Looking for home loan? Here’s how to choose your lender

You have zeroed in on your dream home and it fits your budget . The next step is to identify the lender who will provide the loan you need to make the purchase. It can be a daunting task, given the number of financial institutions and banks operating in the space. "Eligibility criteria, interest rate, processing fee and other factors will be key to deciding your lender," says Rishi Mehra, Co-founder, Deal4loans.com, a loan comparison service engine. Start your search by evaluating the home loan offerings from lenders in the following manner.

Loan amount and eligibility
The quantum of loan you are likely to get will depend on your monthly income and the value of the property. Typically, the loan amount would be 80-85% of the property value. However, it could be more in some cases. "For property valued up to Rs 30 lakh, the customer can avail of a maximum of 90% funding, subject to his income eligibility as assessed by the lender," says Mehra.

The RBI, through a notification last year, allowed a loan-to-value ratio (LTV) of up to 90% for home loans of Rs 30 lakh or less. Earlier, 90% LTV was allowed for loans of up to Rs 20 lakh. Whether you get a home loan at all or not would depend on your occupation (salaried or self-employed), disposable income and number of dependants. Remember, a bigger loan would imply a smaller down payment, but a higher EMI.
Interest rate
The rate of interest on the loan, which will influence the EMI and the total interest paid by you, must be considered before applying for the home loan. Shop around for rates and choose the most competitive one. You also need to find out if the rates are fixed or floating. When rates are fixed, there are no fluctuations. Floating rates vary according to market conditions. "Fixed rate of interest is 25-100 basis points higher than the floating rate. For a shorter loan tenure of 2-5 years, it is better to opt for fixed rates. But for a longer tenure, floating rates works best," says Mehra.



Responsiveness to change in rates
Another important thing is to judge your lender based on how quickly and by how much the lender changes its interest rates following policy changes by the Reserve Bank of India. For instance, if a lender is usually seen reducing rates in response to a cut in repo rate by the RBI, then one should opt for that lender. That is because you can expect a fair deal from that lender not only now but also in the future.

Processing charges and prepayment
The processing fee is the charge banks deduct for processing the loan. This can be anywhere between 0.25%-2% of the loan amount. Lenders also set terms and conditions pertaining to prepayment. "Borrowers must clarify the terms related to settlement/foreclosing the outstanding amount, transferring the balance to another lender's account, prepaying a part or full amount of home loan, and other things, before finalizing a lender. There are also processing and legal fees associated with home loan approval and disbursal.

Documentation
Though most lenders seek the same documents, like proof of age, address and income, actual requirements may vary.

Turnaround time
The time taken to sanction and disburse home loans varies from bank to bank. On an average, banks take around five days to sanction a home loan, provided all documents are in order. "There are a number of post-disbursement services involved. These include getting regular account statements and interest certificates on time every year. Choose a lender with strong systems and good record of after-sales service," says Shetty.

Once you have judged the banks and the housing finance companies on the above parameters, "try to choose what is best suited for you rather than just judging them on one single factor. It will help to close on the best housing finance partner," observes Mehra.

After the loan is sanctioned, the bank's surveyor will visit the property to prepare a technical and legal report. Based on the report and current market value, the valuation of the property will be done by the bank.



Author :- http://economictimes.indiatimes.com/
Reposted By :- http://www.credit4loan.com/

Is a home loan balance transfer your best option?

If one wants to take advantage of the falling interest rate regime and is not too happy with the lender with which he is servicing his home loan, he has the option of refinancing or opting for a home loan balance transfer. If you are in the early stage of your home loan tenure, here are the things to take note of if the idea of a home loan balance transfer has been playing on your mind.

A bank offering you a home loan balance transfer may make it sound like just a signature and an NOC from your existing lender, but the process of a balance transfer in reality is not that simple and requires careful consideration. Firstly, a home loan transfer makes sense only if you are servicing a loan at a higher interest rate than its counterparts in the market, you wish to lower your EMI and improve your cash flow.

A refinancing or a balance transfer will only make sense if your current lender is not flexible and is unable to give you some flexibility in your repayment process. This is however an unlikely phenomenon as banks are more than happy to reset the interest rate on your existing loan as they would not like to let go of a customer. Also if you wish to lower your EMI, there is no reason why your existing bank cannot do so, especially if you have been a diligent borrower making all your repayments on time.

Not the cheapest option

If this is sounding like a campaign against home loan balance transfers, it is because we want to tell you that this option comes with costs such as a processing fee that will be charged by your new lender as well as some other charges like stamp duty and the likes that a customer is required to pay but is not informed about upfront. Therefore, a refinance may prove to be costlier than you thought it was. But in the unlikely event that your existing lender is not even ready to give you a patient hearing, here are the things to consider while opting for a balance transfer:

A time taking process

If you have decided to go through the process of a home loan balance transfer, do bear in mind that it will not happen overnight because it is almost as long drawn a process as getting a new loan sanctioned and you will have to go through the entire rigmarole of paperwork all over again.

Opt for a balance transfer in the early stages of home loan tenure

In the earlier stages of your home loan tenure, the interest component of your EMI is high. Thus it is wise to go in for a refinancing option in the early stages of your home loan tenure. If you have only a few years left in repayment of your home loan, incurring additional expenses with a balance transfer, not to mention the hassles it involves with paperwork and the time taken – not worth the effort. Further if you are planning to move out of the property soon, a balance transfer is not a good idea for you.

Do it for the right reason

In conclusion, it is fair to say that it is wise to opt for a balance transfer only when your current lender refuses to listen to any request to reset interest rates or any other service request has not been paid heed to. But if you are contemplating a home loan balance transfer because your track record of repayment is not great with your existing lender, you can be rest assured that no new lender will be willing to take you on as a borrower as well! Whether it is a fresh loan or a refinance, a CIBIL score of 750 is therefore a must!


Author :- http://www.moneycontrol.com/
Reposted By:- http://www.credit4loan.com/

Wilful defaulters: Working on new system for making list public, says RBI Governor

Reserve Bank Governor Raghuram Rajan on Saturday said the central bank is working on a new system for making public the list of wilful defaulters and new mechanism for out-of-court settlement of bad loan-related disputes. “We have no intent or desire to protect malfeasance. We are very happy to make that list public. In fact my people are working on making sure that we can put that list up in an accessible way and also of defaulters against whom suit has been filed because that is already public information,” he said. As of now credit information bureaus are maintaining a list of wilful defaulters — borrowers who default despite having the capacity to make repayments.
Data from Cibil, the agency which collates information on credit, show 6,819 wilful defaulters owed banks Rs 74,699 crore until December 2015, up from Rs 22,332 crore that 3,703 wilful defaulters owed until December 2012.
We are creating a structure to help out-of-court resolution and we are still at work. It’s work in progress. We are fine-tuning it, making sure it works,” he said. The RBI is in favour of protecting privacy of loan defaults where there are no wrongdoings. A blanket edict that everybody’s name should be made public on the website might not be desirable, he said. Rajan said said it might not be correct to flash the name of all and sundry, including those who forgot to pay their credit bills. “We have to be weary of killing entrepreneurship in this county by putting all unsuccessful risk taking in the same basket. We need risk taking, we need people to take risk,” he said. Rajan added the RBI is creating a structure for an out of court settlement of the disputes relating to bad debts. He said early enactment of the bankruptcy code would give a ‘serious’ instrument in the hands of bankers, who till now lacked any such law to recover their loans in a meaningful way. “Till recently the threat that banks could make to promoters was meaningless, which is why promoters could go to bankers and say take 25 paise on the rupee, otherwise I will see you in a court for the next 15 years,” he said. Rajan said the RBI accorded priority to protecting jobs by trying to put stressed assets back into health, while investigative agencies deal with cases of malfeasance. “I think we have it (NPAs) contained,” Rajan said while speaking at a memorial lecture. The RBI had asked banks to start recognising all stressed assets from October-December quarter. The move led to a spurt in gross NPAs in the PSBs by about Rs 1 lakh crore to about Rs 4 lakh crore at end-December 2015. “But I also want workers in plants today, who are in danger of losing their jobs, to have that job, to be able to produce, because non-functional assets are in nobody’s interest, certainly not in the nation’s,” he said. RBI Guv calls money a great equaliser Stating that money empowers the society more than many other forms of affirmative action, RBI Governor Raghuram Rajan on Saturday argued for increasing society’s tolerance for its use rather than prohibiting the use of money and wealth. Rajan said making it easy for Dalits to start businesses may do more for their social status because money empowers than many other forms of affirmative action. “It is the great equaliser, that so many people across history have been able to acquire resources and invested them to make the world we live in,” Rajan said at a function organised by the Shiv Nadar University. “Income inequality is on the rise, with some having colossal incomes and others worrying about the next meal,” Rajan said about the widening rich-poor gap. Unfortunately, even while inequality between countries is diminishing today, inequality within countries is increasing, he said. In part, this is because skills and capabilities have become much more important in well-paid jobs, and those born in good circumstances have a much better chance, he said. According to him, the winner-take-all nature of many occupations accentuates the value of early childhood preparation; and hence the benefit of being born to the right parents. Rajan also cautioned students about unscrupulous schools which leave students with high education loans and ‘useless degrees’. “We should make sure that unscrupulous schools do not prey on uninformed students, leaving them with high debt and useless degrees,” he said. “The bottom line is that education at high quality research universities will remain expensive for a while, certainly till we learn to combine technology and people better,” Rajan said. ENS

Author :- http://indianexpress.com/
Reposted By :- http://www.credit4loan.com/

For loans over Rs 5 cr: RBI may share defaulter details if probe agencies want the info

THE Reserve Bank of India has indicated its willingness to share details regarding borrowers who have taken large loans of over Rs 5 crore with the government if such information were to be sought by vigilance and investigative agencies, or for court cases. A database of loans of over Rs 5 crore is currently maintained by the Central Repository of Information on Large Credits (CRILC), which was set up the RBI last year. The repository has been set up to improve assessment of credit risk by the banks, early detection of non-performing assets (NPAs), and to improve recovery of loans. While refusing to share the entire database of large loans with the government, the central bank will provide details as may be needed by the investigative agencies, Finance Ministry sources said.

Such information will enable these agencies to ascertain the entire credit history of large borrowers and help with investigation of loan cases where proper due diligence was not followed, they said.


The RBI set up CRILC in order to collect, store and disseminate information on large credits of banks and non-banking financial companies. CRILC collects information at one place and member banks can have access to this information. It enables banks to have a better view of the credit history and the status of all loans taken by the borrower. Banks are also required to report Special Mention Accounts, where principal or interest is overdue for period up to 90 days, to the repository. Such loan accounts are classified as NPAs. The Finance Ministry wanted access to the database to have a better view of large loans that are sanctioned and disbursed. Sources said private sector banks objected to the regulator sharing the entire information with the government, since the latter also being the owner of public sector banks has a conflict-of-interest in gaining data on commercial activities of its competitors. Data from Cibil, the agency which collates information on credit, showed that 6,819 wilful defaulters owed banks Rs 74,699 crore until December 2015, up from Rs 22,332 crore that 3,703 wilful defaulters owed until December 2012. The ratio of top 30 NPAs to NPAs above Rs 1 crore (large borrowers) as on March 2015 for scheduled commercial banks is 51.79 per cent, according to Finance Ministry data. An amount of Rs 1,30,156 crore was classified as NPAs in PSBs for borrowers exceeding Rs 500 crore as on December 2015, the data shows. Last month, the RBI submitted to the Supreme Court a list of defaulters owing Rs 500 crore or more to public sector banks just three months after the apex court ruled that the RBI is “clearly not in fiduciary relationship with any bank” and that it cannot hide information solely because of the embarrassment it may cause. But while submitting the list, the RBI said it was “extremely necessary” to keep these names confidential otherwise it would dent the “fiduciary relationship” between the RBI and the banks, and between the banks and customers. The RBI’s affidavit was filed in response to a reply sought by a bench led by Chief Justice T S Thakur, which had in March taken suo motu cognizance of The Indian Express report that Rs 1.14 lakh crore of bad loans had been written off by state-owned banks between 2013 and 2015.


Author :- http://indianexpress.com/
Reposted :- http://www.credit4loan.com/

Hospitals want patients to be rated on CIBIL lines

Private hospitals in the city wish to maintain "credit score" of patients and their families on the lines of CIBIL as a deterrent to refusal to pay up any bill.

It is one of the proposals that the Association of Hospitals, which represents over 50 private hospitals in the city, plans to submit to the government-appointed committee appointed by the Bombay High Court to look at workable solutions in case of non-payment of bill. Association officials met on Friday to discuss the issue.

The issue of non-payment came into focus in 2014 after a petition was filed in High Court by 25-yearold Sanjay Prajapati who alleged that his brother was detained by Seven Hills Hospital for not paying his bills. The court made scathing remarks against hospitals terming their practices as "inhuman" and "commercialisation of health". It then said that there needs to be guidelines spelt out by a government committee in which hospitals' representatives too can come up with suggestions to find a solution.

Other solutions include getting patients and relatives to sign an undertaking on stamp paper so that in case of non-compliance, civic or criminal action can be initiated. The association has also suggested having a quick-redressal board to settle such matters speedily outside the courts.

Activists say that such clashes take place because of the lack of transparency on the part of private hospitals in the billing process.

"It was a preliminary meeting where we discussed a few possible options. We have to suggest these solutions to the government committee that has been appointed to resolve the ongoing petition between a patient and a hospital that has snowballed into a big debate," said Dr PM Bhujang, president of Association of Hospitals.

Other solutions include getting patients and relatives to sign an undertaking on stamp paper so that in case of non-compliance, civic or criminal action can be initiated. The association has also suggested having a quick-redressal board to settle such matters speedily outside the courts.

A doctor who attended the meeting on condition of anonymity said, "We have at least three such cases where patients/relatives refuse to pay up after treatment. The patients know that the doctor cannot do anything. Legal recourse can drag on for years. So doctors and hospitals are left in the lurch," he said citing a case of a woman who came for a C-section and chose the best room in a hospital. "They had paid Rs 20,000 deposit. The total bill went up to Rs 45,000 but the relatives simply refused to pay up saying that they were overcharged," he said.



Author :- http://www.mumbaimirror.com/
Reposted By :- http://www.credit4loan.com/

Your money: 4 top ways to boost CIBIL score

You are no stranger to the fact that, it is essential for you to maintain a high CIBIL score to have access to loans when you need them. Just like maintaining your fitness profile you must also attend to your credit profile to ensure that your CIBIL score remains satisfactory. Here’s a closer look at how it can be done.
Your financial health is just as important as your physical health these days. In the modern times that we live in, each of your financial activity is being tracked not just by your bank, but the premier credit bureau in the country CIBIL that is keeping score based on your credit behaviour. Each time you apply for a new loan or credit card, your CIBIL score becomes a barometer of how creditworthy you are. Moreover, potential employers these days are increasingly asking for the CIBIL report of potential recruits. This is to assess how responsible they are with their finances and thus how trustworthy and responsible they will be in their jobs.
There are a whole host of factors that impact your CIBIL score. The most important factor that has a 35% bearing on your CIBIL score is your payment history. The other factors that impact your CIBIL score are credit utilization or how much of your total credit you have used, how long how you been servicing debt, the amount of new credit you have taken or applied for and the mix of your credit. Today, we are here to talk about how your credit mix can improve your CIBIL score:
1. Having a good mix or secured and unsecured loans 
One thing that helps you attain a high CIBIL score is a good balance of secured and unsecured credit. A mortgage or an auto loan qualifies as a secured credit. But you cannot rest your laurels if you have only one of these and have no unsecured credit. A credit card with a  reasonably high credit limit, or a personal loan qualifies under the head of unsecured credit. Unsecured credit means that no collateral or advance payment is required to be paid by the consumer at the time of the disbursal of such credit. Having a mortgage or an auto loan and credit card that you service on time is thus a good way to diversify your credit mix and thus keep a high CIBIL score.
2. Installment credit 
Another type of credit that helps you score with CIBIL on the credit mix front, is having some exposure to installment credit. If you have do not have a mortage or a loan for a vehicle, you student loan too qualifies as installment credit. In other words, any kind of loan with a fixed amount of repayment each month under a pre-specified time frame qualifies as installment credit. So if you are in your first job and still servicing a student loan for a management degree or a vocational degree that you have recently completed, you are still scoring high with CIBIL as far as your credit mix is concerned.
3. Finding the right balance 
The trick to have a good credit mix is to have a good balance of active credit. If you do not have a student loan and are not in a position to apply for a mortgage or an auto loan just as yet, do not be under the impression that no credit will help you have an impeccable CIBIL score. While we are not asking you to be reckless and apply for loans, you may want to start out small and prove that you are creditworthy by applying for a credit card at first when you just start about in your professional life. A credit card is a a great way to build your credit profile if you are using it responsibly. Spending within your means on the credit card and making outstanding payments in full is a great example of prudent use.
4. A word of caution 
While we are reiterating the fact that you must diversify your credit mix, you should not consider it to be a green flag to go and apply for every loan on offer. In this intensely competitive financial world, telemarketers and even direct mailers are always trying to lure you with loans on “low rates of interest” or “lifetime free” credit cards, but do bear in mind that things are being sugar coated and you are not being given the full picture upfront.
So don’t bite the bait easily. Not only will you end up with a loan that you do not need, your CIBIL score may drop as a result of too many hard inquiries. A hard inquiry on your CIBIL report happens when a lender accesses your CIBIL score and report to see how creditworthy you are. Therefore your aim to diversify your credit profile may backfire against you!
Thus, as you can see diversification of your credit mix is a great way to improve your CIBIL score. It has a important bearing on your CIBIL score. But when you set out to diversify your credit profile, do so  carefully so as to avoid it boomeranging on you and so that you don’t end up with a lower score instead!

Author : http://www.financialexpress.com/
Reposted By : http://www.credit4loan.com/

Four things that build & maintain high CIBIL score in 2016

As a conscientious individual you probably know that you need to maintain a CIBIL score of 750 and above (out of 900). This will ensure that you get easy access to credit, as lenders will deem you creditworthy. A good CIBIL score backed by good credit history in your CIBIL report will help you move forward economically and ensure your financial well-being. A new year round the corner is the best time to begin the journey to your attractive credit profile – high credit score. Here is how to go about building and keeping up a good CIBIL score.

Credit card- The first stepping stone

If you just started out in life with your first job, and have no credit history, it is prudent to begin building credit with a credit card. However, do not leap at the first offer that you come across. Compare the fees and reward points on each and pick up a card that is best suited to your needs. A credit card, when used judiciously can indeed be a stepping stone to a good CIBIL score. Spend small amounts on your credit card and ensure that you repay the whole outstanding within the billing cycle. The golden rule of using a credit card is, never to go beyond your means, i.e. not buying anything on the credit card that you think you will not be able to repay within the stipulated time frame of your billing cycle.

Make all repayments on time and clear loan outstanding

This is applicable not just to your credit card, but also to any other credit that you may have availed of. For instance, if you have a student loan running when you have begun your career, make it a priority to make the repayments on time. In fact, it is a good idea to make bullet payments and clear the loan outstanding, if you can afford to do so.

Most people get too overwhelmed in the transition phase between the life of a student and a life of an individual who is financially independent and tend to go overboard in a pursuit of “living well”. It is financially prudent not to give in to the lure of luxuries right away at such times and continue living the way you used to as a student till you find a foothold in your career.

Have a good mix of credit

When you begin your life as an independent individual your needs begin to change. You would probably want to avail of credit to purchase a two wheeler or a car and do up your home. Based on your cash flow, avail of credit prudently based on your needs. A good mix of credit, meaning a combination of secured and unsecured loans will augur well for your CIBIL score. However, do not opt for all such credit all at once as that will make you seem credit hungry to a prospective lender and bring down your CIBIL score on account of too many “hard inquiries”. Each time you make an application for fresh credit to a bank, the bank accesses your CIBIL score and CIBIL report in order to assess your creditworthiness. These requests from the banks gets recorded in your CIBIL report as “hard inquiries” and bring down your CIBIL score a few notches each time.

Check your CIBIL score and CIBIL report periodically

This is the part where most people tend to falter. Apart from maintaining good financial habits it is also of utmost importance to keep a tab on your CIBIL score and CIBIL report. This is to ensure that there are no discrepancies that have crept in. There can be errors like a wrong entry under your name, incorrect personal information on your CIBIL report. If you do not check your CIBIL score or CIBIL report periodically, these errors may surface when you are applying for fresh credit and may mar your chances of getting a loan when you need it the most. To ensure that things are in order thus, pull out your CIBIL score and CIBIL report at least once or ideally twice in a year and ensure that all your records are in order.

Thus as you can see, building a good CIBIL score and keeping it up is closely connected to good financial habits. Just as you would take care of your physical health by eating right and adequate exercise, take care of your financial health too by keeping up a good CIBIL score. Not only will this open up doors for you when you need credit, it will also give you perennial peace of mind!



Author :- http://www.moneycontrol.com/
Reposted By :- http://credit4loan.com/

IBM Security to safeguard CIBIL data against cyberattacks

NEW DELHI: Credit Information Bureau India Limited (CIBIL) has partnered with IBM Security to secure its critical business systems against cyberattacks. Under the agreement, IBM Security Services will provide a customized security operations framework to monitor real-time threats and help CIBIL proactively identify fraud.

CIBIL collects credit information pertaining to borrowers from banks and credit institutions which are its members. It then collates this information into credit reports and credit information solutions and provides them to banks and credit institutions to help evaluate risks, while lending to customers.

IBM Security Services will provide round-the-clock proactive security log monitoring and real-time validation of suspicious threats using IBM X Force Intelligence. The company has also built an integrated Security Operations Center (SOC) for incident reporting and management, which will detect and monitor security events and phishing attacks in real-time. The CIBIL website will also be monitored in real-time with daily scanning for signs of malware infections.

An individual's CIBIL report and CIBIL TransUnion score, other than his/her income, are two of the most important tools used by lenders to evaluate applications for any loans or credit cards.  

Author :- http://timesofindia.indiatimes.com/

Reposted By :- http://credit4loan.com/

Top 5 Ways to Improve Your Credit Score

If you're planning to finance a car, there’s one number you can’t be without. You guessed it. It's your credit score, and it allows lenders to gauge your level of financing risk.
The most common credit scoring method used by major lenders is the FICO score, which assigns borrowers a score of between 300 and 850. The higher the score, the better the financing terms. If your score isn’t up to par, it’s not the end of the world. Here are five top tips on how you can improve it.
Check Your Score
Some of the best credit advice comes with the score itself. When you check your FICO score through a credit bureau, such as Experian, you’ll receive a list of specific factors that have influenced the score, for example “no missed payments” or perhaps “short credit history.” These tips can be invaluable for understanding how to improve your credit situation.
Checking your score periodically can also tip you off to harmful reporting errors, and even fraud.
Establish a Good Payment History
It’s no secret. Getting a great score means paying your bills on time, every time. Delinquent payments and collection accounts have a significant negative impact on score, and these can linger on your report for up to seven years. Here’s the good news. As you continue to pay on time, older credit blemishes will affect your score less and less.
Need help? Sign up for payment reminders, if available.
Manage Credit Cards and Pay Off Debt
Using credit cards can fast-track credit score recovery, but only if you manage them responsibly. It’s best to keep card balances low and pay them off in full each month, rather than carry them over. Cardholders should also aim for a “credit utilization rate” of 30 percent or below. This means you use 30 percent or less of the credit that’s offered to you. To find this rate, divide your total balances by total credit card limits.
For this reason, closing an unused card that’s in good standing can actually hurt your score, because it reduces your credit limits without changing the amount owed.
Don’t Take On Unnecessary Credit
Credit scoring evaluates your “credit mix,” which includes accounts like credit cards, auto loans, and mortgages. Using different types of credit can improve your score, but that doesn’t mean you should open unneeded accounts just to broaden this mix. A flurry of credit applications give lenders the wrong idea and adding multiple new accounts lowers your average account age—another important scoring factor.
Instead, think quality over quantity. Manage what you have, and scoring will reward you for older, responsibly paid accounts.
Correct Errors
Mistakes happen. If you find an error on your credit report, such as an account that isn’t yours or an inaccurate missed payment, you can dispute the error with the information provider and respective credit bureau. The dispute process takes time, but when resolved it can yield a significant change in your score.

Author :- http://www.kbb.com/
Reposted By :- http://credit4loan.com/

Credit card against fixed deposit offers a slew of advantages

Credit cards are convenient to use, provide the benefit of moving around cashless and give you the opportunity to build a great CIBIL score if you use it judiciously. However, credit cards being unsecured are a risky proposition for banks and card users can land themselves in a debt trap if they get carried away with their credit card usage. In order to somewhat address these problem, and make life easier for credit card users as well as themselves, banks have in the recent past started offering credit cards against fixed deposits.

How does it work?

This opens up a whole new world of opportunity to people who would not otherwise be eligible for a credit card such as an individual with an annual income of Rs 2-5 lakh, a homemaker, a new employee in an organisation and the likes. If any of these individuals have a fixed deposit in any of the leading banks of the nation they are now eligible for a credit card against such fixed deposits. The deposit amount can be anything between Rs 25,000 to Rs 25 lakh and should be fixed for a minimum of 180 days. The credit card that is issued against such deposits bear a card limit of 80-85% of the deposit amount. This way banks ensure that there is a margin of safety even while offering you an attractive deal.

Even when you opt for a credit card against your fixed deposit you continue to earn interest on it, just like you would normally. However, if you happen to default on the repayment of your credit card, the amount you to owe your lender will be adjusted against your fixed deposit.

Benefits of a card against fixed deposit:

No minimum requirement of an income- Anybody and everybody who has a fixed deposit in his or her name can avail of this facility. Therefore, those who wish to have a card but do not have regular income, such as homemakers, students or the elderly can avail of this facility, so long as they maintain a fixed deposit with the lender. Earning members of the family can gift such cards to their children or parents if they wish to. Such cards provide easy liquidity and are useful to cardholders in case of an emergency.

Easy documentation and no income statement or credit history check required- The documentation unlike a regular credit card is minimal, if at all, in such cards because the customer already has a fixed deposit running with a bank. Besides, a person with no credit history or an income such as a student or a person who has just started working, or a home maker who does not have any credit lines open yet can also easily apply for such a credit card as a credit card against a fixed deposit does not require an individual to furnish an income statement. Also the banks need not run a credit check.

A longer grace period- As compared to regular credit cards that offer a grace period of 21 days to repay one’s outstanding amount free of interest, a credit card against a fixed deposit offers a significantly higher grace period of 48-55 days to repay the borrowed credit interest free.

No harassment to the card user in case of non-payment of dues- Usually banks are very strict with unsecured credit usage such as credit cards. Therefore, when a person fails to repay his dues on time, the bank might give repeated reminders to the card user or even hire the services of a recovery agent if the card user remains unreachable. In case of a credit card against a fixed deposit, there are no chances of such things happening, as the bank will simply adjust the outstanding dues against the fixed deposit. However, the card user must bear in mind that a situation like this must be avoided at all costs.

A word of caution

While credit cards against fixed deposits seem to be a win-win proposition for both the lender and the card user, those opt for such cards must still exercise caution with the usage of such cards. The thumb rule of credit card usage is spending in small amounts and repaying the outstanding amount in full in each billing cycle. There is no exception to this in the case of cards issued against fixed deposit. If you go overboard with your spending and are unable to repay your debt on time, your fixed deposit account will be impacted, thus having a direct bearing on your savings. Therefore, do remember to use your card judiciously and enjoy the benefits on offer!


Author :- http://www.moneycontrol.com/

Reposted By :- http://credit4loan.com/

Product crack: CIBIL TransUnion Score and Credit Portfolio Insights on ICICIdirect.com

ICICI Securities Ltd and Credit Information Bureau (India) Ltd (Cibil) have started an online facility available through ICICIdirect.com, where customers can see their Cibil TransUnion Score and individual ‘Credit Portfolio Insights’. It enables customers to see their liability portfolio alongside their investment portfolio, and gives them a personal net worth that can help make better financial decisions.
WHAT IS IT?
This is an additional facility that ICICIdirect.com customers can access. If you go into your account and go to the portfolio tab, there is a link that says ‘My Networth’. Under that, along with assets or investments, there is a tab with liabilities or loans. Under this, you get an aggregate of all the current outstanding loans (credit card, home, personal and so on) from both banks and non-banking finance companies (NBFCs). Once you confirm your details and pay the Rs.499 annual fee, you will be able to get a monthly update of your outstanding liabilities along with the Cibil credit score in your ICICIdirect account.
The fee is applicable for 12 months and each month, the liabilities data gets updates automatically from Cibil’s database. As soon as you have paid, the database checks for a match at Cibil. If there is a match, within 24 hours you will be able to see details of all your loans.
WHAT’S GOOD...
For ICICIdirect.com customers, it works well to be able to see investments and liabilities in one place. Your net worth tells you what the balance value of your assets is after netting out liabilities. So, you can tell in one glance whether the assets you have are enough to cover your outstanding liabilities. This, in turn, can help you make your next financial decision in a more informed manner.
Typically, if your liabilities side is lighter, you may be more willing to take risk on your investment side. If, on the other hand, you find that your current investments aren’t enough for your liabilities side, then future investments might need to be in more safe and fixed return securities.
The liabilities and loans get aggregated across banks and NBFCs, and you are saved a lot of effort in getting the data from different banks and cards. Along with a summary of the loans you have taken, you also get to see your Cibil credit score—this will help in understanding your position if you want to take a new loan. A credit score above 750 is considered good by lenders.
...WHAT’S NOT
Seeing your liabilities and investments on one screen and being able to understand your net worth will enable you to make financial decisions in a more informed manner. But while liabilities have been included in the feature, for a complete net worth, investments in other asset classes such as alternatives and real estate have not been included. Hence, the picture is still not complete. Also, you need to be a customer with ICICIdirect and have a valid login for an account to be able to access this service.


Author :- http://www.livemint.com/
Reposted By :- http://www.credit4loan.com/

Try credit info firms for data on defaulters: RBI to RTI query

The Reserve Bank of India (RBI) seems to be confused about how to respond to queries related to the disclosure of wilful defaulters.

While the regulator had earlier dismissed a query filed by BusinessLine under the Right to Information Act, 2005 saying it did not have the resources to compile the list of defaulters, a second reply from another desk in the RBI has passed the buck on to credit information companies such as Credit Information Bureau (India) Ltd (CIBIL).

“Banks and financial institutions have been advised to submit the data regarding wilful defaulters and defaulters to Credit Information Companies and not to the RBI from December 2014 onwards. Therefore, we do not have the information,” the RBI said, in response to an RTI filed by BusinessLine.

In an earlier reply, dated April 7, the regulator had said: “Compilation of the same (list of wilful defaulters) would disproportionately divert resources.”

This comes even as pressure builds on the central bank to put in place a system that would name and shame wilful defaulters. The Supreme Court had recently said that it was in favour of making public the list of defaulters. The apex court has observed that “the RBI is supposed to uphold public interest and not the interest of individual banks”, nor is the central bank in “any fiduciary relationship with any bank”.

However, the central bank has so far refused to make the names public on the ground that it would affect companies’ health if they are in genuine difficulty and “may accentuate the failure of the business rather than nursing it back to health”.

Various bank associations and unions are demanding a more pro-active response by the RBI. “If publication of the names of defaulters would defame them or result in loss of business, why is no such consideration being shown for the common man who avails a bank loan? …when it comes to industrialists, all soft options are being advocated,” said a statement from the All India Bank Employees’ Association.

More than 5,600 defaulters

According to one estimate, there are more than 5,600 wilful defaulters, who together owe more than ₹60,000 crore to banks.

Indian National Bank Employees’ Federation General Secretary Subhash Sawant said the RBI’s argument that it cannot allot resources to draw up a list of defaulters does not hold much water because banks have been computerising their operations for the past 15 years. All the information is available at the click of a button.

Author :- http://www.thehindubusinessline.com/

Reposted By :- http://credit4loan.com/

Should borrowers switch to the new MCLR regime for loans?

The beginning of the financial year has brought good news for borrowers. The Reserve Bank of India (RBI) reduced repo rate by 25 basis points on April 5, and Marginal Cost of funds-based Lending Rate (MCLR), the new methodology for computing benchmark lending rates, came into effect from April 1.
MCLR is expected to make banks respond faster to policy rate revisions announced by the central bank. Given the current falling interest rate scenario, the immediate impact will be the lowering of rates.
While MCLR will automatically apply to new loans, existing borrowers can choose to switch to the new methodology after paying a fee. Existing and prospective borrowers will have to decide on moving to the new benchmark rate and choose a lender who fulfils their requirements.

To switch or not to switch
Loan experts feel that it's an opportune time to move to MCLR. "It makes sense to shift to MCLR as interest rates are on a downward slope. You should take advantage of whatever is available now. Even if you have to pay some charges, it could be worth it," says V.N. Kulkarni, an independent banking and management consultant. You might have to pay a conversion fee of 0.5-1% of the loan amount if you decide to move to the new regime.  Take a call after a cost-benefit analysis, like you would while evaluating loan refinance options.

MCLR is also expected to usher in transparency in loan pricing and revision. "Existing borrowers should move to the available MCLR with their respective banks.The new system of benchmarking is more dynamic and better regulated with the end objective of transmitting the monetary policy in essence without manipulation or leakages and ensuring compliance by banks," says Vipul Patel, Founder, Mortgageworld, a loan consultancy firm. While pros and cons of the new system will come to light over the course of time, he does not foresee any adverse impact on home loan borrowers for now.

However, you cannot dodge the risk of an upward interest revision. If the RBI were to hike policy rates in future, MCLR will prompt banks to swiftly follow suit.

Tread with care
New borrowers do not have to make a choice between MCLR and Base Rate—all new loans will be linked to the former. However, if you are planning to apply for a loan in the coming days, you must closely read the terms and conditions of your contract. Under the new regime, banks will use their discretion to decide the reset period—daily, quarterly, half-yearly or annual MCLR—applicable to home and mortgage loans. So, your home loan interest rate will be pegged to the MCLR basket chosen by your bank.
For instance, the State Bank of India has prescribed an annual reset clause. You will find a change in your rates once a year on the date mentioned in your contract. While this means you will not derive benefits of subsequent rate reductions during the year, you will also be protected from any rate hikes during the period. Moreover, you always have the option of switching to banks that may slash rates later.

The flipside
Despite being introduced as the panacea for all ills afflicting the home loan space, the MCLR regime is not without its share of complexities and limitations. In fact, the flexibility that banks enjoy within the MCLR system could create a fertile ground for variable pricing, say experts. "Banks have the option to fix the margins between the MCLR and the lending rate, which is nontransparent. The actual rate for the consumer may vary even within the same bank, depending on various internal lending criteria and product constructs," explains Patel. Banks are yet to provide clarity on these issues.
Therefore, while new borrowers do not have to make a choice between Base Rate and MCLR, the variations in their banks' approach within the MCLR system necessitates careful evaluation of the loan contract. "An annual reset is a close equivalent of annual fixed rate and quarterly reset will fluctuate depending on policy decisions," says Patel. While pointing out that the decision will depend on the borrower's cash flows and risk appetite, he picks quarterly reset option over annual reset in the current declining interest rate scenario. This would be applicable even to existing borrowers contemplating shifting to MCLR.

 

Author :-http://economictimes.indiatimes.com/

Reposted By :- http://credit4loan.com/

A little financial planning will help you to study abroad

With the dollar remaining strong, studying in a reputed foreign institution seems to be a distant dream. While most banks are willing to offer education loans for higher studies, but is it enough for us to just sign the documents without any planning?

We list down a few tips for a better financial planning before you go overseas for your higher education.

Scout for the best loan option

It is a tedious job but it is extremely important for anyone to go through and compare the various loan options available to you. And once, you zero in on the offer that you feel suits you, you can negotiate the terms and conditions.

Remember fluctuating rupee

It is important to remember that fluctuation in rupee value will impact your loan. One must remember that the loan will be rupee denominated and hence on conversion into your desired foreign currency, the amount will be lower.

"A student has to be prepared to bear this foreign exchange risk. For example, a student applies for an education loan of Rs 20 lakh. However, if the rupee weakens further due to exchange rate fluctuations, there would be an increase in the cost of education from the rupee perspective," said Harshala Chandorkar, senior vice president, Consumer Services at CIBIL.

Plan your course of action

In most cases, parents often sign up as a guarantor for the loan availed by you. So, its better to plan your course of action beforehand because if you delay the EMIs or default on them, it will adversely impact their CIBIL report as well.

"Rupee depreciation also adds to the woes of many parents who fund their children's education from their savings as they have to shell out more money. As a guarantor on your education loan your father / mother is liable for its repayment in case you fail to pay the EMIs. His / her credit report will show the details of this education loan and defaults will also show if you do not repay the EMIs on the loan. Thus, your repayment behavior will also impact your parents' credit score," she added.

Spend carefully

While you are overseas, pursuing your higher studies, it is important to do budgeting and know how much can you spend. Becoming a spend thrift can put additional burden on your financials, thus forcing you to delay or default on your loan repayments, negatively affecting your CIBIL report. In case, you cannot avoid certain expenses, consider taking up a job to meet your additional expenses.

"If you have taken a loan to study abroad, timely repayment should be the top most priority. Like any other loans and credit cards, education loans are also reported to the CIBIL and get reflected in the borrower's CIBIL Report. Transactions related to repayment of your education loan will also get reflected in your CIBIL Report and impact your CIBIL Transunion Score. Irregular or non-repayment of EMIs on your education loan will lead to an unhealthy CIBIL Report which can hamper your chances of availing any other loan or credit card in the future," said Chandorkar.


Author :- http://www.businessinsider.in/
Reposted By :- http://credit4loan.com/

Peer to Peer Lending: $50 billion market in India

In the light of mounting Non-Performing Assets by banks, most of the financial institutions including banks have become wary of giving both secured and unsecured loans. "Due to limited availability of funds, a new form of crowd funding method of Peer-To-Peer (P2P) Lending has started in online space where those having excess capital can lend it to borrowers for an interest," said Prof. Saurabh Agarwal, Professor of Finance and Dean (Academics), Indian Institute of Finance, Greater Noida.
According to Prof. Saurabh, the portal which acts as an intermediary does not guarantee the payment and is only a medium where people can meet and lend or borrow. Both lenders and borrowers pay a commission to the online platform arranging this transaction.

From the legal perspective, crowd funding is regulated by SEBI and lending and borrowing is regulated by RBI. Hence, in this case both SEBI and RBI need to regulate the P2P lending. Lending through P2P has grown dramatically from 2.2 million GBP in 2012 to 4.4 billion GBP in 2015 according to P2PFA. Hence, this unregulated sector is growing many folds, said Prof. Saurabh Agarwal.

According to him, from the regulatory perspective in China, Ecuador, Egypt, South Korea and Tunisia it is unregulated. China has the largest amount of P2P loans amounting to $150bn and about 2600 lenders. In countries like Australia, Argentina, Canada, New Zealand, United Kingdom, it is regulated like an intermediary requiring registration and following a proper conduct of business. In UK, P2P loans are about 2.2 bn with around 347 lenders. In France, Germany and Italy, P2P lending platforms have to obtain banking licence, and make complete disclosure.
European Union has 250 P2P platforms with $3.9bn of P2P loans. In United States of America, some states ban the practise of P2P lending, while some states permit it in a limited manner. Also, it is regulated by Federal regulation and Securities and Exchange Commission. Despite dual regulatory authorities US has $ 6.6 bn of P2P lending and borrowing. In some countries like Israel and Japan, it is prohibited, said Prof. Saurabh.

Prof. Saurabh opined that P2P lending is mainly advantageous to borrower as it has lower cost of financing than raising money in unorganised sector. Also, the documentation is far simpler making it easier to accesses the loan. The lenders also benefit as they get a higher return than bank deposits.
According to him, since this P2P lending is growing at a very fast rate with more than 20 companies in last one year itself, it will be prudent to classify them as a NBFC and they should be subject to all the requirements of a NBFC. This should take care of all concerns related to money laundering and adherence to FEMA provisions.
Prof. Saurabh said that the minimum capital requirement of 2 cores recommended by RBI is unjustified keeping in mind that these are start-up trying to provide loans to people who do not otherwise have access to unsecured loans. The brick and mortar requirement, experienced directors, reporting requirement etc. as proposed by RBI look good on paper as despite all prudential norms been present for Indian Banking sector, we are still facing a huge NPA burden of Rs. 1.14 lakh crore of debt. Total NPAs till now is over 8 lakh crore.
He opined that rather than having such requirements which are similar to a bank, RBI and SEBI should think of out of box and put restriction on the people who may lend. This way only those lenders will access these markets who are flushed with lot of money and are not much affected with losses to the tune of Rs. 20 to 30 lacs. Initially, also, small lenders who look for quick gains should not be permitted to lend through this mechanism. As regards borrowers, only those borrowers whose credit worthiness is positive with CIBIL should be permitted to access funds through these P2P companies.
Prof. Saurabh strongly feels that without prudential regulations in this sector, these P2P companies will become Pseudo banks without a banking licence facilitating flow of money outside the purview of either RBI or SEBI which may prove to be disastrous in the light of India being a victim of terrorist attacks and in-depth study of the existing P2P platforms like i2ifunding, Faircent, I-Lend.in etc is also recommended before implementing any rules or regulations.
Registration may facilitate growth to $ 50 billion in India. Registration may also help these financial intermediaries to exploit the market stating registered with RBI and recognized by Government of India. In case P2P financial intermediaries are registered and regulated, an interest range need to be determined by the regulators RBI or SEBI. P2P would also facilitate liquidity to MSME and use of excess cash funds, felt Prof. Saurabh Agarwal.

Author :- http://www.merinews.com/

Reposted :- http://www.credit4loan.com/