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One of the types of banking services which favours the retail or individual customers are personal banking. These customers are usually people who tend to open savings or current accounts for their needs and put a majority of their savings into the bank. It refers to a division of banking which does not lend to corporations, intermediaries, and institutions.

Banks offer such savings and current accounts, deposits like fixed deposits and recurring deposits, debit as well as ATM cards, loans, insurance and other investment products.

Loans form an extremely important part of the bank portfolio. They help consumers upgrade their lifestyle and fulfil their fund requirements.

The different types of loans given under personal banking services are – 

  1. Home loan:

#1 Home loan:

They are offered to fund the purchase of a house. It could be for new construction, resale flat, house with a plot, plot purchase, etc. They are secured loans where the value of the loan depends on the purchase price of the house.

#2 Car loan:

Four-wheeler loans are of different kinds. There is one for a new car, used or second-hand car, or the ones extended against its security. Depending on the bank, you can avail any of these auto loans.

#3 Two-wheeler loan:

They are like four-wheeler loans. The funds get used to purchase either a new or a second-hand two-wheeler. Some banks extend super bike loans to purchase state of art motorcycles.

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#4 Gold loan:

It is a kind of secured personal banking where the security is physical gold. The gold must be left with the lender till the time it gets repaid. The funds from a gold loan can be used for any purpose except for illegal or criminal activities. Banks provide different modes of repayment depending on the borrower’s repayment history.

#5 Personal loan:

They are an unsecured and unconditional loan. The bank extends these to credit worthy customers for whatever use they require funds. They could be medical emergencies, travel expenses, wedding expenses, home renovation, retiring high cost debt, etc.

#6 EMI consumer loan:

You could use such a credit for purchasing consumer durables like refrigerator, TV, Air conditioner, etc on instalment basis. Banks tie up with electronic showrooms to offer these loans to their buyers.

#7 Education loan:

This loan funds the education cost of the borrower or a dependent of the borrower. This loan is directly repaid to the university and is given subject to confirmed admission into the educational institution. It also provides the benefit of moratorium period before which repayment does not begin.

#8 Rural loan:

These loans are given to farmers and other people living in rural areas.

#9 Loan against securities: 

These loans are given out against securities like shares, mutual fund units, etc. However, the loan to value is quite low, around 50 per cent. So, it gives the bank enough margin if the value of the securities falls.

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ArjitChalmela

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