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Home Loan rates: Matter of transparency

admin — Fri, 20 Mar 2009 05:54:47 +0000

Home loan rates are on their way south. The recent player to add to cut rates is LIC housing finance. A 75 basis point cut in the lending rate is also applicable for the existing customer. Considering the existing customer for the rate cut is a big thing. Considering a single digit rate of interest for the new customers in the industry, it is unjust for the bankers to charge 12-13% interest for the existing customers. Especially the private sector bankers, such as ICICI Bank are more than keen to continue with the high rate of interest on their asset books.

There is a need to revive demand for homes to boost the economy. But it is equally important that the existing loan portfolio do not emerge as a bouquet of non performing assets. As the salaries are cut and jobs are lost, the already burdensome home loan equated monthly installments are an up hill task. No wonder, if there are defaults.
This makes a strong case for passing on the benefit of a rate cut to the existing customers. Here one has not factored in the ill effects of house loss due to default on the home loans.

The most unfortunate scene is ‘quarterly results’ oriented banking system in India. The private sector players such as ICICI Bank, HDFC and Kotak Bank to name a few are rather cautious about their ‘spreads’ than the ‘economy. The public sector banks typically work on the directives of the government. A directive from the ministry of finance is more important and the rest falls in place, whether the step is profitable for the bank. The government effectively used the public sector banks as a tool to create a ‘price war’ in the banking system. The quick move by State Bank of India, followed by other public sector banks made us wonder if there are no ‘spread’ issues with them.

For a moment we keep aside these issues. Though it has been reiterated that there is a need to introduce a transparent system which ‘calculates’ the floating rate of interest for banks. After all, it is in the greater interest of the government and the banking system to ensure that there will be no ‘burst’ of unrest of the borrowers.

Ragging – a product of legislative apathy

admin — Mon, 16 Mar 2009 10:54:15 +0000

Death of Aman Kacharoo -a 19 year old student of a medical college in Himachal Pradesh has sent the ball rolling once again. The high profile Sophia College started the ball rolling in 1997 when Indu Anto was ‘killed’ by her seniors in hostel. The justice is still to come. Her parents are still in shock and they have only one thing as a solace – the court accepts that Indu did not commit suicide but she was killed after a long drawn ragging.

The number of unfortunate victims of ragging is still growing at a rapid pace. Barring few states such as Maharashtra, the lack of legislation has ensured that the ragging is not questioned as something worth punishment. Indu’s death ensured that there will be a law in Maharashtra that will cap the extent of ragging and it has brought in some deterrent in this heinous crime. However the central legislature is yet to learn any lesson from this. There is no time to enact a law to that effect.

This is not just one instance. In 1997, the Supreme Court decided on the long drawn case of Vishakha – sexual harassment at work. As a part of the judgment, the honourable court of law issued some guidelines to deal with sexual harassment at work place and all associated abuses. The same judgment clearly mentioned that these guidelines will be applicable till the central legislature comes out with a expansive law. But alas, the Parliament is still very busy with the game of power and there is hardly any time left to enact a law to that effect.

The feminist pressure groups are busy fighting for 33% reservations in Parliament and at all levels of power, but very few of them are bothered to empower a women at workplace, which ultimately earns her economic freedom, the most coveted facet of freedom.

Another case in point is Lok Pal bill. The bill is not expected to gain ground given the apathy prevailing across political parties. The transparency expected and the level of power of Lok Pal and many more points are bone of contention for many in the power house. Given the multi-party governments in the center it is highly unlikely that the government will get some time to go ahead with some of the crucial legislations. Till then let us sit and count the number of Aman Kacharoo and Indu Anto.

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Nano: Nine days to go!

admin — Sat, 14 Mar 2009 15:21:58 +0000

The small is beautiful they say. We add to it. Small is also exciting. At least when it comes to the small car – Nano- is concerned, the small is rather exciting. As the countdown begins and it is a matter of 9 days for the official launch, there are many in the industry who is watching the movements at Tata’s Bombay House. The reasons vary with individuals.

There are those four member typical Indian families who have been trying their level best on those crumpled two wheelers for whom a comfortable journey will also be affordable. For them the car is just a dream coming true. The oldies who saw the days when they would say, book the car when you marry and you will get to ride it when your daughter’s baraat goes to her house, will also see a circle coming to completion. Why not after the instant delivery method it was also required that someone should fit the car in their pocket. Nano is expected to do the same.

The next batch of excited men includes the automakers. How can somebody make a ‘car’ in USD 3000 flat? Is it possible to offer the best safety features? Will the car climb a steep 45% road with four passengers? Will the air conditioners work? There are many questions and the answers are yet to be found and checked on the parameters of consistency. May this lot of people will sleep with some amount of calm on March 23, if they get to see Ratan Tata’s dream coming true.

There is one more lot of jokers, popularly known as the second hand car dealers, who are keen to know about Nano and touch-feel it. After all their inventories’ prices may climb or crash depending upon the failure of success of Nano respectively. The second hand car market was never in such an uncertainty before. But the car has made it happen for all the good reasons.

The last but not the least, is the city commuters and the taxi drivers ‘always ready to lock horns with each other’ are keen to welcome the offering from the Tata stable. Yes you read it correct! We mean to say both are eager to see Nano on roads. The cab-users want an alternative to Fiat Padmini and Ambassadors – the ‘gift’ of Licence Raj in India.

On the other hand, the taxi owners also want to discard the old trundlers for a brand new and more importantly, an affordable Nano. Though it is widely believed that Tata’s wont let Nano travel the taxi lane, they cannot stop the minds full of aspirations.

The next ten days and ten nights will make people dream about the car, prepare to stand in a queue for the forms and arrange for the funds, waiting for the lottery results. And the Tata stable will pray for the success of Nano. When all these things happen, the most excited person will surely be who else but, Ratan Tata. Of course we cannot leave him, the man who dreamt Nano, out of this excited lot.