Three main types of bank loans available in India

There are multifarious loans that are available for people in India. From buying houses to setting up a personal business all can be done wit the aid of loans that are available in the market today.

Let us have a look at the different kinds of loans that are available today

Home loans: home loans are availed by people who want to buy homes or make any construction or perhaps renovation and extension of their houses, apartments or flats. They can also be made use of while trying to procure land or payment of stamp duties. The home loans available in India have fixed and at times adjustable rate of Interest and the payment terms are fixed and adjustable too. There are various kinds of home loans as well. They are well categorised into the following groups.

1. Home purchase loans
2. Home construction loan
3. Land purchase loans
4. Home extension loan
5. Home renovation loan
6. Loan against property
7. NRI home loan

Personal loan

The individual who wants to procure a personal loan from a bank or a financial institution has to first get his credentials verified, his credit ratings are then checked. All of this is done based on the profession they are in and what is the source of their income and whether they have a regular income or not. The personal loan can be utilised for any personal purpose. It might be used for a wedding, personal expenditure, vacation spends so on and so forth. The personal loan requires no collateral and security. This is another reason why the interest rates of the personal loans are pretty high because of the stakes. The loan processing fees amounts to two percent of the total loan amount. The disbursement takes about a week from the date of the application of the personal loan and the interest starts off only when the disbursement of the loan has been done.

Educational loan

Education loan

Educational loans are mostly utilised by students in order to fund their education. This loan is generally availed for higher education. This loan helps the students with their fees of the institution that includes, examination and library fees;travel expenses for abroad, costs of books and equipment that are required. This loan also includes any insurance for the student. The loan also includes additional expenses of thesis, project work, educational tours so on and so forth. The terms of the educational loans are different with different banks. For studying in India Rs 10 lakh is the average and for studying abroad Rs 20 lakh is the average. For an amount of around Rs 4 lakh the parents should be the joint borrowers and for an amount that is above that a tangible asset security is required.  The repayment begins between six months and two years of the completion of the course.

Car loan

It is much easier to avail a car or a vehicle loan when compared to the other loans in the market They involve lesser paperwork and around a week’s time to be processed and getting the clearance.  The interest rates vary from various banks and that depends on their base rate,. Repayment is the same old EMI’s and it also has early repayment options.

Did you know these four facts about inactive savings bank accounts?

This comes to pass exactly during your no bank transaction period that extends for more than 12 months. When there is no transaction done in the bank account, the account automatically changes into an inactive account. The bank then waits for another period of twelve months for the customer to begin another transaction on the same savings bank account that have already been classified as inactive, but still if the customer fails to make a transaction on the account, the bank account then becomes dormant.

One thing worth noting is that the word ‘transaction’ in the banking lingo pertains to any business dealing that has been started by the bank account holder or the bank customer these transactions might be a debit card transaction, a money deposit transaction or a cash withdrawal transaction or internet banking. However the transactions that are initiated by the banks for instance, if any extra charge or fee is levied on your savings bank account, they are not taken into consideration while categorising your account into an inactive or dormant account. But this doesn’t mean that in a fixed deposit account any amount of credit that is earned by the customer is not regarded, it is and also lets you keep your bank account active.

What is the main reason behind banks to categories saving bank accounts into dormant or inactive ones?

With the amount of fraud and fraudsters increasing everyday,the banks too, wants to do away with the risks of any untoward happening in your savings bank account. Once they categories the account as inactive or dormant, the banks alert their staff about a likely contigency that might materialise with your savings bank account and before any fresh transactions can happen in the same bank accounts, they make sure that a thorough diligence check is done.

There are limitations on inactive and dormant accounts – What are they?

There are various limitations put by the banks on inactive or dormant accounts and yet these limitations differ in every individual bank. There are some banks who put a lot of check on phone banking and internet banking as well, there are some banks that put a lot of constraints on cheque transactions as well. An example would be HDFC bank. It bars internet transactions, ATM or Debit card transactions and phone banking as well on dormant saving accounts. HSBC being a global bank, in India it doesn’t allow internet banking, phone banking, issuing and renewal of ATM or Debit card, cheque book requests, cheque transactions, request to change the address and telephone numbers so on and so forth.

Did you want to know the procedure to reactivate your dormant or inactive bank account?

It is a cakewalk! To activate your inactive savings bank account, you just have to make a cash deposit in your bank account. To reactivate a dormant account you have to submit a written request to the bank branch and its authorities. Please keep in mind that the bank cannot levy any charges on you to reactivate your savings account.

All you need to know about personal loans

There are a number of loans that you can avail from a bank, personal loans are one such loans. Such loans are not meant for any specific purpose, you can use the loan amount for any purpose you want to. Sometimes it is very difficult to get a personal loan and require many supportive documents. Lets dig deep into what personal loans actually are:

They are unsecured loans

Unsecured loans implies that you don’t need to use an asset as a collateral for the loan. In case the repayment of the loan by you isn’t done, the bank cannot automatically take a part of your property as the payment. However the bank can definitely resort to other actions even if it cannot take your property or car for that matter. A lawsuit can be filed against you by them, they could hire a collection agency to collect the loan and interest amount from you, they could report you to the credit agencies as well.

The rate of interest in such loans aren’t flexible.

Once the loan is taken a particular rate of interest will be quoted by the financial institution lending you the amount. This rate will not be flexible, once it is decided upon, it will remain the same for the entire tenure of the loan.

The repayment period of personal loans are fixed

When you take a loan, it is up to you to set the time period through which you are going to completely repay the loan without any outstanding. This tenure may range from 1 year to around 5 years. But in case you are unable to complete the loan repayment in the number of years stated in your loan agreement, the lending institution can always charge extra fees on your interest amount. Always keep in mind that if the loan amount repayment period is long, yu always end up paying more to the bank.

Such loans can affect your credit score

Most financial institutions that are lending you the money inform the credit agencies about your loan and the amount you have borrowed. This means that everything that pertains to your loan and the repayment and the interest rate and how timely are you in making the repayment are all informed to the credit agencies and this makes up for your credit score. If you repay your loans without any hitches and delays and if you are not a defaulter in repaying your loans you have a good credit score, however, if you delay in repaying the loans and the interest amount is not paid by you regularly, you end up having a bad credit score. Therefore it is always sensible to maintain a good credit score by properly and timely repaying the loans you have taken.

Four important Personal Loan facts you need to know before you apply for one.

A lot of people in today’s day and age are opting for a personal loan for purchasing things that are costly. They also are frequently turning their monthly purchases into Easy EMI’s or equated monthly installments. If people experience any monetary constraints while buying a house or renovating a house for that matter or pitching in some money for the higher education of their children or perhaps having little or no funds during medical exigencies.

These are a few personal loan facts that will help you to know them better.

The first and foremost aspect about a personal loan is that unlike a car loan or a home loan, a personal loan doesn’t require any security. Therefore if you want the personal loan against your property or gold, that is not possible! This makes the rate of interest for the personal loans too high because of the risk involved while getting them sanctioned. If in case you end up being a defaulter in the repayment of your personal loan, it will reflect in your credit score and in future if you want to apply for a credit card, you won’t get one because of your low credit score.

What are the criteria for eligibility for a personal loan?

The eligibility criteria depend on the bank and different banks and different criteria. The main factors that influence your eligibility is your age, income, capacity to repay, loan, occupation and place of residence.  You have to be a salaried individual, or a businessperson. The credit history of the individual too influences the eligibility criteria.

What is the minimum loan amount?

The minimum loan amount too varies from one bank to another, however most banks have set a minimum limit to their personal loan

And that would be Rs 30,000

What would be the maximum loan amount on the bank personal loans?

The maximum amount for a personal loan differs from one bank to another, however before a final limit is set on your loan amount there are some aspects that are deliberated on.  A high credit score makes one eligible for a greater loan amount. Other than that a higher monthly income, your ability to repay the amount so on and so forth are all responsible in fixing the maximum personal loan amount.

What is the maximum loan time that I can take to dispose off the loan?

This is a big question that every borrower has in his/her mind. However the answer to this is pretty simple. The loan duration might be from one to five years. In case you want to know what is the Emi you have time calculate pay over the period of time you have chosen to dispose of your -personal loan there are countless EMI calculators that lets you see what is the EMI amount you need to pay every month.

How much time does it take for the banks to disburse the loan amount?

After the eligibility process is over and you have also checked your personal loan eligibility and things are finalised, the paper work id some and now all you wait for is to get the amount disbursed from the bank, it almost takes a week’s time from the loan application date to get the amount disbursed.

How is internet banking and mobile banking beneficial to one and all

Internet banking is also called mobile banking or online net banking. It is an electronic payment system that allows the customers of a bank or other financial institution to carry out a number of banking transactions. When doing internet banking the banking system available online will automatically connect to the central banking system and are able to access banking systems.

The first and foremost thing that a customer would require to access internet banking will require a computer with a working internet connection. Once that is established he/she has to register with the website of the bank in which his/her account is and that has to be done by a username and password and other credentials for customer verification purposes. The verification procedures are not at all similar to the verification procedure done on the telephone.

The banks provide a unique customer identification number to a customer which he or she can use in order to access the internet banking. The services that can be accessed via internet banking includes, fund transfers to other bank account and other financial institutions, keeping a track of the number of accounts in the bank and obtaining account summaries and transaction details, credit card payments, utility bill payments, opening a fixed deposit account downloading of bank account statements. The ,kind and amount of services that a particular bank allows through internet banking varies from every bank while the above services are quite common for internet banking facilities in almost all banks some banks might additionally let a customer to order a chequebook, change a telephone number or address, stop payment on a cheque and report loss of credit card.

Internet banking has been developed in order for the customer to enjoy the convenience of banking at his/her fingertips instead of having to visit the bank branch and wait for one’s turn in long queues. Nowadays the world has become a busy place and it is not feasible for anyone for that matter to be stand in long queues in banks in order to deposit a cheque for transfer of funds to another account or put a request for an account statement. With the advent of internet banking, all of these meagre works has become simple. Nowadays one can access every detail of one’s bank account in the comfort of one’s own home and all he ’she would require is the internet.

With internet banking a customer has a permanent access to his/her bank account, the transaction costs are less and less worrisome, one can access internet banking from anywhere, the time taken to do a banking procedure is reduced. One doesn’t have to be bothered about the security of these transactions as they are very secure and no personal information or password is divulged anywhere. The transfer of funds from one bank account to another is done safely, accurately and immediately and needless to mention internet banking allows security of the bank account as well.

Did you know the most common 4 methods of international money transfer?

There are various alternatives available to transfer money to India. However, it is mandatory to research about it ever more and make sure you choose the best while you send your money.

Online Transfer

This is the simplest method for an international money transfer. To do this all one requires is an internet connection and you also should be using the local banking services to send the money to an Indian account. Some other important things that you will be requiring to do this successfully are the account holder’s address and obviously his/her name, the name of the bank of the recipient, the IFSC code and the branch address to which the money will be sent. You will also need the IBAN or SWIFT code of the bank the money is being sent to. This method is mostly suggested if you regularly transfer funds. You can get rid of the steep banking charges and you can also carry out the transaction from the comfort of your home.

ACH transfer

Automated clearing house is another way of international money transfer and is used for transferring money from an Indian account to an account in the US.  A huge advantage of such a method to transfer money is, you can get rid of long bank queues, you will not have to worry about hidden costs, you will also not be required to send checks for the money transfer to materialise. When the money is transferred in this manner, the bank gets the sum that has been sent in the next four working days. This amount can be delivered to the payee on the next day.

Paypal transfers

Another method of electronic money transfer from one account to another throughout the world. Paypal money transfers can also be cloaked as an online money transfer method. While sending the money through paypal be sure that you won’t be charged a penny, however, the one who recieves the sum will be asked to pay a nominal charge of 3.9% on every international money transaction along with the exchange rate of the transfer.


Wire Transfer

One of the most commonplace methods of transferring money internationally is the Wire Transfer method. This method requires the sender to visit a financial institution or a bank or bureaus that cater to international money transfer, for instance Global Exchange, book my Forex,  Western Union, Remit2India, and transfer the money. This wire transfer international money transfer service first takes all the required details about the person or persons the money is being sent to from the person sending the money, the sender is also supposed to divulge the bank details of the money recipient. One those facts are collated, the bureau then starts the transfer procedure which takes the next few days to complete.

Do you know what is Private banking?

This kind of banking is conventionally offered to a bank’s high net worth  individual (HNWI) clients. It is a personalised financial and banking service. This is typically done for wealth Management because the High net worth individual clients have accumulated more wealth than a normal average person and therefore they have the means to access a more diverse and large variety of conventional and alternative investments. Private banks have thus come up with private banking in order to match  such individuals with options that suit them better.

Private banking doesn’t just provide excellent  and exclusive investment advice, it goes much further and addresses a client’s entire financial situation. These services include helping the clients with special financial solutions, protecting and growing assets in the present, retirement planning and passing wealth on to future generations.

Some exclusive private banks accepts clients with at least $500,000  worth of investable assets.  This is because such a high level of wealth lets the clients to be a part of alternative investment methods such as hedge funds and real estate.And a person who has this level of wealth will never have any liquidity problems. Morgan Stanley, Merill Lynch, Credit Suisse, UBS are examples of private banks.

Personalised service

The customers of a private bank receive exclusive personalised service. A relationship manager is assigned to every account holder to deliver a tailor made customised  asset management plan. This is why the customers can also directly liaise with the management officials if ever the need arises.

High net worth individuals typically get services at a huge discount in private banks because of their huge assets. For exchange customers who have export business might receive a reduced foreign exchange rate. They are provided with a lot better investment options by the private banks, investments with returns that  outperform the market.

Challenges with a private bank

The private banks have always dealt with a lot of regulatory environment since the GFC or the Global financial crisis in the year 2008. This is why there is a higher level of transparency and accountability. The licensing requirements for the private banking professionals are hugely stringent and ultimately this benefits the customers because it assures them that they are getting the best advices with regards to their money and assets!

Since the Global financial Crisis happened the private banks have experienced a high employee turnover which finally resulted in  need to focus on talent recruitment. A long-standing customer relationship is mandatory for the success of a private bank which is why there is a need to keep the employees satisfied as well so that a higher level of customer satisfaction can be achieved. Because only if the employees are happy will they do their work better and it will thus bring success to the company!