Check List for Branches.

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Direct Housing Finance Scheme

(This is just a checklist and not substitute for the circulars of the Scheme) 1. Application scrutinized to verify, a. Original Salary Certificate for previous month and Original Salary Certificate/ other satisfactory evidence in case of co-applicant is submitted. b. In case self employed / any other person if loan amount above Rs. 5.00 lacs income tax returns for preceding two years is submitted. c. Loan applied is for specific purpose as permitted under the scheme d. Wherever applicable, consent letter for giving guarantee with full details is obtained from the guarantor. e. Quantum of loan applied is within the permissible limit considering income of the borrower and co-borrower and cost of house/flat or cost of repairs/ extension etc. f. Borrower satisfies age criteria. g. Repayment period requested is not beyond stipulated maximum in case of construction / acquiring new house etc. and 10 years in case of repairs / renovations etc. 2. Identity of the Borrower and Guarantors properly established. To be established as far as possible with introduction given by existing customers or by verifying any of the following documents. a. Pass Port. b. PAN Card. c. Voter ID. d. Identity Card issued by Employer. 3. Assets and Liability declaration from borrower, co-borrower and guarantor/s obtained. 4. Financial Reports of borrower / guarantors drawn wherever necessary. 5. Proof of income i.e. salary certificate, I.T. returns / assessment order obtained and genuineness verified. 6. Pre-sanction inspection is carried out. The Verification / inspections should be done independently.

7. Residential address of borrower / business place independently verified, preferably by personal visit / by sending call card / telephone call etc. 8. Borrowers bank account statement / pass book for at least a year obtained and verified for ascertaining other liabilities / fixed outgoing. 9. Following declarations obtained. a. The borrower has not defaulted in repayment of loan of our bank or other bank or entered into compromise settlement in any capacity. b. The borrower is not related to any of our Banks Director or Director of other bank. c. Consent clause for disclosure of names in case of default to RBI / CIBIL etc. 10. After scrutiny of application and ensuring receipt of all necessary documents / papers acknowledgement is given to the applicant. 11. Risk Rating done using Manual Scoring Model for DHFS. It is ensured that the arrived score is more that hurdle rate of 50. 12. Option letter regarding rate of interest, whether fixed or floating obtained. 13. Legal search report from panel advocate obtained as per Co. circular no. CO: LEGAL: 97-98:229 Dt. 20.01.1998.. (Nature of title deeds may differ from case to case for e.g. house being constructed by the borrower, flat being purchased from already registered cooperative housing society, from builder where society is yet to be formed and title of land yet to be conveyed, ready possession flat in second sale or extension/renovation/repairs of the existing house/flat. Hence proper care to be taken while accepting documents of title for creation of equitable/registered mortgage). List of generally obtained documents: Sale deed/Agreement for sale/Allotment letter from housing board/NOC from society, share certificate from the society, undertaking from society regarding registering banks charge, Borrower-Builder-Bank Tripartite Agreement (wherever applicable). 14. Valuation report in prescribed format obtained wherever necessary. 15. Estimate of construction cost obtained wherever necessary, giving stage-wise break-up of expenses for construction. 16. Verified approved plan of construction and other necessary permissions/approvals are obtained from the government authorities/statutory bodies. 17. NOC under Urban Land Ceiling Act, Conversion Certificate (for converting agricultural land for non-agricultural purpose) obtained wherever necessary. 18. Pre-sanction inspection carried out.

19. Photograph of property to be mortgaged obtained at different stages from different Positions 20. Verified whether the residential project/builder is approved by our Bank. 21. NOC/allotment letter obtained from the housing society wherever necessary. 22. Insurance cover with Bank Clause arranged. 23. EM created taking all necessary precautions and following instructions as given in the manual of instructions. 24. Source of margin money ascertained to ensure borrower has capacity to save. 25. Post-dated cheques obtained. 26. Process note prepared. 27. If sanctioned, detailed sanction letter incorporating all terms & conditions is prepared and given to the borrower obtaining acknowledgement. 28. Sanction must carry signatures of two officers-one recommending and other sanctioning. 29. Post-sanction inspection carried out / programme for inspection at future dates in case of house under construction is chalked out. The post sanction inspection should be carried out by the official other than who has carried out pre inspection. 30. Loan properly categorized in PS/NPS. 31. Documents got executed before disbursement. 32. Proper charge created on other security like NSCs, LIC Policies offered as security after verification of genuineness wherever necessary. 33. Processing fee recovered. 34. Reported in Annexure II. Separate Annexure II for sanctions with deviation/s. 35. All Circulars relating to DHFS are in proper file.

PrecautionsMany types of frauds are being reported; some of the modus operandi is given below. I. Fabrication of Income Documents like Income-tax Return/Salary Slip/Balance Sheet Etc. This has come to light in case of even public sector employees. (Committed generally by Borrowers in connivance with Estate Agent/Builders) Suggestions: i) Verification of salary slips with employer. ii) Salary amount should be compared with Bank Statement. iii) Cross verification of Balance Sheet and telephonic enquiry with Chartered Accountant. In case of doubt a personal visit to CAs office. iv) Personal interview for verifying facts. v.) In case of non-salaried borrowers the income tax return submitted as proof of income should be crosschecked with the IT department. The PAN card submitted should also be crosschecked. II. Loan amount disbursed by way of Cheque/Demand Drafts are encashed by third party/agents etc. (Disbursed amount Cheques are collected by the Agents/third parties from the borrowers bank and deposited in fictitious account opened for this purpose and amounts are withdrawn from such bogus account) Suggestions: i) Cheque should be invariably issued in the name of Bankers to the Builders with the bank account number on it. ii) Cheque should not be handed over to the borrower/agent/seller. iii) In respect of the ready property the cheque should be delivered simultaneously along with registration by deputing the officer to registrar office on the date of registration. III. Title documents being forged Stamped Documents forged by Borrower customer/Builder. (Coloured Xerox copy of various documents are produced including encumbrance certificate, fake stamp papers etc. are used which are difficult to identify/distinguish from the original one)

Suggestions: i. Branch should approach the sub Registrars / Registrars office to verify the genuineness of the stamp paper/documents/registration receipt etc. ii. Documents should be carefully scrutinized to verify that the same are original and not Xerox copies. IV. Over valuation of the property. (This is done to draw higher loan amount in connivance with builders/valuers. The Values of the property are inflated by including various expenditure and additional amenities, fixtures, legal charges, society advance maintenance charges etc. which are non existing) Suggestions: i) Estimate/agreement should be carefully scrutinized. ii) Valuer should be carefully selected in case of large value loans. iii) The valuation should be crosschecked independently by Branch Manager by making discrete inquiry in the market or with local authorities. V. Cancellation of booking of flats/property i.e. collusion between customer & builder. (In this case after availing the initial loan amount, the booking is cancelled and the borrower directly takes the refund from the builders) Suggestion: Builders business standing and reputation in the market should be ascertained. It is advisable that builders should have completed at least 3-4 projects earlier successfully and there is no adverse report. Market enquiries should be made stringently. If original documents are not received back from registering authority within reasonable time enquiry should be promptly made. VI. Sale of property by loanee without clearing existing loan (Property is sold through duplicate/fake title deeds even though the legal title is with the Bank/Housing Finance Agencies) Suggestion: Periodical inspection should be carried out if there is delay in repayment of installments.

VII. Misrepresentation of end use of loan (Loan taken for Residential Housing Property however, Commercial property is purchased by availing such loan) Suggestion: While carrying out pre-sanction inspection this point should be taken care of. As far as possible we should deal directly with the borrower and seller/vendor and avoid dealing with broker/middleman.