Retail Finance

The Most Important Terms and Conditions (MITC) and the Key Facts Statement (KFS) are crucial documents within the lending framework, provided to borrowers prior to availing finance. These documents are mandated by the Reserve Bank of India (RBI), both documents outline the borrower's obligations and ensure they have a clear understanding of the terms and conditions along with the key facts of the loan. Currently, MITC and KFS comprise a total of 42 points, with 25 of those points overlapping…

When is your salary due? When is your telephone bill due? Yes, what you are thinking is right, typically it is the “END OF THE MONTH” If the answer is the end of the month, then why are some HFCs collecting EMIs for the month at the beginning or throughout the same month? Is this practice fair on you? Let us take an example: You have taken a loan of Rs 20 lakhs for 15 years at 8% p.a. The…

In the first part of this series, we had talked about “unfair” practices followed by some HFCs/Banks/NBFCs who charge borrowers interest from the date the loan cheque is prepared or “CUT” and not from the date the cheque is handed over. The next part of this series focuses on the practice of cutting cheques at the end of the month and disbursing the next month. We all know that the journey to owning your dream home is both exciting…

There have been some practices followed by HFCs/Banks/NBFCs who charge customers interest from the date the loan cheque is prepared or “CUT” and not from the date the cheque is handed over.   Before we jump to any conclusion on this practice being right or not, it is interesting to understand the modality of the practice. While sanctioning the loan, the lender completes required verification and gets the loan documents signed by the applicant(s). After sanction, disbursement is fixed, and…

When you want to avail a loan you apply to various lending institutions. Don’t you? Also it is a common practice to apply to more than one lending institution for getting the best terms on the loan.  So do you think making multiple applications is always helpful?   An instant answer to this is of course – yes! But remember as you are waiting to get your best option, all your loan applications are tracked by the credit bureau.  Each time you make a loan…

Do you feel that you have too many credit cards? Are some of them lying idle with you? The correct step is to close these credit cards, but closing credit cards impact your credit score. It impacts the “credit utilization” ratio i.e. credit used against the available limit. Credit utilization ratio is one of the factors based on which credit scores are calculated. Before closing that credit card understand if it is the correct move for you. Consider the following- Spendthrift…

Survey. lendersDownload As mentioned in our previous blogs on moratorium - We designed and constructed a survey, to interview industry leaders, with an aim to learn from their experiences of offering moratorium to their customers. Interviewing several business leaders at mid- size to large-scale, non-banking finance companies, housing finance companies, lenders with financial inclusion focus, and newer Fintech companies, our study scope encompassed all retail lending products. The objective is to learn from these approaches, experiences, outcomes, and bring…

The power of plastic money – ‘Buy now, pay later’ has become a modern day convenience, but the history of the earliest credit cards dates back to the early 1900s. You've read and seen this in books or movies depicting the society where the local general store would extend credit to regular customers, and department stores in the cities would do the same. Though we have come a long way from local general stores to online shopping, but one thing…

In these times of stiff competition among different lenders, it is observed that there has always been an effort made by each of them to make a difference. An interest rate differential is one such example we could use. This factor surely plays an important role in your Equated Monthly Instalments (EMI) payments and your choice of lender.   As there is a difference in the interest rates offered by different lenders, an existing borrower is lured to shift to a lender who quotes a lower interest rate than what she…

In today’s age and time everyone holds a credit card; well almost everyone! Whilst it is a convenient option for many of us….strangely it is also a “cool” option for few! Flaunting a wallet with different credit cards in a party or at a shopping mall is definitely looked upon as “cool”.   But how many credit cards should you hold? How many credit cards make you “cool”?   “One size fits all” solution does not work here. So a working professional can hold 2 cards and a fresh MBA could hold 1 card or…