A STUDY ON HOME LOANS With Reference To SBI by Sanjay Gupta

A STUDY ON HOME LOANS With Reference To SBI A Report submitted in partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by P.Prajwala Devi R.No.017-08-179

DEPARTMENT OF BUSINESS MANAGEMENT OSMANIA UNIVERSITY

HYDERABAD - 500007

DECLARATION I, P.PRAJWALA DEVI, R.NO.0175-08-179, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of any Master Degree Programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.

_______________________

(Student's name & Signature) _______________________ (Registration No.)

Date:__________________

A C K N O W L E D G E M E N T Acknowledgement is not a mere formality or ritual but a genuine opportunity to express the indebtedness to all those without whoâ&#x20AC;&#x2122;s active support and encouragement this project wouldnâ&#x20AC;&#x2122;t have been possible. Hence, it gives me immense gratification to place on records my profound gratitude sincere appreciation to each and every one of those who have helped me in this endeavor. Firstly I would like to thank the Staff of the SBI Branch for allowing me to do my project there and providing valuable help in collecting the data. I extend my sincere thanks to Mrs. Mamata Pradeep for her continuous guidance, cooperation and valuable suggestions to initiate and carry out the study.

. Date: -03-2010 PRAJWALA DEVI PONNALA R.No: 017-08-179

CONTENTS CHAPTER -1 1.

INTRODUCTION.............................................................................................................. 7 1.1. ABSTRACT ............................................................................................................... 7 1.2. OBJECTIVES OF THE STUDY .............................................................................. 9 1.3. NEED OF THE STUDY .........................................................................................10 1.4. SCOPE OF THE STUDY .......................................................................................10 1.5. RESEARCH METHODOLOGY............................................................................11 1.6. TOOLS AND TECHNOLOGIES USED...............................................................11 1.7. LIMITATIONS OF THE STUDY..........................................................................12

CHAPTER -2 2.

LITRTATURE SURVEY................................................................................................13

CHAPTER -3 3.

COMPANY PROFILE ....................................................................................................20

CHAPTER - 4 4.

HOME LOAN PRODUCTS OFFERED BY SBI..........................................................28

CHAPTER -5 5.

TERMS AND NORMS ...................................................................................................38

CHAPTER - 6 6.

SYSTEMS AND PROCEDURES ..................................................................................64

CHAPTER -7 7.

PERFORMANCE EVALUATION ................................................................................75

CHAPTER -8 8. RECOMMENDATIONS .................................................................................................90 9. UPDATE ON HOME LOANS .......................................................................................92 C O N C L U S I O N..........................................................................................................97 BIBLIOGRAPHY .....................................................................................................................98 APPENDIX ...............................................................................................................................99 QUESTIONNAIRE ..............................................................................................................99

LIST OF FIGURES Figure 1: Housing in India ...........................................................................................................13 Figure 2: Demographics in Housing............................................................................................14 Figure 3: Housing Finance Timeline ...........................................................................................14 Figure 4: Penetration of Housing Finance in the World ............................................................15 Figure 5: Improved Affordability ................................................................................................15 Figure 6: Market features .............................................................................................................16 Figure 7: Issues in Affordable Housing in India.........................................................................17 Figure 8: Shareholders of SBI......................................................................................................26 Figure 9: Software Interface for EMI calculation.......................................................................49 Figure 10: demand trends .............................................................................................................76 Figure 11: number of sanctions and disbursals ...........................................................................77 Figure 12: customer portfolio ......................................................................................................78 Figure 13: purpose portfolio.........................................................................................................79 Figure 14: Loan amount portfolio................................................................................................80 Figure 15: Home loan book sizes ................................................................................................81 Figure 16: credit growth trend ....................................................................................................82 Figure 17: share of home loan segment in the retail portfolio ...................................................83 Figure 18: Quality of Assets ........................................................................................................86 Figure 19: customer complaints...................................................................................................88

LIST OF TABLES Table 1: major home loan providers ............................................................................................16 Table 2: Associate Banks of SBI .................................................................................................23 Table 3: SBI Group Comapnies ...................................................................................................24 Table 4: Best Practices in SBI......................................................................................................26 Table 5: SBI Hi-Five Loan...........................................................................................................28 Table 6: Processing fee.................................................................................................................28 Table 7: loan amount in SBI easy home loan .............................................................................29 Table 8: : loan amount in SBI advantage home loan..................................................................30 Table 9: criteria and documents required for individuals ..........................................................39 Table 10: Criteria for Loan Amount ............................................................................................46 Table 11: Determination of Repayment capacity .......................................................................47 Table 12: Enhancing Repayment capacity options.....................................................................49 Table 13: EMI calculation in the flat rate system.......................................................................50 Table 14: EMI calculation in Reduced balanced system ...........................................................51 Table 15: monetary ceilings .........................................................................................................53 Table 16: criteria of margin amount ............................................................................................54 Table 17: Securitization................................................................................................................55 Table 18: Processing fee amounts ...............................................................................................55 Table 19: Rate of interests............................................................................................................58 Table 20: valuation policies .........................................................................................................62 Table 21: Systems and procedures in lending process ...............................................................64 Table 22: competitors ...................................................................................................................75 Table 23: strengths and weaknesses ............................................................................................75 Table 24: demand trend ................................................................................................................76 Table 25: customer capacity profile ............................................................................................77 Table 26: sanctions and disbursals ..............................................................................................77 Table 27: customer portfolio ........................................................................................................78 Table 28: lending purposes ..........................................................................................................79 Table 29: amounts of loans sanctioned .......................................................................................80 Table 30: loan book size...............................................................................................................81 Table 31: credit growth trend.......................................................................................................82 Table 32: share of home loan segment in the retail portfolio ....................................................83 Table 33: take overs......................................................................................................................84 Table 34: outstanding amounts ....................................................................................................85 Table 35: Quality of Assets ..........................................................................................................86 Table 36: income generated .........................................................................................................87 Table 37: customer complaints ....................................................................................................88

CHAPTER -1 1. INTRODUCTION 1.1.

ABSTRACT Home is a dream of a person that shows the quantity of efforts, sacrifices

luxuries and above all gathering funds little by little to afford oneâ&#x20AC;&#x;s dream. Home is one of the things that everyone one wants to own. Home is a shelter to person where he rests and feels comfortable. Many banks providing home loans, whether commercial banks or financial institutions, to the people who want to have a home. Many banks are providing home loans at cheapest rate to attract consumers towards them. The more customer friendly attitude of these banks, currently offer to consumers cheapest loan over homes. In view of acute housing shortage in the country, and keeping in mind the social â&#x20AC;&#x201C; economic role of commercial banks in the present times, the RBI advised banks to encourage the flow of credit for housing finance. With the RBI reducing bank rate, the home loan market rates nose-diving by 50 basis points. The ICICI Bank and Standard chartered bank has become the first player in this sector to announce a housing loan for a 20 years period. No doubt it will enhance the end cost of the home but it will facilitate people to plan their house over longer duration now, it has been made easy for a person to buy that dream house which he dreamt of long ago.

A home loan is a loan taken for buying or constructing a home or to make improvements to a residential property. You can get a loan from banks and registered housing finance companies. The Home loan sector in India is the pivotal role player in the growth of the real estate scenario in India. With tax incentives given to the housing finance sector in the annual budget of 2001, transactions related to buying and selling of residential properties increased. 7

considerably and was much higher as compared to previous years. Since the new class of buyers are relatively younger set of customers who are more aware about legal documentation and approvals, buyers are now more 'end-users' rather than investors; the property market in India undergoes transformation to align itself with global standards with an increased emphasis on quality & cost control and documentation methods. In the current economy of India, the real estate sector has the maximum propensity to generate income and demand for materials, equipment and services. It can be said that housing finance companies were formed for co-existing with buyer's requirements of housing loans for investing in properties. Home loans are made available by financial institutions to both Indian and NRI customers at floating and fixed rate of interest and also at attractive EMI options.

The realty boom in India has given a new dimension to the finance sector in India both in Home Loans and Home Insurance segments. This has not only given a competitive edge to the finance companies to provide attractive options to customers but has also contributed to the increased investments in the real estate sector. This has resulted in 13 new institutions foraying into the housing finance business in the last three years.

1.2.

OBJECTIVES OF THE STUDY

1.2.1. Identification Of The Problem 

To study and learn the various systems and procedures used by the bank in lending to housing sector.



To identify the problems faced by the bank in attracting more customers to use its home loan products.



To identify the problems faced by the bank at various stages of undertaking the home loans.



To understand and identify difficulties in the home loan asset management practices of the bank.



To study the valuation of collateral security method followed by the bank while lending the home loans.

1.2.2. Offer A Solution To The Problem  To suggest better alternative organizational and operational practices.  To enhance its capacity to tap potential market in the home loan sector.  To reduce credit risk  To enhance the recovery system in the bank giving the home loans.

1.3.

NEED OF THE STUDY

It has been felt very useful in future –  To study the roles of the staff and the decision making processes in lending to the home loan borrowers.  To learn and comprehend thoroughly the systems and Procedures used in financing the segment.  To analyze the issues relating to various financial aspects of lending.  To calculate the risk involved and how the risk and uncertainty to be assessed and managed by the bank while lending the home loans.  To study the valuation of collateral security method followed by bank while lending the home loans.

1.4.

SCOPE OF THE STUDY  The present study is confined to Home loan products offered by the domestic operations of State Bank of India.  The study is also confined to the internal functional and operational aspects of the lending process.  The data collected here, is specific to: 

The selected branch as said before.



The time period covering the financial years: FY08-09-Q1FY10.

 The data and the information could be collected here has been taken from the record books maintained by the branch and from the oral communication with the branch manager.

1.5.

RESEARCH METHODOLOGY

1.5.1. Research Design  The study done is exploratory in nature. 

The branch of the bank was selected by convenience and for the sake of access to the qualitative information.



For the latest information and focus, the study is confined to the systems and procedures in lending and the time period as said above.

1.5.2. SOURCES OF DATA The data and the information presented here have been collected mainly from two kinds of resources: 1.5.2.1. Primary sources ♀ Direct and oral interaction with the Bank officials, particularly, the branch manager via a Questionnaire, a copy of which is made available in the APPENDIX. ♀ The Record books maintained at the branch office. 1.5.2.2.

Secondary sources

Several secondary resources have been referred for collecting first hand information and literature on the subject that includes:

      

The Training and Guidance Material supplied to the staff of the Branch. Annual Reports of RBI. Online Annual Reports by Consultancy and Research companies. Online Content of the Bank‟s Website. The material supplied by the Faculty Guide. Several websites on personal loans and Daily News Papers like Economic Times of India and Business Standard. The details of which have been presented in Bibliography.

1.6.

TOOLS AND TECHNOLOGIES USED

1.6.1. Statistical techniques:  Percentages.  Averages and  Tools like  Tables,  Bar Charts and  Pie charts 1.6.2. Hardware and Software Technologies:  Home PC with Internet access  MS Word and Excel-2003.  World Wide Web or Internet 11

1.7.

LIMITATIONS OF THE STUDY

Some of the limitations of the project that were encountered during the study are:  In case of interaction with the representative of a particular bank it happens many a time that the representative cannot disclose all the data because of certain reasons like banks privacy policy etc. thus getting clear picture about the service provided is not possible.  Due to paucity of time, only important factors have been analyzed and discussed.  To collect the data from various banks was quite difficult due to non-cooperation of some banks. This proved to be major limitation of the study.  To access such a large number of customers was difficult because of non-cooperative attitude of respondents.  Lack of data was also the other limitation of the study as some of banks do not have proper data on topic.  There was limitation of time to conduct such a big survey in limited available time.  Generally the data on the websites of the banks are not fully disclosed i.e. other than the charges mentioned on the website there are many hidden charges which increases the cost like service charge etc  Ignorance and reluctant attitude of customers was also a major limitation in this study. I have tried a lot to overcome the above mentioned limitations as far as possible.

CHAPTER -2 2. LITRTATURE SURVEY 2.1.

HOME LOAN INDUSTRY IN INDIA

After going through pervious studies of Home loans in India I came to conclude the following indicated in different forms:

Figure 1: Housing in India

Figure 2: Demographics in Housing

Figure 3: Housing Finance Timeline

Figure 4: Penetration of Housing Finance in the World

Figure 5: Improved Affordability

Figure 6: Market features

Major Home Loan Providers Banks & Public Sector Housing Finance Companies

State Bank of India, Corporation Bank, Punjab National Bank, Central Bank, Dena Bank, Allahabad Bank, Bank of Maharashtra, Bank of Baroda Housing Finance, Can Fin Homes, GIC Housing Finance, LIC Housing Finance, PNB Housing Finance, SBI Home Finance, Centbank Home Finance, HUDCO, LIC, etc.

Financial Institutions

HDFC, ICICI Ltd, Citibank, HSBC, Standard Chartered- Grindlays, IDBI Bank, etc Table 1: major home loan providers

Figure 7: Issues in Affordable Housing in India

2.2.

LATEST TRENDS IN THE INDUSTRY

2.2.1. GDP ratio at 7% provides room for further growth The ratio of mortgage to GDP in India has remained low at 7%, as against 12% for china, 41% for Hong-Kong and more than 80%foor developed countries, thus providing for further growth in the housing sector during the coming years. While the housing finance companies (HFC), which are regulated by National housing Board (a wholly-owned subsidiary of RBI) were pre â&#x20AC;&#x201C; dominantly catering to mortgage needs. Over the past few years, banks too have started in increasing their exposure to real estate, especially Home loans. This is evident from the fact that the market share of HFCs has decreased from 65% if FYO1 to present 55%. Banks, on other hand have been constantly increasing their market share, there by intensifying competition.

2.2.2. Revival in real estate prices in the initial period of the year and low interest rate The correction in the real-estate prices in the initial period of the year and low interest rate schemes announced by the banks/HFCs have resulted in significant surge in volumes especially in the â&#x20AC;&#x153;Affordable housing segmentâ&#x20AC;?.

2.2.3. Sluggish credit demand; banks increase their exposure to housing sector. Due to the sluggish credit demand (up 10.1% yoy for the fortnight ended November 20, 2009), banks have been diverting their funds towards housing loans. According to the figures revealed by RBI, the non-food credit growth during April-august 2009 has remained muted at 0.8%. On the other hand, lending to the home loan segment during this period increased 2.8%. Since February 2009, banks have been aggressively pricing interest rates on home loans (including both floating and fixed rates). Subsidies have also been provided to the form of reduced processing fees and minimal/no penalty on early re-payments. SBIs s home loan book has increased by rs117bn or ar2.5% CQGR in the last four quarters. With credit demand to revive in coming period, banks are likely to divert their funds to high yielding assets thereby reducing their exposure to the housing sector. 18

2.2.4. HFCs continue to do business as usual HFCs foresee the increasing share of banks exposure towards home loan segment as a temporary phenomenon. In our view, banks are likely to face asset-liability miss-match as these loans have a long gestation period. Further, these loans are a zero -sum game in the initial period due to lower interest rate offered. HFCs, on the other hand typically raise money that match their requirements and thus minimize their ALM mismatch

2.2.5. Differential interest rate may not remain for long While the discounted / special scheme rates are offered to new home loans, existing customers continue to ply higher rate of interest. The Indian Bank‟s Association has planned to introduce a uniform rate for all borrowers. 2.2.6. India's mortgage market scores over West  In India, the borrower contributes a higher share of his own funds (24-46% of house value) at the time of purchasing a house.  The loan installments too eat away a smaller portion of the borrowers‟ income.  The installment to income ratio-ranged between 34% and 40%, in India is lower than some countries in the West.  This is based on an analysis by rating agency Fitch of the home loan asset pool that it rates. 

This is because borrowers‟ income has kept pace with rise in property prices.

 The extent of second houses purchased is also limited and most borrowers stick to their repurchase schedules.  The figures computed by Fitch based on the asset pool that it rates implies that on an average, the borrower funds up to 30% of the house value through his own capital  This among other things increases the borrower‟s willingness to repay.  Some bankers say the black money component is also high in the Indian realty market, resulting in higher borrower equity.  Another notable factor is that delinquencies have remained range-bound in the last 33 months, according to residential mortgage index launched by the ratings firm.  The index which tracks home loans that have not repaid for over 90 days has moved in a narrow range between 0.90% and 1.07%. 19

CHAPTER -3 3. COMPANY PROFILE 3.1. Introduction: State Bank of India (SBI) has history of more than 200 years of existence. SBI is the largest commercial bank in India and accounts for approximately 18% of the total Indian banking business and the group account for 25% of the total Indian banking business. The central bank, Reserve Bank of India (RBI) is the largest shareholder in the bank with 59.7% stake followed by overseas investors including GDRs with 19.78% shareholding as on September 06. RBIs stake in the bank is likely to be transferred to the Government of India (GOI). SBI has the largest distribution network in India spread across every nook and corner of India. As on September 06, the bank has 14,061 branches which include 4,755 branches of its associated banks. The bank also has the largest network of 5,624 ATMs. Since the last 5 years the bank has showed continued growth in its core business. The total asset size of the bank reported a CAGR of 9.4% during the period FY01 â&#x20AC;&#x201C;FY06 and stood at Rs. 4,938.69 bn as of September 2006. In HIFY07, the bank reported net interest income (NII) of Rs. 182.14bn, representing a growth of 2.74% over HIFY06 while the bank reported a net profit of Rs.19.8bn, registering a decline of 18.67% during the same period. Credit off take of the bank has been lower than the State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits and loans of all scheduled commercial banks in India. The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into existence

by an act of Parliament as successor to the Imperial Bank of India.

Today, State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings - the Domestic division, the Foreign Offices division, the Foreign Department and the International Services division. If one measures by the number of branch offices and employees, SBI is the largest bank in the world. Established in 1806 as Bank of Calcutta, it is the oldest commercial bank in the Indian subcontinent. SBI provides various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The government nationalized the bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In recent years the bank has focused on three priorities: 1), reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defects to the private sector, 2), computerizing its operations and 3), changing the attitude of its employees (through an ambitious programme aptly named 'Parivartan' which means change) as a large number of employees are very rude to customers.

3.2 Roots: The State Bank of India traces its roots to the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27 January 1921, and named the reorganized banking entity the Imperial Bank of India. All these Presidency banks had been incorporated as joint stock companies, and were the result of the royal charters. The Imperial Bank of India continued as a joint stock company. Until the establishment of a central bank in India the Imperial Bank and its early predecessors served as India's central bank, at least in terms of issuing the currency. The State Bank of India Act 1955, enacted by the Parliament of India, authorized the Reserve Bank of India, which is the central banking organization of India, to acquire a controlling interest in the Imperial Bank of India, which was renamed the State Bank of India on 30 April 1955.

3.3 Timeline: June 2, 1806: The Bank of Calcutta established. January 2, 1809: This became the Bank of Bengal. April 15, 1840: Bank of Bombay established. July 1, 1843: Bank of Madras established. 1861: Paper Currency Act passed. January 27, 1921: all three banks amalgamated to form Imperial Bank of India. July 1, 1955: State Bank of India formed; becomes the first Indian bank to be nationalized. 1959: State Bank of India (Subsidiary Banks) Act passed, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries. 1980s When Bank of Cochin in Kerala faced a financial crisis, the government merged it with State Bank of India.

June 29, 2007: The Government of India today acquired the entire Reserve Bank of India (RBI) shareholding in State Bank of India (SBI), consisting of over 314 million equity shares at a total amount of over 355 billion rupees. 3.4 Associate banks: There are seven other associate banks that fall under SBI. They all use the "State Bank of" name followed by the regional headquarters' name. These were originally banks belonging to princely states before the government nationalized them in 1959. In tune with the first Five Year Plan, emphasizing the development of rural India, the government integrated these banks with the State Bank of India to expand its rural outreach. The State Bank group refers to the seven associates and the parent bank. All the banks use the same logo of a blue keyhole. Currently, the group is merging all the associate banks into SBI, which will create a "mega bank", and one hopes, streamline operations and unlock value.

State Bank State Bank State Bank State Bank State Bank State Bank State Bank

of Bikaner & Jaipur of Hyderabad of Indore of Mysore of Patiala of Saurashtra of Travancore

Table 2: Associate Banks of SBI

3.5 Foreign Offices: State Bank of India is present in 32 countries, where it has 84 offices serving the international needs of the bank's foreign customers, and in some cases conducts retail operations. The focus of these offices is India-related business.

3.6 Growth: State Bank of India has often acted as guarantor to the Indian Government, most notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9400 branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500 branches being incorporated so far. The bank has the largest ATM network in the country having more than 5600 ATMs [1]. The State Bank of India has had steady growth over its history, though the Harshad Mehta scam in 1992 marred its image. In recent years, the bank has sought to expand its overseas operations by buying foreign banks. It is the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating and various other rankings. According to the Forbes 2000 listing it tops all Indian companies. 3.7 Fortune Global 500 Ranking – 2007:  SBI debuted in the Fortune Global 500[2] at 498 in 2006. In 2007 it moved up to 495.  As per fortune 500-2007 following are the data for SBI in $ million. Revenues 15,119.4. Profits 1,407.3. Assets 187,547.1. Stockholders' Equity 9,786.2  "THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer Awards  The MOST PREFERRED BANK AWARD in a survey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21 cities across India. 3.8 Group Companies: SBI Capital Markets Ltd SBI Mutual Fund (A Trust) SBI Factors and Commercial Services Ltd SBI DFHI Ltd SBI Cards and Payment Services Pvt Ltd SBI Life Insurance Co. Ltd - Bancassurance (Life Insurance) SBI Funds Management Pvt Ltd SBI Canada Table 3: SBI Group Comapnies

3.9 The main activities of SBI are into  Personal Banking.  NRI Services.  Agriculture.  International.  Corporate.  SME.  Domestic Treasury.

3.10 State Bank of India offers the following services to its customers –  Domestic Treasury.  SBI Vishwa Yatra Foreign Travel Card.  Broking Services  Revised Service Charge.  ATM Services.  Internet Banking.  E-Pay.  E-Rail.  RBIEFT.  Safe Deposit Lockers.  Gift Cheques.  MICR Codes.  Foreign Inward Remittances. Moreover, State Bank of India has Colleges/Institutes/Training Centers that are the seats of learning and research and development. It caters not only to the employees of State Bank of India but also other banks/establishments in India and abroad.

3.11 Performance: ď&#x192;&#x2DC; SBI Bank India had Total Income of Rs 68376.83 cr for the financial year 2006 -07. ď&#x192;&#x2DC; State Bank of India has posted Net Income to the tune of Rs 6364.38 crore or the financial year 2006 -07.

3.12 Organization: State Bank of India is headed by Mr. Shri O. P. Bhatt, Chairman.

3.13 The Bank stands for Best Practices as it claims itself as under:

People dealing with you

Best practices followed in SBI End to End service by Permanent employees of SBI who are accountable to you.

SBI branch of your choice will service your loan account. You can always meet our employees face to face. Complete transparency. Price Interest charged on the daily reducing balance. No penalty for prepayments made, out of bonafide savings or windfall Prepayment charges gains for which evidence is produced. Place

Costs hidden in fine print

No hidden costs

Transparency

Complete transparency. All the features of our product, including interest rates, are in the public domain. Table 4: Best Practices in SBI

3.14 Share Holders:

Figure 8: Shareholders of SBI

3.15. Unique features of SBI Home Loan Products:

 Provision for on the spot "In principle" approval.  Loan sanctioned within 6 days of submission of required documents.  Option to avail Home Loan as a Term Loan or as an Overdraft facility to save on interest and maximise gains.  Option to club income of your spouse and children to compute eligible loan amount.  Provision to club depreciation, expected rent accruals from property proposed to compute eligible loan amount.  Provision to finance cost of furnishing and consumer durables as part of project cost.  Repayment permitted upto 70 years of age.  Free personal accident insurance covers upto Rs.40 Lac.  Optional Group Insurance from SBI Life at concessional premium (Upfront premium).

CHAPTER - 4 4. HOME LOAN PRODUCTS OFFERED BY SBI 1. SBI HI-FIVE LOAN SBI Hi-Five is available up to 31st March 2010 Amount Maximum Rs.5 Lacs Term Maximum 120 months (i.e. 10 years) including moratorium period. Interest Rates 8% p.a. Fixed interest rate during first 60 months. 61st month Onwards - floating at 2.75% below SBAR Or Fixed interest at 1.25% below SBAR Table 5: SBI Hi-Five Loan

Processing Fee The revised processing fee structure (including service tax) from 9th November 2009 is as under: Loan Amount

Processing Fee(Revised)

Upto Rs.5 Lac

Rs.1000/-

Table 6: Processing fee

2. SBI EASY HOME LOAN FOR LOAN AMOUNT UPTO Rs. 50 Lacs SBI Easy is available up to 31st March 2010

Getting your dream home has become easier with SBI Easy Home Loan. With low interest rates for home loan under Rs. 50 lakhs category, SBI Easy ensures that you are not burdened with high interest for your home loan. Plus with over 12000 SBI branches nationwide you can get your Home Loan account parked at a branch nearest to your present or proposed residence. Interest Rate: Interest rate during the first year (i.e. till first anniversary date from the date of first disbursement) is fixed at 8% p.a. 28

Interest rate during next two years is fixed at 8.5% p. a Interest rate after three years may be Fixed or Floating as per the borrowerâ&#x20AC;&#x;s choice made at the time of sanction. If floating rate option is chosen, then the rate will be 2.75% below SBAR. If fixed rate option is chosen, then the rate will be 1.25% below SBAR prevailing on the third anniversary date from the date of first disbursement, and shall have a reset frequency of 5 years from the third anniversary date of the loan. Fixed interest rate shall be subject to force-majeure clause. Processing Fee:

The revised processing fee structure (including service tax) from 9th November 2009 is as under: Loan Amount

Processing Fee(Revised)

Upto Rs.5 Lac

Rs.1000/-

Above Rs.5 Lac and upto Rs.10 Lac Rs.2000/Above Rs.10 Lac and upto Rs.20 Lac

Rs.5000/-

Above Rs.20 Lac and upto Rs.50 Lac

Rs.7,000/-

Table 7: loan amount in SBI easy home loan

3. SBI ADVANTAGE HOME LOAN FOR LOAN AMOUNT ABOVE Rs. 50 Lacs SBI Advantage is available up to 31st March 2010

SBI Advantage Home Loan with competitive rates of interest is available for home loans above Rs.50 lakhs. Plus with over 12000 SBI branches nationwide you can get your Home Loan account parked at a branch nearest to your present or proposed residence.

Interest Rate: Interest rate during the first year (i.e. till first anniversary date from the date of first disbursement) is fixed at 8% p.a. Interest rate during next two years is fixed at 9% p. a Interest rate after three years may be Fixed or Floating as per the borrowerâ&#x20AC;&#x;s choice made at the time of sanction. If floating rate option is chosen, then the rate will be 1.75% below SBAR. If fixed rate option is chosen, then the rate will be 0.75% below SBAR prevailing on the third anniversary date from the date of first disbursement, and shall have a reset frequency of 5 years from the third anniversary date of the loan. Fixed interest rate shall be subject to force-major clause. Processing Fee

The revised processing fee structure (including service tax) from 9th November 2009 is as under: Loan Amount

Processing Fee(Revised)

Above Rs.50 Lac and up to Rs.1 Cr

Rs.8,000/-

Above Rs.1 Cr and up Rs.10,000/to Rs.5 Cr Above Rs.5 Cr

Rs.20,000/-

Table 8: : loan amount in SBI advantage home loan

4. HOME LOAN PRODUCT VARIANTS

SBI Max Gain

HOME LOAN AS AN OVERDRAFT An innovative and customer-friendly product to enable you to earn optimal yield on your savings and minimize interest burden on Home Loans, with no extra cost. The loan is granted as an Overdraft facility with the added flexibility for you to operate your Home Loan Account like your SB or Current Account. 30

The product serves to minimize your interest cost by enabling you to park your surplus funds in â&#x20AC;&#x17E;SBI-Maxgainâ&#x20AC;&#x; (with the benefit to withdraw the surplus funds whenever you require), specially in the wake of low yields from other deposit/ investment avenues. Minimum Loan Amount: Rs.5 lacs ii) SBI Freedom A revolutionary product designed for customers who are on the look out for a source of finance for a property they want to invest in without mortgaging the same. All you have to do is pledge any financial security that you have and you will get a Home Loan for your dream home. A must-take for those who do not want to pay stamp duty for mortgage of their property or go through the hassles of creation of mortgage.

You also have an option to take the loan by way of mortgage of the property and pledge financial securities in lieu of margin money.

Repayment is highly customized, giving you the option to repay through regular EMIs or through maturity proceeds of the securities pledged.

ii)

SBI Realty

HOME LOANS FOR PURCHASE OF PLOT OF LAND FOR THE PURPOSE OF CONSTRUCTION OF A DWELLING UNIT A unique product if you are on the lookout for a loan to purchase a plot of land for house construction. The loan is available for a maximum amount of Rs.1 crore* and with a comfortable repayment period of upto 15 years.

Customers are also eligible to avail another Housing Loan for construction of house on the plot financed above with the benefit of running both the loans concurrently. (House construction should commence within 2 years from the date of availment of „SBIRealty‟ Housing Loan) (Other terms and conditions – as applicable to regular Home Loans) (* relaxation considered on case to case basis)

iv)

SBI Flexi

HOME LOANS WITH A COMBINATION OF FIXED AND FLOATING INTEREST RATES Home Loans with an option to choose a combination of floating interest rate and fixed interest rate, in a pre determined ratio. Minimum Loan Amount Rs.5.00 lacs. A customized product designed to enable borrowers to hedge their Home Loan against unfavourable movement in interest rates. The product gives you a onetime irrevocable option to choose one of the three customized combinations of fixed and floating interest rates and also to choose the order in which the fixed and floating rate will be availed. v)

NRI Home Loans

HOME LOANS TO NON RESIDENT INDIANS (NRIs) AND PERSONS OF INDIAN ORIGIN (PIOs HOLDING A FOREIGN PASSPORT) Eligibility Individual(s) over 18years of age with a steady source of income who 

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



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



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

Loan Amount The loan amount is to be determined on the basis of repayment capacity taking into account income, age, assets and liabilities, qualifications, stability of occupation, and employment prospects on return. The loan amount is subject to the following: Minimum: Rs. 3 lacs Maximum: Maximum permissible loan amount would be determined by EMI/NMI ratio criteria as applicable to regular Home Loans scheme for Resident Indian customers, which is 40% for Net Annual Income (NAI) upto Rs.2 Lac, 50% for NAI above Rs..2 Lac and upto Rs.5 Lac, 55% for NAI above Rs.5 Lacs.

vi) SBI Optima Innovative and value added products extended to existing Home loan borrowers with a satisfactory repayment record of 3 years and whose loan is Standard Asset, with a view to reinforce the customer loyalty and to maintain long term relationship with the borrowers. In case of take-over of Home Loans from other Banks/HFCs, the borrower should have fulfilled the above conditions with the present Bank/HFC. Vii)

SBI Tribal Plus

SPECIAL HOME LOAN SCHEME FOR HILLY/TRIBAL AREAS 'SBI-Tribal Plus' Home Loans, a Special Scheme designed for Hill/Tribal areas for extending financial assistance to individuals in such areas to: a. Purchase or construction of a new house / flat (without mortgage of land)

b. Purchase of an existing (old) house / flat which is not more than 10 years old (In such cases, valuation report from our empanelled valuer and a certificate on the condition of the house to be given by a structural engineer or Govt. approved architect should be taken); c. Repair /Renovation/extension of an existing house or flat.

viii) Gram Niwas HOME LOANS TO FARMING AND POOREST OF THE POOR IN RURAL AREAS The Scheme covers all rural and sEMI-urban centres. â&#x20AC;&#x153;Rural Areaâ&#x20AC;? for the purpose of the Scheme is the area comprised in any village including the area comprised in any town, the population of which does not exceed 50000 as per 2001 census.The scheme seeks to provide home loans to farming and poorest of the poor in rural areas for the purpose of purchase or construction of a house, repairs and renovation, purchase of plot for the purpose of construction of a house/shed etc.

ix)

Sahyog Niwas

RURAL HOME LOANS TO SELF HELP GROUPS The Sahyog Niwas scheme has been instituted to finance the self help groups with a good track of payment record for 2 years, for on lending to members for housing in rural areas, covering the following purposes. i) For the purchase or construction of a house exclusively or including the housing needs of activities carried by them. (Dairy shed, tailoring shed/shop, grocery stores etc.) ii) For the renovation or repair of an existing house / shed iii) For the purchase of a plot of land for the purpose of house construction. iv) For the extension of existing house / work space to existing house / shed.

x) SBI Happy Home Loans HOME LOANS AT 8% P.A

The SBI Happy Home Loans scheme enables the genuine needy buyers to buy dwelling units by freezing interest rate at 8% p.a. for a period of one year from the date of disbursement on new Home Loans including SBI Special Home Loans scheme.

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

At present State Bank of India is the only Bank in the country supporting the cause of Green Buildings by offering a 5% concession in margin, 0.25% concession in interest rate and waiver of processing fees, on the existing home loan products to customers who go in for Green Projects.

5. HOME LOAN TOP-UP PRODUCTS i) SBI Home Line SBI Home Line Special Personal Loans come with inbuilt provision to sanction personal loans to home loans borrowers with a satisfactory repayment record of 3 years. The rate of interest charged on these personal loans is only 50 bps above the Home Loan interest rate applicable to the repayment tenure opted by the borrower (floating rates only), prevailing as on the date of sanction of â&#x20AC;&#x17E;SBI-Home Lineâ&#x20AC;&#x; Special Personal Loans.

ii)

SBI Home Plus

SBI Home plus is scheme is launched for granting personal loans to the banks home loans customers against the security of their house property. All home loans customers with a satisfactory repayment record of at least one year and who maintain a Savings bank or current account with us. The loan can be used for any purpose, viz. extension/repair of house, purchase of car/ consumer durables, education / medical expenses of family members, personal expenses, etc. There will be no need to obtain documentary evidence for the end-use of funds. However a certificate from the customer in the application to the effect that the loan will not be used for speculative purposes would be obtained.

iii) SBI Life style Loan LOANS TO MEET LIFE STYLE NEEDS OF HOME LOANS CUSTOMERS State Bank Of India launched the SBI Life Style Loans to help home loan customers meet any short term expenditure, (Vacation travel, purchase of Gold, Lifestyle goods) except speculative investments, which adds comfort to the life style of the borrower with satisfactory repayment record. SBI has tie up with various reputed travel houses, lifestyle product companies for discounts to our customers. 36

6. RELATED HOME LOAN PRODUCTS i) Earnest Money Deposit (EMD) Scheme Many Government agencies, like Urban Development Authorities and Housing Boards, periodically come out with schemes for sale of plots/houses, wherein applicants have to submit 10-20% of the cost of plot/house as Earnest Money Deposit (EMD) and allotments are made by draw of lots. The SBI EMD scheme is designed for financing against earnest money for allotment of a house/plot. Individuals above 21 years of age and with a steady source of income are eligible to avail loans under this scheme. ii) SBI Reverse Mortgage Loan LOAN FOR WELFARE OF SENIOR CITIZENS IN INDIA SBI Reverse Mortgage Loan Enables house-owning Senior Citizens having inadequate income to meet their financial needs for renovation/repairs to house, medical & other personal purposes. There is no compulsion for the borrower to repay a RML during his or her lifetime or till such time he or she continues to stay in the house. The borrower continues to retain ownership of the house. Also, the borrower will have the option to prepay the loan at any time during the loan tenure and there will be no pre-payment penalty. 7) Other schemes: The bank offers loans schemes known as 'Prashasan Plus', 'Teacher Plus' and 'Oil Plus' to Government Employees, Teachers and employees of public sector oil companies etc at consessional rates. These â&#x20AC;&#x17E;plusâ&#x20AC;&#x; schemes offer concessional interest rate of 0.25% below the applicable interest rates on Home Loans to niche client groups like Government Employees, Teachers, employees of public sector oil companies and so on

CHAPTER -5 5. TERMS AND NORMS 5.1.

ELIGIBILITY

If one is a resident or non-resident individual who is planning to buy a house in India, one can apply for a home loan. If a person has decided to buy a property in the near future, he/she can apply for a loan before even selecting the property. Once the maximum amount to put into the property has been decided, the Housing Finance Institutions or Banks will let the customer know that how much he/she is eligible for and this helps to plan out the budget. Conditions regarding co-applicants: All Housing Finance Institutions lay down conditions on who can be co-applicants. All coowners of the property need to be co-applicants to the loan necessarily. These institutions do not permit minors to join in as either co-owner or as co-applicants because a minor is not eligible to enter into a contact as per law. They do not permit even friends or relatives who are not blood relatives to take a property jointly. However, Income of co -applicants can be clubbed together to get higher loan eligibility. Given below is a Table that throws light on acceptable relationship of a co-applicant for clubbing of income.

Minimum age: 18 years as on the date of sanction Maximum age: limit for a Home Loan borrower is fixed at 70 years, i.e. the age by which the loan should be fully repaid, subject to availability of sufficient, regular and continuous source of income for servicing the loan repayment.

Eligibility Criteria & Documentation required for Individuals:

Salaried

Self employed

Age

21years to 60years

21years to 70years

Income

Rs.1,20,000 (p.a.)

Rs.2,00,000 (p.a.)

Loan Amount Offered

5,00,000 - 1,00,00000

5,00,000 - 2,00,00000

Tenure

5years-20years

Current Experience

2years

3years

Documentation

1) Application form with photograph 2) Identity & residence proof 3) Last 3 months salary slip 4) Form 16 5) Last 6 months bank salaried credit statements 6) Processing fee cheque

1) Application form with photograph 2) Identity & residence proof 3) Education qualifications certificate & proof of business existence 4) Business profile, 5) Last 3 years profit/loss & balance sheet 6) Last 6 months bank statements 7) Processing fee cheque

Table 9: criteria and documents required for individuals

5.2.

DOCUMENTS (1) ADVOCATE Check List: (Prepare separate set)  Copies of Mother deed/parent document link deeds, allotment letter, Khatha certificate/endorsement, up to date encumbrance & tax paid receipts. (In case of flats, if the project is already approved by SBI panel advocate then this is not required).  Copies of Agreement for sale, Construction Agreement  ORIGINAL Sub Registrar certified copy of the Sale Deed(for takeover loans )  ORIGINAL of updated encumbrance certificate.  Copy of Plan sanction.  Copies of latest Khata certificate,Khata extract etc.  Upto date Tax paid receipts (Form-16).  Copies of Sanction letter of other bank/institution & Letter of original documents held in their custody ( applicable In case of takeover loans from other banks/institutions) 39

(2) ENGINEER Check List: (Kindly take the Engineer Telephone Nos from the bank to co-ordinate with him for inspection of your property)  Photo copy of Sale Deed.  Plan Sanction Copy.  Interior Estimate, if any, for approval by Engineer. (3) Builders/Sellers Check List  Allotment Letter & detail split up cost of the project.  In case of completed projects, a letter from the builder stating that the property is ready for registration.  Letter from the builder/seller the property is not mortgaged to any bank/ financial institution. If mortgaged then an NOC from the concerned bank/institution.  Advance Receipt / Paid Receipts from Builder/Seller, If any.  Due diligence on Builders and Seller KYC Norms : Proof of Identity (PAN copy) & Residence proof (Telephone/electricity bill - both self attested and originals verified & attested by the bank) along with the duly filled in KYC form (form to collect from the bank)

(4) Other Bank/Institution Check List ( In case of Takeover Loans)  Sanction Letter of the other bank/institution.  Loan account statement from the date of sanction till date.  Pre-closure letter inclusive of penalty from the other bank/institution.  Letter of original documents held in their custody.  Receipts for the total amount of the project issued by builder/seller to the purchaser/bank/institution. 40

(5) PERSONAL DOCUMENTS Check List (From the Applicant / Co- applicant and Guarantor, if any) SELF ATTESTED COPIES OF DOCUMENTS Sl.No.1 to 6: 1) Proof of Identity (passport/pan card) 2) Proof of Residence (telephone/electricity bill/ company letter) 3) Salary Slip - last 3 months. (Attested by the employer) 4) Salary account bank statement - last 6 months (bank attested) 5) Form 16 for the last two years. 6) Income Tax Saral copy for the last two years. 7) Photograph - 2 nos. 8) Application Form 9) Company Profile – details of company (6)

Check list by the Purpose

Confirmation of Income 

If you are a salaried person, please provide two recent consecutive pay slips or a co py of your employment contract or a letter from your employer.



If you are self-employed, please provide copies of your last two Financial Accounts as prepared by your accountant.



Appointment Letter



Salary Certificate



Retainer ship Agreement, if appointed as a consultant



FORM 16 issued by the employer in your name.



Last three years income tax returns duly filed and certified by the Income Tax Authorities 41



Similar Document -separately for each co-applicant.

Employment Proof 

Identity card issued by your employer



Visiting card

Age Proof 

Passport



Voter's ID card



PAN card



Ration card



Employer's Identity card



School leaving certificate



Birth certificate

Residence Proof 

Ration card



Passport



PAN card



Rent agreement, if you are staying currently on rent



Bank Pass book



Allotment letter from your company if you are residing in company quarters.

Name Change Proof (If Applicable) a. A copy of the official gazette b. A copy of a newspaper advertisement publicizing the name change c. Marriage certificate Investment Proof (If Applicable) 

Bank statement for the last six months of all operating and salary accounts



Bank statements for the last six months of all current accounts, if self-employed.



Any other photocopies of investments held, if required by the Bank

Property Title Proof 

Original Sale agreement with Builder/Developer duly registered, Registration receipt



Tripartite agreement from builder/developer



Land documents indicating ownership, e.g.- Photocopies of title deeds, if applicable



A certificate by the legal advisor of the builder to the effect that the builder has a good reputation and it is free from encumbrance and other charges.



A certificate from builder's Chartered Accountant certifying that the builder has not mortgaged the property anywhere else.



Certified true copy of approved plan.



Copies of receipts of payments made to builder/developer.



Allotment letter



Possession letter



Lease agreement, if applicable (Property bought from a development authority)



Mortgage deed if the Bank opts for a registered mortgage.



No Objection Certificate from the developer, society or development authority as applicable



Personal Guarantees, if applicable.



In case of alternate or additional security, documents for the same depending upon the security details.



For self-construction: Approved plans and clearance certificates along with estimates



Post dated cheques for the EMIs.

Confirmation of Rental Income Copy of the existing tenancy agreement, or a rental appraisal, from a local real estate agent signed by branch manager, or rental manager.

Deposit or Investments 

Evidence of your deposit or investment funds, i.e. a bank statement or term deposit receipt.



For low equity loans (5-19% deposit), copy of your savings account statements over the last six months.

Sale and Purchase Agreement 

If you are planning to buy a property, please provide a copy of the successful sale and purchase agreement signed by both you and the vendor.



If you are planning to sell or have already sold your existing property, please provide a copy of that property's sales and purchase agreement.

New Customer to the banks of India 

If you are refinancing from another bank please provide copies of your loan statements covering the last six months.



Please provide copies of your account statements covering the last six months from your current bank.



Please provide copies of your identification and if you have arrived in the country within the last 5 years, please provide a copy of your passport.

Government Valuation and rating System A copy of the latest Government or Ratings Valuation is to be provided. Depending on the age and value indicated in conjunction with the amount required to borrow, the Bank may require a Registered Valuation and your Banker will advise you.

5.3. PURPOSE The bank offers home loans for purchase and/or construction of house property as well as plot loans. It offers loans for: 

Purchase/ Construction of new House/ Flat



Purchase of an existing House/ Flat



Purchase of a plot of land for construction of House



Extension/ repair/ renovation/ alteration of an existing House/ Flat



Purchase of Furnishings and Consumer Durables as a part of the project cost



Takeover of an existing loan from other Banks/ Housing Finance Companies 45

5.4. QUANTUM OF LOAN Actual loan amount will be determined taking into consideration such factors as applicant‟s income and repaying capacity, age, assets and liabilities, cost of the proposed house/flat etc. Applicants aged between 18 and 45 years, can get 60 times Net Monthly Income (NMI) or 5 times Net Annual Income (NAI) and for applicants aged over 45 years of age, it is 48 times NMI or 4 times NAI. This will be subject to a maximum EMI/NMI ratio as under:

Net Annual Income

EMI/NMI Ratio

Upto Rs.2 lacs

40%

Above Rs.2 lac to Rs. 5 lacs 50% Above Rs. 5 lacs

55%

Table 10: Criteria for Loan Amount

 Increase upto 5% in the EMI/NMI ratio may be permitted by the sanctioning authority, depending on the availability of disposable surplus income after meeting expenditure towards maintenance of family.



Judgment regarding repayment capacity on the basis of income:

To understand how the income of a customer is considered to arrive at his repayment capacity, it is first necessary to classify customers into salaried and self employed individuals.

a) The income of the salaried individual is considered in the following manner: Gross monthly income as it appears on the salary slip Less:- Any non regular variable income appearing on the salary slip (including overtime, etc.) Add: - 50 per cent of the average variable income of the last six months. Add: - Any fixed cash/voucher payments for which proof can be submitted. Add: - 50 per cent of the average variable cash/voucher payments with proof like traveling reimbursement etc. Add: - HRA receivable if not being received already in the salary slip. The above income calculated for the calculation of eligibility using IIR and FOIR norms. For calculation of FOIR, the installments of all the loans that one has availed of currently for which repayment is being made is taken into account as well. The lower of the two eligibilities is considered as the maximum repayment capacity. E.g.: Determination of loan amount eligibility of a salaried individual:

Net Monthly Income i.e. Take home salary

85,000/-

Expected rental from proposed property

15,000/-

Add any other monthly regular income

Total Net Monthly Income

1, 00,000/-

Take 55% of this for total loan EMI provision i.e.

55,000/-

Subtract all existing loan EMIâ&#x20AC;&#x;s being paid now: (other loans)

15,000/ -

Net EMI available for the present loan

40,000/-

Now, for repayment period 15 yrs @ 9 % the EMI/ lakh is

1,014/-

To arrive at your eligibility Divide 40,000/ by 1014

39.44 lacs

Table 11: Determination of Repayment capacity

i.e. 39.44 lacs or 80% of project cost whichever is lower. 47

b) To consider income of Self-employed individuals we further classify them into Professionals and non-professionals. â&#x20AC;˘ Professionals: - Comprising doctors, chartered accountants, lawyers, architects, etc. For calculation of eligibility of professional's income is computed by most HFIs using the gross professional receipts instead of the Net profit as in the case of self-employed nonprofessionals. â&#x20AC;˘ Non-Professionals: - The income of non-professionals is normally calculated by HFIs in the following manner: Average of the net profits of last 2 years as it appears in the profit and loss account (Returns need to be filed for the same. They should be filed regularly before the due date is over). Less: - Any income, which is unusual and non-recurring in nature like sale of some asset, etc which affects profits substantially, Add: - Any expense that is unusual and non-recurring in nature like repairs and maintenance that has not been capitalized and effect profit adversely. Add: - 50 per cent of the average depreciation of the last two years. The above income is calculated for the calculation of eligibility using IIR and FOIR norms.

For calculation of FOIR the installments of all the loans that one has availed of currently for which repayment is being made is taken into account and the eligibility is worked out. The lower of the two eligibilities is considered as the maximum repayment capacity.

To enhance loan eligibility you have option to add: 1)

Income of your spouse/ your son/ daughter living with you, provided they have a steady income and his/ her salary account is maintained with SBI.

Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased are proposed to be rented out.

Depreciation, subject to some conditions.

Regular income from all sources.

Table 12: Enhancing Repayment capacity options

5.5.

Equated Monthly Installment Calculation:

The staff at the selected Branch did not want to reveal the actual method adopted by SBI as they used to have a computer software Application for the purpose that looks just as below:

Calculate EMI For EMI Calculated: Rs. Amount

3000000

Duration

120

Interest Rate

Calculate

Total Interest: Rs.

Months

Reset

Figure 9: Software Interface for EMI calculation

36398.28

1367793.6

However, the actual calculation model for EMI could be as follows: From various resources, it is found that: 1)

The EMI break up, for SBI is: 

68% - Principal Component and



32% - Interest Component

The way EMI is calculated can be broadly categorized under two heads: 

Flat rate system and



Reducing balance system.

The flat rate system: The rate of interest on the loan amount is calculated over the full duration of the loan, the principal and the interest is divided over the number of installments and the value arrived is your EMI. Let us understand this better:

Table 13: EMI calculation in the flat rate system

A flat rate loan is the most expensive as in this case the interest is calculated on the entire loan amount and no principal deduction is taken into account. Thus the effective rate o f interest works out to be much higher.

Reducing balance system: The interest is charged on the outstanding balance of the loan, which goes on reducing. Hence the cost of the same loan amount on an annual reducing balance method works out to 29% and 35% on a monthly reducing balance method. Again in case of reducing system, there are three types:

Table 14: EMI calculation in Reduced balanced system

Daily reducing balance method (Used by SBI) Here, there is immediate reduction in principal thereby reducing the interest calculated on it. If you have taken a loan of Rs.1, 00,000/- at 21% interest for 3 years and you pay Rs.3, 760/- on Jan 10, the lender will consider total outstanding principal as Rs.96, 240/- from Jan 11. The interest will be calculated on Rs.1,00,000/- from Jan 1 to Jan 10 and from Jan 11, interest will be calculated on Rs.96,240/-. With a lower outstanding principal, the total interest paid out reduces and so does the EMI. Monthly reducing balance method Here, the principal component is deducted at the end of every month and then the interest is calculated on this new outstanding reduced principal. The above table gives the cash outflow on a loan of Rs.1, 00,000/- at 21% interest for 3 years, when interest is calculated by monthly reducing balance method. 51

Annual reducing balance method Here the principal component of EMI though reduced every month, is summated annually. Therefore, the interest is calculated on the original loan amount for the entire year. At the end of the year, the accumulated principal component is deducted from the original loan amount and the interest for the next year is on this reduced loan amount. If you have taken a loan of Rs.1,00,000/- at 21% interest for 3 years, the EMI will be Rs.4,018/-.

Which EMI plan to choose? Payment of EMIs in advance or in arrears? Paying the EMI at the beginning of the month (EMI in advance) means that you lock your money for the month; while paying in arrears, (i.e. at the end of the month) gives you an extra month before the payout. The effective rate of interest on the loan also goes up when you pay the EMI at the beginning of the month. Hence if two schemes offer the same EMI, choose the one, which allows payment in arrears.

Advance EMI payment In advance EMI schemes a certain number of EMIs are collected from the borrower in advance. The number of EMIs that have to be paid out in advance varies with the interest charged on the loan. The more you pay in advance the lesser should be the interest charges.

Also in 100% financed loans, some EMIs have to be paid upfront as advance. This effectively reduces the loan amount and in real terms the financier has not given you 100% finance but charges interest on the entire cost of the asset.

Deposit linked plan Here, the financier offers a lower rate of interest, provided the borrower invests 20% to 25% of the asset cost as a fixed deposit with the financier. The interest on this deposit is usually lower than the interest charged on the loan. Here again you must consider the cost of parking your funds in the deposit as the returns on it may not weigh favorably with the low interest charged on the loan. In the end, the thumb rule of EMI to remember: EMI is lowest, when interest is calculated on a daily reducing basis. The reason why EMI varies for the same loan amount, tenure and interest rate is the difference in the compounding frequency of interest rates. We can remember that one liner joke - “Why sharks never take lenders?” The answer is “Professional courtesy”. Pre-EMI: In case of part of disbursement of the loan, monthly interest is payable only on the disbursement amount. This interest is payable monthly till the final disbursement is made, after the EMIs would commence. 5.6.

MONETARY CEILINGS

The Maximum Permissible Loan Amount is subject to following monetary ceilings: Repairs/Renovation Rs. 10 lacs

Above Rs.10 lacs require prior administrative clearance of network GM

Furnishings and consumer 10% of the

Whichever is less where additional

durables

security is available

Project Cost (or) 3 lacs

Table 15: monetary ceilings

5.7.

TOTAL PROJECT COST

The total value house or flat or the project cost includes:  The cost of undivided share of the flat/land /construction cost,  Additional Amenities like Car Parking, KEB & BWSSB deposits,  Insurance premium  VAT & service taxes,  Maintenance cost &  Stamp duty and Registration expenses subject to your eligibility as calculated above whichever is lower for purchase /construction of new or old property. 5.8. 

MARGIN

Purchase/ Construction of a new House/ Flat/ Plot of land: The SBI home loan borrower should pay 20% of the cost of home for loans up to Rs 1 crore and 25% for loans above Rs 1 crore. Loan Amount

Margin (Min.) Maximum LTV* Ratio (Max.)

Upto Rs. 75 Lacs

20%

80%

Above Rs. 75 Lacs. 25%

75%

Table 16: criteria of margin amount



Repairs/ Renovation of an existing House/ Flat: 20% 

*LTV ratio - Loan to value ratio=Loan amount/Value(project)

5.9.

SECURITIZATION

In most cases, the property to be purchased itself becomes the security and is mortgaged to the bank till the entire loan is repaid.

Equitable or Registered mortgage of property (or) Other tangible security of adequate value like NSCs, Life Insurance policies etc., if the property cannot be mortgaged

Table 17: Securitization

5.10.

FEES OR CHARGES

5.10.1. Pre-Sanction Fees (i)

Processing Fee: The revised processing fee structure (including service tax) from 9th November

2009 is as under: Loan Amount Processing Fee (Revised): Upto Rs.5 Lac

Rs.1000/

Above Rs.5 Lac and upto Rs.10 Lac

Rs.2000/

Above Rs.10 Lac and upto Rs.20 Lac

Rs.5000/

Above Rs.20 Lac and upto Rs.50 Lac

Rs.7,000/

Above Rs.50 Lac and upto Rs.1 Cr

Rs.8,000/

Above Rs.1 Cr and upto Rs.5 Cr

Rs.10,000/

Above Rs.5 Cr

Rs.20,000/ Table 18: Processing fee amounts

ď&#x192;&#x17E; Processing Fee:

0.50% of loan amount or Max.Rs.10,000/-

(Waived for loans partially/fully disbursed before 30/09/2009)

Note: 75 % of the processing fee may be refunded in the following cases:

(a) Rejection of loan application on account of unsatisfactory pre-sanction survey report. (b)

Rejection

loan

application

account

unsatisfactory

legal/valuation reports.

In cases where applications are sanctioned or rejected after complete loan processing, fee will not be refunded.

(ii) Legal Charges:

Advocate's fee for property search and the title investigation report. Legal Fee/charges: Rs.1500/(iii) Govt. Stamp duty : 0.25% of loan amount as stamp duty at the time of equitable mortgage creation at the Bank. (iv) Approx Govt. Stamp papers of Rs.1500/-(approx) for execution of loan documents at the time of sanction (Legal/Engineer/Processing fee cheques to be paid at the time of submission of application form to the bank. Govt Stamp duty of 0.25 %( prevailing now) of the loan amount and Rs750/- approx to be paid at the time of documentation of loan. Insurance will be done after the registration of the property.)

(iii) Valuation Charges: Valuer's fee for valuation report. Engineer's Valuation fee: Rs.1, 500/-

5.10.2. Post-sanction Fees (i) Stamp duty payable for Loan agreement & mortgage. (ii) Property insurance premium: Insurance: Insurance of property building against fire/earthquake etc with New India Assurance Company to be done.

(iii) Service Charges Payable to builders who have been engaged as Marketing Associates. 5.11.

RATE OF INTEREST Interest Rates w.e.f. 29.06.2009

a) Floating Rates linked to SBAR SBAR w.e.f. 29.06.2009 = 11.75 % p.a. Loans (i.e. Sanctioned limits) upto Rs.30 Lacs Loan amount Loan Tenure ->

Loans upto Rs.30 lacs for new loans sanctioned on or after 29.06.2009

Linkage with SBAR in the loan document Special product level discount which may be withdrawn/revised solely at the discretion of the Bank. Effective Rate

Upto 5 Yrs 2.25% below SBAR, 0.25%

9.50% p.a.

Above 5 Yrs & upto 15 Yrs 2.00 below SBAR

Above 15 Yrs & upto 25 Yrs 1.75% below SBAR

0.25%

9.75% p.a.

10.00% p.a.

Loans (i.e. Sanctioned limits) above Rs.30 Lacs and upto Rs.75 Lacs Loan Upto 5 Yrs Above 5 Yrs Above 15 Yrs Tenure -> & upto 15 & upto 25 Yrs Yrs Above Rs.30 lacs and Linkage 2.00% below 1.75% below 1.50% below upto Rs.75 Lacs w.e.f. with SBAR SBAR SBAR SBAR 29.06.2009 Effective 9.75%p.a. 10.00% p.a. 10.25% p.a. rate

Loans (i.e. Sanctioned limits) above Rs.75 Lacs Above Rs.75 Lacs w.e.f. Linkage with 2.00% below 29.06.2009 SBAR SBAR Effective rate

9.75% p.a.

1.75% below SBAR

1.25% below SBAR

10.00% p.a.

10.50% p.a.

b) Fixed rates - Re-payment Upto 10 Years (w.e.f. 29.06.2009): Fixed rates (subject to ‘force majeure’ clause and interest rate reset at the end of every two years on the basis of fixed interest rates prevailing at that time) Upto Rs. 30 Lacs Above Rs. 30 Lacs

11.25% p.a. 12.25% p.a.

c) Loans for deposit of earnest money for allotment of a plot / house / flat (Floating rates only)- w.e.f. 29.06.2009 - 1% above SBAR, Min. 12.75% p.a. Loan amount Upto Rs.30 Lacs Above Rs.30 Lacs and upto Rs.75 Lac Above Rs.75 Lac

Margin 20% 20% 25%

d) Current Rate of Interest by Products: Loan Schemes

SBI HI-FIVE Loan Loan Amount upto Rs. 5 Lacs

SBI Easy Home Loan Loan Amount upto Rs. 50 Lacs

SBI Advantage Home Loan Loan Amount Above Rs. 50 Lacs

1st Year

2nd and 3rd year

After 3rd Year

8.00% (p.a.) Fixed interest rate

9.00% (p.a.) Floating Interest Rates OR 10.50% (p.a.) Fixed Interest Rates

8.50% (p.a.) Fixed Interest Rate

9.00% (p.a.) Floating Interest Rate OR 10.50% (p.a.) Fixed Interest Rate

9.00% (p.a.) Fixed Interest Rates

10.00% (p.a.) Floating Interest Rate OR 11.00% (p.a.) Fixed Interest Rate

8.00% (p.a.) Fixed interest rate

Table 19: Rate of interests

Note: - Interest rate after three years may be Fixed or Floating as per the borrower’s choice made at the time of sanction.

5.12.

MORATORIUM Upto 18 months from the date of disbursement of first instalment or 2 months after final disbursement in respect of loans for construction of new house/ flat (moratorium period will be included in the maximum repayment period)

5.13.

GUARANTOR :  The bank insists on a Guarantor till the property is registered/title transferred on your name and Equitable Mortgage registered in favour of the bank.  Guarantor details in the application with Assets & Liabilities duly filled in along with the above mentioned documents are required.

 For Takeover Loans From Other Banks –

Guarantor Is A Must

 An eligibility criterion of guarantor is that:

80% of the net credit

worthiness of the guarantor should be more than the loan amount (takeover amount).

 The Title holders of the property should ONLY be the borrowers. If the agreement is on the joint names (maximum three persons), then the Sale deed also should be on the joint names and the loan also will be on the joint names. The same is also applicable for take over loans. i.e. Joint Owners then Joint name in the loan application / Single Owner then Single name in the loan application.

5.14.

TAX BENEFITS

 Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965:  Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1, 00,000/- will be eligible for deduction from gross income.  Interest paid on loan after completion of construction will be deductible from income from property  For self occupied - Income will be treated as nil and interest payment will be treated as minus income which will be adjusted against other income. For rental property - It will be adjusted against rental income.

5.15.

PACKAGE OF EXCLUSIVE BENEFITS

 Complimentary international ATM-Debit card.  Complimentary SBI Classic/ International Credit Card with waiver of joining and first year's fees.  Option for E-banking.  Concessional package under 'Credit Khazana' for prospective car loan borrowers whose accounts are conducted satisfactorily.  50% concession in charges in respect of all personal remittances/ collection of outstation cheques.

5.16.

INSURANCE COVER Compulsory insurance of property. Optional life cover from SBI Life & free

accident insurance cover for borrower available. The house/flat to be insured against the risk of fire/riots/earthquake/lighting/floods etc. in the joint names of the borrower and the bank for the actual project cost after netting off the cost of land, stamp duty an registration charges. People seeking home loan often encounter such worries like what if anything happens to them in that case what would happen to the home loan? Naturally, their main concern is that should something happen to them their folks would have to encounter the problem of facing the impact of repaying the loan debt. Home loan insurance is completely different from home insurance. This type of insurance covers the amount of home loan you owe to the bank. This doesn't include the amount you have already paid but the amount still to be paid and evidently your family members will not face the problem of paying the amount being owed to the bank but the insurance provider will bear the brunt of the same. The insurance companies are not very impending about how much amount is to be paid as part of the insurance premium as the premium amount varies depending on the case. The premium amount broadly relies on conditions like - age of the person availing the loan (the younger the person, the lower the premium amount); loan amount (the lesser the loan amount, the lower the premium); period of the loan (the more the loan repayment period, more is the premium); another important factor is the health of the loan taker (the premium amount would be low in case of good health of the individual). SBI offers mortgage life insurance policy to the SBI home loan applicants thereby consolidating the insurance premium along with the EMIs. 61

The State Bank of India offers a free personal accident insurance cover to their clients availing home loan so that the client's family doesn't have to face any problem if he/she meets an accident that proves to be fatal. 5.17.

VALUATION POLICIES

The existing valuation policy was reviewed, and ECCB approved the following valuation and re valuation policy w.e.f. 01.04.08 for individual home loans (IHLS):

(1) Asset Valuation Policy for IHLS: Purpose Of Home Loan

Valuation Policy Valuation of land plus project cost i.e.stae-wise estimated expenditure obtained from the empanelled architect / engineer irrespective of loan amount. Disbursement to be made according to the stage of construction.

Construction of new dwelling unit

For loans unto rs 2 laces at rural /semi-urban branches, the sanctioning authority may waive valuation as above and my assess the valuation based on market prices by enquiry and a certificate by the contractor/engineer involved in construction. Valuation report obtained from the empanelled

Purchase of second sale plot /dwelling units

architect/engineer/valuer irrespective of the loan amount and age of the property. For loans up to rs 20 lacks, reasonableness of the price mentioned in the underlying sale did/agreement to sale etc.ascertained by the

Purchase of new dwelling units

sanctioning authority as per prevailing market prices. For loans above rs 20 lacks, valuation report obtained from an external empanelled architect/ engineer / valuer.

Purchase of plot for constructions of Property valued at cost price as per the dwelling unit from regional agreement of sale/lease. govt.housing development authorities/boards/ Table 20: valuation policies

(2) Asset Revaluation Policy for IHLs:  Loans above rs.1 crore are given up to an LTV ratio of 75% only, and as such will not attract the higher CRW (Credit Ratio Weight).  Loans of Rs 1 crore and below were given up to a LTV of 85 %( now reduced to 80%), which attract higher CRW of 100%.  However, for a regular loan, a part of the principal gets repaid, and over a period of about 2.5 years from commencement of repayment, the LTV ratio comes down to 75%.  Therefore,higher CRW would be applicable only during this period.  There could also be appreciation in value of the property during this initial repayment period of 2.5 years, which could bring down the LTV ratio below 75%.  To have the benefit of lower CRW, the appreciation through a proper revaluation of the property.  The revaluation is to be carried in such cases by the Asst/Dy.manager (advances)/appraisal officer at the branch/RACPC. The process need not be as detailed as n the case of a fresh loan sanction.  In case of all home loans with out standings above Rs 1 crore that are standard assets, the underlying properties should be revalued once after the expiry of 3years by engaging an empanelled architect / engineer / value. The cost of such valuation will be borne by borrower.  The first revaluation, in terms of this policy is due in January 2009 for loans (standard assets having an LTV ratio of more than 75%) sanctioned during last 3 years. (A format for valuation is enclosed.)  Concessionary capital risk weight (CRW) on home loans is available to banks under Basel 2 frame work, provided the assets are valued/revalued in accordance with a collateral valuation policy approved by banks board. Risk weights on home loans based on loan to value ratio (LTV) as per the Basel 2 final guide lines issued by RBI are as under. 63

CHAPTER - 6 6. SYSTEMS AND PROCEDURES 6.1.

STAFF INVLOVED AND THEIR ROLES

Stage Promotion Guidance to prospective Application submission Inspections

PreSanction Process

Credit appraisal Legal Sanctions Valuation

Operations/Considerations   

Advertisements in Print Media Demos at Home Fairs Demos at Home Fairs

     

At Home Fairs To the Field Officers at Branch Document verification Bank's Field Investigation Documents sent to RACPC. Customer‟s worthiness is evaluated.

 

The title deed investigation Search report may be required from Registry office



Estimation of market value of the property or construction Loan sanction

 Sanction

Post-Sanction Process

Disbursement

         

Post-Disbursement Process

STAFF MEMBER(S)

 

  

MAs Builders Field Officers

Table 21: Systems and procedures in lending process

Field Officer 2 Branch Manager/RACPC An advocate from Bank‟s External Panel An Engineer from the Bank‟s Panel Branch Manager/RACPC

2-3 As per the visit of legal advisor 2-3

Offer Letter to the customer Eligibility Certificate to the customer. Property/Construction inspections Signing of Agreements Submitting post-dated cheques . Progress of the work is considered. Complete execution of documents. Creation of valid mortgage. Cheques are given directly to the suppliers/builders Property inspection is carried out and recorded in the Inspection Register at each stage of disbursement. Registration of Property documents. After disbursal, once every 3 years for standard assets.

How many days it takes

4-5

Field Officer

In different proportions in different phases as per the progress of the work. (3-15)

6.2. (a)

PROMOTION AND DISTRIBUTION OF THE PRODUCTS PROMOTION:  State Bank of India, has come up with a non-conventional method to promote

its home loan business.  SBI promotes home loan segment at its „Home Fair Melas’ at each circle level.  SBI also use to enter into an agreement with the known builders to promote its home loan segment.  The bank is looking forward to develop special processing channels so as to provide quick services to home loan customers.  There would be no processing fees on loans, adding that the home loans approved at the fair would bear 0.25 per cent less interest than the nominal rate from the start of fourth year of repayment.  Around 24 property dealers and builders were present at the fair.  Several kinds of staff are involved in these Fairs, who include: ♀ Marketing Associates ♀ Field Officers ♀ Associated Builders and ♀ The staff from respective Retail Asset Central Processing Cells (RACPC).  The staff do undertake several initiatives with the prospective customers at these Fairs itself like:  Enquiries  Guidance  Instructions  Requirement Specifications  Application forms distribution  Application Approvals and  Customer Services (b) DISTRIBUTION: State Bank of India supplies and sells its home loan products through its over 11,440 branches nation-wide and associated RACPCs. 65

6.3.

PROCESS UNDERTAKEN

6.3.1.

APPLICATION SUBMISSION

 The home loan application form of SBI is rather lengthy compared to the forms at other private sector lenders.

 Completely filled in Form along with the necessary documents.  Need to submit the documents from builder.  In my case, the project had APF no in SBI (basically already approved by SBI); so not much documentation was required.

 Otherwise they would make a surge report, which can consume some time. I guess they are quite strict about it.

6.3.2. 

PRE-SANCTION PROCESS

The Field Officers hold Personal Discussion with the prospect customer regarding Interest Rate, Eligibility, EMI and all the terms and conditions



The prospect customer’s options and acceptance are ascertained and recorded.



Necessary documents are collected from the customer.



Pre-Inspection Sheet is maintained along with the documents to record inspection by the Bank‟s staff (or) outsourced agency.



Bank's Field Investigation for address proof/Employment etc.



All the documents are sent to Retail Assets Central Processing Cell (RACPC) for credit appraisal based on the customer‟s financial capacities.



All the terms are conditions including Loan amount, interest rate, tenure, EMI etc are determined.



The RACPC would submit its credit appraisal report on the customer to the branch.

 Legal Opinion: 

Empanelled Lawyer(s) does submit the Title Deed verification and the search report for 30 years in respect of properties of the customer.



The legal clearances/ opinion of the flat/property which you are buying / staying /constructing have to be obtained from an advocate from Bank panel.



Submission of legal documents & legal check.



The search report reveals encumbrance on the property based on which the grant of loan can be avoided and the prospect borrower may be asked to rectify it.  Valuation check:



The Engineer‟s valuation of the property and estimate for the construction to be obtained with bank panel engineer.



In case of takeover loans, two panel engineer valuation is required and the least value between them should be more than the takeover amount.

PRECAUTIONS TO BE TAKEN :  Applications form to be complete in all respects.  Market information about the potential borrower should be gathered.  Pre-sanction survey should be conducted wherever required.  The authenticity of salary slip, form 16 return, and proof of identification, address and income etc. should be cross checked.  Income from all sources is to be considered, wherever applicable, when the sanctioning authority is satisfied about the quantum and uninterrupted flow thereof during the tenure of the loan. 6.3.3.

SANCTION STAGE 67



The branch manager would consider the credit appraisal report of RACPC and will take a decision whether to sanction or not the loan to the customer.



The decision is informed to the prospect customer the decision so taken via Field Officer.



If the decision is “sanctioned”, the Field Officer would issue Offer letter to the prospect. 6.3.4.

POST-SANCTION PROCESS

 Registration of Property documents  Signing of Agreements and submitting post-dated cheques  SBI insists on all the margin money contributions to have been made to the seller and the money receipts to be handed over to them prior to the loan disbursement.  The customer needs to submit the cash amount for various stamps, mortgage fee etc.  They would take 12 cheques of SBI a/c for security.  You can link your SBI savings a/c to have standing instruction to deduct EMI.

Normally, almost all home purchase transactions will entail payment of an advance to the seller and on the day of registration, the remaining contribution from the buyer and the loan amount from the bank are exchanged with the property documents. Not with SBI. And once the registration is done, the loan applicant needs to get the latest Encumberance Certificate (EC) from the Registrar‟s Office and submit it to SBI. Subsequent to this process, SBI will create an equitable mortgage on the property in favour of the bank as collateral. This entails a fee of Rs 7000 (I understand that this is a percentage of the registered value of the property) to the loan applicant. Only after all this is done, will the process be complete. I never saw this equitable mortgage fee being mentioned anywhere in the high decibel advertisements from SBI.

6.3.5. 

DISBURSEMENT

The disbursement is made in phases correlating to the actual progress made in the construction.



The proper end-use of funds is ensured by visits to the sites.



Certificate from the engineer may be required to be submitted by the borrower stating the status of the project.



By BC/DD crossed A/c Payee only incorporating the builder‟s/seller‟s A/c No. and banker‟s name and sent directly to builder/seller by Regd. AD/Speed Post.

6.3.6. 

POST- DISBURSEMENT PROCESS

Property inspection is carried out and recorded in the Inspection Register at each stage of disbursement by the field officers.



The installments are disbursed in different proportions in different phases as per the progress of the work.

6.3.7.

REPAYMENT

 Loan repayment options:  SBI lays down certain rules and regulations pertaining to the repayment of loans.  The loan applicants can repay the amount in the form of equated monthly installments.  The repayment is allowed up to the age of 70 years.  Repayment period: Maximum 25 years (or) Up to the age of 70 years (the age by which the loan should be fully repaid) of the borrower, whichever is early.

MAXIMUM REPAYMENT PERIOD:  For applicants upto 45 years of age: 25 years  For applicants over 45 years of age: 15 years

 Moratorium period (Repayment holiday): The moratorium period is included within the maximum repayment period.

6.3.8. 

PRE-CLOSURE

Pre-closure is allowed by the Bank at any time after the complete disbursal and before the actual tenure.



If the loan is pre-closed from own resources for which proof is submitted by the customer, penalty is not levied irrespective of period for which the a/c has run. Pre-closure Penalty:



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



In case, such proof is not produced by the borrower, penalty @2% on the amount prepaid in excess of normal EMI dues shall be levied if the loan is pre closed within 3 years from the date of commencement of repayment

6.3.9.

NON-PERFORMAING ASSET FORMATION

When a loan or an advance does become an NPA: The main business of a bank is through loans and advances section the bank accept deposits from the public and certain amount they keep it as reserve balance and the rest of it they lend it to the needed customers who require it in the form of loans and advances. The customer who deposits the money they get interest and the person who takes the loan pays interest and the difference between is the profit of the bank.

Suppose the customer who took loan could not pay back the loan amount or the installment money which consist of the interest amount and the principal amount continuously for some specific period of time they are then converted to probable NPA and then comes the role of recovery team which put their maximum effort to get back the amount back which they have given as a loan or advances and at the end if they fail to get back the money then finally the amount is converted as Non Performing Assets.  If the installment is overdue or pending for more then 90 days then a bank can convert the loan amount to probable NPA and  If it could not be recovered by the recovery management team then it is converted into NPA.  An asset becomes non-performing when it ceases to generate income for the Bank. As from 31st March 2006, a non-performing Asset (NPA) is an advance Where: (i) Interest and/or installment of principal remain „overdue‟ for a period of more than 90 days in respect of a Term Loan, (ii) The account remains „out of order‟ for a period of more than 90 days, in respect of an Overdraft/Cash Credit (OD/CC), (iii) The bill remains „overdue‟ for a period of more than 90 days in the case of bills purchased and discounted, (iv) Any amount to be received remains „overdue‟ for a period of more than 90 days in respect of other accounts. (v) A loan granted for short duration crops is treated as NPA, if the installment of principal or interest thereon remains overdue for two crop seasons and a loan granted for long duration crops is treated as NPA, if installment of principal or interest thereon remains overdue for one crop season. vi) An account would be classified as NPA only if the interest charged during any quarter is not serviced fully within 90 days from the end of the quarter.

6.3.10. RECOVERY MECHANISM The following debt collection practices will be applied to all debts (rates and sundry debtors) over $200 that is not in dispute which have been outstanding for 90 days:  First reminder letter will be forwarded, requesting payment within 14 days or to contact Council to enter into an arrangement.  Where no response is received, second reminder letter will be forwarded requesting payment within 14 days or to contact Council to enter into an arrangement.  Where no response has been received a letter of demand for payment within 7 days will be forwarded. The letter will state that failure to make payment in full or to enter into an arrangement will result in the commencement of legal action.  Where no response has been received, outstanding debt will be forwarded to Council‟s debt collection agent.

 Various Recovery Procedures State Bank of India adopts various recovery procedures to recover the debt from its defaulters. The various recovery procedures are mentioned below:  Reasons For Default : There are various reasons for default like mismanagement, diversification of fund, short fall in investment, will fall default etc. So a credit manager should take various factors into account before lending a loan.  Demand Notice: When a defaulter does not repays loan a demand notice is issued to him that he has to repay his loan with a stipulate time period. 72

ď &#x2020; Legal Notice: When a defaulter does not respond to the demand notice a direct notice is issued to him that if he does not repay the loan action would be taken against him legally and the court notice is issued against him. ď &#x2020; Transfer To NPA Account: When a defaulter does not respond to respond to any legal notice or he becomes bankrupt the Whole account is transferred to NPA account.

6.3.11. CUSTOMER CARE SBI home loan customer care services can be accessed from everywhere and at any time using the toll-free helpline numbers or the Internet. The bank has extensively covered all major cities of the country while at the same time not overlooking the customer care requirements of people residing in rural and semi-urban areas. You can get instant solutions to all your home loans related queries the moment you get in touch with the staff working in a local SBI home loan customer care center. State Bank of India is undoubtedly the largest financial institution among all the public and private sector banks operational in India. As a result, it receives an extremely large number of requests seeking home loans and other types of financial assistance. With an extensive customer base spanning all across the country and also at some locations abroad, SBI has emerged as the largest provider of home loans in India. Thus it is not uncommon to see an SBI branch at a remotely located rural or semi-urban area, no matter where it lies on the geographical map of the country.

The customers can talk to SBI executives in a friendly environment and obtain information regarding the types of home loans, current interest rates, repayment options, maximum loan terms, EMI calculation and so on. Moreover, you can use SBI home loan 73

customer care service for registering your complaints and grievances, which ensure a swift remedial action by the concerned authority of the bank. Furthermore, it is also possible to meet an SBI senior official directly through a special service known as Public Grievance Cell Facility and get solutions instantly. This facility is available at all SBI branches across the nation and to avail the same you need not take prior appointment or permission.

You can access SBI home loan customer care service through toll-free numbers and also through Internet. Though the customer care toll free numbers are different for each city, the services provided there remain the same, comprehensive, instant and bearing the quality standard of State Bank of India. SBI Home Loans Customer Care Number (Toll Free): Ahmedabad: 1800 233 7933 Bangalore: 1800 425 8002 Bhopal: 1800-233-7551 Chennai: 1800 425 4424 Delhi: 1800 11 4545 Guwahati: 1800-345-3631 Hyderabad: 1800 425 3888 Kolkata: 1800 345 3455 Lucknow: 1800 180 5201 Mumbai: 1600 22 8866 Patna: 1800 345 6100

SBI Customer Care Mail ID: Ahmedabad: helpline.lhoahm@sbi.co.in Bangalore: sbihelpline.lhoblr@vsnl.net Bhopal: mysbi@sbi.co.in Chennai: helpline.lhoche@sbi.co.in Delhi: helpline.lhodel@sbi.co.in Guwahati: luithelp@sify.com Hyderabad: helpline.lhohyd@sbi.co.in Kolkata: sbihelpline.lhokol@sbi.co.in Lucknow: sbihelp@sancharnet.in Mumbai: helpline.lhomum@sbi.co.in

CHAPTER -7 7. PERFORMANCE EVALUATION 7.1.

COMPETITORS S.No.

Competitor

1 2 3

ICICI HDFC Andhra Bank

Severity of Competition (Low/moderate/High)? low moderate low

Table 22: competitors

Interpretation:  Majority of the competitors for the bank are from private sector in region.  The closest competitor for the bank is HDFC .Virtually; there was an “ad war” with teasing rates between the two banks.  Others include the local player Andhra bank and the private giant ICICI.

7.2.

STRENGTHS AND WEAKNESSES S.NO. 1 2 3 4 5 6 7

Strengths Able Work Force Network Innovative Schemes Loan Pricing Lack Of Prepayment Penalty, Transparency The Interest Rates

Weaknesses Long Turnaround Time Multiple Visits Documentation Needs Competition Varied Customer Demands Shortage Of Staff

Table 23: strengths and weaknesses

Interpretation:  The biggest strength of the bank has been its large distribution network and able workforce.  The weakest elements of the institution are the long processing times and the shortage of staff.

7.3.

DEMAND TREND: Financial Year Number of Enquiries 2006-07 65 2007-08 40 2008-09 60 2009-10 48 Table 24: demand trend

Demand

Enquiries for Home loans 70 60 50 40 30 20 10 0

60 48 40

2006-07

2007-08

2008-09

2009-10

Figure 10: demand trends

Interpretation:  There has been instability in the demand for home loans in the region.  Back in 2006-07, there were enquiries for the home loan from 65 individuals at the branch.  Later on, the figure came down slightly to 40 and then rose to 60 in the next year.  However, there has been an increasing demand in the current year.

7.4.

CUSTOMER CAPACITY

NMI Range Upto Rs.2 Lacs Between Rs.2 Lacs and Rs. 5 Lacs Above Rs.5 Lacs

No. of Borrowers 48 0 0

Total Amount (Rs.) 5.25 crore

Table 25: customer capacity profile

Interpretation:  The repayment capacity of all of the existing customers was just below Rs.2 lacs p.a.  There were no customers with repayment capacity more than Rs.2 lacs p.a.

7.5. SANCTIONS-DISBURSEMENTS Customers (2008-09)

Number of Proposals 60 50 48 48 48

Enquiries Applied(Applications) Approved Sanctioned Disbursed Table 26: sanctions and disbursals

Number of Applications

80 65

60 53 45

50 40

20 0

2006-07

2007-08

2008-09

Enquiries

Approved

Sanctioned and Disbursed

Financial Year

Figure 11: number of sanctions and disbursals

Interpretation:  There has been an increase in the Approvals to Enquiries Ratio from the year 2006 07(81.5%) to the year 2008-09 (95%) and a slight decrease in the next year to 83.3%.  However, there has been huge improvement in Sanction-Disbursal to Approvals ratio to 96% in 2008-09 from average Ratio of 83.3% in the preceding years.  One can understand the trend in terms of transforming the stringent system to hasslefree system.

7.6.

CUSROMER PORTFOLIO Existing customers Individuals from Weaker sections Salaried individuals Self-Employed individuals Realtors Staff of the Branch

Number of accounts 119 44 4 0 0

Amount (Rs.) 23.8 lacs 4.7crores 5 lacs -

Table 27: customer portfolio

% of Borrowers for the Year 2008-09

Salaried Individuals Business men 0% Realtors 8% St aff

Figure 12: customer portfolio

92%

Interpretation:  Majority of the customers are salaried individuals in the region.  The other section of customers is local self- employed.  There is no housing finance to the normal individuals and the weaker sections. 7.7.

PURPOSE PORTFOLIO Purpose To Pay for First homes To Purchase second homes To Improve/renovate existing homes

Number of Accounts 40 8

Amount(Rs.) 5 crore 25 lacs

Table 28: lending purposes

Purpose as a % of borrowers for the Year 2008-09

17% First Home Renovation

83%

Figure 13: purpose portfolio

Interpretation:  Most of the existing customers have availed the loans for construction/purchasing their first homes.  The minority of the customers have sought the loans for repairs/renovation/improvement of their existing houses/properties.  I was told that the branch is not interested in approving the loans for purchasing/constructing second houses. 79

7.8.

QUANTUM OF LOAN

Loan Amount sanctioned Upto Rs.5 Lac Above Rs.5 Lac and upto Rs.10 Lac Above Rs.10 Lac and upto Rs.20 Lac Above Rs.20 Lac and upto Rs.50 Lac

No. of Borrowers 25 19 04 -

Table 29: amounts of loans sanctioned

Loan amount break up as a % of Total Borrowers for the Year 2008-09

8% <5 lacs 5-10 lacs 10-20 lacs

40%

52%

Figure 14: Loan amount portfolio

Interpretation:  More than half of the existing customers are sanctioned loan amount not exceeding Rs. 5 lacs.  The second majority of the customers are sanctioned loan amount above Rs.5 lacs to Rs. 10 lacs.  The low repayment capacity of the customers in the region could be the main reason for the sanction of smaller quantities of loan.  This implies that there was a demand for the lower weight products like SBI HIFIVE LOANS in the region.

7.9.

SIZE OF HOME LOAN BOOK Financial Year Amount(Rs. crores) lent 2006-07 2.50 2007-08 3.62 2008-09 5.25 Table 30: loan book size

Home Loan Book Size Amount(Crores)

6 5 4 Book Size of Home loan

3 2 1 0 2006-07

2007-08

2008-09

Financial Year

Figure 15: Home loan book sizes

Interpretation:  There has been steady increase in the home loan book size of the branch.  In the year 2008-09, the size had grown to 5.25 cr from 2.50 cr in the year 2006-07, which implies the size had doubled in two years.

7.10.

CREDIT GROWTH TREND Financial Year % Growth rate 2007-08 44.8 2008-09 45.02 Table 31: credit growth trend

YoY Credit Growth Rate 45.1

45.02

45 44.9 44.8

44.8 44.7 44.6 Growth Rate

2007-08

2008-09

44.8

45.02 Financial Year

Figure 16: credit growth trend

Interpretation:  There has been a slight growth trend seen from the year 2007-08 to 2008-09.  The growth rate of 44.8 of the year 2007-08 was almost sustained in the year 200809.  The trend can be attributed to the reflection of decrease in demand and the impact of global recessional sentiments in the banking sector.

7.11.

SHARE OF HOME LOANS in retail portfolio Retail Credit segment Home loans Other advances Total retail advances

Amount in Rs. crores 5.25 4.725 52.5

Table 32: share of home loan segment in the retail portfolio

Share of Home Loans in Retail PortFolio for 2008-09 home loans 10%

others 90% Figure 17: share of home loan segment in the retail portfolio

Interpretation: ď &#x2020; The home loan segment had got a very small i.e., 10% share in the total retail segment of advances by the branch in the year 2008-09. ď &#x2020; The other retail advances like car loans, educational loans, personal loans etc got the 90% share of total retail advances of Rs.52.5 crores in the year.

7.12.

TAKE OVERS

Name of the Bank Dewan Housing Finance Ltd. -

Number of Accounts 06 -

Amount (Rs.) 50 lacs. -

Table 33: take overs

Interpretation:  There was less demand for the take over of advances from other banks in the region from the customers of other banks in the home loan segment.  It was found from the collected complaints from the customers that the Bank itself follows stringent mechanisms to entertain the take over requests of the customers of other banks in the rest of the regions and that, may be the reason for the low level accounts of such requests to avert risks.  The branch could entertain the transfer of only six such accounts from Dewan Housing Finance Ltd of total amount Rs. 50 lacs.

7.13.

OUTSTANDINGS

Number of Accounts Outstanding Total Amount Outstanding(Rs.) Total Outstanding/Total Advances (%)

94 5.25 crore 10%

Table 34: outstanding amounts

Outstanding as % of Total Home loans

150% 100% 50% 0%

2006-09

2009-10

Outstanding

10%

100%

Recovered

90%

0% Financial Year

Interpretation: ď &#x2020; 90% of the short-term loans lent during the period 2006-09 have been recovered leaving rest of 10% yet to be recovered or repaid by the customers in installments i.e., 94 accounts. ď &#x2020; Of Course, all the advances lent in the current year have been pending i.e., outstanding amount of Rs.5.25 cr.

7.14.

QUALITY OF ASSETS

Total Assets Non Performing Assets in Home loan Segment 52.57 crores 5.257 lacs

Total Advances

NPAs/Total Assets NPAs/Total Advances

52.57crore

Table 35: Quality of Assets

NPAs as a % of Total Home loans for Year 2008-09

NPAs 1%

Standard Assets 99%

Figure 18: Quality of Assets

Interpretation:  Advances amounting to Rs.52.25 lacs went default out of the total advances in the year 2008-09.  That implies the ratio of NPAs to total Advances is 1%, Of course well within the limits.

7.15.

INCOME GENERATED

Net Interest Income generated on Home Loans 3.31 lacs

Total Net Interest Income

% of Total Net Income

8.34 lacs

39.7

Table 36: income generated

Income Generated for the Year 2008-09

from Home loans 45%

from other advances 55%

Figure 19: income generated

Interpretation: ď &#x2020; The branch could generate 45% of its interest income for the year 2008-09 from home loan segment. ď &#x2020; The interest income from the segment is Rs .3.31 lacs.

7.16.

CUSTOMER SERVICE

7.16.1. NATURE OF COMPLAINTS collected from Online Consumer Forums: Nature of Complaints Tedious Procedures Delays in Processing Transparency Negligence by staff Lack of/improper guidance Insurance cover Teasing interest rates Hidden charges On Take-overs

Number of Complaints 11 14 10 9 5 2 8 3 5

Table 37: customer complaints

Nature of Complaints(% of total) for the year 2008-09

tedious procedures delays transperancy negligent staff improper guidance insurance cover teasing rates take overs

8% 13%

17%

3% 8% 14%

21% 16%

Figure 19: customer complaints

Interpretation:  Majority of the customers are very much concern about the unreasonable delays in processing.  Operational systems used by SBI are so complex.  The transparency level of the bank is maintained low.  Most of the existing customers are demanding for uniform rates.

7.17.

AWARDS AND REWARDS

 “Best Home Loan Provider 2008” by Outlook Money NDTV-Profit.  “The Most Preferred Home Loan Provider” by CNBC AWAAZ Consumer Awards for 3 years consecutively.

CHAPTER -8 8. RECOMMENDATIONS On the basis of the collected data and the analysis along with detailed discussion made in conclusion of this report, some suggestions can be made to the bank which will be helpful to them in improving their services operational and financial performance. These suggestions have been discussed as follows:  Using Information Technology and Electronic Data Interchange at various stages of lending process would definitely give an edge to the bank in fighting competition and arrive at a more realistic lending decision. E.g.: 

Online availability and Submission of Applications.



Use of Central Mortgage Registry (proposed in the Budget-2010 to be set up) for Title/Deed verification, which will ensure that no two borrowers in the country will be able to raise institutional loans against the same asset. This would help the bank in reducing NPAs.



Use of credit appraisal reports from CIBIL or Credit Information Companies (CIC) to avoid frauds.



Online Processing for various inspections and verifications etc.



Online Disbursals and Repayments.

 The Bank should make sufficient provisioning for bad loans and in this regard, the bank should strictly, abide by the guidelines of RBI.  To increase their customers, the bank should provide specialized services in this sector. These services can be such as proper guidance to the customer regarding the processing of loans, especially for the customers who are illiterate.  To satisfy their customers and for good dealings in future, the bank should make prompt disbursement of loan amount to the customers so that they can buy or construct their dream home as early as possible. 90

 The Bank should use easy procedure, or say, less lengthy procedure for the sanctioning of loan to the customer. There should be less number of legal formalities, in case this exists, then, these should be completed in less time. This will be helpful in attracting more customers.  Although the interest rates on specific norms, yet customers seek uniform interest rate giving equal justice to both the existing as well as new customers.  The bank should improve their overall services to increase the number of customers for home loans. They should recruit professionals to provide such services and to satisfy the customers.  Although SBI Bank is a market leader in 'home loans' sector but they should innovate their services, viewing the- increasing competitions from other banks such as HDFC.  The Bank should drop its tease rates as early as possible as their customers face problems in future paying high installment due to their financial problem.  As the banks provide loan according to the repaying capacity of the customer and his/her eligibility. Due to which, some customers are not able to get amount of loan needed by them. So, the banks should soften their norms regarding the loan amount.  The Banks should try to provide proper knowledge regarding their home loan schemes, even to people who don't know about such schemes and their benefits especially in rural areas. So they should provide knowledge to the ignorant customers, especially in rural areas and backward urban area.  So, above are the main suggestions provided to the banks. By considering these suggestions, the banks can strengthen their customer base in home loans sector.  They should improve their services and reduce legal proceedings and should be friendly to their customers.  The bank needs to take serious and sincere steps in reducing the processing times by taking certain measures like using Information Technology to process the documents. 91

9. UPDATE ON HOME LOANS News Paper Clippings from Economic Times of India and Business Standard: 25-3-10:

20-3-10:

16-03-10:

10-3-10:

5-3-10:

3-3-2010:

24-02-10:

23-02-10:

10-02-10:

09-02-10:

06-02-10:

12-01-10

CONCLUSION  The ratio of mortgage to GDP in India has remained low at 7%, as against 12% for china, 41% for Hong-Kong and more than 80%foor developed countries, thus providing for further growth in the housing sector during the coming years. Hence, the banks shall have more opportunities to tap the market.

 Banks have been constantly increasing their market share, there by intensifying competition from other banks as well as Housing Finance Companies.

 While the discounted / special scheme rates are offered to new home loans, existing customers continue to ply higher rate of interest. The Indian Bank’s Association has planned to introduce a uniform rate for all borrowers. As being a Largest Lender in the segment SBI needs to carry the same spirit and the move is in the right direction is certainly expected from all the banks. We need to watch how banks / HFCs adjust their lending portfolios to this effect in future.

 Last, but not the least, you may be the ‘King’ in the Market, but, the Indian customer is your ‘Boss’ by whom, finally, your decision has to be moulded. 97

BIBLIOGRAPHY 1. The Training and Guidance Material supplied to the staff of the Branch. 2. The material supplied by the Faculty Guide. 3. Annual Reports of RBI(made available on its website (www.rbi.org.in) 4. Daily News Papers: Economic Times of India and Business Standard. 5. Indian Journal of Finance 6. Magazines like Business India etc. 7. WEB RESOURCES: a. www.statebankofindia.com b. www.onlinesbi.com c. www.apnaloan.com d. www.consumercomplaints.in e. www.Consumercourt.in f. www.lendingtree.com g. www.guide2homeloan.com h. www.indiahousing.com i. www.deal4loans.com j. Many other online Books and Documents available on ď ł Scribd.com ď ł Docstoc.com

APPENDIX QUESTIONNAIRE TO THE BANK OFFICIAL Dear Sir/ Madam, As part of my MBA curriculum, I, P. Prajwala Devi, am undertaking a study Project on “Home Loans” for which I need your views regarding banking products & services in shape of a questionnaire designed by me. The data being collected are solely for academic purpose. I request you to kindly extend your co-operation. 1) How many Home Loan Products that your Bank is offering to the prospect customers? Interest Quantum of S.No. Product/Scheme Customer Segment rate Amount 1 2 3 4 5 6 : 2) What are the unique features of your offerings? 3) How are you rewarding your customers who service their loans regularly and stand upto your expectations? 4) What are the Value Added Services, if any, that you are offering to the customers? 5) What are the concessions, if any, that you are offering to the customers? 6) What are your strengths and weaknesses in the segment? S.NO. Strengths Weaknesses

7) Who are your main competitors and what‟s the level of competition you face from them? S.No. Competitor Severity of Competition (Low/Medium/High)? 1 2 3 4

Tenure

8) How are you promoting your products? Medium used Proportion of use(low/medium/high) Print Media TV Advertisement Personal Selling Campaigns Road-Side Hoardings

Any additional Info

9) How are you distributing your Products? S.NO. Channel(Sanctioned by) Terms/Conditions

Proportion of Sales

1 2 3 4

10) What is the Process Undertaken (within your branch) S.NO. Stage What is Who done(operations)/ does it considerations 1 2 3 4 5 6 7 8 9 10 11

How many days it takes

Promotion Guidance to prospective Application submission Pre-Sanction Process Sanction Post-Sanction Process Valuation Inspections Legal Sanctions Disbursement Post-Disbursement Inspections

11) How do you see the performance of Marketing Associates and their role in bringing sales? 12) How many sales you have made from Marketing Associates? Number of Sales from MAs Total Sales % of Total Sales

100

13) What are the various standard formats (Proforma Sheets) that you use at various stages? Title of the Sheet Primary Contents Purpose Who Maintains it

14) What are the terms and Norms: Terms/Norms How is it determined/done Who does it

Additional Info

Quantum of Loan NMI/NAI(Net Income) EMI Pre-EMI EMI Reset Margin Security Processing fee Rate of Interest Tenure Insurance Document required Other charges if any NPA formation SBAR(State Bank Lending Rate) Valuation policy(Method) Guarantors

15) What did your customers prefer (Fixed/Floating Interest Rate)? Type of Interest Number of Borrowers Rate Fixed Floating 16) What is the Authority Structure for distribution of Loans: Terms/Conditions Sanctioned by Authoritative Administrative Clearance by organ

17) How are the builders considered and approved? 18) What is the criterion for Repayment? 19) What are the Pre-Closure norms? 101

20) What is the criterion for Re-Phasement? 21) How are you providing for Bad Loans? 22) What is the Recovery Mechanism that you practice? 23) What is the nature of recovery agents? 24) How do you undertake Take Overs?

25) How many prospects (demand)-Applied-Sanctioned-Under Process-Disbursed? Customers Number of Proposals Have shown interest in buying your products Applied(Applications) Approved Sanctioned Disbursed 26) How many Home loans you have disbursed to: Target Segment Number of accounts Individuals from Weaker sections Mortgage loans Salaried individuals Self-Employed individuals Realtors Your Staff

Amount (Rs.)

27) What was the purpose of home loans towards which disbursements have been made? Purpose Number of Amount(Rs.) Accounts To Pay for First homes To Purchase second homes To Improve/renovate existing homes

28) NMI Profile of Customers: NMI Range No. of Borrowers Upto Rs.2 Lacs Between Rs.2 Lacs and Rs. 5 Lacs Above Rs.5 Lacs

102

Total Amount (Rs.)

29) Loan Amount Disbursals: Loan Amount Upto Rs.5 Lac Above Rs.5 Lac and upto Rs.10 Lac Above Rs.10 Lac and upto Rs.20 Lac Above Rs.20 Lac and upto Rs.50 Lac Above Rs.50 Lac and upto Rs.1 Cr Above Rs.1 Cr and upto Rs.5 Cr Above Rs.5 Cr

No. of Borrowers

30) Size Of Home Loan Book for the last 3 financial years: Financial Year Amount(Rs. crores) lent 2006-07 2007-08 2008-09 31) Year-on-Year Credit Growth : Financial Year % growth rate 2006-07 2007-08 2008-09 32) What is the Share Of Home Loans in the retail portfolio? 33) How many Home Loans have been Taken Over from other Banks: Bank

Number of Accounts

Amount (Rs.)

34) How many Outstanding Loan accounts are there? Number of Accounts Outstanding Total Amount Outstanding(Rs.) Total Outstanding/Total Advances (%)

35) Quality Of Assets: Total Assets Non Performing Assets in Home loan Segment

Total Advances

NPAs/Total Assets

36) How are you mitigating risk factors in lending to the segment? 103

NPAs/Total Advances

37) What is Net Income Generated on the segment? Net Interest Income Total Net Interest Income generated on Home Loans

% of Total Net Income

38) Have you met the Targets set? 39) What is the Nature of complaints you have received: Nature of Complaints received at online forums Tedious Procedures Delays in Processing Transparency Discrimination Lack of guidance Rigorous recovery practices Non-Uniform interest rates Hidden charges On Take Overs Others

Number of Complaints

40) How many complaints have been reached at Banking Ombudsmanâ&#x20AC;&#x;s Office? Total Complaints Share of Home Loans % of total

104