Sme Loan Finance

APROJECT REPORT

ON

“TO STUDY THE CREDIT APPRAISAL IN HOME LOAN FINANCE”

AT

GANGAPUR ROAD, NASHIK- 422 013

SUBMITTED TO

UNIVERSITY OF PUNEIN PARTIAL FULFILLMENT OF

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

MISS. SEEMA D. HANDOREMBA-II (FINANCE)

UDER THE GUIDENCE OF

PROF. D.D. WALKEYEAR 2009-10

M.V.P SAMAJ’SINSTITUTE OF MANAGEMENT RESEARCH AND

TECHNOLOGYGANGAPUR ROAD, NASHIK-422002.

Date: 1st Sept, 2009

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Ms. Seema Dayaram Handore has completed her summer project on “To Study the Credit Appraisal in Home Loan Finance” in our organization. The duration of the project was from 1st June to 31st July, 2009. She demonstrated zeal to learn with full enthusiasm. She has been sincere, hardworking and punctual in her work.

We wish her success for her future endeavors.

Regards

Mr. S. M. PISUDy. Manager (credit).

ACKNOWLEDGEMENT

I sincerely thank State Bank of India for giving me the opportunity to learn. I acknowledge my profound sense of gratitude & sincere thanks to the management of State Bank of India for offering me this project & summer training in their prestigious organization.

I would like to thank Mr. S. M. Pisu, who has given me their valuable time throughout the project duration and provided me with all the relevant information along with valuable suggestions and recommendations whenever required.

I also thank Prof. D.D. Walke our project guide without his help and guidance the project would not have been successfully completed.

Seema D. Handore

DECLARATION

I Ms. Seema Dayaram Handore student of MBA hereby declarer that the project titled “To Study The Credit Appraisal In Home Loan Finance” has been carried out by me in partial fulfillment of the MBA program under the University of Pune. This project was undertaken as a part of the academic curriculum as per University ruled & norms and also by non-commercial interest or motive. It is my original work & is also not submitted elsewhere for any other purpose earlier.

Signature Seema D. Handore

(Student IMRT)

INDEXSr. no. PARTICULARS Pg. no.

1. INTRODUCTION:A. OBJECT OF PROJECT.B. SELECTION OF TOPIC.C. OBJECTIVE OF STUDY.D. LIMITATIONS.

2. RESEARCH METHODOLOGY:A. MEANINGB. RESEARCH DESIGNC. DATA COLLECTION(SOURCES)

3. INTRODUCTION TO BANKIG SECTOR IN INDIA:

A. BANKING SECTOR IN INDIAB. FDI IN BANKING SECTORC. PRESENT SITUATIOND. BANKING STRUCTURE IN INDIA

4. ORGANISATION PROFILE:A. EVOLUTION OF BANK.B. BUSINESS.C. MAJOR CHANGES IN CONDITION.D. IMPERIAL BANK.E. FIST FIVE YEAR PLAN.F. ORGANISATION STRUCTURE.

5. INTRODUCTION TO CREDIT APPRAISAL:A. WHAT IS CREDIT?B. WHAT IS APPRAISAL?C. WHAT IS CREDIT APPRAISAL?

6. PRODUCT PROILE7. DATA COLLECTION:

A. SBI HOME LOAN.B. RECENT MODIFICATIONS IN SBI HOME

LOAN.C. DOCUMENTS OF HOME LOAN.D. PROCESS OF HOME LOAN.E. GENERAL CAUSES OF REJECTION OF

PROPOSAL.8. ANALYSIS & INTERPRETATION:

A. COMPARATIVE ANALYSIS.B. ANALYSIS OF BRANCH PERFORMANCE

9. RECOMMENDATIONS & SUGGESTIONS.10. CONCLUSION.11. APPENDICES.12. BIBLOGRAPHY.

INTRODUCTION

INTRODUCTION

We know three basic needs of human beings i.e. food, clothing and shelter. For all these needs we want money? It involves large investment. Everyone does not have that much money to invest at once. Borrowing and lending is the important function of the developing economy. It is in existence right from ancient time. Previously in barter system the goods were exchanged for goods. Now the scenario has changed to fulfill the needs of human. The old concept that emerged as new is “Loan”

The Banking Industry has been undergone some fundamental changes in its approach to banking.

A. OBJECT OF THE PROJECT

The project forms a very vital aspect during the curriculum of M.B.A. At the end of the first year students are required to under go summer training and a project for span of two months. It is very essential to have adequate knowledge about every aspect of the job, so as to handle each & every situation effectively for applying theoretical knowledge in practical life.

The project gives the live experience about the various aspects of the management that is helpful from future point of view. The Project provides opportunity to understand the effectiveness in performance of the organization as well as the student during the 2 months.

B. SELECTION OF TOPIC

The Banking Industry has been undergone some fundamental changes in its approach to banking. There has been a perceptible shift towards Customer Relationship Management (CRM) mainly arising out of the element of intensive competition infused into the industry by the arrival of private players. With free economic reforms government permitted private players to enter into the banking business along with the existing nationalized banks.

In 2002 the government allowed Foreign Banks to enter into the Indian Market.The concept of retail banking introduced with the increase in number of banks, the private player’s especially introduced this concept. The banks are segmenting their portfolio into different segments like Personnel Banking, Retail Banking and are

concentrating on Small Medium Enterprise individual finance like housing finance, vehicle finance, etc as large number of customers can be taped with diversification of risk as it evolved lower risk than corporate banking. All banks are increasing their exposure to this area.

C. OBJECTIVE OF THE STUDY

The Credit Manager plays a crucial role in increasing banks profitability as the major portion of funds are utilized by bank for the purpose of lending of loans and advances to get more return on account of the “Interest” reducing risk in financing.

Objectives of the study:

To study the appraisal process of Home Loan proposal. To understanding the process and key issues in sanctions. To understand the process and key issues in disbursement. To study the restricted areas of credit of the bank. To analyze the performance of the bank regarding sanction, disbursement. To find out the causes of rejection of proposals. To analyze performance of bank.

D. LIMITATIONS

Following are the limitations for carrying out this project work:

As the project was restricted for the period of two months, hence the data

obtained may not be sufficient for interpretation.

The study was related to the Financial Services sector where the Financial

Institution did not given each & every information of their working procedure.

The study was related to Credit Appraisal System for specifically Home Loan,

so other Credit Appraisal System was not taken into consideration for the

study.

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

A. MEANING:

Research is a scientific and systematic search for pertinent information on a specific

topic. Research means search for knowledge. It is discovery of facts, developments of

facts and verification of facts. It is an attempt to find practical solutions to the

problems with the help of application of scientific methods.

The purpose of research is to discover the answers of questions through application of

scientific procedure. The aim of research is to find out the truth which is has been

discovered as yet.

Oxford Dictionary:

“Research is a careful investigation or inquiry especially through search for new facts

in any branch of knowledge.”

B. RESEARCH DESIGN:

Research design is the logical and systematic planning and directing of a piece of

research. Design implies some purpose and thoughtful activity. A research design is a

vital requisite for any research project. It guards the study from going off track and

any premature tripping. It helps to economize on the resources used and prepare the

researcher for potential roadblocks through out the task. It is a logical and systematic

plan that guides the entire study

C. DATA COLLECTION:

Data collecting is collecting information for project while studying a business through different sources of data collection. It is very important aspect of any investigation.

The research methodology includes methods of data collection. Data collection

process begins after research problem has been defined & research plan chocked out

while deciding about method of data collection to be used for studies. There are two

types of data as follows:-

1) Primary Data

2) Secondary Data

1) PRIMARY SOURCES :-

The primary data is collected during in an experimental research but in case we do research of descriptive type & perform surveys. It provides data gathered at first hand the readily available information.

“There are several methods of collecting primary data they are”

i) Letters :-

SOURCES OF DATA

COLLECTION

PRIMARY SOURCES

SECONDAR-Y SOURCES

LETTERSAUTOBIOG-RAPHY

BIOGRAPH-IES

OBSERVAT-ION

METHOD

QUESTIONNAIRE

METHOD

Letters are used by researchers, as evidence in the study of a project letters

often have some propagandist intention since they are designed by a writer to

convey to the recipient, some impression more talking than mere facts.

ii) Autobiography :-

Which are written some time after the events recorded in them and intend for

publication, may be expected to suffer from continuous stylization. The

prospective view on the other hand, enables the writer to select and display

such of his experiences and action that subsequently proved to be significant

features in his ‘Life history’.

iii) Observation method:-

The observation method is most commonly used method. Under this method

information is sought by way of investigators own direct observation without

asking from respondent.

iv) Questionnaire method:-

This method of collection data involves presentation of oral, verbal stimuli &

reply in terms of oral verbal responses. This method can be used through

personnel interviews.

2) SECONDARY SOURCES :-

Secondary data that are already available that is they refer to data which is

already been collected and analyzed by someone else.

There are several methods of secondary data.

A) Reference books, magazines and news paper :-

Through reference books various information is obtain about subject as well as

about organization. The magazines and news paper also provide a wide variety

of information.

B) Internet technology:-

It is very useful in the fast world now days. By a single click we get lots of

information of a particular company having websites and it is very

presentable.

INTRODUCTION TO BANKING SECTOR IN INDIA

A. Banking Sector in India

Immediately after Independence, the government of India initiated measures to play an active role in the economic life of the nation. In pursuance of this policy, government adopted Industrial Policy Resolution in 1948 in which it envisaged a mixed economy. From now onwards, government decided to play an active role in different segments of an economy including banking and finance.

The Government of India, in a major step nationalized Reserve Bank of India in 1948. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India.

Government in order to have firm grip over this sector nationalized the private banks first in 1969 and later in 1980. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

In the early 1990s the then Narsimha Rao government embarking on a policy of liberalization, gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as Global Trust Bank, UTI Bank, (now re-named as Axis Bank), ICICI Bank and HDFC Bank. This almost kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

B. FDI in Banking Sector

The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be

given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions.

C. Present Situation

In the present situation, banking in India has attained fair amount of maturity in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region.Since Indian economy is witnessing strong growth the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&A’s, takeovers, and asset sales.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

D. Banking Structure in India

The commercial banking structure in India comprises:

Scheduled Commercial Banks and Unscheduled Banks. The banks which are included in the second schedule of Reserve Bank of India (RBI) Act, 1934 is called scheduled bank. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act.For assessing the performance of the bank, the Reserve Bank of India categories the bank as public sector banks, old private sector banks, new private sector banks and foreign banks

ORGANISATION PROFILE

A. Evolution of bank

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

B. Business

The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.1 lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woolens, cotton, cotton

piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favor of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

C. Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centers in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.

D. Imperial Bank

The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled

the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.

When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country. E. First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State.

F. ORGANISAION STRUCURE

CHAIRMAN

MD & CHIEF CREDIT & RISK OFFICER DMD & CHIEF FINANCE OFFICER

DMD & CORP. DEVPT. OFFICER DMD (Information technology)

DMD (Corporate strategy & new business) DMD (Inspection & management audit

GM (Corporate communication & change) CHIEF ECONOMIC ADVISOR

CHIEF VIGILANCE OFFICER

DMD & GE (national banking

DMD & GE Rural

business

DMD & GE (MC)

DMD & GE Corporate banking

DMD & GE International banking

DMD & GE Global

markets

DMD & GE Associates

& Subsidiaries

Associates &

Subsidiaries

Domestic & global

treasury

Regional head/ direct branches,

foreign offices &

subsidiaries

Personal Banking Business Unit

Government Business Unit

SME Business Unit

Banking operations

Marketing – cross selling

LHO & (circles)

Regional Offices

Branches

Mid corporate region

Mid corporate branches

CGM (corporate

Accts. Group)

CGM (Asset mgmt. group)

GM (project finance leasing)

CAG branches

SAMG branches

INTRODUCTION TO CREDIT APPRAISAL

A. WHAT IS CREDIT?

You are granted credit when an organization or individual makes a sum available for you to borrow.

There are two main types of credit:

Home loans, or mortgages, and personal or shop loans are linked to a specific item or items – for example, a new kitchen, or a house.

Revolving credit on payment cards can give you access to a fixed amount of money that you can spend as you wish, in a wide range of retailers and other outlets.

Repayment

Loans are normally repaid in regular installments over an agreed period of time. Mortgages, or home loans, can be repaid in variable installments but most personal loans specify fixed repayments of approximately equal amounts.

If you want to make another major purchase when you have finished paying off one loan, you need to negotiate a new loan.

Revolving credit means that you always have access to the amount of your line of credit that remains unspent. And every time you pay off some of the outstanding amount, that proportion of your credit limit becomes available for you to spend again.

So if you have a credit limit of Rs.1, 000/-, spend Rs.30/- and repay Rs.100/-, you have Rs.800/- available to spend.

Whatever type of loan you choose, be certain to make your repayments on time, or you can face financial penalties.

Interest

In order to cover the lending risk and to make a profit on their money, lenders generally charge interest on loans and revolving credit. You must remember this when you are calculating your repayments.

For example, if you borrow Rs.100 and interest is payable at an annual rate of ten per cent, the total cost is Rs.110. This is known as simple interest. It is rarely charged on borrowings.

Compound interest is more common. It means that interest is charged on the interest at regular intervals.

For example –

If you owe Rs.100 and are charged ten per cent compound interest each year, at the end of year one you will owe Rs.110. In year two, the lender will charge ten per cent

of this sum and add it to the outstanding amount, so you will owe Rs.121, and so on. Interest may be compounded after any period – a day, a week, a month and so on.

With fixed repayment loans, the amount of interest is worked out in advance and added into the repayments. There is often a penalty if you want to repay the outstanding amount earlier than agreed.

With revolving credit, you can repay as much or as little as you want, at any point. You can often avoid paying any interest at all if you repay the total amount you have borrowed on the date when the first repayment is due.

B. WHAT IS APPRAISAL?

Appraisals are needed to accurately determine the value of the loan and also inspect the property's condition. An appraisal report is only good for 90 days and most mortgage companies will require a certified appraiser.

General Appraisal

The appraiser obtains an estimated value through the interpretation of the market. The appraiser collects data pertinent to a report, such as the site, amenities and the physical condition of the property. Through considerable research and data collection of both general and specific, the appraiser arrives at the final estimated value.

C. WHAT IS CREDIT APPRAISAL?

It is the process of appraising the credit worthiness of a loan applicant. Factors like age, income, number of dependents, nature of employment, continuity of employment, repayment capacity, previous loans, credit cards, etc. are taken into account while appraising the credit worthiness of a person. Every bank or lending institution has its own panel of officials for this purpose.

The documents submitted by the applicant are verified by the panel of officials / the appraisal committee.

The committee checks the genuineness of the documents and confirms whether the applicant will be able to repay the loan installments or not.

After the verification of the documents the appraisal committee approves the loan application and then submits the / apprises the loan application to the sanction committee for loan sanction.

After the appraisal of the loan to the sanctioning committee in case the sanctioning committee finds any fraud documents then both the applicant as well as the appraisal committee is held responsible.

Legal Appraisal

In legal appraisal the documents submitted by the applicant are verified by a lawyer to confirm whether the holder would be able to generate a mortgage in favor of the bank or not

Technical appraisal

It is considered as the important stage of the appraisal process. In this stage, the applicant’s original documents are verified. All other information provided by the applicant is asked to submit the documents regarding guarantees.The documents needed change depending upon whether house is being purchased or constructed. Bank’s carry out technical appraisal to safeguard the applicant’s interest’s before and after the property selection. The officer of the technical appraisal even safeguards the borrower’s interest.

The loan amount can be disbursed entirely or in installments. The disbursement amount is generally dependant on factors such as own funds available and the extent of completion of construction. The disbursement amount is calculated using the following formula-

RD=AV*CC/100*PC/100+LC/100-(BC-CM)

Where, RD= recommendation for disbursement in Rs.PC= progress of construction in % points,AV=aggregate value = LC+CC,LC= land component,BC= borrowers contribution,CM= cumulative disbursement mode.

Calculation of EMI

Housing loans are long term loans that are replayed in equated monthly installments (EMI). Each of which includes repayment of interest as well as the principal amount. EMI payments generally start after the loan has been fully disbursed or after 12 months from the date of first installments. The EMI is determined on the basis of the loan size, interest rate and loan period. An approximate value of EMI can be arrived at using the following formula-

EMI= ½ (Lr (1+r) ^n/ (1+r) ^n-1)

Where,L=loan’r=rate of interest in decimal &n=loan period.

PRODUCT PROFILE(TYPES OF HOME LOANS)

VARIOUS TYPE OF HOME LOAN:

I. ‘SBI-FLEXI’ HOME L OANS:

A customized product designed to enable borrowers to hedge their Home

Loan against unfavourable movement in interest rates. The product gives

one time irrevocable option to choose one of the three customized

combinations of fixed and floating interest rates and also to choose the

order in which the fixed and floating rate will be availed.

Minimum Loan Amount: Rs.5 lacs

(Other terms and conditions – as applicable to regular Home Loans)

II. ‘SBI-MaxGain’ HOME L OAN:

An innovative and customer-friendly product to enable one to earn optimal yield on savings and minimize interest burden on Home Loans, with no extra cost.

The loan is granted as an Overdraft facility with the added flexibility to operate Home Loan Account like your SB or Current Account.

The product serves to minimize your interest cost by enabling you to park your surplus funds in ‘SBI-MaxGain’ (with the benefit to withdraw the surplus funds whenever require), specially in the wake of low yields from other deposit/ investment avenues.Minimum Loan Amount: Rs.5 lacs

(Other terms and conditions – as applicable to regular Home Loans)

III. ‘SBI-REALITY’ HOME LOANS:

A unique product if borrowers are on the look out for a loan to purchase

a plot of land for house construction. The loan is available for a maximum amount of Rs.1 crore and with a comfortable repayment period of upto 25 years.

Borrowers are also eligible to avail another Housing Loan for construction of house on the plot financed above with the benefit of running both the loans concurrently.

(House construction should commence within 2 years from the date of availment of ‘SBI-Realty’ Housing Loan)

(Other terms and conditions – as applicable to regular Home Loans)

(* relaxation considered on case to case basis)

IV. ‘SBI-FREEDOM’ HOME L OANS:

A revolutionary product designed for customers who are on the look out for a source of finance for a property they want to invest in without mortgaging the same. All one have to do is pledge any financial security that they have and will get a Home Loan for your dream home.

For those who do not want to pay stamp duty for mortgage of their property or go through the hassles of creation of mortgage.

One also have an option to take the loan by way of mortgage of the property and pledge financial securities in lieu of margin money.

Repayment is highly customized, giving you the option to repay through regular EMIs or through maturity proceeds of the securities pledged.

(Other terms and conditions – as applicable to regular Home Loans)

V. ‘SBI-OPTIMA’ ADDITIONAL HOME LOANS ‘SBI-HOMELINE’ SPECIAL PERSONAL LOANS:

Innovative and value added products extended to existing Home loan borrowers with a satisfactory repayment record of 3 years and whose loan is Standard Asset, with a view to reinforce the customer loyalty and to maintain long term relationship with the borrowers. In case of take-over of Home Loans from other Banks/HFCs, the borrower should have fulfilled the above conditions with the present Bank/HFC.

Purpose‘SBI-Optima’ Additional Home Loans

to meet expenditure towards major repair, renovation, addition to their house/flat, purchase of furniture, fixtures and consumer durables

‘SBI-Home line’ Special Personal Loans

General purpose loan to meet expenditure to meet foreseen/unforeseen contingencies

Eligibility‘SBI-Optima’ Additional Home Loans

18 times NMI (for salaried borrowers)/1 ½ times NAI ( for others) or

(i)25% of the original project cost of house/flat (ii) 85% of the cost of repairs etc. or (iii) gap between 85% of the current market price of flat/house and actual outstanding loan dues ,

Whichever is lower (EMI/NMI ratio of all loans should not exceed 60%)

‘SBI-Home line’ Special Personal Loans

18 times NMI (for salaried borrowers)/ 1 ½ times NAI (for others)

Other Salient Features

Inbuilt provision for availment of the loans on the expiry of each bloc of 5 years, the first bloc commencing on the expiry of 5 years from the date of sanction of original Home Loan.

Original Home Loan and all ‘SBI-Optima’ Home Loans/’SBI-Home Line’ Personal Loans can run concurrently

Comfortable repayment obligations – Tenure of the loans equal to the residual maturity of the original Home Loans.

(Other terms and conditions – as applicable to regular Home Loans)

VI. ‘PRASHASAN PLUS’, ‘TEACHER PLUS’ AND ‘OIL PLUS’

The above ‘ plus’ schemes offer Concessional interest rate of 0.25%

below the applicable interest rates on Home Loans to niche client groups

like Government Employees, Teachers, employees of public sector oil

companies etc.

(Other terms and conditions – as applicable to regular Home Loans)

DATA COLLECTION

A. SBI HOME LOANS

“Brings Your Dream House on Earth”

At SBI we take extra care to build your dreams into reality. Providing unmatched

support through easy terms and adequate finances to fulfill your ambition / dream

to own / construct a house.

Purpose

i. Construction of a new house.

ii. Repair.

iii. Renovation.

iv. Alteration of the house.

v. Purchase of a plot for the construction of new house.

vi. Purchase of a new house or flat.

vii. Purchase of existing house / flat.

Eligibility

Basic Eligibility:

Individual(s) with steady source of income including persons engaged in agriculture & allied activities.

Salaried

Self employed professionals

Self employed non-professionals

Age limit:

-The applicant should be of minimum 18 years and maximum 70 years of age.

No of co-borrowers:

-Maximum 3.

No of dependents:

-Maximum 5.

Type of borrowers:

Resident Indians.

Salaried:

i. Minimum qualification: NA

ii. Minimum number of years in total employment:

-Minimum 3 years.

Self – Employed professionals

Various Self–Employed Professionals are-

a. CA / ICWA / CS.b. Architects.c. Lawyers (only advocates practicing with Supreme Court / District Court or

working with Solicitors / Practicing Tax consultants).d. Consultants like Engineers / MBAs etc.e. Doctors / pathologists.f. Chemist with B. Pharm.

i. Minimum income as per P&L A/C:

-NA

ii. Professional qualification certificate:

-Applicable.

Self –Employed Businessmen / Non – professionals

i. Eligible entity:

-NA

ii. Business continuity:

-Minimum 3 years.

Non Resident Indian :

i. Minimum loan: 3 lacs.

ii. Maximum loan: 20 lacs.

iii. Documents:

Photo copy of Passport & Visa.

Photo copy of Pass Book of concerned bank A/C.

Employment proof / business proof.

Residential proof.

And all other documents to be submitted as per the

requirements of the bank.

Loan amount:

For Salaried persons For Business men / Professionals

36 times of Net Take Home Pay 3 times the Net Income of Income Tax

return

Margin:

-20% of Project Cost / valuation cost upto Rs. 5 lacs

-25% of project cost / valuation cost above Rs. 5 lacs.

Security:

-Equitable mortgage on the plot / house / flat being purchased or the house / flat being

constructed / purchased / renovated.

Disbursements:

-Direct disbursement of loan to vendor of the house/flat where building is ready for

possession.

-For construction / renovation / extension of flat / house, disbursement is done in

phases.

Repayment:

-In Equated Monthly Installments (EMIs) comprising of Principal and Interest in a

maximum period of 25 years including moratorium period.

Repayment Period:

-Starting from the month following month of full disbursement of loan.

Maximum period including moratorium :

Age upto 45 years 20 years Age above 45 15 years In case of joint borrowing 25 years

Processing charges:

Loan amount *charges

Upto Rs. 25,000/- Nil.

Rs25,001 to Rs. 2 lacs Rs. 500/-

Above Rs. 2 lacs 0.50%

(* Processing charges changes from scheme to scheme.)

Maximum Loan:

Loan eligibility is determined by EMI/NMI ratio, irrespective of borrower’s age i.e.

the loan amount is decided by the repayment capacity of borrower(s), which comes

out as a ratio of EMI to NMI.

EMI/NMI Ratio:

Maximum Permissible Loan amount (MPLA) is subject to the following income-wise graded ratio:

Net Annual Income EMI/NMI ratioUpto Rs.2 lacs 40%Above Rs.2 to 5 lacs 50%Above Rs.5 lacs 55%

Increase upto 5% in the above ratios may be permitted by the controller of Branch/ RACPC, which processes the loan application, depending on the family size and availability of disposable surplus income.

Monetary ceilings:

MPLA is also subject to following monetary ceilings:

• For repairs / renovation: Rs 10 lacs[Loans above Rs.10 lacs require prior administrative clearance of network GM]

• For furnishings and consumer durables: 10% of the project cost or Rs.3 lacs whichever is less where check off facility or additional security or 3 rd party guarantee good for the amount is available.

• Income of spouse/son/ unmarried daughter and expected rental of proposed house can be clubbed [subject to conditions]

• Regular income from other sources (with proof) can be considered.

Total project cost:

Total project cost to include cost of land, additional amenities, insurance premium,

stamp duty & registration charges for purchase/construction of new or old property.

LTV Ratio:

i) Loans upto Rs. 1 crore 80% (i.e. 20% margin) ii) Loans above Rs.1 crore 75% (i.e. 25% margin) Interest:

-Loans at fixed / floating rates and combination of fixed and floating rates.

-Loans above Rs.1 crore at floating rates only.

-Interest rate concession for loans with LTV ratio of 75% or less.

Type of Loan:

-Term Loan.

Administrative approval:

No prior administrative clearance required.

For purchase of a house upto 10 years old no A/C required.

For >10 years old, controlling authority would be permitted to grant administrative clearance.

In all cases the life & condition of the house shall be such that the bank’s security charge is not affected till full repayment of the loan.

Insurance:

-Insurance of the house / flat covering all risk is necessary.

Inspection:

For standard assets:

Initial inspection(s) at the time of disbursement/ release of instalments during construction.

Thereafter once every 3 years.

If repayments are in arrears for two successive months, inspection should be conducted immediately.

For NPAs: At half - yearly intervals.

Inspections should be recorded in Inspection Register. Property inspection is to be carried out and recorded at each stage of disbursement.

ELIGIBILITY CALCULATION:

PARTICULARS AMOUNT(RS)

Gross Monthly Income *****

Less: Deductions *****

Net Monthly Income *****

Less: Obligations *****

Maximum Amount For Repayment *****

E.M.I CHART (for 1 lac)

EQUATED MONTHLY INSTALMENTS FOR LOAN AMOUNT OF Rs.1,00,000No. of

Months9% 9.25% 9.50% 9.75% 10% 10.25% 10.50% 10.75% 11.00%

6 17,107 17,119 17,132 17,144 17,156 17,168 17,181 17,193 17,20512 8,745 8,757 8,768 8,780 8,792 8,803 8,815 8,827 8,83818 5,960 5,971 5,983 5,994 6,006 6,017 6,029 6,040 6,05224 4,568 4,580 4,591 4,603 4,614 4,626 4,638 4,649 4,66130 3,735 3,746 3,758 3,770 3,781 3,793 3,804 3,816 3,82836 3,180 3,192 3,203 3,215 3,227 3,238 3,250 3,262 3,27442 2,784 2,796 2,808 2,820 2,832 2,844 2,855 2,867 2,87948 2,489 2,500 2,512 2,524 2,536 2,548 2,560 2,572 2,58554 2,259 2,271 2,283 2,295 2,307 2,319 2,332 2,344 2,35660 2,076 2,088 2,100 2,112 2,125 2,137 2,149 2,162 2,17466 1,927 1,939 1,951 1,964 1,976 1,988 2,001 2,014 2,02672 1,803 1,815 1,827 1,840 1,853 1,865 1,878 1,891 1,90378 1,698 1,711 1,723 1,736 1,749 1,761 1,774 1,787 1,80084 1,609 1,622 1,634 1,647 1,660 1,673 1,686 1,699 1,71290 1,532 1,545 1,558 1,571 1,584 1,597 1,610 1,623 1,63796 1,465 1,478 1,491 1,504 1,517 1,531 1,544 1,557 1,571102 1,406 1,419 1,433 1,446 1,459 1,473 1,486 1,500 1,513108 1,354 1,368 1,381 1,394 1,408 1,421 1,435 1,449 1,463114 1,308 1,322 1,335 1,349 1,362 1,376 1,390 1,404 1,418120 1,267 1,280 1,294 1,308 1,322 1,335 1,349 1,363 1,378126 1,230 1,243 1,257 1,271 1,285 1,299 1,313 1,327 1,342132 1,196 1,210 1,224 1,238 1,252 1,266 1,280 1,295 1,309138 1,166 1,180 1,194 1,208 1,222 1,237 1,251 1,265 1,280144 1,138 1,152 1,166 1,181 1,195 1,210 1,224 1,239 1,254150 1,113 1,127 1,141 1,156 1,170 1,185 1,200 1,215 1,229156 1,090 1,104 1,119 1,133 1,148 1,163 1,178 1,192 1,208162 1,068 1,083 1,098 1,112 1,127 1,142 1,157 1,172 1,187168 1,049 1,064 1,078 1,093 1,108 1,123 1,138 1,154 1,169174 1,031 1,046 1,061 1,076 1,091 1,106 1,121 1,137 1,152180 1,014 1,029 1,044 1,059 1,075 1,090 1,105 1,121 1,137186 999 1,014 1,029 1,044 1,060 1,075 1,091 1,106 1,122192 985 1,000 1,015 1,030 1,046 1,062 1,077 1,093 1,109198 971 987 1,002 1,017 1,033 1,049 1,065 1,081 1,097204 959 974 990 1,005 1,021 1,037 1,053 1,069 1,085210 947 963 978 994 1,010 1,026 1,042 1,059 1,075216 936 952 968 984 1,000 1,016 1,032 1,049 1,065222 926 942 958 974 990 1,006 1,023 1,039 1,056228 917 933 949 965 981 998 1,014 1,031 1,047234 908 924 940 956 973 989 1,006 1,023 1,040240 900 916 932 949 965 982 998 1,015 1,032

B. Recent Modifications in SBI Home Loan Scheme:

a. In Principle Approval:

In principle approval / sanction can be given prior to identification

of a specific house / flat / property by the prospective borrower to

give him greater flexibility in negotiations.

It is valid for the period of three months.

The borrower can select the property as per the eligibility or loan

amount he may get.

b. Take over of Housing Loans:

In simple words ‘Take Over of Housing Loan’ means to transfer

the housing loan from other financial institute / bank to SBI.

Take Over of Housing Loans may be considered highly selective

after due diligence and precautions, in cases where possession of

the house / flat has been taken, repayment of the existing loan has

already commenced and installments have been paid as per the

terms of sanction, subject to the conditions-

Each case to be approved by the DGM of the module / Main

branch only, in consideration of large business interests / valuables

connections.

The prospective borrower should address a letter to the institution

through whom the finance has been availed, that the institution

would deliver the title deeds direct to our bank branch upon receipt

of the loan amount.

The institution to confirm the above and that they are holding the

EMI over the property.

The disbursement of the loan should be made direct to the

institution and their receipt kept along with the documents.

The agreement to mortgage should be taken.

C. DOCUMENTS OF HOUSING LOAN

Documents play an important role for the approval of the loan. Unless and until all the documents are submitted by the applicant and are properly verified by the responsible authority the loan cannot be apprised i.e. documents are very important for the appraisal of home loan.

The documents required for the appraisal of Home Loan are divided into two stages which are as follows:

I. PRE-SANCTION / CREDIT DOCUMENTS:

DOCUMENTS

PRE-SANCTION DOCUMENTS

POST-SANCTION DOCUMENTS

These documents are required for the approval / sanction of the housing loan. They are required for the analysis of the credit worthiness of the applicant. They help to understand the financial strength and weakness of the applicant i.e. what amount of loan should be approved? Whether the applicant will be able to repay the loan installments or not?

The documents are as follows-

COMMON DOCUMENTS :

DOCUMENTS AS PER OCCUPATION :

PROCESSING FEE

CHEQUES

NET WORTH SUPPORTING DOCUMENTS

PERSONAL ASSETS & LIABILITY

STATEMENT

IDENTITY & RESIDENTAL

PROOF

COMMON DOCUMENTS

APPLICAT-ION FORM

WITH PHOTO

SALARIED SELF - EMPLOYED PROFESSIONALS

SELF – EMPLOYED BUSINESSMEN

Last three months salary-slip.

Educational qualification certificates & proof of business existence.

Educational qualification certificates & proof of business existence.

Form 16 for last three years. Last three years Income Tax returns.

Last three years Balance-sheet.

Employer’s Certificate Certificate copies of Wealth Tax Returns, if applicable

Certificate copies of Wealth Tax Returns, if applicable

Details of previous employment

Brief write-up on profession Brief write-up on business / business profile.

Latest Income Tax Return, if applicable.

Certified copies of Income Tax.

Certified copies of Income Tax.

DOCUMENTS RELATED TO PROPERTY:

PURCHASE OF HOUSE / FLAT

CONSRUCTION / EXTENSION & REPAIR

OF HOUSE / FLAT

CO-OPERATIVE HOUSING SOCIETY

Agreement of sale. Detailed cost estimate by approved Architect/Civil Engineer/Chartered Engineer/Valuers.

Bye-law’s of the Society.

Letter of allotment. 7/12 abstract Certificate of Membership.Receipt of payment made to the vendor.

NA Certificate. Certificate stating the number of shares held by the member.

Power of attorney, if applicable.

No Objection Certificate for loan and mortgage from Society.

No Objection Certificate for loan and mortgage from lesser / builder, if applicable.

Letter of allotment

Development agreement if applicable.

ANALYSIS OF INOME DOCUMENTS:

1) Salary Slip Analysis

Name of the Applicant – whether matches with the salary slip or not?

Designation

Name of the Employer

Is the latest salary credit as per the salary slip

Are the salary credits in the bank statements as per the salary slip

Is the salary fixed or variable

Any regular deductions reflecting in the salary slip.

2) Understanding Bank Statements

In case of Salaried, number of credits to be checked – Fixed & Variable

In case of Self Employed check the average balance for liquidity

Large credit or debit entries

Recurring debits on account of loan repayment

Inward Cheque bounces

Outward Cheque bounces

Stop Payment / Minimum Balance charges

3) Form 16 – Salaried / Form 16A – Other than salaried

Name & address of the employer

Name and designation of the employee

Details of the salary paid / other income

Details of the tax deducted

Information of Housing loan availed

Information on Mediclaim, pension policy etc

Information on other savings like PPF, NSC, Mutual funds etc.

4) Understanding Profit & Loss Account

Expense heads

Trend in Profitability & Sales over the years

Depreciation charged

Any unusual expenditure

5) Why do we require a Balance Sheet?

To understand the business of the customer in terms of-

Owner’s involvement

Profitability of the business

Asset base

His Customer Base & Liquidity

His Suppliers

6) What to read out of Schedules?

Understanding the list of his Customers

Understanding the list of his Suppliers

Understanding the value of assets as on date

Understanding various loans availed by the loan applicant

Application form for housing loan of SBI:

APPLICATION FORM HOUSING LOANS (PUBLIC)

PLEASE COMPLETE ALL PARTICULARS INBLOCK LETTERS & TICK BOXES WHEREVERAPPLICABLE.

PERSONAL DETAILSAPPLICANT CO-APPLICANT

NAME IN FULLFATHERS/HUSBAND’S NAMERELATIONSHIP WITH CO-APPLICANTPRESENT RESI. ADD. WHETHER OWNED RENTED

LEASED OTHERS

OFFICE ADDRESS

_____________________PIN__________TEL-__________(R)_____________(O)

_____________________PIN__________TEL-__________(R)_____________(O)

DATE OF BIRTHSEXSTATUSMARITAL STATUSNO. OF DEPENDANTSCATEGORY

MALE FEMALE RESIDENT NRI

SINGLE MARRIED

CHILDREN OTHERS

SC ST OBC NA

MALE FEMALE RESIDENT NRI

SINGLE MARRIED

CHILDREN OTHERS

SC ST OBC NAPAN NO./ VOTER ID/PASSPORT NO. (attach Xerox copy)

OCCUPATIONOCCUPATOPN DETAILSEDUCATIONAL/PROFESSIONAL QUALIFICATIONSNO. OF YEARS IN PRESENT OCCU.DESIGNATION & EMPLOYMENT NO.DATE OF RETIREMENT

A/C DETAILSTYPE OF A/C NAME OF THE BANK &

BRANCHA/C NO. YEAR OF

OPENINGAPPLICANTCO-APPLICANT

FINANCIAL DETAILSMONTHLY GROSS INCOMEMONTHLY NET SALARYOTHER INCOMESOURCE OF OTHER INCOMEANNUAL INCOME AS PER IT RETURNADVANCE TAX PAID IN CURRENT YEAREXPECTED MONTHLY RENTAL INCOME FROM PROPOSED FLAT/HOUSEMONTHLY INSTALLMENTS PROPOSED

INVESTMENT & LOAN(ASSETS & LIABLITIES)

SIGNED PHOTO OFAPPLICA-

NT

SIGNED PHOTO OF

CO-APPLICAN

T.

PLEASE INDICATE BELOW DETAILS OF INVESTMENTS & ALL LOANS TAKEN/PROPOSED FROM EMPLOYER, PF ETC. & INSTALLMENT(S) PAYABLE PRE MONTH ON THE SAME INCLUDING INTEREST AGAINST EACH.

APPLICANT CO-APPLICANT

SAVING BANK IMMOVABLE PROPERTY (SPECIFY)CURRENT BAL. IN PF. (YOUR SHARRE)OTHER ASSETS POLICY1.2.LIFE INSURANCE POLICY(IES) POSTAL LIFE INSURANCE POLICY(IES)AMT/MATURITY DATES)

EXISTING LOAN FROM SBIDETAILS OF EXISTING LOANS FROM STATE BANK OF INDIA

APPLICANT: ________________________________________________________________________________________CO-APPLICANT: ____________________________________________________________________________________

DETAILS OF PROPERTYDETAILS OF IMMOVABLE PROPERTY

(TO BE PURCHASED / CONSTRUCTED / RENOVATED / IMPROVED)1. MENTION HOUSE NO. / PLOT NO., AREA, CITY, PIN CODE, PROPOSED __________________________________2. PLOT / FLAT / HOUSE ALLOTED BY A- HOUSING SOCIETY, HOUSING BOARD,

DEVELOPMENT AUTHORITY, PVT. BUILDER, CO-OPERATIVE SOCIETY.

3. IF POSSESION IS LEASEHOLD, UNEXPIRED PERIOD OF LEASE: YEARS.

PURPOSELOAN REQUEST

PURPOSE OF LOAN –1. PURCHASE OF NEW HOUSE/FLAT 2. PURCHASE OF OLD HOUSE/FLAT

3. CONSTRUCTION OF NEW HOUSE 4. EXTENSION OF FLAT/HOUSE

4. IMPROVEMENT, RENOVATION OF HOUSE/FLAT

COST & SOURCESCOST OF PROPERTY RS. SOURCE OF FUNDS RS.

1. COST OF LAND 1. AMT ALREADY INVESTED2. COST OF 2. SAVINGS IN BANK

LOANS O/S AMT

RS.

MONTHLY INSTALL. PAYABLE

RS.

TERM

MONTHS

APPLICANT

EMPLOYERBANK

CREDIT SOCIETYOTHERS

CO-APPLICANTEMPLOYER

BANKCREDIT

SOCIETYOTHERS

CONSTRUCTION/EXTENSION3. COST OF AMENITIES / IMPROVEMENT

3. DISPOSAL OF INVEST/PROPERTY

4. COST OF REPAIRS 4. P.F- A) REFUNDABLE B) NON-REFUNDABLE

5. COST OF FLAT / HOUSE 5. OTHERS (SPECIFY)6. COST OF STAMP DUTY / REG. / ELECTRICAL CONNECTION / MUNICIPAL CHARGES

6. LOAN APPLIED FOR

TOTAL COST TOTAL FUNDS

TOTAL COST SHOULD BE EQUAL TO TOTAL FUNDS AS PER THE SCHEME OF THE BANK, I/WE APPLY FOR THE LOAN ON A FIXED RATE/FLOATING

RATE BASIS (DELETE WHICHEVER IS IN APPLICABLE.

PROPOSED REPAYMENTREPAYMENT TERM OF LOAN PERIOD OF RE-PAYMENT YEARS / MONTHS

MODE OF REPAYMENT CHECK-OFF FACILITY WITH EMPLOYER SALARY A/C & SI AT BRANCH POST DATED CHEQUES

PURPOSE OF LOANA) FOR CONSTRUCTION B) FOR PURCHASE OF

HOUSE/FLATI. HOUSE- 1. IS THE UNIT NEW OLD1. AREA OF PLOT

SQ.FT2. AGE OF EXISTING STRUCTURE IF OLD

YEARS

2. PROPOSED BUILT UP AREA SQ.FT

3. PURCHASE PRICE RS.

3. PURCHASE PRICE OF PLOT RS. 4. COST OF ADDITIONAL ITEMS RS.4. ARCHITECT’S FEES RS. 5. TOTAL COST RS.5. COST OF CONSTRUCTION RS. 6. AREA OF PLOT/ UNDIVIDED

SHARE OF LAND SQ.FT

II. FLAT- 7. BUILT UP AREA SQ.FT1. AREA OF UNDIVIDED SHARE OF LAND

SQ.FT

8. MARKET VALUE LAND VALUE STRUCTURE VALUE

RS.RS.

2. COST OF THE SAME RS.3. COST OF SEMI -FINISHED FLAT RS.4. COST OF COMPLETION / ADDITIONAL ITEMS

RS.

III. REGISTRATION CHARGES RS.IV. TOTAL COST RS.V. MARKET VALUE AS PER REPORT

RS.

C) FOR EXTENSION

1. AGE OF EXISTING STRUCTURE YEARS

2. PLOT AREA/BUILT-UP AREA OF FLAT3. MARKET VALUE OF EXISTING STRUCTURE RS.4. (a) IS THE PROPERTY MORTGAGED TO ANY INSTITUTION

YES, NO.

(b) IF YES, NAME OF THE INSTITUTION (c) VALUE OF O/S LOAN AGAINST MORTGAGE RS.5. DETAILS OF PROPOSED REPAIR/EXTENSION6. ESTIMATED COST OF REPAIR/EXTENSION RS.

DOCUMENTSI/WE HAVE ATTACHED THE FOLLOWING COPIES OF SUPPORTING DOCUMENTS (DULY ATTESTED WHEREVER NECESSARY)

EMPLOYER’S CERTIFICATE GIVING DETAILS OF SERVICE & SALARY & LAST 3 MONTHS SALARY SLIP

LATEST FORM 16 FROM EMPLOYER (FOR EMPLOYEES)

COPIES OF IT RETURN WITH NECESSARY DOCUMENTS CERTIFIED BY CA FOR LAST 3 YRS. STATEMENT OF BANK A/C FOR LAST 6 MONTHS WHERE INCOME IS CREDITED IDENTIFICATION PROOF: VOTERS ID /PAN CARD/ PASSPORT /DRIVING LICENCE ADDRESS PROOF: COPY OF ELECTRICITY BILL/ TELEPHONE BILL/RATION CARD ALLOTMENT LETTR FROM BUILDER/ SOCIETY OR VENDORS OFFER LETTER IF PURCHASE OF FLAT IN RESALE. NOC FOR MORTGAGING THE PROPERTY TO THE BANK FROM SOCIETY/BUILDER ON BANKS FORMAT GOVT. APPROVED VALUERS REPORT (FOR RESSALE OF FLAT) NOC TO SELLER BY BUILDER /SOCIETY FOR SELLING THE SAME(FOR RESALE OF PROPERTY) COPY OF ALL THE EARLIER AGREEMENTS FOR SALE & REGISTRATION COPY OF AGREEMENT FOR SALE/SALE DEED AND RECEIPT OF REGISTRATION GUARANTOR’S APPLICATION FORM (IF APPLICABLE) SALARY SLIP/FORM 16/ LAST 3 YEARS INCOME TAX RETURNS OF THE GUARANTOR.

DECLARATIONI/WE HEREBY APPLY FOR A LOAN FROM STATE BANK FO INDIA TO THE EXTENT INDICATED IN THE LOAN REQUEST SECTION OF THIS APPLICATION FORM. I/WE DECLARE THAT THE FOREGOING PARTICULARS AND INFORMATION FURNISHED I THIS APPLICATION FORM ARE TRUE, ACCURATE AND COMPLETE AND THAT THEY SHALL FORM THE BASIS OF ANY LOANS STATE BANK OF INDIA MAY DECIDE TO SANCTION ME/US. NOR HAVE, I/WE BEEN ADJUDICATED THE CONTENTS THEREIN. I/WE AM/ARE AWARE THAT IF I/WE OPT FOR LOAN AT FLOATING RATE OF INTEREST THE EQUITED MONTHLY INSTALLMENTS WILL COMPRISE PRINCIPAL AND INTEREST BASED ON BANK’S MEDIUM TERM LENDING RATE WHICH IS SUBJECT TO CHANGE FROM TIME TO TIME.I/WE AGREE THAT STATE BANK OF INDIA MAY AT ITS DISCRETION CONDUCT DISCREET INQUIRIES IN RESPECT OF THIS APPLICATION, I/WE UNDERTAKE TO INFORM AS TO ANY CHANGE IN MY/OUR OCCUPATION/ EMPLOYMENT/ RESIDENCIAL ADDRESS AND TO PROVIDE ANY FURTHER INFORMATION THAT THE BANK MAY REQUIRE. STATE BANK OF INDIA WILL BE AT LIBERTY TO TAKE SUCH ACTION AS IT MAY DEEM NECESSARY IF MY/OUR ABOVE STATEMENT ARE FOUND TO BE UNTRUE. I/WE AGREE THAT STATE BANK OF INDIA SHALL HAVE THE SOLE DISCRETION TO REJECT/REDUCE MY/OUR LOAN APPLICATION WITHOUT ASSIGNING ANY REASON THEREFOR. I/WE FURTHER AGREE THAT MY/OUR LOAN TRANSACTION SHALL BE GOVERNED BY THE RULES OF STATE BANK OF INDIA WHICH MAY BE IN FORCE FROM TIME TO TIME.APPLICANT’S SIGNATURE CO-APPLICANTS SIGNATUREPLACE:__________________ PLACE:____________________DATE: __________________ DATE: ____________________

PERMANENT ADDRESS:____________________________________ ____________________________________ ____________________________________

II. POST-SANCTION / LEGAL DOCUMENTS

Once the loan gets sanctioned the banks needs certain documents for security. The documents prepared are legal documents which are as follows-

1. Declaration by the borrower.

2. Documents relating to repayment :

Where Check-off is available:a) Irrevocable Letter of Authority from employee (on standard format).b) Letter of undertaking from employer (on Bank’s standard format).c) Irrevocable Letter of Authority where applicant himself is drawing and

Disbursing Officer (on Bank’s standard format) or in other cases PDCs or standing instructions wherever required may be obtained.

3. Memorandum of Term Loan Agreement for Housing Loan.

4. Guarantee Agreement, if applicable.

5. Mortgage Deed to be executed by the borrower.

6. Agreement to Mortgage, pending creation of mortgage.

7. Documents in connection with pledge of other securities, where applicable.

8. Arrangement letter.

9. A single consolidated stamped affidavit and Indemnity sworn before Magistrate/ notary public.

IMPORTANCE OF THE DOCUMENTS:

1) Declaration by the borrower:

Declaration by the borrower agreeing to construct the house within the stipulated period in case of loan granted for purchase of plot of land.

2) Memorandum of Term Loan Agreement for Housing Loan:

It is the agreement related to the term for which the loan has been taken i.e. number of years of repayment, amount of loan, EMI, etc.

3) Guarantee Agreement:

Guarantee agreement is the agreement signed by the guarantor giving guarantee of repayment of loan in case of default by the borrower.

4) Mortgage Deed to be executed by the borrower:

It is the document related to the mortgage of the property constructed or purchased.

5) Agreement to Mortgage, pending creation of mortgage:

Agreement to mortgage is prepared in case if the property to be mortgage is in incomplete state.

6) Documents in connection with pledge of other securities:

In case where the property to be mortgage is of less value than required then other property or investments such as bonds, insurance policies, etc, are used to cover the risk.

7) Arrangement letter:

Arrangement letter is a letter which consists of all the terms and conditions related to the loan. The term of loan, interest rate, EMI, repayment period, rate of interest margin, disbursement, insurance and other terms and conditions such as non-availment of loan against same property, restrictions related to entering into any agreement related to the sale of same property, etc.

8) Consolidated stamped affidavit and Indemnity:

Declaring non availment of other loans against the same property / from other financial institutions (in lieu of No Dues Certificate), delivery of original documents of title etc.

To cover risk for Home loans below Rs.1 cr., where the search report covers only a period of 15 years and which does not reveal any encumbrance (instead of obtaining non encumbrance certificate for 30 years)

Undertaking that construction is as per sanctioned building plan (plan is to be enclosed to the undertaking.

To enable the Bank to initiate criminal proceedings against borrowers if they declare incorrect, false or misleading information (to mitigate risks on account of multiple financing/ submission of fake / forged title deeds etc).

D. PROCESS OF HOME LOAN

The process of housing loan consists of four stages. All the four stages play a vital

role in fulfilling the requirements of housing finance of the bank.

The stages are as follows-

Flow chart showing the credit appraisal in home loan:

PRE-SANCTION

DISBURSEMENT

SANCTION

REPAYMENT

I. Pre-sanction Stage / Process .

Approval by the sanctioning officer

Visit / inspection by the appraisal officer (if necessary)

Recommendation of loan proposal to higher authority

Checking the genuineness of the builder, property to be purchased)

Verification of documents submitted by the applicant

Submission of documents with application form

Obtaining search report & valuation certificate by empanelled lawyer & valuer.

Preparation of security documents by bank. (Hypothecation & mortgage)

Asset verification by the disbursement officer

Commencement of disbursement

Repayment

PRE-SANCTION

STAGE

SANCTION STAGE

DISBURSEM-ENT STAGE

The process for a meaningful pre-sanction is as follows-

i. Place: residence of the borrower-

a. Identify the borrower based on the proof of identification.

b. Identify the borrower’s address on the basis of proof of residence given by the applicant along with the application form.

c. Educational qualification.

d. Ascertain period of stay in current residence.

e. Whether owned / company leased / rented. If rented, ascertain monthly rent being paid.

f. Ascertain whether he / she have a credit card and name of the credit card issuer.

g. Educational qualification of spouse and children (except minor children). If spouse / children are employed, name of the organization, designation, experience and salary.

h. Number of school going children.

i. Number of other dependents relatives staying with the borrower.

j. Discreet local enquiries with neighbors, opinion makers etc. to ascertain antecedents, credentials of the borrower.

k. Whether he / she owns a car and / or a two wheeler in his / spouse’s name. The vehicle number and name of the owner may be recorded and the name of financiers, if any.

l. Sanctioning authority may make enquiries with the applicant’s bankers, if he deems it necessary.

ii. Place: residence of the guarantor-

a. Identify the borrower based on the proof of identification.

b. Identify the borrower’s address on the basis of proof of residence given by the applicant along with the application form.

c. Educational qualification.

iii. Place: office / work place of borrower-

a. In case of salaried applicant- with colleagues, salary disbursement authority (also with a view to confirm genuineness of salary certificate).

b. In case of self-employed / businessmen / professionals – with another firm engaged in the same line of activity, one or two firm(s) in the neighborhood / concerned industry body.

iv. Place: Builder-

To establish the genuineness, track record and reputation in terms of timely completion of quality projects.

Procedure: check-

a. With a few reputed builders in the area.

b. With a few of the owners of their complete projects to ascertain quality of construction, timely delivery and conveyance of the ownership issues.

c. With the concerned industry body i.e. Chamber of Housing Industry / Builder’s Forum etc.

d. With the builder’s bankers.

v. Place: property proposed to be purchased-

Procedure-

a. Independent and surprise visit is to be made to the property.

b. Identify the property based on details in title documents.

c. Landmarks for reaching and identifying the property to be recorded.

d. Accessibility / approachability i.e. all modes of transport / car / two wheeler only / others.

e. Ensure that proper access is available to the property i.e. roads etc.

f. Comments of the locality i.e. whether residential / commercial / underdeveloped / trouble prone.

g. Comment whether the area is posh / upper middle class / middle class / lower class / slum area.

h. Discreet enquires with the owners / occupants of neighboring houses in respect of the ownership of the property, information on any pending disputes / litigation etc.

i. Ensure that the property is kept in good and tenantable condition.

j. Ascertain whether the property is rented out and, if so, for how long and the rentals p.m. Whether leased to an institution for occupation of its employees or rented out to an individual / business concern.

The following items have been taken out of the preview of pre-sanction inspection by the Bank’s staff wherever the services of outsourced agencies are available:

i. Visit to the residence of the applicant,

ii. Visit to the residence of the guarantor,

iii. Visit to the office / work place of the borrower.

Formats standardized:

In addition to the above procedures, the following formats to be used are also standardized for the pre-sanction and sanction process to ensure uniformity and effective compliance of instructions by operating functionaries and to minimize possibility of frauds during pre-sanction stage:

Pre-sanction inspection sheet To be kept with documents. (Separate format to be used for recording pre-sanction visits by Bank’s staff where outsourced agencies are engaged).

Control Card Control card will serve as a check list of compliance of various processes / procedures, carrying brief details of the loan, including details of post sanction inspection, to be kept with documents.

Appraisal format With a view to ensuring uniformity in appraisal of HLs and compliance with extant instructions, standard appraisal format introduces.

Letter forwarding BC / DD to the Builder / Seller

Standard forwarding letter introduced to safeguard Bank’s interest and ensure proper delivery of BC / DD to seller / builder.

Control report Standard Control Report to ensure uniformity in reporting a sanction.

II. Sanctioning Stage / Process.

The sanction process is the stage where the following process is followed-

SEARCH REPORT:

The sanctioning process in case of home loans starts with the preparation of a search report. In case of loans amounts below Rs. 1 crore, the bank can take a limited risk by making a search for a period pf 15 years, instead of 30 years. if the search made for 15 years does not reveal any encumbrance, then the risk has to be covered by incorporating the relevant clause in the consolidated stamped affidavit. In case of properties belonging to government, local authorities, empanelled lawyer should furnish the search report for 30 years. Where this search report reveals encumbrance on the property which is detrimental to the Bank’s interest, immediate steps are to be taken to either avoid granting the loan or advise the borrower to rectify the defect in the title, if it is possible.

RISK OF MULTIPLE FINANCING/ SBMISSION OF FAKE TITLE DEEDS:

1. A consolidated stamped Affidavit of Declaration and Indemnity is to be obtained from prospective borrowers covering various points including non availment of other loans against the same property, delivery of original documents of title, undertaking that construction is as per sanctioned building plan etc to enable the bank to initiate criminal proceedings against them if they declare incorrect, false or misleading information.

2. The sanctioning authority should verify the current CIS data base to avoid multiple financing. This will also enable them to know the repayment obligations of other loans availed by these borrowers from other branches under other schemes also, which are not disclosed in the loan applications.

3. Branches/RACPCs should access CIBIL data base, wherever required, to trace credit facilities, if any availed by such borrowers from other banks in the centre [opinion report from these Banks should be obtained regarding nature and conduct of the facilities, before sanction].

4. RACPCs/ Branches can use the service of verification agencies that run 'de-dupe' tests with other Banks' data too.

ASSET VERIFICATION AND QUALITY OF LOAN PROCESS:

Controlling Offices are to scrutinize every month, at least 5% of the loans sanctioned by a branch/ RACPC during the previous month, with a view to

ascertaining the quality of pre-sanction processes, loan appraisal, and documentation. This may be done either by asking the branches/RACPCs to submit photocopies of the relevant papers/documents or by visiting the branches/RACPCs concerned. Services of Concurrent Auditors may also be used for this purpose at the RACPCs.Asset verification, in case of at least 5% of the loan accounts sanctioned during the previous quarter, may be arranged by the controlling office during each quarter.

III. Disbursement Stage / Process.

It is a stage where the cheques of sanctioned amount of loan are handed over to the borrower or to the concerned person.

To prevent misuse of funds, disbursement should be made only in phases co-relating to the actual progress made in the construction e.g. at stages like completion of plinth, lintel level, roof, etc. Before disbursement, the proper end-use of funds should be ensured by visit to the sites. Branches may insist on a certificate from engineer / architect of the borrower confirming stage wise completion of the project.

As regards loans for repairs/renovation/construction, etc, Branches should satisfy themselves about the estimated cost of labor and other charges and after obtaining certificate(s) of qualified engineers/architects as concerned necessary.

As far as possible it is made directly to the suppliers / builders as per the progress of the work only after complete execution of documents and creation of valid mortgage.The process of disbursement is as follows-

Disbursement of cheques:

This is the final step in the disbursement stage. The operational manager prepares the cheques along with the letter which is handed over to the borrower.

The disbursement of cheques is done in accordance with the stage of construction as reported by the technical advisor.

The cheques is disbursed in two ways as follows-

i. DISBURSEMENT IN ONE STROKE -

In case of purchase of property which is in ready stage the payment is made in full to the concerned party from whom the property is being purchased. The property such as

DISBURSEMENT

ONE STROKE DISBURSEMENT

STEP-WISE DISBURSEMENT

flat / fully constructed house etc. which are ready for acquisition comes under this case.Also the property which is proposed for re-sale comes under this case where the borrower needs to make full payment to the seller.

ii. STEP-WISE DISBURSEMENT -

In certain cases where the work is carried out in stages such as the construction of house the disbursement is done in phases. The bank requires documents such as the engineer’s or architects completion certificate and the quotation and bills of material to be purchased for disbursement of the cheques. The architect gives the stage wise completion certificate such as-Completion of-

Plinth area, Lintel level, Roof, etc.

In cases where the payment has to be given in installments then the disbursement is also done as per the installments i.e. first installment, second installment, etc.

Example of step-wise disbursement is as follows: PARTICULARS AMOUNT (IN %)

1. At the time of preparing

agreement to sale

10%

2. At the time of ‘Plinth’ 10%

3. At the time of first slab 10%

4. at the time of second slab 8%

5. At the time of third slab 8%

6. At the time of forth slab 8%

7. At the time of fifth slab 8%

8. B. B. Works 10%

9. Outer plaster 10%

10. Internal plaster 8%

11. At the time of flouring 5%

12. At the time of possession 5%

TOTOL: 100%

IV. REPAYMENT OF LOAN:

Repayment of loan starts after the final disbursement of the loan.

If the disbursement is done in one stroke then the repayment starts

immediately from the next month.

If the disbursement is done step-wise then the maximum time for

disbursement of loan is 18 months. The repayment starts from the 19th month

even if the project is completed or not.

F. General causes of rejection of proposal

Not every loan proposal that comes to the bank are approves certain cases gets rejected because of some or the other reason. The common causes of rejection of loan are as follows:

I. Personal Profile:

a. Negative profile.b. Dependants more then 5.c. Age norms not met.d. Negative references.e. Manipulated / undisclosed facts, etc.

II. Documents / Property:

a. The credit documents not as per policy.b. Technical norms not satisfied.c. Legal documents not as per policy.d. Fraud documents submitted.

III. Financial reasons:

a. Unsatisfactory credit history.b. Income norms not met.c. Employment norms not met.d. Poor financial condition.e.Too many existing obligations.

IV. Geographical Reasons:

a. If the property is beyond the geographical limits.b. If the property is in negative profile area.

ANALYSIS &

INTERPRETATION OF DATA

A. Comparative Analysis:

Though the schemes of all the four major competitors are more or less the same, there are so many areas with operational differences.Comparative statements in respect of Housing Finance Activity for the year 2008-09:

I)ITEMS BOBHFL SBI ICICI HDFC

Time required for Processing/Sanction

7 days 5 days 3 days 3 days

Guidelines followed

N.H.B R.B.I N.H.B N.H.B

Periodicity of interest

Annually Monthly Monthly Annually

II)ITEMS (%) BOBHFL SBI ICICI HDFC OTHERSDisbursement 7 16 18 19 37Recovery 98 99 95 98 90NPA 0.5 0.4 0.6 0.5 1

0

5

10

15

20

25

30

35

40

BOBHFL SBI ICICI HDFC OTHERS

DISBURSEMENT

BOBHFL

SBI

ICICI

HDFC

OTHERS

Interpretation:

The chart shows the percentage of disbursement of various financial institutes and banks. From the above the share of State Bank of India is 16% out of total disbursement which is less than ICICI & HDFC.

RECOVERY

BOBHFL

SBI

ICICI

HDFC

OTHERS

Interpretation:

The above chart shows the recovery of housing loans by various financial institutes & banks. State Bank of India shows maximum recovery among all above.

NPA

BOBHFL

SBI

ICICI

HDFC

OTHERS

Interpretation:

The above chart shows the rate of Non-Performing Assets in various financial institutes & banks. Since home loan comes in priority sector the rate of NPA is very low almost negligible for all above mentioned.

B. ANALYSIS OF BRANCH PERFORMANCE:

I)(A)

Total visit

(B)Application

received

(C)Not –

eligible

(D)Rejected

(E)Withdrawn

(F)Sanctioned

(G)Pending

No. of Applicants

170 140 12 6 5 112 5

0

20

40

60

80

100

120

140

160

180

A B C D E F G

PARTICULARS

NO. OF APPLICANTS

Interpretation:The above chart explains us about the number of applicants at every stage for home loan during the year 2008-09 in the branch. From the above chart we can also come to know the number of visitors whose loan was sanctioned during previous year and the number of applicants whose disbursement of loan is still pending.

II) YEAR

PARTICULARS2006 2008 2009

PERSONAL SEGMENT

4546 7171 7298

OTHERS 567 520 1183TOTAL ADVANCES 5113 7691 8481

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2006 2007 2008

OTHERS

PERSONAL

Interpretation:

The above chart shows the figures of State Bank of India, Gangapur Road, Nasik. The amount of total advances is showing an increase since last 3 years. Even the amount of loan in the personal segment is increasing which includes home loans, vehicle loans, education loan, etc.

III) YEAR

PARTICULARS 2006 2007 2008

HOUSING LOAN 3682 5593 5871OTHERS 864 1578 1427TOTAL PERSONAL SEGMENT

4546 7171 7298

(Figures in Lacs)

0

1000

2000

3000

4000

5000

6000

7000

8000

2006 2007 2008

OTHERS

HOUSING LOAN

Interpretation:

The above chart figures of housing loan among the total personal segment of State Bank of India, Gangapur Road, Nasik. The share of housing loan in the total personal segment is maximum and is still increasing day by day.

C. COMPARISON BETWEEN THE THREE MAIN COMPETITORS:

PARTICULARS STATE BANK OF INDIA

ICICI HDFC

1. PURPOSE Purchase/ construction/

extension of old / new house/ flat plot of land for construction of

house.

For purchase of house from builder

/ resale and construction / extension of

existing house.

For purchase of house from

builder / resale and construction / extension of

existing house.

2. RATE OF INTEREST

8% - 11% 9.25% - 10% 9.25% - 10.75%

3. LOAN AMOUNT:i. Salaried

ii. Self employed

Rs. 5,00,000/- to Rs. 1,00,00,000/-

Rs. 5,00,000/- to Rs. 2,00,00,000/-

Rs. 2,00,000/- to Rs. 1,00,00,000/-

Rs. 2,00,000/- to Rs. 2,00,00,000/-

Rs. 2,00,000/- to Rs. 1,00,00,000/-

Rs. 2,00,000/- to Rs. 2,00,00,000/-

4. ELIGIBILITY CRITERIAi. Salariedii. Self employed

Rs. 1, 20,000/- p.a.Rs. 2,00,000/- p.a.

Rs. 1,44,000/- p.aRs. 1,50,000/- p.a

Rs.1,20,000/- p.aRs.1,50,000/- p.a

5. AGE CRITERIAi. Salariedii. Self employed 18 – 60 yrs

18 – 70yrs21 – 65yrs21 – 65yrs

21 to 58yrs21 to 65yrs

6. TENURE 5 – 20 yrs 5 – 20 yrs 5 – 20 yrs

7. EXPERIENCE:i. Salariedii. Self employed

3 yrs3 yrs

1 yrs3 yrs

3 yrs3 yrs

8. PROCESSING FEE

0.50% 0.50% Rs.10,000/- or 0.5% of loan

amount(whichever is lesser) + Service

Tax9. PRE-PAYMENT

CHARGES2% 2 % (Full

payment), No Penalty (Part

Payment).

If 25% of outstanding amount is paid every year till 3 years - No

penalty, otherwise 2% of outstanding

amount

10. DOCUMENT-S REQUIRED

i. Salaried

ii. Self employed

1) Application form with photograph,

2) Identity & residence proof,

3) Last 3 months salary slip,

4) Form 16,5) Last 6 months

bank salaried credit statements ,

6) Processing fee cheques

1) Application form with photograph,

2) Identity & residence proof,

3) Education qualifications certificate & proof of business existence, Business profile,

5) Last 3 years profit/loss & balance sheet,

6) Last 6 months bank statements,

7) Processing fee cheques.

1) Application form with photograph,

2) Identity & residence proof,

3) Age Proof 4) Latest 3 months

salary slip, 5) Form 16,6) If current

service is less than 2 years than previous company relieving letter,

7) Last 6 months bank statements,

8) Processing fee cheques.

1) Application form with photograph,

2) Identity & residence proof,

3) Education qualifications certificate & proof of business existence,

4) Business profile, Last 3 years profit/loss & balance sheet,

5) Last 6 months bank statements, Processing fee cheques

1) Application form with photograph,

2) Identity & residence proof,

3) Latest salary slip,4) Form 16,5) Last 6 months

bank statements,6) Processing fee

cheques.

1) Application form with photograph,

2) Identity & residence proof,

3) Education qualifications certificate & proof of business existence,

4) Business profile, Last 3 years profit/loss & balance sheet,

5) Last 6 months bank statements,

6) Processing fee cheques.

RECOMMENDATIONS&

SUGGESTIONS

RECOMMENDATIONS & SUGGESTIONS

1. The bank needs to satisfy customer needs that are complicated and difficult to

manage. A robust data warehouse should create wherefrom meaningful data

on customers, their preferences, their spending, patterns etc can be viewed.

2. Business process re-engineering is key requirement of bank. Fast delivery of

services, less documentation, simplified process etc, is necessary.

3. It is spending more time on loan disbursement as compared to other private

sector banks. It can focus on measures to reduce this timely delay.

4. There should be strong risk management capabilities.

5. Leadership in market through differentiation and product innovation.

6. SBI can increase professional employment by bank and sells its loan schemes

to customer aggressively with the help of advertising media.

7. Continually invent new products and services to satisfy more customers.

8. Bank can upgrade interest rate according to market share.

9. SBI can provide Net banking services to its existing customers as well as

promotion stunt to attract new customers.

10. Insurance for life is optional for now but to minimize the risk life insurance

should be made compulsory.

CONCLUSION

CONCLUSION

1. For the purpose of approving a loan credit appraisal plays a very important role.

2. Home Loans being a trust area the rate of NPA is very low or negligible as compared to the other loans. Thus, there is minimum risk for default in Home Loan Finance.

3. There is heavy risk involved in funding of any property like double funding.

4. In case of the borrower lost his job or meets with accident, which results into

permanent disability & in case of the borrowers death the loan repayment

responsibility comes on his family. It is major problem.

5. Most of the customers prefer SBI because of low interest rates.

6. Documentation plays a very important role in the appraisal process.

7. Due to careful credit appraisal of loan the chances of default are reduced and

the repayment of loan almost 99%.

8. Recent modifications in home loans such as ‘Take over of housing loan’ helps the borrowers of other banks or financial institutes to transfer their loan to State Bank of India and enjoy the benefit of low interest rates & ‘In principle sanction/approval’ helps the borrower to take advantage of finding property as per his eligibility.

APPENDICES

CASE ONE: Mr. Makarand Joshi

Mr. Makarand Joshi, 35, is a lawyer by profession. He is applying for a loan to purchase a new house. Presently he is residing in a rental house.

COST OF PROPERTY (Rs)

AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

1. Cost of flat 17,00,000 1. Amount already invested 1,50,0002. Cost of construction - 2. Savings in bank 2,91,8753. Cost of amenities/service charges.

50,000 3. Disposal of investment or property

-

4. Cost of repairs - 4 .PF- refundable/nonrefundable

-

5. Miscellaneous - 5. Others -6. Cost of stamp duty/ registration.

17,500 6. LOAN APPLIED FOR 13,25,625

Total cost 17,67,500 Total funds 17,67,500

APPRAISAL NOTE

1. Name of the applicant Mr. Makarand Joshi2. Full address a) Office: Old Maruti chambers, District court,

Nashik. b) Residence: 6, Sideshwar, Gulalwadi, Somwarpeth

Nashik.3. Purpose Purchase of new flat 4. Age as on the date of application 35 years5. Total years of service/occupation 10 years6. Total monthly income/ earnings 60,0007. No. of family members/ dependents 38. Income from any other source NIL9. Whether he owns any house. If yes, whether it is second one proposed now for rental income?

NO.

10. Total annual income of the applicant 7,20,00011. Total family expenses 1,20,00012. Details of the flat to be purchased 20, Ashirwaad, Racca Colony Nashik.13. Whether the applicant is possessing existing house. If so, the purpose of acquiring the proposed house/ flat

NO

14. Amount of loan applied 13,25,62515. Maximum loan amount admissible 13,25,62516. Margin proposed (min. 25%) 25%17. The applicant’s outside liability a) Direct NIL b) Indirect NIL18. If the proposed house is to be given on rental basis, the approx. amount of rental expected

NO

19. ECONOMIES: a) Annual income from profession 7,20,000 b) Annual income of family members - c) Other annual income - d) Total receipts 7,20,000 e) Annual family expenditure 1,20,000 f) Surplus 6,00,000

g) Net monthly income 50,000 h) EMI 12,620 20. Security Purchased flat21. Interest 9.25%22. Repayment programme 216 installments of Rs.12,620 each for

18yrs

CASE TWO: Mr. Pankaj Rawal.

Mr. Pankaj Rawal, 31 is employed in ‘Mahindra & Mahindra’ as a Production Engineer since last five years. Presently he is staying in a rental flat and is proposing for a loan to construct a new house. Following are the particulars:

COST OF PROPERTY (Rs)

AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

1. Cost of land 10,00,000 1.Amount already invested 12,00,0002. Cost of construction 9,10,000 2.Savings in bank 1,00,0003. Cost of amenities/service charges.

1,50,000 3.Disposal of investment or property

-

4 Cost of repairs - 4. PF- refundable/nonrefundable

-

5. Miscellaneous - 5.Others -6. Cost of stamp duty/ registration.

21,000 6.LOAN APPLIED FOR 7,81,000

Total cost 20,81,000 Total funds 20,81,000

1. Name of the applicant Mr. Pankaj Rawal2. Full address a) Office: Mahindra & Mahindra, Satpur, Nashik. b) Residence: 24, Shivam Apt., Govindnagar, Nashik. 3. Purpose Construction of new house4. Age as on the date of application 31 years5. Total years of service/occupation 5 years

6. Total monthly income/ earnings 30,0007. No. of family members/ dependents 48. Income from any other source NIL9. Whether he owns any house. If yes, whether it is second one proposed now for rental income?

NO

10. Total annual income of the applicant 3,60,00011. Total family expenses 72,00012. Details of the flat/ house to be constructed/purchased

“SNEHA”, Plot No.13, Govindnagar, Nashik – 09.

13. Whether the applicant is possessing existing house. If so, the purpose of acquiring the proposed house/ flat

NO

14. Amount of loan applied 7,81,00015. Maximum loan amount admissible 7,81,00016. Margin proposed (min. 25%) 62.5%17. The applicant’s outside liability a) Direct: NIL b) Indirect: NIL18. If the proposed house is to be given on rental basis, the approx. amount of rental expected

NO

19. ECONOMIES: a) Annual income from service 3,60,000 b) Annual income of family members - c) Other annual income - d) Total receipts 3,60,000 e) Annual family expenditure 72,000 f) Surplus 2,88,000 g) Net monthly income 24,000 h) EMI 863820. Security Constructed house 21. Interest 9.25%22. Repayment programme 144 installments of Rs. 8638 each for

12yrsAPPRAISAL NOTE

CASE THREE: Mr. Pawan Nikam.

Mr. Pawan Nikam, 38 is an employee of MICO BOSCH LTD. as a project engineer since last nine years. He is applying for a loan amounting Rs.10, 22,000/- for purchase of a newly constructed row house. His wife Mrs. Sonali Nikam, 34 is working in Glaxo Smith line as an accountant since last 7 years. Following are the particulars of loan.

COST OF PROPERTY (Rs)

AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

1. Cost of Land - 1. Amount already invested 79,5002. Cost of house 11,50,000 2. Savings in bank 2,62,0003. Cost of amenities/service charges

2,00,000 3. Disposal of investment or property.

-

4. Cost of repairs - 4. PF- refundable/nonrefundable

-

5. Miscellaneous - 5. Others -6. Cost of stamp duty/registration

13,500 6. LOAN APPLIED FOR 10,22,000

Total cost 13,63,500 Total funds 13,63,500

APPRAISAL FORM

1. Name of the applicant Mr. Pawan Nikam2. Name of the co-applicant Mrs. Sonali Nikam3. Full address a) Office: MICO BOSCH, Satpur, Nashik. b) Residence: Gyatri Appt. old Pandit colony, Nashik.4. Purpose Purchase of a new row house 5. Age as on the date of application 38 years

6. Total years of service/occupation 9 years7. Total monthly income of applicant Rs.42,600/-8. Total monthly income of co-applicant Rs.14,700/-9. No. of family members/ dependents 310.Income from any other source NIL11. Whether he owns any house. If yes, whether it is second one proposed now for rental income?

Yes, but not to be given on rental basis.

12.Total annual income of the applicant Rs.5,11,200/-13.Total annual income of the co-applicant

Rs.1,76,400/-

14.Total family expenses Rs.84,000/-15. Details of the flat/ house to be constructed/ purchased.

“Durgesh”, Tidke colony, Nashik.

16. Whether the applicant is possessing existing house. If so, the purpose of acquiring the proposed house/ flat

Yes, as the existing house is small.

17.Amount of loan applied Rs.10,22,000/-18.Maximum loan amount admissible Rs.10,22,000/-19. Margin proposed (min. 25%) 25%20.The applicant’s outside liability a) Direct: NIL b) Indirect: NIL21. If the proposed house is to be given on rental basis, the amount of rental expected?

NO

22. ECONOMIES: a) Annual income from service Rs.5,11,200/ b) Annual income of family members Rs.1,79,400/- c) Other annual income d) Total monthly income of applicant Rs.42,600/- e) Total monthly income of co-applicant

Rs.14,700/-

f) Monthly family expenditure Rs.7000/- g) Net monthly income Rs.50,300/- h) EMI Rs.9,360/- 23.Security Purchased row house 24.Interest 9.25%25.Repayment programme 240 installments of Rs.9360/- for 20yrs

CASE FOUR: Mr. Atul Ashok Dhamne (NRI).

Mr. Atul Ashok Dhamne, 28, is an Indian residing in Singapore, employed in an MNC as a network analyst since last 4 years. He is planning to buy a flat in India for which he requires a loan of 20, 00,000. Following are his particulars:

COST OF PROPERTY (Rs)

AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

1. Cost of flat 27,61,000 1. Amount already invested -2. Cost of construction - 2. Savings in bank 2,42,5003. Cost of amenities/service charges.

30,000 3. Disposal of investment or property.

-

4. Cost of repairs - 4.PF- refundable/nonrefundable

-

5. Miscellaneous - 5.Others 6,91,0006. Cost of stamp duty/ registration.

1,42,500 6.LOAN APPLIED FOR 20,00,000

Total cost 29,33,500 Total funds 29,33,500

APPRAISAL NOTE1. Name of the applicant Mr. Atul Ashok Dhamne2. Full address a) Office: Frontier Drilling (ASIA) pvt. Ltd, 221,

Henderson rd, Singapore 159557. b) Residence: Block 654 A, Chua Chukang,

Cresent, Singapore 681684.3. Purpose Purchase of a new house 4. Age as on the date of application 28 years

5. Total years of service/occupation 4 years6. Total monthly income/ earnings Rs.1, 54,440/-7. No. of family members/ dependents 48. Income from any other source NIL9. Whether he owns any house. If yes, whether it is second one proposed now for rental income?

NO

10. Total annual income of the applicant Rs.18,52,280/-11. Total family expenses Rs.2,40,000/-12. Details of the flat to be purchased. Ashoka Heights, Ashoka Gardens,

Gangapur Road, Nashik.

13. Whether the applicant is possessing existing house. If so, the purpose of acquiring the proposed house/ flat

NO

14. Amount of loan applied Rs.20,00,000/-15. Maximum loan amount admissible Rs.22,00,000/-16. Margin proposed (min. 25%) 31.82%17. The applicant’s outside liability a) Direct: NIL b) Indirect: NIL18. If the proposed house is to be given on rental basis, the approx. amount of rental expected

NO

19. ECONOMIES: a) Annual income from service 18,52,280 b) Annual income of family members c) Other annual income d) Total monthly income 1,54,440 e) Monthly family expenditure 20,000 f) Net monthly income 1,34,440 h) EMI 25,600 20. Security Purchased house 21. Interest 9.25%22. Repayment programme 120 installments of Rs. 25,600 each for 10

yrs

CASE FIVE: Mr. Rajendra Patil.

Mr. Rajendra Patil, 67, is a businessman. His proposal is to takeover his housing loan from BOBHFL. He has already repaid maximum portion of the loan amount and now he wants to transfer his remaining loan amount to SBI from BOBHFL.

No margin will be considered in this case since it a takeover case and the previous financial institute has already done it while giving him the loan.

Particulars Amt(Rs) Particulars Amt(Rs)Loan for takeover 2,00,000 Loan approved 2,00,000Total 2,00,000 Total 2,00,000

APPRAISAL NOTE

1. Name of the applicant Mr. Rajendra Patil2. Full address a) Office/Shop: Sweetmeat Shop, opp. Gymkhana,

Shivaji Road, Nashik. b) Residence: SUVIRAM, plot no. 30, 31, Palm Spring,

Savarkar Nagar, Gangapur Road, Nashik.3. Purpose TAKEOVER OF HOUSING LOAN

FROM BOB HOUSING FINANCE

LTD.4. Age as on the date of application 67 years5. Total years of service/occupation 33 years6. Total monthly income/ earnings Rs.11,447/-7. No. of family members/ dependents 3, 2 sons and spouse. All employed8. Income from any other source NIL9. Whether he owns any house? YES, takeover of the same house is being

contemplated.10. Total annual income of the applicant Rs.1,37,734/-11. Total family expenses Rs.30.000/-12. Details of the flat/ house for takeover SUVIRAM, plot no. 30, 31, Palm Spring,

Savarkar Nagar, Gangapur Road, Nashik.13. Whether the applicant is possessing existing house. If so, the purpose of acquiring the proposed house/ flat

NO

14. Amount of loan applied Rs.2,00,000/-15. Maximum loan amount admissible Rs.2,00,000/-16. Margin proposed (min. 25%) NIL17. The applicant’s outside liability a) Direct: NIL b) Indirect: NIL18. If the proposed house is to be given on rental basis, the approx. amount of rental expected

NO

19. ECONOMIES: a) Annual income from business Rs.1,37,734/- b) Annual income of family members - c) Other annual income - d) Total receipts Rs.137734/- e) Annual family expenditure Rs.30.000/- f) Surplus Rs.1,07,734/- g) Net monthly income Rs.8,978/- h) EMI Rs.4,176/-20. Security Same house.21. Interest 9.25%22. Repayment programme 60 installments of Rs.4, 176/- for 5 years.

BIBLOGRAPHYBOOKS & SITES:

BOOKS:

Banking guide –SBI group promotions. By G. Subramanian.Personal segment loan products SBI Staff college Manual.Research Methodology By C. R. Kothari.SITES:

www.google.com www.statebankofindia.com

www.sbi.co.in www.sbimf.com

www.onlinesbi.com www.sbici.com