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The floating rate is linked to an external benchmark and will be independent of the loan amount or duration.
The bank has fixed its lending rate based on the external benchmark (EBR) at 8.05 percent.
The lender has also voluntarily extended the benchmark to micro and small enterprises from October 1
The banking regulator that has recently been entrusted with supervision of non-banking finance companies (NBFCs), is “studying” loan pricing methods in the sector, while no review is in the works as of now.
The step could especially benefit those without steady income flows and credit histories, the group that has traditionally turned towards the informal sector for high-cost credit
The external benchmarking mandate may lead to ALM risk in banks' books if they are unable to address the interest rate risk between floating rate loans and fixed rate deposits.
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Das said that banks have responded positively to linking interest rates to external benchmark but the process needs to be faster.
Union Bank of India also said that it expects MCLR to ease by 15 basis points going ahead. It plans to link its home and auto loan portfolios to RBI's repo rate, as against MCLR presently.
In a letter to shareholders published in the annual report, Parekh said that the housing finance company will continue to focus on the government’s initiative of “Housing for All.”
The consultant attributed factors such as improved connectivity, infrastructure growth, better education and health care facilities that supported the growth of peripheral cities.
The private lender aims to cross Rs 2 trillion in mortgage disbursals by March 2020
Another trend highlighted in the report is that women are availing larger home loans as compared to men
The western state having high urbanisation accounts for 24 percent of the overall home loans as of September 2018, shows the data released by credit information company Crif High Mark.
Gaurav Choudhury, Deputy Executive Editor, Moneycontrol shares his insights on the RBI's directive to banks regarding lending rates for retail loans.
Reserve Bank of India (RBI) has proposed that floating rate home loans will be benchmarked against an external benchmark from April 1, 2019.
RBI has suggested use of external benchmarks such as the repo rate, 91-day Treasury bill yield or the 182-day Treasury bill yield produced by Financial Benchmarks India.
Banks have been relatively generous in loosening their purse strings for unsecured personal loans, adding to the liabilities of households
In case of home loans, your EMIs should not be more than 40% of your income.
Following the revelation, Wells Fargo apologised and said that it has set aside USD 8 million to compensate affected customers. This roughly equates to each customer receiving USD 20,000 from the bank.
Home loans constitute 60% of the company's portfolio, with the rest almost equally divided between lease rental discounting and corporate or developer loans
Some housing finance companies (HFCs) focusing on the affordable housing segment have shown an above-average increase in delinquencies with gross NPA at 4-5 percent, said a CRISIL report.
It plans to expand to 500 more locations in tier II, III and IV cities like Ambala, Bikaner and Tuticorin and grow the business to Rs 2 lakh crore by FY20