Tata Capital Housing Finance Limited Standard Operating Procedure Nov 2014

Tata Capital Housing Finance LimitedStandard Operating Procedure

Nov 2014

Contents

• Home Equity• Housing Loans• Rural Housing

Home Equity Loans

Home Equity loans are secured term loans for any declared legal purpose. This loan amount is determined on the ability to repay and the property value. The loan amount and tenor vary as per the product and are mentioned in each section separately.

Product Description

Product Positioning

The basic target market for Home Equity product is the business and salaried segment. The eligible segment is Resident Indians or Entities incorporated in India as follows

• Salaried• Self employed professionals• Self employed non professionals• Proprietorship firms• Partnership firms• Private limited companies• Unlisted and closely held public limited companies• TATA Ecosystem

The customer is required to read and sign a specific declaration stating the purpose for which the loan is being availed incorporated in the application form. The credit manager further validates this during the credit review with the customer. • Personal needs• Business needs• Renovation of property• Investments• Asset acquisition• Consolidation of debt• Mortgage buyout• Refinance on self financed property Note: Loan cannot be used for any speculative or illegal purpose

End use declaration format

End use of loan

Rates and Charges The loan rates & charges will be advised to the customer at the time of applying the loan. Loans will be on adjustable interest rate basis. These loans interest rate may be revised at the company’s discretion. The rates may be different for different borrower categories or for different programs. All re-pricing decision will be informed to the borrower. The loan documentation must contain appropriate clause to ensure the bank’s ability to re-price and the borrower’s agreement to be the same.

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Home Equity Product Offering• Residential• Commercial Retail• Rent Securitization Policy is defined with certain pre login norms to be followed: 1.Applicant should be among the approved borrower entities based on the approved borrower entity defined. 2.Each applicant should meet pre-sanction documentation norms 3.Each applicant should meet credit norms for the approved borrower entity as applicable.4.All income documents, Identity proofs and bank statement need to be signed by the applicant / co- applicant before submission. The same should be counter verified by DSA or authorised person.5.Applicant should sign all documents (income, identity) including app form and photograph with identical signature as on processing fees chq. 6.Fees chq should be from the bank a/c where customer wants to pay the EMI from. (Salary or main business bank a/c as applicable)

Please Note: Files with deviations & beyond individual credit authority limit shall move to the respective levels for sign-off, as per authority delegated in writing and deviation authority delegation time to time before approving the loan.

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Product Policy Overview

Home Equity Loan is a loan availed by an individual/partnership firm/corporate by way of a definite amount being allotted for a pre-defined period. The loan is close ended & secured instalment loans. End use monitoring – The customer is required to read and sign a specific declaration stating the purpose for which the loan is being availed incorporated in the application form. The credit manager further validates this during the credit review with the customer. Collateral: All loans will be fully secured by way of residential/retail commercial properties as collateral Age Criteria: Minimum AgeMinimum age of the main applicant is 25 years Co applicant’s age has to be at least 18 yearsCollateral owner/s age also needs to be a minimum of 18 years Maximum AgeSalaried: Maximum age at the maturity of the loan should be 65 years or the age of retirement, whichever is lowerSelf employed: Maximum age at the maturity of the loan should be 65 years. In case of family run business, 65 years age may be for any of the co applicants deriving income from the same business

Work Experience: Salaried: 3 years of employmentSelf employed: Minimum of 3 years of continuous business operationCorporate: Minimum of 3 years of continuous business operations with cash profit in the last 2 years Contactability Criteria: Landline / WLL / Post paid mobile are required at residence and / office. For direct customer contact ability, one phone at either place is mandatory. Bills for the last 3 months are required with no arrears in the same. Co applicant : Loans will have co applicants Individual – immediate family members staying in the same residence. Son in law / brother in law staying in the same residence may also be taken if engaged in the same business.Corporate – all partners / directors need to be a part of the loan structure for income consideration. NOC is to be collected from partners / directors not in the loan structure.Sisters, daughters and aunts cannot be accepted as co applicants.

Guarantors: Guarantors will be taken where co applicants cannot be provided. The guarantor should have an independent source of income with loan servicing ability equivalent to that of a borrower who would meet the criteria without any deviation. Guarantor should meet all the credit parameters and KYC norms.

Negative/ Caution Profile: Based on industry feedback, certain professions / profiles are considered restricted. Lending to these profiles is done extremely cautiously and is based on past credit history and with prior permission from Risk Head or designees.Restricted Profiles include: politicians, press, police, prosecutors, property dealers, bar/liquor shop owner, etc (detailed list provided in the Credit Verification Process segment) Debt Burden Ratio (DBR): It is defined as the EMI of the current mortgage loan + all other monthly loan & credit obligations of the customer divided by the monthly assessed income (of all applicants).All loans that have only 9 EMI or less outstanding for payment can be ignored and not clubbed for DBR calculation.

Equated Monthly Instalment (EMI): It is a fixed amount which a customer repays on a monthly basis so that his loan is completely repaid in the given tenor. EMI covers both interest and principal amount. EMI that can be offered to the customer has to be in line with the maximum DBR norms. If the applicant during the personal discussion mentions that he can afford to pay a lower EMI as compared to the maximum permissible DBR norms, then the EMI has to be capped to that amount. Loan to Value (LTV): It is defined as loan amount divided by the property value (market value as reported by an empanelled valuer). The LTV norms are different for different product categories and the same is enumerated in each section. Repayments: Repayment of loan will be made through Post Dated Cheques (PDCs) or Electronic Clearing Services (ECS). Thirty-six PDCs to be collected for the initial EMI amount for the first 3 years of the loan. Replenishment activity of PDCs to commence 6 months prior to PDC exhaustion. One Principal outstanding cheque (referred to as Security PDC) also to be collected. Six PDCs and Security PDC to be collected with ECS instructions.

Documents Requirement for SALARIED Requirement for

SEP

Requirement for SENP under his Individual Name/ Co-borrower for proposed HE loan in the company name

Application form with photograph

Duly completed application form signed by all applicants.



Latest passport photographs of all applicants



Any corrections / overwriting on the application form are to be countersigned by applicants.



Age proof

Passport Passport Passport Driving license Driving license Driving license

Life Insurance Policy Life Insurance Policy Life Insurance Policy

Birth Certificate Birth Certificate Birth Certificate

School leaving certificate School leaving certificate School leaving certificate

PAN Card PAN Card PAN Card

Photo ID Proof

ID proof in the form of Passport, Driving license, PAN, Bankers certificate

ID proof in the form of Passport, Driving license, PAN, Bankers certificate

ID proof in the form of Passport, Driving license, PAN, Bankers certificate .

Documentation:

Proof of existence Not Applicable

Partnership deed copy / MOA / article of association if applicable.

Partnership deed

MOA & Articles of association/Form 32

Contact ability

Landline / WLL / Post paid mobile are required at residence and / office. For direct customer contact ability, one phone at either place is mandatory. Bills for the last 3 months are required with no arrears in the same.



Ownership pattern Not Applicable Not Applicable

Latest list of directors and shareholding pattern certified by company secretary and business proof

Business profile Not Applicable Not Applicable

Must be on the letterhead of the company and should have details like- detailed nature of business activity, No of years in business, Product/services, distribution, suppliers, clients, infrastructure, no of employees, market, branches if any, group company if any, assets, future business plans. Ownership /equity stake – in case of promoter directors

Office address proof Not Applicable

Utility bill-telephone bill, electricity bill (maximum 3 months old)

Utility bill-telephone bill, electricity bill (maximum 3 months old)

Shop & establishment act certificate Shop & establishment act certificateSales tax certificate Sales tax certificate

Residence Address Proof

Residence proof required in form of Utility Bill, Bankers certificate, Bank statements, Property registration documents, Property tax receipt,

Residence proof required in form of Utility Bill, Bankers certificate, Bank statements, Property registration documents, Property tax receipt,

Residence proof required in form of Utility Bill, , Bankers certificate, Bank statements, Property registration documents, Property tax receipt,

Office address Proof Employee ID card

Sales Tax/Excise/VAT, Shop license, , Property registration papers, Property tax receipt, Bank statements, Trade license, Professional license

Sales Tax/Excise/VAT, Shop license, , Property registration papers, Property tax receipt, Bank statements, Trade license, Professional license

Income proof

Last two months’ salary slip or 2 years of Form 16 .Appointment letter/ increment letter

1. Latest two ITR’s, both personal and business along with computation of income.

1. Latest two ITR’s, both personal and business along with computation of income.

All income documents need to be signed by the applicant/co applicant.



Form 16

Form 16 of financial year (- 2), if application is made pre July in financial year (0). Or Form 16 of financial year (-1), if application is made post July in financial year (0). Eg: Incase application is received post July 2008 we need the Form 16 for Financial year 2007-2008. Incase the application is received Pre July 2008 we would need Form16 for the financial year 2006-2007

Not Applicable Not Applicable

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Lending Limits

Customer Category

Income based on Financials

Surrogate Income

Program

Limited Income

Program

Gross Margin Method

Salaried Max Rs.50 lacs Not applicable Not applicable Not applicable

SEP Individual Max Rs.1000 lacs*Program

DiscontinuedMax Rs.200

lacsMax Rs. 500 lacs*

SENP Individual Max Rs.1000 lacs*Program


lacsMax Rs. 500 lacs*

Non Individual Max Rs. 1000 lacs*Program


lacsMax Rs.500 lacs*

Product Features of LAP/ HE- Residential Property Loan against mortgage of existing & owned residential property for personal, business and other non speculative useParameters Policy & Underwriting norms

Loan Amount

Minimum– Rs. 10 LacsMaximum:a) Gross Margin- Rs.5 Croresb) Normal Income- Rs. 10 Crores (Under LRD Maximum

Rs.15 Crs.)c) NRP ( non residential purchase ) Rs. 5 crores

Loan To Value (LTV)Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

1. Under LIP - Resi - 60%, Commercial – 55%2. Under Gross Margin & Normal Income Program:a) Upto Rs.5 Crores- Resi : 65% - Commercial – 60%b) Above Rs.5 Crores- 60% - Commercial – 55%

Debt Ratio (DBR)

Maximum DBR for Salarieda) < 75k per month : 55%b) > 75k upto 2 Lacs : 60%c) > 2 Lacs per month : 65%

Product Features of LAP/ HE- Residential Property …….. contd.

Loan against mortgage of existing & owned residential property for personal, business and other non speculative use

Parameters Policy & Underwriting norms

Debt Burden Ratio (DBR)

Maximum DBR for SENP/SEP/NIa)Normal Income- 70%b)Gross Margin- 60%c)LIP - 55%

Tenor Minimum – 12 monthsMaximum – 180 months

Prime Target Segment

Self Employed in age group of 35 – 45 yrs with established business, good asset base & disposal income

Loan against mortgage of existing & owned commercial retail property for personal, business and other non speculative use

Parameters Proposed Policy & Underwriting normsLoan Amount Minimum– Rs.10 Lacs

Maximum:a) LIP- Rs.2 Croresb) Gross Margin- Rs.5 Croresc) Normal Income- Rs. 10 Crores

Loan To Value (LTV) Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

1. Under LIP - 50%2. Under Gross Margin & Normal Income Program:a) Upto Rs.5 Crores- 55% b) Above Rs.5 Crores- 50%

Debt Ratio (DBR) Maximum DBR for Salarieda) < 75k per month: 55%b) > 75k upto 2 Lacs: 60%c) > 2 Lacs per month: 65%

Product Features of LAP/ HE- Commercial Property

Loan against mortgage of existing & owned commercial retail property for personal, business and other non speculative use

Parameters Proposed Policy & Underwriting normsDebt Burden Ratio (DBR)

Maximum DBR for SENP/SEP/NIa)Normal Income- 70%b)Gross Margin- 60%c)LIP and SIP- 55%


Prime Target Segment Self Employed in age group of 35 – 45 yrs with established business, good asset base & disposal income

Product Features of LAP/ HE- Commercial Property …….. contd.

Loan for acquisition of Non-Residential Premises against the property being purchased.Parameters Proposed Policy & Underwriting normsLoan Amount Minimum– Rs.10 Lacs

Maximum– Rs.5 CroresLoan To Value (LTV) Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

60% of Mkt Value or 85% of Cost of property which ever is lower

Debt Burden Ratio (DBR) Note: Only Normal Income and Gross Margin applicable

Maximum DBR for Salarieda) < 75k per month : 55%b) > 75k upto 2 Lacs : 60%c) 2-lacs per month : 65%Maximum DBR for SENP/SEP/NIa) Normal Income- 70%b) Gross Margin- 60%

Product Features of Non-Residential Premises (NRP) Purchase Loan

Parameters Proposed Policy & Underwriting norms


Transaction type Builder Purchase & Resale; No Refinance allowed Min Area Min of 500 Sq Ft


Self Employed in age group of 35 – 45 yrs with established business, good asset base & disposal income

Product Features of Non-Residential Premises (NRP) Purchase Loan…….. contd.

Loan for acquisition of Non-Residential Premises against the property being purchased.

Loan against non self occupied commercial/ residential property. In order to targetcustomers with rental income as main source of income, this programme is useful.

Parameters Proposed Policy & Underwriting norms

Eligible borrowerIndividuals, proprietorship, partnership, Public Limited Companies and Private Ltd. Companies owning the properties

Minimum Rent Rs.40K per month

Loan Amount Minimum– Rs.10 LacsMaximum- Rs. 10 Crores**Exception to this to be reported to TCHFL Board

Loan To Value (LTV) Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

Residential property:a) Upto Rs.5 Crores- 65% b) Above Rs.5 Crores- 60%Commercial property:a) Upto Rs.5 Crores- 55% b) Above Rs.5 Crores- 50%

Product Features of Funding against Rent Receivables


Parameters Proposed Policy & Underwriting normsDebt Burden Ratio (DBR)/ Loan eligibility(Policy defined calculator is used for arriving at eligibility based on only rentals)

Eligible loan amount (EMI) is equal to 80% of the NPV of net rentals after adjustment of TDS. Annual maintenance( if paid by the property owner) and other municipal taxes to included as part of obligation while calculating eligibility.


Other criteria1. Reputed companies and Govt. entities to be

tenants. If Commercial Organizations, should be profit making with 10 years’ of existence.

2. Rental agreement to have minimum 6 months’ vintage.

Prime Target Segment Customers having good rental income from well known tenants.

Product Features of Funding against Rent Receivables …….. contd.

Income calculation based on FinancialsFor Individuals Loans

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Category Income Definition

SalariedIncome as reflected in Net Salary reflected in salary slips* Addition of variables which are assured fixed component to the customer.

Self Employed Professionals PAT + Depreciation + Other Income (continuous for 2 yrs) – (excluding) any other income which is non continuous in nature e.g. sale of property etc.

Self Employed Non Professionals(proprietors)

PAT + Depreciation + Other Income( continuous for 2 yrs) – (excluding) any other income which is non continuous in nature e.g. sale of property etc.

Partner of Partnership firmPartner's Salary+% of Deprecation in ratio of his profit sharing+ Interest Paid on Partner's Capital in case of partnership firm+ share of profit.

Director of Private/Public Ltd Company

Director's RemunerationFor Non - Individuals Loans

Partnership firm (PAT+ depreciation + Other Income( continuous for 2 yrs) +Interest to partners +Partner remuneration )

Pvt. Ltd. (PAT+ depreciation + Other Income( continuous for 2 yrs) +Director's remuneration)Proprietor (PAT+ depreciation + Other Income (continuous for 2 yrs) )

PAT to be averaged if the current year PAT is more by 50% of the last year.

Verifications

Residence Verification Physical verification by external agency must at the current residence of applicant

Property verification Physical verification by external agency must at property which is to be mortgaged for HE Loan

Office VerificationPhysical verification by external agency must at the office address as given in the application form. The same is not required in case of PD being done by the credit manager AT CUSTOMER’S OFFICE only

Residence tele verification Telephonic verification must at residence of references (both)Office Tele verification Telephonic verification must at office telephone nos. as given in the

application formCD Rom check CD ROM check to be done for all the telephone nos.Internal De dupe All the applicants must clear the internal de dupe.External DE dupe All the applicants must clear the external de dupe:- FI/appointed agencyCIBIL Positive CIBIL check for all the applicant and co-applicants

RCU (Risk containment unit)Once the RCU set up is in place at a particular location then all the files must be passed through the RCU unit who will sample certain percentage of files for verifications / profile checks

Documentation verificationFollowing document verifications to be done for all the cases:-ITR verification-Bank Statement verification

Personal Discussion Personal discussion is must for all the cases as per Personal discussion grid

Geo Limits & Approved locations

As defined for every approved location separately. The list with the credit manager will be the final list.

ITR NormsLast 2 Years ITR to be collected.Latest ITR to be not more than 14 months old.There should be gap of at least 6 months between 2 years ITR’s.

Processes

Mortgaging

Mortgages file processing flow

CPA EXTERNAL AGENCIES CREDITSALES

START

Brings the file to CPA

CPA checks as per login checklist

Quick data entry in LOS

All documents ok?

Initiate CIBIL and dedupe

Basic data entry in LOS

Additional Data Entry in LOS

FI & RCU Update

FinancialEligibility met?

Initiate FI/RCU

YES

Income estimate from CA for

alternate income program(applicable

to other than salaried)

NO

If CIBIL -ve send to credit manager for login approval

Send report to CPA

File login approved?

YES

Rejected

NO

Any query?

YES-Move to ADE to respond to CAM query

1 NO Move to CAM underwriter queue

Receive reports from CA YES

Respond with necessary documents

NO-Send to sales

2:Rework by ADE

In principal approval? YESFollow process for

in final approval NO

Generate CAM/Regenerate CAM(in

case of rework)

Do a personal discussion & insert

commentsYES


CREDITCPA

1

Insert property details & legal

documents and valuation

Send to credit mangers queue

for Final approval

Credit managers queue for in

prinicipal approval

Deviation?

Take approvals as per approval

matrix

In prinicipal approved

Take sanction letter for in

principal approval

Receive property details &

documents

Initiate valuation & lawyer report

2:Rework by ADE

YESNO

CUSTOMER

Hand over to sales to

give to customer/ sales

Give property details

& documents

Deviation?

Regenerate the CAM & move to CAM writers

queue

2:Rework by ADE

Any query?

Receive valuation and lawyers report

NO

CAM writer to insert comment

Any query?

Any query?


matrix

NOYES

YES

Any query?

YES

Any query?

Accepted/rejected

NO

Approved

Send rejection letter to customer Rejected

Accepted/rejected

Rejected

END

Accepted

NO

Customer FAQs

• What is mortgage loan?A conditional pledge of property to a creditor as security for repayment of a debt, typically equitable mortgage.

• What is Loan against Property loan?Loan against secured / free of charge market value of a property (may be residential or a small / medium retail commercial space).

• What are the minimum and maximum loan amounts?

You can avail of loans ranging from Rs.2 Lacs to Rs.10 Crores depending on your collateral property value, income eligibility and repayment capacity.

Customer FAQs

• What are the loan tenure options? The loan can be repaid over a period of 12 to 240 months for HL (Tata Group Employee : 300 months) and 120/180 months for LAP. • Are there any additional charges?

A non refundable fee of Rs.5000/- (plus applicable service tax) is payable upfront with the application form for HL. Further, processing fees as per grid will be payable post sanction and prior to disbursement of the loan.

• How do I repay the loan?You may repay through ECS (Electronic Clearance system) by instructing your Banker to deduct the EMI (Equated Monthly Installment) from the nominated Bank Account your loan account, or you may repay the loan through post-dated cheques or through Auto Debit instruction.

Customer FAQs

• How will TCL/ TCHFL decide my loan eligibility? We assess the applicants’ repayment capacity and proposed collateral property value while deciding on the loan eligibility. Repayment capacity is based on factors such as applicant and co-applicant(s) income, age, number of dependants, financials, banking habit, loan repayment history and business / employment stability. • Can I prepay my loan?

Yes, you can prepay the part / entire loan outstanding amount. Prepayment charges is not applicable in case of HL under floating ROI, while in case of Cash out Loans as applicable would be levied on the outstanding loan amount. • How do I approach TCL/ TCHEL for a Home

Finance Loan?You can approach us in any of the following way- [email protected]

Customer FAQs

Application form

Microsoft Office Excel 97-2003 Worksheet

Mortgages Processing fee calculator


EMI & BPI Calculator

Application Form

Adobe Acrobat Document

Annexures – 14

Annexures – 15

Annexures – 16

Pre Sanction/Post Disbursal Docs checklist



CPA Check List Pre Sanction HL

CPA Check List Pre Sanction HE

Ops Check List HLMicrosoft Office

Excel 97-2003 Worksheet


Ops Check List HE

Annexures – 17

Annexures – 18

Annexures – 19

Annexures – 20

Home Loans

The organized mortgage market in India is about 30 years old. The first private HFC was HDFC Ltd promoted by World Bank, ICICI Ltd and Aga Khan Foundation in Year1977.In the years to follow, most of the nationalized banks and other leading Public Sector Financial Institutions like LIC, GIC etc. also entered the Home Loan market. Last few years (since Yr 1999) has seen a lot of private banks, MNC banks and other institutions entering the mortgage market leading the CAGR to about 42%. The growth in the said business is one of the highest among all the other sectors. Most of the mortgage lenders are traditionally First Mortgage lenders on Equitable Mortgage by way of deposition of Title deeds. The Indian Mortgage market can be categorized in the following segments• Private sector banks• HFCs• Nationalized / Public sector banks• MNC banks & NBFCs Mortgage market is in the real growth phase now and almost all the lenders especially Private sector banks, MNC banks & NBFCs are moving their focus in this segment.

Product Summary

Home loans are secured loans granted for the following purposes. • Under construction ( Builder/ Society)• Self construction• Ready Property• Plot plus self construction• Home Improvement• Home loans to Non Resident Indians (NRI)• Home loan take over and enhancements

Product Description

Product Position The basic target market for Home Loan product is salaried and business segments.• Salaried• Self employed professionals• Self employed non professionals• NRI Salaried only Proprietorship firms Private limited companies• Unlisted and closely held public limited companies• TATA Ecosystem.

Rate and Charges

The loan rates & charges will be advised to the customer at the time of applying the loan. Loans will be on adjustable interest rate basis. These loans interest rate may be revised at the company’s discretion. The rates may be different for different borrower categories or for different programs. All re-pricing decision will be informed to the borrower. The loan documentation must contain appropriate clause to ensure the TCHFL ability to re-price and the borrower’s agreement to be the same.

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Pre Log-in Norm to be followed1. Applicant should be among the approved borrower entities based on the

approved borrower entity defined.

2. Each applicant should meet pre-sanction documentation norms

3. Each applicant should meet credit norms for the approved borrower entity as applicable.

4. All income documents, Identity proofs and bank statement need to be signed by the applicant / co- applicant before submission. The KYC documents should be counter verified by TCHFL.

5. Applicant should sign all documents (income, identity) including app form and

photograph with identical signature as on processing fees chq. Please Note: Files with deviations & beyond individual credit authority limit shall move to the

respective levels for sign- off, as per authority delegated in writing and deviation authority delegation time to time before approving the loan.

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Customer Insights

Customer SegmentationTarget Market Definitions

Salaried

Salaried individuals working for Cat A, B and C

companies.

The companies are classified into CAT A, B, C based on

Listing in BSE/ NSE, Min Share Price, Years In existence,

Minimum Turnover, Minimum Net-worth, net profit and share

holding. Refer Company categorization annexure

Self employed Professionals

Professionals based on Individual Income tax

returns. ( Professionals include Doctors, CA,Engineers).Proof

of professional qualifications and registration to be obtained

Self employed non professionalsProprietors,(Partners, Directors of Private Ltd.

based on their individual Income tax returns)

Non individualsPrivate limited companies

Unlisted and closely held public limited companies

Customer Offerings

Minimum Age Requirement

Borrower Income considered Income not considered

Applicant and co-applicant Minimum 25 yrs at loan

origination for applicant.

Minimum 23yrs at loan

origination for co-applicant.

Minimum 18 yrs at loan

origination

Customer

segments

Maximum age criteria

Salaried Maximum 65 yrs or age of retirement, whichever is less at loan maturity

Self

employed

1. 65 years

2. KEY partner/director whose share of income is being considered, must be within

65 years of age at loan maturity.(Key is defined as majority shareholder )

3. Where rental income is being considered , property owner’s age must not

exceed 70 years at loan maturity

General

criteria

1. Co-applicant whose income is not considered may be of unrestricted age.

2. Owner of property whose income is not being considered can be up to 70 years

at loan maturity. In case age exceeds 70 years, NOC from all legal heirs is required.

Maximum Age Requirement

46

Maximum Loan amount

Customer Category

Normal Income

Limited Income

Program

Gross Margin

Gross Receipts

Surrogate Income

Program

Non-Residential Purchase

SalariedMax Rs.10

crsNot

applicableNot

applicableNot

applicableNot

applicableMax

Rs.5.00 crs

SEP Individual

Max Rs.10 crs

Max Rs.2.00 cr

Not applicable

Max Rs.5.00 crs

Not applicable

Max Rs.5.00 crs

SENP Individual

Max Rs.10 crs

Max Rs.2.00 cr

Max Rs.5.00 crs.

Not applicable

Max Rs.1.00 cr

Max Rs.5.00 crs

Non Individual

Max Rs.10 crs

Max Rs.2.00 cr

Max Rs.5.00 crs.

Not applicable

Not applicable

Max Rs.5.00 crs

NRI loansMax Rs 10

crsNot

applicableNot

applicableNot

applicableNot

applicableNot

applicable

Maximum Loan TenorType of Property Maximum Tenor

Under construction ( Builder/ Society) 20 years

Self construction 20 years

Ready Property 20 years

Plot plus self construction 20 years

Home loan take over and enhancements 20 years

Home loans to Non Resident Indians (NRI) 10 years

Non-Residential Premises purchase 10 years

Minimum Loan AmountParticulars Min loan amount

Minimum Loan amount Rs. 2.00 lacs

Minimum Loan amount under gross margin Rs.7.50 lacs

Minimum Loan amount for NRI’s Rs.10 lacs

Note: Residual age of property to be at least 10 years at the time of loan maturity

For salaried a tenor of 30 years can be offered

Minimum Income Parameter

Income level Customer Segments

Rs.15,000 net salary per month Salaried

Rs. 2.50 lacs gross total income p.a. after tax as

declared in ITR.

• Self employed professionals and non

professionals.

• Self employed non professionals

include Proprietors, Partners/Directors

(applying in their individual capacity).

Firm to be profitable for last 2 years.

Rs. 3.00 lakhs gross total income p.a. after tax as

declared in ITR.Firm to be profitable for last 2 years.

Partnership Firms and Companies

Policy Parameter

Bank Analysis Parameter

Signature Verification Required for all

borrowers

Required for all

Borrowers

Required for

all borrowers

Mandatory

Negative Profile Applicant/Co-Applicant not to be from negative profile list. Caution profile can be funded

based on additional mitigants as specified in the policy

Negative Areas # Property not to be located in negative area

# Customer’s residence not to be in negative area. If the customer is moving from -ve Area

to +ve area then can be approved by RCM

Collateral Only 1 collateral / property per applicant (two collateral this is applicable for cases for single

flat which has two agreements due to government regulations) .Property should be in

TCHFL Operating location.

Locations applicable TCHFL operating locations

Rate of Interest & Fees As communicated by the business from time to time.

Mode of repayment

( EMI) only

Either thru-

*Post dated Cheques from

core banking only

*Deduction at source

* ECS

Either thru-

* Post dated Cheques from core banking only

* ECS

No of PDC for EMI Minimum 36 nos and in multiples of 12 thereon

Pre-Payment fees

Security of the loan.

As communicated by Business from time to time. Mortgage of property by memorandum of

entry or as mandated by legal from time to time. First and exclusive charge of the property.

Product Features of Home Loan

52

Parameters Policy & Underwriting normsLoan Amount

Minimum– Rs.2 LacsMaximum:a) SIP : 1 Croreb) LIP- Rs.2 Croresc) Gross Margin- Rs.5 Crores d) Normal Income- Rs.10 Crores

Loan To Value (LTV)Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

Upto Rs.20 Lacs- 85% of Cost of Property (COP) subject to 90% of Market Value (MV)Above Rs.20 Lacs upto Rs.75 Lacs- 85% of COP subject to 80% of MV (80% of COP for SENP/ SEP/ NI- Above Rs.50 Lacs upto Rs.100 Lacs)Above Rs.75 Lacs- 80% of COP subject to 75% of lower MV (75% of COP for SENP/ SEP/ NI)Self Construction/Extension/ Improvement/ Renovation- 100% of Estimate from Regd. Valuer/Architect subject to 80% of combined Value of Plot + Estimate for construciton for loan upto 75 lacs & loan >75 lacs, LTV on MV is max 75%.

Loan for acquiring/ constructing/ extending/ renovation residential property

Product Features of Home Loan…….. contd.

53

Parameters Policy & Underwriting normsLoan To Value (LTV) Plot Purchase + Self Construction- Plot Purchase: 75% of

Cost including Stamp duty+ Regn charges subject to 60% of market value ; Construction - 100% of Estimate from Regd Valuer/Architect ; Overall Plot+ Constn loan not to exceed 80% of Plot Value+ Constn Estimate for loan upto 75 lacs and loan >75 lacs, LTV has to be max 75%.

Debt Burden Ratio (DBR)

Maximum DBR for Salarieda) < 75k per month : 55%b) > 75k upto 2-lacs : 60%c) > 2-lacs per month : 65%Maximum DBR for SENP/SEP/NIa) Normal Income- 70%b) Gross Margin- 60%c) LIP and SIP- 55%

Tenor Minimum– 12 monthsMaximum– 240 months (300 months for Tata Group Employee & Salaried employees)* for NANO-LIHF, max tenor allowed is 15 yrs.


Salaried & SENP in age group 30 – 40 yrs.

Loan for acquiring/ constructing/ extending/ renovation residential property


Parameters Proposed Policy & Underwriting normsEligible borrower Individuals, proprietorship, partnership, Public Limited

Companies and Private Ltd. Companies owning the properties

Minimum Rent Rs.40K per monthLoan Amount Minimum– Rs.10 Lacs

Maximum- Rs.10 CroresLoan To Value (LTV) Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

Residential property:a) Upto Rs.5 Crores- 65% b) Above Rs.5 Crores- 60%Commercial property:a) Upto Rs.5 Crores- 55% b) Above Rs.5 Crores- 50%

Product Features of Funding against Rent Receivables


Parameters Proposed Policy & Underwriting normsDebt Burden Ratio (DBR)/ Loan eligibility(Policy defined calculator is used for arriving at eligibility based on only rentals)

Eligible loan amount (EMI) is equal to 80% of the NPV of net rentals after adjustment of TDS. Annual maintenance( if paid by the property owner) and other municipal taxes to included as part of obligation while calculating eligibility.


Other criteria 1. Reputed companies and Govt. entities to be tenants. If Commercial Organizations, should be profit making with 10 years’ of existence.

2. Rental agreement to have minimum 6 months’ vintage.

Prime Target Segment Customers having good rental income from well known tenants.

Product Features of Funding against Rent Receivables …….. contd.

Other Credit Norms• End Use

- Personal needs- Business needs- Renovation of property- Investments- Asset acquisition- Consolidation of debt- Mortgage buyout- Refinance on self financed property

• Collaterals- At least one property being offered for mortgage should be occupied by at least one of the applicant whose income is considered for the loan -The other collateral may be vacant or rented

56

Income Assessment Methods• Normal Income (as per ITR and/ or Form 16)

- Business Income : Profit after tax as reflected in the Income tax returns and Profit and Loss statement.- Depreciation : 2/3rd of the depreciation as claimed in the P&L- Salary: Income as reflected in Net Salary reflected in salary slips- Rental Income: Rental Income can be considered if it reflects in Income tax returns / Bank statement/ Rental agreements- Other Income: Interest income, dividend income, etc. can be added if reflected

consistently in the Income tax returns for at least two years- Income which cannot be considered: Incomes from speculative business, capital gains

• Gross Margin Program- Margin as per policy OR 15% of Sales OR Margin provided by CA , whichever is lower- Interest Leverage (PBDIT/ Interest paid) Ratio => 2- Debt/ Equity to be less than 3- Current ratio should be more than 1- CPA report is required for correct business assessment

57

Income Assessment….contd.• Surrogate Income Plan

- Annual Income= EMI (other financier) * 12*2 (where 2 is a multiplier)- Only EMI based loans to be considered under this Program- Loan closed up to 6 months to be considered for surrogate- EMI (in case 2 or more) should have run parallel for at least 12 monthsmaximum number of loans clubbed cannot be more than 5

• Limited Income Program- Assessment of income and repayment capacity of the customer by an empanelled external CPA (normally a qualified Chartered Accountant)- Business income = PAT as declared in ITR * 3 OR (CPA PAT – ITR PAT)*0.75 + ITR PAT, whichever is lower

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Negative Properties

• Properties belonging to HUFs• Properties under construction• Title deeds pending with

registrar• Cinema Halls• Schools• Hospitals• Godown• Industrial Plot• Vacant Land

• Properties located outside India• Chawl type property• Pagdi • Banquet halls• Agricultural Land• Farmland• Old Age Homes and Orphanage• Guest Houses • Gala /industrial estate

59

Note: Industrial estate with RCC structure can be funded

Processes

Common Documentation Requirements for HL / LAP

SENP - Additional

Latest list of Share holding pattern & list of directors certified by Company Secretary (Corporate cases)For corporate cases - Certified copy of MOA/AOA Certified Copy of Partnership Deed in case of Partnership FirmBusiness Profile on the letter head of the companyAddress Proof - OfficeProof Of BusinessProof of Existence2 years ITR, both personal & business with computation of Income

6 months Bank Statement with Maximum vintage of 1 year

SEP - Additional

Proof of qualification & registrationAddress Proof - Office2 years ITR, both personal & business with computation of Income6 months Bank Statement with Maximum vintage of 1 yearXerox of front page of Bank statement attested by Applicant / co-applicant

Common Documentation Requirements for HL / LAP ….contd.

SALARIED

Employment Proof - Employee ID Card3 Month Salary Slips attested by Applicant / Co-applicant, orLast two years Form-16 & Appointment Letter / Increment Letter attested by Applicant / Co-applicant6 months Bank Statement of Salary A/c with Maximum vintage of 1 year

SURROGATE INCOME PROGRAM

– HE

Repayment Track Record - 12 months

Banking - 12 months Bank statement

BALANCE TRANSFER

Repayment Track Record - 6 months min.Banking - 12 months Bank statement

LEGAL DOCUMENT

All legal papers of Collateral Property as required for legal report & valuation

Mortgaging


CPA EXTERNAL AGENCIES CREDITSALES

START

Brings the file to CPA

CPA checks as per login checklist

Quick data entry in LOS

All documents ok?

Initiate CIBIL and dedupe

Basic data entry in LOS

Additional Data Entry in LOS

FI & RCU Update

FinancialEligibility met?

Initiate FI/RCU

YES

Income estimate from CA for

alternate income program(applicable

to other than salaried)

NO

If CIBIL -ve send to credit manager for login approval

Send report to CPA

File login approved?

YES

Rejected

NO

Any query?

YES-Move to ADE to respond to CAM query

1 NO Move to CAM underwriter queue

Receive reports from CA YES

Respond with necessary documents

NO-Send to sales

2:Rework by ADE

In principal approval? YESFollow process for

in final approval NO

Generate CAM/Regenerate CAM(in

case of rework)

Do a personal discussion & insert

commentsYES


CREDITCPA

1

Insert property details & legal

documents and valuation

Send to credit mangers queue

for Final approval

Credit managers queue for in

prinicipal approval

Deviation?


matrix

In prinicipal approved

Take sanction letter for in

principal approval

Receive property details &

documents

Initiate valuation & lawyer report

2:Rework by ADE

YESNO

CUSTOMER

Hand over to sales to

give to customer/ sales

Give property details

& documents

Deviation?

Regenerate the CAM & move to CAM writers

queue

2:Rework by ADE

Any query?

Receive valuation and lawyers report

NO

CAM writer to insert comment

Any query?

Any query?


matrix

NOYES

YES

Any query?

YES

Any query?

Accepted/rejected

NO

Approved

Send rejection letter to customer Rejected

Accepted/rejected

Rejected

END

Accepted

NO

Customer FAQs

• What is mortgage loan?A conditional pledge of property to a creditor as security for repayment of a debt, typically equitable mortgage.

• What is Loan against Property loan?Loan against secured / free of charge market value of a property (may be residential or a small / medium retail commercial space).

• What are the minimum and maximum loan amounts?

You can avail of loans ranging from Rs.2 Lacs to Rs.10 Crores depending on your collateral property value, income eligibility and repayment capacity.

Customer FAQs

• What are the loan tenure options? The loan can be repaid over a period of 12 to 240 months , for HL (Tata Group Employee/Salaried employees : 300 months) and 120/180 months for LAP. • Are there any additional charges?

A non refundable fee of Rs.5000/- (plus applicable service tax) is payable upfront with the application form for HL. Further, processing fees as per grid will be payable post sanction and prior to disbursement of the loan.

• How do I repay the loan?You may repay through ECS (Electronic Clearance system) by instructing your Banker to deduct the EMI (Equated Monthly Installment) from the nominated Bank Account your loan account, or you may repay the loan through post-dated cheques or through Auto Debit instruction.

Customer FAQs

• How will TCL/ TCHFL decide my loan eligibility? We assess the applicants’ repayment capacity and proposed collateral property value while deciding on the loan eligibility. Repayment capacity is based on factors such as applicant and co-applicant(s) income, age, number of dependants, financials, banking habit, loan repayment history and business / employment stability. • Can I prepay my loan?

Yes, you can prepay the part / entire loan outstanding amount. Prepayment charges is not applicable in case of HL under floating ROI, while in case of Cash out Loans as applicable would be levied on the outstanding loan amount. • How do I approach TCL/ TCHEL for a Home

Finance Loan?You can approach us in any of the following way- [email protected]

Customer FAQs

Application form


Mortgages Processing fee calculator


EMI & BPI Calculator

Application Form


Annexures – 14

Annexures – 15

Annexures – 16

Pre Sanction/Post Disbursal Docs checklist



CPA Check List Pre Sanction HL

CPA Check List Pre Sanction HE

Ops Check List HLMicrosoft Office

Excel 97-2003 Worksheet


Ops Check List HE

Annexures – 17

Annexures – 18

Annexures – 19

Annexures – 20

Rural Housing Finance

Revised- July 2013

The National Urban Housing and Habitat Policy released by the Government of India commend a multi pronged strategy for achieving the national goal of ‘Affordable Housing to All’.

Hence, TCHFL as a Company intend to fund Housing Loans at maximum possible locations of Rural as well as Urban Areas across India. To achieve this objective, we have identified Rural Housing Finance as one of thrust areas in our business model.

The Rural Housing Finance will give us a chance to spread our Risk and also achieve priority sector lending norms.

Objective –

1. Property to fall under Rural classified area as per NHB published list –*“Rural area” for the purpose of the scheme is the area comprised in any village including the area comprised in any town, the population of which does not exceed 50,000 (as per the 1991 census). The same has been enclosed in last sheet of the presentation, please go through it and you may find details of the rural locations around your hub locations.

2. The Maximum loan amount eligible under RHF Scheme is INR 15 Lacs, with ceiling of Rs.5 lakh towards extension and renovation.

Product Criteria –

Product Criteria –

3. Women to be owner / co owner of the property (Or) The borrower belongs to notified Minority Community (Muslim/Christian/Sikh) as per notification of Govt. of. India (Or) The borrower belongs to SC/ST segment – Any one criteria to be met.

4. The scheme is applicable for all fresh property purchases (new purchase / under construction/ self construction) and not applicable for balance transfer & Resale Purchase loans.

Classification of Individuals Eligible under RHF –

• The Direct Housing Loans (no BT cases) upto Rs.15 lakh disbursed to individuals of following categories in defined rural areas would be eligible as Rural Housing Finance:

• (a) Small and marginal farmers with land holding of 5 acres and less, and landless laborers, tenant farmers and share croppers;

• (b) Housing Loans where woman is one of the owners/ co-owners of the property (this condition has been recently revised)

Classification of Individuals Eligible under RHF –

• (c) All individuals eligible for loans under SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY) and Differential Rate of Interest (DRI) i.e. classified as BPL or marginally above the poverty line.

• (d) Scheduled Castes, Scheduled Tribes &

• (e) Persons from minority communities as may be notified by Government of India from time to time.

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Case Studies -

1. If a female client owning a non agricultural plot in a rural classified area, wants to construct a house on that plot and has applied for a construction loan worth 12 Lacs with TCHFL; Can we fund such a case under rural housing finance?

2. If a case is meeting all the rural criteria, but if the property is falling under Negative Area or if client’s profile is Negative, can we fund such a case under rural housing finance?

Answers to Case Studies -

1. Yes we can fund such a loan.

2. No we cannot fund loans (whether RHF or not) in Negative Areas. Also, funding to Negative Profiles is restricted under RHF.

Incentive Payout (AHF Business)

The maximum capping should be Rs 65,000 for all the levels including J grade.

AHF Resources : J Grade Payout Structure

Volume in Lacs Incentive %

0 100 Nil

101 150 0.10%

151 200 0.15%

>201 0.20%

AHF – CRE / Sr.CRE / CRO Payout Structure< 1 YEAR >= 1 YEAR

NO OF FILES AMOUNT PER

FILENO OF FILES AMOUNT PER FILE

0 2 Nil 0 3 Nil3 5 2500 4 5 25006 8 3500 6 8 3500

8+ 4000 8+ 4000

List of Rural Locations -

Microsoft Excel Worksheet

Thank you!