Banking: Sumant Kathpalia

I changed my job last week and my new employer has asked me to open a new account. Does that mean my previous salary account will be deactivated automatically? Or, do I need to inform the bank and get it deactivated?
Your existing salary account will not be deactivated automatically. Typically, you need to check with your existing bank on any change in the balance requirement and transaction charges around the “salary account” offering that you were availing of till now.

The Reserve Bank of India cut CRR by 25 basis point for the second consecutive time this year. Will I see a cut in my home loan rate?
The purpose of CRR cut is to bring down the deficit system liquidity to RBI’s tolerance level. This impact, on overall cost of funds, is minimal and not considered sufficient to effect cut in lending rates across products and tenures. Banks do recognise the fact that it is long overdue for reversal in the interest rate cycle. It is seen as a prudent business case to cut lending rates in longer tenure products such as housing and other consumer loans having maturity of over 3-10 years. Banks are already in the process of cutting home loan rates by 25-50 basis points.

I am looking at investing in fixed deposits. With RBI keeping rates unchanged, which tenure deposits should I put my money into? Are longer duration (3 years and more) ones a good option?
Inherently, fixed deposits are a very safe investment option. These can be a preferred investment option if you are looking for assured returns, liquidity and convenience. Many banks have created certain special tenures (400 days, 999 days) where they offer higher interest rate. Therefore, it may be wise to make the most of these special tenure deposits and book a deposit under the same. On longer duration deposits, it is simply a function of your investment horizon. Most of banks are currently offering similar interest rates for all deposit tenures more than one year, longer tenures help if you go in for interest reinvestment, as your monies multiply faster.

I will be travelling to Europe in December. Should I carry a prepaid forex card or will the debit card I use here also work?
Though debit cards are accepted overseas, overseas travellers prefer to use prepaid forex cards. Forex cards are preloaded in foreign currency which saves the clients from any loss, which may arise due to exchange fluctuation. Forex cards can be reloaded even in the client’s absence. No charges are levied on usage of forex card at merchant establishments (swipe on POS terminal) provided forex card is issued in the currency of the destination country.

For instance, dollar denominated forex card will not attract any charges for usage in the US. Use of a dollar card in other country will attract cross currency, mark up charges. Use of debit card will attract cross currency and mark up charges, which makes it an expensive payment gateway.

Sumant Kathpalia
IndusInd Bank consumer banking head