What are the problems in submitting bills while availing home loan on own construction?

I want to avail home loan from bank to construct home on my plot. I want to construct the home by using labour contract and providing materials. Bank ask to submit the bills for availing loan in installments. What are the problems faced during submission of bills? I don’t have any experience in construction field?

Answer
absolutely no problem. you are saving in getting executed your house construction through labour contract by supplying material. good choice if you are free to run for purchase of required materials. the installments are released generally by stages of the building like foundation, lintel level, roof, flooring and completion. you have to give a letter to the funding bank that the particular stage reached and payment required. banks authorized valuer will inspect and send a certificate to the bank recommending the quantum of amount that can be released for the stage. subsequently you will get the check. so you need not prepare the bill. you need to write the stage only. it is simple.

Development Credit Bank (DCB), a private sector lender in India has introduced a new deposit scheme — DCB Freedom 1-2-3 fixed deposit, for its customers.

The newly launched scheme will offer 10.5% rate to customers in the 375 days to three-year tenure. However, Senior citizens will receive 0.5% more rate above the card rates.

The bank also increased rate for 91 days deposit to 9% from 7% for deposits up to Rs 50 lakh. The new rates will come effective from October 1.

Last Month, DCB notified that the bank along with India’s Quantum Group will launch a $500 million infrastructure fund in the first half of 2009.

Nasser Munjee, chairman of India’s DCB and Quantum’s staff would hold 50 percent stake in the fund.

In one of the largest private equity deals in the real estate sector this year, financial services major Credit Suisse has invested $100 million (about Rs 430 crore) in Hyderabad-based Indu Projects for a minority stake.

Indu Projects is a leading name in the construction and real estate sector in Andhra Pradesh in which, about two years ago, Citigroup’s private equity arm had invested about $50 million.

Since the stock markets went into a tailspin at the beginning of the year with real estate companies among the worst hit deals in the sector have dried up. In this deal, Credit Suisse invested directly in the company, and not through a special purpose vehicle in one or more projects which is more common in this sector now, sources said.

Indu Projects, an eight-year-old company, is promoted by Shyam Reddy, who was earlier associated with IVRCL Projects, also a construction and real estate major. Indu Projects is currently associated with, among others, the construction of an IT park in Hyderabad, a real estate project in Pune and also with construction of a Tata Power project. The company also executes government contracts and is planning to foray into power sector in a big way.

Sources said this is among a series of investments made by Credit Suisse with the deal team comprised of industry veterans Hemang Raja, Gaurav Kumar, Nikhil Bhatia and Sameer Nair. Avendus was the investment bankers to the transaction. Real estate consultancy major Jones Lang LaSalle are the advisors to the company on its several real estate projects.

Industry players said post the recent debacle in the stock market, private equity/venture capital funds evaluating real estate companies for investments are looking at firms with good management, clear land bank, and strong execution and development capabilities. But there are very few companies that make the cut, a person associated with the Credit Suisse-Indu Projects deal said.