to 36 months X 449.86 per month = Rs 16,195. Subsequently, the cashback will be credited every 12 months. Because of this cashback, you will save about 6 EMIs.

MonthPrincipal Outstanding at the Beginning of the monthEMIInterestPrincipal RepaymentCashbackPrincipal Outstanding at the end of the month
15,000,00044,98637,5007,486–4,992,514
24,992,51444,98637,4447,542–4,984,971
34,984,97144,98637,3877,599–4,977,372
44,977,37244,98637,3307,656–4,969,716
54,969,71644,98637,2737,713–4,962,003
64,962,00344,98637,2157,771–4,954,232
74,954,23244,98637,1577,830–4,946,402
84,946,40244,98637,0987,888–4,938,514
94,938,51444,98637,0397,947–4,930,566
104,930,56644,98636,9798,007–4,922,559
114,922,55944,98636,9198,067–4,914,492
124,914,49244,98636,8598,128–4,906,364
134,906,36444,98636,7988,189–4,898,176
144,898,17644,98636,7368,250–4,889,926
154,889,92644,98636,6748,312–4,881,614
164,881,61444,98636,6128,374–4,873,240
174,873,24044,98636,5498,437–4,864,803
184,864,80344,98636,4868,500–4,856,303
194,856,30344,98636,4228,564–4,847,739
204,847,73944,98636,3588,628–4,839,110
214,839,11044,98636,2938,693–4,830,417
224,830,41744,98636,2288,758–4,821,659
234,821,65944,98636,1628,824–4,812,835
244,812,83544,98636,0968,890–4,803,945
254,803,94544,98636,0308,957–4,794,989
264,794,98944,98635,9629,024–4,785,965
274,785,96544,98635,8959,092–4,776,873
284,776,87344,98635,8279,160–4,767,713
294,767,71344,98635,7589,228–4,758,485
304,758,48544,98635,6899,298–4,749,187
314,749,18744,98635,6199,367–4,739,820
324,739,82044,98635,5499,438–4,730,382
334,730,38244,98635,4789,508–4,720,874
344,720,87444,98635,4079,580–4,711,294
354,711,29444,98635,3359,652–4,701,642
364,701,64244,98635,2629,72416,1954,675,723
374,675,72344,98635,0689,918–4,665,805
384,665,80544,98634,9949,993–4,655,812
394,655,81244,98634,91910,068–4,645,745
404,645,74544,98634,84310,143–4,635,601
414,635,60144,98634,76710,219–4,625,382
424,625,38244,98634,69010,296–4,615,086
434,615,08644,98634,61310,373–4,604,713
444,604,71344,98634,53510,451–4,594,262
454,594,26244,98634,45710,529–4,583,733
464,583,73344,98634,37810,608–4,573,124
474,573,12444,98634,29810,688–4,562,437
484,562,43744,98634,21810,7685,3984,546,270
494,546,27044,98634,09710,889–4,535,381
504,535,38144,98634,01510,971–4,524,410
514,524,41044,98633,93311,053–4,513,357
524,513,35744,98633,85011,136–4,502,221
534,502,22144,98633,76711,220–4,491,001
544,491,00144,98633,68311,304–4,479,697
554,479,69744,98633,59811,389–4,468,309
564,468,30944,98633,51211,474–4,456,835
574,456,83544,98633,42611,560–4,445,275
584,445,27544,98633,34011,647–4,433,628
594,433,62844,98633,25211,734–4,421,894
604,421,89444,98633,16411,8225,3984,404,673
614,404,67344,98633,03511,951–4,392,722
624,392,72244,98632,94512,041–4,380,681
634,380,68144,98632,85512,131–4,368,550
644,368,55044,98632,76412,222–4,356,328
654,356,32844,98632,67212,314–4,344,014
664,344,01444,98632,58012,406–4,331,608
674,331,60844,98632,48712,499–4,319,109
684,319,10944,98632,39312,593–4,306,516
694,306,51644,98632,29912,687–4,293,828
704,293,82844,98632,20412,783–4,281,046
714,281,04644,98632,10812,878–4,268,167
724,268,16744,98632,01112,9755,3984,249,794
734,249,79444,98631,87313,113–4,236,681
744,236,68144,98631,77513,211–4,223,470
754,223,47044,98631,67613,310–4,210,159
764,210,15944,98631,57613,410–4,196,749
774,196,74944,98631,47613,511–4,183,239
784,183,23944,98631,37413,612–4,169,627
794,169,62744,98631,27213,714–4,155,913
804,155,91344,98631,16913,817–4,142,096
814,142,09644,98631,06613,921–4,128,175
824,128,17544,98630,96114,025–4,114,150
834,114,15044,98630,85614,130–4,100,020
844,100,02044,98630,75014,2365,3984,080,385
854,080,38544,98630,60314,383–4,066,002
864,066,00244,98630,49514,491–4,051,511
874,051,51144,98630,38614,600–4,036,911
884,036,91144,98630,27714,709–4,022,201
894,022,20144,98630,16714,820–4,007,381
904,007,38144,98630,05514,931–3,992,450
913,992,45044,98629,94315,043–3,977,408
923,977,40844,98629,83115,156–3,962,252
933,962,25244,98629,71715,269–3,946,982
943,946,98244,98629,60215,384–3,931,598
953,931,59844,98629,48715,499–3,916,099
963,916,09944,98629,37115,6165,3983,895,085
973,895,08544,98629,21315,773–3,879,312
983,879,31244,98629,09515,891–3,863,421
993,863,42144,98628,97616,011–3,847,410
1003,847,41044,98628,85616,131–3,831,279
1013,831,27944,98628,73516,252–3,815,028
1023,815,02844,98628,61316,374–3,798,654
1033,798,65444,98628,49016,496–3,782,158
1043,782,15844,98628,36616,620–3,765,537
1053,765,53744,98628,24216,745–3,748,793
1063,748,79344,98628,11616,870–3,731,922
1073,731,92244,98627,98916,997–3,714,925
1083,714,92544,98627,86217,1245,3983,692,403
1093,692,40344,98627,69317,293–3,675,109
1103,675,10944,98627,56317,423–3,657,687
1113,657,68744,98627,43317,554–3,640,133
1123,640,13344,98627,30117,685–3,622,448
1133,622,44844,98627,16817,818–3,604,630
1143,604,63044,98627,03517,952–3,586,678
1153,586,67844,98626,90018,086–3,568,592
1163,568,59244,98626,76418,222–3,550,370
1173,550,37044,98626,62818,359–3,532,011
1183,532,01144,98626,49018,496–3,513,515
1193,513,51544,98626,35118,635–3,494,880
1203,494,88044,98626,21218,7755,3983,470,707
1213,470,70744,98626,03018,956–3,451,751
1223,451,75144,98625,88819,098–3,432,653
1233,432,65344,98625,74519,241–3,413,412
1243,413,41244,98625,60119,386–3,394,026
1253,394,02644,98625,45519,531–3,374,495
1263,374,49544,98625,30919,678–3,354,817
1273,354,81744,98625,16119,825–3,334,992
1283,334,99244,98625,01219,974–3,315,018
1293,315,01844,98624,86320,124–3,294,895
1303,294,89544,98624,71220,275–3,274,620
1313,274,62044,98624,56020,427–3,254,193
1323,254,19344,98624,40620,5805,3983,228,215
1333,228,21544,98624,21220,775–3,207,440
1343,207,44044,98624,05620,930–3,186,510
1353,186,51044,98623,89921,087–3,165,423
1363,165,42344,98623,74121,246–3,144,177
1373,144,17744,98623,58121,405–3,122,772
1383,122,77244,98623,42121,566–3,101,206
1393,101,20644,98623,25921,727–3,079,479
1403,079,47944,98623,09621,890–3,057,589
1413,057,58944,98622,93222,054–3,035,535
1423,035,53544,98622,76722,220–3,013,315
1433,013,31544,98622,60022,386–2,990,928
1442,990,92844,98622,43222,5545,3982,962,976
1452,962,97644,98622,22222,764–2,940,212
1462,940,21244,98622,05222,935–2,917,277
1472,917,27744,98621,88023,107–2,894,170
1482,894,17044,98621,70623,280–2,870,890
1492,870,89044,98621,53223,455–2,847,436
1502,847,43644,98621,35623,631–2,823,805
1512,823,80544,98621,17923,808–2,799,997
1522,799,99744,98621,00023,986–2,776,011
1532,776,01144,98620,82024,166–2,751,845
1542,751,84544,98620,63924,347–2,727,497
1552,727,49744,98620,45624,530–2,702,967
1562,702,96744,98620,27224,7145,3982,672,855
1572,672,85544,98620,04624,940–2,647,915
1582,647,91544,98619,85925,127–2,622,788
1592,622,78844,98619,67125,315–2,597,473
1602,597,47344,98619,48125,505–2,571,967
1612,571,96744,98619,29025,697–2,546,271
1622,546,27144,98619,09725,889–2,520,382
1632,520,38244,98618,90326,083–2,494,298
1642,494,29844,98618,70726,279–2,468,019
1652,468,01944,98618,51026,476–2,441,543
1662,441,54344,98618,31226,675–2,414,868
1672,414,86844,98618,11226,875–2,387,993
1682,387,99344,98617,91027,0765,3982,355,519
1692,355,51944,98617,66627,320–2,328,199
1702,328,19944,98617,46127,525–2,300,674
1712,300,67444,98617,25527,731–2,272,943
1722,272,94344,98617,04727,939–2,245,004
1732,245,00444,98616,83828,149–2,216,855
1742,216,85544,98616,62628,360–2,188,495
1752,188,49544,98616,41428,573–2,159,922
1762,159,92244,98616,19928,787–2,131,135
1772,131,13544,98615,98429,003–2,102,133
1782,102,13344,98615,76629,220–2,072,912
1792,072,91244,98615,54729,439–2,043,473
1802,043,47344,98615,32629,6605,3982,008,414
1812,008,41444,98615,06329,923–1,978,491
1821,978,49144,98614,83930,148–1,948,343
1831,948,34344,98614,61330,374–1,917,970
1841,917,97044,98614,38530,602–1,887,368
1851,887,36844,98614,15530,831–1,856,537
1861,856,53744,98613,92431,062–1,825,475
1871,825,47544,98613,69131,295–1,794,180
1881,794,18044,98613,45631,530–1,762,650
1891,762,65044,98613,22031,766–1,730,883
1901,730,88344,98612,98232,005–1,698,879
1911,698,87944,98612,74232,245–1,666,634
1921,666,63444,98612,50032,4875,3981,628,749
1931,628,74944,98612,21632,771–1,595,978
1941,595,97844,98611,97033,016–1,562,962
1951,562,96244,98611,72233,264–1,529,698
1961,529,69844,98611,47333,514–1,496,184
1971,496,18444,98611,22133,765–1,462,419
1981,462,41944,98610,96834,018–1,428,401
1991,428,40144,98610,71334,273–1,394,128
2001,394,12844,98610,45634,530–1,359,598
2011,359,59844,98610,19734,789–1,324,808
2021,324,80844,9869,93635,050–1,289,758
2031,289,75844,9869,67335,313–1,254,445
2041,254,44544,9869,40835,5785,3981,213,469
2051,213,46944,9869,10135,885–1,177,583
2061,177,58344,9868,83236,154–1,141,429
2071,141,42944,9868,56136,426–1,105,003
2081,105,00344,9868,28836,699–1,068,304
2091,068,30444,9868,01236,974–1,031,330
2101,031,33044,9867,73537,251–994,079
211994,07944,9867,45637,531–956,548
212956,54844,9867,17437,812–918,736
213918,73644,9866,89138,096–880,640
214880,64044,9866,60538,381–842,259
215842,25944,9866,31738,669–803,590
216803,59044,9866,02738,9595,398759,232
217759,23244,9865,69439,292–719,940
218719,94044,9865,40039,587–680,353
219680,35344,9865,10339,884–640,469
220640,46944,9864,80440,183–600,287
221600,28744,9864,50240,484–559,803
222559,80344,9864,19940,788–519,015
223519,01544,9863,89341,094–477,921
224477,92144,9863,58441,402–436,519
225436,51944,9863,27441,712–394,807
226394,80744,9862,96142,025–352,781
227352,78144,9862,64642,340–310,441
228310,44144,9862,32842,6585,398262,385
229262,38544,9861,96843,018–219,366
230219,36644,9861,64543,341–176,025
231176,02544,9861,32043,666–132,359
232132,35944,98699343,994–88,366
23388,36644,98666344,324–44,042
23444,04244,98633044,6562,699(3,313)

Due to this, you pre-tax cost of loan goes down from 9% p.a. to 8.87% p.a.

What Is in the Scheme for the Bank?

  1. It makes for good marketing. After all, who doesn’t like cashbacks?
  2. The scheme acts as a disincentive for the borrowers to pre-pay or transfer loan to some other bank. There is no cashback if you pre-pay within 3 years.
  3. Bank does not lose much. As we have seen above, even if you continue for the full 20 years, the effective hit to the bank is only 0.13% p.a. Since many borrowers tend to prepay the loan, the effective hit is likely to be even lower.

In my opinion, it is a smart move from the bank. They don’t lose much.

What Should You Do?

Such offers are likely to be win-win for customers. Unless the cashback offer is a bait to make you sign up for higher interest rates (or more stringent terms), there is no harm in this cashback offer. However, your aim should be to shop for the best interest rates. If you get a cashback offer over and above, go for it.



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