Latest personal finance news and trends in India
December 21, 2008, Ratekhoj.com. City Union Bank, a private sector bank in India, is now offering the highest interest rate for fixed deposits among all the banks in India for non-senior citizens. City Union Bank is offering the highest fixed deposit rate of 11.30% for non-senior citizens. This fixed deposit rate is being offered for a term of 1000 days (just over 3 years) for fixed deposit amounts of upto Rs. 1 crore. DBS Bank (for a period of 1-2 years) and Development Credit Bank (for a period of 1 year) are offering the second best fixed deposit rate of 11.25%.
For senior citizens, DBS Bank is offering the highest fixed deposit rate of 11.75% for a term of 1 to 2 years along with Development Credit Bank which is offering the same rate for a term of 1 year. City Union Bank of offering the second highest interest rate of 11.60% for a term of 1000 days. IndusInd Bank, Karur Vysya Bank, Lakshmi Vilas Bank, Karnataka Bank and Tamilnad Mercantile Bank are all offering fixed deposit products with an interest rate of 11.50% for terms ranging between 200 days and 5 years duration.
Do you have money sitting idle in your savings accounts? Savings accounts current give investors only 3.5% per annum. Most banks in India offer a hybrid between savings and fixed deposit accounts that can help you boost the returns on your savings accounts. These hybrid accounts known by different names in different banks but commonly referred to as Flexi-Deposit schemes by many banks, help you enjoy the high returns of a fixed deposit on surplus money in your savings account. Some banks also offer the flexibility of breaking a part of your fixed deposits without affecting the interest on the rest.
Consider these accounts instead of a simple savings account for to get liquidity benefits provided by savings accounts as well as high returns provided by fixed deposit accounts.
What are Flexi-Deposits? Accounts that provide the liquidity associated with savings accounts along with higher returns of fixed deposits on surplus funds.
How do they work? Typically these accounts require the depositor to open a savings account with a certain minimum balance. The depositor provides instructions to the bank to maintain a certain minimum balance in the account and to transfer any surplus money over this minimum balance into a Fixed Deposit account. Whenever the balance in the savings account goes below the stipulated minimum balance, funds will be transferred from the fixed deposit account in units of Rs. 1000 (or whatever amount is determined by the bank).
What’s the duration of the fixed deposit associated with Flexi-Deposits? The duration of the fixed deposit can be chosen by the depositor. The fixed deposit durations being offered depend on individual banks, but can range from 15 days to 5 years.
As an example, following are details of the Flexi-Deposit scheme from Union Bank of India:
- The depositor opens a Savings Bank Account with a minimum amount of Rs 10,000/- and will issue standing instructions to UBI to maintain a certain predetermined balance through out the tenure of the account and to transfer the surplus funds over and above the said limit to a Fixed Deposit Account in multiples of Rs 5,000/- with a minimum of Rs 5,000/- for a fixed maturity period.
- Whenever the outstanding balance in Savings Bank Account goes below the stipulated amount the gap will be bridged by transfer of required funds from depositor’s Fixed Deposit Account in multiples of Rs 1,000.
Flexi-Deposits are a necessary addition to anybody maintaining savings accounts in India helping deposits with higher returns on their money.
Which banks offer Flexi-Deposits?
Following is a list of banks that offer flexi-deposit accounts.
|Easy Draw Fixed Deposit|
|Allahabad Bank||Flexi-Fix Deposit|
|Andhra Bank||AB – FREEDOM (FLEXI) DEPOSIT SCHEME|
|Axis Bank||Encash 24|
|Bank of Baroda||Baroda Flexible Fixed Deposit Scheme|
|Bank of India||BOI Savings Plus Scheme|
|Bank of Maharashtra||Mixie Deposit Scheme|
|Bank of Rajasthan||Sugam Jama Yojna (SJY)|
|Barclays Bank||Term Deposit account|
|Central Bank of India||CENT Uttam Scheme|
|City Union Bank||Flexi Fix Deposit|
|Corporation Bank||Money Flex|
|Dena Bank||Dena Savifix Deposit Scheme|
|HDFC Bank||Super Saver Facility|
|IDBI Bank||Suvidha Fixed Deposits|
|IndusInd Bank||Flexi Term Deposit|
|Karur Vysya Bank||Rainbow Savings Deposit Scheme|
|Kotak Mahindra Bank||Term Deposits|
|Oriental Bank of Commerce||Flexi Fixed Deposit Scheme|
|South Indian Bank||SIB Flexi Deposit|
|Standard Chartered Bank||2 in 1 Account|
|State Bank of Hyderabad||Multi Option Deposit Scheme|
|State Bank of India||Multi Option Deposit Scheme|
|State Bank of Mysore||Multi Option Deposit Scheme|
|State Bank of Travancore||Unit Deposit Scheme|
|Syndicate Bank||Syndicate Suvidha Deposit|
|Union Bank of India||Union Flexi Deposit|
|United Bank of India||United Bonanza Savings Scheme|
|YES Bank||Fixed Deposits|
December 12, 2008, Ratekhoj.com. Pune was the worst victim of credit card fraud in India in 2007-08 according to a report in Indian Express. According to computer security expert Harshad Patil, Mumbai suffered the second most credit card frauds in India. Lack of awareness among the credit card users in India about potential frauds is cited as the major reason for the increase in credit card fraud activity in India.
Various mechanisms such as phishing, pharming, skimming and dumpster diving by which money can be extracted from a credit card are used by cyber criminals for credit card fraud according to Harshad Patil. People submit personal details and credit card information to fradulent emails that can then be used by criminals to do illegal transactions. Some criminals can even go through trash to find discarded receipts to get credit card information and then use the numbers illegally.
According to Mr. Patil in this report, there were underground forums where credit card numbers can be bought and sold. These forums bring together people who steal the numbers and those who use them. An individual researcher in cyber crime and cyber laws, Patil said economic offences using credit cards have increased in India and countries like US. An FBI report indicated that credit cards were largely responsible for the $ 315 billion loss the US endured from financial fraud in 2005. A study in Europe revealed that over 22 million customers fell victim to credit card fraud in 2006. “The numbers are increasing,” said Patil.
December 11, 2008, Ratekhoj.com. A number of press reports indicate that interest rates of home loans in India will be cut in the near future by state-owned public sector banks. Along with the reduction in interest rates, a number of other incentives such as cuts in processing fees and margin requirements are also expected to give borrowers loans on simpler terms. Borrowers looking for home loans upto Rs. 20 lacs are expected to benefit from this interest rate reductions as well as other concessions. It’s not clear yet if borrowers looking for loans over Rs. 20 lacs will see any benefits as a result of the package being discussed.
As reported in The Hindu, public sector banks may include concessions on margin requirements, waiving of processing fees on loans and changes in pre-payment clauses on loans:
The move to provide relief for home loan borrowers comes in the wake of the Government’s recent fiscal stimulus booster in which it promised that public sector banks (PSBs) would shortly announce a package for two categories – up to Rs 5 lakh, and between Rs 5 lakh and Rs 20 lakh.
Borrowers are now expecting at least 200-300 basis point cut in interest rates as relief under the package. They want interest rates on fixed rate home loans to come down to between 7 and 9 per cent say for a 10-year term period.
The IBA Chairman said that bankers were still discussing the modalities on how the package should be structured and that they had not come to any definite conclusion. Besides interest rate reduction, the public sector banks were also looking to include concession on margin requirements, waiving of processing fee for loans and changes in pre-payment clause in the package, Mr Narayanasami said.
Indian Express reports the story as follows:
State-owned banks are set to lower interest rates on home loans of up to Rs 20 lakh by 200-300 basis points tomorrow. After a meeting of the Indian Banks Association today, bankers said a package would be announced tomorrow. At present, home loans up to Rs 20 lakh carry an interest rate of 11.5 per cent.
While private and foreign banks continue to charge higher interest rates without passing on the benefits of monetary measures including sharp rate cuts over the last six months, state-owned banks agreed to cut processing charges on home loans, ease pre-payment norms and relax the margin requirement. The interest rate on loans up to Rs 5 lakh could drop to about 8 per cent and that on Rs 5-20 lakhs could be reduced to 9 per cent, bankers said.
The fiscal stimulus package announced by the Government on Sunday had specifically called banks to announce special packages for home loans up to Rs 5 lakh and between Rs 5 lakh and Rs 20 lakh. “Some package will be formalised by tomorrow,” Indian Banks Association chairman T S Narayanasamy told reporters in Delhi after a meeting of the heads of state-owned banks.
As reported in the Hindustan Times:
Public-sector banks are set to bring down their home-loan interest rates to 7.5 per cent for loans of up to Rs 5 lakh and 8.5 per cent for loans between Rs 5 lakh and Rs 20 lakh.
Only fresh loans are eligible for the lower rates, but existing borrowers can switch to cheaper loans by making a one-time penalty payment. The government may bear some fiscal burden in the process.
A meeting of key banks, the Indian Banks Association and Finance Ministry officials hammered out a package on Thursday to boost affordable housing and revive a sluggish home-building sector. A formal announcement is expected within the next couple of days, government and banking sources told Hindustan Times.
Housing loan interest rates comparison shown below indicates that banks are currently are offering interest rates over 9.00% for floating rate home loans for a term of 10 years for loan amount below Rs. 20 lacs. A reduction of these rates to between 7 and 9 percent can be a significant boost to the housing market in India and help borrowers significantly:
|Lender||Floating Rate||Duration||Additional Info||EMI for 10 yrs loan(assuming loan of Rs. 1 lakh)
|Bank Of India||9.00%||5-10 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Indian Bank||9.25%||5-10 years||Rate applicable for loan amounts upto Rs. 20 lakhs.
|Bank Of Baroda||9.50%||5-15 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Central Bank Of India||9.50%||5-10 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Bank Of India||9.75%||5-10 years||Rate applicable for loan amounts between Rs. 30 and 50 lakhs.
|Canara Bank||9.75%||5-10 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Indian Bank||9.75%||5-10 years||Rate applicable for loan amounts between Rs. 20 and 30 lakhs.
|Indian Overseas Bank||9.75%||5-10 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|State Bank Of India||10.00%||5-15 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Allahabad Bank||10.00%||5-10 years||Rate applicable for loan amounts upto Rs. 20 lakhs.
|Bank Of Maharashtra||10.00%||5-10 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Corporation Bank||10.00%||5-15 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
|Oriental Bank Of Commerce||10.00%||upto 10 years||Rate applicable for loan amounts upto Rs. 20 lakhs.
|Punjab National Bank||10.00%||5-10 years||Rate applicable for loan amounts upto Rs. 20 lakhs.
|State Bank of Bikaner and Jaipur||10.00%||5-15 years||Rate applicable for loan amounts upto Rs. 30 lakhs.
People who have existing home loans can also take advantage of these new lower interest rates but they may have to consider pre-payment clauses on their loans. Pre-payment clauses on home loans can sometimes run as high as 2 percent of the loan amount. Concessions being discussed such as no or lower processing fees in this package however can soften the blow for existing home loan borrowers considering changing their bank to take advantage of the lower interest rates.
December 10, 2008, Ratekhoj.com. Tata Motors Limited, a flagship company of the Tata Group which is one of the largest business groups in India, has announced that it is offering fixed deposits with terms of 1 year, 2 years and 3 years. Tata Motors is engaged in the manufacture, design and marketing of passenger and commercial vehicles in India.
The company is accepting fixed deposits with a minimum deposit amount of Rs. 20,000 with additional deposits accepted in multiples of Rs. 10,000. Investors can choose either a Quarterly Income Plan (Scheme A) or a Cumulative Deposit Plan (Scheme B) where interest in compounded quarterly. Investors depositing more than Rs. 1 lac can also choose a monthly income plan. Senior citizens can get 0.50% additional interest. The following are the interest rates offered by Tata Motors:
|Quarterly Income Plan|
|Period||Minimum Amount||Interest Rate|
|1 Year||Rs. 20,000||10.00%|
|2 Years||Rs. 20,000||10.50%|
|3 Years||Rs. 20,000||11.00%|
|Cumulative Deposit Plan Plan|
|Period||Minimum Amount||Interest Rate(Compounded Quarterly)||Maturity Value||Yield|
|1 Year||Rs. 20,000||10.00%||Rs. 22, 076||10.38%|
|2 Years||Rs. 20,000||10.50%||Rs. 24,607||11.52%|
|3 Years||Rs. 20,000||11.00%||Rs. 27,696||12.83%|
The offer of 10.00% for a 1 Year fixed deposit does not compare favorably with fixed deposit rates offered by many banks in India currently for a 1 year period. DBS Bank currently offers an interest rate of 11.25% while Tamilnad Mercantile Bank, Karur Vysya Bank and Lakshmi Vilas Bank all offer 11.00%. YES Bank, Catholic Syrian Bank, Bank of Rajasthan, Federal Bank, South Indian Bank, Indian Bank, UCO Bank, IDBI Bank, State Bank of Bikaner and Jaipur, ABN AMRO Bank, State Bank of Mysore, State Bank of Patiala, Corporation Bank and several other banks offer interest rates of 10.00% or more. Given this, the offer by Tata Motors is not attractive to investors for the deposit period of 1 year.
The offer of 10.50% for a 2 Year fixed deposit also does not compare favorably with fixed deposit rates offered by many banks in India currently for a 2 years period. DBS Bank currently offers an interest rate of 11.25% while Tamilnad Mercantile Bank, Karur Vysya Bank, City Union Bank and Lakshmi Vilas Bank all offer 11.00%. YES Bank, Karnataka Bank, ING Vysya Bank, Syndicate Bank, Indian Bank, Bank of Rajasthan and Development Credit Bank all offer interest rates of 10.50% or more. Depositors can choose these banks over Tata Motors for a deposit period of 2 years as well given the relative safety of banks over company deposits.
The offer of 11.00% for a 3 Year fixed deposit is attractive when compared with fixed deposit rates offered by many banks in India currently for a 3 years period. Only Tamilnad Mercantile Bank, Karur Vysya Bank and Lakshmi Vilas Bank currently offer an interest of 11.00% for fixed deposit terms of 3 years. Tata Motors compares favorably with all other banks and therefore offers a good alternative if depositors are looking for higher returns on their fixed deposits for a term of 3 years.
Tata Motors is authorised to raise up to Rs 1,931.48 crore from the public through fixed deposits. People interested in this scheme can download the application form and submit them at designated offices of J M Financial, Kotak Securities Limited, Tata Securities Limited or HDFC Bank as specified in the application form.
December 10, 2008, Ratekhoj.com. Indian Overseas Bank, a public sector bank in India, has modified its home loan rates in the fixed rate category. Interest rates for amounts under Rs. 30 lacs for a loan duration of upto 5 years are now 10.75% up from 10.00% earlier. Interest rates for loan amounts under Rs. 30 lacs and a loan duration of more than 5 years and upto 10 years is now 11.25% down from 12.50% earlier. Interest rates for amounts over Rs. 30 lacs and a duration of upto 5 years is now 13.25% and rates for a duration of 5 years upto 10 years is 13.75% for amounts over Rs. 30 lacs. Indian Overseas Bank does not offer fixed rate home loans for durations over 10 years.
Indian Overseas Bank has not made any changes to interest rates for floating rate home loans.
December 10, 2008, Ratekhoj.com. Citibank has introduced a new fixed deposit scheme named as the Protect & Grow Deposit. According to the announcement, the principal invested stays secure as a Fixed Deposit, while the interest earned can be invested in a mutual fund of your choice. The salient features of this scheme as described by Citibank are:
- Book a deposit of minimum Rs. 15 lakhs, for at least 1 year and see your interest grow.
- Enjoy attractive interest returns on a deposit that works harder than your regular deposit.
- Choose the percentage of interest to be invested in any Mutual Fund scheme, with a minimum of Rs. 5000 in any one scheme.
- Auto-renewal facility is also available.
- Invest the quarterly interest you earn from your Fixed Deposit in up to 4 open ended Mutual Funds distributed by the Bank.
Citibank, a foreign bank operating in India, offers attractive fixed deposit interest rates and this scheme allows investors to take advantage of mutual funds as well on the interest earned.
December 06, 2008, Ratekhoj.com. Kotak Mahindra Bank, a private sector bank in India, has cuts its fixed deposit rates effective from December 5, 2008. For non-senior citizens, fixed deposit rates for a term of 271 days-1 year have come down to 9.75% from 10.50%. Rates for a fixed deposit maturity period of 1-2 years are now 10.25% reduced from a peak of 10.75% for various periods earlier. Fixed deposit rates for a period of 2 years and above to less than 3 years have come down to 10.25% from 10.50%. Rates for terms above 3 years to less than 5 years remain unchanged at 10.25% while fixed deposit rates for terms above 5 years and less than 10 years also remain unchanged at 10.00%.
For senior citizens, interest rates have gone down from 10.75% to 10.25% for a term of 271 days to 1 year. Kotak has actually increased its rates for terms of 3 years and above to less than 5 years from 10.50% to 10.75% for seniors. It has also increased the FD rates for senior citizens for a term of 5 years and above from 10.25% to 10.50%.
As of December 5, 2008, DBS Bank gives the highest interest rate among all fixed deposit terms for non-senior citizens among all banks operating in India. DBS Bank, a foreign bank operating in India, offers an interest rate of 12.00% for a term of 1 year upto 2 years for deposit amounts between Rs. 15 lacs and Rs. 50 lacs. Tamilnad Mercantile Bank, a private sector Indian bank, offers the second highest interest rate of 11.50% for a fixed deposit term of 3 years.
State Bank of Bikaner and Jaipur as well as State Bank of Hyderabad are offering the highest interest rate among all public sector banks of 10.75% for non-senior citizens as of December 05, 2008. State Bank of Bikaner and Jaipur is offering this rate for a term of 2-3 years while State Bank of Hyderabad is offering this fixed deposit interest rate for a term of 750 days which is just over 2 years. For longer term fixed deposits (terms greater than 5 years), Union Bank of India, a public sector bank, is offering the highest interest rate of 10.05%.
December 06, 2008, Ratekhoj.com. Measures taken by the Reserve Bank of India to boost economic growth are likely to result in home loans, car loans, personal loans and other loans becoming cheaper. As announced in a press release by the RBI:
The Reserve Bank has reviewed the evolving macroeconomic and monetary/liquidity conditions and has decided to take the following further measures:
- It has been decided to reduce the repo rate under the LAF by 100 basis points from 7.5 per cent to 6.5 per cent and the reverse repo rate by 100 basis points from 6.0 per cent to 5.0 per cent, effective December 8, 2008.
- We are working on a similar refinance facility for the National Housing Bank (NHB) of an amount of Rs 4, 000 crore. We will announce the details after consideration of the proposal by the Central Board of the Reserve Bank which is meeting next week.
- It has been decided that loans granted by banks to Housing Finance Companies (HFCs) for on-lending to individuals for purchase/construction of dwelling units may be classified under priority sector, provided the housing loans granted by HFCs do not exceed Rs.20 lakh per dwelling unit per family. However, the eligibility under this measure will be restricted to five per cent of the individual bank’s total priority sector lending. This special dispensation will apply to loans granted by banks to HFCs up to March 31, 2010.
Repo rate is the rate at which banks borrow money from RBI and the reverse repo rate is the rate at which banks park their short-term excess liquidity with the RBI. A reduction in the repo rate as announced by RBI above will help banks to get money at a cheaper rate. It is expected that this will be passed on to consumers in the form of cheaper housing, car and other loans to stimulate economic growth. As reported in The Hindu, the RBI Governor D Subbaro expects cuts in both lending as well as fixed deposit rates:
Giving a clear signal to banks to cut the interest rates, the Reserve Bank of India on Saturday reduced the short-term indicative rates — the repo rate and the reverse report rate by 100 basis points each to 6.5 per cent and 5 per cent — with effect from December 8.
This is likely to result in a further cut in interest rates of housing loans and other consumer and personal loans by banks.
“The cumulative impact of the measures in Saturday’s package, together with earlier measures, should be to step up demand and arrest the growth moderation. In particular, the reduction in the repo and reverse repo rates should result in a reduction in the marginal cost of funds to banks and enable them to improve the flow of credit to productive sectors of the economy on viable terms,” RBI Governor D. Subbarao said here while announcing a slew of measures to stimulate the economy.
“Our expectation is that banks will respond to the measures today by lowering lending and deposit rates,” the RBI Governor added.
Earlier, the RBI signalled a lowering of the interest rate structure by reducing its key policy repo rate by 150 basis points from 9 per cent as on October 19 to 7.5 per cent on November 3.
Taking the signal from the repo rate cut, the top five public sector banks have reduced their benchmark prime lending rates (BPLR) from 13.75–14 per cent as on October 1 to 13– 13.50 per cent now.
The central bank expects more banks to reduce rates following the latest measures.
As reported in Indian Express:
The Reserve Bank of India (RBI) sent a strong signal to banks to lower interest rates on all types of borrowings by cutting the repo and reserve repo rates by 100 basis points. The cuts are part of a mega economic stimulus package to make borrowing more affordable.
In another measure that will result in lower home loans, the RBI has decided that loans granted by banks to housing finance companies (HFCs) for on-lending to individuals may be classified under the priority sector, provided the loans granted by HFCs do not exceed Rs 20 lakh per dwelling unit per family. The priority sector status will enable banks to reduce interest rates on such loans significantly.
The RBI had cut the repo rate from 9 per cent to 7.5 per cent in October-November as a signal to commercial banks to bring down rates, but not many private banks did that. This time, RBI Governor D. Subbarao, while announcing the cut in rates in Mumbai on Saturday, said in no uncertain terms that commercial banks “need to get the signal”.
“We hope that commercial banks (will) act accordingly. It is a matter of time before banks take a decision on interest rates on home loans. Monetary transmission takes time. However, as there is adequate liquidity in the system now and the demand for money is also falling, interest rates will also move down,” Subbarao said.
On Friday, ICICI Bank reduced its interest rate for home loans of Rs 20 lakh and below by 1.50 per cent to 11.50 per cent. Bankers said that with a comfortable liquidity position and fall in inflation, interest rates would now fall across the board.
As reported in Business Standard:
Housing finance companies (HFCs) are contemplating a cut in their prime lending rates (PLRs) following the latest measures of the Reserve Bank of India (RBI) to stimulate the economy.
“Naturally, we would reduce our prime lending rates as we are expecting an instant fund flow at a cheaper rate, subsequent to the policy, which would lower our cost of funds,” said LIC Housing Finance Director and CEO R R Nair.
It’s likely that there will be cuts in home loan and other loan rates in the near term in response to RBI’s measures. Therefore, people contemplating a home purchase in the near future can expect benefits from these measures.