DRAFT COPY.NEW

RETAIL LENDING IN BANKING
SECTOR
By
PUJA KUMARI (092601013)
RASHMI KUMARI (092601067)
SUPRITHA. N (092601070)
SUSMITA. SAURABH (092601083)
BBM [e-Banking & Finance] Course
JUNE 2011
Department of Commerce,
Manipal University, Manipal-576 104

A Project Report on
“RETAIL LENDING IN BANKING
SECTOR”
Submitted in partial fulfillment of the requirements
for the award of
Degree of BBM [e-Banking & Finance]
By
PUJA KUMARI (092601013)
RASHMI KUMARI (092601067)
SUPRITHA. N (092601070)
SUSMITA. SAURABH (092601083)
UNDER THE GUIDANCE OF
Mrs.PADMAPRIYA SRIVATHSA and Mr. B.C. MURALIDHARA
JUNE 2011
Department of Commerce,
Manipal University, Manipal-576104

DECLARATION
We, the students of BBM [e-Banking & Finance], Department of Commerce, Manipal
University, declare that the Project Report entitled “RETAIL LENDING IN BANKING
SECTOR”, being submitted to the Department of Commerce, Manipal University, in partial
fulfillment of the requirements for the award of Degree of BBM [e-Banking & Finance], is our
original work and the same is / was not earlier submitted to any other Degree, Diploma,
Fellowship or any other similar title or prizes
Signature of students with Names
followed by Registration Nos.
Date:

CERTIFICATE
This is to certify that the Project entitled “ RETAIL LENDING IN BANKING SECTOR”, is
submitted to Department of Commerce, Manipal University, in partial fulfillment of the
requirements for the award of Degree of BBM [e-Banking & Finance].
PUJA.KUMARI (092601013), RASHMI.KUMARI (092601067),
SUPRITHA.N(092601070), SUSMITA.SAURABH (092601083), have worked under my
supervision and guidance and that no part of this Report has been earlier submitted for the
award of any other Degree, Diploma, Fellowship or any other similar title or prizes and that the
work has not been published in any journal or magazine.
Signature of Faculty Guide with Name &Designation
Date:

(In the Letterhead of the Bank/Institution/Organization)
CERTIFICATE
This is to certify that PUJA.KUMARI (092601013), RASHMI.KUMARI (092601067),
SUPRITHA.N(092601070), SUSMITA.SAURABH (092601083), students of BBM [e-
Banking & Finance], Department of Commerce, Manipal University have carried out
their Project entitled “RETAIL LENDING IN BANKING SECTOR” in our Bank
/Institution / Organization during the period of 6 weeks commencing from 2-5-2010 to
28-5-2010 under the Supervision & guidance of Mr.B.C.MURALIDHAR Asst General
Manager and that no part of this Report has been earlier submitted for the award of any
other Degree, Diploma, Fellowship or any other similar title or prizes and that the work
has not been published in any Journal or Magazine.
The Project has been completed to our satisfaction and copy of the Report submitted by
the aforesaid students has been accepted by us.
Signature of the Company Guide with Signature of the
Name & Designation Authorised signatory
Date: of Bank/Inst. /Org. with
Designation & seal.

ACKNOWLEDGEMENT
We are immensely grateful to Mr.Sandeep Shenoy Head of Department,
Mr. Sai.Sachidanandh.Batt, Project Coordinator and Mr.surendra pai for the constant
support and the guidance that they provided for working on this topic. We would also
like to thank Mrs.padmapriya srivathsa, Faculty Guide.
So in the same sequence at very first, we would like to confer the flower of
acknowledgement to Mr. B.C. MURALIDHARA and other staff members who
taught us that how to do the project through appropriate tools and techniques. Because
SBM has trusted us and given us a chance to do our integrated research study, we
would like to give thanks to the organization and especially to Mr. B.C.
MURALIDHARA Asst. General Manager, SBM, and Mysore from the depth of our
heart. Rest all those people who helped us are not only matter of acknowledgement but
also authorized for sharing our success.

TABLE OF CONTENTS
CHAPTER
NO.
NAME OF THE CHAPTER
PAGE
NO.
1 INTRODUCTION
1.1 Banking
1.1.1 Definition
1.2 Retail thrust in India
1.3 Retail banking
1.3.1 Definition
1.4 Retail lending
1.5 Retail loans
1.5.1 Characteristics
2 TYPES OF LOANS
2.1 Car loan
2.1.1 For new cars
2.1.2 For used vehicles
2.2 E- Education loan
2.2.1 Objective
2.2.2 Student eligibility
2.2.3 Courses eligible
2.2.4 off campus/off-shore campus/study center/distance
Education/foreign universities in India imparting technical
education.
2.2.5 Expenses considered for loan
2.2.6 Quantum of finance
2.2.7Margin
2.2.8 Security
2.2.9 Rate of interest
2.2.10 Loan module

2.2.11 Processing fee
2.2.12 Sanction/Disbursement
2.2.13 Repayment
2.2.14 Extension of moratorium period from 12 months to 24
months
2.2.15 Extension of moratorium period-treatment to restructured
Accounts
2.2.16 Wrong repayment schedule fixation
2.2.17 Follow up
2.2.18 Capability certificate
2.2.19 No due certificate
2.2.20 Disposal of loan application
2.2.21 Type of loan
2.2.22 Documentation
2.2.23 Loan to children of member staff
2.2.24 Residential status of Indian students abroad
2.2.25 Classification under priority sector
2.2.26 Takeover of education loan
2.2.27 Switch over from one course to another
2.2.28 Top-up loans
2.2.29 Multiple loans
2.2.30 Co-obligator
2.2.31 Failed students
2.2.32 Other conditions
2.2.33 Online education application
2.2.34 Finance ministry guidelines
2.3 HOUSING LOAN
2.3.1 Purpose
2.3.2 Eligibility
2.3.3 Loan amount
2.3.4 EMI/NMI Ratio
2.3.5 Loan for repairs
2.3.6 Explanations
2.3.7 Income of spouse/son/daughters
2.3.8 Expected rental
2.3.9 Furnishing and consumer durables
2.3.10 Rain water harvesting

2.3.11 Administrative clearance
2.3.12 Margin
2.3.13For repair/ renovation of existing house
2.3.14 Type of facility
2.3.15 Security
2.3.16 Collateral
2.3.18 Concession rates
2.3.20 Insurance
2.3.21 Sanction of loan
2.3.22 Disbursement of loan
2.3.23 Documents to be submitted
2.3.24 Documentation
2.3.25 Repayment
2.3.26 Moratorium period
2.3.27 Pre-closure of penalty
2.3.28 Check off facility
2.3.29 Inspections
2.3.30 Takeover of housing loan from banks/FIs
2.3.31 Procedure of takeover
2.3.32 Housing finance scheme for non-resident Indian
2.3.33 Housing finance scheme for purchase of
residential site/plot by NRIs/PIOs.
2.3.34 Housing loan to individual- additional housing
loan against second charge of property.
2.3.35 Housing loan for purchase of plot of land for the
purchase of construction of dwelling units
2.4- ALL PURPOSE MORTGAGE LOAN
2.4.1 Purpose
2.4.2 Eligibility
2.4.3 Loan amount
2.4.4 Types of loan
2.4.5 Security
2.4.6 Margin
2.4.7 Repayment
2.4.8 Interest

2.4.10 Insurance
2.4.11 Insurance indemnity
2.4.12 Mode of disbursement
2.4.13 Inspection
2.4.14 Documents to be submitted by the bank with loan
application
2.4.15 Enclosures provided by the bank for legal opinion to
advocate
2.4.16 Maximum time schedule for sanction/ disbursement
of loan
2.5- REVERSE MORTGAGE LOAN
2.5.1
2.5.2 Security
2.5.3 Period
2.5.4 Disbursement
2.5.5 Periodicity of availing loan
2.5.6 Quantum of loan
2.5.7 Loan amount
2.5.8 Purpose of loan
2.5.10 Repayment/settlement
2.5.11 Foreclosure
2.5.12 Pre-closure
2.5.13 Valuation of property
2.5.15 Right of recession
2.5.16 Insurance and maintenance of house
2.5.17 Type of facility
2.5.18 Income recognition and asset classification
2.5.19 Discretionary powers
2.5.20 Product code
2.6- MY BANK HOME CASH LOAN
2.6.1 Eligibility
2.6.2 Eligible loan amount
2.6.3 Purpose
2.6.4 Nature of facility
2.6.5 Interest
2.6.6 Repayment

2.6.8 EMI/NMI Ratio
2.6.9 No. of loans
2.6.10 Pre-closure
2.6.11 Security
2.6.12 Classification
2.6.13 Branches where loan would be available
2.6.14 Others
2.6.15 Documents
3 RESEARCH DESIGN
3.1 Research definition
3.2 Research design meaning
3.3 Objective of project
3.4 Collection of data
3.5 Scope
4 COMPANY PROFILE
5 DATA ANALYSIS
6 FINDINGS
6.1-- Car loan
6.1.1 Rationalization of rates of interest
6.1.2 Fine tuning of other parameters
6.1.3 Empowerment of operational functionaries
6.1.4 Pre-payment penalty
6.1.5 Payment of service charge to dealers for business
sourced
6.1.6 Repayment under SME
6.1.7 Exceptional case

6.2—Educational loan
6.2.1 Documents to be enclosed in application form
6.2.2 Check list
6.3—Housing loan
6.3.1 List of documents needed for disbursement
6.3.2 Home loan sanction process
6.4—All purpose mortgage loan
6.4.1 Incident of fraud in APML accounts
6.4.2 Enclosure in the letter of AGM to advocate with
reference
6.4.3 Application form for loan against equitable mortgage
of immovable property
6.4.4 Legal opinion
6.5 –Reverse mortgage loan
6.5.1 Check list
6.5.2 List of documents to be attached
6.6—My bank home cash
6.6.1 Documentation

7 ANNEXURE
7.1 Credit scoring tool
7.2 Base rate
7.3-- Car loan
7.3.1 Car loan appraisal report
7.3.2 Sanction letter
7.3.3 Sanction communication letter
7.4—Education loan
7.4.1 Sanction letter
7.4.2 Reimbursement of educational expenses
7.5—Housing loan
7.5.1 Credit scoring
7.5.2 Supreme court order on apartment
7.6—Reverse mortgage loan
7.6.1 Sanction communication letter
8 SUGGETIONS
9 CONCLUSION

LIST OF TABLES AND CHARTS
CAR LOAN
EDUCATION
LOAN
HOUSING
LOAN
RML
RATE OF INTREST
PROCESSING TIME
REPAYMENT PERIOD
PROCESSING (GENERAL)
RATE OF INTREST
LOAN AMOUNT
RATE OF INTREST
PROCESSING FEE
INTREST RATE FOR RESIDENTS
EMI/NMI RATIO
PROCESSING FEE(RESIDENTS)
QUANTUM LOAN
TABLE 2.1.1
TABLE 2.1.2
TABLE 2.1.3
TABLE 2.1.4
TABLE 2.2.1
TABLE 2.3.1
TABLE 2.3.2
TABLE 2.3.3
TABLE 2.3.4
TABLE 2.3.5
TABLE 2.3.6
TABLE 2.5.1
TABLE 2.5.2

MBHC LOAN
RESEARCH
DESIGN
DATA
ANALYSIS
FINDING
ANNEXURE
RATE OF INTREST
BASIS ON DATA ANALYSIS
CAR LOAN
EDUCATION LOAN
HOUSING LOAN
ALL PURPOSE MORTGAGE LOAN
REPAYMENT UNDER SME
INPUT SHEET FOR ARRIVING AT CREDIT SCORE
CAR LOAN APPRAISAL REPORT
SANCTION LETTER FOR CAR LOAN
SANCTION COMMUNICATION FOR CAR
LOAN(FORM)
SABCTION LETTER FOR EDUCATION LOAN
CREDIT SCORING FOR HOME LOAN
SANCTION COMMUNICATION FOR RML
INCOME TAX RETURN VERIFICATION FORM
COMPUTATION OF INCOME & TAX THEREON
TABLE 2.6.1
CHART 3.1
CHART 5.1
CHART 5.2
CHART 5.3
CHART 5.4
CHART 5.5
TABLE 5.1.1
TABLE 6.1
TABLE 6.2
TABLE 6.3
TABLE 6.4
TABLE 6.5
TABLE 6.6
TABLE 6.7
TABLE 6.8
TABLE 6.9

ABSTRACT
The undergone project is a part of the training period of four week, which we
had in STATE BANK OF MYSORE, MYSORE. Mr. B.C. MURALIDHAR (Asst.
General Manager) was our organizational guide and Mr.Avinash Kumar was our
internal guide.
Banking Industry is basically our concern industry. We took the challenge and approach
with the project “RETAIL LENDING IN BANKING SECTOR”.
Sample size: EDUCATION LOAN (1)
CAR LOAN (1)
At the end we concluded from the project that customer availing loan from SBM are
satisfied from the Service and the Employee cooperation as well as the whole loan
procedure was so supportive that they want to avail loan in future from SBM only.
The main objective of this project is to study the awareness of the satisfaction of
customers regarding the SBM Retail Banking .During this summer internship program
period we have to achieve something, which is helpful for our career, and some value
addition to the banking Company. It gives us good opportunity to expose and to create
good impression of corporate mind.

1.1 INTRODUCTION TO BANKING
 A bank is a financial institution licensed by a government that deals with money and
credit. In reality banks are service organization selling banking services.
1.1.1 Definition-
“Accepting for the purpose of lending or investment of deposit of money from the
public, repayable on demand or otherwise and withdrawal by cheques, draft, order or
otherwise”
 The bank also offers services such as credit cards, debit cards, interest on deposits.
 ACTIVITIES OF BANKS:
 Accepting Deposits from public/others
 Lending money to public
 Transferring money from one place to another
 Acting as Trustees
 Acting as Intermediaries
 Keeping valuable in safe custody
 Collection Business
 Government Business

1.2 RETAIL THRUST IN INDIA
i. Backdrop of poor credit take off by big corporate “Lending to big corporate and
creating loan assets” is no longer the name of game
ii. Higher middle class with rising Disposable Income, changing life style,
aspiration and willingness to spend more for luxuries
iii. Loan interest rates and prudential norms
iv. Lending to corporate is more risky in the view of uncertainty pertaining to
economic environment
v. Scope for substantial development of funds which offer better return trade off
and well diversify credit portfolio
vi. High profitability and history of low NPA’s
vii. Increased Geographic presence of financers
1.3 RETAIL BANKING

1.3.1 DEFINITION
It is a typical mass-market banking in which individual customers use local
branches of larger commercial banks. Services offered include savings and checking
accounts, mortgages, personal loans, debit/credit cards and certificates of deposit
(CDs).
1.3.2 INTRODUCTION
Retail banking aims to be the one-stop shop for as many financial services as
possible on behalf of retail clients. Some retail banks have even made a push into
investment services such as wealth management, brokerage accounts, private banking
and retirement planning. While some of these ancillary services are outsourced to third
parties (often for regulatory reasons), they often intertwine with core retail banking
accounts like checking and savings to allow for easier transfers and maintenance.
Banking services offered to the general public. Retail banking services are a group of
financial services that includes installment loans, residential mortgages, equity credit
loans, deposit services, and individual retirement accounts. In contrast with Wholesale
Banking or corporate banking, retail banking is a high volume business with many
service providers competing for market share. Some retail banking services, for
example, credit cards, are among the most profitable services offered by financial
institutions.

1.4 RETAIL LENDING
1.4.1 Introduction to Retail Lending
 Retail lending is the primary function of banks. i.e., to grant loans.
 Whatever money that the banks receive by way of deposits, it lends a major part of it
to its customers by way of loans, advances, cash, credit and overdraft.
 The interest received on such loans and advances is the major sources of its income.
 The banks make a major contribution to the economic development of the country by
granting loans to the industrial and agricultural sector.
 INSIGHT TO RETAIL LENDING:-

 PRINCIPLES OF SOUND LENDING:-
• SIMPLICITY
• BETTER RECOVERY OF
INTEREST AND LOAN
• PROFITABILITY
MERITS
• INFLEXIBLITY
• OVERBORROWING
• MORE FORMALITIES
DEMERITS

1.5 REAIL LOANS
1.5.1 INTRODUCTION
A retail loan is actually the fact of lending funds to persons instead of agencies or
companies. Retail loan is an operation that can be performed by banks, savings and loan
associations, and credit unions. These agencies provide loans for instance for car buying, home
purchases, medical care, home improvement, trips, along with many other activities. Retail loans
has taken an outstanding role in the loaning operations of banks, as the validity of credit and the
number of products supplied for retail lending have increased. Know that the sums loaned via retail
loan act are most of the time smaller than loans provided to businesses. They can take the form of
installment loans, which have to be paid back step by stepwise each month during the whole
SAFETY LIQUIDITY PROFITABILITY
DIVERSIFICATION OBJECT OF
LOANS SECURITY
MARGIN MONEY
NATIONAL
INTEREST
CHARACTER OF
THE BORROWER

payment period, or also what called a non-installment loans that are settled in just one assembled
amount
1.5.2 Retail Loans - Characteristics
a. These are small size loans
b. These loans meet the needs of a large number of customers with well diversified
portfolios
c. The target customers are generally individuals or small organizations
d. These loans offer standard products to customers. Very rarely a customer's
requirement is customized
e. The operations of retail credit are centralized in most of the banks
f. Bankers can make quick credit related decisions because of decentralization
g. These loans are designed to cover varied segments of risks
h. High volume business
i. High number of transactions

1.5.3 Salient features of retail loans
i. Types of facilities:
Loans are the finance facility of a fixed amount extended to meet a onetime
requirement of a customer, for a fixed tenure, to be repaid over a period in installments.
To enable customers to meet their emergency requirements, bankers permit them an
overdraft [OD]. This means that bankers allow the customer to withdraw more than the
credit balance in the customer's current account or give a temporary loan in the current
account itself.
ii. Secured/Unsecured facilities:
Secured loans are always secured by an underlying asset against which funding is
extended. This lending is also known as asset based lending. A specific charge is
created against such an asset. This gives the banker/lender the right to take possession
of the asset and sell it to recover the loan in case of default. Unsecured loans do not
have any underlying security and are purely extended based on the creditworthiness of
the borrower. This is also known as non-asset based lending.
iii. Interest:
On a loan given at a fixed rate, interest is charged throughout the tenure of the loan at
that rate which is fixed at the time of granting the loan. The customer has to pay interest
at the contracted rate irrespective of whether the interest rate in the market goes up or

down. In case of floating rate of interest, the rate at which the interest is charged on the
loan varies from time to time according to the movement of interest rate in the market.
iv. Tenure:
The tenure for a loan depends upon the amount of the loan and repayment capacity of
the customer. However, the maximum tenure permitted depends upon the period over
which the asset financed could depreciate completely.
iv. Loan to Value ratio:
Loan to Value ration [LVR] refers to the maximum percentage of the value of the asset
that is given as a loan. It varies according to the nature of the asset and also the rate at
which the asset is expected to depreciate or reduce in value.

TYPES OF LOANS:
CAR LOAN
EDUCATIONAL LOAN
HOUSING LOAN
ALL PURPOSE MORTGAGE LOAN
REVERSE MORTGAGE LOAN
MY BANK HOME CASH LOAN

2.1 CAR LOAN
INTRODUCTION TO CAR LOAN
A Car Loan can be provided either for new vehicles or for used vehicles. Considering
the increase in size of the car loan market and to make the product more competitive,
the car loan scheme has been regularly modified.
2.1.1 FOR NEW CARS:
 PURPOSE:
Terms loans are sanctioned by the bank for purchase of new cars,
Jeeps, Multi Utility Vehicles (MUVs) and SUVs
 ELIGIBILITY:
A. AGE - MINIMUM AGE OF THE BORROWER 21
MAXIMUM AGE OF THE BORROWER 65

B. SALARIED:
Net Annual Income Rupees Seventy Five Thousand and above.
Net Annual Income should be at least Two times of EMI
C. SELF – EMPLOYED AND PROFESSIONALS:
Net Annual Income Rupees Seventy Five Thousand and above for the last year
as per income tax return.
D. PERSONS ENGAGED IN AGRICULTURE AND ALLIED ACTIVITIES:
It is same as for Self-employed and professionals except that income tax
return will not be required.
E. AUTHORISED BRANCHES:

i. All metro and urban branches,
ii. All branches with “p” divisions,
iii. All PBBs,
iv. All District Headquarter Branches,
v. Project area branches,
vi. Branches specially authorized by DGM.
 LOAN AMOUNT:
A. Whichever less of:
i. 85% of the cost of vehicle,
ii. EMI/NMI percentage <= 50 %.
The A.G.M Region/Branch or The Sanctioning Authority is higher in Rank than
A.G.M will have the discretion to grant a higher loan, subject to EMI/NMI percentage
not exceeding sixty percentages in case of tie-ups with reputed PSUs/ Corporate or
institutions or owing to strategic reasons.
B. MAXIMUM LOAN AMTOUNT FOR:

i. SALARIED PERSONS:
30 times of the Net Monthly Income (i.e., net of all deductions including actual monthly
tax deductions at Source).
ii. SELF EMPLOYED & PROFESSIONALS:
2.5 times the Net Annual Income (i.e., income as per latest income tax return filed less
tax payable.)
iii. AGRICULTURISTS:
The annual net income should be the arrived at by branches, based on the nature of
their activity, (i.e., farming, dairy, poultry, orchards) land holding cropping pattern,
yield, etc. and average level of income derived there from in the area. The income of
spouse can be included provided the spouse guarantees the loan.
For new vehicles, there is no ceiling in loan amount.
 MARGIN:
A. FOR LOANS UPTO Rs. SIX LACS : 15%
B. FOR LOANS ABOVE RS. SIX LACS : 30%
C. Where Check-off facility is available -
The sanctioning authority will have discretion to reduce the margin by 5%. Beyond
this, any reduction will be required to be approved by DGM Module/Branch.

D. Where check-off facility is not available -
The AGM or above rank of authority is authorized to reduce margin up to 10% for
strategic reasons to be recorded while according sanction.
 REPAYMENT:
D. In suitable monthly/quarterly installments acceptable to the customer so that the
loan is liquidated within a period of 7 years.
E. Option for payment in shorter duration.
D. In case of Car Loans to agriculturists, the periodicity of installments for
repayment should be decided upon the merits of each case, on a realistic
basis, coinciding with harvest of the crop at half yearly/yearly intervals or
coinciding with the generation of income from ancillary agricultural
activities pursued by the borrower.
E. Should be fixed on the basis of equated installments that are determined on
the basis of current rate of interest, preferably with check facility in the case
of salaried persons.
F. Where check-off facility is not available, Post Dated cheques should be
obtained.

G. Under check off arrangement, an Irrevocable Letter of Authority, s required
to be obtained from the borrower concerned and a letter of undertaking is to
be taken from the employer.
H. In case of Govt. Officers, who are themselves the drawing and disbursing
authorities and take car loans, a Letter of Undertaking need only be obtained.
I. Maximum Repayment Age : 70 years (pensioners are not eligible)
 INTEREST:
DURATION SPREAD OVER
BASE RATE
RATES OF INTEREST
( % )
UPTO & INCLUSIVE
OF 3 YEARS
2.75 12.25
3 YEARS TO UPTO 5 3.00 12.50

YEARS
5 YEARS TO UPTO 7
YEARS
3.25 12.75
Table 2.1.1
 PENAL INTEREST:
Penal rate of 2% per month (i.e.24 % per annum) over and above the
applicable rate will be charged if the account remains irregular beyond a
period of 30 days from the due date, for any reason.
 PROCESSING FEE:
The processing fee is 0.50% of the loan payment.
 SECURITY:
A. PRIMARY SECURITY:
Primary security is the hypothecation of vehicle and noting of
hypothecation charge in the books of R.T.O.

B. COLLATERAL SECURITY:
i. Collateral security can be the guarantee of spouse, if his/her income has
been taken into account for computing eligibility of loan amount.
ii. Check off facility
OR
Security in the form of surrender value of LIC policy, NSCs, units of
YUTI, deposits with our bank for grant of advance to cover at least 35% of
the loan amount.
OR
Third party guarantee good for the loan amount.
iii. The Non-financial securities like Gold and non-specified securities like LIC
policy can be valued at a margin.
C. Third party guarantee or tangible security can be waived by Branch manager,
in cases where the loan is granted to a person (s):
i) Who is Housing loan borrower & has a track record of satisfactory repayments of at
least three years.
OR

ii) Who has in the past repaid term/Demand loan as per repayment schedule.
OR
iii) Who has been maintaining a deposit account for at least 5 years & average deposit
has been of the order of Rs.25,000/-
D. Beside the above cases, the AGM/Branch or above may authorize waiver of Third
party guarantee or tangible security for a customer, for strategic reasons.
 DOCUMENTATION:

A. Application form.
B. Irrevocable Letter of Authority from the borrower.
C. Letter from the Drawing and Disbursing Officer.
D. Letter forwarding Demand Draft/Banker’s cheque to supplier/dealer.
E. Hypothecation Agreement.
F. Guarantee Agreement where applicable.
G. Arrangement Letter.
H. Irrevocable Letter of Authority where Drawing & Disbursing officer himself
is the applicant.
 INSURANCE:
A. In the name of the borrower for the market value or at least 10% above the
loan amount outstanding, whichever is higher, and the Bank’s interest as a
hypothecate should be noted in the certificate if insurance & insurance
policy.
B. Insurance register is to be maintained.

 MODE OF DISBURSEMENT:
A. Remitted directly to the supplier/dealer by means of a crossed ‘Account
Payee’ demand draft/banker’s cheque, forwarded under cover of a letter.
B. To safeguard against misappropriation of funds, the beneficiary’s Bank name
and if possible, Bank account number should be ascertained from the
beneficiary & mentioned in the draft/banker’s cheque.
C. DOCUMENTS REQUIRED FOR THE PROCEDURE:
i. Sanction letter
ii. Sanction Communication Letter
(After going through sanction letter, sanction communication letter and check List,
one copy of check list is given to customer and one is attached to the Documents, copy
of sanction letter and communication letter is signed by the Borrower and the Banker
also.)
iii. STAMP DUTY/PAPER

iv. DEED OF HYPOTHECATION
v. 6 Cheques signed by borrower
vi. FORM 29 (Transfer Of Ownership) and
vii. FORM 30 (Transfer Of Insurance)
viii. FORM 35 (After closure of loan account, cancellation of
Hypothecation is done)
 PRE PAYMENT PENALTY:
Prepayment fee of 2% of the amount of loan prepaid will be
Levied.
 INSPECTION:

A. For Standard accounts periodical inspections are waived after the initial
inspection.
B. However, if there is default of 2 monthly installments, inspection would be
required.
C. In case of NPA accounts, inspection should be made twice a year.
D. Inspection register is to be maintained.
 GENERAL:

A. The following papers to be submitted along with the application form such
as:
i. Statement of Bank Account of the borrower.
ii. Two passport size photographs of borrower/guarantor(s).
iii. Signature identification from bankers of borrower/guarantor(s).
iv. A copy of passport/voters ID card/PAN card.
v. Proof of residence.
vi. Latest salary slips showing all deductions & TDS Certificate Form 16 in
case of salaried persons.
vii. Copy of income tax Return for the last 2 financial years, duly
acknowledged Form 16 in case of salaried persons.
viii. Proof of official address for non-salaried individuals.

 PROCESSING TIME:
The maximum time schedule for receipt of application and sanction/disbursal
of the loan:
Table 2.1.2
Where sanctioning power is that of
BRANCH/RACPC ZONAL OFFICE
Where no immovable property
is taken 3 days 10 days
Where immovable property is
taken as security 10 days 2 weeks

2.1.2 FOR USED VEHICLES:
 PURPOSE:
Term loans are sanctioned by the banks for purchase of passenger
Cars, jeeps, Multi Utility Vehicles (MUVs) and SUVs not more than
5 years old.
However, financing of old vehicles on the basis of duplicate
Registration Books will not be entertained.
 ELIGIBILITY:
A. AGE - The age of the borrowers should be between 21 to 65 years.
B. SALARIED: are eligible if the,
Net annual income is Rs.75, 000/- and above.
Net annual Income should be at least 2 times of EMI.
C. SELF – EMPLOYED AND PROFESSIONALS: are eligible if,
Net Annual Income Rs.75, 000/- and above for the last

Year as per income tax return.
D. PERSONS ENGAGED IN AGRICULTURE AND ALLIED ACTIVITIES:
Is same as for Self-employed and professionals except
That income tax return will not be required.
 AUTHORIZED BRANCHES
A. All metro and urban branches,
B. All branches with “p” divisions,
C. All PBBs,
D. All District Headquarter Branches,
E. Project area branches,
F. Branches specially authorized by DGM.
 LOAN AMOUNT:

A. Whichever less of:
i. 85% of the cost of vehicle,
ii. EMI/NMI percentage <= 50 %.
The A.G.M Region/Branch or The Sanctioning authority is higher in Rank than A.G.M
will have the discretion to grant a higher loan subject to EMI/NMI percentage not
exceeding 60% in case of tie-ups with reputed PSUs/corporate or institutions or owing
to strategic reasons.
B. MAXIMUM LOAN AMTOUNT FOR:
i. SALARIED PERSONS:
For salaried persons it is 30 times of the Net Monthly Income (i.e.net of all deductions
including actual monthly tax deduction at source).
ii. SELF EMPLOYED & PROFESSIONALS:
2.5 times the Net Annual Income (i.e., income as per latest income tax
Return filed less tax payable.)

iii. AGRICULTURISTS:
The annual net income should be the arrived at by branches, based on the nature of
their activity, (i.e. farming, dairy, poultry, orchards) land holding
Cropping pattern, yield, etc. and average level of income derived there from in the area.
The income of spouse can be included provided the spouse guarantees the loan.
IT IS SUBJECTED TO THE MAXIMUM OF RS. FIFTEEN LAKH.
 MARGIN:
A. FOR LOANS UPTO Rs. 6 LACS : 15%
B. FOR LOANS ABOVE RS. 6 LACS : 30%
C. Where Check-off facility is available -
The sanctioning authority will have discretion to reduce the margin by 5% beyond this;
any reduction will be required to be approved by DGM Module/Branch.
D. Where check-off facility is not available -
AGM or above rank of authority authorized to Reduce margin up to 10% for strategic
reasons to be recorded while according sanction.

 VALUATION:
A. Certificate of fitness/Valuation from a reputed garage (authorized by
Controllers) would be required which should be retained with the loan
documents.
B. If the car is sold under the Marmite True Value scheme or Automartindia -
No Valuation Certificate is required.
C. Fitness and valuation should be ensured about its appropriateness to the past
ownership pattern.
D. Care should be taken to avoid models, which have a low second/third hand
demand like Fiat, Uno, Daewoo, Matiz etc.

 TAKE OVER OF LOANS:
A. Takeover of loans may be considered selectively where:
i. The vehicle is not more than 2 years old
ii. It is single ownership vehicle
iii. No insurance claim has been availed and
iv. The account of the borrower with the other bank is a Standard Asset i.e. all
repayments have been made as per terms of sanction of the original
financier.
B. The loan should be repaid within 7 years from the date of the original
purchase of the vehicle.
C. Reimbursements of costs of unencumbered vehicles can also be given under
the takeover norms and other terms of financing old vehicles up to 2 years of
age.
 REPAYMENT:

A. Repayment is done in monthly/quarterly installments which is acceptable to
the customer so that the loan is liquidated within a period of 7 years.
B. There is an option for payment in shorter duration.
C. In case of Car Loans to agriculturists, the periodicity of installments for
repayment should be decided upon the merits of each case, on a realistic
basis, coinciding with harvest of the crop at half yearly/yearly intervals or
coinciding with the generation of income from ancillary agricultural
activities pursued by the borrower.
D. Repayment should be fixed on the basis of equated installments that are
determined on the basis of current rate of interest, preferably with check
facility in the case of salaried persons.
E. Where check-off facility is not available, Post Dated cheques should be
obtained.
F. Under check off arrangement, an Irrevocable Letter of Authority, s required
to be obtained from the borrower concerned and a letter of undertaking is to
be taken from the employer.
G. In case of Govt. Officers, who are themselves the drawing and disbursing
authorities and take car loans, a Letter of Undertaking need only be obtained.
H. Maximum Repayment Age : 70 years (pensioners are not eligible)

 RATE OF INTEREST:
TIME PERIOD SPREAD OVER BASE
RATE
RATE OF INTEREST
%
Up to 3 years 6.50 16.00
3 years to up to 5
Years
7.25 16.75
Table 2.1.3

A. While generally the Equated Monthly Installment need not be changed with
every change in the interest rate, should the borrower seek an EMI reduction
consequent to a rate reduction the same may be permitted if the account is a
standard asset and the amount outstanding is at least Rs. 5 laces and the
interest rate reduction is of 1% or more.
B. Permitted only once during the currency of the loan.
C. The Bank also reserves the right to increase the EMI in case of interest rise.
 PENAL INTEREST:
Penal rate of 2% per month (i.e.24 % per annum) over and above the
applicable rate will be charged if the account remains irregular beyond a
period of 30 days from the due date, for any reason.
 PROCESSING FEE:
The processing fee is 0.50% of the loan payment.
 SECURITY:
A. PRIMARY SECURITY:
Primary security is hypothecation of vehicle and noting of the
Hypothecation charge in the book of R.T.O

B. COLLATERAL SECURITY:
i. Guarantee of spouse, if his/her income has been taken into account for
computing eligibility of loan amount.
ii. Check off facility
OR
Security in the form of surrender value of LIC policy, NSCs, units of YUTI, deposits
with our bank for grant of advance to cover at least 35% of the loan amount.
OR
Third party guarantee good for the loan amount.
iii. Non-financial securities like Gold and non-specified securities like LIC
policy are to be valued at a margin.
C. Third party guarantee or tangible security can be waived by Branch manager,
in cases where the loan is granted to a person (s):

i. Who is Housing loan borrower & has a track record of satisfactory
repayments of at least three years.
OR
ii. Who has in the past repaid term/Demand loan as per repayment schedule.
OR
iii. Who has been maintaining a deposit account for at least 5 years & average
deposit has been of the order of Rs.25,000/-
D. Beside the above cases, the AGM/Branch or above may authorize waiver of
Third party guarantee or tangible security for a customer, for strategic
reasons.
 DOCUMENTATION:

A. Application form
B. Irrevocable Letter of Authority from the borrower.
C. Letter from the Drawing and Disbursing Officer
D. Letter forwarding Demand Draft/Banker’s cherub to supplier/dealer
E. Hypothecation Agreement
F. Guarantee Agreement where applicable.
G. Arrangement Letter
H. Irrevocable Letter of Authority where Drawing & Disbursing officer himself
is the applicant.
 INSURANCE:
A. In the name of the borrower for the market value or at least 10% above the
loan amount outstanding, whichever is higher, and the Bank’s interest as a
hypothecate should be noted in the certificate if insurance & insurance
policy.
B. Insurance register is to be maintained.
 MODE OF DISBURSEMENT:

A. Remitted directly to the supplier/dealer by means of a crossed ‘Account
Payee’ demand draft/banker’s cherub, forwarded under cover of a letter.
B. To safeguard against misappropriation of funds, the beneficiary’s Bank name
and if possible, Bank account number should be ascertained from the
beneficiary & mentioned in the draft/banker’s cherub.
C. DOCUMENTS REQUIRED FOR THE PROCEDURE:
i. Sanction letter
ii. Sanction Communication Letter
[After going through sanction letter, sanction communication letter and check List, one copy of
check list is given to customer and one is attached to the Documents, copy of sanction letter
and communication letter is signed by the Borrower and the Banker also.]
iii. STAMP DUTY/PAPER
iv. DEED OF HYPOTHECATION
v. 6 Cheques signed by borrower

vi. FORM 29 (Transfer Of Ownership) and
vii. FORM 30 (Transfer Of Insurance)
viii. FORM 35 (After closure of loan account, cancellation of
Hypothecation is done).
 PRE-PAYMENT PENALTY:
The prepayment fees of 2% of loan amount prepaid is
Levied.
 INSPECTION:
A. For Standard accounts periodical inspections are waived after the initial
inspection.
B. However, if there is default of 2 monthly installments, inspection would be
required.
C. In case of NPA accounts, inspection should be made twice a year.
D. Inspection register is to be maintained.

 GENERAL:
The following papers to be submitted along with the application form:
A. Statement of Bank Account of the borrower
B. Two passport size photographs of borrower/guarantor(s)
C. Signature identification from bankers of borrower/guarantor(s)
D. A copy of passport/voters ID card/PAN card
E. Proof of residence
F. Latest salary slips showing all deductions & TDS Certificate Form 16 in case
of salaried persons.
G. Copy of income tax Return for the last 2 financial years, duly acknowledged
Form 16 in case of salaried persons.
H. Proof of official address for non-salaried individuals
 PROCESSING TIME:
The maximum time schedule for receipt of application and sanction/disbursal
of the loan:

Table 2.1.4
2.1.3 PAYMENT OF SERVICE CHARGE TO CAR DEALERS
 TO ENLIST THE ASSISTANCE OF CAR DEALERS TO EXPLAIN THE
COMPARATIVE ADVANTAGE OF OUR PRODUCT TO POTENTIAL
CUSTOMERS, A MECHANISM HAS BEEN DEVISED TO
COMPENSATE THEM FOR THE SERVICES RENDERED BY THEM IN:
A. Explaining and convincing prospective customers about merits of obtaining
car finance from bank.
B. Directing the customers towards the branches
Are also required to deploy manpower for the purpose and incur some direct and
indirect expenses and would need to be suitably compensated for the services rendered.
Where sanctioning power is that of
BRANCH/RACPC ZONAL OFFICE
Where no immovable property
is taken 3 days 10 days
Where immovable property is
taken as security 10 days 2 weeks

 QUANTUM OF SERVICE CHARGE:
A. Service charge is to be paid to dealers, for business sourced by them as
under:
i. UPTO 10 VEHICLES PER MONTH FROM ONE DEALER TO ONE
BRANCH:
1% of the loan amount per car.
ii. ABOVE 10 AND UPTO 25 VEHICLES PER MONTH FROM ONE
DEALER TO BRANCH:
0.25% Additional Service Charge i.e., total “service Charge” of 1.25% of
the loan amount.
iii. ABOVE 25 VEHICLES PER MONTH FROM ONE DEALER TO ONE
BRANCH:
0.50% Additional Service Charge i.e., total “Service Charge” of 1.50% of
the loan amount.

B. A flat service charge of 1% will be paid by the branch concerned at the time
of disbursement of the loan.
C. A regards the additional service charge of 0.25% or 0.50%, the same will be
paid by the at the end of the month, on aggregate loans disbursed during the
month, on the basis of Dealer-wise records of disbursements maintained at
the branch.
D. ACCOUNTING
E. “Service charge” will be paid on the amount of each car loan booked by a
branch, to the dealer who sourced the loan and to whom the proceeds of the
car loan are remitted.
F. Through crossed Banker’s Cheju by debit to Interest Account.
G. The loan should certify in the proposal itself whether the same has been
received directly by the branch/RACPC or has been sourced through a
dealer.
H. Dealer wise register should be maintained at the branch, as per format:

I. Name of the car Dealer:
SL.
NO.
DATE
OF
SANC
TION
NAME
OF
BORR
OWER
MODEL
OF
VEHICL
E
AMT
OF
LOAN
SERVICES
CHARGES
PAID
ADDITIONAL
SERVICES
CHARGES
PAID
INITIA
LS
Amt. Date Amt. Date

2.2 E-EDUCATION LOAN-GANAMITRA
SCHEME

2.2.1 OBJECTIVE:
2.2.2 STUDENT ELIGIBILITY:
 Student should be an Indian National.
 Student should have secured admission to professional/technical courses
through Entrance test/Selection process, to foreign university/Institutions.
 No minimum qualifying marks stipulated in the last qualifying examination.
The Educational Loan Scheme aims to provide financial support from the banking system
to deserving students for pursuing higher education in India and Abroad. The main
emphasis is that every meritorious student is provided with an opportunity to pursue
education with the financial support from the banking system at affordable terms and
conditions. No deserving student is denied an opportunity to pursue higher education for
want of financial support.

 For admissions under management quota through a merit based selection
process, the sanctioning authority will not be below the rank of an Assistant
General Manager.
 For students who have discontinued studies and resumed again may be
considered after satisfying the reasons for the same, the sanctioning authority
will not be below the rank of an Assistant General Manager.
 No age limit.
 Several foreign universities require students to deposit a part of the fee before
the admission is formally granted, as students simultaneously apply to a
number of universities and then course the best option. The sanctioning
authority will not below the rank of an Assistant General Manager, will be
authorized to sanction and release the loan in the name of the educational
institution, provided tangible collateral security equal to full value of the loan
has been provided by the applicant.
2.2.3 COURSES ELIGIBLE:

A. STUDIES IN INDIA:
 Graduation Courses
 Post Graduation Courses
 Professional courses
 Computer Certificate Courses
 Courses like ICWA, CA, CFA etc.
 Courses conducted by IIM, IIT, IISC, XLRI, NIFT etc.
 Regular Degree/Diploma courses (including pilot training course).
 Courses in India by reputed foreign Institutes.
 Evening courses of reputed institutes.
 Courses offered by National Institutes and other Private Institutions.
 Teacher training course/Nursing course/B.Ed., approved either by the Central
Government or by State Government, should lead to Degree/Diploma course
and not to certification course.
 Courses which are not considered:

i. Vocational training and Skill Development Study Courses are not eligible.
ii. Medical courses which are not recognized by the Medical Council of India
B. STUDIES ABROAD:
 Graduation
 Post graduation.
 Courses conducted by CIMA (Chartered Institute of Management
Accountants)-London, CPA (Certified Public Accountant) in USA etc.
2.2.4 OFF CAMPUS/OFF-SHORE CAMPUS/STUDY CENTRE/DISTANCE
EDUCATION/FOREIGN UNIVERSITIES IN INDIA IMPARTING
TECHNICAL EDUCATION:
 OFF CAMPUS/OFF-SHORE CAMPUS/STUDY CENTRE:
University Grants Commission has issued public notice some of the deemed
universities after submission of proposal for off campus(s)/New Department(s)/
New Institution(s) to the Govt. of India and UGC, the said universities have
started admitting students without waiting for the final approval from UGC/Govt.
of India, given affiliation to colleges/institutions against approved policy of UGC.

UGC has cautioned the students, parents and the general public at large, not to take
admissions in the unapproved off-campus/off-shore campus/study centers.
 DISTANCE EDUCATION:
Does not cover courses conducted by universities through distance mode of learning.
 FOREIGN UNIVERSITIES IN INDIA IMPARTING TECHNICAL EDUCATION:
Require AICTE approval.
2.2.5 EXPENSES CONSIDERED FOR LOAN:
 Fees payable to college/school/hostel-
In case of own boarding and lodging arrangements, the sanctioning authority
is authorized to fund only when, provided such expenses are not more than
those charged by the educational Institution.

 Includes examination or Library or Laboratory fee.
 Caution deposit, Building fund/refundable deposit supported by institution
bills/receipts. (Fee should not exceed 10 % of the tuition fees for the entire
course.)
 Travel expenses/passage money for studies abroad.
 Purchase of computers essential for completion of course. (< 10 % of the
Tuition fees for the entire course).
 Study tours, project work, thesis etc.
 Cost of two wheeler up to Rs. 50,000 (There should be suitable third party
guarantee and/or tangible collateral security.)
 Also includes insurance premium for student borrower.
2.2.6 QUANTUM OF FINANCE:
 Studies in India - Maximum Rs. 10 lacs
 Studies Abroad - Maximum Rs. 20 lacs.

 In the normal course, it would be necessary for the officer
Appraising/sanctioning the proposal to take a view:
A. As regards reputation /standing of the course and
B. The institution in respect of which education loan can be provided, with a
view to ascertaining the employment prospects of the course and applicant’s
future income.
Where reputation /standing of the course do not afford certainty of employment
prospects commensurate with the repayment liability on completion of the course, the
aspect of repayment capacity/income level of the parent’s will need to be taken into
account while the quantum of finance/evaluating repayment capability or the
desirability of sanctioning the loan.
2.2.7 MARGIN:
 Upton Rs.4 laces - NIL

 Above Rs. 4 laces
A. Studies in India 5%
B. Studies abroad 15%
 Scholarships/assistance is also included.
 Margin may be brought in on year to year basis as and when disbursements are
made on a pro-rata basis.

2.2.8 SECURITY:
 IN INDIA:
A. Upton Rs.4 lacs – No security, only co-obligation of parent is required.
( Margin = funds available from funds/grand total *100)

B. Above Rs. 4 lacs up to Rs.7.50 lacs – collateral in the form of suitable 3rd
party guarantee is required.
C. Above Rs.7.50 lacs up to Rs.10 lacs – Any tangible collateral security for
the full value of the loan is required.
 IN ABROAD:
A. Up to Rs. 4 lacs – No security, only co-obligation of parent is required.
B. Above Rs. 4 lacs up to Rs.7.50 lacs – collateral in form of suitable 3rd
party guarantee.
C. Above Rs.7.50 lacs to Rs.10 laces – Any tangible collateral security for full
value of loan is required.
2.2.9 RATE OF INTEREST:
FLOATING RATE:
 Loan amount

A. Up to Rs.4 laces - 13.00% (3.50% above
BASE RATE)
B. Above Rs.4 laces to Rs.7.50 laces - 14.50% (5.00% above
BASE RATE)
C. Above Rs.7.50 laces - 13.50% (4.00% above BASE
RATE)
TABLE 2.2.1
 The simple interest can be charged during repayment holiday/moratorium
period.
 For girl students, there is concession of 0.50% for the loan sanctioned.
 Penal interest @ 2% is to be charged for loans above Rs.4 laces for the
overdue amount and overdue period.
 Interest concession of 1% for the entire period of loan, if the interest is
serviced during course period and moratorium, to be released in two stages:
A. Up to the end of moratorium period
If the interest is serviced as and when debited, but not later than 30 days of debit, the
interest concession has to be calculated manually till the end of moratorium period and
to be credited to loan account.

B. After the moratorium period:
i. For such of those borrowers who have serviced the interest vide item and
also adhere to the regular repayment schedule.
ii. Moratorium has to be calculated at the end of repayment period and to be
credited to loan account at the time of closure of loan account.
2.2.10 LOAN MODULE: INTEREST RATE CHANGE- SIMPLE INTEREST
TO COMPOUND IN CBS:
 Simple interest is to be applied during moratorium period and at compounding
method after the moratorium.
 New education loan accounts- interest at simple rate
 Old accounts – change of interest application method from simple to
compounding through change of flag at the account level by the branch/CPC.

 Correct moratorium end date in the system.
 Where moratorium is already over, the compound interest is charged by
changing the flag.
 The report titled
Education_Loan_having_simple_Interest_after_Moratorium.txt will be
generated on 5th
and 20th
of every month. Should be verified & rectified if
needed.
It contains:
a) Branch code,
b) Account number,
c) Name of the borrower,
d) Product code,
e) Product description,
f) Moratorium end date and
g) Balance outstanding.

2.2.11 PROCESSING FEE:
In India - No processing fee
In Abroad - 0.50% of loan amount
However the processing fee should be refunded to the student while releasing the first
installment of the loan. In case the student does not avail the loan, processing fee will not
be refunded.
2.2.13 SANCTION/DISBURSEMENT:
 To be sanctioned as per delegation of powers preferably by the branch nearest to the
permanent place of residence/place of domicile of the parent/student.
 Sanctioning should not be rejected without the concurrence of the next higher
authority.
 To be disbursed in stages as per the requirement/demand directly to the
institutions/vendors of books/equipments/instruments to the extent possible.
 In case parent is having transferable job the address for correspondence must be
noted meticulously in the system as well as record.
 Reimbursement of fees already paid to the institutions/colleges due to exigencies may
be considered by the sanctioning authority within a maximum period of 6 months
from the date of such payment.

 Verification of original receipts and held along with the documents with
remarks “REIMBURSEMENT RELEASED UNDER THE EDUCATION
LOAN SCHEME OF THE BANK “under the authentication of branch
manager.
2.2.14 REPAYMENT:
FOR LOANS UPTO RS.
7.50 LACS FOR
STUDIES IN INDIA AND
UPTO RS. 15.00 LACS
FOR STUDIES ABROAD
The loan to be repaid in a
maximum of 5-7 years after
commencement of repayment.
FOR LOANS ABOVE RS.
7.50 LACS IN INDIA AND
RS. 15 LACS FOR
STUDIES ABROAD
The loan to be repaid in a
maximum of 5-10 years after
commencement of repayment.

 MORATORIUM:
Course period + 1 year or 6 months after getting job,
Whichever is earlier?

A. In case student is not able to complete the course within the scheduled time,
extension of time for completion of course may be permitted for a maximum
period of 2 years.
B. The accrued interest during the moratorium period/repayment holiday period
to be added to the principle and repayment in equated monthly installments
(EMI) fixed.
 During the course only the interest is to be paid. In case the student gets the
job after 6 months the principle amount should only be paid.
 Recovery period is fixed according to convenience.
 If the student is able to get job immediately after the course, repayment
procedure for principal amount is started after 6 months.
 In case of not getting job, repayment procedure is started after 12 months.
 After completion of course, recovery period of principal amount of loan
should not exceed 10 years.
2.2.15 EXTENSION OF MORATORIUM PERIOD FROM 12 MOINTHS TO
24 MONTHS:

Banks to consider genuine requests received from students community in extending the
moratorium period up to 24 months for the education loans availed by them, on a case-
to-case basis.
 Original repayment period will not undergo any change.
 On receipt of the request letter from the student and co-borrower an exchange
letter to be issued to the borrower/guarantor and acknowledged copy of the
letter to be kept along with loan documents.
2.2.16 EXTENSION OF MORATORIUM PERIOD-TREATMENT TO
RESTRUCTURED ACCOUNTS:
 RBI advised that Educational loans are eligible for special asset classification
benefits on restructuring, subject to fulfillment of necessary conditions.
 Two major conditions for special treatment:
A. The “dues” to the loan are ‘fully secured’ by tangible security
And

B. The repayment period of the fully restructured advance including the
moratorium i.e. course period plus the repayment holiday( 6 months after
getting the job or 12-24 months after completion of the course, whichever is
earlier), should not exceed 10 years.
2.2.17 WRONG REPAYMENT SCHEDULE FIXATION:
 The repayment should be commenced after the course period + moratorium
period.

 Procedure while opening the new education loan accounts:
 1st day of EMI being the date after the expiry of moratorium i.e. course
period + moratorium.
 The repayment start date will be generated from the APPROVAL DATE +
MORATORIUM PERIOD + COURSE COMPLETION PERIOD.
 In “ EMI Schedule required field “
By selecting “YES “- Automatic generation of
repayment schedule at the time
of loan approval.
By selecting “NO “- No repayment schedule at the time
of loan approval and mistakes
Through manual option.

 The user has to necessarily change the field value as ‘Y: Yes’ in both
“Education loan flag “ and “ Moratorium Flag ” fields;
 For new accounts, care should be taken in case where original
repayment schedule has not been amended by the user and where has
been amended successfully.
 No option of automatic generation of repayment schedule for existing
loan accounts; amended manually and a report containing details of the
accounts where the moratorium period is expiring after one month from
the report date to amend the compounding frequency manually.

2.2.18 FOLLOW UP:
For effective follow up of education loans and to track the students who leave the
institution after completion of the course, following measures should be taken:
 Application/documents have to be invariably signed by the parent/guardian
making them as joint borrowers.
 Progress report of the student to be obtained after each installment.
 Place of residence of the parent/guardian to be visited before release of the
first/last installment.
 Latest address/contact numbers to be updated.
 The college/educational institution to be informed about the ailment of
educational loan by the student & are requested to make a note.
 Letter to the student/guardian or parent informing about the repayment
schedule and startup period of repayment.
 Periodicity may be fixed.

2.2.19 CAPABILITY CERTIFICATE:
For students going abroad for higher studies.
2.2.20 NO DUE CERTIFICATE;
Need not be a precondition for considering loan, but may be obtained a
declaration/affidavit confirming that no loans are availed from other banks.
2.2.21 DISPOSAL OF LOAN APPLICATION:
Within a period of 15 days to 1 month, but not exceeding the time norms stipulated for
disposing of loan applications under priority sector lending.
2.2.22 TYPE OF LOAN:
Term loan
2.2.23 DOCUMENTATION:
o Application form along with the documents listed there in.
o Proposal/control Return form.
o Sanction Communication Letter.
o Term Loan Agreement.
o Guarantee Agreement.
o Deed of Rectification to be executed by a minor on attaining majority.
o Extension of moratorium period after completion of study/course.

2.2.24 LOAN TO CHILDREN OR WARDS OF MEMBER STAFF:
 No administrative clearance.
 Security for loan will be as applicable to public.
 No lien.
 Deduction of the installment due from the salary/pension of the employee.
2.2.25 RESIDENTIAL STATUS OF INDIAN STUDENTS ABROAD:
 Treated as non-residents.
 Eligible to receive remittances from India as per limits set up by RBI from
time to time.
 Eligible for all other facilities available for NRIs under FEMA.
2.2.26 CLASSIFICATION UNDER PRIORITY SECTOR:

As per RBI guidelines, education loans up to Rs. 10 laces in India and up to Rs. 20
laces for studies abroad are to be treated as Priority Sector.
2.2.27 TAKE OVER OF EDUCATION LOANS:
 No restrictions.
 The sanctioning authority will be free to grant additional loan in accordance
with terms & conditions of the scheme, no deviation there from will be
permitted.
2.2.28 SWITCH OVER FROM ONE COURSE TO ANOTHER:
 Reimbursement of additional expenses incurred in connection with such
switch over
 Loan is incumbent upon employment prospects in respect of the course
undertaken as also the institution from which the same is undertaken.
2.2.29 TOP-UP LOANS:

Second loan ( top-up loan ) within the overall limit may be permitted to
pursue a professional course in India or abroad provided the projected
income of the student, after placement, is sufficient to cover full loan
repayment, and subject to the second loan being allowed with the security
requirements.
2.2.30 MULTIPLE LOANS:
 No ceiling in maximum aggregate amount of loan when two or more wards of
a parent/guardian individually avail loan.
 As per RBI, Education loan is given for an individual and not a loan for a
family as a unit.
2.2.31 CO-OBLIGATOR:

 Natural guardian, the legal guardian i.e., a guardian appointed by any
authority, or a person in charge of the care of the person and property of the
student who intends to avail such facility.
 In case of married person, can be spouse or the parent(s)/parents-in-law of the
student.
 When parents/guardian are not there, grand may be considered as co-borrower
to the loan taking into account their net worth.
2.2.32 FAILED STUDENTS:
 May be considered after satisfying the reasons for the same.
 The sanctioning authority not below the rank of an Asst. General.
2.2.33 OTHER CONDITIONS:

 The loan proposals from students whose parents/siblings have defaulted earlier
should not be entertained.
 Discrete enquiries to be made before considering the proposals
 CIBIL data may be used for getting information.
2.2.34 ONLINE EDUCATION APPLICATION:
To speed up the availability of educational loans to students, an
online education application system has been introduced in the
bank.
2.2.35 FINANCE MINISTRY GUIDELINES/REJECTION OF
EDUCATION LOANS ETC.:

 Banks are often rejecting the loan application with reasons;
A. Place of domicile of the applicant falls under the service area of another
bank.
B. Approach another Bank functioning near to the place of their residence.
C. Applicant is over aged.
D. To approach another Bank as per arrangement among local banks.
 There is no restriction with regard to the age of the student to be eligible for
the loan.

2.3.1 PURPOSE:
 Purchase or construct a new house /flat.
 Purchase an existing (old) house/flat or extend an existing house.
 Repair or renovate an existing house/flat.
 Purchase a plot of land for the purpose of construction of a house.
 Purchase furnishing /consumer durables as part of the project cost.
 Rain water harvesting as a part of project cost.
 Two loans may be granted to an Individual provided he has the capacity to
repay.
 The two loans may also be given at different times either for
A. Purchase /Construction (For single property)
B. Repair/Renovation (For single property)
C. Purchase/Construction (For different property)

D. Repair/Renovation (For different property)
 Takeover of housing loans availed by Individual borrows from other bank
/financial Institutions.
2.3.2 ELIGIBILITY:
 AGE – 21 YEARS AND UPTO 60 YEARS OF AGE (With a steady source of
income)
 Persons engaged in agriculture and allied activities are eligible for availing.
2.3.3 LOAN AMOUNT:
The Loan Amount Will be determined by the “EMI/NMI” Ratio.
The Loan Amount is decided by the Repaying Capacity of Borrower which
comes out as a ratio of “EMI/NMI”.

2.3.4 EMI/NMI RATIO (EQUATED MONTHLY INSTALLMENT/NET
MONTHLY INSTALLMENT):
NET ANNUAL INCOME(Rs.) PERMISSIBLE EMI/NMI RATIO
UPTO Rs.60,000/- 20%
>Rs. 60,000/- <= Rs. 1,20,000/- 25%
>Rs.120,000/-<= Rs. 2,00,000/- 30%
>Rs. 2,00,000/-<=Rs. 5,00,000/- 50%
>Rs. 5,00,000/-<= Rs. 10,00,000/- 55%
>Rs. 10,00,000/- 65%
Table 2.3.1 (EMI/NMI RATIO TABLE)
2.3.5 LOAN FOR REPAIRS:
The maximum loan amount should not normally exceed Rs.10 laces where the loan is
being granted for repair/renovation purposes only. Such loans exceeding above ceiling

amount require prior administrative clearance from the General Manager in all cases
where sanctioning authority is an official of a lower grade.
2.3.6 EXPLANATIONS:
 Actual loan amount will be determined taking into consideration factors such
as:
A. Applicant’s Income
B. Repaying Capacity
C. Assets and Liabilities
D. Cost of Proposed house/flat.
 In case of salaried persons NMI means Net Monthly income net of all
deductions, including loan repayments and Actual Tax deductions at source.
 In case of Applicants other than salaried persons, NAI means Annual Income
as per the latest Income Tax return filed less loan repayments and taxes
payable.

 In case of Agriculturists, the NMI should be based on the nature of their
activity (E.g. Farming, dairy, poultry, and orchards), land holding, cropping
pattern, yield etc. and average level of income derived there from in the area.
2.3.7 INCOME OF SPOUSE/SON/DAUGHTER/PARENTS:
 Income of spouse may be considered where the proposed property is jointly
held with the spouse and he/she is joining as co-borrower.
 Whether the property is held in single name of the borrower and the spouse
stands as a guarantor.
 Income of a son/daughter may be considered, with the prior approval of an
authority not below the rank of an AGM (ASSISTANT GENERAL
MANAGER) provided the son/daughter

A. Is living with the borrower
B. Has steady Income and his/her salary is routed through our branch
account and
C. Joins as co-borrower.
 Income of parents can be considered with the prior approval of the controllers,
not below the rank of Assistant General Manager provided the parent is living
with the borrower and has steady income .parent to join as co-borrower.
 Other income from all sources can be considered only it is eligible of total loan
amount and it is satisfied about the proof of the income by sanctioning
authority.
2.3.8 EXPECTED RENTAL:
The maximum rental income can be calculating the Eligibility should not exceed 60%
of the total income or 40% of the rental income whichever is less.
The Eligible rental income can be added to the net “EMI/NMI” Ratio.
2.3.9 FURNISHINGS AND CONSUMER DURABLES:
The cost of Furnishings and Consumer Durable may be included in the project cost to
the extent of 10% of the project cost.

Maximum of Rs. 3, 00,000/- (can be given to the customer for their personal use like
furniture, luxury things etc.)
2.3.10 RAIN WATER HARVESTING:
The cost of rain water harvesting may be included in the project cost to the maximum
of Rs.25000/-.
2.3.11 ADMINISTRATIVE CLEARANCE:
 No Administrative clearance is required for loan up to Rs. 10 cores. (For
purchase /construction of house/flat “new or old”)
 Administrative Clearance is required for loan above or equal to Rs 10 cores
(from HOCC-Head Office Credit Committee)

2.3.12 MARGIN:
 FOR LOAN PROPOSALS FOR AMOUNT UPTO AND INCLUSIVE OF
Rs. 1 CRORE:
A. For loan up to 1 core
15% of the total project cost which include “Cost of land, Additional
Amenities, Registration Fees, Stamp Duty, Cost of Rain Water Harvesting,
and Cost of Stamp Duty for Creating Equitable Mortgage etc.
B. For loan up to 50 laces
Margin may be reduced by 10% by DGM (Should bear by the Customer)
 FOR LOAN PROPOSAL ABOVE Rs. 1 CRORE:
A. For loan above Rs. 1 core
20% of the total project cost which may include “Cost of land, Additional
Amenities, Registration Fees, Stamp Duty, Cost of Rain Water Harvesting,
and Cost of Stamp Duty for Creating Equitable Mortgage”.

2.3.13 FOR REPAIR OR RENOVATION OF AN EXISTING HOUSE
 20% of the cost of repair /renovation work.
 Margin may be reduced to 15% by the Sanctioning Authority in case where a”
CHECK OFF FACILITY” (the EMI of the loan amount will be deducted
every month from the salary of the customer) is available from a Reputed
Employer.
2.3.14 TYPE OF FACILITY
Term Loan
2.3.15 SECURITY
 PRIMARY
Equitable Mortgage by deposit of “TITLE DEED” of the Immovable
Property.
A. The “TITLE DEED” of Landed property/flat/house etc. must be examined by
the bank’s Advocate.

 The Advocate should certify in the” SEARCH REPORT” that the Mortgagor’s
title to the property is clear and created a valid Equitable Mortgage.
 The Equitable Mortgage of the property can be obtained only the loan proposal
is above 5 laces.
 Memorandum relating to Equitable Mortgage of the property should be
compulsorily registered. (This is applicable for branches situated in the State
of Karnataka.)
 PARI-PASS/SECOND CHARGE: Second Charge.
2.3.16 COLLATERAL
If Mortgage of the property being financed is not possible,
Sanctioning Authority may accept, Security of adequate value in the
form of LIC Policies, Government Promissory Notes,
Shares/debentures, Gold Ornaments and other Tangible Security.
 INTERIM SECURITY PENDING CREATION OF MORTGAGE
Wherever creation of Mortgage is to be Delayed for any valid reason ,Suitable
Security including Third Party Guarantee may be taken for INTERIM
PERIOD (Interim period= for 7 days).

2.3.17 RATE OF INTEREST:
(a) HOUSING
LOAN
SPREAD OVER
BASE RATE
RATE OF
INTEREST
(%)
UPTO Rs. 20 laces
UPTO 5 YEARS 0.75 10.25
ABOVE 5 TO 15
YEARS
1.00 10.50
ABOVE 15 TO
INCLUSIVE OF 25
YEARS
1.25 10.75
ABOVE Rs.20
laces UPTO Rs.30
laces
UPTO 5 YEARS 1.00 10.50
ABOVE 5 TO 15
YEARS
1.25 10.75
ABOVE 15 TO
INCLUSIVE OF 25
1.50 11.00

YEARS
ABOVE Rs. 30
laces UPTO Rs. 75
laces
UPTO 5 YEARS 1.25 10.75
ABOVE 5 TO 15
YEARS
1.50 11.00
ABOVE 15 TO
INCLUSIVE OF 25
YEARS
1.75 11.25
ABOVE Rs. 75
laces
UPTO 5 YEARS 1.50 11.00
ABOVE 5 TO 15
YEARS
1.75 11.25
ABOVE 15 TO
INCLUSIVE OF 25
YEARS
2.00 11.50

(b)HOUSING
LOAN
UPTO 10 YEAR
FIXED
INTEREST RATE
UPTO Rs. 30
laces
ABOVE Rs. 30
laces
12.25
12.75
Table 2.3.2 (interest rate of housing loan)
2.3.18 CONCESSION RATES:
 UPTO 0.25%
In Case of all Housing Loans in bulk in one location e.g. Housing Colonies,
Model Towns, HUDA etc.
 UP TO 0.50%
In Case of all Housing Loan with tie up arrangement with large corporate,
Universities etc.

Up to Rs. 5 laces 1000/-
Above Rs. 5 laces to 10 laces 2000/-
Above Rs.10 to 20 laces 5000/-
Above 20 laces to 50 laces 7000/-
Above 50 laces to 1 core 8000/-
Above 1 core to 5 core 10,000/-
Above 5 core 20,000/-
Table2.3.3 (processing fee)
2.3.20 INSURANCE:
The asset purchased/constructed with the Banks finance should be insured against the
risk of fire/riots/earth quakes/lightening, floods etc., in the joint names of the borrower
and the bank for full market value of the property or the outstanding loan amount,
whichever is higher.

2.3.21 SANCTION OF LOAN:
 DISCRETIONARY POWER
As per “DELEGATION OF POWER”
 TIME SCHEDULE
The loan will be sanctioned at branch within 3 Days and at Zonal Office
within 10 days. RACPCs/RASECCs will sanction the loan within 6 days.
 IN-PRINCIPLE APPROVAL
(Permission from Head Office –DGM)
 RECORD OF APPLICATIONS RECEIVED AND DISPOSED OFF
A Proper record of all applications received and disposed of should be maintained in
the “APPLICATIONS RECEIVED AND DISPOSED REGISTER”.

2.3.22 DISBURSEMENT OF LOAN:
 To safeguard the bank’s interest, and to prevent misuse of funds,
Disbursements should be made only in phases of actual progress made in the
construction.
E.g. at stage like (a) completion of plinth
(b) Completion of lintel level
(c) Completion of roof.
 As regards loan for “REPAIR/ RENOVATION/CONSTRUCTION” etc.,
branches should satisfy themselves about the estimated cost of work like
material to be used , cost of labor and other charges, and after obtaining
Certificates of the qualified Engineers/Architects.
 In case of Construction of Building, a Certificate should be obtained from an
Architect that the construction of building is strictly as per sanctioned plan.
 When a loan is sanctioned for purchase of site, 30% of loan amount can be
realized towards site cost. The project has to be completed within 18 months
from the date of first release.

2.3.23 PAPERS/DOCUMENT TO BE SUBMITTED ALONG WITH LOAN
APPLICATION:
 LIST OF PAPERS/DOCUMENTS APPLICABLE TO ALL APPLICANTS:
A. Application for loan
B. Passport size photograph
C. Proof of identity (photo copies of voter ID Card/Passport/driving license/IT
PAN card).
D. Proof of residence (photo copies of recent telephone bills/electricity
bills/property tax receipts/Passport/voter ID card).
E. Proof of business address for non-salaried individuals.
F. Copies of TITLE DEEDS (property in the name of applicants) of the
property as required by the advocate.
G. Valuation certificate from approved value in case of purchase of property.

 PAPERS/DOCUMENTS TO BE SUBMITTED BY SALARIED PERSONS
A. Salary certificate form employer.
B. TDS (Tax Deduction Source) Certificate on “FORM 16”.
C. Copy of IT return for last two financial years, dually acknowledged by ITO
(Income Tax Office).
 WHERE CHECK OFF IS PROPOSED
A. Irrevocable letter of authority.
B. Letter from employer.
C. Irrevocable letter of authority where applicant himself is drawing and
disbursing officer (DGM, AGM)
 FOUR PAPERS/DOCUMENTS TO BE SUBMITTED BY SELF
EMPLOYED/ OTHER IT ASSESSES
A. Acknowledged copies of 3 years IT return.
B. Photo copies of challis evidencing payments of advance income tax.

2.3.24 DOCUMENTAION:
 Appraisal form.
 Irrevocable letter of authority form employee.
 Letter of undertaking from employer.
 Letter of undertaking form drawing and disbursing official where he himself
is availing the loan.
 Memorandum of term loan agreement for housing loan.
 Guarantee agreement (wherever applicable).
 Mortgage deed (in case of registered mortgage).
 Agreement to mortgage (pending creation of mortgage).
 Documents in connection with pledge of other securities.
 Documents/Papers formalities for creation of equitable mortgage and
registration of memorandum of mortgage letter.
 Request letter from the borrower to the existing financer (in case of takeover
of loan).
 Request letter from the borrower to the bank for repaying the existing loan.
 Letter to the borrowers existing financer requesting to close the borrowers’
loan account.

2.3.25 REPAYMENT:
 MAXIMUM REPAYMENT PERIOD:
A. For borrowers up to 35 years of age - 25 years.
B. For borrowers up to 45 years of age - 20 years.
C. For borrowers over 45 years of age - 15 years.
D. MAXIMUM REPAYMENT AGE - 70 YEARS.
2.3.26 MORATORIUM PERIOD:
Where loan is sought for construction of a new house/flat or
where it is being purchased on installments basis from a
government/public agency/reputed builder or society at the
request of the borrower a moratorium period i.e., repayment
holiday may be allowed till 2 months after the completion of
construction or up to 18 months from disbursement of first
installment of loans, whichever is earlier.

2.3.27 PRECLOSURE PENALTY:
2% PENALTY (If the loan is pre closed before the date of
maturity)
2.3.28 CHECK OFF FACILITY:
CHECK OFF FACILITY MUST BE ESTABLISHED EITH THE EMPLOYER
CONCERNED, WHEN LOANS ARE SANCTIONED TO THE FOLLOWING
CATEGORIES OF SALARIED PERSONS.
 Employees of the state and central government undertaking good health
paying salaries regularly.
 Employees of well-known institutions e.g. Universities, Hospitals.
 Employees of select partnership firms.
 Employees of reputed private and public limited companies.
2.3.29 INSPECTIONS:
 For Standard Assets.
 For NPAs (AT HALF YEARLY INTERVAL)

2.3.30 TAKE OVER OF HOUSING LOANS FROM OTHER BANKS/FIs
 Possession of the house/flat has been taken by the borrower.
 Repayment of the loan has already commenced and installments are being
paid as per terms of sanction.
 Borrower has valid documents evidencing his title to the house/flat.
2.3.31 PROCEDURE FOR TAKE OVER
 The borrower should address a letter to the bank/financial institution from
whom he has availed the loan asking them to deliver,
from whom he has availed the loan asking them to deliver, the receipt of the
loan amt, the title deeds and other securities, direct to our lending branch.
 The borrower should give to the branch a request letter for paying to his
existing lending bank/financial institution the outstanding amt of his loan by
debit to his loan account.
 THE BRANCH MUST RECEIVE
A. Obtaining Agreement to create mortgage.
B. Execution of Power of Attorney.
i. Obtain interim security (third party guarantee).

ii. Execution of the required loan documents.
2.3.32 HOUSING FINANCE SCHEME FOR NON-RESIDENT INDIANS (NRIs)/
PERSONS OF INDIAN ORIGIN (PIOs): NRI
 ELIGIBILITY
A. NRIs who are Indian Passport Holders.
B. Persons of Indian Origin (PIOs), Holding a foreign passport.
C. Have been employed Abroad for at least 2 years and presently holding a
valid job contract/work permit, with a minimum Net Monthly Income(NMI)
of Rs.20,000/-.

 LOAN AMOUNT
A. 48 times NMI or 4 times NAI in respect of applicants aged up to 45 years.
B. 36 times NMI or 3 times NAI in respect of applicants aged 45 years and
above.
C. The aggregate repayment obligation should not exceed 50% of their
NMI/NAI (with domestic direct housing loan).

 ADMINISTRATIVE CLEARANCE
A. No Administrative Clearance is required for loan proposals up to Rs.1.00
core for Purchase of house/flat (new or old) or Construction of house/flat.
B. Administrative Clearance is required from the HOCC-I for loan proposals
above Rs.1.00 core
 MARGIN
A. 20% of the total cost to be remitted from abroad or transfer from funds in
NRE/FCNR/NRNR/NRO account- for purchase of land meant for
construction of a dwelling unit, including cost of registration, stamp duty etc.
B. 15% of the total cost including amenities, registration, stamp duty, etc for
purchase of new or old house/flat or construction of house/flat.
C. 20% of the cost of the project for repair/renovation.
 SECURITY:

A. Equitable Mortgage of the property to be purchased/constructed, including
land.
B. Guarantee of a third party, Resident or Non- Resident will be required if the
security is not free and adequate during the course of construction of the
flat/house.
 DISBURSEMENT
A. CONSTRUCTION OF NEW BUILDING
In three stages, 30%, 40%, and 30% of the loan amount. The last installment
shall be disbursed 3 or 4 weeks prior to the completion of the building.
B. OUTRIGHT PURCHASE
100% to the seller, after payment of the margin by the applicant.
C. PURCHASE OF PLOT AND CONSTRUCTION OF THE BUILDING
The loan component for purchase of plot shall be 30% of the total project.
 REPAYMENT
A. 180 Months including the repayment holiday of 18 months.

B. Repayment to being on completion of the house or 18 months from the
disbursement of first installment of the loan, whichever is earlier?
C. Repayment shall be through remittance from abroad or transfer from
NRE/FCNR/NRO accounts.
D. Rental Income if any received should go towards repayment of loan.
E. Repayment can be from local sources after returning to Indian permanently.
 PROCESSING CHARGES
A. 0.30% (INCLUSIVE OF SERVICE TAX) of loan amount will be levied for
all housing loans, irrespective of limit.
B. It is payable at the time submission of application to the Bank.
 Lawyer/value fee to be recovered separately.
 INSURANCE
A. The house/flat should be insured for its full value in the joint name of the
borrower and the Bank at all times against fire, flood, typhoon, lightning,
explosion, riot, strike, earthquake, risks, etc...

B. The cost of insurance is to be paid by the borrower.
 INTEREST RATE
HOUSING LOAN FOR RESIDENTS
PERIODS FOATING
RATE
FIXED
RATE
Up to 5 years 8.00% 9.25%
Above 5 years & inclusive of 10 years 8.75% 9.75%
Above 10 years 9.25% 10.50%
Table 2.3.4

 DOCUMENTS
A. DOCUMENTS TO BE SUBMITTED FOR
CONSTRUCTION/IMPROVEMENT OF HOUSES
i. A copy of the plan inclusive of site plan approved by the local civil
authorities.
ii. A copy of the building permit issued by the Corporation/ Municipality/
Panchayath as required.
iii. Estimate approved by an official not below the rank of Asst. Executive
Engineer, or Registered Architect.
iv. Original and prior title deeds.
v. Latest tax receipts.
vi. Possession certificate.
vii. Encumbrance certificate from the Sub Registrar for the last 15 years.
viii. Title clear certificate from bank’s approved advocate.
ix. Valuation report from the bank’s approved value.

B. DOCUMENTS TO BE SUBMITTED FOR PURCHASE OF
HOUSE/FLAT:
i. Copy of the agreement for sales.
ii. Copy of the Title Deeds of the present owner.
iii. Copy of the land tax receipt.
iv. Copy of the building tax receipt.
v. Encumbrance Certificate from the sub registrar for the last 15 years.
vi. Title clear certificate from the Bank’s approved advocate.
vii. Valuation report of the property; and building from the Bank’s approved
value.
viii. FOR PIOs:
2.3.32..B.viii.1 A Photocopy of the PIOs card.
2.3.32..B.viii.2 Current passport indicating birth place in India.
2.3.32..B.viii.3 Indian passport if held earlier.
2.3.32..B.viii.4 Parents or grandparents passport with details therein
substantiating his claim of being a PIOs.

 SECURITY DOCUMENTS
A. Loan Application.
B. Term loan Agreement.
C. Equitable Mortgage by deposit of Title Deeds.
D. Agreement for Sales.
E. Agreement to create Mortgage.

2.3.33 HOUSING LOAN SCHEME FOR PURCHASE OF RESIDENTIAL
SITE/PLOT BY NRIs/PIOs
 PURPOSE
To Purchase Site/Plot allotted by any Agency/Set –up/Authorized by
Governments like BDA/Housing Board/District Urban Development
Authority/City Improvement Trust Board/Municipal Corporation/State
Development Authority etc., on first sale only.
 LOAN AMOUNT
A. 24 times net monthly income (NMI) or 2 years annual Income or 80% of the
cost of the site whichever is lower.
B. Net Monthly Income of the Spouse may be considered, only when spouse
standing as Guarantor to the loan.
C. Maximum Rs.10.00 laces.
 MARGIN
20% of the cost of Site/Plot.
 REPAYMENT
60 Equated Monthly Installments.

 INTEREST
A. FLOATING RATES-9.59% pea
B. FIXED RATE-10.00% pea
 PROCESSING FEE
Rs.1000/- Flat per account.

 SECURITY
A. Equitable Mortgage of the Site/Plot to be purchased.
B. When creation of Mortgage is to be delayed, suitable security by way of
Third Party Guarantee be taken for the Interim Period.
C. Lien over the balances held in the accounts of the borrower and/ or
Guarantor.
 SECURITY DOCUMENTS
A. Application.
B. Allotment letter from BDA/HB/DGDG/CITB/MC/SDA in original.
C. Sketch of the Site.
D. MTL Agreement.
E. Letter of Guarantee.
F. Agreement to Mortgage.

2.3.34 HOUSING LOAN TO INDIVIDUAL- ADDITIONAL HOUSING LOAN
AGAINST SECOND CHARGE OF PROPERTY:
 On 15/01/2002 the details of considering additional housing loan to the
employee of large Corporate, Public Sectors Bodies, against second charge of
the property are advised.
 To increase the need & demand & also to increase our lending under housing
loan.
 CERTAIN INSTRUCTION
A. The maximum additional loan should not exceed amount eligible under
regular housing loan scheme minus loan sanctioned by the employer.
B. REPAYMENT- The additional loan should be repayable in 15 years.
The maximum repayment age is fixed as 60 years.
C. There is no need of obtaining In-Principle Clearance.
D. The employee should have a residual service of a minimum 5 years.
E. The discretion to sanction the loan against second charge is vested with
respective Sanctioning Authority.
F. Check off facility is available.
G. MARGIN- 25% of the total project cost.

 PROOF OF INCOME FOR ALL APPLIUCANTS:
A. INCOME TAX RETURNS:
i. SALARIED PERSONS- 2 Years IT Returns duly acknowledge by
ITO/TDS Certificate on FORM 16.
ii. BUSINESS MEN- 3 Years IT Returns
iii. SELF- EMPLOYED- 3 Years IT Return.
 ACCOUNT STATEMENT
ACCOUNTS STATEMENTS- For last 6 months.
 SALARY SLIP:
LATEST SALARY SLIP WITH ALL DETAILS
 FORM 16
TDS CERTIFICATE- On FORM 16.
 PROOF OF AGRICULTURE INCOME
FOR AGRICULTURE- The annual Net Income should be
arrived at by branches based on the nature of their activity
(i.e. farming, dairy, poultry, and orchards), land holding,
cropping pattern, yield, etc.

2.3.35 HOUSING LOAN FOR PURCHASE OF PLOT OF LAND FOR THE
PURCHASE OF CONSTRUCTION OF DWELLING UNITS
FEATURES OF THE SCHEME:-

 TYPE OF LOAN-
TERM LOAN
 PURPOSE-
A. Purchase of Site allotted by BDA/Housing Boards/Any Urban Development
Agency/Housing Societies for purpose of construction of a house.
B. The scheme is applicable for second sale also provided the original sale of
Site from any one of the above agency.
 ELIGIBILITY
As per Housing Loan Scheme.
 MAXIMUM LOAN AMOUNT
A. Rs.50 Laths for the branches situated at Metro Centers.
B. Rs.25 Laths for the branches situated at Non Metro Centers.
 EMI/NMI RATIOS
ANNUAL INCOME EMI/NMI RATIO
NOT TO EXCEED
UPTO Rs.2 laces 30%

Table 2.3.5
 MARGIN
30%
 SECURITY
A. Equitable Mortgage of the plot of land proposed to be purchased.
B. Personal guarantee of the Spouse/Son/ Daughter if there Income is also
clubbed with the Income of the borrower.
C. Interim Guarantee of an individual good for the loan amount (to cover the
period from the date of Sanction & date of creation of Equitable Mortgage)
 REPAYMENT TERMS
Repayments in a Maximum of 180 months from the month of
Disbursement of the loan.
ABOVE Rs.2 laces
UPTO Rs.5 laces
40%
ABOVE Rs.5 laces 45%

 PROCESSING FEES
LIMIT Rs.
UPTO Rs.5 laths 1,000/-
ABOVE Rs.5 laths &
UPTO Rs.10 laths
2,000/-
ABOVE Rs.10 laths &
UPTO Rs.20 laths
5,000/-
ABOVE Rs.20 laths &
UPTO Rs.50 laths
7,000/-
Table 2.3.6
 MAXIMUM TIME PERIOD STIPULATED FOR CONSTRUCTION OF
HOUSE
2 Years from the date of an ailment of the loan.

 DOCUMENTATION
A. Arrangements letter.
B. Housing loan Agreement.
C. Guarantee Agreement.
D. Agreement to Mortgage.
E. Declaration by the borrower undertaking to construct house within a period
of 2 years.
F. Demand Draft/Banker’s Cheque forwarding letter
 DISBURSEMENT
A. Direct to the Urban Development Authority/Housing Society/Seller by issue
of Banker’s Cheque /Demand Draft cross “Account payee only” or their
SB/CA accounts maintained with us.
B. Account number and name of the Bank will be Incorporates in the Banker’s
cheque/Demand Draft.
 PENALTY
0.50% of the loan amount.

ALL PURPOSE MORTGAGE LOAN AGAINST MORTGAGE
OF IMMOVABLE PROPERTY
This is a general purpose loan for all categories of individuals with minimum amount
pegged at Rs.1.00 laces and maximum amount being Rs.10.00 laces depending upon
the repayment capacity of the borrower. This type of loan can be taken for marriage
purpose, medical expenses, education purpose, foreign travels etc. The proceeds of loan
should not be used for development/acquisition of land or construction of building or
for any speculative purpose
A credit scoring model has been devised for this scheme with maximum cut off score of
60. To be eligible under this scheme, the individual must not be more than 60 years of
age and should have a net income of Rs.12000/- per month for salaried persons or net
annual income of Rs.1, 50,000/- for others.
Some examples of possible utilization of your mortgage loan:
 Debt consolidation: This is a common reason why a mortgage loan may be
availed of, since such loans generally carry lower interest rates than other loans
like personal loans. Debt consolidation allows borrowers to pay less interest by
securing their debt with their home.
 Home improvements: With the festive season around the corner, home
improvements can be a way of adding value to a home or increasing its

marketability. Using a mortgage loan to add space may be cheaper and involve
less hassle than taking an unsecured loan. As in unsecured loan the term of
repayment for an unsecured loan is shorter, as compared to mortgage loans,
which in turn results in a high EMI.
It is essential that a valid mortgage is invariably created before the grant of loan, after
abstention of an acceptable legal opinion also called legal scrutiny and valuation report
i.e., realizable market value. Where equitable mortgage is not feasible and the customer
is willing to execute a registered mortgage deed, the same can be accepted. The detail
of the scheme is as per given below-
2.4.1 PURPOSE:
General purpose loan/line of credit.
2.4.2 ELIGIBILITY:
Individuals who are:-
a) Employees
b) Professionals, self-employed & others who are income tax assesses
c) Engaged in agricultural & allied activities
The following three conditions would have to be satisfied:
1) Net monthly income of Rs.12, 000/-for salaried persons or net annual income of Rs.
1, 50, 000/- in the case of others and self-employed. For agriculturalists the annual net

income should be arrived at by branches based on the nature of their activities (viz.
farming, dairy, poultry and orchards) land holding, cropping pattern, yield etc. and
average level of income derived there from in the area.
The income of the spouse may be added if he/she is a co-borrower (When the property
is jointly held) or consents to stand as a guarantor.
2) Maximum age limit is 65 years.
3) The credit scoring model attached should be used for appraisal with a cut off score of
60 marks.
1.4.3 LOAN AMOUNT:
A. Minimum: Rs.1.00 lace. (Branch manager can sanction lesser amount than
the prescribed).
B. Maximum: for salaried class-24 times the net monthly income.
C. In case of others 3 times the net annual income.
Subject to a maximum of Rs.1.00 laces.
2.4.3 TYPE OF LOAN
Term loan or A/C over draft.

2.4.4 SECURITY
A. Equitable mortgage of unencumbered residential house/flat, nonagricultural
urban land property, commercial or industrial property in the name and
possession of the borrower i.e., either self-occupied or vacant.
B. Property rented out may be accepted as security only where lease is in
existence in favor of corporation of good standing and repute. Power of
attorney authorizing the Bank to collect the monthly rent to be taken.
C. POWER OF ATTORNEY-
The power of attorney is given by the borrower to the bank. Where the borrower
states that, he the “Grantor” residing at such a place hereby nominate appoint &
constitute some person who is known as the “Attorney” residing at such a place.
The grantor declares such a person as a lawful attorney in his name & on his behalf to
do anyone or all of the acts, deeds, matters & things. Such as, for the purpose of
receiving effective release, to pay all fees, sign documents, furnish details &
information, give any statement, letter, clarification etc.
Thus the grantor declares, agree & confirm that all or any of the powers may be
exercised by the attorney on his behalf. He agrees to ratify all lawful acts, deeds,
matters, and things done by the attorney.

The power of attorney will automatically get revoked on the death, permanent
disability, retirement or resignation of the said attorney.
2.4.5 MARGIN:
50% of the market value of the property.
2.4.6 REPAYMENT:
The loan is repayable in 60 equated monthly installments. The repayment should begin
from the next month of receiving loan & to be repaid within 84 month or 7 yrs.
2.4.7 INTEREST:
For term loan- 4% above PTLR presently 16.25%
For current account overdraft- 4.5% Above PLR presently 17.00%. p.a.
1% of the sanctioned limit (upfront). Stamp duty is 5% of the loan amount.

2.4.9 INSURANCE
The property being mortgaged should be insured against the risk of fire/riots/earth
quakes/lightening/floods etc. in the joint names of the borrower and the Bank for the
full market value of the property, etc. A copy of policy is to be retained with the Bank.
Where insurance is desired to be waived by the borrower, an insurance indemnity is to
be maintained.
Along with the additional security to the extent of 25% of the loan amount by way of
assignment of LIC policy, pledge of Govt. Bonds, NSC , India Visas Petra , Kinas
Visas Petra , Relief Bonds, Magnums, Units of UTI,PSU Bonds, gold
Or any other security normally acceptable to the Bank for grant of advances.
Non-financial securities like gold and non-specified securities like LIC policy to be
valued at a margin as stipulated in the various schemes for finance against the securities
concerned.
Insurance register is to be maintained.
2.4.10 INSURANCE INDEMINITY-
The Insurance Indemnity is a stamped letter of indemnity for waiving of insurance.
It is the letter by the borrower to the branch manager of the bank. Where he states that,
the bank at his request has agreed to waive the said condition of insuring the said
property. The borrower binds himself/his respective heirs oblige their selves to hold the

bank harmless & indemnified from & against all actions proceeding claims and
demands, duties, penalties, taxes, losses, damages, charges, expenses from the said
property.
He unconditionally & irrevocably agrees that the bank may at its sole absolute &
unqualified discretion take out insurance against the risks of loss or damage of the said
property. he undertake to pay to the bank immediately on demand the amount payable
in respect of such insurance on his failure to pay the same debit.
2.4.11 MODE OF DISBURSEMENT:
As per request of the borrower.
2.4.12 INSPECTION
A) Annual Inspection for standard assets accounts.
B) Twice a year for NPAs.
Record of inspections to be maintained in the Inspection Register.
2.4.13 DOCUMENTS TO BE SUBMITTED BY THE BANK WITH LOAN
APPLICATION:
i. Copy of passport /voter ID card or PAN
ii. 2 copies of latest passport size photo of self & guarantor.

iii. Statement of the bank account where salary/income is credited for last 6
month.
iv. Verification of signatures from the bank where salary/income is credited.
v. Title deeds of the property in original & a photocopy.
vi. Proof of residence
vii. Latest monthly salary slip showing deductions
viii. TDS Certificate – Form 16 in the case of salaried persons.
(Not required where the applicant maintains a satisfactorily conducted Current
or Savings Bank account over six months old).
ix. Employment details for last 3 yrs.
x. Copies of Income Tax Return of last 2 yrs. duly acknowledged by ITO.
2.4.14 ENCLOSURES PROVIDED BY THE BANK FOR LEGAL
OPINION TO ADVOCATE
Legal opinion is the report required by bank through the banks advocate
Stating that the property is clear legally & mortgage can be created
Thereon. While obtaining the title opinion from the advocate, the

Advocate should obtain the documents from bank which the bank has
Already obtained from the borrower.
a) Sale deed/Agreement of sale.
b) Catha certificate.
c) Tax paid receipt.
d) Possession certificate
e) Letter of allotment from Housing Board.
f) Copy of approved plan.
g) Permission for construction.
h) In case of conversion of agriculture land, copy of the relative order.
i) Encumbrance certificate for the period from -------- to -------.
The other documents are-

i. D.P Note and D.P Note Delivery Letter in the case of current account
overdrafts.
ii. Guarantee Agreement, if applicable.
iii. Power Of Attorney to the Bank to collect the monthly rent, if applicable
iv. Insurance Indemnity, if applicable.
v. Guarantee Agreement, if applicable.
vi. Undertaking to repay the loan or obtaining Bank’s permission prior to
renting out property.
vii. Irrevocable Letter of Authority where Drawing and Disbursing Officer
himself is the applicant.
viii. Irrevocable Letter of Authority from borrower
Irrevocable letter of authority is the letter provided by the borrower to his employer of
his organization, authorizing his employer to recover by deduction from his salary
payable to him every month representing as the monthly installments to the said bank.
In case of his death, retirement, resignation or discontinuing the service for any reason
he gives the right to his employer to pay an amount payable from his account by way of
terminal benefits like P.F & gratuity.

ix. Letter from the Drawing and Disbursing Officer
This letter is provided by the employer to the bank where his employee has taken loan
from. The employer states to bank that, this person is a permanent employee of this
organization & will deduct a sum of amt from his/her salary and will remit the same to
the bank for crediting his loan account.
x. Arrangement Letter
Arrangement letter is given by the branch manager to the borrowers stating about
their sanction of loan on the terms & conditions such as rate of interest, repayment,
security, insurance, inspection, processing charges, legal expenses & disbursements etc.
xi. Loan Agreement in all cases
It is an agreement between the borrowers & the bank. It includes all terms &
conditions.
The borrower agrees to repay the loan amount in 84 EMI till the entire loan with
interest is fully repaid. In case of overdraft limits, the banks in its sole discretion will
fix the drawing power either at fixed or periodically reducing basis as considered fit by
the bank & borrowers. The borrower should from time to time & at all times in the
continuance of loan should keep the immovable property mortgaged to the bank in good
state, The bank can ask the borrower to provide additional security including 3rd
party
guarantee if the security already created by the borrower is insufficient in the bank’s

opinion. The borrower shall bear and pay all cost, charges & expenses including stamp
duty registration & other charges payable in respect of the agreement.
2.4.15 MAXIMUM TIME SCHEDULE FOR SANCTION/DISBURSEMENT OF
LOAN:
Loan to be No. of days-
Sanctioned
At-
Branch 9 days
Z.O 15 days
TABLE 2.4.1

2.5 INTRODUCTION TO REVERSE MORTGAGE
LOAN

REVERSE MORTGAGE LOAN
The Reverse mortgage loan enables a senior citizen i.e. above the age of 60 yrs. to avail
of periodical payments from a lender against the mortgage of his/her house while
remaining the owner & occupying the house.
The senior citizen borrower is not required to service the loan during his/her lifetime
and therefore does not make monthly repayments of principal and interest to the lender.
The loan amount may be used by the senior citizen for varied purposes including up-
gradation/renovation of residential property, medical expenses etc.

 OBJECTIVE
To provide a source of additional income to the senior citizens who own self acquired
house property in INDIA.
2.5.1 ELIGIBLITY
A. NO. OF BORROWERS –
Single or joint borrowers with spouse in case of living spouse.
B. AGE OF THE FIRST BORROWER-
The age of the borrower should be above 60 years.
C. NO.OF SURVIVING SPOUSE ON THE DATE OF SANCTION OF
LOAN-
Should not be more than one. Borrowers will have to give an undertaking that they
will not remarry during the currency of the loan. If the borrower chooses to remarry,
the loan will be foreclosed

D. AGE IF THE SPOUSE IS ALIVE
Should be above 58 years.
E. RESIDENCE
Borrower should be staying at SELF ACQUIRED and SELF OWNED flat/house
against which loan is being raised, as his permanent primary residence.
Proof of residence has to be provided. Affidavit made before the Executive Magistrate
may also be accepted as proof of residence. Borrowers will be required to inform the
Bank when they cease to use this residence as their permanent residence.
F. TITLE OF THE PROPERTY
Borrower should have a clear and transferable title in their names. The Title
Verification and search report for a period of 30 years will be required to be obtained
from the Bank’s empanelled advocate at borrower’s cost.
G. TITLE OF THE PROPERTY AND NUMBER OF BORROWERS
If the property is in single name and the loan is availed jointly with spouse, the borrower
should make a Registered Will in favor of the other spouse. The Will should confirm that
this is the last Will and that it supersedes all other wills, if any. The borrower to
undertake no fresh will shall be made during the currency of the loan.

H. ENCUMBRANCES
The property should be free from any encumbrances.
In case the borrower has availed Housing loan from SBM and mortgaged to SBM, the
loan under Reverse mortgage will be considered subject to closure of housing loan from
the proceeds of Reverse mortgage.
I. RESIDUAL LIFE OF PROPERTY
Should be at least 20 years in case of single borrower and 25 years in case of spouse
being below the age of 60.
2.5.2 SECURITY
The loan will be secured by way of Equitable Mortgage of residential property.
2.5.3 PERIOD
Age of the younger of the borrower
Between 58-68 years - 15 years
Age of the younger of the borrower

Above 68 years - 10 years
OR
Till death of the borrower(s) whichever is earlier.
2.5.4 DISBURSEMENT
Directly to the joint account of the borrowers operated by E or S.
2.5.5 PERIODICITY OF AVAILING LOAN
Monthly/quarterly payment or Lump sum payment.
2.5.6 QUANTUM OF LOAN
The loan amount would be 90% of the value of the property. The loan installment
payable to the borrower(s) would be as under for a loan amount of Rs. 1 lack (interest
calculated at 10.75% pea).
a) Loan tenor 10yrs 11yrs 12yrs 13yrs 14yrs 15yrs
b) Monthly installments 468 399 343 297 258 225

c) Quarterly installments 1423 1215 1045 905 787 687
d) Lump sum payments 34294 30813 27686 24876 22351 20083
TABLE 2.5.1
Qualifying loan amount (90% of property value) Rs. 9 laces
Tenor 15 yrs.
Monthly installment Rs.225 x 9 = Rs.2025
Quarterly installment Rs. 687 x 9 = Rs.6183
 Quantum of monthly installment/quarterly installments will change wherever
there is change in the rate of interest.
 SBM PENSIONERS (interest rate 10.25% pea)
a) Loan tenor 10yrs 11yrs 12yrs 13yrs 14yrs 15yrs
b) Monthly installments 481 412 355 308 269 236

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