Home Loan – Should buyers go for it now?

Non-food credit grew 11.3 per cent – its lowest figure in the last 12 years, for the period ending on Oct 09, 2009. Home loan, a part of non-food credit did not report very healthy credit off-take too. Nevertheless, the festive offers made by different PSU banks along with reduced interest rates offered by private counterparts revived the home loan disbursals. Various banks offered the ‘8 per cent-first year offer’. This along with reduced property rates aroused the buyers’ appetite to buy homes.
While the market think tanks called these festive rates as teaser rates, similar to the rates offered in western countries which created asset bubble, the central government along with PSU banks offered these special rates for a limited period to revive the realty market on which many builders were dependent or on the verge of collapse.
Initially, in the first two quarters of FY 2010, home loan disbursals were on the track but following the increase in property prices by 10-30% in the last 6 months, consumers have started postponing the buying as they are apprehensive of a possible market correction.

Offerings by PSUs and Private banks
Almost all the PSU banks have come out with special home loan offer where the first year interest rate is pegged at 8 per cent followed by 8-9 per cent rates for next 4 years. Subsequently, the rates would be benchmarked against the said BPLR. They have also offered ‘nil’ processing charges during the festive period along with ‘nil’ prepayment penalty unlike in private banks where they still charge processing fees and prepayment penalties along with higher interest rates.
So, currently PSU banks offer better deals in terms of total incentives albeit they take higher processing time..

Fixed or Floating?
In the market scenario, it is better to blend the fixed with floating. Following the outlook in the 2nd quarter 2009-10, the RBI has indicated to unwind the expansionary monetary policies in near term; so, interest rates may go up in FY 2011. So, it is recommended for the current buyers to lock in the fixed rates to get the early benefits from a possible rise in interest rates.

Time to buy
Moreover, RBI has also asked the provisioning requirement for real estate loans which will also push the cost of the property as builders will pass the cost to consumers. But it won’t be easy to pass the additional cost to buyers as the property markets are already flooded with substantial supply while demand has not evolved. So, the buyers looking for a property should go for it.

Down-payment requirement
In the current calendar year, many banks have reduced the margin requirements for home loan borrowers from 25% to 15-20% of the total property prices. So, it is a further push and an incentive to home buyers.

What percentage of your net income you can have your EMI?
Generally banks offer loan with an EMI in the range of 35%-65% of total monthly income. It also depends upon the credit history of the individuals. So, one can expect an EMI at a moderate level of 50 per cent of total monthly salary.

What should customers do?
The improved economic conditions have already pushed the property rates by 10-30%; so it would be prudent to take the buying decision in the current period as regulatory caps would push up the prices further. Moreover, the festive rates are valid will Dec 31, 2009 after which the normal rates would apply and there won’t be any additional incentives available.

Searching the life

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Searching the life..

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RBI exits from expansionary policies

The domestic economy has started experiencing its feel-good factor with the encouraging numbers from all ends. However, the global economic outlook scripts a different picture. The abundance liquidity, inflationary pressures and week credit off-take forced the central bank to initiate some precautionary steps.

Keeping in mind to provide a balanced approach to our coupled economy, the Reserve Bank of India (RBI) in its second-quarter review of monetary policy 2009-10 maintained its status-quo on its lending and borrowing rates by keeping repo and reverse-repo rates unchanged at 4.75 per cent and 3.25 per cent respectively. It has also kept the Cash Reserve Ratio (CRR), the portion of deposits which the commercial banks need to keep with the RBI unchanged at 5 per cent. However, the bank has hiked the Statutory Liquidity Ratio (SLR), the amount which the commercial banks need to maintain in the form of cash, government approved securities (G-Secs) and/or gold before providing credit to the borrowers, to 25 per cent from 24 per cent effective from Nov 07, 2009 which will suck up over Rs 30,000 crore from the system. The central bank also aims to reduce the surplus liquidity and fight the higher inflationary expectations, which have been building up following a deficit monsoon (22% deficit) causing an increase in prices of food articles and food products.

The RBI has also revised the inflation target from 5 per cent to 6.5 per cent. The inflation has increased from -0.12 per cent to 1.21 per cent within a span of six weeks, thus, reflecting a rise of more than 1 per cent. It has also kept the GDP target unchanged at 6 per cent with an upward bias.

The RBI has responded in a way so that its growth and inflationary targets are met well within their target limits as set and also bridge the fiscal gap by initiating the first phase of its exit from expansionary policy. It has ended the forex swap facility for banks and cut the export credit refinance facility to 15 per cent, the level seen in pre-crisis time from the current level of 50 per cent. It has also ended the special repurchase window for banks, mutual funds and NBFCs with immediate effect.

Following the announcements by RBI, the domestic markets have responded negatively. The barometer Sensex tanked 386 points on profit booking across all sectors except IT companies. The BSE realty index and metals were heavily battered slipping 6.24 per cent and 5.43 per cent respectively. On the debt front, the ten year G-Sec yield slipped from 7.41 per cent to 7.31 per cent, a gain of 0.1 per cent or 10 basis points.

Jounced…

Well everyone dreams a life…a life filled with colors, dreams, expectations, planning etc…Hmm planning? For what? For whom? With whom? Life must go in a direction acceptable to the world, a world to which you own some obligations. Human beings have got a wonderful quality of falling into thoughts, the thoughts on which great discoveries, inventions and other new happenings revolve around the world.

Distances and time have been dwarfed; everyone is looking to be famed for its brevity in all possible paths covered. India, a country of valued and rich culture, customs and its incredibleness have voyaged an inter-generational expedition. Once to be called as Golden Birds, India is fighting hard to retain its lost glory. Even though to some extent on the global front, India is known for its inimitability and equally counted as a forward player which others watch to replicate per se. In London and US airports when Indian executives take a ride on the taxi operated by Indians, the drivers feel proud as Indian companies have galloped some of the overseas giants to show the financial muscles, a message to be flashed in foreigners’ minds we have reached to you. Similarly, in row inter se Harbhajan and Symonds in India-Australia tour, a newspaper in UK quoted, “India showed its financial muscles”. When India threatened to cancel the ongoing tour due to inter-cultural arguments, ICC nudged with a fine of Rs 3.5 billion which BCCI happily replied that the cheque was ready”.

Coming on the individual front, everyone seems to improve, grow in a perpetual way in line with the current world’s demands. Some does it at other’s costs; some achieves at its own strength. In the current now-and-then, we have forgotten our own families, own people. Nuclear family has become a way of life where everyone is strained and stressed. People look for the fun and peace at other places and with others. Discos, regular psychiatrist visits, pubs, extra-marital affairs etc have become a way of life. People struggle for the magic Smile and hardly laugh out. Just ask yourself, when did you laugh last for yourself?

The granny knot of Husband-wife’s relation works as strong as Himalaya. In the current stressed world where people are fighting for the sake of its existence, in some families they live with each other with a compromise which would be followed till its divide. The movie “Life in a metro” clearly depicted the true picture of the world where relations move beyond its existence and take a new shape. Should we continue with the current theme or it would become a trend of the life? Endless questions and eternal explanations have let the relations to reach at the point of extremity. We are fighting over trivial things which need to be looked into. The world needs to be relooked into.

Why do markets go up/down?

Sellers outnumber buyers, says a simple market theory. But the game of economics in the current globalised world which keeps the countries coupled with each other makes the markets gyrate either in upward or downward direction. We often read the financial news “The financial markets reacted to the report with a sharp fall…”. But in reality, do the markets react to the news in this way? Our traditional economic theory says that markets are mostly in equilibrium, reflecting an overall balance of economic forces. Markets’ direction change when these forces change i.e. when any good news about a company increased demand for its stock, making its price go up.

But the theory of simple buying and selling which determines the price discovery seems to fail with the current crisis triggered by the bursting of a financial bubble in the US mortgage markets in 2007 that had grown to gruesome proportions, thanks to lax regulations and complex financial instruments that hid risks. The issue on the top was the issue of ‘moral hazard’. Brokers were incentivized to generate borrowers and investment banks took on these risky loans and lumped them together into “Collateralized Debt Obligations”. And a single failure at one of the nodes of a tree made it to collapse. The striking feature of the crisis is that the situation appeared to be driven by ‘emotion’. The word ‘fear’, not an equilibrium concept, appeared in almost all newspapers. “Too big to fail” syndrome tasted dust with the fall of Lehman Brothers, an investment bank giant. Traditional economic models don’t capture these dynamics. Market dynamics can be bewilderingly complicated, with thousands or even millions of participants – ranging from banks and mutual funds to individual punters – all interacting with one another.

The system of leverage has created a surprised situation in the market. Lots of leverage begins to pose a threat of failures cascading through the market and it bursts out if it crosses a certain threshold. A single failure sends ripples of trouble through the entire market, making it to nosedive.

Moreover, many economic parameters have become so relevant in the financial markets that even a marginal negative movement in these numbers can let markets move in uneven directions. Some of the dominating factors are Index of Industrial Production (IIP), Purchasing Managers Index (PMI), Libor-Dollar movement, GDP growth rate, fiscal deficits, government borrowings, Composite Leading Indicator (CLI) given by OECD, MSCI Index et al. Since the financial crisis in 2007, these numbers performed miserably, before some ‘green shoots’ were visible at the end of last quarter of 2008-09, thanks to series of stimulus plans, bail outs, low interest rates, tax sops etc by central banks across the world. The emotions played stronger, emerged as the major tool in deciding the market movements.

The natural reaction to a crisis is to update and upscale regulation and supervision. The markets unwillingly move in either direction by millions of investors; those with stronger steam make it move in their direction, thus, disproving the basic dynamics of demand and supply. To a large extent, it is the man made movement. The game goes simple, “there is no place for snoozers”. The theory of money making goes on with either party making losses or gains. The only unidirectional beneficiaries in this game are the bourses which just smile, make money and see these punters betting to each other.

Life in a Wheel

Life in a Wheel

Have you ever imagined the importance of a wheel?

The world began approaching towards its current civilizations on ‘Sumerian’ wheels,

From rollers or logs, the first wheel-like devices to the evolution of solid wheels,

It sets its own path irrespective of impediments,

It finds its own journey, if, shown a target,

When attached with a vehicle, it covers a distance,

When walked across its diameter, you reach the same point,

It depicts the life cycle traversing in phases.

Life divulges within an endless series of time cycles,

Human life cycle which repeats itself over again and again,

It never ends its journey and discerns new evolutions and new visions.

The wheels of life are being illustrated as wheels within wheels.

The wheel is whirling and you can’t inhibit.

Unending Journey!

Who says the charm does not lie in India. India, Incredible India on the verge of flagging supremacy in the world. Long ruled, exploited, trodden and left in lurched position, India bounced and showed its commitments towards the world.
India mainly driven by Young India, where 25% of the population is below 25 is mapping its own border, not on LOC but a colorful map in almost all sectors of life. Indian turks are ruling the world. It is generally said and watched that the MNCs who feared crisis handed over the control to an Indian. And we handled it responsibly.
But are we really contributing to India? Ask an IT brat where he would like to head in next 5 years. Probably the answer would be any US states or European states. Though India is experiencing reverse brain-drain, but the impact is too less.
Ask a career oriented person, where would he like to see himself in near future? Definitely the answer would be the next few steps of killing corporate ladder. Hardly you would find a chap thinking other than this. But it comes to criticising goverment, either all would step aside or would curse the current set up.
Can I ask a question? Instead of raising fingers on others, could we finger towards ourselves? Mahatma Gandhi quoted, "We must be the change, we wish to see". Are we changing?
We have some obligations towards the society where the maximum change is required. Today in dwarfed world too, a lot has to be done yet.
I don't deny that people are not working. The committed people are coming out with different plans, thus, mushrooming the street with NGOs. Still the search is on.
Today the government talks about Financial Inclusion and infact a lot has been done and is on the progress. But it is still confined to cafe rooms, seminar rooms filled with white smokes.
I thought that I would shape the world but my vision was shattered by unending committments and other pressures. Though I have not relinquished, the search is on.
I want a helping hand, a hand which can shape the real India. Instead of moving towards the urban polulation, let us move to the rural world where we can find India and can question ourselves, "Have we improved?"
The journey is on...
---Jai Hind---

Love flatters!

Why do you love me?
Why do I love you?
Is it the lust or infatuation bringing us together?
Why do I always need to prove it?
Memories, they come and thrill the body,
Giving us a reason to react, a passion to live,
Sometimes stormed with a cataclysm in the life.
Why do we behave like a stranger?
Why can’t we give few moments to each other?
To get the second chance in life to live,
Can we take a vow to be deterrent?
Memories, they come because I love you.

Me, Myself

I have a dream;
a dream to run in parallel with my life,
surfeited with too many expectations, hopes, and desires.
Everything going in right direction,
And crowning me with the jewel of a perfect man.
Suddenly life becomes vulnerable,
Someone hitting hard, some hitting softly,
Some appears spontaneous, some appears preplanned;
And a strong animosity develops.
Life getting bewildered by unknown reasons.
The dream I lost
And the pleasure of fancied dreams vanishes into oblivion.
For the moment I find an outsider in my own world of dreams.
Let me take an oath,
An oath to confine my dreams within myself;
An oath to fulfill it at my risk.

Up A Blind Alley

Satisfaction! The buzzword everywhere
Whether it comes to our life, workplace,
Or
Even when we cry for physical satiation.
Have we achieved it?
Or, is there any amiss from our side?
Our desires rampantly see-saw our balance.
Do we need to be jejune or still fighting with fuddy-buddy?
A perfect time-a perfect start;
Develop yourself from the small acorn of passion…
into a great rooted tree.
A leader’s job is to look into the future,
Don’t be satisfied with the world God has created.
Create your own world…

The lost life!

Never say I miss you…
Never say I love you…
It all begins with an infatuation, a foolish passion;
with words sworn for each other.
But it passes off like a weekend break in our life
and the loving souls head for the next destination.
Is it a routine practice or a flash of lure?

Never say I miss you…
Never say I love you…
Suddenly our eyes abhor each other;
and the thread holding us get loosened,
and we encounter an end in our relations.

Never say I miss you…
Never say I love you…
People living an egoistic style,
Surfeited with too much commitments,
And we feel abacked by our decisions.
It may be our fault or yours.
But a commitment is needed,
A true commitment to live, love, hate, quarrel and miss.

Never say I miss you…
Never say I love you…

The Weeping World

Smile at your nadir!
Gone out from our vision.
A lost world, a sans smile population
Engaged in daily routines.
But men never cared for magic ‘Smile’.
The Smile, which can’t be begged, bought, borrowed or stolen…
The Smile, which costs nothing but creates much…
An animosity in the human world
Which seems perilous for the coming generation?
So what’s the difference
If our entire smiles are swept by our deeds or Tsunami?
Tsunami, the men who make it happen
Happening in a flash
And the memory of it will last forever….
If nature is to decide our smile
Nobody needs a smile so much as those who have none left to give.
As the action speaks louder than the words,
Let us not challenge the fiery nature….
Let us enjoy permanent bliss…
So Keep smiling…

The Man at last!

Suddenly the Richter scale vibrated,
And the buildings lost their foundations, roads divided in twos;
And a complete silence prevailed.
Nothing to loose, nothing to gain,
Yes, it was an Earthquake, a war by nature against man-kind;
In the moments the Earth swallowed the man-kind.
Should we blame the fiery nature or mankind?
Riots, a curse on our deeds;
A living example of human beings’ wrong deeds,
People contending on the issue of religions,
Thousands butchered, raped and disabled;
Should we blame the system or mankind?
Flood, yet an another devastation;
The whole area ducked creating another chaos.
The system fought, struggled against the nature and bounced back;
Should we blame the God or mankind?
Yes it is what we call Gujarat.
Gujarat-a place of all deeds,
A center of learning, a center of business.
Still being tested year after year.
Has it been a routine work or is there any full stop?
Or is there another cataclysm?
As the action speaks louder than the words
Let us not challenge the fiery nature…
We need to overhaul ourselves…

The Dwindling Journey

Coming along with the ombros and vanishing for the others
It shows the sacrifice, its greatness.
Penetrating the tiny holes of earth,
Helping the underground world,
It energizes the earth with its nourishment.
It results into a sea after losing its identity.
It shows the sign of unity,
It is small but reveals a true portrait of life.
Is it what rain drops are all about?
It does not matter, it follows its journey;
It follows its destination.
Oh! my restless rain drops,
We are convinced that you belong to us.
Let us forget this madness.
You are my life and its joy.
We need you always.