Loans: Manju Srivatsa

I want to take housing loan for a property that is under construction. The developer said I needed to pay in tranches depending on the percentage of the work done. When I go for a loan, will the bank pay the entire amount to the developer at one go or will it pay in tranches? Will the bank charge me interest on the entire loan amount? When will my equated monthly installment (EMI) start — will it be after the flat is handed to me or once the loan is sanctioned?
The bank will pay on the basis of the customer’s request or the stage of construction, whichever is lower. Generally, banks charge interest only on the disbursed amount till full loan disbursement or possession of the property or 18 months from the date of first disbursement, whichever is earlier. The EMI starts after this.

Recently, there has been a lot of talk about banks moving towards a base rate. Can you explain what is it? How will it affect retail customers? What will happen to my existing floating rate home loan once the bank starts using the base rate?
The base rate system is aimed at enhancing transparency in lending rates of banks. According to the Reserve Bank of India (RBI), the banks have to arrive at a minimum benchmark rate they can charge their customers, termed as the base rate, which has to be disclosed transparently. The final lending rate will be determined with reference to the base rate.

Generally, this will be in line with existing floating rates and move simultaneously. The customer will be given a choice to link the existing floating rate to the base rate.

Is there any limit to the number of public provident fund accounts a person can open under Hindu Undivided Family?
According to RBI guidelines, a Hindu Undivided Family cannot open a public provident fund account.

I am buying a new car and planning to purchase accessories along with it. Can banks take into account the total purchase (car and accessories) while giving me a loan?
The cost incurred on accessories is not considered in the total cost of the car. Most financiers fund the on-road price, which comprises the ex-showroom price, and insurance and registration charges. Also, the funding is never 100 per cent of the cost. The customer is required to pay the margin money, which will come to 15-35 per cent depending on the financier and the model of the car.

The writer is the president of retail banking in Axis Bank. The counselor’s views expressed here are her own. Send your queries at yourmoney@bsmail.in