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INTRODUCTION
The State Bank of India has an unbroken tradition of more than 199 years
of banking. In fact, the 200th Anniversary Celebrations commenced in June
2005. Its history is traced back to the Bank of Calcutta (1806), which
received its charter as Bank of Bengal in 1809. There were two other
Banks, Bank of Bombay (1840) and Bank of Madras (1843). These three
banks were known as Presidency Banks. The Presidency Banks were
authorized to conduct Government business and also issue currency notes.
1921: The three Presidency Banks amalgamated to from the Imperial Bank
of India (70 branches) in 1921. The Imperial Bank was conducting
government business exclusively. RBI was established only in 1935
pursuant to the recommendations of the Hilton Young Commission. After
the formation of RBI, the Imperial Bank acted as its agent in doing
government business exclusively. RBI was established only in 1935
pursuant to the recommendations of the Hilton Young Commission. After
the formation of RBI, the Imperial Bank acted as its agent in doing
government business and in maintaining currency chest and small coin
depot. RBI was first established as a Private Bank in 1935 and nationalized
later in 1949.
The All India Rural Credit Survey Committee (Gorwala Committee)
recommended the formation of the State Bank of India. Accordingly, SBI
was formed as a state partnered and state sponsored bank. It took over the
Imperial Bank of India. The former state-owned/state-associated banks
were integrated with it. The S.B.I. was formed under the State Bank of India
Act 1955. The S.B.I. was established with the objective of taking banking to
the interior and remote parts of India.
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OBJECTIVES
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OBJECTIVES
Our main objective is to make home loans customer friendly. Other objectives are as follows:
1. SBI sole purpose is to target customers of all segment of the society.
It performs this function by its varieties of home loan products.
2. SBI home loan is introduced for stimulating growth in housing
industries and has received an overwhelming response from the
market. Intense initiatives have enabled SBI to occupy the leadership
place in home loan industry.
3. The basic need for providing home loans by SBI is to facilitate basic
need and necessity for very individuals. As India is a developing
country, people of different and varied income group exist, and it is
clear that everyone cannot afford the home for oneself. Therefore, to
satisfy the purpose, SBI offers various categories of home loan
products and also help the citizens by offering nominal interest on
home loans.
4. SBI facilitate the transactions by availing different products to the
customers which is suitable for them and tell them to invest so that
they can be benefited in the near future. This generally applies to the
rule of financial management.
5. Home loans mostly cover ideal principle of financial management. It
includes how the finance resources can be best utilized or managed
in the best optimum possible way. Different types of Individual are
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6. eligible for different product. And which product is most suitable for
them, is conveyed to the customers by SBI in the best possible way.
7. How finance would be managed effectively? This is answerable
through the fact that, SBI has the major objective of retaining
leadership through continuous product and process. Innovation has
been decided to give incessant services to the customers.
8. As with a view of stimulating growth, in residential real estate and
related sectors in the economy, it has been decided to provide and
enable the genuine needy buyer to buy the different home loan
products.
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RESERARCH DESIGN
ANDFORMULATION
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RESEARCH DESIGN FORMULATION
The project is concerned mainly about the home loans and its product in
SBI. As research in common parlance is a research of knowledge. Here the
research employed is exploratory research.
Exploratory research follow case study methods or in depth approaches to
reach basic casual relations. Such study usually goes deep into the cause of
things or events that interests us, using every sample and very deep
proving data gathering devices.
The objective of exploratory research is the development of hypothesis
rather than this testing.
Thus in our project, there is exploratory research employed.
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DATACOLLECTION
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SBI HAPPY LOAN - OFFER (NEW PRODUCT)
Eligibility All Home Loans to public including takeovers
sanctioned on or after 2nd February 2009 and at
least partially disbursed on or before 30th April,
2009.
Loans sanctioned under SBI Special Home Loan
Scheme are also eligible. However takeover of loans
is not permitted under SBI Special Home Loan
scheme.
Interest rate [email protected]. (Fixed) upto 30th April, 2010.
Interest rate Freeze Period
Upto 30th April, 2010.
Terms of reset at
the end of freeze
period
Regular contracted interest rate will be applicable,
i.e. Spreads below/above SBAR as applicable on the
date of sanction in case of floating rate, and
applicable fixed rate on the date of sanction in case
of Fixed interest rate loans. In the case of SBI
Special Home Loan scheme interest rate and reset
period will be the same as per extant instructions,
i.e. reset period 5 years from the date of sanction
and interest rates of 8.5%/9.25% p.a. as applicable
depending on the loan amount.
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Repayment
schedule
If moratorium period is less than 12 months then
EMI1 at 8% p.a. to be specified from the EMI1 start
month upto 12th month. There after EMI2 at regular
interest rate to be calculated on the basis of
outstanding balance and remaining term of the
loan. Moratorium period, no. of EMI1 no. EMI2
should add up to the total loan period.
Eligible loan
amount
Eligible loan amount to be worked out on the basis
of EMI2 mentioned above calculated at regular
contracted rate.
Processing fee Fully waived upto 30th April, 2009
This product is more in demand than any other product.
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OTHER HOME LOAN PRODUCTS
HOUSING LOAN
Rational/Objective/
Purpose
Bulk Business: More than 25 applicants with check
off.
Pre-EMI Interest to be addressed suitably so that
actual outstanding will always remain within limit,
for this Addl. HL may be granted obtaining suitable
security doc.
Under Platinum Age Limit (PAL) Sch –
Max Age 75 Yrs. for repayment.
Eligibility Individuals 18 to 70 yrs. of age with steady income,
including Agriculturist 2 loans can be given to an
individual if he has the capacity to repay. Max
eligible expected rent accrual as part of income
subject to NMI of Co-borrower –
Amount of Loan For purchase of land/repairs, etc., max loan in Rs. 10 lacs. Age criteria since withdrawn. Amount of loan now decided on
EMI/NMI RATIO ->
Up to Rs. 2 lacs – 40%,
Rs. 2-5 lacs – 50%,
Rs. Above Rs. 5 lacs – 55%
For Teacher Plus: Loans for 45 Yrs. & below – 72 NMIs & for above 45 yrs – 60 NMIs. Reimbursement investment from own sources for cons/per/repair during last 12m at 25% margin &
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lower value of investment for market price.
Margin 20% of cost incl registration etc. for house (up to Rs.
1 crore) & 25% for above Rs. 1 Cr.; 30% for land,
20% for repairs
Home Loan to Businessman
- Making profit in last 3 years.
- Income: Latest IT Return – Depreciation or 5% of
sales.
- Min Loan: Rs. 25 lacs. Margin : 30%, ROI : Card
Rate
- TL, Maxgain (OD) not allowed
Repayment/Interest Up to 35 Yrs. of Age: Max of 25 year >35 to 45 yrs. of
Age: Max of 20 years Over 45 years of age : Max. of
15 years (In case of joint borrowing, for 25 year
loan, NMI of Borrower of 35 yrs should constitute at
least 75% of the joint NMI)
Security Change in HL Documents : (1) Increase Int. rate
without any change in SBAR, (2) Recall entire
advance in free security in case of default of any or
more installments etc., (3) Authorize to share
information to CIBIL, (4) Vesting absolute right to
assign in favor of Securitizing Co., (5) Penal Interest
for delayed repayment, (6) Option to capitalize pre-
EMI interest, (7) Acceptance of other securities in
lour of mortgage, (8) Hypothecation of consumer
durables and furnishings, (9) Publication of
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Defaulter’s details/photographs in any manner.
Other Features For loans above Rs. 5 crores, prior administrative
Clearance is required Fixed Int. rates offered only up
to 1 Cr. Under Tailor Made Housing loan, customer
can fix up his repayment schedule to suit his
repayment capacity. Existing borrower can switch
over to floating interest rate on payment of 1% fee
on the outstanding -> 2% penalty on the amt.
prepaid in excess of normal EMI to be levied on pre-
closure of HL before expiry of half of original tenure.
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SBI CREDIT KHAJANA
Rational/Objective/
Purpose
- It takes care or entire loan needs of financially
disciplined customer as a package.
- Hassle free additional loan on concessional rate
of interest and margin.
Eligibility Individuals incl joint owners who have
- Availed Housing loan with E.M.
- Satisfactory serviced TL for 1 year after
moratorium.
- With margin 15% (house) / 30% (Land)
Amount of Loan Under the package one or more loans as eligible
under individual schemes – Car Loan, Secom,
Education Loan (for one dependant), Personal Loan,
Tractor Loan, Any other Plus scheme.
Margin Scoom – 5% (if check off), Tractor & Car – 10%,
Education & Personal – as per individual sch.
Repayment/Interest
(See Page : Latest
Interest Rate)
Repayment – As per individual schemes
ROI – Concession of 0.25% for all loans other than
housing loan under this package.
Security Security – as applicable EM of HL will extend for
addl loans insurance of asset, Life from SBI Life, Free
accident cover as per individual scheme.
Other Features - An excellent opportunity for cross selling.
- Help in retention of existing customers
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- Reduce transaction cost of acquiring new
Customers
SBI SHOPPE PLUS ( P Segment)
EARNEST MONEY
Rational/Objective/
Purpose
Loan for EARNEST MONEY for allotment of a
house/plot (sold by Govt. Housing Agencies)
Eligibility Over 18 Yrs. with steady source of income (no min.
income criterion)
Amount of Loan Loan amount at least of – 90% of application
amount or 12 times of NMI or Rs. 10 lacs.
Margin 10% ROI – applicable in HL
Repayment/Interest
(See Page : Latest
Interest Rate)
Disbursement directly to Govt. Housing Agency
Repayment – Direct refund to the loan A/c. in
rejection. Adjustment against regular HL for
successful ones.
Security 3rd PG (waived of 110% tangibles) Otherwise,
Tangible collateral at least 50% of loan.
Other Features Security waived for permanent employee of
reputed PSU/Govt. with check off
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HOUSING LOAN FOR NRI
Rational/Objective/
Purpose
Max eligible expected rent accrual in joint applicant
36 expected monthly rental if >45 yrs. 48EMR if
<45 yrs of age
Eligibility NRIs with valid India passport of PIOs with a
foreign passport & employed abroard for at least 2
yrs. and holding a valid job contract/work permit.
Amount of Loan Minimum: Rs. 3 lacs, Maximum: Age <45 yrs – 60
NMI or 5 NAI, > yrs 48 NMI or 4 NAI, Subject tc
repayment obligation <50% NMI/NAI If loan is for
purchase of land or for repairs, etc., max. Loan in
Rs. 20 lacs. Max. Amt for consumer durables: 10%
of Project cost.
Margin Same as in Housing Loan except purchase of land
15%.
Repayment/Interest Repayment <45 yrs Max 20 yrs., >45 yrs. maxes 15
yrs (Subject to liquidation of loan by 60 yrs. or
retirement).
Security As in Housing Loan
Comprehensive Insurance for the full value in joint
names of Bank and Borrower.
Take Over from the banks allowed
Other Features Processing Fee: 0.5% of the loan amount Interest as
to Housing Finance to residents. 2% penalty on the
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amt. prepaid in excess of normal EMI to be levied
on pre- closure of HL before expiry of half of
original tenure.
GRAM NIWAS
Rational/Objective/
Purpose
EMI/NMI Ratio 25% for Avg. of last 2 yrs Income
Upto Rs. 40000, 45% for >40000-2 lacs, 55% for >2
lacs, 60% for > Rs. 5 lacs.
Eligibility - All Rural/SU Areas population <50000
- All Individuals with satisfactory Deposit / Advance A/c. with us.
- Age 18 to 50 yrs. (>50, when guarantee by all legal heirs)
Amount of Loan 5 times of Avg. Annual Income from all sources incl
spouce income. Max 5 lacs for cons/pur 2 lacs
(repair), 1 lacs (land). NABARD Model Sch – Toilet-
cum-Bath room in Rs. 8600
Margin 10% of the Project cost Rs. 50000, 15% for 50000 –
5 lacs 20% for Rs. 5 lacs.
Repayment/Interest Facility : TL/OD with ATM cum-Debit Card
Repayment – Max 15 years (Moratorium max 18m
of first Instatement or 2 months of completion of
house).
ROI – 0.25% below card rate. Gr Insurance from
SBI Life, Per Accident Insurance cover at Bank’s
cost.
Security Primary – EM/RM or 100% tangibles incl. agl land.
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Other Features - Processing fee waived, Empanelled Lawyers fee
max Rs. 500 from Borrower
- Permit for construction by local auth to be
submitted with approval plan
- Classified under Priority Sect Advance
SAHYOG NIWAS (P S Advance)
Rational/Objective/
Purpose
To finance Self Help Groups/members for housing
in rural & Semi Urban areas
Eligibility - Do -
- SHG with good track record for 2 yrs.
Amount of Loan 10 times of saving corpus subject to max. 50000
per member for new house, 25000 for
land/repair/rencv.
Margin ---
Repayment/Interest Facility: TL/OD with ATM cum-Debit Card Repay
ment – Max 15 years (Moratorium max 18m of first
Instatement or 2 months of completion of house).
ROI – 0.25% below card rate. Gr Insurance from
SBI Life, Per Accident Insurance cover at Bank’s
cost.
Security Primary – EM/RM or 100% tangibles incl. agl land.
(0.50 lac 3rd P G instead of Mortgage)
Collateral – SARFAESI Act prevent, but take where
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available.
Other Features - Processing fee waived; legal fee max Rs. 200/- for
scrutiny etc.
SPECIAL RURUAL HOUSING SCHEME
Rational/Objective/
Purpose
Only for New House
Eligibility Any individual to construct new house or for
repairs or addl. Construction in rural area.
Amount of Loan Max : Rs. 5 lacs for house; Rs. 1 lac for repairs
Margin 20% - 20000, 25% - 200000 to 50000, 30% -
50000 & upto Rs. 1 lac, 35% -> Rs. 1 lac.
Repayment/Interest Max : 15 years
Security As Above
Other Features (a) NHB formulated the scheme & gives refinance
upto Rs. 5 lacs
(b) Loan is not for buying old/existing house.
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CREDIT CUM SUBSIDY SCHEME OF RURAL HOUSING
Rational/Objective/
Purpose
Only for New House
Eligibility For those below Poverty Line & above it up to
annual income of 32000 who are non-defaulters
Amount of Loan Max : Rs. 40000 Ceiling of Subsidy – Rs. 10000
Margin Loan arrived at after reducing subsidy from project
cost.
Repayment/Interest 5 to 8 years depending upon repayment capacity
Interest: SBAR at half yearly rests.
Security As Above
Other Features Type of Loan : Term Loan Rural areas 20 kms. Away
from Metro/Large and 5 kms away from
small/medium towns.
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SBI – TRIBAL PLUS Home Loan
Purpose In many Tribal/Hilly areas granting of HL rendered
difficult due to – No cadastral survey, no land patta,
legal transfer from a tribal to non-tribal not possible
and ownership of the land lies with the community
chief of the village, this scheme obviate the problems.
Eligibility 1. Individual with age 18 to 60 years.
2. Permanent employee of Central/State Govt./ PSUs/
reputed Pvt. Sectors with min 5 yrs. service, subject
to availability of check off or Professionals / Self
employed / businessman / Agriculturists with 5
yrs experience and having satisfactory deposit a/c
with avg. balance Rs. 5000 or Standard loan a/c
both for last 2 yrs.
Amount of Loan 36 NMIs for Employee, 2 NAIs for Professionals, Self-
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employed, businessman and agriculturists, subject to
max Rs. 10 lacs.
Margin 15% (Construction/purchase of new/existing house/
flat), 20% (Repairs/renovation/addition)
Type of Loan Term Loan
Security Third Party Guarantee of other employee or Group
Guarantee, Lien on PF (may be waived by DGM if
check off), lie Insurance policy for a sum equal to the
loan amount which should be assigned by the Bank,
liquids (Salaried 30%, others 50%) in form of TDs,
Lice Policies, NSCs, KVPs, shares, Govt. Promissory
Notes. Other FDs, Gold ornaments (Liquids may be
waived provided Borrower/Guarantor offers of
equitable mortgage of immovable at other centre
equal the value of loan).
Disbursement In phased manner (construction of house)/one-time
(out right purchase).
Repayment EMIs not to exceed 15 years or remaining yrs. of
service (Salaried) or 65 yrs of age (others) Interest
rate, Pre-payment penalty & Penal Interest, Free
accident cover, optional Gr. Insurance and Processing
Fee as in HL Scheme.
Inspection Half yearly (SA), Monthly (NPA) Comprehensive
Insurance in name of Borrower & Bank for the market
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for the market value of the property.
SBI FLEXI HOUSING LOANS
Name of the Scheme In wake of intense market competition & with view
to meeting emerging market demand – To build in
value added & Customer friendly features to our H
loans.
To increase our H L product profile.
Eligibility & Amount
of Loan
- All HL borrowers who avail loans of Rs. 5 lacs and
above – 3 options –
% of Loan on Floating Interest
% of Loan on Fixed Interest Rate
I 50 50
II 60 40
III 75 25
Margin Eligibility, Margin, Interest, Repayment tenure,
Processing Fee as per instructions on HL-2 HL a/cs
to be opened one on Floating & other on Fixed Int.
Repayment/Interest
(Floating)
Disbursement – Irrevocable letter of undertaking to
be obtained from the borrower regarding the 23 | P a g e
options.
Repayment – Undertaking may be obtained which
will clearly show EMI of both the loan a/cs.
Security Documentation – 1. Arrangement Letter, 2.
Memorandum of Housing T loan, 3. Guarantee
Agreement
Other Features - 2% penalty on the amount prepaid in excess of
normal EMI to be levied on pre-closure of HL before
expiry of half of original tenure
- Processing Fee 0.5% of the loan amount max Rs.
10000 Other charges like valuation, search report –
actual basis. Construction of House 2 yrs.
DISTINGUISHING FEATURES OF THE SCHEME
(1) It is a housing loan with a combination of fixed and floating interest
rates.
(2) The facility is available to prospective housing loan borrowers who
avail loan of Rs. 5 lacs and above.
(3) It extends a one time irrevocable option to the prospective borrower
to choose a combination of floating interest rate under noted 3
customized combinations of fixed and floating interest rates.
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SBI REALTY
Rational/Objective/
Purpose
To tap effectively the market potential of HLs for
purchase of land for housing construction – more
appearing our H L product profile.
Eligibility Individuals over 18 years of age with steady source
of income, including persons engaged in agl & allied
activities. Type of Loan – TL Max Loan – Rs. 1 Crore
Permissible EMI/NMI Ratio – 30% upto Rs. 2 lacs of
NAI 40% for 2 lacs – 5 lacs 45% for 5 lacs – 10 lacs
and 60% for Rs. 10 lacs.
Margin 15% of cost of land, Development, Registration,
Stamp duty (2% penalty on the amt prepaid, as in
HL)
Repayment /
Rate of Interest
Max. 180 months starting from the month following
the month of disbursement of loan.
Security EM of Personal & Interim Guarantee good for loan
amt.
Other Features Processing Fee 0.5% of the loan amt max Rs. 10000.
Other charges like valuation, search report – actual
basis.
- Construction of House <2 Yrs.
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SBI MAXGAIN – H L as overdraft
Rational/Objective/
Purpose
H L as overdraft Focus on HNI, Mass Affluent
Segment, Highly paid Professionals & Executives
Rationales 1. To provide an exclusive, innovative & value
added HL product to tap significant potential
market.
2. To improve Bank’s HL product profile.
Type of Loan Overdraft, Eligibility, Purpose, Loan Amount,
Margin, Security, Interest Rate, Pre-Payment
penalty, Processing Fee, Pre & Post sanction
process, Repayment – As per Housing Loan
Scheme.
Special Features For new HL of Rs. 5 lacs & above, Borrower to
maintain SB or CA with min Rs. 5000.
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SBI FREEDOM Home Loans
Rationales To extend value added option to meet the latent needs
of the niche customer group comprising HNIs,
Affluent, NRIs, Highly paid executives, leading
professionals etc.
Background Many prospective HNI & Mass borrowers are keen to
avail HL to the max extent to draw optimal IT Benefit.
Special Features 1. Waiver of Mortgage of the property financed and
in lieu thereof obtains pledge of liquid securities –
TDs, NSCs, KVPs, LIC Policies. Loan amount to the
extent of 90% of the Security incl accrued interest,
subject to max 100% of Project Cost. Further liquid
securities may be accepted in lieu of cash margin.
2. Repayment : Normal repayment as in regular HL,
subject to renewal of the securities pledged on
maturity till liquidation of loan or Repayment of
the loan out of the proceeds of the securities
offered, as an when they mature. Borrowers to
arrange to pay monthly interest.
3. Agreement to Mortgage to be obtained to further
strengthens the securities.
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Marketing Tips 1. To offer 100% financing of the project cost.
2. To effectively meet the latent needs and tap the
business potential emanating from high societies
with bright prospects to tap their deposits and
opportunity to cross sell other products.
3. As entire loan/margin secured by liquid securities,
bank may fully hedge the risks against the possible
dip in real estate prices.
4. Acceptance of out TDs incl FCNB Deposits, enable
us to retain deposits to boost Home Loans portfolio
and to reinforce the loyalty.
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SBI OPTIME ADDITIONAL HOME LOANS
Purpose To meet expenditure towards major repair,
renovation and addition to their residential house/flat
as also for purchase of furniture and fixtures and
consumer durable etc.
Eligibility Home Loan borrowers with a satisfactory repayment
record of 3 years and whose loan in Standard Asset
with the present Bank/HFC.
Eligible Loan
Amount
a. 18 times NMI for salaried persons or 1½ times NAI
of the borrower in respect of professional/self
employed / businessman / agriculturists, with
provision to club income or his/her spouse. (Net
income after netting income-tax and EMIs of the
existing Housing Loan & other P-Segment Loans)
Or
b. 25% of the original project cost of house/flat or
c. 85% of the cost of repair, renovation and addition
(based on Architect’s or Civil Engineer’s estimates).
Or
d. The gap between 85% of the current market price
of the flat/house and the actual outstanding loan
dues
Whichever is lowest
The aggregate EMI of the existing Home Loan, other P-
Segment Loan(s) and the proposed Additional Home
Loan(s) to NMI should not exceed 60%.
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Copy of approved plan and approval from
Appropriate Authority to be obtained in loans involve
additional construction.
Type of Loan Term Loan
Disbursement In stages in respect of additional construction and in
lump sum in other cases
Repayment Repayment for maximum period up to the residual
maturity of the existing Home Loan, by way of check-
off facility/post-dated cheques, to commence from 2
months after date of final disbursement or completion
of the work whichever is earlier.
Rate of Interest Home Loan Interest rate as applicable to the
repayment tenure opted by the borrower.
Processing Fee 0.50% of the loan amount (incl. service tax)
Security Extension of charge over the property mortgage to
Bank for the existing Home Loan. Up to date Non-
Encumbrance Certificate will be obtained.
Third Part guarantee of person(s) who guaranteed the
existing Home Loan.
Inspection Every 3 years after initial inspection(s) at the time of
disbursement. Should repayments fall into arrears for
two successive months, inspections to be done
immediately
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MAXIMUM NUMBER OF OCCASIONS TO AVAIL THE LOANS DURING THE TENURE OF THE EXISTING HOME LOAN –
Eligibility Maximum Number of Occasions
After 5 years & up to 10
years of existing loan
One
After 10 years & up to 15
years of existing loan
One (In addition to the SBI Optima, if any
availed after 5 years up to 10 years.
After 15 years and upto 20
years of existing loan
One (In addition to the SBI Optima, if any
availed after 5 yrs. up to 10 yrs. and above 10
years and upto 15 yrs., if any
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IMPORTANT DETAILS
LOAN ACCOUNTS TO BE OPENED ON INTEREST RATE BASIS ARE –
Two Housing Loan accounts be opened in the same memo level, one in
respect of loan availed on floating interest rate basis and the other for loan
availed on fixed interest rate basis.
DISBURSEMENT TO BE MADE FROM THE TWO ACCOUNT ARE –
Irrevocable letter of authority on the specified format should be obtained
from the borrower(s) at the time of documentation conveying the
borrower(s) option to debit either Fixed Interest Rate Loan or Floating
Interest Rate Loan, towards earlier disbursements and with an undertaking
to avail disbursement from the second loan account only after utilization of
the full amount from the first account so chosen.
REPAYMENT PROCEDURE FOR THE TWO LOAN ACCOUNTS ARE –
Our extent check-off authority/undertaking may be obtained which should
clearly show EMI obligations of both the loans separately and the amount
recovered should be credited to the account accordingly.
Where the loan are secured by obtaining post dated cheques, such cheques
may be obtained for the aggregate EMI obligations of both the loan
accounts and proceeds should be credited to the respective loan accounts.
DOCUMENTATION TO BE OBTAINED ARE –The following as per specified format are to be obtained :
Arrangement Letter Housing Loan Agreement Guarantee Agreement Irrevocable Letter of Authority A consolidated stamped affidavit sworn before notary public
/magistrate containing relevant clauses as obtained for normal HLs.
32 | P a g e
DIRECT FINANCE TO INDIVIDUALS
Eligibility Individual(s) of 18 years and above with steady
source of income including persons engaged in
agriculture & allied activities.
Purpose 1. To purchase/construct a new house/flat
2. To purchase an existing (old) house/flat or
3. To extend an existing house
4. Repair/Renovate an existing house/flat
5. Reimbursement of investment made in housing from own resources
6. Purchase furnishings/consumer durables as part of the project cost.
7. One or more loans may be granted to an individual if he has the capacity to repay.
Maximum Loan The actual loan amount is determined on the basis of
borrower’s income, repayment capacity, age, assets &
liabilities and cost of house/flat.
Maximum Permissible Loan Amount (MPLA) is
subject to : Borrowers upto 45 years 60 times net
monthly income (NMI) for salaried persons 5 times
Net Annual Income (NAI) in case of other OR upto a
period generating EMI <50% of NMI whichever is
less.
Borrowers over 45 years of age [where all
borrowers with an independent assured income
are over 45 years] 48 times net monthly income
(NMI) for salaried persons 5 times Net Annual
Income (NAI) in case or other OR upto a period
generating EMI <50% of NMI whichever is less.
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Joint Borrowers : if any one with independent
assured income is below 45 years, For borrower
upto 45 years, 48 times NMI/4 times NAI
Borrower aged 45 years & above 48 times NMI/4
times NAI MPLA is subject to following monetary
ceilings :
For Repairs/Renovation : Rs. 10 lacs [loan above
Rs. 10 lacs require prior administrative clearance
of network GM]
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 part guarantee good for the amount if available.
Income of spouse/son/unmarried daughter and
expected rental of proposed house can be clubbed
[subject to conditions]
Regular income from other sources (with proof)
can be considered.
Total Project cost to include cost of land, additional
amenities, insurance premium, stamp duty &
registration charges for purchase/construction of
new or old property.
Prior Administrative Clearance
Not required for loans upto Rs. 1 crore : For purchase/construction of new house/flat or purchase of old house not more than 15 years old.
Required for following categories : Loans above Rs. 1 crore : for purchase/construction of a house/flat.
Houses/Flats more than 15 years old.
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Loans against paripassu/second charge over property
Margin (i) Loans up to Rs. 1 Crore 15%
(ii) Loans above Rs. 1 Crore 25%
(iii) Repair or Renovation of existing house/flat 20%
Security Equitable or Registered Mortgage of property. If
neither is possible, then sanctioning authority may
accept at its discretion tangible security of adequate
value like Insurance Policies, GPN, Shares,
Debentures, Gold ornaments or any other tangible
security or adequate value. (These are to be valued
with a margin as stipulated in the various schemes
for finance against the securities concerned).
Processing Fee (Upfront)
0.50% of loan amount with a cap of Rs. 10000/-.
Interest Loans at fixed/floating rates and combination of fixed
and floating rates. Loan above Rs. 1 crore available at
floating rates only. See Interest Rates Annexure for
current rates.
Pre-EMI Interest One time irrevocable option to be given to pay as &
when applied OR capitalize it within the overall loan
eligibility.
Type of Loan Term Loan [or OD under Max-gain]
Disbursement As far as possible to be made directly to the
suppliers/builders as per the progress of the work
only after complete execution of documents and
creation of valid mortgage.
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Repayment Period Maximum Period including moratorium :
For borrowers upto 45 years of age 20 years
For borrower over 45 years of age 15 years
For Shot Term Housing Loan 5 years
Starting from the month following the month of full disbursement of the loan.
Mode Through EMI, If check off is not available, PDCs
should be obtained. Flexible repayment options
available in Tailor made Housing loans. Customized
repayment options through equated installments at
monthly/quarterly/half yearly/ yearly intervals
through PDCs/SI for agriculturists.
Moratorium For construction of new house/flat or purchase of
house/flat on installments, Moratorium Period
(repayment holiday) till 2 months after completion of
construction or 18 months from the disbursement of
1st Installment of loan, whichever is earlier, may be
permitted at the request of the borrower.
Insurance Compulsory insurance of property. Optional life
cover from SBI life & free accident insurance cover
for borrower available.
The house/flat to be insured against the risk of
fire/riots/earthquakes/lightning/floods etc. in the
joint names of the borrower and Bank for the actual
project cost after netting off the cost of land
(including undivided share of land in case of flats),
stamp duty and registration charges.
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To encourage borrowers to insure property for the
entire loan tenure, the lump sum premium can be
considered as part of the project cost.
Inspection For Standard assets :
Initial inspection(s) at the time of disbursement
/release of installments during construction.
Thereafter once every 3 years
If repayments are in arrears for two successive
months, inspection should be conducted
immediately for NPAs at half – yearly intervals
inspections should be recorded in Inspection
Register.
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ELIGIBILITY AND PURPOSE
A Prospective buyer apply for a housing loan even before selecting the
property – Prospective buyers can apply for loan even before identifying a
specific property. In such a case in principle approval on standard format is
to be given which helps applicants decide their budget. This in-principle
approval is valid for 30 days from the date of issue, with a further provision
that at least a partial disbursement of the loan is made before the expiry of
the validity period. The actual sanction depends upon their furnishing of
identification, income and property related documents and fulfillment of
the eligibility criteria.
NUMBER OF LOANS – Loans may be granted to an individual provided he
fulfills the income criteria as also EMI/NMI ratio after netting off the
repayment obligations of existing loans and subject to satisfactory conduct
of existing loan(s) for a minimum period of one year Persons already
owning one house are also eligible in the same or a different town for use
by self or for letting out. The loans may be given simultaneously or at
different times either for purchase/construction and subsequent
repair/renovation of a single property or for purchase/construction/
repair/ renovation / of different properties.
PROPERT AT A DIFFERENT LOCATION – In cases where location of the
property proposed to be purchased/ constructed and place of residence of
applicant are different. HLs should be granted by a branch at the centre
where the employee works (the facility is limited to employees of
PSUs/reputed corporate / Govt. and preferably with check-off facility and
account should move along with him. The mortgage should however be
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created by a branch where the property is located. However a one time
option can be extended to the prospective borrowers while submitting loan
application to avail HLs either at the place of construction or place of
employment/profession/ business activity, by securing the loan repayment
through check-off or PDCs.
OLD HOUSE / FLAT
Additional Instruction relating to loan proposals for purchase of old
house flat are –
(a) In addition to the usual prescribed documents for Housing finance,
the under noted 2 documents should be obtained, the expenses of
which should be borne by the borrower
(i) Valuation Certificate from a Government approved valuer.
(ii) Certificate from the Government approved architect/
structural engineer certifying the condition of the house/flat.
The conditions of the house should be such that the security
cover for Bank’s Loan remains unaffected till full repayment of
the loan.
(b) Further, if the house/flat is more than 15 years old, administrative
clearance of the next higher authority should be obtained where the
sanctioning authority is DGM Module/Branch or an official or lower
grade.
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SECURITY
Type of Mortgage should be obtained as security is –
(i) Equitable Mortgage (by deposit of Title Deeds) is to be obtained
normally considering the legal expenses involved in registered
mortgage.
(ii) Registered Mortgage may be obtained where Title Deeds of the
property in question do not or where Title Deeds of the property in
question do not exist or where the sanctioning authority considers it
necessary to do so.
(iii) The documents of the landed property/flat/house, etc. should be
examined by the Bank’s advocate and a search report obtained to the
effect that the title is clear, valid, marketable, legal and free from all
encumbrances
(iv) If Equitable Mortgage or Registered Mortgage is available the branch
may not insist on any additional tangible security/III Party
Guarantee.
Housing Loan be given against pari-passu/second charge over the
property are – If the property is already held as security with another
financing agency, housing loan in such cases can be given on the basis of
pari-passu/second charge for which administrative approval must be
obtained from the Network General Manager.
The USPs of the guidelines on tie-up with builders is –
Powers vested with DGM of the Module/Branch to approve builders
who fulfill the eligibility norms, to reduce the response time.
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Built in provision for approval or projects pending abstention of
search report/mandatory legal clearance to enable the Bank to
associate with the project right from the period of launch.
Single consolidated search report and valuation report, the cost of
which will be borne by the Bank.
Powers vested with DGM of the Module/branch to reduce margin upto
10%.
Sharing of joint publicity expenditure, subject to a maximum of 30% of
the expenditure incurred, with a cap of 0.30% of the business directed
to us in the respective projects.
Interim security waived with regard to certain category of builders.
DISBURSEMENT
Precautions to be taken while disbursing the loan are – To prevent
misuse of funds, disbursement should be made only in phases correlating to
the actual progress made in the construction evg. At stages like completion
of plinth, intel level, roof etc. Before disbursements, the proper end-use of
funds should be ensured by visits to the sites. Branches may insist on a
certificate from engineer/architect of the borrower confirming stage wise
completion of the project.
Reimbursement of Investment made in housing permitted are – Home
Loan may be sanctioned for reimbursement of investment made by the
borrower in housing from own resources during the preceding 12 months
subject to the following conditions –
(i) Reimbursement will be restricted to investment made by the
borrower from own resources in construction/repair/renovation/
purchase of property including registration fee and stamp duty paid
for the purpose.
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(ii) Small expenditure like furnishing, wood work will not be considered.
(iii) Quantum of reimbursement will be based on (a) the present market
value of the property as per the value’s certificate or (b) the
investment made by the borrower, whichever is lower. Expenditure
receipts should be obtained and kept on record.
(iv) A higher margin of 25% will be insisted upon.
REPAYMENT – Repayment schedule customized for agriculturists are
– Since income of agriculturists is seasonal, the repayment schedule in their
case will be aligned of installments cash flow to reduce chances of default
in a/cs. The periodicity of installments to be decided upon the merits of
each case, on a realistic basis, coinciding with the generation of income
from ancillary agriculturist’s activities pursued by the borrower.
Pre-EMI Interest : is Interest to be paid or can it be deferred during
the Moratorium - Suitable clause to be incorporated in Home Loan
application form which makes it mandatory for the applicants to exercise
either of the following options.
EMI – Should EMI be altered with every Interest Rate Fluctuation are –
In case of Floating Rate option, the EMI need not be altered should interest
rates rise or fall. The net effect of interest rate fluctuations is accounted for
by way of increase in the number of installments.
EMI Reset downwards during the tenure of the loan are –
(a) Under Floating Rate option, in case there is a decline in rate of
interest, the sanctioning authority may refix the EMI downwards (for
select customers) upon written request of the borrower, only if –
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(i) the downward revision in rate of interest is 1% or more as
compared to the original rate of interest at which the loan was
given,
(j) the original loan was of Rs. 5 Lac or more,
(k) the a/c is a Standard Asset and its conduct has been
satisfactory.
(b) Under both the Fixed Rate as well as Floating Rate options, since part
payments and ballon payments are permitted, in case the borrower
pays 20% or more of the outstanding in one instance and requests for
downward resetting of the EMIs.
REPAYMENT PERIOD : We guide a customer who approaches for a 25
year HL are – Some of out competitors are offering loans with repayment
period of 25 years. However, our Bank is not in favour of increasing
maximum repayment period from 20 years to 25 years as it unnecessarily
increases interest burden of the borrower without any significant decrease
in EMI. If repayment period of a Rs. 1 lac loan is increased from 20 to 25
years, the EMI goes down by only Rs. 60/- whereas interest burden of the
borrower goes up by more than Rs. 36000/-. If the customer is guided with
theses facts, it is likely to generate goodwill for the Bank.
RATE OF INTEREST : Penal Interest levied on Irregular Loans are – To
Instill financial discipline among borrowers, penal interest is charged @2%
on the entire loan outstanding for the period default when an EMI is not
paid for any reason, including a bounced cheque or when an overdraft a/c
becomes irregular. Letters to be sent to all borrowers 43 | P a g e
FIXED INTEREST RATES SUBJECT TO –
Fixed Rate of Interest does not normally change with the changes in SBAR.
However, fixed rate loans are subject to –
(i) ‘Force Majeure’ clause, in terms of which the bank has the option to
alter the fixed interest rates applicable suitably and prospectively in
the event of major volatility in interest during the period of the loan
agreement.
(ii) An ‘Interest Rate Reset’ clause, whereby fixed interest may be reset at
the end of every 2 years on the basis of fixed interest rates prevailing
then (to effectively hedge the interest rate risk due to the long tenure
of loan).
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DATA INTERPRATATION AND ANALYSIS(BAR GRAPHS)
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DATA PREPARATION AND ANALYSIS
(1) According to the facility Availed
A
Term Loan – 70%Max Gain – 30%
This graph depicts the facilities and benefits that most of the people avail
from the Home Loan Product. In this graph 30% accounts for Maxgain and
70% accounts for Term Loan provided to the customer.
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B
This graph shows the most demanding loans in Indian market. Happy loan
accounts 80% of the total loans availed by the population. 5% accounts for
NRI, 5% for tribal plus and rest 10% accounts for reality home loan
products.
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2. ACCORDING TO THE CUSTOMER CATEGORY
(A) AMOUNT WISE
HNI Customer – 90%Mass Affluent – 10%
Here the bar graphs shows that total loan availed by different categories of
customer. High network individual comprises of industrialist, businessman
and the person with higher income accounts for 90% of high amount loan
taken in SBI and rest 10% is mass affluent.
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(B) NUMBER WISE
Mass Affluent – 75%HNI Customer – 25%
Here the graph shows the number of customer that avail the facilities of
home loan. Most of the loans taken from SBI are by mass affluent which
accounts for 75% of total population on (as the major population in India
needs shelter for themselves, because it is a basic necessity for everyone)
and rest 25% are taken by high network individuals.
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LIMITATIONS
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LIMITATIONS
1. The major limitation of home loan schemes lies in the fact that the
uneducated customers take erratic decision regarding home loan
schemes. They take the decision by simply watching the
advertisement in television, pamphlets and in newspaper. For
example customer saw the “SBI home loan benefit scheme” in a
newspaper which is provided at 85% mentioned in the paper.
Without enquiring about the detail, one avails it impulsively and thus
getting into trouble.
2. Many of the customers take home loan and are not able to pay it in
the future, in the specific period of time. So they are not able to repay
back in the future and debts starts increasing as interest of home loan
keeps increasing.
3. In some cases, customers do not avail home loans facility as the home
is kept as security which is mortgaged to the bank, so there is a risk
involving it. It hinders many customers to avail the home loan
products.
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CONCLUSION
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CONCLUSION
Despite all the limitation, home loans are very beneficial to the customers.
As we all know that the three basic necessity of life are food, clothing and
shelter. The shelter comprises of home and house is the basic necessity of
every individual. Due to unequal distribution of wealth, the weaker
sections of societies are unable to get home for oneself, which can be
computed. As SBI offers many products at varied schemes and benefit and
nominal interest are charged people can easily fulfil their want.
Basically, SBI home loans could be trusted by people and customers has
faith in them. major objective of SBI is to retain leadership through
continuous product and process, innovation has been decided to give
uninterrupted service to the customer. We conclude that SBI home loans
are concerned about getting the needy buyer at appropriate place and time
to every different home loan.
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REFERENCE
RESEARCH METHODOLOGY BY- C.R KOTHARI
CIRCULARS OF STATE BANK OF INDIA
BANK GUIDE
INTERNET SEARCH SITES -
www.sbi.com
www.sbi.co.in
www.google.com
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APPENDIX
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ABBREVIATIONS USED
EMI - Equated Monthly Installment
NMI - Net Monthly Income
ROI - Rate of Interest
TL - Term Loan
ATL - Agriculture Term Loan
CC - Cash Credit
NAI - Net Annual Income
FY - Financial Year
PIO - Person of India Origin
PG - Personal Guarantee
EMR - Expected Monthly Rental
SHG - Self Help Groups
GOI - Government of India
NMB - National Housing Bank
SB - Savings Account
CA - Current Account
TD - Term Deposit
NSC - National Saving Certificate
KVP - Kisan Vikas Patra
HNI - High Network Individual
FC - Foreign Currency
TPG - Third Party Guarantee
PDC - Post Dated Cheque
SA - Standard Asset
NPA - Non Performing Asset
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