Personal loan india

In 2005-06, when the Reserve Bank of India (RBI) first issued guidelines on securitisation, a number of market participants felt that the move would stump the growth. Prior to this, when the rules were not in place, the market was booming.

Guidelines basically prevented issuers from overleveraging their balance-sheets. This, in hindsight many bankers feel, has averted big-ticket downgrades and defaults in the securitisation market. Bankers also say that asking banks to set aside higher capital for loans given to real estate companies has also helped in minimising the asset-price bubble. Due to higher capital requirements, bankers lowered their exposure to the real estate segment.

Securitisation, to put it simply, is where one entity sells a part of its loan portfolio to another. Technically, it is pooling together of loans into standard marketable bonds, which helps banks free more capital which can then be used for its lending business. RBI asked issuers to set aside full capital for credit enhancement - a facility provided to take care of defaults. This means that in case of a default in the pool, the trustee can draw money from deposits set aside by the issuer to meet the shortfall. Besides, the regulator also said that issue would have to provide 100% risk weighatge for liquidity support - a facility which is used in case of delay in payments.

Earlier, the issuers were providing credit enhancement and liquidity support, but without providing any capital. The new norms, the issuers felt, defeated the purpose of freeing them from capital requirement.

Also, RBI had said that the issuers would have to maintain a fixed amount as cash collateral (money set aside as deposits to meet defaults) for the full tenure of the paper. This means that if the issue has kept aside 10% as cash collateral which translates into Rs 10 crore for the Rs 100-crore outstanding PTC, the issue should continue to maintain it at Rs 10 crore even when the outstanding PTC comes down.

So far, ICRA has downgraded 13 ABS transactions out of the 375 transactions. Mainly, the PTC of ICICI Bank and Tata Motors were downgraded. In hindsight, considering the size of default in home loans, personal loans and auto loans, analyst say that downgrades would have much more if RBI norms were not so stringent.

Since 2005-06, the share of mortgage-based securities, which comprise home loans, and asset-backed securities, which comprise personal loans and auto loans, has fallen sharply in the past two years. However, market participants say that this could also be on account of rising interest rates.

Look at the hoardings dotting your route to the office and you might get misled in more ways than one. Take the instance of some banks offering you personal loans. The advertisement hoarding makes it seem easy. And the face on the hoarding seems positively inviting and friendly.

Just try taking that a bit seriously. As did Mr. Sheik Sintha, a colleague, who approached a public sector bank.

He was told that the bank was not giving personal loans. Despite my colleague trying to reason with the branch manager that he had availed a similar loan two years ago and repaid his dues promptly, the official maintained that the bank was not entertaining personal loan applications any more.

When Mr Sintha asked the officer concerned about the advertisement, he was told that there was a policy of giving personal loans only to employees of designated companies that had a corporate tie-up with the bank. That is, if the employer agreed to settle the loan repayment through deductions from salary on a monthly basis, then the bank was willing to lend - not otherwise.

The officer also conceded that there were no 'targets' for personal loans unlike for car and home loans - explaining why bank officers are not enthusiastic about pushing these loans.

While public sector banks sell this product selectively, new generation and foreign banks have their target segments and were active players till very recently. They offer personal loans to self employed people at rates that range between 18 and 21 per cent and there are quite a few takers.

For instance, HSBC was disbursing 15,000 consumer loans a month at rates that were between 30 to 40 per cent till recently. But it also has decided to go slow in the personal loans disbursement.

The caution that they show is in the backdrop of rising defaults by borrowers. And since these personal loans are taken typically by the relatively lower income group, which often borrows from multiple sources and at high cost, the prospects of defaults have been high. HSBC India's CEO, Ms Naina Lal Kidwai, said, "We are not thrilled with what we are seeing in this segment. We are going slow."

It must be mentioned that personal loans and credit card receivables of banks (both are unsecured loans) have grown steadily over the last five years. According to rating agency Crisil's study on retail assets, these now formed an estimated one-fifth of the total outstanding retail loans as on March 31, 2008, up from 6 per cent as on March 31, 2004.

Number of direct selling agents slashed by 15-25 per cent.

A clampdown on fresh personal loans, credit cards and auto loans is taking a toll on direct selling agents (DSAs) hired by banks to push these products. According to estimates, banks have reduced the number of DSAs by 15-25 per cent, while marketing expenses are 35-40 per cent lower.

For instance, ICICI Bank, the country's second largest lender, has reduced the number of DSAs this year, while pruning the marketing expenses on these channels by 40 per cent to Rs 228 crore at the end of the first quarter.

"The number of DSAs for the bank has been brought down this year, which has helped in reducing the marketing expenses. We are not hiring as many DSAs as we used to hire till last year. The bank cannot have complete dependence on DSAs now. We are changing our sourcing model and focusing on other channels for selling loans, without affecting the bank's growth," a bank executive said, without divulging details.

Citibank, which was till recently the most aggressive player among foreign banks, has slashed the number of DSA-managed sales staff by about 15 per cent over the last 18 months.

"While the number of DSA-based sales staff has been reduced, the bank is also not keen on hiring new DSAs for selling credit cards and generating personal loans. The bank is now depending upon alternative customer acquisition channels for direct selling of its loan products," said a source.

Another foreign bank HSBC has pared its DSA base from 4,000 last year to 3,000 now. "It doesn't make sense to hire more DSAs now, with the given slowdown in credit growth for small-ticket loans. The banks will try to carry on with their available resources rather than hiring new DSAs during this high interest rate and default rate scenario," Naina Lal Kidwai, group general manager and country head, HSBC India, said.

HSBC India is currently associated with 60-65 DSAs, each with 50-60 sales staff. A top executive at HSBC said the bank has tied up with only four to five new agencies this year, as against about 10 new associates last year.

For lenders like HDFC Bank and Axis Bank reliance on DSAs is very small as they generate most of the business through in-house sales teams.

It's not that only banks or agencies that work with lenders alone are doing with fewer employees now, agents are themselves quitting with volumes coming down. A reason for higher attrition at agencies is lower earnings for their employees, who generate loans as their earnings are based on incentives linked to fresh loans.

"The attrition rate of staff within DSAs has increased to around 90 per cent compared with about 60 per cent till last year," said Dheeraj Dikshit, head of consumer assets, HSBC India. Now, the bank's personal loan portfolio is increasing by Rs 100-150 crore a month compared with Rs 250-300 crore a month last year.

"Many DSAs have shut down their operations and some are thinking of changing their line of business. But the present uncertain business outlook is making any shift difficult," said Mansur Singh, who was earlier working for ICICI Bank, but has now shifted his agency to HDFC Bank.

Needs are demands are the two things, which can be arise any time in people's life. It is not always possible to fulfil those demands by paying from own pocket. But if the demand is very important then nothing but going for a loan is the only way. Indian banks provide loan for fulfilling personal needs, which is called personal loans. Here in this article we will discuss about some of the best personal loans in India.

There are times come to our life when we need money for fulfil the desires of ours and our family. These desires can be visiting to a dream holiday vacation. purchasing an electronic appliance for our family, wedding of daughter etc. In the country like India, for the banks and other financial organisations, money can not be the barrier for fulfilling these desires. Indian Banks do provide loans for personal expenses at an affordable rate of interest and flexible terms and conditions.

Personal loans are provided to both salaried and self-employed individuals. Though there are special loans that being provide by the banks to the self employed professionals such as engineers, architects, doctors, chartered accountants, company secretaries and ICWAI graduates. Under the category of personal loan one can get a minimum amount of Rs. 20,000 and the loan amount can be extended up to Rs. 20 lakhs. The amount totally depends on some factors such as the financial standing of the borrower, repayment capacity of the borrower, past record of loan repayment and so on. The repayment option varies from bank to bank. Usually banks provide the repayment tenure period of one year to five years.

The personal loans are absolutely hassle-free loans. For getting the advantage of this kind of loan one does not have to keep anything as security or guarantor to the loan provider. The borrower will get the option to pay the loan amount by with easy Equated Monthly Instalments.

There are various Indian and foreign banks there which provides personal loans against a very moderate rate of interest and flexible terms and conditions. Among all the banks some of the best personal loan providers are State Bank of India - Loan For Personal Expenses, ICICI Bank - Available Loan For Personal Use, HDFC Bank - HDFC Bank Personal Finance, Bank of India - Star Personal Scheme, IDBI Bank - IDBI Personal Expense Finance, Bank of Baroda - Baroda Personal Financial Offer, Standard Chartered - EMI Refund Program Scheme, HSBC Bank - Smooth Personal Loan Repayment, Development Credit Bank - DCB Personal Vantage Plan and United Bank of India - United Personal Schemes. With a very affordable interest rate these banks offer customers highly flexible terms of repayment.

From these banks one can avail specialised best personal loans for under the category of Consumer Durable Loans, Festival Loans, Marriage Loans, Pension Loans and personal Computer Loans.

If we have a close look at the personal loan market in a developing country like India, we will be amazed to know that India has broken her long-standing shackles to emerge as one of the most promising names in the world of economic development, courtesy the loan market. Studies have revealed that the major constituent of the loan borrowers belongs to the middle and low economic classes. These economic classes have made the "right" use of these loans to strengthen their economic prosperity besides fulfilling their basic as well as luxurious needs with the help of these loans. It has also been seen that most of the leading financial institutions in the country are now focusing on customer appealing and budget-friendly loan deals to grab the attention of the masses. These changes have been greatly admired by the masses and this is clearly evident from the fact that a major part of the Indian working class use the personal loans as definitive measures to meet their needs.

GE Money India, which has been scouting for an equity partner for its personal loan and mortgage business for over six months, today said it has decided to go solo.

The company is the domestic consumer finance arm of the US-based conglomerate General Electric Co and is also present in businesses like home loans and credit cards in partnership with Wizard and SBI respectively.

Enthused by the "partnership model" in other businesses it had looked upon brining a partner to its wholly-owned portfolio for personal loan and mortgage business as well.

"After careful consideration, we have concluded that the best alternative for the company at this time is to retain the portfolio as it is," GE Money India President and CEO Iqbal Singh said.

The operational changes that have been effected have resulted in significant improvements in overall cost structure and performance, and the company believes that there is an opportunity to drive growth organically, he said.

The company looks forward to pursuing the long-term growth objectives in India by leveraging global experience in direct to consumer financial services and through joint ventures with leading local partners, he added.

Elaborating on the issue of stake sale, Singh said, the company recently completed a thorough strategic review of its mortgage and personal loans portfolio to evaluate options for the businesses future growth and development.

"Contrary to market speculation about a complete sale being our sole intention, we evaluated all options thoroughly," he said.

Rising prices, falling markets and now, higher interest rates - Indian consumers are in for big trouble.

With RBI hiking the repo rate (the rate at which RBI lends to the banks) by 25 basis points, from 7.75 to 8 per cent last Wednesday, there are expectations that home loan, auto loan and personal loan rates could also rise.

Most bankers feel that though there may not be any immediate rise because the credit growth has been subdued in the last financial year, some banks could take the cue from the apex bank to increase their rates.

The reason is because of the fact that the cost of funds for banks would rise. At present, State Bank of India, India's largest bank, is offering 9 per cent on their five-year fixed deposits. On the other hand, the floating home loan rate is at 10.5 per cent.

"While the total portfolio has to be considered to calculate the impact on spreads, an incremental rise in the cost of borrowing could force banks to increase their rates by 25 to 50 basis points," feels a former banker.

Personal loans, which are unsecured, could see a higher increase. In fact, many expect that the overall credit scenario that is already bad for consumers, could worsen now. Many banks have already started giving lower loan-to- value (LTV) for home loans.

That is, if you approach a bank for home loan for a house worth Rs 40 lakh, it is very likely that it will sanction only Rs 25 lakh instead of Rs 32 -36 lakh (80 -90 per cent of the LTV that banks usually offered) by valuing the house at the lower price.

However, the ones to be hit most would be the existing home loan customers. The floating home loan rates are presently hovering around 9.75 to 11 per cent. And a hike of 0.5 per cent would mean rise in the tenure or equated monthly installments (EMIs).

For instance, if you had taken a loan of Rs 40 lakh a year back at 10.5 per cent for a 15 year period, the EMI would have been Rs 44,216. However, a 0.5 per cent rise in rates would mean that the EMI will rise to Rs 45,405. Of course, if someone has age on his side, the EMI could be kept constant and tenure would increase by 11 months.

That is, while a rise in EMIs would be to the tune of Rs 1,189 per month, the tenure would mean additional payout of Rs 4,86,376. In fact, paying higher EMI is a better option because the extra payout would be less than half at Rs 1,99,752.

Many, however, feel that banks could follow a wait and watch policy now. Says D Sundarajan, chairman, Indian Bank, "I expect that both the public and private sector banks may not increase the rates immediately."

The general view is that the industry is waiting for the impact of higher oil and energy prices to reflect in the inflation numbers (already at 8.75 per cent for week ended May 31, 2008) in the next couple of weeks.

Financial Services company Magma Shrachi Finance today said it will enter into personal loan business, with focusing on rural and semi-urban market.

The company is aiming an initial monthly turnover of Rs 30 crore, Magma Shrachi said in a filing to the Bombay Stock Exchange.

"We are launching (the product) in 54 locations across India and already have set up our team to manage the business," Magma Shrachi Vice-Chairman and Managing Director Sanjay Chamria said.

The company said preparations for the launch of the product has been completed in northern and southern India. "By June we expect to roll out the product in all locations," he said.

As on March 31, Magma Shrachi Finance has a network of 161 offices across the country and employs over 4,000 people. The company is aiming a Rs 30-crore business in the initial months and hopes to scale it up subsequently.

"The company will offer the product to salaried, self-employed professional and non-professionals," he said.

Stating that the personal loan market in the country has witnessed withdrawal of several leading players, the company said, it would continue to focus on the rural and semi-urban market.

Since half of SBI's loans were made in the last 3 years, a sharp hike in NPLs is a possibility.

State Bank of India Chairman OP Bhatt is a man in a hurry. Although he has five years at the helm of India's biggest bank by assets, Bhatt wants to capture as much as he can and as quickly as possible. Last November, he said he wanted SBI's balance sheet to grow from $150 billion (Rs 600,000 crore), at the time, to $250 billion (Rs 10,00,000 crore), in the next couple of years. By the end of the March 2008, SBI had already hit a balance sheet size of Rs 720,000 crore, which meant it had clocked a brisk 28 per cent growth in FY08.

But, in the meanwhile the environment too has deteriorated. So much so that the central bank too doesn't really want credit, for the banking industry, growing beyond 20 per cent in FY09. By trying to force the pace, SBI may just end up compromising profitability. In a year when retail loans didn't find too many takers, SBI's asset book stands out, growing as it did well above the industry average, though by the end of the year, even SBI had some trouble finding customers.

Between April-December 2007, SBI's assets grew 26 per cent versus 22 per cent for the banking industry. Whether it was auto loans (up 30 per cent) or advances to SMEs (up 26 per cent) or even personal loans (up 19 per cent), the bank was determined not to be outdone. Even in the home loans space, its run rate was far higher than that of the industry, though the pace tapered off to about 19 per cent compared with 20 per cent-plus a year back. ICICI Bank's retail loan growth in FY08 was 3 per cent net of sell-downs.

Interestingly, Lehman Brothers estimates that more than half of SBI's current outstanding loans were made in the last three years. The growth may have come at a cost. NPAs are up and net interest margins are down - from 3.2 per cent in FY07 to 2.8 per cent in FY08. Profits look healthy but may not actually be so. Q4 profits of Rs 1,883 crore included Rs 900 crore of IT refunds and pension writebacks - take this into account, and profit before tax actually fell 27 per cent. With the bank having reduced the prime lending rate (PLR) earlier in February 2008, it couldn't charge its customers what it should have, though the cost of money stayed high.

Prime Minister Manmohan Singh had called upon the industry to 'tighten their belts' and help the government in its war against inflation on Tuesday.

Whether industry responds to the PM's call or not, consumers are already tightening their belts, it seems.

Growth in public sector banks' personal loan portfolios has slowed down dramatically, in a clear sign that consumers are avoiding conspicuous consumption and focusing on essential expenditure.

Personal loans grew by a mere 13.2% in February 2008, as opposed to over 25% growth in Feb 2007. In March 2008, the growth rate slipped further to just above 10%. Though total bank credit has seen considerable moderation in 2007-08 due to deliberate measures taken by the Reserve Bank of India, the personal loan category has been hit the most.

India is beginning to experience its own domestic subprime crisis as banks tighten lending procedures to try to curb rising delinquencies, particularly in small unsecured personal loans.

India's financial system has so far been spared much of the pain of the global subprime crisis because of the relatively small size of its banks and their conservative investment focus overseas.

But persistent inflationary pressure has forced the Reserve Bank of India, the central bank, to keep personal loan rates high, which in turn has hit retail credit, from home loans to car and unsecured personal loans.

Overall loan growth in India, which has been on a downtrend since peaking at almost 40 per cent in early 2006, has slumped to about 20 per cent this year due to real lending rates that are among the highest in Asia at about 7 per cent, according to Credit Suisse.

The slowdown has been felt most acutely in what was formerly one of the sector's fastest growing segments - personal unsecured loans, which include credit cards and micro "small ticket" loans. The small ticket loans form what analysts have loosely labelled India's "subprime" segment.

"The balance sheet is still performing well but delinquencies [of personal loans] have been higher than one would have anticipated," said Sanjay Nayar, chief executive of Citigroup in India.

Citigroup does not disclose details of its non-performing loans in India but Mr Nayar said it was rejigging some of its operations to better target India's emerging middle classes.

While the growing defaults in small ticket loans have only a marginal impact on overall credit quality, they have scared Indian banks into becoming more conservative about their lending on the basis of reduced expectations for economic growth. Some had hoped that India's gross domestic product growth would exceed 10 per cent, but 8-9 per cent is now looking more realistic.

If you are pinning hopes on a personal loan to meet any expenses, you better keep an alternative ready. Confronted by growing defaults, banks are now reluctant to sanction personal loans.

While some public sector banks have imposed a virtual ban on personal loans (which are also called clean loans as they carry no security on them), there has been a significant slowdown in these loans in private banks.

"It is true that the personal loan market is tight and there is more caution among the banks. As some banks would be Basel-II compliant by the end of this month, there is more focus on risk mitigation," Mr Amitabha Guha, Managing Director, State Bank of Hyderabad (SBH), told Business Line.

Many banks, including State Bank of Hyderabad, Andhra Bank, Vijaya Bank and Bank of India, have withdrawn the powers of sanctioning loans from the branch manager and moved them to the discretion of zonal offices or centralised retail asset processing centres, according to sources. " Clean loans are a strict 'no' in our bank now though you cannot get any thing on record. The increasing defaults and recovery difficulties are behind this," a senior official of Andhra Bank said.

You can't come over your numerous desires. The accomplishment of one desire gives rise to another. Thus, normally your budget fails to accomplish all your needs at a time. Since, some of your needs entails you to finish it at any cost, you start seeking an external help. In that time, you need such an external help that can stand against any of your personal expense. Taking the account of such financial problems with the borrowers, you are now helped with the personal loans.

Personal loans are that loans, which can help you, get appropriate financial help for any of your personal expenses. The common expenses for that you usually go for these loans are buying a car, wedding cost, luxury holidays, college fees, outstanding bills, and debt consolidation.

The interest rate with these loans is not fixed and may vary according to your personal circumstances and repaying capability. It is your profile which decides the rate; however, ultimately it can be competitive for the tough competition among the lenders.

Depending upon your profile personal loan can arrange a range of amount. When you put collateral against the loan, the amount can be up to its total value. The general range of amount here varies from Rs 50000 to Rs 400000 that can be repaid over a longer period of 25 years. However, when you put nothing against the loan, it is your income and repaying capability that decides the amount. The amount available here generally ranges from Rs 50000 to Rs 100000 and is liable to be repaid over a flexible period of 10 years.

Bad credit is not a great issue here; as you can avail personal loans even have bad credit. So, you no need to hesitate while applying for this loan, even with your CCJs, arrears, defaults, IVAs, etc.

GE Money India is scouting for a strategic partner for its wholly-owned personal loans and mortgage businesses, the newly appointed CEO and President, Mr Iqbal Singh has said.

"My priority would be to find a strategic partner for personal loan and mortgage businesses so that it would fit in with our rest of the model. I also want to look for new opportunities for growth. It may look from outside that we are selling off and getting out. I won't be coming here to India if we are looking to completely exit these businesses", Mr Singh told Business Line here today.

Mr Singh, who is to take over as CEO and President of GE Money India from February 1, said that GE Money India was even prepared to give up controlling interest in the wholly owned personal loans and mortgage businesses to the identified strategic partner if a strong brand, good customer base, distribution and products are brought to the partnership.

Prior to the new role as CEO and President of GE Money India, Mr Singh was Chief Marketing Officer for GE Money Asia and CEO of the Singapore business. In India, Mr Singh replaced Mr Vishal Pandit who has now decided to pursue opportunities outside GE.

On his new role, Mr Singh said that he was "pretty excited about India" given its growth trends. "We think the future is here. We want to invest in India and want to grow. We have a great platform of businesses in place. We need to see how we can up the scale in terms of momentum and get to scale much faster than we had originally hoped", he said.

In a significant development, a few leading private sector banks have begun to cough up a portion of their non-performing home loans to the Asset Reconstruction Company (India) Ltd (Arcil).

Arcil is the country's premier aggregator of distressed industrial assets.

Industry sources say that ICICI Bank recently set the trend by selling a bunch of non-performing home loans to Arcil.

Kotak Mahindra Bank and Standard Chartered are also said to have followed ICICI by doing similar deals with Arcil. This, however, could not be verified by DNA Money.

Rajiv Sabharwal, head of retail assets at ICICI Bank confirmed that ICICI Bank had recently done a deal with Arcil that involved a sale transaction to see bad home loans to Arcil.

"We did this in the last quarter," Sabharwal said.

Sources said ICICI had offloaded receivables worth Rs 1,000 crore, but Sabharwal said the number was around Rs 400 crore in the last quarter.

The securitised portfolio included a mix of home loans and other personal loans, he said.

ICICI Bank's deal to bundle bad home loans in Arcil's favour is a first in the industry.

Arcil's debut into retail space is for the first time.

On April 4, 2007, S Khasnobis, managing director and CEO of Arcil, told DNA Money of a plan to venture into troubled retail home loans market by buying out securities from banks.

Thus far, the asset reconstruction firm has stuck to troubled assets from the corporate sector.

ICICI an aggressive bank has been a pioneer in securitisation of loans. "We do play in this segment. We have been securitising both good and bad assets," Sabharwal said. Arcil aims to create a special purpose vehicle to handle mortgage backed securities.

In the previous interview, Khasnobis had said the initial investment would be to 'test the markets.' Arcil will create its own "fair debt collection norm and formalise a list of dos and don'ts." This is primarily because a clear policy on bad home loans is yet to be drafted by the regulators.

Last week, a floating-rate home loan consumer in Mumbai received a strange letter from his lender, a new-age private sector bank. A cheque issued by the consumer in July, the letter stated, had bounced.

It added that the cheque was drawn to pay the difference in the EMI (equated monthly installment) amount to factor in an interest rate hike. The consumer was thus asked to pay the amount, plus Rs 200 as cheque return charges and 2% service tax.

"Firstly," says the consumer, "I did not issue any cheque for July as I was told the hike was effective from August. And why did the bank suddenly realise that some cheque had bounced six months after it happened?" The bank has since apologised for the goof-up.

"The customer has month on month been paying the differential part of the EMI through a cheque. Since he has been paying the differential amount on a monthly basis, payment of July month's amount has been missed out," it said in a written statement to TOI .

Importantly, the consumer insists, he did not receive any written intimation about the interest rate hike. All communication in the matter, he says, was oral. The bank, on its part, says the consumer had been sent a mail detailing the increase.

"The customer has been sent the reset letter dated April 1, 2007, on April 12, 2007, intimating the increase in ROI (rate of interest) and resultant increase in EMI." Consumer organisations, however, say disputes over communication lapses are not unheard of. They are known to escalate to the banking omubudsman's office too.

"In such cases, we normally ask for proof of delivery (from the courier)," says a senior omubudsman official.

Such lapses may occur due to staff inefficiency or system error. A Delhi personal loan consumer since March 2007, points out Sanjeev Talwar of Delhi's National Consumer Helpline, hasn't received even his account statement. Some time ago, in Mumbai again, another floating-rate loan consumer discovered that his EMI amount, sourced directly from his account via the electronic clearing system (ECS), had increased without any intimation about a rate hike.

Says V M Oza, honourary director, complaints, at Ahmedabad's Consumer Education and Research Centre (CERC), "There is a provision that rate change cannot be made unilaterally. The bank should inform the customer about it without any hindrance."

Britain-based Project Finance International (PFI), a well-known source of global project finance intelligence, has ranked the government-owned State Bank of India as the top loan arranger in the Asia-Pacific region in 2007.

The bank arranged loans worth $4.87 billion covering 16 deals. The loan arranger league table of PFI has 88 participants.

ICICI bank, ranked forth, is the next Indian bank in the top five. The other three are Korea Development Bank, ANZ Bank and CBA. ICICI Bank arranged loans worth $2.14 billion covering 16 deals.

According to PFI, the State Bank of India maintained its number one position in the league table for the third straight year thanks to a continued upsurge in domestic activities.

The presence of other Indian banks in the top five underscored the huge demand for financing in India, PFI said.

The firm's data shows that the Asia Pacific project finance market continued to gather pace and was the busiest to-date last year with 139 deals completed.

Australia and India were the two-standout performers in terms of deal making.

While Australia completed 34 deals for a total of $13 billion, India registered 36 deals for $10.8 billion. The Australian deals centred on mining, oil and gas sectors and Indian deals covered infrastructure sectors including roads and power.

Non-performing assets (NPAs) from retail loans of commercial banks are set to rise, according to a recent report by ratings firm Crisil.

In its report released in Mumbai on Tuesday, Crisil has said that gross NPAs in retail loans are set to rise to 4% over the next two years from 2.7% as of March 2007-end. Delinquencies across all retail asset categories have gone up and are likely to further increase in 2008-09.

The recent move by the central bank to tighten the norms for recovery agents employed by commercial banks could also add to NPAs as it could further encourage wilful defaults by borrowers.

However, the situation will remain manageable, because the less risky mortgage and vehicle loan segments continue to dominate the retail lending portfolio of lenders at 80% of total loans outstanding. Further, rising personal incomes and younger borrower profiles provide cushion in mortgage loans.

Bank profitability is also expected to be hit this year on account of higher provisioning by banks as also rising deposit costs, according to Tarun Bhatia, head, corporate & government ratings, Crisil. This could be marginally offset by banks booking treasury profits from bond sales since yields are seen moving southward.

According to Crisil's analysis, there has been some deterioration in retail loans because of increasing exposure to higher risk customers and rising interest rates. The increasing exposure to higher risk customers is mainly through personal loans and credit card receivables.

There has been some deterioration in the asset quality of retail loans in India in recent times because of increasing exposure to higher risk customers and rising interest rates, according to a study by CRISIL Ratings.

The gross non-performing assets in retail loans, which increased to about 2.7 per cent as of March 2007 from about 1.7 per cent as of March 2005, are likely to rise to 4 per cent over the next two years. However, the situation will remain manageable because secured loans such as mortgage and vehicle loans account for 80 per cent of lenders' retail loan portfolio.

The increasing exposure to higher risk customers is mainly through personal loans and credit card receivables. These are unsecured and accounted for 17 per cent of total outstanding retail loans in March 2007, up from 6 per cent in 2004, the study pointed out.

According to CRISIL's managing director and chief executive officer, Roopa Kudva, "as competition has increased, players in retail lending, in their quest for growth and improvement in profitability, are reaching out to hitherto untapped clients, such as the self-employed and borrowers from smaller cities. This has increased lenders' exposure to risk."

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One segment of the Indian financial industry that saw huge growth in 2007 was the securitisation market. This market is poised for higher growth in the years to come, provided restrictions are eased and more players are allowed to enter.

In a securitisation deal, assets such as auto loans, personal loans and construction loans are pooled together and hived into special investment vehicles, which are bought by investors. While banks and NBFCs sell the assets, the investors could be other banks, insurance companies, pension funds and mutual funds.

Banks had started securitisation as a tool to churn their loan portfolios, but now they may actively look at it as a tool to free up their capital, say industry experts.

Indian banks need to strengthen their recovery mechanism to gear up to meet Basel-II standards.

Loss-given-default (LGD) is an important determinant of credit risk, and is the degree of uncertainty about how much the bank will not be able to collect if a borrower defaults. Banks must measure this loss arising from counterparty default in order to graduate towards the proposed Basel-II minimum capital regulatory framework.

The historical LGD (or accounting LGD) equals 1-historical recovery rate (RR). The historical RR is the sum of the cash flow received from defaulted loans divided by total loan amount due at the time of default (EAD). Economic LGD is the economic loss in the case of default, which can be very different from the accounting one. "Economic" means all costs incurred with recoveries have to be included in the loss estimate, and that the discounting effects have to be integrated.

These banks have given us 691 commercial (with an exposure of more than Rs 50 lakh) and 490 retail NPA accounts, and their recovery experiences from 1998-2007. Commercial loan accounts comprise of defaulted corporates, commercial SMEs, NBFCs and commercial real estate exposures. The retail-defaulted accounts are defaulted housing loans, auto loans, other consumer loan exposures, including student and personal loans, and defaulted credit card exposures.

sorces: business-standard

The neighborhood grocery shop where I buy my supplies has a sticker prominently displayed near his counter which reads "Aaj Nagad, Kaal Udhar" (cash today and credit tomorrow). Clearly it is an attempt at dissuading customers from buying their supplies without paying for them on the spot. It is not that the shop was completely unwilling to provide credit; it is just that they were a bit discerning. Although I have never made use of the credit facility myself, I often see the shop staff taking orders on the phone and noting down details for orders to be fulfilled through home delivery with the bills to be settled on pay day. The shop has a fat and stubby note book where they keep the details of the orders fulfilled thus.

Outside the shops are stickers of another kind. They talk about "Turant Loan" available on call and a mobile number is provided for customers in need of a car loan or a compare personal loan rates. Some stickers announce that loans will be dispensed with minimum of fuss and documentation. Which is probably the big draw. I still remember the days when loans were available only from nationalized banks and getting a consumer loan or a housing loan was an even more notorious exercise as they were not considered the priority in the economy of the day. But things have obviously moved on in capitalist India Udhar is still out but loans, especially of the turant variety are very much in though.

State Bank of India is seeing a slowdown in the personal loan segment of about 5-10 per cent in the second half. However, growth in the retail segment has picked up in the second half after a sluggish first half, said Mr Sitaramam Komaragiri, Deputy Managing Director and Group Executive, National Banking, State Bank of India.

"The decline is not steep and it is only in the personal loan segment. There has been no slowdown in home loans. Even auto loans are fine," he said.

He was speaking to reporters on the sidelines of a press conference to announce the launch of fund transfer using debit card.

The delinquency rate in the personal loan segment is about 3-4 per cent, he added.

Speaking about deposit growth in the same period, Mr Sitaramam said it has been very high, at about 25-26 per cent, over the last year.

source: http://www.thehindubusinessline.com/2007/12/12/stories/2007121251550600.htm

Lenders provide personal loans in quick time. These loans have multiple applications and can be used on any occasion.

Christmas is one of the most expensive times of the year. Many people like to spread festival expenses over several months to come. This is quite possible with the help of loans available in the market.

The loan amount that can be sanctioned to you depends on many things. A lender first verifies your credentials and then takes his decision after considering many aspects. Your creditworthiness is checked from credit reference agencies. These agencies keep a record of every loan transaction and also provide individual credit ratings. You need to Compare personal loan to get best rates for your loan. It will help you in the loan process if you know your credit rating in advance.

Everyone who wants to obtain financing for personal purposes would rather pay a small fee or rate than to get charged high interests for the money owed. However, low fee personal loans are only available for a specific portion of the borrowers.

These loans are only available to those applicants that have a great credit score. Those with fair to bad credit are excluded and usually have to pay higher interest rates when they Compare personal loan rates they can get aware of different banks offering you this finance schemes.

As you can see, though low fees can be easy to find if one checks lenders' promotions and advertisements, they are not easy to get because the requirements for approval can be really harsh. Having great credit score with no delinquencies on your credit history is not an easy task even for those that try to pay everything on time and have a good financial standing. Forgetting to pay a bill is not that uncommon and that only can lower your credit.

Development Credit Bank, the small private sector banking outfit, plans to slash the share of personal loans in its credit portfolio to diversify risks.

It will, instead, scale up the commercial and construction equipment business, which is a secured portfolio in the retail segment.

The bank wants to raise the share of retail assets comprising commercial vehicles and construction equipment in total advances from 45 per cent to 55 per cent. The large and mid corporates currently enjoy 55 per cent share in total loan base. The total advances at the end of September 2007 stood at Rs 3,195 crore.

Do you need some cash immediately? Do you need money instantly but have a poor credit history? Then taking a personal loan is an option for you. A personal loan is loan taken for a purely non-business purpose.

Fast personal loans are available as secured and unsecured personal loans. Secured personal loans are loans given with your home as mortgage. In the case of secured personal loans, the interest rates demanded by the lenders will be lower and the loan simple and easier to manage. On the other hand, in case of default on the loan, you could end up losing your home, so a secure personal loan should be taken only after careful consideration of the risk involved. In case, you do not own a home or you do not want to borrow against it, the only option available to you would be to avail of an unsecured personal loan.

Another factor to consider while taking fast personal loans is the amount you need to borrow. If the amount you need to borrow is relatively small then you could go in for an unsecured personal loan. This is because you do not need to pay closing costs in case of multiple accounts.

Personal loans can be categorized as:

Secured Loans -This loan can be obtained by the borrower against his home. In this form of personal loan, lender holds greater chance of gaining his money back.

Unsecured Loans - These loans don't ask the borrowers to deposit their valuables as security with the lenders. Unsecured loans are a boon for those who do not wish to keep their holds with someone.

Both forms of personal loans can be easily availed online where the customers can secure prime assistance of the loan professionals.

Pros and Cons of Personal Loans

Personal Loans lend many loan choices to the borrowers thereby helping them choose the best to fulfill their utmost need. The maximum amount that one can borrow ranges up to $25,000 and the refund time period is up to ten years. The major advantage with the personal loan is that if a customer goes for the highest amount of loan he would have to pay a lower rate of interest. The terms and conditions that apply to unsecured loans are very different from mortgage as these loans are not protected for the property. So, in case the borrower fails to refund the loan amount, his house would be safe. In case of a personal loan the rate of interest is also fixed.

For the first time borrowers of personal loans it is advisable that they carry a small survey of the various loan plans that are offered by individual lenders and other financial companies, so that they don't fall prey to the clever lenders. One should try sticking to loans that have a low rate of interest and where the terms of refund are moderate.

Are there any signs of a home-grown sub-prime crisis? Yes, it is ticking bomb, which could explode anytime, says former RBI Deputy Governor SS Tarapore. The "sub-prime" crisis here is likened to a scenario in which banks may be saddled with huge defaults.

Tarapore has warned that India is heading towards such risks after four years of scorching credit growth, particularly in loans provided to newer market segments. It is estimated that at least Rs 41,200 crore of sub-prime loans may go bad, comprising personal loans from banks and credit companies, and amounts borrowed on credit cards. "This does not include other sectors which are risk-prone, like automobile and housing loans," Tarapore, also the chairman of the committee on fuller capital account convertibility, said at a risk management seminar organised by Dun and Bradstreet.

Canara Bank today announced it will lower interest rates on new personal loan and automobile loans by 50 basis points and 25 basis points, respectively, from Wednesday, October 17.

New personal loans will now carry an annual interest rate of 13.25%, while automobile loans will be offered at 11.50%, an official release said.

The state-run Canara Bank had recently cut interest rates on fresh housing loans by 50 basis points, across slabs and tenures.

The Canara Bank announcement follows State Bank of India and ICICI Bank, which had recently reduced rates on personal and automobile loans.

Personal loans are always more costly then any other loan. Not a single person have thought about it among us, But that's the fact we have to pay 16-25 per cent on personal loans, where's interest on home loans in only 10-14 per cent.

The justification that loan issuers give for these high interest rates charged on personal loans is that there is no need to specify the purpose for which the loan is required. That is, however, not really the case.

The interest rates on personal loans are much higher, mainly because there is no collateral, i.e. the bank does not have anything to sell off and reclaim the loan in case a borrower defaults. Hence, defaults tend to be more common in the case of a personal loan.

The risk of default is built into the interest rate being charged by the bank. So, individuals who repay the personal loan effectively end up paying for those who don't.

Nine banks have increased rates charged on personal loans this week. Some borrowers will have to pay an extra £250 over the period of a three-year loan. The increases will affect only new customers.

There is £66 billion in personal loans outstanding in the UK - more than twice the debt on credit cards and six times the amount on overdrafts.

Rates had shot up by 24 per cent over the past year before the latest increases, according to figures released this week by the Bank of England.

The chief executive of HBOS, which owns Halifax, also warned this week that home loans would become more expensive as a result of the money crisis.

The Bank of England is expected to keep rates on hold today at 5.75 per cent, and possibly cut them in the coming months.

Nowadays life has become comfortable due to number of lenders. Loans are taken everywhere not only for the large expenses but also for the minor ones. Turning to one's friends or relatives for a loan is becoming passé. People now prefer to not allow money to affect their personal equations. Thus, they turn to banks and other kinds of loan providers when they need some extra money that cannot be accumulated otherwise. Applying for loans has become amazingly simple these days.

However, a lot of borrowers enter into a loan deal without even thinking of going through the fine print that they might encounter. When deciding whether to take on a loan, one must work out one's debt to income ratio. The lender itself will be working this out. However, it is important that the borrower makes sure to take account of the various miscellaneous expenses that the loan provider will not be looking at.

Private bank officials who authorise agents to recover loans using coercion could face charges of abetting suicide in Maharashtra, deputy chief minister R.R. Patil has said.

Patil told a news conference at the state secretariat last evening that the government was examining if senior bank officials could be covered under Section 306 of the Indian Penal Code, relating to abetment of suicide.

Offences under the section are punishable with imprisonment up to 10 years and a fine.

On Sunday, Patil had said the government would apply the policy used against moneylenders, who harassed cotton farmers in six suicide-prone districts of Vidarbha, to deal with coercion by bank recovery agents. In Vidarbha, the government had run a campaign against money-lenders, arresting many of them after the spate of suicides.

"The banks have been charging interest rates ranging between 30 and 50 per cent on personal loans. These are very high rates. We are checking if such high interest rates are in line with the Reserve Bank of India's lending norms," he said.

Like any other young Mumbaikar, Rizwan Qureshi, having spent all his life in a rented one-room kitchen flat in Kurla, had a long-cherished dream of buying his own flat and move into the same after getting married.

Recently, after getting married, when Rizwan started looking for a one BHK flat, he got the shock of his life. There were hardly any buildings with one BHK flats to begin with. When he located one, he was told that he would not be able to buy it because 'Muslims are not welcome in the building'. Finally, when Rizwan managed to find a decent flat, he faced the worst problem no private or foreign bank was ready to give him a home loan.

Rizwan's is not the only case. Minority community organisations have received several complaints about banks denying home, personal loan and vehicle loans to the members of minority communities; especially those who live in areas like Bhendi Bazaar, Mahim, Kurla, and Mumbra that are primarily dominated by minority community.

India is in its 60th year of independence. Yet the poor continue to be poor, the rich continue to get richer and in between is the perishing Indian middle class. Islands of wealth and prosperity are surrounded by a sea of poverty. It is a grim battle, and the middle class is slowly losing its grip.

In a growing economy, the middle class has to be big enough to consume what is produced. But they are burdened by taxes and sometimes squeezed by choice.

First and foremost, we need to tackle corruption. Corruption is rampant and not confined anymore to the politicians and the bureaucrats. The world has always branded India as one of the most corrupt countries and unfortunately it does not affect anybody in India as long as it works in one way or the other.

Most medicines, including life-saving drugs, are spurious, milk is hormone-induced, mangoes are injected with carbides, and buildings are made of cheap materials. There are always a hidden costs -- be it a personal loan, holiday trip, insurance or a home loan.

If we say that secured personal loans are choice of thousands then we are wrong; as today, secured personal loans are considered as the choice of millions. Secured personal loans are opted by many as it is enclosed with the features that illustrate borrowers with their needs.

With Secured personal loans, borrowers can meet their various personal needs like going for vacations at dream place, meeting wedding expenses, adding value to home with renovations, buying new home or car, wiping off the burden of high rated multiple debts, funding for education, purchase of laptop or undergoing for cosmetic surgery and so on.

Secured personal loans have made the life easier as borrower can fetch larger amount at feasible interest rate for easy repayment term. For availing the benefits borrower have to pledge some valuable asset to the lender. This means that anyone borrowing for secured personal loans is using his or her property as collateral for the loan. Collateral can be borrower's home, car in good condition, property, valuable papers etc.

There can be hundreds of reasons why one would like to go in for a personal loan. but there are three which are really worth it. the first is when you are using the money raised in a personal loan to refinance a higher cost debt. assume that you have revolving credit on your credit card at the rate of 2 per cent per month. this amounts to 24 per cent per annum.

what's more, every single item that you purchase and every expenditure billed onto your card is subject to this rate of interest. so now you don't get any free credit. you are paying the bank to use its funds which you eventually have to repay. you can opt for the personal loan and clear all your credit card outstandings.

some lenders have even gone to the extent of customising the equated monthly instalments. says mr dhawan, "after understanding the needs of the people, we have introduced schemes like the 'green channel', which allows one to make an initial down payment of up to 50 per cent, keeping the emis very low, and 'step up' enabling the emis to be increased to shorten the duration of the loan."

Every one of us may opt for some or the other financial solution to fulfill our requirements. It is considered as the best available source to be utilized at the needy times. But have you ever given a thought on the precautions that should be taken at the time of opting for loans? A loan seeker must necessarily take care of certain factors while availing of a loan.

In most cases, loans are taken for personal usage. Depending upon the characteristics and the security provided, these loans are classified as secured and unsecured loans. While obtaining such a help, a loan seeker must ensure to compare loans.

It's always necessary to take care of certain factors while opting for a loan. The main aspect is the APR which decides about the total cost of your loan deal. With cut-throat competition prevailing in the UK loan market, different lenders are coming with different packages to be on the top amongst different loan providers. This has made things more convenient for a borrower to choose from a variety of loan packages with the competitive rate of interest. But he must ensure to compare personal loans to choose the right plan for averting any future troubles.

The best thing about personal loans is that you don't have to pledge any asset to the lender against your borrowings. Isn't it interesting! You remain tension-free of losing the roof over your head in the absence of any surety. You can borrow up to £ 25,000 with a time-duration of 10 years to pay off your borrowings.

Private sector banks, which made the most of the credit boom riding on their network of direct selling associates (DSAs), are now changing tact. They are trying to shed dependence on DSAs and are instead using their own branches to sell products.

DSAs usually do the outsourced work from banks such as selling personal loans. They earn a margin of 0.50-1% on their sales.

"Though our business through DSAs is low at just 20% (out of total loan sales) we plan to use our branches because using DSAs affects the quality of loans and there is also a cost factor," says Harpreet Singh, business director, wealth management distribution and loans at private sector Centurion Bank of Punjab.

"DSAs don't have a relationship with the customer, but if we use our branches and own sales force we can sell more products more efficiently," Singh explains.

Here are some common problems faced by personal loan customers, and possible ways to avoid them.

Problem: Delay in disbursement beyond the promised date.

Solution: Budget for at least a week's delay in disbursement, even after you have handed over all papers.

Problem: Non-disbursement despite approval of loan.

Solution: Just move your loan to another bank.

Problem: Delay in handing over cheque disbursement even though interest meter starts from date of cheque rather than the date on which the cheque is handed over.

Solution: Open an account with the bank early enough and ask for credit of the loan proceeds to that account; as part of the loan application itself. This will ensure that the bank cannot charge interest for any delay in handing over the cheque.

Walk the streets of Mumbai -- India's commercial capital -- and it's hard to avoid billboards from companies such as GE Money, CitiFinancial Consumer Finance and Indiabulls Credit Services promising quick loans with minimal fuss. India's retail lenders have been in high spirits in recent years for reasons that are easy to understand. After all, profits of India's largest publicly listed companies have been growing at 25% to 30% for the past eight quarters; the country's GDP has grown at its fastest pace in 18 years, rising 9.4% in 2006-07 on top of 9% in 2005-06; and surveys show that wages in India -- pushed up by shortages of skilled labor -- are rising fastest among the Asia-Pacific nations. All this should make for the golden age of consumer credit in India, right? Well, not quite.

As the sub-prime credit meltdown in the U.S. shows, fast-growing financial markets often conceal hidden weaknesses. Signs have begun to appear that India's consumer finance markets -- while they may not face a credit crunch of the type that confronts the U.S. economy -- could be slowing down. Industry experts say that as non-performing loans and defaults rise, Indian lenders are becoming cautious about their portfolios, especially loans to weaker borrowers. Firms are rethinking their strategies and re-examining risk management processes to ensure that they don't face the kind of risks that have led some U.S. financial institutions to go belly up.

Home mortgages are hardly the only trouble spot for financial services firms. Unsecured personal loans patronized by young men and women working for the booming business process outsourcing industry also may cause headaches. These workers often borrow 150% to 200% of their annual salary to fund their lifestyles. "A rise in interest rates hits the lower end of the market and those borrowing unsecured loans more," says GE's Chopra, whose consumer finance division has $1.3 billion in assets in India. "Economic growth results in a rise in aspirations. Some consumers who are stretching to get to the next level can get affected by higher interest rates."

Responding to the increase in non-performing loans, credit providers have put the brakes on loans for durable products such as two-wheelers. At Axis Bank, the minimum eligibility standard for personal loans has now been raised from a salary of Rs 7,500 a month ($183.29) to Rs 10,000 ($244.38) a month. More importantly, such banks are now benchmarking their interest rates, ope

Rising defaults, confined till recently to housing loans, personal loans and loans to small and medium enterprises (SMEs), have spilled over to big ticket loans. Banks are facing increasing delinquencies by overleveraged mid-sized companies, now caught in hardships due to changes in their operating environment.

The defaulting mid-sized companies had availed of large amounts of cheaper credit during the lending boom of the last few years, helped by their good credit history. These companies are paying a price for over-leveraging themselves, with interest rates having risen sharply in the last one year, certain export-dependent segments taking a hit due to slackening demand from target markets and a sales slowdown in segments such as automobiles.

Mumbai lawyer Deven Dwarkadas warns against issuing post-dated cheques. "Ensure that you don't give post-dated cheques unless you are sure that your account will always have that amount," he says.

A cheque bounce is a criminal offence and the borrower can be imprisoned for a maximum term of 24 months or asked to pay double the amount. In fact, a bank has threatened D'Souza with criminal proceedings unless she pays double the amount.

Before and after default, but before loan becomes NPA. If you find you will default on a secured loan, it is best to get the bank involved, sell off the secured asset and other assets, if needed, and pay off the loan immediately.

Else, approach the bank for an immediate settlement. If it keeps hanging, the interest and penalties could add up to an unmanageable amount. Remember, the prime objective of the bank is to recover as much as it can.

Says debt counsellor V.N. Kulkarni, "The banks broadly decide the settlement amount based on the value and availability of security, time required in liquidating it, and the cost of doing so." Never borrow from another bank to pay off a loan.

Unsecured loans are best avoided. However, if you have one that you are likely to default on, try to pay it off before the bank attaches your property, in which case even things like your TV, refrigerator and computer get valued.

If you have outstanding amounts on your credit card, then you could take a personal loan and pay off the credit card issuer as this will almost halve the interest you are paying, and buy you time in the process.

Alternatively, if you have more than one credit card, you can use the balance transfer facility to reduce the rate at which you are paying interest on the outstanding amount. You can go for a new card as well. The interest rate on transferred balance is usually 0.5-1.75 per cent. If you have nothing to give, seek police protection.

Consumer durable companies will embark upon a dual strategy of hiking prices of white goods and simultaneously launching hi-tech models in refrigerators, washing machines and microwave ovens.

Reports say that consumer durables majors like Videocon, LG, Samsung and Haier are all planning price hikes by 2-7 per cent.

Videocon Industries is planning to launch refrigerators with built-in colour television and Internet, which can be operated by remote controls and priced between Rs 20,000 and Rs 1 lakh.

Videocon will increase prices of its white goods range by 5-7 per cent. Korean major, LG Electronics India is planning to hike prices of its washing machines (WM), refrigerators and microwave ovens by about 2- 4 per cent in September 2007.

Samsung India is soon launching new models of high-end side-by-side refrigerators with the improved prices.

Haier is also coming up with new innovative appliances to suit customer's needs, which will be followed with minimal hike in prices.

Fedders Lloyd Corporation is planning to launch new models of Llyods microwave ovens and washing machines with different prices toplug various price gaps.

In March-May 2007, durable companies hiked product prices by 4-8 per cent.

Reports also say that the prices are expected to stabilise by Diwali. Plans are on the anvil to launch premium range of refrigerators in 400 and 500 liters by changing the outdoor aesthetics and four new models of solo and grill convection microwave ovens.

The personal loan market is growing and has become competitive with the coming of foreign banks and non banking finance companies entering this space. Banks such as ICICI Bank, HDFC Bank, Citibank, Standard Chartered Bank, Centurion Bank of Punjab and non banking finance companies such as GE, DBS Cholamandalam, and Fullerton India among others are aggressively marketing personal loans.

With the growth the level of delinquency has gone up by 10-20 per cent. This rise in the delinquency has led the banks to tighten their due diligence of marketing agents and also reviewing recovery strategies.

The RBI data shows the growth of 23 percent in the personal loans year-on-year to Rs 87,944 crore as on May 25, 2007.

Banks and NBFCs are working on unsecured loans products as the yield in this business is high which covers for any defaults. There is a variation in the interest rate on personal loans from 14 percent to 30 per cent.

Indusland Bank wants to consolidate its presence in the private sector banking in India and has started hunting for a new name.

Financial Express reports that the names short-listed so far are Indus Bank, the Plus Bank, the Right Bank and so on. Sources say that the bank is in the midst of appointment of an international consultant to carry out the make over. The consultant will also help the bank for the upcoming media blitzkrieg.

The bank management wants to complete the change of name exercise by November 2007 and launch a nationwide media campaign thereafter.The campaign is scheduled to g on till March 2008 with an initial budget of Rs 10 crore.

The bank recently had a successful GDR issue and its net worth touched Rs 1,056 crore as on March 31, 2007. The bank posted a total business turnover of Rs 28,700 crore and is poised for greater growth in the years ahead.

There can be many reasons to borrow extra money through taking loans: the consolidation of outstanding debts, home improvements, education fees or any other requirement. Taking a loan can be an effective way of generating the extra funds but, as with any form of borrowing, it is worth researching and bearing a few things in mind.

Personal loans are unsecured loans. This means that the lender has not secured their investment against any existing property or shares that the borrower may have. Because this is a risk for the lender, it does mean that the rates of payment are likely to be slightly higher than on a secure loan, reflecting the nature of the risk.

Personal loans are designed for consumers who want to borrow up to 15 lacs or less over a fixed term or period of time.

Because they are designed to be paid off over a fixed term, some companies impose penalties on those who try and pay off their personal loans early, usually in the form of a large, accumulated interest bill. In this case, it may be worth considering a flexible loan, where these charges do not apply.

In view of the growing economic activities in the Kashmir valley, we have seen a good number of business houses, including some multinational companies foraying into the valley markets with their products and services. In fact, the Kashmir valley has become their preferred destination to garner business. The availability of world-class products in the Kashmiri markets has raised the appetite of consumers. In other words we can say that the valley is fast changing into a consumer state, where people want, for example, a TV set in their homes of different brands.

Meanwhile, the new generation private sector banks have turned blind eye towards the rural pockets of the State, where it is not commercial character alone, but a social responsibility of helping the people in their economic development, which matters a lot. In other words, these new generation private sector banks are here to sell products like personal loans, home loans etc and garner huge deposits in cities and major towns for investment purpose in rest of the India. We haven't seen any major investment by these banks in the State. They may be global banks, but they lack the local touch in their operational mentality. Precisely, the expansion of branch network should not be confined to cities and towns only.

What's your wish on the eve of India's 60th Independence Day? Maybe, you should ask for freedom from debt. As a senior banker says, "debt is the worst four letter word in the financial language." So what are you doing to get rid of that hefty debt from your wallet? There is no single solution to achieve debt freedom. You actually need a systematic plan to put you off the debt-trap and make you walk towards financial freedom. Can we help you find that today?

If you are saddled with huge debts, you have to rank them in terms of interest rates. That will give you a clear idea about every loan and costs attached to each of them. Typically, unsecured loans such as credit card or personal loans eat a huge portion of your savings.

A credit card loan comes at 40% plus rates while a personal loan costs anywhere between 25% and 30% per annum. Home loan is a large ticket loan and also the cheapest. Its rates hover around 14% pa. After home loans, it is education loans at 12-14 %, car loans at 15%, consumer durable loans at 16%, personal loans and credit card loans that come out costlier and in that order.

A personal loan is often one of the most expensive loan options available. Most personal loans are not secured with any type of property (car, home, land, etc); instead it is just the guarantee of the individual that secures the loan. This is a high risk for the lender because the borrower has nothing tangible to keep them from defaulting on the loan. The cost comes in the higher interest rate.

At one time all loans were a type of personal loan. It was the word of the borrower that secured the loan. If a person defaulted - for any reason - he was imprisoned in debtor's jail until the debt was paid in full. It is only in modern history that this practice has been abolished. For many of today's borrowers, there is not even shame in being unable to pay a debt.
Because of the trend that the lending industry has seen towards bankruptcy, many companies no longer do any unsecured loans - even personal loans have to have some collateral. It the borrowers do not get back on track with repayment, it is likely that the types of personal loans given will continue to decrease. The requirements and guidelines will continue to tighten as well.

Even as the world markets face the fallout of indiscriminate lending in the US subprime market, banks in India are keeping a close watch on their personal loan portfolios. Rising competition has seen overleveraging of customers, which along with rising rates, are causing a rise in delinquencies. Even though this market is nascent, it's one of the fastest-growing loan segments.

Unlike in the US, there is no subprime market in India. The US sub-prime market consisted primarily of people with bad credit records, most of them being mortgage loans. Such a market currently doesn't exist in India. In India, the lower end of the personal loan market, better known as the small-ticket personal loan market (STPL) and largely unsecured, is considered as a subprime segment. Most customers are first-time borrowers from the organised market, and hence, have no credit history.

The Reserve Bank of India on Tuesday tightened the provisioning norms for banks in areas of capital market, real estate, housing and personal loans.

RBI Governor Y. V. Reddy, while announcing the Annual Policy Statement for 2006-07, has asked banks to set apart one per cent (raised from the earlier 0.4 per cent) of personal loans, capital market exposures, residential housing loans beyond Rs. 20 lakh and commercial real estate loans, as a reserve to safeguard against the impact of bad loans in the event of a property bubble bursting.

He raised the risk weight on exposure to commercial real estate to 150 per cent. The exposure to venture capital funds is to be treated as part of the capital market exposure and assigned with higher risk weight of 150 per cent. The RBI Governor also stated that the central bank would be taking further actions if banks have exposure to capital market through non-banking financial companies (NBFCs).''

Standard Chartered Bank's Indian operation has emerged as the second-largest contributor to its profits after Hong Kong. The bank's Indian operation reported a 50% rise in operating profits for the half year ended June 2007 to $320 million against $213 million in the previous corresponding period. Standard Chartered global profits rose 30% to $1.98 billion during the period under review.

Mr Swaroop also indicated that as a conscious strategy, the bank is going slow on credit cards and mortgage loans. Justifying this, he said the bank has limited access to low-cost funds which is needed for housing finance business, as margins are coming down while in case of cards business, the bank is keen to focus on quality. He added that banking would be active in personal loan business as there are more opportunities.

India's share in profits stood at 16.2%, pushing behind Korea, which contributed about 15%, to the third position. Profits from Hong Kong were highest at 26%. However, Jaspal Bindra, regional CEO, south east and south Asia said that China too is growing at a faster pace, although, its share in profit is very low now. "Since, we have been allowed to undertake full-fledge banking business very recently, the base is low. But it is growing fast," he said.

For British holidaymakers, Thailand is the most preferred destination. The country is better known for its ancient temples, beautiful beaches and mouth-watering cuisines. So, plan a visit to Thailand with your family and enjoy the exotic locations there. You can also think of visiting countries like Australia and India, also the favorite destinations and ranked second and third for the British visitors.

As far as the financial implication of a foreign tour is concerned, you must give due thought to it and properly plan your finances. First of all, make it a valid point to avoid using your credit cards while abroad. The credit card companies usually charge hefty fees whenever a credit card is used outside the country. Secondly, make your budget and try not to exceed it during the holidays.

Sales agents of banks can be very pushy when it comes to selling personal loans. Just the other day I got a call from a direct sales agency of a reputed bank asking me if was interested in a personal loan.

The interest rates offered were not attractive enough. And while I was still thinking about it, pat came another offer: "Sir, if you are interested, we can arrange for a personal loan from any other bank as well." Welcome to the big bad world of retail banking in India - where a war is on for market share. And this war is happening across the various loan businesses, not merely personal loans.

'No questions asked, no reasons required - we are ready to give it, if you are ready to take it' - seems to be the general line.

Given the high decibel selling, a customer needn't either disclose the purpose, or furnish any security/ guarantee - indeed, chances are one would be lured into taking a personal loan he may not even require.

I divide my life into two eras - the one before I joined a call centre (BC) and the other after joining a call centre (AC). Before the advent of call centres, I had to make numerous rounds of HR departments of companies for a job. After joining a call centre, especially in the last five years, HR executives of various companies have been flooding me with irresistible offers to join them. Securing a loan, especially a personal loan, was nearly impossible before I joined a call centre. Now I am offered a loan at the drop of a hat.

If I came home late earlier (after 9pm), my wife would ask me, "Where were you? Did you go out with your friends to party?" Now if I come home by 11pm, my wife gets worried and asks me, "What happened, aren't you well? Why are you home so early?" Earlier, if someone invited me for a drink at two in the morning, I would think that he is an alcoholic and now if someone invites me to a drink at seven in the evening, I think he is unemployed with no job and that is why he can't drink during working hours. In the old days (BC), if I wanted to recommend a friend or a family member for a job in my company, I had to wait for weeks for the right opportunity to talk to the MD and plead the case. Now I am assured handsome cash incentives for every successful referral I make and as an added bonus, I can even win a trip to Bangkok.

Securitised pools of two-wheeler loans and personal loans in India have been struck with rising defaults.

Global ratings agency, Fitch Ratings, said the 180 days past due (dpd) two-wheeler loans (loans where EMIs are overdue for over 90 days) have reached as high as 6 per cent of original principal outstanding in some pools compared with a maximum of 3.6 per cent in 2006, Fitch said in its reports on pools of securitised loans.

Securitisation of loans is a process where banks sell a pool of loan assets split into units of securities to investors.

Personal loan pools, Fitch Ratings said, have shown higher delinquency compared to other asset categories. The underlying pools of personal loans have shown weak performance, with about 5.5 per cent of the original pool being over 90 days past due delinquent.

As part of its efforts to boost credit offtake, the State Bank of India ( SBI) has taken a major initiative by deciding to lower the income limit of borrowers from Rs 6,000 per month to Rs 3,000 per month with immediate effect. It has already slashed rate of interest across the board by 0.25 to 0.50 per cent, said Mr R.K. Sinha, Chief General Manager, SBI, Chandigarh circle, here today.

He disclosed that the decision had been taken in view of the demand from lower and middle income groups to lower the minimum net monthly income (NMI) stipulated for availing a loan under the personal loan scheme. Earlier, the SBI was extending personal loans to individuals up to Rs 10 lakh for travelling, medical treatment, marriage and other purposes, provided they had NMI of Rs 6,000 or above. Under the amended scheme, named as festival loan scheme for public, he said, all employees of government, PSUs, profit-making public/private limited companies and institutions would be eligible. The minimum amount of loan would be Rs 5,000 and maximum Rs 50,000 or four times the NMI. It could be repaid through maximum of 12 monthly EMIs.

The use of personal loans to improve your credit score is an excellent opportunity to obtain credit improvements at low cost. Generally, small personal loans are not expensive and they are easy to afford. This is essential because by taking a big loan you can risk not being able to repay it and defaulting on the loan which could ruin your credit score even more.

The process is rather simple: you need to apply for a small personal loan; it doesn't necessarily have to be a short term loan. On the contrary, the key to its efficiency is the continuous repayment of the loan. Thus, you need to obtain a loan of just a couple of hundreds and repay it in several installments. Each installment will be recorded into your credit report as a successful financial transaction and your credit history will start showing an impeccable repayment behavior.

HDFC Bank has increased interest rate on its (Non-resident Indian - external) NRE deposits, effective from July 1, 2007. Interest rate on NRE deposits for three to five years maturity will increase by 16 basis points to 5.45 per cent against 5.29 per cent earlier. Deposits of 2 to less than 3 year maturity, the increase is by 12 basis points to 5.43 per cent as against 5.31 per cent earlier.for further enqueries check out PERSONAL LOAN INDIA.

UK occupants who make not have got collateral or don't desire to pledge collateral against a loan can use for an unbarred personal loan. With no hazard to assets, even householders can use for this type of loan.

An unbarred personal loan have a immense clientèle because of its no collateral bond. Tenants, students, self-employed and even place proprietors take this loan. If any plus is involved, there would be place related legalities to take attention of. Matters like place confirmation and existent estate rating make take a batch of time. Unbarred recognition cuts back on all such as clip consuming activities. The absence of collateral do the full application procedure very smooth and fast.

A barred personal loan on the other manus takes a comparatively longer clip in getting the loan sanctioned. But, a record figure of people still help this loan. This is because a loan on barred recognition guarantees low involvement rate, flexible refund footing and most importantly a pick from different involvement plans.

Did you find your bank manager very reluctant to give you a personal loan? Don't blame him because his management has asked him to go slow on personal loans.

Three years after aggressively pushing the product, public sector banks are realising that personal loans are not their cup of tea. Though customers are walking in large numbers to take loans, it is their repayment behaviour which is making banks worry.

It's now official. The eligible loan limit for micro and small enterprises (MSEs), under the credit guarantee scheme, has been raised from Rs 25 lakh to Rs 50 lakh.

Significantly, all MSEs operated and/or owned by women will get guarantee cover up to 80% of their credit offtake from banks and financial institutions.

The higher guarantee limit has also been extended to micro enterprises that will take loans up to a limit of Rs 5 lakh. Barring these two listed categories, other MSEs will get the guarantee coverage under the scheme up to 75% of their borrowing.

Naturally, many customers are focused on getting the loan itself, but it is just as important that they also think about whether or not they want to protect their loan repayments by taking out payment protection insurance cover.
This change means that it will be up to the customer to actively choose to buy payment protection insurance rather than it being sold automatically."

The Bank of Rajasthan on Friday revised interest rates on its 'tax saving term deposit scheme' from 9.5 per cent to 9.75 per cent with effect from July 16, according to a bank press release.

Now days the changes are occurring so fast, the way of thinking and living have changed. Every one is trying hard to keep themselves up to mark in this race. To help people banks/NBFCs are providing loans so that people can fulfill their wishes. But the lucrative offers in these loans make people end up in heavy debts.

At the time of giving loan banks check all the income related documents attached with the application. The banks do explain terms and conditions and the interest rates the loan carries with it. But these unsecured loans in many cases may be of a small ticket size, but, they carry high interest rates and also other charges in the event of default. In many cases, lending organizations are taking advantage of the unregulated interest rate regime and vulnerability of their customers and subjecting them to the torture of recovery agents.

The agreement signed between Housing Development Finance Corporation (HDFC) and Citigroup has been cancelsd. According to this agreement the two were to sell the mortgage lender's loan products under the American bank's India network.

In this working agreement the two has agreed for cross-selling each other's products recently, which followed the increase of Citigroup venture in HDFC to 12.3 percent and also nominated its representatives in HDFC board. Citigroup officially describes its venture in HDFC as a financial investment.