Under this new offer ICICI Bank is giving cashbacks of up to 20 per cent subject to a maximum amount of Rs. 10,000 on your credit or debit card spend.
Business | NDTV Profit Team | Updated: September 15, 2017 17:04 IST
ICICI Bank, India’s biggest private-sector lender according to assets, has introduced a cashback offer for its customers who avail a new home loan or transfer their existing home loans to the Mumbai-based lender, ICICI Bank said in a release. Under this new offer ICICI Bank is giving cashbacks of up to 20 per cent (subject to a maximum amount of Rs. 10,000) to its existing credit card or saving account customers on their spends of minimum Rs. 30,000 on their credit or debit card if they avail a new home loan or transfer their existing home loans from other banks/NBFCs. The offer is valid from September 1, 2017 to November 30, 2017.
For example, Mr. Shah, a home buyer is sanctioned home loan in September 2017 with disbursal in October 2017. Also, during the offer period, he spends Rs. 55,000 on his ICICI Bank credit card. He will get cashback of Rs. 10,000 on his credit card. (eligible for 20 per cent cashback, up to Rs. 10,000).
While both the home loan sanction and card spends needs to be within the offer period, the chronology of the two does not matter, ICICI Bank said.
In the absence of credit demand from corporates, retail loans have been the focus for most of the lenders in recent days. Banks are launching new offers every other day to entice more and more retail customers. In the first quarter of the current fiscal, ICICI Bank had reported 19 per cent growth in its retail loans compared to overall loan growth of 3 per cent in the quarter.
As of 2:39 pm, ICICI Bank shares traded 0.51 per cent lower at Rs. 292.20 compared to 0.16 per cent gain in the broader Sensex.
31 August 2017 | Moneylife Digital Team
With the Reserve Bank of India (RBI) having cut interest rates, banks have been quick to lower the interest rate on savings account from 4% to 3.5% on deposits up to Rs1 crore. State Bank of India (SBI) was the first to announce the cut and this means an immediate fattening of its bottom-line by as much as Rs4,000 crore at the cost of depositors. Remember, Indian banks had not raised savings account interest rate even when interest rates were soaring; but, as always, they are quick to cut. Other banks have followed SBI’s lead.
From 1 April 2017, SBI had announced the levy of a charge for failure to maintain a minimum quarterly balance in savings accounts. As Moneylife Foundation has said in its campaign against bank charges, this affects students and pensioners the most. SBI has always been the safe, go-to bank for both these categories of depositors. It is learnt that a Right to Information (RTI) application filed by Chandrashekar Gaud has shown exactly how the Bank has benefited.
SBI earned Rs235.06 crore as penalty from 38.87 million accounts only in the first quarter of this financial year. This means that the Bank could earn nearly Rs1,000 crore from such penalties alone. Given that banks are unable to recover their bad loans effectively, this appears to be the easy way to recover losses by penalising the most hapless depositors with the least amount of funds. According to a report in Dainik Bhaskar, SBI is deducting charges even from zero balance accounts of poor students, whose scholarship amount is less than what the Bank mandates as the minimum average balance (MAB).
The State-run lender has demanded that depositors maintain a minimum balance of Rs5,000 for urban and Rs1,000 for rural areas, failing which it levies penalty charges. Ironically, poor scholarship students in metro cities, such as Delhi and Mumbai, are also being forced to keep an impossible minimum balance of Rs5,000. So far, the government has not bothered to respond to pleas about such unconscionable charges. Moneylife has always argued that banks earn hefty spreads of over 7% on deposits which are among the highest spreads in the world; so banks have no reason to levy innumerable charges on ordinary depositors. SBI also levies Rs10+ service charges per ATM transaction, Rs20 for other bank ATM transactions, and Rs50 for branch transactions beyond the four free transactions per month.
An expert says in comparison to savings account, liquid funds will give better returns as the interest rate on them is around 6.5% which is 1-2% higher than savings deposit
Vivina Vishwanathan | Mon, Jul 31 2017. 07 53 PM IST | LiveMint.com
On Monday, State Bank of India (SBI), the country’s largest lender, cut the interest rate on savings account deposits from 4% to 3.5% per annum. The bank, in a BSE notification, said the 3.5% per annum interest rate is for deposits up to Rs1 crore in a savings account. For deposits above Rs1 crore, account holders will continue to earn 4% interest. Here is a look at what it means and what you should do:
The rate cut
Till 2010-11, the interest rate on savings account deposits stood at 3.5%. In October 2011, the Reserve Bank of India (RBI) deregulated interest rate on savings accounts. This allowed banks to set their own interest rates. From 2011-12 onwards, a majority of the large commercial banks offered an interest rate of 4%. However, then new banks such as Yes Bank Ltd and Kotak Mahindra Bank Ltd started offering higher interest rates of 6-7%. Even today these banks offer a higher interest rate.
But why did SBI cut its interest rate?
“The rationale is that the real interest rate is very high right now. In April 2011, interest rate on savings accounts was 3.5% and then there was a negative carry of nearly 5%. Today, if you look at inflation and all other benchmark rates, there is a positive carry of nearly 2.46% on savings bank interest. Real interest being so high, there was no choice for the bank but to bring down the savings account interest rate. The choice was either to raise MCLR (marginal cost of funds-based lending rate) or reduce the savings bank rate. We didn’t consider it appropriate to raise MCLR,” said Rajnish Kumar, managing director, SBI.
What should you do?
Financial planners don’t recommend leaving money idle in a savings bank account. “Typically at 4% interest rate, it was never recommended to leave money in a savings account. At 3.5% it further doesn’t make any sense at all,” said Surya Bhatia, a New Delhi-based financial planner.
Then what should you do?
“Ideally, you should put your money in instruments that give you better returns. You can make use of sweep-in fixed deposit product or liquid funds,” said Bhatia. If you are under the higher tax brackets, fixed deposit may not work for you. Liquid fund will be a better option.
Swarup Mohanty, chief executive officer, Mirae Asset Global Investments (India) Pvt. Ltd, said, “For the first time, the realization of a low interest rate is likely to hit the consumers. SBI’s move will also start the entire process of shifting investment from guaranteed products to other financial assets. This is going to be a significant turning point for incremental money to move towards financial instruments. However, I am not concluding that all money will come to mutual funds but we will benefit,” said Mohanty.
So what is the interest rate on liquid funds?
“In comparison to savings account, a liquid fund will give you better returns. Currently the interest rate on liquid funds is around 6.5%. Last year it was around 8-9%. In any case you will benefit since you are likely to get 1-2% higher returns higher than savings deposit,” said Mohanty.
Hence, instead of leaving your money idle in a bank account, put it to work through other financial products.
RAJESHWARI ADAPPA | Tue, 28 Jun 2016-06:55am | dna
Experts advise that you should park the lump sum in avenues such as liquid or ultra-short term funds till you decide where to invest it as putting the money in a savings account not only earns low interest but also tempts you to blow it
Windfalls or coming into large sums of money sure makes you feel rich but if you want to stay rich, then the challenge is to ensure that the money lasts for a really long time.
Incidentally, experts advise that when one does not know what to do with a large sum, the first thing to do is take it off the bank savings account.
“The money lying there not only earns low interest but tempts you to blow it. Hence, park it in short-term avenues such as liquid funds or ultra-short term funds until you decide or get advice on where to invest the money in,” says Vidya Bala, head of mutual fund research, FundsIndia.
If you have a lump sum to invest, it is best to revisit your investment plan, advises certified financial planner Gaurav Mashruwala.
“Firstly, buy adequate health and life insurance. Secondly, if you have any loans, pay up the loans. After that, you can start goal-based investing,” says Mashruwala.
Most people are confused where to invest for the best returns. “Where to invest would depend on whether they have a near-term use for the money,” says Bala.
“If it is retirement money and the investor needs to create an income stream, they could deploy it in a combination of ultra-short and short-term debt funds and do a systematic withdrawal plan to generate their own income. If it is for the long term, a combination of equity and debt funds will work well. So one needs to know the purpose and the time frame before they can decide where to invest,” says Bala.
The most important task is to create a goal for such money and then allocate and invest accordingly. While goals would depend on the individual’s requirements, broadly your goals could include creating funds for a specific purpose such as a retirement fund, an emergency fund, a kids education or a marriage fund or even a fund for personal goals (say a foreign trip), etc.
A retirement fund is a must. HDFC Pension’s CEO Sumit Shukla advises that 20-30% of the sum should be invested for retirement. He suggests investing the lump sum initially in Tier II account of NPS from which some money could be transferred into the Tier I account every month via systematic withdrawal plan. “This would help to ensure that initially the money is invested in debt (Tier II account) and as one invests in the Tier I account, slowly the equity portfolio is also built up,” says Shukla.
“Corporate debt has earned 10.47% while government debt has earned 10.35%. Compared to the 8.8% returns from PF, this difference would work out to be huge over a period of time,” points out Shukla.
Depending on your risk and return profiles, there is a range of avenues. “Investors seeking low to medium risk can examine fixed deposits, debt mutual funds, corporate bonds, tax-free bonds and monthly income plans.
However, investors with higher risk preference can look at balanced & equity funds, direct equities, private equity & real estate funds,” according to a DBS spokesperson.
“Lump Sum investing is fine when it comes to low-risk debt funds. However, when it comes to equity funds, it is important to understand the risk of timing the market by investing in one go. Ability to take near-term falls is a must of one chooses to invest lump sum,” says Bala. A better option is to invest in a phased manner through an SIP (systematic investment plan).
It may be a good idea to take professional advice. “Also, consider the impact of tax on the returns,” says the DBS spokesperson.
The mistake that many people who come into big money suddenly make is that they start living a lavish lifestyle. “Instead, invest in income generating and growth-oriented assets. Use the returns from these assets to enhance your lifestyle,” advises Mashruwala.
The solution is to invest wisely keeping in mind two primary goals: ensuring safety of capital and also growth.
Source : http://goo.gl/4KucZz
While PSU banks offer 4% interest on savings deposits, private players offer as much as 6%
Press Trust of India | Mumbai | March 16, 2016 Last Updated at 00:06 IST | Business Standard
The Reserve Bank of India (RBI) has asked banks to pay interest on savings bank accounts on a quarterly basis or shorter duration, a move which will benefit crores of savings account holders.
At present, the interest is credited in savings bank accounts on a half-yearly basis. The interest rate on a savings bank account is calculated on a daily basis since April 1, 2010.
“Interest on savings deposits shall be credited at quarterly or shorter intervals (on domestic savings deposits),” RBI said in a circular issued on March 3.
While public sector banks offer four per cent interest on savings deposits, private players offer as much as six per cent. In 2011, the central bank had decided to give freedom to commercial banks to fix savings bank deposit rates, the last bastion of the regulated interest-rate regime. While giving banks this freedom, RBI had said a uniform rate would have to be offered on deposits of up to Rs 1 lakh.
On higher amounts, banks are allowed to offer differential rates to depositors. According to analysts, the lower the periodicity, the higher will be the benefit to savers.
Banks will have to shell out more for customers. According to estimates, the lower periodicity of interest payments might put a burden of Rs 500 crore on banks.
Earlier, banks used to give interest of 3.5 per cent on savings accounts on the basis of the least amount deposited in an account between the 10th and the last day of each month.
-At present, interest is credited in savings a/c on a half-yearly basis
-While PSU banks offer 4% interest on savings deposits, private players offer as much as 6%
-In 2011, RBI bank had decided to give freedom to commercial banks to fix savings bank deposit rates
-Lower periodicity of interest payments might put a burden of Rs 500 crore on banks
Source : http://goo.gl/QthRXy
TNN | Nov 21, 2014, 01.44AM IST | Times of India
MUMBAI: The Reserve Bank of India (RBI) has placed curbs on the charges imposed by banks for not maintaining minimum balance requirements. The new norms require banks to notify the customer by SMS, email or letter about the intention to apply penal charges if minimum balance is not restored within a month. Banks have also been barred from the practice of having negative balances in accounts due to imposition of penal charges.
Under the new norms, the board of directors of a bank has to approve the penal charges proposed to be levied for non-maintenance of minimum balance. “The penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized,” RBI said in a circular to all banks.
Although the board of directors has been given the freedom to fix charges, RBI has said that penal charges must be reasonable and not out of line with the average cost of providing the services. The new charges come into effect from April 2015. Until then, banks have been asked to update their customer’s mobile number and email details.
Earlier, RBI had proposed that banks should not take undue advantage of customer difficulty or inattention and instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level. However, following a representation by banks, the RBI has revised its approach.
Source : http://goo.gl/XhgZIG