Month: May 2021

5 Best Savings Accounts With Interest Rates Up To 7.15%

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Investment

oi-Vipul Das

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A savings account is a standard bank account that lets you make deposits, keep it secure, and withdraw it while earning interest. A tiny handful of withdrawals, cheque book facility, linked debit card facilities, restricted transfer options, and so on are all key factors of a savings account. Savings accounts typically pay compound interest rates which are lower than that of fixed deposits. Despite the fact that these accounts usually pay a low interest rate, their safety makes them an excellent choice for preserving capital for potential needs. If you want to open a savings account in the current turbulent time then here are the 5 banks that are currently fetching best interest rates and most of them are also higher than the interest rates of fixed deposits of leading banks.

Top 5 Private Banks With Higher Interest Rates On Savings Accounts

Top 5 Private Banks With Higher Interest Rates On Savings Accounts

Here are the top 5 private sector banks which are currently higher interest rates on savings accounts. The interest rates are subject to the minimum and maximum deposit amount.

Banks Interest Rates W.e.f.
Bandhan Bank 3.00% to 7.15% 07.09.2020
RBL Bank 4.50% to 6.25% May 7, 2021
IndusInd Bank 4.00% to 6.00% April 26, 2021
Yes Bank 4.00% to 5.50% 08.12.2020
DCB Bank 3.25% to 5.50% 17.06.2020
Source: Bank Websites

Top 5 Public Sector Banks With Higher Interest Rates On Savings Accounts

Top 5 Public Sector Banks With Higher Interest Rates On Savings Accounts

Below we’ve curated a list of the top 5 public sector banks that are currently offering the best savings account rates.

Banks Interest Rates W.e.f.
Punjab National Bank 3.00% to 3.50% March 1, 2021
IDBI Bank 3.00% to 3.40% May 1, 2021
Canara Bank 2.90% to 3.20% 28.09.2020
Bank of Baroda 2.75% to 3.20% 12.02.2021
Punjab & Sind Bank 3.10% 12 November, 2020
Source: Bank Websites

Top 5 Small Finance Banks With Higher Interest Rates On Savings Accounts

Top 5 Small Finance Banks With Higher Interest Rates On Savings Accounts

Below we’ve compiled a list of the top 5 small finance banks with the highest savings account rates right now.

Banks Interest Rates W.e.f.
Ujjivan Small Finance Bank 4.00% to 7.00% 6th March, 2021
AU Small Finance Bank 3.50% to 7.00% May 17, 2021
Equitas Small Finance Bank 3.50% to 7.00% April 1, 2021
Fincare Small Finance Bank 3.00% to 7.00% April 1, 2021
Jana Small Finance Bank 3.00% to 6.75% 06.05.2021
Source: Bank Websites

How interest earned from a savings account is taxed?

How interest earned from a savings account is taxed?

Your savings account interest falls under the category of income from other sources, and then your net income is taxed as per the applicable tax bracket. Individuals and HUFs are eligible for the deduction under section 80TTA, but companies and firms are not. Interest earned on all savings accounts kept in post offices, banks, or co-operative banks is eligible for a maximum deduction of Rs 10,000. Interest received in excess of Rs 10,000 from any of these streams is taxable. Those who are 60 years old or older can seek a maximum deduction of Rs 50,000 on interest income under section 80TTB.



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Best Mutual Fund SIPs To Plan Retirement In India In 2021

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Best Mutual Funds from Different MF Categories That Can Serve Your Long Term Retirement Goal

Mutual fund AUM NAV as on May 21, 2021 SIP investment return 1 year 3 year 5 years
HDFC Retirement Savings Fund Rs. 1433 crore 24.23 66.00% 42.00% 52.00%
ICICI Prudential Balanced Advantage Rs. 30900 crore 45.5 14.87% 25.00% 35.00%
SBI small cap Rs. 7919 crore 86.8 42.00% 61.00% 77.00%
Parag Parikh Flexi Cap Fund Rs. 9179 crore 40.9 27.39% 51.13% 72.30%

1. HDFC Retirement Savings Fund:

1. HDFC Retirement Savings Fund:

Through a SIP of Rs. 10000 per month, you can start investing into the scheme to earn a consistent return. During the last 1-year, a lump sum investment of Rs. 10000 is now valued at Rs 17971, giving an exceptional yield of 80%. And over a still longer time frame, the mutual fund gave an annualized return in the range of 12-19 percent (This is in case of lump sum investment into the mutual fund category).

Interestingly and typically, these retirement funds are for those investors who are undisciplined when it comes to investing and can’t hold on to their investors. These MFs come with a lock in of either 5 years or until retirement.

2. ICICI Prudential Balanced Advantage:

2. ICICI Prudential Balanced Advantage:

If you have typically a longer term then this mutual fund shall be a good choice. This is a CRISIL 2 star rated scheme and has over a 1-year period generated a higher return than its benchmark of 41 percent. The fund’s holdings are into some of the bluechip names, ICICI Bank, RIL, Infosys, HDFC twins, Bharti Airtel, Motherson Sumi among others.

3. SBI Small Cap Fund:

3. SBI Small Cap Fund:

This is a risky bet and is suitable for those investors who have a longer bet as well as a high risk tolerance. Being a highly aggressive fund, the fund managed to reap a high return of over 1 percent in the last 1-year as equity markets saw their best performance. The holdings of the fund include JK Cement, Elgi Equipment, Carborundum, Sheela Foam among others. The fund is categorized within the moderately high risk category.

4. Parag Parikh Flexi Cap Fund:

4. Parag Parikh Flexi Cap Fund:

After the evolution of these flexi cap schemes, this mutual fund category has gained huge investor acceptance. Know about the category of mutual fund. Now coming back to the prospects of this fund meeting your retirement goal, this fund over the last one year has underperformed its benchmark with return of 68 percent.

The fund is invested into international equity say for instance in Alphabet Inc-Class C shares, Microsoft corp, Facebook, Amazon.com and other than that its holding include ITC, Bajaj Holdings & Investments.

Conclusion

Conclusion

Note here we have listed mutual funds considering that your retirement goal is some 10 or even 15-20 years away. But notably, you would then require a substantially higher amount in comparison to what is current expense.

Also as and when you near your financial goal it is best to get off those investments and park the money into short term debt funds to protect your investments.



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Forex gains help RBI to give record Rs 99,122 crore dividend to govt, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) is paying a dividend of Rs 99,122 crore to the government, double than the Budgetary Estimates, which will help the government tide over the revenue losses from lockdowns and extend more support to the pandemic hit industries and the poor people.

Analysts had factored in a dividend of Rs 65,000 crore from the RBI, while the government’s budget estimates included Rs 45,000 crore surplus transfer by the central bank. In fiscal 2020, the RBI had paid only Rs 57,128 crore in dividend.

How the funds came

The higher payout followed the Bimal Jalan panel report that had set a new economic framework capital buffer for the central bank along with the contingency risk buffer at 5.5 per cent.

“In our view, the upside surprise could have been driven by increased returns from domestic assets and changes in accounting practices by the central bank — the RBI recently allowed itself to book profits on its FX transactions from a weighted average cost perspective,” Barclays India said in a report.

This move could have helped the central bank boost yields on its foreign asset holdings. Further, increased holdings of domestic government securities likely further amplified the central bank’s income for the year, the report authored by Barclays India chief economist Rahul Bajoria said.

The dividend announcement will relieve some of the fiscal pressure on the government, providing it with more room to spend in the current fiscal year. This could be particularly helpful in alleviating the impact of the second Covid wave, it said.

Fight against Covid

The record dividend payout will relieve some of the fiscal pressure on the government, providing it with more room to spend in the current fiscal. This could be particularly helpful in alleviating the impact of the second wave, Bajoria added.

Aditi Nayar, the chief economist at Icra Ratings, said this considerably higher surplus transfer will offer the government a buffer to absorb the losses in indirect tax revenue that are anticipated in May-June due to the impact of the lockdowns on the level of consumption on discretionary items and contact-intensive services.

“Moreover, high commodity prices at a time when demand and pricing power are subdued will dent the margins of corporates in many sectors, compressing the growth in direct tax collections,” Nayar warned and said this higher dividend will help cushion some of this revenue shock.

After this dividend payout for the accounting period of nine months ending March 2021 (July 2020-March 2021), the RBI is left with a contingency risk buffer at 5.50 per cent of its capital.

Increased spending

Barclays said the government has flexibility now to increase support to the economy while maintaining its fiscal deficit estimate at 6.8% for FY21-22,

“So far, in response to the second Covid wave, the government has reinstated the free food distribution scheme, which should assist 80 crore people, and set aside a budgetary allocation of Rs 26,000 crore for incremental spending. Further, given the rising demand for the government’s rural job scheme, we see some likelihood that spending on the job guarantee scheme could increase further this year. Recent media reports also indicate that the finance ministry is likely working on further relief measures to support the economy,” it said.



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Best Mutual Fund SIPs To Plan Retirement In India In 2021

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Best Mutual Funds from Different MF Categories That Can Serve Your Long Term Retirement Goal

Mutual fund AUM NAV as on May 21, 2021 SIP investment return 1 year 3 year 5 years
HDFC Retirement Savings Fund Rs. 1433 crore 24.23 66 % 42% 52%
ICICI Prudential Balanced Advantage Rs. 30900 crore 45.5 14.87% 25% 35%
SBI small cap Rs. 7919 crore 86.8 42% 61% 77%
Parag Parikh Flexi Cap Fund
Rs. 9179 crore 40.9 27.39% 51.13% 72.3%

1. HDFC Retirement Savings Fund:

1. HDFC Retirement Savings Fund:

Through a SIP of Rs. 10000 per month, you can start investing into the scheme to earn a consistent return. During the last 1-year, a lump sum investment of Rs. 10000 is now valued at Rs 17971, giving an exceptional yield of 80%. And over a still longer time frame, the mutual fund gave an annualized return in the range of 12-19 percent (This is in case of lump sum investment into the mutual fund category).

Interestingly and typically, these retirement funds are for those investors who are undisciplined when it comes to investing and can’t hold on to their investors. These MFs come with a lock in of either 5 years or until retirement.

2. ICICI Prudential Balanced Advantage:

2. ICICI Prudential Balanced Advantage:

If you have typically a longer term then this mutual fund shall be a good choice. This is a CRISIL 2 star rated scheme and has over a 1-year period generated a higher return than its benchmark of 41 percent. The fund’s holdings are into some of the bluechip names, ICICI Bank, RIL, Infosys, HDFC twins, Bharti Airtel, Motherson Sumi among others.

3. SBI Small Cap Fund:

3. SBI Small Cap Fund:

This is a risky bet and is suitable for those investors who have a longer bet as well as a high risk tolerance. Being a highly aggressive fund, the fund managed to reap a high return of over 1 percent in the last 1-year as equity markets saw their best performance. The holdings of the fund include JK Cement, Elgi Equipment, Carborundum, Sheela Foam among others. The fund is categorized within the moderately high risk category.

4. Parag Parikh Flexi Cap Fund:

4. Parag Parikh Flexi Cap Fund:

After the evolution of these flexi cap schemes, this mutual fund category has gained huge investor acceptance. Know about the category of mutual fund. Now coming back to the prospects of this fund meeting your retirement goal, this fund over the last one year has underperformed its benchmark with return of 68 percent.

The fund is invested into international equity say for instance in Alphabet Inc-Class C shares, Microsoft corp, Facebook, Amazon.com and other than that its holding include ITC, Bajaj Holdings & Investments.

Conclusion

Conclusion

Note here we have listed mutual funds considering that your retirement goal is some 10 or even 15-20 years away. But notably, you would then require a substantially higher amount in comparison to what is current expense.

Also as and when you near your financial goal it is best to get off those investments and park the money into short term debt funds to protect your investments.



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4 Best Mutual Funds To Plan Retirement In India In 2021

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Best Mutual Funds from Different MF Categories That Can Serve Your Long Term Retirement Goal

Mutual fund AUM NAV as on May 21, 2021 SIP investment return 1 year 3 year 5 years
HDFC Retirement Savings Fund Rs. 1433 crore 24.23 66 % 42% 52%
ICICI Prudential Balanced Advantage Rs. 30900 crore 45.5 14.87% 25% 35%
SBI small cap Rs. 7919 crore 86.8 42% 61% 77%
Parag Parikh Flexi Cap Fund
Rs. 9179 crore 40.9 27.39% 51.13% 72.3%

1. HDFC Retirement Savings Fund:

1. HDFC Retirement Savings Fund:

Through a SIP of Rs. 10000 per month, you can start investing into the scheme to earn a consistent return. During the last 1-year, a lump sum investment of Rs. 10000 is now valued at Rs 17971, giving an exceptional yield of 80%. And over a still longer time frame, the mutual fund gave an annualized return in the range of 12-19 percent (This is in case of lump sum investment into the mutual fund category).

Interestingly and typically, these retirement funds are for those investors who are undisciplined when it comes to investing and can’t hold on to their investors. These MFs come with a lock in of either 5 years or until retirement.

2. ICICI Prudential Balanced Advantage:

2. ICICI Prudential Balanced Advantage:

If you have typically a longer term then this mutual fund shall be a good choice. This is a CRISIL 2 star rated scheme and has over a 1-year period generated a higher return than its benchmark of 41 percent. The fund’s holdings are into some of the bluechip names, ICICI Bank, RIL, Infosys, HDFC twins, Bharti Airtel, Motherson Sumi among others.

3. SBI Small Cap Fund:

3. SBI Small Cap Fund:

This is a risky bet and is suitable for those investors who have a longer bet as well as a high risk tolerance. Being a highly aggressive fund, the fund managed to reap a high return of over 1 percent in the last 1-year as equity markets saw their best performance. The holdings of the fund include JK Cement, Elgi Equipment, Carborundum, Sheela Foam among others. The fund is categorized within the moderately high risk category.

4. Parag Parikh Flexi Cap Fund:

4. Parag Parikh Flexi Cap Fund:

After the evolution of these flexi cap schemes, this mutual fund category has gained huge investor acceptance. Know about the category of mutual fund. Now coming back to the prospects of this fund meeting your retirement goal, this fund over the last one year has underperformed its benchmark with return of 68 percent.

The fund is invested into international equity say for instance in Alphabet Inc-Class C shares, Microsoft corp, Facebook, Amazon.com and other than that its holding include ITC, Bajaj Holdings & Investments.

Conclusion

Conclusion

Note here we have listed mutual funds considering that your retirement goal is some 10 or even 15-20 years away. But notably, you would then require a substantially higher amount in comparison to what is current expense.

Also as and when you near your financial goal it is best to get off those investments and park the money into short term debt funds to protect your investments.



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Rs 99,000-crore booster: Bumper dividend for govt from RBI

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A larger number of OMOs results in higher interest income for the RBI. The annual report, when released, could offer greater clarity on this.

The Reserve Bank of India (RBI) on Friday said it will transfer a surplus of Rs 99,122 crore to the government for the nine-month period ended March 31, 2021, 73.5% higher than the Rs 57,128 crore transferred for 2019-20.

With the change in the central bank’s accounting year to April-March from July-June earlier, its board discussed its functioning during the transition period of nine months (July 2020-March 2021) and approved the annual report and accounts for the transition period.

“The Board in its meeting reviewed the current economic situation, global and domestic challenges and recent policy measures taken by the Reserve Bank to mitigate the adverse impact of the second wave of Covid-19 on the economy,” the RBI said in a release. The central board decided to maintain the contingency risk buffer at 5.5%.

It was not immediately clear what contributed to the surge in the quantum of dividend transfer, but a likely reason could be higher earnings from RBI’s market operations during the year. RBI governor Shaktikanta Das said during the April monetary policy review that the central bank had made net outright purchases amounting to ₹3.13 lakh crore during 2020-21. A larger number of OMOs results in higher interest income for the RBI. The annual report, when released, could offer greater clarity on this.

The Union government had budgeted a total Rs 1 lakh crore worth of earnings by way of total dividend from RBI and public-sector enterprises in FY22. The quantum of the RBI’s surplus transfer will likely ensure that the government exceeds its revenue target under this head.

Aditi Nayar, chief economist, Icra, said the higher-than-budgeted surplus transfer will offer a buffer to the government to absorb the losses in indirect tax revenues that are anticipated in May-June 2021. Tax revenues could take a knock from the impact of the now widespread state lockdowns on the level of consumption on discretionary items and contact-intensive services.

“Moreover, high commodity prices at a time when demand and pricing power are subdued, would dent the margins of corporates in many sectors, compressing the growth in direct tax collections,” Nayar said.

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Stellar show: SBI net jumps 80% on strong interest income, lower provisions

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Commenting on the ongoing second wave, SBI chairman Dinesh Khara said there would be some impact, as the banking sector tends to move in tandem with the macro environment.

State Bank of India (SBI) on Friday reported an 80% year-on-year (y-o-y) increase in its net profit to Rs 6,451 crore for the March quarter (Q4FY21) on the back of a healthy growth in interest income, improved asset quality and lower provisioning. The lender’s net interest income (NII) grew 19% y-o-y to Rs 27,067 crore. On the back of this, SBI’s operating profit increased 7% y-o-y and 14% sequentially to Rs 19,700 crore.

Commenting on the ongoing second wave, SBI chairman Dinesh Khara said there would be some impact, as the banking sector tends to move in tandem with the macro environment.

The bottom line also got support from lower provisioning for stressed assets. Total provisions declined 11% y-o-y to Rs 13,249 crore during the March quarter. During FY21, total provisions declined 5% to Rs 51,144 crore, compared to Rs 53,645 crore during FY20.The net profit for FY21 increased 41% y-o-y to Rs 20,410 crore.

The bank saw fresh slippages of 21,934 crore during the quarter under review. “Overall, slippage and restructuring applications for FY21 stood at Rs 46,416 crore, well below guidance of the bank,” Khara said. The lender had earlier said slippage and restructuring would remain under Rs 60,000 crore for the whole financial year (FY21). Total recovery and upgradations during Q4 remained at Rs 27,930 crore. The provision coverage ratio (PCR) improved 413 bps y-o-y to 87.75%, compared to 83.62% during Q4FY20.

The asset quality improved during the March quarter. The gross non-performing asset (GNPA) ratio improved 22 basis points to 4.98%, compared to reported pro forma gross NPAs of 5.44% in the previous quarter. Similarly, net NPAs ratio improved 31 bps to 1.5% from 1.81% in the December quarter. Lenders had reported NPAs on a pro forma basis during the December quarter due to a standstill order from the apex court on declaring NPAs.

“A definitive assessment of the impact of Covid-19 is dependent upon circumstances as they evolve in the subsequent period,” Khara said. However, he said the bank might register a credit growth of around 10% in FY22 as the bank’s credit growth is normally 1% above India’s GDP.

Khara also said SBI is reaching out to customers to see if they need fresh restructuring scheme announced by the RBI. Earlier this month, the regulator had announced a fresh loan restructuring window for individual and small businesses hit hard by fresh Covid-19 wave.

The lender’s fee income increased 7.4% y-o-y to Rs 8,455 crore, compared to Rs 7,873 crore in Q4FY20. Similarly, forex income grew 16% y-o-y to Rs 803 crore. Overall, other income grew 21% y-o-y to Rs 16,225 crore.

Advances grew 5% y-o-y and 3.4% q-o-q to Rs 25.39 lakh crore. Retail lending portfolio increased 16% y-o-y to Rs 8.7 lakh crore. However, corporate advances declined 3% y-o-y to Rs 8.18 lakh crore. Deposits grew 13.5% y-o-y and 4% q-o-q to Rs 36.81 lakh crore. Current account savings account (CASA) grew 17% y-o-y and 7% q-o-q to Rs 16.46 lakh crore.

The net interest margins (NIM) improved 16 basis point (bps) y-o-y to 2.9%, but declined 22 bps sequentially. The capital adequacy ratio (CAR) remained at 14.5% with CET1 ratio of 10.02% at the end of March 2021.

The bank declared a dividend of Rs 4 per equity share for FY21. The date of payment of dividend is June 18, 2021.

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South Indian Bank back in black on lower provisioning

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The provision coverage ratio improved from 54.22% to 58.73% on a year-on-year (y-o-y) basis.

South Indian Bank on Friday reported a net profit of Rs 6.79 crore for the fourth quarter of FY21, against a loss of Rs 143.69 crore in the year-ago period, largely because of lower provisioning for bad loans. Provisions and contingencies for the fourth quarter stood at Rs 412.29 crore, compared with Rs 723.80 crore in the corresponding period of FY20 and Rs 499.48 crore in Q3 of FY21.

The Thrissur based lender had reported a net loss of Rs 91.62 crore during the third quarter of FY21. For the whole FY21, the bank has reported a net profit of Rs 61.91 crore, against Rs 104.59 crore in FY20.

The asset quality deteriorated, with GNPA ratio seen at 6.97%, compared to 4.90% in the preceding quarter and 4.98% in the year-ago period. Net NPA ratio for Q4 was at 4.71%, against 2.1% in Q3 and 3.34% in Q4 of FY20.

The provision coverage ratio improved from 54.22% to 58.73% on a year-on-year (y-o-y) basis.

Murali Ramakrishnan, MD & CEO, said the bank has been able to meet the targeted levels of recovery or upgrades which have helped in containing the GNPA level despite higher slippages during the year on account of Covid.

He added that the lower quarterly profit was mainly on account of credit cost on the fresh slippages during the fourth quarter, as a result of additional stress in the economy due to the pandemic.

The capital adequacy ratio stood at 15.42% as on March 31, 2021. The lender raised Rs 240 crore during the quarter which strengthened the common equity.

Total deposit base at the end of the March quarter is seen higher by 9% y-o-y at Rs 69,827 crore, while advances declined by 9% to Rs 59,418 crore.

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Reserve Bank of India – Tenders

Tenders

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A reference is invited to the advertisement – Application for Empanelment of Tailoring Firms for Stitching of Liveries at Reserve Bank of India, Chennai published on April 16, 2021 and on May 07, 2021 on our website www.rbi.org.in.

2. It has been decided to extend the last date for submission of tender documents till 03.00 PM of June 11, 2021. The other terms and conditions of the tender remain unchanged.

3. The tender will be opened on June 14, 2021 at 11.00 AM.

Chief General Manager (O-i-C)
Reserve Bank of India, Chennai

Place: Chennai
Date: May 21, 2021

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Banks eye sureties of ₹1.8-lakh cr

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Personal guarantees amounting to ₹1.8-lakh crore given by promoters of as many as 42 defaulting corporate entities could now be invoked by banks following the Supreme Court order.

This is likely to include Kapil and Dheeraj Wadhwan of DHFL (₹79,344 crore); Videocon promoters Venugopal and Rajkumar Dhoot (₹22,076 crore); Lanco Infratech’s Madhusudhan Rao and family (₹5,253 crore); IVRCL’s Sudhir Reddy (₹7,058 crore); and Jatin Mehta of Winsome Diamonds (₹6,185 crore), according to a PIL filed in the Supreme Court.

‘Concurrent proceedings’

Legal experts said that creditors can now initiate concurrent insolvency proceedings against the corporate debtor and the personal guarantors. Abhay Itagi, Principal Associate at law firm MV Kini, said the personal guarantors, invariably promoters, shall be liable for their flawed decisions and hopefully appropriate provisions will be inserted for simultaneous insolvency proceedings against the promoter(s) and the company.

On November 15, 2019, the Government, through a Gazette notification, had made a new provision in the Insolvency and Bankruptcy Code, giving banks the right to move an application for initiation of insolvency proceedings against personal guarantors to corporate debtors.

 

Promoters accountable

This was aimed at making promoters accountable for the defaulted loan because the recovery of debt by selling companies through the insolvency process has been low.

But the new provision was challenged by many promoters before different High Courts, claiming that promoters alone should not be held liable for the default on debt repayment.

Banking expert V Viswanathan said that the top court’s decision to uphold the Government’s notification will help banks recover more from stressed accounts. “There is a haircut whether through a resolution plan or liquidation. So, for the balance amount, the banks will now proceed against promoters.”

“Promoters who were not cooperating or trying to reduce the settlement amount by playing dirty tricks will come forward and help creditors get a better price realisation from the corporate assets (otherwise his personal assets will be attached for the balance amount),” Viswanathan said adding that the court ruling will also make promoters wary of extending personal guarantees unless they are confident of the business.

Faisal Sherwani, Partner, L&L Partners, said banks can invoke promoters guarantee even in cases where the company has been sold off under the IBC. This could spell trouble for former promoters of companies like Essar Steel and Bhushan Power.

Independent contract

“The liability of the personal debtor arises from an independent contract and the fate of the company would not ipso facto absolve the surety or personal guarantors,” Sherwani said.

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