Skip to main content

Do banks Reward loyal Customers with Low Inates?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

While old customers can gain by getting low interest rates on loans from their banks, loyalty is not the only criterion for getting preferential treatment



Are you planning to take a bank loan and dreading the tedium of shopping for the best interest rates? Before you begin the legwork and decide to switch banks on the basis of low rates, check with your own bank. After all, you've been a loyal customer for several years and banks should reward this with preferential treatment, right? Not necessarily. While financial institutions do offer privileges to existing customers, this may not be the only criterion that will get you the desired interest rates. Here are the things you should be aware of before you approach your bank for the loan.


Benefits of loyalty


While bank loyalty programmes, which offer reward points on debit card spends, wealth management or priority banking services, are some of the carrots dangled before existing customers, there's another privilege for preferred clients: differential interest rates. So, if you have been operating your account with a particular bank for years and are planning to take a loan, chances are that you can negotiate a sweet deal with your own bank. The interest rate is cheaper by 50-400 basis points compared with that offered to new customers. It may even beat the rate offered by other banks that you approach. Other than getting lower interest rates, banks are also known to waive processing charges for select customers.


Experts point out that banks and financial lenders bear a high acquisition cost for all retail loans. Hence, the best way to create cost efficiency is to retain good customers. Besides, your savings back account is the cheapest source of funds for banks. banking is undergoing a transition from product-oriented to customer-oriented strategies. It is prudent to have a total relationship approach, including revenue, loyalty, long-term association and engagement with the customer. Since preferred customers are a very important part of this strategy, we look at the relationship holistically and offer relationship-based prices across most products.


Cross-selling is another tactic used to foster loyalty while making money from an existing customer. Banks are constantly endeavouring to increase their wallet share in terms of multiple offerings to good customers, So some banks offer their liability-free customers special interest rate and fees when they come back for loans. According to him, the cross-sell ratio on loans in India is 1:2, whereas in developed countries, it is 1:5. The potential, therefore, is huge and banks are expected to step up their cross-selling drive in the years to come.


Is loyalty the only criterion?


Just being loyal, unfortunately, is not good enough when it comes to preferential interest rates. "Banks evaluate the profile and creditworthiness of a customer to decide on the discount that can be passed on," says Raj. Moreover, banks have a standard set of pricing for customer segments based on the risk parameters and historic behaviour of the product portfolio. Within the range specified in the product programme guidelines, we use our discretion and prudence in providing risk based and overall customer relationship pricing.


As mentioned earlier, the differential interest rate regime is based on the customer profile. The loyal customers eligible for preferential rates are chosen according to their employment and risk profile. Most banks have segregated companies into categories, such as super Cat A, Cat B, Cat C, etc. This categorisation is reviewed periodically based on the relationship they have with these companies. Today, the interest rates and fees on loan products are driven by the category in which a customer's workplace falls.


The risk profile of a customer is typically determined using his or her credit score maintained by the Credit Information Bureau India Limited (
Cibil). If a customer has no credit background but his details are available with Cibil, he gets a score of -1. The score is zero when the credit history is less than six months old. Lastly, one can earn a score of 300-900 depending on factors such as repayment record, default record and credit mix.

A person with a score of over 700 can negotiate with the bank for lower interest rates or a waiver of the processing fee. What follows is that you'll need a high score to get preferential treatment.


The bottom line is that banks are increasingly rewarding loyal customers. So if you are into multi-banking, perhaps it's time to consider placing all your eggs in one basket. However, this should not prevent you from shopping around for the best deals, if only to give yourself more negotiating power with your bank.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now