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Annexure A

HOUSING LOAN
1. Eligibility
1.1 All permanent employees of the Board upon joining the services of the Board.
1.2 In case both the husband and wife are employed in the Board, both shall be granted housing
loan for purchase of house separately or they shall be allowed to pool their housing loan to
buy one house subject to fulfillment of other prescribed eligibility conditions.
1.3 In such cases advances shall be sanctioned to the spouses separately but within their
admissible amounts.
2. Purposes
2.1 To acquire a plot of land with the intention of constructing house/s thereon.
2.2 To construct a house on a plot of land already owned or acquired or obtained on lease for
not less than 30 years, solely by the employee or his/her spouse or jointly by the employee
with his/her spouse/any other person;
2.3 To acquire a plot of land and construct house thereon;
2.4 To acquire a ready built flat/house on resale basis;
2.5 To acquire a flat/house individually through a builder/private housing society/ Government
and Statutory bodies such as Improvement Trusts, Housing Boards, Development
Authorities and Local Boards, provided their conditions do not preclude the purchaser from
mortgaging or assigning the property in favor of the Board as security for its loan and subject
to any other conditions that may be prescribed by the Board in this behalf.
2.6 To repay housing loan taken from approved financial institutions subject to the following
conditions
2.6.1 The employee had to obtain housing loan from other approved financial institution ,
since the quantum of the Boards housing loan prevalent at the time of availing of the
Boards loan was inadequate to cover the full cost of the house/flat and irrespective of
whether pari passu/second charge on the property was created with the Boards
permission earlier.
2.6.2

Terms and conditions to be fulfilled while sanctioning housing loan for repayment of
housing loan taken from the outside approved financial institutions are as under :

2.6.2.1 Housing loan will be sanctioned subject to the employees eligibility of the same,
and fulfillment of usual terms and conditions.
2.6.2.2 The Board may consider the title investigation report accepted by the said Financial
Institution, prima facie, to know the legality of the title. The correctness of the title
will be independently examined by the Board, at the time of granting the loan.
Photocopies of the documents can be accepted for preliminary scrutiny with the
Financial Institution confirming that these are true copies.
2.6.2.3 Apart from the usual documents, a confirmation/consent letter from the Financial
Institution stating the below may be obtained.
a. The original documents of the property are in their possession by way of
security for the housing loan sanctioned by them to the employee, along with
the list of documents held.
b. Outstanding balance of the housing loan sanctioned by them for acquisition of
the property and that they will effect pre-mature closure of housing loan account
standing in the name of the employee on receipt of the outstanding balance and
release the mortgage, and the documents of the property will be delivered
directly to the Board on receipt of the outstanding housing loan dues.

c. In cases where the loan sanctioned by the Board is not sufficient for taking over
the entire loan sanctioned by the Financial Institution, and part of the loan
subsists with them, the employee concerned will furnish an undertaking from
the Financial Institution, that the original documents will be handed over to the
Board and the Financial Institution will accept second/pari passu charge on the
property for its housing loan.
d. A declaration from the Financial Institution that they will not have any claim,
including claim for calculation error, or right over the property, once their dues
are paid.
e. An undertaking from the employee that he has remitted all and up to date
municipal dues/taxes/levies etc., as per the local law.
2.6.2.4 The amount of housing loan to be sanctioned will be restricted to the extent of the
outstanding balance of the principal excluding the accrued interest thereon.
2.6.2.5 Disbursement of the loan will be made directly to the financial institution concerned
and in no case payment will be made to the employee.
2.7 Housing Loan will also be granted where an employee has already a residential property
inherited/acquired without the assistance of the Boards housing loan. In such cases,
housing loan may be granted for enlarging/carrying out essential items of work, irrespective
of whether the property is owned by the employee singly or jointly with his/her spouse, or
any other person, subject to the following conditions:
i) the entire flat/house is duly mortgaged in favor of the Board;
ii) the house/flat is occupied by the employee and/or his/her dependants;
iii) it has become inadequate/unsuitable for his/her/their present needs;
iv) Housing Loan for essential items of work such as additional fixtures, fittings,
construction, etc. should be granted subject to the satisfaction of the sanctioning authority
about the need for installation of the items.
2.8 To redevelop the property acquired with the assistance of housing loan. The documents to
be obtained for the purpose are as under:
2.8.1

The acknowledgement of the debt duly stamped may be obtained from the employee.

2.8.2

The letter of consent and willingness from the earlier sureties regarding the
development proposal and construction of new building in the place of the existing one
should be obtained on the acknowledgement itself. If the said sureties are not
available, fresh sureties will have to be obtained separately.

2.8.3

Two sureties drawing more pay than the applicant may be obtained as additional
security. On completion of construction of the new building/mortgage of the property,
they will be released.

2.8.4

Valuation of the land alone without the building by a government approved valuer
should be submitted by the employee. This is to ensure that the existing security,
(which will be land without the building in such cases), is sufficient (that is the value of
the mortgaged property exceeds by one-third of the loan). While working out the
employees share in this value, factors like the number of total occupants of the new
building, area to be allotted to the employee, etc. will also have to be considered. In

case this does not meet the required standard as above, the following options for
rendering the whole security sufficient should be considered.

2.8.5

i)

An authorization from the employee authorizing the trustees of


Securities and Exchange Board of India Provident Fund to pay to the Board
from the balance in the PF account of the employee, the amount equivalent to
the loan and interest due from the employee.

ii)

An authorization from the employee authorizing the Board to adjust


the amount
of the loan and interest from gratuity payable to him/her.

iii)

An authorization from the employee authorizing the Board to adjust


the amount of the loan and interest from the leave encashment, if applicable.

All agreements entered into with the builder and the Society by the employee may be
obtained. Such agreement/s should broadly cover the following aspects:
i)

All the concerned parties agree to create mortgage/charge in favour of the


Board over the existing property, for the amount of housing loan availed by the
employee. The Board to have charge over the undivided interest in land and all
the developmental rights are subject to mortgage rights of the Board.

ii)

The Board can exercise all its rights and claims over the property, and the
builder and the Society have agreed to honour the Boards rights, claims even in
the reallotted schedule of the property, which will be duly communicated to the
Board.

iii)

The parties have agreed to inform the Board regarding reallotted flat and it
will
be ensured that the total area of the new flat will not be less than the existing
flat/house mortgaged to the Board.

iv)

The builder confirms clearly that he has not taken any loan from any
financial
institution, bank, or any other public body, for the purpose of construction of the
building against the security of the mortgage of the land and building and has
not created any encumbrance on the said land

2.8.6

The employee should be asked to furnish Advocates opinion regarding the title to the
property/flat in question and the validity of the mortgage that will be created in favor of
the Board along with clarifications on the existing encumbrances, if any, permissions,
certificates, approvals, the requirements under various local and other laws.

2.8.7

A certificate from the Builders Architect should be obtained clearly certifying that the
construction of the flats/buildings is being carried out strictly as per the sanctioned
plan duly approved by the Competent Authority viz. concerned Municipal Corporation
etc. and that all the conditions imposed/stipulated in the sanctioned plan have so far
been complied with and will be complied with and that there is no other impediment or
reservation against the proposed construction of building/s.

2.8.8

Copy of approved Building plan of the Competent Authority duly certified as true
copy by the Architect/Civil Engineer should be obtained.

2.9 (A) Additional Loans

Additional loans can be granted upto a maximum of four occasions during the entire
service period for the properties acquired with the help of Boards Housing Loan for any
of the following purposes:

2.9.1

Cost escalation
To meet the escalation in cost of construction of the house as per original plans if the
applicant is not able to meet the same with the help of original loan and his/her own
resources. Such applications should be submitted along with a supplemental
agreement between the builder and employee or builder and society for the amount of
escalation in cost accompanied by a certificate from the Architect/Engineer giving the
break-up of completed and yet to be undertaken items of work and should be made
not earlier than six months and not later than twenty four months from the date of
disbursement of the first installment of the original loan except where this period has
been reduced or extended by the Board.

2.9.2

Enhanced eligibility
To meet the total cost of acquisition of a house property if the applicant has become
eligible for a higher loan limit either on account of a revision in his pay or on account
of an increase in the quantum of loan subject to his specifying the reasons to the
satisfaction of the Board, for not being able to raise the funds as declared by him/her
in the original loan application.

2.9.3

Installation of essential items


To install additional fixtures, fittings, etc. in the flat/house, if these were not included in
the original costs and subsequently, it has become necessary to undertake the same
but the employees own resources are not sufficient to meet their cost, provided the
Sanctioning Authority is satisfied about the need for installation of the items. It may be
ensured by the Loan Sanctioning Authority that the additional loan is granted for
certain essential items which have not been included on an earlier occasion. Housing
loan for essential items of work can be given on either of the properties
(original/additional). In the event of any doubt regarding the essentiality or otherwise
of any items of work for which employee has applied for additional housing loan, a
reference may be made to the Facilities Management Department for their comments
and action may please be taken accordingly.

2.9.4

Enlargement of existing house


Loan for enlargement of the residential accommodation should be granted only after
the construction is completed in all respects and a valuation/completion certificate has
been produced by the employee in that regard. Requests for providing an additional
kitchen while undertaking enlargement of the existing house may be considered
favourably depending on the merits of each case, to enable the employee to
accommodate his/her growing family in the said accommodation, provided the plans
have the approval of the Competent Authority.

2.9.5

Loan for construction of garage after construction of the house can be allowed as
additional loan for enlargement, subject to the Plan for construction of garage being
approved by the Competent Authority. If the garage or parking space is allotted by the
builder and was not covered in the original agreement executed with the builder, then
a supplementary/ fresh agreement will have to be entered into for the same.

2.9.6

Payment of Stamp duty, Registration Charges, Incidental charges for Development


and Betterment of the area and cost of installation of Electricity Transformers.
Additional loan can be sanctioned for the above charges provided these were not
taken into account at the time of sanctioning the original housing loan and subject to
production of satisfactory documentary evidence for payment of the same. Employees
may be sanctioned additional housing loan to meet the pro rata cost of the installation
of electricity transformer for the building(s) duly supported by a demand notice issued
by the builder/developer in this regard, provided there is a clause in the Agreement of
Sale submitted by the employee to the effect that transformer charges are required to
be borne by the purchaser of the flat, in addition to the agreed cost of the flat.

However, additional housing loan will not be granted towards electric meter deposit
etc.
2.9.7

Not for repayment purpose.


Except for the cases as mentioned in para 2.6 above, no housing loan, either initial or
additional, will be available either for repayment of any private or institutional loans
availed of by the employee or for replenishing his/her Provident fund balances.

2.9.8

For repairs and renovations of existing house.

2.9 (B) Grant of housing loan for acquiring an additional housing accommodation
Housing Loan will be granted for acquiring an additional accommodation without having to
dispose of the present accommodation subject to compliance with the local laws.
2.9 (C) Conditions in respect of Additional Loans
Additional loans will be granted subject to the following conditions
i)

The quantum of the loan taken together with the amount already sanctioned and
availed should not exceed the eligible loan limit of the employee.

ii)

Housing loan for acquiring an additional accommodation will be granted only once
in the service period of the employee.

iii)

The request for grant of additional loan should be genuine and need based.

iv)

The additional loan liability should be within the repaying capacity of the
employee.

v)

Employees availing of additional loan for enlargement of the existing


accommodation for the second time will forfeit their eligibility for housing loan for
acquiring an additional accommodation.

3.0 Bridge Loan


Employees are eligible for housing loan only to the extent of actual requirements and not for
payments made by them in anticipation of the sanction unless an express permission has
been obtained from the Board to avail of a bridge loan that is to be repaid from the housing
loan as and when sanctioned. If due to difficulties at the time of acquiring a housing
accommodation at some place, employees are not in a position to obtain Boards prior
permission for availing of a bridge loan in certain unavoidable circumstances, the
sanctioning authority may grant post facto approval for the bridge loan availed of by the
employee. Prior or post facto permission may be granted subject to the conditions laid down
in this respect as follows:
i)

The necessity for availing of the bridge loan should be clearly


established/supported by proper documentary evidence. An affidavit from a private
lender stating that he has no claim or any right/title and interest in the said property
should be submitted. Such loans should be raised as purely temporary finance only for
making immediate down payment required by the vendors for booking the plot or flat for
which the housing loan is applied.

ii)

No charge should be created in favor of the lender in respect of the property


proposed to be acquired.

iii)

In no case housing loan should be sanctioned exclusively for repayment of bridge


loan.

iv)

It should be made clear that permission to avail of the bridge loan should not be
construed as the Boards approval for sanction of housing loan.

4.0 Application and List of Documents:


The application along with documents to be submitted by the applicant/s to obtain
disbursement shall be as per office circular no 40/2002 dated 11.07.2002 and instructions
issued thereto by Establishment Division from time to time.
5.0 Disbursement of Loans
5.1

Loans for acquisition of land either on ownership basis or on long lease basis
The loan that has been sanctioned for the purchase of land should be disbursed
directly in favour of the vendor either in one lump sum or in installments as per demand
notices. In the case of plot loan, construction should commence within a reasonable
period from the date of disbursement of land loan. The applicant should furnish
adequate proof, wherever necessary, to satisfy the Board that the acquisition of the
land will be completed without any delay or difficulty.
5.2 Loans for construction of house on land already obtained.
The first installment of an amount equivalent to 30% of the loan sanctioned may be
disbursed to the employee on its/his mortgaging in Boards favour, the land along with
the house/s to be constructed thereon, where such mortgage is permitted under the
terms governing the interest in the said land. In cases where such terms do not vest
the ownership of the land in the purchaser until a house is constructed on it, the
employee should execute an agreement with the Boards agreeing to mortgage the
land together with the house/s to be built thereon as soon as the construction of the
same is completed. The second installment equivalent to 40% of the loan sanctioned
may be disbursed when the construction of the house/s has reached plinth level, upon
the employee furnishing a certificate from its/his Architect/Engineer to that effect. The
balance of the sanctioned amount may be disbursed when the construction of the
house/s has reached the stage of completion on the demand being duly supported by
a certificate from the Architect/Engineer as per the specification given under the
relevant rule. Stage of completion for this purpose means construction with all walls,
frames of doors and windows fixed and roof slab cast, leaving internal and external
sanitary, plumbing and electrical installation, plastering, flooring and shutters for doors
and windows yet to be done. The balance can be disbursed provided the Board is
satisfied that the development of the area in which the construction is undertaken is
complete in respect of amenities such as water supply, roads, drainage and sewerage
or is likely to be completed within a reasonable time.
5.3 Loans partly for purchase of land and partly for construction.
In all cases where part of the loan is given for purchase of land, the land must be
purchased and sale deed/true copy thereof produced to the Board for inspection
within two months of the date on which the loan amount is paid, failing which the
employee will be liable to refund the entire amount to the Board with interest at the
prescribed rate, unless an extension of time is granted by the Board. The balance of
the sanctioned loan shall be disbursed in stages as mentioned at 5.2 above, after
deducting the amount disbursed for the purchase of the land from the total amount
sanctioned.
5.4 Loans for acquisition of flat Disbursement direct to the vendor.
Disbursement of loan will be made directly to the statutory body/private
builders/private housing society/vendor, either in one lump sum or in installments as
per demand notices/schedule of payment drawn up in the letter of allotment or
agreement, duly supported by a certificate from the Architect/Engineer as to the stage

of construction and that the construction of the building is strictly in accordance with
the sanctioned plan. However, in the case of acquisition of property through statutory
bodies, the production of such a certificate need not be insisted upon. Before each
such disbursement, the Board may call for further documents wherever considered
necessary, in addition to the usual documents including the receipt for the earlier
payment made.
5.5 Loans for enlargement/essential items
The amount of loan sanctioned may be disbursed in two installments, on the
employee executing an agreement for the purpose of creating mortgage of the
property in favour of the Board. Bills/Receipts duly supported by a certificate from the
Architect/Engineer about the stage of completion of enlargement and proper utilization
of the amount for essential items of work may be obtained before disbursement of the
second installment. Similarly, after disbursement of the second installment, the above
documents may be obtained and verified by the Board and kept in safe custody.
5.6 Disbursement of additional loans
Disbursement of additional loans will be made in one lump sum or in installments on
the lines prescribed above subject to the employee executing a supplementary
agreement and submitting the other forms and documents enumerated for the
purpose of disbursement of original loans, with a view to creating further mortgage of
the property in favour of the Board. Disbursement of additional loan for enlargement
will be made in two installments. Bills/receipts/certificate from an Architect/Engineer
should be invariably produced to the satisfaction of the Board within two months of
each disbursement, as proof of the expenditure incurred for the purpose for which the
loan was granted. While the additional housing loan sanctioned on account of
escalation in cost, installation of essential items of work and revision in pay scales is
disbursed in one installment that for enlargement is disbursed in two equal
installments.
6.0 Repayment /Recovery
6.1 While fixing the repayment installments, the following details shall be taken
into account:
The employees pay and allowances, the quantum of loan, rate of interest, repaying
capacity, remaining years of service in the Board, amount of superannuation benefits
comprising of the Boards Contribution to Provident Fund and fifty percent of the
gratuity admissible to the employee at the time of granting the loan. At the same
time, it should be ensured that the major portion of the loan together with interest
accrued thereon will be liquidated during the employees remaining period of service
in the Board.
6.2 Repaying capacity
It shall be ensured that the take home salary of the employee shall be adequate to
cover the loan installments to be recovered.
6.3 Recovery of installments
The first installment of the loan should be recovered from the month following the
month in which the first installment of the loan is disbursed. However, if the employee
is having sufficient period of service left before retirement, the recovery can start from
the month in which acquisition/construction of the flat/house is completed. It may
however be noted that such moratorium would not be allowed for a period exceeding
twenty four months from the date of disbursement of the first installment of the loan.

6.4 Repayment in case of employees with lesser service


In cases where the employees are left with a few years of service, they should be
required to repay the loan at a higher installment and recovery should commence not
later than 12 months from the date of disbursement of the first installment of the loan.
In cases where the remaining period of service is less than 10 years, no such
moratorium should be given and recovery should commence from the month following
the month in which the first installment of the loan is disbursed.
6.5 Repayment of additional loan
Repayment installments of additional loan will be fixed separately, keeping in mind the
criteria laid down for fixing the recovery installments in respect of the original loan.
6.6 Repayment during leave period
If the pay and allowances of an employee in any month are insufficient to meet the
monthly installment payable, or if the employee proceeds on leave without pay and
allowances, he should arrange to pay the full installment or any shortfall therein,
directly to the Board.
6.7 Recovery of outstanding amount through terminal benefits.
The outstanding amount of loan with interest should be adjusted at the time of
retirement, death or earlier cessation of the employees service in the Board, from the
superannuation benefits or any other amounts payable by the Board to, or in respect
of, the employee concerned. If these amounts are insufficient and the employee does
not repay the balance due to the Board, it will be open to the Board to enforce the
security of the mortgage of the property at any time thereafter and recover the
balance of the loan dues together with interest and cost of recovery, by sale of the
property or in such other manner as may be permissible under the law.
6.8 Premature repayments
The employee concerned may at any time, with the prior consent of the Board, repay
the loan in monthly installments higher than those fixed by the Board or discharge the
loan or any part thereof in one lump sum earlier than the date of scheduled
repayment. It is also open to the employee to foreclose the loan account by
withdrawal from Provident Fund account if the employee has sufficient balance to his
credit.
7.0 Time Limit
7.1

Time limit for acquisition of housing property:


The acquisition of land and the ready-built house or apartment for which individual loans
have been granted should be completed within two months from the date of
disbursement of the loan. The applicant should obtain title deed vesting in his favor in
respect of the property as was proposed to be acquired. The same is to be deposited
with the Board within a period of two months from the date of disbursement of the loan
unless this period has been extended by the Competent Authority at his/her discretion
subject to a maximum of one year.

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7.2

Time limit for construction of the property:


The construction of a house or building or enlargement of the existing accommodation
for which individual loan has been granted should be commenced within two months
from the date of disbursement of the first installment of the loan and completed before
the expiry of the period of twenty four months. Similarly, it should be ensured that the
construction of the building in which an apartment or the private housing society through
which an accommodation is proposed to be acquired, is completed within twenty four
months from the date of disbursement of the first installment of the loan.

7.3

Extension of time limit:


The Board may extend this period up to a maximum of thirty six months if it is satisfied
that the construction has been delayed for reasons beyond the control of the borrowing
employee. If construction is further delayed for genuine reasons, the Board may
consider further extension of time limit taking into account the reasons for delay in the
matter.

7.4

Plot Loan
There would be no time- limit for construction of a house on a plot of land acquired with
Boards housing loan. However, it may be ensured at the time of sanctioning the plot
loan that the employees intention is to construct a house thereon for residential
purpose, within a reasonable period and that the plot is not intended to be utilized for
investment or commercial purpose. For this purpose, a suitable declaration may be
obtained from the employee and it may be verified from scrutiny of the title deeds and
related documents that the plot proposed to be acquired is not earmarked as a
commercial property. It may be ensured that a house is constructed on the plot of land
acquired with the Boards loan within a reasonable period of time.

8.0 Insurance
All properties acquired with the aid of Boards housing loan facility should be compulsorily
insured in the name of the employee or in joint names of the borrowing employee, as
mortgager and the Board as mortgagee, within two months from the date of disbursement of
the last installment of the loan, without waiting for the completion/occupation of the
building/flat. Insurance cover in respect of the property should be taken against the risk of
earthquake fire, lightning and loss or damage by floods, depending upon the location of the
property and its vulnerability to earthquake, floods, etc. The property should be so insured at
least to the extent of the outstanding balance of the housing loan together with the accrued
interest due thereon and promptly renewed every year till such time as the entire loan with
interest is fully repaid to the Board.
9.0 Inspection
9.1

9.2

Inspection during construction/installation of additional fixtures, fittings, etc.


Inspection may be carried out by the Board only in doubtful cases. Suitable employee/s
may be deputed to conduct the inspection. However, an Architects certificate should be
obtained before disbursement of the third/final installment.
Inspection in cases of misutilisation of housing loan
If for any reason the Board has reason to believe that the facilities granted by the Board
are being misused, the Board may carry out the inspection forthwith. Such inspection
may be conducted by a suitable employee attached to the Board. Any irregularity noticed
during the course of inspection regarding under-utilisation/ misutilisation/non-utilisation

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of housing loan should be viewed seriously and appropriate punitive action should be
taken against the defaulting employee by not only recalling the housing loan liability with
penal interest in one lump sum but also by instituting disciplinary action under SEBI
(Employee Service) Regulations, 2001.
9.3

Inspection of the property situated at far off places


The employee should submit, if required by the Board, in addition to the usual certificate
from Architect/Engineer, a certificate from the village Panchayat/Local Municipal
Authorities confirming that the house has reached the stage of completion.

10.0 Alienation of property Letting out


10.1 The flat/house acquired/constructed with the aid of housing loan from the Board or
advance /withdrawal from Provident Fund, should not be utilized as a source of income,
except to such extent and for such period as the Board may approve. Hence, where
such a flat/house is not occupied by the employee or his/her family members and the
employee wishes to let it out either on lease or leave and license basis or otherwise, he
should approach the Board, the Board may permit the employee to let it out to an
employee/outside party subject to the following terms and conditions :
i)

The house/flat will be allowed to be let out only for residential and not for
commercial purpose.
ii)
The permission will be valid for three years.
iii)

The Board may maintain a copy of the letter of such permissions granted as
part of the loan records of the employee.

10.2 No partial letting out


It shall be ensured that no partial letting out of the flat/house is permitted. The entire
flat/house should be offered on lease/let out, to one tenant for residential purpose only. If
the house has more than one floor, the entire house shall be taken as one unit.
10.3 Employees may be allowed to let out any or both the properties acquired with the
assistance of housing loan, to an outsider, irrespective of the location of the property,
without additional interest being charged for the same.
10.4 Accommodating relatives
Employees may be permitted to accommodate close relatives in the flat/house
constructed with the aid of Boards housing loan, or allow them to occupy the same on
caretaker basis, for a maximum period of 6 months, provided no pecuniary gain is
derived by the employees by such arrangement.
11.0 Alienation of Property Sale of Property
11.1

Requirement of Sale Permission


Property acquired with the assistance of housing loan cannot be sold unless permission
for sale is granted by the Board. If the entire housing loan together with the accrued
interest stands repaid and the mortgage of the property has been discharged by the
Board, permission for sale is not required (Subject to 11.4 (a) and (b) below). Grant of
permission to sell the property can be considered only after five years are completed
from the date of possession of the property. This period of five years can be relaxed on
medical grounds or grounds of extreme hardship acceptable to the Board. Provided the

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employee complies with the provision/s regarding the disposal of property as required
under Regulation 66 of SEBI (ESR) 2001
11.2

Tax Liability
In case of disposal of a property within five years from the date of its possession, the
rebate in Income Tax on account of the repayment of the housing loan availed of by the
employee from the date of possession, should be added to his current years Income Tax
liability.

11.3

Utilization of sale proceeds and acquisition of further property


a) After the sale transaction is effected, the outstanding loan together with accrued
interest would have to be repaid immediately.
b) If thereafter any surplus is left from the sale proceeds, it may not be necessary to
enforce that the same should be utilized for acquisition of a new property.
c) If an employee has acquired only one property, with the help of housing loan, then
after disposal of this original property, he will be eligible for fresh loan (amounting to
his entire entitlement) in accordance with the Housing Loan scheme, subject to
utilization of the net sale proceeds of the earlier property.
d) If the employee acquires. Second property without disposal of the first property
acquired with the assistance of Boards Housing Loan, and thereafter he/she sells any of
the properties, he/she should utilize the entire amount of sale proceeds for repayment of
entire outstanding housing loan both original and additional and accrued interest
thereon.
e) The fresh loan as defined in 11.3 (c) above can be availed of only once throughout
the service period. Therefore even after disposal of fresh property an employee is not
eligible for fresh loan again, but only for additional loan for another property as
defined in (d) above. It means that his eligibility will be limited to his total entitlement less
loan availed for the original property.
f) Housing loan for second accommodation as defined in 11.3 (d) above can be
sanctioned only once throughout the service period. Therefore after having availed of
this facility, no loan can be sanctioned for acquisition of further property, even if original
or/and additional property is disposed off.

11.4

In addition to the conditions enumerated above, the following conditions


should be complied with in respect of housing loan granted for acquisition of an
additional residential accommodation:
a) If an employee has been permitted to dispose of the first (original) property after an
additional loan has been granted, the sale proceeds thereof should be utilized for
repayment of the outstanding housing loan dues in respect of both the properties. This
should be done immediately on realization of the sale proceeds. The sanctioning
authority should stipulate a reasonable time limit (not more than one month) in this
regard while giving approval for sale of the first property.
b) As mentioned at point 11.1 above an employee does not require Boards permission
to dispose off the property acquired with the assistance of the Boards housing loan
provided that the loan together with accrued interest thereon has been repaid in full and
documents have been reconveyed subject to compliance with Regulation 66 of SEBI
(ESR) 2001.

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It is possible that in some cases the employee might have obtained the housing loan for
an additional residential property, after his liability in respect of the original loan has been
fully discharged and the documents are returned to him/her. In such cases, irrespective
of full repayment of the housing loan for the first property, the employees should obtain
Boards permission for sale of the first (original) property and the sale proceeds thereof
should be utilized for repayment of the housing loan along with accrued interest thereon,
availed of for acquiring the additional property.
c) A request for grant of sale permission in respect of the original property can be
considered in the case of an employee who has availed of housing loan for acquisition of
an additional accommodation on the grounds of extreme hardship acceptable to the
Board. In such cases the documents held in the Boards custody in respect of original
property may be returned to the concerned employee subject to compliance of the
undernoted terms and conditions in addition to usual conditions applicable in respect of
sale of property. In case the housing liability in respect of first property is outstanding
and the employee intends to avail of housing loan for acquisition of another residential
property, the documents in respect of the first property will be returned to the
employees only after payment of the entire housing loan (i.e. original + additional)
together with the accrued interest thereon.
(i) The employee should utilize the entire sale proceeds against the outstanding
housing loan liabilities and no further housing loan will be granted.
(ii) The employee should submit documentary evidence for the sale proceeds of the
flat/house realized, supported by an Architects certificate to the effect that the
valuation of the flat/house sold is reasonable.
12.0 Creation of Second Charge/Pari-passu Charge
Employees who intend to avail of additional finance from approved financial institutions,
shall submit the letters / documents for creation of paripassu charge on the property, which
would be as per the office circular no 05/2003 dated 15.01.2003
13.0 Defaults and penalties
Whenever any instance of misuse of the loan is found, or wrong/false declaration/certificate
is submitted by an employee for availing of the housing loan facility, or any other type of
default is committed, punitive provisions as laid down in the loan agreement, loan sanction
letter and the Housing Loan Scheme would be enforced by the Board. Further, this should
also be taken into account, inter alia, while considering retirement reviews for the employees
concerned.
In deciding whether penal interest @ 12% p.a. on the loan amount is to be charged from the
date of first disbursement of the loan or from the date of default, the Board should take into
consideration the nature and extent of the default and take action accordingly. Whatever be
the decision, the entire outstanding balance of the loan with penal interest as imposed will
have to be refunded by the employee committing the default in one lump sum. However, if
an employee is unable to repay the amount in one lump sum on account of reasons
acceptable to the Competent Authority, the same may be recovered from his monthly pay
and allowances @ 30% of his gross emoluments. While doing so, due care may be taken to
allow subsistence take home salary to the employee concerned.
14.0 Filing and Safe Custody of Documents
Filing and safe custody of documents shall be as per office circular no 40/2002 dated

11.07.2002
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15.0 Follow up action


Vigorous follow-up action should be taken to ensure the following:
I)

Documents such as possession letter, final valuation certificate, etc., are submitted
on time after disbursement of final installment of loans. The final valuation certificate
should be scrutinized with a view to ensuring that there is no wide variation between the
estimated cost of construction indicated by the employee in the housing loan application
vis--vis the actual cost indicated in the final valuation certificate.

II)

In case of an employee occupying staff quarters/lease flat, the accommodation is


vacated soon after acquisition of his/her own property at that centre, unless specifically
permitted by the Board to continue occupation of the Boards quarter/leased flat.

III)

Employees should be issued housing loan balances statements as at the end of


June every year, with a request to bring discrepancy, if any, to the notice of the Board.

The above mentioned terms and conditions shall be read in conjunction with the provisions with
regard to Housing loan specified vide earlier circulars issued by SEBI from time to time.

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