Banking Products in Indian Banks
Current account
Current account
• The current account is usually for businessmen and daily transactions.
• It doesn’t serve the purpose of saving your investments.
• The transaction facility to this account is so flexible that you can make innumerable transactions in a day.
• Bank doesn't pay any interest on your invested amount but it charges certain service charges on such accounts
Savings account
• Savings account is the most popular kind of individual account for personal purpose of saving your investments and getting interest rates.
• Savings account provides cheque facility along with flexibility for deposited and withdrawal of funds from your account
Fixed Deposit
• Fixed Deposit is a financial instrument where a sum of money given to a bank, financial institution or company whereby the receiving entity pays interest at a specified percentage for the time duration of the deposit.
•The rate of interest paid for fixed deposit varies according to the amount, period, and from bank to bank. At the end of the time period of deposit, the amount that is originally given is returned to the investor.
Recurring deposit
• Recurring deposit also known as RD accounts who wish to invest an average amount of their savings on a monthly basis. These accounts gain interest on the amount available in your account.
• This account is specially designed for the working public who do not want to invest a large amount at one instance.
Loan
• Loan in simplest term can be explained as a thing that is borrowed, especially a sum of money that is expected to be paid back with interest
• The act of giving money, property or other material goods to another party in exchange for future repayment of the principal amount along with interest or other finance charges are called loan
• A loan may be for a specific, one-time amount or can be available as open-ended credit up to a specified ceiling amount.
A Personal loan
• A personal loan is typically issued for a specific amount and can be used for various purposes at the discretion of the borrower
• A personal loan can be secured loan or an unsecured loan. A secured loan uses an asset – such as house or car – as collateral (or support)
• If the borrowers default on the loan, the creditor can take the asset.
• An unsecured loan does not require collateral and is considered high risk. As such, it has a higher interest rate
Home Loan
• A home loan is a loan advanced to a person to assist in buying a house
• Purchasing a house can be a valuable form of investment
• However, it requires considerable thoughts and careful financial planning before taking on such a big step
• If owning a house is part of your financial goal, then you will need to know whether you can afford from your income and savings.
Business Loan
• Businesses required an adequate amount of capital to fund start-up expenses or pay for expansions
• As such, companies take out business loans to gain the financial assistance they need
• A business loan is debt, that the company is obligated to repay according to the loan’s terms and conditions
• According to the U.S. Small Business Administration, before approaching a tender for a loan, it is imperative for the business owners to understand how loans work and what the lender will want to see from the owner
Education Loan
• A loan is offered to a student which is used to pay off education-related expenses, such as college tuition, room and board at the university or textbooks.
• Many of these loans are offered to students at a lower interest rate.
• In general, students are not required to pay back these loans until the end of the grace period, which usually begins after they have completed their education
• One of the major benefits of these types of loans is that they come with low interest rates and do not require collateral or a credit check.
Vehicle loan
• Most of the people, today need a loan when they buy a new or used car. And the high cost of many cars means that consumers spend years paying for their vehicles
• Because a car loan is such a huge debt for most people, it pays to understand it before entering into an agreement
• A car loan is secured loan, which means the vehicle serves as collateral on the debt
• If you fail to make your payment, the lender can seize it as payment
• This is much safer for the lender than unsecured debt, such as credit card account, where the lender has only the card holder’s promise to pay
Loan against Property.
• The individual takes the loan by mortgaging the house property. It is a secured loan.
• One of the cheapest retail loans after home loans; usually about 12-16%
• Since the rate of interest is lower, frequently LAP EMI turn out cheaper.
• Maximum loan eligibility is determined primarily by the value of the property and income
• The maximum loan tenure for LAP is up to 15 years (180 months)
• A Loan against Property is also known as a Home Equity Loan and is a secured loan, where your existing property is pledged as security collateral against the loan
• These days several lenders and banks help with loan against property, where 40-60% (may differ) amount of the property’s market value can be disbursed to the seeker.
• LAP is a secured loan - you are offering your property as a security to the lender, and in case you default, the lender can have recourse to your property. LAP can be particularly useful for self-employed persons who own their own home, and might not have a regular source of salary income.
Gold Loan
•This is a form of debt financing whereby a potential gold producer borrows gold from a lending institution, sell the gold on the open market, uses the cash for mine development then pays back the gold from actual mine production.
•Gold loan has less appeal in the 1990s as mining companies were offered other increasingly sophisticated financial instruments, such as forwards and options, by the bullion banks.
Credit Card
• Pre-approved credit which can be used for the purchase of items now and payment of them later
• A credit cards credit limit varies based upon an individual's perceived credit worthiness
• Credit limit is the maximum amount loaded
• Credit worthiness is an individual ability and willingness to pay the money back.
• Name of the customer
• 16 digit card number
• Vdity date
• The VISA hologram and the VISA logo
• Name of the issuing bank
• Magnetic strip
• PIN
SIP - Systematic Investment Plan
A systematic plan or SIP is a smart and hassle-free mode for investing money in mutual funds. It helps you to create wealth, by investing small sums of money at specified intervals, over a period of time instead of a heavy one-time investment
A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth by investing an amount as low as Rs 500 monthly. Investing at an early stage of life lets you enjoy the benefits of two powerful strategies, rupee cost averaging and the power of compounding
SIP allows you to buy units on a specified date every month so that you can implement a saving plan for yourself. The benefits of this can be enjoyed as and when the need arises for occasions like marriage, education, buying a house or a car, etc and above all, retirement.
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