home loan

Master Cir_Home Loan 0

MASTER CIRCULAR

ON

ORIENTAL HOME LOAN

SCHEME

ORIENTAL BANK OF COMMERCE

RETAIL CREDIT DEPARTMENT

HEAD OFFICE-GURGAON

Master Cir_Home Loan

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INDEX OF HOUSING LOAN MASTER CIRCULAR

S.No. Subject Page No.

1 Oriental Home Loan 4

2 Eligible Persons 5

3 Margin 7

4 Maximum Eligible Loan Amount 8

5 Relaxation of Eligible Loan Amount 11

6 Assessment of Eligible Loan Amount 11

7 Disbursement 14

8 Security 15

9 Obtention of NEC From Advocate and Valuation Certificate of Property from Approved Valuers

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10 Central Registry 17

11 Rate of Interest 17

12 Concession in Rate of Interest 18

13 Pre-payment penalty-NIL 19

14 Interest Rate Switch-over Option 19

15 Pre-ponement of repayment in existing accounts and adjustment of interest rates

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16 Process Fee / Documentation Charges 21

17 Inspection Clause 21

18 Repayment of Loan 21

19 Terms of Payment of Loan 23

20 Moratorium Period 24

21 Construction Period 24

22 Insurance 25

23 Discretionary Powers 26

24 Deviation Manager 26

25 Loan for Additional Construction on the Existing House 26

26 Housing Loan linked to Various Government Sponsored Schemes 27

27 Second Home Loan 28

28 Take over of Home Loan accounts 28

29 Home Loan to Staff Members under General Public Scheme 29

30 Home Loan for Non-Resident Indians 29

31 Tie-up arrangement with Builders for Housing Loan finance 31

32 Cash down payment to builder/government authority 33

33 Classification of Home Loans Under Priority/ Non priority Sector 33

34 General Terms & Conditions of Home Loan Scheme 33

35 Precautions to be taken for prevention of Frauds in Home Loan Accounts

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36 Home Furnishing Loan Scheme 37

37 List of Documents to be obtained along with Loan Application 39

38 List of Documents to be obtained before disbursal of loan 43

39 Annexure 1 to 30 as mentioned in the Circular 50 onwards

Master Cir_Home Loan 2

ORIENTAL BANK OF COMMERCE HEAD OFFICE, GURGAON

HOME LOAN SCHEME

NOMENCLATURE Housing Finance Scheme shall be called ORIENTAL HOME LOAN SCHEME for all practical purposes including advertisement. SCHEME OBJECTIVE- GOVERNMENT/RBI/BANK The Government of India vide various National Policy Pronouncements have reinforced the primacy of the Housing sector and emphasized the need to provide shelter opportunities to all. In pursuance of National Housing Policy of Central Government, RBI has been facilitating the flow of credit to housing sector. During recent years the housing has emerged as one of the sectors attracting a large quantum of Bank finance. Therefore, the current focus of RBI regulation is to ensure orderly growth of housing loan portfolio of the Banks with minimum risk. PURPOSE The Bank offers financial assistance for/to:

1. Purchase of land and construction of a house thereon.

2. Construction of house, where in the plot/land already owned by the applicant.

3. To buy built up (new or second hand) / semi built up house or flat.

4. To Extend/improve/repair, the existing house or flat.

5. To buy a flat under construction or proposed to be constructed

6. For Home furnishing, furniture / fixtures embedded to structure or otherwise.

7. To take over of housing loan from other Banks/other financial institutes.

A) Home Loan for construction of house (other than Rural areas) Home Loan for construction of house shall be allowed only after ensuring bonafide land/plot holding by the applicant and obtention of sanctioned plan by the competent authority. The borrower shall construct the house upto a maximum period of 24 months*, strictly as per sanctioned plan and shall submit the completion certificate of house within 3 months of completion of construction. A registered architect preferably from Banks panel must also certify at various stages of construction of building/home, that the construction of the building/home is strictly as per approved plan. * The General Manager (Regional Head) & General Manager (Retail) shall be empowered to extend construction period upto 36 months on merit of the case.


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B) Specific provision of loan for House construction in rural area. Generally, in rural /village areas, there is no authority for approving the building plan/map and the documents of title of the land/house are also not available, in such cases the prospective borrower should be asked to get the construction map prepared by architect confirming compliance of Government rulings. Permission from the village panchayat for the construction as per building plan/map shall be obtained along with their certification that there is no map approving authority existing for approving such map for the particular rural areas and the said plot on which construction will be made is located in notified Abadi Area of the village. However, a due diligence in all such cases be exercised by sanctioning authority. C) Home Loan for purchase of built up house / flat

Home loan shall be allowed for purchase of flat / house after obtaining certified copy of approved construction plan/map or an affidavit-cum-undertaking that the house / flat has been constructed as per sanctioned plan and / or building byelaws and as far as possible has a completion certificate. A registered Architect appointed by the bank must also certify before disbursement of loan that the built up property is strictly as per sanctioned plan and / or building byelaws. No loan shall be granted for properties, which fall in the category of unauthorized colonies unless and until they have been regularized, and development and other charges are paid. No loan shall be given in respect of properties meant for residential use but which the applicant intends to use for commercial purposes. Loan to professionals like Doctors, CAs for the purpose of purchase /construction of non-residential premises like nursing home/office unit be delinked from housing loan facility.

ELIGIBLE PERSON(S) Individuals or group of specified individuals (co-borrowers) including HUF having an assured source of regular income viz. salaried / self-employed persons, professionals, businessmen, farmers etc. Further, 1) The staff members of the Bank are also eligible under general public home loan

scheme. 2) The NRI may also avail a housing loan in India subject to compliance of specific

terms at par with those applicable to a person resident in India. RBI SPECIFIC GUIDELINES The following types of Bank finance maybe included under direct housing finance:

1) Bank Finance extending to a person who is also owning a house in town/village where he resides, for buying/ constructing a second house in the same or other town / villages for the purpose of self occupation.

2) Bank finance extended for purchase of a house by a borrower who proposes to let it out on rental basis on account of his posting outside the headquarters or because he has been provided accommodation by his employer.


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However if the applicant intends to have more than two houses, the exposure for third unit house onward may be treated as CRE exposure and falls under the definition of income producing real estate as the borrower may be renting these units and the rental income would be the primary source of repayment. Further, no loan should also be given in respect of the properties meant for residential use, which the applicant, intends to use for commercial purposes, and declares the same while applying for loan. LOAN TO VALUE RATIO As per RBI guidelines, the LTV ratio in respect of housing loans should not exceed 80%. However, for small value housing loans i.e. for loans below Rs. 20.00 Lacs (which are classified as priority sector advances) the LTV ratio should not exceed 90%. All RBI guidelines/directives issued on home loan from time to time shall be treated an integral part of the home loan scheme of the Bank. KYC /CIBIL / RATING The compliance of KYC norms, extraction of CIBIL Reports, Central Registry Search

report and rating of the account are integral part of the Home Loan Scheme for

respective borrowers. As per Loan Policy, these tools are applicable in Home Loan

A/cs and utilized to alleviate various risks and to exercise prudent decision on the loan

proposals. It is relevant that if a customer secures Credit Rating upto financing level,

his/her application will be considered eligible for further processing.

AGE CRITERIA

Minimum age: 18 years as on the date of application

Maximum age:

For Service class: Up to 60 years of age or date of superannuation, whichever is

earlier, however in case of availability of joint / co borrower and one borrower is

having comparatively younger age in consonance with repayment period, then it

can be considered upto 65 years of age for elder borrower & 60 years of age of the

younger borrower.

For Non-Service class: Upto 60 years of age, however in case of loan considered

in favour of joint/ co borrower and one borrower is having comparatively younger

age in consonance with repayment period, then it can be considered up to 65

years of age for elder borrower & 60 years of age of the younger borrower.

The above Maximum age limit of borrower/ co borrowers is permissible subject to the

age by which the loan should be fully repaid, availability of sufficient, regular and

continuous source of income for servicing the loan repayment to the satisfaction of Loan

sanctioning authority.


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FINANCING BRANCH

Normally the financing branch shall be:

a) The branch located at the place of residence / posting of the applicant/ borrower. OR

b) By the branch located at the place of property / nearest to the property proposed to be purchased / constructed is situated.

However, registered / equitable mortgage shall be created at nearby Branch or financing Branch situated in notified area of the particular state where the property is situated.

COMPONENTS OF FINANCE

a) Purchase price of plot/house.

b) Construction cost of the house.

c) Financing of conversion charges payable to Government Authority only for

conversion of the house/flat / plot from leasehold to freehold.

d) For furnishing, repair, renovation & additional construction (Please refer separate

para enunciating terms of finance under Home furnishing Loan)

e) Premium of Group Mortgage redemption Assurance scheme- Canara-HSBC with

OBC insurance company (JV), if opted by borrower. However the premium

amount shall not be taken into account for arriving at LTV ratio on Home loan i.e.

the margin shall be maintained excluding the insurance premium cost.

(We further clarified that Premium of GLPP for covering Housing loan beneficiary can be

financed by the Bank within the overall ceiling (i.e. total financing including GLPP

premium does not exceed 85% for Loans up to Rs. 20.00 Lacs and 75% for loans above

Rs. 20.00 Lacs)).

Note: Purchase of plot only or in isolation is not permissible.

MARGIN

i) Borrower shall contribute his margin upfront. However, the sanctioning authority may consider acceptance of proportionate margin with the release of loan instalments on merits of the proposals.

ii) While taking over Home loan accounts from other financial institutions, it must be ensured that the amount taken over fulfills the criteria of our stipulated margin irrespective of the margin imposed / not imposed by other financing institutions.

iii) Loan amount for purchase of residential plot shall not exceed 50% of the eligible loan amount.

iv) Since loan to value ratio, which is stipulated by RBI, is mandatory to comply and determines the provision percentage under risk weight assets, as such field functionaries meticulously comply the obtention of requisite margin.

v) In case the charge on house is proposed to be extended in other loan accounts as collateral security, in such circumstances the margin will be maintained at 30% irrespective of loan limit.

Loan Limit Margin

Loans Upto Rs.20.00 lac 15%

Loans Above Rs.20.00 lac 25%


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MAXIMUM ELIGIBLE LOAN AMOUNT

There is no ceiling on the amount of loan. However, Maximum loan amount permissible under the scheme shall be:

1) On Margin criteria:

a) 85% of the total cost of construction / purchase price excluding stamp duty and registration charges, for loans upto Rs.20.00 lac.

b) 75% of the total cost of construction / purchase price excluding stamp duty and registration charges, for loans above Rs.20.00 lac.

2) Gross Monthly Income Criteria:

a) For salaried class - Loan shall be equivalent to 60 months Gross salary

b) Person other than salaried class- Loan shall be equivalent to 40 months* Gross salary.

* The Regional Heads on merit of the proposal are empowered to allow the loan upto 60 month gross income / salary after considering their financials, repaying capacity, risk profile of borrower and ensuring safety security of Banks fund.

3) Net Take Home Income Criteria:

The salaried person & Non salaried person falling under below mentioned slab of Gross Annual Income shall have to maintain minimum net take home income (Gross Annual Income minus all existing deductions, income tax deduction & deduction of proposed loan instalment)

Note: The maximum permissible loan amount shall be the amount out of above three alternatives, whichever is less.

THE INCOME 1. For salaried persons:

Gross income shall include salary and other regular income i.e., dividends, interests, rent, etc., as declared in salary certificate, form 16 and/or income tax returns / assessment. Since the salaried income are having increasing trends in future, as such on merits the latest income may be considered for computation of MPBF. However, in case of wide fluctuation in the annual salary income of the past the average of income may be taken into consideration. Net Income = Gross Income All deductions including instalment of proposed loan and income tax.

Gross Annual Income Net Take Home

Upto Rs.10 Lacs 40%

Above Rs.10 Lacs to Rs. 15 lacs 30%

Above Rs.15 Lacs to Rs. 25 lacs 25%

Above Rs.25 lacs 20%


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2. For Non salaried person : where income tax return are being filed

Gross income consists of income as declared in the income tax returns/assessments and/or supported with financial statements and/or certificate from a qualified CA. wherever required a copy of tax paid challan / receipt shall also be obtained to support the income of the person. Net Income = Gross Income All deductions including instalment of proposed loan and income tax.

3. For Non salaried (Self-employed/Small Business/Traders) where income tax returns are not filed:

Subject to complete satisfaction of the sanctioning authority as regard to the earning/income vis--vis repayment capacity of the borrower in this category by subjective/objective means available at his command. Housing Loan, to this category of borrower with a maximum limit of Rs. 2 lacs is permitted. In such cases, branches may accept income as declared by prospective borrower in a duly notarized affidavit as the gross income.

4. For farmers/rural artisans:

In rural and semi-urban areas where income of the applicant cannot be ascertained on the basis of documents, it may be worked out as follows:

a. Income from Agriculture: The following income per acre of land per annum may be taken as base for ascertaining the total amount of income. However, these rates are notional which may be updated with available authenticated income per acre of land provided by NABARD or approved rate of DLCC.

Further, the income from other horticulture/medicinal crops may be considered in all areas, wherever such crops are grown. In case of sugarcane income shall be worked out on the basis of average yield per acre and minimum/special support price (MSP/SAP) declared by the concerned State Government.

These rates may vary from place to place. The loan sanctioning authority should be satisfied with the monthly income and repaying capacity of the individual farmers.

Type of land/Crop Income per acre per annum

For irrigated land Rs.20000/- to Rs.25000/-

For un-irrigated land Rs.5000/- to Rs.7500/-

For Horticultural crops Grapes Rs 95000/- Litchi Rs 29000/-

Coconut Rs 27000/-

Citrus Rs 32000/-

Tea Rs 46000/-

For Medicinal crops - Mulethi Rs 84000/-

Mentha Rs 69000/-


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b. Income from Allied activities : _______________________

c. Income from Services/Business : _______________________

d. Income from other sources (Salary & wages): _______________________

Total Income : _______________________

Detail of Deductions :

1. On account of Crop Loan : __________________

2. On account of Tractors/ Tube-well/Thresher loan etc. : __________________

3. On account of any other loan : __________________

Net Income or Surplus = Gross Income All Deductions including instalment of proposed loan.

5. For HUF

Home Loan to HUF concerns may be considered on selective basis, provided the income of HUF only is reckoned for the purpose of arriving at eligible loan amount. In individual case, income of HUF shall not be added to arrive at eligible loan amount. However, in view of privileges available to MINOR and to safe guard Banks interest requisite undertaking from all coparcener of HUF/family shall be obtained in consultation with Banks panel Advocate.

6. Loan to Pensioners

Loans to pensioners can be considered up to 40 times of the pension/income. Pension amount upto 65 years of age shall be taken into account for calculation of eligible amount and repayment period. Repayment period shall not exceed 10 years and loan must be completely liquidated within 65 years of age of pensioner. However, where co-borrower is taken, maximum repayment period can be extended up to 25 years provided the loan is repaid within 65 years of age of the elder borrower (pensioner) & 60 years of age of the younger borrower having capacity to service the loan.

NOTE:

1. IT IS REITERATED THAT THE ACCEPTANCE OF GROSS INCOME IN THE ABOVE MANNER SHOULD BE TO THE ENTIRE SATISFACTION OF THE SANCTIONING AUTHORITY, TO ENSURE CONTINUANCE OF ADEQUATE FUTURE INCOME FOR REPAYMENT OF LOAN INSTALMENT.

2. HOWEVER, FUTURE RENT FROM THE PROPOSED PROPERTY (THE HOUSE THAT IS GOING TO BE FINANCED) SHALL NOT BE INCLUDED FOR CALCULATION OF LOAN ELIGIBILITY AS PER INCOME CRITERIA IN ALL OF THE ABOVE CASES.

3. IN PROCESS NOTE INVARIABLY THE COMPUTATION OF ELIGIBLE LOAN AMOUNT BE GIVEN ON TABULATED SHEET.


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RELAXATION IN ELIGIBLE LOAN AMOUNT

1) Loan upto 60 times of Gross Monthly Income in case of Doctors, who enjoy good

reputation and have repayment capacity, can be considered at Branch level after

ensuring safety/security of banks fund and risk profile of the borrowers.

2) In case of select business class of High Net Worth Individuals, who enjoys good

reputation and have repaying capacity, loan upto 60 times of Gross Monthly

Income can be considered by the Regional Head on case-to-case basis after

ensuring safety/security of banks funds and accessing the risk profile of

borrowers.

3) In case of Individual/co-borrower the income of spouse, son/sons and

daughters-in-law may also be considered for arriving at the maximum amount of

the loan provided they have a steady income. Further, the income of parents (up

to 65 years of age) residing with their only son who intend to borrow home loan,

can be considered for assessing the maximum loan amount of the son. However,

the particular person whose income has been added to arrive at maximum loan

amount will stand either as co borrower or guarantor of the loan account.

Further, the criteria of minimum take home income shall be applicable to all

the borrowers/ co borrowers/ guarantors individually.

4) The income of the joint owner of the property irrespective of relationship

with the borrower may be considered for computation for maximum

permissible Housing Loan. Note that the joint owners shall essentially be

the co-borrowers. Accordingly, in such circumstances the spouse, son &

daughter in laws income is also permitted to include while computing maximum

eligible loan amount.

5) Depreciation if any, claimed in the income tax return may be considered as a part

of gross income for computation of eligible loan amount. Existing rental income

as per income tax return may be taken into consideration. However, if the

applicant intends to let out the proposed property to be purchased and requests

for inclusion of expected rental income in the gross income of the party, the same

shall not be eligible for home loan, as the same be treated as income producing

real estate.

EXAMPLE FOR CALCULATING MAXIMUM PERMISSIBLE BANK FINANCE (MPBF):-

Illustration-1

Mrs. X, aged 58 years having no source of income intends to avail housing loan payable in 25 years along with her son, Mr. Y, 25 years of age, working with a public sector company of Rs. 65.00 Lacs on gross monthly emoluments of Rs. 90000/- and deductions of Rs. 20000/-. Her husband, Mr. Z, 60 years, stands as a co-borrower having gross annual income of Rs. 4.80 Lacs from his business and having monthly deductions like income tax and others of Rs. 8000/-.


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She also wanted to add the income of her daughter-in-law, Mrs. A, 23 years, who is working with a private company having gross monthly income of Rs. 25000/- and deductions of Rs. 1000/-. The proposed cost of flat is Rs. 90.00 Lacs.

It shall be presumed as if all the four borrowers have approached for housing loan independently and their housing loan requirement shall be assessed independently:-

1) On Margin criteria (Amt. In Lacs)

Total Cost of the Flat/House Rs. 90.00

Margin (25% as the loan is above Rs. 20.00 Lacs) Rs. 22.50

MPBF Rs. 67.50

2) Gross Monthly Income Critieria: (Amt. in Rs.)

Name of the Borrower Gross Monthly salary MPBF (in individual capacity)

I (Mrs. X) 0 0

II (Mr. Y) 90000 90000*60=54,00,000

III (Mr. Z) 40000 (480000/12) 40000*40=16,00,000

IV (Mrs. A) 25000 25000*60=15,00,000

Collectively - Eligibility of X+Y+Z+A 8500000

3) Net Take Home Criteria (Amt. in Rs.)

S.No. Particulars Mrs. X Mr. Y Mr. Z Mrs. A

a. Age Profile 58 25 60 23

b. Repayment Years 7 25 5 25

c. Gross Annual Income 0 10,80,000 4,80,000 3,00,000

d. Gross Monthly Income 0 90,000 40,000 25,000

e. Monthly Net take Home(%age) 0 30% 40% 40%

f. Monthly Net take Home (Amt.) 0 27,000 16,000 10,000

g. Funds available before deductions (d-f)

0 63,000 24,000 15,000

h. Monthly Deductions (Without proposed Loan EMI)

0 20,000 8,000 1,000

i. Fund Available for EMI (g-h) 0 43,000 16,000 14,000

j. EMI per Lac 0 998 2187 998

MPBF [(i *1,00,000)/j] 0 43,08,617 7,31,596 14,02,806

Collectively- Eligibility= 0 + 43,08,617/- + 7,31,596/- + 14,02,806/- = 64,43,019/-

MBPF, on the basis of whichever is less criteria, of all above 3 methods, shall be Rs. 64.43 Lacs. The example and EMI are illustrative only. The actual EMI per lac shall be computed on prevailing ROI on proposed loan and available repayment period of respective borrowers.


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Illustration-2

Mrs. X, aged 62 years having annual income of Rs.4.80 Lacs and monthly deduction of Rs.3000/- intends to avail housing loan payable in 25 years along with her son, Mr. Y, 42 years, having average gross annual business income of Rs.60.00 Lacs and monthly deduction of Rs.1,50,000/-. Her husband, Mr. Z, 63 years, stands as a co-borrower with average gross annual income of Rs.24.00 lac from his business and have statutory obligations like income tax and other deductions of Rs. 50,000/- per annum. She also wanted to add the income of her daughter-in-law, Mrs. A, 23 years, who is working in a private company having on monthly income of Rs. 1.00 Lacs and statutory obligation of Rs.20,000/- .

It shall be presumed as if all the four borrowers have approached for housing loan independently and their housing loan requirement shall be assessed independently:-

1) On Margin criteria (Amt. in Lacs)

Total Cost of the Flat/House Rs. 500.00

Margin (25% as the loan is above Rs. 20.00 Lacs) Rs. 125.00

MPBF Rs. 375.00

2) Gross Monthly Income Criteria: (Amt. in Rs.)

Name of the Borrower Gross Monthly salary MPBF (in individual capacity)

I (Mrs. X) 40,000 40,000*40 = 16,00,000

II (Mr. Y) 5,00,000 5,00,000*40 = 2,00,00,000

III (Mr. Z) 2,00,000 2,00,000*40 = 80,00,000

IV (Mrs. A) 1,00,000 1,00,000*60 = 60,00,000

Collectively - Eligibility of X+Y+Z+A 3,56,00,000

3) Net Take Home Criteria (Amt. in Rs.)

S.No Particulars Mrs. X Mr. Y Mr. Z Mrs. A

a. Age Profile 62 42 63 35

b. Repayment Years 3 23 2 25

c. Gross Annual Income 4,80,000 60,00,000 24,00,000 12,00,000

d. Gross Monthly Income 40,000 5,00,000 2,00,000 1,00,000

e. Monthly Net take Home(%age) 40% 20% 25% 30%

f. Monthly Net take Home (Amt.) 16,000 1,00,000 50,000 30,000

g. Funds available before deductions (d-f)

24,000 4,00,000 1,50,000 70,000

h. Monthly Deductions (Without proposed Loan EMI)

3,000 1,50,000 50,000 20,000

i. Fund Available for EMI (g-h) 21,000 2,50,000 1,00,000 50,000

j. EMI per Lac 3298 1033 4684 1016

MPBF [(i *1,00,000)/j] 6,36,750 242,01,355 21,34,927 49,21,260

Collectively- Eligibility (in Lacs) = 6.37 + 242.01 + 21.35 + 49.21 = Rs. 318.94

MBPF, on the basis of whichever is less criteria, of all above 3 methods, shall be Rs. 318.94 Lacs.

The example and EMI are illustrative only. The actual EMI per lac shall be computed on prevailing ROI on proposed loan and available repayment period of respective borrowers.


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Note:- The above examples are illustrative. If loan is considered in favour of single individual, then the repayment period and installment shall be govern according to his/her individual eligibility. However, in case loan is given jointly in favour of more than 1 borrower having different repayment period, then the installment shall be calculated on the basis of their individual repaying capacity & subsequently clubbed to form a single installment. Initially this clubbed installment shall be of higher amount and subsequently it may be of lower amount. (Please refer step down option given in point no.-IX & X under repayment of loan section)

DISBURSEMENT-

a) Release of instalment in case of purchase of ready built house.

Payment be made in lump sum directly to the seller in consultation with borrower.

In case loan for insurance premium is considered the same may be released in favour of the insurance company after ensuring compliance of margin/loan to value ratio.

In case the house proposed to be purchased is under construction stage and builder / Government agency issues a demand letter of payment, under such circumstances the loan shall be released in accordance to the terms of said demand letter or schedule of construction limited payment.

b) Release of instalment in case of construction of house /floor The Loan for construction of house will be disbursed in stages in accordance with a phased programme according to sanctioned plan as under:

25% when the relative plan is sanctioned

25% for construction upto the plinth level against production of certificate from

architect certifying the amount spent on construction. The architect shall also

certify that construction has been done strictly as per sanctioned plan.

25% for construction upto the ceiling level against production of certificate from

the architect certifying the amount spent on construction. The architect shall also

certify that construction has been done strictly as per sanctioned plan.

Balance on completion of roof against production of certificate from architect.

The loan for petty expenses of construction can be released to the account of borrower directly so as to facilitate him to effect petty payments. However, the Branch Incumbent shall ensure that borrower does not misutilize funds and all other necessary precautions such as site visit, Architect Certificate before release of loan and other terms and conditions of Housing Loan Scheme are meticulously complied with.


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INTRODUCTION OF REIMBURSEMENT OF ADVANCE AMOUNT ALREADY PAID BY THE BORROWERS:

In case of flats allotted by Govt. agencies like DDA, HUDA, PUDA, NOIDA etc. the applicants are required to deposit the entire/ part amount within a limited period for registration of flats in their names. Sometimes it is not possible for them to raise home loans despite their best efforts, within the specified time. In such cases, the applicants are left with no option but to arrange funds from other sources including friends and relatives. With a view to enable such applicants to avail Housing Loan it has been decided to allow reimbursement of the advance amount already paid by them subject to compliance of following terms and conditions:

(i) In such cases, where part/advance payments have been effected, the amount

deposited with the Government Agency may be treated as margin money and the

Bank may reimburse the amount in excess of margin.

(ii) The reimbursement shall be restricted only in those cases, where flats are allotted

by Government agencies and not in case of private builders.

(iii) The borrowers should be able to provide clear documentary evidence of having

paid the amount in advance from sources, which should be clearly identifiable.

(iv) The funds raised should not be older than six months.

SECURITY The loan shall be secured by Registered / Equitable Mortgage of the property (House/Flat) created out of bank finance. However, where Registered / Equitable Mortgage cannot be created immediately-

a) The borrower may give an alternate property/ tangible securities of having a value

which is more than loan limit with clear titles for interim period.

b) In case the borrower is in no position to offer any alternate security and it is expected

that the title deed/security document for creation of mortgage will be available in one

or two weeks time from registrar office then on merit of the case the sanctioning

authority in such situations may permit obtention of a letter of authority (special

power of attorney) from the borrower authorizing the bank to collect the title-deeds

from the office of the sub-registrar as and when the same is ready for delivery. The

receipt/ counter foil issued by the sub registrar office shall invariably be obtained

along with such authorization. The loan disbursing Branch shall maintain a track

record of such authorization and ensure to collect the title deeds from the sub

registrar office on prescribed future date.

However, all relevant loaning documents for creation of registered / equitable

mortgage shall be obtained at the time of release of loan.

c) In case of purchase of flat etc. under construction stage, from co-operative society/

builder/developer or from public sector/ Govt. agencies like DDA, NOIDA, HUDA,

PUDA etc. where the borrower is having only share certificate/allotment

letter/agreement to sell etc. (as the case may be) as document to sanctify the

transfer of property.


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In such cases loan can be secured by obtaining undertaking, as per Annexure-14

and security documents like tripartite agreement Annexure-17&18, power of attorney

as per Annexure-6, letters from the borrower in order to reinforce the right of the

bank to recover its dues as a stopgap arrangement. These provisions are

comparatively for shorter duration.

All above option be exercised in consultation with Banks panel advocate. Further, to obviate any contingent situation and eventualities which may arise in various parts of the country because of local practices/law and also to make system fool proof, Regional Heads/branches shall obtain the opinion of their legal retainers to suggest additional document if any, to supplement the above documents. Since the registered mortgage of immovable property is better option for creation of Banks charge, as such, the preference shall be given for registered mortgage over the equitable mortgage if the same is not creating operational difficulties as well as not attracting excess stamp duty as compared to duty on equitable mortgage. Further, in certain States the Government has made provision for registering equitable mortgage charges with nominal fee, in the books of Registrar. The Branches shall avail the benefit of such provision in consultation with Penal Advocate. OBTENTION OF NEC FROM ADVOCATES AND VALUATION CERTIFICATE OF PROPERTY FROM APPROVED VALUERS As per system in vogue, the branches are required to obtain NEC, Legal Opinion, Legal Vetting and Valuation Certificate (of plot/built up house/flat). Accordingly, the job of obtaining NEC and valuation certificate of the property shall be assigned to Advocates / Valuers on the panel of the Bank only. While perusing the legal opinion, the field functionaries must ensure that the seller has bonafide title to sell the property and the prospective buyer derives better/valid title, besides other compliance. Branches should ensure that advocate on panel of the Bank submits his opinion as per the standard format of Model Legal Opinion circulated vide Head Office Circular No. HO/RMD/10/2011-12/73 dated 09.05.2011 format enclosed as per Annexure-27. The instructions communicated by circular number HO/MKTG./RT/39/2011-12/596 dated 24.11.2011 & HO/RMD/51/2011-12/626 dated 05.12.2011 on obtention of valuation certificate shall be perused and comply. EXTENSION OF CHARGE ON HOUSE PROPERTY TO OTHER CREDIT FACILITIES: Sanctioning authority may allow extension of charge of the house property to cover other credit facilities of the borrower subject to the condition that the banks total exposure towards the borrower(s) housing loan is adequately covered with 30% margin as per banks norms. It should invariably be ensured that the terms and condition of credit policy and housing scheme of the Bank are complied with.


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CONSIDERATION OF HOUSING LOAN ON A HOUSING PROPERTY HELD AS COLLATERAL SECURITY IN THE BUSINESS ACCOUNT

Regional Head may consider/sanction housing loan on properties already mortgaged with the bank in business account within their existing discretionary powers on housing loan. However, it shall be ensured that:

i) Business account has been running satisfactorily during the last one year and is

a standard asset.

ii) Sufficient collateral security is available to cover over-all exposure in the

business as well as in housing loan account in terms of the credit policy of the

bank issued from time to time.

iii) However, in all circumstances the housing loan account shall remain 143%

backed by value of acquisition cost of the house / flat and residual value will be

available for collateral security in other loan accounts.

iv) The Branch incumbents are not authorized to consider such specific proposals

even though the proposal falls with their discretionary powers.

Minimum margin/contribution of the borrower in such cases shall be 30% instead of existing 15% and 25% as the case may be.

CENTRAL REGISTRY

Banks charge of mortgage shall be noted in the Central Registry System within 30 days of creation of such charge. The increase in limits or modification of charge shall also be got registered within 30 days. The procedural aspects communicated vide HO. Circular No. HO/RMD/ 25 /2011-12 dated 17.06. 2011 shall be meticulously complied with by all field functionaries.

RATE OF INTEREST

a) Table of present interest rate:

S.No Particulars Up to 5 years

1 Loans up to Rs. 30.00 lac BR + 0.25%

2 Above Rs. 30 lacs and up to Rs. 75 lacs BR + 0.50%

3 Above Rs. 75 lac and up to Rs. 3 crores BR + 0.75%

4. Loan above Rs. 3 crores. Rate of interest shall be decided by the sanctioning Authority at Head Office, subject to minimum of Base Rate.


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b) Concession in Rate of Interest

The Regional Head is empowered to permit concession of 0.25% in rate of interest over & above the normal rate of interest to the followings:

1. To captive/loyal customers who are having annual average balance in their saving account Rs. 1.00 Lacs or in current account Rs.5.00 Lacs and above. As well as to Directors, Partners or Proprietor of all Cash Credit account holders having Credit Rating upto 4 for last 24 months.

2. To the existing standard Home Loan Borrowers having regular repayment (minimum 24 months).

3. In case party is offering collateral security in shape of term deposit upto 75% of loan amount.

4. In case of loan proposal received from group of employees(minimum 5) where the employer undertake to deduct and remit loan instalment to the Bank

Note:

i) The above concessions will not be merged with any existing customized scheme.

ii) In any case after allowing concession in interest rate the effective rate shall not

fall below the Base Rate.

iii) The Branch Incumbents, after considering the housing loan on normal rates may

recommend to their Regional Offices for grant of such concessions.

These rates of interest shall be applicable only on fresh Home loans.

c) Calculation of interest:-

1. Interest on the amount of the loan will be applied at the prevailing rate per annum on daily reducing balance with monthly rests.

2. In case any fresh additional/supplementary loan (excluding the home furnishing loan) is considered in favour of existing borrower and during the currency of existing loan, the rate of interest in such accounts shall be determined as per the slab falling in respective categories after clubbing the outstanding of existing accounts plus proposed loan limit. If the derived Rate of Interest is higher, then the existing rate, the new rate will be applicable on both the accounts or if the new rate is lesser than the existing rate, then two different rate on existing account (prevailing rate) and new account (fresh rate) shall be applicable.

3. The rate of interest shall be on floating rate basis as well as on monthly rest.

4. Interest during moratorium period shall be paid as & when it becomes due. In case borrower exercises the option of not paying interest during moratorium period, interest component charged in the account for the moratorium period will be added to the loan amount and would be spread over EMIs for the entire repayment period.

5. Rate of interest is subject to change as per RBI/Banks guidelines circulated from time to time.

6. With a view to facilitate the branches calculation of equated monthly instalments instantaneously, a comprehensive chart showing EMIs on applicable interest rates for loan of Rs 100000/- is enclosed as per Annexure-1.


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d) Intimation of change in Interest Rate:-

The borrower shall be deemed to have notice of changes in the rate of interest whenever there are changes in Base Rate either increase or decrease. By display of Base Rate on the website of Bank/Notice Board of the Branch or published in news papers or made through entries of the interest rate charged in the passbook/statement of account furnished to the borrower and the borrower is liable to pay such revised rate of interest. A condition clause to this effect be also incorporated in sanction letter (Annexure-31). However, the field functionaries shall also comply the instructions in this regard as are mentioned in particular circular communicating changes in Base Rate.

e) Penal Interest

i) The application of penal interest clause shall be governed in accordance to Banks loan policy. Presently the penal interest shall be charged at the rate of 2% over and above the normal rate of interest on irregular amount of loan and for the period of irregularity.

ii) In case construction of the house is not completed within 24 months* from the

date of possession of the plot/land or the plot/land is alienated, commercial rate of interest shall be charged from the date of disbursement of the loan and loan shall be recalled as per the normal procedure of the bank.

* The General Manager (Regional Head) & General Manager (Retail) shall be empowered to extend construction period upto 36 months on merit of the case f) Pre-payment penalty

NIL - The prepayment penalty clause is completely waived. None of the occasion the pre payment penalty will be applied in the account, even the borrower opts to switch his home loan account to other bank/financial institution.

INTEREST SWITCH OVER OPTION

The interest switch over option shall be available to existing borrowers on any

occasion, when they feel the current prevailing card rates of Home loan interest is in

their favour as compared to interest actually applied in their account. They may

exercise the interest switch over option subject to paying onetime fee as under:

S.No. Loan limit Switch over option fee(payable one time)

a) Upto Rs.25.00 Lacs 0.50% of outstanding as on the date of switch over

b) Above Rs.25.00 Lacs 0.75% of outstanding as on the date of switch over


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Note: 1. The fee shall be governed in accordance to sanctioned limit and not on the basis

of outstanding in particular account.

2. This option shall be available only once during the currency of the loan.

3. The respective sanctioning authority of the loan may permit the switchover

option.

4. The facility will be extended only in standard regular accounts.

5. The fee recovered shall be credited to Commission Received Miscellaneous.

6. While considering switchover option the terms of original sanction shall not be

changed i.e. the repayment period, interest rate slab/ group etc. and accordingly

the new rate of interest shall be determined.

Further, there would be some borrowers (normally high value/ important

customers), who could still plead for a complete waiver of such charges. In such

cases the following authority can permit deviation in accordance to discretion

given below:

Authority Deviation

ED & CMD Authorized to permit 100% waiver in switch over fee.

GM(Retail) Authorized to permit 50% waiver in switch over fee.

Regional Head (GM/DGM/AGM)

Authorized to permit 25% waiver in switch over fee

The field functionaries are advised to note the above new provision in the scheme and not only check any takeover of Home loan from our Bank but by extending above benefits to valued customer explore the possibility of fetching more business from them.

PREPONEMENT OF REPAYMENT IN EXISTING ACCOUNTS AND ADJUSTMENT OF INTEREST RATES The sanctioning authority is permitted to consider reschedulement of repayment period taking the 1st date of disbursement as the base and to arrive at applicable interest rate as available in a particular time-segment. However, the newly determined interest rate shall be applicable only from prospective effect i.e. for the remaining period of loan as proposed by the borrower(s) after considering the satisfactory conduct of the account in past and future source of payment. However, this option can be exercised only once during the currency of the loan by the borrower. It must be ensured that after exercising this option, if any borrower(s) proposes to shift/transfer his loan account at any stage to some other bank/financial institution, the benefits so availed by him in the process shall be withdrawn and interest-differential shall be recovered. In the event of borrower(s) failing to repay the loan as per the new schedule, penalty of 2% shall be charged for the period of default on overdue amount.


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An undertaking, as per the format (Annexure-9) shall be obtained from the borrower(s) and shall be retained with the loaning documents. Intimation shall be sent to the borrower(s) as per Annexure-10 and duly acknowledged copy of the same shall be kept along with the loaning documents.

PROCESS FEE/ DOCUMENTATION CHARGES*

Loan limit Process fee / Documentation Charges

Irrespective of any limit

Process fee - 0.50% of the loan amount, subject to maximum of Rs. 20000/- plus service tax, if any

Documentation charges -NIL

* Does not include advocate charges, valuer fee and insurance charges which shall be borne by the applicant on actual basis.

* The process fee shall be recovered as per banks existing guidelines on the basis of above rates.

* The process fee shall not be recovered from staff/ex-staff members if they avail home loan under general public scheme.

INSPECTION CHARGES - Nil

BOUNCED CHEQUE/ECS OR STANDING INSTRUCTION DISHONOURS:-

A penalty of Rs 250/- + service tax will be charged for every bounced cheque/ECS or SI dishonors. The rate may vary from time to time.

INSPECTION CLAUSE

The property financed under Home Loan shall be inspected at yearly interval or at irregular interval in case of need after giving due notice to the borrower. This inspection is besides pre and post sanction visit.

It is also relevant that in case of salaried employee, details of employee from employers be obtained including employers ID/PF number, permanent address, date of joining, retirement etc. besides other details. Further, now a days particularly in multinational companies, the employees are switching over from one company to another or the nature of their employment is on contractual basis for a particular period. In such type of employment due care be taken by the sanctioning authority to ensure continuity of adequate income of the borrower for serving the loan instalment / interest.

Time to time circular/guidelines issued in this regard shall also be complied.

REPAYMENT OF LOAN

i. The entire loan shall be repaid in maximum of 300 months preferably in

equated monthly instalments including the moratorium period subject to the age

criteria of the borrowers.

ii. For Service class: Up to 60 years of age or date of superannuation, whichever

is earlier. However in case of availability of joint / co borrower and one borrower

is having comparatively younger age in consonance with repayment period, then

it can be considered upto 65 years of age of elder borrower & 60 years of age of

the younger borrower.


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iii. For Non-Service class: Upto 60 years of age, however in case of loan

considered in favour of joint/ co borrower and one borrower is having

comparatively younger age in consonance with repayment period, then it can be

considered up to 65 years of age of elder borrower & 60 years of age of the

younger borrower.

iv. For Pensioners Class: Repayment period shall not exceed 10 years and loan

must be completely liquidated within 65 years of age of pensioner. However,

where co-borrower is taken, maximum repayment period can be extended up to

25 years provided the loan is repaid within 65 years of age of the elder borrower

(pensioner) & 60 years of age of the younger borrower having capacity to

repay the loan.

v. Due diligence on repaying capacity and financial soundness be exercised by the

sanctioning authority while considering loans upto repayment age of 65 years of

the borrower.

vi. Repayment of loan by the agriculturist may be by way of monthly/quarterly/ half

yearly instalments so as to be commensurate with generation of income cycle.

However, preference be given to recover monthly instalment in case the

agriculturalist is having repaying capacity.

vii. In case of takeover of home loan from other financial institution / Bank, the

original repayment period shall not be rescheduled. The takeover amount shall

be recovered in remaining period of repayment as mentioned in terms of sanction

of other Banks, subject to the maximum of 300 months.

viii. The Equated Monthly Installment (EMI) are/shall comprise of principal and interest.

ix. Step Down Option- In case of joint borrowers, with different age profile,

where one or more borrower will attain maximum permissible age during

currency of loan, the step down option shall apply. EMIs will be fixed

according to number of years, each co-borrower shall pay within maximum

permissible age limit/repayment period. The EMI of each co-borrower shall

be clubbed to form a single installment. The clubbed installment shall be

higher during the available repayment period of elder borrower and may

reduce thereafter.

x. All the borrowers shall be jointly and severally liable to repay the loan irrespective

of the fact whether they are joint owners of the property or not.

In case of joint borrowers in different age groups and varied income, maximum

permissible loan shall be the sum total of permissible loan to each individual

borrower as if each one has applied independently for housing loan. Similarly

EMI will be fixed for each joint borrower & clubbed to arrive at total EMI.

xi. The above said Maximum age limit of borrower/ co borrowers is permissible

subject to the age by which the loan should be fully repaid, availability of

sufficient, regular and continuous source of income for servicing the loan

repayment to the satisfaction of Loan sanctioning authority.


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xii. The repayment of loan shall be made through the Electronic Clearance System

(ECS)/standing instructions/Auto Collection Procedure from the operative

accounts of the borrower with us, given the mandate to collect the EMI. The

use of post dated cheque be discontinued as per government guidelines in

context to compliance of Go Green Concept.

xiii. PDCs obtain in existing accounts may retain and presented for recovery

instalment as per existing terms. However, the borrower be given option to switch

over to ECS/ standing instructions/Auto Collection Procedure for payment of

future instalment.

xiv. Although the repayment period is allowed upto 300 months, however, in view of

upward fluctuation in rate of interest, the sanctioning authority is permitted to

exercise following two options subject to expressed consent of the borrower(s):

a) To recalculate / revise the existing EMI amount for recovery of the then

outstanding in remaining existing repayment period taking in to account the

increase in rate of interest.

b) To recommend Head Office for increasing the repayment period of loan with

same / revised EMI wherever required subject to a maximum of 360 months.

However, while recommending, it be ascertain that the borrower is having

repaying capacity to pay future instalment.

TERMS OF PAYMENT The borrower may choose any of the under noted three options to suit his convenience: 1. EMI (Uniform Instalments for entire repayment period).

2. Payment of only interest for first five years and thereafter in EMI for next 20 years.

3. In case moratorium period is permitted, the borrower can exercise his option to repay the interest amount during moratorium period or at a subsequent date i.e instalment commencement date.

4. In case the borrower has adequate repaying capacity and request of preponment of repayment period the same can be permitted by the sanctioning authority after considering the satisfactory conduct of account and ensuring future source of repayment. However, this option can be exercised only once during the currency of the loan.

An undertaking as per Annexure 9 shall be obtained from the borrower(s) and be retained with loaning documents. An intimation shall also be sent to the borrower(s) as per Annexure 10 and its duly acknowledged copy be kept on record.

5. In all such cases where the borrower makes a lump sum/bullet payment in advance and request for reducing future EMI, then the sanctioning authority may revise the existing EMI subject to compliance of the followings:


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a) The account is standard & regular b) After receipt of lump sum/bullet payment from borrower, the EMI be

restructured in a manner that the residual outstanding balance stand liquidated within the original residual repayment period.

c) The terms of original sanction (more particularly interest rate & repayment period) will not be changed.

6. However, to universalize the repayment period, preference will be given for EMI based repayment of uniform instalments.

MORATORIUM PERIOD

a) Maximum permissible moratorium period is 18 months from the date of first disbursement or

b) Upto the date of possession of flat subject to Maximum permissible moratorium period is 18 months from the date of first disbursement or

c) The above moratorium period shall be permitted within the overall repayment period (the repayment period shall be inclusive of moratorium period).

d) In case of take over Home loan account from other Banks/FI the repayment shall commence from the following month of disbursement/take over date of loan.

NOTE: However, in all above circumstances, the option be preferred for recovery of accrued interest during moratorium period, if EMI is not served since inception. Alternatively, the accrued interest during moratorium period be capitalized as on the date of commencement of installments.

CONSTRUCTION PERIOD

a) Construction period is different from moratorium period i.e the moratorium period is a holiday period for EMI whereas the construction period is time involve in construction.

b) In case of purchase of ready to move flat/house the construction period be treated as nil.

c) In case of purchase of house from Govt. Agencies/Builders, the permissible construction period is 24 months from the date of first disbursement.

d) In case of purchase of plot & construction there upon, the permissible construction period is 24 months from the date of first disbursement.

e) In specific cases on merit the the General Manager in Regions & General Manager (Retail) can extend the construction period upto 36 months from the date of first disbursement.

f) In case of take over Home loan account from other Banks/FI, the construction period shall not be allowed as NIL.

g) In case the construction is not completed within the stipulated period the penal provision shall be applicable in the account.

TREATMENT OF RESCHEDULING OF REPAYMENT PERIOD

Where the borrower has initially opted for a shorter repayment period but later on intends to extend the same because of shrinkage of income/repayment capacity due to unforeseen circumstances, sanctioning authority may extend repayment period upto a maximum of 25 years inclusive of lapsed period on case to case basis on merits.


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Interest rate as well as EMI shall be re-worked on balance outstanding for the proposed remaining extended repayment period on the current applicable interest rates or on the rates applicable as on base date (the date on which the loan was originally sanctioned) whichever is higher. The re-schedulement of accounts on above lines shall only be permitted in standard regular accounts. In such cases branch incumbent can defer the overdue instalments for 2-3 months and in case rescheduling is required for more that 2-3 months, request of the borrower along with the recommendations of the Branch Incumbents should be sent to the Regional Office for their approval. If a rescheduling is done in standard irregular account based on written request giving genuine reasons of the borrower, the status of the account shall not be downgraded to substandard category as already clarified vide our Circular No. HO:SL&PS:63/2005-06/300 dated 4.10.2006. Illustration A borrower opting initially for 5 years repayment period proposes to switchover to 20 years repayment period after 3 year. Sanctioning Authority may consider rescheduling by switching the borrower from relevant existing repayment period i.e. 5 years to proposed repayment period i.e. 20 years. However, the interest rate as per the repayment period shall also be apply according to new slab and will be applicable from the original date of sanction and the arrear of interest for the past period (in this case, for the last 3 years) shall be recovered while giving permission for such re-schedulement. INSURANCE An insurance cover under the agreed Banks clause as per system in vogue of house / flat (structure) financed under home loan scheme of the Bank, be obtained. The insurance scheme- Group Loan Protection Plan (GLPP) Scheme for Home Loan Customers launched by our Marketing Department vide CIRCULAR No. HO/Mktg./JV2010-11/678 dated 15.01.2011, shall be perused and its benefit be informed to the prospective home loan customers for cross selling of this product. Insurance premium amount in both cases shall be borne by the borrower. TIME FRAME FOR DISPOSAL OF LOAN PROPOSAL The maximum time frame for disposal of applications has been prescribed as under: For Loans under Branch Manager Discretionary Powers: 3 to 7 days after submission of full set of documents by the borrower. For Loans under Regional Head Powers: Maximum upto 15 days after submission of full set of documents by the borrower.


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DISCRETIONARY POWERS

(Rs in Lacs)

The field functionaries are also eligible to sanction home loan to directors/partners (in their individual capacities) of a company/firm, whose original limits are sanctioned by higher authorities. DEVIATION MANAGER

S.No. Deviation Manager

Deviation(s)

1. CMD Concession in ROI upto 2.00%, subject to minimum of Base Rate

2. ED Concession in ROI upto 1.00%, subject to minimum of Base Rate

3. GM(Retail) at H.O Scheme related deviations except ROI & Process Fee

4. Authority as per Loan Policy

Process Fee (Authority as per discretionary powers vested with them as defined in Loan Policy issued from time to time)

Note: The respective Authority shall permit deviations in the Scheme/interest rate/process fee on merits within the overall objective and prescribed guidelines of RBI/Bank issued from time to time. LOAN FOR ADDITIONAL CONSTRUCTION/TOP-UP LOAN ON THE EXISTING HOUSE Whereas we have stipulated requirements for fresh loans, position in respect of loans for additions to house owner requires separate classification as under

1. Fresh loanees i.e. who have not availed any housing loan earlier or have repaid their existing loans.

2. Persons who have availed housing loan from us or from any other financial institutions and seek additional loans.

In case of borrowers falling in the first category, their loan entitlement, repayment, etc. shall be considered in accordance to the terms of fresh Housing Loans. However, in case of additional loans to existing loanees, their overall entitlement shall remain the same i.e. 40 / 60 months gross income and the repayment guidelines also shall be the same. However, for computing their entitlements for additional loan, the difference between the amount of existing home loan and the fresh assessment of MPBF based on gross income (at the time considering additional loan) shall be worked out to arrive at the maximum entitlement for the additional loan.

CMD ED GM

(HO) Regional Head Branch Incumbent- (Scale)

GM DGM AGM VI V IV III II I

FULL FULL 300 300 150 100 150 100 40 25 10 10


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In case of those borrowers whose first housing loan is outstanding with us and the additional loan is for additions in the same house, the repayment of the additional loan shall be so fixed that both the loans are repaid within the repayment period fixed for the first loan.

Further, in case of applicants who are availing housing loan from our bank, the security shall be the existing properties mortgaged with us otherwise formalities be completed as in fresh sanctions.

In case of salaried persons who have availed loan for construction/ acquisition of

accommodation from their own department and need supplementary finance, bank may

consider housing loan after obtaining parri-passu or second charge over the property

mortgaged in favour of first lender. The amount of loan to be allowed shall be based on

net income after catering to the existing loan and overall repayment capacity.

SUPPLEMENTARY LOAN AND CREATION OF SECOND CHARGE

Present scheme permits supplementary housing loan to salaried persons who have

availed housing loan for construction/acquisition/renovation from their own

Employer/Department but need supplement sources to meet their additional cost of

construction/renovation etc. The security in such cases remains to be the second

charge over the property mortgaged in favour of the first lender.

As per the system in-place, the document required to create second charge, necessitate

physical delivery of the title documents by the first lender to the bank. It has been

experienced by the branches that while the Central govt. ministries readily agree to part

with the title-documents to Bank but other departments/PSU do not generally agree to it

and hence good business potential is lost in this process.

To overcome this difficulty, document for creation of second charge without insistence

of physical delivery of title documents from 1st lender have been devised and copy of

the documents to be obtained in such cases is enclosed with this circular as Annexure

20 to 26.

However, this option shall be exercised only where it is not feasible to obtain delivery of

title document from the first lender.

HOUSING LOAN LINKED TO VARIOUS GOVERNMENT SPONSORED SCHEME/ CUSTOMIZED SCHEME OF LOCAL/STATE GOVERNMENT.

The Branches shall continue to extend financial assistance under above said existing

specific scheme by complying the norms, terms & conditions defined in particular

scheme, within the broad parameters of Banks Home Loan Scheme.

In case of any new scheme, launched/formulated by any Government/ Development

Authorities or NHB, the same shall be referred to Head Office for approval and its

implementation.


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SECOND HOME LOAN

Loan to existing home loan borrowers for purchase/construction/repair/ renovation of a

second house can be considered provided the net take home income/salary after

instalments of both the loans and other deductions is in accordance to minimum gross

take home income stipulation. It shall, however, be ensured that existing account is

running regular and the facility is not misused for speculative purposes. The second

home is not for the purpose of its commercial utilization.

TAKE OVER OF HOME LOAN ACCOUNT

In view of our cost effective scheme topped with many other attractions, persons who

have already availed home loans from other FIs/Banks, may express willingness to

switch their home loan accounts to our bank. The above request may be considered

only by the next higher authority according to delegated discretionary power as defined

in Banks Loan Policy issued time to time, subject to the following conditions.

All the terms and conditions as are defined &updated on takeover account in Banks

loan policy shall be complied with.

i) It shall be ensured that the conduct of the account with the existing FI/Bank

had been strictly regular and borrower had neither defaulted/delayed in

payment of any installment nor had there been any rephasement /

reschedulement in the loan account.

ii) Before considering such requests, it shall also be ensured that the house

property can be validly charged to the bank. However, mechanism of

charging of property may be devised by the Regional Office in consultation

with the legal retainer in case of any localized problem.

iii) To safeguard against the falling/stagnant property prices, it shall be ensured

that the value of the property vis--vis balance in the existing loan account is

sufficient to cover margin requirement as per our home loan scheme.

iv) The original repayment period shall not be extended.

v) It shall also be ensured that such proposals confirm to all the parameters of

our home loan scheme/guidelines circulated from time to time.

vi) The Branch incumbent shall have no discretionary powers for takeover

of housing loan accounts.

vii) The collateral securities charge to the existing Banker should not be diluted

however, the sanctioning authority, in its best judicious wisdom, may consider

waiving of third party guarantee only in select cases where risk-profile of the

account is anticipated to be negligible.


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HOUSING LOAN TO STAFF UNDER GENERAL PUBLIC SCHEME Vide HO Circular Estt./Per/60/49/2003/174 11.08.2003 Housing loan to staff can be sanctioned as to general public with the following additional conditions

1. The minimum take-home salary shall not be less than the stipulated norms for different income slabs. However, the minimum take home income shall be taken 40% for all slab of income in case the staff is availing overdraft limit/Contingency Loan under staff scheme as against the stipulated norms to general public.

2) Loan can be availed for purchase/construction/renovation for own residential purpose and not for commercial/speculative purpose.

3) The terms& conditions i.e. rate of interest Compounding factor and Repayment period shall be same as to general public.

4) The loan earlier availed should be fully adjusted with interest. (The condition stands modified under General Public Scheme as mentioned below in point no. 5).

5) In view of legitimate self occupancy purpose, a second loan to general public is introduced. On similar lines, the staff members may avail second housing loan under general public scheme for acquiring house/ flat for their need base self occupancy purpose. However, the second loan shall be subject to their eligibility and repaying capacity under general public home loan scheme as well as minimum take home salary.

6) If spouse of the staff member intends to avail loan under general public scheme, staff member can become co-borrower after taking necessary permission from vigilance / HRD department, wherever required. Security under staff housing loan shall also be acceptable under general public scheme.

7) Staff members shall also be eligible for loan for renovation purposes on the terms applicable to general public.

8) If the home loan is also availed under the staff home loan scheme the general terms & conditions of the staff loan shall be complied with.

HOME LOAN FOR NON-RESIDENT INDIANS Eligible NRIs

Reserve Bank of India vide its notification no. FEMA 21/2000 RB dated 3rd May 2000 and as amended master circular no 15/2010-11 dated 01.07.10 has notified the regulations applicable to a person resident outside India for acquiring and transferring immovable property in India. There are two categories of Non-residents who have been given general permission by Reserve Bank of India to acquire immovable property other than agricultural/plantation/farm house in India. They are:

1. Indian citizens

2. Person of Indian origin

Note: Person of Indian origin for the purpose of this general permission means an individual (not being a citizen of Pakistan or Bangladesh or Srilanka or Afghanistan China or Iran or Nepal or Bhutan), who


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i) At any time held an Indian passport, or ii) Who or either of whose father or whose paternal grandfather was a citizen of

India by virtue of the constitution of India or the citizenship Act 1955 (57 of 1955)

NRIs not covered under above will be required to obtain prior permission of the Reserve Bank of India for purchase/acquisition of residential premises in India. Persons who require prior approval Regulation 7 of FEMA notification no. 21/2000 dated 03.05.2000 prohibits any person who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan to acquire or transfer immovable property in India, other than lease, not exceeding five years, without the prior approval from Reserve Bank. In other words, a person whether resident in India or Resident outside India who is a citizen of any of the above countries require prior approval of Reserve Bank for acquisition of immovable property in India.

Branches may therefore, allow housing loan facility only to those NRIs who either fall under the general permission or have obtained prior approval from Reserve Bank. Apart from the conditions specified in the Housing Loan scheme of the bank following additional conditions shall also be applicable.

a. The quantum of loan, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India.

b. The loan amount shall not be credited to Non-Resident External (NRE)/ Foreign Currency Non-Resident FCNR)/ Non-Resident Non repatriable NRNR) account of the borrower.

c. The loan shall be fully secured by registered / equitable mortgage of the property proposed to be acquired, and if necessary, also by lien on the borrowers other assets in India.

Repayment of loan The instalment of loan, interest and other charges may be paid by the borrower from any of the following sources. 1. By inward remittances from abroad through normal banking channels viz.

NRE/FCNR(B)/NRO

2. Out of funds lying in his non-resident accounts with banks in India or out of rental

income derived from the renting out of the property acquired by utilization of the loan

Additional documents/papers required from the eligible NRIs In addition to the documents/papers/application, form etc. required as per the housing loan scheme of the bank, following additional documents/papers/ information shall be obtained from eligible NRIs.


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1. Approval of Reserve Bank, wherever required. 2. Certified copy of relevant pages of passport with visa stamped on it. 3. Copy of valid work permit. 4. Copy of appointment letter and employment contract, in English, duly attested

by employer/Consulate/Embassy, in case, it is in any other language. 5. Copy of Continuous Discharge Certificate (CDC) for applicants from Merchant

Navy. 6. Details of previous employment. 7. Bank statements for the last six months both domestic and international. 8. General Power of Attorney duly attested by the Indian Consulate in case NRI/

PIO is not in India. If the NRI/PIO is in India, then the Power of Attorney can be locally notarized.

9. Copy of labour card/identity card (translated in English and countersigned by the consulate) if employed in the Middle East.

10. Salary Certificate specifying name, date of joining, designation and salary details.

11. Undertaking cum declaration that the loan shall not be utilized for acquisition of Agricultural/plantation/farm house in India and that he is eligible to acquire immovable property in India in terms of FEMA 99 and rules/regulations made there under.

12. Status of the NRI i.e. whether Indian citizen or person of Indian origin. However, branches may also refer the guidelines/instructions issued from International Banking Division, Head Office from time to time for its meticulous compliance.

TIE-UP ARRANGEMENT WITH BUILDERS FOR FINANCING HOME LOANS

The Regional Heads are empowered to approve the projects of reputed builders for extending Home Loans to the prospective buyers/borrowers. The need and importance of having such tie-up arrangements for marketing of bulk housing loan proposals have been emphasized from time to time. However, the progress in this regard has not been encouraging and not many reputed builders/projects could be approved / marketed by the Bank.

In certain other instances, it has been found that no proper due diligence was made before approving the Builders and their projects which exposed the bank to greater financial risks.

In order to ward off such operational risks, it is decided to standardize the processing system of approving the tie up arrangements with the Builders/Housing Projects at the Regional Office level. We enclose a copy of the process note format (Annexure-26), which may be amended according to requirement. The format shall be used while considering a specific Housing Project/Builder for tie-up arrangement.


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REVISED GUIDELINES ON TIE UP ARRANGEMENT

1. Henceforth the tie-up arrangement with builder shall not be mandatory for

considering Home Loan.

2. The Tie-up arrangement will be applicable for Bulk marketing of proposal only on

existing terms & guidelines. In case a tie-up with builder is approved then fresh

legal opinion & valuation certificate from each customer is need not to be obtained.

Consequently the prospective buyers save cost & time on extraction of legal opinion

and valuation certificate. The concern branches relying upon such tie-up may

expeditiously dispose the loan proposals received under such project.

3. Wherever clear title deeds and favourable legal opinion is available, the single loan

proposal can be considered by the sanctioning authority with or without builders tie-

up.

4. In all cases, due diligence guidelines should be adhered to by the Sanctioning

Authority to avoid any chances of fraud, delinquencies or acquisition of disputed

property etc.

5. The respective sanctioning authority while considering such Home loan proposals

as per Scheme must ensure that the Builder is a reputed one, all statutory

clearances including possession are available to ward off any multiple sales of flats

and No Objection Certificate from financing bank (to builder), if any shall be

obtained. Further, the project approved for Home loan financing by other Banks

may be given preference.

6. In case where the Builder has availed loan facility for their residential projects from

our bank, the sanctioning authority (of project financing) will stipulate a term that our

branches shall be authorized to automatic financing of housing loan without any tie-

up arrangement Further, similar projects of the same Builder shall also qualify for

financing Home loan by the branches subject to favorable legal opinion & statutory

compliance by the builders.

7. Regional Head shall explore all possibilities to tie up with all reputed builders in his

Region. Marketing Manager may be given specific target to market Home Loan

borrowers.

8. As a Post approval formalities the approving Regional Office shall communicate the

details of approval to Head Office, Retail Credit Deptt. as well as to branches of

their Region for exploring the benefit of such tie-up. The adjacent Regional Offices

be also informed about such tie-up for their onward communication to the branches

situated in nearby vicinity of such project.


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CASH DOWN PAYMENT TO BUILDER/GOVERNMENT AUTHORITY To consider request for cash-down payment in case of those buyers who plan to purchase flats from reputed builders in order to facilitate borrowers to take advantage of the huge cash discount being offered by builders. The matter has been considered and it has been decided to permit branches to entertain such request from home-loan aspirants. However, before undertaking such request, branches shall ensure that particular builder has approval of Regional Office and unblemished track record and enjoys sound reputation, credit worthiness and has never been a defaulter of any bank. Branches shall further ensure that the builder has not defaulted in constructing/delivery of possession of the flats, in past the builders of very high repute who have made a name for themselves like Unitec in Delhi, Rahejas /Lokhandwala in Mumbai etc. (These names are of simply illustrative to stress upon the importance of reputation of the builders and does not confer approval of the bank). In such cases the decision shall be taken by the Regional Head CLASSIFICATION OF HOUSING LOANS UNDER PRIORITY SECTOR : Housing loan to individuals etc. upto Rs.25.00 lacs shall be classified under Priority Sector subject to classification guidelines/ directives issued by RBI from time to time. However all staff loans granted to the employees of the bank including loans granted under consumer banking (home loan granted under general public scheme) are not to be classified as priority sector. MIS Code for Housing (Priority Sector) is HSGPS GENERAL TERMS & CONDITIONS FOR HOUSING LOANS SANCTIONS 1. Cost/Expenses of mortgage, legal costs, cost of other documents & registration

expenses etc. shall be borne by the borrower/s.

2. Repayment shall be made in accordance to the option exercised by the borrower.

3. Disbursement of the loan shall be effected only after all documentation

formalities are completed and all the terms and conditions of the sanction are

complied.

4. Disbursement of the loan will be effected only by Account Payee Pay

Order/Demand Draft directly in favour of the seller/builder/vendor/co-operative

Housing Society/Government House Building Agency after recovery of the

margin under confirmation of the borrower.

5. The construction should be exactly according to the approved plan and

specification on the basis of which the advance was sanctioned. Prior

concurrence of the competent authority be obtained for any deviation from

approved plan.

6. The construction should be completed within maximum period upto 24 months

(or 36 months wherever permission granted by the General Manager in Regions

& General Manager (Retail), of the date on which the first drawl/disbursement of

the loan was made.


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7. That the borrower shall during the entire currency of the loan, maintain the

house/flat in good condition at his/her own cost and keep the same free from all

encumbrances, pay all taxes and other statutory dues and that he/she will permit

any representative of the Bank to inspect the property from time to time at the

Banks option/discretion with advance intimation to the borrower.

8. In case of lease hold property, in addition to the original lease deed lessors

consent must be obtained before mortgage of the property.

9. As the land in cantonment area belong to the cantonment authority, equitable

mortgage of land in cantonment area is not considered to be a good security and

as such only registered mortgage should be insisted upon.

10. In case of specified Lal Dora property, in the absence of availability of requisite

documents, under normal circumstances, the loan shall not be considered.

11. The housing loan interest certificate for income tax purpose has been made

available in the system which can be generated through Finacle DR site by using

option INT-RET RETAILGENINTCERLA

PRECAUTIONS TO BE TAKEN FOR PREVENTION OF FRAUDS IN HOME LOAN ACCOUNTS Of late, large number of frauds has been reported in advances of housing sector. A study of behavioral pattern of this indiscretion leads us to believe that in most of the cases laxity has been exercised in pre/post sanction follow up. With a view to check prevention of frauds, Pre/Post sanction follow up format has been devised for Home loans as circulated vide HO circular No. HO/SL& PS/61/04/455 dated 26.03.2004 and the same are annexed as per Annexure 2&3 respectively.

Branches are advised to adhere to the guidelines strictly.

Before considering a housing loan proposal, sanctioning authority shall ensure the following.

A. Identification of Borrower

1) An officer shall be deputed to visit residence/work place of the applicant to observe and report in writing (as per Annexure-2&3) his findings/impression about general reputation of the applicant at work place/neighborhood by meeting one or two colleagues/ neighbors etc.

2) Verification of Income Criteria i) Shall obtain income tax return/Form no.16/financial papers (in case of self

employed) and verify their genuineness by contacting respective authorities. ii) Shall obtain self-verified Salary Slip preferably cross-verified by

Employer/Superior officer. iii) Shall obtain Bank statement of business / salary account of the applicant for the

last twelve months and verify its genuineness by calling the bank branch over phone/by personal visit.

iv) Scrutinize the operations in the statement of account and ensure that applicant genuinely meets 30% take home criteria.

v) Shall correlate the above information to ensure genuineness of Income.


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B. Verification of Builders reputation

i) Shall ensure that the vendor builder enjoys a sound reputation in business circles as per format enclosed (Annexure-2&3). The antecedents and past track record of the vendor builder should be verified by making local enquiries from reputed persons/other builders operating in the area.

ii) Ensure that pay order for housing loan is delivered personally by an authorized officer to the vendor builder against serially numbered printed receipt on letterheads of the builder.

iii) Ensure that the pay order on account of housing loan is invariably drawn as account payee and is collected through the main account of the builders bank as per our record. (In case the pay order is collected through some other account of the builder or through an endorsement, branch should be alarmed that a foul play might be afoot.)

iv) Record the name and account number of the main banker of the builder. C. Index searching / property verification

i) Ensure that the index search is not perfunctory by empanelling advocates of exemplary integrity.

ii) Ensure obtaining affidavit from applicant that he has not obtained loan from any other bank/FI as per format enclosed.

iii) Ensure that chain of ownership/title of the property is clear and marketable.

iv) Shall invariably read through the index report/ non-encumbrance certificate issued by the advocate and ensure that the particulars mentioned there in matches with the particulars as appearing in the title documents.

v) Ensure that non-encumbrance certificate / index report is not qualified and in case it is so, then shall obtain papers / documents mentioned in the report.

vi) Shall ensure that search receipt is obtained and placed on record. Other Precautions

i) Authenticity / genuineness of the documents of title to property should be

verified from the concerned sub-registrar office by obtaining copy and verifying

stamps of registration and photographs of the owners. Special caution to be

exercised if there are material alterations in amount / names after registration

of sale deeds.

ii) Market value of the property should be verified from adjoining areas while

conducting pre-sanction visit.


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iii) Banks lien on the flat should be marked in the record of co-operative house

building societies or permission for mortgage of leased property be obtained

from the concerned urban housing development authority (wherever,

applicable)

iv) The borrowers be called to the branch for signing of loan documents and if this

is not possible then some bank official should visit the place of borrowers and

get the loaning documents executed in his presence.

v) Strict adherence to the terms and conditions as stipulated in the legal opinion

obtained for creation of valid charge be ensured.

vi) Due diligence of builder be conducted and a negative list be prepared so as to

aid sanctioning staff that credit facilities are not extended to the venture floated

by the builders with doubtful credentials.

vii) The agreements between landowner and builder or the power of attorney

executed in favour of builder be thoroughly scrutinized and their authenticity be

established before proceeding further.

viii) Special care be observed in case of group borrowers approaching for loans.

ix) Wherever, concurrent auditors are posted in Branch, they be instructed to

verify housing loan accounts, its documents and on going basis for timely

prevention and detection of fraud.

x) The physical verification/ inspection of the property be also conducted by

concurrent auditor as per guidel

home loan

Documents

Transcript of home loan