The loan restructuring window has just ended, and it will take another 45 days for more clarity on defaults in the housing finance sector, said Mahesh Misra, CEO, India Mortgage Guarantee Corporation (IMGC). IMGC is the country’s first mortgage guarantee company, and provides mortgage default guarantee to lenders. It has guaranteed over 57,000 homebuyers, crossed the ₹8,500-crore portfolio and onboarded 15 lender partners. In an interview with BusinessLine, he said there will be continued demand for affordable housing and larger players will do well. Excerpts:
Is there concern about rising stress among housing finance companies?
Delinquencies have certainly worsened over the last year, but they are not as bad as initially feared. Most of our lender partners have seen about 20 per cent to 30 per cent increase in delinquency, but it is still not at a worrisome level. The loan restructuring window has just ended and it will take another 45 days for more clarity. Lenders will do a bit more reconciliation and filtering of data. In the last five years, the housing industry has been dominated by end users who tend to be more genuine in payments as it is the most important asset they have. The increased stress in portfolio is because businesses are not in the same shape as they were last year and some people would have lost jobs.
What is your outlook for the housing finance sector?
The sector is doing quite well. Property prices are attractive and interest rates are low. It is a good time to lend. Large banks have more appetite to grow secured businesses. Nearly 65 per cent of lending is done by banks in the sector. It is a good time for larger players. Smaller players are seeing some challenge as they have to take care of increased delinquencies and liquidity will be a bit of a challenge. So, they will find it difficult to compete with entities offering loans at 6.8 per cent or so. We also see a much sharper emphasis on promoting affordable housing, especially among public sector banks. We are talking to three PSBs, where their main focus seems to be affordable housing. I see the demand for luxury homes dropping at this stage unless they are from reputed builders or ready-to-move-in projects.
What kind of demand is there for mortgage guarantee?
We had our highest ever month in December 2020. During the pandemic, we signed two new lender partners, and in this quarter we expect to sign on another three to four more partners. For this quarter of January to March, we expect the run rate to be nearly 70 per cent higher than last year.
Is it a paradox that there is demand for housing amid low growth, job losses?
Only people with income stability are buying homes. In certain Tier 2 and 3 towns, we see a lot of interest from government employees. For them, buying a home has become very affordable, interest rates are low and income is assured. There is a fair bit of refinancing also happening, where larger players are buying over loans that are running at higher interest rates in the past.
What are the plans of IMGC for the year ahead?
We have contractual arrangements with all the large lenders, including LIC Housing Finance, HDFC, ICICI Bank, Axis Bank and State Bank of India. We intend to now start focussing on smaller HFCs and expand our client base with them. We believe it is the right time to partner with more PSBs also.
What are your expectations from the Budget?
Many States have reduced stamp duty, which has been a huge catalyst. Even without the Budget, States are recognising the need to get people to buy homes and the trigger it provides. There could be some income tax concessions, but regardless of that end users will continue to buy.
Private sector lender ICICI Bank has launched a new year campaign with offers available on various brands and e-commerce platforms.
Called iDelights New Year Bonanza, it is a customised bouquet of offers for its customers to celebrate the beginning of 2021, the bank said in a statement on Friday.
“Available from January 1 to February 28, these offers encompass leading brands in luxury, e-commerce, electronics, grocery, food ordering, travel, health and wellness, fitness, gifting, home décor, auto mobiles and e-learning,” it further said, adding that customers will get benefits like additional cashback and discounts, which can be availed using the bank’s debit and credit cards, internet banking and Pockets.
Welcome to the refurbished site of the Reserve Bank of India.
The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.
With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.
The site can be accessed through most browsers and devices; it also meets accessibility standards.
Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.
Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.
Power Finance Corporation’s first tranche of NCD (non-convertible debenture) issue for Rs 5,000 crore opens for subscription on January 15. The issue closes on January 29 and has an option for early closure, too. The proceeds will be used for fresh lending as well as for refinancing and servicing the company’s existing debt.
The first tranche has seven series – I to VII – with varying tenure (three to 15 years), and interest type (fixed or floating), rate and interest payment frequency. There is no compounding option.
None of the options make the cut as alternate fixed income options such as bank fixed deposits, small savings schemes and the Government of India (GOI) 7.15 per cent floating rate savings bonds (popularly known as RBI bonds) score better. However, on grounds of better liquidity and wider availability as compared to the GOI floating rate bonds alone, retail investors can consider investing some portion of their surplus in the 10-year (series V) NCDs that offer a floating coupon rate linked to the 10-year G-Sec yield.
While PFC’s concentrated exposure to the troubled Indian power sector and the consistently negative cash flow from operations may be a cause for concern, the NBFC’s Central Government backing offers comfort. Government of India holds nearly 56 per cent stake in the company. Also, PFC’s capital to risk weighted assets ratio (CRAR) was at a comfortable 17.54 per cent as of September 2020.
Not the best
PFC is offering fixed coupon (interest) rates of 4.8 per cent and 5.8 per cent on its three-year and five-year NCDs, respectively. The interest will be paid out annually. Many banks offer better rates, and that too on deposits of shorter tenure. Given the historic low interest rates today, it’s best not to lock in to higher tenure fixed income products, to avoid losing out on better returns once the rate cycle turns up.
One- to two-year deposits from several public and private sector banks are available at rates of 5.1 to 5.3 per cent and 5.3 to 5.75 per cent per annum, respectively. A few other FDs come with even higher rates. DCB Bank, for instance, offers 6.35 per cent on its 15 to under 18 months deposit. Small finance banks, too, offer attractive rates. Equitas Small Finance Bank’s 1-year to 18 months deposit at an interest rate of 6.6 per cent is an option worth considering.
Better liquidity for floating rate option
Also, while rates on the 10-year NCDs (series III and IV) at 6.82 per cent and 7 per cent and on the 15-year NCDs (series VI and VII) at 6.97 and 7.15 per cent may appear attractive, note that these are fixed rates. The 10-year floating rate option, which offers a coupon of 80 basis points over the 10-year G-Sec yield (5.9 per cent now), is a better alternative. Today, the floating rate option can offer 6.7 per cent and this will be reset annually. Floating rates, though, will be subject to a floor rate of 6 per cent and a cap of 7.5 per cent for retail individual investors.
GOI floating rate bonds still seem better when compared on interest rates alone. Today, they offer 7.15 per cent (spread of 35 basis points above NSC). There is also no cap. But these are relatively less liquid. Premature redemption (after a few years) is allowed only to those 60 years and above.
On the other hand, the PFC NCDs can be sold in the secondary market before maturity.
Minimum investment and tax
Retail investors can put in a minimum of ₹10,000 across all series collectively and in multiples of ₹1,000, thereafter. The interest received on the NCDs will be taxed at your income tax slab rate.
If the NCDs are bought in the issue and held till maturity, they will be redeemed at face value – implying no capital gains and, hence, no tax. According to Archit Gupta, Founder and CEO, ClearTax, if the NCDs are sold after being held for up to 12 months, short-term capital gains, if any will be taxed at your slab rate. If the NCDs are sold after 12 months, then any long-term capital gains will be taxed at 10 per cent without indexation benefit.
In certain ways, it becomes difficult to make the correct investment choice than to simply earn the capital itself, with individuals combusting their hard-earned money on inappropriate securities. Our future could be made or ruined by these investments, and hence it is necessary to pick them carefully. Fixed Deposits and Public Provident Fund (PPF) are two highly common investment vehicles, each competing to draw investors with a range of advantages and assured returns as well. For risk-averse investors, both instruments are perfect alternatives, but which can be the best bet that suits your personal finance. Here is a summary of both the nuances and similarities to grasp.
Fixed Deposit of Banks or NBFCs
A fixed deposit (FD) is an investment strategy that gives investors the opportunity to comfortably hold their investments and gain returns on it. The interest gained on a term deposit i.e. FD is often better if opposed to a savings account. As we all know that in a fixed deposit account, the interest rate, as well as the deposit amount, remains fixed for the entire term. At banks, commercial as well as small finance, and NBFCs (non-banking financial companies), fixed deposits are available. A fixed deposit can appear to be very appealing for those looking for a risk-free investment vehicle. Returns are determined at pre-fixed interest rates and there is no impediment to the interests of an existing customer due to changes in market dynamics.
In the middle of COVID-19, where the economy is so uncertain and unpredictable, if you’re not willing to damp your heels in high risk, investing in a bank or corporate fixed deposit can be a secure bet. Fortunately, where a bank FD would provide up to Rs. 5 lakh of DICGC deposit insurance coverage, company FD will be comparatively lightweight in terms of guaranteed returns. We therefore encourage you to place your capital in a small finance bank FD where the interest rates are currently as high as 7.5%. FD will also allow you to save tax benefits up to Rs. 1.5 lakh in a year with a lock-in term of 5 years respectively.
Public Provident Fund
Public Provident Fund (PPF), funded by the Government of India, is a tax saving investment vehicle. As this fund is backed by the government of India, it is purely a risk-free choice among the investors who want to get assured returns along with tax benefits. Some of the major banks in India are now offering this scheme as their offering and one can open a PPF account at banks as well as post office. If you don’t have a large amount to invest at present, and you’re searching for decent returns is a risk-less path, then PPF can be a good bet for you.
That being said, unlike an FD, a 15-year lock-in term comes with PPF. Consequently, if you are all right to have a part of your savings blocked for 15 years on a regular basis, then PPF is suitable to you. The yields are promised by leading banks with interest rates that are often higher than FD rates as of now. For the current quarter of January 1 to 31 March 2021, PPF will fetch you an interest rate of 7.1% which is much higher than the FD rates if we compare it with the rates of the largest commercial banks.
Difference between FD and PPF
Both Fixed Deposits and the Public Provident Fund can be taken into consideration for risk-averse investors. But which can be the best? Let’s find out by differentiating both:
Maturity period: Public Provident Funds fall with a maximum period of 15 years, which is obviously an extremely long period. On the other hand, fixed deposits can be locked for terms ranging from 7 days to 10 years, based on an individual’s requirements, thereby allowing more stability in preparing for the near future.
Interest Rates: The interest rate on PPF is set and revised by the Government on a quarterly basis. The current rate of interest on PPF is 7.1 percent per annum. The interest rates on fixed deposits are determined by financial institutions, and by doing a short survey, an individual may well have a shot to get a higher interest rate. Many small financial banks can provide you an interest rate of up to 7.5 percent, and you can get an interest rate of up to 9 percent on corporate fixed deposits currently.
Premature withdrawal facility: For PPF, premature withdrawal facility is allowed after 5 years of deposit. Some banks allow early withdrawals of fixed deposits, however, relying on their policy, they can charge a certain penalty in case of premature withdrawal.
Loan against deposit: Loans against the PPF can be issued from the third year onwards from the date of account opening. Most banks provide an overdraft option in the case of fixed deposits that may reach as high as 90 percent of the balance in the FD.
Taxation: Under Section 80C of the Income Tax Act, individuals can claim a tax deduction for such holdings, with both the Public Provident Fund and Tax Saving Fixed Deposits being liable for such exemptions. For both of these savings, the current cumulative deduction available is Rs 1.5 lakh respectively.
Maximum deposit amount: The overall amount that a person can contribute in PPF is restricted to Rs 1.5 lakh per year. But when it comes to fixed deposits the overall deposit limit is not restricted. Based on individual bank policy you can deposit in crores.
FD vs PPF: How can I calculate my returns?
Interest to be earned on investments is compounded annually as far as PPF is known. There are two ways in which it is measured in the occurrence of fixed deposits, via. Compound interest or transparent interest. There are methods such as the FD Calculator and PPF Calculator accessible at Goodreturns.in to get an estimation of the maturity amount. Both these tools are cost-free and can be utilised countless times to help investors determine the right choice for them at varying FD/PPF rates and maturity period.
How can I open an FD/PPF account?
Depositors have the alternative to choose from two types of fixed deposits, fixed deposits of banks and fixed deposits from companies. Bank Fixed Deposits can be opened by submitting the required KYC documents and application form at any bank. Most of the banks are also allowing online methods to open an FD account. Company Fixed Deposits are provided by corporations where depositors for a fixed amount of time can deposit money with the company. Company fixed deposits come with higher returns but are not risk-free until you go for a high rated company FD. It is easy to open Company Fixed Deposits by filling out the application form and submitting the necessary documents as well.
Our take
The selection between FD and PPF relies on the investor’s requirements, so one can carefully consider the benefits and drawbacks of both instruments when considering between these two. Though PPF is an absolutely safe choice as it is backed by the government, it comes with a long lock-in duration of 15 years and also a premature withdrawal is only allowed after 5 years of continuous deposit. There is insurance of Rs. 5 lakh on bank FDs when discussing FD. In contrast to PPF, FD is a considerably more flexible alternative. Premature withdrawals, both partial and complete, can be used as per the rules of the bank or corporation. Consequently, PPF may seem effective if the intention is to hold the capital locked-in securely for a large couple of years. If you want a low-risk investment with respectable returns along with the convenience of closing the account early, FD is a smarter bet.
For investment related articles, business news and mutual fund advise
YES,in collaboration with Aditya Birla Wellness Private Limited has launched ‘YES BANK Wellness’ and ‘YES BANK Wellness Plus’ credit cards with the aim of holistic health, self-care and wellness growth of the consumers.
Cardholders will be able to enjoy the complimentary health benefits by simply registering on the Aditya Birla Multiply App. The app will allow consumers to avail complimentary benefits such as annual health check-up, round the clock doctor or counsellor helpline, in-studio or home-based workout sessions, personalized diet plans, among others.
Rajanish Prabhu, Business Head – Credit Cards and Merchant Acquisition, YES BANK, says, “As we adapt to the new normal, prioritizing the health and well-being as individuals and that of our loved ones has become ever more important. This card has been designed keeping the holistic wellness needs of consumers in mind and it is a compelling value proposition.”
Key benefits of the YES BANK Wellness and Wellness Plus Card;
1. Wellness Credit Card
Priced at Rs 1,999 a year, the Wellness card will offer 20 Reward Points on Pharmacy spends (every Rs 200),
4 Reward Points on other spends (every Rs 200), along with complimentary annual preventive health check-up (25 parameters).
6 complimentary fitness session per month: options like Gym, Yoga and Zumba. The card will also offer unlimited doctor consultations on call, and free online consultations across medical specialities.
2 . Wellness Plus Credit Card
Priced at Rs 2,999 a year, the Contactless payment Wellness Plus card will offer 30 Reward Points on Pharmacy spends (every Rs 200), 6 Reward Points on other spends (every Rs 200).
Complimentary annual preventive health check-up (31 parameters), and 12 complimentary fitness session per month: options like Gym, Yoga and Zumba.
It will offer unlimited Doctor consultations on call, Diet Plans according to the cardholder’s goals, and free online consultations across medical specialities.
Cardholders will also get domestic airport lounge access (2 visits per quarter).
The bank says as consumers face new realities of home-schooling of children, working from home, and lack of physical contact with loved ones and colleagues, this innovative step will encourage and promote self-care, mental and physical well-being. The cards also offer benefits like annual complimentary preventive health check-up, on-call consultation with Doctors, Specialists, Counsellors and Nutritionists, etc.
ICICI Prudential Asset Management Company has contributed funds for planting over 50,000 saplings on behalf of its ESG fund investors.
The number of planted saplings is equivalent to the number of investors who have opted to invest in ICICI Prudential ESG Fund during the New Fund Offer period, said the fund house in a statement.
Post plantation, investors are provided with a certificate issued by Grow-Trees, a social enterprise which is the also the official partner of the United Nations Environment Program’s Billion Tree Campaign.
Each certificate bears a distinct eTreeCertificate number with a geo-tagged location of the plantation, thereby allowing investors to locate and track the progress of the sapling planted.
The New Fund Offer had received an encouraging response with over 50,000 applications cumulatively worth ₹1,457 crore.
In the first of its kind initiative in the mutual fund industry, ICICI Prudential AMC, in association with ICICI Foundation and Grow-Trees, planted a sapling at Nainital, Uttarakhand.
Nimesh Shah, Managing Director, ICICI Prudential AMC, said with this initiative the fund house aims to participate in improving India’s green cover and support rural livelihood.
The saplings planted through this initiative are largely indigenous in nature such that the biodiversity is maintained. The effort is aimed at restoring forests, improving wildlife habitats, and supporting rural livelihoods as part of social responsibility, which blends well with the ESG theme, said ICICI Prudential AMC.
Reserve Bank of India invites e-Tender for Annual Maintenance Contract for Providing Sniffer Dogs Services at Main Office Building (MOB) & Additional Office Building (AOB) of Reserve Bank of India, Nagpur
Estimated Cost of the work ₹20.00 lakhs (per Annum). AMC period 01.04.2021 to 31.03.2022 Earnest Money Deposit ₹ 40,000/-. The tendering would be done through the e-tendering portal of MSTC Ltd. (https://mstcecommerce.com/eprochome/rbi). All interested commercial firms/institutions/individuals must register themselves with MSTC through the above referred website to participate in the tendering process
Tender Schedule
Schedule Date
Tender view date in MSTC Website
11:00 Hrs of January 15, 2021
Pre-bid meeting
15:00 Hrs of January 28, 2021 (offline)
Last Date of submission of Tender
February 15, 2021 till 11:00 Hrs
Date of opening of Part I
February 15, 2021 till 11:30 Hrs
The Bank reserves the right to accept or reject any or all Tenders without assigning any reason thereof.
Regional Director Nagpur
NOTICE INVITING TENDER
Sl. No
Item
Details
1
E-Tender no.
RBI/Nagpur/Estate/309/20-21/ET/432
2
E-Tender name
Annual Maintenance Contract for Providing Sniffer Dogs Services at Main Office Building (MOB) & Additional Office Building (AOB) of Reserve Bank of India, Nagpur
At 1500 Hrs on January 28, 2021 at Reserve Bank of India, Main Office Building, Dr. Raghavendra Rao Road, Reserve Bank Civil Square, Civil Lines, Nagpur, Maharashtra 440001.
5
Estimated cost of the work
20 Lakhs
6
i) Earnest Money Deposit
Rs. 40,000/- (Rupees Forty thousand Only) By 1) NEFT, RBI A/c No186003001, IFSC Code: RBIS0NGPA01 (5th& 10th digit is zero).
Date of closing of online e-tender for submission of Techno-Commercial Bid & Price Bid.
February 15, 2021 till 1100 Hrs
10
Date & time of opening of Tender Part I
Part-I (Technical Bid): at 1130 Hrs on February 15, 2021
11
Date & Time of opening of Part- II (Financial Bid)
Opening of Financial Bid will be intimated to all the eligible bidders later by e-Mail.
12
Transaction Fee
0.05% of total estimate cost of contract plus GST to be paid through MSTC Payment gateway/NEFT/RTGS in favour of MSTC Limited or as advised by M/s MSTC Ltd.
For more details, please contact:- 0712-2806517 or 2806307
The Bank is not bound to accept minimum bid or any bid of the tender or any tender. The bank reserves the rights to accept the whole or part of the tender and to reject all or any tender without any reason. Tenders without EMD will not be accepted under any circumstances.
For technical assistance to register with MSTC you may kindly contact MSTC officials on the following numbers;
Reserve Bank of India, in the public interest, had issued directions to Bhagyodaya Friends Urban Co-operative Bank Ltd., Warud, Distt. Amravati, Maharashtra in exercise of powers vested in it under sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS) from the close of business on January 17, 2019. These directions were modified from time to time, the validity of which was last extended upto January 17, 2021. These shall continue to apply to the bank for a further period of three months from January 18, 2021 to April 17, 2021, subject to review. The Directions stipulate certain restrictions and / or ceiling on withdrawal / acceptance of deposits. The detailed Directions are displayed on the bank’s premises for interested members of public to peruse. Reserve Bank of India may consider modifications of the Directions depending upon the circumstances. The issue of Directions should not per se be construed as cancellation of banking license by the Reserve Bank of India. The bank will continue to undertake banking business with restrictions till its financial position improves.
