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OF BANKING SECTOR TO HOUSING FINANCE

INTRODUCTION
Earlier it was very
difficult to take a loan
from the financial
institutions. Interest rates
were high and a lot of
documentation was there.
But today when there are
a large number of
financial institutions in
India, who are providing
credit facility, it has
become very easy to take
a loan.
Terms and
conditions are liberal i.e. low
interest rates, less
documentation etc. Interest
rates are becoming globally
competitive and declining
continuously. Now a day just
think of purchasing a car and
car-financing companies will
start knowing at your door
and ringing your phone.
Financial institutions have adopted liberal credit policies. They
enquire less about end use of funds. Various types of loans are there and
easily available at cheap rates.
When we take the case of home loans, it is a very safe area of loans
from the point of view of financial institutions. They are easier to increase
their share in the home loan sector. So they are coming with the attractive
schemes. Customers can have the benefit of liberal terms and conditions as
well as tax benefits if they choose to take a home loan. So the use has gain
attention. The increasing number of home loans available today as
strengthened the middle class individual to venture forth and fulfill his
dreams.
Today, the demands of the current social status necessitate that varied
means are tapped into in order to achieve the ultimate goal-better living
Home loan proposals are thus gaining popularity due to their easy-
installments schemes, low interest rates and high returns on the standards of
living. While a home loan generally includes financial for home extension,
home improvement loans are well as loans for property medication; the
terms are more commonly applied to finance schemes for purchasing
houses.
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 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 th 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.
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.

Contents
1. Introduction
2. Objectives
3. Research Methodology
4. Home Loan Scheme of Various Bank
SBI Home Loan Scheme¬
PNB Home Loan Scheme
BOB Home Loan Scheme¬
HDFC Home Loan Schemes¬
5. Analysis & Finding
6. Limitations
7. Recommendations and Conclusion
8. Annexure :-
Questionnaire
Bibliography

Project Description :
Category : Project Report for MBA
Title : STUDY OF CONVERGENCE OF BANKING SECTOR TO HOUSING
FINANCE
Pages : 70
This project is our paid category, its cost is Rs. 2499/- only without Synopsis and Rs.
2999/- only with synopsis. If you need this project, mail us at this id :
bkm@allprojectsmba.com or bhushanmehta245@yahoo.co.in or call at +91-9355998386.
We will send you a hardcopy with hard binding and a softcopy in CD from courier.

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