Ask Us - Banking

I am a home loan borrower paying an interest rate of nearly 14 per cent. Will the recent RBI rate cut offer me any benefits?

—Subham Bose , Mumbai

As several banks are talking only about slashing lending rates and not their base rate, it is unlikely that existing borrowers will benefit from RBI's repo rate cut. However the good news is that now there is ban on prepayment penalty. Though some banks have already done away with it in the recent past, this announcement is likely to bring uniformity across all banks. What this means for the existing borrowers is that they can now shift to a lender offering lower interest rates and benefit from the rate cut without needing to pay any prepayment penalty.

Are there any tax benefits on educational loans?

—Tarun Tomar, Chandigarh

Educational loans taken for courses after passing the higher secondary examination qualify for tax benefits. However, on these loans only interest is exempted from tax and there is no cap on it.

I overlooked an insurance policy and did not honour my insurance premium payments for the last three years. Is there any way I can retain my insurance policy? 

—Prasoon Joshi, Uttarakhand

Generally, there is a grace period for paying your insurance premiums – a period of one month. During this period, the policy remains valid but beyond one month, it lapses.

However the premiums you have paid so far can still be accounted for. Your policy can still be revived. In your case, the policy has ceased to be in force for three years but can be revived within five years from the date of the last unpaid premium. The next steps you need to take is to contact the insurance company, submit a declaration of health from a doctor recognised by the insurance company, and pay the amount of unpaid premiums along with a late payment penalty to revive your policy.

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