A

SUMMERTRAINING
REPORT
ON
COMPARISONOFHOMELOANSCHEME
OFDIFFERENTBANKS

SUBMITTEDTO

SUPERVISORNAME

SUBMITTEDBY
YOURNAME

COURSE
COLLEGE

ACKNOWLEDGEMENT
Perfectisthefamoussayingandwhenapersongetpracticalexperienceundertheguidance
ofexpertoftherespectivefield,theknowledgegainedispriceless.
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
invaluablesupportandcontributionofnumberofthepeoplesindirectandindirectmanner.
In the light of foregoing, first of all my heartfelt great fullness and thanks goes to Mr.
SUMITSURIasaMANAGERofHDFCLIMITEDforgivingopportunitytoworkforhis
highly esteemed organization and for being a constant source of inspiration and guidance
throughouttheproject.Withouthisablesupporttheprojectwouldnothaveseenthelightof
theday.
At this juncture, I would also like to thank all the other team members of the HDFC
LIMITED.Withouttheirindispensablecooperation,theprojectwonthavebeencompleted
withinthestipulatedtimeperiod.FinallyIwouldliketothankthestaffofotherhomeloan
providerbanks,withoutwhosecooperationinprovidingthedatafortheprojectwouldhave
beenimpossible.

PREFACE

Modern organizations are highly complex ad dynamics systems. They operate under very
turbulentsocialeconomicandpoliticalenvironment.Theyarerequiredtoreconcileseveral
incompatiblegoals.Conflictingrolesanddivergentinteresttheyarealsofraughtwiththeuse
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
managementastohowmarketingproblemsshouldbesolved.
The marketing research is the process which links to manufacturer, dealers and individuals
throughinformationinimportantpartofcurriculumofM.B.A.programmeisprojecttaken
by the students to institute under which he or she is studying, after completion of third
semesteroftheprogramme.
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
extremelyusefultothemanagement.

INTRODUCTION
Theroofoveronesheadandgroundbeneathonesfeetcountasthebarenecessitiesoflife.
Theres nothing quite like owing a home, however humble to give that warm and glowing
feeling.Butwhenonebuysahome,onehasmuchmorethanafeelgoodpurchaseinmind!
Its also a crucial investment decision, perhaps the biggest spending decision of ones life.
There are ample opportunities today for young salaried investors to plan their moves early
andbuyahouseatrighttimeandatrightprice.Intheprocess,notonlydotheyfulfillthat
cherisheddreamofowingahouse,butalsoputthemselvesonthepathtoacquiringproperty
thatwouldmeettheneedsandaspirationsoftheirgrowingfamily,evenasitleadstowealth
creation.Everyindividualaspirestoownahome.Butmanyeitherspendalifetimesavingto
purchaseahouseorexhaustmoneyonmonthlyhouserents.
Take a house loan and let the monthly rent (easily converted into affordable EMIs)
builddreamhome.

OBJECTIVEOFTHESTUDY:
The main objective of the study is to find out the tariff changes charges by other banks in
comparisontoHDFCbank.
The aim of the study is to help HDFC to know where it lacks in loans and how for the
performanceofotherbanksisbettersothatHDFCfigureoutthecommonproblems
being faced by the customers while dealing in the loan department so that further
HDFCcanimproveitsservicesandschemesofferedbythemtotheircustomers.
PROFITABLEPROPOSITION
Theoveralldemandinresidentialsectorhasgrownbyabout78%inthepastfewmonthsas
comparedtothesameperiodlastyear.Thegrowthisonaccountoftwomainfactors:
One,incometaxexemption.
Two,withnosimilarrebatesavailableforindividualsinthehighincomegroup,they
arecreatingasecondasset.
Addtothisthestablepropertypricesoverthelastyearandplunginginterestrates,planning
for dream,] home could not have been better timed. Rockbottom interest rates,
standardizationofperiodicityofinterestcalculationacrosslenders(whichmakeiteasierto
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
consumerastheking.
Inresponse,privateplayerslikeICICIBank,IDBIBank,StandardCharteredBankandfew
otherstooloweredtheirrates.
MarketleaderHDFCalsobroughtdownitsinterestrateto8.75%veryrecently,toparticipate
intheinterestratewar.Ifoneisstillnotsatisfiedwiththeloweredloanratestheresmore.
Someindustrywatchersbelievethatthefloatinghomeloanratewillslipto8%forlongterm
loansanothertwoorthreeyears.
Mostbankshavechangedthewaytheinterestiscalculatedfromannualresttomonthlyrests.
Undertheannualrestmethod,theEMIs(equalmonthlyinstallment)onepaythroughayear,
arefactoredinaspartrepaymentoftheprincipalcomponentonlyattheendofeachyear.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
frequentlyinterestiscalculated,thebetterforthecreditor.


HDFCaddedmonthlyrestsonitsfixedinterestloansapartfromannulrests.Asaresultthe
fall in the EMIs on fixed interest loans (where the interest rate is constant for the entire
tenureoftheloan,irrespectiveofthechangesinthelendingrates)ismorepronouncedthan
onfloatingrateloans(wheretheloaninterestratevarieswiththechangesintheinterestrate).
Forexample,theEMIonafifteenyearfixedinterestloanforRs.15lakhhascomedownby
Rs.15lakhhascomedownbyRs.840,thecorrespondingfallintheEMIonafloatingrate
loanisonly4165.apartfromloweringthecostofonesloan,theswitchovertomonthlyrests
hasanotheradvantage:itmakesiteasiertocompareloans.

HOMELOAN
Homeloansareloansyouhaveaccessto,dependingonwhetheryouwanttobuyorbuilda
houseandcanalsobeusedtorepairorextendanexistinghouse.
Whocanavailoftheseloans?
Accordingtolendinginstitutions,anyIndianresidentwhoisover21yearsofageat
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,underRBIguidelines,canapproachonlynationalizedbanksandotherHDFCfor
loans.
Whyshouldoneoptionforaloantobuyahouse?

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
incomecurrently,buytheiraccumulatedcapitalisntenoughtopurchaseahouse.Whereasa
homeloancangivethemaccesstocapitaltheircurrentearnings.
Also, if you take a 10 years old loan when you are thirty, you could repay it by the time
youre forty. So you dont have to be burdened with the interest and are free to plan your
retirementsavings.
TheQuantumofloanthatonecanavailof:

Loan sanctioned depend on your repayment capacity which is based on your current
income and your future repayment capacity. You would include your spouses name to
enhance the loan amount.The maximum loan can be sanctioned varies with each
bank/institutionsandrangesfromRs.10lakhstoRs.1crore.
Benefitsoftakingahomeloan:

A home loan is very different from a personal loan like a car loan for instance. You can
utilizeahomeloanforfinancinganassetthatwillholditsvalueandevenappreciateoverthe
periodoftheloan.Thoughitspricecouldfluctuateintheshortterms,TotalEstatewillshow


capitalappreciationovertheyears.Thevalueofyourhousegenerallywhiletheloanremains
constant.Ifyouhadoptedtowait,saveupandbuyahouse,itwould,inthelongruncostyou
muchmorehomeloansalsocomewithmanytaxbenefits.
Taxbenefitsoftakingahomeloan:

The income tax authorities look with favor upon those servicing a housing loan from
specifiedfinancialinstitutions.And,itisuptoyoutobewiseenoughtotakeadvantageof
this.
Section24oftheIncomeTax:

Interest on loan till Rs.1.5 lakhs per annum is exempted form income tax (under section
23/24(1)oftheIncometaxact).
Section88ofIncomeTaxAct:
Yougeta20%rebateonrepaymentofprincipleduringafinancialyear.Onceagain,overthe
years, the principle repayment eligible for rebate has been enhanced from Rs.10,000 to the
currentlimitofRs.20,000Stampduty,registrationfeeortransferofsuchhousepropertyto
theassessesisalsoconsideredunderthisamount.
FinancialInstitutions,whichgive,homeloans:

LeadingBanksHousingfinancecompanies
FINANCIALIMPLICATIONSOFAVAILINGALOAN(SMALLORBIG)
Thereareseveralexpensesinvolvedapartfromrepaymentoftheactualloanamount:
1. Processing fees A processing fee (PF) is charges at the time of submission of the
applicationformandcoversexpensesincurredforprocessingtheapplicationform.Thisfee
hastobepaidupfrontbythecustomerinsomecases,itisnonrefundable.
2.Administrationfeestomeetoperatingexpenses.
3. PreEMI A simple interest calculated on the disbursement amount in case of a plot
underconstruction.
4.EMITheEMIisanabbreviatedformoftheequatedmoneyinstallmentandissimply
referredtoasmonthlyinstallmentincommonparlance.And,beingaselfexplanatoryterm
thatisexactlywhatitis.Theamountyouwillhavetopayyoufinanciereverymonthwhen
repayingyourloan.Beingamonthlypayment,attheendoftheyear,youwouldhavepaid12
EMIs.


TYPESOFLOANSAVAILABLE
Broadlytwotypesfixedrateandvariablerateloanswhiletheformerdealswithafixedrate
of interest over the entire duration of the loan, the latter has the rate of interest changing
accordingtothefluctuationsinthemarket.
LOANTHATONECANAVAIL
Upto8590%ofthetotalcostbasedprimarilyupontheindividualspaybackcapacity.
GENERALCONDITIONSTHATGOVERNAHOMELOAN:

Thesearelikelytovarywithrespecttothedifferenttypesofhousingloans:
The maximum period of the loan is normally fixed by HFIs. However, HFIs do
providefordifferenttenorswithdifferenttermsandconditions.
TheInstallmentthatyoupayisnormallyrestrictedtoamount45%ofyourmonthly
grossincome.
You will be eligible for a loan amount, which is the lowest as per your eligibility.
Thisiscalculatedonthebasisofyourgrossincomeandpaybackcapabilities.
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
disbursementofyourloantasksplace.
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
benefitthatyougetwhenyouavailofaloanfromanHFI.
YourepaytheloaneitherthroughDeductionagainstSalary,Postdatedcheques,and
standinginstructionsorbyCash/DD.
WHATALLONECANTAKETHELOANFOR?
Therearedifferenttypesofhomeloantailoredtomeetonesneedsheresallsomeofthem.
Homepurchaseloan:Thisisthebasichomeloanforthepurchaseofnewhome.
Homeimprovementloans:Theseloansaregivenforimplementationrepairworks&
renovationinahomethathasalreadybeenpurchasedbytheclient.
Homeconstructionloan:Thisisavailablefortheconstructionofnewhome.
Homeextensionloan:Thisisgivenforexpandingorextendinganexistinghomefor
e.g.:additionofanextraroometc.
Homeconversionloan:Thisisforthosewhohavefinancedthepresenthomewith
homeloan&wishtopurchase&movetoanotherhomeforwhichsomeextrafunds
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
previousloan.
Land purchasing loan: this loan is available for the purchasing of land for both
constructionandinvestmentpurpose.
Bridgeloan:thesearedesignedforthosepeoplewhowishtoselltheexistinghome
&purchaseanotherone.Thebridgeloanhelpfinancethenewhome,untilabuyeris
foundforthehome.

HDFCBANK

INTRODUCTION
HDFC(HomeDevelopmentFinanceCorporation)HomeLoan,Indiahavebeenservingthe
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.

COMPANYPROFILE
HDFC Limited founded in 1997 by Ravi Maurya and Hansmukh bhai Parekh, is an Indian
NBFSfocusingonhomeloans.HDFCoperatesthroughalmost450locationsthroughoutthe
countrywithitscorporateheadquartersinMumbai,India.HDFCalsohasaninternational
office in Dubai, UAE with service associates in Kuwait. HDFC is the largest housing
companyinIndiaforthelast27years.
HDFCwasamongstthefirsttoreceiveaninprincipalapprovalfromRBItosetupabankin
theprivatesector,asapartoftheRBIsliberalizationoftheIndianbankingindustry.Itwas
incorporatedon30thaugust1994inthenameofHDFCBankLimited,withitsregistration
office in Mumbai. HDFC began its operations as a scheduled commercial bank on 16th
January1995.

ABOUTTHEPROMOTER
HDFC,thepromoter,isIndiaspremierhousingfinancecompanyandenjoyanimpeccable
trackrecordinIndiaaswellasininternationalmarkets.
Since its inception in 1997, HDFC has maintained a consistent growth in its operation and
profitability.Itsoutstandingloanportfoliocoversoveramilliondwellingunits.HDFChas
developedsignificantexpertiseinretailmortgageloanstodifferentmarketsegmentandalso
has a large corporate client base in relation to its housing related credit facilities and its
investmentinportfolio.
With its tremendous brand equity, the strong reputation in the Indian and international
financialservicesmarket,largeshareholderbaseanduniqueconsumerfranchise,HDFCwas
ideallypositionedtopromoteabankinthe
Indian environment. HDFC (together with its fully owned subsidiary HDFC Investment
Limited)ownsabout31%oftheequity.Theyhadstartedwithastrategicalliancewiththe
NatwestgroupinUKwith20%equity,whichhasdivestedlateron.Thebankhasalsosigned
a memorandum of understanding for strategic business collaboration with chase Manhattan
BankinFeb.2,1999.


BUSINESSPHILOSOPHY
ThemissionoftheHDFCBankistobeworldclassIndianbank.Thiswouldimplyabank
thatwouldmeetvariousfinancialneedsofitscustomersinaconvenientandcosteffective
manneratinternationalstandardofservice.
The bank seeks to achieve the status of a preferred organization among its major
constituents customers, shareholders, regulators, employees, suppliers etc. while
maintainingthehighestlevelofintegrityandcorporategovernance.
ThebusinessphilosophyatHDFCbankisbasedonfourcorevalues:operationalexcellence,
customerfocus,andproductleadershipandpeoplecompetitors.
The Bank faces the strong competition in all of their principal lines of business. Their
primarycompetitorsarelargepublicsectorbanks,otherprivatesectorbanks,foreignbanks
andinsomeproductareas,nonbankingfinancialinstitutions.
WHOLESALEBANKING
Principalcompetitorsinwholesalebankingarepublicandnewprivatesectorbanksaswell
asforeignbanks.Thelargepublicsectorbankshavetraditionallybeenthemarketleadersin
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.
RETAILBANKING
Inretailbanking,theirprincipalcompetitorsarethelargepublicsectorbanks,whichhave
muchlargerdepositbasesandbranchnetworks,,othernewprivatesectorbanksandforeign
banksincaseofretailloanproducts.Theretaildepositsharesoftheforeignbanksarequite
smallincomparisontothepublicsectorbanks,andhavealsodeclinedinthelastfiveyears,
whichweattributeprincipallytothecompetitionfromnewprivatesectorbanks.However,
someoftheforeignbankshaveasignificantpresenceamongnonresidentIndiansandalso
compete for nonbranch based products such as auto loans and credit cards. They face
significant competition primarily from foreign banks. In provision of debit cards and also
expecttofacecompetitionfromforeignbankswhenwebeginofferingcreditcards.Inmutual
fundsalesandotherinvestmentrelatedproducts,theirprincipalcompetitorsarebrokersand
foreignprivatebanks.


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
banksiontheforeignexchangeandmoneymarketbusiness.
LOANS
HDFCbringsbackyouawiderangeofloanstocateryourfinancialneeds.
Thebankoffersthefollowingloans:
1)
2)
3)
4)
5)
6)
7)
8)

Personalloans.
Consumerloans.
Autoloans
Loansagainstshares
LoansagainstRBIbonds
Loansagainstinsurancepolicy
EInstantloansgivethefacilityofloansapprovalinthe60secondontheinternet.
HDFChasofficesspreadalloverthecountry.ThisextensivenetworkhelpsHDFCin
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
MiddleEastbasednonresidentIndianstoapplyforloantoHDFCIndia.
9) HDFCispioneerofhousingfinanceinIndiaandhasbeenaleaderinbusinessforthe
last 23 years. HDFC has vast experience and a very committed and skilled staff to
handlehousingloanapplicationsandsolvingcustomerproblems.
HDFCLOANSCHEMEPURPOSE
HDFCLimitedoffersloansforthefollowingpurposes:

Landpurchase
Homeconstruction/purchase
Homeextension
Homeimprovementloans
Shorttermbridgeloans
Nonresidentpremisesloansforprofessionals.


LOANAMOUNT

Youcanavailofmaximumofupto85%ofthecostoftheproperty,includingthecostofthe
land.
LOANTENURE
Youcanrepaytheloanoveramaximumperiodof20yearsunderbothFRHLandARHL.
Repaymentwillnotordinarilyextendbeyondyourageofretirement(ifyouareemployed)or
on your reaching 65 years of age, whichever is earlier. However, HDFC will endeavor to
determinetherepaymentperiodtosuityourconvenience.
RATEOFINTEREST
TherateofinterestofHDFCis8.75%.underthemonthlyrestoption,interestiscalculatedon
monthlyrests.Principalrepaymentiscreditedattheendofeverymonth.
At HDFC you have the choice between the normal FRHL and the innovative ARHL.
AlternativelyyoucanalsoavailthepartoftheloanunderFRHLandbalanceunderARHL.
HDFC also offers you the option to switch between schemes for the nominal fee. Interest
ratesonARHLwillbelinkedtoHDFCsRetailPrimeLendingRate(RPLR)whichcurrently
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,theEMIonthehomeloandisbursedwillnotchange.(iftheinterestrateincreases,
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
interestandprincipalpaymentmadeduringtheyear.
SECURITY
Securityfortheloannormallyisfirstmortgageofthepropertytobefinancedand/orsuch
other collateral security as may be necessary. Interim security may be required, if the
propertyisunderconstruction.CollateralorinterimsecuritycouldbeassignedtoHDFCof
life insurance policies, the surrender value of which is at least equal to the loan amount,
guaranteesfromsoundandsolventguarantors,pledgeofsharesandsuchotherinvestments
thatareacceptabletotheHDFC.
LoansfromHDFCareavailableevenifyouareavailingahousingloanfromyouremployer.
HDFChasalreadyenteredintoarrangementswithseveralemployersenablingemployeesto
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
affectthetitletothepropertyadversely.


DOCUMENTS/SUPPORTINGDOCUMENTSTOBEATTATCHED:
FORALLTHEAPPLICANTS:
1) Allotmentletteroftheooperativesociety/associationoftheapartmentowners.
2) Copyofapproveddrawingsofproposedconstruction/purchase/extension.
3) Agreement for sale/sale deed/detailed cost estimate from architect/engineer for the
propertytobepurchased/constructed/extended/renovated.
4) If you have been in your present employment/business or profession for less than a
year,mentionanaseparatesheetdetailsoftheoftheoccupationsforpreviousfive
years,givingpositionheld,reasonforchangeandperiodofsame.
5) Applicableprocessingfees.
6) Proofofresidence:attestedcopyofanyoneofthefollowing:
a) Rationcard
b) Passport
c) Drivinglicense
d) Votersidentitycard
e) Currenttelephonebill/electricitybill/gasbill
7) Proofofidentity:attestedcopyofayoneofthefollowing:
a) Passport
b) Drivinglicense
c) Voters identity car5d identity card issued by the employer (if employed in
state/centralgovernment)
d) PANcard
8) Certificateofloanoutstandingissuedbythelender(forrefinancecasesonly)
9) Anyotherinformationregardingyourrepaymentcapacitythatisnecessaryandwill
assistHDFCinappraisingtheloanproposal.
ADDITIONALLY
IFYOUAREEMPLOYED:
1) VerificationoftheemploymentformwithonlypartIfilledin.
2) Latestoriginalsalaryslip/salarycertificateshowingalldeductions.
3) If your job is transferable, permanent address where correspondence relating to the
applicationcanbemailed.
4) AletterfromyouremployeragreeingtodeducttheEMItowardstherepaymentofthe
loanfromyoursalary.Thiswillexpeditetheprocessingofyourloanapplication.
5) Yourupdatedoriginalbankpassbook/sororiginalbankstatement/sshowingsalary
andsavingentriesforthelastsixmonths.
6) A photocopy of your Form16 (issued by your employer) for the last assessment
year.


IFYOUARESELFEMPLOYED:
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
CharteredAccountant.
2) A note giving information on the nature of your business/profession, form of
organization,clients,suppliers,etc.
3) Copiesofindividualtaxchalansforthelastthreeyears
4) Copyofadvancetaxchalan(ifany)
5) Your updated original Bank Pass Book/s or Original Bank Statement/s showing
savingsentriesforthelasttwelvemonths.
TAXBENEFIT
Youareeligibleforcertaintaxbenefitsonprincipalandinterestcomponentsofaloanunder
theIncomeTaxAct,1961.
ELIGIBILITY
TherepaymentcapacityasdeterminedbytheHDFCwillhelpindecidinghowmuchwecan
borrow(thecostofthepropertyorRs.1crorewhicheverislower).Repaymentcapacitytakes
into consideration factors such as income, age, qualifications, number of dependents,
spousesincome,assets,liabilities,stabilityandcontinuityofoccupationandsavinghistory.
And,ofcourse,HDFCsmainconcernistomakesureyoucancomfortablyrepaytheamount
youborrowed.
ABOUTTHEPRODUCT
HDFCs Home Loans offers you various unique benefits and are easy to arrange and
repayableineasymonthlyinstallments.Thetermsoftheloancanbestructuredaccordingto
thecustomerrequirement.
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 coapplicants.
However,thecoapplicantsneednotbecoowners.Loanscanavailuptoamaximumof85%
ofthecostoftheproperty(includingthecostoftheland).HDFClendsuptoamaximumof
Rs. 10000000 on a home loan to an individual. You can repay the loan over a maximum
periodof20years.Theydeterminetheloanamountafterevaluatingtherepaymentcapacity
of the individual. HDFCs main concern is to help individuals comfortably repay the
borrowedamount.


SUPERIORPROCESSINGCAPACITY:
HDFChasovertheyearsinvestedsubstantiallyintothecomputersystemsandtraining.This
hasenabledHDFCtorespondtocustomerneedsandbuildupcapabilitiestoapproveloanon
thespotordisbursethemfast.
BRANCHNETWORK:
HDFC has offices spread all over the country. This extensive network helps HDFC in
providingservicetolargeandwellspreadoutclients.Thisnetworkofinterconnectedoffices
(ondatacircuits)helpsHDFCtoprocessapplicationsforpurchaseofpropertyanywherein
India. HDFC has further established an office in Dubai and service associates in Kuwait,
Oman,Qatar,BahrainandSaudiArabiatomakeiteasierforMiddleeastbasednonresident
IndianstoapplyfortheloantoHDFCIndia.
EXPERIENCEDTRAINEDSTAFF:
HDFCisapioneerofhousingfinanceinIndiaandhasbeenaleaderinthebusinessforthe
last 25 years. HDFC has vast experienced and very committed and skilled staff to handle
housingloanapplicationsandsolvingcustomerproblems.
FREECOUNSELLING:
HDFC believes that it is in the business of providing solutions to an individuals need for
owingahouse,andnotjustinthebusinessofprovidingfinance.KeepingthisinmindHDFC
willprovidefreecounselingtoonhowandwheretobuyahouseinIndia(propertyservices)
orwhatarethepricesandtrendsintherealestatemarketorwhatprecautionsoneshouldtake
beforebuyingahouse.ThisserviceisofferedatanyoftheHDFCsoffices.
LEGALANDTECHNICALGUIDANCE:
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
beingdevelopedbythereputeddevelopers.IthasalwaysbeenHDFCsendeavortoprotect
the interest of the borrower, as we believe that the buying a house is one of the most
Importantdecisionsinthislife.
FLEXIBLE(CUSTOMIZED)REPAYMENTSCHEMES:
Keepinginmindthefactthateachindividualhasuniqueproblemrequiringuniquesolution,
HDFChasdevelopedvariousrepaymentoptionslikeStepUpRepaymentFacility(SURF),
Flexible Loan Installment Plan (FLIP) Balloon Payment plan and Structured Repayment
Plan.


STEPUPREPAYMENTFACILITY
HDFCLtdhasahithertowithyou,rightthrough.ThisstatementHDFCprovestimeand
Againbydevelopingcloserelationshipwithindividualcustomersandbyconstantly
Developingandmarketinginthemarketnewandinnovativeproductsthatincreasethe
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
yourdream.
Thisfacilityisespeciallyhelpfultothosecustomerswhowanttogetaloanonanamount
thatisnotfallingwithinthepermissiblelimitoftheirrepaymentcapacity.Italsoisinline
withHDFCsaimtoprovidegreaterdegreeofpersonalizationinserviceandthetools.Hence
therecanbethesituationwhereintheapplicantisnotinthepositiontopaytherequiredEMI
whichiscalculatedbytheILPS(Individualloanprocessingsystem).HDFCinthiscaseoffers
tolettheapplicantuseoneofthetwoplanstorepaytheloanamount.
TheEMIChooser1
InthisplantheapplicantgetstheadvantagefromHDFCtoselecttheamountthat
hewantstopayashisfistEMI.ThismeansthatHDFCwilllettheapplicantdecide
what amount he can comfortably pay to HDFC in the first term of his Loan Repayment
Schedule.ThesystemwillcalculatethenexttwoEMIsforthenexttwoterms

ThecustomercanhencedecidewhenhewantstorepaythemaximumamountoftheLoanto
HDFCandwhenhewantstorepayminimumleftoverorremainingamountoftheloaninthe
formofstillsmallerEMIs.

TheEMIChooser2
Thisplanisanextensionoftheaforementionedplan.InthisplanHDFChelpstheApplicant
bylettinghimchoosetwoEMIs.ThismeansthattheApplicantcanselecttheamountthathe
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
theseplansdontstophere.
TheApplicantcanalsoallocatethetermlengthforwhichhewantstopaywhatamount
ThistranslatesintoagreatadvantagetotheApplicant.Hecannowlink
1.Hiscurrentsalary
2.Therateofaverageincrement,
3.Hisexistingandexpectedobligations,
4.Hisexistingandexpectedexpenses
5.Thelengthofthetermamongothers.

HDFCcanhenceassisttheApplicantindevelopingamuchmorepersonalizedloanplanas
comparedtoitscompetitorsintheHousingLoanmarket.
TheApplicantcanalsosavemoneybyusingtheseplans.ThisisbecausethetotalOutflowin
caseofaregularplanismoreascomparedtothesespecialplans.TheApplicantwillhence
obtainmorebenefitincaseofPrepaymentandelsewhere.

C.AllLoansfromHDFCLtdaresubjecttoTaxexemptionandbetreatedasRebate.
HenceHDFCletsthecustomersavetheirhardearnedmoney.
FLEXIBLELOANINSTALMENTPLAN(FLIP)

Another First of its kind product from HDFC .This is also to assist the Applicant to easily
securealoaninthefollowingcondition.FLIPisusedwhentheapplicantandcoapplicant
want to jointly repay the loan. There is however a problem in the situation which would
otherwisenotallowtheloantobesanctioned.Therearetwoapplicantshencetwoincomes
.Thereforeinthejointpaymenttheycancombinetheirincometorepaytheloan.Lettherebe
Mr.AandBwhowanttotakealoanfor14years.AisthefatherandBisthesonofA.Now
considerthesituationinwhichAandBwanttotakealoanandjointlyrepayit.ButAis52
yearsoldandBisonly25.HenceAwillretireafter8yearsandwillnotberepayingthe
EMIbutBcancontinuetorepaytheloan.Inthatcasealthoughtherewillbeaproblemat
otherplacesbutinHDFCthisissolvedbytakingdifferentincomesintheterms.Hencethe
incomethatwillbeconsideredearlierwillbethefathersincomeandathisretirementorat
anyotherselectedstageofrepaymentwewillbegintoconsideronlytheincomeoftheson.
The advantage of FLIP in terms of the Applicant is that of joint payment, personalization,
easyrepayment,andfreedomfrommanypossibleproblems.IntheIllustrationthefatheris
goingtopayonlyfor105monthsandafterthatwearetoconsiderthesonssalaryonlyfor
thenextremaining60months.
PARIPASSU/SECONDMORTGAGEARRANGEMENT:
HDFC has a tieup with a large number if public sector organizations and banks which
enableustoofferloanstoyouremployeeswiththeflexibilityoftheirspousealsoavailinga
loanfromhis/herownemployer.
SAFEDOCUMENTSTORAGEFACILITIES:
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
safelyovertheperiodoftheloanandarereleasedalmostimmediatelyafteracustomerrepay
hisloan.


ELECTRONICMAIL:
HDFCthroughitsEmailservicescanpromptlyrespondtoqueries.Inaddition,HDFCcan
promptlysenditsapplicationformcumbrochureandotherdetailonitsloanproductsbye
mailtointerestedindividuals.ForNonresidentIndiansourinteractivewebsiteoffersanother
meansofcontactingus.InourefforttoreachoutgloballydispersedNonresidentIndians,we
willcontinuouslyenhanceourwebsite.
HOMECONVERSIONLOAN:
HDFCoffertheoptionofahomeconversionloantoitsexistingcustomerwhoareinterested
inmovingtoanewhouse.Throughthisschemethecustomercanapplytohavetheirexisting
loan transferred towards the purchase 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
optionofsellingt6heirexistinghouseiftheywishto,withouthavingtorepaytheiroldloan
APPLICATIONCANBEMADEBEFORESELECTINGTHEPROPERTY:
Individualsmaymakeanapplicationfortheloanevenifthepropertyhasnotbeenselected
or the construction has not commenced. HDFC can provide assistance in locating an
appropriatehousetosuchcustomers.
HOMEIMPROVEMENTLOANS:
AsanexclusiveoffertoitsexistingcustomersHDFCoffersHomeImprovementLoanupto
100%oftheimprovementcostascomparedtothehomeimprovementloansupto70%ofthe
improvementcostofferedtothegeneralpublic.
FEE:
Aprocessingfeeof0.5%oftheloanamountappliedforrs.5perrs.1000oftheloanapplied
forispayablewhentheapplicationformissubmittedtoHDFC.Thisfeeisintherespectof
costsincidentaltotheapplication.Forexample:
Loanappliedforfees
Rs.20000
Rs.100000

Rs.100
Rs.500

Onapprovaloftheloan,aloanofferismadetoyouonacceptanceoftheoffer.Youhaveto
payanadministrativefeeofRs.0.5%oftheloanapproved.Youcanalsopaytheprocessing
feeandadministrativefeeupfronti.e.1%oftheloanatthetimeofsubmissionoftheloan
application itself. This fee is in respect of the costs incidental to the application. Taxes as
applicablewillbechargedonthefeescollected.

CHARGES:
ForFixedRateHomeLoan(FRHL)anearlyredemptionchargeof2%oftheamountbeing
prepaid is payable, if the amount being repaid is more than 25% of the opening balance.
HoweverunderAdjustableRateHomeLoan(ARHL)optionearlyredemptionchargesof2%
ispayableonlyincaseofcommercialrefinance.Youmayberequiredtosubmitthecopiesof
your Bank Statements or any other documents that HDFC deems necessary to verify the
sourceofprepayment.
You can make payment for fees and charges by cheque marked payees account only
drawnonabankinacitywhereHDFChasanofficeorbydemanddraft(payableatparto
HDFC).

HOWTOAPPLY
Customer can either download (in PDF format) the application form or get the application
formbyEmail.Alternatelythecustomerscancollecttheapplicationformfromanyofyour
nearest HDFC offices. Customer need to submit it along with supporting documents and
processingfeeatanyHDFCofficethatisconvenienttothecustomer.Customerscanmake
paymentsbythechequemarkedpayeesaccountonlydrawnonabankinacitywherethe
HDFChasanoffice,bydemanddraft(payableatparttoHDFC)orbycash.Customercan
make an application at any time after they have decided to acquire a house even when the
househasnotbeenselectedorconstructionhasnotcommenced.
HDFCwillconsideryourapplication,makeenquiriesasitdeemsnecessaryandconveyits
decisiontoyou.Onacceptanceoftheoffer,youwillhavetopayanadministrativefeeforthe
loanapproved.Customercantakethedisbursementoftheloanafterthepropertyhasbeen
completedandyouhaveinvestedyourowncontributioninfull(owncontributionisthetotal
cost of the property less HDFCs loan). The loan will be disbursed in full or in suitable
installments(normallynotexceedingthreeinnumber)takingintoaccounttherequirementof
the funds and the progress of the construction, as assessed by HDFC and not necessarily
accordingtothebuildersagreement.

STAGESOFHOMELOAN

DataEntry
Application

Munirka
HUB

DISBURSE
TheLoan

Fix
Chrg
es

PROCESS
Firstofalldocumentsarecollected

Login

DoubleChecking
Over(DCOVR)

Scanning

Recommendation
Over(ROVR)


RESEARCHMYTHODOLOGY
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
researchtoolsandtechniquestocompletetheresearch.
Thestudyoftheconsumerbehaviorisimportantbecauseheistheking.Theresearchprocess
isbaseduponsurveymethod,soinorderwegotoserviceproviderandservicesuserwhichis
thecustomers.
Theresearchinvolvesthefollowingsteps:
Definetheproblemandresearchobjective:Theproblemandobjectiveistoassess
theservicesofferedbythevariousserviceprovidersandwhatthecustomerwants.
Developingtheresearchplan:Thesecondstageoftheresearchmethodologyisto
developaresearchplan.Theresearchplandesignedtotakethedecisiononthedata
sources, research approaches, research instruments, sampling plan and contact
methods.
Surveyresearch:Itwasadescriptiveresearch.
Researchinstrument:Theuseofaneffectiveresearchinstrumentisveryimportant
because through this instrument we collect data in this project through observations
andpersonalinterviewwereconducted.
Personalinterview:asweweredoingdirectsellingweinteractedwithmycustomers
and asked about their views in selecting a service and what are their wants and
expectationsfromaserviceprovider.
Sampling plan: After finalizing the research approach and instruments a sampling
mustbedesigned.
Samplingunit:Datahavebeencollectedfrombanks.
Samplingsize:Ithasbeencollectedfromfourbanks.
Sampling procedure: what process should be used to collect the sample. So,
representationsample,conveniencesamplingisused.
Collecttheinformation:Aftercompletingallthesteps,thedataarecollectedfrom
differentsources.
Analyzetheinformation:Afterthedataiscollectedtheyareanalyzedtoknowthe
findings.Thedataisthentabulatedtodevelopthefrequencydistribution.
Presentthefindings:Asthelaststep,thefindingsarepresentedthatarerelevantto
themajormarketingdecisions.

ANALYSISOFDATA
Thehomeloansprovidedbythebanksaremoreorlesssameatthebasiclevel.Thebanks
generallytrytogoaheadofotherbanksintermsofattractingnumberofcustomerstotheir
countries. For this they are trying to offer some unique services as per the unique
requirementsoftheuniqueimportantcustomers.
COMPARITIVESTATEMENTOFHOMELOAN

PARTICULARS

HDFC

ICICI

PNB

SBI

ROI(FIXED)

14%

15Yrs.16%
5 10 Yrs.
16 % 10 15
Yrs.16%
15
20Yrs
13.75%

Up to 5yrs Year18%
9.25% (up to 20 Year 2 & 3
lakh)
9%
&
10% (above 20
lakh)
5to10yrs10%
(upto20lakh)
&
10.25% (above
20lakh)

ROI(FLOATING)

Upto30lakh
8.75%
30
lakh
50lakh9%
Above50lakh
9.25%

10 to 20 yrs
10.50%(upto20
lakh)
&
10.75% (above
20lakh)
1 5 Yrs. 16 Up to 5yrs
%
8.75% (up to 20
5 10 Yrs. lakh)
11.25%
&
10 15 Yrs. 9.50%(above20
16%
lakh)
15 20 Yrs
16%
5to10yrs9%
(upto20lakh)
&
9.50%(above 20
lakh)

Year
onwards

up to 50 lakh
9.25%

over 50 lakhs
9.75%

10
to20yrs
9.25% (up to 20
lakh)
&
9.75%(above20
lakh)

PROCESSINGFEE
PENALTY
TENURE
MINIMUMAGE
MAXIMUMAGE

0.5%
2%
25years
21
60

0.5%
2%
15years
25
55

0.5%
2%
20years
25
55

0.5%
2%
25years
25
55

COMPARISONOFMAJORPLAYERS
ThemarketsforhomeloanshavebeensizzlinginIndia.Thespurtingrowthinrecentyears
and the prospect of continued buoyancy in demand have attracted many players to the


industrywhichtillacoupleofyearsbackhadtwomajorplayersHDFCandLICHousing
Finance.Theresultiscutthroatcompetition,whichhasbenefitedtheloanseekers.Thehome
loanmarkethasgrownatacompoundedrateofover40%overthelastfouryears.Andfrom
what industry experts believe that there is a little chance that there will be any significant
declineinthegrowthratesgoingforward.Sowhathavebeenthekeyfactorsintriggeringof
thishighgrowthperiod?
Thereareseveralreasonsforthesameonthedemandside:
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
interestandcapital).
Thentherearefactorsonthesupplysidetoowhichhavesupportedthisgrowth:
Morecompetitioninthehousingfinancesectorresultedincompaniescharginglower
interestrates,sometimesevenatthecostofspread(i.e.profitmargin)
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 EMIs increases as the income of the individual
increaseshasbeenabighitwiththeindividualsjuststartingoffwiththeircareers.
OneotherfactorisincreasingcollaborationbetweenHousingFinanceCompaniesand
builders. Such partnership minimizes the service and funding related issues
significantlythusmakingiteasiertobuyproperty.
Oneinnovationinthehousingfinancesectorhasbeentheintroductionoffloatingratehome
loansimplyputthecostofsuchhomeloanortheinterestratenotfixedduringthetenureof
the loan. Instead interest rate is benchmarked against some index/ indicator. So as the
benchmarkratemovesupordown,thecostofyourloantoochanges,atsomepredetermined
frequency(usuallyonceaquarter).
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
interestratesareexpectedtorise.
Butisthechoicethatsimple?Intodaysenvironmentwhenthereisalotoftalkaboutrising
interestrate,shouldinvestorshunfloatingratehomeloan.Altogetheristherestillsomemerit
inthisinstrument?Inthelastoneyear,therewasatrendoffloatingratehomeloansbeing
morepopularascomparedtothefixedrateloan.Asofnow,thistrendiscontinuingsays
Mr.SureshMenon,GM(Mumbairegion),HDFCLimited.


Therearethreeimportantissueswhichoneneedstoconsiderbeforeoptingforonetypeofa
loanovertheother:
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
floatingrateproductmaybepreferable.Theotheroptionforgoinginforafixedrate
product and then switching at the end of the year will entail costs (there could be
penaltyof1%2%oftheoutstandingloanamount)andmaynotmakefinancialsense.
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.Thiscouldappealtoindividualswhogetlumpsumbonuseswhichtheycan
usetoreducetheirloanexposure.
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.
Apparentlytherealityissomewhatdifferent.Itseemsthatcompaniesthathavegiven
outfixedratehomeloanscanrevisetheirratesupwardsinexceptionalcircumstances
(significantriseininterestrateforone)soifyouthinkinterestratewillremainrage
boundovertheneartermanddeclineoverthelongterm,youarestillbetteroffwith
thefloatingrateproduct.
Third, a fixed rate loan is generally priced higher as compared to the floating rate
product.Thisholdstrueinthecurrentenvironmentwherethefixedrateloanisata
higherinterestrateascomparedtothefloatingrateloan.Thedifferenceiscurrently
about0.25%to21%.Soifyouexpectthatinterestratearelikelytomoveup,butonly
totheextentofthisdifferential,thenyoushouldideallybeindifferentbetweenthe
twotypesofloan.Thedecidingfactorsthenshouldbewhenyouthinktherateswill
increaseandalsothelongtermexpectationsofinterestrates.
As always there is no one answer to whether you should go in for floating or a fixed rate
homeloan.Ifyouareapersonwithverylittleappetiteforriskornegativesurprises,optfor
fixed rate home loan. But in case you can take on some risk a floating rate home loan is
worthalook.

Fivestepstotakearightloan:


1) Gatherdataoninterestrate.Getinterestrateinformationfrommorethanonesource
andgetthesameinformationfromeachsoyoucancomparetheoffers.
2) Getinformationonfees.Findoutaboutprocessingfees,administrationchargesand
othercoststhatmaybeinvolvedintakingthehomeloan.Awrittenstatementofall
the fees from the housing finance companies will ensure that there will be no
surpriseslateron.Usethelowestamountoffeestonegotiatewiththeotherlenders.
3) Getpreapprovalletter.Thisgivesyousubstantialleverageasyouarethenseenas
seriousbuyerbytheselleroftheproperty.Also,havingtheletterinyourhandwill
setalimittotheamountofmoneyyoucancommittotheproperty.Thiswillhelpin
identifyingtherightproperty.
4) Bargainforalowerrateofinterest.Housingfinancewillreducetheirrackratesfor
customerswiththegoodcreditrecord.Abargaindealwilleasilyfixedahomeloan
at significantly lower rates (at times you can get a discount of as high as 0.50
percent).Hereagaingetaconfirmationoftherate(andforhowlongitwillremain
fixed)viaaletter.

5) Watch out for a predatory lending. Dont include false information on your home
loan application to get quick approval. Also do not borrow more money than you
needorcanafford.
Afloatinginterestrateallowscustomertotakeadvantageofinterestratemovements.They
getimmunityfromadversemovementsandreadthebenefitsofanyfallininterestratebuta
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
seasonedmarketwatchers.
Iftheyarelookingforahomeloan,bepreparedtocoughupaprettysumasdownpayment.
TheRBI,inarecentmeetingwiththebankerscautionedbanksagainstlending100%ofthe
property value. That is because of increasing competition in home loan some banks have
beenfundingeven110%oftheagreementvalue.Thismeansyourloannotonlypayforthe
property,ithelpswiththestampdutyandregistrationchargesandevenfurnishing.Itsbeing
sweetdealsofor,asborrowernotonlyneedhavenoaccesstootherfunds,theyalsogettax
breaks.
TheRBIspositionisthatlendingsuchsumswillremainadditionalriskforthebank.Incase
ofdefault,thebankmaynothavesufficientcollateralsecuritytorecoverduesandmayhave
to write off the additional borrowings. However, the bankers do not seen unduly worried.
Nonperformingassetsinthehousingsegmentarequitelowbelow1%andthat,saybankers,
isduetothehigherassetquality.

SWOTANALYSISOFHOUSINGFINANCEINDUSTRY


STRENGTHS
1) The industry has been witnessing very fast growth rate, which is 6% growth in the
first
2) Quarterof20022003asagainst35%growthrecordedinthefirstquarterof2001
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
appreciaterapidly.
5) Taxbenefit&otherfacilitiesprovidedonloanrepayments.
WEEKNESSES
1) Theforeclosurerulesofcourtoflawsuchasprovisionregardingtheownershipofnot
morethanonehouse(inDelhi)bindstheindustry.
2) ThehealthyofanHFCdependuponitsabilitytomobuplowcostfunds.
3) ANHFCisunabletotaptheruralmarketduetolackofproperretrievalprocedures
sowhilst
4) Theruralmarketoffersahigherrateofreturnithasahigherrisk&defaultrate.
5) Manylegalimpendentexist,deferringpurchaseofcertaintypesofpropertybeyonda
6) Certain extent thereby negatively impacting weak mortgage laws, resulting in an
increaseinriskcompoendingthis.
OPPORTUNITIES
1) Thehousingindustryfacesasevereshortageofhouses.Thetotaldemandforhouses
isExpectedtotoucharound19.40millionunitsbytheyear2003ofthese12.8million
2) Dwelling units (6598%) would be in rural areas & 6.6 millions dwelling units
(34.02%)inurbanareas.
3) Whiletheloanfacilityisbackedbythesecurityofpropertythissectorrepresentalow
marginButonthelowmarginbutonthesamelinelowrisksegment.Theaddressthis
4) 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
installmentsassessingtheCreditworthinessoftheprospectiveclientandprovidingfor
groupsecurities.
5) TherolesofNHBinrefinancing&providingregulationofhousingfinancesystem.
6) Thegovernmentsinitiativestopromotethesector&itscontributioninupliftingthe
sector.
THREATS
The industry faces increased competition as more & more foreign backs & Housing
FinanceCompaniesareprovidingloanfacility.
SWOTANALYSISOFHDFCHOMEFINANACE


STRENGTH
1)Savesubstantialinterest.
2)Prepaywheneverthecustomer.
3)Reducetheirloanoutstanding.
4)Accessthesurplusfindsanytime.
5)Usesurplusfundstoinvestwhentherightopportunitiesarises.
WEAKNESS

Productisverygoodbutitismainlysuitableforhigherincomegroup&isnotsuitablefor
theMiddleincomegroup
OPPORTUNITIES
There is ample scope for financing flats & apartments for the salaried class in the higher
incomeGroup.
THREATS
1)NationalizedbankslikeSBI,UnionBank,PNB.
2)PrivateBankslikesHDFC&standardchartered&CitiBankwithitshomecreditscheme.

ICICIHOMEFINANACECOMPANYLTD


Consumerfriendlyhousingfinancecompany

HISTORY
ICICIhomefinancecompanyltdwasincorporatedonMay28,1999as100%subsidiaryof
ICICIPersonalFinancialServicesLimited(ICICIPFS).ICICIfinancecompanyLtdwasset
up with objective of providing long term housing loan to individual and corporate. The
company was registered on March 302000 with National Housing Act, 1987 in terms of
HousingFinancingCompanies(NHB)direction,1989witheffectfromMay3,2002,ICICI
homefinancehasbecomea100%subsidiaryofICICIbankLtd.
OVERVIEW
ICICIhomeloansareatpresentavailabletocustomerin150cities/townsacrossthecountry.
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 companyhas
alsointroducedseveralcustomersfriendlyservicessuchasdoorstepservices,knowyour
loan on phone facility and ICICI home search free property brokerage services. ICICI
PersonalFinancialServicesLimited(ICICIPFS)formerlyICICIcreditwasoneofthefirst
four companies to obtain registration as non banking financial banking companies(NFBc)
fromthereservebankofIndia(RBI)onsep10,1997underthenewsection45IAofthe
RBIact,1939.
Duringtheyear19981999,therewasasignificantshiftinthecompanysoperationsfrom
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 ICICIs retail strategy aims at offering a
comprehensiverangeofproducts&servicestoretailcustomers.Inviewofthisreorientation
ofthebusiness,thenameofthecompanywaschangedfromICICICorporationLimitedto
(ICICIPFS)effectivemarch22,1999.
ICICIcommenceditscustodialservicesbusinessin1992&playedapioneeringroleinthe
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
custodianof41ADR/GDRissues&intheprocess,hasestablishedtherelationshipwillall
themajoroverseasinstitutionalinvestorsincludingforeigninstitutionalinvestors(FIIs)&
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&GDRarbitrageto:
1)Overseasinstitutionalinvestorslike

a)FIIS
b)OCBS
c)OFFSHOREFUNDS
d)VENTUREFUNDS
2)Overseasgovernmentagencies.
3)Institutionallookingforproprietaryinvestment.
4)Mutualfunds
5)Privateinvestmentcompanies
6)Largecorporate
7)Highnetworthindividual
As a value added services ICICI custodial services division assist the client in preparation,
submission&followupforvariousapplicationsbyFIIS/OCBwithSEBI/RBI
APPLICATIONPROCESSOFYOURHOMELOAN
Yoursearchforthe perfecthomeloanendshereat ICICI Bank Home Loans, even before
yourhavefoundtheperfectproperty.
Themomentyoudecidetobuyahome,youcanputinyourapplicationforahomeloan.Yes,
youcanapplyforahomeloanevenbeforeyouhaveselectedtheproperty.
Thepropertyneednotevenbeinthesamecitywhereyouareresiding.Theonlycondition
beingthatICICIBankhasHomeLoansoperationsinboththecities.
Shouldtherebeachangeinyourfinancialstatusorplans,youcanwithdrawyoursanction
within6monthsofapprovalofyourhomeloan.
However, we are always ready to assist our customers in the event of legitimate problems.
And,wemightreconsiderthisifwefindthattherearesatisfactoryreasonsforthedelay.
And,neitherwouldwechargeyouextraforthisdelay.
If it is refinancing you are interested in, it is possible within 6 months from the date of
purchaseofproperty.

PERSONALBANKING


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.
Eachservicesoffertheircustomersecurity,flexibilityofoperations&maximumreturns.
Thevariousservicesprovidedunderthisisasfollow:
1)Maximumcashsavingaccount
2)Quantumfixeddeposits
3)Quantumoptimavalueaddedsavingaccount
4)Moneypluscurrentact
5)ATM
6)Treasurechestcockerfacility
7)Powerpayroll
8)Retailtreasuryinstruments
CORPORATEBANKING
MOBILECOMMERSE
ICICI bank now brings back account & ICICI credit card to customers fingertips .with
mobilecommercecustomercanperformawiderangeofquerybasedtransactionfromtheir
orangetm(Mumbai)&Airtel(DELHI)mobilephone,withoutevenmakingacall.

1)Accessmultipleaccounts
2)Balanceinquirytothelinkedaccount
3)Chequebookrequest
4) Mini statement listing of last three transactions5) Request for account statements (by
mailorfax)

ICICI
1)AttractiveIR
2)Doorstepservicefromenquirystagetillthefinaldisbursement.
3)Noguarantorrequired.
4)Cantransferyourexistinghighinterestrateloan.
5)Special100%fundingforspecialproperties.
FACTORSAFFECTINGYOURLOANAMOUNT
WithICICIBankHomeLoans,youcangetahomeloansuitedtoyourneeds.Thehomeloan
amountdependsonyourrepaymentcapabilityandisrestrictedtoamaximumof80%ofthe
costofthepropertyorthecostofconstructionasapplicable.Anumberoffactorsaretaken
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,continuityofoccupationandsavingshistory.
However,therearewaysbywhichyoucanenhanceyoureligibility.


If your spouse is earning, put him/her as a coapplicant. The
additionalincomeshallbeincludedtoenhanceyourloanamount.
Incaseofanycoownerstheymustnecessarilybecoapplicants. The final amount to be
sanctioned will depend
on your repayment capacity. However, what you ultimately are entitled to will have to
conformwithinthelimitsfixedforeachloan.
Also, when the company looks at the total cost, registration charges, transfer charges and
stampdutycostsareincluded.

DocumentsrequiredforHomeLoanSanction
ICICIBankHomeLoans,IndiasleadingHomeLoansProvider,offersattractiveinterest
ratesandunbeatablebenefitstoensurethatyougetthebestdeal.Keepingyourconvenience
inconsideration,weaskyouforminimalmandatorydocumentsforthesanctioningofyour
homeloan,tokeeptheprocesstotallyhasslefree.
Werequirethefollowingdocumentstosanctionyourhomeloan:
SanctionDocumentsCompletedapplicationform
Photograph
FeeCheque
PhotoIdentityProof
AgeProof
SignatureVerificationProof
ResidenceAddressProof
DocumentfortheSalaried
Last3monthsSalarySlip
Form16
BankStatementforthelast6monthsfromSalaryAccount
RepaymentTrackrecordofexistingloans/Loanclosureletter
DocumentfortheSelfemployed
IncomeTaxReturn/ComputationofTotalIncome/AuditorsReport/BalanceSheet/Profit
&LossAccountcertifiedbyCharteredAccountantforlast2years(3yearsforHomeEquity)
(bothforbusinessandpersonalofpartners/directors)
Bankstatementforthelast6monthsfromoperatingaccount
RepaymentTrackrecordofexistingloans/Loanclosureletter
BoardResolutionincaseofacompany
Proofofexistence
OfficeAddressProof

Photo Identity Proof, Residence Address Proof, Signature Verification Statement for all the main


partners/directors.

HOMELOAN

1)Customermustbeat21yearofagewhentheloanissanctioned.


2)Theloanmustterminatebeforeorwhenyoutwin65yearofageorbeforeretirement,
Whicheverisearlier.
3)Customermustbeemployedorselfemployedwithregularsourceofincome
LOANAMOUNT
Anumberoffactorsaretakenintoaccountwhenassessingrepaymentcapacity.
Customer income, age, number of dependents, qualification, asset &liabilities,
stabilityandcontinuityofcustomeremployment.Businessisoneofthem.However
therearewaysbywhichyoucanenhanceyoureligibility.
Ifthecustomerspouseisearningputhe/sheasacoapplicant.theadditionalincome
shallbeincludedtoenhancetheloanamount.Incidentally,ifthereareanycoowners
they must necessarily be coapplicant customer fiances income can also be
consideredsanctioningtheloanonyourcombined
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
policiesmayalsohelptoenhanceEligibility.
Whilethereisnoneedforguarantor,itcouldbethathavingonemightenhanceyour
credibility with us. If so, our loan officer would provide customer with positive
necessarydetails.
The final act to be sanctioned will depend on your repayment capacity. However,
whatcustomersultimatelyareentitledtowillhavetoconformwithinthelimitsfixed
foreachloan.
Also when the company looks at the total cost, registration charges, stamp duty,
transferchargesarealsoincluded.
HOMELOAN
WeatICICIbankunderstandthevalueofowingyourhouse.Ouraffordablehomeloanscan
makeallthedifferencetotheirdreamsofowinghome.
FINDTHERIGHTHOME
Providefacilityforsearchoffreeonlineproperty.Aonestopshopforalltheir
RealEstateneeds.
WHATYOUGET
0%brokerageonfirstsalepropertiesaccesstheentiremarketunderourroofsitevisitstothe
properties short listed by you. Help in negotiating the best price. Help the legal
documentation.
LISTINGSBELOWARETHESTEPINVOLVEDINAVAILINGOFAHOMELOAN
Apersonappliesforahomeloan


The executive meets the applicant & briefs him the entire loan process,
requirements&thevariousoptionsavailable.
Theapplicantchoosesahousingfinancecompany(HFC)&handovertheincome
DocumenttotheexecutivearetheincomedocumentsareheadedovertotheHFCfor
eligibility&approval.
The HFC verifies the documents & checks the repaying capacity, saving habits,
tenureofservicesetc.oftheapplicant&approvestheloanamount.
AfterapprovalanofferletterisgiventotheapplicantbytheHFC,alongwithlistof
originaltitledocumentsthathavetohandovertotheHFC.
TheapplicantgivestheoriginalpropertytitledocumenttotheHFC
TheHFCscrutinizesthelegal&thetechnicalaspectsoftheoriginaltitledocument.
If the HFC is satisfy as to the legal & technical aspect of the document then the
applicantiscalledtosigntheloanagreement
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
propertyisreadyforPossession.
Theapplicantgetspossessionofthepropertydependinguponthelevelofcompletion
oftheproperty.
TheapplicantcanstartpayingtheEMIs.
DISBURSEMENT
Customer loan will be disbursed after you identify & select the property or the home that
customerarepurchasingandontheirsubmissionoftherequisitelegaldocuments.
Whilethecustomermaybeunderimpressionthatthelistofdocumentsaskedforitisrather
extensive.Eachandeverysingledocumentaskedforwillbeverified&checktoensuretheir
safety.Thismaytakesometimebutthebankswanttoensureacleartitleandwillcomplete
allthelegal&technicalverificationtoensurethattheyhavefullrighttotheirhome.
The 230 a clearance of the sellers or 371 clearance from the appropriate income tax
authorities(ifapplicable)isalsoneededonsatisfactorycompletionofabove,onregistration
of conveyance deed and on the investment of your own contribution, the loan amount (as
warrantedbythestageofconstruction)willbedisbursedbyICICI.
Thedisbursementwillbeinfavorofthebuilder/seller.

AtICICIBankHomeLoans,wedisbursetheloanamountafteryouidentifyandselectthe
propertyorhomethatyouarepurchasingandsubmittherequisitelegaldocuments.
While you may be under the impression that the list of documents asked for is rather
extensive,pleasenotethatitisforyourowngood.Eachandeverysingledocumentaskedfor
willbeverifiedandcheckedtoensureyoursafety.
Thismaytakesometimebutwewanttoensureacleartitleandwillcompleteallthelegal
andtechnicalverificationstoensurethatyouhavefullrightstoyourhome.
Yourloanwillbedisbursedafteryouidentifyandselectthepropertyorhomethatyouare
purchasingandonyoursubmissionoftherequisitelegaldocuments.

The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax
authorities(ifapplicable)isalsoneeded.
Onsatisfactorycompletionoftheabove,onregistrationoftheconveyancedeedandonthe
investment of your own contribution, the loan amount (as warranted by the stage of
construction)willbedisbursedbyICICIBank.

DisbursementDocuments
Property documents (as per P&D for respective states and as asked by empanelled lawyers
forindividualcases)
FacilityAgreement
DisbursalRequestForm
ChequeSubmissionFormforPreEMIandEMIcheques
ECS or Auto Debit for ICICI Bank account holders or Post Dated Cheques for EMI / Pre
EMI
Personal Guarantors Documents (PG Form, Photograph, Identity Proof, Address Proof,
SignatureVerificationandIncomedocuments,ifapplicable)
Incaseofpropertyisownedbyacompany
MemorandumofEntry
Form8
NOC

AMOUNT
Thislargelydependonano.offactslikeonesage,profession,salary,thecityoneresideis
amongothersuchfactors.itvariesbetween2.1lakhto1croredependingonthelenderasthe
ruleofthethumb,dependingonHFConehavetocoughup15%20%oftheloanamountas
thedownpayment.Forsmalleramount,thismaynotbemuch.Butforfigureremaininginto
lakhthiscouldmakeloadsofdifference.Fore.g.anapartmentofcostingRs10lakhmayget
85%financing,soonewillhavetoarrangeforremainingRs15lakh.Ifonetakesthisinto
amounttheadditionalthousandswilldefinitelyputastrainononesfinances
.

TENURE


Generallythemaximumtenureofhomeloansis15years,withafewlendersofferingtenure
of20yearsormore.ICICIoffers15yearloan.Thelongerthetenure,themoreonepayin
totalinterestbutonesmonthlypaymentwillbeless.Sodependingonesearningpotential&
bankbalanceonecanchooseanappropriatetenure.Animportantrequirementofmostofthe
banks/ HFCs is that one pays up the entire loan before one retires. One can always prepay
onesentireloanamountbeforeitisdue.Thereisatrendtodoawaywiththeprepayment
penaltybeingimposedbysomelenders.Soitsbestonechecksonthisaswell.

INTERESTRATE
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 EMIs (equated
monthlyinstallment).Thelongerthetenure,themoreonepaysininterest,butonesmonthly
paymentwillbeless.TheinterestrateofICICIis
TenureInterestTypeInterestRate
.1520Fixed13.75%
1015Fixed16%
510Fixed16%
15Fixed16%
15Floating16%
510Floating11.25%
1015Floating16%
1520Floating16%

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/HFCtopaybackanotherloanbeforeitsnaturaltenure.Itgivesonetheopportunityof
prepaying ones high cost debt and get a lower cost one. In todays 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.

MISCELLANEOUSCHARGES


TheinterestratesandEMIsarenotonlythecostfactor.Neverunderestimatehowmuchthe
processing fee and administration fees amount to. A 0.5% administration fees and 0.5%
processingfeeonsay,aRs.500000loanwouldbeRs.5000.othertimesitcouldbejustone
fee (either administration or processing but could yet work out to be much more if it is
considerablyhigherat,say,2.5%or3%.Thevariousotherfees,whichoneisrequiredtopay
alongwiththemarginamountare:
INTERESTTAX:
This is tax payable on the interest paid on a home loan and not the principal. This is
sometimesincludedintheinterestrateoftheloan,ormaybechargedseparatelyasinterest
tax.
PROCESSINGCHARGE
Itisthefeepayabletothelenderonapplyingforaloan.Itiseitherafixedamountnotlinked
totheloanormaybeapercentoftheloanamunt.Theloanamountreceivedbyyoucanbe
lessthanprocessingfee.
PREPAYMENTPENALTIES
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
Itisquitepossiblethatsomelendsmaylevyadocumentationorconsultantcharge.

ICICIBANKANNOUNCESITSBASERATE,VALIDFROMJULY1,2010
ICICI Bank has announced a shift in the existing benchmark rate from Floating Reference
Rate(FRR)/IBARtheBaseRate(IBase).Thesamewillbeeffectiveforallitsmortgage
productsfromJuly1,2010.
TheICICIBankBaseRate(IBase)hasbeenfixedat7.50%.Thisistheminimumratethat
ICICIBankwillchargetoitsnewcustomers.

BENEFITS
Someofourkeybenefitsare:
Guidancethroughouttheprocess
Homeloanamountssuitedtoyourneeds

HomeLoantenureupto20years
Simplifieddocumentation
Doorstepdeliveryofhomeloanpapers
Sanctionapprovalwithouthavingselectedaproperty.
FreePersonalAccidentInsurance(Terms&Conditions)
Insuranceoptionsforyourhomeloanatattractivepremium

PUNJABNATIONALBANK

INTRODUCTION
PNB has over 4500 branches and offices bringing the Punjab National Bank to your
doorstep.Around2400officescomeunderthenetworkofCentralizedBankingSolutionor
CBS. A need for centralized banking system prompted PNB to go computerized and what
followedwastheestablishmentofCBSinPunjabNationalBankbranchesinalltheleading
cities like Delhi, Pune, Chennai, Mumbai, Ahmedabad, Chandigarh, Gurgaon, Hyderabad,
Jalandhar,Kolkata,Ludhiana,NodalandBangalore.InternetBankingServicesareprovided
to all customers in the CBS branches. A branch and ATM locator is also available on the
officialwebsiteofPunjabNationalBank.Foranoverviewoftheannualreportorthebank
profile, the site can be resourceful. The website also provides info on the careers and
recruitmentsatPNBandtheexamresults.ThecareersatnationalizedbankslikePNBarethe
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
evaluatedbytheSSSRetirement,Death&FuneralBenefitsProgram.

PROFILEOFPNB
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, multinational 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
another5100branchesofitsAssociateBanksalreadynetworked,todayitoffersthelargest
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 other electronic
channels such as Internet banking, debit cards, mobile banking, etc.The objectives of the
CompanyareinlinewithobjectiveslaiddownbyRBIforthePrimaryDealers:
Strengthen the infrastructure in the government securities market in order to make it
vibrant,liquidandbroadbased.
EnsurethedevelopmentofunderwritingandmarketmakingcapabilitiesforGovernment
Securities


Improve secondary market trading system, which would contribute to price discovery,
enhance liquidity and turnover and encourage voluntary holding of Government securities
amongstawiderinvestorbase
Becomeaneffectiveconduitforconductingopenmarketoperations.
PNBHISTORY
PunjabNationalBankofIndiawasestablishedbyLalaLajpatRaiinthepreindependence
Indiain1895inPunjab,withLahoreasitsheadoffice.Todayitisthesecondlargestpublic
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
publicanditwaslistedonthestockexchange.In1992,PNBbecamethefirstPhilippinebank
toreachP100billioninassets.Laterthatyear,privatizationcontinuedwithasecondpublic
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 PNBs
franchiseandoperationalcompetitiveness.
Today,StateBankofIndia(SBI)hasspreaditsarmsaroundtheworldandhasanetworkof
branchesspanningalltimezones.SBI'sInternationalBankingGroupdeliversthefullrange
ofcrossborderfinancesolutionsthroughitsfourwingstheDomesticdivision,theForeign
Officesdivision,theForeignDepartmentandtheInternationalServicesdivision.

PNBRECENTACHIEVEMENTSANDMILESTONES
Punjab National Bank (PNB), has announced that it has completed 100% core banking
implementationatallits4604branchesandextensioncountersthroughtheFinacleUniversal
Banking Solution from Infosys, on Sun infrastructure and the Oracle Database setting a
significantmilestoneforthemselvesandanewbenchmarkfortheIndianbankingindustry.
CompletedinNovember2008,4monthsaheadofschedule,thebankimplementedindustry
leadingFinaclecorebankingsolutionfromInfosysacrossitsoperationsrunningaflexible,
andscalabledatabaseplatformfromOracleandinnovativeserversfromSunMicrosystems
Withanincreasinglydynamicbusinessandregulatoryenvironment,PNBsoughttonotonly
achieve automation, but also centralize operations, standardize branch processes, achieve
highscalabilityforfuturebusinessgrowth,provideflexibilityofcreatinginnovativebanking
products to its lines of business, and at the same time, reduce overall costs. The visionary
zealandthefuturisticviewoftheBankstopmanagementintheyear20072008incubated
theideaofintroductionofaCentralisedBankingsolution.Theboldandinnovativethought
culminatedintotheCBSarchitecturewithFinacleapplicationonOracleDatabaseandSun
hardware platform with Solaris Operating System. With Finacles agile and future proof
technology,thebanktodayhasover22,500concurrentusers.Thesolutionsscalabilityhas


also enabled the banks 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
seamlessintegrationofdeliverychannelssuchasATMandinternetbankingsolutions,PNB
isabletoprovide24X7servicestocustomersatareducedtransactioncost.PNBschoiceof
theOracleDatabasehasprovidedthebanksITinfrastructurewithrobustness,management
features,securityandscalabilityaswellasperformancerequirementstoservice3.5million
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
increasinglychangingcompetitiveenvironment.20
With secure, highly available and scalable grids of lowcost servers and storage, Oracle
customerscantacklethemostdemandingtransactionprocessing,datawarehousing,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 longstanding and
progressive partnership also highlights Finacles leadership in large scale banking
transformation, the solutions future proof technology and powerful capabilities. India is a
strategic market for Finacle and we look forward to closely collaborating with Punjab
NationalBankfortheirfuturegrowthplans.
REGULARHOUSINGFINANCESCHEMEFORPUBLIC
PNBreachesouttoyouwithfast,friendlyandmostconvenienthomeloansfor:

Constructionorpurchaseofhouse/flat.
Purchaseofhouse/flatonFirstPowerofAttorneybasisfromtheoriginalallottee
Carryingoutrepairs/renovations/additions/alterationstoexistinghouse/flat
SpecialFeatureTocovertheloanoutstanding,lifeInsurancecoverisalsoavailable
onpaymentofonetimepremiumwhichcanalsobefinancedbytheBank.
PRODUCTS
PNBApnaGharYojanahomeloansaremeantforconstructionorforacquisition/purchaseof
house/flats. The minimum loan amount would be Rs.50000 and maximum loan amount
dependsontherepaymentcapacityoftheborrower.Incaseofjointapplication,incomeof
borrowers /coborrowers is clubbed together for calculation of loan eligibility. The loan
repaymentisinEquatedMonthlyInstallments(EMI)overamaximumperiodof20years.
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,woodworketc.TheloanamountrangesfromaminimumofRs50,000to


amaximumofRs.1000000.Borrower'sminimumcontributionwillbe25%oftheestimated
costofrepairs/renovations
INDIVIDUAL
For construction/purchase of house/flat: 75% of the cost of construction of house or
purchaseofhouse/flat.Costofcarparkinguptothemaximumextentof5%ofthecostof
flat/house can also be included in the cost of the project. For carrying out repairs/
renovations/additions/alterations:75%oftheestimatedcostsubjecttomaximumofRs.20
lacs.
LoanisavailableuptoRs.20lacsforpurchaseofLand/Plot.Loanisavailablemaximumup
toRs.2lacsforfurnishing
PRODUCTRANGEOFCOMPANY/INDUSTRY:
TheproductsandservicesprovidedbythePNBareinvariousfields,suchas:
NRIservices
Internationalbanking
Corporatebanking
Agriculturalbanking
Internationalbanking
ELIGIBILITY
Ageoftheapplicantmustbelessthan60years.
ExistinghomeloanborrowercanalsoapplyprovidedtheirloanaccountisregularandnoIR
irregularitypersist.
DOCUMENTSNEEDED
1.Proofofidentity
2.Proofofincome
3.Proofofresidence
4.BankstatementorPassBookwheresalaryorincomeiscredited.
5.EducationCertificate
6.Photos
7.Salaryslips&form16
8.Incometaxreturnlast3yearsalongwithbalancesheets.
9.Assetsliabilitiesstatements.
10.Documentsofproperty.
11.Estimateofconstruction.
12.Guarantor


FREEHOLDANDLEASEHOLDPROPERTY
Theloancanbegrantedbothforfreeholdandleaseholdproperty.
Incaseofleasehold,loancanbegrantedonthebasisofpowerofattorneybasisfromoriginal
allotee where DDA/PUDA/HUDA permit conversion of leasehold into freehold property
otherwiseadvanceisnotpermittedagainstplotpurchasedonPowerofAttorneybasis.
EXTENTOFLOAN
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
costsubjecttomaximumofRs.20lacs.LoanuptoRs.20lacsforpurchaseofland/plot
LoanisavailablemaximumuptoRs.2lacsforfurnishing
CHARGES
Prepaymentcharges

2%

BalanceTransferCharges
(incaseofrefinance)

2%

PartpaymentCharges

Nil

SwitchingCharges

Nil

(FixedtoFloatingorviceaversa)

SPEEDOFSANCTIONOFLOAN
Theloanwillbesanctionedwithin7workingdays.
TENURE:
Youcanrepaytheloanoveramaximumperiodof25yearsunderbothFRHLandARHLin
SBI . Repayment will not ordinarily extend beyond your age of retirement (if you are
employed)oronyourreaching65yearsofage,whicheverisearlier.

RATEOFINTEREST

Forrepaymentperiod

Floating
Fixed Option
Fixed Option for
Optionfor
for
loans(Upto20
loans(Upto
loans(Above20
lac)
20
lac)
lac)

FloatingOption
for
loans(Above20
lac)

i)Upto5years

9.25

10.00

8.75

9.50

ii) Above 5 & upto 10

10.00
years

10.25

9.00

9.50

iii)Above10&upto20
10.50
years

10.75

9.25

9.75

iv) Above 20 yrs &

10.75
upto25yrs.

11.00

9.50

10.00

Theinterestratecanbefixedorfloating
Optioncanbechangedfromfixedtofloatingandviceversawithflatchargesof2%feeon
balanceoutstanding.
Fixed interest rate be reset after a block of 5 year in respect of loans disbursed on or after
1.08.2006
DOCUMENTATIONCHARGES
Rs.1350+ServiceTax
UPFRONTFEE
ForloansuptoRs.300lacs=0.50%oftheloanamountwithacapofRs.20,000/
ForloansaboveRs.300lacs=0.90%oftheloanamount
REPAYMENT
1.Loanistoberepaidinequatedmonthlyinstallmentswithinaperiodof25yearsorbefore
theborrowerattainstheageof65years.
2.Repaymentofloanforrepair/renovation/addition/alterationhas,howeverbeenrestricted
to10years.Father/Mothercanalsobemadecoborrowerincasespropertyisinsinglename
of his /her son and also clubbing of their income is permitted for determining eligibility
criteria.Minimum24advancechequeshouldbeobtainedasandwhen,6chequesremain,
freshlottobeobtainedoutof24,23chequesshouldbeoftheamountequaltothebalance.
LoanistoberepaidinEMIwithinaperiodof25yearsorbeforetheborrowerattainstheage
of65years.
SECURITY

Mortgageofpropertyforwhichfinanceisbeinggiven
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,borrowerandtheBank
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/LICpolicy/Govt.Securities,NSCs,KVPs,IVPs,/PSUBondsetc.hastobeprovided
FEATURES
Loancanbesanctionedbybranch/hubneartothepresentplaceofwork/posting/residenceof
theborrower.
Loan can be sanctioned even if property is in the name of wife/parents provided that the
ownerismadecoborrower.
Loancanbegrantedfor2ndhouseinthesamecity.
Loancanbegrantedforpurchaseofhouseforrentalpurpose
Fortakeover,permissionofhigherauthorityisnotrequired.
IMPORTANTCONDITIONSLOANCANNOTBEGRANTED:
ForconstructioninUnauthorizedcolonies.
Ifpropertyistobeusedforcommercialpurpose.
WithoutapprovedMap.
PREPAYMENTCHARGES
NilIncaseswheretheloansareprepaidbytheborrowerfromtheirownsources
NilIncaseswheretheborrowershiftstootherbankwithin30daysfromthedateof
issuance of circular for upward revision in the rate of interest to be charged in his
accountorchangeinothertermsofsanction.
2 % In cases where the account is taken over by some other Bank/ Financial
institutionsbywayofaailmentofloanfromsuchbank/financialInst

DISBURSEMENTFORHOMELOAN
a. Foroutrightpurchaseofhouse/flat,theloanamountwillbepaidinlumpsumtothe
vendor.
b. Forhouse/flatunderconstruction,theloanamountwillbedispersedinstagesasper
progressofconstruction/demandbysellingagency.

STATEBANKOFINDIA

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
onefifthofdepositsandloansofallscheduledcommercialbanksinIndia.TheStateBank
Groupincludesanetworkofeightbankingsubsidiariesandseveralnonbankingsubsidiaries
offeringmerchantbankingservices,fundmanagement,factoringservices,primarydealership
ingovernmentsecurities,creditcardsandinsurance.Theeightbankingsubsidiariesare: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
spanningalltimezones.SBI'sInternationalBankingGroupdeliversthefullrangeofcross
borderfinancesolutionsthroughitsfourwingstheDomesticdivision,theForeignOffices
division,theForeignDepartmentandtheInternationalServicesdivision.
PROFILE
The SBIs powerful corporate banking formation deploys multiple channels to deliver
integrated solutions for all financial challenges faced by the corporate universe. The
CorporateBankingGroupandtheNationalBankingGrouparetheprimarydeliverychannels
forcorporatebankingproducts.
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
primecorporateandinstitutionalclientsofthecountrysbiggestbusinesscenters.Theothers
aretheProjectFinanceunitandtheLeasingunit.TheNationalBankingGroupalsodelivers
theentirespectrumofcorporatebankingproductstoothercorporateclients,onanationwide
platform. The bank is also looking at opportunities to grow in size in India as well as
internationally.Itpresentlyhas82foreignofficesin32countriesacrosstheglobe.Ithasalso
7SubsidiariesinIndiaSBICapitalMarkets,SBICAPSecurities,SBIDFHI,SBIFactors,
SBILifeandSBICardsformingaformidablegroupintheIndianBankingscenario.Itisin
the process of raising capital for its growth and also consolidating its various holdings.
Throughoutallthischange,theBankisalsoattemptingtochangeoldmindsets,attitudesand
takeallemployeestogetheronthisexcitingroadtoTransformation.Inarecentlyconcluded
massinternalcommunicationprogrammetermedParivartantheBankrolledoutover3300
two day workshops across the country and covered over 130,000 employees in a period of
100daysusingabout400Trainers,todrivehomethemessageofChangeandinclusiveness.


The workshops fired the imagination of the employees with some other banks in India as
wellasotherPublicSectorOrganizationsseekingtoemulatetheprogramme.

HISTORY
TheoriginsofStateBankofIndiadatebackto1806whentheBankofCalcutta(latercalled
theBankofBengal)wasestablished.In1921,theBankofBengalandtwootherPresidency
banks(BankofMadrasandBankofBombay)wereamalgamatedtoformtheImperialBank
ofIndia.In1955,thecontrollinginterestintheImperialBankofIndiawasacquiredbythe
Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of
ParliamentassuccessortotheImperialBankofIndia.
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
crossborderfinancesolutionsthroughitsfourwingstheDomesticdivision,theForeignOffices
division,theForeignDepartmentandtheInternationalServicesdivision.

SBIRECENTACHIVEMENTSANDMILESTONES:
AWARDS:
SBIhasbeentheproudrecipientoftheICRAOnlineAward8times,CNBCTV18,Crisil
Award 2006 4 Awards, The Lipper Award (Year 20052006) and most recently with the
CNBCTV18CrisilMutualFundoftheYearAward2007and5Awardsforourschemes.
SBICardreachesthreemillionmilestones:
SBI Card, a joint venture between State Bank of India and GE Money, announced yet
another landmark achievement of crossing the three million cardholdersmarks. Roopam
Asthana, CEOSBI Card, said, "This milestone is even more remarkable as we have added
onemillioncardholdersinjusttenmonths.Ourobjectiveistoacceleratethepaceofgrowth
by extending the benefits to a broader range of consumers in Tier II cities, along with
improvedvaluepropositionsfortheurbanaffluentcustomers."SBICardrecentlysignedup
IndiancricketerYuvrajSinghasitsbrandambassador.
SBIjoinsChinesebanktotouch10,000branches:
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
branchhere.Speakingontheoccasion,ChidambaramsaidChina'sICBCBankwastheother
banktohave10,000branches.Opening10,000brancheswasagreatfeat."Itisnotaneasy
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
proudoftheachievementhesaidandwishedthatthebankopenedonelakhbranches.The
Ministersaidoutoftheover100crorepeople,seventy75percentdidnothaveanytypeof


insurance.Similarly,50percentofthe11crorefarmersdidnothavebankaccount.Banks
shouldgotothepeopleandenrollthemasaccountholders.'Thatiswhateconomistssayis
financialinclusion,'hesaid.
MainSBIHomeLoanSchemes
SBIRealty:Purchaseofplotofland
SBIOptima:Loantoexistinghomeloanborrowers
SBI Green Home Loan : For homes that fight against the adverse climate change,
SBIoffers0.25%concessionininterestrateandwaiverofprocessingfees
SBIFlexi:Combinationoffloatingandfixedinterestrate,inapredeterminedratio
NRIHomeLoans:LoansforNRIsandPIOs
SBIFreedom:Pledgingotherfinancialsecuritythanmortgagingthehouse
SBIMaxGain:OperateyourhomeloanaccountlikeyourSBorCurrentAccount
PRODUCTRANGEOFCOMPANY/INDUSTRY:
TheproductsandservicesprovidedbytheSBIareinvariousfields,suchas:
Bankingservices
NRIservices
Internationalbanking
Corporatebanking
Agriculturalbanking
Internationalbanking
SBIHOUSINGLOAN
Features
SBI Home Loan provides no cap on maximum loan amount for the
purchase/constructionofhouse/flat.
There is an option to club the income of the applicant's spouse and children to
computetheeligibleloanamount.
Thebankprovidesfreepersonalaccidentinsurancecover.
AcomplimentaryinternationalATMcumDebitcardisalsoprovidedbySBI.
Onthespot"inprinciple"approvalisaspecialprovisionfortheapplicant.
If all the required documents are submitted by the applicant, SBI Home Loan is
sanctionedwithin6daysofthedateofsubmission.
TheapplicantcanalsoconsiderSBI'sHomeLoanasaTermLoanorasanOverdraft
facility,incasehe/shewantstosaveoninterestandmaximizegains.
SBI Home Loan also provides free personal accident insurance cover up to Rs 40
Lakhs.
Repaymentispermittedupto70yearsofage,whichisanaddedadvantageofSBI
HomeLoan.
SCHEMESPROVIDEDBYSBI

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
differentschemes.SchemesAre:
1.SBIEasyHomeLoan
2.SBIAdvantageHomeLoan
3.SBIHousingFinanceScheme
4.SBIHappyHomeLoans
5.SBILifeStyleLoan
6.SBIGreenHomeLoan
7.SBIHomePlus
8.SBIHomeLine
9.SBIMYHOMECAMPAIGN
PRODUCTS
'SBIFlexi'HomeLoansaredesignedtoenableborrowerstohedgetheirHomeLoanagainst
unfavorablemovementininterestratesandgivesthecustomersaonetimeirrevocableoption
tochooseoneofthethreecustomizedcombinationsoffixedandfloatinginterestrates.
'SBIFreedom'HomeLoansarecustomizedforhighnetworthindividualsandofferbenefits
such as 100 per cent finance of the project and no mortgage of the property, provided the
individualcouldshowliquidsecuritiessuchasLICpoliciesorNSCs.
ELIGIBILITY
Theminimumageoftheapplicantis18years,onthedateofthesanctionoftheloan.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,
regularandcontinuoussourceofincomeforrepayingtheloan.
DOCUMENTS
CompletedApplicationFormwithonePassportSizePhotograph
IdentityProoftheapplicantcanmakeuseofhis/herPANCard/VoterID/Passport/Driving
License,forthepurpose.
Residence Proof the applicant can make use of his/her Recent Telephone Bill/ Electricity
Bill/Propertytaxreceipt/Passport/VotersID
Proofofbusinessaddressinrespectofbusinesspersons/industrialists
Sale Deed, Agreement of Sale, Letter of Allotment, Non Encumbrance Certificate,
Land/BuildingTaxpaidreceiptetc.
CopyofApprovedPlanandapprovalfromtheLocalBody
StatementofBankAccount/PassBookforlast6months
INTERESTRATE(SBARiscurrently11.75%)

Year18%fixed
Year2&39%fixed
Year4onwardsForloansupto50lakhs,9.25%floating.
Forloanamountover50lakhs,9.75%floating
EligibilityCriteria&DocumentationrequiredforSBIHomeLoan

Salaried

Selfemployed

Age

21yearsto60years

21yearsto70years

Income

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

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

5,00,0001,00,00000

5,00,0002,00,00000

Tenure

5years20years

5years20years

Current
Experience

2years

3years

Documentation

1)Applicationformwithphotograph
1) Application form with
2)Identity&residenceproof
photograph
3) Education qualifications certificate &
2)Identity&residenceproof
proofofbusinessexistence
3)Last3monthssalaryslip
4)Businessprofile,
4)Form16
5) Last 3 years profit/loss & balance
5)Last6monthsbanksalaried
sheet
creditstatements
6)Last6monthsbankstatements
6)Processingfeecheque
7)Processingfeecheque

Loan
Offered

Amount

OtherProductsfromSBI(StatebankofIndia)
1)
2)
3)
4)

SBIPersonalLoan
SBICard
SBIHomeLoan
SBIHousingLoan

LOANTENURE
Youcanrepaytheloanoveramaximumperiodof25yearsunderbothFRHLandARHLin
SBI . Repayment will not ordinarily extend beyond your age of retirement (if you are
employed)oronyourreaching65yearsofage,whicheverisearlier.

PROCESSINGFEE

FEESRUPEES
Upto5lakhRs.1000
5lakh10lakhRs.2000
10lakh20lakh
Rs.5000
20lakh50lakh
Rs.7000
50lakh1croreRs.8000
1crore5crore
Rs.10,000
Above5croreRs.20,000

PREPAYMENTCHARGES
IfpaidfromownsourceNil,
Inothercases2%onprincipalamountprepaid
LATEPAYMENTCHARGES
IfpaidfromownsourceNil,
Inothercases2%onprincipalamountprepaid

REVIEWOFLITERATURE

BenR.CraighadstudiedabouttheFederalHomeLoanBankLendingtoCommunityBanks,
are Targeted Subsidies Necessary? The GrammLeachBliley Act of 1999 amended the
lending authority of the Federal Home Loan Banks to include advances secured by small
enterpriseloansofcommunityfinancialinstitutions.Threepossiblereasonsfortheextension
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 smallbusiness lending
decision by rural community banks. Specifically, they estimate two empirical models of
smallbusiness lending by community banks. The data reject the hypothesis that access to
increasedfundswillincreasetheamountofsmallbusinessloansmadebycommunitybanks.
2) In December 2006 Fulbag Singh and Reema Sharma had studied about the housing
FinanceinIndia.Housing,asoneofthethreebasicneedsoflife,alwaysremainsonthetop
priorityofanyperson,economy,governmentandsocietyatlarge.InIndia,majorityofthe
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
introducingvarioushousingloanschemesforruralandurbanpopulation.Thefirstattemptin
this regard was the National Housing Policy (NHP), which was introduced in 1988. The
NationalHousingBank(NHB)wassetupin1988asanapexinstitutionforhousingfinance
andawhollyownedsubsidiaryofReserveBankofIndia(RBI).Themainobjectiveofthe
bankistopromoteandestablishthehousingfinancialinstitutionsinthecountryaswellasto
providerefinancefacilitiestohousingfinancecorporationsandscheduledcommercialbanks.
Moreover, for the salaried section, the tax rebates on housing loans have been introduced.
ThepaperisbasedonthecasestudyofLICHousingFinanceLtd.,whichanalyzesregion
wisedisbursementsofindividualhouseloans,theirportfolioamountsandthedefaultsforthe
last ten years, i.e., from 199596 to 200405 by working out relevant ratios in terms of
percentagesandthecompoundannualgrowthrates.Arelevantcharthasalsobeenprepared
tohighlighttheresults.
3)InMay18,2007MichaelLaCourLittlehadstudiedabouttheEconomicFactorsAffecting
Home Mortgage Disclosure Act Reporting. The public release of the 20042005 Home
MortgageDisclosureActdataraisedanumberofquestionsgiventheincreaseinthenumber
and percentage of higherpriced home mortgage loans and continued differentials across
demographicgroups.Hereweassessthreepossibleexplanationsfortheobservedincreasein
2005over2004:(1)changesinlenderbusinesspractices(2)changesintheriskprofileof
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
statisticallysignificantincreaseinreportablevolumeforloansoriginateddirectlybylenders
during2005,thoughindirect,wholesaleoriginationsdidsignificantlyincrease.Finally,given
a model of the factors affecting results for 20042005, we predict that 2006 results will
continue to show an increase in the percentage of loans that are higher priced when final
numbersarereleasedinSeptember2007.

4)InMay1991StephenF.BordehadstudiedabouttheIstheSavingsandLoanIndustry
FacingExtinction?Thisarticletellsaboutthesavingandloancrisis.Proposedsolutionsare
discussed in the context of the industry as it currently stands. With a somewhat similar
liabilitystructuretothatofbanks(mainlyshorttermdeposits),theassetstructureofS&Lsis
quitedifferent.Whereasbanksassetsconsistofshorttermloans,S&Lassetsconsistlargely
of longterm loans, such as home ownership mortgages. Therefore, in the absence of
adequatehedgingmeasures,S&Lsaremorevulnerabletointerestraterisk,whichcanleadto
lowerprofitswheninterestratesrise.
5)InJune29,2001JoshuaRosnerhadstudiedabouttheHousingintheNewMillennium:A
HomewithoutEquityisJustaRentalwithDebt.TheystudiedabouttheprospectsoftheU.S.
housing/mortgagesectoroverthenextseveralyears.Basedonouranalysis,webelievethere
are elements in place for the housing sector to continue to experience growth well above
GDP.However,webelievetherearerisksthatcanmateriallydistortthegrowthprospectsof
thesector.Specifically,itappearsthatalargeportionofthehousingsector'sgrowthinthe
1990'scamefromtheeasingofthecreditunderwritingprocess.Sucheasingincludes:*The
drasticreductionofminimumdownpaymentlevelsfrom20%to0%*Afocusedeffortto
target the "low income" borrower * The reduction in private mortgage insurance
requirementsonhighloantovaluemortgages*Theincreasinguseofsoftwaretostreamline
theoriginationprocessandmodify/recastdelinquentloansinordertokeepthemclassifiedas
"current" * Changes in the appraisal process which has led to widespread over
appraisal/overvaluation 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
difficulteconomicenvironment,itmaybepossibleforlenderstofurthereasecreditstandards
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
standardsandthesupportoftheGSEs(GovernmentSponsoredEnterprises)haveovercome
manyofthem.Ifthereisaneconomicdisruptionthatcausesamarkedriseinunemployment,
the negative impact on the housing market could be quite large. These impacts come in
severalforms.Theyincludeareductioninthedemandforhomeownership,adeclineinreal
estatepricesandincreasedforeclosureexpenses.Theseimpactswouldbeexacerbatedbythe
increasingdebtburdenoftheU.S.consumerandthereductionofhomeequityavailablein
the home. Although we have yet to see any materially negative consequences of the
relaxationofcreditstandards,webelievetheriskofcreditrelaxationandleveragecan'tbe
ignored.Importantly,arelativelynewmethodofloanforgivenesscantemporarilyalterthe
perception of credit health in the housing sector. In an effort to keep homeowners in the
homeandreduceforeclosureexpenses,holdersofmortgageassetsarecurrentlyrecastingor
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
wouldlikelybecomerelevantonceagain.Thevirtuouscircleofincreasinghomeownership


duetogreaterleveragehasthepotentialtobecomeaviciouscycleoflowerhomepricesdue
toanacceleratingrateofforeclosures.
6)InDecember2002MelissaB.JacobyhadstudiedabouttheHomeOwnershipRiskbeyond
a Sub prime Crisis: The Role of Delinquency Management. They studied that Public
investmentinandpromotionofhomeownershipandthehomemortgagemarketoftenrelies
onthreejustificationstosupplementsheltergoals:tobuildhouseholdwealthandeconomic
selfsufficiency, to generate positive socialpsychological 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 in sub prime delinquency have produced calls for
emergency foreclosure avoidance interventions (as well as frontend regulatory fixes).
Whatevertheirmerit,Icontendthatasystemofmortgagedelinquencymanagementshould
beanenduringcomponentofhousingpolicy.Furtheranceofhousingandhouseholdpolicy
objectives hinges in part on the conditions under which homeownership is obtained,
maintained,leveraged,andinsomesituationsexited.Giventhathighleverageortrigger
eventssuchasjoblossandmedicalproblemsplaysignificantrolesinmortgagedelinquency
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
frameworkformanagingdelinquency.Legalscholarshipshouldnolongerdiscussmortgage
enforcementprimarilyintermsofforeclosurelawandinsteadshouldincludeotherdebtor
creditor laws such as bankruptcy, industry loss mitigation efforts, and thirdparty
interventionssuchasdelinquencyhousingcounseling.Intermsofanalyzingthisframework,
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
systemhonorsandfurthersthegoalsofwealthbuilding,positivesocialpsychologicalstates,
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
theseobjectivesshouldstrivetoprovidefair,transparent,humane,andpredictablestrategies
forhomeexitaswellasforhomeretention.Althoughmoreempiricalresearchisneeded,this
essay starts the process of analyzing mortgage delinquency management tools in the
proposedfashion.
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


fluctuateverycloselywiththenumberofparticipantsinthemortgagemarket.Therefore,the
numberofhousingstartsislinkedstronglytotheprivatemortgagemarket.
8)RobertB.AveryandAllenN.BergerhadstudiedabouttheLoancommitmentsandbank
riskexposure.TheystudiedabouttheLoancommitmentsincreaseabank'sriskbyobligating
ittoissuefutureloansundertermsthatitmightotherwiserefuse.However,moralhazardand
adverseselectionproblemspotentiallymayresultinthesecontractsbeingrationedorsorted.
Dependingontherelativerisksoftheborrowerswhodoanddonotreceivecommitments,
commitmentloanscouldbesaferorriskieronaveragethanotherloans.theempiricalresults
indicate that commitment loans tend to have slightly better than average performance,
suggestingthatcommitmentsgeneratelittleriskorthatthisriskisoffsetbytheselectionof
saferborrowers.
9) Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studied about the
Loancommitmentsandprivatefirms.Theystudiedthat,mostloansareintheformofcredit
lines. Empirical studies of line demand have been complicated by their use of data on
publiclytradedfirms,whichhaveawidemenuoffinancingoptions.Weavoidthisproblem
byusingauniqueproprietarydatasetfromalargefinancialinstitutionofloancommitments
made to 712 privatelyheld firms. We test Martin and Santomero's (1997) model, in which
linesgivefirmsthespeedandflexibilitytopursueinvestmentopportunities.Ourfindingsare
consistentwiththeirpredictions.Firmsfacinghigherratesandfeeshavesmallercreditlines.
Firms with higher growth commit to larger lines of credit and have a higher rate of line
utilization. Firms experiencing more uncertainty in their funding needs commit to smaller
creditlines.Almostallfirmsconvertunusedcreditlineportionsintospotloansandtakeout
newlines.
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
relationshipbetweenmortgageratevolatilityandhomemortgageloans.Furtherinvestigation
indicatesthatthisisduetovolatilityinthebondmarket.Intimesofhighinterestvolatility,
householdsdisinvestingovernmentsecuritiesandinvestinrealassets,whichyieldapositive
relationshipbetweenmortgageratevolatilityandhomemortgageloans.
11)Innovember2000MichelleJ.WhiteandEmilyY.LinhadstudiedabouttheBankruptcy
and the Market for Mortgage and Home Improvement Loans. They studied that this paper
investigatestherelationshipbetweenbankruptcyexemptionsandtheavailabilityofcreditfor
mortgageandhomeimprovementloans.Wedevelopacombinedmodelofdebtors'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 crossstate 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
relationshipsalsoholdwhenweintroducestatefixedeffectsintothemodel.
12)InOctober14,2008DavidP.BernsteinhadstudiedabouttheHomeEquityLoansand
PrivateMortgageInsurance:RecentTrends&PotentialImplications.Theystudiedaboutthe
impact of increased use of home equity lines and decreased private mortgage insurance
(PMI)onmortgagemarkets.Thedataconfirmsthatintheyearsleadinguptothemortgage
crisishomebuyersandlendershaveaggressivelyusedpiggybackloanstoavoidtakingout
PMI on first mortgages. Multiplemortgage financing packages as a percent of newly
originatedmortgages(mortgagesoriginatedwithinthepreviousfiveyears)wentfrom14.8%
in survey year 2001 to 21.5% in survey year 2007. The multiplemortgage percentage for
seasonedmortgages(mortgagesoriginatedmorethanfiveyearspriortotheoriginationdate)
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 multiplelien 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 multiplelien versus singlelien households. The
comparisonssuggestsinglelienhouseholdstendtohaveslightlystrongerfinancialvariables
than multiplelien households. The data does not support the view that homeowners with
multipleliensarelessriskyandshouldthereforebeallowedtoavoidPMI.Thereduceduse
ofPMIandtheincreaseduseofhomeequityloansincreasedmortgageholderriskinseveral
differentwaysandwasacontributingfactortothe2008mortgageandfinancialcrisis.This
changeinlendingandborrowingbehaviorisnotasubprimemarketproblem.
13)InAugust2007MichaelLaCourLittlehadstudiedabouttheHomePurchaseMortgage
PreferencesofLowandModerateIncomeHouseholds.HousingpolicyintheUnitedStates
haslongsupportedhomeownership,yetvariationpersistsacrossincomegroups.Thisarticle
employs recent mortgage origination data to focus on the revealed preferences of low and
moderateincome(LMI)householdsinhomepurchasemortgagechoice.Iidentifythefactors
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
effectivelycompetewithgovernmentinsuredproductsintheLMIsegment.
14)In24October2008DavidC.WheelockhadstudiedabouttheGovernmentResponseto
HomeMortgageDistress:LessonsfromtheGreat.TheystudiedabouttheGreatDepression
wastheworstmacroeconomiccollapseinU.S.history.Sharpdeclinesinhouseholdincome
and real estate values resulted in soaring mortgage delinquency rates. According to one
estimate,asofJanuary1,1934,fullyonehalfofU.S.homemortgagesweredelinquentand,
on average, some 1000 home loans were foreclosed every business day. This paper


documentstheincreaseinresidentialmortgagedistressduringtheDepression,anddiscusses
actions taken by state governments and the federal government to reduce mortgage
foreclosures and restore the functioning of the mortgage market. Many states imposed
moratoriaonbothfarmandnonfarmresidentialmortgageforeclosures.Althoughmoratoria
reducedfarmforeclosureratesintheshortrun,theyappeartohavealsoreducedthesupply
ofloansandmadecreditmoreexpensiveforsubsequentborrowers.Thefederalgovernment
tookanumberofstepstorelieveresidentialmortgagedistressandtopromotetherecovery
andgrowthofthenationalmortgagemarket.TheHomeOwnersLoanCorporation(HOLC)
was created in 1933 to purchase and refinance delinquent home loans as longterm,
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
percentofallnonfarm,owneroccupieddwellingsintheUnitedStates,andabout20percent
of those with an outstanding mortgage. The Great Depression experience suggests how
foreclosuresmightbereducedduringthepresentcrisis.
15)InMarch2001TullioJappelliandMariaConcettaChiurihadstudiedabouttheFinancial
Market Imperfections and Home Ownership: A Comparative Study. They explore the
determinantsoftheinternationalpatternofhomeownershipusingtheLuxembourgIncome
Study(LIS),acollectionofmicroeconomicdataonfourteenOECDcountries.Inmost,the
crosssection 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
loansanddownpaymentratiosaffectstheageprofileofhomeownership,especiallyatthe
young end. The results have important implications for the debate on the relationship
betweensavingandgrowth.
16) In 10 December 2007 Irina Paley and Chau Do had studied about the Explaining the
Growth of HigherPriced Loans in HMDA: A Decomposition Approach. The period 2004
2005showedasignificantincreaseinHomeMortgageDisclosureAct(HMDA)ratespread
reporting. Following the Oaxaca (1973), Blinder (1973), and Fairlie (2005) decomposition
techniques,thisstudyidentifiesthefractionoftheincreaseduetotheflatteningoftheyield
curve.Evenaftercontrollingforchangesinborrowerriskcharacteristics,thefindingsreveal
thatduring20042006,theflatteningoftheyieldcurveexplainsasignificantamountofthe
increase in rate spread reportable loans. This is the case for both prime and sub prime
originations.
17) In Feb. 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael LaCourLittle had
studiedabouttheuniquepairedloandatasetcontaininginformationonmultipleconventional
conformingmortgageloansofhouseholdstoexaminehomeequityextractiondecisionsover
theperiod20002006.Themainquestionaddressedishowmuchhouseholdsborrowwhen
refinancingtheircurrentmortgagedebtinacashouttransaction.Wealsoprovideestimates


of the marginal effect of certain borrower characteristics. Results contribute both to the
literatureonrefinancingbehaviorandtheroleofhousepriceappreciationinprovidingfunds
thatmaybeusedforconsumerspendingorotherpurposes.
18)Inaugust2004MarkCareyandGregNinihadstudiedabouttheCorporateLoanMarket
Globally Integrated? A Pricing Puzzle. We offer evidence that interest rate spreads on
syndicated loans to corporate borrowers are economically significantly smaller in Europe
thanintheU.S.,otherthingsequal.Differencesinborrower,loanandlendercharacteristics
associatedwithequilibriummechanismssuggestedintheliteraturedonotappeartoexplain
the phenomenon. Borrowers overwhelmingly issue in their natural home market and bank
portfolios display significant home "bias." This may explain why pricing discrepancies are
notcompetedaway,butthefundamentalcausesofthediscrepanciesremainapuzzle.Thus,
important determinants of loan origination market outcomes remain to be identified, home
"bias"appearstobematerialforpricing,andcorporatefinancingcostsdifferinEuropeand
theU.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
householdstoshiftfromdebttowardequityfinancing.Thegreatertheshift,thelessisthetax
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.
Takingthisrestrictionintoaccountreducestheestimatedfinancingresponseby20percent(a
32percentdeclineindebtvs.a40percentdecline).Theestimationisbasedon86,000newly
originatedUKloansfromthelate1990s.
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
releasesofthe2004and2005HMDAdatahaveengenderedalivelydebateoverthepricing
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
proprietarydataprovidedtousbylendersandanendogenousswitchingregressionmodelto
estimate the probability of taking out a sub prime mortgage, and annual percentage rate
("APR")conditionalongettingeitherasubprimeorprimemortgage.Wefindthatupto90
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
appropriatelyexplainmortgagepricingdifferentials.Althoughanypotentialdiscriminationis
problematic and should be addressed, our analysis suggests that little of the aggregate
differences in APRs paid by minority and nonminority borrowers are appropriately
attributedtodifferentialtreatment.


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 purchase loans originated by a major depository
institution in Philadelphia under a flexible lending program between 1988 and 1994. We
examine longterm 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
delinquencyisgreaterforborrowerswithlowcredithistoryscoresandthosewithhighratios
of housing expense to income, and when the property is unusually expensive for the
neighborhoodwhereitislocated.

CONCLUSION
The Indian customer has come a long way from purchasing to fulfilling their needs from
buyingahousecustomersnowgrabeverythingthatcomestheirwaybuttheydotheirown
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
bankhastosucceedincompetitiveworld,itshouldbetechnologicalstarry.Customercentric
progressivedrivenbyhigheststandardofcooperativegovernance&guidedbysoundethical
values&aboveallshouldhavepersonalizedcustomerservices.Thereisscopeofexploiting
thevastmiddleincomegroupbyreleasingloanswithspecialinterestrate,whichwouldbe
beneficialtobothparties.


RECOMMENDATION
Thefollowingsuggestionsarestronglyrecommended:
Tobroadenthecustomerbasethevastmiddleincomestratashouldbefullyexploited.
Simplify the procedure, reduce service charges & demand only the basic essential
proof.
Mostbanksarereluctanttoadvanceloantotheserviceclass.E.g.lawyears,police
officersetc.thisaspectmustbeexploited.
Adoptionofflexible&morelenientpenaltyshouldthe
Customer fails to deposit the payment on time. The penalty should be case to case
basisratherthanthesamefortheentirecustomerbase.
Restrictiontobereducedtobareminimumforloanadvances&forrepayment.For
e.g. offers Long term repayment facilities & have no age restriction to choosing
repayment.Themaximumageforrepaymentcouldbeincreaseto6570yearsofage.
Suchfacilitywillgrowfastretailsegmentofthebank.
Offer multiple repayment loans services. Class to be exploited by offering special
reduced
Rates&linkingtherepaymentfromthesourcewherethepaychequetotheemployee
is issued. This need to undergo special contract with government organization to
ensureimplementation.