role of hdfc in housing finance in india

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ROLE OF HDFC IN HOUSING FINANCE IN INDIA

A Project Report submitted in partial fulfillment of the requirements for

BBA (III semester) in Management

By:

Vijayata Khanna

Enrollment No.- 1121921708

Under the Supervision of

Guide Name Mr. Manoj Kumar

Department Of Management

Lingayas Lalita Devi Institute of Management and sciences

Affiliated to GGSIP University

Kashmere Gate, New Delhi

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CONTENTS

PAGE NO.

1. Preface 4

2. Declaration 5

3. Acknowledgement 6

4. Introduction 7-17

a) Overview of housing in India 7-11b) Evolution of housing finance in India 12-17

5. Home Loans in India 18-21

5. Types of home loans in India 22-23

6. Tax Benefits on Home Loans 24-25

7. Home Loans Providers in India 26

8. Housing Finance Companies 27-46

a) Public Institutions 27-38b) Private Institutions 39-46

9. HDFC Bank 47-56

10. Mile Stone- 30 Years 56-76

11. HDFC Home Loan Advantage 77-78

12. HDFC Home Loan 79-92

a) Home Loan Improvement 83-85b) Home Extension Loan 86-88c) Home Equity Loans 89-91

d) Application Form 92

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13. Objective/Scope 93

14. Research Methodology 94

15. Limitations 95

16. Suggestions 96

17. Conclusion 97-98

18. Bibliography 99

19. Appendix 100-103

a) Housing Finance (FAQS) 100b) Home Loan (FAQS) 101-103

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PREFACE

Its a matter of great pleasure that we the student of B.B.A III semester have undertaken the project Role of HDFC in Housing Finance in India.

Against the milieu of rapid urbanisation and a changing socio-economic scenario, the demand forhousing has grown explosively. The importance of the housing sector in the economy can be illustrated

by a few key statistics. According to the National Building Organisation (NBO), the total demand forhousing is estimated at 2 million units per year and the total housing shortfall is estimated to be 19.4million units, of which 12.76 million units is from rural areas and 6.64 million units from urban areas.The housing industry is the second largest employment generator in the country. It is estimated that the

budgeted 2 million units would lead to the creation of an additional 10 million man-years of directemployment and another 15 million man-years of indirect employment.

Having identified as a priority area in the Ninth Five Year Plan (1997-2002), the national housing policyhas envisaged an investment target of Rs. 1,500 billion for this sector. In order to achieve this investmenttarget, the government needs to low cost funds easily available and enforce legal and regulatory reforms.

I would like to thank Mr. Manoj Kumar (Faculty Guide) under whose guidance and care I am able tocome up with this analysis. It was their continuous support and boosting morale due to which I am ableto succeed against all the odds.

I must concede that this project would never have been written without the support, encouragement andprodding of my family members.

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DECLARATION

I hereby declare that the project report, entitled Role of HDFC in Housing Finance in India is based onmy original study and has not been submitted earlier for any degree or diploma of any institution/university.

The work of author(s), wherever used, has been acknowledged at appropriate place(s).

Place: New Delhi Candidates SignatureDate: Name: Vijayata Khanna

Enrollment No: 1121921708

Countersigned

Mr. Manoj Kumar

Supervisor

Lingayas Lalita Devi Institute of Management and Sciences

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ACKNOWLEDGEMENT

This project work has been a great experience on Role of HDFC in Housing Finance in

India. This work would not have been possible without the help, cooperation,

constructive suggestion and well wishes of many people. I would like to thank all of

them, as I mention a few here.

I owe my profound respect toMr. Manoj Kumar, my project guide, and express my deep

sense of gratitude and indebtedness for his inspirations, valuable and scholarly guidance,

imperative suggestions and personal attention at each stage of the Work. His gamut of

knowledge, dedication towards research, exemplary devotion and trust towards me has

been unique and is the prime key behind the success of this project. His personality has

been instrumental in blending an exciting spirit and atmosphere for research. It has been a

great opportunity and experience to work with him, as I will forever cherish the deep

interaction I had with him.

Finally, I am most grateful to my parents for their moral support and blessings and for

being an immense source of inspiration for me all through my life.

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INTRODUCTION

OVERVIEW OF HOUSING IN INDIA

India is home to over 1.1 billion people. With about one in every sixth person in the world living inIndia, housing perforce assumes significant importance. Successive Indian governments have regardedhousing as a primary need of its people. The need to provide affordable housing has been the reason

behind state interventions in the sector. Housing policies, however, tended to be framed by thegovernment from a social rather than economic perspective. Despite explicit recognition of the need forhousing, housing programmes received low public investment. Housing and subsidies were largelysynonymous and hence the tendency to view housing finance from the angle of the governments cash

budget and not as a developmental activity with tremendous spin-offs to the economy.

A significant trigger of change in housing policies in India occurred pursuant to the Global ShelterStrategy adopted by the United Nations (UN) in November 1988. These resolutions encouragedindividual countries to establish comprehensive, multi-faceted housing programmes to provide shelter forall. The Global Shelter Strategys main aim was to ensure social, economic and environmentalsustainability while simultaneously upgrading living conditions. A defining feature of the resolution wasthat it sought to involve national governments, private bodies as well as non-governmental organisationsin formulating housing programmes. This provided the impetus to the Indian government in drafting itsfirst National Housing Policy, which was tabled in Parliament in 1992 and adopted in August 1994.Subsequently, with a national agenda of shelter for all, a new Housing and Habitat Policy was adoptedin 1998. This proved to be a watershed with the governments recognition that it should withdraw fromdirect participation in the housing and housing finance sector and instead take on the role as facilitator,thereby creating an enabling environment to encourage private sector capital.

In 2000, UN members adopted eight Millennium Development Goals ranging from eradication ofpoverty to developing a global partnership for development. For housing though, it was the seventh goalthat would prove to be important. Goal 7 called for ensuring environmental stabilityand assigned UN-HABITAT the responsibility of assisting states to monitor and gradually attain the Cities WithoutSlums target, popularly known as Target 11. This target calls on member states to achieve a significantimprovement in the lives of at least 100 million slum dwellers by 2020. For India, this will prove to bedaunting. In 2001, Indias population estimated to be living in slums was 61.8 million (Ministry of Urban

Employment, 2005).

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Role of Housing

Macroeconomic stability and the housing sector are inextricably linked. It is estimated that for one Indian

Rupee (Rs.) invested in housing; Rs. 0.78 gets added to the gross domestic product of the country. Thehousing sector has strong backward and forward linkages to over 250 ancillary industries. Afteragriculture, the housing and real estate industry is the second largest employment generator. It isestimated that the construction sector provides direct employment to 16 percent of the countrysworkforce, which isgrowing at a rate of 7 percent 4per annum. The housing sector alone accounts for 58

percent of workers in the construction sector.However, nearly 55 per cent of these workers are in theunskilled category.

shortage of Housing

Official and updated statistics on the shortage of housing units in the entire country is not readilyavailable. According to the National Buildings Organisation (NBO), the components of housing shortageinclude(a) the excess of households over houses, including homeless households,(b) congestion i.e. the number of married couples requiring a separate room,(c) replacement or upgradation of unserviceable houses and

(d) obsolescence/replacement of old houses.The last official estimate on the shortage of housing units was from the NBO which estimated a totalshortfall of 19.4 million units comprising 6.6 million units in urban areas and 12.8 million units in ruralareas. Further, over 90 percent of this shortage is for the poor and low-income category (Ministry ofUrban Affairs, 1998). This, shortage however, is based on the 1991 Census figures and thus is outdated.

The unofficial estimate of the housing shortage is currently pegged at over 40 million dwelling units.

Despite the absence of reliable statistical information, the growing population and increasingurbanisation has resulted in rising pressure on the available housing stock.

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Planning Commission estimates, the total requirement of urban housing during the tenth five year plan,covering the period 2002-2007, is 22.44 million dwelling units in urban areas. This comprises twocomponents - an urban housing backlog of 8.89 million dwelling units estimated at the beginning of

2002 and an addition of 13.55 million new dwelling units. As per the Census 2001, housing completions(defined as the absolute increase in housing stock during a particular period) is around 5 houses units per1,000 population per annum in India. The average annual housing completion in urban areas per 1,000

population was steady at around 7 housing units during the past three decades. This however, is lowerthan the minimum threshold as recommended by the United Nations of 8 to 10 housing units per 1000

population for developing countries (NHB Trend and Progress Report, 2004).

Table 1.1: Addition of

Census Houses per

1,000 Population 1971-

81 1981-91 1991-01

UrbanAdded CensusHouses (million) 11.55 16.55 19.53Added Households(million) 10.00 11.64 12.95Annual HousingCompletions/1,000

population 7.23 7.61 6.83

RuralAdded CensusHouses (million) 19.25 29.02 34.56Added Households(million) 15.50 19.16 25.61Annual Housing

Completions/1,000population 3.66 4.62 4.65

TotalAdded CensusHouses (million) 26.53 45.58 54.08Added Households(million) 25.50 30.80 38.56Annual HousingCompletions/1,000

population 3.87 5.39 5.26

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Housing Conditions in India

Housing conditions are a key indicator of socio-economic development. The National Sample SurveyOrganisation (NSSO) uses the classes, katcha, semi-pucca and puccato differentiate between the types ofhomes in India. A katchahouse is built with non-durable materials like unburnt bricks, mud, thatches,leaves and bamboo. A pucca house is one built with permanent materials like oven burnt bricks,concrete, stone blocks, cement, iron or other metal sheets and timber. A semi-pucca house is built with

both katchaand puccamaterials.

Table 1.2: Percentage Distribution of Households with DwellingUnits by Type ofStructure

(Figures in %)

Area Type

Pucca Semi-Pucca Katcha

Rural 36 43 21

Urban (including

slum and

squatter areas)

77 20 3

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Table 1.2: demonstrates that the majority of households in India live in either pucca or semi-puccahomes. This situation has improved gradually over the years. In 2002, 36 percent of those in rural areaslived in puccahomes as opposed to 32 percent in 1993. In urban areas, the percentage of puccahomes

increased to 77 percent in 2002 from 74 percent in 1993 (NSSO, 2004).Further, statistics show that exclusive amenities available in homes are also improving. There, however,still exists a wide disparity between amenities available in rural and urban areas as well as amenitiesavailable to various income groups. Table 1.3: demonstrates the change over the last three decades.

Further, the 2001 Census data on conditions of homes were recorded on a scale of good, livable ordilapidated based on the perception of the respondent. Of the total number of 192 million householdssurveyed, 96 million responded as living in houses which they considered as good, 85 millionhouseholds responded as livable and the remaining 11 million responded as living in dilapidatedconditions.

Table 1.3:

Distribution of

Housing by

Exclusive

Amenities

(Figures in %)

Amenities

1981 1991 2001

Urban (%)

Safe drinking water 74.10 81.60 90.60Toilet facilities 57.40 63.60 73.70ElectricityConnections

61.60 75.90 87.60

Rural (%)

Safe drinking water 26.30 55.90 80.50Toilet facilities - 8.80 21.90ElectricityConnections

14.30 31.10 43.50

All-India (%)

Safe drinking water 37.90 62.70 83.30Toilet facilities - 23.50 36.40ElectricityConnections

25.70 43.00 55.80

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EVOLUTION OF HOUSING FINANCE IN INDIA

Housing has been classified as a basic need in India and successive governments havehighlighted its priority status. Despite such emphasis, housing policies largely remainedstatements of intent rather than being translated into implementation. Earlier IndianGovernments tended to view housing from a social perspective rather than an economicone, and the policies of the time reflected this. Today, the scenario has changed. Playerslike commercial banks and housing finance companies have made efforts to develop themortgage market and increase the availability and affordability of housing.

The early development of housing finance in India is a result of the housing policiesimplemented by the government. A clear perspective on the evolution of housing

policies in India can be seen in the Five Year Plans, which were based on a centrallyplanned mode of development. Development activities in India have been structured onthe basis of Five Year Plans since 1951.

Housing in the Five Year Plans

In the first plan (1951-56), housing was introduced into the policy framework at thenational level. Affordability was emphasised as the key issue and government supportthrough subsidies and loans were deemed necessary. A separate Ministry of Works andHousing was established and the National Buildings Organisation was created. This

plan in fact became the benchmark for subsequent Five Year Plans for the next twodecades.

The second plan (1956-61) strengthened the schemes of the first plan by expandingcoverage. However, there was a policy shift as the central government decided to

provide assistance to state governments to develop low-income housing instead ofdirectly providing loans to low-income groups. This gave rise to State Housing Boardsthat still remain in existence today.

The third plan (1961-66) and an annual plan (1966-69) placed emphasis on planned

development and land acquisition, particularly for urban areas. Although both planscontinued the schemes of the previous plans, there was an additional thrust towardstargeting low-income groups.

State Housing Boards had their resources increased and were expected to address thehousing shortfall in their respective states.

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Despite these efforts, by the fourth plan (1969-74) the government was faced with thedual problem of a rapidly growing population and a slow growing housing stock. Forthefirst time, the government decided to encourage private andco-operativehousingschemes by providing financial assistance. However, the majority of activitystillremained within the public sector. The government also recognised the need to provide

housing finance to low-income groups and thus set up the Housing and UrbanDevelopment Corporation (HUDCO) in 1970. HUDCOs mandate was to provide suchgroups with loans below peak interest rates and with longer repayment periods.

It was during the fifth plan (1974-79) that the Urban Land (Ceiling and Regulation) Act(ULCRA) was introduced. ULCRA sought to prevent concentration of land holding inurban areas and make more land available for equitable disbursal. However, it failed toachieve its goals and its repercussions are still being felt today. Significantly, as acompletely private sector initiative, in 1977, the first retail housing finance company,Housing Development Finance Corporation (HDFC) was set up. HDFC sought to

provide financial assistance to individuals, groups, co-operative societies andcompanies for staff housing.

In a move to cope with increasing urbanisation, the thrust of the sixth plan (1980-85)was aimed at increasing housing in small and medium towns. Efforts were madetowards improving the conditions of the slums and the lives of its inhabitants, whileemphasising the need to increase support to private groups. During this period, otherhousing finance companies also entered the market.

It was the seventh plan (1985-90), that brought about a radical change in governmentpolicies.

It was also during this time that several reforms were made. The UN Global ShelterStrategy, of which India subscribed to, was passed in the UN General Assembly in1988. This gave the impetus to the drafting of a National Housing Policy for the firsttime. Another major reform that took place at the time was the founding of the NationalHousing Bank (NHB) in 1988.

The NHB was founded to promote and regulate housing finance companies and tomobilise additional resources for housing. A Building Materials and Technology

Promotion Council was also formed. During this period, several housing financecompanies were promoted. Commercial banks still shied away from direct lending tohousing finance.

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The eighth plan (1992-97) built on the foundations of the seventh plan, againacknowledging that housing related activities belonged in the private sphere, althoughadmitting that there was room for state intervention to provide housing to low-incomegroups. It was during the eighth plan that the NationalHousing Policy was first adopted

by Parliament in 1994. Importantly, the plan recognised that urbanisation was inevitable

and concentratedresources on upgrading urban centres. It recommended that reformsshould bemade on both, the financial and legal aspects toallow themortgage market to develop further. It laid special emphasis on government incentivesto enhance the flow of credit to the housing sector through housing finance institutions.

Both the ninth (1997-2002) and tenth (2003-2007) plan recommended further reformsto enable the government to play its role as a facilitator and encourage the developmentof the mortgage market. Emphasis was particularly laid on market friendly reforms forimproving both taxes and infrastructure to help increase investments into housing. Both

plans stress on abolishing old laws. In 1999, the central government repealed ULCRA.The government also adopted a revised National Housing Policy in 1998 and preparedanother draft in 2005. The ninth and tenth five-year plans are also characterised by theaggressive entry of commercial banks into housing finance.

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Planned Investment

The total investment proposed in housing has increased from Rs. 11.5 billion under thefirst plan to Rs. 7.26 trillion (US $ 0.15 trillion) in the tenth plan. However, the absoluteinvestment in housing as a percentage of the total plan investment has declined due tothe shift in the governments emphasis from provider to facilitator.

Table 1.4: Investment Requirement for Housing during the Five-

Year Plans

(Rs. Billion)

Plan

Peri

od

Public

Investment

Private

Investment

Total

Investment

1st (1951-56) 2.50 9.00 11.502nd (1956-61) 3.00 10.00 13.003rd (1961-66) 4.25 11.25 15.504th (1969-74) 6.46 21.75 28.005th (1974-79) 7.96 36.40 44.366th (1980-85) 14.91 180.00 194.917th (1985-90) 24.58 290.00 314.588th (1992-97) 315.00 660.00 975.009th (1997-02) 520.00 990.00 1,510.0010th(2003-07)* 4,150.00 3,113.00 7,263.00

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Development of the Formal Housing Finance System

The beginning of formal housing finance in India first came with the setting up ofHUDCO in 1971. HUDCO sought mainly to cater to low-income groups, but at thesame time provided technical and financial assistance to State Housing Boards,urban development institutions and to the co-operative sector.

Private sector involvement in retail housing finance did not begin until the setting upof Housing Development Finance Corporation Limited (HDFC) in 1977. HDFCspecialises in providing housing finance to individuals, co-operative societies andthe corporate sector. HDFCs initial share capital included subscription from HisRoyal Highness the Aga Khan and International Finance Corporation, Washington(IFC).

Towards the mid and late 1980s a few housing finance companies were set up eitheras private limited companies (e.g. Dewan Housing Finance Limited) or as a jointventure with partnership from the state government (e.g. Gujarat Rural HousingFinance Corporation) or bank sponsored housing finance companies (e.g. Can FinHomes, SBI Home Finance, PNB Housing Finance). Even state owned insurancecompanies like the Life Insurance Corporation and the General InsuranceCorporation of India set up housing finance arms.

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Role of Banks in Housing Finance

The Reserve Bank of Indias initial efforts to encourage commercial banks inhousing finance came in the form of directed credit. This included mandating banks

to lend to housing finance intermediaries at the banks prime lending rate less 150basis points and annually allocating 1.5 percent of their incremental deposits in theprevious year for housing finance. Overtime, as the Reserve Bank of India made abid to move away from directed credit, the mandated lending below prime rates tohousing finance companies was removed in 1998, though the allocation for housingfinance was increased to 3 percent of incremental deposits.

Bank lending under housing comprises three components: direct lending whichentails banks themselves extending housing finance loans, indirect lending where

banks lend to approved housing finance companies or state housing boards which

on-lend for housing finance and lastly, investments in mortgage-backed securitiesunderlying loans securitised by housing finance companies.

Domestic scheduled banks and foreign banks are required to extend a minimum of40 percent and 32 percent respectively of their net bank credit to the priority sectorwith sub-targets for lending to various sectors. Priority sector lending inter aliacomprises agriculture, small-scale industries, small businesses, retail trade, lendingto state sponsored organisations for scheduled castes/tribes and education. It was aslate as 1990 when the Reserve Bank of India put housing finance on its list of

priority sectors (World Bank, 2004). For a direct housing loan to qualify as priority

sector, each loan should not exceed Rs. 1,500,000 (US $33,333) irrespective ofwhether a house is in a rural, semi-urban or urban area. As regards indirect housingfinance, each loan should not exceed Rs. 500,000 (US $ 11,111) to qualify for

priority sector lending.

It was not till the late 1990s that banks actively got involved in housing finance.Against the backdrop of lower interest rates, industrial slow-down, sluggish creditoff-take and ample liquidity, commercial banks recognised that if they had tomaintain their profit margins they needed to shift their focus from the wholesalesegment and build their retail portfolios. The lower interest rate regime, risingdisposable incomes, relatively stable property prices and fiscal incentives madehousing finance an attractive business. Further, housing finance traditionally has

been characterised by low non-performing assets and given the vast demand forhousing loans, almost all the major commercial banks plunged into the business ofhome loans.

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HOME LOANS IN INDIA

The home loan sector in India is the pi-vital role player in the growth of the real estate

scenario in India. With tax incentives given to the housing finance sector in the annualbudget of 2001, transactions related to buying and selling of residential propertiesincreased considerably and was much higher as compared to previous years.

Since the new class of buyers are relatively younger set of customers who are moreaware about legal documentation and approvals, buyers are now more 'end-users' ratherthan investors; the property market in India undergoes transformation to align itselfwith global standards with an increased emphasis on quality & cost control anddocumentation methods. In the current economy of India, the real estate sector has themaximum propensity to generate income and demand for materials, equipment andservices. It can be said that housing finance companies were formed for co-existing

with buyer's requirements of housing loans for investing in properties. Home loans aremade available by financial institutions to both Indian and NRI customers at floatingand fixed rate of interest and also at attractive EMI options.

For construction or buying a new home

For home repairs and renovations

For purchase of plots

Against mortgage of property

No tax benefits are available for NRI customers unless you file returns and therebybecome eligible to avail of the tax benefits.

Besides home loans, commercial property loans are also available and differentfinancial institutions in India provide commercial loans at different rates anddifferent upper limits.

Real estate loans are available to builders, promoters and real estate developers. Theexperience and financial standing of the builders is taken into account before the

loan is granted which is to be returned with the minimum installments.

Today, the amount of money that a city dweller spends on rent is roughly the same,or only slightly less than the amount he pays as an EMI on a housing loan. Earlierthe home loan sector in India was solely dependent on nationalized and publicsector banks, but the entry of public sector banks into the housing finance businessmarked the beginning of the first round of interest rate cuts. And this reduction ininterest rates has enhanced the borrowing power of customers. Moreover, HFCs areoffering incentives to attract investors like

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Some companies sanction the housing loan without requiring you to identifyproperty as a pre-requisite for eligibility

Free accident insurance & property insurance Waiving of pre-payment penalty Waiving of processing fee

There are a few documents which the finance companies require for setting up criteriafor eligibility of Home loans.

Salaried Employee Self-employed

The latest salary slip showingstatutory deductions

Computation of income for theprevious two years, certified by aChartered Accountant

Form 16 (showing tax deducted at

source by employer)

Profit & Loss Account and Balance

Sheet for the previous two years,certified by a Chartered Accountant

Proof of age (birth certificate/voteridentity card/passport/school-leavingcertificate/valid driving license

Proof of age (birth certificate/voteridentity card/passport/school-leavingcertificate/valid driving license)

Proof of residence (phonebill/electricity bill/ration card).

Proof of residence (phonebill/electricity bill/ration card).

The realty boom in India has given a new dimension to the finance sector in india- bothin Home Loans and Home insurance segments. This has not only given a competitive

edge to the finance companies to provide attractive options to customers but has alsocontributed to the increased investments in the real estate sector. This has resulted in 13new institutions foraying into the housing finance business in the last three years.

Major Home Loan Providers

Banks & Public

Sector Housing

FinanceCompanies

State Bank of India, Corporation Bank, Punjab NationalBank, Central Bank, Dena Bank, Allahabad Bank, Bankof Maharashtra, Bank of Baroda Housing Finance, Can

Fin Homes, GIC HousingFinance, LIC HousingFinance, PNB Housing Finance, SBI Home Finance,CentbankHome Finance, HUDCO, LIC,etc.

Financial

Institutions

HDFC, ICICI Ltd, Citibank, HSBC, StandardChartered-Grindlays, IDBI Bank, etc

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Home Loan Interest Rates

Interest Rates for Home Loans are undoubtedly the most important parameter to factorinto your calculations. And in most cases is the decisive factor for an investor to narrowdown on a certain housing finance company's home loan offer. The interest on housing

loans in India is usually calculated either on monthly reducing or yearly reducingbalance basis.

Comparative Chart on Home Loan Interest Rates

Financial

Institutions

Tenure

(in

years)

Rate of

Interest

Fixed

Rate of

Interest

Floating

Processing

Charges

State Bank ofIndia

Up to 5years

12.25% 10.75% 0.50% of loanamount

5-20years

12.25 % 11.25 % -

ICICI 0-20years

10.5% 9.5% 1% of loanamount

LIC Housing

Finance Ltd.

0-20years

10.5%- 11% 9.5% 0.5 per cent of the amount (max.Rs. 5000)

HDFC 0-20years

13.25% 11.25% 1% of the loanamount+applicableservice taxes andcess)

HSBC 0-20years

10.75% - 1% of loanamount

Citibank 0-20years

9.75% 9.00% 1% of loanamount

Canara Bank Up to 5years

10.75% - -

Above 5yrs up to10 yrs

11.00%- -

Standard

Chartered Bank

0-20years

10.5% 9.25% 1.25 % of loanamount

Canfin Homes

Ltd

0-20years

9.25%-12% - -

IndusInd Bank 0-20 10.5 % (for


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years lakhs)13% (for >20lakhs)

lakhs) 12% (for>20 lakhs)

amount

Saraswat Bank 0-20

years

11 10 -

HUDCO 0-20years

10 % (< 10 lacs)10.5% (>10 lacs)

9% (< 10 lacs)9.5% (>10 lacs)

0.5 % of loanamount(Max. Rs.250)

Most HFCs follow the yearly reducing-balance method, which accounts for yourprincipal repayments only at the end of their financial year. Thus, you pay interest onthe principal that you have already returned to the HFC. The effective interest rate is

thus higher than the quoted interest rate by around 0.7%. Banks and some HFCs, on theother hand follow the daily or monthly reducing-balance method, by which the

principal on which you pay interest reduces every month as you pay your EMI resultingin a lower interest burden. Thereby, the EMI for the monthly reducing system iseffectively lesser than the yearly reducing system of calculating interest.

Moreover, there are two kinds of interest rates for housing finance in India - Fixed rateand Floating rate interests. Some HFC's have fixed rate of interest which means that theinterest rates remain unchanged for the entire duration the loan. This basically meansthat you do not benefit, even if the rates of interest drop in the market while the floatingrate interest fluctuates according to the market lending rate. The interest rates may varyfrom institutions to institutions and generally range from about 12.5% to around 16%.Repayment is in the form of EMI's (equated monthly installments) so, longer the tenure,the more you pay in interest, but your monthly payment will be less. Generally, themaximum tenure of home loans is 15 years, with a few lenders offering tenure of 20years or more (ICICI has recently launched a 30 year loan). The longer the tenure, moreyou pay in total interest, but your monthly payments will be less. So depending on yourearning potential and bank balance, you can choose an appropriate tenure. An importantrequirement of most banks/HFCs is that you pay up the entire loan before you retire.

The Housing Finance Companies and the Banks have variable interest rates depending

upon the tenure and types of home loans. Though interest rates for housing finance arenot very volatile, one may well be advised to look out for indication of any rateincreases or decreases prior to finalizing the timing and amount of loan.

TYPES OF HOME LOANS

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A person seeking investments for house or a property opts for Home Loans for a varietyof purposes ranging from construction to renovation. The Housing Finance Companies(HFCs) now offer individuals with various alternatives to choose from while buying ahome loan. And the availability of Home Loans offered is as varied as theirrequirements.

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. Thedocuments 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 ofone year before you started construction of your house, most HFCs will include the landcost as a component, to value the total cost of the property. In cases where the periodfrom the date of purchase of land to the date of application has exceeded a year, theland 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 thathas already been purchased, for external works like structural repairs, waterproofing orinternal 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 requisiteapprovals from the relevant building authority.

Home Extension Loans:

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

Home Conversion Loans:

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This is available for those who have financed the present home with a home loan andwish 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 homeincluding 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 investmentpurposes

Stamp Duty Loans:

This loan is sanctioned to pay the stamp duty amount that needs to be paid on thepurchase of property.

Bridge Loans:

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

Balance-Transfer Loans:

Balance Transfer is the transfer of the balance of an existing home loan that youavailed 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 particularROI you have taken drops over the years and you stand to lose. In such cases you mayopt to swap your loan. This could be done from either the same HFI or another HFI atthe 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 buya home or property in India. The HFCs offer attractive housing finance plans for NRIinvestors with suitable repayment options.

TAX BENEFITS ON HOME LOANS

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As the Indian real estate market makes an upward swing, and investors opt for housingfinance or home loans, tax benefits obtained from them is a lucrative option. Customersavailing of Home Loans can claim a certain portion of the interest and principal thatthey pay towards the loan installments for reducing tax liability. Resident Indians areeligible for certain tax benefits on principal and interest components of a loan under the

Income Tax Act, 1961. Moreover, an added tax benefits under Sec 80 C on repaymentof principal amount up to Rs. 1,00,000 p.a. can be availed that can further reduce yourtax liability by about Rs. 30,000 p.a.

Tax benefits can be claimed on both the principal and interest components of the homeloan as per the Income Tax Act, 1961. These deductions are available to assesses, whohave taken a loan to either buy or build a house, under Section 24(b). Interest on

borrowed capital is deductible up to Rs 150,000 if the following conditions aresatisfied:

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

property. The acquisition/construction should be completed within 3 years from the end

of the financial year in which capital was borrowed. The person, extending the loan, certifies that such interest is payable in respect

of the amount advanced for acquisition or construction of the house A loan for refinance of the principle amount outstanding under an earlier loan

taken for such acquisition or construction.

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

Capital is borrowed before April1,1999 for purchase, construction,reconstruction repairs or renewal of a house property.

Capital should be borrowed on or after April1, 1999 for reconstruction, repairsor renewals of a house property.

If the capital is borrowed on or after April1,1999, but construction is notcompleted 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 fora 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. Interest on the fresh loan can beclaimed as a deduction, subject o the stated upper limit.

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2. An additional loan for extension/addition to the same house and the person'sdeductions 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 150,000for a financial year.

3. Tax benefits under Section 24 and deduction under section 80C of the Income

Tax Act can be claimed only when the payment is made. If a person fails tomake EMI payments, he cannot claim tax benefits for the same.

4. According to the IncomeTax Act, only the person who has taken the loan canclaim tax rebates.

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

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

7. If a person buys a house and sells it within the same year/after 3 years, and ifany 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 tookplace in the same year. But, if the sale had taken place after 3 years, then a long-term capital gains tax liability would have arisen.

8. If it is proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax

benefits, then tax benefits will not be allowed and benefits, previously claimed,will be clubbed to the income and taxed accordingly.

9. Tax benefits on interest on housing loans are allowable only for the originalloan and for a second loan taken to repay the first loan and not for subsequentloans. This means that if you have already availed of one loan to refinance theoriginal loan and want to now avail a thirdloan to refinance the second loan, taxrebate on interest payments will not be permissible. This is because the Section24 (1) only talks of the second loan and not of subsequent loans. Even if youtake the second loan at a rate of interest higher than the original loan, you will

be eligible for a tax rebate on the second loan.

HOME LOANS PROVIDERS IN INDIA

Real estate in India is currently one of the hottest investments options in Asia A recentsurvey of the real estate scenario acknowledge the Indian metropolis of MumbaiBangalore and New Delhi as the top three investors' choices for real estate investmentin Asia. But there were concerns mainly related to the availability of necessary funds

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for investment and in the more recent times, the boom in the real estate market openedthe doors for a host of realty funds from financial institutions. Prior to five years, thereal estate segment in India was neither organized nor were there too many largeinstitutions in the construction industry. But now with an organized finance sector andwith the increase in transparency levels, it has become easier to create financing

vehicles.

The decrease in housing loan interest rates and an increase of disposable income hascontributed largely to an increased demand in the residential segment. In spite of a risein home loans interest rates and qualitative sanctions being levied by the RBI on banks,

buying interest has not waned because home loans are still cheaper than ten years ago.The retail markets are also undergoing a defining change with the introduction of largerretailing formats. The financial institutions also wasted no opportunity in tapping thefund requirement catering to the inflow of potential buyers in the retail sector. Whilemost funds were initially floated by financial Institutions or banks such as HDFC,ICICI Bank and IDBI Bank to name a few, real estate developers like DLF Universal

and even retailers such as Pantaloons Retails (India) have now entered the real estatesector for creating more retail facilities and have been successful.

As the realty prices in India skyrockets, housing complexes mushrooming and citylandscapes becoming unrecognizable, the growth across all real estate segments andexperts estimate that demand will remain steady at the currently high levels because ofthe improving economic environment and the real estate sector is expected to grow 30%every year. This rising property prices encourage banks and financial institutions tolend more with the increase in collateral values. Although the home loan providers havehiked their rates twice in less than three months, home loans continue to be nearly 45

per cent cheaper than what they were in early 2001. Because if statistics are referred to,the interest rates which now range between 9-10 per cent, are still much lower thanwhat they were ten years ago, at 16-17 per cent.

In addition to funds being raised by the Indian financial institutions like HDFC, ICICIand IDFC abroad, the money could be used to develop business and IT parks andtownships. A study has revealed that as many as one million homes are financed everyyear in India now with an estimated home mortgages market of US$ 10.7 billion -contributing to India's phenomenal realty prospect.

HOUSING FINANCE COMPANIES

Public Institutions

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BANK OF BARODA Housing Finance Ltd.

Schemes of loan by Bank of Baroda for purchase of residential plots

by individuals

Purpose

For purchase of land /site from Govt./statutory bodies such as housing boards,Development Authorities/CIDCO etc.

Eligibility

Permanent salaried employees/self employed persons with own business orprofession/pensioners.

Age Limit: Not more than 65 yrs of age.

Co-applicant should be

Spouse Son/daughter-in-law Father/mother Co-owner of property to be purchased /mortgaged.

Amount

(Least of the following subjects to minimum of Rs. 50,000/-) 85% of thecost/purchase price of the land. Rs.100 lacs

42 months gross salary or 3 1/2 times of average annual income as per incometax returns last 3 years of whichever is less.

Repayment

Max.20 years or 70 years of age whichever is earlier in equated monthlyinstallment (EMI).

Rate of Interest:

The current interest rates are as under:

FIXED RATE OPTION

TENURE NEW

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RATE1-5 9.00%6-10 9.25%11-20 9.75%

VARIABLE OPTION

TENURE NEW

RATE1-20 9.75%

Interest will be calculated on annual rest basis. Installment to commence from the next month, from the month in which loan is

fully disbursed or expiry of 1 1/2 year from the date of first disbursalswhichever is earlier.

Pending EMI, Pre-EMI interest is to be paid on monthly basis on loandisbursed.

Security

Equitable mortgage of the plot of land to be purchased. Personal guarantee of one individual. Usual Loan Documents.

Charges

0.80% of amount of loan applied as processing charges (Presently nil). 1% of sanctioned loan amount as administrative charges Application form Rs.10/-

Others

For plot purchase an undertaking to the effect that construction would start within 12months after the sanction of the Home Construction loan has to be submitted by the

borrower failing which commercial interest rate would be charged from him.

Canfin Home Loans

Housing Loan Schemes for Resident Indians

After having seen over a lakh satisfied customers secure their own homes, Can Fin

Homes now looks toward your home financing requirements. Having spent over adecade in the home finance business, we are well placed to understand the significance

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and importance of your need to own a home. This section is here to do just that, see yourealise the dream of owning a home, as swiftly and smoothly as possible.

To help us assess your home financing requirements better, please indicate in the checkboxes provided alongside, as to which of the home owning categories you come under:

Finance for the construction of a house. Loan for the purchase of a flat or house. Finance for the acquisition of a plot and construction of a house on the same,

under the composite housing loan scheme. A loan for the extension of your existing house. Loan towards the repairs, renovation and upgradation of your house or flat.

Eligibility

You are eligible for a home loan from Can Fin Homes, if you are -

Earning a regular monthly income. Salaried individual with minimum of 5 years of service left. A professional /self employed/Business man with age less than 58 years having

filled IT returns during the last 3 years. Having a clear and marketable title of the property and want to avail for

purchase /construction/repair and renovation /extension.

If your spouse is earning, put him/her as a co-applicant. The additional income shall beincluded to enhance your loan amount. Incidentally, if there are any co-owners they

must necessarily be co-applicants. Co-applicants need not be co-owner of the property.

Easy home loans

Getting a home loan from Can Fin Homes is easier because of "Friendship Finance".The main focus at Can Fin is to understand you before we go about understanding andassessing your loan requirements. The human element of trust, confidence andfriendship is as important to us as your loan financing is. Our trained and courteousstaffs ensure that you are first at ease andin full confidence with them, before anythingelse. We at Can Fin call it "Friendship Finance" since we believe in making friends withyou, before we finance your requirements.

Once you have familiarized yourself with our personnel and understood the terms andconditions of the financing, then there's very little paperwork you need to do. In fact,the paperwork required by Can Fin Homes to clear your application, is perhaps the leastin the entire home finance industry! So don't wait any longer, the details of thedocuments you must provide are given in this section.

How much amount you get a loan

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Upto Rs. 1,00,00,000/- depending on your repayment capacity. Repayment capacitywill be considered after assessing your income, age, qualifications, work experience,number of dependents, spouse's income, stability of income and employment, assets,liabilities, etc.

You can apply for a loan upto

80% in the case of site loan and 85% of total project cost for the remaining section

depending on your repayment capacity.

Items which can included in the project cost

For composite Loan Total estimated construction cost including interiors and land cost For purchase of ready built flat/house

Cost of flat/house(Registered value), registration charges, stamp duty etc For purchase of flat under construction Cost of flat, interiors, deposit, car parking, other amenities etc For purchase of site Cost of site (Registered value), registration charges and stamp duty.

Your loan repayment will be

5 - 10 years for site loans , 5 - 20 years for other loans. They are payable in easy, Equated Monthly Installments

Documents to be submitted along with loan application include

Personal document Property document Security document Personal documents:

Salaried class:

Salary certificates or certified copies of salary certificates with deductions forthe past 6 months.

Form 16 from the employer for the past 3 years. Bank Statements for a period of last six months

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Age proof of the applicants. (Copy of passport /driving license/voter's IDCard /Ration Card)

Income proof of the applicants. Self employed/business class:

Property document

Your loan will be disbursed after you identify and select the property or home that youare purchasing and on your submission of the requisite legal documents.

While you may be under the impression that the list of documents asked for is ratherextensive, please note that it is for your own good. Each and every single documentasked for will be verified and checked to ensure your safety.

This may take some time but we want to ensure a clear title and will complete all thelegal and technical verifications to ensure that you have full rights to your home.

LIC Housing Finance

Home Purchase Loan for Resident Indian

1. Griha Prakash

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Loan Amount:

Min. Rs. 25,000 - Max.Rs.1,00,00,000.

Loan to Property Cost :

85% of total Cost of the property including Stamp Duty and RegistrationCharges.

Loan Term :

Upto 20 Years or Retirement Age or 70 years of Age, whichever is earliest.

Repayment Mode:

Equated Monthly Installments(EMI) - Monthly Rest Basis

Security :

1. Equitable Mortgage of House/Flat

2. One Guarantor.

Risk Cover :

Any existing or new policy under any acceptable plan of insurance (issued byLIC of India) on the lives of the applicants, having risk cover to the extent ofloan amount.

Front End Charges :

1.00% of Loan Sanctioned.

2. Loan for Purchase of Vacant Plots/Sites

Loan Amount :

Min Rs.50,000 Max Rs. 20,00,000.

Loan to Property Cost :

85% of the Cost of Plot/Site.

Loan Term :

Upto 15 Years or Retirement Age, or 70 years of Age, whichever is earliest.

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Repayment Mode :

By Equated Monthly Installments (EMI) - Monthly Rest Basis.

Security :

1. Equitable Mortgage of Plot/Site2. One Guarantor.

Risk Cover :

Life Insurance Cover is not required but advisable in the interest of the applicants.

Front End Charges :

1.00% of Loan Sanctioned.

IND BANK HOUSING LTD.

Loans to Indian Resident Individuals

1. Quantum of Loan

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Purchase/ConstructionMinimum - Rs 7,500/-

Maximum - Rs 25,00,000/-

Upgradation/ Major Repairs/ Additional Construction

MinimumRs 7,500/-MaximumRs 5,00,000/-

2. Margin

15% of the project cost

3. Rate of Interest

In respect of loans for Construction/Purchase

Upto Rs 50,000/- 12.00%Rs 50,001 - 5,00,000/- 13.50%Rs 5,00,001 - 10,00,000/- 14.50%Rs 10,00,001 - 25,00,000/- 15.00%

In respect of loans for Upgradation/ Major Repairs/Additional

Construction

Upto Rs 60,000/- 13.50%Rs 60,001 - Rs 3,00,000- 14.00%Rs 3,00,001 - Rs 5,00,000- 14.50%

4. EMI for a loan of Rs.10,000-for 20 years

12.00% - Rs. 11213.50% - Rs. 12314.00% - Rs. 12614.50% - Rs. 13015.00% - Rs. 134

5. Age of Building (In case of Purchase)

Not exceeding 20 years.

6. Repayment PeriodMinimum : 5 years.

Maximum : 20 years.Subject to the repayment period not extending beyond the retirement in the case of

salaried class and beyond 65 years in the case of others.

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7. Security

Equitable Mortgage of the property / Registered Mortgage wherever necessary andguarantees from 2 suitable persons

8. Other Charges

Registration fees - Rs 10/-

Processing fees:

Upto a loan limit of Rs 5 lacs - 0.75% of the loan applied (non refundable).

Loan limit of above Rs 5 lacs - 1% of the loan applied for. (1/4 th of the fee isrefundable in case of rejection of application).

Administration fees - 1% of loan sanctioned(non refundable).

Prepayment charges - NIL

Commitment Charges - 1% of the loan if not availed within 3/9 months in case ofpurchase/ construction.

9. Insurance

Company will arrange for adequate insurance of the property at the cost of theborrowers.

PNB Housing Finance

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APNA GHAR YOJANA

We provide housing finance to individuals for construction or for acquisition/ purchaseof house/ flat from development authorities such as DDA/HUDA/ PUDA/RHB etc. andalso from private builders/groups housing societies. We consider enhancement in loan

amount in the event of escalations in cost.

ELIGIBILITY:

Individuals in permanent service or having their own business (Resident or non-resident).

Age of the applicant should not be more than 60 years in case of service class and65 years in case of businessman or self employed;

LOAN AMOUNT:

Minimum loan amount would be Rs.50,000/- and maximum loan amountdepends entirely on the repayment capacity of the borrower(s).

Actual loan eligibility shall be on the basis of repayment capacity as determinedbe PNBHFL taking into account income, age, qualification and occupation.

Income of borrower(s) / co-borrower(s) shall be clubbed together for calculationof loan eligibility / the level of finance in case of joint application

MARGIN:

The borrower's contribution shall be minimum 20% of the total cost of project,

including stamp duty and registration charges.

INTEREST RATES: (Effective from 1.07.2006)

PERIODFloating Rate of

Interest(%)

3-yearly fixed rate

of interest(%)1-10 years 9.00 10.5011-15 years 9.25 10.5016-20 years 9.50 10.50

SBI Housing Loan

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SBI Housing loan schemes are designed to make it simple for you to make a choice atleast as far as financing goes!

'SBI-Home Loans'

Unique features:

No cap on maximum loan amount for purchase/ construction of house/ flat Option to club income of your spouse and children to compute eligible loan

amount Provision to club expected rent accruals from property proposed to compute

eligible loan amount Provision to finance cost of furnishing and consumer durables as part of project

cost Repayment permitted upto 70 years of age Free personal accident insurance cover Optional Group Insurance from SBI Life at concessional premium (Upfront

premium financed as part of project cost) Interest applied on daily diminishing balance basis 'Plus' schemes which offer attractive packages with concessional interest rates to

Govt. Employees, Teachers, Employees in Public Sector Oil Companies. Special scheme to grant loans to finance Earnest Money Deposits to be paid to

Urban Development Authority/ Housing Board, etc. in respect of allotment ofsites/ house/ flat

No Administrative Charges or application fee Prepayment penalty is recovered only if the loan is pre-closed before half of the

original tenure (not recovered for bulk payments provided the loan is notclosed) Provision for downward refixation of EMI in respect of floating rate borrowers

who avail Housing Loans of Rs.5 lacs and above, to avail the benefit ofdownward revision of interest rate by 1% or more

In-principle approval issued to give you flexibility while negotiating purchaseof a property

Option to avail loan at the place of employment or at the place of construction Attractive packages in respect of loans granted under tie-up with Central/ State

Governments/ PSUs/ reputed corporates and tie-up with reputed builders.

Package of exclusive benefits:

Complimentary international ATM-Debit card

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Complimentary SBI Classic/ International Credit Card with waiver of joiningand first year's fees

option for E-banking Concessional package under 'Credit Khazana' for prospective car loan

borrowers whose accounts are conducted satisfactorily

50% concession in charges in respect of all personal remittances/ collection ofoutstation cheques

Purpose

Purchase/ Construction of new House/ Flat Purchase of an existing House/ Flat Purchase of a plot of land for construction of House Extension/ repair/ renovation/ alteration of an existing House/ Flat Purchase of Furnishings and Consumer Durables as a part of the project cost Takeover of an existing loan from other Banks/ Housing Finance Companies

Eligibility

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

Loan Amount

Applicant/ any one of the applicants are aged over 21 years and upto 45 years - 60 timesNet Monthly Income (NMI) or 5 times Net Annual Income (NAI), subject to aggregate

repayment obligations not exceeding 57.50% of NMI/ NAIApplicant(s) aged over 45 years of age- 48 times NMI or 4 times NAI, subject toaggregate repayment obligations not exceeding 50%of NMI/ NAI

To enhance loan eligibility you have option to add:

Income of your spouse Income of your son/ daughter living with you, provided they have a steady

income and his/ her salary account is maintained with SBI Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased

is proposed to be rented out Regular income from all sources

Private Institutions

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HDFC Housing Finance

A new home brings with it new hopes, joys and emotions. At HDFC, we have sharednew hopes, joys and emotions with over 26 Lakh customers. Every customer has aspecific and unique concern. Having earned an experience of 28 years in home loans,

Our home loan product is customised to provide you solutions for your unique concern.

Features

Maximum loan

85% of the cost of the property (including the cost of the land) and based on therepayment capacity of the customer.

Maximum Term

20 years subject to your retirement age.

Applicant and Co- Applicant to the loan

Home Loans can be applied for either individually or jointly. Proposed owners of theproperty, will have to be co-applicants. However, the co-applicants need not becoowners.

Adjustable Rate Home Loan

Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR).The rate on your loan will be revised every three months from the date of firstdisbursement, if there is a change in RPLR, the interest rate on your loan may change.However, the EMI on the home loan disbursed will not change*.If the interest rateincreases, the interest component in an EMI will increase and the principal componentwill reduce resulting in an extension of term of the loan, and vice versa when theinterest rate decreases.

Purpose

Purchase of

Flat, row house, bungalow from developers Existing freehold properties Properties in an existing or proposed co-operative housing society or apartment owner's association First Power of Attorney purchases in Delhi for DDA flats allotted before 1992. Self Construction

Fees

1% of the loan amount applied plus applicable service taxes and cess.

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No Charges for

Part or Full Prepayment of loan under Adjustable Rate (except in case of prepaymentthrough a refinance from other bank or institutions prepayment charges will beapplicable)

Fixed Rate

Part prepayment upto 25% of opening loan outstanding in a financial yearReplacement of cheques

Income Tax CertificatesAccelerated Repayment Option

Multiple Repayment Option

Step up Repayment Facility

Helps young executives take a much bigger loan today based on an increase in theirfuture income, this helps executives buy a bigger home today

Flexible Loan installments Plan

Often customers, parents and their children, wish to purchase properties together. Theparent is nearing retirement and their children have just started working. This option

helps such customers combine the incomes and take a long term home loan where in theinstallment reduces upon retirement of the earning parent.

Accelerated Repayment Scheme

Accelerated Repayment Scheme offers you a great opportunity to repay the loan fasterby increasing the EMI. Whenever you get an increment, increase in your disposableincome or have lumpsum funds for loan prepayment, you can benefit by

Increase in EMI means faster loan repayment

saving of interest because of faster loan repayment

You can invest lumpsum funds rather than use it for loan prepayment. The return fromthe investments also gives you the comfort of paying the increased EMI.

ICICI Home Loan

Home Loans

ICICI Bank offers easy home loans for purchase / construction of flat / house. Also youcan avail of host of other benefits like:

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Attractive Interest Rates Simplified Documentation Doorstep Service Get a sanction even without having selected a property free Personal Accident Insurance

Insurance options for your Home Loan at attractive premium Office Premises Loans

It is one of the things you have always desired. A place where you have the freedom toachieve your goals and fulfill your dreams - An Office of Your Own. This loan isespecially meant for self-employed professionals like Doctors, Architects etc.

Choose a loan ranging anywhere between Rs.3 lakh and Rs.1 croreconveniently pay off your loan over a period of upto 15 years

Loan against Property

You can avail of a multipurpose loan against your property. You can avail of Loanagainst Property for purposes like:

Education Medical Reasons Buying a Car Home Improvement Financing your Business Marriage Expenses

Purchase of a new house or office Get loan for upto Rs 3 crore Avail of tenures upto15 years Loans available against residential and commercial properties

Home Improvement Loans

You can get a loan for renovation /refurbishment of your home. Get the same interest rate as applicable on Home Loans Avail of loan upto Rs. 50 Lakhs Avail of loan upto 70% of cost of improvement Enjoy repayment period of upto 15 years

LIC Housing Finance

Home Purchase Resident Indian

Griha Prakash

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Loan Amount:

Min. Rs. 25,000

Max.Rs.1,00,00,000.

Loan to Property Cost:

85% of total Cost of the property including Stamp Duty and Registration Charges.

Loan Term:

Upto 20 Years or Retirement Age or 70 years of Age, whichever is earliest.

Repayment Mode:

Equated Monthly Installments(EMI) - Monthly Rest Basis

Security :

1. Equitable Mortgage of House/Flat2. One Guarantor.

Risk Cover:

Any existing or new policy under any acceptable plan of insurance (issued by LIC of

India) on the lives of the applicants, having risk cover to the extent of loan amount.Front End Charges: 1.00% of Loan Sanctioned.

Loan for Purchase of Vacant Plots/Sites

Loan Amount:

Min Rs.50,000

Max Rs. 20,00,000.

Loan to Property Cost: 85% of the Cost of Plot/Site.

Loan Term: Upto 15 Years or Retirement Age, or 70 years of Age, whichever isearliest.

Repayment Mode: By Equated Monthly Installments (EMI) - Monthly Rest Basis.

Security:

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1. Equitable Mortgage of Plot/Site2. One Guarantor.

Risk Cover: Life Insurance Cover is not required but advisable in the interest of theapplicants.

Front End Charges: 1.00% of Loan Sanctioned.

HUDCO NIWAS

INDIVIDUAL HOUSING FINANCE SCHEME

Property:

Housing Urban Development Corporation (HUDCO) offers Niwas scheme. The schemeis a housing finance instrument for individual families which offers loan assistance toindividuals constructing or buying a house or a flat. Similar loan assistance is alsoextended to extend or improve an existing house or flat.

Amount:

The maximum loan amount will not exceed 85 per cent of the total cost of the housingunit, including incidental costs like stamp duty and registration. The maximum loan

amount granted by HUDCO is Rs 15 lakh.

Eligibility:

For eligibility, the applicant must be in service, or should be engaged in any professionor business with a regular income for servicing the loan. Applicants have to submit anapplication form along with supporting documents.

An important condition for sanction of the loan is that the proposed owners of thehousing unit, for which a loan is beingsought, will have to be co-applicants. However,it is not necessary that all co-applicants need be co-owners of the property.

Also, the actual sanction of the loan depends on the repayment capacity of theborrower. Factors such as income, age, qualifications, number of dependants, income

Of the spouse, asset and liability of the persons, continuity of occupation and saving

history are considered while arriving at the repaymentcapacity.

Application:

Loan applications can be submitted in any HUDCO Niwas office in the prescribed formalong with supporting documents. Contact HUDCO at:

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HUDCO Niwas OfficeHUDCO HouseLodhi Road

New Delhi - 110 003URL: www.hudco.org

Email: [email protected]

Fees:

A processing fee (non-refundable) of 0.5% of the loan amount applied for i.e. Rs 5 perRs 1000 of the loan amount applied for is payable, subject to a minimum of Rs 250, atthe time of submission of the application form to HUDCO Niwas.

On sanction of a loan, the loan offer is made to the applicant. On acceptance, a one-timeadministrative fee of 1per cent of the loan amount sanctioned is payable. In case theapplicant is handicapped or a widow, the processing fees will be 0.4 per cent of the loanamount applied for, and the administrative fee will be 0.8 per cent of the loan amountsanctioned.

Payment Term:

It is normally up to 15 years, but the period will not extend beyond the age of 65 yearsof applicant. However, HUDCO Niwas will endeavour to determine the repayment

period to suit the convenience of the applicant.

In case the applicant wishes to extend the period of repayment beyond 15 years, it can

be extended up to 20 years. However, in such cases, additional interest of 1 per cent perannum will be charged over and above the regular rates.

EMI:

Loan will be repayable in Equated Monthly Installments (EMI) comprising principaland interest. The interest is calculated on the monthly reducing balance method. Themonthly installment depends on the quantum of loan, interest rate applicable and theterm of repayment.

GE Money Home Loan

Shift to your dream home todaystill living in a rented apartment?

Is owning your own home still a distant dream?

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Not any more! GE Money says Yes! to making it possible for you. GE Money HousingFinance offers you complete solutions for all your housing related needs. Apply for aGE Money Home Loan today. Avail of unmatched advantages.

Home Loans ranging from Rs. 5 Lakhs to Rs. 1 Crore

Attractive interest rates Up to 85% of property value as loan Loans for ready to move-in residential properties Longer tenor of up to 20 years Attractive offers on Loan Transfer from other banks Insurance Cover on your Home Loan Income Tax benefits Simple documentation and doorstep service

A few documents and you are ready to move in

Only GE Money offers you flexibility and options in terms of Home Loandocumentation required. Apply for a GE Money Home Loan today. Just a fewdocuments and you are ready to move-in.

Identity Proof Signature Verification Residence Proof As Income Proof

Sundaram Finance Group

Availing Home Loans in India you could

construct a house on your plot of land purchase an apartment from a builder purchase a bungalow/apartment on a second hand basis

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purchase your home from a Statutory Authority

Maximum loan:

Rs.1 crore or 85% of the agreement value, whichever is less, subject to repayment

capacity as assessed by SHFL.

Maximum term of loan:

Salaried Category:

20 years or retirement age, whichever is earlier for all salaried categories of customers.

For Self-employed:

15 years or 65 years, whichever is earlier.

HDFC BANK

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HDFC Bank Ltd.

Type Public (BSE: 500180, NYSE: HDB)

Founded 1994

Headquarters Mumbai, India

Industry

Banking

Insurance

Capital Markets and allied industries

Products Financial services

Website www.hdfcbank.com

About Us

Introduction

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HDFC Bank Ltd is a commercial bank of India, incorporated in August 1994, afterthe Reserve Bank of India allowed establishing private sector banks. The Bank was

promoted by the Housing Development Finance Corporation, a premier housing financecompany (set up in 1977) of India. HDFC Bank has 1,412 branches and over 3,295

ATMs, in 528 cities in India, and all branches of the bank are linked on an online real-time basis. As of September 30, 2008 the bank had total assets of INR 1006.82 billion.For the fiscal year 2008-09, the bank has reported net profit of Rs.2,244.9 crore, up41% from the previous fiscal. Total annual earnings of the bank increased by 58%reaching at Rs.19,622.8 crore in 2008-09.

Helping Indians experience the joy of home ownership. The road to success is a toughand challenging journey in the dark where only obstacles light the path. However,success on a terrain like this is not without a solution. As we found out nearly threedecades ago, in 1977, the solution for success is customer satisfaction. All you need isthe courage to innovate, the skill to understand your clientele and the desire to give

them your best. Today, nearly three million satisfied customers whose dream we helpedrealise, stand testimony to our success. Our objective, from the beginning, has been toenhance residential housing stock and promote home ownership. Now, our offeringsrange from hassle-free home loans and deposit products, to property related servicesand a training facility. We also offer specialised financial services to our customer basethrough partnerships with some of the best financial institutions worldwide.

Background

At the request of AID and RHUDO/Asia, The Urban Institute evaluated the HousingGuaranty Program (HG-002) with the Housing Development Finance Corp., Ltd.(HDFC) in October 1989. The goal of the Housing Guaranty (HG) program in Indiawas the establishment of a market-oriented housing finance system.

HistoryIn 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches tomore than 1,000. Though, the official license was given to Centurion Bank of Punjab

branches, to continue working as HDFC Bank branches, on May 23, 2008.

HDFC Founder

MAN WITH A MISSION

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An extract from the book 'A Tribute'

If ever there was a man with a mission it was Hasmukhbhai Parekh, our Founder andChairman-Emeritus, who left this earthly abode on November 18, 1994. Born in atraditional banking family in Surat, Gujarat, Mr. Parekh started his financial career atHarkisandass Lukhmidass - a leading stock broking firm. The firm closed down in thelate seventies, but, long before that, he went on to become a towering figure on theIndian financial scene. In 1956 he began his lifelong financial affair with the economicworld, as General Manager of the newly-formed Industrial Credit and Investment

Corporation of India (ICICI). He rose to become Chairman and continued so till hisretirement in 1972. At the ripe age of 60, Hasmukhbhai started his second dynamic life,even more illustrious than his first. His vision for mortgage finance for housing, gave

birth to the Housing Development Finance Corporation - it was a trend-setter forhousing finance in the whole Asian continent. He was a true development banker. His

building up HDFC without any government assistance, is itself a brilliant chapter infinancial history. His wisdom and warmth drew people from all walks of life to him, foradvice, guidance and inspiration. A soft spoken man of few words, Mr. Parekhnevertheless held strong and definite views with a quiet conviction. He was alwaysconcerned with building bridges, improving and encouraging communication between

people. He was also a writer in his own right. There are over 200 published articles by

him, full of incisive comments on finance and economics. In 1953 he brought out avolume called: The Bombay Money Market. It detailed the intricate working of theIndian money market. His works in Gujarati - Hirane Patro, Hirane

Vadhu Patro - occupy pride of place in Gujarati literature. In 1992, the Government ofIndia honoured him with the Padma Bhushan Award. The London School of Economics& Political Science conferred on him an Honorary Fellowship.

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But there was much more to the man than his financial genius. In his own unassumingway, Hasmukhbhai devoted all his life to raising resources for philanthropic causes. Hewas one of the Founder Members of the Centre for Advancement of Philanthropy, andits Chairman till 1993. He took active interest in the Bombay Community Public Trust,designed specifically to serve the needs of the city's underprivileged citizens. When Mr.

Deepak Parekh took over as Chairman from Hasmukhbhai, he said: "Taking over fromH.T. Parekh is a formidable task; his vision. brought about not only an institution, butan entire concept which has proved itself to be of lasting importance." In his last years,developments in the financial sector brought him some measure of satisfaction. SaysICICI Chairman, N. Vaghul: "The most gratifying aspect about his life is that values hecherished all his life came into reality in the last years. Opening up the financial sector,and deregulation of lending rates were issues he stood for all his life and this happened

before he passed away." Farewell dear Hasmukhbhai! All of us will miss not only H.T.Parekh the financial wizard, but much more so, the man. The only and best tribute wecan pay to such an individual is to try and follow in his footsteps, keeping in mind hishigh ideals and philanthropic outlook.

As Henry W. Longfellow said:

Lives of great men all remind us

We can make our life sublime,

And, departing leave behind us Footprints on the sands of time.

Objectives & Background

Housing Finance Sector

Against the milieu of rapid urbanisation and a changing socio-economic scenario, thedemand for housing has grown explosively. The importance of the housing sector in theeconomy can be illustrated by a few key statistics. According to the National BuildingOrganisation (NBO), the total demand for housing is estimated at 2 million units peryear and the total housing shortfall is estimated to be 19.4 million units, of which 12.76million units is from rural areas and 6.64 million units from urban areas. The housingindustry is the second largest employment generator in the country. It is estimated that

the budgeted 2 million units would lead to the creation of an additional 10 million man-years of direct employment and another 15 million man-years of indirect employment.

Having identified housing as a priority area in the Ninth Five Year Plan (1997-2002),the National Housing Policy has envisaged an investment target of Rs. 1,500 billion forthis sector. In order to achieve this investment target, the Government needs to make

low cost funds easily available and enforce legal and regulatory reforms.

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Background

HDFC was incorporated in 1977 with the primary objective of meeting a social need -that of promoting home ownership by providing long-term finance to households fortheir housing needs. HDFC was promoted with an initial share capital of Rs. 100

million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the countrythrough the provision of housing finance in a systematic and professional manner, andto promote home ownership. Another objective is to increase the flow of resources tothe housing sector by integrating the housing finance sector with the overall domesticfinancial markets...

Organisational Goals

HDFC's main goals are to

a) Develop close relationships with individual households

b) Maintain its position as the premier housing finance institution in the country

c) Transform ideas into viable and creative solutions

d) Provide consistently high returns to shareholders

e) To grow through diversification by leveraging off the existing client base.

Organisation & Management

HDFC is a professionally managed organisation with a board of directors consisting ofeminent persons who represent various fields including finance, taxation, constructionand urban policy & development. The board primarily focuses on strategy formulation,

policy and control, designed to deliver increasing value to shareholders.

Board of Directors

Details of the Board of Directors in terms of their directorships/memberships incommittees of public companies (excluding HDFC) as on August 31, 2009 are asunder:

Sr. Name of Director Category No. of No. of Committee

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No. Directorship Member Chairperson

1 Mr. Deepak S. ParekhExecutiveChairman

11 7 5

2 Mr. Keshub Mahindra Independent 5 1 1

3 Mr. Shirish B. Patel Independent 1 0 0

4 Mr. B. S. Mehta Independent 14 9 5

5 Mr. D. M. Sukthankar Independent 4 1 1

6 Mr. D. N. Ghosh Independent 4 1 1

7 Dr. S. A. Dave Independent 11 7 0

8 Dr. Ram S. Tarneja Independent 11 6 1

9 Mr. N. M. Munjee Independent 14 9 4

10 Dr. Bimal Jalan Independent 0 0 0

11 Dr. J. J. Irani Non-executive

9 2 0

12 Mr. D. M. Satwalekar Independent+ 5 2 2

13 Ms. Renu Sud KarnadJointManagingDirector

12 5 2

14 Mr. K. M. Mistry

ViceChairman &ManagingDirector

12 9 3

HDFC has a staff strength of 1445 (as on 31st March, 2008), which includesprofessionals from the fields of finance, law, accountancy, engineering and marketing.

Centre For Housing Finance(CHF)

A synonym for convenient and hassle-free service, HDFC's Training Centre, CHFpresents a unique focal point to hold training programmes.

Nature at its best...

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CHF is located in the serene ambience of Lonavla, 2000 feet above sea level, 120 kms.from Mumbai. The hills and valleys and scenic landscape make your training a unique

pleasurable experience, so much so you may even prefer having your sessions out in theopen lush green lawns.

Training & Human Resource Management...

HDFC, having pioneered and helped develop market-oriented housing finance in India,has continued to expand its services to a broader spectrum of clients by offeringspecialised training courses.

HDFCs Centre for Housing Finance (CHF) provides technical assistance to nationalgovernments and housing finance institutions in developing countries in the SouthAsian and African regions, especially in the field of institutional development foreffective shelter finance delivery.

The second major area of activity of the CHF is managerial training for housing financeinstitutions. Besides effective housing finance operations, some established housingfinance institutions also seek training for systems development and improvement.

Technology adds value...

State-of-the-art technology at this Training Centre makes your training programmescome alive. Overhead Projectors with remote control screen, multimedia projector,electronic copy board & programmable lighting arrangements all make for a greatlearning experience. Besides, you can bid farewell to the hiss, crackle and static of

artificial audio sounds. And welcome sound in its natural state thanks to the acousticcushioning of the Training Centre.

CHF is also well-equipped with computers, fax and photocopying facilities. A back-upgenerator set provides uninterrupted power supply. Air conditioning systems ensure a

balanced climate here. Also our Syndicate rooms provide facilities for group work.

Service that makes you smile

CHF Offering you service when you need it the most. Ergonomically designedchairs, with seating arrangements which are flexible to suit your requirements andrefreshment services at preferred timings make the experience complete and fulfilling inevery respect. A well-equipped Library, and above all, a caring and experienced staff

who understand your needs are what make CHF truly one of a kind. When you come to

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