Although State Bank Of India (SBI) has implemented a rural housing scheme (Golden Jubilee Rural Housing Finance Scheme of RBI (GJRHFS)) under personal segment, bank has not been able to comprehensively cater to the needs of the farming community and poorest of the poor for Home 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.
For example, dwelling cum work area or shed for the cow etc. Considering the huge potential for Home Loans in rural areas, two schemes viz, "Gram Niwas" and "Sahayog Niwas" are launched.
Gram Niwas - Home Loans to Farming and Poorest of the poor in Rural areas
Objective of SBI Gram Niwas: To provide Home Loans to Farming and Poorest of the poor in Rural areas.
- The product is designed to comprehensively cater to the housing requirements of farming and other rural community.
- Classification as Priority Sector Advances
- No processing fee
- Concession in interest rate
- Group Life Insurance Cover from SBI Life: protects the borrower’s family in the event of untimely demise of the borrower. The amount payable towards upfront premium is considered as part of the project cost.
- Free Personal Accident Insurance Cover
- Can be combined with other variants of Home loans like SBI-Freedom.
- Loans given in terms of NABARD’s Model Sanitation Scheme are designed to effectively address the requirements for better sanitation facilities in rural areas and also to discharge our Corporate Social Responsibility to the rural community.
Purpose of SBI Gram Niwas Home Loan
- Purchase or construction of a house, including the cost of construction of work shed for pursuing income generating activities viz. dairy shed, tailoring shop, grocery store, work shed for village artisans etc.
- 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.
- Purchase of a plot of land for the purpose of house construction.
- Extension of existing house / work space.
- Extension of existing house to construct twin-structure of toilet and bathing room, costing about Rs. 8600/- (in terms NABARD Model Scheme for provision of sanitation Refinance to be claimed from NABARD under the Rural Housing Scheme with Automatic Refinance Facility.)
If the plots owned are in different places in the same village, two separate loans for construction of house and work shed may be extended.
Operational Area of SBI Gram Niwas Home Loan
The Scheme will cover 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 50000 as per 2001 census. Location of the residential property being funded by SBI should be within the "Rural Area" as defined above.
Eligibility for SBI Gram Niwas Home Loan
All Individuals (farmers, entrepreneurs, traders, businessmen, employees etc.) having satisfactorily conducted account with SBI or a member of a Self Help Group having savings / loan accounts with SBI.
Loan amount of SBI Gram Niwas Home Loan
The permissible loan amount will be decided by the repayment capacity defined as under:
|Average Annual Income||Maximum permissible|
Instalment to Income Ratio
|Above Rs.40,000 and upto Rs.2 Lac||45%|
|Above Rs.2 Lac and upto Rs.5 Lac||55%|
|Above Rs.5 Lac||60%|
(Average of last two years’ income will be considered for computation of the income eligibility). Regular income from all sources could be considered to arrive at the eligible loan amount, provided the sanctioning authority is satisfied about the same.
The loan amount will 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.
Maximum Loan amount of SBI Gram Niwas Home Loan
For construction/purchase of house: Rs.5.00 lacs For repairs/renovation: Rs.2.00 lacs For purchase of land: Rs.1.00 lac
Age criteria for SBI Gram Niwas Home Loan
18 years to 50 years. Applicants above 50 years may be considered for sanction of loan with all the legal heirs joining as guarantors.
Assessment of Loan requirements for SBI Gram Niwas
For loans upto Rs.0.50 lacs, 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 Home Loans above Rs.0.50 lacs, Circles will 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 will be vetted by the Civil Engineer at LHO.
The unit costs for the different categories so arrived at will be adopted for deciding the eligible loan amount in respect of Home Loans under the Scheme in the Circle. The rates may be reviewed once in three years and revised considering the impact of inflation on cost of building materials / labour costs.
Margin for SBI Gram Niwas Home Loan
Loan amount upto Rs.50,000 - 10% of the project cost.
Loan amount above Rs.50,000 and upto Rs.5.00 Lac - 15%
Loan amount above Rs.5 Lac - 20%
Processing charges of SBI Gram Niwas Home Loan
It has been waived. However Advocate's fee not exceeding Rs. 500/- should be recovered from the borrower for scrutiny of title deeds by Bank's empaneled Advocate.
Security for SBI Gram Niwas Home Loan
1. Primary: Equitable / Registered Mortgage of the house / plot. or Any other tangible security including agricultural land to cover 100% of loan amount (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 loans upto Rs. 50,000/- by obtaining a collateral security.
2. Collateral: As bank 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 bank file a civil suit, the branches may explore the possibility of obtaining collateral security covering the loan amount, wherever available.
Repayment of SBI Gram Niwas Housing Loan
Home Loans under the Scheme should be repaid over a period of not more than 15 years in equated monthly / quarterly / half yearly / yearly installments (including a maximum moratorium period of 18 months from the disbursement of the first installment of the loan or 2 months after completion of construction of the house whichever is earlier).
The period of repayment and the installments fixed for repayment 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 eg. dairy / poultry etc. or in monthly / quarterly installments 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 for SBI Gram Niwas Housing Loan
As offered under GJRHFS, a concession of 0.10% below the applicable card rate on the date of sanction. Latest instructions in this regard should be ascertained from Home Loan interest rate circulars.
Facility of SBI Gram Niwas Home loan
TL or OD as in SBI Maxgain in case of eligible customers with ATM-cum-Debit card facility.
Insurance for SBI Gram Niwas Housing Loan
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.
Disbursements of SBI Gram Niwas Home Loan
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 eg. 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 and should be made after the branch is fully satisfied about the proper end use of funds through site inspection.
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 will be considered as a part of the project cost.
Personal Accident Insurance Cover
The personal accident insurance cover will be available to all Home Loans extended under the Scheme, at Bank's cost.
Other Terms and Conditions
- 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.
- 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.