All you need to know before taking a Home Loan !

Processing Fee

As per the common norms onwards

Interest Rate

8.75% onwards

Processing Fee

0.50% onwards

Interest Rate

9.1% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

8.5% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

8.75% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

14% onwards

Processing Fee

0.50% onwards

Interest Rate

8.65% onwards

Processing Fee

1% onwards

Interest Rate

9.1% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

8.8% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

8.85% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

10.5% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

10.24% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

9.25% onwards

Processing Fee

5000 onwards

Interest Rate

9.6% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

11.25% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

8.75% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

10% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

9.8% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

12% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

19.5% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

11.49% onwards

Processing Fee

2% of the loan amount onwards

Interest Rate

19.5% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

8.35% onwards

Processing Fee

1% of loan amount onwards

Interest Rate

10% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

10% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

11% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

10% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

11% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

14% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

10.5% onwards

Processing Fee

As per the banking norms onwards

Interest Rate

14% onwards

Processing Fee

1st Year - 1,000  onwards

Processing Time

2 days

Processing Fee

1500 onwards

Processing Time

24 hour

Processing Fee

As per the banking norms onwards

Processing Time

24

Processing Fee

1500 onwards

Processing Time

24 Hour

OVERDRAFT

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.

Overdrafts occur for a variety of reasons.

  • Intentional loan – The account holder finds themselves short of money and knowingly makes an insufficient-funds debit. They accept the associated fees and cover the overdraft with their next deposit.
  • Failure to maintain an accurate account register – The account holder doesn't accurately account for activity on their account and overspends through negligence.
  • ATM overdraft – Banks or ATMs may allow cash withdrawals despite insufficient availability of funds. The account holder may or may not be aware of this fact at the time of the withdrawal. If the ATM is unable to communicate with the cardholder's bank, it may automatically authorize a withdrawal based on limits preset by the authorizing network.
  • Temporary deposit hold – A deposit made to the account can be placed on hold by the bank. This may be due to Regulation CC (which governs the placement of holds on deposited checks) or due to individual bank policies. The funds may not be immediately available and lead to overdraft fees.
  • Unexpected electronic withdrawals – At some point in the past the account holder may have authorized electronic withdrawals by a business. This could occur in good faith of both parties if the electronic withdrawal in question is made legally possible by terms of the contract, such as the initiation of a recurring service following a free trial period. The debit could also have been made as a result of a wage garnishment, an offset claim for a taxing agency or a credit account or overdraft with another account with the same bank, or a direct-deposit chargeback in order to recover an overpayment.
  • Merchant error – A merchant may improperly debit a customer's account due to human error.
  • Chargeback to merchant – A merchant account could receive a chargeback because of making an improper credit or debit card charge to a customer or a customer making an unauthorized credit or debit card charge to someone else's account in order to "pay" for goods services from the merchant. It is possible for the chargeback and associated fee to cause an overdraft or leave insufficient funds to cover a subsequent withdrawal or debit from the merchant's account that received the chargeback.
  • Authorization Holds – When a customer makes a purchase using their debit card without using their PIN, the transaction is treated as a credit transaction. The funds are placed on hold in the customer's account reducing the customer's available balance. However, the merchant doesn't receive the funds until they processes the transaction batch for the period during which the customer's purchase was made. Banks do not hold these funds indefinitely, and so the bank may release the hold before the merchant collects the funds thus making these funds available again. If the customer spends these funds, then barring an interim deposit the account will overdraw when the merchant collects for the original purchase.
  • Bank fees – The bank charges a fee unexpected to the account holder, creating a negative balance or leaving insufficient funds for a subsequent debit from the same account
  • Playing the float – The account holder makes a debit while insufficient funds are present in the account believing he will be able to deposit sufficient funds before the debit clears. While many cases of playing the float are done with honest intentions, the time involved in the cheque's clearing and the difference in the processing of debits and credits are exploited by those committing check kiting.
  • Returned check deposit – The account holder deposits a cheque or money order and the deposited item is returned due to non-sufficient funds, a closed account, or being discovered to be counterfeit, stolen, altered, or forged. As a result of the cheque chargeback and associated fee, an overdraft results or a subsequent debit which was reliant on such funds causes one. This could be due to a deposited item that is known to be bad, or the customer could be a victim of a bad cheque or a counterfeit check scam. If the resulting overdraft is too large or cannot be covered in a short period of time, the bank could sue or even press criminal charges.
  • Intentional Fraud – An ATM deposit with misrepresented funds is made or a cheque or money order known to be bad is deposited (see above) by the account holder, and enough money is debited before the fraud is discovered to result in an overdraft once the chargeback is made. The fraud could be perpetrated against one's own account, another person's account, or an account set up in another person's name by an identity thief.
  • Bank error – A cheque debit may post for an improper amount due to human or computer error, so an amount much larger than the maker intended may be removed from the account. Some bank errors can work to the account holder's detriment, but others could work to their benefit.
  • Victimization – The account may have been a target of identity theft. This could occur as the result of demand-draft, ATM-card, or debit-card fraud, skimming, cheque forgery, an "account takeover," or phishing. The criminal act could cause an overdraft or cause a subsequent debit to cause one. The money or cheques from an ATM deposit could also have been stolen or the envelope lost or stolen, in which case the victim is often denied a remedy.
  • Intraday overdraft – A debit occurs in the customer’s account resulting in an overdraft which is then covered by a credit that posts to the account during the same business day. Whether this actually results in overdraft fees depends on the deposit-account holder agreement of the particular bank.
  • Merchant overdraft – an unsecured overdraft offered by financial institutions to a merchant, and the amount overdrawn is within the authorized overdraft limit, which is usually of very high value

CASH CREDIT

 Cash credit is a short-term cash loan to a company. A bank provides this type of funding, but only after the required security is given to secure the loan. Once a security for repayment has been given, the business that receives the loan can continuously draw from the bank up to a certain specified amount.

The interest on this facility is charged on the running balance and not the borrowing limit which is given by bank.  It is one of the important short term sources of finance for a business. It is a tremendous motivation for the borrower to collect money from the debtors as soon as possible and deposit in the current account. It is as good as investing the surplus funds at the interest rate which he pays on the cash credit limit.

Normally, a bank would wish some amount of interest to flow in whether a cash credit account is utilized or not. It’s very obvious from bank’s point of view as it is blocking some amount of its ‘float’ for the borrower. For example, in a 10 million cash credit limit, 2 million may be the minimum usage level below which there would be no interest waiver. If the balance goes to 1 million, interest will be calculated on 2 millions only.

 

FEATURES: Cash credit facility is bound by a limit specified by bank. The borrowing limit is determined based on the drawing power of the borrower. Drawing power is calculated using book debts, inventories and creditors. Till this limit is not exhausted, the borrower can withdraw and deposit funds any number of times.

SECURITY: A cash credit facility is extended against a security. Securities may be in the form of stock, debtors, etc as primary security and fixed assets and other immovable properties etc as collateral security.

VALIDITY OF CREDIT PERIOD: The limit allowed is valid for say 1 year and then the drawing power will be re-evaluated. One year is just an example whereas in some cases, it may be evaluated every quarter.

BENEFITS OF CASH CREDIT

Flexibility of deposit and withdrawals.

Due to this, a borrower can save a lot of interest cost by depositing the extra cash available with him.

It also keeps the borrower motivated towards collection from debtors which will not only expedite the cash cycle but also bring a disciplinary effect on the debtors and borrower himself.

 

DISADVANTAGES OF CASH CREDIT

The securities required should be adequate and the adequacy is evaluated in time and again which increases administrative work for the business.

 

LETTER OF CREDIT

 A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. It is also known as non-fund based working capital financing .In the event that the buyer is unable to make payment on the purchase; the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade

Because a letter of credit is typically a negotiable instrument, the issuing bank pays the beneficiary or any bank nominated by the beneficiary. If a letter of credit is transferrable, the beneficiary may assign another entity, such as a corporate parent or a third party, the right to draw.

Funding a Letter of Credit

Banks typically require a pledge of securities or cash as collateral for issuing a letter of credit. Banks also collect a fee for service, typically a percentage of the size of the letter of credit. The International Chamber of Commerce Uniform Customs and Practice for Documentary Credits oversees letters of credit used in international transactions.

Types of Letters of Credit

  • A commercial letter of credit is a direct payment method in which the issuing bank makes the payments to the beneficiary. In contrast, a standby letter of credit is a secondary payment method in which the bank pays the beneficiary only when the holder cannot.
  • A revolving letter of credit lets the customer make any number of draws within a certain limit during a specific time period. A traveler’s letter of credit guarantees the issuing banks will honor drafts made at certain foreign banks.
  • A confirmed letter of credit involves a bank other than the issuing bank guaranteeing the letter of credit. The second bank is the confirming bank, typically the seller’s bank. The confirming bank ensures payment under the letter of credit if the holder and the issuing bank default. The issuing bank in international transactions typically requests this arrangement.



 

 

BANK GUARANTEE

It is primarily known as non-fund based working capital financing. Bank guarantee is acquired by a buyer or seller to reduce the risk of loss to the opposite party due to non-performance of the agreed task which may be repaying money or providing of some services etc. A buyer is buying some products from seller. In this case, buyer may acquire bank guarantee from the bank and give it to seller to save him from the risk of nonpayment. Similarly, if seller may acquire bank guarantee and hand it over to buyer to save him from the risk of getting lower quality goods or late delivery of goods etc. In essence, a bank guarantee is revoked by the holder only in case of non-performance by the other party. Bank charges some commission for same and may also ask for security.

Types of Bank Guarantees

  • A direct guarantee is typically used in foreign or domestic business and issued directly to the beneficiary. The guarantee applies when the bank’s providing security is not reliant on the existence, validity and enforceability of the main obligation. Guarantees are often chosen for cross-border transactions since the beneficiary asserts claims rapidly due to the general nature of the guarantee. A direct guarantee is easier to adapt to foreign legal systems and practices due to not having form requirements.
  • An indirect guarantee is often issued for export business, especially when government agencies or public entities are beneficiaries. Many countries do not accept foreign banks and guarantors because of legal issues or other form requirements. With an indirect guarantee, a second bank, typically a foreign bank with a head office in the beneficiary’s country of domicile is utilized.