Base rate Vs BPLR
Shift from BPLR to Base Rate
Recently with release of RBI circular on Base rate implementation, there has been a lot of debate going on regarding BPLR (benchmark prime lending rate). Here is our beginner’s guide to understand the two rates.
What is BPLR?
BPLR is the reference rate for banks for pricing their loan products. It is calculated taking into account the cost of funds, operational expenses, and the minimum margin to cover regulatory requirements of provisioning and capital and profit margin. Banks are supposed to lend to their prime customers at BPLR and increase the rate with risk premium in case of sub-prime customers and tenor premium wherever applicable.
Problems with BPLR
1. Main problem with BPLR is that banks have resorted to sub-BPLR lending. On an average, 67% of the total loans and Advances of banks was sub-BPLR. For Private banks, the figure was even higher at 83%. Housing, agriculture, and corporate segments were the major beneficiaries of sub-BPLR lending. Nearly 31% of the housing loans in FY08 were disbursed at an interest rate of less than 10%, while 49% of the housing loans were disbursed at 10-12%. In the case of loans to the industry, around 32% were disbursed at an interest rate of 10-12%.
A study of BPLR and actual lending rates of the banks show that as on Sep’2009, against a BPLR in the range of 11-13.5% for public sector banks, actual lending rates where in the range of 4.2-18%. For private banks, actual lending rates were 3-29.5% against BPLR of 12.5-16.7%.
How to Save Money with a Car Warranty?
Car ownership is rarely a hassle-free experience. Although cars bring us so much joy, when they fail it is often a big disaster. A car warranty can help you make savings when it comes to repairing your vehicle – it can be described as a form of insurance policy. A basic car warranty will be offered by a manufacturer but an extended warranty can be provided by the manufacturer and also through a separate insurer. Many people will find themselves facing problems with their vehicles because of electrical or mechanical faults and a warranty will provide cover for costs that are incurred due to these faults. This may involve the cost of repairs or parts that need to be replaced. An extended car warranty can provide even greater cover by increasing the time period within which a person is covered for any vehicle problems. Therefore, the extended warranty can save you money. It’s important to look into the details when considering an extended car warranty. More >
Book Review – When Genius Failed
When Genius Failed: The Rise and fall of Long Term Capital Management
This book authored by Roger Lowenstein, is a short biography and chronology of an infamous hedge fund.
Background
So before getting into the review of this excellent read we need to understand, what does hedge fund means?
Investopedia defines the term hedge funds as “An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns”.
For most of us (read naive to financial jargons), hedge funds would refer to something which creates volatility in the market and most of the times makes our well thought out investment decisions wrong. More >
How to invest in mutual funds online?
How to invest in mutual funds online? – this question is asked lot of times. Before answering this question we have to answer one more question, why more and more individual investors are trying to take the online route for investing in mutual funds.
Why investors are shifting to online investing?
This has become more relevant ever since SEBI has banned the entry load on mutual funds. Banning of entry load has made it very difficult for independent financial advisors (IFAs) to service individual clients. The advisors, if smart enough, can at the most earn Rs. 50 as upfront fees from an investor wishing to invest Rs. 10000. Earning this Rs. 50 will involve travelling, communication, time and knowledge. Hence many independent advisors have stopped distributing mutual funds. This is making it difficult for investors to execute transactions physically; hence many investors are shifting to online investing. More >
Interesting Forex Slangs
Every morning while browsing through the forex market commentaries I usually come across a range of terms used in currency market which either do not exist in real world or exist in a totally different context. Its quite interesting to know these terms and find out why they have been named as such.
Cable
Refers to the Great Britain Pound i.e. GBP/USD currency rate (read our note on currency basics to understand the pair). It refers to the Atlantic Cable, a steel cable laid under the Atlantic Ocean in 1850, telegraphically linking the UK with the USA, enabling messages with currency prices to be transmitted between the London and New York Exchanges. GBPUSD pair is also known as Pound Sterling
Aanjaneya Lifecare Limited
Overview- Company and business
Aanjaneya Lifecare limited was incorporated in 2006. The company is a research based pharmaceutical company with manufacturing and marketing capabilities in APIs (Active Pharmaceutical Ingredients) mainly focus on anti-malarial and (Finished Dosage Forms) FDFs. Company is the largest manufacturers if quinine salts in the world. The company started its manufacturing activities in the year 2007. The company also have a small R&D block in Mahad, Maharashtra. Company have a product portfolio of Anti malarials, Animal Health Product and Anti-cancer. The manufacturing facilities have been approved by various regulatory authorities and are ISO 9001-2008 and WHO GMP certified.
Job Opening: Options Trading with Kredent, Kolkata
Enter the exciting world of trading options and volatilities….
Inviting applications from experienced options traders for Options trading desk at Kredent Finance, Kolkata
Kredent Finance is one of the largest professional trading firms in Eastern India contributing significantly to market volumes. Our professional trading desk has access to all the asset classes available for trading in India and houses some of the best traders in this part of the country. We are direct clearing and trading members of the NSE, BSE, MCX-SX, MCX, NCDEX and ACE. Visit www.kredent.com for more details.
Position will be based out of Kolkata.
Incumbent should be experienced in trading options in either equities or currencies on Indian markets.
Please forward your resumes to career@kredent.com with the subject line “Options Trading”.
Muthoot Finance- Follow up note
Muthoot Finance Limited, the second IPO in the year 2011 listed at a premium on debut on both NSE and BSE. At NSE Muthoot Finance Limited opened at Rs. 196.60, a premium of 12.34% against the issue price. The issue price was Rs. 175 a share. The script had touched the high price of Rs. 198.90 with a total turnover value of Rs. 1,067.4 crore. Subsequently it had touched an intraday low of Rs. 161.40. MFL finally closed at 172.40 on NSE registering a decline of 1.3% from the issue price. More >
Sanghvi Forging and Engineering Ltd
Overview- Company and business
Sanghvi Forging and Engineering Ltd is an ISO 9001-2008 certified company. The inception of the company was in 1990. It is a Vadodara based company. SFEL is engaged in manufacturing and marketing of forging product for the non-automotive sector. It manufactures stainless steel forged and Machine Subtends, Forged Flanges, Forged fitting and CNC Machined Forged parts for various industries oil & gas, fertilizers, power etc. The company also exports the products mainly at Europe, Middle East and Canada. The total installed capacity of forged flanges is 3600 MTPA. The company is an approved global vendor of General Electric (GE) and it has obtained an approval of Mazagaon Dock, a GOI enterprise manufacturing submarines and vessels for defence, and Kuwait National Petroleum Corporation.
The Importance of a Financial Education to Young Minds
It doesn’t come naturally for children, teens and young adults to make smart long-term decisions with their money. After all, when you’re young, instant gratification is the key to candy, video games, fast food and trendy clothing.
Because young people aren’t likely to get a thorough financial education in school while they’re busy learning math, science, literature and languages, it’s important that you instill in them valuable financial life lessons while they’re still living in your home. The practical knowledge you provide your children will definitely be worth your while, unless of course you want your children to be borrowing money from you well into adulthood to make up for their money blunders.
