Final Diss

7/29/2019 Final Diss

1/74

A Comparative Study of Home Loan Finance Facilities in Shegaon

D.B.A.R., S.S.G.M.C.E., Shegaon Page 1

CHAPTER 1

INTRODUCTION

What is a Home loan?

Home Loan is a Secured Loan offered against the security of a house/property which

is funded by the banks loan, the property could be a personal property or a

commercial one. The Home Loan is a loan taken by a borrower from the bank issued

against the property/security intended to be bought on the part by the borrower giving

the banker a conditional ownership over the property i.e. if the borrower is failed to

pay back the loan, the banker can retrieve the lent money by selling the property.

1.1 DIMENSIONS OF HOUSING REQUIREMENT

A) To meet the housing:-

The dream of every person is to own a house. 30 year ago there were

very few people who used to construct house with their own money. There were

people who constructed the house by taking the loan. The people are interested in

constructed house and buying the flats, they are aided financing for constructing their

dream home. Most of the people in India are from salary class, so that they are not

able to spend lump-sum amount at a time. But they are ready to pay installment for

the loan taken. Hence the loan, which is going to complete the dream home of the

people, is introduced.

B) Tax benefit:-

Interest paid on capital borrowed for the acquisition, Construction,

repair, renewal or reconstruction of property is entitled to a deduction. That means

applicants are allowed to deduct an amount equivalent to the total interest payable on

the housing loan from applicant taxable income within the same financial year.

This is now a substantial amount. It started off with the income tax

department offering Rs 15,000 as the maximum amount eligible for deduction in the

case of self-occupied property. This later got doubled to Rs 30,000.It did not stop

there. After getting enhanced to Rs 75,000, It was then taken to a limit of Rs 1lakh.

Presently, the limit stands elevated to Rs 1.5 lakh.
http://www.deal4loans.com/http://www.deal4loans.com/


2/74



Once get a 20% rebate on repayment of principal during a

financial year. Once again, over the year, the principal repayment eligible for rebate

has been enhanced from 10,000 to the current limit of Rs20, 000. Stamp duty,

registration fee or other such expenses paid for the purpose of transfer of such house

property to the assesses is also considered under this amount.

C) Property appreciation:-

Most of the people in India are from salary class, s they are not able to

spend lump-sum amount at a time. Maximum middle class taking loan not only

purchase or construction of new house or flat but also they are taking loan for

appreciation of property. Now various schemes provide loan for land purchase. Home

loan scheme are one of the important source of finance for appreciation of property,regarding the condition of the flat/house as well its remaining life.

1.2 IMPLICATIONS OF HOUSING FINANCE

A) Insurance of the property:-

Applicants responsibility to ensure that the title to the property is absolutely

clear and marketable and free from any encumbrances. The Property being

financed would have to be insured for an amount not less than the cost of the

property and for a minimum period equivalent to the tenure of the loan and the

policy.

B) Loan amount:-

The loan amount sanctioned under each scheme near about 85% by nationalize

bank, value of existing home.

Which is not sufficient for customer .The loan amount is

determined by assessing applicant repaying capacity with references to applicant

income documents and other factor such as the profile of them employer, stability

of applicant business, number of dependents ,credit history and the position of

applicant assets and liabilities.

C) Recovery Pattern:-

All these institutions apply only equated monthly installment (EMI) pattern for

recover the loan Amount. Annual installment facility is also required for some

customer.


3/74



D) Delayed Payment:-

In the case of a bounced cheque or delayed payment, charges and outstanding dues

will be charged as per the prevailing company policy.

E) Unnecessary documentation:-

All these institution demanded large number of document for loan sanctioned and

which are very difficult and time consuming activity. Some of this document is

unnecessary.

e.g. In the case of an old existing house, applicant will need to get a valuation

certificate from approved values as well as a certificate from a government approved

architect/structural engineer regarding the condition of the flat/house as well s its

remaining life.

1.3 Problem Formulation:-

In Shegaon there are 2 nationalize and other Co operative bank are available to

provide home loan finance facility to the people. But some different problem are

come in home loan as related to the rate of interest co-op bank having more EMI as

compare to the Nationalize bank, but in condition of availability in co-op bank is very

few time or within short time provide home loan to the people as camper to the other

nationalize Bank.

1.4 Utility of the study:-

In my study first I will suggest to the people which bank is suitable in categories wise

people. In village people should be aware or all the various scheme of Home loan can

be introduce and which scheme is suitable for that purpose my study is helping to the

people.


4/74



CHAPTER 2

HOME LOANS SCHEMESA THEORETICAL REVIEW

2.1 MEANING AND CONCEPT

Home loans do not include only the loan for construction of house or

purchasing the flat .But home loan includes all the related working with the home.

Home loan includes the loan for renovation of the house, purchasing the resale house

or a flat, loan for repayment of the home loan from the other banks.

Regarding the home loan any financial institution does not provide

more than 85% of the total amount required. The reason behind this is that, if any

bank provides 100% loan to the person then his personal interest does not get

involved in it so that there is possibility of non-repayment of the loan by the customer.

So for the safety purpose no institution provides 100% finance to the customer.

Housing is one of the basic necessities of man, and the capital

required per dwelling is so large that few individuals can raise it from their own

savings. There is therefore a great need and scope for the development of arrangement

for supplying loans or finance for the purpose of house construction. However for

some reasons or other, the shelter sector of the Indian financial system has remained

utterly underdeveloped so far, although it is hoped that there would be improvements

in the near future. The lakh of adequate institution supply of credit for house building

has been stressed by many as an important gap in the process of financial

development in India. in the recent past, the authorities have initiated certain steps to

bridge this gap. In this sec. we briefly describe the existing and changing arrangement

in India for providing financial for housing.

Finance for housing is provided in the form of mortgage loans, i.e

it is provided against the security of immovable property of land and buildings. The

suppliers of house mortgage loans in India are the following : the Housing and urban

development corporation (HUDCO), the apex Co-operative Housing Fianc Societies

and Housing Boards in different States, Central and State Government, LIC,

Commercial banks, GIC and a few private housing finance companies and nidhis .The

government provide direct loans mainly to their employees. The participation of

commercial and urban co-operative banks in direct mortgage loans has been marginal

till recently. LIC has been a major supplier of mortgage loans in indirect direct forms.


5/74



It has been giving major supplier of mortgage loans indirect and direct forms. It has

been giving loans for house buildings to the State Governments ,apex Co-operative

Housing Finance Societies, HUDCO, and so on .In addition ,It has been providing

mortgage loans directly to individuals under its various mortgage schemes. Its

outstanding loans for housing development including by way of mortgage of

properties were of the order of Rs.1998 corers in 1988-89.

2.2 SCHEME CHARCTERISTICS

A) Repayment

Repayment facility is to provide the customer with a repayment schedule,

which is linked to his expected growth in income .It, also helps a customer get a larger

amount of loan as compared to the loan under the normal housing loan. The customer

can avail of a higher amount of loan and pay lower EMIs in the initials years.

Subsequently, the repayment is accelerated proportionately with the assumed increase

in his income.

The EMIs will be increased in stages .For eg: For a 15-year loan, the

repayment schedule, divided into 3 tranche would give a step up in the EMI at the end

of the 3

rd

and 7

th

year. The EMIs for the first seven years constitute a large part ofinterest and a nominal sum of the principal portion. For the balance 8 years, the EMIs

are stepped up to recover the outstanding principal and interest for the remaining

term of the loans, this product can be used to maximize the tax benefit as it defers the

payment of principal.

B) Balloon Payment

Balloon Payment is an enhancement tool, which helps in increasing the

loan eligibility of the customer without increasing the EMI by assigning securities like

National Savings Certificate (NSC), LIC policies etc. The present value of the

maturity amount of assigned securities is combined with the loan amount to arrive at

the enhanced loan eligibility. Under this facility, the EMI is calculated on the net loan

amount (i.e total loan less the present value of the maturity value of the securities).


6/74



C) Flexible Loan Installment

This product offers a customized solution to suit the needs of customers

whose repayment capacity is likely to alter during the term of the loan. The loan is

structured in such a way that the EMI is higher during the initial years and

subsequently decreases in the latter part proportionate to the reduced income of the

customer. For eg: If Husband has 10 years of service left and wife has 15 years to

retire then a 15 years loan can be structured such that a higher EMI (serviced out of

both the incomes ) is paid for 10 years and a lower EMI (serviced out of only wifes

income) is paid for next 5 years.

D) Equal Monthly installment

EMI stands for Equated Monthly Installments. This installment comprises

both principal and interest companies .EMI calculated to find out applicant monthly

payments based on the loan amount ,the rate of interest and the repayments periods

.Choose the combination that the best meets applicants financial resources and

requirements.

2.3 REGULATORY PROVISION

A Study Group on finance intuitions was appointed by the Reserve

Bank of India in sep 1987 , under the Chairmanship of Dr. C. Rangarajan, then

Deputy governor of Reserve Bank of India (now Governor of RBI) , to make

suggestions regarding , inter alia ,the role that could be played by commercial banks

in housing finance. In the light of deliberations of the Study Group and keeping in

view the objectives of the national housing policy , the Reserve Bank of India has

modified the existing guidelines(issued in Oct 1988) as, indicated in the following

paragraphs.1. Direct Lending

i) Terms and condition Governing Housing Loans

a) Eligibility Criteria for Treatment as Housing Finance: Construction activity eligible

for bank credit a housing finance will continue to be as set out in Annexure I

(reproduced below) to the RBI circular DBOD No.CAS. BC71/C 446 (HF-P) 79 dated

31 May, 1979.


7/74



b) Rate of interest, Margin, etc .: Housing finance is subject to usual lending rate

except in the case of finance to intermediary lending agencies which are provided

funds at 3% below the minimum rate applicable for credit limits in the category of

over Rs.2 lakhs. Loans upto Rs.5, 000 to SC/ST beneficiaries continue to be at 4 %

interest per annum, but effective from May 14,1991 these loans would be covered

under DRI scheme, subject to such beneficiaries fulfilling the incoming criterion

under the scheme.

c) Ceiling on amount of Loan: For the purpose of financing, the cost should be

estimated the current cost of construction, at the same time ensuring almost economy

in the use of land, built-up space and building materials. The RBI advised scheduled

commercial banks that National Housing Bank would, in due course, make cost

studies and issue necessary guidelines for the purpose. The amount of bank loan per

individual should not exceed Rs.3 lakh , but this ceiling stands withdraw with effect

from 11th

October 1989. It was felt that while the present thrust for financing smaller

houses must continue, there may be cases with genuine needs of loans for over Rs.3

lakh further banks will have discretion to change a higher interest rate of 16% p.a. on

housing loans exceeding Rs.3 lakh . However, such housing loans exceeding on

housing loans exceeding Rs. 3 lakh . However, such housing loans exceeding Rs. 3

lakh per individual will not form part of housing finance allocation stipulated by the

reserve bank

d) Security: the security for the advance should be mortgage of property or

government guarantee as per the existing guidelines. Where neither is feasible, banks

can accept, at their discretion, security of adequate value I the form of life insurance

policies, government promissory notes, shares, debentures, gold ornaments or such

other security as they deem appropriate.

e) Repayment Schedule: The repayment period should not exceed 15 years (including

a moratorium or repayment holiday, at the option of beneficiary, till completion or 18

months from the disbursement of the loan, whichever may be earlier). The repayment

should be fixed on a realistic basis taking into account the repayment capacity of the

borrower which should not normally exceed30% of his income.

f) Graduated installments: In order to make housing finance affordable for the lower

income groups, banks may consider fixing the monthly/quarterly installments on a

graduated basis , if there is reasonable expectation of growth I the income of the

borrower In the coming year. Under the repayment schedule smaller amount of


8/74



installment will be payable in the earlier years and larger one in the latter years, so

that they become more affordable by the lower income group.

ii) Housing fianc to persons affected by natural calamities, Riot, Etc: Provision

of relief and rehabilitation assistance by banks to persons affected by natural

calamities, riots, etc., including grant of loans to victims for house

repairs/construction is governed by guidelines issued by Rural Planning and Credit

Department vide their circular RPCD No.PS. BC6/PS-126-86 dated 2nd

August 1984

and RPCD No. PL.PS-BC 28 /PS. 126-86 dated 5th

December 1986. Banks should

ensure effective implementation of the guidelines at the field level and render

financial assistance to the affected people, keeping in the view the terms and

condition stipulated above.

2. Indirect Lending:-

(i)Terms Loans to Housing Finance Institutions

a) Banks may grant term loans to housing finance institution, taking into

consideration their (long-term) debtequity ratio, track record, recovery performance

and other relevant factor. While the quantum of term loans to the Housing and UrbanDevelopment Corporation Ltd.(HUDCO) would have to be decided in relation to the

housing projects to be financed, funds available from other sources ,etc.

b) The rate of interest to be charged on term loans to housing finance institutions may

be 12.5% per annum, barring in the case of housing loans upto to Rs.5, 000 to SC/ST

in respect of whom the concessional interest of 4% per annum is applicable. The rate

12.5% per annum will be subject to the condition that (i) not less than 75% of the

units financed are meant for Economically Weaker Section (EWS) and Lower Income

Group (LIG) and (ii)The rate of interest charged to ultimate beneficiaries and other

terms are as stipulated in paragraph (i)(a) to (e) under Direct Lending above. If the

condition at(i) is not satisfied banks may fix appropriate higher rates of interest on

their lending to housing finance institutions, subjects, however, to compliance with

condition (ii).There payment period of the term loan should not exceed 15 years .


9/74



(ii) Lending to Housing Board and other Agencies

Banks may extend term loans to state level Housing Boards and other

public agencies on the same terms and conditions as indicated at (i) (b) above. In

order to develop a healthy housing finance system, while performance of those

agencies in the matter of recovery from the beneficiaries but they should also

stipulated that the Board will ensure prompt and regular recovery of loan installments

from the beneficiaries.

(iii) Financing of Land Acquisition

In view of the need to increase the availability of land and housing

sites for increasing the housing stock in the country, banks may extend finance to

public agencies for acquisition and development of land provided it is a part of the

complete project including development of infrastructure such as water system,

drainage, roads, provisions of elasticity, etc such credit may be extended by banks by

away of term loan at maximum rate of interest of 15 %per annum. However the

project may be completed as early as possible, in case within 3 years, as to ensure

quick recycling of bank funds for optimum results. This project also covers

construction of houses credit extended therefore in respect of individual beneficiariesshould be on the same terms on conditions as stipulated under (i) Direct Lending.

(iv) Private Builders:-

There are at present no restrictions on commercial banks financing

private builders but commercial bank credit has not been flowing to them in any

significant measure. In view of the important role which professional builders as

providers of constructions services have to play in the housing field especially where

land is acquired and developed by state Housing Boards and other public agencies,

commercial banks may extend credit to them on commercial basis(i.e., not less than

16% annual rate of interest ) by way of demand loan linked to each specific periods

for a maximum periods up to 18 months subject to usual safeguard and after obtaining

such security as they them appropriate. Such credit may be extended to builders of

repute and employing professionally qualified personnel. It should be ensured through

close monitoring that no part of such funds is used for any speculation in land. Care

should also be taken to see that prices charged from the ultimate beneficiaries do not


10/74



include any speculative element that is, they should be based only on the documented

price of land, the actual cost of construction and a reasonable profit margin.

2.4 Types of Home Loan

There are different types of home loans available in the market to cater borrowers

different needs.

Home Purchase Loan:

This is the basic type of a loan which has the purpose of purchasing a new house.

Home Improvement Loan:

This type of loan is for the renovation or repair of the home which is already bought.

Home Extension Loan: This type of loan serves the purpose when the borrower

wants to extend or expand an existing home, like adding an extra room etc

Home Conversion Loan: It is that loan wherein the borrower has already taken a

housing loan to finance his current home, but now wants to move to another home.

The Conversion Housing Loan helps the borrower to transfer the existing loan to the

new home which requires extra funds, so the new loan pays the previous loan &

fulfills the money required for new home.

Bridge Loan: This type of loan helps finance the new home of the borrower when

he wants to sell the existing home, this is normally a short term loan to the borrower

& helps during the interim period when he wants to sell the old home & want to buy a

new one, It is given till the time a buyer is found for the old home.

Home Construction Loan:

This type of loan is taken when the borrower wants to construct a new home.

Land Purchase Loan:

It is that loan which is taken to purchase a land for construction & investment

purposes.


11/74



2.5 Needs and Limitations:-

The present study is conducted aim at knowing the various home loans

financing schemes available in Shegaon city and offered by different housing finance

institutions along with different characteristics, details of regulatory provision. The

study is useful for financial institutional in Shegaon city. The data collected from

these institutions is in guessing figure. It is not actual figure because they have to

maintain trade secrete.

2.6 Home Loan Documentation:-

Owing a home loan is probably one of the most precious and cherished dreams of any

person; especially when he or she has to earn his or her living from a fixed quantum

of salary. For that you basically have two options either save or invest in a plannedway, or take a home loan. Numerous banks now days have tailored -made packages to

serve you, with lots of promises to disburse your loan. The only precondition is your

home loan documentation should be ok. After the entire credit appraisal officer is also

a salaried person! He has to document the papers in a proper way so that if tomorrow

you fail to pay the money, he has got enough piles of papers to save e his back! Jokes

apart, home loan documentation is the first and foremost hurdle for a salaried

individual in the way of getting a home loan .so here is checklist for every salaried

individual in the way of getting a home loan. So here is checklist for every salaried

person to comply before the proceeds to any bank of his choice to apply for a home

loan.

The Banks normally try to assure themselves of three things:-

a) Income / employment proof of the applicantso that he can repay the Loan.

b) Identity and address proof of the applicantso that he can easily traceable

c) Authenticity proof of the house propertyso that the applicant doesnt come afterfew days seeking a personal loan for litigation with the promoter.

Each of the aforesaid issues are dealt in below, listing each individual documents,

generally sought after, by both the nationalized and private banks

A. Income Proof:-

1) Salary slips for the last three months.

2) Appointment letter.

3) Salary Certificate.


12/74



4) Retainer Ship agreement, if appointed as a consultant.

5) Form 16 issued by the employer in your name.

6) Last three years Income Tax Returns duly filed and certified by the Income .

Tax authorities.

7) Similar documentsseparately for each co-applicant.

Additional Note:-

Co-applicants income can be considered for enhancing your loan eligibility or

increasing your loan amount. Please ensure that all financial documents of co-

applicants (s) are attached with yours India Home Loan application.

B. Employment Proof:-

1) Identity card issued by your employer.

2) Visiting card.

C. Age Proof:-

1) Passport

2) Voters ID card

3) PAN card

4) Ration card

5) Employers Identity card

6) School Leaving certificate.

7) Birth Certificate.

D. Residence Proof:-

1) Ration card.

2) Passport

3) PAN card

4) Rent agreement, if you are staying currently on rent.

5) Bank pass book.

6) Allotment letter from your company if you are residing in company quarters.

E. Name Change Proof: (If Applicable)

1) A copy of the official gazette.

2) A copy of newspapers advertisement publishing the name change.

3) Marriage Certificate.


13/74



F. Investment Proof:-

1) Bank statement for the last six months of all operating and salary accounts.

2) Banks statements for the last six months of all current accounts, if self-employed.

3) Any other photocopies of investment held, if required by the bank.

G. Property Title Proof:-

1) Original sale agreement with builder or developer duly registered registration

receipt.

2) Tripartite agreement from builder or developer.

3) Land documents indicating ownership, e.g photocopies of title deeds, if

applicable.

4) A certificate by the legal adviser of the builder to the effect that the builder has a

good reputation and it is free from encumbrance and other charges.

5) A certificate frombuilders chartered accountant certifying that the builder has not

mortgaged the property anywhere else.

6) Certified true copy of approved plan.

7) Copies of receipts of payments made to builder or developer.

8) Allotment letter.

9) Possession letter.

10) Lease agreement, if applicable (property bought from a development authority)

11) Mortgage deed if the bank for a registered mortgage.


14/74



CHAPTER 3

COMPANY PROFILE

A. Nationalized Banks:

I) Introduction:-

The SBIs powerful corporate banking formation deploys multiple channels to

deliver integrated solutions for all financial challenges faced by the corporate

universe. The Corporate Banking group and the National Banking group are the

primary delivery channels for corporate banking products .State Bank of India

proudly stands as one of the nationalized bank catering to the needs of common mass

since long.

The Bank is actively involved since 1973 is non-profit activity called community

Services Banking. All our branches and administrative offices throughout the country

sponsor and participate in large number of welfare activities and social causes. Our

business is more than banking because we touch the lives of people anywhere in many

ways.The Bank is forging ahead with cutting edge technology and innovative new

banking models, to expand its rural banking base, looking at the vast untapped

potential in the hinterland and proposes to cover 100,000 villages in the next two

years.

Branches:-

The corporate center of SBI is located in Mumbai. In order to cater to different

functions, there are several other establishments in and outside Mumbai, apart from

the corporate center. The bank boasts of having as many as 14 local head offices and

57 Zonal Offices, located at major cities throughout India. It is recorded that SBI has

about 10000 branches, well networked to cater to its customers throughout India.

ATM Services

SBI provides easy access to money to its customers through more than 8500 ATMs in

India. The Bank also facilitates the free transaction of money at the ATMs of State

Bank Group, which includes the ATMs of State Bank of India as well as the Associate

3.1 State bank of India


15/74



Banks State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of

Indore, etc. You may also transact money through SBI Commercial and International

Bank Ltd by using the State Bank ATM-cum-Debit (Cash Plus) card.

Subsidiaries

The State Bank Group includes a network of eight banking subsidiaries and several

non-banking subsidiaries. Through the establishments, it offers various services

including merchant banking services, fund management, factoring services, primary

dealership in government securities, credit cards andinsurance.

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

Personal Banking

SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

Other Services

Agriculture/Rural Banking

NRI Services

ATM Services

Demat Services Corporate Banking

Internet Banking

Mobile Banking

International Banking

Safe Deposit Locker

RBIEFT

E-Pay

E-Rail

SBI Vishwa Yatra Foreign Travel Card

Broking Services Gift Cheques


16/74



In Shegaon city there is one branch of State Bank of India is stand on the middle

of the city. There 3ATM service provider located in different place at shegaon

II) History:-

The evolution of State Bank of India can be traced back to the first decade of the 19th

century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June

1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January

1809. It was the first ever joint-stock bank of the British India, established under the

sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay

(established on 15 April 1840) and the Bank of Madras (established on 1 July 1843)

followed the Bank of Bengal. These three banks dominated the modern banking

scenario in India, until when they were amalgamated to form the Imperial Bank ofIndia,on27January1921.

The All India Rural Credit Survey Committee proposed the take over of the Imperial

Bank of India, and integrating with it, the former state-owned or state-associate banks.

Subsequently, an Act was passed in the Parliament of India in May 1955. As a result,

the State Bank of India (SBI) was established on 1 July 1955. This resulted in making

the State Bank of India more powerful, because as much as a quarter of the resources

of the Indian banking system were controlled directly by the State. Later on, the State

Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State

Bank of India to make the eight former State-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the

480 offices comprising branches, sub offices and three Local Head Offices, inherited

from the Imperial Bank. Instead of serving as mere repositories of the community's

savings and lending to creditworthy parties, the State Bank of India catered to the

needs of the customers, by banking purposefully. The bank served the heterogeneous

financial needs of the planned economic development.

III) Awards and Recognitions:-

a) Only Indian Bank to find a place in the fortune global 500 list improved

Ranking from 495 last year to 380 this year.

b) Improved ranking from 219th

position last year to 150th

this year in the

Forbes 2000 list of largest companies in the world.


17/74



c) Reputation institute US has ranked SBI 29th

.

d) Awarded the Bank of the year 2008-India by the Banker Magazine

, London.

e) Ranking in the The Bankertop 1000 World Bankimproved to 57 from

70 in 2007. Only Indian Bank among the top100 banks in the world. Rank

8th

in top 25 Banks in Asia.

f) Ranked 1 is survey of top 5 companies in India in terms of financial

Reputation by wall street journal.

Mission Statement

Develop into a top rate, nimble footed banking institution committed to excellence in-

services to its customers, enhancing stakeholders value though care and competence

and fulfilling obligations to the community at large.

Vision Statement

a) Attain high standards of efficiency and professionalism and core institutional

values comparable to the best in the field.

b) Possess world-class standards of efficiency and professionalism rooted in the core

institutional values of the State Bank Group.

c) To be a committed, caring and responsible corporate citizen

d) To provide a satisfying work environment with opportunities for learning, self-

development and self-actualization.

History of the Bank

Established in 1911, Central Bank of India was the first Indian commercial bank

which was wholly owned and managed by Indians. The establishment of the Bank

3.2 Central Bank of India
http://www.centralbankofindia.co.in/upload/History%20Book%20Pages%201%20-%2022.pdfhttp://www.centralbankofindia.co.in/upload/History%20Book%20Pages%201%20-%2022.pdfhttp://www.centralbankofindia.co.in/upload/History%20Book%20Pages%201%20-%2022.pdf


18/74



was the ultimate realization of the dream of Sir Sorabji Pochkhanawala, founder of

the Bank. Sir Pherozesha Mehta was the first Chairman of a truly 'Swadeshi Bank'. In

fact, such was the extent of pride felt by Sir Sorabji Pochkhanawala that he

proclaimed Central Bank of India as the 'property of the nation and the country's

asset'. He also added that 'Central Bank of India lives on people's faith and regards

itself as the people's own bank'.

During the past 99 years of history the Bank has weathered many storms and faced

many challenges. The Bank could successfully transform every threat into business

opportunity and excelled over its peers in the Banking industry.

A number of innovative and unique banking activities have been launched by Central

Bank of India and a brief mention of some of its pioneering services are as under:

1921 Introduction to the Home Savings Safe Deposit Schemeto build saving/thrift

habits in all sections of the society.

1924 An Exclusive Ladies Department to cater to the Bank's women clientele.

1926 Safe Deposit Locker facility and Rupee Travellers' Cheques.

1929 Setting up of the Executor and Trustee Department.

1932 Deposit Insurance Benefit Scheme.

1962 Recurring Deposit Scheme.

Subsequently, even after the nationalization of the Bank in the year 1969, Central

Bank continued to introduce a number of innovative banking services as under:

1976 The Merchant Banking Cell was established.

1980 Central card, the credit card of the Bank was introduced.

1986 'Platinum Jubilee Money Back Deposit Scheme' was launched.

1989 The housing subsidiary Cent Bank Home Finance Ltd. was started with its

headquarters at Bhopal in Madhya Pradesh.1994 Quick Cheque Collection Service (QCC) & Express Service was set up to

enable speedy collection of outstation cheques.

Further in line with the guidelines from Reserve Bank of India as also the

Government of India, Central Bank has been playing an increasingly active role in

promoting the key thrust areas of agriculture, small scale industries as also medium

and large industries. The Bank also introduced a number of Self Employment

Schemes to promote employment among the educated youth.


19/74



Among the Public Sector Banks, Central Bank of India can be truly described as an

All India Bank, due to distribution of its large network in 27 out of 29 States as also

in 3 out of 7 Union Territories in India. Central Bank of India holds a very prominent

place among the Public Sector Banks on account of its network of 3967 branches and

27 extension counters at various centers throughout the length and breadth of the

country.

Customers' confidence in Central Bank of India's wide ranging services can very well

be judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC,

HDFC as also almost all major corporate houses in the country.

Key Attributes

Central Bank of India claims to be the first bank to be conferred with the National

Award for Excellence in Micro and Small Enterprises (MSE) Lending for the year

2007-08.

The bank entered a partnership with Kotak Mahindra Assets Management Company

in December 2008, under which all the Kotak Mutual Fund products will be made

available through Central Bank of India branches.

Products and Services

Central Bank of India offers a host of banking services to its customers including

Regular Banking Services such as Deposits and Loans, International Banking

Services, and other services including Central card Electronic Cards, Debit Cards, No-

Frills Savings Deposit Account under the name Cent Bachat Khata, and Finance

options for domestic and international tours under the name Cent Safar.

Presence in India

Central Bank of India has a strong presence in the country with over 3000 branches

and more than 250 extension counters nationwide as of April 2009. The headquarters

of the bank are located in Mumbai, the financial capital of India, along with 16 other

zonal offices established in different cities of the nation, including Agra, Ahmadabad,

Bhopal, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Lucknow, Mumbai

Metro Zonal Office, Muzaffarpur, Nagpur, New Delhi, Patna, Pune and Raipur.


20/74



A. NonNationalized Bank

Introduction:-

The Shegaon urban is the Non-nationalized bank it is just located in centre of

the city when there are number of borrower is in the locally or the person is account in

that bank are known well manner transaction of that bank, A number of innovative

and unique banking activities have been launched by Shegaon urban Bank of India

and a brief mention of some of its pioneering services are as under:

History of the bank:-

Shegaon urban Credit Co-operative Society bank is established in the year of

1992. In that period only is working on manual manner like as register manner after

that the number of account open or response of bank is much more so it should be

development our bank in computerized manner. Firstly is only to taking the saving

money account only for few year for the survival of the bank in city. After that bank

improve there characterized year by year in well manner. When the period of modern

like so it will be going to firstly step on loan schemes started in year 2005. In Shegaon

is the 80% people is business depend so they towards preferred the urban bank mostly

because of the process is fast and easy to work out.

Branches:-

When the Number of people open the account in that bank or mostly happen to

easy the service of people Shegaon urban credit bank in Shegaon newly open there 2.

Sub-branches in different area of Shegaon to operate there service easily and move

the number of people towards there bank to open there account. On that period is not

stop outside the Shegaon also response people to that bank for that condition they can

be open there branches in also on Khamgaon and Paturda khamgaon is the very

income source or daily lot of transaction is done .

Manager meeting with the under bodies member yearly:-

In the balance sheet purpose all the transaction are front of the chairperson of the

bank and the under meeting all the employs of bank in all braches are to be present in

that meeting under all the annual problem should be discussed with each other and

correct solution find it .Any new plan should be conducted. In future care taking

3.3 The Shegaon Urban Credit

Co-operative Society in Shegaon


21/74



purpose all the data is legally formed in well organized manner and annual balance

sheet is correctly tally.

Other Activities:-

In Bank is working on a period is not work for there own purpose so some time

should be the organized some like social programmed like, Tree plantation, Blood

donation champ ,Adult literacy programmed.etc.

Shri keshav urban Credit Co-opp society is the bank is also indicated by the

name is Keshavardhini working for that necessary need of loan is the main

purpose of that bank. In Shegaon when limited number of people is salary based for

that according the condition is work for the person. The bank is major role in saving

account, or a credit account of the people.


The Keshavardhini bank i.e Keshav bank is established in the year of 1995-

1996 firstly this bank is open in shegaon city and offering to open a new account of

the customer i.e saving a/c or current fixed deposit a/c on that way bank ways go there

ways in positively manner after in shegaon same period like most of the people is

purchase the land in more in nature in that period keshav bank openly there Home

loan schemes and full filament of need people to acquired and getting the land very

easy manner . The home loan scheme is nearly established in 2000-2002 year from to

updates. In that bank are having general nature is to maximum of borrower are

satisfaction and happy to tells the nature of the bank, so easily increasing there

customer.

Branches:-

The shegaon Keshav urban are yearly in progress in nature and outside the

people are come so the time of that bank open there new branches in other city or

villages. So there are 2 branches is outside from shegaon is 1 in near Tunki another

one in Nandura. This bank is also working in progress in well manner , after that

bank are taken a role to improve there various schemes under at so in future bank is

come in front from all of us.

3.4 Shri Keshav Urban Credits

Co-operative Society Shegaon:-


22/74



Other activities:-

In shegaon is the city of Sant shri Gajanan maharaj so in any festival of maharaj

near villages come up with there palkhi in maharaj palkhi so in that activities Bank

play very vital role i.e bank distribute voluntarily Tea, Water, Mahaprasad, etc.

Another activities is the play in social purpose i.e in Government hospital with in

year 2 times goes there employs and needy people to distribute the some fruits, basic

need, etc.

The Shegaon shri Agrasen sahakari bank is towards under there name for the

identify is Agravardhini .In the bank under the road ways of Shri Shatrapati

Agrasen Maharaj in there behavior in front of there eyes in travel the bank in all over

the Maharashtra. The name suggests that Agrasen so the it is more or large number of

is related to the caste of Agrasen marvadi it is observation in that bank data

collection period. The Agrasen bank is very rapidly growing bank in condition in

todays.

History of bank:-

The Shegaon Agrasen sahakari bank is open in 1988 in shegaon. In fist the started

the bank so limited number of account is open and in that period all the work of the

employs work are perform in manual manner and registered it . when after that some

year goes and number of response is increasing so all the working is need to

computerized and changing there infrastructure in the year of 2000-2001 . In the latest

2011-2012 annual schedule or balance sheet under that is very happy tails us there

employs loan distribute, loan borrower is not a strong point so it will be kindly takecare of customer so changing there behavior , and very fast service to the customer so

the customer should be satisfaction is the main purpose of the bank.

Annual Transaction:-

In the current balance sheet is observe that the bank are crossing the limit of 5577

cores in year.

3.5 The Shegaon Shri Agrasen

Credit Co-operative society


23/74



Branches:-

The Shegaon Agrasen Sahakari Bank is not only in shegaon there are number of

branches in surrounded to shegaon .there is main office in shegaon.

There are 17 branches is outside from shegaon is Murtijapur, Khamgaon, Akot,

Vamannagar, Latur, Malkapur, Shahada, Deoulgaon raja, Pune, Jalgaon jamod,

Hingoli, Buldhana, Washim, Akola. In shegaon branch name like Agravardhini so

in khamgaon branch gives name also like as Agravijay. When the number of

customer is increasing so the more number of branches is also increasing the bank

goes towards in positively manner and in profit condition.

Awards and Recognition:-

1) When the bank is crossing there amount in balance more than 112 crores in that

period Chairperson of the bank is Mr. Bhikarilalji Agraval is to awarded by the

Ankur Sahitya groups in Jeevangaurao Awards .

2) In that bank also the vice-chairperson of Mr. Ramesh Bagdiya and there family is

to awarded by the maharasthra agrawal groups in awards of Agrashri

Other Activities:-

1) In the Organization of all the employs is to be literate or educated by the some

other senior guidance to tails some and improve there transaction well organized

manner or some time employs is to outside there branches also travel and educated

well them. From the employs hard work and help the bank is very strong position

in the market.

2) In Sheaon There are the number of people are come for the maharaj darshan for

that care of people Water distribute in near railway station road.

3) In the Narayan help organization udyapur in that handicapped people for that

purpose Agrasen organization gives the sponsorship, and distributes the

instruments which are necessary for the handicapped person.


24/74



3.6 Buldana urban co-opp credit society ltd. Buldana in Shegaon..:-

Buldana Urban initiated micro finance, a facility that supported and transformed

countless common lives. It went beyond just finance to enrich and empower the

common man, with an array of socio-economic activities. It took co-operative

movement to the grass root level and utilized it to uproot problems. By procuringsecured finance to the farmers and offering solutions to their problems such as storage

and distribution of their products, Buldana Urban gave them economic stability and

confidence.

Passion for people and their lives, compassion for their adversities and needs, respect

for values and discipline, focus on humanity, concern for society, an unwavering faith

in the principle of co-operation, all this and much more is at the root of Indias

largest co-operative credit society, the Buldana Urban Co-operative Credit Society.

Shree Gajanan Maharaj at Shegaon is the much worshipped figure in Maharashtra.

Last year was the centenary year marking the profound meditation of this great saint.

Buldana Urban had supplied free lunch services during the period 9th to 13th

September at Shegaon. More than 60000 devotees were served through this. We at

Buldana Urban are feeling positive as we could offer at least some comfort to the

devotees of Shree Gajanan Maharaj.

It is true that the Society is receiving recognition throughout India. Many a great

personalities have visited the Head Office to see the working of Buldana Urban and to

master the art of banking. I am very much thankful to all the followers of the co-

operative movements who have always considered the working of Buldana Urban as

worthwhile. I am also thankful to the eminent personalities who have found time from

their busy schedules to visit the premises of Buldana Urban.

3.6 Buldana urban co-operative credit

society ltd. Buldana in Shegaon


25/74




Buldana Urban Co-Operative Credit Society Ltd. was established on 19th

June 1986 at

Buldana, India.

At the time of establishment, account holders of the society were only in a number of

two digits and now this number has grown up to six digits i.e. 1,95,000.

Today, Buldana Urban Co-Operative Credit Society Ltd., Buldana having 172

branches in major cities cross the India. We have been able to achieve this only with

the co-operation and co-ordination of our valued account holders.

Buldana Urban Co-Operative Credit Society Ltd.is committed to create member

centric organization with a deep and high sense of social responsibility and to

continuously leverage technology to attain world class standards of performance.Co-operation leads to prosperity and prosperity are committed to the welfare of

the society. With this belief, Buldana Urban was established way back in 1986, by

Mr. Radheshyamji Devkisanji Chandak. It was a time when people viewed co-

operation with distrust. Buldana Urban was a pioneering credit society that reinstated

the trust by connecting itself to people in more ways than one. Being run and

regularized by people, it worked flawlessly and relentlessly for the benefit of the

people and their day-to-day problems.

The great saint Samarth Ramdas has revealed in the Dasbodh that, one must speak

less but concentrate more on work, as also one must try to inculcate the best in his or

her working and should make it known to others by deeds and not by words.

Consistently, in this twenty-fifth year, the Society is advancing rapidly towards

progress with more and more deposits in terms of monitory gain as well as customer

reliance and approval. This year there was an increase of 26% in the deposits. The

more the deposits the more is the action-oriented awareness towards social

commitments. Consequently, the Society has given more importance to the

contentment gained through the social banking than the happiness achieved through

the profits made by the book banking.

India for its continuous and concrete support. Yes Bank has also allotted a loan of Rs.

150 crore to the Society, to extend the loan facility for Agricultural Projects.


26/74



Sub-branches:-

Today Buldana Urban stands tall with a well connected network of 220 Branches

across Maharashtra and a number of firsts to its credit. Buldana Urban is the first

credit society to do core banking. Its deposits have exceeded 1900 crores and loan

recovery is at 97% to 98%.

Facilities

1. 365 days, 8.00 AM to 8.00 PM (12 Hrs.)Main Branch only.

2. Locker facility.

3. SMS facility for account balance enquiry.

4. TT & DD facility ( All over India)

5. LIC

6. Western union money transfer.

7. Home deliveryWithdrawal on just one phone call.

8. Ambulance

9. Higher level education loan.

10. 224 branches in Maharashtra, MP, Rajasthan, Chatisgad.

11. All branches computerized.

Other activities:-

1) Buldana urban sponsorship society is to development it is the all over the India

when awarded by the kopkon-2007.

2) In the Buldana main manager Mr. Bhaiji is to be awarded by the in Nagpur

Buldana Dist society through Goarao Puraskar in the hand of Dr. Rajendra

Shingne.

3) Buldana urban khamgaon branch on the occasion of New Year it is to celebrate of

camp of mobile van in eyes check-up.


27/74



CHAPETR-4

RESEARCH METHODOLOGY

4.1:- INTRODUCTION:-

Research is commonly referred to search for knowledge. It is also defines

Research as a scientific search for the pertinent on specific topic. It is also an art of

scientific investigation.

Research is a systematic method of collecting, recording facts, tabulating

and analyzing the fact in the form of objective set as through conclusion over the

problem based on the collected data.

4.2:- Definitions:-

The word research is derived from Latin word meaning to know. It is a

systematic and a replicable process which identifies and defines problems, within

specified boundaries. It employs well designed method to collect the data and

analyses the results. It disseminates the findings to contribute to generalize able

knowledge.

Research methods are the particulars strategies researches use to collect the

evidence necessary for building and testing theories

Research is purposive analysis tries to establish a basis for prediction and

control behavior of its studies

Research methodology has many dimensions and research methods are

integral part of it. Research methodology has a wider scope that the research methods.

Research methodology is systematic way for solving research problem. It is a science

of study how research is done scientifically.

It is essential for any research to know not only research technologies but also

research methodology. In research methodology we study the various steps that are

generally adopted by researcher in studying his research problem along with logic

behind them so that research result are capable of being evaluated either by the

researcher himself or by any other person.


28/74



Scope of the study:-

1. This study is analysis and comparison of home loan provided by

nationalized banks and private

2. It is helpful in analysis and comparison of home loan provided to the customer

3. Most of peoples are issuing home loan.

4.3 OBJECTIVES:

1) To study the role of financial institution.

2) To study home loan scheme of various bank & financial institution.

3) To evaluate the home loan scheme of various bank & financial institution.

4) To identify the best home loan financing bank.

4.4 Research Process:-

In the words of Albert Einstein formulation of a problem is far more

essential than its solution, which may be merely a matter of mathematical or

experimental skill. To raise new possibilities, to regards old problem form a new

angle requires creative imagination and market real advance in science. Research

process consist of the steps of action to carry out which are closely related.

All research problems require their own special emphases and approaches

since every research problem is unique in some ways. There is a sequence of step

called the marketing research process the following figure shows the different stages

in research process.

Research process:-

FORMULATE PROBLEM

DETERMINE RESEARCH DESIGN

DETERMINE DATA COLLECTION

DESIGN DATA COLLECTION FORM

DESIGN SAMPLE AND COLLECTION

ANALYSE AND INTERPRET THE DATA


29/74



4.4.1 Formulating Research Problem:-

At the very outset the research must decide the general area of interest. Initially the

problem may be stated in a broad general way and then narrow it down to specific

problem. Problem definition involves in understanding the problem thoroughly and

rephrasing the same in a suitable way in operation terms for the analysis.

The researcher must examine all available literature to get familiarity with the

problem. Literature, both, conceptual and empirical, must be reviewed properly. The

outcome of which is useful in finalizing the data and other material available for

operational purpose to specify the research problem.

The problem to be investigated must be defined unambiguously that will help in

discriminating the relevant data with irrelevant data. Once the problem is formulated abrief summary may be written down which is called as research plan. As I wanted to

study the different loan facilities available in shegaon, I have formulated the problem

for my study as-Comparative study of Home loan finance facilities in Shegaon

4.4.2:- Research Method:-

Exploratory Research:

Exploratory research is a type of research conducted because a problem has not been

clearly defined. Exploratory research helps determine the best research design, data

collection method and selection of subjects. Given its fundamental nature, exploratory

research often concludes that a perceived problem does not actually exist. Exploratory

research often concludes that a perceived problem does not actually literature and/or

data, or qualitative approaches such as informal discussion with consumer,

employees, management or competitors, and more formal approaches such as

informal discussion with consumers, employees management or competitors, and

more formal approaches through in-depth interviews, focus groups, projective

methods, case studies or pilot studies. The internet allows for research methods that

are more interactive in nature: The results of exploratory research are not usually for

decision making by themselves , but they can provide significant insight into a given

situation. Although the results of qualitative research can give some induction as to

the why, how and when something occurs ,it cannot tell us how often or

how many


30/74



4.4.3 Research (Design) Approach:-

It is the blue print of research. It is the conceptual structure within which research

would conduct. A flexible research design ,which provides opportunity for

considering ,many different aspects of problem and a suitable design will be one that

minimizes bias and maximizes the reliability of the data collected and analyzed . The

experimental and no experimental hypothesis testing are a few examples of research

design.

All research approach can be classified into one of two general categories of research

: exploratory, descriptive and casual( conclusive) differ significantly in terms of

research purpose, research questions the precision of the hypothesis that are formed,

and the data collection methods that are used.

4.4.4: Research Tactics:-

A] Collection of Data:-

Good inference depends heavily on the appropriateness of the data. There

are several ways of collection the appropriate data such as, by observation ,through

personal interviews ,telephone interviews ,by mailing questionnaires, through

schedule etc, the research should select one of these methods of collection of data

taking into consideration the nature, scope and objective.

Data collection looks forward to data analysis, so the data requirement is to

be well anticipated in advance. Special care must be taken in the collection phased to

avoid the source of under or over statement for the various characteristics; the

research should not ignore the already available relevant data that is secondary data.

The usefulness of the research project depend on the overall quality of the research

design, the data collected and analyzed based on the design.

B] Analysis of Data:-

Once the data is collected, the analysis of the data is an important task. The

analysis of data requires the number of operations, such as establishment of category

codification of data, tabulation of data and then deriving the inference. A research can

analyze the collected data with the help of various statistical measures such as various

percentages and analysis of variances.


31/74



The data analysis can be classified as univariate analysis where a single

characteristic of interest is analyzed and in vicariate analysis and multivariate analysis

deals with two and more than two characteristics of interest.

4.4.5 Methods used while doing the project:-

Sources of Data:

Primary Data

Secondary Data

I ] Primary Data:-

Primary data are those, which are collected afresh and for the first time,

and thus happen to be original in character. Information regarding the company wascollected through various discussions held with the concerned company executives

Data regarding company history and profile were also gathered through the website.

Data collected by structured questionnaire.

II] Secondary Data:-

Data which are not originally collected but rather obtained from published

or unpublished sources are known as secondary data. It is second hand information.When an investigator uses the data, which has been already collected by others, such

data is called as secondary data. This data for someone else who uses this data for his

own purpose. The secondary data can be obtained from journal, reports and

government. Publication, publications of professional & research organizational & so

on.

4.4.6: Sample Size and Selection Process:-

The sample selection process requires the form of sample be specified. Forthis purpose, researcher has subjectively decided which particular group will be part

of the study. In a sample survey a small part of the entire Bank is subjected to the

research.

The sample size has been kept to 2 Nationalized Bank i.e (State Bank of

India & Central bank of India) and 10 Non - Nationalized Bank. The sampling

procedure is simple random sampling .After the sample size is decided, the next step

was to meet the respondent personally and to collect data from them through personal

interviews. Data was collected in the form of response to the well framed


32/74



questionnaire from employs of bank they was taken home loan with respective bank.

The research area is only Shegaon city.

Literature study:-

This data were collected from following sources,

Company websites

Books

4.4.7 Limitations of study:

Every research has its own limitations likewise this study is having some of them.

1) This study aim to know the various Home Loan schemes of Private Bank and

Nationalize Bank in Shegaon city.

2) The information is obtained from employs and thus findings are based on that

information only.

3) The sample size was small that is of 10 Non-nationalize bank and 2 nationalize

bank due to the considerable limitations of time factor and economy.

4) This survey was based on random sampling technique. It is believed that responses

in such type of research cannot be taken granted heavily.


33/74



Chapter-5

HOME LOAN SCHEMES

A new home brings with it new hopes, joys and emotions. Every customer has a

specific and unique concern. There are different schemes for home loan. All

Nationalized and Private Bank focus on variable interest rate.

5.1 State Bank of India:-

State Bank of India home loan is one of the best loan products that you will come

across in the market. The bank has designed a range of loan products to satisfy

various requirements of the customers.

State Bank of India home loan is available with alternative interest rates

and repayment terms that are suitable for the borrowers. These loans are offered by

the personal banking division of State Bank of India. The bank has been recognized as

the most favored home loan provider in Awaaz Consumer Awards.

. SBI home loan are now available with attractive discounts on green

homes in line with the vow of State Bank of India to Environment Safety

'SBI-Home Loans'

Unique features:

No cap on maximum loan amount for purchase/ construction of house/ flat

Option to club income of spouse and children to compute eligible loan amount

Provision to club expected rent accruals from property proposed to compute

eligible loan amount

Provision to finance cost of furnishing and consumer durables as part ofproject cost

Repayment permitted upto 70 years of age

Free personal accident insurance cover

Optional Group Insurance from SBI Life at concessional premium (Upfront

premium financed as part of project cost)

Interest applied on daily diminishing balance basis

'Plus' schemes which offer attractive packages with concessional interest rates

to Govt. Employees, Teachers, Employees in Public Sector Oil Companies.


34/74



Special scheme to grant loans to finance Earnest Money Deposits to be paid to

Urban Development Authority/ Housing Board, etc. in respect of allotment of

sites/ house/ flat

No Administrative Charges or application fee

Prepayment penalty is recovered only if the loan is pre-closed before half of

the original tenure (not recovered for bulk payments provided the loan is not

closed)

Provision for downward refixation of EMI in respect of floating rate

borrowers who avail Housing Loans of Rs.5 lacs and above, to avail the

benefit of downward revision of interest rate by 1% or more

In-principle approval issued to give you flexibility while negotiating purchase

of a property

Option to avail loan at the place of employment or at the place of construction

Attractive packages in respect of loans granted under tie-up with Central/ State

Governments/ PSUs/ reputed corporates and tie-up with reputed builders

(Please contact your nearest branch for details)

Purpose

Purchase/ Construction of new House/ Flat

Purchase of an existing House/ Flat

Purchase of a plot of land for construction of House

Extension/ repair/ renovation/ alteration of an existing House/ Flat

Purchase of Furnishings and Consumer Durables as a part of the project cost

Takeover of an existing loan from other Banks/ Housing Finance Companies

Eligibility

Minimum age 21 years as on the date of sanction

Steady source of income

Loan Amount

Applicant/ any one of the applicants are aged over 21 years and upto 45 years -

60 times Net Monthly Income (NMI) or 5 times Net Annual Income (NAI),

subject to aggregate repayment obligations not exceeding 57.50% of NMI/ NAI


35/74



Applicant(s) aged over 45 years of age- 48 times NMI or 4 times NAI, subject to

aggregate repayment obligations not exceeding 50%of NMI/ NAI

To enhance loan eligibility you have option to add:

Income of your spouse

Income of your son/ daughter living with you, provided they have a steady

income and his/ her salary account is maintained with SBI

Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased

is proposed to be rented out

Regular income from all sources

A. Home Loan Interest Rate:-

State Bank of India home loan interest rates are one of the most competitiverates that you will get in the market. The rates are subject to change as per the sole

discretion of SBI. The tables given below will help you understand State Bank of

India home loan better.

i) SBI Easy Home Loan

Interest rate for loan

Loan Amount Upto Rs.30 lakh

Facility type Overdraft (Max gain) or Term Loan

Interest for 1st

year 10.75 % per annum( Fixed)Interest for 2

nd& 3

rdyear 11 % per annum (Fixed)

Interest for 4th

year on wards 1.50 % higher than the base rate, presently

rate in force being 11.50 % per annum

No fixed rate option

Table No. 5.1 SBI Easy Home Loan

ii) SBI Advantage Home loan:

Interest rate for loan

Loan Amount Above Rs. 30 lakh and upto Rs.75 lakh

Facility type Term LoanInterest for 1

styear 11 % per annum

Interest for 2nd

& 3rd

year 11.25 % per annum

Interest for 4th

year on wards 1.75 % higher than the base rate, presently

rate in force being 11.75 % per annum

No fixed rate option

Table No. 5. SBI advantage Home Loan


36/74



When youre searching for the most affordable home loan interest rates from the

market, you should give state bank of India a thought. State Bank of India home loan

interest rates are one of the best rates that are available to you in India.

B. SCHEMES OF HOME LOAN:-

A) SBIFLEXI HOUSING LOAN:-

In wake of intense market competition & with view to meeting emerging market

demand to build in value added & customer friendly features to our Home Loan. To

increase our H L product profile. All HL borrowers who avail loans of Rs. 5 lakh and

above.

B) SBI REALTY:

To tap effectively the market potential for home loan for purchase of land for

housing constructionmore appealing & customer friendly approach.

Eligibility:- Individuals over 18 years of age with steady source of income,

including persons engaged in allied activities.

C) SBIFREEDOM HOME LOANS:

To extend value added option to meet the latent needs of the niche customer group

comprising HNIs, Affluent, NRIs, Highly paid executives, leading professional etc.

Background:- In wake of enhanced IT incentives for HL ( U/S 80 C up to Rs 1 lakh

of principle repayment as against the earlier cap of Rs 20000 only ), Many

prospective HNI & mass affluent borrowers are keep to avail HL to the Max extent

to draw optional IT Benefit.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 and when they mature . Borrowers to

arrange to pay monthly interest.

D) SBIOPTIMA ADDITIONAL HOME LOAN:-

Purpose: - To meet expenses towards major repair, renovation & addition to their

house/flat as also for purchase of furniture, fixture, consumer durable etc.


37/74



Rationales:-

a. To maintain long term relationship with home loan borrowers.

b. Ensure continued customer loyalty.

c. Make of HL scheme more customers friendly by extending value added

facilities

d. Improve our competitive edge in the market.

e. To take over of home loan by optimally tapping the significant potential.

Repayment:- Max up to residual period of HL by clerk off/ PDC from2 months

after final disbursement or completion of work which ever is earlier . Processing fee:

0.25% of the loan amt max Rs.10000

E) SBI- Home Line:-

Purpose:- General purpose loan against mortgage of immovable property.

Rationales:-

1. To reinforce the loyalty of existing Home loan borrowers.

2. To tap the potential for takeover of home loans.

3. To give a discernible boost to the off take of personal loans.

4. To improve net interest Margin (NIM)

F) SBI HOME CASH now renamed: SBI HOME PLUS

A vale added personal loan to our existing home loan customers on attractive & easy

terms especially in views of the comfort of security as house property.

Eligibility:-All HL customers with satisfactory repayment records of at least one year

and maintaining SB/CA with us. Loan amount :Minimum Rs.25000, maximum

Rs.10 lakh subject to present value of house property (-) 25% margin on property

value & (-) present outstanding in home loan a/c .The present market value of the

property to be decided by approved panel velour.

Purpose: - any purpose extension /repair of house, purpose of car / consumer

durables, education / medical expenses of family, personal expenses etc.


38/74



Repayment:- Not beyond the existing period of HL convenient to borrower ,starting

one month after disbursal. Prepayment: Penalty of 1% amount prepaid. No Penalty if

HL & TL prepaid simultaneously.

G) SBI YUVA HOME LOAN:-

PURPOSE:- Consequent upon nuclearization of families and young affluent

workforce intend to purchase properties at a young age , gap between the available

funds and property prices is wide , to bridge this gap it has been decided to launch this

product.

Eligibility:- Salaried employees of private sectors, MNCs, PSUs, Government

employees .Age- YUVA :> =21 years and


39/74



I) SBI Happy Home Loan:-

Rationale:- For stimulating growth in residential real estate and related sectors in the

economy, it has been decided to provide to the genuine needy buyers to buy dwelling

units by freezing interest at 8% p.a for a period of 1 year on all new Home loan.

Eligibility:- All Home Loan to public include take-over sanctioned on or after

02.02.2010 and at least partially disbursed on or before 30.09.2010 include SBI

special Home loan.

Interest Rate:- Freezed at 8% (fixed) up to 30.09.2010 after that interest will reset as

per regular contract rate.

Repayment:- EMI set at 8% in first 12 months ; EMI will be reset on outstanding

balance after 12 months .

Loan amount:- To be worked on regular contracted rate after 12 months.

J) SBI Lifestyle Loan:-

For existing HL Customers.

Rationale: - To meet any short-term expenditure, except speculative investment,

which adds comfort to the life style of the borrower (like vacation travel, purchase of

gold & lifestyle goods etc) with satisfactory repayment record?

Eligibility:- Satisfactory repayment of HL, minimum 5 EMIs repaid ,standard asset .

This loan may be availed by HL borrower or spouse guaranteed by HL Borrower.

Loan Amount:- 10% of HL, min Rs 10000 max Rs 5 lakh .

Interest: 8 %( fixed). Tenor: 24month Type: Demand Loan.

Repayment:- In 24 EMIs. Modality Offer letter to be sent to eligible HL Borrower.


40/74



5.2 Central Bank of India:-

A central bank is the term used to describe the authority responsible for policies that

affect a countrys supply of money and credit. More specifically, a central bank uses

its tools of monetary policyopen market operations, discount window lending,

changes in reserve requirementsto affect short-term interest rates and the monetary

base (currency held by the public plus bank reserves) and to achieve important policy

goals.

A. Home Loan Interest Rate:-

Central Bank of India home loan interest rates are one of the most competitive

rates that you will get in the market. The rates are subject to change as per the solediscretion of CBI. The tables given below will help you understand Central Bank of

India home loan better.

B. SCHEMES OF HOME LOAN:-

I) Direct Housing Finance Scheme (DHFS)

1 Purpose (a) For construction / acquiring of new or existing house/flat not olderthan 30 years.

(b) For extension in the existing house/flat.

(c) For repairs/renovation/alteration of existing house/flat.

(d) Finance (Maximum Rs.25.00 lakh) may be granted for purchase of

plot subject to condition that construction shall start within two years.

2 Eligibility a. Individual salaried employees, self-employed persons, professional,

any other person having a legal, identified and regular source of income.

Floating Rate option

Repayment PeriodUp to Rs. 30

Lacs

Above Rs. 30 Lacs andbelow Rs. 75 Lacs

75 Lacs andabove

Upto 5 years 10.75% 11% 11.25%

Over 5 years & up to 10

years 10.75% 11% 11.25%

Over 10 years & up to

15 yrs10.75% 11% 11.25%


41/74



b. The applicant/s must be 18 years old (completed) as on the date of

application.

c. In case of salaried individuals, applicants must submit original salarycertificate/Form 16/income tax return.

d.In case of self-employed person, professional, any other person :

i. Loan amount upto Rs.5.00 lakh: Satisfactory evidence of sufficient

monthly/annual income to be produced by the borrower.

ii.Loan amount above Rs.5.00 lakh: The borrower should produce Income

Tax Return for preceding two years as evidence of income.

3 Quantumof loan

90% (for loans upto Rs.25 lakh) and 75% (for loans above Rs.25.00

lakh) of the cost of construction / purchase of new / existing

flat/house or cost of extension of existing house/flat (including cost

of land, stamp duty, registration charges and cost of life insurance

cover on the life of borrower for entire tenure of housing loan if

taken by the borrower on single premium basis).

75% of the cost of repairs/renovations/alterations of existing

house/flat subject to a maximum of Rs.10.00 lakh.

75% of the cost of purchase of plot subject to a maximum of

Rs.25.00 lakh. Plot on standalone basis should not be

financed. Cost of the plot should not exceed 50% of the total cost

of housing unit.

4 Margin Loan up to Rs. 25 lakhs- 10%

Loan above Rs. 25 lakhs- 25%

5 Security Equitable/Registered mortgage of the property being financed.

Where mortgage of the property being financed is not possible, for

instance, in case of purchase of house/flat on first power of

attorney, other tangible securities such as mortgage of some other

property, pledge of bank's FDR/ LIC policy/Govt. Securities,

NSCs, KVPs, IVPs, Bonds, etc. equal to 125% of the loan amount

may be taken as security.


42/74



6 Guarantee Condition of Guarantee is waived for salaried individuals

irrespective of loan amount. In case of self-employed /others for

loans up to Rs.20.00 lakh, no guarantee is required. However, wife,

husband, father, mother, sister, brother may be taken as co-applicant instead of insisting for guarantor for loans above Rs.20.00

lakh to self-employed/others.

7 epayment a) For construction/acquiring of new or existing house/flat not older

than 10 years, maximum period of 25 years or on borrower reaching the

age of 70 years whichever is earlier.

b) For purchase of house/flats older than 10 years, maximum period of

20 years or on reaching the age of 65 years whichever is earlier.

c) In the case of new construction, installments will start after 18

months from the date of first disbursement or 6 months, after the date of

completion whichever is earlier. In other cases, installments will start from

second month of disbursement.

In case of extension of existing house / flat, repairs/ renovation / alteration

of existing house / flat repayment should be made within a maximum

period of 10 years. The installment will start from the second month of

disbursement.

8 ate of

Interest

Rate of Interest on Housing Loan is as under

(Festive Season offer till 31.03.2012):

Loan upto Rs.30

lakh

Above Rs.30

lakh

upto Rs.75 lakh

Loan above Rs. 75

lakhs

Tenure Floating Floating

Up to 5 years BR+0 =10.75% BR+0.25=11.00%

BR+0.75=11.50%

Over 5 yrs and

less than 10 yrs

BR+0 =10.75% BR+0.25=11.00

%

BR+0.75=11.50%

10 years and

above

BR+0.25=11.00

%

BR+0.75=11.50

%

BR+1.00=11.75%

9 ProcessingCharges

Complete waiver of processing charges during Festive Offer Season till

31.03.2012.

10 PrepaymentCharges

No prepayment charges in case of floating rate housing loans.In case of

fixed rate housing loans no prepayment charges in case borrower repays

entire loan amount out of his/her own sources and 1% of outstanding

amount if account is taken over by other Bank/FIs.


43/74



11 Take overof loan

Take over of loan from other Bank/FI is allowed on certain terms and

conditions

12 Net Take

Home Pay

For borrowers with annual income upto Rs.5.00 lakh, the Net Take Home

Pay/Income should not be less than 35% of Gross Monthly Salary/Incomeafter including the income of the co-borrower/s. This can be relaxed up to

30% for borrowers with annual income above Rs.5.00 lakh but upto

Rs.10.00 lakh and 25% for borrowers with annual income above Rs.10.00

lakh.

1 Purpose Refurbishment / renovation /furnishing of house or buying

furniture /LCD TV/ Home theatre etc.

2 Eligibility Existing Borrowers under Direct Housing Finance Scheme

having completed minimum 3 (three) years of repayment

schedule without any default.

In case Housing loan is in Joint Name, Both the Joint

borrowers should join as borrower for the loan or consent / no

objection for extending charge of house property created out

of Housing loan should be obtained.

3 Quantum ofLoan

Maximum of Rs.10.00 lakhs

4 Margin 25% on the Present Market value of the property for aggregate

loan up to Rs.30 lakhs including the proposed limit under this

scheme.

35% on the Present Market value of the property for aggregate

loan above Rs.30 lakhs including the proposed limit under this

scheme

5 Security Extension of mortgage on the House property for which

Housing Loan was sanctioned

6 Repayment The loan ha

Final Diss

Documents

Transcript of Final Diss