Banks to get Rs6,000 crore more from home loans on rising rates

Crisil noted that the floating interest rate for home loan borrowers has increased by around 250 basis points (bps) since April 2010, due to continuous hike in key policy rates. This corresponds to an average rise of 15% in EMIs

Mumbai: Rising interest rates will push up the equated monthly instalments (EMIs) of home loan borrowers by Rs6,000 crore annually, reports PTI quoting leading research agency Crisil.

“Crisil estimates that rising interest rates would increase the EMIs of home loan borrowers by about Rs6,000 crore annually,” the rating agency said in a statement here.

Higher EMIs and a slowdown in economic growth would result in a rise in non-performing assets (NPAs) of financiers, while the teaser loan portfolio getting linked to the prevailing higher market rates in April 2012, would increase the profitability of financiers, it said.

Crisil noted that the floating interest rate for home loan borrowers has increased by around 250 basis points (bps) since April 2010, due to continuous hike in key policy rates. This corresponds to an average rise of 15% in EMIs.

The Reserve Bank of India (RBI) has increased its key policy rates by a record 12 times in the past 19 months to control inflation.

“As per our estimates, EMIs have increased for 40% of existing floating rate customers, while the remaining customers have chosen to increase their tenures or do a part payment. Customers paying higher EMIs face an estimated additional annual burden of around Rs3,500 crore,” it said.

Crisil said the higher rates have not yet affected customers who have opted for teaser loan schemes, as the rates are fixed for the initial two-three years.

It found that 25% of the housing loan portfolio of Rs5.10 lakh crore as of March 2011, comprises teaser loans.

“Once interest rates get reset to prevailing market rates (from April 2012), we estimate an additional EMI burden of Rs2,000-Rs2,500 crore annually on this account,” Crisil noted.

User

Economy to grow by close to 8% this fiscal: PM

“The fundamentals of our economy remain strong. Despite the global slowdown, we will still achieve a growth rate of close to 8% this year,” prime minister Manmohan Singh said

New Delhi: Prime minister Manmohan Singh Tuesday said the country will achieve an economic growth rate of close to 8% in the current financial year but will have to deal with high inflation in the short-term, reports PTI.

“The fundamentals of our economy remain strong. Despite the global slowdown, we will still achieve a growth rate of close to 8% this year,” the prime minister said while addressing the Combined Commanders Conference of the Indian Armed Forces here.

The economic growth in April-June period slowed to 7.7%, the slowest in six quarters. The Reserve Bank of India (RBI) has already revised downwards its growth forecast for the country to 8% in 2011-12, from 8.5% GDP growth in the previous fiscal.

The central bank had also said that inflation would act as a dampener.

“Our short-term challenge is to bring down inflation, while in the long-term we have to make our growth process more inclusive, spur agricultural growth, expand the delivery of education, health and other services, protect our environment and improve our overall infrastructure,” Mr Singh said.

Headline inflation stood at a 13-month high of 9.78% in August. RBI has hiked its key policy rates 12 times since March 2010 to tame demand and curb inflation.

Referring to the issue of defence production, he said the private sector’s IT and knowledge skills should be utilised well for modernisation of the armed forces.

“We are among the world leaders in information technology and a knowledge-based economy. We have a vibrant private sector. It is necessary to put in place policies to promote a viable defence industry in the country using the large industrial and skill base that already exists...The Defence Production Policy announced this year is a step in the right direction,” he said.

He added that it should be a joint effort of armed forces, scientists and captains of Indian industry to ensure that the there is less dependency on external sources for equipment and technology.

User

RBI unveils cheaper credit for exporters

Exporters of handicrafts, handlooms and carpets will be eligible for the interest subvention to be available up to 31 March 2012, while exporters in the small and medium enterprises across all the sectors would also be entitled for cheaper bank credit, subject to a minimum interest rate of 7%, the RBI said

New Delhi: The Reserve Bank of India (RBI) Tuesday announced 2% interest subsidy on rupee export credit to the labour-oriented and small scale sectors to cushion them from slowdown in the major markets like the US and Europe, reports PTI.

Exporters of handicrafts, handlooms and carpets will be eligible for the interest subvention to be available up to 31 March 2012, the RBI said.

The exporters in the small and medium enterprises across all the sectors would also be entitled for cheaper bank credit, subject to a minimum interest rate of 7%.

In a direction to the banks, the RBI said that the government has decided to extend the scheme from April 2011 to March 2012, for the four categories of exporters.

“Banks may ensure to pass on the benefit completely to the eligible exporters,” it said.

The decision to help exporters was announced on a day when the high-level Board of Trade reviewed the situation arising out of renewed worries about the US economy and the debt crisis in Europe.

The BoT, headed by commerce and industry minister Anand Sharma and comprising well-known industrialists, discussed issues like currency volatility, availability of dollar credit and high cost of credit.

Although India’s exports grew by 54% in April-August period, the time ahead is viewed as full of challenges.

“I am apprehensive about the roll-out of next seven months. I hope we should be able to achieve $280 billion exports this fiscal,” minister of state for commerce and industry Jyotiraditya Scindia said.

Exporters’ body FIEO welcomed the interest subsidy but wanted more. “We were expecting 3% and also for sectors like textile, gems and jewellery and engineering,” it said in a statement.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)