Jan 15, 2010

Money Teaser # 3: Retail Banking

Photo by lumaxart

Enough of life insurance! For a change let’s shift our focus to banking.

To operate our personal finances, every one of us deals with banks on day-to-day basis. So let’s see how much you know about the way banks operate and manage their business.

This money teaser should be easier to answer as compared to life insurance riddle because banking business is quite simple in comparison to business of life insurance which involves so many intricacies (After all designing Smart & Innovative insurance products takes a lot of time and effort). Moreover, the questions doesn’t relate to complex banking terms such as asset-liability mismatch, SLR & CRR, BPLR, NPAs, Basel II norms, risk management, repo and reverse-repo.

So here we go fishing in the troubled banking waters:


This time try to think inside the box!!

Q-1: Why do the lenders quote flat rate of interest instead of reducing balance rate?

Q-2: Why do the banks charge pre-payment penalty?

Q-3: Why do banks continue to offer
you personal loans while your savings and FD accounts are overflowing with cash?

Q-4: Why do banks offer teaser loans (fixed-cum-floating-rate schemes with artificially low interest rate in the initial fixed period)?

Q-5: What makes the banks sure that despite teaser loans being similar to sub-prime mortgage, these won’t lead to large scale default in future?

Q-6: Why do banks offer lower rates to potential customers as compared to the current customers?

Q-7: Why the banks have shifted focus from corporate lending to retail lending?

Q-8: Finally, what is the definition of retail banking?



Answers will be published in another post.

Best of Luck!


Also see:

1. Money Teaser #2: Life Insurance
2. Answers to Money Teaser #2

1 comment:

  1. One of the numerous inquiries which come upward quite a few instances is usually that ought to children offer an life insurance coverage? Typically life insurance is important for just a man or woman together with users who're dependent on her or him thus it is usually viewed as a salary substitute. How helpful can it be to have life insurance for children? insurance Providers. .

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