I can confirm this, sometimes even during quarterly closings they do this dance.
How do you transfer funds from broker account to your bank account. Should you give Zerodha instruction and then Zerodha will manually do the transfer. Is this the process followed by discount broker.
Would be nice to know as my account is with Icici Direct and accounts are linked to my bank. I can transfer anytime except for the amount for which I have placed order
There is nothing illegal here.
It becomes illegal only if the customer is notified about the higher sanctioned loan amount. If its kept as just numbers in the bankâs IT system - all is fine.
Other banks may also do this, the only way to stop this is to get a RBI person sit at the top 10 banks in India and audit.
We think it is only numbers, however when the bank approves a limit to a customer, there is an implicit understanding that the customer can use the money anytime. The only exception is for Overdraft where the limit is granted and everyone understands that the money will be drawn only in case of need. However, in case of a Term Loan which would be of higher ticket size, there will be a fees to be paid if the amount is not drawn within a specified period, this is called âcommitment feesâ or âUndrawn feesâ.
This is because when a loan or OD is approved, the bank is committed to give the money as and when the customer request and cannot deny. This also means that this loan amount will be part of the Sector, Industry, sub limits which the bank board would have approved. Hence any non utilisation of the limit is a loss for the bank.
Example - Bank A would have sector limit of say 5000 crore for Real Estate. This means that all Real Estate loans granted should be below this level. Hence if a customer is approved 1,000 crore and he does not use it, then the bank sector limit is utilised without any gain to the bank and another customer is deprived of the same. Although banks use the outstanding (current amount utilised) as a benchmark, since they are committed to the loan, they would be mindful of the 1,000 crore limit approved and not utilised.
Hence it is not in good interest of the bank to increase the limit and keep it without being utilised.
This was really felt during the 2008 real estate crisis.
Banks create currency (future cash flows) when they issue loans. Ie for a 50 lakh mortgage for 20 years, 7% interest they create additional 1.43cr currency.
One metric to look at is the cash reserve ratio - by which RBI can know how much is the actual deployed deposits.
We just have to place a request online to withdrawal funds.
Itâs as simple placing an order to trade. The cut off time is 10PM and any request placed before that will be processed and I wake up to the msg from my banker that my account is credited.
this is a new learning for me. does that mean if i dont use the full allotted loan amount i need to pay penalty ?
Say 20 lakhs is the sanctioned loan, i use only 15L - i get penalty ?
This is mainly for large ticket corporate loans. For every loan there will be loan milestone, which basically is the dates when the loan will be utilised and in what portion and on what date the loan will be completely utilised. As an example
20 year loan of 100 cr
Start date 01.01.2023.
50 lacks by 31.01.2023
50 lacks by 31.01.2024. By this date loan is fully drawn
Then repayment starts for the remaining 18 years.
Now if the corporate use only 40 lacks by 31.01.2023, then the bank will charge this fee for the remaining 10 lacks.
Again these are subject to negotiations.
In your example, if you do not use the remaining portion, the bank might ask you to either pay a fee or cancel the undrawn portion.
Normally these are for large value corporates.
In a business sense, this is not possible.
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