According to National Housing Bank sources barely 2,800 accounts amounting to Rs 550 crores had been sanctioned during the 2 years till December 2008 under the reverse mortgage loan scheme for senior citizens.(BT020409)
Tuesday, April 14, 2009
Bank of India is planning to double the number of
Bank of India is planning to double the number of its ATMs across India during the current fiscal. The bank which has around 500 ATMs will add 500 more during 2009-10 according to a senior official of the bank. (TOI120409)
State Bank of Hyderabad will recruit over 2,000
State Bank of Hyderabad will recruit over 2,000 clerical and supervisory staff soon to support its expansion plans. The bank will add 170 new branches shortly to its present strength. (BL110409)
SBI has extended till 30th September 2009
SBI has extended till 30th September 2009 the facility whereby its existing SME customers can avail themselves of term loans as well as 20% additional working capital at 8% concessional rate of interest. For new SME customers with loan requirements upto Rs 5 lacs the new rate is 8% and for those whose requirements are above Rs 5 lacs but less than Rs 25 lacs the rate offered is 10%. However the loan should be guaranteed under the Credit Guarantee Trust Fund for Micro and Small Enterprises. (BL120409)
Bank of India is planning
Bank of India is planning to implement the branchless banking model in 48 districts in the country after Raigad district in Maharashtra. More than 46,000 households have been provided with biometric smart cards in Raigad where business correspondents visit the households of rural customers to provide bankng services. The bank has opened more than 17 lac savings bank no frills account. (BL130409)
Thursday, April 9, 2009
Banks Loans and Advances
Banks Loans and Advances
Banks are providing credit facilities in multiple ways according to the purpose of the loan and the security that is offered by the customer. The end use of the loan is important as banks funds are meant to be productively employed in order that the borrower is able to repay the amount of loan with interest. For this to happen the borrower should either generate surplus funds by utilizing the loan for profitable purpose or he should have sufficient repaying capacity as in case of personal loans,consumer loans, travel loans, credit card usage etc. It must be remembered that loans need to repaid as only then can the funds be recycled for further use or else the bank loans which are its assets would not be able to pay its liabilities which are the bank deposits. If such a situation arises and persists then the failure /collapse of the bank is inevitable.
Bank loans and advances can be of the following types—
Overdrafts /loans against Fixed deposits, Recurring deposits, Post office National Savings Certificates, LIC policies, Stocks of reputed listed companies: a fixed percentage of the face value/ surrender value of the security is allowed as overdraft which can be a revolving facility or loan to be repaid before maturity of the security in question subject to execution of documents as prescribed by the bank. The security has to be pledged to the bank for availing the loan. For loans against deposits the interest charged on the loan is linked to the deposit rate whereas in case of others the overdraft rate is generally applicable.
Personal loans, Consumer loans, Travel loans etc are part of retail loans promoted by banks to customers who have the repaying capacity based on their monthly income. The interest rates for such loans are comparatively higher as it is generally unsecured. Unsecured loans are those where the bank does not have any security for the loan given. In the event of non payment by the borrower the prospects of recovery become that much difficult.
Automobile loans, Home loans are given to acquire two/three wheelers, cars and residential property respectively. These are secured loans as the automobile is hypothecated to the bank and the property is mortgaged. They are released only when the respective loan account is adjusted in full with interest. The respective interest rates are reasonable in view of the security and also the fact that the industry/economy needs to be pushed. While auto loans can stretch upto seven years, home loans can be availed in certain cases upto 30 years also. There is considerable competition among banks for providing loans in this category and hence it is essential that the customer chooses the bank which provides the best rates over the entire tenure of the loan including a check of other charges/fees and exit routes if necessary. There is also the concept of floating and fixed interest rates which the customer should carefully examine for the overall interest cost during the period of the loan.
Educational loans are being encouraged by banks for higher studies in India and abroad. Each bank has its own rules but usually there are different monetary limits for availment which determine the nature of security to be provided. For educational loans it is necessary for one of the parents to be a coapplicant with the candidate who is to pursue the study. These are generally loans for seven years with reasonable interest rates and repayment starts after the study is over.
All loans are subject to the discretion of the bank and fulfillment of the stipulated criteria for being eligible. However banks are covered by Fair Practices Code for Lenders and customers have the right to be adequately informed in case they are aggrieved. It is also critical to have a satisfactory credit history of borrowing as customers of dubious reputation and doubtful integrity are rejected.. Credit Information Bureau India Ltd is maintaining the credit profile of each individual customer for reference of banks while taking lending decisions.
Credit card use is also a form of availing bank funds which come at very high cost as they are totally unsecured with a revolving facility over an extended tenure till non renewal or cancellation.
Banks are providing credit facilities in multiple ways according to the purpose of the loan and the security that is offered by the customer. The end use of the loan is important as banks funds are meant to be productively employed in order that the borrower is able to repay the amount of loan with interest. For this to happen the borrower should either generate surplus funds by utilizing the loan for profitable purpose or he should have sufficient repaying capacity as in case of personal loans,consumer loans, travel loans, credit card usage etc. It must be remembered that loans need to repaid as only then can the funds be recycled for further use or else the bank loans which are its assets would not be able to pay its liabilities which are the bank deposits. If such a situation arises and persists then the failure /collapse of the bank is inevitable.
Bank loans and advances can be of the following types—
Overdrafts /loans against Fixed deposits, Recurring deposits, Post office National Savings Certificates, LIC policies, Stocks of reputed listed companies: a fixed percentage of the face value/ surrender value of the security is allowed as overdraft which can be a revolving facility or loan to be repaid before maturity of the security in question subject to execution of documents as prescribed by the bank. The security has to be pledged to the bank for availing the loan. For loans against deposits the interest charged on the loan is linked to the deposit rate whereas in case of others the overdraft rate is generally applicable.
Personal loans, Consumer loans, Travel loans etc are part of retail loans promoted by banks to customers who have the repaying capacity based on their monthly income. The interest rates for such loans are comparatively higher as it is generally unsecured. Unsecured loans are those where the bank does not have any security for the loan given. In the event of non payment by the borrower the prospects of recovery become that much difficult.
Automobile loans, Home loans are given to acquire two/three wheelers, cars and residential property respectively. These are secured loans as the automobile is hypothecated to the bank and the property is mortgaged. They are released only when the respective loan account is adjusted in full with interest. The respective interest rates are reasonable in view of the security and also the fact that the industry/economy needs to be pushed. While auto loans can stretch upto seven years, home loans can be availed in certain cases upto 30 years also. There is considerable competition among banks for providing loans in this category and hence it is essential that the customer chooses the bank which provides the best rates over the entire tenure of the loan including a check of other charges/fees and exit routes if necessary. There is also the concept of floating and fixed interest rates which the customer should carefully examine for the overall interest cost during the period of the loan.
Educational loans are being encouraged by banks for higher studies in India and abroad. Each bank has its own rules but usually there are different monetary limits for availment which determine the nature of security to be provided. For educational loans it is necessary for one of the parents to be a coapplicant with the candidate who is to pursue the study. These are generally loans for seven years with reasonable interest rates and repayment starts after the study is over.
All loans are subject to the discretion of the bank and fulfillment of the stipulated criteria for being eligible. However banks are covered by Fair Practices Code for Lenders and customers have the right to be adequately informed in case they are aggrieved. It is also critical to have a satisfactory credit history of borrowing as customers of dubious reputation and doubtful integrity are rejected.. Credit Information Bureau India Ltd is maintaining the credit profile of each individual customer for reference of banks while taking lending decisions.
Credit card use is also a form of availing bank funds which come at very high cost as they are totally unsecured with a revolving facility over an extended tenure till non renewal or cancellation.
Fair Practices Code for Lenders
Fair Practices Code for Lenders
This code has been adopted by banks for setting out the fair practices expected during lending by banks. The code applies to the following areas---
# application for loan and their processing
it gives the time schedule for acceptance and disposal of the loan application. Reasons for rejection are required to be intimated to the applicant. The borrower is also informed about the fees/charges that are levied according to the nature of loan.
# loan appraisal and terms and conditions
the terms and conditions under which the loan is granted is suitably informed along with copies of documents executed by the borrower, on request, is given. Any changes in interest rates during the loan period is also to be intimated by the bank.
# post disbursement handling
# list of recovery agents.
The detailed information from the above perspective is available to the borrower customer so that there is complete understanding of the loaning process of banks. The borrower also has a responsibility in strictly complying with the terms and conditions in order that the bank’s funds are appropriately utilized for the purpose it is meant. The end use of funds is a critical component of bank lending and is required to be strictly adhered
This code has been adopted by banks for setting out the fair practices expected during lending by banks. The code applies to the following areas---
# application for loan and their processing
it gives the time schedule for acceptance and disposal of the loan application. Reasons for rejection are required to be intimated to the applicant. The borrower is also informed about the fees/charges that are levied according to the nature of loan.
# loan appraisal and terms and conditions
the terms and conditions under which the loan is granted is suitably informed along with copies of documents executed by the borrower, on request, is given. Any changes in interest rates during the loan period is also to be intimated by the bank.
# post disbursement handling
# list of recovery agents.
The detailed information from the above perspective is available to the borrower customer so that there is complete understanding of the loaning process of banks. The borrower also has a responsibility in strictly complying with the terms and conditions in order that the bank’s funds are appropriately utilized for the purpose it is meant. The end use of funds is a critical component of bank lending and is required to be strictly adhered
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