Month: May 2021

Single FD account with and without nomination

In case a depositor have an FD account individually or in a single name with a nomination, then the designated nominee can only seek the FD amount upon the depositor’s death by providing the depositor’s death certificate and proof of identity. If there is no nomination, the depositor’s family members must file a succession certificate, as well as the depositor’s death certificate, to claim the funds. The bank will request a legitimate heir certificate if there is succession certificate and the money will be divided equally among all legitimate heirs.

In case of Joint Accounts

If the depositor have a joint account, the claim process will be determined by the category of joint account, which includes “Either or Survivor,” “Anyone or Survivors,” “Former or Survivor,” “Latter or Survivor”, “Jointly” and “Jointly or Survivor”.

“Either or Survivor”

This account can only be operated by two individuals: the primary account holder and the secondary account holder. On the death of any of the account holders, the total balance and interest (if any) will be paid to the survivor. The account can be continued by the survivor. And if the account has a nomination, the funds will go to the survivor. And if both account holders die then the nominee will be allowed to claim the amount. The maturity proceeds will be divided among the legitimate heirs of both depositors in case both the account holders die and there is no nominee.

“Anyone or Survivor”

This is close to the above-mentioned joint account. In this case, though, the account can be operated by more than two individual persons. All in the family members can manage this kind of joint account. In case of death of one or more account holders and if there are more than two individuals named on the FD, the bank will reimburse the total balance and interest to the survivors. The nominee will receive the funds until all depositors die. If no nomination is made, the fund will be transferred to the legitimate heirs of the late depositor and the surviving deposit holders upon the death of one or more depositors. The proceeds will be distributed to the legitimate heirs of all depositors upon their death.

“Former or Survivor”

Only the primary account holder can access and manage this form of joint account until hos or her demise. Only after the primary account holder has expired the second account holder can run the account and withdraw funds. The second account holder will be required to file the first account holder’s death certificate to claim the funds. The eligible nominee will be allowed to withdraw funds on n the death of both holders. The money will be allocated to the legitimate heirs of all depositors if there is no designated nominee and all depositors die.

“Latter or Survivor”

This works in the same way as the “former/survivor” account. The distinguishing factor is that only the second account holder can manage the account until he or she dies. Only after the death of the secondary account holder, the primary account holder (first account holder) can manage the account and withdraw funds accordingly. When all depositors die, the principal amount, plus any interest, will be paid to the nominee. If there is no nominee and all account holders die, the money will go to the legitimate heirs of the holders.

“Jointly”

All transactions in this type of account must be approved and confirmed by all account holders. The account will be become inactive if any of the account holders dies and the maturity proceeds will be paid to the survivor.

“Jointly or Survivor”

This is identical to the above discussed option “jointly.” The main distinction is that the account can be operated by the survivor. Conversely, the account’s proceeds will be provided to him or her.

Note

In addition to the above alternatives, there is a type known as a “Minor Account.” An adult guardian can be added as a joint account holder if the primary account holder is under the age of 18 years old. If the mode of service is “either or survivor” or “jointly,” all current account holders must sign the application form which is an important point to note here. According to the RBI guidelines, deposit accounts under which a valid nomination is available and opened under the survivor provision i.e. either or survivor or former or survivor or anyone or survivor or latter of survivor; the payment to the survivor(s)/nominee of the deposit account is a valid release of the liability of the bank provided once it has been adequately looked after, and cautioned in the deposit account.

Such bank payments to the survivor(s)/nominee does not impact any person’s right or claim against the survivors. Banks should not rely on presenting the legal representation/succession certificate/letter of administration or probate, etc. In the event of accounts without the survivor/nominee provision, banks may set a minimum balance threshold in the deceased account for which claims are to be settled and without requiring any documents other than the indemnity letter. The banks may follow the same procedure for the deposit accounts in order to access the contents of the locker/safe custody article concerning the death of the locker holder/article depositor.

The repayment of claims and disbursement payments to survivors / nominees is approved by the banks for payment within a span of not more than 15 days after the date on which the claim has been received subject to a proof of the death of the depositor and appropriate acknowledgement of the claim(s). In the case of missing persons, claims can be addressed on the grounds of presumption of death, which can be addressed only after a period of seven years has passed after the person was declared missing to a competent court and the court presumes the individual is dead under Section 107/108 of the Indian Evidence Act, 1872. By establishing a threshold cap, banks can devise a policy to address claims in respect of lost individuals without depending on the submission of any documents other than the FIR, the traceable report by police authorities and indemnity letter.

As per the AMFI’s monthly mutual fund performance tracker report, net inflows into the open-ended equity schemes continued to be positive for the second straight month in April. Among the different categories, thematic or sectoral funds netted the most inflows to the tune of Rs. 1705 crore as per a Groww report. On the other hand, the subcategories that saw outflows include multi-cap fund, dividend yield fund, value fund/ contra fund and ELSS schemes.

Here we will discuss some of the top thematic funds in terms of their performance. But before that’s let’s understand thematic schemes and their other basics:

What are Thematic/Sectoral Funds?

Thematic mutual funds are open-ended equity schemes that invest in pre-decided investment theme. Say for instance, the fund bullish on agriculture situation in the economy will bet on all such areas including fertilizer, chemicals, and sugar stocks among others.

Who Should Invest In Thematic Funds?

– High risk takers:

Thematic funds are typically ideal for those who can afford high risk as thematic or sectoral funds are the riskiest categories among the various mutual fund sub-categories. This is because the scope of investment in the fund gets restricted as the investment is limited to the pre-decided theme. Consequently the fund is semi-diversified and in a case when the theme does not augurs well owing to any of the fundamentals or technical’s involved, the scheme might suffer substantially.

– Investor who has longer available term for the investment returns:

Higher returns are not generated overnight by any investment and same is the case with thematic funds that show up their best potential in some considerable span as the sector or the theme may take time to perform at its best. Buy by and large these schemes are not advised for new mutual fund investors.

– Well versed investors with know-how on macros, sectors etc:

Investor knowing about the macros of the economy, its dynamism and of the various sectors and the factors that influence them may be able to better pick the thematic funds as they are theme-based and may park their money into stocks from different sectors.

4 Five-Star CRISIL Ranked Thematic Funds That Gave 1-Yr Return Of Up To 120%

Note: Returns and NAV are as on May 14, 2021 and sourced from Money control website.

DSP Natural Resources and New Energy fund- (G):

CRISIL 5-Star rating for the fund indicates very good performance among peer schemes. Expense ratio of the fund is 2.5% and falls under the high-risk category investment as per the MF risk-o-meter. The fund’s total investment into Indian stocks is 75% investment in of which 48.11% is into large cap, 23.4% is in mid cap and 2.38% in small cap stocks.

Rs.10000 invested in the scheme on May 12, 2020 is now value at Rs 21977, providing an annualized 1-year return of 120 percent. Some of the top holdings of the fund include Tata Steel, Jindal Steel and Power, Hindalco, Hindustan Zinc and SAIL among others.

Invesco India Infrastructure Fund-(G):

Another 5 star rated thematic fund from the Invesco Mutual fund AMC is a high risk mutual fund scheme. Expense ratio of the fund is 2.65%which is more than the category average of 2.51%. Fund has over 90 percent investment into Indian stocks of which the major chunk goes to the small cap stocks of over 40 percent.

A sum of Rs. 10000 invested on May 12, 2020 are now worth Rs. 16295, giving an annualized return of 62.95%. The fund’s holdings comprise L&T, NTPC, KNR Constructions, RIL, Tata Steel, PNC Infratech and KEC International among others.

BOI AXA Manufacturing and Infra fund- (G):

Another high risk thematic scheme entails an expense charge of 2.53%. 98% of the scheme’s investment is into Indian stocks of which the scheme is majorly invested into small cap stocks, while some of its investments are parked in G-securities. These schemes are primarily suitable for investors who have deep insight on the macros and wish to go for selective schemes that can produce higher return as against equity schemes.

Rs. 10000 invested on May 14, 2020 are now valued at Rs. 17684, providing annualized return of 77 percent. Top 10 stocks in the scheme’s portfolio include Honeywell Automation, Tube Investments, Divis Lab, Dixon Tech, APL Appolo Tubes, Gujarat Gas etc.

Sundaram Rural and Consumption Fund- (G):

The scheme carries moderately high risk as per the Risk-o-meter and commands a lower expense ratio of 2.31 percent as against the category average of 2.36%. The fund is largely invested into large-cap scrips with 40% exposure in them.

Rs. 10000 invested in the fund as lump sum as on May 14 is valued at Rs.14337, generating an annualized return of 43 percent. The fund’s holding comprises Tata Consumer, Varun Beverages, HUL, Asian Paints, HDFC Bank, Mahindra and Mahindra, ICICI Bank, Ramco Cements etc.

Taxation on Thematic funds

It is the post-tax return that matter in the long run and hence depending upon your holding period, taxation rules apply.

Holding Period	Capital gain	Taxation rate
Is less than 1 year (units are sold off)	Short term capital gains	15%
Holding period beyond 1 year	Long term capital gain	10% ( on capital gains over Rs. 1 lakh in a FY)

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