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: Dr. B.D.Mishra Associate Professor

Submitted By: Rahul Yadav 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: _____________ Place: Bilaspur

(Name and Signature of the Student) 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: ____________ Place: Bilaspur

(Name and Signature of the Supervisor)

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 3 COMPANY PROFILE:-

HDFC BANK STATE BANK OF 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 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 companys 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.
1. INTRODUCTION

Chapter Name

Page No.
01

A study on Housing Finance schemes of HDFC bank & SBI bank

2. INSTITUTIONAL FINANCE FRAMEWORK OF HOUSING 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

Formal Sector

Informal Sector

Household savings

Disposal of Existing properties

Borrowings from friends, relatives and money lenders etc.

Government

Banking Commercial Banks Cooperative Banks Other Banks

Non-Banking

Central Govt.
HUDCO

State Govt.

Public Authorities

Non-Banking Finance Companies (NBFCs)

House Finance Companies (HFCs) Insurance LIC/GIC

Non-Banking Housing Finance Companies Specialised (NBHFCs) Institution HDFC

HOME LOAN TYPES

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. Self Employed

Salaried Employee

The latest salary slip showing deductions. \

story 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 Proof of age (birth certificate/voter identity card/passport/school leaving certificate/valid card/passport/school leaving certificate/valid driving license driving license

Proof of residence (phone bill /electricity Proof of residence (phone bill/electricity bill/ration card). 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 Sector & Public State Bank of India, Corporation Bank ,Punjab National bank Central Housing 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.

Finance Companies

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 Bankits 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 agribased 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 Bankits 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 20 years subject to your retirement age.

Term

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 (Monthly Rest Basis) Upto and including Rs 30 lacs Rs.30.01 lacs to Rs.75 lacs Rs.75.01 lacs and above

Rates

Fixed rates%

Variable rates%

Basis% RPLR RPLR - 5.50 RPLR - 5.25 RPLR - 5.00

11.25 11.25 11.25

9.50 9.75 10.00

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 customers 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 photograph

Application form with photograph

Application form with photograph

Identity Residence Proof

and

Identity and Residence Proof

Identity and Residence Proof

Latest Salary-slip

Education Qualifications Certificate Education Qualifications Certificate and Proof of business existence and Proof of business existence

Form 16

Last 3 years Income Tax returns (self and business)

Business profile

Last 3 years Income Tax returns Last 6 months bank Last 3 years Profit /Loss and statements Balance Sheet (self and business) Last 3 years Profit /Loss and Balance Sheet

Processing cheque

fee

Last 6 months bank statements

Last 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 o o

Increase in EMI means faster loan repayment Saving of interest because of faster loan repayment 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 o o o o o o o o o

External repairs Tiling and flooring Internal and external painting Plumbing and electrical work Waterproofing and roofing Grills and aluminum windows Waterproofing on terrace Construction of underground/overhead water tank Paving of compound wall (with stone/tile/etc.) Borewell loan

Maximum

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 15 years subject to your retirement age

Term

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 coowners.

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 (Monthly Rest Basis) Upto and including Rs 30 lacs Rs.30.01 lacs to Rs.75 lacs Rs.75.01 lacs and above

Rates

Fixed rates%

Variable rates%

Basis% RPLR RPLR - 5.20 RPLR - 5.25 RPLR - 5.00

10.50 10.75 11.25

9.50 9.75 10.00

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 customers loan. c. Third Party cheques d. Surrender of property to developer

Documents
Salaried Customers Self Employed Professionals Self Employed Businessman

Application

form

with photograph

Application form with photograph

Application form with photograph

Identity Residence Proof

and

Identity and Residence Proof

Identity and Residence Proof

Latest Salary-slip

Education Qualifications Certificate Education Qualifications Certificate and Proof of business existence and Proof of business existence

Form 16

Last 3 years Income Tax returns (self and business)

Business profile

Last 3 years Income Tax returns Last 6 months bank Last 3 years Profit /Loss and statements Balance Sheet Last 3 years Profit /Loss and Balance Sheet

Processing cheque

fee

Last 6 months bank statements

Last 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 20 years subject to your retirement age

Term

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 coowners.

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 (Monthly Rest Basis) Upto and including Rs 30 lacs Rs.30.01 lacs to Rs.75 lacs Rs.75.01 lacs and above

Rates

Fixed rates%

Variable rates%

Basis% RPLR RPLR - 5.50 RPLR - 5.25 RPLR - 5.00

10.75 10.75 10.75

9.50 9.75 10.00

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 customers loan. c. Third Party cheques d. Surrender of property to developer

Documents
Salaried Customers Self Employed Professionals Self Employed Businessman

Application

form

with photograph

Application form with photograph

Application form with photograph

Identity Residence Proof

and

Identity and Residence Proof

Identity and Residence Proof

Latest Salary-slip

Education Qualifications Certificate Education Qualifications Certificate and Proof of business existence and Proof of business existence

Form 16

Last 3 years Income Tax returns (self and business)

Business profile

Last 3 years Income Tax returns Last 6 months bank Last 3 years Profit /Loss and statements Balance Sheet Last 3 years Profit /Loss and Balance Sheet

Processing cheque

fee

Last 6 months bank statements

Last 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 borrowers 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 borrowers 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 Banks solicitor/Advocate. Fee is to be paid for legal opinion to be obtained through a lawyer on the Banks 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 9.00% SBI HI-FIVE Loan Floating 8.5% (p.a.) Rates OR 10.50% After 3rd Year (p.a.)

(p.a.) 9.00%

Interest Floating Interest Rates OR 10.50% (p.a.)

Loan Amount upto Rs. 5 Lacs

Fixed interest rate

(p.a.) Fixed Interest Rates

Fixed Interest Rates 9.00% SBI Easy Home Loan 8.5% (p.a.) 8.50% (p.a.) (p.a.)

Floating Interest Rate OR 10.50% (p.a.)

Loan Amount upto Rs. 50 Lacs

Fixed interest rate

Fixed Interest Rate

Fixed Interest Rate 10.00% SBI Advantage Home Loan Loan Amount upto Rs. 75 lacs 8.5% (p.a.) 9.25% (p.a.) (p.a.)

Floating Interest Rate OR 11.00% (p.a.)

Fixed interest rate

Fixed Interest Rates

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 Age Income Loan Offered Tenure Current Experience Amount 21years to 60years Rs.1,20,000 (p.a.) Self employed 21years to 70years Rs.2,00,000 (p.a.)

5,00,000 - 1,00,00000

5,00,000 - 2,00,00000

5years-20years

5years-20years

2years

3years

1)

Application

form

with 1) 2)

Application Identity

form &

with

photograph proof

photograph

residence

2) Identity & residence proof 3) Education qualifications certificate & Documentation 3) Last 3 months salary slip proof 4) Form 16 4) of business Business existence profile,

5) Last 6 months bank salaried 5) Last 3 years profit/loss & balance sheet credit statements 6) Last 6 months bank statements

6) Processing fee cheque

7) Processing fee cheque

Eligibility

Minimum age 18 years as on the date of sanction Steady source of income Amount

Loan

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 Loan Amount HDFC BANK 80% of cost of property SBI BANK 60 times of Net Monthly Income or 5 times of Net Annual Income Interest (Fixed) Interest (Floating) 9.75% upto 75 lac. 10.00% above 75 lac. Rate 9.50% upto 30 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. Rate 11.25% 10.50%

Processing Fee

0.5% plus applicable service tax and 0.50% of loan amount with a cap of cess 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 No Administrative Charges or

Application Fees

0.5% of the loan amount applied

plus applicable service taxes and application fee cess.

HOUSING LOAN SCHEMES OF DIFFERENT BANKS

Bank Name Floating Interest rate Prepayment Charges

Processing Fee

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

Rs.10,000/- above 1 crore If Full Payment 9.50% (Upto 25Lacs), 0.50% of loan amount - 2% of outstanding Then 10% upto 1 crore amount If Part Payment - No Penalty

If 25% of outstanding 0.5% plus applicable service tax and cess amount is paid within 3 years - No Penalty , otherwise 2% of outstanding amount

9.75%

LIC Housing

10.15% ( Fixed for 5 yrs), Floating 9.25%

0.5 % -1%

2% of out standing Payment

9.75%

1% of the loan amount + applicable taxes

NIL

Up to 1%of loan amount (Rs 2500 to be 10.25%-10.50% collected at login and balance at the time of sanction ) If Balance Transfer then 2% Otherwise Nil

5000 + 10.30% (service ING Vysya tax) 9.75% (Upto 20Lacs) 5000 + 10.30% (service tax) (Above 20Lacs) 4% for 18 months Standard Chartered 9.75% 0.5% and 2% after 18 months If 20% of outstanding 0.5% - 1%(basis on profile) amount is paid every year -No Penalty , otherwise 2% of outstanding amount 2%

DHFL

10.50%

Citibank

10% - 10.75%

0.5%+Service tax

2%

11.50%

0.50% of loan amount, Maximum Rs. 10,000/N.A 0.50 % of loan amount,

N.A

Bank of Maharastra Central Bank of India

10.00% 10.50%

N.A N.A

maximum Rs.20,000 Upto Rs.5 lakhs 0.50% of loan subject to min. Rs.1,000/- & max. Rs.2,500/Above Rs.5 lakhs & upto Rs.15 lakhs 0.50% of loan subject to min. Rs.2,500/- & 10.75% 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/For loans upto Rs.30 lacs One time @ 0.55% of loan amount min. Rs. 3000/- and max. Rs.10000/Bank of India 11.25% 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 2.25% of outstanding loan amount. N.A

 One time flat Rs.20,000/-

0.25% of loan amount subject to a maximum Union Bank of India 10.50% of Rs.15000/- plus service tax as applicable United Bank of India UCO Bank 10.95% 11% - 11.50% 10.50% 10.50% 0.50% of the loan amount N.A N.A N.A N.A N.A

Nil for fresh Loans upto Rs.20.00 lac, For Loans above 10.50% Rs.20.00 lacs 0.50% of the loan amount subject to a maximum of Rs.12,500/N.A

2% of Principal Kotak Bank 10% - 10.25% 0.25% - 0.5% Outstanding + 2% on amount prepaid in last 12 months

11.00%

N.A

N.A

10.50% 9.75% - 10% (for Deutsche Post Housing Finance Salaried / SEP) , 10% 10.25% (For Self Employed)

0.5%

2%

0.5%

Nil

Vijaya Bank Syndicate Bank

10.25% - 10.75% 11.25% 9.50%

N.A N.A N.A 0.5%

N.A N.A N.A 3%

Barclays Bank

10% - 10.25%

Federal Bank

10% - 10.50%

0.50% 1% of the loan amount applied for, subject to a minimum of Rs 10000 25%of the original

HSBC Bank

10% - 13%

plus service tax. This loan amount free for fee is payable on application and is not refundable every financial year

PNB Housing Finance Development Credit Bank

9.75%

0.5%

2%

11% - 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) 1) 0.25 % on Loan amount (Non refundable) (to be 11.00% remitted at the time of submission of application) 2) 0.32 % on Loan Nil 2% of the outstanding loan amount 1) No pre-closure charges, if loan is closed out of own funds. 2) 2% on Balance outstanding or applicable Drawing

amount (at the time of acceptance of sanction)

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 Google 2) Visit :- HDFC & STATE BANK OF INDIA