Suvidha Home Loans PDF

SUVIDHA Home Loans  Learning Objective At the end of this module participant will be able to understand the key features of our home loan product and Income appraisal procedure for customers without formal income proof. This presentation also share information on...

SUVIDHA Home Loans  Learning Objective At the end of this module participant will be able to understand the key features of our home loan product and Income appraisal procedure for customers without formal income proof. This presentation also share information on Basics of Housing Finance Customer Segments along with Examples CREDIT Appraisal Technical Appraisal Legal Appraisal Income Appraisal examples Organisation Structure HF Affordable Team Prime-High Value Team Credit Team Mr. Gopalkrishnan Santosh Mr. Gopalkrishnan Santosh Mr. Ravindra Baburaya Gadiyar Mr. Subhash Samant Mr. Subhash Samant Mr. Ashutosh Balyan Zonal Manager (2) Sr.RM/RM/TM (23) Mr. Ruchin Mittal Regional Credit Manager (10) AM/AIC (79) Regional Sales Manager (12) Area Credit Manager (20) ROIC (402) CCE (598) Sales Manager (55) Credit Manager (15) Few Data Points Statistics Housing Finance- Business and Financial Overview Housing Asset Housing HousingAsset Asset Bifurcation (₹ in Bn) Borrowers Bifurcation – Mar’24 Segment Segmentwise wise(in (in%)%) 0.5 11.2% 3.7% 46.5 53.0 0.9% 0.8% 0.8% 299.2 10.8% 8.7% 8.0% 288.5 12.5% 269.0 13.7% 14.4% 2.4 2.4 2.5 26.1 Salaried Self Employed Professionals 31.1 21.5 43.1 33.6 39.6 Housing Asset Disbursements (₹ in Bn) FY 24 72.7 78.6% 76.1% 74.7% 215.4 227.7 FY 23 63.5 211.4 Q4 FY 24 26.4 Q3 FY 24 17.5 Q4 FY 23 8.1 Mar'23 Dec'23 Mar'24 Mar'23 Dec'23 Mar'24 Housing LAP IBPC Construction 8 Housing LAP IBPC Construction  YoY Disbursement Details Year Total 2023-24 7066.12 2019-20 3961.88 Cr. 2020-21 3684.28 Cr. 2022-23 6129.49 2021-22 5324.27 Cr. 2022-23 6129.49 Cr. 2021-22 5324.27 2023-24 7066.12 Cr. 2020-21 3684.28 2019-20 3961.88 0.00 1000.00 2000.00 3000.00 4000.00 5000.00 6000.00 7000.00 8000.00 Month Wise Disbursement Details--2023-24 (In Cr.) Month wise Disbursment 1100 1021 900 700 669 637 571 526 508 495 481 494 500 447 463 458 297 300 100 Jan-24 Nov-23 July-23 Jun-23 Sep-23 Feb-24 Mar-24 April-23 April-24 May-23 Aug-23 Oct-23 Dec-23 -100  Region Wise Disbursement Details-2023-24 (In Cr.) 1400 1248 1200 1000 788 800 658 530 600 468 418 355 400 297 257 251 231 224 223 216 197 195 165 129 200 85 56 43 33 0  Product Wise Disbursement Details--2023-24 Amt.(in Cr.) 3500.00 3353.61 Highest Disbursement Product: 3000.00 Suraksha: With a disbursement amount of ₹3353 Cr., Suraksha is the leading product, contributing the 2500.00 highest share among all the listed products. 2000.00 1787.21 SUVIDHA and LAP: These products have substantial 1718.60 disbursement amounts of ₹1787 Cr. and ₹1718 Cr. 1500.00 respectively. 1000.00 Samman, Sajavat, and IPF: These products have much lower disbursement amounts, with Samman at 500.00 ₹195 Cr., Sajavat at ₹9 Cr., and IPF at ₹2 Cr. 195.36 9.22 2.12 0.00 Suraksha Suvidha Mortgage Samman Sajavat INSPF Understanding on Housing Finance What is a Home Loan? For internal use only - HR/ L& D/HF/ Ver 1 May'24 What is a Home Loan?  A home loan, also known as a housing loan, is provided by financial institutions to individuals or families for the purpose of purchasing new or old house or constructing residential property.  It allows borrowers to acquire a property by providing a portion of the purchase price upfront and repaying the remaining amount, plus interest, over a specified period.  Home loans typically have lower interest rates compared to other forms of borrowing, making them an attractive option for aspiring homeowners. For internal use only - HR/ L& D/HF/ Ver 1 May'24 Home Loan Products Housing Loan Products Available at Bandhan Bank Home Loan Loan Against Property Insurance Premium Funding Balance Transfer Repair and Renovation Loan Construction Finance Loan Products Home Loan Products Bandhan Home Loan Center offers range of Loan Products for different segments. Home Loans for purchase, construction, repairs or renovation of dwelling units. Based on the customer segment the home loans are further categorized as under: Home/Housing Loans A home loan or housing loan is the loan borrowed by the customers to Purchase new or old house or construct residential property. SURAKSHA Home Loan (Loan based on Formal Income Proof) SUVIDHA Home Loan(Loan based on insufficient income proof) SAJAVAT Home Loan (Loan for Repair Renovation of residential property) Samman Home Loan (Loan for Salaried Customers) Mortgage Loan Insurance Premium Balance Transfer Construction or LAP Funding and Top up Finance  SURAKSHA Home Loan Purpose: Suraksha is given for the purpose of purchase and / or construction of residential properties to individual with formal income proof. Segment:- Segment:- Salaried /Self-employed Professional /Self-employed Non Professional NRIs, Partnership firms/LLP, Private Limited companies ,Closely Held Public Limited company, Associated of Persons, Corporate Body, HUF, Trust/Society Formal Income proof includes: Salary slips / certificate of last 3/6 months (for salaried class) reflecting PF deduction and / or Form 16 Profit & Loss Accounts and Balance Sheets (for business class) IT returns filled in respective years showing sufficient income. (In case of ITRs and Financials available for less than 3 years, cases can be considered under Suraksha. Refer CAAM document Interest Rate:-Variable Amortization/Repayment:- Monthly SURAKSHA Eligibility Parameters Sr # Type Details 1 Minimum Income Rs. 8000/- p.m. 2 Maximum Loan Amount (in Rs.) Rs. 10 Crore, subject to LTV/Maximum loan amount as per credit policy /CAAM 3 Minimum Loan Amount (in Rs.) Rs. 1 Lac Maximum Loan Tenure at the Time of 4 30 years, subject to age of applicants not crossing policy norms Loan Origination 5 Minimum Loan Tenure 1 year 6 Maximum FOIR (%) As per DOP grid mentioned in CAAM 7 Maximum LTV (%) As per DOP grid mentioned in CAAM - Minimum age: 18 years (Non-Financial Co-applicant) and 21 years (Financial Co-applicant)- Maximum Age at the time of loan 8 Age of Applicant (in Years) maturity: 75 years (For Financial Co-applicant) and 90 years (For Non-Financial Co-applicant) Minimum credit bureau score >=600. No hit/No matches/ New to Bureau/ No history available with Bureau etc. can also be 9 Credit Bureau Score considered  SUVIDHA Home Loan Purpose:- Suvidha is given for the purpose of purchase and / or construction of residential properties to individual based on appraised income. This loan is also offered for buying houses in projects funded by the Bank. Segments:-  Professionals  Businessmen or Self employed  Salaried individuals without PF and / or Form 16  Others where no formal income proof is available based on their appraised income Income Proof:-  Formal proofs of income do not reflect actual income of the applicant,  Formal income proof is not available or  The applicant needs higher eligibility than that supported by his formal income proofs.  Appraised Income would be derived by appraising the surrogate income proofs as provided by the applicant and substantiating the earning capacity by field investigation. Interest Rate:-Variable Amortization/Repayment:- Monthly SUVIDHA eligibility parameters Sr # Type Details 1 Minimum Income (in Rs.) Rs. 8000/- p.m. 2 Maximum Loan Amount (in Rs.) Rs. 10 Crore, subject to LTV/Maximum loan amount as per credit policy /CAAM 3 Minimum Loan Amount (in Rs.) Rs. 1 Lac 4 Maximum Loan Tenure 30 years, subject to age of applicants not crossing policy norms 5 Minimum Loan Tenure 1 year 6 Maximum FOIR (%) As per DOP grid mentioned in CAAM 7 Maximum LTV (%) As per DOP grid mentioned in CAAM - Minimum age: 18 years (Non-Financial Co-applicant) and 21 years (Financial Co-applicant)- Maximum Age at the time of loan 8 Age of Applicant (in Years) maturity: 75 years (For Financial Co-applicant) and 90 years (For Non-Financial Co-applicant) Minimum credit bureau score >=600. No hit/No matches/ New to Bureau/ No history available with Bureau etc. can also be 9 Credit Bureau Score considered Suvidha Product : Assessment Methods and Criteria  Suvidha Home Loan : Drafted in the Bank’s Credit Policy to allow assessment of income through surrogate assessment methods in cases where formal income proofs are not reflective of actual business incomes.  Surrogate assessment methods: Standardized model to be used, not subjectively across geographical presence.  Existing methodology: Cash flow analysis and estimation of income under Suvidha product program.  Newly standardized methods: Two surrogate methods of assessing incomes: Average Bank Balance (ABB) based income assessment Turnover based income assessment ABB (Average Bank Balance) Based Income Assessment  ABB (Average Bank Balance) Based Income Assessment Using PERFIOS: Calculate monthly income by averaging the daily bank balance for the last 12 months. Adjust for cheque returns. Without PERFIOS: Calculate monthly income by averaging the bank balance on specific dates (5th, 10th, 15th, 20th, and 25th) for each month for the last 12 months. Adjust for Cheque returns.  GST Turnover based income assessment: Monthly Income = (Last 12 month’s GST Turnover x Margins) / 12 Margins to be considered: Lower of the following two: (A) Margins as assessed during PD and (B) Industry Margins (Manufacturers- 8% ; Traders- 10% ; Service Providers- 15%) Loan Against Rent Receivable(LARR) Loan against future rent receivables has been developed considering the growth potential in the real estate in various metros and urban centers, where many residential properties are being developed and the owners approach banks for loans against securitization of future rent receivables from such properties Sr# Parameter Details 1 Minimum Income in Rs ₹12,000 per month 2 Maximum Loan Amount in Rs ₹5 Crore 3 Minimum Loan Amount in Rs ₹1 Lakh Home Loan :-15 Years or up to Balance lease tenor 4 Maximum Loan Tenure (Whichever is lesser) LAP :-20 Years 5 Minimum Loan Tenure 1 Year 6 Maximum FOIR(%) 85% of Net rent 7 Maximum LTV(%) 50% 8 Age of applicant in Years Up to 75 years List of Restricted Properties S No Negative/Restricted Property list 1 Commercial Property including Cinema Halls/Multiplex, Hotels, Restaurant, Banquet halls, Hospitals, Nursing homes. 2 Properties designed and constructed as per specific usage like hostels, guest houses, park, Zoo, Amusement park etc., 3 Guest house 4 HUF Property, Property held by minor/Trust 5 Properties identified for re-development in HL, LAP and NRP (to be identified / ascertained during technical visit) 6 Residential Basement property/Unapproved basement 7 Schools, college (However Playgroup, Nursery , Creche in residential units) 8 Farmhouse 9 Religious structures like Mosque, Temple, Church, Gurudwara, etc 10 Property owned by Partnership firm (Allowed where Firm is registered with Registrar of Firms(ROF). 11 Agriculture Land/Property  SAJAVAT-Repair Loan Purpose:- Internal / external repairs and Structural improvements of existing residential units. Repair Includes:- Segments:-  Plastering / painting of walls,  Professionals  Flooring,  Businessmen  Roofing,  Self employed Individuals  Bathroom plumbing,  Salaried individuals  Tile work,  Construction of kitchen platform,  Electrical fittings to name a few Income Proof:-  Formal proofs as defined in SURAKSHA  Appraised Income Working as elaborated in SUVIDHA  Along with the income proof repair estimate needs to be given to determine the amount of Loan require SAJAVAT eligibility parameters # Type Details ==>Formal Income Segment 1 Customer Segment ==>Appraised Income Segment - Salaried / Self-employed Professional / Self-employed Non Professional - NRIs - Partnership firms/LLP - Private Limited companies 2 Customer Categories - Closely Held Public Limited company - Association of Persons - Corporate Body - HUF - Trust/Society 3 Value to be Considered Estimate of repair by an authorized individual like civil engineer and Realisable value given by valuer 4 Minimum Income (in Rs.) Rs. 8000/- p.m. 5 Maximum Loan Amount (in Rs.) Rs. 15 lacs 6 Minimum Loan Amount (in Rs.) Rs. 1 lac 7 Maximum Loan Tenure 15 years 8 Minimum Loan Tenure 1 year 9 Maximum FOIR (%) As per DOP grid mentioned in CAAM - Minimum age: 18 years (Non-Financial Co-applicant) and 21 years (Financial Co-applicant) 10 Age of applicant in Years - Maximum Age at the time of loan maturity: 75 years (For Financial Co-applicant) and 90 years (For Non-Financial Co-applicant) - Minimum credit bureau score >=600 11 Credit Bureau Score - No hit/No matches/New to Bureau/No history available with Bureau etc. can also be considered. Sajavat loan offered for: - Internal / external repairs and structural improvements of existing residential units. Repairs include: - Plastering / painting of walls 12 Purpose - Flooring, Roofing - Bathroom plumbing, Tile work - Construction of kitchen platform - Electrical fittings to name a few As defined in Suraksha 13 Income Proof As defined in Suvidha  Mortgage Loan Purpose:-  Buying a car or any other vehicle  Marriage of daughter  Education of children  Medical treatment of parents  Business expansion  Purchase of property Segments:- The Mortgage Loan to individuals against residential and non residential property. It can be taken by both categories of customers’ i.e.  Ones who can provide formal income proof and also In case where appraised income is to be considered  The valuation report is taken from empaneled Valuer to ascertain the market value of property. As per RBI guideline, the valuation should be done by professionally qualified independent valuers i.e. the Valuer should not have a direct or indirect interest.  Here in some cases, the requirement of funds is not very high and applicant may wants to raise less amount compared to market valuation of existing property. Mortgage Loan Eligibility Parameters Sr # Type Details 1 Minimum Income Rs. 10,000/ p.m. 2 Maximum Loan Amount (in Rs.) Rs. 10 Crore 3 Minimum Loan Amount (in Rs.) Rs. 1 Lakh 4 Maximum Loan Tenure 30 years, subject to age of applicants not crossing policy norms 5 Minimum Loan Tenure 1 year 6 Maximum FOIR (%) As per DOP grid mentioned in CAAM As per DOP grid mentioned in CAAM but not more than 80% (for some categories) As per DOP grid mentioned in CAAM but 7 Maximum LTV (%) not more than 75% (for other categories) Minimum age: 18 years (Nonfinancial Coapplicant) and 21 years (Financial Coapplicant) 8 Age of Applicant (in Years) Maximum age at the time of loan maturity: 75 years (For Financial Coapplicant) and 90 years (For Nonfinancial Coapplicant) Minimum credit bureau score >=600. No hit/No matches/New to Bureau/No history available with Bureau etc. can also be 9 Credit Bureau Score considered Buying a car or any other vehicle Marriage of immediate family member Education of children 10 Purpose Medical treatment of family members Business expansion Purchase of property Any other purpose allowed by RBI  Insurance Premium Funding Purpose:-  Bank customers can agree to take life cover as security for the loan under the group insurance tie ups of the Bank.  This scheme can be opted to fund the insurance premium for any of the insurance companies with whom the Bank is having a tie up. Segment:  This product may be offered to all Housing Finance customers who avail a Home loan from the Bank. Income Proof:  This product is linked to the original loan of the customer  Amortization/Repayment:- Monthly Insurance Premium Funding Eligibility Parameters Sr# Type Details 1 Interest Type FIXED 2 Minimum Income in Rs Rs. 2500/- p.m. 3 Maximum Loan Amount in Rs Rs. 15 lacs 4 Minimum Loan Amount in Rs Rs. 1 lac 5 Maximum Loan Tenure 30 years 6 Minimum Loan Tenure 1 year 7 Maximum FOIR and LTV As per DOP grid mentioned in CAAM Minim age: 18 years (Non-Financial Co-applicant) and 21 years (Financial Co-applicant) 8 Age of applicant in Years Maximum Age at loan maturity: 75 years (Financial Co-applicant) and 90 years (Non-Financial Co- applicant) Minimum credit bureau score >=600. 9 Credit bureau score No hit/No matches/ New to Bureau/ No history available with Bureau etc. can be considered. 10 Income proof Depending on the Suraksha/ Suvidha Profile of the customer  Balance Transfer and Top up Loan BT plus Top up:- Top up (Enhancement) of loan will be allowed up to 100% of the original loan amount subject to meeting Income & LTV (Loan to Value) norms as per product and policy guidelines. Vintage of Balance Transfer loan should be minimum 12 months. For Top up (Enhancement) more than 100% of the original loan amount, case will required to be put to RM or as per latest DOP on the basis of the merit of the case. Top up to existing customer:- Top up to existing customer shall be allowed after 12 months of first disbursement subject to meeting income & eligibility norms.  Construction Finance Purpose: To provide financial assistance to real estate developers for construction of residential and commercial projects. Broad Parameters:  Loan can be given in the form of Term Loan or Line of Credit facility  As far as possible it should be exclusively funded by the Bank  CF exposure only in RERA approved projects, wherever applicable.  Exposure norms to be restricted to the following limit:  Per party exposure maximum upto 15% of Net Owned Funds  Group exposure maximum upto 25% of Net Owned Funds  Overall CF portfolio upto maximum 10% of outstanding loan assets Broad Eligibility Criteria of Borrowers  Broad Eligibility Criteria Eligibility of Loan depends on various factors such as Age , Income , Credit Score, Employment, Documents, Financial Situation. Require Loan amount is processed only if the customer meets the basic credit parameters Below are some tools used for Loan Eligibility.  IIR:-Installment to income Ratio  FOIR:-Fixed Obligation to income Ratio  LTV:-Loan to Value Ratio IIR Calculation What is Installment to income Ratio(IIR)? It is the method by which HFC/banks can evaluates a persons ability to repay loan. Normally lenders assume that person can pay a maximum EMI of 25% to 30% of his monthly income. If the EMI is increased more then that customer will not be able to sustain his normal life style and he may default in future. Lets understand IIR with the help of one example. IIR Calculation Loan Installment Loan Amount:-20,00,000 ---------------- Term:-20 Years Documented/Appraised Income EMI:-Rs.17995 Gross Monthly Income:-Rs. 50,000 IIR = 17995*100/50,000 IIR = 35.99%  FOIR Calculation What is Fixed Obligation to income Ratio(FOIR)? It is the ratio of customers fixed commitment to income while calculating this HFC/banks consider the other fixed obligations of the customer which are currently due. Here Institution assumes that borrower can pay a maximum EMI of 35% to 45% of his monthly income. FOIR Calculation Lets understand FOIR with the help of one example. Fixed monthly liability Loan Amount:-20,00,000 (of the applicant) Term:-20 Years ------------------------ Installment :-Rs. 17995 Documented/Appraised Income EMI of Personal Loan:-Rs.5000 Gross Monthly Income:-Rs. 50,000 FOIR = 17995+5000*100/50,000 FOIR = 45.99%  Calculation of LTV What is Loan to Value Ratio(LTV)? LTV stands for the Loan to Value ratio. Lenders use these ratio to calculate the loan eligibility based on market value of the property. Lets understand LTV with the help of an example. LTV Calculation Loan Amount:-25,00,000 Market Value :-40,00,000 Loan Amount ------------------------ Term:-20 Years Market Value as per the empaneled Valuer Installment :-Rs. 17995 Gross Monthly Income:-Rs. 50,000 LTV = 25,00,000/40,00,000 LTV = 62.50% Calculation of LTV Calculation of LTV For the purpose of calculating the LTV, the following guidelines should be followed for arriving at the cost of the property: Loan Products applied for Cost to be considered for LTV Value of the property based on the Valuation report by empaneled Valuer. The Suraksha and Suvidha valuation report should not be older than 3 months The market value based on the Valuation report from empaneled Valuer should be Mortgage loans considered. The valuation report should not be older than 3 months Sajavat Estimate of repair by an authorized individual like civil engineer LTV Eligibility:- Sr No Individual Housing Loans LTV Ratio% < = 80% 1 Up to Rs.30 lakh >80% and