In India, loan defaults and frauds are the major reason behind unpaid loans. Lenders believe lending is risk free when borrower have a good credit score and a regular income source but recent slowdown in economy, vanishing jobs and increased unemployment in the country has led to a rise in number of loan defaulters. The majorly popular loans in India are Home loan, loan against property, Gold loan, Used car loan, Machinery Loan, Business loan, Personal loan etc. These loans have been classified into two categories; one is secured loan and second is unsecured loan. There are “Some Reasons You Should Know Behind Loan Defaults“ such as delays in salaries, job loss and business turn down are some of the top reasons for debt defaults.

Delay in Salary: It is the most common reason behind 40% of the loan defaults in India. The salary delay is common whether you are in government job or private job. Therefore, borrower is no left with any other option of delayed payment of loan for more than a month affecting your credit report.

Job Loss: As the Indian economy has been slowing down after demonetization, the number of job losses has increased and in such a case, borrower is left with no money to repay his/her ongoing monthly installments.

Business Loan: Business is always unpredictable where nothing is sure and most of the business owners take a working capital loan for the smooth operation of their venture. In case of any loss or failure, the repayment of the loan becomes tough leading to loan default.

Frauds: It might sound unrealistic but fraud is one of the major reason of loan default because some people take loans with a pre-planned intention of not to repay it. It is difficult to qualify for a loan without having legal documents still some manage to do so. Some of them misguide the lender and get underground not to “Repay the Loan Amount“.

The defaults are most common in business loans and personal loans as they are unsecured, so in that case of fraud borrowers do not pledge collateral equivalent to the borrowed amount and later on they do not repay. The consequences related to loan defaults are additional charges and penalties, drop in credit score, less chances to qualify for future credit, loss of ownership of collateral with lots of stress and tension. When you are not able to repay the loan for more than 3 months, the lender will send you a legal notice if you do not take any considerable step. The court will provide you a time period to repay the amount but if you failed to utilize that time, then your collateral will be considered as non-performing asset.

In order to lessen the defaults in country, every lending institution needs to tighten their loan eligibility and have a thorough check on the borrower’s repayment history and job security. Moreover, in case of business loans, every lender needs to be more sure about the repayment before they lend.

Wishing a Happy New Year is the best way to close an eventful year and to introspect the year gone by and look forward at 2020 with optimistic approach. Year 2019 has been a volatile year with surprises ranging from the unnerving fluctuations in the price of gold and oil, a sharp fall in the rupee and the gradual implosion of taxes. However, in these unwelcomed circumstances, there have been “Some Financial Tips to Welcome the New Year“ by ShubhBank. Let us focus on such learnings to carry forward into 2020.

Goal-based approach to investing: if you don’t have any financial goals to reach then it is unlikely you will get anywhere. You should have approach towards investing in equities and bonds at random; it is unlikely that you will get too far in making wealth. It is always advisable to start your investment journey with your goals in mind. Outline your goals such as retirement, child’s education, vacations etc. Once you extrapolate the amount needed for these goals, you can create a core portfolio.

It is good to take some risks: A liquid fund will result in 6% annualized return which will come to be 4.50% after taxes. Forget about wealth creation because you cannot beat inflation; so you must take the risk of equities. When you have long term goals, you must look at equities as the preferred asset class.

A rupee saved is worth than rupee spent: The time when you spend the money, it is gone and so is its future value. If you save and invest the money in productive assets such as bonds and equities, it creates future value. With the passage of time, not only the principal amount but even returns generate the additional returns. There is an effective power of compounding in such cases. The goal of wealth creation remains extracting optimal savings out of your income.

No wealth creation with too much debt: Many people do not realize the consequences of large borrowings till they actually fall into debt trap. It not only puts burden on your cash flow but also reduces your potential and capacity to take financial risks. Some of the debts such as home loan or vehicle loan are inevitable but high cost debts such as outstanding credit card payments and personal loans are best kept at the minimum margin. The main concern of your financial planning should be repaying high cost debts first, if you have any of them.

Don’t panic about factors you cannot control: it is so natural to worry about the price hikes; return of same powers etc. but the fact is that you do not have any control over either. Being an investor, your focus must be on looking at existing risks and managing them. Most of the triggers are out of your control but the things that are in your control are stock selection and portfolio mix.

Hope, you may have a financially rewarding year with these tips. “Happy New Year 2020“!

Have you achieved your financial goals before the New Year knocks at your door? Everyone is gearing up to welcome the New Year with pomp and splendor, we would suggest you to spare some time to assess the year gone by, especially in terms of finances. It is not a difficult task as we are always there to help you get head start. Here we are presenting some financial moves that you must take, if you want to be financially sorted for the coming year.

Status of your financial goals: Have you charted out how far have you reached in terms of achieving the financial goals? We understand that some of your goals are long term, hence, would take long time to achieve but what about your short term goals? It is high time to review the status of your goals. It will help you to figure out what’s been working or what’s not. Moreover, this outlines can help you priorities your goals or set the new ones for the coming year.

Revise your budget: If you don’t have your budget in place, it is better to start working on where you have been spending and if your priorities are in place or not. You can also re-outlay your budget for the New Year to maximize savings.

Make a strategy to pay-off after evaluating your debts: Your financial health can be affected by too many debts. So what’s situation you are in, how much loan do you have to repay and credit card dues you have? Ask yourself about unnecessary and unexplained expenses that can be cut down. It’s time to take complete control of your finances, cut down on expenses and dedicate your income towards clearing debts and savings. If your credit report is messed up, get focused on repairing it as it is important for your financial future.

Re-balance your financial portfolio: You have to invest somewhere to face the emergency situations in life. It is must to re-balance your finances at least once a year and the end of the year is the best time to do so. You must re-balance your portfolio only if your financial objectives have not changed otherwise you may consider changing your asset allocation. Re-balancing gets your investment portfolio back to its original state.

Review your insurance policy: Change is the way of life. Getting an adequate “Insurance Policy“ can help you tide through unpredictable life and uncertainties thrown by it. It is advisable to review your insurance plans at least once a year to accommodate any changes. Changes may include from getting married/divorced to having a child to buying your dream house. As the magnitude of the change increases, you may consider increasing your insurance cover.

ShubhBank have got your back when it comes to financial assistance. Just click ShubhBank.com to start exploring whether you want to start your own business, to plan a long international holiday or invest in something that interests you.

You might be in your late 40’s and you are working twice as hard to get half the reward to lead a comfortable life and you might be forgetting something very important to your future. After some years when you retire, there will not be any cushion to protect your backbone as you will not be drawing the salary that time. You need to lay out a plan that your life after retirement will be as pleasant as now. Retirement is an important event in one’s life as it marks the end of one phase. It is necessary to be financially fit at that age but for achieving this, you need to plan carefully to lead a good life. In this article, we are going to discuss what the importance of “Future Financial Planning In Life“ is and why you should secure your future early.

REASONS FOR SECURING YOUR FUTURE EARLY IN LIFE
You might be wondering what it is required to plan so early in your life. There are some reasons mentioned below that why should you start planning immediately.

Quality of Life: If you are really planning to lead the life as you are leading now such as with your maximum salary, then you have to start planning early to maintain the same quality of life. The long term plan will enable you to save significantly. On a flip side, you will have to scrimp after your retirement and finances will become more of a restriction.

Income: You may have the income sources in future like pension, side business, rent etc. but you will most likely have a little income. It is good to start a calculation now and try to save up from now for a better future.

Medical Expenses: Aging is sure to bring along some diseases and illness. As per saying, “Man is not immortal.” Now you might be fit as fiddle but after a certain age, your health starts deteriorating and there may be some medical expenses. If you are aware of such things then you should save up now to afford your medical expenses after retirement.

Other Expenses: In coming years, you might want to fund your grandchildren’s higher studies or their wedding; with this view you should probably start saving up immediately. On contrary, you have to liquidate some assets to fulfill these requirements, ultimately leading to the bad quality of life.

Moreover, life is always unpredictable. You might plan something and life may have something totally different in store for you. You should be prepared for unforeseen events such as medical emergency or any other financial need. If you have saved up a substantial amount of money for future, you can use it in dire consequences as well. Saving up early in life is always advantageous because your earnings have more time to compound and grow. So planning for your future is more like an ongoing process which pays off after your retirement.