Month: April 2013

Credit information bureaus want access to mobile bill payment records

Mumbai, April 21:  Business Line

Could your post-paid mobile bill payment record help banks arrive at a decision on giving you a loan? Well, chiefs of Credit Information Bureaus think so.

The bureaus (CIBs) have initiated talks with the telecom regulator for allowing telecom companies to lodge customer bill payment history with them.

“Telecom service providers are willing to share information. However, there is a regulatory clause whereby TRAI (Telecom Regulatory Authority of India) does not allow information sharing by telecom operators. We are in talks with the regulator,” said Arun Thukral, Managing Director, Credit Information Bureau (India) Ltd (CIBIL).

CIBIL, the agency that tracks credit history of borrowers and assesses their credit worthiness, is also pursuing regulators such as electricity regulatory commissions to get access to utility bill payment information as this could prove to be an alternative source of credit history on consumers.
Full-file reporting

According to Mohan Jayaraman, Managing Director, Experian Credit Information Company of India, “We need more of full-file reporting, which gives a 360 degree view of the consumer, like in the US, UK and Europe. Today, it doesn’t get reported to the bureaus but this is great information to work with.”

Full-file reporting is any information that captures your repayment record with any entity and is given to the bureau. The repayments could be related to utility bills, lease rentals, and telecom service.

“With more mobile subscribers than bank accounts in India, this (full-file reporting) can help credit bureaus access wider range of information. We have spoken to the Reserve Bank of India in this regard,” Jayaraman said.

However, Cellular Operators’ Association of India (COAI) Director-General Rajan Mathews, said: “No operator would be willing to share customer details, unless mandated by a regulatory authority, due to the privacy issues involved. These are highly-sensitive data, as they divulge a lot of details such usage pattern and monthly spend among others.”

State Bank chief wants 100 bps cut in CRR

Mumbai, April 16:  Business Line

A cut in Cash Reserve Ratio will be much more effective in bringing down lending rates than a repo rate cut, said State Bank of India Chairman Pratip Chaudhuri.

A strong votary of abolishing the CRR, the SBI chief said he will bring the base rate down by 20 basis points, if the Reserve Bank of India cuts the CRR by 100 basis points. Base rate is the minimum lending rate below which banks cannot lend.
Policy meeting

The RBI will review key policy rates in its annual policy meeting scheduled on May 3.

Currently, the CRR (the slice of deposits that banks keep with RBI) and the repo rate (the interest rate at which banks borrow short term funds from the RBI) are at 4 per cent and 7.50 per cent, respectively.

“Repo rate has very little or insignificant impact on the cost transmission. The only thing that can significantly bring down the base rate is the CRR. “Looking at the inflation numbers yesterday, I am encouraged to recommend a 1 per cent (100 basis points) reduction in CRR,” Chaudhuri said.

Also, a CRR cut will release more liquidity into the banking system. “The banks will be less desperate for deposits so it (liquidity) will have a more benign impact on the interest rates,” the SBI chief said.

Chaudhuri, who mooted the idea of banks being allowed to introduce ultra-short term deposits of three days maturity, said there will not be any liquidity management issues if such a product is introduced.

Pointing out that absence of such a product is making banks uncompetitive, Chaudhuri reasoned that if banks can take care of seven-day deposits, then they can take care of three-day deposits too.

The SBI chief said that he has explained the new idea to the RBI top brass.

In any case, there is no rule saying that customers cannot withdraw money before the seven-day maturity period, he said. “So, if a seven- day deposit is stable then three-day deposits will also be stable.”

SB deposits

Chaudhuri pointed out that the entire savings bank deposits of banks constitute 25 to 40 per cent of their total deposits and they are with drawable on demand.

PNB Metlife launches product to protect borrowers

New Delhi, April 14:  Business Line

PNB MetLife India Insurance Company Ltd (PNB MetLife) on Sunday announced the launch of its loan protection plan, Met Flexi Shield for PNB’s home and education loan customers.

This proposition provides protection against loan liability, in the event of unforeseen circumstances of the death of the borrower and offers full financial protection to the family.

“With the launch of this offering, we have added a customised life insurance product, which comes at competitive rates and offers best service to our customers at the branches”, said K.R. Kamath, Chairman and Managing Director of PNB.

The launch coincided with the auspicious day of Baisakhi, which happened to be the foundation day of the bank. Rajesh Relan, Managing Director and Country Manager, PNB MetLife, said this is the company’s first bundled proposition for PNB customers.
benchmark partnership

“With the launch of this compelling offering, we are taking another step in our journey to create a benchmark partnership and bring our products, technology and capabilities to PNB customers, to help achieve financial security ”.

SBI to discontinue free accident cover for loan customers

New Delhi, April 7: Business Line

The country’s largest bank SBI will discontinue a free accident insurance cover given to its home and car loan customers from July this year.

In a notification to its customers, the State Bank of India said the complimentary group personal accident insurance cover (death only) for home and car loan customers will be discontinued on the expiry of current Master Policy on July 1, 2013.

“Hence, in case of accidental death of any Home/Car loan borrower on or before July 1, 2013, claims may be lodged for the outstanding amount in the loan account subject to the terms and conditions mentioned in Master Policy,” SBI said.

The bank, however, did not mention the reasons for scrapping the complimentary cover.

SBI said that its home and car loan borrowers, who do not have any insurance cover for their loan liabilities, may opt for the policies being offered by SBI’s insurance venture.

Currently, SBI General Insurance Company Ltd is offering an accident insurance cover of Rs 4 lakh for SBI’s savings bank account holders for an annual premium of Rs 100.

Earlier this year, SBI had said it provided personal accident cover to over 7 million of its account holders across the country in association with SBI General Insurance.

SBI General Insurance Company is a joint venture between the State Bank of India and Australia’s leading general insurance provider Insurance Australia Group.

How to secure your Home Loan?

With the high competition between banks it has become so easy to raise a home loan for purchase of property in a week days of time with the best and least home loan interest rates, but the actual challenge lays post disbursement of the loan. There are people who sold their property or left them to bank due to failure of EMI payments. These are some cases where people are suffering for not knowing how to manage the loan post home loan disbursement.

The process of securing your home loan starts from the day 1 when you start the home loan process. Every customer is advised to take photo copies of all documents submitted to bank and keep it for future references and cross check the home loan rates with other banks before applying.  Most of the customers sign the home loan applications and agreements when they are blank which is not at all suggestible, will you sign a blank cheque without writing anything and give it to somebody then why you are ok to sign the home loan agreement without filling it, ask the bank officials to fill the agreement and then sign it.

All the customers will sign two copies of home loan agreements one of which will be received by customer post home loan disbursement. The agreement will have all the details of your loan and their terms i.e loan amount, interest rate, repayment period, EMI, Processing fee paid, list of documents deposited etc. one should retain this copy of agreement till the loan completion. The agreement will have a copy of General Power of Attorney which should be read before signing if any clause is objectionable to you then you can ask bank for a clarification.

Along with these one should make more down payment towards the property and raise lesser loan amount which will ease the process of making EMI payments and gives us the scope of saving to pre close the loan. On a blink calculation any customers who go for a home loan will pay 125% of the loan amount as interest to the bank. So opting for lesser loan amount will save money and will secure the loan. It is always advisable to the customer to opt for Home Loan Linked Life Insurance which covers the loan amount in case of death of the applicant and waves the remaining EMI’s by releasing the property from the bank. Banks fund for these insurances along with home loan and it is a onetime premium which will secure both the home loan and applicant’s loan burden.

Axis Bank rolls out launches new home loan scheme

2 Apr 2013, ET Bureau.

MUMBAI: Private sector lender Axis Bank on Tuesday rolled out a new home loan scheme – Empower Home Loan – aimed at self-employed individuals.

Both professionals and non-professionals will be eligible for home loans under the scheme.

The bank is promoting its assured rate reduction feature as the scheme’s key selling point. Borrowers with a good repayment track record are promised three rate reductions of 25 basis points each at the end of second, third and fifth years.

“Self-employed people are the backbone of the India growth story . However, credit availability to this group tends to be limited. With ‘Empower home loans’, Axis Bank would like to partner in the progress of this group of customers and reward them for good credit behavioru,” said J airam Sridharan, head, consumer lending and payments, Axis Bank, in an official release.

The maximum loan amount available under the scheme is Rs 1 crore for Tier I cities and Rs 50 lakh for other cities and towns. The maximum tenure under the loan is 15 years or till the borrower turns 65, whichever is earlier. Only the floating rate option is offered to borrowers under the scheme.

Upside: The scheme’s USP – rates will go down by 25 basis points in the second, third and fifth years of the home loan tenure.

Downside: Assured rate reduction does not mean you should avoid scouting for cheaper loan refinancing deals later. If other lenders are offering rates lower than your reduced rate then, it might still make sense to switch over. Also, the maximum loan amount for Tier I cities is Rs 1 crore, which might not be adequate in cities like Mumbai.

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