Despite heady growth numbers, there are growing fears of overspending by individuals and households. In what indicates some nervousness in the personal loan market, India’s biggest rating agency Crisil has downgraded a securitised pool of personal loan portfolio issued by ICICI Bank.

This is the first time that a securitised paper has been downgraded in the Indian market. Crisil lowered the rating — series A1 and A2 by two notches from AAA to AA. Securitisation is a mechanism through which banks palm off loans from their books to another vehicle which issues pass through certificates (PTCs) or securitised papers to investors. PTCs are services from interest earnings on loans that the vehicle holds. The credit pool size at the time of issuance was Rs 314 crore of principal and about Rs 86 crore of interest component.

The issuer, ICICI Bank, provided 10.9% credit support and 3.3% of liquidity support, respectively. The credit support facility is a deposit made by ICICI Bank with another bank and it works like an insurance cover. In case of a default in the pool, the special purpose vehicle (SPV), which has issued PTCs to investors would draw money from the credit support account. PTCs were issued in July 2005 with a 56-month repayment schedule.

The downgrade is on account of ‘more-than-desired utilisation of the credit support facility’, said the rating agency. About 23% (Rs 9-10 crore) of Rs 43-crore credit support facility has been drawn, which is higher than anticipated by Crisil.

The pool has paid investors 58% of the due principal and the weightage average tenure left for PTCs to mature is 10.5 months. “Securitisation market is developing and this is a natural evolution to it. In the international market, this is a very common phenomena,” said Ramraj Pai, director of structured product, Crisil. However, market analysts say that many more downgrades will happen as the securitisation market develops. Investors, primarily banks, will have to take a knock on their bond portfolios.

HDFC Bank has increased interest rate on its (Non-resident Indian – external) NRE deposits, effective from July 1, 2007. Interest rate on NRE deposits for three to five years maturity will increase by 16 basis points to 5.45 per cent against 5.29 per cent earlier. Deposits of 2 to less than 3 year maturity, the increase is by 12 basis points to 5.43 per cent as against 5.31 per cent earlier.

The rate of interest for deposits maturing between one and two years is up by 3 basis points to 5.42 per cent as against 5.39 per cent earlier. The NRE rates were last revised by the bank on June 1, 2007.

The country`s second-largest public sector bank Punjab National Bank(PNB), is planning to cut exposure to personal loans including home finance, to bridge the gap between higher credit offtake and lower deposits, reports agency sources.

`The bank is concerned over widening gap between resource mobilisation and credit expansion and will soon take decisions on curtailing credit exposure by reducing personal loans,` PNB chief general manager, U S Bhargava said. The bank`s asset liability committee (ALCO), will meet later this week to decide on the issue, he added.

PNB`s, credit exposure is growing at 28% as against a growth of 20-22% in resource mobilisation. The bank, earlier indicated an increase in the prime lending rate (PLR) by 25 to 50 basis points and interest rates on all types of personal loans, including housing loans.

At present, PNB charges a PLR of 12.25% and the interest rate on personal loans is between 12-13%.

A number of lenders such as ICICI Bank and HDFC Bank, raised PLR by 100 basis points, while Bank of Baroda increased the rates by 75 basis points.

The move is in effect to the Reserve Bank`s decision, to increase repurchase rate at which it lends to banks and the cash reserve ratio, the deposits to be kept by all banks with RBI, to check high credit growth and tame inflation in the economy.

Bhargava said that, while loans for the first house of a borrower will be kept under priority area, PNB will take steps to discourage buying a second or third house.

When considering taking on the debt of a car loan, you should ask yourself how much you can really afford, and if it is really necessary to have a new car. You can get a used car loan for less than a new one, and although the interest rate on the auto loan will be slightly higher than that on a new car loan, you will still be saving yourself money.You can get a used car loan through a bank, a credit union, the dealership, or any other traditional auto loan companies. Most places that offer new car loans will also offer used car loans. You can even shop online to get the best deal on a auto loan without leaving your home.It has gotten so expensive lately that more and more people are turning to the used auto loan market, as this way they can get a car that is new for them, without putting themselves in debt over their heads. It is also smarter to let someone else take the brunt of the depreciation of the car, so that when you take it over it has already lost the majority of money that it is going to.There are more and more cars out there to choose from as well. Those who are a little more well off will find themselves trading in cars to get something new, much sooner than most of us would. There are also those that went for the new car loan and got in over their heads and their cars ended up repossessed. It has become much easier for someone to get a used car loan for a car that has barely been driven.

As a rule, and has been reported, many Latinos have problems when they come to this country in understanding how car loans, or even mortgages work. Some of it is due to the language barrier, some of it is that they don�t understand our money system. However, some people have taken advantage of their ignorance and have made an already stressful situation for them even worse.Enter �Universidad Financiera� which was started by a Hispanic to try and educate those coming to this country so that they don�t get taken advantage of when applying for a car loan. The site that Daniel Marcos created is called and he is in the process of collecting one of the largest gatherings of personal finance articles in Spanish so that people can learn to understand.The site gives information on how to apply for car loans, as well as how to manage finances. Marcos believes that credit ratings should be considered something that helps individuals get ahead in life, not something that can be an obstacle to those that do not understand. Eventually, he will be offering the articles in English as well.The university will tell them what the right questions are to ask when applying for a car loan or mortgage, how to handle things using a ITIN, how to handle any credit they may currently have, and other topics that they will find useful. They will also offer finance products catering to the Hispanic community, including auto loans, credit cards, student loans, etc.

Let’s say you went out and bought a new or used car, and now you are paying fairly high interest rates on your auto loan for whatever reason. A good way to bring down your auto loan payment is to refinance it. Refinancing your auto loan can substantially help you in reducing your monthly payment. Sometimes you may have had bad credit when you first applied for the auto loan, or perhaps you didn�t know what interest rate you were paying for the auto loan � this happens a lot. Or maybe you purchased the used car when they were running some sort of special, and now the deals that are out there for auto loans are even better than what you have now. No matter what your situation, refinancing can help.You can go online or to a bank, it depends on how you want to try and find the new auto loan. Looking for the auto loan online will be substantially easier, if not only for the fact that you can do it as soon as you finish reading this article. Get together your personal information such as social security number, address, driver’s license, etc. If you have a pretty good credit rating and a steady source of income, you will be approved in no time.For those of you who had bad credit to begin with, paying on your current auto loan for a year or so will substantially improve your credit score. You apply on line, and they send you a check. Pretty simple. You will not be able, as a rule, to get more money than what the car is worth, so keep that in mind if you are upside down in your current auto loan. Do your research and find the auto loan that is best for you, and offers the best terms and the best interest rate  for they are not the same thing.

The executive director of Columbia University’s financial aid department has been suspended for allegedly profiting from stock options he acquired from a loan company his department recommended to students as a “preferred lender,” according to officials at the office of the Attorney General for New York. David Charlow, the senior associate dean for student affairs at Columbia University, allegedly netted $100,000 by selling 7,500 stock options and 2,500 stock warrants granted to him by the Education Lending Group, officials said. The Education Lending Group subsidiary, Student Loan Xpress, is one of Columbia’s preferred lenders for student loans.   It was selected as a lender in the same year that Mr. Charlow received his stock options, according to the attorney general’s office and Security and Exchange Commission filings that were made in conjunction with the company’s public offering “The AG’s office is investigating potentially improper stock grants by certain student loan companies to college financial aid officers as part of its widening investigation into conflicts of interest in the college loan industry., the AG’s office issued subpoenas to Student Loan Xpress Inc. and CIT Group Inc. in connection with this investigation. the Attorney General issued a subpoena to Columbia University,” a spokesperson for the attorney general’s office said. In an e-mail response to ABC News, Robert Hornsby, the director of media relations for Columbia University, said, “As a result of the attention generated by the Attorney General’s investigation, we learned that untila financial aid administrator at Columbia College and the Fu Foundation School of Engineering and Applied Science had a financial interest in one of our preferred lenders.  We promptly began an investigation, placed the officer on leave pending a full review and notified the Attorney General. Columbia did not receive the initial letters of inquiry sent by the Attorney General in early February. The University Office of Student Services is reviewing all the recommendations contained in the Attorney General’s March letter to New York educational institutions and we fully support the Code of Conduct proposed by the Attorney General. Pending the completion of the Attorney General’s and our investigations, we have no further comment on this matter at this time.”

As financial aid award letters arrive in the mailboxes of next years’ college freshmen, two top-tiered colleges have agreed to make financial settlements as a result of a law enforcement probe into practices, which, authorities say, enriched schools while deceiving students into thinking they got the best interest rates for their student loans.New York University (NYU), University of Pennsylvania (Penn) and four other colleges have reached a settlement with New York Attorney General Andrew Cuomo as a result of Cuomo’s probe into the so-called “preferred lender” lists, the attorney general’s office said. According to Cuomo, those lists give the impression they include lenders that will give students the best rates when in fact the lists often are made up by lenders that offer the best “sweeteners” — cash and other incentives — to universities and their personnel.NYU agreed to return $1.4 million to students while Penn agreed to $1.6 million. As for the other four colleges, who agreed to settle rather than face possible litigation, Syracuse University agreed to return $164,084, St. John’s University $80,553, Fordham University $13,840 and Long Island University $2,435.St. Lawrence University also signed a settlement with no money attached to it.All six colleges also agreed to abide by a new “College Code of Conduct,” which prohibits revenue sharing and the acceptance of more than nominal gifts and tips by college employees. It also requires the colleges to clearly explain their preferred lender criteria and prohibits lender personnel from staffing a financial aid office.

The country’s largest mortgage finance company, HDFC, may reduce lending rates if the central bank does not tighten rates or resort to a monetary squeeze by hiking the cash reserve ratio (CRR). The company has already seen a decline in borrowing costs in July and is waiting to see whether the decline in rates will be sustained before reducing lending rates. Although interest rates have gone up during the first quarter of 2006-07, liquidity generated by forex inflows has helped bring down rates in the money markets. Towards July, interest rates have eased and borrowing costs have come down for institutional borrowers. Some banks, which had hiked their lending rates in the fourth quarter of last year, said they would bring down home loan rates. “We have seen a reduction in borrowing costs in July. If the decline in rates is sustained, we may bring down lending rates,” HDFC chairman Deepak Parekh said. He, however, added that there was a possibility of a hike in CRR by the Reserve Bank of India this month-end to absorb surplus liquidity. If this happens, rates may not come down, he said. HDFC’s profits are expected to see substantial upside in the second quarter on account of exceptional items. HDFC would gain close to Rs 311 crore from the sale of its stake in Intelenet to Blackstone. In the second quarter, HDFC will also finalise a non-life partner to whom it will sell 74% stake in HDFC Chubb General Insurance at a premium. The second quarter would also see Rs 3,114 crore of capital coming in following the preferential allotment of equity shares to Carlyle Group through CMP Asia and Citigroup Strategic Holdings Mauritius.

Public sector lender Corporation Bank has reduced interest rates on floating home loan rates by a quarter per cent for loans with a tenure of five to 15 years. For housing loan with limits up to and inclusive of Rs 20 lakhs, the interest rate is reduced from 10.50 per cent per annum to 10.25 per cent per annum, A Mohan Rao, General Manager, said in a statement here today. The interest rates on loans with limits and above Rs 20 lakhs stands revised from 11.50 per cent per annum to 11.25 per cent per annum, he said. The revision is applicable to the floating rate Corp Home Loans to be initially disbursed on or after July 23, he said. Corporation Bank is the first bank to revise its interest rates on housing loan, he said.