Banks in India


Vision of Banks in India

The banking scenario in India has already gained all the momentum, with the domestic and international banks gathering pace. The focus of all banks in India has shifted their approach to 'cost', determined by revenue minus profit. This means that all the resources should be used efficiently to better the productivity and ensure a win-win situation. To survive in the long run, it is essential to focus on cost saving. Previously, banks focused on the 'revenue' model which is equal to cost plus profit. Post the banking reforms, banks shifted their approach to the 'profit' model, which meant that banks aimed at higher profit maximization.

 

Focus of banks in India


The banking industry is slated for growth in future with a more qualitative rather than quantitative approach. The total assets of all scheduled commercial banks by end-March 2010 is projected to touch Rs 40,90,000 crore. This is going to comprise around 65% of GDP at current market prices as compared to 67% in 2002-03. The bank's assets are estimated to grow at an annual composite rate of growth of 13.4% during the rest of the decade as against 16.7% between 1994-95 and 2002-03.


Barring the asset side, on the liability perspective, there will be huge additions to the capital base and reserves. People will rely more on borrowed funds, pace of deposit growth slowing down side by side. However, advances and investments would not see a healthy growth rate.

Consolidation of Banks in India


Would the banking industry in India get opened up for more international competition? India would see a large number of global banks controlling huge stakes of the banking entities in the country. The overseas banking units would bring along with it capital, technology, and management skills. This would lead to higher competition in the banking frontier and ensure greater efficiency. The FDI norms in the banking sector would give more leverage to the Indian banks.

Thus, a consolidation phase in the banking industry in India is expected in the near future with mergers and acquisitions gathering more pace. One might also see mergers between public sector banks or public sector banks and private banks. Credit cards, insurance are the next best strategic places where alliances can be formed.

Future challenges of Banks in India


The Indian banks are hopeful of becoming a global brand as they are the major source of financial sector revenue and profit growth. The financial services penetration in India continues to be healthy, thus the banking industry is also not far behind. As a result of this, the profit for the Indian banking industry will surely surge ahead. The profit pool of the Indian banking industry is probable to augment from US$ 4.8 billion in 2005 to US$ 20 billion in 2010 and further to US$ 40 billion by 2015. This growth and expansion pace would be driven by the chunk of middle class population. The increase in the number of private banks, the domestic credit market of India is estimated to grow from US$ 0.4 trillion in 2004 to US$ 23 trillion by 2050. Third largest banking hub of the globe by 2040 - is that vision too far away?

Bank Loans in India


Due to the unequal distribution of wealth, India has arrived at a situation where the affluent class gets richer and richer and the underprivileged becomes poorer. To bridge this financial gap and to satisfy their day to day requirements, Bank plays a vital role by offering various loans to the finance seekers. Hence every borrower should have prior knowledge on the various Bank Loans in India, which are eligible for meeting their financial objectives.

Types of Bank Loans Offered by Banks in India



The various Loans offered by Banks in India are mentioned as under:

Personal Loans

Personal Bank Loans are the credits which a bank offers to its customer to meet his instant personal requirements ranging from home renovation to purchasing of new laptop, a getaway with family or for reimbursing the credit card liabilities, for buying a new car or for child's education, etc. Personal loan simplifies the cash flow of the customer besides handling its immediate needs.

Personal Loans

Eligibility
For salaried Individuals
For Self-Employed Individuals
Minimum and Maximum Age
21 years and 58 years respectively
25 years and 65 years respectively
Maximum Annual Income
Rs. 1,20,000
Rs. 1,50,000
Minimum years in service/ business
1 year
3 years
Loan Amount
Rs 50,000 to
Rs 15,00,000

Rs. 50,000 to
Rs. 15,00,000
Loan Tenure
1 years to 7 years
1 years to 7 years
Interest Rates
12-24%.
12-24%.
Mode of Repayment
Post-dated cheques or Standing orders to debit from personal A/c
Post-dated cheques or Standing orders to debit from personal A/c


Home Loans

To buy a dream home is the dream of every person. Home Loan has helped in changing every Indian's dream into reality. However, the every increasing property rates and escalating rates of interest sometimes act as an obstacle. Therefore, before opting for a home loan it is advisable to check every prospect of the product.

Home Loans

Eligibility
For salaried Individuals
For Self-Employed Individuals
Minimum and Maximum Age
21 years and 65 years respectively
21 years and 70 years respectively
Maximum Annual Income
Rs. 1,00,000
Rs. 1,50,000
Minimum years in service/ business
1 year
3 years
Loan Amount
Rs 2,00,000 to
Rs 2,00,00,000

Rs 2,00,000 to
Rs 2,00,00,000
Loan Tenure
5 years to 20 years
5 years to 20 years
Interest Rates
9-16%
9-16%

Tax Benefits on Home Loans: Any person who opts for home loan is entitled for tax benefits under Income Tax Act, 1961 on principal and the interest amount in the form of deductions from the chargeable earnings.


Bank Loans against Property


Property Loan or Loan against property is a kind of loan which is allowed by the bank on the condition of keeping the customer's current assets as a security with them. These loans are very useful when other resources of financing get exhausted.

It is significant to recognize that a loan against property is not similar to mortgage. While loan against property is obtained from the bank by allocating customer's current assets as a security against the credit, a mortgage is an instrument for purchasing an asset. On the basis of the current market situations, the paid up cost of the asset and other aspects, the cost of the credit against asset can range anywhere from 40% to 60% of the asset costs.

Loans against Property

Eligibility
For salaried Individuals
For Self-Employed Individuals
Minimum and Maximum Age
21 years and 60 years respectively
21 years and 65 years respectively
Maximum Annual Income
Rs. 1,20,000
Rs. 1,50,000
Minimum years in service/ business
1 year
3 years
Loan Amount
Rs 2,00,000 to
Rs 1,50,00,000

Rs 2,00,000 to
Rs 1,50,00,000
Loan Tenure
1 years to 15 years
1 years to 15 years
Loan to cost ratio
60% of residential cost
50% of commercial cost
60% of residential cost
50% of commercial cost
Tax Rebate
NIL
NIL


Business Loans


Before starting a business, the entrepreneur should be mentally and financially prepared to encounter the fiscal setbacks during the process. To bail the companies out from the fiscal crunch, several banks in India offers business Loans both for meeting urgent official growth and expenses. Other details of Business Loans offered by Banks in India are:





Car Loans


Every individual want to own a car. Hence, the need for car loans emerges at some point or the other. While selecting a car loan it is always wise to scrutinize the various options accessible in the market besides analyzing its fiscal suitability.


Car Loans

Eligibility
For salaried Individuals
For Self-Employed Individuals
Minimum and Maximum Age
21 years and 60 years respectively
21 years and 65 years respectively
Maximum Annual Income
Rs. 1,00,000
Rs. 60,000
Loan Amount
Rs. 1,00,000 (new) and Rs. 50,000 (old) to
Rs. 20,00,000

Rs. 1,00,000 (new) and Rs. 50,000 (old) to
Rs. 20,00,000
Loan Tenure
1 years to 7 years
1 years to 7 years
Loan to cost ratio
85-90% of car cost
85-90% of car cost


Education Loans


Education Loans offered by various banks in India provide much required assistance to fund your child's education when all other resources of finance get exhausted. Education Loans are offered by almost every Indian bank thus providing ample opportunity to students to undergo higher education both in India and abroad.


Education Loans

Eligibility
For Students
Minimum and Maximum Age
16 years and 26 years respectively
Expenses covered
course and examination fee, refundable deposits, procurement of books, travel expenses
Loan Amount for studies in India
Upto Rs 10,00,000
Loan Amount for studies abroad
Upto Rs 20,00,000
Repayment Period
5-7 years