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Banks say no room to cut loan rates despite RBI's rate cut

Only three of the country’s 45 commercial banks have cut base lending rates since the Reserve Bank of India’s (RBI) surprise easing on January 15, hurting the government’s drive to lift business investment.

Bank executives insist they cannot lower loan rates despite the official interest rate cut because cash conditions are tight, and money markets are little changed since the cut, but RBI insiders see that as more an excuse to protect profit margins.

The failure to pass on the rate cut to businesses and consumers has both diluted the impact of monetary policy and weakened the push by the government to quickly unlock more credit and spur investments as the economy struggles to recover from its slowest growth rates since the 1980s.

“We are already providing liquidity higher than what the banking system requires. We do not plan to increase that amount,” said a senior policymaker with knowledge of the central bank’s cash management strategy.

“Banks need to manage their assets and liabilities more efficiently,” he added.

Bankers say the average funds the RBI provides the market has been steady at around Rs 1 lakh crore ($16.2 billion) a day since the repurchase (repo) rate was cut by 25 basis points to 7.75 per cent.

The slashed rate has had little impact in financial markets, suggesting a blockage in policy transmission.

The interbank overnight cash rate, a key measure of cash conditions that tends to track the repo rate, has remained around 8 per cent despite the rate cut.

Furthermore, three-month wholesale deposit rates have held near 8.50 per cent and the one-year wholesale deposit rate has risen 10 basis points to 8.60 per cent.

The Reserve Bank manages the amount of liquidity in the market to aid transmission of its rate decisions. The next scheduled policy review is on Tuesday, but analysts do not expect it to ease again at least until after the Union Budget at the end of February.

“If RBI provided slightly more liquidity than what it is providing now, it will force banks to cut their base lending rates,” said CVR Rajendran, chairman and managing director at state-run Andhra Bank.

Analysts say the RBI will eventually have to inject more funds, although may not as much as lenders want, if it continues easing monetary policy.

Bank of America-Merrill Lynch believes the central bank will need to inject around US $49 billion in new money to the banking system during 2015-16 (April-March) if lenders are to lower lending rates enough to meet the brokerage’s projections for a recovery in credit growth to 17.5 per cent in the comig 2015-16 financial year.

Credit grew at an annual rate of 10.7 per cent in early January, near decade lows, and the Narendra Modi government has been seeking lower interest rates to help spark a revival in lending to business.

Earlier in January, the RBI mandated that lenders change the methodology used to compute the base rate, or the minimum lending rate, in a bid to spur more lending.

Banks continue to suffer from deteriorating asset quality, which is pressuring earnings. Bank of Baroda, the country’s second-biggest lender by assets, on Friday posted a 69 per cent fall in quarterly profit due to higher provisions for bad loans and a surge in tax expenses.

An executive at a public sector bank acknowledged profit was a factor in the reluctance to lower lending rates but said liquidity was a bigger issue.

“There is a lot of micro-management of liquidity by RBI. Banks are taking their own time to cut lending rates because we are still not sure about RBI’s liquidity policy,” he said.

“Typically banks are faster in raising lending rates than cutting to enjoy fat interest margins,” the executive added.

(Reuters)

[…]

Dealstruck Funds Home Care Services Franchise Owner

SAN DIEGO, CA–(Marketwired – Jan 5, 2015) – Online direct lender Dealstruck, Inc has provided growth capital to one of the top 20 ComForcare home care franchise owners in the US. Dealstruck’s term loan and line of credit, designed for growing, profitable small businesses, will increase cash flow for the growing business, based in Lower Bucks County, PA, as it continues its rapid expansion.

“Our aggressive growth happened so quickly, we began to feel cash flow restriction,” said Dan Surkin, ComForcare franchise owner. “The need to hire additional staff and make payroll on-time while waiting for our customers to process our invoices was difficult for us financially. Dealstruck granted us both a term loan and a line of credit, which allowed us continue our day-to-day operations while managing our growth, keeping our business strong and healthy.”

An entrepreneur with more than 31 years’ expertise in IT consulting, Surkin decided to buy a ComForcare franchise in 2011. He had cared for his mother through several illnesses and surgeries and realized he wanted to spend his time in a business that helped others. Only three years after launching his franchise, the business has been listed as #19 out of 180 ComForcare franchises in the country.

Surkin’s early success led to a need for a business loan soon after his launch. Initially, he found only high-interest loan options with 50 percent interest rates, plus fees. This impacted the profit of Surkin’s ComForcare franchise and he feared he would not be able to continue his business.

Dealstruck, however, was able to provide Surkin with a two-year term loan and an asset based line of credit at less than half the cost of his other options. The term loan had manageable, fixed monthly payments and the line of credit let his business access cash immediately and only pay down the balance after he collected payments from his customers. This growth capital let Surkin continue his expansion by helping the company make payroll and cover its insurance expenses. Surkin has continued to quickly increase his revenue.

“Dealstruck provides franchise owners with healthy loan options that enable them to manage quick growth for continued success,” said Candace Klein, Dealstruck’s Chief Strategy Officer. “Franchises comprise many of the profitable small businesses in need of growth capital. We’re honored to support Dan and his team through sustained growth as they move along on the path to becoming bankable.”

Dealstruck was the first online lender to offer businesses the opportunity to access multiple credit products, which were designed for growing, profitable small businesses looking for fast, fair and transparent financing.

About Dealstruck
The Dealstruck lending marketplace connects profitable, small- and medium-sized businesses (SMBs) with innovative credit solutions funded by individual and institutional accredited investors. Unlike the one-size-fits-all approach offered to them by banks and the high-cost, short-term credit offered to them by alternative lenders, Dealstruck provides growing SMBs with a suite of products that give them a credible and transparent path to bankable. Dealstruck is the first online lending platform to offer multiple products to SMBs, and the first to allow investors the freedom to choose specific investments. For more information, please visit https://www.dealstruck.com/.

[…]

Cash-strapped Ukraine expects IMF loan decision by late Jan

KIEV (Reuters) – Ukraine expects the International Monetary Fund to reach a decision on the disbursement of its next multi-billion dollar instalment of financial aid by late January, a senior presidential official said on Wednesday.

Ukraine has so far received two tranches of aid under the IMF programme worth a combined $4.6 billion, under a $17 billion (11 billion) bailout package agreed in April to shore up its foreign currency reserves and support the economy.

The third payment was delayed as the IMF waited for the formation of a new government, which has pledged to carry out the extensive reforms required under the bailout.

Ukrainian presidential adviser Valeriy Chaly said an IMF mission would visit Kiev in early January for the next round of talks on the loan programme, which the country has asked to have increased.

“We expect that all the decisions on macro-financial help will be reached by the last 10 days of January,” Chaly said in a televised briefing.

Ukraine’s foreign currency reserves have more than halved since the start of the year to a 10-year low due to gas debt repayments to Russia and efforts to support its struggling currency, the hryvnia.

Prime Minister Arseny Yatseniuk said Kiev, facing the additional financial burden of the rebellion in its eastern territories, risks defaulting unless Western donors come up with more funds in addition to what has already been pledged.

First deputy finance minister Ihor Umansky said on Wednesday that it was too soon to talk of restructuring the country’s debt.

“The question of restructuring … is not currently a subject of discussions,” he said at a briefing. “Until the aid package is agreed for Ukraine, it’s too early to discuss this.”

(Reporting by Natalia Zinets and Pavel Polityuk; Writing by Alessandra Prentice; Editing by Hugh Lawson)

Politics & GovernmentBudget, Tax & EconomyInternational Monetary FundUkraineforeign currency reserves […]

Websites offering instant cash still operating despite payday loan rates cap

Websites offering instant cash still operating despite payday loan rates cap – ITV News Top stories Your area National Border Tyne Tees Calendar Granada Central Anglia London Meridian Wales West Country (E) West Country (W) Channel Topics World Politics Business Money Health Education Entertainment Royal Technology Sport And Finally Environment Science Travel Religion Economy Weather Countryside Employment Animals Consumer Weather Main page content

[…]

UK regulators cap payday loan interest | Business | DW.DE | 11.11 …

Interest charged on loans offered by payday lenders in Britain would be capped at 0.8 percent per day from January of next year, the country’s Financial Conduct Authority (FCA) announced Tuesday.

The decision was made after months of consultations and stark critcism by consumer protection groups of exorbitant interest rates often causing misery among borrowers.

The authority also stipulated that borrowers must never have to pay back more in fees and interest than the amount granted to them, meaning a total cost cap of 100 percent.

No more spiraling payday debts

“I am confident that the new rules strike the right balance for firms and consumers. If the price cap was any lower, then we risk not having a viable market. Any higher and there would not be adequate protection for borrowers,” FCA Chief Executive Martin Wheatley said.

The FCA added default fees would be capped at 15 pounds ($24, 19 euros).

“For people who struggle to repay, we believe the new rules will put an end to spiraling payday debts,” Wheatley argued. “For most of the borrowers who do pay back their loans on time, the cap on fees and charges represents substantial protections.”

The FCA had first published its proposals for a payday loan price cap in July. The price cap structure and levels remained unchanged following the consultation process.

[…]

InstaLoan Now Offers 150 Instant Cash Locations

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InstaLoan Now Offers 150 Instant Cash Locations

Consumer loan company now has 150 store locations throughout Georgia and Florida. For more information about InstaLoan, visit http://www.instaloan.com.

We are here to help all types of individuals get the financing they need as quickly and easily as possible.

Savannah, GA (PRWEB) October 29, 2014

InstaLoan, a subsidiary of TMX Finance, has maintained a steady rate of growth since its inception. As one of the nation’s fastest growing consumer finance companies, it is now operating 150 brick and mortar locations throughout Georgia and Florida. The consumer loan company has expanded its footprint during 2014, adding 30 locations throughout the course of this year. Additional InstaLoan locations are planned for the Greater Atlanta Area before the end of 4th quarter. Individuals residing throughout Georgia and Florida will have an opportunity to get the cash they need through a variety of different loan options including: 1st lien loans, personal loans, and signature loans.

“Our consumer demand is positive proof that InstaLoan offers a much-needed service,” said Robert Gomez, Vice President of Operations for InstaLoan. “We are here to help all types of individuals get the financing they need as quickly and easily as possible.”

InstaLoan offers a variety of different types of financial solutions, including: 1st lien loans, signature loans, and personal loans. To secure a short-term cash loan, an individual must have a government-issued ID and proof of income. Some loan products require a vehicle registered in the applicant’s name or loan documentation for the vehicle. Individuals with good, bad, and no credit can be approved for a short-term cash loan with InstaLoan. Hours of operation are Monday – Friday from 9:00 a.m. to 7:00 p.m. and Saturday from 10:00 a.m. to 4:00 p.m. and our stores can be reached by calling 855-849-LOAN. To learn more about the loan products offered by InstaLoan, visit http://www.instaloan.com.

About InstaLoan

Our history: InstaLoan, a subsidiary of TMX Finance, opened its first location in Macon, GA in 2006 under the EquityAuto Loan brand. Since then the company has grown to 150 locations in Georgia and Florida.

What we offer: InstaLoan is one of the fastest growing consumer loan companies in the country. InstaLoan offers a variety of short-term lending solutions, including: 1st lien loans, signature loans, and personal loans, to individuals with all types of credit profiles. InstaLoan focuses on providing people with the cash they need by working with them to determine the best type of loan for their situation.


[…]

Consumer loan or credit card loan?

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Many of us plan to make big-ticket purchases like an LCD television, a high-end mobile phone or laptop during the festive season. Not only is it an auspicious time to buy new articles, it is also the time when retailers come up with attractive offers such as discounts and tie-ups with financers. Banks and Non-banking Finance Companies (NBFCs) also offer loans on credit cards and durable loans. Which of these two options is better?

A works in the form of the cardholder first on the card and immediately converting the expense into a loan, which is repaid in the form of EMIs that constitute repayment of both the principal and interest. The interest on a credit card loan is generally lower than the rates charged for a normal credit card expense. When a loan is taken on the credit card, the outstanding credit amount comes down to that extent.

In the case of a consumer durable loan, the bank or NBFC offers a loan for the value of the product, with a small down from the borrower’s side. The bank or NBFC also charges a processing fee for the same. The loan is repaid in EMIs for a pre-specified tenure. In most cases, a pre-closure charge is levied if you want to close the loan before the specified tenure. Let us understand the differences between the two with the help of a case:

(See the table below)

In spite of the obvious high interest of the credit card loan, which makes the total repayment high, the fact that Borrower 1 gets an upfront cash

of Rs 2,000 and converts the payment after discount as the loan. So, he manages to pay only as much as Borrower 2, who opted for the consumer loan.

On the other hand Borrower 2 shells out Rs 2,000 as down payment, whereas for Borrower 1 this loss is his gain. However, in spite of Borrower 1’s gain in this respect, do remember that in the case of a credit card loan, his credit limits falls to the extent of the loan.

Further, if Borrower 1 happens to miss out on an EMI payment, he will have to pay exorbitant charges to the bank on account of interest and late payment fee. As compared to this, for Borrower 2 there is no problem of a reduction in credit limit, and so on.

Zero per cent schemes by NBFCs:

Many in the country offer consumer durable loans to consumers which is given at zero per cent interest cost. How does this scheme work? The NBFC has a tie up with big retailers to fund consumer durable purchases. Accordingly, the retailer offers the loan scheme to the consumer when he decides to purchase the product. The loan is not charged interest. However, since the loan comes at zero cost, the retailer does not offer a discount on the product, which is usually offered for full cash payment (see example above). There is also a possibility of higher processing fee. For example, if you wish to purchase a mobile phone worth Rs 25,000 and take a zero per cent scheme, you forego the discount offered by the retailer (let’s say 10 per cent, that is, Rs 2,500). The NBFC charges a processing fee of 2 per cent, Rs 500 in this case. So you end up paying an extra Rs 500 and losing an extra Rs 2,500, meaning you pay Rs 3,000 more for what you got. So in this case, a zero per cent scheme is not really zero per cent.

The RBI, recognising this, directed banks to discontinue this scheme in 2013. NBFCs are still allowed to give this offer. Some NBFCs that offer this scheme are Bajaj Finserv and Tata Capital. One should find out all the details such as availability of discount, processing fees and other terms to understand if the scheme is really zero per cent or not.

Which is the best option to fund big-ticket purchases?

Choosing a credit card loan or consumer loan depends on several factors – the scheme offered by the retailer, your relationship with your bank, other purchase schemes in the market and your financial situation. These schemes are still quite popular, especially during the festive season. That said, it is advisable to take a credit card loan or consumer durable loan only when there is no way out. These schemes are expensive and also do not give you any benefits (such as tax benefits), except giving you access to funds for your lavish purchases. Using these schemes simply because they are available can hurt your finances.

Instead, one should explore other loan schemes, which can work out to be cheaper such as a loan against fixed deposit (interest cost of FD interest rate +2 per cent). These loans, however, are not instant like credit card loans and consumer durable loans. But they work out to be less expensive and safer for your finances. One should look at all options available in the market, rather than blindly opt for the easy way out.

The author is CEO

,

BankBazaar.com […]

Avail Payday Loans Online To Meet Cash Emergencies In Life

If you require immediate cash and left out with no other option like borrowing from friends or taking a loan from bank, just checkout with the payday loans online that are quickly processed and offer you a loan within 48 hours time for you to meet your cash emergency needs on the spot. It is evident that banks often have a long procedure to sanction loans but the payday loans takes just one or two days time to scrutinize your application and deposit the cash in your account.

You should also understand that payday loans are often sanctioned only in the range of $100 to $1000 and are short term loans to meet your urgent cash requirements. The payday loans are also sanctioned without any credit check and are often based on your income that is yet to come from your employer and hence your chances are high for approval of a loan in times of emergency. But as there is higher risk associated with these short term loans you have to be prepared to pay higher interest rates than the regular loans in market and hence it is advised that you avail the payday loans online only in times of cash emergency to meet your urgent requirements.

You can use the payday loan matching service online that helps you in finding the lenders interested in your application to sanction the loans. You can fill in the online form of the payday loan matching service which shall be circulated to different credible lenders on their listing and help you get the best interest rates for you to approve the lenders document and get in touch with them to avail the payday loan. For the payday loan matching service there is no fee as they collect their amount from the lenders as referral commission for linking the customers for short term loans.

However, to become eligible for the payday loans online you need to at least 18 years of age and a citizen of the country with a direct deposit account and also an income of more than $1000 per month. So once you satisfy the above conditions the lender sanctions you the loan within in the next business day on approval of your application along with terms and conditions on the interest rates and the repayments that need to be paid on time. In case of default on paying back the loan you may end up with additional fees, collection costs and also sending your information to the consumer reporting agency which may reflect negative on your credit score.

Address:

Moneylend

PO Box 75264

Seattle

Washington

98175

United States

+1.2062223333

Find cheap instant payday advance loans online at Moneylend.net. We are right source for payday loan matching service with 100+ lenders in the network. For more details about Cash Advance Online, please visit us at http://moneylend.net/

[…]

Seventh Circuit: Claims against payday loan provider can continue …

Recently, the Seventh Circuit Court of Appeals, which includes the states of Wisconsin, Illinois and Indiana, overturned a lower court’s ruling when it decided to allow a class action lawsuit against an online payday loans provider to continue.

The suit involves three plaintiffs who each borrowed $2,525 from Western Sky Financial LLC, one of several online payday loan businesses operated by the defendant. The plaintiffs charged that the loans violated federal and state lending laws.

The defendant, who is a member of the Cheyenne River tribe, argued that the lawsuits should be dismissed out of federal court because of an arbitration provision in the loan agreements providing that Cheyenne River tribal courts should have jurisdiction over any disputes.

The lower court judge initially agreed and dismissed the claims in 2012, but the Seventh Circuit decided last month that the claims can continue after determining that the arbitration clause in the loan agreements was “unreasonable” and “unconscionable” to the borrowers.

What that means is the suit will be able to continue and a federal court will decide whether the loans — which charged interest rates of up to 139 percent — were violated federal and state lending laws.

The same defendant is also facing a federal racketeering class action lawsuit. He also agreed to pay fines close to $1 million to the Federal Trade Commission after being accused of engaging in “unfair and deceptive tactics to collect on payday loans.”

As you can see, there are many payday loan providers throughout the country who run questionable, if not criminal, operations. That’s why it’s important to seek out options such as credit counseling or debt negotiation in effort to find a solution to your debt problem instead of making your financial situation worse.

Additionally, it’s vital to work with a service that is trustworthy and professional — one that has your best interests at heart and won’t take advantage of your situation.

Source: The Cook County Record, “Seventh Circuit revives class action suit over payday loans; calls arbitration clause “unconscionable” and process “a sham,” Jonathan Bilyk, Aug. 25, 2014

[…]

Shropshire payday loans debts are rocketing « Shropshire Star

The number of people in Shropshire struggling to cope with payday loan debts has rocketed during the last year.

In Telford, the Citizens Advice Bureau reported a 64 per cent jump during the first quarter of this financial year, compared to the same period last year, in the number of people who were using their services to discuss issues about payday loans.

From April to June this year 54 people sought advice from the service, up from 33 during the same months last year. Since the start of July another 40 have visited for advice already and figures only included people who had visited the CAB.

Telford MP David Wright said the figures were “a symptom of the cost of living crisis”.

The Shropshire Star obtained the figures as debt charity StepChange reported the number of people they had dealt with across the country soared by more than 13,000 to 43,716 people in the first six months of this year, compared with 30,762 for the same period last year.

Payday loans – such as those offered by companies such as Wonga – are short-term loans designed to tide people over until they get paid but most lenders charge between £25 to £30 in interest per month for each £100 borrowed. Some also charge a money transmission fee and the Money Advise Service warns potential customers taking one could make their financial situation worse if they can’t afford to pay it back on time.

Lyn Brayne, service director at Telford CAB, said: “Our figures reflect the national picture.

“We looked at what people were taking their loans out for and what we found was the vast majority of them use it for every day essential living costs, so people who simply do not have enough to live on a day-to-day basis – rent, food bills, petrol to get to work. We are not really seeing people take it out for non-essential living costs.”

She said customers needed to be aware of management fees – which companies can charge just for dealing with an enquiry about a loan. She said in one case, a resident had found 11 different companies had taken a total of £4,700 out of their account in admin fees and they had not even taken a loan.

She added: “I am sure as with any form of credit there is a place for quick credit with a few questions asked and some occasions where it may be beneficial to get that quick loan.

“The interest fees, however, rocket up if you do not pay it back and our advice would be to think twice and do not give out bank details over the phone unless you feel you understand and know what you are signing up for and that management fees will be applied. People need to be aware of that.

“There may also be other alternatives, we always suggest people take financial advice before taking out a payday loan.”

Mrs Brayne said she feared the problem could get worse. “We have seen a large increase and it does not show any signs of letting up and we think it will get worse as people’s household budgets are squeezed further and further,” she added.

Star comment: Payday loans are no quick debt relief […]