Our Business Process for Loans
We have a detailed business process in place for providing Housing Finance and Urban Infrastructure Finance.
- Loan Originations
Our 21 regional offices and 11 development offices are responsible for business development. They also assess the varied needs and preferences of different market segments and provide suggestions to our corporate office for the development of new financial products. Our current focus is on sanctioning new loans to State Governments and their agencies. Through our pan-India presence and our role of appraising projects under various Government schemes, we have built strong relationships with State Governments and their agencies. This gives us a better chance of providing loans to those entities, whether for projects under those schemes or otherwise.
- Loan Sanction or Rejection
The loan sanction or rejection process primarily begins by the receipt and scrutiny of a loan application at one of our regional offices. We have a common loan application form for all our loans (except HUDCO Niwas). The application is appraised by a duly constituted appraisal team comprising three members: one member with project assessment skills; one member with finance skills; and one lawyer (preferably from the concerned regional office). If the amount of the loan applied for exceeds the amount that may be sanctioned at the regional office level, the application will be examined by our Project Appraisal Committee-I for loans requiring sanction at the ED level or our Project Approval Committee-II for loans requiring sanction by either the Chairman and Managing Director or the Board. If required, the appraisal team/relevant Project Appraisal Committee will send consolidated comments on the applicant’s application seeking further information or documents required to complete the appraisal of the application. As part of the loan application review process, we also undertake other actions, depending on the type of applicant and type of loan, such as title verification checks on the collateral offered by the applicant to verify its quality and enforceability. If the value of the collateral exceeds a certain amount, depending upon the value of the collateral, we appoint one or two independent valuers to value the collateral. The appraisal team/relevant Project Appraisal Committee then prepares an appraisal report in our prescribed format. If they recommend its approval, a sanction note is prepared in our prescribed format, along with any issues they think the competent authority should consider before approving the loan, if any.
The sanctioning powers vests with different levels of authority at regional offices and our orporate office. Once the proposal is approved by the competent authority, a sanction letter is issued by the concerned regional office.
The disbursements are made after completion of all required documentation, including, if applicable, the creation of the security interest by the relevant regional office.
Disbursements for loans to finance projects are based on our verification of the construction progress of the project and our review of completion certificates or other documents provided by the borrower. Disbursements typically occur at specific stages of the project, such as percentage of construction completed or at particular milestones.
- Monitoring and Default Resolution
Each regional office has a default review committee that is responsible for monitoring and reviewing loan defaults by borrowers in that region. Our Default Monitoring and Resolution Committee conducts periodical monitoring and review of loan defaults on the basis of information given to it by the recovery cells at our corporate office and the minutes of the default review committees at our regional offices. The committee also reviews the default resolution packages/one time settlement (OTS) packages received from regional offices and agencies and considers requests by and recommendations of regional offices regarding waiver/relaxation of dues. The committee then makes recommendations to the Board regarding what actions the Board should approve.
In case of default where recoveries become difficult, we have systems and procedures in place for invoking the securities given for loans for recovery of our dues.