Retail Lending

RETAIL LENDING SCHEMES

Strategies

Reaching to masses : need to customize Customer segmentation Data mining / CRM based campaign Products per customer Promoting low risk retail lending products Offer array of products Cost effective expansion Execution by front line employees Growth through alliances

Various Retail Lending Schemes Housing Loan & all its variants Car & Two wheeler loan Educational Loan Personal loan Loan to pensioners Mortgage loan against immovable property up to Rs 1.00 crore Reverse Mortgage Advances against Bank deposit and Govt. / liquid securities Gold loan

The following schemes stand excluded from Retail segment

Advances against Future Lease Rentals Advances to Doctors Advances to Traders Mortgage loan against immovable property above Rs. 1.00

crore

RULE BASED LENDING GUIDELINES

DEFINITION: Credit appraisal strictly based on a set of pre-determined CONSIDERATIONS in a structured manner is termed as Rule Based Lending. These guidelines, to a large extent, seek to replace SUBJECTIVITY with OBJECTIVITY in credit decisions.

Objective: Good quality assets. Diversify credit risk. Ensure higher profitability having satisfied

customer base.

Contd…

Aim: Task of assessment and sanction of Retail

loans becomes simple; Reduces loan processing time thus ensuring

that the time spent on appraisal is proportionate to amount of income generated;

Enables to take Quick and uniform decisions;

Results in improved Credit quality and; Enhances Customer satisfaction through

speedy decision-making process.

Rating Sheet of Applicant

Parameter (Total Marks) EXAMPLE

Type of Applicant 10Salaried

(10)Professional

(8)Self employed

(5)Others

(0)

Age 5Upto 25 years

(2)

Above 25 & upto40 years

(5)

Above 40 & upto50 years

(4)Above 50 years

(2)

Educational Qualification 5

Ph.D/M.B.B.S/B.D.S /B.E./B.TECH.

&above(5)

Post Graduate &other professionals

(4)

Graduate(3)

Intermediate(2)

House Ownership 10

House/Flat owned by Self/Spouse

(10)

House/Flat owned by parents of Self/Spouse

(5)

Others(0)



Period of stay at current residence 5 Above 5 years

(5)

above 2 years & upto 5 years

(3)

2 years & less(1)

If self employedIncome above Rs. 2 lacs for how many years 10

Continuously for last 3

years(10)

Continuously for last 2 years

(6)

Last year(2)

OR If Salaried type of Employer 10Govt./Public

Sector(10)

Public Limited(6)

Private Limited(4)

Others(2)

Work experience 5Above 10

years(5)

Above 5 years & upto 10 years

(4)

Above 3 years & upto 5 years

(3)

Others(0)

Networth of Applicants as per Statement of Assest & Liabilities 5

Above Rs. 5 lacs(5)

Above Rs.3 lacs& upto Rs.5 lacs

(4)

Above Rs.2 lacs& upto Rs.3 lacs

(3)

Above Rs.1 lac& upto Rs.2

lacs(2)



Networth to Loan Amount Ratio 5

Above 5 times

(5)

Above 4 times& upto 5 times

(4)

Above 3 times

& upto 4 times

(3)

Above 2.5 times

& upto 3 times

(2)

Monthly Income to monthly installment of Loan Ratio 20

Above 5 times(20)

Above 4 times& upto 5 times

(16)

Above 3 times

& upto 4 times(12)

Above 2.5 times

& upto 3 times

(8)Ratio of collateral security provied to Loan amount 5 150%

(5)100 to 150%

(4)50 to 100%

(3)25-50%

(2)

Type of collateral security provided 5

NSC/LIC Policy/FD

(5)

Shares(4)

Immovable property

(3)

Others(0)



Guarantor Type 5Salaried

Govt./Public Sector(5)

Professional(4)

Self employed

(2)

Salaried other

Sectors(2)

Guarantor Income 5Greater than

borrower(5)

Less than Borrower & I.T.

payer(3)

Less than Borrower &

Non-IT Payer but

Govt. Employee

(2)

Less than borrower

and Non-IT Payer

(0)

PNB SCORE

Rule based lending guidelines (scoring model) was used for housing, car & personal loan schemes under retail segment.

To have a comprehensive and structured approach for evaluating all the loan under retail loan category, credit scoring models for the retail loan schemes have been developed and placed in the scoring model software “ PNB SCORE”

The credit scoring models for the retail loan scheme shall be applicable for limits up to Rs. 50 lac.

Maker and Checker Concept

The appraising officer (maker) in the RAB will verify the information provided in the application and select & click the relevant risk attributes under each risk parameter of the respective scoring model and generate the score sheet in the scoring model software.

The score sheet so prepared by the maker will be checked and finalized by the sanctioning authority/checking official (checker) in the RAB.

How to Use PNB SCORE

• All the parameters of applicable scoring models are evaluated and no parameter should be left.

• Each attribute is to be selected after careful evaluation/analysis/calculation on the basis of the guidelines in the scoring model software.

• Wherever any calculation is required under any parameter of the scoring model(e.g. ratio of net monthly income to EMI, ratio of net worth to loan amount etc), the same has to be calculated manually by the appraising officer and a copy of such calculation sheet should be kept with score sheet

• Any exercise under scoring model should not be handed over to the borrower or any other bank and it should be marked and kept as confidential document

• Scoring sheet signed by maker & checker to be kept with loan document

Colouring/Scoring Scheme in Credit Scoring Model

Score Range Colour Scheme Implication

Up to 40 Red Zone Cannot be considered for sanction

Above 40 - up to 50 Yellow ZoneCan be considered by next higher authority for sanction with proper

justification

Above 50 - up to 75 Green zone Can be considered for sanction at RAB level

Above 75 Blue Zone May be considered for price discount to be decided by RBD/SME Division

Conveyance Loan

Risk Parameter’s Attributes(example)

Age Above 40 years to 50 years

Income Tax status IT assessee with tax paid less than 2000

Present residence Ownership Owned by self/Spouse

Occupation Businessman/Self Employed

Work Experience/Number of years in business/profession

More than 3 years but up to 5 years

Repayment period More than 5 years but up to 7 years

Occupation of spouse Not working/House wife/Unmarried

Ratio of Net Monthly Income (including income of spouse if co-borrower) to EMIs

More than 2 but up to 3

Conveyance Loan contd…

Risk Parameter’s Attributes(example)

Relationship of borrower with PNB in years

Up to 1 year

Ratio of Net worth to loan amount

More than 200%

Ratio of Guarantor’s Networth to loan amount

More than 200%

Either check-off facility OR income routed through Branches(Mode of deduction of EMI)

Only advance cheques of EMIs provided

Credit History CIBIL Score between 800 & 900 or No CIBIL data available but availed

Age of the vehicle proposed to be purchased

New vehicleGREEN Total score: 55.92

Housing Loan Risk Parameters Attributes(Example)

Age of applicant with major share of income /Age of main promoter of company(in case of loan against future lease rental)

Above 30 years to 50 years

Status of current Residence (Present address for communication/ Status of current residence of promoter of company (in case of loan against future lease rentals)

Owned by Self/ Spouse

Distance of proposed property from the financing branch

Within City municipality limits in the same city/town

Occupation Salaried – Private

Work experience / Number of years in business/profession

Between 3 years to 10 years

Spouse ‘s source of income /source of income of the spouse

No source of Income

Housing Loan Contd…

Risk Parameters Attributes(Example)

Repayment period Between 5 to 10 years

Ratio of Net worth(verifiable sources only) to loan amount

Between 100% to 200%

Loan to value ratio Between 0.5 to 0.74

Ratio of Guarantor’s networth or networth of the promoter of the company in case of loan against future lease rentals to loan amount

Guarantee not required as per scheme

Relationship with PNB (Deposit Account)

Less than 2 years

Either check-off facility OR income routed through branches

Only advance cheques of EMIs provided/a letter of undertaking

Purpose of the loan Repair/Renovation of existing house

Housing Loan Cond…

Risk Parameters Attributes(Example)

Ratio of present Surplus Income (All sources of income) to total EMI

Between 2 to 3 times

Credit History CIBIL score between 800 & 900 or No CIBIL data available but availed

Collateral Security Provided No collateral provided

Parents/Spouse as co borrowers No

GREEN Total score: 55.10

Education Loan

Risk Parameters Attributes (example)

Type of course pursued Professional courses i.e. engineering, medical, management

Admission secured in colleges/institutions/Universities

Recognized by Govt./UGC/AICTE/AIBMS/ICMR etc

Previous work experience of the student

No

Occupation of Co obligator/parents in case of admission to IITs/IIMs

Salaried – Private

House ownership of borrower /co-borrower

Owned by self/spouse/parents and no lien

Percentage of marks obtained in last/qualifying exam

50% but upto 60%

Education Loan Contd…


Relationship of borrower/co-obligator/parents (in case of admission in IITs/IIMs) with PNB

More than 10 years

Work experience /Number of years in business / profession of the co – obligator/parents (n case of admission in IITs/IIMs) other than the student

Less than 7 years

Margin provided Only prescribed margin

Repayment Period Between 3 to 5 years

Ratio of Networth(of the borrower/co obligator) to all loan amount raised by family members for education

More than 200%

Education Loan Contd…


Guarantor’s networth to loan amount

No guarnator

Credit History No CIBIL data available and availed no loan /loans from any financial institute

Ratio of value of collateral to total amount of all education loans raised by members of the family

No collateral

Place of residence Same city/Centre

Whether studying abroad NoGREEN Total score: 69.70

Financing Purchase of Car by Public

Purpose : To purchase a) New car/van/Multi Utility Vehicle

b) Old car/van/jeep/MUV/SUV

Eligibility : For private use i) Individuals ii) Business concerns

Income Criteria : i) Minimum net monthly salary / pension / income – Rs. 20000/- (Income of Parents/ spouse can be considered for eligibility provided stand as additional guarantor). CH & above may relax income criteria considering value of account of prospective borrower.

Loan Amount

Individual/Proprietorship : 25 times of Net monthly income with a ceiling of Rs.25 lac (for one or more vehicle). CH & above may relax the criteria and sanction need based amount

Business Concern : No ceiling on loan amount (for one or more vehicle). Sanctioning authority may treat as normal term loan

Margin : New vehicle – 15% of on-road price inclusive of one time road tax & insurance. CH & above may reduce to 10%. Tie up arrangement with dealer- Margin10% on-road Price. Old Vehicle – 30% of the value of the vehicle (Old vehicle current invoice price less depreciation @ 15% on SLM

Repayment Period

New Vehicle: Principal and Interest in 84 EMI from succeeding month. Old vehicle: maximum 60 EMI

Ch & above may relax repayment period by 12 months for New vehicle and within 70 years of age from 65 years of normal age

Note: Installment should not exceed 50% monthly income Where gross salary is above Rs.50000, deductions can be

permitted up to 60% Pre-payment charges: 2% on the outstanding amount

except i)where repaid out of own sources of borrower ii) where borrower shifts to other bank within 30 days from date of issuance of circular for upward revision of rate of interest or change in other term of sanction

Contd…

Insurance: To obtain comprehensive insurance policy with agreed bank clause and policy to remain deposited with bank

Security: Vehicle purchased to be hypothecated to the bank. Name of the branch must be mentioned on the Joint Registration Certificate and a BM verified copy of the same to be kept on record.

Third party guarantee/ collateral security is waived i)Permanent employees of central/state govt./PSU/MNC/Listed companies ii) For other than salaried class where ex-showroom cost of car is Rs.6 lac.

EDUCATION LOAN

Courses eligible: Studies in India Graduation courses BA, B.Com., B.Sc., etc. Teacher Training Course/Nursing Course/B.Ed. will be eligible for

education loan, provided the training institutions are approved either by the Central Government or by State Government and such courses should lead to Degree or Diploma course and not to Certificate course

Post Graduation courses : Masters & PhD. Professional courses : Engineering, Medical, Agriculture, Veterinary,

Law, Dental, Management, Computer etc. Computer certificate courses of reputed institutes accredited to Dept.

of Electronics or institutes affiliated to university Courses like ICWA, CA,CFA etc Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc. Regular Degree/Diploma courses like Aeronautical, Pilot training,

Shipping etc., approved by Director General of Civil Aviation/Shipping, if the course is pursued in India. In case the course is pursued abroad, the Institute should be recognized by the competent local (abroad) Aviation/Shipping authority.

Contd…

Courses offered in India by reputed foreign universities (reputation to be decided by Circle Head).

Advance Diploma in Banking Technology offered by PNBIIT, Lucknow. Evening courses of approved institutes. Other courses leading to diploma/ degree etc. conducted by

colleges/universities approved by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.

Courses offered by National Institutes and other reputed private institutions(reputation of the institutes to be decided by the Circle Head on the basis of a) placement record, b) campus/availability of required infrastructure, c) faculty, d) age of the institute, e) affiliation of the institute, f) size of enrolment, etc.)

Diploma courses, Diploma Leading to Degree Courses local as well as abroad and courses offered by recognized universities of repute through distance learning etc.(To be permitted by Circle Heads & above)

Contd…

Courses eligible: Studies Abroad Graduation: For job oriented professional/technical courses

offered by reputed universities abroad. Post Graduation: MCA, MBA, MS, etc. offered by reputed

universities abroad. Courses conducted by CIMA – London, CPA in USA etc.

Amount of loan: Rs.10.00 in India and 20.00 lac for abroad. CH can exercise higher powers.

Priority Sector: Rs.10.00 lac in India and Rs.20.00 lac for abroad Expenses considered for loan:

Fee payable to college/ school/ hostel Examination/ Library/ Laboratory fee. Purchase of books/ equipments/ instruments/ uniforms Caution deposit, Building fund/refundable deposit supported by

Institution bills/receipts, subject to the condition that the amount does not exceed 10% of the total tuition fees for the entire course.

Contd…

Expenses considered for loan: Travel expenses/ passage money for studies abroad. Purchase of computers - essential for completion of the course. Insurance premium for student borrower (for obtaining insurance

coverage under the specified scheme from specified insurance company/ies). Any other expense required to complete the course - like study tours,

project work, thesis, etc. Eligibility:

Indian National Secured admission to professional/technical courses in India or abroad.

More than one loan in a family: “In case of receipt of application for more than one loan for student borrowers from a family, the loan be considered individual-wise and not family-wise, subject to margin and repaying capacity of the parent/student. In other words, any number of applicants belonging to the same family may be sanctioned loans upto Rs.4.00 lac individually without insisting for any security.”

Contd…

Top up Loans: Top up loans may be sanctioned to students for pursuing further studies within overall eligibility limits with appropriate reschedulement of existing loans and required security by the CH

Age of student: There is no restriction with regard to age of student for being eligible for the loan.

Income Criteria: No Income criteria is prescribed for the parents. However amount of loan be decided by judging Income of the parents.

Capital Requirement: Risk Weight as per BASEL-I : 100% Risk Weight as per BASEL-II: 75%

Margin: NIL Upto Rs. 4.00 lac

5% Above Rs.4.00 lac in India

15% Above Rs. 4.00 lac abroad

Contd…

Repayment: The loan to be repaid in 5-7 years after commencement of repayment.

Extension of time for completion of course may be permitted for a maximum period of 2 years.

Repayment Holiday = Course period + 1 year or 6 months after getting job, whichever is earlier.

The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Installments (EMI) fixed.

Security: Up to Rs. 4 lac - Co-obligation of parents. No Security.

Above Rs. 4 lac and upto Rs. 7.5 lac - Co-obligation of parents together with Coll. security in the form of suitable 3rd party guarantee. The Sanctioning Authority may, at its discretion, in exceptional cases, waive 3rd party guarantee if satisfied with the net-worth/means of parent/s who would be executing the documents as “joint borrower”.

Contd…

For students of IITs, IIMs, RECs, NITs, ITs, Government Recognized Medical Colleges, FMS Delhi, MDI Gurgaon and XLRI Jamshedpur exemption from taking guarantee for loans upto Rs. 7.50 lacs w.e.f. 07.09.2009

Loan amount of above Rs. 7.50 lac: Co-obligation of parents together with tangible coll. security of suitable value, along with the assignment of future income of the student for payment of installments.

Co-obligator: Parent(s)/guardian of the student borrower. In case of married person, co-borrower can be either spouse or the parent(s)/parent(s)-in-law. In case parents are not alive, grandparent(s) be taken as co-obligator taking into account their net worth.

Fees reimbursement: BM may permit reimbursement of the Fees paid by the student/guardian at the time of admission or at subsequent stages within six months from the date of payment of fees on individual merits of the case. Reimbursement after a period of more than six months may be considered at Circle Head level. The re-imbursement will however, be within the sanctioned limit and subject to production of proper receipt/documentary evidence or proof of payment to the satisfaction of the bank.

Contd…

Rate of Interest: As applicable from time to time Simple interest to be charged during the Repayment holiday/

Moratorium period. Students of IITs, IIMs, RECs, NITs, ITs, Government Recognized

Medical Colleges, FMS Delhi, MDI Gurgaon and XLRI Jamshedpur to get rebate of 0.50% in rate of interest in case of sanctions on or after 07.09.2009 (branches to give -0.50% in ‘A/c Pref. Intt. (Dr.)’ field while opening the account in CBS).

A rebate of 0.50% in rate of interest permitted to women beneficiaries for loans up to Rs.10 lac for studies in India and Rs. 20 lac for studies abroad for existing as well as new girl student borrowers wef. 08.03.2009. (the rebate not to be allowed where such rebate has already been permitted in terms of PNB Mahila Sasaktikaran Abhiyan).

Penal Interest: Up to 25000/- ----NIL , Above 25000/- @ 2% on default / irregular portion

Contd…

Upfront fee: No processing/ upfront charges may be collected on education loans for studies in India. However, for loans for studies abroad, Upfront fee @ 0.50% with a maximum of Rs. 5000/ be recovered which shall be refunded on availment of the loan amount.

Documentation Charges: Upto 4.00 lac – Rs. 270/- plus service tax

Above 4.00 lac Rs. 450/- plus service tax Calculation of interest: Simple interest is to be charged during

moratorium period and kept in a separate account. The accrued interest during repayment holiday will be added to Principal for fixing of EMI.

Interest concession: 1% interest concession is allowed if it is serviced during holiday period. The concession will be given at start of repayment and EMI will be fixed accordingly.

Constitutes of loan: Tuition fees, Hostel charges, Exam fees, Library/Lab charges, Books, Equipment, Instruments, Uniform, Building fund, Refundable deposit, Travel expenses & Computer.

Contd…

Documents: Documents will be executed both by student and the parent/guardian.

1. In case the student is Minor- Agreement (PNB 1116) duly stamped to be taken. On attaining majority, confirmation from student be obtained as per PNB 1147.

2. In case the student is Major- Agreement (PNB 1117) duly stamped to be taken.

3. Letter of Guarantee (PNB 785) duly stamped as an Agreement to be taken where applicable.

Post sanction Follow up: Banks to contact college/ university authorities to send the progress report to the bank at regular intervals in respect of students who have availed loans. In case of studies abroad, bank may obtain the Unique Identification Number (UIN)/Identity Card and note the same in the bank's records. Branches to ensure whereabouts of the student borrowers and co-borrowers on half yearly basis even after completion of their studies / placement and a record of the same is maintained in the loan file.

Contd…

Insurance: Life Insurance policy on the students availing Educational Loan may be taken (at the option of the Student borrower) from the approved Co. (Presently Kotak Mahindra Old Mutual Life Insurance Ltd.-KLI). The name of the product is “VIDYA RIN KAWATCH” and this tie up arrangement is for a period of one year w.e.f. 14.02.2011. The product is available for fresh cases till six months from the date of sanction.

HOUSING FINANCE (PUBLIC) Eligibility: Individual & Joint Owners Purpose & Extent:

Purchase of Plot Rs.20 lac. However, CH & above may consider Loan upto Rs. 50 lac.

Construction of House

Need based

Semi -built House/flat from Pvt Builders

Incumbent Incharge of Hubs / CCPC (Scale III) : Rs.30 lakhIncumbent Incharge of Hubs / CCPC (Scale IV) : Rs. 60 lakhOfficers in Circle Office / Head Office:Scale IV : Rs.60 lakhScale V : Rs. 125 lakhScale VI : Rs. 150 lakhScale VII : Rs. 200 lakh

Repair & Renovation Rs. 20 lac

Cost of furnishing Max. 10% of the loan upto maximum of Rs. 2.00 lac

Pari pasu Charge CH powers up to 20 lac to Govt. Employees

Contd…

Freehold & Lease hold: The loan can be granted both for freehold and for leasehold property. In case of Leasehold, loan can be granted on the basis of P/A

from original allottee where DDA/PUDA/HUDA permit conversion of leasehold into freehold property.

Otherwise advance is not permitted against plots purchased on Power of Attorney basis.

Capital Requirement: Loan limit up to 30 lac : Risk Weight is 50%

Loan limit above 30 lac : Risk Weight is 75%

Loan above 75 lac

(irrespective of LTV Ratio) : Risk Weight is 125%

Contd…

Margin: Land/Plot : 40%

Construction/repair/addition : 25% Rate of Interest:

0.50 % extra will be charged on H/L for 3rd or subsequent House/ Flat.

The interest can be fixed or floating Option can be changed from fixed to floating and vice versa with

flat charges of 2% fee on Balance outstanding Fixed Interest rate be reviewed/reset after a block of 5 years in

respect of loans disbursed on or after 1.8.2006. 0.25% relaxation in interest rate for serving Defence Personnel.

(New cases) Repayment:

Maximum 25 years including Moratorium period of 18 months Maximum 10 years including moratorium period of 6 months

in case of loan for repair/renovation/addition/alteration

Contd…

Repayment: Installment can be fixed up to maximum age of 65 years. Circle Head/Hub

Incharge in the rank of Scale IV & above can relax the age up to 70 years (can also permit repayment tenor according to the age of co-borrower who is not co-owner of the property.)

All deductions should not exceed 50% of Gross monthly income. However where gross monthly salary is above 50000/-, the deduction can be up to60% and if gross monthly salary is above 100000/-, the deduction can be up to 70% with the permission of CH. The income of earning spouse and children can be taken into account.

The Income of spouse and earning children can be taken into account provided they are made co-borrowers.

Father/mother can also be made co-borrowers in cases where property is in the single name of his/her son and also clubbing of their income is permitted for determining eligibility criteria.

Minimum 24 advance cheques should be obtained. As and when, 6 cheques remain, fresh lot be obtained. Out of 24, 23 cheques should be of installments and 1 cheque should be of the amount equal to the balance amount.

ECS/standing instruction may also be considered. Wherever ECS/Standing Instructions are obtained, 2-3 PDCs are to be procured/ maintained by the branches/Retail asset branches to keep remedy alive under Section-138 of Negotiable Instruments Act.

Contd…

Graduated EMI: PNB offers benefit of graduated EMI. This means that the customer has the option of choosing EMI that can increase or decrease during repayment period rather than being given a fixed EMI over repayment tenor.

Upfront fee: For housing loans upto Rs.300 lakh - 0.50% of the loan amount (earlier 0.90%) with a cap of Rs. 20000/-. Both are exclusive of service tax plus education cess. For loans above Rs. 300 lakh – 0.90% of the loan

amount exclusive of service tax plus education cess. 50% relaxation in Processing (Upfront) Fee for serving

Defense Personnel (New cases) Documentation charges: Rs. 1350 + service tax

Contd…

Security: Equitable/Registered Mortgage of Immovable Property Tripartite agreement be executed amongst Housing Board/Dev

Authority/Coop Society/Builder, the borrower and the bank where mortgage cannot be created immediately. In such cases, 3rd party guarantee is also to be obtained.

EM of other IP or pledge of NSC etc. up to 125% of loan amount if property is being purchased from 1st P/A holder and where there is delay in execution of Tripartite agreement or where the mortgage of property is not possible being an ancestral property (without title deeds) or Lal Dora Land.

Verification of security is required once in 2 years. In case of NPAs accounts, security is to be verified on Half yearly basis.

Guarantee: In general, no guarantee is to be asked for. But while preparing RBL score sheet, if score is less than 50%, then 3rd party guarantee can be obtained to raise score of the applicant.

Contd…

Insurance: In case of building at Re-construction cost. Priority Sector inclusion:

Repair & Renovation Rs.1.00 lac (Rural & Semi/Urban)

Rs. 2.00 lac (Urban) Others Rs. 20.00 lac

Other features: Loan can be sanctioned by the branch/hub near to the present place of work/posting/residence of the borrower. However, if the property is situated at other place, services of branch/hub located at that center may be availed for verification of Security and NEC/Valuation etc.

CH may give administrative clearance for sanction by HUB/Branch where the property is located.

Loan can be granted even if property is in the name of wife/parents provided that the owner is made co-borrower.

Loan can be granted for 2nd house in the same city. Loan can be granted for purchase of house for rental purpose. Cost of Car parking upto maximum extent of 5% of the cost of house/flat can be

included in the cost of project. For takeover, permission of higher authority is not required.

Contd…

Important conditions: Loan cannot be granted: For construction in Un-authorized colonies If property is to be used for commercial purpose Without approved Map Pre-payment charges of 2% be recovered on account being taken

over by another bank. In case, the loan is pre-paid out of own sources or the loan is taken over by another bank within 30 days from date of circular by which either the interest is raised or any important term or condition is changed, there will be no pre-payment charges.

Flat pre-payment charges of 2% be recovered from borrowers who prepay without construction on the plot before 5 years.

In case, the construction of house is not completed within 3 years or in case the plot is sold, penal interest @2% over and above the applicable rate be charged.

In respect of builders/developers of national repute, request for down payment in case of under construction houses/flats can be permitted by sanctioning authority subject to availability of tangible collateral security of the value of at least 50% of down payment to be disbursed.

Contd…

Expression of Interest: It is a letter issued by the bank/branch wherein the lender expresses intention to make advance to the intended borrower on the basis of eligibility criteria subject to the fulfillment of terms and conditions.

Sanction / Disbursement: Housing loan should be sanctioned at the Hub/CCPC, which is near the present place of work/posting/residence of prospective borrower. For security verification/NEC, the sanctioning Hub/CCPC should,

however, take the help of Hub/CCPC, which is located near the housing property.

Further, Hub/CCPC at the place of the housing property must get the job of security verification/NEC done promptly, so that there should be no complaint on this count.

Circle Head of the area where housing property is located is, however, empowered to give administrative clearance for considering sanction of Housing Loan at Hub/CCPC falling in his/her area, on merits.

Contd…

Group Total Suraksha Scheme of TATA–AIG: One time premium to be borne by the customer can be financed by the Bank.

The minimum age of entry is 18 years and maximum age is 65 years.

Maximum age for coverage is 70 years. Minimum term of Coverage shall not be less than 1 year or more

than 25 years. The initial Sum Insured shall not be less than Rs.1,000 and maximum

sum insured will be as per bank norms equivalent to the loan amount

disbursed. A term insurance policy is purely risk cover with no saving element.

Benefit is payable only, if Death occurs during the term of insurance, which will be as per the amortization table for a specific sum insured for certain repayment tenor taking the rate of interest at 10% p.a

Contd…

Earnest Money Deposit Scheme: To meet the requirement of earnest money to apply for plot/flat/house from State Housing Boards and Urban Development authorities.

These authorities undertake to refund or issue allotment letter to the bank subject to eligibility of the bank for proposed loan and future requirement of Housing Loan.

Extent of loan is 90% of EMD or max. Rs. 2.00 lac in the shape of Demand Loan

ROI is BPLR – 1.75% Repayment through Refund order/Housing Loan/Bullet Payment. Guarantee clause deleted. OD Facility to existing H/L borrowers: OD facility can be allowed to

existing Housing Loan borrowers there is no IR irregularity. Other features of the scheme are as under:

Minimum 50000/- and Maximum Rs. 5.00 lac. Additional limit and present o/s should not exceed 75% of current

market price of the house so as to maintain margin of 25%.

Contd…

Upfront fees is NIL and documentation charges are Rs.500/-. Take home salary should not be less than 40% of gross salary. Loaning powers are SB-Nil, MB- Rs.4.00 lac, LB, ELB & VLB Rs. 5.00 lac. ROI is equal to BPLR After HL is repaid, OD can be continued/ renewed provided the

sanctioning authority is satisfied about repaying capacity of the borrower and Value of security.

OD facility for personal use should not be sanctioned to the borrowers, who have availed loan for plot , construction on which is yet to be completed.

The condition of minimum 2 years of repayment track record has been waived subject to compliance of KYC and other conditions/parameters/guidelines. Also, this overdraft facility may be considered by branches at their level (i.e. outside the purview of Hub & Spoke Model) in the accounts of existing HL borrowers. This facility is outside the purview of “Hub and Spoke“ model in the accounts of existing HL borrowers

PERSONAL LOANS FOR PUBLIC Eligibility: Only PNB Account holders are eligible. Minimum 6

months salary should be routed in the account or 6 months satisfactory transaction record for non salary saving accounts.

Permanent Defence, CRPF, BSF & ITBP Personnel, loan not allowed if retiring with next 24 months.

Confirmed permanent employees of Central/state Govt./PSUs/Reputed Co./Schools/Institutions.

Drawing salary through branch Check-off facility Minimum annual income of Rs.4.00 lac, if no salary a/c. MBBS/BDS doctors with minimum annual income of Rs. 4.00 lac,

dealing with branch for last 6 months and tax payer for last 3 years

Contd…

Check off Facility: It means that the employer undertakes to deduct monthly installment from the salary and remit the same towards adjustment of the loan till its liquidation and also confirms attachment of terminal dues of the borrower/employee.

Purpose & Extent: Personal needs. Minimum Rs. 50000 & Maximum Rs. 4.00 lac or 20 times net salary whichever is lower depending upon the repaying capacity & Rs. 5.00 lac for those salaried persons who have completed 3 years in the present organization and drawing net monthly salary above Rs. 30000/-.

Nature: TL or OD Sanction and Disbursement: All branches can generate leads

for processing at Retail Hubs/CCPCs. However disbursement can be made only by branches having recovery percentage of not less than 90% under Personal Loan segment as at end of previous half year.

Contd…

Minimum net monthly income:

Margin: NIL Repayment: TL – 60 EMIs OD- Reducing DP spread over 60

M. Defense Personnel – 36 Months or remaining period of stay at present

station (CH can relax it to 48 Months) Amount of EMI should not be more than 50% of net monthly

income. 60 advance cheques (maximum) signed by the borrower along with

letter of deposit be obtained. Obtention of advance cheques is applicable where check off facility is not available.

Metro Rs.15000/- p.m. CH can relax to 12500

Urban Rs.12500/- p.m. CH can relax to 10000

SU & Rural areas Rs.10000/- p.m. CH can relax to 7500

Defense personnel and Teachers

Rs.7500/- p.m. CH – no relaxations

Guarantee: Suitable 3rd party guarantee. CH may waive RBL Sheet: PNB Score system will be applicable and the applicant will

have to score at least 50% marks to avail loan. Upfront fee: 1.80 % of loan amount + service tax

NIL for defense personnel. Docm. Charges: (Rs. 270/- up to Rs.2.00 lac. Rs. 450/- Above Rs. 2.00

lac.) + service tax & Edu cess. NIL for defense personnel Other Requirements: In case of Army personnel, a copy of authority

letter be sent to Controller of Defense Account (CDAO) Pune so that salary is remitted till liquidation of

loan Statement of account for at least 6 m. be obtained. Affidavit that no other loan from other bank is availed be obtained. Copy of IT return for previous 3 years be obtained. Form 16 be taken if

loan is granted to employee. A Registered letter be sent to the employer informing about details of loan

raised by the employee. the branches eligible for disbursement/maintaining the accounts shall

obtain blanket permission from CH for disbursement in the next 25 accounts submitting performance of the branch under the portfolio.

The genuineness of salary certificates be independently got verified from HR Deptt. Of the employer of applicant. Drawing of CIRs from CIBIL data base for considering any request for Personal Loan.

Scheme for Financing Traders Eligibility: Traders, who are individuals, firms, HUFs, cooperative

societies registered under any law relating to cooperative societies and companies etc. Promoters /coobligants must have existing satisfactory relationship of minimum / at least six months with the Bank.

Traders should comply with applicable statutory requirements, such as State/Central Sales Tax Registration Certificate, Licence under Shops & Commercial Establishment Act, Registration with Excise Department, etc.

Advances against goods or any other item prohibited by RBI/Govt. from time to time will not be covered under this scheme.

Advance is to be considered for genuine trade transactions and not utilized for hoarding / speculative purposes

Contd…

The above condition of six months existing satisfactory relationship of the Promoters /coobligants with our Bank may not be insisted upon, however, track record of at least one year of prospective borrower /co-borrower/ coobligants, dealing with other banks /FI and willing to avail loan from our Bank must be verified before making the advance. Genuineness of documents including other bank /FI statement of account obtained for the purpose.

In cases where the promoter / co-obligant(s)/ borrower is neither having transactional record of six months with our Bank nor with any other Bank /FI of at least one year as mentioned at (a) above, Circle Heads may permit deviation on merits of each case. While considering /permitting deviations, they shall have to personally satisfy themselves about the KYC issues, credit worthiness and past conduct of the party with the existing bank, if any

In such cases, field functionaries are, however, advised that all other precautions / safeguards for ensuring quality of the loan portfolio with due diligence shall be complied before sanction / disbursement of loans.

Contd…

Purpose: Financing of stock in trade, book debts (not older than four months) and other assets to be used in the trade.

Acquiring of assets for furnishing of shop & show room like partition, fixture and furnishing etc, purchase of air-conditioners, other gadgets and delivery van required for running the business.

Nature & Extent: Working Capital/Term Loan (fund based & non-fund based) - Need Based

Margin: TERM LOAN : 30% WORKING CAPITAL LIMITS: Against Stocks : 30% - 40%, keeping in view nature of

stocks, price fluctuation, shelf life etc. Higher margins may be fixed in cases where commodities financed are perishable or life span is short. Such higher margins may be decided by sanctioning authority on case-to-case basis.

Against Receivables : 40%

Contd…

Rate of Interest: Rate of Interest on working capital and term loan for trading advances shall be levied as advised by IRMD HO, from time to time.

Assessment of Working Capital limit: Simplified method linked with turnover- For fund based working capital limits up to Rs. 200 lakh – as per Nayak Committee recommendations

MPBF System- For fund based working capital limits above Rs.200 lakh – on the basis of CMA data applicable for traders

Term Loan for acquiring of assets for furnishing of shop & show room like partition, fixture and furnishing etc, purchase of air-conditioners, other gadgets and delivery van required for running the business should be restricted to a maximum of Rs.100 lakh for Metro and Urban centre and Rs.25 lakh for SU and rural centre.

However, advance be restricted up to 20% of the entitlement (as mentioned above), in case the shop/ show room is rented / leased.

Contd…

Repayment: Working capital limit upto Rs. 5 lakh granted by way of term loan (WCTL) will be repayable in equal monthly/quarterly instalments within a period of 3 to 5 years. Commencement of repayment be linked with generation of revenue by the business within a maximum period of 3 months of 1st disbursement.

The term loan for acquiring fixed assets will be repayable in equal monthly/quarterly instalments within a period of 5 to 7 years including moratorium period of 3-6 months.

Working capital limits shall be sanctioned for a period of one year and shall be renewed/ reviewed annually.

Collateral Security: Legally Enforceable Equitable/Registered Mortgage of IP / pledge or creation of charge on liquid security having realizable/ surrender value equal to the amount of loan/credit facilities;

However, in case of loans /limits up to Rs. 5 lakh, advance should be collaterally secured by way of suitable third party guarantee and mortgage of IP may not be

insisted upon. In case the mortgage of IP is offered by third party, the mortgagor must

be made guarantor in the account.

Contd…

Stock Statement: Inventory be obtained on Monthly/Qtrly basis as permitted by Sanctioning Authority. The quarters will be May, Aug, Nov and Feb. DP be calculated after netting of Debtors and Creditors.

Calculation of DP: Drawing power in the account will be worked out on the basis of Inventory/Stock Statement, inclusive of Debtors (not more than 4 months old) of the preceding month/quarter after netting of sundry creditors.

Insurance: Stocks/Assets charged be got comprehensively insured with agreed bank clause at borrower's cost and the policy to remain with the Bank. Circle Head may relax/waive the condition on merits of the case.

Retail Lending

Documents

Transcript of Retail Lending