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.

SBI Cuts Car, Home Loan Rates 50bps

State Bank of India on Wednesday cut interest rates on loans for homes and cars, a move that could benefit millions of consumers. By cutting rates, the country’s largest lender is trying to capture the growing retail segment in the face of falling demand for loans from corporates. 
The move will force rival private sector and state-run peers to lower interest rates, which could put pressure on their profitability. SBI did not say whether lower rates will be applicable to existing customers. 
“We have targeted the retail segment because the instrument of interest rate should be used for increasing credit flow,” SBI Chairman Pratip Chaudhuri said in an interview to ET NOW. “Large term loan proposals are very few and working capital for good corporates is already happening below base rates...So, for a bank like us, the option is to accelerate the retail (lending).” The rate on car loans now stands at 10.75%, down from 11.25%, which will translate into a monthly repayment of . 1,699 on a seven-year loan, compared with . 1,725 earlier. The rate on home loans up to . 30 lakh will fall to 10.25% from 10.5%. Forloans between . 30 lakh and . 75 lakh, the rate will be 10.4%, down from 10.75%. For home loans over . 75 lakh, the rate will be 10.4%, compared with 11% earlier. The new rates will be effective from August 7.

Interest Rate of LICHFL in August 2012

Interest Rate of LICHFL in August 2012

A New Limited Edition Floating Rate Product called “YUVA” has been introduced w.e.f 01.08.2012 by LICHFL. This product is offered for a Limited Period of 3 Months i.e., for loans sanctioned till 31.10.2012 and for 1st Disbursements to be availed on or before 30.11.2012.:-

Amount of Loan	Interest Rate
Upto and including Rs 40 lacs	10.75%
More than Rs 40 lacs and less than Rs 75 lacs	11.00%
Rs 75 lacs & above upto Rs 1.50 cr	11.25%

This product is Floating Rate of Interest for the first 3 years from the date of first disbursement & would be linked to PLR prevalent on the date of first disbursement. However after 3 years Interest rate will be PLR-250BPS & 75 lacs to 1.50 Cr will be PLR-225BPS

Other products of LICHFL are Grand 3 & Advantage 5

Amount of Loan	Grand 3	New Advantage 5
Upto 40 Lacs	10.70%	11.15%
40 Lacs to 1 crore`	11.25%	11.40%
1 crore to 1.50 crore	11.75%	11.65%

Grand 3 is fixed for 3 years & floating thereafter. New Advantage 5 is fixed for 5 Years & floating thereafter.

Home loan top up is cheaper than personal Loan

These days if you have Home Loan on your house you can get top up on that loan for your personal use. The top up Loan on your home Loan is much cheaper as compared to the Personal loan. It’s come with a interest rate of 13-14% p.a. as compared to the Personal loan whose Rate of Interest is ranging from 15-20% as well as higher Processing Fees.

So if you need personal loan for your personal use like sisters or daughters marriages etc. you can go for home Loan Top up on the existing Loan or loan against property as the same is much cheaper than the personal loan & very easy to process.

If you already have home loan you just need to approach your existing financer for top up on the same. The financer will provide you the loan faster as the property is already mortgaged to them if the financier have margin for the same. Since the end use of the loan is different & not for home purchase or construction, obviously the rate of interest for the top up loan will be higher. However the interest rate on your home loan portion will be same as of earlier & will not be effected by your top up loan interest rate. Financer will just treat those as two separate loan account though the property is same.

Same way if a person does not have any loan on his home can approach financers for his/her business loan/ personal loan needs by offering house as mortgage for cheaper rate of interest.

[For any query on the said matter write your query to Housingfinance.advisor@gmail.com]

Home Loan Calculator

Home Loan Calculator

Prepayment charge on Home Loan

Prepayment Charge

RBI as well as NHB (National Housing Bank) has abolished prepayment charge/penalty on prepayment of home loan from this April 2012 onwards. Some Banks were charging 1-2% penalty on prepayment of their home loans.

Now from April 2012 onwards Bankers are bound to waive the prepayment penalty on pre payment of Home Loans. The borrowers on floating rate of interest will need not to pay prepayment charge whether its paid from own source or it’s a takeover by any other banks. However borrowers on fixed rate of interest would get this benefit only on payment from its own sources.

The borrowers on fix-o-floaty scheme (where interest rate is fixed for certain period & floating thereafter) will be considered as fixed interest rate borrower without considering the fact that whether the borrower is at the time of prepayment is under fixed or floating rate of interest. Therefore they will get the benefit of prepayment charge abolishment only if they pay the amount from their own sources.

The borrowers with good track record & paying a high floating rate of interest, mainly the borrowers who borrowed long time back, can consider for takeover of their loan from any other bank to minimize the interest burden. By the same time borrowers with idle money in hand can consider for prepayment to utilize the idle money by saving interest on their home loan.

For any query on the above article mail us at housingfinance.advisor@gmail.com

Average Property Price in Mumbai

Average Property Price in Mumbai

Average Residential Apartments Price in Delhi NCR

Average Residential Apartments Price in Delhi NCR

Special Rate of Interest from LICHFL for LIC Policy Holders

Special Rate of Interest from LICHFL for LIC Policy Holders

LICHFL is offering 25 basis point off on their Floating Interest Rate for the customer having LIC policy of Rs.15 Lakh or more. Therefore LICHFL will charge 0.25% less Interest rate from the customer who is having a policy from LIC of Rs.25 Lakh or more.

Average Property Rates in Delhi NCR

Source: Times of India, 30th June, 2012

Some Queries of Readers on CIBIL

Some Queries of Readers on CIBIL

Is CIBIL a list of defaulters?

No. CIBIL only maintains account information of various loan customers and credit card customers irrespective of the fact whether they are defaulters or not. The information comprises their name, address, monthly repayment track record, outstanding amounts, etc.

  

Does a bank report the names of all customers' to CIBIL?

Only the names of the borrowers i.e. those customers who have availed of a loan or a credit card from a CIBIL member are reported to CIBIL.  Details of liability accounts such as savings, fixed deposits and recurring deposits are not sent to CIBIL.

  

On what segments does CIBIL provide a credit report?

CIBIL is a repository of credit information and in the consumer segment it provides information on the various loans availed of and cards held by an individual from a member bank. Its commercial report covers the credit availed of by non-individuals.

What is the content of a CIBIL report?

CIBIL only reports loan and credit-card information such as repayment track, loan type, amount outstanding, loan amount disbursed, various dates, etc. The report also contains a customer's personal information like name, address, date of birth, phone number(s), passport number, voter's ID number, PAN, etc. In a commercial credit report the inputs are similar but include some additional details pertaining to the commercial entity like legal constitution, registration number, etc. The credit report does not provide any opinion or comment on whether a loan should be extended to a customer. It reports the facts that its member banks and financial institutions have reported.

  

Can a customer's name be removed from CIBIL's database?
Member banks contribute to CIBIL on a monthly basis data of all their customers who maintain a loan/credit-card account with them. Hence a customer's name cannot be removed from CIBIL's database.
If a loan is denied to a customer by one bank on the grounds of the CIBIL report, will it be denied by other banks too?
Approval or rejection of a credit application depends on the bank's policies. Rejection by one bank on the grounds of the CIBIL report might not imply rejection by another bank. CIBIL do not keep any track of the loan rejections by any banker on their credit report.

  

If a customer's family member has defaulted, will it affect the customer's status in CIBIL's records?

The CIBIL report has information of loan/credit details of the borrower only. Therefore, for a retail customer, it would not matter if someone in his/her family has defaulted. If the customer's repayment track record is okay, his/her credit score will not be affected by that of his/her family members. However if he/she has stands guarantor for the said loan then it will appear in his/ser CIBIL report. Whether loan track of any loan appears in the CIBIL report if the customer stands guarantor for the said loan Yes, The track of the loan will appear in the Guarantor’s Credit report & a bad track record of that loan may arrive into a rejection of loan by banker. If they found that the said loan may becomes future liability of the guarantor.

 What is Credit Score :

 The credit history & repayment behavior of a customer is translated into a number developed by CIBIL, called 'credit score' ranging from 300-900. It is an indicator of the credit-worthiness of a customer. It predicts the likelihood of a consumer defaulting on a payment. A borrower who is more financially disciplined will have a higher credit score. Higher credit scores are better.

  

How Does a Score Is Related to Loan Appraisal :

A strong credit history & a higher score will get you better credit terms - better loan amounts & attractive rates of interest. If you have defaulted on any payment, then your credit history will be impacted and it may limit your ability to get a new credit product, or sustain the current product

What if a Bank has rejected my loan application on account of unfavorable CIBIL report / score:

·         If the bank is rejecting a loan on the grounds of the CIBIL report being unfavorable, then you can ask your bank for a copy of your CIBIL report or purchase the same from CIBIL & if any error is there apply to CIBIL for correction of the same otherwise try to improve your credit history.

How CIBIL get & share Credit information of consumers

How CIBIL get & share Credit information of consumers

CIBIL collects credit information of the customers of each member financial institutes & get it compiled by its own. CIBIL share the credit report of consumers with in its member group only. The Credit Information Companies (Regulation) Act, 2005, and various Rules and Regulations issued by Reserve Bank of India has empowered CIBIL or (Credit Information Bureau (India) Ltd to collect the data from various types of credit grantors (i.e. lenders). and then share the same within the group.   The legislation has enabled banks to submit data to CIBIL without obtaining borrower consent. This has enabled CIBIL to tracks repayment history of bank customers loans, credit cards and further banking finances. Data sharing is based on the Principle of Reciprocity, which means that only Members who have submitted all their credit data, may access Credit Information Reports from CIBIL. The relationship between CIBIL and its Members is that of close interdependence.

For credit grantors to gain a complete picture of the payment history of a credit applicant, they must be able to gain access to the applicant's complete credit record that may be spread over different institutions. CIBIL collects company and consumer credit-related data and collates such data to create and distribute credit reports to Members.

Thus, we can say that CIBIL collects commercial and consumer credit-related data and collates such data to create and distribute credit reports to Members.   (A Credit Information Report (CIR) is a factual record of a borrower's credit payment history compiled from information received from different credit grantors

Member banks contribute to CIBIL on a monthly basis data of all their customers who maintain a loan/credit-card account with them. You may not get your payment updated with CIBIL immediately after your payment since its update their data on the basis of monthly report of members.

Can a customer’s name be deleted from CIBIL?

No, since bankers share credit data monthly with the CIBIL so, a customer's name cannot be removed from CIBIL's database.

How to Own your CIBIL Report

How to Own your CIBIL Report

There is a procedure for purchase of one's own CIBIL report so that before you apply for loan, you are aware of the same & you may get the errors rectified, if there any, before you’re your lender seen the wrong credit report of yours. .  You can visit the following link to buy the report from CIBIL https://www.cibil.com/online/credit-score-check.do

Since April 2011, Credit Information Bureau (India) Ltd (CIBIL), India's first credit information company, has allowed consumers to purchase their "CIBIL TransUnion Score" directly from CIBIL & is now available to consumers for Rs 470.

The very purpose of sharing the CIBIL report with consumers is to help them to assess their own credit history better and enable them to 'see themselves as lenders do. Knowing their CIBIL TransUnion Score will enable consumers to better manage their credit history, avail speedier access to credit and derive benefits associated with good credit history. The score is provided along with the CIBIL Credit Information Report (CIR). The TransUnion Score is a three-digit numeric summary (ranging from 300 to 900) of a consumer's credit history, compiled from information received from credit institutions who are members of CIBIL.

  

An individual's score provides a credit institution with an indication of the "probability of default" based on his/her credit history. It helps in estimating the likelihood of repayment of their loan based on the individual's past pattern of credit usage and loan repayment behavior.    The closer the score is to 900, the more confidence the credit institution will have in the individual's ability to repay the loan and hence, the better the chances of his/her application getting approved.

Consumers can pay for availing their TransUnion Score by following an online payment procedure or through a demand draft. The higher the score, the more favorably it is viewed by credit institutions. However, every institution has its own benchmark of what constitutes a good credit score & sometimes they generate CIBIL without score which gives just the track record & they used to analyse the same at their own. CIBIL does not recommend any cut-off score loan application eligibility.

CIBIL benefits both credit grantors and consumers by collecting, analysing and delivering information on credit histories of millions of borrowers. It provides its members with information on both consumer and commercial borrowers, thus enabling them make sound credit decisions across both individuals and businesses.