Loans
Home Loans: Existing borrowers cannot immediately avail of lower interest rates
Here is good news for new borrowers of home loans as they can now get lower interest rates, with several lenders having reduced the rates. However, for existing borrowers on floating rate basis, there is no immediate respite, as they will have to wait for the next reset date for the marginal cost of funds based lending rate (MCLR). In addition, they may have to pay certain charges to lower their interest rates for home loans. 
 
Several prominent banks, including State Bank of India, the country's largest lender, ICICI Bank, HDFC Bank, Bank of Baroda and Bank of India have reduced the interest rate on home loans of up to Rs30 lakh, to 8.35%. However, this is applicable only for salaried women borrowers. Other borrowers will have to pay 8.40% interest on home loans of up to Rs30 lakh.
 
Last year the Reserve Bank of India (RBI) issued guidelines on MCLR, which is a tenor-based benchmark rate. Banks are required to review and publish their MCLR for different maturities every month on a pre-announced date. 
 
However, the same tenor-based clause is preventing existing borrowers from getting the benefit of lower interest rates. When one of our readers approached his bank for reduction in interest rate for his home loan, he was told "...MLCR is revised on annual basis, so no changes can be done before that."
 
This is as per the guidelines issued by RBI. For a borrower, the guidelines say, the MCLR prevailing on the day the loan is sanctioned will be applicable till the next reset date, irrespective of changes in the benchmark rates during the interim period. 
 
For example, if the bank has given a one-year reset period in the home loan agreement, then the borrower will continue to pay interest on the same rate till next reset date. If she had taken home loan at 9.5%, then even if the interest rate comes down to 8.35%, she cannot get the benefit and will have to wait for the next reset day and pray that the reduced interest rate prevail on that day.
 
Here are the new interest rates of some banks for the salaried

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COMMENTS

manish vora

2 months ago

Dear team, existing borrowers are not passed on benefit of reduced interest rate but the article provides incomplete information. NHB circular of 2009 is not followed by leaders, still NHB being watchdog is silent.

Indian Demographic Dividend: The Need is for Quality, Not Just Numbers
With 800 Million persons below 35 years of age, the Indian work force is considered a demographic dividend. However, recent reports about un-employability of Indian youth have put a question mark on the real value of this dividend.  In November 2016, a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) on higher education stated that almost 93% of graduates from the Master in Business Administration (MBA) and 80% from the engineering stream are not employable. These facts were also echoed by Aspiring Minds, an employability evaluation and certification company, in its national employability report, which stated that 80% of engineers remained unemployable in the software sector.  
 
The reasons for this dismal situation are not far to seek. Of late, getting a degree in India, albeit with some notable exceptions, has become synonymous to purchasing off-the-shelf merchandise. With money, obtaining any degree in the country is possible. Quite of few of these institutions do not even require regular teaching classes. Education too has piggy-backed itself on the online bandwagon. Increasing population has led to increasing demand for colleges. To meet the demand, colleges and universities have mushroomed in the country. People from all walks of life have entered the education business. Real estate tycoons, detergent manufactures, politicos and even sweet shop owners have set up universities and degree colleges. 
 
As education turned into a business and barriers of entry got measured only by financial ability rather than intellectual capability, the results were obvious. Good initiatives, like autonomy to colleges, also got misused. More courses were designed to accommodate larger numbers, regardless of the fact that these courses may be of no use for the future career of students. 
 
Contrast this with the situation elsewhere and we see stark differences. In China, if one wants to join a graduate degree course, there is a national college entrance examination (NCEE). Only those who qualify can move ahead to get a degree. Others, who cannot qualify, join vocational courses. Smaller countries like South Korea too have a similar system, where each person who wants to join a graduate course takes a college scholastic ability test. The results of such early screening are obviously reflecting on the financial growth of these countries. 
 
Against this backdrop, if the employability index in India has to improve, the current scenario of providing degrees to anyone who can afford it, barring a few exceptions, has to change. A common graduate eligibility examination needs to be made mandatory for all aspiring students to achieve a graduate degree, be it online or offline. Only those who clear this common graduate eligibility examination for graduate enrollment can take further examinations for entrance to engineering, commerce, medical or other professions. All others who are not successful could take up vocational courses from various Industrial Training Institutes (ITI’s) and National Skill Development centres in the country.  
 
Alongside screening for degree aspirants, institutions too, autonomous or otherwise, should have standardised courses, which reflect future skill requirements rather than help the finances of promoters.  The clamour for autonomy as far as administration is concerned is fine, but the coursework builds the academic capital of the country and hence needs to be closely monitored.  The formation of new institutions too should be mapped according to future workforce requirements rather than on grounds of financial avarice.
 
Our country’s potential has never been in doubt. With an estimated work force of 250 million in 2030, expected to take India to the position of the third largest economy in the world, changes in the current educational system need serious thought.  Else this promise of demographic dividend may remain a mirage. 
 
(Sanjay Pandey, an IPS officer, is the Deputy Commandant of Home Guards and deputy director of Civil Defence in Maharashtra. He holds a Masters' Degree in Public Administration from Harvard University, US and is a B Tech in Computer Science from the Indian Institute of Technology, Kanpur. Views expressed in this article are personal.)

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COMMENTS

PulseOn

2 months ago

Education is no more a charity. The faster people realise that true teachers too need to support their aspirations, meet their needs, the better it will be. Demographic dividend is a double edged sword. Job generation is in hands of private sector and that sector is not able to freely function with cronyism. If Tatas is affected, then there is no hope. Brain drain is only solution. Reservations does not help. It should be on basis of economic criteria solely, linking full family income and financial data to arrive at needy persons.

Simple Indian

2 months ago

Fine article. Education has indeed become a business, and it's hurting the education sector like never before. As Mr. Pandey states, there are various dividends from good education which certainly contribute to a country's economic progress. Sadly, in India, everything is controlled by politicians, and over time they have even diluted the once-coveted educational institutions like IITs and IIMs by creating many more such institutions but without the required safeguards against their misuse/abuse. Moreover, the reservation system is also a major factor for erosion of educated people in the country, with undeserving 'creamy layer' usurping the lion's share of quotas meant for truly deserving backward communities. Moreover, India should make everyone compete for jobs and promotions in jobs as equals. Only then will even those who get State-sponsorship for their education really value them. The flawed reservation policy has degraded not just our education system, but also our government mechanism, with more n more from the reserved category occupying govt jobs, but not doing their jobs sincerely, knowing fully well that their jobs are secure (and so are regular promotions) regardless of how they perform.

REPLY

Pradeep Kumar M Sreedharan

In Reply to Simple Indian 2 months ago

If reservation is the evil that waylaid India, then India should have been tops in Olympic Gold medals. But that isn't the case

Pradeep Kumar M Sreedharan

2 months ago

With 12 million entering workforce every year against job creation of about 3.5 lakhs, quality or otherwise, what we have at hand is a ticking time bomb. That is why they talk about Universal Basic Income.

By the way, reservation has been going on for thousands of years, in yesteryears it was enforced by not rule of law, but by pouring molten lead into the ears of the hapless

SuchindranathAiyerS

2 months ago

Quality not quantity?

Vote Banks are made from quantity not quality.

Naturally, an IPS Officer would have to tip toe around the elephant in the room which is "reservations" and the policy of making merit, competence and integrity subservient to the dregs of the ruling PANGOLIN* dispensation:

It was the season in March. My servants were begging for money to pay their children's school fees. It costs Rs. 18,000 per child in a Government School. This is what the parents earn in three months or more! (If they convert to Constitutionally protected and prospered Christianity, they would get better quality education, free for their children)

My Maternal Grand Father (K. Srinivasan) went to a Government School (Fort High School) Bangalore. Like all Government Schools in Maharaja's Mysore, it was free. He topped the ICS examination. (He opted instead for the Mysore Civil Service when his Highness came on horseback to request my Great Grand Father "Controller" Subba Raya Aiyer, who had been sent by Travancore for his integrity and competence to sort out the Mysore Treasury which had been in a mess). My Paternal Grand Father (B. S. Ramaswamy Aiyar) studied free at a Veda Pathashala in Bethelegundu (on the Highlands near Madurai). He topped the Madras Matriculation and the Jesuit Principal of St Joseph's College Tirchinopoly begged his father to send him to study free, and recommended him to Her Majesty's Secretary of State in London for appointment to the Indian Service of Engineers. His first salary of eight gold sovereigns exceeded the combined fortune of his native village. He could be and was generous to a large number of ungrateful, vicious, persons belonging to communities currently Constitutionally certified to be congenitally backward.


From a Great Power in 1947, India has been reduced to 135 out of 172 countries in Human and Social Development and 143 out of 172 countries in Internal Peace and Stability by 2016 (UNDP 2015). It is home to 30% of the World’s poor (World Bank 2016). There were more Bomb Blasts in India in 2016 than any other country. Twice as many as Iraq which came in a proud second.

This is the result of a vicious Constitution and polity that has waged relentless war on integrity, merit and competence. Sir. M. Vishweshwaraya, who raised the Mysore war cry of “Industrialize or Perish” in 1912 has been proved more than right on his resignation letter in 1918 by the villainous, sadistic, anti National PANGOLIN* rulers of the Republic of India. The idea of reservations was implemented by the British since 1921 as part of a comprehensive "Divide to rule" Policy. Ambedkar enlarged it to loot the resources of the Nation and apply them to exclusive benefit of his own community. Nehru blessed it just as he did so many other divisive policies such as partition because it helped him to capture and retain power to abuse and misuse as per his perversions. No ideal state can be achieved when founded on trash. Rose trees do not bloom from Parthanium roots.

Mysore is a classic example of what can happen when founded on ideals and what happens when those same ideals are destroyed. Mysore had universal primary and secondary education with health care and nutrition and NO reservations. Gandhi called it "Rama Rajya" though His Highness Krishna Raja Wadeyar preferred to call it "Camelot". When the British pushed "reservations" as part o their divide and rule policy into Mysore through the Maharaja, the Diwan, Sir M. Vishweshwaraya who has done more for ALL the people of Mysore than any man save Sir Mark Cubbon, resigned. The words in his resignation letter were as prophetic in its way as Sir Winston's prognosis for India. "Only the very best competence and integrity can help raise the wretched of the earth to the status of human beings. There is no short cut. You cannot elevate the wretched and expect them to do the work that the most talented and competent find arduous" Today Mysore has been more thoroughly trashed than any other state of the Indian Union because there was so much more to trash. India is a Constitutional Hypocracy, With inequality under law and exceptions to the rule of law, it is neither secular nor a democracy.

*Note: PANGOLIN: An enemy of India who believes in inequality under law, exceptions to the rule of law and persecution of some for the benefit of others. At present, the sole purpose of the Indian Republic, Constitutional or otherwise, is to pamper and provide for certain constitutionally preferred sections of society who the British found useful to hold and exploit India at the cost of those who the British hated and persecuted. The Pangolin is a creature that is unique to India and feeds on ants that are known in nature to be industrious and hard working if not quite as fruitful as bees who flee to better climes. (PANGOLIN is an acronym for the Periyar-Ambedkar-Nehru-Gandhi-Other (alien) Religions-Communist Consensus that usurped the British Mantle and has worn it with elan to loot, plunder, and rape India since 1921 and re write History and laws to their exclusive benefit since 1947)

Rahul Pande

2 months ago

Well written article.Things will not change till education is in the hands of politicians.

Parimal Shah

2 months ago

Also, we need a compulsory military training for at least 2 years without exceptions to inculcate the values and discipline.

ARUN KULKARNI

2 months ago

quite true Sir, 80% graduates and MBA's of institutes who are unemployable needs to be put on better use by retraining and upping their skill sets.Its dynamic world and we need capable and resourceful people around in the coming days to take this country forward.

Abhijit

2 months ago

Aspiring Minds, an employability evaluation and certification company, in its national Aspiring Minds report, which stated that 80% of engineers remained unemployable in the software sector. Why engineers are expected to be employed only in software sector?

Trump’s New Bank Regulator: Lawyer Who Helped Banks Charge More Fees

In the early 2000s, banks successfully sued to stop Iowa from limiting their ability to charge ATM fees to non-customers. They also fought off states' attempts to stop them from charging non-customers to cash checks drawn on the banks' accounts. In another case, they stopped California from forcing two banks to conduct audits of their own residential mortgages.

 

What do all these cases have in common? The winning argument in each was that states had no right to impose their laws on federally regulated national banks. And the man who helped make that powerful argument was Keith Noreika — President Trump's pick to head the federal agency that oversees national banks.

 

Noreika, a prominent Washington attorney who specializes in financial regulatory law, has made a career out of representing banks as they sought to fight back consumer-friendly state regulations and class-action lawsuits accusing banks of deceptive practices.

 

He is now the acting head of the Office of the Comptroller of the Currency, a position he can serve for 130 days without Senate approval and during which he does not have to abide by stricter ethics rules governing permanent appointees.

 

As head of the OCC, Noreika will be well-positioned to lighten regulations on banks — without the need for Congress to pass legislation.

 

Among the targets may be the 2010 Dodd-Frank Wall Street overhaul, which made it easier for states to hold national banks accountable. Noreika has criticized the law's burdens, while Trump has called it "horrendous."

 

Under Dodd-Frank, the head of the OCC has broad power to review and preempt states' consumer finance laws.

 

"The first way to change the regulations is to put in regulators who will propose to stop enforcing them," said Andy Green, a former Democratic Senate staffer who helped craft the 2010 law and now works at the liberal Center for American Progress.

 

Noreika's ascension fits into a broader pattern of Trump administration appointees. Many of them have worked to influence the same agencies they've now been assigned to lead. And while Trump has been slow to name people to positions that require Senate confirmation, he has been quick to install officials out of public view.

 

Through an OCC spokesman, Noreika declined to be interviewed. But he said in a statement:

"I am proud to have had an effective law practice where I represented clients of all types — banks, institutions, individuals, and a large labor union."

 

He added:

"I do think that ten years after the crisis and seven years after the passing of Dodd-Frank, now is a good time to take stock of the rules implemented and actions taken to ensure the nation has the right sense of balance and coherence in regulating financial institutions."

(Read his full statement here.)

 

Noreika's appointment has raised the ire of Democratic lawmakers.

 

"You have chosen to replace the current head with an acting head who is unvetted, has obvious conflicts of interest, and lacks the experience to run an agency that employs almost 4,000 individuals," seven Democratic Senators wrote in a letter to Treasury Secretary Steven Mnuchin on Thursday.

 

Noreika is following in the footsteps of his mentor, John Dugan, who worked with Noreika at the corporate law firm Covington & Burling — before himself leaving to head the OCC from 2005 to 2010.

 

Under Dugan, the OCC was criticized as being too friendly to banks in the face of widespread lending abuses that fueled the financial crisis. While Noreika now heads up the OCC, Dugan is back at Covington, where his bio says he "advises clients on a range of legal matters affected by significantly increased regulatory requirements resulting from the financial crisis."

 

Some say it's too early to draw any conclusions on how Dugan's protégé will run the agency.

 

"I don't think you should assume that what a lawyer argues for a client is indicative of how he or she would react when you're administering the law," said H. Rodgin Cohen, senior chairman of Sullivan & Cromwell, a prominent corporate law firm.

 

Consumer advocates are particularly concerned about Noreika's frequent reliance on the argument that federal banking laws and OCC regulations trump state laws — a concept known as preemption.

 

In 2005, when Noreika became a partner at Covington, the firm noted that "many of Mr. Noreika's cases have challenged the validity of state and local laws as preempted by the federal banking laws" and listed Wells Fargo and Bank of America as prominent clients.

 

ProPublica identified more than a dozen such cases filed in federal court from 2000 through 2005. Most were dismissed or settled in banks' favor.

 

"That's a real problem," said Lauren Saunders, associate director of the National Consumer Law Center in Washington, D.C. "States often have laws that protect consumers in areas where there are no national laws."

 

Banking lawyers say it only makes sense to give precedence to federal banking laws. Otherwise, national banks would end up dealing with 50 different regulators rather than one — the OCC. That was the whole point behind Congress' creation of the agency during the Civil War, when states' conflicting regulations made banking and commerce more difficult.

 

But in the years before the financial crisis, as abuses in the mortgage-lending markets began to surface, the OCC was slow to act. States did act. Between 1999 and 2007, North Carolina and about 30 other states passed laws targeting predatory lending practices.

 

The OCC, meanwhile, adopted sweeping regulations that prevented those laws from applying to national banks and extended that protection to the banks' state-chartered subsidiaries. In 2008, then-New York Gov. Eliot Spitzer accused the agency of embarking "on an aggressive and unprecedented campaign to prevent states from protecting their residents."

 

At the time, Dugan brushed off the criticism. "Almost everyone who has paid attention to the subprime lending crisis has concluded that OCC-regulated national banks were not the problem," he said in a statement responding to Spitzer.

 

But two separate inquiries — the Financial Crisis Inquiry Commission and a report by the U.S. Senate Banking Committee — disagreed. The commission concluded that the OCC's preemption of state laws ended up "preventing adequate protection for borrowers and weakening constraints" on risky mortgages.

 

The banks used the OCC to engage in "regulatory arbitrage," said Arthur Wilmarth, a professor at the George Washington University Law School.

 

Dugan did not return phone calls but said in an email, "I disagree categorically with Wilmarth." He referred his testimony to the crisis investigators, in which he said the financial crisis was "not caused by federal preemption of state mortgage lending laws." Instead, Dugan said, "the root cause of the mortgage crisis was exceptionally weak underwriting standards."

 

In 2007, as Dugan presided over the OCC, Noreika and his Covington colleagues won the biggest preemption victory of all, Watters vs. Wachovia Bank. The case evolved from separate federal lawsuits involving banks that had sought to shield their subsidiaries from state laws and subsequently faced collapse or fell into legal trouble for their business practices — Wachovia, National City Bank of Cleveland and Wells Fargo. Wilmarth advised state banking regulators on the cases.

 

The cases were merged and went all the way up to the Supreme Court, where Noreika argued that state laws didn't apply to subsidiaries of national banks like Wachovia. In a 5-3 vote, the high court agreed.

 

Preemption became an even bigger issue after the 2008 collapse of several big banks, including Wachovia. Local governments tried to sue banks for alleged misdeeds, but again were blocked by preemption.

 

By then, Congress was working on Dodd-Frank, and preemption was a hotly debated area of reform. One of the changes Congress enacted as part of the law was to negate the effect of the Supreme Court decision that Noreika had litigated. Dodd-Frank also gave local law enforcement authorities more power to bring lawsuits against national banks under state laws. And it created a revised set of rules under which the OCC can review state banking laws to determine if they should be preempted.

 

The responsibility for those reviews falls to the head of the OCC — now Noreika. He has the power to determine if a state consumer finance law is preempted by federal law.

 

"He will now have his hand on the preemption button," said Wilmarth, the George Washington University law professor.

 

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