Thursday, November 16, 2017

What is the interest rate for a loan on a fixed deposit?

It varies from one bank to another bank
Normally, they charge one or two percent more than the interest payable for the deposit.
However, neither the bank employees nor the customers pay attention to the following aspect:
Let us imagine this situation:
You have one deposit for rupees 10.00 lakhs at rate of interest 10% p.a. deposited for a period of two years
You avail a loan for rupees five lakhs and the rate of interest to be will be 12% p.a.
Suddenly you are willing to close the deposit before maturity after completion of six months from the date of opening the deposit and the interest payable for this is 8 percent p.a.
The deposit along with interest at the rate of 8 percent for the period of six months is paid to the depositor after adjusting the loan amount
How much interest rate is applicable for the loan?
Normally the interest rate should be 10 percent - two percent more than the rate of interest paid to the deposit
The bank charges interest at the rate of 12 percent as originally recorded and they are not reverting to the new interest rate structure at 10 percent
It may not be on account of their ignorance or negligence
This point has to be noted by the readers for their future guidance

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