State Bank of Indore has raised its BPLR by 50 basis points which will be 13.25 per cent. Thus home, auto and corporate loans will become expensive for the existing borrowers.
Earlier the parent bank State Bank of India (SBI) had raised its BPLR by 50 basis points to 12.25 per cent. Its new rates came into effect from August 17.
SBI has informed that the merger process of State Bank of Indore with SBI will start from August 26. Therefore the entire undertaking of State Bank of Indore will be transferred to and vested in State Bank of India from August 26.
On July 28, 2010, the government had issued the 'Acquisition of State Bank of Indore order 2010'. It said, as per the order the process of amalgamation will begin from the 30th day from the date of order that is August 26.
The SBI board had given its approval last year following this Centre also given an in-principle approval. SBI will have a 98 per cent stake in State Bank of Indore.
SBI has already made an announcement of swap ratio of 34:100 for the merger, thus SBI will be giving 34 shares for every 100 shares of State Bank of Indore held by minority shareholders.
Hence SBI will issue up to over 1.16 lakh shares of face value of Rs 10 each to minority shareholders of State Bank of Indore.
After this merger, there will be only five associate banks of SBI-- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. Among these, the State Banks of Bikaner and Jaipur, Mysore and Travancore are listed companies.
Thursday, August 19, 2010
Monday, August 9, 2010
How to increase loan eligibility
While sanctioning loan to a borrower, banks check the income statement of the person in order to assess the repaying capacity of the individual and also reduce chances of risk.
There are some points which are taken into consideration for loan eligibility:
People with steady jobs and constant income are mostly preferred rather than people who frequently change jobs. To people whose retirement is close bank don’t prefer to give long tenure loans. However banks prefer young borrowers but applicant who have default history, credit score is poor, then there chance of getting loan minimizes. To some extent education also have bearing on loan eligibility. In case loan borrower is a senior citizen with sound financial position then banks take into consideration this factor while sanctioning loan.
The eligibility for loan can be enhanced by clubbing your income with that of your spouse, father, mother or son. If husband and wife apply for a joint loan, their combine income the eligibility will become double. Moreover co-owners will be eligible for tax benefits separately on the home loan repayments in proportion to their shares in loan liability.
Managing finances is also one of the factors to increase loan eligibility. If you have cleared previous debts then you will have funds for the repayment of the new loan you plan to take or have taken. Clearing of credit card payments, loan repayments will make you eligible for a greater loan amount.
In case of home loan you can increase the eligibility by opting for long tenure as this will reduce the monthly EMI burden.
There are some points which are taken into consideration for loan eligibility:
People with steady jobs and constant income are mostly preferred rather than people who frequently change jobs. To people whose retirement is close bank don’t prefer to give long tenure loans. However banks prefer young borrowers but applicant who have default history, credit score is poor, then there chance of getting loan minimizes. To some extent education also have bearing on loan eligibility. In case loan borrower is a senior citizen with sound financial position then banks take into consideration this factor while sanctioning loan.
The eligibility for loan can be enhanced by clubbing your income with that of your spouse, father, mother or son. If husband and wife apply for a joint loan, their combine income the eligibility will become double. Moreover co-owners will be eligible for tax benefits separately on the home loan repayments in proportion to their shares in loan liability.
Managing finances is also one of the factors to increase loan eligibility. If you have cleared previous debts then you will have funds for the repayment of the new loan you plan to take or have taken. Clearing of credit card payments, loan repayments will make you eligible for a greater loan amount.
In case of home loan you can increase the eligibility by opting for long tenure as this will reduce the monthly EMI burden.
Friday, August 6, 2010
Borrowers still have to decided whether to switch to new base rate system
Some of the banks have increased their benchmark prime lending rate (PLR) floating rate, on which they used to lend prior July 1, therefore the borrowers say they have to yet think on whether they should shift the loans to the new base rate system.
According to bankers the borrowers, who find that the rates offered under the base rate system are favorable and less volatile, would not think to move over to the new base rate system.
KR Kamath, CMD of Punjab National Bank, said, “Previous loans that are linked to PLR will get costlier. Hence, borrowers who feel that the hike in the rate will adversely impact them can shift to the base rate system”.
Recently PNB, IDBI Bank and Union Bank of India have raised their PLR rates they offered to their prime borrowers, thus the rates linked to rate will be more expensive.
PNB has raised its PLR to 11.75 per cent from 11 per cent, while Union Bank has increased it to 12.25 per cent from 11.75 per cent. IDBI Bank raised its PLR by 50 basis points. These banks have set their base rate at 8%.
The PLR rates are the rates offered by the bank to its best borrowers where loans can be offered at rates lower than benchmark rate, while the base rate system is rigid as banks cannot give loans below the base rate.
All floating rate loans will be affected by the raise in PLR but the borrowers of home loans will get impacted the most. PNB is offering home loan at 8.75 per cent for a 5 year tenure, 9 per cent for loans of 5-10 years, 9.25 per cent for 10-20 years and 9.5 per cent for above 20 years for Rs 20 lakh linked to its base rate.
Union Bank has set its floating rate loans up to Rs 30 lakh at 8.5 per cent for a 5-year loan (base rate plus 0.5 per cent), it is 8.75 per cent for loans of 5-15 years and 9 per cent for 15-20 years. IDBI Bank under the new regime is offering floating rate loan of up to Rs 20 lakhs at 8.5 per cent, Rs 20-30 lakhs 8.75 per cent, Rs 30-50 lakhs 9 per cent and above Rs 50 lakhs is 9.25 per cent.
CS Jain, head, personal banking, IDBI Bank said, customers should decide whether they want to move their loans to the base rate system, especially as it is more stable.
Jain said, “Customers would now have to decide whether to exercise the option provided by the RBI. This system is theoretically less prone to fluctuations when compared to the PLR system where banks keep adjusting rates frequently.”
Kamath added PNB will review its base rate quarterly. He said, “Our base rate would be reviewed after every quarter. One of the inputs towards this will be our cost of deposits. We have also raised our deposit rates by matching amount to give our customers a fair deal.”
According to Ashish Jindal, regional director (north), Knight Frank India for home loan borrower’s base rate is more beneficial.
He said, “I feel that borrowers would be better off under a more transparent base rate system. The previous system was anything but transparent where the benefits were often not passed on to the borrowers.”
According to bankers the borrowers, who find that the rates offered under the base rate system are favorable and less volatile, would not think to move over to the new base rate system.
KR Kamath, CMD of Punjab National Bank, said, “Previous loans that are linked to PLR will get costlier. Hence, borrowers who feel that the hike in the rate will adversely impact them can shift to the base rate system”.
Recently PNB, IDBI Bank and Union Bank of India have raised their PLR rates they offered to their prime borrowers, thus the rates linked to rate will be more expensive.
PNB has raised its PLR to 11.75 per cent from 11 per cent, while Union Bank has increased it to 12.25 per cent from 11.75 per cent. IDBI Bank raised its PLR by 50 basis points. These banks have set their base rate at 8%.
The PLR rates are the rates offered by the bank to its best borrowers where loans can be offered at rates lower than benchmark rate, while the base rate system is rigid as banks cannot give loans below the base rate.
All floating rate loans will be affected by the raise in PLR but the borrowers of home loans will get impacted the most. PNB is offering home loan at 8.75 per cent for a 5 year tenure, 9 per cent for loans of 5-10 years, 9.25 per cent for 10-20 years and 9.5 per cent for above 20 years for Rs 20 lakh linked to its base rate.
Union Bank has set its floating rate loans up to Rs 30 lakh at 8.5 per cent for a 5-year loan (base rate plus 0.5 per cent), it is 8.75 per cent for loans of 5-15 years and 9 per cent for 15-20 years. IDBI Bank under the new regime is offering floating rate loan of up to Rs 20 lakhs at 8.5 per cent, Rs 20-30 lakhs 8.75 per cent, Rs 30-50 lakhs 9 per cent and above Rs 50 lakhs is 9.25 per cent.
CS Jain, head, personal banking, IDBI Bank said, customers should decide whether they want to move their loans to the base rate system, especially as it is more stable.
Jain said, “Customers would now have to decide whether to exercise the option provided by the RBI. This system is theoretically less prone to fluctuations when compared to the PLR system where banks keep adjusting rates frequently.”
Kamath added PNB will review its base rate quarterly. He said, “Our base rate would be reviewed after every quarter. One of the inputs towards this will be our cost of deposits. We have also raised our deposit rates by matching amount to give our customers a fair deal.”
According to Ashish Jindal, regional director (north), Knight Frank India for home loan borrower’s base rate is more beneficial.
He said, “I feel that borrowers would be better off under a more transparent base rate system. The previous system was anything but transparent where the benefits were often not passed on to the borrowers.”
Thursday, August 5, 2010
Banks asked to speed up financing of over 59,000 projects under PMEGP
Banks have been asked to speed up the disbursal of loans under the Prime Minister's Employment Generation Programme (PMEGP). The government said banks should ensure that they meet the set target of financing over 59,000 projects in the current fiscal.
Minister of State for Micro, Small and Medium Enterprises Dinsha Patel said, "I request all the CMDs of banks to issue policy circulars to the financing branches to ensure fulfillment of the targets allocated."
At National Workshop on the Prime Minister's Employment Generation Programme Patel said, for the current fiscal, the ministry has set a target of implementing 59,714 projects under the PMEGP with margin money assistance of Rs 836 crore which will generate employment for 5.97 lakh persons.
The minister informed that up till now only 10 per cent of the loan amount has been disbursed for this financial year. He said, it is important to bring Khadi and Village Industries Commission (KVIC) to every village.
Under the scheme, from the total amount of loan to be disbursed, 15% has been sanctioned for scheduled castes, while 7.5 per cent will be for scheduled tribes, 27 per cent for other backward classes, 5 per cent for minorities and 30 per cent for women.
The scheme was launched in 2008, since then around one lakh projects have been sanctioned and about 10 lakh people have been provided jobs.
However under PMEGP scheme urban and rural entrepreneurs in the general category have also been provided a subsidy of 15% and 25% on the project cost while the urban and rural businessmen of the weaker sections of society have been provided a 25 per cent and 35 per cent subsidy.
The KVIC is the nodal agency responsible for the implementation of PMEGP, set the targets for its field officers and the Khadi and Village industries boards of various states.
At the workshop an agreement was signed between Union Bank of India and KVC for a 'one bank, one nodal branch' concept, under this agreement bank will be coordinating the operations of its branches across the country through a single nodal branch.
Minister of State for Micro, Small and Medium Enterprises Dinsha Patel said, "I request all the CMDs of banks to issue policy circulars to the financing branches to ensure fulfillment of the targets allocated."
At National Workshop on the Prime Minister's Employment Generation Programme Patel said, for the current fiscal, the ministry has set a target of implementing 59,714 projects under the PMEGP with margin money assistance of Rs 836 crore which will generate employment for 5.97 lakh persons.
The minister informed that up till now only 10 per cent of the loan amount has been disbursed for this financial year. He said, it is important to bring Khadi and Village Industries Commission (KVIC) to every village.
Under the scheme, from the total amount of loan to be disbursed, 15% has been sanctioned for scheduled castes, while 7.5 per cent will be for scheduled tribes, 27 per cent for other backward classes, 5 per cent for minorities and 30 per cent for women.
The scheme was launched in 2008, since then around one lakh projects have been sanctioned and about 10 lakh people have been provided jobs.
However under PMEGP scheme urban and rural entrepreneurs in the general category have also been provided a subsidy of 15% and 25% on the project cost while the urban and rural businessmen of the weaker sections of society have been provided a 25 per cent and 35 per cent subsidy.
The KVIC is the nodal agency responsible for the implementation of PMEGP, set the targets for its field officers and the Khadi and Village industries boards of various states.
At the workshop an agreement was signed between Union Bank of India and KVC for a 'one bank, one nodal branch' concept, under this agreement bank will be coordinating the operations of its branches across the country through a single nodal branch.
Monday, July 19, 2010
Southern states to seek direct sanction of loans to tenant farmers and no collateral security on loans
The southern states want the bank loans to the tenant farmers should be directly sanctioned and no collateral security should be taken from small and micro enterprises in the state for giving loan. The southern states finance ministers conference is going to be held on July 20 and the Chief Minister K Rosaiah told that the state will taking up this agenda, to arrange for sanction of loans directly to the tenant farmers with suitable guidelines so that they can get loans at 7 per cent interest and other benefits including crop insurance, with Union finance minister Pranab Mukherjee, who will be attending the meet.
The chief ministers or finance ministers of the southern states including Andhra Pradesh, Tamil Nadu, Karnataka, Kerala and Union Territories of Pondicherry, Andaman and Nicobar Islands and Lakshadweep will be attending the meet.
All the CEOs, CMDs of public sector banks and financial institutions, Reserve Bank of India deputy governor and NABARD chairman will also attend the meeting.
Rosaish reviewed the arrangements and issues with the chief secretary S V Prasad, special chief secretary (finance) G Sudhir and other officials, to be taken up in the meeting.
The chief minister told that his main focus will be on getting loans without collateral security for micro, small and medium enterprises (MSMEs). He told a certain percentage of bank loans be given to MSME sector under the Credit Guarantee Trust.
Rosaiah added that he will ask for 2% interest subvention for the loans that were rescheduled due to floods and drought in the state also for waiver of the service charge, being collected on SMART cards of NREGS beneficiaries.
In a press release, the CMO stated in the meeting the financial issues confronting the states and the will also be taken up, also the CMDs of public sector banks and Union finance minister will respond to their queries and problems.
The other issues to be taken up in the meeting include state wise flow of credit and credit related parameters like agriculture credit, MSME credit, housing and education loans, credit to weaker sections and minority communities and CD ratio etc.
Also, the progress of Centrally sponsored schemes like Swarnajayanti Gram Swarogar Yojana (SGSY), Swarna Jayanti Shahari Rozgar Yojana (SJSRY), Prime Minister's Employment Generation Programme (PMEGP), revival package for short term cooperative credit structure, implementation of Aam Admi Bima Yojana and implementation of co contributory pension scheme by the states for unorganized sector under the Swavalamban Pension Scheme of the Government of India will be part of the agenda in the meeting.
The chief ministers or finance ministers of the southern states including Andhra Pradesh, Tamil Nadu, Karnataka, Kerala and Union Territories of Pondicherry, Andaman and Nicobar Islands and Lakshadweep will be attending the meet.
All the CEOs, CMDs of public sector banks and financial institutions, Reserve Bank of India deputy governor and NABARD chairman will also attend the meeting.
Rosaish reviewed the arrangements and issues with the chief secretary S V Prasad, special chief secretary (finance) G Sudhir and other officials, to be taken up in the meeting.
The chief minister told that his main focus will be on getting loans without collateral security for micro, small and medium enterprises (MSMEs). He told a certain percentage of bank loans be given to MSME sector under the Credit Guarantee Trust.
Rosaiah added that he will ask for 2% interest subvention for the loans that were rescheduled due to floods and drought in the state also for waiver of the service charge, being collected on SMART cards of NREGS beneficiaries.
In a press release, the CMO stated in the meeting the financial issues confronting the states and the will also be taken up, also the CMDs of public sector banks and Union finance minister will respond to their queries and problems.
The other issues to be taken up in the meeting include state wise flow of credit and credit related parameters like agriculture credit, MSME credit, housing and education loans, credit to weaker sections and minority communities and CD ratio etc.
Also, the progress of Centrally sponsored schemes like Swarnajayanti Gram Swarogar Yojana (SGSY), Swarna Jayanti Shahari Rozgar Yojana (SJSRY), Prime Minister's Employment Generation Programme (PMEGP), revival package for short term cooperative credit structure, implementation of Aam Admi Bima Yojana and implementation of co contributory pension scheme by the states for unorganized sector under the Swavalamban Pension Scheme of the Government of India will be part of the agenda in the meeting.
Thursday, July 8, 2010
SBH extended special home and car loans rates
After the two big lenders the State Bank of India and HDFC bank, State Bank of Hyderabad has extended its special interest rates for home and car loans.
The bank said the interest rates of home loans for first year will remain at 8.5% (fixed) and for the second and third years for loan up to Rs 50 lakh it would be offering 9.25% (floating) further for the second and third years for loans above Rs 50 lakh it is offering 9.5% (floating).
The bank will link the rate to base rate from the fourth year onwards which will be 9.75% for loans up to Rs 50 lakh and for loans above Rs 50 lakh the rate will be 10.75%.
SBH has set its base rate at 7.75%.
On car loans bank is offering interest rate of 8.5% (fixed) for new cars for the first year and for second and third years it is offering floating rate at 10.5%. Thereafter from fourth year onwards, bank will link the rate to base rate which will be 11.5% for loans up to Rs 5 lakh and for loans above Rs 5 lakh the rate will be 11.25%.
The bank said the interest rates of home loans for first year will remain at 8.5% (fixed) and for the second and third years for loan up to Rs 50 lakh it would be offering 9.25% (floating) further for the second and third years for loans above Rs 50 lakh it is offering 9.5% (floating).
The bank will link the rate to base rate from the fourth year onwards which will be 9.75% for loans up to Rs 50 lakh and for loans above Rs 50 lakh the rate will be 10.75%.
SBH has set its base rate at 7.75%.
On car loans bank is offering interest rate of 8.5% (fixed) for new cars for the first year and for second and third years it is offering floating rate at 10.5%. Thereafter from fourth year onwards, bank will link the rate to base rate which will be 11.5% for loans up to Rs 5 lakh and for loans above Rs 5 lakh the rate will be 11.25%.
Friday, July 2, 2010
LIC Housing Finance introduced three loan products with special rates
With the introduction of base rate system for loans change in market home loan market is expected. Anticipating the change in home loan market LIC Housing Finance Ltd. has announced three different products offering various options to the customers.
1. Floating Rate: New home loan borrowers who prefer Floating rates ab-initio for them the company is offering special rates of 8.75% for loans up to Rs 1.50 crore. Before this special rates were offered at 9.75% for loans above Rs 75 lakhs up to Rs 1.50 crores.
2. New Fix-O-Floaty: Home loan borrowers who want to go for short term fixed rate, company is offering the new Fix-O-Floaty loans at competitive rate of 8.90% for loans up to Rs 1.50 crores. Up to 31.03.2012 fixed rate will be offered and thereafter the rate will be floating. Earlier the rate of interest offered for loans above Rs 75 lakhs up to Rs 1.50crores was 9.90%.
3. Advantage 5: In today’s scenario it is not possible to predict the movement of interest and many borrowers might opt for fixed lending rate for a considerable long period. To meet the borrowers need LICHFL has introduced a unique product called ‘Advantage 5’ under which the lending rates are fixed at 9.25% for 5 years and thereafter on floating basis.
The new rates will be effective from 1st July 2010.
1. Floating Rate: New home loan borrowers who prefer Floating rates ab-initio for them the company is offering special rates of 8.75% for loans up to Rs 1.50 crore. Before this special rates were offered at 9.75% for loans above Rs 75 lakhs up to Rs 1.50 crores.
2. New Fix-O-Floaty: Home loan borrowers who want to go for short term fixed rate, company is offering the new Fix-O-Floaty loans at competitive rate of 8.90% for loans up to Rs 1.50 crores. Up to 31.03.2012 fixed rate will be offered and thereafter the rate will be floating. Earlier the rate of interest offered for loans above Rs 75 lakhs up to Rs 1.50crores was 9.90%.
3. Advantage 5: In today’s scenario it is not possible to predict the movement of interest and many borrowers might opt for fixed lending rate for a considerable long period. To meet the borrowers need LICHFL has introduced a unique product called ‘Advantage 5’ under which the lending rates are fixed at 9.25% for 5 years and thereafter on floating basis.
The new rates will be effective from 1st July 2010.
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