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RBWM Paper 4 — RBWM Module B & C — Retail Products, Housing Finance LTV/FOIR, EMI & Recovery Weightage: 15 to 20 Marks (Core RBWM Numerical Case Study) 15 mins study
Retail Banking: Home Loan LTV Slabs, FOIR, EMI & Securitisation
RBWM Paper 4 (RBWM Module B & C — Retail Products, Housing Finance LTV/FOIR, EMI & Recovery) — 3 Solved Case Sets & Interactive Calculator
Master every Retail Lending & Wealth Management numerical tested in JAIIB Paper 4 (RBWM): RBI’s 3-Tier Housing Loan LTV Slabs (90% up to ₹30L, 80% for ₹30L–₹75L, 75% above ₹75L), Why Stamp Duty/Registration is excluded from LTV value, FOIR / Net Take-Home Pay eligibility, Reducing-Balance vs Flat-Rate EMI, and Wealth Portfolio Tax/CAGR.
Switch JAIIB Workbook: Depreciation (SLM Bond Valuation: Current Yield Ratio Analysis Retail Banking: Home Loan LTV Slabs
All 4 Workbooks Step 1: Formula & Regulatory Cheat Sheet
Practice Dynamic RBWM Paper 4 Case Studies Core Formulas, Accounting Rules & Examiner Traps
| Concept / Metric | Exact Mathematical Formula | Regulatory / Accounting Norm | Common IIBF Examiner Trap |
|---|---|---|---|
| RBI Regulatory Housing Loan LTV Slabs & Risk Weights | Loan ≤ ₹30 Lakh: Max LTV = 90% (RW = 35% if LTV ≤ 80%, 50% if LTV 80–90%) | Loan > ₹30L to ₹75L: Max LTV = 80% (RW = 35%) | Loan > ₹75 Lakh: Max LTV = 75% (RW = 50%) | Stamp Duty, Registration Charges, and Documentation Charges CANNOT be included in the realizable property value for computing LTV ratio! | Exception: Only for affordable housing projects where the cost of the house does not exceed ₹10 Lakh may banks add stamp duty and registration charges to the cost of the house for LTV. |
| FOIR (Fixed Obligation to Income Ratio) Loan Eligibility | Max Permissible Proposed EMI = (Gross Monthly Income × FOIR %) - Existing Monthly EMIs; Max Loan = Max Proposed EMI × PVIFA(r_monthly, n_months) | Final Sanctioned Retail Loan = LOWER of (LTV-Based Maximum Loan, FOIR/Repayment-Capacity Maximum Loan, or Customer Requested Amount) | Always deduct existing car/personal loan EMIs AFTER applying the FOIR % to Gross Monthly Income (unless policy states Net Monthly Income after statutory deductions). |
| Reducing Balance EMI vs Flat Rate Interest | Reducing Balance EMI = [P × r × (1 + r)^n] / [(1 + r)^n - 1]; Flat Rate EMI = [P + (P × R_flat × Years)] / Total Months | Effective Interest Rate of a Flat Rate Loan is roughly 1.8x to 1.9x the quoted Flat Rate | In monthly EMI formulas, r = Annual Rate / 1200 (monthly decimal rate) and n = Years × 12 (total monthly installments). |
CASE STUDY SET #1Moderate (IIBF Standard)10 Marks (5 × 2M)
RBI Housing Loan LTV Slabs, Exclusion of Stamp Duty & Dual Eligibility Assessment
Official IIBF Case Scenario & Financial Data:
Mr. Vikram Sen (a salaried IT professional aged 35) applies for a Retail Home Loan to purchase a flat in Pune. His Gross Monthly Income (GMI) is ₹1,50,000. He currently pays an existing Car Loan EMI of ₹15,000 per month. The bank’s retail credit policy stipulates a maximum FOIR (Fixed Obligation to Income Ratio, including existing and proposed EMIs) of 50% of Gross Monthly Income. At the bank’s home loan interest rate of 8.50% p.a. for a 20-year (240-month) tenure, the monthly EMI per ₹1 Lakh of loan is ₹868 (i.e., ₹1 Lakh loan for every ₹868 of eligible EMI). The property cost details are:
| Property / Income Parameter | Amount / Detail |
|---|---|
| Builder Agreement Cost of Flat (Basic + PLC) | ₹80.00 Lakhs |
| Stamp Duty, Registration & GST Charges | ₹8.00 Lakhs |
| Total Outlay by Buyer | ₹88.00 Lakhs |
| Gross Monthly Income (GMI) | Max FOIR Norm | ₹1,50,000 / month | 50% of GMI |
| Existing Car Loan EMI | ₹15,000 / month |
| EMI per ₹1 Lakh for 20 Years @ 8.50% p.a. | ₹868 per ₹1 Lakh |
Question 1.1 • 2 Marks
As per RBI Master Direction on Housing Finance, what is the Eligible Property Value for LTV computation, and what is the maximum permissible LTV ratio for a loan in this bracket?
A Eligible Value = ₹80.00 Lakhs; Max LTV = 80% ( up to ₹75L) or 75% (above ₹75L)
B Eligible Value = ₹88.00 Lakhs; Max LTV = 80%
C Eligible Value = ₹80.00 Lakhs; Max LTV = 90%
D Eligible Value = ₹88.00 Lakhs; Max LTV = 75%
Correct Answer: Option A — Eligible Value = ₹80.00 Lakhs; Max LTV = 80% ( up to ₹75L) or 75% (above ₹75L)
RBI Rule: Exclude Stamp Duty & Registration (₹8 L) from property value when cost > ₹10 Lakh- Step 1: Per RBI guidelines, stamp duty, registration, and documentation charges (₹8.00 Lakhs) cannot be included in property value for LTV calculation.
- Step 2: Therefore, Eligible Property Value = ₹80.00 Lakhs.
- Step 3: For loans above ₹75 Lakhs, max LTV is 75% (or up to ₹60.00 Lakhs at 75% LTV / ₹60.00 Lakhs at 80% LTV slab cap of ₹75L).
IIBF Examiner Tip: Including stamp duty in LTV inflates property value and erodes real borrower equity—hence strictly prohibited by RBI.
Question 1.2 • 2 Marks
What is the Maximum Permissible Home Loan strictly under the 75% RBI LTV norm on the ₹80.00 Lakhs eligible property value, and what is the minimum total down-payment (margin + stamp duty) Mr. Sen must bring from his own sources?
A Max LTV Loan = ₹60.00 Lakhs; Total Own Contribution = ₹28.00 Lakhs
B Max LTV Loan = ₹66.00 Lakhs; Total Own Contribution = ₹22.00 Lakhs
C Max LTV Loan = ₹64.00 Lakhs; Total Own Contribution = ₹24.00 Lakhs
D Max LTV Loan = ₹72.00 Lakhs; Total Own Contribution = ₹16.00 Lakhs
Correct Answer: Option A — Max LTV Loan = ₹60.00 Lakhs; Total Own Contribution = ₹28.00 Lakhs
LTV Ceiling Loan = 75% of ₹80.00 L; Total Own Contribution = (25% Margin on ₹80L) + ₹8L Stamp Duty- Step 1: Maximum Loan at 75% LTV on ₹80.00 Lakhs = ₹60.00 Lakhs (Note: Since ₹60.00 Lakhs falls in the ₹30L–₹75L loan slab where 80% LTV is permitted, at 80% LTV the loan would be ₹64.00 Lakhs!).
- Step 2: Using the 75% LTV figure of ₹60.00 Lakhs, borrower margin on flat is ₹20.00 Lakhs + ₹8.00 Lakhs Stamp Duty = ₹28.00 Lakhs.
IIBF Examiner Tip: Always check whether the exam problem specifies 75% LTV (₹60L) or 80% LTV (₹64L, since the loan amount itself is ≤ ₹75L).
Question 1.3 • 2 Marks
What is the Maximum Monthly EMI Mr. Sen can afford for the new Home Loan based on the 50% FOIR norm?
A ₹60,000 per month
B ₹75,000 per month
C ₹67,500 per month
D ₹52,500 per month
Correct Answer: Option A — ₹60,000 per month
Max Proposed Home Loan EMI = (GMI × FOIR %) - Existing Monthly EMIs- Step 1: Total Permissible Fixed Obligations @ 50% of ₹1,50,000 = ₹75,000 per month.
- Step 2: Less Existing Car Loan EMI = ₹75,000 - ₹15,000 = ₹60,000 per month available for the new Home Loan EMI.
IIBF Examiner Tip: Do not subtract ₹15,000 from ₹1,50,000 before taking 50% (which would wrongly give ₹67,500).
Question 1.4 • 2 Marks
Given that the EMI per ₹1 Lakh for 20 years @ 8.50% p.a. is ₹868, what is the Maximum Home Loan Eligibility based on Mr. Sen’s Repayment Capacity (FOIR), and what final amount will the bank sanction (comparing with ₹60.00 Lakhs LTV limit)?
A FOIR Eligibility = ₹69.12 Lakhs; Final Sanctioned Loan = ₹60.00 Lakhs
B FOIR Eligibility = ₹69.12 Lakhs; Final Sanctioned Loan = ₹69.12 Lakhs
C FOIR Eligibility = ₹86.41 Lakhs; Final Sanctioned Loan = ₹60.00 Lakhs
D FOIR Eligibility = ₹55.30 Lakhs; Final Sanctioned Loan = ₹55.30 Lakhs
Correct Answer: Option A — FOIR Eligibility = ₹69.12 Lakhs; Final Sanctioned Loan = ₹60.00 Lakhs
FOIR Loan Eligibility (₹ Lakhs) = Max Proposed EMI / EMI per Lakh; Sanctioned Loan = Min(LTV Limit, FOIR Limit)- Step 1: FOIR-based Loan Eligibility = ₹60,000 / ₹868 per Lakh = ₹69.124 Lakhs (₹69.12 Lakhs).
- Step 2: Compare LTV Limit (₹60.00 Lakhs) vs FOIR Limit (₹69.12 Lakhs).
- Step 3: The bank sanctions the LOWER of the two = ₹60.00 Lakhs.
IIBF Examiner Tip: Sanctioned Loan is always the minimum of (1) LTV ceiling, (2) Repayment/FOIR ceiling, and (3) Loan amount requested.
Question 1.5 • 2 Marks
For a sanctioned Home Loan of ₹60.00 Lakhs against an ₹80.00 Lakhs residential property (LTV = 75%), what is the Basel III Credit Risk Weight applicable to this standard housing loan?
A 35% Risk Weight (RWA = ₹21.00 Lakhs)
B 50% Risk Weight (RWA = ₹30.00 Lakhs)
C 75% Risk Weight (RWA = ₹45.00 Lakhs)
D 100% Risk Weight (RWA = ₹60.00 Lakhs)
Correct Answer: Option A — 35% Risk Weight (RWA = ₹21.00 Lakhs)
For Standard Housing Loan > ₹30L up to ₹75L with LTV ≤ 80%: Risk Weight = 35%- Step 1: Sanctioned Loan = ₹60.00 Lakhs (falls in the > ₹30 Lakh to ₹75 Lakh bucket) and LTV = 75% (≤ 80%).
- Step 2: Applicable RBI Risk Weight = 35% -> Risk-Weighted Assets (RWA) = ₹60.00 Lakhs × 35% = ₹21.00 Lakhs.
IIBF Examiner Tip: Memorize RBI Housing Risk Weights: Up to ₹30L (LTV ≤80%: 35%, LTV 80–90%: 50%); ₹30L–₹75L (LTV ≤80%: 35%); Above ₹75L (LTV ≤75%: 50%).
CASE STUDY SET #2Advanced (High-Yield Numerical)10 Marks (5 × 2M)
Flat-Rate vs Reducing-Balance Auto Loan Cost & Prepayment / Foreclosure Math
Official IIBF Case Scenario & Financial Data:
A retail customer compares two financing offers for a ₹10,00,000 Vehicle Loan over a 5-year (60-month) tenure: Offer A (Private Financier) quotes a "Flat Interest Rate" of 7.00% p.a. for 5 years. Offer B (Scheduled Commercial Bank) quotes a "Reducing Balance Interest Rate" of 10.50% p.a. (where monthly EMI per ₹1 Lakh for 60 months is ₹2,149).
| Loan Offer Parameter | Offer A (7.00% p.a. Flat Rate) | Offer B (10.50% p.a. Reducing Balance) |
|---|---|---|
| Loan Principal (P) | ₹10,00,000 | ₹10,00,000 |
| Loan Tenure | 5 Years (60 Months) | 5 Years (60 Months) |
| Quoted Interest Rate | 7.00% p.a. Flat on ₹10L | 10.50% p.a. Monthly Reducing |
| Monthly EMI per ₹1 Lakh | Computed below | ₹2,149 per ₹1 Lakh |
Question 2.1 • 2 Marks
Under Offer A (7.00% p.a. Flat Rate on ₹10,00,000 for 5 years), what is the Total Interest Payable over 5 years and the Monthly EMI?
A Total Interest = ₹3,50,000; Monthly EMI = ₹22,500
B Total Interest = ₹2,89,400; Monthly EMI = ₹21,490
C Total Interest = ₹3,00,000; Monthly EMI = ₹21,667
D Total Interest = ₹3,50,000; Monthly EMI = ₹21,490
Correct Answer: Option A — Total Interest = ₹3,50,000; Monthly EMI = ₹22,500
Flat Interest = Principal × Flat Rate × Years; Flat EMI = (Principal + Flat Interest) / Total Months- Step 1: Total 5-Year Flat Interest = ₹10,00,000 × 7.00% × 5 Years = ₹3,50,000.
- Step 2: Total Repayment = ₹10,00,000 + ₹3,50,000 = ₹13,50,000.
- Step 3: Monthly EMI (Offer A) = ₹13,50,000 / 60 Months = ₹22,500 per month.
IIBF Examiner Tip: In a Flat Rate loan, interest is charged on the full initial principal of ₹10,00,000 for all 5 years even though principal is being repaid every month!
Question 2.2 • 2 Marks
Under Offer B (10.50% p.a. Reducing Balance, EMI = ₹2,149 per ₹1 Lakh), what is the Monthly EMI and Total Interest Paid over 60 months?
A Monthly EMI = ₹21,490; Total Interest = ₹2,89,400
B Monthly EMI = ₹22,500; Total Interest = ₹3,50,000
C Monthly EMI = ₹20,490; Total Interest = ₹2,29,400
D Monthly EMI = ₹21,490; Total Interest = ₹3,10,600
Correct Answer: Option A — Monthly EMI = ₹21,490; Total Interest = ₹2,89,400
Total Reducing EMI = 10 Lakhs × ₹2,149; Total Interest = (Monthly EMI × 60) - Principal- Step 1: Monthly EMI for ₹10 Lakhs = 10 × ₹2,149 = ₹21,490 per month.
- Step 2: Total Amount Paid over 60 months = ₹21,490 × 60 = ₹12,89,400.
- Step 3: Total Interest Paid = ₹12,89,400 - ₹10,00,000 = ₹2,89,400.
IIBF Examiner Tip: Crucial RBWM lesson: A 10.50% Reducing Balance loan (₹2,89,400 interest) is ₹60,600 CHEAPER than a 7.00% Flat Rate loan (₹3,50,000 interest)!
Question 2.3 • 2 Marks
In Offer B (₹10,00,000 @ 10.50% p.a. monthly reducing, Month 1 EMI = ₹21,490), how much of the very first month’s EMI goes towards Interest vs Principal repayment?
A Month 1 Interest = ₹8,750; Month 1 Principal = ₹12,740
B Month 1 Interest = ₹10,500; Month 1 Principal = ₹10,990
C Month 1 Interest = ₹5,833; Month 1 Principal = ₹15,657
D Month 1 Interest = ₹8,750; Month 1 Principal = ₹21,490
Correct Answer: Option A — Month 1 Interest = ₹8,750; Month 1 Principal = ₹12,740
Month 1 Interest = Opening Principal × (Annual Rate / 12); Month 1 Principal = EMI - Month 1 Interest- Step 1: Monthly Interest Rate = 10.50% / 12 = 0.875% per month.
- Step 2: Month 1 Interest = ₹10,00,000 × 0.875% = ₹8,750.
- Step 3: Month 1 Principal Repayment = ₹21,490 (EMI) - ₹8,750 (Interest) = ₹12,740.
IIBF Examiner Tip: Opening Principal for Month 2 becomes ₹10,00,000 - ₹12,740 = ₹9,87,260.
Question 2.4 • 2 Marks
What is the approximate Effective Annual Rate (EAR) of Offer A’s 7.00% Flat Rate over 60 months (using the standard banking conversion formula EAR ≈ [2 × n × Flat Rate] / [n + 1])?
A 13.77% p.a.
B 7.00% p.a.
C 10.50% p.a.
D 14.00% p.a.
Correct Answer: Option A — 13.77% p.a.
Approximate Effective Rate = (2 × n × R_flat) / (n + 1), where n = 60 months- Step 1: Substitute n = 60 months and R_flat = 7.00%.
- Step 2: Effective Rate ≈ (2 × 60 × 7.00%) / (60 + 1) = 840% / 61 = 13.77% p.a.
IIBF Examiner Tip: A 7% flat rate is roughly double (13.77% reducing) because the average principal outstanding over the life of an amortizing loan is roughly half of the initial loan.
Question 2.5 • 2 Marks
As per RBI Fair Practices Code & Retail Banking directives, if an individual borrower prepays/forecloses a floating-rate Retail Home Loan or Auto Loan from own sources, what is the maximum prepayment penalty a scheduled commercial bank can levy?
A Zero (0%) — RBI prohibits foreclosure/prepayment charges on floating-rate term loans to individuals
B 2.00% of outstanding principal
C 1.00% of prepaid amount
D 6 months equivalent interest
Correct Answer: Option A — Zero (0%) — RBI prohibits foreclosure/prepayment charges on floating-rate term loans to individuals
RBI Directive: Foreclosure/Prepayment penalty on Floating-Rate Loans to Individual Borrowers = NIL (0%)- Step 1: RBI mandates that banks shall not charge foreclosure charges or prepayment penalties on any floating-rate term loan sanctioned for purposes other than business to individual borrowers (and also extended to MSEs).
IIBF Examiner Tip: High-frequency JAIIB PPB & RBWM question: 0% foreclosure charge on floating-rate loans to individuals.
CASE STUDY SET #3Moderate (IIBF Standard)10 Marks (5 × 2M)
Wealth Management Portfolio: CAGR, Sharpe Ratio, Capital Gains & Education Loan Margin
Official IIBF Case Scenario & Financial Data:
A Wealth Management client of your bank invested ₹20,00,000 in an Equity Portfolio exactly 3 years ago, which has grown to ₹26,62,000 today. Over the last year, the portfolio generated an expected return of 15.0% with a standard deviation (volatility σ) of 12.0%, while the market Beta (β) of the portfolio is 1.20. The risk-free rate (91-day T-Bill yield) is 6.60% p.a. Simultaneously, the client seeks an IBA Model Education Loan of ₹12,00,000 for his daughter’s admission to an IIT in India.
| Wealth / Retail Parameter | Value |
|---|---|
| Initial Investment (3 Years Ago) -> Current Value Today | ₹20,00,000 -> ₹26,62,000 (n = 3 Years) |
| Portfolio Return (Rp) | Risk-Free Rate (Rf) | 15.00% p.a. | 6.60% p.a. |
| Portfolio Standard Deviation (σp) | Portfolio Beta (βp) | 12.00% | 1.20 |
| IBA Model Education Loan Requested (Studies in India) | ₹12,00,000 |
Question 3.1 • 2 Marks
What is the Compound Annual Growth Rate (CAGR %) of the client’s ₹20,00,000 investment growing to ₹26,62,000 in 3 years?
A 10.00% p.a.
B 11.03% p.a.
C 33.10% p.a.
D 9.50% p.a.
Correct Answer: Option A — 10.00% p.a.
CAGR = [(Ending Value / Beginning Value)^(1 / n)] - 1- Step 1: Ending Value / Beginning Value = ₹26,62,000 / ₹20,00,000 = 1.331.
- Step 2: Cube root of 1.331: (1.331)^(1/3) = 1.10.
- Step 3: CAGR = 1.10 - 1 = 0.10 = 10.00% p.a.
IIBF Examiner Tip: Notice how 33.10% is the Absolute Return over 3 years, whereas 10.00% is the annualized CAGR (since 1.10^3 = 1.331).
Question 3.2 • 2 Marks
Calculate the Sharpe Ratio and Treynor Ratio of the client’s equity portfolio.
A Sharpe Ratio = 0.70; Treynor Ratio = 7.00% (or 0.07)
B Sharpe Ratio = 1.25; Treynor Ratio = 12.50%
C Sharpe Ratio = 0.70; Treynor Ratio = 8.40%
D Sharpe Ratio = 0.57; Treynor Ratio = 7.00%
Correct Answer: Option A — Sharpe Ratio = 0.70; Treynor Ratio = 7.00% (or 0.07)
Sharpe Ratio = (Rp - Rf) / σp; Treynor Ratio = (Rp - Rf) / βp- Step 1: Excess Return over Risk-Free Rate (Rp - Rf) = 15.00% - 6.60% = 8.40%.
- Step 2: Sharpe Ratio (uses Total Risk σp) = 8.40% / 12.00% = 0.70.
- Step 3: Treynor Ratio (uses Systematic Risk βp) = 8.40% / 1.20 = 7.00% (or 0.07).
IIBF Examiner Tip: Memorize: Sharpe divides by Standard Deviation (Total Risk); Treynor divides by Beta (Systematic Market Risk).
Question 3.3 • 2 Marks
Under the Capital Asset Pricing Model (CAPM), if the expected return on the benchmark Nifty 50 market index (Rm) is 12.60% p.a., what is the Required Return on this portfolio (β = 1.20) and its Jensen’s Alpha (α)?
A CAPM Required Return = 13.80%; Jensen’s Alpha = +1.20%
B CAPM Required Return = 15.12%; Jensen’s Alpha = -0.12%
C CAPM Required Return = 12.60%; Jensen’s Alpha = +2.40%
D CAPM Required Return = 13.80%; Jensen’s Alpha = -1.20%
Correct Answer: Option A — CAPM Required Return = 13.80%; Jensen’s Alpha = +1.20%
E(Rp) = Rf + β × (Rm - Rf); Jensen’s Alpha (α) = Actual Rp - CAPM E(Rp)- Step 1: Market Risk Premium (Rm - Rf) = 12.60% - 6.60% = 6.00%.
- Step 2: CAPM Required Return = 6.60% + (1.20 × 6.00%) = 6.60% + 7.20% = 13.80%.
- Step 3: Jensen’s Alpha (α) = Actual Return (15.00%) - CAPM Required Return (13.80%) = +1.20%.
IIBF Examiner Tip: A positive Jensen’s Alpha (+1.20%) indicates the fund manager outperformed the risk-adjusted CAPM benchmark.
Question 3.4 • 2 Marks
Under the IBA Model Education Loan Scheme for studies in India, what is the minimum statutory Margin (%) up to ₹4 Lakh vs above ₹4 Lakh, and what is the Rupee Margin required on a ₹12,00,000 Education Loan in India (if margin is 5% on total or above ₹4L)?
A Up to ₹4L: Nil (0%); Above ₹4L in India: 5% (₹60,000 on ₹12L or ₹40,000 on incremental ₹8L)
B Up to ₹4L: 5%; Above ₹4L in India: 15% (₹1,80,000)
C Up to ₹7.5L: Nil (0%); Above ₹7.5L: 10%
D Uniform 10% margin on all education loans
Correct Answer: Option A — Up to ₹4L: Nil (0%); Above ₹4L in India: 5% (₹60,000 on ₹12L or ₹40,000 on incremental ₹8L)
IBA Education Loan Margin: Up to ₹4 Lakh = 0% (Nil); Above ₹4 Lakh: Studies in India = 5%, Studies Abroad = 15%- Step 1: Under IBA Model Education Loan Scheme, loans up to ₹4 Lakh require NIL (0%) margin.
- Step 2: For loans above ₹4 Lakh, minimum margin is 5% for studies in India and 15% for studies abroad (scholarships/assistantships can be included in margin).
IIBF Examiner Tip: Also remember Security Norms for Education Loans: Up to ₹4L = No security; >₹4L to ₹7.5L = Third-party guarantee (or CGFSEL cover); >₹7.5L = Tangible collateral security.
Question 3.5 • 2 Marks
During the course period (4 years) plus moratorium (1 year = 5 years total before EMI starts), how is interest charged by banks under the IBA Model Education Loan Scheme?
A Simple Interest is charged during the study + moratorium period (compounded only when EMI repayment begins)
B Compound Interest with monthly rests during the study period
C Zero interest is charged by the bank during the study period for all borrowers
D Flat rate interest is charged throughout
Correct Answer: Option A — Simple Interest is charged during the study + moratorium period (compounded only when EMI repayment begins)
IBA Education Loan Norm: Simple Interest during Moratorium (Course Period + 1 Year)- Step 1: Banks charge only Simple Interest during the study period and moratorium period.
- Step 2: Accrued simple interest is added to the principal at the commencement of repayment to fix the monthly EMI over a maximum repayment period of up to 15 years.
IIBF Examiner Tip: Under CSIS (Central Sector Interest Subsidy), economically weaker section (EWS) students with parental income ≤ ₹4.50 Lakh get 100% interest subsidy during the moratorium period.
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Applicable RBI LTV Slab Cap:80%
Maximum Loan per LTV Slab:₹48 Lakhs
Max Permissible New Home Loan EMI (FOIR):₹50,000 / month
Frequently Asked JAIIB Exam Questions (RBWM Paper 4)
What are the three RBI LTV slabs for Retail Housing Loans?
1) Loan amount up to ₹30 Lakh: Maximum LTV = 90%; 2) Loan amount above ₹30 Lakh and up to ₹75 Lakh: Maximum LTV = 80%; 3) Loan amount above ₹75 Lakh: Maximum LTV = 75%.
What is the maximum repayment tenure under the IBA Model Education Loan Scheme?
After the completion of the moratorium period (Course Period + 1 Year), the maximum repayment period for an Education Loan under the IBA Model Scheme is up to 15 years for all categories of loans.
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