Reserve Bank of India – Press Releases
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Rupambara Press Release: 2020-2021/1108 |
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Month: February 2021
What Makes Me To Opt Senior Citizen Savings Scheme Than Bank FDs?
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What is the eligibility criteria?
An account under SCSS can be opened only by an individual citizen over 60 years. Either individually or jointly with your spouse, you can open an SCSS account. As eligibility criteria under this retirement scheme are determined in regard to only the primary account holder, a second holder (spouse) even below the age of 60 can only be considered to open a joint account. As the first holder, the spouse can also open an account under SCSS if the standards are met. At any post office or the approved branches of permitted banks, you can open an SCSS account. Even before the age of 60, but not before the age of 55, those who have obtained voluntary retirement or who have retired on superannuation can open this account. In both situations, the account must be activated within one month of the date from which the retirement payouts are received. In the case of former defence service staff, the same could be opened at the age of 50 years. Deposits rendered by individuals under 60 years of age are capped at Rs 15 lakhs.
Nomination facility and deposit limit
For your SCSS account, you are entitled to add a nominee on your behalf. The nomination can be rendered initially or may be made, cancelled or changed at any time during your lifespan. Under SCSS, you can open multiple accounts as well, but all accounts are required to have deposits of a limit of Rs 15 lakh, placed together at any particular time. With respect only to the first holder, the limit of Rs 15 lakh is determined.
Premature withdrawal option
The overall tenure of the SCSS is five years, and can only be extended once over a period for a block of 3 years respectively. You are entitled to withdraw the money early after opening the account, but not until the expiration of one year. A penalty of 1.5 per cent of the deposit amount is deducted if the account is closed before the second year. The applicable penalty is 1 per cent for accounts closed after two years but before 5 years from the date of issuance of the account.
Return
Under this scheme, the interest rate is declared in advance by the government for each quarter. The rate available for the entire term shall be the rate existing at the time the deposits are made and shall not be liable to adjustment for the deposit tenure. The interest rate announced for the quarter of March-21 is 7.4 per cent per annum. Without any cumulative option, the interest is due quarterly under SCSS. The first interest shall be paid from the date of making the deposit until the end of the quarter and for each quarter thereafter.
Taxation
You can claim a deduction under Section 80C up to Rs 1.50 lakh per year against the contributions made towards SCSS. This clause is relevant as other strategies under Section 80C for seeking tax benefits, such as EPF, bank FDs and so on. The interest earned under SCSS is subject to taxation. If the amount of interest crosses Rs 50,000 in a year for senior citizen account holders, the bank will subtract TDS @ 10 per cent. The maximum cap for TDS is Rs 40,000 per annum for others. If interest crosses the TDS limit for the entire year, you can submit Form 15H/15G to the bank or post office in order to avoid TDS. You are allowed to claim an exemption of up to Rs 50,000 for interest received under this scheme, along with other interest gained by you from banks and post offices under Section 80 TTB, if you are a senior citizen and have made deposits under this scheme.
Withdrawal option in case of your death
In the case of the death of a single holder, if a nomination is made under this scheme, the deposit amount including interest is paid to the nominee. After pursuing a painful process, the legitimate hairs can claim it in case nomination is not made by the primary holder. Thus, at the time of making the deposits, it is important to have the nominee added. The spouse gains the ability to proceed with the scheme in the case of joint accounts. If the spouse does not wish to proceed, the capital can be withdrawn respectively. The spouse has to withdraw the additional deposit in case the cumulative cross the threshold of Rs 15 lakhs.
How to open a senior citizen savings scheme account?
An SCSS account can be opened by filling the application form and depositing a minimum of Rs 1,000 or any in multiples of Rs 1,000, not surpassing Rs 15 lakh. To know more please click here.
SCSS Vs Bank FD Rates
Because you receive better returns on deposits under SCSS than those commonly available investment vehicles such as bank FDs, senior citizens who need risk-free returns on their investments should consider SCSS first. Below is an interest rate comparison of SCSS and bank FDs.
| Bank FDs/SCSS | Tenure | ROI |
|---|---|---|
| Senior Citizen Savings Scheme | 5 years | 7.40% |
| SBI Special FD Scheme | 5 Years to 10 years | 6.20% |
| HDFC Bank Senior Citizen Care FD | 5 years and 1 day to 10 years | 6.25% |
| ICICI Bank Golden Years FD | 5 years and 1 day to 10 years | 6.30% |
| Bank of Baroda Senior Citizens Saving Scheme | 5 Years to 10 years | 6.25% |
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What Makes Me To Opt Senior Citizen Savings Scheme Than Bank FDs?
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Read More/Less
What is the eligibility criteria?
An account under SCSS can be opened only by an individual citizen over 60 years. Either individually or jointly with your spouse, you can open an SCSS account. As eligibility criteria under this retirement scheme are determined in regard to only the primary account holder, a second holder (spouse) even below the age of 60 can only be considered to open a joint account. As the first holder, the spouse can also open an account under SCSS if the standards are met. At any post office or the approved branches of permitted banks, you can open an SCSS account. Even before the age of 60, but not before the age of 55, those who have obtained voluntary retirement or who have retired on superannuation can open this account. In both situations, the account must be activated within one month of the date from which the retirement payouts are received. In the case of former defence service staff, the same could be opened at the age of 50 years. Deposits rendered by individuals under 60 years of age are capped at Rs 15 lakhs.
Nomination facility and deposit limit
For your SCSS account, you are entitled to add a nominee on your behalf. The nomination can be rendered initially or may be made, cancelled or changed at any time during your lifespan. Under SCSS, you can open multiple accounts as well, but all accounts are required to have deposits of a limit of Rs 15 lakh, placed together at any particular time. With respect only to the first holder, the limit of Rs 15 lakh is determined.
Premature withdrawal option
The overall tenure of the SCSS is five years, and can only be extended once over a period for a block of 3 years respectively. You are entitled to withdraw the money early after opening the account, but not until the expiration of one year. A penalty of 1.5 per cent of the deposit amount is deducted if the account is closed before the second year. The applicable penalty is 1 per cent for accounts closed after two years but before 5 years from the date of issuance of the account.
Return
Under this scheme, the interest rate is declared in advance by the government for each quarter. The rate available for the entire term shall be the rate existing at the time the deposits are made and shall not be liable to adjustment for the deposit tenure. The interest rate announced for the quarter of March-21 is 7.4 per cent per annum. Without any cumulative option, the interest is due quarterly under SCSS. The first interest shall be paid from the date of making the deposit until the end of the quarter and for each quarter thereafter.
Taxation
You can claim a deduction under Section 80C up to Rs 1.50 lakh per year against the contributions made towards SCSS. This clause is relevant as other strategies under Section 80C for seeking tax benefits, such as EPF, bank FDs and so on. The interest earned under SCSS is subject to taxation. If the amount of interest crosses Rs 50,000 in a year for senior citizen account holders, the bank will subtract TDS @ 10 per cent. The maximum cap for TDS is Rs 40,000 per annum for others. If interest crosses the TDS limit for the entire year, you can submit Form 15H/15G to the bank or post office in order to avoid TDS. You are allowed to claim an exemption of up to Rs 50,000 for interest received under this scheme, along with other interest gained by you from banks and post offices under Section 80 TTB, if you are a senior citizen and have made deposits under this scheme.
Withdrawal option in case of your death
In the case of the death of a single holder, if a nomination is made under this scheme, the deposit amount including interest is paid to the nominee. After pursuing a painful process, the legitimate hairs can claim it in case nomination is not made by the primary holder. Thus, at the time of making the deposits, it is important to have the nominee added. The spouse gains the ability to proceed with the scheme in the case of joint accounts. If the spouse does not wish to proceed, the capital can be withdrawn respectively. The spouse has to withdraw the additional deposit in case the cumulative cross the threshold of Rs 15 lakhs.
How to open a senior citizen savings scheme account?
An SCSS account can be opened by filling the application form and depositing a minimum of Rs 1,000 or any in multiples of Rs 1,000, not surpassing Rs 15 lakh. To know more please click here.
SCSS Vs Bank FD Rates
Because you receive better returns on deposits under SCSS than those commonly available investment vehicles such as bank FDs, senior citizens who need risk-free returns on their investments should consider SCSS first. Below is an interest rate comparison of SCSS and bank FDs.
| Bank FDs/SCSS | Tenure | ROI |
|---|---|---|
| Senior Citizen Savings Scheme | 5 years | 7.40% |
| SBI Special FD Scheme | 5 Years to 10 years | 6.20% |
| HDFC Bank Senior Citizen Care FD | 5 years and 1 day to 10 years | 6.25% |
| ICICI Bank Golden Years FD | 5 years and 1 day to 10 years | 6.30% |
| Bank of Baroda Senior Citizens Saving Scheme | 5 Years to 10 years | 6.25% |
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Move to use digital solutions helps Karnataka Bank in data-driven transformation: BCG
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The Mangaluru-based Karnataka Bank Ltd’s (KBL) decision to embrace digital and technology solutions under ‘Project KBL Vikaas’ has helped it to successfully achieve its goal and lead the data-driven transformation, according to Prateek Roongta, Managing Director and Partner at Boston Consulting Group (BCG).
In a recent interaction with BusinessLine, he said BCG had a three-year mandate from the bank in 2017 to transform it across various dimensions that would be technology and digital-driven.
BCG started laying the foundation of a better future for the 90-year-old Karnataka Bank, and put in place various HR-related elements to attract, retain and reward talent better.
“But more importantly, building on that foundation, we also layered a lot of digital front-end. Whether it was digitising their lending processes, account opening process, upgrading their mobile banking, internet banking across dimensions. We created a mini digital bank within KBL,” he said, adding: “I think what is most heartening is that if you look at the adoption of digital products, the bank today is doing much better than many of the leading private sector banks.”
Data analytics
He said BCG created a 300-member strong outbound sales force, both for retail and MSME, that would go out and seek business, and also built a software – lead management system (LMS). The leads that were generated using the bank’s data were posted on the LMS, and the respective sales personnel would call the customer, update the status and ensure that the lead was fulfilled. “That was one example of using the bank’s data and running analytics on it to generate new business. In fact, that was one of the visions that we set up at the start of the programme,” he said.
A lot of the digital and analytics work was done in retail and MSME segments only to ensure the increase of the proportion of these portfolios.
Referring to the establishment of ‘Digital Centre of Excellence’ (DCoE) of the bank in Bengaluru, Roongta said once a strong foundation for future growth was made this centre was set up that can almost culturally behave like a startup, and follow an agile way of creating these digital journeys. DCoE has developed many new products for the bank over the last two years.
Key takeaways
To a query on the key takeaways from this transformation journey with Karnataka Bank, he said: “I think what we learned is that in banks like this the support from top management is really critical. That helped us here. At the same time, you have to invest time and effort in also onboarding the middle layer leadership of the bank. I think this was instrumental in getting the success that we finally got over this three year period.”
He said the bank was at its right scale in its investments in digital solutions. “When we have done similar programmes for large banks it just takes much more time to make a similar impact. This bank was at the sweet spot of having a very manageable scale to take a programme like this, which can help them see dividends in a relatively short period of time,” he said.
Stating that the bank was open to trying many different things, he said the challenge at PSBs is that they are typically held close to trying many different things. KBL was very open to experiment, he added.
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Medical expenses key reason for digital loans during pandemic: CASHe survey
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Emergency funds during the Covid-19 pandemic for medical expenses and credit refinancing was the main reason why millennials took digital loans in 2020, a new survey has revealed.
Post the lockdown, there was a surge in loan demand, mainly for home renovation and shopping, said the ‘Millennial Loan-o-Nomics’ survey by digital lending company CASHe.
“Compared to the trend in 2019, borrowing by millennials was skewed towards purchase of consumer durables,” it said.
Among the key reasons for borrowing, 29 per cent was for medical reasons, 23 per cent for home renovation, 17 per cent for shopping, 16 per cent for credit refinancing, and 15 per cent for other needs.
The 2020 report analysed data of an active pool of over 4 lakh loan applications received from customers outlining multiple data points and key insights showcasing the typical consumption patterns, buying behaviour and borrowing habits of millennials across India.
Loan demand was highest at 81 per cent from millennials earning between ₹10,000 to ₹50,000.
In terms of loan size, 76 per cent of the millennials preferred small-ticket loans ranging between ₹ 10,000 to ₹50,000.
Among cities, Bengaluru was ahead in terms of millennial credit demand, followed by Hyderabad, Chennai, Mumbai, Pune, Gurugram and Kolkata.
Yogi Sadana, CEO, CASHe, noted: “The pandemic has created a spurt in digital payments and digital lending in India that are seeking to address the unmet credit needs of young salaried millennials and under-banked individuals.”
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Religare hopeful of finalising debt restructuring soon: Nitin Aggarwal
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Religare Enterprises Ltd is hopeful of finalising the debt restructuring of Religare Finvest Ltd by the end of the current fiscal, and is also looking at a possible listing of its health insurance subsidiary, possibly in the coming year.
“We are at a very advanced stage of the resolution plan being discussed with the lenders. Within this fiscal year, we expect to have a clear roadmap for that business,” said Nitin Aggarwal, Group Chief Financial Officer, Religare Enterprises Limited (REL).
In an interaction with BusinessLine, Aggarwal said talks are on with the bankers on what option has to be taken for the restructuring.
“We have investors ready to invest, and REL is also ready to hold the company and invest in the company,” he said, when asked about the options available.
Revival of lending biz
Aggarwal is optimistic about the revival of the lending businesses after the restructuring is done.
“Lending will start after the restructuring. We are doing small-scale lending in the home finance business. SME lending we will be able to start lending only after the debt restructuring is completed and we have permission from the Reserve Bank of India,” he said.
Previously, the RBI had rejected a proposal to allow TCG Advisory, which is part of NRI investor Purnendu Chatterjee’s The Chatterjee Group, to pick up a stake in the company.
However, the other two arms of REL – health insurance and retail broking – are now on an upswing.
“If RFL is put on track this fiscal year, then next fiscal all four businesses will be on a good growth path. That is what the entire Religare team is working towards,” he said.
REL is a Core Investment Company (CIC) which owns and manages RFL (SME lending), Care Health Insurance, Religare Broking, and Religare Housing Development Finance Corporation (affordable housing finance).
Aggarwal noted that Care Health Insurance is now the second largest standalone health insurer in the country and is profitable and working well.
With the business now reaching maturity, he said REL will try and take it public either in the next fiscal year or early part of 2022.
“We have started thinking about it. It is towards maturity now,” he said. In June last year, PE firm Kedaara had taken a six per cent stake in the insurer and invested about ₹567 crore, including ₹300 crore of growth capital. The company was renamed from Religare Health Insurance to Care Health Insurance.
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RBI board reviews current economic situation
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The Central Board of Directors of the Reserve Bank of India reviewed the current economic situation, global and domestic challenges, among others, at its meeting on Tuesday .
Nirmala Sitharaman, Union Minister of Finance & Corporate Affairs, in her address to the directors, outlined the thinking behind the Budget and the priorities of the government.
In his statement on February 5, the RBI Governor Shaktikanta Das observed that the Budget has provided a strong impetus for revival of sectors such as health and well-being, infrastructure, innovation and research, among others.
Investment climate
This will have a cascading multiplier effect, going forward, particularly in improving the investment climate and reinvigorating domestic demand, income and employment, he added.
“The investment-oriented stimulus under AatmaNirbhar 2.0 and 3.0 (given during the peak of the pandemic) has started working its way through, and is improving the spending momentum along with the quality of public investment.
“Both will facilitate regaining India’s growth potential over the medium-term. The projected increase in capital expenditure augurs well for capacity creation and crowding in private investment, thereby improving the prospects for growth and building credibility around the quality of expenditure,” Das said.
The RBI has projected India’s real GDP growth at 10.5 per cent in 2021-22 – in the range of 26.2 to 8.3 per cent in H1 (April-September 2021) – and 6.0 per cent in Q3 (October-December 2021).
Per the statement, the projection for Consumer Price Index (CPI) based (retail) inflation has been revised to 5.2 per cent in Q4 (January-March) 2020-21 (earlier projection: 5.8 per cent), 5.2 per cent to 5.0 per cent in H1 2021-22 (5.2 per cent to 4.6 per cent) and 4.3 per cent in Q3: 2021-22, with risks broadly balanced.
The board meeting, held under the Chairmanship of Shaktikanta Das, Governor, through video conferencing, also reviewed the various areas of operations of the Reserve Bank, including ways for strengthening Grievance Redress Mechanism in banks.
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TCS BaNCS solution to help BankservAfrica drive Rapid Payments Program in South Africa
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Tata Consultancy Services on Tuesday announced that its TCS BaNCS for Market Infrastructure solution has been selected by the South African Bankers Services Company Proprietary Limited (BankservAfrica) to drive the Rapid Payments Program (RPP) in South Africa.
RRP is a significant national initiative to introduce a next-generation, easy to use, real-time retail payments system for the growing payments ecosystem in South Africa.
The program aims to introduce instant payments, usage of proxy resolution for easier addressability, and the ability to initiate payments using a request-to-pay, TCS explained in its press release.
BankservAfrica picked the TCS BaNCS for Market Infrastructure solution to create a modern and open central payments infrastructure to enable real-time payments and unlock innovation across multiple industries in the country.
The solution will provide Bankserv with “an ultra-high performance, low latency and scalable solution” to meet the needs of RPP. It will help consolidate multiple payment rails into a single solution while offering the flexibility and configurability to cater to a differentiated payments infrastructure, TCS said.
“Complete ISO 20022 support will enable standardization and the solution’s APIs will allow for easy integration with ecosystems and overlays, expanding the reach of payments in the country,” it said.
BankservAfrica’s customers will also be able to leverage TCS’ Quartz Smart Ledgers for proxy resolution. The Quartz KYC/ AML solution will provide real-time fraud management capabilities to facilitate transaction screening and monitoring.
Jan Pilbauer, CEO, BankservAfrica, said: “In addition to having the best technology stack, TCS BaNCS have had major success for innovating in India’s payments ecosystem and will no doubt support us in bringing some of this experience to South Africa. This comes at a time where economic recovery is critical and the industry needs to catch up to the digital changes in the economy,” said
“With TCS’ technology, we are well-positioned to expedite the launch of a modern, easy-to-use and efficient payments platform that caters to lower value transactions at an affordable cost for the benefit of all South Africans,” added Pilbauer.
R Vivekanand, Co-Head, TCS Financial Solutions said, “As BankservAfrica looks to set new standards for real-time payments and financial inclusion in South Africa, TCS BaNCS for Market Infrastructure will help create a modern, high-performance, open central payments infrastructure.”
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Employees’ union voice concerns against privatising BoM
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Bank of Maharashtra’s (BoM) employees’ union wants the government to maintain the public sector character of the bank in the backdrop of the problems that two private sector banks – YES Bank and Lakshmi Vilas Bank – and a host of urban co-operative banks (UCBs) faced in the recent past.
“Customers are scared of private sector banks, more particularly after the YES Bank episode. In Maharashtra, Punjab and Maharashtra Co-operative Bank customers have suffered a lot.
“The Reserve Bank of India (RBI) has cancelled the licence of Subhadra Local Area Bank (Kolhapur) from private sector and Shivam Sahakari Bank (Ichalkaranji, Kolhapur) and The Karad Janata Sahakari Bank (Karad) from UCB sector,” said Devidas Tuljapurkar, General Secretary, All India Bank of Maharashtra Employees Federation (AIBoMEF), in a statement.
He emphasised that the RBI and government should have initiated steps to repose stakeholders’ confidence in the banking system.
Referring to the government’s announcement that it will privatise two public sector banks in FY22, Tuljapurkar said this announcement has triggered speculation in the market and created confusion in the minds of customers.
According to reports, the government could weigh privatisation of Indian Overseas Bank (IOB), Bank of Maharashtra (BoM), Bank of India (BoI) and Central Bank of India (CBoI). It may zero-in on two of these four banks for privatisation.
“Bank of Maharashtra is identified with the common man and is showing extraordinary performance. Financials of the bank are strong.
“The unions in the bank are proactive and will continue their efforts in pursuing the government to maintain its public sector character,” said Tuljapurkar.
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All you need to know about the potential privatisation of 4 mid-sized banks, BFSI News, ET BFSI
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Share prices of Bank of India, Bank of Maharashtra, Indian Overseas Bank and Central Bank of India rallied more than 10 percent each in early trade on Tuesday amid reports that the government may privatise these banks.
Government has shortlisted these four mid-sized state-run banks for privatisation, under a new push to sell state assets and shore up government revenues, three government sources said. Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.
The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country’s bigger banks, the officials said.
Bank of India has a workforce of about 50,000 and Central Bank of India has 33,000 staff, while Indian Overseas Bank employs 26,000 and Bank of Maharashtra has about 13,000 employees, according to estimates from bank unions.
PM Modi’s office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees. The actual privatisation process may take 5-6 months to start, one of the government sources said.
To facilitate the privatisation of public sector banks, the government is likely to bring amendments to two legislations later this year. Amendments would be required in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 for privatisation, sources said.
The government hopes that the Reserve Bank of India, the country’s banking regulator, will soon ease lending restrictions on Indian Overseas Bank after an improvement in the lender’s finances that could help its sale.
“The government should consider what gives it a better pricing without compromising its long-term goal of financing the growing Indian economy,” said Devendra Pant, chief economist at India Ratings, the Indian arm of Fitch ratings agency.
(With Inputs from Reuters)
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