Housing Development Finance Corporation (HDFC), educational loan unit Credila Financial Services has set a target of increasing its loan book 2.5 times in the current financial year.
HDFC, early this month acquired an additional 10 per cent with which its stake in Credila increase to 51 per cent, is planning to take control of the distribution network and customer base of HDFC Bank to expand.
Credila Country Head Prashant Bhonsle said: “We have so far disbursed over Rs 40 crore and plan to reach Rs 100 crore by March 2011. HDFC can help us scale up quickly. Along with its brand equity, we can leverage its distribution structure and network”.
The public sector banks (PSBs) are the main players of the education loan. To be in competition with PSBs Credila has to cover a wide distance.
In 2009-10 PSBs disbursed educational loans worth Rs 8,000 crore to 320,000 students while there outstanding loans amounted to Rs 35,628.33 crore at the end of March 2010.
He said, “We can access its (HDFC’s) existing customers and database. It will not only help us expand but also bring down the cost of funds.”
The company is also having talks with other banks in order to diversify its sources of funds. PNB is giving credit whereas CARE has assigned a “BBB”-rating for its term loan facility (Rs 100 crore).
Currently Credila is doing 65 per cent of lending, to students studying within the country and the loan is given mainly for management courses in India, in the United States the disbursement is largely for masters in science, followed by management courses.
Bhonsle said, “This is an asset class in India which has not been focused on as a separate venture. While PSBs have been offering student loan services, they have been selling it as part of the product portfolio they offer.”
Giving details on where does Credila stands out vis-à-vis banks; Bhonsle says the loan facilities offered by banks are mostly identical. Moreover banks sanction loans only after a student has attained admission. Whereas, non-banking financial companies based on domain expertise and their understanding of the background, approve loans before admission.
Credila says that it is more rationalized on courses and career prospects for students, due to which it is more flexible. It gives loans against less security (collateral) as compared to big commercial banks. Bhonsle said, “We are flexible. Our domain expertise helps us extend this facility in such a large market of opportunity.”
It also has a different approach. To get loan student has to visit bank branch whereas Credila reaches out to students for loans.
“Students and parents want the kind of help that we are offering –reaching their door steps. If someone comes to them and explains everything, it makes sense. Small things are of large importance,” added Bhonsle.
Credila’s keep its back-end operations updated on education institutes. It has a database of more than 20,000 colleges.
The company is offering loans between interest rates of 9.75 per cent and 12.5 per cent and provides loans up to Rs 50 lakh, while PSBs do not lend more than Rs 20 lakh.
Thursday, July 22, 2010
Wednesday, June 2, 2010
HDFC Bank has raised withdrawal limit and shopping limit of all debit cards
At present customers are allowed to withdraw up to Rs50,000 per day on their debit cards from ATM. But HDFC Bank has raised the withdrawal limit and shopping limit of all debit cards, effective June 1.
The ATM withdrawal and shopping limits, respectively, for the Imperia Gold card has been increased to Rs1 lakh and Rs1.25 lakh from Rs50,000 per day; Easy Shop Regular International/Maestro/NRO cards has been increased from Rs25,000 and Rs40,000 from Rs15,000 and 25,000 while on Kid’s Advantage card the limit has been increased to Rs2,500 from Rs1,500 and Rs1,000 and on Women’s card it has been increased up to Rs25,000 from Rs20,000.
However ICICI Bank allows withdrawals up to Rs1 lakh and a transaction limit of Rs1.5 lakh on its Titanium, Platinum and Signature debit cards per day.
While on Gold card the withdrawal as well as transaction limit is up to Rs 50,000.
On Axis Bank’s Gold Card withdrawal limit is up to Rs 50,000, but shopping limit is of Rs1.75 lakh per day.
Withdrawal limits for customers set by the banks are according to Reserve Bank of India guidelines.
A banking analyst with a brokerage firm pointed out, “Withdrawal limits set by banks usually depend on their customer bases and the nature and ticket sizes of the transactions.”
“Few transactions or withdrawals by our customers touch the limit. So, as of now, we haven’t thought of raising those limits,” said SS Ranjan, chief financial officer, State Bank of India (SBI).
Meanwhile, SBI, country’s largest public sector lender has a withdrawal limit of Rs Rs40,000 and transaction limit of Rs50,000 per day.
However cash withdrawals from the ATMs of other banks have not been changed it is still Rs 10,000 per transaction, allowing five such transactions a month.
The ATM withdrawal and shopping limits, respectively, for the Imperia Gold card has been increased to Rs1 lakh and Rs1.25 lakh from Rs50,000 per day; Easy Shop Regular International/Maestro/NRO cards has been increased from Rs25,000 and Rs40,000 from Rs15,000 and 25,000 while on Kid’s Advantage card the limit has been increased to Rs2,500 from Rs1,500 and Rs1,000 and on Women’s card it has been increased up to Rs25,000 from Rs20,000.
However ICICI Bank allows withdrawals up to Rs1 lakh and a transaction limit of Rs1.5 lakh on its Titanium, Platinum and Signature debit cards per day.
While on Gold card the withdrawal as well as transaction limit is up to Rs 50,000.
On Axis Bank’s Gold Card withdrawal limit is up to Rs 50,000, but shopping limit is of Rs1.75 lakh per day.
Withdrawal limits for customers set by the banks are according to Reserve Bank of India guidelines.
A banking analyst with a brokerage firm pointed out, “Withdrawal limits set by banks usually depend on their customer bases and the nature and ticket sizes of the transactions.”
“Few transactions or withdrawals by our customers touch the limit. So, as of now, we haven’t thought of raising those limits,” said SS Ranjan, chief financial officer, State Bank of India (SBI).
Meanwhile, SBI, country’s largest public sector lender has a withdrawal limit of Rs Rs40,000 and transaction limit of Rs50,000 per day.
However cash withdrawals from the ATMs of other banks have not been changed it is still Rs 10,000 per transaction, allowing five such transactions a month.
Friday, May 14, 2010
HDFC follows SBI's suit and extends its teaser home loan scheme
Earlier HDFC Bank following the suit of State Bank of India (SBI) had reintroduced its teaser rate scheme and the last date was April 30. As SBI is getting good response for its teaser home loan scheme so it extended the up till June 30. Although HDFC did not said anything about the extension of the scheme but, now it has also extended its special home loan scheme till June 30.
Under this special scheme, HDFC will offer a fixed rate of 8.25% up to March 2011, 9% for the next one year and floating rate thereafter to all customers who avail at least part of the loan by June 30, an HDFC spokesperson told.
Earlier, when the Reserve Bank’s raised concern over such teaser schemes all banks, except SBI had stopped their teaser schemes or special home loan offers under which they offered loans at a cheaper rate to customers for a fixed period.
As HDFC has announced extension of the scheme it is believed more banks might also announce similar products to attract borrowers.
Under this special scheme, HDFC will offer a fixed rate of 8.25% up to March 2011, 9% for the next one year and floating rate thereafter to all customers who avail at least part of the loan by June 30, an HDFC spokesperson told.
Earlier, when the Reserve Bank’s raised concern over such teaser schemes all banks, except SBI had stopped their teaser schemes or special home loan offers under which they offered loans at a cheaper rate to customers for a fixed period.
As HDFC has announced extension of the scheme it is believed more banks might also announce similar products to attract borrowers.
Tuesday, November 24, 2009
HDFC expect rates to increase by 25-50 bps in the first quarter of next fiscal
According to Housing Development Finance Corporation (HDFC), country’s largest mortgage company interest rates will probably increase by 25 to 50 basis points in the first quarter of the next fiscal. This was pointed out by HDFC joint managing director Renu Karnad, who informed reporters that HDFC is also expecting increase in loan disbursements of by 22 to 25% during the current fiscal.
While speaking on the sidelines of a function marking the launch of the Real Estate Sensitive Index (Ressex), Ms Karnad stated attention is being paid over the rise in the real estates prices which have increased sharply due to the recovery in capital markets.
In her speech, Ms Karnad said, “Even in today’s ‘affordable housing’ mantra days, the common man has to shell out more than an arm and a leg to buy his home. “In India, housing, if priced correctly, has an enormous demand. Given the acute housing shortage, it is unlikely that there will be any saturation in the market for a long time to come.”
Ms Karnad added, the real estate index, will be helpful for the customers and lender as they will be to take a view of the housing market. The index has been developed by a private consultancy firm Liases Foras.
“In the last year alone, which was one of the toughest periods in economic history, the real estate industry in India has managed to grow at over 16% YoY. As a contributor to GDP growth, current estimates place the real estate sector at 8.86% of GDP. At the same time, over Rs 230 billion is being proposed to be raised across 8-10 real estate IPOs within the next 6-12 months. The post-crisis events have shown us the importance of transparency, compliance and integrity in the business world,” she said.
“The housing industry in particular, which addresses the needs of millions of consumers, requires a greater degree of sophistication in its reporting of accessible and value-adding information,” she added.
While speaking on the sidelines of a function marking the launch of the Real Estate Sensitive Index (Ressex), Ms Karnad stated attention is being paid over the rise in the real estates prices which have increased sharply due to the recovery in capital markets.
In her speech, Ms Karnad said, “Even in today’s ‘affordable housing’ mantra days, the common man has to shell out more than an arm and a leg to buy his home. “In India, housing, if priced correctly, has an enormous demand. Given the acute housing shortage, it is unlikely that there will be any saturation in the market for a long time to come.”
Ms Karnad added, the real estate index, will be helpful for the customers and lender as they will be to take a view of the housing market. The index has been developed by a private consultancy firm Liases Foras.
“In the last year alone, which was one of the toughest periods in economic history, the real estate industry in India has managed to grow at over 16% YoY. As a contributor to GDP growth, current estimates place the real estate sector at 8.86% of GDP. At the same time, over Rs 230 billion is being proposed to be raised across 8-10 real estate IPOs within the next 6-12 months. The post-crisis events have shown us the importance of transparency, compliance and integrity in the business world,” she said.
“The housing industry in particular, which addresses the needs of millions of consumers, requires a greater degree of sophistication in its reporting of accessible and value-adding information,” she added.
Friday, October 30, 2009
CCI to investigate loan prepayment penalty charged by banks
The Competition Commission of India (CCI) is keeping an eye on few of private sector lenders including HDFC Bank, Deutsche Postbank Home Finance and LIC Housing Finance, as they are levying a penalty on consumers who are paying off their loans ahead of schedule.
According to a person closely watching the development in case the CCI found the practice anti-competition, then either the regulator or its appellate tribunal can put ban on this practice across the industry and can also penalize banks for charging the levy. The person informed the regulator is trying to gather information from these institutions. A senior CCI official refused to comment on this.
Replying to an e-mail sent by ET, HDFC, India’s largest mortgage lender said, “....the business of a bank/ financial institution involves borrowing and lending and in the process the lending institution tries to run a matched balance sheet of assets and liabilities. Prepayments are essentially accelerated payments before the schedule. Any prepayment will disturb the asset-liability match and in order to mitigate the negative impact of the prepayments the institutions/banks charge a prepayment charge. Every time when there is a prepayment from the borrowers it will not be feasible for the banks to prepay its lenders as its loan agreement with lenders may either not permit it or permit it only with certain charges, notice period and may be subject to other conditions.” HDFC is charging maximum prepayment levy of 2% of the amount prepaid.
When contacted Deutsche Postbank Home finance, it declined to discuss the issue, stating that the matter was sub judice, while HDFC Bank and LIC Housing Finance, refused to comment on this. Till now no directives have been issued to banks, by the banking regulator on a prepayment penalty. When newsperson contacted, RBI governor D Subbarao said in Mumbai, that complaints regarding levying a penalty will be discussed with the ombudsman.
However some of the lenders inflict prepayment charge only in the cases where customer decided to refinance the loan by borrowing at a lower interest from another institution. An HDFC spokesperson said, “The policies of HDFC have always favored customers prepaying loans from their own savings. For example, there are no prepayment charges on part prepayments up to 25% of the opening balance or if the customer prepays his entire loan after three years from his own savings.” In the last one year when banks began to lower interest rates and also agreed to refinance existing loans to gain market share, then only borrowers came to know about the charges relating to loan prepayment. Early this year State Bank of India, country’s largest lender, initiated with its 8% home loan.
The senior banker pointed out although prepayment levied on fixed interest rate is justified, but according to consumers it is not right to attach these charges with floating rate loans. Moreover, when interest rates come down, not many banks pass on the full benefits to their customers, but they are quick in increasing either the EMI (equated monthly installment) or the loan tenor when interest rates start rising.
Thus due to these levied charges, borrowers who had taken floating rate loans restrain from switching to another lender that is offering a lower rate loan.
On the other hand banks also restrain from giving benefits of lower rates to the existing borrowers, instead they offer cheaper loans to attract new customer. CCI is already looking into prepayment charges for auto, personal and other loans, but in case of home loans the issue seems to be significant which have tenors of as long as 15 to 20 years.
A person familiar with the CCI investigation stated, “Prepayment penalty comes in the way of a customer who wants to close a loan and avail of another loan from a bank that lends at a lower interest rate. It makes such migration economically unviable unless the interest rate differential between the banks is more than the quantum of penalty. Such exit load on loans is an entry-barrier for new products in the market and hence anti-competitive”.
The CCI, will also investigate whether the charging of levying prepayment penalty leads to collusive behavior.
According to a person closely watching the development in case the CCI found the practice anti-competition, then either the regulator or its appellate tribunal can put ban on this practice across the industry and can also penalize banks for charging the levy. The person informed the regulator is trying to gather information from these institutions. A senior CCI official refused to comment on this.
Replying to an e-mail sent by ET, HDFC, India’s largest mortgage lender said, “....the business of a bank/ financial institution involves borrowing and lending and in the process the lending institution tries to run a matched balance sheet of assets and liabilities. Prepayments are essentially accelerated payments before the schedule. Any prepayment will disturb the asset-liability match and in order to mitigate the negative impact of the prepayments the institutions/banks charge a prepayment charge. Every time when there is a prepayment from the borrowers it will not be feasible for the banks to prepay its lenders as its loan agreement with lenders may either not permit it or permit it only with certain charges, notice period and may be subject to other conditions.” HDFC is charging maximum prepayment levy of 2% of the amount prepaid.
When contacted Deutsche Postbank Home finance, it declined to discuss the issue, stating that the matter was sub judice, while HDFC Bank and LIC Housing Finance, refused to comment on this. Till now no directives have been issued to banks, by the banking regulator on a prepayment penalty. When newsperson contacted, RBI governor D Subbarao said in Mumbai, that complaints regarding levying a penalty will be discussed with the ombudsman.
However some of the lenders inflict prepayment charge only in the cases where customer decided to refinance the loan by borrowing at a lower interest from another institution. An HDFC spokesperson said, “The policies of HDFC have always favored customers prepaying loans from their own savings. For example, there are no prepayment charges on part prepayments up to 25% of the opening balance or if the customer prepays his entire loan after three years from his own savings.” In the last one year when banks began to lower interest rates and also agreed to refinance existing loans to gain market share, then only borrowers came to know about the charges relating to loan prepayment. Early this year State Bank of India, country’s largest lender, initiated with its 8% home loan.
The senior banker pointed out although prepayment levied on fixed interest rate is justified, but according to consumers it is not right to attach these charges with floating rate loans. Moreover, when interest rates come down, not many banks pass on the full benefits to their customers, but they are quick in increasing either the EMI (equated monthly installment) or the loan tenor when interest rates start rising.
Thus due to these levied charges, borrowers who had taken floating rate loans restrain from switching to another lender that is offering a lower rate loan.
On the other hand banks also restrain from giving benefits of lower rates to the existing borrowers, instead they offer cheaper loans to attract new customer. CCI is already looking into prepayment charges for auto, personal and other loans, but in case of home loans the issue seems to be significant which have tenors of as long as 15 to 20 years.
A person familiar with the CCI investigation stated, “Prepayment penalty comes in the way of a customer who wants to close a loan and avail of another loan from a bank that lends at a lower interest rate. It makes such migration economically unviable unless the interest rate differential between the banks is more than the quantum of penalty. Such exit load on loans is an entry-barrier for new products in the market and hence anti-competitive”.
The CCI, will also investigate whether the charging of levying prepayment penalty leads to collusive behavior.
Friday, July 24, 2009
HDFC Bank revised lending rate by 25 basis points
HDFC Bank country’s second largest bank among private sector lender announced cut in the benchmark lending rate by 25 basis points to 15.75 per cent.
According to information placed on HDFC bank website the revised benchmark prime lending rate of 15.75 per cent per annum has come into effect from July 20. With the cut in lending rates the fixed deposits rated have also been reduced effective from May 18.
In the past six months, the PLR has been revised by 75 basis points earlier bank had revised PLR in December 2008, when the rate was reduced by 50 basis points to 16 per cent.
The loans given by the private sector banks are mostly rated below PLR, but some of the corporate loans they relate to the benchmark rate.
As there is variation in PLR therefore to study the relevance of PLR in the changed scenario, last month the Reserve Bank formed a six-member working group to study the Benchmark Prime Lending Rate (BPLR) system and suggest a single method for pricing of floating rate loans, which will help in bringing more transparency in fixation of interest rates on housing loans by banks.
The working group is headed by the RBI Executive Director Deepak Mohanty includes J P Morgan India chief economist Jahangir Aziz and Indian Institute of Management (IIM) Ahmedabad Professor as its members.
In addition to them, other members of working group include RBI chief general manager P Vijaya Bhaskar and Janak Raj, advisor-in-charge in the monetary policy department of the central bank and RBI's monetary policy department director Himanshu Joshi, who is a member secretary.
According to RBI release, "The working group may co-opt any other members as special invitees and may consult with all stakeholders".
The group would be placing its report by end-August 2009. In the report the group will give some suggestions for a suitable benchmark for floating rate loans in the retail segment.
Also there will be some recommendation for an appropriate loan pricing system based on international best practices, the release stated. It said the reviewing is being done to make the credit pricing more transparent.
According to information placed on HDFC bank website the revised benchmark prime lending rate of 15.75 per cent per annum has come into effect from July 20. With the cut in lending rates the fixed deposits rated have also been reduced effective from May 18.
In the past six months, the PLR has been revised by 75 basis points earlier bank had revised PLR in December 2008, when the rate was reduced by 50 basis points to 16 per cent.
The loans given by the private sector banks are mostly rated below PLR, but some of the corporate loans they relate to the benchmark rate.
As there is variation in PLR therefore to study the relevance of PLR in the changed scenario, last month the Reserve Bank formed a six-member working group to study the Benchmark Prime Lending Rate (BPLR) system and suggest a single method for pricing of floating rate loans, which will help in bringing more transparency in fixation of interest rates on housing loans by banks.
The working group is headed by the RBI Executive Director Deepak Mohanty includes J P Morgan India chief economist Jahangir Aziz and Indian Institute of Management (IIM) Ahmedabad Professor as its members.
In addition to them, other members of working group include RBI chief general manager P Vijaya Bhaskar and Janak Raj, advisor-in-charge in the monetary policy department of the central bank and RBI's monetary policy department director Himanshu Joshi, who is a member secretary.
According to RBI release, "The working group may co-opt any other members as special invitees and may consult with all stakeholders".
The group would be placing its report by end-August 2009. In the report the group will give some suggestions for a suitable benchmark for floating rate loans in the retail segment.
Also there will be some recommendation for an appropriate loan pricing system based on international best practices, the release stated. It said the reviewing is being done to make the credit pricing more transparent.
Friday, July 3, 2009
HDFC says demand for home loans is picking up
According to a banker who had attended the meeting of the Finance Minister and PSU bank chiefs said that the finance ministry as well as the Reserve Bank of India wanted a steep fall in lending and deposit rates because it is believed this will cover RBI interest rate curve, which is one of the reason for the absence of the strong pick-up in the credit demand.
The banker informed private and foreign banks have reduced lending as they have become cautious and risk reluctant, whereas the force of increasing the loans growth and meeting credit needs of the corporate sector is being endured by state-owned banks.
However the finance ministry and RBI officials have been advising the banking sector to pass on the benefits of lower interest rates to customers. After the meeting with Pranab Mukherjee, a few banks such as State Bank of India, Union Bank of India, ICICI Bank, IDBI Bank and HDFC Bank reduced their deposit and loan rates.
Housing Development Finance Corporation (HDFC), India’s leading housing finance lender, too had slashed its deposit rates by 25 basis points (0.25%) after the FM-bankers meet but has not taken any decision on reducing lending rates in the near future. Earlier the housing finance lender had reduced its lending rates on May 7 by 0.25% after bringing it down by 0.50% in March. At present the institution is waiting for directions on interest rates from Budget 2009-10 as well as Reserve Bank of India's credit policy review will be presented in July before moving on loan rates.
Recently Deepak Parekh, chairman, HDFC, informed that interest rates will be reviewed only after decline in cost of funds. Currently HDFC is charging 9.25% for loans up to Rs 30 lakh, 9.75 for loans between Rs 30 lakh and Rs 1 crore and 10% for loans above Rs 1 crore.
Sources at HDFC told UTVi that recently demand for housing is picking up substantially as against to what was seen in the last quarter of 2008. There has been increase in loan approvals in June which have exceeded the May numbers of the institution, as per the information provided by sources. The leader in housing finance is also likely to maintain growth in net profit for the current financial year at 20%. In the previous financial year, HDFC had registered a profit of Rs 2,268 crore, up 24% in comparison to the previous fiscal. The lender had approved around Rs 49,166 crore while disbursals amounted to Rs 39,650 crore in 2008-09.
The banker informed private and foreign banks have reduced lending as they have become cautious and risk reluctant, whereas the force of increasing the loans growth and meeting credit needs of the corporate sector is being endured by state-owned banks.
However the finance ministry and RBI officials have been advising the banking sector to pass on the benefits of lower interest rates to customers. After the meeting with Pranab Mukherjee, a few banks such as State Bank of India, Union Bank of India, ICICI Bank, IDBI Bank and HDFC Bank reduced their deposit and loan rates.
Housing Development Finance Corporation (HDFC), India’s leading housing finance lender, too had slashed its deposit rates by 25 basis points (0.25%) after the FM-bankers meet but has not taken any decision on reducing lending rates in the near future. Earlier the housing finance lender had reduced its lending rates on May 7 by 0.25% after bringing it down by 0.50% in March. At present the institution is waiting for directions on interest rates from Budget 2009-10 as well as Reserve Bank of India's credit policy review will be presented in July before moving on loan rates.
Recently Deepak Parekh, chairman, HDFC, informed that interest rates will be reviewed only after decline in cost of funds. Currently HDFC is charging 9.25% for loans up to Rs 30 lakh, 9.75 for loans between Rs 30 lakh and Rs 1 crore and 10% for loans above Rs 1 crore.
Sources at HDFC told UTVi that recently demand for housing is picking up substantially as against to what was seen in the last quarter of 2008. There has been increase in loan approvals in June which have exceeded the May numbers of the institution, as per the information provided by sources. The leader in housing finance is also likely to maintain growth in net profit for the current financial year at 20%. In the previous financial year, HDFC had registered a profit of Rs 2,268 crore, up 24% in comparison to the previous fiscal. The lender had approved around Rs 49,166 crore while disbursals amounted to Rs 39,650 crore in 2008-09.
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