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Declaration

The Summer Project “Cost Benefit Analysis of Direct v/s Indirect Sourcing Channels” at
Aadhar housing finance ltd, Mumbai is an authentic work done by me. It is to the best of my
knowledge and belief.
This is to declare that all my work indulged in the completion of this project report such as research
and analysis of the investment behavior of youth is a profound and honest work of mine.

Date: Signature

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Acknowledgement

Firstly, I express my sincere gratitude to Mr. Sandeep Jain, Head alternate channel, Aadhar
housing ltd, for his belief in me and giving a chance to do market research for the company.
Sincere thanks must go to the following:

Aadhar Housing Finance Ltd. for giving me an opportunity to be a part of it during the internship
period and learn more about their organization. Dr. Shubhangi Jadhav, Internal faculty of my
college for their encouragement & moral support throughout internship period.

I would also like to acknowledge my sincere gratitude to our Prof. Col. Balasubramanian,
Executive Director, BIMM and Dr. Biju Pillai, Director BIIB, for giving me an opportunity to
work on a project, which has to be a valuable learning experience and also a memorable one.

Finally, to all those people who helped me for filling the questionnaires, my family members for
their support and patient & my friends who provided academic opinions and all those people whom
I met during my internship and helped me to accomplish my project in the most efficient and
effective manner.

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Tables of Contents

Chapter Title Page no.

Chapter 1 Executive summary 4
Chapter 2 Industry Background 5-14
Chapter 3 Company Profile 15
Chapter 4 Product offering 16-28
Chapter 5 Process of application 29-37
Chapter 7 Market growth 38-44

Chapter 8 Problems in housing finance 45-47

Chapter 9 Some Important Terms 48-49
Chapter 10 Limitations 50
Chapter 11 Conclusion 51

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Chapter 1

Executive Summary

Good housing is a pre-requisite for human development and welfare. It provides shelter, security,
amenities and privacy to the human beings for decent living. Without good housing, people cannot
realize their full potential and carry on the life they want to lead. Good housing reflects the general
welfare of the community, whereas bad housing leads to serious consequences such as diseases,
immorality, and Juvenile delinquency. Deprivation of a decent housing, In fact, becomes a threat
to social harmony and economic prosperity. Housing is also an investment activity and provides
impetus to economic growth.
It has both forward and backward linkages. Because of its forward and backward linkages, even a
small initiative in housing will propel multiplier effect in the economy through the generation of
employment and demand. Recognizing the critical importance of human settlement in developing
countries, the Universal Declaration of Human Rights and the International Covenant on
Economic, Social and Cultural Rights, have recognized the right to housing as a human right. The
UN also declared the year 1987 as International Year for Shelter for the Homeless and Poor. Since
then, there has been a growing concern to address various forms of housing deprivation particularly
in developing countries, where with the growing population pressure, meeting the housing needs
of all families is a real challenge.

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Chapter 2

Industry Background

There are various factors that influence your home loan interest rates, including your credit score
Home loan, usually, is a big and long-term financial commitment and one where a slight difference
in interest rate is likely to lead to a significant difference in payout over the long run. While
traditionally, lenders set the interest rates for home loans primarily on the basis of their own cost
of funds, many have now started factoring in the ‘risk’ associated with the applicants. This means
lenders are ready to offer lower interest rates for home loans to those who have a strong profile.
On the other hand, applicants who are perceived as ‘risky,’ instead of getting outright rejected by
lenders, may be able to get the loan, though at a higher rate of interest.
Here are the major factors that influence interest rates on a home loan:

1) Bank’s MCLR: The most important factor that determines the home loan rate is a bank’s
MCLR (marginal cost of funds based lending rate). MCLR is calculated on the basis of four major
components — the marginal cost of funds, tenor premium, operating cost and negative carry on
account of cash reserve ratio (CRR). Banks are required to review their MCLR every month on a
pre-specified date based on which they review their lending rates too. Hence, the MCLR applicable
on the date of the loan sanction will determine the interest rate of the loan.
Banks are required to compulsorily review their home loan interest rate at least once a year on a
pre-specified reset date. The MCLR on this date will remain applicable on the home loan till the
next reset date, irrespective of any changes in the interim months.

2) Credit score: Banks and NBFCs consider the applicant’s credit score to be one of the most
important factors while evaluating home loan applications. A person’s credit score is a reflection
of how well he/she has behaved with past loans. An applicant with a low credit score (600 and
below) is considered ‘risky’ by lenders and would either be rejected or offered the loan at a higher
rate of interest.

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Some lenders have, in fact, started using credit scores for setting interest rates, offering concessions
to those with higher scores (over 700). For example, Union Bank of India, for home loans of up to
₹75 lakh sanctioned, charges an interest rate of 8.7% p.a. to applicants having CIBIL score of 700
and above and 8.8% to those with a score less than 700.The same 10 bps (basis points)difference
in interest rate is applicable for home loans above ₹75 lakh as well.
Similarly, Allahabad Bank offers 10 bps concession in home loan interest rates to borrowers
having credit scores of 750 and above from CIBIL and CRIF High Mark.
Home loan borrowers should note that most lenders consider the credit score of all co-owners of
the property and not just the home loan applicant. So, if your spouse or parent are joint owners of
the house you are purchasing, you need to ensure their credit score is high as well.
Ideally, fetch your free credit report from the credit bureaus or online financial marketplaces at
least six months prior to applying for the loan and work towards having a credit score of 750 and
above.

3) Loan amount: Lenders usually charge higher interest rates for bigger loan amounts. For
example, while the lowest interest rate for home loans of up to ₹30 lakh from SBI starts at 8.7%
p.a., the rate for home loans of ₹30-₹75 lakh and above ₹75 lakh start from 8.9% p.a. and 9% p.a.
respectively. Thus, try to pay as much as you can in the down payment of your property if that
leads you to get your home loan at lower rates.

4) Interest rate type: Home loans come in three varieties as far as their interest rate types are
concerned — fixed, mixed and floating rates. While floating and fixed rate home loans are self-
explanatory, interest rates of mixed-rate loans stay fixed for a pre-determined period after which
they become floating rates. As banks and HFCs (housing finance companies) have higher interest
rate risk in case of fixed and mixed rate home loans, they charge higher interest on such loans to
compensate their future loss in interest income, if any, arising out of interest rate volatility. For
example, Union Bank of India’s interest rate starts from 8.7% p.a. for floating rate home loans,
whereas the interest rate for their mixed-rate (fixed for up to 5 years) home loans start from 11.40%
p.a. onwards.

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5) LTV ratio: Loan-to-value ratio refers to the proportion of the property value that one can
finance through a loan. The rest of the property value has to be financed out of the borrowers’ own
resources.
Currently, RBI has capped this ratio at 90% for home loans of up to ₹30 lakh; 80% for loans
between ₹30 lakh and ₹75 lakh and 75% for loans above ₹75 lakh.
As a lower LTV ratio decreases the credit risk for banks and HFCs, they encourage higher margin
contribution by charging lower interest rates. For example, Allahabad Bank offers a 5 bps (basis
points) concession in interest rates on home loans of up to ₹75 lakh with an LTV ratio of 75% and
less. For loans above ₹75 lakh, the 5 bps concession is available on having an LTV ratio of 65%
and less.

6) Job profile: Lenders prefer to sanction home loans to those with a stable job or income
source. Salaried professionals are often offered home loans at lower interest rates than those who
are self-employed. Among the salaried class, government and PSU employees are the most
preferred followed by employees of top private sector companies. Among the self-employed,
doctors and chartered accounts are usually considered as the least ‘risky’ professions.
As a result, some lenders usually try to target these specific customer segments by offering them
home loans at concessional rates. For example, UCO Bank offers 10 bps concession in interest
rates for home loans availed by government and PSU employees. Similarly, Punjab National Bank
charges 5 bps less on home loans sanctioned to central and State government employees.
Concession for women
Additionally, most banks also provide 5 bps concession in the interest rates on home loans where
the primary loan applicant is a woman. The concession is usually available across all home loan
categories for all loan amounts. Hence, those planning to avail a home loan can apply in their
wife’s name to save money. For example, a ₹70-lakh home loan for 20 years lent at 9% p.a. would
entail a total interest cost of ₹81.15 lakh whereas the interest cost for the same loan at 8.95% p.a.
would reduce the interest cost by ₹53,950.
While the above are the standard factors used by most lenders for offering differential interest
rates, each bank and HFC has its own mechanism to calculate interest rates.
Hence, when applying for any kind of loan, especially home loans, since they usually involve a
high amount, ensure you compare all options available to you and choose the best-suited option.

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Hence, when applying for any kind of loan, especially home loans, since they usually involve a
high amount, ensure you compare all options available to you and choose the best-suited option.
Expressing confidence in the government's real estate initiatives, the sector has hailed the Prime
Minister NarendraModi-led government's victory in the 2019 General Elections as a vote for
development.
Citing initiatives such as GST, RERA and the Affordable Housing for All by 2022 scheme, the
sector expects institutional investments in the sector to double to $10 billion in 2019.
The impact of reforms has been reflected in the number of investments received by the real estate
sector, as of the total institutional investments of $30 billion during 2009-2018, $20 billion was
invested in 2014-2018. During the same period, the share of foreign investments more than
doubled to 70 percent in 2018 from 31 percent in 2009.
"We are confident that institutional investments in 2019 will nearly double to $10 billion as
compared to 2018," said Ramesh Nair, CEO & Country Head, JLL India.

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Government Vision
Creating a vibrant community and nation through affordable housing
The Modi government in June 2015 committed to a grandiose vision of "Housing for All" by
2022, the 75th year of India's independence. With a view to provide a concrete shape to this
vision, the government rolled out the "Pradhan Mantri Awas Yojana" (PMAY). The scheme
aimed at boosting affordable housing by providing credit-linked subsidy to construct around
2.95 crore houses in rural areas and 1.2 crore houses in urban areas. The affordable housing
model envisages a self-contained brick and cement habitat with access to water, electricity and
sanitation facilities.
Importance of Affordable Housing
Access to affordable homes should be a fundamental, undeniable right of every citizen, especially
from the low income strata of society. A roof over the head with basic amenities contributes to the
economic and social well-being of individuals and families. It is key to providing people a
heightened sense of safety and security. It also plays a pivotal role in the economic revitalization
of communities.
A decent, affordable home also remains vital to reducing stress and boosting physical and mental
health of people. When families and communities have access to decent, affordable abodes, they
have increased income at their disposal which enhances their purchase power, allowing for a higher
spend on quality healthcare and food.
A rise in income levels enables families to make long-term investment plans, create retirement
corpuses and be assured of future sustainability and survival.
Access to quality education also forms a key takeaway for children from economically deprived
communities. With a roof to call their own in the form of a steady and decent affordable home,
instances of children experiencing disruption in the pursuance of education reduces significantly.
It also has the potential to considerably improve the academic performance of children with a
marked improvement in their attendance and reduction in dropout rates.

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Boosting Affordable Housing Initiatives

The government will have to initiate key policy interventions and suitable measures in the form of
financial and non-financial support to boost the affordable housing segment in the country.
Financial subsidies and
cross subsidies by the government will play a critical role in bringing large sections of India's
economically deprived populations within the gambit of affordable housing. While the scope of
provisioning privately
held land for the construction of affordable housing units holds limited potential, a suitably
structured PPPP (Public-Private-People's Partnerships) model can be a key route to leverage the
domain expertise
of the private sector in building affordable homes.
Private builders and contractors will need to be gainfully involved and incentivised to build cost
effective, ready-to-move houses in a time-bound manner.
Concerned government departments will need to increasingly use private land for building
affordable houses on a mass level with the provisioning of suitable Floor Space Index and Transfer
Development Rights for builders and developers for building high-end housing stocks. The PPPP
strategy can also include the allocation of government grants and subsidies for unlocking
underutilized and unutilized land parcels owned by government departments and private parties.
A key role in bolstering the scope and scale of the affordable housing market will involve increased
access to institutional finance and capital markets to private developers and builders. The
government will have to roll-out suitable initiatives to provide working loans to builders on easy
repayment terms to speed up affordable housing projects.
Issuance of building permits and awarding of contracts will need to be streamlined and expedited
with a specific onus on reduced red-tape and lower scope of bureaucratic delays. It goes without
saying here
that a proper checks and balances system should be instituted and proper project audits should be
undertaken at every stage of project cycles to ensure a successful outcome for the projects.

Owner Driven Construction and Housing Support Services

Homeowner driven construction requires handholding and structured support in the form of
Housing Support Services. Under housing support services homeowners can not only build new

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homes but also can complete their homes which were unfinished for several years. This will help
families to keep the construction cost to a minimum while keeping the home design simple yet
aesthetic. The housing support services also enable the families to align the expenses with
estimates. The families are able to claim the subsidy as per the cash-flow and planned construction
schedule. This approach will eliminate over -- engineering and under-engineering.
The Housing Support Services is a tool, which can empower the homeowners with technical
knowledge and financial literacy ensuring them to have a decent shelter they can call their home.

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Indian Real Estate Industry

Indian Real Estate Industry

Introduction
The real estate sector is one of the most globally recognized sectors. Real estate sector comprises
four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well
complemented by the growth of the corporate environment and the demand for office space as well
as urban and semi-urban accommodations.
It is also expected that this sector will incur more non-resident Indian (NRI) investments in both
the short term and the long term. Bengaluru is expected to be the most favored property investment
destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Market Size
Real estate sector in India is expected to reach a market size of US$ US$ 1 trillion by 2030 from
US$ 120 billion in 2017 and contribute 13 per cent of the country’s GDP by 2025. Retail,
hospitality and commercial real estate are also growing significantly, providing the much-needed
infrastructure for India's growing needs.
Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for
office space in recent times. Commercial office stock in India is expected to cross 600 million

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square feet by 2018 end while office space leasing in the top eight cities is expected to cross 100
million square feet during 2018-20. Co-working space across top seven cities has increased sharply
in 2018 (up to September), reaching 3.44 million square feet, compared to 1.11 million square feet
for the same period in 2017.

Investments/Developments
The Indian real estate sector has witnessed high growth in recent times with the rise in demand for
office as well as residential spaces. Between 2009-18*, Indian real estate sector attracted
institutional investments worth US$ 30 billion. Private Equity and Venture Capital investments in
the sector reached US$ 4.47 billion in 2018 and US$ 546 million in Jan-Feb 2019.
According to data released by Department of Industrial Policy and Promotion (DIPP), the
construction development sector in India has received Foreign Direct Investment (FDI) equity
inflows to the tune of US$ 24.91 billion in the period April 2000-December 2018.
Some of the major investments and developments in this sector are as follows:
• Housing launches across top eight Indian cities increased 75 per cent in 2018 to 182,207
units.
• In March 2019, Embassy Office Parks, India’s first real estate investment trust (REIT) went
public.
• Warehousing space in top eight Indian cities increased 22 per cent y-o-y in 2018 to 169 mn
sq. ft.
• Around 5.1 million sq. ft. of retail space became operational in top seven Indian cities in
2018.
• In May 2018, Blackstone Group acquired One India bulls in Chennai from India bulls Real
Estate for around Rs 900 crore (US$ 136.9 million).
• In February 2018, DLF bought 11.76 acres of land for Rs 15 billion (US$ 231.7 million)
for its expansion in Gurugram, Haryana.

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Government Initiatives
• The Government of India along with the governments of the respective states has taken
several initiatives to encourage the development in the sector. The Smart City Project,
where there is a plan to build 100 smart cities, is a prime opportunity for the real estate
companies. Below are some of the other major Government Initiatives:
• Under the Pradhan Mantri Awas Yojana (PMAY) Urban, more than 6.85 million houses
have been sanctioned up to December 2018.
• In February 2018, creation of National Urban Housing Fund was approved with an outlay
of Rs 60,000 crore (US$ 9.27 billion).
• Under the Pradhan Mantri Awas Yojana (PMAY) Urban 1,427,486 houses have been
sanctioned in 2017-18. In March 2018, construction of additional 3,21,567 affordable
houses was sanctioned under the scheme.

Road Ahead
The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate
Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in
the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65
billion) in the Indian market over the years. Responding to an increasingly well-informed
consumer base and, bearing in mind the aspect of globalization, Indian real estate developers have
shifted gears and accepted fresh challenges. The most marked change has been the shift from
family owned businesses to that of professionally managed ones. Real estate developers, in
meeting the growing need for managing multiple projects across cities, are also investing in
centralized processes to source material and organize manpower and hiring qualified professionals
in areas like project management, architecture and engineering.
The growing flow of FDI into Indian real estate is encouraging increased transparency.
Developers, in order to attract funding, have revamped their accounting and management systems
to meet due diligence standards.

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Chapter 3

Company Profile
Aadhar housing finance ltd (Aadhar), formerly known as DHFL Vysya Housing Finance Ltd, is
one of the largest affordable housing finance companies in India servicing the home financing
needs of the low income sections of the society.Aadhar endeavours to empower underserved
millions to own their first homes.
With two-thirds of India's 1.2 billion population residing in the hinterland, we are committed to
serve home buyers from the low income group. After all, everyone deserves the security of a home
– from barbers, tailors, carpenters, plumbers, kirana merchants to police, defence and railway
personnel, SMBs and the self-employed.By empowering this segment with the security of a home,
we endeavor to create a truly inclusive India.

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Chapter 4

Product Offering

home loan for salaried home loan foe self loan for plot purchase
employees employeed or/and construction

loan against
loan for home
loan for home extension residential/commercial
improvement
property

loan for
balance transfer and purchase/construction
fixed deposits
top up of non residential
property

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FORMAL
SEGMENT

SEP(self employed SENP(self employed non Non individual

salaried(bank credit)
professionals) professional) entity(e.g)company

resident indian non - if the unit to be

residential indian. work independently
trades against purchased is for the use
Person of indian origin professional skills works independently of the directo r or
services employees of the
company

INFORMAL
SEGMENT

salaried (cash) NIP(No Income Proof)

1. Home Loan For Salaried Employees

Purpose
At Aadhar we understand this, thus bringing you tailor made home loan solutions to suit your
needs. With Aadhar's Home Loan for Salaried employees, everyone can get a Home Loan
including 3rd and 4th grade Govt. or Private Employees, Railway Employees, Teachers, Police
Employees and so on. Monthly salary eligibility starts from as low as Rs. 5000 per month.

Loan Amount

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You can avail of an Aadhar Home Loan up to Rs. 1,00,00,000/- but not exceeding 80% of the cost
of property. The actual loan amount is determined after assessing the individuals requirement and
his repayment capacity based on various factors like:
• Age

• Educational background

• Stability and Continuity of income

• Number of dependents in the Family

• Co-applicant's income

• Assets

• Liabilities

• Saving habits, and others

To calculate your indicative home loan eligibility based on your financial background you can
use our

Tenure
The maximum loan tenure on your Home Loan is up to 30* years. The tenure however does not
extend beyond the retirement age or 60 years whichever is earlier.

EMI
The EMI that you would be paying to repay the loan depends on factors like Quantum of loan,
Interest rates applicable & the tenure you have taken the home loan for.
To calculate the indicative EMI on your home loan you can use our

Applicant and Co-Applicant

Aadhar Home Loans can either be applied individually or jointly. The Co-Applicant may or may
not be a Co-owner of the property. However all the Co-owners of the property must be a Co-
Applicant. Co-Applicants should be immediate family members like Spouse, Parents or Children*.

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For more information, you can click on "Apply for Loan" button on the left side and provide your
details and an Aadhar representative shall get in touch with you shortly.

2. Home Loan for Self Employed

Purpose

While a large part of the Indian work force is Self-employed, this category of home seekers
has been largely ignoredby housing finance entities.

The reasons range from variable or irregular monthly income and lack of proper documentation to
support their real financial status, even when they are eligible for credit. Aadhar Housing Finance
understands these ground realities and has evolved new processes that facilitate the assessment of
income for self employed individuals.

This enables us to extend housing loans on fair terms even to those who might otherwise remain
ineligible for a loan. We acknowledge the sheer effort and hard work that is typical of such
individuals, and specially focus on enabling them to acquire homes, through our schemes specially
designed to offer home loans for self-employed individuals.

Loan Amount
You can avail of an Aadhar Home Loan up to Rs. 1,00,00,000/- but not exceeding 80% of the cost
of property. The actual loan amount is determined after assessing the individual’s requirement and
his repayment capacity based on various factors like:

• The self-employed person should be less than 70 years of age.

• The applicant is self-employed /trader or engaged in service industry.

• The applicant should have been in the same line of business for a minimum period of 3 years or
should have inherited the business from parents.

• The applicant should be able to contribute at least 20% of the total sum required.

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• Sales Tax Registration or any other registration of business required by statutory authorities / local
laws is mandatory.

• Business premises should not be on encroachment land without title to property or deviated in
construction from approved plans.

Tenure
The maximum loan tenure on your Home Loan is up to 30* years. The tenure however does not
extend beyond the retirement age or 60 years whichever is earlier.

EMI
The EMI that you would be paying to repay the loan depends on factors like Quantum of loan,
Interest rates applicable & the tenure you have taken the home loan for.
To calculate the indicative EMI on your home loan you can use our

Applicant and Co-Applicant

Aadhar Home Loans can either be applied individually or jointly. The Co-Applicant may or may
not be a Co-owner of the property. However all the Co-owners of the property must be a Co-
Applicant Co-Applicants should be immediate family members like Spouse, Parents or Children*.

3. Loan for Plot Purchase and/or Construction

Purpose
Nothing is more satisfying than building your dream home like the way you had always wanted.

Found the plot of land where you want to construct your home, or you simply want to own a plot?
You can purchase non-agricultural land situated within Municipal / Local Development Authority
limits, whether you are salaried or self-employed through Aadhar Housing Finance. If you want

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to build your dream home on the purchased plot, Aadhar can finance that too.designed to
offer home loans for self-employed individuals.

Loan Amount
You can avail of an aadhar loan up to Rs.1,00,00,000/- for plot loans and Rs.1,00,00,000/-
for plot + construction loan but not exceeding 70% (in case plotloan only) of the cost of plot or
80% (in case of construction) of the construction cost. The construction has to happen on the plot
and within the time frame according to the NHB guidelines. The actual loan amount is
determined after assessing the individuals requirement and his repayment capacity based on
various factors like:

• Age
• Educational background
• Stability and Continuity of income
• Number of dependents in the Family
• Co-applicant's income
• Assets
• Liabilities
• Saving habits, and others

To calculate your indicative home loan eligibility based on your financial background you can
use our

Tenure
The maximum loan tenure on your plot loan is upto 20 years and plot + construction loan is upto
30 years. The tenure however does not extend beyond the retirement age or 60 years (65 years in
case of Self-Employed individuals) whichever is earlier.

EMI

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The EMI that you would be paying to repay the loan depends on factors like Quantum of loan,
Interest rates applicable & the tenure you have taken the home loan for.
To calculate the indicative EMI on your home loan you can use our

Applicant and Co-Applicant

Aadhar Home Loans can either be applied individually or jointly. The Co-Applicant may or may
not be a Co-owner of the property. However all the Co-owners of the property must be a Co-
Applicant. Co-Applicants should be immediate family members like Spouse, Parents or
Children*.
For more information, you can click on "Apply for Loan" button on the left side and provide
your details and an Aadhar representative shall get in touch with you shortly.

You may also walk in to the nearest Aadhar Housing finance branch in your city.
For complete list of Aadhar Housing finance bran

4. Home Improvement Loan

Purpose
At Aadhar Housing, we understand that everyone aspires to create his own identity with the home he lives in.

You may want to repaint the house, or maybe spruce up the flooring depending on your lifestyle,
at Aadhar Housing we look forward to help you with this with our Home Improvement Loans.

Loan Amount
You can avail of an Aadhar Home Improvement Loan up to Rs. 1,00,00,000/- but not
exceeding 100% of estimated cost as certified by chartered engineer or 100% of Cost certified by
our technical officer whichever is lower, Subject to Maximum 80% of overall market value of
the property.

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The actual loan amount is determined after assessing the individual’s requirement and the
valuation of the property by Aadhar Housing Finance Ltd.

Purpose
You can avail of an Aadhar Home Improvement loan for various purposes as mentioned below:

• Flooring or Roofing
• Plumbing
• Plastering
• Electrical Work
• Painting
• Grills and Sliding Doors & windows
• Parapet wall & Boundary wall Underground or Overhead water tank
• Replacement of doors & windows or Non-movable Assets viz. etc. are allowed to be considered
under the above category.

To calculate your indicative home loan eligibility based on your financial background you can
use our

Tenure
The maximum loan tenure on your Home Loan is up to 20* years. The tenure however does not
extend beyond the retirement age or 60 years (70 years in case of Self-Employed individuals)
whichever is earlier.

EMI
The EMI that you would be paying to repay the loan depends on factors like Quantum of loan,
Interest rates applicable & the tenure you have taken the home loan for.

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To calculate the indicative EMI on your home loan you can use our

Applicant and Co-Applicant

Aadhar Home Loans can either be applied individually or jointly. The Co-Applicant may or may
not be a Co-owner of the property. However all the Co-owners of the property must be a Co-
Applicant. Co-Applicants should be immediate family members like Spouse, Parents or
Children*.

5. Home Extension Loan

Purpose
A growing family requires additional space, so it may be that you want your kid to have room for
himself, or it could even be a special pooja room that you always wanted, we at Aadhar help you
in doing so with our Home Extension Loans.

Loan Amount
You can avail of an Aadhar Home Extension Loan up to toRs. 1,00,00,000/- but not exceeding
100% of estimated extension cost as certified by chartered engineer or 100% of Cost certified by
our technical officer whichever is lower, Subject to Maximum 80% of overall market value of
the property.

Purpose

You can avail of an Aadhar Home Extension loan for either Construction or Addition of New
room within House premises, or for Construction of New Floors within House premises.

To calculate your indicative home loan eligibility based on your financial `background
you can use our

Tenure

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The maximum loan tenure on your Home Loan is up to 20* years. The tenure however does not
extend beyond the retirement age or 60 years (70 years in case of Self-Employed individuals)
whichever is earlier.

EMI
The EMI that you would be paying to repay the loan depends on factors like Quantum of loan,
Interest rates applicable & the tenure you have taken the home loan for.

To calculate the indicative EMI on your home loan you can use our

Applicant and Co-Applicant

Aadhar Home Loans can either be applied individually or jointly. The Co-Applicant may or may
not be a Co-owner of the property. However all the Co-owners of the property must be a Co-
Applicant. Co-Applicants should be immediate family members like Spouse, Parents or
Children*.

For more information, you can click on "Apply for Loan" button on the left side and provide
your details and an Aadhar representative shall get in touch with you shortly.

Loan against residential/commercial property

Purpose
Want to mortgage your residential property? Aadhar housing Finance offers you special Mortgage Loans if
you are a salaried or self-employed professionally qualified individual.

Loan Amount
You can avail of an Aadhar Mortgage Loan upto Rs.10, 00,000 for salaried employees and Rs.1,
00, 00,000 for self-employed.

• Age

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• Educational qualifications

• Stability and Continuity of income

• Number of dependents in the Family

• Co-applicant's income

• Assets

• Liabilities

• Saving habits, and others

To calculate your indicative loan against property eligibility based on your financial
background you can use our

Tenure
The maximum loan tenure on your loan against residential property is 15 years and commercial
property is 10 years.

EMI
The EMI that you would be paying to repay the loan depends on factors like Quantum of loan,
Interest rates applicable & the tenure you have taken the home loan for.
To calculate the indicative EMI on your home loan you can use our

Applicant and Co-Applicant

Aadhar Home Loans can either be applied individually or jointly. The Co-Applicant may or may
not be a Co-owner of the property. However all the Co-owners of the property must be a Co-
Applicant. Co-Applicants should be immediate family members like Spouse, Parents or Children*.
For more information, you can click on "Apply for Loan" button on the left side and provide your
details and an Aadhar representative shall get in touch with you shortly.

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Balance Transfer and Top Up

Purpose
Already taken a Home Loan from elsewhere? No Problem
Have you already taken a Home Loan from some other bank or NBFC, now you want to transfer
that loan to Aadhar to avail the benefits of Aadhar's competitive interest rates?

OR

You want a top up amount from Aadhr on your existing Home Loan taken from elsewhere?

Aadhar makes it possible with its Balance Transfer and Top Up Loan facilities.
For more information, you can click on "Apply for Loan" button on the left side and provide your
details and an Aadhar representative shall get in touch with you shortly.

Loan for Purchase/Construction of Non-residential Property

Purpose

Purchase of ready possession / under construction or construction of commercial property within Municipality
limits of the city and approved for commercial usage by civic authority.

Min Loan: Rs. 2 lacs | Max Loan: Rs. 1 Cr | Max Tenure: 30 Years

LCR / LTV
75% of sale deed or 50% of market value whicheveris Lower

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Fixed deposits:
Features & Rates
Interest Rates offered under Fixed Deposit Schemes:

• At present, the Rate of interest offered ranges from 8.50% p.a. to 9.40% p.a. (for Half Yearly
Compounding Deposit Schemes) and from 8.68% p.a. to 9.62% p.a. (for Annual Compounding
Deposit Schemes) and the tenure ranges from 12 months to 120 months

• Additional Interest Rate of 0.05% p.a. for Women Depositors i.e., Deposits with Women as First
Applicant. However this additional interest rate of 0.05% shall not be applicable for Privilege
Category Customers.

• Additional Interest Rate of 0.15% p.a. on Renewals where deposit is renewed on or before the
maturity date

• Option of Auto Renewal / Auto Repayment

• Facility of Loan against FD

• Trust Deposit placed with Aadhar Housing Finance Ltd. qualifies as Specified Investment, as
defined under the Section 11 (5) (ix) of the Income Tax Act, 1961

• Deposit received from Non-Resident Indians (NRIs) shall be as per NHB Regulation read along
with Notification No. FEMA.5/2000-RB dated 3rd May, 2000 issued by RBI. The tenure of NRI
deposit shall be from 1 year to 3 years only.

• For Fresh Deposits, the Minimum Deposit Amount shall be Rs.5000/- and thereafter in multiples
of Rs.1000/-

• In case of renewal of Matured Cumulative Fixed Deposits, the total maturity value including
interest amount will be rounded off to the nearest rupee. Such Renewed Fixed Deposits may be
odd amounts in multiples of Rs.1/- for which the consent of the depositor will be taken at the time
of accepting deposits.

• For Non-Cumulative Deposit Schemes, Interest will be paid either monthly / quarterly / half-yearly
/ annual basis as selected by the customer at the time of application

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• For Cumulative Deposit Schemes, Interest will be compounded half yearly, on 31st March and
30th September of every year after deducting tax, wherever applicable. The Principal along with
Interest will be paid on maturity once the discharged deposit receipt is received by us.

• Interest will be paid by way of NACH

• With effect from 2nd March, 2019, CRISIL has revised the rating on Fixed Deposits of Aadhar
Housing Finance Ltd to: FA+/(Watch) Negative.

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Chapter 6
Process of Application

DOCUMENTATION & PROCESSING FEE CHEQUE

SALES LOGIN

CREDIT HISTORY CHECK

PERSONAL DISCUSSION

ELIGIBILITY CHECK

TECHNICAL AND LEGAL VERIFICATION OF PROPERTY

FILE SANCTION

DISBURSEMENT

POST SALES SERVICES

Home Loan Approval and Disbursement Process

At Aadhar Housing finance, our primary goal is to make it easy and simple for a customer to
acquire a home loan. Our home loan application form is simple yet comprehensive. All you have
to do is fill the application form, collate the essential documents required to process your home
loan and submit it to us along with a chequefavouring "Aadhar Housing Finance Private Ltd"
for the initial processing fees. If you have any questions at this stage or need help with this,
our home loan advisors are at hand to assist you with your application.

Here is a quick, step-by step guide to the process we follow in our endeavour to disburse your
housing loan at the earliest.

STEP1:ASSESMENT

At this stage, we want to determine that you can afford the loan repayments. Our credit team will
conduct income verification and validate the accuracy of the information you have provided.

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A credit check will then be carried out to reveal your credit history; in this case we as a lender will
obtain a credit report that will show the following details :

• Personal details such as : Name, Residential Addresses, Date of Birth and PAN card
number
• Records of some recent credit accounts
• Overdue Accounts (Defaults) which may have been listed against your name, including an
indicator on whether the default amount has been paid or not.
• As your credit history plays an important part in the home loan application process, it is
always advisable to clarify and resolve any credit related issues before lodging your loan
application.

STEP2:CONDITIONAL LOAN SANCTION

If there are no major issues with your income verification and credit checks, we at Aadhar Housing
will provide a conditional sanction for your loan. This means that we will issue a formal Letter of
Offer cum acceptance favouring all the applicants to the loan. We recommend all applicants read
this document carefully, sign and return it to us, making sure the information is correct and that
everyone understands all the terms and conditions.
Your Aadhar Housing Finance Home Loan executive will be there to guide you through this step
and assist you in compiling documents, should we require any further information.

STEP3:SECURITY ASSESMENT

Technical Assessment: A qualified technical officer will conduct a valuation on the property you
intend to purchase and any property that will be used as security.

Legal Assessment: A qualified lawyer will examine the property documents i.e. chain of
agreements/title etc to determine if the property documents provided by you are conducive for
lending.

STEP4:LOAN DISBURSEMENT

Once you have formally accepted our loan offer, a thorough scrutiny of all of the above steps is
conducted by us to ensure accuracy of the entire process. Once the final check is completed, you

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need to submit the final processing fee cheque (all other charges as mentioned in the tariff
schedule) to your Aadhar housing executive favouring "Aadhar Housing Finance ltd".
Upon receiving the funds you will start paying your first home loan repayment usually from the
next month after the disbursement date.
And with these four simple steps, you and your family become a proud owner of your own Home.
If you have more questions, Please mail us your questions to customercare@aadharhousing.com

Documents needed for KYC compliance

National Housing Bank (NHB) had introduced Know Your Customer (KYC) Guidelines for
Housing Finance Companies. We request you to co-operate with us in complying with these
guidelines.

• Aadhar Card
• PAN Card
• Passport
• Voters ID Card
• Driving License

Photo ID Proof
(any one required)

Residence Proof
(any one required)

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Passport
Electricity Bill
Telephone Bill
Ration Cardp
Letter from Employer

List of Documents-income document

Salaried Individuals
• KYC Documents
• Salary slip for the last 3 months / Salary Certificate
(If variable components like Over Time and Incentives are reflected then salary slips for
the past 6 months are required)
• Age Proof
• Copy of all bank pass books / bank statements for the past 6 months including front page
• Company profile if it is a lesser known organization including front page

List of Documents-property document

Transfer Of Property And Its Modes:

• SALE DEED

• GIFT NEED

• PARTITION DEED

• PROBATE OF WILL SUCCESSION

• RELIQUISHMENT/SURRENDER/FAMILY/TRANSFER DEED

• TRANSFER BY COURT DECREE

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• REGISTERED SETTLEMENT DEED

Legal terminology:

Mortgage :

• It is the transfer of an specific immovable property.

• For the purpose of securing the payment of money advanced by way of loan,an existing or
future debt,or the performance of an engagement which may give rise to pecuniary liability
• Mortgage money:The principal amount and interest of which payment is secured for the
time being is called mortgage money.
• Mortgage deed:The instrument by which the transfer is affected is called as mortgage deed.

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TYPES OF
MORTGAGE

EQUITABLE REGISTERED
MORTGAGE MORTGAGE

TRANSFER OF PROPERTY AND ITS MODES:

• SALE DEED

• GIFT NEED

• PARTITION DEED

• PROBATE OF WILL SUCCESSION

• RELIQUISHMENT/SURRENDER/FAMILY/TRANSFER DEED

• TRANSFER BY COURT DECREE

• REGISTERED SETTLEMENT DEED

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Segmentation of Product
Housing finance is basically required by both suppliers(builders) and users. The builders need
finance forland acquisition, purchase of building materials and construction related activities. The
household-users need finance for purchase / construction of new house or flat orhouse-site, for
repairs, renovation or extension of already existing houses. Housing being a long durable asset,
thefinance required is generally a long term credit in nature.As a durable asset, housing structure
provides security forhouse finance. Hence it is made usually against mortgageof house itself as
security. Naturally it follows that tobecome eligible for house finance, the borrower should bethe
owner of the house with clear title of ownership.
Housing finance, thus, enables individual households toacquire land and build their own dwelling
units with thebasic amenities for a better standard of living.The need and significance of increasing
housinginvestment are two-fold : First, the consideration ofhuman comforts, decency and dignity
as well as socialand economic welfare justifying adequate investment tomeet the growing demand
for housing by the people, andsecondly, with economic development and increasedincome, the
people become increasingly more consumeroriented, which would raise the propensity for
betterquality housing services calling for larger investmentsto improve housing (Cherunilam and
Heggade, 1987).
Inother words, investment in housing is not only sociallydesirable but also necessarily
becomeseconomicallyindispensable. Increasing emphasis and demandfor more investment in
housing is, therefore, a directoff - shoot of the welfare state goals of the moderngovernments all
over the world (Heggade, Odeyar 1987).Investment and financing in housing can be
broadlydivided into two categories : private and public. Thereare three types of private investment
in housing. Theyare : (i) the investment in owner-occupied housing,(ii) the private investment in
housing to earn regularincome by way of rent and (iii) the housing investmentundertaken by the
private industrialists / employers forhousing their employees. The public investment inhousing is,
on the other hand, based on the socioeconomic considerations and welfare objectives.
Theeconomic objective in housing investment is to promoteemployment and to contribute to the
development ofnational economy, whereas the social objective intendsto improve social welfare
of people through a provision ofbetter quality housing to the resource poor community.The owner
occupied private housing investment ismotivated by the need for and the ability to pay forhousing.

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In other words, the magnitude of investmentrequirement depends on the type of house

constructed.Type of house constructed depends on the nature ofaccess to resources required.
Usually, there are threecategories of households, who would require investmenton owner-
occupied housing. The first group, comprisingof the business class, industrialists and other rich
classof society require the construction of luxury housingunits. Financing for construction of these
house models does not pose problems, as the owners from their ownresources usually meet them.
The second is the middleclass and salaried families, who require semi-luxurydecent housing to
live in. This class of householdsneeds financial assistance on cost recovery basisfor construction
of houses of the type they prefer. Thelast is the assetless resource poor families, who cannotafford
the houses at market rate and require financialsupport by the Government. There is a good case
forcredit to low-income households through a subsidymixed specific housing programs. This is
entirely theresponsibility of the government, as the low-income households cannot get access to
formal housing credit (World Bank, 1984).

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TARGET CUSTOMERS
Aadhar Housing Finance - making home loans accessible to all

Owning a house is a dream that every Indian grows up with. However, while there are various
options for people in the middle and higher income groups to avail loans and fulfil this dream, it
is the low income group that has been always been in the periphery. However, one key player
realized this difference and established a lending service that is focused on this low-income group
- Aadhar Housing Finance. Aadhar Housing Finance was established with a clear-cut vision to
focus on the low-income segment. From day one we started targeting low-income segment, and
we went from state to state, location to location. In 2017, Aadhar merged with another group
company, DHFL Vysya Housing Finance. After their merger, the name of the company was again
changed to Aadhar Housing Finance, and it became the India's largest affordable housing finance
company, in terms of reach."
Aadhar Housing Finance has been making the dream of owning a home, a reality for lakhs of
Indians and they aim to increase their reach in the coming years. With the boost, provided by the
Government of India's Housing for All scheme, Aadhar Housing is looking to reach a target of Rs
35,000 crore loan book by 2022.

Positioning of product

• Canopy and umbrella activity

• Leaflet insertion in newspapers
• Aadhar parichay
• Aadhar Para marsh shivir
• Participation with branded stall in important local events/festivals/exhibitions
• Aadhar awas mela
• Spot sanction camp

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Chapter 7
Market Growth
Housing credit growth likely to rise to 17-19% in FY2019: ICRA

Housing finance companies will need incremental funding of around Rs 4 lakh

crore in financial year 2019

The growing affordability for the first time home buyer supported by government’s incentives
such as the Pradhan Mantri Awas Yojana (PMAY), is expected to push housing credit growth to
17 percent to 19 percent in the financial year 2019, says ICRA in its latest research update on
Housing Finance Companies.
As per ICRA estimates, with steady housing credit growth of 16 percent in FY2018, the mortgage
penetration (housing credit as a percentage of GDP) touched the double-digit mark of 10 percent
as on March 31, 2018 (9.5 percent as on March 31, 2017).
ICRA expects mortgage penetration levels to go up by another 300-500 bps over the next five
years. At the same time, the overall asset quality indicators for all HFCs remained stable with
Gross NPA of 1.1 percent as on March 31, 2018 (1.2 percent as on December 31, 2017 and 0.8
percent as on March 31, 2017). ICRA expects overall gross NPAs for HFCs to remain range-bound
between 1.2 percent to 1.5 percent.
The retail home loan asset quality of HFCs is likely to be benefitted by the recent cabinet
ordinance, to treat home buyers as financial creditors, ICRA said.
“HFCs would need to tie-up the incremental funding requirements of around Rs 4 lakh crore for
meeting the growth plans as well as replacing the maturing liabilities in FY2019. Going forward,
incremental funding from banks especially PSBs will be lower owing to their capital constraints.
Though RBI has relaxed the norms for ECBs which will enable HFCs to diversify their funding
mix and expand the investor base, the proportion of funds raised through ECB route will be
dependent on competitiveness of overall landed cost of these ECBs as compared with the domestic
borrowing rates”, says Supreeta Nijjar, Vice President and Sector Head, Financial Sector Ratings,
ICRA.
Newer HFCs in affordable housing segment continued to grow at higher than the overall industry
growth rate of 39 percent. However, as anticipated by ICRA in its previous reports on the HFC

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sector, the gross NPA in the sub-segment deteriorated from 3.3 percent as on March 31, 2017 to
4.1 percent as on March 31,2018 driven by greater portfolio seasoning, entity-specific factors in
some cases and external events such as demonetization and implementation of Goods and Service
Tax (GST) impacting the cash flows of the borrowers.
“While growth prospects remain good, given that the borrower profile is more vulnerable to
income and external shocks, lenders would have to maintain good origination and lending
processes as they expand in this segment,” says Nijjar.
The ultimate credit losses in the affordable housing segment would be a function of the HFCs’
ability to repossess the properties and timely sell the repossessed assets, which is hitherto largely
untested. Though the ticket sizes are small, the process could be more time consuming and the
recovery costs could also be high in relation to the loan amount, thereby reducing the final recovery
for the lender.
As per ICRA’s estimates, gearing levels for HFCs are expected to remain at around 8.5-9 times
over the medium term, supported by adequate internal capital generation and comfortable access
to capital. The incremental capital requirement is expected to be Rs 7,700-12,000 crore for the
next three years. Given the good investor appetite for the sector, ICRA expects the HFCs to
maintain adequate capitalization levels going forward as well.
Housing Finance Market Maintains Growth Momentum

Urbanization and migration are inevitable in India. Cities are regarded as “engines of growth” for
economies. The confluence of capital, people, and space in cities unleash the benefits of
agglomeration, creating a fertile environment for innovation of ideas, technologies, and processes
which produce huge economic returns. Cities in India generate two-thirds of national GDP, 90 per
cent of tax revenues and the majority of formal sector jobs, with just a third of the country’s
population. As per the 2011 Census of India, 31.2% of the population lived in urban areas, which
is projected to grow to 50% by 2050.

Despite being centers of opportunity, the cities of India bring with them a host of environmental
and infrastructure challenges, from pollution to lack of civic amenities like drinking water, sewage,
housing and electricity, which disproportionally impacts the more vulnerable poor population. For
addressing these issues, the Government has taken various steps to improve urban infrastructure

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like Swachh Bharat Mission (SBM, urban), Atal Mission for Rejuvenation and Urban
Transformation (AMRUT), Heritage City Development and Augmentation Yojana (HRIDAY),
Smart Cities, and Housing for All Mission. Under the Smart Cities Mission, 99 cities have been
selected with a total outlay of ₹2.04 lakh crore ($31 billion).

Housing is a long-term and stable asset for the people and the Nation. The Government has
accorded top priority for housing and put it on a growth trajectory not only by offering tax and
fiscal incentives for builders and consumers, but also through structural reforms and single window
clearance to improve transparency and disclosures to attract domestic and foreign investments.
Housing is also a great contributor to GDP being the second biggest employer after agriculture.
The sector with its backward and forward linkages to 250 ancillary industries, has the potential to
generate significant employment opportunities and provide a quantum jump to the Indian
economy. Accelerating the housing growth in the sector can help turn-around the sluggish GDP
growth witnessed in the last few years. The housing finance to GDP ratio in India is at 9.7% in
2016-17, up from 1.8% in 1996-97. Even though this represents phenomenal growth for the sector, it is
still low when compared with other developing and developed countries.
Our Hon’ble Prime Minister Shri NarendraModi’s “Housing for All’ programme has rejuvenated
the housing sector and a lot of construction activity is going on particularly in the affordable
housing segment. India would require about 6 crore housing units on a pan India basis by 2022 to
achieve this vision. It is imperative that to achieve this vision, we strengthen the sector by
streamlining the archaic norms and procedures of urban local bodies and incentivize stakeholders.
The Housing Finance market has been growing at a CAGR of around 16%-17% for the last five
years and has grown to more than ₹15 lakh crore in 2017-18 from about ₹25,000 crore in 1996-
97. The main driver being the loans in the ticket size of less than Rs. 25 lakh.
The housing finance sector in the last 3 decades has expanded and graduated to a relatively matured
sector. New Institutions, products, and customer base have ensured that the sector which was
dominated by a few select institutions, has widened its base with the entry of Banks in the early
2000s and today with corporates thereby creating competition and better services to the customer.
NHB’s journey since inception has been pioneering and eventful. It has provided a balance
between the various functions such as regulation, supervision, financing and creating a market

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infrastructure towards developing a healthy, profitable and sustainable eco-system around the
Policies and Schemes of the Central & State Government to focus on affordable housing segment.
Some of the key achievements by NHB in the past three years:

Performance Highlights (2015-2018)

• Valid Certificate of Registrations (No. of HFCs) increased by 48% (65 à 96)

• 20% increase in no. of Regulatory Inspections (50 à 60)
• Implemented on-line portal (ORMIS) for data submission by HFCs
• Successfully implemented multilateral programmes such as Energy Efficient Programme,
Affordable Housing Programme and Informal Housing Programme through funding from
KfW, DFID and World Bank, with AFD SUNREF Program in progress
• 100% collection efficiency in Refinance Accounts is maintained
• Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme (CLSS) has been
successfully implemented and has reached 2 lakh beneficiary households with 200
primary lending institutions on board
• Launched the revamped Housing Price Index under NHB RESIDEX covering 50 cities in
India
• Finnoviti 2016 Award from Banking Frontier & Deloitte for “GRIDS Portal” as one of
the best technology innovations in Banking Financial Services and Insurance Industries
sector
• Digital India Award 2017 for “PMAY Portal” under the category of “Good for India –
Digital Innovation in e-Governance Solutions”
• NHB’s in-house quarterly Hindi Magazine ‘AawasBharti’ received the first prize for the
last three years (2013-16) from the Reserve Bank of India and from the Delhi Town
Official Language Implementation Committee.

• Financial Highlights (2015-2018)

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Government initiatives

1)RERA:

• Government of India has enacted the Real Estate (Regulation and Development) Act 2016
and all the sections of the Act shall come into force with effect from May 1, 2017. Under
this Act, Government of Maharashtra established Maharashtra Real Estate Regulatory
Authority (MahaRERA), vide Notification No. 23 dated 8 March 2017, for regulation and
promotion of real estate sector in the State of Maharashtra
• Under this Act, appropriate government shall establish Real Estate Regulatory Authority
for regulation and promotion of the real estate sector in the State / UTs. The Authority shall
strive to facilitate the growth and promotion of a healthy, transparent, efficient and
competitive real estate sector while protecting the interest of allottees, promoters and real
estate agents. The authority shall also establish an adjudicating mechanism for speedy
dispute redressal regarding registered real estate projects.

2)PMAY:

• In order to empower people to get their dream home,honorable prime minister has
announced a comprehensive and a progressive mission,’PradhanMantriAwasYojna-
housing for all on 17 june,2015
• One of the major verticals of PradhanMantriAwasYojana is credit linked subsidy
scheme(CLSS)for lower income group/economically weaker section(EWS/LIG) and
middle income group(MIG-I&II)
• Under this scheme, Central government provides financial assistance through lending
institutions to eligible beneficiaries across all statutory towns as per 2011 census and their
adjacent planning area(updated by the government from time to time)

3)CIBIL:

• CIBIL is India’s first credit information company (CIC) founded in august 2000.

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• CIBIL collects and maintains records of an individual’s payments pertaining ,on a monthly
basis.
• These records are submitted to CIBIL by member banks and credits institutions,on a
monthly basis
• This information is then used to create Credit Information Reports(CIR) and credit scores
which are provided to credit institutions in order to help evaluate and approve loan
applications.

Credit-linked Subsidy Scheme (CLSS)

• The scheme is available for the first-time home buyers in the Economic weaker section
(EWS), Low income group (LIG) and Middle income group (MIG) categories, as under:
• Applicable for customers who are purchasing/constructing their first home. The
beneficiary family should not own any other house in their name
• Family means husband/wife/unmarried children
• Actual subsidy amount credited is as approved by the National Housing Bank (NHB)
• 6.50% interest subsidy for loan amount of Rs. 6 Lakhs for 20 years to EWS / LIG
beneficiaries having the carpet area which should not exceed 30 sq. mt. (annual household
income up to Rs. 3 Lakhs PA), 60 sq. mt. for LIG (annual household income between Rs.
3 Lakhs and Rs. 6 Lakhs PA)
• 4.00% interest subsidy for MIG I category for loan amount up to Rs. 9 Lakhs for 20 years
having carpet area of 160 sq. mt. (annual household income between Rs. 6 Lakhs and Rs.
12 Lakhs PA) and 3.00% interest subsidy for MIG II category for loan amount up to Rs.
12 Lakhs for 20 years having carpet area of 200 sq. mt. (annual household income between
Rs. 12 Lakhs and Rs. 18 Lakhs PA) as per revised guidelines issued by NHB
• The construction/extension must be completed within 36 months
• The notified areas as per above regulation are eligible for availing the subsidy

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Fiscal Incentives

chall
• The government has taken many initiatives on supply side such as, exemption under
Income Tax on profits of a developer from affordable housing project, the building plan
approval process, the affordable housing is given infrastructure status etc. has been eased
out. Your Company has already registered subsidy claims to the tune of Rs. 11.06 Croresfor
573 customers for FY 2017-18 under the scheme. The Subsidy claim of about Rs. 90 Crores
in over 5,000 cases is under process. Real Estate Regulatory Act (RERA) The Act brought
real estate developers under the ambit of stringent regulations primarily to protect the
interest of buyers, implying a certain order and clarity into the sector. However, at the
implementation level, there are certainenges hampering the functioning of the sector. From
the long-term perspective, the regulatory framework will bring more maturity into the
sector.

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Chapter 8
Problem of Housing Finance

In India, the demand for housing has increased rapidly due to population growth, migration from
rural areas to urban areas, the decay of the existing housing stock and breakdown of traditional
joint families. The information
technology revolution and rapid growth of knowledge based industries in recent years have also
further contributed to the already growing acute shortage of
housing India particularly in urban areas. Since housing requires huge investment, a critical
constraint for the development of housing is lack of finance. With the entry of commercial banks
into housing finance, the housing sector has witnessed real boom during the last decade. The
growing demand for housing finance has contributed for rapid growth of banks' lending to housing
sector. Housing finance has now emerged as an important segment of the credit portfolio of banks.
Its rate of growth in the recent years is rapid enough to cause concern to the regulator. During the
year 2003 for example, the unprecedented interest evinced by almost all banks in attracting new
customers for their housing loans, has resulted in an increase of 55 percent in housing finance. In
its Annual Report 2002-03, the Reserve Bank of India expressed its concern in a box item
captioned as Housing Finance: New Driver of Bank Credit. “The cause for potential worry” it
revealed, “is that by lowering the lending rates, banks are approaching the cost of funds”. It
cautioned, “Banks need to be alert against an unbridled growth of housing finance and should take
due precaution in the matter of interest rates, margin, rest period and documentation.” It is also
important to note that the on-going global financial crisis was mainly caused by housing finance
in US. With the real estate boom and appreciating house prices, the housing finance spurred
competition among financial institutions to unprecedented levels. Large number of borrowers,
brokers and appraisers inflated house prices and borrowers income on loan applications. The banks
were confident that potential repayment problems could be mitigated by ever increasing market
prices for the collateral houses. With the fall in asset prices, the housing finance by banks
ultimately led to subprime lending crisis. From the housing finance policy perspective, India has
a lesson to draw from this housing finance subprime crisis. Tarapore Committee has already drawn
the attention of policy makers on the growing subprime quality of housing finance in India. The

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expansion in housing finance has continued unabated. In March 1990, it constituted only 2.4
percent of the total bank credit. While according to the latest Report on Currency and Finance
(2005-06), its share has gone up to 11 percent. The rate of growth of housing finance since 2000-
01, has been about 40 percent. Excessive speed is bound to result in accidents. This is evident from
the emergence of NPAs. It is estimated to be around 3 to 4 percent of the net advances. It is also
reported that three of the major players in the housing finance sector have approached the Asset
ReconstructionCompany Ltd (ARCIL) to sell the bad loans from their home loan portfolios.
ARCIL is expected to purchase a good volume of the bad loans from these banks at a discount and
recover the advances. Besides direct lending, many public sector banks have promoted in the past
subsidiaries for extending housing finance. Only a few of them appear to have been successful like
CanFin Homes Ltd. and PNB Housing Finance Ltd. Other housing finance subsidiaries like
Corpbank Homes Ltd. and VIBANK Housing Finance Ltd. are merged with the parent banks, ING
Vysya Bank Ltd. - a private sector bank also had a housing finance outfit, which was taken over
by Dewan Housing Finance Ltd. Other prominent players in this area are HDFC Ltd. and LIC
Housing Finance Ltd. IDBI is in the process of setting its own housing finance subsidiary. Housing
finance has received a boost since the establishment of National Housing Bank by the Reserve
Bank of India in 1988. In addition to providing refinance facilities, NHB has provided a regulatory
framework for the operations of the housing finance companies in India.
On the demand side, housing being a basic need of the growing population, the strategic role of
the house building industry and the bulging demand for housing finance cannot be under-
estimated. A large section of the population in rural and semi-urban areas is still beyond the reach
of the banks. Banks also are concentrating in urban and metropolitan centres, where the demand
for housing finance is strongly supported by the builders. On the supply side, public sector banks
are the major source of housing finance having share of 63 percent. The share of private sector
banks-both of the older and younger generations - is 26 percent. Foreign banks, though quite active
in extending housing finance, their share is about 9 percent only. Gramin banks have a negligible
share at less than 2 percent. The total number of housing loans serviced by the banking sector is
45.21 lakh only. This figure can be considered as an infallible indicator of the long way the banks
have to go to enable the teeming millions to have a roof over their heads. The concentration of
housing finance in the metropolitan centres is a unique feature of the disbursal of housing finance
in India. According to the available data, 51 percent of the total housing finance is lent in

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metropolitan centres only. Out of the total housing finance amounting to Rs.1, 82,167 crore, the
rural sector receives only Rs.18, 213 crore - 10 percent during 2005- 06. The poorer sections of
the population depend upon the government-sponsored and subsidized housing schemes. Most of
those working in the un-organized sector are unable to obtain housing finance from banks and
financial institutions. Regional inequalities in the disbursement of housing finance are very
conspicuous. Three states- Maharashtra, Karnataka and Tamil Nadu account for nearly 43 percent
of the total as on March 2007.
Of this, the share of Maharashtra alone is 21 percent. In the less developed states, housing finance
has not shown any signs of growth. Maharashtra and the southern states together get the lion's
share. Despite phenomenal growth in housing finance by commercial banks in India, there exists
mismatch between demand and supply, regional disparity in disbursement, rural and urban divide
and poor outreach to weaker sections of the community. Besides this, they are faced with the
problem of growing NPA and legal complications.

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Some Important Terms

Application Login:Submission of application with required documents.

Credit Appraisal:It is a check on the applicant’s financial situation to determine eligibility for
home loan and the maximum loan amount.

Sanction:Approval of the loan application known as sanction.

Sanction Letter:A home loan sanction letter is issued by a bank or financial institution to an
applicant who has applied for the loan.

Technical appraisal:To check the validity for approvals for construction from local government
bodies is verified.

Legal appraisal:To verify that the property has a clear title,and that the home loan is being
disbursed to the right owner of the property for legal and valid reasons.

Pre-Approved Property:It is approval of property for loan sanction before purchasing any
property,the home buyer needs to ensure that the builder possesses the requisite approvals.

Disbursement:t refers to the release of loan amount to borrower by lender.

Emi: Payment of only interest on the amount disbursed is EMI.

Interest Rate:In the earlier days floating rate lending used to be applying on loans with reference
to each banks individual benchmark rate.

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Floating Rate:The margin will be as per the prevailing rate at the time of disbursement.The margin
for the customer is locked at sanction and is fixed for the tenure of the loan whereas base will
fluctuate as per change in interest rate.

Amortization:Amortization is paying off an amount owed over time by making planned,

incremental payments of principal and interest.

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Chapter 9

Limitations

• The information can be biased due to use of questionnaire.

• It was difficult to find respondent as they need to go for field work and collection of data
was difficult. Therefore, the study is carried out based on the availability of the respondent.
• Avoidance of the people to fill complete information affects the validity of responses.

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Chapter 10

Conclusion

• Aadhar Housing Finance Ltd. has maintained a very good brand image in the mind of lower
income section customers.
• It provides proper attention and services to meet housing financial needs of LIG customers.
Indirect channels are essential to drive the housing finance business successfully.
• They help to generate leads and provides essential support to Aadhar Housing Finance Ltd.
and Low Income Group customers.
• In all indirect channels like Direct Selling Agent are business and cost effective.
• Aadhar Housing Finance Ltd. should enhance marketing activities and customer
awareness through builder visits and Direct Selling Agent.
• Aadhar Housing Finance Ltd. can minimize the fixed cost through connectors and Direct
Selling Agents.

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