FAQ Category: Banking system & loans schemes under govt

High interest rates and no (or low) monthly fee.

A Minimum Balance is the minimum amount of money needed in a bank account to avoid any fee.

According to the Reserve Bank of India (RBI), if you do not make transactions such as withdrawing cash at an ATM/branch, transferring funds, paying via cheques, etc., your saving/current account will become dormant.

One of the similarities between current account and saving account is the facilities that both these accounts provide ATM or debit cards, internet banking service along with the facility to open joint account or single account.

A Zero Balance Account is also a kind of saving bank account. But, as the name indicates, there is no minimum balance requirement for these accounts. If, you open a zero balance account with a bank, you need not to worry about a specific sum in your account at all times.

A Zero Balance Saving Account is a must for a student looking to open a bank account. Now, several banks in India offer Zero Balance saving accounts with other benefits, immensely fulfilling a student ‘s needs.  

Loan is something that is borrowed, especially a sum of money that is expected to be paid back with interest after an agreed time period. Most common amongst them are:

1. Personal Loan- Loan does not require collateral or security and is offered with minimal documentation by banks and financial institutions.
2. Home Loan– It is an amount an individual borrows from a financial institution like banks etc for purchase or construction of a house.
3. Vehicle Loan- It is a loan that allows you to purchase four or two wheelers (any vehicle) for personal or commercial use.
4. Education Loan– It is an unsecured loan that is borrowed from financial institutions to pay for higher studies. 
5. Gold Loan– It is a secured loan taken against gold.
6. Business loan– It is a loan specifically taken for business purposes. It is a sum of money that the company has to pay as per Terms & conditions.

You can generally seek a first time home loan for buying a house or a flat, renovation, extension and repairs to your existing house. Most banks have a separate policy for those who are going for a second house. Please remember to seek specific clarifications on the above-mentioned issues from your commercial bank.

Your bank will assess your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable / surplus income, (which in turn is based on factors such as total monthly income / surplus less monthly expenses) and other factors like spouse’s income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically, a bank assumes that about 55-60 % of your monthly disposable / surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individual’s gross income and not on his disposable income.

The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo / outflow which in turn depends on your disposable income. Banks generally fix an upper age limit for home loan applicants.