Welcome to this comprehensive article designed for aspirants of the IIBF Certification in Compliance in Bank. This post focuses on the vital topic of Retail Product Norms — a key area in the syllabus that covers housing finance, education loans, gold loans, personal loans, and digital lending regulations.
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1. Housing Finance – Overview
Housing loans are one of the most common retail banking products regulated under RBI guidelines. Banks must ensure compliance with lending norms and risk management procedures at every stage.
Permitted Purposes and Eligible Borrowers
- Loans for purchase, construction, extension, or renovation of residential properties.
- Borrowers can be salaried or self-employed individuals; commercial property is generally excluded.
- Joint loans allowed between family members, subject to due diligence.
Loan Quantum and LTV (Loan to Value)
- LTV ratios are regulated to ensure that banks do not over-finance properties.
- Common ratios: up to 90% for small-value loans, 80% for larger loans.
Security, Interest & Tenure
- Primary security: mortgage of the property being financed.
- Interest: fixed, floating, or hybrid rate based on market benchmark.
- Tenure: typically up to 30 years, subject to borrower’s age and repayment capacity.
Due Diligence and Approvals
- Verification of property title, legal clearance, and valuation report.
- Builder’s track record, RERA registration, and approval from local authorities must be checked.
Innovative Housing Loan Products
- Flexible repayment options, step-up/step-down EMIs.
- Top-up loans, green home loans, and balance transfer schemes.
Regulatory Aspects and Risk Control
- PSL (Priority Sector Lending) housing loan limits to ensure financial inclusion.
- Exposure norms for real estate lending as per internal risk policy.
- Staff training and monitoring to mitigate builder, documentation, and valuation risks.
2. Education Loan – Objectives and Norms
Education loans promote access to higher studies and skill development. Banks provide loans for studies in India and abroad under specific schemes.
- Purpose: Tuition fees, travel, hostel expenses, and study materials.
- Security: Generally unsecured up to certain limits; above that, third-party guarantee or collateral may be required.
- Moratorium: Course period plus one year; repayment starts thereafter.
- Interest: Floating rate linked to external benchmarks.
- Application facilitation: via **Vidya Lakshmi Portal** or direct bank applications.
3. Gold Loans – Retail Lending Norms
Gold loans are short-term secured loans popular in India, requiring careful compliance and valuation practices.
- LTV ratio capped as per RBI guidelines (generally up to 75%).
- Proper valuation by certified appraisers and purity check mandatory.
- Loan tenure: usually 3–12 months; renewable upon repayment.
- Documentation: KYC, pledge agreement, sanction terms, and safe custody record.
- Penalties: RBI has issued strict norms on auction procedures and transparency for defaulted accounts.
- Special schemes: **Gold Metal Loan** and **Gold Monetization Scheme (GMS)** for bullion transactions.
4. Personal Loan – Usage and Risk Management
Personal loans are unsecured retail advances that require strict adherence to credit standards and borrower assessment norms.
- Purpose: Personal or consumer needs such as travel, marriage, or medical expenses.
- Eligibility: Based on income, credit score, and debt-to-income ratio.
- Interest Rate: Usually floating; must follow external benchmark reset norms.
- Documentation: Salary slip, ITR, KYC, employment verification, and digital consent.
- NBFC Tie-ups: Banks must comply with outsourcing and digital lending norms when partnering with NBFCs.
5. Digital Lending and Emerging Retail Norms
Digital banking has introduced new compliance dimensions that bankers and IIBF aspirants must understand.
- Transparency: All charges, interest rates, and terms must be disclosed upfront.
- Consent-based lending and data privacy protocols mandatory.
- Periodic audit of fintech partnerships and digital loan applications.
- Transition from MCLR/Base Rate to external benchmarks as per updated IIBF syllabus.
6. Compliance Significance and Risk Mitigation
Understanding retail product norms is essential for compliance officers and bankers to mitigate operational, credit, and reputational risks.
- Ensures lending discipline and protects customer interests.
- Facilitates accurate reporting under statutory and regulatory frameworks.
- Improves transparency, reduces NPA risk, and strengthens internal audit systems.
7. How to Use This Article and Resources
- Watch our **YouTube Video on Retail Product Norms** for visual learning.
- Download your free **Retail Product Norms PDF File** for notes and MCQs.
- Join the **IIBF Compliance in Bank Full Course** to access live classes and detailed modules.
- Use this post for quick revision and bookmark it for exam preparation.
8. Call to Action for IIBF Aspirants
If you’re preparing for the IIBF Compliance in Bank certification, this is the perfect time to strengthen your preparation.
Download PDF Notes
Watch Full YouTube Class
Join Complete IIBF Course
9. Conclusion
The study of Retail Product Norms provides a complete understanding of how banks manage retail loans, ensure regulatory compliance, and safeguard customer interests.
From housing and education loans to gold and personal finance, each product comes with its unique compliance framework that every banker must know.
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