A REPORT

ON

HOME LOANS

AT

AXIS BANK

BY

SHRINGARIKA MANGAL

MBA (3rd SEM)

A REPORT SUBMITTED IN PARTIAL

FULFILLMENT OF MBA PROGRAM (2008-09) OF

WISDOM-BANASTHALI UNIVERSITY

(RAJASTHAN).

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ACKNOWLEDGEMENT

A project starts with an objective but it is accomplished only with enormous efforts and tremendous support and guidance. It has been an utmost pleasure for me to work with AXIS. The cordial environment here has always made me feel to be a part of the organization.

The process of completion of project report involves creation of debt towards innumerable persons. I am grateful to Mr. Sudhir Rohela (Branch Manager, Haridwar) and Mr. Sudhir Gundev(General Manager ,Pooja Metals, Haridwar), who gave me time from their busy schedule & under whose guidance this project has been successfully completed.

I also express my appreciation and thanks to all employees of AXIS, Haridwar Branch for their patience, helpful nature and who have contributed to my learning which I will cherish forever.

I express my profound gratitude to my faculty guide Prof. Harsh Purohit, who helped me with his guidance during the project.

My deepest regards to my parents, for their encouragement that became my strength which lead me to the path of knowledge.

(Shringarika Mangal)

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INDEX

Executive Summary 4

About AXIS Bank 5

Loans 7

Loans in India 9

What are Home Loans? 10

Why take a Home Loan? 13

Home Loan Process 14

Home Loans in India-Present Scenario 15

Different Types of Home Loans in India 16

Home Loans for Non Resident Indians 18

Home Loans for Resident Indians 25

Home Loan in AXIS Bank

Overiew 35

Loan Purposes 36

Eligibility 36

Loan Amount 37

Documentation 38

Interest Rates 39

Terms and Conditions 40

Fair Practice Code for Lenders 41

Comparative Interest Rates 45

Indian Home Loan Market 46

Pre checks befor getting a loan 47

Conclusion 48

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Bibliography 49

EXECUTIVE SUMMARY

Objective:

The main objective of having practical training in AXIS, Haridwar is: -

To know about Home Loans Services of AXIS Bank to its customers. To have an idea about full range of financial products and banking services

of PNB which gives the customer a one-stop window for all his/her banking requirements.

The detail study of process of sanctioning of home loans in AXIS Bank. To compare the interest rates of different banks providing Home Loans.

Methodology:

The method adopted to carry on this report was based on both primary and secondary

sources.

Primary sources were:

Through personal interaction with the customers visiting to the bank.

Through telephonic interaction.

Through interaction with the existing employees.

Secondary sources were:

By reading manuals of bank.

Through websites

Journals

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ABOUT AXIS BANK

Axis Bank was the first of the new private banks to have begun operations in 1994, after

the Government of India allowed new private banks to be established. The Bank was

promoted jointly by the Administrator of the specified undertaking of the Unit Trust of

India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC) and other four PSU insurance companies, i.e. National

Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental

Insurance Company Ltd. and United India Insurance Company Ltd.

The Bank today is capitalized to the extent of Rs. 359.00 crores with the public holding

(other than promoters) at 57.60%.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at

Mumbai. The Bank has a very wide network of more than 827 branches and Extension

Counters (as on 31st March 2009). The Bank has a network of over 3595 ATMs (as on

31st March 2009) providing 24 hrs a day banking convenience to its customers. This is

one of the largest ATM networks in the country.

The Bank has strengths in both retail and corporate banking and is committed to adopting

the best industry practices internationally in order to achieve excellence.

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MISSION AND CORE VALUES

Mission

Customer Service and Product Innovation tuned to diverse needs of individual

and corporate clientele.

Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices

Core Values

Customer Satisfaction through

Providing quality service effectively and efficiently

"Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits

Maximization of Stakeholder value

Success through Teamwork, Integrity and People

Leading through innovation to offer world class and competitive products to

customers.

Building long term relationships with customers by creating a world-class service

experience through operational excellence and the innovative use of technology.

Have created a customer centered and result focused vision that inspires each one

of our Associates and has their buy in.

Are committed to creating a High Performance Organization by creating an

environment that allows each our associates to perform at peak. As a result

recognized as an employer of choice.

Committed to partnering with internal and external customers for mutual success.

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Working with integrity, fairness and financial prudence in all our dealings

keeping the interests of our shareholders, customers and Associates paramount.

LOANS

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of

financial assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back,

usually but not always in regular installments, to the lender. This service is generally

provided at a cost, referred to as interest on the debt. A borrower may be subject to certain

restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other

institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans

and credit are one way to increase the money supply.

Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for

the promise of a creditor to give another sum of money.

There are two types of loans

a. Secured Loans

b. Unsecured Loans

I. SECURED LOANS:

Secured loan is a loan in which the borrower pledges some asset as collateral for the loan.

The loan is thus secured against the collateral — in the event that the borrower defaults

the lender takes possession of the asset used as collateral and may sell it to regain the

amount originally lent to the borrower.

As the loan is secured, the lender is relieved of most of the financial risks involved; he

may thus offer attractive terms for the borrower on interest rates and repayment period.

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From the creditor's perspective this is a category of debt in which a lender has been

granted a portion of the bundle of rights to specified property. Usually in secured loans

the end use of loan amount drawn is given.

Following are the examples of the secured loans:

• Car Loan is taken to buy a new/used car.

• Home Loan is taken to buy or construct or renovate a home.

• Car Overdraft is taken as a loan against mortgaging your car, but you can use the

amount taken for your any personal use.

• Loan Against Property is also a form of secured loan where your pledge your asset

and use the amount needed for consolidating your debt or for any other end use.

• Secured Business Loan can also be secured if any asset (machinery, stock, raw

material, building etc) are pledged against the loan amount required.

II. UNSECURED LOANS:

A loan that is not backed by collateral, also called signature loan. An unsecured loan has

no collateral pledged as a secondary payment source should you default on the loan. The

lender provides you with an unsecured loan because it considers you a low risk.

The loan is given on the basis of your income and expense behavior.

Following are the examples of the unsecured loans:

• Personal Loans is the most common form of unsecured loans, which is referred to as

all-purpose loans; they are ideal to buy a product for which you do not have ready

liquidity.

• Unsecured Business Loan, as the name explains is a type of loan that doesn’t require

collateral. It is typically at a higher rate of interest and is taken for a comparatively

smaller tenor.

• Credit Card loans Credit card is the most flexible form of short-term borrowings with

easy repayment options.

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• Bank Overdraft is also a form by which you can avail unsecured finance from your

bank for your business.

LOANS IN INDIA

One of the reasons for boom in Indian economy is that now a days loans are easily

available and the rate of interests at which they are available are very reasonable. Banks

are giving loan for and loan against any and every thing. Government too is encouraging

people to take loans for certain purposes. For example, government is encouraging people

to take housing loans by giving tax concessions.

In view of the deluge of loans that are available in the market today, we have come up

with useful information about variety of loans that are available in India. These include:

Home Loans

Auto Loans

Business Loans

Education Loans

Marriage Loans

Personal Loans

loan against property

Loans against home

Loans against auto

Loans against shares

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WHAT ARE HOME LOANS?

Home loan is the sum of money a bank or financial institution lends you to help you buy your dream home.

By taking a home loan from a bank or a housing finance company you pledge your home as the lender’s security for repayment of your loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it.

Home loans are generally taken for long tenures, as the loan amount is usually a huge sum. A home loan can be taken anywhere between 5 and 30 years. The amount of loan one is eligible for is dependent on the individual’s credit profile.

Features of Home LoanHome loans are available on fixed rate of interest as well as floating rate of interest. In fixed rate loans, the interest rate remains fixed over the life of the loan, irrespective of the interest rates in the open market. The plus point of fixed rate loans is that they remain steady over the years, making at least one aspect of your monthly cash flow predictable. However, the flip side is that the lenders charge a higher rate of interest for fixed-rate loans because if interest rates shoot up, they lose the opportunity to make more money on the funds they are lending.

In floating rate loans, the rate of interest changes according to a set formula as interest rates fluctuate in the open market. The plus point is that lenders charge a lower rate for such loans because you are taking on some of the interest-rate risk. The downside is that interest rates may rise anytime and you can end up paying more than fixed rate loans. The type of interest you opt for will entirely depend on your personal preferences.

General Information The loan amount is based on the repayment capacity of the customer. However,

it cannot be more than 85% of the cost of the property (including the cost of the land).

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The minimum term of home loan is 5 years, while the maximum duration for the loan is 20 years, subject to the retirement age of the applicant.

Home Loans can be applied either individually or jointly, with spouse, children (son or daughter) and even earning parents (father or mother), but if staying with the applicant and having regular income.

Home loan eligibility can be enhanced by repaying the outstanding loans, clubbing the income, increasing the home loan tenure and opting for a step-up loan.

The amount of loan sanctioned varies from bank to bank. Generally, the maximum loan amount granted for the applicant would be 80% to 85% of the cost of the home.

The eligibility for the applicant depends upon his/her capacity of repayment. It stiffens with the increase in home loan rates.

Processing charge, pre-payment penalties, commitment fees and miscellaneous costs accompany a home loan, in many of the cases.

Providing additional security, like bonds, fixed deposits and LIC policies, or having a guarantor can enhance your eligibility for a home loan.

Eligibility Criteria The minimum age limit for the person applying for loan is 21 years. For Government employees and those working at public limited companies, the

maximum age limit for applying for home loan is 60 years, while for salaried individuals, it is 58 years.. For self employed people, the maximum age limit is 65 years.

The applicant should be graduate. The applicant should have a stable source of income, at the time of availing the

loan and should have a saving history as well.

Documents Required

Salaried Individuals Salary slip A photocopy of the first and last pages of Ration card or copy of

PAN/Telephone/Electricity bills A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any

other documents supporting the financial background of the borrower A photocopy of LIC policies with the latest premium payment receipts (if any). Two passport size photographs A photocopy of bank statement for the last six months

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Self-Employed/Businessmen A brief introduction of Business/Profession Balance Sheet, Profit and Loss account and statement of income with Income

Tax returns for the last 3 years, certified by a CA A photocopy of Advance Tax payments (if applicable) A photocopy of Registration Certificate of establishment under shops and

Establishments Act/Factories Act A photocopy of Registration Certificate for deduction of Profession Tax (if

applicable) Bank statements of Current and Saving accounts for the last 6 months A photocopy of Certificate of Practice(if applicable) A photocopy of any bank loan (if applicable) A photocopy of the first and last pages of the Ration card or a copy of

PAN/Telephone/Electricity Bills A photocopy of LIC policy (if applicable) A photocopy of investments (FD Certificates, Shares, any other fixed asset Two passport size photographs

Insurance cover (an added cost) Also, many banks may insist on getting your home insured to safeguard their interest. There are various kinds of insurance covers available for you. Apart from getting the mandatory ones you should try to get insurance as per your circumstances. You also have a choice of getting insured from another company without any objection from your bank.

Other costs The interest rates and EMIs are not the only cost factor. A 1% administration fee and a 1% processing fee on a Rs.10 lac loan, would amount to Rs.20,000.Processing fees, administration fees, valuation fee, legal fee, is to be paid when you apply for a loan and other fees paid at closing. Many of these fees are negotiable. You should ask for zero processing fees and zero-penalty for pre-payment option. If this were not available, then lowest cost would be better.Make sure you work out as to how much these other costs add up to. So even though the interest rate may be lower, it usually adds up to being expensive. If the EMIs may come out a lot more than what you can afford on a monthly basis; try to redo the math with changes in the tenure and loan amount (if possible).

Penalties Once you have received the loan do your best to pay it back as quickly as possible. But this early payment might invite a pre-payment clause.Banks make their money off the interest they charge and the sooner you pay back a loan

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the less money you will have to pay in interest. When it comes to Home loans, penalties are binding, like if you chose to pay up your entire money before the tenure, a Pre-payment penalty is charged. So you should know about such penalties beforehand to avoid future misunderstanding between you and the bank.

WHY TAKE A HOME LOAN?

Taking a home loan nowadays has become very simpler. The RBI has been regularly slashing interest rates, with the result that housing finance loans that came at an interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year the Finance Minister's generosity during the Budget seems to be solely concentrated for the housing sector and construction sector. The Budget 2000's allowed interest payment up to Rs 1 lakh and principal payment of Rs 20,000 to be exempted from income tax. To top it all, the Housing Finance Companies (HFCs) are aggressively wooing customers. Now, when the sun shines, it’s the best time to make hay.

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HOME LOAN PROCESS

Due to swelling competition in the housing loan industry, the home loan process in India has become considerably streamlined. Despite shaking off the tag of a long and tedious documentation process, the housing loan procedure still requires one to go through certain mandatory stages.

After choosing a particular home loan, the customer submits the application form to the housing finance company (HFC) along with other relevant documents as required by the HFC. They comprise documents to establish income, age, residence, employment, investments, etc. The customer also needs to hand over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-1% of the loan amount to the HFC.

In the next stage, HFCs validate the information provided by the customer on the application form. They usually conduct checks on the residential address of the customer, the place of employment of the customer, and credentials of the employer. Some HFCs may insist on a personal interview with the customer and perform a reference check on the references provided by the customer on the application form.

After due appraisal of customer profile, a sanction letter is issued which contains details such as loan amount, rate of interest, annual / monthly reducing balance, tenor of the loan, mode of repayment and general terms and conditions of the loan.

The customer is required to leave the entire set of original documents pertaining to the property being purchased with the HFC as security for the loan amount sanctioned. These documents remain in the custody of the HFC till the time the loan is fully repaid. Once the documents are handed over to the HFC, they send all the documents for a thorough legal scrutiny.

Prior to disbursement, the HFC also conducts a site visit to the customer's property to ensure that all construction norms have been adhered to properly. Once the HFC is satisfied that the property is legally and technically clear, they disburse the loan amount. The disbursement from the HFI is on the basis of the stage of construction of the property.

Until such time that the entire sanctioned amount is not drawn, the customer will pay a simple interest on the Actual Amount drawn (without any principal repayments). The EMI payments will commence only after the entire Sanctioned Loan Amount is drawn.

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HOME LOANS IN INDIA - Present scenario

In the last few years, housing loan scenario in India has changed drastically. It has taken a front seat and people are looking forward to owning their own houses. It is no more a dream that required lifetime saving and a difficult decision to make. Today the new home purchase loan is much easily available and is much cheaper than what was available earlier. In the last few years, housing loan scenario in India has changed drastically. It has taken a front seat and people are looking forward to owning their own houses. It is no more a dream that required lifetime saving and a difficult decision to make. Today the new home purchase loan is much easily available and is much cheaper than what was available earlier. Banks are now everywhere and the schemes are implemented even in villages and smaller towns. The housing loans are popular there too, however, the activity of building flats is little slow. It would not be wrong to say that there has been a boom in the home loan market and with this boom; there is also a boom in the number of home loan mortgage brokers in India.

The main reason for this boom in home loan market is the change in government policies. It is our government’s motivation that the home loan interest rates in India have fallen considerably. Lot many banks are offering home loans and this is available at low EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending rate is in the range of 7.5 to 15 %.

Again, there are different types of home loans available today. The interest rate available is also of two different types. One is the fixed rate loan and the other is the floating rate loan. In the fixed rate loan, whatever interest is fixed on the start of loan is carried on for the complete period. However, in the other one, the interest rate is not fixed and as the interest rate goes up or low the effect is directly transferred to the person who is taking the loan. In the last few years the floating interest rate has been a favorite among most of the people taking home loans.

There is also a trend to opt for home construction loan. This loan is available to those who want to design their homes according to their requirement and taste. In other words, this loan is meant for those who themselves want to construct their new home.

As shared earlier, taking a loan is not a difficult task. However, before taking a loan, one must realize that the relationship with the bank will be for a longer period usually 15 to 20 years so one must ensure faith and integrity in bank. Apart from low rate of interest, the bank should also provide some value added services. The other thing is to look into is the property that is to be brought. Making sure that the builder has all sanctions and facility to build a good building is very important.

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DIFFERENT TYPES OF HOME LOANS IN INDIA

A person seeking investments for house or a property opts for Home Loans for a variety of purposes ranging from construction to renovation. The Housing Finance Companies (HFCs) now offer individuals with various alternatives to choose from while buying a home loan. And the availability of Home Loans offered is as varied as their requirements. Home Loan, for many, is the loan availed for the purchase or construction of a new home. But, in reality, home loans are available for virtually everything from construction and renovation to extension, land purchase, and even the stamp duty.

There are different types of home loans tailored to meet one’s needs:

 Home Purchase Loans  Home Construction Loans  Home Improvement Loans  Home Extension Loans  Home Conversion Loans  Land Purchase Loans  Stamp Duty Loans  Bridge Loans  Balance Transfer Loans  Refinance Loans  Loans to NRIs

Home Purchase Loans: This is the basic home loan for the purchase of a new home.

Home Construction Loans: This loan is available for the construction of a new home on a said property. The documents that are required in such a case are slightly different from the ones you submit for a normal Housing Loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFCs will include the land cost as a component, to value the total cost of the property. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility.

Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased, for external works like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility of a home improvement loan, after obtaining the requisite approvals from the relevant building authority.

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Home Extension Loans: An extension loan is one which helps you to meet the expenses of any alteration to the existing building like extension/ modification of an existing home; for example addition of an extra room etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite approvals from the relevant municipal corporation.

Home Conversion Loans: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through a home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan.

Land Purchase Loans: This loan is available for purchase of land for both home construction or investment purposes

Stamp Duty Loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.

Bridge Loans: Bridge Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home.

Balance-Transfer Loans: Balance Transfer is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest.

Re-finance Loans: Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you have taken drops over the years and you stand to lose. In such cases you may opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower.

NRI Home Loans: This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or property in India. The HFCs offer attractive housing finance plans for NRI investors with suitable repayment options

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Home loans in India are mainly of two types:

i) non resident Indians

ii) resident Indians

HOME LOANS FOR NON RESIDENT INDIANS

The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulatory Act, 1973. Every bank and housing finance companies follow the RBI guidelines to define NRI - "An Indian citizen who holds a valid documents like Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI."

Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:

Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad;

Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources;

Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP);

Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.

Documents required for Resident Indians as well as for NRIs for getting Home Loans are different in some respect. Home loans for NRIs are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.

The FDI Policy that permits FDI up to 100% from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing

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schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.

Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.

ELIGIBILITY

Age: The loan applicant has to be 21 years of age.

Qualification: The NRI loan seeker has to be a graduate.

Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs).The eligibility is also determined by the stability and continuity of your employment or business.

Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.

Number of dependants: The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.

An NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a maximum of Rs 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. Also Home Loan Tenure for NRIs is different from Resident Indians.An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.

However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.

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RBI DIRECTIVES

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country.

The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directive for sanctioning home loans to Non-Resident Indians. The guidelines provided are:

The home loan amount should not exceed 85% of the cost of the dwelling unit, as the remaining amount that is 15% needs to be provided an own contribution towards the cost of unit financed.

The cost of dwelling unit which is own contribution financed less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.

However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.

The repayment option for NRIs as they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most of the home loan provider companies consider the economical stability of the applicant, home loans for NRIs are quite feasible, because they are well in economic resource.

REPAYMENT OPTIONS

The repayment option for Non-Resident Indians (NRIs) is done in EMIs, and includes interest and principal amount calculated on monthly rests. The borrower can pay EMIs by issuing post-dated cheques from your Non Resident External (NRE)/Non-Resident Ordinary (NRO) or Non Resident (Special) Rupee Account (NRSR) in India; or any other account approved by the Reserve Bank of India (RBI).

In the case of part-disbursement of the loan, the monthly interest is payable only on the disbursed amount. EMI is payable every month, by the end of the month from the date of each disbursement up to the date of commencement of EMI. Pre-EMI is calculated at the same rate at which EMI is calculated.

Step Up Repayment Facility By the step-up repayment option, a borrower can apply for a higher range loan based on

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the prospects of growth in income for years to come. In this repayment option the loanee has to pay less EMI in the initial years which increase as the income grows with the coming years.

Flexible Loan installments Plan In this mode of repayment, the borrower has flexible loan installment facility where a borrower nearing retirement age can opt for paying higher EMI in the initial years and gradually move to paying lower installments after reaching retirement age.

Tranche Based EMITranche Based EMI is a special facility offered to the customers so as to save their interest, in cases when customers purchasing an under construction property need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. In such cases, customers can fix the installments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards principal repayment. The customer benefits by starting EMI and hence repays the loan faster.

Accelerated Repayment SchemeAccelerated Repayment Scheme for NRIs offers a great opportunity to repay the loan faster by increasing the EMI. Whenever you get an increment, increase in your disposable income or have lump sum funds for loan prepayment, the loanee can benefit by

Increase in EMI, which means faster loan repayment Saving of interest because of faster loan repayment You can invest lump sum

funds rather than use it for loan prepayment.

A NRI loanee can opt for repayment ahead of schedule, by remittances in abroad through normal banking channels, your NRO / NRSR in India. However, by regulations in many states in India, the Agreement of Sale between the builder and purchaser is required to be registered by law. It is therefore advisable to record the agreement for registration within four months of the date of the Agreement at the office of the Sub Registrar appointed by the State Government, under the Indian Registration Act, 1908.

HOME LOAN TENURE

The home loan tenure for Non-resident Indians differs from the Resident Indians on a few points, which may of course vary from one HFC to another. For most HFC the home loan tenure exceeds maximum from 25 to 30 years. However, for NRIs the maximum tenure is from 7 years up to 15 years.The number of years fixed by RBI. However, you cannot opt for a term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier).

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TAX BENEFITS

NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation where they work and earn. Moreover, you need to file tax returns to become eligible for home loans. However, if they pay tax in India for income earned in India, they can claim tax rebate for the home loan.

DOCUMENTS REQUIRED

The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to het Home Loans in India.

Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.

The documents needed for obtaining NRI home loans are:

Passport and Visa A copy of the appointment letter and contract from the company employing the

applicant. The labor card/identity card (translated in English and countersigned by the

consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.

Bank Statements for the last six months

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List of Classified documents for Salaried and Self Employed NRI Applicants

Salaried NRI Applicants Self-Employed NRI Applicants

Copy of valid passport showing VISA stamps

Passport copy with valid visa stamp

Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder

Brief profile of the applicant and business/Trade license or equivalent document

Overseas Bank A/C for the last 3 months showing salary credits

6 months overseas bank account statement and NRE/ NRO account

Latest contract copy evidencing Salary / Salary Certificate / Wage Slips

Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)

Property Documents:

Original title deeds tracing the title of the property for a minimum period of the last 13 years.

Encumbrance Certificate for the last 13 years. Agreement of sale /construction, if any Receipts for payments made for purchase of the dwelling unit. Approved plan / license. ULC clearance /conversion order etc. Receipts for having invested the margin money through normal banking channels

from the Non-Resident (External) account in India and / or the Non-Resident (Ordinary) account in India.

Latest tax paid receipt. Allotment letter from the co-operative society / association of apartment owners. Agreement for sale / sale deed /detailed cost estimate from Architect / Engineer

for property to be purchased / constructed /extended / improved. Copy of approved drawings of proposed construction/purchase/extension.

Additional documents to be submitted by Person of Indian Origin

Photocopy of PIO card.

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If the PIO card is not available, photocopies of any of the following documents:

The current passport, with birthplace as 'INDIA' The Indian passport, if held by the individual earlier. Parents/grandparents Indian passport/birth certificate/marriage certificate

substantiating the individuals claim as a person of Indian origin.

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HOME LOANS FOR INDIAN RESIDENTS

Home loan for resident Indians are offered by the Housing Finance Companies (HFCs) which range from buying a house either from the developer - built, un-built or under construction or from a second owner or for the improvement and renovation of the existing building structure.

With the latest boom in the Real estate, and investment market in India, many venture capitalists are coming forward to have their share invested in so called rich dividend paying projects. And so has been the mushrooming of banks and financial institutions that are coming forward to offer to the customers a variety of deals to choose from.

And since Home being the integral part of an individual, who since his birth and childhood, dreams to have a living space of his own in India. Once in a lifetime investment requires loan to accomplish it, and that is how the home loans comes into the scheme of things.

With so many private sector banks, and private as well as public sector's housing financing companies lending their shoulders out, it's becoming gradually uneasy for the consumers to choose the best deal as well.

For an Indian resident to avail loans, certain factors including eligibility criteria, documentation need to be considered, and of course you must know about some Home Loan Tips before applying for Home Loan, which are discussed in this section, which includes eligibility, amount of loans, types of interest, tenure of interest, the documents required, rate of interest, and even disbursal of loans.

ELIGIBILITY

Home loan eligibility for Resident Indians depends upon the repayment capacity of the loan applicant. The maximum loan that can be sanctioned varies with the banks and other housing finance companies (HFC) and generally, the maximum loan amount granted is 80 to 85% of the cost of your home.

Home loan eligibility corresponding to repayment option is based on the following factors. Even though, the eligibility criteria may vary according to the HFCs regulations.

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Age (minimum) 21 years

Age (maximum)58(salaried)

60(Public limited/Government Employees)

65 (self employed)

Qualification Graduation

Income Stable source of income and saving history

Dependents Number of dependents, assets, liabilities

Other income sources Spouse's income

As home loan rates increase, the loan eligibility for a borrower becomes stiffer. In such a scenario, some home loan borrowers might have to re-evaluate their options (in terms of loan amount) on account of the new eligibility criteria. Home loan eligibility can be enhanced by:

i) Increasing the Home loan tenureOne of the basic process of enhancing the home loan eligibility is by opting for a higher tenure. This is so because the EMI, which an individual has to pay, starts to decline as the tenure increases while the interest rate as well as the principal amount remains the same. What changes though, is the net interest outgo, which rises with a rise in tenure. And since the individual is paying a lower EMI now, his 'ability to pay' and therefore his loan eligibility automatically increase.

ii)Repaying other outstanding loansThere might be adverse effect on home loan eligibility for individuals with outstanding loans like car loans or personal loans. Industry standards suggest that existing loans with over 12 unpaid installments are taken into account while computing the home loan borrower's eligibility. In such a scenario, individuals have the option of prepaying in part/full their existing loans. This will ensure that their eligibility for the home loan purpose is unaffected.

iii) Clubbing of incomesHome loan eligibility can also be enhanced by clubbing incomes of spouse, children (son

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or daughter) staying with the applicant and having regular income and even earning parents (father or mother) living with the applicant. The eligibility in such cases, will be calculated on the clubbed income of both the applicants enhancing the individual's eligibility to the extent of the co-applicant's income.

iv)Step-up loanIndividuals can also enhance their loan eligibility by opting for step-up loans. A step-up loan is a loan wherein an individual pays a lower EMI during the initial years and the same is enhanced during the rest of the loan tenure. HFCs usually consider the lower EMI of the initial years to calculate his loan eligibility while the initial lower EMI helps increase the individual's 'capacity to borrow'.

v) PerksSalaried individuals must ensure that variable sources of income like performance-linked pay among others are taken into consideration while computing their income. This in turn will imply that the loan amounts they are eligible for stand enhanced as well.

However, potential investors and borrowers must work out solutions best suited for their profile after speaking to their home loan consultant and only then consider acting on the options discussed. Because, increasing loan eligibility can have an impact on other aspects of their financial planning.

RBI DIRECTIVES

The Reserve Bank of India (RBI) has in the latest directive asked the Indian banks to be more "fair and transparent" while signing their agreements with the consumers. This has come following complaints from various consumer sections regarding home loans.

It has emphasized on the fact that while giving a home loan, the banks should not tie their loans with their own prime lending rates (PLR) which often results in pro-bank and against consumer interest.

Households should get credit counseling before signing any loan agreement. In such case, banks should give credit counseling to customer before giving a loan. Any non-governmental organization can also give independent credit counseling to small borrowers.

Consumers often complain of not receiving benefits of falling interest rates as banks tie their floating rate loans with its PLR and even when rates fall, the banks kept the PLR unchanged. But when interest rates are hiked, the banks increase the benchmark rate, thus making customers pay a higher rate and consequently increase the number of EMIs too. The RBI has asked the banks to mend rules for the same.

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Individual borrowers should ask for the exact tenure and EMI while taking a fixed rate loan. The RBI has also resolved to look into all consumer complaints if it is bought to the regulator's notice.

The IRDA (insurance regulator) has powers to take action against banks if a customer feels cheated while buying an insurance product. On its regulatory role, the RBI is trying to maintain a balance between the extent of freedom granted to the banks and the objectives of governance.

RBI has made it mandatory for all banks - including private and foreign banks - to offer a passbook to their customers with the address and telephone number of the nearest branch.

Customers have often been harassed by banks' call centers where there is no accountability of the query made. The "do not call" registry has also been flouted by banks as customers are bombarded with unnecessary product offerings. The RBI has directed the Indian Banks' Association to come out with a single "do not call" registry or when a customer adds his name to a single bank registry it should then stop unsolicited calls from all banks.

On rising credit card frauds and wrong statements given by the banks, the RBI has asked the customers to approach the ombudsman to redress their problems. This way the RBI feels would inculcate more consumer friendly practices among Indian banks.

REPAYMENT OPTIONS

Every housing finance companies or banks have customized repayment options to suit every individual's requirement and also repaying capacity with some tax benefits. They have thereby come up with more flexible and Multiple Repayment Option.

A few among them are:

Step-up Repayment Facility

The objective of step-up repayment is to provide the borrower with a repayment schedule, which is linked to expected growth in income. It not only helps a customer get a larger amount of loan as compared to the loan under the normal housing loan; but the customer can avail of a higher amount of loan and pay lower EMIs in the initial years, which is subsequently accelerated proportionately with the assumed increase in his income.

Flexible Loan installments Plan

This repayment option offers a customized solution to suit the needs of customers whose repayment capacity is likely to alter during the term of the loan. In cases when a borrower is nearing retirement, the loan is structured in such a way that the EMI is higher during the initial years and subsequently decreases in the latter part proportionate to the reduced

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income of the customer. This option helps such customers combine the incomes and take a long term home loan where in the installment reduces upon retirement of the borrower.

Tranche Based EMI

Customers purchasing an under construction property, need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. Tranche Based EMI is a special facility offered by some banks to help customer save this interest. Customers can fix the installments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards principal repayment. The customer benefits by starting EMI and hence repays the loan faster.

Accelerated Repayment Scheme

Accelerated Repayment Scheme offers you a great opportunity to repay the loan faster by increasing the EMI. Whenever you get an increment, increase in your disposable income or have lump sum funds for loan prepayment, you can benefit by

Increase in EMI means faster loan repayment Saving of interest because of faster loan repayment Or invest lump sum funds rather than use it for loan prepayment. The return from

the investments also gives you the comfort of paying the increased EMI.

Balloon Payment

Balloon Payment is an augmentation tool offered by the financial institutions, which helps in increasing the loan eligibility of the customer without increasing the EMI by assigning securities like National Savings Certificate (NSC), LIC policies etc. The present value of the maturity amount of assigned securities is combined with the loan amount to arrive at the enhanced loan eligibility. Under this facility, the EMI is calculated on the net loan amount (i.e. total loan less the present value of the maturity value of the securities).

HOME LOAN TENURE

Home loan tenures fixed by RBI are available up to a term of 15 years. Some financial institutions have home loan tenures in the range extending up to 20, 25 and 30 years if the applicant fulfils certain criteria. However, you cannot opt for a term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier).

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Home loan Tenure:

Type of Property Salaried Self-Employed

Residential15 years 10 years

Plot of Land10 years 10 years

Against Existing Plot of Land

15 years 10 years

TAX BENEFITS

There are certain tax benefits for the resident Indians based on the principal and interest component of a loan under the Income Tax Act, 1961. It may help one get tax benefit up to Rs. 50,490 p.a. (approx). if interest repayment of Rs. 1,50,000 p.a. is paid. In addition to this, one also is eligible for getting tax benefits under section 80C on repayment of Rs. 1, 00,000 p.a. that further reduces the tax liability by Rs.33.660 p.a.

These deductions are available to assesses, who have taken a loan to either buy or build a house, under Section 24(b). However, interest on borrowed capital is deductible up to Rs 150,000 if the following conditions are fulfilled:

Capital is borrowed for acquiring or constructing a property on or after April 1, 1999.

The acquisition and construction should be completed within 3 years from the end of the financial year in which capital was borrowed.

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The person, extending the loan, certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house

A loan for refinance of the principle amount outstanding under an earlier loan taken for such acquisition or construction.

If the conditions stated above are not fulfilled, then the interest on borrowed capital is deductible up to Rs 30,000 though the following conditions have to be satisfied:

Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction repairs or renewal of a house property.

Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or renewals of a house property.

If the capital is borrowed on or after April 1, 1999, but construction is not completed within 3 years from the end of the year, in which capital is borrowed.

In addition to the above, principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs 100,000 under Section 80C from assessment year 2006-07.

Terms and conditions for availing Tax benefits on Home Loans

1. Tax deductions can be claimed on housing loan interest payments, subject to an upper limit of Rs 150,000 for a financial year.

2. An additional loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs 150,000; he can claim further benefits from the additional loan taken, subject to the upper limit of Rs 150,000 for a financial year.

3. Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. If an individual fails to make EMI payments, he cannot claim tax benefits for the same.

4. According to the Income Tax Act, tax rebates can only be claimed by the loan applicant.

5. The interest on home loans taken for repairs, renewals or reconstruction, also qualifies for the deduction of Rs 150,000.

6. A husband and wife, both of whom are tax-payers with independent income sources, get tax deduction benefits, with respect to the same housing loan; to the extent of the amount of loan taken in their own respective name.

7. If an individual buys a house and sells it within the same year or after 3 years, and if any profit is made, then a capital gains tax liability arises on the same for which the individual is liable to pay short-term capital gains tax since the sale took place in the same year. But in case, if the sale had taken place after 3 years, then a long-term capital gains tax liability would have arisen.

8. On being proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax benefits, then tax benefits will not be allowed and benefits, previously claimed, will be clubbed to the income and taxed accordingly.

9. Tax benefits on interest on housing loans are allowable only for the original loan and according to Section 24 (1), tax benefits can also be availed for a second loan

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taken to repay the first loan but not for subsequent loans. This means that if you have already availed of one loan to refinance the original loan and want to now avail a third loan to refinance the second loan, tax rebate on interest payments will not be permissible.

DOCUMENTATION

Documentation refers to the specific documents to be submitted by Resident Indians as they apply for home loan. These documents are very much necessary for the financial institutions to avoid any dispute and uncertainty. The documents to be provided by the resident Indians include income proof, property documents and personal identification documents, etc. which of course varies based on the borrowers financial status and the type of loan you want to avail.And of course every resident Indian should follow some eligibility criteria before apply Home Loans in India.

However, there are some standard documents made mandatory for a loan applicant to produce such as the loan applicant's profile, earning life of the applicant and present financial status proof etc.

The Applicant's Profile refers to the bio-data of the applicant, mentioning his address, age, family background and detail information.

The Earning Life of the Applicants' proof clarifies the capability of the loan payment.

The Present Financial status gives the present capability of handling the own contribution and other expenditures. This includes the mortgage to be deposited against the loan amount.

List of Documents

Salaried Customers Self Employed Professionals Self Employed Businessman Application form with photograph Application form with photograph Application

form with photograph Identity* and Residence Proof** Identity and Residence Proof Identity and

Residence Proof Latest Salary-slip Education Qualifications Certificate and Proof of business

existence-Education Qualifications Certificate and Proof of business existence Form 16 Last 3 years Income Tax returns (self and business) Business profile Bank statements (last 6 months) Last 3 years Profit /Loss and Balance Sheet Last

3 years Income Tax returns (self and business) Last 3 years Profit /Loss and Balance Sheet Processing fee cheque Bank statements(last 6 months) Bank statements(last 6

months) (self and business)

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Processing fee cheque Processing fee cheque

*Proof of Individual's Identity (any one of the following)

Passport Photo PAN Card Defence Identity Card Voter's Identity Card Driving License Photo Ration Card Government Identity Card

**Proof of Residence (any one of the following)

Passport Ration Card Telephone (Land/Mobile) Bill Electricity Bill Driving License Society Outgoing Bill Voter's Identity Card Life Insurance Policy

Only Passport can be used as both Proof of Individual's Identity and Proof of Residence.

** Proof of Age (any one of the following)

Passport Valid Driving License Voter's Identity Card Birth Certificate School leaving certificate LIC Policy or Premium Receipt clearly indicating the applicant's age Letter from the employer stating the age of the employee Photo Ration Card

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HOME LOANS

IN

AXIS BANK

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Different types of loans provided by Axis Bank are:

Home loans Loan against property Loan against security Car loans Study loans Consumer loans Personal loans

OVERVIEW:

Axis bank provides home loans under Axis Bank’s Power Home, which puts an end to all the Real Estate troubles. Offers Free Property and Personal Accident Insurance with Home loan.

The features of the Home loans provided by the bank are:

Attractive interest rates Balance Transfer facility Doorstep service Option to choose from floating rate or fixed rate

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LOAN PURPPOSES:

You can apply for Power Home for the following purposes

Purchase of a plot of land and construction of a house thereon Construction of a house on plot of land already owned Purchase of a new house or flat Residual age of the property should not be less than 30 years old (Home Acquisition Plan) Extension or renovation or repair of a house or flat already owned by self (improvement or extension plan) Take-over of existing Housing Loan (Balance Transfer) Pre-allotment booking finance Loan takeover with additional refinance (Balance Transfer + top up) Loan to NRI for purchase of ready residential property only Purchase of residential plots only

ELIGIBILITY:

A) Salaried Individuals

Any individual who is in permanent service in Government or reputed companies The applicant in all the cases should be above 24 years of age at the time of loan commencement and up to the age of superannuation

B) Professionals

Professionals (ie, doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretary, management consultants only) can apply The applicant should be above 24 years of age at the time of loan commencement and up to 65 years or less at the time of loan maturity

C) Self Employed Individuals

Any individual filing Income Tax returns can apply The applicant in all the cases should be above 24 years of age at the time of loan commencement and up to 65 years or less at the time of loan maturity

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LOAN AMOUNT:

Limits on home loan

Minimum - Rs 1 lac Maximum - Rs 50 lacs

Margin

15% in case of Home loans 25% in case of improvement or renovation loans

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DOCUMENTATION:

Documents Required

The following documents are required along with your loan application:

Purpose Salaried Others

Proof of identity

Voter's ID card or driving license or PAN card or photo credit card or employees ID card or defense or police or government department ID card

Voter's ID card or driving license or PAN card or photo credit card

Proof of income

Latest salary slip showing all deductions or Form 16 along with recent salary certificate

IT returns for the last 2 years and computation of income for the last 2 years certified by a CA

Proof of residence

Bank account statement or latest electricity bill or latest mobile or telephone bill or latest credit card statement or latest LIC policy or insurance premium receipt or employers letter certifying the current mailing address or latest NSC or other similar instruments indicating the address or existing house lease agreement

Bank account statement or latest electricity bill or latest mobile or telephone bill or latest credit card statement or latest LIC policy or insurance premium receipt or latest NSC or other similar instruments indicating the address

Bank statement or Pass Book where salary or income is credited

Last 6 months Last 6 months

Guarantor form

Optional Optional

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INTEREST RATES:

Type Loan amount (Rs.) Rate Of Interest (p.a.)

FloatingUp to 30 Lacs 9.00%

Above 30 Lacs 9.50%

Fixed Irrespective of the loan amount 14.00%

Loan Processing Charges

Prepayment Charges

No Due Certificate

Solvency Certificate

Charges for Late Payment of EMI

Charges for changing from fixed to floating rates of interest

Charges for changing from floating to fixed rates of interest

1% + Service tax as applicable

Nil NA NA

Rs 500 + taxes per cheque bounce

Min. Rs. 5000 or 1% of the outstanding amount whichever is higher

Min. Rs. 5000 or 1% of the outstanding amount whichever is higher

Switching Cost:

Switching from the Floating rate scheme to the Fixed rate scheme and vice versa is permissible. If a fixed rate customer wants to reschedule the loan to a lower interest rate, the same is also permissible.

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TERMS AND CONDITIONS:

Repayment

Repayment period for home loans shall not exceed 20 years Repayment period of pre-allotment bookings of housing loans shall not exceed 1½ year Repayment period of improvement or renovation or extension of existing property shall not exceed 10 years

Security

Equitable mortgage of the property to be financed by way of deposit of title deeds.

Disbursement

The loan will be disbursed in full or in suitable installments, taking into account the requirement of funds and progress of construction, as assessed by the Bank directly to seller or builder or local development authority or supplier of materials etc.

Processing charges or admission fee

Processing fee equivalent to 0.5% of the loan amount (applied for) will be collected along with the application form (taxes as applicable).

Penalty for early closure

Nil.

Other Conditions

Bank reserves the right to reject any application without assigning reasons thereof The applicant will undertake to inform the Bank as and when there is a change in address or employment The terms and conditions mentioned above and elsewhere under the scheme are subject

to modification from time to time solely at Bank's discretion.

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FAIR PRACTICE CODE FOR LENDERS:

As directed by the Reserve Bank of India, vide circular DBOD.No.Leg.No. BC.65/ 09.07.005/2006-07 dated March 6, 2007; the Bank has adopted modified Fair Practice Code for lenders as approved by the Board of Directors. The salient features of the same are:

i) Applications for Loan In the loan application form, the Bank shall provide comprehensive information including information about fees and charges if any payable for processing and amount of such fees refundable in case of non acceptance of application, prepayment options and other matter which affects the interest of the borrowers, of all categories of loans, irrespective of the

ii) Processing

a. The Bank shall provide acknowledgement for receipt of all loan applications

indicating the time frame within which the application will be disposed of.

b. The Bank shall verify the loan application and if additional details / documents

are required, these will be sought from the applicant.

c. For all categories of loans and irrespective of any threshold limits, the Bank will be expected to process the application without delay. In case the application is turned down, the Bank will convey in writing to the applicant the reasons for rejection within one month.

iii) Loan Appraisal and Terms and Conditions

a. The sanctioning authority will be expected to ensure proper assessment of the

credit application as per the extant instructions and credit policy of the bank. The

availability of adequate margin and security will not be a substitute for due

diligence on the creditworthiness of the customer.

b. All the terms and conditions and other caveats will be duly communicated by an

authorized official of the Bank to the customer in writing.

c. The acceptance of the customer will be obtained on the sanction letter with the

customer's signature under the caption "I/WE ACCEPT ALL THE TERMS AND

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CONDITIONS WHICH HAVE BEEN READ AND UNDERSTOOD BY

ME/US".

d. A copy of the loan agreement along with all the enclosures quoted in the loan

agreement will be furnished to the customer at the time of issue of the sanction

letter.

e. The sanction letter / loan agreement will clearly state that the credit facilities will

be extended solely at the discretion of the Bank and that drawings under the

following circumstances will be solely at the discretion of the Bank.

i. Drawings beyond the drawing power / sanctioned limits.

ii. Honouring of cheques issued for the purpose other than specifically

stipulated in the sanction.

iii. Drawings in an account once it is classified as NPA.

iv. No drawings will be allowed in case of non-compliance of the terms and

conditions by the borrower.

v. Meeting further requirements of the borrower on account of growth in business will be subject to proper review of the credit limits.

iv) Disbursement of loans including changes in terms & conditions

a. The disbursement will be done immediately on compliance of all the terms and

conditions of the sanction by the borrower and the branches need not refer to the

sanctioning authority for disbursement.

b. Any changes in the terms and conditions of the sanction such as interest and

charges will be notified to the borrower before effecting the changes.

Any changes in interest rate and charges will be effected only prospectively after giving due notice to the borrower.

v) Post disbursement supervision

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a. The post disbursement supervision, such as submission of periodical reports and

periodic inspection, will be stipulated at the time of issue of the sanction letter.

The sanction letter would also mention whether the Bank or the borrower will

bear the cost of inspection.

b. The Bank will issue notices to the borrowers in advance in case the Bank decides

to recall the advance / accelerate the payment / accelerate the performance under

the loan agreement. Or seek additional securities.

The Bank shall release all securities on receiving payment of loan. However, the Bank may decide to exercise the right to set off any legitimate right or lien for any other claim against borrower. In case the Bank decides to retain the security, the borrower will be notified about the remaining claims and the documents under which the Bank is entitled to retain the security till the relevant claim is paid / settled.

vi) Others

a. The Bank will not interference in the affairs of the borrowers except where

provided for in the terms and conditions of the loan sanction documents, such as

periodic inspection, scrutiny of books of accounts, verification of stocks and book

debts, and scrutiny of QIS statements.

b. In case any information not disclosed earlier by the borrower has come to the

notice of the Bank, the Bank will have the right to elicit the necessary information

from the borrower and initiate action to protect its interest.

c. While, the Bank may participate in credit-linked schemes framed for weaker

sections of the society, the Bank shall not discriminate on grounds of sex, caste

and religion in the matter of lending.

d. In the matter of recovery of loans, the Bank shall not resort to undue harassment

such as persistently bothering the borrowers at odd hours and use of muscle

power.

In the case of receipt of request for transfer of borrowal account, either from the borrower or from other banks / FIs which propose to take over the loan, the Banks' consent or objection, if any, shall be conveyed within 21 days from the date of receipt of request.

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vi) Grievance Redressal

Though the sanction of the loans will be at the sole discretion of the Bank, borrowers will have an opportunity to appeal against the decision of the Bank's functionaries. Any such grievance received from the borrower will be heard and disposed of by the next higher authority. For this purpose the following review structure is available to the borrower,

Grievance against decision of Reviewing Authority

Branch Head Zonal Head

VP / AVP Zonal Head

Zonal Head

President (Credit) for corporate advancesPresident (Merchant Banking) for capital-market related advances andSenior Vice President (Retail Banking) for retail advances.

Corporate Credit & Retail Loans (under Retail Banking)

Executive Director

All others Chairman and CEO

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COMPARITIVE INTEREST RATES

Home Loan interest rates for 20 years as on June 5,2009BANK Above Rs 20

lakh to Rs 30 lakh

EMI (per lakh)

Above Rs 30 lakh

EMI (per lakh)

HDFCFixed 14.25 1262 14.25 1262Floating 9.25 916 9.75 949ICICIFixed 16 1391 16 1391Floating 9.25 916 9.75 949IDBIFixed DP DP DP DPFloating 9.75 949 9.75 949AXISFixed 14 1244 14 1244Floating 9 900 9.5 932

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INDIAN HOME LOAN MARKET

The Indian consumer is sensitive to issues of long term debt. Hence the first factor to be considered is the amount of money one will have to shell out every month towards a home loan. Also important is to keep in mind is how much cash one can afford as down payment for the initial purchase of a house.

The government has taken initiative of making housing affordable by providing huge tax benefits. The housing finance companies in India have responded warmly by lowering their lending rates. All banks and most financial institutions offering home loans have their own websites to enable home seekers a convenient way of checking the various rates and avail of the best loan. State Bank of India, IDBI, HDFC, Punjab National Bank, LIC Housing Finance Ltd. and some finance companies have a number of schemes across all categories of housing requirements most important of which are the purchase of flats, construction of residential houses and also for repairs, renovations, additions and alterations/improvements.

The strong presence of so many housing companies in the market has induced a healthy competition thereby making the finance seeker go for the best bargain. Generally, the interest rate charged by the banks, financial institutions and finance companies and so on stay close to the interest rates that seem to be prevailing in the market.

RBI has made higher provisioning requirements for real estate loans for banks. Thus in a market scenario that constantly drives estate prices and home loans rates in the upward direction, the general notion is that demand will be fairly strong and home borrowers would continue to be there due to robust fundamental demand and limited supply. One of the predictions is that for every 0.50% increase in the interest rate, there will be a decrease in demand by about seven percent, though. Rather than increase rates, some banks have thought of increasing EMI i.e. Equated Monthly Installments or reducing the loan repayment period.

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Pre-checks one need to make before availing home loans:

Balance Transfer: To avail of advantages associated with housing loan many borrowers rush in to pay up their loan amounts before maturity and write off debts. The housing loans are typically long term in nature and give the benefit to house buyer. If you decide to pre pay your loan, time it carefully.

The house inspection: Before taking into possession, the house should be a perfectly investigated by self, family members and an expert who can verify the things such as Cracks on walls, leaking roofs, bad wiring etc. on buying a house. House improvement loans finance the cost of tiling, plumbing, electrical work, grills, woodwork, painting, compound walls and almost all improvements.

Terms and Conditions: Read home loans agreement cautiously and determine the mode of interest levied on your loan. Save yourself from an inflated cost on it. Make sure that you read the documents and the agreement well enough before signing. Make sure that all the various terms, interest rates and installment dates are clear to you. See if there are hidden charges involved.

Your home checklist should include making a serious investigation for legal and physical aspects, the authority approval details of the building plans and the progress of the work, title deed of the land where the building is to be constructed or is being constructed, the past track record of the builder in delivering on time when you are purchasing, the quality of construction material used by the builders for construction and its proportion as well as stamp duty and registration charges applied.

Against this backdrop, a home loan cover that insures the home loan undertaken immediately is a blessing. The cover can be used to secure the liability and is beneficial to all availing home loans. One can apply soon after opting for a home loan. The loan cover provides a lump sum on death of the life assured during the term of the plan. Some life insurance companies, however, provide the home loan cover under term plans.

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CONCLUSION

This procedural part for AXIS Home Loans is a very vast field in understanding as there

are a lot of hidden features on which there are deviations and for the same the approval is

taken form the product head level.

AXIS Bank has the lowest lending rates which makes it the best option for a person who

wants to get a home loan. The best part of the product of AXIS bank is the flexibility that

is provided to the customer.

BIBLIOGRAPHY

www.axisbank.com as on 5 june,2009

www.apnapaisa.com as on 22june,2009

Bank manuals

Company brochures

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