There are two types of interest rates in mathematics, simple interest rates and compound interest rates. Simple Interest rates it is the normal interest calculation which uses all of us for our normal daily calculation with percent calculation. All the PSU banks, Private sector banks and all financial institutions are applying simple interest which is the composition of interest and principle amount portion. Normally banks use the interest rate with reducing balance and it works as reducing interest amount and increasing principle balance and goes up to the ending of the loan. Private financial lenders normally use the compound interest rates for lending the funds as loans to customers. Apart from these banks uses the compound interest for fixed deposit and other recurring deposit for investment of the money by the account holders. Interest rate is subject to change from bank to bank.
Repayment Capacity: As per banks credit parameter, EMI is equals to your repaying capacity of total debt burden. All the banks have wide range of loan programs. Millions of loan applications are processed in these banks in every month. Credit manager play the most important role while processing any of the loan application. Credit teams arrange a personal discussion with the respective customers after calculating the loan eligibility and asks some specified questions with the customers like,
• Why are you applying for loan?
• What is the expectation of the amount?
• How much amount can be paid by the customer as repayment of monthly EMI?
• What is the specific endues of the loan funds? Means for what reason the customer is taking this financial instruments?
After providing positive answers of these questions, if the credit team is satisfied with all the business visits and other verifications, and completely agree with the customers than only send the application for approvals of the loan. Otherwise the application goes for rejection and case is declined. All the bankers are doing very hard credit at the time of processing all applications. There are compulsory guidelines from the RBI and banks are dedicated for the fair practices. Hard credit is better to cure with the NPA and it helps to build the strong and healthy relation with the customers. All NBFCs which are doing very well in market and providing the loan facility to the customers. They also ask for the end use of the funds which is very important thing. This analysis is most effective and helps to collect the intention of the borrower. That ensures if he is the right candidate and should bank fund him or not? Is he going to repay the loan timely? Many more questions come up at the time of personal discussion with the customers. So it is the very important part of loan disbursal process.
How to swap ECS account?
Normally it is done when customers existing bank account is getting some problem or the account got closed for any specific reason. The customer needs to contact the existing loan providers and inform about the situation. He should ask the bankers to provide the new ECS form and the customer has to verify the ECS form from the new bankers where the borrowers has opened a new account or their additional existing bank accounts. After submission of the new ECS mandate to the loan providers they start the repayment of the loan from the new account. The lender may take some charges for the swapping of the ECS to the new accounts. Generally it takes time of around 15 days. So borrower need to be careful till the transaction of the ECS is not completed. Borrowers also needs to be very careful about bounces in loans as it affects the credit score and as result shows DPD in CIBIL. CIBIL rating is the most important parts of any kinds of loans. Banks and NBFC’s are generating the CIBIL score for processing of even the small ticket like loan against gold and other consumer loans.