LIC HOUSING FINANCE

BACHELOR OF MANAGEMENT STUDIES

SEMESTER-V
SUBMITTED
IN PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE AWARD OF DEGREE OF
BACHELOR OF MANAGEMENT STUDIES
BY
ANIKET RAMCHANDRA MALUSARE
ROLL.NO.-551615
MODEL COLLEGE OF SCIENCE AND COMMERCE
CHINCHPADA, KALYAN (E)

DECLARATION

I , ANIKET MALUSARE the student of T.Y.B.M.S Semester v (2016-2017) hereby

declared that I have completed the project on LIC HOUSING FINANCE. The
information submitted is true and original to the best of my knowledge.

Signature

Aniket Malusare
Roll no.551615
Model College Of Sci. & Commerce
Chinchpada, kalyan(E)

ACKNOWLEDGEMENT
To list who all have helped me is difficult because they are so numerous and the depth is so enormous.
I would like to acknowledgement the following as being idealistic channels and fresh dimensions to the
completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this project.
I would like to thank my Principle, Mr. Bramhavale for providing the necessary facilities required for
the completion of this project.
I take this opportunity to thank our Coordinator Prof. Asha Jain for her moral support and guidance.
I would also like to express my sincere gratitude towards my project guide Prof. Asha Jain whose
guidance and care make the project successful.
I would like to thank my college library, for having provided various reference books and magazines
related to my project.
Lastly, I would like to thank each and every person who directly and indirectly helped me in the project
especially my parents and peers who supported me throughout my project.

INTRODUCTION OF HOUSING FINANCE :Housing being one of the three basic needs of life always remains in the top priorities of any
person, society and economy. As a human being, an individual needs his own space and privacy,
which can be provided by the ownership of a house. The home is the basic unit of the society.
Home provides a platform to the family and the family is the most important social institution,
which leaves its imprint on an individual for whole life. Thus housing deserves significant
attention in the context of developing policies and strategies for human development. But still the
majority of human
populace lives in slums, shanties and temporary shabby shelters in rural areas.
The shortage of housing is a big impediment in the healthy development of an
individual and consequently the society, and the nation. The problem of space, privacy, security
and sanitation leads to social, economic and environmental degeneration. The perpetual strife for
space and house-ownership leads to personal and social disorganization, which is detrimental for
the society and the economy. A developing nation like India has to focus more on housing sector
to cater to the housing needs ofburgeoning population and to accelerate the economic growth.The housing
sector has been globally used as an engine to propel the economic growth as it generates employment and
demand in the market. Last one decade has witnessed the authorities giving significant focus on the
housing sector in India. The government of India has been trying to nurture and strengthen the housing
sector in recent times through various fiscal and legislative measures. The incentives given through fiscal
and monetary policies in tandem with healthy economic environment in India are providing boost to
housing sector.Low interest rates, reduced cash reserve ratio, low non-performing assets inhousing
finance sector and slowdown in growth of other sectors of economyhave made the housing sector more
attractive. In order to attract the customersfurther, the financial institutions have liberalised the lending
norms, reduced the rates of interest, increased the period of loan, eased the collateral requirement etc.
(NHB, 2002)

The housing finance market has been consistently exhibiting rapid growth in the past few years with an
estimated CAGR of 38%. Growth has been largely in urban areas and in the middle to high income
groups, in particular the salaried class. This growth was partly fuelled by the entry of commercial banks
seeking asset growth in a sluggish business environment coupled with the tax incentives on housing
loans. The banks, with their lower cost of funds, extensive branch network, capability to provide a range
of personal banking services and aided by the average low default rates inhousing finance, could expand
the market considerably.
Despite the phenomenal growth of housing finance, outstanding housing loans constitute a mere
estimated 4% of the countrys GDP, much lower than other comparable countries such as Korea, China,
Thailand,Malayasia, Brazil. Widespread access to long-term, competitively pricedmortgages has
revolutionized housing in high-income industrialised countries
over the past 60 years. An overwhelming share of households in these countries has now acquired homes
with market-rate mortgages from private sector financial institutions. In the context of the apparent
potential for housing finance in the country, the issues of affordability, new and customised products,
delivery channels, policy interventions and their sequencing assume relevance. While the expanding
middle and higher income groups may continue to access conventional housing finance,
increasingattention should be paid to the needs of the unserved and underserved. Thischapter has
attempted to outline the relationships between housing policy and the development of housing finance
system in the country. It has emphasized that while large welfare gains can be expected by the
development of housing finance systems, housing finance systems alone cannot be expected to meetthe
task of housing the poor. Other mechanisms, including subsidies, microfinance, and the development of
other tenures need to be considered.

HOUSING SCENARIO IN INDIA

Housing being one of the basic needs of human beings assumes multifaceted significance in terms of
degree of economic well being and human development as well as socio-cultural progression and political
stability. The development of satisfactory housing has always been the priority of both the central and
state governments. A rapid rise in population results in higher demand of dwelling units for residential
purposes. This coupled with the growth in household formation and increased urbanization in search of
employment opportunities has resulted in severe pressure on urban infrastructure in recent years. The
consequence has been overcrowding and unhealthy living environment, shortages of basic amenities and
finally social and economic deprivation.
In 2001, India had a total housing stock of 187.16 million dwelling units of which 52.06 million was in
urban areas and 135.1 million in rural areas. Of the total urban housing stock, 82 per cent formed pucca
houses, 13.4 per cent semi-pucca, and 4.8 per cent kutcha houses (NSS Report, 2003). The percentage of
households living in single room accommodation in urban areas declined from 39.6 per cent in 1991 to
36.5 per cent in 2001. As regards tenure status, 63.1 per cent lived in owned accommodation in 1991
and85.05per cent in 2001. Thus the proportion of those living in rented accommodation has come down
from 46.5 per cent to 11.78 per cent duringthe last decade. The estimated shortage of housing in 2001 was
of the order of22.1 million units, comprising 8.89 million units in urban and 13.21 million in rural areas.
As the country enters an era of economic growth, economic liberalization and prosperity, the country
seem not yet ready to house the growing population and provide work and services and environmental
infrastructure for all. The twin problems of affordability and availability prevail in most part of the
country.

INVESTMENT IN HOUSING DURING FIVE YEAR PLANS

PUBLIC INVESTMENT
AMOUNT
% to TOTAL

PRIVATE INVESTMENT
AMOUNT
% to

FIVE YEAR

TOTAL
TOTAL

PLANS
1951-56 (1st )
1956-61(2nd)
1961-66 (3rd)
1968-74 (4th)
1980-85 (6th)
1985-90 (7th)
1992-97 (8th)
1997-2000 (9th)
2002-07 (10th)

250
300
425
625
1491
2458
31500
52000
415000

22
23
27
22
8
8
32
34
57

900
1000
1125
2175
18000
29000
66000
99000
311300

78
77
73
78
92
92
68
66
43

INVESTMENT
1150
1300
1550
2800
19491
31458
97500
151000
726300

HOUSING FINANCE SYSTEM IN DEVELOPING COUNTERIES:Over the last few decades, comprehensive studies of housing markets and housing finance systems
across the world have created a shared body of knowledge on what constitute effective and non-effective
housing policies and housing market regulations.
In particular, programmes to finance social housing are perceived differently today than a few
decades ago, both in developing countries and advanced economies. The focus is on creating wellfunctioning housingmarkets and the expansion of a safe and sound housing finance system.
Housing finance systems in many developing and emerging economies share several characteristics. First,
most housing finance systems are, institutional patchworks that comprise private sector lenders as well
as several government-managed housing finance institutions or programmes (Renaud, 1996). They
operate in the form of special government housingbanks or special housing funds. Their reliance on the
supply of low costfunds from payroll levies and central government transfers stifle competition in the
financial system. The constant resource top-ups take away any desire to innovate by developing new
financial instruments, look for new client groups and offer bespoke finance packages. Second, in most
developing countries, only a minority of households can afford debt service on the least expensive
contractor-built unit available. In Bolivia, Colombia, Suriname, andVenezuela, 60 to 80 percent of
households in these countries lack the income to qualify for a loan for the least expensive contractor-built
unit available.
Third, Traditional housing programmes in developing countries have produced complete units that are
highly subsidised, high-cost solutions. Subsidies have gone largely to professional and middle-class
householdsthrough political influence despite a rhetoric that supposedly targets low income families. In
more recent versions, the government funds the private sector to build these units and channels loans
through a private sector financial institution, which then originates below-market interest rate loans to
developers and to households (Ferguson, 2001).

Increasingly, developing countries move towards a more integrated modern housing finance system. First,
there is a trend to increasingly rely on capital markets as sources of funds for primary housing finance
lenders ratherthan on depository institutions alone. Second, it has been shown that, if assistance to low
and moderate income households is necessary, subsidy programmes are best designed to allow
households to participate in thehousing market, rather than provide public housing.
Third, support to moderate income borrowers to acquire loans through the private financial sector has
proven to be most efficient if it is provided as a direct demand subsidy in combination with other
facilitating measures and incentives to the banks rather than as interest-rate subsidies through segregated
government lending programmes and institutions.
Fourth, for those households who cannot use the private sector for their housing finance needs, even with
incentive programmes, special social housing funds or lending mechanisms are used that provide shorterterm and smaller loans, at concessionary rates if necessary, but which are clearly separated from the rest
of the housing finance system. Both types of finance subsidies are set up to be efficient, transparent and
well targeted to those who cannot participate in the formal housing
finance sector without such support (Hoek-Smit, 1998)

HOUSING FINANCE SYSTEM IN INDIA

The formal housing finance sector in India had its beginnings in the 1960s when the Government, through
its various schemes for public and lowcosthousing, was the sole provider of housing finance. The
Governmentimplemented many of its schemes through state housing boards that allocated serviced land
and housing to individuals based on social welfare objectives, not commercial considerations. The 1970s
marked two significantdevelopments in the housing finance sector. A public sector housing company,
HUDCO, was established in 1970, and the first private housing finance company (HFC), HDFC, was
established in 1977. HUDCO served asthe principal institution to finance Government-supported housing
programmes, whereas HDFC introduced mortgage financing to India and has become the largest and most
successful HFC in the country
The late 1980s heralded a number of important events, beginning with the formation of NHB in 1988 as
an apex bank for housing finance. NHBs responsibilities include establishing guidelines for Housing
Finance Institutions (HFIs) to ensure sound financial management, refinancing mortgage loans made by
qualified HFIs, and mobilising formal sector resources into housing finance. The draft National Housing
Policy (NHP), calling for the removal of many legal and regulatory constraints in the housing sector, was
also tabled in Parliament in 1988, and ultimately adopted in 1994. Also in the late 1980s, the Government
directed insurancecompanies, commercial banks, provident funds, and other agencies to invest a part of
their incremental resources in housing. Based on the success of HDFC, a number of new HFCs were
subsequently established during the 1980s to enter into the mortgage lending market.
The 1990s witnessed significant changes in housing policy starting with the NHP, which envisaged the
Governments role as a facilitator of housing activity, rather than one of provider; this position was
reiterated and elaborated in the National Housing and Habitat Policy (NHHP) of 1998. As a result,
Government contributions to housing finance have fallen to less than 9%, compared with 23 % four
decades ago. The liberalisation of thefinancial sector has also accounted for an increase in mortgage
lending byformal finance institutions not traditionally in the housing sector, most notably commercial
banks and non-bank financial institutions.

Based on datafrom the National Sample Survey Organization, however, the share of formal sector
housing finance varies from only about 22 percent for new houses in urban areas to less than 8 % for
additions and alterations in rural areas.
By comparison, informal sources contribute as much as 79 percent of thefinance for new
construction in urban areas and 88 percent in rural areas. Another important event in the late 1990s, which
has significant implications for the future development of Indias housing finance sector, was the
structuring of a pilot mortgage securitisation issue that is expected to raise about Rs.60 crores.
Although there were a large number of agencies providing housing finance to the housing sector,
there was no well established finance system till the 1990s. It is, therefore, imperative that an effective
housing finance system which is an integral part of the main financial system be created for the
development of housing and real estate sector in the country. The setting up of the National Housing Bank
(NHB) as a fully-owned subsidiary of theReserve Bank of India as an apex institution paved the way
for theimplementation of housing finance system in India. The implementation of housing finance system
sees the emergence of several specialised financial institutions which have strengthened the organisation
of the housing finance industry in the country.

COMPANY PROFILE
LIC HOUSING FINANCE
LIC Housing Finance Ltd is one of the largest Housing Finance Company in India. The company is
engaged in the business of providing loans for purchase construction, repairs and renovations of houses/
flat to individuals, corporate bodies, builders and co-operative housing societies and has its operations
within India. They provide loans for homes, construction activities, its corporate housing schemes around
89% of the loan portfolio derived from the retail segment and the rest from the large corporation clients.
The main objective of the company is of new / existing (resale)flats /houses. The company also provides
for purchase/ property for business / personal needs and gives loans to professionals for purchase/
constructions of clinics/ Nursing homes / Diagnostic Centres / office space and also for purchase of
equipments. The company through their subsidiaries LICHFL Care Homes Limited, is engaged in the
business of setting up, running and managing assisted living community centre/ care homes for senior
citizens.
LICHFL Financial Services Ltd., is engaged in the business of marketing various financial products and
services, and LICHFL Asset management Company Ltd., is engaged in business of managing, advising,
administering, mutual funds, unit trusts, investment trusts and to act as financial and investment advisers
and render financial advisory services.
The company possesses one of the industrys must extensive marketing network in India. The company is
having their registered and corporate office at Mumbai. They have 7 regional offices, 13 back offices and
190 marketing units across India. In addition the company has appointed over 1241 direct sales agents,
6535 home loan agents and 782 customer relationship associates to extend their marketing reach. They
have set up a representative office in Dubai and Kuwait, Qatar and Saudi Arabia.
LIC Housing Finance Ltd. Was incorporated on June 19, 1989. The company was promoted by LIC of
India and went public in the year 1991. The company is recognised by National Housing Bank and listed

on the National Stock Exchange & Bombay Stock Exchange Limited and its shares are traded only in
Demat Format.
In the period of 2001, the company launch their new scheme called GRAHA VIKAS. In the year 2002,
the company signed a deed of assignment to take over individual housing loan portfolio of Citibank.
In the year 2003, they launch a new project for elderly people called LICHFL Care Homes. In October
2005 the company started offering of New Graha Laxmi for women special housing loans against the
security of certain approved financial asset like Bank Fixed Deposit, National Saving Certificates and
Life Insurance Policies. In the year 72006 the company introduced new Griha Jestha for senior citizen for
buying unit of LICHFL Care Homes Ltd.
In May 2007 the company launched maiden Fixed Deposit Scheme. In October 31, 2007 the company
incorporated LICHFL Financial Services Ltd. For undertaking non fund based activities like marketing of
housing loans, insurance products, credit card, mutual fund, personal loan, etc.
In February 14, 2005 the company incorporated LICHFL Asset Management Company private Ltd., for
undertaking the business of managing, advising, administering venture funds, unit trusts, investment trust
India as well as abroad.

OBJECTIVES :
1.
2.
3.
4.
5.
6.

To study the process of home loan.

Document required for loan sanction
Documents required for loan disbursement.
Processing fees paid by customer for the processing of the home loan proposal.
To study the process of customer verification
To satisfy the process of calculation of loan disbursement on property.

RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research problem. It may be
understood as a science of studying now research is done systematically. In this various steps,
those are generally adopted by a researcher in studying has problem along with the large behind
them.
Data collection is important step in any project and success of any project will be largely
depend upon now much accurate you will be able to collect and how much time, money and effort
will be required to collect that necessary data, this is also important step.
Data collection plays an important role in research work. Without proper data available for
analysis you cannot do the research work accurately. There are two types of data collection
methods available.
DATA SOURCES:
1) PRIMARY DATA:
The information about the company is gathered from the discussion with the employees/staff.
Basically I was use primary data for that project.
2) SECONDARY DATA:
The secondary data collected
The balance sheet as on the date of 31st March 2013 for the period of
1st April 2012 to 31st March 2013.

SAMPLING SIZE:
Five cases of home loan proposal are to be studied for understanding of the appraisal of home loan. Data
collected through survey of procedure, service, etc. provided by LIC Housing Finance Ltd. By filling
questionnaire of fifty & above LIC Housing Ltd customer.
The methodology of this study has been adopted on the following basis:

Study of various journals, news & books.

Collection of primary & secondary data records of the organisation.
Analysis of the collected data for its application

SCOPE OF THE STUDY:

LIC HOUSING FINANCE LIMITED (LICHFL):
LIC Housing Finance Limited (LICHFL) as a subsidiary of Life InsuranceCorporation (LIC) was
incorporated on June 19th 1989, to accelerate the developmentof housing. LICHFL is the second largest
Housing Finance Company in India.To each one a home of his own is the main objective of
LICHFL. It renders liberal financial assistance to policy holders and others forpurchase/construction of
residential houses/flats. The following are the otherobjectives of LICHFL:
(i) To provide loans to public sector/private sector employees to constructresidential accommodation for
their employees.
(ii) To mobilize insurance linked long term savings from the public to deploysuch funds in long-term
finance in the housing sector.
(iii) To facilitate approval of builders in advance and offer them constructionfinance to enhance customer
servicing with a real estate marketinformation.

VARIOUS PRODUCTS OFFERED BY LIC HOUSING FINANCE:As per various LIC Housing Finance news, there are many products that are offered by the company ever
since it was launched way back in the year 1989. These include both deposits as well as advance scheme
that work as tool of housing finance by LIC.

REASONS FOR HOME LOAN:To own a home is everyones dream from a single room to multi-storeyed apartments, private villas,
holiday homes, second homes- the Housing market is well developed in most towns. Home loans help

you realize your own home dream, even when you are young. We help you plan your dream home as you
start your working life, by offering various options of easy instalments, Income Tax Benefits and more.
LOANS :- Loans are offered as per different target groups of consumers. Thus, there are LIC housing
finance schemes offered as loans according to different borrower category, such as :
1)
2)
3)
4)

Corporate loans
Loans meant specifically for builders as well as real estate developers
Home loan
Loans aimed at professionals

DEPOSIT SCHEME:- Deposit schemes were first launched by the company on 10th may 2007 and may
be accepted as both cumulative as well as non-cumulative deposit schemes. Terms of deposit may range
from 1year, 18 months, 2 years, 3 years as well as 5 years.
Interest under non-cumulative deposit schemes would be distributed twice a year, whereas interest on
cumulative deposit schemes would be calculated as per bi-annually compounding.
LOANS: Housing Finance by LIC:Loan schemes available with lic housing finance are customized to suit varied requirements as per
individual borrower-profile. As per official website and LIC Housing Finance news following loans are
available:
1) HOME LOANS: are offered at easy rates to both residents as well as non residents Indians. Size
up facility in items of amount of EMI amount is also available for those who wish to opt for a
steady increase in their repayment capacity during tenure if loan.
2) CORPORATE LOANS: aimed at corporate employees who have been approved by LIC and
include employees of PSUs, reputed public as well as private limited companies.
3) HOUSING FINANCE BY LIC LOANS TO PROFESSIONALS: aimed at non salaried
professionals.

SUBSIDIARY COMPANIES

1.

LICHFL CARE HOMES LIMITED:To address the crying need of housing for the senior citizen of the country, the company had
promoted LICHFL Care Homes Ltd. To establish and operate assisted community living centres.
LICHFL Care Homes Ltd. Was incorporate on 11th September, 2001. It launched its eco-friendly
pilots projects in Bangalore with cost effective independent cottages and all other on-camps
amenities, fully structured and self-contained to address every possible need of residents. It has
library, community centre, home theatre, mediation centre, and doctors on call and ambulance to
take the ailing to the nearest city Medicare centre-all that would make the lives of senior citizens

comfortable and satisfying.

2. LICHFL FINANCIAL SERVICES LIMITED:
LICHFL financial services limited was incorporated on 31st October,2007 for undertaking non
fund based activities like marketing of housing loans, insurance products, credit cards, mutual
fund, personal loan etc. it has become operational in 2008-09 and has already opened five offices
in Maharashtra and plans to open atleast another thirty offices during 2009-10.
3. LICHFL TRUSTEE COMPANY PRIVATE LIMITED:
LICHFL trustee company private limited was incorporated on 5th March, 2008 for undertaking the
business of trustee of venture capital trust, funds in India and offshore fund.
4. LICHFL ASSET MANAGEMNT COMPANY PRIVATE LIMITED:
LICHFL asset management company private limited was incorporated on 14th February, 2008 for
undertaking the business of managing, advising, administering venture funds, unit trust,
investment trust in India as well as abroad. The company would launch its operations very soon.

TYPES OF HOME LOAN:

The two most widely used types of homes loans are fixed rate loans and adjustable rate loans and
adjustable rate loans. A fixed rate loan keeps the same interest rate for the life of the loan, which means
that the principal and interest portion of the monthly payment stay the same. Adjustable rate mortgages
begin with a lower interest rate for the first few years and then adjust to market rates after the initial
period is over Caps are placed on how much the rate can adjust at any given time, as well as on how much
the rate can increase over the duration of loan. This means the principal and interest portions of the
monthly payment change repeatedly through the duration of loan. There are different types of home loans
to meet our needs. Here is a list of few :
1. Housing Loans :
This is the basic home loan for the purchase of a new home.
2. Improvement Housing Loans :These loans are given for implementing repair works and renovations in a home that has already
been purchased.
3. Construction loan:
This loan is available for the construction of a new home.
4. Extension loan:
This is given for expanding or extending an existing home. For eg. Addition of an extra room etc.
5. Home Conversion Loans:
This is available for those who have financed the present home with a home loan and wish to
purchase and move to another home for which some extra funds are required.
6. Land Purchase Loan:This loan is available for purchase of land for either construction or investment purposes.
5. Bridge Loans:Bridge loans are designed for people who wish to sell the existing home and purchase another one.
The bridge loans help finance the new home, until a buyer is found for the home.
PROCESSING FEES & STAMP DUTY :
Up to 50 lacs 10500/- + service tax (including Cersai charges)
Beyond 50 lacs 15500/- + service tax (including Cersai charges)
Intimention of mortgage 2000to 2500 (If manual 2500 & online 2000)
Memorandum of Deposit of title deeds (if 0.2% loan amount stamp paid by sub registrar

duty & stamp paper)

Loan agreement 300/- stamp paper

Affidavit sum undertaking 100/- Stamp paper

Power of attorney 500/- stamp paper
RATE OF INTEREST
SCHEME
Celebration 25
Super Fix
New fixed 10

RATE OF INTEREST
10.10%
12.25%
(up to 3 Crores)
75 lacs
>75 lacs
11.25%
11.75%

FIX FOR
2 years
Full term
10 ears

SPECIAL FEATURES:
Get sanction letter before you finalised your property
Tenor up to 30 years
Higher loan amount eligibility
Monthly reducing balance
Easy & simple documentation
No required- guarantor & insurance product
Maximum funding 85%( up to 20 lac)& 80% (above 20 lac)
FEATURES:
Home loan
Loan against property
Balance transfer +top up
Both fixed & floating rates available
Best housing finance company in country awarded by CNBC TV 18
Housing finance expertise of more than 20 years

HOME LOAN PROCEDURE

With the increasing competition in the market for offering Home loans, the otherwise tedious
process of availing loans has gone a tremendous change in the recent years. However, there is still some
process involved in the procurement of home loan. It is advisable for borrower to first look at the different
stages required for obtaining a home loan. Here is step by step procedure of procuring home loan.

Step 1: Application form

The first step involved in applying for home loan is the procurement of appliances form from the
HFC of applicants choice. The performa of applications every HFC is different from the other but about
80% information required to the furnished is the same. Along with the application form necessary
documents like address proof, age proof, proof of income, bank balance etc. are also to be attached with
the application form before it is submitted to the HFC. Along with all these documents HFC also ask for
processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.
Step 2 : Personal Discussion
After successfully filling the application form and submitting it to the authority the next step is face
to face with bank or HFC where you have applied for the home loan. The bank first evaluates the papers
submitted and summons the applicant for the personal discussion regarding the home loan applied for.
Step 3 : Banks Field Investigation

The next step is the field investigation done by the HFC or bank. They send representatives to the
existing residence of the applicants or their offices for the validation of the documents submitted. This is
the essential part for the banks to establish the trust with the applicants.
Step 4: Credit Appraisal by the Bank and Loan sanction (CIBIL)
This is the make or break stage of the process. The bank or HFC will establish repayments capacity
based on applicants income, age, qualification, experience, employer, nature of the business etc. to
access credential. The bank can refuse loan application if any discrepancy is found at this stage.1

Step 5: Offer Letter

After the sanction of the home loan, the applicant gets offer letter from the bank of HFC with the
following details. Loan amount, rate of interest, fixed or variable rate of interest, tenure of the loan,
Mode of repayment general terms and conditions of the loan, special conditions etc. If the terms and
conditions are agreed the applicants has to sign the duplicate copy of the offer letter and that is to be
submitted to the bank of HFC.
Step 6: Submission Of Legal Documents & Legal Check
The bank or the HFC now asks for the legal documents of the property involved for applying home
loan. All the legal documents of the property involved have to be submitted. The bank does all the legal
checks on the property. The documents remain with the bank until the repayment of the home loan.
Step 7: Technical / Valuation check
The banks or HFC then go about the technical valuation of the property. The experts of the bank
visit the site to be purchased and value it as per the existing rules and regulations. The valuation of the
property is the most important aspect that the bank considers before financing any property.
Step 8 : Registration of property documents
After the legal and technical valuation of the property the draft documents has to be cleared by the
lawyer and stamping and registration of the documents is needed.

Step 9: Signing of Agreement and Submitting post-dated cheques

Now it is time of signing the final agreement of the home loan. After the signing of the agreement a
bunch of post-dated cheques are to be submitted as agreement. It is time for the final disbursement of the
home loan. After the bank or HFC.

Step 10: Disbursement

It is time for the final disbursement of the home loan. After the bank or HFC ensures financing the
property is involves no risk they pay the final amount that is agreed upon. The mode of payment varies
from full to part payment. In the case of under construction property the mode is part payment and in the
case of ready possession properties disbursement is full and final.

HOME LOAN TWO STAGES

The housing finance cycle at LIC Housing Finance Ltd. is of two stages, both are important and play a
vital role in fulfilling the requirements of housing finance institution.
The two stages are as under:
1) Sanction stage
2) Disbursement stage
1.SANCTION STAGE :- It is a stage where the customer get sanction or approval that he is eligible to
take a loan of specific amount calculated on the basis of his income from LIC Housing Finance Ltd.
A.
B.
C.
D.
E.
F.
G.
H.
A.

Generation of leads/ sourcing of business

Contact & collection of documents from customer
Completion of document
Field investigation report
Verification of relationship officer
Personal discussion
Final approval or rejection by the branch credit manager
Sanction letter delivered to the customer
GENERATION OF LEADS/SOURCING OF BUSINESS:-

This is an important step in the housing finance cycle to keep the organization moving successfully. It is
essential to generate cases LICHFL uses methods to source business & generate leads.
1.
2.
3.
4.
5.

Mall
Walk-in-interview
Telephone enquiry
Customer reference
Approved project life

B. CONTACT & COLLECTION OF DOCUMENTS FROM CUSTOMER:Once the lead has been sourced the sales officer contact him & give him a list of documents long with
other corresponding information. When the documents are handed over to sales officer, he submit
documents along with the application form to LIC Housing Finance Ltd. Sales officer gives an idea about
how much loan can customer avail as per his income.
C. COMPLETION OF DOCUMENTS:The document have been collected by the sales officer hand over to the back office executive, executive
then complete documents inn special file provided for. LIC Housing Finance Ltd. In accordance with the
requirement of LIC Housing Finance Ltd.
D. FIELD INVESTIGATION REPORT:After completing the documents the back office executive ties the field investigation report with the data
compiled from the file before moving it on the next stage.
E. VERIFICATION BY SALES MANAGER:After completion of documents and filling of it, the documents are handed over to the sales manager, who
verifies the documents to check for loan analysis the strength and weakness of a case, the loan eligibility
& the requirement of additional documents. The sales manager act as a filter allowing good case to flow
through for final approval while do not fit, into the policies of LIC Housing Finance Ltd. Sales manager
make signature if the case fit into policies of the bank.
F. PERSONAL DISCUSSION :PD is an important stage in sanction process as per norms loan amount is decided on the basis of
PD with him. It helps to judge the credit worth ness of applicant which helps organisation in
future. Sales manager make signature if the cases fit into policies of the bank.
G. FINAL APPROVAL OR REJECTION BY THE BRANCH CREDIT MANAGER:The file is send to the branch credit manager for final approval after checking the file
branch credit manager take final decision of approval or rejection of the case. If the case is
rejected the documents are returned to the customer & if the case is approved then it goes to the
next step.
H. SANCTION LETTER DELIVERED TO THE CUSTOMER:-

This is the final step in sanction process after receiving the sanction letter it hand over the sanction
letter to customer along with a list of legal documents required for the next stage i.e. disbursement
stage.
2. DISBURSEMENT STAGE: It is a stage where the cheque of sanctioned amount is handover to the
customer or concerned person.
A.
B.
C.
D.
E.
F.
A.

Collection of legal documents

Completion of documents
Legal appraised
Technical appraised
Final check by the BCM
Check disbursement
COLLECTION OF LEGAL DOCUMENTS:
This is the first step towards the disbursement of cheque after sanction of the case. Already the
sales officer collects the legal documents from the customer in case of self construction & collect

it from the builder from whom the customer is purchasing the property.
B. COMPLETION OF DOCUMENTS:
Once the documents are collected by the sales officer he hand it over to the back office executive
for compilation the executive complete the documents and process.
C. LEGAL APPRAISED:The legal appraisal of a case is an important step & it done by lawyer specially appointed by LIC
Housing Finance Ltd. The lawyer verify the documents to check if the title of the property is free
& marketable from all obligation, other legal aspect is free from any fraud. Once the documents
have been verified he submit a legal report to LIC Housing Finance Ltd. The lawyer report very
essential without his approval no case is clear of negative remark mentioned by the lawyer the
case is being rejected.
D. TECHNICAL APPRAISAL:The technical appraisal is a task in which an engineer specially appointed by LIC Housing Finance
Ltd he visit the site and check the property and prepare a report and submit it to the bank. On the
basis of the report the BCM takes his disbursement decision.
1. If the property is in accordance with the plans rules and regulation approved by MNC.
2. If there are any legal and unauthorized construction on the site.
3. If the owner of the property is the same as mentioned on the legal documents
4. The extract or stage of constructions
5. The raw material etc. available on the site.
6. He checks to see the cost is being incurred on the property is equivalent to the estimate shown
by the customer.
7. He also provide an estimated date of compilation of the property

8. Checking the age and conciliation of the property in case of resale property.
E. FINAL CHEQUE BY THE BCM:The BCM makes a final check of the documents before taking his decisions. It the case is clear
than BCM send the file to operational manager.
F. CHEQUE DISBURSEMENT:This is final step in the disbursement stage. The operation manager prepare the cheque along with
the letter which is handed over to the sales offer who then five it to the customer. Disbursement of
cheque is done in accordance with the stage of construction reported by technical advisor.
The cheque are disbursed in two ways:
1. As a apart disbursement
2. Fully disbursement

LIST OF DOCUMENTS RECEIVED FOR HOME LOAN SANCTION

1) SALARIED PERSON:1. Application for completed with 2 photo duly filled & signed
2. ID proof, Pan Card, Passport, Voter Card, Employer ID card & Driving License.
3. Residence Proof : Latest Telephone bill, Bank Statement containing Address for last 6 months,
Electricity Bill, Ration card, Letter from employer.
4. Salary slips for last 3 months with seal & sign.
5. Latest form 16 with seal & sign
6. Copy of appointment letter with latest CTC & confirmation Letter
7. Original Bank statement, passbook of salary a/c for last 6 months with seal &sign.
8. Last qualification proof.
9. Previous employment details if applicant is on probation
10. LIC insurance & other insurance policy details, if any
11. Processing fees cheque.
12. All track records for 24 months for existing loans if any
13. All documents to be self attested.
2) SELF EMPLOYED/ PROFESSIONAL
1. Application for completed with 2 photo duly filled & signed
2. ID proof, Pan Card, Passport, Voter Card, Employer ID card & Driving License.
3. Residence Proof : Latest Telephone bill, Bank Statement containing Address for last 6 months,
Electricity Bill, Ration card
4. Last 3 years ITRs (SARAL computation of income, balance sheet, profit & loss a/c, TDS
certificates(if applicable) tax paid challans.
5. In case of partnership firm, ITRs for last 3 years & partnership firm.
6. In case of company Audit reports for last 3 years & partnership firm.

7. Bank Statement / Passbook of current & SB a/c for last 6 months (update)
8. Alternate business proof ( shop registration certificate etc.)
9. Processing fees cheque
10. 26 AS for 3 years.
11. IT verification
3) IN CASE OF TAKE OVER
1. Outstanding loan quotation
2. Repayment track record
3. List of document from bank
4. NOC for take over
5. Copies of property agreement
6. Sanction plan copy (blue print)
4) NON RESIIDENCY INDIAN
1. COPY OF PASSPORT, Visa, Service Contract, Salary Slip (all duly attested by Indian
embassy/ notary/ HFL officials/ bank)
2. GPA (general power of attorney in our format (all duly attested by Indian embassy/ notary/
HFL officials/ bank)
3. Bank statement for past one year of recent employment.
4. NRI bank statement for 6 months
5. See list of salaried document.
# above mentioned income document are required for the Co-applicant also if His/her income
is considered.

CUSTOMER BASIC ELIGIBILITY CALCULATION

Income
Below 20000 to 25000
25000 and above
INCOME RATIO:

Applicable FOIR
50%
60%

How We Treat Income From Other Sources ?

FOIR : FIXED
OBLIGATION TO

Source
Agricultural income (As

Eligibility %
50% of average of last2

proof
3 years ITRs and 7/12

The *
*agreement

stated in ITR)

years

extract or ownership
of the

Rental income

100% of average of last 2

Rental income

years
100% of current rental

document copy
03 ITR

from other
Lease agreement for 3 years

income as per lease

Rental income

eligibility

sources of
income

agreement
50% of current rental

Leave & license agreement

must not be

income as per lease &

copy of current period

more than
100% of

LIC/ broker commission i.e.

license agreement
50% of new business &

Certificate/ original

NSC , KVP,IVP postal

Interest/ dividend income

100% of renewal business

50% of average of last 2

commission slip of Cos.

03 years ITRs

salary income.

1) RESIDENT INDIAN SALARIED

CONSIDERATION
100%
100%
100%
100%
50%
50%
50%

2) SELF EMPLOYED- PROFESSIONAL:For calculation purpose SEPs can be classified as per following patternsa. Doctors
b. Allopathic (MBBS plan)
c. Other (BHMS, BUMS, etc.)
d. Others (CA, CWA, CS, Lawyer, Consultant, etc)
Methods used:
1. GPR Multiplier Method
2. Eligibility based on net profit

agreement
of the main

years

ITEM
REGISTERED ITEMS (PAYSLIP)
HRA
PENSION INCOME
BONUS
ANNUAL BENEFITS
FIXED REIMBURSEMENT
VARIABLE ITEM

the

TYPE
Agricultural income
Rental income
Interest/ dividend income

ELIGIBILITY
50%
100%
50%

PROOF
ITRs
ITRs
ITRs

INCOME FROM OTHER SOURCES

*Average of the last two years amount income from above sources should not exceed 50% of the total
appraised income.

DATA ANALYSIS AND INTERPRETATION

TABLE 1.
AGE GROUP
25-35
35-50
50-60
Above 60
total

PERCENTAGE
45
35
15
5
100

GRAPH:

PERCENTAGE

15%

5%

25-35

45%

35-50
50-60
Above 60

35%

ANALYSIS:
It was found that about 45% of people were between age group of 25-35, 35% were between 35-50, 15%
were between 50-60 and 5% were above 60.
INTERPRETATION :-

Thus we conclude that the average percentage of people in the above age group showed interest in the
survey of LICHFL.

TABLE 2:
ANNUAL INCOME
Below 2lacs
2-5 lacs
5-10 lacs
Above 10 lacs
TOTAL

PERCENTAGE
2
30
65
3
100

GRAPH:

PERCENTAGE
2%
3%
30%

65%

BELOW 2 LAC

2-5 LAKH

5-10 LAKH

ABOVE 10 LAKH

ANALYSIS :It was found that 2% of candidates are below 2 lakhs. 30% are between 2.5 lakhs, 65% are between 5-10
lakhs. While only 3% are above 10 lakh.

INTERPRETATION:
Therefore it can be conducted that maximum income group was found between 5-10.

TABLE 3:POSSESS PROPERTY

PERCENTAGE

YES

67

NO

33

TOTAL

100

GRAPH :

PERCENTAGE

33%

YES
NO

67%

ANALYSIS :
67% candidates possess their own property and 33% of candidates had no property.

INTERPRETATION:

This shows that out of 100 respondent 67% had their own property while 33% had no property 67% were
not willing to invest or buy any property.

TABLE 4:- If yes, the type of property.

TYPE OF PROPERTY
RESIDENTIAL
COMMERCIAL
OTHERS
TOTAL

PERCENTAGE
78
18
4
100

GRAPH :

PERCENTAGE
18%

4%

RESIDENTIAL
COMMERCIAL
OTHERS

78%

ANALYSIS :

It was found that 78% of the candidates preferred residential property, 18% wanted commercial while
only 4% of the respondents wanted other than residential and commercial property.
INTERPRETATION :-

Thus, it can be conducted that 78% of the respondents wants to invest in the property for living purpose.
While 18%, wants to derive their business with the help of that property.

TABLE 5:
BUDGET
10-30
31-50
Above 50
TOTAL

PERCENTAGE
69
21
10
100

GRAPH:

PERCENTAGE
10%
Oct-30

21%

31-50
Above 50

69%

ANALYSIS:-

69% have budget more than 50 lacs 21% have between 31-50 and 10% have between 0-30 lakhs.
INTERPRETATION:

Thus, it can be said that major respondents do not want to invest much to buy a property. As majority of
the respondents are middle class society. While there are only 10% who belong to high class society can
invest above 50 lakhs.

TABLE 6:
HOME LOAN
YES
NO
CANT SAY
TOTAL

PERCENTAGE
79
11
10
100

GRAPH:

PERCENTAGE
10%
YES

11%

NO
CANT SAY

79%

ANALYSIS :

79% of respondents preferred home loan while 11% did not prefer loans. There were 10% of respondents
who could not decide whether to take or not.
INTERPRETATION :-

Major respondents wanted to buy a property over loan basis as mostly respondents are service men. Those
who did not prefer loan were businessmen.

TABLE 7:

PREFERRED OPTIONS
SBI
HDFC
LICHFL
ICICI
AXIS
PNBHFL
CANARA
ALLAHABAD BANK
DHFL
TOTAL

PERCENTAGE
32
16
12
10
8
9
3
6
4
100

GRAPH:

PERCENTAGE
SBI
HDFC

6%4%
3%
9%

LICHFL

32%

8%

ICICI
AXIS
PNBHFL

10%
12%

16%

CANARA
ALLAHABAD BANK
DHFL

ANALYSIS:

32% respondents preferred SBL, 16% preferred HDFC, 10% preferred ICICI, 8% preferred Axis, 9%
preferred PNBHFL, 3% preferred Canara Bank, 6% preferred Allahabad Bank, 4% preferred DHFL.

INTERPRETATION:

Maximum proportion of respondents preferred to opt for SBI. This shows that most of them have faith in
SBI. Next preference is to HDFC and then LICHFL.

CONCLUSION
Now, it is very much clear that home loan have very much importance in national development. Without
the help of banks or home loan finance companies millions of people in India would be lacking the much
needed financial support. The LIC housing finance ltd. takes active part in local communities and local

development with a stronger commitment and social responsibilities. As per the survey 90% people took
home loan for the purchase home or development of their house. The LIC Housing Finance provides in
urban in rural areas.
Now todays life home loan is more important to develop our own property. Its first need of our
life.

RECOMMENDATION

WEBLIOGRAPHY
www.lichousing.com
www.moneycontrol.com
www.google.com
www.economictimes.indiatimes.com
www.profit.ndtv.com

ANNEXURES
1.What is your age?
a.25-35

b. 35-50

2. What is your occupation?

c. 50-60

d. above 60

a. service class

b. businessmen

c. professional

3. what is your annual income?

a. below 2 lakh

b. 2-5 lakh

c. 5-10 lakh

d. above 10 lakh

4. Do you have your own property?

a. yes

b. no

5. What is your property cost ?

a. above 10 to 25 lakh

b. above 25 to 50 lac

c. above 50 to 75 lac

d. more than 75 lac

6. What is your reaming balance (source of fund) paid by builder ?

a. saving in bank

b. provident fund

c. disposal of investment/ property

d. loan from employer

7. Are you interested in buying a property in near future ?

a. yes

b. no

c. cant say

8. If yes Which type of property you interested ?

a. residential

b. commercial

c. other

9. If interested, the main purpose of buying the property isa. for self purpose

b. for investment

c. others

10. Are you satisfied with the house loan procedure of LIC Housing finance?
a. yes

b. no

11. Rate of interest at LIC Housing Finance Ltd. is

a. high

b. low

c. normal

12. PI specify the location in which you are interested for buying property ?
Name :

Address :
Contact no.: