Mint, along with Hindustan Times and NDTV, brings you a brand new personal finance show called Let's Talk Money. The weekly call-in show, anchored by Monika Halan, editor, Mint Money, and Manisha Natarajan, editor and senior anchor, special programmes, NDTV, aims to answer viewers questions about money-linked issues. This is the edited transcript of the show that aired over the weekend on NDTV Profit and NDTV.
Balakrishnan Pandit: Some years back I had taken a loan from HDFC (Housing Development Finance Corp. Ltd). The rate of interest on the loan at the time of sanction was 7 per cent floating. After a year I found to my dismay that the rate of interest being charged on my housing loan account was 10.5 per cent. When I visited the office of HDFC and raised this issue with an executive, I was told that the PLR has increased. I pointed out that the corporation was offering new loans at 8 per cent. Also that HDFC had later on reduced the PLR. Why wasn't my rate of interest reduced?
Halan: It's just not your finance company but all banks have been on this system where they would fix the PLR and it would vary actually within the bank for different borrowers. The good news is that the RBI (Reserve Bank of India) has changed the way the home loans are pegged to the benchmark. Earlier, banks would control the benchmark and nobody stopped banks from having multiple benchmark, or PLR.
From July 1, all banks have to declare what is called a base rate. Your loans are now linked to that base rate. So what will happen now is that if the rate goes down banks will have to lower the base rate because that's the rate which is applicable to all the borrowers, corporations or retail. But the problem is that the older borrowers are still on the old system. They will have to go back and negotiate.
Natarajan: And if you can't negotiate with your bank, you will just have to shift to another bank. Here's a list of some attractively priced home loans — SBI 8 per cent, HDFC 8.25 per cent, ICICI 8.75 per cent. Remember, SBI and HDFC are teaser rates and are valid right now and may not be there for a long period of time.
Amrik: Could you please throw some light on the composition of my portfolio. Are there some which needs to be reduced or increased?
Natarajan: I will quickly read out the funds: Franklin India Prima Plus-Div, HDFC Prudence Fund-Div, Franklin India Blue Chip-Div, HDFC Equity Fund, HDFC Top 200-Div, IDFC Premier Equity Fund-Div, Pru ICICI Tax Plan, Prudential ICICI Discovery Fund-Div, Reliance Diversified Power Sector Fund, Reliance Tax Saver, Sundaram Select Midcap-Div.
Halan: Well, we have a risk-taking person here. It's good to see that. Seventy years old and still looking at equity. You have done really well. Sensex over the last five years has been 19 per cent and your portfolio has done between 23 per cent and 35 per cent, so all of your funds have outperformed. Yet I think you have too many funds. I would actually get rid of the two Franklin Templeton schemes, both of them, are lagging behind.
You also have four ELSS (equity-linked saving schemes), (but) under the new direct taxes code the ELSS benefit will go away as the three-year lock-in ends. Start redeeming your ELSS because that tax break will not come.