Real Estate and Retail loans fall, Interest Rates hike

RBI found unequal rise in loans and real estate sector, Infrastructure sector. Banks provides lending to NBFC’s at high mass.
Banking regulator not found any clue of explosion in economy, but because of these the trends goes towards asset and liability mismatched.
Banking sectors concerns about inconsistent growth of credit in real estate, Infrastructure, NBFC and retail segment sector.
Bank credit to NBFCs saw 50 per cent growth in 2010-11, compared to last year. Loans to the infrastructure sector may reasonable. According to RBI data, credit growth to NBFCs on a y-o-y basis in September set at 46.2 %, considerably higher than 18.5 % in last year, while loan growth to the commercial real estate sector go up 12.6 % in September, The data also showed personal loans, or retail loans, increased by 15.2 % on an annual basis in September. Most types of loans, personal loan, housing, advances against fixed deposits, advances against shares, bonds and car loans, registered step up growth.
“Growth in infrastructure and personal loans raises risks to the banking sector, as these loans may raise asset-liability mismatches. The RBI also said the rollover risk of maturity of foreign currency convertible bonds may be an issue in need of attention.
Growth Table

	Real Estate	NBFC	Personal loans	Infrastructure
Sep 24,10 over sep 25,09	7.90%	18.50%	8.60%	47.39%
Sep 23,11 over sep 24,10	12.60%	46.20%	15.20%	20.30%
Sep 24,10 over mar 26,10	10.30%	10.80%	5.00%	23.62%
Sep 23,11 over mar 26,11	2.30%	4.70%	3.40%	7.28%

Tips for get a low rate personal loans

Personal loans are handy when you are in a spot and need some urgent cash. However, personal loan are tricky and you need to know as much as possible about their basics before applying for one.
Before you choose your personal loan:
Calculate the inexpensive loan offer: Personal loans come with very high interest rates ranging from 14% to 24%. Compare personal loan interest rates and get the complete picture by understanding the annualized interest rates for each offer.
Then figure out the total amount of repayment you need to shell out with all the offers before opting for the loan of your choice.
Processing fee et al: You need to keep in mind the processing fee and other fees that will be levied when you apply for your personal loan.
Prepayment penalty check: Ask upfront if there would be any penalty payments for prepayment of the loan at any point in time. More often than not loan consumers tend to pay up their loans earlier than planned to be rid of debt. Hence, its important to know if your personal loan offer allows part prepayments.
If that is the case, then you should be aware from what time frame in the loan period you can start prepaying and understand the cost you incur due to such prepayments in part or full.
EMI and tenure: Evaluate all loan offers. The first condition for loan offer selection is the total money outflow that the loan will cost. The second factor is the EMI. A loan offer with a lower EMI and a longer tenure may seem attractive, as it could be easy on your purse strings, however not all such loans prove to be cost effective in the long run.
Hence, first calculate the total loan cost and then try to opt for a higher EMI, which you can comfortably manage to enable shorter loan tenure.

Mumbai banks plan to stay loan rates unaffected

Many banks in Mumbai are reconsidering their plans to hike home loan rates next month because of the upcoming holiday season, which will increase the demand for those loans.
This comes after the decision last week by the Reserve Bank of India to change policy rates. The banks said that they will potentially increase their lending rates next month when a review of the base rate is done.
Indian festivals such as Dessehra and Diwali in the next two months are expected to create a big demand for home, car, and personal loans because of the belief that this period is an auspicious time to acquire things.
“Banks may not hike home loan rates immediately since sales are expected to pick up soon after the Pitr Paksha is over,” said Oriental Bank of Commerce CMD Ty Prabhu.
The Hindu festival of Pitr Paksha is considered an inauspicious time to invest so loan rates may remain unchanged at this time.

Personal loan as a short-term finance option

In the last few weeks, calls from telemarketers have already gone up asking you to sign up for personal loans. The difference this time is that most banks want to lend to their own customers and in many cases, customers are being offered pre-approved loans to cut down on processing time.
While a personal loan is a short-term finance option, it is often used by many for long-term needs. In the process, a borrower ends up paying up a higher interest amount if he fails to clear the loan on the due date. On the contrary, a personal loan can be a handy option if chosen with care.
How to make better use of a personal loan?
Some tips to help you make better use of a personal loan:
Compare total interest payable
A personal loan with an interest rate of 14-28 percent is a better option than a high cost credit card loan as the latter charges interest in excess of 35 percent.
The same holds good for those who are in the habit of taking hand loans which carry higher rates. For such borrowers, a personal loan would be a cost-effective option and more importantly, it enables the borrower to repay the loan in totality.
Repay the loan in short to medium terms
Often, salaried professionals use a personal loan as a component of property investment. The margin money of the property cost is funded by a personal loan.
The idea is good provided the borrower is in anticipation of some funds coming in a few months later, and is in a position to clear the loan. Or else, the loan amount should not be more than a few lakhs so that it does not pinch the borrower considerably.
For instance, if a property investor is short of funding to the extent of Rs 2-5 lakhs for a property which is valued in excess of Rs 50 lakhs, the implications would not be severe. On the contrary, if the borrower depends on the personal loan to take care of more than 25-30 percent of the property cost, the chances are that he would be unable to repay the loan in the short to medium terms.
EMI a determining factor in personal loan
Keep track of EMI
Unlike other loan products, the EMI is the determining factor in a personal loan.
Since the loan is for a shorter period of time, the EMI is much higher, which is also the reason why some struggle with their cash positions after signing up for a personal loan. Hence, a personal loan should be determined by the EMI component rather than just eligibility.
This will help the borrower to be realistic with the loan repaying capabilities and not get into a default.
Keeping good credit track record
Be a good borrower
Signing up for a personal loan may be the easiest thing to do but make sure to be a good borrower as non-repayment or lack of commitment towards repayment can tarnish the creditworthiness. With banks providing details of all borrowers to the common database under the Credit Information Bureau (India) Ltd (CIBIL), a negative entry relating to payment history can make it tough for all future loans.
Also, borrowers need to make sure to complete the documentation relating to disputed loans as a failure to do so may make it difficult for future borrowing.

Personal Loan v/s Credit Card Withdrawals

V/S                                        
A personal loan is easy to get, but do your research on cost, term and services.
Personal loans enable you to take care of instant necessities without much hassle. You do not have to provide security or guarantor; you can utilise the amount of loan for any purpose, except speculation. But, before taking, you should plan your requirements and assign the operating expense to be met with this loan.
The amount approved will depend on your eligibility, based mostly on your income. The repayment is monthly and the tenure varies from one to five years. Since personal loans do not require any security or hypothecation of resources, the banks charge higher interest rate compared to other secured or protected loan like home loan.
On the other hand, let's say you want to take the loan money through your credit card. How does this compare?
Foremost, withdrawing cash using a credit card can be very costly if you do not repay quickly. Interest rates on credit card loan withdrawals can range from 20-40 per cent on an annual basis. For nearly all cards, the interest rate on cash withdrawals and credit outstanding for purchases made are the same. But here is the kicker - for the purchases you make through your card, you get an interest-free period to pay back. Cash withdrawals on your card have no such benefits; interest is charged from the moment you withdraw the cash.
And, do not forget the transaction charge, levied on the withdrawal at the ATM. The average interest rate charged for a personal loan is in the range of 12-22 per cent , whereas the average interest rate is 20-40 per cent for withdrawal from a credit card.
Therefore, unless in a very real emergency where you need instant cash, it is advisable to not withdraw cash on your credit card. It is always better to go for a personal loan. It is the fastest of all retail loan products and the interest rates are a lot lesser than those on credit card withdrawals.