Month: May 2021

3 High Rated Small Cap Funds That Gave 1-Year Returns Over 100%

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Investment

oi-Vipul Das

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Small-Cap Funds invest a large portion of their actively managed corpus in small-cap company, equity or equity-related securities, and undoubtedly they have also exploded in popularity in recent years among the investors. A small cap company is classified as one with a market capitalization of less than Rs. 500 crores. This means that small-cap mutual funds have a better chance of outperforming the benchmark. It’s important to remember that small-cap funds are high-risk investments. These stocks, on the other hand, have a tremendous opportunity to have incredible returns. Small-cap stocks are very vulnerable to market fluctuations. As a result, when the market falls, these stocks are likely to suffer the most. As a result, when investing in Small-Cap Funds, it is pertinent to have a long-term investment period to ensure that the investment has enough time to generate decent returns. Small-cap funds are preferred if you have a high risk profile and a long investment period. Keeping all these factors in mind we have covered here the top 3 small cap funds which are rated 4-5 star by Value Research/CRISIL and have generated 1-year returns over 100%.

3 High Rated Small Cap Funds That Gave 1-Year Returns Over 100%

Kotak Small Cap Fund

This fund has generated a return of 125.13% in the last 1 year, whereas the fund’s 3-year return and 5 year return have been 16.70% and 20.09%. The assets under management (AUM) of Kotak Small Cap Fund Direct-Growth is Rs 3.423 crores, and the latest NAV is Rs 138.21 as of 7 May 2021. The fund has a 0.60 percent expense ratio. Chemicals, Engineering, Construction, Metals, and FMCG make up the majority of the fund’s holdings. Century Plyboards (India) Ltd., Sheela Foam Ltd., Carborundum Universal Ltd., Supreme Industries Ltd., and Persistent Systems Ltd. are the fund’s top five holdings. This fund has been rated 4-star by Value Research which is acceptable.

PGIM India Midcap Opportunities Fund Direct Growth

PGIM India Midcap Opportunities Fund Direct-Growth has Rs 1,108 crores in assets under management (AUM), with a current NAV of Rs 36.10 as of May 7, 2021. The fund has a 0.49 percent expense ratio. The 1-year direct growth returns of the PGIM India Midcap Opportunities Fund are 111.85 percent, while the 3-year and 5-year returns are 19.55 percent and 20.02 percent, respectively. The financial, engineering, technology, automobile, and services sectors make up the bulk of the fund’s assets. MindTree Ltd., NIIT Technologies Ltd., Voltas Ltd., Cholamandalam Investment & Finance Co. Ltd., and MTAR Technologies Ltd. are the fund’s top five holdings. With a decent return of 1 year the fund is also rated by 5-star by Value Research which is a pretty good reason to bet.

ICICI Prudential Small Cap Fund Direct Plan Growth

ICICI Prudential Small Cap Fund Direct Plan-Growth has Rs 2,065 crores in assets under management (AUM) and a current NAV of Rs 40.38 as of May 7, 2021. The expense ratio of the fund is 0.83 percent. The bulk of the capital in the fund is invested in the sectors of services, construction, financial, engineering, and technology. Mahindra Lifespace Developers Ltd., V-Mart Retail Ltd., INOX Leisure Ltd., Dixon Technologies (India) Ltd., and KPIT Technologies Ltd. are the fund’s top five holdings. This fund has also performed admirably among the best small cap funds in terms of one-year returns. The fund has also given a decent return of 109.55% across the last 1-year, while the 3 and 5 year returns of the fund is 10.86% and 15.89% respectively. The fund is rated 4 star by CRISIL and 3 star by Value Research.

1-5 Year Returns

Fund 1 Year Returns 3 Year Returns 5 Year Returns Rating
Kotak Small Cap Fund 125.13% 16.70% 20.09% 4 star by ValueResearch
PGIM India Midcap Opportunities Fund Direct Growth 111.85% 19.55% 20.02% 5 star by ValueResearch
ICICI Prudential Small Cap Fund Direct Plan Growth 109.55% 10.86% 15.89% 4 star by CRISIL
Source: Groww

Goodreturns take

Small Cap Funds give you insight to smaller companies that have the capacity to grow into mid- and large-sized businesses in the potential. Small Cap Funds give you insight to smaller companies that have the capacity to grow into mid- and large-sized businesses in the future. Small caps, on the other hand, can be highly unstable in the short term, specifically if market dynamics are unfavourable. That being said, if you keep invested for a long period, you may outperform the benchmark. Small cap mutual funds are highly volatile, and you must exercise strict caution while investing in small cap funds. The above discussed funds may yield good returns only if you have a higher risk-tolerance and want to invest for long-run. But if you have a lower risk-profile and want to get risk-free returns than Public Provident Fund (PPF), Bank FDs, RBI Taxable Bonds can be a good bet here.



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BBB recommends two names for forthcoming two LIC MD posts

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The Banks Board Bureau (BBB), an apex body tasked to recommend candidates for the top management posts in public sector banks and state owned insurers, has recommended two names for the forthcoming two positions of Managing Director in insurance behemoth Life Insurance Corporation (LIC).

While Ipe Mini has been recommended for the first vacancy of Managing Director of LIC, the BBB has recommended B C Patnaik for the second vacancy of Managing Director in LIC.

Meanwhile, the Finance Ministry is yet to approach the Appointments Committee of the Cabinet (ACC) on the issue of recommending an extension in the tenure of the incumbent LIC Chairman M R Kumar. Although it is widely speculated that Government is bringing changes in the eligibility and experience criteria for appointment of LIC Chairman, no such formal proposal has been yet made by the Finance Ministry to the ACC as yet, it is learnt.

Currently, LIC has four Managing Directors –Vipin Anand, Mukesh Kumar Gupta, Raj Kumar and Siddhartha Mohanty. The Government is looking to take LIC public this fiscal through a mega initial public offering ( IPO) and raise about ₹ 1 lakh crore from the divestment.

Other BBB recommendations

The BBB has recommended the name of Inderjeet Singh for the position of Chairman and Managing Director of United India Insurance Company Ltd. Also, BBB has recommended Suchita Gupta for the position of CMD in National Insurance Co Ltd.

BBB had on May 7 interfaced with eight candidates for the forthcoming positions of Chairman-cum-Managing Directors in National Insurance Company Ltd and United India Insurance Company Ltd.

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5 Reasons Why Sugar Stocks Could See A Solid Rally

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Investment

oi-Sunil Fernandes

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Sugar companies are in a sweet spot and one could see a better performance by some of these companies in the next few quarters. Here are 5 reasons why sugar stocks could see a rally, according to a report from Motilal Oswal.

1. Shortfall in global sugar production

Brazil and Thailand, the two largest sugar exporters in the world, are expected to witness lower production of 7-8MMT each as compared to last year, given the challenges faced due to dry weather. This would result in higher opportunities for domestic exporters as the surplus inventory for the current season is expected to be 9.5MMT.

5 Reasons Why Sugar Stocks Could See A Solid Rally

2. Leading to higher global sugar prices

Further the shortfall in global sugar production has resulted in sharp increase in global prices of sugar to > 16.5 cents/lb, which is likely to sustain. Also, if global sugar prices increase from 16.5-17.5cents/lb to 19-20/lb, then higher amount of sugar is expected to be utilized for conversion to ethanol, leading to further increase in global sugar prices.

3. Sugar prices saw spurt in Apr’21

During Dec-Mar’21, sugar prices were flat at Rs 31/kg. However, in Apr’21 the prices saw spurt to Rs 33-34/kg, reflecting higher demand due to summer season. Going forward, prices are expected to sustain at higher levels.

4. Push for higher Ethanol blending

In the current season, sugar players are committed to supply 3.5bn-litres of ethanol to OMCs players, post which, average Ethanol blending with fuel across India is expected increase to 8.3-8.5%. GoI plans to increase this blend rate to 20% across India by CY25, post which the demand for ethanol is expected to increase substantially. At 20% ethanol blended rate, demand for ethanol is expected to increase to 10bn-litres.

5. Positive Outlook:

As mentioned above, sugar industry is well poised to benefit from both global and domestic factors. Tight global demand-supply situation, favourable policies, push for higher ethanol blending in India and higher ethanol capacity addition will keep the inventory under control and prices firm.

Here are some stock recommended by Motilal Oswal

Scrip Buying range Target price
Dhampur Sugar 255-265 360
Balrampur Chini 305 – 315 380
Dalmia Sugar 278 340
Andhra Sugar 424 500
Dwarkesh 49.6 64



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Stocks That Have Turned Into Multibaggers In 2021

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1. Adani Total Gas:

From a closing price of Rs. 239.85 as on November 6, this gas distribution company stock has zoomed to a price of Rs. 1310.3 in a matter of six months, a mammoth 446 percent return. The company’s market cap is Rs. 1,44,108 crore considering the closing price on May 7, 2021. Furthermore, the stock scaled a new 52-week high of Rs. 1337.9 on the NSE. Infact Adani Total Gas is said to top the list of multibagger stocks.

Why the stellar rally in Adani Total Gas?

Q3FY21 turned out to be a successful quarter for the company with the highest ever financial numbers. The company is into developing City Gas Distribution (CGD) Networks to supply the Piped Natural Gas (PNG) to the Industrial, Commercial, Domestic (residential) and Compressed Natural Gas (CNG) to the transport sector.

For the Q4 quarter, Adani Total posted an increase in net profit by 18.6% (YoY) at Rs. 144 crore. Also sales at the company have recorded have surged by 26 percent YoY to Rs. 584 crore.

2. Tanla Platforms:

2. Tanla Platforms:

This mid-tier IT services firm was a recommendation as a multibagger stock for 2020. From the charts we can identify that during November-December the stock was consistently making newer highs. And in the six months period gave a return of 149%.

3. Morepen Laboratories:

3. Morepen Laboratories:

As the pharma company in such uncertain Covid times is seen to outperform, there has been a rush to stocks from the sector. And this small cap pharma company has been delivering phenomenal returns. After significant correction between December to March, the stock started to see big moves from April 20. In the FY 21, the return from the stock have been 360%.

4. Hindustan Copper:

This metal company has again delivered meteoric returns and is seen to have a likely target of Rs. 185 and Rs. 195 in the current circumstances when the stock is trading above Rs. 170 apiece. On May 7 itself the stock with gains of almost 10% closed at a new 52-week high of Rs. 171.95.1.

5. Prince Pipes and Fittings:

5. Prince Pipes and Fittings:

This plastic product manufacturing company has been performing good ever since its listing in December 2019. For the December quarter of FY21, the company’s net profit rose 175 per cent year-on-year (YoY) to Rs 67 crore on the back of higher revenues. The company had posted a profit of Rs 24 crore in the year-ago quarter.

6. IIFL Finance:

This NBFC company has almost trebled investor’s wealth in just 6 months time. Brokerages cite that a strong close over Rs. 280 may result in a breakout towards Rs. 320. The RSI has fallen below the overbought category but needs to make a positive crossover, as per the weekly chart.

7. Somany Home Innovation:

7. Somany Home Innovation:

The firm owing brand like Hindware Appliances targeted a growth of 35% for FY21 as amid lockdown situation most of the people work from home, there is an increased interest for home improvement and products in the category. The stock in just last last 6 months has been able to deliver returns of over 240 percent.

Multibagger stocks of 2021 which yielded up to 446% in just last 6 months time

Scrip Closing price as on November 6, 2021 Closing price as on May 7, 2021 % gain in six months
Adani Total Gas 239.85 1310.3 446
Hindustan Copper 34.25 171.95 402
Tanla Platforms 348.75 871.55 149
Morepen Lab 27.5 61.8 124
Prince Pipers and Fittings 240.05 579.35 141
IIFL Finance 84.75 266.6 214
Somany Home Innovation 83.8 285.25 240



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3 Debt Funds Whose Returns Have Beaten Bank FDs

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ICICI Prudential Bond Fund

This fund has generated a returns of 8.05% in the last 1 year, while the three year returns have been 9%. The funds investment is in extremely secure investments like Governemnt of India Securities, Uttar Pradesh State Development Loan, State Bank of India Bonds etc. In fact, almost 26% of the portfolio is in Government of India Securities.

The Assets Under Management of the fund is nearly Rs 4,000 crores. While the track record of this debt fund is good, returns are largely determined by the movement of interest rates in the country. We believe that interest rates in the country would hold at the current levels at least for a few more quarters. This fund has a 4-star rating from Crisil, which is reasonably good.

HDFC Medium Term Debt Fund

HDFC Medium Term Debt Fund

HDFC Medium Term Debt Fund has generated a returns of 9.77% and a 3-year returns of 8.22%. The fund has been rated 4-star by Crisil. The fund has holdings in 9.65% Green Infra Wind Energy, Government of India Securities, Muthoot Finance Debentures, Shriram City Union Finance etc.

The portfolio we would say is not as safe as ICICI Prudential Bond Fund, which has a higher portfolio accorded to Government of India Securities. If you are looking to invest you can do so with a sum of Rs 5,000. The net asset value of the fund under the growth plan is Rs 43.84. The fund also has an option for dividend payout, which is another good option for people who are looking at regular income.

Axis Strategic Bond Fund

Axis Strategic Bond Fund

This is another long term bond fund, which has done well in terms of returns in the more short term. In fact, the fund has generated a returns of 9.16% in the last 1 year and 8% returns in the last 3 years. Future returns are almost always uncertain, though we believe that interest rates in India are unlikely to move either way too quickly.

This fund has been rated 4-star by both CRISIL and Value Research. Almost 25% of the portfolio is in Government of India securities or companies majority owned by the Government of India. This makes the portfolio of the fund exceedingly strong. Overall, this fund looks pretty decent for those looking to invest even for a more shorter term duration of three years.

About the author:

About the author:

Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning



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Why you should to be wary of credit card mis-selling

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Following the financial turmoil from the pandemic, customer interest for credit cards is on the rise, as it gives access to quick money that is not available in your bank account. Even if you have some investments which can be tapped to meet your emergency needs, it takes some time to break them. Hence, people tend to prefer credit cards where funds are available on tap. While credit cards do come in handy during emergencies, customers should also remember that with salespersons sitting on heightened targets to acquire customers, mis-selling of credit cards may be quite rampant. You must fully be aware of the terms and conditions, do’s and don’ts, lest your liabilities pile up.

In the Annual Report of Ombudsman Schemes 2019-20 (latest available), the RBI highlighted that about 28,713 complaints received (9 per cent of total complaints) were with respect to credit card mis-selling.

Taking cues from these complaints, we highlight certain things you need to be aware of before you take up a credit card.

Unsolicited issue

Ever experienced pre-approved credit cards landing in your mailbox ? Well, the money may be handy, but the problems may not be far behind. Banks are clearly prohibited from issuing such unsolicited cards. Even for their existing clientele, banks can only issue inactive credit cards, without the prior approval of the customer.

The activation of the card can solely be done by the customer, and until such time no charges whatsoever can be levied. If you receive an unsolicited card, you should immediately sort this out with the bank to avoid fraudulent use of such card or any ensuing levy of charges.

Hence, it pays to be alert and keep a tab on your bank communications and statements. Even in your savings account, do a thorough check of every charge, however petty. These charges can alert you on any such wrongful or unintended activation of credit cards in your name.

Also, most banks have the credit card tabs included in their mobile application and net banking website. Visiting the credit card section once in a while will help you keep a tab on all active credit cards, the amount billed and due on the same, etc. If any such unauthorised cards are activated, immediately report the same with the bank.

Lack of transparency in charges

Instances were also reported of wrongful charges being levied on authorised credit cards. While the bank personnel could have presented the card as a completely free one, sudden levy of annual maintenance charge (AMC) or other charges would have taken you by surprise.

Turns out the waiver on AMC was only applicable for the first year and has been wrongly communicated to the customer. Or only some charges have been waived while a set of other charges continue to be levied.

Quite often these charges also don’t form part of the many brochures and statement of charges that are mailed along with your card, which leaves the customer in a tricky spot.

However, it is not that sellers alone are at fault. Customer ignorance is also to be blamed in many instances as per the Annual Report of Ombudsman Schemes.

Credit card cash withdrawal related complaints show such examples of customer unawareness. Banks often highlight the limit of cash withdrawals on your credit card, along with the credit limit. But what goes unnoticed mostly is that, while you have a 30-45 day interest free window to pay your normal dues on credit card, no such leeway exists for cash withdrawn from credit cards. Not only is an interest levied at exorbitant rates (23.8-42 per cent, per annum currently) from the date of withdrawal, but most banks also charge you a cash advance fee, that ranges from 2.5 to 3.5 per cent per month, on the amount withdrawn. This cash advance fee is also added to your dues and attracts interest from the date of withdrawal.

Wrong reporting of CIBIL score

Another category of customer complaints relate to wrongful reporting to credit bureaus such as CIBIL, which affect the credit score. But again, this is more due to lack of awareness on the customer’s side than mis-selling on the part of the bank.

Are you aware that multiple applications for credit card made in a short span works against your credit score? Any liability on stolen/ lost cards that is not reported immediately, may also hamper your credit score.

Besides, many of those who only pay their minimum dues are also often unaware that the remaining amount due is treated on par with a loan – along with interest being levied, the dues form part of your credit report too.

Every late payment or non- payment of credit card dues also affects your credit score negatively. Whether the delay was on account of any disputed charge or not often isn’t mentioned in the report. Six months of missed payments and the bank can even ‘charge off’ your credit card. This ‘charge off’ status will remain on your credit report for as long as seven years.

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CSB Bank reports highest-ever net profit of Rs 218.40 crore for FY21

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Total income of the bank during the period rose to Rs 609.45 crore from Rs 475.49 crore in the -ago period.

CSB Bank on Saturday reported a net profit of Rs 42.9 crore in the fourth quarter of FY21 largely on higher interest income. The Thrissur-based lender had reported a net loss of Rs 59.7 crore in Q4 FY20 and a net profit of Rs 53 crore in the third quarter of the last fiscal year.

CSB reported the highest-ever net profit of Rs 218.40 crore for the full financial year 2020-21 as against a net profit of Rs 12.72 crore in FY 2019-20. Net interest income of the lender is seen higher by 75 % year-on-year (y-o-y) to Rs 275.7 crore for the fourth quarter of FY21, while non-interest income grew by 30 % y-o-y to touch Rs 112.3 crore. Total income of the bank during the period rose to Rs 609.45 crore from Rs 475.49 crore in the -ago period.

C VR Rajendran, managing director & CEO of the bank, said the bank can now fully focus on growth in FY 22 without any baggages of the past.

“While the industry grew by approximately 12% in deposits and 6% in advances, we could outperform by recording 21% and 27% growth in deposits and advances respectively. In terms of overall business, the bank has grown a fourth of the total business it grew in past 99 years. We could also open 101 branches in this 101st year of existence,” he added.

The bank has plans to open 200 branches in the current fiscal.

Gross non-performing assets (NPA) as a percentage of gross advances is seen at 2.68 % from 1.77 % in the preceding quarter and 3.54% in the year ago period. Net NPA as a percentage of gross advances stands at 1.17% for the fourth quarter as against 0.68% in the third quarter and 1.91% in the fourth quarter of FY20.

However, the bank’s proforma Gross NPA ratio and proforma Net NPA ratio is seen at 3.42 % and 1.93 % respectively for the third quarter, bank sources said.

Gold loan portfolio of the lender has grown by 61.3% y-o-y to touch Rs 6131 crore and the bank has 17.28 tonnes of gold in its custody.
Provision Coverage of the bank has improved to 84.89 % as on 31.03.2021 from 80.02 % as on 31.03.2020.

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Bandhan Bank Q4 profit falls 80% to Rs 103.03 crore on higher provisions

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Net Interest Margin (NIM) stood at 6.8%, down 129 bps from 8.1% for the last quarter of FY20. The bank said NIM in Q4FY21 was at 8.8%, excluding one time interest reversal on NPA and interest on interest.

Private sector lender Bandhan Bank on Saturday reported an 80% year-on-year fall in net profit for the quarter ending March, to Rs 103.03 crore on the back of additional provisions on non-performing assets (NPAs).

The Kolkata-based bank had posted Rs 517.28 crore net profit in the fourth quarter of FY2019-20. The lender’s total provision and contingencies during the fourth quarter of FY2020-21 rose 92.7% y-o-y to Rs 1594.30 crore from Rs 827.36 crore in the same quarter previous fiscal.

During the period under review, gross NPAs as a percentage of total loans increased 569 basis points quarter-on-quarter to 6.8% from 1.11% during the third quarter last fiscal.

The bank’s proforma GNPA had stood at 7.12% in Q3FY21. During Q4FY21, net NPA ratio rose by 325 bps q-o-q at 3.51%. Chandra Shekhar Ghosh, MD and CEO, Bandhan Bank, said a very challenging year ended on a positive note with growth and collection coming back to normalcy. “With accelerated provisioning and write off, we are now well placed as we enter FY22. We remain cautious but confident as we deal with the Covid 19 second wave,” Ghosh said.

During the fourth quarter, the bank wrote-off Rs 1930 crore worth of loans, where Rs 1876 crore was from the microfinance segment. “Our bank did not restructure any loan in the microfinance segment, while Rs 617 crore of housing finance was restructured,” Ghosh said.

In microfinance segment, the lender’s collection efficiency, including NPA and written-off borrowers, at the end of March 31, 2021, stood at 95% as against 92% at the end of December 31, 2020. At end of the last quarter of FY21, collection efficiency, excluding NPA and written-off borrowers, was 98% as per value. Net Interest Income (NII) for the quarter grew 4.58% to Rs 1757.01 crore as against Rs 1,680.04 crore in the corresponding quarter of the previous year.

Net Interest Margin (NIM) stood at 6.8%, down 129 bps from 8.1% for the last quarter of FY20. The bank said NIM in Q4FY21 was at 8.8%, excluding one time interest reversal on NPA and interest on interest.

During the last fiscal, total advances grew 21.2% to Rs 87,042.9 crore as against Rs 71,846 crore as on March 31, 2020.

“Our customers got experiences from the first wave of Covid. Now, they know how to deal with the pandemic situation and lockdowns. Compared to the nationwide lockdowns last year, this time we are having state-wise and region-wise lockdowns to combat Covid second wave. So, we expect this time customers’ businesses would not be impacted that much as compared to the last year,” Ghosh said, adding thus, for the bank, FY22 would be better compared to FY21.

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How to dodge QR code scamsters

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In the backdrop of the pandemic, online/digital payments have received a big boost. QR (Quick Response) codes have emerged as a convenient way to promote contactless payments but the lack of necessary knowledge on how to spot a fraudulent QR code is costing people dear.

According to reports available publicly, every fifth payment fraud today involves QR codes. Banks, e-commerce websites and digital security experts are warning people.

Here we discuss how the QR code scam happens, and what you should do to avoid getting cheated.

A code like no other

A QR code is a type of matrix barcode. It consists of black squares arranged in a square grid on a white background.

The code has information embedded in it. The patterns within QR codes represent binary codes that can be interpreted to reveal the code’s data.

QR codes are easily read by smartphones. All you need is a camera and an app to read the code. Many use the QR code route to pay for purchases at merchant outlets by simply scanning the QR code using an app.

QR codes are extremely easy to generate. But, what’s hidden in them is very difficult to identify.

So, a scamster can lie about the actual information behind the QR code and dupe people.

These days the popular way of deceiving people with QR codes involves targetting individuals who are trying sell or buy goods online. Examples are a person in Bengaluru ordering wine online and losing ₹1.6 lakh, a person uploading a classified to sell his mobile but ended up losing ₹80,000.

Modus operandi

Assume you want to sell off an item online such as a sofa for ₹20,000. Days pass and no real leads come. You are disappointed and wonder if you need to lower the price. Suddenly, the phones rings and the scamster will pretend to be an interested buyer. They will aim to win the trust of the seller by agreeing to buy the item near the quoted rate ₹18,000.

Then, the cyber criminal will send ₹500-1000 to the seller, calling it a ‘test transaction’. Since the seller actually receives money in their bank account instantaneously, the trust factor rises mani-fold.

Pay attention because this is the moment when the fraud will happen. The fraudster will create a QR code with a high amount (the balance i.e. ₹17,000) and will share it with the seller through WhatsApp, email and other platforms. They will say scanning the QR code will result in the seller getting the balance amount instantly.

After sharing the QR code, the scamster will ask the seller to select “Scan QR code” option on the app and select QR code from phone photo gallery. After scanning the QR code from photo gallery, the seller is asked to ‘proceed’ with the payment.

After clicking on “Proceed”, the seller will enter UPI PIN. That’s when money will actually be deducted from their account.

Ways to avoid scam

The biggest problem with a QR code is that humans can’t read it. So, it’s critical to pay close attention while making payments or transactions using QR codes.

First and foremost, if you are receiving funds/payment you do not need to give any PIN/special number for any QR code transaction. If somebody is asking you to enter a PIN to receive funds, be very suspicious.

A QR code payment transaction involves some steps and it is important to notice the smallest details. Don’t proceed with a transaction if you suspect anything is out of place.

It is best to pay or receive money using QR codes only in secure and familiar environments. Don’t do a QR code transaction if you don’t fully trust the counter-party.

Many a times victims understand that money is being debited from their bank account when they do a QR code transaction.

However, due to social engineering tactics used by scamsters, they dupe victims by saying ‘it was a mistake’ and then try their luck with another similar transaction. A Delhi-based politician’s daughter in this way was duped of ₹34,000 in two simultaneous transactions.

One of the ways to identify a scamster will be the unusual hurry to complete the transaction. Before engaging in any payment transaction, verify the credentials of the counter-party.

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How to get back your entire term insurance premium

Personal Finance

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Two neighbours’ daily routine of watering plants leads to an interesting conversation

Bindu: These plants give back much more than the time and care we invest in them.

Sindu: Yes. Speaking of giving back, have you heard of the concept of return of premium or ROP in life insurance plans?

Bindu: No. What is it?

Sindu: It is literally what the name means. ROP is where the term plan returns the entire premium paid (excluding tax) during the policy term . A few insurers even return 110-150 per cent of premium paid.

Bindu: Wait. Did you say term plan? Terms plans don’t given any kind of returns to the policyholders. It is a pure risk cover. The policy terminates after the policy term.

Sindu: Yes, exactly. Many policyholders who survive the policy term feel they don’t get anything in return. So for them, term plan with ROP (TROP) variant was introduced.

Bindu: How does it work?

Sindu: Most insurers offer TROP as a rider or optional cover. Upon payment of additional premium, you can buy this cover. Here, you get life cover during the policy term and if you survive the policy term, 100 per cent total premium paid including underwriting extra premium (if any) under the base policy will be paid at the end of the policy term and the policy will terminate.

Bindu: Great! Do we get tax breaks on this as well?

Sindu: Tax benefits available on regular life insurance policies under Section 80C can be availed on ROP term plans too. Maturity benefit, i.e., the premium that is returned, is eligible for tax exemption under Section 10 (10 D). And, unlike the regular term covers, under TROP, the policy becomes paid-up. That is, if you stop paying the premium, the policy will continue to cover you till end of the policy term for a reduced sum assured (SA).

Bindu: Well, this is good!

Sindu: Yes. It appears to be. But hold your horses. There are a few things to keep in mind. One, the premium for this return of premium variant is higher than the plain- vanilla cover. Two, you get only the premium paid for the base cover. That is, if you had opted for any optional or rider covers such as accidental death benefit, critical illness riders or joint life, you will not get back the amount paid. And three, ROP has to be selected at the inception of the policy.

Bindu: Basically, if I don’t mind spending the extra money, then I can go for this cover. It not only protects my family in my absence during the policy term but gives me a financial cushion at the end of the policy term. It is not so bad.

Sindu: True that. But it is still expensive for a term cover. Instead, you can always invest that extra money paid as premium in alternate platforms and consider a plain-vanilla term cover. After all, insurance is for protection.

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