Thursday, 23 July 2015

Focus is now on personal loan space: Shyam Srinivasan

SME grew 17% y-o-y and we think this growth will continue. Corporate growth has been dented. Retail and agri segments are growing well although gold loan book is flattish. In retail, home loan is doing okay, but we are confidently stepping into the personal loan biz




Federal Bank reported a 36% y-o-y drop in net profit in the first quarter of this fiscal. Shyam Srinivasan, MD & CEO, attributed this fall to provisioning for one large account and treasury losses. The bank, however, expects NPAs to improve going forward and is now concentrating on the personal loan space. 

Excerpts from an interview:
Federal Bank’s PAT fell 36% y-o-y and NPAs also rose. What led to this?
Largely, two things impacted the quarter that went by. One was the impact of one large account worth R134 crore and, added to this, was the impact of treasury. The treasury provisions were about R49 crore whereas credit provision for the one particular account stood at R70-odd crore. A combination of these two increased the overall provisions by almost R120 crore. For the first quarter, the provisions stood at R153 crore against R22 crore in the same quarter last year.

How soon do you think you could recover your loan from this account?
We are certainly looking at recovery. The percentage of recovery and the duration in which we can make it is a challenge because we are not the sole bankers. There are nine banks and the outstanding is quite significant. The market is working on various options, including SDR. It may take some time.



What would be your outlook on NPAs going forward?
If you see our last seven to eight quarters, sequentially, it (the asset quality) has improved every quarter. I expect it to revert to that momentum. It also depends on how the economy shapes up. I would not like to guide a figure, but certainly the improvement will be seen.
How were the NIMs in Q1? What is your guidance for the same?
NIM for Q1 was 3.12%, while for the same quarter last year, it was 3.25%. NIM for Q4FY15 was 3.31%. The fall in NIMs is a function of the impact of reversal of interest on account of slippage. We have had excellent deposit growth, but deployment has been relatively muted. We are looking at an NIM of 3.2-3.22% for the full year.

What was your cost of funds for Q1?
Our blended cost of funds for Q1 came to 7.12% against 7.29% on a sequential basis. The yield on advances has fallen much more.
Any recoveries or upgrades in the first quarter?
Nothing major, apart from the routine ones. There is one account where we had a recovery of R18 crore.

Where is your growth coming from?
SME is doing well. It grew 17% on a year-on-year basis and we think this growth will continue. Corporate growth has been dented. Retail and agri segments are growing well although gold loan book is flattish. In the retail segment, home loan is doing okay, but we are confidently stepping into the personal loan business.
We have also got the approval from all authorities for launching our IFSC branch in the GIFT City. That will be a big one for us prospectively, more in the medium term. In FY17, we should see big benefits accruing from our ability to compete more formidably on the foreign currency business. By end of this quarter or early next quarter, we will be launching it.

What are your fund raising plans for FY16?
Almost none. We are very well capitalised and we don’t see any requirements in the near term.

Monday, 13 July 2015

6 things about CIBIL every young adult should know

Your CIBIL score is a measure of your financial health. A good CIBIL report and CIBIL score of 750 and above can help you get easy access to credit. But did you ever wonder how the CIBIL score is calculated, or what are the factors that may take it downhill? Here are six things that you must know about CIBIL.

How is your CIBIL score calculated?
First, you need to know the components of the CIBIL score and the weightage they carry.
· The pattern you follow in paying off your credit card and loan EMIs has the highest weightage of 35% and thus is the most important factor impacting your CIBIL score.
· Next comes the "credit utilisation" that carries a weightage of 30%. Credit utilisation ratio is arrived at by calculating the balance outstanding on your existing cards as a percentage of the total credit limit on all your cards.
· The third factor carrying a weightage of 15% is the "length of credit" or how long have you been servicing debt.
· The number of "hard inquiries" on your CIBIL report has a 10% weightage on your CIBIL score. Every time you apply for a new loan or a credit card, it gets registered in CIBIL as a hard inquiry and shaves off a few points from your CIBIL score.
· Lastly bearing a 10% weightage on your CIBIL score is the "mix of credit". A healthy mix of secured and unsecured credit, will have a positive bearing on your CIBIL score.

Now that you know what goes into the calculation of your CIBIL score, here a few mistakes you need to avoid to keep your CIBIL score intact.



Making late payments
It doesn't matter how many credit cards you own, but if you develop a habit of not paying the total outstanding amount within the billing cycle, you may be heading towards a disaster. Ensure that you spend judiciously and make all credit card repayments on time. The same holds true for loans, missing even one repayment can bring your CIBIL score down substantially.


Exceeding credit utilisation above 30%
Having a higher limit on your credit card, doesn't mean that you have to use it completely. This ways, you'll be inviting an overwhelming debt trap, as a higher credit utilisation means that more points being knocked off your CIBIL score. Therefore, keep a conscious check to see that your credit utilisation remains under 30% at all times.

Closing old credit cards
Do not commit the mistake of closing a credit card that was given to you by your parents once you are proficient enough to own a bunch of cards yourself. The reason being that if the card carries you name, it means that CIBIL has been recording your repayment history (assuming that your Mom or Dad have been footing the bill for the same). You simply need to ensure that you have cleared the balances as this will help you gain brownie points for maintaining good credit history.

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Appearing credit hungry
We are often credit card issuers and money lender to avail easy credit, but one should try to escape as much as possible unless you are in dire need of it. Applying for too many credit cards or loans will make you appear credit hungry and a considerable number of enquiries on your CIBIL report will bring your CIBIL score down.

Not having the right credit mix
If you are thinking that you are better off not availing credit at all, you are wrong. In fact, it makes a lender wary because he can't access your credit history to asses you. On the other hand, what adds on to your CIBIL score is having a good mix of credit such as a home loan, car loan, a personal loan, etc. along with a maximum of two or three credit cards. Remember, the crux of maintaining a good CIBIL score is to use credit responsibly. If you are aware of your spending habits and are making timely repayments, you have little to worry about!

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Monday, 6 July 2015

Now get a home loan from State Bank of India in just 10 days!

"It will bring down the average time taken for delivery of home loan to within 10 days from the date of receipt of completed home loan application form and relevant supporting documents from the customer," the release said.


Country's largest lender State Bank of India has launched an initiative to provide doorstep services and expedite home loans application process.



The initiative known as 'Project Tatkal' will help get the loan within 10 days after receipt of application form and relevant supporting documents, the bank said in a release.

"It will bring down the average time taken for delivery of home loan to within 10 days from the date of receipt of completed home loan application form and relevant supporting documents from the customer," the release said.

The implementation will be done at large centres with sizable home loan business.

The bank has also recently introduced an online customer acquisition solution (OCAS) for instant e-approval of home loan applications.

The bank has over three million home loan customers with a portfolio of over Rs 16,60,000 crore.



Thursday, 2 July 2015

HDFC Bank launches 10-second personal loan disbursement

COIMBATORE: 
     HDFC Bank will now disburse personal loans to its customers in just 10 seconds. With this product, existing customers will have a pre-approved loan amount available to them 24x7. "The entire process to avail of the loan is completely paperless, and users can simply log into their bank account via net-banking or mobile banking and avail of this loan at a click," HDFC Bank said.

The bank claimed that it is the first institution in the retail lending space to completely automate the entire process of loan approval and disbursement. "The 10-second loan is completely hassle-free and transparent and users will no longer have to wait for disbursement of funds, particularly in medical or other types of emergencies where there is an urgent need for cash," it said.


For  Personal Loan in Chennai , Call 91-9710283311




"It is like having a real cheque in one's virtual wallet and is part of our mission of enabling customer delight by creating simple and speedy banking solutions that are available at a click," said Arvind Kapil, business head - unsecured loans, home & mortgage loans, HDFC Bank.

"Customer convenience lies at the heart of our digital initiatives and we have noticed growing demand from digitally-savvy customers to avoid paper-work and to accelerate processes," he said. "Most customers expect banks to connect the dots between online and offline options to deliver convenient, consistent service," he stated.

The 10-second loan is the latest initiative in HDFC Bank's digital banking offering christened 'GoDigital'. This campaign began in Varanasi last year with the launch of its 'Bank Aap Ki Muththi Mein' offering, which literally converts the mobile phone into a bank branch. Since then the bank has launched a host of digital initiatives.

"The move is part of our transformation into a digital bank which inlays digital solutions all through its value chain," Kapil said. "This means building significant efficiencies in the back-end and streamlining of processes that are central to delivering an enriched customer experience at the front-end," he said. At the end of 2014-15, 63% of all transactions at HDFC Bank were conducted through digital channels.

Saturday, 6 June 2015

Beware! Banks are spying on your spending habits

Ever wondered why you are getting calls offering personal loan? Why personal loans are being sanctioned to you instantly? Or why you get inundated with calls for a credit card even if you don't need them?

The answer is banks are engaging in data mining, where they analyse customer's profiles and behaviour. They even track down your favourite restaurant, your eating habits, shopping preferences, movies you watch, books you read, the hospital visits you made; in fact, just anything about you.


Your loan repayments too are intensely scrutinised. These informations help banks take a quick call whether to offer you a loan or deny one, and effectively check bad loans. It also helps banks frame a strategy to sell financial products, have tie-ups with retail stores or simply entice with a good deal so that a good customer transfers his/her loan account.

A senior SBI official said, "We compile such customer data which help us decide on how to sell our insurance, mutual fund products or lure one customer to bank with us or have more than one relationship with an existing customer. Suppose a customer has a savings bank account with us and a home loan with another bank we try to woo the customer to shift his loan account."

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According to Harshala Chandorkor, senior vice-president, Consumer Services and Communications at Credit Information Bureau (India) Ltd (CIBIL), "Banks are engaging in data mining to understand the profile of their customers and understand the health and behaviour of their portfolio. It helps them to deepen their relation with existing customers, enhance credit limits on your credit cards, deny credit cards if your credit history is poor and have tie-ups with retailers. We at CIBIL undertake data mining to understand the profile and behaviour of the customers which help banks to define their strategies."

The bank has a data mining centre in Belapur, Navi Mumbai. With strict KYC (Know your customer) norms in place, banks get all the basic information from the customers themselves. And often customers with a savings account will be having a debit card, a credit card, a home loan or a car loan. Each time your card is used your bank gets a feedback of what you do with your money.

All banks, especially those in private sector, undertake data mining to understand the customer better before marketing various financial products to them and to avoid bad loan decisions. Tie-ups with online retailers are also undertaken considering the customer profile. HDFC Bank debit card has offers on various travel portals, and jabong and ebay. Banks like ICICI and HDFC are active in making calls to sell credit cards and personal loans.

For example, SBI debit card has tie-up with LG and other traders that the bank markets it as a 24x7 market place; ICICI Bank has tie-up with Shoppers Stop, Flipkart etc. Thus, each bank, depending on the kind of customer profile, will go in for tie-ups with merchant establishments who, in turn, will give discounts on the bank's credit, debit cards.

A senior banker with Union Bank of India said, "We regularly monitor our savings bank customers to find out from where they may have taken a home loan or a car loan. And try to find out how the bank could not have caught the customer. His relationship with the bank cannot just be a savings bank account. It makes sense for the bank to have more than one relationship with the customer."




Tuesday, 2 June 2015

Should I Use a Personal Loan to Pay off My Student Debt?

With large student debts, many graduates are seeking new ways to pay off their student loans. An emerging option is the use of small personal loans to pay off and save on high-interest loans.

A personal loan can be a quick way to pay off your financial expenses under new, hopefully more favorable conditions. The loan has a set term and fixed payment throughout the life of the loan. Personal loans typically do not have any prepayment penalties and they affect your credit the same way a student loan would. Overall, a personal loan is not drastically different from a student loan – you are just using a new loan to pay of an existing student loan.

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Advantages:

There are many benefits to using a personal loan to pay off student loans.

You may have access to a lower fixed rate loan by using a personal loan.
Personal loans usually have shorter payoff periods if your goal is to pay off your loans as fast as possible.
Your student loan can be combined into one convenient payment.
You can release any cosigners you have on your student loans. If you qualify for the personal loan on your own, the person who cosigned for your student loans will not be obligated on your new loan.
Unlike most student loans, a personal loan is dischargeable in bankruptcy.




Disadvantages:

One drawback to using a personal loan to pay off student loans would be that you could lose the benefits of forbearance and deferment options on federal loans, or the reduced payments available with private loans. Check to see if your existing loans have these benefits and if you have a need to utilize them.

Another disadvantage is most lenders have a limit on loan amounts for personal loans. Since a personal loan does not have any collateral, lenders typically limit the amount that can be borrowed. Furthermore, if you still have new credit a lender may not feel like you have sufficient credit history to warrant a high loan amount.

So if you are a borrower with a large amount of student loan debt you may not be able to pay off all of your student loans utilizing a personal loan. Also, there aren’t any tax benefits on a personal loan. Each year borrowers can utilize a tax deduction for up to $2500 paid in interest on their student loans, but this is not extended to personal loans.

Should I get a personal loan?

A personal loan is one of many options worth considering when trying to reduce your student loan interest rates. There are several lenders on the market that offer personal loans to pay off student loans. Alternatively, refinancing lenders will pay off your existing loans for you as well as typically have lower rates than personal loans. Depending on your financial situation there are pros and cons to both refinancing and using a personal loan to pay off your student loans. Figure out what your repayment goals may be and explore your options.



Saturday, 30 May 2015

5 good reasons to get a personal loan

A personal loan can be a powerful tool in managing your finances — as long as it is used responsibly. But given some of the taboos commonly associated with debt, you might think that taking out a personal loan is always a bad idea. Sure, taking out a loan means you’ll be in debt, and too much debt can hurt your credit score. Still, a personal loan can reap important benefits under the right circumstances.

For Personal Loan in  Chennai

Below are five signs that it might be a good idea to get a personal loan to improve your financial situation.

1. You’re saving money while carrying debt.

Bloomberg notes that the savings rate in February — which was 5.8 percent — was the highest it has been since December 2012. On a long-term basis, this is good news, as it suggests more people are trying to effectively plan for the future. “After years of spending as if there were no tomorrow, consumers are now saving like there is a tomorrow,” said Richard Moody, chief economist at Regions Financial Corp. Yet, it’s important not to ignore some basic economic realities.

In January, GOBankingRates published its 10 best savings accounts of 2015 list, with the best offered APY coming in at 1.10%. When you compare this to the average new credit card interest rate at roughly 15 percent, you quickly see that building up savings while carrying debt is a losing proposition. Rather than falling behind in the interest rate game, taking out a personal loan to consolidate your credit card debt could be a sound approach.

2. You can’t afford to pay your medical bills.

An unforeseen medical bill can create havoc in the finances of even the most diligent planner. The good news is that thanks to a recent change in the way the major credit bureaus look at medical bills, you will have 180 days to address these bills before they are added to your credit report. This can give you the time you need to apply for and secure a personal loan in the event that the bill is more than you can afford and a payment arrangement with the provider cannot be worked out. Just make sure you get a personal loan with a low interest rate and favorable terms.



3. Your moving costs are too high.

Moving can be an extremely stressful activity, particularly when you consider the myriad of expenses associated with it. Between movers, storage, boxes, supply, transportation and unexpected small costs, the total price can be significant.

U.S. News reported that the average cost of an intrastate move is $1,170, and a move between states is $5,630. It is tempting to simply put these charges on your credit card. But if you’re credit card compounds your interest, which many tend to do, you’ll be paying “interest on interest.” In other words, your interest will be calculated on the principal amount and the accrued interest. Taking out a small personal loan with a lower interest rate and simple interest — which is only calculated on the principal amount — might be an affordable option.

4. You can’t pay your car repair bills out-of-pocket.

Having reliable access to an operational car might be a critical part of your ability to earn a living. Car accidents that are not covered by insurance and unexpected major repair bills can seriously interfere with that access. If you can’t find a car repair shop that lets you take make affordable monthly payments on a hefty bill, it might be a better choice for you to take out a personal loan to pay for the costs.

5. You want to make home improvements but don’t have equity.

While you might be able to pay for home improvements with a construction or home equity loan, in some cases, these options might not be available to you. If you are planning to move relatively soon, there are certain home remodels that can add value to your home and make it easier to sell. These include kitchens, baths, outdoor features and roofs. To pay for these renovations or additions, it might be worth it to take out a personal loan. You should make an assessment of your home’s value and determine if the debt is worthwhile. Consulting an expert is a good idea, as well.

When used for the right reasons, personal loans that offer low interest rates and fair terms are great tools for managing your finances. If you are facing any of the above scenarios, consider consulting a lender to take out a loan.

Tags: Personal Loan in Chennai, Axis Bank Personal Loan, ICICI Personal Loan, Home Loans in Chennai, Business Loans in Chennai

Thursday, 28 May 2015

ICICI Bank launches voice recognition for customers

MD Chanda Kochhar says the facility 'has the potential to increase security and convenience

ICICI Bank has launched a voice recognition service, which can identify and authenticate a customer, based on his voice. This will spare the customer the task of remembering his account and personal details and passwords. ICICI Personal Loan

This voice recognition technology works on voice prints that will comprise about 100 characteristics such as voice modulation, speed, accent, pronunciation, etc. These will be stored in the customer’s account and will be used to authenticate the details every time they call back. The bank said the voice recognition is secure, since these characteristics are specific to one person and, therefore, it will be difficult to emulate it.




“We have noticed that customers, especially those who use smartphones, find it difficult to enter the 16-digit card number and the four-digit PIN with accuracy and at a reasonable speed. We wanted to offer them a secure and hands-free alternative to the traditional on-screen commands on smartphones. The voice recognition service has the potential to increase security and convenience,” said Chanda Kochhar, managing director and chief executive officer, ICICI Bank.

The lender said 33 million of its bank and credit card customers would be able to use the service. It has become the first lender to launch such a service. The bank had earlier launched other innovative services that include new applications for mobile banking, fully automated and ‘touch banking’ branches, tab banking, banking on Twitter, contactless debit and credit cards, and ‘Pockets’ — a digital bank on the mobile phone.

Thursday, 21 May 2015

ICICI Bank posts lowest profit growth in 21 quarters

Bad loans rise but bank says worst is over; healthy growth in retail loans


ICICI Bank, the country’s largest private sector lender, registered a 10.2 per cent growth in net profit to Rs 2,922 crore for the quarter ended March, from Rs 2,652 crore in the corresponding period a year before, mainly aided by trading gain.

This is its lowest profit growth since the October-December quarter of 2009, when the bank incurred a loss. Net profit numbers, however, were a tad higher than a Bloomberg estimate of Rs 2,881 crore.

Bad loans zoomed, with more of restructured assets slipping to the non-performing assets (NPAs) category. Gross NPAs were at Rs 15,095 crore or 3.78 per cent of gross advances, as on March 31, compared with Rs 10,505 crore a year before.

“We have seen higher slippages from the restructuring portfolio. The restructuring of loans was done on the assumption that economic activity will pick up but economic growth remained volatile,” said Chanda Kochhar, managing director and chief executive officer, explaining the rise in NPAs.

However, she said, the worst was over and the addition to NPAs would come down in this financial year compared to the earlier one. The net restructuring book is at Rs 11,017 crore. The bank made Rs 2,033 crore of provisioning in the quarter. She indicated about 25 per cent of the restructured accounts had been downgraded, in line with the sector average. The restructuring pipeline is seen at Rs 1,500 crore.



Treasury operations were the silver lining. The bank booked trading profit worth Rs 726 crore as compared to Rs 245 crore in the same period last year, on the back of favourable bond and equity markets. Trading gains helped non-interest income to grow 17 per cent; fee income rose seven per cent.

The bank has seen healthy growth in retail loans, which is 42.5 per cent of the total portfolio; home loans grew 26 per cent and car loans by 25 per cent. Overall retail loan growth was 25 per cent, while the corporate book saw 10 per cent growth. Overall net interest income growth was 16 per cent.

The growth in retail loans, coupled with 15 per cent growth in low-cost deposits, helped the bank to improve its net interest margin (NIM) by 11 basis points over the previous quarter to 3.57 per cent In Jan-March. For the full year, NIM was 3.48 per cent as compared to 3.33 per cent a year before. “Our endeavour will be to maintain the margins of the current levels (3.48 per cent),” she said.

ICICI expects loan growth to improve and aims at a higher rate than the sector. “We might grow two to four percentage points higher than the system loan growth, at 18-20 per cent in FY16,” she said. Deposit growth is expected to be 15-16 per cent.

ICICI Bank scrip on BSE closed 2% lower on Monday at Rs 302.

Monday, 18 May 2015

Defaulters of personal loans account for 80% of court cases

nal loan cases in courts accounted for 80 percent of all court cases in the last six months.
Courts Kingdom-wide have received 2,641 cases related to defaulters of personal loans filed by banks, firms and finance agencies, Al-Watan daily said quoting informed sources.
According to the sources, Riyadh topped other regions with having the highest number of personal loan cases at 1,330, followed by Jeddah (489), Madinah (353), Dammam (245), Tabuk (225), and Makkah (219).
Lawyer Thamir Al-Sakakir attributed the rising rates of loan-defaulting cases to the growth of installment firms which used to provide loans to individuals without paying attention to their financial obligations to other parties.
Earlier, a source in the Ministry of Justice said courts Kingdom-wide have ordered debtors to repay a total of SR51 billion in claims to creditors in the last 18 months. The money lenders (creditors) had filed more than 166,000 claims to get back their funds through courts, the source said.
Those who refuse to comply with court orders face penalties including seizure of money, imprisonment, ban from travel, or suspension of electricity services, which are all decided by judges, the source said.
Judicial rulings are normally related to unpaid checks, notes and bonds and a variety of funds, including fixed and movable properties.


Tags: Personal Loans in Chennai, Home Loans in Chennai, Axis bank Personal Loan

Thursday, 14 May 2015

Soon, you can shop on HDFC Bank website; customers to get best deals from Snapdeal, Flipkart, Amazon


MUMBAI: 

HDFC Bank is set to double up as an online shopping mart of sorts, selling grocery, clothes, shoes and other lifestyle products on its website, and getting its customers the best deals from e-tailers such as Snapdeal, Flipkart and Amazon.

Given the rapid growth in e-commerce, this is a timely move on the part of India's second largest private sector lender, said a senior executive.


"We are a large retail and payment bank...about 30-40% of customer spends on e-commerce happens through our credit and debit cards," said Parag Rao, senior executive vicepresident and business head (card payment products and merchant acquiring services) at HDFC Bank. "We are also a large acquirer; so, as a bank we thought while being the payment provider why don't we give customers the option to shop for a host of products on the bank website and get offers and preferential treatment to increase customer stickiness."

Rao said that the bank will not be selling goods directly as the rules do not permit it. "We have tied up with partners in travel, bill payment, grocery, hotel and shopping who have their sites anyway," he added.

The bank, based on customer feedback for the past one year, has been working to launch SmartBuy, which will provide a platform to its customers to get better discounts and facilities at one place.

E-commerce spends grew at a compounded annual growth rate of 34% between 2009 and 2014 to touch $16.4 billion, according to a PwC India report. The sector is expected to expand to $22 billion by the end of this year. The Reserve Bank of India, taking note of the growing importance of ecommerce companies, had asked banks to form joint ventures with them or appoint them as business correspondents.

The central bank's move to licence niche payment banks has also led to increased focus among banks on digital banking.

"The increase in e-tailing is something that doesn't matter to banks. They want these transactions to be executed through their website so that they get the fee income," said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services. "They are just gearing up for payments banks.

Banks like ICICI Bank, HDFC Bank and Axis Bank want to ensure their transactions are not routed to any third-party website, for if a payment bank comes and these are routed to its website these banks may lose customers," said Parekh.

Fee income is a major contributor to HDFC Bank's profits. Its other income, which includes fees and commission from offer of banking services, grew 29.9% to Rs 2,563.8 crore in the quarter to March, which led to a 20% growth in its net profit.

"HDFC Bank is the largest acquirer (of customers) in the country and it cannot leave the acquisition space. Banks are just trying to pre-empt products that the payment banks would come up with," said Parekh.

Aditya Puri, the managing director and chief executive officer of HDFC Bank, has been pushing the digital initiative since December 2014, replicating the best practices of some of the global banks such as US-based Wells Fargo and Poland's mBank. The private sector lender last year appointed Nitin Chugh as the head of its digital banking initiative.

Chugh, who visited the mBank, found out that the Polish bank rolls out loan products in 30 seconds. "When I came back we tried to improvise and launched a similar product where our customers can avail of personal loan in 20 seconds," he said.

The bank is also in the process of launching a new wallet facility on mobile phones that will allow customers to store their virtual credit and debit cards to perform transactions.

Wednesday, 13 May 2015

Axis Bank goes personal with loan app

Axis Bank has launched an instant personal loan service called “24X 7 Instant Personal Loan” — available through its mobile app.


Axis Bank has launched an instant personal loan service called “24X 7 Instant Personal Loan” — available through its mobile app, via which its select customers can avail personal loans that will be credited to their accounts instantly.
The paperless service requires a customer to log on to the bank’s app where they can view their pre-approved loan amount. The customer can then decide on the amount they want to avail of, through a slider scale on the app, as well as the loan tenure.
After the selection, the app displays the equated monthly instalment (EMI) for the amount, along with the processing fee and the interest rate applicable on the loan amount.
Once one agrees to the terms and conditions, the money is instantly credited to the customer’s account and a message is displayed on the phone. According to Axis Bank, there is no verification call for this process.



The maximum loan amount a person could avail of varies from customer to customer, depending upon their credit profile.
“We keep track of the customer’s records and, based on the latest information, we make the offers on the app and this differs from person to person. We are using the big data technology at the back-end,” said Jairam Sridharan, head of retail lending and payments, Axis Bank.


Since the pre-approved amount depends on the latest track record of the customer, it may differ from day to day, he added.
On the maximum loan amount that could be disbursed through this service, Sridharan said for the top-end customers, it would be up to Rs 5 lakh. The bank did not disclose what the minimum amount is, but confirmed it will be close to Rs 1 lakh. The interest rate is likely to be in the range of 12-17% for the personal loan, according to Sridharan.



Monday, 11 May 2015

Now, a personal loan disbursed every minute from HDFC Bank

Unsecured loans had became a no-go area for banks that burnt their fingers following the global financial crisis of 2008. However, that has not deterred India’s second largest private sector bank, HDFC Bank, from pushing such loans in a big way and capturing 50 per cent of the personal loan market.

On Tuesday, the bank launched a new product that could process personal loans in 10 seconds. The response on the first day was so huge that by the end of the day, the bank ended up disbursing personal loans of an average size of Rs 3 lakh in a minute.

Arvind Kapil, senior executive vice-president — unsecured loans, home and mortgage loans, said the bank received ‘overwhelming’ response. “Earlier, we had thought it would take 15 days to catch on, but customers have been delighted and have given it clear thumbs-up. It’s a beginning of a journey and we will need to watch and learn as we go along,” he added.


Currently, the 10-second loan is available only to salaried employees who are existing HDFC Bank customers. Since the bank has a record of those customers’ transaction history, earning and expenditure pattern, it could process the loans within 10 seconds.

According to bankers, personal loans worth Rs 3,000 crore are disbursed every month. HDFC Bank is keen to get a larger share of the pie.

At the end of March 31, the personal loan dues for the bank stood at Rs 26,010 crore, compared to Rs 20,581 crore a year ago. At the end of FY15, personal loans made up 14.7 per cent of the total retail advances.

With this digitised personal loan product, the bank is looking at improving its productivity and cost efficiency by 25 per cent. In the months to come, it is hoping a third of the entire personal loan business will be driven by this product.

Going ahead, the lender is looking at replicating this loan processing technology to other consumer loans as well. This is going to be part of the bank’s transformation into its ‘GoDigital, Bank Aap Ki Muththi Mein’ strategy.

One reason HDFC Bank is confident on unsecured loans is that it has a very low level of non-performing assets.

As on March 31, its gross NPAs were at 0.9 per cent of gross advances, while net NPAs were at 0.2 per cent.

“We have one of the lowest delinquencies in personal loans, which is also reflected in the overall numbers,” said a bank official.

The industry level figures were much higher; gross NPAs was at 4.45 per cent as on March 15, 2015. Net NPAs was at  2.36 per cent.

It is not only personal loans, but the lender has been aggressively growing its overall unsecured loan portfolio as well. The, a market leader in the credit card business, saw the portfolio grow 32 per cent in the last financial year.

At the end of March 31 this year, the credit card outstanding stood at Rs 16,154 crore, compared to Rs 12,257 crore. According to the Reserve Bank of India data, the total number of outstanding cards at the end of December 2014 stood at 5,748,412.

Wednesday, 6 May 2015

Get a good deal on personal loans

Compare rates across lenders and use this to negotiate with your bank


Getting the best deal on personal loan can be daunting. Being unsecured loans, there is a range of interest rates and terms offered by banks, making it difficult to zero in on the best option.

Here are five ideas that can help you land a good deal.

Hunt around


The interest rate on a personal loan is based on a bank’s base rate and a spread. These vary among banks and change over time for the same bank.

So, rather than limit your search to only banks with which you have an existing relationship, know what other banks offer. One quick way to do this is to compare rates on websites such as BankBazaar.com, Bestdealfinance.com and Rupeezone.in.

You can also talk to agents who are authorised by banks to syndicate loans.

In addition to interest rates and tenure, find out other costs such as processing fee, closing costs and prepayment charges. This due diligence helps in getting a good deal.

For instance, if the terms offered by the bank where you have an existing account are not the best, it may be worth your while to get quotes from competing banks and then use these to negotiate.



Close existing loans


A factor that can impact rates is your existing loan obligations. This is because banks evaluate your ability to service a loan based on your income after subtracting EMI payments.

Closing your existing loans, if possible, can qualify you for a higher loan amount. It can also improve your credit score and get you better rates. Banks may also offer better terms if you transfer a personal or other loan from another bank to them.

However, you must also look at the full cost — prepayment penalty, closing costs and higher overall interest payments due to your loan payment schedule getting reset.

Establish stability


Banks perceive personal loans  as risky as they are not backed by any collateral.

So they want to ensure that you are both capable and willing to service the loan. It helps to establish that you have a good history of repayments.

Besides, you will be judged as a high-risk borrower if you just moved to a city or took up a job. The risks are considered higher if this is your first job, says V Muralidharan, designated SBI authorised loan counsellor.

If you have a salary account, a long transaction history and good income potential — judged by your education and length of employment — you are likely to be considered a low-risk customer. Banks may be willing to reduce processing fees or increase loan eligibility based on your account history.

Look for offers


You can also take advantage of special offers that banks come up with from time to time. For example, during festive season, there may be promotion schemes linked to products, such as white goods or consumer durables, says Manavjeet Singh, Managing Director, Bestdealfinance.com.

There may also be bulk deal offers to government employees or those working with well-known companies. For instance, if you are employed by a top-tier company, your company’s preferred banking partner may offer personal loans with a lower processing fee, says Adhil Shetty, CEO of BankBazaar.com.

You may sometimes find that the best deal from a bank is for a lower amount than what you actually need.

Split the loan


In this case, rather than pass up the offer, you can consider splitting your loan between two banks. You can ask for waiver of prepayment/pre-closure charges with the bank offering higher rate so that you can pay it off, if possible, before the tenure to reduce interest costs.

However, taking two loans involves more overall cost due to processing cost. So, be sure to weigh this aspect also when deciding on splitting the loan.

Saturday, 2 May 2015

Algorithm to approve personal loans in HDFC Bank’s retail push


MUMBAI: 
   With most of this year's loan growth expected to come from the retail segment, HDFC Bank has devised a strategy of using algorithms to approve personal loans completely doing away with credit officials. The bank now promises to disburse loans to its customers online, around the clock and without any paperwork.

Unlike the conventional process of researching a borrower's credit history, the bank has installed a software that continuously scans each of its savings accounts, tracks the cash-flow patterns and corroborates its finding with the borrower's credit score. This data backup coupled with analytics has enabled the bank to deploy straight-through processing of personal loans without human intervention.



"This will change the way in which retail lending is being done in the country," said Arvind Kapil, head, unsecured loans, home and mortgage loans at HDFC Bank. He said while the bank was always using analytics for sanctioning small-ticket loans, this is the first time that such lending will be possible without any bank official 'eyeballing' the application form. All that an accountholder has to do is to click on a banner on his home screen once he logs in and the application form will pop up. So when a borrower applies for a loan online, he can get a sanction within 10 seconds of filling the form, which would partly be pre-populated with data the bank already holds.


For most private banks, credit growth in FY15 has been powered by a growth in retail lending. Most banks are reporting corporate loan growth in single digits and not seeing much of a credit offtake this year. "The consumer finance industry has been growing at 15-16% so far. It is expected to grow at 18-20% over the next five years. HDFC Bank's personal loans business has been growing at 25-30%. In the future, if it has to stay ahead of the curve, it needs to create efficiencies by digitizing its operations," said Kapil.

Tuesday, 28 April 2015

HDFC Bank offers 10-second loan nod

Your loans will not only become cheaper, but will be disbursed faster, within seconds.
In three weeks, HDFC Bank will offer personal loans disbursed in 10 seconds through net banking, as it expands market share and gears up for increased competition from non-banking finance companies (NBFCs).
The offer is for existing customers of HDFC Bank, and will be available 24 hours a day. Customers will need to fill an online form and will be directed for a one-time password as additional security.

"We will disburse the loan in 10 seconds, even at 2AM," Arvind Kapil, senior executive vice-president, unsecured loans, home and mortgage loans, told HT. "We felt there is need to create a business opportunity through customer convenience. Today, in consumer finance, public sector banks account for 40% market share, private banks (such as HDFC) have more than 24% and NBFCs about 30%. But unlike banks, NBFCs do not have a liability franchise. So there has to be a clear differentiation in services," he added
HDFC Bank is currently testing the scheme and will formally launch it in three weeks.
This offer would be the world's fastest loan disbursal; M Bank in Poland offers disbursals in 30 seconds.
"This has been done through better technology, analytics and credit bureaus," Kapil said.
Since the recipients are existing customers whose details are known to the bank, fears of payment defaults are minimum. "This will change the way retail lending is conducted," Kapil added.