Till few years back i was quite bullish on Debt Mutual Funds. The Great Crash of Debt Mutual Funds in July 2013 shattered my faith in Debt Mutual Funds. The most impacted funds were Liquid Mutual Funds that are considered to be safest among all. Liquid funds invest in money market instruments. The lower maturity period makes them best investment option for short term. I regained my faith in Debt Mutual Funds and invested in Long Term Debt Mutual Funds. The last one year is also not good, especially for long-term/gilt debt mutual funds. We will discuss this later in detail. The 1 month return ... Read More
Banking Transactions – Are they really SAFE?
A couple of my recent Banking Transactions inspired me to write this post. Despite the efforts from RBI, the fraudulent transactions are on the rise. The fraudsters take advantage of a loophole in Banking process to exploit the same. For ease of understanding in this post, i will refer all the transactions i.e. Credit Card, Debit Card or Net Banking as Banking Transactions. Most of the frauds are carried out from outside India so that the fraudster remain out of the clutches of India Law. Big frauds hog limelight in newspaper reports but the majority of frauds are of small value. Some time ... Read More
Are You Ready For Prepayment Penalty?
There is famous saying that "Life comes FULL Circle" which is true for Prepayment Penalty on Home Loan. In 2011, prepayment penalty was first abolished by HFC's like HDFC Ltd, LICHFL, etc. followed by banks in 2012. Now same HFC's are demanding reintroduction of prepayment penalty. The background of this move in 2011 was differential interest rates charged to Existing Home Loan customers. Rather than fixing the core issue of equal interest rates for existing and new customer, NHB and RBI took an alternative route to abolishing prepayment penalty on floating interest home loans. In short, ... Read More
Review – ICICI Bank Extraa Home Loan
ICICI Bank Extraa Home Loan is a new Home Loan product for retail borrowers. Currently, ICICI Bank Extraa Home Loan is available only in Greater Mumbai, Delhi & NCR, Bangalore and Surat. It seems that ICICI Bank is test marketing the product before full-fledged launch. These 4 cities are selected considering the target group and concentration of potential borrowers in mind. ICICI Bank Extraa Home Loan is available for Home Loans of up to 75 lacs. In layman terms, ICICI Bank Extraa Home Loan is useful for the borrowers who fall short on eligibility criterion due to age or income factor. As ... Read More
Impact of Base Rate Cut on Home Loans
Impact of Base Rate Cut on Home Loans is the hot topic these days. RBI surprised twice by out of cycle Repo Rate cuts of 25 basis points each or 0.25%, Banks were reluctant to cut Base Rate. Despite the public displeasure of both RBI and the Govt, Banks stood firm on their stand. As i highlighted in my post that RBI is King without Kingdom, a very little can be done by RBI in this regard. Rather i will say, its a cartelization similar to that of Telecom and Airline Companies. Only 2 banks i.e. Union Bank of India and United Bank of India cut the base rate to benefit customers. As these banks ... Read More
Why Banks want Minimum Balance Penalty?
I must admit, Indian Banks are street smart. Banks always find out way around to protect their turf (Read: Income). Non Maintenance of Minimum Balance is a major issue for the banks to handle. Banks incur cost for maintaining and servicing the Savings Account. Banks recover this cost by imposing minimum balance criterion i.e. an amount which should be retained in the savings account on a regular basis to recover such cost. Charges levied for Non Maintenance of Minimum Balance generate substantial revenue for any bank. It is one of the most widely imposed penalty by any bank. It will not be an ... Read More