Banking

Banking — No Comments
5
Mar 11

Home Equity Loans

The term Home equity loans is a term which many people do not know, even people who have knowledge of finance are unaware of this term. Home equity loans are those loans which an individual can take on the house which he or she owns. So if one has a house or property then he or she can mortgage that property to bank or financial institution and take a loan. The amount of that loan can be used by the borrower for several purposes like marriage, higher education, for renovation of house etc…

Home loan equity can be better understood with the help of an example, suppose you need money for the higher education of your kids and you do not have money, than if you have your own house than you can mortgage that house and in turn you will receive cash from the bank which you can use for the desired purpose. Home equity loan is different from home loan because in home loan one can use the amount of loan only for construction of home while under home equity loan one can use the amount of loan for any purpose.

Home loan equity has many advantages, one of it being is that interest rate charged by the bank on this type of loan is lower than normal loan because security in this type of loan is the house in which you are living and therefore it is considered as safe by the bank to give loan on the home. Another advantage of this loan is that since there is no real value of your house when you yourself are living in the home and therefore this type of loan can be a great source of support if you are in need of money

Banking — No Comments
23
Feb 11

Types of Retail Loans

Retail loans are those loans which are given by the banks to individuals so as to meet there personal needs, retail loans are smaller in size as compared to corporate loans. Given below are various types of retail loans which are given by the banks -

  1. Housing Loans – Most individuals take housing loans and when it comes to retail loans, housing loans is right there at the top. Banks give housing loans to individuals so that can buy apartment or construct new house if they already have the land.
  2. Educational Loans – This type of loans is given by the banks to students so that they can pay for the tuition fees, hostel expenses, foreign education and other such expenses.
  3. Vehicle or Auto Loans – This type of loans are given to individuals who are looking for buying cars whether new or second hand, auto loans are also given for two wheelers to individuals.
  4. Personal Loans – Personal loan are the loans which are given to individuals for purposes such as marriage, traveling to abroad, loans for covering hospital expenses and other such loans which individual may need depending on his or her needs and situations.
Banking — No Comments
17
Feb 11

Wire Transfer Process

In this electronic age everybody wants to have their work quickly and same applies to transfer of money between two parties. Wire transfer refers to process by which banks transfer money from one account to another account through electronic medium. The process through which bank effect the wire transfer is explained below -

  1. Wire transfer process starts when the person or a company approaches the bank and request or order the bank to transfer certain amount of money into the account of other person or a company.
  2. Banks then demands the account number and IFSC or BIC codes so that bank can transfer the amount to the beneficiary.
  3. After bank receives the code and account number it transmits the message through SWIFT which is the acronym for Society for Worldwide Interbank Financial Telecommunication, to the bank in which the beneficiary account is there.
  4. After receiving this message which contains the payment instructions, the receiving bank will begin the process of transfer of money from sender’s account to beneficiary account, which may take 12 hours to 48 hours.

For effecting the wire transfer both sending bank and receiving bank should have mutual account with each other so that receiver does not have any problems, Banks charges fees from clients for providing wire transfer facility.

Banking — No Comments
4
Jan 11

Types of Guarantee

Guarantee refers to the promise made by a person or institution to the third party for the performance of other party. For example if there are three people A,B and C, so if A gives guarantee to B that C will perform certain work, and in case of C does not perform the work than A will compensate B. Banks also provides guarantees for their clients, let’s see some of the guarantees which banks provides –

1. Financial Guarantee – This type of guarantee is given be the bank to the creditor on behalf of debtor that debtor will pay his or her debt to the creditor on time and in the event of default made by the debtor, bank will compensate to the credit for the loss due to failure of repayment by the debtor.

2. Performance Guarantee – Performance guarantee is often given by the bank on the behalf of contractor who undertakes to complete the contract on time. The company which has awarded the contract to contractor demand guarantee that work will completed on time, and in this case bank will give performance guarantee that contractor will complete the contract on stipulated time, and if he is not able to complete it on time bank will compensate the company for the losses due to such delay in work.

Apart from above guarantees banks also undertake to pay for goods and services in case of import and export of goods and services, however it is not guarantee in strict sense because in this case the liability of the bank is primary, however in case of guarantees the liability of banks is secondary which implies that bank will pay only when the party for which it is given guarantee defaults.

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