Opening a bank account may not be a big deal for most of us. But for a large part of the population living on low incomes, getting one was rather difficult. Whether it's your maid servant, the sweeper in your building, the vegetable vendor from whom you buy vegetables, or a construction worker -- a bank account was simply out of reach earlier.

Despite falling housing sales, builders are continuing to hold their price line without effecting the much anticipated downward correction. This is despite various attempts by the Reserve Bank of India in the last one year to cool real estate prices by raising housing loan interest rates. RBI measures, though, had the positive effect of putting a stop to further rise in real estate prices. The situation is developing into a tug of war between builders and home buyers. The banks, a crucial player in the housing industry through home loans, have been urging builders to reduce housing price. Leading spokesmen of home loan industry - HDFC Chairman Deepak Parekh and ICICI Bank Chief Executive KV Kamat - have at many times in the past few months indirectly hinted that housing price should correct itself by 10 to 20 per cent.

Speak to your bank about home finance only after you have identified the property you want to buy. While most banks will provide finance for ready-to-move-in properties, some banks do not readily finance a property which is being self-constructed or a property under construction. Also, if the property is very old or is being developed by a relatively unknown builder, the bank might have an issue with providing a home loan. Take a sanction for the loan only after identifying the property. Banks are known to reserve the best deals for immediate disbursement cases.

In March 2000, the interest rates on home loans were about 14%; which started falling quite steeply. By the last quarter of 2003, the interest rate (floating) on home loans fell to 7%. Again the loan interest waves have splashed to a high of around 10.00% (floating rate of interest) in January 2007. This hike is dramatic; considering that it is a jump of 3.50% since the historic low of 7% reached in 2003.

Credit bureaus are independent companies which collect the bill payment records of all the customers of various lending organisations like banks, credit card companies, housing finance companies as well as consumers of telecom companies (or consumers of any services which involve credit and/or periodic payments) and even keep track of any bankruptcy proceedings or alimony payments ordered by the courts.

The story is getting gloomier for the real estate sector. For almost two years, the Reserve Bank of India (RBI) has been indicating that the real estate sector is 'overheated'. The apex bank has also increased the reverse repo rates and more recently, the CRR (cash reserve ratio) by 0.5 per cent (50 basis points). And if that was not enough, the FM recently asked banks to go slow on realty loans and 'lend more' to finance the country's gross domestic growth. Says Niranjan Hiranandani, Managing Director, Hiranandani Constructions, 'The step is definitely retrograde in nature and will lead to more inflation.' He feels the lower middle class will get adversely impacted because of this decision. Today, 80 per cent of home loans are less than Rs 5 lakhs and rate hikes impact them the most.

The Reserve Bank of India (RBI) and, more recently, the Central government has 'advised' the banks in their own capacity to go slow on the realty sector. The year began with the government allowing 100 per cent Foreign Direct Investment (FDI) in real estate, but it ended with the same government asking banks to lend less to the realty sector. Besides, the RBI has been making all the noises about this sector being 'overheated' for almost one-and-a-half years. And finally, the government and RBI seem to be concurring.

A common question asked around coffee machine these days is; should I prepay my home loan? The trigger for this question is quite obvious. Most home loan borrowers in the last 5 years have taken floating rate loans and banks have increased interest rates on these loans three or four times in the last one year itself.

Recently, a good friend of mine was complaining about the behaviour of her bank ever since she took a home loan from them. Though the home loan was fixed, the bank promptly increased her interest rate (even though she had signed a 'fixed' rate contract) when the rates went up. And to top it all, when she called up to enquire about the change, she was curtly told to read the loan agreement where the bank had clearly reserved a right to increase the 'fixed' interest rate. Grumbling about the bank's behaviour, she happened to mention the sharp contrast in their behaviour from the time when she had applied for the home loan. As both she and her spouse work at the middle management level for a leading MNC and individually draw a six-figure pay packet per month, the bank actually went overboard when she applied for the home loan. She confessed that the sales person from the same bank, not so long ago, was wooing them and willing to answer every query of hers to make her a client. All in all, a very satisfying experience, as she did not have to move out of her office even for a minute during the entire loan process.

Despite the Reserve Bank of India's (RBI) money tightening measures, home loan and personal loan interest rates are likely to remain flat. Most bankers expect interest rates to remain stable. Banks have to keep a portion of their cash reserves with the RBI as per a ratio called the cash reserve ratio (CRR). Recently, in its quarterly review of credit policy, the RBI increased CRR from 6.5% to 7%, which effectively means banks have to keep a larger share of their reserves with RBI. Despite the initial fears, it is not expected that the RBI move will jack up interest rates.