Some analysts indicate that home loan interest rates may rise in the near future. There are indicators to this effect. The high inflation rate of around 10 % could affect the stable macroeconomic and interest rate environment here.
The Reserve Bank of India (RBI) may hike the key interest rates again to cool down the inflation rate in the next credit policy review in the next couple of months. The inflation rate has been rising due to the rising food prices.
The RBI had hiked the key rates in the Annual Credit Policy for 2010-11. It increased the short-term lending and borrowing rates and the portion of banks' deposit with it by 25 basis points each.
The move was aimed at controlling the inflation rate spiral without choking growth. It had hiked the key lending and borrowing rates, as also the mandatory cash reserves banks park with it by 0.25 %.
Hike in rates will raise cost of funds for lenders
The RBI increased the repo and reverse repo, the rates at which it lends to and borrows short-term money from banks, by 25 basis points. It hiked the cash reserve ratio (CRR), the portion of money that commercial banks deposit with the central bank, by an identical percentage.
The move was to draw out Rs 12,500 Cr from the system. The hike in the repo and reverse repo rates, to 5.25 and 3.75 % respectively, will raise the cost of funds for lenders.
At that time, borrowers could breathe easy as there was enough liquidity in the system. The policy actions resulted in the cost of funds going up which was absorbed by the banking system.
Interest rates may increase in coming months
Likewise, the RBI had said that it will continue to monitor macroeconomic conditions, particularly the price situation, closely and take further action as warranted.
The three major factors that could have a bearing on inflation are uncertain monsoons, volatile prices of crude oil in the international markets, demand pressures.
Presently, all these factors are uncertain. The global factors including the euro crisis, volatility in the stock markets, oil prices etc are all causes of concern. The inflation rate hasn't really reversed.
The economic growth is contingent to a large extent on the monsoons. All these micro and macro indicators indicate that the interest rates may again increase in the coming months. Bad monsoon, global cues and spiraling inflation, can push up interest rates.
Realty attractive
Following the global slowdown the property prices went through a correction. Now, as the economy has staged a recovery, the prices too are on an upward trend.
There is more job security and homebuyers are back in the market. Regardless of the interest rate movements, this is a good time for those planning to buy property to make a move. The question is which one to go for—fixed and floating rates.
Fixed rate ideal
Those planning to purchase a house may do well to lock-in their borrowing now. They should go in for a fixed rate loan. As such, there is no concept of fixed rate loans for the entire tenure of the home loan. The interest rate is generally fixed for only two or three years, after which it is subject to revision. Yet, one should lock into a fixed rate loan.
Friday, June 11, 2010
Monday, June 7, 2010
Home Loan: Getting an owned house is not difficult further
Most of us cannot afford to build our own homes. This may be due to scarce financial resources or unavailability of land or the absence of a desire to live in an owned home. Whatever the reason may be, there is no denying the fact that an owned home is always better than a rented accommodation since it saves valuable finances and is a valuable long-term investment by all standards.
In context of the Indian housing market, it can be clearly said that the home loan borrowers are happy customers these days, all thanks to the customer-friendly terms, conditions and plans. The reduced home loan EMIs due to intensified competition have opened the doors of personal prosperity and asset accumulation for many home loan aspirants these days.
Due to the emergence of new market players in the Indian housing loan market, the interests of home loan aspirants have blossomed to a considerable extent. There is a remarkable difference in the Indian loan market of yesteryears and today. The changing market trends and attitudes of the financial institutions as well as the other lenders have bolstered the overall growth and prosperity of the Indian housing loan market.
The industry and customer-friendly guidelines issued by the Reserve Bank of India (RBI) have also strengthened the market norms and attitude. If we have a close look at the home loan EMIs rates for the last few years, we can easily conclude that the reformative measures introduced by many financial institutions and the Indian government in all these years have contributed significantly in an attempt to grab the attention of home loan aspirants. The home loan EMIs has helped the middle and low-class income earners to start thinking about their own homes. This is evident from the fact that in the last two years, the majority of customers asking and/or availing the home loans belonged to these economic classes. The option of making an equated monthly instalment rather than making a lump-sum payment obviously encourage more home loan aspirants.
Some of the most eminent Indian financial institutions such as State Bank of India, HDFC, ICICI, Standard Chartered and Punjab National Bank etc. have opened their hands to greet the home loan aspirants. The plans and policies of these banks have motivated the working class of the country to strive for an owned home rather than living the life of misery in rented or PG accommodation.
A prospective home loan borrower must consider certain things before starting the search for a lender. He must be ready to spend some of his valuable time in understanding the present home loan market trends as that will help him to get effective bargains without losing his focus. The advice of a financial expert, who is dealing in the arena of home loans, is highly recommended since he can offer a complete insight into the complexities of the housing loan segment.
Home loan in India can be taken by any individual who is of the age of 18 years and holds the citizenship of India. Some of the banks are also offering the home loans to NRIs, subject to fulfilment of certain pre-defined conditions. The loan applicant must have a regular source of income and preferably must be enjoying a good credit rating. He must have a valid identity and residence proof such as Government ID card, PAN card, passport, voter ID card and bank statement with address etc. The loan formalities are quite easy, making it pretty easy for the loan aspirants to obtain such loans.
Thus, it can be easily said that the reducing home loan EMIs have surely helped the Indian masses to think beyond the self-defined limits.
In context of the Indian housing market, it can be clearly said that the home loan borrowers are happy customers these days, all thanks to the customer-friendly terms, conditions and plans. The reduced home loan EMIs due to intensified competition have opened the doors of personal prosperity and asset accumulation for many home loan aspirants these days.
Due to the emergence of new market players in the Indian housing loan market, the interests of home loan aspirants have blossomed to a considerable extent. There is a remarkable difference in the Indian loan market of yesteryears and today. The changing market trends and attitudes of the financial institutions as well as the other lenders have bolstered the overall growth and prosperity of the Indian housing loan market.
The industry and customer-friendly guidelines issued by the Reserve Bank of India (RBI) have also strengthened the market norms and attitude. If we have a close look at the home loan EMIs rates for the last few years, we can easily conclude that the reformative measures introduced by many financial institutions and the Indian government in all these years have contributed significantly in an attempt to grab the attention of home loan aspirants. The home loan EMIs has helped the middle and low-class income earners to start thinking about their own homes. This is evident from the fact that in the last two years, the majority of customers asking and/or availing the home loans belonged to these economic classes. The option of making an equated monthly instalment rather than making a lump-sum payment obviously encourage more home loan aspirants.
Some of the most eminent Indian financial institutions such as State Bank of India, HDFC, ICICI, Standard Chartered and Punjab National Bank etc. have opened their hands to greet the home loan aspirants. The plans and policies of these banks have motivated the working class of the country to strive for an owned home rather than living the life of misery in rented or PG accommodation.
A prospective home loan borrower must consider certain things before starting the search for a lender. He must be ready to spend some of his valuable time in understanding the present home loan market trends as that will help him to get effective bargains without losing his focus. The advice of a financial expert, who is dealing in the arena of home loans, is highly recommended since he can offer a complete insight into the complexities of the housing loan segment.
Home loan in India can be taken by any individual who is of the age of 18 years and holds the citizenship of India. Some of the banks are also offering the home loans to NRIs, subject to fulfilment of certain pre-defined conditions. The loan applicant must have a regular source of income and preferably must be enjoying a good credit rating. He must have a valid identity and residence proof such as Government ID card, PAN card, passport, voter ID card and bank statement with address etc. The loan formalities are quite easy, making it pretty easy for the loan aspirants to obtain such loans.
Thus, it can be easily said that the reducing home loan EMIs have surely helped the Indian masses to think beyond the self-defined limits.
Monday, May 31, 2010
Fixed rates loans the best option
The RBI increased the repo and reverse repo, the rates at which it lends to and borrows short-term money from banks, by 25 basis points. It hiked the cash reserve ratio (CRR), the portion of money that commercial banks deposit with the central bank, by an identical percentage. The move was to draw out Rs 12,500 crores from the system. The hike in the repo and reverse repo rates, to 5.25 and 3.75 percent respectively, will raise the cost of funds for lenders.
At that time, borrowers could breathe easy as there was enough liquidity in the system. The policy actions resulted in the cost of funds going up which was absorbed by the banking system. Moreover, the RBI had said that it will continue to monitor macroeconomic conditions, particularly the price situation, closely and take further action as warranted. The three major factors that could have a bearing on inflation are uncertain monsoons, volatile prices of crude oil in the international markets and demand pressures.
Presently, all these factors are uncertain. The global factors including the euro crisis, volatility in the stock markets, Greece debt crisis, oil prices etc are all causes of concern. At home, the inflation rate hasn't really reversed. The economic growth is contingent to a large extent on the monsoons that are not yet very certain.
All these micro and macro indicators indicate that the interest rates may again increase in the coming months. A bad monsoon, global cues, and spiralling inflation, can push up interest rates again.
Realty attractive
Following the global slowdown the property prices went through a correction. Now, as the economy has staged a recovery, the prices too are on an upward trend. There is more job security and homebuyers are back in the market.
Regardless of the interest rate movements, this is a good time for those planning to buy property to make a move. The question is which option to go for between fixed and floating rates.
Fixed rate ideal
Those planning to purchase a house may do well to lock-in their borrowing now. They should go in for a fixed rate loan. As such, there is no concept of fixed rate loans for the entire tenure of the home loan. Nowadays, the term fixed rate loan is relative. The interest rate is generally fixed for only two or three years, after which it is subject to revision, depending on the market rates of interest. Yet, one should lock into a fixed rate loan.
Some analysts indicate that home loan interest rates may rise in the near future. There are indicators to this effect. The high inflation rate of around 10 percent could affect the stable macroeconomic and interest rate environment here.
At that time, borrowers could breathe easy as there was enough liquidity in the system. The policy actions resulted in the cost of funds going up which was absorbed by the banking system. Moreover, the RBI had said that it will continue to monitor macroeconomic conditions, particularly the price situation, closely and take further action as warranted. The three major factors that could have a bearing on inflation are uncertain monsoons, volatile prices of crude oil in the international markets and demand pressures.
Presently, all these factors are uncertain. The global factors including the euro crisis, volatility in the stock markets, Greece debt crisis, oil prices etc are all causes of concern. At home, the inflation rate hasn't really reversed. The economic growth is contingent to a large extent on the monsoons that are not yet very certain.
All these micro and macro indicators indicate that the interest rates may again increase in the coming months. A bad monsoon, global cues, and spiralling inflation, can push up interest rates again.
Realty attractive
Following the global slowdown the property prices went through a correction. Now, as the economy has staged a recovery, the prices too are on an upward trend. There is more job security and homebuyers are back in the market.
Regardless of the interest rate movements, this is a good time for those planning to buy property to make a move. The question is which option to go for between fixed and floating rates.
Fixed rate ideal
Those planning to purchase a house may do well to lock-in their borrowing now. They should go in for a fixed rate loan. As such, there is no concept of fixed rate loans for the entire tenure of the home loan. Nowadays, the term fixed rate loan is relative. The interest rate is generally fixed for only two or three years, after which it is subject to revision, depending on the market rates of interest. Yet, one should lock into a fixed rate loan.
Some analysts indicate that home loan interest rates may rise in the near future. There are indicators to this effect. The high inflation rate of around 10 percent could affect the stable macroeconomic and interest rate environment here.
Saturday, May 15, 2010
SBI head sees interest rates hardening soon
There could be some hardening in interest rates in the days to come, according to Mr O.P. Bhatt, Chairman, State Bank of India.
“There continues to be surplus liquidity in the system and credit offtake has not picked up, in fact it has been negative and by the end of June it could be flat. Capital inflows also look good for now, so there is no pressure on liquidity, however, if RBI takes steps to control inflation, liquidity could dry up, and there could be an upward bias in interest rate,” he said.
The bank aims to raise Rs 15,000-20,000 crore, preferably by way of a rights issue by the end of this fiscal.
“We have adequate capital at present. But we are in talks with the Government for seeking their approval for a rights issue, which would help us maintain the Government's stake at the present level of 59 per cent,” he said.
The bank also had the option of raising funds by diluting government's stake from 59 per cent.
“Though rights issue will be the preferred route, in case government does not agree for that, then we have the cushion of bringing down government's stake to 55 per cent (59 per cent). There is also a Bill in the Parliament, which will enable us to bring down government's stake further to 51 per cent so we can dilute up to eight per cent and can raise about Rs 20,000 crore,” he pointed out.
The bank also plans to come out with a retail bond issue of about Rs 200 crore in the first half of this year. The bonds would have a duration of 15 years, with a call option for 10 years, or duration of 10 years, with a call option of five years, he said.
The bank also wanted its life insurance venture, SBI Life, to be listed, he said. “We are not in need of capital for the company, but we would like it to be listed, so that there can be some price discovery. We are in touch with IRDA for that,” he said.
On the overseas front, the bank plans a foray into the Latin American countries.
“There are places where we already have licenses. For example, in Botswana we already have licenses and we have not utilised that so far,” he said.
The bank would also consider foraying into countries where there is business from India but the bank has no presence so far – such as in Africa, where Indian companies might go for energy, metals or minerals, he observed.
SBI Card may break even
SBI Cards, the credit card venture of the bank is likely to break even by the end of this fiscal, he said and added, “The losses have been coming down, we have been able to issue about 25,000 fresh cards on a monthly basis; we are hopeful of breaking even by this fiscal.” The net loss was down by 17 per cent at Rs 154 crore (Rs 185 crore) during the present fiscal.
“There continues to be surplus liquidity in the system and credit offtake has not picked up, in fact it has been negative and by the end of June it could be flat. Capital inflows also look good for now, so there is no pressure on liquidity, however, if RBI takes steps to control inflation, liquidity could dry up, and there could be an upward bias in interest rate,” he said.
The bank aims to raise Rs 15,000-20,000 crore, preferably by way of a rights issue by the end of this fiscal.
“We have adequate capital at present. But we are in talks with the Government for seeking their approval for a rights issue, which would help us maintain the Government's stake at the present level of 59 per cent,” he said.
The bank also had the option of raising funds by diluting government's stake from 59 per cent.
“Though rights issue will be the preferred route, in case government does not agree for that, then we have the cushion of bringing down government's stake to 55 per cent (59 per cent). There is also a Bill in the Parliament, which will enable us to bring down government's stake further to 51 per cent so we can dilute up to eight per cent and can raise about Rs 20,000 crore,” he pointed out.
The bank also plans to come out with a retail bond issue of about Rs 200 crore in the first half of this year. The bonds would have a duration of 15 years, with a call option for 10 years, or duration of 10 years, with a call option of five years, he said.
The bank also wanted its life insurance venture, SBI Life, to be listed, he said. “We are not in need of capital for the company, but we would like it to be listed, so that there can be some price discovery. We are in touch with IRDA for that,” he said.
On the overseas front, the bank plans a foray into the Latin American countries.
“There are places where we already have licenses. For example, in Botswana we already have licenses and we have not utilised that so far,” he said.
The bank would also consider foraying into countries where there is business from India but the bank has no presence so far – such as in Africa, where Indian companies might go for energy, metals or minerals, he observed.
SBI Card may break even
SBI Cards, the credit card venture of the bank is likely to break even by the end of this fiscal, he said and added, “The losses have been coming down, we have been able to issue about 25,000 fresh cards on a monthly basis; we are hopeful of breaking even by this fiscal.” The net loss was down by 17 per cent at Rs 154 crore (Rs 185 crore) during the present fiscal.
Tuesday, May 4, 2010
Steps For choosing a safe, beneficial home loan
Owning a home is a dream of every person. Purchasing a home may mean different things to different people. To a middle- class person, it is an achievement of a life-time, while for the affluent it may represent their arrival on the social stage.
Nevertheless, whatever one’s means, banks and housing finance companies have consistently played a pivotal role in fulfilling this basic need? For a safe and beneficial home loan, proper awareness over the products, policies, terms and conditions of the bank is most important as ignorance may result in wrong decisions having a lifelong impact.
WHILE CHOOSING A HOME LOAN MANY QUESTIONS ARISE
How do I go about obtaining a loan?
How do I find a property that suits my budget?
What will be the EMI? How is it calculated?
What are the eligibility conditions for a home loan?
What are the home loan rates offered by Banks?
These are basic questions that need to be answered! Obtaining a home loan may seem very cumbersome but a systematic approach will allow you to be a proud owner of your home.
CHOOSING THE LENDER
First before one sets out on the journey to buy a home one needs a pre-qualified home loan. Without this in hand, it isn’t recommended you begin your search for a new house. The more you hunt for a home without funds, the greater will be the stress. The first step towards your loan is choosing the besthousing finance companies (HFC) which can guide you through the entire procedure.
Various points need to be kept in mind when discussing and finalising a home loan - interest rates, application processing fee (generally around 0.50% to 1.00% of total loan amount), legal charges, pre-payment charges, valuation fees, and other hidden costs.
WHILE CHOOSING THE BEST OPTION COMPARE FOR THE FOLLOWING IN THE COMPETITION
Check the rate of interest being charged.
Check the processing fees being charged.
Check the movement of the benchmark rate over the last two years.
Check the partial and prepayment fee clause.
Consolidate debt so that not more than 50% of the monthly income is going into servicing debt.
THE PROCESS
Once you have identified the right institution, you will need to fill some forms: an application form, Know Your Customer form (KYC), age proof, and submit employment and Income details to the financial institution. The application is processed on the basis of income papers and KYC documents of the customer.
After this the Bank will do a due diligence to verify the authenticity of the borrower and check the veracity of the income papers. Once the due diligence is over, the Bank will assess the repayment capacity of the applicant and then sanction the loan on the basis of his/her credit worthiness.
On the basis of the sanctioned loan, it becomes easier for the applicant to identify the property. Later, if the applicant wishes to downsize the loan sanctioned, it can be done by simply intimating the same to the bank.
SELECTING THE RIGHT PROPERTY
Choosing the right property depends on various factors like budget, area, amenities, location, proximity to workplace , convenience. The importance you assign to each of these would depend on one’s profile, income and age.
A young executive, for e.g., would give importance to amenities, proximity, convenience, area and location. A senior level executive would prefer area, location, amenities, convenience, and proximity keeping in mind that the area where the house is located is a symbol of his social status.
A good real estate consultant who understands the wishlist can speed up the process.
TAX IMPLICATIONS
Government of India has provided various tax benefits on home loans.
The interest of up to Rs 1.50 lac paid on home loan on self-occupied property during the financial year can be availed by the borrower as a deduction from his/her income for that year. In addition, the borrower also gets an exemption within overall limit of Rs.1 lac under Section 80C of Income Tax Act for Principal amount repaid by him/her during the financial year.
The interest paid by the borrower on the home loan, till completion of construction of the property, is allowed as deduction from his/her income, in equal installments for the next five years within the applicable limit.
INTEREST RATES AND FORCED MAJEURE CLAUSE
Almost all banks offer home loans with - both fixed and floating rates of interest. As a thumb rule, the customer should go for floating rates when the rates are expected to fall and fixed rates when they are expected to rise in future. However you must realise that there is something called as Forced Majeure Clause. The Force Majeure Clause enables the lender to undertake appropriate modifications in the interest rates on home loans they sanction to their borrowers. This situation applies even if the borrower has opted for a home loan at a fixed interest rate.
So, while you read your home loan agreement papers, you can spot statement like this Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.
There is a lot of awareness out there in the market and customers are increasingly examining the various aspects vs - vs home loans. Having said this, one should not get swayed by the lucrative interest rates and other such schemes being offered. Buying a home is definitely a dream comes true and home loan fulfils that dream. I will advise you to spend considerable time with your banker in helping you make a fair decision so that your dream home always has pleasant memories. Click Here for Apply Home Loan
Nevertheless, whatever one’s means, banks and housing finance companies have consistently played a pivotal role in fulfilling this basic need? For a safe and beneficial home loan, proper awareness over the products, policies, terms and conditions of the bank is most important as ignorance may result in wrong decisions having a lifelong impact.
WHILE CHOOSING A HOME LOAN MANY QUESTIONS ARISE
How do I go about obtaining a loan?
How do I find a property that suits my budget?
What will be the EMI? How is it calculated?
What are the eligibility conditions for a home loan?
What are the home loan rates offered by Banks?
These are basic questions that need to be answered! Obtaining a home loan may seem very cumbersome but a systematic approach will allow you to be a proud owner of your home.
CHOOSING THE LENDER
First before one sets out on the journey to buy a home one needs a pre-qualified home loan. Without this in hand, it isn’t recommended you begin your search for a new house. The more you hunt for a home without funds, the greater will be the stress. The first step towards your loan is choosing the besthousing finance companies (HFC) which can guide you through the entire procedure.
Various points need to be kept in mind when discussing and finalising a home loan - interest rates, application processing fee (generally around 0.50% to 1.00% of total loan amount), legal charges, pre-payment charges, valuation fees, and other hidden costs.
WHILE CHOOSING THE BEST OPTION COMPARE FOR THE FOLLOWING IN THE COMPETITION
Check the rate of interest being charged.
Check the processing fees being charged.
Check the movement of the benchmark rate over the last two years.
Check the partial and prepayment fee clause.
Consolidate debt so that not more than 50% of the monthly income is going into servicing debt.
THE PROCESS
Once you have identified the right institution, you will need to fill some forms: an application form, Know Your Customer form (KYC), age proof, and submit employment and Income details to the financial institution. The application is processed on the basis of income papers and KYC documents of the customer.
After this the Bank will do a due diligence to verify the authenticity of the borrower and check the veracity of the income papers. Once the due diligence is over, the Bank will assess the repayment capacity of the applicant and then sanction the loan on the basis of his/her credit worthiness.
On the basis of the sanctioned loan, it becomes easier for the applicant to identify the property. Later, if the applicant wishes to downsize the loan sanctioned, it can be done by simply intimating the same to the bank.
SELECTING THE RIGHT PROPERTY
Choosing the right property depends on various factors like budget, area, amenities, location, proximity to workplace , convenience. The importance you assign to each of these would depend on one’s profile, income and age.
A young executive, for e.g., would give importance to amenities, proximity, convenience, area and location. A senior level executive would prefer area, location, amenities, convenience, and proximity keeping in mind that the area where the house is located is a symbol of his social status.
A good real estate consultant who understands the wishlist can speed up the process.
TAX IMPLICATIONS
Government of India has provided various tax benefits on home loans.
The interest of up to Rs 1.50 lac paid on home loan on self-occupied property during the financial year can be availed by the borrower as a deduction from his/her income for that year. In addition, the borrower also gets an exemption within overall limit of Rs.1 lac under Section 80C of Income Tax Act for Principal amount repaid by him/her during the financial year.
The interest paid by the borrower on the home loan, till completion of construction of the property, is allowed as deduction from his/her income, in equal installments for the next five years within the applicable limit.
INTEREST RATES AND FORCED MAJEURE CLAUSE
Almost all banks offer home loans with - both fixed and floating rates of interest. As a thumb rule, the customer should go for floating rates when the rates are expected to fall and fixed rates when they are expected to rise in future. However you must realise that there is something called as Forced Majeure Clause. The Force Majeure Clause enables the lender to undertake appropriate modifications in the interest rates on home loans they sanction to their borrowers. This situation applies even if the borrower has opted for a home loan at a fixed interest rate.
So, while you read your home loan agreement papers, you can spot statement like this Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.
There is a lot of awareness out there in the market and customers are increasingly examining the various aspects vs - vs home loans. Having said this, one should not get swayed by the lucrative interest rates and other such schemes being offered. Buying a home is definitely a dream comes true and home loan fulfils that dream. I will advise you to spend considerable time with your banker in helping you make a fair decision so that your dream home always has pleasant memories. Click Here for Apply Home Loan
Tuesday, April 27, 2010
Top taxpaying foreign bank in India
UK-based Standard Chartered Bank has pipped Citi Bank and HSBC Bank to become the top taxpayer among foreign banks operating in India during fiscal 2009-10.
With advance tax payment of Rs 1,405 crore, up 14.2 per cent from previous fiscal, StanChart stood as the 16th highest taxpayer in India among all corporates, banking and otherwise, according to advance tax figures made available to PTI.
Standard Chartered Bank was followed by HSBC Bank, which paid an advance tax of Rs 835 crore for FY'10 and American lender Citi Bank that paid Rs 800 crore during the year.
While StanChart saw a rise of 14 per cent in its tax payment, Citi Bank and HSBC Bank saw fall of 53 per cent and 39 per cent (from Rs 1,710 crore and Rs 1,375 crore in the year-ago period), respectively, in tax payment.
Among all bankers in the country, foreign as well as local, StanChart stands behind only three big names -- State Bank of India, Punjab National Bank and ICICI Bank.
While SBI with Rs 6,552 crore advance tax payment leads the corporate segment, PNB paid Rs 2,018 crore and ICICI Bank Rs 1,502 crore as advance tax.
Among other major lenders, HDFC Bank, Bank of Baroda and Union Bank of India paid Rs 1,375 crore, Rs 1,277 crore and Rs 767 crore, respectively as advance tax.
Among the foreign bankers, Deutsche Bank comes in at the fourth slot with an advance tax payment of Rs 413 crore. This, too, saw a decline of about 13 per cent over fiscal 2008-09.
Next in line is Bank of America with Rs 298 crore, up 23 per cent compared to last year, followed by Barclay's Bank (Rs 275 cr) and DBS Bank (Rs 220 cr).
With advance tax payment of Rs 1,405 crore, up 14.2 per cent from previous fiscal, StanChart stood as the 16th highest taxpayer in India among all corporates, banking and otherwise, according to advance tax figures made available to PTI.
Standard Chartered Bank was followed by HSBC Bank, which paid an advance tax of Rs 835 crore for FY'10 and American lender Citi Bank that paid Rs 800 crore during the year.
While StanChart saw a rise of 14 per cent in its tax payment, Citi Bank and HSBC Bank saw fall of 53 per cent and 39 per cent (from Rs 1,710 crore and Rs 1,375 crore in the year-ago period), respectively, in tax payment.
Among all bankers in the country, foreign as well as local, StanChart stands behind only three big names -- State Bank of India, Punjab National Bank and ICICI Bank.
While SBI with Rs 6,552 crore advance tax payment leads the corporate segment, PNB paid Rs 2,018 crore and ICICI Bank Rs 1,502 crore as advance tax.
Among other major lenders, HDFC Bank, Bank of Baroda and Union Bank of India paid Rs 1,375 crore, Rs 1,277 crore and Rs 767 crore, respectively as advance tax.
Among the foreign bankers, Deutsche Bank comes in at the fourth slot with an advance tax payment of Rs 413 crore. This, too, saw a decline of about 13 per cent over fiscal 2008-09.
Next in line is Bank of America with Rs 298 crore, up 23 per cent compared to last year, followed by Barclay's Bank (Rs 275 cr) and DBS Bank (Rs 220 cr).
Friday, April 2, 2010
SBI Hike Home Loan Interest Rates
State Bank of India (SBI), the largest bank in India and one of the leading players in the housing finance market, has raised interest rates on home loans. Although the bank will continue with its 8% teaser rate — which the SBI had introduced more than a year ago — for the first year, it has increased rates for the subsequent years, effective April 1. The hike in home loan rates by SBI was triggered by the recent increase in its cost of funds.
Till March 31, SBI had two schemes — The Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh). ‘‘From April 1, both the schemes have been merged and extended for a month,'' an SBI spokesperson confirmed to TOI. ‘‘The rates applicable for new loans sourced from April 1 till April 30 are 8% for the first year, 9% for the second and third years and floating rate at 1.75% below SBAR (SBI's equivalent of prime lending rate, or PLR) thereafter,'' the spokesperson added.
So in effect, the home loan rates for the second and the third years have gone up by 50 basis points (100 basis points=1%), from 8.5% earlier to 9% now. While fourth year onwards, at the current structure, the interest rate will be at 10% per annum, since currently SBAR is at 11.75%. Earlier, from the fourth year onward, the floating rate was at 2.75% below the SBAR and the effective rate was 9%.
Under the new rate structure (assuming a 10% rate from the fourth year), on a 20-year loan of Rs 30 lakh, a customer would have to shell out about Rs 3.9 lakh over the tenor of the loan. Thus the effective rate that the customer would be paying over the 20-year period is 9.5%.
Explaining the rationale for hiking rates on home loans, the SBI spokesperson said it mainly reflected ‘‘the increased cost of funds from April 1 stemming from the new methodology for paying interest in savings bank accounts on daily balances.'' In April 2009, Reserve Bank of India (RBI) had mandated all the banks in India to move to a new methodology of calculating interest rates on savings bank accounts that would add interest on a daily basis. This is a significant departure from the earlier practice of calculating interest rate on minimum balance after the tenth of every month.
For sometime now, with the annual rate of food inflation hovering around 20% level and the yields on benchmark 10-year government securities around the 8% mark, bankers and home finance veterans were talking about the possibility of a hike in interest rate in the economy. And now with SBI, the country's largest bank, hiking housing loan interest rates, industry players are almost sure that interest rates have bottomed out in the current cycle.
Lately a number of banks and financial institutions, including the country's home loan pioneer HDFC, have withdrawn their home loan products at 8% or at a slightly lower rates, and are moving to a more sustainable interest rate structure.
Till March 31, SBI had two schemes — The Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh). ‘‘From April 1, both the schemes have been merged and extended for a month,'' an SBI spokesperson confirmed to TOI. ‘‘The rates applicable for new loans sourced from April 1 till April 30 are 8% for the first year, 9% for the second and third years and floating rate at 1.75% below SBAR (SBI's equivalent of prime lending rate, or PLR) thereafter,'' the spokesperson added.
So in effect, the home loan rates for the second and the third years have gone up by 50 basis points (100 basis points=1%), from 8.5% earlier to 9% now. While fourth year onwards, at the current structure, the interest rate will be at 10% per annum, since currently SBAR is at 11.75%. Earlier, from the fourth year onward, the floating rate was at 2.75% below the SBAR and the effective rate was 9%.
Under the new rate structure (assuming a 10% rate from the fourth year), on a 20-year loan of Rs 30 lakh, a customer would have to shell out about Rs 3.9 lakh over the tenor of the loan. Thus the effective rate that the customer would be paying over the 20-year period is 9.5%.
Explaining the rationale for hiking rates on home loans, the SBI spokesperson said it mainly reflected ‘‘the increased cost of funds from April 1 stemming from the new methodology for paying interest in savings bank accounts on daily balances.'' In April 2009, Reserve Bank of India (RBI) had mandated all the banks in India to move to a new methodology of calculating interest rates on savings bank accounts that would add interest on a daily basis. This is a significant departure from the earlier practice of calculating interest rate on minimum balance after the tenth of every month.
For sometime now, with the annual rate of food inflation hovering around 20% level and the yields on benchmark 10-year government securities around the 8% mark, bankers and home finance veterans were talking about the possibility of a hike in interest rate in the economy. And now with SBI, the country's largest bank, hiking housing loan interest rates, industry players are almost sure that interest rates have bottomed out in the current cycle.
Lately a number of banks and financial institutions, including the country's home loan pioneer HDFC, have withdrawn their home loan products at 8% or at a slightly lower rates, and are moving to a more sustainable interest rate structure.
Tuesday, March 30, 2010
LIC Housing Finance shares up 9 percent
After having a healthy trading throughout the day LIC Housing Finance emerged as one of the top gainers with a gain of Rs. 69.90 (8.57 percent). During the day the company traded in the range of Rs. 815.55 - 893.90 with trades of 1,338,535 shares. The company has P/E ratio of 13.78.
LIC Housing Finance is an India-based company. The company is engaged in the business of providing loans for purchase, construction, repairs and renovation of houses/flats to individuals, corporate bodies, builders and co-operative housing societies and has its operations within India. The company's subsidiaries include LICHFL Care Homes, which is engaged in the business of setting up, running and maintaining assisted living community centre/ care homes for senior citizens; LICHFL Financial Services, which is engaged in the business of marketing various financial products and services; LICHFL Asset Management Company, which is engaged in business of managing, advising, administering mutual funds, unit trusts, investment trusts and to act as financial and investment advisors and render financial advisory services, and LICHFL Trustee Company, which acts as a trustee to venture capital trusts and funds.
With 2,239,999 units of shares HDFC Top 200 Fund holds the largest number of shares in LIC Housing Finance. Other housing finance companies also ended the day on high note with GIC Housing Finance and IND Bank Housing gaining 2.09 and 2.90 percent, respectively. Out of 13 stock analysts following LIC Housing Finance, the consensus recommendation is hold, while four recommended buying the stock.
Also Get Info on LIC Credit Card Product.
LIC Housing Finance is an India-based company. The company is engaged in the business of providing loans for purchase, construction, repairs and renovation of houses/flats to individuals, corporate bodies, builders and co-operative housing societies and has its operations within India. The company's subsidiaries include LICHFL Care Homes, which is engaged in the business of setting up, running and maintaining assisted living community centre/ care homes for senior citizens; LICHFL Financial Services, which is engaged in the business of marketing various financial products and services; LICHFL Asset Management Company, which is engaged in business of managing, advising, administering mutual funds, unit trusts, investment trusts and to act as financial and investment advisors and render financial advisory services, and LICHFL Trustee Company, which acts as a trustee to venture capital trusts and funds.
With 2,239,999 units of shares HDFC Top 200 Fund holds the largest number of shares in LIC Housing Finance. Other housing finance companies also ended the day on high note with GIC Housing Finance and IND Bank Housing gaining 2.09 and 2.90 percent, respectively. Out of 13 stock analysts following LIC Housing Finance, the consensus recommendation is hold, while four recommended buying the stock.
Also Get Info on LIC Credit Card Product.
Thursday, March 25, 2010
Chanda Kochhar MD and CEO of ICICI Bank
Chanda Kochhar is managing director and chief executive officer of ICICI Bank, India's largest private sector bank, which has helped spearhead the rise of the country's middle class with its home mortgages and car loans.
While India has avoided some of the worst affects of the global debt crises, she told the Wall Street Journal that ICICI Bank and others in India have had to slash their unsecured retail lending because too many consumers were refusing to pay their credit card and personal loan bills.
While India has avoided some of the worst affects of the global debt crises, she told the Wall Street Journal that ICICI Bank and others in India have had to slash their unsecured retail lending because too many consumers were refusing to pay their credit card and personal loan bills.
Overseas acquisition might be considered by SBI
It has appeared that the State Bank of India, which is India's biggest lender, has opened its doors for overseas acquisitions, if in case there is synergy in business.
O P Bhatt, Chairman explained that if they meet an opportunity for foreign acquisition they will see it but it should fit in their environment, public sector culture, business, our clientele.
Bhatt further said that the bank has an enormous international network itself and also informed that presently its global operations contribute nearly 14 pct to the top line.
A hike by 54 per cent to Rs 86,267 crore was seen in the SBI's international credit portfolio during 2008-09, against Rs 56,196 crore in the previous year.
SBI had a network of 92 offshore offices spread over 32 countries covering all time zones at the end of March 2009.
It should be noted that 37 branches, five sub-offices, 8 representative offices, 35 branches of subsidiaries, three managed exchange companies and four joint ventures are included in the 92 offices.
Nine outlets were opened last fiscal by the bank along with its subsidiaries and joint ventures abroad. These outlets also had full-fledged retail operations, in Singapore.
Apart from this, it also launched three new branches and seven ATMs with the aim of enhancing retail operations in Singapore.
It network was added with one branch and a sub-office in Male and a representative office in Tianjin in China was made operational.
O P Bhatt, Chairman explained that if they meet an opportunity for foreign acquisition they will see it but it should fit in their environment, public sector culture, business, our clientele.
Bhatt further said that the bank has an enormous international network itself and also informed that presently its global operations contribute nearly 14 pct to the top line.
A hike by 54 per cent to Rs 86,267 crore was seen in the SBI's international credit portfolio during 2008-09, against Rs 56,196 crore in the previous year.
SBI had a network of 92 offshore offices spread over 32 countries covering all time zones at the end of March 2009.
It should be noted that 37 branches, five sub-offices, 8 representative offices, 35 branches of subsidiaries, three managed exchange companies and four joint ventures are included in the 92 offices.
Nine outlets were opened last fiscal by the bank along with its subsidiaries and joint ventures abroad. These outlets also had full-fledged retail operations, in Singapore.
Apart from this, it also launched three new branches and seven ATMs with the aim of enhancing retail operations in Singapore.
It network was added with one branch and a sub-office in Male and a representative office in Tianjin in China was made operational.
Monday, March 8, 2010
The accurate Calculator Tools to Know Your Home Loan Eligibility
Every couple dreams of owning a pleasant innovative house. Getting the house is however much more difficult than dreaming about one. You would first need to obtain the correct home loan that would suit you. A home loan calculator could greatly help you in picking out the accurate type of home loan for you.
There are so many options when it comes to option out a home loan. You are jump to realize this if you do a simple online search about home loans. You would also see that there are many websites with home loan calculators. However, some of these devices could have certain advantages over others like it. Some home loan calculators could be more accurate and could be more comprehensive than others. In order to get a correct and realistic estimate regarding your home loan, it's essential that the device you use for this purpose functions properly.
You could use various home loan calculators in different websites to find out from where you would be able to obtain your low interest Home Loan Rates. By comparing the different results that you get, you could get an understanding about this. However keep in mind that home loan calculators, even the most sophisticated ones, would only give a rough idea of the kind of home loan that you would be able to get. Other matters need to be taken into account so home loan calculators should not be your one and only guide when obtaining a home loan.
You can find the maximum amount that you could borrow, the maximum amount that you can afford and the rate of basic interest that you could get, through the use of a home loan calculator. Some of these devices have other helpful functions, like providing a list of mortgage brokers and providing various comparison tools. This could greatly help you in getting an idea about the kind of home loan that would suit you.
In order to get such information from a calculator home loan, you may have to enter information regarding your income, the rate that you prefer, the value of the property in question and the period of the home loan. Criteria could change at least a little bit between different home loan calculators but the basic questions asked would probably not vary all that much.
If you do have any ideas of getting a home loan just find a good home loan calculator and resolve any doubts that you might have.
There are so many options when it comes to option out a home loan. You are jump to realize this if you do a simple online search about home loans. You would also see that there are many websites with home loan calculators. However, some of these devices could have certain advantages over others like it. Some home loan calculators could be more accurate and could be more comprehensive than others. In order to get a correct and realistic estimate regarding your home loan, it's essential that the device you use for this purpose functions properly.
You could use various home loan calculators in different websites to find out from where you would be able to obtain your low interest Home Loan Rates. By comparing the different results that you get, you could get an understanding about this. However keep in mind that home loan calculators, even the most sophisticated ones, would only give a rough idea of the kind of home loan that you would be able to get. Other matters need to be taken into account so home loan calculators should not be your one and only guide when obtaining a home loan.
You can find the maximum amount that you could borrow, the maximum amount that you can afford and the rate of basic interest that you could get, through the use of a home loan calculator. Some of these devices have other helpful functions, like providing a list of mortgage brokers and providing various comparison tools. This could greatly help you in getting an idea about the kind of home loan that would suit you.
In order to get such information from a calculator home loan, you may have to enter information regarding your income, the rate that you prefer, the value of the property in question and the period of the home loan. Criteria could change at least a little bit between different home loan calculators but the basic questions asked would probably not vary all that much.
If you do have any ideas of getting a home loan just find a good home loan calculator and resolve any doubts that you might have.
Monday, February 15, 2010
Teaser rates are coming to end in March
Home Loan and auto loan customers will have to shell out more with several public sector banks including the State Bank of India, Punjab National Bank and Bank of India deciding to end the concessional or limited period loan regime, commonly called teaser rates.
The public sector banks, which are offering low interest rates for the initial period of the loan to attract new customers, have decided not to extend the validity of their schemes beyond March.
In certain cases, the schemes would be discontinued during the course of this month itself. The country’s largest lender banks chairman OP Bhatt (State Bank) had said in recent times that special home and Car loan schemes would continue only till the end of March.
The SBI has been trying to attract more customers by offering home and auto loans as low as 8 per cent with a limited period offer. As part of the special scheme under ‘My home campaign,’ the SBI home loan offering (up to Rs 5 lakh) at 8 per cent interest rate during the first five years of a 10-year loan.
For loans above Rs 5 lakh and up to Rs 50 lakh, the home loan interest rate has been fixed at 8 per cent during the first year and 8.5 per cent during second and third years.
Bank of India executive director M Narendra said, “our scheme is valid till February. We may not continue the scheme post-February.”
The scheme, he added, was launched for a limited period and the product has served the purpose.
The public sector banks, which are offering low interest rates for the initial period of the loan to attract new customers, have decided not to extend the validity of their schemes beyond March.
In certain cases, the schemes would be discontinued during the course of this month itself. The country’s largest lender banks chairman OP Bhatt (State Bank) had said in recent times that special home and Car loan schemes would continue only till the end of March.
The SBI has been trying to attract more customers by offering home and auto loans as low as 8 per cent with a limited period offer. As part of the special scheme under ‘My home campaign,’ the SBI home loan offering (up to Rs 5 lakh) at 8 per cent interest rate during the first five years of a 10-year loan.
For loans above Rs 5 lakh and up to Rs 50 lakh, the home loan interest rate has been fixed at 8 per cent during the first year and 8.5 per cent during second and third years.
Bank of India executive director M Narendra said, “our scheme is valid till February. We may not continue the scheme post-February.”
The scheme, he added, was launched for a limited period and the product has served the purpose.
Tuesday, January 26, 2010
LIC Housing Finance net up 14%
LIC Housing Finance (LICHF) reported a 14 per cent rise in net profit to Rs 153.58 crore for the quarter ended December 2009 compared with Rs 134.33 crore in the year-ago quarter.
Over the same period, disbursements grew by 86 per cent to Rs 3,604 crore, while sanctions grew 72 per cent to Rs 4,516 crore.
However, provisions jumped to Rs 15.83 crore compared with Rs 74 lakh in the corresponding period last year.
Gross non performing assets (NPAs) as a percentage of advances were 1.44 per cent as of December 2009 as against 1.69 per cent in December 2008.
The outstanding mortgage portfolio as on December 31, 2009, was Rs 34,166 crore as against Rs 25,335 crore a year ago, registering a growth of 35 per cent.
Net interest margin improved to 2.76 per cent from 2.44 per cent at the end of the December 2008 quarter.
Thursday, January 21, 2010
HOME LOANS | Advantages of Joint Ownership
There are many advantages of taking a home loan in joint name. There are tax benefits, joint benefits etc.
Tax benefit:
If the owned property is being used for living, the annual value of the said property is deemed to be nil. Moreover, you could claim a deduction for the interest paid on the home loan (for purchase or construction) up to Rs.1.5 lac, (subject to conditions). This would result in a loss under the head - house property of up to Rs.1.5 lac, which could be set off against other incomes.
If the property is let out, the actual amount of housing loan interest, without limit, could be claimed as deduction. Also, an individual can claim a deduction up to Rs.1,00,000 for re-payment of the principal amount u/s 80C of the Income Tax Act, 1961.
Joint benefits:
It is very advantageous to buy a property in joint name as each individual has the right to claim tax benefits. So if a property is owned by husband and wife together then both are entitles to claim deductions individually.
There is no rule as to the number of co-owners or who the co-owner is (brother, spouse or parents).
Following are the points to consider:
• The house should be bought in the joint name and care should be taken to keep the proof of co-ownership.
• The housing loan should be taken in joint names.
Repayment
The repayment of the loan should be done individually or from their joint bank account. The funds in the account should be contributed by the co-owners in proportion to their ownership/loan. Co-owners should have their independent sources of income from which the loans are re-paid.
Tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.
Additional benefits:
• If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan.
• In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.
If husband and wife jointly own a property reduces the succession issues.
• Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.
Tax benefit:
If the owned property is being used for living, the annual value of the said property is deemed to be nil. Moreover, you could claim a deduction for the interest paid on the home loan (for purchase or construction) up to Rs.1.5 lac, (subject to conditions). This would result in a loss under the head - house property of up to Rs.1.5 lac, which could be set off against other incomes.
If the property is let out, the actual amount of housing loan interest, without limit, could be claimed as deduction. Also, an individual can claim a deduction up to Rs.1,00,000 for re-payment of the principal amount u/s 80C of the Income Tax Act, 1961.
Joint benefits:
It is very advantageous to buy a property in joint name as each individual has the right to claim tax benefits. So if a property is owned by husband and wife together then both are entitles to claim deductions individually.
There is no rule as to the number of co-owners or who the co-owner is (brother, spouse or parents).
Following are the points to consider:
• The house should be bought in the joint name and care should be taken to keep the proof of co-ownership.
• The housing loan should be taken in joint names.
Repayment
The repayment of the loan should be done individually or from their joint bank account. The funds in the account should be contributed by the co-owners in proportion to their ownership/loan. Co-owners should have their independent sources of income from which the loans are re-paid.
Tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.
Additional benefits:
• If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan.
• In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.
If husband and wife jointly own a property reduces the succession issues.
• Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.
Saturday, January 16, 2010
32% net up in Quarter3 for HDFC Bank
Strong loan expansion in Home loan and Personal Loan and lower interest expenses helped HDFC Bank report a third quarter net profit of Rs 818.5 crore, a growth of 31.6% over Rs 621.7 crore in the corresponding period last year. Outstanding loans rose to Rs 1, 21,051 crore, a growth of 21%, for the past 12 months. For the first three quarters, the growths in advances were at 20% as against an 8.8% growth for the banking system.
Gross non-performing assets as of December declined to 1.6 per cent of gross advances as against 1.9 per cent a year-ago.
“Sequentially, we have grown 5%. Corporate advances have grown 30% while retail was at 11%,” Paresh Sukthankar, executive director, HDFC Bank, said. He added that retail growth would have been higher at 17-18%, if the unwinding of the erstwhile Centurion Bank of Punjab’s retail portfolio were to be factored in.
“Overall numbers are in line with the expectations. Current and savings accounts deposits (CASA) have gone up by 130 bps on Quarter on quarter basis. The asset quality improved vis- a`-vis that in the previous quarter. Its restructured assets form only 4% of advances, which is probably the least in the industry,” said Rajiv Mehta, research analyst, India Infoline. The bank is among the few which has been growing its retail book.
The retail products that have seen a larger growth are car loans and home loans. However, retail loans comprised half the overall advances. Mr Sukthankar feels that although retail credit will pick up even more, corporate loans will continue to grow slightly faster than retail.
Fee-based income grew by 12.4 per cent to Rs 723.7 crore in Q3 FY10 as compared to the year-ago period and emerged as a major contributor to the overall growth along with the net interest income, HDFC Bank, Executive Director, Paresh Sukthankar told reporters.
The CASA deposits of the bank is at 49% as against 40% last year, among the highest in the banking system. The bank has shown a 9.19% dip in other income at Rs 853 crore due to revaluation and sale of investments. The main components of the other income were fees and commission at Rs 723.7 crore (up 12.4%). The net interest margins grew to over 4.3% as against 4.2% last year. The bank stock closed at Rs 1,691 up by 0.33% in the Bombay Stock Exchange.
Provisions have seen a fall of 15.8% to Rs 447.72 crore in the third quarter. Both the gross NPAs and net NPAs have also seen a fall. The NPA coverage ratio which was at 71% has risen, according to Mr Sukthankar, to 72%. He added that that it does appear that the worst is behind us.
Gross non-performing assets as of December declined to 1.6 per cent of gross advances as against 1.9 per cent a year-ago.
“Sequentially, we have grown 5%. Corporate advances have grown 30% while retail was at 11%,” Paresh Sukthankar, executive director, HDFC Bank, said. He added that retail growth would have been higher at 17-18%, if the unwinding of the erstwhile Centurion Bank of Punjab’s retail portfolio were to be factored in.
“Overall numbers are in line with the expectations. Current and savings accounts deposits (CASA) have gone up by 130 bps on Quarter on quarter basis. The asset quality improved vis- a`-vis that in the previous quarter. Its restructured assets form only 4% of advances, which is probably the least in the industry,” said Rajiv Mehta, research analyst, India Infoline. The bank is among the few which has been growing its retail book.
The retail products that have seen a larger growth are car loans and home loans. However, retail loans comprised half the overall advances. Mr Sukthankar feels that although retail credit will pick up even more, corporate loans will continue to grow slightly faster than retail.
Fee-based income grew by 12.4 per cent to Rs 723.7 crore in Q3 FY10 as compared to the year-ago period and emerged as a major contributor to the overall growth along with the net interest income, HDFC Bank, Executive Director, Paresh Sukthankar told reporters.
The CASA deposits of the bank is at 49% as against 40% last year, among the highest in the banking system. The bank has shown a 9.19% dip in other income at Rs 853 crore due to revaluation and sale of investments. The main components of the other income were fees and commission at Rs 723.7 crore (up 12.4%). The net interest margins grew to over 4.3% as against 4.2% last year. The bank stock closed at Rs 1,691 up by 0.33% in the Bombay Stock Exchange.
Provisions have seen a fall of 15.8% to Rs 447.72 crore in the third quarter. Both the gross NPAs and net NPAs have also seen a fall. The NPA coverage ratio which was at 71% has risen, according to Mr Sukthankar, to 72%. He added that that it does appear that the worst is behind us.
Wednesday, January 13, 2010
RBI sees anxious about home loan rates
The perform among commercial banks of attract customers with beneficial interest rates on housing loans only to convert it into floating rates later is a cause for concern, Reserve Bank of India Deputy Governor Usha Thorat said Tuesday.
"In the area of housing loan, teaser rates are increasingly being offered which is a cause for concern," said Thorat at a banking conclave in Mumbai.
"I hope banks are ensuring that borrowers are well aware of the implications of such rates and the appraisal takes into account repaying capacity of the borrowers when the rates become normal."
RBI’s concern can perhaps be traced to the fact that the genesis of the mortgage crisis in the US lay in home loan extended to borrowers who struggled to repay. These loans, popularly known as sub-prime loans because they were given to people in lower income groups, included so-called adjustable rate mortgages where the repayment is low in the initial months with installments rising in subsequent months, somewhat similar to teaser rates.
Lenders in India, however, say there is no cause for concern as far as quality of lending is concerned since repayment capacity is assessed based on the overall liability and not the first year’s rate. Many leading lenders, including the State Bank of India (SBI), ICICI Bank, Canara Bank, Punjab National Bank and Housing Development Finance Corporation (HDFC), have recently introduced such special offers to attract borrowers at a time when demand for loans from individuals and industries has been tepid.
The shift from lower Home loan interest rates to floating rates has often resulted in the monthly installments of borrowers to shoot up by as much as 50 per cent, along with the risk of the tenure of repayment also getting extended by several years.
Major housing loan providers including State Bank of India, which controls about 25 percent of the total loans and deposits of the country, and top private institutions like ICICI Bank and HDFC have been offering such teaser interest rates.
"In the area of housing loan, teaser rates are increasingly being offered which is a cause for concern," said Thorat at a banking conclave in Mumbai.
"I hope banks are ensuring that borrowers are well aware of the implications of such rates and the appraisal takes into account repaying capacity of the borrowers when the rates become normal."
RBI’s concern can perhaps be traced to the fact that the genesis of the mortgage crisis in the US lay in home loan extended to borrowers who struggled to repay. These loans, popularly known as sub-prime loans because they were given to people in lower income groups, included so-called adjustable rate mortgages where the repayment is low in the initial months with installments rising in subsequent months, somewhat similar to teaser rates.
Lenders in India, however, say there is no cause for concern as far as quality of lending is concerned since repayment capacity is assessed based on the overall liability and not the first year’s rate. Many leading lenders, including the State Bank of India (SBI), ICICI Bank, Canara Bank, Punjab National Bank and Housing Development Finance Corporation (HDFC), have recently introduced such special offers to attract borrowers at a time when demand for loans from individuals and industries has been tepid.
The shift from lower Home loan interest rates to floating rates has often resulted in the monthly installments of borrowers to shoot up by as much as 50 per cent, along with the risk of the tenure of repayment also getting extended by several years.
Major housing loan providers including State Bank of India, which controls about 25 percent of the total loans and deposits of the country, and top private institutions like ICICI Bank and HDFC have been offering such teaser interest rates.
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