Aditya Birla Group entering housing Finance

The $40 billion-plus diversified conglomerate Aditya Birla Group headed by Kumar Mangalam Birla has taken a major step forward in financial services with the license for its housing finance company coming through from the National Housing Bank (NHB).

The home finance foray is a major boost for the group which had drawn up big plans for a banking license but did not find itself in the list of two names cleared by the Reserve Bank of India (RBI) recently.

A spokesman for the Aditya Birla Financial Services Group (ABFSG) confirmed to Forbes India that the license from NHB had come in about a week ago and the group would now begin the execution of the business. The home finance business is expected to kick off operations in the third quarter of the current fiscal.

Sources said the home finance business was a perfect fit for the group and in keeping with its plans to grow its presence in the retail lending business. This will now allow ABFSG to offer home loans to its customers. ABFSG is already present across 500 cities in India and will initially offer its home loans in the top 30 cities.

ABFSG is currently present in various lines of business in the financial services space including life insurance, fund management, private equity, loans against property, SME loans, loans against shares, structured finance, general insurance broking, wealth management, stock broking and online money management.

The aggregate revenues of ABFSG as of March 31 2014 stood at Rs. 6,655 crore and its aggregate profit before tax was Rs 742 crore. ABFSG managed assets aggregating Rs 1,22,362 crore as of March 31.

Having gained healthy scale on the financial services business, the plan for the group now is to emerge as a one-stop for its customers' financing needs. "ABFSG intends to focus on product innovation and superior service to enhance its customer value proposition in this new segment," the spokesperson told Forbes India.

According to an ICRA study, the Indian mortgage market is currently dominated by big institutions like the State Bank Group, the HDFC Group, LIC Housing and ICICI Group which together accounted for 60 percent of the total market as at September 30, 2013. Recent reports have put the size of the Indian home finance market at Rs 9 lakh crore. But an NHB trend and progress report on housing in 2013 also shows that the penetration of housing is very low in India, with the housing to GDP ratio at just 9 percent, significantly lower than most emerging and advanced economies.

Though there is no independent confirmation of this, the Aditya Birla Group is also understood to be studying the recent draft norms for small banks and payment banks unveiled by RBI earlier this month very carefully. While a payment bank would be a good fit for the group too, given that it has telecom company Idea in its fold, a small, local feel bank is also something which can add heft to the financial services play of the group.

It is not yet clear how, if at all, the group will approach the two opportunities, though several players who did not get banking licenses in the first round feel that they still may get an opportunity in future rounds if licenses are given 'on tap.'

ING Vysya Bank Customers needs to look for another banker for getting Home Loan

ING Vysya Bank Stays away from Home Loan Segment

When most banks have switched focus on expanding their retail Housing Finance business to preserve asset quality in an uncertain economy, ING Vysya Bank appears to change the trend. The private sector lender has scaled down its incremental disbursal of home loans because of lower pricing and rising incidence of pre-payment.

“The difference in terms of pricing between home loan today and an average self-employed customer would be in the range of 150 to 200 basis points. So, that is one of the key reasons why the focus has to be more on loan against property compared to home loans... Secondly, on a commercial basis, because of higher incidence of foreclosure we decided to stay away from it (housing finance),” Mahesh Dayani, country head – retail assets at ING Vysya Bank, told analysts during a recent interaction.

While the bank has not exited the retail housing finance business, it is neither stepping up the incremental acquisition of home loan borrowers. In the first three months of this financial year, housing loans constituted only nine per cent of ING Vysya Bank's aggregate mortgage disbursals compared to 30 per cent in 2013-14 and 60 per cent in 2012-13. The share of home loans in the lender's mortgage book is now below 60 per cent compared to 90 per cent earlier.

This is in sharp contrast to the industry trend. At the end of June, 2014, while gross bank credit was up only 13 per cent from a year earlier, home loans increased by 17 per cent, the RBI data showed.

But with RBI waiving the pre-payment penalty on housing loans, ING Vysya Bank has decided to go slow on this business. “Last year if you would recollect, the foreclosure charges for a home loan were completely done away with. That saw a lot of foreclosures happening on the home loans. So, even if I board a customer at 10.50 per cent, it does not really guarantee that the customer is going to be sticky for the next seven to 10 years. The account could move out and we would continue to lose,” Dayani said.

The bank is now focusing on growing its loan against property business, where the pricing is relatively better. “We want to be in a segment, which we understand best. Self-employed segment is our core strength and they are primarily customers for loan against property. We will continue to scale down our home loan portfolio and grow the loan against property book as long as the pricing arbitrage remains in these two products,” Dayani told Business Standard.

He added that the delinquency rate is more or less similar for both these lending products. Loan against property now constitutes 91 per cent of ING Vysya Bank's incremental mortgage disbursal and is close to 10 per cent of the bank's retail advances.

Your Property documents mortgaged with Bank may not be Secured

LIC Housing Finance asked to pay Rs 2.3L for loss of documents

New Delhi District Consumer Disputes Redressal Forum has asked LIC Housing Finance Ltd to pay Rs 2.3 lakh compensation for loss of documents, due to imperfection in securing it properly in safe custody, submitted by Dr Mukesh  Kumar and Dr Renu Bala, residents of Delhi. 

The complainants had told the forum that they had taken a loan from LIC HFL for DDA flat allotted to him. Documents of fifth and final demand letter, payment challan and conveyance deed, were given in office of the company, for conversion from lease holder to free holder. Later they demanded back the letters deposited with company. The company, however, accepted that the conveyance deed was lost but it denied that other papers were supplied to it. It maintained its stand before the forum. 

The complainants had alleged that they had submitted three documents with the company-- fifth and final demand letter, payment challan and conveyance deed-- which were lost. Though the company was denying that other two documents were with it, the complainants from day one were reminding it to return the same.

However, at the stage all the three documents being not traceable by company, all it can do is to issue a certificate to the complainants, in pursuance to this decision to say that original conveyance deed of the particular property of complainants, was deposited by complainants with company and same has been lost by company. 

The forum had directed to pay Rs two lakhs as compensation to complainants for loss of conveyance deed... OP is directed to pay Rs 30,000 as litigation expenses and also directed the company to approach DDA for re-construction of a duplicate conveyance deed, with endorsement from the Registrar that original was registered with it and same was lost so that they are protected against fraudulent deals.

Additional Tax Benefit for first time Home Buyer

If you are planning for buying your 1st house in this financial year you can claim extra benefit on your home loan. First time individual home buyers can get tax deduction on interest of home loan, under newly inserted section 80EE of the Income Tax Act, applicable for assessment year 2014-15. This is in addition to tax rebate on interest payment of home loan, under section 24. Now you can claim total Interest deduction of Rs. 2.50 lakhs on your first self-occupied property.

Eligibility for 80EE rebate:

This rebate on home loan interest is applicable only for home loans satisfying the following conditions:

1. Loan has been sanctioned for house by any financial institutions from 01 April, 2013 to 31 March, 2014.

2. Loan amount sanctioned for acquisitions house property does not exceed 25 Lacs.

3. There are no other house property on the date of sanction housing loan to assessee.

4. Value of house property not exceed of Rs. 40 lacs.

5. Buyer of house property is the first time buyer.

The amount claimed under 80EE cannot be claimed for tax rebate under any other sections in any year.

How to get 80EE tax benefit:

You can either produce certificate from your lender to the HR or get deduction on salary TDS or you can deduct the amount from total income while filing income tax return.

Your home can reduce your tax burden too

Your home can is not your shelter only it can reduce your tax burden too. There is only 3 months of time to end of this Financial year, it is time to start planning your tax saving strategies. Your house can also be used to reduce the tax liability to a some extent. Under Section 24 of the Income Tax Act, interest paid up to Rs 1.5 lakhs per annnum on a home loan & can be set-off from salary or business income, for a self-occupied property. Further if you have got your house rented than there is no limit on Interest paid, you can claim the actual interest paid, no matter what is the Rent amount. The interest amount is eligible for deduction even if you took the loan for reconstruction / renewal/ repair of your house.

Loan for construction eligible for deduction

A loan availed for the construction of a residential property, purchase of a residential property, extension of an existing house, and major repairs and renovation of a house are eligible for tax benefits. Under Section 80C of the Income Tax Act, a home loan borrower can claim a deduction of up to Rs 1 lakh from his taxable income on repayment during the year along with specified savings instruments like provident fund.

All co-owners eligible for deduction

In case there are co-owners to a property, each of them can claim tax benefits separately , in proportion to their share holding in the property. If the share holding is not mentioned in the purchase deed, they can execute an agreement on a stamp paper, mentioning the shares in the property, and claim tax benefits separately . Co-owners can thus claim a deduction of up to Rs 1.5 lakhs per annum separately, on interest paid towards a self-occupied house, and also up to Rs 1 lakh per annum towards principal amount repaid.

Pre-EMI qualifies for benefit

The entire pre-EMI interest amount (the interest paid during the construction period ) is allowed as a deduction under Section 24 of the Income Tax Act equally over five years (20 percent of total interest paid per annum), starting from the year in which the construction is completed.

However, if one avails a loan only for a land purchase, he is not eligible for any tax benefits. In the case of a composite loan (for land and construction ) and the house construction is completed within three years, only after completion of the construction will one be eligible for the tax benefits.

Interest Rate Chart of LICHFL Till 31.03.2013

Interest Rate Chart for Retail Loans
Scheme	Limit	Rate of Interest	Validity
Bhagya Laxmi	For Loan upto Rs. 75 Lacs	10.00%	31.03.2013
	For Loan of Rs. 75 Lacs & above upto Rs. 1.50 Crs	10.50%
Super Choice	For Loan upto Rs. 75 Lacs	10.25%	31.03.2013
	For Loan of Rs. 75 Lacs & above upto Rs. 1.50 Crs	10.75%
Grand 3	For Loan Amount upto & including Rs 40 Lacs	10.70%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.00%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.80%
New Advantage 5	For Loan Amount upto & including Rs 40 Lacs	11.15%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.40%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.65%
Pure Fixed	For Loan Amount upto & including Rs 40 Lacs	10.95%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.20%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.50%

Corporation Bank has decided to slash interest rates on home

Corporation Bank has decided to slash interest rates on home, car and educational loans with effect from September 1 for a three-month period.

The state-run bank has also decided to waive the processing fee for these loans.

The bank's Chairman and Managing Director Ajai Kumar said the interest rates for Corp Home Housing loan for up to Rs 50 lakh would be 10.50%.

The rates would be 10.75% for loans up to Rs 1 crore and 11% for loans exceeding Rs 1 crore. The bank hitherto charged 11.25% interest on home loans, he told reporters here yesterday.

In case of vehicle loans, customers would be charged at 11.25% for a five-year period.

The interest rate for auto loans with a tenure of 7 years would be 11.75% as against 12% charged so far, he said.

Kumar said the bank has launched Corp Doctor Plus scheme for medical professionals, under which any registered medical can avail loans at 12.10% interest rate against the existing rate of 12.60%.

Ashwani Kumar and Amar Lal, both Executive Directors of the bank and K Ramamurthy, General Manger were also present at the event.