Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.

P2MBA16060

INTRODUCTION:

Sundaram Home Finance Limited was incorporated on July 2, 1999, under

the Companies Act 1956. Sundaram Finance Limited has promoted Sundaram
Home Finance Limited.

Sundaram BNP Paribas Home Finance Limited combines its expertise in

Home Finance with the service-orientation of its promoter Sundaram
Finance. Sundaram Finance Limited, based on the huge potential in housing
sector and with an aim to make housing loans available to both formal and
informal section of society established Sundaram Home Finance
Limited. Incorporated on July 2, 1999, as a subsidiary of Sundaram Finance
Limited Also The Company has obtained (Certificate of Registration) under
Section 29A of NHB ACT 1987 from National Housing Bank- (which is a
regulator and advisory for Home Loan Companies) To leverage the market
potential Sundaram Finance Limited (SFL) and BNP Paribas Personal Finance
(Formerly Union de Credit pour le Batiment (UCB) a wholly-owned subsidiary
of BNP Paribas France), entered into a joint venture agreement on 9th of May
2007, for a foray into the Home Loan Market in India.

UCB acquired a 49.9% stake in Sundaram Home Finance

Limited Consequent to the completion of the statutory regulatory approvals, the
Company was renamed as Sundaram BNP Paribas Home Finance
Limited effective 28th November 2007.

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

OBJECTIVE

The objective is to know the process of loan appraisal, from sanction to

disbursement. To ensure there is a proper frame work in the loan process.

SCOPE

1. To have clear understanding of home finance and its competition.

2. To know the below mentioned process
 Understanding the Products
 Borrower category
 Verifying loan documents
 Loan appraisal
 Loan sanction
 Disbursement

PRODUCTS:

Products

Housing Loans Non-Housing Loans

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

Housing Loans

1.Home Loans:

Home loan is given to a person for constructing a house in his own land or
plot, purchasing a flat in an apartment, purchasing a new house and resale of a
flat or house.

2. Home Improvement loans:

Home improvement loans are given for the internal and external repairs
like plumbing work, electrical work, cupboards, compound walls for existing
house. These loans are given for existing customer or new borrowers according
the work after verifying the market value and technical officer of Sundaram BNP
Paribas Home Finance Limited.

3. Home Extension loans:

Home extension loans are given for the existing house for constructing
extra rooms, floors, increase the built up area. These loans are given for existing
customer or new borrowers after estimating the work, market value and verified
by the technical officer of Sundaram BNP Paribas Home Finance Limited.

4. Land loan or Plot loan:

Land loan or Plot loan are given for the borrowers to buy a land or plot and
after buying land or plot the should start construction within 3 years, if it is not
possible they considered this is a Non Housing Loan.

Non-Housing Loans

These loans are given for personal or business needs against security of
commercial or residential property. For providing to construct office, commercial
space for professionals and non-professionals.

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

1.Lamp Residential:

If a customer ahead owns a residential property and wants to avail loan

against the same, there loans are granted. They can be used for any purpose like
business, education, marriage, hospitalization etc.

2. NRPRO-Non Residential Poverty:

These NRPRO loans are given for professionals such as

 Practicing doctors for keeping hospital

 Chatted Accountants for keeping office
 Management consultants for set up an office

These NRPRO loans are given for non-professionals to keep a business or

establishing the business, improving the business.

Properties which are eligible for security:

The property which are offered as security should have proper number,
location of property should come under municipal co-operation, town or village
panchayat. Facilities like transport, water should be there. Agricultural lands
should not be used for funding.

CATEGORIES OF BORROWERS

Borrowers

Salaried Self Employed

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

1) Salaried Customers:

Customers who are employed including the NRI’s whose income is

considered based on salary slip are salaried customers.

2) Self-employed customers:

Customers whose income is considered based on IT return, CA appraisal are

classified under self-employed.

CHECKLIST FOR EACH CATEGORIES

I. General Check list:

This is a general check list for all categories. i.e., salaried, self-employed.

1. Application form to be filled in all aspects

2. Know your Customer (KYC)
3. Credit report and Mapping
4. Upfront Processing fee (PF) cheque
5. Field Investigation (FI)-Internal report
6. Field Investigation (FI)-External report
7. Self-Attestation and Original verified
8. Data entry in system
9. Technical report & End use of Non-Housing Loans
10.Proof for Obligations considered and Not-considered
II. Salaried Customers:
1. Latest 3 month’s salary slip, if variable 6 month’s salary slip
2. Latest 6 month’s bank statement of savings account or current account of
borrower
3. Form-16 for 3 years if applicable
4. Proof of employment

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III. Self-Employed customers:

1. Latest 6 month’s bank statement of savings account or current account of
borrower
2. Latest 3 year’s Income tax returns (ITR)
3. Tax paid challans
4. Registration certificate of business
5. Partnership details and documents of partner if applicable
6. If the turnover is more than 1 crore form 3CB is needed

VERIFICATION PROCESS

For applying housing loan in Sundaram PNB Paribas home finance the
borrower has to undergo the below verification for the process to complete.

1. Application Form:

The borrower has to fill the application form duly. The most important for
the borrower to fill are the qualification, occupation, address, loan amount
requested, Co-applicant details etc. Also, the borrower has to give clear
information of the property with the address where the property is currently
situated. The details of upfront PF Cheque has to be filled mandatorily.

2. KYC (know your customer):

The proof submitted by the borrower should match with KYC. Copy of
proofs like Pan Card, Aadhar card, Passport Copy, Ration Card, Driving License
etc.

3. Credit Information Bureau:

The main reason for looking into the credit information bureau is to provide
comprehensive credit information service conforming to global standards. It

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

matches information provided by its members with a maximum set of common

parameters sought and obtained by the various institutions.

4. Data Entry in System:

Data entry is done by the CSO’s in the branch after collecting the required
documents by the borrower. The branch CSO’s after entering they create a file
number to the borrower and upload all the documents in the system.

5. Income Documents:
 Latest 6 months’ bank statement, transactions of borrower, EMI’s, Salary
has to be verified. Also, the name of the branch its logo and the font size
has to be verified.
 Salary slips- The company from which the borrower is getting salary has
to be verified. To see if the company do exist and if he really does earn the
so said amount of salary. The salary slip should contain how much he/ she
earning with the deductions.
 Form 16- This form is to be obtained for the salaried borrowers whose
Income is more than 2 lakhs. Form 16 has to be submitted for 3 years.
 ITR- Income tax return papers have to be submitted for 3 years duly with
P&L, balance sheet, Annexures. If ITR is not claimed the borrower has to
self-appraisal with an external CA auditor.
 Form 3CB- IF the turnover of the business income is more than 1 crore for
any borrower, this form has to be submitted.
 Partnership- If it is a partnership business 6-month’s bank statement, form
3CB, ITR, Proofs of the partner has to be submitted.
6. Field investigation report (Internal & External):

once the documents are collected the customer service officers or field
officer goes physically to the place where the business takes place and checks the
property and route sketch for the internal investigation purpose.
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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

After the sanction of loan, the legal officer will go through the past 15
years’ history of the property and technical officer fixes the property value based
on the market value. And based the technical report the loan amount will be
sanctioned.

7. Self-attestation and Original verification:

The documents provided by the borrower has to be self-attested by him/

her and has to verified by the CSO at their branch.

In case the borrower has applied for any previous non housing loans under
all these categories (salaried & self-employed) the proof of the loans has to be
submitted. If any loans are closed even they have to be submitted by the borrower.
Once these process are completed and the documents verified, it undergoes 2
checks. It will be verified first by CSO at branch and then comes to the corporate
office for the loan sanction.

After verification of the borrower income documents the eligibility to

extend to which he/she is allowed is shown below.

PROCESS & RATIO’S ELIGIBILITY

After the loan appraisal, the eligibility of the customers is to be determined

by calculating certain ratio’s such as IIR, FOIR, LCR, LTV.

 IIR- Installment to Income ratio

This ratio is to find out the level at which the borrower is able to make his
commitments towards the repayment of loan from the income he earns. The
earnings here refer to the income that is availed to him every month.

IIR = (EMI of the loan Amount/ Total monthly income considered for
appraisal) *100

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

 FOIR- Fixed obligation to Income ratio

FOIR is the sum of all commitments including other obligation it can also
be Sundaram home EMI as a percentage of appraised monthly income.

FOIR = (EMI of existing SHFL loan + other obligations) / Total monthly

income considered for appraisal) *100

 LCR – Loan to cost ratio

It is a ratio against the total cost incurred to the purchase/ construction of a

property with the loan amount.

LCR = (Loan amount *100/ Total cost incurred to construct OR purchase

of property)

 LTV- Loan to value ratio

It is a loan against the present value of property to be mortgaged as

appraised by technical officer with the loan amount.

LTV= (Loan amount*100/ present market value as per technical report)

LTV (LOAN TO VALUE) ELIGIBILITY TABLE

S.no Product Requirement Salaried IT Returns

1 Housing Loans Up to 30 Lakhs 90% 90%
Above 30 to 70 lakhs 80% 80%
Above 70 lakhs 75% 75%
2 Plot loans 75% 75%
3 Non-housing 50% 50%
loans

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

EVALUATION & PROCESS FOR EACH CATEGORY

 Salaried category:

The Income of salaried customers is considered by looking into their 3

month’s salary slips (6 months if variable) and the gross income is taken to
calculate IIR, FOIR. Eligibility of IIR is up to 45% and Eligibility of FOIR Is up
to 50%. LCR & LTV is calculated based upon the property.

Also, it must be ensured that the income shown in the salary slip is credited
in the bank statement every month. If it is credited less than the Income shown in
the salary slip, then further deductions documents must be shown.

The below files are taken in random from different branches and are
observed and calculated accordingly.

BRANCH INCOME LOAN IIR FOIR LCR

AMOUNT
Kanchipuram 50634 1500000 37% 48% 81%
Kochi 219714 2950000 15% 42% 83%
Hyderabad 41263 2300000 49% 49% 74%
Pudukkottai 106630 4600000 48% 51% 80%
T.Nagar 250894 1111600 5.6% 5.6% 75%

 Self-Employed:

The Income of self-employed customers is considered by looking into

their, Saral, Computation of Income, Profit & Loss, Balance sheet of the
borrower. In P&L the Net profit and depreciation is looked into for calculating
IIR, FOIR, LCV, LTV. Eligibility of IIR is up to 45% and Eligibility of FOIR Is
up to 50%. LCR & LTV is calculated based upon the property. In case the

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

eligibility Is not arrived we do it through self-appraisal by appraising the actual

cash flows of customer.

The below files are taken in random from different branches and are
observed and their ratios are calculated.

Branch Income Loan IIR FOIR LCR

Amount
Kanchipuram 640168 8000000 16% 27% 64%
Madurai 215000 2036000 14.6% 37% 62.6%
Vijayawada 384000 1500000 5% 43% 47.3%
Pudukkottai 415000 5000000 19% 20.62% 20%
This is up to loan sanction. After the completion of technical and legal
verification report the loan amount is sanctioned according to the LTV table
shown above. LTV is calculated after the sanction.

This table shows the LTV calculation after the sanction of loan.

category Branch Income EMI Loan Technical LTV

Amount Value
Salaried Kanchipuram 50634 18759 1500000 1850000 81%
Kochi 219714 33076 2950000 3472500 84%
Hyderabad 41263 20253 2300000 2850500 80%
Pudukkottai 106630 51576 4600000 6727750 68%
T.Nagar 250894 14074 1111600 1482000 75%
Self- Kanchipuram 640168 102427 8000000 12500000 64%
Employed
Madurai 215000 31436 2036000 4237650 48%
Vijayawada 384000 19823 1500000 3168000 47.3%
Pudukkottai 415000 79144 5000000 24855400 20%

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

According to the LTV value the Loan Amount fixed and Disbursed to the
borrower.

LEGAL & TECHNICAL APPRAISAL OF SUNDARAM BNP

HOME FINANCE

Legal appraisal involves ensuring availability of the title documents,

relevant corresponding parent documents linking the chain of transactions,
encumbrance certificate etc. and ascertaining the marketability of title.
Technical appraisal of property is to establish the identity, life span,
stability, marketability, value of the property to be financed and whether the
construction is done as per the approved plan.
Legal Appraisal
The primary and core concern for the legal appraisal aspect are:
I. Title to be clear and marketable:

Legal appraisal or Scrutiny of documents relating to the property proposed for

loan is to ensure that the title is clear and marketable. This is done by the In-house
Legal Team.

II. Collection of original documents, Safe custody of documents and

return of original documents on closure of the loan

The original property documents are required to prove the ownership of the
property for dealing all future transactions over the property. So a proper control
and maintenance is being ensured in collection, custody and return of original
documents on closure of loan.

Steps that involve to ensure the title of the property is clear and
marketable

 Title documents (present title owner to prove the ownership of the

property)
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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

Present title owner of the property and to prove the ownership of the
property
 Parent / link documents (the various documents by way of registered /
revenue documents to establish / create link from the original ownership to
the present owner)
 Encumbrance certificate or Search report
To ascertain whether the devolution of the title based on title scrutiny and
EC are in order and there are no adverse transactions.
 Revenue / Land records

How to Peruse Title Deed?

The various significant aspects which need to be verified in a deed or document

is as follows;

1. Date of the Deed:

There are two dates in a deed/document i.e. the date of execution of the document
and the date of the Registration of documents
2. Document Number:
Every document / deed which is being registered at Sub Registrar office will bear
Registration document number for all future references.
3. Executed by:
The address and other details of the person who executes a deed / document
whereby he transfer / release / settles / right title.
4. Executed in Favor of:
The address and other details of the person in whose favor the document / title
deed is executed whereby he acquires right and interest over the property is the
claimant.

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5. How the property has been purchased / acquired earlier:

There is a specific recital in the deed / document on how the property has been
acquired / purchased from the earlier owners, disclosing the earlier deed /
document registration number, date of registration and sub registrar office.

6. Schedule of the property -Extent conveyed:

The concluding portion of the deed / document reflects the schedule of the
property i.e. property details mentioning Survey No, Village Name, etc. along
with the boundaries of the property extent of the land, built up area and
measurements are being reflected for identifying the property.
7. Whether Minor share is involved:
To ascertain whether the person who had executed the deed / document i.e.
Executant and in whose favor the title deed i.e. claimant is a person who is Major
and had capacity to enter in any contract.

Technical Appraisal:
Technical appraisal undergoes 2 stages’:
Stage-1
A basic scrutiny of document is done before inspection of property.
 Approval details like date of approval, approving authority, signature of
approval authority.
 What type of development such as residential, shop, park, road, etc.
 Survey no, village name, district, state.
 No of plots approved weather a residential plot, shop, public utility etc.
 Dimension of plot
 Survey number of plot
 Plan outlet
 Direction- orientation of property

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

Stage-2
Once the document is scrutinized, site inspection will be conducted. While site is
inspected it undergoes certain formalities.
 Based on market and outlet approval copy the property is intended
 Plot number, survey number, plot orientation, village name, land mark etc.
will be confirmed with the documents.
 Site measurement will be compared with the approved layout copy.
 Proximity of civic amenities like infrastructure development level of site
from road level.

DISBURSEMENT
Disbursement happen only after clearances of Technical and Legal Appraisal.
They are provided with an appraisal report regarding the clearances. The CPC
(central process control) team will verify the documents and arrange them in order
and process for disbursement.
Disbursement is made based on the borrower needs.
 Cheque
 DD
 Fund Transfer
For self-construction, disbursement is done based on stage of construction. For
Every installment the technical officer should give clearance. For purchase and
resale cases disbursement will be given to seller directly. Once the disbursement
is done Loan Agreement copy, Cheque copy, Voucher copy & covering letter will
be sent to borrower for proof.
SCORING MODEL

This is a Model Sundaram BNP Paribas Home Finance wants to Implement in the
near future. This model is developed to improve the quality of files. Scoring
model has 2 divisions TAT and Documents, both together are rated for 300 (TAT-

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

200, Documents-100). Since, there are different products, customers are

categories as below based on their occupation and Income. There are checklists
for different categories, according to the category the customer needs to submit
the required documents for their loans process. Also, this is an individual analysis
for the customer support officers (CSO) to get their file done on TAT time. It also
helps them to rate the file and see the scores themselves.

TAT (TURN AROUND TIME):

The time between login date to sanction date is TAT. TAT score is different for
each Category. Each files TAT dates are allotted based on the difference between
the system login date and sanction date and accordingly their scores are
calculated. It must be ensured that the files once logged in must be completed on
TAT time because the delay will put the scores down even if the other documents
are completed on time.

TAT Scoring Table:

Categories Days 100 75 50 0

Salaried 4 days Less than 4- 10 Greater than 10 Greater than 18 Greater than 25
days & less than 18 & less than 25 days or 1
days days month

Self-Employed 10 days Less than 10- Greater than 15 Greater than 22 Greater than 1
15 days days & less days & less month
than 22 days than 30 days

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Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

Documents

 Salaried:

 NRI’s:

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

 Self-Employed:

The above documents for the categories salaried, self-employed, & NRI
are the papers that the borrowers have to submit for their Loan process. The

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

borrowers should ensure in submitting the documents on time, if there is a delay

the file will be put on hold. Also, the Internal & External verification has to be
done on time. The internal verification as a part of data entry they would be
entered whereas the External report needs to be completed before Disbursement.

ANALYSIS:

File Number File Type Login Sanction TAT TAT Documents Total % Final
Date Date days Score Score scores
PDK20180002 Self- 13- 28-04-17 15 150 87 237 79 7.9
Employed 04-17

KCH20180011 Self- 26- 28-04-17 2 200 80 280 93.33 9.3

Employed 04-17

KCH20170110 Self- 23- 27-04-17 35 0 90 90 30 3

Employed 03-17

PON20180002 Self- 11- 28-04-17 17 150 90 240 80 8

Employed 04-17

MDU20180010 NRI 24- 05-05-17 11 150 85 235 78.33 7.8

04-17

KKU20180005 Salaried 13- 29-04-17 16 150 100 250 83.33 8.3

04-17

This is an analysis, 6 files are taken in random from different Branches and
their scores are evaluated. Each files are categories according to the person
occupation and Income. It has to be made sure that each categories documents

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 Internship report-Sundaram BNP Paribas Home Finance – P. Harsha Vinay – BL.BU.P2MBA16060

are clearly verified. This analysis is done to find the average Turn Around Time
taken and the document quality for a file.

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