Category: Banking

The spread of coronavirus across the globe has created a big dent on the financial conditions of everyone. With pay cuts, salary delays and even lay-offs, there is hardly any money coming in people’s bank account. In this situation, people who forget to maintain a minimum balance in their accounts get charged with hefty fines.

Amidst all this, top banks such as Axis Bank, Kotak Mahindra Bank and Bank of Maharashtra have announced a revision in the penalty charges of non-maintenance of minimum balance. The penalty has increased and so has the troubles of common people.

The Best Way Out: Open A Zero Balance Savings Account

One of the best ways is to open a zero balance savings account. If you are a salaried employee, chances are high that you already have it. Otherwise, you can also open one online.

Be it SBI, HDFC or ICICI or Kotak Mahindra, almost all the leading banks offer this zero balance savings account that offers various features and benefits. Some of the best ones include:

·     No Need to Maintain Minimum Balance: As the name suggests, you do not need to maintain a minimum balance, unlike a normal savings account. You will not be charged with any penalty even if you have no balance in the account.

·     Easy Transactions: Zero balance accounts offer net banking, allowing you to make easy cash transactions. You can use this option to pay your bills and make payments online.

·     Free Debit Card and ATM access: A zero balance account also offers you ATM access with Debit card across all the outlets.

·     Mobile Banking: Banks also offer mobile banking services with zero balance account which you can easily access from your smartphone. From checking your bank balance to making transactions and paying utility bills, you can use all these services easily through your mobile.

·     Interest Rates: In some banks, the interest rate on a zero balance saving account is the same as that on a regular saving bank account.

Apart from the features listed above, you can also avail various other benefits such as banking on Whatsapp, Virtual Debit Card, Personalized account number and so on.

Different banks offer different features of zero balance account but one thing that remains the same is that you do not have to maintain a minimum balance.

 For more such articles and updates from the banking sector, keep browsing bankingontips.com.

Apply for Kotak Bank Zero Balance Saving Account: Click Here

Apply for IndusInd Bank Zero Balance Saving Account: Click Here

In his speech of making India 'Atmanirbhar' (self-dependant), Prime Minister announced a boost of Rs. 20 Lakh Crore to the Indian Economy. Out of this Rs. 20 Lakh Crore, around Rs 1.37 lakh crore was sanctioned to MSMEs, under Emergency Credit Line Guarantee Scheme (ECLGS). But, to give relief to a broader set of people, Govt. of India has now announced that this ECLGS scheme will now also cover individual entrepreneurs.

Earlier, this used to cover only loans availed for Micro, Small, and Medium Enterprises, but with this new announcement, personal loans given for business purposes will also be counted under the ECLGS scheme.

Eligibility Criteria

A number of MSME organizations and market chambers suggested to the finance ministry that they should broaden their eligibility criteria to include individual entrepreneurs under this scheme. A great chunk of loan borrowers (around 80-90 percent) who had taken loans from NBFCs for their business tools or vehicles were ineligible for the Emergency Credit Line Guarantee Scheme yet.

With this change, individual business persons like cab or truck drivers, shop owners, lawyers, doctors, engineers, etc. will also be eligible for the loan.

However, the catch is that first-time loan borrowers can not get new loans under this scheme. People who have already taken loans from banks to Non-Banking Financial Companies can stretch their loans.

What Are The Benefits?

Talking about the scope of this new development, Debasish Panda, Secretary of Department of Financial Services said to the media, "A total of around Rs 1.37 lakh crore has been sanctioned under the scheme by member lending institutions to around 40 lakh accounts, of which around Rs 87,000 crore has been disbursed. The changes in the ECLGS scheme are likely to make an additional Rs 1 lakh crore eligible."

Companies that have an annual turnover of up to Rs 250 crore but have an outstanding loan of the amount up to Rs 50 crore can now avail an additional loan of up to 20%. This implies that individual entrepreneurs will now be eligible to get around Rs 10 crore as additional financing, instead of just Rs 5 crore.

To make sure that lenders don't charge too much from the borrowers, the central government has capped the interest rates. For banks and financial institutions, loans under the ECLGS scheme can only charge an interest rate of 9.25 percent per annum, while for Non-Banking Financial Companies, this cap is up to 14 percent interest rate per annum

According to market insiders, if executed before the prescribed date, this scheme can boost the economy enough that it can gain a stable momentum afterward.

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With jobs laid off and factories locked down, COVID-19 has taken up people's livelihood if not lives. With no income source, a large number of people are thinking of violating lockdown rules, just to earn pennies.

However, India's biggest lending institution has stepped in to give them a breath of ease. The State of Bank of India (SBI) has started to provide emergency loans to its customers with a hassle-free process.

The maximum amount of loan is Rs 5 lakh, and the loan type is - Personal loan. An account holder of SBI savings account can apply for this loan through the YONO app of SBI.

How To Check Your Eligibility Of Loan

Of course, the SBI is not lending money to every account holder. A background history check-up will be done of your account before lending you a loan. To check if you are eligible for the loan or not, you can choose any of the following two methods:

Through YONO App

●      Download the YONO App on your mobile phone. It is available in both- Google Play Store for Android users and the App Store for iOS users.

●      Once the app is installed, open it and click on the 'Pre Approved Loans' option.

●      An OTP will be sent to your linked mobile number. Enter that OTP in your app.

●      Your part of the job is done. SBI will reply to you in 45 minutes.

Through SMS

●      Open your text messages and Type PAPL and the last four digits of your SBI bank account number in the text area.

●      Send the message to 567676 through your linked mobile number.

●      SBI will send further query questions like loan amount. Reply, as per your need.

●      The bank will reply you back in 45 minutes.

Interest Rate and EMIs

If your bank account is eligible for the emergency loan, SBI will credit the money into your bank account in less than 45 minutes. The interest rates for the loan will be 10.5 percent.

Compared to the interest rates of personal loans given by other banks, the interest rate on the SBI Emergency Loan is pretty fair. And the best thing about the loan is that the EMIs will start after six months of the loan approval.

We will update the news as soon as the bank gives more updates on the loan. Still, if you have any queries about the loan, you can contact the customer care services of the bank.

For more such news and trending stories on the banking sector, keep reading BankingOnTips.

In the wake of ongoing coronavirus crisis, Reserve Bank of India (RBI) held two separate meetings with the heads of various public and private sector banks. The meeting was held online through video conferences. Understanding the importance of it, the meeting was attended by Governor Shaktikanta Das, Deputy Governor and senior officials of RBI along with the MD and CEOs of major public and private sector banks.

One of the most important discussions was made on the implementation of 3 months moratorium of the repayment of bank loans. 

As per the reports, many banks have requested the RBI to extend the grant to another 3 months to the borrowers owing to the pandemic outbreak. However, some banks are not ready to allow NBFCs the benefit of 3-month moratorium.

As per sources, Bank of India, Bank of Baroda and Indian Bank were in favour of giving moratorium relief to NBFCs, while State Bank of India (SBI) had continued to stay on the other side of the discussion. 

However, RBI conveyed that NBFCs are covered under `borrowers' to be eligible for a moratorium; thus, giving them a chance to stay afloat during this crisis. This step by RBI can be the result of complaints by the NFBCs claiming they are being deprived of the moratorium. 

Along with this statement, RBI also said that banks can also use their discretion to decide the eligibility of firms based on their credit and liquidity profile.

Earlier, RBI had announced a moratorium on loan EMIs and credit card dues between the period of March 1, 2020, and May 31, 2020.

Other Points Discussed in the Meeting

As per the official website of RBI, the meetings aimed to review the current economic situation and discuss crucial matters to ensure the proper functioning and stability of the banking sector of the country. 

The meeting touched upon various matters including review of the flow of credit to different sectors of the economy, "including liquidity to Non-Banking Financial Companies, Micro Finance Institutions, Housing Finance Companies, Mutual Funds, etc." They also discussed the post lockdown credit flows with a special focus on credit flows to MSMEs.

Apart from this, monitoring of overseas branches was also done since coronavirus is affecting the economies of all over the world. 

The lenders also highlighting the fact the relief by the government is not enough since 80% of their corporate borrowers are working in the red zones where hardly any relaxation is offered in terms of business revival.

For more such articles on the banking sector, keep reading BankingOnTips.

In October last year, the Reserve Bank of India changed some rules that made the lending procedure more transparent, but banks were not ready to share that transparency with their customers. Banks nodded to RBI but didn't inform their customers about what is the repo-linked lending rate as it would have saved customers’ money.

What is RLLR?

There are three kinds of benchmarks a bank can set up on your loan's interest. If you have taken a loan between the period of April 2016 to September 2019, then your loan interest comes under something called the marginal cost of funds-based lending rate (MCLR). This MCLR is the banks' internal benchmark.

If you have taken a loan prior to April 2016, then your loan is linked to something called the Base Rate. This base rate is also a kind of internal benchmark set by the bank.

However, the problem with these internal benchmarks was that banks used to increase the interest rates when RBI increased its rates. But, when RBI used to lower its rates, banks never moved parallel to that.

RLLR Vs MCLR: How they stack up

To solve this grievance of customers, RBI made an external benchmarking regime called repo-linked lending rates or RLLR. This RLLR is directly proportional to the repo rate set externally by the RBI. The banks now have to link every bank loan taken after October 1, 2019, to this external benchmark system.

Now interest rates of those loans which are attached to RLLR are lower than that of MCLR or base rate as RBI has reduced the repo rate by 75 bps to 4.40% in March this year.

How to move to RLLR?

The process is as simple as just making a phone call or writing an e-mail. If your bank's customer care is open in lockdown, just dial the Customer Care number and make a request for changing your interest regime. However, if your bank's customer care service is down in lockdown, just write a request with your bank-attached e-mail about the regime change.

One more thing to notice: this regime change service is only mandatory for banks, not for housing finance companies (HFCs). They are not abided by this new external benchmark rule of RBI.

But one thing you can do to compel your housing finance company to lower your interest rate is to ask them to reduce your rate or to transfer your loan to some other lending company (essentially, a bank). No good housing finance company would want to lose a good customer. The company will have to reduce your rate to somewhat closer to RLLR.

Don't forget to do your homework before dialing up at your bank. Make sure you know all the market rates before starting to negotiate with your bank. Just 5 minutes of brainwork can save thousand-lakh of rupees of your hard work.

To save more of your hard-earned money, keep reading our blog.

The central government has declared the Indian banking industry as a Public Utility Service (PUS) for the next six months. The rule is applied under the selected provisions of the Industrial Disputes Act and will be in effect from 21 April to next six months, i.e. until October 21.

The Department of Financial Services released a circular on April 20 saying that the Labour and Employment Ministry has now declared India's banking industry as PUS for the upcoming six months.

What does it change?

According to some banking industry pundits, now that the banking sector has become a PUS, the employees of any designation cannot go on a strike until the banking industry comes to the same position as it was before April 21.

Indian Banking Sector is a highly unionised sector with educated employees. So, there are more than a dozen unions in the sectors comprising of employees and officers. Before revising the salaries of employees every third year, the Indian Banks Association negotiate with these unions. Now that the sector has become a public utility service; these unions' powers will be reduced.

The circular published by the Department of Financial Services has been sent to every key position holder in the industry: the governor of Reserve Bank of India, the Chairman of States Bank of India, all the managing directors and CEOs of nationalised banks and the Indian Banks' Association.

Is every bank included in this?

With a few exceptions, most of the banks are members of Indian Banks Association and hence come under the new rule. All the public sector banks, very old private sector banks (Like ICICI Bank, Federal Bank, Axis Bank, HDFC Bank), a few foreign banks like HSBC and Citibank will come under this rule. Any salary issues or other employment-related issues of these banks are settled by the IBA.

Few banks that would not come under the new rule are - Kotak Bank, IndusInd Bank and Yes Bank. Any wage or employment issues of these banks don't come under the purview of the Indian Banks Association.

For more news on the banking industry, keep reading BankingOnTips.