Report on Home Loan Process in Different Financial

Institutions of Nepal

Submitted by (Group Members): Submitted to:

Aashika Khadka Mr. Ramesh Chauhan
Dipesh Raj Pandey
Pravash Dhar Sharma
Sanjay Gautam
Sushant Singh Bhandari
 Acknowledgement

F
irst of all, we would like to thank our Mathematics teacher Mr. Ramesh Chauhan for his
support in completing this project and preparing this report. His vital guidance and
supervision helped us a lot in the completion of this project which has been completed as
per the course requirement. We would also like to thank Ace institute of management for
giving us an opportunity to do this project. This project helped all of us to boost our confidence,
gave us practical knowledge about the process of loan in different financial institutions and
expanded our bookish knowledge.

We would also like to thank the representatives of different banks who helped us by giving us
information about the process of home loan in their institutions. Our report shows the process of
home loan(land and building purchase loan) in following financial institutions:

Standard Chartered Bank Nepal

Nabil Bank Limited

Ace Development Bank

Global IME Bank

NIC Bank
 Table of contents
1.Introduction of the Report

1.1 Background

1.2 Objectives

1.2.1 General Objective

1.2.2 Specific Objective

1.3 Methodology

1.3.1 Primary source

1.3.2 Secondary source

1.4 Limitations

2. Information on bank, loan and provision for land and building purchase loan

2.1 Introduction to bank and loan

2.2 Introduction to home loan(land and building purchase loan)

2.3 Provision for land and building purchase loan provided by different financial
institutions

3.Summary and Conclusion

4.Recommendation

5.Bibliography

6.References

7.Appendix
1.Introduction of the Report

1.1 Background

This report analyzes the process for land and building purchase loan or readymade house
purchase loan (a type of home loan) in different financial institutions of Nepal. For this report,
we have decided to purchase land and building amounting to 2 crore 50 lakh. We have assumed
to have 1 crore and 50 lakh. So, we have planned to take the land and building purchase loan of 1
crore from the financial institutions.

After our research in different financial institutions, we have found that the installment is paid on
EMI (Equated Monthy Installment) or EQI(Equated Quarterly Installment) basis in case of the
land and building purchase loan. The total time or tenure to repay the land and building purchase
loan varies according to the financial institutions but it is usually between 10-15 years. The rate
of interest for land and building purchase loan also varies according to the financial institutions
but is usually 10%-15%. This report mainly provides information about the specific benefits and
process of taking land and building purchase loan from different financial institutions.
1.2 Objectives

The report is prepared for fulfilling the following objectives:

1.2.1 General Objective

The general objective of the report is, for the partial fulfillment of our course for the
requirement of the undergraduate level degree of BBA-BI.

1.2.2 Specific Objective

The specific objectives of this project work are:

To know the various kinds of loan available at the banks.

To boost self confidence.

To improve our communication skils.

To know the prevailing loan systems.

To know the current situation of banking sector in providing home loans.

To be clear about the mathematical knowlede regarding present value and amount of an
annuity, simple interest and compound interest by going to different banks and understanding
the loan process.

To enhance our knowledge in field of management.

 1.3 Methodology
While collecting information for report, various methods can be used. Some of them are:

Taking interview

Asking question and answer

Conducting surveys, etc.

1.3.1 Primary source

For primary source of information we went to the following financial institutions:

Nabil Bank

Standard Chartered Bank

Ace development Bank

SBI Bank

Everest Bank Limited

1.3.2 Secondary source

For secondary sources of information we visited official sites of different banks.

1.4 Limitations

While preparing this report we faced some problems which are listed below:

Due to less time we couldnt visit a lot of financial institutions.

Since this was a new topic for us, we felt awkward and shy to talk with the representatives
of the bank in the beginning due to which we couldnt get a lot of information from them.
2. Information on bank, loan and provision for land and
building purchase loan in different financial institutions

2.1 Introduction to Bank and Loan

BANK
A bank is a financial institution and a financial intermediary that accepts deposits and
channels those deposits into lending activities, either directly by loaning or indirectly
through capital markets. A bank is the connection between customers that have capital
deficits and customers with capital surpluses.

Standard activities of bank:

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as Automated Clearing House (ACH), Wire transfers or telegraphic
transfer, EFTPOS, and automated teller machine(ATM).
Banks borrow money by accepting funds deposited on current accounts, by
accepting term deposits, and by issuing debt securities such as banknotes and bonds.
Banks lend money by making advances to customers on current accounts, by
making installment loans, and by investing in marketable debt securities and other forms
of money lending.
Banks provide different payment services, and a bank account is considered
indispensable by most businesses and individuals. Non-banks that provide payment
services such as remittance companies are normally not considered as an adequate
substitute for a bank account.
 LOAN
Loan can be defined as a sum of money or other valuables or consideration than an
individual, group or other legal entity borrows from another individual, group or legal
entity(legal entity is often a financial institution) with the condition that it be returned or
repaid at a later date(most of the times with interest amount). In short, loan is the
temporary provision of money(usually at interest). It is a type of debt.

Type of loan available in the Nepalese banking sector:

Home Loan
Home Equity Loan
Flexi Loan
Education Loan
Vehicle Loan
Professional Loan
Personal Loan

2.2 A SHORT INTRODUCTION TO HOME LOAN

Home loan is the sum of money a bank or financial institution lends you to buy your dream
house.

By taking a home loan from a bank or a housing finance company you pledge your home as the
lenders security for repayment of your loan. The bank or financial institution will hold the title
or deed to the property till the loan has been paid back with the interest due for it.

Home loans are generally taken for long tenures as the loan amount is usually a huge sum. A
home loan can be taken anywhere between 5 and 30 years. The amount of loan one is eligible for
is dependent on the individuals credit profile.

We will be dealing with the process, tenure and rate of interest of land and building
purchase loan which is a type of home loan in different financial institutions of Nepal.

As mentioned above, we have planned to take 1 crore as land and building purchase loan
from the financial institutions.
2.3 Provision for Home Loan(Land and Building
purchase loan) provided by different financial
institutions
Standard Chartered Bank Nepal
INTRODUCTION
Standard Chartered Bank Nepal Limited has been in operation in Nepal since 1987 when it was
initially registered as a joint-venture operation. Today the Bank is an integral part of Standard
Chartered Group who has 75% ownership in the company with 25% shares owned by the
Nepalese public. The Bank enjoys the status of the largest international bank currently operating
in Nepal.
An integral part of the only international banking Group currently operating in Nepal, the Bank
enjoys an impeccable reputation of a leading financial institution in the country. With 15 points
of representation and 16 ATMs across the country and with around 350 local staff, Standard
Chartered Bank Nepal Ltd. is in a position to serve its customers through a large domestic
network.

Branches:
Head Office, New Baneshwor, Kathmandu

Other Kathmandu valley branches: Jawalakhel, Lazimpat,

Other places: Bhairahawa, Biratnagar, Birgunj, Hetauda, Dharan, Nepalgunj, Pokhara (2),
amongst others.

Priority Banking:

Priority Banking unit provides exclusive services with a new level of care and attention whilst
fulfilling the entire gamut of financial needs of our most valued customers.

Features:
Personalized services
Commitment to service quality
Privacy at an Exclusive Priority Banking Unit

Benefits:
Highest level of professional and personal services through dedicated relationship.
Managers:
Efficient, elegant and comfortable Priority Banking Unit which provides privacy and
confidentiality to its customers.
Our Master Gold Card is a symbol of premier recognition in the market.
Preferential interest rates on Home Loans, Auto Loans and Personal Loans
Credit facilities against fixed deposits/Government Bonds and near cash backed
securities.
Under special conditions, Home Banking services is provided to our customers where
they can avail an array of banking services without leaving the comfort of their home.

Requirements:
If you are aged at least 21 years and are under an employment having a take away pay sufficient
to cover the installments, you can take approach to avail our customized land and building
purchase loan.

Rate of interest:
Since you are planning to take 1 crore as loan, the rate of interest in this bank will be between
10.50%-11.75%.

Tenure of loan:
Loan amount of 1 crore has to be paid within 18 years.

Documentation Requirements(The following documents are

needed to complete loan process in the bank):
Passport size photo of applicants / guarantor
Copy of citizenship document of borrowers / guarantor
Copy of Land ownership document (lal purja)
Copy of Transfer deed (Rajinama)
Blue Print of Land
Building construction approval from Municipality / VDC along with drawing plans
(applicable where building is involved).
 Char Killa (four boundary)
Land revenue Tax Receipt (malpot receipt)
Income certifying document (Salary letter, Audited balance sheet, rental agreement etc.)
Firm / company registration and PAN in case of business entity.

Features:
Minimum 30% equity contribution
Maximum tenor of 18 years
Maximum loan amount up to NPR 20 million

Benefits of taking loan from this bank:

Convenient repayment plan (equal monthly installment spread over a maximum period of
18 years
Competitive interest rates
Quick Processing Time
Easy documentation
Personalized service
Total interest to be paid to the Standard Chartered Bank Nepal if loan
amount is decided to be paid within 10 years(The maximum amount to
repay the loan in this bank is 18 years):

Given, Present value(PV) or loan= Rs. 1,00,00,000+1.25% processing fee=Rs. 1,01,50,000

Rate of interest(r)=10.5% compounded per month
Time for payment of loan(n)=10 years=10*12=120 months
Annuity(P)=?
Where,i=r/1200=10.5/1200=0.00875% per month

Now, using the formula for present value of immediate annuity,we have,

PV= P/i[1-1/(1+i)^n]
or, 1,01,50,000=P/0.00875[1-1/(1.00875)^120]
or, 88,812.5=P[1-1/2.8446]
or, 88,812.5=P[1-0.3515]
or, 88,812.5=P*0.6485
or, P =88,812.5/0.6485
Therefore, Monthly payment(P)=Rs. 1,36,950.6554

So, Interest(I)= nP-PV

= 120*1,36,950.6554-1,01,50,000
= 1,64,34,078.64-1,01,50,000
= Rs.62,84,078.643
NABIL BANK LIMITED
Introduction

Nabil Bank Limited, the first foreign joint venture bank of Nepal, started operations in July 1984.
Nabil was incorporated with the objective of extending international standard modern banking
services to various sectors of the society. Pursuing its objective, Nabil provides a full range of
commercial banking services through its 51 points of representation across the kingdom and over
170 reputed correspondent banks across the globe.

Nabil, as a pioneer in introducing many innovative products and marketing concepts in the
domestic banking sector, represents a milestone in the banking history of Nepal as it started an
era of modern banking with customer satisfaction measured as a focal objective while doing
business.

Operations of the bank including day-to-day operations and risk management are managed by
highly qualified and experienced management team. Bank is fully equipped with modern
technology which includes ATMs, credit cards, state-of-art, world-renowned software from
Infosys Technologies System, Bangalore India, Internet banking system and Telebanking
system.
 (Interview taken with Mr. Jaya Krishna Shrestha)
Required documents for completing loan process:
ID Related Documents:
Citizenship and/or Passport
Bank account statement
Photograpsh
Firm/company Registration (if any)
PAN (if any)
Article & Memorandum of Association (if any)
Partnership deed (if any)

Security/collateral related documents:

Lal purja with Rajinama/Bakaspatra
Malpot receipt
Blue print
Approved House Map (in case of building)
Tax Clearance of the building
Char Killa Pramanit
Ghar Kayam in Lalpoorja in case of existence of house

Income source related documents:

Salary certificate
Rental agreement (if any) with an identification of tenant
P/L account and Balance Sheet for 2 fiscal years (if business income)
Copy of blue book of vehicle (if income from commercial vehicle)
Copy of Agreement (if consultancy income)

Rate of Interest:
The rate of interest for land and building purchase loan in this bank is 12%-14%.

Tenure of loan:
The loan amount of 1 crores has to be paid within 15 years. Prepayment not allowed before 1
year.
Total interest to be paid to the Nabil Bank Limited if loan amount is
decided to be paid within 10 years(The maximum amount to repay
the loan in this bank is 15 years):

Given, Present value(PV) or loan= Rs. 1,00,00,000+1.25% processing fee=Rs. 1,01,25,000

Rate of interest(r)=12% compounded per month
Time for payment of loan(n)=10 years=10*12=120 months
Annuity(P)=?
Where,i=r/1200=12/1200=0.01% per month

Now, using the formula for present value of immediate annuity,we have,

PV= P/i[1-1/(1+i)^n]
or, 1,01,25,000 =P/0.01[1-1/(1.01)^120]
or, 1,01,250 =P[1-1/3.3004]
or, 1,01,250 =P[1-0.3030]
or, 1,01,250 =P*0.6970
or, P =1,01,250/0.6970
Therefore, Monthly payment(P)=Rs. 1,45,265.4232

So, Interest(I)= nP-PV

= 120*1,45,265.4232-1,01,25,000
= 1,74,31,850.79-1,01,25,000
= Rs.73,06,850.790
ACE DEVELOPMENT BANK
INTRODUCTION
Ace Development Bank Ltd. has been a leading player in the financial market of Nepal. It was
founded in August 1995 as Ace Finance Company Ltd. and was upgraded to Ace Development
Bank Ltd., a full fledged category B development bank in 2007.

Over the years, customers and regulators have been in appreciation of the many financial
products and innovations developed by us. Our diversified risk asset portfolio has served the
economy in every sector as have the wide choices of deposit account schemes. Our wholesale
banking initiatives have assisted numerous commercial banks and private enterprises with risk
management concerns such as debentures and rights.

Our resolve to provide client-centric solutions and surpass the expectations of our stakeholders
remains firm and unyielding. We are now in a position to provide various products to serve all
our customers needs under one umbrella. We are now more competitive than ever with new
products and innovations in the pipeline.

Corporate Governance is another aspect which we strongly believe in. The Institute of Chartered
Accountants of Nepal has awarded us the Best Presented Account Award for four years in a
row. This shows the transparency and accuracy of our book of accounts.

Our employees are all qualified with a minimum of a Bachelors Degree. All our managerial
level personnel have a minimum of an MBA degree. Employees are constantly upgraded in
seminars, workshops and training programs in the country and internationally. Ace Development
Bank prides itself in having the highest productivity in ratio to its size.
 (Interview taken with Ms. Namita Shrestha)
Requirements(Eligibility):
The applicant must be a Nepali citizen who is employed with a stable job or self-employed with
a regular income source.

The client should provide collateral in the form of land and/or building or other fixed assets with
adequate value to cover the loan requirement. Other forms of security may be accepted upon
terms and conditions.

IN CASE OF LAND AND BUILDING AS COLLATERAL:

Registered charge (mortgage) over the fixed assets

Original Property Title Deed (Lalpurja)
Original Blue Print of Cadastral Map (Napi Naksa)
Photocopy of recent land tax payment receipt from Land Revenue Office
Photocopy of Property Ownership Transfer Deed
Photocopy of Four Boundary Certificate
Original Building Construction (Naksa) Pass Certificate
Original Insurance Receipt
Relationship Certificates of legal heirs issued by local authority (if applicable)

Tenure:
The tenure of the land and building purchase loan of 1 crore can be maximum of 15 years.

Rate of interest:
Interest rate for land and building purchase loan in this bank is 14%-16%.
Total interest to be paid to the Ace Development Bank if loan
amount is decided to be paid within 10 years(The maximum amount
to repay the loan in this bank is 15 years):

Given, Present value(PV) or loan= Rs. 1,00,00,000+2.00% processing fee=Rs. 1,02,00,000

Rate of interest(r)=14% compounded per month
Time for payment of loan(n)=10 years=10*12=120 months
Annuity(P)=?
Where,i=r/1200=14/1200=0.0117% per month

Now, using the formula for present value of immediate annuity,we have,

PV= P/i[1-1/(1+i)^n]
or, 1,02,00,000 =P/0.0117[1-1/(1.0117)^120]
or, 1,19,340 =P[1-1/4.0225]
or, 1,19,340 =P[1-0.2486]
or, 1,19,340 =P*0.7514
or, P =1,19,340/0.7514
Therefore, Monthly payment(P)=Rs. 1,58,823.5294

So, Interest(I)= nP-PV

= 120*1,58,823.5294-1,02,00,000
= 1,90,58,823.53-1,02,00,000
= Rs.88,58,823.529
 GLOBAL IME BANK

INTRODUCTION
Global IME Bank Ltd. emerged after successful merger of Global Bank Ltd (an A class
commercial bank), IME Financial Institution (a C class finance company) and Lord Buddha
Finance Ltd. (a C class finance company).

Global Bank Limited (GBL) was established in 2007 as an A class commercial bank in Nepal
which provides entire commercial banking services. The bank was established with the largest
capital base at the time with a paid up capital of NPR 1.0 billion. The paid up capital of the bank
has since been increased to NPR 2.18 billion. The bank's shares are publicly traded as an 'A'
category company in the Nepal Stock Exchange.

Pursuant to the liberalized economic policy of the government, majority of the commercial banks
have established their head office in the Kathmandu valley. Witnessing the incredible potential
the country offers outside the capital, the promoters have established the bank in Birgunj, the
commercial hub of the nation. It is in line with the aim of the bank to be The Bank for All by
giving necessary impetus to the economy through world class banking service.

For the day to day operations, the bank has been using the world renowned FINACLE software
that provides real time access to customer database across all branches and corporate locations of
the bank. This state of the art customer database has also been linked to a Management
Information System that provides easy reach to all possible database information for balanced
and informed decision making. A disaster recovery system (DRS) of the Bank has also been
established in the Western Region of Nepal (200 kms west of Kathmandu).

The bank has been able to achieve excellent diversification of its assets. A well balanced
distribution of exposure in areas of national interest has been possible through long term
forecasting and timely strategic planning. The bank has diversified interests in hydro power,
manufacturing, textiles, services industry, aviation, exports, trading and microfinance projects,
just to mention a few.

The exemplary performance of the bank in these last five years has elevated it to a premier status
in the industry. The bank has been handling government transactions and is officially among the
only 5 banks in Nepal to do so. The bank has been able to earn the trust and confidence of the
public, which is reflected in the large and ever expanding customer base of the bank. Through all
this the bank has been able to truly achieve its vision of being The Bank for All. Even with all
this success, the bank remains internally focused towards manpower development, product
innovation and process innovation etc, to have a strong and solid foundation, which are ongoing
and continuous improvement initiatives undertaken by the management and staff alike.
 (Interview taken with Mr. Mishal Raj Pandey):

Requirements(Eligibility):
Individual - Nepalese Citizen above 21 years.
Salaried individual, self employed persons
EMI /EQI 50% of gross income and EMI /EQI 80% of uncommitted (disposable) income
Swapping of loan is subject to the satisfactory debt servicing to other Banks/ FIs.
Acceptable collateral to the bank (the residential property being purchased)

Documentation Requirements(The following documents are

necessary to complete the loan process in the bank):
Identification:
2 Passport size photo of applicant
Photocopy of Citizenship certificate of applicant and guarantor
Photocopy of Tax/PAN/VAT certificate along with registration certificate
Photocopy of Article of Association and Memorandum of Association

Proof of Income:
Salary certificate
Photocopy of contract agreement between applicant and his/her employer
Photocopy of Rent Contract if any
Photocopy of audited/management prepared Financial Statements (past 3 years).
Others if any

Others:
Loan application form duly filled and signed in standard format of the Bank
Current account of the applicant / borrower
Name of the family members
Net worth declaration
Original quotation of housing company, if being bought from housing company
Original letter stating coheir (Anshiyar) of seller from local authority (Ward)
Original Blue Print of the land (Napi Naksha) certified by concerned authority
Copy of construction completion certificate form Municipality/VDC in case of purchasing
already build house (Nirman Sampanna Pramanpatra)
Copy of detailed breakdown of cost estimation from the applicants consultant
Copy of land Ownership Certificate (Lalpurja)
Original latest land revenue receipt (Malpot Receipt)
Copy of blue print of building approved from Municipality/VDC (Naksha Pass)
Copy of land Transfer deed (Rajinama)
Original four Boundary Disclosure (Char Killa Pramanit) from ward office
Approval letter of Municipality for extension and renovation/modification (if needed) of house
 In case of swapping of loan, loan statement form other banks and financial institution
Net worth declarations
Other documents stipulated by the Bank from time to time

Rate of interest:
Competitive Interest rate: 13% to 14.50% p.a.

Tenure:
The maximum time to repay the land and building purchase loan is 15 crore.
Total interest to be paid to the Global IME Bank if loan amount is
decided to be paid within 10 years(The maximum amount to repay
the loan in this bank is 15 years):

Given, Present value(PV) or loan= Rs. 1,00,00,000+1.00% processing fee=Rs. 1,01,00,000

Rate of interest(r)=13% compounded per month
Time for payment of loan(n)=10 years=10*12=120 months
Annuity(P)=?
Where,i=r/1200=13/1200=0.0108% per month

Now, using the formula for present value of immediate annuity,we have,

PV= P/i[1-1/(1+i)^n]
or, 1,01,00,000 =P/0.0108[1-1/(1.0108)^120]
or, 1,09,080 =P[1-1/3.6437]
or, 1,09,080 =P[1-0.2744]
or, 1,09,080 =P*0.7256
or, P =1,09,080/0.7256
Therefore, Monthly payment(P)=Rs. 1,50,330.7607

So, Interest(I)= nP-PV

= 120*1,50,330.7607-1,01,00,000
= 1,80,39,691.29-1,01,00,000
= Rs.79,39,691.290
 NIC BANK
INTRODUCTION
Nepal Industrial & Commercial Bank Limited (NIC Bank) commenced its operation on 21 July
1998 from Biratnagar. The Bank was promoted by some of the prominent business houses of the
country. The current shareholding pattern of the Bank constitutes of promoters holding 51% of
the shares while 49% is held by the general public. NIC Bank has over 34,000 shareholders. The
shares of the Bank are actively traded in Nepal Stock Exchange with current market
capitalization of about NPR 10,493 million.

The Bank has grown rapidly with 36 branches throughout the country while several branches are
planned to be opened this year. All branches are inter-connected through optical fiber as well as
V-Sat and are capable of providing real time on-line transactions.

NIC Bank was the first commercial bank in Nepal to have received ISO 9001:2000 certification
for its Quality Management System standard in the year 2006. The Bank has recently been
certified under the upgraded ISO 9001:2008 standards for the Bank's Quality System on
Commercial Banking Activities for the first time in Nepal. Furthermore, NIC Bank became the
1st Bank in Nepal to be provided a line of credit by International Finance Corporation (IFC), an
arm of World Bank Group under its Global Trade Finance Program, enabling the Bank's Letter
of Credit and Guarantee to be accepted/ confirmed by more than 200 banks worldwide.

To add to these achievements, the Bank has also been awarded the "Bank of the Year 2007-
Nepal" by the world-renowned financial publication of The Financial Times, U.K.-The Banker.
This is the fruit of the Bank's outstanding performance backed by belief and support of its
customers towards the Bank.

The Bank is run by professionals and believes in the highest standards of corporate governance.

The Bank believes in continuously offering new and value added services to its customers, with
commitment to quality and value to its clients at the same time. Accordingly, the Bank has been
in the forefront in launching innovative and superior products having unique customer friendly
features with immense success.
 (Interview taken with Mr. Saurav Singh Bhandari)
Tenure:
The loan amount should be paid within 15 years on EMI basis.

Rate of interest:
The rate of interest for land and building purchase loan is 10.50%-11.00%.

Eligibility:
Self employed professionals having reliable/stable source of income or income of own family
supported by the documentary evidence.
Any other individuals having identifiable source of income supported by the documentary
evidence of the same.
Employees of corporate entities supported by salary slips and employer's undertaking that
salary will be routed through the Bank.
Borrowers' uncommitted income should be 25% more than the Equated Monthly Installment
(EMI)
Nepalese Citizens only but should be above 18 years of age and last installment to be repaid
within 60 years of his/ her service, unless steady and regular income justifies.
For the corporate borrowers, company's past performance of 2 years and projection reports of
2 years, (including current year) its financials as well as the reputation of the promoters will be
considered.

Documentation requirements(The following documents are

necessary to complete loan process in the bank):

The documents are similar to the documents required in other banks which have been
mentioned above.
Total interest to be paid to the NIC Bank if loan amount is decided
to be paid within 10 years(The maximum amount to repay the loan
in this bank is 15 years):

Given, Present value(PV) or loan= Rs. 1,00,00,000+1.00% processing fee=Rs. 1,01,00,000

Rate of interest(r)=11% compounded per month
Time for payment of loan(n)=10 years=10*12=120 months
Annuity(P)=?
Where,i=r/1200=11/1200=0.0092% per month

Now, using the formula for present value of immediate annuity,we have,

PV= P/i[1-1/(1+i)^n]
or, 1,01,00,000 =P/0.0092[1-1/(1.0092)^120]
or, 92,920 =P[1-1/3.0010]
or, 92,920 =P[1-0.3332]
or, 92,920 =P*0.6668
or, P =92,920/0.6668
Therefore, Monthly payment(P)=Rs. 1,39,352.1296

So, Interest(I)= nP-PV

= 120*1,39,352.1296-1,01,00,000
= 1,67,22,255.55-1,01,00,000
= Rs.66,22,255.549
3. Summary and Conclusion

After studying different procedures of taking home loan from different banks we have come to
the following conclusions:

We found that the interest rate for taking home loan from financial institutions in Nepal is
higher compared to other countries.

After the research, we came to a conclusion that Standard Chartered bank provides the
best home loan facility in Nepal. It is because of the competitive interest rates, higher
tenor, quick processing time and easy documentation facility provided by Standard
Chartered Bank compared to other financial institutions.

If a land and building purchase loan of 1 crore is taken from the financial institutions
included in this report and the loan amount is paid after 10 years the following interest
has to be paid to the financial institutions:
Total interest to be paid to Standard Chartered Bank Nepal: Rs. 62,84,078.643
Total interest to be paid to Nabil Bank Limited: Rs. 73,06,850.790
Total interest to be paid to Ace Development Bank: Rs. 88,58,823.529
Total interest to be paid to Global IME Bank: Rs. 79,39,691.290
Total interest to be paid to NIC Bank: Rs. 66,22,255.549
 4. Recommendations and Suggestions

After the completion of our research, we have answered the following two most important
questions regarding home loan which will be very helpful to the concerned people.

A. How to choose a bank for any type of home loan?

1.Ask friends and relatives who currently own mortgages for recommendations on a bank for
your mortgage. Some may have very strong opinions based on past experiences.

2.Consider using your current bank for your lender. If a banking relationship already exists,
certain fees may be waived.

3.Compile a list of three lenders and ask each for a quote on a mortgage. Request a copy of
the Good Faith Estimate and Truth in Lending Statement from each one.

4.Compare each document. The mortgage with the lowest APR (annual percentage rate) as
listed on the Truth in Lending statement is the cheapest overall mortgage. The APR is the
numerical representation of the total cost of the mortgage for one full year, including the
closing costs as well as the monthly interest rate.

5.Select the mortgage with the lowest APR. Consider the bank and loan officer attached to
this mortgage. If you are not comfortable with this lender, or simply prefer another one, ask
the preferred lender to meet or beat the quote from the other lender in order to win your
business.

B. How can I get approved for a home loan?

Credit/Character
When you apply for a loan, you will sign an authorization allowing the lender to run your credit
report. From your credit report, the lender will see any delinquent obligations, outstanding
collections, judgments and bankruptcy within the last 10 years. The lender will also see how
many other lenders have run your credit in the past 12 months. If an excessive amount of
inquiries exist, the lender will question why you have applied for so many loans. To get
approved, lenders check your report for good credit history, education, stable employment and
residence.
 Capacity
To get approved for a loan, you must exhibit the ability to repay your loan. Most lenders require
some type of income verification. You will provide W2s, pay stubs and tax returns as proof of
your cash inflow. The bank will divide your monthly debt obligations into your monthly income.
This figure is your debt-to-income ratio. The acceptable level for approval varies, but in most
cases it should be less than 40 percent.

Capital
Capital is your cash on hand. While a strong capital base is favorable for any loan, it becomes
more of a factor with commercial loans. To get approved, you will submit a personal financial
statement. On this statement you will list your assets (items you own with cash value) and
liabilities (money you owe such as mortgages, credit card debt and other loans). The difference
between the two values is your net worth. An individual with a higher net worth is a better
candidate for a loan. An individual with low or negative net worth will find it more difficult to
get approved.

Collateral
Collateral is an asset that a borrower offers as security for a loan. To get approved, an individual
must have enough collateral to support the loan amount. The two strongest types of collateral are
cash (saving accounts, CDs, investment accounts) and real estate. Other types of collateral are
equipment, business assets and vehicles. The net lendable value on the collateral will vary based
on type. For example, a lender may approve up to 80 percent of the value of an owner-occupied
residence. This means that on a Rs.250,000 property, it will lend Rs.200,000. On the other hand,
the lender may only approve 50 percent of the value of equipment. This means if you have
Rs.50,000 in equipment, the lender will only give you Rs.25,000.
5. Bibliography

Standard Chartered Bank Nepal: Mr. Sunil Raj Pandey( 9841680459)

Nabil Bank Limited: Mr. Jaya Krishna Shrestha(4221718, 4227181)
Ace Development Bank: Ms. Namita Shrestha( 4441110)
Global IME Bank: Mr. Mishal Raj Pandey(9813374350)
NIC Bank: Mr. Saurav Singh Bhandari(4262277)
6.References
i. http://www.standardchartered.com.np
ii. http://www.nabilbank.com/
iii. http://ace.com.np/
iv. http://www.globalimebank.com/
v. http://www.nicbank.com.np/
vi. http://en.wikipedia.org/
 7.Appendix

Key questions remembered while preparing this report:

1. What is your detail plan after taking the loan?

2. Which bank do you choose for the loan?
3. What is the process of taking loan from the different banks?
4. How much would you want to take from bank?
5. When would you start to repay the loan?
6. What is the rate of interest for different payment schedule?
7. Which payment schedule do you prefer?
8. What is the present value, annuity and interest which you are going to pay to
the bank for facility provided by the bank?
9. How will you be benefited from this loan?