CIBIL Credit Score really necessary for Home Loan..!

There are various banks and nbfc's in the market who finds lower credit score of home loan applicants but still provides loan to customers. How they are doing it, as generally there is so much hype that if your score is low then you don't get any loan unless it is improved to a sufficient benchmark.

Let's discuss what this benchmark are and how they are roughly decided by the banks:

Generally for a home loan cibil score till 630 or 650 also consider to disburse a loan to customer, because home loan is a secured loan where in banks have a security and loan applicant is meeting all other eligibility criteria to get that loan. If only cibil/experian/equifax/crifhigh mark credit score is low then banks tend to ignore this factor as well.

Because in today's financial industry, if a one bank will reject application then multiple other banks are standing on a queue to provide loan to that customer. So for banks also it is always a subjective call, whether to sanction a loan to an applicant who has low credit score or has defaulted in the past and has a series of settlement or write off in his credit report.

If any individual find itself in this type of scenario, then they should not panic. They can get in touch with credit 4 loan and be rest assured that they will get best advisory at lowest service fees and with result oriented programs.

If someone has to apply for a home loan, then it is always recommend that they should check their credit score first. If they don't know about where to check or which is a genuine website to check then they should get in touch with credit 4 loan. Because Credit 4 Loan is well experienced and has a better knowledge about credit score parameters, loans with low credit score and credit cards.

Personal Loan without CIBIL Credit Score!!

In today's financial scenario, Every individual seeks for a loan, Whether it is personal loan, home loan, business loan, machinery loan, etc.

Basics to get a loan are very simple:

Where if following documents are meet then person gets a loan

1. Basic KYC
2. Income Proof
3. Bank Statement

But very few people are aware that apart from this your cibil credit report is also require and equally important to get you a loan sanction in minutes.

Yes, It is true.

If anyone having CIBIL Credit Score less then 750, then it becomes very difficult to get a loan, while if someone having score more than 750+ and meeting above said documents criteria said to be a happy person with big smile on thier faces compare to people who has low cibil credit score.

It is always advisable people to check credit report and credit score first before approaching any financial institution to avoid further shock from those institutions.

Credit Score is easily available, ask Credit 4 Loan, And you'll get it quickly.

So, if applying anywhere for personal loan or any other loan, Kindly check credit score, 

Because it is always better safer then being sorry in the end

Not just horoscope, your CIBIL score can also impact your marriage

Apart from taking stock of family, personality, compatibility and pay packages, families are now also concerned about the CIBIL score of a prospective groom.

Are you a bachelor living in Delhi and planning to get married anytime soon? You might be earning well and even consider yourself an eligible bachelor, but are paying your credit card bills and EMI payments on time? This affects your CIBIL score, and may also have an impact on your marriage prospects.

Apart from taking stock of family, personality, compatibility and pay packages, families are now also concerned about the CIBIL score of a prospective groom before getting their daughters married. Detectives are also being hired to get confirmed information about the CIBIL score.

And as per the trend, it is no less important than matching of horoscope, which is a custom in Indian marriages. According to experts, CIBIL score of a person shows the liability on him and also tells if he is capable enough to repay a loan.

Actual Article Link - http://zeenews.india.com/india/not-just-horoscope-your-cibil-score-can-also-impact-your-marriage-2098532.html

For Credit Score Improvement - www.credit4loan.com

How this 7 points checklist makes your home buying easy

When two colleagues at a software company, Mayank Patil and Sundar Iyer, decided to purchase a property in the suburbs of Mumbai, they had a different set of experiences altogether. Over the next eight months Mayank got into a number of challenges like lack of clarity on title of property, bank refusal to fund the project, delays by the builder in getting basic amenities. On the other hand Sundar started his house hunting with a seven points checklist on the key points to address while acquiring the property. Not surprisingly, Sundar’s journey was a lot simpler and largely hassle-free. In traditional Indian parlance there is aphorism that - “Marrying off your child and building a house are the two biggest challenges that a man faces.” But if you plan and execute the purchase of your property like Sundar instead of Mayank, chances are that your journey will much smoother.

Here is the seven point checklist that Sundar opted for while purchasing the property.

1. Does the property fit into your budget, tax framework and financial plan?

When you buy a property, banks will be willing to fund the property. Most banks and home financing companies will finance up to 80-85% of the cost of the property. The balance will have to be brought in as your equity margin. Ensure that you have these funds available with you. Secondly, check your CIBIL score, which is offered online for a small fee. If you CIBIL score is high in the range of 750-900 you stand a much better chance of getting a loan at different loan providers. Thirdly, ensure that you can afford to pay the EMI. The thumb rule is that your EMI for the home loan should not be more than 40% of your net take home salary after considering your routine expenses. This is also the criterion that the banks will use while financing like five times of your gross salary. Lastly, ensure that you are able to get the full tax benefits. There is a tax exemption of Rs.200,000 under Section 24 for interest on home loan, an additional deduction of Rs.50,000 for first-time buyers and an outer limit of Rs.150,000 under Section 80C for principal repayment. You need to structure your EMIs in such a way that you are able to make the best of all these provisions.

2. Check the location and amenities of the property

This may appear to be quite elementary, but a little bit of focus can save you a lot blushes later. Ensure that basic requirements like provisions, vegetables and other household needs are just a stone’s throw away. The closer your property is to a bus-stop or railway station or metro station, the more convenient it is for you to commute efficiently. Ensure that getting from your house to the city centre or your office does not involve too many traffic snarls and road chokes. These minor issues can make life a lot easier when you move into your new house. Also check out the water supply, sewerage and electricity connection agreements and approvals from the municipality.

3. Check out the rental potential and resale value prevailing...

When you buy property, there is a strong investment angle to it. As an investment, there are two things you need to consider. What is the rental value of a similar property? The rental value in most cities ranges from 3-5% of the value of the property per year. The higher the rental potential as a percentage of the price you pay, the better it is. Secondly, you also need to evaluate the re-sale value and potential of the property. You may always need to move to another city and you do not want to be stuck with an illiquid property, nor do you want to do a distress sale. Above all, you also need to ensure that you are not left with negative equity; meaning your loan outstanding must not be more than the value of the property.

4. Understand the actual cost of the property you need to pay

Buying a property can be quite a nuanced affair. What your builder or seller tells you is the cost at which he is willing to sell the property. There are other adjunct costs that can add up to quite a bit. The registration cost is about 1% of the value of the property while the stamp duty varies by state and can add up to 2-4% depending on the state in which the property is located. Most builders impose additional costs like building fund, club fees, gymnasium membership fee, car parking charges etc. In addition, you may also have to bear additional costs like estate agent fees, land surveyor fee, notary charges, legal opinion fee etc. Add all these up to get a picture of your actual cost. More importantly, understand the difference between carpet area, built-up area and super built-up area. Most builders quote the price based on super built-up area which includes common corridors and common space. What you must understand is the carpet area which is the area you will actually get to live in.

5. Check that the title deeds and paper work are crystal clear...

This is the most important step. Ensure that the title deeds of the builder/seller are clear. You can check these link documents at the office of the sub-registrar. Ensure that there is no encumbrance, pending legal case, property dispute or lien on the property. A lawyer can help you check these items for a nominal fee. Remember, your financing bank will do all these checks but it is always safer that you also get these checks done independently. Any deficiency can lead to problems when you try to sell the property later. Also once you make the initial payment ensure to get the allotment letter if it is a builder and an “Agreement of Sale” if you are buying an existing property. Your purchase of property will be completed only after the sale deed is executed and registered with the registrar. Normally, this sale deed will have to be hypothecated with your financier and you can keep a photocopy of that.

6. Executing the purchase and follow up activities

Once you take possession of the house, immediately inform the bank as your tax benefits will kick in from that date. The period prior to that has a different tax treatment as pre-construction period. With the sale deed, you can register the property in your name. At this point you will have to pay the stamp duty, so prepare yourself financially for the same. Once the property is registered in your name, the payment of municipal taxes on that property becomes your responsibility. You need to ensure that municipal taxes are paid on time without fail, as it is an important proof of continued ownership.

7. Possession and future maintenance...

Remember, the builder is responsible for maintenance of the building for a period of 18 months after the Occupancy Certificate (OC) is given. Also remember to get a car parking allotment letter with a map of the parking lot. By the end of the 18 months, the builder along with representatives will initiate the formation and registration of the society, which will elect its representatives and take over the management of the society from then on.

What Sundar managed to do was to adopt a more methodical and checklist approach to buying a property. This enabled him to plan his property purchase much better, saving him the hassles. Here is a 5-point summary of the points that you need to consider as a property buyer:

• Check what you are able to buy and the best deal that banks can give you
• Compare properties, estate agents, financiers and pick the best deals
• No laxity on paperwork. The devil lies in the details, so get involved in the detailing
• Ensure the property adds value in terms of location, resale price, amenities etc.
• House is a long term investment. So, envisage your needs for the next 10 years.

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

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/

Satish Pillai, new MD & CEO of CIBIL

Credit Information Bureau India Ltd (CIBIL), India’s leader in credit information, has appointed Satish Pillai as its new Managing Director and Chief Executive Officer on Thursday.

Pillai succeeds Arun Thukral who retires this year after a decade.

Satish Pillai has been serving CIBIL in the capacity of Chief Operating Officer for more than four years where he was responsible for product development and bureau operations. Earlier, Pillai led TransUnion’s operations in India overlooking the creation of the solutions team that supported generic and custom analytics and decisioning technologies, including the launch of the CIBIL TransUnion Score- India’s first generic scoring model, CIBIL said in a statement.

Pillai said, “A growing and thriving middle class is the key to a strong and vibrant economy for India. CIBIL’s commitment is to be the underlying credit infrastructure to this growth, enabling faster and cheaper access to credit by accelerating our investment in solutions across retail and commercial lending and partner in the national momentum of helping drive higher financial literacy, inclusion and protection. We are also working closely with the Reserve Bank of India and other Regulators to make the credit information infrastructure even more comprehensive and enhance our content to better serve the needs of our customers.”

CIBIL, India’s largest credit information bureau, maintains credit information on more than 406 million consumer accounts and 22 million business accounts and has a membership base of over 1400 banks and credit institutions.

Author: THe Hindu - Business Line

Reposted By: Credit 4 Loan

www.credit4loan.com, cibil, personal loan,credit 4 loan, credit card, home loan, civil

Banks to start cross-checking KYC scores, too

Apart from checking credit history, banks and financial institutions have also started checking identity score as part of Know Your Customer (KYC) procedure..

If you would filled in the wrong date of birth in a bank application form or not filled in the correct address then there is a chance that your loan application may be rejected or it will take longer to process. This is because now apart from checking your credit history banks and financial institutions have also started checking your identity score as a part of the Know Your Customer (KYC) procedure. 

Mohan Jayaraman, Managing Director, Experian says that now lenders are taking the help of credit bureaus to ascertain the identity parameters. In this apart from ascertaining the identity other factors such as location is also taking in to account. 

“As part of this we will check if the address that you have provided is correct or not. Apart from this suppose if in the same house there are other people who have defaulted onloans or don’t have a sound credit history then it can raise a red-alert for banks,” he explained. 

Also, if you change your house very often then even that may even ring a warning signal for lenders, explains Kalpana Pandey, CEO & MD, CRIF High Mark Credit Information Services. 

“The idea is to also verify the address stability. Suppose if you have a home loan in another address and for your personal loan you have given another address, then it may be a concern for banks. Or if there are times when in one form a customer has mentioned a different birth date than the actual one then even that can lower the KYC score,” she added. 

Experts explain that these scores and checks by credit bureaus can help in weeding out KYC or Anti Money Laundering Frauds. Recently, in April Reserve Bank of India slapped a penalty of Rs 1.5 crore each on three public sector banks - Bank of Maharashtra, Dena Bank and Oriental Bank of Commerce - for violating KYC-AML rules. Apart from this, the regulator had also asked eight other public sector banks - Bank of India, Punjab National Bank, State Bank of Bikaner & Jaipur, Union Bank of India, Central Bank of India, UCO Bank, Vijaya Bank and Punjab & Sindh Bank - to ensure strict compliance with KYC rules. 

RBI had pointed out that instances of banks opening fixed deposits and granting overdrafts without due diligence were detected. The credit bureaus say that such instances can be reduced by such identity scores. 

“We have a solution to authenticate the identity of the applicant which is now being used by banks and credit institutions. This is a unique solution that allows banks and credit institutions to authenticate a customer in real time by leveraging CIBIL’s vast credit information database, thereby helping drive process efficiency for faster and smoother on boarding of customers" – said Harshala Chandorkar, Sr. VP- Consumer Services and Communication, CIBIL. 

Jayaraman also said that part from identity check and location even the tenure of one’s previous loans will affect these background check scores. He explains that if the tenure of loan that a customer has been repaying from a particular address is longer then it will help in affirming the veracity of his address. 

Credit bureaus said that not only banks but even Non Banking Financial Companies, Insurance players and even telecom companies are using these background checks. However, considering that these services are limited the number of players using the score is still limited. 

"KYC procedure was always being followed by banks but now it is getting integrated with the credit score checks as well. Banks and other institutions are opting to go via credit bureaus like Equifax because it helps in solving logistical issues for the lenders and more over now credit bureaus are coming up as a one-stop shop to do credit and identity checks,” said Nimilita Chatterjee, Senior VP – Products, Analytics and Data Operations at Equifax.

Author: Business Standard

Reposted By: Credit 4 Loan

www.credit4loan.com, cibil, personal loan,credit 4 loan, credit card, home loan, civil

Cibil credit score not to your rescue

Lenders use these scores only as a preliminary filter. Actual loan sanctions depend on their internal mechanism.

Until now, the Credit Information Bureau or Cibil provided consumers access to just their credit information report (CIR), withholding their credit scores. However, this is set to change. Borrowers can now access their credit scores and know how their credit performance is being rated, as well.

The rating is done on a scale of 300-900 — 300 being the lowest and 900 being the highest. The scores are calculated according to the proprietary model created by Cibil. Harshala Chandorkar, senior vice-president, consumer relations, Cibil, lists out the broad parameters used for calculating the score — loan value, delinquencies in loan repayments, loan types: secured and unsecured, queries made for loans, loan request rejections, frequency of opening loan accounts, etc.

PUT TO TEST

Score presented on a scale of 300 - 900; 300 being lowest and 900, highest Parameters used to determine score - loan value, delinquencies in loan repayments, loan types - secured and unsecured, queries made for loans, loan request rejections and frequency of opening loan accounts Credit Information Report updated on a regular basis (whenever data is received); score calculated only when an enquiry is placed Banks are more interested in the regularity of loan repayments than the score while evaluating eligibility for credit

BANK’S INTERPRETATION OF THE SCORE
Each bank’s interpretation of the score will vary and would be based on its risk appetite. It would also differ across ‘assets’ or types of lending. Simply put, each bank will determine its own cutoffs for sanctioning loans. So, Bank A may require a minimum 700 score for approving a home loan, while Bank B may accept even a 600 score. Having said this, typically, banks require a higher score for unsecured loans such as personal loans or credit cards. While for secured loans, it could be slightly lower.

However, all banks do not rely on these scores for sanctioning loans. As S Rajendran, general manager, Union Bank of India, says, “We have an internal model for determining credit scores that is used while taking lending decisions, mainly for home and auto, both securitised products.” He also adds pricing decisions are not taken on the basis of the credit score. And, loan sanctions are governed by other factors such as individual’s income, age, experience, etc.

Many banks would consult the Cibil report only for the borrower’s repayment track record. “More than the cumulative score, we are interested in how many times he has defaulted on the repayment of his dues,” says Nandan Srivatsava, general manager, retail banking, Bank of Baroda.

Thus, lenders use these scores only as a preliminary filter in the process. “The parameters used by Cibil as well as credit institutions for determining one’s credit worthiness are roughly the same. Despite this, no lender will ever rely solely on their scores,” says Sanjay Agarwal, senior vice-president and group head (retail strategy and branding), Arcil.

Besides, in the absence of risk-based pricing in the retail segment, a high credit score does not give you an edge either to negotiate a better interest rate. Risk-based pricing essentially means the interest rate on a loan is also determined by the lender’s estimate on whether the borrower would default on the loan. So, while it is done for individual product categories, the sheer number of retail customers makes it difficult for such a large client base.

NEW ENTRANTS
Besides Cibil, there are other credit rating companies such as Equifax and Experian in the fray, as well. These companies are still building on their database. At a later date, most banks may either align themselves with one of these agencies or work out a system for taking an average of all scores. Irrespective of what option they pick, a perfect score from these agencies will still not guarantee credit, at least in the current scenario.

ACCESS IT
Your CIR reflects the credit history over a three-year period and is updated on a regular basis. The score, however, will be calculated only when an enquiry is made, says Chandorkar.

Consumers must pay Rs 450 for the score plus CIR. Alternatively, they can pay Rs 142 for just CIR each time they want to access the information from Cibil. The application process for getting the score is the same as applying for CIR — you can pay online, through the Cibil website, take a print out of the form and mail it to the company, along with documents providing address and identity proof.

So, despite paying a higher amount for getting your score, there seems to be no clear advantage in sight. A CIR may serve you just as well.

Author: Business Standard

Reposted By: Credit 4 Loan

www.credit4loan.com, cibil, personal loan,credit 4 loan, credit card, home loan, civil

Depositors get some protection if bank fails

Deposits up to Rs 1 lakh are insured. Read on for ways to raise this cover..

Bank fixed deposits are among the safest of savings instruments. The principal and interest are guaranteed and depositors know exactly how much return they can expect at maturity. But, what if the bank goes bankrupt? Or it merged with another bank? What happens to your deposits in that case?

The latest Financial Stability Report (FSR) of the Reserve Bank of India raises concerns about the soundness of public sector banks due to their high level of non-performing assets (NPAs).

"The decline in their (PSBs') soundness (measured in terms of CRAR, the capital to risk weighted assets ratio) by 1.8 percentage points between March 2011 and March 2015 was the (highest), followed by foreign banks at 1.5 percentage points and PVBs (private banks) at 1.1 percentage points," the report said.

Global deposit shield

The International Association of Deposit Insurers (IADI) was formed in May 2002. The aim is to enhance the effectiveness of deposit insurance systems, by promoting guidance and international cooperation. IADI currently represents 79 deposit insurers from 76 jurisdictions. It is a non-profit body, constituted under Swiss law and domiciled at the Bank for International Settlements in Basel. India's DICGC is a member of IADI.

The level of stressed assets was highest for PSBs at 13.5 per cent of total advances as of this March, while the net NPA ratio increased from 3.1 per cent to 3.1 per cent, it added.

Given this, is there a need for those with deposits in PSBs to worry? Since the government is the majority shareholder here, chances of bankruptcy are slim. If it fails on all financial parameters, it could get merged with a stronger bank, in which case there might be no real reason to worry.

If you have bank deposits up to Rs 1 lakh, your money is protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC). It insures all deposits.

According to the FSR, as on March 31, the number of fully protected accounts was 1,345 million. This constitutes 92.3 per cent of the total number of accounts, 1,456 million. The international benchmark is 80 per cent.

Amount-wise, insured deposits at Rs 26 lakh crore as at end-March constituted 30.8 per cent of assessable deposits at Rs 84.75 crore, against the international benchmark of 20 to 30 per cent, the report said.

Some PSBs face severe stress and the main reasons are the high NPAs and the slow growth of last year, says Vibha Batra, senior vice-president at ratings agency ICRA.

"Some banks might not be able to grow and, ultimately, you need to grow to get out of the stress. This might take time to shape up. That is why capital infusion for PSBs is critical. But on the reported capital adequacy, banks might not require merger, as yet," she says.

Merger among PSBs can also be contentious because of the strong bank unions. It is a possibility in case the government feels the need to bail out weak banks.

"The last forced merger was when Global Trust Bank merged with Oriental Bank of Commerce. The government has been stressing that merger among PSBs should be voluntary and not forced. Capital infusion in weak PSBs seems more likely," says Batra.

Deposits guaranteed
Deposits up to Rs 1 lakh per depositor, across one bank, are insured under the DICGC scheme. All banks pay premium to DICGC for this insurance. There have been several cases of co-operative banks going bust. In such cases, deposits up to Rs 1 lakh are protected. So, if you have deposits with co-operative banks, restrict the amount to Rs 1 lakh per bank, so that even if there is a problem with the lender, your money will be protected, says V N Kulkarni, of Abhay, a Bank of India-promoted debt counselling centre.

Using joint a/cs
All deposits held in your single name, in one bank, will together be covered up to Rs 1 lakh. If you hold deposits jointly with your spouse or child or if you hold deposits as sole proprietor of a firm or as a partner in a firm, then each of those deposits will be guaranteed separately up to a limit of Rs 1 lakh.

Multiple joint accounts of the same persons in the same bank, but with different names as first applicant, will be also be covered separately up to Rs 1 lakh. So, a joint account with A as first applicant and B as second applicant will be covered up to Rs 1 lakh. Another joint account with B as first applicant and A as second will also be covered up to Rs 1 lakh, even if both are in the same bank.

Loan rates in merger
If you have a loan from one bank and it gets merged with another, the new loan will depend on the agreement between the two banks. It is unlikely that rates will change suddenly. For instance, if your original bank's loan book is smaller compared to the bank that takes it over, it is possible that the bank will offer you the lower loan rate. Otherwise, it is possible that the bank might ask you to continue with your original contracted loan rate, says Kulkarni.

Financial health
To check if your bank is financially healthy or not, customers must check some parameters. These include the ratio of net NPAs, restructured accounts and provision allocated for bad assets. "Customers of small co-operative banks must particularly keep track of these parameters on a regular basis. If you feel your bank is in trouble, keep only the minimum balance in your account. In the case of PSBs, since the government is the majority stakeholder, there is no real need to worry," says Kulkarni.

Author: Business Standrad

Reposted By: Credit 4 Loan

www.credit4loan.com, cibil, personal loan,credit 4 loan, credit card, home loan, civil

DSG backs IndiaLends to make it easier and faster to get loans

There’s a big gap between the haves and have-nots among borrowers in India. The gilt-edged ones with ready collateral and guarantors are chased by banks to take loans. Others have to run from pillar to post to process their loan applications in time for an urgent need, be it for a property purchase or a medical emergency.

CIBIL (Credit Information Bureau India Limited) was set up in 2000 to assess customer data from banks and other financial institutions. The CIBIL score has now become the gold standard for loans to be approved. But this has ended up excluding large numbers of people – CIBIL scores range from 300 to 900, but 80 percent of loans go to those with a score above 750.

Many of the sub-750 lot might be deemed credit-worthy if only the parameters to assess them were broadened. New technology employing big data and analytics now enables this. So Delhi-based fintech startupIndiaLends set out in March this year to capture and analyze a variety of data points for newer risk models and credit scoring. With loans depending more on data than securities and guarantees, financial institutions also get a much larger pool of potential customers.

“In India, organized lending is available only to a lucky few – mainly those with high CIBIL scores. The remaining borrowers are at the mercy of unorganized lenders and loan sharks, and end up paying outrageously high interest rates. We are here to change that and help both borrowers and lenders make better credit decisions,” says Gaurav Chopra, co-founder of IndiaLends.

Chopra, who has an MBA from the London Business School, and his co-founder, Mayank Kachhwaha, who graduated from IIT Madras, both worked earlier at international financial corporation Capital One.

Alternative data points

IndiaLends borrows some of the practices the co-founders found to be effective while working in London. “At Capital One, we used a lot of alternative data points like bank transactions and utility payments to build credit risk models that enabled instantaneous underwriting decisions,” Kachhwaha tells Tech in Asia. The scene in India was very different with lending primarily based on a single credit score from CIBIL, which made it hard for a majority of people to secure loans. So the Capital One colleagues decided to change the rules of the game with a new model.

After tying up with lending institutions and catering to 1,500 customers in the first four months of operation in Delhi, IndiaLends is now ready to expand to Mumbai and Bangalore. Today, it announced its first round of funding from Singapore-headquartered DSG Consumer Partners and angel investors, including Siddharth Parekh, son of Deepak Parekh, chairman of HDFC, India’s leading housing finance corporation.

Deepak Shahdadpuri, managing director of DSG, which has earlier invested in successful startups in India such as Zipdial and GOQii, says IndiaLends could transform a key part of the country’s financial services infrastructure. He adds:

 This will reduce the cost, provide a better mechanism to price risk, and reduce time to assess credit. 

The IndiaLends website promises to respond to loan applications in minutes. Those cleared for loans can expect to receive the money within two days. If IndiaLends stays true to these promises, it will reduce heartache for millions of borrowers in India who are used to running around for weeks, if not months, in pursuit of their loans.

Tech startups can play a big role in making the system more efficient by becoming a lending platform for large banks and financial institutions. The IndiaLends model is that of an online marketplace. It doesn’t take credit risk on its own books. “This ensures an unlimited amount of funds that can be provided to borrowers having different credit risk profiles,” says Kachhwaha.

Earlier this year, Capital Float raised US$13 million to give startups in India easier access to loans. Aye Finance is another new player serving startups, who typically lack the collateral to access institutional loans.

For now, IndiaLends is focusing on salaried and self-employed borrowers. But it may soon serve startups as well. “Analyzing the credit behavior of our self-employed customers will help us enter the SME space,” says Kachhwaha.

Author: TechInAsia.Com

Reposted By: Credit 4 Loan

www.credit4loan.com, cibil, personal loan,credit 4 loan, credit card, home loan, civil

Applying for loan, keep credit score high: CIBIL

Applying in for a loan, check credit score. To ascertain credit worthiness of individuals every bank are referring to Credit Information Bureau (India) Ltd (CIBIL) rating.

On an average 79% of loans approved are of customers with a credit score of 750 or above. Addressing a press conference here on Thursday, CIBIL senior vice-president (customer relations and communications) Harshala Chandorkar informed customers need to maintain a sound financial history. “It works both ways. Risk index ensures loans from banks and NBFCs are given to customers or corporate. It also helps customers with faster processing of their loans.”

CIBIL consumer bureau has an estimated 406 million database which includes 220 million consumers. Every month records are updated and a CIBIL score is applicable ahead of any loans, she added. Simply put, CIBIL TransUnion Score or credit score are set by banks for every individual.CIBIL already has in place a rating mechanism for individuals based on credit score. It can range from 300 to 900 – a higher score means better credit worthiness.

Score is based on past performance (30%), credit type and duration (25%) along with leverage (25%) and other factors (20%). Credit information is governed by RBI regulations. Besides banks, the information can be accessed by telecommunications and insurance companies. However, telecom companies use the data to set credit limit on post-paid customers only. For purpose of transparency, a bank can view an individual’s credit score only when he/she applies for a loan.

However, individual can seek information on his/her credit score from the bank directly or can apply to CIBIL for the same. For a sum of Rs 500 a customer can access his CIBIL report. The process can be offline or online at cibil.com after paying a fee.

Courtesy: Times of India

Reposted By: Credit 4 Loan

How an old default history may ruin the chances of a new loan

Imagine this: You and your friend walk into a bank’s branch to apply for loans to buy similar cars ahead of Diwali. The bank offers you a loan, but turns down your friend’s application despite identical earnings and terms.

The reason: your friend still has an outstanding unpaid bill of a few hundred rupees on an old credit card that she no longer uses.

Welcome to the world of 360 degree dynamic credit-worthiness.

Banks and credit card issuers have started scrutinising customers and their repayment pattern with a fine tooth-comb while processing loan applications.

“I did not realise that I was not eligible for any loan until I approached a bank to raise funds to buy a car. I was pointed out that I had not settled a mere Rs 150 with a multinational bank many years ago,” said Ashish Gupta ( name changed), a Delhi-based executive of a multi-national company.

Not just that. Increasingly, lenders are collating data from multiple credit information companies to test consistent loan repayment track record.

Also, even if you have had a high credit score all this time but have been irregular in repayment just one or two times, it would get registered in your credit score.

This could prompt banks to reduce your credit card limit or sanction a loan lower than the amount applied for.

Consumers can purchase their credit scores directly from firms such as Credit Information Bureau of India Limited (CIBIL), Experian Credit Information Company of India, High Mark Credit Information Services and Equifax Credit Information Services among others to know their specific “credit score.”

The ‘score’, a three-digit number ranging between 300 to 900, helps banks in estimating the likelihood of repayment of loan based on the individual’s past pattern of credit usage and loan repayment behaviour.

The closer the score is to 900, the more confidence the bank will have in the individual’s ability to repay, and therefore, sanction loans faster.With the government actively pushing to increase electronic transactions, including payments in credit and debit cards, banks said customers’ “credit scores” would be critical for credit card issuance and loan approvals.

“We are very careful about the credit scores of customers and it is not enough to get a high score just once, it is an ongoing process and it analysed continuously to ensure that default on credit cards do not rise as it, touching over 9% about 10-12 years ago,” a senior executive at a large private sector bank who did not wish to be identified told HT.

“Information on consumers’ financial habit is no more restricted to just one or two banks, information pertaining to this is now in the system and it could be accessed by any lender,” a chairman of a public sector bank said.

Courtesy: Hindustan Times

Reposted By: Credit 4 Loan

Credit information companies may cull client feedback from Facebook, Twitter to finalise scores

Independent credit information companies may soon cull information and client feedback from social media sites like Facebook, Twitter and Yellow Pages to arrive at credit scores. Some small businessmen, however, are worried that their rivals may potentially misuse the platform to harm their prospects.

Experian, which provides information to companies, gathers a lot of information from the social media space such as comments on Yellow Pages, consumer forums, company websites and published reports.

“We are working with a private sector bank to look at using information that’s available in the social media space for credit evaluation of customers,” said Mohan Jayaraman, managing director, Experian Credit Information Company of India.

Experian also has a fraud prevention service called Hunter to check costly application frauds.

Under this product, it screens and highlights potentially fraudulent applications, enabling organisations to identify fraudsters before they become customers. Information on social media will be used to detect frauds in the small and medium enterprises space. Typically, a credit report is an individual’s credit payment history across loan types and credit institutions over a period of time.

Jayaraman said that they are looking at the correlation between social behaviour/credit information and their credit rating. The project is at an exploratory stage. Credit rating companies use unstructured data like the ones on Yellow Pages, Facebook or Twitter to rate bank clients in other markets.

There are four credit rating companies in India — Credit Information Bureau India, Equifax Credit Information Services, Experian Credit Information and High Mark Credit Information.

Author: Economic Times

Reposted By: Credit 4 Loan

Don’t let the summer heat beat your credit score

It’s that time of the year when the day starts becoming longer, the scorching sun gets harsher, schools take a break and the sign of mangoes signal the onset of summer. It’s also that time when parents scout for last minute travel deals to locations far-off from the summer heat. And like the rest, Mayank and Neha have been planning a short summer vacation for their 5 year old daughter Kiara.

After scouting through various travel websites Neha finally arrived at the best deal for the family, which not only gave her an attractive discount on her hotel stay but also a 15% cashback on her credit card, a deal that would save her family a substantial amount.

But Mayank was not too keen on swiping the credit card and rather preferred paying outright cash. His displeasure comes from an earlier experience just a couple of days before his bachelorhood ended! Having swiped his credit card for the trip, Mayank then forgot to pay that month’s credit card bill in the entire melee of the post trip excitement and wedding thereafter, thus adversely affecting his credit score.

After deliberating and debating, Neha and Mayank finally decided to swipe the credit card to pay for the holiday. Although Mayank made sure to discuss with Neha and put down some ground rules on credit card usage so that it does not adversely impact their credit reports and CIBIL TransUnion Score.

Decide a budget and stay within that

Mayank and Neha chalked out the total budget of the holiday down to the daily meals, holiday shopping and commuting costs. It was mutually agreed to stay within this set budget to avoid undue expenses.

Avail travel insurance

The couple also sought to purchase considerable travel insurance coverage to be on the safer side in case of loss of baggage or theft during the holiday.

Set payment alerts

They activated and ensured alerts are kept for payment of all the credit card bills both on the phone or their emails before the due date. Late payments are negatively viewed by lenders because this indicates that you are having trouble servicing your existing obligations.

High utilisation of credit limit

While increased spending on the credit card will not necessarily affect one’s credit score, an increase in the current balance of your credit card indicates a higher repayment burden and may negatively affect your credit score. It’s always prudent to not use too much credit. Mayank and Neha mutually decided on a credit card spending cap which was way lower than the limit on their credit card.

Ensure timely payment

The couple committed to make regular and timely payments of the credit card bill in full every month. Paying off dues before the due date every month is the best way to avoid credit card debt.

Review credit report

Mayank and Neha also accessed their credit reports before jet setting on the holiday to ensure that their credit history was up to date and they both had a good credit score.

Mayank was prudent and had learnt from his past mistakes as a bachelor when he was not financially responsible. And like Mayank, many of us tend to make the same mistake, be it as a bachelor or even as a family person. Better late than never; ensure financial prudence while planning for this summer holiday to ensure that you have access to finance for all your future aspirations.

Author: Rediff

Reposted By: Credit 4 Loan

Education loan default can impact CIBIL credit score

Non-repayment of education loan can now affect one’s credit score, a top official of Credit Information Bureau (India) Ltd (CIBIL) has said.

“The education loans have to be paid once one completes his/her course and gains employment. Also, like any other loans and credit cards, education loans are also reported to CIBIL and get reflected in the borrower’s CIBIL Report and impact the CIBIL Trans Union Score,” said CIBIL Senior Vice President-Consumer Services and Communications Harshala Chandorkar.

CIBIL Trans Union Score is a key parameter relied on by banks while processing loan applications.

According to CIBIL data, the outstanding education credit, including for study within the country and abroad, stood at Rs 63,800 crore as on March 31 this year.

The data released by CIBIL throws significant light on education loan trends in the country.

While the demand for educational loan is need based, the number of new loan accounts opened in calendar year are almost same over the last five years, it said.

Noting that the third and fourth quarters of each calendar year witness a spurt in education loans, the data says about 1,30,000 education loan accounts were opened in the fourth quarter of 2014.

However, the average sanctioned amount continues to grow over time, it added.

“Average sanctioned amount in fourth quarter of 2014 was Rs 6 lakh, while in fourth quarter of 2013 it was about 4.5 lakh. In recent period, loans with amount less than Rs 1 lakh has reduced below 10 per cent of total sanctions while loans with ticket size/amount of more than Rs 5 lakh have gone up to almost 30 per cent of the total sanctions.

“In fourth quarter of 2014, loans of ticket size of more than Rs 5 lakh were around 30 per cent of total sanctions while in fourth quarter of 2012, loans of more than Rs 5 lakh comprised about 22 per cent of total sanctions,” CIBIL said.

It says delinquency on education loans has decreased over the past year.

“Delinquency for 90+ days amount overdue was around 3.50 per cent in fourth quarter of 2013 which has lowered to 2.70 per cent in fourth quarter of 2014,” says the data.

Stating that bad loans from education segment are very high, the Reserve Bank’s Deputy Governor R Gandhi had asked CIBIL and banks to “counsel” the youth on good credit behavior during the CIBIL Trans Union Annual Conference in March, CIBIL said in a release.

Author: Economic Times

Reposted By: Credit 4 Loan