Investment banking & Financial services (14MBA FM302)

Module 2:
Depository System

Depository System:
Objectives, activities, interacting systems, role of depositories and their services, Advantages of
depository system - NSDL and CDSL. The process of clearing and settlement through
Depositories, Depository Participants. Regulations relating to Depositories-SEBI (Depositories
and Participants) Regulations 1996- Registration of depository and participant- Rights and
Obligations of depositories and participants- Recent amendments Custodial services- The Stock
Holding Corporation of India Limited
Depository System
The term depository is defined as „a central location for keeping securities on deposit‟. It is also
defined as „a facility for holding securities, either in certified or uncertified form to enable book
entry transfer of securities. It is understood from the above two definitions that the depository is
a place where securities are stored, recorded in the books on behalf of the investors.
A system in which securities of an investor are held by depository on behalf, and at the request,
of an investor in an Electronic Form. This system is also know as Scrip Less Trading system.
The Need and Objective of Depository System in India:
The old trading system /Traditional Scrip Based System was affected by a lot of problems such
as: Enormous paperwork Time consuming/longer settlement cycles Poor infrastructure Bad
deliveries due to signature difference, mistake in completing details in transfer deeds, litigation
in respect of shares purchased, fake certificates, tearing/mutilation of certificates, postal delays,
processing time taken by companies. Huge transaction cost
Functions of a Depository:
1. Account Opening: An investor wishing to avail depository services must first open an
account with a depository participant registered with a depository. The process of opening a
demat account is very similar to that of a bank account. The account opening form must be
supported by copies of any one of the approved documents which serve as proof of identity and
proof of address as specified by SEBI. Apart from these PAN card has to be shown in original at
the time of account opening W.E.F April 01, 2006.
2. Dematerialization:
One of the primary functions of a depository is to eliminateorminimizethe movement of physical
securities in the [Link] or demat is
the process of converting the securities held in physical form intoan electronic record form or to
directly allot securities in electronic record form. These electronicrecords of securities are shown
as “electronic balances” in the demat accounts of investors.
[Link]: is the process by which a client can get his electronic holdings converted
into physical certificates.
[Link] of Securities:
The depository gives effects to all transfers resulting from thesettlement of
tradandothertransactions between various beneficial owners by recordingentries in the account of
such beneficial owners.
5 Corporate Actions: is a process by which a company gives benefits to the investors who are
holding securities of the company. Types of corporate actions corporate actions are classified ito
two main categories. Cash and Non-cash corporate actions. Cash corporate action results in

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investors getting benefits in form of cash. Examples of cash corporate actions are payment of
interest / dividend. Non cash corporate actions result in the investors getting benefits in form of
securities. Examples of non-cash corporate action are bonus, rights, etc.
5. Cash Corporate Actions: The Issuer/R&T agent will distribute dividend, interest and other
monetary benefits directly to the beneficial owners on the basis of list provided by Depository.
Non-cash Corporate Actions:
∑ Depository will provide the details of the beneficial owners and their holding to
issuer/RTA.
∑ The Issuer / RTA then submit an allotment file to Depository containing the details of
allotments to BOs.
∑ Based on the said allotment file the securities are credited to the demat accounts of the
BOs.
6. Pledge and Hypothecation:
The securities held with the depository may be used as collateralto secure loans and other credits
by the clients. Both pledgee and pledger are required to have ademat account. The pledged
securities are blocked in favour of pledgee /lender, who can releasethe pledge once the loan is
repaid by the borrower. In case of default by the pledgor or any otherreason agreed by pledgor
and pledgee, the pledgee , as per the terms of the agreement, mayinstruct his DP to invoke the
pledge. The pledgee BO has to submit an “Invocation RequestForm” (IRF). On execution of this
instruction, the securities are transferred into the pledgee‟saccount.

7. Account freezing: Account freezing means suspending any further transaction fro depository
account till the account is unfrozen. An investor, by issuing instructions to depository, in which
he is maintaining demat account, can get his account frozen till further instructions.
8. Transmission : The word "transmission" means devolution of title to shares, for example,
devolution by death, lunacy, bankruptcy, winding-up (in case of corporate) etc. The claimant
should submit to the concerned DP an application with Transmission Request Form (TRF) along
with documents like death certificate, Succession certificate, Probate of the will, Letter of
administration. The major advantage in case of dematerialized holdings is that the transmission
formalities for all securities held in a demat account can be completed just by interaction with the
DP alone.
Role of depositories
The role of depository participants in stock market is very important. Now a days all kinds of
trading works in stock market are being executed through internet and the basis of most part of
the entire infrastructure of a depository is constituted in electronic form. In this article I will try
to give all outcanenjoy while trading in stock market.
Advantages o f depository system
Benefits to investor
∑ This system will eliminate paper work
∑ The risk of bad deliveries, fraud and misplaced, mutilated
∑ The electronic media will shorter settlement time.
∑ Investors will change portfolio more frequently.
∑ The distribution of dividends, interest and other benefits will be speedier.
∑ Cost of transfer is less as the share transfer
∑ Faster payment in case of sale of shares.

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Benefits to companies
∑ The companies will be able to know the particulars of beneficial owners and their
holdings periodically.
∑ At the time of declaration of dividends, bonus s, etc, there will not be any rush for
transfer related activities for the companies.
Benefits to the capital market
∑ The capital market will be more transparent as the trading, clearing and settlement
mechanism have to be highly automated and interlinked with the depositary among them.
∑ The market will be highly automated and efficient due to the above two aspect.
∑ The foreign investors will start participating in the market resulting in a more buoyant
∑ Capital market.
∑ The existence of depository will result in increase in the volume of trade both by number
and value.
National Securities Depositary Ltd (NSDL)
The first depositary in India. The national securities Depositary Ltd (NSDL) was established in
1996. It has been promoted by the Industrial Development Bank of India. Unit trust of India and
NSE.
NSDL started operations in November 1996 and has made significant progress since then.
NSDL performs a wide range of securities related functions
∑ Maintenance of individual investor‟s beneficial holdings in an elective form.
∑ Dematerialization of securities.
∑ Account transfer for settlement of trade in electronic shares.
∑ Allotments in the electronic form in case of initial public offerings.
∑ Distribution of non-cash corporate actions.
∑ Facility for freezing or locking of investor accounts.
∑ Facility for pledge and hypothecation of securities.
In the first 16 months of its operations, 186 companies constituting over 50% of the total market.
Capitalizations have signed up agreements with NSDL to get their securities admitted for
dematerialization. A total of 163 crore shares values at Rs.19,600 crores have already been
dematerialized.
According to NSDL, the dematerializations volume has crossed Rs.4,63,385 crores as on March
2001. There are 341 depository participants operational as on March 2007 which are providing
services at about 1452 locations in India. Over 24 lakh clients have opened accounts with these
DPs. There are 5632 corporate which have signed agreements with NSDL of which securities of
6973 corporate as available for dematerialization.
Right now, seven stock exchanges, the NSE, BSE, CSE, DSE, luthiana and Bangalore stock
exchanges have established connectivity with NSDL.
Central Depository Services (India) Ltd (CSDL)
The CSDL has been set up by Bombay stock exchange and co-sponsored by SB, Bank of India,
Bank of Baroda and HDFC Bank. It commenced its operations on March 22, 1999. Up to
March2000, 680 companies made available their shares for demat. The market value of
dematerialized securities amounted to Rs. 8188 crore. The number of beneficial owners stood at
28545. As on April 2008 there were 422 depository participants with 5771 DP service centers.
The number of investors account was 52, 68,932. 6063 companies made available their shares

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for demat as on April 2008. There were 422 depository participants with 5771 DP service
centers.
Objectives of CSDL
∑ To make a major trust on individual investors to participate in depository services.
∑ To create a competitive environment this will be responsive to the user‟s interest and
demands.
∑ To enhance liquidity.
The process of clearing and settlement through Depositories
There are basically three tasks that are performed in the process of buying and selling of
securities. They are:
∑ Trading
∑ Clearing
∑ Settlement
Trading basically deals with putting an order and its execution. Clearing deals with
determination of obligations, in terms of funds and securities. Settlement means that the trade
will be completed and NSCCL acts as a counter party and takes an obligation for the same. It has
created a faith in the investors that all the trades would be settled and in no case any investor will
have to face any problem of insufficient funds and securities. NSCCL acts as a buyer to every
seller and a seller to every buyer. This principle is called novation. In case of default by any
party, the NSCCL takes action against the defaulter.
The following steps are followed in the settlement of a trade:
Step 1: Determination of obligations:
Obligations are determined by NSCCL for the tradersand acts as a central counter-party (CCP)
to the members. It determines the obligations of the members as what they ought to give and
receive on the due date.
Step 2: Pay-in of funds and securities:
The members, after knowing their obligations, make available the funds and securities to
NSCCL. The member‟s depository having obligation to pay in the securities; get an instruction
from the NSCCL to pass the required entry for the transfer of securities to them. For the
members having an obligation to pay-in funds, NSCCL gives an instruction to the clearing banks
for the same.
Step 3: Pay-out of funds and securities:
After processing the shortages of funds and securities
and arranging for the movement of the same, NSCCL sends out electronic instructions to the
clearing banks/ depositories to pass the required entries for the same.
Step 4: Risk management:
Since there is a time lag between execution of trade and its settlement, there are chances of
default. To minimize the risk of defaults, NSCCL has framed a comprehensive risk management
and surveillance system. Under this, the organization keeps a check through various systems (on-
line and off-line monitoring) and in case of default panelizes
the respective trader for the same.
Depository Participants:
A“DepositoryParticipant”(DP)isanagentofthedepositorywhoisauthorizedtoofferdepositoryservis
to investors. They are the intermediaries between the depository and theinvestors.
Therelationship between the DPs and the depository is governed by an agreementmade between
thetwo under the Depositories Act, 1996. In a strictly legal sense, a DP is anentity who is

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registeredas such with SEBI under the provisions of the SEBI Act.A DP is the first point of
contact withthe investor and serves as a link between the investor andthe company through
depository indematerialization of shares and other electronic [Link] to SEBI, the
followingcan apply for DP: Public financial institutions, scheduledcommercial banks, foreign
banksoperating in India with the approval of the Reserve Bank ofIndia, state financial
corporations,custodians, stock-brokers, clearing corporations / clearinghouses, NBFCs and
registrar to an issue or share transfer agent complying with the requirementsprescribed by
SEBIcanberegistered as DP.
Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996:
Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996
A. Registration of Depository
(1) An application for the grant of a certificate of registration as a depository shall be made
to the board by the sponsor and shall be accompanied by the fee Rs. 50,000 in the form of
a demand draft or bankers‟ cheque payable to the SEBI, Mumbai.
(2) The application shall be accompanied by draft bye-laws of the depository that is proposed
to be set up.
(3) A Sponsor who is applying for registration as Depository may be: a public financial
institution a bank included for the time being in the Second Schedule to the Reserve Bank
of India Act, 1934 a foreign bank operating in India with the approval of the Reserve
Bank of India;
(4) A Recognized stock exchange
(5) A body corporate engaged in providing financial services where not less than seventy
five percent. of the equity capital is held by any of the institutions mentioned in above
sub-clauses
(6) A body corporate constituted or recognized under any law for the time being in force in a
foreign country for providing custodial, clearing or settlement services.
(7) An institution engaged in providing financial services established outside India and
approved
(8) by the Central Government;
B. Grant of certificate of registration. :
After the Board is satisfied that the company established by the sponsor is eligible to act as
depository, it may grant a certificate of registration to the depository subject to the following:
(a) The depository shall pay the registration fee of Rs. 25,00,000, within 15 days of receipt
of information.
(b) The depository shall comply with the provisions of the Act, the Depositories Act, the
bye-laws, agreements and these regulations;
(c) The depository shall not carry on any activity other than that of a depository
(d) The sponsor shall, at all times, hold at least fifty one per cent. of the equity share capital
of the depository.
C. Payment of annual fee. :
Payment of annual fee. A depository who has been granted a certificate of registration under
shall pay annual fee of Rs. 10,00,000 to SEBI.
D. Certificate of Commencement Of Business:
A depository, which has been granted a certificate of registration shall within one year from the
date of issue of such certificate make an application to the Board for commencement of business.
E. Registration of Participant

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Application for grant of certificate of Registration. An application for the grant of a certificate of
initial registration as a participant shall be made to the Board, through each depository in which
the applicant proposes to act as a participant, along with application fee of Rs. 5000.
F. Consideration of application for grant of certificate of initial registration:
The applicant belongs to one of the following categories
(i) A public financial institution as defined in section 4A of the Companies Act, 1956 (1
of 1956);
(ii) A bank included for the time being in the Second Schedule to the Reserve Bank of
India Act, 1934 (2 of 1934);
(iii) A foreign bank operating in India with the approval of the Reserve Bank of India;
(iv) A state financial corporation established under the provisions of section 3 of the State
Financial Corporations Act, 1951 (63 of 1951);
(v) An institution engaged in providing financial services, promoted by any of the
institutions mentioned in sub clause (i),(ii), (iii), (iv) jointly or severally;
(vi) A custodian of securities who has been granted a certificate of registration by the
Board
(vii) A clearing corporation or a clearing house of a stock exchange;
(viii) A stock broker who has been granted a certificate of registration by the Board
G. Grant of certificate of initial registration.
On being satisfied that the applicant is eligible and has complied with the conditions stipulated in
the SEBI (D&P) Regulations, SEBI grants a initial registration certificate to the applicant. SEBI
considers, inter alia, whether the applicant has adequate infrastructure and systems. Grant of
initial registration is also subject to the condition that the Participant shall redress the grievance
of beneficial owners within thirty days of the date of receipt of the complaint and keep the
depository informed about the number and nature of redress. The participant shall pay the
registration fee Rs. 1,00,000 and annual fees of Rs.1000.
H. Period of validity of the certificate of initial registration.:
The certificate of initial registration granted shall be valid for a period of five years from the date
of its issue to the applicant.
I. Grant of certificate of permanent registration:
Grant of certificate of permanent registration A participant who has been granted a certificate of
initial registration may, three months before the expiry of the period of certificate of initial
registration, make an application for grant of a certificate of permanent registration through the
depository in which it is a participant.
Custodial services
Custodian, A financial institution that holds customers' securities for safekeeping so as to
minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic
or physical form.
Rights and Obligations of Depositories :
Depositories have the rights and obligations conferred upon them under the Depositories Act, the
regulations made under the Depositories Act, Bye-Laws approved by SEBI, and the agreements
made with the participants, issuers and their R&T agents. Every depository shall, in its bye-laws,
state the specific securities which are eligible for being held in dematerialised form in the
Depository. Securities eligible for Dematerialization: shares, scrips, stocks, bonds, debentures,
debenture stock or other marketable securities of a like nature in or of any incorporated company
or other body corporate; (b) units of mutual funds, rights under collective investment schemes

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adventure capital funds, commercial paper, certificates of deposit, securitized debt, money
market instruments, Government Securities and unlisted securities shall also be similarly eligible
for being held in dematerialized form in a depository. (c) any other security as may be specified
byte Board from time to time.
Either on the issuer or on the investors exercising an option to hold his securities with a
depository in de materialised form, the issuer shall enter into an agreement with a depository to
enable the investor to dematerialise the securities. Every depository shall allow any participant to
withdraw or transfer its account, if the request for such withdrawal or transfer is in accordance
with conditions stipulated there for in the bye-laws of the depository.
The DP should maintain and preserve the following records and documents depository wise for a
minimum period of 5 years: records of all the transactions entered into with a depository and
with a beneficial owner. Details of securities dematerialised, rematerialised on behalf of
beneficial owners. Records of instructions received from beneficial owners and statements of
account provided to beneficial owners Records of approval, notice, entry and cancellation of
pledge or hypothecation, as the case may be. No participant shall assign or delegate its functions
as participant to any other person, withoutthe prior approval of the depository.
Stock Holding Corporation of India Ltd.
SHCIL was incorporated as a Public Limited Company in [Link] its registered office in
Mumbai, Maharashtra. It has been jointly promoted by leading Banks and Financial Institutions
.SHCIL is a subsidiary of IFCI Limited. The equity capital of SHCIL is presently held by LIC,
GIC, IFCI Ltd., SU-UTI, NIA, NIC, UIC, and TOICL, all leaders in their respective fields of
business.
The Ministry of Corporate Affairs has recently issued a Circular, notified in the Gazette of India
G.S.R. 352(E) dated May 10, 2012, notifying the Rule “Investor Education and Protection Fund
(Uploading of information regarding unpaid and unclaimed amounts lying with Companies)
Rules, 2012”. As per this Rule, companies have to identify and upload details of unclaimed
dividend on their website.
SHCIL services
∑ Custodial Services
∑ Registration of Foreign Portfolio Investor
∑ Clearing & Settlement(Cash)
∑ Electronic & Physical Safekeeping
∑ F&O Clearing
∑ Asset Servicing
∑ Premium Offerings
∑ Securities Escrow Account services
SHCIL provides first-rate custodial services to India‟s leading Financial Institutions, Insurance
Companies, Mutual Funds, Foreign Institutional Investors (FII‟s), Banks, Indian and Foreign
Venture Capital Companies, Funds, PF Trusts & Corporates.
Clearing & Settlement Services (Cash Segment)
∑ Smooth Straight through Processing (STP) systems with a choice of two reputed service
∑ providers, enabling the competitive advantage of efficient settlements.
∑ Seamless monitoring and constant updates on failed trades and status (T+2 basis)
∑ Daily verification of settlements (Normal/Auction), thus mitigating systemic risks.
∑ Efficient fund transfer facilities offering flexibility of settlement of funds through wide

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∑ panel of banks having RTGS (Real Time Gross Settlement) capabilities.

∑ Effortless handling of residual trades in physical mode, since it has the necessary
infrastructure in place.
Electronic & Physical Safekeeping Services
∑ Operations on both Depositories, National Securities Depository Limited & Central Securities
Depository Limited, manned by qualified, certified & experienced staff, complemented by
cutting-edge back-office processes
∑ Comprehensive document tracking & storage systems that enable the instant tracking and
status of any investments in physical custody.

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Investment banking & Financial services (14MBA FM302)

Module 3:
Housing Finance:

Role, Types of housing loans, Institutions and banks offering Housing Finance, Procedure and
Interest rates. Income Tax Implication. Reverse mortgage loan.
Non-Banking Finance Companies:
Types, Growth, Functions, RBI Guidelines, and Prudential Norms.
A housing finance is refers to finance provided to individuals or group of individuals including
co-operative societies for purchase/build house or houses. The R.B.I. has states that banks are
free to decide the guidelines on accepts such as age of dwelling units, repayment
schedules,margin and security with the approved of their board. Housing Finance Retail Banking
Types of housing loans
The different types of Housing Finance are shown in the chart. Types of Housing Finance
Direct Finance- purchase another house, For letting it out for rent, Buy an old house, Purchase
of plot borrower Declares that he intends to construct a house on the plot
Supplementary Finance - alteration/repairs
Indirect Finance - To other housing financial institution, provided after obtaining “Pain Passu”
or he “Second Mortgage”
Purpose, Quantum
The housing loan provided for;
ó Purchase of flat/house or purchase of plot of land.
ó For renovation/repairs of an existing house/flat.
ó For extending an existing house.
Short term bridge finance while purchasing another house/flat. The quantum of loan is vary from
bank to bank normally bank stipulate minimum of Rs. 1,00,000/-. The maximum would depend
on the bank and it could vary from Rs. 10 Lakhs to Rs. 2crores or more. For repairs the amount
isless, around Rs. 10lakhs.
Eligibility and Terms of loan
All individuals are eligible who are above the age of 18years having sufficient income to repay
the loan.
The loans are not normally extended to the individuals who are above 58 years of age. The
amount of advance will be based on individuals gross pay or net take home pay. The criteria may
be differs from bank to bank as per the suggestion of R.B.I. The terms or the period of repayment
is also depend on age of buyer. Normally it is from 15 years to 25 years. The main aspect behind
this is the amount of loan along with interest should be repaid before the person retires. Loans
provided for self-employed personals are sometime a shorter duration.
Margin, Interest, Security
The housing loan is normally between 80% to 85% of cost of the house/flat. The entire amount is
rarely advanced by nationalized bank. some private banks are now financing 100%amount. For
housing loan there are two types of interest rate.
∑ Fixed for entire tenure of the loan: Which is charging through out the duration of
∑ Floating loan the security in respect of housing finance is the property purchase with a
mortgage is taken on the same. For additional security guarantee may be taken.
Housing Loans under Priority Sector
The following housing finance limits will be considered as Priority Sector Advances:
Direct Finance

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(i) Loans up to Rs. 15 lakh in rural, semi-urban, urban and metropolitan areas for construction of
houses by individuals, with the approval of their Boards.
(ii) Loans up to Rs.1 lakh in rural and semi urban areas and Rs. 2 lakhs in urban areas for repairs
to damaged houses by individuals.
Indirect Finance
Assistance given to any governmental agency for construction of houses, or for slum clearance
and rehabilitation of slum dwellers, subject to a ceiling of Rs. 5 lakh of loan amount per
[Link] given to a non-governmental agency approved by the National Housing
Bank for the purpose of refinance for reconstruction of houses or for slum clearance and
rehabilitation of slum dwellers, subject to a ceiling of Rs. 5 lakh of loan amount per housing unit.
Housing Development Finance Corporation Limited (HDFC)
HDFC is one of the leaders in the Indian housing finance market with almost 17% market
shareas on March 2010. Serving more than 38 lakh Indian customers as on March 2011
In the FY 2010-11, it registered a net profit of `4528.41 crore. It also registered a net profit of
971 crore in the quarter ended September 30, 2011.
HDFC provides
ó Home Loan
ó Home Improvement Loan
ó Home Extension Loans
ó Land Purchase Loans
ó Top – Up Loans
State Bank of India
State Bank of India is another major player in the Indian housing finance market with 17% of the
market share, same as HDFC's share as on March 2010. The SBI Housing Loan schemes are
specifically designed to meet the varied requirements of the customers. SBI Home
Finance registered a net profit of ` 24.63 crore in the year ended March 31, 2009.
ó SBI Surakshit Home Loan
ó SBI Yuva Home Loan
ó SBI Home Loan PAL ( Pre-Approved Limit )
ó SBI Maxgain (Home Loan as an overdraft)
ó SBI Realty
ó NRI Home Loans
ó Gram Niwas
LIC Housing Finance Limited
LIC Housing Finance is another major player in housing finance sector in India with about
8% of market share. Promoted by Life Insurance Corporation of India, LICHFL has an
extensive distribution network with a strong brand presence. Recently, the company has been
awarded “Consumer Super brand 2009/10 Status” by Super brands Council. In the last
financial year (ended on March 31, 2011), LICHFL earned a net profit of ` 974.49 crore,
comparing to ` 662.18 in the previous FY. It also registered a net profit of ` 256.50 crore in
April- June quarter of 2011.
ó Purchase of flats/house
ó Construction
ó Extension of flats/house
ó Plot purchase
ó Repairs/renovation to existing flats/house

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Home Loan Procedure in India:

Submission of Application Form : After choosing a particular home loan, the customer submits
the application form to the housing finance company (HFC) along with other relevant documents
as required by the HFC. They comprise documents to establish income, age, residence,
employment, investments, etc. The customer also needs to hand over a cheque for payment of an
up front (non -refundable) processing fee of about 0.5-1% of the loan amount to the HFC.
Validation of the Information: In the next stage, HFCs validate the information provided by the
customer on the application form. They usually conduct checks on the residential address of the
customer, the place of employment of the customer, and credentials of the employer. Some
HFCs may insist on a personal interview with the customer and perform a reference check on the
references provided by the customer on the application form.
Issue of Sanction Letter : After due appraisal of customer profile, a sanction letter is issued
which contains details such as loan amount, rate of interest, annual / monthly reducing balance,
tenor of the loan, mode of repayment and general terms and conditions of the loan. This is the
actually the approval of the money lending procedure by the company. However, the money is
sanctioned only after the documents and the property on behalf of which the loan is being
granted.
Submission of Documents: Once the sanction letter is passed, the customer is required to leave
The entire set of original documents pertaining to the property being purchased with the HFC as
Security for the loan amount sanctioned. These documents remain in the custody of the HFC till
the time the loan is fully repaid. Once the documents are handed over to the HFC, they send all
The documents for a thorough legal scrutiny.
Validation of Property: Prior to disbursement, the HFC also conducts a site visit to the
customer's property to ensure that all construction norms have been adhered to properly. Once
the HFC is satisfied that the property is legally and technically clear, they disburse the loan
amount. The disbursement from the HFI is on the basis of the stage of construction of the
property.
Payment Procedure: Once all the above mentioned process, the borrower is entitled to take the
Money from the lender party. Until such time that the entire sanctioned amount is not drawn, the
customer is supposed to pay a simple interest on the Actual Amount drawn (without any
principal repayments). The EMI payments commences only after the entire sanctioned loan
Amount is drawn.
Or
Application form
The first step involved in applying for home loan is the procurement of application form from the
HFC of your choice. The Performa of application every HFC (Housing Finance Companies) is
different from the other but about 80% information required to be 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 HFCs also ask for processing fee of the home loan that
varies 0.25% to 0.50% of the total loan amount.
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. It is advisable that you carry all your original documents of whose

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Department of Management Studies, GCEM