Month: April 2021

Know The Quick Formula To Calculate Your FD Returns

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Investment

oi-Vipul Das

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A fixed deposit (FD) or term deposit is a form of investment provided by banks, corporates and non-banking financial companies (NBFCs). These deposits usually come with a higher interest rate as opposed to a savings account. The money you put into an FD is locked in for a set period of time, which can range from 7 days to 10 years. And depending on the maturity period as well as the type of depositor i.e. Non-senior citizens or senior citizens, interest rates on FDs vary respectively. The rate of interest on FDs is set at the time of opening the account and is not affected by market volatility. Determining an FD’s maturity amount can be a difficult task, as a result, using an online FD calculator allows you to calculate it from the comfort of your home or office. But what if you don’t have internet connectivity or do not know how to use an FD calculator? No need to worry about here is the simple formula using which you can calculate your FD returns in a matter of seconds.

Know The Quick Formula To Calculate Your FD Returns

Formula to calculate FD returns

Simple interest FD and compound interest FD are the two kinds of FDs that you can choose from. The following formula is used in the fixed deposit calculator to calculate simple interest FD.

For simple interest FD

P + (P x r x t/100) = M

Here, P is the principal amount i.e. the money you invested, R is the rate of interest, T is the tenure i.e. the period for which you have invested your money and M is the maturity amount.

For instance, if you have deposited Rs 5 lakhs for a tenure of 5 years at a 5.4% interest rate (here the interest rate has been taken of SBI) then your maturity amount will be:

Rs 5,00,000 + (Rs 5,00,000 x 5.4 x 5 / 100) = Rs 6,35,000.

For compound interest FD

P (1+r/n) ^ (n * t) = M

Here, M is the maturity amount, P is the principal amount, R is the rate of interest, N is the number of compounding in a year, and T is the Tenure

For instance, if you have deposited Rs 5 lakhs for a tenure of 5 years at 5 % interest rate, then your returns will be:

Rs 5,00,000 {1 + (5/4)} ^ (4 * 5) = Rs 6,41,019 (approx)

Compound Interest = Maturity Amount – Principal Amount

Rs 6,41,019 – Rs 5,00,000 = Rs 1,41,019 (interest amount)



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On Lockdown Risk And Its Likely Impact On Markets: Axis Securities List Out Its Top Stock Picks

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Investment

oi-Roshni Agarwal

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At a time when the second Covid 19 wave has once again brutally engulfed the country with the reporting of over 1.3 lakh cases in a day, the brokerage firm Axis Securities citing caution has recommended some of the stock picks. Nonetheless, experts are optimistic that in the race of vaccination drive and the rising case of Covid 19, the former would win without considerably impacting the markets. In fact various industries have been announcing of their preparedness to deal with the second Covid wave.

Lockdown Risk And Its Likely Impact On Markets: Axis Securities Lists Its Picks

On Lockdown Risk And Its Likely Impact On Markets: Axis Securities List Out Its Top Stock Picks

However what is at risk as per the brokerage is the swift economic recovery which lately gathered pace as well as economic activity. And of the total caseload in the country, 5 states account for 73.24 percent. “Maharashtra will look to break the transmission chain through the lockdown, but it must also contain the outbreak within its borders in the national interest. While other states have put in restrictions on inter-state travel,” the Axis report pointed.

Worst Case Scenario

So, in a worst case scenario if the situation takes a bad shape similar to Brazil, Axis Securities has come up with recommendations based on what transpired in the last nationwide lockdown. And the least risk facing sectors include Pharma, IT services, Chemicals & Fertilisers, Telecom and FMCG from EPS/PE erosion in a lockdown scenario.

Further as per the brokerage observation, sectorally sales growth were not impacted for chemicals and fertilizers, telecom, IT services as well as pharma. Also, utilities including OMCs and power saw a decline in sales but profits were maintained during June quarter.

Market situation if partial lockdown is imposed:

In this event the sectors that shall continue to perform include FMCG, infra, resources as well as cement will likely maintain and that was even witnessed from the September quarter performance, noted Axis.

So, the sectors as per the brokerage that will suffer the most brunt in a partial lockdown situation shall be media, engineering, real estate and retail. And the impact on the auto will be based on the degree of severity.

And for the purpose, the brokerage has come up with the list basis 3 criterion including

1. Business resilience or sales

2. Operational flexibility or EBITDA

3. Market acknowledgement or price performance

And basis the above given criteria stocks are placed into 3 buckets:

1. In the first 35 stocks that registered healthy June 2020 sales as well as price performance. The only exception being from the BFSI pack wherein it included stocks that registered positive price performance by December 2020- a sign of book confidence.

The stock list here comprise Divis Labs, IPCA, Alembic Pharma, PI Industries, Britannia Industries, Persistent Systems, L&T Infotech , HDFC Bank, Kotak Mahindra Bank, Bharti Airtel, Dr. Reddy’s, Biocon, Natco Pharma, Cholamandalam Investment, Mphasis, Bajaj Finance, Coforge, Indian Energy Exchange, Cipla, Aurobindo Pharma, HCL Technologies, HDFC, Infosys, Alkem Labs, Eris Lifesciences, Tech Mahindra, HUL, Cadila Healthcare, Mindtree, Sumitomo Chemical,Torrent Pharma, Nestle, Glenmark Pharma, TCS and Syngene.

2. Stock picks in case of partial lockdown:

17 stocks that registered positive September 2020 sales as well as June 2020 performance (early market acknowledgment-confidence in business model or outlook)

Here the list includes Balkrishna Industries, JK Cement, SRF, Navin Fluorine, Whirlpool India, Amara Raja Batteries, Dabur India, CG Consumer Electricals, Godrej Consumer, Berger Paints, Shree Cement, Asian Paints, Sun Pharma, Pidilite Industries, Varun, Sudarshan Chemical and Jindal Steel and Power.

3. Partial lockdown- Stocks that showed late rally:

16 stocks that saw positive September 2020 sales and positive price performance in Sept quarter – late acknowledgment by the market; could adapt in future market movement.

The stock list includes HeroMotocorp, Redington, Emami, Voltas, Suprajit Engineering, JSW Steel, Maruti Suzuki, Astral Polytechnik, Aster DM Healthcare, Ambuja Cements, Supreme Industries, Minda Industries, Mah& Mah, TVS Motor, eClerx Services and Matrimony.com

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IRDAI must review prohibition on investment in AIF investment overseas

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While the Insurance Regulatory and Development Authority of India’s (IRDAI) decision to permit insurer’s investments in startups fund of funds is a good move, it needs to review the prohibition on investment in AIFs investing overseas.

According to experts, IRDA should revisit this blanket prohibition in light of the fact that market regulator SEBI permits AIFs to invest up to 25 per cent of the investible funds in overseas securities.

Under applicable insurance laws, an insurance company cannot directly or indirectly invest outside India, and hence IRDA whilst permitting insurer’s investments in FoF has prohibited investment by such an FoF in any AIFs investing overseas.

“However, IRDA should revisit this blanket prohibition in light of the fact that whilst SEBI permits AIFs to invest upto 25 per cent of the investible funds in overseas securities, at the same time SEBI also allows the AIF managers to excuse an investor from participating in any underlying investments, if such participation is not legally permitted for the concerned investor. Hence as long as an AIF can ensure that the monies invested by insurance companies do not even have an indirect overseas investment exposure, the insurer’s direct/indirect participation in such AIFs should be permitted,” said Tejash Chitlangi, Sr. Partner IC Universal Legal Advocates & Solicitors.

In a new notification on Friday, IRDA has allowed insurance companies to make their investments in FoF, subject to the condition that these investments are not made into overseas companies. The government has set up a Fund of Funds for startups with a corpus of ₹10,000 crore. The Small Industries Development Bank of India (SIDBI) is the operating agency for the FFS.

In March, the Government had issued a notification allowing private retirement funds to park five per cent of their investible surplus into AIFs. It stated that non-government provident funds, superannuation funds, and gratuity funds to invest in units issued by Category I and Category II AIFs, subject to certain conditions.

Ashley Menezes, Partner and COO, ChrysCapital Advisors, LLP & Chair, Regulatory Affairs Committee, IVCA said the move by IRDA allows insurance companies to derisk their exposure. “However, such capital from insurance companies cannot be utilized by an AIF to make investments outside India and this is a matter that still needs discussion.”

Siddharth Pai, Founding Partner and CFO at 3one4 Capital, Co-Chair at Regulatory Affairs Committee,Indian Private Equity and Venture Capital Association (IVCA) said the FOF system is the perfect vehicle in terms of diversification for Indian Institutional Capital and the inability of Insurance Companies, whose annual premium flows is orders of magnitude larger than the entire Indian AIF universe.

“One question that still needs to be answered is whether Insurance companies can invest into AIFs with overseas investments, provided that the amount invested by the Insurance Company into the AIF will not form part of the overseas investment. The inflection point for any startup ecosystem is when domestic institutional capital is allowed to start investing into the local ecosystem. This move by the IRDAI and the move by PFRDA last month shows the government’s intent to accelerate institutional rupee funding to startups, which will help in economic growth and job creation.” Pai said.

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Top 10 Public Sector Banks That Offer Good Returns On Fixed Deposits

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oi-Vipul Das

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Last year many banks had lowered their fixed deposit interest rates in response to the Reserve Bank of India’s decision to hold the repo rate at 4%. This has become a source of concern for many risk-averse investors who fixate strongly on fixed deposit returns to achieve their financial objectives. For absolute risk reduction, many investors favour government banks to private, foreign, or small finance banking. Hence, if you are looking to invest in fixed deposits (FDs) here are the top 10 public sector banks that offer higher interest rates on FDs.

Top 10 Public Sector Banks That Offer Good Returns On Fixed Deposits

List of the best public sector banks that offer higher interest rates on FDs

Please keep in mind that for each of the public sector banks listed in the table below, we have only provided the highest reported interest rates. Bear in mind that all the interest rates listed below apply to deposits of less than Rs 2 crore.

Sr No. Banks Regular FD Rates in % Senior Citizen FD Rates in %
1 Union Bank 5.60 6.10
2 Canara Bank 5.50 6.00
3 State Bank of India 5.40 6.20
4 Bank of India 5.30 5.80
5 Punjab National Bank 5.30 5.80
6 Punjab & Sind Bank 5.25 5.75
7 Bank of Baroda 5.25 5.75
8 Indian Overseas Bank 5.20 5.70
9 Indian Bank 5.15 5.65
10 IDBI Bank 5.10 5.60

Tax benefits on fixed deposit

Individuals are eligible for a maximum income tax deduction of Rs 1.5 lakh u/s 80c each financial year. This tax advantage is only applicable to the account’s first holder in the case of a joint account. A tax-saving fixed deposit requires a minimum contribution of Rs 100 and a gross investment of Rs 1.5 lakh per financial year. And apart from FDs, there are a slew of other tax-saving investment options to consider, including ELSS, PPF, NSC, SCSS, Post Office Time Deposit and so on. Interest income from FD is classified as “Income from Other Sources.” As a result, if the interest earned in a fiscal year surpasses Rs 40,000 for regular investors and Rs 50,000 for senior citizens from all accounts kept with the bank, the bank deducts TDS. To check the specifics of the deduction, a TDS certificate will be provided. If your fixed deposit income surpasses Rs 40,000 or Rs 50,000, and you furnish the bank with your PAN, the bank may subtract 10% TDS from the interest earned. If you do not submit your PAN to the bank, the bank will subtract 20% of your fixed deposit income as TDS. When the total income is less than the required taxable amount, no TDS is deducted. That being said, where you submit Form 15G or 15H to claim interest income without TDS, the bank will not subtract TDS. To escape the inconvenience of additional TDS deduction, Form 15G (for non-senior citizens) and 15H (for senior citizens) should be submitted at the start of each financial year at your bank.

Should you invest in fixed deposits?

Exploring the current investment climate as an investor can be fraught with risk. It can be difficult to determine when the market is ready for investment while still seeking to forecast returns and align yields with the objectives. In this situation, smart portfolio allocation is critical because you don’t want to leave all of your objectives untouched. Exploring the current investment climate as an investor can be fraught with risk. It can be difficult to determine when the market is ready for investment while still seeking to forecast returns and align yields with the objectives. In this situation, smart portfolio allocation is critical because you don’t want to leave all of your objectives unfunded. A fixed deposit is a tried-and-true fixed-income strategy that risk-averse investors especially senior citizens always consider. Though the repo rate i.e. 4% has been kept untouched by RBI in its most recent bi-monthly monetary meeting on April 7, 2021, your portfolio’s yields still surge if you use FD as a [art of your investment. Because of the guaranteed returns that FDs offer, it’s impossible to overlook them while considering investment instruments. FDs play an important role in an environment flooded with negative-yield holdings particularly if you’re risk-averse and looking to achieve guaranteed returns. Unlike market-linked investments, which need regular tracking, most investors consider investing in a fixed-income investment that is a fixed deposit.



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IRDAI allows insurers to invest in Fund-of-Funds

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In a major boost to private equity industry, the Insurance Regulatory and Development Authority of India (IRDAI) has now allowed insurance companies to invest in Fund-of-Funds (FoF) that invest within the country. This move is expected to open more capital raising options for the startup ecosystem in India, fulfilling a longstanding industry demand.

The latest move by the IRDAI comes on the heels of the recent decision of the government to allow domestic private retirement funds to invest upto 5 per cent of their surplus in AIFs.

While insurers can now directly invest in FoF on the lines of their making direct investments in Alternate Investment Funds (AIFs), they are barred from investing in FoFs that invest in overseas companies or funds with overseas exposure, according to a IRDAI circular modifying the guidelines for investment in AIFs. The insurance regulator has also barred insurers from investing in AIFs in which insurer has taken an exposure.

IRDAI has also mandated insurers to obtain a quarterly certificate from a concurrent auditor about their compliance with these conditions and file it along with their quarterly periodical returns.

FoF is an AIF that invests in another AIF. An AIF is basically a vehicle established for the purpose of raising capital from a number of investors with an aim to invest these funds into assets to generate favourable returns.

In its 2017 Master circular, IRDAI had stipulated that no investment will be permitted in AIFs, which are FoFs and leverage funds.

However, now the IRDAI has said that the insurer shall invest only into FoFs which comply with the requirement of Section 27E of the Insurance Act 1938. Section 27E stipulates that no insurer can directly or indirectly invest outside India the funds of the policyholder.

Siddharth Pai, Founding Partner and CFO at 3one4 Capital, Co-Chair at Regulatory Affairs Committee, IVCA said, “IRDAI has fully embraced the Atmanirbhar movement through this new move that allows Insurance Companies to invest into FoFs. This move by the IRDAI and the move by PFRDA last month shows the government’s intent to accelerate institutional rupee funding to startups, which will help in economic growth and job creation.”

The inflection point for any startup ecosystem is when domestic institutional capital is allowed to start investing into the local ecosystem.”

Ashley Menezes, Partner and COO, ChrysCapital Advisors, LLP & Chair, Regulatory Affairs Committee, IVCA said, “It is a huge win for the private equity industry that insurance companies are now permitted to make investments into funds of funds as well, similar to them making a direct investment in an AIF. This allows insurance companies to derisk their exposure. However, such capital from insurance companies cannot be utilized by an AIF to make investments outside India and this is a matter that still needs discussion.”

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Kotak Mahindra Bank customers can pay overdue EMI through payment app

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Kotak Mahindra Bank customers can now pay a missed EMI or an overdue loan instalment using any payment app such as Google Pay, PhonePe, Paytm.

“Kotak Loans is now live on the Bharat Bill Payment System (BBPS) platform and customers have to simply choose ‘Kotak Mahindra Bank Loan’ as the biller name on the payment app of their choice,” the private sector lender said in a statement on Saturday, adding that details of any EMIs that are past the due date will be displayed and the payment will reflect in the customer’s loan account on a real-time basis.

“This repayment facility is available on all KMBL terms loans such as Personal Loan, Home Loan, Consumer Durable Loan, Business Loan, Gold Loan, Loan against Property as well as Commercial Vehicle Loan, Tractor Finance Loan, Construction Equipment Loan,” it further said.

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Does your LIC Policy Cover Covid-19 Claim?

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Insurance

oi-Sneha Kulkarni

|

With the number of new Covid-19 cases increasing by the day, hospitals in most metro areas are running out of beds. To ease policyholders’ woes LIC has allowed policyholders to deposit their maturity claim documents at any LIC office across the country. Life Insurance Corporation (LIC), a government-owned insurance company, has assured customers that it is committed to their safety and well-being during the pandemic.

LIC services are available to you 24 hours a day, seven days a week, from the comfort and security of your own home. LIC has allowed Policyholders whose Maturity payments are due to send Maturity Claims documents to any of its 113 Divisional Offices, 2048 Branches, 1526 Satellite Offices, and 74 Customer Zones, regardless of the servicing branch of the policy.

Does Your LIC Policy Cover Covid-19 Claim?

According to General Insurance Council sources, health insurance claims related to Covid have increased by 27% to 9.9 lakh claims worth Rs 14,500 crore, up from 7.8 lakh claims worth Rs 11,850 crore in January 31.

It is critical that you understand the claim process and are aware of the required documents as a nominee.

Will your policy cover Covid-19 claims?

Yes, Death claims resulting from the coronavirus COVID 19 are treated similarly to claims resulting from other causes of death. The policy’s terms and conditions govern how the death claim is handled. As a result, COVID 19 death claims are admissible, subject to policy conditions.

If the nearest branch office is open, the Nominee can submit a death claim notice, a death certificate, and a copy of the policy schedule. If your nearest branch is closed due to various COVID-19 advisories, you can email the following documents to the Nodal Person: death claim intimation, death certificate, and copy of policy schedule.

Documents required to submit death claim

A policy document, original/attested copy of death certificate issued by the local municipal authority, death claim application form, an NEFT mandate form attested by bank authorities along with a cancelled cheque of bank account passbook along with nominee’s photo identity proof, a discharge/death summary attested by hospital authorities.



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Basic Savings Account can be opened in Post Office

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Now beneficiary of government welfare scheme can open a basic savings bank account with a post office. The Finance Ministry has notified changes in Post Office Savings Account Scheme, 2019. The notification has also reduced the fee for not maintain the balance in a savings account.

As of now, such account can be opened in a scheduled commercial bank or India Post Payment Bank.

According to the notification, deposit required for opening of such an account will be NIL. There will be no requirement for maintaining minimum balance. Account can be opened by registered adult member of any Government Welfare Scheme. Guardian of a minor whose name is registered for any Government Benefit can also open an account. Same set of people can operate the account. The notification also mentioned that any Basic Savings Accounts already opened under Post Office Savings Account Rules,1981 will not be covered under the new notification and will remain operational.

Basic Savings Account is similar to Basic Saving Bank Deposit Accounts (BSBDA). These are part of normal banking services but with some conditions. One big difference is that one can have only one basic savings account in a bank or in the post office. RBI guidelines for BSBDA prescribes the deposit of cash can be made at bank branch as well as ATMs/CDMs (Cash Deposit Machine). These accounts can receive money through any electronic channel or by means of deposit /collection of cheques drawn by Central/State Government agencies and departments. There is no limit on number and value of deposits that can be made in a month. However, withdrawal will be limited to four in a month including that from branch and ATM. Bank has been asked to issue ATM-cum-Debit card.

One prominent basic savings bank account has been Jan Dhan Yojana account which can be opened in any of the bank’s branch or business correspondent’s kiosks or even with India Post Payment Banks. The government claims that with over 42.20 crore accounts and over ₹1.45 lakh crore balance, the scheme has been successful in distributing the welfare funds. These funds are also distributed with the help of Post Office Savings Account which is like normal saving bank account of a bank. Experts feel with provision of Basic Account, the post offices will have a much better product portfolio.

Post Office Savings Accounts can be opened with minimum of ₹500. After that minimum of ₹10 can be deposited while there is no limit on maximum deposit. In terms of withdrawal, minimum of ₹50 is permitted. Rules say no withdrawal will be permitted which has the effect of reducing the balance to less than ₹500. In case account balance not raised to ₹500 at the end of financial year ₹100 will be deducted as Account Maintenance Fee and if account balance became Nil the account shall stands automatically closed.

Now, the Finance Ministry has halved the Account Maintenance Fee to ₹50 (inclusive of GST). Officials feel that this will give some relief to small account holders.

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Continue Buying Into Gold At Dips; To Scale Again To $2000/Oz By Decemeber

Personal Finance

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Personal Finance

oi-Roshni Agarwal

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Of late a lag in dollar and the US yield has supported a rise in gold prices to above Rs. 46000 levels on the MCX. In Friday’s (April 9, 2021), gold future prices for June delivery settled at Rs. 46610 per 10 gm.

Continue Buying Into Gold At Dips; To Scale Again To $2000/Oz By Decemeber

Continue Buying Into Gold At Dips; To Scale Again To $2000/Oz By Decemeber

Nonetheless, year to date there has been a huge correction in gold price from its peak levels and this is owing to economic recovery from the coronavirus-led fall-out. Also, the risk sentiment has got a boost after the US economic recovery has been faster than expected, the best pace in 4 decade, giving risky-assets a push and at the same time dampening the appeal of safe haven gold.

Gold prices unlikely to fall below $1600 per oz mark

Now as the Covid 19 risk is still far from over, and so gold prices may not retreat lower below $1600 levels. Other factors that would keep the gold prices higher include low interest rates, loose monetary policy, rise in inflation because of extreme liquidity conditions and increased demand for the yellow metal from both India and China will also support prices in the immediate term. And by the end of FY22, price of gold is expected to again scale back to $2000 per oz and there is recommended a buy on every dip strategy to gain from the bullion.

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What To Do If Not Satisfied With Banking Services?

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Personal Finance

oi-Roshni Agarwal

|

In this barter system association when we trade goods for money, dealing without money cannot happen. Herein where dealing with banks or our association with banks also come into picture. Undoubtedly directly or indirectly we make the various transaction through these financial institutions, or visit them for various funding requirements loan, credit card etc.

What To Do If Not Satisfied With Banking Services?

What To Do If Not Satisfied With Banking Services?

Now, if on any front you are not satisfied due to proper response from your bank or may be because of irresponsible act from the part of the bank’s representative:

Here are the different recourses available to you as a banking customer:

1. One can file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online at (“click here to lodge a complaint”) or by sending an email to the Banking Ombudsman. There is a form along with details of the scheme on the RBI website. However, it is not mandatory to use this format.

2. One may lodge his/ her complaint at the office of the Banking Ombudsman under whose jurisdiction, the bank branch against which the complaint has to be made is situated.For complaints relating to credit cards and other types of services with centralized operations, complaints may be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located.

If the problem is taken to the Banking Ombudsman it is noteworthy that these entities do not charge any amount and the complaint can be made by one’s authorized representative. For knowing the Ombudsman, to whom you need to refer or take the complaint, you can refer to this link https://www.rbi.org.in/commonman/English/Scripts/AgainstBankABO.aspx

Greivance redressal by way of monetary compensation

The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or Rs. 20 lakhs, whichever is lower.

In a case if there has been mental harassment that the banking customer has suffered from any of the banking rep, a compensation not exceeding Rs. 1 lakh can be paid.

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