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08 - Income Eligibility Norms - SENP (Industry Margin)

Credit Norms : Based on Business Income
Illustration: Mr. Bharat, a business man having a manufacturing facility in Mumbai wants to avail home
loan under Industry Margin Method.He has a car loan with balance tenure of 28 months paying an EMI of
Rs.26,572. He wants maximum loan for tenure of 240 months @ 8.75% p.a.
Business Income Norms % Comp. Income Calculation Amt. (Rs.)
Gross Turnover As per P&L 100% 4,50,00,000 4,50,00,000
As an illustration
Industry Margin(IM) As per Credit Policy IM considered (8% x 4,50,00,000) 36,00,000
as 8%
Capping Norms Capped to 3 times Cash Profit
Eligible Income of Cash Profit* 15,00,000 3 x 15,00,000 45,00,000
Bus. Income considered = ` 36,00,000 as it is within capping norms 36,00,000
Sub-Total: Business Income per month (36,00,000/12) 3,00,000
Other Income Norms % Comp. Income Calculation Amt. (Rs.)
Gross As per latest Rent 100% 4,20,000 p.a (4,20,000/12) 35,000
Rental Agreement & B.S

Avg. of Int., Avg. of last 2 yrs. 100% Interest 4,46,000+5,44,000 ( 41,250
Y1=4,46,000 (
Div.& Com. as per ITR 2 x 12
income Y2=5,44,000
Sub-Total: Other Income 76,250
Other income is 76,250
which is lower than Bus.
Other Income Capped at 100% of Business
considered Income Income of 3,00,000 and 76,250
hence income
considered is 76,250
Monthly Total Income = Business Inc. + Other Inc. (3,00,000 +76,250) 3,76,250
Loan Eligibility
Credit Norms % Income Amt.
Criteria Considered Calculation (Rs.)
FOIR Max. EMI as a % 80% 3,76,250 (80% x 3,76,250) 3,01,000
of Total Income
Less : Car Loan
Existing loan > 12 mnths. 100% EMI of (3,01,000 - 26,572) 2,74,428
EMI O/s will be Obligation Rs.26,572
Max. Loan Max. EMI Payable ( 2,74,428 ( 3,10,43,891
possible EMI per lakh 884* x 1,00,000
* EMI per lakh for tenure of 20 years @ 8.75% p.a. is Rs.884
Cash Profit = PAT + Dep. + Salary/Int. paid to Partners/ Directors + Int. Paid to close
relatives u/s 40A2(b) as per Tax Audit report + Int. paid on term loans

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