HOUSING FINANCE

History of housing Finance

The housing finance system in india has had three distinct phases the first phse was before
1970s, when only provider of support to house building activity was government, through its
various social schemes for public housing government implemented its schemes through State
Housing Board
The 1970s saw two major developments in housing finance. A public sector housing company
HUDCO (Housing and Urban Development Corporation) was established in 1970 and a private
sector company HDFC(Housing Development Finance Corporation) was formed in 1977. The
mandate for HUDCO was to assist and promote housing and urban developments with
government agencies. HDFC pioneered individual lending based on market principles for
homeownership in india. The success of HDFC over years indicated that Financing House can be
profitable business.
The 1980s also saw enhanced government involvement in directing various agencies like
insurance companies ,provident funds , mutual funds etc to invest part of their annualincremntal
resources in Housing. And an important event of Formation of National Housing Bank (NHB) in
1987. The objective was to source housing finance through promotion sound, healthy and cost
effective housing finance system.
In the post liberal era , three distinct groups emerged ; specialized housing finace companies ,
housing finance companies created as subsidiary of some commercial banks and housing finance
companies setup by insurance companies. Drastic changes came in after 1991 in Housing finance
The total housing shortage in the country in 1997 was estimated to be 13.66 million units, of
which 7.57 million units were in urban areas. More than 90 per cent of this shortage was for the
poor and low income category. Against this background, the National Housing and Habitat
Policy (NHHP) was formulated in 1998 and stressed on:

removing legal, financial and administrative barriers for facilitating access to loans,
finance and technology;
ensuring that housing, along with supporting services, was treated as a priority and at par
with the infrastructure sector;
the creation of surpluses in housing stock; and
providing quality and cost-effective shelters especially to the vulnerable groups and the
poor.
The NHB has issued guidelines to the HFCs on prudential norms for income recognition, asset
classification, provisioning for bad and doubtful debts, capital adequacy and concentration of
credit investment. The NHB also conducts inspection of the HFCs to ensure proper compliance
with the prudential norms and prevent the affairs of any of them being conducted in a manner

detrimental to the interests of the depositors or their own. Guidelines for asset liability
management system for the HFCs have also been issued by the NHB.
Housing finance
Housing finance is a business of financial intermediation wherein money raised
through various sources such as public deposits, institutional borrowings, refinance
from national housing bank and their own capital, is lent to borrowers for purchasing
a house. These intermediates lend money by accepting mortgage by deposit of title
deeds of residential properties.

Types of housing finance

1. Home Purchase Loans: Home Purchase Loans are the basic home loan you can opt for
purchasing new home. This type of Home Loan is offered by all kinds of Banks and
HFCs.
2. Home Construction Loans: Home Construction Loans are especially meant for the
construction of a new home. Formality of availing this loan has a little different from the
normal Housing Loan. The plot on which the construction is being erected is purchased
within a period of one year, the cost of the plot is then also included as the component for
thevaluation of total cost of the property.
3. Home Extension Loans: Home Extension Loans is offered for meeting the operating cost
of alteration to an existing building. Extension here means addition of an extra room etc.
4. Home Conversion Loans: Home Conversion Loans are offered to those who want finance
for the purchase of another home by converting the already existing home and on which
loan is already sanctioned. Through this loan, the existing loan is transferred to the new
home including the extra amount required and there is no need for pre-payment of the
previous loan
5. Land Purchase Loans: Land Purchase Loans can be availed for purchasing land for both
home construction as well as investment purposes.
6. Stamp Duty Loans: Stamp Duty Loans is offered for the payment of stamp duty in the
transaction of the property.
7. Bridge Loans: Bridge Loans are offered for selling the existing home and purchasing of
another. The bridge loan assists in the finance of new home, until a buyer is found for the
old home.
8. Balance-Transfer Loans: Balance Transfer of the loan is the transfer of the balance of an
existing home loan at a higher rate of interest (ROI) to either the same company or
another.
9. Re-finance Loans: Refinance loans are availed when a loan from an organization at a
particular ROI is dropping leading to a loss. Then the option of swap of the loan can be
availed. One can avail this from either the same HFI or other at the current rates of
interest.
10. NRI Home Loans: NRI Home Loans are meant for Non-Resident Indians who wish to
build or buy a home.

INSTITUTIONS PROVIDING HOUSING FINANCE

In India, the following types of institutions provide long term finance for housing:

Commercial banks
Cooperative banks
Regional rural banks,
Agriculture and rural development banks
Housing finance companies and
Cooperative housing finance societies.

Advantages

Your costs are predictable and more stable than renting because theyre ideally based on a fixedrate mortgage.
The interest and property tax portion of your mortgage payment is a tax deduction.

Disadvanatges

Homeownership is a long-term financial commitment.

Although mortgage payments are usually fixed, theyre generally higher than rent
payments.
Buying a home requires a down payment, closing costs and moving expenses.
The value of your house may not increase especially during the first few years.
Higher interest component offset the property appreciation to large extent
I personally feel that any financial decision should not be biased and prejudice. We
should look at both the aspects before arriving at final decision. Based on rough
estimates, 80% residential real estate transactions in India are executed by availing Home
Loan. For majority of Indians real estate affordability is major concern. At the same time
there is no love lost for Real Estate & Gold. Home Loan is blessing in disguise for this
section. Buying a property on Home Loan is a major financial decision and each financial
decision comes with own set of advantages and disadvantages.
Home Loan is Long Term Commitment
Though average duration of home loan is 8 years but it is just an average. Median is
normally 10-12 years. If you have any major financial goal lined up in next 10 years like
kids education or marriage than Home loan is a major hurdle to fulfill the same. Home
Loan put major burden on finances atleast for initial 4-5 years and then it takes another 3-

5 years to recover from same. You must be wondering, salary will also increase but we
need to account inflation also which is devaluing the salary hike. Last year suppose i got
hike of 7% in salary but with average inflation of 10%, in real terms my salary reduced
by 3%. This point remain remain one of key disadvantages of home loan until unless
there is sharp jump in income levels.
Volatile Interest Rate Movement
Daily i get 4-5 cases where people are serving EMI from last 2 years but principal
outstanding is still same as it was at the time of availing loan. Reason, when interest rate
increases banks increase the loan tenure rather increasing EMI thus your interest
component increases in EMI. In few cases, principal outstanding is more than original
amount even after 2 years. Uncertainty in Interest rate movement is one of key
disadvantages of Home Loan. You may opt for Fixed Rate Home Loan but it also not
fixed in true sense.
Opportunity Lost
The biggest flaw in our calculations & one of critical disadvantages of home loan is that
we dont consider opportunity lost. If i am paying 2 Lac as principal component during a
year then my opportunity lost is returns which i would have received, if i would have
invested same money in some other financial instrument say Bank FD. Assuming 9%
interest rate, my opportunity lost for the year is Rs 18000 & it should be reduced from
home loan benefits.
Actual Cost of Property
My friend purchased a 3 BHK apartment in year 2007 for 50 Lac. In 2012, he sold the
same flat for 70 lac. Sounds good & prime facie he made profit of 20 lac on his
investment. This is not the case as he paid approx 24 Lac interest on Home Loan of 40
Lacs in 5 years. Now, next question coming to your mind will be that he saved income
tax also. We will address this in next point but in real sense the actual cost of property is
74 Lacs i.e. 50 lac (Cost) + 24 Lac interest. Notwithstanding this, his principal liability at
the time of sale was approx 20 Lacs. Reason for very high interest rate payout initially is
that principal

Objectives of the study

The current work revolves around the following major objectives.
1. To study the present condition of housing sector in India such as current position of housing
stock, household and its comparison with population growth etc.
2. To evaluate and contrast the evolution and recent trends in housing finance system in India.
3. To assess housing shortage and affordable housing policies in Indian housing market.
4. To give some significant recommendations to improve the affordability in housing
development in India.

Performance output of key organizations in India

India is the second largest populous country in the world, next only to china. Home to roughly
1.1 billion people, India is the second most populous country after China and is expected to
overtake it by 2030. About one in every sixth person on earth lives in India, and the growth rate
of the population is still rapid. Housing finance is a relatively new concept in India comparing to
other financial services that are widely available in the country since a long year back (Annual
report ICRA,2011)33. However, the speedy development in housing and various housing
activities have understandably led to the growth of Indian housing finance market. As a result, a
number of players have barged into the market.
RBI
The Reserve Bank of India (RBI) is India's central banking institution, which controls the
monetary policy and plays an important role in the development of the nation. In pursuance of
National Housing Policy of Central Government, Reserve Bank of India has been facilitating the
flow of credit to housing sector. Since housing has emerged as one of the sectors attracting a
large quantum of bank finance, the current focus of RBI's regulation is to ensure orderly growth
of housing loan portfolios of banks.
National Housing Policy
As a part of the strategy to overcome the colossal housing shortage, the Central Government
adopted a comprehensive National Housing Policy which, among other things, envisaged:
i.
ii.

iii.

Development of a viable and accessible institutional system for the provision of

housing finance;
Establishing a system where housing boards and development authorities would
concentrate on acquisition and development of land and infrastructure; and Creation
of conditions in which access to institutional finance is made easier and affordable for
individuals for construction/buying of houses/flats.
This may include outright purchase of houses/flats constructed by or under the aegis
of public agencies.

HUDCO
It was in the year 1970 when Housing and Urban Development Corporation (HUDCO) was
established to finance various housing and urban infrastructure activities. However, the Housing
Development Finance Corporation (HDFC) was the India's first private sector housing finance
company came into existence in 1977. Since then, the housing finance in India has been flying
high. It's expected to grow at a growth rate of 36% in the coming years. Through its
Niwasscheme, HUDCO offers housing loans for the buying/constructing house/flat. Loans are
also offered for Enovation/extension/alteration of existing house/flat.
In the financial year 2009-10 (ended on March 31, 2010), HUDCO registered a net profit of `
495.31crore, comparing to ` 400.99crore of the previous year.

Commercial banks
As the commercial banks started expanding housing-related disbursements, the market share
also started growing up. In 2000, the Indian housing finance companies accounted for 70 per
cent of the disbursements, while their collective share decreased to 36 per cent within 5 years. In
2005, banks accounted for 64 per cent of the disbursements.
Housing Development Finance Corporation Limited (HDFC)
Housing Development Finance Corporation Ltd (HDFC) is one of the leaders in the Indian
housing finance market with almost 17% market share as on March 2010. Serving more than
38lakh Indian customers as on March 2011, HDFC also offers customized solutions that fit to the
need of the customer. In the FY 2010-11, it registered a net profit of `4528.41crore. It also
registered a net profit of ` 971crore in the quarter ended September 30, 2011.
State Bank of India Home Finance (SBI):
State Bank of India is another major player in the Indian housing finance market with 17% of the
market share, same as HDFC's share as on March 2010. The SBI Housing Loan schemes are
specifically designed to meet the varied requirements of the customers. It offers home loan for
various purposes including new house/flat, purchase of land, renovation/ alteration/ extension of
existing house/flat etc. SBI Home Finance registered a net profit of ` 24.63 crore in the year
ended March 31, 2009.
LIC Housing Finance Limited:
LIC Housing Finance is another major player in housing finance sector in India with about 8% of
market share. Promoted by Life Insurance Corporation of India, LICHFL has an extensive
distribution network with a strong brand presence. Recently, the company has been awarded
Consumer Super brand 2009/10 Status by Super brands Council. In the last financial year
(ended on March 31, 2011), LICHFL earned a net profit of ` 974.49 crore, comparing to ` 662.18
in the previous FY. It also registered a net profit of ` 256.50 crore in April- June quarter of 2011.
ICICI Home Finance Company Limited:
ICICI is the third largest housing finance company in India with almost 13% market share. It
offers various types of home loans for its customers which may have tenure up to 20 years. The
home loan interest rate is connected to the ICICI Bank Floating Reference Rate (FRR/PLR).
Here it can be added here that, the PLR has been increased to 17.5% from its previous rate of
17% since February 23, 2011. As on March 31, 2010, ICICI HFC has 2009 branches with an
asset of ` 363400crore. The net profit of the company rose 45.19% to Rs 233.29crore in the year
ended March 2011 compared to Rs160.68crore profit it earned during the previous year.
IDBI Home finance Limited (IHFL):

Founded in January 10, 2000, IDBI Home finance Limited has become one of the major players
in the Indian housing finance market with about 4% market share as on March 2010. It offers a
range of housing financial solutions to its customers including Individual Home Loans, Home
Improvement Loan, Home Extension Loan, and Home Loans for NRIs, Plot Loans, and Loan
against Home etc. The home loan advances of IHFL as of March 2010 were Rs 3,537crore
compared to Rs 3,089crore in the previous year. In the financial year 2010-11, IDBI Bank
registered a profit of ` 1650crore, comparing to a net profit of ` 1031crore in the previous
financial year.
PNB Housing Finance Limited
PNB Housing Finance Limited offers a wide range of loans for purchase/construction of property
to resident Indians as well as NRIs. It also offers housing finance for renovations, repairs and
enhancement of immovable properties. In the last financial year ended on March 31, 2011, PNB
Housing Finance Limited registered a net profit of 69.37crore, which is 3.93% more than the net
profit of its previous financial year of 66.75crore.
Dewan Housing Finance Corporation Limited (DHFL)
Dewan Housing Finance Corporation Limited is one of the largest housing finance solution
providers in India with an extensive network of 74 branches, 78 service centers and 35 camps
spread across the nation. For the year ended March 31, 2011, DHFL registered a net profit of Rs.
265.13crore which is a growth of 75.9% over net profit of Rs. 150.69crore in the previous fiscal.
In the quarter ended on September 30, 2011, DHFL earned a profit (after tax) of Rs. 71.89crore.
GIC Housing Finance Limited
GIC Housing Finance Limited, one of the leading housing finance companies in India, was
initially established as GIC Grih Vitta Limitedon December 12, 1989. Promoted by General
Insurance Corporation of India, GIC Housing Finance Limited offers extensive range of housing
finance solutions to its customers through its wide network of 24 Business Centers and 3
Collection Centers across the nation. In the financial year 2010-11, GIC Housing Finance
Limited registered a profit (after tax) of Rs.113.76crore. Furthermore, in the quarter ended June
30, 2011, it registered a profit of Rs.1756lakhs.
Can Fin Homes Limited (CFHL)
Can Fin Homes Limited is another big player in the Indian housing finance market with an
extensive network of 40 branches. It is also the first and one of the biggest bank-sponsored
(sponsored by Canara Bank) housing finance companies in India. In the financial year 2010-11,
Can Fin Homes Limited registered a net profit of Rs. 4201.6lakhs. It also registered a net profit
of Rs.814lakh in the quarter ended on September 30, 2011. The increase in population (more
than 1027 million in 2001 with CAGR of 2.13% during the decade 1991-2001) has led to
increase in total number of household from 83.50 million in 1951 to 191.96 million in 2001 (with
CAGR of 2.7% during 1991-2001). However, there has also been correspondingly consistent
increase in construction of additional houses. As a result, the number of occupied houses in

Indian GDP has grown at 6% for the past 10 years and 8% for the last 3 years and interestingly
service sector accounts for 60% of GDP (Parekh, D, 2006)

Bibliography: http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/financehousing.html

Housing Finance in India

Let me now turn to housing in India. As per the Census, during the decade of 2001 to 2011,
while housing stock increased by 51 per cent, number of households has increased by 47 per
cent. Notwithstanding recent improvements, urban India in 2012 had an estimated shortfall of
about 19 million houses. Most of the housing shortage is obviously for economically weaker
section (56 per cent) and low income group (39 per cent) people5.
Institutional financing for housing in India is dominated by commercial banks. As on March
2012, outstanding housing loans by banks and housing finance companies was `6.2 trillion, of
which about two-thirds were accounted for by banks.
Overall trend in annual growth of credit of scheduled commercial banks in India indicates that
the share of credit for housing in aggregate credit rose from under 5 per cent in March 2001 to 12
per cent by March 2006. This was facilitated by a number of favorable factors: First, sustained
reduction in inflation resulted in lowering of lending rates. Second, removal of the restriction of
prime lending rate (PLR) as the floor rate for pricing housing loan coupled with reduction in risk
weight from 100 per cent to 50-75 per cent for housing loan to individuals aided competitive
pricing of such loans. Third, the acceleration in GDP growth raised the demand for housing.
Thereafter, the rate of growth in housing credit has moderated. Consequently, its share in total
bank credit has declined gradually to about 8 per cent by March 2012.
As a percentage of GDP, outstanding housing credit from banks rose from 1.2 per cent in 2001 to
a peak of 5.3 per cent in 2006 before moderating to 4.2 per cent by March 2012. The weighted
average lending rate (WALR) on housing loan first declined from 12.8 per cent in March 2001 to
a low of 8.6 per cent in 2006 before rising to 11.1 per cent by March 2012. Though the interest
rate on housing finance has gone up since 2006, it has remained below the overall weighted
average lending rate of banks (

Eligible Category of Borrowers

UCBs may grant loans to the following categories of borrowers:

i.

Individuals and co-operative / group housing societies.

ii.

Housing boards undertaking housing projects or schemes for economically weaker

sections (EWS), low income groups (LIG) and middle income groups (MIG).

iii.

Owners of houses / flats for extension and up-gradation, including major repairs.
Eligible Housing Schemes
The borrowers in the above categories will be eligible for finance for the following types of
housing schemes:
a.

Construction / purchase of houses / flats by individuals

b.

Repairs, alterations and additions to houses / flats by individuals

Schemes for housing and hostels for scheduled castes and scheduled tribes

c.

Under slum clearance schemes - directly to the slum dwellers on the guarantee of the
Government, or indirectly through Statutory Boards established for this purpose

d.

Education, health, social, cultural or other institutions / centres which are part of a
housing project and considered necessary for the development of settlements or townships

e.

Shopping centres, markets and such other centres catering to the day to day needs of the
residents of the housing colonies and forming part of a housing project
Terms and Conditions for Housing Loans
Finance provided by the UCBs to the eligible categories of borrowers for eligible housing
schemes will be subject to the following terms and conditions:
1 Maximum Loan Amount & Margins

i.

UCBs, based on their commercial judgment and other prudential business considerations,
with the approval of their Board of Directors, are free to identify the eligible borrowers, decide
margins and grant housing loans depending upon the repaying capacity of borrowers.

ii.

Tier-I UCBs are permitted to extend individual housing loans upto a maximum of `30
lakh per beneficiary of a dwelling unit and Tier II UCBs (UCBs other than Tier I) to extend
individual housing loans up to a maximum of `70.00 lakh per beneficiary of a dwelling unit
subject to extant prudential exposure limits.

iii.

The maximum loan should not exceed 15 percent of capital funds of the bank in case of
individual borrowers and 40 per cent of the capital funds in case of group of borrowers. The
capital funds for the purpose shall include both Tier I Capital and Tier II capital.

* Tier I UCBs are categorised as under:

- Banks having deposits below `100 crore operating in a single district
- Banks with deposits below `100 crore operating in more than one district will be treated as Tier
I provided the branches are in contiguous districts and deposits and advances of branches in one
district separately constitute at least 95% of the total deposits and advances respectively of the
bank and
- Banks with deposits below `100 crore, whose branches were originally in a single district but
subsequently, became multi-district due to reorganization of the district
Deposits and advances as referred to in the above definition may be reckoned as on 31st March
of the immediate preceding financial year.
2 A. Interest
Banks may, with the approval of their Boards, determine the rate of interest, keeping in view the
size of accommodation, degree of risk and other relevant considerations.
B. Foreclosure Charges / Prepayment Penalty
With effect from June 26, 2012 it has been decided that UCBs will not be permitted to charge
foreclosure charges / prepayment penalties in home loans on floating interest rate basis.
3 Charging of Penal Interest
Banks may formulate, with the approval of their Boards, transparent policy for charging penal
interest rates to be levied for reasons such as default in repayment, non-submission of financial
statements, etc. The policy should be governed by well accepted principles of transparency,
fairness, incentive to service the debt and due regard to genuine difficulties of customers.
4 Security
(i) UCBs may secure housing loans either
a.

by mortgage of property, or

b.

by government guarantee where forthcoming, or

c.

by both.
(ii) Where this is not feasible, banks may accept security of adequate value in the form of LIC
policies, Government Promissory Notes, shares / debentures, gold ornaments or such other
security as they deem appropriate.

5 Period of Loan
(i) Housing loans may be repayable within a maximum period of 20 years, including moratorium
or repayment holiday.
(ii) The moratorium or repayment holiday may be granted
a.
b.

at the option of the beneficiary, or

till completion of constructions, or 18 months from the date of disbursement of first
instalment of the loan, whichever is earlier.
https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8106#

http://www.censusindia.gov.in/2011census/hlo/HLO_Tables.html

http://www.slideshare.net/hbjcapital/indiabulls-housing-finance-updated-34997418

CRITERIAS FOR HOUSING FINANCE

While formulating the policies, banks have to take into account the following RBI guidelines and
ensure that bank credit is used for production, constructions activities and not for activities
connected with speculation in real estate.
(A) ACQUISITION OF LAND

Bank finance granted only for purchase of a plot, provided a declaration is obtained from the
borrower that he intends to construct a house on the said plot, with the help of bank finance or
otherwise, within such period as may be laid down by the banks themselves.
(B) CONSTRUCTION OF BUILDING / READY-BUILT HOUSE
1) Banks may grant loans to individuals for purchase/construction of dwelling unit per
family and loans given for repairs to the damaged dwelling units of families.
2) Bank may extend finance to a person who already owns a house in town/village where
he resides, for buying/ constructing a second house in the same or other town/ village for
the purpose of self-occupation.
3) Bank may extend finance for purchase of a house by a borrower who proposes to let it
out on rental basis on account of his posting outside the headquarters or because he has
been provided accommodation by his employer.
4) Bank may extend finance to a person who proposes to buy an old house where he is
presently residing as a tenant.
5) Banks may finance for construction meant for improving the conditions in slum areas for
which credit may be extended directly to the slum-dwellers on the guarantee of the
Government, or indirectly to them through the State Governments.
6) Bank may provide credit for slum improvement schemes to be implemented by Slum
Clearance Boards and other public agencies.
7) Banks are advised to also adhere to the following conditions, in the light of the
observations of Delhi High Court on unauthorized construction:

In cases where the applicant owns a plot/land and approaches the banks/FIs for a credit
facility to construct a house, a copy of the sanctioned plan by competent authority in the
name of a person applying for such credit facility must be obtained by the Banks/FIs
before sanctioning the home loan.

An affidavit-cum-undertaking must be obtained from the person applying for such credit
facility that he shall not violate the sanctioned plan, construction shall be strictly as per
the sanctioned plan and it shall be the sole responsibility of the executants to obtain
completion certificate within 3 months of completion of construction, failing which the
bank shall have the power and the authority to recall the entire loan with interest, costs
and other usual bank charges.

An Architect appointed by the bank must also certify at various stages of construction of
building that the construction of the building is strictly as per sanctioned plan and shall
also certify at a particular point of time that the completion certificate of the building
issued by the competent authority has been obtained.

In cases where the applicant approaches the bank/FIs for a credit facility to purchase the
built up house/flat, it should be mandatory for him to declare by way of an affidavitcum-undertaking that the built up property has been constructed as per the sanctioned
plan and/or building bye-laws and as far as possible has a completion certificate also.

An Architect appointed by the bank must also certify before disbursement of the loan
that the built up property is strictly as per sanctioned plan and/or building bye-laws.

No loan should be given in respect of those properties which fall in the category of
unauthorized colonies unless and until they have been regularized and development and
other charges paid.

No loan should also be given in respect of properties meant for residential use but which
the applicant intends to use for commercial purposes and declares so while applying for
loan.

8) Supplementary Finance

Banks may consider requests for additional finance within the overall ceiling for carrying
out alterations/ additions/repairs to the house/flat already financed by them.
In the case of individuals who might have raised funds for construction/ acquisition of
accommodation from other sources and need supplementary finance, banks may extend
such finance after obtaining paripassu or second mortgage charge over the property
mortgaged in favour of other lenders and/or against such other security, as they may
deem appropriate.
Banks may consider for grant of finance to
A. The bodies constituted for undertaking repairs to houses.
B. The owners of building/house/flat, whether occupied by themselves or by tenants,
to meet the need-based requirements for their repairs/additions, after satisfying
themselves regarding the estimated cost (for which requisite certificate should be
obtained from an Engineer / Architect, wherever necessary) and obtaining such
security as deemed appropriate.

9) Bank finance should, however, not be granted for the following:

Banks should not grant finance for construction of buildings meant purely for
Government/Semi-Government offices, including Municipal and Panchayat offices.
However, banks may grant loans for activities, which will be refinanced by institutions
like NABARD.

Projects undertaken by public sector entities which are not corporate bodies (i.e. public
sector undertakings which are not registered under Companies Act or which are not
Corporations established under the relevant statute) may not be financed by banks. Even
in respect of projects undertaken by corporate bodies banks should satisfy themselves that
the project is run on commercial lines and that bank finance is not in lieu of or to
substitute budgetary resources envisaged for the project. The loan could, however,
supplement budgetary resources if such supplementing was contemplated in the project
design. Thus, in the case of a housing project, where the project is run on commercial
lines, and the Government is interested in promoting the project either for the benefit of
the weaker sections of the society or otherwise, and a part of the project cost is met by the
Government through subsidies made available and/or contributions to the capital of the
institutions taking up the project.
Banks had, in the past, sanctioned term loans to Corporations set up by Government like
State Police Housing Corporation, for construction of residential quarters for allotment to
employees where the loans were envisaged to be repaid out of budgetary allocations. As
these projects cannot be considered to be run on commercial lines, it would not be in
order for banks to grant loans to such projects.

(C) LENDING TO HOUSING INTERMEDIARY AGENCIES

Financing of Land Acquisition

a) In view of the need to increase the availability of land and house sites for increasing
the housing stock in the country, banks may extend finance to public agencies and not
private builders for acquisition and development of land, provided it is a part of the
complete project, including development of infrastructure such as water systems,
drainage, roads, provision of electricity, etc. Such credit may be extended by way of
term loans. The project should be completed as early as possible and, in any case,
within three years, so as to ensure quick re-cycling of bank funds for optimum results.
If the project covers construction of houses, credit extended therefore in respect of
individual beneficiaries should be on the same terms and conditions as stipulated for
financing the beneficiary directly.
b) Banks should have a Board approved policy in place for valuation of properties
including collaterals accepted for their exposures and that valuation should be done by
professionally qualified independent valuers.
c) As regards the valuation of land for the purpose of financing of land acquisition as also
land secured as collateral, banks may be guided as under:
Banks may extend finance to public agencies and not to private builders for
acquisition and development of land, provided it is a part of the complete project,
including development of infrastructure such as water systems, drainage, roads,
provision of electricity, etc. In such limited cases where land acquisition can be

financed, the finance is to be limited to the acquisition price (current price) plus
development cost. The valuation of such land as prime security should be limited
to the current market price.
Wherever land is accepted as collateral, valuation of such land should be at the
current market price only.

Lending to Housing Finance Institutions

Banks may grant term loans to housing finance institutions taking into account (longterm) debt-equity ratio, track record, recovery performance and other relevant factors
including the other applicable regulatory guidelines.

Lending to Housing Boards and Other Agencies

Banks may extend term loans to state level housing boards and other public agencies.
However, in order to develop a healthy housing finance system, while doing so, the banks
must not only keep in view the past performance of these agencies in the matter of
recovery from the beneficiaries but they should also stipulate that the Boards will ensure
prompt and regular recovery of loan instalments from the beneficiaries.

Term Loans to Private Builders

a.

In view of the important role played by professional builders as providers of

construction services in the housing field, especially where land is acquired and
developed by State Housing Boards and other public agencies, commercial banks
may extend credit to private builders on commercial terms by way of loans linked
to each specific project.

b. Banks however, are not permitted to extend fund based or non-fund based facilities
to private builders for acquisition of land even as part of a housing project.
c. The period of credit for loans extended by banks to private builders may be decided
by banks themselves based on their commercial judgment subject to usual
safeguards and after obtaining such security, as banks may deem appropriate.
d. Such credit may be extended to builders of repute, employing professionally
qualified personnel. It should be ensured, through close monitoring, that no part of
such funds is used for any speculation in land.
e. Care should also be taken to see that prices charged from the ultimate beneficiaries
do not include any speculative element that is, prices should be based only on the

documented price of land, the actual cost of construction and a reasonable profit
margin.

Terms and Conditions for Lending to Housing Intermediary Agencies

a. In order to enhance the flow of resources to housing sector, term loans may be
granted by banks to housing intermediary agencies against the direct loans
sanctioned/ proposed to be sanctioned by the latter, irrespective of the per borrower
size of the loan extended by these agencies.
b. Banks can grant term loans to housing intermediary agencies against the direct loans
sanctioned/proposed to be sanctioned by them to Non-Resident Indians also.
However, banks should ensure that housing finance intermediary agencies being
financed by them are authorised by RBI to grant housing loans to NRIs as all housing
finance intermediaries are not authorised by RBI to provide housing finance to NRIs.
c. Banks have freedom to charge interest rates to housing intermediary agencies without
reference to Benchmark Prime Lending Rates (BPLR) upto June 30, 2010. Under the
Base Rate System effective from July 1, 2010, all categories of loans will be priced
with reference to Base Rate which is the minimum interest rate for all loans.

Adherence to guidelines on Commercial Real Estate (CRE) exposure

Lending to housing intermediary agencies will be subject to the guidelines on commercial real
estate exposure.
D) QUANTUM OF LOAN

While deciding the quantum of loan to be granted as housing finance, banks should
ensure that the LTV ratio for loans are as under:

Category of Loan
(a) Individual Housing Loans
Upto 20 lakh
Above 20 lakh & upto 75 lakh
Above 75 lakh
(b) CRE RH

LTV Ratio (%)

90
80
75
NA

In order to have uniformity in the practices adopted for deciding the value of the house
property while sanctioning housing loans, banks should not include stamp duty,

registration and other documentation charges in the cost of the housing property they
finance so that the effectiveness of LTV norms is not diluted.
In cases where the cost of the house/dwelling units does not exceed Rs.10 lakh, bank may
add stamp duty, registration and other documentation charges to the cost of the
house/dwelling unit for the purpose of calculating LTV ratio.
Banks are advised that disbursal of housing loans sanctioned to individuals should be
closely linked to the stages of construction of the housing project / houses and upfront
disbursal should not be made in cases of incomplete / under-construction / green field
housing projects.
However, in cases of projects sponsored by Government/Statutory Authorities, banks
may disburse the loans as per the payment stages prescribed by such authorities, even
where payments sought from house buyers are not linked to the stages of constructions,
provided such authorities have no past history of non-completion of projects.
It is emphasized that banks while introducing any kind of product should take into
account the customer suitability and appropriateness issues and also ensure that the
borrowers/ customers are made fully aware of the risks and liabilities under such
products.

(E) RATE OF INTEREST

Banks should charge interest on housing finance granted by them in accordance with the
directives on Interest Rates on Advances issued by Reserve Bank of India from time to time.
(F) APPROVALS FROM STATUTORY/ REGULATORY AUTHORITIES
While appraising loan proposals involving real estate, banks should ensure that the borrowers
should have obtained prior permission from government / local governments / other statutory
authorities for the project, wherever required. In order that the loan approval process is not
hampered on account of this, while the proposals could be sanctioned in normal course, the
disbursements should be made only after the borrower has obtained requisite clearances from the
government authorities.
(G) DISCLOSURE REQUIREMENTS
In view of the observations of High Court of Judicature at Bombay, while granting finance to
specific housing / development projects, banks are advised to stipulate as a part of the terms and
conditions that:

Disclose in the Pamphlets / Brochures etc., the name(s) of the bank(s) to which the
property is mortgaged.

Append the information relating to mortgage while publishing advertisement of a

particular scheme in newspapers / magazines etc.
Indicate in their pamphlets / brochures, that they would provide No Objection Certificate
(NOC) / permission of the mortgagee bank for sale of flats / property, if required.
Banks are advised to ensure compliance of the above terms and conditions and funds
should not be released unless the builder/developer/company fulfils the above
requirements.
The above mentioned provisions will be mutatis-mutandis, applicable to Commercial
Real Estate also.

(H) EXPOSURE TO REAL ESTATE

Banks are well advised to frame comprehensive prudential norms relating to the ceiling
on the total amount of real estate loans, single/group exposure limit for such loans,
margins, security, repayment schedule and availability of supplementary finance and the
policy should be approved by the banks board. While framing the banks policy the
guidelines issued by the Reserve Bank should be taken into account.
(I) ADDITIONAL GUIDELINES
It is advised that banks should adhere to the National Building Code (NBC) formulated
by the Bureau of Indian Standards (BIS) in view of the importance of safety of
buildings especially against natural disasters. Banks may consider this aspect for
incorporation in their loan policies. Banks should also adopt the National Disaster
Management Authority (NDMA) guidelines and suitably incorporate them as part of
their loan policies, procedures and documentation.

NHB (National Housing Bank)

NHB is wholly owned by RESERVE BANK OF INDIA. Its an apex financial institution
for housing which commenced its operations on 9 July 1988. It operates as a principal agency to
promote housing finance institutions both at local and regional levels and to provide financial
and other support to such institutions.
VISION: To promote inclusive expansion with stability in housing finance market
MISSION: To harness and promote the market potentials to serve the housing needs of all
segments
of the population with the focus on low and moderate income housing

OBJECTIVES:
a.

Promote a sound, healthy, viable and cost effective housing finance system to cater to all
segments of the population and to integrate the housing finance system with the overall
financial system.

b.

Promote a network of dedicated housing finance institutions to adequately serve various

regions and different income groups.

c.

Augment resources for the sector and channelize them for housing.

d.

Make housing credit more affordable.

e.

Regulate the activities of housing finance companies based on regulatory and supervisory
authority derived under the Act.

f.

Encourage increased supply of buildable land and also building materials for housing and
to upgrade the housing stock in the country.

g.

Motivate public agencies to emerge as facilitators and suppliers of serviced land, for
housing.

Entire paid-up capital contributed by RBI.

NHB grants direct loans to Public Agencies directly or in partnership with private developers
under PPP model to development of housing projects as per the Schemes/Guidelines of NHB.
NHB does not grant any loan (housing loan/mortgage loan/reverse mortgage loan) directly to
individual.

For commencing the housing finance business, an HFC is required to have the following in
addition to the requirements under the Companies Act, 1956: Certificate of registration from NHB,
Minimum net owned fund of Rs. 10 crores ( w.e.f. 01.04.2014)

HFC (HOUSING FINANCE COMPANY) falls under the NHB (National Housing Bank). The
names of various HFCs are- DHFL Housing Finance Limited, GIC, GRUH, HDFC (Housing
Development Finance Corporation Limited), ICICI Home Finance Company Limited, India
Bulls Housing Finance Limited, etc. The following will give clear understanding of HFC and
how it is a part that falls below NHB.

Housing Finance Company (HFC)

A company registered under the Companies Act, 1956 which primarily transacts or has as one of
its principal objects, the transacting of the business of providing finance for housing, whether
directly or indirectly.

HFCs are categorized in terms of the type of liabilities, by NHB, into Deposit and Non-Deposit
accepting HFCs and are issued Certificate of Registration accordingly

Apart from Registrar of Companies, registration from NHB is needed by HFC

Its needed from NHB to commence or carry out the business of housing finance. Moreover,
w.e.f. April 1, 2014, NHB has specified the net owned fund requirements of Rs. 10 crores to be
by abided by HFC.
Requirements for commencing housing finance business by an HFC with NHB
Requirements under the Companies Act, 1956:
A company must be registered (Certificate Of Registration) under the Companies Act,
1956 and desirous of commencing business of a housing finance institution.
Either it should primarily transacts or has as one of its principal objects of transacting the
business of providing finance for housing, whether directly or indirectly
Should have a minimum NOF-Net Owned Fund(*) of Rs. 10 crore. ( w.e.f. 01.04.2014)
HFC is/shall be in a position to pay its present/future depositors in full as and when their
claims accrue
Proposed management of the HFC shall not be prejudicial to the public interest or to the
interests of its depositors
Public interest shall be served and grant of certificate of registration shall not be
prejudicial to the operation and growth of the housing finance sector of the country

* Net Owned Fund (NOF) - Paid up capital + reserves & surplus(excluding revaluation
reserve)+Long term liabilities(to be paid after one year)-Trading investment-Fictitious
assets(like preliminary expenditure)

Can HFC appeal against the order of rejection of certificate of registration and if so with whom.
Yes. An appeal to the Central Government within a period of 30 days from the date on which
such order of rejection is communicated to it.
Whether NHB can cancel the Certificate of Registration granted to a HFC, and if so under what
circumstances.

In terms of sub-section (5) of Section 29 A of the National Housing Bank Act, 1987, NHB may
cancel a certificate of registration granted to a housing finance company, subject to certain
provisions, if such company:
Ceases to carry on the business of a housing finance institution in India
Has failed to comply with any condition subject to which the certificate of registration
had been issued to it
Failed to comply with any direction issued by the National Housing Bank under the
provisions of Chapter V of the National Housing Bank Act, 1987
Has not maintained accounts in accordance with the requirement of any law
/direction/order issued by the National Housing Bank under the provisions of Chapter V
of the National Housing Bank Act, 1987.
Failed to submit/offer for inspection its books of account and other relevant documents
when demanded by an inspecting authority of the National Housing Bank.
Has been prohibited from accepting deposit by an order made by the National Housing
Bank under the provisions of the National Housing Bank Act, 1987 and such order has
been in force for a period of more than three months.
How are HFC different from banks.
HFCs lend and make investments and have their activities akin to that of banks. However, there
are few differences stated as follows:
I.
HFCs cannot accept demand deposits.
II.
HFCs do not form part of the payment and settlement system and cannot issue cheques
drawn on it.
III.
Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not
available to depositors of HFCs, unlike in case of banks.

Grievance Redressal Mechanism in place for customers of HFCs

Complainant can lodge the complaint with the respective housing finance company (HFC) and
an online (24x7) Grievance Registration and Information Database System (GRIDS) has been
implemented for lodging the complaint by the complainant against HFCs and its status tracking
for efficient and effective disposal. Further, if the complainant is still not satisfied with the
outcome or his complaint is not resolved within a given period, he/she can approach other
forms of legal remedies available.
Can all HFCs accept public deposits.
For acceptance of public deposits HFCs can be divided into two categories, i.e. HFCs carrying
on the business of housing finance before June 12, 2000 and HFCs commencing housing
finance business after that date.
(a) Companies carrying on business of housing finance before June 12, 2000 can accept deposits
provided they have NOF of over Rs. 25 lakhs and have applied for certificate of registration with

NHB before December 12, 2000 and either have been granted the certificate of registration valid
for acceptance of deposits by NHB or their application is still pending for issue of certificate of
registration with NHB.
(b) Companies commencing the business of housing finance after June 12, 2000 can accept
public deposits only after:
(i) obtaining certificate of registration from NHB valid for acceptance of deposits; and
(ii) having minimum net owned funds (NOF) of [Rs. 2 crores or more]*.
*this amount was Rs 25 lakhs or more for HFCs which commenced business before February 16,
2002.
Ceiling on the maximum amount of public deposit which can be accepted by an HFC
Yes. HFCs having credit rating from approved credit rating agencies not below A and
complying with all prudential norms requirements can accept deposit not exceeding five times
of its net owned fund. The HFCs having no credit rating can accept deposit only upto two times
of its net owned fund or Rs. 10 crores whichever is lower provided such HFC complies with all
prudential norms and also has capital adequacy ratio of not less than fifteen percent as per the
last audited balance sheet.
Is credit rating compulsory for acceptance of public deposits by an HFC?
No. The HFC having credit rating can accept more deposits as per the conditions laid down for
acceptance of deposits in such a case as compared to an HFC without such rating.
The following credit rating agencies have been approved for the purpose
The Credit Rating Information Services of India Ltd. (CRISIL)
ICRA Ltd.
Credit Analysis and Research Limited (CARE)
FITCH Ratings India Pvt. Ltd.

Action that can be taken by NHB against HFCs if not complying with the provisions of the
Act or the Housing Finance Companies (NHB) Directions, 2001.

Issuing specific directions prohibiting acceptance of deposits and alienation of assets

Cancellation of certificate of registration.
Filing of applications for winding up petition
Imposition of financial penalties on the HFC and its principal officers
Filing of complaints before the Magistrate for imposition of penalties

Ceiling on the rate of interest offered by an HFC on public deposits

The Housing Finance Companies (NHB) Directions, 2001 provide for ceiling on the maximum
rate of interest which can be offered by an HFC on public deposits. The present ceiling is twelve
and half per cent per annum compounded at intervals not shorter than monthly rests. However,
there is no stipulation with regard to the minimum rate of interest required to be offered on
public deposits by an HFC.

Limitation/ restriction on the period for which public deposit can be accepted by a HFC.
HFCs can accept public deposits for periods of 1 year - 7 years only.

Can an HFC on its own repay the deposit prematurely?

No, acceptance of public deposit is a contract between the HFC and the depositor for a
definite period of time. However, any novation of the contract has to be mutually agreed
between the parties and should be in conformity with the provisions of Housing Finance
Companies (NHB) Directions, 2001.

Are public deposits of HFCs guaranteed by NHB

No. The depositor is advised to satisfy himself about the financial position and all relevant
aspects before placing his deposit with the HFC. A person making public deposits with
HFCs should satisfy himself that it holds a valid certificate of registration for accepting
public deposits from NHB. NHB while issuing certificate of registration to an HFC
specifically mentions whether or not it can accept public deposits.

Remedies available to a depositor when the HFC does not re-pay the deposits on maturity.
The depositor can file a civil suit for recovery of the amount of deposit. He can also make a
complaint to the Consumer Forums set up under the Consumer Protection Act, 1986. The
depositor should also bring such cases to the notice of NHB for taking action against the
defaulting companies under the provisions of the NHB Act. On being satisfied that the
company has defaulted in repayment of deposits NHB may issue directions prohibiting it
from acceptance of further deposits and alienation of its assets. NHB may also impose
financial penalties and take action for imposition of other penalties. NHB may also file
winding up petition against such companies.

Provisions for regulation of HFCs under the National Housing Bank Act, 1987.
The provisions for regulation of the HFCs as provided under the NHB Act, 1987 are:
Requirement of Registration and Net Owned Fund
Maintenance of percentage of assets in specified securities

Creation of Reserve Fund by the HFCs

Regulation or prohibition of issue of prospectus or advertisement soliciting deposits
Determination of Prudential Norms for HFCs
Collection of information as to deposits and to give directions
Issue of directions to the auditors of the HFCs relating to financial statements and
disclosure requirements
Prohibition of acceptance of deposits and alienation of assets
Penalty for violation of the provisions of the Act or the directions issued thereunder.
Filing of winding up petition against erring HFCs.

Methodology adopted by NHB to regulate the HFCs under the NHB Act, 1987 and
Housing Finance Companies (NHB) Directions, 2001.
The methodology adopted by NHB broadly comprises the following:
Entry level regulation, i.e., scrutiny of the HFC at the time of Registration
Off-site surveillance, i.e., through analysis of the information, return, periodicals etc.
filed by the HFCs from time to time.
On-site inspections, i.e., visit by the officers of the NHB to the offices of HFCs and
verification/ scrutiny of the books of accounts, returns, etc.
Constant interaction with other regulatory authorities

The returns/ statements required to be submitted by the HFCs to NHB are:

Annual Return
Half-yearly Return on Prudential Norms
Quarterly Return on maintenance of Liquid Assets
Auditors Certificate on annual basis certifying the capability of the HFC to repay
deposits
Copy of financial statements / Annual Report
Returns on changes pertaining to address of the registered office of the HFC, its
Directors etc.
Filing a copy of the advertisement soliciting Public Deposits or statement in lieu
thereof.
Provisions under the NHB Act, 1987 and Housing Finance Companies (NHB) Directions,
2001 for safeguarding the interest of the depositors.

Some of the safeguards under the NHB Act, 1987 and Housing Finance
Companies (NHB) Directions, 2001 are enumerated below:
Imposition of ceiling on the amount that can be accepted by an HFC
Imposition of ceiling on the rate of interest on deposits
Provision for nomination facility

Requirement of disclosures to the depositors

Imposition of ceiling on brokerage to be paid by HFC for raising deposits
Prohibition on alienation of assets in case of default in repayment of deposits
Requirement of maintenance of Liquid Assets by HFC
Creation of Reserve Fund

HFCs are doing functions similar to banks as bank also provides housing
loans. What is difference between banks & HFCs.
HFCs lend and make investments and hence their activities are akin to
that of banks. However, there are a few differences as given below:
HFCs cannot accept demand deposits
HFCs do not form part of the payment and settlement system and
cannot issue
cheques drawn on it.
Deposit insurance facility of Deposit Insurance and Credit Guarantee
Corporation is not available to depositors of HFCs, unlike in case of
banks.

MORTGAGE BACKED SECURITIZATION

Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows
from pools of mortgage loans, most commonly on residential property. Mortgage loans are
purchased from banks, mortgage companies, and other originators and then assembled into pools
by a governmental, quasi-governmental, or private entity. The entity then issues securities that
represent claims on the principal and interest payments made by borrowers on the loans in the
pool, a process known as securitization.
The transactions between parties in the housing finance sector can be broadly classified as those
relating to primary residential mortgage market and secondary residential mortgage market.
The primary mortgage market activity mainly comprises creation of mortgages as a result of
transactions between the borrowers and primary lenders. The primary lenders create mortgages
against loans provided by them to the purchasers of houses. The mortgages held as assets,
generate cash flows represented by repayments of both principal and interest, on the loans.
The secondary mortgage market mainly involves the conversion of mortgages into tradable
financial instruments and the sale of these instruments to prospective investors. The cash flows
which come as repayments from the borrowers to the originators, can be transferred to a third
party with simultaneous transfer of assets to an intermediary agency (SPV) designated for the
purpose of managing the bought over pool of mortgages. These cash flows are passed on to the
investors by the SPV. In the process, the mortgages are converted into securities which are
tradable financial instruments and sold to investors. The secondary mortgage market is thus

made up of securities which are backed by mortgages (MBS) and refers to the transactions
between the issuers and investors.
Once the securitized mortgages are sold by the originators viz., the primary lending institutions,
they are either de-recognized in the originators books of account or presented in a specific
manner. All future transactions in the mortgage backed financial instruments then take place in
the secondary mortgage market, depending up the depth of the market. The overall liquidity in
the capital market and housing finance system would increase with the number of transactions
among investors in the secondary mortgage market.
Securitization : Benefits
Supportive fiscal measures and the policies of Reserve Bank of India (RBI) have established a
systemic framework for specialized mortgage finance in the country and the sector has been
witnessing steady growth of over 28% in the past few years. In the recent past, with the
emergence of the capital market as the central pool of resources for sectorial development,
Securitization not only offers a viable and sustainable market oriented sourcing mechanism with
the potential of integrating housing market with the domestic as well as the international capital
markets, but also brings in a range of specializations, resulting in efficient and cost effective
structures and practices.

Improves Capital Adequacy Ratio (CAR) through transfer of risk weighted assets;

Aids Asset Liabilities Management and helps long term source for deployment in housing
sector;

Enables better spread management, and facilitates improvement of return on assets and
return on equity;

Enables new source of fee based income

The transaction involves :

a) Assignment and Transfer of a pool of housing loans along with the underlying mortgages,
from the primary lending institution to NHB.
b) Securitization of Mortgage Debt: On acquiring the pool along with the underlying mortgages,
an express declaration of trust will be made by NHB in respect of the mortgage debt, appointing
itself as the trustee for the benefit of the investors. Once the assets have been declared property
in trust (the Trust), the Trust will issue PTCs to investors.

STEP NO. 1

Authorization for securitization by originator: Originator to obtain authorization from

its relevant internal highest authority for securitization its pool of home loans.

Intimation to NHB : The originator (HFC / Bank) to write a formal letter to NHB
indicating its intention to securitize its home loans with copies of relevant authorization
of its relevant authorities (for instance Board Resolution) and proposal to go ahead with
securitization of its home loan portfolio with NHBs SPV arrangement.

STEP NO. 2
selection of pool of loans
time frame: as per originators convenience

NHBs Pool Selection Criteria (given separately) - the home loans should satisfy the
standards for being considered for selection in the Mortgage Pool offered for
securitization.

Identification of Geographic Locations for Selection of Loans To begin with, loans

originated in Tamil Nadu, Gujarat (compulsory), Karnataka, Maharashtra, and West
Bengal may be considered.

Initial Pool Size Decision (by Originator in consultation with NHB)

Supply of Initial Pool Information to NHB

STEP NO. 3
Due diligence & rating of the mortgage pool (may be done simultaneously)
(a)

Appointment of Rating Agency by Originator (for AAA(So) Rating) (in consultation with
NHB)

Supply Pool Information to Rating Agency

Commencement of Rating Process

Award of Rating by Rating Agency

(b)

Appointment of Auditors for Due Diligence Audit of Mortgage Pool (with consultations
between NHB and Originator)

Verification of Mortgage Pool by Auditors for certifying Due-diligence (Auditors may be

Statutory Auditors of Bank/HFC or a Chartered Accountancy Firm)

Completion of Due Diligence Audit and Certification by Auditors

STEP NO. 4
(may be done simultaneously with step 5, as offer document is a part of memorandum of
agreement to be executed between NHB & bank)

Appointment of Issue Arranger(s) by NHB (On consultations between NHB and

Originator)

Preparation of Offer Document by Issue Arrangers

STEP No. 5
EXECUTION OF MEMORANDUM OF AGREEMENT WITH NHB

Draft Agreement to be sent from NHB to Bank/HFC

Finalization of Agreement by Bank/HFC

Signing the Agreement by NHB and Originator

STEP NO. 6

Issue opens

Receipt of application money by NHB

Issue closes

Finalization of allotment by NHB and issue arrangers

Issue of allotment letter to investors by NHB (immediately after finalization of allotment)

Payment of consideration by NHB to originators (simultaneously with issue of allotment

letter to investors)

STEP No. 7
PAY-OUTS TO INVESTORS ON STIPULATED PAY-OUT DATE(S)
STEP No. 8
DOCUMENTATION

Execution of:
- Deed of Assignment
- Deed of Declaration of Trust
- Servicing and Paying Agency Agreement
- Any other Document(s)

Registration of Documents (Deed of Assignment and Declaration of Trust) at the Office

of Sub-Registrar of Assurances
(NHB shall provide all legal and advisory support pertaining to execution of documents
at Gujarat. For the purpose of local coordination at Gujarat, the Originating HFC /Bank
may engage an advocate in consultation with NHB)

Selection of Pool of Housing Loans

The pool of housing loans would be selected by the Primary Lending Institution from its existing
housing loans based upon a pool selection criteria.
ELIGIBILITY CRITERIA FOR HOME LOANS TO QUALIFY FOR SECURITISATION
The home loans should satisfy the following standards for being considered for selection in the
Mortgage Pool offered for securitization:

The borrower should be individual(s).

The home loans should be current at the time of selection/securitization.

The home loans should have a minimum seasoning of 12 months (excluding moratorium
period).

The Maximum Loan to Value (LTV) Ratio permissible is 85%. Housing loans originally
sanctioned with an LTV of more than 85% but where the present outstanding is within
85% of the value of the security, will be eligible.

The Maximum Installment to (EMI) to Gross Income ratio permissible is 45%.

The loan should not have over dues outstanding for more than three months, at any time
throughout the period of the loan.

The Quantum of Principal Outstanding Loan size should be in the range of Rs.0.50 lakh
to Rs.100 lakhs.

The pool of housing loans may comprise of fixed and/or variable interest rates.

The Borrowers have only one loan contract with the Primary Lending Institution (PLI).

The loans should be free from any encumbrances/charge on the date of

selection/securitization. The sole exception to this norm being loans refinanced by NHB
(In such cases, the loans may be securitized subject to the originator substituting the same
with other eligible housing loans conforming with the provisions of the refinance
schemes of NHB).

The Loan Agreement in each of the individual housing loans, should have been duly
executed and the security in respect thereof duly created by the borrower in favour of the
PLI and all the documents should be legally valid and enforceable in accordance with the
terms thereof.

The Bank/HFC has with respect to each of the housing loans valid and enforceable
mortgage in the land/building/dwelling unit securing such housing loan and have full and
absolute right to transfer and assign the same to NHB.

The Pool selection criteria may be modified by NHB from time to time at its sole discretion.
Valuation of the pool and Consideration of Assignment
NHB will consider making payment of purchase consideration to the Primary Lending Agency
under the following methodology, with a view to obtain a sound and efficient pricing structure to
the benefit of originators:
(i) Par Pricing Methodology:
The consideration payable to the Primary Lender for transferring the pool would be equal to the
total future outstanding principal balances of the individual loans on a Cut-Off Date.
(ii) Premium Pricing Methodology: The consideration paid to the Primary Lender for transferring
the pool would be decided and paid on the basis of discounting of future stream of net cashflows
relating to the pool. It shall normally be higher than the total outstanding principal balances of

the individual loans on a Cut-Off Date as the discounting rate used shall be lower than the
weighted average coupon of the pool.
(iii) Discount Pricing Methodology: The consideration paid to the Primary Lender for
transferring the pool would be lower than the total outstanding principal balances of the
individual loans on a Cut-Off Date as the discounting rate used shall be higher than the weighted
average coupon of the pool due to higher risk perception.
Working out cutoff date balances
The outstanding principal as on the cut-off date, may be worked out by adjusting the original
loan amount to the extent of the principal component of the EMIs payable up to the cut-off date
together with the adjustment for any prepayments received during this period.
Liquidity Adjustment Facility
In view of delayed receipt of installments from some borrowers at times and grace periods
allowed by the primary lending agencies to its borrowers, collection efficiencies may vary from
month to month leading to inadequacy of cash flow required for servicing. In order to protect the
purchaser of housing loans/investors in MBS from such uncertainties, there may be a need to set
up a Liquidity Adjustment Facility as a temporary stopgap arrangement.

VISITS

Housing Development Finance Corporation (HDFC)

The Housing Development Finance Corporation, popularly known as HDFC Bank, was
established in the year 1994 and is one of the first Indian banks to receive an in-principle
approval from the RBI. At present, HDFC is one the largest lenders in India and the fifth largest
bank in the country by assets. HDFC is also ranked one among the top 50 banks in the world in
terms of market capitalization. The bank has also received an array of awards like J.P Morgan
Quality Recognition Award and Fab 50 by Forbes Asia that stands as a testimony to its
impeccable quality and customer services.
HDFC home loan products are popular in the Indian market because of the customercentric advantages and the features that it offers.
HDFC is the pioneer in home loan section With features like attractive rate of interest,
flexible tenure, tailored schemes for different individuals and customized repayment solutions,
HDFC Home Loans will delight the borrowers.
A pioneer in home loan section who has served over 4.4 million happy home owners,
HDFC Home Loans will take away the monetary-constraint factor so you have a happy property
financing experience.

The USP of HDFC is their developed system and their understanding of this sector.

Features and Benefits of HDFC Housing Loans:

Read on to find more about the features that make HDFC Home Loans one of the most-sought
after product in the Indian financial market.

Attractive and affordable rate of interest

Customers can enjoy flexible repayment tenure of up to 30 years.
An extensive range of specially crafted home loan products & solutions like home
extension loans, automated repayment of EMI and home improvement loan
Different tailored solutions like pre-approved home loans, home loan transfer and Home
loans for Non-resident Indians
Special offers for horticulturalists, planters, agriculturalists and farmers.
Quick and efficient loan processing with door-step service
Absolutely no hidden charges and completely transparent process
Legal and technical counseling by experts to help the customer make the right decision
Extensive branch network for loan servicing and availing, anywhere across the country
HDFC Bank offers you the flexibility to schedule your home loan as part floating or fixed
as per your requirements.

Products Offers
HDFC NRI Home Loan
This loan is offered for Non-Resident Indians who are of Indian origin or is a citizen of India.
HDFC Rural Home Loan
This loan is specially offered for planters, agriculturalists, horticulturalists and dairy farmers.
Co-applicant for the home loan
When you are applying jointly for HDFC bank housing loan, all proposed owners of the house
must be co-applicants. But, all co-applicants need not necessarily be co-owners. Co-applicants
are generally immediate family members.
The income requirements vary depending on the loan amount, tenure, type of housing loan
scheme and other conditions.

Documents required for HDFC Home Loans:

Having all necessary documents in place will ensure a quick and easy loan processing, here is a
list of documents that you must have when applying for HDFC Housing Loan.
Mandatory Documents:
For Agriculturalists, Salaried Customers, Businessmen and Professionals:

 Application form with recent photographs

Bank statements for the last 6 months
Identity and Address Proof
Income Documents:
For
Agriculturalists

Copies of title documents for agricultural land showing the land holding
Copies of title documents for agricultural land showing crops being
cultivated
Statement of loans availed in the last 2 years

Salaried
Applicants

Latest salary slips

Form 16

Businessmen
and
professionals

Business profile documents

IT Returns for the last 3 years for business & self
Last three years profit and loss statement (P&L) and balance sheet
Certificate of educational qualifications
Proof of business

Other Documents:
Proof of identity and residence can be any of a valid passport, voter ID card, valid driving
license and Aadhar card.
Applicants might be asked to submit the following documents as income proof - PAN
card, last 3 months salary slips, last 6 months bank statements showing salary credit and
the latest ITR & Form-16.
As property documents, the applicant must submit a copy of the allotment letter, buyer
agreement and receipt of payment made of the developer.
If the applicants employment is less than 1 year, the employment contract or
appointment letter will be asked for.
Different Types of Home Loan Available at HDFC Bank Ltd:
The following types of home loan schemes are offered by HDFC Bank.

Home Loan for Salaried and Self-Employed

HDFC Pre-Approved Loan Scheme
HDFC NRI Home Loan
HDFC Home Loan Transfer
Home Improvement Loan (HIL)
Home Extension Loan
HDFC Special Home Loan for Agriculturists
HDFC Rural Housing Finance

HDFC Home Loans Interest Rates:

HDFC Bank, as one of the flag-bearers of banking in India, offers home loans at an interest rate
that is considered very appealing and competitive. Currently, this interest rate starting from
9.85% to 10.35%, and is applicable to different home loan products and eligible customer
groups banking with HDFC.
Home Loan Interest Rates for Salaried and Self-Employed Professionals:
Home Loan/Home Improvement Loan/Refinancing/Home
Extension Loan

Revised Rate
9.90 %

Basis RPLR
6.65 %

HDFC Housing Loan Interest Rate for Self-Employed Non-Professionals:

Home Loan/Home Improvement Loan/Refinancing/Home
Extension Loan

Revised Rate
9.90 %

Basis RPLR
6.65 %

For Self-Employed Value plus Home Loans:

Home Loan/Home Improvement Loan/Refinancing/Home
Extension Loan

Revised Rate
10.90 %

Basis
RPLR
5.65 %

Interest Rates for Top-Up Home Loans in HDFC:

Interest rate for home loan plus the top-up loan

9.90%

Interest Rates for TruFixed plus Home Loans - 2 and 3 year variants:
For employed and self-employed
professionals

Self Employed NonProfessionals

Interest
Rate

ARHL interest rate post

fixed rate period

Interest
Rate

ARHL
interest rate
post fixed rate
period

Up to and including
Rs.75 lakhs

9.95%

RPLR - 6.60

9.95%

RPLR - 6.60

Above Rs.75 lakhs to

Rs.5crore

10.05%

RPLR - 6.50

10.15%

RPLR - 6.40

Above Rs.5crore

10.15%

RPLR - 6.40

10.25%

RPLR - 6.30

Loan Slabs

Interest Rates for TruFixed Plus Home Loans - 10 Year variant:

For employed and self-employed

professionals

Self Employed NonProfessionals

Interest
Rate

ARHL interest rate post

fixed rate period

Interest
Rate

ARHL interest
rate post fixed
rate period

Up to and including
Rs.75 lakhs

10.05%

RPLR - 6.50

10.05%

RPLR - 6.50

Above Rs.75 lakhs to

Rs.5 crore

10.20%

RPLR - 6.35

10.30%

RPLR - 6.25

Above Rs.5 crore

10.30%

RPLR - 6.25

10.40%

RPLR - 6.15

Loan Slabs

HDFC Adjustable rate home Loan for Women:

Loan Quantum- Any

Interest Rate per annum 9.85% to 10.35%
RPLR Minus Spread RPLR 6.70 to 6.20

HDFC Home Loan Repayment:

Step Up Repayment Facility (SURF)

This repayment scheme is based on the expected income growth of the borrower. In the initial
years, you can pay substantially lower installments and still avail a high quantum of loan.
Subsequently, the repayment increases proportionally with the assumed growth in the
borrowers income.

Tranche Based EMI

In case you purchase a property that is under construction, you are required to pay the interest
amount for the loan till the final disbursement of loan amount and then pay the EMIs
thereafter. With tranche based EMI, customers can immediately start on the principal
repayment and start paying EMIs on cumulative disbursed amount.

Flexible Loan Installments Plan (FLIP)

FLIP is essentially a customized solution which is linked to the repayment capacity of the
borrower which may change during the loan tenure. The repayment schedule is in such a way
that the installment is higher during initial years of the term and then decreases proportionally
to the income.

Accelerated Repayment Scheme

This is a flexible scheme where you can increase the EMIs every year, proportional to your
income growth which will enable you to repay the loan much faster.

Telescopic Repayment Option

Telescopic repayment plan will get the borrower a longer repayment tenure of up to 30 years
which means the EMIs will be more affordable and the loan eligibility will also be enhanced.

Prepayment of loan
Yes, you can make prepayments. The penalty charges for prepayment will be as follows.

For home loans sanctioned to individual customers

On account of full or part prepayments, no prepayment charges will be levied.
For other loans
For any amount up to & including 25% of the principal balance, no prepayment charges
will be levied. For part prepayment exceeding 25% of full prepayment amount will attract
a prepayment charge of 2% plus taxes if the prepayment is made within 3 years from the
date of loan disbursement. For part prepayment made after 3 years, there is no
prepayment penalty. However, full pre-payment after 3 years of loan disbursement, 2%
charges will be levied.

The processing fee

The processing fee is up to 0.50% of the total loan amount or Rs.2,000 whichever is higher
plus the taxes as applicable.

The Recovery process

The recovery process depends on the customer responses.

If a customer dont pay his installment for 2 months company sends the notice for the
payment with some penalty.
If the customer ignores the notices for 3-5 months than company will visit them and give
oral notice with penalty.
If the customer doesnt response properly than after 6-8 months company forward that
case to recovery agency.
Here if the customer is able to pay his installment in between for once or twice then
company will not forward it to recovery agency.

INDIABULLS

Indiabulls Group is one of the country's leading business houses with interests in housing
finance, real estate, securities, construction equipment leasing and facilities sector. The group had
combined revenues of over Rs. 8,300 Cr and PAT of over Rs. 1,900 Cr for the year ended 31
March 2014. All the group companies are listed on the Bombay Stock Exchange, and the National
Stock Exchange. The combined market capitalization of these companies as on 30th June 2014
was Rs. 17,900 Cr.
Indiabulls Housing Finance Ltd. (IBHFL) is the 2nd largest private housing finance company in
India, regulated by the National Housing Bank (NHB). they have the highest rating of AAA from
CARE ratings and Brickwork ratings.
offering home loans at competitive rates, especially loans of up to Rs. 50 lakhs .
PURPOSE OF PROVIDING HOUSING LOAN

Purchase of Flat, row house, bungalow from developers, existing freehold properties,
and properties in an existing co-operative housing society or apartment owner's
association
Construction of residential dwelling unit on a plot already owned.
Purchase of residential plot and / or construction thereon
Extension of existing residential property (adding floors, new rooms)
Renovation of existing residential property

ADVANTAGE INDIA BULLS PROVIDES:

Home loans come with a dual advantage, tax benefits and rent saving. Both these elements
contribute towards EMI outflow. Appreciation in the property value is an additional bonus.
Here is a list of benefits that you can avail when you take an India Bulls home loan:

Approval of loan even if property is yet to be selected

Online access of Loan account
Funding available for NRI customers
Facility for funding for builders under construction and ready properties
Experienced staff to provide doorstep services
Quick processing and disbursal of loans

INDIABULLS COMPETITIVE EDGE IS AS FOLLOWS:

Loan tenure of up to 30 years
Competitive rate of interest- 9.85% (others have interest rate of interest)
Doorstep service availed
Loan sanction of 48 hours
Online account access helps clients to apply online for loan and then the HF
staff would visit their place for further loan procedure
Flexible income program Scheme suppose the tenure is 15 years if some is
retiring after 5 years then his EMI for 5 years will be more and then for next
10 years it will be less
In case of a fresher having 2 years of experience so initially his EMI will be
less and then when he is established & has started earning then his EMI will
increase
Under Loan to Value (LTV) if loan taken is upto 25lac or less then, upto 80% can be

granted and if its more than 25 lac then its upto 85%
It also provides Balance Transfer feature: If suppose X takes loan of 15lakhs it can

transfer that loan amount to some other finance company to avail loan at cheaper cost or
better facilities.
Under Top up loan - if after a few years client requires more money so by that top up loan
he can take more loan in this case. Minimum criterion for getting top up is that the
customer should have paid minimum 12 EMIs
We continue to be one of the best capitalized HFCs, with our CRAR at 18.4% as against
the prescribed 12 %.
Among its lenders, the Company now counts 132 strong relationships: 26 PSU banks, 17
Private and Foreign banks.
DURATION BETWEEN LOAN REQUEST AND LOAN GRANTED.
For Salaried person- 48hrs.
Self-Employed Professional- If loan taken is less than 25Lakhs then, the loan process
would take maximum 5 days to grant a loan if property has been verified & approved
by the Technical team & loan documents are 100% ready.
But, in case of Self-employed professional taking loan above 25Lakhs there is no tag
on number of days it would take the housing Finance to grant loan.

LOAN TENURE OPTIONS.

IBHFL offers Home loan up to 30 years, provided the term does not extend beyond 65 years of
age or the retirement age, whichever is earlier.
PUBLIC DEPOSITS:
During the year under review, the Company has not accepted any deposits from the public,
falling within the ambit of Chapter V of the Companies Act, 2013 and the Companies
(Acceptance of Deposits) Rules, 2014.

INTEREST RATE IS CALCULATED/CHARGED ON MONTHLY REST.

CO-APPLICANTS FOR THE LOAN.

Spouse
Blood relative (immediate family members)
Also co-owner has to be necessarily co-applicant in the loan.

SECURITIES/ COLLATERALS NEEDED TO PROVIDE

Immovable property owned by the applicants. The applicant's title to the property should be
clear, marketable and free from any encumbrances. The security created on property shall be first
and exclusive. Such security will be created by deposit of original title documents of the said
property.
STAGES INVOLVED WHILE TAKING A LOAN.

Application submission - Submit a completely filled in application with all the necessary
documents.
Sanction - You get an approval for a specific loan amount based on your requirement,
repayment capability and the value of the property.
Disbursement is done on the basis of nature of transaction.
For resale, disbursal instrument is made favoring the seller.

For Balance transfer cases it will be favoring existing financer, for self-construction cases
it will be on the basis of stage of construction favoring the borrower. It will be in favoring
of the builder for builder direct x construction favoring the borrower. It will be in
favoring of the builder for builder direct allotment cases.

VARIOUS KINDS OF LOANS EXTENDED.

Loan for home purchase

Loan for Residential plot and self-construction
Loan for Home extension/Improvement
Balance Transfer from other banks
Loan for builders properties
Loan Against Property

MONTHLY REDUCING BALANCE

An Equated Monthly Installment (EMI) has 2 components: interest and principal. When the
interest is calculated on monthly rests, the principal on which the interest is charged goes down
every month. This results in significant savings for the customer over the tenure of the loan.
IHFL works on Monthly Rests basis.
AMORTIZATION SCHEDULE
An amortization schedule is a table giving the reduction of your loan amount by monthly
installments. The amortization schedule gives the break-up of every EMI towards repayment
interest and outstanding principal of your loan
TAX BENEFIT FOR AN INDIVIDUAL WHILE APPLYING FOR A HOME LOAN
Clients can claim tax benefits on both the principal and interest components of the home loan as
per the Income Tax Act. These benefits are in the form of deductions available to assess who
have taken a loan to either buy a house or build one. Can reduce tax liability by a maximum of
Rs.6250 per month (Rs.75000 p.a.) (for self-occupied property) Under section 80,repayment of
principal of up to Rs.1 lac is deductible in full from your income which means we can save tax
up to a maximum of Rs.30,000 p.a. on principal. Similarly under section 24 of the Income Tax
Act, interest is deductible up to a maximum of Rs.1.5 lac. Thus, this leads to an additional saving
of a maximum of Rs.45000 p.a.

TYPES OF RATE OF INTERESTS OFFERED- Floating rate of Interest.

DOCUMENTS REQUIRED

All applicants are required to present these documents while applying for a home
loan.
Application form: duly signed
Processing Fee Cheque
Know Your Customer documents: Name & date of birth proof, address proof,
signature proof, identity proof
Income documents
If salaried: Salary slips, Form 16 and bank statement
If self-employed: ITRs with financial statements, Bank statement
Property Documents

HOME LOANS & VARIABLE RATE

Loan Amount

Variable rates%

Upto and including Rs 150 lacs

9.85% to 11.50%

More than Rs 150 lacs

10.50% to 12.00%

Fixed & Floating

Fixed Rate Tenor

Rates%

Loan Amount

Upto and including Rs 75 lacs

More than Rs 75 lacs & Upto

150 Lacs

10.05% to 11.00%

Upto 10 Years
10.20% to 11.20%

More than Rs 150 lacs

10.50% to 12.00%

After the completion of Fixed Rate Tenor, the rate of interest applicable on loan will be the
prevailing Variable Rate Of Interest basis the Margin adjusted to Reference Rates at the time of
loan agreement execution.

PROCESSING FEE

Processing Fees

Upto Rs 28 lacs

Rs 7500

Rs 28.01 lacs to Over Rs 50 lacs

Upto 0.50%

Over Rs 50 lacs

0.50% to 1.00%

TAX BENEFITS

The income tax authorities offer certain benefits and exemptions to individuals who have taken a
housing loan from specified financial institutions.
Section 24 of the Income Tax Act
Interest paid on capital borrowed for the acquisition, construction, repair, renewal or
reconstruction of property is entitled to a deduction. Rs 2,00,000 is the maximum amount
eligible for deduction in the case of self-occupied property and for rented out property there is no
limit of amount of deduction.
Section 80C of the Income Tax Act.
Client can get a maximum Rs.1,50,000 deduction from the Income, on repayment of principal
during a financial year. Stamp duty, registration fee or other such expenses paid for the purpose
of transfer of such house property to the assesse is also considered under this amount.

VARIOUS DEPATMENTS:

OPERATION
COLLECTION
CREDIT: This department considers Technical & Legal team wherein the Technical
looks after the property and approves it. Only, then the loan is provided for that property
SALES

COLLECTION PROCESS

If any client defaults then their property comes under NPA (Non- Performing Assets). In case of
BANK- recovery process starts after 90 days and till 90 days warning is given to the client to pay
his due amount. And, for NBFCs it is 180 days. Accordingly clients are given tittle- Bucket as
per their due duration.
1 bucket: 30-60 DAYS
2 bucket: 60-90 DAYS
3 bucket: 90-180 DAYS

After categorizing, Collection team follows up clients as per their bucket.

There are no recovery agents rather, they have a full-fledged team of collection

Collection comfort described to them by their collection team of the property they have
visited. They give comfort or approval to INDIABULLS that now you can file a case
against the borrower as now he is going to default.
Company generally doesnt get defaulted because even though the ownership of the
property is with the borrower the possession of the property is with the company so, the
company can sell of the property and can recover the loan amount.
SLR of 12.2% has to be maintained
Indiabulls has received investment from various HNIs as well as Groups Retail
Investment.
In case of mortgage they recover by selling of property.
Even in the case of home loan ownership is with client but possession of deed is with
company
It also provides support to builders by providing them loan and buyer of property and
third party support

ICICI
Youre probably eligible for an ICICI Bank Home Loan if you are
At least 21 years old
Less than 65 years old
Salaried / Self-employed
with regular income
Earn more than the minimum income required

Your ICICI Bank Home Loan amount eligibility is based on these

factors
EMI limited to about 50% of monthly income
Loan capped @ 90% of property value
EMIs of other loans lower your eligibility

Increase your eligible ICICI Bank Home Loan amount by these steps
Make your spouse a co-applicant, and her income will add to your eligibility

Choose longer tenure loan up to 30 years

Alternatively add your parents

Documentation needed to apply for an ICICI Bank Home Loan

1. Signed application form with photograph
2. ID and residence proof
3. Processing fee cheque
4. Last 6 months bank statements

5. Documentation for salaried applicants:

Last 3 months salary-slips

Form 16 or Income Tax Returns

6. Documentation for self-employed applicants:

Education qualification certificate & proof of business existence

Last 3 years Income Tax Returns with computation of Income

Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account

Interest Rate
Processing Fees
Loan Tenure
Partial pre-payment Charges
Pre-closure Charges
Guarantor Requirement

9.7% to 10.15%
0.50% of the loan amount or 10000 which ever is minimum
1 year to 30 years
Nil
Nil
No Guarantor Required

Features and Benefits of ICICI Housing Loan:

Affordable interest rates and both floating and fixed options

The home loan can be sanctioned before selecting the property

A really smooth simplified documentation process and even faster documentation process
for existing customers

You get the freedom of enjoying a longer tenure with lower EMIs

The Balance Transfer feature allows you to transfer your existing home loan availed
from any other bank, to ICICI Bank. This is for you to enjoy long term savings.

With the Balance Transfer feature, you can enjoy up to additional top up loan amount.
This can be up to 100% of the original home loan.

The banks home loan page provides unique online tools like Eligibility calculator and
EMI calculator. With the eligibility calculator you can find the home loan amount you are
eligible to avail for, and the EMI calculator calculates the monthly repayment amount
towards the loan.

Selected customers can enjoy pre-approved home loans.

Up to 30 years of loan tenure available

Enjoy a fixed interest rate for the first 10 years, and thereafter a choice of fixed or
floating interest rates

ICICI Home Loan Interest Rates:

For women borrowers (she should be the main applicant of the loan, or a co-owner in the
financed property):

The floating rate of interest ranges from 9.85% to 10.10%.

The fixed rate of interest (for 5 years, 10 years) ranges from 9.85% to 10.20%

The full tenor fixed interest rate ranges from 9.95% to 10.30%

For weaker section borrower:

The floating rate of interest, for a loan amount of up to Rs. 25 lakhs, is 9.85%

For salaried borrower:

The floating interest rate ranges from 9.90% to 10.15%

The fixed interest rate for, 1 year, 2 years, 3 years, ranges from 9.90% to 10.15%

The fixed interest rate for, 5 years, 10 years, ranges from 9.90% to 10.25%

The full tenor fixed interest rate ranges from 10% to 10.35%

For self-employed borrower:

The floating interest rate ranges from 9.90% to 10.15%

The fixed interest rate for, 1 year, 2 years, 3 years, ranges from 9.90% to 10.15%

The fixed interest rate for, 5 years, 10 years, ranges from 9.90% to 10.25%

The full tenor fixed interest rate ranges from 10% to 10.35%