Money & Banking
Lending rates cut leads to balance transfers in home loan market: ICRA
The lending rates cut, which effectively set off a price war in the Rs 13 trillion home loan market, could lead to increased competition and balance transfers in the highly competitive housing loan market, rating agency ICRA said in its report.
 
With a bulk infusion of fresh liquidity arising out from the demonetisation, State Bank of India reduced the lending rates for home loans by 50 bps to 8.6 percent (for floating rate loans), various lenders followed suit.
 
Key lenders that together account for over 65 percent of the home loan market, now offer interest rates in the range of 8.5-8.7 percent after the reduction, compared with their earlier rates of 9.1-9.3 percent, the agency said.
 
"While the reduced rates are applicable for new loans and loans linked to Marginal Cost of Funds based Lending Rate (MCLR), this could lead to increased competition and balance transfers in the highly competitive Indian housing loan market, especially the prime salaried segment," the report said.
 
Loans linked to MCLR for banks were less than 15 percent of the overall home loan book, it said.
 
The report said lenders might also try to retain borrowers by giving them the option to shift to a lower interest rate by paying a fee.
 
Housing finance companies (HFCs) would also benefit from the reduction in MCLR by various banks and should be able to re-price a portion of their liabilities.
 
However, the report said the smaller HFCs are likely to get impacted more on account of their relatively higher operating cost ratios.
 
"Given that only a few HFCs would be able to match the interest rates being offered by banks , this could lead to some balance transfers from HFCs to banks and hence an increase in banking sector market share," the report added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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Maharashtra civic elections on Feb 16, 21
Nearly 10 crore voters will exercise their franchise in a two-phased election to 10 municipal corporations, 25 Zilla Parishads and 283 Panchayat Samitis across the state, Maharashtra's State Election Commissioner (SEC) Jageshwar S. Saharia announced here on Wednesday.
 
Polling in 15 Zilla Parishads and 165 Panchayat Samitis will be held on February 16 and elections to the remaining Zilla Parishads, 118 Panchayat Samitis and 10 top Municipal Corporations on February 21, the SEC said at a press conference.
 
The counting for all the elections will take place simultaneously on February 23 and the results are likely to be declared the same day, Saharia added.
 
The much anticipated, high-stakes elections will cover 25 of the state's 36 districts with the participation of nearly 85 per cent of the electorate spread across 246 out of 288 assembly segments.
 
The code of conduct for all the elections comes into immediate effect, Saharia declared.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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Urjit Patel calls for unified financial regulator for Gujarat's GIFT City
Reserve Bank of India (RBI) Governor Urjit patel called for a unified regulator for the successful execution at India's first International Financial Services Centre (IFSC) coming up at Gujarat International Finance Tec-City (GIFT).
 
"A unified financial regulatory framework providing for a single regulator for GIFT City could contribute to better regulation and supervision of the financial entities," Patel said here at the ongoing Vibrant Gujarat Global Summit 2017.
 
"While individual regulators can supervise the entities initially when the size of the business is small, a unified regulator would be necessary to pay undivided attention to the IFSC. Work on the design of such a framework should begin soon so as to be able to implement this in time," he added.
 
He also said that the existing laws governing financial contracts in India should be reviewed and gaps addressed.
 
"Based on the review, a world class legal framework for financial contracts in GIFT could be enabled, either by appropriately amending the existing laws governing financial contracts or enacting a fresh law," Patel said.
 
"Either way, this should be expedited, may be by constituting a high level working group to address this gap in mission mode," he added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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