A

SUMMER TRAINING
REPORT
ON
COMPARISON OF HOME LOAN SCHEME
OF DIFFERENT BANKS

Perfect is the famous saying and when a person get practical experience
under the guidance
of expert of the respective field, the knowledge gained is priceless.
With the sense of great pleasure and satisfaction, I present this project report
entitled
COMPARISON OF HOME LOAN SCHEME OF DIFFERENT BANKS completing a
task successfully is never a man efforts similarly completion of this report is
the result of
invaluable support and contribution of number of the peoples in direct and
indirect manner.
In the light of foregoing, first of all my heartfelt great fullness and thanks
goes to Mr.
SUMIT SURI as a MANAGER of HDFC LIMITED for giving opportunity to work
for his
highly esteemed organization and for being a constant source of inspiration
and guidance
throughout the project. Without his able support the project would not have
seen the light of
the day.
At this juncture, I would also like to thank all the other team members of the
HDFC
LIMITED. Without their indispensable cooperation, the project wont have
been completed
within the stipulated time period. Finally I would like to thank the staff of
other home loan
provider banks, without whose cooperation in providing the data for the
project would have
been impossible.
PREFACE
Modern organizations are highly complex ad dynamics systems. They
operate under very
turbulent social economic and political environment. They are required to
reconcile several

incompatible goals. Conflicting roles and divergent interest they are also
fraught with the use
risk and uncertainties, hence tactful management of such organization to
plan to execute
guide, coordination and control the performance of people to achieve
predetermined goals.
Management has to keep the organization vibrant moving and in equilibrium.
It has to
achieve goal which themselves are changing it is therefore a problem highly
complex and
ticklish.
This information will be asset to marketing manager in making effective
decisions. The
researches are used to acquire and analyze information and to make
suggestions to
management as to how marketing problems should be solved.
The marketing research is the process which links to manufacturer, dealers
and individuals
through information in important part of curriculum of M.B.A. programme is
project taken
by the students to institute under which he or she is studying, after
completion of third
semester of the programme.
The objective of this project is to enable the students to understand the
application of the
academics in the real business life. I am fully confident that this project
report will be
extremely useful to the management.
INTRODUCTION
The roof over ones head and ground beneath ones feet count as the bare
necessities of life.
Theres nothing quite like owing a home, however humble to give that warm
and glowing
feeling. But when one buys a home, one has much more than a feel good
purchase in mind!
Its also a crucial investment decision, perhaps the biggest spending decision
of ones life.
There are ample opportunities today for young salaried investors to plan
their moves early
and buy a house at right timeand
at right price. In the process, not only do they fulfill that
cherished dream of owing a house, but also put themselves on the path to
acquiring property
that would meet the needs and aspirations of their growing family, even as it
leads to wealth

creation. Every individual aspires to own a home. But many either spend a
lifetime saving to
purchase a house or exhaust money on monthly house rents.
Take a house loan and let the monthly rent (easily converted into
affordable EMIs)
build dream home.
OBJECTIVE OF THE STUDY:
The main objective of the study is to find out the tariff changes charges by
other banks in
comparison to HDFC bank.
The aim of the study is to help HDFC to know where it lacks in loans and how
for the
performance of other banks is better so that HDFC figure out the common
problems
being faced by the customers while dealing in the loan department so that
further
HDFC can improve its services and schemes offered by them to their
customers.
PROFITABLE PROPOSITION
The overall demand in residential sector has grown by about 78%
in the past few months as
compared to the same period last year. The growth is on account of two main
factors:
One, income tax exemption.
Two, with no similar rebates available for individuals in the high income
group, they
are creating a second asset.
Add to this the stable property prices over the last year and plunging interest
rates, planning
for dream,] home could not have been better timed. Rockbottom
interest rates,
standardization of periodicity of interest calculation across lenders (which
make it easier to
compare loans), lower interest charges, waiver of loan application processing
fee and a
customer friendly attitude is reason enough to celebrate the ascension of the
home loan
consumer as the king.
In response, private players like ICICI Bank, IDBI Bank, Standard Chartered
Bank and few
others too lowered their rates.
Market leader HDFC also brought down its interest rate to 8.75% very
recently, to participate
in the interest rate war. If one is still not satisfied with the lowered loan rates
theres more.

Some industry watchers believe that the floating home loan rate will slip to
8% for long term
loans another two or three years.
Most banks have changed the way the interest is calculated from annual rest
to monthly rests.
Under the annual rest method, the EMIs (equal monthly installment) one pay
through a year,
are factored in as partrepayment
of the principal component only at the end of each year. In
other words one has to pay interest even on the installments one has paid
until they are
reduced from the principal at the end of each year. Under monthly rests, the
principal is
lowered by the appropriate amount each month. The thumb rule being that
the more
frequently interest is calculated, the better for the creditor.
HDFC added monthly rests on its fixed interest loans apart from annul rests.
As a result the
fall in the EMIs on fixed interest loans (where the interest rate is constant for
the entire
tenure of the loan, irrespective of the changes in the lending rates) is more
pronounced than
on floating rate loans (where the loan interest rate varies with the changes in
the interest rate).
For example, the EMI on a fifteen year fixed interest loan for Rs. 15 lakh has
come down by
Rs. 15 lakh has come down by Rs. 840, the corresponding fall in the EMI on a
floating rate
loan is only 4165. apart from lowering the cost of ones loan, the switchover
to monthly rests
has another advantage : it makes it easier to compare loans.
HOME LOAN
Home loans are loans you have access to, depending on whether you want to
buy or build a
house and can also be used to repair or extend an existing house.
Who can avail of these loans?
According to lending institutions, any Indian resident who is over 21 years of
age at
the beginning of the loan and below 65at its maturity can avail of the loan.
Salaried
Employees as well as SelfEmployed
citizens can apply. NRI Salaried and RBI Self
Employed, under RBI guidelines, can approach only nationalized banks and
other HDFC for
loans.
Why should one option for a loan to buy a house?

Taking a loan seems like a good option when the money at hand is
insufficient to buy the
house of your dreams. Consider couples in their twenties and thirties. They
enjoy a good
income currently, buy their accumulated capital isnt enough to purchase a
house. Whereas a
home loan can give them access to capital their current earnings.
Also, if you take a 10 years old loan when you are thirty, you could repay it
by the time
youre forty. So you dont have to be burdened with the interest and are free
to plan your
retirement savings.
The Quantum of loan that one can avail of :
Loan sanctioned depend on your repayment capacity which is based on
your current
income and your future repayment capacity. You would include your spouses
name to
enhance the loan amount.The maximum loan can be sanctioned varies with
each
bank/institutions and ranges from Rs.10 lakhs to Rs. 1 crore.
Benefits of taking a home loan:
A home loan is very different from a personal loan like a car loan for
instance. You can
utilize a home loan for financing an asset that will hold its value and even
appreciate over the
period of the loan. Though its price could fluctuate in the short terms, Total
Estate will show
capital appreciation over the years. The value of your house generally while
the loan remains
constant. If you had opted to wait, save up and buy a house, it would, in the
long run cost you
much more home loans also come with many tax benefits.
Tax benefits of taking a home loan:
The income tax authorities look with favor upon those servicing a housing
loan from
specified financial institutions. And, it is up to you to be wise enough to take
advantage of
this.
Section 24 of the Income Tax:
Interest on loan till Rs.1.5 lakhs per annum is exempted form income tax
(under section
23/24(1) of the Income tax act).
Section 88 of Income Tax Act:
You get a 20% rebate on repayment of principle during a financial year. Once
again, over the

years, the principle repayment eligible for rebate has been enhanced from
Rs.10,000 to the
current limit of Rs.20,000 Stamp duty, registration fee or transfer of such
house property to
the assesses is also considered under this amount.
Financial Institutions, which give, home loans:
Leading Banks Housing finance companies
FINANCIAL IMPLICATIONS OF AVAILING A LOAN (SMALL OR BIG)
There are several expenses involved apart from repayment of the actual loan
amount:
1. Processing feesA
processing fee (PF) is charges at the time of submission of the
application form and covers expenses incurred for processing the application
form. This fee
has to be paid upfront by the customer in some cases, it is nonrefundable.
2. Administration feesto
meet operating expenses.
3. PreEMIA
simple interest calculated on the disbursement amount in case of a plot
under construction.
4. EMIThe
EMI is an abbreviated form of the equated money installment and is simply
referred to as monthly installment in common parlance. And, being a
selfexplanatory
term
that is exactly what it is. The amount you will have to pay you financier every
month when
repaying your loan. Being a monthly payment, at the end of the year, you
would have paid 12
EMIs.
TYPES OF LOANS AVAILABLE
Broadly two typesfixed
rate and variable rate loans while the former deals with a fixed rate
of interest over the entire duration of the loan, the latter has the rate of
interest changing
according to the fluctuations in the market.
LOAN THAT ONE CAN AVAIL
Up to 8590%
of the total cost based primarily upon the individuals payback capacity.
GENERAL CONDITIONS THAT GOVERN A HOME LOAN:
These are likely to vary with respect to the different types of housing loans:
The maximum period of the loan is normally fixed by HFIs. However, HFIs
do
provide for different tenors with different terms and conditions.
The Installment that you pay is normally restricted to amount 45% of your
monthly

gross income.
You will be eligible for a loan amount, which is the lowest as per your
eligibility.
This is calculated on the basis of your gross income and payback capabilities.
Some HFIs insist on guarantees from other individuals for due repayment
of your
loan. In such cases you have to arrange for the personal guarantee before
the
disbursement of your loan tasks place.
Most HFIs have a panel of lawyers who go through your property
documents to
ensure that the documents are clear and are not misrepresented. This is an
added
benefit that you get when you avail of a loan from an HFI.
You repay the loan either through Deduction against Salary, Post dated
cheques, and
standing instructions or by Cash/DD.
WHAT ALL ONE CAN TAKE THE LOAN FOR?
There are different types of home loan tailored to meet ones needs heres all
some of them.
Home purchase loan: This is the basic home loan for the purchase of
new home.
Home improvement loans: These loans are given for implementation
repair works &
renovation in a home that has already been purchased by the client.
Home construction loan: This is available for the construction of new
home.
Home extension loan: This is given for expanding or extending an
existing home for
e.g.: addition of an extra room etc.
Home conversion loan: This is for those who have financed the present
home with
home loan & wish to purchase& move to another home for which some extra
funds
are required through home on version loan ,existing loan is transferred to the
new
home including the extra amount required eliminating the pre payment of
the
previous loan.
Land purchasing loan: this loan is available for the purchasing of land
for both
construction and investment purpose.
Bridge loan: these are designed for those people who wish to sell the
existing home
& purchase another one. The bridge loan help finance the new home, until a
buyer is

found for the home.

HDFC BANK
INTRODUCTION
HDFC (Home Development Finance Corporation) Home Loan, India have been
serving the
people for around 3 decades and providing various housing loan according to
their varied
needs at attractive and reasonable interest rates. Owing to their wide
network of financing,
HDFC Home Loans provide services at doorstep and helps you find a home as
per your
requirements.
COMPANY PROFILE
HDFC Limited founded in 1997 by Ravi Maurya and Hansmukh bhai Parekh, is
an Indian
NBFS focusing on home loans. HDFC operates through almost 450 locations
throughout the
country with its corporate head quarters in Mumbai, India. HDFC also has an
international
office in Dubai, UAE with service associates in Kuwait. HDFC is the largest
housing
company in India for the last 27 years.
HDFC was amongst the first to receive an in principal approval from RBI to
set up a bank in
the private sector, as a part of the RBIs liberalization of the Indian banking
industry. It was
incorporated on 30th august 1994 in the name of HDFC Bank Limited, with
its registration
office in Mumbai. HDFC began its operations as a scheduled commercial
bank on 16th
January 1995.
ABOUT THE PROMOTER
HDFC, the promoter, is Indias premier housing finance company and enjoy
an impeccable
track record in India as well as in international markets.
Since its inception in 1997, HDFC has maintained a consistent growth in its
operation and
profitability. Its outstanding loan portfolio covers over a million dwelling
units. HDFC has
developed significant expertise in retail mortgage loans to different market
segment and also
has a large corporate client base in relation to its housing related credit
facilities and its
investment in portfolio.

With its tremendous brand equity, the strong reputation in the Indian and
international
financial services market, large shareholder base and unique consumer
franchise, HDFC was
ideally positioned to promote a bank in the
Indian environment. HDFC (together with its fully owned subsidiary HDFC
Investment
Limited) owns about 31 % of the equity. They had started with a strategic
alliance with the
Natwest group in UK with 20% equity, which has divested later on. The bank
has also signed
a memorandum of understanding for strategic business collaboration with
chase Manhattan
Bank in Feb. 2, 1999.
BUSINESS PHILOSOPHY
The mission of the HDFC Bank is to be world class Indian bank. This would
imply a bank
that would meet various financial needs of its customers in a convenient and
cost effective
manner at international standard of service.
The bank seeks to achieve the status of a preferred organization among its
major
constituentscustomers,
shareholders, regulators, employees, suppliers etc. while
maintaining the highest level of integrity and corporate governance.
The business philosophy at HDFC bank is based on four core values:
operational excellence,
customer focus, and product leadership and people competitors.
The Bank faces the strong competition in all of their principal lines of
business. Their
primary competitors are large public sector banks, other private sector
banks, foreign banks
and in some product areas, nonbanking
financial institutions.
WHOLESALE BANKING
Principal competitors in wholesale banking are public and new private sector
banks as well
as foreign banks. The large public sector banks have traditionally been the
market leaders in
the commercial lending. Foreign banks have focused primarily on serving the
needs of
multinational companies and the Indian corporations with crossborder
financing
requirements including trade, transactional and foreign exchange services,
while the large

public sector banks have extensive branch networks and large local currency
funding
capabilities.
RETAIL BANKING
In retail banking, their principal competitors are the large public sector
banks, which have
much larger deposit bases and branch networks,, other new private sector
banks and foreign
banks in case of retail loan products. The retail deposit shares of the foreign
banks are quite
small in comparison to the public sector banks, and have also declined in the
last five years,
which we attribute principally to the competition from new private sector
banks. However,
some of the foreign banks have a significant presence among nonresident
Indians and also
compete for nonbranch
based products such as auto loans and credit cards. They face
significant competition primarily from foreign banks. In provision of debit
cards and also
expect to face competition from foreign banks when we begin offering credit
cards. In mutual
fund sales and other investment related products, their principal competitors
are brokers and
foreign private banks.
TREASURY
In treasury advisory services for corporate clients, the compete principally
with foreign
banks in foreign exchange and derivatives trading as well as SBI and other
public sector
banks ion the foreign exchange and money market business.
LOANS
HDFC brings back you a wide range of loans to cater your financial needs.
The bank offers the following loans:
1) Personal loans.
2) Consumer loans.
3) Auto loans
4) Loans against shares
5) Loans against RBI bonds
6) Loans against insurance policy
7) EInstant
loans give the facility of loans approval in the 60 second on the internet.
8) HDFC has offices spread all over the country. This extensive network helps
HDFC in
providing services to large and well spread out clients. This network of

interconnected offices (on data circuits) helps HDFC to process application

for
purchase of property anywhere in India. HDFC has further established an
office in
Dubai and service associates in Kuwait, Oman and Quarter to make to easier
for
Middle East based nonresident
Indians to apply for loan to HDFCIndia.
9) HDFC is pioneer of housing finance in India and has been a leader in
business for the
last 23 years. HDFC has vast experience and a very committed and skilled
staff to
handle housing loan applications and solving customer problems.
HDFC LOAN SCHEME PURPOSE
HDFC Limited offers loans for the following purposes:
Land purchase
Home construction/purchase
Home extension
Home improvement loans
Shortterm
bridge loans
Nonresident
premises loans for professionals.
LOAN AMOUNT
You can avail of maximum of up to 85% of the cost of the property, including
the cost of the
land.
LOAN TENURE
You can repay the loan over a maximum period of 20 years under both FRHL
and ARHL.
Repayment will not ordinarily extend beyond your age of retirement (if you
are employed) or
on your reaching 65 years of age, whichever is earlier. However, HDFC will
endeavor to
determine the repayment period to suit your convenience.
RATE OF INTEREST
The rate of interest of HDFC is 8.75%.under the monthly rest option, interest
is calculated on
monthly rests. Principal repayment is credited at the end of every month.
At HDFC you have the choice between the normal FRHL and the innovative
ARHL.
Alternatively you can also avail the part of the loan under FRHL and balance
under ARHL.
HDFC also offers you the option to switch between schemes for the nominal
fee. Interest

rates on ARHL will be linked to HDFCs Retail Prime Lending Rate (RPLR)
which currently
is 13.75% .The rate on your loan will be revised every three months from the
date of first
disbursement, if there is a change in RPLR, i.e. the interest rate on your loan
may change.
However, the EMI on the home loan disbursed will not change. (if the interest
rate increases,
the interest component in an EMI will increase and the principal component
will reduce,
resulting in an extension of the term of the loan, and vice versa when the
interest rate
decreases).customer will be provided with an annual statement indicating
the details of the
interest and principal payment made during the year.
SECURITY
Security for the loan normally is first mortgage of the property to be financed
and/or such
other collateral security as may be necessary. Interim security may be
required, if the
property is under construction. Collateral or interim security could be
assigned to HDFC of
life insurance policies, the surrender value of which is at least equal to the
loan amount,
guarantees from sound and solvent guarantors, pledge of shares and such
other investments
that are acceptable to the HDFC.
Loans from HDFC are available even if you are availing a housing loan from
your employer.
HDFC has already entered into arrangements with several employers
enabling employees to
avail of loans both from the employer as well as HDFC for the same property.
Please do
ensure that the title of the property is clear, marketable and free from
encumbrance. To
elaborate there should not be any existing mortgage, loan or litigation which
is likely to
affect the title to the property adversely.
DOCUMENTS/SUPPORTING DOCUMENTS TO BE ATTATCHED:
FOR ALL THE APPLICANTS:
1) Allotment letter of the ooperative
society/association of the apartment owners.
2) Copy of approved drawings of proposed construction/purchase/extension.
3) Agreement for sale/sale deed/detailed cost estimate from
architect/engineer for the
property to be purchased/constructed/extended/renovated.

4) If you have been in your present employment/business or profession for

less than a
year, mention an a separate sheet details of the of the occupations for
previous five
years, giving position held, reason for change and period of same.
5) Applicable processing fees.
6) Proof of residence: attested copy of any one of the following:
a) Ration card
b) Passport
c) Driving license
d) Voters identity card
e) Current telephone bill/electricity bill/gas bill
7) Proof of identity: attested copy of ay one of the following:
a) Passport
b) Driving license
c) Voters identity car5d identity card issued by the employer (if employed in
state/central government)
d) PAN card
8) Certificate of loan outstanding issued by the lender (for refinance cases
only)
9) Any other information regarding your repayment capacity that is
necessary and will
assist HDFC in appraising the loan proposal.
ADDITIONALLY
IF YOU ARE EMPLOYED:
1) Verification of the employment form with only part I filled in.
2) Latest original salary slip/salary certificate showing all deductions.
3) If your job is transferable, permanent address where correspondence
relating to the
application can be mailed.
4) A letter from your employer agreeing to deduct the EMI towards the
repayment of the
loan from your salary. This will expedite the processing of your loan
application.
5) Your updated original bank pass book/s or original bank statement/s
showing salary
and saving entries for the last six months.
6) A photocopy
of your Form16
(issued by your employer) for the last assessment
year.
IF YOU ARE SELF EMPLOYED:
1) Balance Sheets and Profit & Loss Accounts of the business/profession
along with
copies of individual income tax returns for the last three years certified by
the

Chartered Accountant.
2) A note giving information on the nature of your business/profession, form
of
organization, clients, suppliers, etc.
3) Copies of individual tax chalans for the last three years
4) Copy of advance tax chalan (if any)
5) Your updated original Bank Pass Book/s or Original Bank Statement/s
showing
saving s entries for the last twelve months.
TAX BENEFIT
You are eligible for certain tax benefits on principal and interest components
of a loan under
the Income Tax Act, 1961.
ELIGIBILITY
The repayment capacity as determined by the HDFC will help in deciding how
much we can
borrow (the cost of the property or Rs.1crore whichever is lower). Repayment
capacity takes
into consideration factors such as income, age, qualifications, number of
dependents,
spouses income, assets, liabilities, stability and continuity of occupation and
saving history.
And, of course, HDFCs main concern is to make sure you can comfortably
repay the amount
you borrowed.
ABOUT THE PRODUCT
HDFCs Home Loans offers you various unique benefits and are easy to
arrange and
repayable in easy monthly installments. The terms of the loan can be
structured according to
the customer requirement.
Home loans can be applied for by either individually or jointly. Proposed
owner of the
property, in respect of which the loan is being sought, will have to be
coapplicants.
However, the coapplicants
need not be coowners.
Loans can avail up to a maximum of 85%
of the cost of the property (including the cost of the land). HDFC lends up to
a maximum of
Rs. 10000000 on a home loan to an individual. You can repay the loan over a
maximum
period of 20 years. They determine the loan amount after evaluating the
repayment capacity
of the individual. HDFCs main concern is to help individuals comfortably
repay the

borrowed amount.
SUPERIOR PROCESSING CAPACITY:
HDFC has over the years invested substantially into the computer systems
and training. This
has enabled HDFC to respond to customer needs and build up capabilities to
approve loan on
the spot or disburse them fast.
BRANCH NETWORK:
HDFC has offices spread all over the country. This extensive network helps
HDFC in
providing service to large and well spread out clients. This network of
interconnected offices
(on data circuits) helps HDFC to process applications for purchase of property
anywhere in
India. HDFC has further established an office in Dubai and service associates
in Kuwait,
Oman, Qatar, Bahrain and Saudi Arabia to make it easier for Middle east
based nonresident
Indians to apply for the loan to HDFCIndia.
EXPERIENCED TRAINED STAFF:
HDFC is a pioneer of housing finance in India and has been a leader in the
business for the
last 25 years. HDFC has vast experienced and very committed and skilled
staff to handle
housing loan applications and solving customer problems.
FREE COUNSELLING:
HDFC believes that it is in the business of providing solutions to an
individuals need for
owing a house, and not just in the business of providing finance. Keeping this
in mind HDFC
will provide free counseling to on how and where to buy a house in India
(property services)
or what are the prices and trends in the real estate market or what
precautions one should take
before buying a house. This service is offered at any of the HDFCs offices.
LEGAL AND TECHNICAL GUIDANCE:
HDFC has qualified legal and technical staffs who liaise with developer to
collect and
scrutinize the property documents and permissions. We have master files of
most projects
being developed by the reputed developers. It has always been HDFCs
endeavor to protect
the interest of the borrower, as we believe that the buying a house is one of
the most
Important decisions in this life.
FLEXIBLE (CUSTOMIZED) REPAYMENT SCHEMES:

Keeping in mind the fact that each individual has unique problem requiring
unique solution,
HDFC has developed various repayment options like Step Up Repayment
Facility (SURF),
Flexible Loan Installment Plan (FLIP) Balloon Payment plan and Structured
Repayment
Plan.
STEP UP REPAYMENT FACILITY
HDFC Ltd has a hitherto with you, right through .This statement HDFC
proves time and
Again by developing close relationship with individual customers and by
constantly
Developing and marketing in the market new and innovative products that
increase the
Comfort level of the customers. Along the same philosophy HDFC came up
with Step Up
Repayment Facility which once again reassures customers that HDFC helps
you achieve
your dream.
This facility is especially helpful to those customers who want to get a loan
on an amount
that is not falling within the permissible limit of their repayment capacity. It
also is in line
with HDFCs aim to provide greater degree of personalization in service and
the tools. Hence
there can be the situation wherein the applicant is not in the position to pay
the required EMI
which is calculated by the ILPS (Individual loan processing system).HDFC in
this case offers
to let the applicant use one of the two plans to repay the loan amount.
The EMI Chooser 1
In this plan the applicant gets the advantage from HDFC to select the
amount that
he wants to pay as his fist EMI. This means that HDFC will let the applicant
decide
what amount he can comfortably pay to HDFC in the first term of his Loan
Repayment
Schedule. The system will calculate the next two EMIs for the next two terms
The customer can hence decide when he wants to repay the maximum
amount of the Loan to
HDFC and when he wants to repay minimum leftover or remaining amount of
the loan in the
form of still smaller EMIs.
The EMI Chooser 2
This plan is an extension of the aforementioned plan .In this plan HDFC helps
the Applicant

by letting him choose two EMIs .This means that the Applicant can select the
amount that he
wants two pay for both the First and the Second terms of his repayment
schedule. This
translates into more help and more convenience to the applicant. However
the benefits of
these plans dont stop here.
The Applicant can also allocate the term length for which he wants to pay
what amount
This translates into a great advantage to the Applicant .He can now link
1. His current salary
2. The rate of average increment,
3. His existing and expected obligations,
4. His existing and expected expenses
5. The length of the term among others.
HDFC can hence assist the Applicant in developing a much more
personalized loan plan as
compared to its competitors in the Housing Loan market.
The Applicant can also save money by using these plans .This is because the
total Outflow in
case of a regular plan is more as compared to these special plans. The
Applicant will hence
obtain more benefit in case of Prepayment and elsewhere.
C. All Loans from HDFC Ltd are subject to Tax exemption and be treated as
Rebate.
Hence HDFC lets the customer save their hard earned money.
FLEXIBLE LOAN INSTALMENT PLAN (FLIP)
Another First of its kind product from HDFC .This is also to assist the
Applicant to easily
secure a loan in the following condition. FLIP is used when the applicant and
coapplicant
want to jointly repay the loan. There is however a problem in the situation
which would
otherwise not allow the loan to be sanctioned. There are two applicants
hence two incomes
.Therefore in the joint payment they can combine their income to repay the
loan .Let there be
Mr. A and B who want to take a loan for 14 years .A is the father and B is the
son of A .Now
consider the situation in which A and B want to take a loan and jointly repay
it .But A is 52
years old and B is only 25 .Hence A will retire after 8 years and will not be
repaying the
EMI but B can continue to repay the loan. In that case although there will be
a problem at

other places but in HDFC this is solved by taking different incomes in the
terms. Hence the
income that will be considered earlier will be the fathers income and at his
retirement or at
any other selected stage of repayment we will begin to consider only the
income of the son.
The advantage of FLIP in terms of the Applicant is that of joint payment,
personalization,
easy repayment, and freedom from many possible problems. In the
Illustration the father is
going to pay only for 105 months and after that we are to consider the sons
salary only for
the next remaining 60 months.
PARI PASSU/SECOND MORTGAGE ARRANGEMENT:
HDFC has a tieup
with a large number if public sector organizations and banks which
enable us to offer loans to your employees with the flexibility of their spouse
also availing a
loan from his/her own employer.
SAFE DOCUMENT STORAGE FACILITIES:
HDFC has state of art storage facilities which are theft and fire proof, at
various locations
where loan and property documents are stored. In this way valuable
documents are stored
safely over the period of the loan and are released almost immediately after
a customer repay
his loan.
ELECTRONIC MAIL:
HDFC through its Email
services can promptly respond to queries. In addition, HDFC can
promptly send its application form cum brochure and other detail on its loan
products by email
to interested individuals. For Nonresident
Indians our interactive website offers another
means of contacting us. In our effort to reach out globally dispersed
Nonresident
Indians, we
will continuously enhance our website.
HOME CONVERSION LOAN:
HDFC offer the option of a home conversion loan to its existing customer who
are interested
in moving to a new house. Through this scheme the customer can apply to
have their existing
loan transferred towards the purchase of the new home. Customers may also
apply for an

additional loan amount for the purchase of the new house. This gives the
customers the
option of selling t6heir existing house if they wish to, without having to repay
their old loan
APPLICATION CAN BE MADE BEFORE SELECTING THE PROPERTY:
Individuals may make an application for the loan even if the property has not
been selected
or the construction has not commenced. HDFC can provide assistance in
locating an
appropriate house to such customers.
HOME IMPROVEMENT LOANS:
As an exclusive offer to its existing customers HDFC offers Home
Improvement Loan up to
100% of the improvement cost as compared to the home improvement loans
up to 70% of the
improvement cost offered to the general public.
FEE:
A processing fee of 0.5% of the loan amount applied for rs.5 per rs.1000 of
the loan applied
for is payable when the application form is submitted to HDFC. This fee is in
the respect of
costs incidental to the application. For example:
Loan applied for fees
Rs.20000 Rs.100
Rs.100000 Rs. 500
On approval of the loan, a loan offer is made to you on acceptance of the
offer. You have to
pay an administrative fee of Rs.0.5% of the loan approved. You can also pay
the processing
fee and administrative fee upfront i.e. 1% of the loan at the time of
submission of the loan
application itself. This fee is in respect of the costs incidental to the
application. Taxes as
applicable will be charged on the fees collected.
CHARGES:
For Fixed Rate Home Loan (FRHL) an early redemption charge of 2% of the
amount being
prepaid is payable, if the amount being repaid is more than 25% of the
opening balance.
However under Adjustable Rate Home Loan (ARHL) option early redemption
charges of 2%
is payable only in case of commercial refinance. You may be required to
submit the copies of
your Bank Statements or any other documents that HDFC deems necessary
to verify the
source of prepayment.

You can make payment for fees and charges by cheque marked payees
account only
drawn on a bank in a city where HDFC has an office or by demand draft
(payable at par to
HDFC).
HOW TO APPLY
Customer can either download (in PDF format) the application form or get
the application
form by Email.
Alternately the customers can collect the application form from any of your
nearest HDFC offices. Customer need to submit it along with supporting
documents and
processing fee at any HDFC office that is convenient to the customer.
Customers can make
payments by the cheque marked payees account only drawn on a bank in
a city where the
HDFC has an office, by demand draft (payable at part to HDFC) or by cash.
Customer can
make an application at any time after they have decided to acquire a house
even when the
house has not been selected or construction has not commenced.
HDFC will consider your application, make enquiries as it deems necessary
and convey its
decision to you. On acceptance of the offer, you will have to pay an
administrative fee for the
loan approved. Customer can take the disbursement of the loan after the
property has been
completed and you have invested your own contribution in full (own
contribution is the total
cost of the property less HDFCs loan). The loan will be disbursed in full or in
suitable
installments (normally not exceeding three in number)taking into account
the requirement of
the funds and the progress of the construction, as assessed by HDFC and not
necessarily
according to the builders agreement.

STAGES OF HOME LOAN

PROCESS:
RESEARCH MYTHODOLOGY
Research methodology is an important part of every project. Because it helps
in knowing
how to select the representative sample from the world or the general
population, the right
research tools and techniques to complete the research.
The study of the consumer behavior is important because he is the king. The
research process
is based upon survey method, so in order we go to service provider and
services user which is
the customers.
The research involves the following steps:
Define the problem and research objective: The problem and
objective is to assess
the services offered by the various service providers and what the customer
wants.
Developing the research plan: The second stage of the research
methodology is to
develop a research plan. The research plan designed to take the decision on
the data
sources, research approaches, research instruments, sampling plan and
contact
methods.
Survey research: It was a descriptive research.
Research instrument: The use of an effective research instrument is
very important
because through this instrument we collect data in this project through
observations
and personal interview were conducted.
Personal interview: as we were doing direct selling we interacted with
my customers
and asked about their views in selecting a service and what are their wants
and
expectations from a service provider.

 Sampling plan: After finalizing the research approach and instruments a

sampling
must be designed.
Sampling unit: Data have been collected from banks.
Sampling size: It has been collected from four banks.
Sampling procedure: what process should be used to collect the
sample. So,
representation sample, convenience sampling is used.
Collect the information: After completing all the steps, the data are
collected from
different sources.
Analyze the information: After the data is collected they are analyzed
to know the
findings. The data is then tabulated to develop the frequency distribution.
Present the findings: As the last step, the findings are presented that
are relevant to
the major marketing decisions.
ANALYSIS OF DATA
The home loans provided by the banks are more or less same at the basic
level. The banks
generally try to go ahead of other banks in terms of attracting number of
customers to their
countries. For this they are trying to offer some unique services as per the
unique
requirements of the unique important customers.

COMPARITIVE STATEMENT OF HOME LOAN

PARTICULAR
S
ROI(FIXED)

HDFC
14%

ICICI
15
Yrs. 16%
5 10
Yrs. 16
% 10 15
Yrs. 16%
15
20Yrs13.75
%

PNB
Up to
5yrs9.25%
(up to 20
lakh)
&
10% (above
20
lakh)
5 to
10yrs10%
(up to 20
lakh)
&
10.25%
(above
20 lakh )
10 to 20
yrs10.50%
(up to 20
lakh)
&
10.75%
(above

SBI
Year 18%
Year 2 &
3-9%

ROI(FLOATING
)

Up to
30lakh8.75%
30
lakh50lakh9%
Above50lakh9.
25%

15
Yrs.16
%
5 10
Yrs.11.25
%
10 15
Yrs.16
%
15 20
Yrs16
%

20 lakh)
Up to
5yrs8.75%
(up to 20
lakh)
&
9.50%
(above 20
lakh)

Year 4
onwards
up
to 50
lakh9
.25%
over 50
lakhs9.7
5%

5 to10yrs9%
(up to 20
lakh)
&
9.50%(above
20
lakh ) 10
to20yrs9.25
%
(up to 20
lakh)
&
9.75%
(above 20
lakh)
PROCESSING
FEE
PENALTY
TENURE
MINIMUM AGE
MAXIMUM
AGE

0.5%
2%
25 years
21
60

0.5%

0.5%

0.5%

2%
15 years
25
55

2%
20 years
25
55

2%
25 years
25
55

COMPARISON OF MAJOR PLAYERS

The markets for home loans have been sizzling in India. The spurt in growth
in recent years

and the prospect of continued buoyancy in demand have attracted many

players to the
industry which till a couple of years back had two major playersHDFC
and LIC Housing
Finance. The result is cutthroat
competition, which has benefited the loan seekers. The home
loan market has grown at a compounded rate of over 40% over the last four
years. And from
what industry experts believe that there is a little chance that there will be
any significant
decline in the growth rates going forward. So what have been the key factors
in triggering of
this high growth period?
There are several reasons for the same on the demand side:
Faster rise income as compared to property prices, thus making housing
more
affordable.
Decline interest rates, which have greatly reduced the cost of borrowing
(both o0n
interest and capital).
Then there are factors on the supply side too which have supported this
growth:
More competition in the housing finance sector resulted in companies
charging lower
interest rates, sometimes even at the cost of spread (i.e. profit margin)
The fee for getting the home loan has reduced dramatically over the last
couple of
years. From over 2% of the loan amount to as long as 0.25% (some
companies are
known to wave of the fee entirely). Housing Finance Companies have
introduced
several new products to meet the needs of wide variety of customers. One
such
scheme, the Step up Loan, where EMIs increases as the income of the
individual
increases has been a big hit with the individuals just starting off with their
careers.
One other factor is increasing collaboration between Housing Finance
Companies and
builders. Such partnership minimizes the service and funding related issues
significantly thus making it easier to buy property.
One innovation in the housing finance sector has been the introduction of
floating rate home
loan simply put the cost of such home loan or the interest rate not fixed
during the tenure of

the loan. Instead interest rate is benchmarked against some index/ indicator.
So as the
benchmark rate moves up or down, the cost of your loan too changes, at
some predetermined
frequency (usually once a quarter).
Ideally loan seekers should opt for a floating rate home loan when it is
expected that the
interest rate will decline going forward. Fixed rate loans should be preferred
when the
interest rates are expected to rise.
But is the choice that simple? In todays environment when there is a lot of
talk about rising
interest rate, should investor shun floating rate home loan. Altogether is
there still some merit
in this instrument? In the last one year, there was a trend of floating rate
home loans being
more popular as compared to the fixed rate loan. As of now, this trend is
continuing says
Mr. Suresh Menon , GM (Mumbai region), HDFC Limited.
There are three important issues which one needs to consider before opting
for one type of a
loan over the other:
First, an important determinant of what you go in for should be the long term
expectation of interest rate. For example if you (or the experts) expects the
rates to
rise for the next one year, but then decline gradually over the next several
years a
floating rate product may be preferable. The other option for going in for a
fixed rate
product and then switching at the end of the year will entail costs (there
could be
penalty of 1%2%
of the outstanding loan amount) and may not make financial sense.
Moreover floating rate home loans do not change the rate of interest every
quarter
(even though they review the rate every quarter). Mr. Menon points out The
attraction of a floating rate home loan is that it does not attract a part
prepayment
charge. This could appeal to individuals who get lump sum bonuses which
they can
use to reduce their loan exposure.
Second, the issue whether fixed rate home loan are actually fixed rate.
When
considering a fixed rate home loan over floating rate of home loan a strong
selling
point is that if interest rate were to rise dramatically you will be protected.

Apparently the reality is some what different. It seems that companies that
have given
out fixed rate home loans can revise their rates upwards in exceptional
circumstances
(significant rise in interest rate for one) so if you think interest rate will
remain rage
bound over the near term and decline over the long term, you are still better
off with
the floating rate product.
Third, a fixed rate loan is generally priced higher as compared to the
floating rate
product. This holds true in the current environment where the fixed rate loan
is at a
higher interest rate as compared to the floating rate loan. The difference is
currently
about 0.25% to 21%. So if you expect that interest rate are likely to move up,
but only
to the extent of this differential, then you should ideally be in different
between the
two types of loan. The deciding factors then should be when you think the
rates will
increase and also the long term expectations of interest rates.
As always there is no one answer to whether you should go in for floating or
a fixed rate
home loan. If you are a person with very little appetite for risk or negative
surprises, opt for
fixed rate home loan. But in case you can take on some risk a floating rate
home loan is
worth a look.
Five steps to take a right loan:
1)Gather data on interest rate. Get interest rate information from more than
one source
and get the same information from each so you can compare the offers.
2) Get information on fees. Find out about processing fees, administration
charges and
other costs that may be involved in taking the home loan. A written
statement of all
the fees from the housing finance companies will ensure that there will be no
surprises later on. Use the lowest amount of fees to negotiate with the other
lenders.
3) Get preapproval
letter. This gives you substantial leverage as you are then seen as
serious buyer by the seller of the property. Also, having the letter in your
hand will
set a limit to the amount of money you can commit to the property. This will
help in

identifying the right property.

4) Bargain for a lower rate of interest. Housing finance will reduce their rack
rates for
customers with the good credit record. A bargain deal will easily fixed a
home loan
at significantly lower rates (at times you can get a discount of as high as
0.50
percent). Here again get a confirmation of the rate (and for how long it will
remain
fixed) via a letter.
5) Watch out for a predatory lending. Dont include false information on your
home
loan application to get quick approval. Also do not borrow more money than
you
need or can afford.
A floating interest rate allows customer to take advantage of interest rate
movements. They
get immunity from adverse movements and read the benefits of any fall in
interest rate but a
floating rate loan makes sense only when interest rate are high so that they
can take
advantage of possible fall. But predicting interest rate movement could
confound even
seasoned market watchers.
If they are looking for a home loan, be prepared to cough up a pretty sum as
down payment.
The RBI, in a recent meeting with the bankers cautioned banks against
lending 100% of the
property value. That is because of increasing competition in home loan some
banks have
been funding even 110% of the agreement value. This means your loan not
only pay for the
property, it helps with the stamp duty and registration charges and even
furnishing. Its being
sweet deal so for, as borrower not only need have no access to other funds,
they also get tax
breaks.
The RBIs position is that lending such sums will remain additional risk for the
bank. In case
of default, the bank may not have sufficient collateral security to recover
dues and may have
to write off the additional borrowings. However, the bankers do not seen
unduly worried.
Non performing assets in the housing segment are quite low below 1% and
that, say bankers,
is due to the higher asset quality.

SWOT ANALYSIS OF HOUSING FINANCE INDUSTRY

STRENGTHS
1) The industry has been witnessing very fast growth rate, which is 6%
growth in the
first
2) Quarter of 20022003
as against 35%
growth recorded in the first quarter of 20012002
3) The market faces a high demand curve, thoroughly mismatched by a low
supply
curve
4) Investment is based in assets that are securities & those that have
historically
appreciate rapidly.
5) Tax benefit & other facilities provided on loan repayments.
WEEKNESSES
1) The foreclosure rules of court of law such as provision regarding the
ownership of not
more than one house (in Delhi) binds the industry.
2) The healthy of an HFC depend upon its ability to mob up low cost funds.
3) AN HFC is unable to tap the rural market due to lack of proper retrieval
procedures
so whilst
4) The rural market offers a higher rate of return it has a higher risk &
default rate.
5) Many legal impendent exist, deferring purchase of certain types of
property beyond a
6) Certain extent thereby negatively impacting weak mortgage laws,
resulting in an
increase in risk compo ending this.
OPPORTUNITIES
1) The housing industry faces a severe shortage of houses. The total demand
for houses
is Expected to touch around 19.40 million units by the year 2003 of these
12.8 million
2) Dwelling units (6598%)
would be in rural areas & 6.6 millions dwelling units
(34.02%) in urban areas.
3) While the loan facility is backed by the security of property this sector
represent a low
margin But on the low margin but on the same line low risk segment. The
address this
4) Market the ones lies on the HFCS to device bold & innovative alternatives
like
mortgage Based securities use of method such as door to door collection of

installments assessing the Creditworthiness of the prospective client and

providing for
group securities.
5) The roles of NHB in refinancing & providing regulation of housing finance
system.
6) The governments initiatives to promote the sector & its contribution in
uplifting the
sector.
THREATS
The industry faces increased competition as more & more foreign backs &
Housing
Finance Companies are providing loan facility.
SWOT ANALYSIS OF HDFC HOME FINANACE
STRENGTH
1) Save substantial interest.
2) Prepay whenever the customer.
3) Reduce their loan outstanding.
4) Access the surplus finds anytime.
5) Use surplus funds to invest when the right opportunities arises.
WEAKNESS
Product is very good but it is mainly suitable for higher income group & is not
suitable for
the Middle income group
OPPORTUNITIES
There is ample scope for financing flats & apartments for the salaried class in
the higher
income Group.
THREATS
1) Nationalized banks like SBI, Union Bank, PNB.
2) Private Banks likes HDFC & standard chartered & Citi Bank with its home
credit scheme.
ICICI HOME FINANACE COMPANY LTD
Consumer friendly housing finance company
HISTORY
ICICI home finance company ltd was incorporated on May 28, 1999 as 100%
subsidiary of
ICICI Personal Financial Services Limited (ICICI PFS). ICICI finance company
Ltd was set
up with objective of providing long term housing loan to individual and
corporate. The
company was registered on March 302000 with National Housing Act, 1987
in terms of
Housing Financing Companies (NHB) direction, 1989 with effect from May 3,
2002, ICICI

home finance has become a 100% subsidiary of ICICI bank Ltd.

OVERVIEW
ICICI home loans are at present available to customer in 150 cities/towns
across the country.
Loans are offered for the purchase of new homes. Purchase of resale homes
and home
improvement. Besides the companies also offers loans for commercial
property and loans
against existing property. The loans are offers foe tenors up to 30 years. The
company has
also introduced several customers friendly services such as door step
services, know your
loan on phone facility and ICICI home search free property brokerage
services. ICICI
Personal Financial Services Limited (ICICI PFS) formerly ICICI credit was one
of the first
four companies to obtain registration as non banking financial banking
companies(NFBc)
from the reserve bank of India (RBI)on sep 10, 1997 under the new section
45 I A of the
RBI act ,1939.
During the year 19981999,
there was a significant shift in the companys operations from
leasing and hire purchase to distribution and servicing the all the retail
products for ICICI,
including two auto loans, consumer durable finance & another financial
products. The
company has become a critical part of ICICIs retail strategy aims at offering
a
comprehensive range of products &services to retail customers. In view of
this reorientation
of the business, the name of the company was changed from ICICI
Corporation Limited to
(ICICI PFS) effective march 22, 1999.
ICICI commenced its custodial services business in 1992 & played a
pioneering role in the
business when it accepted the custodian role for the first ever GDR issue by
an Indian
corporate (reliance industry Ltd). ICICI has a major market share in the
segment act as
custodian of 41 ADR/GDR issues & in the process, has established the
relationship will all
the major overseas institutional investors including foreign institutional
investors (FIIs) &
as on the June 30,1999, the value of asset held in our custody exceeded us 2
billion. At

present, ICICI offers a full range of custodial services for primary and
secondary market
operation pertaining to debt, equity, money market instruments GDR/EURO
issues
conversion & GDR arbitrage to:
1) Overseas institutional investors like
a) FIIS
b) OCBS
c) OFFSHORE FUNDS
d) VENTURE FUNDS
2) Overseas government agencies.
3) Institutional looking for proprietary investment.
4) Mutual funds
5) Private investment companies
6) Large corporate
7) High net worth individual
As a value added services ICICI custodial services division assist the client in
preparation,
submission & follow up for various applications by FIIS/OCB with SEBI/RBI
APPLICATION PROCESS OF YOUR HOME LOAN
Your search for the perfect home loan ends here at ICICI Bank Home Loans,
even before
your have found the perfect property.
The moment you decide to buy a home, you can put in your application for a
home loan. Yes,
you can apply for a home loan even before you have selected the property.
The property need not even be in the same city where you are residing. The
only condition
being that ICICI Bank has Home Loans operations in both the cities.
Should there be a change in your financial status or plans, you can withdraw
your sanction
within 6 months of approval of your home loan.
However, we are always ready to assist our customers in the event of
legitimate problems.
And, we might reconsider this if we find that there are satisfactory reasons
for the delay.
And, neither would we charge you extra for this delay.
If it is refinancing you are interested in, it is possible within 6 months from
the date of
purchase of property.
PERSONAL BANKING
At ICICI bank they are committed to making banking a pleasure. This
commitment is
manifested in services they offer a wide range of account, investment
scheme & facilities.

Each services offer their customer security, flexibility of operations &

maximum returns.
The various services provided under this is as follow:
1) Maximum cashsaving
account
2) Quantum fixed deposits
3) Quantum optima value added saving account
4) Money pluscurrent
act
5) ATM
6) Treasure chest cocker facility
7) Power pay roll
8) Retail treasury instruments
CORPORATE BANKING
MOBILE COMMERSE
ICICI bank now brings back account & ICICI credit card to customers
fingertips .with
mobile commerce customer can perform a wide range of query based
transaction from their
orange tm (Mumbai) & Airtel (DELHI) mobile phone , without even making a
call.
1) Access multiple accounts
2) Balance inquiry to the linked account
3) Cheque book request
4) Mini statement listing of last three transactions5) Request for account
statements (by
mail or fax)
ICICI
1) Attractive IR
2) Door step service from enquiry stage till the final disbursement.
3) No guarantor required.
4) Can transfer your existing high interest rate loan.
5) Special 100% funding for special properties.
FACTORS AFFECTING YOUR LOAN AMOUNT
With ICICI Bank Home Loans, you can get a home loan suited to your needs.
The home loan
amount depends on your repayment capability and is restricted to a
maximum of 80% of the
cost of the property or the cost of construction as applicable. A number of
factors are taken
into account when assessing your repayment capacity. Repayment capacity
takes into
consideration factors such as income, age, qualifications, number of
dependants, spouse's
income, assets, liabilities, stability, continuity of occupation and savings
history.

However, there are ways by which you can enhance your eligibility.
If your spouse is earning, put him/her as a coapplicant.
The
additional income shall be included to enhance your loan amount.
In case of any coowners
they must necessarily be coapplicants.
The final amount to be
sanctioned will depend
on your repayment capacity. However, what you ultimately are entitled to
will have to
conform within the limits fixed for each loan.
Also, when the company looks at the total cost, registration charges, transfer
charges and
stamp duty costs are included.
Documents required for Home Loan Sanction
ICICI Bank Home Loans, Indias leading Home Loans Provider, offers
attractive interest
rates and unbeatable benefits to ensure that you get the best deal. Keeping
your convenience
in consideration, we ask you for minimal mandatory documents for the
sanctioning of your
home loan, to keep the process totally hasslefree.
We require the following documents to sanction your home loan:
Sanction Documents Completed application form
Photograph
Fee Cheque
Photo Identity Proof
Age Proof
Signature Verification Proof
Residence Address Proof
Document for the Salaried
Last 3 months Salary Slip
Form 16
Bank Statement for the last 6 months from Salary Account
Repayment Track record of existing loans / Loan closure letter
Document for the Selfemployed
Income Tax Return / Computation of Total Income / Auditors Report / Balance
Sheet / Profit
& Loss Account certified by Chartered Accountant for last 2 years (3 years for
Home Equity)
(both for business and personal of partners/directors)
Bank statement for the last 6 months from operating account
Repayment Track record of existing loans / Loan closure letter
Board Resolution in case of a company
Proof of existence
Office Address Proof

 Photo Identity Proof, Residence Address Proof, Signature Verification Statement for all the
main
partners / directors.

HOME LOAN
1) Customer must be at 21 year of age when the loan is sanctioned.
2) The loan must terminate before or when you twin 65 year of age or before
retirement,
Whichever is earlier.
3) Customer must be employed or self employed with regular source of
income
LOAN AMOUNT
A number of factors are taken into account when assessing repayment
capacity.
Customer income, age, number of dependents, qualification, asset
&liabilities,
stability and continuity of customer employment. Business is one of them.
However
there are ways by which you can enhance your eligibility.
If the customer spouse is earning put he/she as a coapplicant.
the additional income
shall be included to enhance the loan amount. Incidentally, if there are any
co owners
they must necessarily be coapplicant
customer fiances income can also be
considered sanctioning the loan on your combined
Income .the disbursement of the loan, however will be done only after the
submit
proof of Marriage. Providing additional security like bonds, fixed deposits &
LIC
policies may also help to enhance Eligibility.
While there is no need for guarantor, it could be that having one might
enhance your
credibility with us. If so, our loan officer would provide customer with positive
necessary details.
The final act to be sanctioned will depend on your repayment capacity.
However,
what customers ultimately are entitled to will have to conform within the
limits fixed
for each loan.
Also when the company looks at the total cost, registration charges, stamp
duty,
transfer charges are also included.
HOMELOAN
We at ICICI bank understand the value of owing your house. Our affordable
home loans can
make all the difference to their dreams of owing home.

FIND THE RIGHT HOME

Provide facility for search of free online property. A one stop shop for all their
Real Estate needs.
WHAT YOU GET
0% brokerage on first sale properties access the entire market under our roof
site visits to the
properties short listed by you. Help in negotiating the best price. Help the
legal
documentation.
LISTINGS BELOW ARE THE STEP INVOLVED IN AVAILING OF A
HOMELOAN
A person applies for a home loan
The executive meets the applicant & briefs him the entire loan process,
requirements & the various options available.
The applicant chooses a housing finance company (HFC) & handover the
income
Document to the executive are the income documents are headed over to
the HFC for
eligibility & approval.
The HFC verifies the documents & checks the repaying capacity, saving
habits,
tenure of services etc. of the applicant & approves the loan amount.
After approval an offer letter is given to the applicant by the HFC, along
with list of
original title documents that have to hand over to the HFC.
The applicant gives the original property title document to the HFC
The HFC scrutinizes the legal & the technical aspects of the original title
document.
If the HFC is satisfy as to the legal & technical aspect of the document
then the
applicant is called to sign the loan agreement
The loan disbursement schedule is decided by the HFC according to the
stage of
construction (If property under construction) or a onetime payment is made
if
property is ready for Possession.
The applicant gets possession of the property depending upon the level of
completion
of the property.
The applicant can start paying the EMIs.
DISBURSEMENT
Customer loan will be disbursed after you identify & select the property or
the home that
customer are purchasing and on their submission of the requisite legal
documents.

While the customer may be under impression that the list of documents
asked for it is rather
extensive. Each and every single document asked for will be verified & check
to ensure their
safety. This may take some time but the banks want to ensure a clear title
and will complete
all the legal & technical verification to ensure that they have full right to their
home.
The 230 a clearance of the sellers or 371 clearance from the appropriate
income tax
authorities (if applicable) is also needed on satisfactory completion of above,
on registration
of conveyance deed and on the investment of your own contribution, the
loan amount (as
warranted by the stage of construction) will be disbursed by ICICI.
The disbursement will be in favor of the builder/seller.
At ICICI Bank Home Loans, we disburse the loan amount after you identify
and select the
property or home that you are purchasing and submit the requisite legal
documents.
While you may be under the impression that the list of documents asked for
is rather
extensive, please note that it is for your own good. Each and every single
document asked for
will be verified and checked to ensure your safety.
This may take some time but we want to ensure a clear title and will
complete all the legal
and technical verifications to ensure that you have full rights to your home.
Your loan will be disbursed after you identify and select the property or home
that you are
purchasing and on your submission of the requisite legal documents.
The 230 A Clearance of the seller and / or 37I clearance from the appropriate
income tax
authorities (if applicable) is also needed.
On satisfactory completion of the above, on registration of the conveyance
deed and on the
investment of your own contribution, the loan amount (as warranted by the
stage of
construction) will be disbursed by ICICI Bank.
Disbursement Documents
Property documents (as per P&D for respective states and as asked by
empanelled lawyers
for individual cases)
Facility Agreement
Disbursal Request Form
Cheque Submission Form for Pre EMI and EMI cheques

ECS or Auto Debit for ICICI Bank account holders or Post Dated Cheques for
EMI / Pre
EMI
Personal Guarantors Documents (PG Form, Photograph, Identity Proof,
Address Proof,
Signature Verification and Income documents, if applicable)
In case of property is owned by a company
Memorandum of Entry
Form 8
NOC
AMOUNT
This largely depend on a no. of facts like ones age ,profession, salary, the
city one reside is
among other such factors. it varies between 2.1lakh to 1crore depending on
the lenderas
the
rule of the thumb, depending on HFC one have to cough up 15% 20%
of the loan amount as
the down payment. For smaller amount, this may not be much. But for figure
remaining into
lakh this could make loads of difference. For e.g. an apartment of costing Rs
10 lakh may get
85% financing, so one will have to arrange for remaining Rs 15 lakh. If one
takes this into
amount the additional thousands will definitely put a strain on ones finances
.
TENURE
Generally the maximum tenure of home loans is 15 years, with a few lenders
offering tenure
of 20 years or more. ICICI offers 15 year loan. The longer the tenure, the
more one pay in
total interest but ones monthly payment will be less. So depending ones
earning potential &
bank balance one can choose an appropriate tenure. An important
requirement of most of the
banks/ HFCs is that one pays up the entire loan before one retires. One can
always prepay
ones entire loan amount before it is due. There is a trend to do away with the
prepayment
penalty being imposed by some lenders. So its best one checks on this as
well.
INTEREST RATE
Without doubt the most important parameter to factor into ones calculations.
The interest
rates may vary from institution to institution. Repayment is in the form of
EMIs (equated

monthly installment). The longer the tenure, the more one pays in interest,
but ones monthly
payment will be less. The interest rate of ICICI is
Tenure
15-20
10-15
5-10
1-5
1-5
5-10
10-15
15-20

Interest Type
Fixed
Fixed
Fixed
Fixed
Floating
Floating
Floating
Floating

Interest Rate
13.75 %
16 %
16 %
16 %
16 %
11.25 %
16 %
16 %

REFINANCE
This is concept that is yet to catch on in the home loan market but is bound
to be a major
service in the months to come. Under this facility, one can take a new loan
from another
bank/HFC to pay back another loan before its natural tenure. It gives one the
opportunity of
prepaying ones high cost debt and get a lower cost one. In todays falling
interest rate
scenario one should use this vehicle to lower ones debt payment as much as
possible. The
lender facilitates the shift by paying the outstanding and transferring the
asset to other
portfolio.
MISCELLANEOUS CHARGES
The interest rates and EMIs are not only the cost factor. Never
underestimate how much the
processing fee and administration fees amount to. A 0.5% administration
fees and 0.5%
processing fee on say, a Rs.500000 loan would be Rs.5000. other timesit
could be just one
fee (either administration or processing but could yet work out to be much
more if it is
considerably higher at, say, 2.5% or 3%. The various other fees, which one is
required to pay
along with the margin amount are:
INTEREST TAX:
This is tax payable on the interest paid on a home loan and not the principal.
This is

sometimes included in the interest rate of the loan, or may be charged

separately as interest
tax.
PROCESSING CHARGE
It is the fee payable to the lender on applying for a loan. It is either a fixed
amount not linked
to the loan or may be a percent of the loan amunt. The loan amount received
by you can be
less than processing fee.
PREPAYMENT PENALTIES
When the loan is paid back before the nd of the agreed duration a penality is
charged by
some banks or companies, which is usually between 1% and 2% of the
amount being
prepaid.
OTHERS
It is quite possible that some lends may levy a documentation or consultant
charge.
ICICI BANK ANNOUNCES ITS BASE RATE, VALID FROM JULY 1, 2010
ICICI Bank has announced a shift in the existing benchmark rate from
Floating Reference
Rate (FRR)/ IBAR
the Base Rate (IBase).
The same will be effective for all its mortgage
products from July 1, 2010.
The ICICI Bank Base Rate (IBase)
has been fixed at 7.50%. This is the minimum rate that
ICICI Bank will charge to its new customers.
BENEFITS
Some of our key benefits are:
Guidance through out the process
Home loan amounts suited to your needs
Home Loan tenure upto 20 years
Simplified documentation
Doorstep delivery of home loan papers
Sanction approval without having selected a property.
Free Personal Accident Insurance (Terms & Conditions)
Insurance options for your home loan at attractive premium
PUNJAB NATIONAL BANK
INTRODUCTION
PNB has over 4500 branches and offices bringing the Punjab National Bank to
your
doorstep. Around 2400 offices come under the network of Centralized
Banking Solution or

CBS. A need for centralized banking system prompted PNB to go

computerized and what
followed was the establishment of CBS in Punjab National Bank branches in
all the leading
cities like Delhi, Pune, Chennai, Mumbai, Ahmedabad, Chandigarh, Gurgaon,
Hyderabad,
Jalandhar, Kolkata, Ludhiana, Nodal and Bangalore. Internet Banking Services
are provided
to all customers in the CBS branches. A branch and ATM locator is also
available on the
official website of Punjab National Bank. For an overview of the annual report
or the bank
profile, the site can be resourceful. The website also provides info on the
careers and
recruitments at PNB and the exam results. The careers at nationalized banks
like PNB are the
most sought after one and candidates are selected on the basis of their
exam result. PNB
topped the Best Paying Commercial Bank category with an overall rating of
87.45% as
evaluated by the SSS Retirement, Death & Funeral Benefits Program.
PROFILE OF PNB
The profile of the PNB shows superior banking services in corporate,
personal and
international banking, industrial and agricultural finance and finance of
trade. Punjab
National Bank boasts of a varied clientele consisting of small and medium
industrial units,
exporters, multinational
companies, Indian conglomerates and NRI. The Bank is changing
outdated front and back end processes to modern customer friendly
processes to help
improve the total customer experience. With about 8500 of its own 10000
branches and
another 5100 branches of its Associate Banks already networked, today it
offers the largest
banking network to the Indian customer. The Bank is also in the process of
providing
complete payment solution to its clientele with its over 8500 ATMs, and other
electronic
channels such as Internet banking, debit cards, mobile banking, etc.The
objectives of the
Company are in line with objectives laid down by RBI for the Primary Dealers:
Strengthen the infrastructure in the government securities market in order to
make it

vibrant, liquid and broad based.

Ensure the development of underwriting and market making capabilities for
Government
Securities
Improve secondary market trading system, which would contribute to price
discovery,
enhance liquidity and turnover and encourage voluntary holding of
Government securities
amongst a wider investor base
Become an effective conduit for conducting open market operations.
PNB HISTORY
Punjab National Bank of India was established by Lala Lajpat Rai in the
preindependence
India in 1895 in Punjab, with Lahore as its head office. Today it is the second
largest public
sector bank in India. It was nationalized in 1969 along with 13 other major
commercial
banks. The privatization started in 1989 when 30 per cent of its shares were
offered to the
public and it was listed on the stock exchange.In 1992, PNB became the first
Philippine bank
to reach P100 billion in assets. Later that year, privatization continued with a
second public
offering of its shares. In August 2005, PNB was fully privatized. The joint sale
by the
Philippine government and the Lucio Tan Group of the 67% stake in PNB was
completed
within the third quarter of 2005. The Lucio Tan Group exercised its right to
match the P
43.77 per share bid offered by a competitor and purchased the shares owned
by the
government. The completion of sale is expected to speed up the
development of PNBs
franchise and operational competitiveness.
Today, State Bank of India (SBI) has spread its arms around the world and
has a network of
branches spanning all time zones. SBI's International Banking Group delivers
the full range
of crossborder
finance solutions through its four wings the
Domestic division, the Foreign
Offices division, the Foreign Department and the International Services
division.
PNB RECENT ACHIEVEMENTS AND MILESTONES

Punjab National Bank (PNB), has announced that it has completed 100% core
banking
implementation at all its 4604 branches and extension counters through the
Finacle Universal
Banking Solution from Infosys, on Sun infrastructure and the Oracle
Database setting a
significant milestone for themselves and a new benchmark for the Indian
banking industry.
Completed in November 2008, 4 months ahead of schedule, the bank
implemented industryleading
Finacle core banking solution from Infosys across its operations running a
flexible,
and scalable database platform from Oracle and innovative servers from Sun
Microsystems
With an increasingly dynamic business and regulatory environment, PNB
sought to not only
achieve automation, but also centralize operations, standardize branch
processes, achieve
high scalability for future business growth, provide flexibility of creating
innovative banking
products to its lines of business, and at the same time, reduce overall costs.
The visionary
zeal and the futuristic view of the Banks top management in the year
20072008
incubated
the idea of introduction of a Centralised Banking solution. The bold and
innovative thought
culminated into the CBS architecture with Finacle application on Oracle
Database and Sun
hardware platform with Solaris Operating System. With Finacles agile and
future proof
technology, the bank today has over 22,500 concurrent users. The solutions
scalability has
also enabled the banks scalability to be the best in the country with the
number of peak
transactions at 3.5 million. Finacle core banking platform also provides the
bank with
exceptional agility for product innovation and improved flexibility of
operations. With
seamless integration of delivery channels such as ATM and internet banking
solutions, PNB
is able to provide 24X7 services to customers at a reduced transaction cost.
PNBs choice of
the Oracle Database has provided the banks IT infrastructure with
robustness, management

features, security and scalability as well as performance requirements to

service 3.5 million
transactions and 22500 concurrent users a significant achievement in the
Indian banking
industry. In addition, the Oracle Database will help PNB take control of its
enterprise
information, gain better business insight, and quickly and confidently adapt
to an
increasingly changing competitive environment.20
With secure, highly available and scalable grids of lowcost
servers and storage, Oracle
customers can tackle the most demanding transaction processing, data
warehousing, business
intelligence and content management applications. The 100%
implementation of Finacle
Core Banking Solution shall enable PNB to further reduce operational costs
and revenue
leakage while improving productivity of branches, introduction of new and
innovative
products and visibility of business. The anywhere anytime banking facility
will enable the
bank to offer products for every segment of the customer. PNB longstanding
and
progressive partnership also highlights Finacles leadership in large scale
banking
transformation, the solutions future proof technology and powerful
capabilities. India is a
strategic market for Finacle and we look forward to closely collaborating with
Punjab
National Bank for their future growth plans.
REGULAR HOUSING FINANCE SCHEME FOR PUBLIC
PNB reaches out to you with fast, friendly and most convenient home loans
for:
Construction or purchase of house/ flat.
Purchase of house/ flat on First Power of Attorney basis from the original
allottee
Carrying out repairs/ renovations/ additions/ alterations to existing house/
flat
Special FeatureTo
cover the loan outstanding, life Insurance cover is also available
on payment of one time premium which can also be financed by the Bank.
PRODUCTS
PNB Apna Ghar Yojana home loans are meant for construction or for
acquisition/purchase of

house/flats. The minimum loan amount would be Rs.50000 and maximum

loan amount
depends on the repayment capacity of the borrower. In case of joint
application, income of
borrowers /coborrowers
is clubbed together for calculation of loan eligibility. The loan
repayment is in Equated Monthly Installments (EMI) over a maximum period
of 20 years.
PNB Ghar Sudhar Yojana home loans are offered for up gradation, renovation
or repair of
house/flat. It includes among others, internal and external repairs, water
proofing, roofing,
flooring, electrical, woodwork etc. The loan amount ranges from a minimum
of Rs 50,000 to
a maximum of Rs. 1000000. Borrower's minimum contribution will be 25% of
the estimated
cost of repairs/renovations
INDIVIDUAL
For construction/purchase of house/flat: 75%
of the cost of construction of house or
purchase of house/flat. Cost of car parking up to the maximum extent of 5%
of the cost of
flat/house can also be included in the cost of the project. For carrying out
repairs/
renovations/ additions/ alterations: 75%
of the estimated cost subject to maximum of Rs. 20
lacs.
Loan is available up to Rs. 20 lacs for purchase of Land/ Plot. Loan is
available maximum up
to Rs. 2 lacs for furnishing
PRODUCT RANGE OF COMPANY/INDUSTRY:
The products and services provided by the PNB are in various fields, such as:
NRI services
International banking
Corporate banking
Agricultural banking
International banking
ELIGIBILITY
Age of the applicant must be less than 60 years.
Existing home loan borrower can also apply provided their loan account is
regular and no IR
irregularity persist.
DOCUMENTS NEEDED
1. Proof of identity
2. Proof of income

3. Proof of residence
4. Bank statement or Pass Book where salary or income is credited.
5. Education Certificate
6. Photos
7. Salary slips & form 16
8. Income tax return last 3 years along with balance sheets.
9. Assets liabilities statements.
10. Documents of property.
11. Estimate of construction.
12. Guarantor
FREEHOLD AND LEASEHOLD PROPERTY
The loan can be granted both for freehold and leasehold property.
In case of leasehold, loan can be granted on the basis of power of attorney
basis from original
allotee where DDA/PUDA/HUDA permit conversion of leasehold into freehold
property
otherwise advance is not permitted against plot purchased on Power of
Attorney basis.
EXTENT OF LOAN
For construction/purchased of house/flat 75% of the cost of construction or
purchase of
house/flat. For carrying out repairs/renovation/additions/alternation: 75%
of the estimated
cost subject to maximum of Rs. 20 lacs. Loan up to Rs. 20 lacs for purchase
of land/plot
Loan is available maximum up to Rs. 2 lacs for furnishing
CHARGES
Pre payment charges
Balance Transfer Charges (incase of refinance)
Partpayment Charges
Switching Charges
(Fixed to Floating or viceaversa)

2%
2%
Nil
Nil

SPEED OF SANCTION OF LOAN

The loan will be sanctioned within 7 working days.
TENURE:
You can repay the loan over a maximum period of 25 years under both FRHL
and ARHL in
SBI . Repayment will not ordinarily extend beyond your age of retirement (if
you are
employed) or on your reaching 65 years of age, whichever is earlier.

RATE OF INTEREST
For
repayment
period

Fixed Option
for
loans(Upto
20
lac)

Fixed Option
for
loans(Above
20
lac)

Floating
Option for
loans(Upto
20
lac)

i) Upto 5
years
ii) Above 5 &
upto 10
years
iii) Above 10
& upto 20
years
iv) Above 20
yrs &
upto 25 yrs.

9.25

10.00

8.75

Floating
Option
for
loans(Above
20
lac)
i)
9.50

10.00

10.25

9.00

9.50

10.50

10.75

9.25

9.75

10.75

11.00

9.50

10.00

The interest rate 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 reset after a block of 5 year in respect of loans
disbursed on or after
1.08.2006
DOCUMENTATION CHARGES
Rs. 1350 + Service Tax
UPFRONT FEE
For loans up to Rs. 300 lacs = 0.50% of the loan amount with a cap of Rs.
20,000/For
loans above Rs. 300 lacs =0.90% of the loan amount
REPAYMENT
1. Loan is to be repaid in equated monthly installments within a period of 25
years or before
the borrower attains the age of 65 years.
2. Repayment of loan for repair/ renovation/ addition/alteration has, however
been restricted
to 10 years. Father/Mother can also be made coborrower
in cases property is in single name

of his /her son and also clubbing of their income is permitted for determining
eligibility
criteria. Minimum 24 advance cheque should be obtained as and when, 6
cheques remain,
fresh lot to be obtained out of 24, 23 cheques should be of the amount equal
to the balance.
Loan is to be repaid in EMI within a period of 25 years or before the borrower
attains the age
of 65 years.
SECURITY
Mortgage of property for which finance is being given
In case of purchase of house/ flat from housing board/ society where
mortgage cannot be
created immediately, a tripartite agreement shall be executed amongst the
housing board/
society, borrower and the Bank
In case of purchase of house/ flat on first power of attorney, additional
security equal to
125% of the loan amount by way of mortgage of some other property or
pledge of bank's
FDR/ LIC policy/ Govt. Securities, NSCs, KVPs, IVPs, / PSU Bonds etc. has to be
provided
FEATURES
Loan can be sanctioned by branch/hub near to the present place of
work/posting /residence of
the borrower.
Loan can be sanctioned even if property is in the name of wife/parents
provided that the
owner is made coborrower.
Loan can be granted for 2nd house in the same city.
Loan can be granted for purchase of house for rental purpose
For take over, permission of higher authority is not required.
IMPORTANT CONDITIONS LOAN CANNOT BE GRANTED:
For construction in Unauthorized
colonies.
If property is to be used for commercial purpose.
Without approved Map.
PREPAYMENT CHARGES
Nil-In cases where the loans are prepaid by the borrower from their own
sources
Nil-In cases where the borrower shifts to other bank within 30 days from
the date of
issuance of circular for upward revision in the rate of interest to be charged
in his
account or change in other terms of sanction.

 2 % In cases where the account is taken over by some other Bank/

Financial
institutions by way of a ailment of loan from such bank/ financial Inst
DISBURSEMENT FOR HOME LOAN
a. For outright purchase of house/flat, the loan amount will be paid in lump
sum to the
vendor.
b. For house/flat under construction, the loan amount will be dispersed in
stages as per
progress of construction/demand by selling agency.
STATE BANK OF INDIA
INTRODUCTION
State Bank of India (SBI) is India's largest commercial bank. SBI has a vast
domestic
network of over 9000 branches (approximately 14% of all bank branches)
and commands
onefifth
of deposits and loans of all scheduled commercial banks in India. The State
Bank
Group includes a network of eight banking subsidiaries and several
nonbanking
subsidiaries
offering merchant banking services, fund management, factoring services,
primary dealership
in government securities, credit cards and insurance. The eight banking
subsidiaries are: State
Bank of Bikaner and Jaipur (SBBJ),State Bank of Hyderabad (SBH).State Bank
of India
(SBI),State Bank of 13 Indore (SBIR),State Bank of Mysore (SBM),State Bank
of Patiala
(SBP),State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT).
Today, State
Bank of India (SBI) has spread its arms around the world and has a network
of branches
spanning all time zones. SBI's International Banking Group delivers the full
range of crossborder
finance solutions through its four wings the
Domestic division, the Foreign Offices
division, the Foreign Department and the International Services division.
PROFILE
The SBIs powerful corporate banking formation deploys multiple channels to
deliver
integrated solutions for all financial challenges faced by the corporate
universe. The

Corporate Banking Group and the National Banking Group are the primary
delivery channels
for corporate banking products.
The Corporate Banking Group consists of dedicated Strategic Business Units
that cater
exclusively to specific client groups or specialize in particular product
clusters. Foremost
among these a specialized group is the Corporate Accounts Group (CAG),
focusing on the
prime corporate and institutional clients of the countrys biggest business
centers. The others
are the Project Finance unit and the Leasing unit. The National Banking
Group also delivers
the entire spectrum of corporate banking products to other corporate clients,
on a nationwide
platform. The bank is also looking at opportunities to grow in size in India as
well as
internationally. It presently has 82 foreign offices in 32 countries across the
globe. It has also
7 Subsidiaries in India SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI
Factors,
SBI Life and SBI Cards forming
a formidable group in the Indian Banking scenario. It is in
the process of raising capital for its growth and also consolidating its various
holdings.
Throughout all this change, the Bank is also attempting to change old
mindsets, attitudes and
take all employees together on this exciting road to Transformation. In a
recently concluded
mass internal communication programme termed Parivartan the Bank rolled
out over 3300
two day workshops across the country and covered over 130,000 employees
in a period of
100 days using about 400 Trainers, to drive home the message of Change
and inclusiveness.
The workshops fired the imagination of the employees with some other
banks in India as
well as other Public Sector Organizations seeking to emulate the programme.
HISTORY
The origins of State Bank of India date back to 1806 when the Bank of
Calcutta (later called
the Bank of Bengal) was established. In 1921, the Bank of Bengal and two
other Presidency
banks (Bank of Madras and Bank of Bombay) were amalgamated to form the
Imperial Bank

of India. In 1955, the controlling interest in the Imperial Bank of India was
acquired by the
Reserve Bank of India and the State Bank of India (SBI) came into existence
by an act of
Parliament as successor to the Imperial Bank of India.
Today, State Bank of India (SBI) has spread its arms around the world and has a
network of
branches spanning all time zones. SBI's International Banking Group delivers the
full range of
crossborder
finance solutions through its four wings the
Domestic division, the Foreign Offices
division, the Foreign Department and the International Services division.
SBI RECENT ACHIVEMENTS AND MILESTONES:
AWARDS:
SBI has been the proud recipient of the ICRA Online Award 8
times, CNBC TV 18, Crisil
Award 2006 4
Awards, The Lipper Award (Year 20052006)
and most recently with the
CNBC TV 18
Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.
SBI Card reaches three million milestones:
SBI Card, a joint venture between State Bank of India and GE Money,
announced yet
another landmark achievement of crossing the three million
cardholdersmarks.
Roopam
Asthana, CEOSBI
Card, said, "This milestone is even more remarkable as we have added
one million cardholders in just ten months. Our objective is to accelerate the
pace of growth
by extending the benefits to a broader range of consumers in Tier II cities,
along with
improved value propositions for the urban affluent customers." SBI Card
recently signed up
Indian cricketer Yuvraj Singh as its brand ambassador.
SBI joins Chinese bank to touch 10,000 branches:
Public sector State Bank of India on Sunday became only the second bank in
the world to
have 10,000 branches when Union Finance Minister P Chidambaram
inaugurated its latest
branch here. Speaking on the occasion, Chidambaram said China's ICBC
Bank was the other
bank to have 10,000 branches. Opening 10,000 branches was a great feat.
"It is not an easy

milestone though the SBI was the bank of the government and Indian people
even before
other banks were nationalised," he said. People all over the world, including
the Chinese,
would now know about this small village where the 10000th branch of the
SBI had been
opened, he said adding they would be amazed by the bank's growth. The
bank should be
proud of the achievement he said and wished that the bank opened one lakh
branches. The
Minister said out of the over 100 crore people, seventy 75 per cent did not
have any type of
insurance. Similarly, 50 per cent of the 11 crore farmers did not have bank
account. Banks
should go to the people and enroll them as account holders. 'That is what
economists say is
financial inclusion,' he said.
Main SBI Home Loan Schemes
SBI Realty : Purchase of plot of land
SBI Optima : Loan to existing home loan borrowers
SBI Green Home Loan : For homes that fight against the adverse
climate change,
SBI offers 0.25% concession in interest rate and waiver of processing fees
SBI Flexi : Combination of floating and fixed interest rate, in a pre
determined ratio
NRI Home Loans : Loans for NRIs and PIOs
SBI Freedom : Pledging other financial security than mortgaging the
house
SBI Max Gain : Operate your home loan account like your SB or Current
Account
PRODUCT RANGE OF COMPANY/INDUSTRY:
The products and services provided by the SBI are in various fields, such as:
Banking services
NRI services
International banking
Corporate banking
Agricultural banking
International banking
SBI HOUSING LOAN
Features
SBI Home Loan provides no cap on maximum loan amount for the
purchase/construction of house/flat.
There is an option to club the income of the applicant's spouse and
children to
compute the eligible loan amount.
The bank provides free personal accident insurance cover.

 A complimentary international ATM cum Debit card is also provided by SBI.

On the spot "in principle" approval is a special provision for the applicant.
If all the required documents are submitted by the applicant, SBI Home
Loan is
sanctioned within 6 days of the date of submission.
The applicant can also consider SBI's Home Loan as a Term Loan or as an
Overdraft
facility, in case he/she wants to save on interest and maximize gains.
SBI Home Loan also provides free personal accident insurance cover up to
Rs 40
Lakhs.
Repayment is permitted up to 70 years of age, which is an added
advantage of SBI
Home Loan.
SCHEMES PROVIDED BY SBI
The Most Preferred Home Loan provider SBI Bank offers a Home Loan with
Attractive
Interest Rates with Latest Schemes and Benefits. SBI also provides a Housing
loan with
different schemes. Schemes Are:1.
SBI Easy Home Loan
2. SBI Advantage Home Loan
3. SBI Housing Finance Scheme
4. SBI Happy Home Loans
5. SBI Life Style Loan
6. SBI Green Home Loan
7. SBI Home Plus
8. SBI Home Line
9. SBI MY HOME CAMPAIGN
PRODUCTS
'SBIFlexi'
Home Loans are designed to enable borrowers to hedge their Home Loan
against
unfavorable movement in interest rates and gives the customers a one time
irrevocable option
to choose one of the three customized combinations of fixed and floating
interest rates.
'SBIFreedom'
Home Loans are customized for high net worth individuals and offer benefits
such as 100 per cent finance of the project and no mortgage of the property,
provided the
individual could show liquid securities such as LIC policies or NSCs.
ELIGIBILITY
The minimum age of the applicant is 18 years, on the date of the sanction of
the loan. The

maximum age limit for a Home Loan applicant is 70 years. It is the maximum
age limit,
within which the loan should be fully repaid. The applicant should consist of
sufficient,
regular and continuous source of income for repaying the loan.
DOCUMENTS
Completed Application Form with one Passport Size Photograph
Identity Proof the
applicant can make use of his/her PAN Card/Voter ID/ Passport/Driving
License, for the purpose.
Residence Proof the
applicant can make use of his/her Recent Telephone Bill/ Electricity
Bill/Property tax receipt/Passport/Voters ID
Proof of business address in respect of businesspersons/ industrialists
Sale Deed, Agreement of Sale, Letter of Allotment, Non Encumbrance
Certificate,
Land/Building Tax paid receipt etc.
Copy of Approved Plan and approval from the Local Body
Statement of Bank Account/ Pass Book for last 6 months
INTEREST RATE (SBAR is currently 11.75%)
Year 1 - 8%
fixed
Year 2 & 3 - 9%
fixed
Year 4 onwards - For
loans up to 50 lakhs, 9.25% floating.
For loan amount over 50 lakhs, 9.75% floating
Other Products from SBI (State bank of India)
1) SBI Personal Loan
2) SBI Card
3) SBI Home Loan
4) SBI Housing Loan
LOAN TENURE
You can repay the loan over a maximum period of 25 years under both FRHL
and ARHL in
SBI . Repayment will not ordinarily extend beyond your age of retirement (if
you are
employed) or on your reaching 65 years of age, whichever is earlier.
PROCESSING FEE
FEES
RUPEES
Upto 5 lakh
Rs. 1000
5lakh-10lakh
Rs. 2000
10lakh-20lakh
Rs. 5000
20lakh-50lakh
Rs. 7000
50lakh-1crore
Rs.8000
1crore-5crore
Rs.10, 000

Above 5 crore

Rs.20, 000

PREPAYMENT CHARGES
If paid from own sourceNil,
In other cases2%
on principal amount prepaid
LATE PAYMENT CHARGES
If paid from own sourceNil,
In other cases2%
on principal amount prepaid

REVIEW OF LITERATURE
Ben R. Craig had studied about the Federal Home Loan Bank Lending to
Community Banks,
are Targeted Subsidies Necessary? The GrammLeachBliley
Act of 1999 amended the
lending authority of the Federal Home Loan Banks to include advances
secured by small
enterprise loans of community financial institutions. Three possible reasons
for the extension
of this selective credit subsidy to community banks and thrifts are examined,
including the
need to: subsidize community depository institutions, stabilize the Federal
Home Loan
Banks, and address a market failure in rural markets for small enterprise
loans. They
empirically investigate whether funding constraints impact the smallbusiness
lending
decision by rural community banks. Specifically, they estimate two empirical
models of
smallbusiness
lending by community banks. The data reject the hypothesis that access to
increased funds will increase the amount of smallbusiness
loans made by community banks.
2) In December 2006 Fulbag Singh and Reema Sharma had studied about the
housing
Finance in India. Housing, as one of the three basic needs of life, always
remains on the top
priority of any person, economy, government and society at large. In India,
majority of the
population lives in slums and shabby shelters in rural areas. From the last
decade, the
Government of India has been continuously trying to strengthen the housing
sector by
introducing various housing loan schemes for rural and urban population.
The first attempt in

this regard was the National Housing Policy (NHP), which was introduced in
1988. The
National Housing Bank (NHB) was set up in 1988 as an apex institution for
housing finance
and a whollyowned
subsidiary of Reserve Bank of India (RBI). The main objective of the
bank is to promote and establish the housing financial institutions in the
country as well as to
provide refinance facilities to housing finance corporations and scheduled
commercial banks.
Moreover, for the salaried section, the tax rebates on housing loans have
been introduced.
The paper is based on the case study of LIC Housing Finance Ltd., which
analyzes regionwise
disbursements of individual house loans, their portfolio amounts and the
defaults for the
last ten years, i.e., from 199596
to 200405
by working out relevant ratios in terms of
percentages and the compound annual growth rates. A relevant chart has
also been prepared
to highlight the results.
3) In May 18, 2007 Michael LaCourLittle
had studied about the Economic Factors Affecting
Home Mortgage Disclosure Act Reporting. The public release of the
20042005
Home
Mortgage Disclosure Act data raised a number of questions given the
increase in the number
and percentage of higherpriced
home mortgage loans and continued differentials across
demographic groups. Here we assess three possible explanations for the
observed increase in
2005 over 2004: (1) changes in lender business practices (2) changes in the
risk profile of
borrowers and (3) changes in the yield curve environment. Results suggest
that after
controlling for the mix of loan types, credit risk factors, and the yield curve,
there was no
statistically significant increase in reportable volume for loans originated
directly by lenders
during 2005, though indirect, wholesale originations did significantly
increase. Finally, given
a model of the factors affecting results for 20042005,
we predict that 2006 results will

continue to show an increase in the percentage of loans that are higher

priced when final
numbers are released in September 2007.
4) In May 1991 Stephen F. Borde had studied about the Is the Savings and
Loan Industry
Facing Extinction? This article tells about the saving and loan crisis.
Proposed solutions are
discussed in the context of the industry as it currently stands. With a
somewhat similar
liability structure to that of banks (mainly shortterm
deposits), the asset structure of S&Ls is
quite different. Whereas banks assets consist of shortterm
loans, S&L assets consist largely
of longterm
loans, such as home ownership mortgages. Therefore, in the absence of
adequate hedging measures, S&Ls are more vulnerable to interest rate risk,
which can lead to
lower profits when interest rates rise.
5) In June 29, 2001 Joshua Rosner had studied about the Housing in the New
Millennium: A
Home without Equity is Just a Rental with Debt. They studied about the
prospects of the U.S.
housing/mortgage sector over the next several years. Based on our analysis,
we believe there
are elements in place for the housing sector to continue to experience
growth well above
GDP. However, we believe there are risks that can materially distort the
growth prospects of
the sector. Specifically, it appears that a large portion of the housing sector's
growth in the
1990's came from the easing of the credit underwriting process. Such easing
includes: * The
drastic reduction of minimum down payment levels from 20% to 0% * A
focused effort to
target the "low income" borrower * The reduction in private mortgage
insurance
requirements on high loan to value mortgages * The increasing use of
software to streamline
the origination process and modify/recast delinquent loans in order to keep
them classified as
"current" * Changes in the appraisal process which has led to widespread
over
appraisal/overvaluation
problems If these trends remain in place, it is likely that the home
purchase boom of the past decade will continue unabated. Despite the
increasingly more

difficult economic environment, it may be possible for lenders to further ease

credit standards
and more fully exploit less penetrated markets. Recently targeted
populations that have
historically been denied homeownership opportunities have offered the
mortgage industry
novel hurdles to overcome. Industry participants in combination with eased
regulatory
standards and the support of the GSEs (Government Sponsored Enterprises)
have overcome
many of them. If there is an economic disruption that causes a marked rise in
unemployment,
the negative impact on the housing market could be quite large. These
impacts come in
several forms. They include a reduction in the demand for homeownership, a
decline in real
estate prices and increased foreclosure expenses. These impacts would be
exacerbated by the
increasing debt burden of the U.S. consumer and the reduction of home
equity available in
the home. Although we have yet to see any materially negative
consequences of the
relaxation of credit standards, we believe the risk of credit relaxation and
leverage can't be
ignored. Importantly, a relatively new method of loan forgiveness can
temporarily alter the
perception of credit health in the housing sector. In an effort to keep
homeowners in the
home and reduce foreclosure expenses, holders of mortgage assets are
currently recasting or
modifying troubled loans. Such policy initiatives may for a time distort the
relevancy of
delinquency and foreclosure statistics. However, a protracted housing
slowdown could
eventually cause modifications to become uneconomic and, thus, credit
quality statistics
would likely become relevant once again. The virtuous circle of increasing
homeownership
due to greater leverage has the potential to become a vicious cycle of lower
home prices due
to an accelerating rate of foreclosures.
6) In December 2002 Melissa B. Jacoby had studied about the Home
Ownership Risk beyond
a Sub prime Crisis: The Role of Delinquency Management. They studied that
Public

investment in and promotion of homeownership and the home mortgage

market often relies
on three justifications to supplement shelter goals: to build household wealth
and economic
selfsufficiency,
to generate positive socialpsychological
states, and to develop stable
neighborhoods and communities. Homeownership and mortgage obligations
do not
inherently further these objectives, however, and sometimes undermine
them. The most
visible triggers of the recent surge in sub prime delinquency have produced
calls for
emergency foreclosure avoidance interventions (as well as frontend
regulatory fixes).
Whatever their merit, I contend that a system of mortgage delinquency
management should
be an enduring component of housing policy. Furtherance of housing and
household policy
objectives hinges in part on the conditions under which homeownership is
obtained,
maintained, leveraged, and in
some situations exited.
Given that high leverage or trigger
events such as job loss and medical problems play significant roles in
mortgage delinquency
independent of loan terms, better origination practices cannot eliminate the
need for
delinquency management. One function of this brief essay is to identify an
existing rough
framework for managing delinquency. Legal scholarship should no longer
discuss mortgage
enforcement primarily in terms of foreclosure law and instead should include
other debtorcreditor
laws such as bankruptcy, industry loss mitigation efforts, and thirdparty
interventions such as delinquency housing counseling. In terms of analyzing
this framework,
it is tempting to focus on its impact on mortgage credit cost and access or on
the absolute
number of homes temporarily saved, but my proposed analysis is based on
whether the
system honors and furthers the goals of wealth building, positive social
psychological states,
and community development. Because those ends are not inexorably linked
to ownership

generally or owning a particular home, a system of delinquency

management that honors
these objectives should strive to provide fair, transparent, humane, and
predictable strategies
for home exit as well as for home retention. Although more empirical
research is needed, this
essay starts the process of analyzing mortgage delinquency management
tools in the
proposed fashion.
7) In 1999 Yoko Moriizumi had studied about the Current Wealth, Housing
Purchase and
Private Housing Loan Demand in Japan. Japanese households accumulate
wealth for down
payments at a high rate. Therefore, current wealth plays an important role in
home
acquisition as public loans whose direct mortgage lending is a strong support
for home
purchasers. We estimate the wealth effect on private mortgage debt as well
as housing
consumption by applying a model where mortgage debt demand is derived
from house
purchase decisions and is determined jointly with housing consumption. We
use a
simultaneous equation Tobit estimation method. Wealth effects on private
mortgage debt,
likelihood of borrowing, and housing consumption are not elastic. On the
other hand, a
change in housing consumption affects the likelihood of borrowing elastically
much more
than the private mortgage amount of borrowers. Housing and private
mortgage markets
fluctuate very closely with the number of participants in the mortgage
market. Therefore, the
number of housing starts is linked strongly to the private mortgage market.
8) Robert B. Avery and Allen N. Berger had studied about the Loan
commitments and bank
risk exposure. They studied about the Loan commitments increase a bank's
risk by obligating
it to issue future loans under terms that it might otherwise refuse. However,
moral hazard and
adverse selection problems potentially may result in these contracts being
rationed or sorted.
Depending on the relative risks of the borrowers who do and do not receive
commitments,
commitment loans could be safer or riskier on average than other loans. the
empirical results

indicate that commitment loans tend to have slightly better than average
performance,
suggesting that commitments generate little risk or that this risk is offset by
the selection of
safer borrowers.
9) Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studied
about the
Loan commitments and private firms. They studied that, most loans are in
the form of credit
lines. Empirical studies of line demand have been complicated by their use of
data on
publicly traded firms, which have a wide menu of financing options. We avoid
this problem
by using a unique proprietary data set from a large financial institution of
loan commitments
made to 712 privatelyheld
firms. We test Martin and Santomero's (1997) model, in which
lines give firms the speed and flexibility to pursue investment opportunities.
Our findings are
consistent with their predictions. Firms facing higher rates and fees have
smaller credit lines.
Firms with higher growth commit to larger lines of credit and have a higher
rate of line
utilization. Firms experiencing more uncertainty in their funding needs
commit to smaller
credit lines. Almost all firms convert unused credit line portions into spot
loans and take out
new lines.
10) Faik Koray and Eric T. Hillebrand had studied about the Interest Rate
Volatility and
Home Mortgage Loans. They studied that The U.S. economy has experienced
substantial
fluctuations in real and nominal interest rates since the 1970s. This paper
investigates
empirically the relationship between home mortgage loans and volatility in
mortgage rates
for the period 1971:02 through 2003:03. Contrary to common wisdom, we
find a positive
relationship between mortgage rate volatility and home mortgage loans.
Further investigation
indicates that this is due to volatility in the bond market. In times of high
interest volatility,
households disinvest in government securities and invest in real assets,
which yield a positive
relationship between mortgage rate volatility and home mortgage loans.

11) In november2000 Michelle J. White and Emily Y. Lin had studied about the
Bankruptcy
and the Market for Mortgage and Home Improvement Loans. They studied
that this paper
investigates the relationship between bankruptcy exemptions and the
availability of credit for
mortgage and home improvement loans. We develop a combined model of
debtors' decisions
to file for bankruptcy and to default on their mortgages and show that the
theory predicts
positive relationships between both the homestead and personal property
exemption levels
and the probability of borrowers being denied mortgage (secured) and home
improvement
loans. We test these predictions empirically and find strong and statistically
significant
support when evidence from crossstate
variation in bankruptcy exemption levels is used.
Applicants for mortgages are 2 percentage points more likely to be turned
down for
mortgages and 5 percentage points more likely to be turned down for home
improvement
loans if they live in states with unlimited rather than low homestead
exemptions. These
relationships also hold when we introduce state fixed effects into the model.
12) In October 14, 2008 David P. Bernstein had studied about the Home
Equity Loans and
Private Mortgage Insurance: Recent Trends & Potential Implications. They
studied about the
impact of increased use of home equity lines and decreased private
mortgage insurance
(PMI) on mortgage markets. The data confirms that in the years leading up to
the mortgage
crisis home buyers and lenders have aggressively used piggyback loans to
avoid taking out
PMI on first mortgages. Multiplemortgage
financing packages as a percent of newly
originated mortgages (mortgages originated within the previous five years)
went from 14.8%
in survey year 2001 to 21.5% in survey year 2007. The multiplemortgage
percentage for
seasoned mortgages (mortgages originated more than five years prior to the
origination date)
also increased by a modest amount. Further comparisons reveal a large
decrease in the

proportion of mortgages with PMI with the largest decreases in PMI coverage
occurring
among newly originated multiplelien
packages. Data from the SCF was used to compare
five financial characteristics (credit card debt, installment loans, consumer
credit, homeowners
equity, and liquid assets) for multiplelien
versus singlelien
households. The
comparisons suggest singlelien
households tend to have slightly stronger financial variables
than multiplelien
households. The data does not support the view that homeowners with
multiple liens are less risky and should therefore be allowed to avoid PMI.
The reduced use
of PMI and the increased use of home equity loans increased mortgage
holder risk in several
different ways and was a contributing factor to the 2008 mortgage and
financial crisis. This
change in lending and borrowing behavior is not a sub prime market
problem.
13) In August 2007 Michael LaCourLittle
had studied about the Home Purchase Mortgage
Preferences of Lowand
ModerateIncome
Households. Housing policy in the United States
has long supported homeownership, yet variation persists across income
groups. This article
employs recent mortgage origination data to focus on the revealed
preferences of lowand
moderateincome
(LMI) households in home purchase mortgage choice. I identify the factors
associated with conventional conforming, FHA, nonprime and specially
targeted programs.
Empirical results show that individual credit characteristics and financial
factors, including
pricing, generally drive product choice, with some variation evident when
loans are
originated through brokers. Results also indicate that targeted conventional
programs
effectively compete with governmentinsured
products in the LMI segment.
14) In 24 October 2008 David C. Wheelock had studied about the
Government Response to
Home Mortgage Distress: Lessons from the Great. They studied about the
Great Depression

was the worst macroeconomic collapse in U.S. history. Sharp declines in

household income
and real estate values resulted in soaring mortgage delinquency rates.
According to one
estimate, as of January 1, 1934, fully onehalf
of U.S. home mortgages were delinquent and,
on average, some 1000 home loans were foreclosed every business day. This
paper
documents the increase in residential mortgage distress during the
Depression, and discusses
actions taken by state governments and the federal government to reduce
mortgage
foreclosures and restore the functioning of the mortgage market. Many
states imposed
moratoria on both farm and nonfarm residential mortgage foreclosures.
Although moratoria
reduced farm foreclosure rates in the short run, they appear to have also
reduced the supply
of loans and made credit more expensive for subsequent borrowers. The
federal government
took a number of steps to relieve residential mortgage distress and to
promote the recovery
and growth of the national mortgage market. The Home Owners Loan
Corporation (HOLC)
was created in 1933 to purchase and refinance delinquent home loans as
longterm,
amortizing mortgages. Between 1933 and 1936, the HOLC acquired and
refinanced one
million delinquent loans totaling $3.1 billion. The HOLC refinanced loans on
some 10
percent of all nonfarm, owneroccupied
dwellings in the United States, and about 20 percent
of those with an outstanding mortgage. The Great Depression experience
suggests how
foreclosures might be reduced during the present crisis.
15) In March 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about
the Financial
Market Imperfections and Home Ownership: A Comparative Study. They
explore the
determinants of the international pattern of home ownership using the
Luxembourg Income
Study (LIS), a collection of microeconomic data on fourteen OECD countries.
In most, the
crosssection
is repeated over time and includes several demographic variables carefully

matched between the different surveys. This allows us to construct a truly

unique
international dataset, merging data on more than 400,000 households with
aggregate panel
data on mortgage loans and down payment ratios. After controlling for
demographic
characteristics, country effects, cohort effects and calendar time effects, we
find strong
evidence that the availability of mortgage finance as
measured by outstanding mortgage
loans and down payment ratios affects
the ageprofile
of home ownership, especially at the
young end. The results have important implications for the debate on the
relationship
between saving and growth.
16) In 10 December 2007 Irina Paley and Chau Do had studied about the
Explaining the
Growth of HigherPriced
Loans in HMDA: A Decomposition Approach. The period 20042005
showed a significant increase in Home Mortgage Disclosure Act (HMDA) rate
spread
reporting. Following the Oaxaca (1973), Blinder (1973), and Fairlie (2005)
decomposition
techniques, this study identifies the fraction of the increase due to the
flattening of the yield
curve. Even after controlling for changes in borrower risk characteristics, the
findings reveal
that during 20042006,
the flattening of the yield curve explains a significant amount of the
increase in rate spread reportable loans. This is the case for both prime and
sub prime
originations.
17) In Feb. 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael
LaCourLittle
had
studied about the unique paired loan dataset containing information on
multiple conventional
conforming mortgage loans of households to examine home equity
extraction decisions over
the period 20002006.
The main question addressed is how much households borrow when
refinancing their current mortgage debt in a cashout
transaction. We also provide estimates
of the marginal effect of certain borrower characteristics. Results contribute
both to the

literature on refinancing behavior and the role of house price appreciation in

providing funds
that may be used for consumer spending or other purposes.
18) In august2004 Mark Carey and Greg Nini had studied about the
Corporate Loan Market
Globally Integrated? A Pricing Puzzle. We offer evidence that interest rate
spreads on
syndicated loans to corporate borrowers are economically significantly
smaller in Europe
than in the U.S., other things equal. Differences in borrower, loan and lender
characteristics
associated with equilibrium mechanisms suggested in the literature do not
appear to explain
the phenomenon. Borrowers overwhelmingly issue in their natural home
market and bank
portfolios display significant home "bias." This may explain why pricing
discrepancies are
not competed away, but the fundamental causes of the discrepancies remain
a puzzle. Thus,
important determinants of loan origination market outcomes remain to be
identified, home
"bias" appears to be material for pricing, and corporate financing costs differ
in Europe and
the U.S.
19) In July 2005 Gwilym B.J. Pryce and Patric H. Hendershott had studied
about the
Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage
Interest.
Mortgage interest tax deductibility is needed to treat debt and equity
financing of homes
equally. Countries that limit deductibility create a debt tax penalty that
presumably leads
households to shift from debt toward equity financing. The greater the shift,
the less is the tax
revenue raised by the limitation and smaller is its negative impact on
housing demand.
Measuring the financing response to a legislative change is complicated by
the fact that
lenders restrict mortgage debt to the value of the house (or slightly less)
being financed.
Taking this restriction into account reduces the estimated financing response
by 20 percent (a
32 percent decline in debt vs. a 40 percent decline). The estimation is based
on 86,000 newly
originated UK loans from the late 1990s.

20) In 1 NOVEMBER 2007 Marsha Courchane studied about The Pricing of

Home
Mortgage Loans to Minority Borrowers: How Much of the APR Differential. The
public
releases of the 2004 and 2005 HMDA data have engendered a lively debate
over the pricing
of mortgage credit and its implications regarding the treatment of minority
mortgage
borrowers. We provide a unique empirical assessment of this issue by using
aggregated
proprietary data provided to us by lenders and an endogenous switching
regression model to
estimate the probability of taking out a sub prime mortgage, and annual
percentage rate
("APR") conditional on getting either a sub prime or prime mortgage. We find
that up to 90
percent of the African American APR gap, and 85 percent of the Hispanic APR
gap, is
attributable to observable differences in underwriting, costing and market
factors that
appropriately explain mortgage pricing differentials. Although any potential
discrimination is
problematic and should be addressed, our analysis suggests that little of the
aggregate
differences in APRs paid by minority and nonminority
borrowers are appropriately
attributed to differential treatment.
21) In 1991 Susan M. Wachter and Paul S. Calemhad studied about the
Community
Reinvestment and Credit Risk: Evidence from an Affordable Home Loan
Program. This
study examines the performance of home purchase loans originated by a
major depository
institution in Philadelphia under a flexible lending program between 1988
and 1994. We
examine longterm
delinquency in relation to neighborhood housing market conditions,
borrower credit history scores, and other factors. We find that likelihood of
delinquency
declines with the level of neighborhood housing market activity. Also,
likelihood of
delinquency is greater for borrowers with low credit history scores and those
with high ratios
of housing expense to income, and when the property is unusually expensive
for the
neighborhood where it is located.

CONCLUSION
The Indian customer has come a long way from purchasing to fulfilling their
needs from
buying a house customers now grab everything that comes their way but
they do their own
survey of optimum loans same is the case with banks & housing loans. With
innumerable
choices before him, the customer is needed then king. It is therefore
imperative that if the
bank has to succeed in competitive world, it should be technological starry.
Customer centric
progressive driven by highest standard of cooperative governance & guided
by sound ethical
values & above all should have personalized customer services. There is
scope of exploiting
the vast middle income group by releasing loans with special interest rate,
which would be
beneficial to both parties.
RECOMMENDATION
The following suggestions are strongly recommended:
To broaden the customer base the vast middle income strata should be
fully exploited.
Simplify the procedure, reduce service charges & demand only the basic
essential
proof.
Most banks are reluctant to advance loan to the service class. E.g. law
years, police
officers etc. this aspect must be exploited.
Adoption of flexible & more lenient penalty should the
Customer fails to deposit the payment on time. The penalty should be
case to case
basis rather than the same for the entire customer base.
Restriction to be reduced to bare minimum for loan advances & for
repayment. For
e.g. offers Long term repayment facilities & have no age restriction to
choosing
repayment. The maximum age for repayment could be increase to 6570
years of age.
Such facility will grow fast retail segment of the bank.
Offer multiple repayment loans services. Class to be exploited by offering
special
reduced
Rates & linking the repayment from the source where the pay cheque to
the employee
is issued. This need to undergo special contract with government
organization to

ensure implementation.