Homeloans

EXECUTIVE SUMMARY
INTRODUCTION
Home is where the heart is - owning a home is a lifelong dream for most of the people. Home is
more or less a lifetime investment and hence home loans are an integral part of every person
who dreams and wants to have a living space of his own. Buying a home is probably the biggest
purchase most of us will ever make in our lifetimes. Owning our own home is a watershed event
in our life. You are the master (or mistress) of your own space, your little corner in the universe.
But the process of finding your little nest is a stressful one. A once in a lifetime investment
needs a loan and that is how a home loan comes into the scheme of things in your life.
Almost all public and private sector banks are offering home loans at attractive rates for
purchasing their dream home. Home loan usually cover a variety of types. All Banks have come
out with home loan products studded with features and value additions that make the schemes
not only attractive but also serve as a substantial source to the borrowers for owning their dream
home.
RATIONALE OF THE STUDY
The rationale of the study can be considered as follows:
• It helps to improve research ability.
• The study enables to enhance the knowledge base regarding home loans and its various
other aspects.
• It enables to think logically and practically.
• The study helps in development of skills of getting primary data.
• It leads to overall knowledge development
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HYPOTHESIS
The hypothesis being put forth for this study about home loans is that the awareness of home
loans is 100% but after the survey the conclusion can be put that there are still many people who
do not know about home loans. Banks are coming up with new innovative home loans schemes
for increasing their customer base.
RESEARCH METHODOLOGY
The research methodology is data collection through
• Primary Sources
• Secondary Sources
Primary Sources: Survey by distributing questionnaire to the people taking sample size of 100.
Interviews conducted with bankers.
Secondary Sources: Data collection through books, magazines, websites, journals, etc.
EXPECTED CONTRIBUTION
Expectations from the study are that it may contribute to the real scenario of home loans demand
and accordingly the banks can go for new innovative schemes. It will also specify some
recommendations and based on that banks can make suitable arrangements in a particular sector.
It will also make people aware about the various home loan schemes and its various procedures
and formalities.
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INTRODUCTION
Banking system in the world has emerged many centuries ago and in India it rooted its seed with
the existence of the General Bank of India in the year 1786. In earlier days banks were the
Financial Institutions dealing in day to day services i.e. accepting deposits and lending money.
But now it has spread its wings to various others sectors like it first started lending to big
business entities and has also entered into the retail banking sector i.e. it started lending for
purchasing car, for education, marriage and most importantly for purchasing a house.
To own a house is every man’s desire. But more than that, shelter is a basic human need next
only to food and clothing in importance. Yet every year more and more people continue to be
added to the category of homeless. Though a basic need of all a significant section of the society
is severely handicapped in getting shelter at affordable cost. This need for housing finance for
individuals was only fulfilled with the advent of National Housing Bank (NHB), Housing and
Urban Development Corporation (HUDCO), Housing Development Finance Corporation, etc
and most particularly with the entry of commercial banks in the housing finance sector.
In Tune with the conservative traditions in lending, commercial banks played a very limited role
in providing housing finance till the early seventies. However, now as per Reserve Bank
guidelines, housing finance is part of priority sector lending schemes for banks. There has been
progressive increase in housing finance disbursed by commercial banks since 1979.
The housing finance industry is getting increasingly commoditised. Competition within the
sector is ensuring that players offer consumers flexibility and features to choose from. Features
such as adjustable rate plans, lower processing fees/monthly rest/interest rates/EMI/margin
money, no prepayment penalty have become common across the industry. There is a growing
trend among Banks and FIs to include the cost of registration, stamp duty, society charges and
other associated costs while sanctioning loans to differentiate and make the home loans products
more attractive. This has resulted in further lowering the threshold limit for buying a house.
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TYPES OF LOANS
Loan refers to a sum of money borrowed at a particular interest rate. More generally, it refers to
anything given on condition of its return or repayment of its equivalent. A loan may be
acknowledged by a bond, a promissory note, or a mere oral promise to repay. Banks grants 3
types of loans which are as follows:
Commercial loans or Industrial loans, Consumer loans and Mortgage loans
1) Commercial loans: Commercial loans are mainly provided to the business and industrial
firms. These can be divided into:
• Short term loans: Short term loans are mainly given for a period up to 1 year and usually
granted to the business and industrial firms to meet the working capital requirements. For
e.g.: Cash credit, Bank overdraft etc. (loans to finance the purchase of material or labour)
• Long term loans: Long term loans are granted for a period above 5 years and are granted to
meet capital expenditure. For e.g. project finance, Education loan etc. (loans to purchase
machinery and equipments). Most commercial bank offers a variable interest rate on these
loans, which means that the interest rate can change over the course of loan. Sanction of loan
depends upon the credit and loan history of the borrower, the borrower ability to make
scheduled loan payment, the amount of capital the borrower has invested in the business, the
condition of the economy and the value of the collateral the borrower pledges to give the
bank if the loan payments are not made.
2) Consumer Loans: One of the important areas of bank financing in recent years is towards
purchase of consumer durables like TV sets, Washing Machines etc. Banks also provide
liberal car finance. These days banks are competing with one another to lend money for
these purposes as default of payment is not high in these areas as the borrowers are usually
salaried persons as default of payment is not high in these areas as the borrowers are usually
salaried persons having regular income. Further, bank’s interest rate is also higher. For e.g.
Housing Loan, Medical Loan, Car Loan, Education Loan.
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There are two types of consumer loans:
• Closed ended credit: Closed ended loan are for fixed period of time, fixed amount of loan,
but not for a fixed purpose. The items purchased by the consumer serve as collateral for the
loan.
• Open ended credit: Open ended loan are for variable amount of money and it does not
require the borrower to specify the purpose of the loan. For e.g. Credit cards. Most open
ended loans carry fixed interest rate and it requires no collateral but interest or other
penalties or fees may be charged. Open end credit interest rates usually exceed close end rate
because open end loans are not backed by collateral.
3) Mortgage loans:
These are usually long term loans and the interest rates charged can be either a variable or a
fixed rate for the term of the loan which often ranges from 15- 30 years. These loans are used to
purchase land or building such as household and factories which serves as the collateral for the
loan.
Classification of Loans:
Loans given by bankers can also be classified broadly into the following categories on the basis
of security:
1. Clean Loans: Advances for which are given on the personal security of the debtor, for
which no tangible or collateral security is taken; this type of given either when the amount of
the advance is very small, or when the borrower is known to the banker and banker has
complete confidence in him.
2. Secured Loans: Loans which are covered by tangible or collateral security. Bank provides
such loan against different types of securities which a banker may accept for such advances.
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INTRODUCTION TO HOME LOAN
The sun at home warms better than sun elsewhere.
True isn’t it, where else do you find that comfort that makes you feel so special everyday.
Undoubtedly owning a house is the most important phase in ones life. Not long ago, turning this
dream into a reality was a daunting task for the common man with property rates going north all
the time. But now, thanks to the proliferation of home loans and housing finance companies, one
can aspire to own a roof over one's head. Many think it is an expensive affair and beyond reach.
Well, that’s not always true. It takes a little planning and awareness to get to that home you want
to call your own.
Buying a home for the first time can be daunting to any person but in today’s time various banks
are lending a helping hand to the people to purchase their dream house. Thus people look
forward towards choosing a home loan. The primary concern of a housing finance company is to
determine the loan amount that the borrower is comfortably able to repay. The most popular
method of financing a home purchase is with a mortgage. This is a loan that is secured over the
home. There are a number of different mortgage suppliers and people will have to shop around
in order to get the best deal.
Home Loan is one of the fastest growing retail and mass banking area. It forms an important part
of the country’s priority in 5 year plans. Almost all public and private sector banks are offering
home loans at attractive rates for purchasing their dream home. Home loan usually cover a
variety of types. All Banks have come out with home loan products studded with features and
value additions that make the schemes not only attractive but also serve as a substantial source
to the borrowers for owning their dream home.
Banks as financial service providers aims at providing financial support from the banking
system to the needy for purchasing a home to the resident Indians as well as non-resident
Indians. The main emphasis is that every needy person is provided with an opportunity to pursue
home loan with the financial support from the banking system with affordable terms and
conditions.
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CHARACTERISTICS OF HOME LOAN
• Home Loans are the consumer loans.
• Home loans are long term loans provided by various banks.
• These are large amount loans which provide financial support to the people who want to
purchase their dream home.
• Home loans are secured loans.
• The borrowers get to own their dream home and pay for it in easy and affordable
installments.
• Banks and Financial Institutions offers home loans at cost-effective rates.
• Tax concessions make home loans more attractive than other loan products.
• The borrowers can get tax deduction on repayment of the principal amount of a loan taken to
buy or construct a house.
• The interest paid on a loan is deductible from 'income from property', even if it has not been
paid during the year.
• Interest paid on a new loan taken to repay the original housing loan is also allowed as
deduction.
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TYPES OF HOME LOANS
Lending institutions like banks offer different types of home loans for a wide gamut of housing
activities. Some of the popular home loans are:
Home Purchase Loans: There are the basic home loans for the purchase of a new home.
Home Improvement Loans: These loans are given for implementing repair works and
renovations in a home that has already been purchased by the borrower.
Home Construction Loans: These loans are available for the construction of a new home.
Home Extension Loans: These are given for expanding or extending an existing home. For
example addition of an extra room, etc.
Land Purchase Loans: These loans are available for purchase of land for both home
construction or investment purposes.
Bridge Loans: Bridge Loans are designed for people who wish to sell the existing home and
purchase another. The bridge loan helps finance the new home, until a buyer is found for the old
home.
Balance Transfer: Balance Transfer loans help the borrower to pay off an existing home loan
and avail the option of a loan with a lower rate of interest.
Refinance Loans: These loans helps to pay off the debt the borrower have incurred from private
sources such as relatives and friends, for the purchase of your present home.
Home Conversion Loans: These loans are for those people who have financed the present
home with a home loan and wishes to purchase/move to another home for which some extra
finances are required. In Home Conversion Loan, the existing loan is transferred to new home
including the extra amount required, eliminating need for pre-payment of the previous loan.
Stamp Duty Loans: These loans are sanctioned to pay the stamp duty amount that needs to be
paid on the purchase of property.
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Loans to NRIs: These loans are given to the NRI’s to build/buy a home in India. EMI is
payable till the loan is paid back in full. It consists of a portion of the interest as well as the
principal.
BENEFITS OF HOME LOANS TO BORROWERS
Food, clothing, shelter -- these are the basic needs of every individual. But to most, owning a
home is just a dream. The real estate boom and steadily rising capital values are now making it
next to impossible for most people to fund their own homes. Banks and financial institutions are
offering aggressively competitive rates on home loans, making it possible for more people to
own the home of their dreams. Many builders have tie-ups with banks or financial institutions so
that prospective buyers are assured of housing loans without any hassles. Taking a home loan
serves two purposes. One, of course, is that the borrower gets to buy his/her own home and pay
for it in easy installments. The other is that the borrowers get several benefits under the Income
Tax Act.
TAX BENEFITS
1) For Resident Indians
There are certain tax benefits for the resident Indians based on the principal and interest
component of a loan under the Income Tax Act, 1961. It may help one get tax benefit up to Rs.
50,490 p.a. (approx) if interest repayment of Rs. 1, 50,000 p.a. is paid. In addition to this, one
also is eligible for getting tax benefits under section 80C on repayment of Rs. 1, 00,000 p.a. that
further reduces the tax liability by Rs.33.660 p.a.
These deductions are available to assesses, who have taken a loan to either buy or build a house,
under Section 24(b). However, interest on borrowed capital is deductible up to Rs. 150,000 if the
following conditions are fulfilled:
• Capital is borrowed for acquiring or constructing a property on or after April 1, 1999.
• The acquisition and construction should be completed within 3 years from the end of the
financial year in which capital was borrowed.
• The person, extending the loan, certifies that such interest is payable in respect of the amount
advanced for acquisition or construction of the house.
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• A loan for refinance of the principle amount outstanding under an earlier loan taken for such
acquisition or construction.
If the conditions stated above are not fulfilled, then the interest on borrowed capital is deductible
up to Rs 30,000 though the following conditions have to be satisfied:
• Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction repairs or
renewal of a house property.
• Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or renewals
of a house property.
• If the capital is borrowed on or after April 1, 1999, but construction is not completed within
3 years from the end of the year, in which capital is borrowed.
In addition to the above, principal repayment of the loan/capital borrowed is eligible for a
deduction of up to Rs 100,000 under Section 80C from assessment year 2006-07.
Terms and conditions for availing Tax benefits on Home Loans
1. Tax deductions can be claimed on housing loan interest payments, subject to an upper limit
of Rs 150,000 for a financial year.
2. An additional loan for extension/improvement to the same house and the individual's
deductions on the existing loan are less than Rs 150,000; he can claim further benefits from
the additional loan taken, subject to the upper limit of Rs 150,000 for a financial year.
3. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can
be claimed only when the payment is made. If an individual fails to make EMI payments, he
cannot claim tax benefits for the same.
4. According to the Income Tax Act, tax rebates can only be claimed by the loan applicant.
5. The interest on home loans taken for repairs, renewals or reconstruction, also qualifies for
the deduction of Rs 150,000.
6. A husband and wife, both of whom are tax-payers with independent income sources, get tax
deduction benefits, with respect to the same housing loan; to the extent of the amount of loan
taken in their own respective name.
7. If an individual buys a house and sells it within the same year or after 3 years, and if any
profit is made, then a capital gains tax liability arises on the same for which the individual is
liable to pay short-term capital gains tax since the sale took place in the same year. But in
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case, if the sale had taken place after 3 years, then a long-term capital gains tax liability
would have arisen.
8. On being proved that the home loan is simply an arrangement between the loan-seeker and
the builder or with a third party for the purpose of claiming tax benefits, then tax benefits
will not be allowed and benefits, previously claimed, will be clubbed to the income and
taxed accordingly.
Tax benefits on interest on housing loans are allowable only for the original loan and according
to Section 24 (1), tax benefits can also be availed for a second loan taken to repay the first loan
but not for subsequent loans. This means that if the borrower have already availed of one loan to
refinance the original loan and want to now avail a third loan to refinance the second loan, tax
rebate on interest payments will not be permissible.
2) For Non- Resident Indians
NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation
where they work and earn. Moreover, the borrowers need to file tax returns to become eligible
for home loans. However, if they pay tax in India for income earned in India, they can claim tax
rebate for the home loan.
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STEPS IN PLANNING FOR A HOME LOAN
A) PURPOSE
The first step in planning for a home loan is to find out the purpose for which one is planning to
take the loan. Depending on the borrowers requirements, home loans can be taken for a variety
of purposes such as to purchase a new home, to implement repair works and renovations in a
home that has already been purchased by the borrower, to construct a new home, for expanding
or extending an existing home, to purchase land for both home construction or investment
purposes, etc. Hence finding out the purpose of the loan is the first and foremost step in planning
for a home loan.
B) SELECTION OF A PARTICULAR HOME LOAN
The selection of a particular home loan depends on the affordability position of the borrower.
What kind of home one can afford is, more often than not, a function of how much/the
maximum one can borrow?
How much one can afford/ the maximum one can borrow: Banks follow a thumb rule while
deciding the maximum a person can borrow: the monthly repayment on the loan should not be
more than 40 per cent of the net monthly income. This ratio is called the Income to Installment
ratio or IIR. Some lenders may even be more conservative. One could expect to be allowed to
borrow an even lower figure if they consider an IIR of as low as 30 per cent of the net monthly
income. They finance a certain portion of the property value, typically 75-85 per cent. The rest is
the borrowers’ contribution, usually called the down payment or the margin, and has to come out
of his (borrower’s) own resources.
Down payment: Another important determinant of the value of the house one can afford is how
much the borrower has saved up. Since banks only finance between 75 and 85 per cent of the
property value, effectively the down payment can determine the value of the home that one can
go for. Of course, this is subject to the limit on how much one can repay every month, as
determined by the IIR.
C) FINDING OUT COST OF THE HOUSE
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Buying a home involves many financial considerations. Some home buying expenses are one-
time costs and others are ongoing commitments. In addition, there are other costs that the
borrowers should take into consideration in calculating the cost of the house. Below is a
checklist of additional expenses that the borrowers need to keep in mind when purchasing a
home.
Home buying costs
The Down Payment: A minimum down payment of 15% is required for a Normal Housing
loan. The government offers Tax incentives for homebuyers.
The Payment: A Home Loan Security is security for a loan on the property the borrower own.
It is repaid in regular monthly payments which are combined payments. This means that the
payment includes the principal (amount borrowed) plus the interest (the charge for borrowing
money).
Checklist of Additional Expenses: Additional expenses need to be incurred after one has
moved in.
Maintenance costs: These costs are incurred to cover the costs of anticipated or unexpected
repairs or replacement of such things as the painting or household appliances.
Renovation and repairs costs: These costs are incurred in cases where the need arises to repair
the house. A home inspection may indicate that the home needs major structural repairs.
Property taxes: Property taxes are always a certainty and needs to be taken into account when
one plans to purchase a home.
Property insurance: It is imperative for the borrowers to take insurance of the house they plan
to purchase. Additional expenses go into insuring the house like premium expenses, legal
expenses, etc.
Service charges: This includes the service charges levied by the banks and financial institutions
for processing the loan application.
Lawyer (notary) fees: Even a straightforward home purchase requires a lawyer to review the
Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details.
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Lawyers fees for a Housing loan and purchase range widely depending on the complexity of the
deal but will probably be at least Rs.500.
Moving costs: This refers to the expenses incurred when one moves from one home to another
for example expenses incurred for hiring a truck..
Other Costs: This is a list of possible extra costs involved in buying a home. Some of them are
one-time costs and others, such as maintenance fees and property insurance, will be ongoing
monthly expenses.
D) SELECTION OF THE MOST SUITABLE BANK
Choosing the most suitable bank is a crucial stage in the home loan process. It is imperative to
choose the financer with utmost care and proper consideration of its past track record since the
customer is entering in a long-term relationship with the bank when he takes a home loan.
After finding out the cost of the house, one must compare banks on the basis of cost to see
which loan is the cheapest. Besides cost factors, though, there are some other factors that one
need to consider. Evaluation of the lenders can be done on the basis of the following factors:
Rate of interest: This is where it all begins. Although the rate of interest offered by most banks
is more or less the same on paper, some degree of bargaining in most cases, leads to a lowering
of rates by as much as 0.25 to 0.50 percentage points and more so if the borrowers profile
happens to match the requirements of the bank. The lowering of interest rate has a significant
impact over the long term although the difference is not so noticeable over the near term. Care
needs to be taken to ensure that the difference is not being offset elsewhere by the bank under
the guise of other `charges'.
Total financing cost: This measure quantifies what the loan really costs. It not only
incorporates interest cost but also combines the other costs such as processing fees and other
administrative charges collected by lenders upfront. Looking for a bank not just with the lowest
interest rate but the lowest total financing cost can help one in opting for the best deals.
National presence: The bank should be present across the country or at least have branches in
all major metros and towns. This assumes importance if the current job of an individual is of a
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transferable nature (e.g. bank jobs, defence personnel) or if he needs to make long and frequent
outstation visits (e.g. consultants, businessmen). The individual shouldn't be put through the
hassle of couriering his cheques to the resident branch every time or contacting the resident
branch each time he has a difficulty or a query. So it helps if the bank is well networked across
the country.
Prepayment/Foreclosure benefits: For many individuals, this plays a significant role in their
decision to go in for a particular bank. For example, many salaried individuals know for a fact
that their salaries would be revised every year. This means that they can pay a higher EMI going
forward. Some of these individuals also know that they would be getting a bonus, which they
can utilise to pay off their home loan (either fully or partly). Some banks do not charge
individuals for making a prepayment/foreclosing his account. Obviously such bank should get
preference over other banks that do levy a prepayment charge.
Calculation of the exact home loan amount: Here the banks differ in their calculation of the
loan amount to be disbursed. Some banks calculate the amount to be disbursed on the basis of,
say, the gross salary while some banks calculate it on the net salary. This might make a
difference to individuals as the loan amount and the EMI will vary across banks. One needs to
look into this and get a comparative analysis done across banks to understand which bank offers
the best deal to the borrower.
Extent of funding: Some banks fund only 60 to 75 per cent of the property value, while others
fund higher amounts. If the amount of down payment one have saved up is not enough, this
factor may tilt one lender's loan in ones’ favour.
Flexibility of repayment plans. Some banks offers flexibility in terms of repayment. They
could have either have 'Step-up' plans in which the EMI is stepped up as the tenure increases
(suitable for young borrowers just starting their careers) or repayment plans that allow the
borrower to load payments upfront (suitable for borrowers who are close to retirement). Also,
some banks allow borrowers to fix the monthly payment themselves, especially when they take a
loan far lower than what they are eligible for and where repayments are very comfortable. In
such a case, the borrower himself can fix the loan tenure. If the profile fits one of these cases,
one can consider a bank who allows such flexibility.
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Property characteristics: Some banks are wary about financing flats that are old (more than 30
years). So it is important to check whether the bank will finance such a property. Also, very few
banks lend against properties that are sold by holders of power of attorney on a property, rather
than owners.
Collateral: Housing loans are already backed by collateral - the house being financed. In
addition to this, some banks ask for collateral such as life insurance policies and fixed deposits.
Since there are banks who will not ask for such collateral and it is not particularly necessary to
cough up extra collateral, especially if the credit is good, one can look for a bank that does not
ask for such collateral.
Service: Some banks offer some extra services that make the loan process a whole lot easier.
They come to the applicant’s home and get the application form filled by him; they drop the
disbursed check to the home or office of the borrower. When there is a tie-up with the employer
of the borrower, the process becomes a whole lot easier.
Other factors: Other factors like documentation, processing fees, document storage facilities
and several other factors can be considered. It is also important to consider the time taken to
process the loan as well as special deals that a particular bank may have with a real-estate
developer. For example, individuals do not like it if the documentation is an irksome process or
if the processing fees are exorbitant.
E) FOLLOW UP WITH BANK’S PROCEEDS
After the application is submitted along with all supporting documents, the loan officer conducts
a formal interview where he assesses the creditworthiness of the applicant and his repayment
capability, based on the information provided in the form and the applicant’s explanations
during the interview.
The lender then conducts a credit evaluation of the applicant, which also factors in the property
valuation report from an independent valuer appointed by the lender himself. If the loan officer
has some queries, more documents and more explanations may be needed. Based on the finding
of the credit evaluation, a loan amount is determined and sanctioned. A sanction letter is then
sent to the applicant who generally contains a disbursal plan.
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POINTS TO REMEMBER ABOUT A HOME LOAN
1) The monthly installment or the EMI. The housing loan is normally repaid by a monthly
installment. Usually the monthly installment is an EMI (equated monthly installment), an equal
amount that, if paid every month over the tenure of the loan, results in fully paying off the loan
taken. Part of the monthly installment is interest (calculated at the loan interest rate on the
principal outstanding for that month) and the remaining part is accounted for as principal repaid.
Principal repaid in the previous month is reduced from outstanding principal amount every
month. Interest is calculated in the above fashion on reducing principal. At the end of the loan
tenure, the principal reduces to zero.
2) The loan tenure: Longer repayment tenure would mean more interest payments on the loan.
Before one sets out to complete the paperwork for a loan, the calculation of the Equated
Monthly Installments (EMI) is important to know how much one is expected to pay and whether
the borrower have the capacity to pay that in time.
3) How is the net monthly income calculated: For a salaried individual, the net monthly
income is calculated as salary minus all the statutory deductions. Statutory deductions are items
like insurance premiums, tax deductions, PF contributions, which have to be deducted from the
salary of an individual. In case of self-employed person lenders look for cash earnings.
Therefore, they add a portion of the depreciation claimed by the applicant to the applicant’s
annual net profit. This, divided by 12, gives the net monthly income for a self-employed person.
Not all lenders consider depreciation, though. So the loan amount may be less than what one
thought it would be if the lender does not consider depreciation in the computation of net annual
income.
4) Monthly/Annual repayments: It is important to know whether interest is being calculated on
monthly rests or annual rests. The reason is that the borrower pays more as interest over the
years in case of annual rests as compared to monthly rests, even if the interest rate is the same.
How does this happen? The answer lies in a small but important difference in the manner in
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which principal repaid by the borrower as part of the monthly installment is accounted for by the
bank.
In case of monthly rests, principal repaid in the previous month is reduced from the outstanding
principal amount every month. Interest is calculated in the above fashion on reducing principal.
On the other hand, in case of annual rests of principal, principal repayment every month is not
accounted for at the end of every month but only credited at the end of the year. This results in
more payment of interest by the borrower.
If one bank quotes interest on annual rests basis and another quotes on monthly rests basis, even
if the interest rate is the same, effectively, the annual rests rate in monthly reducing terms would
be higher. So when banks give a rate of interest asking them the method of computation would
be helpful.
5) Fixed or floating rate of interest: The borrowers are often faced with a choice between
whether the loan should be at a fixed rate or a floating rate. There are advantages to both. A
fixed rate loan means that one will have certainty of payments and even if interest rates rise in
the future the borrower will still be paying the older, lower rate. The right time to pick a fixed
rate loan is at the bottom of the interest rate cycle form where it looks like the rates have only
one way to go. And that is up. On the other hand, the right time to pick a floating rate is when
interest rates are at their highest and the interest rates look like they are on their way down.
6) Total financing costs: Apart from knowing how the interest rate is calculated, it is important
to understand the impact of processing and administrative costs on the loan cost. They add to the
costs as they have to be paid upfront. The total financing cost determines what the loan really
costs the borrower. Hence, a thorough study of the total costs is important.
7) Co-applicant: Sometimes the income of the borrower may not be enough to secure the loan
amount required by him. In that case, one can consider applying for the loan with a co-applicant.
Clubbing a co-applicant’s income and applying jointly can help get one a higher loan amount.
When property is jointly owned, most banks insist that joint owners have to be co-applicants for
a loan against such a property. Also sometimes, the loan officer might have a view that the
borrower doesn’t have much of a chance of getting the desired loan on his own strength and also
is not convinced of the regularity and sustainability of the applicant’s income. In that case,
clubbing a co-applicant’s income might just put that loan within one’s reach.
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8) Tax advantages: A housing loan comes with some tax benefits. These benefits further
reduce the cost of the borrowing. There are two heads under which a borrower can claim tax
benefits. One is an exemption for interest paid on a housing loan. This exemption is available up
to an interest paid of Rs 1 lakh per year. And the other is a 20 per cent rebate on principal repaid
in the year subject to a maximum rebate of Rs 4,000. That is, a 20 per cent rebate is available on
a maximum principal repaid of Rs 20,000.
9) Identification of the property: It is not always necessary for the property to be identified the
application process for the loan starts. In fact, both the processes can be conducted
simultaneously. When the borrower is clear about the value of the property to be financed and
have zeroed in on the bank, he can get a pre-approval on the loan. The loan pre-approval is a
process where the bank conducts the credit evaluation and sanctions a loan amount for which the
borrower is eligible. The sanction is generally valid for six months, during which period the
borrower has to identify the property and execute the property documents; the payment will be
released after this. Pre-approval saves time and improves the bargaining position with the seller.
10) Pre-payment dilemma: If the borrower decides to repay the loan before the stipulated
period, he will be pre-paying the loan. Few banks charge a 0.5-2% of the amount the borrower is
pre-paying as pre-payment penalty. Some banks don't have a pre-payment penalty provided the
borrower is not paying off the entire loan amount. That means when the loan is pre paid partly;
there may not be any penalty or charges. Therefore it is advisable to borrow from a bank
wherever the pre-payment clause or Loan Redemption charge is not harsh.
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TIPS WHILE BUYING A HOME
Buying a home is a dream of a lifetime for most of the people. Before applying for a home loan,
here are some tips that will be helpful when the borrowers are looking for a house of their own.
1) While buying a flat from a promoter or builder
a) With respect to the location
i. A proper check should be done for proper approach roads.
ii. One should ensure secured electricity and water connections
iii. Ensuring that well laid out drainage, sewerage and garbage disposal arrangements have been
made.
iv. Checking out whether there is any pollution due to industries etc. in the area
v. finding out the level of developmental activities of the area - adequate public transport
facilities and other vital amenities like educational institutions, hospitals and shopping avenues
b) With respect to approvals
i. One should check if the builder/promoter has been granted documented approvals from
Municipal Corporation, Area Development Authorities, Electricity Boards, Water Supply &
Sewerage Boards, Airport Area Authorities, etc
ii. Checking out if the builder/promoter has secured approvals from Pollution Control Boards,
Agriculture & Forest Authorities
c) With respect to the property
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i. Checking out for proper Development Agreements and the authority for conveyance of title in
favour of builder/promoter
ii. Obtaining a clear and marketable title of the property
iii. Ensuring execution of proper sale agreements on the initial payments
iv. Having a look at the sanctioned plan
v. Registration of the property
vi. Verification of the plinth and carpet area of the property
d) With respect to amenities
i. Verification of the specifications given by the builder regarding including quality of
construction and availability of drinking and potable water have been delivered
ii. Assessment of the natural lighting, ventilation, water connection & sanitary connection status
of the prospective property
iii. Checking up the common service area charged and their reasonability
2) While buying a flat from a second owner
i. Checking for proper approach roads
ii. Checking for electricity and municipal water connections
iii. Finding out whether well laid out drainage, sewerage and garbage disposal arrangements are
made
iv. Finding out whether there is pollution due to industries etc in the area
v. Checking for the developmental activities of the area
vi. Public transport facilities in the area
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vii. Checking for educational institutions, hospitals, shopping avenues nearby, green belts &
rainwater drainage
Documented approvals from City Corporation, Area Development Authorities, Electricity
Boards, and Water Supply & Sewerage Boards
i. Title deeds of the vendor of the property
ii. Previous title deeds covering a period of 13 years
iii. Sanctioned plan
iv. Encumbrance certificate for the past 13 years
v. Upto-date tax paid receipts
vi. Valuation of the property from a registered valuer
vii. Checking out if the flat/apartment is free from tenancy
viii. Registration of the property
i. Checking for the condition of the building and the future life expectancy
ii. Finding out whether drinking water is available
iii. Checking for natural lighting, ventilation, water connection & sanitary connection
3) While buying an independent house from a promoter/ builder
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i. Checking for proper approach roads
ii. Checking for electricity connections
iii. Finding out whether municipal water connections are present
iv. Finding out whether there is well laid out drainage, sewerage and garbage disposal
arrangement made
v. Finding out whether there is pollution due to industries etc in the area
vi. Checking for the developmental activities of the area
vii. Finding out the availability of public transport facilities in the area
viii. Check for educational institutions, hospitals, shopping avenues nearby, green belts &
rainwater drainage
Checking out if necessary approvals from City Corporation, Area Development Authorities,
Electricity Boards, Water Supply & Sewerage Boards, and Airport Area Authorities have been
obtained
i. Sale deed of the vendor of the property
ii. Clear & marketable title of the property
iii. Sanctioned plan
iv. Encumbrance certificate for the past 13 years
v. Upto-date tax paid receipts
vi. Valuation of the property from a registered valuer
vii. Registration of the property
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viii. Checking out the plinth area and the carpet area of the apartment
ix. Ensuring that the price being paid for the flat, including the common service area is
reasonable
i. Checking for the condition of the building and the future life expectancy
ii. Finding out whether drinking water is available
iii. Checking for natural lighting, ventilation, water connection & sanitary connection
24

FAIR PRACTICES CODE TO BE FOLLOWED BY BANKERS
WHILE GIVING HOME LOANS
With a view to setting out fair lending practices in a transparent manner, the RBI has advised
Banks and Financial Institutions (FIs) to adopt the following as Lenders’ Fair Practices Code.
The Fair Practices code applies to the following areas:
A) Applications for loans and their processing
1) Standard schedule of fee/ charges relating to the loan application depending on the segment to
which the accounts belong should be made available to all the prospective borrowers in a
transparent manner, along with the loan application, irrespective of the loan amount. Likewise,
amount of fee refundable in the event of non-acceptance of the application, prepayment options
and any other matter which affects the interest of the borrower should also be made known to
the borrower at the time of application.
2) Receipt of completed application should be duly acknowledged.
3) The acknowledgement should also include the approximate date by which the applicant
should call on the Bank for preliminary discussions, if deemed necessary.
4) All loan applications will be disposed of within a stipulated period from the date of receipt of
duly completed loan applications i.e. with all the requisite information/papers.
5) In case of rejection of loan application, irrespective of category of loans or threshold limits,
the same should be conveyed in writing along with the main reason(s), which led to rejection of
the loan application. The time frame for conveying the reason/s of rejection should be as per the
Schedules.
B) Loan appraisal and terms/conditions
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1) In accordance with Bank’s prescribed risk based assessment procedures, each loan application
should be assessed and suitable margin/securities should be stipulated based on such risk
assessment and Bank’s extant guidelines, however without compromising on due diligence.
2) The sanction of credit limit along with the terms and conditions thereof is to be conveyed to
the loan applicant in writing and applicant’s acceptance of such terms and conditions should be
obtained in writing. Such terms and conditions as have been mutually agreed upon between the
bank and borrower prior to the sanction will only be stipulated.
3) Copy of loan documents, along with a copy of all relevant enclosures should be made
available to the loan applicant on specific request. Standard sanction letter would include
instances of approval, disallowance, etc. The bank is under no legal obligation to consider
increase/additional limits/facilities without proper review/assessment.
4) In case of lending under consortium arrangement, the participating banks would decide the
timeframe to complete appraisal of the proposal and communication of the decision. The Bank
will abide by the decision of the consortium.
C) Disbursement of loans including changes in terms and conditions
1) Disbursement of loans sanctioned is to be made immediately on total compliance of terms and
conditions including execution of loan documents governing such sanction.
2) Any change in terms and conditions, including interest rate and service charges, should be
informed individually to the borrowers in case of account specific changes and in case of others
by Public Notice/display on Notice Board at the branches/on the Bank’s website/through Print
and or other Media from time to time.
3) Changes in interest rates and service charges should be effected prospectively.
4) Consequent upon such changes any supplemental deeds, documents or writings are required
to be executed, the same shall also be advised. Further, availability of facility will be subject to
execution of such deeds, documents or writings.
D) Post disbursement supervision
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1) Post disbursement supervision by Banks/ FIs, particularly in respect of loans upto Rs. 2 lacs,
should be constructive with a view to taking care of any genuine difficulties that the borrower
may face.
2) Before taking a decision to recall/accelerate payment or performance under the agreement or
seeking additional securities the Lenders should give reasonable notice to the borrower.
3) All securities pertaining to the loan should be released by Banks/ FIs on receipt of full and
final payment of the loans subject to any legitimate right or lien and set off for any other claim
that the Bank/ Financial Institution may have against the borrowers. If such right is to be
exercised, borrowers should be given due and proper notice with requisite details.
E) Other general guidelines
1) The Banks/ FIs should refrain from interference in the affairs of the borrower except for what
is provided in the terms and conditions of loan sanction documents (unless new information, not
earlier disclosed by the borrower, has come to the notice of the Bank as lender). However this
does not imply that Bank’s right of recovery and enforcement of security under Law as well as
appointment of nominee directors, where required, is affected by this commitment.
2) While lending Banks/ FIs should not discriminate on the grounds of gender, caste or religion
in its lending policy and activity.
3) In the case of recovery, Banks/ FIs should resort to the usual measures as per laid down
guidelines and extant provisions and should operate within the legal framework.
4) For the purpose of recovering loans, Banks/ FIs should have a Model Policy on Code for
Collection of Dues and Repossession of Security. They should not resort to undue harassment
viz. persistently bothering the borrowers at odd hours, use of muscle power, etc.
5) In case of request for transfer of borrowal accounts, either from the borrower or from a
Bank/FI, the Bank’s consent or otherwise should be conveyed within a stipulated period from
the date of receipt of request.
6) The Branch Officials should immediately take up the matter for redressal in case of any
complaint/grievance from the applicant/borrowers.
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7) In case of complaints received, the branch should take into consideration the matter with full
details within a stipulated period from date of receipt and take all necessary steps to redress and
resolve the grievance/dispute within a proper time frame.
COMMITMENTS AND RESPONSIBILITIES ON THE PART OF
THE BANKERS
1. The banks/ FIs should assure that they shall act fairly and reasonably in all their dealings
with the customers on ethical principles of integrity and transparency in respect of services
they offer, and in the procedures and practices their staff follow and make sure the products
and services meet relevant laws and regulations.
2. The banks/ FIs shall help the borrowers to understand how the financial products and
services work by giving information about them. They shall also provide the operational
guidelines for Govt. accounts like PPF / pension etc. The salient features of the products /
services including the financial implications should be highlighted in the product profile.
3. Before people becomes a customer, the banks/ FIs shall give clear information explaining
the key features of the services and products which the people are interested in and give the
information on any type of account facility which they have to offer.
4. The banks/ FIs shall tell the customers what information they need from the borrowers,
before opening any deposit a/c, to prove their identity and address and to comply with legal
and regulatory requirements, and request for additional information about them, their
business/ profession and their family. The Bank before opening any deposit account shall
carry out due diligence as required under "Know Your Customer" (KYC) guidelines issued
by RBI and or such other norms or procedures adopted by the Bank. This will involve
satisfying about the identity of the person, verification of address, satisfying about his
occupation and source of income, obtaining introduction of the prospective depositor from a
person acceptable to the Bank and obtaining recent photograph of the person/s opening /
operating the account. In addition to the due diligence requirements, under KYC norms the
Bank is required by law to obtain Permanent Account Number (PAN) or General Index
Register (GIR) Number or alternatively declaration in Form No. 60 or 61 as specified under
the Income Tax Act / Rules.
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If the decision to open an account of a prospective depositor requires clearance at a higher level,
reasons for any delay in opening of the account shall be informed and the final decision of the
Bank shall be conveyed at the earliest.
5. The banks/ FIs shall give upfront details of any interest and/ or charges applicable to the
products chosen by the borrowers.
6. The banks/ FIs shall seek specific consent of the borrowers for giving details of their names,
addressess etc. to any third party including other entities in their group, for marketing
purposes.
7. The banks/ FIs shall make sure that all advertising and promotional material is clear, fair,
reasonable and not misleading.
8. To help manage their account and check entries on it, the banks/ FIs shall give the borrowers
their account statements at regular intervals or Pass Book for the type of account they have.
9. The banks/ FIs shall tell the borrowers about the clearing cycle, including when they can
withdraw their money after lodging collection instruments and when they will start earning
interest.
10. The banks/ FIs shall keep original cheques paid from the customer’s account or copies, for
such periods as required by law. If, within a reasonable period after the entry has been made
on their statement, there is a dispute about a cheque paid from their account, the lenders/
financial institutions shall provide the customers with the necessary information for evidence
-subject to a possible charge for the same.
11. In the event the cheque book, passbook or ATM/Debit card has been lost or stolen, or that
someone else knows the customer’s PIN (Personal Identification Number) or other security
information, the banks/ FIs shall, on notification, take immediate steps to try to prevent
these from being misused.
12. The customer information collected from the customers shall not be used for cross selling of
services or products among the banks, their subsidiaries or affiliates. The banks/ FIs shall
treat all the personal information of their customers as private and confidential (even when
they are no longer their customer), including entities in their group, other than in the
following four exceptional circumstances for which the banks/ FIs are permitted to do so :-
a. If they (i.e. the banks/ FIs) have to give the information by law.
b. If there is a duty to the public to reveal the information in the interest of the public at large.
29

c. If their interests require them to give the information (for example, to prevent fraud) but the
banks/ FIs shall not use this as a reason for giving information about its customers or their
accounts (including their name and address) to anyone else, including other companies in
their group, for marketing purposes.
d. If the customers asks the banks/ FIs to reveal the information, or if the banks/ FIs have the
customers’ permission to provide such information to their group/ associate/ entities or
companies when the lenders/ financial institutions have tie-up arrangements for providing
other financial service products.
PROCEDURE OF HOME LOAN
30

Home loan procedure caters to processes right from the time the customer walks into the bank
with a request for home loan till the time the loan is finally repaid by the customer. The three
major phases in the home loan procedure are the information acquisition, credit appraisal and
sanction, and disbursement. Tracking the performance of the process is an underlying phase that
runs across the application processing cycle and is critical for monitoring and profitability for
the Bank/ Financial Institution.
The procedure for availing a home loan can be explained with the help of the following flow
chart:
A. Submission of application form: The application is submitted along with photographs,
credit documents and a cheque for processing, documentation and administration fees by the
Submission of application form
Personal Discussion with customer
Field Investigation by the bank/FI
Credit Appraisal and loan sanction
Issue of offer letter to the customer
Submission of property / legal documents
Legal check on the property by the bank
Technical check on the property by the bank
Disbursement
Repayment
Interest tax certificate
Prepayment by the customer
31

customer. The credit documents comprise documents to establish income, age, residence,
employment, investments, etc. During this stage, the bank/financial institution checks the
repayment capacity of the customer. The repayment capacity is determined by taking into
consideration factors such as income, age, qualifications, number of dependants, spouse's
income, assets, liabilities, stability and continuity of occupation and savings history.
B. Personal Discussion with customer: Some banks/FIs require the customer be present at the
time of the credit appraisal. Some banks/FIs may insist on a personal interview with the customer
and perform a reference check on the references provided by the customer on the application
form. For the personal discussion the customer needs to take with him all documents pertaining
to the information provided by him on the application form.
C. Field Investigation by the bank/FI: The bank/FI validates information
provided by the customer on the application form. This stage revolves around two key aspects.
Critically appraising the credit worthiness of the customer and analyzing the risk in lending. It is
necessary to capture all the information required to cater to these aspects. It is important to
verify that the information supplied by the customer is correct and authentic. Banks achieve this
mostly through external agencies. Also the validity and authenticity of information can be done
through conducting checks on the residential address of the customer, the place of employment
of the customer, and credentials of the employer, verification of documentary proofs of income,
age and other information. To minimize the risk, it is necessary to check that the customer is not
a fraud or black listed within the bank or other institutions.
D. Credit Appraisal and loan sanction: The next phase in the home loan process is the credit
appraisal and loan sanction. After checking the customer's repayment capacity, the bank/FI sets
norms that define the customer's eligibility for a loan amount. The loan then gets sanctioned
along with certain terms and conditions. When evaluating the measurable aspects of home loan
requests, an analyst addresses the following issues: the character of the borrower, the use of loan
proceeds, the amount needed, and the primary and secondary sources of repayment. Therefore,
the bank has to base its decisions more on qualitative parameters rather than quantitative aspects.
Credit analysis therefore is distinct for each type of home loan scheme. Credit analysis is the
most popular methods of evaluating home loans.
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D. Issue of offer letter to the customer: The bank/FI sends an offer letter to
the customer with the loan sanction details which mention:
• Loan amount
• Rate of interest and whether it is fixed / variable rate of interest. If variable, period after
which the rate of interest would be reset - annual / monthly reducing balance
• Loan duration
• Mode of loan repayment
• Scheme of the loan, if a special scheme has been offered to the customer
• General terms and conditions of the loan
• Special conditions, if any, which the customer needs to adhere to prior to disbursement
• Submission of the acceptance copy of the offer letter and a cheque for administrative fees by
the customer
F. Submission of property / legal documents by the customer to the bank/FI: After the
selection of the property, the customer is required to submit the original documents pertaining to
the property being purchased or mortgaged (if the property purchased is different from the
property mortgaged). The bank/FI keeps the property documents as security for the loan amount
given to the customer till the time the loan is fully repaid.
G. Legal check on the property by the bank: The bank/FI sends all the documents to their
empanelled lawyer for a thorough scrutiny. On receiving the lawyer's report that the documents
are clear, the bank/FI decides to disburse the loan to the customer. If the documents sent to the
lawyer are not enough to arrive at a judgment, the bank/FI requests the customer to furnish
additional documents.
H. Technical check on the property by the bank/financial institution: Prior to disbursement,
the bank/FI conduct a site visit to the customer's property to verify the following:
In case of under construction property:
• Quality of construction
• Stage of construction: Whether it is the same as mentioned in the payment notice given to
the customer by the builder
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• Progress of work
• Layout of flats and area of property is within permission granted by the governing authority
• Requisite certificates have been received by the builder to start construction at the site
In case of ready construction/ resale:
• Age of the structure
• Quality of construction
• Whether the structure will last the tenure of the loan
• External maintenance of the property
• Internal maintenance of the property
• Surrounding area (development)
• Required certificates from the governing authority have been received by the builder for
handing over possession of the flat
• There is no existing lien or mortgage on the property
I. Disbursement: After verifying that the property is legally and technically clear, the bank/FI
disburses the loan amount on the basis of the stage of construction of the property. The customer
needs to pay the margin money from his own contribution prior to the disbursement.
J. Repayment: The repayment of the loan by the customer starts only after the full
disbursement of the loan amount has been made by the bank/FI. The loan is always repaid by
way of EMIs. The mode of repayment, however, differs from case to case. In case of a loan
repayment done through Deduction Against Salary (DAS), Post Dated Cheques (PDCs),
Standing Instructions (SI) and cash / Demand Draft (accepted only by some banks/FIs). The
customer can deposit the amount of his EMI every month at the bank/FI’s office.
K. Interest tax certificate: This certificate is given by the bank/FI to the customer to avail of
tax benefits that accrue through a home loan. The customer can submit this to his employer or
Chartered Accountant to account it while calculating the customer's tax liability.
L. Prepayment by the customer: The customer can either partly or fully prepay his loan at any
given point of time. The loan could be partly or fully disbursed when the customer wishes to
34

prepay his loan. Most banks/FIs, however, have a limit on the number of times that a person can
prepay his loan. There is, normally, also a minimum amount that a customer has to prepay each
time he wishes to do so. Whenever a customer makes a prepayment, the customer has an option
of reducing his EMI by keeping his tenure constant or to reduce his tenure by keeping the EMI
constant.
35

PARAMETERS IN RELATION TO HOME LOANS
Home loans are an important means of social mobility. Under home loans, the eligibility criteria,
documentation, interest rates, quantum of loan, margin requirement, security, repayment etc and
such other important parameters are put into consideration by banks and financial institutions
while giving loans to the borrowers. The parameters put down by banks and financial
institutions vary from institution to institution. However, the overall guidelines followed by
them are given as below:
 ELIGIBILITY CRITERIA
Home loan eligibility for Resident Indians depends upon the repayment capacity of the loan
applicant. The maximum loan that can be sanctioned varies with the banks and other housing
finance companies (HFC) and generally, the maximum loan amount granted is 80 to 85% of the
cost of the home.
Home loan eligibility corresponding to repayment option is based on the following factors. Even
though, the eligibility criteria may vary according to the HFCs regulations:
Age (Minimum)
21 Years
Age (Maximum)
58(salaried), 60(Public limited/Government
Employees), 65 (self employed)
Qualification
Graduation
Income Stable source of income and saving history
Dependents Number of dependents, assets, liabilities
Other income sources Spouse's income
As home loan rates increase, the loan eligibility for a borrower becomes stiffer. In such a
scenario, some home loan borrowers might have to re-evaluate their options (in terms of loan
amount) on account of the new eligibility criteria. Home loan eligibility can be enhanced by:
36

i) Increasing the Home loan tenure: One of the basic process of enhancing the home loan
eligibility is by opting for a higher tenure. This is so because the EMI, which an individual has
to pay, starts to decline as the tenure increases while the interest rate as well as the principal
amount remains the same. What changes though, is the net interest outgo, which rises with a rise
in tenure. And since the individual is paying a lower EMI now, his 'ability to pay' and therefore
his loan eligibility automatically increase.
ii) Repaying other outstanding loans: There might be adverse effect on home loan eligibility
for individuals with outstanding loans like car loans or personal loans. Industry standards
suggest that existing loans with over 12 unpaid installments are taken into account while
computing the home loan borrower's eligibility. In such a scenario, individuals have the option
of prepaying in part/full their existing loans. This will ensure that their eligibility for the home
loan purpose is unaffected.
iii) Clubbing of incomes: Home loan eligibility can also be enhanced by clubbing incomes of
spouse, children (son or daughter) staying with the applicant and having regular income and
even earning parents (father or mother) living with the applicant. The eligibility in such cases
will be calculated on the clubbed income of both the applicants enhancing the individual's
eligibility to the extent of the co-applicant's income.
iv) Step-Up loan: Individuals can also enhance their loan eligibility by opting for step-up loans.
A step-up loan is a loan wherein an individual pays a lower EMI during the initial years and the
same is enhanced during the rest of the loan tenure. HFCs usually consider the lower EMI of the
initial years to calculate his loan eligibility while the initial lower EMI helps increase the
individual's 'capacity to borrow'.
v) Perks: Salaried individuals must ensure that variable sources of income like performance-
linked pay among others are taken into consideration while computing their income. This in turn
will imply that the loan amounts they are eligible for stand enhanced as well.
However, potential investors and borrowers must work out solutions best suited for their profile
after speaking to their home loan consultant and only then consider acting on the options
discussed. Because, increasing loan eligibility can have an impact on other aspects of their
financial planning.
37

The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The
parameters include:
Age: The loan applicant has to be 21 years of age.
Qualification: The NRI loan seeker has to be a graduate.
Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this
criterion may differ across HFCs).The eligibility is also determined by the stability and
continuity of your employment or business.
Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques
through his NRE/ NRO account. He cannot make payments from another source say, his savings
account in India.
Number of dependants: The eligibility of the applicant is also determined by the number of
dependents, assets and liabilities.
An NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a
maximum of Rs 1 crore, based on the repayment capacity and the cost of the property, which
although is variable by the priorities of the home loan provider. Also Home Loan Tenure for
NRIs is different from Resident Indians. An applicant will be eligible for a maximum of 85% of
the cost of the property or the cost of construction as applicable and 75% of the cost of land in
case of purchase of land, based on the repayment capacity of the borrower.
However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant
who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher
than those offered to Resident Indians. The difference is to the income. Also, the rate of interest
for home loans to NRIs is higher than those offered to Resident Indians. The difference is to the
extent of 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for
NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative'
in the books of HFCs, find it difficult to get a home loan.
38

 QUANTUM OF LOAN
The quantum of loan is assessed based on the net monthly/ net annual income with a direct
bearing on age factor of the borrower. A person of age in the range of 21 to 45 years is eligible
for a maximum amount of 60 times of his Net Monthly Income (NMI)/ five times of Net Annual
Income. In case the age is above 45 years the quantum will be restricted to 48 times of NMI/
four times of Net Annual Income. Many banks have put a ceiling on the maximum amount of
home loan at Rs.50 lakhs. In order to assess the quantum of finance income of spouse or close
relative can also be reckoned, provided that person becomes a co applicant.
 DOCUMENTATION
“Loan Documentation” refers to the documents needed to legally enforce the loan agreement
and properly analyze the borrower’s financial capacity. Documentation is an essential
component from the point of view of the safety of an advance. The ability to control arises from
the documentation of provisions, which confirm understanding on the basis of which a credit
facility has been sanctioned. Documents should be properly drafted, stamped and executed with
necessary legal formalities, if any. An effective loan approval process establishes minimum
requirements for the information and analysis upon which a credit decision is based.
There are certain sets of documents that need to be submitted at the time of application for a
home loan. The document sets will vary according to the individual status - either resident or
non resident in India, as also the type of loan that the borrower may want to avail of.
Resident Indians Non – Resident Indians
• Income documents
• Property documents
• Personal documents
• Income documents
• Property documents
• Personal documents
39

Documentation refers to the specific documents to be submitted by Resident Indians as they
apply for home loan. These documents are very much necessary for the banks to avoid any
dispute and uncertainty. The documents to be provided by the resident Indians include income
proof, property documents and personal identification documents, etc. which of course varies
based on the borrowers financial status and the type of loan he want to avail. And of course
every resident Indian should follow some eligibility criteria before applying for Home Loans in
India.
However, there are some standard documents made mandatory for a loan applicant to produce
such as the loan applicant's profile, earning life of the applicant and present financial status
proof etc.
• The Applicant's Profile refers to the bio-data of the applicant, mentioning his address, age,
family background and detail information.
• The Earning Life of the Applicants' proof clarifies the capability of the loan payment.
• The Present Financial status gives the present capability of handling the own contribution
and other expenditures. This includes the mortgage to be deposited against the loan amount.
1) Income documents
 If you are employed
• Verification of Employment form
• Latest salary slip/salary certificate showing all deductions for at least the past 6 months
• Form 16 from your employer for the past 3 years.
• If your job is transferable, permanent address where correspondence relating to the
application can be mailed.
• If you have been in your present employment / business or profession for less than a year,
mention details of occupation for previous 5 years, giving position held reasons for change
and period of the same.
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 If you are self employed
• Balance sheet and profit and loss account of the business/profession along with copies of
individual income tax returns for the past 3 years as certified by a chartered accountant.
• A note giving information on the nature of the business/profession, year of establishment,
present bankers, form of organisation, clients, suppliers etc.
• Your net worth as an applicant/co-applicant.
2) Property documents
 Purchase of a flat or apartment from a builder/promoter
• Title deeds of the builder/land owner for a period of at least 13 years.
• Development agreement between the builder and land owner if applicable.
• Power of Attorney executed in favour of the builder, if applicable.
• An encumbrance certificate for the past 13 years.
• The khata certificate. (Basic document indicating ownership of property as entered in the
register of the government authorities.)
• Up-to-date tax paid receipts of the property.
• A sanctioned plan and license.
• An agreement for sale and a construction agreement with the borrower.
 In case purchase of house from second owner
• Title deeds of land owner for a period of at least 13 years.
• Encumberance certificate for the past 13 years.
• Khata certificate (Basic document indicating ownership of property as entered in the register
of the government authorities).
• Up to date tax paid receipts of the property.
• Sanctioned plan and license.
• Agreement for sale in favour of the applicant/applicants.
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• Valuation report from qualified valuers.
 In case of repairs / renovation / extension of house/ flat
• Title deeds of land owner for a period of at least 13 years
• Sanctioned plan and license for the extension.
• Estimates of costs from a qualified engineer.
3) Personal documents
• 1 passport size photograph,
• 1 copy of your passport/PAN card/Driving License//School Leaving Certificate/Birth
Certificate/LIC Policy/Bankers sign verification,
• 1 copy of last month's telephone bill/electricity bill/ ration card (first and last page)/Title
deed of property/rental agreement/driving license)
The documentation required to be submitted by the NRIs are different from the Resident Indians
as they are required to submit additional documents, like copy of the passport and a copy of the
works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to get
Home Loans in India.
Another vital document required while processing an NRI home loan is the power of attorney
(POA). The POA is important because, since the borrower is not based in India; the bank would
need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory,
the POA is usually drawn on the NRI's parents/wife/children.
1) Income documents for NRIs
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• Employment contract (if the contract is in any language other than English, the same has to
be translated into English and attested by the employer/Indian Embassy.
• Certified copy of the latest salary slips for the past 6 months
• Identity card issued from the current employer
• Continuous discharge certificate, if applicable
• Latest work permit
• Visa stamped on passport
• NRE bank account passbook sheets
• Overseas bank account statement for the past 6 months
• Bio data covering educational qualifications, age job experience, nature of
profession/business with necessary proof
• Power of attorney in favour of local representative in India, if required
• Guarantor forms along with net worth proof/income proof. Number of guarantors as per the
norms of the company. The guarantors should be related to the applicant/applicants.
2) Property documents for NRI’s
 Purchase of a flat or apartment from a builder/promoter
• Title deeds of the builder/land owner for a period of at least 13 years.
• Development agreement between the builder and land owner if applicable.
• Power of Attorney executed in favour of the builder, if applicable.
• An encumbrance certificate for the past 13 years.
• The khata certificate. (Basic document indicating ownership of property as entered in the
register of the government authorities.)
• Up-to-date tax paid receipts of the property.
• A sanctioned plan and license.
• An agreement for sale and a construction agreement with the borrower.
 In case purchase of house from second owner
• Title deeds of land owner for a period of at least 13 years
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• Sanctioned plan and license.
• Valuation report from qualified valuers.
 In case of repairs / renovation / extension of house/ flat
• Title deeds of land owner for a period of at least 13 years.
• Sanctioned plan and license for the extension.
• Estimates of costs from a qualified engineer
3) Personal documents for NRI’s
• 1 passport size photograph,
• 1 copy of your passport/PAN card/Driving License//School Leaving Certificate/Birth
Certificate/LIC Policy/Bankers sign verification,
• 1 copy of last month's telephone bill/electricity bill/ ration card (first and last page)/Title
deed of property/rental agreement/driving license)
 FEES & CHARGES
The interest rates and EMIs are not the only cost factor that the banks and financial institutions
take into account while giving Home Loans. The certain other fees and charges that the banks
levy on the borrowers can be as follows:
1) Processing Charge: It's a fee payable to the lender on applying for a loan. It is either a fixed
amount not linked to the loan or may also be a percentage of the loan amount. The loan amount
received by the borrower can be less than the processing fee.
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2) Interest Tax: This is the tax payable on the interest paid on a home loan and not the
principal. This tax is some times included in the interest rate of the loan, or may be charged
separately as interest tax.
3) Documentation Fees: Banks collect fees for documentation, administration, consultant
charge, valuation fees and legal fees from the customers as part of the application processing.
4) Commitment Fees: Some institutions levy a commitment fee in case the loan is not availed
of within a stipulated period of time after it is processed and sanctioned.
5) Prepayment Penalties: When a loan is paid back before the end of the agreed duration a
penalty is charged by some banks/companies, which is usually between 1% and 2% of the
amount being pre paid.
6) Registration of mortgage deed
 AGE CONSIDERATION FOR HOME LOANS
The minimum age requirement for availing any type of Housing Loan is 18 years, and the
maximum is 60 years. The maximum age can be relaxed in deserving cases up to 65 to 70 years.
 PENALTY FOR PRE-PAYMENT
When a loan is paid back before the end of the agreed duration a penalty is charged by some
banks/companies, which is usually between 1% and 2% of the amount being pre paid.
 EMI (EQUATED MONTHLY INSTALMENT)
This is the installment amount the borrower has to make towards repayment of his loan. The
EMI comprises of both the principal and interest. Banks/FIs charge an Equated Monthly
Installment from the borrower that is calculated on the basis of loan amount and the interest rate
charged for the same. Repayment by way of EMI generally commences from the month
following the month in which one takes disbursement. It can be calculated either on the basis of
annual reducing rest, monthly rest or daily rest. In an annual rest the EMIs (equated monthly
installments) are calculated on an annual basis. The interest is calculated on the outstanding
principal at the beginning of every year. Once the interest is calculated at the rate charged to the
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customer for the entire year it is deducted from the EMIs received during the year. The balance
EMI is taken as principal repaid during the year and this is deducted from the opening balance of
principal of the current year to arrive at the opening balance of principal for the next year. Under
this method, typically the component of interest in the EMI is higher for the first few years and
later on the component of principal increases and the interest keeps reducing year after year. In
other words, the interest in the EMI will keep reducing year after year and the principal
component in the EMI keeps increasing. This is commonly known as Annual Reducing Balance
of the principal amount lent. In this case EMI becomes 1/12th the Equated annual installment.
In the monthly rest, principal repayments are credited at the end of every month and interest is
calculated on the outstanding principal at the end of every month. In the daily reducing principal
repayments are credited at the end of the day an installment is paid.
The EMI for the loan will begin after the loan has been disbursed in full. Till such time the
borrower has to pay the interest for the loan. The amount of interest payable every month is
called pre-EMI.
In short the following four factors go into the determination of EMI.
• The principal amount - This is the actual loan amount taken. Obviously the larger the
amount, the greater the EMI.
• The rate of interest - Another obvious one, the higher the interest rate, the higher the EMI.
• The tenure - The longer one take the loan for, the lesser the EMI. The faster one want to
repay it, the higher the EMI.
• How the interest rate is calculated - It could be calculated either on a daily reducing or
monthly reducing or on an annual reducing basis.
 INTEREST RATES FOR HOME LOANS & THEIR CALCULATION
Interest rates charged by housing finance companies vary depending upon your individual status
- either resident or non resident in India, the loan amount, scheme type, and are sometimes even
based on the tenure of the loan.
The way banks / FIs charge interest to arrive at the value of EMI can be broadly classified into
‘Flat rate system’ and ‘Reducing balance rate system’. In the flat rate system, the rate of interest
on the loan amount is calculated over the entire duration of the loan and the principal plus the
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interest is divided over the number of installments and the value arrived is the EMI. But in case
of 'Reducing Balance system’, the interest is charged on the outstanding balance of the loan,
which goes on reducing.
The reducing balance can be further classified into monthly reducing, quarterly reducing and
annual reducing methods based on the number of times the principal is reduced/credited in a
year. Suppose the principal is reduced 12 times a year, it is termed as monthly reducing balance
method, if the principal is reduced 4 time a year, it termed as quarterly reducing balance method
and if the principal is reduced 1 time a year, it known as annual reducing balance method.
Annual reducing balance method is very common with Indian banks and monthly reducing
balance method is popular among the foreign banks and nationalized banks, engaged in the
activity of housing finance.
Resident Indians Non-Resident Indians
• Buying a new house
• Buying an existing house
• House improvement
• Buying a new house
• Buying an existing house
• House improvement
1) Interest rates for Resident Indians
• Buying a new house from a builder/promoter
Banks and FIs offer resident Indians loans upto Rs 10,000,000 for upto 30 years for buying a
new flat from a builder. The flat may be under construction at the time of application.
The table below offers a comparison of loan ranges and corresponding interest rates applicable
under this scheme.
Company Loan amount (Rs.) Floating rate (%) Fixed rate (%)
HDFC (Monthly) For all loan amounts 11.25
13.25
HSBC
For all loan amounts
12.00 13.50
ICICI
For all loan amounts 13.75 14.00
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SBI For all loan amounts
11.25 12.75
• Buying a house from a second owner
Banks and FIs offer resident Indians loans upto Rs 10,000,000 for upto 30 years under this
scheme.
under this scheme.
13.25
HSBC
12.00 13.50
ICICI
11.25 12.75
• Home Improvement
Banks and financial institutions offer non resident Indians loans upto Rs 1,000,000 for periods
ranging from 1 to 10 years under this scheme.
Home improvement schemes allow the borrower to finance internal and external repairs and
other structural improvements in your home. Some of the home improvements one can finance
under this scheme are:
• External repairs
• Waterproofing and roofing
• Internal and external painting
• Plumbing and electrical works
• Tiling and flooring
• Grills and aluminium windows
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under this scheme.
13.25
HSBC
12.00 13.50
ICICI
11.25 12.75
2) Interest Rates for Non-Resident Indians
• Buying a new house from a builder/promoter
Banks/ FIs offer non resident Indians loans upto Rs 10,000,000 for upto 10 years for buying a
new flat from a builder. The flat may be under construction at the time of application.
under this scheme.
13.25
HSBC
12.00 13.50
ICICI
11.25 12.75
• Buying a house from a second owner
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Bankls/ FIs offer non resident Indians loans upto Rs 10,000,000 for upto 10 years under this
scheme.
under this scheme.
13.25
HSBC
12.00 13.50
ICICI
11.25 12.75
• Home Improvement
Banks and FIs offer non resident Indians loans upto Rs 1,000,000 for periods ranging from 1 to
10 years under this scheme.
Home improvement schemes allow the borrower to finance internal and external repairs and
other structural improvements in the home. Some of the home improvements one can finance
under this scheme are:
• External repairs
• Waterproofing and roofing
• Internal and external painting
• Plumbing and electrical works
• tiling and flooring
• Grills and aluminium windows
under this scheme.
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13.25
HSBC
12.00 13.50
ICICI
11.25 12.75
 MARGIN AMOUNT FOR HOME LOANS
The difference in the total cost of the property and the loan amount sanctioned is the margin
amount. This money has to be invested by the borrower of the property prior to the release of the
loan amount in case of construction of a house. In case it is for purchase of a ready house, the
loan amount is released on the day of registration of the property and the margin money has to
be invested by the borrower prior to the release. In case of purchase of flats also, the release will
be made only on investment of the margin money by the borrower. A margin amount is the
amount that the applicant pays through his/her pocket. As far as home loans are concerned a
bank usually pays 85% of the total cost of the house to be purchased by the borrower. The
margin is usually the amount not covered by the bank for the payment of the essential and
necessary fees for the purchase of the house. In most of the cases, the margin amount of
25% of the purchase consideration has to be borne by the borrower in the case of purchase of old
houses/approved plots and 15% of the project cost in the case of loans for construction/purchase
of new house/flat.
 SECURITY FOR HOME LOANS
In most cases, the property to be purchased itself becomes the security and is mortgaged to the
lending institution till the entire loan is repaid. Interim security may be additionally required, if
the property is under construction Some companies may also require additional securities which
are called collateral securities like the assignment of life insurance policies, pledge of shares,
NSCs, units of mutual funds, bank deposits or other investments.
 GUARANTOR FOR HOME LOANS
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Guarantors are essential for sanctioning of loans. Usually, a guarantor is required so that if the
applicant fails or becomes incapable of repaying, the guarantor will be responsible for clearing
the debt. Generally most banks do not insist on a guarantor when giving home loans but some
might insist for 1 or 2 guarantors in certain cases. A guarantor is equally liable to pay up the
loan in case the borrower misses out on repayments. By seeking a guarantor, the lender tries to
enforce a moral check that prevents the borrower from defaulting.
If the borrower is a salaried individual with a good employment record and laudable debt
repayment history, banks are assured of his/her financial stability and credibility. In case one
runs a small business with low profits, the banks are taking a risk. To safeguard their interests in
such circumstances, banks seek a guarantor who is legally bound to make repayments in case of
default. The bank seeks a guarantor in case the loan applicant does not live in the same city in
which he is purchasing the property. If the nature of his job is such that he will be constantly
transferred or could go abroad, the banks need a guarantor.
The same is the case for self-employed individuals who lack required professional
qualifications. Absence of a co-applicant for a loan sometimes calls for a guarantor. In most
other cases, there is no personal guarantor required as home is an investment to which people
have emotional bonding. And they are sure to go to any extent to keep it. Any friend or family
member can be a guarantor and can guarantee the loan. A guarantor has to fulfill the criteria
relating to age and income of a normal customer. The minimum income criteria vary from one
housing finance company to another. This is to ensure that since he is equally liable to pay the
loan in case of default, he has to be financially sound too like the loan applicant himself.
 DISBURSEMENT
When the entire essential work of selecting the land/ home is done and after all the legal
documentation (such as handing over of the original agreement for sale / lodging receipt to the
lender), etc is completed, the borrower starts getting the disbursement of the loan. On an average
it takes around fifteen days for processing of one's application if the documents are in order. It
takes another week for the bank/FI to check out the property papers and make the disbursement.
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The bank /FI also ask for a proof stating that the borrowers own contribution of the cost of the
property has been paid upfront to the seller/vendor / builder / developer of the property. In case
of property under construction, the disbursement of the loan is made in installments according to
the stage of construction.
 REPAYMENT OPTIONS
Every bank/ FI have customized repayment options to suit every individual's requirement and
also repaying capacity with some tax benefits. They have thereby come up with more flexible
and Multiple Repayment Option. A few among them are:
Step-up Repayment Facility: The objective of step-up repayment is to provide the borrower
with a repayment schedule, which is linked to expected growth in income. It not only helps a
customer get a larger amount of loan as compared to the loan under the normal housing loan; but
the customer can avail of a higher amount of loan and pay lower EMIs in the initial years, which
is subsequently accelerated proportionately with the assumed increase in his income.
Flexible Loan Installments Plan: This repayment option offers a customized solution to suit
the needs of customers whose repayment capacity is likely to alter during the term of the loan. In
cases when a borrower is nearing retirement, the loan is structured in such a way that the EMI is
higher during the initial years and subsequently decreases in the latter part proportionate to the
reduced income of the customer. This option helps such customers combine the incomes and
take a long term home loan where in the installment reduces upon retirement of the borrower.
Tranche Based EMI: Customers purchasing an under construction property, need to pay
interest (on the loan amount drawn based on level of construction) till the property is ready.
Tranche Based EMI is a special facility offered by some banks to help customer save this
interest. Customers can fix the installments they wish to pay till the property is ready. The
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minimum amount payable is the interest on the loan amount drawn. Anything over and above
the interest paid by the customer goes towards principal repayment. The customer benefits by
starting EMI and hence repays the loan faster.
Accelerated Repayment Scheme: Accelerated Repayment Scheme offers the borrower a great
opportunity to repay the loan faster by increasing the EMI. Whenever the borrower get an
increment, increase in the disposable income or have lump sum funds for loan prepayment, he
can benefit by:
• Increase in EMI means faster loan repayment
• Saving of interest because of faster loan repayment
• Or invest lump sum funds rather than use it for loan prepayment. The return from the
investments also gives the borrower the comfort of paying the increased EMI.
Balloon Payment: Balloon Payment is an augmentation tool offered by the banks/FIs, which
helps in increasing the loan eligibility of the customer without increasing the EMI by assigning
securities like National Savings Certificate (NSC), LIC policies etc. The present value of the
maturity amount of assigned securities is combined with the loan amount to arrive at the
enhanced loan eligibility. Under this facility, the EMI is calculated on the net loan amount (i.e.
total loan less the present value of the maturity value of the securities).
The repayment option for Non-Resident Indians (NRIs) is done in EMIs, and includes interest
and principal amount calculated on monthly rests. The borrower can pay EMIs by issuing post-
dated cheques from the Non Resident External (NRE)/Non-Resident Ordinary (NRO) or Non
Resident (Special) Rupee Account (NRSR) in India; or any other account approved by the
Reserve Bank of India (RBI).
In the case of part-disbursement of the loan, the monthly interest is payable only on the
disbursed amount. EMI is payable every month, by the end of the month from the date of each
disbursement up to the date of commencement of EMI. Pre-EMI is calculated at the same rate at
which EMI is calculated.
Step-Up Repayment Facility: By the step-up repayment option, a borrower can apply for a
higher range loan based on the prospects of growth in income for years to come. In this
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repayment option the loanee has to pay less EMI in the initial years which increase as the
income grows with the coming years.
Flexible Loan Installments Plan: In this mode of repayment, the borrower has flexible loan
installment facility where a borrower nearing retirement age can opt for paying higher EMI in
the initial years and gradually move to paying lower installments after reaching retirement age.
Tranche Based EMI: Tranche Based EMI is a special facility offered to the customers so as to
save their interest, in cases when customers purchasing an under construction property need to
pay interest (on the loan amount drawn based on level of construction) till the property is ready.
In such cases, customers can fix the installments they wish to pay till the property is ready. The
minimum amount payable is the interest on the loan amount drawn. Anything over and above
the interest paid by the customer goes towards principal repayment. The customer benefits by
starting EMI and hence repays the loan faster.
Accelerated Repayment Scheme: Accelerated Repayment Scheme for NRIs offers a great
opportunity to repay the loan faster by increasing the EMI. Whenever the NRI get an increment,
increase in the disposable income or have lump sum funds for loan prepayment, the loanee can
benefit by:
• Increase in EMI, which means faster loan repayment
• Saving of interest because of faster loan repayment and can invest lump sum funds rather
than use it for loan prepayment.
A NRI loanee can opt for repayment ahead of schedule, by remittances in abroad through
normal banking channels, the NRO / NRSR in India. However, by regulations in many states in
India, the Agreement of Sale between the builder and purchaser is required to be registered by
law. It is therefore advisable to record the agreement for registration within four months of the
date of the Agreement at the office of the Sub Registrar appointed by the State Government,
under the Indian Registration Act, 1908.
 REPAYMENT TENURE
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Home loan tenures fixed by RBI are available up to a term of 15 years. Some financial
institutions have home loan tenures in the range extending up to 20, 25 and 30 years if the
applicant fulfills certain criteria. However, one cannot opt for a term that extends beyond
attaining retirement age or 60 years of age (whichever is earlier).
Home loan Tenure:
Type of Property Salaried Self-Employed
Residential
15 years
10 years
Plot of Land
10 years 10 years
Against Existing Plot of Land 15 years
10 years
The home loan tenure for Non-resident Indians differs from the Resident Indians on a few
points, which may of course vary from one bank to another. For most banks the home loan
tenure exceeds maximum from 25 to 30 years. However, for NRIs the maximum tenure is from
7 years up to 15 years, the number of years fixed by RBI. However, one cannot opt for a term
that extends beyond attaining retirement age or 60 years of age (whichever is earlier).
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HOME LOAN WITH INSURANCE COVER
There are many individuals who worry about the adverse impact of the home loans if something
happened to them. This is where a home loan insurance product comes to the rescue. Many
banks and financial institutions insist on getting the home insured to safeguard their interest. The
borrower needs to ensure that the property is duly and properly insured for fire and other
appropriate hazards, as required by the bank and financial institution during the period of the
loan and will have to produce evidence each year and/or whenever required by the lenders. The
bank/financial institution will be the beneficiary of the insurance policy. There are various kinds
of insurance covers available for a homeowner. The various options may be insurance against
fire, against other disasters, etc.
Home loan insurance plans, also known as mortgage redemption plans are policies that cover the
home loan liability. Though there are some minor variants, most plans offer a sum assured that
reduces as the outstanding home loan comes down every year. In such plans, it is not the home
but the loan that is covered should something happen to the borrower. For instance, if a person
have taken a home loan of Rs 40 lakh and covered this through a home loan insurance. If after a
year, the outstanding loan comes down to Rs 39 lakh, then the sum assured also comes down to
Rs 39 lakh. In short the sum assured is adjusted against the home loan liability.
This insurance is much like the term plan or pure risk cover plan that is available from various
insurance companies. There are exceptions like ICICI Bank (through their tie-ups with ICICI
57

Lombard) home insurance loan where the sum insured remains constant. And in the event of
death of the life assured, the outstanding home loan is cleared off and the rest is paid to the
family. Some characteristics of such plans include:
• Low premiums, high cover
• No maturity amount on survival of the term
• Choice of one time premium or regular premiums
However, the cover in term plans available in India are level term plans where the cover remains
the same whereas in the case of home loan covers, the amount keeps falling as the home loan
liability decreases. Also it is important to know that while most term plans can be bought till the
age of 55, home loan insurance plans can be bought till the age of 60. However, the medical
underwriting is stringent and it is only after adequate tests that these policies are issued at the
higher age band. If one opts for a joint application then the premium is double. And if any of the
joint applicants die, the loan is paid off by the insurance company. The premiums are calculated
based on the medical underwriting, based on the age and medical record. The conditions are:
Age of the life insured: The premium increases with age. Medical tests increase with age and
are mandatory above 40 years. Below this age, a simple declaration is good enough though this
depends on each insurance company.
Medical record: If the borrower of the loan is in a good health, the premiums will be regular
but if the insurance company's prognosis about the life assured is at higher risk, then the
premiums will be higher. A past family history of early death or critical illness will also increase
the premiums.
Loan tenure: The premium will increase with the duration of the loan. A cover of Rs 50 lakh
for five years and a cover of Rs 50 lakh for 20 years will attract different premiums, with the
latter being more expensive.
Since this is a life insurance plan issued by an insurance company, the premiums paid towards
life insurance schemes are eligible for deductions under Section 80C. However, if the premium
is clubbed within the equated monthly installment of the home loan, then the borrower will not
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get the Section 80C benefit. Most banks have tie-ups with insurance companies for the issuance
of such policies. There is always the question that whether it is better to take a term plan and
insure the life that is going to repay the home loan or go for home loan insurance. A factor that
tilts the argument in favour of term plans is the cost, which is much less and remains constant as
well.
However, a majority of the people should get thorough needs analysis done and not just cover
their home liability but other liabilities as well, dependent goals (financial needs of children) and
dependent income goals (monthly needs of family if the borrower were to die) as well. After
this, taking a term plan for the requisite cover needed is considered. For those who cannot
undergo this exercise, opting for the home loan insurance cover may prove helpful.
The policies that one may consider other than a home insurance are as
follows:
1) Fire policy for a householder
Suitability
A householder can cover his movable and immovable properties against fire and allied perils.
Apart from persons owning a house, people staying in a Rented/Leased house can take this
policy, if they are responsible for its safety by any covenant. An individual can also insure
household contents not belonging to him, but held in trust or belonging to relatives permanently
staying with him.
Salient Features
The Fire Policy can be taken to cover any property within the country. The policy offers cover
on loss and/or damage on account of:
• Accidental fires
• Lightning
• Explosion & implosion 'due' to pressure vessels (used for domestic purposes)
• By rioting mob, striking workers, malicious acts by third parties and damage by terrorists
• Impact damage by rail/road vehicles, carts & animals
• By aircraft or any arial devices or articles dropped there from
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• Landslide & rockslide
• Storm, cyclone, flood & inundation and similar vagaries of nature
• Bursting and over flowing of water tanks and pipes etc.
• Missile Testing
• Leakage from sprinklers
• Bush Fire
Benefits
• Claims are payable at the market value of the property damaged at the time of loss.
• If the individual value if assets is not furnished then the value of each property is considered
as not more than 5% of the total sum insured.
• Long term policy may be taken.
2) All risk Insurance
Suitability
This policy is suitable for people owning things, which are prone to accidental loss or damages.
Salient Features
It covers valuables like jewelry, work of art and similar artifacts of sentimental values. The
scope of the cover is limited to loss or damage due to fire, riot & strike, terrorist act, burglary,
larceny or theft and accidental loss or damages.
Benefits
The policy pays for any loss to the property insured against by insured perils. The amount of
claim payable is limited to the sum insured or the market value at the time of loss, whichever is
lower.
3) Burglary Insurance
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Suitability
This policy is more suitable for people who have movable property like clothes, appliances etc.
prone to burglary, theft and larceny.
Salient Features
This insurance policy covers burglary, theft and larceny.
Benefits
This policy pays for any loss of property due to burglary, theft or larceny occurring during the
policy period. The amount of claim payable is limited to the sum insured or the market value at
the time of loss, whichever is lower. This policy also covers damage to the premises like walls,
windows etc.
4) Householder’s Package Policy
Suitability
This is a single package policy offered at economical rates of premium through which all of the
householder's needs are addressed.
Salient Features
The package includes the following policies:
• Fire Insurance
• Burglary
• All Risks Insurance
• Plate Glass Insurance
• Break down of Domestic Appliances (Electrical and mechanical failures)
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• Television including VCR & VCP and music systems
• Pedal cycle Insurance
• Personal baggage insurance
• Personal accident
• Public liability
• Employers Liability
Benefits
This being a package policy, only one proposal form is to be completed instead of separate
proposal forms for individual policies. As regards fire risks, while covers like
explosion/implosion (other domestic gas cylinders or pressure cookers) and impact of rail/road
vehicles are withdrawn as inconsequential, special risks like damage due to bursting and
overflowing of water tanks, apparatus, or pipes are included in the policy.
RECOMMENDATIONS FOR BANKERS
The entire housing finance sector thrives on a simple logic that the house is the single largest
investment made by a common man in his entire lifetime. There is an emotional and sentimental
attachment towards his house property wherein lots of personal money is involved. Hence, the
risk is very low to a lender since it would be a great loss to the borrower if he looses the
possession of the house. This safest mode of business has spurred many new entrants to join the
fray. According to the details given by the National Housing Board (NHB) pertaining to the
housing loan disbursements of banks and housing finance companies as on June 29, 2006, the
housing finance sector has shown an exponential growth as compared to the other areas of
credit.
62

The housing finance sector even if it is showing an exponential growth is not devoid of risks.
The problem of bad loans has always been a matter of concern for the entire industry. Since the
competition among the players in the housing finance sector is too high, all the housing finance
companies maintain the interest rates in unison except for public sector banks which operate on
relatively low rates of interest as they concentrate more on retail business. Despite the low risk
attached to this sector and legal support to the lenders, problem loans are creeping into the
system overwhelmingly. In order to avoid the problem of bad loans the banks and financial
institutions may undertake the following remedial measures for mitigation of risks:
1) PROPER SCRUTINY IN SANCTIONS AND DISBURSEMENTS
Home loans are made available by banks and financial institutions to both Indian and Non
Resident Indian customers at floating and fixed rates of interest and also with attractive EMI
options. The loans are offered for construction of or buying a new house, home repairs and
renovations, purchase of plots, against mortgage of property, etc. Hence the banks and financial
institutions should conduct a proper scrutiny while sanctioning and disbursements of loans.
2) PROPER STUDY OF FINANCIAL STATEMENTS
Many a times the banks and financial institutions in order to cope with and to outsmart the
competitors, they go to the extent of luring the customers of their competitors by providing
attractve schemes. Some companies even go to the extent of sanctioning the home loan without
identifying the property and improper title deeds which is the prerequisite for eligibility.
Waiving the processing fee, providing free accident insurance and property insurance, waiving
penalties, etc,. are some of the factors causing reduction in the profit margin. Hence proper study
of financial statements and analysis should be undertaken in order to increase the profitability.
3) END USE OF THE MONEY LENT
Banks and other housing finance companies have high rate of interests for non- residential use of
the loan. A study of the NPAs of these banks/FIs shows that individuals who avail themselves of
loans for residential properties, divert them for commercial or any other purposes. Any
fluctuations in the business operations or mindset of the borrowers lead to non-payment of
interest. At times, it is very difficult for the lender to recover the loan amount if the borrower has
63

left the country. Hence, it is very important for banks and financial institutions to verify that the
loan given is utilized for the purpose for which it is sanctioned.
4) MARKETABILITY OF THE MORTGAGED ASSETS
Improper valuation and scrutiny of the documents tend to lead the financier to invest more than
100% of the value of the property. In case, the loan is not serviced, he may not realize the claim
amount. When the borrower constantly defaults in servicing the loan, the lender has five types of
rights. Possession, lease, manage, reconstruct or sell. In practice the possessed assets are in such
a condition that they can be neither sold nor managed nor given for lease. To market them the
lender of the loan has to incur further expenses adding to his risk of getting back his further
investment.
5) CONSTANT MONITORING
Once the loan is sanctioned, the job of the lender is not over. He has to exercise vigilance and
monitor the payments of installments by the borrowers. It is advisable to make periodical review
of the borrower’s financial position to ensure his capabilities of prompt payment of installments.
A close monitoring has to be done by the lender about the performance of various industrial
units, changes in the socio-economic conditions in his areas of operations, which will have a
bearing on the repayment capacity if the individuals.
6) TAKE OVER OF BAD LOANS
Most of the institutions play safe by handing over their doubtful and risky loans to the other
institutions. These are taken over just to add a feather to their asset portfolio in the balance sheet.
As far as possible, taking over of loans should be done only after a thorough study of the case
and the reasons of handing over the loan. Verification of repayment track and reasons for
takeover are very important.
7) FAIR ASSESSMENT OF PROPERTY
While scrutinizing the valuations, it is very important for the lender to go by his own assessment
instead of being carried over by real estate boom. The banks and financial institutions should
64

keep in mind the resale value of the asset rather than the market value. Most of the cases suffer
form the drawback of poor collateral. Condition of the underlying asset also must be taken care
of. Care should be taken to see that the asset is sold very soon after seizing it. Or else, the resale
value may come down. Therefore, finding out the buyers to dispose of the asset is a challenging
task for the banks and financial institutions.
8) INCREASING EMPLOYEE MORALE
The banks and financial institutions should protect the employee morale by providing
performance-based incentives as there is a tendency in any finance department to become
corrupt. The sanctioning official must be made directly responsible for the bad loans to a certain
extent.
TABULATED COMPARISON BETWEEN HOME LOAN
SCHEMES PROVIDED BY SBI BANK & ICICI BANK
1) ELIGIBILITY
Scheme Min Age
(years)
Max Age
(years)
Min Income
(Rs/mth)
Max Income
(Rs/mth)
SBI Optima Additional Home Loans/SBI
Housing Loan-RI/SBI Freedom Home
Loans(NRI)
21 45 1 _
ICICI Home Loans (for Resident Indians) 21 65 1 _
ICICI Home Loans (for NRIs) 21 65 _ _
65

2) FEES
Scheme Processing Fees (%) Administrative Fees (%)
SBI Freedom Home Loans(NRI)/SBI Housing Loan-
RI/SBI Optima Additional Home Loans
0.50 _
ICICI Home Loans (for NRIs) _ _
ICICI Home Loans (for Resident Indians) 0.50 5.00
3) INTEREST
Scheme From (years) To
(years)
From
(Rs)
To (Rs) Interest Rate
(%)
SBI Optima Additional Home Loans 1 5 _ 500,00,000 9.50
SBI Optima Additional Home Loans 6 10 _ 500,00,000 9.75
SBI Housing Loan-RI/ SBI Freedom
Home Loans
1 5 _ 500,00,000 9.50
SBI Housing Loan-RI 6 10 _ 500,00,000 9.75
SBI Freedom Home Loans (NRI) 6 10 _ 500,00,000 9.25
SBI Maxgain Home Loan- RI 1 5 500,000 0 8.75
SBI Flexi Home Loan-RI 0 5 500,000 0 8.75
ICICI Home Loans (for RI) _ 20 2,00,00
0
_ 11.00
ICICI Home Loans (for RI) _ 20 2,00,00
0
_ 9.50
ICICI Home Loans (for NRIs) _ _ 5,00,00
0
100,00,000 11.00
4) MAXIMUM LIMIT
Scheme Min
Amt
(Rs)
Max Amt
(Rs)
Max Limit Min
Term
(years)
Max
Term
(years)
SBI Freedom Home
Loans (NRI)
_ 5,00,00,000 _ _ 20
SBI Housing _ 5,00,00,000 The maximum amount=60 NMI/ 5 times 0 5
66

Loan-RI NAI, subject to aggregate repayment
obligations not exceeding 57.50% of NMI/
NAI for those less than 45 years of age. If the
borrower is above 45 years of age it is 48
times NMI or 4 times NAI.
SBI Optima
Additional Home
Loans
_ 5,00,00,000 The eligibility is 18 times NMI (for salaried
borrowers)/ 1 times NAI (for others) or (i)
25% of the original project cost of house/flat
(ii) 85% of the cost of repairs etc. or (iii) gap
between 85% of the current market price of
flat/house and actual outstanding loan dues,
whichever is lower (EMI/NMI ratio of all
loans should not exceed 60%)
_ _
ICICI Home
Loans (for
Resident Indians)
2,00,000 _ Maximum of 85% of the cost of the property _ 20
ICICI Home
Loans (for NRIs)
5,00,000 1,00,00,000 Maximum of 85% of the cost of the property _ 15
5) UNIQUE FEATURES
Scheme Unique Features
SBI Freedom Home
Loans(NRI)
This product is for those individuals who are on the lookout for a source of finance for a
property they want to invest in without mortgaging the same. All they have to do is pledge
any financial security that they have and will get a Home Loan for their dream home.
SBI Housing Loan-
RI
This loan is for Purchase/Construction of new House/ Flat, Purchase of an existing House/
Flat, purchase of a plot of land for construction of House, Extension/ repair/ renovation/
alteration of an existing House/ Flat, takeover of an existing loan from other Banks/ FIs.
Free personal accident insurance cover. Optional Group Insurance from SBI Life at
concessional premium.
SBI Optima Additional
Home Loans
This loan is aimed at enabling the customer meet expenditure towards major repair,
renovation, addition to their house/flat, purchase of furniture, fixtures and consumer
durables.
ICICI Home Loans (for
Resident Indians)
Door-step service from enquiry stage till final disbursement. Free personal accidental
insurance, Special 100% funding for select properties. The borrowers can transfer the
existing high-interest rate loan.
ICICI Home Loans
(for NRIs)
The borrowers can take loans for purchase, construction, extension or renovation of a new
house or flat.
ANALYSIS
67

ICICI and SBI are the pioneers in the home loan sector in private and public sector respectively
in India. These banks offer home loans with attractive and unique features for the benefits of
their customers. As per the eligibility criteria ICICI bank holds a better position as compared to
SBI bank because it provides home loan to maximum age limit of 65 years as compared to the
maximum age limit of 45 years offered by SBI bank. With respect to the fees SBI stands ahead
of ICCI because it has less processing fees and administrative charges. Interest rates offered by
ICICI are up to 11% whereas in case of SBI the loans are offered below 10%. SBI has an upper
hand over ICICI because the maximum limit is Rs. 5, 00, 00,000. By analyzing the home loan
schemes offered by both the banks SBI can be placed at a better position as compared to ICICI
because of the advantages stated above.
SURVEY
I had conducted a survey taking the sample size of 100 people including all groups of people. I
had done the survey at different places like Andheri station, Kandivli, Bhayander, Ghatkopar,
Lokhandwala, Borivali, Santacruz, Bandra, Dadar and other places considering all income
groups of people. The questionnaire of the survey in enclosed in the annexure.
It was a very good experience while conducting this survey. It developed a sense of confidence
and augmented the data collection skills within me. It enabled me to develop a skill of getting
primary data from the common people and then analyzing it and presenting it in a systemic
manner. Most importantly it made me think logically and practically and thereby improved my
research ability. The information collected is analyzed and represented below with all possible
diagrams.
ANAYLSIS
AWARENESS OF HOME LOAN
68

95%
5%
Aware
Not
aware
The survey indicates that nearly 95% of the people are aware about the Home loan facilities
offered by different banks. But there are still 5% of people who are not much educated and are
unaware about the different types of home loan facility. For this banks should also target their
lower income group while making the publicity of their home loan products and their should
also be a direct selling concept of marketing their product and by this banks can increase their
customer base by providing loan to this particular section of people by making them aware of it.
Security and comfort in life is a top priority for everyone. So everyone should be made aware of
this facility and enable them to take advantage of it for which banks and financial institutions
should take care of.
DEMAND FOR HOME LOANS
30%
70%
Want to
Pursue
Don’t
want to
Pursue
The survey conducted by me shows that 70% of the people want to pursue home loan facility in
the future if required. This shows there is an increase in the demand for home loans. The reason
behind this could be the boom in the home loan sector in India. The real estate boom has added
new dimensions to the housing finance sector. The new class of young buyers, whose
affordability are high, is spending a little more on paying Equated Monthly Installments (EMIs)
rather than spending huge amounts on the rents, thereby, owns a house. Hence the reasons for
the growth of the home loans market has been mainly fuelled by certain fiscal, social and
regulatory drivers such as:
69

• Changes in demographic profile including increase in the rate of household formation due to
structural shift from joint family system to nuclear family
• Ever increasing middle class, migration of population and increasing urbanization resulting
in acute shortage of housing units
• Increase in disposable income levels due to decrease in marginal tax rates and increase in
total income levels
• Tax benefits and other fiscal incentives announced in the Union Budgets thereby
encouraging the sector
• Increasing affordability of housing property purchase due to declining interest rates and
stable property prices
• Decline in the average house cost to annual income ratio to around 4-5 from 11-14 during
the last decade resulting in an affordable EMI as a percentage of monthly income
• Aggressive lending by banks to the housing sector due to lower credit off take by the
corporate sector, attractive spread and lower non performing assets
PREFERENCE FOR TYPE OF HOME LOAN
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
No. of people
Home
purchase
Land
Purchase
Home
Extension
Others
Type of loan preferred
According to the survey 42% of the people would prefer to take loan for home purchase, 33%
for purchasing land, 14% for home extension/improvement/renovation, while only 11% for other
type of loan. Due to the hike in the property rates the demand for loan for home purchase is
increasing and the same is so for the purchase of land property. Due to affordability factor and
less amount of money required for home extension or improvement or renovation people prefer
70

less to opt for loan for these purposes.The other type of loans such as Bridge Loans,
Balance Transfer, Refinance Loans, Home Conversion Loans, Stamp Duty Loans and Loans to
NRIs, are not much in demand.
PREFERENCE TO PRIVATE, PUBLIC SECTOR OR FOREIGN BANKS
30%
10%
60%
Public Sector Banks
Private Sector Banks
Foreign Banks
As per the survey, 60% of the people preferred to go for public sector banks, 30% for private
sector banks while the remaining for foreign banks. In the booming home loan segment, it is the
public sector banks (PSBs) which are now having a clear-cut advantage over their private and
foreign counterparts. Some of the big PSBs, including State Bank of India, Bank of Baroda and
Canara Bank, are offering both fixed and floating home loan products almost 75-100 basis
points cheaper than private and foreign banks.
After the recent rate hike by the Reserve Bank of India (RBI), the private sector and foreign
banks like ICICI Bank and Standard Chartered have also raised rates to manage the rising cost
of funds. However, their public sector counterparts are yet to join the bandwagon and are
unlikely to react before the quarterly review of the RBI Annual Policy.
As a result, public sector banks, now following the same marketing model like the private sector
and foreign banks, are now offering competitive rates in home loan segments. To make life
further tough for the private and foreign banks, PSBs have beefed up their marketing campaign
to sell home loan products. For example, BoB has launched a pilot project in Mumbai, named
Project Parivartan, in which BoB officers are going door-to-door to sell home loans. This move
is probably for the first time that a public sector bank is going door-to-door to sell their products,
initiatives normally associated with private banks. Foreign Banks have recently started
71

concentrating on retailing sector particular in home loan sector in India so there is still a lot of
scope for them to catch the interest of the Indian borrowers. In case of public sector banks the
rise in home loan rate is not as steep as in the private sector.
PREFERENCE FOR FIXED OR FLOATING INTEREST RATES
Going by the trend, it should surprise no one if interest rates on home loans rise as a
consequence of the rising interest rate scenario. This being the case, home loan seekers
considers opting for a fixed rate loan (i.e. fixed for 3-5 years). This protects them from a
potential interest rate hike in the near term. At the end of the said 3-5 year term, they have the
option of considering either to continue with the 'fixed' rate (if interest rates continue to rise) or
migrate to a floating rate loan However, in case an individual does not have the risk appetite to
take the interest rate fluctuations in his stride, he may consider selecting the 'truly' fixed rate
loans. Such loans have a fixed rate throughout the tenure of the loan. However, if interest rates
were to decline going forward, the truly fixed rate loan will not reflect the fall in interest rates
and the consumer will forfeit any chance of benefiting from a decline in interest rates.
EFFECTS OF PROPERTY RATES HIKE ON HOME LOANS
The home loan sector has been drastically affected by the hike in the property rates. The
property prices have been rising and touching unprecedented heights. In fact so much so, that
property are again becoming out of reach of common man. Whether the price rise is justified or
is it just a manipulated bubble remains to be seen. Reserve Bank of India, in its policy
statements has time and again cautioned the banks to be extra cautious before taking exposure.
In fact RBI went to the extent of increasing the risk weight age of the housing loans. Reserve
Bank of India increased the risk weight on real estate exposure and hiked the risk weight for
lending to the real estate sector. The RBI has cautioned the banks to be extra careful while going
all out to fund and finance the real estate sector. According to reports, the property prices have
come to their saturation and there is little scope for further increases. The price hike has been
quite fast and unrealistic. The growth in infrastructure has not been able to keep pace with the
increase in property prices. Hence property rates hike have led to an increasing importance to
home loans but bankers have to be extra cautious on their part.
72

HOME LOAN PROCESS
According to the survey 25% of the people feel that home loan process is convenient. Maximum
number of people i.e. 75% says that the process is lengthy as banks requires time for processing
the loan application, verification of various documents, appraising the credit and other
formalities takes a longer time in sanctioning of the loan.
CONCLUSION
In view of its backward and forward linkages with other sectors of the economy,
housing finance in developing countries is seen as a social good. In India, growth of housing
finance segment has accelerated in recent years. Several supporting policy measures (like tax
benefits) and the supervisory incentives instituted had played a major role in this market.
The housing finance industry is getting increasingly commoditised. Competition within
the sector is ensuring that players offer consumers flexibility and features to choose from.
Features such as adjustable rate plans, lower processing fees/monthly rest/interest
rates/EMI/margin money, no prepayment penalty have become common across the industry.
There is a growing trend among Banks and FIs to include the cost of registration, stamp duty,
society charges and other associated costs while sanctioning loans to differentiate and make the
home loans products more attractive. This has resulted in further lowering the threshold limit for
buying a house. For differentiation of their home loan products, banks are also resorting to
73

offering of free add-ons such as life insurance, credit cards and consumer loans at reduced rates
for furnishing the house.
Some of the major players in the housing finance industry have started organizing
property fairs, wherein the projects of different construction companies are brought together and
bundled with a lower than normal interest rate loan product. Such initiatives are expected to
result in a more organized housing market and more value for the customer. On the services
front the banks/ FIs have begun addressing concerns of borrowers through counseling and legal
advisory services on matters pertaining to property’s title, its technical evaluation, and its pricing
etc. Banks/ FIs have been upgrading their technology and investing in sophisticated systems for
sourcing, processing and managing information pertaining to home loan customers.
Housing credit has increased substantially over last few years, but from a very low base.
Thus, from miniscule amounts, the exposure of the banking sector to housing loans has gone up.
However, with growing competition in the housing finance market, there has been a growing
concern over its likely impact on the asset quality. While no immediate financial stability
concerns exist, there is a need to put in place appropriate risk management systems, strengthen
internal control procedures and also improve regulatory oversight in this area. Banks also need
to monitor their exposure and the credit quality. In a fiercely competitive market, there may be
some temptation to slacken the loan scrutiny procedures and this need to be severely checked.
ANNEXURE
74

I had visited ICICI Bank, Andheri (West) Branch on 28th
August, 2007. There I interviewed
Miss. Shubhangi Gaekwad, Assistant Manager of the bank. It was a very good experience
interviewing her. Also she entertained me to the full extent and rendered full support by
providing me with the relevant information in regards to the completion of this project.
BIBLIOGRAPHY
MAGAZINES
• Professional Banker (The ICFAI University Press Release, June 2007 Publication)
BOOKS FOR REFERENCE
• Merchant Banker by H. R. Suneja
OTHER SOURCES
• Interview with Miss. Shubhangi Gaekwad (Assistant Manager), ICICI Bank, Andheri
(West) Branch and Mrs. Mithila Jadhav (Chief Manager) SBI Bank, Andheri (East)
Branch.
• Brochures of ICICI Bank and SBI Bank.
WEBSITES
75

• www.economictimes.com
• www.indiainfoline.com
• www.icicibank.com
• www.surfindia.com
• www.hindustanlinks.com
• www.myiris.com
• www.moneycontrol.com
• www.bankofindia.com
• www.hdfc.com
• www.sbi.co.in
• www.bankof baroda.com
• www.sundaramfinance.com
• www.harmonyindia.org
• www.obc.com
• www. sify.com
SEARCH ENGINES
• www.google.com
• www.yahoo.com
• www.rediff.com
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