PROJECT REPORT
ON
AT
SUBMITTED TO
UNIVERSITY OF PUNE
IN PARTIAL FULFILLMENT OF
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY
M.V.P SAMAJ’S
INSTITUTE OF MANAGEMENT RESEARCH AND
TECHNOLOGY
GANGAPUR ROAD, NASHIK-422002.
Date: 1st Sept, 2009
Regards
Mr. S. M. PISU
Dy. Manager (credit).
ACKNOWLEDGEMENT
I sincerely thank State Bank of India for giving me the opportunity to learn. I
acknowledge my profound sense of gratitude & sincere thanks to the management of
State Bank of India for offering me this project & summer training in their prestigious
organization.
I would like to thank Mr. S. M. Pisu, who has given me their valuable time
throughout the project duration and provided me with all the relevant information
along with valuable suggestions and recommendations whenever required.
I also thank Prof. D.D. Walke our project guide without his help and guidance
the project would not have been successfully completed.
Seema D. Handore
DECLARATION
I Ms. Seema Dayaram Handore student of MBA hereby declarer that the
project titled “To Study The Credit Appraisal In Home Loan Finance” has been
carried out by me in partial fulfillment of the MBA program under the University of
Pune. This project was undertaken as a part of the academic curriculum as per
University ruled & norms and also by non-commercial interest or motive. It is my
original work & is also not submitted elsewhere for any other purpose earlier.
Signature
Seema D. Handore
(Student IMRT)
INDEX
Sr. no. PARTICULARS Pg. no.
1. INTRODUCTION:
A. OBJECT OF PROJECT.
B. SELECTION OF TOPIC.
C. OBJECTIVE OF STUDY.
D. LIMITATIONS.
2. RESEARCH METHODOLOGY:
A. MEANING
B. RESEARCH DESIGN
C. DATA COLLECTION(SOURCES)
3. INTRODUCTION TO BANKIG SECTOR IN
INDIA:
A. BANKING SECTOR IN INDIA
B. FDI IN BANKING SECTOR
C. PRESENT SITUATION
D. BANKING STRUCTURE IN INDIA
4. ORGANISATION PROFILE:
A. EVOLUTION OF BANK.
B. BUSINESS.
C. MAJOR CHANGES IN CONDITION.
D. IMPERIAL BANK.
E. FIST FIVE YEAR PLAN.
F. ORGANISATION STRUCTURE.
5. INTRODUCTION TO CREDIT APPRAISAL:
A. WHAT IS CREDIT?
B. WHAT IS APPRAISAL?
C. WHAT IS CREDIT APPRAISAL?
6. PRODUCT PROILE
7. DATA COLLECTION:
A. SBI HOME LOAN.
B. RECENT MODIFICATIONS IN SBI HOME
LOAN.
C. DOCUMENTS OF HOME LOAN.
D. PROCESS OF HOME LOAN.
E. GENERAL CAUSES OF REJECTION OF
PROPOSAL.
8. ANALYSIS & INTERPRETATION:
A. COMPARATIVE ANALYSIS.
B. ANALYSIS OF BRANCH PERFORMANCE
9. RECOMMENDATIONS & SUGGESTIONS.
10. CONCLUSION.
11. APPENDICES.
12. BIBLOGRAPHY.
INTRODUCTION
INTRODUCTION
We know three basic needs of human beings i.e. food, clothing and shelter. For all
these needs we want money? It involves large investment. Everyone does not have
that much money to invest at once. Borrowing and lending is the important function
of the developing economy. It is in existence right from ancient time. Previously in
barter system the goods were exchanged for goods. Now the scenario has changed to
fulfill the needs of human. The old concept that emerged as new is “Loan”
The Banking Industry has been undergone some fundamental changes in its approach
to banking.
A. O B J E C T O F T H E P R O J E C T
The project forms a very vital aspect during the curriculum of M.B.A. At the end of
the first year students are required to under go summer training and a project for span
of two months.
It is very essential to have adequate knowledge about every aspect of the job, so as to
handle each & every situation effectively for applying theoretical knowledge in
practical life.
The project gives the live experience about the various aspects of the management
that is helpful from future point of view. The Project provides opportunity to
understand the effectiveness in performance of the organization as well as the student
during the 2 months.
B. SELECTION OF TOPIC
The Banking Industry has been undergone some fundamental changes in its approach
to banking. There has been a perceptible shift towards Customer Relationship
Management (CRM) mainly arising out of the element of intensive competition
infused into the industry by the arrival of private players. With free economic reforms
government permitted private players to enter into the banking business along with
the existing nationalized banks.
In 2002 the government allowed Foreign Banks to enter into the Indian Market.
The concept of retail banking introduced with the increase in number of banks, the
private player’s especially introduced this concept. The banks are segmenting their
portfolio into different segments like Personnel Banking, Retail Banking and are
concentrating on Small Medium Enterprise individual finance like housing finance,
vehicle finance, etc as large number of customers can be taped with diversification of
risk as it evolved lower risk than corporate banking. All banks are increasing their
exposure to this area.
The Credit Manager plays a crucial role in increasing banks profitability as the major
portion of funds are utilized by bank for the purpose of lending of loans and advances
to get more return on account of the “Interest” reducing risk in financing.
D. LIMITATIONS
Following are the limitations for carrying out this project work:
As the project was restricted for the period of two months, hence the data
obtained may not be sufficient for interpretation.
The study was related to the Financial Services sector where the Financial
Institution did not given each & every information of their working procedure.
The study was related to Credit Appraisal System for specifically Home Loan,
so other Credit Appraisal System was not taken into consideration for the
study.
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY
A. MEANING:
Research is a scientific and systematic search for pertinent information on a specific
topic. Research means search for knowledge. It is discovery of facts, developments of
facts and verification of facts. It is an attempt to find practical solutions to the
problems with the help of application of scientific methods.
The purpose of research is to discover the answers of questions through application of
scientific procedure. The aim of research is to find out the truth which is has been
discovered as yet.
Oxford Dictionary:
“Research is a careful investigation or inquiry especially through search for new facts
in any branch of knowledge.”
B. RESEARCH DESIGN:
Research design is the logical and systematic planning and directing of a piece of
research. Design implies some purpose and thoughtful activity. A research design is a
vital requisite for any research project. It guards the study from going off track and
any premature tripping. It helps to economize on the resources used and prepare the
researcher for potential roadblocks through out the task. It is a logical and systematic
plan that guides the entire study
C. DATA COLLECTION:
Data collecting is collecting information for project while studying a business through
different sources of data collection. It is very important aspect of any investigation.
The research methodology includes methods of data collection. Data collection
process begins after research problem has been defined & research plan chocked out
while deciding about method of data collection to be used for studies. There are two
types of data as follows:-
1) Primary Data
2) Secondary Data
SOURCES OF
DATA
COLLECTION
SECONDA
PRIMARY
R-Y
SOURCES
SOURCES
OBSERVA QUESTIO
AUTOBIO
T-ION NNAIRE
LETTERS G-RAPHY
METHOD METHOD
BIOGRAP
H-IES
1) PRIMARY SOURCES:-
i) Letters:-
ii) Autobiography :-
Which are written some time after the events recorded in them and intend for
publication, may be expected to suffer from continuous stylization. The
prospective view on the other hand, enables the writer to select and display
such of his experiences and action that subsequently proved to be significant
features in his ‘Life history’.
iii) Observation method:-
The observation method is most commonly used method. Under this method
information is sought by way of investigators own direct observation without
asking from respondent.
This method of collection data involves presentation of oral, verbal stimuli &
reply in terms of oral verbal responses. This method can be used through
personnel interviews.
2) SECONDARY SOURCES:-
Secondary data that are already available that is they refer to data which is
already been collected and analyzed by someone else.
B) Internet technology:-
It is very useful in the fast world now days. By a single click we get lots of
information of a particular company having websites and it is very
presentable.
INTRODUCTION TO BANKING
SECTOR IN INDIA
A. Banking Sector in India
The Government of India, in a major step nationalized Reserve Bank of India in 1948.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India.
Government in order to have firm grip over this sector nationalized the private banks
first in 1969 and later in 1980. With the second dose of nationalization, the GOI
controlled around 91% of the banking business of India. After this, until the 1990s,
the nationalized banks grew at a pace of around 4%, closer to the average growth rate
of the Indian economy.
In the early 1990s the then Narsimha Rao government embarking on a policy of
liberalization, gave licenses to a small number of private banks, which came to be
known as New Generation tech-savvy banks, which included banks such as Global
Trust Bank, UTI Bank, (now re-named as Axis Bank), ICICI Bank and HDFC Bank.
This almost kick started the banking sector in India, which has seen rapid growth with
strong contribution from all the three sectors of banks, namely, government banks,
private banks and foreign banks.
The next stage for the Indian banking has been setup with the proposed relaxation in
the norms for Foreign Direct Investment, where all Foreign Investors in banks may be
given voting rights which could exceed the present cap of 10%, at present it has gone
up to 49% with some restrictions.
C. Present Situation
In the present situation, banking in India has attained fair amount of maturity in terms
of supply, product range and reach-even though reach in rural India still remains a
challenge for the private sector and foreign banks. In terms of quality of assets and
capital adequacy, Indian banks are considered to have clean, strong and transparent
balance sheets relative to other banks in comparable economies in its region.
Since Indian economy is witnessing strong growth the demand for banking services,
especially retail banking, mortgages and investment services are expected to be
strong. One may also expect M&A’s, takeovers, and asset sales.
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks
(that is with the Government of India holding a stake), 29 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges)
and 31 foreign banks. They have a combined network of over 53,000 branches and
17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public
sector banks hold over 75 percent of total assets of the banking industry, with the
private and foreign banks holding 18.2% and 6.5% respectively.
Scheduled Commercial Banks and Unscheduled Banks. The banks which are included
in the second schedule of Reserve Bank of India (RBI) Act, 1934 is called scheduled
bank. RBI in turn includes only those banks in this schedule which satisfy the criteria
laid down vide section 42 (6) (a) of the Act.
For assessing the performance of the bank, the Reserve Bank of India categories the
bank as public sector banks, old private sector banks, new private sector banks and
foreign banks
ORGANISATION PROFILE
A. Evolution of bank
The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.
Three years later the bank received its charter and was re-designed as the Bank of
Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of
British India sponsored by the Government of Bengal. The Bank of Bombay (15 April
1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These
three banks remained at the apex of modern banking in India till their amalgamation
as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into existence
either as a result of the compulsions of imperial finance or by the felt needs of local
European commerce and were not imposed from outside in an arbitrary manner to
modernize India's economy. Their evolution was, however, shaped by ideas culled
from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the
relations of the Indian economy to the economy of Europe and the global economic
framework.
B. Business
The business of the banks was initially confined to discounting of bills of exchange or
other negotiable private securities, keeping cash accounts and receiving deposits and
issuing and circulating cash notes. Loans were restricted to Rs.1 lakh and the period
of accommodation confined to three months only. The security for such loans was
public securities, commonly called Company's Paper, bullion, treasure, plate, jewels,
or goods 'not of a perishable nature' and no interest could be charged beyond a rate of
twelve per cent. Loans against goods like opium, indigo, salt woolens, cotton, cotton
piece goods, mule twist and silk goods were also granted but such finance by way of
cash credits gained momentum only from the third decade of the nineteenth century.
All commodities, including tea, sugar and jute, which began to be financed later, were
either pledged or hypothecated to the bank. Demand promissory notes were signed by
the borrower in favor of the guarantor, which was in turn endorsed to the bank.
Lending against shares of the banks or on the mortgage of houses, land or other real
property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the
business of discounts on private as well as salary bills was almost the exclusive
monopoly of individuals Europeans and their partnership firms. But the main function
of the three banks, as far as the government was concerned, was to help the latter raise
loans from time to time and also provide a degree of stability to the prices of
government securities.
A major change in the conditions of operation of the Banks of Bengal, Bombay and
Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the
right of note issue of the presidency banks was abolished and the Government of India
assumed from 1 March 1862 the sole power of issuing paper currency within British
India. The task of management and circulation of the new currency notes was
conferred on the presidency banks and the Government undertook to transfer the
Treasury balances to the banks at places where the banks would open branches. None
of the three banks had till then any branches (except the sole attempt and that too a
short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had
given them such authority. But as soon as the three presidency bands were assured of
the free use of government Treasury balances at places where they would open
branches, they embarked on branch expansion at a rapid pace. By 1876, the branches,
agencies and sub agencies of the three presidency banks covered most of the major
parts and many of the inland trade centers in India. While the Bank of Bengal had
eighteen branches including its head office, seasonal branches and sub agencies, the
Banks of Bombay and Madras had fifteen each.
D. Imperial Bank
The Imperial Bank during the three and a half decades of its existence recorded an
impressive growth in terms of offices, reserves, deposits, investments and advances,
the increases in some cases amounting to more than six-fold. The financial status and
security inherited from its forerunners no doubt provided a firm and durable platform.
But the lofty traditions of banking which the Imperial Bank consistently maintained
and the high standard of integrity it observed in its operations inspired confidence in
its depositors that no other bank in India could perhaps then equal. All these enabled
the Imperial Bank to acquire a pre-eminent position in the Indian banking industry
and also secure a vital place in the country's economic life.
When India attained freedom, the Imperial Bank had a capital base (including
reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94
crores respectively and a network of 172 branches and more than 200 sub offices
extending all over the country.
F. ORGANISAION STRUCURE
CHAIRMAN
MD & CHIEF CREDIT & RISK OFFICER DMD & CHIEF FINANCE OFFICER
DMD (Corporate strategy & new business) DMD (Inspection & management audit
DMD & GE
DMD & GE DMD & GE DMD & GE DMD & GE DMD & GE
DMD & GE Associates
(national Rural Corporate Internation Global
(MC) &
banking business banking al banking markets
Subsidiaries
Regional
head/ direct
Mid corporate region Domestic & Associates
branches,
global &
foreign
treasury Subsidiaries
Mid corporate branches offices &
subsidiaries
Regional Offices
CGM GM
Branches CGM (Asset
(corporate (project
mgmt.
Accts. finance
group)
Group) leasing)
Personal Banking Business Unit
Banking operations
A. WHAT IS CREDIT?
You are granted credit when an organization or individual makes a sum available for
you to borrow.
There are two main types of credit:
Home loans, or mortgages, and personal or shop loans are linked to a specific
item or items – for example, a new kitchen, or a house.
Revolving credit on payment cards can give you access to a fixed amount of
money that you can spend as you wish, in a wide range of retailers and other
outlets.
Repayment
Loans are normally repaid in regular installments over an agreed period of time.
Mortgages, or home loans, can be repaid in variable installments but most personal
loans specify fixed repayments of approximately equal amounts.
If you want to make another major purchase when you have finished paying off one
loan, you need to negotiate a new loan.
Revolving credit means that you always have access to the amount of your line of
credit that remains unspent. And every time you pay off some of the outstanding
amount, that proportion of your credit limit becomes available for you to spend again.
So if you have a credit limit of Rs.1, 000/-, spend Rs.30/- and repay Rs.100/-, you
have Rs.800/- available to spend.
Whatever type of loan you choose, be certain to make your repayments on time, or
you can face financial penalties.
Interest
In order to cover the lending risk and to make a profit on their money, lenders
generally charge interest on loans and revolving credit. You must remember this when
you are calculating your repayments.
For example, if you borrow Rs.100 and interest is payable at an annual rate of ten per
cent, the total cost is Rs.110. This is known as simple interest. It is rarely charged on
borrowings.
Compound interest is more common. It means that interest is charged on the interest
at regular intervals.
For example –
If you owe Rs.100 and are charged ten per cent compound interest each year, at the
end of year one you will owe Rs.110. In year two, the lender will charge ten per cent
of this sum and add it to the outstanding amount, so you will owe Rs.121, and so on.
Interest may be compounded after any period – a day, a week, a month and so on.
With fixed repayment loans, the amount of interest is worked out in advance and
added into the repayments. There is often a penalty if you want to repay the
outstanding amount earlier than agreed.
With revolving credit, you can repay as much or as little as you want, at any point.
You can often avoid paying any interest at all if you repay the total amount you have
borrowed on the date when the first repayment is due.
B. WHAT IS APPRAISAL?
Appraisals are needed to accurately determine the value of the loan and also inspect
the property's condition. An appraisal report is only good for 90 days and most
mortgage companies will require a certified appraiser.
General Appraisal
The appraiser obtains an estimated value through the interpretation of the market. The
appraiser collects data pertinent to a report, such as the site, amenities and the
physical condition of the property. Through considerable research and data collection
of both general and specific, the appraiser arrives at the final estimated value.
The documents submitted by the applicant are verified by the panel of officials
/ the appraisal committee.
After the verification of the documents the appraisal committee approves the
loan application and then submits the / apprises the loan application to the
sanction committee for loan sanction.
After the appraisal of the loan to the sanctioning committee in case the
sanctioning committee finds any fraud documents then both the applicant as
well as the appraisal committee is held responsible.
Legal Appraisal
In legal appraisal the documents submitted by the applicant are verified by a lawyer to
confirm whether the holder would be able to generate a mortgage in favor of the bank
or not
Technical appraisal
It is considered as the important stage of the appraisal process. In this stage, the
applicant’s original documents are verified. All other information provided by the
applicant is asked to submit the documents regarding guarantees.
The documents needed change depending upon whether house is being purchased or
constructed. Bank’s carry out technical appraisal to safeguard the applicant’s
interest’s before and after the property selection. The officer of the technical appraisal
even safeguards the borrower’s interest.
RD=AV*CC/100*PC/100+LC/100-(BC-CM)
Where,
RD= recommendation for disbursement in Rs.
PC= progress of construction in % points,
AV=aggregate value = LC+CC,
LC= land component,
BC= borrowers contribution,
CM= cumulative disbursement mode.
Calculation of EMI
Housing loans are long term loans that are replayed in equated monthly installments
(EMI). Each of which includes repayment of interest as well as the principal amount.
EMI payments generally start after the loan has been fully disbursed or after 12
months from the date of first installments. The EMI is determined on the basis of the
loan size, interest rate and loan period. An approximate value of EMI can be arrived
at using the following formula-
Where,
L=loan’
r=rate of interest in decimal &
n=loan period.
PRODUCT PROFILE
(TYPES OF HOME LOANS)
A unique product if borrowers are on the look out for a loan to purchase
a plot of land for house construction. The loan is available for a
maximum amount of Rs.1 crore and with a comfortable repayment
period of upto 25 years.
For those who do not want to pay stamp duty for mortgage of their
property or go through the hassles of creation of mortgage.
One also have an option to take the loan by way of mortgage of the
property and pledge financial securities in lieu of margin money.
Purpose
‘SBI-Optima’ to meet expenditure towards major repair,
Additional Home Loans renovation, addition to their house/flat,
purchase of furniture, fixtures and consumer
durables
‘SBI-Home line’ General purpose loan to meet expenditure to
Special Personal Loans meet foreseen/unforeseen contingencies
Eligibility
‘SBI-Optima’ Additional Home 18 times NMI (for salaried
Loans borrowers)/
1 ½ times NAI ( for others) or
Inbuilt provision for availment of the loans on the expiry of each bloc of 5
years, the first bloc commencing on the expiry of 5 years from the date of
sanction of original Home Loan.
Original Home Loan and all ‘SBI-Optima’ Home Loans/’SBI-Home Line’
Personal Loans can run concurrently
Comfortable repayment obligations – Tenure of the loans equal to the residual
maturity of the original Home Loans.
Purpose
i. Construction of a new house.
ii. Repair.
iii. Renovation.
iv. Alteration of the house.
v. Purchase of a plot for the construction of new house.
vi. Purchase of a new house or flat.
vii. Purchase of existing house / flat.
Eligibility
Basic Eligibility:
• Salaried
• Self employed professionals
• Self employed non-professionals
Age limit:
No of co-borrowers:
-Maximum 3.
No of dependents:
-Maximum 5.
Type of borrowers:
Resident Indians.
Salaried:
i. Minimum qualification: NA
-Minimum 3 years.
a. CA / ICWA / CS.
b. Architects.
c. Lawyers (only advocates practicing with Supreme Court / District Court or
working with Solicitors / Practicing Tax consultants).
d. Consultants like Engineers / MBAs etc.
e. Doctors / pathologists.
f. Chemist with B. Pharm.
-NA
-Applicable.
i. Eligible entity:
-NA
-Minimum 3 years.
Loan amount:
Margin:
-20% of Project Cost / valuation cost upto Rs. 5 lacs
-25% of project cost / valuation cost above Rs. 5 lacs.
Security:
-Equitable mortgage on the plot / house / flat being purchased or the house / flat being
constructed / purchased / renovated.
Disbursements:
-Direct disbursement of loan to vendor of the house/flat where building is ready for
possession.
-For construction / renovation / extension of flat / house, disbursement is done in
phases.
Repayment:
-In Equated Monthly Installments (EMIs) comprising of Principal and Interest in a
maximum period of 25 years including moratorium period.
Repayment Period:
Processing charges:
Loan amount *charges
Upto Rs. 25,000/- Nil.
Rs25,001 to Rs. 2 lacs Rs. 500/-
Above Rs. 2 lacs 0.50%
(* Processing charges changes from scheme to scheme.)
Maximum Loan:
EMI/NMI Ratio:
Increase upto 5% in the above ratios may be permitted by the controller of Branch/
RACPC, which processes the loan application, depending on the family size and
availability of disposable surplus income.
Monetary ceilings:
• For furnishings and consumer durables: 10% of the project cost or Rs.3
lacs whichever is less where check off facility or additional security or 3rd party
guarantee good for the amount is available.
LTV Ratio:
i) Loans upto Rs. 1 crore 80% (i.e. 20% margin)
ii) Loans above Rs.1 crore 75% (i.e. 25% margin)
Interest:
-Loans at fixed / floating rates and combination of fixed and floating rates.
-Loans above Rs.1 crore at floating rates only.
-Interest rate concession for loans with LTV ratio of 75% or less.
Type of Loan:
-Term Loan.
Administrative approval:
No prior administrative clearance required.
In all cases the life & condition of the house shall be such that the bank’s
security charge is not affected till full repayment of the loan.
Insurance:
-Insurance of the house / flat covering all risk is necessary.
Inspection:
For standard assets:
ELIGIBILITY CALCULATION:
PARTICULARS AMOUNT(RS)
Gross Monthly Income *****
Less: Deductions *****
Net Monthly Income *****
Less: Obligations *****
Maximum Amount For Repayment *****
a. In Principle Approval:
• In principle approval / sanction can be given prior to identification
of a specific house / flat / property by the prospective borrower to
give him greater flexibility in negotiations.
• It is valid for the period of three months.
• The borrower can select the property as per the eligibility or loan
amount he may get.
The documents required for the appraisal of Home Loan are divided into two stages
which are as follows:
DOCUMENTS
PRE-SANCTION POST-SANCTION
DOCUMENTS DOCUMENTS
COMMON DOCUMENTS:
APPLICAT
-ION FORM
WITH PHOTO
COMMON
DOCUMENTS
PERSONAL
NET WORTH
ASSETS &
SUPPORTING
LIABILITY
DOCUMENTS
STATEMENT
Form 16 for last three years. Last three years Income Tax Last three years Balance-
returns. sheet.
LEASED OTHERS
OFFICE ADDRESS
_____________________PIN__________ _____________________PIN__________
TEL-__________(R)_____________(O) TEL-__________(R)_____________(O)
DATE OF BIRTH
SEX MALE FEMALE MALE FEMALE
STATUS RESIDENT NRI RESIDENT NRI
MARITAL STATUS SINGLE MARRIED SINGLE MARRIED
NO. OF DEPENDANTS
CATEGORY CHILDREN OTHERS CHILDREN OTHERS
SC ST OBC NA SC ST OBC NA
PAN NO./ VOTER
ID/PASSPORT NO. (attach Xerox
copy)
OCCUPATION
OCCUPATOPN DETAILS
EDUCATIONAL/PROFESSIONAL
QUALIFICATIONS
NO. OF YEARS IN PRESENT OCCU.
DESIGNATION & EMPLOYMENT
NO.
DATE OF RETIREMENT
A/C DETAILS
TYPE OF A/C NAME OF THE BANK & A/C NO. YEAR OF OPENING
BRANCH
APPLICANT
CO-APPLICANT
FINANCIAL DETAILS
MONTHLY GROSS INCOME
MONTHLY NET SALARY
OTHER INCOME
SOURCE OF OTHER INCOME
ANNUAL INCOME AS PER IT
RETURN
ADVANCE TAX PAID IN CURRENT
YEAR
EXPECTED MONTHLY RENTAL
INCOME FROM PROPOSED
FLAT/HOUSE
MONTHLY INSTALLMENTS
PROPOSED
INVESTMENT & LOAN
(ASSETS & LIABLITIES)
PLEASE INDICATE BELOW DETAILS OF INVESTMENTS & ALL LOANS TAKEN/PROPOSED FROM
EMPLOYER, PF ETC. & INSTALLMENT(S) PAYABLE PRE MONTH ON THE SAME INCLUDING INTEREST
AGAINST EACH.
LOANS O/S AMT MONTHLY TER
INSTALL. M
PAYABLE MON
RS. RS. THS
APPLICANT
EMPLOYER
BANK
CREDIT
SOCIETY
OTHERS
CO-
APPLICANT
EMPLOYER
BANK
CREDIT
SOCIETY
OTHERS
APPLICANT CO-
APPLICANT
SAVING BANK
IMMOVABLE
PROPERTY
(SPECIFY)
CURRENT BAL. IN
PF. (YOUR
SHARRE)
OTHER ASSETS
POLICY
1.
2.
LIFE INSURANCE
POLICY(IES)
POSTAL LIFE
INSURANCE
POLICY(IES)
AMT/MATURITY
DATES)
DETAILS OF PROPERTY
DETAILS OF IMMOVABLE PROPERTY
(TO BE PURCHASED / CONSTRUCTED / RENOVATED / IMPROVED)
1. MENTION HOUSE NO. / PLOT NO., AREA, CITY, PIN CODE, PROPOSED
__________________________________
2. PLOT / FLAT / HOUSE ALLOTED BY A- HOUSING SOCIETY, HOUSING BOARD,
DEVELOPMENT AUTHORITY, PVT. BUILDER, CO-OPERATIVE SOCIETY.
PURPOSE
LOAN REQUEST
PURPOSE OF LOAN –
1. PURCHASE OF NEW HOUSE/FLAT 2. PURCHASE OF OLD HOUSE/FLAT
PROPOSED REPAYMENT
REPAYMENT TERM OF LOAN PERIOD OF RE-PAYMENT YEARS / MONTHS
MODE OF REPAYMENT
CHECK-OFF FACILITY WITH EMPLOYER
SALARY A/C & SI AT BRANCH
POST DATED CHEQUES
PURPOSE OF LOAN
A) FOR CONSTRUCTION B) FOR PURCHASE OF
HOUSE/FLAT
I. HOUSE- 1. IS THE UNIT NEW OLD
1. AREA OF PLOT SQ.F 2. AGE OF EXISTING STRUCTURE YEAR
T IF OLD S
2. PROPOSED BUILT UP AREA SQ.F 3. PURCHASE PRICE RS.
T
3. PURCHASE PRICE OF PLOT RS. 4. COST OF ADDITIONAL ITEMS RS.
4. ARCHITECT’S FEES RS. 5. TOTAL COST RS.
5. COST OF CONSTRUCTION RS. 6. AREA OF PLOT/ UNDIVIDED SQ.FT
SHARE OF LAND
II. FLAT- 7. BUILT UP AREA SQ.FT
1. AREA OF UNDIVIDED SHARE OF SQ.F 8. MARKET VALUE
LAND T LAND VALUE RS.
STRUCTURE VALUE RS.
2. COST OF THE SAME RS.
3. COST OF SEMI -FINISHED FLAT RS.
4. COST OF COMPLETION / RS.
ADDITIONAL ITEMS
III. REGISTRATION CHARGES RS.
IV. TOTAL COST RS.
V. MARKET VALUE AS PER RS.
REPORT
C) FOR EXTENSION
1. AGE OF EXISTING STRUCTURE YEAR
S
2. PLOT AREA/BUILT-UP AREA OF FLAT
3. MARKET VALUE OF EXISTING STRUCTURE RS.
4. (a) IS THE PROPERTY MORTGAGED TO ANY YES, NO.
INSTITUTION
(b) IF YES, NAME OF THE INSTITUTION
(c) VALUE OF O/S LOAN AGAINST MORTGAGE RS.
5. DETAILS OF PROPOSED REPAIR/EXTENSION
6. ESTIMATED COST OF REPAIR/EXTENSION RS.
DOCUMENTS
I/WE HAVE ATTACHED THE FOLLOWING COPIES OF SUPPORTING DOCUMENTS
(DULY ATTESTED WHEREVER NECESSARY)
EMPLOYER’S CERTIFICATE GIVING DETAILS OF SERVICE & SALARY & LAST 3 MONTHS SALARY
SLIP
LATEST FORM 16 FROM EMPLOYER (FOR EMPLOYEES)
DECLARATION
I/WE HEREBY APPLY FOR A LOAN FROM STATE BANK FO INDIA TO THE EXTENT
INDICATED IN THE LOAN REQUEST SECTION OF THIS APPLICATION FORM. I/WE
DECLARE THAT THE FOREGOING PARTICULARS AND INFORMATION FURNISHED I THIS
APPLICATION FORM ARE TRUE, ACCURATE AND COMPLETE AND THAT THEY SHALL
FORM THE BASIS OF ANY LOANS STATE BANK OF INDIA MAY DECIDE TO SANCTION
ME/US. NOR HAVE, I/WE BEEN ADJUDICATED THE CONTENTS THEREIN. I/WE AM/ARE
AWARE THAT IF I/WE OPT FOR LOAN AT FLOATING RATE OF INTEREST THE EQUITED
MONTHLY INSTALLMENTS WILL COMPRISE PRINCIPAL AND INTEREST BASED ON
BANK’S MEDIUM TERM LENDING RATE WHICH IS SUBJECT TO CHANGE FROM TIME TO
TIME.
I/WE AGREE THAT STATE BANK OF INDIA MAY AT ITS DISCRETION CONDUCT
DISCREET INQUIRIES IN RESPECT OF THIS APPLICATION, I/WE UNDERTAKE TO INFORM
AS TO ANY CHANGE IN MY/OUR OCCUPATION/ EMPLOYMENT/ RESIDENCIAL ADDRESS
AND TO PROVIDE ANY FURTHER INFORMATION THAT THE BANK MAY REQUIRE.
STATE BANK OF INDIA WILL BE AT LIBERTY TO TAKE SUCH ACTION AS IT MAY DEEM
NECESSARY IF MY/OUR ABOVE STATEMENT ARE FOUND TO BE UNTRUE. I/WE AGREE
THAT STATE BANK OF INDIA SHALL HAVE THE SOLE DISCRETION TO REJECT/REDUCE
MY/OUR LOAN APPLICATION WITHOUT ASSIGNING ANY REASON THEREFOR. I/WE
FURTHER AGREE THAT MY/OUR LOAN TRANSACTION SHALL BE GOVERNED BY THE
RULES OF STATE BANK OF INDIA WHICH MAY BE IN FORCE FROM TIME TO TIME.
APPLICANT’S SIGNATURE CO-APPLICANTS
SIGNATURE
PLACE:__________________
PLACE:____________________
DATE: __________________ DATE:
____________________
PERMANENT ADDRESS:____________________________________
____________________________________
____________________________________
II. POST-SANCTION / LEGAL DOCUMENTS
Once the loan gets sanctioned the banks needs certain documents for security. The
documents prepared are legal documents which are as follows-
8. Arrangement letter.
9. A single consolidated stamped affidavit and Indemnity sworn before
Magistrate/ notary public.
It is the agreement related to the term for which the loan has been taken i.e.
number of years of repayment, amount of loan, EMI, etc.
3) Guarantee Agreement:
7) Arrangement letter:
Arrangement letter is a letter which consists of all the terms and conditions
related to the loan. The term of loan, interest rate, EMI, repayment period, rate
of interest margin, disbursement, insurance and other terms and conditions
such as non-availment of loan against same property, restrictions related to
entering into any agreement related to the sale of same property, etc.
To cover risk for Home loans below Rs.1 cr., where the search report
covers only a period of 15 years and which does not reveal any
encumbrance (instead of obtaining non encumbrance certificate for 30
years)
The process of housing loan consists of four stages. All the four stages play a vital
role in fulfilling the requirements of housing finance of the bank.
The stages are as follows-
PRE-SANCTION
SANCTION
DISBURSEMENT
REPAYMENT
DISBURSE
Commencement of disbursement M-ENT
STAGE
Repayment
c. Educational qualification.
f. Ascertain whether he / she have a credit card and name of the credit
card issuer.
c. Educational qualification.
Procedure: check-
Procedure-
e. Ensure that proper access is available to the property i.e. roads etc.
j. Ascertain whether the property is rented out and, if so, for how long
and the rentals p.m. Whether leased to an institution for occupation of
its employees or rented out to an individual / business concern.
The following items have been taken out of the preview of pre-sanction
inspection by the Bank’s staff wherever the services of outsourced
agencies are available:
Formats standardized:
SEARCH REPORT:
The sanctioning process in case of home loans starts with the preparation of a
search report. In case of loans amounts below Rs. 1 crore, the bank can take a
limited risk by making a search for a period pf 15 years, instead of 30 years. if the
search made for 15 years does not reveal any encumbrance, then the risk has to be
covered by incorporating the relevant clause in the consolidated stamped affidavit.
In case of properties belonging to government, local authorities, empanelled
lawyer should furnish the search report for 30 years. Where this search report
reveals encumbrance on the property which is detrimental to the Bank’s interest,
immediate steps are to be taken to either avoid granting the loan or advise the
borrower to rectify the defect in the title, if it is possible.
2. The sanctioning authority should verify the current CIS data base to avoid
multiple financing. This will also enable them to know the repayment obligations
of other loans availed by these borrowers from other branches under other
schemes also, which are not disclosed in the loan applications.
4. RACPCs/ Branches can use the service of verification agencies that run 'de-dupe'
tests with other Banks' data too.
ASSET VERIFICATION AND QUALITY OF LOAN PROCESS:
As far as possible it is made directly to the suppliers / builders as per the progress of
the work only after complete execution of documents and creation of valid mortgage.
The process of disbursement is as follows-
Disbursement of cheques:
This is the final step in the disbursement stage. The operational manager prepares the
cheques along with the letter which is handed over to the borrower.
In case of purchase of property which is in ready stage the payment is made in full to
the concerned party from whom the property is being purchased. The property such as
flat / fully constructed house etc. which are ready for acquisition comes under this
case.
Also the property which is proposed for re-sale comes under this case where the
borrower needs to make full payment to the seller.
In certain cases where the work is carried out in stages such as the
construction of house the disbursement is done in phases. The bank
requires documents such as the engineer’s or architects completion
certificate and the quotation and bills of material to be purchased for
disbursement of the cheques.
The architect gives the stage wise completion certificate such as-
Completion of-
• Plinth area,
• Lintel level,
• Roof, etc.
I. Personal Profile:
a. Negative profile.
b. Dependants more then 5.
c. Age norms not met.
d. Negative references.
e. Manipulated / undisclosed facts, etc.
Though the schemes of all the four major competitors are more or less the same, there
are so many areas with operational differences.
Comparative statements in respect of Housing Finance Activity for the year 2008-09:
I)
ITEMS BOBHFL SBI ICICI HDFC
Time required for 7 days 5 days 3 days 3 days
Processing/Sanction
Guidelines N.H.B R.B.I N.H.B N.H.B
followed
Periodicity of Annually Monthly Monthly Annually
interest
II)
ITEMS (%) BOBHFL SBI ICICI HDFC OTHERS
Disbursement 7 16 18 19 37
Recovery 98 99 95 98 90
NPA 0.5 0.4 0.6 0.5 1
DISBURSEMENT
40
35
30
25 BOBHFL
SBI
20 ICICI
HDFC
15
OTHERS
10
0
BOBHFL SBI ICICI HDFC OTHERS
Interpretation:
The chart shows the percentage of disbursement of various financial institutes and
banks. From the above the share of State Bank of India is 16% out of total
disbursement which is less than ICICI & HDFC.
RECOVERY
BOBHFL
SBI
ICICI
HDFC
OTHERS
Interpretation:
The above chart shows the recovery of housing loans by various financial institutes &
banks. State Bank of India shows maximum recovery among all above.
NPA
BOBHFL
SBI
ICICI
HDFC
OTHERS
Interpretation:
The above chart shows the rate of Non-Performing Assets in various financial
institutes & banks. Since home loan comes in priority sector the rate of NPA is very
low almost negligible for all above mentioned.
I)
(A) (B) (C) (D) (E) (F) (G)
Total Application Not – Rejected Withdrawn Sanctioned Pending
visit received eligible
No. of 170 140 12 6 5 112 5
Applicants
180
160
140
120
100
80
NO. OF APPLICANTS
60
40
20
0
A B C D E F G
PARTICULARS
Interpretation:
The above chart explains us about the number of applicants at every stage for home
loan during the year 2008-09 in the branch. From the above chart we can also come to
know the number of visitors whose loan was sanctioned during previous year and the
number of applicants whose disbursement of loan is still pending.
II)
YEAR
8000
7000
6000
5000 OTHERS
4000 PERSONAL
3000
2000
1000
0
2006 2007 2008
Interpretation:
The above chart shows the figures of State Bank of India, Gangapur Road, Nasik. The
amount of total advances is showing an increase since last 3 years. Even the amount
of loan in the personal segment is increasing which includes home loans, vehicle
loans, education loan, etc.
III)
YEAR
7000
6000
5000
OTHERS
4000
HOUSING LOAN
3000
2000
1000
0
2006 2007 2008
Interpretation:
The above chart figures of housing loan among the total personal segment of State
Bank of India, Gangapur Road, Nasik. The share of housing loan in the total personal
segment is maximum and is still increasing day by day.
4. ELIGIBILITY
CRITERIA
i. Salaried Rs. 1, 20,000/- p.a. Rs. 1,44,000/- p.a Rs.1,20,000/- p.a
ii. Self employed Rs. 2,00,000/- p.a. Rs. 1,50,000/- p.a Rs.1,50,000/- p.a
5. AGE CRITERIA
i. Salaried
ii. Self employed 18 – 60 yrs 21 – 65yrs 21 to 58yrs
18 – 70yrs 21 – 65yrs 21 to 65yrs
6. TENURE 5 – 20 yrs 5 – 20 yrs 5 – 20 yrs
7. EXPERIENCE:
i. Salaried 3 yrs 1 yrs 3 yrs
ii. Self employed 3 yrs 3 yrs 3 yrs
8. PROCESSING 0.50% 0.50% Rs.10,000/- or
FEE 0.5% of loan
amount(whichever
is lesser) + Service
Tax
9. PRE-PAYMENT 2% 2 % (Full If 25% of
CHARGES payment), No outstanding amount
Penalty (Part is paid every year
Payment). till 3 years - No
penalty, otherwise
2% of outstanding
amount
10. DOCUMENT-S
REQUIRED
1. The bank needs to satisfy customer needs that are complicated and difficult to
manage. A robust data warehouse should create wherefrom meaningful data
on customers, their preferences, their spending, patterns etc can be viewed.
2. Business process re-engineering is key requirement of bank. Fast delivery of
services, less documentation, simplified process etc, is necessary.
6. SBI can increase professional employment by bank and sells its loan schemes
to customer aggressively with the help of advertising media.
9. SBI can provide Net banking services to its existing customers as well as
promotion stunt to attract new customers.
10. Insurance for life is optional for now but to minimize the risk life insurance
should be made compulsory.
CONCLUSION
CONCLUSION
1. For the purpose of approving a loan credit appraisal plays a very important
role.
2. Home Loans being a trust area the rate of NPA is very low or negligible as
compared to the other loans. Thus, there is minimum risk for default in Home
Loan Finance.
3. There is heavy risk involved in funding of any property like double funding.
4. In case of the borrower lost his job or meets with accident, which results into
permanent disability & in case of the borrowers death the loan repayment
responsibility comes on his family. It is major problem.
7. Due to careful credit appraisal of loan the chances of default are reduced and
the repayment of loan almost 99%.
8. Recent modifications in home loans such as ‘Take over of housing loan’ helps
the borrowers of other banks or financial institutes to transfer their loan to
State Bank of India and enjoy the benefit of low interest rates & ‘In principle
sanction/approval’ helps the borrower to take advantage of finding property as
per his eligibility.
APPENDICES
APPRAISAL NOTE
APPRAISAL FORM
1. Name of the applicant Mr. Pawan Nikam
2. Name of the co-applicant Mrs. Sonali Nikam
3. Full address a) Office: MICO BOSCH, Satpur, Nashik.
b) Residence: Gyatri Appt. old Pandit colony, Nashik.
4. Purpose Purchase of a new row house
5. Age as on the date of application 38 years
6. Total years of service/occupation 9 years
7. Total monthly income of applicant Rs.42,600/-
8. Total monthly income of co-applicant Rs.14,700/-
9. No. of family members/ dependents 3
10.Income from any other source NIL
11. Whether he owns any house. If yes, Yes, but not to be given on rental basis.
whether it is second one proposed now
for rental income?
12.Total annual income of the applicant Rs.5,11,200/-
13.Total annual income of the co- Rs.1,76,400/-
applicant
14.Total family expenses Rs.84,000/-
15. Details of the flat/ house to be “Durgesh”, Tidke colony, Nashik.
constructed/ purchased.
16. Whether the applicant is possessing Yes, as the existing house is small.
existing house. If so, the purpose of
acquiring the proposed house/ flat
17.Amount of loan applied Rs.10,22,000/-
18.Maximum loan amount admissible Rs.10,22,000/-
19. Margin proposed (min. 25%) 25%
20.The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
21. If the proposed house is to be given NO
on rental basis, the amount of rental
expected?
22. ECONOMIES:
a) Annual income from service Rs.5,11,200/
b) Annual income of family members Rs.1,79,400/-
c) Other annual income
d) Total monthly income of applicant Rs.42,600/-
e) Total monthly income of co- Rs.14,700/-
applicant
f) Monthly family expenditure Rs.7000/-
g) Net monthly income Rs.50,300/-
h) EMI Rs.9,360/-
23.Security Purchased row house
24.Interest 9.25%
25.Repayment programme 240 installments of Rs.9360/- for 20yrs
APPRAISAL NOTE
1. Name of the applicant Mr. Atul Ashok Dhamne
2. Full address a) Office: Frontier Drilling (ASIA) pvt. Ltd, 221,
Henderson rd, Singapore 159557.
b) Residence: Block 654 A, Chua Chukang,
Cresent, Singapore 681684.
3. Purpose Purchase of a new house
4. Age as on the date of application 28 years
5. Total years of service/occupation 4 years
6. Total monthly income/ earnings Rs.1, 54,440/-
7. No. of family members/ dependents 4
8. Income from any other source NIL
9. Whether he owns any house. If yes, NO
whether it is second one proposed now for
rental income?
10. Total annual income of the applicant Rs.18,52,280/-
11. Total family expenses Rs.2,40,000/-
12. Details of the flat to be purchased. Ashoka Heights, Ashoka Gardens,
Gangapur Road, Nashik.
13. Whether the applicant is possessing NO
existing house. If so, the purpose of
acquiring the proposed house/ flat
14. Amount of loan applied Rs.20,00,000/-
15. Maximum loan amount admissible Rs.22,00,000/-
16. Margin proposed (min. 25%) 31.82%
17. The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
18. If the proposed house is to be given on NO
rental basis, the approx. amount of rental
expected
19. ECONOMIES:
a) Annual income from service 18,52,280
b) Annual income of family members
c) Other annual income
d) Total monthly income 1,54,440
e) Monthly family expenditure 20,000
f) Net monthly income 1,34,440
h) EMI 25,600
20. Security Purchased house
21. Interest 9.25%
22. Repayment programme 120 installments of Rs. 25,600 each for 10
yrs
No margin will be considered in this case since it a takeover case and the previous
financial institute has already done it while giving him the loan.
APPRAISAL NOTE
1. Name of the applicant Mr. Rajendra Patil
2. Full address a) Office/Shop: Sweetmeat Shop, opp. Gymkhana,
Shivaji Road, Nashik.
b) Residence: SUVIRAM, plot no. 30, 31, Palm Spring,
Savarkar Nagar, Gangapur Road, Nashik.
3. Purpose TAKEOVER OF HOUSING LOAN
FROM BOB HOUSING FINANCE
LTD.
4. Age as on the date of application 67 years
5. Total years of service/occupation 33 years
6. Total monthly income/ earnings Rs.11,447/-
7. No. of family members/ dependents 3, 2 sons and spouse. All employed
8. Income from any other source NIL
9. Whether he owns any house? YES, takeover of the same house is being
contemplated.
10. Total annual income of the applicant Rs.1,37,734/-
11. Total family expenses Rs.30.000/-
12. Details of the flat/ house for takeover SUVIRAM, plot no. 30, 31, Palm Spring,
Savarkar Nagar, Gangapur Road, Nashik.
13. Whether the applicant is possessing NO
existing house. If so, the purpose of
acquiring the proposed house/ flat
14. Amount of loan applied Rs.2,00,000/-
15. Maximum loan amount admissible Rs.2,00,000/-
16. Margin proposed (min. 25%) NIL
17. The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
18. If the proposed house is to be given NO
on rental basis, the approx. amount of
rental expected
19. ECONOMIES:
a) Annual income from business Rs.1,37,734/-
b) Annual income of family members -
c) Other annual income -
d) Total receipts Rs.137734/-
e) Annual family expenditure Rs.30.000/-
f) Surplus Rs.1,07,734/-
g) Net monthly income Rs.8,978/-
h) EMI Rs.4,176/-
20. Security Same house.
21. Interest 9.25%
22. Repayment programme 60 installments of Rs.4, 176/- for 5 years.
BIBLOGRAPHY
BOOKS & SITES:
BOOKS:
Banking guide –SBI group promotions. By G. Subramanian.
Personal segment loan products SBI Staff college Manual.
Research Methodology By C. R. Kothari.
SITES:
www.google.com www.statebankofindia.com
www.sbi.co.in www.sbimf.com
www.onlinesbi.com www.sbici.com