How are banks created?
How are banks created? In other words, are banks established with private funds or does the Federal Reserve Bank allocate funds for a bank to begin operations? Also, how do banks determine their lending interest rates?
Why do private sector banks offer a higher interest rate than public sector banks?
Thanks for A2A.If you have a lakh and want to make a deposit in a bank. You have two banks both having same rate of interest but one is Sarkari and other is private. Which one would you opt for?In addition to this general perception of people that Sarkari banks are safe compared to private, public banks already have larger bank branch netowrk and higher penetration. Therefore they enjoy higher CASA ratio.Thus when RBI deregulated the rate of interest, the private banks started offering higher rate in order to attract more customers
Do banks charge different amounts for the same amount?
Your suspicions are correct. Banks are free to charge different amounts for the same amount, and in fact, this is very common.For two different accounts, where the amount involved is the same, they will charge one amount to one account and a different amount to the other account.This is their choice to do, and they do it in order to improve their profits. Keep in mind that profits are what a bank is all about, unless the bank is run by the government.
What is the difference between base rate, prime lending rate and benchmark prime lending rate?
Base rates are the ones below which banks won’t lend.Prime lending rate or benchmark prime lending rate are the ones treated as reference for lending. Clients with good credit will be offered rates below prime rate, those with somewhat risky credit, will be offered a higher rate.
Which bank in India offers the best education loan in terms of low Interest rates?
As of 12th Aug 2017,Here are the interest rate of different financial institute for an education loan abroad.State Bank of India: For loan greater than 20 Lakhs, Boys will have to pay interest rate of 10.5 % and Girls will give 10%. There is an life insurance call SBI Rin Raksha insurance which protects your co-applicant against any misfortune to the student. if you take that insurance, your interest rate would further get reduce by 50 basis points which is 10% for boys and 9.5 % for girls. GyanDhan is in partnership with SBI and have getting loan sanctioned without any hassle from the bank.Bank Of Baroda: If the college you are going to is in the list A and list B of Bank of Baroda, For Boys you will get 9.6 % and for girls it is 9.1 %. If the college is not in List A and List B of Bank of Baroda, then for Boys it is 11.1 % and for girls it is 10.6 %. GyanDhan has collaborated with BOB in a unique way where customer don’t have to visit the branch for the loan. You just have to fill a simple form on GyanDhan’s website and then GyanDhan team connects you with Specialised Mortgage Centre at BOB which directly process the loan in 6–7 working days.Axis Bank: Axis Bank have two types of loans: one is secured and another is unsecured, Well the secured product of Axis Bank is quite costly as compare to SBI & BOB, i.e. 10.5–11.5 %. But when it comes to unsecured loan, Axis bank have one of the best product in the market. Their unsecured loan product interest rate starts from 11% which is lowest as no other bank provide unsecured loan more than 30 lakhs and NBFC usually charge very high interest rates. GyanDhan closely work with Axis Bank Sales Managers all over India and helps students getting loan sanctioned in minimum time period and interest rate.If you are looking for an education loan, I will suggest you to check your loan eligibility here and someone from GyanDhan team would contact you in next 24 hours to discuss your profile and help you with the best available option according to your situation.PS: I work at GyanDhan and have helped more than 500 students in last one year to get their loan sanctioned for education loan abroad.
What is the merit and demerits of SBI and Bank of Baroda and LICHFL home loans?
Always go for a Nationalised or old generation private bank for availing home loan. All banks are regulated by RBI. Banks interest is linked to MCLR. Read my answer to understand MCLR.Kommina Sivanand's answer to How can MCLR (marginal cost of funds based lending rate) calculation be understood with an example?Best example is the present demonetisation. Due to availability of liquid funds, banks reduced interest rates. This was passed on to existing customers. This was not done by HFLs.HFLs like LICHFL, DHFL etc were regulated by National Housing Board(NHB). They charge lower interest rate during first two years and increase later. STATE BANK'S 50% of home loan business comes from takeover from HFLs. This gives you clear idea how HFL charge you on long run.Here you have to understand the difference between a bank and HFL. PNB is a bank and PNBHFL is a HFL. PNB is public sector, where as PNBHFL is owned by a private entity. Banks charge interest on daily reducing balance, HFL charge on monthly balance.For example, you have ₹90,000/- excess funds and want to credit to home loan to reduce interest burden. (Assume ₹30,000/- is your monthly EMI). HFLs will reduce your no. of EMIs by 3 (3×30,000/-), where as banks will straight credit to principal, thus reduce your EMIs by 3 and also interest on excess credits.As per RBI guidelines, banks should not charge any fee for pre closure of loans. Since HFLs need not follow RBI instructions, they charge pre closure charges.If banking with bank, your property can be easily extended to avail education loans and other top up loans easily in future.So please take your decision wisely. As on date, Bank of Baroda is offering lowest interest rate in the market. State bank too is coming up with various concessions. Over last 5 years, SBI is offering lowest interest rate.The below are few HFLs which market themselves as banks or Govt undertakings which are not regulated by RBI.HDFCICICILICHFLPNBHFLCAN FINAnd many more like DHFL, INDIA BULLS etc..
Federal Reserve Bank? why the hell do we have it..?
It appears you may have gotten some misinformation from off the web. One of the most circulated pieces of misinformation is that the Federal Reserve is private and not controlled by the government. That would be untrue. The Federal Reserve System is a congressionally-chartered agency like the USPS and NASA. It is organized with a 100% government agency at the top (the Board of Governors), and branches beneath them that resemble corporations. (http://www.federalreserveeducation.org/f... ) The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress. It operates per it's charter and laws set by congress. it is overseen by congress. There is no structure or mechanism for private ownership at this level. Board members are forbidden by law to have any economic interest in a private bank. (Ref: Title 12 chapter 3 of the U.S. Legal Code) The 12 branches, however, are organized similar to private corporations. Member banks are required to buy shares in their branch. They can vote for 6 of their 9 board members. The shares get a standard 6% dividend. These shares cannot be sold on the open market. The Fed says 'No' (ref http://www.federalreserve.gov/generalinf... ) though there is a certain duality of control at the branch level. - Re: Interest on currency This bit of misinformation comes from the fact that the Federal Reserve collateralized currency with interest-bearing T-Bonds it buys on the open market. What theses sites don't tell you is that BY LAW, all 'profit' from the Federal Reserve branches are turned over to the Treasury at the end of the year. Over 90% of the interest is returned. That's not a bad deal for the tax payer who would have to pay 100% of the interest if the T-bill was owned by a private party, - Re U.S. always be in debt? Yes and no. If the U.S. ran a balanced budget for 10 consecutive years (the length of time for 10 year T-Bills to fully mature), there would be almost no public debt. T-bills owned by the Fed can be considered permanently as it is necessary to back up currency. Brian: Keep asking questions! There is a lot of misnformation out there.