Month: April 2021

Non-banking finance cos seek easier rules for cancelling NACH mandates

Banking & Finance

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Non-banking finance companies, especially those with an asset base of less than ₹500 crore, have sought relaxation in rules for cancelling National Automated Clearing House (NACH) mandates by their customers. The Finance Industry Development Council (FIDC) has written to the National Payments Corporation of India “to provide cancellation facility through simpler means such as Whatsapp and SMS” in a secure manner.

In a letter to the NPCI Managing Director and CEO, Dilip Asbe, FIDC has said this would enable customers to cancel NACH mandates in a simple manner rather than having to access the companies’ websites to carry out such a request. NACH or “National Automated Clearing House (NACH)” for banks, financial institutions, corporates and government is a web-based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature and bulk payments.

‘Best effort’ basis

It has also requested NPCI to allow small NBFCs (with asset base of less than ₹500 crore – which are categorised by the RBI as non-systemically important) to provide such a facility on a “best effort” basis and not as a mandate.

“Most of our members are small NBFCs that operate in limited geographies and provide the vital last mile credit delivery to unserved and under-served segments of the economy including agriculturists, MSME, small road transport operators,” FIDC said in the letter, adding that many of these NBFCs are very small and do not have a well developed website.

Further, many of their customers are not tech-savvy and are not comfortable with transacting on electronic platforms though they may be comfortable in using SMS or WhatsApp, it has said.

“Small NBFCs have, with great difficulty, convinced their customers to use electronic and non-cash means for EMI payments, but still the prevalence of cash repayments is significant,” FIDC said, adding that the provision of the facility for cancellation of NACH mandates is neither feasible nor effective in achieving the ultimate objective of customer empowerment.

NPCI guidelines

In a circular dated September 11, 2020, NPCI had come out with guidelines to provide customers the facility for online cancellation of NACH mandates.

“In order to faciliate online submission of customer request for mandate cancellation, all the entities that are obtaining the mandates from the customer shall provide an option to the customer to submit the stop/cancellation request through their website or any other electronic channels,” NPCI had said in a circular, noting that customers have to reach out to the company or the bank branch and submit the cancellation request in á physical form.

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Reserve Bank of India – Tenders

Tenders

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In terms of Schedule of Tender of Part-I of the tender document on the captioned subject, a Pre-bid meeting was held on March 31, 2021 at 11.00 a.m. at 4th floor, meeting room, MOB.

2. Two firms participated and attended the said meeting. The list of participants is given below: –

Sr No. Name
  Reserve Bank of India, Ahmedabad
1 Ms. Supriya Pai (DGM)
2 Mr. Mahipal, Assistant Manager (Electrical)
3 Mr. Parth Ghori, Assistant
4 Ms. Ritu Gajjar, Assistant
  Vendors Name of Representatives
1 Prostarm Infosystem Mr. Vipul Dabhi
2 Novateur Electrical & Digital Systems Pvt. Ltd. Mr. Bhavesh Khatri
3 Novateur Electrical & Digital Systems Pvt. Ltd. Mr. Nirav Patel

3. The meeting was presided over by DGM (ED) and it began with introduction of team members from Estate Department. AM (Technical) asked if the participants are having any doubts/queries regarding Terms and Conditions of the Tender.

4. The queries raised by the participants during the meeting and the Bank’s clarifications are provided in Annex.

5. The participating bidders were advised to submit their bids on MSTC website well before the last date of submission of tender.

6. This document (minutes of the Pre-Bid Meeting) shall form a part of the tender and a duly signed & stamped copy of the same must be uploaded by the bidder along with Part-I of the tender. Any bid received without a duly signed and stamped copy of this document is liable to be rejected.

Annex

The queries raised by the vendors and their clarifications are furnished as under:

E Tender no: RBI/Ahmedabad/Estate/445/20-21/ET/686

Sr. No. Relevant paras /clauses in the Tender Documents Queries raised by the Participants RBI’s Clarification
1. Section X of the tender document Whether the Bank will provide Input power supply switch/MCCB for each UPS unit and Output Load Panel or the bidder has to provide the same? The bidders were advised to refer to Section X of tender wherein (at point no. 10) it has been clearly mentioned that the Bank will provide Input power supply switch/MCCB in the UPS room whereas the cables from Input panel to each UPS unit and from UPS to Output load panel will be in scope of the bidder. For the benefit of the bidders, it was clarified that the size of the UPS room is approx. 3.5 Metre X 3.3 Metre.
2. Section X of the tender document Duration of battery back up to be provided. Bidders were advised to refer to point III of clause K under section X of the tender document.
3. Clause 9 of Section II of the tender document Whether EMD can be submitted through NEFT? Yes (clause 9 of Section II of the tender document).

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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015





Dear All




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.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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March IPO: How Did 9 IPOs Perform In Their Debut?

Personal Finance

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Planning

oi-Sneha Kulkarni

|

In March, Dalal Street was overflowing in IPOs (initial public offerings). The bourses – NSE and BSE – have a total of nine companies listed. These nine companies raised a total of Rs 6,255 crore. An initial public offering (IPO), also known as a stock market launch, is a public offering in which a company’s shares are sold to institutional and, in most cases, retail investors. One or more investment banks underwrite an IPO and arrange for the shares to be listed on one or more stock exchanges. When a company lists its securities on a public exchange, the money paid by investors for the newly issued shares goes directly to the company, as well as any early private investors who choose to sell all or part of their holdings as part of the larger IPO.

March IPO: How Did 9 IPOs Perform In Their Debut?

Kalyan Jewellers

On March 26, Kalyan Jewellers was listed at Rs 73.9, a 15.06% discount to the issue price. Kalyan Jewellers’ shares fell as much as 13.44% on Friday, closing at Rs 75.30 apiece on the BSE. Kalyan Jewellers raised Rs 1,175 crore in its initial public offering, which included a fresh issue of Rs 800 crore in shares. On April 1, the stock closed at Rs 71.45, up 4.92%.

Anupam Rasayan India

Anupam Rasayan India was listed on March 24 at Rs 534.7, a 3.66% discount over the issue price. The Rs 760 crore IPO received 44.06 times bids, with the HNI quota (NII) receiving 97.42 times, the QIB quota 65.74 times, and the retail quota 10.77 times. On a restated EPS of Rs 5.80, the scrip had a PE of 95.2 times trailing 12-month at the issue price. This is more than double the peer average of 33 times. On April 1, the stock closed at Rs 517.10 up 5.43% on BSE.

Suryoday Small Finance Bank

It was listed on March 26 at Rs 293, a 3.93% discount over the issue price. According to NSE data, the Rs 582-crore issue received bids for 3,20,66,482 shares against 1,35,15,150 shares on offer. On April 1, the stock closed at Rs 273, down 0.13% on NSE.

Craftsman Automation

Craftsman Automation was listed on March 25 at Rs 1350, a 9.40% discount over the issue price. Craftsman Automation shares were listed on the BSE at Rs 1,350 per share, a 9.4% discount to the issue price of Rs 1,490. On the National Stock Exchange, the stock was listed at Rs 1,359, a discount of 8.79%. On April 1, the stock closed at Rs 1,447, up 1.98% on NSE.

Laxmi Organic

Laxmi Organic’s Rs 600 crore initial public offering drew a massive response (IPO) Laxmi Organic Industries’ stock opened at Rs 156.20 on stock exchanges, a 20% premium to its issue price of Rs 130 per share on the BSE.

Heranba Industries

The company’s shares began trading at Rs 900 per share, up 43.54% from the IPO price of Rs 627 per share. Heranba Industries had a market capitalisation of Rs 3,600 crore when it went public. The company listed at Rs 900, which is over 40% premium to the issue price. On April 1, the stock closed at Rs 631, up 0.04% on NSE.

Easy Trip Planners Limited

Easy Trip Planners was listed on March 19 at Rs 206, a 10.16% premium over the issue price. The listing was subdued in comparison to the IPO’s oversubscription. The Rs 510-crore issue of the online travel company was subscribed to 159 times. On April 1, the stock closed at Rs 213, up 2.05% on BSE.

Nazara Technologies Limited

Nazara Technologies was listed on March 30 at Rs 1971, a 79.02% premium over the issue price. The stock of Nazara Technologies started trading at Rs 1,971 per share, up Rs 870 or 79.02% from the IPO price of Rs 1,101 per share. On the day of the listing, the debutant stock had a market capitalization of Rs 6,002.25 crore. On April 1, the stock closed at Rs 1,670, up 13.94% on NSE.

MTAR Technologies Limited

MTAR Technologies was listed on March 15 at Rs 1063.9, an 85.03 percent premium over the issue price. MTAR Technologies made a strong market debut, trading at Rs 1,063.90 on the Bombay Stock Exchange (BSE), a premium of 85.03 percent over its issue price of Rs 575. On April 1, the stock closed at Rs 1,045, up 2.06% on BSE.



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How Gold May Perform In FY 2021-22?

Personal Finance

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Investment

oi-Roshni Agarwal

|

Now is the time again when you might plan your finances and investments basis your likely income flow and future financial goals and given the low interest rate regime for long term investments you definitely have to have a larger portion into equity and neither can ignore the yellow metal that is thought of as both as a safe-haven and inflationary hedge. And after a roller-coaster, you may as well be willing to know how gold may perform in the new fiscal year after climbing to record highs in the interim of FY21.

How Gold May Perform In FY 2021-22?

How Gold May Perform In FY 2021-22?

Now the factors currently weighing on gold price are:

Rising US 10-year treasury yield as well:

10-year US treasury yield has gone down below 1.7 percent. As can be explained here treasuries as well as gold both are considered to be safe-haven and so there exist positive correlation between bond prices and gold and negative correlation between bond yield and gold. This is because there is an opportunity cost of holding gold which does not bears any interest income so funds move from gold to bonds, weighing negatively for gold prices.

Also, at the same time the rise in bond yield have raised expectations of a hike in interest rate. Though, countries including the US, Bank of Japan have committed to maintain low interest rates for long.

Gains in the dollar:

Dollar has retreated lower in today’s trade but most of the economic indicators for the US economy in recent time have been optimistic including the GDP outcome, robust manufacturing data and a fall in number of US citizens claiming unemployment benefit and this has lent support to the dollar which is now gaining ground. This has also weighed on gold prices.

Threat of governments and central bank rolling back stimulus measures:

As and when there is seen normalization of economic activity, government’s as well as central banks may roll back the various stimulus measures provided to trigger economic revival. This approach has been already taken on to by some of the nations such as Brazil to tackle inflation.

Investment demand for gold has seen a hit even though gold price has corrected sharply

Owing to volatility in the yellow metal, investors have offloaded their position in gold and as per SPDR ETF data, while gold holdings in September 2020 were reported at 1278 tonnes, these have substantially come down to 1040 tonnes as per last reports.

So, while any sharp run in gold similar to that witnessed in 2020 will not be possible without drastic dollar losses, there is still steam left for the gold to run up owing to coronavirus which continues unabated and also because of several other geo-political risk facing the world. Besides, global central banks liquidity tap which may continue to run until there is strong economic rebound will also support gold prices.

For investors it may again be a volatile year for gold with prices swinging between Rs. 42000 to Rs. 60000 per 10 gm. Buying on dips for gold is suggested to maintain 10-15% allocation in gold.

GoodReturns.in



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SBI FD Vs Post Office FD: Which Can Be A Good Bet For Conservative Investors?

Personal Finance

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SBI Fixed Deposit For Regular Citizens

SBI FDs with a maturity period of 7 to 45 days will yield 2.9 per cent. Term deposits with a maturity period of 46 to 179 days will yield 3.9 per cent. FDs with maturity ranging from 180 days to less than one year will yield 4.4 per cent. Deposits with a maturity period of one year or less than two years will now offer 10 basis points more. The interest rate on these deposits will be 5% instead of 4.9 per cent. FDs maturing in two to three years will yield 5.1 per cent. FDs with a maturity period of three to five years will offer 5.3 per cent, while term deposits maturing in five to ten years will offer 5.4 per cent. These rates are in effect from January 2021. Below are the SBI FD rates for the general public for a deposit amount of less than Rs 2 Cr.

Tenure Rate of interest
7 days – 45 days 2.90%
46 days – 179 days 3.90%
180 days – 210 days 4.40%
211 days – 364 days 4.40%
1 year – 1 year 364 days 4.90%
2 years – 2 years 364 days 5.10%
3 years – 4 years 364 days 5.30%
5 years – 10 years 5.40%

SBI Fixed Deposit For Senior Citizens

SBI Fixed Deposit For Senior Citizens

The State Bank of India (SBI), India’s largest lender, has recently extended its SBI WeCare FD for senior citizens for the third time, until June 30. During the coronavirus pandemic, SBI FD for senior citizens was introduced to offer a higher interest rate to senior citizens. In the Retail TD category, a special SBI Wecare Deposit for Senior Citizens was introduced, in which an additional premium of 30 basis points (over and above the current 50 basis points) will be provided to Senior Citizens on their retail TD for tenors of ‘5 Years and Over’ only. The interest rate on SBI’s special FD scheme for senior citizens will be 80 basis points (bps) higher than the general public rate. SBI currently offers a 5.4 per cent interest rate on five-year fixed deposits to the general public. The interest rate applied to a fixed deposit made by a senior citizen under the special FD scheme is now 6.20 per cent respectively.

Tenure Rate of interest
7 days – 45 days 3.40%
46 days – 179 days 4.40%
180 days – 210 days 4.90%
211 days – 364 days 4.90%
1 year – 1 year 364 days 5.40%
2 years – 2 years 364 days 5.60%
3 years – 4 years 364 days 5.80%
5 years – 10 years 6.20%

Post Office Time Deposit

Post Office Time Deposit

The post office time deposit scheme is identical to those offered by banks. Term deposits are available at post offices for one to five years. On April 1, 2021, the interest rate on Post Office deposits was modified. The Government of India has withdrawn the previously declared lower rate of interest on Small Savings Schemes, and the rate of interest on these will now remain unchanged, and it will provide the same interest rate as it was in the last quarter of 2020-2021. As a result, it gives a 5.5 per cent interest rate on a one-year or three-year time deposit. The Post Office provides a 6.7 per cent interest rate for a five-year time deposit account.

Why Small Saving Schemes Is Important For Your Personal Finance?

Key benefits of post office time deposit

Key benefits of post office time deposit

The major advantages of the post office time deposit scheme are listed below:

  • Deposits in post office time deposit schemes can be made for one, two, three, or five years, with only one deposit allowed per account.
  • Transferring time deposit accounts from one post office to another can be done.
  • Time deposit accounts can be opened and managed individually or jointly.
  • When a time deposit account matures, account holders have the option of extending its term.
  • One can open a post office fixed deposit account by depositing a minimum amount of Rs 1000 and in multiple of Rs 100 with no upper limit.
  • This account can be opened and managed by a minor who is 10 years old or older. A parent or guardian can also open a Post Office Time Deposit account for a minor.
  • As it is backed by the government of India, it provides guaranteed returns.
  • Section 80C of the Income Tax Act allows for a tax exemption on 5-year time deposits.
  • Since the principal amount invested and the interest received are covered by a sovereign guarantee, POTD is considered better than FDs.

Post Office Time Deposit Interest Rates

Post Office Time Deposit Interest Rates

The below are the post office time deposit account interest rates for the period of April 1, 2021, to June 30, 2021.

Tenure ROI
1 Year 5.50%
2 Years 5.50%
3 Years 5.50%
5 Years 6.70%

Taxation

Taxation

The SBI Tax Saving Fixed Deposit Scheme enables deposits to gain a reasonable interest rate on lump-sum deposits up to Rs.1.5 lakh and also provide tax deductions of up to Rs.1.5 lakh under section 80C of the Income Tax Act. On their fixed deposit, senior citizens will earn an extra 0.50 per cent interest. Because of the tax incentives, there is a 5-year lock-in period. For a lock-in period of 5-year, the general public can earn an interest rate of 5.4% whereas senior citizens can earn an interest rate of 6.2% on tax-saving FD of SBI. This scheme allows you to deposit a minimum of Rs.1,000 and a limit of Rs.1.5 lakh. Income tax benefits, on the other hand, are only valid on a 5-year post office time deposit account. Depositors will be entitled to claim up to Rs.1.5 lakh of income tax deduction under Section 80C of the Income Tax Act, 1961.

Our take

Since the features of a Time Deposit Scheme are ideal for short-term investment and come with the assurance of assured returns which makes it a good bet for conservative investors. Investors seeking an option to bank fixed deposits should consider investing in Post Office Time Deposit Schemes, which pay better interest rates than fixed deposits for both the general public and senior citizens. You can also opt to invest in these schemes if you are an ultra-conservative investor with a low-risk appetite and a need for guaranteed returns. SBI Fixed Deposits, on the other hand, provide the highest level of security as well as consistent returns. SBI FD is perfect for you if you want complete security for your investments as well as a low but assured interest income. If you’re trying to save up a certain amount for potential use or just want to optimize your returns, go with the cumulative interest payment option. If you’re looking for a regular stream of interest, the non-cumulative alternative is the better bet. If you’re 60 years old or older, we recommend investing in a Post Office Time Deposit or a Senior Citizen Savings Scheme rather than the SBI ‘WeCare’ scheme, which is a special senior citizen FD with a 5-year term. You will, without a doubt, get a 0.80 per cent higher rate of interest than the regular rate under this deposit scheme. However, the interest rate on a post office time deposit is 6.7 per cent for a 5-year term, which is slightly higher than the rate on SBI’s special FD scheme, which is just 6.2 per cent until June.



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Minutes of Pre-bid meeting – Design, Supply, Installation, Testing and Commissioning (DSITC) of Variable Refrigerant Flow (VRF) technology based air-conditioning system for Bank’s office premises at Riverfront House in Ahmedabad

Tenders

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In terms of Schedule to Tender of Part-I of the tender document on the captioned subject, a Pre-bid meeting was held on March 30, 2021 at 03.00 PM at Meeting Room, 4th Floor, MOB.

2. Seven firms participated and attended the said meeting. The list of participants is given below: –

Sr No. Name
  Reserve Bank of India, Ahmedabad
1 Ms. Supriya Pai (DGM)
2 Mr. Ashutosh Jaiswal (DGM)
3 Mr. Mahipal, Assistant Manager (Tech-Electrical)
4 Mr. Nishant Pandey, Junior Engineer (Electrical)
5 Mr. Parth Ghori, Assistant
6 Ms. Ritu Gajjar, Assistant
  Vendors Name of Representatives
1 M/s Milestone Engineering Mr. Denny Christian
2 M/s Carrier/ Toshiba Mr. Anuj Kumar
3 M/s Carrier/ Toshiba Mr. Rajeev Saha
4 M/s Blue Star Mr. Nilay Buch
5 M/s Aditi Airconditioning Mr. Sachin Nigam
6 M/s Aditi Airconditioning Mr. Ashwin Prajapati
7 M/s Midea Mr. Hard Dave
8 M/s Samsung Mr. Pratik Shah
9 M/s Pranam Technologies Mr. Krushang Patel

3. The meeting was presided over by DGM (ED) and it began with introduction of team members from Estate Department. Assistant Manager (Tech-Electrical) asked the participating firms about any doubts/queries regarding Terms and Conditions of the Tender.

4. Various queries were raised by the participants during the meeting and were addressed. The issues raised by them regarding the Technical and Commercial Specifications and other Terms and Conditions were clarified and the same was agreed upon by all the Participants. The clarifications to the points raised by the vendors are furnished in the Annex – A

5. Additionally, HVAC layout of the 4th floor, Riverfront House is also attached with the minutes of the meeting for reference of the prospective bidders.

6. This document of Pre-Bid Meeting shall form a part of the tender and a duly signed & stamped copy of the same must be uploaded by the bidder along with Part-I of the tender. Any bid received without a duly signed and stamped copy of this document is liable to be rejected.

Annex – A

The queries raised by the vendors and their clarifications are furnished as under:

E Tender no: RBI/Ahmedabad/Estate/444/20-21/ET/685

Sr. No. Relevant paras /clauses in the Tender Documents Queries raised by the Participants / Issues discussed RBI’s Clarification
1. Point 13 of Schedule of Tender (SOT) The participants enquired about extension of the date for submitting the tender. It was clarified that the last date for the submission of the tender shall continue to be April 05, 2021 up to 03:00 PM.
2. Clause 3.24 of Section III of the Tender Document Clarification regarding tender evaluation procedure for arriving at lowest bid for work allotment. Tenders will be evaluated on the basis of Total Cost of Ownership (TCO) which will be computed as per Clause 3.24 of Section III of the Tender Document. In case, the amount quoted by the bidders for Comprehensive Annual Maintenance Contract (CAMC) is less than 6% of their own capital cost, the minimum base rate of 6% will be considered for evaluation purpose only. However, if the amount quoted for CAMC is higher than 6% of their capital cost, then the same shall be considered for evaluation purpose. Notwithstanding the above, the Bank shall pay only the quoted rate of the CAMC during the currency of the committed contract period subject to renewal formula indicated in the tender.
3. Clause 3.1.2 of Section III of the Tender Document Whether only the Original Equipment Manufacturer (OEM) or its dealers can participate in the tender? The participants may please refer Clause 3.1.2 of Section III of the Tender Document. Additionally, the participating firm must submit an undertaking as mentioned in Annexure G.
4. Item No. 1A of Schedule of Quantity What should be the combination for 40 hp outdoor unit. Participating bidders were informed that the 40 hp outdoor unit system may preferably comprise of 02 (two) nos. modular units, capacities of which shall add up to 40 hp.

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Why First 4 Days Of April Hold Significance For PPF?

Personal Finance

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Personal Finance

oi-Roshni Agarwal

|

PPF is a famous tax saving investment that enjoys EEE tax exempt status in respect of contribution made, interest earned and on maturity proceeds. And now as the fresh financial year has just begun and you may be tempted to lock current high rates after a sudden rate cut move which was later reversed. Here we will tell you why April 1-4 hold significance for PPF:

Why First 4 Days Of April Hold Significance For PPF?

Why First 4 Days Of April Hold Significance For PPF?

Say your PPF investment as at the end of March 31, 2021 was Rs. 10 lakh and you invest the maximum allowed Rs. 1.5 lakh into it again as a fresh contribution on April 3 then PPF balance as on April 3 shall be Rs. 11.5 lakh. And accordingly as per the rule, the minimum balance between April 5 and April 30 shall be Rs. 11.5 lakh. So for the April month the current 7.1% interest rate shall be payable on this amount of Rs. 11.5 lakh i.e Rs. 6804.

And now considering that you make contribution after April 5 say on April 7 then even though the balance on April 7 shall be Rs. 11.5 lakh, the minimum balance between 5th April and 30th April shall be Rs. 10 lakh, so interest earning in such a case shall be on Rs. 10 lakh even though you made a contribution in the first week of April and it will amount to Rs. 5917. So, here you lost out an interest of almost Rs. 900 just by delaying the contribution into the instrument by few days time.

Here note that PPF interest is calculated monthly but is credited only once at the financial year ending. Hence there is no monthly compounding of interest for PPF. Furthermore after you have exhausted your annual contribution to PPF at the start of the FY only, the minimum balance per month would remain the same.

But in a case if your pocket does not allows contribution to PPF all at one go that is even fine. But then your interest earnings shall be slightly lower.

GoodReturns.in



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Why Small Saving Schemes Are Important For Your Personal Finance?

Personal Finance

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Investment

oi-Vipul Das

|

The government of India has introduced a range of investment vehicles widely known as small savings schemes of the post office. The PPF, the National Savings Certificate (NSC), the Senior Citizens Savings Scheme (SCSS), Post Office Recurring Deposit, 5-Year Time Deposit and the Sukanya Samriddhi Scheme are among them. The funds contributed by individuals in these schemes is forwarded to the Centre and deposited in the National Small Savings Fund (NSSF). Since the government collects the funds for these savings schemes they are backed by the government. For the first quarter of 2021-22, the government revoked its order cutting interest rates on small savings schemes such as National Savings Certificates (NSC) and Public Provident Fund (PPF). The Finance Ministry declared a 50-110 basis point reduction in interest rates for small savings schemes on Wednesday. Small savings scheme interest rates are calculated on a quarterly basis. Union Finance Minister Nirmala Sitharaman stated in a tweet on Thursday that the interest rates of the Government of India’s small savings schemes will stay the same as they were in the last quarter (January-March) of the fiscal year 2020-21. Here, we will discuss why small savings schemes should be a must for your personal finance.

Why Small Saving Schemes Are Important For Your Personal Finance?

Tax-saving benefit

Fixed income options such as tax-saving fixed deposits, National Savings Certificates (NSC), Sukanya Samriddhi Account Scheme, Senior Citizen Savings Scheme, and the Public Provident Fund (PPF) are suitable for those seeking tax-saving investment options with minimal risk and volatility, as well as guaranteed returns. Though several small savings schemes are currently fetching decent returns along with tax incentives under section 80C, 5-year tax-saving fixed deposits are currently offering a low-interest rate of just 5.4 per cent, such as SBI. Here we will compare the post office savings schemes which are providing better returns than bank FDs along with tax benefits. (W.e.f 1.4.2021 to 30.6.21)

Scheme Rate of interest Minimum and maximum deposit Tax benefits
Post Office Time Deposit Account (TD) 1-3 year (5.5%), 5 year-6.7% Rs 1000 and in multiple of Rs 100, no upper limit 5 year TD qualifies for the benefit of section 80C of Income Tax Act, 1961.
Senior Citizen Savings Scheme (SCSS) 7.40% Rs 1000 up to Rs 15 lakhs Qualify for deduction under section 80C of Income Tax Act.
Public Provident Fund Account (PPF) 7.10% Rs 500 to Rs 1.5 lakh Tax deduction under section 80C of Income Tax Act up to rs 1.5 lakh
National Savings Certificates (NSC) 6.80% Rs 1000 and in multiple of Rs 100, no upper limit Qualify for deduction under section 80C of Income Tax Act.
Sukanya Samriddhi Accounts 7.60% Rs 250 to Rs 1.5 lakh Deposit up to Rs 1.5 lakh exempt under Section 80C, interest and amount received on maturity is tax free

Withdrawal facility

The post office, nationalised banks, and several major private lenders operate small savings schemes. By visiting a post office or a bank branch and filling out the necessary paperwork, you can invest in or withdraw from these schemes. Banks such as SBI have made an online process, especially for those who want to contribute to small savings accounts like the PPF, which means you can easily open an account and withdraw funds from your PPF account. Apart from SBI, there are banks like HDFC, Axis and ICICI Bank which allow investors to open a PPF account online. To know the process to open an account with any of these banks, click here. Premature withdrawal of the FD is often subject to more strict criteria. In the first six months, Post Office FDs cannot be prematurely closed. If you withdraw within the first 6 and 12 months, you will only receive the same rate of interest as a Post Office savings account, which is currently capped at 4%.

Better returns than bank FDs

Undoubtedly post office savings schemes provide better returns than bank FDs. If we compare the interest rates on FD of the top 5 leading banks of India such as SBI, ICICI, Axis, HDFC and Kotak Mahindra Bank, they are just providing an interest rate ranging from 2.55 to 5.75% only. Small savings rates, on the other hand, are much better than these banks’ FDs and are updated every quarter. In certain cases, though, if you’ve locked in an interest rate, you’ll continue to benefit from it even though rates fall later. Bank FD rates are comparatively lower than small savings rates and do not offer tax benefits on interest, except senior citizens who can save up to Rs 50,000 a year under Section 80 TTB of the Income Tax Act, 1961. In the five-year pool, the difference between bank FDs and Post Office FDs, which are part of small savings schemes, is higher. SBI FD offers 5.4 per cent, HDFC Bank FD offers 5.5 per cent (for five years and one day), and ICICI Bank FD offers 5.35 per cent. On the other side, a five-year Post Office deposit provides 6.7 per cent, and a five-year National Savings Certificate offers 6.8 per cent. The Public Provident Fund (PPF), which is not purely identical to FDs because of its 15-year term, is yielding 7.1 per cent. Senior citizens get 0.5 per cent higher rates from banks, but they can also reap the benefits of the 5-Year Senior Citizens Savings Scheme (SCSS), which pays 7.4 per cent. The SCSS has a five-year limit that can be extended for three more years. The government guarantees Post Office FDs. The tax status is similar to that of bank FDs. For Post Office accounts, though, you may not be able to get the same standard of net banking and bill payment facilities.

Benefits for senior citizens

Last week two leading banks of India SBI and HDFC extended their special FD schemes for senior citizens until June 2021. The Senior Citizen Care FD scheme, provided by HDFC Bank, is a special fixed deposit (FD) scheme for senior citizens. On these special FDs for senior citizens, the bank proposes higher interest rates. On these deposits, HDFC Bank gives a 75 basis point (bps) higher interest rate. The interest rate on a fixed deposit made by a senior citizen under the HDFC Bank Senior Citizen Care FD will be 6.25 per cent. These rates are in force from Nov 20. In the Retail TD category, a special SBI Wecare Deposit for Senior Citizens is added, in which an additional premium of 30 basis points (over and above the existing 50 basis points) will be provided to Senior Citizens on their retail TD for tenors of ‘5 Years and Over’ only. The deposit scheme “SBI Wecare” has been extended until June 30, 2021. The interest rate on SBI’s special FD scheme for senior citizens will be 80 basis points (bps) higher than the general public rate. SBI presently proposes a 5.4 per cent interest rate on five-year fixed deposits to the general public. If a senior citizen deposits in a fixed account under the special FD scheme, the interest rate will be 6.20 per cent respectively. Though the deadline of special FD schemes of these two banks has been extended until June, there are some post office schemes such as the Senior Citizens Savings Scheme, Post Office Monthly Income Scheme, which are currently providing higher rates of 7.4% and 6.6% respectively.

Our take

Savings Schemes are savings strategies provided by the government and other public sector financial institutions to the risk-averse investors of India. Investors can enable their wealth to cherish at higher interest rates and gain benefits such as tax exemptions by government-backed saving schemes. Savings schemes appeal to a diverse investor base, enabling them to prepare for a range of life pursuits such as retirement, children’s higher education, marriage, and so on. They are perfect for creating long-term capital because they have a fixed lock-in period and have strong returns. To simplify, there are a number of saving schemes available that appeal to a wide range of risk profiles and investors. Since they are all backed by the government, they all pledge capital appreciation and sustainability at competitive rates. To pick the best choice, bear in mind the interest rates, tax advantages, and lock-in period of various schemes. You can also invest in a mix of the best investment strategies for optimum wealth generation.



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New Income Tax Return Forms for AY 2021-22: Check Details Here

Personal Finance

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oi-Sneha Kulkarni

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In light of the ongoing COVID pandemic and to make things easier for taxpayers, no significant changes to the ITR Forms have been made in comparison to last year’s ITR Forms. Only the bare minimum changes were made as a result of amendments to the Income-tax Act of 1961. In comparison to last year, there has been no change in the way ITR Forms are filed. The assessment year for income earned in the financial year 2020-21 is 2021-22. The ITR must be filed for income earned from April 1, 2020, to March 31, 2021, in the assessment year 2021-2022, with the last date being July 31 of the relevant assessment year unless extended by the government. The assessment year (AY) follows the fiscal year (FY). This is when the income earned during the fiscal year is assessed and taxed. Both the FY and the AY begin on April 1 and end on March 31.

New Income Tax Return Forms for AY 2021-22: Check Details Here

Who can file ITR 1 Sahaj?

The ITR 1-Sahaj is for individuals who are residents and have a total income of up to Rs 50 lakh from salaries, one house property in single ownership, interest income, family pension income, and agricultural income of up to Rs 5,000.

Who can file ITR Form 4 (Sugam)?

Individuals, HUFs, and Firms (other than LLP) who are residents and have total income up to Rs.50 lakh, one house property (single ownership), income from business and profession computed under sections 44AD, 44ADA, or 44AE or Interest Income, Family Pension, and agricultural income up to Rs.5,000 are eligible for ITR 4-Sugam.

Who can file ITR-2?

Individuals and HUFs without business or professional income and thus not eligible to file Sahaj can file ITR-2. A director of any company, as well as anyone who owns unlisted equity shares of a company, will be required to file ITR-2 returns. Individuals who own more than one house property should also file an ITR-2 income tax return. ITR-2 cannot be used by any individual taxpayer who earns money from a business or profession.

Who can file ITR-3?

Those with income from a business or profession can file Form 3 of the ITR. required to file the ITR 3. Individuals who earn money from the following sources are eligible to file ITR 3:

a. Running a business or practising a profession (both tax audit and non-audit cases)

b. Income from a house, salary/pension, capital gains, and income from other sources may all be included in the return.

Who can file ITR-5?

Firms, LLPs, AOPs (Association of Persons) and BOIs (Body of Individuals), Artificial Juridical Person (AJP), Estate of Deceased, Estate of Insolvent, Business Trust, and Investment Fund are all eligible to file this income tax return. Persons other than individual, HUF and companies i.e. partnership firm, LLP etc. can file ITR Form 5

Who can file ITR-6?

Companies can file ITR Form 6. Companies that are not eligible for an exemption under Section 11 must file their income tax returns in ITR-6 format. Companies that receive income from property held for charitable or religious purposes are exempt under section 11. The Income Tax Department must receive this income tax return electronically and with a digital signature.

Who can file ITR-7?

Trusts, political parties, charitable institutions etc. claiming exempt income under the Act can file ITR-7. When individuals, including companies, fall under section 139(4A), section 139 (4B), section 139 (4C), or section 139 4D, should file an ITR-7 form. It is recommended that taxpayers match the taxes deducted, collected, or paid by or on their behalf with their Tax Credit Statement Form 26AS. The ITR-7 form is divided into two parts with a total of 23 schedules. Part A consists of general information. From the 2019-20 fiscal year onwards, a taxpayer must also provide information on the registration or approval details. Part-B – Outline of total income and tax computations with regard to taxable income.



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