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Loans: The Economic Seeds

Loans are those systematized and regularized mechanisms of credit-taking, binding both the creditor and the funds-taker in a legally-valid contract about the interest rates, terms and conditions of repayments and other related requirements.

Author: Addi Vardhaman

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In India, presently the loan scene is in the throngs of a financial fever; so it will be quite befitting to have a brief over-look of the latest developments in the field of banking and borrowings.

The top bank (RBI) has raised the CRR to 8.25 percent points to counter balance the adverse affects of a worryingly rising rate of inflation. The latter is being pushed upwards by the rising prices of oil and other consumer commodities. During the yearly 'credit policy meeting' the top bank hiked the CRR by 25 basis points so as to absorb the extra liquidity from the financial market. Further, the highest bank has brought down the 'risk weight' factor on home borrowings up to 30 lacs. The decision has been arrived at in the hopes of the banking sector taking a reciprocating action by bringing down the rates on home loans. Starting from April, 2007 to the February of this year, the regular rise in the home loan rates has almost crashed the housing borrowings.

To still broaden the economic options available with the clients, the 'Reliance Retail' & 'Citibank' have come together to form an alliance to create newer and newer choices in the field of consumer finance. This upcoming joint venture will provide credit cards and other financial incentives to cater to the needs of the emerging retail chain in most parts of urban India. The field of consumer finance—loans and the credit cards—is very impressively emerging as a very significant part of the financial services in the country.

The Bank of India (BoI) has updated the interest rates on the deposits scheme known as 'select tenures' by the factor of '75 basis points'. The deposit rates are presently like this:

1. For the amounts less than 10 crore rupees, a rate of 9.15 percent for the time up to 2 years

2. 9.25 percent for the time between 2-3 years

3. 9.5 percent for the time between3 -5 years

On the issue of car loan front, the 'Ducati Motor Holding', the European motor-bike maker is eying the Indian market on a large scale. But these machines are very costly falling in the range of Rs.15 -Rs.50 lacs. So, the companies will have to consider that the would-be buyers get sufficient financing schemes and incentives. It is because most of the consumer section in our country is dependent upon borrowings to fulfill its dreams of a vehicle, bike or car.

Further, in an effort to boost the chances of consumers like the students taking loans to realize their dreams of further education, the Government of India (GoI) has formed a subsidy plan on educational borrowings. In the preferred list are included the technical, professional and other scientific subjects.

The Indian loan scenario is alive with car loans, loans for business, loans against property, homeowners loans and various other forms of borrowings.

About Author

About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Paisawaisa as a finance specialist.

For more information related to finance community please visit: http://www.paisawaisa.com/loans/nri-loans.aspx

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