2009: A year that went by!!

2009 turned out to be a special year for loan aspirants of the country. Taking nothing away from the central government, which doled out large volumes of artificial liquidity in the name of fiscal stimulus, at the end of all it was the banking fraternity that made life lot easier for prospective loan applicants. Truly, year 2009 was a landmark year for the Indian banking industry. The RBI, the topmost banking regulatory institution of the country played its part to perfection, by reducing Cash Reserve Rate (CRR) and Statutory Liquidity Ratio (SLR) thus, allowing much-needed space to players (referring to banks here) for infusing liquidity in blocked veins of economy.

Personal loans portfolio of almost all banks along with home loans have been the biggest beneficiaries out of it. That only became possible because of reduction in prime lending rates (PLR). Obviously, personal loan interest rates too in the meantime have gone for a toss. However, how much we talk about it, the fact remains this reshuffling or restructuring in the past one year in various loan portfolios though have managed to excite customers, but we still haven't been able to drive out fear from people's mind who even today prefer to think thousand times before actually opting for one.

Most of the personal loan interest rates are still hovering in the range of 12-15 percent which in times of 7.31 percent annual inflation is quite a lot. Meanwhile, there is an interesting thing which i would like to share with you. Gold, after Dubai crisis, has taken a beating to such an extent that people are gladly parking their assets (gold in this case) with banks as collateral at a decent interest rate. And believe me there is a significant difference between the two loan product's interest rate. While personal loan product is carrying an interest rate of 18 percent on its head, loan against gold is costs 15.75 percent annually to the customers in the same bank. And this difference grows if the bank is public.

One thing that I would like to add here for the good of people is the fact that people who after reading this blog, are thinking of doing exactly the same, can get their gold accessories, jewellery tested first. Since, banks are smart and they will only allow such lucrative interest rates only when they are completely assured of the authenticity of jewellery (whether it is hallmarked or not, etc.). It is to be noted here, that banks in such cases want to capitalise on the emotional value attached to jewellery and other items and not the gold coins or bars which are not accepted as collateral for loans.