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Summer project report, 2010

SUMMER TRAINING
REPORT

ON

SUBMITTED TO

Mr. SUMIT SURI


MANAGER
HDFC LTD.
YAMUNA NAGAR

SUBMITTED BY

BPSM UNIVERSITY 1 SHWETA NAGPAL


Summer project report, 2010

SHWETA NAGPAL
MBA
BPSM UNIVERSITY (SONIPAT)

ACKNOWLEDGEMENT

Perfect is the famous saying and when a person get practical experience under the guidance of expert of the
respective field, the knowledge gained is priceless.
With the sense of great pleasure and satisfaction, I present this project report entitled “COMPARISON OF
HOME LOAN SCHEME OF DIFFERENT BANKS” completing a task successfully is never a man efforts
similarly completion of this report is the result of invaluable support and contribution of number of the peoples
in direct and indirect manner. In the light of foregoing, first of all my heartfelt great fullness and thanks goes to
Mr. SUMIT SURI as a MANAGER of HDFC LIMITED for giving opportunity to work for his highly esteemed
organization and for being a constant source of inspiration and guidance throughout the project. Without his able
support the project would not have seen the light of the day.
At this juncture, I would also like to thank all the other team members of the HDFC LIMITED. Without their
indispensable cooperation, the project won’t have been completed within the stipulated time period. Finally I
would like to thank the staff of other home loan provider banks, without whose cooperation in providing the data
for the project would have been impossible.

BPSM UNIVERSITY 2 SHWETA NAGPAL


Summer project report, 2010

PREFACE

Modern organizations are highly complex ad dynamics systems. They operate under very turbulent social
economic and political environment. They are required to reconcile several incompatible goals. Conflicting roles
and divergent interest they are also fraught with the use risk and uncertainties, hence tactful management of such
organization to plan to execute guide, coordination and control the performance of people to achieve
predetermined goals. Management has to keep the organization vibrant moving and in equilibrium. It has to
achieve goal which themselves are changing it is therefore a problem highly complex and ticklish.
This information will be asset to marketing manager in making effective decisions. The researches are used to
acquire and analyze information and to make suggestions to management as to how marketing problems should
be solved.
The marketing research is the process which links to manufacturer, dealers and individuals through information
in important part of curriculum of M.B.A. programme is project taken by the students to institute under which he
or she is studying, after completion of third semester of the programme.
The objective of this project is to enable the students to understand the application of the academics in the real
business life. I am fully confident that this project report will be extremely useful to the management.

BPSM UNIVERSITY 3 SHWETA NAGPAL


Summer project report, 2010

INTRODUCTION

The roof over one’s head and ground beneath one’s feet count as the bare necessities of life. There’s nothing
quite like owing a home, however humble to give that warm and glowing feeling. But when one buys a home,
one has much more than a feel good purchase in mind! It’s also a crucial investment decision, perhaps the
biggest spending decision of one’s life. There are ample opportunities today for young salaried investors to plan
their moves early and buy a house at right time- and at right price. In the process, not only do they fulfill that
cherished dream of owing a house, but also put themselves on the path to acquiring property that would meet the
needs and aspirations of their growing family, even as it leads to wealth creation. Every individual aspires to own
a home. But many either spend a lifetime saving to purchase a house or exhaust money on monthly house rents.
Take a house loan and let the monthly rent (easily converted into affordable EMI’s) build dream home.

BPSM UNIVERSITY 4 SHWETA NAGPAL


Summer project report, 2010

OBJECTIVE OF THE STUDY:

The main objective of the study is to find out the tariff changes charges by other banks in comparison to HDFC
bank. The aim of the study is to help HDFC to know where it lacks in loans and how for the performance of
other banks is better so that HDFC figure out the common problems being faced by the customers while dealing
in the loan department so that further HDFC can improve its services and schemes offered by them to their
customers.

PROFITABLE PROPOSITION

“The overall demand in residential sector has grown by about 7-8% in the past few months as compared to the
same period last year. The growth is on account of two main factors:

 One, income tax exemption.


 Two, with no similar rebates available for individuals in the high income group, they are creating a
second asset.
Add to this the stable property prices over the last year and plunging interest rates, planning for dream,] home
could not have been better timed. Rock-bottom interest rates, standardization of periodicity of interest
calculation across lenders (which make it easier to compare loans), lower interest charges, waiver of loan
application processing fee and a customer friendly attitude is reason enough to celebrate the ascension of the
home loan consumer as the king.
In response, private players like ICICI Bank, IDBI Bank, Standard Chartered Bank and few others too lowered
their rates.
Market leader HDFC also brought down its interest rate to 8.75% very recently, to participate in the interest rate
war. If one is still not satisfied with the lowered loan rates there’s more. Some industry watchers believe that the
floating home loan rate will slip to 8% for long term loans another two or three years.
Most banks have changed the way the interest is calculated from annual rest to monthly rests. Under the annual
rest method, the EMI’s (equal monthly installment) one pay through a year, are factored in as part-repayment of
the principal component only at the end of each year. In other words one has to pay interest even on the
installments one has paid until they are reduced from the principal at the end of each year. Under monthly rests,
the principal is lowered by the appropriate amount each month. The thumb rule being that the more frequently
interest is calculated, the better for the creditor.

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Summer project report, 2010

HDFC added monthly rests on its fixed interest loans apart from annul rests. As a result the fall in the EMI’s on
fixed interest loans (where the interest rate is constant for the entire tenure of the loan, irrespective of the
changes in the lending rates) is more pronounced than on floating rate loans (where the loan interest rate varies
with the changes in the interest rate). For example, the EMI on a fifteen year fixed interest loan for Rs. 15 lakh
has come down by Rs. 15 lakh has come down by Rs. 840, the corresponding fall in the EMI on a floating rate
loan is only 4165. apart from lowering the cost of one’s loan, the switchover to monthly rests has another
advantage : it makes it easier to compare loans.

HOME LOAN

Home loans are loans you have access to, depending on whether you want to buy or build a house and can also
be used to repair or extend an existing house.

Who can avail of these loans?

According to lending institutions, any Indian resident who is over 21 years of age at the beginning of the
loan and below 65at its maturity can avail of the loan. Salaried Employees as well as Self- Employed citizens
can apply. NRI Salaried and RBI Self Employed, under RBI guidelines, can approach only nationalized banks
and other HDFC for loans.

Why should one option for a loan to buy a house?

Taking a loan seems like a good option when the money at hand is insufficient to buy the house of your dreams.
Consider couples in their twenties and thirties. They enjoy a good income currently, buy their accumulated
capital isn’t enough to purchase a house. Whereas a home loan can give them access to capital their current
earnings.
Also, if you take a 10 years old loan when you are thirty, you could repay it by the time you’re forty. So you
don’t have to be burdened with the interest and are free to plan your retirement savings.

The Quantum of loan that one can avail of :

Loan sanctioned depend on your repayment capacity – which is based on your current income and your future
repayment capacity. You would include your spouse’s name to enhance the loan amount.The maximum loan can
be sanctioned varies with each bank/institutions and ranges from Rs.10 lakhs to Rs. 1 crore.

Benefits of taking a home loan:

A home loan is very different from a personal loan like a car loan for instance. You can utilize a home loan for
financing an asset that will hold its value and even appreciate over the period of the loan. Though its price could
fluctuate in the short terms, Total Estate will show capital appreciation over the years. The value of your house

BPSM UNIVERSITY 6 SHWETA NAGPAL


Summer project report, 2010

generally while the loan remains constant. If you had opted to wait, save up and buy a house, it would, in the
long run cost you much more; home loans also come with many tax benefits.

Tax benefits of taking a home loan:

The income tax authorities look with favor upon those servicing a housing loan from specified financial
institutions. And, it is up to you to be wise enough to take advantage of this.

Section 24 of the Income Tax:

Interest on loan till Rs.1.5 lakhs per annum is exempted form income tax (under section 23/24(1) of the Income
tax act).

Section 88 of Income Tax Act:

You get a 20% rebate on repayment of principle during a financial year. Once again, over the years, the principle
repayment eligible for rebate has been enhanced from Rs.10,000 to the current limit of Rs.20,000 Stamp duty,
registration fee or transfer of such house property to the assesses is also considered under this amount.

Financial Institutions, which give, home loans:

Leading Banks Housing finance companies

FINANCIAL IMPLICATIONS OF AVAILING A LOAN (SMALL OR BIG)

There are several expenses involved apart from repayment of the actual loan amount:

1. Processing fees- A processing fee (PF) is charges at the time of submission of the application form and
covers expenses incurred for processing the application form. This fee has to be paid upfront by the customer –
in some cases, it is non-refundable.
2. Administration fees- to meet operating expenses.
3. Pre-EMI- A simple interest calculated on the disbursement amount in case of a plot under construction.
4. EMI- The EMI is an abbreviated form of the equated money installment and is simply referred to as
monthly installment in common parlance. And, being a self-explanatory term that is exactly what it is. The
amount you will have to pay you financier every month when repaying your loan. Being a monthly payment, at
the end of the year, you would have paid 12 EMIs.

BPSM UNIVERSITY 7 SHWETA NAGPAL


Summer project report, 2010

TYPES OF LOANS AVAILABLE

Broadly two types- fixed rate and variable rate loans; while the former deals with a fixed rate of interest over the
entire duration of the loan, the latter has the rate of interest changing according to the fluctuations in the market.

LOAN THAT ONE CAN AVAIL

Up to 85-90% of the total cost based primarily upon the individual’s payback capacity.

GENERAL CONDITIONS THAT GOVERN A HOME LOAN:

These are likely to vary with respect to the different types of housing loans:

 The maximum period of the loan is normally fixed by HFIs. However, HFIs do provide for different
tenors with different terms and conditions.
 The Installment that you pay is normally restricted to amount 45% of your monthly gross income.
 You will be eligible for a loan amount, which is the lowest as per your eligibility. This is calculated on the
basis of your gross income and payback capabilities.
 Some HFIs insist on guarantees from other individuals for due repayment of your loan. In such cases you
have to arrange for the personal guarantee before the disbursement of your loan tasks place.
 Most HFIs have a panel of lawyers who go through your property documents to ensure that the
documents are clear and are not misrepresented. This is an added benefit that you get when you avail of a
loan from an HFI.
 You repay the loan either through Deduction against Salary, Post dated cheques, and standing instructions
or by Cash/DD.

WHAT ALL ONE CAN TAKE THE LOAN FOR?

There are different types of home loan tailored to meet ones needs here’s all some of them.

 Home purchase loan: This is the basic home loan for the purchase of new home.
 Home improvement loans: These loans are given for implementation repair works & renovation in a
home that has already been purchased by the client.
 Home construction loan: This is available for the construction of new home.
 Home extension loan: This is given for expanding or extending an existing home for e.g.: addition of an
extra room etc.
 Home conversion loan: This is for those who have financed the present home with home loan & wish to
purchase& move to another home for which some extra funds are required through home on version
loan ,existing loan is transferred to the new home including the extra amount required eliminating the pre
payment of the previous loan.
 Land purchasing loan: this loan is available for the purchasing of land for both construction and
investment purpose.

BPSM UNIVERSITY 8 SHWETA NAGPAL


Summer project report, 2010

 Bridge loan: these are designed for those people who wish to sell the existing home & purchase another
one. The bridge loan help finance the new home, until a buyer is found for the home.

HDFC

INTRODUCTION

HDFC (Home Development Finance Corporation) Home Loan, India have been serving the people for around 3
decades and providing various housing loan according to their varied needs at attractive and reasonable interest
rates. Owing to their wide network of financing, HDFC Home Loans provide services at doorstep and helps you
find a home as per your requirements.

COMPANY PROFILE

HDFC Limited founded in 1997 by Ravi Maurya and Hansmukh bhai Parekh, is an Indian NBFS focusing on
home loans. HDFC operates through almost 450 locations throughout the country with its corporate head
quarters in Mumbai, India. HDFC also has an international office in Dubai, UAE with service associates in
Kuwait. HDFC is the largest housing company in India for the last 27 years.
HDFC was amongst the first to receive an in principal approval from RBI to set up a bank in the private sector,
as a part of the RBI’s liberalization of the Indian banking industry. It was incorporated on 30th august 1994 in the
name of ‘HDFC Bank Limited’, with its registration office in Mumbai. HDFC began its operations as a
scheduled commercial bank on 16th January 1995.

ABOUT THE PROMOTER

HDFC, the promoter, is India’s premier housing finance company and enjoy an impeccable track record in India
as well as in international markets.
Since its inception in 1997, HDFC has maintained a consistent growth in its operation and profitability. Its
outstanding loan portfolio covers over a million dwelling units. HDFC has developed significant expertise in

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Summer project report, 2010

retail mortgage loans to different market segment and also has a large corporate client base in relation to its
housing related credit facilities and its investment in portfolio.
With its tremendous brand equity, the strong reputation in the Indian and international financial services market,
large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the

Indian environment. HDFC (together with its fully owned subsidiary HDFC Investment Limited) owns about 31
% of the equity. They had started with a strategic alliance with the Natwest group in UK with 20% equity, which
has divested later on. The bank has also signed a memorandum of understanding for strategic business
collaboration with chase Manhattan Bank in Feb. 2, 1999.

BUSINESS PHILOSOPHY

The mission of the HDFC Bank is to be world class Indian bank. This would imply a bank that would meet
various financial needs of its customers in a convenient and cost effective manner at international standard of
service.
The bank seeks to achieve the status of a “preferred organization” among its major constituents- customers,
shareholders, regulators, employees, suppliers etc. while maintaining the highest level of integrity and corporate
governance.
The business philosophy at HDFC bank is based on four core values: operational excellence, customer focus,
and product leadership and people competitors.
The Bank faces the strong competition in all of their principal lines of business. Their primary competitors are
large public sector banks, other private sector banks, foreign banks and in some product areas, non-banking
financial institutions.

WHOLESALE BANKING

Principal competitors in wholesale banking are public and new private sector banks as well as foreign banks. The
large public sector banks have traditionally been the market leaders in the commercial lending. Foreign banks
have focused primarily on serving the needs of multinational companies and the Indian corporations with cross-
border financing requirements including trade, transactional and foreign exchange services, while the large
public sector banks have extensive branch networks and large local currency funding capabilities.

RETAIL BANKING

In retail banking, their principal competitors are the large public sector banks, which have much larger deposit
bases and branch networks,, other new private sector banks and foreign banks in case of retail loan products. The
retail deposit shares of the foreign banks are quite small in comparison to the public sector banks, and have also
declined in the last five years, which we attribute principally to the competition from new private sector banks.
However, some of the foreign banks have a significant presence among non-resident Indians and also compete
for non-branch based products such as auto loans and credit cards. They face significant competition primarily
from foreign banks. In provision of debit cards and also expect to face competition from foreign banks when we
begin offering credit cards. In mutual fund sales and other investment related products, their principal
competitors are brokers and foreign private banks.

BPSM UNIVERSITY 10 SHWETA NAGPAL


Summer project report, 2010

TREASURY

In treasury advisory services for corporate clients, the compete principally with foreign banks in foreign
exchange and derivatives trading as well as SBI and other public sector banks ion the foreign exchange and
money market business.

LOANS

HDFC brings back you a wide range of loans to cater your financial needs.
The bank offers the following loans:

1) Personal loans.
2) Consumer loans.
3) Auto loans
4) Loans against shares
5) Loans against RBI bonds
6) Loans against insurance policy
7) E- Instant loans give the facility of loans approval in the 60 second on the internet.
8) HDFC has offices spread all over the country. This extensive network helps HDFC in providing services
to large and well spread out clients. This network of interconnected offices (on data circuits) helps HDFC
to process application for purchase of property anywhere in India. HDFC has further established an office
in Dubai and service associates in Kuwait, Oman and Quarter to make to easier for Middle East based
non-resident Indians to apply for loan to HDFC-India.
9) HDFC is pioneer of housing finance in India and has been a leader in business for the last 23 years.
HDFC has vast experience and a very committed and skilled staff to handle housing loan applications and
solving customer problems.

HDFC LOAN SCHEME PURPOSE

HDFC Limited offers loans for the following purposes:

 Land purchase
 Home construction/purchase
 Home extension
 Home improvement loans
 Short-term bridge loans
 Non-resident premises loans for professionals.

LOAN AMOUNT

You can avail of maximum of up to 85% of the cost of the property, including the cost of the land.

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Summer project report, 2010

LOAN TENURE

You can repay the loan over a maximum period of 20 years under both FRHL and ARHL. Repayment will not
ordinarily extend beyond your age of retirement (if you are employed) or on your reaching 65 years of age,
whichever is earlier. However, HDFC will endeavor to determine the repayment period to suit your convenience.

RATE OF INTEREST

The rate of interest of HDFC is 8.75%.under the monthly rest option, interest is calculated on monthly rests.
Principal repayment is credited at the end of every month.
At HDFC you have the choice between the normal FRHL and the innovative ARHL. Alternatively you can also
avail the part of the loan under FRHL and balance under ARHL.
HDFC also offers you the option to switch between schemes for the nominal fee. Interest rates on ARHL will be
linked to HDFC’s Retail Prime Lending Rate (RPLR) which currently is 13.75% .The rate on your loan will be
revised every three months from the date of first disbursement, if there is a change in RPLR, i.e. the interest rate
on your loan may change. However, the EMI on the home loan disbursed will not change. (if the interest rate
increases, the interest component in an EMI will increase and the principal component will reduce, resulting in
an extension of the term of the loan, and vice versa when the interest rate decreases).customer will be provided
with an annual statement indicating the details of the interest and principal payment made during the year.

SECURITY

Security for the loan normally is first mortgage of the property to be financed and/or such other collateral
security as may be necessary. Interim security may be required, if the property is under construction. Collateral
or interim security could be assigned to HDFC of life insurance policies, the surrender value of which is at least
equal to the loan amount, guarantees from sound and solvent guarantors, pledge of shares and such other
investments that are acceptable to the HDFC.
Loans from HDFC are available even if you are availing a housing loan from your employer. HDFC has already
entered into arrangements with several employers enabling employees to avail of loans both from the employer
as well as HDFC for the same property. Please do ensure that the title of the property is clear, marketable and
free from encumbrance. To elaborate there should not be any existing mortgage, loan or litigation which is likely
to affect the title to the property adversely.

DOCUMENTS/SUPPORTING DOCUMENTS TO BE ATTATCHED:

FOR ALL THE APPLICANTS:

1) Allotment letter of the o-operative society/association of the apartment owners.


2) Copy of approved drawings of proposed construction/purchase/extension.
3) Agreement for sale/sale deed/detailed cost estimate from architect/engineer for the property to be
purchased/constructed/extended/renovated.

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Summer project report, 2010

4) If you have been in your present employment/business or profession for less than a year, mention an a
separate sheet details of the of the occupations for previous five years, giving position held, reason for
change and period of same.
5) Applicable processing fees.
6) Proof of residence: attested copy of any one of the following:

a) Ration card
b) Passport
c) Driving license
d) Voters identity card
e) Current telephone bill/electricity bill/gas bill
7) Proof of identity: attested copy of ay one of the following:
a) Passport
b) Driving license
c) Voters identity car5d identity card issued by the employer (if employed in state/central
government)
d) PAN card
8) Certificate of loan outstanding issued by the lender (for refinance cases only)
9) Any other information regarding your repayment capacity that is necessary and will assist HDFC in
appraising the loan proposal.

ADDITIONALLY

IF YOU ARE EMPLOYED:

1) Verification of the employment form with only part I filled in.


2) Latest original salary slip/salary certificate showing all deductions.
3) If your job is transferable, permanent address where correspondence relating to the application can be
mailed.
4) A letter from your employer agreeing to deduct the EMI towards the repayment of the loan from your
salary. This will expedite the processing of your loan application.
5) Your updated original bank pass book/s or original bank statement/s showing salary and saving entries
for the last six months.
6) A photo-copy of your Form-16 (issued by your employer) for the last assessment year.

IF YOU ARE SELF EMPLOYED:

1) Balance Sheets and Profit & Loss Accounts of the business/profession along with copies of individual
income tax returns for the last three years certified by the Chartered Accountant.
2) A note giving information on the nature of your business/profession, form of organization, clients,
suppliers, etc.
3) Copies of individual tax chalans for the last three years
4) Copy of advance tax chalan (if any)

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Summer project report, 2010

5) Your updated original Bank Pass Book/s or Original Bank Statement/s showing saving s entries for the
last twelve months.

TAX BENEFIT

You are eligible for certain tax benefits on principal and interest components of a loan under the Income Tax Act,
1961.

ELIGIBILITY

The repayment capacity as determined by the HDFC will help in deciding how much we can borrow (the cost of
the property or Rs.1crore whichever is lower). Repayment capacity takes into consideration factors such as
income, age, qualifications, number of dependents, spouse’s income, assets, liabilities, stability and continuity of
occupation and saving history. And, of course, HDFC’s main concern is to make sure you can comfortably repay
the amount you borrowed.

ABOUT THE PRODUCT

HDFC’s Home Loans offers you various unique benefits and are easy to arrange and repayable in easy monthly
installments. The terms of the loan can be structured according to the customer requirement.
Home loans can be applied for by either individually or jointly. Proposed owner of the property, in respect of
which the loan is being sought, will have to be co-applicants. However, the co-applicants need not be co-owners.
Loans can avail up to a maximum of 85% of the cost of the property (including the cost of the land). HDFC
lends up to a maximum of Rs. 10000000 on a home loan to an individual. You can repay the loan over a
maximum period of 20 years. They determine the loan amount after evaluating the repayment capacity of the
individual. HDFC’s main concern is to help individuals comfortably repay the borrowed amount.

SUPERIOR PROCESSING CAPACITY:

HDFC has over the years invested substantially into the computer systems and training. This has enabled HDFC
to respond to customer needs and build up capabilities to approve loan on the spot or disburse them fast.

BRANCH NETWORK:

HDFC has offices spread all over the country. This extensive network helps HDFC in providing service to large
and well spread out clients. This network of interconnected offices (on data circuits) helps HDFC to process
applications for purchase of property anywhere in India. HDFC has further established an office in Dubai and
service associates in Kuwait, Oman, Qatar, Bahrain and Saudi Arabia to make it easier for Middle east based
non-resident Indians to apply for the loan to HDFC-India.

EXPERIENCED TRAINED STAFF:

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Summer project report, 2010

HDFC is a pioneer of housing finance in India and has been a leader in the business for the last 25 years. HDFC
has vast experienced and very committed and skilled staff to handle housing loan applications and solving
customer problems.

FREE COUNSELLING:

HDFC believes that it is in the business of providing solutions to an individuals need for owing a house, and not
just in the business of providing finance. Keeping this in mind HDFC will provide free counseling to on how and
where to buy a house in India (property services) or what are the prices and trends in the real estate market or
what precautions one should take before buying a house. This service is offered at any of the HDFC’s offices.

LEGAL AND TECHNICAL GUIDANCE:

HDFC has qualified legal and technical staffs who liaise with developer to collect and scrutinize the property
documents and permissions. We have master files of most projects being developed by the reputed developers. It
has always been HDFC’s endeavor to protect the interest of the borrower, as we believe that the buying a house
is one of the most Important decisions in this life.

FLEXIBLE (CUSTOMIZED) REPAYMENT SCHEMES:

Keeping in mind the fact that each individual has unique problem requiring unique solution, HDFC has
developed various repayment options like Step Up Repayment Facility (SURF), Flexible Loan Installment Plan
(FLIP) Balloon Payment plan and Structured Repayment Plan.

STEP UP REPAYMENT FACILITY

HDFC Ltd has a hitherto “with you, right through” .This statement HDFC proves time and
Again by developing close relationship with individual customers and by constantly
Developing and marketing in the market new and innovative products that increase the
Comfort level of the customers. Along the same philosophy HDFC came up with Step Up Repayment Facility
which once again reassures customers that HDFC helps you achieve your dream.
This facility is especially helpful to those customers who want to get a loan on an amount

that is not falling within the permissible limit of their repayment capacity. It also is in line with HDFCs aim to
provide greater degree of personalization in service and the tools. Hence there can be the situation wherein the
applicant is not in the position to pay the required EMI which is calculated by the ILPS (Individual loan
processing system).HDFC in this case offers to let the applicant use one of the two plans to repay the loan
amount.

The EMI Chooser 1

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Summer project report, 2010

In this plan the applicant gets the advantage from HDFC to select the amount that
he wants to pay as his fist EMI. This means that HDFC will let the applicant decide
what amount he can comfortably pay to HDFC in the first term of his Loan Repayment Schedule. The system
will calculate the next two EMIs for the next two terms

The customer can hence decide when he wants to repay the maximum amount of the Loan to HDFC and when
he wants to repay minimum leftover or remaining amount of the loan in the form of still smaller EMIs.

The EMI Chooser 2

This plan is an extension of the aforementioned plan .In this plan HDFC helps the Applicant by letting him
choose two EMIs .This means that the Applicant can select the amount that he wants two pay for both the First
and the Second terms of his repayment schedule. This translates into more help and more convenience to the
applicant. However the benefits of these plans don’t stop here.

The Applicant can also allocate the term length for which he wants to pay what amount
This translates into a great advantage to the Applicant .He can now link

1. His current salary


2. The rate of average increment,
3. His existing and expected obligations,
4. His existing and expected expenses
5. The length of the term among others.

HDFC can hence assist the Applicant in developing a much more personalized loan plan as compared to its
competitors in the Housing Loan market.

The Applicant can also save money by using these plans .This is because the total Outflow in case of a regular
plan is more as compared to these special plans. The Applicant will hence obtain more benefit in case of
Prepayment and elsewhere.

C. All Loans from HDFC Ltd are subject to Tax exemption and be treated as Rebate. Hence HDFC lets the
customer save their hard earned money.

FLEXIBLE LOAN INSTALMENT PLAN (FLIP)

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Summer project report, 2010

Another First of its kind product from HDFC .This is also to assist the Applicant to easily secure a loan in the
following condition. FLIP is used when the applicant and co-applicant want to jointly repay the loan. There is
however a problem in the situation which would otherwise not allow the loan to be sanctioned. There are two
applicants hence two incomes .Therefore in the joint payment they can combine their income to repay the loan
.Let there be Mr. A and B who want to take a loan for 14 years .A is the father and B is the son of A .Now
consider the situation in which A and B want to take a loan and jointly repay it .But A is 52 years old and B is
only 25 .Hence A will retire after 8 years and will not be repaying the EMI but B can continue to repay the loan.
In that case although there will be a problem at other places but in HDFC this is solved by taking different
incomes in the terms. Hence the income that will be considered earlier will be the father’s income and at his
retirement or at any other selected stage of repayment we will begin to consider only the income of the son.

The advantage of FLIP in terms of the Applicant is that of joint payment, personalization, easy repayment, and
freedom from many possible problems.

In the Illustration the father is going to pay only for 105 months and after that we are to consider the sons salary
only for the next remaining 60 months.

PARI PASSU/SECOND MORTGAGE ARRANGEMENT:

HDFC has a tie-up with a large number if public sector organizations and banks which enable us to offer loans
to your employees with the flexibility of their spouse also availing a loan from his/her own employer.

SAFE DOCUMENT STORAGE FACILITIES:

HDFC has state of art storage facilities which are theft and fire proof, at various locations where loan and
property documents are stored. In this way valuable documents are stored safely over the period of the loan and
are released almost immediately after a customer repay his loan.

ELECTRONIC MAIL:

HDFC through its E-mail services can promptly respond to queries. In addition, HDFC can promptly send its
application form cum brochure and other detail on its loan products by e-mail to interested individuals. For Non-
resident Indians our interactive website offers another means of contacting us. In our effort to reach out globally
dispersed Non-resident Indians, we will continuously enhance our website.

HOME CONVERSION LOAN:

HDFC offer the option of a home conversion loan to its existing customer who are interested in moving to a new
house. Through this scheme the customer can apply to have their existing loan transferred towards the purchase

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of the new home. Customers may also apply for an additional loan amount for the purchase of the new house.
This gives the customers the option of selling t6heir existing house if they wish to, without having to repay their
old loan

APPLICATION CAN BE MADE BEFORE SELECTING THE PROPERTY:

Individuals may make an application for the loan even if the property has not been selected or the construction
has not commenced. HDFC can provide assistance in locating an appropriate house to such customers.

HOME IMPROVEMENT LOANS:

As an exclusive offer to its existing customers HDFC offers Home Improvement Loan up to 100% of the
improvement cost as compared to the home improvement loans up to 70% of the improvement cost offered to the
general public.

FEE:

A processing fee of 0.5% of the loan amount applied for rs.5 per rs.1000 of the loan applied for is payable when
the application form is submitted to HDFC. This fee is in the respect of costs incidental to the application. For
example:

Loan applied for fees

Rs.20000 Rs.100
Rs.100000 Rs. 500

On approval of the loan, a loan offer is made to you on acceptance of the offer. You have to pay an
administrative fee of Rs.0.5% of the loan approved. You can also pay the processing fee and administrative fee
upfront i.e. 1% of the loan at the time of submission of the loan application itself. This fee is in respect of the
costs incidental to the application. Taxes as applicable will be charged on the fees collected.

CHARGES:

For Fixed Rate Home Loan (FRHL) an early redemption charge of 2% of the amount being prepaid is payable, if
the amount being repaid is more than 25% of the opening balance. However under Adjustable Rate Home Loan
(ARHL) option early redemption charges of 2% is payable only in case of commercial refinance. You may be
required to submit the copies of your Bank Statements or any other documents that HDFC deems necessary to
verify the source of prepayment.
You can make payment for fees and charges by cheque marked “payee’s account only” drawn on a bank in a city
where HDFC has an office or by demand draft (payable at par to HDFC).

HOW TO APPLY

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Customer can either download (in PDF format) the application form or get the application form by E-mail.
Alternately the customers can collect the application form from any of your nearest HDFC offices. Customer
need to submit it along with supporting documents and processing fee at any HDFC office that is convenient to
the customer. Customers can make payments by the cheque marked “payee’s account only” drawn on a bank in a
city where the HDFC has an office, by demand draft (payable at part to HDFC) or by cash. Customer can make
an application at any time after they have decided to acquire a house even when the house has not been selected
or construction has not commenced.
HDFC will consider your application, make enquiries as it deems necessary and convey its decision to you. On
acceptance of the offer, you will have to pay an administrative fee for the loan approved. Customer can take the
disbursement of the loan after the property has been completed and you have invested your own contribution in
full (own contribution is the total cost of the property less HDFC’s loan). The loan will be disbursed in full or in
suitable installments (normally not exceeding three in number)taking into account the requirement of the funds
and the progress of the construction, as assessed by HDFC and not necessarily according to the builder’s
agreement.

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STAGES OF HOME LOAN

Data Entry
Application
Munirka
HUB Login Scanning

DISBURSE
Double Checking
The Loan
Fix Over (DCOVR) Recommendation
Chrg Over (ROVR)
es

PROCESS

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 First of all documents are collected

RESEARCH MYTHODOLOGY

Research methodology is an important part of every project. Because it helps in knowing how to select the
representative sample from the world or the general population, the right research tools and techniques to
complete the research.
The study of the consumer behavior is important because he is the king. The research process is based upon
survey method, so in order we go to service provider and services user which is the customers.
The research involves the following steps:

 Define the problem and research objective: The problem and objective is to assess the services offered
by the various service providers and what the customer wants.
 Developing the research plan: The second stage of the research methodology is to develop a research
plan. The research plan designed to take the decision on the data sources, research approaches, research
instruments, sampling plan and contact methods.
 Survey research: It was a descriptive research.
 Research instrument: The use of an effective research instrument is very important because through
this instrument we collect data in this project through observations and personal interview were
conducted.
 Personal interview: as we were doing direct selling we interacted with my customers and asked about
their views in selecting a service and what are their wants and expectations from a service provider.
 Sampling plan: After finalizing the research approach and instruments a sampling must be designed.
 Sampling unit: Data have been collected from banks.
 Sampling size: It has been collected from four banks.
 Sampling procedure: what process should be used to collect the sample. So, representation sample,
convenience sampling is used.
 Collect the information: After completing all the steps, the data are collected from different sources.
 Analyze the information: After the data is collected they are analyzed to know the findings. The data is
then tabulated to develop the frequency distribution.

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 Present the findings: As the last step, the findings are presented that are relevant to the major marketing
decisions.

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ANALYSIS OF DATA

The home loans provided by the banks are more or less same at the basic level. The banks generally try to go
ahead of other banks in terms of attracting number of customers to their countries. For this they are trying to
offer some unique services as per the unique requirements of the unique important customers.

COMPARITIVE STATEMENT OF HOME LOAN

PARTICULARS HDFC ICICI PNB SBI


ROI(FIXED) 14% 1 -5 Yrs. -16% Up to 5yrs-9.25% Year 1 - 8%
5 - 10 Yrs. - 16 % (up to 20 lakh) Year 2 & 3 - 9%
10 -15 Yrs. - 16% &
15 -20Yrs-13.75% 10% (above 20
lakh)

5 to 10yrs-10%
(up to 20 lakh)
&
10.25% (above 20
lakh )

10 to 20 yrs-10.50%
(up to 20 lakh)
&
10.75% (above 20
lakh)

ROI(FLOATING) Up to 30lakh- 1 - 5 Yrs.- 16 % Up to 5yrs-8.75% Year 4 onwards -


8.75% 5 - 10 Yrs.- 11.25 % (up to 20 lakh)
30 lakh- 10 - 15 Yrs.-16 % & up to 50 lakh-9.25%
50lakh-9% 15 - 20 Yrs- 16 % 9.50% (above 20
Above50lakh- lakh) over 50 lakhs-9.75%
9.25%

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5 to10yrs-9%
(up to 20 lakh)
&
9.50%(above 20
lakh )

10 to20yrs-9.25%
(up to 20 lakh)
&
9.75% (above 20
lakh)

PROCESSING FEE 0.5% 0.5% 0.5% 0.5%


PENALTY 2% 2% 2% 2%
TENURE 25 years 15 years 20 years 25 years
MINIMUM AGE 21 25 25 25
MAXIMUM AGE 60 55 55 55

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COMPARISON OF MAJOR PLAYERS

The markets for home loans have been sizzling in India. The spurt in growth in recent years and the prospect of
continued buoyancy in demand have attracted many players to the industry which till a couple of years back had
two major players- HDFC and LIC Housing Finance. The result is cut-throat competition, which has benefited
the loan seekers. The home loan market has grown at a compounded rate of over 40% over the last four years.
And from what industry experts believe that there is a little chance that there will be any significant decline in
the growth rates going forward. So what have been the key factors in triggering of this high growth period?
There are several reasons for the same on the demand side:-

 Faster rise income as compared to property prices, thus making housing more affordable.
 Decline interest rates, which have greatly reduced the cost of borrowing (both o0n interest and capital).

Then there are factors on the supply side too which have supported this growth:-

 More competition in the housing finance sector resulted in companies charging lower interest rates,
sometimes even at the cost of spread (i.e. profit margin)
 The fee for getting the home loan has reduced dramatically over the last couple of years. From over 2%
of the loan amount to as long as 0.25% (some companies are known to wave of the fee entirely). Housing
Finance Companies have introduced several new products to meet the needs of wide variety of
customers. One such scheme, the Step up Loan, where EMI’s increases as the income of the individual
increases has been a big hit with the individuals just starting off with their careers.
 One other factor is increasing collaboration between Housing Finance Companies and builders. Such
partnership minimizes the service and funding related issues significantly thus making it easier to buy
property.

One innovation in the housing finance sector has been the introduction of floating rate home loan simply put the
cost of such home loan or the interest rate not fixed during the tenure of the loan. Instead interest rate is
benchmarked against some index/ indicator. So as the benchmark rate moves up or down, the cost of your loan
too changes, at some predetermined frequency (usually once a quarter).
Ideally loan seekers should opt for a floating rate home loan when it is expected that the interest rate will decline
going forward. Fixed rate loans should be preferred when the interest rates are expected to rise.
But is the choice that simple? In today’s environment when there is a lot of talk about rising interest rate, should
investor shun floating rate home loan. Altogether is there still some merit in this instrument? “In the last one

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Summer project report, 2010

year, there was a trend of floating rate home loans being more popular as compared to the fixed rate loan. As of
now, this trend is continuing” says Mr. Suresh Menon , GM (Mumbai region), HDFC Limited.
There are three important issues which one needs to consider before opting for one type of a loan over the other:-
 First, an important determinant of what you go in for should be the long term expectation of interest rate.
For example if you (or the experts) expects the rates to rise for the next one year, but then decline
gradually over the next several years a floating rate product may be preferable. The other option for going
in for a fixed rate product and then switching at the end of the year will entail costs (there could be
penalty of 1%-2% of the outstanding loan amount) and may not make financial sense. Moreover floating
rate home loans do not change the rate of interest every quarter (even though they review the rate every
quarter). Mr. Menon points out “The attraction of a floating rate home loan is that it does not attract a part
prepayment charge. This could appeal to individuals who get lump sum bonuses which they can use to
reduce their loan exposure.”
 Second, the issue whether fixed rate home loan are actually ‘fixed rate’. When considering a fixed rate
home loan over floating rate of home loan a strong selling point is that if interest rate were to rise
dramatically you will be protected. Apparently the reality is some what different. It seems that
companies that have given out fixed rate home loans can revise their rates upwards in exceptional
circumstances (significant rise in interest rate for one) so if you think interest rate will remain rage bound
over the near term and decline over the long term, you are still better off with the floating rate product.
 Third, a fixed rate loan is generally priced higher as compared to the floating rate product. This holds
true in the current environment where the fixed rate loan is at a higher interest rate as compared to the
floating rate loan. The difference is currently about 0.25% to 21%. So if you expect that interest rate are
likely to move up, but only to the extent of this differential, then you should ideally be in different
between the two types of loan. The deciding factors then should be when you think the rates will
increase and also the long term expectations of interest rates.
As always there is no one answer to whether you should go in for floating or a fixed rate home loan. If you are a
person with very little appetite for risk or negative surprises, opt for fixed rate home loan. But in case you can
take on some risk a floating rate home loan is worth a look.
Five steps to take a right loan:-

1) Gather data on interest rate. Get interest rate information from morethan one source and get the same
information from each so you can compare the offers.
2) Get information on fees. Find out about processing fees, administration charges and other costs that may
be involved in taking the home loan. A written statement of all the fees from the housing finance
companies will ensure that there will be no surprises later on. Use the lowest amount of fees to negotiate
with the other lenders.
3) Get pre-approval letter. This gives you substantial leverage as you are then seen as serious buyer by the
seller of the property. Also, having the letter in your hand will set a limit to the amount of money you
can commit to the property. This will help in identifying the right property.
4) Bargain for a lower rate of interest. Housing finance will reduce their ‘rack’ rates for customers with the
good credit record. A bargain deal will easily fixed a home loan at significantly lower rates (at times you
can get a discount of as high as 0.50 percent). Here again get a confirmation of the rate (and for how long
it will remain fixed) via a letter.

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5) Watch out for a predatory lending. Don’t include false information on your home loan application to get
quick approval. Also do not borrow more money than you need or can afford.

A floating interest rate allows customer to take advantage of interest rate movements. They get immunity from
adverse movements and read the benefits of any fall in interest rate but a floating rate loan makes sense only
when interest rate are high so that they can take advantage of possible fall. But predicting interest rate
movement could confound even seasoned market watchers.
If they are looking for a home loan, be prepared to cough up a pretty sum as down payment. The RBI, in a
recent meeting with the bankers cautioned banks against lending 100% of the property value. That is because of
increasing competition in home loan some banks have been funding even 110% of the agreement value. This
means your loan not only pay for the property, it helps with the stamp duty and registration charges and even
furnishing. Its being sweet deal so for, as borrower not only need have no access to other funds, they also get tax
breaks.
The RBI’s position is that lending such sums will remain additional risk for the bank. In case of default, the
bank may not have sufficient collateral security to recover dues and may have to write off the additional
borrowings. However, the bankers do not seen unduly worried. Non performing assets in the housing segment
are quite low below 1% and that, say bankers, is due to the higher asset quality.

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SWOT ANALYSIS OF HOUSING FINANCE INDUSTRY

STRENGTHS

1) The industry has been witnessing very fast growth rate, which is 6% growth in the first
2) Quarter of 2002-2003 as against 3-5% growth recorded in the first quarter of 2001-2002
3) The market faces a high demand curve, thoroughly mismatched by a low supply curve
4) Investment is based in assets that are securities & those that have historically appreciate rapidly.
5) Tax benefit & other facilities provided on loan repayments.

WEEKNESSES

1) The foreclosure rules of court of law such as provision regarding the ownership of not more than one
house (in Delhi) binds the industry.
2) The healthy of an HFC depend upon its ability to mob up low cost funds.
3) AN HFC is unable to tap the rural market due to lack of proper retrieval procedures so whilst
4) The rural market offers a higher rate of return; it has a higher risk & default rate.
5) Many legal impendent exist, deferring purchase of certain types of property beyond a
6) Certain extent thereby negatively impacting weak mortgage laws, resulting in an increase in risk compo
ending this.

OPPORTUNITIES

1) The housing industry faces a severe shortage of houses. The total demand for houses is
2) Expected to touch around 19.40 million units by the year 2003 of these 12.8 million
3) Dwelling units (65-98%) would be in rural areas & 6.6 millions dwelling units (34.02%) in urban areas.
4) While the loan facility is backed by the security of property this sector represent a low margin But on the
low margin but on the same line low risk segment. The address this
5) Market the ones lies on the HFCS to device bold & innovative alternatives like mortgage Based
securities use of method such as door to door collection of installments assessing the Creditworthiness of
the prospective client and providing for group securities.
6) The roles of NHB in refinancing & providing regulation of housing finance system.
7) The government’s initiatives to promote the sector & its contribution in uplifting the sector.

THREATS

The industry faces increased competition as more & more foreign backs & Housing Finance Companies are
providing loan facility.

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SWOT ANALYSIS OF HDFC HOME FINANACE

STRENGTH

1) Save substantial interest.


2) Prepay whenever the customer.
3) Reduce their loan outstanding.
4) Access the surplus finds anytime.
5) Use surplus funds to invest when the right opportunities arises.

WEAKNESS

Product is very good but it is mainly suitable for higher income group & is not suitable for the Middle income
group

OPPORTUNITIES

There is ample scope for financing flats & apartments for the salaried class in the higher income Group.

THREATS

1) Nationalized banks like SBI, Union Bank, PNB.


2) Private Banks likes HDFC & standard chartered & Citi Bank with its home credit scheme.

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ICICI HOME FINANACE COMPANY LTD

Consumer friendly housing finance company

HISTORY

ICICI home finance company ltd was incorporated on May 28, 1999 as 100% subsidiary of ICICI Personal
Financial Services Limited (ICICI PFS). ICICI finance company Ltd was set up with objective of providing long
term housing loan to individual and corporate. The company was registered on March 30’2000 with National
Housing Act, 1987 in terms of Housing Financing Companies (NHB) direction, 1989 with effect from May 3,
2002, ICICI home finance has become a 100% subsidiary of ICICI bank Ltd.

OVERVIEW

ICICI home loans are at present available to customer in 150 cities/towns across the country. Loans are offered
for the purchase of new homes. Purchase of resale homes and home improvement. Besides the companies also
offers loans for commercial property and loans against existing property. The loans are offers foe tenors up to 30
years. The company has also introduced several customers friendly services such as ‘door step services’, ‘know
your loan on phone’ facility and ICICI home search free property brokerage services. ICICI Personal Financial
Services Limited (ICICI PFS) formerly ICICI credit was one of the first four companies to obtain registration as
non banking financial banking companies(NFBc) from the reserve bank of India (RBI)on sep 10, 1997 under the
new section 45 I A of the RBI act ,1939.
During the year 1998-1999, there was a significant shift in the company’s operations from leasing and hire
purchase to distribution and servicing the all the retail products for ICICI, including two auto loans, consumer
durable finance & another financial products. The company has become a critical part of ICICI’s retail strategy
aims at offering a comprehensive range of products &services to retail customers. In view of this reorientation of
the business, the name of the company was changed from ICICI Corporation Limited to (ICICI PFS) effective
march 22, 1999.
ICICI commenced its custodial services business in 1992 & played a pioneering role in the business when it
accepted the custodian role for the first ever GDR issue by an Indian corporate (reliance industry Ltd). ICICI
has a major market share in the segment act as custodian of 41 ADR/GDR issues & in the process, has
established the relationship will all the major overseas institutional investors including foreign institutional
investors (FII’s) & as on the June 30,1999, the value of asset held in our custody exceeded us 2 billion. At
present, ICICI offers a full range of custodial services for primary and secondary market operation pertaining to
debt, equity, money market instruments GDR/EURO issues conversion & GDR arbitrage to:
1) Overseas institutional investors like

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Summer project report, 2010

a) FIIS
b) OCBS
c) OFFSHORE FUNDS

d) VENTURE FUNDS
2) Overseas government agencies.
3) Institutional looking for proprietary investment.
4) Mutual funds
5) Private investment companies
6) Large corporate
7) High net worth individual

As a value added services ICICI custodial services division assist the client in preparation, submission & follow
up for various applications by FII’S/OCB with SEBI/RBI

APPLICATION PROCESS OF YOUR HOME LOAN

Your search for the perfect home loan ends here at ICICI Bank Home Loans, even before your have found the
perfect property.
The moment you decide to buy a home, you can put in your application for a home loan. Yes, you can apply for a
home loan even before you have selected the property.
The property need not even be in the same city where you are residing. The only condition being that ICICI
Bank has Home Loans operations in both the cities.
Should there be a change in your financial status or plans, you can withdraw your sanction within 6 months of
approval of your home loan.
However, we are always ready to assist our customers in the event of legitimate problems. And, we might
reconsider this if we find that there are satisfactory reasons for the delay.
And, neither would we charge you extra for this delay.
If it is refinancing you are interested in, it is possible within 6 months from the date of purchase of property.

PERSONAL BANKING

At ICICI bank they are committed to making banking a pleasure. This commitment is manifested in services they
offer a wide range of account, investment scheme & facilities. Each services offer their customer security,
flexibility of operations & maximum returns.
The various services provided under this is as follow:
1) Maximum cash-saving account
2) Quantum fixed deposits
3) Quantum optima –value added saving account
4) Money plus-current act

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Summer project report, 2010

5) ATM
6) Treasure chest –cocker facility
7) Power pay roll
8) Retail treasury instruments

CORPORATE BANKING

MOBILE COMMERSE
ICICI bank now brings back account & ICICI credit card to customers fingertips .with mobile commerce
customer can perform a wide range of query –based transaction from their orange tm (Mumbai) & Airtel
(DELHI) mobile phone , without even making a call.

1) Access multiple accounts


2) Balance inquiry to the linked account
3) Cheque book request
4) Mini statement –listing of last three transactions5) Request for account statements (by mail or fax)

ICICI

1) Attractive IR
2) Door step service from enquiry stage till the final disbursement.
3) No guarantor required.
4) Can transfer your existing high interest rate loan.
5) Special 100% funding for special properties.

FACTORS AFFECTING YOUR LOAN AMOUNT

With ICICI Bank Home Loans, you can get a home loan suited to your needs. The home loan amount depends
on your repayment capability and is restricted to a maximum of 80% of the cost of the property or the cost of
construction as applicable. A number of factors are taken into account when assessing your repayment capacity.
Repayment capacity takes into consideration factors such as income, age, qualifications, number of dependants,
spouse's income, assets, liabilities, stability, continuity of occupation and savings history.
However, there are ways by which you can enhance your eligibility.

If your spouse is earning, put him/her as a co-applicant. The


additional income shall be included to enhance your loan amount.
In case of any co-owners they must necessarily be co-applicants. The final amount to be sanctioned will
depend on your repayment capacity.
However, what you ultimately are entitled to will have to conform within the limits fixed for each loan.

Also, when the company looks at the total cost, registration charges, transfer charges and stamp duty costs are
included.

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Documents required for Home Loan Sanction

ICICI Bank Home Loans, India’s leading Home Loans Provider, offers attractive interest rates and unbeatable
benefits to ensure that you get the best deal. Keeping your convenience in consideration, we ask you for minimal
mandatory documents for the sanctioning of your home loan, to keep the process totally hassle-free.

We require the following documents to sanction your home loan:

Sanction Documents Completed application form


Photograph
Fee Cheque
Photo Identity Proof
Age Proof
Signature Verification Proof
Residence Address Proof
Document for the Salaried
Last 3 months’ Salary Slip
Form 16
Bank Statement for the last 6 months from Salary Account
Repayment Track record of existing loans / Loan closure letter

Document for the Self-employed


Income Tax Return / Computation of Total Income / Auditors Report / Balance Sheet / Profit & Loss Account
certified by Chartered Accountant for last 2 years (3 years for Home Equity) (both for business and personal of
partners/directors)
Bank statement for the last 6 months from operating account
Repayment Track record of existing loans / Loan closure letter
Board Resolution in case of a company
Proof of existence
Office Address Proof
 Photo Identity Proof, Residence Address Proof, Signature Verification Statement for all the main partners /
directors.

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HOME LOAN

1) Customer must be at 21 year of age when the loan is sanctioned.


2) The loan must terminate before or when you twin 65 year of age or before retirement,
Whichever is earlier.
3) Customer must be employed or self employed with regular source of income

LOAN AMOUNT

 A number of factors are taken into account when assessing repayment capacity.
 Customer income, age, number of dependents, qualification, asset &liabilities, stability and continuity of
customer employment. Business is one of them. However there are ways by which you can enhance your
eligibility.
 If the customer spouse is earning put he/she as a co-applicant. the additional income shall be included to
enhance the loan amount. Incidentally, if there are any co owners they must necessarily be co-applicant
customer fiancée’s income can also be considered sanctioning the loan on your combined
 Income .the disbursement of the loan, however will be done only after the submit proof of Marriage.
Providing additional security like bonds, fixed deposits & LIC policies may also help to enhance
Eligibility.
 While there is no need for guarantor, it could be that having one might enhance your credibility with us.
If so, our loan officer would provide customer with positive necessary details.
 The final act to be sanctioned will depend on your repayment capacity. However, what customers
ultimately are entitled to will have to conform within the limits fixed for each loan.
 Also when the company looks at the total cost, registration charges, stamp duty, transfer charges are also
included.

HOMELOAN

We at ICICI bank understand the value of owing your house. Our affordable home loans can make all the
difference to their dreams of owing home.

FIND THE RIGHT HOME

Provide facility for search of free online property. A one stop shop for all their
Real Estate needs.

WHAT YOU GET

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Summer project report, 2010

0% brokerage on first sale properties access the entire market under our roof site visits to the properties short
listed by you. Help in negotiating the best price. Help the legal documentation.
s

LISTINGS BELOW ARE THE STEP INVOLVED IN AVAILING OF A HOMELOAN

 A person applies for a home loan


 The executive meets the applicant & briefs him the entire loan process, requirements & the various
options available.
 The applicant chooses a housing finance company (HFC) & handover the income
 Document to the executive are the income documents are headed over to the HFC for eligibility &
approval.
 The HFC verifies the documents & checks the repaying capacity, saving habits, tenure of services etc. of
the applicant & approves the loan amount.
 After approval an offer letter is given to the applicant by the HFC, along with list of original title
documents that have to hand over to the HFC.
 The applicant gives the original property title document to the HFC
 The HFC scrutinizes the legal & the technical aspects of the original title document.
 If the HFC is satisfy as to the legal & technical aspect of the document then the applicant is called to sign
the loan agreement
 The loan disbursement schedule is decided by the HFC according to the stage of construction (If
property under construction) or a onetime payment is made if property is ready for Possession.
 The applicant gets possession of the property depending upon the level of completion of the property.
 The applicant can start paying the EMIs.

DISBURSEMENT

Customer loan will be disbursed after you identify & select the property or the home that customer are
purchasing and on their submission of the requisite legal documents.
While the customer may be under impression that the list of documents asked for it is rather extensive. Each and
every single document asked for will be verified & check to ensure their safety. This may take some time but the
banks want to ensure a clear title and will complete all the legal & technical verification to ensure that they have
full right to their home.
The 230 a clearance of the sellers or 371 clearance from the appropriate income tax authorities (if applicable) is
also needed on satisfactory completion of above, on registration of conveyance deed and on the investment of
your own contribution, the loan amount (as warranted by the stage of construction) will be disbursed by ICICI.
The disbursement will be in favor of the builder/seller.

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At ICICI Bank Home Loans, we disburse the loan amount after you identify and select the property or home that
you are purchasing and submit the requisite legal documents.
While you may be under the impression that the list of documents asked for is rather extensive, please note that it
is for your own good. Each and every single document asked for will be verified and checked to ensure your
safety.
This may take some time but we want to ensure a clear title and will complete all the legal and technical
verifications to ensure that you have full rights to your home.
Your loan will be disbursed after you identify and select the property or home that you are purchasing and on
your submission of the requisite legal documents.

The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if
applicable) is also needed.
On satisfactory completion of the above, on registration of the conveyance deed and on the investment of your
own contribution, the loan amount (as warranted by the stage of construction) will be disbursed by ICICI Bank.

Disbursement Documents

Property documents (as per P&D for respective states and as asked by empanelled lawyers for individual cases)
Facility Agreement
Disbursal Request Form
Cheque Submission Form – for Pre EMI and EMI cheques
ECS or Auto Debit for ICICI Bank account holders or Post Dated Cheques for EMI / Pre EMI
Personal Guarantor’s Documents (PG Form, Photograph, Identity Proof, Address Proof, Signature Verification
and Income documents, if applicable)

In case of property is owned by a company


 Memorandum of Entry
 Form 8
 NOC

AMOUNT

This largely depend on a no. of facts like ones age ,profession, salary, the city one reside is among other such
factors. it varies between 2.1lakh to 1crore depending on the lender- as the rule of the thumb, depending on HFC
one have to cough up 15% - 20% of the loan amount as the down payment. For smaller amount, this may not be
much. But for figure remaining into lakh this could make loads of difference. For e.g. an apartment of costing Rs
10 lakh may get 85% financing, so one will have to arrange for remaining Rs 15 lakh. If one takes this into
amount the additional thousands will definitely put a strain on ones finances
.

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TENURE

Generally the maximum tenure of home loans is 15 years, with a few lenders offering tenure of 20 years or more.
ICICI offers 15 year loan. The longer the tenure, the more one pay in total interest but ones monthly payment
will be less. So depending ones earning potential & bank balance one can choose an appropriate tenure. An
important requirement of most of the banks/ HFCs is that one pays up the entire loan before one retires. One can
always prepay ones entire loan amount before it is due. There is a trend to do away with the pre-payment penalty
being imposed by some lenders. So its best one checks on this as well.

INTEREST RATE

Without doubt the most important parameter to factor into ones calculations. The interest rates may vary from
institution to institution. Repayment is in the form of EMI’s (equated monthly installment). The longer the
tenure, the more one pays in interest, but ones monthly payment will be less. The interest rate of ICICI is

Tenure Interest Type Interest Rate

.15 -20 Fixed 13.75 %


10 -15 Fixed 16 %
5 - 10 Fixed 16 %
1-5 Fixed 16 %
1-5 Floating 16 %
5 - 10 Floating 11.25 %
10 - 15 Floating 16 %
15 - 20 Floating 16 %

REFINANCE

This is concept that is yet to catch on in the home loan market but is bound to be a major service in the months to
come. Under this facility, one can take a new loan from another bank/HFC to pay back another loan before its
natural tenure. It gives one the opportunity of prepaying ones high cost debt and get a lower cost one. In today’s
falling interest rate scenario one should use this vehicle to lower ones debt payment as much as possible. The
lender facilitates the shift by paying the outstanding and transferring the asset to other portfolio.

MISCELLANEOUS CHARGES

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The interest rates and EMI’s are not only the cost factor. Never underestimate how much the processing fee and
administration fees amount to. A 0.5% administration fees and 0.5% processing fee on say, a Rs.500000 loan
would be Rs.5000. other timesit could be just one fee (either administration or processing but could yet work out
to be much more if it is considerably higher at, say, 2.5% or 3%. The various other fees, which one is required to
pay along with the margin amount are:

INTEREST TAX:

This is tax payable on the interest paid on a home loan and not the principal. This is sometimes included in the
interest rate of the loan, or may be charged separately as interest tax.

PROCESSING CHARGE

It is the fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may
be a percent of the loan amunt. The loan amount received by you can be less than processing fee.

PREPAYMENT PENALTIES

When the loan is paid back before the nd of the agreed duration a penality is charged by some banks or
companies, which is usually between 1% and 2% of the amount being prepaid.

OTHERS

It is quite possible that some lends may levy a documentation or consultant charge.

ICICI BANK ANNOUNCES ITS BASE RATE, VALID FROM JULY 1, 2010

ICICI Bank has announced a shift in the existing benchmark rate from Floating Reference Rate (FRR)/ I-BAR
the Base Rate (I-Base). The same will be effective for all its mortgage products from July 1, 2010.
The ICICI Bank Base Rate (I-Base) has been fixed at 7.50%. This is the minimum rate that ICICI Bank will
charge to its new customers.

BENEFITS
 Some of our key benefits are:
 Guidance through out the process
 Home loan amounts suited to your needs
 Home Loan tenure upto 20 years
 Simplified documentation
 Doorstep delivery of home loan papers
 Sanction approval without having selected a property.

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 Free Personal Accident Insurance (Terms & Conditions)


 Insurance options for your home loan at attractive premium

PUNJAB NATIONAL BANK

INTRODUCTION

PNB has over 4500 branches and offices bringing the Punjab National Bank to your doorstep. Around 2400
offices come under the network of Centralized Banking Solution or CBS. A need for centralized banking system
prompted PNB to go computerized and what followed was the establishment of CBS in Punjab National Bank
branches in all the leading cities like Delhi, Pune, Chennai, Mumbai, Ahmedabad, Chandigarh, Gurgaon,
Hyderabad, Jalandhar, Kolkata, Ludhiana, Nodal and Bangalore. Internet Banking Services are provided to all
customers in the CBS branches. A branch and ATM locator is also available on the official website of Punjab
National Bank. For an overview of the annual report or the bank profile, the site can be resourceful. The website
also provides info on the careers and recruitments at PNB and the exam results. The careers at nationalized banks
like PNB are the most sought after one and candidates are selected on the basis of their exam result. PNB topped
the Best Paying Commercial Bank category with an overall rating of 87.45% as evaluated by the SSS
Retirement, Death & Funeral Benefits Program.

PROFILE OF PNB

The profile of the PNB shows superior banking services in corporate, personal and international banking,
industrial and agricultural finance and finance of trade. Punjab National Bank boasts of a varied clientele
consisting of small and medium industrial units, exporters, multi-national companies, Indian conglomerates and
NRI. The Bank is changing outdated front and back end processes to modern customer friendly processes to help
improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches
of its Associate Banks already networked, today it offers the largest banking network to the Indian customer. The
Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs, and

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other electronic channels such as Internet banking, debit cards, mobile banking, etc.The objectives of the
Company are in line with objectives laid down by RBI for the Primary Dealers:
 Strengthen the infrastructure in the government securities market in order to make it vibrant, liquid and broad
based.
 Ensure the development of underwriting and market making capabilities for Government Securities
 Improve secondary market trading system, which would contribute to price discovery, enhance liquidity and
turnover and encourage voluntary holding of Government securities amongst a wider investor base
 Become an effective conduit for conducting open market operations.

PNB HISTORY

Punjab National Bank of India was established by Lala Lajpat Rai in the pre-independence India in 1895 in
Punjab, with Lahore as its head office. Today it is the second largest public sector bank in India. It was
nationalized in 1969 along with 13 other major commercial banks. The privatization started in 1989 when 30 per
cent of its shares were offered to the public and it was listed on the stock exchange.In 1992, PNB became the
first Philippine bank to reach P100 billion in assets. Later that year, privatization continued with a second public
offering of its shares. In August 2005, PNB was fully privatized. The joint sale by the Philippine government and
the Lucio Tan Group of the 67% stake in PNB was completed within the third quarter of 2005. The Lucio Tan
Group exercised its right to match the P 43.77 per share bid offered by a competitor and purchased the shares
owned by the government. The completion of sale is expected to speed up the development of PNB’s franchise
and operational competitiveness.
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.

PNB RECENT ACHIEVEMENTS AND MILESTONES

Punjab National Bank (PNB), has announced that it has completed 100% core banking implementation at all its
4604 branches and extension counters through the Finacle Universal Banking Solution from Infosys, on Sun
infrastructure and the Oracle Database setting a significant milestone for themselves and a new benchmark for
the Indian banking industry. Completed in November 2008, 4 months ahead of schedule, the bank implemented
industry-leading Finacle core banking solution from Infosys across its operations running a flexible, and scalable
database platform from Oracle and innovative servers from Sun Microsystems With an increasingly dynamic
business and regulatory environment, PNB sought to not only achieve automation, but also centralize operations,
standardize branch processes, achieve high scalability for future business growth, provide flexibility of creating
innovative banking products to its lines of business, and at the same time, reduce overall costs. The visionary

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zeal and the futuristic view of the Bank’s top management in the year 2007-2008 incubated the idea of
introduction of a Centralised Banking solution. The bold and innovative thought culminated into the CBS
architecture with Finacle application on Oracle Database and Sun hardware platform with Solaris Operating
System. With Finacle’s agile and future proof technology, the bank today has over 22,500 concurrent users. The
solution’s scalability has also enabled the bank’s scalability to be the best in the country with the number of peak
transactions at 3.5 million. Finacle core banking platform also provides the bank with exceptional agility for
product innovation and improved flexibility of operations. With seamless integration of delivery channels such
as ATM and internet banking solutions, PNB is able to provide 24X7 services to customers at a reduced
transaction cost. PNB’s choice of the Oracle Database has provided the bank’s IT infrastructure with robustness,
management features, security and scalability as well as performance requirements to service 3.5 million
transactions and 22500 concurrent users – a significant achievement in the Indian banking industry. In addition,
the Oracle Database will help PNB take control of its enterprise information, gain better business insight, and
quickly and confidently adapt to an increasingly changing competitive environment.20
With secure, highly available and scalable grids of low-cost servers and storage, Oracle customers can tackle the
most demanding transaction processing, data warehousing, business intelligence and content management
applications. The 100% implementation of Finacle Core Banking Solution shall enable PNB to further reduce
operational costs and revenue leakage while improving productivity of branches, introduction of new and
innovative products and visibility of business. The anywhere anytime banking facility will enable the bank to
offer products for every segment of the customer. PNB long-standing and progressive partnership also highlights
Finacle’s leadership in large scale banking transformation, the solution’s future proof technology and powerful
capabilities. India is a strategic market for Finacle and we look forward to closely collaborating with Punjab
National Bank for their future growth plans.”

REGULAR HOUSING FINANCE SCHEME FOR PUBLIC

PNB reaches out to you with fast, friendly and most convenient home loans for:

 Construction or purchase of house/ flat.


 Purchase of house/ flat on First Power of Attorney basis from the original allottee
 Carrying out repairs/ renovations/ additions/ alterations to existing house/ flat
 Special Feature- To cover the loan outstanding, life Insurance cover is also available on payment of one
time premium which can also be financed by the Bank.

PRODUCTS

PNB Apna Ghar Yojana home loans are meant for construction or for acquisition/purchase of house/flats. The
minimum loan amount would be Rs.50000 and maximum loan amount depends on the repayment capacity of the
borrower. In case of joint application, income of borrowers /co-borrowers is clubbed together for calculation of
loan eligibility. The loan repayment is in Equated Monthly Installments (EMI) over a maximum period of 20
years.
PNB Ghar Sudhar Yojana home loans are offered for up gradation, renovation or repair of house/flat. It includes
among others, internal and external repairs, water proofing, roofing, flooring, electrical, woodwork etc. The loan

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amount ranges from a minimum of Rs 50,000 to a maximum of Rs. 1000000. Borrower's minimum contribution
will be 25% of the estimated cost of repairs/renovations

INDIVIDUAL
For construction/purchase of house/flat: - 75% of the cost of construction of house or purchase of house/flat.
Cost of car parking up to the maximum extent of 5% of the cost of flat/house can also be included in the cost of
the project.
For carrying out repairs/ renovations/ additions/ alterations: - 75% of the estimated cost subject to maximum of
Rs. 20 lacs.
Loan is available up to Rs. 20 lacs for purchase of Land/ Plot.
Loan is available maximum up to Rs. 2 lacs for furnishing

PRODUCT RANGE OF COMPANY/INDUSTRY:

The products and services provided by the PNB are in various fields, such as:

• NRI services
• International banking
• Corporate banking
• Agricultural banking
• International banking

ELIGIBILITY

Age of the applicant must be less than 60 years.


Existing home loan borrower can also apply provided their loan account is regular and no IR irregularity persist.

DOCUMENTS NEEDED

1. Proof of identity
2. Proof of income
3. Proof of residence
4. Bank statement or Pass Book where salary or income is credited.
5. Education Certificate
6. Photos
7. Salary slips & form 16
8. Income tax return last 3 years along with balance sheets.
9. Assets liabilities statements.
10. Documents of property.
11. Estimate of construction.
12. Guarantor

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FREEHOLD AND LEASEHOLD PROPERTY


The loan can be granted both for freehold and leasehold property.
In case of leasehold, loan can be granted on the basis of power of attorney basis from original allotee where
DDA/PUDA/HUDA permit conversion of leasehold into freehold property otherwise advance is not permitted
against plot purchased on Power of Attorney basis.

EXTENT OF LOAN

For construction/purchased of house/flat 75% of the cost of construction or purchase of house/flat.


For carrying out repairs/renovation/additions/alternation: - 75% of the estimated cost subject to maximum of Rs.
20 lacs.
Loan up to Rs. 20 lacs for purchase of land/plot
Loan is available maximum up to Rs. 2 lacs for furnishing

CHARGES

Pre payment charges 2%

Balance Transfer Charges


2%
(incase of refinance)

Part-payment Charges Nil

Switching Charges
Nil
(Fixed to Floating or vice-a-versa)

SPEED OF SANCTION OF LOAN

The loan will be sanctioned within 7 working days.

TENURE:

You can repay the loan over a maximum period of 25 years under both FRHL and ARHL in SBI . Repayment
will not ordinarily extend beyond your age of retirement (if you are employed) or on your reaching 65 years of
age, whichever is earlier.

RATE OF INTEREST

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Floating Option
Fixed Option for Fixed Option for Floating Option for
for
For repayment period loans(Upto 20 loans(Above 20 loans(Above 20
loans(Upto 20
lac) lac) lac)
lac)
i) Upto 5 years 9.25 10.00 8.75 9.50
ii) Above 5 & upto 10 years 10.00 10.25 9.00 9.50

iii) Above 10 & upto 20 years 10.50 9.25 9.75


10.75
iv) Above 20 yrs & upto 25
10.75 11.00 9.50 10.00
yrs.

The interest rate can be fixed or floating


Option can be changed from fixed to floating and vice versa with flat charges of 2% fee on balance outstanding.
Fixed interest rate be reset after a block of 5 year in respect of loans disbursed on or after 1.08.2006

DOCUMENTATION CHARGES
Rs. 1350 + Service Tax

UPFRONT FEE

For loans up to Rs. 300 lacs = 0.50% of the loan amount with a cap of Rs. 20,000/-
For loans above Rs. 300 lacs =0.90% of the loan amount

REPAYMENT

1. Loan is to be repaid in equated monthly installments within a period of 25 years or before the borrower attains
the age of 65 years.

2. Repayment of loan for repair/ renovation/ addition/alteration has, however been restricted to 10 years.
Father/Mother can also be made co-borrower in cases property is in single name of his /her son and also clubbing
of their income is permitted for determining eligibility criteria. Minimum 24 advance cheque should be obtained
as and when, 6 cheques remain, fresh lot to be obtained out of 24, 23 cheques should be of the amount equal to
the balance. Loan is to be repaid in EMI within a period of 25 years or before the borrower attains the age of 65
years.

SECURITY

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Mortgage of property for which finance is being given


In case of purchase of house/ flat from housing board/ society where mortgage cannot be created immediately, a
tripartite agreement shall be executed amongst the housing board/ society, borrower and the Bank
In case of purchase of house/ flat on first power of attorney, additional security equal to 125% of the loan amount
by way of mortgage of some other property or pledge of bank's FDR/ LIC policy/ Govt. Securities, NSCs, KVPs,
IVPs, / PSU Bonds etc. has to be provided

FEATURES

Loan can be sanctioned by branch/hub near to the present place of work/posting /residence of the borrower.
Loan can be sanctioned even if property is in the name of wife/parents provided that the owner is made co-
borrower.
Loan can be granted for 2nd house in the same city.
Loan can be granted for purchase of house for rental purpose
For take over, permission of higher authority is not required.

IMPORTANT CONDITIONS LOAN CANNOT BE GRANTED:

 For construction in Un-authorized colonies.


 If property is to be used for commercial purpose.
 Without approved Map.

PRE- PAYMENT CHARGES

 Nil- In cases where the loans are prepaid by the borrower from their own sources
 Nil- In cases where the borrower shifts to other bank within 30 days from the date of issuance of circular
for upward revision in the rate of interest to be charged in his account or change in other terms of
sanction.
 2 % - In cases where the account is taken over by some other Bank/ Financial institutions by way of a
ailment of loan from such bank/ financial Inst

DISBURSEMENT FOR HOME LOAN

a. For outright purchase of house/flat, the loan amount will be paid in lump sum to the vendor.
b. For house/flat under construction, the loan amount will be dispersed in stages as per progress of
construction/demand by selling agency.

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STATE BANK OF INDIA

INTRODUCTION

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 State Bank Group includes a network of eight banking subsidiaries
and several non-banking subsidiaries offering merchant banking services, fund management, factoring services,
primary dealership in government securities, credit cards and insurance. The eight banking subsidiaries are: State
Bank of Bikaner and Jaipur (SBBJ),State Bank of Hyderabad (SBH).State Bank of India (SBI),State Bank of 13
Indore (SBIR),State Bank of Mysore (SBM),State Bank of Patiala (SBP),State Bank of Saurashtra (SBS) and
State Bank of Travancore (SBT). 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.

PROFILE

The SBI’s powerful corporate banking formation deploys multiple channels to deliver integrated solutions for all
financial challenges faced by the corporate universe. The Corporate Banking Group and the National Banking
Group are the primary delivery channels for corporate banking products.
The Corporate Banking Group consists of dedicated Strategic Business Units that cater exclusively to specific
client groups or specialize in particular product clusters. Foremost among these a specialized group is the
Corporate Accounts Group (CAG), focusing on the prime corporate and institutional clients of the country’s
biggest business centers. The others are the Project Finance unit and the Leasing unit. The National Banking
Group also delivers the entire spectrum of corporate banking products to other corporate clients, on a nationwide
platform. The bank is also looking at opportunities to grow in size in India as well as internationally. It presently
has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries in India – SBI Capital Markets,
SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming a formidable group in the Indian
Banking scenario. It is in the process of raising capital for its growth and also consolidating its various holdings.
Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all employees
together on this exciting road to Transformation. In a recently concluded mass internal communication
programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and
covered over 130,000 employees in a period of 100 days using about 400 Trainers, to drive home the message of

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Change and inclusiveness. The workshops fired the imagination of the employees with some other banks in India
as well as other Public Sector Organizations seeking to emulate the programme.

HISTORY

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.

SBI RECENT ACHIVEMENTS AND MILESTONES:

AWARDS:

SBI has been the proud recipient of the ICRA Online Award - 8 times, CNBC TV – 18, Crisil Award 2006 - 4
Awards, The Lipper Award (Year 2005-2006) and most recently with the CNBC TV - 18 Crisil Mutual Fund of
the Year Award 2007 and 5 Awards for our schemes.
SBI Card reaches three million milestones:

SBI Card, a joint venture between State Bank of India and GE Money, announced yet another landmark
achievement of crossing the three million cardholders-marks. Roopam Asthana, CEO-SBI Card, said, "This
milestone is even more remarkable as we have added one million cardholders in just ten months. Our objective is
to accelerate the pace of growth by extending the benefits to a broader range of consumers in Tier II cities, along
with improved value propositions for the urban affluent customers." SBI Card recently signed up Indian cricketer
Yuvraj Singh as its brand ambassador.

SBI joins Chinese bank to touch 10,000 branches:

Public sector State Bank of India on Sunday became only the second bank in the world to have 10,000 branches
when Union Finance Minister P Chidambaram inaugurated its latest branch here. Speaking on the occasion,
Chidambaram said China's ICBC Bank was the other bank to have 10,000 branches. Opening 10,000 branches
was a great feat. "It is not an easy milestone though the SBI was the bank of the government and Indian people
even before other banks were nationalised," he said. People all over the world, including the Chinese, would now
know about this small village where the 10000th branch of the SBI had been opened, he said adding they would
be amazed by the bank's growth. The bank should be proud of the achievement he said and wished that the bank
opened one lakh branches. The Minister said out of the over 100 crore people, seventy 75 per cent did not have
any type of insurance. Similarly, 50 per cent of the 11 crore farmers did not have bank account. Banks should go
to the people and enroll them as account holders. 'That is what economists say is financial inclusion,' he said.

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Main SBI Home Loan Schemes

 SBI Realty : Purchase of plot of land


 SBI Optima : Loan to existing home loan borrowers
 SBI Green Home Loan : For homes that fight against the adverse climate change, SBI offers 0.25%
concession in interest rate and waiver of processing fees
 SBI Flexi : Combination of floating and fixed interest rate, in a pre determined ratio
 NRI Home Loans : Loans for NRIs and PIOs
 SBI Freedom : Pledging other financial security than mortgaging the house
 SBI Max Gain : Operate your home loan account like your SB or Current Account

PRODUCT RANGE OF COMPANY/INDUSTRY:

The products and services provided by the SBI are in various fields, such as:
• Banking services
• NRI services
• International banking
• Corporate banking
• Agricultural banking
• International banking

SBI HOUSING LOAN

Features

 SBI Home Loan provides no cap on maximum loan amount for the purchase/construction of house/flat.
 There is an option to club the income of the applicant's spouse and children to compute the eligible loan
amount.
 The bank provides free personal accident insurance cover.
 A complimentary international ATM cum Debit card is also provided by SBI.
 On the spot "in principle" approval is a special provision for the applicant.
 If all the required documents are submitted by the applicant, SBI Home Loan is sanctioned within 6 days
of the date of submission.
 The applicant can also consider SBI's Home Loan as a Term Loan or as an Overdraft facility, in case
he/she wants to save on interest and maximize gains.
 SBI Home Loan also provides free personal accident insurance cover up to Rs 40 Lakhs.
 Repayment is permitted up to 70 years of age, which is an added advantage of SBI Home Loan.
SCHEMES PROVIDED BY SBI

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The Most Preferred Home Loan provider SBI Bank offers a Home Loan with Attractive Interest Rates with
Latest Schemes and Benefits. SBI also provides a Housing loan with different schemes. Schemes Are:-

1. SBI Easy Home Loan


2. SBI Advantage Home Loan
3. SBI Housing Finance Scheme
4. SBI Happy Home Loans
5. SBI Life Style Loan
6. SBI Green Home Loan
7. SBI Home Plus
8. SBI Home Line
9. SBI MY HOME CAMPAIGN

PRODUCTS

'SBI-Flexi' Home Loans are designed to enable borrowers to hedge their Home Loan against unfavorable
movement in interest rates and gives the customers a one time irrevocable option to choose one of the three
customized combinations of fixed and floating interest rates.
'SBI-Freedom' Home Loans are customized for high net worth individuals and offer benefits such as 100 per cent
finance of the project and no mortgage of the property, provided the individual could show liquid securities such
as LIC policies or NSCs.

ELIGIBILITY
The minimum age of the applicant is 18 years, on the date of the sanction of the loan.
The maximum age limit for a Home Loan applicant is 70 years. It is the maximum age limit, within which the
loan should be fully repaid.
The applicant should consist of sufficient, regular and continuous source of income for repaying the loan.

DOCUMENTS

Completed Application Form with one Passport Size Photograph


Identity Proof - the applicant can make use of his/her PAN Card/Voter ID/ Passport/Driving License, for the
purpose.

Residence Proof - the applicant can make use of his/her Recent Telephone Bill/ Electricity Bill/Property tax
receipt/Passport/Voters ID
Proof of business address in respect of businesspersons/ industrialists
Sale Deed, Agreement of Sale, Letter of Allotment, Non Encumbrance Certificate, Land/Building Tax paid
receipt etc.

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Copy of Approved Plan and approval from the Local Body


Statement of Bank Account/ Pass Book for last 6 months

INTEREST RATE (SBAR is currently 11.75%)

Year 1 - 8% fixed
Year 2 & 3 - 9% fixed
Year 4 onwards - For loans up to 50 lakhs, 9.25% floating.
For loan amount over 50 lakhs, 9.75% floating

Eligibility Criteria & Documentation required for SBI Home Loan

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
5,00,000 - 1,00,00000 5,00,000 - 2,00,00000
Offered
Tenure 5years-20years 5years-20years
Current Experience 2years 3years
1) Application form with photograph
1) Application form with photograph
2) Identity & residence proof
2) Identity & residence proof
3) Education qualifications certificate & proof of
3) Last 3 months salary slip
business existence
Documentation 4) Form 16
4) Business profile,
5) Last 6 months bank salaried credit
5) Last 3 years profit/loss & balance sheet
statements
6) Last 6 months bank statements
6) Processing fee cheque
7) Processing fee cheque

Other Products from SBI (State bank of India)

1) SBI Personal Loan


2) SBI Card
3) SBI Home Loan
4) SBI Housing Loan
LOAN TENURE

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You can repay the loan over a maximum period of 25 years under both FRHL and ARHL in SBI . Repayment
will not ordinarily extend beyond your age of retirement (if you are employed) or on your reaching 65 years of
age, whichever is earlier.

PROCESSING FEE

FEES RUPEES

Upto 5 lakh Rs. 1000


5lakh-10lakh Rs. 2000
10lakh-20lakh Rs. 5000
20lakh-50lakh Rs. 7000
50lakh-1crore Rs.8000
1crore-5crore Rs.10, 000
Above 5 crore Rs.20, 000

PREPAYMENT CHARGES

If paid from own source- Nil,


In other cases- 2% on principal amount prepaid

LATE PAYMENT CHARGES

If paid from own source- Nil,


In other cases- 2% on principal amount prepaid

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REVIEW OF LITERATURE

Ben R. Craig had studied about the Federal Home Loan Bank Lending to Community Banks, are Targeted
Subsidies Necessary? The Gramm-Leach-Bliley Act of 1999 amended the lending authority of the Federal Home
Loan Banks to include advances secured by small enterprise loans of community financial institutions. Three
possible reasons for the extension of this selective credit subsidy to community banks and thrifts are examined,
including the need to: subsidize community depository institutions, stabilize the Federal Home Loan Banks, and
address a market failure in rural markets for small enterprise loans. They empirically investigate whether funding
constraints impact the small-business lending decision by rural community banks. Specifically, they estimate two
empirical models of small-business lending by community banks. The data reject the hypothesis that access to
increased funds will increase the amount of small-business loans made by community banks.

2) In December 2006 Fulbag Singh and Reema Sharma had studied about the housing Finance in India. Housing,
as one of the three basic needs of life, always remains on the top priority of any person, economy, government
and society at large. In India, majority of the population lives in slums and shabby shelters in rural areas. From
the last decade, the Government of India has been continuously trying to strengthen the housing sector by
introducing various housing loan schemes for rural and urban population. The first attempt in this regard was the
National Housing Policy (NHP), which was introduced in 1988. The National Housing Bank (NHB) was set up
in 1988 as an apex institution for housing finance and a wholly-owned subsidiary of Reserve Bank of India
(RBI). The main objective of the bank is to promote and establish the housing financial institutions in the
country as well as to provide refinance facilities to housing finance corporations and scheduled commercial
banks. Moreover, for the salaried section, the tax rebates on housing loans have been introduced. The paper is
based on the case study of LIC Housing Finance Ltd., which analyzes region-wise disbursements of individual
house loans, their portfolio amounts and the defaults for the last ten years, i.e., from 1995-96 to 2004-05 by
working out relevant ratios in terms of percentages and the compound annual growth rates. A relevant chart has
also been prepared to highlight the results.

3) In May 18, 2007 Michael LaCour-Little had studied about the Economic Factors Affecting Home Mortgage
Disclosure Act Reporting. The public release of the 2004-2005 Home Mortgage Disclosure Act data raised a
number of questions given the increase in the number and percentage of higher-priced home mortgage loans and
continued differentials across demographic groups. Here we assess three possible explanations for the observed
increase in 2005 over 2004: (1) changes in lender business practices; (2) changes in the risk profile of borrowers;
and (3) changes in the yield curve environment. Results suggest that after controlling for the mix of loan types,
credit risk factors, and the yield curve, there was no statistically significant increase in reportable volume for
loans originated directly by lenders during 2005, though indirect, wholesale originations did significantly
increase. Finally, given a model of the factors affecting results for 2004-2005, we predict that 2006 results will
continue to show an increase in the percentage of loans that are higher priced when final numbers are released in
September 2007.

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4) In May 1991 Stephen F. Borde had studied about the “Is the Savings and Loan Industry Facing Extinction?”
This article tells about the saving and loan crisis. Proposed solutions are discussed in the context of the industry
as it currently stands. With a somewhat similar liability structure to that of banks (mainly short-term deposits),
the asset structure of S&Ls is quite different. Whereas banks assets consist of short-term loans, S&L assets
consist largely of long-term loans, such as home ownership mortgages. Therefore, in the absence of adequate
hedging measures, S&Ls are more vulnerable to interest rate risk, which can lead to lower profits when interest
rates rise.

5) In June 29, 2001 Joshua Rosner had studied about the Housing in the New Millennium: A Home without
Equity is Just a Rental with Debt. They studied about the prospects of the U.S. housing/mortgage sector over the
next several years. Based on our analysis, we believe there are elements in place for the housing sector to
continue to experience growth well above GDP. However, we believe there are risks that can materially distort
the growth prospects of the sector. Specifically, it appears that a large portion of the housing sector's growth in
the 1990's came from the easing of the credit underwriting process. Such easing includes: * The drastic reduction
of minimum down payment levels from 20% to 0% * A focused effort to target the "low income" borrower * The
reduction in private mortgage insurance requirements on high loan to value mortgages * The increasing use of
software to streamline the origination process and modify/recast delinquent loans in order to keep them classified
as "current" * Changes in the appraisal process which has led to widespread over appraisal/over-valuation
problems If these trends remain in place, it is likely that the home purchase boom of the past decade will
continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders
to further ease credit standards and more fully exploit less penetrated markets. Recently targeted populations that
have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to
overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs
(Government Sponsored Enterprises) have overcome many of them. If there is an economic disruption that
causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These
impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real
estate prices and increased foreclosure expenses. These impacts would be exacerbated by the increasing debt
burden of the U.S. consumer and the reduction of home equity available in the home. Although we have yet to
see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit
relaxation and leverage can't be ignored. Importantly, a relatively new method of loan forgiveness can
temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the
home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled
loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics.
However, a protracted housing slowdown could eventually cause modifications to become uneconomic and,
thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing
homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to
an accelerating rate of foreclosures.
6) In December 2002 Melissa B. Jacoby had studied about the Home Ownership Risk beyond a Sub prime
Crisis: The Role of Delinquency Management. They studied that Public investment in and promotion of
homeownership and the home mortgage market often relies on three justifications to supplement shelter goals: to
build household wealth and economic self-sufficiency, to generate positive social-psychological states, and to
develop stable neighborhoods and communities. Homeownership and mortgage obligations do not inherently
further these objectives, however, and sometimes undermine them. The most visible triggers of the recent surge

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in sub prime delinquency have produced calls for emergency foreclosure avoidance interventions (as well as
front-end regulatory fixes). Whatever their merit, I contend that a system of mortgage delinquency management
should be an enduring component of housing policy. Furtherance of housing and household policy objectives
hinges in part on the conditions under which homeownership is obtained, maintained, leveraged, and - in some
situations - exited. Given that high leverage or trigger events such as job loss and medical problems play
significant roles in mortgage delinquency independent of loan terms, better origination practices cannot
eliminate the need for delinquency management. One function of this brief essay is to identify an existing rough
framework for managing delinquency. Legal scholarship should no longer discuss mortgage enforcement
primarily in terms of foreclosure law and instead should include other debtor-creditor laws such as bankruptcy,
industry loss mitigation efforts, and third-party interventions such as delinquency housing counseling. In terms
of analyzing this framework, it is tempting to focus on its impact on mortgage credit cost and access or on the
absolute number of homes temporarily saved, but my proposed analysis is based on whether the system honors
and furthers the goals of wealth building, positive social psychological states, and community development.
Because those ends are not inexorably linked to ownership generally or owning a particular home, a system of
delinquency management that honors these objectives should strive to provide fair, transparent, humane, and
predictable strategies for home exit as well as for home retention. Although more empirical research is needed,
this essay starts the process of analyzing mortgage delinquency management tools in the proposed fashion.
7) In 1999 Yoko Moriizumi had studied about the Current Wealth, Housing Purchase and Private Housing Loan
Demand in Japan. Japanese households accumulate wealth for down payments at a high rate. Therefore, current
wealth plays an important role in home acquisition as public loans whose direct mortgage lending is a strong
support for home purchasers. We estimate the wealth effect on private mortgage debt as well as housing
consumption by applying a model where mortgage debt demand is derived from house purchase decisions and is
determined jointly with housing consumption. We use a simultaneous equation Tobit estimation method. Wealth
effects on private mortgage debt, likelihood of borrowing, and housing consumption are not elastic. On the other
hand, a change in housing consumption affects the likelihood of borrowing elastically much more than the
private mortgage amount of borrowers. Housing and private mortgage markets fluctuate very closely with the
number of participants in the mortgage market. Therefore, the number of housing starts is linked strongly to the
private mortgage market.

8) Robert B. Avery and Allen N. Berger had studied about the Loan commitments and bank risk exposure. They
studied about the Loan commitments increase a bank's risk by obligating it to issue future loans under terms that
it might otherwise refuse. However, moral hazard and adverse selection problems potentially may result in these
contracts being rationed or sorted. Depending on the relative risks of the borrowers who do and do not receive
commitments, commitment loans could be safer or riskier on average than other loans. the empirical results
indicate that commitment loans tend to have slightly better than average performance, suggesting that
commitments generate little risk or that this risk is offset by the selection of safer borrowers.
9) Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studied about the Loan commitments and
private firms. They studied that, most loans are in the form of credit lines. Empirical studies of line demand have
been complicated by their use of data on publicly traded firms, which have a wide menu of financing options. We
avoid this problem by using a unique proprietary data set from a large financial institution of loan commitments
made to 712 privately-held firms. We test Martin and Santomero's (1997) model, in which lines give firms the
speed and flexibility to pursue investment opportunities. Our findings are consistent with their predictions. Firms
facing higher rates and fees have smaller credit lines. Firms with higher growth commit to larger lines of credit

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and have a higher rate of line utilization. Firms experiencing more uncertainty in their funding needs commit to
smaller credit lines. Almost all firms convert unused credit line portions into spot loans and take out new lines.
10) Faik Koray and Eric T. Hillebrand had studied about the Interest Rate Volatility and Home Mortgage Loans.
They studied that The U.S. economy has experienced substantial fluctuations in real and nominal interest rates
since the 1970s. This paper investigates empirically the relationship between home mortgage loans and volatility
in mortgage rates for the period 1971:02 through 2003:03. Contrary to common wisdom, we find a positive
relationship between mortgage rate volatility and home mortgage loans. Further investigation indicates that this
is due to volatility in the bond market. In times of high interest volatility, households disinvest in government
securities and invest in real assets, which yield a positive relationship between mortgage rate volatility and home
mortgage loans.
11) In november2000 Michelle J. White and Emily Y. Lin had studied about the Bankruptcy and the Market for
Mortgage and Home Improvement Loans. They studied that this paper investigates the relationship between
bankruptcy exemptions and the availability of credit for mortgage and home improvement loans. We develop a
combined model of debtors' decisions to file for bankruptcy and to default on their mortgages and show that the
theory predicts positive relationships between both the homestead and personal property exemption levels and
the probability of borrowers being denied mortgage (secured) and home improvement loans. We test these
predictions empirically and find strong and statistically significant support when evidence from cross-state
variation in bankruptcy exemption levels is used. Applicants for mortgages are 2 percentage points more likely to
be turned down for mortgages and 5 percentage points more likely to be turned down for home improvement
loans if they live in states with unlimited rather than low homestead exemptions. These relationships also hold
when we introduce state fixed effects into the model.
12) In October 14, 2008 David P. Bernstein had studied about the Home Equity Loans and Private Mortgage
Insurance: Recent Trends & Potential Implications. They studied about the impact of increased use of home
equity lines and decreased private mortgage insurance (PMI) on mortgage markets. The data confirms that in the
years leading up to the mortgage crisis home buyers and lenders have aggressively used piggyback loans to
avoid taking out PMI on first mortgages. Multiple-mortgage financing packages as a percent of newly originated
mortgages (mortgages originated within the previous five years) went from 14.8% in survey year 2001 to 21.5%
in survey year 2007. The multiple-mortgage percentage for seasoned mortgages (mortgages originated more than
five years prior to the origination date) also increased by a modest amount. Further comparisons reveal a large
decrease in the proportion of mortgages with PMI with the largest decreases in PMI coverage occurring among
newly originated multiple-lien packages. Data from the SCF was used to compare five financial characteristics
(credit card debt, installment loans, consumer credit, home-owners equity, and liquid assets) for multiple-lien
versus single-lien households. The comparisons suggest single-lien households tend to have slightly stronger
financial variables than multiple-lien households. The data does not support the view that homeowners with
multiple liens are less risky and should therefore be allowed to avoid PMI. The reduced use of PMI and the
increased use of home equity loans increased mortgage holder risk in several different ways and was a
contributing factor to the 2008 mortgage and financial crisis. This change in lending and borrowing behavior is
not a sub prime market problem.

13) In August 2007 Michael LaCour-Little had studied about the Home Purchase Mortgage Preferences of Low-
and Moderate-Income Households. Housing policy in the United States has long supported homeownership, yet
variation persists across income groups. This article employs recent mortgage origination data to focus on the
revealed preferences of low- and moderate-income (LMI) households in home purchase mortgage choice. I

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identify the factors associated with conventional conforming, FHA, nonprime and specially targeted programs.
Empirical results show that individual credit characteristics and financial factors, including pricing, generally
drive product choice, with some variation evident when loans are originated through brokers. Results also
indicate that targeted conventional programs effectively compete with government-insured products in the LMI
segment.

14) In 24 October 2008 David C. Wheelock had studied about the Government Response to Home Mortgage
Distress: Lessons from the Great. They studied about the Great Depression was the worst macroeconomic
collapse in U.S. history. Sharp declines in household income and real estate values resulted in soaring mortgage
delinquency rates. According to one estimate, as of January 1, 1934, fully one-half of U.S. home mortgages were
delinquent and, on average, some 1000 home loans were foreclosed every business day. This paper documents
the increase in residential mortgage distress during the Depression, and discusses actions taken by state
governments and the federal government to reduce mortgage foreclosures and restore the functioning of the
mortgage market. Many states imposed moratoria on both farm and nonfarm residential mortgage foreclosures.
Although moratoria reduced farm foreclosure rates in the short run, they appear to have also reduced the supply
of loans and made credit more expensive for subsequent borrowers. The federal government took a number of
steps to relieve residential mortgage distress and to promote the recovery and growth of the national mortgage
market. The Home Owners Loan Corporation (HOLC) was created in 1933 to purchase and refinance delinquent
home loans as long-term, amortizing mortgages. Between 1933 and 1936, the HOLC acquired and refinanced
one million delinquent loans totaling $3.1 billion. The HOLC refinanced loans on some 10 percent of all
nonfarm, owner-occupied dwellings in the United States, and about 20 percent of those with an outstanding
mortgage. The Great Depression experience suggests how foreclosures might be reduced during the present
crisis.

15) In March 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about the Financial Market
Imperfections and Home Ownership: A Comparative Study. They explore the determinants of the international
pattern of home ownership using the Luxembourg Income Study (LIS), a collection of microeconomic data on
fourteen OECD countries. In most, the cross-section is repeated over time and includes several demographic
variables carefully matched between the different surveys. This allows us to construct a truly unique
international dataset, merging data on more than 400,000 households with aggregate panel data on mortgage
loans and down payment ratios. After controlling for demographic characteristics, country effects, cohort effects
and calendar time effects, we find strong evidence that the availability of mortgage finance - as measured by
outstanding mortgage loans and down payment ratios - affects the age-profile of home ownership, especially at
the young end. The results have important implications for the debate on the relationship between saving and
growth.

16) In 10 December 2007 Irina Paley and Chau Do had studied about the Explaining the Growth of Higher-
Priced Loans in HMDA: A Decomposition Approach. The period 2004-2005 showed a significant increase in
Home Mortgage Disclosure Act (HMDA) rate spread reporting. Following the Oaxaca (1973), Blinder (1973),
and Fairlie (2005) decomposition techniques, this study identifies the fraction of the increase due to the
flattening of the yield curve. Even after controlling for changes in borrower risk characteristics, the findings
reveal that during 2004-2006, the flattening of the yield curve explains a significant amount of the increase in
rate spread reportable loans. This is the case for both prime and sub prime originations.

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17) In Feb. 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael LaCour-Little had studied about the unique
paired loan dataset containing information on multiple conventional conforming mortgage loans of households to
examine home equity extraction decisions over the period 2000-2006. The main question addressed is how much
households borrow when refinancing their current mortgage debt in a cash-out transaction. We also provide
estimates of the marginal effect of certain borrower characteristics. Results contribute both to the literature on
refinancing behavior and the role of house price appreciation in providing funds that may be used for consumer
spending or other purposes.

18) In august2004 Mark Carey and Greg Nini had studied about the Corporate Loan Market Globally
Integrated? A Pricing Puzzle. We offer evidence that interest rate spreads on syndicated loans to corporate
borrowers are economically significantly smaller in Europe than in the U.S., other things equal. Differences in
borrower, loan and lender characteristics associated with equilibrium mechanisms suggested in the literature do
not appear to explain the phenomenon. Borrowers overwhelmingly issue in their natural home market and bank
portfolios display significant home "bias." This may explain why pricing discrepancies are not competed away,
but the fundamental causes of the discrepancies remain a puzzle. Thus, important determinants of loan
origination market outcomes remain to be identified, home "bias" appears to be material for pricing, and
corporate financing costs differ in Europe and the U.S.

19) In July 2005 Gwilym B.J. Pryce and Patric H. Hendershott had studied about the Sensitivity of Homeowner
Leverage to the Deductibility of Home Mortgage Interest. Mortgage interest tax deductibility is needed to treat
debt and equity financing of homes equally. Countries that limit deductibility create a debt tax penalty that
presumably leads households to shift from debt toward equity financing. The greater the shift, the less is the tax
revenue raised by the limitation and smaller is its negative impact on housing demand. Measuring the financing
response to a legislative change is complicated by the fact that lenders restrict mortgage debt to the value of the
house (or slightly less) being financed. Taking this restriction into account reduces the estimated financing
response by 20 percent (a 32 percent decline in debt vs. a 40 percent decline). The estimation is based on 86,000
newly originated UK loans from the late 1990s.

20) In 1 NOVEMBER 2007 Marsha Courchane studied about The Pricing of Home Mortgage Loans to Minority
Borrowers: How Much of the APR Differential. The public releases of the 2004 and 2005 HMDA data have
engendered a lively debate over the pricing of mortgage credit and its implications regarding the treatment of
minority mortgage borrowers. We provide a unique empirical assessment of this issue by using aggregated
proprietary data provided to us by lenders and an endogenous switching regression model to estimate the
probability of taking out a sub prime mortgage, and annual percentage rate ("APR") conditional on getting either
a sub prime or prime mortgage. We find that up to 90 percent of the African American APR gap, and 85 percent
of the Hispanic APR gap, is attributable to observable differences in underwriting, costing and market factors
that appropriately explain mortgage pricing differentials. Although any potential discrimination is problematic
and should be addressed, our analysis suggests that little of the aggregate differences in APRs paid by minority
and non-minority borrowers are appropriately attributed to differential treatment.

21) In 1991 Susan M. Wachter and Paul S. Calemhad studied about the Community Reinvestment and Credit
Risk: Evidence from an Affordable Home Loan Program. This study examines the performance of home

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purchase loans originated by a major depository institution in Philadelphia under a flexible lending program
between 1988 and 1994. We examine long-term delinquency in relation to neighborhood housing market
conditions, borrower credit history scores, and other factors. We find that likelihood of delinquency declines with
the level of neighborhood housing market activity. Also, likelihood of delinquency is greater for borrowers with
low credit history scores and those with high ratios of housing expense to income, and when the property is
unusually expensive for the neighborhood where it is located.

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CONCLUSION

The Indian customer has come a long way from purchasing to fulfilling their needs from buying a house
customers now grab everything that comes their way but they do their own survey of optimum loans; same is the
case with banks & housing loans. With innumerable choices before him, the customer is needed then king. It is
therefore imperative that if the bank has to succeed in competitive world, it should be technological starry.
Customer centric progressive driven by highest standard of cooperative governance & guided by sound ethical
values & above all should have personalized customer services. There is scope of exploiting the vast middle
income group by releasing loans with special interest rate, which would be beneficial to both parties.

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RECOMMENDATION

The following suggestions are strongly recommended:

 To broaden the customer base the vast middle income strata should be fully exploited.
 Simplify the procedure, reduce service charges & demand only the basic essential proof.
 Most banks are reluctant to advance loan to the service class. E.g. law years, police officers etc. this
aspect must be exploited.
 Adoption of flexible & more lenient penalty should the
 Customer fails to deposit the payment on time. The penalty should be case to case basis rather than the
same for the entire customer base.
 Restriction to be reduced to bare minimum for loan advances & for repayment. For e.g. offers Long term
repayment facilities & have no age restriction to choosing repayment. The maximum age for repayment
could be increase to 65-70 years of age. Such facility will grow fast retail segment of the bank.
 Offer multiple repayment loans services. Class to be exploited by offering special reduced
 Rates & linking the repayment from the source where the pay cheque to the employee is issued. This
need to undergo special contract with government organization to ensure implementation.

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