Suryoday Small Finance Bank is set to launch its initial public offering on March 17 and looks to raise about Rs 580 crore. The issue will close on March 19.
“The IPO will help the bank comply with the regulatory guidelines of the Reserve Bank of India for the listing of small finance banks within three years of their net worth reaching ₹500 crore, and also help raise enough primary capital to further enhance our capital base,” said R Baskar Babu, Managing Director and CEO, Suryoday SFB on Friday.
“The price band of the offer has been fixed at ₹303 to ₹305 per equity share,” the bank said in a statement, adding that it proposes to use the net proceeds from the fresh issue towards augmenting Tier – 1 capital base to meet its future capital requirements.
The issue comprises a fresh issue of up to 81.5 lakh equity shares and an offer for sale of up to 1.09 crore equity shares.
The bank has undertaken a pre-IPO placement of 52.08 lakh equity shares.
The offer for sale includes up to 43.87 lakh shares by International Finance Corporation, up to 20.21 lakh shares by Gaja Capital Fund II, up to 18.89 lakh shares by DWM (International) Mauritius, up to 7.5 lakh shares by HDFC Holdings, up to 15 lakh shares by IDFC First Bank, up to 1 lakh shares by Americorp Ventures, up to 1.86 lakh shares by Kotak Mahindra Life Insurance and up to 1.06 lakh shares by Gaja Capital India AIF Trust (represented by its trustee, Gaja Trustee Company).
The issue includes a reservation of up to five lakh shares (constituting up to 0.47 per cent of the post-Issue paid-up equity share capital), for subscription by eligible employees, who may be given a discount of up to 10 per cent of the issue price.
“Bids can be made for a minimum of 49 equity shares and in multiples of 49 equity shares thereafter,” the statement said.
Axis Capital, ICICI Securities, IIFL Securities and SBI Capital Markets are the Book Running Lead Managers to the issue
When it comes to tax-saving investments like bank FDs, National Savings Certificate (NSC), National Pension System (NPS) and so on, both the Equity Linked Savings Scheme (ELSS) and the Public Provident Fund (PPF) can also be considered as a smart bet by the tax-savers. But between the two there is still some uncertainty among investors while deciding which one to opt. Although PPF has long been a familiar investment strategy, due to higher returns, ELSS is cottoning up in the modern age. Furthermore, investors should be aware that the two strategies are not identical in terms of tax advantages. Since the asset class treatment of PPF and ELSS differs significantly, we’ve compared their characteristics here to help investors make an enlightened decision.
Equity Linked Saving Scheme (ELSS)
Equity Linked Savings Scheme (ELSS) is a form of mutual fund that counts for a tax exemption under Section 80C of the Income Tax Act of 1961. ELSS has been increasingly common in recent years thanks to higher returns and the shortest lock-in time in the tax-saving segment. Interestingly, it provides a better potential for long-term wealth creation, and it is favoured by those with a higher risk threshold. A large chunk of the capital invested in an ELSS goes into equity shares, and the returns are market-linked. As a result, the returns are influenced by market fluctuations. In the long term, it has proven to be worthwhile. Over the 5-years, the best ELSS funds have outperformed standard instruments like PPF and FD in terms of returns. Some key considerations of ELSS are as follows.
Returns: In the category of tax-saving investments, ELSS has generated one of the best returns. According to historical records, ELSS schemes have produced 14-24 per cent returns over 3 and 5 years according to the data of Value Research. ELSS returns, on the other hand, are market-linked and hence cannot be promised.
Tax benefits: Section 80C of the Income Tax Act, 1961 allows for tax deductions on ELSS investments up to Rs.1.5 lakh per year. ELSS returns, on the other hand, are taxable at 10% if the gain exceeds Rs. 1 lakh in the year, unlike PPF, which is tax-free at all stages.
Lock-in period: In the tax-saving category, ELSS investment has a three-year lock-in period, rendering it a comparatively liquid alternative.
SIP mode: The Systematic Investment Plan (SIP) allows you to start investing in ELSS with as little as Rs. 500 per month.
Risk: Because ELSS funds invest primarily in equity shares they are vulnerable to the intrinsic uncertainty of the market. This risk can be reduced by using the SIP mode to invest in ELSS.
Liquidity: ELSS provides more liquidity than other Section 80C tax-saving investment options because it has a three-year lock-in term. Although staying invested in ELSS schemes for the long term is always recommended, having the opportunity to redeem after three years gives investors more financial stability.
5 Best ELSS Funds In Terms Of Returns
Funds
3 year returns
Quant Tax Dir
22.28
Canara Robeco Eqt Tax Saver
20.26
Mirae Asset Tax Saver Dir
19.94
Axis Long Term Equity Dir
17.15
Kotak Tax Saver Dir
16.09
Funds
5 year returns
Mirae Asset Tax Saver Dir
24.53
Quant Tax Dir
23.39
BOI AXA Tax Advantage Dir
20.36
Canara Robeco Eqt Tax Saver
19.91
JM Tax Gain Dir
19.56
Source: Value Research
Public Provident Fund (PPF)
Public Provident Fund (PPF) is a long-term fixed-income scheme that comes with a tenure of 15 years and is backed by the government of India. As this tax-saving instrument is government-backed, the returns are assured and are not subjected to market-linked like ELSS or NPS. The government sets the interest rates on PPF every quarter. For the present quarter, the interest rates are capped at 7.1 per cent.
Risk: PPF is among the best tax-saving investments that not only provide assured returns but also tax benefits under section 80c. PPF comes with a sovereign-backed guarantee on both the principal and interest portion since it is regulated by the government of India. Despite its low returns, PPF has become a widely accepted investment choice because of its capital safety and guaranteed returns.
Tax benefits: PPF contributions fall under the exempt-exempt-exempt (EEE) classification, which means that PPF returns, maturity amount and interest earned are tax-free. Investors who make PPF deposits of up to Rs. 1.5 lakh are eligible for tax benefits under section 80C of the Income Tax Act.
Lock-in period: The mandatory lock-in period for PPF deposits is 15 years. The most serious disadvantage of a PPF is its scarcity of liquidity. PPF enables partial withdrawal and premature closure despite its long maturity period. Starting in the seventh year of subscription, partial withdrawals are only permitted once a year. After five years, the account can be closed early for the care of emergencies.
Returns: Every year, the interest rate on PPF deposits is fixed. On a quarterly basis, the government determines the interest rate. Currently, PPF is fetching an interest rate of 7.1% which is much higher than 5-Year FDs.
Deposit cap and withdrawal: PPF allows you to contribute a minimum of Rs 500 and up to a limit of Rs 1.5 lakh. You can deposit money into your PPF account up to 12 times annually. Just a few instances, such as acute illnesses, allow for the early closure. After 5 years from the end of the year in which the account was opened, partial withdrawals are permissible.
PPF Historical Returns
Quarter/Period
ROI in %
01.01.2021 to 31.03.2021
7.10%
01.10.2020 to 31.12.2020
7.10%
01.04.2020 to 30.09.2020
7.10%
01.07.2019 to 31.03.2020
7.90%
01.10.2018 to 30.06.2019
8.00%
01.01.2018 to 30.09.2018
7.60%
01.07.2017 to 31.12.2017
7.80%
01.04.2017 to 30.06.2017
7.90%
01.10.2016 to 31.03.2017
8.00%
01.04.2016 to 30.09.2016
8.10%
2013-14 to 2015-16
8.70%
2012-13
8.80%
01.12.2011 to 31.03.2012
8.60%
01.03.2003 to 30.11.2011
8.00%
01.03.2002 to 28.02.2003
9.00%
01.03.2001 to 28.02.2002
9.50%
15.01.2000 to 28.02.2001
11.00%
01.04.1999 to 14.01.2000
12.00%
1986-87 to 1998-99
12.00%
1985-86
10.00%
1984-85
9.50%
1983-84
9.00%
1982-83
8.50%
1981-82
8.50%
1980-81
8.00%
1979-80
7.50%
1978-79
7.50%
1977-78
7.50%
1976-77
7.00%
1975-76
7.00%
01.08.1974 to 31.03.1975
7.00%
01.04.1974 to 31.07.1974
5.80%
1973-74
5.30%
1972-73
5.00%
1971-72
5.00%
1970-71
5.00%
1969-70
4.80%
1968-69
4.80%
PPF vs ELSS Chart
The benefits and drawbacks of investing in ELSS and PPF are summarised below.
Factors
PPF
ELSS
Risk
PPF holdings are safe because they are backed by the Government of India.
Investments in ELSS are subject to market uncertainties.
Returns
Every year, the government announces the rate of interest for PPF investments. For the current quarter the interest rate is kept at 7.1%.
Since the returns are market-linked, they can differ based on the scheme chosen.
Tax benefits
PPF comes with an EEE (Exempt Exempt Exempt) status
If your returns surpass 1 lakh after a one-year holding period, you will be subject to a 10% LTCG tax.
Lock-in duration
It comes with a lock-in period of 15 years, after 5-years from the date of account opening partial withdrawals are allowed
Comes with a lock-in period of 3 years with no premature withdrawal option
Deposit cap
With a minimum deposit of Rs 500 up to a limit of Rs 1.5 lakh can be made either in a lump sum or installments
Deposits can be made through SIP
Our take
Generally, investors with a long-term financial goal consider investing in PPF. ELSS, on the other hand, has proven itself as an effective investment vehicle for the reasons of tax-benefits and long-term wealth formation, thanks to higher yields, liquidity, and convenience of investment. Over a longer time period, however, PPF provides significantly lower returns than ELSS. PPF is more advantageous in terms of tax gains and capital security; however, ELSS is a viable choice for higher and market-linked returns. Although both are beneficial in terms of tax savings, only PPF offers tax-free returns. PPF, on the other hand, has a much longer lock-in period than ELSS, which has a three-year lock-in period and promises better returns on investment compared to PPF. Besides that, the risk of investing in ELSS is greater than that of PPF, which offers a lower rate of return. Another thing to remember is premature withdrawal, which is approved by PPF after five years. However, ELSS does not accept partial withdrawals. While choosing which strategy to choose, consider all factors including risk apart from returns only.
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About 10 lakh bank employees and officers of the banks will participate in this two-day strike
Bank branches may remain closed for the next four days, including a two-day weekend holiday, and a two-day planned strike beginning Monday. The United Forum of Bank Unions (UFBU), an umbrella body of nine unions, will go on a two-day strike on March 15 and 16, 2021, to protest against the proposed privatisation of two state-owned banks. Starting tomorrow, banks are scheduled to be closed on March 13, 2021 (second Saturday) and March 14, 2021 (Sunday). Due to this, bank services are likely to be impacted for the next four days. However, ATM, mobile and internet banking will remain functional. Customers are advised to plan bank-related work accordingly today, in order to avoid any last-minute trouble.
Finance Minister Nirmala Sitharaman in her Union Budget 2021 speech announced the privatisation of two public sector banks (PSBs) as part of a disinvestment plan to generate Rs 1.75 lakh crore. In 2019, the government has already privatised IDBI Bank by selling its majority stake to LIC. Moreover, so far in the last four years, the government has merged 14 public sector banks. Conciliation meetings – before the Additional Chief Labour Commissioner on March 4, 9 and 10 – did not yield any positive result, PTI quoted All India Bank Employees Association (AIBEA) general secretary C H Venkatachalam as saying.
10 lakh employees to participate in strike
About 10 lakh bank employees and officers of the banks will participate in this two-day strike. Along with AIBEA the bank unions of All India Bank Officers’ Confederation (AIBOC), National Confederation of Bank Employees (NCBE), All India Bank Officers Association (AIBOA) and Bank Employees Confederation of India (BEFI), National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation of Bank Workers (NOBW) and National Organisation of Bank Officers (NOBO), among others have given a call for a strike.
Work in SBI may be impacted
State Bank of India (SBI) has made all arrangements to ensure normal functioning in its branches and offices. However, in a BSE filing, SBI has informed that work in the bank may be impacted by the strike. “We have been advised by the lndian Banks Association (lBA) that United Forum of Bank Unions (UFBU) which comprises 9 major Unions….has given a call for all-lndia strike by Bank Employees on 15th & 16th March 2021,” it said in an exchange filing.
Canara Bank: Bank branches functioning may be hit
Earlier this month, Canara Bank also said that it has been informed by the Indian Banks’ Association (IBA) that the United Forum of Bank Unions (UFBU) has given a call for strike in the banking industry on 15 March and 16 March for the issues relating to industry level and not for any bank-level issues. It assured that the Bank has taken necessary steps for the smooth functioning of Bank’s branches/offices on the days of proposed strike. “However, in the event of strike materializing, the functioning of the branches/offices may be impacted,” it added.
After IDBI Bank’s exit from Reserve Bank of India‘s prompt corrective action, chances of the other three lenders — Indian Overseas Bank (IOB), UCO Bank and Central Bank of India — to exit the stringent RBI norms have brightened.
According to reports, Indian Overseas Bank and Central Bank of India are among the four banks shortlisted by the government for privatisation. Bringing the banks out of PCA could boost their valuations in the event of privatisation.
The PCA status
All three banks under PCA Indian Overseas Bank, UCO Bank and Central Bank have reported net non-performing assets (NPAs) below levels that trigger PCA. However, on the proforma net NPA front, Central Bank falls short as its NNPA is 6.58% against the 6% required to be out of PCA.
Even after PCA exit, these banks may still be under RBI watch. In the case of IDBI Bank, which has committed to comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis, RBI has said the lender would be under continuous monitoring. “It has been decided that IDBI Bank be taken out of PCA framework, subject to certain conditions and continuous monitoring,” RBI had said.
Privatisation bid
Reuters had earlier reported quoting officials that the four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India.
Two public sector banks and one general insurance company are expected to be disinvested this year in addition to the divestment of IDBI Bank, Finance Minister Nirmala Sitharaman had announced during Budget presentation last month.
IDBI Bank
IDBI Bank, which met the Reserve Bank of India’s parameters, was brought out of PCA. The government wants to sell its about 48% stake in IDBI Bank to strategic investors while the current promoter Life Insurance Corporation is also slated to pare its holding. LIC is planning to come out with an IPO and This will give the strategic investor a controlling stake in the bank
As on December 30, 2020, LIC held a 49.24 per cent stake in IDBI Bank while 45.48 per cent was with the central government. How does PCA work?
PCA is based on the trigger points of CRAR (a metric to measure balance sheet strength), NPA and ROA, with three risk threshold levels (1 being the lowest and 3 the highest). Banks with capital to risk-weighted assets ratio (CRAR) of less than 10.25% but more than 7.75% fall under threshold 1. Those with CRAR of more than 6.25% but less than 7.75% fall in the second threshold. In case a bank’s common equity Tier 1 (the bare minimum capital under CRAR) falls below 3.625%, it comes under the third threshold level. Banks having a net NPA of 6% or more but less than 9% fall under threshold 1, and those with 12% or more fall under the third threshold level. On return on assets, banks with a negative return on assets for two, three and four consecutive years fall under threshold 1, threshold 2 and threshold 3, respectively.
Here’s all you need to about NSC and its benefits:
You will currently earn fixed returns of 6.8% annual interest and get a regular income. The interest rate on NSC is much higher than the interest rate of bank FDs, which is now as low as 5 to 6%.
There were two forms of certificates in the scheme at first: NSC VIII Issue and NSC IX Issue. NSC IX Issue was closed down by the government in December 2015. So far, only the NSC VIII Issue is available for purchase.
You can invest up to Rs.1.5 lakh in this government-backed tax-saving scheme to invoke the tax-deductions under section 80C.
You can make a deposit with a minimum of Rs.1,000 (or multiples of Rs.100), with no upper limit.
The current interest rate is 6.8% p.a., with the government revising it every quarter. It will be compounded annually and paid out at maturity.
National Savings Certificate (NSC) comes with a tenure of 5 years
By submitting the required documents and completing the KYC process, you can buy this certificate from any post office. It’s also simple to transfer the certificate from one post office or from one individual to another. To know more about the transfer process click here.
NSC is accepted as collateral or security by banks as well as NBFCs (Non-banking financial companies) or secured loans. To do so, the responsible postmaster must stamp the certificate with a transfer stamp and submit it to the respective bank or NBFC.
Both single type and joint type accounts can be opened for this scheme.
In the unfortunate event of the investor’s death, the investor can nominate a family member (even a minor) to claim the maturity amount.
You will be paid the full maturity value on the maturity date. Because no TDS is deducted from NSC payouts, the subscriber is liable for paying the relevant tax.
Premature closure of the account
In most instances, it is difficult to exit the scheme early. However, under specific circumstances such as the death of an investor or in case if court order premature withdrawal is possible. Only the principal amount is payable if an account is prematurely closed before the one-year from the date of account opening. In case the account is prematurely closed after one year but before three years from the date of deposit, the premature closure will be permitted, and interest on the principal amount will be paid at the rate applicable to the Post Office Savings Account from time to time for the entire months the account has been kept. The amount payable, inclusive of interest accrued for a deposit of one thousand rupees and at a proportionate rate for other amounts of deposits, if an account is prematurely closed after three years from the date of opening, is as stated in the table below.
The term between the account’s opening and its premature closure
Amount payable including rate of interest in Rs
Three years or more, but less than three years and six months
1221.61
Three years and six months or more, but less than four years
1263.05
Four years or more, but less than four years and six months
1305.9
Four years and six months or more, but less than five years
1350.2
Payment in case of death of the account holder
The eligible amount in the account is payable in the case of the death of the depositor of a single account or of all the depositors of a joint account. If a nomination is in effect at the time of the demise of the depositor of a single account or any of the depositors of a joint account, the nominee may send an application in Form-2 to the administrative department for payment of the eligible balance, along with proof of the depositor’s demise and, if any other nominee has also died, proof of such nominee’s demise. If there are two or more standing nominees, the eligible balance will be allocated in the proportion indicated by the depositor while making the nomination, or in equal proportion to all viable nominees if no such proportion or portion is stated. If a nominee dies, his designated portion of the eligible balance is divided among the existing nominees in the same proportion as their defined portions. If the surviving nominee is a minor, the payment will be made to a person designated by the depositor to receive that payment, or to the minor’s guardian if no such person has been designated.
Tax benefits on National Savings Certificate
A tax benefit of up to Rs.1.5 lakh can be received by investing in the National Savings Certificate under Section 80C. In addition, the interest paid on the certificates is credited back to its initial purchase, making it eligible for a tax exemption. For example, if you spend Rs.1,000 in certificates, you will be eligible for a tax refund on that amount during the first year. However, you can claim a tax deduction for both the NSC investment(s) and the interest received in the first year in the second year. This is how interest is accrued annually and added to the initial investment.
NSC vs other tax-savings investments
NSC is among the tax-saving investment vehicles under Section 80C that provide assured returns along with tax benefits. Below we compare other instruments with NSC for a better glance at a good tax-saving bet.
Tax-saving investments
ROI
Lock-in period
Risk
ELSS
14 – 22 % (3-year returns, source: Value Research)
This scheme is ideal for those looking for a secure investment alternative that helps them to save tax while generating a stable income and full capital security. However, unlike ELSS and NPS, NSC is unlikely to generate inflation-beating returns over the last 5 years. By making NSC available in post offices, the government has made it more affordable for potential investors. The National Savings Certificate is simply a fixed-income scheme that is backed by the government of India which makes it a secure bet for risk-averse investors, unlike ELSS or NPS. Seeing as you have understood what there is to discover about NSC and its advantages, you can confidently state that this safe and low-risk investment bet. This is the scheme to invest in whether you want your capital to be secure, or if you want to diversify your portfolio with an instrument that provides a fixed return as well as tax benefits.
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.
In the underwriting auctions conducted on March 12, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:
Reserve Bank of India invites e-Tender for Annual Maintenance Contract for Management and Housekeeping (including catering) of Bank’s Visiting Officers’ Flats, Transit Holiday Homes and Medical Flat located in the residential colonies at Bank Road and Rajendranagar, Patna. Detailed information of the tender is available on the RBI website at the following link (https://www.rbi.org.in/Scripts/BS_ViewTenders.aspx) as well as on the MSTC Portal (https://www.mstcecommerce.com/eprochome/rbi). The Last date and time for submission of e-tender is April 12, 2021 up to 15:00 Hrs.
The Bank reserve the rights to reject any tender without assigning any reason thereof.
Any amendments / corrigendum to this e-tender notice, if any, issued in future will only be notified on the RBI Website and the same will not be published in newspapers.
States like West Bengal, Assam, Odisha and Maharashtra were facing maximum re-payment stress, according to credit bureau CRIF High Mark.
The early delinquencies rate in microloans remained 6% higher than the pre-pandemic level during the third quarter of this fiscal, although it improved by over 7% from the second quarter. States like West Bengal, Assam, Odisha and Maharashtra were facing maximum re-payment stress, according to credit bureau CRIF High Mark.
Releasing the Microlend Report, a quarterly update on the microfinance lending landscape in India, on Thursday, CRIF said, “High re-payment stress has continued from the previous quarter with PAR (portfolio at risk) 31-180 reaching 12.7%, having maximum stress in West Bengal, Assam, Odisha and Maharashtra.”
The report said early delinquencies by value (PAR 1-30 DPD) reduced by 7.4% coming into December 2020. NBFC-MFIs, banks and small finance banks (SFBs) witnessed greater early repayment stress in rural markets compared to urban.
“Eastern states of Assam and West Bengal witnessed very high stress with PAR 31-180 DPD reaching 23.1% and 22.8%, respectively coming into December 2020. PAR 180+ stood higher for Assam (7.9%) and Maharashtra (7.6%) compared to other states as of December 2020,” CRIF observed.
West Bengal and Assam, hit by the dual impact of the pandemic and natural calamities, have witnessed maximum repayments stress as of Q3FY21. The Assam Microfinance Institutions (Regulation of Money Lending) Bill, 2020 has been introduced to regulate operations of microfinance institutions (MFIs) and ease stress in the sector.
Notably, collection efficiencies for microfinance players fell sharply in Assam in January after passing of the Bill by the state Assembly in December last year and talks of a possible waiver of microloans ahead of the state elections. Around 47% of banks’ MFI portfolio is concentrated in eastern region, followed by 14% in south and 12.5% in west, CRIF added.
Financial Express is now on Telegram. 
