Bindisha Sarang, ET Bureau Dec 29, 2014, 08.00AM IST | Economic Times
The banking space was a mixed bag for retail customers in 2014. Interest rates remained decidedly high during the year, delighting depositors but dismaying borrowers. HDFC reduced its home loan rates by a marginal 15 basis points.
There was some relief for home loan customers in the Budget. The deduction limit for home loan interest was raised from Rs 1.5 lakh to Rs 2 lakh a year. But this won’t offer any benefit if your loan is less than Rs 15 lakh because the interest will not be more than Rs 1.5 lakh a year.
The RBI introduced several customer-friendly measures during 2014 and even took up cudgels on behalf of the aam admi by laying down a charter of rights. But all these got balanced by a new rule that allows banks to charge for ATM usage beyond five times a month.
Other banks’ ATM can be used for free only three times in a month. After that, transactions will be charged Rs 20. SBI, Axis Bank and HDFC Bank have already started charging customers for usage beyond the free transactions. However, in response to a PIL, the Delhi High Court has asked the RBI to explain why customers should be made to pay for taking out money from their own bank’s ATM.
Financial inclusion at 10
Another major change was the RBI’s nod to allow children above 10 to operate their bank accounts independently. Kids are permitted to use facilities like ATM and cheque books.
The objective is to familiarize children with banking procedures but many parents are skeptical about letting children handle money so early.
Rate cut seems imminent, but…
Though most analysts expect the RBI to cut rates in 2015, it is not clear if this will happen in the next couple of months. Till that happens, make best use of the high deposit rates offered by banks. If you do not have a large sum to invest in a fixed deposit, use recurring deposits to lock in to the high rates.
Bank deposits are not as tax efficient as debt funds, but the 2014 budget levelled some portions of the playing field. If the investment horizon is less than three years, there will be no difference in the tax.
Also, if you plan to take a home loan in 2015, opt for a floating rate loan. Given the imminent cut in rates, a fixed rate home loan will not be a good idea. Customer friendly steps by the RBI in 2014:
KYC norms eased
Customers may submit only one proof of address when opening a bank account or during periodic updation.
Banks not to charge foreclosure charges on floating rate loans.
Minimum balance in savings accounts
Instead of penal charges for not maintaining minimum balance, banks should limit services available on such accounts.
Minimum balance in dormant accounts
Banks not to levy penal charges for non-maintenance of minimum balance in any inoperative account.
Banking for minors
Minors above the age of 10 allowed to open and operate savings bank accounts independently.
SMS alert charges
Banks told to charge customers only on the basis of actual usage.
Source : http://goo.gl/8oiRHw