ASSIGNMENT

OF

PERSONAL FINANCIAL PLANNING

SUBMITTED TO: -
SUBMITTED BY:-
Mr.Lovey Aggarwal Gyanendra Goshwami
Faculty of LIM Roll No. RT1901 A15
Regd.
No. 10904875
SOURCES OF CREDIT

In relation to business financing could be refer to the various means and ways in which one or
an enterprenuer could acquire money to start his business.

There are several means/places which one can get fund for financing his/her business or for
starting a new one. This depends on the personal financial strength, financier or finance
institutes.

These means / places are:

 Banks

 Personal Savings

 Finance Houses

 Government

 Friends

 Family Donation

 conversion of Share or bonds

What Are the Different Sources of Credit?

There are many different types of credit that are available for people who want to finance
purchases of all kinds. Here are some ways that you can borrow money, depending on your
needs and credit history.

CREDIT AND CHARGE CARDS

Although many people use the terms interchangeably, credit cards and charge cards are really
two different things. You can make purchases with both whenever you desire, and you need to be
approved for both. The difference lies in the way that payments are calculated.

Charge cards (American Express is one example) must be paid off each month. You can charge
whatever amount you want, but you do not have the option to only pay part of the bill; you must
pay the whole balance when the payment is due.

With credit cards (MasterCard and Visa, for example), you have the option of either paying them
off each month, paying only the minimum amount due, or paying an amount in between the
minimum amount due and the entire balance. You will be charged interest on the amount that
you don’t pay off each month.

Department store cards are similar to regular credit cards, in that you may choose to pay or not
pay the entire balance each month, but they tend to have higher interest rates. If you do not
qualify for a major credit card, you might have better luck applying for a department store credit
card. These cards can normally only be used at the store that they are issued from.

PERSONAL LOANS

Personal loans are loans given by a bank or financial institution in order to make a large
purchase or to consolidate other debt. Many people use personal loans to pay for cars. You get
the money as a lump sum, and you cannot borrow additional amounts on the same loan. Your
payment, including interest, is the same each month, and there is a set time that the loan will be
paid off. With most personal loans, you are able to pay more than your monthly payment in order
to pay the loan off more quickly.

MORTGAGES

A mortgage is usually a large amount of money loaned by a bank or mortgage company in order
to purchase a house or other property. Like a personal loan, the monthly payment includes
interest. Many mortgages also include homeowners’ insurance and taxes for the property that
you are buying. Fixed rate mortgages keep the same interest rate throughout the life of the loan
(usually 15, 20, or 30 years), while adjustable rate mortgages fluctuate. Some mortgages are
fixed for a certain amount of time and then change into an adjustable rate after that time period.

PAYDAY LOANS

Payday loans are available to most people, even those with bad credit. In this type of loan, the
amount borrowed is usually fairly small, and is only enough to get the borrower through until his
or her next payday, when they must pay the loan back. The interest rates are normally much
higher than other kinds of loans, and these should only be used in the case of an emergency, if at
all.

You should choose the type of loan or credit that you apply for carefully, taking in to
consideration what you are purchasing, how much expendable money you have each month, and
what interest rate is being offered to you. You can speak to a bank representative or credit
counselor to find the right type of credit for your needs.

LOAN AGAINST GOLD ORNAMENTS

ICICI Bank presents “Loan Against Gold Ornaments”, designed to provide liquidity against gold
ornaments without having to sell them.
This product is ideal to meet agriculture and allied agriculture requirements like cultivation,
dairy, poultry, fishery, etc. Gold ornaments lying idle can be put to productive use by availing
Loan Against Gold Ornaments.

LOANS AGAINST LIFE INSURANCE POLICIES

There are many banks providing home loans but loan will cover maximum 85% of your property
value. Your dream house cannot be 100% funded by a home loan as Banks are not allowed to do
so.
This is to serve two purposes. Firstly, 85% limit ensures that the person taking the loan has a
significant risk in the house. Secondly, in case of fall in property prices, lender (viz. bank) has
sufficient security against the loan. Although this will make it difficult for the borrowers with
insufficient savings to make down payments though they are earning decent salaries.
It is possible to take another loan to cover the complete funding but then it has to be borne in
mind payment of EMIs (Equal Monthly Installments) of both the loans. Study say that an
individual’s EMI should not exceed 50-65% of his gross income.
Another point to remember is that a personal loan affects home loan repayment capacity.
Mortgage lenders regard the loan eligibility based on the repayment capacity.
Income, age, qualifications, work experience, the number of dependents, job profile, spouse’s
income (if any), assets, liabilities (which include personal loans), continuity of occupation and
savings history are few elements considered while assessing the repayment capacity. So the
alternate could be to borrow against liquid asset like life insurance as they come at a cheaper cost
than personal loans and credit cards.
Infact this could prove to be the best option if the Insurance Company lends the amount. Then
you could benefit in two ways, firstly, the low interest rate and secondly, convenient repayment
schedule. But, one can borrow against an endowment policy only (not term policy or unit-linked
plan). LIC allows one to borrow 90% of the surrender value of the policy on which an interest of
9% is to be paid half yearly.
Alternatively one can choose to deduct the loan amount at the time of claim payments. Or, a loan
can be raised by pledging the insurance policy with a bank.
In both the cases, in the event of ones death, the benefits will repay the loan outstanding and any
surplus left-over is paid to the nominees.

WHAT IS A CREDIT CARD?

A credit card is a small plastic card with some numbers embossed on it and which helps to
purchase the things with no requirement of cash in pocket. It is 3-1/8 inches by 2-1/8 inches in
size and has identification information for example a signature or picture.

It permits the person named on it to charge purchases or services to his account charges for
which he will be billed periodically. This information is checked where we use it for example by
automated teller machines (ATMs), store readers, Internet computers and banks.

ADVANTAGES OF USING A CREDIT CARD

 Credit cards eliminate the need to carry large sums of cash

 If you are away from home without cash, you often can receive a cash advance or have
the option of buying traveler's checks with a credit card
 Places that are suspicious of personal checks often take credit cards.
 Credit cards act as a short-term loan if you find something that is a bargain and haven't
 the cash or balance in your checking account to pay for it.
 If you move to a new place, credit cards give you purchasing power until you establish
yourself as a good risk in a new community.
  If you charge an item or service that costs $50 or more in Colorado (or within 100 miles
of your home) and later discover it doesn't work or has other problems, you can withhold
payment from the credit card company if you have attempted to resolve the problem with
the merchant.
 You often get the best rates of exchange when traveling in foreign countries if you use
your credit card for purchases and your ATM card to get cash. Check with your card
issuers about surcharges before you leave on your trip. A two to three percent surcharge
may eliminate this advantage.
 Credit cards can help coordinate receipts for tax purposes.
 Bookkeeping is reduced to one monthly bill as opposed to checks.

DISADVANTAGES OF USING A CREDIT CARD

 Some people have been swindled by giving their credit card numbers to dishonest
salespeople over the phone.
 It becomes a loan when the credit becomes due and you do not pay for it.
 Adding monthly interest charges means you pay more for the goods and services.
 Consumers often have more than one credit card and each one has a credit limit. When
the credit limits for all cards are added up, the total can be in the thousands of dollars.
 Consumers can fall into the habit of using credit cards to extend their income.
 Credit cards are easier to use than applying for loans even when a loan from a credit
union, bank or other financial institution may provide the funds at a lower interest rate.

CREDIT CARDS OFFERED BY HDFC BANKS

1. GOLD CREDIT CARD

Features and benefits

 Attractive Reward Points

 Rewards points redemption
 Worldwide acceptance
 Revolving credit facility
 Free Add-on card
 Interest free credit facility
 Zero liability on lost card
Fees and charges

SCHEDULE OF CHARGES
Description of Charges Gold Card
Interest Free Period
Minimum Repayment Amount
Cash Advance Limit
Annual/ Renewal Fee
Spend condition for waiver of annual setup
charges
Charges On revolving Credit
Cash Advance Charges
Late Payment Charges
Charges on overlimit account
Payment return Charges
Cash processing fee
Balance Transfer / Balance Transfer on 2.0% of BT / BT on EMI amount or Rs.
EMI Processing Charges
Petrol Transaction Charge
Railway Ticket Purchase Fee
Reissue of Lost, Stolen or Damaged Card
Upto 50 days
5%, Minimum Rs 200
30% of credit limit for the 1st year & 40%
of the credit limit from 2nd year onwards
Rs. 199
1st year fee waiver condition:Rs. 5,000
retail spends in 1st 3 months from the card
date.
Renewal fee (2nd year onwards) waiver:
Rs.15,000 retail spends in 12 months form
card renewal date.
3.25% P.M., 39.0% Annually - from
Transaction date#
2.5% on amount withdrawn or Rs. 300/-,
whichever is higher
Nil for Credit card bills upto Rs.100, Rs.100
for credit card bills between Rs.100 and
Rs.500, Rs.350 for credit card bills between
Rs.501 and Rs.10000, Rs.500 for credit card
bills between Rs.10001 and Rs.20000 and
Rs.600 for credit card bills above Rs.20000.
2.5% of overlimit amount subject to a
minimum of Rs 500
2% of payment amount subject to
minimum of Rs. 300
With effect from 1 May 2007, cash
processing fee of Rs 50 per payment is
payable on cash deposits at HDFC Bank
branches/ATMs.
Card accounts levied with Late Payment
Charges in the latest generated statement
will be exempted from the cash processing
fee.
200,whichever is higher.( Max. Rs. 600/-)
2.5% (subject to a minimum of Rs. 10)
Rs. 30 + 2.5% of transaction amount
Rs. 100
Outstation Cheque Processing Charge Rs. 100
Retrieval Fees ( Chargeslip) Rs. 125 per Chargeslip
Bank Charges Cross currency mark-up of
Foreign Currency Transactions
3.5%

2. PURCHASE CARDS

The HDFC Bank Purchase Card is a credit card solution given to corporates by
HDFC Bank to facilitate quick payments for business expenses for corporates and
their employees. It helps the corporate manage business expenses and makes purchase
transactions smoother by eliminating the hassles of cash and cheque payments. It can
be used only for official business expense purposes and records all purchase
transactions made by employees.

Benefits

 Reduces transaction processing time, cost of high volume and low value
transactions for the Corporate.
 Streamlines the payment process and enables account management control.
 Reduces the cost of goods by consolidating the supplier base and negotiating
more favorable pricing from preferred suppliers.
 Minimizes risks associated with fraud, forgery and theft through a secure,
totally mechanized card programme.
 Provides online expense management solutions - minimizing paperwork and
simplifying reconciliation.

Fees and charges

The schedule of charges for HDFC Bank Purchase Card is as follows:

SCHEDULE OF CHARGES
Description of Charges Applicable charges
Interest free credit period Up to 45 Days
Minimum repayment amount 100% of the Previous Statement Balance
Joining fee NIL
Annual fee NIL
3.25% p.m. from the transaction date*
Penal charges on non payment
(*subject to change)
Late Payment Charges Nil for Credit card bills up to Rs.100,
 Rs.100 for credit card bills between Rs.100
and Rs.500,
Rs.350 for credit card bills between Rs.501
and Rs.10000,
Rs.500 for credit card bills between Rs.10001
and Rs.20000 and Rs.600 for credit card bills
above Rs.20001.
Outstation cheque processing charges Rs.100/-
2.5% of the over-limit amount subject to a
Charges on over-limit amount
minimum of Rs 500/-
Rs.50 (For all card payments made by
Cash Processing Fee depositing cash in HDFC Bank Branches or
ATMs)
2% of payment amount subject to a minimum
Payment Return Fee
of Rs.300/-
Reissue of Lost, Stolen or Damaged Card Rs. 100
Retrieval Fees (Charge slip) Rs. 125 per Charge slip
Bank Charges Cross currency mark-up of
Foreign Currency Transactions
3.5%
Applicable on all fees, interest and other
Service Tax
charges.

Credit cards offered by state bank of india

1. SBI PLATINUM CARD

Benefits

 Cash Access Across the World

 Convenience @ the Speed of Technology
 E-statements
 SMS Alerts
 SBI Card Online
 Fuel Freedom
 Easy Bill Pay Facility at Zero Charge
 Balance Transfer at Low Interest Rates
 Easy Money Facility
 Online Railway Tickets Booking
 Global Card
  Add On Card
Fees and charges
Fees
Joining Fee (One time)
Annual Fee (p.a.) +
Add-on Fee (p.a.)
Extended Credit
Interest Free Credit Period
Finance charges
Minimum Amount Due
Cash Advance fee
SBI ATMs/Other Domestic ATMs
International ATMs
Other Charges & Fees
Protection Plus Insurance Scheme*
Cheque Pickup
Cheque Bounce/ Invalid Cheque
Statement Retrieval
Chargeslip Retrieval
Late Payment
Rs. 1,500
Rs. 1,500
Nil
20-50 days (applicable only on retail
purchases and if previous months
outstanding balance is paid in full)
Upto 3.10% p.m. (37.2% p.a.) from the
transaction date
5% of Total Outstanding (Min Rs. 200) +
Govt. Service Tax
2.5% of withdrawal amount or 300/- (WIH)
per transaction
3% of withdrawal amount or 300/- (WIH) per
transaction
Personal Accident (Insurer RSA) - Rs. 24
p.m.
Suraksha Plus (Insurer SBI Life) - 0.1% of
Total Outstanding
Admin Fee - Rs. 20 p.m.
Rs 90/-
2% of Cheque dishonor amount (Min Rs.
350, Max Rs. 500).
Rs. 100 per Statement (> 3 months old)
Rs. 225 per Chargeslip
NIL for Total Amount Due uptoRs. 500; Rs.
100 for Total Amount Due from Rs. 501 - Rs.
1,000; Rs. 350 for Total Amount Due from
Rs. 1,001 - Rs. 5,000; Rs 500 for Total
Amount Due from Rs 5,001 - Rs10,000;Rs.
600 for Total Amount Due from Rs. 10,001 -
Rs. 25,000; Rs. 700 for Total Amount Due
 above Rs. 25,000 ;
Overlimit 2.5% of Overlimit Amount (Min. Rs. 500)
Card Replacement Rs. 100
Emergency Card Replacement (When Actual Cost (Min. $175)
Abroad)
Foreign Currency Transaction Conversion mark up: 3.5%
Card Upgrade Fee UptoRs. 500
Rewards Redemption Fee Rs 99/- Plus GST.
Surcharge
Railway Tickets - Railway Counters Rs. 30 + 2.5% of transaction amount
1.8% of transaction amount + service charge,
Railway Tickets - www.irctc.co.in
as applicable
0% surcharge for single transaction spend
between Rs. 500 &Rs. 3,000 ;For SBI
Platinum Cardholders: 0% surcharge for
single transaction spend between Rs. 500
&Rs. 4,000
Petrol & all products/services sold at petrol
Maximum surcharge waiver of Rs. 100 p.m.
pumps
per credit card account
2.5% of transaction amount (Min. Rs. 10) for
transaction amounts <Rs. 500 &>Rs. 3,000
(SBI Platinum Cardholder for transaction
amounts <Rs 500 &>Rs 4000)

2. SBI SILVER AND MORE CARD

Benefits

 Worldwide Acceptance
 Credit Facility
 Add-on cards - Enhanced Power to your family
 0% Fuel Surcharge
 Cash on the go
 Book your railway tickets online
 Utility Bill Payment Facility
 Guaranteed peace of mind
 Balance Transfer on low interest rates
 Flexipay
 Easy Money Facility
 Convenience of Technology
 E-statement
 SBI Card Alerts
 SBI Card Online
Fees
Joining Fee (one time) Rs. 250
Annual Fee(p.a.)+ Rs. 250
Addon Fee(p.a.) NIL

Extended Credit
Interest Free Credit Period/Grace period 20-50 days (applicable only on retail
purchases and if previous months
outstanding balance is paid in full)
Finance Charges Upto 3.35% p.m. (40.2% p.a.) from the
transaction date
Minimum Amount Due 5% of Total Outstanding (Min Rs. 200) +
Govt. Service Tax
Cash Advance
Cash Advance Limit Upto 80% of Credit Limit
Free Credit Period NIL
Finance Charges Upto 3.35% p.m.(40.2% p.a.) from the
transaction date
Cash Advance Fees
SBI ATMs /Other Domestic ATMs 2.5% of withdrawal amount or 300/-
(WIH) per transaction
International ATMs 3% of withdrawal amount or 300/- (WIH)
per transaction
Other Charges & Fees
Protection Plus Insurance Scheme* Personal Accident (Insurer RSA) - Rs. 24
p.m.
Suraksha Plus (Insurer SBI Life) - 0.1% of
Total Outstanding
Admin Fee - Rs. 20 p.m.
Cheque Pickup Rs 90/-
Cheque Bounce/Invalid Cheque 2% of Cheque dishonor amount (Min Rs.
350, Max Rs. 500).
Statement Retrieval Rs. 100 per Statement (> 3 months old)
Chargeslip Retrieval Rs. 225 per Chargeslip
Late Payment NIL for Total Amount Due uptoRs. 500;
Rs. 100 for Total Amount Due from Rs.
501 - Rs. 1,000; Rs. 350 for Total Amount
Due from Rs. 1,001 - Rs. 5,000; Rs 500 for
Total Amount Due from Rs 5,001 - Rs
10,000;Rs. 600 for Total Amount Due from
Rs. 10,001 - Rs. 25,000; Rs. 700 for Total
Amount Due above Rs. 25,000 ;
Overlimit 2.5% of Overlimit Amount (Min. Rs. 500)
Card Replacement Rs. 100
Emergency Card Replacement (WhenActual Cost (Min. $175)
Abroad)
Foreign Currency Transaction
Conversion mark up: 3.5%
Card Upgrade Fee UptoRs. 500
Rewards Redemption Fee Rs 99/- Plus GST
Surcharge
Railway Tickets - Railway Counters Rs. 30 + 2.5% of transaction amount
Railway Tickets - http://www.irctc.co.in/ 1.8% of transaction amount + service
charge, as applicable
Petrol & all products/services sold at petrol0% surcharge for single transaction spend
pumps between Rs. 500 &Rs. 3,000 ;For SBI
Platinum Cardholders: 0% surcharge for
single transaction spend between Rs. 500
&Rs. 4,000
Maximum surcharge waiver of Rs. 100
p.m. per credit card account
2.5% of transaction amount (Min. Rs. 10)
for transaction amounts <Rs. 500 &>Rs.
3,000 (SBI Platinum Cardholder for
transaction amounts <Rs 500 &>Rs 4000).
Customs duty 2.25% of transaction amount (Min. Rs. 75)

Credit Card offered by Axis Bank:

1. Axis Bank Gold Plus Credit Card:

• Balance Transfer : Available

• Eligibility: Rs. 1, 80,000 p.a.

• Grace Period : 50 days

• Min.Monthly Payment : 100 or 5%

• Reward Program : Complimentary return flight voucher | 50% discount

on hotels | Earn 1 reward point for Rs. 100 spent | 0% fuel surcharge

• Annual Fee :Rs. 500

 • Other Fee Notes : Joining Fee: Rs. 1000

2. Axis Bank Silver Plus Credit Card:

• Balance Transfer : Available

• Eligibility:Rs. 1, 20,000 p.a.

• Grace Period : 50 days

• Min.Monthly Payment : 100

• Reward Program : Free return ticket on joining | Up to 50% discounts at

hotels | 1 Plus Point for every Rs. 100 spent on domestic transactions | 2 Plus
Points for every Rs. 100 spent on international transactions

• Annual Fee : Rs.300

• Other Fee Notes : Joining Fee: Rs. 500

Comparison between cards offered by these banks

So after comparing all these credit cards on the basis of:-

1. Grace period- grace period offered by all the 3 banks is almost the same i.e 50 days. So
on the basis of this all the cards are the same. But purchase cards offered by HDFC bank
has a grace period of 45 days so it can be said that other cards are better than this card on
the basis of grace period.

2. Annual fees and joining fees- the annual fees and joining fees of axis bank is higher
than that of SBI and HDFC. And HDFC bank has the lowest annual and joining fees so it
can be said that cards offered by HDFC bank are better than that of the other 2 banks.

3. Other fees- so after comparing these 3 banks on the basis of other fees also it can be said
that the other fees charged by SBI is the lowest amongst all the 3 banks. So it can be said
that SBI is charging lowest fees on its credit cards.