A

PROJECT REPORT
ON

“TO STUDY THE CREDIT APPRAISAL IN HOME LOAN FINANCE”

AT

GANGAPUR ROAD, NASHIK- 422 013

SUBMITTED TO

UNIVERSITY OF PUNE
IN PARTIAL FULFILLMENT OF
MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

MISS. SEEMA D. HANDORE

MBA-II (FINANCE)

UDER THE GUIDENCE OF

PROF. D.D. WALKE

YEAR 2009-10

M.V.P SAMAJ’S
INSTITUTE OF MANAGEMENT RESEARCH AND
TECHNOLOGY
GANGAPUR ROAD, NASHIK-422002.
 Date: 1st Sept, 2009

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Ms. Seema

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

We wish her success for her future

endeavors.

Regards

Mr. S. M. PISU
Dy. Manager (credit).
 ACKNOWLEDGEMENT

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

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

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

Seema D. Handore
 DECLARATION

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

Signature
Seema D. Handore
(Student IMRT)
 INDEX
Sr. no. PARTICULARS Pg. no.
1. INTRODUCTION:
A. OBJECT OF PROJECT.
B. SELECTION OF TOPIC.
C. OBJECTIVE OF STUDY.
D. LIMITATIONS.
2. RESEARCH METHODOLOGY:
A. MEANING
B. RESEARCH DESIGN
C. DATA COLLECTION(SOURCES)
3. INTRODUCTION TO BANKIG SECTOR IN
INDIA:
A. BANKING SECTOR IN INDIA
B. FDI IN BANKING SECTOR
C. PRESENT SITUATION
D. BANKING STRUCTURE IN INDIA
4. ORGANISATION PROFILE:
A. EVOLUTION OF BANK.
B. BUSINESS.
C. MAJOR CHANGES IN CONDITION.
D. IMPERIAL BANK.
E. FIST FIVE YEAR PLAN.
F. ORGANISATION STRUCTURE.
5. INTRODUCTION TO CREDIT APPRAISAL:
A. WHAT IS CREDIT?
B. WHAT IS APPRAISAL?
C. WHAT IS CREDIT APPRAISAL?
6. PRODUCT PROILE
7. DATA COLLECTION:
A. SBI HOME LOAN.
B. RECENT MODIFICATIONS IN SBI HOME
LOAN.
C. DOCUMENTS OF HOME LOAN.
D. PROCESS OF HOME LOAN.
E. GENERAL CAUSES OF REJECTION OF
PROPOSAL.
8. ANALYSIS & INTERPRETATION:
A. COMPARATIVE ANALYSIS.
B. ANALYSIS OF BRANCH PERFORMANCE
 9. RECOMMENDATIONS & SUGGESTIONS.
10. CONCLUSION.
11. APPENDICES.
12. BIBLOGRAPHY.

INTRODUCTION
 INTRODUCTION

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

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

A. O B J E C T O F T H E P R O J E C T

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

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

B. SELECTION OF TOPIC

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

In 2002 the government allowed Foreign Banks to enter into the Indian Market.
The concept of retail banking introduced with the increase in number of banks, the
private player’s especially introduced this concept. The banks are segmenting their
portfolio into different segments like Personnel Banking, Retail Banking and are
concentrating on Small Medium Enterprise individual finance like housing finance,
vehicle finance, etc as large number of customers can be taped with diversification of
risk as it evolved lower risk than corporate banking. All banks are increasing their
exposure to this area.

C. OBJECTIVE OF THE STUDY

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

Objectives of the study:

 To study the appraisal process of Home Loan proposal.

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

D. LIMITATIONS

Following are the limitations for carrying out this project work:

 As the project was restricted for the period of two months, hence the data
obtained may not be sufficient for interpretation.

 The study was related to the Financial Services sector where the Financial
Institution did not given each & every information of their working procedure.

 The study was related to Credit Appraisal System for specifically Home Loan,
so other Credit Appraisal System was not taken into consideration for the
study.
RESEARCH METHODOLOGY
 RESEARCH METHODOLOGY

A. MEANING:
Research is a scientific and systematic search for pertinent information on a specific
topic. Research means search for knowledge. It is discovery of facts, developments of
facts and verification of facts. It is an attempt to find practical solutions to the
problems with the help of application of scientific methods.
The purpose of research is to discover the answers of questions through application of
scientific procedure. The aim of research is to find out the truth which is has been
discovered as yet.

Oxford Dictionary:
“Research is a careful investigation or inquiry especially through search for new facts
in any branch of knowledge.”

B. RESEARCH DESIGN:
Research design is the logical and systematic planning and directing of a piece of
research. Design implies some purpose and thoughtful activity. A research design is a
vital requisite for any research project. It guards the study from going off track and
any premature tripping. It helps to economize on the resources used and prepare the
researcher for potential roadblocks through out the task. It is a logical and systematic
plan that guides the entire study

C. DATA COLLECTION:

Data collecting is collecting information for project while studying a business through
different sources of data collection. It is very important aspect of any investigation.
The research methodology includes methods of data collection. Data collection
process begins after research problem has been defined & research plan chocked out
while deciding about method of data collection to be used for studies. There are two
types of data as follows:-
1) Primary Data
2) Secondary Data

SOURCES OF
DATA
COLLECTION

SECONDA
PRIMARY
R-Y
SOURCES
SOURCES

OBSERVA QUESTIO
AUTOBIO
T-ION NNAIRE
LETTERS G-RAPHY
METHOD METHOD

BIOGRAP
H-IES

1) PRIMARY SOURCES:-

The primary data is collected during in an experimental research but in case we do

research of descriptive type & perform surveys. It provides data gathered at first
hand the readily available information.

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

i) Letters:-

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

often have some propagandist intention since they are designed by a writer to
convey to the recipient, some impression more talking than mere facts.

ii) Autobiography :-
 Which are written some time after the events recorded in them and intend for
publication, may be expected to suffer from continuous stylization. The
prospective view on the other hand, enables the writer to select and display
such of his experiences and action that subsequently proved to be significant
features in his ‘Life history’.
iii) Observation method:-

The observation method is most commonly used method. Under this method
information is sought by way of investigators own direct observation without
asking from respondent.

iv) Questionnaire method:-

This method of collection data involves presentation of oral, verbal stimuli &
reply in terms of oral verbal responses. This method can be used through
personnel interviews.

2) SECONDARY SOURCES:-

Secondary data that are already available that is they refer to data which is
already been collected and analyzed by someone else.

There are several methods of secondary data.

A) Reference books, magazines and news paper:-

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

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

B) Internet technology:-
 It is very useful in the fast world now days. By a single click we get lots of
information of a particular company having websites and it is very
presentable.

INTRODUCTION TO BANKING
SECTOR IN INDIA
A. Banking Sector in India

Immediately after Independence, the government of India initiated measures to play

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

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

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

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

B. FDI in Banking Sector

The next stage for the Indian banking has been setup with the proposed relaxation in
the norms for Foreign Direct Investment, where all Foreign Investors in banks may be
given voting rights which could exceed the present cap of 10%, at present it has gone
up to 49% with some restrictions.

C. Present Situation

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

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

D. Banking Structure in India

The commercial banking structure in India comprises:

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

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

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

B. Business
The business of the banks was initially confined to discounting of bills of exchange or
other negotiable private securities, keeping cash accounts and receiving deposits and
issuing and circulating cash notes. Loans were restricted to Rs.1 lakh and the period
of accommodation confined to three months only. The security for such loans was
public securities, commonly called Company's Paper, bullion, treasure, plate, jewels,
or goods 'not of a perishable nature' and no interest could be charged beyond a rate of
twelve per cent. Loans against goods like opium, indigo, salt woolens, cotton, cotton
piece goods, mule twist and silk goods were also granted but such finance by way of
cash credits gained momentum only from the third decade of the nineteenth century.
All commodities, including tea, sugar and jute, which began to be financed later, were
either pledged or hypothecated to the bank. Demand promissory notes were signed by
the borrower in favor of the guarantor, which was in turn endorsed to the bank.
Lending against shares of the banks or on the mortgage of houses, land or other real
property was, however, forbidden.

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

C. Major change in the conditions

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

D. Imperial Bank

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

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

E. First Five Year Plan

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

F. ORGANISAION STRUCURE
 CHAIRMAN

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

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

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

GM (Corporate communication & change) CHIEF ECONOMIC ADVISOR

CHIEF VIGILANCE OFFICER

DMD & GE
DMD & GE DMD & GE DMD & GE DMD & GE DMD & GE
DMD & GE Associates
(national Rural Corporate Internation Global
(MC) &
banking business banking al banking markets
Subsidiaries

Regional
head/ direct
Mid corporate region Domestic & Associates
branches,
global &
foreign
treasury Subsidiaries
Mid corporate branches offices &
subsidiaries

LHO & (circles)

Regional Offices

CGM GM
Branches CGM (Asset
(corporate (project
mgmt.
Accts. finance
group)
Group) leasing)
Personal Banking Business Unit

Government Business Unit CAG SAMG

branches branches
SME Business Unit

Banking operations

Marketing – cross selling

 INTRODUCTION TO CREDIT
APPRAISAL

A. WHAT IS CREDIT?
You are granted credit when an organization or individual makes a sum available for
you to borrow.
There are two main types of credit:
 Home loans, or mortgages, and personal or shop loans are linked to a specific
item or items – for example, a new kitchen, or a house.

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

Repayment

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

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

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

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

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

Interest

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

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

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

For example –
If you owe Rs.100 and are charged ten per cent compound interest each year, at the
end of year one you will owe Rs.110. In year two, the lender will charge ten per cent
of this sum and add it to the outstanding amount, so you will owe Rs.121, and so on.
Interest may be compounded after any period – a day, a week, a month and so on.

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

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

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

General Appraisal

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

C. WHAT IS CREDIT APPRAISAL?

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

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

 The committee checks the genuineness of the documents and confirms

whether the applicant will be able to repay the loan installments or not.

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

 After the appraisal of the loan to the sanctioning committee in case the
sanctioning committee finds any fraud documents then both the applicant as
well as the appraisal committee is held responsible.
Legal Appraisal
In legal appraisal the documents submitted by the applicant are verified by a lawyer to
confirm whether the holder would be able to generate a mortgage in favor of the bank
or not

Technical appraisal

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

The loan amount can be disbursed entirely or in installments. The disbursement

amount is generally dependant on factors such as own funds available and the extent
of completion of construction. The disbursement amount is calculated using the
following formula-

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

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

Calculation of EMI

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

EMI= ½ (Lr (1+r) ^n/ (1+r) ^n-1)

Where,
L=loan’
r=rate of interest in decimal &
n=loan period.
 PRODUCT PROFILE
(TYPES OF HOME LOANS)

VARIOUS TYPE OF HOME LOAN:

 I. ‘SBI-FLEXI’ HOME LOANS:

A customized product designed to enable borrowers to hedge their Home

Loan against unfavourable movement in interest rates. The product gives
one time irrevocable option to choose one of the three customized
combinations of fixed and floating interest rates and also to choose the
order in which the fixed and floating rate will be availed.
Minimum Loan Amount: Rs.5 lacs
(Other terms and conditions – as applicable to regular Home Loans)

II. ‘SBI-MaxGain’ HOME LOAN:

An innovative and customer-friendly product to enable one to earn

optimal yield on savings and minimize interest burden on Home Loans,
with no extra cost.

The loan is granted as an Overdraft facility with the added flexibility to

operate Home Loan Account like your SB or Current Account.

The product serves to minimize your interest cost by enabling you to

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

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

III. ‘SBI-REALITY’ HOME LOANS:

A unique product if borrowers are on the look out for a loan to purchase
 a plot of land for house construction. The loan is available for a
maximum amount of Rs.1 crore and with a comfortable repayment
period of upto 25 years.

Borrowers are also eligible to avail another Housing Loan for

construction of house on the plot financed above with the benefit of
running both the loans concurrently.

(House construction should commence within 2 years from the date of

availment of ‘SBI-Realty’ Housing Loan)

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

(* relaxation considered on case to case basis)

IV. ‘SBI-FREEDOM’ HOME LOANS:

A revolutionary product designed for customers who are on the look

out for a source of finance for a property they want to invest in without
mortgaging the same. All one have to do is pledge any financial security
that they have and will get a Home Loan for your dream home.

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

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

Repayment is highly customized, giving you the option to repay through

regular EMIs or through maturity proceeds of the securities pledged.

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

V. ‘SBI-OPTIMA’ ADDITIONAL HOME LOANS

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

Purpose
‘SBI-Optima’ to meet expenditure towards major repair,
Additional Home Loans renovation, addition to their house/flat,
purchase of furniture, fixtures and consumer
durables
‘SBI-Home line’ General purpose loan to meet expenditure to
Special Personal Loans meet foreseen/unforeseen contingencies

Eligibility
‘SBI-Optima’ Additional Home 18 times NMI (for salaried
Loans borrowers)/
1 ½ times NAI ( for others) or

(i)25% of the original project cost of

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

Whichever is lower (EMI/NMI ratio

of all loans should not exceed 60%)
‘SBI-Home line’ Special 18 times NMI (for salaried
Personal Loans borrowers)/
1 ½ times NAI (for others)

Other Salient Features

 Inbuilt provision for availment of the loans on the expiry of each bloc of 5
years, the first bloc commencing on the expiry of 5 years from the date of
sanction of original Home Loan.
 Original Home Loan and all ‘SBI-Optima’ Home Loans/’SBI-Home Line’
Personal Loans can run concurrently
 Comfortable repayment obligations – Tenure of the loans equal to the residual
maturity of the original Home Loans.

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

VI. ‘PRASHASAN PLUS’, ‘TEACHER PLUS’ AND ‘OIL
PLUS’
The above ‘ plus’ schemes offer Concessional interest rate of 0.25%
below the applicable interest rates on Home Loans to niche client groups
like Government Employees, Teachers, employees of public sector oil
companies etc.
(Other terms and conditions – as applicable to regular Home Loans)
 DATA COLLECTION

A. SBI HOME LOANS

 “Brings Your Dream House on Earth”
At SBI we take extra care to build your dreams into reality. Providing unmatched
support through easy terms and adequate finances to fulfill your ambition / dream
to own / construct a house.

 Purpose
i. Construction of a new house.
ii. Repair.
iii. Renovation.
iv. Alteration of the house.
v. Purchase of a plot for the construction of new house.
vi. Purchase of a new house or flat.
vii. Purchase of existing house / flat.

 Eligibility

Basic Eligibility:

Individual(s) with steady source of income including persons engaged in

agriculture & allied activities.

• Salaried
• Self employed professionals
• Self employed non-professionals
Age limit:

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

No of co-borrowers:

-Maximum 3.

No of dependents:

-Maximum 5.

Type of borrowers:
  Resident Indians.

 Salaried:

i. Minimum qualification: NA

ii. Minimum number of years in total employment:

-Minimum 3 years.

 Self – Employed professionals

Various Self–Employed Professionals are-

a. CA / ICWA / CS.
b. Architects.
c. Lawyers (only advocates practicing with Supreme Court / District Court or
working with Solicitors / Practicing Tax consultants).
d. Consultants like Engineers / MBAs etc.
e. Doctors / pathologists.
f. Chemist with B. Pharm.

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

-NA

ii. Professional qualification certificate:

-Applicable.

 Self –Employed Businessmen / Non – professionals

i. Eligible entity:

-NA

ii. Business continuity:

-Minimum 3 years.

 Non Resident Indian:

 i. Minimum loan: 3 lacs.
ii. Maximum loan: 20 lacs.
iii. Documents:
• Photo copy of Passport & Visa.
• Photo copy of Pass Book of concerned bank A/C.
• Employment proof / business proof.
• Residential proof.
• And all other documents to be submitted as per the
requirements of the bank.

Loan amount:

For Salaried persons For Business men / Professionals

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

Margin:
-20% of Project Cost / valuation cost upto Rs. 5 lacs
-25% of project cost / valuation cost above Rs. 5 lacs.

Security:
-Equitable mortgage on the plot / house / flat being purchased or the house / flat being
constructed / purchased / renovated.

Disbursements:
-Direct disbursement of loan to vendor of the house/flat where building is ready for
possession.
-For construction / renovation / extension of flat / house, disbursement is done in
phases.

Repayment:
-In Equated Monthly Installments (EMIs) comprising of Principal and Interest in a
maximum period of 25 years including moratorium period.

Repayment Period:

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

Maximum period including moratorium:

 Age upto 45 years 20 years

 Age above 45 15 years
 In case of joint borrowing 25 years

Processing charges:
Loan amount *charges
Upto Rs. 25,000/- Nil.
Rs25,001 to Rs. 2 lacs Rs. 500/-
Above Rs. 2 lacs 0.50%
(* Processing charges changes from scheme to scheme.)

Maximum Loan:

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

the loan amount is decided by the repayment capacity of borrower(s), which comes
out as a ratio of EMI to NMI.

EMI/NMI Ratio:

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

graded ratio:

Net Annual Income EMI/NMI ratio

Upto Rs.2 lacs 40%
Above Rs.2 to 5 lacs 50%
Above Rs.5 lacs 55%

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

Monetary ceilings:

MPLA is also subject to following monetary ceilings:

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

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

• Income of spouse/son/ unmarried daughter and expected rental of proposed house

can be clubbed [subject to conditions]

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

Total project cost:

Total project cost to include cost of land, additional amenities, insurance premium,
stamp duty & registration charges for purchase/construction of new or old property.

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

Interest:
-Loans at fixed / floating rates and combination of fixed and floating rates.
-Loans above Rs.1 crore at floating rates only.
-Interest rate concession for loans with LTV ratio of 75% or less.

Type of Loan:
-Term Loan.

Administrative approval:
  No prior administrative clearance required.

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

 For >10 years old, controlling authority would be permitted

to grant administrative clearance.

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

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

Inspection:
For standard assets:

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

construction.

• Thereafter once every 3 years.

• If repayments are in arrears for two successive months, inspection should be

conducted immediately.

• For NPAs: At half - yearly intervals.

Inspections should be recorded in Inspection Register.

Property inspection is to be carried out and recorded at each stage of disbursement.

ELIGIBILITY CALCULATION:
PARTICULARS AMOUNT(RS)
Gross Monthly Income *****
Less: Deductions *****
Net Monthly Income *****
Less: Obligations *****
Maximum Amount For Repayment *****

E.M.I CHART (for 1 lac)

EQUATED MONTHLY INSTALMENTS FOR LOAN AMOUNT OF Rs.1,00,000
No. of 9% 9.25% 9.50% 9.75% 10% 10.25% 10.50% 10.75% 11.00%
Months
 6 17,107 17,119 17,132 17,144 17,156 17,168 17,181 17,193 17,205
12 8,745 8,757 8,768 8,780 8,792 8,803 8,815 8,827 8,838
18 5,960 5,971 5,983 5,994 6,006 6,017 6,029 6,040 6,052
24 4,568 4,580 4,591 4,603 4,614 4,626 4,638 4,649 4,661
30 3,735 3,746 3,758 3,770 3,781 3,793 3,804 3,816 3,828
36 3,180 3,192 3,203 3,215 3,227 3,238 3,250 3,262 3,274
42 2,784 2,796 2,808 2,820 2,832 2,844 2,855 2,867 2,879
48 2,489 2,500 2,512 2,524 2,536 2,548 2,560 2,572 2,585
54 2,259 2,271 2,283 2,295 2,307 2,319 2,332 2,344 2,356
60 2,076 2,088 2,100 2,112 2,125 2,137 2,149 2,162 2,174
66 1,927 1,939 1,951 1,964 1,976 1,988 2,001 2,014 2,026
72 1,803 1,815 1,827 1,840 1,853 1,865 1,878 1,891 1,903
78 1,698 1,711 1,723 1,736 1,749 1,761 1,774 1,787 1,800
84 1,609 1,622 1,634 1,647 1,660 1,673 1,686 1,699 1,712
90 1,532 1,545 1,558 1,571 1,584 1,597 1,610 1,623 1,637
96 1,465 1,478 1,491 1,504 1,517 1,531 1,544 1,557 1,571
102 1,406 1,419 1,433 1,446 1,459 1,473 1,486 1,500 1,513
108 1,354 1,368 1,381 1,394 1,408 1,421 1,435 1,449 1,463
114 1,308 1,322 1,335 1,349 1,362 1,376 1,390 1,404 1,418
120 1,267 1,280 1,294 1,308 1,322 1,335 1,349 1,363 1,378
126 1,230 1,243 1,257 1,271 1,285 1,299 1,313 1,327 1,342
132 1,196 1,210 1,224 1,238 1,252 1,266 1,280 1,295 1,309
138 1,166 1,180 1,194 1,208 1,222 1,237 1,251 1,265 1,280
144 1,138 1,152 1,166 1,181 1,195 1,210 1,224 1,239 1,254
150 1,113 1,127 1,141 1,156 1,170 1,185 1,200 1,215 1,229
156 1,090 1,104 1,119 1,133 1,148 1,163 1,178 1,192 1,208
162 1,068 1,083 1,098 1,112 1,127 1,142 1,157 1,172 1,187
168 1,049 1,064 1,078 1,093 1,108 1,123 1,138 1,154 1,169
174 1,031 1,046 1,061 1,076 1,091 1,106 1,121 1,137 1,152
180 1,014 1,029 1,044 1,059 1,075 1,090 1,105 1,121 1,137
186 999 1,014 1,029 1,044 1,060 1,075 1,091 1,106 1,122
192 985 1,000 1,015 1,030 1,046 1,062 1,077 1,093 1,109
198 971 987 1,002 1,017 1,033 1,049 1,065 1,081 1,097
204 959 974 990 1,005 1,021 1,037 1,053 1,069 1,085
210 947 963 978 994 1,010 1,026 1,042 1,059 1,075
216 936 952 968 984 1,000 1,016 1,032 1,049 1,065
222 926 942 958 974 990 1,006 1,023 1,039 1,056
228 917 933 949 965 981 998 1,014 1,031 1,047
234 908 924 940 956 973 989 1,006 1,023 1,040
240 900 916 932 949 965 982 998 1,015 1,032
B. Recent Modifications in SBI Home Loan Scheme:

a. In Principle Approval:
 • In principle approval / sanction can be given prior to identification
of a specific house / flat / property by the prospective borrower to
give him greater flexibility in negotiations.
• It is valid for the period of three months.
• The borrower can select the property as per the eligibility or loan
amount he may get.

b. Take over of Housing Loans:

• In simple words ‘Take Over of Housing Loan’ means to
transfer the housing loan from other financial institute / bank to
SBI.
• Take Over of Housing Loans may be considered highly
selective after due diligence and precautions, in cases where
possession of the house / flat has been taken, repayment of the
existing loan has already commenced and installments have been
paid as per the terms of sanction, subject to the conditions-

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

branch only, in consideration of large business interests / valuables
connections.
 The prospective borrower should address a letter to the institution
through whom the finance has been availed, that the institution
would deliver the title deeds direct to our bank branch upon receipt
of the loan amount.
 The institution to confirm the above and that they are holding the
EMI over the property.
 The disbursement of the loan should be made direct to the
institution and their receipt kept along with the documents.
 The agreement to mortgage should be taken.

C. DOCUMENTS OF HOUSING LOAN

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

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

DOCUMENTS

PRE-SANCTION POST-SANCTION
DOCUMENTS DOCUMENTS

I. PRE-SANCTION / CREDIT DOCUMENTS:

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

The documents are as follows-

 COMMON DOCUMENTS:

APPLICAT
-ION FORM
WITH PHOTO

PROCESSING IDENTITY &

FEE RESIDENTAL
CHEQUES PROOF

COMMON
DOCUMENTS

PERSONAL
NET WORTH
ASSETS &
SUPPORTING
LIABILITY
DOCUMENTS
STATEMENT

DOCUMENTS AS PER OCCUPATION:

 SALARIED SELF - EMPLOYED SELF – EMPLOYED
PROFESSIONALS BUSINESSMEN

Last three months salary- Educational qualification Educational qualification

slip. certificates & proof of certificates & proof of
business existence. business existence.

Form 16 for last three years. Last three years Income Tax Last three years Balance-
returns. sheet.

Employer’s Certificate Certificate copies of Wealth Certificate copies of

Tax Returns, if applicable Wealth Tax Returns, if
applicable

Details of previous Brief write-up on profession Brief write-up on

employment business / business
profile.
Latest Income Tax Return, if Certified copies of Income Certified copies of
applicable. Tax. Income Tax.

 DOCUMENTS RELATED TO PROPERTY:

PURCHASE OF CONSRUCTION / CO-OPERATIVE

HOUSE / FLAT
Agreement of sale.
Letter of allotment.
Receipt of payment made
to the vendor.
Power of attorney, if
applicable.
No Objection Certificate
for loan and mortgage from
lesser / builder, if
applicable.
Development agreement if
applicable.
EXTENSION & REPAIR HOUSING SOCIETY
OF HOUSE / FLAT
Detailed cost estimate by Bye-law’s of the Society.
approved Architect/Civil
Engineer/Chartered
Engineer/Valuers.
7/12 abstract Certificate of Membership.
NA Certificate. Certificate stating the
number of shares held by
the member.
No Objection Certificate
for loan and mortgage
from Society.
Letter of allotment

ANALYSIS OF INOME DOCUMENTS:

1) Salary Slip Analysis
 Name of the Applicant – whether matches with the salary slip or not?
 Designation
 Name of the Employer
 Is the latest salary credit as per the salary slip
 Are the salary credits in the bank statements as per the salary slip
 Is the salary fixed or variable
 Any regular deductions reflecting in the salary slip.

2) Understanding Bank Statements

 In case of Salaried, number of credits to be checked – Fixed & Variable
 In case of Self Employed check the average balance for liquidity
 Large credit or debit entries
 Recurring debits on account of loan repayment
 Inward Cheque bounces
 Outward Cheque bounces
 Stop Payment / Minimum Balance charges

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

 Name & address of the employer
 Name and designation of the employee
 Details of the salary paid / other income
 Details of the tax deducted
 Information of Housing loan availed
 Information on Mediclaim, pension policy etc
 Information on other savings like PPF, NSC, Mutual funds etc.

4) Understanding Profit & Loss Account

 Expense heads
 Trend in Profitability & Sales over the years
 Depreciation charged
  Any unusual expenditure
5) Why do we require a Balance Sheet?
To understand the business of the customer in terms of-
 Owner’s involvement
 Profitability of the business
 Asset base
 His Customer Base & Liquidity
 His Suppliers

6) What to read out of Schedules?

 Understanding the list of his Customers
 Understanding the list of his Suppliers
 Understanding the value of assets as on date
 Understanding various loans availed by the loan applicant
Application form for housing loan of SBI:

APPLICATION FORM HOUSING LOANS

(PUBLIC)
PLEASE COMPLETE ALL PARTICULARS IN
BLOCK LETTERS & TICK BOXES WHEREVER SIGNED SIGNED
APPLICABLE. PHOTO OF PHOTO OF
APPLICA- CO-
PERSONAL NT
DETAILS APPLICAN
T.
APPLICANT CO-APPLICANT
NAME IN FULL
FATHERS/HUSBAND’S NAME
RELATIONSHIP WITH CO-
APPLICANT
PRESENT RESI. ADD.
WHETHER OWNED
RENTED

LEASED OTHERS

OFFICE ADDRESS
_____________________PIN__________ _____________________PIN__________
TEL-__________(R)_____________(O) TEL-__________(R)_____________(O)
DATE OF BIRTH
SEX MALE FEMALE MALE FEMALE
STATUS RESIDENT NRI RESIDENT NRI
MARITAL STATUS SINGLE MARRIED SINGLE MARRIED
NO. OF DEPENDANTS
CATEGORY CHILDREN OTHERS CHILDREN OTHERS

SC ST OBC NA SC ST OBC NA
PAN NO./ VOTER
ID/PASSPORT NO. (attach Xerox
copy)
OCCUPATION
OCCUPATOPN DETAILS
EDUCATIONAL/PROFESSIONAL
QUALIFICATIONS
NO. OF YEARS IN PRESENT OCCU.
DESIGNATION & EMPLOYMENT
NO.
DATE OF RETIREMENT
A/C DETAILS
TYPE OF A/C NAME OF THE BANK & A/C NO. YEAR OF OPENING
BRANCH
APPLICANT
CO-APPLICANT
FINANCIAL DETAILS
MONTHLY GROSS INCOME
MONTHLY NET SALARY
OTHER INCOME
SOURCE OF OTHER INCOME
ANNUAL INCOME AS PER IT
RETURN
ADVANCE TAX PAID IN CURRENT
YEAR
EXPECTED MONTHLY RENTAL
INCOME FROM PROPOSED
FLAT/HOUSE
MONTHLY INSTALLMENTS
PROPOSED
 INVESTMENT & LOAN
(ASSETS & LIABLITIES)
PLEASE INDICATE BELOW DETAILS OF INVESTMENTS & ALL LOANS TAKEN/PROPOSED FROM
EMPLOYER, PF ETC. & INSTALLMENT(S) PAYABLE PRE MONTH ON THE SAME INCLUDING INTEREST
AGAINST EACH.
LOANS O/S AMT MONTHLY TER
INSTALL. M
PAYABLE MON
RS. RS. THS
APPLICANT

EMPLOYER
BANK
CREDIT
SOCIETY
OTHERS
CO-
APPLICANT
EMPLOYER
BANK
CREDIT
SOCIETY
OTHERS

APPLICANT CO-
APPLICANT
SAVING BANK
IMMOVABLE
PROPERTY
(SPECIFY)
CURRENT BAL. IN
PF. (YOUR
SHARRE)
OTHER ASSETS
POLICY
1.
2.
LIFE INSURANCE
POLICY(IES)
POSTAL LIFE
INSURANCE
POLICY(IES)
AMT/MATURITY
DATES)

EXISTING LOAN FROM SBI

DETAILS OF EXISTING LOANS FROM STATE BANK OF INDIA
APPLICANT: ________________________________________________________________________________________
CO-APPLICANT: ____________________________________________________________________________________

DETAILS OF PROPERTY
DETAILS OF IMMOVABLE PROPERTY
(TO BE PURCHASED / CONSTRUCTED / RENOVATED / IMPROVED)
1. MENTION HOUSE NO. / PLOT NO., AREA, CITY, PIN CODE, PROPOSED
__________________________________
2. PLOT / FLAT / HOUSE ALLOTED BY A- HOUSING SOCIETY, HOUSING BOARD,
DEVELOPMENT AUTHORITY, PVT. BUILDER, CO-OPERATIVE SOCIETY.

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

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

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

4. IMPROVEMENT, RENOVATION OF HOUSE/FLAT

 COST & SOURCES
COST OF PROPERTY RS. SOURCE OF FUNDS RS.
1. COST OF LAND 1. AMT ALREADY INVESTED
2. COST OF 2. SAVINGS IN BANK
CONSTRUCTION/EXTENSION
3. COST OF AMENITIES / 3. DISPOSAL OF INVEST/PROPERTY
IMPROVEMENT
4. COST OF REPAIRS 4. P.F- A) REFUNDABLE
B) NON-REFUNDABLE
5. COST OF FLAT / HOUSE 5. OTHERS (SPECIFY)
6. COST OF STAMP DUTY / REG. / 6. LOAN APPLIED FOR
ELECTRICAL CONNECTION /
MUNICIPAL CHARGES
TOTAL COST TOTAL FUNDS

• TOTAL COST SHOULD BE EQUAL TO TOTAL FUNDS

• AS PER THE SCHEME OF THE BANK, I/WE APPLY FOR THE LOAN ON A FIXED RATE/FLOATING
RATE BASIS (DELETE WHICHEVER IS IN APPLICABLE.

PROPOSED REPAYMENT
REPAYMENT TERM OF LOAN PERIOD OF RE-PAYMENT YEARS / MONTHS
MODE OF REPAYMENT
CHECK-OFF FACILITY WITH EMPLOYER
SALARY A/C & SI AT BRANCH
POST DATED CHEQUES
PURPOSE OF LOAN
A) FOR CONSTRUCTION B) FOR PURCHASE OF
HOUSE/FLAT
I. HOUSE- 1. IS THE UNIT NEW OLD
1. AREA OF PLOT SQ.F 2. AGE OF EXISTING STRUCTURE YEAR
T IF OLD S
2. PROPOSED BUILT UP AREA SQ.F 3. PURCHASE PRICE RS.
T
3. PURCHASE PRICE OF PLOT RS. 4. COST OF ADDITIONAL ITEMS RS.
4. ARCHITECT’S FEES RS. 5. TOTAL COST RS.
5. COST OF CONSTRUCTION RS. 6. AREA OF PLOT/ UNDIVIDED SQ.FT
SHARE OF LAND
II. FLAT- 7. BUILT UP AREA SQ.FT
1. AREA OF UNDIVIDED SHARE OF SQ.F 8. MARKET VALUE
LAND T LAND VALUE RS.
STRUCTURE VALUE RS.
2. COST OF THE SAME RS.
3. COST OF SEMI -FINISHED FLAT RS.
4. COST OF COMPLETION / RS.
ADDITIONAL ITEMS
III. REGISTRATION CHARGES RS.
IV. TOTAL COST RS.
V. MARKET VALUE AS PER RS.
REPORT

C) FOR EXTENSION
1. AGE OF EXISTING STRUCTURE YEAR
S
2. PLOT AREA/BUILT-UP AREA OF FLAT
3. MARKET VALUE OF EXISTING STRUCTURE RS.
4. (a) IS THE PROPERTY MORTGAGED TO ANY YES, NO.
INSTITUTION
(b) IF YES, NAME OF THE INSTITUTION
(c) VALUE OF O/S LOAN AGAINST MORTGAGE RS.
5. DETAILS OF PROPOSED REPAIR/EXTENSION
6. ESTIMATED COST OF REPAIR/EXTENSION RS.
DOCUMENTS
I/WE HAVE ATTACHED THE FOLLOWING COPIES OF SUPPORTING DOCUMENTS
(DULY ATTESTED WHEREVER NECESSARY)
 EMPLOYER’S CERTIFICATE GIVING DETAILS OF SERVICE & SALARY & LAST 3 MONTHS SALARY
SLIP
LATEST FORM 16 FROM EMPLOYER (FOR EMPLOYEES)

COPIES OF IT RETURN WITH NECESSARY DOCUMENTS CERTIFIED BY CA FOR LAST 3 YRS.

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

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

PERMANENT ADDRESS:____________________________________
____________________________________
____________________________________
 II. POST-SANCTION / LEGAL DOCUMENTS

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

1. Declaration by the borrower.

2. Documents relating to repayment :

Where Check-off is available:

a) Irrevocable Letter of Authority from employee (on standard format).
b) Letter of undertaking from employer (on Bank’s standard format).
c) Irrevocable Letter of Authority where applicant himself is drawing and
Disbursing Officer (on Bank’s standard format) or in other cases PDCs
or standing instructions wherever required may be obtained.

3. Memorandum of Term Loan Agreement for Housing Loan.

4. Guarantee Agreement, if applicable.

5. Mortgage Deed to be executed by the borrower.

6. Agreement to Mortgage, pending creation of mortgage.

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

applicable.

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

IMPORTANCE OF THE DOCUMENTS:

1) Declaration by the borrower:

Declaration by the borrower agreeing to construct the house within the

stipulated period in case of loan granted for purchase of plot of land.

2) Memorandum of Term Loan Agreement for Housing Loan:

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

3) Guarantee Agreement:

Guarantee agreement is the agreement signed by the guarantor giving

guarantee of repayment of loan in case of default by the borrower.

4) Mortgage Deed to be executed by the borrower:

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

purchased.

5) Agreement to Mortgage, pending creation of mortgage:

Agreement to mortgage is prepared in case if the property to be mortgage is in

incomplete state.

6) Documents in connection with pledge of other securities:

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

7) Arrangement letter:

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

8) Consolidated stamped affidavit and Indemnity:

 Declaring non availment of other loans against the same property /

from other financial institutions (in lieu of No Dues Certificate),
delivery of original documents of title etc.

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

 Undertaking that construction is as per sanctioned building plan (plan

is to be enclosed to the undertaking.

 To enable the Bank to initiate criminal proceedings against borrowers

if they declare incorrect, false or misleading information (to mitigate
risks on account of multiple financing/ submission of fake / forged title
deeds etc).
 D. PROCESS OF HOME LOAN

The process of housing loan consists of four stages. All the four stages play a vital
role in fulfilling the requirements of housing finance of the bank.
The stages are as follows-
 PRE-SANCTION

SANCTION

DISBURSEMENT

REPAYMENT

Flow chart showing the credit appraisal in home loan:

 Submission of documents with application
form

Verification of documents submitted by

the applicant

Visit / inspection by the appraisal officer PRE-

(if necessary) SANCTION
STAGE

Recommendation of loan proposal to

higher authority

Checking the genuineness of the builder,

property to be purchased)

Obtaining search report & valuation

certificate by empanelled lawyer & valuer.

Approval by the sanctioning officer SANCTION

STAGE

Preparation of security documents by

bank. (Hypothecation & mortgage)

Asset verification by the disbursement

officer

DISBURSE
Commencement of disbursement M-ENT
STAGE

Repayment

I. Pre-sanction Stage / Process.

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

i. Place: residence of the borrower-

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

b. Identify the borrower’s address on the basis of proof of residence

given by the applicant along with the application form.

c. Educational qualification.

d. Ascertain period of stay in current residence.

e. Whether owned / company leased / rented. If rented, ascertain

monthly rent being paid.

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

g. Educational qualification of spouse and children (except minor

children). If spouse / children are employed, name of the organization,
designation, experience and salary.

h. Number of school going children.

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

j. Discreet local enquiries with neighbors, opinion makers etc. to

ascertain antecedents, credentials of the borrower.

k. Whether he / she owns a car and / or a two wheeler in his / spouse’s

name. The vehicle number and name of the owner may be recorded
and the name of financiers, if any.

l. Sanctioning authority may make enquiries with the applicant’s

bankers, if he deems it necessary.

ii. Place: residence of the guarantor-

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

b. Identify the borrower’s address on the basis of proof of residence

given by the applicant along with the application form.

c. Educational qualification.

iii. Place: office / work place of borrower-

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

b. In case of self-employed / businessmen / professionals – with another

firm engaged in the same line of activity, one or two firm(s) in the
neighborhood / concerned industry body.

iv. Place: Builder-

To establish the genuineness, track record and reputation in terms of

timely completion of quality projects.

Procedure: check-

a. With a few reputed builders in the area.

b. With a few of the owners of their complete projects to ascertain

quality of construction, timely delivery and conveyance of the
ownership issues.

c. With the concerned industry body i.e. Chamber of Housing Industry /

Builder’s Forum etc.

d. With the builder’s bankers.

v. Place: property proposed to be purchased-

Procedure-

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

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

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

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

wheeler only / others.

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

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

underdeveloped / trouble prone.

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

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

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

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

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

i. Visit to the residence of the applicant,

ii. Visit to the residence of the guarantor,

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

 Formats standardized:

In addition to the above procedures, the following formats to be used are

also standardized for the pre-sanction and sanction process to ensure
uniformity and effective compliance of instructions by operating
functionaries and to minimize possibility of frauds during pre-sanction
stage:

Pre-sanction inspection sheet To be kept with documents. (Separate format to be

Control Card
Appraisal format
Letter forwarding BC / DD
to the Builder / Seller
Control report
used for recording pre-sanction visits by Bank’s staff
where outsourced agencies are engaged).
Control card will serve as a check list of compliance
of various processes / procedures, carrying brief
details of the loan, including details of post sanction
inspection, to be kept with documents.
With a view to ensuring uniformity in appraisal of
HLs and compliance with extant instructions, standard
appraisal format introduces.
Standard forwarding letter introduced to safeguard
Bank’s interest and ensure proper delivery of BC / DD
to seller / builder.
Standard Control Report to ensure uniformity in
reporting a sanction.

II. Sanctioning Stage / Process.

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

 SEARCH REPORT:

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

RISK OF MULTIPLE FINANCING/ SBMISSION OF FAKE TITLE DEEDS:

1. A consolidated stamped Affidavit of Declaration and Indemnity is to be obtained

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

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

3. Branches/RACPCs should access CIBIL data base, wherever required, to trace

credit facilities, if any availed by such borrowers from other banks in the centre
[opinion report from these Banks should be obtained regarding nature and conduct
of the facilities, before sanction].

4. RACPCs/ Branches can use the service of verification agencies that run 'de-dupe'
tests with other Banks' data too.
 ASSET VERIFICATION AND QUALITY OF LOAN PROCESS:

Controlling Offices are to scrutinize every month, at least 5% of the loans

sanctioned by a branch/ RACPC during the previous month, with a view to
ascertaining the quality of pre-sanction processes, loan appraisal, and
documentation. This may be done either by asking the branches/RACPCs to
submit photocopies of the relevant papers/documents or by visiting the
branches/RACPCs concerned. Services of Concurrent Auditors may also be used
for this purpose at the RACPCs.Asset verification, in case of at least 5% of the
loan accounts sanctioned during the previous quarter, may be arranged by the
controlling office during each quarter.
III. Disbursement Stage / Process.
It is a stage where the cheques of sanctioned amount of loan are handed over to the
borrower or to the concerned person.

To prevent misuse of funds, disbursement should be made only in phases co-relating

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

As regards loans for repairs/renovation/construction, etc, Branches should satisfy

themselves about the estimated cost of labor and other charges and after obtaining
certificate(s) of qualified engineers/architects as concerned necessary.

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

Disbursement of cheques:

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

The disbursement of cheques is done in accordance with the stage of construction as

reported by the technical advisor.

The cheques is disbursed in two ways as follows-

 DISBURSEMENT

ONE STROKE STEP-WISE

DISBURSEMENT DISBURSEMENT

i. DISBURSEMENT IN ONE STROKE-

In case of purchase of property which is in ready stage the payment is made in full to
the concerned party from whom the property is being purchased. The property such as
flat / fully constructed house etc. which are ready for acquisition comes under this
case.
Also the property which is proposed for re-sale comes under this case where the
borrower needs to make full payment to the seller.

ii. STEP-WISE DISBURSEMENT-

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

• Plinth area,
• Lintel level,
• Roof, etc.

 In cases where the payment has to be given in installments then the

disbursement is also done as per the installments i.e. first installment,
second installment, etc.

 Example of step-wise disbursement is as follows:

PARTICULARS AMOUNT (IN %)
 1. At the time of preparing 10%
agreement to sale
2. At the time of ‘Plinth’ 10%
3. At the time of first slab 10%
4. at the time of second slab 8%
5. At the time of third slab 8%
6. At the time of forth slab 8%
7. At the time of fifth slab 8%
8. B. B. Works 10%
9. Outer plaster 10%
10. Internal plaster 8%
11. At the time of flouring 5%
12. At the time of possession 5%
TOTOL: 100%
IV. REPAYMENT OF LOAN:

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

 If the disbursement is done in one stroke then the repayment starts
immediately from the next month.
 If the disbursement is done step-wise then the maximum time for
disbursement of loan is 18 months. The repayment starts from the 19th month
even if the project is completed or not.
 F. General causes of rejection of proposal
Not every loan proposal that comes to the bank are approves certain cases gets
rejected because of some or the other reason. The common causes of rejection of loan
are as follows:

I. Personal Profile:

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

II. Documents / Property:

a. The credit documents not as per policy.

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

III. Financial reasons:

a. Unsatisfactory credit history.

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

IV. Geographical Reasons:

a. If the property is beyond the geographical limits.

b. If the property is in negative profile area.
 ANALYSIS
&
INTERPRETATION OF DATA
A. Comparative Analysis:

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

I)
ITEMS BOBHFL SBI ICICI HDFC
Time required for 7 days 5 days 3 days 3 days
Processing/Sanction
Guidelines N.H.B R.B.I N.H.B N.H.B
followed
Periodicity of Annually Monthly Monthly Annually
interest

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

40

35

30

25 BOBHFL
SBI
20 ICICI
HDFC
15
OTHERS
10

0
BOBHFL SBI ICICI HDFC OTHERS

Interpretation:

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

RECOVERY

BOBHFL
SBI
ICICI
HDFC
OTHERS

Interpretation:

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

BOBHFL
SBI
ICICI
HDFC
OTHERS

Interpretation:

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

B. ANALYSIS OF BRANCH PERFORMANCE:

I)
(A) (B) (C) (D) (E) (F) (G)
Total Application Not – Rejected Withdrawn Sanctioned Pending
visit received eligible
No. of 170 140 12 6 5 112 5
Applicants
 180
160
140
120
100
80
NO. OF APPLICANTS
60
40
20
0
A B C D E F G
PARTICULARS

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

II)
YEAR

PARTICULARS 2006 2008 2009

PERSONAL 4546 7171 7298
SEGMENT
OTHERS 567 520 1183
TOTAL ADVANCES 5113 7691 8481
 9000

8000

7000

6000

5000 OTHERS

4000 PERSONAL

3000

2000

1000

0
2006 2007 2008

Interpretation:

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

III)
YEAR

PARTICULARS 2006 2007 2008

HOUSING LOAN 3682 5593 5871
OTHERS 864 1578 1427
TOTAL PERSONAL 4546 7171 7298
SEGMENT
(Figures in Lacs)
 8000

7000

6000

5000
OTHERS
4000
HOUSING LOAN
3000

2000

1000

0
2006 2007 2008

Interpretation:

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

C. COMPARISON BETWEEN THE THREE MAIN COMPETITORS:

PARTICULARS STATE BANK ICICI HDFC

OF INDIA
1. PURPOSE Purchase/ For purchase of For purchase of
construction/ house from builder house from
extension of old / / resale and builder / resale and
 new house/ flat construction / construction /
plot of land for extension of extension of
construction of existing house. existing house.
house.
2. RATE OF 8% - 11% 9.25% - 10% 9.25% - 10.75%
INTEREST
3. LOAN
AMOUNT:
i. Salaried Rs. 5,00,000/- to Rs. 2,00,000/- to Rs. 2,00,000/- to
Rs. 1,00,00,000/- Rs. 1,00,00,000/- Rs. 1,00,00,000/-

ii. Self employed Rs. 5,00,000/- to Rs. 2,00,000/- to Rs. 2,00,000/- to

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

4. ELIGIBILITY
CRITERIA
i. Salaried Rs. 1, 20,000/- p.a. Rs. 1,44,000/- p.a Rs.1,20,000/- p.a
ii. Self employed Rs. 2,00,000/- p.a. Rs. 1,50,000/- p.a Rs.1,50,000/- p.a
5. AGE CRITERIA
i. Salaried
ii. Self employed 18 – 60 yrs 21 – 65yrs 21 to 58yrs
18 – 70yrs 21 – 65yrs 21 to 65yrs
6. TENURE 5 – 20 yrs 5 – 20 yrs 5 – 20 yrs

7. EXPERIENCE:
i. Salaried 3 yrs 1 yrs 3 yrs
ii. Self employed 3 yrs 3 yrs 3 yrs
8. PROCESSING 0.50% 0.50% Rs.10,000/- or
FEE 0.5% of loan
amount(whichever
is lesser) + Service
Tax
9. PRE-PAYMENT 2% 2 % (Full If 25% of
CHARGES payment), No outstanding amount
Penalty (Part is paid every year
Payment). till 3 years - No
penalty, otherwise
2% of outstanding
amount
10. DOCUMENT-S
REQUIRED

i. Salaried 1) Application 1) Application 1) Application

form with form with form with
photograph, photograph, photograph,
2) Identity & 2) Identity & 2) Identity &
residence proof, residence proof, residence proof,
3) Last 3 months 3) Age Proof 3) Latest salary
salary slip, 4) Latest 3 months slip,
4) Form 16, salary slip, 4) Form 16,
 5) Last 6 months 5) Form 16, 5) Last 6 months
bank salaried 6) If current bank statements,
credit statements service is less 6) Processing fee
, than 2 years cheques.
6) Processing fee than previous
cheques company
relieving letter,
7) Last 6 months
bank statements,
8) Processing fee
cheques.

ii. Self employed 1) Application 1) Application 1) Application

form with form with form with
photograph, photograph, photograph,
2) Identity & 2) Identity & 2) Identity &
residence proof, residence proof, residence proof,
3) Education 3) Education 3) Education
qualifications qualifications qualifications
certificate & certificate & certificate &
proof of business proof of proof of
existence, business business
Business profile, existence, existence,
5) Last 3 years 4) Business 4) Business profile,
profit/loss & profile, Last 3 Last 3 years
balance sheet, years profit/loss profit/loss &
6) Last 6 months & balance sheet, balance sheet,
bank statements, 5) Last 6 months 5) Last 6 months
7) Processing fee bank statements, bank statements,
cheques. Processing fee 6) Processing fee
cheques cheques.
 RECOMMENDATIONS
&
SUGGESTIONS

RECOMMENDATIONS & SUGGESTIONS

1. The bank needs to satisfy customer needs that are complicated and difficult to
manage. A robust data warehouse should create wherefrom meaningful data
on customers, their preferences, their spending, patterns etc can be viewed.
2. Business process re-engineering is key requirement of bank. Fast delivery of
services, less documentation, simplified process etc, is necessary.

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

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

4. There should be strong risk management capabilities.

5. Leadership in market through differentiation and product innovation.

6. SBI can increase professional employment by bank and sells its loan schemes
to customer aggressively with the help of advertising media.

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

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

9. SBI can provide Net banking services to its existing customers as well as
promotion stunt to attract new customers.

10. Insurance for life is optional for now but to minimize the risk life insurance
should be made compulsory.
 CONCLUSION

CONCLUSION

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

2. Home Loans being a trust area the rate of NPA is very low or negligible as
compared to the other loans. Thus, there is minimum risk for default in Home
Loan Finance.
3. There is heavy risk involved in funding of any property like double funding.

4. In case of the borrower lost his job or meets with accident, which results into
permanent disability & in case of the borrowers death the loan repayment
responsibility comes on his family. It is major problem.

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

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

7. Due to careful credit appraisal of loan the chances of default are reduced and
the repayment of loan almost 99%.

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

CASE ONE: Mr. Makarand Joshi

Mr. Makarand Joshi, 35, is a lawyer by profession. He is applying for a loan to

purchase a new house. Presently he is residing in a rental house.

COST OF PROPERTY AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

(Rs)
1. Cost of flat 17,00,000 1. Amount already invested 1,50,000
2. Cost of construction - 2. Savings in bank 2,91,875
3. Cost of 50,000 3. Disposal of investment or -
amenities/service property
charges.
4. Cost of repairs - 4 .PF- -
refundable/nonrefundable
5. Miscellaneous - 5. Others -
6. Cost of stamp duty/ 17,500 6. LOAN APPLIED FOR 13,25,625
registration.
Total cost 17,67,500 Total funds 17,67,500

APPRAISAL NOTE

1. Name of the applicant Mr. Makarand Joshi

2. Full address a) Office: Old Maruti chambers, District court,
Nashik.
b) Residence: 6, Sideshwar, Gulalwadi, Somwarpeth
Nashik.
3. Purpose Purchase of new flat
4. Age as on the date of application 35 years
5. Total years of service/occupation 10 years
6. Total monthly income/ earnings 60,000
7. No. of family members/ dependents 3
8. Income from any other source NIL
9. Whether he owns any house. If yes, NO.
whether it is second one proposed now
for rental income?
10. Total annual income of the applicant 7,20,000
11. Total family expenses 1,20,000
12. Details of the flat to be purchased 20, Ashirwaad, Racca Colony Nashik.
13. Whether the applicant is possessing NO
existing house. If so, the purpose of
acquiring the proposed house/ flat
14. Amount of loan applied 13,25,625
15. Maximum loan amount admissible 13,25,625
16. Margin proposed (min. 25%) 25%
17. The applicant’s outside liability
a) Direct NIL
b) Indirect NIL
18. If the proposed house is to be given NO
on rental basis, the approx. amount of
rental expected
19. ECONOMIES:
a) Annual income from profession 7,20,000
b) Annual income of family members -
c) Other annual income -
d) Total receipts 7,20,000
e) Annual family expenditure 1,20,000
f) Surplus 6,00,000
g) Net monthly income 50,000
h) EMI 12,620
20. Security Purchased flat
21. Interest 9.25%
22. Repayment programme 216 installments of Rs.12,620 each for
18yrs

CASE TWO: Mr. Pankaj Rawal.

Mr. Pankaj Rawal, 31 is employed in ‘Mahindra & Mahindra’ as a Production

Engineer since last five years. Presently he is staying in a rental flat and is proposing
for a loan to construct a new house. Following are the particulars:

COST OF PROPERTY AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

(Rs)
1. Cost of land 10,00,000 1.Amount already invested 12,00,000
2. Cost of construction 9,10,000 2.Savings in bank 1,00,000
3. Cost of 1,50,000 3.Disposal of investment or -
amenities/service property
charges.
4 Cost of repairs - 4. PF- -
refundable/nonrefundable
5. Miscellaneous - 5.Others -
6. Cost of stamp duty/ 21,000 6.LOAN APPLIED FOR 7,81,000
registration.
Total cost 20,81,000 Total funds 20,81,000
 APPRAISAL NOTE

1. Name of the applicant Mr. Pankaj Rawal

2. Full address a) Office: Mahindra & Mahindra, Satpur, Nashik.
b) Residence: 24, Shivam Apt., Govindnagar, Nashik.
3. Purpose Construction of new house
4. Age as on the date of application 31 years
5. Total years of service/occupation 5 years
6. Total monthly income/ earnings 30,000
7. No. of family members/ dependents 4
8. Income from any other source NIL
9. Whether he owns any house. If yes, NO
whether it is second one proposed now for
rental income?
10. Total annual income of the applicant 3,60,000
11. Total family expenses 72,000
12. Details of the flat/ house to be “SNEHA”, Plot No.13, Govindnagar,
constructed/purchased Nashik – 09.
13. Whether the applicant is possessing NO
existing house. If so, the purpose of
acquiring the proposed house/ flat
14. Amount of loan applied 7,81,000
15. Maximum loan amount admissible 7,81,000
16. Margin proposed (min. 25%) 62.5%
17. The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
18. If the proposed house is to be given NO
on rental basis, the approx. amount of
rental expected
19. ECONOMIES:
a) Annual income from service 3,60,000
b) Annual income of family members -
c) Other annual income -
d) Total receipts 3,60,000
e) Annual family expenditure 72,000
f) Surplus 2,88,000
g) Net monthly income 24,000
h) EMI 8638
20. Security Constructed house
21. Interest 9.25%
22. Repayment programme 144 installments of Rs. 8638 each for
12yrs

CASE THREE: Mr. Pawan Nikam.

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

COST OF PROPERTY AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

(Rs)
1. Cost of Land - 1. Amount already invested 79,500
2. Cost of house 11,50,000 2. Savings in bank 2,62,000
3. Cost of amenities/service 2,00,000 3. Disposal of investment or -
charges property.
4. Cost of repairs - 4. PF- -
refundable/nonrefundable
5. Miscellaneous - 5. Others -
6. Cost of stamp 13,500 6. LOAN APPLIED FOR 10,22,000
duty/registration
Total cost 13,63,500 Total funds 13,63,500

APPRAISAL FORM
1. Name of the applicant Mr. Pawan Nikam
2. Name of the co-applicant Mrs. Sonali Nikam
3. Full address a) Office: MICO BOSCH, Satpur, Nashik.
b) Residence: Gyatri Appt. old Pandit colony, Nashik.
4. Purpose Purchase of a new row house
5. Age as on the date of application 38 years
6. Total years of service/occupation 9 years
7. Total monthly income of applicant Rs.42,600/-
8. Total monthly income of co-applicant Rs.14,700/-
9. No. of family members/ dependents 3
10.Income from any other source NIL
11. Whether he owns any house. If yes, Yes, but not to be given on rental basis.
whether it is second one proposed now
for rental income?
12.Total annual income of the applicant Rs.5,11,200/-
13.Total annual income of the co- Rs.1,76,400/-
applicant
14.Total family expenses Rs.84,000/-
15. Details of the flat/ house to be “Durgesh”, Tidke colony, Nashik.
constructed/ purchased.
16. Whether the applicant is possessing Yes, as the existing house is small.
existing house. If so, the purpose of
acquiring the proposed house/ flat
17.Amount of loan applied Rs.10,22,000/-
18.Maximum loan amount admissible Rs.10,22,000/-
19. Margin proposed (min. 25%) 25%
20.The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
21. If the proposed house is to be given NO
on rental basis, the amount of rental
expected?
22. ECONOMIES:
a) Annual income from service Rs.5,11,200/
b) Annual income of family members Rs.1,79,400/-
c) Other annual income
d) Total monthly income of applicant Rs.42,600/-
e) Total monthly income of co- Rs.14,700/-
applicant
f) Monthly family expenditure Rs.7000/-
g) Net monthly income Rs.50,300/-
h) EMI Rs.9,360/-
23.Security Purchased row house
24.Interest 9.25%
25.Repayment programme 240 installments of Rs.9360/- for 20yrs

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

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

COST OF PROPERTY AMT (Rs) SOURCES OF FUNDS (Rs) AMT (Rs)

(Rs)
1. Cost of flat 27,61,000 1. Amount already invested -
2. Cost of construction - 2. Savings in bank 2,42,500
3. Cost of 30,000 3. Disposal of investment or -
amenities/service property.
charges.
4. Cost of repairs - 4.PF- -
refundable/nonrefundable
5. Miscellaneous - 5.Others 6,91,000
6. Cost of stamp duty/ 1,42,500 6.LOAN APPLIED FOR 20,00,000
registration.
Total cost 29,33,500 Total funds 29,33,500

APPRAISAL NOTE
1. Name of the applicant Mr. Atul Ashok Dhamne
2. Full address a) Office: Frontier Drilling (ASIA) pvt. Ltd, 221,
Henderson rd, Singapore 159557.
b) Residence: Block 654 A, Chua Chukang,
Cresent, Singapore 681684.
3. Purpose Purchase of a new house
4. Age as on the date of application 28 years
5. Total years of service/occupation 4 years
6. Total monthly income/ earnings Rs.1, 54,440/-
7. No. of family members/ dependents 4
8. Income from any other source NIL
9. Whether he owns any house. If yes, NO
whether it is second one proposed now for
rental income?
10. Total annual income of the applicant Rs.18,52,280/-
11. Total family expenses Rs.2,40,000/-
12. Details of the flat to be purchased. Ashoka Heights, Ashoka Gardens,
Gangapur Road, Nashik.
13. Whether the applicant is possessing NO
existing house. If so, the purpose of
acquiring the proposed house/ flat
14. Amount of loan applied Rs.20,00,000/-
15. Maximum loan amount admissible Rs.22,00,000/-
16. Margin proposed (min. 25%) 31.82%
17. The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
18. If the proposed house is to be given on NO
rental basis, the approx. amount of rental
expected
19. ECONOMIES:
a) Annual income from service 18,52,280
b) Annual income of family members
c) Other annual income
d) Total monthly income 1,54,440
e) Monthly family expenditure 20,000
f) Net monthly income 1,34,440
h) EMI 25,600
20. Security Purchased house
21. Interest 9.25%
22. Repayment programme 120 installments of Rs. 25,600 each for 10
yrs

CASE FIVE: Mr. Rajendra Patil.

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

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

Particulars Amt(Rs) Particulars Amt(Rs)

Loan for takeover 2,00,000 Loan approved 2,00,000
Total 2,00,000 Total 2,00,000

APPRAISAL NOTE
1. Name of the applicant Mr. Rajendra Patil
2. Full address a) Office/Shop: Sweetmeat Shop, opp. Gymkhana,
Shivaji Road, Nashik.
b) Residence: SUVIRAM, plot no. 30, 31, Palm Spring,
Savarkar Nagar, Gangapur Road, Nashik.
3. Purpose TAKEOVER OF HOUSING LOAN
FROM BOB HOUSING FINANCE
LTD.
4. Age as on the date of application 67 years
5. Total years of service/occupation 33 years
6. Total monthly income/ earnings Rs.11,447/-
7. No. of family members/ dependents 3, 2 sons and spouse. All employed
8. Income from any other source NIL
9. Whether he owns any house? YES, takeover of the same house is being
contemplated.
10. Total annual income of the applicant Rs.1,37,734/-
11. Total family expenses Rs.30.000/-
12. Details of the flat/ house for takeover SUVIRAM, plot no. 30, 31, Palm Spring,
Savarkar Nagar, Gangapur Road, Nashik.
13. Whether the applicant is possessing NO
existing house. If so, the purpose of
acquiring the proposed house/ flat
14. Amount of loan applied Rs.2,00,000/-
15. Maximum loan amount admissible Rs.2,00,000/-
16. Margin proposed (min. 25%) NIL
17. The applicant’s outside liability
a) Direct: NIL
b) Indirect: NIL
18. If the proposed house is to be given NO
on rental basis, the approx. amount of
rental expected
19. ECONOMIES:
a) Annual income from business Rs.1,37,734/-
b) Annual income of family members -
c) Other annual income -
d) Total receipts Rs.137734/-
e) Annual family expenditure Rs.30.000/-
f) Surplus Rs.1,07,734/-
g) Net monthly income Rs.8,978/-
h) EMI Rs.4,176/-
20. Security Same house.
21. Interest 9.25%
22. Repayment programme 60 installments of Rs.4, 176/- for 5 years.

BIBLOGRAPHY
BOOKS & SITES:

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

www.google.com www.statebankofindia.com

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

www.onlinesbi.com www.sbici.com