My wife has an auto loan with HDFC Bank. We decided to part pay the loan. I called my personal banker to ask him the minimum amount I need to pay. He told me the loan department has not yet opened for work as yet and that he would let me know in one hour! This is core banking for you. He called back within one hour as promised only to tell me that he can't access the information and I should call their call centre and ask them! So much for a personal banker, who you are supposed to contact for your 'Banking Needs".
I did not have my loan account number with me and requested him to trace the loan from my Customer ID which I thought was enough for all my transactions. They could only trace my loan through my car number and not from Customer ID-even though the EMI (equated monthly instalment) is debited to our savings account with HDFC itself. I later found out that my savings account reflects the loan account number as well.
I then got a call from loan department saying that I will have to pay 3% pre-payment charges on the amount that I wished to pre-pay. I protested saying RBI had asked banks to do away with these charges. I was told, "We have no such information and your request for waiver has been forwarded to higher authorities."
A couple of days back I got a mail saying that for making the pre-payment I would have to travel to their "loan branch" and I couldn't make the payment at the branch where my account was! I would also need to carry an authority letter from my wife to make the payment along with my wife's and my photo ID.! I asked why do they need all this when I am their client and paying money from my savings account with them? The answer was as usual "Sir this is our procedure and I can't do anything about this! Our system is like this."
Finally I went to my branch where two officials came to my rescue and accepted my cheque for pre-payment. So at the branch I do get personalized treatment, may be because I keep causing trouble to them! But what about other customers?
When liquidity is tight and banks are offering high rates on deposits should they not be welcoming pre-payments and actually offer incentives rather than asking for penal charges? Or are they saying that we have increased our cost of funds but don't know what to do with the money? If that is the case then they should reduce interest rates on deposits!
I also learnt that no charges are applicable on your at par cheques only up to a limit of Rs2 lakh per month; anything above that is chargeable. I have no idea why this is so. Banks with complete automation are expected to become customer friendly. When I was a banker, without computers we delivered better service to our customers! This also reinforces my belief that IT companies lack domain knowledge and banks themselves do not provide all information to them when they are writing the software. So the customer will be at the mercy of the banks and their systems, developed by great Indian IT companies!
Removal of the charges or penalty will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans
Mumbai: In a relief to number of borrowers, the Reserve Bank of India (RBI) has asked banks to immediately stop charging penalty on pre-payment of home loans taken on floating interest rates, reports PTI.
"It has...been decided that banks will not be permitted to charge foreclosure charges or pre-payment penalties on home loans on floating interest rate basis, with immediate effect," the Reserve Bank said in a communication to banks.
The RBI noted that the Damodaran Committee had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers. This is particularly so considering that banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario, it added.
"As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source," the RBI said.
According to the central bank, the removal of the charges or penalty will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans.
"Though many banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there is a need to ensure uniformity across the banking system," it added.
Some banks were charging pre-payment penalty of 1%-2% of the outstanding loans.
With an aim to ensure uniformity across the banking system in home loan segment, the RBI in the annual monetary policy for 2012-13 had proposed "not to permit" banks to levy the charges. It had said that detailed guidelines in this regard would be issued separately.
Last year, a consensus was reached at the Banking Ombudsmen Conference that banks should not impose pre-payment charges on loans with a floating rate of interest.
Earlier, housing finance regulator National Housing Bank (NHB) had directed all housing finance companies to desist from imposing a pre-payment penalty. NHB, which regulates 54 housing finance companies, including mortgage major HDFC, LIC Housing Finance and Dewan Housing Finance, had said that if the borrower want to pre-close a housing loan out of their own sources, then there should not be any penalty.
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Nifty’s next resistance is at 5,100
The market closed in the positive on easing of the debt problems in Europe. An appreciation in the rupee also supported the upmove. Yesterday we had mentioned that if the Nifty manages to close above 5,020, we may see the index reaching the level of 5,200. Today the Nifty closed well above this level. The benchmark has to firmly close above 5,100 for the upmove to continue. The National Stock Exchange (NSE) saw a volume of 64.92 crore shares.
The market continued its upmove for the successive fourth day as it opened in the positive on firm cues from the global arena. US markets closed higher overnight as European leaders were looking a ways to help Spain deal with its troubled banks and comments from the Federal Reserve that economic growth has improved in the last two months. This optimism also supported Asian markets this morning, which were mostly in the green in morning trade.
The Nifty opened at 5,035, up 38 points over its previous close, and the Sensex surged 124 points to resume trade at 16,578. While select buying in the morning session helped the indices to move northwards, choppy trade capped the gains.
The rupee appreciated by 18 paise to 55.18 against the US dollar in early trade following a rising trend in the equity market and dollar selling by exporters and banks. On Wednesday, the rupee had gained 28 paise to close at a one-week high of 55.36 against the dollar.
The market fell to its intraday low in late morning trade. At this point the Nifty went back to 5,008 and the Sensex touched 16,520. However, buying in blue chips and a positive trend in the European markets pushed the local market higher in the noon session.
Sectors like banking, realty, metal and auto, which saw good buying interest in post-noon trade, pushed the benchmarks higher. The push enabled the benchmarks hit their intraday highs towards the end of the trading session. At the highs the Nifty rose to 5,060 and the Sensex scaled 16,681.
The market closed marginally off the lows. The Nifty gained 58 points to 5,055 and the Sensex settled at 16,649, up 195 points.
Markets across Asia closed mostly higher on hopes that European leaders would find ways to help Spain to infuse additional liquidity into its banks. Besides, comments from Federal Reserve vice chairman Janet Yellen that the lacklustre growth in the job market and flagging stock markets may lead to additional stimulus to spur growth.
The Hang Seng advanced 0.85%; the KLSE Composite rose 0.37%; the Nikkei 225 surged 1.24%; the KOPSI Composite jumped 2.56% and the Taiwan Weighted gained 0.34%. Among the losers, the Shanghai Composite declined 0.71%; the Jakarta Composite shed 0.02% and the Straits Times settled 0.06% lower.
At the time of writing, the key European markets were trading with gains of 0.37% to 0.67% while the US stock futures were mixed.
Back home, institutional investors—foreign and domestic—were net buyers in the equities segment on Wednesday. While foreign institutional investors pumped in Rs269.21 crore, domestic institutional investors infused 489.14 crore.