Monday, 9 January 2017

Lower Interest Rates: A Reason to Look Forward To 2017

The most eventful year in recent years has finally come to an end. And if you think that Donald Trump as the US President, Baahubali: The Conclusion, Deepika Padukone's XXX: Return of the Xanger Cage and even Priyanka Chopra's Baywatch aren't enough reasons for you to look forward to 2017, there is exciting news for those who are still to buy their own home in India.
Despite demonetisation, weird weather conditions and growing hostilities between India and Pakistan, 2016 laid the foundation of some much needed reforms for a brighter future for the country, in which curbing black money and a push towards a cashless economy top the list.

What's New in the Housing Sector?

The Modi government is mulling a new scheme to boost the housing sector which will be announced in the 2017 budget. This scheme may use the money from the demonetization drive. A news article published in The Financial Express on November 29, 2016 says that the new housing scheme will have just 6-7 % home loan interest rate. There are prominent chances that banks and home finance companies will find room to lower loan rates as well, in order to encourage people to buy homes.

Need for Lower Interest Rates

Interest rate is the cost of borrowing money or simply compensation for the risk of lending money. Lower interest rates make it cheaper for the customer to borrow, encouraging spending and investment.

In theory, here is what lower interest rates can do:

  • Lower Interest Payments: Decline in the interest rates means lower housing loan EMI, which in turn means that the borrower's monthly cost of mortgage repayments decline, leaving the householders with more disposable income. This should cause a serious rise in consumer spending.

  • Stimulates Economy in Recession: It is known that during a recession, the RBI lowers the interest rates to entice customers to purchase more credit products and loans. This activity helps to boost and stimulate the economy. It is an economic mindset that people buy homes and automobiles when rates are low.

  • Increased Demand for Products and Rising Employment: As economic activity picks up, demand for products increases. And in order to meet the demand, companies hire more workers. This activity can create more jobs and put a full stop to the surging unemployment rate.

  • Boost in the Price of Shares: In the lower interest rates period, assets like shares, bonds and assets become relatively more attractive, and people tend to buy shares that offer a better rate of return than saving their hard earned money in a bank.

Banks, home finance companies and people are eagerly waiting for what the 2017 budget holds in store for them.

Friday, 6 January 2017

Are We Heading into a Year of Digital Economy?

In last few years, India has seen a tsunami in terms of payment services, led by eCommerce websites, wallet services, digital payments and FinTech start-ups. According to a report by The Economic Times, India accounted for 14% of the total online transactions in FY2015. The major reason for this spike was the growth of e-commerce websites in the country, with retail electronic clearing accounting for 71% of the overall cashless transactions.

The already rising sector witnessed a major boost in the form of demonetisation. As the government withdrew the Rs. 500 and Rs. 1000 notes as legal tender, which had accounted for 86.7% of the currency in circulation, people had no other option but to turn to digital banking and mobile wallets. 

There are many factors that indicate that 2017 might be the year when India finally becomes ready to adopt technology completely.

Better Adaptation after Demonetisation

It won’t be wrong to say that 2015 was the year of awareness for digital banking in India, 2016 witnessed better use of technology and application of innovative methods, and in 2017, since people have seen it all, they might be ready to use these services for extra convenience.

According to the data released by the Reserve Bank of India, mobile banking transactions jumped to Rs. 49,029 crores in December 2016, as compared to the previous month. An improvement of 82% was seen from the September to December period. This should clear any doubts regarding the adaptability of the Indian public to technology.

Higher Penetration of Smartphones

Smartphones are a very important tool in making mobile banking popular. The number of smartphone users is expected to reach 340.2 million by 2017 and India is expected to leave the United States behind in this regard. Better penetration means more people will have access to technology and knowledge. This will eventually increase cashless activities in the country.

Full Government Support

The dream of a cashless economy cannot be achieved without full government support and Prime Minister Narendra Modi has already made his intentions clear by urging people to use the digital mode of payment.

According to the National Federation of Urban Cooperative Banks and Credit Societies, about 2,13,000 farmers had activated mobile banking accounts by the last week of 2016 and about 81,000 farmers had started using e-wallets. This is a major milestone towards achieving the goal of cashless economy. As the word spreads, more of the rural population will begin to move to digital banking and 2017 looks like the year in which the digital platform will really take off. 

A virtual wallet that does everything for you!

The world has become much smaller due to the presence of the Internet in our lives. The digital medium has brought spontaneity, ease of operations and reduction in time and effort in our lives. What would take days or hours previously – paying bills, communicating with far-flung corners of the world and even banking – is now reduced to a matter of minutes. You just need to log on to the Internet on your laptop or pick up your smartphone. Whatever task you need to complete, you can do it in minutes without even shifting in your seat.

It is this ease of operations that has made us all highly demanding customers. We want instant feedback, instant redressal to our problems and immediate solutions. If businesses tell us to wait or keep redirecting our calls all over their customer care centre, they lose us as customers. Rapid turnaround time and cutting edge products and services decide the fate of businesses today.

The same applies to banking. It is not enough for banks to have an Internet presence; they must present customers with innovative solutions and complete security. Their banking solutions must be customised to suit the mobile UI. Of all the banks in India, DBS Bank scores on these points much more than the rest.

Not only is DBS’s Digibank mobile banking app easy and seamlessly integrated with the bank’s various products and functionalities, it offers a slew of exciting features for daily banking needs. For starters, it is the only app to offer 7% interest rates on savings deposits, applicable from the first Rupee of deposit. Next, it offers 24/7 AI-powered virtual assistance at the press of a button. Third, it is a new age mobile wallet that can be opened in just 90 seconds – once operational, you can use it to shop online, book travel and movie tickets, and get a host of cashback and discount offers all month.

All you need to do to enjoy the Digibank advantage is to convert your account to a digiSavings one. You start receiving 7% interest rate on your savings, and there is no minimum account balance stipulation. Plus, there are no maintenance fees charged on the account and you can withdraw money from any ATM in the country any number of times, for free!

Also, your Digibank mobile wallet helps you shop at over 1,00,000 online merchants and win attractive discounts and cashback in return. So you can buy movie tickets, book travel, shop and enjoy a host of experiences while also being rewarded for doing so.

Thursday, 5 January 2017

5 Questions You Should Ask Yourself When Expanding Your Business to a Second Location

For any business venture, expansion through a new location is an accomplishment, and with easy term loans available, doing so is not just a dream anymore. However, before you expand your business, you need to put some serious thought into it. Here are some of the issues that you should look at before looking for loans to purchase commercial property.

  1. Can Your Business Run Without You?
When you are looking to expand your current business by opening a second location, the first thing that should pop into your mind should be whether this new location will function without your physical presence at all times. A second location calls for added responsibilities, since you can’t possibly be at both locations at the same time. Make sure the employees are well trained and everything works systematically, irrespective of your presence at any particular time.

  1. What is the Strength of Your Existing Business?
When your current location is generating enough profit for you, thinking of a new location doesn't appear to be a tedious task, given that you might have the required finances. However, if you are thinking of taking a term loan for expansion, first identify your current strengths and work on replicating them at the new place to ensure its success. After all, you do need to repay the loan.

  1. Have you Conducted Proper Market Research on the New Location?
When shopping for new business premises, you need to have a clear picture of what you wish to achieve at this new location. Conducting market research on various locations, understanding what each place has to offer and having a clear strategy of making the new premises work for you are essential before narrowing down your choices.

  1. Will You be Able to Manage the Budget?
Opt for term loans that come with a variety of advantages. It is the best option for financing large investments, including the opening of a second location. This type of funding can be repaid through regular payments over a given period of time, which could be anywhere between one and ten years, and even more in certain cases.

The key to growing a business is expanding to new territory, whether it is in terms of your offerings or your location. So, never give up on the idea of expansion but definitely have an actionable plan in place before doing so. And don’t let concerns regarding the investment slow you down.

Wednesday, 4 January 2017

5 reasons to buy a term plan today

In times of financial uncertainty, it is often the steps we take today that can have an impact on the future. Too often we fail to correctly estimate how much money will be needed for future financial goals. Inflation and rising expenses eat into our monthly income steadily.

At the same time, we often fail to factor in one grim fact – we are able to support our families only as long as we are present with them. If we are not, our loved ones may face severe financial difficulties. The best way to remedy this situation is by buying a term insurance plan.

Consider the following reasons to buy a term plan:

  1. It is affordable. Term insurance policies are among the most affordable insurance products in India today. This is because the premium payable is quite low. Hence, it is an ideal insurance product for those who do not wish to invest in expensive life insurance policies, but who would like to have sufficient life coverage for their loved ones’ future.

  2. High sum assured. Though the premium on the term plan is quite low, the corresponding sum assured is not. In fact, term plans have some of the highest sum assured amounts across life insurance products in India. This large sum of money can be useful to your loved ones in your absence – many of their personal milestones can be achieved using this money.

  3. Flexibility. Reputed insurance companies in India are offering flexibility in term plans. Apart from simple pure life insurance policies, they are offering different pay-out options and the chance to change the plan matrices if necessary. This was not possible earlier, when only simple term insurance was offered with a lump sum payout.

  4. Low possibility of claim rejection. As per a new mandate from the IRDA (Insurance Regulatory Development Authority), insurance providers cannot penalise the policy holder on grounds of non-disclosure of facts two years after the policy becomes active. However, you must take care to furnish all the correct and latest information about yourself at the time of taking the term plan. This mandate means that future claims made on your policy will likely not be rejected, if your information is correct.

  5. Best way to pay for the future. You may have created savings and made investments for the future. However, in times of high living costs and mounting expenses, these may not last for more than a few months. Realistically, it may not be possible for you to create a savings or investment fund to the tune of crores of Rupees. However, your term plan money can be upwards of Rs 1 crore. Hence, term insurance will hold your family in better stead.

Tuesday, 3 January 2017

Follow These Steps to Start Your Own Enterprise

“Entrepreneurship is living a few years of your life like most people won’t so that you can spend the rest of your life like most people can’t.”

Being an entrepreneur might not be a walk in the park but it can be one of the most fulfilling experiences. If you have been toying with the idea of setting up your own venture, and you have zeroed in on the product/service you wish to offer, the only thing that could hold you back is the capital required to get going.

Unfortunately, the need for consistent cash flow will never go away. There are times when liquidity isn’t a problem but if you are thinking of growing your business, either by adding to your offerings or expanding to a new region, once again, the need for investment will arise. This is where an SME loan can help you. Here’s a look at some of the other things an entrepreneur should keep in mind.

5 Steps to Fulfilling Your Dreams

1.      Create a Business Plan: The idea here is to put down the core concept of your business. This means that you should be able to specify your offerings, your plan of action over the next couple of years, where and how revenue will be generation and what your marketing strategy will be.

2.      Fix the Budget: It is recommended to keep the initial costs as low as possible. However, if you do find yourself low on capital, check out the options for business loans in India. Set up the business with the aim of at least breaking even in the first year of operations.

3.      Proper Paperwork: A business in India needs to be registered with the appropriate regulatory body. So, decide on the business structure and ensure that all your paperwork is in order and compliant with the laws.

4.      Don’t Overspend: Whatever the business entity is, keep its funds separate you’re your personal accounts to avoid confusion. Set up an account for your business and transact only through that for all business needs.

5.      Register Your Online Presence: Being online is key to the success of any business in this tech savvy world. So, apart from setting up a website, also make sure you establish a presence on the popular social platform to gain visibility.

And if you find yourself running low on cash, either for your daily operations or for a specific business need, check out SME loans. These are specifically designed to meet the needs of small and medium sized businesses.

Wednesday, 30 November 2016

Is India Ready For Another Gujarat 2001?

On November 13, 2016, while most Indians were busy exchanging their old notes at the banks, in another part of the world, New Zealand was rocked by an earthquake of magnitude of about 7.5 on Richter scale. About 232 aftershocks of the event were recorded in the country by GeoNet, leaving thousands of people stranded near the epicenter.

It brought back haunting memories of what happened in Gujarat back in 2001 and once again raised the question: Are we ready for such disasters?

What Happened in Gujarat?

While the whole nation prepared to celebrate its 52nd Republic Day, Gujarat was shaken awake to one of the worst disasters in the history of India. On the morning of January 26, 2001, an earthquake of magnitude of around 7.9 hit this western state at 8:46 am.

It was a result of the Indian plate pushing towards the Eurasian plate in the North. Although the quake lasted for only two minutes, it claimed over 18,000 lives and 167,000 people were left injured.

The Destruction Caused

  • Out of the 25 districts of the state, 21 were completely destroyed.
  • Kutch was the most affected area and reported around 17,000 deaths.
  • 7,065 children and 9,110 women were reported dead.
  • Around 348 orphans and 826 widows were registered. While some were protected with life or term insurance, many were left financially crippled.
  • The collective economic loss was around Rs. 99 billion.
  • Out of those who were injured, a vast majority was left handicapped.
  • Around 8,000 villages were affected and more than 3,000 health facilities were destroyed.
  • Over 12 million houses were damaged, leaving thousands of people homeless.

The Response

It took years for Gujarat to recover from the disaster. The Gujarat Model of Development was formed to help the health, educational and industrial sectors reach new heights. About 300 international and 150 local NGOs were involved in providing assistance. Financially too, millions of dollars were used to make things normal again. Immediate relief of Rs. 500 crores was announced by the NCCF.

What transpired in New Zealand has once again underlined the importance of better future planning. Today, Gujarat stands strong but policies like term insurance and life insurance are the need of the hour to protect the financial future of your family.

To get these services is easier than it was ever before. Many banks these days also provide instant loans that can be used in times of crisis as well.