Banks ask borrowers to wrap their personal loans, overdraft services

The banking sector, reeling under a rise in non-performing assets (NPAs) from the corporate sector, is seeking to hedge loans to individual borrowers. Increasingly, borrowers are being asked to buy insurance policies to cover their loans. “Covers with personal loans and overdraft facilities have gained traction in recent times. Both public and private sector banks are aggressively pushing these products to retail customers,” said a senior State Bank of India (SBI) official. According to Reserve Bank of India data, outstanding personal loan, without housing, consumer durables, credit cards, etc, stood at Rs 12,817 crore at the end of December.
Insurance industry players say at present, almost 30 % of personal loan borrowers are buying insurance covers. And, that is increasing at a fast clip. In comparison, the penetration in case of home loans is up to 90 %, mostly for loans between Rs 10 lakh and Rs 1 crore and around 75-80 % for an average education loan of Rs 4 lakh and above.
 Since personal loans are for a period of three-five years, the premium is not very high. Also, if the borrower purchases a group insurance policy, the premium is even cheaper.
“At a small cost, both banks and borrowers are assured of peace of mind,” said a public sector bank head.
The premium for a 35-38-year old is Rs 350-400 per lakh annually, if one takes the group insurance route. A single-premium policy for five years will cost Rs 1,500-2,000.
Says A S Narayanan, chief distribution officer at Bajaj Allianz Life Insurance, “Group mortgage covers are fast gaining ground. A lot of people are buying covers for personal and overdraft to avoid burdening their families in the event of their death.”
Group mortgage covers are mostly single-premium covers, especially for personal loans, as these are short-duration loans as opposed to housing loans. There are various options, such as a single-premium reducing cover, a single-premium level cover, and regular-premium reducing and level covers.
Reducing covers, as the name implies, decrease as the outstanding loan amount (principal borrowed) decreases over the loan tenure.
This results in a lower premium as the loan amount decreases. On the other hand, a level cover stays stagnant even if the loan amount decreases. “Some of these policies also have a money-back proposition where the buyer gets back a certain sum at the end of five years,” said a senior SBI official.
According to bankers, borrowers are being sold the covers under the proposition of ‘no headache to families, in case of an untimely death or even unemployment’.
“Borrowers are showing interest because if there is a default due to death, the family will not be pestered or will not be burdened with a loan,” said the retail head of a private sector bank.
Some banks have even made it mandatory to purchase a cover with a personal loan. In the case of some, the premium is included as part of the loan fee. However, a senior SBI official says since the central bank does not allow linking an insurance product with any loan, banks have to take a consent order from the customer before selling such bundled products.

Trends of loans in January 2012

In year 2011, RBI kept increasing rates till Nov and just by the year end, they gave signals that rates may come down.
So in year 2012, here is what we expect in the loans market.

• Personal loans Trends

Personal loans  rates were stable in between 14%-40%. This range is defined by where do you work, how much you earn and what is your credit history.
So If you work for a top brand and your salary is above 75000 per month, you can get a personal loan for 14% but if you salary is 10000 and you work in a small company, you can expect 30-40% rate of Interest.
Personal loan are given on fixed rates so RBI fluctuation during your loan tenure doesn't affect your rates for your ongoing personal loan.This means once you take a Personal loan and the rate is given by the bank, this will not change - may whatever is the market condition.
For year 2012- we see Banks may tighten there norms for personal loans as they see that recession may hit India and Personal loan being unsecured loan, Banks will like to take a risk averse actions and may give it to only where they are sure of that they will get it back.
The rates may reduce if RBI eases rates and liquidity , but may only happen for top executives and best companies.

• Home Loans Trends

In year rates touched 11% due to many hikes pushed by Rbi actions on liquidity etc.In another major move the regularity body on home loans issues guidelines to housing finance companies to go away with prepayment charges. The housing loan companies did and some Banks also had to follow the step of giving away prepayment charges.
This is one major help for customers who can now shift to alternate Bank/housing finance companies if there existing Bank is charging at a higher rate.
For year 2012, we expect Rbi to loosen the liquidity and for existing home loan customers- rates may come down. We also see rates coming down for new home loan customers.

• Car loans Trends

In year 2012 - in the first quarter 50 new cars are set to be launched in India.This will bring a lot more push to sell more cars and thus leading to more Car loans.
Car loan rates are fixed , so for customers rates do not change during the tenure of the loan. For new car loan customers- rates may come down with liquidity ease measures expected in the first three months.
The rates may come down also for used car loan market.
Thus in end, the rates will come down this year-But how much will depend on the inflation in the country and RBI measures.So expect a better year for loan takers but anyways taking loan

Exploring better alternatives for Personal Loans

Acquiring a personal loan is intended for financing is intended for financing and managing a person’s financial needs. For taking finance, a person may apply for a loan or a credit card to purchase shares or any asset like home, vehicle etc. But, before deciding about the financial goals, a person must assess his or her financial situation. While using credit card or personal loan in financing, proper plan for management of debt burden is imperative.
Correct information should be given in the credit report. The most common errors that occur in the credit report are outdated information, which can stay on the report for seven years, and inaccurate marking like erroneous late payment, repossession and bankruptcy.
Prior to applying for a loan with a financial company, it must be ensured that best rates and terms are selected especially for first time borrowers. First time borrowers must initially determine how much to borrow and for how long to take for repayment. Lenders usually impose higher interest rates for loans on small amounts and so it makes better sense to apply for higher amounts of loans and use the surplus cash to invest with higher rate of interest. If that is frightening, it is advisable to write a budget of all the expenses including monthly bills and daily living costs. Then the expenses should be subtracted from the net income and 75 percent of the left over amount can be set apart for the monthly loan payment keeping the rest 25 percent as a buffer for other expenses.
In fact, there are viable alternatives to personal financing that can save money. For example homeowners can explore mortgage products and refinancing also will help to some extent. For a relatively lower amount, applying for a credit card can come in handy for people with poor credit if the intention is to pay off the debt in a short span of time. If the application for personal loan has been rejected, it is advisable to wait for one or two months before applying again.
Apart from all these hassles, to avoid dealing with emergency purposes-most of the personal loans are for this purpose -it is good if a small "emergency fund" is developed by entailing a few dollars away every month as savings.

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%

SBI Diwali Offers On loans and Gold 2011

State Bank of India (SBI) has brought many exciting offers this Diwali to help you celebrate the festival of lights in a grand way. These include car loans, home loans and gold sale.
"We are offering the purest form of gold coins at competitive rates in the market. All coins will be available at 1% discount," SBI's (Patna Circle) chief general manager Jeevandas Narayan said at a press conference here on Saturday.
SBI gold coins are available in denominations of 2gm, 4gm, 5gm, 8gm, 10gm, 20gm, and 50gm to suit the demands of customers. Customers can avail discount on all these denominations till October 30, 2011 only. A total of 110 SBI branches in Bihar and Jharkhand will be selling gold coins this festive season.
"We will set up exclusive counters on 'Dhanteras' at all gold coin selling branches to deal with the rush of customers. These branches will be kept open till 9pm on Dhanteras day," Das said. Currently, 2gm gold coin (99.99% pure) costs Rs 5,965 and 50gm coin Rs 1.43 lakh. SBI aims to sell over 50kg of coins on Dhanteras.
The bank also has offers for those wanting to avail car loans. SBI Car loan at an interest rate of 11.25% per annum till the end of this year. It will charge no prepayment penalty and no processing fee for it.
SBI home loan (below Rs 30 lakh) SBI will be charging 10.50%, which is a concession of 0.25%. Among its other features are free personal accident insurance up to Rs 40 lakh and no prepayment penalty.
Jeevandas also announced the launch of Vishwayatra Foreign Travel Card (VFTC) for SBI customers who want to go on foreign tour.
"Customers who have VFTC will get dollars when they use it to withdraw money in the United States. They will get currency of the particular foreign country which they are in. Customers can get these cards at 14 different major SBI branches (where foreign exchange facility are available) in Bihar and Jharkhand," Das added.
SBI has installed four permanent Self Service Kiosks (SSKs) to make transactions easy this festive season. One SSK each has been installed at its branches at Gandhi Maidan, Kadamkuan, Telco Colony in Jamshedpur and Ranchi branch. SSKs will perform various non-financial transactions, including pass book printing.
The bank has also come out with offers for NRIs, under which they can open accounts with SBI at zero balance and also avail various other services.

liberalisation policies for NRIs and residents

In a move that might make life a little easier for Non-Resident Indians (NRIs), the RBI, in September, announced a series of liberalisation policies with respect to foreign exchange transactions. Here are a few such changes that will simplify the process of remittances both in and out of the country.
Convenience of joint holding
Resident Indians were earlier not allowed to hold a joint local savings bank account with their NRI relatives. A savings account holder in India, for instance, was not allowed to have his/her NRI spouse as a joint account holder. This has changed now. A resident individual is now permitted to include close NRI relatives as joint holders on a ‘former' or ‘survivor' basis. This is applicable for Exchange Earners' Foreign currency (EEFC) accounts and Resident Foreign Currency (RFC) accounts of the local resident, as well. However, the former or survivor clause means that the NRI joint account holder cannot operate the account during the lifetime of the local resident. The move, nevertheless, helps secure another person to immediately operate the account in the event of sudden demise of the local account-holder.
Another, more significant, move by the RBI is to allow a local resident to be a joint holder for NRE/FCNR accounts held by NRIs/ Persons of Indian Origin (PIO). For instance, your son living in the US will now be able to include you as a joint account holder, on a ‘former' or survivor' basis for his NRE account. You can continue to operate the account with a power of attorney, even during the lifetime of the NRI. Before this change, NRE accounts could have a local resident power of attorney holder but not a local joint account-holder.
Gift liberally
Are you a savvy investor, wanting to give away wealth-building gifts? You can now do it more liberally. A person resident in India can now transfer securities such as shares/convertible debentures, by way of gift, to any person outside India, up to $50,000 in a financial year. This limit was earlier $25,000 in a calendar year. Note the difference here - the transfer period will be a12-month period from April to March and not January to December.
If you do not care much for shares, fret not, for you can gift in Indian rupees too. A resident Indian can now make a rupee gift to NRI/PIO who is a close relative, provided it is within the overall limit of $200,000 of outward remittance permitted in a financial year under the Liberalised Remittance Scheme of the RBI. The change here is that such gift can be made through a crossed rupee cheque or an electronic transfer to the Non-Resident Ordinary Rupee account (NRO account) of the NRI/PIO. Earlier, such a credit was not possible in rupee terms in to an NRO account.

Lend in rupees
You can now also lend to your NRI/PIO relative in rupees within the overall limit of $200,000 an annum. This however, comes with a few strings. One, the loan shall be interest-free and have a repayment schedule of not less than one year. Two, the loan shall be utilised only for the borrower's (an NRI/PIO) personal requirements for his own business purpose in India. Such business shall not include any activities related to chit fund/ Nidhi company, agriculture or plantation activities or trading in transferable development rights. Get Info on Personal Loans Online and apply.
Such loan can be credited to the borrower's NRO account in India and the loan amount shall not be remitted outside India. Repayment can be made through normal banking channels or through the borrower's NRO/NRE/FCNR account. The borrower can also sell shares or securities or any immovable property (against which loan was granted) to repay the loan.

Benefits of online Personal loans or Unsecured loans

Online personal loan is one of the latest options for people who need cash fast and who can’t afford to slow down their lifestyle in order to get it. Applying for this kind of loan is easy because they can be done from home or from work through a simple and secure online application process. Rather than risking financial penalties that could leave a checking account and the negative even after payday, one of these online loans will control costs while helping people pay their bills on time.
Bad credit personal loans are specially designed to provide people with the cash they need without allowing past financial problems to cause roadblocks. These small personal loans are designed with less stringent requirements than most banks and other lenders, so more people can get the cash they need and spite of past problems. These loans are a good alternative to secured personal loans that usually require an applicant to put up a car title to guarantee the repayment of the loan.
To get a personal loan online, Read More Tips

1. Visit the secure online loans site to fill out a confidential application. This can be done from any computer with Internet access, so you don’t have to lose work or personal time driving to a loan store. The application is usually very sure and can be completed within just a few minutes.
2. Find out if you are approved. Ordinarily a personal loan approval decision comes very quickly, in just a few minutes or seconds. Although a lot of people are nervous at this stage because of their credit history, most of the time, past credit issues are not a problem with this kind of loan.
3. After approval, the money from your loan is deposited directly into your bank account through standard automatic processes. In most cases, the money is available the business day following your loan approval. This speedy delivery of funds eliminates the need to make special trips to cash checks and avoids problems that arise when you’re schedule prevents you from going to the bank.
4. Pay back your loan. This type of online loan is personal because it allows you to decide how long you will take to pay back your loan. We understand that sometimes a single payday is not enough to help you recover from a financial emergency. This way you are in the driver seat, meaning that you can take more or less time to repay depending on your situation.
Easy Application Process
These loans can be applied for online from the comfort of your own home or anywhere else there is an internet connection. They can also be applied for at any time of the day. On top of this, the actual application itself (no matter which lender you choose) is very easy to read, understand, fill out and submit.
If you have bad or no credit at all, you will most likely be denied a loan from a bank. However, when dealing with payday and other types of online personal loans, a negative credit history does not affect your approval process. This is because with payday loans, your job is what acts as collateral for the money you are lent.
Fast Approval
Nothing is worse than waiting to be approved for a bank loan. Sometimes, this can take days. However, online, the approval process is almost instantaneous. No more waiting and watching you financial situation grow out of control. You will be notified the instant your application has been reviewed and accepted.
Click to Here For apply Personal Loan Online