Professional Documents
Culture Documents
SECTOR
Comparative Study of
the Indian and the
Swiss Banking
Instruments
Banking
Comparative study of the Banking Instruments of India and
Switzerland
Indian Banking Sector
India is not only the world’s largest independent democracy, but also an emerging economic giant.
Without a sound and effective banking system, no country can have a healthy economy. India’s
banking system is a robust one and is classified into commercial banks and co-operative credit
institutions. Commercial banks include: 1) scheduled commercial banks (SCBs) and non-scheduled
commercial banks. SCBs are further classified into public sector banks (PSBs), private banks,
foreign banks and regional rural banks (RRBs). Cooperative credit institutions include the various
co-operative banks. As on Mar, 2012 the Indian banking system comprised 87 SCBs, 82 RRBs, 618
Urban Cooperative Banks (UCBs) and 94,531 rural cooperative credit institutions. As on Dec 2012,
the Indian banking system comprised 165 SCBs including RRBs.
For the past three decades, India’s banking system has several outstanding achievements to its credit.
It is no longer confined to only the metropolitans, but has reached even to the remote corners of the
country. This is one of the reasons of India’s growth process. Today, the banking sector is one of the
biggest service sectors in India. Availability of quality services is vital for the well-being of the
economy. The focus of banks has shifted from customer acquisition to customer retention. With the
stepping in of information technology in the banking sector, the working strategy of the banking
sector has seen revolutionary changes. Various customer-oriented products like internet banking,
ATM services, Tele-banking and electronic payment have lessened the workload of customers. The
facility of internet banking enables a consumer to access and operate his bank account without
actually visiting the bank premises. The facility of ATMs and credit/debit cards has revolutionized
the choices available with the customers. Banks also serve as alternative gateways for making
payments on account of income-tax and online payment of various bills like the telephone, electricity
and tax. In the modern-day economy where people have no time to make these payments by standing
in queue, the services provided by banks are commendable. Among the institutions whose role in the
development of the less developed regions is well recognised but inadequately emphasised are the
development banks. Playing multiple roles, these institutions have helped promote, nurture, support
and monitor a range of activities, though their most important function has been as drivers of
industrial development.
In Thailand, banking system is regulated by the Financial Institution Act B.E. 2551 (2008), which defines a commercial
bank and sets out the type of businesses a bank may undertake. The law covers commercial banks for small businesses,
and banks which are subsidiaries or branches of a foreign commercial bank.
The Thai financial sector is regulated by the Ministry of Finance (MOF) and the Bank of Thailand (BOT).
The MOF sets out fiscal policy, economic and financial system policy, economic policy; oversees public finances, taxation,
treasury, government property, as well as oversees operations of state enterprises and government monopolies.
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2.Promote monetary stability and formulate monetary policies.
4.Provide banking facilities to the government and act as the registrar for the government bonds.
8.Manage the country’s foreign exchange rate under the foreign exchange system and manage assets in the currency
reserve according to the Currency Act.
Perspectives
According to the Main Plan, there will be only two kinds of financial institutions in Thailand that can operate in the field of
banking business. These are the banks with a full range of services and banks that serve small business (at the moment,
all banks operating in Thailand are banks with a full range of services).
Banks with a full range of services: offers a full range of financial services for all types of customers, with the exception of
insurance underwriting, brokerage, trading and underwriting securities.
Banks that serve small business (Retail Banks): The provision of financial services to small and medium enterprises and
low-income customers, taking into account the credit limit per customer. In fact, retail banks can provide all of the same
financial services as banks with a full range of services, but they do not have the right to conduct business related to
foreign currencies and derivative financial instruments.
Regarding to foreign financial institutions, there will be only 2 types of foreign financial institutions:
Fully-fledged representative office: can provide all the same services as banks with a full range of services, except that
there would not be allowed to open more than one representative office or perform banking operations in Thailand in any
other form than that which this representative office engaged.
Subsidiaries: can provide all the same services as banks with a full range of services, and they are allowed to open 3 - 5
branches. Criteria for the establishment of subsidiaries will be introduced later.
Subsequent implementation phase will be directed primarily to restructuring of foreign financial institutions in Thailand.
However, the challenges currently faced by banks in Switzerland are in fact manifold: high
regulatory costs; shrinking margins; price-sensitive customers; restricted access to foreign markets;
rising competition from both financial and non-financial actors and continuing negative interest
rates. Overall, Swiss banks are affected by the negative interest rates. Interest rates on banks’ sight
deposits at the Swiss National Bank, which exceed an exemption threshold, remain negative at
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-0.75%. And the end of the low rates’ regime is not in sight due to the upward pressure on the Swiss
franc.
Despite considerable headwinds, the Swiss banking sector is in good shape. The stability-related
homework is done, service quality meets the highest standards, but profitability needs to be
increased. Banks in Switzerland are now primarily focusing on digital innovation in order to develop
new business models and to improve internal efficiency and cost structures.
PERSONAL LOANS
A personal loan is an amount of money you can borrow to use for a variety of purposes. For instance,
you may use a personal loan to consolidate debt, pay for home renovations, or plan a dream wedding.
Personal loans can be offered by banks, credit unions, or online lenders. The money you borrow
must be repaid over time, typically with interest. Some lenders may also charge fees for personal
loans.
Types
Personal loans may be secured or unsecured. A secured personal loan is one that requires some type
of collateral as a condition of borrowing. For instance, you may secure a personal loan with cash
assets, such as a savings account or certificate of deposit (CD), or with a physical asset, such as your
car or boat. If you default on the loan, the lender could keep your collateral to satisfy the debt.
An unsecured personal loan requires no collateral to borrow money. Banks, credit unions, and online
lenders can offer both secured and unsecured personal loans to qualified borrowers. Banks generally
consider the latter to be riskier than the former because there’s no collateral to collect. That can mean
paying a higher interest rate for a personal loan
INDIA
With loan-availing procedures becoming lenient and the RBI mandating loan disbursal within a
month of completion of formalities for eligible individuals, the demand for loans for personal use has
seen an upwards trend.
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If you already have another loan like car loan or home loan, those deductions will be taken into
account to calculate total deductions out of the salary and arrive at the eligible loan amount.
Your CIBIL score will also play a significant part in the bank’s decision in granting a personal
loan.
There is no fixed eligible loan amount, as individual banks have different methods of
calculation. The generally accepted practice is to fix a ceiling of about 50 per cent of deductions
from salary including the repayment of the loan to be granted. If you are within this ceiling,
then the eligible amount could be about 10/12 times the gross monthly salary or 6 times the
total taxable income as declared in Form 16 or income tax returns (ITR). This can vary among
nationalized banks and also among private banks (private banks compute on the take-home
pay).
Since he does not get a salary, the Business income as reflected in the income tax returns will be
the basis of ascertaining his total income. He may be required to submit details of his
enterprise/nature of income.
The performance of Business can also be a factor that influences the loan sanction. In case of a
new enterprise, banks can insist on collateral securities like bank deposits and bonds, in addition
to providing one or more personal surety of adequate net worth.
For Professionals
For professionals – doctors, lawyers, chartered accountants, architects, etc. – the following could be
additional conditions to be fulfilled.
An Attested copy of their Qualifications will have to be submitted along with the application
form.
Since some banks have specialized Personal Loan schemes for such professionals offering lower
rates of interest, the bank may ask for some details on the profession as also copies of
receipts/payments and/or income/expenditure account.
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When Can the Loan Be Rejected
Past Default
Banks draw up a list of their own defaulters and upload in their computer systems for any branch to
look into and verify the past record of a loan seeker. This is in addition to the CIBIL report that
contains credit information on the loan seeker with other banks.
Loan Guarantor
You may have stood as personal surety by guaranteeing repayment to the bank in case of default by
your friend, who was the borrower for a bank loan. You may have forgotten it, but the CIBIL report
will show you as a defaulter for the loan, even though you were only a guarantor. You could be in for
a shock, but that is how the system works. So, think twice before offering to stand as personal surety
to anyone.
Many Loans
While calculating your eligibility for a loan, banks will normally add all the existing outstanding
loans from banks, private borrowings, etc., before arriving at the eligible amount. The loan-to-
income ratio is calculated (banks generally say that the total deductions –including the repayment of
the present loan – should not exceed 50 per cent to 70 per cent of your take-home/gross salary) by
the bank before extending a loan.
Job Stability
If you shift jobs frequently or shift your location a number of times, it becomes public knowledge
and might go against you, as the bank could be asking searching questions on this score. A stable
employment track record plays a favourable role in bank’s decision to give you a loan. Since this
loan is not secured by any collateral security and is given based on a good track record of
employment (loyalty factor) and credit profile (good or acceptable CIBIL score), stability in one’s
life is of prime importance in the eyes of the bank.
Tax Record
Banks could make a thorough assessment of your tax profile by asking for the ITR copies of
previous assessment years or could ask for details of tax deducted at source/professional tax paid
against your salary in the past. Failure to give them or submit satisfactory answers could come in the
way. So, the advice is to obtain income certificate/TDS certificate/Form 16-16 (A) from your
employer and produce the same when necessary.
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Past Loan Rejection
If you have applied for a loan or credit card in the past and got rejected (for whatever reason),
applying again could get you a rejection.
SWITZERLAND
General Criteria
Swiss lenders have a fairly long list of criteria that you will have to meet in order to show that you
are good for the money. If you don’t meet these criteria, you will not be approved for a loan.
The interactive loan comparison on moneyland.ch is the only tool in Switzerland that lets you find
loans for which you may be eligible based on their criteria for approval. Only loan offers which
match your situation appear in comparison results.
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Open debt collection cases: If you have an open debt collection case, you will automatically be
persona-non-grata at Swiss lenders. You can find out if there are any open debt collection cases
against you by requesting a statement from your municipal debt collection register.
Approval is based on all criteria
In addition to the basic criteria listed above, each lender has its own list of eligibility criteria for
borrowers. Factors which might not disqualify you from getting a loan on their own may disqualify
you when combined with other factors. A lot depends on the lender and the type of loan you need.
Your ratio of expenses in relation to your income will have a decisive impact on whether your
application will be approved or denied. If your average expenses are high in relation to your income,
your loan application most likely will not be approved. The reason for this is that if your expenses
are high in relation to your income, unexpected expenses can easily result in your being unable to
meet your loan repayments.
There are other factors which can affect lenders' decisions to approve or deny loan applications when
combined with other factors. These include: Your marital status; whether you have children, the
number of children you have and the ages of your children; your annual net income; your monthly
home rental or mortgage payments; your housing situation; your employer (and further information
provided by your employer); and your occupation. Additionally, lenders may access credit reports
from private rating agencies and databases in addition to the records managed by the Swiss central
credit bureau.
Other Facts
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Changing personal loans is easy in Switzerland. You have the legal right to terminate your personal
loan at any time without penalties. Refinancing an existing personal loan with a cheaper loan can
save you money.
Online Loan
Swiss lenders are increasingly digitizing the loan application process. Many lenders offer online
loans which you can apply for without having to visit a branch office. Some lenders go a step further
and let you complete the full application process digitally without receiving and signing a contract by
mail. Online loans are listed as such in the personal loan comparison.
Repayment of Loan
You can repay a personal loan or make additional repayments anytime you choose to. You do not
have to stick to the repayment schedule or loan term. If you are capable of making additional
repayments or paying off your loan completely, doing this is a good financial move which saves you
money. Swiss lenders are not allowed to charge any penalty fees for early repayment of personal
loans. Swiss personal loans typically have a minimum loan term of 6 months, though loans with 3-
month minimum terms are offered. The maximum loan term ranges between 60 months and 120
months depending on the lender. The loan term is set when you apply for a personal loan, but it can
be extended under some circumstances. Important: The longer the loan term is, the more you pay for
the loan in total – even though the monthly payments may be lower than when you choose shorter
terms.
SAVINGS ACCOUNT
Savings accounts are bank accounts which are designed for saving money rather than for transfers
and spending. By depositing money into a savings account, you lend that money to the bank, making
it available for the bank to invest over longer terms. Banks pay you interest on this loan.
Savings accounts typically yield higher interest than private accounts. This is because they typically
have tighter restrictions on withdrawals and transfers which encourage you to leave the money in the
bank over long terms.
SWITZERLAND
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But there are exceptions. For example, there are banks which charge annual fees of 5, 10 or even
50 francs for a savings account.
Savings accounts typically charge penalty fees when you make more than a predetermined
number of monthly or annual withdrawals. You also typically pay penalty fees when you make
withdrawals which are bigger than the notice-free limit without giving notice first.
Some banks charge high transfer fees for transfers from savings accounts to accounts at third-
party banks. In this case, these savings accounts are not suitable for regular transfers. But there
are also banks which use their standard private account transfer fees for savings accounts as well.
Some banks charge account closure fees when you close their savings accounts.
Most Swiss banks do not charge you fees to close and cash out savings accounts. But there are
banks which charge account closure fees of 10 or 20 francs, for example.
Some banks do not charge fees when you close individual savings accounts, but do charge fees if
you terminate your entire banking relationship. Some banks charge you fees to transfer money
from your account to a different bank. Banks which charge relationship termination or cashing
out transfer fees charge between 10 and 50 francs, depending on the bank.
Swiss banks offer special savings accounts for children and/or teenagers and young adults up to
the ages of 20 or 25. These typically have much better interest rates than savings accounts for
adults.
Many banks offer special student savings accounts. These are often available to students up to the
age of 30. Interest rates are normally identical to those of youth accounts, so they are much more
favorable than standard interest rates for adult savings accounts.
Many banks no longer offer senior savings accounts. But there are still some Swiss banks which
do offer special accounts for seniors. Savings accounts which are only available to seniors are
included in comparisons if you are eligible for them based on your year of birth.
Notice Periods
If you want to withdraw more money than your savings account limits allow for, you have to give
notice in advance.
Example: Say your savings account has a withdrawal limit of 20,000 francs per month and a 3
months’ notice period for larger withdrawals. If you want to withdraw 60,000 francs in one month,
you will have to notify the bank three months before you make the withdrawal.
Notice periods vary between savings accounts. Many Swiss savings accounts have notice periods of
3 months, but notice periods can be as high as 12 months.
Important: You can make larger withdrawals than your savings account’s terms and conditions allow
for. However, you may be charged penalty fees for failing to give notice. Early withdrawal penalty
fees can be as high as 2% of the amount withdrawn without correct notice.
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The savings account comparison calculations assume that you reside in Switzerland, and do not
account for non-resident fees.
There are some banks which only charge non-resident fees for private accounts and not for savings
accounts. In some cases, these banks require you to hold a private account in order to hold savings
accounts. But there are also banks which let you hold stand-alone savings accounts if you meet
certain criteria (an income in Switzerland, for example) and do not charge non-resident fees for
savings accounts. In this case, a savings account can provide an affordable alternative to private
accounts for non-residents who need a Swiss bank account.
INDIA
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Charges for opening and using savings account for top banks-
Security
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Balances in excess of the limit do not benefit from special protection. When a bank goes bankrupt,
the unprotected portion of balances falls under the third category of debt claims (non-priority
bankruptcy claims).
Tier 1: Preferential deposits
When a bank goes bankrupt, up to 100,000 francs of account balances per customer are classified as
preferential deposits. The bankrupt bank must repay as much of these preferential deposits as
possible from its liquid assets.
Repayment of preferential deposits must be made promptly and without accounting for customer
debt. This means that the bank cannot deduct debts owed it by a customer from repayment of the
customer’s account balances which are classified as preferential deposits. Customers with debts have
the exact same claim to repayment of preferential deposits as customers without debt.
Tier 2: Protected deposits
If the bankrupt bank does not have enough liquid assets to cover all of its customers’ preferential
deposits, the Esisuisse depositor protection scheme steps in. This scheme insures up to 100,000
francs of account balances per customer and bank. The Swiss Federal Council has the authority to
adjust this limit.
The depositor protection is limited to a maximum sum insured of 6 billion francs for all banks and
bank customers. This maximum sum insured is sufficient to cover individual bankruptcies of smaller
banks. However, if a large bank or multiple smaller banks were to go bankrupt, the 6 billion francs
would not adequately cover all protected deposits.
Tier 3: Bankruptcy privilege
Account balances which are not repaid by the depositor protection scheme become bankruptcy
claims. Up to 100,000 francs of balances per customer and bank fall under the second category of
bankruptcy claims (privileged bankruptcy claims). Only bankruptcy claims which fall under the first
category (priority bankruptcy claims) have a higher priority. First category claims include salary
claims by bank employees, among others.
The chance of collecting on privileged bankruptcy claims which fall under the second category is
notably higher than the chance of collecting debts which fall under the third category (non-priority
bankruptcy claims). Typically, third-class bankruptcy claims represent the bulk of debt claims, and in
many cases a large portion of these claims must be written off as bad debt.
Here is an example which helps to clarify what happens to your money when a Swiss bank goes
bankrupt:
A bank customer has 300,000 francs of assets deposited at a Swiss bank. Of this amount: 50,000
francs is in a pillar 3a account; 100,000 francs is in a vested benefits account; 150,000 francs is in a
savings account. The bank does not have a state guarantee (like many cantonal banks do), but it does
participate in the Esisuisse depositor protection scheme.
If the bank were to go bankrupt: 100,000 francs of the 150,000 francs of combined pillar 3a and
vested benefits account balances are preferential deposits. Additionally, 100,000 of the 150,000
francs in the savings account would be classified as preferential deposits and is also covered by the
Esisuisse depositor protection scheme.
In total, 200,000 of the 300,000 francs would be classified as preferential deposits. Of that 200,000
francs, 100,000 francs are both preferential deposits and protected deposits.
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held by an individual in a singe bank exceed Rs 5 lakh, then he/she will be able to get Rs 5 lakh
inclusive of principal and interest amount if the bank goes bankrupt.
DICGC covers all deposits such as savings, fixed, current, recurring and so on except for the
following deposits:
1. Deposits of foreign governments;
2. Deposits of Central/State Governments;
3. Inter-bank deposits;
4. Deposits of the State Land Development Banks with the State co-operative bank;
5. Any amount due on account of and deposit received outside India
6. Any amount, which has been been specifically exempted by the corporation with the previous
approval of Reserve Bank of India
7.
SWITZERLAND
SARON Mortgages
A SARON mortgage is a money market mortgage. The interest rate of a SARON mortgage fluctuates
in keeping with the SARON (Swiss Average Rate Overnight). SARON mortgages are replacing
LIBOR mortgages in Switzerland.
The interest rate of a SARON mortgage is variable. It is made up of the SARON rate (or a
hypothetical money market rate when the SARON is negative) plus a markup added by the lender.
SARON mortgage interest rates change when the SARON changes in keeping with the contractual
interest adjustment intervals.
The advantage of SARON mortgages: Using a SARON mortgage is beneficial when interest rates
are low. When the SARON index sinks, the interest rate of a SARON mortgage sinks shortly after.
SARON mortgages are generally also advantageous when interest rates remain constant over longer
periods.
Disadvantages of SARON mortgages: When interest rates climb, the mortgage interest rate quickly
follows. When this happens, you pay more for your mortgage than you would if you locked in a low
interest rate with a fixed-rate mortgage.
The SARON mortgage is suitable for you if:
You expect continuously low or falling interest rates and would like to benefit from
this development.
You can accept uncertainties and fluctuations in the market interest rate.
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You can accept that you will know only at the end of a billing period what interest
rate you have to pay.
Eligibility Criteria
These are the main criteria used by lenders:
Age: You have to be at least 18-years-old to be approved for a loan. Many lenders also have a
maximum age limit for borrowers.
Country of residence: As a rule, Swiss lenders only provide loans to applicants who live in
Switzerland. Some lenders also accept applicants who are residents of Liechtenstein.
Canton of residence: Some cantonal Banks require that you live (or work) in the canton
which they service.
Residence permit: If you are not a Swiss citizen, your eligibility for a loan will depend on the
type of residence permit you hold. Permanent residents (class C permit) are generally
eligible. Loan applications from residents with a class B permit may not always be accepted,
or additional criteria may be required. Only a handful of lenders provide loans to cross-border
workers (class G permit).
Bank account: Some banks only give loans to their account holders.
Loan amount: Each lender has its own minimum loan size and maximum loan size criteria.
Loan terms: Each lender has its own limits on minimum and maximum loan terms.
Depending on what loan term you need, you will have more or less loan offers to choose
from.
Reason for getting a loan: Some lenders limit the purposes for which loans can be used. For
example, certain lenders may only accept applications for loans which will be used to finance
a car or a home, or use lower interest rates for these loans.
Employment status: You will have to prove that you are employed on an unlimited and
ongoing basis. As a rule, you should not apply for a loan during a probationary employment
period. You will have to include at least 3 salary slips in your application. Some loan offers
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are also available to self-employed individuals, and some are accessible for employees with
temporary employment contracts.
Type of loan: Some offers only apply to new loans and not to loan refinancing.
Minimum income: Many loan offers have minimum income requirements. The moneyland.ch
personal loan comparison only shows loans for which you are eligible.
Open debt collection cases: If you have an open debt collection case, you will automatically
be a persona-non-grata at Swiss lenders. You can find out if there are any open debt
collection cases against you by requesting a statement from your municipal debt collection
register.
Complexity. The split mortgages proposed by some lenders are unnecessarily complicated.
This makes you dependent on consultation services from a bank or mortgage broker.
Negotiating better interest rates for a single, large mortgage is often easier than negotiating
better interest rates for multiple small mortgage tranches.
The main disadvantage of split mortgages is that refinancing a split mortgage is often more
difficult. You can normally only refinance a split mortgage when you refinance each
tranche of the mortgage with the same new lender. Because the individual mortgage
components of a split mortgage normally have different mortgage terms, you may have to
wait a long time before you can move to a different lender.
Splitting a mortgage into multiple smaller mortgages with different terms is not recommended in
most cases. If you believe a split mortgage could benefit you, make sure that the terms and
conditions allow you to terminate all tranches when the longest fixed-rate mortgage expires.
INDIA
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Fixed Rate Home Loans
For a Fixed Rate Loan, the rate of interest is fixed either for the entire tenure of the loan or a certain
part of the tenure of the loan. In case of a pure fixed loan, the EMI due to the bank remains constant.
If a bank offers a Loan which is fixed only for a certain period of the tenure of the loan, please try to
elicit information from the bank whether the rates may be raised after the period (reset clause). You
may try to negotiate a lock-in that should include the rate that you have agreed upon initially and the
period the lock-in lasts.
Hence, the EMI of a fixed rate loan is known in advance. This is the cash outflow that can be
planned for at the outset of the loan. If the inflation and the interest rate in the economy move up
over the years, a fixed EMI is attractively stagnant and is easier to plan for. However, if you have
fixed EMI, any reduction in interest rates in the market, will not benefit you.
Flexibility in EMI:
Some banks also offer their customers flexible repayment options. Here the EMIs are unequal. In
step-up loans, the EMI is low initially and increases as years roll by (balloon repayment). In step-
down loans, EMI is high initially and decreases as years roll by.
Step-up option is convenient for borrowers who are in the beginning of their careers. Step-down loan
option is useful for borrowers who are close to their retirement years and currently make good
money.
Tax Benefits:
The tax benefit on home loan is divided into two sections-
Tax exemption on repayment of the home loan principal: This is the deduction allowed
under Tax Section 80C with a maximum annual tax deduction of Rs, 150,000 under the
section.
Tax benefit on the interest rate for a home loan: Under Section 24 of the Income Tax Act,
you can avail the tax benefit on the amount of interest paid on a home loan to the maximum
limit of Rs. 2 lakhs for a self-occupied property.
Tax benefit for Joint Borrowers: In case of joint home loans, each of the co-borrowers is
eligible to receive a total of Rs. 3.5 lakhs (1.5 lakhs under section 80C + 2 lakhs under section
24) as tax exemption. Hence, if a married couple co-signs for a home loan, they can claim a
total tax exemption of Rs. 7 lakhs on their home loan.
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Eligibility Criteria
Home Loan Eligibility Criteria for Salaried Individuals
The applicant must be employed with a stable source of salaried income
He/she must have minimum 3 years of work experience
He/she must be a residing Indian citizen
He/she must be between 23 and 62 years of age
Note that the home loan eligibility requirements are indicative and can include additional
criteria.
What Are Some of the Factors that Decide Home Loan Eligibility?
The home loan eligibility of an individual depends on various factors. These include:
1. Applicant Age
An individual’s age determines a suitable tenor for the home loan. Applicants at the onset of their
career can conveniently avail of the loan for an extended tenor due to their repayment potential for a
long term. Lenders, thus, cap the maximum borrowing age for salaried and self-employed applicants
to reduce the risk of default in repayment.
2. Credit Profile and Score
An applicant’s credit profile and score are other essential home loan eligibility parameters that help
lenders identify the risk involved in extending the loan. Individuals with a high credit score of over
750 and a healthy credit profile of timely repayments stand a better chance of receiving prompt
approval for a housing loan.
3. Employment Status/Business Stability
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Based on the applicant’s profile, financial institutions also check their income stability. Employment
of 3+ years for salaried applicants depicts a stable income source and an increased propensity for
timely repayment.
Similarly, self-employed individuals with a current business vintage of 5+ years depict suitable home
loan eligibility with stable occupation and a reliable income for timely repayment.
4. Condition of the Property
The mortgaged property’s condition, current market value, and resale value also determine a
borrower’s eligibility for a housing loan. Properties with all amenities in their vicinity and situated in
prime locations stand a better chance of raising high loan value, and vice versa. Lenders also
consider a property’s age as a contributing factor in determining the maximum loan amount they can
extend. Properties constructed recently carry a higher propensity for a sizeable loan amount.
5. FOIR
Fixed Obligation to Income Ratio, or FOIR, is a measure of an applicant’s repayment capacity. It is
calculated as a percentage of one’s monthly income against the fixed monthly liabilities, such as
EMIs and rent. FOIR contributes to the overall housing loan eligibility and must not exceed 50% of
an applicant’s monthly income for the required approval.
6. LTV
The Loan-to-Value ratio, or LTV, represents the maximum loan amount a lender can extend as a
percentage of the mortgaged property’s current market value. As per the RBI guidelines, a lender
cannot extend more than 90% of the property’s total valuation as a home loan. So, if the property’s
value is Rs.75 lakh, the loan amount provided by the lender cannot exceed Rs.67.50 lakh.
Applicants must, therefore, make a down payment of not less than 10% of the property’s valuation to
avail themselves of the required loan. The amount of down payment required and the total loan value
available also depend on the LTV set by the lender within the 90% cap.
CREDIT CARDS
Credit cards are not nearly as heavily used in Switzerland as they are in some countries, but most
Swiss adults have at least one. Rewards credit cards like the Migros Cumulus Mastercard offered by
Migros (Cembra Money Bank) and the Coop Supercardplus issued by Swisscard have found their
way into many Swiss wallets. The uptake in online shopping and mobile payments is also driving up
credit card use.
But aside from providing a more convenient way to make online payments, what do Swiss credit
cards really give you? More importantly, how do the perks compare with those enjoyed by
cardholders in India
1. Interest rates
Switzerland: In Switzerland, credit cards are legally limited to maximum interest rate of 12% per
annum at the moment. That means that you will never pay more than 12% interest on your credit
card balance. Rather than charging interest based on creditworthiness. Swiss card issuers use a single
interest rate for all holders of a certain card. The bad news is that most credit card issuers in
Switzerland use the maximum interest rate, no matter how good your creditworthiness is. But there
are cards that come with interest rates lower than 10%.
India :In india the interest rates charges are much higher , it starts from 3.3 % to 3.5 % i.e. 39% to
42% p.a.
2. Rewards
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Many card providers, including some Swiss issuers, offer cash back, points or miles of some sort in
order to encourage consumers to use their credit card to pay, rather than cash or debit cards.
Switzerland: You couldn’t be blamed for thinking that the idea of being rewarded for using a credit
card has somehow passed Switzerland by. But we will let you be the judge. Take a look at the value
you get from these highly popular Swiss rewards credit cards:
Migros Cumulus Mastercard: 1 Cumulus point for every 1 Swiss franc of purchases from Migros
stores using your Cumulus credit card (1 point per 3 francs spent at other merchants). 500 Cumulus
points can be redeemed for a 5-franc voucher which can be used to pay at Migros and at a number of
partners. That’s the equivalent of 0.5% - 1% cash back. Of course, these savings only make sense for
Migros customers. The Coop Supercardplus has a similar rewards rate.
TCS Mastercard Gold: 1% cash back on purchases, make this one of the most rewarding cash back
credit cards available in Switzerland. The catch is that you have to be a TCS member to be eligible
for this card, and that comes with its own set of costs. Plus, you pay a 100 Swiss franc annual fee to
use this card, which detracts somewhat from its savings potential.
India : India consumers enjoy more rewards as compare to the swiss users .
Accelerated reward points on birthday spends and international POS and e-commerce
transactions.
Attractive offers on categories like dining, wellness, shopping, etc.
Insurance cover in the unfortunate event of the primary cardholder's accidental death.
Fuel surcharge waiver on fuel transactions of Rs.400 to Rs.5,000 anywhere in India.
Joining bonus - Indian customers get more rewards as compare to Switzerland as in India
these benefits are used to encourage people to used credits cards more.
3. Annual Fees
Most Swiss credit cards have an annual fee which you have to pay every year in order to use the
card. How do fees compare with those paid by other cardholders around the world?
Switzerland: A handful of credit cards are available for no annual fee (these are reviewed here).
Most Swiss credit cards have annual fees of between 40 and 250 Swiss francs
India: Technically most Credit Cards charge an annual fee. But these fees are waived off if you
use your card regularly and achieve a minimum spend – for example, the HDFC Bank Visa
Signature Card will waive off the annual fee if you spend Rs 15,000 in 90 days of the card issuing
date.
We Also have many credit cards that don’t change any annual fee ( HSBC visa Platinum Card ,
Kotak Fortune Gold Credit Card , ICICI bank Platinum Chip Credit Card )
.
4. Foreign transaction fees
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Swiss residents tend to travel outside of the country fairly regularly for leisure, business or in some
cases even to do shopping. That makes foreign transaction fees a good source of revenue for credit
card issuers.
Switzerland: With foreign transaction fees of 1.2% to 2%, depending on the issuer, Swiss cards are
about average. However, the currency exchange rates used are often unfavorable. There are a handful
of cards, like the Swiss Bankers Travel Cash Card, which do not charge a foreign transaction fee.
Unfortunately, these are primarily prepaid cards which have low spending limits and charge you a
fee when you add money to your card account. But it is worth noting that many Swiss banks also
offer euro or U.S. dollar credit cards in addition to Swiss franc accounts. That means, if you travel to
countries that use the euro or to the U.S., you can skip out on both the foreign transaction fee and the
currency exchange markup by using Swiss foreign currency credit cards.
India: Whenever you conduct a transaction overseas, banks and credit card networks charge a fee to
convert the denominations. The credit card network such as Visa and MasterCard charge 1% of the
amount as fee. Many banks also charge anywhere between 0.99% and 2.5% of the amount as mark-
up fee.
5. Bonus offers
Getting free airline tickets or hundreds of dollars of cash back just for using a credit card would
sound like a joke to most Swiss consumers. But Indians have been enjoying the benefits of welcome
offers for a long time.
Switzerland: A handful of credit cards in Switzerland now have welcome offers, which is great.
While offers have gotten more generous in recent years, they still aren’t anything to write home
about. The most outstanding are the welcome offers of between 5000 and 20,000 miles (depending
on the card) when you apply for Miles and More credit cards from Swisscard and Cornèrcard.
India: Many banks in India provide good offers for new members unlike Switzerland there are
comparatively more offers provided by the Indian credit card companies .
Offers like : (During the initial 60 days, avail 10% cashback on all spends, provided at least 5
transactions are made and the minimum spend is Rs.10,000. Avail a maximum cashback of
Rs.2,000.
As a welcome benefit, get up to Rs.2,250 with 3 complimentary airport lounge access at
domestic and also international lounges or 3 AirDine (meal) vouchers)- HSBC VISA
Platinum
HDFC Freedom Credit card - (Enjoy 5X reward points on everything from grocery, dining,
movie, railway, and taxi bookings.
Get 25X reward points on spends made on your birthday etc
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6. Introductory interest rates
Because most Swiss do not carry a balance on their credit cards, Swiss issuers have been slow to add
introductory interest rates as an incentive. Not so in the U.S. where introductory interest offers are
the norm.
Switzerland: As of yet, Swiss issuers do not offer introductory interest rates at all. Right from the
start, balances which you carry past the monthly due date are subject to the standard interest rate.
India : In India the credit card companies do offer introductory offers like waving of the annual fees
for the 1st year and many companies charge a lower interest rate
7. Benefits
Most credit cards offer perks that can make them a smart choice to use for certain types of purchases.
These benefits may include complimentary travel insurance coverage, price matching, return
protection and extended warranties.
Credit card companies and issuers often partner with retailers and travel merchants to offer you
special privileges such as free extended hotel stays or instant discounts on purchases.
Some issuers go a step further and deliver lifestyle privileges like concierge services, free airport
lounge access and exclusive access to events or restaurants without reservation.
Switzerland: In Switzerland, most of the benefits you get with a credit card are determined by the
card issuer rather than by Visa, American Express, Mastercard or Diners Club. Most Swiss credit
cards, even Basic (Silver) Visa cards and standard Mastercard cards, give you basic travel accident
insurance, price protection and extended warranties when you use them to pay. Gold Visa or
Mastercard cards may also include trip delay or cancellation insurance, luggage loss or delay
insurance and purchase protection. Concierge services come with some mid-priced cards (like
the Visa Libertycard Plus), and specialized benefits like the bicycle insurance which comes with
the Visa Libertycard caters to the needs of Swiss consumers.
India :
Priority Airport Check-ins, Free Lounge Access and other Perks
Credit Card Insurance Cover in India
Boost Your CIBIL Score
Cashback, Reward Points & Air Mile
50 Days Interest Free Credit Period
DEBIT CARDS
1966: The Bank of Delaware launches a debit card pilot program as an alternative to carrying cash or
a checkbook. Adoption of this new debit card system is slow because there’s no technology
connecting merchants to banks outside their state.
1969: The first Automatic Teller Machine (ATM) in the U.S. makes its appearance at Chemical
Bank in Rockville, New York. Consumers are able to withdraw cash using a form and a PIN number.
Debit cards made the process more user-friendly in the 1970s.
2017: Approximately 66 percent of American consumers say they prefer making debit card
payments over credit cards because they give them more control over their finances by preventing
overspending and interest charges.
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SWITZERLAND
Debit cards overtook physical money as the most preferred payment method of Swiss consumers in
2019. During that year, just under 40 percent of survey respondents said they preferred to use debit
cards, such as EC cards or Maestro or V-Pay, for in-store payments. Although this was a moderate
increase compared to the previous year, they became more popular than coins and banknotes in the
country. Mobile payments, such as Apple Pay, were much less preferred in Switzerland. However,
when compared to 2018 results, the number of people who chose them as their favourite payment
method doubled.
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Depending on the bank which issues the Debit Mastercard, card fees can be lower than those of a
credit card. For example, you pay much less to make cash withdrawals with a Debit Mastercard than
to get cash advances from Swiss credit cards – both in Switzerland and abroad. Using a Debit
Mastercard to pay for large purchases from foreign merchants is generally cheaper than using Swiss
credit cards.
INDIA
In financial year 2021, over 960 million transactions in India were reported for the National
Automated Clearing House (NACH) mode worth nearly 8.7 trillion Indian rupees. This was by far
the highest value within the debit payments segment. NACH was implemented by the National
Payments Corporation of Indie (NPCI) and was largely used for large transfers within the banking
and financial institutions sector.
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among other debit cards. In comparison with the multinational competitors, Rupay Debit Cards offer
more flexibility and convenience.
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