Our Bank is already having a Housing Loan Scheme named as “KGB AWAS” which has been in operation since 14th March, 2009. However, a greater chunk of our clientele in Rural/Semi-Urban/Urban areas are deprived of availing housing loan under “KGB AWAS” as they do not fulfill some of the major terms and conditions of the scheme such as:

• The monthly income of the applicant should at least be equal to/more than the EMI+ 4000/- in case of a family having 4 members and the monthly requirement will go up progressively by 1000/-p.m. for each additional member irrespective of the loan amount.
• In case the applicant is a professional/businessman, he should produce the last Income Tax Assessment order/Income Tax return filed so as to ascertain his monthly income.
• For Farmers/Agriculturist assessment of income will be done on the basis of average deposit in SB a/c for last twos and/or average surplus of last two years after loan adjustment in KCC account.
• Repayment period of the loan is limited to 15 years(Maximum)

In order to enable the low/medium income group in the rural /semi-urban/urban areas to construct a modest dwelling house of their own with the help of bank finance, but who do not satisfy the above stringent conditions, an acceptable and hassle free Small Housing Loan Scheme named as “KGB KUTIR” has been prepared by us.

THE DETAILS OF THE SCHEME ARE GIVEN BELOW.
i) Objective
The objective of the scheme is to address the problem of housing through improved access to housing credit which would enable an individual to build a modest new house or improve or add to the existing dwelling unit in "Rural Area/Semi-urban/Urban" areas. The Scheme also aims at ensuring rural sanitation by providing one room, one kitchen and one latrine & bath in the “Small House” concept.
ii) Scope
The Scheme aims to provide improved access to housing finance which would enable an individual to build a modest house or to improve or add to his existing dwelling unit in the rural/Semi-urban/Urban area. The Scheme envisages provision of Bank credit up to 5.00 lakh to individuals desirous of constructing new dwelling units and up to 2.00 lakh for major repairs to the existing units in Rural/Semi -urban/Urban areas at normal rate of interest.
iii) Terms of Sanction
a) Location of the Unit : Rural/Semi-Urban/Urban area irrespective of population but within the operational area of the Bank.

b) Purpose : 1-Constructing new dwelling unit/Addition/Alteration of existing Dwelling units.
2- Major Repairs to the existing Dwelling unit.
(2)
c)Loan amount: i) Maximum loan amount for new
Construction or Addition/ Alteration to existing
Construction in Urban/Semi-Urban/Rural areas - 5.00 lakh

ii) Maximum loan amount for Major Repair 2.00 lakh to the existing dwelling house in Urban/
Semi-Urban/Rural areas

d)Size of the Dwelling
Unit : The minimum size of the Dwelling unit proposed to be constructed should be such that it contains one Room of standard size, one kitchen and one latrine and Bath room.
The provision of latrine and Bath should be made compulsory in order to ensure rural sanitation.

e) Eligibility : Existing customers of our bank having minimum 6 month transactions with our bank branch and permanently residing in the operational area of the bank. The age of the borrower should be minimum 21 years and maximum 65 years inclusive of repayment period. Agriculturists, Small Businessmen, Rural artisans and other households etc can avail loan under this scheme. It may be granted singly or jointly. The Employees of State Govt., Central Govt., Reputed public Companies, Schools, Colleges, Universities (teaching and non-teaching staff), other recognized Institutions, PSUs, etc are also eligible to avail loan under this Scheme provided their loan requirement is within the limit of the scheme. In case of the customers of other Bank(s), they are also eligible under this scheme provided they have satisfactory transaction with other Bank(s) for last six months either in their loan a/c or SB a/c. However, they must close their loan account with other Bank, before availing loan from our Bank.

f) Margin : Minimum 15% of the cost of construction/repair cost. Loan amount   should not exceed 85% of the cost of construction/repair cost.

g) Period of Repayment : Maximum 25 years including moratorium period. The moratorium period for repayment will be 12 months from the date of 1st disbursement or completion of the house which ever is earlier. Loan availed for the purpose of major repair/ up gradation etc will be repaid within a maximum period of 10(ten) years with a moratorium period of 6 months (inclusive) from the date of availment of the loan.

h) Mode of Disbursement:In case of construction of house, the loan amount may be disbursed in a phased manner preferably in 3 installments i.e. 30:40:30 ratios. Each time before and after disbursement, the inspection must be carried out by the Manager and a copy of the said report should be kept preserved in the loan documents.
(3)
i) Rate of Interest:As per the guidelines of the Bank subject to change from time to time in accordance with NHB/RBI guidelines and on assessment of cost of fund. Presently, the rate of interest is fixed at 10.50% p.a.
j) Security :a) Equitable Mortgage of homestead land and building to be constructed over the said land.
b) Post Dated Cheques drawn on the financing branch of our  Bank for repayment of Installments should be obtained.
k) Refinance facility: Refinance facility from NABARD/NHB, as applicable will be    available for such loan assistance.
l) Processing fees: Borrower has to pay a processing fee equal to 0.5% of the loan amount subject to minimum 500/-
m) Other Service Charges: Inspection and other service charges should be recovered as per the existing guidelines of the Bank subject to change from time to time. Please refer to Circular no. PDIT/06/09-10 dated 16.06.2009.

iv) Operative Instructions
It may be observed from the above guidelines that the Small Housing Loan Scheme (KGB KUTIR) is similar to the KGB Awas Yojana launched by our Bank excepting the followings:

1. The Maximum quantum of loan under Small Housing Loan Scheme (KGB KUTIR) would be 5.00 lakh for construction of new dwelling unit/Addition/Alteration of existing dwelling unit and 2.00 lakh for major repair of existing dwelling unit whereas the maximum quantum of loan under KGB Awas Yojana is 50.00 lakh in urban area, 15.00 lakh in semi urban area and 10.00 lakh in rural areas.

2. Take over of housing loan proposals from other Banks under this KGB Small Housing loan Scheme (KGB KUTIR) is not permitted.
3. Housing loan under this Scheme should not be extended for purchase of land; however the cost of the land may be taken towards margin money for the loan amount for construction of house.
4. This scheme is not for purchase of ready built house/flat.

5) Income Assessment

• Minimum 40% of total income of the applicant (Non-Salaried persons) should be earmarked for family expenses while calculating the eligible loan amount.
• In case of employees 40% of gross salary after all deductions including deduction of EMI of the proposed Housing loan from our Bank should be maintained for family expenses. The concerned employee should submit salary certificate from the Employer/DDO.
• In case of Farmers/Agriculturist/Micro Entrepreneurs/Small Businessmen/Rural Artisans etc. not coming under the purview of Income Tax, their income should be taken in to account on the basis of Income Certificate issued by concerned

Revenue Officer not below the rank of Tahasildar. However, income of the applicant should be assessed by the Branch Manager himself by conducting independent enquiry.

(4)
6. Calculation of loan amount- On the basis of monthly income,
Loan amount = 1 lakh X B/A
Where A=EMI per 1 lakh of loan for the proposed repayment period and with the applicable rate of Interest.
B= amount available for servicing of EMI i.e. Net monthly income (minus) - 40% of the Gross monthly Income.
Loan entitlement = lower of amounts coming in point no. (c) of terms of sanction and point no 6.

7- Insurance-
The Bank will look in to the possibility of insuring the life and assets of the borrower with approved Insurance Companies.
8-Lending Powers:
Branch Manager Scale I, II & Scale-III .5 lakh
Regional Manager- Full
GM/Chairman- Full
On the basis of the guidelines issued by Reserve Bank of India vide circular No.RBI/2010-11/533 RPCD.CORRB.No.71/03.05.33/2010-11 dated 16.05.2011 to all RRBs housing loans up to .25.00 lakh to individuals for purchase / construction of dwelling unit per family, (excluding loans granted by banks to their own employees) and loans given for repair to the damaged dwelling units per families up to .1 lakh in rural and semi-urban areas and up to .2 lakh in urban and metropolitan areas are to be treated as Priority Sector advance. Hence almost all advances granted under the KGB Small Housing Loan Scheme (KGB KUTIR) will come under Priority Sector Advances.

The achievement under housing finance under KGB AWAS Yojana by branches is being reported in MPR under KGB Awas Yojana column every month. Achievement made in respect of "KGB KUTIR" is to be reported separately just below KGB Awas Yojana in MPR.