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A Study On
A study on Housing Finance schemes of
HDFC bank & SBI bank
A Project Report Submitted for the
Partial Fulfillment of the Requirement for the Award of the Degree of
Master of Business Administration (MBA)
Supervised By: Submitted By:
Dr. B.D.Mishra Rahul Yadav
Associate Professor Roll Number-
2012
Department of Management Studies
Guru Ghasidas Vishwavidyalaya, Bilaspur (C.G.)
Certificate by the Student
This is to certify that I, Rahul Yadav, a student of MBA Fourth Semester of
the batch 2010-12 (Roll No. - _________ ) have carried out a project entitled
“A study on Housing Finance schemes of HDFC bank & SBI bank”
under the supervision of Dr. B.D.Mishra, Associate Professor, in the
Department of Management Studies, Guru Ghasidas Vishwavidyalaya,
Bilaspur (C G). This is an original work carried out by me and the report has
not been submitted to any other University for the award of any degree or
diploma.
Date: _____________ (Name and Signature of the Student)
Place: Bilaspur Rahul Yadav
MBA IV Sem.
Roll No.-______________
Certificate by the Supervisor
This is to certify that, Mr. Rahul Yadav , a student of MBA Fourth Semester
of the batch 2010-12 (Roll No. - ___________ ) have carried out a project entitled
“A study on Housing Finance schemes of HDFC bank & SBI bank” under my
supervision and guidance. It is also certified that the student has complied with all
the guidelines designed for the project report. To the best of my knowledge this
report is an authentic record of the work carried out by the student and it is
considered fit for being referred for evaluation.
Date: ____________ (Name and Signature of the Supervisor)
Place: Bilaspur Dr.B.D.Mishra
Department of Management Studies
Guru Ghasidas Vishwavidyalaya,
Bilaspur (C G)
SYNOPSIS
Title of the project:-
“A study on housing finance schemes of HDFC Bank & SBI Bank.”
Objective of the project:-
1) To analysis housing loan schemes of HDFC Bank & SBI Bank.
2) To examine the opinion of customers regarding housing loan offered by HDFC &SBI
Bank.
3) To understand the housing loan schemes.
4) To compare the housing loan schemes of HDFC & SBI Bank.
Significance of the project:-
It provides knowledge about the banking finance strategy of bank in housing finance sector.
Data sources & Methodology:-
Primary sources: - Information & data will be collected from HDFC & SBI Bank.
Secondary sources: - Information & data will be collected through internet.
Methodology:-Study has considered two major institutions involved in providing housing
loan, viz. HDFC & SBI Bank. Cross table are arrange in terms of purpose of loan, tenure of loan,
cost of loan, repayment schedule, awareness about interest rates, time taken for processing the
application, procedural formalities and security for getting the loan. These opinions have been
arranged and calculated to make a comparative presentation.
Chapter Plan:-
Chapter 1:- Introduction.
Chapter 2:- Housing finance in India.
Chapter 3:- Company profile of HDFC Bank & SBI Bank.
Chapter 4:-Analysis of data home loan of HDFC Bank & SBI Bank
Chapter 5:-Conclusion
Chapter Plan
Chapter 1 INTRODUCTION OF HOUSING FINANCE
INSTITUTIONAL FRAMEWORK OF HOUSING FINANCE
STRUCTURE OF HOUSING FINANCE INDUSTRY
HOME LOAN TYPES
OBJECTIVES
Chapter 2
HOUSING FINANCE IN INDIA TAX BENEFITS ON HOME LOANS WHY TAKE A HOME LOAN?
Chapter 3COMPANY PROFILE:- HDFC BANK STATE BANK OF INDIA
Chapter 4ANALYSIS OF DATA:- HOME LOAN OF HDFC BANK HOME LOAN OF STATE BANK OF INDIA COMPARING HOME LOAN SCHEMES OF HDFC & STATE BANK OF INDIA HOUSING LOAN SCHEMES OF DIFFERENT BANKS
Chapter 5 FINDING CONCLUSION
Bibliography
Appendices
PREFACE
My research project deals with “A study on housing finance schemes of HDFC Bank & SBI
Bank.”In this report, I have studied & evaluated the consumer perception regarding the
Electronic Bikes.The first section deals with the concept of consumer perception and the factors
which influence the behavior of the consumer and rol of consumer in marketing. In this section, I
have given a brief explanation about the Automobile (Electronic bikes) Industry . It also contains
the Company profile of Electrotherm India Ltd. and its products special focus on Auto division
i.e. E-Bikes. This section of my report deals with a detailed company profile. It includes the
company’s history: its activities and operations, organizational structure, etc. this section
attempts to give detailed information about the company and the nature of its functioning.
In the second section of my report, contains the various tool & techniques used by me to
accomplish the study successfully. I have conducted a research study to determine the factors
which influence or prevents a customer to purchase Electronic Bikes.
The third and fourth section of this report consists of data analysis & interpretations of
collected data and information it also contains major findings of the study, conclusion and
Suggestions for the organizations. Findings is comprises f Benefit of E-Bikes on Conventional
Bikes and SWOT Analysis of Yo-Bikes (Electrotherm India Ltd.).
Rahul Yadav
ACKNOWLEDGEMENT
At the outset, I wish to express my sincere thanks to almighty for showering his blessing
on me to develop this project.
Preparing a project of this nature is an arduous task and I was fortunate enough to get
support from a large number of people to whom I shall always remain grateful. I would like to
express my sincere thanks to Dr.B.D.Mishra, Associate Professor, who gave me the opportunity
for under taking the project.
I wish to thank my internal guide Dr. B.D.Mishra in MBA Department for his help and
encouragement in the development and refinement of the project. I also would like to show my
gratitude to Dr. S.V.S. Chauhan Sir (Professor & Head of the Department) and Dr. L.P. Pateriya
Sir (Professor) for their immense support & guidance for completion of the project.
Rahul Yadav
INDEX
Chapter No. Chapter Name Page No.
1. INTRODUCTION 01
A study on Housing Finance schemes of
HDFC bank & SBI bank
2. INSTITUTIONAL FRAMEWORK OF HOUSING
FINANCE
03
3. STRUCTURE OF HOUSING FINANCE INDUSTRY 04
4. HOME LOAN TYPES 05
5.OBJECTIVE OF THE PROJECT
06
6.SIGNIFICANCE OF THE PROJECT
06
7. METHODOLOGY 06
8. CONCLUSION 66
9. BIBLIOGRAPHY 67
10. APPENDICES 68
CHAPTER- 1
INTRODUCTION OF HOUSING FINANCE
INSTITUTIONAL FRAMEWORK OF HOUSING FINANCE
STRUCTURE OF HOUSING FINANCE INDUSTRY
HOME LOAN TYPES
OBJECTIVES
SIGNIFICANCE
METHODOLOGY
INTRODUCTION
Housing is one of the best human needs of the society. It is closely linked with the process of
overall socio-economic development of a country. India, being a highly populated country, there
is a great need and scope for the development of Housing Sector. Unfortunately, for some
reasons or the other, the housing sector in India has remained underdeveloped in the past,
however, it is hoped that there would be improvement in the near future.
Housing is a growing industry. There is substantial gap between demand and supply and is
persisting for a very long period According to an estimate by the National Building
Organization, the cumulative shortage of total dwelling houses in the country by the end of 1991
was 31 million. It is further estimated by this organization that the demand for housing will be
around 4.5million units, leaving a gap of one million housing units annually. Hence, based up on
this estimate, the cumulative shortage of housing may reach to41million units by the end of this
century.
Presently, funds required per dwelling shelter are so high that the individual's saving is not
adequate to meet the expenditure of house building. As a result, there is great demand for
external housing finance.
Housing was given due priority only in 1988 when a National Housing Policy was announce.
The policy reflected the trust that housing was not merely a consumption expenditure but also a
productive investment which would provide economic activity in the country. Besides this, the
policy also envisaged that an impetus given to housing would stimulate economic development
through creation of substantial employment opportunities. Consequently, the institutional
mechanism for housing was strengthened by the establishment of National Housing Bank (NHB)
by the Reserve Bank of India.
INSTITUTIONAL FRAMEWORK OF HOUSING FINANCE
The setting up of the National Housing Bank marked the new era in housing finance as a new
fund based financial service in the country. A large number of financial institutional/companies
in the public, private and joint sector entered in this field. For example, Life Insurance
Corporation of India and General Insurance Corporation came with various schemes for
financing the housing units. In 1970, Housing and Urban Development Corporation (HUDCO), a
wholly government owned enterprise, was setup with the objective of housing and urban
development as well as infrastructure development. After that, in 1977, another Corporation
named Housing Development Finance Corporation (HDFC) was setup in private sector.
Housing was given due priority only in 1988 when a National Housing Policy was announced.
The policy reflected the trust that housing was not merely a consumption expenditure but also a
productive investment which would provide economic activity in the country. Besides this, the
policy also envisaged that an impetus given to housing would stimulate economic development
through creation of substantial employment opportunities. Consequently, the institutional
mechanism for housing was strengthened by the establishment of National Housing Bank (NHB)
by the Reserve Bank of India.
STRUCTURE OF HOUSING FINANCE INDUSTRY
Housing Finance
HOME LOAN TYPES
Formal Sector Informal Sector
Household
savings
Disposal of
Existing
properties
Borrowings from
friends, relatives
and money lenders
Government Banking Non-Banking
Central
Govt.
State
Govt.Public
Authorities
Commercial
Banks
Cooperative
Banks
Other
Banks
HUDCO
Non-Banking
Finance
Companies
(NBFCs)
House Finance
Companies
(HFCs)
Non-Banking
Housing
Finance
Companies Insurance
LIC/GIC
Specialised
Institution
HDFC
Owning a piece of land or property is a lifetime dream for every individual. There are many
home loans provider in the market to make your dream come true. But before you opt for any
home loan provider, you need to consider certain factors related to property that you are
interested in buying and also about the salient features offered by a home loan provider and also
study some Home Loans and Home Insurance FAQs which helps in applying a Home Loan in
India.
And the most important thing is you should know about each and every term related with Home
Loans before applying for a Loan. It is always advisable to consult a home loan expert or
consultant before applying for a home loan or purchasing a property.
You can take different types of home loans like Bridge Loans, Home construction Loans, Home
Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc for
different schemes available in the market. There are different types of home loans tailored to
meet your needs.
Home Purchase Loans: These are the basic forms of home loans used for purchasing of
a new home.
Home Improvement Loans: These loans are given for implementing repair works,
healing and renovations in a home that has already been purchased.
Home Construction Loans: These loans are available for the construction of a new
home.
Home Extension Loans: These loans are given for expanding or extending an existing
home. For eg: addition of an extra room etc.
Home Conversion Loans: These loans are available for those who have financed the
present home with a home loan and wish to purchase and move to another home for
which some extra funds are required. Through home conversion loan, the existing loan is
transferred to the new home including the extra amount required, eliminating the need of
pre-payment of the previous loan.
Land Purchase Loans: These loans are available for purchasing land for both
construction and investment purposes.
Bridge Loans: Bridge loans are designed for people who wish to sell the existing home
and purchase another one. The bridge loans help finance the new home, until a buyer is
found for the home.
OBJECTIVE OF THE PROJECT:-
1) To analysis housing loan schemes of HDFC Bank & SBI Bank.
2) To examine the opinion of customers regarding housing loan offered by HDFC &SBI
Bank.
3) To understand the housing loan schemes.
4) Comparing the housing loan schemes of HDFC & SBI Bank.
SIGNIFICANCE OF THE PROJECT:-
It provides knowledge about the banking finance strategy of bank in housing finance sector.
METHODOLOGY:-
Study has considered two major institutions involved in providing housing loan, viz. HDFC &
SBI Bank. Cross table are arrange in terms of purpose of loan, tenure of loan, cost of loan,
repayment schedule, awareness about interest rates, time taken for processing the application,
procedural formalities and security for getting the loan. These opinions have been arranged and
calculated to make a comparative presentation.
CHAPTER PLAN:-
Chapter 1:- Introduction.
Chapter 2:- Housing finance in India.
Chapter 3:- Company profile of HDFC Bank & State Bank of India
Chapter 4:-Analysis of data home loan of HDFC Bank & State Bank of India
Chapter 5:-Conclusion
CHAPTER-2
HOUSING FINANCE IN INDIA
TAX BENEFITS ON HOME LOANS
WHY TAKE A HOME LOAN?
HOUSING FINANCE IN INDIA
The Home loan sector in India is the pivotal role player in the growth of the real estate scenario
in India. With tax incentives given to the housing finance sector in the annual budget of 2001
transactions related to buying and selling of residential properties increased considerably and
was much higher as compared to previous years
Since the new class of buyers are relatively younger set of customers who are more aware about
legal documentation and approvals, buyers are now more 'end-users' rather than investors the
property market in India undergoes transformation to align itself with global standards with an
increased emphasis on quality & cost control and documentation methods. In the current
economy of India, the real estate sector has the maximum propensity to generate income and
demand for materials equipment and services. It can be said that housing finance companies
were formed for co-existing with buyer's requirements of housing loans for investing in
properties. Home loans are made available by financial institutions to both Indian and NRI
customers at floating and fixed rate of interest and also at attractive EMI options.
For construction or buying a new home
For home repairs and renovations
For purchase of plots
Against mortgage of property
No tax benefits are available for NRI customers unless you file returns and there by become
eligible to avail of the tax benefits.
Besides home loans, Commercial property loans are also available and different financial
institutions a India provide commercial loans at different rates and different upper limits.
Real estate loans are available to builders, promoters and real estate developers. The experience
and financial standing of the builders is taken into account before the loan is granted which is to
be returned with the minimum installments.
Today, the amount of money that a city dweller spends on rent is roughly the same, or only
slightly less than the amount he pays as an EMI on a housing loan. Earlier the home loan sector
in India was solely dependent on nationalized and public sector banks, but the entry of public
sector banks into the housing finance business marked the beginning of the first round of interest
rate cuts. And this reduction in interest rates has enhanced the borrowing power of customers.
Moreover, HFCs are offering incentives to attract investors like
Some companies sanction the housing loan without requiring you to identify property as
a pre-requisite for eligibility
Free accident insurance & property insurance
Waiving of pre-payment penalty
Waiving of processing fee
There are a few documents which the finance companies require for setting up criteria for
eligibility of Home loans.
Salaried Employee Self –Employed
The latest salary slip showing story
deductions. \
Computation of income for the previous two
years, certified by a Chartered Accountant.
Form16 (showing tax deducted at \
Source by employer)
\Profit & Loss Account and Balance Sheet for
the previous two years, certified by a
Chartered Accountant.
Proof of age (birth certificate/voter identity
card/passport/school leaving certificate/valid
Proof of age (birth certificate/voter identity
card/passport/school leaving certificate/valid
driving license driving license
Proof of residence (phone bill /electricity
bill/ration card).
Proof of residence (phone bill/electricity
bill/ration card).
The realty boom in India has given a new dimension to the finance sector in India - both in
Home Loans and Home Insurance segments. This has not only given a competitive edge to the
finance companies to provide attractive options to customers but has also contributed to the
increased investments in the real estate sector. This has resulted in 13 new institutions for saying
in to the housing finance business in the last three years.
Major Home Loan Providers
Banks & Public
Sector Housing
Finance Companies
State Bank of India, Corporation Bank ,Punjab National bank Central
Bank Dena Bank ,Allahabad Bank ,Bank of Maharashtra ,Bank of
Baroda Housing Finance, Can Fin Homes, GIC Housing
Finance ,LIC Housing Finance, PNB Housing Finance ,SBI Home
Finance, Centbank Home Finance ,HUDCO, LIC, etc.
Financial Institution HDFC, ICICI Ltd, Citibank, IDBI Bank ,etc
TAX BENEFITS ON HOME LOANS
As the Indian real estate market makes an upward swing, and investors opt for housing finance
or home loans, tax benefits obtained from them is a lucrative option. Customers availing of
Home Loans can claim a certain portion of the interest and principal that they pay towards the
loan installments for reducing tax liability. Resident Indians are eligible for certain tax benefits
on principal and interest components of a loan under the Income Tax Act, 1961.Moreover, an
added tax benefits under Sec 80 C on repayment of principal amount up to Rs. 1,00,000p.a. can
be availed that can further reduce your tax liability by about Rs. 30,000p.a.
Tax benefits can be claimed on both the principal and interest components of the home loan as
per the Income Tax Act, 1961. These deductions are available to assesses, who have taken a loan
to either buy or build a house, under Section 24(b). Interest on borrowed capital is deductible up
to Rs 150,000 if the following conditions are satisfied:
Capital is borrowed on or after April 1, 1999for acquiring or constructing a property.
The acquisition/construction should be completed within 3 years from the end of the
financial year in which capital was borrowed.
The person, extending the loan, certifies that such interest is payable in respect of the
amount advanced for acquisition or construction of the house
A loan for refinance of the principle amount outstanding under an earlier loan taken for
such acquisition or construction.
If the conditions stated above are not fulfilled, then the interest on borrowed capital is deductible
upto Rs 30,000 though the following conditions have to be satisfied:
Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction
repairs or renewal of a house property.
Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or
renewals of a house property.
If the capital is borrowed on or after April 1, 1999, but construction is not completed
within 3 years from the end of the year, in which capital is borrowed.
In addition o the above, principal repayment of the loan/capital borrowed is eligible for a
deduction of up to Rs 100,000 under Section 80C from assessment year 2006-07.
Tax Limitation on Home Loans
Income Tax act 1961, provides two section where you can use home loans for the Tax Savings
purpose. The two sections are :
Section 80c
Under this section maximum of Rs.100000 (one lac) can be exempted from the Income Tax on
repayment of principal on home loans.
Example 1
If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is
Rs.80000, then your Taxable Income is Rs.500000 – Rs.80000 = Rs.420000.
Example 2
If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is
Rs.100000, then your Taxable Income is Rs.500000 – Rs.100000 = Rs.400000.
Example 3
If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is
Rs.140000, then your Taxable Income is Rs.500000 – Rs.100000 = Rs.400000. Because you can
exempt maximum of one lac under this section.
Other savings
Note that under this section (80c) you can show other savings like Public Provident Fund
(PPF), etc. Maximum limit Rs.100000 includes all the savings. If you are declaring Rs.100000
as the principal payment, then you can not include other savings.
Section 24b
Under this section maximum of Rs.150000(1.5 lac) can be declared as the interest payable on the
Home Loans. As we have shown the examples, here as well the rule is same. You can exempt
maximum of Rs.150000.
Terms and conditions for availing Tax benefits on Home Loans
1. Tax deductions can be claimed on housing loan interest payments, subject to an upper limit of
Rs 150,000 for a financial year. Interest on the fresh loan can be claimed as a deduction, subject
of the stated upper limit.
2. An additional loan for extension/addition to the same house and the person's deductions on the
existing loan are less than Rs 150,000; he can claim further benefits from the additional loan
taken, subject to the upper limit of Rs 150,000 for a financial year.
3. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be
claimed only when the payment is made. If a person fails to make EMI payments, he cannot
claim tax benefits for the same.
4. According to the Income Tax Act, only the person who has taken the loan can claim tax
rebates.
5. The interest on home loans taken for repairs, renewals or reconstruction, also qualifies for the
deduction of Rs 150,000.
6. A husband and wife, both of whom are tax-payers with independent income sources, get tax
deduction benefits, with respect to the same housing loan; to the extent of the amount of loan
taken in their own respective name.
7. If a person buys a house and sells it within the same year/after 3 years, and if any profit is
made, then a capital gains tax liability arises on the same for which the individual is liable to pay
short-term capital gains tax since the sale took place in the same year. But, if the sale had taken
place after 3 years, then along-term capital gains tax liability would have arisen.
8. If it is proved that the home loan is simply an arrangement between the loan-seeker and the
builder or with a third party for the purpose of claiming tax benefits, then tax benefits will not be
allowed and benefits, previously claimed , will be clubbed to the income and taxed accordingly.
9. Tax benefits on interest on housing loans are allowable only for the original loan and for a
second loan taken to repay the first loan and not for subsequent loans. This means that if you
have already availed of one loan to refinance the original loan and want to now avail a third loan
to refinance the second loan, tax rebate on interest payments will not be permissible. This is
because the Section 24 (1) only talks of the second loan and not of subsequent loans. Even if you
take the second loan at a rate of interest higher than the original loan, you will be eligible for a
tax rebate on the second loan.
WHY TAKE A HOME LOAN?
Taking a home loan now days has become very simpler. The RBI has been regularly slashing
interest rates, with the result that housing finance loans that came at an interest rate of 16.5% to
18%four years ago are now available at 11.5%to 13%or lower. Each year the Finance Minister's
generosity during the Budget seems to be solely concentrated for the housing sector and
construction sector .The Budget 2000's allowed interest payment up to Rs 1 lakh and principal
payment of Rs 20,000 to be exempted from income tax. To top it all, the Housing Finance
Companies (HFCs) are aggressively wooing customers .
CHAPTER-3
COMPANY PROFILE:-
HDFC BANK
STATE BANK OF INDIA
COMPANY PROFILE
HDFC BANK
HDFC Bank Limited (BSE: 500180,) is a major Indian financial services company based in
India, incorporated in August 1994, after the Reserve Bank of India allowed establishing private
sector banks. The Bank was promoted by the Housing Development Finance Corporation, a
premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and
over 5,000 ATMs, in 780 cities in India, and all branches of the bank are linked on an online
real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion. For the
fiscal year 2008-09, the bank has reported net profit of 2,244.9 crore (US$498.37 million), up
41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at
19,622.8 crore (US$4.36 billion) in 2008-09.[4]
It is one of the Big Four banks of India, along with State Bank of India, ICICI Bank and Punjab
National Bank—its main competitors.
History
HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited
(HDFC), India's largest housing finance company. It was among the first companies to receive
an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private
sector. The Bank started operations as a scheduled commercial bank in January 1995 under the
RBI's liberalisation policies.
Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged
with HDFC Bank Ltd Provision to club expected rent accruals from property proposed to
compute eligible loan amount
Provision to finance cost of furnishing and consumer durables as part of project cost
Repayment permitted upto 70 years of age
Free personal accident insurance cover
Optional Group Insurance from SBI Life at concessional premium (Upfront premium
financed as part of project cost)
Interest applied on daily diminishing balance basis
'Plus' schemes which offer attractive packages with concessional interest rates to Govt.
Employees, Teachers, Employees in Public Sector Oil Companies.
Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban
Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat
No Administrative Charges or application fee
Prepayment penalty is recovered only if the loan is pre-closed before half of the original
tenure (not recovered for bulk payments provided the loan is not closed)
Provision for downward refixation of EMI in respect of floating rate borrowers who avail
Housing Loans of Rs.5 lacs and above, to avail the benefit of downward revision of
interest rate by 1% or more
In-principle approval issued to give you flexibility while negotiating purchase of a
property
Option to avail loan at the place of employment or at the place of construction
Attractive packages in respect of loans granted under tie-up with Central/ State
Governments/ PSUs/ reputed corporates and tie-up with reputed builders (Please contact
your nearest branch for details)
., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank
received 1 share of HDFC Bank for every 5.75 shares of Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than
1,000. The amalgamated bank emerged with a base of about Rs. 1,22,000 crore and net advances
of about Rs.89,000 crore. The balance sheet size of the combined entity is more than Rs.
1,63,000 crore.
Business focus
HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail
Banking Services, Treasury. It has entered the banking consortia of over 50 corporates for
providing working capital finance, trade services, corporate finance and merchant banking. It is
also providing sophisticated product structures in areas of foreign exchange and derivatives,
money markets and debt trading and equity research
Wholesale banking services
Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates and agri-
based businesses. For these customers, the Bank provides a wide range of commercial and
transactional banking services, including working capital finance, trade services, transactional
services, cash management, etc. The bank is also a leading provider of for its to corporate
customers, mutual funds, stock exchange members and banks.
Retail banking services
The objective of the Retail Bank is to provide its target market customers a full range of financial
products and banking services, giving the customer a one-stop window for all his/her banking
requirements. The products are backed by world-class service and delivered to customers
through the growing branch network, as well as through alternative delivery channels like
ATMs, Phone Banking, Net Banking and Mobile Banking. HDFC Bank was the first bank in
India to launch an International Debit Card in association with VISA (VISA Electron) and issues
the Master card Maestro debit card as well. The Bank launched its credit card business in late
2001. By March 2009, the bank had a total card base (debit and credit cards) of over 13 million.
The Bank is also one of the leading players in the “merchant acquiring” business with over
70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant
establishments. The Bank is well positioned as a leader in various net based B2C opportunities
including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments,
etc.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,
Local Currency Money Market & Debt Securities, and Equities. These services are provided
through the bank's Treasury team. To comply with statutory reserve requirements, the bank is
required to hold 25% of its deposits in government securities. The Treasury business is
responsible for managing the returns and market risk on this investment portfolio.
STATE BANK OF INDIA
State Bank of India (SBI) is the largest state-owned banking and financial services company
with its headquartered in Mumbai, India. The bank is largest in India by turnover and total assets.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding
in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and
Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The
government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of
India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took
over the stake held by the Reserve Bank of India.
SBI provides a range of banking products through its vast network of branches in India and
overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with
over 16,000 branches, has the largest banking branch network in India. It also has around 130
branches overseas. With an asset base of $352 billion and $285 billion in deposits, it is a regional
banking behemoth and is one of the largest financial institutions in the world. It has a market
share among Indian commercial banks of about 20% in deposits and loans.
The State Bank of India is the 29th most reputed company in the world according to Forbes.
Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual
survey conducted by Brand Finance and The Economic Times in 2010.
The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank,
Punjab National Bank and HDFC Bank—its main competitors. And “GUINNESS BOOK OF
WORLD RECORD " that 56 million transactions happening per day all over the world is
definitely an achievement
History
State Bank of India Mumbai Main Branch.
The roots of the State Bank of India rest in the first decade of 19th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15
April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies and were the result of the royal charters. These three
banks received the exclusive right to issue paper currency in 1861 with the Paper Currency Act,
a right they retained until the formation of the Reserve Bank of India. The Presidency banks
amalgamated on 27 January 1921, and the reorganized banking entity took as its name: Imperial
Bank of India. The Imperial Bank of India remained a joint stock company
Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30
April 1955, the Imperial Bank of India became the State Bank of India. The government of India
recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of
interest because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, enabling the
State Bank of India to take over eight former state-associated banks as its subsidiaries. On 13
September 2008, the State Bank of Saurashtra, one of its associate banks, merged with the State
Bank of India.
SBI has acquired local banks in rescues. For instance, in 1985, it acquired the Bank of Cochin in
Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of
Travancore, already had an extensive network in Kerala.
Associate banks
SBI has five associate banks:
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
State Bank of Saurashtra - merged with SBI in 2008.
State Bank of Indore - merged with SBI in 2010.
Branches of SBI
State Bank of India has 131 foreign offices in 32 countries across the globe.
SBI has about 21,000 ATMs; and SBI group(including associate banks) has about 45,000
ATMs.
SBI has 26,500 branches, including branches that belong to its associate banks.
SBI includes 99345 offices in India.
CHAPTER-4
ANALYSIS OF DATA
HOME LOAN OF HDFC BANK
HOME LOAN OF STATE BANK OF INDIA
COMPARING HOME LOAN SCHEMES OF HDFC & STATE BANK OF INDIA
HOUSING LOAN SCHEMES OF DIFFERENT BANKS
HOME LOAN OF HDFC BANK
Housing Development Finance Corporation Limited or HDFC (BSE: 500010), founded 1977 by
Hasmukhbhai Parekh, is an Indian NBFC, focusing on home mortgages. HDFC's distribution
network spans 283 outlets that include 66 offices of HDFC's distribution company and HDFC
Sales Private Limited. In addition, HDFC covers over 90 locations through its outreach
programmes. HDFC's marketing efforts continue to be concentrated on developing a stronger
distribution network. Home loans are also sourced through HDFC Sales, HDFC Bank Limited
and other third party Direct Selling Agents (DSA).To cater to non-resident Indians, HDFC has an
office in London, Singapore, and Dubai and service associates in GCC countries.
HDFC Home Loan
Features
A new home brings with it new hopes, joys and emotions. At HDFC, HDFC have shared new hopes,
joys and emotions with over 32 Lakh customers. Every customer has a specific and unique concern.
Having earned an experience of 30 years in home loans, HDFC home loan product is customised to
provide customer solutions for his unique concern.
Features
Maximum loan
80% of the cost of the property (including the cost of the land) and based on the repayment
capacity of the customer.
Maximum Term
20 years subject to your retirement age.
Applicant and Co- Applicant to the loan
Home Loans can be applied for either individually or jointly. Proposed owners of the
property, will have to be co-applicants. However, the co-applicants need not be co-owners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The rate
on your loan will be revised every three months from the date of first disbursement, if there is
a change in RPLR, the interest rate on your loan may change. However, the EMI on the home
loan disbursed will not change*. If the interest rate increases, the interest component in an
EMI will increase and the principal component will reduce resulting in an extension of term of
the loan, and vice versa when the interest rate decreases.
Purchase of
o Flat, row house, bungalow from developers
o Existing freehold properties
o Properties in an existing or proposed co-operative housing society or apartment
owner's association
o First Power of Attorney purchases in Delhi for DDA flats allotted before 1992.
Interest Rate
Wef : 1st October 2011 RPLR: 14.75
Applicable Rates
(Monthly Rest Basis)Fixed rates% Variable rates%
Basis%
RPLR
Upto and including Rs 30 lacs 11.25 9.50 RPLR - 5.50
Rs.30.01 lacs to Rs.75 lacs 11.25 9.75 RPLR - 5.25
Rs.75.01 lacs and above 11.25 10.00 RPLR - 5.00
ADJUSTABLE RATE HOME LOAN [ARHL]/ DUAL RATE HOME LOAN [DRHL]
For prepayments made within the first 3 years from the date of first disbursements , no
prepayment charges will be payable for prepayments of upto 25% of the opening balance in any
given financial year. For any amounts prepaid in excess thereof , prepayment charges of upto
2.00 % calculated on the excess amount being so prepaid shall be payable .
FIXEDRATE HOME LOAN [FRHL]
No prepayment charge shall be payable for part prepayment of upto 25% of the opening balance
of the loan in any given financial year. For any amounts prepaid in excess thereof shall bear a
prepayment charge of upto 2.00 % of the amounts being so prepaid.
PRE CLOSURE / FULL PREPAYMENT CHARGES :
There shall be no incidence of Prepayment charges in the event a loan is preclosed (prepaid) in
full out of own sources of the borrower.
Any prepayment from sources other than own sources shall be subject to a prepayment charge of
2.00% of the outstanding amounts being so prepaid (such amounts shall include all amounts
prepaid during the given financial year).
You shall be required to submit copies of your Bank Statements or any other documents
that HDFC deems necessary to ascertain the source of prepayment.
The following is an indicative list of sources other than own sources.
Sources other than Borrowers' own sources would include:
a. Loans availed from various sources such as from employer, refinance facility, HDFC,
other financial institutions for other purposes (whether or not linked to any security,
including of mortgage of the property financed), relatives, friends or family members
who are not co-borrowers.
b. Payment from Sale of property financed either directly or through internal adjustment of
another customer’s loan.
c. Third Party cheques
d. Surrender of property to developer
Documents
You can download the Application Form and submit alongwith the following documents for an
approval of loan.
Salaried Customers Self Employed Professionals Self Employed Businessman
Application form
with photographApplication form with photograph Application form with photograph
Identity and
Residence ProofIdentity and Residence Proof Identity and Residence Proof
Latest Salary-slipEducation Qualifications Certificate
and Proof of business existence
Education Qualifications Certificate
and Proof of business existence
Form 16Last 3 years Income Tax returns
(self and business)Business profile
Last 6 months bank
statements
Last 3 years Profit /Loss and
Balance Sheet
Last 3 years Income Tax returns
(self and business)
Last 3 years Profit /Loss and
Balance Sheet
Processing fee
cheque
Last 6 months bank statementsLast 6 months bank statements (self
and business)
Processing fee cheque Processing fee cheque
Repayment Options
Step Up Repayment Facility
Helps young executives take a much bigger loan today based on an increase in their
future income, this helps executives buy a bigger home today!
Flexible Loan installments Plan
Often customers, parents and their children, wish to purchase properties together. The
parent is nearing retirement and their children have just started working. This option
helps such customers combine the incomes and take a long term home loan where in the
installment reduces upon retirement of the earning parent.
Tranche Based EMI
Customers purchasing an under construction property need to pay interest ( on the loan
amount drawn based on level of construction) till the property is ready. To help customer
save this interest, we have introduced a special facility of Tranche Based EMI. Customers
can fix the installments they wish to pay till the time the property is ready for possession.
The minimum amount payable is the interest on the loan amount drawn. Anything over
and above the interest paid by the customer goes towards Principal repayment. The
customer benefits by starting EMI and hence repays the loan faster.
Accelerated Repayment Scheme
Accelerated Repayment Scheme offers you a great oppourtunity to repay the loan faster
by increasing the EMI. Whenever you get an increment, increase in your disposable
income or have lumpsum funds for loan prepayment, you can benefit by
o Increase in EMI means faster loan repayment
o Saving of interest because of faster loan repayment
o You can invest lumpsum funds rather than use it for loan prepayment. The return
from the investments also gives you the comfort of paying the increased EMI.
HDFC Home Renovation Loan
Features
Purpose
o External repairs
o Tiling and flooring
o Internal and external painting
o Plumbing and electrical work
o Waterproofing and roofing
o Grills and aluminum windows
o Waterproofing on terrace
o Construction of underground/overhead water tank
o Paving of compound wall (with stone/tile/etc.)
o Borewell
Maximum loan
80% of the cost of improvement. This is however subject to valuation of the property as
assessed by HDFC.
Subject to market value of the property
Maximum Term
15 years subject to your retirement age
ApplicantandCo-Applicant to the loan
Home Loans can be applied for either individually or jointly. Proposed owners of the
property, will have to be co-applicants. However, the co-applicants need not be co-
owners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on your loan will be revised every three months from the date of first disbursement,
if there is a change in RPLR, the interest rate on your loan may change. However, the
EMI on the home loan disbursed will not change*. If the interest rate increases, the
interest component in an EMI will increase and the principal component will reduce
resulting in an extension of term of the loan, and vice versa when the interest rate
decreases.
Interest Rate
Wef : 1st October 2011 RPLR: 14.75
Applicable Rates
(Monthly Rest Basis)Fixed rates% Variable rates%
Basis%
RPLR
Upto and including Rs 30 lacs 10.50 9.50 RPLR - 5.20
Rs.30.01 lacs to Rs.75 lacs 10.75 9.75 RPLR - 5.25
Rs.75.01 lacs and above 11.25 10.00 RPLR - 5.00
The above rates are subject to change without notice.
Security
Security for the loan is a first mortgage of the property to be financed, normally by way of
deposit of title deeds and/or such other collateral security as may be necessary. Interim security
may be required, if the property is under construction
Fee
1% of the loan amount applied plus applicable service taxes and cess.
No Charges for
Replacement of cheques
Income Tax Certificates
Accelerated Repayment Option
PART PREPAYMENT CHARGES:
ADJUSTABLE RATE HOME LOAN [ARHL]/ DUAL RATE HOME LOAN [DRHL]
For prepayments made within the first 3 years from the date of first disbursements , no
prepayment charges will be payable for prepayments of upto 25% of the opening balance in any
given financial year. For any amounts prepaid in excess thereof , prepayment charges of upto
2.00 % calculated on the excess amount being so prepaid shall be payable .
FIXED RATE HOME LOAN [FRHL]
No prepayment charge shall be payable for part prepayment of upto 25% of the opening balance
of the loan in any given financial year. For any amounts prepaid in excess thereof shall bear a
prepayment charge of upto 2.00 % of the amounts being so prepaid.
PRE CLOSURE / FULL PREPAYMENT CHARGES :
There shall be no incidence of Prepayment charges in the event a loan is preclosed (prepaid) in
full out of own sources of the borrower.
Any prepayment from sources other than own sources (*) shall be subject to a prepayment
charge of 2.00% of the outstanding amounts being so prepaid (such amounts shall include all
amounts prepaid during the given financial year).
You shall be required to submit copies of your Bank Statements or any other documents
that HDFC deems necessary to ascertain the source of prepayment.
The following is an indicative list of sources other than own sources.
Sources other than Borrowers' own sources would include:
a. Loans availed from various sources such as from employer, refinance facility, HDFC,
other financial institutions for other purposes (whether or not linked to any security,
including of mortgage of the property financed), relatives, friends or family members
who are not co-borrowers.
b. Payment from Sale of property financed either directly or through internal adjustment of
another customer’s loan.
c. Third Party cheques
d. Surrender of property to developer
Documents
Salaried Customers Self Employed Professionals Self Employed Businessman
Application form
with photographApplication form with photograph Application form with photograph
Identity and
Residence ProofIdentity and Residence Proof Identity and Residence Proof
Latest Salary-slipEducation Qualifications Certificate
and Proof of business existence
Education Qualifications Certificate
and Proof of business existence
Form 16Last 3 years Income Tax returns
(self and business)Business profile
Last 6 months bank
statements
Last 3 years Profit /Loss and
Balance Sheet
Last 3 years Income Tax returns
Last 3 years Profit /Loss and
Balance Sheet
Processing fee
cheque
Last 6 months bank statementsLast 6 months bank statements (self
and business)
Processing fee cheque Processing fee cheque
Detailed cost estimate from architect/engineer for the property to be constructed/ renovated.
Security
Existing customer
o Extension of the mortgage already created on the property financed and/or other
security as may be required by HDFC.
New Customer
For others, security for the loan is a mortgage on the entire property being improved and/or other
security as may be required by HDFC
HDFC Home Extension Loan
Features
Purpose
HDFC Home Extension Loan makes it convenient for you to extend or add space to your
home. Be it an additional room, a larger bathroom, or even enclosing an open balcony.
Maximum loan
80% of the cost of extension. This is however subject to valuation of the property as
assessed by HDFC.
Maximum Term
20 years subject to your retirement age
Applicant and Co- Applicant to the loan
Home Loans can be applied for either individually or jointly. Proposed owners of the
property, will have to be co-applicants. However, the co-applicants need not be co-
owners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on your loan will be revised every three months from the date of first disbursement,
if there is a change in RPLR, the interest rate on your loan may change. However, the
EMI on the home loan disbursed will not change*. If the interest rate increases, the
interest component in an EMI will increase and the principal component will reduce
resulting in an extension of term of the loan, and vice versa when the interest rate
decreases.
Interest Rate
Wef : 1st October 2011 RPLR: 14.75
Applicable Rates
(Monthly Rest Basis)Fixed rates% Variable rates%
Basis%
RPLR
Upto and including Rs 30 lacs 10.75 9.50 RPLR - 5.50
Rs.30.01 lacs to Rs.75 lacs 10.75 9.75 RPLR - 5.25
Rs.75.01 lacs and above 10.75 10.00 RPLR - 5.00
The above rates are subject to change without notice.
Fees
% of the loan amount applied plus applicable service taxes and cess.
No Charges for
Replacement of cheques
Income Tax Certificates
Accelerated Repayment Option
PART PREPAYMENT CHARGES
ADJUSTABLE RATE HOME LOAN [ARHL]/ DUAL RATE HOME LOAN [DRHL]
For prepayments made within the first 3 years from the date of first disbursements , no
prepayment charges will be payable for prepayments of upto 25% of the opening balance in any
given financial year. For any amounts prepaid in excess thereof , prepayment charges of upto
2.00 % calculated on the excess amount being so prepaid shall be payable .
FIXED RATE HOME LOAN [FRHL]
No prepayment charge shall be payable for part prepayment of upto 25% of the opening balance
of the loan in any given financial year. For any amounts prepaid in excess thereof shall bear a
prepayment charge of upto 2.00 % of the amounts being so prepaid.
PRE CLOSURE / FULL PREPAYMENT CHARGES :
There shall be no incidence of Prepayment charges in the event a loan is pre closed (prepaid) in
full out of own sources of the borrower.
Any prepayment from sources other than own sources (*) shall be subject to a prepayment
charge of 2.00% of the outstanding amounts being so prepaid (such amounts shall include all
amounts prepaid during the given financial year).
You shall be required to submit copies of your Bank Statements or any other documents
that HDFC deems necessary to ascertain the source of prepayment.
Sources other than Borrowers' own sources would include:
a. Loans availed from various sources such as from employer, refinance facility, HDFC,
other financial institutions for other purposes (whether or not linked to any security,
including of mortgage of the property financed), relatives, friends or family members
who are not co-borrowers.
b. Payment from Sale of property financed either directly or through internal adjustment of
another customer’s loan.
c. Third Party cheques
d. Surrender of property to developer
Documents
Salaried
CustomersSelf Employed Professionals Self Employed Businessman
Application form
with photographApplication form with photograph Application form with photograph
Identity and
Residence ProofIdentity and Residence Proof Identity and Residence Proof
Latest Salary-slip
Education Qualifications
Certificate and Proof of business
existence
Education Qualifications Certificate
and Proof of business existence
Form 16Last 3 years Income Tax returns
(self and business)Business profile
Last 6 months bank
statements
Last 3 years Profit /Loss and
Balance Sheet
Last 3 years Income Tax returns
Last 3 years Profit /Loss and
Balance Sheet
Processing fee
cheque
Last 6 months bank statementsLast 6 months bank statements (self
and business)
Processing fee cheque Processing fee cheque
Detailed cost estimate from architect/engineer for the property to be constructed/
renovated
Security
Existing customer
o Extension of the mortgage already created on the property financed and/or other
security as may be required by HDFC.
New Customer
For others, security for the loan is a mortgage on the entire property being improved and/or other
security as may be required by HDFC
HOME LOAN OF STATE BANK OF INDIA
The MITC (Most Important Terms & Condition) covers the following Loan Products:
1. SBI Easy/Advantage/Premium Home Loan
2. SBI Pre-approved Home Loan
3. SBI Yuva Home Loan
4. SBI Max Gain Home Loan
5. SBI Realty Home Loan
6. SBI NRI Home Loan
7. SBI Gram Niwas/Sahyog Niwas/Tribal Plus
8. SBI Green Home Loan
Purpose for which home loan can be availed:
1. The loan will be sanctioned for the purpose of purchase / construction / extension /
repairs/renovation of new/second-hand residential house/flat/plot of land/purchase of consumer
durables/furnishings (hereinafter referred to as the ‘project’)
2. Premium of Home Loan Insurance cover (Optional) : The premium for the optional Home
Loan Life Insurance cover (if availed) will be added to the loan amount.
Loan to Value Ratio (LTV):
For loan amount less than Rs.20 Lacs, maximum permissible LTV ratio is 90% of the assessed
value of the property. For loan amount less than Rs.20 Lacs, maximum permissible LTV ratio is
80%.
Rate of Interest:
Floating Rate of Interest: -
Interest on the loan will be charged at prevailing floating rate of interest on a daily reducing
balance at monthly rests. The rate of interest is subject to revision from time to time due to (i)
changes in Base Rate or (ii) revision even without change in Base Rate the Bank has the option
to reduce or increase the EMI or extend the repayment period or both consequent upon revision
in interest rate.
Fixed Rate of Interest:-
Interest on the loan will be charged at the prevailing fixed rate of interest on daily reducing
balance at monthly rests, subject to interest rate reset at the end of every two years on the basis of
fixed interest rates prevailing then. State Bank of India (SBI) may at its discretion stipulate the
periodicity of computation of interest. Further, SBI may at its sole discretion alter the rate of
interest suitably and prospectively in the event of major volatility in interest rates during the
period of the agreement. Thenceforth the rate of interest varied as aforesaid shall be applicable to
the Loan. SBI shall be the sole judge to determine whether such condition exists or not. If the
Borrower is not agreeable to the revised interest rate so fixed, the Borrower can request SBI,
within 15 days of receipt of the notice intimating change in interest rates from SBI, to terminate
the loan and the Borrower shall repay the Loan and any other amount due to SBI in full and final
settlement in accordance with the provisions of the Agreement relating to pre-closure.
Calculation of interest:-
Interest on the amount of the loan will be applied at the prevailing rate per annum on daily
reducing balance with monthly rests.
Intimation of change in Interest Rate:-
The borrower shall be deemed to have notice of changes in the rate of interest whenever there are
changes in Base Rate or increase in interest rates where there is no change in Base Rate are either
displayed on the Notice Board of the Branch or published in news papers or made through
entries of the interest rate charged in the passbook/statement of account furnished to the
borrower and the borrower is liable to pay such revised rate of interest.
Penal interest:-
In the event of a default in payment or any irregularity in the account, the Bank reserves the right
to levy a higher rate of interest as it deems fit. Enhanced rate of interest @2% p.a on the
irregular amount for the period of irregularity, over and above the applicable rate will be
charged if the Equated Monthly Installment (EMI) remains unpaid for a period of 30 days from
the due date, for any reason, including a bounced cheque.
Bounced cheque/ECS or SI dishonours:-
A penalty of Rs 250/- will be charged for every bounced cheque/ECS or SI dishonours. The rate
may vary from time to time.
Repayment:
The loan is to be repaid in Equated Monthly Installments over the tenure of the loan. The
repayment installment commences (a) 2 months after completion of construction of house/flat or
after eighteen months from disbursement of first installment, where loan is released in
installments, whichever is earlier or (b) from the next month after the date of full disbursement in
respect of outright purchase of land/house/flat/extension, repairs or renovation of an existing
house/flat. The liability to the bank will be extinguished only when the outstanding in the loan
account becomes Nil, on payment of residual amount, if any.
Loan Tenor:
Maximum 25 years (or) up to the age of 70 years (the age by which the loan should be fully
repaid) of the borrower, whichever is early.
Pre-closure Charges:-
Loans on Fixed and Floating rate of interest:
Pre-closure charge of 2% of the amount pre-paid in excess of normal EMI dues will be levied in
case of pre-closure of loan within 3 years from the stipulated date of commencement of
repayment. If the loan is pre-closed from own resources other than borrowings, for which proof
is submitted to the satisfaction of the Bank, pre-closure charges shall not be levied irrespective of
the period for which the loan account has run.
Primary:-
The loan will be secured by Equitable / Registered mortgage/extension of mortgage of the land
and building/flat for which the loan is to be sanctioned.
Collateral:-
If mortgage of the property being financed is not possible, Bank may accept, at it discretion,
security of adequate value in the form of Life Insurance policies, Government Promissory Notes,
shares/ debentures, gold ornaments or such other tangible security as may be deemed
appropriate.
Interim Security Pending Mortgage:-
Wherever creation of mortgage is likely to be delayed for any valid reason, suitable security
including third party guarantee, as considered necessary, may be taken for the interim period.
Utilisation of the loan:
The amount of the loan shall be utilized strictly for the purpose detailed in the borrower’s
application form and in the manner prescribed. The construction of the house/flat or the
modification/extension proposed by the borrower in the existing house/flat should be strictly
according to the plan approved by the Local Authorities/Town Planning and Development
authorities. Any modification desired in the plan as originally approved, can be undertaken only
after express sanction for it has been obtained from the appropriate authority.
Insurance:
The house/flat shall be insured comprehensively for the market value covering fire, flood,
Earthquake etc. in the joint names of the Bank and the borrower. Cost of the same shall be borne
by the borrower.
Inspection:
The Bank will have the right to inspect, at all reasonable times, the borrower’s property by an
officer of the Bank or a qualified auditor or a technical expert as decided by the Bank and the
cost thereof shall be borne by the customer.
Fees and charges:
1)Processing fee: Is to be paid upfront at rates laid down by the Bank from time to time. Entire
processing fee would be refunded if application is rejected after initial scrutiny. If loan
application is rejected after site inspection and/or obtention of legal/valuation report, 75% of the
processing fee will be reimbursed. No refund of processing fee is permissible in case of
sanction/rejection by sanctioning authority.
LOAN AMOUNT PROCESSING FEE
Upto Rs.5 Lac Rs.1000/-
Above Rs.5 Lac and upto Rs.10 Lac Rs.2000/-
Above Rs.10 Lac and upto Rs.20 L Rs.5000/-
Above Rs.20 Lac and upto Rs.50 Lac Rs.7,000/-
Above Rs.50 Lac and upto Rs.1 Cr Rs.8,000/-
Above Rs.1 Cr and upto Rs.5 Cr Rs.10,000/-
Above Rs.5 Cr Rs.20,000/-
2. Legal Fee*: Title of the property proposed to be purchased is to be clear, absolute,
unencumbered and marketable to the satisfaction of the Bank’s solicitor/Advocate. Fee is to be
paid for legal opinion to be obtained through a lawyer on the Bank’s panel. This fee is payable
regardless of whether the clear title is established and whether the loan is sanctioned.
3. Valuation fee*: The valuation of the land and building /flat will be done by the empanelled
valuer of the bank and prescribed fee is payable by the borrower.
4. All legal and other expenses, stamp duty, registration charges and other incidental expenses
incurred in connection with the loan shall be borne by the borrower.
*Items 2 and 3 may vary from place to place and the rates will be intimated to the applicant by
the branch/sourcing entity. Item 4 varies from State to State according to the local registration
laws, Stamp Duty Act etc. and is payable to the State Govt.
State Bank of India retains the right to alter any charges or fees from time to time or to introduce
any new charges or fees, as it may deem appropriate, with due intimation to customer.
5. Conversion charges for switching loan from fixed to floating rate: : Option for switching
loan from fixed to floating rate or vice versa is not available.
Fees and Charges are subject to change from time to time at the sole discretion of SBI.
Disbursement:
The loan will be disbursed only on the following conditions:
1. All the security documents prescribed have been executed by borrower/co-applicant (s)/
guarantor/s
2. A valid mortgage (equitable or registered if equitable mortgage is not possible) has been
created in favour of the Bank as per the laws of the State.
3. Wherever creation of mortgage is likely to be delayed for any valid reason, suitable security
including third party guarantee, has been taken for the interim period.
4. The loan will be disbursed in stages where a loan for construction is desired or purchase is
through payment to seller in installments.
5. All necessary statutory compliances are in place.
SBI may disburse the quantum of loan in lump sum or in installments at its own discretion
depending on the level of construction of the House/Flat as acceptable to SBI.
SBI will disburse loan amount directly to the builder/seller/society as the case may be and as
requested / specified/ directed by the customer to SBI at the time of each disbursement. SBI shall
not be responsible / liable in any manner whatsoever for any delay by the customer in providing
such request/ specification/ direction to SBI and the customer shall not claim any costs, charges
and expenses in any relation to any non-disbursal by SBI due to any such delay by the customer.
The Bank reserves the right to collect any tax if levied by the State/Central Government and/or
other Authorities in respect of this transaction.
SBI as of 2010 is offering three housing loan schemes to suit different people and borrowal
amounts.
There different schemes of SBI Housing Finance are as follows. Below you can find details on
the schemes, repayment home loan interest rates etc.
SBI hi - fi loan, SBI Easy Home Loan and SBI Advantage Home Loan
SBI hi - fi loan can be availed when you want your home built or improved within an amount of
5 lakhs. You will be paying an interest rate of around 8 percentage per annum for the first year
after borrowing. Following which the interest rate will be decided by the bank based on the
regulated maximum rate by Reserve Bank of India. Generally the rate charged by the bank would
be at least 2.5% below the limit indicated by SBAR or State Bank Advacned Rate.
SBI Easy Home Loan
SBI Easy Home Loan is when you would like to borrow amount lesser than 50 lakhs. This is the
widely soughted loan from people. Interest rate is typically around 9 percentage per annum. Just
like the previous loan scheme discussed this applies only to the first couple of years of
repayment period. Following this the bank would charge a rate of 2.5% lesser than SBAR from
third year onwards. However there is a fixed rate option where you would be paying .75% below
State Bank Advanced Rate.
SBI Advantage Home Loan
This loan is where the amount to be borrowed is at an excess of fifty lakh rupees. Interest rate for
repayment during the first year would be 8 percentage per annum. Following this you would be
required to pay 9 percentage per annum for the next two years. After the three year period you
have to pay a rate around 1.5% below SBAR. Just like Easy home loan scheme discussed
previously, this scheme has a got a fixed rate option where you would be paying much lower.
SBI Housing Loan
SBI Housing loan schemes are designed to make it simple for US to make a choice at least as far
as financing goes!
'SBI-Home Loans'
Unique features:
No cap on maximum loan amount for purchase/ construction of house/ flat
Option to club income of your spouse and children to compute eligible loan amount
Package of exclusive benefits:
Complimentary international ATM-Debit card
Complimentary SBI Classic/ International Credit Card with waiver of joining and first year's fees
Option for E-banking
Concessional package under 'Credit Khazana' for prospective car loan borrowers whose accounts are conducted satisfactorily
50% concession in charges in respect of all personal remittances/ collection of outstation cheques
Purpose
Purchase/ Construction of new House/ Flat
Purchase of an existing House/ Flat
Purchase of a plot of land for construction of House
Extension/ repair/ renovation/ alteration of an existing House/ Flat
Purchase of Furnishings and Consumer Durables as a part of the project cost
Takeover of an existing loan from other Banks/ Housing Finance Companies
Current Rate of Interest
Loan Schemes 1st Year 2nd and 3rd year After 3rd Year
SBI HI-FIVE Loan
Loan Amount upto Rs. 5
Lacs
8.5% (p.a.)
Fixed interest rate
9.00% (p.a.)
Floating Interest
Rates
OR
10.50% (p.a.)
Fixed Interest Rates
9.00% (p.a.)
Floating Interest Rates
OR
10.50% (p.a.)
Fixed Interest Rates
SBI Easy Home Loan
Loan Amount upto Rs. 50
Lacs
8.5% (p.a.)
Fixed interest rate
8.50% (p.a.)
Fixed Interest Rate
9.00% (p.a.)
Floating Interest Rate
OR
10.50% (p.a.)
Fixed Interest Rate
SBI Advantage Home Loan
Loan Amount upto Rs. 75
lacs
8.5% (p.a.)
Fixed interest rate
9.25% (p.a.)
Fixed Interest Rates
10.00% (p.a.)
Floating Interest Rate
OR
11.00% (p.a.)
Fixed Interest Rate
Note:- Interest rate after three years may be Fixed or Floating as per the borrower's choice made
at the time of sanction.
Features & Benefits of SBI Home Loan
• Purchase/ Construction of House/ Flat
• Purchase of a plot of land for construction of House
• Lowest Home Loan Interest Rate..
• Extension/ repair/ renovation/ alteration of an existing House/ Flat
• Purchase of Furnishings and Consumer Durables as a part of the project cost.
• Takeover of an existing loan from other Banks/ Housing Finance Companies.
• Interest charged on the daily reducing balance
• No penalty on prepayments of home loan
• No hidden costs
• Option to club income of your spouse and children to compute eligible loan amount
• Provision to club depreciation, expected rent accruals from property proposed to compute
eligible loan amount
• Provision to finance cost of furnishing and consumer durables as part of project cost
Eligibility Criteria & Documentation required for SBI Home Loan
Salaried Self employed
Age 21years to 60years 21years to 70years
Income Rs.1,20,000 (p.a.) Rs.2,00,000 (p.a.)
Loan Amount
Offered5,00,000 - 1,00,00000 5,00,000 - 2,00,00000
Tenure 5years-20years 5years-20years
Current Experience2years 3years
Documentation
1) Application form with
photograph
2) Identity & residence proof
3) Last 3 months salary slip
4) Form 16
5) Last 6 months bank salaried
credit statements
6) Processing fee cheque
1) Application form with photograph
2) Identity & residence proof
3) Education qualifications certificate &
proof of business existence
4) Business profile,
5) Last 3 years profit/loss & balance sheet
6) Last 6 months bank statements
7) Processing fee cheque
Eligibility
Minimum age 18 years as on the date of sanction
Steady source of income
Loan Amount
Applicant/ any one of the applicants are aged over 21 years and upto 45 years - 60 times Net
Monthly Income (NMI) or 5 times Net Annual Income (NAI), subject to aggregate repayment
obligations not exceeding 57.50% of NMI/ NAI. Applicant(s) aged over 45 years of age- 48
times NMI or 4 times NAI, subject to aggregate repayment obligations not exceeding 50%of
NMI/ NAI
To enhance loan eligibility you have option to add:
Income of your spouse
Income of your son/ daughter living with you, provided they have a steady income and
his/ her salary account is maintained with SBI
Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased is
proposed to be rented out
Regular income from all sources
COMPARING HOME LOAN SCHEMES OF HDFC & SBI BANK
BASIS HDFC BANK SBI BANK
Loan Amount 80% of cost of property 60 times of Net Monthly Income or 5
times of Net Annual Income
Interest Rate
(Fixed)
11.25% 10.50%
Interest Rate
(Floating)
9.50% upto 30 lac.
9.75% upto 75 lac.
10.00% above 75 lac.
8.5% 1st ,9%2nd ,9%3rd upto 5 lac.,
8.5%1st ,8.5%2nd ,953rd upto 50
lac ,8.5%1st ,8.5%2nd ,10.00%3rd upto
75 lac.
Processing Fee 0.5% plus applicable service tax and
cess
0.50% of loan amount with a cap of
Rs.10,000 + service tax
Prepayment
Charges
If 25% of outstanding amount is paid
within 3 years - No Penalty ,
otherwise 2% of outstanding amount N.A
Application
Fees
0.5% of the loan amount applied
plus applicable service taxes and
cess.
No Administrative Charges or
application fee
HOUSING LOAN SCHEMES OF DIFFERENT BANKS
Bank Name Floating Interest rateProcessing Fee
Prepayment
Charges
8.5% (1st yr),
9.25%(2nd and 3rd
yr),10.00%(after 3
years)
0.50% of loan amount
with a cap of Rs.10,000
+ service tax
N.A
9.50% (Upto 25Lacs),
Then 10%
0.50% of loan amount
upto 1 crore
Rs.10,000/- above 1
crore If Full Payment
- 2% of outstanding
amount If Part
Payment - No
Penalty
9.75%0.5% plus applicable
service tax and cess
If 25% of
outstanding amount
is paid within 3 years
- No Penalty ,
otherwise 2% of
outstanding amount
LIC Housing10.15% ( Fixed for 5
yrs), Floating 9.25%0.5 % -1%
2% of out standing
Payment
9.75%1% of the loan amount
+ applicable taxesNIL
10.25%-10.50% Up to 1%of loan
amount
(Rs 2500 to be
collected at login and
If Balance Transfer
then 2% Otherwise
Nil
balance at the time of
sanction )
ING Vysya9.75%
5000 + 10.30% (service
tax)
(Upto 20Lacs)
5000 + 10.30% (service
tax) (Above 20Lacs)
2%
Standard Chartered 9.75% 0.5%
4% for 18 months
and 2% after 18
months
DHFL 10.50%0.5% - 1%(basis on
profile)
If 20% of
outstanding amount
is paid every year -
No Penalty ,
otherwise 2% of
outstanding amount
Citibank 10% - 10.75% 0.5%+Service tax 2%
11.50%0.50% of loan amount,
Maximum Rs. 10,000/-N.A
Bank of Maharastra 10.00% N.A N.A
Central Bank of India 10.50%0.50 % of loan amount,
maximum Rs.20,000N.A
10.75%
Upto Rs.5 lakhs
0.50% of loan subject
to min. Rs.1,000/- &
N.A
max. Rs.2,500/-
Above Rs.5 lakhs &
upto Rs.15 lakhs
0.50% of loan subject
to min. Rs.2,500/- &
max. Rs.7,500/-
Above Rs.15 lakhs &
upto Rs.20 lakhs
0.50% of loan subject
to min. Rs.7,500/- &
max. Rs.10,000/-
Above Rs.20 lakhs
0.50% of loan subject
to min. Rs.10,000/- &
max. Rs.50,000/-
Bank of India 11.25%
For loans upto Rs.30
lacs One time @ 0.55%
of loan amount min.
Rs. 3000/- and max.
Rs.10000/-
For Loan over Rs.30
Lacs upto Rs.50 lacs –
One time flat
Rs.15,000/-
For Loan over Rs.50
Lacs upto Rs.1.00 crore
– One time flat
Rs.20,000/-
2.25% of outstanding
loan amount.
Union Bank of India 10.50%
0.25% of loan amount
subject to a maximum
of Rs.15000/- plus
service tax as
applicable
N.A
United Bank of India 10.95%0.50% of the loan
amountN.A
UCO Bank 11% - 11.50% - N.A
10.50% N.A N.A
10.50%
10.50%
Nil for fresh Loans
upto Rs.20.00 lac,
For Loans above
Rs.20.00 lacs 0.50% of
the loan amount subject
to a maximum of
Rs.12,500/-
N.A
Kotak Bank 10% - 10.25% 0.25% - 0.5% 2% of Principal
Outstanding + 2% on
amount prepaid in
last 12 months
11.00% N.A N.A
10.50% 0.5% 2%
Deutsche Post
Housing Finance
9.75% - 10% (for
Salaried / SEP) , 10%
- 10.25% (For Self
Employed)
0.5% Nil
Vijaya Bank 10.25% - 10.75% N.A N.A
Syndicate Bank 11.25% N.A N.A
9.50% N.A N.A
Barclays Bank 10% - 10.25% 0.5% 3%
Federal Bank 10% - 10.50% 0.50%
HSBC Bank 10% - 13%
1% of the loan amount
applied for, subject to a
minimum of Rs 10000
plus service tax. This
fee is payable on
application and is not
refundable
25%of the original
loan amount free for
every financial year
PNB Housing Finance 9.75% 0.5% 2%
Development Credit
Bank11% - 11.50% 0.5%
2% of o/s + Service
tax
State Bank of
Travancore 9.25% (for 1 yr), 10%
(from 2 & 3 yr),
10.25% (from 4th yr)
Nil
2% of the
outstanding loan
amount
11.00%
1) 0.25 % on Loan
amount (Non
refundable) (to be
remitted at the time of
submission of
application)
2) 0.32 % on Loan
amount (at the time of
acceptance of sanction)
1) No pre-closure
charges, if loan is
closed out of own
funds.
2) 2% on Balance
outstanding or
applicable Drawing
Limit whichever is
higher, if loan is
closed by way of
take over by another
Bank / Financial
Institution.
CHAPTER-5
FINDING
CONCLUSION
FINDINGS
Housing is one of the best human needs of the society .HDFC and SBI provides home loan to the
customer. It is closely liked with the process of overall socio-economic development of the
country.
By analysis of this two HDFC Bank and State Bank of India company profile & their home loan
schemes I found that the SBI bank provides the home loan at a less interest rate as compared to
the interest rates of HDFC Bank. As the State Bank of India rate of interest is 8.5% (p.a.) Fixed
interest rate for 1st year , 9.25% (p.a.) Fixed Interest Rates for 2nd year, 10.00% (p.a.) Floating
Interest Rate OR 11.00% (p.a.) Fixed Interest Rate for 3rd year for the amount up to 75 lakh,
which is less than the HDFC home loan. I also want to highlight the various attractive home loan
schemes offer by the SBI Bank that is SBI HI-FIVE Loan Amount up to Rs. 5 Lacs, SBI Easy
Home Loan
Loan Amount upto Rs. 50 Lacs, SBI Advantage Home Loan, Loan Amount upto Rs. 75 lacs.
Whereas HDFC Bank offer Upto and including Rs 30 lacs fixed rate is 11.25 & variable rate
is9.50, Rs.30.01 lacs to Rs.75 lacs fixed rate is 11.25 & variable rate is 9.75, Rs.75.01 lacs and
above fixed rate is 11.25 & variable rate is 10.00. So I found that State Bank of India has attract
the customer with their interesting home loan or housing finance schemes and also offer low
interest rate as compared to HDFC home loan.
CONCLUSION
Housing is a growing industry. Various public and private institutions have entered in this field.
These institutions have initiated various house financing schemes to cater the diversified needs
of this sector. Besides the emerging and expanding institutional set up, the system of credit
delivery of housing is still inadequate. The responsibility to provide house finance largely was
rested with the Central Government till the early eighties. The setting up of the NHB in 1988, as
the apex housing finance institution, was the beginning of the emergence of housing finance as a
fund based financial service in the country. Its role fall into three categories promotional,
financial and regulatory. Housing finance institutions must become self sustaining units which
work on full cost recovery basis and device innovative financial instruments to mobilize their
resources from household sector.
APPENDICES
HOME LOAN TIPS
The home buying process can seem complicated, but if you take things step-by-step and you
know how to choose the right home loan, you will soon be holding the keys to your own home.
Ten steps to buying a home:
Step 1: Figure out how much you can afford. What you can afford depends on your income,
credit rating, current monthly expenses, down payment and the interest rate. The calculators can
help, but it is best to visit a lender to find out for sure. A housing counselor can help you figure
out how to manage and pay off your debt, and start saving for that down payment!
Step 2: Know your rights
Step 3: Shop for a loan. Save money by doing your homework. Talk to several lenders, compare
costs and interest rates, and negotiate to get a better deal. Consider getting pre-approved for a
loan.
Step 4: Learn about home buying programs
Step 5: Shop for a home. Choose a real estate agent, Wish list - what features do you want,
Home-shopping checklist - take this list with you when comparing homes.
Step 6: Make an offer. Discuss the process with your real estate agent. If the seller counters your
offer, you may need to negotiate until you both agree to the terms of the sale.
Step 7: Get a home inspection. Make your offer contingent on a home inspection. An inspection
will tell you about the condition of the home, and can help you avoid buying a home that needs
major repairs.
Step 8: Shop for homeowners insurance Lenders require that you have homeowners insurance.
Be sure to shop around.
Step 9: Sign papers. You're finally ready to go to "settlement" or "closing." Be sure to read
everything before you sign!
Step 10: The House is yours now. Have Puja or hawan.
Terms used in Housing Finance
EMI: Equated Monthly Installment till the loan is paid back. It consists of a portion of
interest and the principal
Floating Rate of interest: Rate of interest which varies with the market lending rate. This
means that there is an element of risk of paying more than budgeted amount in case the
lending rates goes up
Monthly Reducing balance: In this system interest reduces monthly with repayment of
Principal amount
Annual Reducing Balance: In this system principal is reduced annually at the end of the
year so you end up paying interest even for the portion of principal you have actually
paid back
Fixed rate of interest: Rate of interest remains unchanged throughout the period of the
loan
Processing charge: It's a fee payable to the lender on applying for the loan
Prepayment Penalties: When loan is paid back before the agreed term of the loan, then
banks/ institutions charge penalty for the prepayment
Commitment Fee: Some institution charge commitment fee in case the loan is not availed
within a stipulated period, after it is processed and sanctioned
Miscellaneous Cost: It is quite possible that some lenders may charge documentation or
consultant charges
BIBLIOGRAPHY
1) Internet :- www.HDFC Bank.com
www. sbi.com
2) Visit :- HDFC & STATE BANK OF INDIA