How Has Digital Banking Brought Changes In India?

Banking plays a fundamental part in financial activity today, and digital banking in India is highly advanced. Finding its roots, the word bank developed from the Italian word ‘Banca’ which means ‘bench’. The traders in the early middle ages would sit on benches where they would keep their coins for lending, exchanging, and trading. Chanakya, in his Arthashastra of the second or third century CE, mentions to dominant money lenders who lent money and kept deposits.

But currently, the new era is into internet banking. What is it? Digital banking, also known as online banking, provides its services online, and customers can access banking transactions, submit requests, and manage other banking activities online, it is called digital banking.

Indian banks were very hesitant to implement the changes brought about by technological advancement. Several factors brought about modernisation and digitisation in the banking industry in India. Putting in place standard cheque encoders was the first step towards digital transformation in banking.

Digital banking services allow funds to get transferred using different online modes such as RTGS, NEFT, and IMPS. Recent years have seen an increase in mobile banking services and other innovative services online.

Benefits of digital banking
Availability:
The customer can access his/her bank records anytime he/she wants, and several banking services are available to him/her 24/7. Transferring money is easier, faster, and secure.

No time constraint:
Several services require waiting for long periods. Banks have fixed times at their branches for different services. Even simply encashing a cheque takes time. But with digital banking, it is instant, with zero-time constraints.

Online bill payments
It is a feature that saves customers a lot of time and money. Customers no longer require carrying cash and wait in long queues to pay their utility bills or other bills.

The benefits of digital banking highlight its importance by themselves. However, the socio-economic conditions that surface add to the importance of digital banking in India. With the increase in crime rates and corruption, digital banking is a secure way to manage financial transactions.
Nowadays, even digital banking apps have changed the way banking is done in India. Almost every bank provides the same.

Advantages Of Priority Banking

Have you ever considered applying with your bank for preferred banking? Many banks give their customers something called "Priority Banking Solutions" which qualifies for the eligibility criteria.
Banks handle premium banking consumers in a specific manner, and they handle their priorities. Let us talk about it in detail, and if it makes sense for you as a customer to apply for priority customer banking.

You need to understand if the banks have a model of priority banking at all. If you want to put it positively, then it is a way to keep a different list of High Net-worth Individuals, concentrate more on them and serve them better, as one customer who's qualified for private banking would give the bank 100 times more business/profit than a regular one. A chosen banking customer would have to meet a few eligibility requirements, which gets linked to the bank balance.

Similarly, other banks also maintain criteria for high balance in the bank savings account. It means the bank can get plenty of cash for their business and can handle these customers well.

Facilities provided to Private Banking Customer
A customer of private banking enjoys few benefits over regular customers and gets more functionality. Some of these are:

• Separate queue at the bank
• No Net Banking charges on NEFT and RTGS transactions
• Free cheque book payable at any branch of the bank throughout the country, so you do not have to ask for demand drafts
• Charges waiver for cancellation of DD, Cheque Return, Duplicate Statement Fees, Demand Draft Charges, Locker Charges discount
• Cheque pick-up facility
• If you are transacting at other bank ATMs in India, no fees on balance inquiries and cash withdrawals

Most people have basic banking needs. Since the advent of Internet banking and mobile banking, your dependence on cheque books, Demand Drafts, and any physical visits to banks has decreased.
For most people, banking is a small part of their financial life, and they only get most of the facilities and what they need from their basic banking account. For them, applying for priority banking does not make sense.

Most investors, however, are actively interested in banking for personal purposes or their professional needs. For many of them, a few features that come with Privilege Banking may mean something very significant. If you are one of them, see how much of it you can need and then take a call.

Types Of Personal Loan Interest Rates

Every bank has a different method of functioning. There are different types of offers and benefits that they offer. They want to keep their customers happy. Hence, they choose to provide user-friendly services.

Interest rate is the rate at which interest is applicable on any amount borrowed from a bank or Non-Banking Financial Company (NBFC). Personal loan interest rates are the critical factors that determine the selection of a loan application. Thus, always compare interest rates from multiple lenders before settling on a loan offer.

There are two types of Interest rates applicable on a personal loan, these are:

• Fixed-Rate of Interest
• Floating Rate of Interest

1. a) Fixed interest rate: In this case, the rate of interest remains constant throughout the loan tenure. Consequently, the monthly EMI amount also remains fixed throughout the loan repayment period. It may help to plan long term monthly expenses.
   
2. b) Floating interest rate: It depends on either the limitation set by the lender or as current market conditions. As a result, the floating interest rate is liable to change periodically, which leads to an increase/decrease in loan tenure or monthly EMI pay-outs depending on whether the rates move upwards or downwards.

Interest Calculation Methods
A personal loan calculator, available on online banking apps, can be used to calculate interest in the following methods:

• Flat Rate method: The interest gets calculated on the total loan amount initially borrowed over the entire tenure of the loan.
  
• Reducing Balance method: As monthly EMIs are paid off, parts of the loan amount and the interest component are also reduced. Thus, the principal loan amount decreases. The interest is calculated on this decreasing loan amount and not the total amount initially borrowed.

Interest Rates for Different Applicants
Most lenders consider some factors when deciding the interest rate applicable to loan borrowers. The following are some points on personal loan interest rates differ depending upon the applicant type:

• Salaried and self-employed: Generally, salaried employees with a stable employment record employed with reputed organizations get the loan at a lower interest rate than independent professionals because they have greater job security and better repayment capacity towards the loan. Self-employed applicants who have stable sources of income can also take these loans from banks.

• Women: Certain banks and NBFCs provide a preferential rate of interest to women. It is to promote salaried women, entrepreneurs, and professionals to fulfil their dreams and be financially stable.

• Pensioners: Pensioners can get special personal loans at a relatively lower rate of interest from banks. Beyond the applicant type, the interest rate depends on the profile of the loan applicant. People with a stable income, decent credit history tend to receive a loan at a lower rate, irrespective of their category.

How do EMI calculators work?

Whenever people opt for loans, they pay it all at once or in instalments, also known as Equated Monthly Installments, as per their loan requirement and loan duration. It is vital to calculate the amount carefully and ensure there are no delays in the payment. Paying late EMIs is penalised, and nobody would want to risk it. However, EMIs make payment facilities organised and structured in a manner where the loan borrower can meet daily essentials without feeling financially helpless.

A simple definition of a personal loan EMI calculator is that it is a tool where loan borrowers enter the amount to borrow, the loan duration, the rate of interest and the processing fee. The calculator will calculate the estimate loan amount along with the amount required for the EMI monthly. Accordingly, the borrower will set a budget to create a balance between the income and the expense.

The device uses a simple formula to derive the loan amount: E = P x r x (1 + r) ^ n / ((1 + r) ^ n – 1).
Given below is the explanation of the formula:

E – It is the EMI amount that the borrower will pay every month
P – It is the amount that the individual will borrow
r – It is the rate of interest calculated monthly
n – It is the duration of the loan calculated in months
Given below are three reasons why loan calculation is essential:

1. Loan amount: It is advisable to borrow loans of amounts that one can pay quickly. People choose appropriate loan amounts depending on the loan EMI calculation so that repayment becomes less of a hassle. By maintaining a low ratio between debt and income, people can avoid defaulting on loan repayment.
   
2. Loan tenure: Shorter loan tenures mean higher EMI payments and lower interest rates. In contrast, longer loan tenures mean lower EMI payments and higher rates of interest. Calculate EMIs for different types of loans using a personal loan calculator designed especially for estimating EMI payments and suitable loan tenures.
   
3. Loan EMI: Loan borrowers with high debt-to-income ratios are at a higher chance of defaulting on the loan. Defaulting on secured loans, like car loans, force banks to repossess the vehicle and put it up for auction, to compensate the loan amount and other dues. Hence, loan amounts should not exceed more than 50 per cent of the borrower’s income.

Manual calculation of loan EMIs leads to human errors. With the advancement in technology, people can use an online personal loan calculator for free. Online banking apps have this feature to help others get accurate and instant results on any type of loan scheme.

Different Types of NRI Account in Indian Banks

An NRI account is opened by a Non-Resident Indian (NRI) or a person of Indian Origin (PIO) with the RBI-authorised bank or a financial institution.

Types of NRI banking Accounts 
It is quite reasonable for an NRI to get confused about what to do with the existing bank accounts. Especially for a person who already has three to four savings accounts in India and is moving abroad for some time, then comes the dilemma of what to do with the bank accounts. The banking services and operations for an NRI account is slightly different from that of regular savings bank account. The following are the different types of NRI banking accounts –

1. Non-Resident External (NRE) Account 
2. Non-Resident Ordinary (NRO) Account 
3. Foreign Currency Non-Resident (FCNR) Account 

Non-Resident External (NRE) Account: 

• An NRE account is opened in India by an NRI to save their foreign earnings. It allows you to transfer your foreign earnings instantly to India. 
• For this, you need to open an NRE account and deposit your foreign currency from abroad. 
• In an NRE account, you can deposit money in any foreign denominations and withdraw it in Indian rupee. At the time of deposit, the amount is converted into Indian rupee and credited to your account.
• The principal amount and the interest you earn from an NRE account is non-taxable in India. 

Non-Resident Ordinary (NRO) Account: 

• An NRO account is an ordinary saving account opened by an NRI.
• NRO account helps NRIs to manage the income earned in India and abroad. This includes rent, dividends, subsidies, pension, or any amount you receive.
• Both foreign and Indian currencies can be deposited in an NRO account, but the withdrawal can only be made in Indian Rupees.  
• Under this account, you can deposit Indian money and manage the services like any other savings bank account. 
• Interest income earned on an NRO account is liable for TDS (Tax Deductible at Source). 

Foreign Currency Non-Resident (FCNR) Account:

• If you are an NRI and wish to open a fixed deposit account in India, then the FCNR account is the preferred choice for NRI services. 
• An FCNR account is opened and maintained in foreign currency. The deposit in FCNR account is not subject to any exchange rate fluctuations. 
• You can open an FCNR account for a minimum of 1 year and a maximum of 5 years. You can withdraw the FCNR amount before completion of the selected term, but the premature withdrawals are subject to penalties. 

There are multiple of NRI banking services available for non-resident Indians to do their banking activities in India. Even NRI online banking is one of the famous banking services for an NRI. 

What are the NRI net banking services available?

Moving to a foreign country for a better standard of living and earnings, but confused about the banking services? This article will take you through the internet banking facilities available for an NRI.

Every bank considers NRIs as its premium customers and provides custom banking tools that fit their requirements. When it comes to banking, there are NRI banking services which extend to online, helping the NRIs to stay back at home (abroad) and do the financial transactions at ease.

NRI internet banking is one of the preferred and most beneficial banking services for an NRI. No more visiting the branch and clarifying the deposit and currency fluctuation rates when everything today is accessible at your fingertip. So, let’s have a look at the net banking services available for an NRI:

• Inquiries – be it an inquiry about your account or a mini statement, with NRI banking online, one can quickly get access to his/her account details, within no time. You can reach customer support for all your queries regarding your account.
  
• Fund transfer – one of the most useful and beneficial banking services of an NRI is the fund transfer. Gone are those days of visiting a foreign exchange centre to transfer the funds to India instantly. Today, the use of mobile banking or internet banking has made it easy for the NRIs to immediately send money, which gets credited in the NRI savings account within seconds.
  
• Requests – this includes chequebook/ DD request, Aadhaar number linking, changing the username or password, changing the two-factor authentication, blocking debit/credit card online, customizing the fund transfer limit, etc.
  
• Alerts – receiving important account-related alerts – including deposit and withdrawal, minimum balance alert, fraud risk management alerts, loan repayment alerts, service breakdown/ server upgrade warnings, etc.
  
• Bill payments – like the fund transfer, NRIs have benefitted a lot with the online bill payment. With a single tap on the mobile, you can pay your utility bills, electricity bills, telephone bills, insurance premium payments, online shopping bills, donations, tours and travels, hotel bills, fee payment, gas/ newspaper bills, etc.
  
• Security features – whether it’s a standard savings account or an NRI account, the security factors are the same for every account. Net banking allows e-security ensuring 128-bit encryption and using second-factor authentication for high-value transactions.
  
• Investment options – these days, every online banking platform provides investment options where an NRI can invest your foreign earnings in mutual funds or SIP or shares. You don’t have to come to India and visit an investment broker for investing in any options.
  
• Loan against deposit online – an internet banking NRI user can avail for a loan against their deposit at any time. The loan will be processed and opened instantly by crediting the loan amount within a day or two.

The online use of NRI banking services is pretty much simple. It has helped the NRIs all across the world to quickly transfer funds from abroad to India without any delay in processing. 

Benefits of Opening An Online Saving Account

Since years, people have been securing their money in the savings accounts of their banks. It ensures mental satisfaction and asset security for all account holders. Those who have a saving account earn interest on it and use it as and when required. They are easily accessible to the respective account holder and offer services like fund transfers from other accounts using IMPS, RTGS, NEFT, or even UPI, where account holders can earn interest on their deposits.

The applicable interest rates range between 3.5 per cent to 7 per cent per annum and differ bank to bank. Customers have the liberty to deposit or withdraw their money by submitting cheques or withdrawal slips. They can also take the help of ATMs to solve the purpose by applying for debit cards linked to their bank accounts.

The key features of saving accounts
A saving account helps customers track the inflow and outflow of money from their accounts. They enable banks to provide passbooks, debit-cum-ATM cards, cheque leaflets, internet banking facilities, bank statements, and even free SMS and email alerts for every transaction made. Bank account holders have unique and personalised account numbers with no limitation on deposits. Linking recurring deposits or even EMIs to the savings account is possible.

Types of accounts available
There are two types of accounts available:

• Minimum Balance Accounts: Initially, customers had to maintain a minimum balance in their account for the same to remain active. This policy varies, like the rates of interest offered by them. The account holder pays a fine for not following the rules and not maintaining minimum account balance.
• Zero Balance Accounts: With a change in banking services, zero balance accounts have also come in to effect. People convert regular saving accounts to zero balance accounts so that they avoid the penalties in future. Zero balance saving account services are also available.

The eligibility criteria
Those interested in opening accounts in banks need to follow some standard eligibility criteria laid down by banks.

1. The account holder should be a resident of India.
2. The age limit to open bank accounts is 18 years and above. Accounts are available for minors as well that are taken care of by parents/guardians.

There are many eligibility calculators online that can help users determine their eligibility to open bank accounts.

Benefits of opening online savings accounts
Technology has emerged as a winner for all the fields of business and banking. It ensures quick and safe connectivity within parties. The accounts used to save resources, such as income, can be tracked and used to make transactions via the internet or mobile banking apps. Online bank account opening with zero-balance helps increase accessibility by making themselves available on online banking platforms. Online documentation services are also available like KYC. Customers can contact helpline numbers through calls and emails for clarifications of queries or report of issues.