TABLE OF CONTENT

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Overview
Objective and Methodology
Product Loan Against Property
New Products & Polices (Tenor)
Basic Terms
Gross Turnover Scheme
Loan Against Property to Salaried Person
Banned Profile For LAP
Fixed Obligation To Income Ratio
Types of Property & General Details
Questionnaire
References

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OVERVIEW
The Kotak Mahindra Group was established in 1984 and is already
considered one of Indias most reputable financial institutions. They were
approved to carry out financial transactions when their flagship company
Kotak Mahindra Finance ltd was licensed by the Reserve Bank of India.
With the granting of this license to carry banking transactions, banking
history was made as it is the first time in India that a company
successfully converted into a bank. According to Section 22 of the Banking
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Regulation Act in 1949, this license gives them full ability to conduct
banking business in India.
The new banking institution was promoted to the public by Uday S. Kotak,
A.A. Pinto, Mr Sidney, and Kotak and Company Ltd as Kotak Capital
Management Finance Ltd. They began the promotion on 21st Nov 1985.
Their Certificate of Commencement of Business was granted to them on
11th Feb 1986.
Like most banks, each customer will have access to over 4500 Automated
Teller Machines in India along with over 800000 ATM machines throughout
the world. The visa cards issued by KMB can be used at over 50000
businesses across India and at any other place that accepts visa in the
world which is over 10 million places.

Key group companies and their businesses

Kotak Mahindra Bank
Kotak Mahindra Finance limited, which is the flagship company of Kotak
Mahindra Group, was created in 1985. This is what was then converted in
the the Kotak Mahindra Bank in March of 2003. With Kotak Mahindra no a
fully operational banking institution, it now can offer services for corporate
banking, financing of housing loans, business banking, retail financing,
commercial vehicle financing, and any other service that established and
licensed banking institutions are able to offer.
Kotak Mahindra Capital Company
The premier investment bank in India is presently Kotak Mahindra Capital
Company Limited. Company mergers and acquisitions, financial advising,
and equity service make up the main niche of this investment bank.
Kotak Securities
One of Indias largest brokerage and securities distributers is Kotak
Securities Ltd. They have proven to be one of the leaders in India for
investors of institutional and non-institutional services. Due to their size,

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the institution is now a huge part of the industry as they have franchises
throughout the country. They offer tradition banking and modern services
such as online banking and products that can cater to non-institutional
investors.
Kotak Mahindra Prime
The former Kotak Mahindra Primus Limited, now known as Kotak Mahindra
Prime Limited, was created with the intentions of financing trade of multi
utility vehicles along with passenger vehicles in India. Through them,
customers are able to obtain financing for both previously owned and
brand new vehicles. They also offer wholesale financing options to
commercial dealerships in the automobile sales industry.

Kotak Mahindra Asset Management Company

Kotak Mahindra Bank has a subsidiary known as Kotak Mahindra Asset
Management Company that serves as an asset manager for Kotak
Mahindra Mutual Fund. At any given time, the KMMF is managing funds of
more that Rs 20,80 crore. They are also able to provide offers that cater to
different levels of risk-return schemes for investors of all kinds. Investing
in only government securities, it became the first institution of its kind in
India.

Kotak Mahindra Old Mutual Life Insurance Limited

Another product that is offered by Kotak is life insurance, which is a joint
venture between the groups of Kotak Mahindra Bank and Old Mutual plc
known as Kotak Mahindra Old Mutual Life Insurance Limited. They assist
customers by offering a range of insurance products that are tailored to
different stages of each customers life so that they may feel more
financially independent.

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OBJECTIVE
To compare the features and benefits of the loan against property
given by banks to the customers.
To identify the differences in Eligibility requirements given by banks
to the customer.
To compare the interest rates on loan against property given by the
banks.
To understand which bank gives good benefits to the customer, so
that the customer takes loan from there bank.

METHODOLOGY

To achieve the stated objective, I have used secondary data from

internet for the project.

I have decided to conduct the survey on loan against property for

the DSAs.
For survey I have prepared a questionnaire for the DSAs
I will be conducting survey and the respondents will be around 2530.

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PRODUCT - LOAN AGAINST PROPERTY

Customers who are self-employed are able to take advantage of taking out
loans against their property. Whether the customers are involved in
trading wholesale or retail goods, they are able to use this product of
loans against property.
In India, NBFCs and most other banks offers this product. The best option
for customers though would be to use a regular bank as opposed to the
NBFC due to the relatively lower interest rate charged compared to NBFC.
The most common reason for taking out a loan against property is
because a business may need more working capital. When this type of
product is being done, the item used as collateral is secured for the
duration of the loan which the company taking the loan will use for
building new factories, purchasing machines, or capital to complete
construction projects.
The property used is generally secured by equitable mortgage for the
duration. The loans can be taken by using property that is residential or
commercial. The purpose of the loans being taken out is to help the
customer use their existing assets to help them create more wealth for
themselves or their own business.
The value of the property that is used against the loan is determined by
the lender. This then determines how much they are able to receive for
whatever they are putting up as collateral. For whichever item is accepted
to be used for this loan, the person receiving the loan can expect to
receive up to 50-60% of their items value which again was determined by
the lender.
Of course, it will take more than just an item to put up as collateral to
receive this loan. The institution given the loan will also need to assess
your ability to pay back the loan and all interest on time. This is done by
providing proof of income as well as a CIBIL report.

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If you or your business is planning on getting a loan, you will have to have
specific documents available. This is to comply with the Know your
customers norm, or KYC. You would need to provide your income proof in
the copy of a return of your past 3 years, a bank statement, and proof of
address. Another requirement is that you can submit a projected profit
and loss account with a balance sheet so that the bank will be confident
that they cash flow into your business will sufficiently cover the loan
repayments.
Since the loans are secured, the interest rate is much lower than that of a
personal loan with no collateral given. It is also much easy to get loans
when you have this property that you are willing to use as collateral. You
must be working as either a government employee or with some other
well-known and well regarded company in India.
You are able to obtain these loans for up 15 years compared to only 5
years for a personal, non-collateral loan. They are easy a lot easier to
obtain and easier to pay back due to the longer period of repayment.

BANKS FOR COMPARISON

Kotak Mahindra Bank
HDFC Bank
ICICI Bank
HSBC Bank

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NEW PRODUCTS & POLICES

TENOR
15 Years tenor can now be given only for Loan against Property:

FOIR will be restricted to 100%.

Only Residential Property and Commercial Property allowed.
LTV in case of Residential Property / Commercial Property = 60%
LTV in case of Commercial Property / Residential Property = 55%
Commercial Property purchase is also doable, customer to give
declaration that he will occupy the property, Maximum LTV shall be

80%.
For other products, tenure cannot exceed 10 years.

BASIC TERMS
LTV / LCR: LTV stands for the Loan to Value ratio. LCR stands for the Loan
to Cost ratio. Banks use these ratios to calculate the loan amount that a
person is eligible for on the total cost of the property.
FOIR: This stands for Fixed Obligation to Income Ratio. In FOIR calculation,
the Bank takes into account the instalments of all other loans previously
availed of by the customer, including the home loan applied for. In other
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words, this ratio includes all the fixed obligations that the customer is
supposed to pay regularly on a monthly basis.

GROSS TURNOVER SCHEME

CRITERIA
Target Profile

Manufacturers, Traders, Stockiest

Eligible borrower

and Service industry

Proprietorship firms, Partnership
firms, Private Limited Companies,

Loan Amount

Closely held limited companies.

Minimum = Rs. 10 Lakhs

Tenure
Type of Property

Maximum = Rs. 400 lakhs

LAP 3 years to 15 years
Residential and Commercial (Not

LTV

Industrial)
Residential = 65%
Commercial = 60%

Business Vintage

Vacant Property = 55%

Minimum 5 Years (3 Years in the

Financials

same line)
Minimum Turnover Rs. 50 Lakhs
Minimum cash profits Rs. 5 lakhs
There should be increasing trend in
turnover and cash profits.
In case of multiple entities. One of
the entities should comply with
minimum business vintage.
Eligibility will be calculated on the
basis of clubbed income.
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CIBIL
Additional Points

All applicant>= 650, -1

Positive Net profit for latest 2 years
is mandatory.
Average banking of last 6 months
should be >= 1 times of proposed
EMI.

LOAN AGAINST PROPERTY TO SALARIED PERSON

Loan against property will be given to the employees who are

working with preferred list of companies.

Eligibility will be calculated on the bases of Net Income.
CAT A Cities

Net Salary
Rs. 55,001 to Rs. 70,000
More than Rs. 70,001

FOIR
65%
70%

Net Salary
Rs. 55,001 to Rs. 70,000
More than Rs. 70,001

FOIR
65%
70%

CAT B Cities

BANNED PROFILE FOR LAP

o
o
o
o

Mining
Power
Iron and Steel Manufacturing
Transporter/Logistics

Cautious profile also to be kept in mind while sourcing-Auto Ancillary.

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FIXED OBLIGATION TO INCOME RATIO

(All Existing EMI + Proposed EMI)
FOIR = ------------------------------------------------------------------------------------------(Net Monthly Income after tax prior deduction of obligations)

Obligations - Any other fixed liabilities excluding monthly obligations

where EMIs is to be serviced for less than 12 months.

TYPES OF PROPERTY
1) Purchase of a plot of land and Construction of a house thereon
2) Construction of a house on plot of land already owned
3) Purchase of a new house / flat
4) Purchase of old house / flat.
5) Extend /Renovate/Repair of a house or flat already owned by self
6) Take-over of existing Housing Loan
7) Under construction properties - Approved projects only

The property which is legally and technically clear.

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Loan Tenure - 1 year to 15 years.

Acceptable Property
Residential Property put to residential use, rented, vacant.
Commercial Property put to residential use, commercial
use.

Questionnaire for DSAs

1. Which Bank do you prefer most for Loan against Property?
Option:
a.
b.
c.
d.
e.

Kotak Mahindra Bank

HDFC Loans
ICICI Bank
HSBC Bank
Others:..

2. Reason for choosing Kotak Mahindra Bank

Option:
a.
b.
c.
d.
e.
f.
g.
h.

Low Interest Rate

Quick Approval
Greater Flexibility
Brand Name
Easy to apply
Customer of the bank
Good Relations with the bank
Others:.

3. The level of satisfaction of LAP provided by Kotak Mahindra

a.
b.
c.
d.
e.

Bank:
(1 --- 5: bad --- good)
1
2
3
4
5

4. Loans from banks or other financial institutions were (only

one answer for the most substantial loan):
From a local bank where personal contacts existed
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 From a local bank where no personal contacts existed

5. Which NBFCs do you prefer most for Loan against Property?

6. Do you trust NBFCs that provide loans?

Completely
Somewhat
Dubious
Not at all
7. Which of the following facilities is given more importance in
your organisation?
(a)Loan facilities
(b)O/D facilities
(c)Both

8. Which bank or NBFC offers competitive interest rate?

.
9. Name - ..
10.
Organisation Name - .
11.
Gender - O Male O Female
12.
Phone No. - .
13.
Email - .

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