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A

Major Project Report

On

BANKING INDRUSTRY

In partial fulfillment of the requirement of two years full time

Masters of Business Administration (MBA) Programme

Of THE GLOBAL OPEN UNIVERSITY (NAGALAND)

GUIDED BY: PREPARED BY:

JITENDRA AGRAWAL NAME:- MANMEET SINGH SALUJA

PROFESSOR ROLL NO.:- PG/485/MBA(I)/2009J

THE GLOBAL OPEN UNIVERSITY

NAGALAND

1


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THE GLOBAL OPEN UNIVERSITY

NAGALAND

CERTIFICATE

This is to certify tht !r" !AN!EET SINGH SALU#A $ ROLL NO%&

PG'*'!BA(I)'+,,-#$ st./e0t of THE GLOBAL OPEN

UNIVERSITY$NAGALAND hs s.ccessf.y co23ete/ his 4r0/

3ro5ect o0 6BAN7ING INDRUSTRY 8 i0 3rti f.92e0t of the

!BA 3ro4r2 of THE GLOBAL OPEN UNIVERSITY" This is his

ori4i0 :or; 0/ hs 0ot


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PREFACE

As 3rt of the co.rse c.rric..2$ the !BA st./e0ts re re>.ire/

to 3re3re 4r0/ 3ro5ect i0 their 90 se2ester" The o


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INDEX

1. Retail banking in!"t#$ %#&'ile ((((((((((.. )

*. H&!"ing 'inan+e "e+t a#e in inia ((((((((( ,

-. Ne /&!"ing 'inan+e +&0%an$ bank &' inia(((( 1)

2. T/e /&!"ing 'inan+e "$"te0 in inia((((((((( 13

). I""!e it/ /&!"ing 'inan+e((((((((((((. *1

3. Re"ea#+/ %#&%&"al(((((((((((((((( *)

4. G!ieline" ' t/e "an+ti&ning %#&+e""(((((((. *,

,. H&0e l&an %#&+e""(((((((((((((((.. -)

5. H&0e l&an inICICI/&!"ing 'inan+e(((((((( 25

16. Anal$"i" &' in'ati&n((((((((((( 34

11. 7/i8"9!a#e +#elati&n(((((((((((..5*

1*. 7#elati&n anal$"i"(((((((((((. 165

1-. :ining"((((((((((((((((..114


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12. 7&n+l!"i&n(((((((((((((((..1*6

*


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C


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1. Retail Banking In!"t#$ P#&'ile

Retail Banking Industry in India

covers industry segments like housing loan, auto loan, personal loan, education loan, consumerdurable loan, credit card, debit cards, bank assurance and the regular operation of the banks. The

major playersincluding !ublic, !rivate, and "oreign sector# in the Indian Banking Industry

includes Bank of Baroda, $tate Bank of India, %anara Bank, !unjab &ational Bank, '("%

Bank, I%I%I Bank, )otak *ahindra Bank, %itibank, $tandard %hartered Bank, '$B% Bank,

+B& +*R Bank, +merican -press, etc.

(uring /001203, gross credit etended by Indian commercial banks grew by 45.647 to touch

I&R 89,59: billion. Retail credit constitutes about /:7 of the total credit and has grown by

/6.07 to I&R 5,/86.4billion The annual growth in bank credit to the commercial sector is at

/:.57 as on *arch 48, /003 and was lower than /3./7 against previous year. ;ntil /080, retail

banking is epected to grow at a %+


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Indian *utual "und industry witnessed a growth of 59.667 from *ay /003 to *ay

/006, and a higher /8:.187 growth was recorded in closed ended schemes.

Increasing number of millionaires in India is increasing the scope of >ealth *anagement

$ervices.

Bankable households in India are estimated to move up at a %+


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-


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*. H&!"ing :inan+e "e+t in Inia

Industry Classification

Life cycle position

'ousing finance as a financial service is relatively young in India. The growth in housing

and housing finance activities in recent years reflect the buoyant state of the housing financemarket in India. The real estate sector is the second largest employment generator in the country.

In 8930, the state set up the 'ousing and ;rban (evelopment %orporation ';(%# to

finance housing and urban infrastructure activities, in 8933, the 'ousing (evelopment "inance

%orporation '("%# was the first housing finance company in the private sector to be set up inIndia.

%urrently there are *5 H:7"approved for refinance assistance from &'B.

The following types of home loans are generally available in the market?

H&0e E9!it$ L&an"? + form of finance to the customer by way of mortgage of eisting

property to the financier for taking a loan for some other purpose. The current market value ofthe property is the basis for providing home equity loans.

H&0e E;ten"i&n L&an"? The purpose of this loan is the etension of eisting houses tike the

addition of rooms, toilet facilities etc. $uch loans fall under the category of home loans.

H&0e I0%#&


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';(% is a powerful government organiAation. "inancing state government for infrastructural

development is the main aim. But ever since it has entered individual housing finance sector, the

entire scenario has changed. The main war of interest rates has actually begun when ';(%

has started giving housing finance for 88.: 7 and after deductions the interest rates comes to

6.687.

+fter &'B, many housing finance companies looked at ';(% for refinancing their proposals.

'ometrust @td., a company by eiAmann "inance @td., *aharishi

'ousing "inance %orporation @td., a company from *aharishi


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having its name as synonymous as, housing finance.


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III Bank Floating 8.75 8.75 8.75 9 9.5 9.5

III Bank Fixed 16 16 16 16 16 16

I.BI Bank Fixed 11 11 11 11 11 11

I.BI Bank

$pecial$cheme Floating 8.25 8.25 8.25 8.25 8.25 8.25

I.BI )ome

+inance Floating 8.25 8.25 8.25 8.25 8.25 8.25

I.BI )ome

+inance Fixed 13.75 13.75 NA NA NA NA

In&ian Bank Floating 9.75 9.75 10 10.5 10.5 10.5

In&ian

/verseas

Bank Floating 8.75 8.75 8.75 10.25 NA NA

1 Bank Floating 11.5 11.5 12.25 12.25 12.25 NA

otak Bank Floating 8.5 8.5 8.5 8.5 8.5 NA

*I +i(-o-

+loaty Floating 8.9 8.9 8.9 8.9 8.9 8.9

*I )ousin,

+inance Floating 9.75 9.75 9.75 9.75 9.75 9.75

Moneyline

re&it *t& Floating 15 15 15 15 15 15

/riental Bank

of ommerce Floating 9.25 9.25 9.5 10.25 10.25 10.25

/riental Bank

of ommerce Fixed 10.25 10.25 10.5 NA NA NA

P3B )ousin,

+inance *t& Floating 9.5 9.5 10 10 10 10

P3B )ousin,

+inance *t& Fixed 13 13 13 13 13 13

Punja% 1 $in&

Bank Floating 8.25 8.25 8.5 10 10 10

Punja%

3ational Bank Fixed 10.5 10.5 10.75 10.75 10.75 10.75

1


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Punja%

3ational Bank Floating 9.25 9.25 9.75 9.75 9.75 9.75

Punja%

3ational

Bank- +estive

offer 4+i(e& Fixed 8.5 8.5 8.5 8.5 8.5 8.5

Punja%

3ational

Bank- +estive

offer

4+loatin, Floating 8.5 8.5 8.5 8.5 NA NA

Reliance

)ome +inance Floating 8.25 8.25 8.25 8.25 8.25 8.25

$BB

A&vanta,e

)ome *oan Fixed NA NA NA NA 8 8

$BB

A&vanta,e

)ome *oan Floating NA NA NA NA 8 8

$BB 6asy

)ome *oan Fixed 8 8 8 8 NA NA

$BB 6asy

)ome *oan Floating 8 8 8 8 NA NA

$BI Floating 9.75 9.75 9.75 10.25 10.25 10.5

$BI

A&vanta,e

)ome *oan Fixed NA NA NA NA 8 8

$BI

A&vanta,e

)ome *oan Floating NA NA NA NA 8 8

$BI 6asy

)ome *oan Fixed 8 8 8 8 NA NA

$BI 6asy

)ome *oan Floating 8 8 8 8 NA NA

$outh In&ian

Bank Fixed 12.75 12.75 12.75 13.5 13.5 13.5

1


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:e H&!"ing :inan+e 7&0%anie" Bank" &' Inia

H&!"ing De

'ousing (evelopment "inance %orporation @td '("%# is one of the leaders in the

Indian housing finance market with almost 437 market share. $erves more than /1 lakh

customers across the nation, '("% also offers customiAed solutions that fit to the need of

the customer. In the " /006, it registered a net profit of Rs. /,/6/.:5 crore. It also

registered a net profit of Rs. 114.95 crore in the quarter ended $eptember 40, /009.

State Bank &' Inia H&0e :inan+e =SBI>

$tate Bank of India is another major player in the Indian housing finance market with

almost 817 of the market share. The $BI 'ousing @oan schemes are specifically

designed to meet the varied requirements of the customers. It offers home loan for

various purposes including new houseCflat, purchase of land,

renovationCalterationCetension of eisting houseCflat etc. $BI 'ome "inance registered a

net profit of Rs. /5.14 crore in the year ended *arch 48, /009.

LI7 H&!"ing :inan+e Li0ite

@I% 'ousing "inance is another major player in housing finance sector in India with

almost 847 of market share. !romoted by @ife Insurance %orporation of India, @I%'"@

has an etensive distribution network with a strong brand presence. Recently, the

company has been awarded D%onsumer $uperbrand /009C80 $tatusE by $uperbrands

%ouncil. In the last financial year ended on *arch 48, /009#, @I%'"@ earned a net

profit of Rs. 463.89 crore, comparing to Rs. /39.85 in the previous ". It also registereda net profit of Rs. 838./: crore in the quarter ended on $eptember 40, /009.

I7I7I H&0e :inan+e 7&0%an$ Li0ite

I%I%I is a leading housing finance company in India with almost 17 market share. It

1*


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offers various types of home loans for its customers which may have tenure up to /0

years. The home loan interest rate is connected to the I%I%I Bank "loating Reference

Rate "RRC!@R#. 'ere it can be added here that, the !@R has been reduced to 85.3:7

from its previous rate of 8:./:7 since Fune 5, /009. +s on Fanuary /4, /009, I%I%I '"%

has 8581 branches with an asset of Rs. 4,35,580 crore. +s on (ecember 48, /006, the

company has a net worth of Rs. :0,04: crore.

Dean H&!"ing :inan+e 7%ati&n Li0ite =DH:L>

(ewan 'ousing "inance %orporation @imited is one of the largest housing finance

solution providers in India with an etensive network of 35 branches, 36 service centers

and 4: camps spread across the nation. The company registered a net profit of Rs.

6,148.64 lacs in /006209, comparing to a net profit of Rs. 6,/:3.35 lacs in the previous

financial year. In the quarter ended on $eptember 40, /009, ('"@ earned a profit after

ta# of Rs. 4,3:8.09 lacs.

1C


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1


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-.T/e H&!"ing :inan+e S$"te0 in Inia

The following chart shows the financial institutes, banks and other specific institutes involved in

financing the people for the houses.

1


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Figure . 1

The following institutes are providing different 'ome @oan product to the different class of the

people in the society and conduct the activity of financing and refinancing in the sector.

8. $cheduled %ommercial Banks

/. 'ousing "inance %ompanies

1-


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4. $cheduled %ooperative Banks $cheduled $tate %o2operative Banks, $cheduled (istrict

%ooperative Banks and $cheduled ;rban %ooperative Banks#

5. +griculture and Rural (evelopment Banks

:. $tate @evel +pe %o2operative 'ousing "inance $ocieties

S+/e!le 7&00e#+ial Bank"

The $%Bs have the largest network of branches and are also the largest mobiliAer of savings in

the country. $ince housing finance becomes a part of the 50 per cent !riority $ector lending, it

makes business sense for banks to undertake this activity. *oreover, a favorable ta andregulatory regime, act as catalyst for doing business in this sector. "urther, the earmarking of 4

per cent of incremental deposits of $%Bs to finance housing activities has ensured availability of

adequate funds for housing activities. $ecurity by way of mortgage of property and robust

demand has been major considerations for banks to lend to this sector.

H&!"ing :inan+e 7&0%anie"

To boost the housing sector there is a need to regulate and have a greater access of credit for

housing. Thus a good housing finance system is imperative. 'ousing "inance %ompanies '"%#

need to be recogniAed as a part of total financial system and should be given a level playing

field.

+midst liberaliAation certain provisions of the %ompanyGs +ct 89:1, such as, restrictions on

interoperate loans and deposits continue to discriminate 'ousing "inance %ompanies against

other non2banking financial companies. +lso certain ta laws, such as deduction of ta at

sources, restrictions on acceptance of cash as deposits are disadvantages to '"%. The Reserve

Bank of India has put housing finance on priority core sector lending. In the developed

countries, the flow of housing finance a substantial share of total financial system. In fact, the

savings for housing is among the single largest source of funds in their entire financial system.

S+/e!le 7&&%e#ati


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The concept of %o2operatives as an institutional mechanism for satisfying various needs of the

people is premised on the principles of Hself2helpG as well as Hcollectiveeffort.G $cheduled $tate

%o2operative Banks, $cheduled (istrict %ooperative Banks and $cheduled ;rban %ooperative

Banks come under heading of the $chedule %ooperative Banks. 'ousing cooperatives have a

prominent place in the cooperative movement in the country. Today, it is estimated that there are

over 9/,000 primary housing cooperatives with over 1.: million members.

The co2operative sector has played an important role in providing housing to its members and

has made a significant impact across the country. The cooperative sector is epected to play a

lead role, particularly in land acquisition, allotment of land and housing sites to encourage group

housing and development of amenities in their projects, as envisaged in the &ational 'ousing

and 'abitat !olicy. The &ational %o2operative 'ousing "ederation &%'"# was established as

an ape organiAation for coordinating, guiding and promoting cooperative housing activities in

the country.

Ag#i+!lt!#e an R!#al De


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borrowers. In addition, &%'" also helps the +%'"$ in improving their financial, organiAational

and technical capabilities.

The primary housing co2operatives functioning at the grass root level are supported by /:

+%'"$ all over the country with a membership of over 1.: million. These +%'"$ represent

about 9/,000 housing co2operatives all over the country out of which, about 48,000 housing co2

operatives are affiliated to state level +%'"$ for getting financial assistance.

++


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2. I""!e" it/ t/e H&!"ing :inan+e "e+t in Inia

Agg#e""i


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institutions to adopt aggressive practices including very high loan to value loans, softening of

collateral requirements, competitive pricing etc. with such an aggressive approach being

followed may lead to increase in the default rates.

7&"t &' '!n"

The prevailing interest rate war has resulted in constant downward revision of interest rates.

"urther, the spreads are increasingly becoming thin as the lending rates are fast nearing the cost

of funds. >hile during 8994295, the interest rate on housing loans were in the range of 832867

the same right now are in the range of 3726.:7. This may lead to erosion of profitability in the

long run.

Se+!#it$ De'i+it !e t& n"

*any primary lending institutions are making terms and conditions of sanction fleible and

liberal, thus enabling the borrowers to avail the loans even more than value of security for long

tenure of /0 to /: years. The large quantum of institutional finance in the property transactions

may lead to the problem of security deficit.

D!e iligen+e I""!e"

Increasingly, there have been instances of dilution in due diligence on the part of lenders.

$ometimes, loans are sanctioned without strictly complying with laid down rules, systems and

procedures. This situation arises primarily out of fierce competitive pressures. It is observed that

the growing customer epectations force the !rime @ending Institutes to compromise due to

diligence, field verification process and appraisal norms, in a rush to sanction the loan at the

earliest.

La+k &' Uni'it$ &' n" a0&ng"t in!"t#$ %la$e#"

>hile banks and '"%s are the prominent players, '"%s face few constraints. The regulatory

norms stipulate 807 capital adequacy for banks whereas the same is 8/7 for '"%s. "urther,

banks have access to lower cost retail funds compared to '"%s. ;niformity in norms and hence

+


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a level playing field has to be ensured for a healthy housing finance system. These are newer

challenges which need to be addressed and resolved in times to come.

In!"t#$ :#ag0entati&n

The fragmented nature of the housing finance industry is a major impediment for its further

growth. (espite this, the industry has managed to grow mainly due to consistent decline in

interest rates, ta incentives given by the government and changing income profile of the Indian

middle class population.

7&n'li+ting Inte#e"t"

>hile the private housing finance institutions are required to abide by the guidelines of the&'B, the general financial institutions, which include the commercial banks, follow the

guidelines set by the RBI. Today, both these sections are competing with each other for the same

housing pie but their functioning and lending practices seem to bear no similarity.

AL?

+sset liability mismatch is one of the biggest risks housing finance institutions are confronted

with. "unding of long term loans with short term deposits, leads to a mismatch between assetsand liabilities that can be overcome by adopting appropriate asset liability management +@*#

techniques.

+*


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Future Outlook

The onset of year /080 has brought in some good news for those who are dreaming of a =home=

with home loan ratesas well as property rates spiraling downwards.

The considerable reduction in rates is already beginning to affect deposit rates and will soon lead

to a fresh round of rate cuts for both deposits and loans. In fact home seekers are likely to see

single digit interest rates for regular /0 year home loans not just for those below Rs. /0 lacs# in

this quarter from at least the !$; banks.

Recently announced stimulus package by the


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+


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). Re"ea#+/ P#&%&"al

Ob@e+tihen it comes

to micro factors, customer satisfaction, preference and behavioral aspects regarding the 'ousing

"inance are the out puts of the live research. The study of the 'ome @oan !rocess at I%I%I

'ousing "inance has helped us to get practical eposure of operation hierarchy of 'ome @oan

!rocess.

Re"ea#+/ ?et/&&l&g$

Data S&!#+e8

P#i0a#$ ata

Information collected though the survey of consumers of the bank

Se+&na#$ ata

Industry portals, company websites, magaAines, newspapers, trade journals, other financial

data provided by the bank required for the study.

+


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Re"ea#+/ A%%#&a+/8

>e have used the $urvey Research to collect the primary data, as it is best suited for descriptive

research.

Re"ea#+/ In"t#!0ent8

>e have used the questionnaire as our research instrument. In which close2ended and open2

ended questions have help to understand consumer preference and behavior more clearly.

Sa0%ling Plan8

$ample ;nit ? ne 'ome @oan Taker

$ampling $iAe ? consumers

$ampling *ethod ? $imple Random $ampling

7&nta+t ?et/&8

ut of the four method of primary data collection namely mail questionnaire, telephone

interview, personal interview and online interviewL we will be using personal interview and

telephone interview , so that we can ask more questions.

Li0itati&n"

+s it is the questionnaire survey, there are chances of bias answers.

>e have taken simple random sampling because population survey is not possible.

$ampling plan is limited to +hmedabad region only.

@imited time period to conduct the project

@imited information was available from company side.

+-


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,


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3. G!ieline" ' t/e San+ti&ning P#&+e""

'ere are the basic guidelines which every loan provider has to accept and follow before

sanctioning any loan in India.

Ba"i+ 9!ali'i+ati&n" ' a /&0e l&an =Re"ient Inian>

=I> A #e"ient Inian i" eligible ' a /&0e l&an i' /e "ati"'ie" t/e '&ll&ing

+&niti&n"?

8. 'e must be earning a regular monthly income.

/. If he is from the salaried class, then he should a minimum of : years of service left.

4. +bove /8 years of age at the commencement of the loan

5. Below 1: when the loan matures

:. If he is a business person or a professional or a self employed individual, then his age

should be less than :6 years at the time of applying for the loan.

1. The property that he wishes to purchaseCconstruct should have a clear and marketable

title.

=II> D&+!0ent" #e9!i#e t& be "!b0itte at t/e ti0e &' a%%li+ati&n

There are certain sets of documents that need to be submitted at the time of application. The

documents sets will vary according to individual status2 either resident or non2resident in India,

as also the type of loan that an individual may want to avail of.

Re"ient Inian

(a# $alaried Individual

1


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$alary slipC"orm 81+

+ photocopy of the first and last pages of ration card or copy of !+& CtelephoneC

electricity bills.

+ photocopy of Investments "( certificates, $hares, any fied asset, etc# or any other

documents supporting the financial background of the borrower

+ photocopy of @I% policies with the latest premium payment receipts if any#

!hotographs as applicable#

+ photocopy of bank statement for the last si months.

b# $elf employed or businessman

+ brief introduction of businessCprofession

Balance sheet, profit M loss account and statement of income with Income Ta returns for

the last 4 years certified by the %hartered +ccountant

+ photocopy of advance ta payments if applicable#

+ photocopy of registration certificate of establishment under shops and establishments

+ctCfactories +ct

+ photocopy of registration certificate for deduction of profession ta if +pplicable#

Bank statements of current and saving accounts for the last si months

+ photocopy of certificate of practice if applicable#

+ photocopy of any bank loan if applicable#

+ photocopy of the first and last pages of the Ration card or a copy of

!+&CtelephoneCelectricity bills

+ photocopy of investments "( certificates, shares, any other fied assets#

+


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(c# If flat is purchased from builder

riginal copy of your agreement with the builder

3C8/ etract of your agreement with the builder

%opy of &.+. permission for the land from the collector

$earch and title report with the details of the documents# for the last 40 years

(evelopment agreement between the owner of land and the builder

%opy of the order under the urban land ceiling +ct

%opy of building plans sanctioned by the competent authority

%ommencement certificate granted by the corporation C &agar !alika

Building completion certificate if available#

The latest receipts of taes paid

!artnership deed or memorandum of association of the builder firm

d# If the property is being purchased in a co2operative society

riginal share certificate of the society

+llotment letter from the society in your name

%opy of the lease deed, if eecuted

%ertificate of the registration of the society

%opy of the bye2laws of the society

&o objection certificate from the society

3C8/ etract or property register card in the societyGs name


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%opy of &.+ permission for the land from the collector

$earch and title report with the details of documents# for the last 40 years

%opy of order under the urban land ceiling +ct

%opy of the building plans sanctioned by the competent authority

%ommencement certificate granted by the corporation C &agar !alika

The latest receipts of ta paid

riginal +greement to assignC (eed of assignment

e# If constructing on own land

riginal sale deed of land and etract of inde /

3C8/ etract or property register card in your name

%opy of &.+ permission for land from the collector

$earch and title report with the details of documents# for the last 40 years

%opt of order under urban land ceiling +ct

%opy of the building plans sanctioned by the competent authority

Building permission granted by corporation C &agar !alika

The latest receipts of taes paid

-stimate of cost of construction certified by the architect

N&n8#e"ient"


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a# Income (ocuments

-mployment contract if the contract is in any language other than -nglish, the same has

to be translated into -nglish and arrested by the employerCIndian -mbassy#

%ertified copy of the latest salary slips of the past 1 months

Identity card issued from the current employer

%ontinuous discharge certificate, if applicable

@atest work permit

Nisa stamped on passport

&R- bank account passbook sheets

verseas bank account statements for the past 1 months

Bio2data covering educational qualifications, age job eperience, nature of professionC

business with necessary proof

!ower of attorney in favour of local representative in India, if required


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;p2to2date ta paid receipts of the property

+ sanctioned plan and @icence

+n agreement for sale and a construction agreement with the borrower

c# In case of purchase of house from second owner

Title deeds of land owner for a period of at least 84 years

&on2encumbrance certificate for the past 84 years

)hata certificate

;p to date ta paid receipts of the property

$anctioned plan and license

+greement for sale in favour of the applicants#

Naluation report from the qualified valuers

d# Incase of repairsC renovationC etension of houseC flat

Title deeds of land owner for a period of at least 84 years

&on2encumbrance certificate for the past 84 years

)hata certificate

;p to date of ta paid receipts of the property

$anctioned plan and license for the etension

+greement for sale in favour of the applicants#

C


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-stimates of costs from the qualified engineer

e# !ersonal (ocuments

8 passport siAe photograph

8 copy of your passportC !+& cardC (riving @icenseC school leaving certificateC birth

certificateC @I% policyC bankers sign verification

8 copy of last months telephone bill C ration card first and last page# C title deed

property C rental agreement C driving license

=III>L&an a0&!nt eligibilit$

The maimum amount that a resident Indian can borrow from housing finance companies is

3:7 2 6:7 of the project cost. $ubject to this condition, the borrowers repayment capacity takes

into consideration factors such as income, age, qualifications, number of dependants, spouseGs

income, assets, liabilities, stability and continuity of occupation and saving history. @oans

beyond the above mentioned limits can be considered by the housing finance companies

depending on the merits of the case.

=IV> D&+!0ent" #e9!i#e t& be "!b0itte a'te# "an+ti&n

+part from the various documents to be submitted at the time of application of loan, there are

further documents to be given to the housing finance company once the loan is sanctioned.

Tri2partite agreement between the borrower, builder and housing finance company

!roof of investment of margin money

@oan papers by the applicants


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&o objection certificate from the builder to mortgage the property in favour of the

housing finance company

&o objection certificate from other housing finance companies if the builder has availed a

project loan

&o objection certificate from the co2operative housing society

$hare certificate of housing society


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-


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,. H&0e L&an T/e P#&+e""

:#&0 a%%l$ing ' a /&0e l&an t& getting it in


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1. A%%l$ing ' a l&an

"illing up the application form is the first step. The look of an application form may differ from

bank to bank, but nearly 60 per cent of the information they need is similar. *ost of this is

basically personal and professional information, details of applicants financial assets and

liabilities and the details of the property if finaliAed# including the estimated cost and the means

of financing the same.

D&+!0ent" t& "!b0it

>hile submitting the application form, every bank asks for several documents. +nd most banks

these days provide doorstep service, so that applicant doesn=t have to spend time visiting their

office to submit the documents. 'owever, some banks still insist on the customer visiting their

offices at least once.

P#&&' &' in+&0e?

This will need to be backed up by proof such as copies of last three years Income Ta returns

along with copies of %omputation of IncomeC+nnual accounts, if any#, "orm 81C"orm 81+, last

three months salary slips, copies of the last 1 months statements of all applicantGs active bank

accounts in which applicantGs salaryCbusiness income details are reflected, etc. ther documents

that applicant need to provide with application form include age proof, address proof and

identification proof. +pplicant may also be asked to give applicantGs employment details.

Age %#&&'?

%opy of school leaving certificateC(riving licenseC!assportCration cardC!+& cardC-lection

%ommission=s cardCetc.

A#e"" %#&&'?

$imilar documents need to be provided to prove that applicant is actually staying at hisCher

current address.

1


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Ienti'i+ati&n %#&&'?

$ame as above, but with photograph. $ometimes, the same document if it contains a photograph,

the current residential address and the correct age can be the proof for all 4 things.

E0%l&$0ent etail"?

If applicantGs company is not well2known, then a short summary about the nature of the

company, its business lines, its main customers, its competitors, number of offices, number of

employees, turnover, profit, etc may be needed. ;sually, the company profile that is available on

the standard website of the company is enough.

:inan+ial +/e+k

+ll the income2related documents submitted by applicant serve a specific purpose. The lending

institution uses them to study financial status. The bank statements are scrutiniAed for?

Le


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P#&+e""ing :ee

+long with the application form and the credit documents, banks ask for a processing fee. This

fee varies from bank to bank, but is usually around 0./:7 to 0.:07 of the total loan amount. The

agent dealing with applicant earns a commission from the bank, which to some etent is also

affected by the amount of fees paid.

*ost banks have fleible fee structures, and it is advisable that applicant negotiate hard to find

out the bank=s minimum possible fees though it is unlikely that a bank will agree to provide a

loan without any upfront fee at all. $ome banks have Aero upfront fee loans, but that advantage

may be negated as their other charges such as legal charges and =stamp duty is normally higher.

This fee is collected to maintain applicantGs loan account, and includes work like sending Income

Ta certificates every year, maintaining post2dated cheques, etc.

*. Pe#"&nal i"+!""i&n

+fter applicant has formally and successfully completed the application process, all applicants

have to do is wait till the home finance institution evaluates applicantGs papers. The waitnormally lasts only a day or two or sometimes even less. 'owever, some banks insist on meeting

applicant after receiving the application form, and before the loan sanction. This is to gather

more details about applicant that may not be mentioned in the application form and to reassure

them of applicantGs repayment capacity.

-. :iel In


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organiAation#, residence and work telephone numbers. Representatives are sent to applicantGs

workplace or residence to verify the details.

-ven the references applicant has provided in the application form are checked out. >hile this

may sound irritating and an invasion of hisCher privacy, banks are forced to undertake validation

in the absence of any credit bureau. nce applicantGs credentials are validated, it helps establish

trust between applicant and the bank.

2. 7#eit a%%#ai"al an l&an "an+ti&n

This is the make2or2break stage. If the bank is not convinced about applicantGs credentials,

applicantGs application may get rejected. If it is satisfied, it sanctions applicantGs loan.

The bank or the home financier establishes applicantGs repayment capacity based on applicantGs

income, age, qualifications, eperience, employer, nature of business if self employed#, etc, and

based on these, works out applicantGs maimum loan eligibility, and the final loan amount is

communicated to applicant. The bank then issues a sanction letter. This letter may either be an

unconditional letter, or may have certain terms and conditions mentioned, which applicant have

to fulfill before the loan disbursal.

). O''e# lette#

nce the loan is sanctioned, the banks sends applicant an offer letter mentioning the following

details?

o @oan amount

o Rate of Interest

o >hether fied or variable rate of interest linked to a reference rate

o Tenure of the loan


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o *ode of repayment

o If the loan is under some special scheme, then the details of the scheme

o


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The documents are sent to a lawyer in their panel either in2house or outsourced# for a thorough

scrutiny. The lawyer=s report either gives a go2ahead if documents are clear, or it may ask for a

further set of documents. In the latter case, applicant is epected to hand over the additional

documents to the bank for a clear title.

4. Te+/ni+al C Val!ati&n +/e+k

Banks are etremely careful about the property they plan to finance. They send an epert to visit

the premises applicant intend to purchase. This epert could either be a bank employee or he

could belong to a firm of architects or civil engineers.

Site


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o >ill the building last the loan tenureQ This has a direct bearing on applicantGs loan

eligibility, since the loan tenure will be restricted to the maimum age of the

property as decided by the bank=s engineer and this will impact applicantGs loan

eligibility.

o Puality of construction.

o $urrounding area development#.

o >hether the builder has received the requisite certificates for handing over

possession of the flat.

o There is no eisting lien or mortgage on the property.

o Naluation of the property in relation to other deals in the surrounding areas.

o These inspections are carried out to protect consumer interests in terms of

construction quality, adherence to local laws, approved building plans, etc. +

technical inspection also lets the bank understand the progress of construction so

as to release the staggered disbursements.

,. Val!ati&n Realit$ +/e+k

$ince housing loans are cheaper than other loans, there have been cases where individuals have

shown purchase of properties from related entities at inflated prices to obtain cheap loans. $ince

the risk associated with diversion of funds is higher than if the loan was used for genuine

purposes, banks carry out an independent valuation to find out whether the transaction is in line

with the eisting market price of the area.

Naluation of real estate as a profession is still in its infancy in India and is still non2standardised.

In many cases, the valuer determines the value of the property at an amount that is lower than the

documented cost of the property and this would result in the loan amount being lower, since the

bank funds a certain percentage of the cost or valuation of the property, whichever is lower.
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This practice has led to severe consumer issues in an increasing number of cases, as the

valuation is normally done only after the consumer takes a sanction by paying a fee# and after

identifying and committing to buy the property.

The valuation issue rarely arises when a property is purchased through a reputed builder directly

or if the property is pre approved. In both the cases, the banks would have already completed the

valuation and therefore, applicant can safely assume that there is no difference between the

documented cost of the property and the bank=s valuation amount.

5. Regi"t#ati&n Sealing t/e eal

+fter the legal and technical C valuation check, the draft documents as cleared by the lawyer need

to be finaliAed and signed and the stamping and registration of the documents need to be done.

+lso, if any &%s are pending, these need to be obtained in the format approved by the bank=s

lawyer.

16. Signing t/e /&0e l&an ag#ee0ent In bla+k /ite

+ll borrowers need to sign the home loan agreement. +pplicant also needs to submit post2dated

cheques for the first 41 months if that is the agreed mode of repayment#. The original property

documents have to be handed over to the bank at this stage. $ome banks also create a document

recording the handing over of the property documents to them as security for the due repayment

of the home loan.


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This document is also called a memorandum of entry and attracts significant stamp duty

depending on the amount of the loan in some states. The stamp duty payable on such a

memorandum is naturally recovered from applicant.

&ot all banks create this memorandum and hence the stamp duty may or may not be payable,

depending on the practice of the specific bank. 'owever, even where no such memorandum of

entry is created, the state government concerned may, in the future, demand a stamp duty on the

loan transaction, which naturally is recoverable from applicant as per the home loan agreement

signed by applicant.

11. Di"b!#"e0ent

+fter the bank has ensured that the property is legally and technically clear, all the original

documents pertaining to transfer of ownership of property in applicantGs favor have been

submitted and all the necessary loan agreements have been eecuted. +pplicant will now actually

receive the cheque in hisCher hand. Before the big moment arrives, applicant need to submit

documents to prove that applicant has paid hisCher personal contribution towards the property,

since banks normally finance only up to 6:290 7 of the total cost of the house.

In case applicant is epecting money from other sources to fund hisCher own contribution, need

to provide sufficient evidence for the same. It is only after submitting this proof that the bank

will release part2disbursement of the loan.

The cheque will be in the name of the reseller for resale flats#, builder, society or the

development authority. It is only in eceptional circumstances, that is, if applicant provides

documents to support that heCshe has made an ecess payment from hisCher own account then,

the cheque will be handed over to applicant directly by the bank.

Di"b!#"e0ent in "tage"

;sually, loans are disbursed on the basis of the stage of construction of the property. $o, in case

of resale or ready possession properties, the disbursement is full and final. 'owever, in case of

-


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under2construction properties, the payment is made in parts, also known as part2disbursement.

-ach option would have different disbursement processes.

1. Pa#t i"b!#"e0ent? >hen a loan is partly disbursed, the bank does not start -*Is

immediately, since it is calculated on the total loan amount at a particular rate of interest and for

a given tenure. *oreover, it normally does not start breaking up the installments into its principal

and interest components until the entire loan amount is disbursed.

To overcome this difficulty, banks charge simple interest on the partly disbursed loan amount.

"or instance, if applicant have a sanctioned loan of Rs80 lakh, but the property is under

construction and the bank has disbursed only Rs5 lakh, applicant will be charged a simple

interest only on the disbursed amount. This process continues until the final disbursement takes

place. The simple interest paid is called !re2-*I interest or !-*I.

+t this stage, banks may take only around three to si post2dated cheques on account of !-*I.

*. :!ll an 'inal i"b!#"e0ent? If it is a ready2possession property, the bank disburses the

entire loan amount in favor of either the reseller or the builder.

P&"t Di"b!#"e0ent Relati&n"/i%

The final disbursement does not end applicantGs relationship with the bank. In fact, it is just the

beginning. +nd there are various issues C situations that arise in between the beginning of the

relationship and its end.

These include?

o

Payment ReceiptoRepayment

oIncome tax certificate

oPrepayment

*,


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oLoan preclosure/satisfaction

Pa$0ent #e+ei%t?

nce the bank hands over the pay order to applicant, applicant in turn are epected to hand it

over to the reseller or the builder. +pplicant should get a receipt from them for the payment and

hand it back to the bank, as it will become part of applicantGs mortgage documentation.

$hare certificates? In case applicantGs property is part of a society, applicant will need to get the

flat transferred to applicantGs name by asking the society to issue the share certificate in

applicantGs name and recording the transfer of ownership in their books. This normally happens

at the first +


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+nother possible mode of payment is by cash or demand draft not all banks offer this#.

+pplicant can deposit the -*I every month at the bank=s office.

In+&0e Ta; +e#ti'i+ate

-very bank issues an income ta certificate that serves as requisite proof to let applicant avail of

ta benefits that accrue on repayment of a home loan. This will typically contain the total

amount of interest and capital repaid during the year. This is mandatory to claim the ta benefit

in respect of self2occupied property. +pplicant will have to file this with applicantGs ta returns

and submit this to applicantGs employer or chartered accountant to calculate applicantGs ta

liability.

P#e%a$0ent

+pplicant can prepay a loan either in part or in full at any given point of time. +pplicant can also

prepay it even when it is only partly disbursed. 'owever, most banks have an upper limit on the

number of times a person can prepay his loan in a year as well as on the minimum amount

applicant can prepay each time. ;ntil recently, banks charged a penalty for part or full

prepayment. But increased competition has forced most banks to allow partial prepayment at nil

charge. *ost banks levy a prepayment charge if applicant make full repayment and ask for

release of applicantGs property documents.

L&an %#e8+l&"!#e8 "ati"'a+ti&n

+pplicant also has the option of completely repaying the loan at any time. f course, each bank

has its conditions for preclosure. +lso, the loan will get completely paid off on the epiry of the

tenure of the loan if applicant has paid all installments on time.

nce applicant has completely repaid hisCher loan, ensure that the entire set of original property

documents is handed back to applicant. +pplicant should also ask the bank for a &o2bjection

*+


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%ertificate saying the account has been cleared. +s an option, the bank may issue a consent letter

stating that the property is now free from mortgage.

If applicant has guarantors, the bank will issue a separate letter for each of the guarantors stating

that their liability has come to an end. nly after applicant receive these documents can applicant

say that the property is now completely free of mortgage.

+t this stage, in some cases, applicant may discover that the original documents have yet not

been received by the bank from the registrar. In such cases, applicant will need to follow up with

the registrar and get the documents from them directly by showing them a copy of the bank=s

clearance certificate.

$ometimes and we must stress only sometimes# the bank may misplace applicantGs original

property documents leading to avoidable stress. In fact, the bank may claim that these documents

were never given to them at all. 'ence the importance of insisting on a proper receipt of title

documents while handing them over to the bank.

Remember that receipt will come in very useful when the loan is fully paid off. +lso, it is

etremely useful when applicant want to shift applicantGs loan to a new lender.

*


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*


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5.H&0e L&an in I7I7I H&!"ing :inan+e

P#&!+t" in I7I7I H&!"ing:inan+e

I%I%I Bank 'ome loansprovide not just the most competitive interest rates M best level of

service, but also products designed to cater to the specific needs of consumer. 'ome @oans are

provided to individuals to own a residential property

Lan L&an"

@and loans give an opportunity for individual customer to purchase a residential plot of land to

do self2 construction. Thus, customer can invest now in a plot of land M build in future. The

@and loan can be financed only within municipal limits of ';B locations or in case of direct

allotment outside municipal limits by (+.

@and @oancan be availed by Resident Indian whether $alaried or $elf2-mployed and also by

&on2 Resident Indian.

H&0e I0%#&


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generating steady flow of income. The product can also include the estimate of renovation at the

time of purchase of the property. This loan is especially meant for self2employed professionals

like (octors, +rchitects etc.

'ome @oans can be availed by Resident Indian who is $elf2-mployed and also by &on2

Resident Indian who are $alaried.

E?I !ne# 7&n"t#!+ti&n

-*I under %onstruction is offered for structuring a home loan to enable individuals to

commence his -*I in a partly disbursed under construction project. %ommencement of -*I

ensures re2payment towards principal amount leading to savings in interest and faster repayment

of the loan. The -*I 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.

-*I under %onstruction can be availed by Resident Indian whether $alaried or $elf2-mployed

and also by &on2 Resident Indian.

Balan+e T#an"'e#

Balance Transfer is a facility offering the customer a choice to transfer the outstanding balance

of the loan availed for better terms M 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 '"%s approved by &'B for refinance, Banks or employer @oans

taken from %entral or $tate


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maintaining large balance in the *oney $aver account can save on the interest paid by faster

repayment. This means one can pay less M repay loan faster.

This product can be offered only in case of first and final disbursement !art disbursement cases

cannot be offered this product. *oney$aver would be available at "loating Rates only M "ied

-*I per lac per month would be applicable. IT certificate in the case of *oney$aver is not

issued. *oney $aver can be availed by Resident Indian whether salaried or $elf2-mployed

T&% U% L&an

Top ;p @oan can be availed time and again for various personal requirement based on value of

the property. It offers the customer additional funds against the security of the same property. To

avail Top ;p loan, the vintage of at least si months is required for the loan availed. The basic

eligibility emerges with good repayment track record. The end use letter is essential to be

collected.

The -nd use of Top ;p @oans can be

"urnishing of home

%onsumer durable

%hildGs education

(aughterGs marriage

"amily holiday

Nehicle

+ny other personal requirement of the borrower provided it is not speculative or illegal in nature.

This product is applicable to fully disbursed cases with no post2 disbursement document

pending. This product is priced more than base home loan rates but lower than any personal loan

rates. Top ;p @oan can be availed by Resident Indian whether $alaried or $elf2-mployed.

L&an &n P/&ne

*
http://www.icicibank.com/Pfsuser/loans/homeloans/propoverdraft.htmhttp://www.icicibank.com/Pfsuser/loans/homeloans/propoverdraft.htmhttp://www.icicibank.com/Pfsuser/loans/homeloans/propoverdraft.htmhttp://www.icicibank.com/Pfsuser/loans/homeloans/propoverdraft.htm


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@oan n !hone is a pre2sanctioned loan. Its is based on the eisting relationship of the customer

with I%I%I Bank. The biggest advantage is that the customer can get the loan with minimum

documentation. here mortgage is not possible#

Improvement of !roperty

*edical Treatment

'ome -quity @oans can be availed by Resident Indian who is $elf2-mployed and also by &on2

Resident Indian who are $alaried.

P#&%e#t$ O


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banking facility. The customer is charged interest only for the amount that he withdraws from the

account. >henever he deposits funds into the account, they go towards reducing the outstanding

balance in the account.

It offers the following benefits?2


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*edical Treatment

@ease Rental (iscounting can be availed by Resident Indian whether salaried or $elf2-mployed

C,


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Eligibilit$ N" ' H&0e L&an"

'ome @oans can be availed by Resident Indian whether salaried or $elf2-mployed and also by

&on2 Resident Indian who are $alaried. "or resident Indians the following are the eligibility

norms

ne must be at least /8 years of age when the loan is sanctioned.

The loan must terminate before or when one turns 1: years of age or before retirement,

whichever is earlier.

ne must be employed or self2employed with a regular source of income

:a+t" a''e+ting H&0e L&an A0&!nt

I%I%I 'ousing"inance provides home loan suited as per clientGs needs. The home loan amount

depends on clientGs repayment capability and is restricted to a maimum of 6:7 of the cost of

the property or the cost of construction as applicable. 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.

'owever, there are ways by which clients can enhance their eligibility

If clientGs spouse is earning, put himCher as a co2applicant. The additional income shall be

included to enhance loan amount. Incidentally, if there are any co2owners they must

necessarily be co2applicants.

"iance=s income can also be considered for sanctioning the loan on combined income.

The disbursement of the loan, however, will be done only after the proof of marriage is

submission.

C1
http://www.icicibank.com/Pfsuser/loans/homeloans/hlhomepage.htmhttp://www.icicibank.com/Pfsuser/loans/homeloans/hlhomepage.htmhttp://www.icicibank.com/Pfsuser/loans/homeloans/hlhomepage.htmhttp://www.icicibank.com/Pfsuser/loans/homeloans/hlhomepage.htm


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!roviding additional security like bonds, fied deposits and @I% policies may also help to

enhance eligibility.

>hile there is no need for a guarantor, it could be that having one might enhance credibility. If

so, loan officer would provide clients with the necessary details.

The final amount to be sanctioned will depend on your repayment capacity. 'owever, what you

ultimately are entitled to will have to conform within the limits fied for each loan.

+lso, when the company looks at the total cost, registration charges, transfer charges and stamp

duty costs are included.

H&0e L&an Inte#e"t Rate" ' Re"ient Inian"

>ith varied offering of house loans and home finance, I%I%I 'ousing "inance gives an

opportunity to select the perfect home loan as per needs of clients. %lients are availed with2

+djustable Rate 'ome @oan

"ied Rate 'ome @oan

%ombination of the above two

Ste% U% Re%a$0ent :a+ilit$ =SUR:>

$;R" is a variant to enhance the eligibility of a young professionally qualified home loan

customer with out increasing monthly outflow as -*I. The structuring considers a notional

percentage increase in income M offers options of graded increase in -*I over the tenure of the

loan contracted.

The tenure is divided in three parts

!rimary being lowest -*I

C+


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$econdary

Tertiary being highest -*I

The following are the features of SURF

'igher eligibility of loan amount with lower -*I

"@I! is a variant for structuring enhanced eligibility of home loan applicants with varying tenure

of income source. This repayment facility is given when income is going to reduce after certain

time during the loan tenure due to one of the borrowers retiring before loan maturity. The -*I

payable becomes affordable based on individual income source and also matching the family

cash flow. This variant is offered typically to family members joining as applicants like husband

M wife or father M son with varying tenure of service !eriod C +ge norm.

"@I! has the following features

"@I! considers income of two applicants and offers step down repayment facility

ne of the applicants should have service period till the end of the tenure of the loan

"@I! would have two different -*Is during the tenure of the loan

&ormally the first -*I would be based on the combined income

The second -*I would be smaller M based on the lower income with longer tenure of the

applicant

"@I! can be availed by Resident Indian whether salaried or $elf2-mployed and also by &on2

Resident Indian who is $alaried.

C


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Pa#t :i;e Pa#t :l&ating

+ product that offers the dual benefit of fied rate loans as well as floating rate loans. >ith this

product, a customer can book part of his loan under a fied rate plan and the other part under a

floating rate plan. Thus, he can minimiAe the impact of any adverse changes in the interest rate

regimes and at the same time, avail of any benefits that may come by way of favorable changes.

!art "ied, !art "loating can be availed by Resident Indian whether salaried or $elf2-mployed

and also by &on2 Resident Indian who is $alaried.

S0a#t:i; H&0e L&an"

4 years fied and floating rate thereafter. + product that offers the safety of fied rates plus theadvantages of floating rates. The $mart "i enables the customer to lock at fied rate of interest

today with the contract to move to a floating rate on a subsequent date. "or the first 4 years you

get a fied interest rate. "rom the fourth year, your loan gets switched to the prevailing floating

interest rate. Thus, a customer gets an opportunity to observe the interest rate movement over a

period of time and epects to benefit in the bargain

$mart "i can be availed by Resident Indian whether salaried or $elf2-mployed.

The interest rate on I%I%I Bank 'ome @oans is linked to the I%I%I Bank "loating Reference

Rate "RR#C!@R. +s per earlier communication, "RRC!@R was increased by 0.3: 7 on Fune

40th /006. $ubsequent to this change, as per recent announcement, the "RRC!@R has been

further increased by 0.3:7 effective from Fuly 48st /006. The "RR has gone up from 84.:07 to

85./:7 M !@R has gone up from 8:.:07 to 81./:7. "or all the +djustable Rate 'ome @oan

customers, both the above changes will be effective from Fuly 48st /006.

In"!#an+e Plan" ' $&!# H&0e L&an

Introducing eclusive 'ome Insurance plans, that can provide cover to your 'ome loan in the

face of any unforeseen event happening to your life. In case of any of these happenings, your

family will have the support of the insurance cover to pay for the outstanding 'ome loan,

without being burdened by the loan -*I=s.

C


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I%I%I 'ousing"inance presents D'ome$afe!lusDM D'ome+ssureC'ealth+ssureD two eclusive

and innovative insurance plans to insure your 'ome @oan.

HomeSafePlus

Insurance cover for 'ome$afe!lus provided by I%I%I @ombard


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(ual benefit to customers, @ife %over from 'ome+ssure and %ritical Illness %over from

'ealth+ssure

(ual ta benefits, $ection 60% benefits under 'ome+ssure, $ection 60( benefits under

'ealth+ssure

$implified claim procedure

CC


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H&0e A""!#e P#e0i!0 7/a#t P#e0i!0 a" a F &' t/e L&an a0&!nt

Table !. 1

AgeCTe#0 * - 2 ) 3 4 , 5 16 11

1,8-6 0.468 0.565 0.:69 0.19: 0.60/ 0.98 8.0/4 8.841 8./:5 8.415

-18-) 0.5/8 0.:5: 0.134 0.60: 0.955 8.066 8./49 8.491 8.::9 8.38:

-3826 0.:53 0.389 0.699 8.061 8./64 8.59 8.306 8.949 /.86: /.5/5

2182) 0.3:/ 8.00/ 8./19 8.::5 8.618 /.866 /.:46 /.984 4.484 4.308

238)6 8.814 8.:13 /.00/ /.516 /.919 4.:05 5.035 5.168 :.4/5 :.958

)18)) 8.6/ /.51: 4.8:4 4.66/ 5.11 :.569 1.43: 3.4/1 6.451 9.458

)3836 /.309 4.19/ 5.31 :.9/ 3.86 6.:58 80.005 88.:6: 84.40/ 85.991

AgeCTe#0 1* 1- 12 1) 13 14 1, 15 *6 *1

1,8-6 8.566 8.185 8.351 8.66/ /.0// /.813 /.489 /.531 /.158 /.684

-18-) 8.69 /.03/ /./15 /.51: /.133 /.99 4.84: 4.465 4.151 4.9//

-3826 /.195 /.964 4./69 4.18/ 4.9:: 5.486 5.308 :.805 :.:/3 :.919

2182) 5.851 5.183 :.885 :.146 1.869 1.316 3.436 6.089 6.195 9.509

238)6 1.151 3.49/ 6.86/ 9.0/8 9.98/ 80.6:3 88.6:: 8/.988 85.045 8:.//6

)18)) 80.59 88.38: 84.0// 85.5// 8:.9/1 83.:5: 89./6: /8.8:1 &+ &+

)3836 81.966 89.8:6 /8.:83 &+ &+ &+ &+ &+ &+ &+

AgeCTe#0 ** *- *2 *) *3 *4 *, *5 -6

1,8-6 /.995 4.865 4.464 4.:9/ 4.68/ 5.05/ 5./65 5.:41 5.396

-18-) 5./84 5.:84 5.649 :.835 :.:/5 :.666 1./19 1.111 3.068

-3826 1.544 1.983 3.5/1 3.9:9 6.:86 9.80: 9.386 80.4:9 88.04/

2182) 80.8:9 80.959 88.36 8/.1:5 84.:36 85.::1 8:.:69 81.16 &+

46-50 16.501 17.856 19.298 NA NA NA NA NA NA

C


68/128

H&0e L&an P#&+e"" at I7I7I H&!"ing :inan+e

"irst of all individual who is interested in taking 'ome @oan, is provided with all information

regarding different products of I%I%I 'ousing "inance. 'eC$he is given information

regarding general norms of availing the facility of 'ome @oan.

1. If client is interested and eligible for getting 'ome @oan, 'eC$he is

asked to submit all the required documents.

*. "ile of all necessary documents of client is getting sourced by the

Back2ffice people and %lient I( is given to the file of client.

-. If any document is remaining to be submitted then, query is

conveyed to the client. %lient is asked to submit the remaining

documents so that the file can be moved ahead.

2. Team of officials called DRisk %ontaining ;nitE R%;#

properly verifies the documents given by the client and if there is

any query, it is communicated to the Back ffice people.

C


69/128

). !roperty for which @oan is taken is properly identified by the

!rofessional -valuation Team of the I%I%I 'ousing "inance. There

are two types of property evaluation conducted by the !rofessional

-valuation Team mentioned below..

8# Technical -valuation2 -g? @ayout plan, Building premises etc.

/# Resale @egal# -valuation2 -g? @egality of documents of

previous owner, legality of property etc.

3. +fterwards credibility of client is verified by D%redit !rocessing

+gencyE %!+#. n the bases of credibility of client amount of

loan is decided and sanction letter is prepared which is signed by

the authoriAed officer. This sanction letter should be having the

signature of the managers at the different hierarchy based on the

amount of the loan.

U% t& R". 16 Lak/8 B#an+/ 7#eit ?anage#

R". 16 Lak/ t& R". 26 Lak/8 A#ea 7#eit ?anage#

R". 26 Lak/ t& R". 36 Lak/8 Regi&nal B!"ine"" Hea

?e t/an R". 36 Lak/8 &nal B!"ine"" Hea

C-


70/128

4. The net step is moving of file to the peration (epartment where

the (isbursement !rocess is conducted. %lient has to pay theamount, which is the difference between the property value and the

amount of @oan sanction by the I%I%I, to the builder of the

property. Thus now property becomes ready for the disbursement

from the I%I%I side.

,. %lient has to submit all necessary disbursement documents. The

/40 + %learance of the seller and C or 43I clearance from the

appropriate income ta authorities if applicable# is also needed.

"ollowings are the disbursement documentsS

!roperty documents as per !M( for respective states and

as asked by empanelled lawyers for individual cases#

"acility +greement

(isbursal Request "orm

%heque $ubmission "orm for !re -*I and -*I cheques

-%$ or +uto (ebit for I%I%I Bank account holders or !ost

(ated %heques for -*I C !re -*I

,


71/128

!ersonal


72/128

7a"e '#&0 I7I7I H&!"ing :inan+e

Table !.2

&ame of *ain +pplicant Fitendra 'irabhai Rathod

&ame of %o2+pplicant 2

+ge 45 ears


73/128

$ervice Ta and -ducation %ess

already included in -*I#Rs. 98/.01C2

$ecurity+s may be specified by I%I%I 'ousing "inance from

time to time as its sole discretion

"ees on !art !ayment 07 on +mount !repaid

"ees on "ull and "inal

!repayment

/7 on +mount !repaid and on all +mounts tendered

by the borrower towards !repayment of the @oan

during the last one year from the date of "inal

!repayment

Insurance Type 'ome+ssureC'ealth+ssure

+mount of Insurance Rs. 38,000C2

*argin +mount which is being deducted from !@R for @oan up to Rs. /0 @akh as per

norms of I%I%I 'ousing "inance. -g? If current !@R of I%I%I 'ousing "inance is 81.007 then

+djustable Interest Rate would be 81.007 2 :.3:7# 80./:7.

In the case of !art !repayment %lient does not require to pay any !repayment %harges

when heCshe makes the payment of all -*Is up to the last 8/ -*Is. *inimum 8/ -*Is must

remain to avoid the !repayment %harges.


74/128


75/128

5. Anal$"i" &' t/e In'ati&n

H&!"ing S!#


76/128

"rom the above graph we can see that maimum number of people prefer the 'ome @oan for

"irst !urchase in ready construction and under construction property. ut of which the

preference for the "irst !urchase in ready construction is comparatively higher, that is 5/7. This

data shows that individuals are more attracted towards the purchase of house after they properly

see and feel the house. 4/7 people have chosen the 'ome @oan for ;nder %onstruction

!roperty, majority of them have approached 'ome @oan provider through builderGs tie2up. >e

can see that only /7 out of the sample of /00 have chosen @and @oans. These individuals are

having income more than Rs. : @akh. ne of the major reasons for this is they get no ta benefit

on principal and interest of this loan.

2. T$%e &' H&0e L&an P#&


77/128

>e can see that popularity of Banks in 'ome @oan sector is more than the 'ousing "inance

%ompanies. Banks capture 137 of our sample and 447 of people go for 'ousing "inance

companies. The reason for this is, Banks are providing many products and people are already

taking other services from Banks so Banks are easily acceptable by the people.

+" H&!"ing :inan+e 7&0%anie"

This question helps to know the preference of the people towards the 'ousing "inance

%ompanies.

Table ".


78/128

"rom the graph we can see that out of 58 people who have taken home loan from the '"%, 53 7have chosen @I% 'ousing "inance which is highest amongst the group. ne reason for this can

be the lower interest rate of @I% and brand name of @I%.


79/128

Figure ".

"rom the graph we can see that out of 65 people who have taken home loan from the Banks,

417 have chosen $BI. which is highest amongst the group ut of 48 individuals who have

chosen $BI, most of respondents are


80/128

Table ". $

@ess than : @akh 1*

: @akh to 80 @akh *,

80 @akh to 8: @akh -

8: @akh to /: @akh C*ore than /: @akh *

Figure ". #

"rom the graph we can see that majority of people prefers to take a loan of second and third

range which is : @akh to 80 @akh and 80 @akh to 8: @akh respectively. These individuals are

having the income range of /.: @akh to : @akh and few falls in the income range of more than :

@akh. Through this analysis we can say that middle class people are more likely to go for home

loans. Two individuals out of three who have taken the loan of more than /: @akh is for the @and

@oan. 3 "emales out of 88 females have taken the 'ome @oan for the amount which is less than

: @akh. $o that we can see that "emales are more likely to take 'ome @oan of less amount.

3. Ti0e !#ati&n &' H&0e l&an

There are many options available to home loan takers for deciding their time duration of paying

the @oan and amount of -*Is. This question gives an in2sight regarding the time duration

preferred by the people for 'ome @oan.

,


81/128

Table ". %

1 $ea#t& ) $ea#" 1

) $ea#" t& 16 $ea#" C

16 $ea#" t& 1) $ea#"

1) $ea#" 0e +&gure ".$

"rom the above graph we can see that 467 of people prefer the time duration of 80 years to 8:

years to pay home loan. ne of the main reasons for longer duration to repay the loan is lower

-*Is. +s number of years increase the amount of -*Is decreases and this is more convenient to

the middle class people. +ll the individuals of the category 8 year to : years have taken the loan

of the amount less than : @akh. The entire individuals who have taken the loan of more than 8:

@akh and few from the range of 80 @akh to 8: @akh falls in the time duration of more than 8:

years.

4. T$%e &' inte#e"t #ate

There are two type of interest rate available to the 'ome @oan takers. This question gives an

insight towards the choice of interest rate by the people.

Table ".'

"ied Rate *

1


82/128

"loating Rate ,

Figure ".%

"rom the above graph, we can conclude that 157 of people go for floating rate of interest.

"loating rate gives fleibility and protection to the home loan takers as it varies according to the

market condition and economy of the country. The data shows that number of people are less

who are going for fied rate of interest. *ostly people believe that if they take the loan at high

fied interest rate and future interest rates will decrease then they will have to bear unnecessary

interest burden.

,. Range &' :i;e inte#e"t #ate

Interest rate is the important factor affecting the amount of -*Is. In this situation this question

helps to know the people who are paying the fi rate of interest falling in the different ranges

shown below.

Table ".!

:7 to 37 ,

37 to 97 ,

97 to 887

+


83/128

887 to 847 1

847 or more +*

Figure ".'

The above mentioned data indicates that out of 5: people of this category, ::7 pay fied rate of

interest which is more than 847. %urrently Interest rates for 'ome @oan is low in all Banks and

'"%s. Because of non fleibility of fied rates they are paying high interest rate and this is the

major reason for the dissatisfaction of all 81 individuals who are discussed in P;-.80 III#

16. Range &' :l&ating inte#e"t #ate

11. The characteristic of floating rate is that it changes from time to time. This information

gives the clear picture of the shift of 'ome @oan rates from one range to another.

Table "."

At the ti2e ofDis


84/128

97 to 887 * +

887 to 847 1

847 or more ,

(onGt know eactly & 1,

Figure ".!


85/128

Figure ". "

Recession in the Indian economy and different steps taken by the RBI for the recovery of the

same is having the positive impact on the floating rates of interest in 'ome @oan. >e can see

that : people were falling in the range of 97 to 887 of interest rate at the time of disbursement,

but currently there are /5 individuals falling in this range of floating interest rate. +t the same

time we can not ignore that number of individuals falling in the interest rate range of more than

847 is the highest at the time of disbursement with ::7 which is now 07. There are 80

individuals who donGt know their current floating rate of interest. This situation can be because

of lack of attention paid towards the timely notice letter sent by the 'ome @oan %ompany. In

$BI highest people have selected floating rate of interest, while in '("% 89 individuals have

selected floating interest rate

*


86/128

16. Rating ' t/e bank" %#&+e!#e '#&0 1 t& ). =/e#e ) "tan" ' t/e be"t>

This question helps to understand the satisfaction level of 'ome @oan takers on the following

shown indicators.

Table ".1

Ea"e &' D&+!0entati&n

82'ighly (issatisfied C

/2(isatidsfied 1

42+verage **

52$atisfied

:2'ighly $atisfied -

Figure ". 1

"rom the findings we can see that :: individuals out of people have given average rating and 46

individuals have given satisfactory rating. *ost of the people who have given the rating of 5 and

:, which indicate satisfaction and high satisfaction, have taken the 'ome @oan from private

sector. ut of 83 individual who were dissatisfied include 1 'ome @oan taker of $BI 'ousing

"inance, 5 'ome @oan takers of


87/128

Table ". 11

Ti0e D!#ati&n ' L&an San+ti&ning

82'ighly (issatisfied ,/2(isatidsfied 1

42+verage *,

52$atisfied

:2'ighly $atisfied 1

Figure ". 11

"rom the findings we can see that :0 individuals out of people have given average rating and 53

individuals have given satisfactory rating. !eople who were highly satisfied are mostly the client

of $BI 'ousing "inance and '("%. "rom this information we can say that private sector is

taking less time for sanctioning of 'ome @oan


88/128

Table ". 12

Inte#e"t Rate 7/a#ge"

82'ighly (issatisfied

/2(isatidsfied +

42+verage *52$atisfied ,

:2'ighly $atisfied C

Figure ". 12

:4 individuals out of have given average rating to Interest rate charges. +ll those individuals

who are highly dissatisfied and majority of those who are dissatisfied are fied interest rate

payers. (issatisfaction towards fied rate of interest is because of liberal rates offered to the

individuals who have opted for floating rate of interest for 'ome @oan.

Table ". 1

P#&+e""ing :ee"


89/128

82'ighly (issatisfied 1

/2(isatidsfied +*

42+verage C

52$atisfied +

:2'ighly $atisfied

Figure ". 1

!rocessing "ees are almost similar in most of the 'ome @oan providers. 13 individuals have

given average rating to !rocessing "ees. ne of the reasons for this can be, when it comes to the

charges or fees, people are not satisfied as they are less willing to pay such charges.

Table ". 1#

7/a#ge" ' late %a$0ent

82'ighly (issatsfied -

/2(isatidsfied 1C

-


90/128

42+verage

52$atisfied *

:2'ighly $atisfied 1+

Figure ". 1#

54 people have responded for this question. 'ere one assumption can be made that 4/

individuals, who are dissatisfied,would have had bad eperiences with there 'ome @oan

providers.

1. illingne"" ' %#e%a$0ent &' t/e H&0e l&an

-,


91/128

Table ". 1$

es 1

&o 11+

Figure ". 1$

84 people are willing for the prepayment of the 'ome @oan in which 9 individuals are fied

interest rate payers. This is the open ended question and people have given the reasons likeS

"ied rate of interest is high on their 'ome @oan and they are more likely to go for

prepayment charges rather than paying high fi rate of interest.

+vailability of sufficient fund.

1*. H&0e l&an it/ In"!#an+e +&


92/128

@oan taker or sometimes paid separately, as per the choice of client. Insurance cover is decided

on the bases of the amount of 'ome loan, age of the person, property price and tenure of the

loan. Insurance cover cannot be more than the amount of 'ome @oan. !remium paying term is

the tenure of the @oan and if property is under construction then, construction period is also

added in that.

Table ". 1%

es 85

&o 888

Figure ". 1%

-+


93/128

+s it is not compulsory and it highly depends on the preference of the 'ome @oan taker to either

take the insurance or not, majority of people from the sample of have not taken insurance with

their 'ome @oan. ne of the reasons for this can be increased burden of premium as person is

already paying -*I and individuals are not much ready to bear etra payments.

12. illingne"" &' t#an"'e# &' /&0e l&an

!eople have responded for these questions for the transfer of 'ome @oan from one provider to

another provider. This question is helpful to know the factors affecting the satisfaction level of

the loan takers.

Table ". 1'

es 1

&o 1,

Figure ". 1'

-


94/128

83 people are willing to transfer there loan. +ll these people are the clients of private 'ome @oan

providers namely


95/128

"rom the data we can see that word of mouth is the best source people think, to get the

information as 56 7 people have taken suggestion from their friends and relatives for 'ome

@oan.

+ny other category includes reasons likeS

-ither that person or hisCher spouseCfamily members working in that organiAation

$atisfied with the banking services, so have chosen the same for 'ome @oan.

"ew were the clients of different other loans of that organiAation in the past and their

satisfaction level has led them towards the home loan of the same organiAation.

-*


96/128

Pe#"&nal Detail

1. Gene# &' H&0e L&an take#

Table ". 1"

*ale 885

"emale 88

Figure ". 1"

"rom the above graph we can see that 98 7 of the respondents are *ale and only 9 7

respondents are "emale. This data includes the names of people who have taken the @oan on

their own names. *ajor decisions regarding huge amount of financial products are generally

taken by the *ale.

-C


97/128

*. E!+ati&n &' H&0e L&an take#

Table ". 2

!ost


98/128

-. O++!%ati&n &' H&0e L&an Take#

Table ". 21

!rivate -mployee 49


99/128

2. In+&0e &' H&0e L&an Take#"

Table ". 22

@ess than 8.: @akh +

8.: @akh to /.: @akh ++

/.: @akh to 4.: @akh *-

4.: @akh to : @akh +

*ore than : @akh 1*

Figure ". 22

"rom the above graph we can see that people going for home loan, out of that 51 7 are from the

income range of /.: @akh to 4.: @akh. This people come unders the middleclass income level of

the society. !eople having income less than 8.: @akh and more than : @akh covers the smallest

part of this chart.

--


100/128

1,,


101/128

7HI S9!a#e Te"t.

P!#%&"e

The purpose of this of this test is to analyAe that whether the amount of loan is dependent

on income of a respondent or not. $o we will assume two hypotheses related to this

analysis.

H& T/e#e i" "igni'i+ant #elati&n beteen in+&0e &' a #e"%&nent an a0&!nt &' H&0e

l&an

H1 T/e#e i" n& "igni'i+ant #elati&n beteen in+&0e &' a #e"%&nent an a0&!nt &' H&0e

l&an

ICICI

Table 1.1

E3ecte/ re>.e0ciesF T


102/128

0 0 0 0 0

0./8 /.:/ 8.0:/ 0./8 0

0.:3 1.95 /.9 0.:3 0

0.8: 8.9 0.36 0.8: 0

0.0:/ 0.14 0./1 0.0:/ 0

7al+!lati&n"

Arr04i04 O.e0cies As oo:s% T


103/128

The value of U//8.409

(egree of freedom (.".# r28# c28# 81

U/

tab at : 7 confidence level# /1./91

'ere U/ cal W U/

tab.

Hen+e H& i" a++e%te

Inte#%#etati&n

A" 'ig!#e "/&" t/e "a0%le 7/i S9!a#e t/e


104/128

Table 1.#

E;%e+te :#e9!en+$

Table 1.$

, , , , ,

1"C1 ,"-+ "C , ,

"C +"1* ", , ,

1" ,"C +" , ,

,"+C ,"1* ,"* , ,

Arr04i04 O.e0cies As oo:s% T


105/128

0 0 0 0.000 0.000

0 0 0 0.000 0.000

0 0 0 0.000 0.000

0 0 0 0.000 0.000

0 0 0 0.000 0.000

1 1.61 -0.61 0.372 0.2312 0.92 1.08 1.166 1.268

3 3.46 -0.46 0.212 0.061

0 0 0 0.000 0.000

0 0 0 0.000 0.000

6 3.76 2.24 5.018 1.334

1 2.15 -1.15 1.323 0.615

7 8.07 -1.07 1.145 0.142

0 0 0 0.000 0.000

0 0 0 0.000 0.000

0 1.34 -1.34 1.796 1.340

1 0.76 0.24 0.058 0.0764 2.88 1.12 1.254 0.436

0 0 0 0.000 0.000

0 0 0 0.000 0.000

0 0.26 -0.26 0.068 0.260

0 0.15 -0.15 0.023 0.150

1 0.57 0.43 0.185 0.324

0 0 0 0.000 0.000

0 0 0 0.000 0.000

6.237

U/ V 2-#/ 1./43

The value of U/1./43


U/ tab at : 7 confidence level# /1./91

The value of U/1./43

U/ tab. J*3.*5-

'ere U/ cal W U/

tab.

Hen+e H& i" a++e%te

1,*


106/128


U% t&

)

Lak/

) t& 16

Lak/

16 t& 1)

Lak/

1) t& *)

Lak/

?e

t/an *)

T&tal

U% t& 1.) 8 0 0 0 0 1

1.) t& *.) 8 5 4 0 0 ,

*.) t& -.) / 5 : 0 0 11

-.) t& )

0 5 4 0 8 ,

?e t/an ) 0 0 0 / 8 -

T&tal 2 1* 11 * * -1

1,C


107/128

0 0.8/ 20.8/ 0.085 0.8/0

0 0.46 20.46 0.855 0.460

0 0.4: 20.4: 0.8/4 0.4:0

0 0.015 20.015 0.005 0.015

0 0.015 20.015 0.005 0.0008 8.04 20.04 0.008 0.008

5 4.09 0.98 0.6/6 0./16

4 /.64 0.83 0.0/9 0.080

0 0.:8 20.:8 0./10 0.:80

0 0.:8 20.:8 0./10 0.000

/ 8.58 0.:9 0.456 0./53

5 5./: 20./: 0.014 0.08:

: 4.9 8.8 8./80 0.480

0 0.3 20.3 0.590 0.300

0 0.3 20.3 0.590 0.000

0 8.04 28.04 8.018 8.040

5 4.09 0.98 0.6/6 0./16

4 /.64 0.83 0.0/9 0.080

0 0.:8 20.:8 0./10 0.:80

8 0.:8 0.59 0./50 0.000

0 0.46 20.46 0.855 0.460

0 8.81 28.81 8.451 8.810

0 8.01 28.01 8.8/5 8.010

/ 0.89 8.68 4./31 83./548 0.89 0.68 0.1:1 0.000

*2.3-3

/ V 2-#/ /5.141

-

The value of U/

/5.141


U/ tab at : 7 confidence level# /1./91

1,


108/128

The value of U//5.141

U/ tab. J*3.*5-

'ere U/ cal W U/

tab.

Hen+e H& i" a++e%te


U% t&

) Lak/

) t& 16

Lak/

16 t& 1)

Lak/

1) t& *)

Lak/

?e t/an

*)

T&tal

U% t& 1.) 0 0 0 0 0 6

1.) t& *.) 0 0 0 0 0 6

*.) t& -.) 8 4 0 0 0 2

-.) t& )

0 / 8 0 0 -

?e t/an ) 0 0 8 0 0 1

T&tal 1 ) * 6 6 ,

1,


109/128

0 0.1/ 20.1/ 0.465 0.1/0

8 0./: 0.3: 0.:14 /./:0

0 0 0 0.000 0.000

0 0 0 0.000 0.000

:.0:3

/ V 2-#/ :.0:3

-

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