Name: Ankit Bhootra Mobile No: 8121767594

Enrollment No.: 13BSPHH010065 E-mail Id: ankit.bhootra90@gmail.com

INTERNSHIP PROGRAM Internship Proposal

I.

Internship Proposed:
Operation Process of Housing Finance Company (HFC).

II.

Description on Internship in brief :

Non-bank financial companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license. These institutions typically are restricted from taking deposits from the public depending on the jurisdiction. Nonetheless, operations of these institutions are often still covered under a countries banking regulations. The project involves the study of operations of a housing finance company. There is a process involved in the procurement of Home loan. The followings are the steps involved in getting home loan:

Step 1 : Application form The first step involved in applying for home loan is the procurement of application form from the HFC of your choice. The Performa of application every HFC (Housing Finance Companies) is different from the other but about 80% information required to be furnished is the same. Along with the application form necessary documents like address proof, age proof, proof of income, bank balance etc. are also to be attached with the application form before it is submitted to the HFC. Along with all these documents HFCs also ask for processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.

Step 2 : Personal Discussion After successfully filling the application form and submitting it to the authority the next step is face to face with bank or HFC where you have applied for the home loan. The bank first evaluates the papers submitted and summons the applicant for the personal discussion regarding the home loan applied for. It is advisable that you carry all your original documents of whose copy you have submitted along with the application.

Step 3 : Bank's Field Investigation The next step is the field investigation done by the HFC or banks. They sent their representatives to the existing residence of the applicants or their offices for the validation of the documents submitted. This is the essential part for the banks to establish the trust with the applicants.

Step 4 : Credit Underwriting by the bank and loan sanction This is the make or break stage of the process. The bank or HFC will establishes repayment capacity based on your income, age, qualifications, experience, employer, nature of business etc. to access your credential. The bank can refuse your loan application is any discrepancy is found at this stage. But if every thing goes according to the conditions negotiated by both the parties then the bank or HFC sanction the loan that may be unconditional or with some conditions levied.

Step 5 : Offer Letter After the sanction of the Home Loan, the applicant gets offer letter from the bank or HFC with the following details:

Loan amount Rate of Interest fixed or variable ROI Tenure of the loan Mode of repayment General terms and conditions of the loan

Special conditions, if any If the terms and conditions are agreed the applicant has to sign the duplicate copy of the offer letter and that is to be submitted to the Bank or HEC.

Step 6 : Submission of legal documents & legal check The bank or the HFC now asks for the legal documents of the property involved for applying home loan. All the legal documents of the property involved have to be submitted. The bank does all the legal checks on the property. The documents remain with the bank until the repayment of the Home loan.

Step 7 : Technical / Valuation check The Banks or HFC then go about the technical valuation of the property. The experts of the bank visit the site that has to be purchased and value it as per the existing rules and regulations. The valuation of the property is the most important aspect that the bank considers before financing any property.

Step 8 : Registration of property documents After the legal and technical valuation of the property the draft documents has to be cleared by the lawyer and stamping and registration of the documents is needed.

Step 9 : Signing of agreements and submitting post-dated cheques Now it is time of signing the final agreement of the home loan. After the signing of the agreement a bunch of Post dated cheques are to be submitted as agreed on the agreement paper.

Step 10 : Disbursement It is time for the final Disbursement of the Home Loan. After the bank or HFC ensures financing the property is involves no risk they pay the final amount that is agreed upon. The mode of payment varies

from full to part payment. In the case of under construction property the mode is part payment and in the case of ready possession properties disbarment is full and final.

Credit Underwriting: Credit Underwriting provides an objective and balanced analysis of each transaction with objective support enabling decision makers to make fully informed decisions regarding the risk and relative returns associated with a particular investment, mortgage loan or collateral property. Staff members dedicated to credit underwriting average over 20 years experience providing surveillance and a rigorous due diligence process to existing and potential real estate transactions. Top-down / Bottom-up approach to Credit Underwriting empowers fully informed decisions. Credit Underwriting capabilities extend from macro to granular levels of oversight and review.

The first step to credit underwriting is usually a credit check of any potential borrower. Checking credit involves calculating a borrowers credit score, evaluating the source and extent of any outstanding debt, and looking at past loan repayment practices. The goal of credit checking is to determine how creditworthy a particular borrower is, or is likely to be. Financial analysis and other risk assessment also come within the purview of credit underwriting. Credit underwriters are usually looking for the maximum possible return on credit and loan extensions. As such, they must determine both what sorts of interest charges and fees the market will bear, as well as the kind of payments that individual borrowers are capable of making. In this respect, credit underwriting can be quite a science of numbers, predictions, and complex equations projected over time. Credit underwriting also includes the way in which a loan or other credit extension is executed. Underwriters typically set their own terms with respect to which borrowers are selected, as well as the terms of each individual credit extension. They often work under the direction of the bank or primary lending institution, but usually also have a lot of latitude with respect to specific selections. Product Segmentation and Schemes Segmentation: Once the potential applicant is recognized, the company provides various schemes and products to the applicant. The applicant chooses among those products, which serves him/her the best and suits his profile. Profile includes information like salaried or self employed, any other source of income, etc. Portfolio of Magma Housing Finance Corporation for financial year 2013-2014

III.

Objective of the Internship:

The main objective of the internship is to understand the Credit Underwriting and whole of home loan process in a Non Bank Financial Companies. To get a better understanding of the working and business of Home Loan process in a Non Banking Financial Company. To get a detailed description of the process and operations of the organization. To understand what are the key factors and parameters the organization checks and analyze for providing a housing loan/ housing equity. To understand on what basis the organization segregates its customers to fit in various products which the organization is providing. To get a broader view of how the various concepts of finance are used on a practical basis in an Non Banking Financial Company.

IV.

Action Plan:
To study the files received through sales/channel sourcing department. Categorize the applicant into salaried/self employed depending on the source of the income. Fit the customer among the various products company is providing. Analyze the documents provided by the applicant, especially the bank statements, the financial statements, income tax reports and property proofs. Work out for the eligibility of the applicant for the loan. To analyze the portfolio of Magma Housing Finance Corporation for financial year 2013-2014 on various parameters. Provide views/suggestions/recommendations to improve on existing activities.

V.

Schedule: 24th February 2014 23rd May 2014

VI.

Limitations: Delay in the reports by various departments of the organization.

Faculty Guide Name: Mr. Shekar Rajagopalan Company Guide Name : Mr. Mahaboob Basha Mogal

Date: 7th March, 2014

Ankit Bhootra