Tuesday 24 November 2015

Rules to follow when taking a loan


Don't borrow more than you can repay

The first rule of smart borrowing is what the older generation has been telling us all the time: don't live beyond your means. Take a loan that you can easily repay. One thumb rule says that car EMIs should not exceed 15% while personal loan EMIs should not account for more than 10% of the net monthly income. Your monthly outgo towards all your loans put together should not be more than 50% of your monthly income. If your EMIs gobble up too much of your income, other critical financial goals, like saving for retirement or your kids' education, might get impacted. Retirement planning is often the first to be sacrificed in such situations.

Keep tenure as short as possible

The maximum home loan tenure offered by all major lenders is 30 years. The longer the tenure, the lower is the EMI, which makes it very tempting to go for a 25-30 year loan. However, it is best to take a loan for the shortest tenure you can afford. In a long-term loan, the interest outgo is too high. In a 10-year loan, the interest paid is 57% of the borrowed amount. This shoots up to 128% if the tenure is 20 years. The longer the tenure, the higher is the compound interest that the bank earns from you. Increasing the EMI amount can have a dramatic impact on the loan tenure. Assuming that the borrower's income will raise 8-10% every year, increasing the EMI in the same proportion should not be very difficult.

 Ensure timely and regular repayment

Missing an EMI or delaying a payment are among the key factors that can impact your credit profile and hinder your chances of taking a loan for other needs later in life. Never miss a loan EMI, even if it means missing other investments for the time. In an emergency, prioritize your dues. You must take care never to miss your credit card payments because you will not only be slapped with a non-payment penalty but also be charged a hefty interest on the unpaid amount. If you don't have the money to pay the entire credit card bill, pay the minimum 5% and roll over the balance. But don't make a habit of this because at an interest rate of 24-36%, credit card debt is the costliest loan you will ever take. To avoid missing the due date every month, just give standing instructions to your bank to pay the minimum 5% amount whenever the bill is due.
Don't borrow to splurge or invest
This is also one of the basic rules of investing. Never use borrowed money to invest. Ultra-safe investments like fixed deposits and bonds won't be able to match the rate of interest you pay on the loan. And investments that offer higher returns, such as equities, are too volatile. If the markets decline, you will not only suffer losses but will be strapped with an EMI as well. Avoid taking a loan for discretionary spending. You may be getting SMSs from your credit card company for a travel loan, but such wants are better fulfilled by saving up. It's not a good idea to take a personal loan for buying luxury watches and high-end bags.
Take insurance with big-ticket loans
If you take a large home or car loan, it is best to take insurance cover as well. Buy a term plan of the same amount to ensure that your family is not saddled with unaffordable debt if something happens to you. The lender will take over the asset (house or car) if your dependents are unable to pay the EMI. A term insurance plan of Rs 50 lakh will not cost you too much. Typically, banks push a reducing cover term plan that offers insurance equal to the outstanding amount. However, a regular term plan is a better way to cover this liability. It can continue even after the loan is repaid or if you switch to another lender. Moreover, insurance policies that are linked to a loan are often single premium plans. These are not as cost effective as regular payment plans.



About Author: The author of this blog has a passion for writing and has written many blogs related to bpo, business solutions, customer service, outsourcing.


Friday 20 November 2015

Some opportunities for creating value with your customer base


Customer
·         Give customers reasons to trust you. Not just once, but repeated over time
·         Make customers happy, make their lives easier (not more complicated)
·         Segment customers and develop value propositions for target segments, based on needs and behaviors
·         Measure and improve customer loyalty, across product lines
Process
·         Rethink processes from a customer experience perspective and create a superior customer experience
·         Optimize processes to present a seamless face to the customer across all products and channels
Channel
·         Rethink branch operating models and branch network footprint
·         Incorporate all channels into an integrated customer experience.
·         Use technology to provide multi-channel, more convenient access to products and services
Product
·         Create more transparent products (for assets, liabilities, off-balance products)
·         Offer the right products to the right customer segment based on their risk profile
·         Bundle products and services relevant to a target segment to reward customers for keeping more products with you
·         Build a strategic pricing framework that drives relation deepening and customer loyalty
·         Train front staff to be able to describe products simply and clearly, rightly target them and take new clients properly on board
Service
·         Improve service operation excellence. Train staff to delight your target customers.
·         Develop personalized relationships with your most valuable customers. Redirect front staff time to relationship-building with most valuable customer segments; automate standard transactions through remote channels to gain efficiency
·         Align the service model with the value that customer segments bring
·         Innovate your sales systems; improve cross-selling and retention rates





aAbout Author: The author of this blog has a passion for writing and has written many blogs related to bpo, business solutions, customer service, outsourcing.


Monday 16 November 2015

Internet Banking Solutions for Financial Services


Online banking is an electronic payment system that enables customers of a financial institution to conduct financial transactions on a website operated by the institution, such as a retail bank, virtual bank, credit union or building society. Online banking is also referred as internet banking, e-banking, virtual banking and by other terms.
The common features fall broadly into two categories:
1)       A bank customer can perform non-transactional tasks through online banking, including -
·        Viewing account balances
·        Viewing recent transactions
·        Downloading bank statements, for example in PDF format
·        Viewing images of paid cheques
·        Ordering cheque books
·        Download periodic account statements
·        Downloading applications for M-banking, E-banking etc.

2)       Bank customers can transact banking tasks through online banking, including -
·        Funds transfers between the customer's linked accounts
·        Paying third parties, including bill payments (see, e.g., BPAY) and third party fund transfers (see, e.g., FAST)
·        Investment purchase or sale
·        Loan applications and transactions, such as repayments of enrollments
·        Credit card applications
·        Register utility billers and make bill payments
·        Financial institution administration
·        Management of multiple users having varying levels of authority
·        Transaction approval process
·        Increase customer satisfaction – and reduce service costs – with online self-service
·        Maximize ease-of-use, create differentiation, and speed customer service initiatives

Online Business Banking

·        Easily and effectively manage an entire organization's cash position   
·        Move to electronic processing to eliminate inefficiencies and errors   
·        Ensure service with support for transaction-intensive deployments   
·        Leverage services for small, midsize, and large businesses with a single solution   
·       


Thursday 5 November 2015

Inward and Outward Clearing Services

The security related to imaging and creating the electronic cheque needed to be defined and the cheque clearing process adjusted to accommodate electronic cheques.
Banks and financial institutions use cheque truncation systems (CTS) to manage this process. These systems have to deal with two main processes, outward clearing and inward clearing.
In outward clearing, the deposited items are scanned and the operator performs amount entry, account entry, item verification, balancing and bundling of the items at the branch level. The items are then sent to a service branch.
In inward clearing, the items received from branches are processed in the service branch where the operator performs amount entry, account entry, item verification, balancing and bundling of the items.
In India the clearing system is local and confined to a defined jurisdiction covering all the banks and branches situated in the area under a particular zone. The clearing house is a voluntary association of banks where the settlement accounts are maintained. Wherever RBI has its office the clearing house is managed by it. In the absence of an office of RBI the clearing house is managed by the SBI, Its associate banks and in few cases by public sector banks. The following are the various processes used by the bank for clearing:
Outward clearing: Cheques deposited by the customers sent for clearing to the respective banks is called outward clearing.
Inward clearing: Cheques received by the branch from various banks for debiting their customers’ accounts of the branch is called inward clearing
Outward return: Cheques which were sent in outward clearing returned unpaid, received by the branch along with the inward clearing
Inward clearing return: Cheques which are returned by the branch for various reasons from the inward cheques received by the branch.