I want to thank the author of the article alongwith rediff.com for putting such an educating and relevant article for the commonmen in very simple language. Usually, we all discuss about the performance of government on the basis of its policies (administrative as well as monetary) and their success.But, seldom we know the key terms and their meaning while doing so. Now, those dicussions will have some meaning and the leaders will be taken care of on this credit policy.
First of all I congratulate the author of the article for writing and explaining some of the nitty-gritties of bank system in very clear and easy to understand way.Indeed these have been some terms like repo rate and reverse repo rate which people like me read in newspaper and leave everything on RBI without actually knowing what is happening and why?Still we do not have any control over these matters but now we can surely understand the things.But what I fail to understand is why RBI is making the common man to suffer,who has already taken loans in previous years(say 5 yr. back)by increasing the interests rate.I mean it should be applicable to new loan seekers.Instead banks tend to provide new loans at slightly lower rates than current rates to attract new customers and thus keeping the loan process an attractive one for new loans seekers(esp. for home loans)which in turn increases the loan demand and thus inflation.
I hav e taken home loan in 2003 @7.25% interest in floating rate. But now it has changed to 9.25% interest. Is it possible to change into fixed. What is the correct procedure to do.
RE:loan too expensive
by prakash on Jun 13, 2008 05:58 PM
you seems to be lucky as ur bank is charging only 9.25%. many people like me are paying around 10-11%.
I could not understant the role of nationalised banks.when RBI feed the money to them and decide the polices of loans.These banks like a middle man and why not RBI opens own its institutions in the form of banks.
Good article definitely. Well, what I still fail to understand is the difference between 'bank' and 'repo' rates - both are described as the RBI lending rate. One last bit, wouldn't it be great if the common mass were to get the RBI rates. I mean, whats the point in having middle banks make money out of our laons.
RE:Bank rate & repo rate
by on Jan 31, 2007 03:19 PM
You can get reply to your query regarding difference between bank and repo rate from google.
One thing I am observing from various messages is that you people appear to be under the impression that banks borrow from RBI at lower rates and lend to borrowers at higher rates. I am affraid that is not so. The main source of funds availability for the banks for lending purpose is through deposits from the public, government and float funds from corporates. The banks borrow from RBI only for short term to bridge shortages if any. The banks have to offer competitive interest rates to attract deposits from depositors which depends on market conditions i.e., if you have Rs 10,000 spare cash for investing and if you have option to put it in say mutual funds and or as fixed deposit in bank, you may very likely go for mutual funds. You must have observed with rising interest rates, rates on deposits have also improved. If you recall the situation in early 90's you were getting as high as 14% interest on your deposits. Then housing loan interest rates were some where around 13%. Commercial lending rates were much higher say 15.5% p.a. The basic funda is lower the tenure, lower is the interest rate. If you have housing loan to be repayable in 5 years, interest rate is lower in such case than say repayment period of 10 years. Bank rate and repo rate are for borrowings of short term say 15 days to 45 days.
How come builders and others have huge amounts to buy entire societies and who has given them this money?The RBI and other banks are out to swindle the common man untill he is choked in debts and finally takes his life.Why do only certain people manage to get loans that amount to severalo crores of Rupees whereas we have to struggle to get even 50,000/= Rs.To hell with this biased banking system.It is controlled by the rich who will one day collapse and we the common people will have the last laugh!
Home loan borrowers feel cheated, the number of installment increased drastically the home loan negotiated for 7.5% stands for 3 months then it is changing as per banks well & wishes what is the meaning of advertising home loan available in certain % within 6 months home loans are coastlier by 1.5 % how many person can afford that?
