Presentation On:

1.CREDIT CARDS
2.PERSONAL LOAN
3.EDUCATION LOAN
arunachatterji@gmail.com
Presented By:
Isha Mahajan
Juhi Kapoor
Natasha Vashisht
Sakshi Verma
Open Account Credit
 An open a/c credit is a type of a/c where a credit
extension is given to the customer before any
kind of transaction takes place.
 Both retail outlets & banks issue an open a/c.
 Among the open a/cs the biggest are the bank
CREDIT CARDS (plastic cards) and the retail
charge cards.
 A credit card is a small plastic card issued to
users as a system of payment. It allows its
holder to buy goods and services based on the
holder's promise to pay for these goods and
services. The issuer of the card creates a
revolving account and grants a line of credit to
the consumer (or the user) from which the user
can borrow money for payment to a merchant
or as a cash advance to the user.
Parties involved in plastic
money transaction
1.Card Issuer
2.Card Holder (Customer)
3.Designated Merchant
Establishment (ME)
4.Credit Card Affiliates (eg. Master
& Visa card)
5.
Card Issuer
More & more banks are entering
into plastic money business,
because of the high returns
associated. Eg. Banks charge 2.5%
commission from merchants who
are selling goods/ services using
credit cards.
Banks offer a credit period of 30-45
days. After the completion of the
credit period, the customer has to
pay the outstanding amount.
Banks charge interest rate of 2.5%
Card Holder: It can include both
salaried individuals and business
organizations.
Merchant Establishment(ME): It
includes retail outlets,
departmental stores, hotels,
hospitals, travel agencies, petrol-
pumps etc. These lists are
maintained by the plastic money
issuer.
Merchants generally pay 2.5%
commission to banks except in
 Member Affiliates(MA): Certain
organizations enter into tie-ups with
the banks and therefore also issue
cards on behalf of the bank to the
customer eg. Taj Hotel is MA of Bank
Of India.
 International Agencies: Card Issuers
(banks) affiliate itself with Master card
and Visa card. This allows the card
holder of one affiliate to use his card
at ME of another affiliate.
 For eg a card holder of citibank can use
his card at a retail outlet affiliated with
Process of obtaining a Credit
Card
The Credit Application

The Credit Investigation

The credit Bureau

The Credit Decision

The Credit Application
 For obtaining a credit card, customer is
required to fill up a credit card
application.
 Application includes the basic
information about the customer such
as his/her full name, address, official
address, number of family members,
date of birth, occupation, e-mail
address, contact no. etc.
 The lender tries to determine whether
the applicant has the character and
capacity to handle the debt.
 Along with the application the person is
The Credit Investigation
 Once the credit application process is
complete then the application is sent
to the investigation department. This
department basically checks whether
the information provided by the
customer is true or not.
 If the income is higher and credit history
is good, there are greater chances of
the credit application getting
approved. Any false or misleading
information will lead to rejection of the
application.
 Executives visit both the office and the
The Credit Bureau
Consumer-reporting agencies
(CRA) or credit bureaus collect
and send the customer’s credit
report to the banks or other
financial institutions.
A consumer credit report includes
information such as residential
address, the current
employment, and the source for
the payment of bills of the
customer.
The Credit Decision
After the application has been
filled and sent for investigation
to the bureau, then the bank has
to decide whether to grant the
credit or not.
Credit scoring is used for this
decision.
For eg two persons with different
information have different credit
scores:
 Age (45 years):18  Age (25) : 5
pts pts
 Married : 9  Single : -2
pts pts
 Annual income:15  Annual income: 12
pts pts
 Length of  Length of employ:
employ:10 pts 4 pts
 own a house: 10  Rented house: 0
pts pts
 TOTAL 62  TOTAL 19
pts pts
How does a Credit Card
work?
 The credit card offered by the customer is swiped
through the CDC machine, which reads the data
on the magnetic stripe. This msg is sent via
telephone line to a computer maintained by the
merchant’s bank (acquirer).
 This information is further transferred to the
issuer bank. If the customer has enough credit
on his card, the issuer bank will send back a
message authorizing the transaction.
 Once the transaction has taken place, the
acquirer bank requests the transaction amount
from the issuer bank via Visa/Merchant bank.
 The issuer bank subtracts its interchange fee and
transfers the amount to the merchant bank.
 The merchant bank subtracts its discount fee and
  CREDIT INFORMATION BUREAU OF INDIA LTD.
(CIBIL)


 CIBIL was promoted by SBI, HDFC, Dun & Bradstreet

Information services (P) Ltd. to provide credit information
of clients to its members. Presently, its shareholding
pattern has been diversified to include number of banks
and finance companies.


 CIBIL collects commercial and consumer credit-data and

collates such data to create and distributes credit reports to
its members. CIBIL primarily gets information from its
members and at subsequent stage will supplement it with
public domain information in order to create a truly
comprehensive snapshot of an entity’s financial track
record.


 A Credit information reportis a factual

record of borrower’s credit payment history. Its
purpose is to help credit grantors make
informed lending decisions-quickly and
objectively. CIBIL caters to both consumer and
commercial sectors. Consumer Credit Bureau
covers credit availed by individuals while the
Commercial Credit Bureau covers credit
availed by non-individuals e.g. partnership
firms, proprietary concerns, Private and Public
Ltd. companies etc.

 FEATURES OF CREDIT
CARDS

LINE OF CREDIT-: Agreement beteween

bank and customer to maintain maximum
possible loan balance.

CASH ADVANCES-: Loans on which interest
begins to accrue immediately.They take place
at a commercial bank or financial institution.
 INTEREST CHARGES-:
Special low introductory rates or the teaser
rates for first 6 to 12 months.


Interest rate every month 2.95% and service

charges 2.5%.


Most cards have variable interest rates tied to

the index.The prime or the base rate.

Interest rates on credit cards are higher than
any other form of consumer credit.
OTHER FEES-:
Annual fees is charged by the banks for the
priviledge of being able to use the card.
Transaction fees is charged by many issuers for
each ( non ATM) cash advance
Late payment fees
Over the limit charges.
Foreign transaction fees
Balance transfer fees
SURAKSHA INSURANCE-: Additional
insurance facility provided to the customer.

Additional coverage amount of Rs. 25 lakhs on
air accident.

PHOTO CARD

MEDICAL EXPENSES

TRAVEL PRIVILEDGES


OTHER BENEFICIARY FEATURES
GOOD HEALTH POLICY

MEDICLAIM POLICY

ACCIDENT INSURANCE POLICY


TYPES OF CARDS

 CREDIT CARDS:
◦ Form of consumer loan with a revolving credit
account that has a credit line of a specific
amount.
◦
◦ Issued by both traditional and non-traditional
banks i.e. financial entities.
◦
◦ Categorized as general purpose or proprietary.
◦
◦ Offer other services like, ,cash advances.
,convenience checks, automatic travel insurance
etc.
  ATM CARDS
◦ Permits customers to access and transact
current and savings account 24 hrs a
day, every day of the year, through
automated teller machines
◦
◦ Offer services like ,dispensing cash,
handling deposits and withdrawals,
checking account balances, making loan
payments ,print transaction statements
etc.

 DEBIT CARDS
◦ Directly access the customer’s saving or current
account
◦ Instead of accessing a credit line, funds are deducted
from the cardholder’s deposit account.
◦ Categorized as on the line and off the line
 SMART CARDS
◦ Plastic card into which a tiny computer chip is
embedded
◦ Filled with a “Monetary Value”
◦ Also used to store data for informational purposes.
 CHECK GUARANTEE CARDS
◦ Attached to a line of credit associated with a personal checking
account.
◦ Has largely been replaced by ATM cards.


 PRIVATE LABEL CARDS
◦ Credit is extended by the bank which acts a contractual agreement
with the retailer
◦ Can be used only in stored designated by the name or label of the
retailer that appears on its face.
◦ Underlines a one to one relationship between the retailer and the
customer.
  AFFINITY GROUP CARDS
 Bank card designed for groups with some form of a
common interest or relationship. For eg:cards for
professionals ,alumni of a specific college etc.
 CO- BRANDED CREDIT CARDS
 Those bank cards that have tie up with a company of another
sector .Eg. Jet airways and concerned bank.


 RETAIL CHARGE CARDS

 Issued by department stores, oil companies, car rental agencies
etc.popular among the merchants and convenient during
shopping. More expensive than bank credit cards.

 30- DAY CHARGE CARD
 Allows customer to pay monthly bill in full amount
which is billed in 10 – 20 days after the billing date.


SILVER CARDS
 Internationally accepted cards offered to normal
profile sectors. Monthly income criteria Rs. 8000 or
above.
 Insurance coverage-Rs. 10,00,000
 Air travel benefits 3.5%discount on domestic travel
and 5% on international travel.
 Limit of Rs.25,000 or less annual charge may be free
of Rs. 750 per year.
 CORPORATE CREDIT CARDS
 Travel and entertainment cards. Such cards
require 30-40% of administrative expenses and
require a lot of manpower application goes into
it.
GOLD CARDS
 Offered to persons in high income category Limit on card
starts from 50,000-200000.
 Eligibility minimum balance of Rs. 1,00,000 in his/ her savings
account. Annual gross salary of Rs. 1,50,000 or more in income
tax statement.
 Internationally accepted cards . Insurance coverage of Rs.
20,00,000. Air travel discount domestic 3.5% and international
5%.

  PLATINUM CARDS
 High profile internationally accepted cards given usually to the
cream of the society.
 Credit limit up to Rs. 6,00,000 or more.
 Annual charges are Rs. 7500 and Insurance coverage
Rs.1,00,00,000.
 DINER’S CLUB INTERNATIONAL CARDS
 Internationally accepted charge card and has a preset limit.
 It is an unlimited card offered to only high income segment
 insurance coverage- Rs 30 lakhs
 Air travel discount 3.5% domestic travel and 7% international
travel
 Annual charges Rs. 1500 and for first year Rs. 1250.
 Gross salary requirement Rs. 1,56,000 or more.
 Does not offer logo of master or visa card.

BENEFITS OF BANK CREDIT CARDS
BENEFITS TO
CARDHOLDERS
No need of checks
No cash to carry
No difficulty in purchasing (mail order)
Wide acceptance
Credit readily available
Delayed payment
No risk
Recordkeeping
Most convenient method of shopping.
For emergency purposes.
Security


BENEFITS TO
MERCHANTS
Help in boosting and making impulse
sales
Easy to validate
 - call bank authorization centre
 - electronic authorization
No risk in extending credit

 DISADVANTAGES

Losing track of payment details and

deadlines in lure of acquiring many credit
accounts.

False sense of security among the
customers.

Difficulty in understanding the fine print
that gives information to various fees and
charges may not be obvious initially.
 Possibility of fraudulent usage of the cards
by others especially in the internet is
very high.

Falling behind with payments will result
in an interest charge on all future charges
regardless of whether the bill statement
is done or not within the specified
period.



 CARD CHARGES
INDIVIDU CARD JOINING ANNUAL INTEREST
AL BASE FEES FEES RATE
PLAYERS (IN Rs. Rs. %
CITIBANK MILLIONS
2.40 NIL 750 2.95
ICICI )2.40 100 750 3.00
STANDAR 1.70 100 700 2.95
D
SBI 1.60 250 500 2.50
CHARTER
HSBC 0.90 300 500 2.75
ED
HDFC 0.50 200 600 2.95
ABN- 0.40 300 700 2.50
AMRO
ANZ- 0.30 200 750 2.75
GRINDLA
YS
Educational loan
A loan offered to students which is used to pay
off education-related expenses, such as college
tuition, room and board at the university, or
textbooks.
Many of these loans are offered to students at
a lower interest rate. In general, students are
not required to pay back these loans until the
end of a grace period, which usually begins
after they have completed their education.
There are 2 banking and financial apex bodies,
the Reserve Bank of India (RBI) and Indian
Bankers Association (IBA)
Have helped the government in preparing the
plan and procedures for educational loan for
all types of courses in India and abroad.
Features of Educational
Loan
1.The scheme provides loan upto 7.5 lacs
for studies in India and upto Rs. 15 lacs
for studies in abroad.
2.
2. Repayment holiday/MoratoriumCourse

period =
1 year after the completion of course or 6

months after getting job, whichever is

earlier.


 The loan to be repaid in 5-7 years after

commencement of repayment period.
Features of Educational
Loan
 3. The repayment of educationl loan is
deductable under sec 80E of the Income
Tax Act.


 4. For loan upto 4 lakh no security or

margin is necessary.
 Rate of interest- Prime Lending Rate
 For loan above 4 lakh rate of interest -
PLR+1%
 Studies in India 5%
 Studies abroad 15%
Eligibility
1.Should be an Indian National.
2.Secured admission to professional/ technical
courses in India or Abroad through Entrance
Test/ Merit Based Selection process.


 Courses eligible for studies in India

 Graduation courses : BA, B.Com., B.Sc., etc.
 Post Graduation courses : Masters & Phd.
 Professional courses : Engineering, Medical,
Agriculture, Veterinary, Law, Dental,
Management, Computer etc.
 Computer certificate courses of reputed institutes
accredited to Dept. of Electronics or institutes
affiliated to university.
Expenses considered for
loan


 Fee payable to college/ school/ hostel.

 Examination/ Library/ Laboratory fee.
 Purchase of books/ equipments/ instruments/
uniforms.
 Caution deposit, Building fund/refundable
deposit supported by Institution bills/receipts,
subject to the condition that the amount does
not exceed 10% of the total tuition fees for
the entire course.
 Travel expenses/ passage money for studies
abroad.
 Purchase of computers - essential for
completion of the course.
Merits of educational loan
1.It provides loan holiday.
2.Flexible repayment scheme.
3.No collateral or guarantor is required.
4.Fast approval and turnaround time.
5.Covers tuition fees and insurance
premium.
6.Peace of mind- insurance benefits.
PERSONAL LOANS
Personal loans are the financial
assistance from financial
institutions for the immediate
personal needs.
Why do people need personal

loans
-Pecuniary aid for the renovation of

the house
-Buying a new laptop

-Vacation with family


Personal loans-loans without
any guarantee or security from
Rs. 0.50 lac to Rs.25 Lac. The
Loan is given on the basis of
Financials such as ITR, Salary
Slip or Form 16 or on the basis of
track record as running or
completed EMIs for loan as
home, personal or vehicle
Tips for choosing a
personal loan
 Check your credit report before applying
for loan
 Plan your budget and stick to it
 Borrow only the amount you need, do
not borrow in excess.
 Know your APR(Annual Percentage Rate)
i.e. How much the loan would cost in
interest per year
 Look for payment delivery charges as
some players charge you for early
payment.
 Be careful about the risks involved in
List of top personal loan
finance companies in India
 1. State Bank of India: SBI offers SBI Saral
personal loan customized in a manner that
helps an individual meet varied kinds of
personal expenses. The interest rates at which
these loans are offered are quite competitive
with no hidden costs or administrative charges,
no prepayment penalties. It also comes with
easy repayment term.
 2.AXIS Bank: Axis bank's personal loans are
meant for salaried persons, self employed
individuals and also professionals. The
processing of the loan is simple with easy
documentation and fast approval
 3. ICICI Bank: ICICI bank's personal loan comes
at attractive interest rates along with 12-60
months repayment choices. The processing is
4.UCO Bank: UCO cash is a personal loan
scheme that has been customized in a
manner which can take care of varied needs
like marriage, medical expenses, traveling,
and other personal obligations. One can
repay the loan in 48 EMIs.
5.Punjab National Bank: PNB personal
loans are meted out to permanent
defence personnel which comprise
officials of Military Station Headquarters,
BSF, CRPF, CISF,ITBP, permanent central /
state Govt employees, etc. the loans can
be repaid in 60 EMIs or in the residual
 6.HSBC: MyTerms Credit from HSBC bank
has four simple repayment options
along with competitive interest rates.
There are also special relationship
discounts on existing customers.
 7.IDBI: IDBI personal loan is offered
along with an insurance cover, helping
you in tough times. The insurance cover
is meant to take care of the EMI's.
 8.Standard Chartered Bank: Standard
Chartered personal loans come with no
securities, collaterals and guarantors.
Coupled with a special health insurance
 9.Andhra Bank: Any kind of personal
requirement, Andhra Bank personal
loans can meet all expenses.
10.HDFC: HDFC bank provides
personal loan which is hassle free
with no guarantor/security/ collateral
needed for approval. The interest
rates are low too.

 QUIZ TIME????????
1.What are the parties involved in
credit card transaction?
2.What are the basic four steps
involved in obtaining credit?
3.What are the interest charges
applicable on credit cards?
4.What is the difference between
debit
 and credit card?
1.
What is the limit to apply for a
loan without guarantee or
security?
What are payment delivery
charges?
What is the limit for Educational
loan in India and Abroad?
What is the interest rate
applicable on Educational loan
above 4 lacs?