Repo Rate vs Bank Rate

UK is home to some of the best universities in the world. Many Indians aspire to pursue their higher education in these universities, but the fees makes it difficult for them to fulfil their wishes. To help Indian students in getting admission abroad, banks in India offer education loans at very competitive rates of interest. Most of these loans can be returned after the completion of the course.

Top Universities in the UK:

Mentioned below are names of some of the top universities in the UK:

  • University of Oxford.
  • University of Cambridge.
  • Imperial College London.
  • University College London.
  • London School of Economics and Political Science.
  • University of Edinburgh.
  • King’s College London.
  • University of Manchester.
  • University of Bristol.
  • University of Warwick.

Banks Offering Education Loan for Studies in the UK:

  • Bank of Baroda
  • It offers an education loan called Baroda Scholar loan to assist Indian students in pursuing higher studies abroad. Students can use this loan to apply for a graduate, post graduate, job oriented, doctorate or technical course in reputed foreign universities. Borrowers can avail up to Rs.60 lakhs, if they apply to any institute mentioned in List A of the scheme and they can avail up to Rs.40 lakhs, if they apply to any institute mentioned in List B of the scheme. The tenure of a loan of up to Rs.7.5 lakhs is a maximum of 120 months and the tenure of a loan of over Rs.7.5 lakhs is a maximum of 180 months. Collateral is required only if the loan amount is more than Rs.7.5 lakhs.

  • Punjab National Bank
  • The education loan offered by this bank for overseas education is called PNB Udaan. The loan can be applied for by Indians for pursuing a graduate or post-graduate course or for studying a course offered by CPA in USA, CIMA – London, etc. The loan amount can be used to study any degree or diploma course as well. The loan amount offered by the scheme depends on the need of the borrower. The margin is 15% for loans of more than Rs.4 lakhs. Tangible collateral is required only if the loan amount exceeds Rs.7.5 lakhs. The tenure for this loan is a maximum of 15 years. The repayment period starts after the end of the course plus 1 year.

  • Syndicate Bank
  • The education loan provided by this bank for foreign education is called SYNDVIDYA Scheme. This scheme also offers loan for education in India. The loan can be taken for pursuing graduation/post-graduation courses abroad. Borrowers can use this scheme to study degree or diploma courses and courses conducted by CPA in USA, CIMA – London, etc. For foreign education, a maximum of Rs.20 lakhs can be availed by applicants as loan, which has to be repaid in a maximum of 15 years after completion of the course plus one year. Collateral is required for loans of over Rs.7.5 lakhs.

  • Bank of India
  • It offers an attractive education loan scheme called Star Education Loan to Indians to help them in pursuing courses in India and abroad. Loan can be taken for pursuing graduation/post-graduation courses abroad. Borrowers can use this scheme to study courses offered by CPA in USA, CIMA – London, etc. The scheme offers up to Rs.20 lakhs as loan for foreign education. The margin on loans taken for foreign education is 15%, provided the loan amount exceed Rs.4 lakhs. Tangible collateral is required only if the loan amount is more than Rs.7.5 lakhs.

  • Central Bank of India
  • This bank offers an education loan called Cent Vidyarthi to help Indians in pursuing higher education in India and abroad. It is a term loan that offers a maximum of Rs.20 lakhs for foreign education. The rate of interest for male students is MCLR + 2% and the rate of interest for female students is MCLR + 1.5%. The bank may choose to provide 1% concession on the interest rate during the course period in certain cases. The tenure for loan of up to Rs.7.5 lakhs is a maximum of 10 years and the tenure for loan of more than Rs.7.5 lakhs is a maximum of 15 years. The scheme offers life insurance protection to the borrowers.

  • Allahabad Bank
  • Allahabad bank offers education loan schemes to meritorious Indian students who want to pursue their higher studies in India and other countries. Borrowers who want to study abroad can apply for this loan, provided they are applying for professional or technical job oriented courses. The loan offers up to Rs.50 lakhs, which has to be repaid after the course is over.

  • HDFC Bank
  • This bank in partnership with Credila offers educational loans exclusively for people who want to study abroad. It offers up to Rs.20 lakhs as loan, which covers various expenses such as exam fee, library fee, cost of books and equipment, travel expenses, insurance, etc. The scheme has flexible loan terms and competitive interest rates. Borrowers can enjoy tax benefits under Section 80(E) of the IT (Income Tax) Act.

  • State Bank of India
  • It offers two education loans called SBI Student Loan Scheme and SBI Global ED-VANTAGE Scheme to help Indian students in pursuing higher education in the UK. SBI Student Loan Scheme can be applied for after admission is secured for a course. The bank offers up to Rs.20 lakhs as loan under SBI Student Loan Scheme and it offers Rs.20 lakhs to Rs.1.5 crore as loan under SBI Global ED-VANTAGE Scheme. The repayment period of the loan is 15 years.

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News About Repo Rate vs Bank Rate

  • Balance Transfer and Prepayment is the Answer to Home Loan Rate Hikes

    With the home loan rates surging incessantly, customers who had borrowed large amounts for home loans with lower interest rates might have to gear up to deal with the rate hikes. State Bank of India (SBI) has increased its marginal cost of funds-based lending rate (MCLR) by 20 basis points from 8.25% to 8.45%. Hence, the interest rates for the home loans offered by the bank will now range between 8.10% to 8.65% from the previous 7.90% to 8.45%. On the other hand, ICICI Bank has hiked both its 6-month MCLR and 1-year MCLR by 15 basis points. While these new rates will impact new borrowers immediately, these new rates will be implemented in the existing borrowers once the reset dates arrive.

    In case of a rise in interest rates, banks usually increase the tenure while keeping the EMI constant. However, borrowers can also opt for a higher EMI if cash flow is not an issue. This option is better in terms of the interest cost over the loan tenure. In order to counter the rising rates of interest, existing customers can also exercise other options such as balance transfer to a better home loan rate. This can be done after the individual compares the rates offered by the existing lender with other banks and non-banking financing companies (NBFCs).

    7 September 2018

  • RBI Governor set to launch UPI 2.0 today

    Despite multiple delays and roadblocks, the updated version of the UPI commonly called UPI 2.0 is all set to be launched by the National Payments Corporation of India at an event in Mumbai. State Bank of India chairman, Reserve Bank of India Governor and the non executive chairman of Infosys are expected to launch the updated version of UPI 2.0. It is expected that 10 banks will join UPI 2.0 right from the start including Axis Bank, HDFC Bank, State Bank of India, Yes Bank, and ICICI Bank. Other banks are in different stages of making updates to the payment product. The NPCI wanted the Governor of the RBI to launch the updated version of UPI just like the initial version. Many banks are looking at UPI 2.0 as a new mode of payment which is most likely to increase the number of transactions in the payment platform. It is most likely that banks will take a while to incorporate the product updates but things are expected to be stabilised in the coming months. While the new UPI version will not have the automatic recurring payments feature, features like block feature of digital platforms, overdraft facility, IPO subscription and a lot more will be available in UPI 2.0.

    17 August 2018

  • RBI approves Federal Bank request to open offices in Kuwait, Bahrain and Singapore

    Private sector lender Federal Bank has received approval from the Reserve Bank of India to open offices in Kuwait, Bahrain and Singapore. The bank is now waiting for local clearance to commence its operations in these countries. Federal Bank, headquartered in Kochi already has representative office in Dubai and Abu Dhabi. Their decision and desire to expand comes at a time when many of the major banks are reducing their overseas presence after the Rs.13,500 crore Nirav Modi scam. Many of the nationalised banks that account for most of the presence of domestic lenders in the overseas market have now started to slowly reduce their presence overseas. This step has been taken as part of a government directive. Many of the other private sector banks are however continuing their expansions overseas in the recent months. Federal Bank do not have plans to expand their presence locally but will focus on digital means to reach out to many more customers. The main focus of the bank will be on the unsecured lending segment, where its book stands at Rs.380 crore now. The bank is looking to double the loan book as the scope to for growth in this segment is very high.

    24 July 2018

  • Despite hikes in MCLR, average lending rates dip for PSBs

    Since the beginning of this year, banks have been increasing their lending rates and hiking their deposit rates. The weighted average lending rate for public sector banks fell by 30 basis points during the December quarter. This is despite the increase in the benchmark lending rate - marginal cost of funds based lending rate (MCLR). The MCLR increased by 10-20 basis points for some of the leading PSU banks in the last one year. Some of the market players believe that the PSU banks are looking to focus more on credit that is less risky with much lower yields. This looks to have brought down the overall lending rate for the PSU banks. Since the month of March, many more PSU banks have started to increase the MCLR by around 10-15 basis points. The risk averse lending approach however is continuing to have an an impact on the overall yield of the PSU banks. This cautious approach to less riskier and low yielding segments will continue to have a significant impact on the profitability of PSU banks.

    13 July 2018

  • Effective monetary tools used by RBI for liquidity management

    RBI has raised its policy repo rate to 6.25% by 25 basis points recently. In fact, this is the first time in the past 4 years that RBI has hiked the interest rate. Just like the policy repo rate RBI has some other effective monetary tools at its disposal to retain liquidity in the banking system. Here are the details of the key RBI monetary tools:

    Cash Reserve Ratio - Cash Reserve Ratio (CRR) is referred to the portion of cash deposits that banks hold with the RBI. When the CRR is reduced banks have more money in deposit, whereas when the CRR is increased banks have lesser amount to invest.

    Statutory Liquidity Ratio - The percentage of deposits that banks invest in government securities with the RBI is termed as the Statutory Liquidity Ratio (SLR). At present, the SLR is 19.5% which means for a deposit of Rs.100 received from a customer, the banks have to contribute 19.5% in government securities.

    Repo Rate - The fixed interest rate at which the banks can borrow money from the RBI by lending their surplus government securities is known as the Repo Rate. The more the repo rate, the costlier are the loans for the customers.

    Reverse Repo Rate - This is the rate of interest that RBI offers to the banks for borrowing their surplus funds for a short period of time. Currently, the reverse repo rate is 6%.

    26 June 2018

  • RBI going to purchase Rs.10,000 crore of government bonds for liquidity management

    RBI announced the purchase Rs.10,000 crore of Government bonds on Tuesday with a purpose of liquidity management. According to the Central Bank, the purchase of securities will be conducted under its open market operations. This decision has brought some respite to the bond market which is going through severe pressure due to the rising yields in spite of a plenty of regulatory measures. Expectedly, this move will give some relief to the struggling bond market.

    RBI has taken this decision after assessing the current liquidity condition of the market. Earlier, the previous week, RBI has withdrawn the clause that was forcing the foreign portfolio investors to purchase government bonds and state development loans having a minimum of 3 years of residual maturity. Moreover, in the month of April, the central bank has extended the limits for the FPIs to purchase Indian bonds. It also permitted banks to distribute the provisioning for losses on their portfolios of bonds over 4 quarter. However, unfortunately none of the measures worked to recover the demands. But with this new announcement, the bond market has taken a breath of relief.

    25 June 2018

  • Hike in RBI repo rate and its impact on home loans

    The Monetary Policy Committee (MPC) of the central bank has announced a hike in repo rate by 25 basis points. The rate now stands at 6.25%. This indicates that all bank loans will now be more expensive.

    It is interesting to note that almost all banks had hiked their lending rates (MCLR) by 0.1% in the last few weeks. Let us take a look at how this rate hike will impact the home loan sector.

    Consider a scenario in which you have taken a home loan worth Rs.20 lakh with an interest rate of 8.4%. Your EMI would then be Rs.1.68 lakh. At the time of a hike in interest rate by 25 bps (following repo rate hike), the interest rate will go up to 8.65%. This implies that your EMI will be Rs.1.73 lakh, an increase of Rs.5,000. The impact will be harder on higher loan amounts as well. This effectively means that if your home loan was worth Rs.2 crore, the EMI will go up by Rs.50,000!

    7 June 2018

  • RBI and Sebi give approval to NSE to launch repo in corporate debt securities

    Reserve Bank of India and market regulator Sebi provided their approval to stock exchange NSE to launch repurchase(repo) in corporate debt securities. BSE also recently got the approval from the regulators to introduce repo in corporate debt securities and is planning to start trading and reporting in the coming weeks. The step was taken in order to benefit and deepen the corporate bond markets. NSE is also planning to introduce an online web based trading platform specifically for tri-party repo market platform.

    29 May 2018

  • RBI meeting minutes reveal that there may be a rise in repo rate

    Recently, a monetary policy committee (MPC) meeting was held, in which the deputy governor of the Reserve Bank of India (RBI), Viral Acharya, said that he would most likely ask for withdrawing accommodation in the subsequent MPC meeting in the month of June. The meeting also addressed minimum support price hike. The governor of the RBI, Urjit Patel, spoke about inflation at the same meeting. The RBI intends to work towards achieving economic growth by enhancing the monetary policy. Mr. Acharya also said that inflation in India was associated with food, and that monetary policy should focus on addressing this.

    23 April 2018

  • HDFC raises rates on home loans making it the first hike since 2013

    Country’s largest mortgage firm, HDFC has hiked its Benchmark Prime Lending Rate (PLR) by 16.35% which will be will be effective from 1 April 2018 onwards. This is the first hike by HDFC since 2013 and will mark a shift in the trajectory of interest rates. For loans of more than Rs.30 lakh, the mortgage rates have been raised by up to 20 bps while for loans below Rs.30 lakh, the rates have been raised by 5 bps. The increase in the PLR will help the company retain their historic average margins in the range of 2.20% to 2.35%.

    For loans between Rs.30 lakh to Rs.75 lakh, the cost has been hiked to 8.60% from 8.40% while for loans above Rs.75 lakh the cost will increase to 8.70% from 8.50%. The cost of loans for Rs.30 lakh and below has been raised to 8.45% from 8.40%. There will be a rebate of 5 bps for all women borrowers on all the slabs.

    11 April 2018

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