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‘P’ SEGMENT ADVANCES : GENERAL INSTRUCTIONS
'P' Adv. : Check-off Facility : Modified Guidelines : Detailed in CCFO/ADV/347/2005-06.
I.-T. Returns : In case of doubt, the branches may engage services of Chartered Accountants
to verity and establish genuineness of Income-Tax Returns : CIRCO/ADV/CL/134/2004-05.
Per Seg. Adv. : Access Rights : As a fallback mechanism, the Operating units/major Branches,
which are handling the Personal Loans, Education Loans and Auto Loans, etc., have been provided
with CIC user rights, so that in the eventuality of any disruptions in LOS, there will not be any
disruption in the sanctioning process of these loans : e-Cir/789/2013-14.
‘P’ Banking Adv. : LOS : All the schemes of Education and Personal Loans have been migrated
to LOS except Loans against Bank’s Own Time Deposits : e-Cir/328/2013-14.
Therefore, no such loan account should be opened in CBS outside LOS.
‘P’ Adv. : Common Irregularities : Leading to perpetration of Frauds : Some of the lapses are
detailed vide CIRCO/ADV/CL/115/2003-04.
As personal banking advances are a thrust area of the Bank, there is a need for Branch Managers,
Divisional Managers and field staff to meticulously carry out pre and post sanction functions
and also to closely monitor the advances, with a view to safeguarding the Bank's interests.
Car Loan & Housing TL : Double Financing : Procedural lapses : Detailed in CIRCO/ADV/
CL/52/2003-04.
'P' Adv. : Frauds : As meaningful pre-sanction inspection has a major bearing in establishing
the credentials of the borrower/guarantor and in containing frauds, Corporate Centre has reiterated
a few major aspects of pre-sanction inspection process of housing and other 'P' segment loans
vide CIRCO/ADV/CL/132/2004-05.
'P' Loans : Frauds : Reference may be made to borrower-wise, city-wise list, in alphabetical
order, generated by ZOCCs from CISLA Returns : CIRCO/ADV/CL/288/2004-05.
Frauds in 'P' Advances : (To prevent frauds relating to finance on the same property from other
banks and our branches), the branches in cities should make a reference to the latest CISreturns of City Branches kept at Zonal Office (Administrative Office) / On Locale Regional Office/
Main Branch : CIRCO/ADV/CL/325/2004-05.
'P' Advances : Frauds : Letter of undertaking from the employer agreeing to give check-off
facility, submitted by the prospective borrower(s), should be properly verified / confirmed by the
branches for their genuineness with the employers before granting loans (so as to obviate the
possibility of financing borrowers who represent themselves as employees of fictitious
organizations) : CCFO/ADV/CL/04/2005-06.
Frauds in Personal Loans : Impersonation, Fake Documents : Frauds in personal loans can be
avoided if the branch officials take the care to verify the antecedents of the prospective customers
as also the genuineness of the documents submitted in evidence of proof of identity, residence
income and employment: CCFO/ADV/CL/24/2005-06.
‘P’ Adv. : Vigilant Approach : An undertaking should be obtained from those borrowers who
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want to avail loans under P Loans other than home, auto and student loans : CCFO/ADV/CL/81,
102/2006-07.
“I/We hereby certify that the proceeds of this loan will not be used for any speculative purpose
whatsoever.”
‘P’ Adv. : Frauds : Serious deficiencies in pre-sanction and post-disbursement : Detailed in
CCFO/ADV/CL/262/2006-07.
‘P’ Adv. : O.R.M. : Operational Risk Management : Three-pronged approach : Detailed in CCFO/
ADV/CL/115/2006-07; to be implemented to mitigate the operational risk due to multiple financing.
'P' Adv. : Repayment Schedule : The Bank has now permitted aligning the repayment schedule
with expected cash flow in case of Home Loans, Car Loans and Two-Wheeler Loans availed by
agriculturists. (This is not only convenient for the borrowers, but also reduces chances of default
in accounts) : CIRCO/ADV/274/2004-05.
‘P’ Adv. : Rephasement : (With a view to providing relief to borrowers in Personal Segment
where reasons for default are beyond their control), re-structuring/rescheduling/rephasement
may be allowed in such term loans, more particularly housing loans very selectively : CIRCO/
ADV/CL/74/2004-05.
As per extant delegation, the authority that can sanction the advance also has powers to
rephase the same loan. However, once the decision has been taken to rephase a term loan,
control return is be submitted to the next higher controlling authority, invariably.
‘P’ Adv. : Rejected Applications : Review Procedure : The Bank’s extant review procedure for
rejected applications at RACPCs as conveyed by BPR Dept. is reiterated in e-Cir/155/2009-10.
‘P’ Adv. : Tie-ups : The Bank has laid down the basic guidelines and power structure for
approving improvement in pricing in respect of tie-ups with corporates for granting Housing and
other P-segment loans to their employees. The structure put up applies only to borrowers who
cannot be accommodated in the 'Plus Schemes'.
'P' Advances : Tie-ups : The concessions applicable under the prescribed parameters cannotbe clubbed while quoting improvement in pricing to various target group of borrowers. Thus, onlyone concession is permissible to a particular customer : CIRCO/ADV/CL/127/2004-05.
(In view of high NPAs under Two-wheeler loans,) it should be ensured that extant guidelines of
the scheme are meticulously complied with and genuineness of the customer and his repayment
capacity and credit worthiness are duly verified : CIRCO/ADV/CL/180/2003-04.
SBI Vishesh : A new product, named SBI Vishesh, has recently been launched for our Mass
Affluent segment customers. SBI Vishesh includes a bundle of value propositions and services
for offering to a select group of valued P-segment (Domestic) customers of the Bank. Details of
SBI Vishesh are enclosed to CCFO/ADV/CL/152/2005-06.
CIBIL : The information detailed in CCFO/ADV/CL/21/2005-06 should be incorporated in housing
and car loan applications forms.
‘P’ Adv. : Discretionary Powers : To permit relaxation in interest rates : CCFO/ADV/CL/338/
2005-06.
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‘P’ Adv. : Processing Fee : Discretionary Structure for Concessions : e-Cir/70/ 2008-09.
‘P’ Adv. : CRPF : Payments of Salary and Loan Facilities : CCFO/ADV/CL/98/
2006-07.
‘P’ Adv. : Irregularity Reports : From quarter ending June 2006 : The Bank has recently
introduced a system for submission of irregularity reports in respect of P-segment Loans, in line
with the irregularity reporting of other business segments. The salient features of the irregularity
reporting structure for P-segment Loans is detailed in CCFO/ADV/CL/123/2006-07.
‘P’ Adv. : Verification Agencies : Engagement of their Services : Details : CCFO/ADV/CL/295/
2005-06.
Guidelines for outsourcing of verification agencies : CCFO/ADV/CL/360/2006-07.
The Scheme is applicable to all P Segment loans above Rs. 10,000/-, including Home Loans,
Auto Loans and all other P Segment loans (including Personal Loans and Education Loans). The
arrangement is due for review after six months. The Branch should verify 2% of the cases handled
during this period by the outside agency, as a cross-check of the quality of their services : e-Cir/
541/2008-09.
Per Segment Adv. : Employment of Verification Agencies : The power of appointment of local
verification agencies and fixing of charges for the scope of work within terms and conditions are
now vested with the Circle CGM : e-Cir/888/2013-14.
‘P’ Advances : Register : Branches/RACPCs should ensure that guidelines regarding maintaining
of Loan Application Receipt and Monitoring Register are meticulously followed : e-Cir/866/
2011-12.
Retail Loans : Bulk Proposals : Prevention of Frauds : Branches/operational units/CPCs should
immediately start carrying out enhanced due diligence, as suggested by RBI : e-Cir/120/2011-12.
IPCs : Issue of Irrevocable Payment Commitments : The RBI has now put in place adequate risk
mitigation mechanism to protect the banks from the adverse movements in the equity prices and
the possibility of default by domestic Mutual Funds / Flls, while ensuring that there is no undue
disruption in the functioning of the capital market in the country.
Instructions effective from 01.11.2010 are detailed in e-Cir/563/2010-11.
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‘P’ SEGMENT ADV. : CHECK-LIST
• Verbal Interview of the applicant to be taken by the appraising officer and then the aplicant
may be asked to submit the application, if the interview is satisfactory (Applicable to all
schemes)
• The Branch should inform the applicant in writing about all the papers/documents required, if
any (Applicable to all schemes)
• Necessary Particulars should be recorded in Applications Received and Disposal Register
(Applicable to all schemes)
• Ask the applicant to submit the Bank’s standard Application form, along with Guarantor(s)
profiles, and other documents like Salary certificate, etc.
• Declaration for not taking concurrent loan (Applicable to all schemes)
• Compilation of opinion reports on the Applicant and Guarantor(s)
(Applicable to all schemes)
• Search report by the Bank’s lawyer at the cost of the applicant in the prescribed format
• Details of Collateral Security by the borrower or Guarantor(s)
(Assignment of LIC Policy/Pledge of NSCs/KVPs/Pledge of Bank’s TDR/STDR/Other
Securities like Shares/Debentures
• Control returns to be prepared in Triplicate : Original and Duplicate to be sent to the Controller.
Record of the duplicate received back with the approval and comments of the Controller
(Applicable to all schemes)
• Inspections are to be conducted : Pre-Sanction, Post-Sanction (as per prescribed periodicity)
till liquidation of the loan. It should be incorporated in the Inspection Register (Applicable to
all schemes)
• The house, flat/car should be insured for its full value in proper style. Bank’s charge to be
noted therein. The premium is to be borne by the Customer. Insurance particulars must be
noted in Insurance Register
• Valuation Certificate from a Govt. approved valuer may be obtained in all eligible cases
• Allotment letters may be obtained in case of purchase of house/flat
SECURITY DOCUMENTS
• Sanction letter (arrangement letter) to be accepted by the Borrower/Guarantor(s)
• Appropriate Loan Agreement, duly stamped, executed by the Customer
• Hypothecation Agreement, where necessary
• Guarantee agreement, duly stamped, executed by the Guarantor(s)
• Irrevocable Letter of Authoritv from the customer in duplicate (one for the Bank and other for
the Employer)
• Letter from Salary Disbursing Officer (Employer)
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• Irrevocable letter of Authority, where the Drawing and Disbursing Officer (DDO) himself is the
applicant
• D.P. Note and D.P. Note Delivery Letter, where applicable
• Agreement to Mortgage, duly stamped, where applicable
• In case of TDR, STDR, KVPs*/NSCs as Collateral Security, Form ‘A’, or A1 or A2 (as the
case may be), duly stamped, along with Security Delivery Letter (issuance of KVPs - Kisan
Vikas Patras since discontinued)
• In case of TDR/STDR, stamped and undated discharge; lien noted properly
• In case of KVPs/NSCs, the customer should fill in the appropriate forms issued by the Dept
of Post. Our pledge charge should be got recorded on the instruments by the issuing Post
Office
• In case of LIC Policy, assignment should be written/typed on the Original Policies by the
Assignor (policy-holder) and signed
• Unstamped Letter of Authority from the customer for debiting his Account for Taxes/Insurance
Premia, etc. (Applicable to all schemes)
• Prescribed forwarding letter for A/c Payee Draft/Banker’s Cheque favouring dealer/supplier/
vendor/seller
• Equitable Mortgage should be created by deposit of the Original Documents of Title. All
persons interested in the property as owners must visit the Branch at the Notified Centre, to
make the deposit in the presence of the Branch Manager/Divisional Manager and two Officers
of the Bank and a Recital (separate prescribed format for original sanction and enhancement)
must be made
• The mortgager to send by Registered Post a Confirmatory letter (separate format for original
sanction and enhancement) to the Branch, where the mortgage has been created
• On receipt of the Original Title Deeds from the Branch creating the mortgage, the financing
Branch must acknowledge receipt thereof. This receipt should be preserved by the Notified
Centre Branch for perusal by the Inspecting Offcials
• The financing Branch must enter the title deeds in the Title Deeds Register and hold them as
security
• In case of extension of Equitable Mortgage on enhancement, a Supplemental Recital and
Confirmatory letter are to be obtained (Applicable to all schemes)
• In case of pledge of TDR/STDR, NSC/KVP, etc. necessary entries should be made in Branch
Security Register and Ledger (Applicable to all schemes) (issuance of KVPs - Kisan Vikas
Patras since discontinued)
REVIVAL LETTERS & DAILY LISTS
• Documents are to be revived once in 3 years. As such, a Revival Letter is to be obtained from
the Borrower / and Guarantor(s). For this purpose, a noting must be made in the Daily list 2
years, 3 months from the date of the original documents / last Revival (Applicable to all
schemes)
* Issuance of KVPs since discontinued.
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• Ensure that documents never get time-barred. Expiry date of Insurance must also be recorded
in the Daily List (Applicable to all schemes)
• In case of change in interest rates, please advise the Borrower/Guarantor (Applicable to all
schemes)
• Interest rate to be linked to SBAR/Base Rate
• Credit Rating Assessment to be carried out carefully.
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CORPORATE SALARY PACKAGE (C.S.P.)
Corporate Salary Package : C.S.P. : A new ‘P’ Segment Product : For the employees of
Institutions/Corporates with four variants : CCFO/ADV/CL/166/2006-07 :
a) Corporate Salary Account - Silver
b) Corporate Salary Account - Gold
c) Corporate Salary Account - Diamond
d) Corporate Salary Account - Platinum.
Concessions in various P segment products : CCFO/ADV/CL/167/2006-07.
The Bank has now withdrawn the charge per cash withdrawal transaction at the Branch from the
Product features : CCFO/ADV/CL/214/2006-07.
C.S.P. : Concessions : Discretion vested with General Manager (Network) : CCFO/ADV/CL/153/
2007-08.
CSP : Service Charges : The Bank has now permitted to exclude CSP account holders from
paying inter-core charges (core power charges) : e-Circular/367/2008-09.
CSP : Opening of Salary Accounts of CRPF Employees : Measures to be taken : CCFO/ADV/
CL/230/2007-08.
CSP : Bulk conversion of ordinary salary accounts into CSP accounts : Branches, specially
captive branches where such large number of salary accounts exist should arrange to convert the
existing salary accounts into CSP salary accounts : e-Circular/365/2008-09.
CSP : Discretion : The discretion to permit the deviation in respect of number of employees that
are required for a tie-up under Corporate Salary Package is now vested with the Circle PBBUhead who would, based on the value of connection, decide whether to permit the deviation in the
eligibility criteria on the number of employees. However, the minimum number of employees,
who will be opening the salary accounts, from such corporates/institutions, etc., should be minimum
of 10 : e-Circular/366/2008-09.
CSP : Concessions on P-Segment Loans to Permanent Employees of SBI Life Insurance Co.
Ltd. (SBILICL) : e-Cir/91/2010-11.
CSP : Concessions on P-Segment Loans to Permanent Employees of SBI General Insurance
Co. Ltd. (SBIGICL) : e-Cir/85/2010-11, 444/2013-14.
CSP : Tie-ups : Railway Salary Package (RSP) : New Product : Detailed in e-Cir/770/2010-11.
CSP : Review of Waivers : Offer of Free ezTrade Accounts : e-Cir/171, 242/2010-11.
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SALARY PACKAGE ACCOUNTS
Salary Package Accounts : Bulk Conversion : e-Cir/1011/2010-11.
CSP, DSP : Corporate Salary Package, Defence Salary Package : Financial planning and advisory
services : Inclusion in CSP/DSP : e-Cir/402/2010-11.
CSP, DSP : Additional Discount : On Purchase of Gold Coins : e-Cir/603/2010-11.
DSP, CSP : e-Cir/114/2011-12 :
a) Providing personal accident insurance (death) cover to CSP/DSP account-holders in silver
category, and
b) Enhancement in personal accident insurance (death) cover to CSP/DSP account-holders
in gold and above categories.
Central Govt. Salary Package : The concessions detailed in the package are applicable only to
the permanent employees of all Ministries and Departments of Central Govt. listed in e-Cir/238/
2011-12, who maintain their Salary accounts with us.
Renewal : e-Cir/1016/2013-14.
Railway Salary Package : Renewal : Detailed in e-Cir/718/2013-14.
Whenever a Railway employee applies for any loan, he/she is required to obtain prior permission
of the Competent Authority in terms of Railway Service (Conduct) Rules, 1966.
SGSP : State Government Salary Package : For permanent employees of State Government and
Union Territories : New Product : e-Cir/691/2010-11.
Inclusion of Employees of Corporations, Boards etc. Under SGSP : e-Cir/218/2011-12.
Renewal : e-Cir/1048/2012-13.
Police Salary Package (PSP) : For permanent employees of Central and State Police
Organisations : e-Cir/844/2010-11.
Renewal : e-Cir/1049/2012-13.
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DEFENCE SALARY PACKAGE (D.S.P.)
DSP : Army, Navy and Air Force : All branches in the Circles are authorized to open DSP
Accounts : e-Cir/84/2010-11.
DSP : Assam Rifles (CSP - AR) : Details furnished in e-Cir/73/2010-11.
DSP : Air Force : DSP - AF : Details furnished in e-Cir/81/2010-11.
DSP : Personnel of Rashtriya Rifles : e-Cir/90/2010-11.
DSP : HCL : Tie-up Campaign “Mission Cyber Power” : Extension : e-Cir/297/2010-11.
DSP : Queries and Clarifications : e-Cir/251/2010-11.
Xpress Credit : Consolidated Instructions : As applicable for Defence Salary Package (DSP) :
e-Cir/266/2010-11.
DSP : Defence Banking Advisors (DBAs) and Circle Defence Banking Advisors (CDBAs) : Job
Profile, Role, Responsibilities, etc. : e-Cir/1012/2010-11.
Defence Salary Package : Air Force (DSP-AF) : Inclusion of Non-Combatants (Enrolled) - NC(E)s -
in Silver Variant : e-Cir/1013/2013-11.
DSP (GREF) : Defence Salary Package (General Reserve Engineer Force) : New Product : e-Cir/
686/2010-11.
CSP, DSP, PMSP : Providing Accident Insurance Cover, Enhancement in Personal Accident
Cover : e-Cir/828/2010-11.
DSP, PMSP : Defence Salary Package, Para-Military Salary Package : Credit Scoring Model for
Express Credit to DSP, PMSP : The Bank has made the existing Personal Loan scoring model
applicable to Xpress Credit DSP/PMSP as well, however, with reduced cut-off scores as compared
to other account-holders, as detailed in e-Cir/86/2011-12.
DSP, PMSP : Concessions : On education loans to DSP/PMSP account-holders, etc. : The
Bank has recently withdrawn the concessions for DSP/PMSP accounts (it applies to all personnel
of these organisations and not merely to the Salary Package account holders) with immediate
effect : e-Cir/517/2013-14.
ICGSP : New Product : Indian Coast Guard Salary Package : e-Cir/342/2011-12.
PARA-MILITARY SALARY PACKAGE (P.M.S.P.)
Para-Military Salary Package : New Product : Detailed in e-Cir/240/2010-11.
PMSP : Para-Military Salary Package : Inclusion of Para-Military Pensioners Under New Customer
Type and Produce Code : e-Cir/340/2011-12.
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‘P’ SEGMENT ADV. : CHECK-OFF
Ref. : e-Cir/465/2010-11.
• The process by which the salary disbursing officer undertakes to deduct loan instalments
from the salary of the borrower and remits the same to the Bank for credit to the loan
account.
Or
• The employer pays the borrower’s salary into his Savings/Current Account with our Bank.
• The borrower gives an irrevocable Standing Instruction (SI) for recovery of the loan instalments
from his aforesaid account with the SI being synchronized with the date of credit of salary
in the borrower’s Savings/Current Account.
AND
• The employer undertakes to inform the Bank if and when there is a severance due to
borrower’s transfer, resignation, retirement, etc.
Per. Adv. : Intimation to DDO : To mitigate the risk of submission of fake/forged documents and
to strengthen the process of verification of the bona-fides of the employee, henceforth the Operating
Units should compulsorily advise the respective DDO the full details of the loan sanctioned to the
respective employee, within a week of sanction of such loans : e-Cir/1022/2013-14.
The undernoted paragraph should be added in the Loan Application Forms of Xpress Credit, SBI
Saral Personal Loan and Festival Loan schemes under the head “Declaration”:
“I/we also understand that the Bank is at liberty to get confirmed any details furnished by me/us
and also to intimate to my/our DDO/Departmental Head/CEO, the details of any of the loans
sanctioned/disbursed to me/us and I/we accordingly convey my/our consent for such disclosure.”
These instructions are not applicable to Loans to Defence and Para Military Salary Package
account- holders.
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PLUS SCHEMES, ETC. :PERSONAL BANKING ADVANCES :
REVIEW & MODIFICATIONS
Ref. : CCFO/ADV/CL/35/2006-07 :
The performance under some of the schemes has been encouraging. However, in view of changed
environment and re-alignment of various loan products, following changes in the Plus schemes
have been made :
Parameters :
1. Interest Rates : Concession of 25 bps on card rate on all P Segment
loans to continue as earlier.
2. Margin : No concession under plus scheme.
3. Processing Fee : No concession under plus scheme.
Merger and Withdrawal of following Plus Schemes : CCFO/ADV/CL/35/2006-07 :
• Sainik Plus merged with Prashasan Plus scheme as armed forces are covered under Central
Government employees. Prashasan Plus was withdrawn in 2009-10.
• Withdrawal of Oil Plus, Press Plus and Gaveshak Plus, as wherever needed, corporate tie-
ups are entered into with individual institutions on all-India level.
‘P’ Advances : Withdrawal of Products with Immediate Effect : e-Cir/713/2009-10 :
1. Easy Travel Loan (BID Product Code)
2. Mediplus
3. Big Buy Scheme
4. Computer Loan
5. Mahila Shakti / Career Plan
6. Personal Education Loan APTECH FL
7. Teacher Plus (TL Personal Plus PER)
8. Prashasan Plus (TL Personal Plus PER)
The existing accounts already opened may be reviewed and continued till closure.
SBI Optima : Discontinuance : in Sep. 2010 : e-Cir/475/2010-11.
SBI Home Line : Discontinuance : in Sep. 2010 : e-Cir/475/2010-11.
SBI Flexi : Discontinuance : in Sep. 2010 : e-Cir/475/2010-11.
SBI Freedom : Discontinuance : in Sep. 2010 : e-Cir/475/2010-11.
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PB SEGMENT : CREDIT PROCESSPOST- DATED CHEQUES (PDCs) : GUIDELINES
Detailed Guidelines in this regard have now been framed and are as under (CIRCO/ADV/79/
2002-03, CCFO/ADV/CL/32/2005-06) :
i) Number of Cheques to be Obtained : Since it should not be difficult for the borrower to
obtain a cheque book containing 50 leaves, at least 48 cheques or cheques covering the
full repayment period, whichever is less, should be obtained. Cheques should be scrutinised
to ensure that these are properly filled in. The 'Crossing Seal' should be put on the face
of the cheque before keeping them in custody.
ii) Date of PDCs : Date of cheques should be synchronised with credit of salary / rent, etc.
wherever payment of PDC is to be contingent upon such a credit to the account. In other
cases where the deposit account of the borrower will have sufficient credit, at least during
the first fortnight of the month, the cheques should be dated prior to the 7th of every
month.
It may be convenient for the branches if PDCs are put through on 4 or 5 fixed dates in a
month (so that the task is not spread over the whole of the month and administration
thereof does not dislocate the work).
iii) Diarisation : A suitable diary note for obtention of another set of 48 cheques (or lesser
number of cheques where the remaining repayment period is less than 48 months) should
be done after 42 months so that a clear period of six months is available for obtention of
PDCs.
iv) Custody : PDCs should not be retained along with the security documents to avoid
unnecessary handling of documents. These should be retained by the Asstt. / Deputy
Manager (Loans) or the officer entrusted with 'P' advances in joint custody with Manager
PBD or Accountant or Cash Officer and placed in a fire-proof safe / locker.
v) Handling of Cheques Returned Unpaid: Should any cheque be received unpaid from the
paying banker for want of sufficient funds, the borrower should be immediately contacted.
The cheque should be represented within a period of 3 days of its having been returned
unpaid on a written request of the borrower.
In the event of the borrower failing to deposit the amount of the cheque, the undernoted
procedure for initiating legal action under Section 138 of the Negotiable Instruments Act,
1881, should be initiated:
Steps to be taken when a cheque is dishonoured on account of (a) insufficient funds, (b)
closing the account, (c) stop payment of the cheque (on account of insufficient fund).
Step 1 :
When a cheque is dishonoured, the branch has to give a notice in writing to the drawer within 30days (raised from the earlier 15 days) of the receipt of information by it from the Bank regarding
the return of the cheque. It should be entered in the separate register for this purpose and
monitored.
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Step 2 :
If drawer fails to make the payment of the said amount of money to the Bank within 15 days of
the receipt of the notice mentioned in Step-1, the branch should proceed to Step-3.
Step 3 :
A complaint should be filed before the Metropolitan Magistrate or First Class Magistrate, within
one month from the date of cause of action. Example : Cause of action arose on 01.01.2013,
under Step-2 (that is failure to pay within time mentioned there), the complaint should be filed on
or before 31.01.2013.
Step 4 :
During the pendency of the complaint, if the drawer desires to compound the offence, the
Branch can withdraw the complaint on receipt of the amount of the cheque, interest, legal cost
and other expenses.
It may, however, be noted that the initiation of legal action is a measure of last resort and all
efforts should be made to contact the borrower to regularise the position. However, the one
month time limit should not be allowed to be exceeded under any circumstances (except under
instructions from the Controlling Office).
P Seg. Adv. : Post-Dated Cheques : Clarifications regarding some terms like ‘well known
institutions’, ‘Government undertakings in good health’ : CCFO/ADV/CL/32/2005-06.
Extant instructions regarding obtention and custody of PDCs : Reiterated : CCFO/ADV/CL/32/
2005-06.
PDCs : ECS Mandates : As a risk mitigation measure, the IBA has permitted banks to obtain a
couple of CTS-2010 standard compliant Cheques from customers as Security PDCs, in addition
to ECS mandate for ECS-backed loans : e-Cir/1114/2013-14.
The RBI has now permitted banks to take a few additional cheques (in CTS-2010 standard format)
as security. However, it may be noted that such instruments are to be used only for the purpose
as stated above and should not to be presented in inter-bank clearing as a matter of routine.
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PERSONAL BANKING ADVANCES :OTHER PERSONAL LOANS :
CURRENT MARGINS
MARGINS (PUBLIC) : w.e.f. 13.08.2011.
Ref. : e-Cir/437/2011-12 :
• Gold Ornaments : 30%.
• NSCs : 40% of face value plus accrued interest (till the date of advance) of NSC VIII issue.
• KVPs* : 40% on purchase value plus accrued interest.
• RBI Relief Bonds : 40%.
• LIC Policies : 5% of the surrender value of the Policy.
• Open-ended Schemes of SBI Mutual Fund : 50%.
Margins are calculated on the Net Asset Value (NAV).
MARGINS (STAFF/BANK PENSIONERS) :
w.e.f. 13.08.2011.
Ref. : e-Cir/952/2010-11.
• NSCs : 15% of face value plus accrued interest of NSC VIII issue.
• KVPs* : 15% on purchase value plus accrued interest.
• RBI Relief Bonds : Bonds less than 2 years old : 35%.
• Bonds 2 years old or more : 20%.
• LIC Policies : 5% of the surrender value of the Policy.
• Open-ended Schemes of SBI Mutual Fund : Between 20-40% Scheme-wise, based on
risk profiles of the Funds.
Margins are calculated on the Net Asset Value (NAV).
* Issuance discontinued in 01.12.2011 : ET 12.01.2012
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‘P’ SEGMENT ADVANCES :GOLD LOANS
Gold Loans : Reporting : If an agriculturist avails such a loan for personal needs, it must be
reported as a Personal segment advance and not under Agriculture segment. Likewise, an
advance granted to a businessman for meeting any of his personal requirements should also be
treated as an advance under Personal segment only and not under Small Business Finance/
Trade Finance: CIRCO/ADV/150/2004-05.
Advance Value : Instead of Circle Management Committee, CCO (earlier, CCFO) was empowered
to fix advance value of gold every month : CCFO/ADV/CL/189/2005-06.
Advance value for agri gold loan is being fixed at a centralized level by Agri Business Unit,
Corporate Centre, and is published in SBITIMES on the first of every month : e-Cir/073, 074/
2013-14.
Hallmarked Gold Jewellery : Government of India has identified BIS as the sole agency in
India to operate this scheme. BIS Hallmarking Scheme is voluntary in nature and is operating
under the BIS Act : CCFO/ADV/CL/186/2005-06.
Although BIS Certification Scheme for Hallmarking of Gold Jewellery is not mandatory yet, the
BIS hallmark, (a mark of conformity widely accepted by the consumer) bestows the additional
confidence to the consumer on the purity of gold jewellery. In this background, the scheme for
Loans against Gold Ornaments should be marketed aggressively : CCFO/ADV/CL/186/
2005-06.
Loan against Hallmarked gold jewellery is only a part of the Bank's existing "Loan against
Pledge of Gold Ornaments" scheme. Hallmarked gold jewellery has been included as per the
directives of the IBA under the instructions of Ministry of Finance, Government of India : CCFO/
ADV/CL/272/2005-06.
Gold Loans : Hallmark Jewellery : Processing Fees : Reduced as per e-Cir/744/2013-14.
24-carat Gold : In view of the recent clarification issued by the RBI, branches can now grant
loans against specially minted gold coins (sold by Banks). These coins are not treated as “Bullion”
for this purpose : e-Cir/696/2009-10.
Revised RBI Guidelines : The RBI has announced to restrict the facility of advances against the
security of specially minted gold coins (sold by banks) per customer to gold coins weighing up to
50 grams : e-Cir/112, 236/2013-14.
Gold Loans : E.T.F. : Revised RBI Guidelines : In view of the restriction imposed by the RBI, the
Bank has withdrawn its existing scheme of loan against gold exchange Traded Fund (ETF), i.e.,
Loan against the units of gold exchange Traded Funds (ETF), i.e., loan against the units of God
Exchange Traded scheme, with immediate effect : e-Cir/112, 237/2013-14.
Max. Amount : Loan amount to be linked to the need/value of the gold less usual margin with a
cap of Rs. 10 Lac : e-Cir/714/2010-11.
Revised RBI Guidelines : In no case Gold loan to any customer in P-segment should be more
than the maximum Limit of Rs. 10 Lac as prescribed in the Scheme : e-Cir/112, 236/2013-14.
Gold Loans : Type of Facility : Now, only DL can be granted. No OD should henceforth be
opened : e-Cir/714/2010-11.
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The existing OD accounts should be converted to Demand Loans at the time of annual review/
renewal of the account.
Gold Loans : P Segment : Revised Processing Charges : w.e.f. 10.05.2010 : Detailed in e-Cir/
69/2010-11.
Bank Finance for Purchase of Gold : No advances should be granted for purchase of gold in
any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange
Trade Funds (ETF) and units of gold Mutual Funds : e-Cir/857/2012-13.
However, genuine working capital requirements of jewellers as financed hitherto continue. The
Metal Gold Loan Scheme of the Bank continues to be in force.
Gold Loans : C.B.S. : e-Cir/474/2013-14 :
a) Security value should be fed in the system.
b) The security value should be correctly fed in CBS after netting off the margin stipulated in the
scheme.
Gold Loans : Repayment : Gold Loans in Per Segment are repayable in one or more lump sum/
instalments at customer’s choice within a period of 30 months. Interest is applied to the account
at monthly rests and has to be recovered on an on-going basis : e-Cir/128/2013-14.
If interest on P Segment gold loan is not serviced for more than 90 days, the loan becomes NPA
as per RBI IRAC norms.
Repayment : Maximum : 30 Months (unchanged) : e-Cir/1001/2013-14.
The repayment of Principal and Interest should commence from the month following the month of
disbursement : e-Cir/1001/2013-14.
Gold Loans : Precautions : Branches should exercise caution while granting loans against gold
ornaments (both under ‘P’ and ‘Agri’ Segment) with special emphasis on meticulous compliance
of guidelines on verification of purity of gold ornaments being pledged to the Bank and adherence
to KYC norms in vogue/doing due diligence on these borrowers, so as to safeguard Bank’s
interest. Any laxity in this regard should be viewed seriously and dealt with firmly : CCFO/BO/CL/
279/2007-08.
Gold Loans to Farmers : Detailed separately.
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GOLD LOANS :RESPONSIBILITY OF OFFICERS
Ref. : Cir. Letter No. GEN/94/1985 :
A. Responsibility of CASH OFFICER :
He is responsible for the :
• Genuineness, fineness, purity and intrinsic value of gold in the ornaments tendered
as cover for advances. (He may, however, avail of the services of an outside goldsmith
whenever considered necessary.)
• Correctness of weights and number of items of gold ornaments pledged along with the
custodian.
B. Responsibility of Joint Custodian/Officer Sanctioning Gold Loans :
He is responsible for the :
• Weight : Correctness of the total weight.
• Number of Items : of gold ornaments
• Antecedents : Verification of the antecedents of the tenderer.
• Documents : Correctness of the security documents executed, and
• Guidelines : Ensuring that Bank’s guidelines issued in regard to sanction and conduct
of such advances are followed.
C. Responsibility of OFFICERS in case of Change of INCUMBENCY :
CASH OFFICER :
When the Cash Officer is transferred, the incoming incumbent is expected to ascertain
and satisfy himself regarding the genuineness, fineness, purity and valuation of the
gold ornaments under pledge.
Once the incoming cash officer takes over complete charge of the gold ornaments
satisfactorily, the outgoing cash officer should be absolved of his responsibilities.
JOINT CUSTODIAN :
In case of change of incumbency of the Joint Custodian, the incoming incumbent should
see the following:
• Weight : Correctness of the total weight;
• Number of Items : of gold ornaments;
• Documents : Correctness of the security documents executed;
• Guidelines : He should also ensure that the Bank’s guidelines issued in regard to
sanction and conduct of such advances have been observed.
Any departure therefrom should be brought to the notice of the respective controlling
authority and corrective steps taken.
The outgoing official should be absolved of his responsibilities once the charge has
been satisfactorily taken over by the new incumbent.
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ADVANCES AGAINST TIME DEPOSITS :T.D., R.D., ANNUITY DEP.
ADVANCES AGAINST TERM DEPOSITS*
General :
Adv. Against TDRs/STDRs : Loans against term deposits should normally be favourably
considered if the term deposits have already completed 50% of their maturity period : P&SB/
21/1995-96.
If a loan is sought immediately after issue of a term deposit, it should be discouraged and
depositors should be advised to take a premature payment of the TDRs.
Initially, the depositors should be persuaded to go for liquid term deposit scheme (where
they can withdraw a part of the deposit at convenience without much loss).
(As a significant portion of the deposits gets blocked for meeting the SLR/CRR requirements,
granting loans against term deposits at only the prescribed % above the deposit rate is
unprofitable if very low margins are held).
M A R G I N S
i) General Public : (RBI in their Credit Policy announced on 16.10.1994 abolishedretention of margin of 25% on advances against Bank’s own deposits and allowed the
banks to determine the margin to be retained on such advances themselves.
In case, advances are granted free of margin, there is always a possibility of such
advances becoming irregular inasmuch interest on the advances is always above the
interest paid on relative deposits).
To make loans against TDRs/STDRs further attractive, the SBI has recently reduced
the margin downwards as under (CIRCO/ADV/126/2002-03) :
TDRs :
a) For loans up to Rs. 10,000 & tenor less than 36 months. : 10%.
b) For loans above Rs. 10,000 & for loans of tenor 36 months and above : Min.10%v
v depending upon the competition for the business. For loans against deposits of
tenor 36 months and above, Branch Managers might endeavour for higher margins.
STDRs :
Margin same as TDRs. However, as the interest on STDRs is quarterly compounding
and the interest on advances is monthly compounding, the effective margin erodes
faster in case of STDR if a customer does not service the interest.
* A TDR is not negotiable and not transferable. It is merely a receipt evidencing the contract entered into
between the banker and the depositor. Advances on the security of TDRs cannot be regarded as pledge
advances [as the lending banker cannot take pledge of an actionable claim under which claim the banker
itself is a debtor (of the depositor). Such advances are only advances against a specific loan (deposit)].
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Accordingly, if interest servicing is not done for advances against STDRs for 3 months,
available cushion, i.e., prematurity payment due less outstandings should be worked
out, and if it is less than the prescribed %, encashment should be made forthwith. A
simple letter as per annexure ‘B’ of CIRCO/ADV/126/2002-03 should be taken from
each borrower for this purpose.
The revised guidelines apply to all kinds of constituents, including institutions, trusts,
partnership firms, companies, etc. (wherever there is the primary security), provided
applicants have requisite borrowing powers.
The margin on STDRs also covers all other such deposits which are in the nature of
recurring or reinvestment deposits like recurring deposit accounts, etc. (P&SB/21/
1995-96).
ii) Staff Deposits : The Bank at its (sole, absolute and unqualified) discretion,† may not
apply the stipulation regarding maintenance of the above margin in case of advances
up to Rs. 3 Lakh granted to member/retired member of the Bank’s staff or the spouse
of a deceased member/retired member of the Bank’s staff against their term deposits :
GEN/CL/19/1986, P&SB/CL/44, 54/1994-95.
iii) SME Segment : SME (C&I, SIB) Business : Margin in respect of both overdrafts and
demand loans against term deposits, the margin has been reduced from the earlier 15% to
10% : e-Cir/516/2008-09.
MANNER OF CHARGING INTEREST
a) Borrower’s Own TDRs : When an advance is granted to the customers either singly
or jointly against a term deposit, the interest chargeable should be as under :
Prescribed % over theTDR/STDR rate irrespective of loan amount : e-Cir/169, 187,
281/2008-09.
The deposit may stand in the name of :
i) the borrower either singly or jointly,
ii) one of the partners of a partnership firm, and the advance is made to said firm,
iii) the proprietor of a proprietory concern, and the advance is made to such a
concern,
iv) a ward whose guardian is competent to borrow on behalf of the ward, and where
the advance is made to the guardian of the ward in such capacity.
b) Third-Party TDRs : When an advance irrespective of limits is granted against a term
deposit which is not in the nature of those at (i) to (iv) in clause (a) above :
W.e.f. 26-08-2002 : CIRCO/ADV/126, 230/2002-03 :
Prescribed % over TDR/STDR rate, or SBAR or Rate of interest applicable to the
activity financed (SIB/AGL, etc.) - highest of the three.
However, if third-party loan is granted in personal segment, rate of interest to be
charged is as applicable for the purpose for which the loan is utilized e.g. for Personal
Loan, Car Loan, Education loan, Housing loan etc. In other words, interest should be
charged as applicable for the product in question. For this purpose, the declarationgiven by the customer should ordinarily be accepted. If no such declaration is given, it
should be treated as clean overdraft.
† It is not obligatory.
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Applicable rate shall be the highest of the above three.
c) Staff Advances : The Bank at its (sole, absolute and unqualified) discretion, may notapply the rate of interest stipulated at (a) in the case of advances up to Rs. 3 Lakhgranted to a member/retired member of the Bank’s staff or the spouse of a deceased
member/retired member of the Bank’s staff against their term deposits : P&SB/19-A/
17/1996-97,CIRCO/ADV/126/2002-03, etc.
d) Two-Tier Basis : R.B.I. had advised that the practice of charging interest on two tier-
basis viz. :
i) on the portion of the loan/advance up to 85% or 90% of the term deposit :
Prescribed % higher than the rate of interest payable on term deposit, and
ii) on the remaining portion of the loan/advance : @ applicable for clean overdrafts,
is IRREGULAR : Cir. Letter No. GEN/151/1985.
e) Premature Payments : The interest charged on the advance [against the Bank’s
term deposit receipts] where the relative deposits are subsequently withdrawn
prematurely, should be adjusted in such a way that the interest charged on the advance
works out to the prescribed % (as applicable) over the rate at which interest is actuallypaid on the deposit (Cir. No. 372/1976).
These instructions are applicable only in respect of the depositor’s own term deposit
receipts and not otherwise : Cir. 221/1978.
The rate of interest charged on a loan granted against a TDR of any maturity period
which is withdrawn before a term of 15 days, is as under (CIRCO/ADV/126/2003-03) :
For Public : @ applicable to clean overdrafts.
For Staff : @ applicable to clean overdrafts.
D I S C H A R G E
Undated Stamped Discharge (on Revenue Stamps of Re. 1/-) :
i) A dated stamped discharge on the receipt may amount to refund of the deposit before
maturity. It may also create complications in recovering the bank dues from the
survivors/legal heirs/representatives of the deceased depositors.
ii) RBI have opined that the discharge without a revenue stamp is not a proper discharge.
iii) IBA Letter Dated 26-11-1981 :
A TDR represents an actionable claim (chose in action) under Section 130 of the
Transfer of Property Act. It can be assigned to the lending bank by a deed of assignment
followed up by intimation to and acknowledgement by the depositee.
Instead of resorting to a cumbersome procedure involving the cost of assignment,
banks have devised a simpler method of making an advance on Term Deposits by
obtaining a discharge on the TDR from the depositor. This constitutes an equitableassignment of the debt evidenced by the TDR.
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TDRs Held as Collateral Securities for Adv. :
i) The term deposit receipts discharged (stamped, undated discharge) by the concerned
depositors should be held at the branch in security.
ii) These should be delivered to the branch, along with suitably worded security delivery
letters.
Note : No advance should be granted on the security of a T.D.R. which is already chargedto the Bank as collateral security for some other advance/Bank guarantee. Such TDR should
be renewed from time to time during the currency of the advance, and released only afterliquidation of the advance in full.
It is not considered necessary to obtain the discharge of depositor on the renewed TDR. In
the absence of discharge on the renewed TDR also, the TDR continues to be (continuing)
security and does not affect the real transaction. The format of security delivery letter
[standardised vide O&M/11/1987] provides for automatic renewal of the deposit, for such
period(s) as the Bank may at its [sole, absolute, unqualified] discretion deems fit.
Miscellaneous :
JOINT Custody of TDRs/STDRs : Detailed separately.
Security Delivery Letter : Revised Format : Detailed in earlier paragraph.
A. TDRs OF OTHER BRANCHES/BANKS :
1. TDR Issued by Other Branch : No loan/advance should be granted against a TDR
issued by some other branch of the Bank until and unless the lien of the lending/
disbursing branch is recorded in the books of the issuing branch : tested telex/
telegraphic confirmation message : CCO/C&I/CL/10/1995-96, 4/1996-97.
Term Deposits of Other Banks : (In the context of present resources constraint and
certain deficiencies observed in the handling of advances against term deposits, the
Bank has decided that,) until further instructions, loans should not be granted against
the term deposits of other banks : CCO/C&I/CL/4/1996-97, C&I/3/1996-97. (Also to
check/prevent use by unscrupulous elements of fake TDRs of one bank for obtaining
advances form other banks.)
B. TYPES OF BORROWERS :
1. Minors’ A/cs : Under no circumstances, should an advance be granted to the guardian
against the amount belonging to the minor, or a TDR issued in the name of the minor
alone : Sec. 11 of Indian Contract Act. (Either during minority or after attaining the
majority, the minor may contest that the amount of advance was not meant/utilised for
his benefit, and that it should not be recovered from his property. Thus, the advance
under reference may become irrecoverable in law).
The minor alone also cannot be granted an advance against such a TDR.
Advances should not be permitted to third-parties against the TDR obtained by
guardians on behalf of minors or jointly with minors payable to either or survivor (P&SB/
25/1980). Minor’s property cannot be encumbered or used for third-parties’ benefit.
Advances to N/G against TDRs : In case the minor attains majority, his discharge on
the term deposit receipt is necessary when an advance is granted, to the guardian
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against the term deposit receipt and the receipt will have to be pledged, duly discharged,
along with the Bank’s standard letter of guarantee on Form A-1 or A-2, as applicable
(‘P’ Segment Deposit Schemes : Current as on 31.03.1996).
2. Joint A/cs : (Premature payment or) Loan against a term deposit issued in joint names
(payable to all/some of the holders : O&M/10/1988 as amended vide CIRDO/OP&SP/
32/2004-05) may now be granted on receipt of a written request from all the depositors,
the former/the latter, either or survivor, any one or survivor(s), at the discretion of the
Bank.
3. Staff Advances : In genuine cases of hardship, stipulation of fixing a definite
repayment programme for advances to staff against term deposits can be waived with
the prior permission of the respective controlling authority : Cir. No. 207/1976; P&SB/
5/1991 (The repayment for all staff loans is fixed to inculcate a sense of financial
discipline in them; also to ensure that such advances do not assume a perpetual
character.)
This stipulation is not applicable in the case of overdrafts granted to Bank’s staff
under Cashkey Scheme (P&SB/5/1991) [and advances granted against NSCs (Staff/
11/1993-94)].
4. Deceased A/cs : In the case of death of one of the joint depositors, the requests for
loans from surviving depositor(s) may also be considered in special cases with the
prior approval of the respective controlling authority.
5. Registration of Charge : The charge on term deposits in the name of a company
does not require registration.
C. LEGAL RESTRICTIONS :
1. TDRs Representing Earnest Money for a contract : No advance should be granted
against such a TDR (as the deposit is already charged to the concerned department).
2. Sec. 54-E of I.-T. Act : No loan/advance should be granted either to the depositor or
to any other person on the security of the term deposit issued under Section 54-E of
the I.-T. Act, 1961 : Cir. No. 238/1978.
3 TDRs Issued under Special Schemes : (Capital Gains A/cs Scheme, 1988, Capgains
Plus, SBI Tax-Saving Scheme, 2006, etc.) : No advance/bank guarantee should be
granted against such TDRs. These TDRs cannot be charged or alienated in any manner
whatsoever : GAD/GOVT/37/1988, CFO/BOAD/25/1997-98.
4. Claim/Compensation Amounts : No advance/loan/withdrawal should be granted
against compensation awarded by claims tribunals without the permission of the
court : CFO/BOAD/GENCL/31/1997-98, e-Cir/163/2010-11.
D. LIQUIDATION OF ADVANCE :
1. Discharge : On liquidation of the advance in full, the depositor’s discharge on the
TDR, and noting regarding security account number, etc. should be cancelled.
2. C.O.S.-49 : It is not necessary to obtain this form on the due date of TDR; the disposal
of the proceeds of TDR should be noted on the relative security delivery letter. These
forms should be preserved like COS-49 for verification by the auditors/inspectors.
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REVISED INSTRUCTIONS : for obtention of COS-49 : detailed separately.
E. RENEWAL/TRANSFER :
1. Renewal : DLs and ODs (including the ODs granted under the Cashkey Scheme)
granted against the security of time deposits should not be allowed to continue after
the maturity of the relative deposit (by renewing the maturity proceeds) : P&SB/21/
1995-96.
2. Transfer of DL/OD A/cs granted against the security of Bank’s own deposits
simultaneously with the transfer of deposit account (Cir. No. 98/1984 and O&M/19/
1984) : The Bank has provided the facility of transfer for the convenience of the
customers.
The request letter for transfer of account should be signed by all the joint account
holders, irrespective of the mode of operation (B.B.I.)
The documents need not be endorsed in favour of the transferee branch : O&M/19/
1984.
F. SUNDRIES :
1. D.Ls. Against Same TDR/STDR : Multiple A/cs : Multiple Demand Loans against the
same TDR/STDR can be permitted so long as the sum total of the limits of all the Demand
Loan accounts is within the permissible limit of the Demand Loan against the TDR/STDR.
The sanctioning authority can, however, allow maximum of four such Demand Loans. In
special cases, the AGM/RM can permit a fifth loan : e-Cir/619/2011-12.
2. C.B.S. : Loans Against Time Deposits : Some important changes have been made in the
Core Banking to take care of security in loans against Bank’s own Time Deposits : e-Cir/
506/2010-11.
New changes have been made whereby after roll-over also STDRs/TDRs continues to be
linked to the Loans Account. Lien/Hold also continues.
The Branches should obtain the following mandate from the borrower(s) at the time of
sanction of the Demand Loan :
“I (we) hereby authorise the Bank to credit the interest earned on my/our TDR(s) in the
loan account instead of my/our deposit account till the loan is liquidated”.
Demand Loans Against Time Deposits : New Menu/Screen : A new Quick Loans Menu/
Screen has been developed by CBS for Demand Loans against TDRs/STDRs : e-Cir/185/
2013-14.
ADVANCES AGAINST TDRs/STDRs
Documents : Advances Against TDRs/STDRs : Documentation in those cases where no TDR/
STDR is issued : Details : CIRDO/OP&SP/CL/07/2006-07 (detailed separately).
Rate of Interest : For individual depositors : Modifications :
Prescribed % over the rate paid on the relative time deposit offered as security irrespective of the
loan amount.
Adv. Aganist Term Deposits : SME Business : In respect of both overdafts and demand loans
against term deposits, the interest rate prescribed % above the rate of interest paid on deposit for
all the future loans as well as Current Account overdrafts : e-Cir/254/2008-09 (detailed separately).
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ADVANCES AGAINST RECURRING DEPOSITS
Minimum Balance : Minimum balance in the account should be Rs. 100/-.
Margin : Public : @ as in the case of Term Deposits.
Staff : Nil.
Pass-Book : The pass-book need not be retained at the branch.
ADVANCES AGAINST ANNUITY DEPOSITS
In special cases, the request for advances against Annuity Deposit may be considered at
the discretion of the Branch Manager : e-Cir/822/2009-10.
Minors : No advance should be granted to a minor : P&SB/24/1981.
LOANS AGAINST SBI PLATINUM A/C
Interest : Where loan facility was extended against the security of the deposit and the depositor
requested us to close the account within 1 year, interest on the overdraft/demand loan granted
against the security of SBI Platinum account was to be charged @ 1.50% p.a. : CCFO/ADV/CL/
426/2006-07.
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LOANS AGAINST BALANCEIN TERM DEPOSIT ACCOUNTS :
REVISED DOCUMENTS
(e.g. Term Deposit / Special Term Deposit A/cs where no TDR/STDR is issued)
(Ref. : CIRDO/OP&SP/07/2005-06)
REVISED INSTRUCTIONS :
• Branches should henceforth obtain undernoted documents while granting Demand Loan/
Overdraft against balances in Term Deposit/ Special Term Deposit Account :
i) Loan Application Form (Annexure-1).
ii) Loan Agreement - Specified Security (Annexure-3); (No Form-A, A-1, A-2 is now
required to be obtained).
iii) D.P. Note with D.P. Note Delivery Letter in case of Demand Loan.
iv) E or S form in COS-142 and / or E or S Agreement in COS-57, if applicable.
v) Witness letter in case of illiterate borrowers, if applicable.
• Branches should issue an Arrangement Letter (Annexure-2) and retain a copy thereof
with documents, duly acknowledged by the borrower.
• Depositors should not be asked to surrender Deposit Advice already issued / delivered
to them.
• Branches should mark the lien in the system and generate Statement of Customer
Balances as per Annexure-5, showing lien marked therein on the relative deposits, and
should keep it with the loan documents (to facilitate verification of the fact by Inspectors/
Auditors).
• Branches should not make any entry in Security Register / Ledger.
• In case the loan account against TD/STD Advice is closed from funds other than proceeds
of relative deposit, no acknowledgement in COS-49 should be obtained. Instead, Security
Release Letter (Annexure-4) should be issued to the holder of security, with a copy
endorsed to the borrower, by the branches.
• Loan documents should be kept under single custody of Authorised Official, as in the
case of other loan documents in Personal Banking Department.
• Where the deposits are accepted as collateral for other advances to the depositor(s)
himself or to the third-parties, the existing instructions continue except that there is no
need to surrender the Deposit Advice.
• These instructions are applicable in case of loans / banking facilities against balances
in TD / STD account where no TDR / STDR has been issued.
• Demand loan to a literate customer where the deposit (TD / STD) is held in the single
name: Branches should obtain only three documents for such advance, namely Loan
Application Form (Annexure-1) along with D.P. Note and D.P. Note Delivery Letter. No
other documents are required to be obtained by the branches for such loans henceforth.
• Instructions relating to loans against Bank’s own Term Deposits, where TDRs / STDRs
have been issued (in physical form), remain unchanged.
Loans Against Balances in Dep. A/cs : Documents : Extant instructions reiterated vide e-Cir/
14, 31/2011-12.
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In case of loans against deposit held in single name, the loan agreement prescribed for specified
security is not required to be obtained. In such cases, the consent for disclosure to CIBIL or any
other agency should be obtained separately.
The depositors are not required to surrender the deposit advice already issued/delivered to them.
In case the loan account against TD/STD Advice is closed from funds other than proceeds of
relative deposit, no acknowledgement in COS-49 should be obtained. Instead, security released
letter (prescribed format) should be issued to the holder of the security, with a copy endorsed to
the borrower, by the branches.
The branches should mark lien on the relative deposit(s) in the system.
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BHAGYA REKHA LOAN FOR WOMEN DEPOSITORS
(AGAINST RECURRING DEPOSITS)
Ref. : CCFO/Adv/CL/116, 125/2006-07 :
Purpose To garner regular savings through Recurring Deposit Scheme and grant
Demand Loans to women for general purpose needs.
Eligibility Any RD account holder is eligible to avail this loan after the RD has run
for at least 12 months. The RD instalment should have been paid
regularly. The RD account can be opened in single name or jointly with
children.
Type of Loan Demand Loan.
Minimum RD Rs. 400/- p.m. for 36 months maturity (to arrive at minimum loan amount
Instalment of Rs. 10,000/-), and 200/- p.m. for 60 months maturity (to arrive at
minimum loan amount of Rs. 5,000/-).
Quantum of Loan Twice the balance outstanding in the RD account : Minimum
Rs. 5,000/-, maximum Rs. 50,000/-.
Interest Linked with SBAR/Base Rate.
Repayment The loan is partially clean and partially secured by the amount
outstanding in the RD account. The clean portion of the loan is repaid
in 24/ 48 monthly instalments, with EMIs commencing one month
after taking the loan till maturity of RD account (24 months loan tenure
for an RD of 36 months and 48 months loan tenure for an RD of 60
months). At maturity of RD, the loan outstandings are adjusted out of
the maturity proceeds and the remaining balance is paid back to the
depositor.
Documentation • DP Note.
• DP Note Delivery Letter.
• Arrangement Letter clearly stipulating the right of the Bank’s lien
over the balance in the RD account and the Bank’s right to set off
the balance in the account.
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ADVANCES AGAINST NSCs, KVPs, SAVINGS BONDS
ADVANCES AGAINST NSCs
Adv. against NSCs : Precautions : Loans against National Savings Certificates should be granted
by branches only after complying with KYC guidelines and after necessary verification with
Post Office regarding genuineness of the NSCs tendered by the prospective borrower : CCFO/
ADV/CL/04/2005-06
ADVANCES AGAINST KVPs(ISSUANCE OF KVPs SINCE DISCONTINUED)
Kisan Vikas Patras : Advances : The RBI has instructed banks to ensure that no loans are
sanctioned for acquisition of / investing in Small Savings Instruments, including Kisan Vikas
Patras : CCFO/ADV/CL/30/2007-08.
ADV. AGAINST SAVINGS BONDS
Adv. Against Savings Bonds : The Govt. has allowed for pledge or hypothecation or lien of the
bonds issued under the followings schemes as collateral for obtaining loans from scheduled
banks : e-Circular/479, 561/2008-09 :
a) 7% savings bonds 2002,
b) 6.5% saving bonds 2003 (non-taxable), and
c) Classification of bonds as specified securities.
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ADVANCES AGAINST GOVT. SECURITIES*,
UNITS & P.S. BONDS, ETC.
ADVANCES AGAINST G.P. NOTES
a) GPN : The left-hand portion on the reverse of the Govt. Promissory Notes is meant for
recording periodical interest payments, the right-hand portion for making endorsements.
b) Scrutiny : All GPNs tendered as security for advances are required to be sent to the
respective P.D.O. (Public Debt Office of RBI) with a view to ensuring that :
• they are genuine;
• endorsements thereon are in order;
• the notes are neither stopped nor confiscated;
• none of the notes is duplicate one, and
• no alterations have been made in the principal amounts.
c) Endorsements : No endorsements should be made outside the cages meant for
endorsements. Similarly, no allonge should be pasted on the note.
A government promissory note bearing several endorsements (3 or more), tendered as
security for an advance, is required to be renewed before its endorsement in the Bank’s
favour.
ADV. AGAINST STOCK CERTIFICATES†
While granting advances against the security of stock certificates, the S.Cs. are required to
be converted into promissory notes (because SCs are transferred by transfer deeds printed
on the reverse of the certificate), signed by the transferor and transferee both (whereas the
promissory notes are transferred by endorsement and delivery).
ADVANCES AGAINST BEARER BONDS
The lending banker should ensure that all the unpaid coupons are attached to these bonds.
The bonds should not be torn/mutilated/damaged/defaced for otherwise defective.
* The details regarding various types of Govt. Securities are furnished in the Govt. Securities Manual.
† Trusts are allowed to invest in stock certificates (and not in G.P. Notes and Bearer Bonds). These are
also known as 'Trustee Securities'. These are issued for a minimum amount of Rs. 100/- and may be
subscribed for amount in multiples of Rs. 100/-.
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ADVANCES AGAINSTNATIONAL SAVINGS CERTIFICATES
1. General :
i) Interest Portion : The pledgee (lending banker), being the holder of the
certificates under NSC Rules, was entitled to receive the payment of interest on
the pledged security also (under Rule 19 of NSC VI/VII Issue Rules 1981)‡ : Cir.
No. 5/1988; GEN/CL/39/1988; Cir. 29/1989.
ii) Preferably, Demand Loans should be granted : Cir. No. 5/1982.
2. Purpose : Before granting an advance against NSCs, the purpose of the advance and
the proposed mode of repayment should invariably be ascertained (with a view to
ensuring proper conduct of the account): 0/330/1965.
3. Illiterate Holders : Application for advances to illiterate holders against NSCs should
be referred to the respective Controlling Authority (Cir. No. 27/1965).
Execution of security documents in the presence of two independent witnesses known
to the Bank and not related to the borrower; declarations from witnesses regarding
fully explaining the implications of the transactions to the borrower : Cir. 46/1987.
4. Discharge : Discharge of the depositor is not considered necessary on the reverse of
National Savings Certificate.#
5. Registration of Nominee : Branches should not refuse advances against NSCs
merely on the ground that they bear registration of nominee on the face of them : G/
CL/18/1987.
[The rights of the nominee are subject to the rights of the lending banker (pledgee)].
6. Terms & Conditions : RBI have reiterated that banks should grant advances against
the security of NSCs subject, however, to the normal terms and conditions : Cir. No.
34/1985.
7. Margins : Detailed separately.
The outstandings at any stage/point of time should not exceed the maturity
proceeds of certificates : Cir. 29/1989, 27/1992-93.
8. Staff Adv. Against NSCs : Repayment :
Periodical (quarterly) interest must be paid by the borrower when due. For this, suitable
monthly repayment programme should be fixed (from the salary).
For meeting genuine individual/family requirements of employees : Staff/11/1993-94.
(Thus, no repayment programme need be fixed as in case of Cashkey scheme).
‡ W.e.f. 01-04-1989, the Govt. introduced a new N.S.C. Series VIII. It is eligible for tax concession u/s 88
(earlier Sec. 80 C). (The earlier NSC series VI and VII were discontinued w.e.f. 01.04.1989.)
# NSCs are got transferred in the name of the lending banker (Cir. 48/1958, O/89/1962) by execution of
appropriate application form prescribed by the Dept. of Post The holder's signature on this transfer form
are deemed as sufficient (legal opinion).
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9. Advances (Against NSCs) to Bank’s Staff :
i) In case of Demand Loan Account, the account and NSCs pledged as security
should be retained at the original pledgee branch, even after transfer of the
employee.
The repayment instalments should be regularly remitted to the pledgee branch
till the outstandings in the account are fully liquidated.
ii) In the case of overdraft account, the account should be transferred to the
transferee branch. However, NSCs should be retained at original pledgee branch.
iii) For the purpose of audit, Branch’s Certificate/Memorandum of Security should
be issued to the transferee branch : Cir. No. 20/1989.
10. Advances Against NSCs/KVPs : Branch staff should be on their guard against
fraudulent pledge of the lost certificate/patras for obtaining loans.
The extant instructions in respect of advances against bearer securities should be
strictly followed.
Advances against NSCs : VIIIth (8th) Issue*
Cir. 4/1990, 27/1992-93 :
Margins : Detailed Separately.
The prescribed margin is being retained for the Bank’s staff/pensioners as a special case on
condition that interest should be serviced by the staff regularly.
It should, therefore, be stipulated while granting advances to the staff members that theinterest applied to the loan accounts must be serviced by the borrowers promptly and
regularly.
The branches should ensure that at no point of time, the outstandings exceed the maturity
value of the security.
Precautions : The chances of some miscreants targetting our Bank’s branches for committing
frauds by obtaining loans against the security of fake NSCs cannot be ruled out.
Branch Staff should exercise utmost care to obviate such possibilities.
Branches should arrange noting of lien on the Govt. securities independently without any
assistance from the borrowers/brokers.
Loans against NSCs should be granted by branches only after complying with KYC guidelines
and after necessary verification with Post Office regarding genuineness of the NSCs tendered
by the prospective borrower : CCFO/ADV/CL/04/2005-06
ADVANCES AGAINST INDIRA VIKAS PATRAS
IMPORTANT : The Govt. of India discontinued the sale of Indira Vikas Patras w.e.f.
16.07.1999 (the lack of documentation in the Scheme - bearer character - has rendered the
subscriber vulnerable).
* NSCs : VIIIth (8th) Issue are covered under 'specified security' in terms of Sec. 61 (d) of the SBI
General Regulations : GEN/CL/186/1990.
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ADVANCES AGAINST KISAN VIKAS PATRAS(ISSUANCE OF KVPs SINCE DISCONTINUED )
Introduction : These certificates are available in the Post offices in the denominations of
Rs. 100/-, Rs. 500/-, Rs. 1,000/- and Rs. 10,000/- for a period of 5½ years. These certificates can
now be encashed after 2½ years : GEN/CL/183/1989.
General Instructions : The extant instructions regarding the grant of advances against the
security of NSCs are applicable, mutatis mutandis (with suitable modifications) to KVPs
also.
The Kisan Vikas Patras are issued by the Govt. itself and covered under the Clause (a) of
Sec. 20 of the Indian Trusts Act, 1882. As such these are treated as trustee security and
specified security : GEN/CL/174/1990.
Interest : Public : Linked with SBAR/Base Rate.
Staff/Pensioners : Linked with SBAR/Base Rate.
Margins : Public : @ prescribed rate - detailed separately - on the purchase value
(not the face value) of the patras.
Staff/Pensioners : @ prescribed rate - detailed separately. However, the advances
are subject to suitable repayment programme.
Precautions : Branch staff should exercise utmost care in respect of loans and advances
against the security of stolen KVPs so as to guard against frauds.
Branches should arrange noting of lien on the Govt. securities independently without any
assistance from the borrowers/brokers.
The RBI has instructed banks to ensure that no loans are sanctioned for acquisition of / investing
in Small Savings Instruments, including Kisan Vikas Patras : CCFO/ADV/CL/30/2007-08.
ADVANCES AGAINST UNITS OF U.T.I.#
1. Actionable Claims : These are actionable claims (neither shares nor debentures).
For the purpose of sanction/conduct of advances, and sanctioning powers, these are
treated as specified securities (Cir. No. 136/1978, 14/1990). Overdrafts and demand
loans are granted against their security (except the units with minimum lock-in-period).
2. Repayments : The outstandings should be reduced by monthly instalments (as in the
case of overdrafts against LIC policies) : Cir. 102/1965.
3. Adv. Against Units of MFs/UTI : to Corporate Customers : to meet the temporary
mismatch in their cash-flow : on the guidelines detailed vide C&I/CL/1/1994-95.
4. Precautions : Advances against units should be allowed to unit-holders only.
The IBA have advised the member banks to disburse advance against units only afterthe units are transferred/assigned in the bank’s name (to obviate possibilities of frauds).
# The units are readily marketable. The safety and security of the investment in units is assured. The
return is also attractive coupled with tax benefits.
Consequent upon addition of Clause (ee) made to Sec. 20 of the Indian Trusts Act, 1882, Units of U.T.I.
are now treated as specified security' under S.B.I. General Regulations : Cir. 14/1990.
Unit Trust of India is the largest family in the world.
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Comprehensive Set of Revised Guidelines :
Important Changes : CIRFO/ADV/CL/84/2003-04.
Branches should vigorously market the schemes for loans against the Bonds and units
under UTI-II.
Advances on the Security of MembershipCertificates Issued by U.T.I. under U.L.I.P.
No advance should be granted (as these certificates are issued for the information of the
members; these cannot be assigned in the Bank’s favour in any manner).
ADVANCES AGAINST PUBLIC SECTOR BONDS(HELD IN ABEYANCE)
Purpose : Personal requirements or for investment, including subscription to right or other
issues of shares/debentures, etc. : P&SB/16/1987.
Nature of Advance : Overdraft.
Margin : @ 40% on the face value or market value, whichever is lower.
Applicable to the Bank’s staff and pensioners also : P&SB/9/1989.
Amount of Loan : Not to exceed Rs. 5 Lac (raised from the earlier Rs. 3 Lac) per individual
borrowal account : P&SB/8/1988.
Security : P.S. bonds endorsed in the Bank’s name. After granting the advance, the bonds
and the interest warrants should be sent to the issuing company for registration of the
Bank’s name in their books.
Documents : Security Delivery Letter, D.P. Note, D.P.N. Delivery Letter, Form A/A-1/A-2, as
applicable.
Rate of Interest : Public : Linked with SBAR/Base Rate.
Bank’s Staff & Pensioners : Linked with SBAR/Base Rate.
Repayment : Within 3 to 5 years.
Master Circular : The RBI has recently issued a master circular containing all the current
guidelines of the subject. Copy enclosed to CIRCO/CPPC/C&I/CL/31/1998-99.
The current consolidated instructions of RBI supersede all their earlier instructions on the
subject.
Imp. Modification : The Bank has recently decided not to lend against Public Sector Bonds
both state and central, for the time being. These instructions do not apply to quoted shares/
debentures : CIRCO/ADV/CL/340/2002-03.
(Of late, no major Public Sector Undertaking has issued Public Sector Bonds. Some of the bonds
already in the market have been downgraded by CRISIL. Besides, in the case of default, liquidation
of outstanding by premature encashment of such bonds is difficult).
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ADV. AGAINST SAVINGS BONDS
The Govt. has allowed for pledge or hypothecation or lien of the bonds issued under the followings
schemes as collateral for obtaining loans from scheduled banks : e-Circular/479, 561/2008-09 :
a) 7% savings bonds 2002,
b) 6.5% saving bonds 2003 (non-taxable), and
c) Classification of bonds as specified securities.
BONDS OF NABARD
NABARD bonds should be treated on par with Government and Trustee Securities for the
purpose of granting credit facilities : GEN/CL/61/1991.
ADVANCES AGAINST RBI RELIEF BONDS
The Bank has stipulated a margin - detailed separately - in respect of advances to members
of staff against the security of RBI Relief Bonds. This is applicable to retired employees of
the Bank also : CIRCO/CPPC/P&SB/10/2001-02
(Bringing margins on staff loans against RBI Relief Bonds in line with those against other
Government securities like IVP, KVP and NSC, etc.)
Keeping in view the potential for granting loans against RBI Relief Bonds (a specified security)
and their increasing popularity, a comprehensive scheme has been designed for branches.
The same is enclosed as Annexure to CIRCO/CPPC/P&SB/26/2001-02.
No advance should be granted against 7% Savings Bonds 2002 and 6.5% Savings Bonds 2003 :
CIRCO/ADV/CL/14/2003-04.
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ADVANCES AGAINST L.I.C. POLICIES
Ref. : e-Cir/470/2009-10, etc.
A. TYPE OF CONTRACT :
1. Contract of Insurance : It is a contract of indemnity with utmost good faith (uberrimae
fidei).
Any misrepresentation or concealment of material facts by the insured regarding the
risk covered may render the policy invalid.
B. TYPES OF POLICIES :
1. Preference : Overdrafts may be granted against an Endowment Policy, AnticipatedEndowment Policy or a Money Back Policy*, on the Bank’s usual terms and conditions.
The amount of advance must not exceed 95% of the present surrender value of the
policy.
However, advances against whole-life policies should be discouraged.
The insurance policy should be unencumbered and in full force.
2. Married Women’s Property Act, 1874 : Sec. 6 : An insurance policy on the life of a
married man and expressed on the face of it to be for the benefit of his wife and/or
children is deemed as a trust for the benefit of the wife or children.
So long as any object of the trust remains, the policy is NOT subject to the control of
the husband or his creditors or form part of his estate. (Trust funds are not assignable).
Therefore, no advance should be granted against such a policy (settlement policy).
C. SURRENDER VALUE, AGE, ASSIGNMENT :
1. Surrender Value† : It is the amount payable by the L.I.C. on premature payment of
the policy. Generally, the surrender value of a policy which has been kept alive/current
for less than 3 years (during first three years) is nil.
The premium amount is linked with the age of the assured.
2. Age of Assured : It should have been admitted in the policy by the L.I.C.
A wrong statement regarding the age, misrepresentation, misdescription, concealment/
non-disclosure of material facts, etc. can lead to repudiation of insurance claim under
the policy.
Even if the age of the assured has been admitted by the L.I.C., the Corporation may
be able to repudiate its liability under the policy if the L.I.C. proves that there was a
variation between the actual age of the assured and the declared age : Sec. 45 of
Insurance Act.
3. Assignment :
• The assignment of LIC policies is governed by Sec. 39 of the Insurance Act.
* In the case of endowment and money-back policies, the policy amount or a part thereof is repaid after
the expiry of stipulated period, or on the death of the assured, whichever occurs earlier.
† The surrender value of a policy depends upon (i) its original term, (ii) the period over which it has been
in force, and (iii) the premiums already paid.
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• The policy standing in joint names should be assigned by both the persons in
favour of the Bank
• The signature of the nominee is not necessary on the assignment in the lending
Bank’s favour (as the nomination operates only after the death of the assured).
• A nomination (made by the borrower in the lending banker’s favour at the time of
sanction of advance) is cancelled by an assignment : Sec. 38 of the Insurance
Act.
• The policies should be properly/absolutely assigned in the lending bank’s favour
before disbursal of the loan amount (legal charge).
The assignment should be made on the policy itself‡ (format furnished in B.B.I.)
• The policies should be directly forwarded by the Bank to the issuing offices of
the insurance company by Registered Post for registration of the assignment in
the Bank’s favour.
• At present, no charges/fees are levied by LIC for registration of assignment.
D. PROCEDURE TO BE FOLLOWED :
e-Circular/470/2009-10 :
• Assignment : The policy should be assigned in favour of the Bank. Where there is more
than one such party to a policy, the parties may assign it either jointly or through a
chain of assignments. As a separate document of assignment attracts stamp duty, the
assignment (or assignments) should preferably be on the policy itself; it must be sent
to the LIC/Post Office/SBI Life, as the case may be, immediately for registration and
return.
• Notice : A notice, in duplicate, signed by the assigneor (i.e., borrower) and the Assignee
(i.e., Bank), requesting the LIC/Post Office/SBI Life to return one copy thereof duly
acknowledged by it under its seal, should be sent along with the assignment. The
acknowledged copy of the notice should be retained along with the assigned policy,
when received.
• Requisite Information : At the time of notifying the Bank’s interest in the policy, the
LIC/Post Office/SBI Life, as the case may be, should be asked :
i) to advise the present surrender value of the policy,
ii) to confirm that no other assignment is registered with them and the policy is
unencumbered,
iii) to confirm that the premia have been paid up to date, and
iv) to confirm that the age of the insured is admitted.
• Register : The policy received after registering the assignment in Bank’s favour together
with the confirmation on the above points should be kept property filed after recording all
the details in the Miscellaneous Security Register.
‡ An assignment made on a separate sheet of paper attracts ad-valorem (= according to value) stamp
duty.
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E. OTHER OPERATIONAL ASPECTS :
1. Repayment Programme : Some definite repayment programme must be fixed for
advances against L.I.C. policies : Cir. No. 58/1962.
2. Standing Instructions : SIs (in the prescribed form : COS-125) regarding periodical
payment of insurance premia by debit to the borrower’s account should be obtained
and duly recorded. [If the insurance premium on a policy is not paid on due date, the
L.I.C. may treat the policy as paid-up (lapsed).]
3. Recording : The policy and the relative papers should be duly entered in MiscellaneousSecurity Register.
4. Surrender of Policy : During the life-time of the assured, the concurrence of the
assignor (i.e., borrower) is required for surrendering the policy to realise the security
and liquidate the loan/advance.
In the absence of such consent/concurrence, it is open to assignee bank to give
notice to the assignor that in the event of his failure to repay the loan/advance by a
specified date, the Bank shall as assignee surrender the policy and adjust the proceeds
towards the loan, and also claim from him any shortfall. LIC acts on the Bank’s
application for surrender value (after the expiry of the time given in the letter) : GEN/
CL/167/1986 (as per the IBA guidelines).
F. MISCELLANEOUS :
1. Liquidation of Advance : On the liquidation of the advance in full, the assignment on
the policy should be got cancelled/vacated and the borrower advised to nominate
afresh (on the lines of Cir. 199/1963) : Sec. 38 of the Insurance Act.
2. Death of Assured : In the case of the death of the assured during the currency of the
Bank’s advance, the original death certificate, policy, prescribed claim form and
discharge form are required to be submitted to the concerned office of the L.I.C.
3. Nominee : A nominee of a policy does not become the owner/proprietor of the sum
assured and has no right to policy. He cannot validly assign the policy whether
before or after the death of the assured : L.I.C. v/s United Bank of India & another
(1971) 41 Company Cases p. 603.
4. Suicide* Clause : If the assured commits suicide during the currency of the policy,
the policy becomes invalid and generally no claim is paid by the insurance company.
[In most of the policies, the suicide clause (onerous clause) does not adversely affect
the rights of third parties acquired by assignment for value, i.e., bonafide holder for
value].
An attempt to commit suicide or its abetment is a penal offence, ruled the Supreme
Court on 21-03-1996 (reversing its earlier judgement which had declared that the
provisions for punishment under the I.P.C. were unconstitutional).
* Suicide is no more a crime in the U.K. under the Suicide Act, 1961.
In India, an attempt to commit suicide is an offence punishable under Sec. 309 of the Indian Penal
Code.
(In 1994, the Supreme Court struck off Sec. 309 of the I.P.C. providing punishment for attempted
suicides).
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ADVANCES AGAINST INS. POLICIES OF SBILIFE
The Branches may grant overdraft against the security of life insurance policy issued by
SBI Life Insurance Company Ltd. (SBI Life) on the same terms and conditions as stipulated
for the above-referred Scheme : CIRCO/CPPC/P&SB/09/2001-02
Procedure detailed vide CIRCO/CPPC/P&SB/09/2001-02.
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ADVANCES AGAINST COMPANY SHARES, ETC.*
Loans/Advances against Shares/Debentures : To Individuals : Review and Modifications
: Revised scheme detailed vide CirCO/CPPC/P&SB/28/2001-02.
A. TYPES OF SHARES :
1. Blue-Chip Securities : Shares of First Class Limited Liability companies are known
as blue chip securities.
2. Autho. Branches : This scheme is restricted to select branches in Bhopal Circle as per
list enclosed to CirCO/CPPC/P&SB/28/2001-02.
All other branches, if they have advances against shares outstanding, are now required
to either get these loans liquidated or transfer these accounts to the identified branches
(detailed vide CirCO/CPPC/P&SB/28/2001-02).
Other branches may, however, accept shares in demat form as collateral security for
their advances. Particulars of such shares held as collateral security should be reported
to the Product Development Department, NBG, Mumbai by such branches as early as
possible.
3. Restrictions : The following types of shares should not be accepted as security for
advances (ODs) : Shares of Pvt. Ltd. companies,† partly-paid shares (C&I/15/1987,
44/1989, 3/1990), Bank’s own shares, mutilated/torn/damaged scrips, company fixed
deposits,‡ shares of other banks, receipts for shares, qualification shares offered by a
director, promoter’s quota shares, etc.
(The directors of a company are required to purchase the necessary qualification
shares as prescribed by the Articles of Association).
The RBI have since withdrawn the restrictions imposed on advances against shares :
P&SB/CL/37/1993-94.
The branches may encourage such advances against shares of blue chip companies,
or companies whose shares are regularly traded in the stock exchange : P&SB/CL/
37/1993-94.
4. Bank’s Own Shares : No advance should be granted against the Bank’s own shares
(Sec. 20 of Banking Regulation Act; C&I/44/1989, 3/1990).
Secondly, transfer of own shares in the Bank’s name is not permissible for registration
of charge. It tantamount to purchase of own shares (i.e., reduction/depletion in capital).
(Reduction in capital can be made only with the prior permission of the company law
board : Sec. 100 of Companies Act.)
* Guidelines for verification of genuineness of shares/debentures are given in the enclosure to P&SB/
106-J/26/1996-97.
The RBI has recently issued a master circular containing all the current guidelines of the subject.
Copy enclosed to CIRCO/CPPC/C&I/CL/31/1998-99.
The current consolidated instructions of RBI supersede all their earlier instructions on the subject.
Rights issue consists of issue of shares, etc. to existing share-holders.
† Restricted transferability : Sec. 3 of the Indian Companies Act, 1956.
‡ Fixed deposit holders rank as unsecured creditors in the case of liquidation of the company.
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5. Acceptable Shares# : The shares should be fully-paid (C&I/44/1989, 3/1990) and
readily marketable. They should be quoted in one of the principal stock exchanges
in Mumbai, Delhi, Kolkata, Chennai (Madras) & Ahmedabad and reported in the columns
of financial newspapers. (Out of the companies listed on the stock exchanges, daily
transactions are carried out in only some of them; rest of them hardly have any liquidity :
IBA Bull Dec. 1992.)
[The 5 major stock exchanges at Mumbai, Delhi, Kolkata, Ahmedabad and Chennai
account for more than 90% of the listed stocks and market capitalisation.
To streamline the functioning of the Stock markets and protect the interests of investors,
the Govt. has set up CRISIL, S.E.B.I. and Stock Holding Corporation of India (SHCI).
Guidelines have also been announced for venture capital funds and for mutual funds
managed by banks : S.B.E.N. 12.11.1990.]
Preference share are deemed as cumulative unless otherwise stated. The holders of
preference shares enjoy preferential rights/privileges in regard to payment of dividend
and repayment of capital. The lending banker should prefer cumulative preference
shares.
The shares should be accepted in marketable lots. It is difficult and expensive to sell
the odd lots. (Marketable lots : particular number of shares in multiplies of which
transactions of a company’s share take place in stock exchanges. This differs from
company to company.)
Ist Class Companies : The advances should be granted against shares/debentures/
bonds of first class companies.
It is considered inadvisable to maintain any specific list of eligible security : CPP/
PER/CL/144/1997-98.
The risk assessment is also related to the borrower though the recommending/
sanctioning authority has also to consider the quality to securities pledged for arriving
at the decision.
B. M A R G I N S :
1. Public & Staff : @ prescribed by the RBI (detailed separately) on the prevailing
market prices of the share/non-convertible debentures in the Stock Exchanges as
reported in the Economic Times.
The RBI has raised the margin on all advances against shares/financing of IPOs/issue of
guarantees. This margin is applicable to all fresh advances granted. The existing advances
may continue at the earlier margins until they come up for renewal : CIRCO/ADV/CL/275/
2003-04.
The RBI has increased the margin requirement to 50% in respect of advances against
shares / financing of IPOs : CIRCO/ADV/CL/252/2004-05.
The margin of 50% is applicable to the Bank's existing schemes, viz. (i) Advances to
individuals, (ii) Advances to corporate borrowers towards meeting promoters' contribution
in new companies.
# The debenture-holders have priority over the shareholders in the event of liquidation of the company.
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The margin of 50% should be maintained on the prevailing market price of the share / non-
convertible debenture, for all loans under the Scheme : CIRCO/ADV/CL/281/2004-05.
Branches should review the margin available against these advances and make it 50% in
case of existing loan accounts and maintain 50% margin against all future loans : e-Cir/
546/2008-09.
In terms of RBI’s recent directives, the Bank raised the ceiling of advances against
shares and debentures in dematerialised form (from Rs. 10 Lac) to Rs. 20 Lac per
individual : CIRCO/CPPC/P&SB/CL/11/1998-99, CIRCO/CPPC/P&SB/9/2000-01.
The above ceiling of Rs. 20 Lac is per individual borrower per bank, and not banking
industry-wise ceiling: CIRCO/CPPC/P&SB/9/2000-01.
In respect of advances against shares and debentures held in physical form, the
earlier instructions (maximum amount Rs. 10 Lac) remained unchanged : CIRCO/
CPPC/P&SB/ CL/11/1998-99 CIRCO/CPPC/P&SB/9/2000-01.
The drawing powers/limits should be reviewed periodically and revised according to
market value of shares : CirCO/CPPC/P&SB/CL/01/1998-99.
C. OPERATIONAL ASPECTS :
1. Transfer Deeds : As per Sec. 2(7) of Sale of Goods Act, share certificates are ‘goods’.
Therefore these are pledgeable. Blank, signed, stamped and undated transfer deed
(COS-213), duly witnessed, should be obtained from the shareholder. It is now not
necessary to obtain dated transfer deeds from the borrowers : P&SB/CL/20/1995-96.
(The transferee has the right to fill in the necessary particulars, including his name as
transferee, even after the death of the original transferor.)
It is sufficient if blank, signed and undated transfer deed in respect of shares lodged
as security is executed by the borrower personally : P&SB/CL/20/1995-96.
Valid blank transfer forms must be taken regularly : CirCo/CPPC/P&SB/CL/01/1998-
99.
[According to Sec. 103 (IC) of the Companies Act, the requirement under Section 108
(IA) to produce the blank transfer deed to the competent authority for endorsing the
date of presentation, before execution of the transfer is not applicable to shares lodged
with the Bank as security for advances.]
2. Notice of Bank’s Lien / Charge on Shares : Such notice over the shares should
invariably be sent to the company in duplicate, advising them to return the duplicate
thereof, duly signed. The relative postal acknowledgement (A.D.) should also be kept
attached to the security documents.
By sending the notice of lien, the lending banker acquires priority over the debts
incurred by the particular shareholder to the company subsequent to the receipt of
notice of bank’s lien by the company.
3. Letter of Renunciation : If the shares stand in the name of a person other than the
borrower, a letter of renunciation/relinquishment, signed by that person (giving up share
holder’s own rights in favour of the borrower), should invariably be obtained along
with form A/A-1/A-2.
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4. Drawing Power : Suitable repayment programmes should be insisted in all cases
(so that such advances do not assume a permanent/perpetual character). The D.P.
should be revised from time to time based on prevailing market value of shares, margin
and repayment programme.
D. LEGAL REQUIREMENTS :
1. Statutory Provision : As per Section 19(2) of the B.R. Act (Banking Regulation Act),
no banking company can hold shares in a company, whether as pledgee/mortgagee
or absolute owner of an amount exceeding 30% of the paid-up share capital of that
company, or 30% of the banking company’s share capital plus reserves, whichever is
less.
Sec. 19(2) of B.R. Act : P&SB/CL/58/1994-95, P&SB/106-J/26/1996-97 :
a) In the case where the company holds shares in trust for the Bank who is not the
absolute owner, the position of the Bank is neither of a pledgee nor of a mortgagee.
Hence Sec. 19(2) of the Banking Regulation Act, 1949 is not applicable in such
cases.
b) Units of U.T.I., master shares, mutual fund instruments are not shares and
hence do not fall under the purview of the above Act.
Revised Reporting Structure : The Bank has recently prescribed a revised reporting
structure for dealing with loans and advances against shares both from the point of view of
compliance of Sec 19(2) of the B.R. Act, 1949, and compliance of aggregate exposure to
the Capital Market as stated in the RBI Master Circular (2010) on exposure Norms, as
detailed in e-Cir/729/2010-11.
The instructions detailed in e-Cir/729/2010-11 are applicable to Personal Segment products
also : e-Cir/771/2010-11.
Nodal Officer : DGM (Compliance) : e-Cir/784/2010-11.
Compliance With Sec. 19 (2) of Banking Regulation Act : Extant Instructions Reiterated :
e-Cir/874/2011-12.
E. T R A N S F E R :
1. Transfer in Bank’s Name : With a view to discouraging the use of bank finance for
speculative purposes and other unethical/unhealthy activities.
The Reserve Bank of India has recently raised the monetary limit for advances against
shares and debentures (from the earlier Rs. 5 Lakh) to Rs. 10 Lakh per individualborrower, beyond which the security is required to be transferred in the name of the
financing bank (legal charge over the shares), so that the borrower cannot exercise
his voting rights in the company : P&SB/106-J/26/1996-97.
Thus, shares of a company when accepted as security against credit facility are
required to be transferred in the Bank’s name if the value of shares is more than Rs.
10 Lac : CIRCO/CPPC/MISC/CL/34/1998-99.
If necessary, the Bank could exercise this right with the prior approval of the RBI
(C&I/44/1989, 3/1990).
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RBI have recently advised that their prior approval is now not necessary for exercising
the voting rights in respect of shares transferred in the Bank’s name as security :
CPP/C&I/CL/159/1997-98, CPP/PDMPB/CL/179/1997-98.
As regards the Bank exercising voting rights in respect of shares transferred to and
held in the Bank’s name as security for any loan, the instructions contained in CPP/
C&I/CL/159/1997-98 should be followed : CPP/PDMPB/CL/179/1997-98.
The Bank has decided that in the case of securities in the demat form against which
a loan has been sanctioned, only a pledge in our favour need be taken, with a noting
of the pledge with the Depository, instead of the transfer of the securities to the Bank’s
name.
The RBI has now stipulated that the shares and debentures which are held beyond 9
months (earlier; 3 months) are required to be transferred to the Bank’s name : C&I/13/
1995-96.
Such advances without transfer of scrip in the name of the Bank should be granted
only to parties whose credentials are well established to the Bank’s satisfaction (C&I/
44/1989).
Monetary Limit : The monetary limit per individual borrower for advances against the
security of shares and debentures in physical form was raised to Rs. 10 Lac (from the
earlier Rs. 5 Lac) : C&I/21, 44/1989, 3/1990, P&SB/CL/12/1993-94, P&SB/106-J/26/
1996-97.
Joint holdings : RBI have clarified that joint holders of shares may be treated as
separate borrowers for the purpose of reckoning the limit (of Rs. 10 Lac/Rs. 20 Lac)
up to which loan against shares can be sanctioned : P&SB/CL/46/1994-95.
Collateral Security : The RBI has recently advised that collateral security taken by
banks in the form of shares is deemed as an advance against shares.
The classification of the advance as a loan having a pre-determined repaymentschedule has been left to the discretion of the financing bank. However, it is preferableto grant such advances in C&I Segment with definite repayment programme : C&I/15/
1987; 8, 65/1988.
The monetary ceilings in respect of investment companies, share and stock brokers,
trusts and endowments are detailed in C&I/44/1989, 3/1990.
F. DEMATERIALISATION :
1. Shares in Demat Form : In the cases where shares and debentures are taken as
security for loans in demat form (paperless form), RBI’s extant instructions which
mandated transfer of the security to the financing bank’s name are not applicable
now : CPP/C&I/CL/159/1997-98.
Banks are now free to take their own decisions in regard to method of taking security
of demat shares/debentures.
Margin & Max. Finance : Detailed above.
In regard to shares/debentures which are not in demat form, RBI’s extant instructions
continue to apply.
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Dematerialisation : of shares held as security : CIRCO/CPPC/MIS/CL/3/1999-2000:
• Branches should arrange for immediate dematerialisation of notified shares held
as security when there is an urgent need to enforce the security.
• In other cases, the dematerilisation process should be completed within a period
of 3 months.
• Steps should be initiated to convert all the existing equity/debt securities held as
primary/ collateral into dematerialized form : CCFO/ADV/CL/39/2006-07.
• Shares of companies not in the notified list may be continued to be held in
material form for the present.
• Branches should henceforth sanction loans against shares of the companies
appearing in the notified list/future notified lists, only in demat form.
• Dematerialisation of shares is done in the electronic media by a depository
through a depository participant. The Bank’s Security Services Branch, Mumbai
is a D.P. Branches are, therefore, required to open an account with SSB as per
the procedure outlined in CIRCO/CPPC/MISC/CL/3/1999-2000.
• List of Companies : Comprehensive lists of companies whose shares have been
notified for compulsory trading in demat form by institutional/all category of
investors : enclosed to CIRCO/CPPC/MISC/CL/75/1999-2000.
Additional Details : Certain additional procedural details are required to be observed by
the branches. A compendium of procedures relating to dematerialisation is enclosed to
CIRCO/CPPC/MISC/CL/79/1999-2000.
Rematerialisation : This process refers to conversion of dematerialised shares into physical
shares.
G. PURPOSE, ETC. :
i) While granting the advances against shares, the nature, purpose and need for which
the advances are granted should be given more weightage rather than what the advance
is against (to ensure that the bank finance is not utilised for speculative purposes).
ii) The above considerations/stipulations should be applied with greater force; and greater
caution, and restraint should be exercised in lending against shares and corporate
securities to all parties, including financial and investment companies : Cir Letter No.
GEN/144/1985; C&I/15/1987; 44/1989, 3/1990, P&SB/106-J/26/1996-97.
iii) Bank finance should be used only for short-term productive purposes and not for (a)
speculative purposes, or (b) acquiring controlling interest in company/companies :
C&I/44/1989, 3/1990.
iv) Advances against shares/debentures should be kept separate and not combined with
any other advance: C&I/44/1989, 3/1990.
v) The commercial banks have now been permitted by the RBI to extend loans and
advances up to the above limit to individuals (against security of existing shares or
debentures) for purchase of shares or debentures in the secondary market (with a
view to providing a fillip to the country’s capital market) : C&I/42/1987.
vi) Share Advances to Farmers : detailed separately.
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H. MISCELLANEOUS :
1. Precautions : Branches should remain vigilant while accepting shares, debentures
bonds, etc. as security for advances (to obviate the possibilities of advancing against
unauthorised duplicate shares) : P&SB/CL/47, 54/1995-96.
(To safeguard the Bank’s interests in the event of circulation of fake and benami share
certificates,) loans against shares, etc. should be granted to genuine customers of
good standing : P&SB/20/1995-96, P&SB/CL/54/1995-96.
2. Loans to Shares & Stock-Brokers : The lending policy in this regard is formulated
and fresh instructions issued from time to time for advances to be sanctioned to
shares and stock-brokers : CIRCO/CPPC/C&I/CL/106/2001-02.
Revised norms for taking exposure to Capital Markets : Detailed in CCFG/ADV/CL/324/
2007-08.
Current norms for taking exposure to Capital Markets : Detailed in CCFG/ADV/CL/324/
2007-08.
Operating Units should not extend credit facilities (both fund-based and non-fund-based) to
the Stock Brokers and any violation in this regard is viewed seriously.
The Bank takes up this activity in a focussed manner through selected branches.
Our Mumbai Main Branch (MMB) has been designated as the hub for our lending to the
Capital Market and is the central point of control for the other identified branches.
3. Promoters' Equity Shares : Collateral Security : While sanctioning term loans, stipulation
of pledge of promoters' equity shares should be considered as one of the items of collateral
security and can be stipulated by the sanctioning authority, where deemed necessary :
CCFO/ADV/CL/89/2005-06.
Only fully paid-up shares should be accepted as security. For companies which are
listed and quoted, the lowest quote of the previous 52 weeks should be reckoned as the
value of the security. For unlisted companies, 50% of the face value of the share may be
considered as its value : CCFO/ADV/CL/89/2005-06.
It should be in compliance with Section 19(2) of the B.R. Act Banking Regulation Act
(which states that, no banking company can hold shares in a company, whether as pledgee/
mortgagee or absolute owner of an amount exceeding 30% of the paid-up share capital of
the company, or 30% of the banking company's share capital plus reserves, whichever is
less) : CCFO/ADV/CL/112/2005-06.
ADVANCES AGAINST SHARES ISSUED BY M.S. PATEL CO-OP. BANK LTD.
No advance should be granted against the shares issued by the above bank.
ADVANCES AGAINST ENDOWMENT CERTIFICATES ISSUED BYPEERLESS GENERAL FINANCE & INVESTMENT CO. LTD.
No advance should be granted on the security of endowment certificates issued by the
above company.
No other facility/concession should be granted to their field officers, etc. also (Cir. Letter
No. P/1985).
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ADV. AGAINST UNITS OF SBIMF*
Ref. : e-Cir/819/2010-11 :
a) The following Magnum Funds of SBI Fund Management Private Ltd. (SBFM) are accepted
as collateral security for the Bank’s fund/non-fund-based exposure (CIRCO/ADV/CL/61/2004-
05, e-Cir/819/2010-11) :
• Magnum Insta Cash Fund (MICF)
• Magnum Institutional Income Fund (MIIF)
• Magnum Income Fund (MIF)
• Magnum Gilt Fund (MGF)
b) The Bank has recently included the following Mutual Fund instruments also for acceptance
as collateral security for fund/non-fund based credit facilities sanctioned by the Bank. Besides,
these instruments are also approved for acceptance in lieu of cash margin for the Non-Fund-
Based exposure sanctioned/to be sanctioned by the Bank.
• SBI Dynamic Bond Fund (erstwhile Magnum NRI Fund - Long Term)
• SBI Short Horizon Debt Fund (ultra Short Term Fund).
c) While for the purpose of acceptance of the two funds as collateral security, the funds are
accepted at 95% of their face value.
d) Such instruments when accepted in lieu of Cash Margin in respect of the non-fund-based
limits sanctioned / to be sanctioned by the Bank, it should be ensured that the face value of
surrendered MF instruments should be equivalent to 125% of the cash margin stipulated. Further,
in such cases, the loans attract additional 0.25% p.a. interest charges for compensating the
Bank for additional capital the Bank is required to provide.
e) Whenever a fall in NAV (Net Asset Value) is observed, the borrower should be advised to
supplement the value of collateral security, or else the investments furnished as collateral security
should be redeemed by the Bank.
f) Adv. Against Units of SBIMF : The following mutual fund schemes may be accepted as
collateral security and also in lieu of cash margin to cover the Bank’s fund and non-fund-based
credit limits : e-Cir/924/2010-11 :
• Magnum Income Fund Floating Rate Plan (MIFR).
• Magnum Debt Fund Schemes (MDFS).
For these funds also, (c) and (d) above remain unchanged.
g) RBI’s Instructions : The RBI are not in favour of the banks extending credit to Corporates/
Non-Corporates (other than individuals) against units of debt-oriented mutual funds : e-Cir/1272/
2012-13.
RBI’s Instructions : The RBI are not in favour of the banks extending credit to Corporates/Non-Corporates (other
than individuals) against units of debt-oriented mutual funds : e-Cir/1272/2012-13.
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Adv. Against SBI Magnums : Acceptance of Investments in Select SBI Mutual Funds as Collateral
Security and in Lieu of Cash Margin for the Bank’s Fund/Non-Fund Exposures : e-Cir/1054/2010-
11 : While for the purpose of acceptance as collateral security, the funds would be accepted at
95% of its face value, such instruments when accepted in lieu of cash margin in respect of non-
fund-based limits sanctioned/to be sanctioned, it should be ensured that the face value of the
surrendered mutual fund instruments should be equivalent to 125% of the cash margin stipulated.
Further, in such cases, the facility sanctioned (LC/BG) would attract additional 0.25% in the
applicable service charge to compensate the Bank for the additional capital the Bank is required
to provide : e-Cir/357/2012-13.
When investments in schemes of SBIMF are accepted in lieu of Cash Margin for the NFB Limits
(L/C, B/G, etc) sanctioned to a borrower, additional service charge (Commission) to the tune of
0.25% should be recovered. However, there should be no addition to the existing rate of Interest
charged to a borrower for the limits sanctioned if the investments in schemes of SBIMF are
accepted as Collateral Security : e-Cir/357/2012-13.
SDFS : SBI Debt Fund Series of SBIMF : SDFS Short-Duration Loan and SDFS-Long Duration
Loan : Against Demat Units SBI Debt Fund Series (of fixed maturities) : New Scheme : Salient
Features : e-Cir/378/2011-12.
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ADVANCES AGAINST COLLATERAL
SECURITY OF MAGNUMS*
Old/New Names of Schemes : The existing names of the SBIMF Schemes and their corresponding
new names are mentioned in e-Cir/357/2012-13.
Advances Against Units of M.Fs. : The RBI has recently issued a master circular containing
all the current guidelines of the subject. Copy enclosed to : CIRCO/CPPC/C&I/CL/31/1998-
99.
The current consolidated instructions of RBI supersede all their earlier instructions on the
subject.
1. Margins : RBI Directive : (regarding maintenance of margin of prescribed % of the
N.A.V.) applies even to units of mutual funds, including magnums of SBI mutual fund
floated before the listing requirement came into effect : P&SB/CL/9/1995-96.
Current Margins : detailed separately.
Listed Magnums : Loans up to prescribed % of its N.A.V.
Unlisted Magnums : Loans up prescribed % of its N.A.V.
Such advances may be granted by way of a overdraft in current account. (Demand
loans can also be granted).
Adv. against Units of SBIMF : Margins : Branches should review the margin available
against these advances and make it 50% in case of existing loan accounts and maintain
50% margin against all future loans : e-Cir/546/2008-09.
Extant instructions relating to percentage of margin : Reiterated vide e-Cir/357/2012-13.
2. Eligibility : Magnum-holders are eligible to avail of advances in their own names as
also to offer the magnums as collateral security for advances granted to thirdparty/
ies, or as margin money towards LCs and guarantees : C&I/32/1988.
3. Interest : Interest rate linked with SBAR/Base Rate (magnums are now classified as
specified securities; also to give edge over the other competitors in a fiercely competitive
market, and to reduce the financial burden of small investors).
Simple interest should be charged on advances granted to the Bank’s staff (Staff/19/
1998-99).
Procedure : The following procedure is followed :
• Scrutiny : The Magnum Certificate(s) should be scrutinised with a view to ascertaining
whether the same is/are, prima facie, in order.
• Identity : The identity of Magnum-holder must be established. This could be by way
* No loan/advance was permissible against the Magnums issued under :
a) Magnum Equity-linked Savings Scheme, 1990-91.
b) Magnum G.I.F.T.S., 1992.
c) Magnum Taxgain, 1993.
d) M.R.I.S. 1989 (no loan after 01.10.1993 : MBB/CL/8/1993-94).
e) Magnum Tax Profit, 1994.
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of reference to Passports/Identity Cards issued by employers/specimen signature on
branch record in case the Magnum-holder has an account with the branch/authentication
of signature by a bank/any other acceptable means.
• Application : Once the identity of the Magnum-holder is established and the
Certificate(s) is/are prima facie in order, the Magnum-holder (or all the joint holders,
as the case may be) is required to make an application to the Bank for grant of the
overdraft facility.
In cases, where the overdraft facility is proposed to be availed of by third party/parties,
such applications should be made jointly with such third party/ies.
The sanctioning authority should thereafter sanction the overdraft facility.
• Disbursement : Where the quantum of loan sought is up to Rs. 15,000/- per applicant
(in the case of joint holders of Magnum, the same should be treated as single applicant
for this purpose), the facility may be released on execution of prescribed documents.
Simultaneously, the branch should advise the Registrar of the relative scheme of
SBI Mutual Fund the details of Magnum Certificate(s) accepted as collateral security
with a request to register a “Charge” on the certificate(s) in favour of the branch
(annexure ‘G’).
• Loans Exceeding Rs. 15,000/- : When the quantum of loan sought is in excess of
Rs. 15,000/- per applicant, the branch should approach the Registrar, with details of
Magnum Certificates proposed to be accepted as collateral security, and with a request
to register a “charge” on the certificate(s) in favour of the branch (annexure ‘G’). The
loan facility should be released on receipt of advice from SBI Mutual Fund notifying
registration of charge.
For valued C&I customers, the ceiling (of Rs. 15,000/- for release of loan without a prior
registration of charge with SBI Mutual Fund) could be raised to Rs. 25 Lac while granting
advances against the security of magnums or taking the magnums as cover towards margin
money for LCs/Bank guarantees : C&I/46/1988.
• Documents to be Obtained from Borrower :
i) Application for grant of overdraft facility (annexure ‘F’).
ii) Magnum Certificate(s) along with Transfer Form (undated).
iii) All other documents stipulated by the Bank for clean overdrafts.
Note :
i) The above documents should be executed by all the persons whose names appear
in the Magnum Certificate(s) offered as collateral security (even in cases where only
one or some of the Magnum holders is/are availing of the overdraft facility).
ii) Where the overdraft limit is sought by third party/ies or by one or some of the Magnum
holders jointly with third party/ies, the application for grant of overdraft facility should
be signed by all the persons whose names appear in the relative Magnum Certificate(s)
together with the third party/ies. Also in such cases, necessary form A, A-1, A-2, as
the case may be, should be obtained. The procedure and documents stipulated for
clean overdrafts to third party/ies against collateral security should be followed.
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g) Financial Powers : The powers delegated for sanction of advances against specified
securities*, apply for overdrafts against the collateral security of Magnums also (MOP/
14/1989).
However, where quantum of overdraft is in excess of Rs. 15,000/- per applicant, the
facility should be released on receipt of advice from SBI Mutual Fund notifying
registration of charge.
ADVANCES TO BANK’S STAFF AGAINST MAGNUMS
Objective : With a view to motivating the staff members for investing their savings in magnums,
the following concessions have been made for advances against the collateral security of Magnums
(Staff/90/1988; 43/1990; 75/1991) :
Nature of Loan : Demand Loan or Overdraft.
Margin : detailed separately
Interest : Rate linked with SBAR/Base Rate.
Repayment : 36 monthly instalments.
Relaxations : As per the extant instructions, all advances to members of the Bank’s staff
stipulate fixing of a repayment schedule : P&SB/5/1991.
In the case of overdrafts granted to members of staff under Cashkey Scheme, no repayment
programme is now stipulated (to encourage members of staff to avail of facility under the
Scheme, as and when deemed convenient, by doing away with the stipulation of a repayment
schedule) : P&SB/7/1990.
Sanctioning Authority : Same as applicable to advances against surrender value of LIC
policies (Staff/43/1990, 75/1992, OP/2/1995/96, CIRCO/CPPC/MIS/CL/111/2000-01).
RBI’s RECENT GUIDELINES REG.ADVANCES AGAINST UNITS OF MUTUAL FUNDS (MAGNUMS)
RBI’s Comprehensive Set of Revised Guidelines : C&I/40/1993-94 :
• Listing : The units (of mutual funds) should be listed in the stock exchanges.
• Lock-in-period : The units should have completed the minimum lock-in-period
stipulated in the scheme.
• Quantum : The amount of advance should be linked to the N.A.V. (net asset value),
and NOT TO THE FACE VALUE.
(N.A.V. : The net asset value of any scheme is calculated by determining the value of
scheme’s assets
and substracting the liabilities of the scheme taking into consideration the accruals
and provisions. The N.A.V. per magnum is calculated by dividing the NAV of the scheme
by the total number of magnums outstanding on that date).
* The magnum certificates issued under different schemes from time to time having the following salient
features are now treated as specified securities :
(a) assured minimum return; (b) assured repayment of principal; (c) loan facilities up to prescribed %
of the N.A.V. or M.V. or repurchase value of the holding; (d) repurchase at par or premium : MOP/14/
1989.
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• Margin : Margin requirements as per the current RBI directives applicable to such
advances.
Further, the margin should be calculated on the N.A.V.
This applies even to units of mutual funds (including magnums of SBIMF) floated
before the listing requirement came into effect : P&SB/CL/9/1995-96.
• Purpose : The advances should be purpose-oriented, as in the case of advances against
shares/debentures.
Advances should not be granted for subscribing to, or boosting the sales of, another
scheme of mutual fund or for purchase of shares/debentures/bonds.
• Finance Companies : The Bank’s lendings to finance companies (which includes
investment companies) in this regard should not exceed the limit prescribed by the
R.B.I.
• Earlier Instructions : The above instructions supersede all the earlier instructions.
139
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ADVANCES AGAINST OPEN-ENDEDSCHEMES OF SBI MUTUAL FUND
Scope of Scheme : The Scheme covers short-term advances to individuals against the
collateral security of demat units of open-ended schemes of SBI
Funds Management Ltd. (SBIFM), a subsidiary of SBI. A list of
open-ended mutual fund schemes currently being marketed by
SBIFM is enclosed at Annexure A of CIRCO/CPPC/P&SB/33/
2001-02.
Loans against the units of Tax-Saving Funds should be given onlyafter the lock-in period of 3 years has expired.
Purpose : Advances against the units should be purpose-oriented, taking into
account the credit needs of the investor. They may be granted to
individuals to meet contingencies and personal needs.
Advances should not be granted for subscribing to or boosting up
the sales of another schemes of mutual funds, for the purchase of
shares/debentures/bonds or speculative purpose.
Eligibility : 1. Individual(s) over 21 years of age with a steady source of
income who are :
a) employees,
b) professionals, self-employed and others who file income
tax returns,
c) engaged in agricultural and allied activities,
d) Pensioners of central and state governments, defence
establishments,PSBs.
Non-Resident Indians holding a Indian passport with a
steady source of income are eligible for the loan through
branches specifically authorised by the Circles.
Branches are required to ensure compliance with all
extant exchange control directives of RBI pertaining
to advances against the security of shares or other
securities held in the name of the NRI borrowers.
2. Maximum age limit : 65 years.
3. Minimum net monthly income of Rs. 5,000/- for salaried
persons.
For self-employed and others, minimum net annual income
of Rs. 50,000/- is acceptable.
The income of the spouse can be taken into account for
computing the eligibility amount, provided he/she guarantees
the loan or is a co-borrower (being a joint holder of the
security).
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Loan Amount : Minimum : Rs. 10,000/-.
Maximum : Against demat units : Rs. 20 Lac (which should be
inclusive of any loans granted against the security of shares/
debentures and bonds).
The actual amount of loan should be limited to 10 months’ net
monthly income, net of all deductions, including tax for salaried
individuals and pensioners and one year’s net annual income for
others, subject to a ceiling of Rs. 20 Lac as stated earlier and
prescribed margins of CIRCO/CPPC/P&SB/CL/33/2001-02.
Margin : Scheme-wise as per Annexure A of CIRCO/CPPC/P&SB/33/2001-
02.
Current Margins : detailed separately.
Margin has been determined based on the risk profiles of the funds.
Margin should be calculated on the Net Asset Value (NAV).
NAVs are published daily in newspapers/financial papers.
Valuation : The security should be marked to market at least on a weekly
basis, i.e., the value determined based on the NAV on any day of
the week decided by the branch and value recorded in a register/
PC. The stipulated margin should always be available in the
account.
In case the outstandings in the demand loan or current account
exceed 60% - 85% of the NAV, the customer should be requested
to make good the difference, depending on the scheme whose units
are pledged with the Bank. However, if this difference is less than
10% of the loan limit, it may be ignored in loans up to Rs. 2 Lac, in
view of operational costs.
Security : Lien on Units : The Statement of Account of the open-ended units
certifying that a lien has been marked by the Registrar is retained
along with the loan documents. The detailed procedure for having
the lien noted by the Registrar and the cancellation thereof
subsequent to liquidation of the loan is detailed in Annexure B of
CIRCO/CPPC/P&SB/CL/33/2001-02.
Type of Loan : Demand Loan or overdraft facility in current account repayable in a
maximum of 30 months.
Repayment : The Demand Loan is repayable in 30 EMIs. Branches should strive
to establish check-off arrangement in respect of salaried borrowers.
Where a check-off facility is not available, post-dated cheques dated
prior to 7th of each month should be obtained.
In the case of current account overdrafts, the DP should be reduced
monthly over the repayment period of maximum 30 months.
Rate of Interest : Linked with SBAR/Base Rate.
Demand Loans can be granted at fixed or floating rates of interest.
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Current account overdraft limits are subject to floating rates of
interest only.
Processing Fee : @ current rates.
Declaration : A declaration should be obtained from the borrowers indicating the
extent of loans availed of by them from other branches against
shares/debentures/units of mutual funds (with a view to ensuring
compliance with RBI stipulation of maximum amount of such loans
not exceeding Rs. 10.00 Lac and Rs. 20.00 Lac against securities
held in physical and dematerialised forms, respectively, which is
inclusive of shares/debentures and mutual funds).
Documents Pre-Sanction :
(Required with i) Proof of Identity :
Application) : - Voters I-Card/Passport/driving licence/PAN card.
ii) Proof of Residence :
- Electricity Bill/Telephone Bill/Passport/Voters I-Card.
iii) Passport size Photograph.
iv) Proof of Income :
a) For Employees :
- Latest Salary slip showing all deductions or a salary
certificate.
- latest Form 16.
b) For others :
- Copy of IT Returns for last two financial years - duly
acknowledged by ITO with computation of income.
v) Proof of official address (for other than employees) :
Shop and Establishment Certificate/Lease Deed/Telephone
Bill.
vi) Latest Statement of Account issued by SBI Funds
Management Ltd., indicating details of units held.
vii) Declaration
Post-Sanction :
i) Arrangement Letter - Annexure II.
ii) DP Note and DP delivery letter.
iii) Original Statement of Account of SBIFM, indicating noting of
lien.
iv) a) Post-dated cheques (where no check-off facility is
available).
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b) Where check-off is available :
- Irrevocable letter of authority from the borrower.
- Letter from the employer.
- Letter from the employer where applicant himself is
the Drawing and Disbursing Officer.
Autho. Branches : i) All (computerised) branches.
ii) All branches having a ‘P.B. Division’ in metro/urban and semi-
urban centres.
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AUTO FINANCE MARKET,SBI CAR LOAN SCHEMES
Auto Fin. Market : Delivery Channels : Branches should ensure that Bank’s multiple delivery
channels for enhanced distribution of products are fully exploited to capture a dominant share in
the Auto Finance Market, without losing focus on the credit quality : CCFO/ADV/CL/340/
2006-07.
Auto Loans : Repayment Period : The repayment period for auto loans has been increased from
the earlier 7 years to 8 years for the purpose of extending the repayment period, if interest rates
on the existing loans go up and the EMIs are left unchanged : e-Cir/570/2011-12.
Auto Loans : Revised Application Forms : Enclosed to e-Cir/683/2011-12.
Auto Loan Counsellors : Details of the Scheme : e-Cir/408/2010-11.
Vehicle Loans : For Customers in CAG and MCG BUs : Detailed in e-Cir/751/2011-12.
AUTO FINANCE MARKET : SBI CAR LOAN SCHEME
Car Loan Scheme : Applications : On-line Sourcing of applications through SBI Website : e-
Cir/134/2009-10.
This facility has been made available for select cities where the Bank has set up MPSTs : e-Cir/
134/2009-10.
NRI Car Loan Scheme : Under this new scheme, the borrower is a resident Indian, who is a
close relative of a sponsoring NRI, who would be the guarantor : CCFO/ADV/CL/258/2006-07.
Salient Features : Detailed in CCFO/ADV/CL/258/2006-07.
Autho. Branches : The new product is available at NRI-Intensive Branches as per list enclosed to
CCFO/ADV/CL/286/2006-07.
PIO : The Scheme has been recently extended to Persons of Indian Origin (PIO) and modifications
have been made in the minimum income eligibility criteria of NRI/PIO : CCFO/ADV/CL/394/
2006-07.
SBI Advantage Car Loan Scheme : With a view to providing a suitable scheme to the affluent
customers, the Bank introduced a New Car Loan product, “SBI Advantage Car Loan Scheme.”
The scheme targeted mid-size car and above segments with a minimum loan component of
Rs. 5 Lac. The details of the scheme are furnished in e-Cir/495/2009-10.
Modifications in EMI/NMI Ratio : e-Cir/749/2010-11.
Discontinued vide e-Cir/940/2011-12.
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Certified Pre-owned Car Loan Scheme : New Product : Detailed in e-Cir/713/2010-11.
Modification in Documents : Detailed in e-Cir/12/2011-12.
Modifications : The Bank has recently decided to keep one single product for all Car Loans
irrespective of the loan amount by merging the two products : SBI Advantage Car Loan and SBI
Ezee Car Loan. The new product is now known as “SBI Car Loan Scheme” : e-Cir/940/2011-12.
Modifications : Detailed Separately.
Car Loans : Up-selling of Two-wheeler to Car Loan Customers : For their son/daughter : e-Cir/
611/2011-12.
SBI Combo Loan Scheme : New Product : Under the combo product, the limit for a car loan and
a two-wheeler loan is combined into a single limit for the entire tenure of the loan and at the
interest rate as applicable under the regular car loan scheme. Thus, a customer applying under
Combo Loan product is benefitted in interest rate for two-wheeler loan portion. Besides, he can
avail maximum tenure of 7 years for this combo limit : e-Cir/1269/2012-13.
The salient features of the scheme are detailed in e-Cir/1269/2012-13.
Accident Insurance : Personal accident insurance cover : for Home Loan/Car loan borrowers :
New India Insurance Co. : Credit of claim amount through electronic funds transfer : e-Cir/1008/
2011-12.
Car Loans, Home Loans : Personal Accident Insurance : The Bank has discontinued the Free
(Complimentary) Group Personal Accident Insurance Cover (Death only) provided to its Existing
as well as New Home & Car Loan customers with effect from 01.07.2013 (i.e., on the expiry of the
current Master Policy).
However, in case of any incident of accidental death of any borrower(s) on or before 01.07.2013,
the relative claim, along with the required documents, should be submitted immediately to SBI
General Insurance Co. Ltd. for settlement of such claims : e-Cir/1294/2012-13.
Home Loans/Car Loans : Insurance : From 02.07.2012, the Bank has mandated SBI General
Insurance Co. Ltd. to handle this business. However, claims up to 01.07.2012 will be settled
through New India Assurance Co. Ltd. who were providing insurance cover till that date : e-Cir/
452/2012-13.
Branches/RACPCs are required to issue Certificate of Insurance to the customers, along with the
Arrangement Letter while sanctioning Home/Car loans, in the format enclosed to e-Cir/452/
2012-13.
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CAR LOAN - OVERDRAFT SCHEME
Master Cir : Updated up to 30.06.2010 : e-Cir/237/2010-11.
Imp. : Please read the undernoted features of the Car Loan Overdraft Scheme in conjunction
with the Revised Car Loan Scheme effective from 01.07.2007 - detailed separately.
This Scheme, launched in 2006, is a variant of car loan offered as an overdraft facility (instead
of a term loan). Initially, the Scheme was made available only to new borrowers availing Car
Loans of Rs. 3 Lac and above : CCFO/ADV/CL/278, 338/2006-07.
Type of Loan
Loan Amount
Interest
Repayment
Additional
Repayment
Stipulations
Cheque
Book, ATM-Cum-
Debit Card &
INB Facilities
Service
Charges
Authorised
Branches
Documents
Other Terms &
Conditions
Overdraft for purchase of new vehicles.
As applicable to normal car loans.
Minimum Loan Amount : Rs. 3 Lac.
No upper ceiling for new vehicles.
50 bps higher than normal car loan rates for different tenures - linked
with SBAR/Base Rate.
As per extant instructions applicable to normal Car Loans -
Customer should remit EMIs as in a normal car loan. Drawing Power on
the loan account is reduced on monthly basis to the extent of principal
component (so that the OD is liquidated at the end of the tenure). Interest
component of the EMI remitted services the interest obligations.
After loan disbursal and completion of required formalities, including
hypothecation of vehicle, borrowers are eligible for issue of cheque book,
ATM-Debit Card and Internet Banking facility for operation in the loan
account. However, no overdrawings are to be permitted in the accounts
in excess of the Drawing Power.
The extant schedule of service charges applicable to Current Accounts
is also applicable to these loans.
Launched on pilot basis at all branches attached to RACPC/PBBs and
branches having PB Division which are operating on Core Banking
Platform. After stabilisation of the Scheme, it is being extended to other
branches.
As per Circular.
As per extant car loan scheme, including those for purpose, eligibility,
margin, pre-payment penalty on pre-closure of the loan, security, interest
rate concessions and other relaxations under ‘Plus’ schemes, corporate
tie-ups, processing fee, pre-EMI capitalization, pre and post sanction
inspection, etc.
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CAR LOANS :
IRREGULARITIES, FRAUDS
Car Loan Scheme : Deficiencies : The branches should ensure that the deficiencies in pre-
sanction verification and post-sanction follow-up detailed in CIRCO/ADV/CL/137/2004-05 are
removed forthwith, if not already done.
Auto Loans : Irregularities : In the Financial Inspection Report under Section 35 of Banking
Regulation Act, 1949, the RBI has pointed out the following irregularities in the sanction and
disbursement of auto loans : e-Circular/370/2008-09 :
a) Copy of invoices from the auto dealers not obtained and verified,
b) I-T Return/Salary slip not obtained,
c) Copy of RC book with bank’s lien marked therein not obtained,
d) Copy of insurance policy and relevant cash receipts not obtained/expired for auto loans,
f) Quotations of outstation dealers are accepted without verifying the veracity of these documents,
g) Auto Loans sanctioned on the basis of old quotations,
h) Primary security is not available as the charges are not registered with ROC.
In the case of verification of proof of residence, office, genuineness of salary slips of income,
etc. to establish the identity and the responsibility to ensure compliance with KYC norms should
remain with the branches. Similarly, the instructions issued by the Bank for recovery agents from
time to time on the Do’s and Don’ts and code of conduct, etc. should be followed meticulously.
Frauds : Car Loans : e-Cir/352/2010-11.
In order to obviate possibilities of frauds relating to Car Loans, the following measures must be
taken :
• KYC and customer due diligence must be complied without any deviation.
• PAN of borrower and TAN of supplier/dealer should be taken without fail before sanctioning
of loan. The verification of the said documents must be certified by an official.
• The copy of R.C. Book/Smart Card relating to the registration of the car with RTO must be
obtained normally within 15 days from delivery of the car by the dealer. In no case, more
than 1 month should be allowed for obtention of the said documents. In event of delay of
more than 1 month, alert must be raised with higher authorities/dealers/auto companies.
• Meaningful pre-sanction survey/post-disbursement inspections should be carried out.
• The instruments representing the loan proceeds should be delivered to the genuine suppliers
directly against their acknowledgement instead of borrowers.
Car Loans : Frauds : Learning Points : Detailed in e-Cir/930/2013-14 :
Imp. Precautions : a) DSE should not source car loans from dealerships other than the
Dealership where he is employed.
b) Web-check of telephone number (in case of BSNL and MTNL connections) should be done.
c) For loan amount above Rs. 5 Lac, credit information report from second credit information
company should be sought.
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SBI CAR LOAN SCHEME
FOR NEW VEHICLES ONLY
Master Cir. : e-Cir/719/2012-13.
Modifications : e-Cir/1175/2013-14, etc.
1. Purpose :
Term Loan & Overdraft are sanctioned by the Bank for purchase of new passenger cars,
Multi-Utility Vehicles (MUVs) and Semi-utility Vehicles (SUVs).
2. Eligibility :
i) Regular employees of State/Central Govt., Public Sector Undertakings, corporations,
private sector companies, and reputed establishments.
ii) Professionals, Self-employed, Businessmen, proprietary/partnership firms and others
who are income-tax assesses can avail of the loan facility.
iii) Persons engaged in agriculture and allied activities can also avail the car loan. Income-
Tax return is not required in case of agriculturists.
Age : 21-65 years (for sanction of loan).
Loans can be granted by sanctioning authority to individuals who have sufficient, regular and
continuous source of income for servicing the loan repayment beyond 65 years. Loan must
be fully repaid before the borrower attains the age of 70 years.
3. A. Minimum Income :
i) Salaried :
Minimum Net Annual Income of applicant (and/or co-applicant, if any, together) should
be Rs. 3 Lac p.a. and above. Income from other sources like bank interest/dividends of
listed companies, rent, agriculture income can be added : e-Cir/1175/2013-14.
ii) Self-employed, Professionals, Proprietary/Partnership firms & Businessmen :
Minumum Net Profit or Gross Taxable income of Rs. 4 Lac p.a. as per ITR after adding
back depreciation and deducting repayment of all existing loans. Business Income from
other sources like bank interest/dividends of listed Companies, rent, agriculture income
can be added.
Income of Co-applicants : For Self-Employed, Professionals and Businessmen, income
of co-applicant can be clubbed to arrive at the minimum income criteria of Gross Taxable
Income of Rs. 4 lac (reduced from the earlier Rs. 6 lac) : e-Cir/980/2013-14 as amendeded
vide e-Cir/1175/201314.
iii) Agriculturists :
Minimum Net annual income of applicant and/or co-applicant together to be Rs. 4 Lac.
The Net Annual income is arrived at based on the nature of the activity, land-holding,
cropping pattern, yield, etc. in terms of the extant instructions.
All the car loans to agriculturists under ‘P’ Segment are now opened under the prescribed
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product codes only. This helps the Bank to monitor the performance under the category
at all levels : e-Cir/818/2013-14.
Revised Minimum Income Criteria : For Employees of Public Sector Banks/Public
Sector Insurance Companies and Our Employees and Officers : e-Cir/679/2013-14 as
amended vide e-Cir/1175//2013-14 :
a) The minimum Net Annual Income for availing the Car Loan under commercial rate is
fixed at Rs. 3 lac (reduced from the earlier Rs. 4 Lac) for Officers and employees of SBI,
subject to extant instructions prescribed for availing of Car Loan under commercial rate
for staff and officers.
b) The minimum Net Annual Income for availing the Car Loan is fixed at Rs. 3 lac
(reduced from the earlier Rs. 4 Lac) for the employees of other Public Sector Banks,
subject to submission of No-Objection Certificate from the appropriate authority (as they
are not permitted for outside borrowing without the permission of their employer).
c) The minimum Net Annual Income for availing the Car Loan is fixed at Rs. 3 lac
(reduced from the earlier Rs. 4 Lac) for employees of Public Sector Insurance Companies,
who are drawing their salaries through the Bank.
B. NMI, NAI : Clarifications : e-Cir/239/2012-13 :
a) Salaried : The NMI to be eligible for Car Loan should be equivalent to the Total Gross
Income less statutory and compulsory deductions like Income-Tax, Employees Provident
Fund, etc. as already advised. No other deductions should be reduced from the monthly
Gross Salary to arrive at the NMI. Accordingly, NAI should be 12 times of NMI as defined
above.
b) Other than Salaried : The NAI to be eligible for Car Loan should be equivalent to Net
Profit or Gross Taxable Income per annum as per ITR after adding back depreciationand deducting repayment of all existing loans.
4. Authorized Branches :
i) The extant instructions continue.
ii) All Branches should market this product.
iii) The Bank has recently decided to continue the arrangement permanently to all Scale-III
& above branches, all PBs, all district headquarter branches, Project area Branches
and Branches authorized by AGM (RBO) to process, sanction and disburse the car
loans w.e.f. 01.10.2013 : e-Cir/759/2013-14.
5. Loan Amount :
Maximum Loan Amount :
a) For Salaried : The maximum loan amount that can be granted is restricted to 48 times
the net monthly income of salaried persons (i.e., net of all deductions including actual
monthly tax deductions at source).
b) For Others other than Agricultists : Up to 4 times the Net Profit or Gross Taxable
Income per annum as per ITR after adding back depreciation and deducting repayment
of all existing loans.
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c) Agriculturists : 3 times of N.A.I.
Regular income from all sources can be considered provided the sanctioning authority is
satisfied with the proof of income. Income of spouse, father, mother, brother, sister, son and
daughter may be included for arriving at the loan eligibility (any one). The person whose
income is included should join as a co-borrower. The maximum number of applicants should
be restricted to two.
6. EMI/NMI Ratio :
Depending on Net Annual Income, EMI/NMI Ratio should be as under :
Net Annual Income EMT/NMI Ratio
a) Up to Rs. 5 Lac should not exceed 50%
b) Above Rs. 5 Lac and upto Rs.10 Lac should not exceed 50%
c) Above Rs. 10 Lac should not exceed 60%.
The EMI includes all EMIs towards existing loans and proposed loan and the NMI should be
equivalent to the Total Gross Income after adding back depreciation (if applicable) less statutory
and compulsory deductions like Income-Tax, Employee Provident Fund, etc.
Salary Package Account Holders : EMI/NMI Ratio : The discretion available to BM/RACPC
head or the sanctioning authority not below the rank of Chief Manager to sanction car loan
with EMI/NMI ratio not exceeding 60% for annual income up to Rs. 5 Lac in case of tie-ups
with reputed PSUs/Corporates or institutions or owing to strategic reasons have been
withdrawn : e-Cir/1175/2013-14.
L.T.V. Ratio :
a) Up to Rs. 10 Lac : 85% of the ‘On-Road price’ of the car
b) Above Rs. 10 Lac : The minimum margin for car loan is as under :
i) 15% margin on Ex-Showroom price of the car, or
ii) Margin of 20% on the ‘On-Road price’ of the car at the option of the
customer.
7. Margin :
a) For loans up to Rs. 10 lac : 15% of the total cost of the vehicle, i.e., “on-road price”. The
total cost of vehicle is inclusive of one-time road tax, octroi, registration, insurance,
accessories and extended warranty total maintenance package, etc.
b) For loans above Rs. 10 Lac :
15% margin on ex-showroom price of the car, or,
margin of 20% on the On-road Price of the car at the option of the customer.
c) The maximum cost of accessories should not exceed 5% of the cost of vehicle or
Rs. 50,000/-, whichever is less. Any consumer offer or discounts announced by the
manufacturers and dealers should be reduced from the on-road price of the vehicle.
d) The sanctioning authority has the discretion to reduce the margin by 5% (i.e., loan of
90% of on-road price) where check-off facility from a reputed employer is available with
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annual net income up to Rs. 10 lac only.
e) Recent Modifications : e-Cir/667/2013-14 :
i) Maximum cost of accessories should not exceed 5% of the ex-showroom cost of
the vehicle or Rs. 50,000/- whichever is less.
ii) The cost of accessories and cost of Extended Warranty/Total Service Package/
AMC cannot exceed 5% of the ex-showroom cost of the vehicle, subject to a
combined maximum limit of Rs. 50,000/-.
iii) The modifications advised above are offered without exceeding the prescribed
stipulation regarding maximum loan amount and stipulated EMI/NMI ratio. The
prescribed margin requirement on ON-ROAD cost of the vehicle should be
maintained.
The modifications are applicable to SBI Combo Loan scheme also.
8. Repayment :
8.1 Maximum 7 years (84 EMIs) for all categories of borrowers, including agriculaurists.
However, the repayment period should, in no case, exceed beyond 70 years of the age
of the borrower.
8.2 The customer has option for payment in shorter duration.
8.3 The repayment should be fixed on the basis of equated instalments, preferably with a
check-off facility in the case of salaried persons.
8.4 The Equated Installment is determined on the basis of the current rate of interest.
8.5 Where check-off facility is not available, post-dated cheques should be obtained.
8.6. Wherever Electronic Clearing Service is available, the Bank may use the services for
paperless debit of installments. However, six cheques to cover the loan amount should
be obtained from the borrower.
8.7 Under check off arrangement, an Irrevocable Letter of Authority, as per Annexure-
Car II, is required to be obtained from the borrower (employee) concerned and a letter
of undertaking is to be taken from the borrower’s employer as per Annexure-Car III.
8.8. In case of Govt. officers, who are themselves the drawing and disbursing authorities
and take car loans, a Letter of Undertaking on the lines of Annexure- Car VIII need only
be obtained.
8.9. Repayment for loans to self-employed, professional and businessmen can be accepted
from Cheque drawn from their own or firm’s account after obtaining the firm’s mandate.
8.10. Repayment Cycle : The repayment date should be fixed in succeeding to coincide with
the date on which the borrower’s major income flow happens. ECS mandate to be
lodged for activation immediately after disbursement.
8.11 Seizure of Vehicle : Whenever an installment remains unpaid, it should be immediately
brought to the notice of the borrower by issuance of a notice as per the Bank’s extant
instructions and if the installments still remain unpaid, the prescribed procedures
should be followed.
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9. Rate of Interest :
For Term Loans, the rate of interest is linked to Base Rate.
For Overdraft accounts, the differential of 0.50% should be maintained over the above-mentioned
rates.
9.1 Network GMs have discretion to quote concession of 0.25% in interest rate to all
customers who are eligible under the Corporate Salary Package, subject to upper ceiling
on concessions, prescribed from time to time.
9.2 All loans should be given only on a floating rate basis, i.e., the effective interest will
increase or decrease with every increase or decrease in Base Rate, or whenever the
rate of interest on Car Loans are revised without changing Base rate, this should be
advised to the borrower(s).
9.3 While generally the Equated Monthly Installment need not be changed with every change
in the interest rate, should the borrower seek an EMI reduction consequent to a rate
reduction, the same may be permitted if the account is a Standard Asset and the loan
outstanding is at least Rs. 5 Lakh and the interest rate reduction is of 1% or more. The
above facility is permitted only once during the currency of the loan.
9.4 The Bank reserves the right to increase the EMI in case of interest rate rise.
10. Penal Interest :
If the irregularity exceeds EMI, for a period of one month, then the penal interest should be
charged @ 2% p.a. (over and above the applicable interest rate) on the overdue amount for
the period of default. If part installment or part EMI remains overdue, then penal interest
would not be levied. This provision has been made to avoid application of penal interest on
Personal Segment Loan accounts where stipulated EMIs or installments are being paid
regularly by the borrowers.
11. Processing Fee :
Processing fee should be recovered on the loan amount upfront as detailed in the latest
Master Circular.
12. Security :
a) Hypothecation of vehicle and noting of hypothecation charge in the books of R.T.O. No
other security is to be obtained.
Registration of Bank’s Hypothecation Charge : The Ministry of Road Transport & Highways,
Government of India, has developed the website “vahan.nic.in in July 2011.
The branches should verify the details of the vehicles financed from the site “vahan.nic.in”.
The information sheet is required to be printed from the site and should be kept, along
with the loan documents wherever RC Book copies are delayed to be obtained by the
operating units. The operating units may access the site within 15 days of disbursement
of car loan for this purpose : e-Cir/416/2012-13.
However, the operating units are required to collect copy of RC Book with Bank’s
hypothecation charge recorded therein in due course and produce the same for verification
in the subsequent audit.
b) Any other security, including third-party guarantee, should be obtained only when there
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is a need for credit enhancement e.g. credit score below threshold limit, or any other
business consideration.
13. Insurance :
The vehicle purchased is to be kept comprehensively insured in the name of the borrower for
the market value or at least 10% above the loan amount outstanding, whichever is higher,
and the Bank’s interest as a hypothecatee should be noted in the certificate of insurance and
insurance policy. A copy of this is to be retained with the loan documents.
14. Mode of Disbursement :
14.1 The proceeds of the loan should be credited to the account of supplier/dealer by way
of RTGS/NEFT facility. If dealer is maintaining account with SBI, his account should
be credited through CBS system.
14.2 A letter should be sent to the dealer, advising him the date of credit in his account,
along with UTR number of the remittance. The format of the letter is available in the e-
Cir/1175/2013-14.
15. Pre-payment Penalty :
Pre-payment penalty is not applicable.
16. A. Pre-sanction Survey and KYC :
To be conducted as under :
i) Any one official from MPST or Branch should visit the customer for KYC and Pre-
sanction survey. The KYC, Pre-sanction survey and opinion report prepared by the
official of any of these offices under his/her signature & seal is acceptable to
sanctioning authority.
ii) For existing customer, Pre-sanction survey and KYC can be waived if the address
of the customer has not changed and he is a :
a) Home/Personal Loan customer with minimum one year’s satisfactory track
record.
Or
b) A car loan customer with a satisfactory track record, who wants to avail another
car loan,
Or
c) Customer having satisfactory deposit account with average balance of Rs.
50,000/- & above and banking with us for at least one year.
Or
d) Under Corporate Tie-ups where check-off is available.
B. Employment of Verification Agencies :
The RACPCs/sanctioning branches may utilize the services of verification agencies
which have been empanelled for the purpose of address/employment verification. The
compliance with KYC norms, however, continue, to be the responsibility of the Branch/
Sales Force, which sources the proposals.
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C. Liabilities in Credit Bureau Reports :
Branches/RACPCs should access the CIBIL data base, in a bid to trace credit facilities,
if any, availed by such borrowers from other banks.
For car loans over Rs. 5 Lac, at least two credit agencies reports should be assessed
as per the latest policy, once the services of RBI certified CICs (Credit Information
Companies) made operational in the Circles.
D. Implementation of Risk Scoring Model :
The scoring model has been implemented as a credit decision-making tool and will
strengthen the existing system of sanction or rejection of loan applications. No loan
should be processed without application of Risk Scoring Model. The detailed instructions
have been incorporated in Master Circular of Car Loans.
E. Implementation of Loan Originating Software :
All the car loan applications should be processed in LOS at the BPR centres and even
at Non-BPR centres once the LOS coverage is extended to them.
17. Inspection :
For Standard Asset accounts, periodical inspections are waived after the initial inspection.
However, if there is a default of 1 monthly instalments, inspection is required. In case of NPA
accounts, inspections should be made twice a year.
Inspection register should be maintained properly.
18. Documents to be obtained :
For Salaried Individuals :
i) Statement of Bank account of the borrower for last 6 months.
ii) Proof of Identity : (any one of the following) - Passport copy/PAN Card/Voters ID card/
Driving Licence, etc.
iii) 2 passport size photographs of borrower.
iv) Income Proof : Latest salary slip with form 16.
v) Address Proof : (any one of the following) : Ration card/Driving Licence/Voters ID Card/
Passport Copy/Telephone Bill/ Electricity Bill/Life insurance policy/ PAN Card.
vi) I.T. Returns/Form 16 for the last 2 years. (It is not necessary to obtain both I.T return and
Form-16 from the applicant).
Relaxation may be permitted by obtaining ITR/Form 16 for I year by one step highersanctioning officer, provided he is satisfied about the genuineness of source, amount and
continuity of income and repayment capacity of the borrower over the loan tenor. In all such
cases, the basis for income verification should be properly recorded on the loan appraisal.
For Self-Employed, Professionals , Proprietary/Partnership firms & Businessmen :
i) Statement of Bank account of the borrower for last 6 months.
ii) Proof of Identity : (any one of the following) : Passport copy/PAN Card/ Voters ID card/
Driving Licence, etc.
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iii) 2 passport size photographs of borrower.
iv) Income Proof : Latest ITR for 2 years.
v) Address Proof : (any one of the following) : Ration card/Driving licence/Voters ID Card/
Passport Copy/Telephone Bill/ Electricity Bill/Life Insurance policy/ PAN Card.
vi) I.T. Returns/Form 16 for the last 2 years.
vii) Audited Balance sheet, P&L statement for 2 years, Shop & Establishment Act certificate/
sales-tax certificate/SSI registered certificate/copy of partnership.
Relaxation may be permitted by obtaining ITR/Form 16 for 1 year by one step highersanctioning officer, provided they are satisfied about the genuineness of source, amount and
continuity of income and repayment capacity of the borrower over the loan tenor. In all such
cases, the basis for income verification should be properly recorded on the loan appraisal.
For Agriculturists :
i) Statement of Bank account of the borrower for last 6 months.
ii) Proof of identity : (any one of the following) : Passport copy/PAN Card/ Voters Id Card/
Driving Licence, etc.
iii) 2 passport size photographs of borrower.
iv) Address Proof : (any one of the following) : Ration card/Driving Licence/Voters ID card/
Passport Copy/Telephone Bill/Electricity bill/Life Insurance policy/PAN Card
v) Direct agricultural activity (crop cultivation) : Khasra/Chitta Adangal (showing cropping
pattern) Patta/Khatoni (showing land holding) with photograph. All land should be on
freehold basis and ownership proof to be in the name of applicant.
vi) Allied agricultural activity (like Dairy, Poultry, Plantation/Horticulture) : documentary proof
of running of the activities should be obtained.
19. A. Payment of Service Charges to Car Dealers/Dealer Sales Executive (DSE) :
19. A.1 For Dealers : The prescribed fee (detailed in the latest Master Circular) should be
paid on the business sourced by the dealers. The service fee is inclusive of the
service-tax. The fee should be paid by the sanctioning authority at the time of the
disbursement of the car loan.
For DSEs : The prescribed fee should be paid as incentive to DSEs for the loan
applications sourced by them at all BPR centres. The incentive should be paid by
the sanctioning authority at the time of the disbursement of loan.
19. A.2 A list of sales executives should be obtained from the car dealers on their letterhead,
which will be retained at the Branch/CPC for identification of sales executives for
payment of incentives. Dealers sales executive incentive is to be paid by CPCs and
Branches in BPR centres only.
19. A.3 The service fee is payable only when loan applications are sourced by car dealers
to the Bank. The centralized processing offices should maintain proper record of
payments made through the overdraft account for verification and audit by the
controlling office.
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19. B. Empanelment of Auto Loan Counselors :
The services of the Auto Loan Counselors should be utilized to explain our car loan schemes
to the prospective customers and to source the applications at the dealerships. In this
connection, the appropriate authority has approved empanelment of retired officers of the
Bank on contract as Auto Loan Counselors (ALC). In case we fail to engage adequate
number of retired employees or to get desired results from them, the appropriate authority
has also approved empanelment of individuals with certain qualifications from SBI customers
(other than staff) and others as Auto Loans Counselors (ALC). The ALC plays the role of a
Direct Sales Executive of car dealers for booking Car Loans and he/she is paid an incentive
for the proposal sourced and sanctioned with no fixed remuneration.
No amount is payable to Dealers/DSEs/ALCs for loans NOT SOURCED by them.
20. Transfer of Accounts :
Standard assets can be transferred from one Branch to other Branch at the request of the
borrower.
21. Place of Availing Loan :
a) Loan can be availed at the place of permanent residence or work. However, inspection
and verification of asset should be done by an office located at the centre where the
asset is maintained.
b) Inspection charges are to be recovered every time an inspection is carried out as per the
laid down instructions. The inspection fee of Rs. 750/- should be recovered by the
inspecting branch by raising a debit on the financing Branch and credit it to its Commission
Account.
22. Takeover of Loans :
i) Takeover of car loans is considered selectively where :
(a) the vehicle is not more than 2 years old
(b) it is a single ownership vehicle
(c) no insurance claim has been availed, and
(d) the account of the borrower with the other bank is a Standard Asset, i.e., all
repayments have been made as per terms of sanction of the original financier.
ii) The loan should be repaid within 7 years from the date of the original purchase of the
vehicle.
23. Reimbursement of Costs of Car Purchased by Own Sources :
Finance for the cars purchased out of own funds which are not more than 3 months old may
be reimbursed. The rate of interest applicable to New Cars is available for loan by way of
reimbursement.
24. Discretionary Powers : To be exercised as per the Delegation of Powers advised by LHO.
Sanctioning Powers : In view of the mounting NPA level in Auto Loans, the Bank has decided
that in all cases where the Branch Auto Loan NPA percentage exceeds 2%, the CirMAC
considers temporary withdrawal of Auto Loan sanctioning powers from the Branches : e-Cir/
556/2013-14.
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Any car loan proposals coming to such Branches either through on-line car loan application
system or by physical means may be processed and sanctioned through nearest authorized
Branches.
25. Processing Time :
25.1 LOS : All car loans must be processed through LOS : e-Cir/597/2013-14.
25.2 The processing time should be as per the norms set by the BPR Department. Presently,
the maximum time-schedule for receipt of application and sanction/disbursal of the
loan is 2 days.
25.3 For effective monitoring of the TAT, a register should be maintained at the Branch/
Office on the lines of the register maintained for SIB advances.
25.4 Control Report and Irregularity Reports should be sent to Controlling Office as per
extant instructions for Personal Segment Advances.
26. Car Loans : Retail Scoring Models : Modifications in weightage assigned to Parameters :
w.e.f. 11.12.2012.
The revised Car Loan Scoring Model is enclosed to e-Cir/918/2012-13.
Revised Risk Scoring Model : Since incorporated in LOS : e-Cir/1072/2012-13.
27. Migration of Documents : Car Loan documents are to be migrated from authorized Branches
in BPR centers to respective RACPC/RASMECCC on fortnightly basis and confirmationin this regard is to be sent to the controllers. The maintenance and follow-up functions of Car
loans rest with RACPC/RASMECCC : e-Cir/374, 491, 493, 1175/2013-14.
Any local practice of keeping the migration process pending for want of RC/Insurance Certificate,
etc. is a clear violation of the Bank’s laid down instructions.
The RC book and the insurance certificate, etc. should be followed up by the respective
RACPCs/RASMECCCs in BPR centres and by the sanctioning Branches in NON-BPR centres.
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SBI NANO CAR BOOKING (SNBF)
• SNBF : SBI NANO Car Booking Funding Scheme : Salient Features : e-Circular/761/
2008-09.
• Revised Scheme : Enclosed to e-Circular/774/2008-09.
• Salient Features : e-Circular/6/2009-10.
• Modifications : e-Cir/210/2009-10.
• Receipt of Application Forms : From Preferred financiers, including our branches : e-Cir/67/
2009-10.
• Cancellation & Transfer of Loan from other Preferred Financiers : e-Cir/206/2009-10.
• Revised application form and documentation : Enclosed to e-Circular/774/2008-09.
• Procedure for Receipt of Application Forms : Detailed in e-Circular/1/2009-10.
• Process Flow : Event-vise : e-Circular/3/2009-10.
• Funding Scheme : Rate of Interest Beyond 90 days : e-Cir/12/2009-10.
• Funding Scheme : Processing Fee : TML Share : e-Cir/17/2009-10.
• Funding Scheme : Revised CBS Product Code : e-Cir/13/2009-10.
• Credit of Application Sale Proceeds : Proper procedure to be followed : e-Cir/14/2009-10.
• Procedure to be followed by SBI staff deputed to TATA Motors Dealerships, CROMA and
Westside Stores : e-Cir/20/2009-10.
• Accounting Procedure at CMP Branches : Queries and Clarifications : e-Cir/24/2009-10.
• Booking of Nano Car by the Bank Staff : Procedure : e-Cir/33/2009-10.
• Take-over, etc. : Procedure to be followed for converting SNBF into SBI Nano Car Loan/
Cancellation/Take-over : Detailed in e-Cir/206/2009-10.
• Revised Procedure for Take-over : e-Cir/228/2009-10.
• Simplified Procedure regarding original allotment letter of Tata Motors Ltd. : e-Circular/244/
2009-10.
• Procedure for cancellation : e-Circular/270, 390/2009-10.
• Revival of Cancelled Bookings Based on Applicant’s Request : Salient features of the pro-
cess : e-Circular/329/2009-10.
• Auto Loans : Tata Car : The amount of compensation short paid to be dealer should now be
credited to Commission Account instead of Interest Account : e-Cir/279/2013-14.
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SBI TWO-WHEELER LOAN SCHEME (REVISED)(W.E.F. 01.06.2007)
Ref. : CCFO/ADV/CL/39/2007-08 :
1. Purpose :
To provide finance for purchase of new Two-wheelers viz. scooter/motor cycle/ moped/battery-
operated vehicles of reputed make.
2. Authorised Branches :
All branches are authorised to sanction Two-wheeler loans.
3. Scheme :
3.1 Eligibility :
• Permanent employees of State/Central Government/ Defence Establishments, Public Sector
Undertakings, corporations, private sector companies, and reputed establishments are eligible
to avail the loan. Professionals, Self-employed, and others, who are income tax assesses,
are also eligible under the Scheme. Persons engaged in agriculture and allied activities can
also apply.
• For regular petrol/diesel/gas-operated scooters & motor cycles :
Min. NMI : Rs. 6,250/-; or
Min. NAI : Rs. 75,000/-.
For mopeds and battery-operated Two-wheelers :
Min. NMI : Rs. 5,000/-; or
Min. NAI : Rs. 60,000/-.
3.2 Loan Amount :
• For salaried persons, the maximum loan amount is restricted to 6 times Net Monthly Income
(NMI), i.e., net of all deductions, including actual monthly tax deductions at source.
• In case of others, the maximum loan amount is restricted to half of Net Annual Income (NAI),
i.e., income as per latest income-tax return filed less taxes payable.
• For agriculturists, the net annual income should be arrived based on the nature of their
activity (i.e., farming, dairy, poultry, orchards, etc.), land-holding, cropping pattern, yield,
etc., and average level of income derived therefrom in the area.
• Regular income from all sources can be considered provided the sanctioning authority is
satisfied with the proof of income.
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3.3 Type of Loan : Term Loan.
3.4 Margin : For all loans : 15%.
The sanctioning authority may reduce the margin in one of the following cases :
• 5% if a check-off is available from a reputed employer.
• 5% under the ‘Plus’ Schemes.
• 5% depending on the value of connection, details of which should be mentioned in the sanction
note.
Above relaxations cannot be clubbed and a minimum margin of 10% should be maintained :
CCFO/ADV/CL/66/2007-08.
3.5 Repayment :
• The loan should be repaid in suitable instalments acceptable to the customer in such a
manner that the loan is liquidated within a period of 36 months. The customer has the option
for repayment in shorter duration.
• For loans disbursed on or before 15th of the month, and on or after 16th of the month, the
repayment date should be fixed as 10th and 20th of the following month respectively.
• The repayment should be fixed on the basis of equated instalments, preferably with a check-
off facility in the case of salaried persons.
• Under check-off arrangement, an Irrevocable Letter of Authority, (as per Annexure-Two-Wheeler
II) is required to be obtained from the borrower (employee) concerned, and a letter of undertaking
is to be taken from the borrower’s employer (as per Annexure-Two-Wheeler-III).
• In case of Govt. Officers, who are themselves the drawing and disbursing authorities and
take Two-wheeler loans, a Letter of Undertaking on the lines of Annexure- Two-wheeler VIII
need only be obtained.
• Where check-off facility is not available, post-dated cheques should be obtained.
• Wherever Electronic Clearing Service (ECS) is available, the Bank may use the services for
paperless debit of instalments. Additionally, six undated cheques to cover the loan amount
should be obtained from the borrower.
• Customized repayment for agriculturists through PDCs/SI/ECS with 6 cheques to cover the
loan amount.
3.6 Interest :
• Rate of Interest : Only on floating rates; linked with SBAR/Base Rate.
• All loans should be given only on a floating rate basis, i.e., the effective interest should
increase or decrease with every increase or decrease in SBAR/Base Rate. Whenever the
rate of interest on Two-wheeler Loans are revised without changing SBAR/Base Rate., this
should be advised to the borrower(s). The equated monthly instalments, however, need not
be changed.
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• Interest should be calculated and applied on monthly compounding basis as advised by the
Bank from time to time.
• The Bank also reserves the right to increase the EMI in case of interest rate rise.
• Concessional Rate of interest can be offered in case of :
a) Bulk Finance, i.e., where proposals are received for financing of 25 or more Two-wheeler
within a period of 3 months.
The General Manager (Network) can offer the concessional terms and conditions detailed
in CCFO/ADV/CL/121/2007-08 for bulk purchase of two-wheelers by the employees as
on case-to-case basis, subject to :
a) Minimum 25 vehicles financed within a period of three months.
b) Availability of check-off-facility.
b) Where check-off facility is available under tie-up arrangements with reputed employers
or under Plus Scheme, a concession of 0.25% on the card rate can be given by the
sanctioning authority.
c) DGM and above can give interest rate concessions up to 50 bps in cases like :
- Very Senior Corporate Executive, Government Officials, Doctors, Chartered
Accountants and Architects.
- For a period up to seven days during loan mela launched on the occasion of important
festivals like Diwali, Onam, etc.
However, these facilities, i.e., concessions under Plus Scheme, check-off or concession by
DGM and above cannot be clubbed together and are disallowed.
Penal Interest :
Penal interest should be charged as per the current policy for the period of default. Branches
should send letters to all borrowers as per Annexure “C” to caution them against occurrence
of irregularity in the accounts.
A copy of the Notice may also be displayed in the Branch notice board for information of all
P Segment borrowers. Notice as per Annexure ‘D’ should be addressed to all defaulting
borrowers advising them to regularise the loan within 30 days of occurrence of irregularity
and his/her liability to pay penal interest in case of failure to regularize the loan within the
stipulated period.
3.7 Processing Fee :
• As per the current rates.
• The DGM of the Module/Branch can reduce the fee by up to 50% in case of :
a) Short-term promotional drives.
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b) Wherever bulk finance is involved with availability of check-off from reputed employer,
1% of loan amount may be charged as processing fee. This may be reduced or even
waived by the DGM of the Module/Branch, for strategic reasons under a tie-up
arrangement with a corporate / institution of repute leading to bulk lending of minimum
25 cases in 3 month’s time.
3.8 Security :
• For loans against vehicles requiring compulsory registration with RTO :
a) The loan is secured by the hypothecation of vehicle and noting of hypothecation charge
in the books of RTO and Registration Book,
And
b) Check-off/PDC or ECS/SI with 6 cheques to cover the loan amount.
• In case the vehicle is not required to be registered with RTO, the following may be obtained :
a) Check-off/PDC or ECS/SI with 6 cheques to cover the loan amount, and
b) Third-party guaranteelCo-applicant good for the loan amount (preferably, a co-applicant).
3.9 Payment of Service Charge to Two-Wheeler Dealers :
• Service Fee at 2.50% (inclusive of service tax) of the loan amount to be paid to the dealer for
sourcing applications to the Bank. The maximum service fee is restricted to Rs. 2,500/- and
paid along with the loan disbursement by debit to branch Interest Account.
• No service fee is payable in the case of staff loans, bulk finance and whenever loans are
granted at interest rates at SBAR or below.
3.10 Documents :
The following documents are to be obtained :
• Application Form - Annexure Two-Wheeler-I.
• Irrevocable Letter of Authority from the borrower - Annexure-Two-Wheeler-II.
• Letter from the Drawing and Disbursing Officer - Annexure-Two-Wheeler-III.
• Letter forwarding demand draft/banker’s cheque to supplier/dealer - AnnexureTwo-
Wheeler-IV.
• Loan-cum-Hypothecation Agreement - Annexure-Two-Wheeler-V.
• Guarantee Agreement, where applicable - Annexure-Two-Wheeler-VI.
• Arrangement Letter - Annexure-Two-Wheeler-VII
• Irrevocable Letter of Authority where Drawing and Disbursing Officer is himself the applicant -
Annexure-Two-Wheeler-VIII.
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3.11 Insurance
• The vehicle purchased is to be kept comprehensively insured in the name of the borrower for
the market value or at least 10% above the loan amount outstanding, whichever is higher.
The Bank’s interest as a hypothecate should be noted in the certificate of insurance and
insurance policy. A copy of this is to be retained with the loan documents.
• Insurance register is to be maintained properly.
3.12 Mode of Disbursement :
The amount should be remitted to the supplier/dealer by means of a crossed account payee
demand draft/banker’s cheque which should be forwarded under cover of a letter. The usual
charges for issue of demand drafts/banker’s cheques should be recovered from the borrowers.
3.13 Inspection :
• Inspection is waived for standard asset accounts after the initial inspection.
However, if there is a default of 2 monthly instalments, inspection is required.
• Inspection to be conducted twice a year for NPA accounts.
• Inspection Register is to be maintained.
3.14 Loan Application, Papers :
The following papers are to be submitted along with loan application :
• Statement of Bank account of the borrower for last 6 months.
• 2 passport size photographs of borrower/guarantor(s).
• Signature identification from bankers of borrower/guarantor(s).
• A copy of passport/voters ID card/PAN card.
• Proof of residence.
• Latest salary-slip, showing all deductions and TDS certificate - Form 16 in case of salaried
persons.
• Copy of Income-Tax Return for last two financial years, duly acknowledged by I.T.O., for
professionals, self-employed and others.
• Proof of official address for non-salaried individuals.
3.15 Tie-up :
Tie-up with Honda Motorcycle & Scooter India Pvt. Ltd. : CCFO/ADV/CL/96/2007-08.
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HOME LOANS - I
Home Loans : Master Circular : As on 24.08.2013 : e-Cir/554/2013-14.
H.Ls. : Sub-product Codes : Home Loan Accounts opened with incorrect Sub-product Codes :
Change in Sub-Product Code from Back-end : e-Cir/762/2010-11.
HLs : Processing Fees, Lawyer’s and Valuer’s Fees : Loan Applications Rejected : Procedure
for Recovery/Refund : CCFO/ADV/CL/139/2005-06.
HLs : Service Charges : Sanctioning authority should make sure that the applicable fees
like processing fees, etc. are collected and realized from the applicant upfront prior to
consideration/evaluation of the proposal by them : e-Circular/655/2008-09.
HLs : Revised Processing Fees : as per e-Cir/563/2009-10.
The Bank recently decided to exclude loan component for one-time premium of SBI Life policy, if
any, from the total loan amount for the purpose of processing fee calculation.
The revised processing fee is applicable to Home Loans granted under hybrid schemes viz. SBI-
Flexi/SBI-Realty/SBI-Maxgain/SBI-Freedom/SBI-Optima/SBI-NRI Home Loans/SBI-Tribal Plus
Home Loan/Home Loans under various Plus Scheme, etc. However, no processing fee is levied in
respect of loans granted under SBI Gram Niwas : CCFO/ADV/CL/89, 121/2006-07.
The Bank has withdrawn the discretionary powers vested with Module DGMs to reduce/waive
processing fee, including discretionary powers vested in this regard under builder tie-ups.
H.Ls. : Processing Fees : Clarifications : e-Cir/135/2011-12 :
a) In case of Home Loans under SBI Home Loans PAL Scheme, processing fee should be
recovered at the time of issuance of PLAL (Pre-approved Loan Arrangement Letter) as before
issuance of PLAL, the Bank undertakes all due-diligence and assessment of eligible loan amount
pending to finalization of property by the applicant.
b) In all other Home Loan products like SBI Yuva, SBI Realty, SBI Maxgain, NRI Home Loan,
etc., processing fees should collected at the time of documentation of the loan.
Processing Fees Structure : Revised as per e-Cir/898/2011-12.
The extant instruction for collection of processing fee at the time of documentation of the loan
rather than upfront will remain in place.
H.Ls. : Control Reports : Submitted to WBCC : e-Cir/207/2011-12.
H.Ls. : Validity Period of Sanction : Restricted as per e-Cir/829/2011-12.
H.Ls. : Revised Builder Tie-up Approval Process : A more simple and operation-friendly approach :
e-Cir/109/2013-14.
Revised Autho. Structure : For Builder Tie-ups : e-Cir/820/2011-12.
H.Ls. : Builder Tie-up Ownership : With a view to creating a fail-safe arrangement for enlarging
the scope of SME BU-Builder relationship so as to include PBBU interests also, the Bank has
put in place a mechanism detailed in e-Cir/455/2010-11.
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H.Ls. : Approval of Specific Project of Builders Under Normal Route : Modification : e-Cir/730/
2010-11 :
a) Constitution of the builder should be proprietorship concern, partnership firm, Pvt/Pub. Ltd.
Company and the key promoters should be reputed and experienced in the line of activity.
b) Track record of the builder in timely conveyance of valid title, which should be ascertained on
the basis of their latest 2 (earlier, 3) completed projects.
H.Ls. : Revised Procedure for Builder Tie-ups : Detailed in e-Cir/260/2011-12.
H.Ls. : ADF : Advance Disbursement Facility : Circle-wise List of Centres Covered : Furnished in
e-Cir/758/2011-12.
In view of the RBI notification, the Bank has discontinued the Advance Disbursement Facility
(ADF) in Home Loans with immediate effect. However, disbursement of Home Loans already
sanctioned under ADF should made as per the sanctioned terms : e-Cir/602/2013-14.
H.Ls. : Interest Subvention : GOI Scheme of 1% interest subvention on housing loans up to Rs.
10 Lac (since raised to Rs. 15 Lac) : Collection of User ID & Password data for Creation of Users
(Maker/Checker) : e-Cir/1014/2010-11.
Modalities for submission of the claim to RBI : e-Cir/1021/2010-11.
Loan amount raised to Rs. 15 Lac; project cost raised to 25 Lac : w.e.f. 01.04.2011. Scheme
extended up to 31.03.2012 : e-Cir/108/2011-12.
Opening of Current Account at Circle Level in the style “Home Loans-1% Interest Subvention
Distribution Account : e-Cir/227/2011-12.
CRE H.Ls. : Recent Modifications : e-Cir/941/2011-12.
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HOME LOANS :DISBURSEMENT, REPAYMENT, REPHASEMENT
H.Ls. : Disbursement Schedule : Branches should enter correct disbursement schedule in all
new home loan accounts especially in accounts where disbursement schedule in spread beyond
one year. If the procedure is followed correctly the Bank will not need to provide capital on the part
of limits not due for disbursement during the year : e-Cir/638/2011-12.
H.Ls. : Repayment Period : As per the Bank’s current Loan Policy, maximum loan tenor permitted
under the Home Loan Scheme is 25 years. However, extension of loan tenure up to 5 years
beyond the original tenor is permitted by the Bank’s Loan Policy with a ceiling of 30 years, if
interest rates on the existing loans go up and the EMIs are left unchanged : e-Cir/511/2011-12.
Such increased tenure should not exceed 30 years, subject to the stipulation that loan should be
liquidated before the borrower attains the age of 70 years : e-Cir/570/2011-12.
Formalities : Detailed in e-Cir/555/2011-12.
The Bank has recently raised the maximum loan tenor for new floating interest rate Home Loans
at origination up to 30 years in place of the current maximum tenor of 25 years, subject to the
stipulation that loan should be fully repaid before the borrower attains the age of 70 years : e-Cir/
576/2011-12.
The revised maximum loan tenor from 25 years to 30 years at the origination is not available to
Home Loan borrowers falling under ‘Commercial Real Estate (CRE)’ and individuals engaged in
business.
H.Ls. : Pre-closure Penalty : The Bank has recently discontinued the pre-closure/pay-payment
penalty on all Home Loans irrespective of the period for which the account has run or the source
of funds : e-Cir/743/2011-12.
HLs : Rephasement : Guidelines : Principles/Methods : e-Cir/183/2008-09.
Liberalised/amended Guidelines : Enclosed to e-Cir/570/2008-09.
Home Loan rephasement under the Scheme may be sanctioned by the authority who sanctioned
the loan.
In cases where loans were sanctioned by authorities up to the rank of AGM and subsequently
migrated to RACPCs, the sanctioning authority for rephasement is AGM (RACPC) : e-Cir/271/
2008-09.
AGMs (SARB) has also been included in the list of sanctioning authorities. AGMs (SARB) may
now sanction rephasement of Home Loans, which were sanctioned by authorities up to the rank
of AGM, and which have been subsequently migrated to SARBs.
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HOME LOANS :
OTHER TERMS AND CONDITIONS :MODIFICATIONS
Ref. : e-Cir/865/2010-11.
LOANS FOR MORE THAN ONE HOUSE :
Applicant(s) should fulfil the income criteria as also EMI/NMI norms after netting off the repayment
obligations of the existing loans and subject to satisfactory conduct of existing loan(s), if any, as
evidenced from statement of loan account and CIBIL report, provided sanctioning authority is
satisfied about the genuineness of source of income and continuity of repayment capacity of the
borrower.
POST-DATED CHEQUES (PDCs) :
At least 48 cheques or cheques covering the full/remaining repayment period, whichever is less,
should be obtained at each instance. However, in cases where mandate for ECS Debit/S.l. is
received from borrower(s) and repayment in the account is received through ECS/S.I., 6 undated
and duly signed cheques (5 cheques for EMIs and one cheque for full loan amount) should be
obtained from the borrower(s).
INTERIM SECURITY PENDING CREATION OF MORTGAGE :
Sanctioning Authority or AGM (Region)/(Branch), as the case may be, is now vested with discretionto waive interim security in cases :
• where an applicant is of undoubted integrity and standing.
• The interim security may also be waived in the case of loans of employees of Central/State
Government, PSUs and reputed Corporations and Institutions, if check-off facility is provided
along with an irrevocable undertaking from the employer (for making repayment of outstanding
loan out of any amount payable to the employee, including terminal benefits on retirement/
resignation, towards all dues pertaining to the account).
TIE-UP WITH BUILDER : INTERIM SECURITY :
Where builder is willing to enter into a Tripartite Agreement, interim security may be waived for
Home Loans in respect of project tie-ups approved by the appropriate authority under the new
simplified procedure for construction-linked disbursement : e-Cir/865/2010-11.
FURTHER MODIFICATIONS :
Ref. : e-Cir/260/2011-12.
NUMBER OF CO-BORROWERS :
In cases where the co-applicants are unrelated to each other, the DGM (B&O)/DGM (Credit)
may permit the relaxation for acceptance of non-related co-borrowers, provided the repayment is
made through an account with the Bank in the name of all borrowers and Sanctioning Authority is
satisfied with the reasons furnished by the unrelated co-borrowers for acquiring the property in
their joint names.
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PROJECT COST :
Project cost now includes cost of land, house/flat, cost of additional amenities related with said
house/flat, registration charges, stamp duty, service tax and other statutory dues, if any, less
margin as stipulated from time to time.
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HOME LOANS - II
Housing Loans : Modified Application Format : w.e.f. 01-07-2011 : Enclosed to e-Cir/259/2011-
12.
CCFO/ADV/CL/310/2005-06.
Standardisation of Formats : For proposals/control reports : Submitted to WBCC/CCCC/
ECCB : e-Cir/547/2008-09.
HLs : CIBIL Credit Report : Credit card-related liabilities, which appear in the CIBIL report, may
be due to some dispute like charges for late payment, finance charges, interest charges, etc.
Sanctioning authority up to the rank of an AGM have been given discretion for accepting proposals
with disputed outstanding up to Rs. 5,000/-. For disputed amounts exceeding Rs. 5,000/-,
discretionary powers are detailed in e-Cir/185/2010-11.
Housing Finance : Option : Housing Finance to Individuals : One-Time Option to Fixed Rate
Borrowers to Opt for current Fixed/Floating Rates : CIRFO/ADV/CL/142/2003-04.
Fixed Rate Loans and Extending One-Time Option to Floating Rate borrowers to switch to Fixed
Rate Loans : CIRCO/ADV/138/2004-05.
Branches should ensure having sent suitable letters by registered/speed post to the floating rate
borrowers in the prescribed format (Annexure-A), advising them about the extension of the one-
time option to switch over to fixed interest rates. Branches should retain the receipt issued by
postal authorities with the documents of the respective Housing Loan as evidence of despatch of
such letters : CIRCO/ADV/CL/155/2004-05.
HLs : Fixed Interest Rates : (In view of the recent firming up of Housing Loan interest rates, and
to effectively hedge the interest rate risk due to the long tenure of Housing Loans,) an interest rate
re-set clause should also be incorporated in respect of Housing Loans granted on fixed interest
rates, whereby fixed interest rates may be reset at the end of every three years on the basis of the
fixed interest rates prevailing then : CCFO/ADV/CL/134/2005-06.
Copies of the modified arrangement letter and Housing Loan agreement to be obtained in respect
of Housing Loans granted on fixed interest rate are enclosed to CCFO/ADV/CL/134/2005-06.
The interest re-set period applicable to Home Loans granted on fixed interest rates continues to
be 3 years : CCFO/ADV/CL/248/2005-06.
Floating Rate Loans : EMI Re-set : One-time exercise : CCFO/ADV/CL/169/2007-08.
H.Ls. : Interest Rates : Discretionary Concession : e-Cir/868/2010-11.
H.Ls. : Base Rate : Switching From SBAR to Base Rate at Customer’s Request : Procedure :
Detailed in e-Cir/645/2010-11.
H.Ls. : Floating Rate of Interest : Instructions relating to increase in loan tenure/EMIs consequent
upon increase in Base Rate : Extant Instructions Reiterated : e-Cir/988/2013-14.
H.Ls. : Interest Rates : To provide a decisive competitive edge in pricing of the Home Loan
products vis-a-vis other major Home Loan providers, the Bank has revised the Home Loan Interest
Rate Structure as per e-Cir/1042/2013-14.
The Bank has also rolled out a separate Interest Rate structure for the Woman Home Loan
borrowers, subject to the compliance of the eligibility criteria detailed in e-Cir/1042/2013-14.
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H.Ls. : One-time Option : The Bank has recently decided to give an option to all existing Home
Loan borrowers having regular and standard floating interest rate accounts in higher interest
brackets than the current rate for corresponding loan limits to switch over to current card interest
rates on upfront payment of one-time switch-over fee of 1.00% of their outstanding : e-Cir/1122/
2011-12.
The switch-over should not result in extension of tenor of loan or additional loan amount.
H.Ls. : Interest Rate Re-set on Fixed Rate Home Loans : Option to Increase EMI/Tenure :
Instead of asking the customers to pay the amount in a lump sum, they should be given an option
(specimen of letter given in Annexure ‘A’) to increase the EMI or a combination of increase in EMI
and tenure : e-Cir/150/2012-13.
H.Ls. : One-time Option to Existing Fixed Interest Rate Borrowers : to Switch over to Current
Floating Interest Rate Structure : Procedure to be followed : e-Cir/386/2012-13.
H.Ls. : Option to Existing Borrowers to Switch over to Current Interest Rate Structure : Revision
in Switch-Over Fee : The Bank has recently reduced the one-time switch-over fee from 1% of the
outstanding in the account to 0.50% plus applicable Service Tax, the present effective switch-over
fee being 0.56% of the outstanding : e-Cir/609/2012-13.
The facility of switchover to the current Interest Rate is extended to the existing Home Loan
customers from the date of credit of switch-over fee to the Branch Commission Account.
H.Ls. : Interest Certificates : The Bank has decided to despatch interest certificates to all Home
loan borrowers at the addressed recorded in the CBS : e-Cir/182/2012-13.
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HOME LOANS - III
HLs : High-value Loan Proposals : Due Diligence : Norms : For Home Loans of Rs. 1 Crore and
Above : e-Cir/976/2012-13.
HLs : High-value HL Proposals : of Rs. 1 Crore & above : Due Diligence : The Home Loan
account (proposed to be taken over from other Banks/HFCs/FIs) should have a satisfactory track
record of a minimum of two years from the date of first disbursement, and the account should be
Standard as per IRAC norms. However, in the cases of Take-over of Home Loans from other
Banks/HFCs/FIs, having a satisfactory seasoning tenor of less than 2 years, Interim Security/
TPG should be obtained as per extant instructions in this regard : e-Cir/1132/2012-13.
HLs : To Businessmen/Professionals : Depreciation : The Bank has now allowed adding back of
depreciation on fixed assets to the net annual income of individuals, irrespective of whether they
were financed by SBI or not. The revised norms for permitting adding-back of depreciation to the
net annual income for the purpose of arriving at home loan eligibility are detailed in e-Cir/1/
2012-13.
HLs : To Businessmen : The Bank has recently withdrawn the norm of considering 5% of the
Annual Sales Revenue (as per the latest Audited Balance Sheet) for the purpose of calculating
loan eligibility to businessmen under the Home Loans Scheme : e-Cir/110/2013-14.
The Home Loan eligibility of the businessmen should be calculated on the basis of Annual Income,
as indicated in the latest Income-Tax Return. The norm of adding back the depreciation to compute
Net Annual Income of the Individuals falling under the category of Business, Professional and
self-employed running their business/profession on proprietorship basis remains unchanged.
HLs : Building Plan : The copy of approved plan should not be insisted upon in such cases
where houses/flats were constructed prior to enforcement of building bye-laws of the concerned
Development Authority/Municipality/Corporation. However, if the property in question is subject to
property/house tax, Branches/CPCs can deduce from the tax receipt that it is not an illegal
construction. But, such receipts should not be insisted upon if no such tax is payable on the
property : e-Cir/80/2012-13.
HLs : Liquid Securities : The Bank has recently decided to waive the stipulation of mortgage of
the residential property financed by it, provided in lieu thereof the loan is secured by pledge of
liquid securities of adequate value viz. (i) Term Deposits (including NRE/FCNB deposits) in own
name/in the name of third-party, (ii) NSCs/KVPs in own name/in the name of a third-party, (iii) Life
Insurance Policies in own name (to the extent of surrender value), Govt. Promissory Notes in own
name or in the name of the third-party, etc. and such other tangible liquid securities as may be
deemed appropriate by the sanctioning authority, subject to the margins stipulated in the scheme
for finance against the securities concerned. Wherever the security tendered stands in the name
of the third-party, he/she should guarantee the home loan : e-Cir/195/2012-13.
However, Agreement to Mortgage should be obtained with a view to further strengthen security in
addition to the documents required to pledge the liquid securities in the Bank’s favour.
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HLs : Security : If mortgage of the property being financed by the Bank is not possible or gets
unusually delayed, the AGM (Region)/AGM (Branch)/AGM (CPC) may permit acceptance of
security of another immovable residential property of adequate value in lieu thereof, subject to the
conditions detailed in e-Cir/111/2013-14.
All the existing instructions, including the provision of accepting liquid securities of adequate
value in lieu of mortgage, remain unchanged.
HLs : ‘Security’ Value in CBS : The Agreement to Mortgage and Tripartite Agreement (entered
into by the Borrower, the Builder and the Bank) are obtained as security documents pending
creation of equitable mortgage in respect of Home Loans sanctioned for the purchase of a residential
unit/flat in an under-construction project : e-Cir/737/2013-14.
Branches should follow the guidelines detailed in e-Cir/737/2013-14 to enter the value of the
underlying property in CBS at the time of opening of the account.
HLs : Repayment : ECS/S.I. : The Bank has recently withdrawn the instruction for obtaining
undated and pre-signed cheques where mandate for repayment of home loan through ECS/S.I. is
obtained. Operating units should take legal recourse on dishonor of ECS or S.I. with the same
rigour as they would have taken for dishonor of Negotiable Instruments : e-Cir/1074/2011-12.
HLs : Correct Product Codes, Activity Codes and Scheme Codes : related to the Home Loan
Scheme and other related Products : e-Cir/271/2013-14.
HLs : Guidelines on Dealing with CIBIL Credit Information Report : New Version for Scoring :
Changes detailed in e-Cir/610/2012-13.
Updation of Mobile Numbers : All Branches having Home Loan exposure should identify and
update mobile numbers in all accounts parked with them : e-Cir/1094/2013-14.
HLs : Asset Revaluation : Detailed Guidelines : e-Cir/1228/2012-13.
Home Loans up to Rs. 20 Lac are sanctioned with LTV ratios up to 90% and Home Loans above
Rs. 20 Lac are sanctioned with LTV ratios up to 80%.
The Revaluation of Assets should be done every year so that the correct Loan-to-Value (LTV) ratio
is worked out for the entire Home Loan portfolio and the correct computation of Capital Adequacy
of our Bank ensured.
HLs : Solar Photo Voltaic Home Lighting System : The Bank has recently included the cost of
“Solar Photo Voltaic Home Lighting System” as a part of the project cost in Home Loans for
purchase/construction of residential units. However, the Home Loan amount is restricted to the
maximum permissible loan amount as per LTV Ratio prescribed by the Reserve Bank of India : e-
Cir/011/2013-14.
HLs : Unsolicited Commercial Communications : In view of the directives by TRAI and RBI, the
Bank has instructed that the operating units engaged in marketing of Home Loan products should
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follow the guidelines detailed in e-Cir/884/2013-14 while making calls to the prospective Home
Loan borrower.
The officials/Home Loan Counselors, etc., dealing with Home Loans, should not make any calls
to non-customers without obtention of their loan applications or written consent on the prescribed
format mentioned above.
If any HLCs/empanelled sourcing persons are found to be violating the above guidelines, his/her
empanelment should be terminated forthwith.
HLs : AWHO : Detailed procedures for handling Home Loan proposals received from applicants
under our arrangements with the AWHO (Army Welfare Housing Organisation) and ANHB (Airforce
and Naval Housing Board) : e-Cir/283/2013-14.
Marketing Associates : Engagement of Builders as MA : Payment of Service Charges :
Modifications : e-Cir/586/2008-09.
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HOME LOANS : INSURANCE
• H.Ls. : Insurance : Though it is desirable that the borrowers should be convinced to take
property insurance from the SBI General Insurance Co. Ltd. as they are offering discounts
on long-term General Insurance Policy to our customers, the customers should not be
insisted upon to take the insurance cover from any particular Company : e-Cir/084/
2013-14.
Any insistence by our operating units for taking SBI Life cover as a pre-condition for availing
Home Loans may result in violation of the regulatory guidelines prescribed by the Reserve
Bank of India and Insurance Regulatory and Development Authority.
• Group Insurance scheme for SBI Home Loan borrowers : Features of the scheme detailed
in CIRCO/ADV/CL/301/2002-03.
The Bank has recently simplified the medical criteria for Home Loan borrowers up to
Rs. 7.5 Lac : CIRCO/ADV/CL/47/2003-04.
For loans above Rs. 7.5 Lac, the existing process continues.
• Home Loan Insurance Scheme of SBI Life : Modification : Joint Life Coverage : CIRFO/
ADV/147/2003-04.
• Optional Group Insurance Scheme : Modifications and Enlargement of Scope : CIRCO/
ADV/110/2003-04.
• Agreement for Additional Housing Loan : To be obtained from the borrower wherever an
additional loan for the amount of premium is granted : Format enclosed to CIRCO/ADV/
146/2003-04.
• Optional Group Insurance Scheme : USPs (unique selling points) of the Scheme : Benefits
available to the branches: CIRCO/ADV/CL/210/2003-04.
• Group Insurance : Changes in Home Loan Insurance Scheme : W.e.f. 01.01.2004 : CIRCO/
ADV/320/2003-04.
• Home Loan Insurance : Competing product of LIC : Chart containing features of LIC’s
product with the relative features of SBI Life’s product : CIRCO/ADV/CL/113/2003-04.
• Incentive Structure for Branches : CIRCO/ADV/CL/117/ 2003-04, CIRCO/ADV/205, 273/
2003-04.
(With a view to encouraging our staff members to get coverage under the captioned scheme,)
SBI Life offer a special rebate of 5% on the total premium payable to all staff members who
have availed housing loans from the Bank and opt for their group insurance cover : CIRCO/
ADV/123/2003-04.
• Revised Administration Fees Payable : For all home loans covered under the Home Loan
Insurance Scheme of SBI Life : CIRCO/ADV/114/2004-05.
• Non-Medical Limit : SBI Life have increased the Non-Medical Limit under its Home Loan
Insurance scheme for the Bank from the earlier Rs. 7.5 Lac to Rs. 20 Lac based on
different age brackets for all borrowers (public as well as staff) : CCFO/ADV/CL/343/
2005-06.
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• Closure of Home Loan insurance Scheme : for Existing (Old) Home Loan Borrowers :
CCFO/ADV/CL/72/2006-07.
• Home Loan Insurance : SBI Life : The age of a applicant should be computed properly :
CCFO/ADV/CL/162/2006-07.
• Insurance : The value of land is excluded in this regard since land cannot be damaged by
fire and allied perils : CCFO/ADV/CL/176/2006-07.
• Insurance : SBI Life Insurance Co. has recently discontinued the discount in the premium
in respect of Home Loan Insurance availed by the younger co-borrower in joint home loan
accounts : CCFO/ADV/CL/182/2006-07.
• Home Loan Insurance Scheme of SBI Life : Extension of Home Loan Insurance Scheme of
SBI Life Insurance Company : The Scheme also covers the existing housing loan of our
employee, subject to the conditions detailed in CCFO/ADV/CL/432/2006-07.
• Insurance Cover : It should be ensured that a clear mandate from the prospective borrower
as to whether he opts for the Home Loan Insurance cover is obtained before the sanction is
conveyed. No discrimination should be made to the borrowers who do not opt for Home
loan Insurance cover : CCFO/ADV/CL/102/2007-08.
• Insurance : In order to align the insurance coverage, the maximum cover of home loan
insurance has been increased to 25 years for the age bracket 18-35 years : CCFO/BO/CL/
346/ 2007-08.
• Home Loans : SBI Life : The authority issuing letter to customers regarding availability of
insurance cover should take utmost care that under no circumstances the letter is issued
to an ineligible person not cited on the website as such person would not be covered by the
Master Policy : e-Cir/781/2009-10.
• SBI Surakshit Home Loan : Home Loans with Life Cover : e-Cir/377/2010-11.
As per the regulatory guidelines, the insurance policy is required to be sold to the customer
only when he volunteers to obtain the cover.
With a view to ensuring demonstrated compliance with these guidelines and avoiding
incidence of alleged coercive tactics by the operating units for selling of insurance products,
the Bank has decided to keep two separate Home Loans plans on the shelf, viz. (i) SBI
Surakshit Home Loans (With Life Insurance Cover), and (ii) SBI Home Loans (without Life
Insurance cover).
Special Home Loan Scheme : List of Home Loans covered by SBILIFE : e-Cir/44/2010-11.
H.Ls. : New Product : Loan for SBI Life Premium to Cover Home Loan Outstanding : SBI Suraksha :
The Bank recently launched an exclusive new product named SBI Suraksha for funding 100% of
the SBI Life premium through a separate account. The detailed structure of the product is detailed
in e-Cir/127/2011-12.
H.Ls. : Life Premium : Loan for SBI Life premium to cover existing home loan outstanding : Step-
by-step Procedure : e-Cir/870/2011-12.
H.Ls. : SBI Suraksha : In cases where Home Loan limits were sanctioned along with the life-
premium, no separate documents are required to be executed for opening of two different accounts
within the overall sanctioned limit. Bank is only required to inform the customers regarding change
in accounting procedure (detailed in e-Cir/201/2011-12).
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H.Ls. : Surakshit H.Ls. : Opening of Surakshit Home Loans in CBS along with SBILIFE A/c &
Linking of Existing Home Loans Account with new SBILIFE Account : e-Cir/510/2011-12.
H.Ls. : Insurance Claims : Revised procedure for lodging a claim under Personal Accident
Insurance Master Policy : e-Cir/629/2011-12.
HLs : SBI Suraksha : The additional loan amount for SBI Life premium is not considered for calculation
of eligibility under Home Loan and does not require any fresh appraisal, as such the same may be
sanctioned by CPCs on written request of customers without referring to the sourcing units : e-Cir/
960/2011-12.
The Bank recently allowed Home Loan borrowers with loan limit of Rs. 25 Lac and above to choose
between RiNn Raksha (Group Policy) and Smart Shield (Individual Policy) : e-Cir/135/2012-13.
Detailed process flow for handling request for coverage under Smart Shield : furnished in e-Cir/135/
2012-13.
HLs : Free Group Personal Accident Insurance (Death only) : Cover for Home Loan/Car Loan
Borrowers : New Policy with SBI General Insurance Co. Ltd. : W.e.f. 02.07.2012 to 01.07.2013 : e-
Cir/310/2012-13.
HLs : Home Loan Surakshit A/c : Step-by-Step Guide for Opening of Home Loan Account along with
RiNn Raksha Account: Enclosed to e-Cir/396/2012-13.
HLs : Credit Life Insurance Coverage : The Bank has recently decided that a Home Loan borrower
already having insurance policy of any other insurance company can also be assigned to cover the
Home Loan. The policy must stand in names of the borrowers and assigned in favour of the Bank and
assignment registered with the respective insurance company. The sum assured of risk coverage
should be equal/more than the loan limit or the outstandings in case of old and fully disbursed loans.
The obligation to pay future premium of such policies rests with the borrower(s) : e-Cir/571/2012-13.
HLs : Insurance Cover : Long-term Home Insurance Policy of SBI General: Revised Guidelines :
Detailed in e-Cir/833/2012-13.
HLs : Insurance Cover : The Bank has now allowed Home Loan borrowers to avail of insurance cover
under Sbi Saral Shield (Individual Policy). The premium payable by Home Loan borrowers for availing
of insurance cover under Saral Shield is also financed by the Bank by way of an additional Term Loan
(Suraksha Loan) as in the case of RiNn Raksha or Smart Shield : e-Cir/788/2012-13.
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HOME LOANS - IV
HLs : Admin. Clearance : Authority Structure for Administrative Clearance : For Sanction of
high-value home loans and for purchase of old houses : CCFO/ADV/CL/25/2007-08.
HLs : In-Principle Approval : The format detailed in CCFO/ADV/CL/176/2006-07 has been
prescribed to make it more comprehensive, transparent and self-contained.
Home Loans : Modification in Eligibility Criteria : CCFO/ADV/CL/67/2006-07.
Home Loans : Age : The Bank has modified norms regarding minimum age of eligibility for Home
Loans as 18 years, subject to availablity of steady source of income and fulfilment of other
eligibility norms : CCFO/ADV/344/2005-06.
HLs : Pre-EMI Capitalisation : With a view to bringing about a significant reduction in NPA
levels, it has been decided to grant an option to the existing Home Loan borrowers whose loans
have become NPA due to non-payment of Pre-EMI interest (i.e., interest accrued during moratorium
period), to capitalize the same and rephase the repayment programme, subject to the conditions
detailed in CCFO/ADV/CL/303/2005-06.
HLs : EMIs : Loans Sanctioned on floating rate basis : In case of upward revision of interest rates,
the Bank has decided to keep the EMIs unchanged for the time being : CCFO/ADV/CL/304/
2006-07.
HLs : Interest Applied During Moratorium Period : The Bank has modified the earlier instructions
regarding procedure to be adopted for capitalization of pre-EMI interest of Home Loans to ensure
that such accounts do not become irregular, inviting adverse comments during Statutory Audit
exercise : CCFO/ADV/CL/367/2005-06.
HLs : Improvement in Pricing : Discretionary Powers : Branches should send suitable
communication to the respective corporates / builders in this regard : CCFO/ADV/CL/305/
2005-06.
Fixed rates will continue to be subject to force majeure clause and interest rate reset clause at
the end of every three years on the basis of fixed interest rate prevailing then.
Improvement in pricing in respect of tie-up with reputed corporates/builders : Revision of floor
rates : The Bank has revised the floor rates to 0.50% below the applicable card rates on the date
of sanction of the individual loans under the package, with immediate effect : CCFO/ADV/CL/191/
2006-07.
HLs : Concessions : Discretionary Powers : CCFO/ADV/CL/368/2006-07.
HLs : Modifications : New Features added : Subject to the conditions detailed in CCFO/ADV/
CL/377/2006-07.
a) Adding Back Depreciation to the Net Income.
b) Reimbursement of Investment Made During the Preceding 12 Months.
HLs : Rationalisation : CCFO/ADV/CL/26/2007-08 :
Rationalisation of (1) EMI/NMI Ratio, (2) Loan to Value (LTV) Ratio, and (3) Maximum Age of
Borrower.
HLs : Revised EME/NMI Ratio : e-Cir/185/2010-11 :
a) Up to Rs. 60,000/- : 20%
b) > Rs. 60,000/- and <= Rs. 1,20,000/- : 25%
c) > Rs. 1,20,000/- and <= Rs. 2 Lac : 30%
d) > Rs. 2 Lac and <= Rs. 5 Lac : 50%
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e) > Rs. 5 Lac and <= Rs. 10 Lac : 55%
f) > Rs. 10 Lac : 65%.
Increase up to 5% in the above ratios may be permitted by the controller of the Branch or AGM of
the RACPC, which processes the loan application, depending on the family size and availability
of disposable surplus income. EMI for the purpose of computing the ratio includes EMIs towards
all the existing loans of the borrower and the proposed loan.
HLs : LTV Ratio : Loan to Value Ratio : It is expressed as percentage of loan outstanding to the
value of property mortgaged to the Bank as security : CCFO/ADV/CL/176/2007-08.
Home Loans : LTV Ratio, Risk-Weights, Provisioning : Revised RBI Instructions : Detailed in e-
Cir/299/2013-14 :
Individual Home Loan Amount LTV Ratio (%)
a) Up to Rs. 20 Lac 90%
b) Above Rs. 20 Lac and up to Rs. 75 Lac 80%
c) Above Rs. 75 Lac 75%
A maximum LTV Ratio of 75% is now permitted while Taking-over Home Loans, along with the
Top-up Loans from other Banks/HFCs/FIs as against the earlier LTV Ratio of 80% (maximum).
For the purpose of calculation of LTV ratio, the ‘Loan amount’ may include the additional permissible
expenditure like cost of stamp duty, registration, etc. ‘Value’ is the assessed value of the property :
e-Cir/799/2010-11.
In effect, ‘Margin’ will be no longer defined as a prescribed percentage of the Project Cost. Rather,
the Loan Amount will be determined by prescribed LTV and the ‘Margin’ will derive as ‘Project
Cost ( – ) Loan Amount’ : e-Cir/799/2010-11.
H.Ls. : LTV Ratio : Salary Packages : The Bank has recently revised as under the instructions
for account-holders of all Salary Packages, i.e., Corporate Salary Package, Defence Salary
Package, Para-Military Salary Package, Railway Salary Package, State Government Salary
Package, etc. The maximum loan amount is determined by the stipulated LTV ratio : e-Cir/845/
2010-11.
Home Loan Amount Loan to Value (LTV) Ratio for Construction-linked disbursement
House under Construction House Ready for Possession
a) Loan up to Rs. 20 Lac 90% 90%
b) Loan above Rs. 20 Lac 80% 80%
The Discretionary Powers for sanctioning concessions in LTV have since been withdrawn.
HLs : Marketing Associates : Engagement of Builders as Marketing Associates : Details of
Arrangements, Enlargtement of Scope : CCFO/ADV/CL/29, 257/2007-08.
Payment of service charges : Detailed in CCFO/ADV/CL/29/2007-08.
HLs : Income : Clubbing of income of spouses of joint/multiple borrowers is not permissible :
CCFO/ADV/CL/14/2006-07.
However, if the property is jointly held by all the borrowers and their spouses, the loan is availed
in the joint names of the borrowers and their spouses and where equitable mortgage of the
property will be created by all of them, income of all such joint borrowers could be clubbed to
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determine the eligible loan amount. Taking into consideration the possibility of disputes amongst
the joint borrowers, which will adversely impact the servicing of loan obligations, the number of
such joint borrowers should be limited to a maximum of 3 borrowers.
Other Income : Regular income from all sources, including performance-linked incentives, bonus,
etc. can be considered, in whole or in part, on the basis of the average of the last two years, to
arrive at the total eligible loan amount, provided the sanctioning authority is satisfied about the
continuity of the income. However, reimbursement of expenditure should not be considered as
income even though it may be reflected in the salary slip : e-Cir/865/2010-11.
H.Ls. : Income Criteria : Regular income from all sources, including Variable pay, Performance/
Production Linked Incentives, Bonus, Overtime, etc. can be considered, in whole or in part, on the
basis of the average of the last two years, to arrive at the eligible loan amount. However, the
reimbursements of expenditure should not be considered as income even though it is reflected in
the salary slip. The Home Loan appraising official should ensure inclusion of all types of incomes
which are regular in nature other than reimbursements to arrive at the Home Loan eligibility : e-Cir/
998/2012-13.
HLs : Expected Rent Accruals : Maximum eligible expected rent accruals in the case of joint
applicant(s) should be arrived at on the basis of the age of the first applicant and it should be
computed as detailed in CCFO/ADV/CL/90/2006-07.
There is no provision to add expected rent accruals in case of SBI-Realty Home Loans.
HLs : Revised Margins : e-Cir/185/2010-11.
Loan Amount Margins (Min.)
For House under Construction House for Ready Possession
Up to Rs. 75 Lac 20% 15%
Above Rs. 75 Lac 25% 15%.
Discretionary powers vested with various functionaries for margin reduction : e-Cir/573/2008-09.
Branches should ensure that requests for relaxation in margin are considered only as an exception(with a view to avoiding possible impact of the volatility in real estate prices on our security
coverage) : CCFO/ADV/CL/113/2006-07.
HLs : Option to Avail Loan at the Place of Construction : CCFO/ADV/CL/111/2006-07.
The Bank has extended a one-time option to the prospective borrower(s), while submitting loan
application, to avail Home Loans either at the place of construction or place of employment/
profession/business activity, by securing the loan repayment through check-off facility or by obtaining
post-dated cheques as per extant instructions. The modified instructions are applicable to hybrid
loan products also viz. SBI Realty/SBI-Flexi/SBI-Maxgain/SBI-Optima/SBI-Freedom, etc. and to
loans granted under Plus packages.
The prospective borrower(s) can exercise the above one-time option at a Branch located at other
centre where he/she has on-going relationship for last 2 years, by securing the loan repayment
through check-off facility or by obtaining post-dated cheques/ECS/S.I. as per extant instructions :
e-Cir/865/2010-11.
HLs : Tie-up : with Govt. of M.P. : Relaxation in EMI/NMI norms : CCFO/ADV/CL/93/2007-08.
HLs : Relaxations : Salary Certificate, Form-16 : Relaxations may be permitted by the DGM of
Module : CCFO/ADV/CL/227/2007-08.
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HLs : Age : The Bank has modified norms regarding minimum age of eligibility for Home Loans as
18 years, subject to availability of steady source of income and fulfilment of other eligibility norms :
CCFO/ADV/344/2005-06.
HLs : Scrutiny : Controlling Offices may scrutinise every month, at least 5% of the loans sanctioned
by branch / RACPC during the previous month, with a view to ascertaining the quality of pre-
sanction processes, loan appraisal, and documentation. This may be done either by asking the
branches / RACPCs to submit photocopies of the relevant papers/documents or by visiting the
branches/RACPCs concerned. Services of Concurrent Auditors may also be used for this purpose
at the RACPCs :
HLs : Asset Verification : CCFO/ADV/CL/90/2007-08 :
a) In case of at least 5% of the loan accounts sanctioned during the previous quarter, asset
verification may be arranged by the controlling office during each quarter.
b) Branches as well as RACPCs should carry out post-disbursement inspection within 7
days of disbursement in all cases, and subsequently randomly selected 5% of the accounts
every month in case of standard assets, and 100% of the delinquent accounts (i.e., accounts
where repayments are not forthcoming as per the agreed terms) within one month of the
default.
HLs : Physical Verification : The prescribed procedure regarding physical verification of the
property mortgaged to the Bank must be meticulously followed in case of all Home Loans.
Further, property inspection must be carried out and recorded at each stage of disbursement :
CCFO/ADV/CL/147/2007-08.
Whenever it is established that physical verification of properties mortgaged to the Bank was not
done, all the officials involved in the loan sanction process, including the Controllers, shall be held
responsible for the lapses.
HLs : Loans for Construction in the Seismically-Vulnerable Zones : Badwani, Dindori and
Jabalpur districts fall in seismically vulnerable zone. Branches in these district in particular should
keep the BIS norms for construction in that zone in view before advancing loans for constructions :
CIRCO/ADV/CL/217/2004-05
Fin. to Housing Projects : T&C : While granting finance to specific housing development projects,
branches should stipulate as a part of the terms and conditions, the additional terms and conditions
detailed in e-Circular/377/2009-10.
Funds should not be released unless the builder/developer/company fulfils these conditions.
HLs : Account Opening at RACPC : Apart from follow-up activities, it is imperative that up- to-
date information on address fields and telephone numbers of borrowers is available in the system
for other maintenance functions like sending statements, obtaining revival letters, etc. : e-Cir/350/
2010-11.
H.L. Counsellors : Empanelment : The channel of Home Loan Counsellors (HLCs) for sourcing of
Home Loans was launched in June 2008 at branches linked to RACPCs : e-Cir/571/
2008-09.
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The process, for empanelment and control of HLCs has been reviewed and the changes detailed
in e-Cir/200/2011-12 have been made.
HLCs : Home Loan Counselors : Additions/Modifications/Amendments : in the operating
instructions : e-Cir/1214/2012-13.
Revised Remuneration Structure for Home Loan Counselors (HLCs) : Detailed in e-Cir/888/2012-
13.
H.Ls. : Marketing Consultants : Empanelment of Retired Officers/Employees as MCs : Revised
operating instructions and modification in remuneration paid : e-Cir/1213/2012-13.
The role of HLCs is limited to the sourcing of proposal only. KYC verification, Pre-sanction survey,
appraisal, documentation, disbursement and Post-sanction survey in respect of Home Loans are
to be done by the Branches/RACPCs.
Remuneration Structure : e-Cir/307/2010-11.
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HOME LOANS : LOAN TENOR
HLs : Max. Loan Tenor : Modifications : CCFO/ADV/CL/227/2007-08 :
a) Age up to 35 : 25 years.
b) Age above 35 year and up to 45 : 20 years.
c) Age above 45 : 15 years.
In case of joint borrowing for 25-year loan, NMI of borrower of age up to 35 years should constitute
at least 75% of the joint NMI.
H.Ls. : Moratorium Period : The norms relating to the moratorium period have been reviewed
and modified suitably. The revised norms for the maximum permissible moratorium period under
the Home Loans Scheme are detailed in e-Cir/211/2013-14.
The moratorium is not linked to the execution period of the project as a whole. Rather it is linked
to the execution period for each building in the project.
HLs : Extension of Moratorium : Additional moratorium period for Home Loans, on case-to-
case basis, where the sanctioned moratorium period has expired or is likely to expire and
possession is delayed due to non-completion of project by the builder/developer. It should be
ensured that the extant norms regarding maximum permissible loan tenor, maximum permissible
age by which loan repayment should be completed, etc. should be adhered to, while granting the
additional moratorium period. Also the total moratorium period, including the additional moratorium,
should not exceed 30 months : e-Circular/745/2008-09.
HLs : Quantum of Loan : Modifications : CCFO/ADV/CL/227/2007-08 :
The loan eligibility is now determined by EMI/NMI ratio, irrespective of the age of the borrower,
i.e., the loan amount is decided by the repayment capacity of the borrower(s), which comes out
as a ratio of EMI to NMI.
HLs : Asset Valuation Policy, & (II) Asset Revaluaton Policy : to be made Effective
From 01.04.2008 : CCFO/ADV/CL/211/2007-08.
Concessionary Capital Risk Weight (CRW) on Home Loans is available to the Banks under
Basel-II framework, provided the assets are valued/revalued in accoudance with a Collateral Valuation
Policy approved by the Bank’s Board.
HLs : Revaluation : Capital Charge : Branches take up the exercise of revaluation of standard
assets so that when revaluation of home loans is done, the correct LTV ratio is worked out for the
whole Home Loan portfolio for the purpose of computation of capital charge : e-Cir/445/2008-09.
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HOME LOANS : DOCUMENTATION
• Set of Modified Security Documents : Enclosed to CCFO/ADV/CL/281/2007-08.
• Arrangement Letter : Modified Format : Enclosed to CCFO/ADV/CL/281/2007-08.
• Loan Agreement : Modified Format : Memorandum of Loan Agreement for Home Loan Granted
to Public : Enclosed to CCFO/ADV/CL/281/2007-08.
• Affidavit to be obtained from HL Borrowers : Revised format : enclosed to CCFO/ADV/CL/
243/2007-08 :
Format of covering letter for this Affidavit is enclosed at Annexure “A” of CCFO/ADV/CL/243/
2007-08.
The affidavit should be sworn before Magistrate or Notary Public : CCFO/ADV/CL/195/
2006-07.
• Attorneys : The sanctioning authority may allow execution of Home Loan documents, exceptLoan Application which must be signed by the borrower himself/herself, by duly Constituted
Attorneys in cases of “Defence Employee” borrowers : CCFO/ADV/CL/299/2006-07.
Power of Attorney for this purpose should be obtained in the format placed at “Annexure-A”
of CCFO/ADV/CL/299/2006-07. A certified photocopy of Defence Identity Card should also
be attached to the Power of Attorney.
Branches should not consider execution of documents on the basis of Power of Attorney in
respect of domestic Home Loans : CCFO/ADV/CL/357/2005-06
The Govt. proposes to declare all property transactions executed on Power of Attorney
basis, as illegal, to check the revenue loss to the exchequer : CCFO/ADV/CL/188/2006-07.
The facility of execution of documents on the basis of Power of Attorney is permitted for
borrowers employed in Para-Military Forces personnel also, subject to the compliance of
norms stipulated for extending similar facility to Defence Service Personnel : e-Cir/865/2011.
• HLs : Sale of Property Through Power of Attorney (POA) : Builders : Companies/Firms/Individual/
Propertory Concerns : Important Safeguards : Detailed in e-Cir/864/2012-13.
The revised procedure - detailed in e-Cir/864/2012-13 - should be followed where the Builders
viz. Companies/ Firms/Individual or Proprietory Concerns have executed Power of Attorney in
favour of their Partners/Employees/ Authorized Representatives to sign Flat Allotment Letters,
NOCs, Agreement of Sale, Sale Deeds, etc. in favour of buyers of flats/units.
• HLs : Need for Registration : AGM Region / AGM Branch have been given discretion, to
permit deviation regarding Non-registration of documents like Development Agreement,
Power of Attorney, etc. provided the Tripartite Agreement is registered and available. The
deviation is permitted strictly on case-to-case basis in the cases of borrowers and builders
with integrity beyond doubt and creditworthiness as per the scheme parameters. Deviations
in this regard are restricted to employees of Govt./PSUs and reputed companies whose
salaries are routed through the Bank : e-Cir/185/2010-11.
• H.Ls. : Documentation : The Bank has recently decided to delegate the authority of getting
Home Loans documents executed to certain Branches to be identified as Home Loan
Documentation Branches (HLDBs) at BPR Centres to enhance the level of customer
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convenience and satisfaction. The revised guidelines contained e-Cir/212/2013-14 provide
the concerned HLDBs with the opportunity to get projects acquainted with the new Home
Loans borrowers and also to offer them the Bank’s other products/services with a view to
having a more deeper, wider and mutually beneficial relationship. The operational guidelines
have been detailed in e-Cir/212/2013-14.
• H.Ls. : HLDBs : All Branches having P Divisions at BPR Centres have been delegated the
authority of executing Home Loan documents and categorized as Home Loan Documentation
Branches (HLDBs) : e-Cir/437/2013-14.
In addition to the ‘P’ Division Branches, the Circle may identify a few other Branches, if
thought fit, as HLDBs after assessing customer requirements, locations of CPCs, etc. with
the approval of the Circle Management Committee.
• H.Ls. : Tripartite Agreement : The Tripartite Agreement, duly signed by the Borrower,
Builder and the Authorized official of the Bank, is obtained in all Home Loans emanating from
approved Builder Tie-ups, wherever the creation of equitable mortgage is scheduled to take
place subsequent to the disbursal of the loan : e-Cir/1177/2012-13 :
Amended Format : Enclosed to e-Cir/1177/2012-13.
• H.Ls. : CERSAI Registration Charges : The Bank recovers the registration charges (on actual
basis) payable to CERSAI separately from Home Loan borrowers at the time of documentation
of loan w.e.f. 30th December, 2013. The limit-wise registration charges (inclusive of Service
Tax @ 12.36%) are detailed in e-Cir/1066/2013-14.
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HOME LOANS : NPA MANAGEMENT
HL NPAs : Follow-up : Action Points : CCFO/ADV/CL/150/2007-08 :
a) Fresh slippage needs to be kept at the minimum and reduction in the level of existing
NPAs to be given focused attention.
b) SARFAESI notices have to be served in all eligible cases.
c) SARCs should be active in disposing of NPAs.
d) Fresh slippages to be arrested. Weak advances to be identified in early stages and corrective
action taken immediately.
e) Names of defaulters should be published in local newspapers (as per the procedure detailed
in CCFO/ADV/CL/125/2007-08).
Taking over assets for the Bank’s use : With a view to reducing the incidence of Non-Performing
Home Loans, it has been decided by the Bank to include provisions in the Home Loans Agreement,
which empower the Bank to take the premises of defaulting borrowers on hire at market rent (as
applicable) for use by the Bank for commercial purposes or for residential purposes for the
employees : e-Cir/184/2008-09.
Additional clauses to be incorporated in the Memorandum of Loan Agreement for Home Loans
granted to Public.
H.Ls. : Recalled Assets A/c : Regularisation : In cases where Home Loan accounts under
Recalled Assets have been regularized by the borrowers by paying full irregular amount, the
Branches may permit these accounts for up-gradation to ‘Standard Accounts’ by closing these
accounts and simultaneously opening a new Home Loan account (with a new account number)
with the outstanding dues in Recalled Assets Accounts after obtaining a letter from borrower, duly
signed by all borrower(s)/guarantor(s), if any, on the standard format (specimen given in Annexure
‘A’). It must, however, be ensured that new Home Loan account will carry the same interest rate
structure as was applicable at the time of sanction of existing loan and tenor of the new loan
would be the residual tenor of the existing loan : e-Cir/637/2011-12.
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HOME LOANS :FRAUDS/SERIOUS IRREGULARITIES/
PROCEDURAL LAPSES
HLs : Frauds/Serious Irregularities/Procedural Lapses :
• Branch staff should exercise adequate care and remain vigilant against attempts to defraud
the Bank : CIRCO/ADV/CL/99, 200/2004-05.
• The banker’s cheques/demand drafts, constituting disbursement of housing loans, and
favouring builders, should be directly despatched to them by registered AD or speed post :
CIRCO/ADV/CL/164/ 2004-05.
• Procedural Lapses : CIRCO/ADV/CL/223, 248/2004-05.
• Procedure for avoiding creation of multiple equitable mortgages with fake stamp papers :
CCFO/ADV/CL/222/2004-05.
The letter confirming the deposit of title deeds should be obtained from the mortgagors
subsequent to creation of E.M., by registered post : Cir. 29/1969, CCFO/ADV/CL/222/
2004-05.
The advocate should be requested to comment on the genuineness of the stamp paperalso.
The borrowers may be requested to execute a registered mortgage (memorandum of deposit
of title deeds or simple mortgage) for a nominal amount. This procedure should be adopted
by branches while granting Housing Loans where there is any doubt about genuineness of
stamp paper used for title deeds : CCFO/ADV/CL/222/2004-05, etc.
Comprehensive guidelines for investigating title of properties proposed to be mortgaged :
CCFO/ADV/CL/222/2004-05, etc.
• In a majority of the cases, the frauds involved a combination of fabrication/ falsification of title
deeds and multiple financing : CCFO/ADV/CL/154/2005-06.
Measures to mitigate the risk of frauds : CCFO/ADV/CL/154/2005-06.
• Branches should exercise caution while sanctioning housing loans so that the lapses detailed
in CCFO/BO/CL/170/2005-06 do not recur.
• Best practices suggested by RBI : CCFO/ADV/CL/70/2006-07.
a) The entire process of appraisal, due diligence and sanction is carried out by the lending
institutions’s regular staff and credit appraisal standards are not diluted under any
circumstances notwithstanding aggressive competitive measures adopted by various
market players.
b) Authenticity of salary certificates and Income-Tax returns submitted by the borrowers/
guarantors are independently verified from the employees/Income-Tax authorities
respectively, if necessary by engaging services of Chartered Accountants. Extant
instructions reiterated.
• List of factors that contributed to the incidence of frauds in many cases : CCFO/ADV/CL/
147/2006-07.
• Extant Instructions reiterated for strict compliance : CCFO/ADV/CL/179/2006-07.
• Specimen of NOC to be obtained from the builder / seller on their letterhead and signed by
his authorized signatory : Format enclosed to CCFO/ADV/CL/90/2007-08.
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This format binds builders to :
a) Issue a NOC for mortgaging the related property by the borrower to SBI;
b) Note our charge / lien on the related property;
c) Obtain NOC from the Bank for transfer / sale of property, and
d) Refund the loan instalments received by him to the Bank in case of cancellation of the
sale agreement.
• Three major steps in the due diligence exercise for Housing Loans : Detailed in CCFO/ADV/
CL/141/2007-08.
Random verification of housing loans sanctioned/outstanding : procedure to be adopted by
Modules : CCFO/ADV/CL/141/2007-08.
• It is absolutely essential to follow the pre-sanction processes meticulously with a view to
hedging the risk of frauds : CCFO/ADV/CL/336/2007-08.
Instructions contained in CCFO/ADV/CL/90/2007-08 regarding scrutiny of home loan sanction
by branches reiterated vide CCFO/ADV/CL/336/2007-08.
• Branches/RACPCs must ensure that the credit history of the borrowers get verified with the
CIBIL in all cases before sanction so as to ensure that applicants with poor credit history are
detected at the initial stage itself : e-Cir/711/2007-08.
• HLs : Prevention of Frauds : Gist of Important Instructions : Furnished in e-Circular/740/
2008-09.
HLs : Precautions :
• While granting Housing Loans, Branches should keep close follow-up to ensure timely
completion of house construction, timely conveyance of the ownership title to the purchaser
and completion of equitable mortgage formalities : CCFO/ADV/CL/04/2005-06.
• HLs : Precautions : CCFO/BO/CL/68/2005-06 :
a) Pre-sanction/Post-sanction visit/inspection should be carried out properly.
b) The estimate/map prepared by the architect should incorporate the plot number.
c) The title deed of the plot should contain particulars about identification of the plot.
d) In the agreement for the loan, the plot No. should be mentioned correctly.
e) The authorised official should certify having verified the construction only after visiting
the construction site.
HLs : Irregularities : Deficiencies / irregularities detailed in CCFO/ADV/CL/164/2005-06 been
pointed out by RBI auditors in the Annual Financial Inspection Report u/s 35 of the Banking
Regulation Act.
HLs : Weak Spots : Common irregularities observed by the RBI in the sanction and disbursement
of Home Loans are detailed in e-Cir/25/2008-09.
H.Ls. : Sanction of Bulk Proposals : Prevention of Frauds : Measures : e-Cir/618/2011-12.
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HOME LOANS - FRAUDS :
PREVENTIVE VIGILANCE
Areas : The Reserve Bank of India have advised that the incidence of frauds in the area of housing
loans has witnessed a sharp increase in the recent years, which is a cause of concern. As
observed by them :
• Submission of fake/forged title deeds of properties,
• Submission of fake/inflated/manipulated salary certificates and IT returns,
• Laxity in conduct of due diligence on borrowers,
• Laxity in conduct of due diligence on builders,
• Non-observance of procedures for pre-sanction visit to the project site, and
• Laxity in post-disbursement supervision
had mainly contributed to frauds in this area.
Group of Borrowers : One of the common modus operandi observed by RBI in a number of
housing loan frauds is sanction of loans to group of borrowers introduced to the Bank as
employees of some specific company/establishment by either the promoters/directors of those
companies or by builders/developers/middlemen. Salary slips/income proofs, photographs, postal
addresses, etc. of these borrowers, along with loan applications, are submitted by these promoters/
directors, etc. in a bunch, and banks sanction loans to bogus/ non-existent borrowers without
verification of such information.
In some cases, these promoters/directors stand as guarantors to the borrowers and proceeds of
loans sanctioned to borrowers are credited to the accounts of promoters/directors. During the
initial months, repayments are made in the accounts; however, soon they turn NPAs and when
the recovery proceedings are initiated, banks come to know of the fraudulent nature of these
accounts.
In many cases, the groups of borrowers, introduced to banks as employees of well known
companies establishments, are subsequently disowned by the concerned companies/
establishments.
Preventive Vigilance : Frauds not only increase the Operational Risks and put the Bank to
monetary loss, but also affect the morale and efficiency of the work-force. Therefore, preventive
vigilance assumes greater importance, especially in today’s scenario when the Bank is marketing
Home Loans very aggressively. Unless he is vigilant, an aggressive lender may end up being a
soft target for fraudsters, who are resorting to sophistication in modus operandi to the extent of
opening fake offices in the names of reputed companies by hiring premises and converting them
to look like genuine operating offices of the target company, and issuing salary slips, Form 16,
copies of IT returns, bank statements, PAN cards, Voter ID Cards, etc. as evidence of the worth
and employment of their accomplices to enable them to raise loans fraudulently.
As such, the operating staff and the controllers concerned need to be sensitized on the processes
prescribed by the Bank with a view to minimizing the risk of frauds in Home Loans. For this
purpose, gist of some of the important instructions issued by Home Loans Department in this
regard is furnished as under :
Pre-sanction Processes :
• Check-list of documents, pre-sanction process; Pre-sanction inspection sheet for recording
particulars of visit to :
- residence of the applicant,
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- residence of the guarantor,
- office/work place of the borrower,
- Builder, and
- Property being financed.
• “Revised Pre-sanction Inspection Sheet” should be used where pre-sanction inspection
processes have been outsourced.
• Use of CIS data, CIBIL data, and engagement of services of verification agencies who run
‘de-dupe’ tests with other Banks’ data for mitigation of the risk of multiple financing.
• NOC to be obtained from the builder/seller in the prescribed format.
• Pre-sanction visit. Due diligence on builders.
• Common irregularities observed by RBI in sanction of Home Loans :
- KYC norms not followed,
- Track record of the borrowers not ascertained,
- Pre-sanction inspection not carried out,
- Non ascertainment of source of margin money,
- fake/inflated salary slips, and non-verification of the same.
Post-Sanction Processes :
• Prescribed Forwarding letter to Builder/Seller for forwarding BC/DD by Regd. AD.
• Mentioning the Bank’s name and account number on the Banker’s Cheque/Demand Drafts
issued in favour of the builders, and sending the Banker’s Cheque/Demand Drafts to the
builder on his recorded address directly by an approved mode of dispatch.
• Scrutiny in the prescribed manner of loans sanctioned by Branch/RACPC, by the controllerwith a view to ascertaining the quality of pre-sanction process, loan appraisal, and
documentation.
• Asset verification (detailed below).
• Loan disbursement before completion of the stipulated stage of construction has been
observed by RBI in may cases.
• Physical verification of properties mortgaged to the Bank must be carried out and recorded
at each stage of disbursement. Whenever it is established that physical verification of
properties mortgaged to the Bank was not done, all the officials involved in the loan sanction
process, including the controllers, shall be held responsible for the lapses.
• Verification of property as per description in the title deed together with boundaries.
• Controllers to scrutinize every month, at least 5% of the loans sanctioned by Branch/
RACPC during the previous month. Special attention may be given to loans concentrated
in one entity like one builder/developer (where there is no tie-up) or one office (especially,
where salary accounts of the employees are not maintained with us). Asset verification, in
case of at least 5% of the loan accounts sanctioned during the previous quarter, may be
arranged by the controlling office during each quarter. Branches as well as RACPCs should
carry out post-disbursement inspection within 7 days of disbursement in all cases, randomly
selected 5% of the accounts every month in case of standard assets, 100% of the delinquent
accounts within one month of the default.
Ref. : e-Circular 740/2008-09
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HOME LOANS :MODIFICATIONS/CLARIFICATIONS, ETC.
HLs : Salary Accounts : e-Cir/72/2008-09 :
a) In the circumstances like change of job, etc., wherein salary is not credited by the employer
to the borrower’s account maintained with us, the borrower is required to give an undertaking
that he will give Standing Instructions to the account servicing bank to transfer entire salary
credit from salary account to the his/her demand liability account maintained with us. For the
limited purpose of continuation of concessions in interest rates, the demand liability account
with us under this arrangement is reckoned as pseudo-salary account.
b) Concession under this facility would stand withdrawn and the interest rate will be increased
accordingly, if the borrower discontinues his/her salary account/pseudo-salary account as
defined above.
c) Revised formats of Home Loan arrangement letter and Home Loan Agreement are enclosed
to e-Cir/72/2008-09.
HLs : Boundaries : All operating units should verify description of the property together with
boundaries of the same on north, south, east and west directions as mentioned in the Title
Deeds : e-Cir/138/2008-09.
Home Loans : Platinum Age Limit (PAL Scheme) : With a view to increasing affordability of
Home Loan by reducing the EMI burden, the Bank has given an option of extended loan tenure up
to 75 years of age to the borrowers from higher age brackets under SBI Platinum Age Limit
Scheme: e -Cir/89/2008-09.
Revised instructions regarding maximum age are given in e-Cir/89/2008-09.
Home Loans : e-Cir/104/2008-09 :
a) Lower Interest Rate for Loans up to Rs. 30 Lac.
b) Risk-Based Pricing.
c) Minimum Margin.
d) Floor Rate.
HLs : Classification : Performance figures in respect of the following loans are not to be included
in Home Loan figures in the Monthly ‘P’ Reports : CCFO/ADV/CL/288/2007-08 :
a) SBI Home Plus
b) SBI Reverse Mortgage Loan
c) Personal Loan against mortgage of immoveable properties
d) Rent Plus.
The above mentioned loans are to be classified under Personal Loans, and not under Home
Loans.
HLs : Green Housing : Interest Rate Concessions : Concession of 10 bps below the applicable
interest rates may be extended for Home Loans for purchase/construction of dwelling units in
Green Buildings rated by the agencies detailed in CCFO/ADV/CL/317/2007-08.
HLs to Businessmen : With a view to roping in high-value business class clientele for our Home
Loans and containing the risk within acceptable norms, the Bank has incorporated the modifications
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detailed in e-Cir/71/2008-09 in the Home Loan product in case of businessmen at select centres
namely all LHO centres and all centres covered by RACPCs : e-Cir/156/2008-09.
Businessmen (non-salaried class of customers) whose Home Loan eligibility is calculated on the
basis of Income-Tax returns would continue to be eligible to avail Home Loan under the existing
Home Loan scheme and the norms like margin, minimum loan amount, etc. applicable to therein
would be applicable in such cases as per the existing Home Loan scheme :
e-Cir/90/2008-09.
Higher margin and other stipulations advised vide e-Cir/71/2008-09 are applicable only when loan
amount eligibility is worked out on the basis of Annual Sales Revenue instead of I.-T. Returns.
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HOME LOANS : TAKE-OVER
(MODIFICATIONS - 2009)
Ref. : e-Circular/640/2008-09 :
With a view to facilitating hassle-free evaluation of take-over cases and enabling the customer to
meet the switchover costs, take-over norms have been modified recently as under :
Criteria for Take-Over :
• Due diligence should be carried out on the borrower - and the seller (e.g. builder). They
should satisfy the eligibility criteria for availing Home Loan as per the extant instructions of
the Bank.
• Houses/ Flats under construction can also be considered for take-over. In such cases, it
should be ensured that there is no undue delay in construction / completion of project.
• The borrower should have serviced interest and/or instalment of the existing loan regularly, if
fallen due.
• The borrower has valid documents evidencing the title to the house/flat.
Institutions from whom we may Take Over Loans :
Scheduled Commercial Banks, including Private and Foreign Banks/FIs/Borrower’s employers, if
they are Central/State Govts. or their Undertakings or Public Sector Undertakings.
H.Ls. : Take-over : From Associate Banks : Whenever individual requests for Take-over of Home
Loans are received from Customers of the Associate Banks, we may consider such proposals on
merits, provided that they maintain their salary accounts with us under our Corporate Salary
Package. However, our Branches should not canvass for Take-over of Home Loans from the
Associate Banks : e-Cir/1293/2012-13.
The Bank has recently permitted take-over of Home Loans along with the Top-up Loans from the
present lenders, subject to compliance of the stipulations detailed in e-Cir/190/2013-14.
H.Ls. : Take-over : Revised Instructions : Detailed in e-Cir/376/2013-14.
Processing Fee :
As applicable to Home Loan scheme. Processing fee should be collected up-front.
Expenses Funded :
Permissible Quantum of Finance for Take-over of Home Loan :
A+B as under :
A) Home Loan Amount :
Revised : Outstanding with other Bank plus pre-payment penalty, if any, or present Market Value
less prescribed margin, whichever is lower : e-Cir/72/2009-10, 185/2010-11
B) Additional Amount :
At the time of the take-over, the sanctioning authority, based on the merits of the case and
requirements/eligibility of the borrower, may sanction additional loan amount as part of the
total limit for the undernoted purposes :
• Renovation/extension/furnishings. (Margin as per extant instructions).
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• Reimbursement of expenses permissible under the Bank’s Scheme, incurred by the
borrower during the preceding 12 months, for which satisfactory documentary evidence
is produced by the borrower and the asset so created or value so added to the existing
assets has been verified to the satisfaction of the sanctioning authority. (Margin for
such expenditure to be retained as per extant instructions at 25%.)
• Premium for Home Loan Life insurance cover, if opted by the borrower.
• Pre-payment fee, if any, charged by the existing Home Loan provider.
• Cost of valuation of property,
• Documentation and legal charges spent on account of take-over.
Total of limits sanctioned under (B) above should not exceed Present Market Value of the
property less margin as per extant stipulations less Home Loan amount under (A) above.
Other criteria like maximum permissible finance, EMI/NMI ratio, security, etc. under the
Bank’s Home Loan scheme should be adhered to.
H.L. : Take-over : Where the Agreement value minus margin covers the amount to be financed,
no fresh valuation need be obtained.
In case the Agreement value less margin does not cover the proposed loan amount, the marketvalue of the property should be assessed on the basis of valuation reports obtained from twoempanelled valuers of the Bank, and the same should be conservatively valued by the loan
appraising official/sanctioning authority, lower value of which should be considered for the sanction :
e-Cir/185/2010-11.
The Bank has recently allowed take-over of Home Loans sanctioned by Housing Finance Companies
registered with National Housing Bank as approved finance companies for granting Home Loans :
e-Circular/741/2008-09.
HLs : Take-Over From Other Banks / HFCs : Provisions with regard to interim security in case of
take-overs, which would safeguard our interests, till title deeds are received and mortgage created :
Extant Instructions Reiterated : CCFO/ADV/CL/130/2007-08.
H.Ls. : Revised Autho. Structure : For take-over of Home Loans from other banks/FIs :
e-Cir/820/2011-12.
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DIFF. SCHEMES UNDER HOUSING FINANCE
NRI HLs : Loan Tenor : A Maximum tenor of 30 years is now permitted under NRI Home Loan
Scheme, subject to liquidation of the Home Loan outstanding before the borrower attains the age
of 60 years or before retirement, whichever occurs earlier : e-Cir/885/2012-13.
SBI-NRI Home Loans : P.A. : It is not advisable to insist on registration of the Power of Attorney
stipulated for SBI-NRI Home Loans. However, branch may consider registering the Power of
Attorney, if the NRI is available in India : CCFO/ADV/CL/357/2005-06.
Process for sanction at Foreign Offices / Subsidiaries : The Bank has recently put in place an
additional process for sanction of housing loans to NRIs at foreign offices / subsidiaries for purchase
of house / flat in India (loan should be disbursed in India and loan account should be with the
specified branch in India) : CCFO/ADV/CL/446/2006-07.
H.Ls. for NRIs & PIOs : Revised maximum permissible loan amount : CCFO/ADV/CL/2/2007-08.
NRI H.Ls. : Min. Service Required : Deviation : May be permited by the DGM of Module :
CCFO/ADV/CL/227/2007-08.
NRI H.Ls. : The Bank has recently aligned the Scheme with the home loan schemes for resident
indians to the feasible extent.
Some of the features of the Scheme have been revised as per e-Circular/241/2009-10.
NRI Home Loans : Repayment : The AGM (Region)/(Branch) may permit the repayment of loan
up to the age of 70 years provided the approving authority is satisfied about the continuity of the
income : e-Cir/865/2010-11.
GJRHFS : Golden Jubilee Rural Housing Finance Scheme : The Bank has reduced the interest
rates, with immediate effect on loans under GJRHFS by 25 basis points, i.e., 0.25% below the
applicable rate for the normal Scheme for Housing Finance : CIRCO/ADV/55/2002-03.
Housing Loans granted under GJRHF Scheme and 'SBI-Gram Niwas Rural Housing' Scheme
should be classified under P-segment Housing Loans : CCFO/ADV/CL/09/2005-06.
'SBI Flexi Housing' Loans : The Bank launched a new product 'SBI Flexi Housing' Loans
extending a one-time irrevocable option to the prospective Housing Loan borrowers who avail
loans of Rs. 5 Lac and above, to choose from the 3 customized combinations of fixed and
floating interest rates detailed in CIRCO/ADV/184/2004-05.
Repayment : The loan component on fixed interest rates should be repaid within a maximum
period of 10 years only : CCFO/ADV/CL/192/2006-07.
Illustration given in CCFO/ADV/CL/192/2006-07.
SBI Green Home Loan : Present Home Loan scheme under a new brand name SBI Green
Home Loan : Additional features for Green Residential Buildings : e-Circular/726/2008-09.
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SBI Special Home Loan Scheme : Property in Joint Names : In cases where the residential
property is held in joint names, loan could be sanctioned under SBI Special Loan Scheme to one
of the joint owners provided all the remaining joint owners guaranteed the loan and joined in
creating mortgage of the property in favour of the Bank : e-Circular/742/2008-09.
Disbursements allowed up to 08.08.2009 : e-Circular/274/2009-10.
Closure : The Scheme closed on 30.06.2009. Loans sanctioned under the Scheme but notdisbursed on or before 30.06.2009 could be disbursed under SBI Easy Home Loan scheme,
subject to acceptance of terms and conditions under SBI Easy Home Loan scheme by the loan
applicants : e-Cir/179/2009-10.
SBI Happy-Home Loan Offer & SBI Lifestyle Loan : Details : e-Circular/657/2008-09.
Extension up to 30.09.2009 : e-Circular/75/2009-10.
SBI Easy Home Loan : New Product : Introduced w.e.f. 01.07.2009 : e-Cir/186/2009-10.
Features other than those detailed in e-Cir/186/2009-10 are the same as in the case of SBI Home
Loan Scheme (i.e., other than affordable interest rates and relaxed repayment programme).
SBI Advantage Home Loan : New Product : Introduced w.e.f. 01.07.2009 : e-Cir/187/2009-10.
Features other than those detailed in e-Cir/187/2009-10 are the same as in the case of SBI Home
Loan Scheme (i.e., other than affordable interest rates and relaxed repayment programme).
Corrections to be made in e-Cir/187/2009-10 are detailed in e-Cir/198/2009-10.
H.Ls. : Special Schemes : SBI Easy Home Loan, SBI Advantage Home Loan : In accordance
with the RBI guidelines, the floating interest rates on housing loans are linked to Base Rate
instead of SBAR with effect from 1st July 2010 : e-Cir/196/2010-11.
Documentation formalities : Modifications : Detailed in e-Cir/196/2010-11.
H.Ls. : New Products : Launched w.e.f. 03.01.2011 : Salient Features : e-Cir/808/2010-11 :
a) SBI Easy Home Loan : Up to Rs. 30 Lac.
b) SBI Advantage Home Loan : Above Rs. 30 Lac and up to Rs. 75 Lac.
c) SBI Premium Home Loan : Above Rs. 75 Lac.
Modifications in documents and arrangement letter (Consequent upon the change in Base Rate) :
e-Cir/823/2010-11.
Home Equity : New Product : With a view to adequately tap the potential available for granting
additional loans to existing Home Loan borrowers for meeting their personal needs like expendi-
ture on education, marriage, health care, renovation/furnishing of the house, etc., the Bank re-
cently launched an exclusive new product named SBI Home Equity. The detailed structure of the
product is detailed in e-Cir/58/2012-13.
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Documents : The relative application form and security documents pertaining to Home Equity
scheme are enclosed to e-Cir/483/2012-13.
Housing Sector : New Sub-sector : CRE-RH : As per RBI guideline, a separate sub-sector
called Commercial Real Estate - Residential Housing (CRE-RH) has been carved out from the
CRE Sector : e-Cir/427/2013-14.
CRE-RH consists of loans to builders/developers for residential housing projects (except for captive
consumption) under CRE segment.
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ISHUP : INTEREST SUBSIDY SCHEMEFOR HOUSING URBAN POOR
(LAUNCHED BY GOVT. OF INDIA)
ISHUP : For Economically Weaker Sections (EWS) and Low Income Groups (LIG) w.e.f. 29.11.2012 :
Detailed in eCir/948/2012-13.
The ISHUP scheme was originally opened for sanctions up to and including 31 st March 2012 : e-Cir/
178/2012-13.
Scheme of 1% interest subvention, on Housing Loans up to Rs. 15 Lac with cost of housing unit not
exceeding Rs. 25 Lac, was extended for the Financial Year 2012-13 : e-Cir/192, 632, 845, 1151/
2012-13.
ISHUP : The ISHUP scheme was extended by the Ministry of Housing and Urban Poverty alleviation,
Govt. of India for all housing loans sanctioned and disbursed (subject to maximum loan amount
eligible for subsidy of Rs. 15 Lakh) up to 30th June, 2013 to the EWS/LIG borrowers under the
scheme : e-Cir/210/2013-14.
ISHUP : Interest Subsidy Scheme for Housing the Urban Poor : The scheme has been recently
extended by the Ministry of Housing and Urban Poverty Alleviation, Govt. of India, for all home
loans sanctioned and disbursed (subject to maximum loan amount eligible for subsidy of Rs. 15
Lac) up to 30th September, 2013 to the EWS/LIG borrowers under the scheme : e-Cir/605/
2013-14.
The relative Utilisation Certificates have to be submitted by Banks, duly signed by their Statutory
Auditors certifying that the claims made are true and correct : e-Cir/1171/2012-13.
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SCHEME FOR FINANCING RURAL HOUSING(PERSONAL BANKING / DEVELOPMENT BANKING)
1) GRAM NIWAS YOJANA, &
2) SAHAYOG NIWAS YOJANA
Although Bank has implemented a rural housing scheme (Golden Jubilee Rural Housing Finance
Scheme of RBI (GJRHFS) under personal segment, branches have not been able to
comprehensively cater to the needs of the farming community and poorest of the poor for housing
loans in view of the peculiarity of the ownership title in rural areas, social habits, type of construction
and other related needs not being fully covered under GJRHFS e.g. dwelling cum work area or
shed for the cow, etc. Considering the huge potential for housing loans in rural areas, the Bank
launched the above-mentioned two schemes (CIRCO/ADV/200/2003-04) :
“GRAM NIWAS YOJANA” :SCHEME FOR RURAL HOUSING LOANS TO INDIVIDUALS
Objectives : To provide housing loans to farmers and other rural dwellers for :
i) Purchase or construction of a house, including the cost of construction of workshed for
pursuing income generating activities viz. dairy shed, tailoring shop, grocery store, workshed
for village artisans, etc.
ii) Renovation or repair of existing house/shed which is not more than 15 years old in case of
RCC/Tiled Roof (with steel/wooden beams) and 5 years for other types of construction.
iii) Purchase of a plot of land for the purpose of house construction.
iv) Extension of existing house/work space.
If the plots owned are in different places in the same village, two separate loans for construction
of house and workshed may be extended.
Operational Area : The Scheme now covers all rural and semi-urban centres. “Rural Area” for
the purpose of the Scheme is the area comprised in any village, including the area comprised in
any town, the population of which does not exceed 50,000 as per 2001 census : CCFO/ADV/CL/
258/2007-08.
Location of the residential property being funded by the Bank should be within the “Rural Area” as
defined above.
Eligibility : All Individuals (farmers, entrepreneurs, traders, businessmen, employees, etc.)
having satisfactorily conducted accounts with the Bank or a member of a Self-Help Group having
savings / loan accounts with the Bank : CCFO/ADV/CL/258/2007-08.
Loan Amount : The permissible loan amount is decided by the repayment capacity defined as
under : CCFO/ADV/CL/258/2007-08 :
Average Annual income : Maximum Permissible Instalmentto Income Ratio
a) Up to Rs. 40,000 : 25%
b) Above Rs. 40,000 and up to Rs. 2 Lac : 45%
c) Above Rs. 2 Lac and up to Rs. 5 Lac : 55%
d) Above Rs. 5 Lac : 60%
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(Average of last two year’s income should be considered for computation of the income eligibility).
Regular income from all sources could be considered to arrive at the eligible loan amount, providedthe sanctioning authority is satisfied about the same.
The loan amount should be limited to the Cost of the Project less margin money to be contributed
by the applicant or the upper ceiling fixed for the activity.
Income of the spouse can be considered for computing the loan amount :
i) where the property is jointly held with the spouse and the spouse is a co-borrower, or
ii) the property is held in single name and the spouse stands as a guarantor.
Max. Loan Amount : Revised : CCFO/ADV/CL/258/2007-08 :
Purpose of Loan Revised Ceiling on Loan Amount
a) Construction/Purchase of House : Rs. 5 Lac.
b) Repairs/Renovation of House : Rs. 2 Lac.
c) Purchase of Land for Construction of House : Rs. 1 Lac.
Age Criteria : 18 years to 50 years : CCFO/ADV/CL/258/2007-08.
Applicants above 50 years may be considered for sanction of loan with all the legal heirs joining
as guarantors.
Assessment of Loan Requirements : For loans up to Rs. 0.50 Lac, branches may take a
decision based on a simple estimate prepared by the applicant, keeping in view the type of
construction and the market rates for building materials/labour costs prevailing in the area.
In respect of housing loans above Rs. 0.50 Lac, Circles may fix the specifications, depending
upon the prevalent local practices, for two/three categories of houses (e.g. concrete wall & roof/
concrete wall & asbestos roof/semi-pucca construction with asbestos/tiled roof, etc.), in consultation
with an empanelled architect, and the costs per square foot so fixed may be vetted by the Civil
Engineer at LHO. The unit costs for the different categories so arrived at may be adopted for
deciding the eligible loan amount in repect of housing loans under the Scheme in the Circle. The
rates may be reviewed once in 3 years and revised considering the impact of inflation on cost of
building materials/labour costs.
Margin : CCFO/ADV/CL/258/2007-08 :
a) Loan amount up to Rs. 50,000 : 10% of the project cost.
b) Loan amount above Rs. 50,000 and up to Rs. 5 Lac : 15%.
c) Loan amount above Rs. 5 Lac : 20%.
Processing Charges : Waived. However, Advocate’s fee not exceeding Rs. 500/- should be
recovered from the borrower for scrutiny of title dees by Bank’s empanelled Advocate.
Security :
i) Primary : Equitable/Registered Mortgage of the house/plot,
or
Any other tangible security, including agricultural land to cover 100% of loan amount.
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(Considering the expenses involved for creation of registered mortgage, normally mortgage
by deposit of title deeds should be obtained. However, registered mortgage over the property
may be obtained in all cases where it is considered necessary by the sanctioning authority
and also where title deeds do not exist.)
Mortgage may be waived for laons up to Rs. 50,000/- by obtaining a third-party guarantee.
ii) Collateral : As we cannot proceed against agricultural land under the provisions of SARFAESI
Act and as a ‘farm house’ being exempt under Sec. 60 of CPC, cannot be sold in execution
if we file a civil suit, the branches may explore the possibility of obtaining collateral security
covering the loan amount, wherever available.
Repayment : Housing loans under the Scheme should be repaid over a period of not more than
15 years in equated monthly/quarterly/half-yearly/yearly instalments (including a maxium
moratorium period of 18 months from the disbursernent of the first instalment of the loan, or 2
months after completion of construction of the house, whichever is earlier).
The period of repayment and the instalments fixed for repyament should be decided upon the
merits of each case, on a realistic basis, coinciding with the harvest of the crop at half-yearly/
yearly intervals or coinciding with the generation of income from ancillary agricultural activities
pursued by the borrower e.g. dairy/poultry, etc., or in monthly/quarterly instalments in case of
other regular sources of income. The repayment could be made by post-dated cheques or by
executing standing instructions.
Rate of Interest : As offered under GJRHFS; a concession of 0.25% is permitted.
Tenure Rate of Interest (CIRCO/ADV/CL/271/2003-04)
Floating Rate Loans :
a) up to 5 years Linked with SBAR/Base Rate.
b) Above 5 years and Linked with SBAR/Base Rate.
up to 15 years
Fixed Rate Loans 25 basis points above the rate of interest applicable to the floating
rate loans for the repective tenure.
Insurance : The land and building should be insured at all times against fire, flood, cyclone,
typhoon, lightning, explosion, riot, earthquake risks, etc. for the full market value or 10% above
the limit, whichever is higher, at the cost of the borrower.
Inspection : Inspection of the house financed may be carried out once a year, after it is completed,
till the loan amount is fully recovered. Should repayments be in arrears for two successive
instalments, inspection should be done immediately.
For NPA accounts, inspection should be conducted at half-yearly intervals.
Application : The application prescribed for Housing Loans (Public) should be used with suitable
changes, wherever required.
Types of Facility : TL or OD as in SBI Maxgain in case of eligible customers with ATM-cum-Debit
Card facility : CCFO/ADV/CL/258/2007-08.
Documentation :
i) Arrangement Letter, duly accepted by the borrower(s)/guarantor(s),
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ii) Memorandum of Term Loan Agreement for Housing Loans,
iii) guarantee Agreement for Housing Loans.
[The security documents as above applicable for Housing Loans (Public) should be used with
suitable changes, wherever required. The amended draft security documents as above are enclosed
to CIRCO/ADV/CL/200/ 2003-04].
Disbursement : To safeguard the Bank’s interest and to prevent misuse of funds, disbursements
should be made only in phases and should correspond with the actual progress made in
construction e.g. at stages like completion of foundation, lintel level, roof level and final completion
as follows :
1. For completion till foundation level : 15%
2. For completion of lintel level : 20%
3. For completion of roof level : 35%
4. For final completion : 30%.
The disbursement plan should be drawn up by the branches; disbursements should be made after
the branch is fully satisfied about the proper end-use of funds through site inspection.
Discretionary Powers : The discretionary powers should be exercised as per the delegation
advised by the respective LHO.
Classification as Priority Sector Advances :
Loans granted under the Scheme are classified as Priority Sector Advances.
Group Life Insurance Cover from SBI Life : As the coverage under group life insurance
protects the borrower’s family in the event of untimely demise of the borrower, the Scheme should
be marketed to the applicants. The amount payable towards upfront premium should be considered
as a part of the project cost.
Personal Accident Ins. Cover : The Personal accident insurance cover is available to all housing
loans extended under the Scheme, at the Bank’s cost.
NPA Norms : These loans attract NPA norms if equated instalments remain overdue for a period
of more than 90 days w.e.f. March 2004 : CIRCO/ADV/CL/224/2003-04.
NABARD Model Scheme : Modification in Terms of NABARD’s Model Scheme on Sanitation :
CCFO/ADV/CL/161/2006-07.
Other Terms & Conditions :
a) Approval/Permit for construction issued by the local Village Panchayat, Gram Panchayat,
Municipality should be obtained along with a copy of the approved plan, if any.
b) The title deeds, land tax paid receipt, non-encumbrance certificate and possession certificate
should be scrutinized by the Bank’s Advocate who should also obtain a search report to
establish clear, absolute, and marketable title of the borrower.
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“ SAHAYOG NIWAS YOJANA” :RURAL HOUSING LOANS TO SELF-HELP GROUPS
Objectives : To finance Self-Help Groups for on-lending to members for housing in rural areas,
covering the following purposes (CIRCO/ADV/200/2003-04) :
i) For the purchase or construction of a house exclusively or including the housing needs of
activities carried by them (Dairy shed, tailoring shed/shop, grocery stores, etc.),
ii) For the renovation or repair of an existing house / shed,
iii) For the purchase of a plot of land for the purpose of house construction,
iv) For the extension of existing house/work space to existing house/shed.
If the plots owned are in different places in the same village, two separate loans for the
purposes of dwelling area and workshed may be extended.
Operational Area : In semi-urban and rural areas where SHGs are operating.
Eligibility : CIRCO/ADV/CL/88/2004-05 :
SHGs which are in existence for more than 2 years and with good track record of payment for 2
years.
[If the LHO is satisfied that the SHGs are working very well, and that there is harmonious relationship
and their economic activities are doing well, this period can be reduced to 1 (one) year without a
reference to the Corporate Centre].
SHGs fulfilling the above conditions but maintaining their accounts with other banks are also
eligible.
Loan Amount : 10 time the savings of the corpus of SHG. This ceiling includes the loan outstanding
in the limits already sancioned to SHGs. SHG will on-lend to its members for housing, subject to
a maximum of Rs. 50,000/- per member for purchase/construction of house and Rs. 25,000/- for
repairs/renovations/purchase of plot.
Classification : All loans under this scheme are classified as priority sector advances under
SHG.
Processing Charges : All handling charges such as processing fee, ledger folio fee (account-
keeping charges), etc. are waived.
Security : Primary : Group Guarantee of SHG members.
Repayment : The repayment of instalment to be spread over a period of 15 years and the
instalment amount to be fixed at monthly/quarterly/half-yearly/yearly, as is convenient.
Rate of Interest : As offered under GJRHFS; a concession of 0.25% below the card rate is
permitted :
Tenure Rate of Interest (CIRCO/ADV/200/2003-04)
Floating Rate Loans :
a) Up to 5 years : Linked with SBAR.
b) Above 5 years and : Linked with SBAR.
up to 15 years
Fixed Rate Loans : 25 basis points above the rates of interest applicable on floating
rate loans for the respective tenure.
The rate of interest charged by SHGs to its members should be left to the Groups themselves in
terms of the guidelines of NABARD in force : CIRCO/ADV/200/2003-04, CIRCO/ADV/CL/308/
2003-04.
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Considering the economic status of SHG members and the quantum of loan being availed from
us, it is suggested that SHGs keep within 3% of interest rate being charged by the Bank to them
(so that the members get adequate relief) : CIRCO/ADV/CL/308/2003-04.
Application : Specimen copy of the “Application to be submitted by SHG to the Bank branch
while applying for housing loan for its members” is enclosed to CIRCO/ADV/CL/200/2003-04.
Documentation :i) Article of Agreement for Financing Housing Loan to Self-Help Groups,
ii) Inter-se Agreement,
iii) Arrangement Letter.
Discretionary Powers : The discretionary powers should be execised as per the delegation
advised by the respective LHO.
Other Terms & Conditions : SHGs should not charge to its members more than 3% of
interest rate charged by the Bank under this Scheme.
Sahyog Niwas for SHGs : Rural Housing : Model Scheme for Sanitation formulated by NABARD :
CCFO/ADV/CL/216/2006-07.
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SBI MAXGAIN
(Housing Loan as on Overdraft)
This is a variant of housing loan product launched in 2005 under which a housing loan is sanctioned
as an overdraft : CCFO/Adv/208/2005-06, e-Cir/185/2010-11.
Maxgain : Guide : Step-by-Step Guide on Maxgain Account Opening : e-Cir/582/2011-12.
Overdraft.
As applicable to Housing loans.
Facility available for new Housing loans of Rs. 5 Lac and above from
applicants who maintain a satisfactorily conducted SB account or
Current account with an average balance of Rs. 5,000/- (reduced from
the earlier Rs. 10,000/-) with the Bank.
i) Stipulation of minimum balance is not applicable to customers
whose salaries are regularly credited to this account and repayments
are proposed to be made from this account : CCFO/ADV/CL/260/
2007-08.
ii) Prospective customers who open SB/CA with an initial minimum
deposit of Rs. 5,000/-. The stiulation of initial minimum deposit is
not applicable if salary of the applicant is proposed to be credited
to this SB/CA : CCFO/ADV/CL/260/2007-08.
The Bank initially introduced upper limit of Rs. 30 Lac on Home Loans
under SBI MaxGain Scheme. Staff and loans availed by staff jointly
with their spouse have been exempted from this restriction. Home
Loan files already on hand and Home Loan leads that were being followed
up on the basis of introductions (i.e., without any ceiling) prior to this
Circular were allowed to be closed by 30th November 2008 : e-Cir/503/
2008-09.
The upper ceiling was raised to Rs. 50 Lac vide e-Cir/185/2010-11.
The Bank increased in 2011 the earlier ceiling of Rs. 50 Lac on SBI
MaxGain Loan to Rs. 1 Crore : e-Cir/500/2010-11.
W.e.f. 2012, there is no upper cap for maximum loan amount : e-Cir/
1007/2011-12.
Until the full disbursement of the loan, DP in the loan account should be
fixed by the Manager (PBD) which should correspond to the borrower’s
eligibility, depending upon the progress of work completed less stipulated
margin. It should be ensured that outstandings do not exceed drawing
power.
The outstanding in the home loan accounts under Maxgain scheme
can fluctuate within the ‘Drawing Power’ (DP) in the account, as such
the switch-over fee on the Maxgain account should be calculated with
reference to the DP or outstanding, whichever is higher : e-Cir/51/
2012-13.
Type of Loan
Eligibility
Additional
Eligibility Criteria
Upper Ceiling
Disbursal &
Drawing Power
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After full disbursement of the loan and completion of required formalities,
including creation of equitable mortgage, borrowers are eligible for issue
of cheque book, and Internet Banking facility for operation in the loan
account. However, it should be strictly ensured that no overdrawings
are permitted in the account in excess of the Drawing Power.
The Maxgain Loan borrowers are issued Cheque Book and Internet
Banking (INB) facility to operate the account. However, no Debit Card
(ATM) should now be issued to the Maxgain Loan borrowers : e-Cir/
400/2013-14.
As per extant instructions applicable to Housing Loans.
‘Auto DP reduction’ software reduces DP on the Housing Loan Account
on monthly basis to the extent of principal component of the loan (so
that the loan is liquidated at the end of the tenure). Interest component
of the EMI remitted services the interest obligations. Repayment of
EMIs is by check-off/obtaining PDCs as per extant instructions.
Our Home Loan (Maxgain) borrowers are permitted to deposit surplus
funds over and above the stipulated EMIs and to withdraw the surplus
amounts deposited in the account after full disbursement of the loan :
e-Cir/400/2013-14.
However, no drawings should be permitted in the overdraft account
exceeding the available Drawing Power.
Following documents in the prescreibed formats as specified in the
Scheme :
• Arrangement Letter, with relevant clauses included.
Arrangement Letter : Revised Format : enclosed to e-Cir/333/
2012-13.
• Housing Loan Agreement with relevant clauses included.
• Guarantee Agreement
• A consolidated stamped affidavit sworn before notary public/
magistrate, containing relevant clauses as obtained for normal HLS.
In respect of check-off, existing formats under regular Housing Loan
should be used with suitable modifications.
Revival Letter : The Bank has recently :
i) dispensed with the obtention of Revival Letters and Balance
Confirmation Letters in case of Maxgain Home Loans which are
being serviced regularly and are classified as “Standard Assets”,
and
ii) decided not to make any demand on the guarantor(s) unless it is
decided to call up the loan and file a civil suit or initiate any other
legal action : e-Cir/838/2012-13.
Conversion of Existing Home Loan (Term Loan) to Miscellaneous
Maxgain Account (OD) : Guidelines : Detailed in e-Cir/142/2012-13.
Post-disbursal
(Cheque book,
ATM-cum-debit
card, INB Facility)
Repayment
Additional
Repayment
Stipulations
Security
Documents
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SBI HOME PLUS(Originally, SBI HOME CASH)
(PERSONAL BANKING ADVANCES)
Ref. : CIRCULAR LETTER NO. CCFO/ADV/132/2007-08 :
Original Name of the Scheme : SBI Home Cash.
Later on, renamed as SBI Home Plus : CCFO/ADV/CL/254/2007-08.
• Purpose : This product is targeted towards the personal loan needs of customers and has
the basic characteristics of a Personal Loan, additionally secured by the extension of mortgage
of the house property. Salient features of the product are detailed in CCFO/ADV/CL/132/
2007-08 :
• Eligibility : All Home Loan customers with a satisfactory repayment record of at least one
year and who maintain a SB/current account with us.
• Eligible Loan Amount : Present market value of the house property less (i) margin of 25%
on the property value, and (ii) the present outstandings in the Home Loan account.
The present market value of the house property is decided by a fresh valuation from an
approved panel engineer/valuer. However, for loans up to Rs. 2,00,000/-, valuation as above is
not required, and an assessment could be done by the sanctioning authority.
Minimum loan amount : Rs. 25,000/-, maximum : Rs. 10 Lac.
• Purpose : Any purpose (personal loan needs of the borrower) viz. extension/repair of house,
purchase of car/consumer durables, education/medical expenses of family members, personal
expenses, etc. There is no need to obtain documentary evidence for the end-use of funds. A
certificate from the customer in the application to the effect that the loan will not be used for
speculative purposes should be obtained.
• Nature of Facility : Term Loan / Current Account Overdraft.
In the case of Current Account Overdraft, ATM-cum-Debit Card should be issued.
• Interest : Only floating rate linked to SBAR/Base Rate.
• Repayment :i) The term loan is repayable in EMIs (Equated Monthly Instalments) convenient to the
borrower beginning one month after the disbursal of the loan, subject to a maximum of
120 EMIs.
ii) The overdraft facility operates on a reducing drawing power arrangement on the EMI
basis, subject to a maximum of 120 EMIs.
Within the overall repayment period of 10 years, the sanctioning authority may permit,
at the request of the borrower, a moratorium of up to 12 months, subject to servicing of
interest.
• Processing Fee : 0.50% of the loan amount with a minimum of Rs. 500/-.
• EMI/NMI Ratio : Not to exceed 60%.
In the case of borrowers with NMI of Rs.10 Lac and above, the ratio may be relaxed up to
70%. The EMI includes EMI of both proposed and present borrowings, including all other
loans by the same borrower(s).
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• No. of Loans : Second loan under the scheme may be considered after a gap of 2 years
from the first loan. At any point of time, not more than 2 loans should be allowed to exist
under the Scheme, within the overall ceiling of Rs.10 Lac, other than the Home Loan.
• Pre-payment : Term Loans under the scheme may be pre-paid. A prepayment penalty of
1% should be charged on the amount pre-paid. However, in the case of both the Home Loan
and the Term Loan being prepaid simultaneously from own resources, no pre-payment penalty
should be levied.
• Security : Extension of mortage of the house property.
• Application, Appraisal, Documentation : Formats of application, appraisal and arrangement
letter are enclosed to CCFO/ADV/132/2007-08. Loan agreements applicable for Personal
Loan against mortgage of immoveable properties should be used. However, as the applicant
is an existing borrower, Credit Scoring Model, which is being used for Personal Loans,
should be used.
• Discretionary Powers for Sanction of Loan : Same as for Home Loan sanction.
• Classification : These loans are classified under “Personal Loans” in the Performance Reports.
• Branches where Loans are made Available : All Branches, including except rural
branches : CCFO/ADV/263/2007-08. Branches/RACPCs where the Home Loan documents
are held should sanction the loan.
• Bank’s Staff : Extension of Scheme to the Bank’s staff members, who have availed Home
Loans under Staff Housing Loan scheme and / or Home Loans under commercial interest
rate scheme, on the concessionary terms detailed in CCFO/ADV/CL/171/2007-08.
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SBI REVERSE MORTGAGE LOAN
(FOR SENIOR CITZENS) : W.E.F. 12.10.2007
Ref. : CCFO/ADV/CL/204/2007-08 :
Objective of Scheme : To provide a source of additional income for senior citizens of India who
own self-acquired and self-occupied house property in India.
Eligibility
• No. of Borrowers : Single or jointly with spouse in case of a living spouse.
• Age of First Borrower: Above 60 years.
• No. of Surviving Spouses on Date of Sanction of Loan: Should not be more than one.
Borrowers should give an undertaking that they will not remarry during the currency of the
loan. If the borrowers choose to remarry, the loan will be foreclosed.
• Age of Spouse : Above 58 years.
• Residence: Borrower should be staying at self-acquired and self-owned house /flat against
which loan is being raised, as his permanent primary residence.
Mobile/Telephone/Credit Card bills/ Certificate from the Housing Society where the borrower
is staying / Affidavit made before the Executive Magistrate may be accepted as proof of
residence.
Borrowers should inform the Bank when they cease to use this residence as their permanent
residence.
• Title of Property : Borrowers should have a clear and transferable title in their names. Title
verification and search report for a period of 30 years is required to be obtained from the
Bank’s empanelled advocate at borrowers’ cost.
• Title of Property & No. of Borrowers : Case - Title in single name and loan availed jointly
with spouse :
Title holder should make a Registered Will in favour of the other spouse. The Will should
confirm that this is the last Will and that it supersedes all earlier Wills, if any. The borrower
to undertake that no fresh Will shall be made during the currency of the loan.
Style of Account : The Bank has modified, as detailed in e-Cir/112/2008-09, the earlier
instructions in case of single ownership of property, with a view to giving an option to the
borrower for availing loan in single name. If this option is exercised by the borrower, the loan
shall become due for foreclosure in the event of death of the borrower, and the spouse will
be required to vacate the property if the Bank’s dues are not settled by the legal heirs. There
will not be any restriction on the age of the spouse under this option and the spouse will not
be a co-borrower : e-Cir/112/2008-09.
There is no change in instructions in cases where the property is held in the joint names of
the husband and the wife.
• Encumbrances : The property should be free from any encumbrances. However, in case of
property purchased by availing Home Loan from SBI and mortgaged to SBI, it is considered
for RML, subject to closure of the Home Loan account out of the proceeds of RML.
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• Residual Life of Property : Should be at least 20 years in case of single borrower and 25
years in case of spouse being below 60 years of age.
Certificate from empanelled engineer/architect is required to be obtained for this purpose, in
addition to valuation of property.
Security : The RML is secured by way of equitable mortgage of residential property.
Tenor : For Age of the younger of the borrowers between 58 and up to 68 years : 15 years.
Age of the younger of the borrowers above 68 years : 10 years
OR till death of the borrower(s), whichever is earlier.
Disbursement : By credit to a SB account in the joint names of the borrowers operated by
E or S.
Periodicity of Availing Loan :
a) Monthly / quarterly payments,
b) Lump sum payment.
Quantum of Loan : The loan amount is 90% of the value of property. Loan amount includes
interest till maturity. The loan instalments payable to the borrower(s) are as per CCFO/ADV/CL/
204/2007-08 :
The maximum loan amount is Rs.1 Crore (for 15 years) and minimum Rs. 3 Lac (for 15 years).
Example of arriving at the monthly instalments : Property value : Rs.10 Lac.
Qualifying loan amount (90% of property value) : Rs. 9 Lac.
Tenor : 15 years.
Monthly instalment : Rs. 225 x 9 = Rs. 2,025/-.
Purpose of Loan : Supplementing income, any personal expenses, house repairs, etc. Loan
amount should not be used for sopeculative, trading and business purposes.
Repayment/Settlement :
• The loan becomes due and payable only when the last surviving borrower dies or opts to sell
the home, or permanently moves out of the home to an institution or to relatives. Typically, a
“permanent move” may generally mean that neither the borrower nor any other co-borrower
has lived in the house continuously for one year or do not intend to live continuously. The
Bank may obtain such documentary evidence as may be deemed appropriate for the purpose.
• Settlement of loan along with accumulated interest is to be met by the proceeds received
out of sale of residential property or pre-payment by borrowers and his next of kin.
• The borrower(s) or his/her/their legal heirs / estate are provided with the first right to settle
the loan along with accumulated interest, without sale of property.
• A reasonable amount of time, say up to 6 months, may be provided when RML repayment is
triggered, for house to be sold.
• The balance surplus (if any), remaining after settlement of the loan with accrued interest and
expenses, should be passed on to the borrower or the estate of the borrower/legal heirs.
• Borrowers are required to submit annual life certificates in the month of November every
year. This certificate also includes clauses regarding marital status, and permanent residence
of the borrowers, in addition to the balance confirmation as on 31st October of that year.
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• List of legal heirs should be obtained at the time of sanction of loan. With a view to avoiding
disputes at the time of settlement of loan amount by legal heirs, specific instructions about
inheritance of the property and payment of balance amount, if any, of the sale proceeds after
settling the Bank’s dues, is required to be part of the borrowers’ Will.
Foreclosure : The loan is liable for foreclosure due to occurrence of the following events of
default :
• If the borrower(s) has/have not stayed in the property for a continuous period of one year.
• If the borrower(s) fail(s) to pay property taxes or maintain and repair the residential property,
or fail(s) to keep the home insured, the Bank reserves the right to insist on repayment of loan
by bringing the residential property to sale and utilizing the sale proceeds to meet the
outstanding balance of principal and interest.
• If borrower(s) declare himself/herself/themselves bankrupt.
• If the residential property so mortgaged to the Bank is donated or abandoned by the borrower(s).
• If the borrower(s) effect changes in the residential property that affect the security of the loan
for the lender. For example : renting out part or all of the house by creating a tenancy right;
adding a new owner to the house’s title; changing the house’s zoning classification; or
creating further encumbrance on the property either by way of taking out new debt against
the residential property or alienating the interest by way of a gift or will.
• Due to perpetration of fraud or misrepresentation by the borrower(s).
• If the government under statutory provisions, seeks to acquire the residential property for
public use.
• if the government condemns the residential property (for example, for health or safety reasons).
• Any other event such as re-marriage of the borrower(s), etc. which shall have an adverse
impact on the loan settlement prospects.
• Borrowers do not accept the revised terms on revaluation of property and interest reset at the
end of every 5 years from sanction.
• Any violation of the terms and conditions of RML.
Pre-payment of Loan :
• The borrower(s) have the option to pre-pay the loan at any time during the loan tenor.
• There will be no pre-payment penalty.
Valuation/Revaluation of Property and
Option for Bank to Adjust Payments :
• After the initial valuation to determine the loan amount, subsequent revaluation should be
done at intervals of 5 years.
• The Bank has the option to revise the periodic/lump-sum amount every 5 years along with
revaluation. In the scenario of fall in property prices, the Bank may decide to revise the
amount at any time earlier than 5 years.
At every stage of revision, it should be ensured that the Loan to Value ratio does not exceed
90% at maturity.
• If the Borrower does not accept the revised terms, no further payments will be effected by the
Bank. Interest at the rate agreed before the review continues to accrue on the outstanding
amount of the loan. The accumulated principal and interest becomes due and payable as
mentioned above.
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Interest Rate :
• Public : Fixed, subject to re-set every 5 years.
• SBI Pensioners : Concessional interest rate of 1% below the card rate applicable to public :
CCFO/ADV/CL/214/2007-08.
Processing Fee : 0.50% of the loan amount, minimum Rs. 500/-, and maximum of
Rs. 10,000/-.
Table of loan instalments : enclosed to CCFO/ADV/CL/214/2007-08.
Right of Rescission : As a customer-friendly gesture and in keeping with international best
practices after the documents have been executed and loan transaction finalized, borrowers will
have right of rescission up to seven days to cancel the transaction. If the loan amount has been
disbursed, the entire loan amount will need to be repaid by the borrower within this period. However,
interest for the period may be waived. Processing fee is not refunded in such cases.
Insurance & Maintenance of House Property :
• The house property should be insured by the borrower at his cost against fire, earthquake
and other calamities.
• The borrower should ensure to pay all taxes, charges, etc.
• Bank reserves the right to pay insurance premium, taxes, charges, etc. by reducing the loan
amount to that extent.
• The borrower should maintain the property in good condition.
Documents : Set of documents : enclosed to CCFO/ADV/CL/214/2007-08.
Will : The Bank has recently withdrawn the stipulation of registration of will : CCFO/ADV/CL/306/
2007-08.
However, it is necessary for the Title-Holder to execute a Will in favour of the spouse as per the
prescribed draft (duly modified).
SBI RML : Revised Documents : The revised Arrangement Letter and RML Agreement are enclosed
to e-Cir/73/2008-09.
Operational Issues :
a) Type of Facility : Non-renewable Overdraft without ledger folio charges (account- keeping
charges). No cheque book / debit card should be linked to this account.
b) IRAC : Income Recognition and Asset Classification : The loan should be treated as a
standard asset as long as repayment does not become due as per the prevailing norms.
Interest applied should be booked as income as long as the loan remains a standard asset.
A Reverse Mortgage Loan Asset remains classified as ‘Standard Asset’ till 89 days after the
due date. If the outstanding is not liquidated (within the aforesaid period), then it is classified
as a ‘Sub-standard’ Asset on the 90th day after the due date. The conditions which determine
the due date for repayment of outstanding under the Reverse Mortgage Loan are reproduced
in e-Cir/1178/2012-13.
Details regarding settlement of outstanding in RML : Detailed in e-Cir/1178/2012-13.
c) Discretionary Powers for Loan Sanction : Same as for Home Loan sanction.
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d) Classification in Performance Reports : Looking at the nature of the utilization of the loan,
these loans are treated as Personal Loans against mortgage of immoveable properties.
e) Loans to be made Available at : All branches.
f) Inspection : In the case of joint borrowing under RML where property is in the single name
of one of the borrowers, in the event of death of the property owner, the Bank will have to allow
the surviving co-borrower, who is the spouse of the deceased borrower, to continue to live in
the mortgaged property and ensure continuation of payment of Reverse Mortgage Loan for
the benefit of surviving co-borrower. For this purpose, the Bank is required to ascertain that
the surviving borrower continues to stay in the house. This may be done by way of inspection,
at least once in a year, along with obtention of life certificate : e-Cir/73/2008-09.
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SBI EARNEST MONEY DEPOSIT (EMD) SCHEME :
LOAN FOR EARNEST MONEY DEPOSITFOR ALLOTMENT OF PLOT/HOUSE/FLAT (REVISED)
(‘P’ BANKING ADVANCES)
Ref. : CCFO/ADV/CL/272/2006-07 :
Minimum Income Applicants should prima facie fulfil income eligibility criteria for availing
a Home Loan of the required amount ultimately, i.e., the entire project
cost for the house less margin.
No minimum income criteria should be stipulated : e-Cir/88/2010-11.
Margin Margin waived in all cases, subject to (e-Cir/88/2010-11) :
i) Allotment letters/refund orders should be routed through SBI.
ii) Lump sum amount equal to 6 month’s interest to be taken upfront.
Loan Amount i) 100% of application money : e-Cir/88/2010-11.
ii) Maximum of Rs.10 Lac : e-Cir/88/2010-11.
Security Waiver of security in all cases irrespective of the loan amount, subject
to (e-Cir/88/2010-11) :
i) Allotment letters /refund orders being routed through SBI.
ii) Lump sum amount equal to 6 months’ interest to be taken upfront.
iii) 2 PDCs one for the principal amount of EMD and another towards
interest for the next 6 months should be taken to meet the eventuality
of refund getting delayed.
Recovery of Interest In view of the relaxations now allowed, interest is to be recovered upfront
for the period till the refund / allotment is expected.
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SBI-FREEDOM HOME LOANS(DISCONTD. IN SEPT. 2010)
Purpose : In the light of the Income-tax benefits under Sec. 80C (up to Rs. 1 Lac), to save stamp
duty for creation of equitable mortgage, and with a view to effectively tapping the business potential
from the niche segment comprising HNIs, Affluent and Mass Affluent, NRIs, highly paid executives,
software professionals, etc., the Bank had launched SBI Freedom Home Loans, with the value-
added features (like waiver of mortgage of property financed and obtention of pledge of liquid
securities) detailed in CCFO/ADV/288/2005-06.
SBI-Freedom, a variant of Home Loan Scheme, was launched with the following value-added
options : CCFO/Adv/288/2005-06.
• Waiver of Mortgage of the Property Financed &
in lieu thereof Pledge of Liquid Securities viz.
i) Term Deposits (including NRE/FCNB deposits) in own name/in the name of third party
maintained with the Bank.
ii) NSCs/ KVPs in own name/ in the name of third-party.
(Where the security tendered stands in the name of a third-party, he/she should guarantee
the Home Loan.)
iii) Life Insurance Policies from LIC/SBI Life/Other Life Insurance companies in own name (to
the extent of surrender value of the policy), etc.
• The loan amount was limited to 90% of the value of security offered, including accrued interest,
subject to a maximum of 100% of the project cost.
• Liquid Securities in lieu of Cash Margin : In respect of applicants who proposed to avail
Home Loan under the normal scheme with mortgage of property and usual margins, but were
unable to offer cash margin, liquid securities could be accepted in lieu of cash margin.
• Additional Documents : Agreement to Mortgage was to be obtained to further strengthen
security in addition to Security Delivery letter and Form A/A1/A2 to pledge the deposits standing
in the name of all/some/third-party.
• Structured Repayment Options : EMIs in line with the repayment norms applicable to regular
Home Loans, subject to renewal of the securities pledged on maturity till the liquidation of the
loan. (Part-delivery of the scrips pledged is permitted once in a year, subject to advance value
of the remaining securities covering the outstanding loan amount).
or
Repayment of the loan out of proceeds of the securities offered, as and when they mature. But
the borrower should arrange to service the monthly interest. Check-off authority/Post-dated
cheques were to be obtained as per instructions for an amount equivalent of 1/12th of
approximate annual interest obligations
• Other Stipulations : All other extant stipulations governing regular Home Loans are applicable
to the loans sanctioned under the Scheme, i.e., purpose, eligibility parameters, including
computation of income, moratorium, repayment period, interest rates, processing fee, margin,
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penal interest for delayed payments, pre-payment penalty, inspection, documentation,
discretionary powers to sanction loans under Scheme of Delegation of Financial Powers,
discretionary powers to quote improvement in pricing, free personal accident insurance cover,
optional group insurance cover from SBI Life, etc.
• Discontinuance :
In Sep. 2010, the Bank withdrew the Scheme with immediate effect : e-Cir/475/2010-11.
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‘SBI-OPTIMA’ ADDITIONAL HOME LOANS(DISCONTD. IN SEPT. 2010)
Purpose
Eligibility
Eligible Loan
Amount
With a view to (a) maintaining the long-term relationship with Home
Loan borrowers, (b) ensuring continued customer loyalty, (c) making
our Home Loan Scheme more customer-friendly by extending value-
added facilities, (d) improving our competitive edge in the market, (e)
optimally tapping the significant potential for take-over of Home Loans,
the Bank had launched a customized Home Loan product, SBI-Optima
Additional Home Loans, to the existing Home Loan borrowers
maintaining a satisfactory repayment record for the prescribed minimum
period : CCFO/ADV/CL/12/2006-07.
To meet expenditure towards major repair, renovation and addition to
their residential house/flat as also for purchase of furniture and fixtures
and consumer durables, etc. : CCFO/Adv/CL/12/2006-07.
Home Loan borrowers with a satisfactory repayment record of 3 years
and whose loan was a Standard Asset. In case of take-over, the loan
should had a satisfactory repayment record of 3 years and the loan
account was to be a Standard Asset with the present Bank/HFC.
a) 18 times NMI for salaried persons or 1½ times NAI of the borrower in
respect of professional/self-employed /businessmen /agriculturists,
with provision to club income of his/her spouse.
(Net income after netting income-tax and EMIs of the existing
Housing
Loan & other P segment loans), or
b) 25% of the original project cost of house/flat, or
c) 85% of the cost of repair, renovation and addition (based on
Architect’s or Civil Engineer’s estimates), or
d) the gap between 85% of the current market price of the flat/house
and the actual outstanding loan dues,
whichever is the lowest.
The aggregate EMI of the existing Home Loan, other P Segment Loan(s)
and the proposed Additional Home Loan(s) to NMI was not to exceed
60%.
Copy of approved plan and approval from Appropriate Authority was to
be obtained if loans involve additional construction.
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Type of Loan
Disbursement
Repayment
Rate of Interest
Security
Other Terms
Inspection
Discretionary
Powers
Papers to be
submitted
Term Loan.
In stages in respect of additional construction, and in lump sum in
other cases.
Repayment for maximum period up to the residual maturity of the existing
Home Loan, by way of check-off facility/post-dated cheques, was to
commence from 2 months after date of final disbursement, or completion
of the work, whichever is earlier.
Home Loan interest rate as applicable to the repayment tenure opted
by the borrower.
Extension of charge over the property mortgaged to the Bank for the
existing Home Loan. Up to date Non-Encumbrance Certificate was to
be obtained.
Third-party guarantee of person(s) who guaranteed the existing Home
Loan.
Interest rate concessions/processing fee/ documentation/Pre-payment
penalty/Pre and post sanction procedure as per extant instructions
applicable to Home Loans.
Every 3 years after initial inspection(s) at the time of disbursement.
Should repayments fall into arrears for two successive months,
inspection to be done immediately.
For NPA accounts : At quarterly intervals.
Were to be exercised as per the Delegation of Powers advised by the
respective LHO in respect of Home Loans.
• Copy of latest salary certificate/salary slip, Form-16 and I.-T. returns
in respect of salaried individuals, showing gross salary, deductions
and net salary.
• Copy of I.-T. returns, with enclosures, for the last year, duly
acknowledged by ITO, in respect of professionals and self-employed,
businessmen and others.
• Proof of income certified by revenue authorities in respect of
agriculturists.
• Discontinuance :
In Sept. 2010, the Bank withdrew the Scheme : e-Cir/475/2010-11.
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‘SBI-HOMELINE’ SPECIAL PERSONAL LOANS(DISCONTD. IN SEPT. 2010)
Purpose
Eligibility
Occasions
Maximum Number of
Occasions to avail the loans
during the tenure of the
Original HL (Eligibility for
second/third loan is subject
to satisfactory conduct of
existing Home/other loans)
Eligible Loan Amount
Credit Scoring
Processing Fee
This product was an extension of the Bank’s Home Loan
Scheme with built-in provision for sanction of special Personal
Loans; the borrowers were automatically entitled to avail these
loans, promptly and in a hassle-free manner, subject to
meeting the stipulated eligibility criterion : CCFO/ADV/CL/
101/2006-07.
It was basically a general purpose loan against mortgage of
immovable property. Therefore, security documents pertaining
to loans against mortgage of immovable property were to be
obtained : CCFO/ADV/CL/189/2006-07.
General purpose loan against mortgage of Immovable property
launched in 2006 : CCFO/Adv/CL/101, 138, 189/2006-07.
Home Loan borrowers whose loan was a Standard Asset
with a satisfactory repayment record of 3 years.
For take-overs, the loan could be made available only in respect
of loans taken over from Foreign banks/Pvt Sector banks/ HFCs
with a satisfactory repayment record of 3 years and the loan a/
c being Standard Asset with the present Bank/HFC : e-Cir/
363/2008-09
Tenure of the Loan Max. No. of Occasions
for availing loan
a) Above 5 years & Once
up to 10 years
b) Above 10 years and Twice
up to 15 years
c) Above 15 years Three times
and up to 20 ears
18 times NMI (for salaried borrowers); 1½ times NAI (for
professionals/self-employed / businessmen / agriculturists) with
provision for clubbing income of his/her spouse (after netting
Income-Tax and EMIs of existing HL and other P Segment
loans availed, if any).
The aggregate EMI [of existing HL, other P Segment loan(s)
and proposed Special Personal Loan] to NMI was not to exceed
60%.
Waived.
0.50% of the loan amount (including service tax).
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Security
Documentation
Rate of Interest
Repayment
Inspection
Discretionary Powers
Papers to be submitted
• Extension of charge on property mortgaged to the Bank for
the existing HL.
• Up-to-date Non-encumbrance Certificate .
• Third-party guarantee of persons who guaranteed the
existing Home Loan.
As applicable to Personal Loan against mortgage of immovable
property.
50 bps above the Home Loan interest rate applicable to the
repayment tenure opted by the borrower (floating rates only),
prevailing as on the date of sanction of ‘SBI-Home Line’.
There is uniform interest rate structure for SBI Home Line
for existing Home Loan customers as well as for take-over
cases : e-Circular/363/2008-09.
By check-off / PDCs, commencing 1 month after date of
final disbursement. Maximum period up to the residual
maturity of the existing original H.L.
Every 3 years after initial inspection(s) at the time of
disbursement. Immediately, if repayments fall into arrears
for two successive months.
For NPA accounts : at quarterly intervals.
As per Delegation of Powers advised by the respective LHO
for Personal Loans against mortgage of immovable property.
Copy of latest salary certificate/salary slip, Form-16 and I.-
T. returns in respect of salaried individuals, showing gross
salary, deductions and net salary. Copy of I.-T. returns with
enclosures for the last year, duly acknowledged by the I.T.O.
in respect of professionals and self-employed, businessmen,
etc.
• Discontinuance :
In Sept. 2010, the Bank withdrew the Scheme : e-Cir/475/2010-11.
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SBI REALTY
(HOUSING LOANS FOR PURCHASE OF PLOT OF LAND FOR
PURPOSE OF CONSTRUCTION OF A DWELLING UNIT)
(P.B. SEGMENT)
Reference : CIRCO/ADV/189/2004-05.
Objective : With a view to effectively tapping the market potential for Housing Loans for purchase
of plot of land for house construction, the Bank has launched an independent product ‘SBI Realty’,
with more appealing and customer-friendly features, and to position it with an exclusive focus on
the target clientele.
The salient features of the scheme are as under :
Type of Loan : Term Loan.
Purpose : Purchase of a plot of land for purpose of construction of a house.
Eligibility : Individual(s) over 21 years of age with a steady source of income, including persons
engaged in agriculture and allied activities.
Loan Amount : The actual loan amount is determined on the basis of repayment capacity, taken
into account income and age of the borrower(s). The eligible loan amount is computed as under :
i) For borrower(s) over 21 years and up to 45 years of age (In case of joint loans, any one
borrower, with a steady source of income, should be within the above age group), the maximum
loan amount is 60 times of the Net Monthly Income (NMI) of the applicant in case of salaried
persons, and 5 times of Net Annual Income (NAI) in case of others (i.e., income as per latest
income tax returns less taxes payable).
For agriculturists, the Net Annual Income (NAI) should be arrived at, based on the nature of
their activity (i.e., farming, dairy, poultry, etc.), land-holding, cropping pattern, yields, etc.
and the average level of income derived therefrom in the area.
ii) For borrower(s) over 45 years of age, the loan amount is 48 times of Net Monthly Income
(NMI) in case of salaried persons or 4 times of Net Annual Income.
iii) Income of spouse should be clubbed with the income of the applicant where spouse is the
co-borrower or stands as a guarantor.
iv) An authority not below the rank of an AGM is authorized to add income of the son or a
daughter, who is living with the borrower, provided the son/daughter has a steady source of
income and he/she joins as a co-borrower/guarantor.
v) Regular income from all sources can be considered to arrive at the eligible loan amount,
provided the sanctioning authority is satisfied about the proof of income.
Max. Loan Amount : Rs. 10 Crore (raised from the earlier Rs. 1 Crore) : e-Cir/86/2010-11.
Admin. Clearance : Loan above Rs. 50 Lac require prior administrative clearance from DGM
(Module) in all cases where sanctioning authority is an official of a lower grade : CCFO/ADV/CL/
259/2007-08.
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Margin : e-Cir/86/2010-11 :
Loan Amount Margin
< = Rs. 75 Lac 20% (same as in Home Loan).
> = Rs. 75 Lac and up to Rs. 1 Cr 25% (same as in Home Loan), (Say, Y%).
> Rs. 1 Cr Y% for Loan of Rs. 1 Cr, plus 50% for loan in excess
or Rs. 1 Cr.
e.g. if loan amount is Rs. 1.6 Cr, then margin will be
[Rs. 25 Lac + (1.6 Cr-1 Cr) x 50%] = Rs. 55 Lac,
i.e., 34.40%. Discretionary power to reduce margin,
if used, is restricted to loan portion up to Rs. 1 Cr
only. Margin for loan portion in excess of Rs. 1 Cr is
50%. Margin concession sanctioned under
discretionary powers is not applicable to 50% margin
for loan portion in excess of Rs. 1 Cr.
Margin : The prescribed % of the cost of land (i.e., price in the sale deed), including cost of
registration, stamp duty, etc.
The Bank has decided to include the development cost charged by the Developer towards
preparation of layout and to provide common amenities like roads, water supply, drainage, electricity,
parks, recreation facilities, etc, on the basis of agreement executed by the Promoter/Developer
with the buyer and subject to Bank’s approved valuer certifying the valuation thereof : CCFO/ADV/
187/2005-06.
Security :
1) Equitable mortgage of the plot of land proposed to be purchased.
2) Personal guarantee of the spouse/son/daughter if their income is also clubbed with the
income of the borrower for computing the eligibility and they are not co-borrowers.
3) Interim guarantee of an individual goods for the loan amount (to cover the period from the date
of sanction and date of creation of equitable mortgage).
Repayment Terms : Repayable in a maximum of 180 months, commencing from the month
following the month of disbursement of the loan.
Interest Rate : Floating Rate Loans, Fixed Rate Loans. Linked with SBAR/Base Rate. and
tenure of loan.
Interest Rate Concessions : As per CIRCO/ADV/189/2004-05, etc.
Processing Fees : At current rates.
Further, all charges in connection with search report/valuation certificate, etc. are to be recovered
on actual basis, as and when incurred.
Documentation :
i) Arrangement Letter.
ii) Housing Loan Agreement.
iii) Guarantee Agreement.
iv) Agreement to Mortgage.
v) Declaration by the borrower undertaking to construct house within the prescribed period (as
per Annexure-’A” of CIRCO/ADV/189/2004-05).
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vi) Demand Draft/Banker’s Cheque Forwarding Letter (as per annexure-’B’ of CIRCO/ADV/189/
2004-05.
Disbursement : Direct to the Urban Development Authority/Housing Society/Seller by issue of
Banker’s Cheque/Demand Draft crossed “Account Payee Only” or their SB/CA accounts maintained
with us. Account number and name of the bank should be incorporated in the Banker’s Cheque/
Demand Draft. The branches should forward the cheques under cover of a standard covering letter
- prescribed proforma (annexure-B of CIRCO/ADV/189/2004-05) - to be sent to Urban Development
Authority/Housing Society/Seller by Registered AD/Speed Post.
Further, branches should ensure that the purchase price in the Agreement of Sale is incorporated
as the value of the property in the Sale Deed registered.
Maximum Time Period : Stipulated for Construction of House : 2 years (reduced from the
earlier 5 years) from the date of availment of the Loan : CCFO/ADV/CL/253/2006-07, e-Cir/86/
2010-11.
Accordingly, branches should obtain suitable declaration (in the amended format enclosed to
CCFO/ADV/CL/253/2006-07) from such borrowers, undertaking to construct a house on the said
plot of land within the aforesaid period and also authorizing the Bank to charge higher rate of
interest, as deemed fit by the Bank, or even recall the loan, in the event of failure to construct the
house within the prescribed period.
In case of plots purchased from Govt.-Sponsored housing development agencies, the construction
should commence within 2 years from the date of handing over of possession by the Govt.
housing development agency. In other cases, construction should commence within two years
from the date of availing of loan : CCFO/ADV/CL/259/2007-08.
(Govt-sponsored Housing Development agencies take more than 2-3 years in handing over
possession of the plots to the allottees after allotment of plots. Therefore, it is practically not
possible for the allottee to commence construction within two years : CCFO/ADV/CL/259/2007-
08).
In case of loan for plot of land in development projects undertaken by Government agencies, and
the date of handing over possession of developed plot to the purchaser in such projects exceeds
2 years, the maximum time period may be extended by the sanctioning authority in sync with the
date of possession : e-Cir/86/2010-11.
Penalty in case of Delay in Construction : Interest rate as applicable to Personal Loan Against
Mortgage of Immovable Property or 1% above the Bank’s PLR, whichever is higher, should be
applied if construction of house is not commenced within the maximum stipulated period. The
higher rate should be charged after the expiry of period stipulated for commencement of construction
: CCFO/ADV/CL/259/2007-08.
EMI/NMI Ratio : Accordingly, the Housing Loan borrowers will have twin benefit of availing Housing
Loan for purchase of plot of land under ‘SBI Realty’ and also another Housing Loan for construction
of house in the plot so purchased. Both the loans can run concurrently, subject to combined
EMI/NMI ratio of both the loans being within the stipulated benchmarks detailed below : CCFO/
ADV/CL/259/2007-08.
Net Annual Income (Rs.) Max. Permissible EMI/NMI Ratio
• Up to Rs. 2 Lac : 30%
• Above Rs. 2 Lac and up to Rs. 5 Lac : 40%
• Above Rs. 5 Lac and up to Rs.10 Lac : 45%
• Above Rs. 10 Lac : 50% (earlier, 60%) : e-Cir/86/2010-11.
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In cases where the customer undertakes to complete construction of house with his own resources,
and substantiates it with acceptable proof like maturing securities, receivables, etc. for the same,
the above limits may be permitted to be increased by 10% by the sanctioning authority.
(In cases where loan is availed by a customer under SBI Realty to the maximum permissible
extent of EMI/NMI ratio, the Bank is not in a position to grant him further Home Loan for construction
on the plot purchased as EMI/NMI ratio in such case would exceed the maximum permissible
ratio.)
Processes Introducted :
The following processes have been introducted for mitigation of the credit risks and the fraud
risks : e-Cir/86/2010-11 :
i) With a view to minimizing the risk of over-valuation of the property, independent valuation of
the property by two empanelled valuers has been introduced for loans above Rs. 50 Lac
under SBI Realty. Lower of the two valuations should be considered for loan assessment.
ii) With an objective of minimizing fraud risk, two title search reports from different lawyers
should be obtained - one before loan sanction, and one before disbursement of loan under
SBI Realty.
iii) For loans above Rs. 50 Lac under SBI Realty, a fresh CIBIL Credit Information Report on the
borrower should be obtained before disbursement of loan, in addition to the one obtained
as part of loan sanction process.
Miscellaneous :
i) Instructions contained in CIRCO/ADV/189/2004-05 supersede all earlier instructions in
respect of purchase of land for construction of a dwelling unit : CIRCO/ADV/260/2004-05.
ii) As the Scheme is a variant of generic Home Loans, interest rates as applicable to Home
Loans for the respective tenures are applicable to loans granted under ‘SBI’ Realty’ also :
CIRCO/ADV/260/2004-05, CCFO/ADV/187/2005-06.
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SBI SPECIAL HOME LOAN SCHEME
(AVAILABLE UP TO 30.06.2009)
Ref. : e-Circular/572/2008-09.
Introduction : In response to the strategies rolled out by the Govt. of India and the Reserve
Bank of India for stimulating growth in the economy, IBA had announced special Home Loan
Package for small loan borrowers. A new product was, therefore, launched effective from
16th December 2008 for small ticket Home Loans in conformity with the IBA guidelines.
The primary focus of this product was to add a degree of certainty and affordability in the
loan repayment obligation over a fairly longer period. Therefore, this product had been offered
at a fixed rate of interest for a period up to 20 years (as against the maximum 10 years under
regular Home Loan schemes) and an interest rate re-set frequency of five years (as against
2 years under regular Home Loan schemes). In addition, the customer had an option to
convert the loan outstanding into a floating rate loan at the time of re-set.
Parameter Norms
• Product name SBI Special Home Loan Scheme.
• Facility a) For Loans up to Facility Type :
Rs. 5 Lac Term Loanb) For Loans above Facility Type :
Rs. 5 Lac and Term Loan;up to Rs. 20 Lac Facility Type :
Overdraft (SBI
Max Gain)
• Product Up to 30th June 2009.Availability Period
• Purpose i) Purchase/construction/extension of old/new house/flat/plot of
land for construction of house* together with registration
charges and stamp duty.
* When loan was availed for purchase of plot, the loan is
governed by the maximum period allowed for construction under
SBI Realty Scheme.
ii) Loan for the purpose of renovation could be given under SBI
Freedom only.
Note : Take-over of Home Loan from other Bank/Financial Institution
or Swapping of existing Home Loan availed from the Bank was
NOT permitted. However, loans, which were sanctioned and not
disbursed even partially, could be considered under this Scheme.
Overall exposure (i.e., total of limits sanctioned) under this Scheme
to one individual was restricted to Rs. 20 Lac. Format of Affidavit to
be obtained from the borrower, modified suitably for this purpose,
was furnished at Annexure A & B of e-Circular/572/2008-09.
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Parameter Norms
• Facility Type Term Loan or Overdraft Under SBI MaxGain for loans above Rs. 5
Lac and up to Rs. 20 Lac.
Note : Loan under SBl MaxGain could be given only to Salaried
Employees/Pensioners of Government/Government Undertakings/
PSUs and reputed companies.
• Maximum Loan Rs. 20 Lac.
Amount
• Interest rate For Loans up to Rs. 5 Lac : 8.5% p.a. fixed rate with re-set every 5
years from the date of disbursement of First instalment.
For Loans above Rs. 5 Lac and up to Rs. 20 Lac : 9.25% p.a. fixed
rate with re-set every 5 years front the date of disbursement of first
instalment.
One-time option available to customer at the end of 5 years to
convert into floating interest rate loan. Re-set or conversion was at
the rates prevailing at the time of re-set.
• Risk-Based Risk-Based Concessions and discounts on interest rate were notConcession/ applicable on this loan.
Discount
• Special Special concessions in interest rate like concession for Green
Concessions Housing, Plus Schemes, Credit Khazana, Salary Accounts, etc.
were not applicable on this loan.
• Discretionary Discretionary powers were given to Circle authorities to quote
interest Concessions rate concessions on Home t.oans were notapplicable for this Scheme.
• Margin For Loans up to Rs. 5 Lac : Min.10%.
For Loans above Rs. 5 Lac and up to Rs. 20 Lac : Min. 15%.
• Discretion to No discretion was available with the Circle authorities for reduction
Reduce Margin of margin.
• Maximum 20 years (including moratorium period), or till the borrower
Permissible Loan complete the age of 70 years, or the period over which the borrower
Tenor is normally expected to have a continuous source of income
sufficient enough to service the loan repayment obligation with a
fair degree of comfort, whichever is earlier.
• Repayment i) Loan together with interest is to be repaid by way of EMIs.
ii) EMI/NMI** ratio was to be in conformity with the norms pres-
cribed for regular SBI Home Loan Scheme, presently as under :
Net Annual Income EMI/NMI RatioUp to Rs. 2 Lac 40%
Above Rs. 2 to Rs. 5 Lac 500%
Above Rs. 5 Lac 55%
Increase up to 5% in the above ratios could be permitted by the
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Parameter Norms
controller of the Branch/AGM (RACPC), which processes the loan
application, depending on the family size and availabilitv of
disposable surplus income. EMI for the purpose of computing the
ratio included all EMIs towards existing loans and the proposed
loan.
** ln case of loans sanctioned for purchase of plot, EMI/NMI
ratio was to be in comformity with that applicable to SBI
Realty.
Income of the family members (i.e., spouse, parents, children,
siblings), who guarantee the loan, was to be reckoned for calculation
of loan eligibility.
• Eligibility Loan was to be provided in the name of single person only, to
Indian Nationals and PIOs (Persons of Indian Origin) above 18 years
of age with a continuous and verifiable source of salaried/business/
professional income during the preceding two years. SBI Staff
members may also avail loan under this Scheme.
• Other Processing Fee : Waived.
Eligibility Norms, Pre-payment charges : NIL.
Security, Loans under SBI Freedom could also be considered under this
Processing Fee, Scheme. All other norms as per the existing Home Loan Scheme.
Documentation,
Accident Insurance
Cover, Property
insurance
cover, etc.
• Life Insurance Life Insurance cover for the entire amount of outstanding loan in
conformity with original repayment schedule was to be provided to
the borrower at the Bank’s cost.
• Other HL Products Other Home Loan products offered by the Bank prior to introduction
of this product were available. Home loan cases up to Rs. 20 Lac,
which did not fit into the criteria of this Scheme, could be considered
under other Schemes.
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SBI YUVA HOME LOAN :
HOME LOANS : NEW PRODUCT
Ref. : e-Cir/571/2010-11 as amended vide e-Cir/1142/2011-12.
Introduction :
Since the properties are being purchased at a young age, the gap between the available
funds and the property prices is wide. With a view to enabling the YAW (Young Affluent
Workforce) to bridge this gap with SBI Home Loan it has been decided to launch an exclusive
new product named SBI Yuva Home Loan for this segment, as per the undernoted particulars :
Occupation :
Salaried employees of Companies from the private sector, MNCs, Government undertakings,
PSUs, Government employees.
Age :
YUVA : >=21 years and <= 45 years (earlier, <35 years) : e-Cir/1142/2013-14.
Loans under the scheme are now available to the salaried employees of Central/State
Government, Government undertakings/PSUs/MNCs and reputed private sector companies
in the age bucket of 21 years and above and up to 45 years.
In case of joint borrowing with spouse, the minimum and upper age limit remains capped at
21 years and 45 years respectively.
Minimum Net Monthly Income (NMI) :
Rs. 30,000/- : earlier, Rs. 50,000 (Expected rental income from the proposed property should
not be included in the monthly income of the borrower as the purpose of purchase of dwelling
unit under this Scheme is for self use) : e-Cir/1142/2013-14.
Loan Term :
a) Originally, fixed loan term of 240 months. (Shorter or longer term was not permitted).
b) Loan tenor extended up to 25 years : e-Cir/865/2010-11.
c) Loan tenor further extended up to 30 years : e-Cir/1142/2013-14.
Maximum Permissible Loan :
20% extra, i.e., 1.2 times the loan quantum calculated as per the existing method based on
EMI/NMI ratio.
Repayment :
First 36 months : Only the interest applied during the month should be recovered.
37th month onwards : 204 EMIs.
(Note : Interest rate applicable from 37th month should be used for calculation of EMI).
Borrower’s liability will extinguish only when the entire outstanding loan amount and interest
applied is repaid by him.
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Interest Rate :
Concession : As per e-Cir/1142/2013-14.
Other Benefits for Borrowers :
Benefits under Corporate Salary Package (CSP) may be extended to the borrower if his
employer company is under CSP.
If not under CSP, then Festival Loan (Demand Loan) equivalent to 3 months’ NMI, and
repayable within 36 months will be made available to the borrower.
Opportunities for Cross-Selling :
i) New Pension System,
ii) SBl Life Dhanaraksha,
iii) SBI General Property Insurance.
Facility Type :
Originally, Term Loan only.
The loan under the scheme is now available both by way of term loan and overdraft under
Maxgain facility.
An option from the customer in this regard should be obtained at the time of application.
Features, other than those mentioned above are the same as those applicable to SBI Home
Loan Scheme.
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SBI HOME LOAN PAL (PRE-APPROVED LIMIT)
Ref. : e-Cir/378/2010-11.
Introduction :
The certainty about the eligible loan amount and certainty about the time taken for disbursement
can be assured to the borrowers if KYC compliance and Assessment of eligible loan amount are
completed before finalization of the property deal by the borrower. For this purpose, a product
named “SBI Home Loan PAL (Pre-Approved Limit)” has been introduced recently.
• All the documents prescribed for Home Loan, except property documents are collected
from the applicant along with the application form.
• Non-refundable processing fee as applicable to the Home Loan is collected up-front.
• KYC formalities, including visits to residence and workplace, verification of income-proof to
be completed by the laid down agency on submission of the file to the RACPC.
• CIBIL credit report should be verified.
• RACPC assesses the loan eligibility on the basis of income details of the applicant.
• Sanction of pre-approved Home Loan limit is advised to the borrowers through a “Pre-approved
Loan Arrangement Letter (PLALs)” in the format furnished at Annexure A.
• RACPC maintains a record of PLALs issued.
• Process Modifications : The procedure for sanction of Home Under PAL, falling beyond the
discretionary powers of AGM (RACPC), has been modified as detailed in e-Cir/807/2010-11.
Characteristics :
Pre-approved Loan Arrangement Letter (PLAL) has the following characteristics :
• PLAL is now valid for a period of 4 months (earlier, 2 months). Home Loan application is
required to be submitted by the borrower within the validity of PLAL. Since the processing fee
in such cases is collected upfront, it is not levied again : e-Cir/885/2012-13.
• Pre-approved loan arrangement letter (PLAL) carries the eligible loan amount calculated
on the basis of prevailing interest rates. Loan amount calculated on the basis of prevailing
interest rates is valid for a period of 1 month. (If the interest rate is revised downwards within
a period of 1 month, then the borrower is given the benefit of such downward revision.).
Thereafter, the interest rates applicable on the date of sanction of Home Loan is applicable.
For the benefit of understanding of the borrower, the PLAL also carries the eligible loan
amount if interest rate moves up or down by 25 basis points and 50 basis points respectively.
• Interest rate is not mentioned in the PLAL, so as to avoid misuse of PLAL by the borrower
for shopping around for bargains.
• Home Loan has to be availed by the borrower from the same RACPC which has issued the
PLAL.
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• Home Loan should be sanctioned against the PLAL by the RACPC on satisfactory legal
verification, valuation, and inspection.
• TAT is as under :
Activity For property under Other than
approved projects approved projects
Sanction* 1 day 3 days
Documentation & 1 day 1 day
Disbursement
* Additional one day is permitted if the borrower’s address in the Sale Agreement is different
than the one verified by us as a part of KYC process. Address is verified again in such cases.
• If the time gap between PLAL and submission of Home Loan application by the customer is
more than one month, fresh CIBIL Credit report should be verified by the RACPCs. This is
warranted as the score of an applicant can change in the interim if he has approached
several entities for credit facilities.
• PLAL carries a clause that Home Loan will be sanctioned on the basis of PLAL only if there
is no change in the CIBIL credit report which is perceived to be adding to the risk assessed
by the Bank at the time of issuing PLAL.
• PLAL should be issued under the dual signatures of the processing officer as well as the
sanctioning officer.
• Revised format of Arrangement Letter for HL under PAL : Enclosed to e-Cir/807/2010-11.
Benefits of this Product :
• Customer can confidently negotiate with the builder/seller.
• Builder/sellers, who are apprehensive about our ability to deliver in time, will not find a need
to influence the customer to go to other banks/HFCs.
• Data-base of Pre-approved loans will enable the Bank to negotiate with the builders to offer
better rates for SBI Home Loan borrowers.
Minimum Loan Amount :
With a view to ensuring a smooth roll out of the product, a minimum limit amount of Rs. 30 Lac
was originally prescribed under this facility. Reduced to Rs. 10 Lac later on (e-Cir/865/2010-11).
Operating procedures introduced for sanctioning of PLAL through Loan Origination Software.
Availability :
The Product is available only at the RACPCs.
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SBI STUDENT LOAN SCHEME
SBI Student Loan Scheme : Master Circular : As on 31.01.2011 : e-Cir/957/2010-11.
In view of the difficulties faced by operating staff in contacting the borrower after the completion of
studies and rising NPA in Education Loans, the Bank has recently made PAN Card of the student
and the Parent/Guardian a mandatory document for all Education Loans : e-Cir/1017/2011-12.
The Branches may assist the applicants for submission of PAN Card application, along with
necessary documents, at the time of sanction of Education Loans (so that student/co-borrower
receives the PAN Card within a fortnight). The respective Education Loan applications should be
sanctioned pending receipt of the PAN card. However, the disbursement could be made only after
obtention of PAN cards by the student/co-borrower : e-Cir/904/2012-13.
In addition to PAN Card, Aadhar Card may also be obtained, wherever available.
In cases the Student/Parent/Guardian has applied for PAN through our Branch and the Branch
has submitted the same to the respective IT Deptt, but the Student/Parent/Guardian has not yet
received the PAN Card, the disbursement of 1st tranche of Education Loan may be made, pending
receipt of the PAN Card.
Also, in cases where the Student/Parent/Guardian have applied for PAN on their own, but PAN
Card is not yet received, the disbursement of 1st tranche may be made, pending receipt of the
PAN card, provided the Student/Parent/Guardian produces an acknowledgement copy of
submission of the PAN application to the respective I.T. Dept. However, the Branch should ensure
that PAN details of the Student and Parent/Guardian are received before the next disbursement
is made : e-Cir/1242/2012-13.
Branches/CPCs should send letters to remaining borrowers to obtain PAN cards before availing
next disbursement. Operating units may also run a campaign for obtaining PAN card of the
student and the parent/guardian for remaining Education Loan accounts where disbursements
are completed : e-Cir/59/2012-13.
Edu. Loans : Service Area Approach : The Branches should not reject/re-direct education loan
applications on the grounds that the area has been apportioned to other Banks/other Branch : e-
Cir/570/2010-11.
The service area approach has been given up except for the limited purpose of implementation of
sponsored schemes.
The Service Area approach is not to be followed in case of Education Loans and no loan application
is to be rejected without valid grounds : e-Cir/638/2012-13.
The Branches should ensure that the loan applications are sourced directly from the borrowers
and not through tout of an educational institution : e-Cir/570/2010-11.
Edu. Loans : Internet Banking : The facility to update temporary address via INB interface for
education loan borrowers has been operational from 24.05.2010 : e-Cir/569/2010-11.
The accounts have only viewing rights in INB.
Edu. Loan Scheme : Third-party Guarantee : In case of education loans above Rs. 4 Lac and
up to Rs. 7.5 Lac, the structure of competent authority in the Circle to permit waiver of third-party
guarantee in the above cases is an official not below the rank of AGM of CPC/Region : e-Cir/1055/
2010-11.
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In such cases, the bank should be satisfied with the net-worth/means of parent/s who would be
executing the documents as “joint borrower”.
Edu. Loans : Tuition Fees : 1st Semester : The tuition fee already paid to the institute by the
borrower from his own sources for first semester at the time of counselling/admission may be
considered for reimbursement as a part of the scheme, provided the reimbursement is claimed
within 6 months of the payment. It should be ensured that the claims for reimbursement are
genuine and appropriate safeguards to be exercised by verifying receipts/proof of payment/account
statement, etc. : e-Cir/828/2011-12.
Edu. Loans : Courses : Modifications : e-Circular/355/2009-10 :
Teacher Training Course/Nursing Course/B.Ed., is eligible for education loan provided the training
institutions are approved either by the Central Government or by State Government and such
courses should lead to Degree or Diploma Course and not to Certification Course. The fees to be
considered for the purpose should be the fees structure as approved by State Government or a
Government-approved Regulatory Body for merit seats in Government/Private Self-Financing
Colleges, Co-operative and Colleges run by Universities, as the case may be.
Student Loan Scheme : Computer Courses : In view of the latest UGC notifications, all technical/
professional courses need to be approved by AICTE/UGC/Government, whereas the courses
offered by NIIT are not approved by AICTE/UGC/Dept. of Electronics, Govt. of India. As such,
these courses do not qualify for finance under the Student Loan Scheme. The Bank has, therefore,
withdrawn the same from SBI Student Loan Scheme with prospective effect : e-Cir/850/2010-11.
Chartered Accountancy Course : Loans to students entering into the chartered accountancy
course conducted by ICAI only may be considered under Student Loan Scheme. A maximum
loan of Rs. 2 Lac may be sanctioned based on the expenses detailed in e-Cir/190/2011-12.
Studies Abroad : Courses : addition to the existing courses, job-oriented professional/technical
Post Graduate Diploma courses offered by reputed universities are also covered under the scheme :
e-Cir/1032/2011-12.
SBI Student Loan Scheme : Inclusion of Management Quota : Modifications : Detailed in e-
Cir/695/2012-13 :
a) Student Eligibility : Students who have appeared in any Entrance Test, secured passing
marks but could not get admission due to lower ranking and who opt to pursue the course under
Management Quota in the same Institution or another Institution, for reasons of convenience
(proximity) or choice of course, are eligible for sanction of Education Loans.
b) Expenses Covered : For courses under Management Quota seats considered under the
scheme, fees as approved by the State Government/Government approved regulatory body for
payment seats is taken.
c) Course Eligibility : Regular Degree/Diploma Courses like Aeronautical, pilot training, shipping,
etc., Degree/Diploma in Nursing or any discipline, approved by Director General of Civil Aviation/
Shipping/Indian Nursing Council or any other regulatory body, as the case may be, if the course
is pursued in India.
Edu. Loans : Interest : Branches/CPCs should ensure the entry of correct moratorium and date
in the system, and ensure that in case of existing accounts where moratorium is already over,
the compound interest is charged by changing the flag : e-Cir/123/2010-11.
Education Loans : Interest : The Bank has recently introduced a regular report for Education
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Loans having Simple Interest even after expiry of moratorium period. The report titled Education
Loan having Simple Interest after Moratorium will be generated for both Branches and CPCs.
Report to CPCs will be sorted Home Branch-wise. This report will be generated on quarterly basis
and will contain the details furnished in e-Cir/803/2010-11.
Expenses Considered for Loan : e-Cir/1032/2011-12 :
Where the student will be making his own boarding and lodging arrangements, the sanctioning
authority is authorized to fund boarding and lodging expenses on the basis of estimate submitted
by the student/parent, provided such expenses are not more than those charged by the educational
institution for boarders.
In case, the institute does not provide for boarding and lodging facilities, such expenses should
be assessed at the time of sanctioning of loan, based on the reasonable boarding and lodging
charges applicable to that area. For studies abroad, living expenses (boarding/lodging expenses)
are generally mentioned in the admission letter issued by the university/institute. If it is not
mentioned in the admission letter, the applicant is required to download it from university/institute’s
website. Maximum eligible expense is restricted to the university’s estimates.
Purchase of books/equipment/instruments/uniforms/computer at reasonable cost, if required for
course completion and any other expense required to complete the course - like study
tours, project work, thesis, etc. considered for loan should be capped at 20% of the full
amount of total tuition fees payable by the students who do not get any concessions/
remissions : e-1153/2013-14.
Second Loan (Top-Up Loan) : e-Cir/1032/2011-12 :
• Second loan (Top-Up Loan) for further studies, within the overall limit, is permitted to
pursue a professional course in India or abroad if such further studies are commenced
during the moratorium period of the first loan and subject to the second loan being
allowed with the security requirements as applicable to the aggregate loan limit.
• The repayment of the loan will commence after the completion of the second course and
further moratorium period, as provided under the Scheme. The combined repayment of the
loan will commence after the completion of the second course, or 6 months after taking up a
job, whichever is earlier.
SBI Student Loan Scheme : Re-structured A/cs : RBI’s Instructions : Education Loans are
eligible for special asset classification benefits on restructuring, subject to the fulfilment of necessary
conditions set out in RBI Circular : e-Cir/456/2010-11.
Two major conditions for special treatment are :
a) the dues to be Bank are ‘fully secured’ by tangible security, and
b) the repayment period of the fully restructured advance, including the moratorium, i.e., course
period plus the repayment holiday (6 months after getting the job or 12/24 months after the
completion of the course, whichever is earlier), should not exceed 10 years.
Edu. Loans : NPAs : Branches should arrange to send legal notices to all those education loan
borrowers, co-borrowers and guarantors whose loan accounts have turned NPA : e-Cir/616/
2011-12.
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SBI STUDENT LOAN SCHEME
SBI Educational Loan Scheme : Renamed as ‘SBI Student Loan Scheme’ : CCFO/ADV/CL/
280/2005-06.
E.L.S. : Norms : The main emphasis of the scheme is that every meritorious student though poor
is provided with an opportunity to pursue education with affordable financial support. The scheme
naturally has to be non-discriminatory and by and large non-discretionary : e-Cir/56/
2008-09.
Student Eligibility : e-Cir/1032/2011-12 :
• Student should be an Indian National.
• Secured admission to a higher education course in recognized institutions in India through
Entrance Test/Merit-Based Selection process after completion of HSC (10 plus 2 or equivalent).
• Secured admission to foreign university/institutions.
• In cases where there is no Entrance Test/Merit-based selection procedure, securing admission
to a higher education course in a recognized institute may be considered.
• Admission under management quota to be kept outside the scope of the scheme for all
courses.
Education loans should be granted within the norms of the laid-down scheme.
E.L.S. : Eligibility Criteria : The Bank has reiterated that there are no minimum qualifying
marks in the last qualifying examinations stipulated, as per the Scheme. No loan proposals
should be declined stating this reason as this would be contradictory to the IBA Model Education
Loan Scheme : e-Circular/338/2008-09.
Further, the loan proposals from students who have failed in the last qualifying examination,
including class XII and subsequently cleared and discontinued studies and resumed again, may
be considered after satisfying the reasons for the same.
E.L.S. : Age : At present, the Bank’s does not restrict any age limit for the students availing the
loan : e-Circular/353/2008-09.
E.L.S. : Parents/Guardians : Wherever parents/guardians are not there, the branches may
consider grand-parent as co-borrower to the loan taking into account their net worth (as advised
by IBA) : e-Circular/353/2008-09.
E.L.S. : Defaulters : The sanctioning authority may consider loan proposals from students in
cases where the parent/guardian is a defaulter after satisfying about the background of the student,
and if the margins and security norms, etc. are met by the student and de-linked from such
defaulter/co-borrower and replaced by another co-borrower : e-Circular/391/2008-09.
Modified Application-cum-Appraisal Form : enclosed to CCFO/ADV/CL/315/2005-06.
Website : Branch staff should refer to the website of the respective institutions and verify
genuineness of Institute, before sanctioning the education loan, wherever necessary : CIRCO/
ADV/CL/317/2004-05.
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Special package of Education Loans to students of “The Indian Institute of Business, Hyderabad” :
Salient features : CIRCO/ADV/CL/128/2004-05.
The Indian School of Business, Hyderabad (ISB) : Modification in the package of concessions :
CIRCO/ADV/CL/177/2004-05.
I2IT : Education Loans to International Institute of Information Technology : Branches should consider
Education Loans to the students of I2IT, as per the extant instructions for Education Loans :
CCFO/ADV/CL/05/2005-06.
Diploma Courses in Nautical Sciences, etc. : Branches may consider the courses mentioned in
CCFO/ADV/CL/332/2005-06 under education loan scheme.
Inclusion of additional courses : CCFO/ADV/CL/75, 94, 202/2007-08.
The Bank has recently included the course in MBA/Post-Graduate Diploma in Business
Administration (PGDBA) (Full-Time) conducted by ICFAI for coverage under the SBI Student Loan
Scheme : CCFO/ADV/CL/31/2006-07.
The Bank has recently approved GNIIT, ANIIT and AAE courses conducted by NIIT : CCFO/ADV/
CL/65/2006-07.
The branches should follow the recent Ministry of Finance, Govt of India guidelines regarding
tracking of Education Loans, viz. taking parent/guardian as co-borrower and sanctioning the loans
at the nearest branch to the place of domicile/permanent residence of students/parents.
Delisting of ICFAI Course for the time being : CCFO/ADV/CL/73/2006-07.
Inclusion of the MBA/PG Diploma in Business (PGDBA) courses conducted by ICFAI Business
School : CCFO/ADV/CL/105/2006-07.
The course conducted by the Institute of Insurance and Risk Management (IIRM) has been approved
by the Bank for financing : CCFO/ADV/CL/404/2006-07.
Inclusion of AICTE/UGC Websites in Intranet : e-Cir/309/2011-12.
Approval of Institutions/Courses : By the General Manager (Network) : CCFO/ADV/CL/388/
2006-07, 228/2007-08.
E.L.S. : Approved Courses : It is necessary to verify from the UGC/AICTE site to weed out
applications of Education Loans pursuing courses of the derecognized institutions except for the
courses specially approved under the powers vested with Circles/Corporate Centre and circulated
separately : e-Cir/212/2008-09.
It is now mandatory to obtain AICTE approval for Technical Education. Branches may be guided
by the AICTE notifications issued in this regard : e-Cir/515/2008-09.
Courses : Teacher Training Course/Nursing Course/B.Ed. are eligible for education loan providedthe training institutions are approved either by the Central Government or by State Government,
and such courses should lead to Degree or Diploma Course and not to Certification Course. The
fees to be considered for the purpose should be the fees structure as stipulated in Central/State
Government Colleges : e-Circular/400/2008-09.
The fees to be considered for the purpose should be the fees structure as approved by State
Government or a Government approved Regulatory Body for merit seats in Government/Private
Self Financing Colleges, Co-operative and Colleges run by Universities, as the case may be : e-
Cir/444, 454/2010-11.
SBI Student Loan Scheme : Courses : Branches should ensure that no off-campus courses
conducted by Private & Deemed Universities are considered for education loans unless they
conform to UGC notification issued in June and November 2009 : e-Cir/631/2009-10.
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ELs : Caution : Students, parents and the general public at large are cautioned and advised by
UGC not to take admission in the unapproved Off-campus/Off-shore campus/Study Centers :
e-Cir/308/2010-11.
The Bank’s Education Loan Scheme does not cover courses conducted by universities through
Distance Mode of Learning.
Foreign Universities in India Imparting Technical Education : As per the notification placed in
AICTE website, such courses require AICTE approval.
Edu. Loan Scheme : Universities : No deemed university has been derecognized till date (in
view of the Supreme Court Directions) : e-Cir/236/2010-11.
Documents : The documents are required to be executed by both the student and the parent /
guardian as joint borrower : CCFO/ADV/CL/99/2005-06.
Edu. Loans : Documents : Additional paragraphs to be added : e-Cir/119/2011-12.
In cases where the net worth / repayment capacity of the guardian is more than that of the
parents, the branch may obtain co-borrowership of the guardian.
Revival Letter : A clause detailed in CCFO/ADV/CL/305/2006-07 should be incorporated in
Agreement for the Term Loan in connection with SBI Education Loan, enabling the father/guardian
to sign the revival letter on behalf of the student.
Copy of modified agreement : enclosed to CCFO/ADV/CL/305/2006-07
Security : No security except for the parents/guardians standing as co-borrowers for Education
Loans up to Rs. 4 Lac should be insisted upon. Instructions should be strictly followed : CCFO/
ADV/CL/153/2006-07.
The requirement of third-party/tangible collateral security has been waived for education loans,
including the insurance premium amount, up to a limit of Rs. 4 Lac. Branches should make efforts
to actively market SBI Life cover to all the students.
E.L.S. : Repayment Period : Originally, the loan was to be repaid in 5-7 years, after commencement
of repayment : e-Circular/789/2008-09.
Repayment Period : Increased as under e-Cir/859/2013-14 :
a) Up to Rs. 4 Lac : Up to 10 years
b) Above Rs. 4 Lac & Up to Rs. 7.5 Lac : Up to 10 years
c) Above Rs. 7.5 Lacs : Up to 12 years (no change).
The increase in repayment period is applicable to all existing as well as fresh loans. RBI has
clarified that if the repayments in education loans are extended due to revision in the repayment
period, the same may not be treated as restructuring. However, this treatment is available only to
education loans which are standard in the books of banks on the date of such extension of
repayment period.
Edu. Loans : Repayment Start Date : The automatic repayment schedule creation menu
should be used in order to generate correct repayment start date : e-Cir/620/2010-11.
Repayment starts after the completion of course plus 1 year, or, 6 months after getting the job,
whichever is earlier : e-Cir/226/2013-14.
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SBI Student Loan Scheme : Repayment Holiday/Moratorium : Originally, course period + 1
year, or 6 months after getting job, whichever is earlier : e-Circular/789/2008-09.
The Bank has extended the moratorium from the earlier 12 months to 24 months in genuinecases after satisfying that the student did not get any employment after completing studies : e-
Cir/173/2009-10.
Extension of Moratorium : The Bank has approved extending the moratorium period in respect of
Education Loans granted under SBI Student Loan Scheme from 12 months to 24 months, after
completion of the course on a case-to-case basis : e-Cir/242/2012-13.
Continuation of Extension of Moratorium Period From 12 to 24 months : e-Cir/463/2013-14.
Education Loans : SBI Student Loan Scheme and SBI Scholar Loan Scheme : Moratorium for
Second (Top-up) Loan : Extension : e-Cir/1172/2013-14 :
a) For Students opting for Higher Studies, without availing 2nd (Top-up) Loan from our Bank due
to following reasons :
i) Availability of Scholarship for the Higher studies.
ii) Concessional/Low fee structure,
moratorium period to be extended for the duration of the higher studies also.
b) The combined repayment to be shifted to one year after the completion of Higher Studies, or
6 months after taking up a job, whichever is earlier.
c) In cases where the student is pursuing higher studies by availing Second Loan from some
other Bank, there is no change in the moratorium period.
E.L.S. : Intt. Concession : The concession in interest rate of 1% p.a. is available for servicing the
interest during moratorium period : e-Cir/282/2008-09.
The interest in the loan account should, therefore, be reset when the repayment starts and the
excess interest of 1% p.a. pertaining to the moratorium period should be refunded/credited to the
loan account.
The above instructions are applicable to SBI Student Loan Scheme (including the loans extended
to the wards of staff members) and SBI Scholar Loan Scheme.
Edu. Loan Scheme : Additional Interest Rate Concession : Of 0.50% to Girl Students : For
Future Loans : e-Circular/721/2008-09.
Communication to College Authorities : Immediately on sanction / release of first instalment
of the Education Loan, the branches should invariably address a suitable communication stating
that the student has been financed by us to the College / Institute (as per format enclosed to
CCFO/ADV/CL/78/2005-06 ) where the student intends to undertake the course : CCFO/ADV/
CL/78/2005-06.
Autho. Branches : The Bank has exempted all village branches and SABs from the Scheme,
so that these branches are not burdened with this work. Students approaching such branches
should be directed to the nearest Taluka/District Headquarters Branch : CCFO/ADV/CL/211, 223/
2006-07.
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Sanction : Branches should ensure processing of applications for sanction of loans with despatch.
The controllers should monitor processing of such applications. In the cases where it is not
possible to sanction such loan, a reply should be sent to the applicant in such a manner that no
embarrassment is felt by him/her (as detailed below) : CCFO/ADV/CL/323, 327/2006-07.
Whenever a request of the student is to be declined, it should be done politely.
Appraisal/Sanction/Disbursement : e-Cir/1032/2011-12 :
• After the receipt of duly filled in application form, a standard acknowledgement, giving
a reference number, should be issued. The acknowledgement contains contact details
of the Bank official who could be contacted in case of delay in disposal of application.
• Sanction/rejection should be communicated within 15 days of receipt of duly completed
application with supporting documents.
• No application for educational loan received should be rejected without the concurrence
of the next higher authority. Branches need to record reasons for rejection and advise
the applicants suitably with reason for rejection to avoid complaints : e-Cir/515/2008-
09, 1032/2011-12.
Quarterly Progress Report : CCFO/ADV/CL/327/2006-07.
Complaints : Guidelines to avoid references and reduce complaints from customers : CCFO/
ADV/CL/223/2006-07.
On-line Registration : Web-based Application : To facilitate students for availing of education
loans, Corporate Centre have enabled our customers to register their applications with our Bank
on-line : CCFO/ADV/CL/248/2007-08.
On-line Registration of applications (Web-Based) : Ref. No. : On completion of an on-line
registration of application under Education Loan Schemes, the applicant gets a Tickets No.
(Reference No.)
Recently, a new field Reference No. has been created in the “Loan Additional Details Screen” to
capture the Ticket No. : e-Cir/543/2009-10.
Edu-Shield, Shield : Initially, SBI Life Insurance Co. Ltd. introduced a new product called ‘Edu-
shield’ for our Education Loan Customers with the features detailed vide CIRCO/ADV/32/2004-05.
The Edu. Shield was discontinued w.e.f. 01.05.2007. “Shield” introduced in its place : CCFO/BO/
CL/35/2007-08.
Edu. Loans : Insurance : In terms of IBA guidelines, insurance premium for student-borrower
can be considered as expense for the loan. IBA has advised that while it is not compulsory for
all students taking loan from the Bank to avail the Insurance facility, the branches should explain
to the student/parent borrowers the benefits arising out of taking an insurance policy covering life
and make efforts to market the product : e-Cir/68/2008-09.
Edu. Loans : “RiNn RAKSHA” : Insurance Coverage of Educational Loans : SBI Life has now
come out with a new policy RiNn Raksha (IRDA License No. : UIN : 111N078V01) which is
designed to cover Educational Loan borrowers : e-Cir/704/2011-12, 226/2013-14.
While it is not compulsory for all students taking loan from the Bank to avail the Insurance
facility, the Branches should explain to the student/parent borrowers the benefits arising out of
taking an insurance policy covering life, and make efforts to market the product.
Education Loans : Insurance : The student may be appropriately counselled to obtain suitable
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insurance policy from the SBI Group viz., Rinn Raksha OR Shield. However, the choice of Insurance
Company should be left to the borrower and the policy needs to be assigned in favour of the Bank.
Since, Rinn Raksha is a Group Credit Life Insurance Policy, no separate assignment is required.
However, Smart Shield has to be assigned in favour of the Bank : e-Cir/798/2013-14.
Edu. Loan Scheme : 2 or more Wards : Modifications : The restriction of maximum permissible
amount of loan as per the Scheme while considering the aggregate loan amount for two or more
wards of a parent/guardian, i.e., Rs. 10 Lac for studies in India and Rs. 30 Lac for studies abroad
has been removed. Each ward of a parent/guardian can now avail of loan as per their eligibility
provided availability of collateral security stipulated as per the Scheme for the aggregate loans
put together : e-Cir/268, 789/2008-09.
Revised Instructions issued by IBA : e-Cir/780/2009-10 : There is no ceiling on maximum aggregate
amount of loan when two or more wards of a parent/guardian individually avail loan. Educational
Loan is given for an individual and not for the family as a unit. Each ward of a parent/guardian may
be sanctioned loans up to Rs. 4 Lakh individually without insisting for any security.
Edu. Loans : & Scholar Loan Scheme : Resumption of Studies after a Break : A break in
studies for reasons beyond control such as death, illness in the family, or any other major
dislocation should not result in denial of educational loan to a meritorious student : CCFO/ADV/
CL/119/2007-08.
Such cases should be referred to the Controller of the branch/RACPC, who is the appropriate
authority to take a decision in such cases.
Education Loan Scheme : Sanction of Higher Loan Limit and Other Deviations : Authority
Structure : Detailed in e-Cir/439/2013-14.
Edu. Loans : to Wards of Staff : All disbursements of Education Loan must invariably be
made by way of a draft in the name of the Institutions in all cases, including loans relating to staff
members : CCFO/ADV/CL/313/2006-07.
Edu. Loans to Wards of Staff : Amendments : CCFO/ADV/CL/199/2007-08 :
i) The stipulation that total deductions should not exceed 60% of total emoluments of the
employees is withdrawn.
ii) No tangible collateral security/TPG or lien on PF balance is to be taken for education loans
up to Rs. 4 Lac sanctioned to wards/children of our staff. For loans above Rs. 4 Lac, employees
should be required to provide sufficient tangible collateral security/TPG as applicable for
public.
iii) A mandate for deductions of instalment due from the salary/pension of employee should be
obtained in all cases.
The changes/modifications advised in CCFO/ADV/CL/199/2007-08 are also applicable to the
existing education loans as on 22.09.2007, i.e., the date of the circular, provided the employee
furnishes adequate tangible collateral security/third-party guarantee, if any, as applicable to the
general public, as on the date sanction of the loan if the loan amount is more than Rs. 4 Lac : e-
Cir/61/2008-09.
Incentive : As an incentive to pursue higher education by the wards of our employees, the Bank
has lowered the rate of interest on Student Loans as well as on SBI Scholar Loans to their wards
in the existing as well as the new loans at 8% P.A. with effect from 01.07.2009.
Moreover, interest rate concession of 0.50% offered to girl students in terms of the direction of
the Ministry of Finance, Govt. of India will continue to be available as hitherto.
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However, the incentive of 1% reduction in rates for regular servicing of interest during the moratorium
period as available hitherto is not available to the wards of staff w.e.f. 01.07.2009 due to reduction
in rates significantly : e-Cir/174/2009-10.
Adv. to Nurses Seeking Employment Abroad : Salient Features of the new product : CCFO/
ADV/52/2005-06.
Pilot Training Courses : In order to align the SBI Student Loan Scheme with the IBA Model
Education Loan Scheme (Revised in 2007), the Bank recently included the pilot training courses
under SB Student Loan Scheme and withdraw the pilot training courses from SBI Career Loan
Scheme : e-Circular/407/2009-10.
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SBI STUDENT LOAN SCHEME :
MARGIN, SECURITY NORMS
Master Cir. : e-Cir/789/2008-09 :
Margin :
Up to Rs. 4 Lac : NIL
Above Rs. 4 Lac :
- Studies in India : 5%
- Studies Abroad : 15%.
Scholarship/assistantship to be included in margin.
Margin may be brought in on year-to-year basis (on a pro-rata basis) as and when disbursements
are made.
E.L.S. : Studies Abroad : Margin : Modifications : e-Circular/352, 789/2008-09 :
a) While arriving at the margin for loan, only those expenses which are to be funded through
the loan account, may be considered. A letter may be obtained from the student/parent to
the effect that the other expenses/part of the expenses will be taken care of by them.
b) The student borrower/parent should bring minimum 15% margin on the amount that he
wants to be funded by the Bank at the time of each disbursement.
SBI Student Loan Scheme : Studies Abroad : The Bank has recently enhanced the maximum
loan amount for studies abroad from the earlier Rs. 20 Lac to Rs. 30 Lac : e-Cir/412/2012-13.
In cases, where the students have already availed of loans for studies abroad and need additional
finance in view of the depreciation of Indian Rupee, top-up loans may be sanctioned where
disbursement is not completed. However, the total amount of existing loan and the top-up loan
should not exceed Rs. 30 Lac, which is the maximum loan limit for loans for studies abroad.
Security :
Studies in India :
a) Up to Rs. 4 Lac : No security. Only Co-obligation of parents.
b) Above Rs. 4 Lac & up to Rs. 7.50 Lac : Collateral in the form of a suitable third-party
guarantee.
c) Above Rs. 7.50 Lac & up to Rs. 10 Lac : Tangible Collateral Security of suitable value
together with co-obligation of parents.
Studies Abroad :
a) Up to Rs. 4 Lac : No security. Only Co-obligation of parents.
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b) Above Rs. 4 Lac & up to Rs. 7.50 Lac : Collateral in the form of a suitable third-party
guarantee.
c) Above Rs. 7.50 Lac & up to Rs. 30 Lac : Tangible Collateral Security of suitable along with
the assignment of future income of the student for payment of instalments.
- Assignment of future income of the student for payment of instalments may be obtained.
- The documents should be executed by both the student and the parent/guardian (as joint
borrower). If the student is a minor, the documents should be signed by the guardian acting
‘for self’ as well as ‘for and on behalf of the minor’.
- The collateral security can be in the form of land/building/Govt. Securities/Public Sector
Bonds/Units of UTI, NSC, KVP, LIC policy, gold, shares/debentures, bank deposit in the
name of student/parent/guardian or any other third-party with revised margin, as under :
a) Land/Building : 10%.
b) Govt. Securities, Public Sector Bonds, NSCs, bank Deposits, RBI Relief Bonds, etc. :
NIL. Face value of the security/bond should be reckoned as value of security.
c) LIC Policies : Surrender Value.
- Wherever the land/building is already mortgaged, the unencumbered portion can be taken
as security on IInd charge, provided it covers the required loan amount.
A second charge on the property can be accepted provided the market value thereof, as per
acceptable current valuation, is adequate to cover our loan also after providing for liability
towards the 1st mortgage.
- In case the loan is given for purchase of a computer, the same is to be hypothecated to the
Bank.
- All charges in connection with valuation of property, search report from the Bank Advocate,
Stamp Duty, etc. are to be borne by the borrower.
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EDUCATION LOAN SCHEME (E.L.S.) :
MODIFICATIONS/CLARIFICATIONS, ETC.
Govt. Guidelines : The Branches should follow the recent Ministry of Finance, Govt of India
guidelines regarding tracking of Education Loans, viz. taking parent/guardian as co-borrower and
sanctioning the loans at the nearest branch to the place of domicile/permanent residence of
students/parents : CCFO/ADV/CL/65/2006-07.
E.L.S. : IBA Guidelines : The IBA recently advised that member banks should implement the
guidelines under the education loan scheme in the right perspective; as far as possible they
should not reject any genuine requests and try to accommodate the student community as far as
possible within the broad framework of the Scheme : e-Circular/353/2008-09.
E.L.S. : Finance Ministry Guidelines : e-Cir/578/2008-09.
a) Branches should not refuse to process education loan on the grounds that the applicant is
not falling within the area of operation of the branches.
b) As per the extant instructions, the education loans are generally sanctioned at the branchnearest to the permanent residential address of the student/parent for tracking purposes.
Many parents/guardians move away from their place of domicile due to employment/
transferable jobs, etc. and face difficulty in processing the loans at the present place of
stay/employment although they may be residing there for number of years and possess
sufficient documents to prove their stay at that place. Branches may consider such cases
in right spirit and record their permanent addresses and their movements for tracking
purposes.
Edu. Loans : Modifications : CCFO/ADV/CL/51/2006-07.
a) Penal Interest : Penal interest @ 2% should be charged for loans above Rs. 4 Lac for the
overdue amount and overdue period.
b) Processing Charges : No processing / Upfront charges to be collected as hitherto. However,
other instructions regarding recovery of the prescribed charge for loans above Rs. 4 Lac for
students going abroad continue.
Service Charges : Any charges levied by our branches/other banks abroad may be recovered
from the remitter and not from the beneficiary. The remitting branches should mark the
instruction “All charges to the remitter and not to beneficiary” in their advices : e-Cir/620/
2009-10.
SBI Student Loan : Modifcations/Clarifications : CCFO/ADV/CL/228/2007-08 :
• In the case of the parent having a transferable job, the address for correspondence must be
meticulously noted in the system as well as in the records.
• For the purpose of Education Loan, the guardian may be defined as under :
Natural guardian, the legal guardian, i.e., a guardian appointed by any authority, or a person
in-charge of the care of the person and property of the student who intends to avail of such
loan facility.
• Funding of enhanced cost (enhanced fees) may be permitted on case-to-case basis.
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• The Bank has authorised branches at other centres to sanction SBI Scholar Loan to students
who gain admission to the select list of prestigious education institutions.
Education Loans : Validity Period : The Bank has Incorporated the validity period of 30 days(from the date of the arrangement letter) in arrangement letter issued to the borrowers in respect
of Education Loans to avoid ambiguity of period within which the borrower should avail loan facility :
e-Cir/481/2013-14.
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SBI SCHOLAR LOAN SCHEME
(MODIFIED)
Master Cir. : e-Cir/789/2008-09.
Purpose :
• To extend financial assistance to deserving/meritorious students for pursuing full-time
courses in India at select premier and reputed institutes.
• Regular full-time Degree/Diploma Courses and not certificate/part-time courses, through
entrance test/selection process. Full-time Executive Management Courses like PGPX (for
IIMs) are also covered : e-Cir/872/2009-10.
SBI Scholar Loans are to be sanctioned for core programmes only, i.e., regular full-time Degree/
Diploma Courses and Executive Management courses like PGPX, EPGP of all IIMs and other
reputed institutions like XLRI, MDI and ISB Hyderabad : e-Cir/981/2012-13.
Updated list : of Institutions enclosed to e-Cir/739/2013-14.
Re-classification : Of Institutes from List ‘B’ to ‘A’ : e-Cir/395/2013-14.
This entitles the students to a maximum loan limit of Rs. 20 Lac without tangible collateral and up
to Rs. 30 Lac with tangible collateral security. Parent/Guardian is to be taken as co-borrower in all
cases.
Student Eligiblity :
• He should be an Indian National.
• He should have secured admission to full-time professional/technical courses through
Entrance Test/Selection process in any of the select institutes.
Eligible Expenses :
• Fee payable to college/school/hostel.
• Examination/Library/Laboratory fees.
• Purchase of books/equipment/instruments/uniforms.
• Caution deposit / building fund / refundable deposit supported by Institution bills/receipts.
• Travel expenses.
• Purchase of computers, if essential for completion of course.
• Any other expense required to complete the course like study tours, visits to foreign
universities in exchange programmes, project work, thesis, etc.
Type of Loan :
Term loan.
Margin :
• Up to Rs. 4 lac : Nil.
• Above Rs. 4 lac : Nil (originally, 5%) : e-Cir/226/2013-14.
• Scholarship/assistantship was to be included in margin.
• Margin should was to be brought in on year-to-year basis as and when disbursements
were made on a pro-rata (in proportion) basis.
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Interest :
• Loans should be sanctioned only on floating rate basis.
• Interest should be debited on simple interest rate basis during the course period and the
repayment holiday/moratorium period.
• Penal interest for loans above Rs. 4 Lac : @ 2% on the amount of default for the period of
default, over and above the applicable rate if the EMIs remain unpaid for a period of 30 days
from the due date, for any reason, including a bounced cheque.
• 1% concession in interest rate for full tenure of loan if, interest is serviced during moratorium
(if any moratorium period is specified.)
• As the concession is available for servicing interest during moratorium, interest in the loan
account should be re-set when the repayment starts, and the excess interest of 1% p.a.
pertaining to the moratorium period should be refunded/credited to the loan account.
• Revision of Rate of Interest and Concessions : for Select 19 Institutions : Applicable only
to SBI Scholar Loans sanctioned on or after 01.06.2012 : e-Cir/294/2012-13.
Processing Fee :
Nil.
Security :
No security/collateral or guarantee should be asked for from the student. Loan should be sanctioned
solelyon the basis of the student having secured admission in a reputed/top-rated institute.
Co-borrower :
The loan is sanctioned jointly in the name of the student and his parent/guardian. In case of
married person, co-obligator can either be spouse or parent/parent-in-law. Parental co-obigation
can also be substituted by a suitable third-party guarantee : e-Cir/872/2009-10.
The discretion to waive the parental involvement rests with the concerned sanctioning authority,
as the tracking of these loans may be difficult : CCFO/ADV/CL/30/2006-07.
Enhanced Loan Amount :
e-Cir/11/2012-13 :
Category Without any tangible with tangible collateral
collateral, only parent/ of full value and Parent/
Guardian as co-borrower Guardian as co-borrower
• List ‘A’ - IIMs, etc. :
Maximum loan amount Rs. 20 Lac. Rs. 30 Lac.
• List ‘B’ - The remaining
institutes from the existing list :
Maximum loan amount Rs. 15 Lac. Rs. 20 Lac.
• List ‘C’ - New institutes :
Maximum loan amount Rs. 10 Lac. Rs. 15 Lac.
Execution of Documents : In the case where the parents (co-borrowers) reside away from the
campus where the applicant resides or executes the documents : CCFO/ADV/CL/152/2006-07.
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The document may be executed by the student by paying the applicable stamp duty at the place
of execution by the student. The document may be sent for execution by parents, at such place
where they reside and the difference in the stamp duty be paid thereat. Alternatively, the highestof the stamp duties may be paid by the student at the time of execution by him and then the
document may be sent for execution by the parents.
Repayment Holiday/Moratorium :
• Moratorium for course duration plus 6 months after completion of course. Remains
unchanged : e-Cir/173, 872/2009-10, 226/2013-14.
• Accrued interest during the moratorium should be added to the principal and repayment in
EMIs should be fixed : e-Cir/226/2013-14.
Repayment :
• Originally, maximum 5-7 years after commencement of repayment.
• Extension of time for completion of course may be permitted for a maximum period of 2
years if student is not able to complete the course within the scheduled time : e-Cir/226/
2013-14.
• Repayment Period : Increased to 12 years after commencement of repayment : e-Cir/226,
859/2013-14.
Repayment starts 6 months after the completion of the course.
In case if the second loan is availed, the student is given a maximum period of 12 years
after completing the second course to repay both the loans : e-Cir/226/2013-14.
The increase in repayment period is applicable to all existing as well as fresh loans. RBI
has clarified that if the repayments in education loans are extended due to revision in the
repayment period, the same may not be treated as restructuring. However, this treatment
is available only to education loans which are standard in the books of banks on the date
of such extension of repayment period : e-Cir/859/2013-14.
Sanction & Disbursement :
At the authorised/Branch. After the completion of the studies and if the student desires, the loan
account can be transferred to a Branch closer to the place of co-borrower and preferably which
has made KYC verification at the time of availing loan for tracking purposes : e-Cir/872/2009-10.
All MMGS-III and above incumbency branches : e-Cir/226/2013-14.
SBI Scholar Loan Scheme : NPAs : Precautions : The incidence of NPA is quite high under the
Scheme. Branches/CPCs are advised to keep a track of the student/parent by means of regular
follow-up. In addition to the existing follow-up measures, the following additional measures should
be initiated : e-Cir/1069/2010-11 :
• Campus/Designated Branches to keep liaison with the Alumni of these institutes.
• Passport details/PAN number and/or UID to be obtained of applicant/co-applicant invariably.
• CIBIL check of the borrower/co-borrower to be done, and in cases of default, report should be
sent to CIBIL.
• In case of the parent having transferrable job, the address for correspondence to be
meticulously noted in the system for tracking purposes.
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Sanc. & Disb. of Loan :
The Bank has recently made modifications in sanctioning and disbursing loans under SBI Scholar
Loan scheme before the completion of Pre-sanction check, to all students taking admission in
institutes covered under SBI Scholar Loan scheme, subject to completion of the same within a
period of 3 months and fulfilling other terms and conditions mentioned in e-Cir/1002/2011-12, 226/
2013-14.
KYC (identity check) of the student/co-borrower/guarantors to be done at MMGS-III & above
inclubency Branch, on the basis of which the RACPC will sanction the loan after pre-sanction
check of student/co-borrower/ guarantor.
i) In case where the student lives in BPR centre, the sanctioning RACPC in co-ordination with
the Branch should ensure that pre-sanction check of the borrower/co-borrower/ guarantor
required for the loan should be done. (Pre-sanction check can be assigned to RACPC
concerned where the student/parent resides, as they have necessary outfit to carry out the
same).
ii) If the student lives in non-BPR centre, the sanctioning RACPC in co-ordination with the
Branch should ensure the same and get the pre-sanction check completed from the Branch
concerned nearer to the permanent residence of student before the disbursal of the loan.
iii) In case the Branch disbursing the loan is not linked to any CPC, the branch concerned will
follow up for completion of the formalities with CPC or the Branch as mentioned in (i) and (ii)
above.
Under the modified process of Pre-sanction check required for SBI Scholar Loans, the Branch will
first carry out a CIBIL check on the co-borrower/guarantor. The instalment will be disbursed onlyafter completion of pre-sanction check of the borrower/ co-borrower/ guarantor required for the
loan.
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Purpose
Eligibility
Type of Loan
Facility
Age
Loan Amt.
Repayment
Interest
Proc. Fee
Security
The Bank has recently formulated a fully collateralized loan scheme to finance
individuals who opt for training to acquire skills needed to join a job/profession:
CCFO/ADV/CL/322/2006-07.
Individuals who undertake a course for training/skill development. Initially,
this scheme is restricted to persons joining Commercial Pilot Training
Courses and Airhostess Training Courses in India and abroad, from institutes
recognised by the Ministry of Civil Aviation/DGCA : CCFO/Adv/CL/322/2006-
07.
The courses for Commercial Pilot Training conducted abroad have now been
included in the SBI Career Loan Scheme, subject to the conditions detailed
in CCFO/ADV/CL/86/2007-08.
Personal loan.
Term Loan with applicant and parent/guardian/spouse as co-borrowers.
i) Applicant : Minimum : 18 years.
ii) Co-borrower : Maximum : 60 years.
Maximum Rs. 20 Lac (originally).
Reduced from Rs. 20 Lac to Rs. 3 Lac : e-Cir/366/2011-12.
Maximum moratorium one year after completion of course. Repayment in
36 EMIs commencing from one year after date of completion of course :
CCFO/ADV/CL/120/2007-08.
Type of Security Rate of Interest
a) Land/Building As per Circular
b) Bank’s TDRs/STDRs As per Circular
c) Govt. Securities / Public As per Circular
Sector Bonds/ NSCs/ KVPs /
RBI Relief Bonds, LIC Policy
0.50% of the loan amount to be recovered upfront.
i) Equitable mortgage of non-encumbered residential house/flat, non-
agricultural urban immovable property, commercial or industrial property
in the name and possession of the borrower/co-borrower, (i.e., either
self-occupied or vacant). Where EM is not feasible and customer is
willing to execute a Registered mortgage deed, it can also be accepted,
or
SBI CAREER LOAN
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Margin
Documents
Insurance
Sanctioning
Authority
ii) Security in the form of Govt. Securities/Public Sector Bonds/NSCs/KVPs/
RBI Relief Bonds/LIC Policy/TDRs of the Bank.
iii) SBI Life Policy may also be treated as collateral security, to the extant
of surrender value : CCFO/ADV/CL/206/2007-08.
Type of Security Margin
a) Land/Building 20%.
b) Govt. Securities/Public Sector 10% on the Face value of the
Bonds, NSCs, KVPs, Bank’s Security.
Deposits, RBI Relief Bonds, etc.
c) LIC Policies 10% margin on surrender value
of LIC Policies.
Documents applicable to :
i) Personal Loans backed by Security. (Application Form Column 17 - to
mention Purpose of loan, details relating to course e.g. duration, name
of institute, proposed repayment schedule,) or
ii) Personal Loans against Mortgage of Immovable Property. (Application
Form Col. 15 - Purpose of loan, details relating to course e.g. duration,
name of institute, proposed repayment schedule to be mentioned).
The property being mortgaged to be insured for the full market value against
the risk of fire/earthquake/lightning/floods, etc. in the joint names of the
borrower/co-borrower and the Bank.
At Branches : sanctions by appropriate authority as per Delegation of Financial
Powers.
In centres with RACPC/RASECC : sanctions by processing centre.
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SBI EDUCATION PLUS
Product
Purpose
Eligibility
Age
Eligible
Courses
Loan Amount
Margin
Facility
Processing
Charge
Repayment
Security
Documents
Scheme for Financing Distance Education : The Bank has formulated
a scheme known as SBI Education Plus, specially targeted towards
employed persons who want to pursue Distance Education courses
and Part-Time Courses (Evening, etc). The loan product is in the form of
Personal Loans and is different from the Education Loan Scheme which
has been formulated as per the IBA guidelines : CCFO/ADV/CL/114/
2006-07.
To finance employed persons to pursue Distance Education Programmes
and Part-Time Courses (evening, etc.) for career development : CCFO/Adv/
CL/114/2006-07.
Permanent employees of State/Central/PSUs/Reputed Private Sector
Companies/Reputed Institutions with a minimum service of 2 years and
who have secured seat for pursuing higher studies in the Distance Education
and also Part-Time Courses (evening, etc). A letter of clearance/ consent
letter from the employer for pursuing the proposed course should be obtained.
Below 45 years.
Distance Education and Part-Time Courses (evening, etc.) leading to
Diploma/ Degree/Post-Graduation conducted by I colleges/ universities
approved by UGC/Govt/ AICTE/AIBMS/ ICMR/ IGNOU, etc., and other
reputed institutions approved by the GM (Network) falling within his area of
operation.
15 times NMI, Max. Rs. 1 Lac, Min. Rs. 25,000/-.
10%.
Term Loan.
Nil.
60 months in EMIs, commencing from one month from the date of
disbursement. No penal charges should be levied in case of early repayment
of loan by borrowers.
Check-off facility letter to be obtained from the employer, or PDCs (wherever
employer’s undertaking to deduct salary is not available) along with suitable
third-party guarantee.
As applicable to Xpress Credit.
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EDUCATION LOANS :
INTEREST SUBSIDY SCHEMEFOR ECONOMICALLY WEAKER SECTION (EWS)
FORMULATED BY MINISTRY OF HRD, GOVT. OF INDIA
Background : The Hon’ble Minister of Finance in his Budget Speech 2009-10 announced the
proposal to introduce the above Scheme. The Govt. has now formulated a Scheme for providing
interest on Education Loans during moratorium for technical and professional courses for studies
in India under the IBA Model Education Loan Scheme for students from Economically Weaker
Sections (EWS) with annual gross parental/family income up to Rs. 4.50 Lac per annum from the
academic year 2009-10. The Government of India, Ministry of HRD through IBA implements of the
Scheme. The broad guidelines of the Scheme issued by IBA are as under : e-Cir/235/2010-11 :
Scheme : The Scheme is known as Central Scheme to provide Interest Subsidy for the period of
moratorium on Education Loans taken by students from Economically Weaker Sections (EWS)
from scheduled banks under the Education Loan Scheme of the Indian Banks’ Association to
pursue technical/professional education for studies in India.
Applicability of Scheme : The Scheme has been adopted by all scheduled banks and is applicable
only for studies in recognized Technical/ Professional courses in India. The interest subsidy shall
be linked with the existing Education Loan Scheme of IBA and restricted to students enrolled in
recognized Technical/Professional courses (after class XII) in India in Educational institutions
established by Acts of Parliament, other institutions recognized by the concerned Statutory
Bodies, Indian Institutes of Management (IIMs) and other institutions set up by the Central/State
Government.
Interest Rates : As per the provisions of IBA Model Education Loan scheme linked to Bank’s
PLR/ Base Rate of individual Banks.
Moratorium Period : The subsidy is provided for the period of moratorium, i.e., course period
plus one year or six months after getting job, whichever is earlier, as prescribed under the IBA
Model Education Loan Scheme. After the moratorium period is over, the interest on the outstanding
loan amount shall be paid by the student in accordance with the provisions of the Education Loan
Scheme.
Criteria for Economically Weaker Section : The benefit of the Scheme would be applicable to
students belonging to economically weaker sections with an annual gross parental/family income
with upper limit of Rs. 4.5 Lac per year (from all sources). Income proof shall be required from the
students from such public authorities which are authorized by State Governments for certification
of income status for this Scheme, including Central and State Government schemes. The present
scheme is intended to cater to the needs of students belonging to economically weaker sections,
with prescribed upper parental gross income limit of the family from all sources, which is based
on economic index and not on social background. The Scheme is independent of any other
schemes which may cater to EWS.
Competent Authority to Issue Certificate : The Ministry of HRD, Government of India has
issued an Advisory to all the State Governments requesting them to designate appropriate authority
or authorities who are competent to issue income certificates, based on economic index and notsocial background for the purpose of this scheme. Banks implement the Scheme based on the
notification of the certification authority by State Governments communicated through District
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Level Consultative Committees (DLCCs). A format for issue of uniform certificate sent by IBA is
given in the Annexure-‘A’. The DLCCs are given the list and the signatures of the competent
authority to issue the income certificate.
Appropriate Authority/authorities, who are competent to issue income certificates : an updated
list of 28 States / UTs, along with the designated certifying authorities, received from the IBA, is
enclosed to e-Cir/123/2013-14.
Eligibility for Interest Subsidy : The interest subsidy under the Scheme shall be available to the
eligible students only once either for the first under-graduate degree course or the post graduate
degree/diploma in India. Interest subsidy shall, however, be admissible for integrated courses
(graduate plus post-graduate).
Interest subsidy under this Scheme shall not be available for those students once they discontinuethe course midstream, or who are expelled from the institutions on disciplinary or academic
grounds. However, the interest subsidy will be available only if the discontinuation was due to
medical grounds for which necessary documentation to the satisfaction of the Head of educational
institution will have to be given.
Awards/Certificates : There would be tag/ marker on the degree of the student, indicating his
repayment liabilities. Electronic Tags will enable employers to identify loanees.
(The Ministry of HRD has launched the process to dematerialize the educational awards/certificates,
setting up of Depository for maintaining the records in dematerialized form and providing service
to the users. Banks can have on-line access for verification process which would eliminate fraudulent
practices like forging of certificates and mark-sheets).
Nodal Bank : The Scheme is being implemented through Canara Bank, which is the Nodal
Bank for the Ministry of Human Resources Development. Modalities for implementation and
monitoring have been being finalized in consultation with Canara Bank and IBA. Canara Bank has
submitted the following documents for the use of subsidy claiming banks :
a) Certificate and Undertaking to be signed by the Banks while claiming subsidy. The certificate
should accompany the claim submitted by each office of the Bank (Annexure ‘B’).
b) Agreement between the student and the Branch of the Bank (Annexure-’C’).
The documents have been vetted by the Law Dept.
The formats, including MIS data for submission of claim, are available with the Circles. The
settlement of claims is quarterly or half-yearly or yearly. The time-limit proposed by Canara Bank
is 30 days for the first claim and 60 days for the supplementary claim.
Applicable Academic Year : The Scheme is applicable from the academic year 2009-10 starting
1st April 2009. The Scheme is applicable only in respect of disbursements made by the Banks
on or after 1st April, 2009 for the academic year 2009-10, irrespective of date of sanctioning.
However, the interest on disbursement made from 1.4.2009 is eligible for interest subsidy.
For example, in case of loans sanctioned prior to 1.4.2009, for the courses beginning prior to
academic year 2009-10, the interest subsidy is available to the extent of disbursements made
after 1.4.2009.
List of Technical/Professional Courses : A list of Technical/Professional courses, for which the
Scheme is applicable, has been brought out by the Ministry of HRD in consultation with the
concerned Ministries/ Departments and the Indian Banks’ Association and is being publicized
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from time to time. As regards list of accredited universities/institutions and recognized professional
courses, UGC and AICTE display the names of such institutions and courses in their websiteswhich may be accessed for verification purposes. In case of doubt, Banks may approach UGC/
AICTE and other councils for clarification for which UGC/AICTE and other councils have created
Cells and identified Nodal Officers whom Banks can approach for relevant information.
Interest Concession : Under the Bank’s Education Loan Scheme, 1% interest concession is
provided for the borrowers if the interest is serviced during moratorium for the entire loan tenure.
This 1% interest concession would be extended under the Central Scheme of Interest Subsidy
provided Govt. disburses interest subsidy claims half-yearly or yearly basis. Clarification from
IBA/Ministry of HRD regarding the procedure to be followed for refund of interest, where the entire
interest is paid during moratorium as per the Education Loan Scheme has been issued.
Disbursement of Interest Subsidy Claims : The disbursement of Interest Subsidy Claims to
the Banks shall be on quarterly or half-yearly or yearly basis.
Similar Schemes Approved by State Governments : In case some State Governments are
simultaneously offering a similar scheme, Banks should claim reimbursement of interest subsidy
only through one of the schemes.
Monitoring : A monitoring mechanism has been evolved by the Ministry of HRD to monitor the
benefits accruing to different categories of borrowers such as Scheduled Castes, Scheduled
Tribes, Minorities, Disabled, Male, Female, Type of Course and Geographical distribution. Branches
create a database of these loans for the purpose of reporting.
Audit : Statutory Audit of the Accounts, coinciding with the Annual Statutory Audit of the Bank,
should be conducted once a year.
Applicability of Interest Subsidy Scheme to SBI : Under Education Loan Scheme, the Bank
has two schemes at present :
i) SBI Student Loan Scheme,
ii) SBI Scholar Loan Scheme.
Under the above schemes, education loans for eligible students for studies in India up to a maximum
limit of Rs.10 Lac are eligible for interest subsidy.
Information to Public : IBA has devised a standard format to be displayed at Branches giving
information about the Interest Subsidy Scheme (given as Annexure ‘D’). Circles/Branches arrange
to display the information prominently. IBA also arranges to release advertisement in newspapers.
Education Loans : For EWS : Refund of Excess Subsidy Amount : e-Cir/1065/2011-12.
Education Loans : EWS : Submission of Subsidy Claims : e-Cir/1130/2011-12.
Education Loans for EWS : Subsidy Claims : The Branches should spread the awarenessabout the subsidy claim among the education loan borrowers so that maximum number of eligible
education loan borrowers avail of the Govt.’s subsidy. The Ministry of HRD and Nodal Bank do not
entertain claims if not submitted within the stipulated period : e-Cir/109, 133, 689, 795/2012-13.
Accountability is fixed for non-submission of interest subsidy claims in respect of all eligible
cases : e-Cir/470/2013-14.
All the relevant documents and income certificates, etc., pertaining to the interest subsidy claims
are required to be obtained only once from the students.
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Branches should submit the supplementary interest subsidy claims in respect of all eligible
students for the year, to their controllers at the earliest : e-Cir/833/2013-14.
It should be ensured that no eligible claims are left out for submission.
The Ministry of HRD has permitted the banks to submit supplementary claims/pending claims
during the period - November to December, every year : e-Cir/965/2013-14.
A list of students in respect of whom Interest Subsidy Claims have been submitted is placed on
PBBU’s site in State Bank Times : e-Cir/877/2013-14.
The Branches/RACPCs should refer to this list of students at the time of lodgment of interest
subsidy claims for higher studies to ensure that no such claims are submitted for the students
who had availed of the same earlier for the undergraduate courses/studies.
Implementation of Scheme : IBA have issued clarifications on certain issues. The Bank has
designated a Nodal Officer and a Branch in each LHO centre to receive the subsidy. Branches
familiarize themselves with the Scheme and identify the beneficiaries and lodge claim. The operating
units concerned should send letters to all Education Loan borrowers, where the disbursements
have taken place, detailing the Scheme so that eligible borrowers would come forward with
necessary documents to claim the subsidy. The exercise of sending letters should be monitored
by PBU at LHO level with the help of the designated Nodal Officer who ensures that no borrowers
are left out. A copy of the letter to be addressed to the borrowers is given in Annexure ‘E’. ITC,
Belapur facilitates Branches in lodging the subsidy claims.
Miscellaneous :
Important Points & Precautions : e-Cir/929/2010-11.
Tag/Marker & Other Developments in Account Opening Screen : e-Cir/663/2010-11.
C.B.S. Branches should ensure that all eligible accounts for which interest subsidies are claimed
and data submitted to their controllers, are invariably tagged in CBS before submission, i.e.,
the field “Interest Subsidy For EWS” should be made Yes : e-Cir/275/2013-14.
Claims : Procedure for submission : e-Cir/505/2010-11.
Clarification regarding acceptance of Claims, etc. : e-Cir/17/2011-12.
Clarification : Issued by IBA : e-Cir/516/2011-12.
Branches should tag all eligible education loan accounts including those where interest subsidies
have already been claimed in CBS i.e. make ‘Interest subsidy for EWS’ field as ‘Yes’ filling in all
mandatory fields as required : e-Cir/640/2011-12.
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PERSONAL LOANS
Personal Loans : Frauds : KYC norms should be meticulously followed by the branches.
Salary slip submitted by the applicant should be properly verified : CCFO/ADV/CL/372/2005-06.
Other precautions detailed in CCFO/ADV/CL/372/2005-06.
Personal Loans : Prevention of Frauds : All Branches dealing with personal loans should ensure
that (e-Cir/550/2008-09) :
a) Strict KYC Compliance is done.
b) The salary disbursement of employees granted personal loans should preferably be through
the accounts of the employees opened with the branch/bank.
c) Cash payments should be effected to the employees/borrowers themselves.
d) The credit worthiness of the employer itself should be considered, to ensure that there is no
wholesale mortality of loans on account of failure of the company.
Handling by RACPC : Till the RACPC is ready for the same, all advances under Personal Loan
Scheme (including SBI Saral) will be handled by branches only : CCFO/ADV/CL/94/2006-07.
In Bhopal Circle, the SBI Saral (except Xpress Credit) is to be continued by RACPCs : CCFO/
ADV/CL/132/2006-07.
SBI Saral : RACPC : The appropriate authority has accorded approval for shifting the Personal
loans under SBI SARAL Loans Scheme, to the RACPCs, subject to the instructions regarding
the Scheme (types of borrowers, etc.) issued by the Personal Banking Business Unit (PBBU)
from time to time : CIRDO/OP&SP/CL/06/2006-07.
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SIMPLIFIED PERSONAL LOAN SCHEME - SBI SARAL
(PERSONAL BANKING ADVANCES)
1. Background :
The Bank’s current Personal Loan Scheme caters to a restricted segment of the public and
hence we are losing our competitive advantage to other players in the market. Besides,
many of the processes relating to the scheme have not been clearly enunciated. Therefore,
while continuing with the Xpress Credit Scheme for select categories of salaried employees,
the Bank replaced the ‘Personal Loan Scheme’ with ‘SBI Saral Scheme’ with the following
objectives (CCFO/ADV/218/2005-06) :
i) Inclusion of a wider target group,
ii) Issuance of clear instructions regarding processes.
No staff accountability will be examined in all cases where systems and procedures laid
down under the Scheme are followed meticulously.
2. Purpose :
2.1 It is the intention of the Bank to ensure that any customer Resident Indian National
having capability to repay a loan gets the opportunity to avail of finance, irrespective of
the Segment except customers from agriculture segment. Therefore, the new ‘SBI Saral
Scheme’ caters to all P segment customers other than those covered under Xpress
Credit. The scheme tries to meet sudden unanticipated needs of persons for lump sum
in cash without any stipulation about end-use of funds.
2.2 The loan is granted for any legitimate purpose whatsoever (e.g. expenses for domestic
or foreign travel, medical treatment of self or a family member, meeting any financial
liability, such as marriage of son/daughter, defraying educational expenses of wards,
meeting margins for purchase of assets, etc). In line with the Bank’s corporate social
responsibilities, the scheme seeks to ensure that no individual with repayment capacity
should have to resort to a money-lender for emergency funds.
3. Eligibility :
Any person is eligible for SBI Saral Loan, who satisfies all the following conditions :
- He should have sufficient cash-flows to repay the loan from salary (in the case of
employees), or regular income (in the case of other persons), as evidenced by 6 months
salary slips/income-tax returns of 2 years (Employees should have minimum 1 year’s
length of service). Income in all cases should be sufficient to take care of a ratio of EMI/
NMI of 50% at least.
- He should provide proof of residence and proof of identity to satisfy KYC norms
- He should produce 6 months satisfactory statement of bank account (at any bank).
- If the customer is a credit card holder, he should be asked to submit last 3 months credit
card statement (pertaining to any bank).
- He should score minimum 50 marks in the Credit Scoring Model.
The Bank has recently re-introduced the following category of borrowers under SBI Saral
Scheme : CCFO/ADV/CL/320/2007-08 :
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“Salaried individuals of good quality corporates, who are eligible under Xpress Credit Scheme,
Self-employed engineers, doctors, architects, chartered accountants, MBAs with minimum
2 years standing.”
4. Minimum Income :
- For employees, the net monthly income (NMI) should be at least Rs. 5,000/- after all
deductions (including income-tax).
- For others, the net annual income (NAI) should be at least Rs. 60,000/- (i.e., income as
per latest income-tax return less tax payable).
- Income of spouse must be considered if the loan is availed jointly or the spouse guarantees
the loan.
5. Loan Amount :
Minimum :
- Rs. 24,000/- in metro and urban centers.
- Rs. 10,000/- in rural/semi-urban centers.
Maximum :
- 12 months NMI for salaried individuals.
- 1 year’s NAI in case of others
- Ceiling of Rs. 10 Lac in all centers, subject to credit score of 50 or more.
6. Security :
The loan is clean in nature and security should not be taken for SBI Saral Loan. A borrower
who is able to provide security, should be financed not under Saral Scheme but under the
relevant scheme corresponding to the nature of the security e.g. Mortgage Loan against
Property, Share Loan against Shares, Secured Loans against security, etc.
7. Type of Loan :
The loan is sanctioned as a Term Loan.
8. Repayment Period :
a) The loan should be repaid through Equated Monthly Instalments (EMIs), in any period
from 6 to 48 months as per the wishes of the borrower.
b) If the borrower prepays the loan before 6 months, a pre-payment service charge of 1% of
loan amount should be charged.
c) Renewal of loan should be allowed after 24 months. Alternatively, a separate loan can be
taken, subject to EMI/NMI ratio of not more than 50%.
9. Mode of Repayment :
9.1 The loan should be repaid through :
- A tie-up with employers, to remit the EMIs from the salary of the employee.
- Standing Instructions from the salary account of the borrower with our Bank.
- A full set of PDCs (post-dated cheques) for the entire period of loan.
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9.2 No external or internal agency, including co-operative societies, should be allowed to act as
middlemen.
9.3 Appropriate arrangement should be made at the branch for the safe-keeping and diarising of
the cheques, as per the Bank’s extant instructions reiterated vide CCFO/ADV/218/2005-06.
10. Interest :
The interest rate is as under :
- Salaried borrowers with tie-up arrangement (other than those under Xpress Credit scheme)
: above SBAR/Base Rate (detailed in CCFO/ADV/218/2005-06).
- All others : The interest rate depends on the credit scoring model (detailed in CCFO/
ADV/218/ 2005-06).
- Processing Fee : Detailed in CCFO/ADV/218/2005-06.
Clarification regarding Interest Rate : CCFO/ADV/CL/312/2006-07.
11. Waivers and Discretions :
The waivers and discretions detailed in CCFO/ADV/218/2005-06 can be permitted, for which
full records should be maintained by B.M./P.B. Manager/Field Officer for showing to auditors.
12. Delegation of Financial Powers :
As per the delegation communicated by the Bank from time to time.
Revised Sanctioning Structure : Detailed in e-Cir/457/2013-14.
13. Documentation :
13.1 Pre-sanction Process :
The following documents should be obtained before sanction :
1. Application-cum-appraisal Form, with a photograph of the borrower, duly attested by the
Field Officer/BM/PBD Manager.
2. To put in place an arrangement for verification of the address of the borrower by an
outside agency. A report, duly signed by the verification agency (in places where an
arrangement is in place), or by our officer/staff in other places (where verification agency
approved by the Corporate Centre is not available), should be compiled, based on the
following verifications :
i) Verification of the borrower’s residence address, as given in the loan application, by
actually visiting the residence of the borrower.
ii) Verification of the borrower’s office address, as given in the loan application, by actually
visiting the office of the borrower.
iii) Verification of the borrower’s residence telephone number, as given in the loan application,
by actually calling the residence telephone number of the borrower.
iv) Verification of the borrower’s office telephone number, as given in the loan application,
by actually calling the office telephone number of the borrower.
v) Verification of the I.T. returns of the borrower with I.T. Department, through a person
approved by the Regional Office/Zonal Office, where feasible.
Where IT returns cannot be verified by the Bank, statement of account of the borrower
may be scrutinized to verify income flows.
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Where the verification work is not outsourced, the Branch staff must do the verification
and the report should be clubbed with the loan documents.
13.2 Compliance with KYC Norms :
The Branch should satisfy itself about the customer regarding KYC norms by calling for the
undernoted documents, a xerox copy of which should be retained by the branch, duly attested
by the Field officer/BM/PBD Manager.
i) Proof of Identity (any one) :
- Voter’s card.
- Employer issued Photo Identity Card.
- Valid Passport which is unexpired (copy of page with photograph and address is
sufficient).
- Valid Driving Licence.
- PAN Card.
ii) Proof of Residence (any one) :
- Telephone Bill/Electricity Bill not more than 3 months old, or any utility bill such as
gas connection bill/Internet connection bill or lease deed. If the name on the bill is
different from the name of the borrower, the details of the person in whose name the
telephone line is maintained - own/parent’s/spouse’s/sibling’s - and his relationship
with the customer should be recorded.
- Valid Passport which has not expired (copy of page with photograph and address is
sufficient for retention).
- Valid Voter’s Card.
- Employer issued Photo Identity Card.
iii) Proof of Income :
a) For Employee : Latest 6 months salary slips, showing all deductions or Latest
Form 16 (in the case of income-tax payers).
b) From Professionals/others : Copy of I.-T. Returns for last two financial years, duly
acknowledged by I.T.O., with computation of income.
iv) Proof of Official Address for other than Employees (any one) :
a) Shop and Establishment Certificate.
b) Lease Deed.
c) Telephone Bill.
13.3 Post-sanction Process :
The following documents should be executed post-sanction :
a) Arrangement Letter.
b) DP Note, Delivery Letter, Personal Loan Agreement, including CIBIL Consent Clause.
c) Loans without check-off with PDCs :
Full set of Post-dated cheques, wherever check-off facility is not available.
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d) Appraisal form as per Credit Scoring Model, duly authenticated by the Field Officer/BM/
PBD Manager (in cases where the Field Officer is not available).
Where Check-off is Available :
a) Irrevocable letter of authority from the borrower.
b) i) Letter from employer-accepting borrower’s authority letter.
ii) Letter from employer where applicant himself is the Drawing and Disbursing Officer.
14. Disbursement :
Disbursement should never be done in cash. Mode of disbursement can be :
a) Through Banker’s cheques mailed directly to the address of the borrower only, or
b) By credit to the borrower’s account with our Bank.
15. Autho. Branches :
The scheme is applicable at all branches.
16. Handling at RACPC : CCFO/ADV/CL/15/2006-07 :
i) Loans under SBI Saral Scheme to the salaried individuals, who are not eligible under
Xpress Credit Scheme, are now required to be handled by the RACPC (Employees of
only good quality Corporates to be covered. Employees of Central Government/State
Government undertaking, which is perennially loss-making, should not be included).
The loans would be handled by RACPCs, which would enable consistent and uniform
processing of proposals and avoidance of multiple financing at different branches in a
centre. Branches not linked to RACPCs are not authorized to sanction loans under SBI
Saral to Professional and Self-employed individuals : CCFO/ADV/CL/320/2007-08.
ii) The credit for such Personal Loans under SBI Saral is required to go to the branch
originating the loans to whom the business budget would be allocated.
iii) Under SBI Saral, Personal Loans to individuals other than the salaried persons mentioned
in paragraph (i) were kept in abeyance for some time : CCFO/ADV/CL/15/2006-07.
The stipulation has since been relaxed as per para 3.
17. Staff Accountability :
There will be no accountability for sanction of loans under the scheme provided the above
terms of the Scheme are complied with.
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XPRESS CREDIT : PERSONAL LOANS TO EMPLOYEES
(P.B. SEGMENT)
Reference : Original Cir. No. CIRCO/ADV/28/2004-05.
Gist of Modifications : CCFO/ADV/267/2005-06.
The Bank recently launched a separate product (Xpress Credit) akin to Personal Loan Scheme, in
the shape of a pre-approved loan, to employees of leading Public Sector Undertakings (PSUs),
Government Organisations, Quasi-Govt. Organizations, IITs, IIMs and Educational Institutions of
national stature and Private Sector undertakings where we have our captive branches. These
should satisfy the following conditions (CIRCO/ADV/28/2004-05, CCFO/ADV/60/2005-06) :
i) Salaries of the employees are being credited to employees’ accounts with us (this conditions
is not applicable for captive branches with a view to wooing back the employees who have
shifted to other banks); and
ii) Drawing and Disbursing Officer (DDO) consents in writing to provide check-off facility as well
as an undertaking to obtain an NOC from the loan disbursing branch before releasing terminal/
superannuation dues of the employees.
In addition to existing categories, employees of Private Sector companies with SB1 and SB2
rating as well employees of those units who have been given SB3 rating but satisfy the take-
over norms are also eligible with the same conditions. Here condition of captive branches
has not been made applicable : CCFO/ADV/60/2005-06.
Salient Features of Xpress Credit, as distinct from the existing Personal Loan Scheme, are as
follows : CCFO/ADV/60/2005-06 :
• Eligibility (Credit Scoring Model) : Minimum 60 marks as per Credit Scoring Model, wherever
a check-off is not available.
• Minimum Net Monthly Income (NMI) : Rs. 5,000/- p.m. (raised from the earlier Rs. 2,500/-
p.m.)
Selective relaxation : The minimum Net Monthly Income (NMI) required for eligibility under
the Scheme has been reduced from Rs. 5,000/- to Rs. 3,000/-, not as a general criterion :
CCFO/ADV/CL/196/2006-07.
Such reduction should be permitted, subject to the condition that the salary accounts of the
entire enterprise are with the branch and hence the Bank is also required to take into the fold
the Xpress Credit for lower level employees too.
• Minimum Loan Amount : Rs. 10,000/-.
• Maximum Loan Amount : 24 months (raised from the earlier 18 months) NMI (net of all
deductions, including tax) for salaried individuals, subject to the EMI/NMI not exceeding
50%. Maximum Loan : Rs. 15 Lac. : e-Cir/465/2010-11.
• Processing Fee : 1% of the loan amount.
• Rate of Interest : Linked with SBAR/Base Rate.
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Interest Rates : Linked with Base Rate (Floating), depending on the category of check-off
- full/partial check-off, no check-off : e-Cir/465/2010-11.
Further clarifications detailed in e-Cir/465/2010-11.
• Repayment Period : 60 EMIs or remaining service, whichever is less : e-Cir/465/2010-11.
Other Guidelines : As the product is offered to employees whose salary is being paid through
their accounts with us, following modalities for check-off facility should be worked out with the
management of the PSU/Govt. Organisation at an appropriate level :
a) Management of the PSU/Govt. Organisation should be approached by an appropriate authority
of the Circle/Branch, depending on the estimated business potential for obtaining written
consent for providing check-off facility in respect of loans proposed to be offered to their
employees.
b) After obtaining consent of the PSU/Govt. Organisation to provide check-off facility, based on
the information gathered from their HR Deptt. and information available with the Branch as
regards net monthly income credit to the account of the employee, a letter conveying sanction
of a Personal Loan should be sent to the employee, requesting him to visit the Branch to
complete the formalities necessary for disbursal of the loan. The branches can also arrange
a loan-mela to complete the formalities after giving due publicity to it, with a view to converting
the pre-sanctions into loans.
c) PDCs : In cases where check-off facility/NOC is not available, post-dated cheques (PDCs)
may be obtained in lieu of check-off facility and NOC; discretion to permit this deviation is
vested with concerned GM (Network). Further, wherever check-off facility is not available,
minimum 60 marks should be obtained as per Credit Scoring Model for Personal Loan
Scheme : CCFO/ADV/171/2005-06. Where check-off is available, Credit Scoring Model is
not applicable.
Check-off facility may be taken to include the following situations in the case of good corporate
and reputed institutions : CCFO/ADV/60, 171/2005-06 :
i) The employer pays the borrower’s salary through the borrower’s savings/current account
with our Bank.
ii) The borrower gives an irrevocable Standing Instruction for recovery of the loan amount
from his aforesaid account (in such a case, the standing instructions should be
synchronized with date of credit of salary in the borrower’s salary account) and the
same should be recorded at the branch.
iii) The employer undertakes to inform our Bank if and when there is a severance due to the
borrower’s transfer, retirement, etc.; undernoted papers are to be obtained for check-off
facility in the Bank’s standard format :
• Irrevocable letter of authority from borrower.
• Letter from employer.
• Letter from employer where applicant himself is the drawing and disbursing officer.
• Competent authority should sign check-off facility letter.
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OVERDRAFTS UNDER XPRESS CREDIT(FACILITY DISCONTINUED IN SEPT. 2010)
Besides Demand Loans, overdraft facility also could be availed of under Xpress Credit Scheme :
CCFO/ADV/60/2005-06 :
Sl. Parameter Particulars under Revised Scheme
i) Nature of Loan : Overdraft
(in addition to existing Demand Loan).
ii) Rate of Interest : Linked with SBAR/Base Rate.
iii) Repayment : The loan was being granted for a period of one year, subject to
review each year. At the time of review/renewal of the loan, the
quantum eligible was being reduced/enhanced, depending upon
the conduct of the loan account. The entire payment to the
employee was to be routed through the account. On retirement,
the account was to be settled with the retirement benefits.
iv) Quantum of Finance : 10 times Net Monthly Income. Net take-home salary was not to
be less than 40% of gross salary after servicing the interest on
the proposed loan.
Discontinuance of O.D. Facility :
In Sep. 2010, the Bank withdrew the facility of Overdraft under the Scheme. The existing borrowers
have been asked to convert the same to Demand Loan / Term Loan Xpress Credit at the time or
annual review/renewal of the account : e-Cir/465/2010-11.
XPRESS CREDIT SCHEME :
CLARIFICATIONS, ETC.
Xpress Credit Scheme : Coverage : Only good quality corporates to be targeted - No Central
Government / State Government undertaking which is perennially loss-making to be targeted :
CCFO/ADV/CL/337/2005-06.
SB-3 Companies : Employees of SB3 companies, which satisfy take-over norms, can also be
covered under Xpress Credit Scheme : CCFO/ADV/CL/96/2006-07.
Interest Rate : CBS Branches : The change in rate of interest relating to Xpress Credit Accounts
should be dealt with manually, branch by branch, to ensure that there is no income leakage :
CCFO/ADV/CL/247/2007-08.
Handling : Loans under Xpress Credit Scheme are required to be handled by the branch paying
the salary of the borrower : CCFO/ADV/CL/15/2006-07.
Salary/Deposit A/cs : Under no circumstances, Personal Loans under Xpress Credit Scheme
should be sanctioned to those employees who do not maintain their Salary accounts with us :
CCFO/ADV/CL/292/2006-07.
Modifications : CCFO/ADV/354/2005-06 :
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a) Check-off : Waiver of papers by the sanctioning authority in cases detailed in CCFO/ADV/
354/2005-06.
b) Undertakings : Specimens of undertakings to be obtained from the employer and applicant
are enclosed to CCFO/ADV/354/2005-06.
Transfer of A/c : Modifications : The Personal Loan Accounts, irrespective of IRAC status, are
required to be transferred from one branch to another, subject to the conditions detailed in CCFO/
ADV/CL/380/2006-07.
M/s Bata : Personal Loans Under XCS to Employees of M/s Bata India Ltd. : Deviations approved :
CCFO/ADV/CL/89/2007-08.
Handling : It should be meticulously ensured that CIBIL report is obtained invariably before
any such loan is processed and sanctioned.
XPRESS CREDIT :RECENT MODIFICATIONS
Xpress Credit : Verification of Addresses of Borrowers : Where the verification is not outsourced,
the Branch staff must do the verification and the report should be added and kept with the loan
documents : e-Cir/662/2010-11.
In addition, the genuineness of salary slip and other documents viz. irrevocable letter, duly signed
and stamped by the DDO, undertaking by the employer that severance cases will be advised to
the Bank, etc., should be verified by the Branch official, under his signature. This may be done by
keeping on record the signature of the DDO with his office seal. The Branch official should also
visit the office of the organisation and maintain better liaison with them.
CISF Employees : Branches should extend Personal Loan facility under Xpress Credit Scheme
to CISF employees, whose salary is paid through our Bank on the basis of Standing Instructions
activated simultaneously with salary credit, without insisting on Check-off and NOC. A specimen
of certificate to be obtained from DDO is enclosed to CCFO/ADV/CL/4/2006-07.
Defence Salary Package : Xpress Credit : Consolidated Instructions : As applicable for Defence
Salary Package (DSP) : e-Cir/266/2010-11.
Simplified Xpress Credit : BSF Personnel : The simplified scheme is now applicable to BSF
personnel : e-Cir/217/2011-12.
Xpress Credit : DSP : Defence Salary Package : Modifications : e-Cir/553/2010-11 :
Eligible Loan Amount : 24 Months’ NMI, subject to the EMI/NMI not exceeding 50%. Maximum
Loan Rs. 15 Lac.
Repayment Period : 60 EMIs or remaining service, whichever is less.
Xpress Credit : Applicability of Simplified DSP Xpress Credit Norms to PMSP : e-Cir/774/2010-11.
Xpress Credit : Deferring of Revised Scoring Model for DSP and PMSP Customers : e-Cir/774/
2010-11.
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Xpress Credit Loans : Railway Salary Package : Undertaking : Xpress Credit loans to railway
employees under RSP are henceforth sanctioned only to those employees where the Salary
Disbursing Authority gives an unconditional letter to deduct loan instalments from salary of the
respective employee and remits the same to the Bank for credit to the Xpress Credit loan account :
e-Cir/538/2013-14.
X-press Credit : Consolidated Instructions : As applicable for DSP/PMSP/ICGSP account-holders :
Detailed in e-Cir/1109/2012-13.
Express Credit Loans : To Employees of CAG/MCG/NBG Corporates : Creation of Universe of
Eligible Corporates : e-Cir/945/2013-14.
Xpress Credit : Risk Mitigation : It should be ensured that the Risk Mitigation measures, i.e.,
Pre-sanction and Post-sanction are followed without exception in all cases of loan sanction
under the Scheme : e-Cir/344/2012-13 :
• Use of LOS is now mandatory for sanction of loans at all Branches as it ensures PAN
verification, CIBIL check and Passing Scoring for loan sanction.
• LOS generates Control Reports and all control functions are required to be done on this
report only.
• The documents should be migrated to RACPC afer sanction and disbursement of loan for
maintenance and follow-up on monthly basis.
• RBOs to scrutinize the Control Report more meaningfully.
• Controllers on their Branch Visit should check sample documents to verify that loans are
sanctioned as per the laid down terms and conditions.
• Quick Mortality study should be done by Controllers at stipulated periodicity.
Xpress Credit : Revised Sanction Structure : With a view to further strengthen the quality of
sanction, the Bank put in place the revised structure for sanction of Xpress Credit loans : e-Cir/
580/2012-13.
Revised Sanctioning Structure : Detailed in e-Cir/457/2013-14.
Xpress Credit Loans : Managers of Divisions : The Manager PB/Designated Officials at scale-IV
and above incumbency Branches sanction Xpress Credit loans within their respective delegated
financial powers under the respective schemes, based on the scale of the respective loan
sanctioning official : e-Cir/697/2013-14.
In respect of Customers whose Salary Accounts are not with our Bank, no Xpress Credit Loans
should be sanctioned.
Sanctioning authority to ensure compliance with the check-list (enclosed to e-Cir/1069/2012-13)
while sanctioning xpress credit loans.
Revised Sanctioning Structure : Clarifications : Detailed in e-Cir/1263/2012-13.
266
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MORTGAGE LOANS
Mortgage Loans : Purpose : It should be ensured that the loans sanctioned by the Branches
(particularly, the general purpose loans) are used for the purpose for which they have been sanctioned
and not diverted to capital market : CCFO/ADV/CL/215/2006-07.
Format of undertaking from all borrowers who wish to avail loans against Mortgage of Immovable
Property Scheme amounting to Rs. 25 Lac and above : enclosed to CCFO/ADV/CL/215/2006-07.
An undertaking detailed in e-Circular/626/2008-09 should be obtained from all borrowers
irrespective of the loan amount, under Mortgage Loan or Rent Plus in P-segment.
Rural/Semi-urban Property : Non-encumbered residential house/flats situated in rural/semi-
urban areas may also be accepted as collateral security under this scheme : CCFO/ADV/CL/92/
2007-08.
Repayment Period : It should be ensured that proposals are entertained within the stipulated
repayment period as per the scheme : CCFO/ADV/CL/152/2007-08.
Mort. Loans, Rent Plus : Classifi. : Loans against Mortgage of Immovable Property Scheme
and Loans under Rent Plus Scheme should be classified by Segment, based on the activityfor which the property is utilized. In other words, loan for Personal purposes like marriage/
medical treatment/education/foreign travel alone can be processed by the PBU : e-Circular/
626/2008-09.
An undertaking detailed in e-Circular/626/2008-09 should be obtained from all borrowers
irrespective of the loan amount, under Mortgage Loan or Rent Plus in P-segment.
RBI’s Concerns : Loans against Mortgage of Immovable Property Scheme and Loans under Rent
Plus Scheme should be classified by Segment, based on the activity for which the property is
utilized. Thus, whenever the purpose of loan declared by the individual is business-related, the
proposal should be processed and classified under SME segment instead of P segment. If a loan
is sought for more than one purpose, it may be preferable to have separate loans to facilitate
proper classification : CCFO/ADV/CL/123/2007-08.
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SBI LOAN TO PENSIONERS(MODIFIED SCHEME)
Eligibility : All Central/State Government pensioners, and SBI Pensioners whose pension
accounts are maintained by our Branches.
In addition, pensioners whose pensions are disbursed by Government Treasuries by means
of cheques drawn in favour of our Branches, as per mandate of the pensioner, have also
been included recently, subject to the conditions details in CCFO/ADV/217/2005-06.
The pensioners should not be more than 72 years of age (raised from the earlier 70 years of
age) : CIRCO/CPPC/P&SB/10/1999-2000, CIRCO/CPPC/P&SB/CL/19/2000-01, CCFO/ADV/
217/2005-06.
Purpose : To meet personal expenses.
Loan Amount : The Bank has recently raised the maximum amount of loan permissible under
the Scheme to 12 times (raised from the earlier 6 times) the net pension with a ceiling of Rs. 1
Lac (as against the earlier ceiling of Rs. 75,000/-) : CIRCO/ADV/217/2005-06.
(Rationale :
- To liberalise the key aspects of the Scheme with a view to making it more popular.
- To empower our branches to attract accounts of pensioners having higher income.)
Margin : Nil.
Primary Security : Nil.
Collateral Security (Guarantee) : The spouse eligible for family pension should guarantee
the loan, or any other family member, or a third-party worth the loan amount.
Repayment : In Equated Monthly Instalments (EMIs) commencing from the pension payable
one month after disbursal of loan. The branch should deduct the instalment from the pension
at the time of payment of pension : CIRCO/ADV/90/2003-04
Repayment Period : Changed from the earlier period of 48 months as under : CCFO/ADV/217/
2005-06 :
Age of Pensioners at the Repayment Age at the time of
time of Sanction of Loan Period Full Repayment
a) Up to 70 years 60 months 75 years
b) 70 - 72 years 48 months 76 years
Type of Loan : Demand Loan.
Interest Rate : Clean OD rate.
Processing Fee : Nil. No change w.e.f. 01.02.2006.
Disbursement : The amount may be credited to SB or CA of the pensioner.
Documents Required : Application-cum-Authority Letter (revised format enclosed to CIRCO/
ADV/90/2003-04).
- DP Note in COS-228 (to be signed by pensioner in favour of guarantor and endorsed by
the guarantor in favour of the Bank).
- DP Note Take Delivery Letter (in COS-230) : To be signed by borrower and guarantor.
Autho. Br. : All branches maintaining pension accounts. The loan to be given by the branch
paying the pension.
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LOANS TO FAMILY PENSIONERS
The Bank has recently included the family pensioners also in the ambit of the Scheme with
safeguards in respect of amount of loan, security and age of the family pensioner as follows
(CIRCO/ADV/137/2003-04) :
Eligibility : Family pensioner, i.e., spouse authorized to receive pension after the death of the
pensioner.
Not more than 65 years (as against 72 years for pensioners).
Loan Amount : A maximum of 9 times the family pension as against 12 times for pensioners),
with a ceiling of Rs. 50,000/-. In no case should the Equated Monthly Instalment (EMI) be more
than 25% of the net pension drawn by the family pensioner.
The additional ceiling of 25% is stipulated as family pension is considerably lower than the pension
drawn by the pensioner. Repayment of the loan should not be onerous, especially if the interest
rates move upwards.
Security : Third-party guarantee of a person who has been maintaining a satisfactorily conducted
account with the Bank, preferably of the son/daughter of the family pensioner.
Documents : As in the case of pensioners.
The ‘Application-cum-Authority Letter’ has been partially modified; the revised format is enclosed
to CIRCO/ADV/137/2003-04.
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PERSONAL LOANS UNDER SBI LOAN TOAFFLUENT PENSIONERS
(PERSONAL BANKING ADVANCES)
Ref. : e-Circular/223, 286, 301/2009-10.
The salient features of SBI Loan to Affluent Pensioners Scheme are as under :
Pensioners :
i) All Central, State Government pensioners and SBI Pensioners whose pension accountsare maintained by our branches.
ii) Pensioners whose pensions are disbursed by Govt. Treasuries by cheques drawn in
favour of our branches as per mandate of the pensioner are also eligible, subject to
condition that pensioner should not be more than 72 years of age.
Family Pensioners : Family pensioner, i.e., spouse authorised to receive pension after the
death of the pensioner, subject to condition that family pensioner should not be more than
65 years of age.
Loan Amount :
i) Pensioners : Maximum of 12 months’ net pension with a ceiling of Rs. 3 Lac.
ii) Family pensioners : A maximum of 9 months’ net family pension with a ceiling of Rs.
1.50 Lac. In no case, the EMI should be more than 25% of the net pension drawn by the
family pensioner.
Collateral Security :
i) Pensioners : Third-party guaranee (TPG) of the spouse eligible for family pension. In the
absence of the spouse, TPG of any other family member or a third-party worth the loan
amount.
ii) Family Pensioners : Third-party guarantee of a person, who has been maintaining a
satisfactorily conducted account with the Bank, preferably of the son/daughter of the
family pensioner.
Repayment Period : In EMIs commencing from the pension payable one month after disbursal
of loan. Instalment is deducted at the time of payment of pension :
Age at the time of Repayment Period Age at the time of
loan Sanction full Repayment
Up to 70 years 36 months 73 years
70-72 years 24 months 74 years
PAN : Pensioners are required to submit their PAN Number or Form 15H before availing loan
under this Scheme.
Existing Scheme : This is a new scheme governed by new parameters on loan ceiling and
age. The existing scheme with loan amount celing at Rs. 1 Lac continues.
270
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FESTIVAL LOAN SCHEME FOR PUBLIC
Purpose : Loan to individuals for meeting expenditure related to festivals : CIRCO/
ADV/163/2002-03.
Eligibility : 1. Employees of Govt., PSUs, profit making public/private limited
companies/institutions, etc. with a minimum of 2 years service.
Efforts should be made to establish check-off facility, wherever
feasible.
2. Self-Employed Persons with minimum 3 years standing/experi-
ence.
3. Persons having regular source of income from verifiable channels
like Pensions and interest from TDRs/NSCs/Govt. Securities, etc.
Minimum Income : Net Monthly Income (NMI) of Rs. 3,000/- and above.
Loan Amount : Minimum : Rs. 5,000/-.
Maximum : Rs. 50,000/-.
The maximum amount of loan is restricted to 4 times the NMI.
Security : Primary : Nil.
Collateral : Personal guarantee of the spouse of any other person of adequate
worth where cheek-off facility is not available.
Repayment Period : Maximum of 12 months through Equated Monthly Instalments (EMIs).
No penalty for prepayment.
Interest : Linked with SBAR/Base Rate.
The applicant can opt for fixed rate of interest in which case the rate of
interest remains fixed for the full tenure of the loan, or a floating rate of
interest.
Processing Fee : At current rates.
(One-time) Sanctioning authority has the power to grant a remission of half a per
cent where employees of an organization numbering at least 50 avail
the loan in the same month and provide check-off facility. GMs of the
Network have powers for full waiver of processing fee on business con-
siderations.
Disbursement : To the borrowers by credit to their account.
Type of Loan : Demand Loan.
Documents : Pre-Sanction :
Required with i) Proof of Identity* :
Application - Voters I-Card/Passport/driving licence/PAN Card.
ii) Proof of Residence* :
- Ration Card / Telephone Bill / Passport /
Voters I-Card.
271
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iii) Passport size Photograph.
iv) Proof of Income.
v) Proof of official address (for other than employees).
Shop and Establishment Certificate/Lease Deed/Telephone Bill.
*(not required from existing Bank customers).
Security a) Arrangement Letter.
Documentation : b) D.P. Note and D.P. Note Delivery Letter. Where third-party guaran-
tee is obtained, the D.P. Note is be executed by the borrower in
favour of the guarantor and endorsed by the latter in favour of the
Bank.
Where a Check-off Facility is Established :
a) Irrevocable letter of authority from the borrower.
b) i) Letter from employer.
ii) Letter from employer where applicant himself is the Draw-
ing and Disbursing Officer.
(Formats prescribed for Personal Loan Scheme may be
used.)
Authorised : i) All PBBs (for their existing customers only or those who open
Branches SB/CA/TDR account with them).
ii) All Computerised branches.
iii) All branches presently conducting ‘P’ Segment business.
iv) Branches specifically authorised by the DGM of the Module.
272
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JAI JAWAN PENSION LOANFOR YOUNG DEFENCE PENSIONERS
Purpose
Eligibility
Age
Loan Amount
Margin
Guarantee
Repayment
Type of Loan
Processing Fee
Disbursement
Documents required
Interest
Authorised Br.
To meet personal expenses of young Defence pensioners beyond the
existing Personal Loan ceiling of Rs.1 Lac : CCFO/Adv/CL/104/
2006-07.
Pensioners of Armed Forces, including Army, Navy and Air Force,
Paramilitary Forces, Coast Guards, Rashtriya Rifles, CRPF, BSF, ITBP,
etc.
Up to 50 years.
48 times net monthly pension, subject to maximum of Rs. 2 Lac. EMI/
NMI not exceeding 40%.
Nil.
• TPG of spouse eligible for family pension.
• In the absence of spouse, TPG of any other family member, or a
third-party worth the loan amount.
• No guarantee if the loan is below Rs. 25,000/-.
Maximum 84 months, payable one month after loan disbursal through
S.I., to debit the pension account for recover of EMIs.
Term Loan.
Nil.
By credit to pensioner’s Savings Bank account or Current account.
As per SBI Pension Loan Scheme.
As per SBI Pension Loan Scheme.
All pension disbursing branches.
273
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LOANS TO EMPLOYEES TO PURCHASE ESOPS OF
THEIR OWN COMPANY(PERSONAL BANKING ADVANCES)
Features of the Scheme : CCFO/ADV/CL/58/2007-08.
Purpose : Finance to employees for purchasing shares of their own companies under ESOPs.
Eligibility Criteria : Permanent employees with minimum 2 years service. Employees should
have at least 3 years service left for superannuation.
Amount of Loan : 90% of the purchase price of the shares or Rs. 20.00 Lac, whichever is lower,
with a cap of maximum 24 months Net Monthly Income (NMI).
Margin : 10% of the offer price of the shares.
Rate of Interest : Linked with SBAR/Base Rate.
Processing Fee : @ prescribed rate.
Nature of Facility : Demand Loan.
Repayment : The loan should be repaid within a period of 3 years in Equated Monthly instalments
(EMIs). A moratorium period of up to 12 months can be allowed within this 3-year period, during
which the interest comoonent should be regularly serviced.
Security : Shares should be held in Demat account and lien marked in the Bank’s favour. All the
shares financed under ESOP should be taken as security. Employer company to give a certificate
indicating DPID/Customer ID/Name of account holders and number of shares held and confirming
noting of the Bank’s lien/charge.
Procedure for Selection of Co., Finalising Arrangement with Co. : ESOPs of only those
Companies are eligible under the scheme, who fulfil the undernoted conditions :
• The company must be profit making for the past 3 financial years.
• The shares of the company must be listed in BSE 100 Index Companies.
• Shares offered against ESOPs should be in Demat form.
• The market price of shares of the company should not have fallen below par during preceding
52 weeks.
• The market price of the shares should not be at variance with the arithmetical average of
preceding 52 weeks high and low by more than 25% in downward direction.
• P/E ratio of the company should not exceed 40.
• The total number of shares of company traded on NSE and BSE should exceed 25,000 on
the day of submission of proposal for ESOPs.
• Cases should not be accepted where the market price of share 52 week high is 4 times of
the 52 week low.
• Leading financial newspapers should invariably be referred for ascertaining the information
relating to 52 weeks high and low, P/E ratio and traded volumes in NSE and BSE.
274
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OTHER ‘P’ SEGMENT LOANING SCHEMES
Bicycle Loans : Finance for purchase of Bicycles to Primary and Secondary School Teachers
in Rural/Semi-urban areas : (The Bank has been putting a great thrust in 'P' segment loans and
to that extent has moved away from unstructured low-value advances to structured high-value
advances). Accordingly, no advances need be granted under the captioned schemes. Such
request can only be accommodated under Personal Loan Schemes, subject to availability of
check-off facility and their meeting eligibility criteria : CIRCO/ADV/CL/326/2002-03.
Equity Plus Scheme : Personal Loans to Employees of M/s. Power Grid Corporation of India
Ltd. (PGCIL) : CCFO/ADV/CL/240/2007-08.
Loan for Subscription to IPOs : Credit Scoring Model is to be used for evaluation of proposals
received under this Scheme : CCFO/ADV/CL/188/2007-08.
Modifications : e-Cir/1039/2010-11 :
Purpose : For funding subscription to IPOs of PSUs and Public Limited Companies.
Amount of Loan : Up to Rs. 1,00,000/- per IPO, subject to maximum exposure of Rs. 10 Lac per
person as per extant RBI instructions.
Authorised Branches : All DP branches where Demat facility is available for customers. Since the
financing branch bears key responsibility, a document detailing the procedure is enclosed to e-
Cir/1039/2010-11.
L&T : Personal Banking Advances : Personal Loans to Employees of L&T Ltd. under Loans to
Employees to Purchase ESOPS of their Company : CCFO/ADV/CL/252/2007-08.
Loans to Shikshakarmis : P Segment loans may be granted to Shikshakarmis, who maintain
salary accounts with branches, provided the loans are repayable fully within the contractual
period of their employment : CCFO/ADV/CL/239/2007-08.
Security bond loan@sbi : New Product : The Bank recently developed a hybrid product named
as “security bond loan@sbi” to the new recruits of M/s. Network Solutions (P) Ltd. (NSL). Under
this arrangement, a Personal Loan of Rs. 45,000/- is sanctioned to the new recruits against an
acceptable third-party guarantee for issue of Bank Guarantee of Rs. 50,000/- in favour of NSL as
detailed in CCFO/ADV/CL/201/2007-08.
Rupee Loans Against Gold Deposits : The Bank now extends rupee loans against the gold
deposit certificates to impart an element of liquidity to the scheme and make it more attractive.
Unlike acceptance of gold deposits, which is restricted to select branches, loans against gold
deposit certificate can be extended at any branch of the Bank.
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The GDCs have been classified as specified securities.
The operating guidelines are detailed separately.
SBI-GETS : Loan Against the Units of Gold Exchange Traded Scheme (SBI - GETS) : SBI Gets
Short-Duration Loan, SBI Gets Long-Duration Loan : e-Cir/1015/2010-11.
Scheme for Financing EMD : Earnest Money Deposit : Concession in Processing Fees :
Discretion : e-Cir/932/2010-11.
Surya Kiran : Scheme for Financing for Purchase of Solar Photo Voltaic Home Lighting System :
e-Cir/251/2011-12.
Capital Subsidy-cum-refinance scheme for installation of Solar Off-Grid (Photo-Voltaic & Thermal)
& Decentralized Applications under the Jawaharlal Nehru National Solar Mission.
Rent Plus Loan Scheme : Per Seg : The recent circular guidelines (21.01.2013) on Rent Plus
Scheme are approved for Business Groups/Units other than PBBU : e-Cir/756/2013-14.
Branches should ensured that the extant guidelines of Rent Plus Loan Scheme under Personal
Segment, which are available in the Manual on Loans & Advances, Part-8, Personal Banking
Advances (updated as on 31.03.2013) are followed meticulously while sanctioning loans under
Rent Plus Scheme of P-Segment.
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ADVANCES TO BANK’S STAFF
Clerical Staff : Car Loan Scheme : The Bank has extended the concessionary rate of interest
as applicable to officers’ car loan scheme also to the car loan scheme applicable to the clerical
staff. The repayment of principal should be made in the first 90 months and the interest in the
remaining 30 monthly instalments. The total outstanding in the existing car loan should be treated
as a fresh loan at simple rate of interest and repayment fixed accordingly. However, all other
terms and conditions laid down under the car loan scheme for clerical staff remain unchanged :
CIRDO/HR/CL/59/2007-08.
The revised rate of interest are effective from 1st October, 2007 to new as well as existing car
loans availed by clerical staff. Vehicle loan availed of by a clerical cadre employee for purchased
of a scooter/motor cycle at concessionary rate of interest will have to be liquidated before giving
the interest concession in existing car loan or before availing of a new car loan.
Staff : Misc. : Computer Loan Scheme : Salient Features : CIRDO/HR/CL/62/2007-08 :
a) Eligibility : All permanent employees with 2 years of service, including probation
period.
b) Type of Facility : Demand Loan.
c) Amount of Loan : Up to a maximum of Rs. 40,000/-.
d) Repayment : In 36 to 60 equated monthly instalments.
e) Security : Personal Security.
f) Rate of Interest : @ 5% p.a.
g) Deductions : Total deductions, including the EMI of this loan, should not exceed 60%
of gross salary.
h) Sanctioning Auth. : Branch Manager/Head of the Department/RACPC, wherever established.
i) Margin : Nil.
j) Documents : D.P. Note, D.P. Note Delivery Letter, Hypothecation Agreement.
H.L. at Comm. Rate : Staff Misc. : For acquiring/construction of second house : The Bank has
recently removed the stipulation of liquidation of housing loan raised at concessionary rate of
interest under staff housing loan scheme while permitting staff members to avail second housing
loan from the Bank under the Bank's Housing Finance Scheme for Public at commercial rate of
interest : CIRDO/P&HRD/CL/59/2003-04.
Terms and Conditions : Detailed vide CIRDO/P&HRD/CL/59/2003-04.
Staff Adv. : Deductions : Up to 60% of deductions (which includes deduction towards principal
and/or interest towards proposed loan), excluding deductions for savings such as Insurance
Premium, R.D. Accounts, saving/welfare fund of the society, extra deductions towards provident
fund, festival advance, etc., may be permitted while sanctioning loan to the staff on public terms
and conditions or under schemes for staff : CIRDO/HR/CL/15/2007-08.
P.F. Balance : Lien : The procedure detailed in CIRDO/P&HRD/CL/23/2003-04 should be
followed while noting/cancelling lien on provident fund balance.
As no lien can be marked on member's own contribution, gratuity, leave encashment, we take
letters of undertaking from the employee/his nominees and these are kept on record for use,
when warranted.
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Staff Sup. & Workmen : Personal Guarantee : For Loans to Relatives/Others involving
Commercial Transactions : The Bank has recently decided that the authority for granting
permission in such cases on merits and subject to the other extant guidelines in this regard
be vested with the CGMs (Chief General Managers) of Circles in respect of staff working in
Circles (now, G.M. of the respective Network) : CIRCO/P&HRD/CL/73/2002-03.
Granting of permission is considered only on exceptional basis and in genuine cases
where the denial of permission is likely to result in hardship or inconvenience to the staff
applying for permission, subject to the following extant guidelines :
i) The guarantee or indemnity is not given for consideration
ii) The guarantee or indemnity is prima facie within the means of the employee so that in
the event of the failure of the borrower's venture, he is able to repay the dues to the
Bank without the Bank being required to file a suit against its own and serving
employees.
iii) The giving of such a guarantee or indemnity does not adversely affect the Bank's
interests.
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SANCTION OF STAFF ADVANCESIN DIVISIONALISED BRANCHES
Recent Relaxation : In branches, where A/cs and Administration Division exists, the
procedure detailed under should now be followed, to relieve the heads of business divisions
from internal work (CIRDO/OP-S&P/OP/CL/4/1999-2000) :
i) Powers : In divisionalised branches, irrespective of branch categorisation, all loans to
staff in the branch, under approved schemes of the Bank and against specified securities,
should be sanctioned by the head of the Accounts and Administration Division.
In branches where Relationship Management concept has been introduced, Chief
Operating Officer (COO) should sanction staff advances.
ii) B.M., etc. : Loans beyond the powers of the head of Accounts and Administration
Division (or COO) should be put up to the Branch Manager or higher authority, as may
be necessary.
iii) Routing : All proposals should be routed through the Head of the respective business
division, in which a staff member is working. This procedure is being laid down to keep
the head of the business division informed of the borrowings of the staff in his division.
However, no processing or recommendation is necessary at this stage. All such
proposals received in the business divisions should be ‘forwarded’ to the Accounts and
Administration Division for processing and sanction/recommendation, as may be
necessary.
iv) Br. without Div. : In respect of branches without divisions, staff advances should continue
to be sanctioned by the Branch Manager and not the Manager/Dy. Manager (Accounts)/
Manager - Branch Operations (at BPR Centres).
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YEARLY ASSETS/LIABILITIES STATEMENTS(under Rule No. 62 of SBI Officers Service Rules)
Codified Instructions : Staff/63/1997-97, e-Circular/431/2009-10.
Importance : Staff advances (viz. housing loan, festival advance, consumer loan, conveyance
loan, etc.) should NOT be sanctioned to the officers who fail to submit their statements of
the assets and liabilities as on 31st March by the 30th June : Staff/641988, 5/1992-93.
The information regarding submission of up-to-date statements of assets and liabilities should
be furnished in the loan/advance application form, as also in the relative C/R (control return).
Any transactions in the movable property (owned or held by the officer in his own name
or in the name of a member of his family), the value of which exceeds Rs. 25,000/- (raised
from the earlier Rs. 5,000/-) should be individually reported to the competent authority:
Staff/36/2001-02.
All the officers are also required to furnish the information - in the format enclosed to Staff/
26/1994-95 - to the prescribed authority, regarding total transactions in sale, purchase or
both, in shares, securities, debentures, mutual funds, exceeding Rs. 25,000/- during the
financial year (with a view to keeping a close watch over such transactions by officer-
employees).
The above form should be invariably submitted along with the yearly statements of assets
(movable/immovable) & liabilities as on the 31st March.
Yearly Statement of shares/debentures under promoter’s quota/employee’s quota : in the
format enclosed to Staff/13/1997-98.
The details of guarantees issued by the officer on behalf of other individuals (for loans taken
from co-op. societies) and any other contingent liabilities for which he is liable as co-obligant,
should also be furnished against ‘’Other Liabilities’’ : Staff/16/1996-97.
