Com-Exultant : Finance and Research

  Balloon Payment The Balloon payment is the final amount paid against the loan and is much higher than the regular monthly installments. Simply, the lump sum amount attached to a loan which has to be paid (generally at the end of the loan period) to extinguish the loan is called as a balloon payment. The need for a balloon payment may arise due to the inadequacy of the previous installments in setting off the loan amount or due to some error or late payments. If any loan comes with a balloon payment, it is termed as a “Balloon Loan”. Such payment is more prevalent in the mortgage cases, where the full amount is not amortized over a period of time, and the final payment is due at maturity. Thus, the final payment is called the balloon payment because of its larger size (value). The Balloon loans may be useful for those investors whose monthly cash flows are uncertain and believes that will be able to pay off the lump sum amount at the time of maturity. But, t...

    Repo Rate for Banking The repo rate is a cornerstone of monetary policy, deeply influencing a country's financial landscape. Understanding the nuances of this rate is essential to understanding how the Reserve Bank of India (RBI) steers the economy. This article discusses the repo rate, detailing its meaning, functioning, and significant impact on the economy and personal finances. What is the Repo Rate? The repo rate (repurchase rate) is the interest rate at which the central bank lends money to commercial banks when there is a shortage of funds. In simpler terms, it is the rate at which banks borrow money from the central bank for short-term needs, usually against government securities. This mechanism allows central banks to regulate liquidity and maintain monetary stability. ·    Lending Mechanism:  When commercial banks face a liquidity crunch, they can approach the central bank to borrow money. The central bank, in turn, provides these funds...