Month: August 2021

List Of Upcoming Bonus Issues In 2021

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Illustration to understand bonus share issuance:

Say a company ‘X’ announces 4:1 bonus and the investor holds 200 equity shares of that company ‘X, then for every 1 share, the investor shall be entitled to receive 4 additional shares for free. So, his ownership in the company would increase as following 800 bonus shares and 200 original shares that he owned, making the total to 1000 shares.

Why do companies issue bonus shares?

Why do companies issue bonus shares?

Companies come up with bonus share issuance to attract more of retail participation as well as to increase their equity base. When bonus shares are issued, outstanding shares in the market increase, which results in the decrease in the price per share of the company issuing bonus shares.

To know how the issuing company and investors benefit from bonus share issue read here.

Prerequisite for bonus share issuance

Prerequisite for bonus share issuance

– The bonus share issuance needs to be approved by the Articles of Association. In a case when the Articles of Association is unable to sanction the same, the company needs to pass a special resolution act at their general meeting. Note in the case of a general meeting, the bonus share issuance need to be approved by the shareholders also.

– Also, the company needs to see that the total share capital does not becomes higher than the authorized share capital due to the bonus issue. And if at all it happens, the Memorandum of Association’s capital clause needs to be modified by augmenting the authorized capital.

All in all the Sebi guidelines on the bonus share issuance need to be adhered to.

Bonus share issuance: Understanding record date, ex-bonus date

Bonus share issuance: Understanding record date, ex-bonus date

The company that announces bonus share issuance also reveals the ‘record date’. So, what is the record date?

Record date is a cut-off date decided by the company for determining shareholders who will be eligible for the bonus shares. Basically, those shareholders who own the company’s scrip as on the cut-off date are entitled to receive bonus shares.

Ex-bonus date: After the company declares the bonus but before the record date, the shares of the bonus issuing company are referred as ‘Cum bonus’. Besides, there is an ex-date which is set one business day before the record date. Importantly, in India we adhere to the T+2 rolling system for share delivery.

Determining the eligibility for bonus shares

Now to be eligible for receiving bonus shares, you need to buy shares before the ex-date as in a case when you happen to purchase the shares of the company that has announced bonus shares on the ex-date, the same shall not be credited into your account on the record date and hence you will not be entitled for the bonus shares.

How bonus shares get credited to the eligible shareholder’s account?

How bonus shares get credited to the eligible shareholder’s account?

As soon as the new ISIN or International Securities Identification Number is allotted to the bonus shares, the bonus shares get credited to eligible shareholders’ account within a period of 15 days.

List of companies turning ex-bonus soon

Company Bonus Ratio Bonus announcement date Record date Ex-bonus date
Kshitij Polylin 1:6 8.7.2021 17.8.2021 13.8.2021
Sun Retail 3:5 30.6.2021 17.8.2021 13.8.2021
Redington 1:1 07.07.2021 20.8.2021 18.8.2021
Swasti Vinayaka 2:7 29.06.2021 24.8.2021 23.8.2021
Rajnandini Metal 1:2 26.07.2021 03.09.2021 02.09.2021
KSolves India 1:1 27.07.2021 07.09.2021 06.09.2021

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7 Points To Note Such That Your IPO Application Is Not Rejected

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Planning

oi-Roshni Agarwal

|

At a time when primary market is buzzing with IPO offers and we are witnessing that the market is being tapped by around 1-2 new companies every week and the splendid listing is providing a reason to cheer to the successful allottees. So, the IPO applicant while applying for IPO as offered by the new company should be aware of the following points so that their application is not rejected on any ground such as incomplete or duplicate applications being submitted by the applicant.

7 Points To Note Such That Your IPO Application Is Not Rejected

7 Points To Note Such That Your IPO Application Is Not Rejected

Never apply more than one application: Say in a case if you maintain 2 or more demat accounts with different brokerages and you make multiple applications for one IPO, being the same applicant, then the bid shall be considered invalid and you will not secure the IPO shares.

PAN linked to the Bank should be same as IPO Applicant PAN: Since the Banker has key role in refunding the IPO Application money at the time of rejection of Application the Applicant should make payment or block payment (ASBA Process) from the same PAN linked bank account for each IPO Applicantion PAN otherwise it shall be rejected.

For HNI Application’s never select Cut Off Price: The HNI Investor who agrees to invest more than 2 Lacs Rs in the newly listed IPO shall not checkbox the Cut off Price option as the HNI Investor is allotted shares at Upper Price of the Price Band as indicated in the Prospectus. Cut off price is the

For Retail Institutional Investor Application’s always select Cut Off Price: The Retail Institutional Investor who can invest upto Rs 2 Lacs in each IPO should select Cut off Price while submission of IPO Application form. The cut off price is the offer price at which the company is ready to allot its shares to its applicant shareholders.

For Retail Institutional Investor Application’s applying under shareholder’s quota: The Retail Institutional Investor who can invest upto Rs 2 Lacs in each IPO should select and apply for shares under the shareholder’s quota which is being provided by the parent company if any as informed in the prospectus. However, such shareholder’s shall consider the record date for holding of such parent companies such to become eligible for applying in this quota.

Demat Account should be Active: The investor should clearly watch out while filing IPO Application forms its Demat details should be correctly filled up and the demat account should be active and not be dormant.

IPO Application’s is being accepted beyond time limits: Many offline modes accept the IPO Application till last minute to raise the subscription numbers where these last minute rushed up IPO Applications are outrightly rejected and not considered in the lottery system of allotment.

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Story first published: Saturday, August 7, 2021, 23:21 [IST]



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How green rulings can put you in the red

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Receiving environmental clearance (EC) for a residential project is often seen as a routine formality. But recent judgements by the National Green Tribunal (NGT) have hung a huge question mark over this assumption. The Tribunal had, in the last nearly 18 months, revoked ECs granted, imposed hefty penalties and even ordered the demolition of construction completely.

Hence, it is high time for home buyers to understand why EC has come under the spotlight, so that you can potentially weigh and mitigate such risks in your purchases.

Key rulings

While there are a few interesting rulings, the recent high profile one is that of Godrej Reflections, a high-rise residential project in Varthur, Bengaluru. The project had received EC on January 10, 2018 and was registered with RERA in March 2018. Bookings were opened to home buyers after that. But based on a petition filed, challenging the EC, the NGT cancelled the clearance in February 2020 – stating that there was construction in the buffer zone of a lake, which would be in violation of zoning plan.

The ruling was challenged in the Supreme Court and in August 2020, it was ruled that the NGT would reconsider the decision, but that no construction shall happen until the issue is resolved. Based on additional inspection reports submitted to the NGT, it ruled in July 2021 that the project was in violation. The constructions made on the site was ordered to be demolished and the habitat restored. Besides fine for the builder, it also imposed a fine of ₹10 lakh on Bruhat Bengaluru Mahanagara Palike (BBMP) for illegally allowing alterations of the storm water drain passing through the project site.

The order also noted that construction had commenced even before grant of consent to establish (CTE) by Karnataka State Pollution Control Board (KSPCB) and in violation of conditions of EC. It added that the committee which made inspections and submitted the report was not the one constituted by it and the Environment Ministry.

Buyers beware

Why are the facts of this case important? The import of the judgement, particularly as it involves a reputed builder, can be huge for those who purchase under-construction homes.

For one, while issues with violating green norms are not new, the impact has lately been tougher on the buyers. While this is a welcome move – as compliance is better enforced -, it is a big shift from the past where the rulings often only required payment of a fine by the builder. For example, in the case of Sushant Lok project in Gurugram, the builder was asked to pay a fine for flouting various norms. Likewise, Goel Ganga Developers based in Pune was asked to pay a fine of INR 195 crores in 2018 for multiple issues. Now, given that more is at stake, buyers can avoid projects in environmentally sensitive zones, advises Vijay Kumar, Advocate, who specializes in RERA related cases.

Two, this is the not an isolated case of EC being revoked by the NGT. In January 2020, the NGT had stopped work on a project by Young Builders in Delhi. This was based on questions raised on the validity of the EC – that it could only be granted by the Ministry of Environment and Forests and not by SEIAA – as the project is within 10 km from a Critically Polluted Area. Likewise, Falcon View, a residential project in Mohali, was asked to stop construction by the NGT as the EC it had obtained for a mixed-use development did not cover the housing project.

Given the repeated history of EC being inadequate, buyers must inspect this aspect closely – get advice from environmental lawyers to ensure the validity of the clearance and any possibilities of it being challenged. “Check land usage restrictions and land conversion approvals. Be sure to also inspect the city master plan to understand the nature of projects approved in that land/area”, advises Vijay Kumar.

Three, the process seems to be a roller-coaster ride with long delays. For example, in both the Delhi and Bengaluru cases, the builder challenged the order in the apex court, which set aside the order and required the NGT to consider reports from a new committee. However, the NGT had, after some delay in getting the report, stood by its decision to revoke the EC. In the case of Godrej Reflections, the first NGT order was made nearly two years from the start of customer bookings and the second order was after more than 3 years. If you do book early, make sure you check the clauses in the agreement that relate to exiting and be open to exercise it if there are early roadblocks such as lawsuits filed.

Four, despite the comfort provided by RERA, there is no assurance of completion for a project. And prerequisites for getting RERA, including the EC, may be revoked, adding to the risk. The implication is that RERA must not be seen as a guarantee and the truly safe option is to buy completed projects – preferably those with Occupancy Certificates. The OC is proof that the project meets the applicable building codes, regulations and laws, thereby avoiding completion and various legal risks.

The author is an independent financial consultant

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All you wanted to know about reporting capital gains in ITR forms

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Reporting capital gains in income tax returns (ITR) is undoubtedly becoming tedious for taxpayers. With the taxman aiming to leave no stone unturned, the disclosures in the ITR forms have only increased in the last few years.

Here, we simplify the reporting requirements of short term capital gains (STCG) and long-term capital gains (LTCG) under Capital Gains Schedule in the ITR forms.

Property, equity disclosures

After many tweaks over the last few years, there is thankfully no significant change to the current ITR forms (applicable for FY21). The only change is in the case of immovable property.

Here the difference between the transaction value and the circle rate is now altered to 10 per cent, from the previous level of 5 per cent, to be in line with the amendments in the tax law proposed in the Budget of 2020.

In case of STCG/LTCG on the sale of immovable property, it is mandatory to disclose the details such as consideration, stamp value, cost of acquisition of the property and name and PAN/Aadhaar number of the buyer etc.

These details should be furnished separately for each immovable property transferred during the year. If you have sold land and building, quoting the PAN of buyer is mandatory only if tax is deducted under section 194-IA or is mentioned in the documents.

For sale of listed equity shares or equity-oriented mutual fund units, while STCG on sale can be reported on a consolidated basis, scrip-wise details for long-term capital gains (for which LTCG tax at 10 per cent was introduced in Budget 2018 for sale exceeding ₹1 lakh) for certain transactions have to be reported under Schedule 112A.

However, the Central Board of Direct Taxes (CBDT), vide a press release dated 26.09.2020, clarified that scrip-wise reporting in the ITR was required only for those shares/units eligible for the benefit of grandfathering.

The grandfathering clause exempts tax on LTCG on listed equity shares up to January 31, 2018 for those securities bought before that date.

The ITR form has introduced a drop-down feature in Schedule 112A wherein the taxpayer can select if the share/ unit was acquired “on or before” or “after 31.01.2018”.

For the listed shares/units acquired after 31.01.2018, the consolidated amount of sale consideration and cost of acquisition alone should be reported. For others, the fields requiring details of “ISIN code” and “name of share/ unit” scrip-wise has to be reported.

Amounts reinvested in certain specified forms such as residential house property, agricultural land or tax free bonds – which comes under Section 54 – can be claimed as deduction from capital gains. The details of such claims have to be furnished as per part D of the Schedule CG. Information such as cost of new residential house/agricultural land and amount invested in specified/notified bonds and date of these transactions are to be reported.

Further, part E of the Schedule CG provides for set-off of current year capital losses with current year capital gains. The schedule is mostly auto-filled but note that the long-term capital loss can only be adjusted with any long-term capital gains only. While short-term capital losses are allowed to be set-off against both long-term and short-term gains.

Also, part F of the Schedule requires reporting of quarter-wise details of incomes under the head ‘capital gains’, details of which is taken for calculation of advance tax liability and interest under 234C. Thus, capital gains accrual or receipt have to be reported on a quarterly basis.

Other schedules

While most of the Schedule CG requires entering the details, other schedules relevant to reporting of capital gains mostly require just confirmation as most of the details would have been auto-populated.

The capital gains in a financial year, remaining after intra head set off (as discussed above), will be reflected in Schedule CYLA, where set-off against current year losses under various heads of income takes place.

Here, losses under any other head can be set off with income under the capital gain head.

Subsequently, the income remaining after set off of current year losses, as per Schedule CYLA will be shown in Schedule BFLA, where set off of brought forward losses of earlier years takes place.

The brought forward losses under this schedule will be picked from Schedule CFL of the ITR form, in which brought forward losses details are to be manually entered. Note that brought forward short-term capital loss can be set off against any STCG or LTCG. However, brought forward long-term capital loss can only be set off against an LTCG.

In case of capital loss instead of capital gain, the remaining capital loss after above adjustments will be taken to Schedule CFL for losses to be carried forward to future years – that is, next eight assessment years from the assessment year in which the loss was incurred.

Mode of filing

Individuals having capital gains shall report the income in ITR 2/ITTR 3 form for FY21. ITR 3 is required when an individual has income from business or profession in addition to capital gains income.

The CBDT has launched a new offline utility called JASON for the assessment year 2021-22. The existing excel and java utility have been discontinued. The new JSON utility has currently been enabled for ITR 1 to 4.

The utility will import and pre-fill the data from e-filing portal to an extent possible, while the key transactional data has to be keyed in. Once the JSON file is created, it that has to be uploaded to the new income tax e-filing portal, which is yet to be fully functional.

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Why Bajaj Finance FDs are a safe option

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If you are a fixed income investor in search of higher rates, and are comfortable going beyond bank fixed deposits, then NBFC deposits are an option you can consider.

Many NBFCs (non-banking financial companies) are offering higher rates than most private and public sector banks on fixed deposits of comparable tenures, of course, for the higher risk they entail.

However, unlike bank deposits that are insured for an amount up to ₹5 lakh by the Deposit Insurance and Credit Guarantee Corporation, NBFC deposits enjoy no such protection.

It therefore, makes sense to restrict yourself only to the deposits of NBFCs with strong financials.

Today, interest rates are at near bottom and are expected to go up, though not anytime soon.

The RBI left the repo rate unchanged yet again in the latest monetary policy review on August 6, 2021.

Two-year fixed deposits, that offer better rates than lower tenure deposits without locking-in your money for too long, can therefore, be a good choice.

What’s on offer

Bajaj Finance offers 6.10 per cent per annum on its two-year cumulative FD and non-cumulative FD (with an annual interest pay-out option). This is better than the 5.1 – 5.2 per cent and 5.0 – 5.5 per cent respectively offered by several public and private sector banks.

The Bajaj Finance FD rates are a tad lower than those offered by other NBFCs such as Mahindra & Mahindra Financial Services (6.2 per cent) and Shriram Transport Finance (6.54 per cent) on their similar deposits.

But Bajaj Finance’s strong financials, among the best in the sector, offer ample comfort to investors.

The deposits enjoy the highest ratings — CRISIL’s FAAA/Stable and ICRA’s MAAA (stable).

Senior citizens, that is, those aged 60 or above get an additional 0.25 per cent on the Bajaj Finance FD. Those booking an online FD get an additional 0.10 per cent. This does not apply to senior citizens. You must invest a minimum of ₹25,000 in the FD.

Strong financials

Bajaj Finance has a well-diversified loan book spread across consumer, rural, SME and commercial loans.

As of June-end 2021, consumer loans accounted for 44 per cent of the lender’s loan book of ₹1.6 lakh crore. With a presence in over 3,100 locations, the non-bank lender is geographically well-diversified too. The loan book registered a year-on-year growth of 15 per cent growth in the June 2021 quarter.

Adequate buffer

As of June-end 2021, Bajaj Finance’s net NPAs (non-performing assets) were only 1.46 per cent.

While this is higher than the 0.5 per cent in the June 2020 quarter, the previous year’s numbers are not comparable due to the then ongoing moratorium.

Also, Bajaj Finance’s capital to risk weighted assets ratio (CRAR) of 28.57 per cent is well above the mandated 15 per cent, providing adequate buffer against any future bad loans.

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What role do anchor investors play in an IPO

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Two colleagues sharing a cab ride to office have money conversations.

Aruna: Markets are doing well. I wish I could make some extra money from it.

Sarika: Yes, same here. IPOs are quite the money-spinners today I hear.

Aruna: Yeah, more than half a dozen IPOs in August alone. My broker says to look at anchor investor book before applying.

Sarika: Who are anchor investors? Promoters?

Aruna: No. Anchor investors are institutional investors who are offered shares a day before the IPO opens.

Sarika: If some are buying shares ahead of IPO, are they not cutting our chances?

Aruna: Haha. Actually, anchor investments are a useful guide to other investors. They indicate whether there is demand for IPO offered.

Sarika: Do anchor investors get any discount?

Aruna: No. They are supposed to ‘anchor’ the issue by agreeing to subscribe to shares at a fixed price. Anchor investors can bid for shares at any price within the IPO price band.

Sarika: Then, how is this important? To me it seems just another share-sale!

Aruna: In a bull market, everything seems simple. But actually anchor investors are quite important for small investors. Unlike brokerages who simply put out IPO reports, anchor investors have skin in the game. Typically, they are mutual funds, insurance companies and foreign funds. They would have done better research.

Sarika: So, if the public issue has any problem, will the anchor investors give it a tepid response?

Aruna: Yes, Sari. There have been instances of some IPOs failing to mop up money from anchor investors, or anchor investors bidding at the lower end of the IPO price band.

Sarika: Oh, there is some method to the madness then! I was thinking they are like IPO brand ambassadors.

Aruna: Obviously there is a lot of at stake. Its real money that anchor investors put in and they can’t sell their shares for at least 30 days after the allotment. So, they have to be doubly sure.

Sarika: Where do I get anchor investor information?

Aruna: Anchor investor details are published in BSE Notices and NSE Circulars a day before the IPO opens for the public. The communique will mention shares allotted to each anchor investor, percentage of anchor investor portion allotted, value of shares allotted and so on.

Sarika: Interesting. In comparison to all the grey market premium (GMP) talk on upcoming IPOs, I suppose the anchor investor activity is a far better signal.

Aruna: Definitely. And we have reached office. Time to drop anchor here!

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Amid asset quality woes, FPIs pull out nearly ₹11,000 crore from financials in July

Banking & Finance

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Foreign portfolio investors (FPIs) have pulled out close to ₹11,000 crore from the financial services sector stocks in July amid concerns over the spike in fresh slippages and asset quality deterioration from the key sector constituents — banks and NBFCs.

According to NSDL data, FPIs pulled out ₹10,767 crore from the financial services sector in July. Of the same, ₹7,341 crore was pulled out from banks while the remaining ₹3,426 crore outflow was from ‘Other financial services’ which includes NBFCs and financial institutions (FIs). The outflow from the financial sector accounts for 95 per cent of the overall FPI outflow during the month across 35 sectors.

“The banking index has been underperforming on concerns of asset quality deterioration. The 6-month Nifty Bank return is only 0.43 per cent while the 6-month Nifty return is 8.8 per cent This under-performance has been largely due to the poor performance of HDFC Bank and Kotak Bank. These two were FIIs’ favourites,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Almost all private and public sector banks have posted good results in the first quarter in terms of earnings, profitability and business growth. However, fresh slippages and elevated levels of non-performing assets still remain a concern for the investors. Take State Bank of India for instance. The country’s largest lender posted its highest ever quarterly net profit at ₹6,504 crore in Q1FY22. However, fresh slippages during the quarter went up to ₹15,666 crore (from ₹3,637 crore in the year-ago quarter). Although, the bank said it was able to claw back Q1 slippages to the tune of ₹4,700 crore in July.

Covid impact

Similarly, major private sector banks including HDFC Bank, ICICI Bank, Axis Bank have all witnessed deterioration in their asset quality in the first quarter due to the impact of the second wave of pandemic.

In its recent report on largest private sector lender HDFC Bank, Emkay Global said, “The bank has managed the first Covid wave well, but the GNPA ratio shot up to a decadal-high of 1.5 per cent in Q1, reflecting accumulated Covid-induced stress in the retail portfolio and the impact of the health scare on collection teams’ mobility.”

The RBI also, in its Financial Stability Report (FSR), said macro stress tests indicate that the gross non-performing asset (GNPA) ratio of scheduled commercial banks may increase from 7.48 per cent in March 2021 to 9.80 per cent by March 2022 under the baseline scenario; and to 11.22 per cent under a severe stress scenario.

Portfolio rejig

Market experts also attribute the FPI outflow from the financial services stocks to the sector’s underperformance and portfolio rejig efforts by the foreign investors.

Motilal Oswal Financial Services’ recent analysis on institutional ownership in Nifty-500 and Nifty-50 companies highlighted that in the Nifty-500 universe, FIIs have the highest ownership in private banks (48 per cent) followed by NBFCs (31.5 per cent), Oil & Gas (22.5 per cent), Insurance (21.6 per cent) among others.

“Financials has had a dominant run over the past few years. However, BFSI’s (private banks, NBFCs, insurance, and PSU banks) underperformance has continued to reflect in the FII allocation – down to 38 per cent in the Nifty-500 as of June, from 45.1 per cent in December 2019 and 40 per cent in March 2020. This has resulted in the trimming of weight by 130 bps q-o-q (quarter-on-quarter),” it added.

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DCB Bank Q1 net falls 57.5% to ₹34 cr

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DCB Bank reported a 57.5 per cent drop in its standalone net profit in the first quarter of the fiscal as provisions surged.

The private sector lender had a net profit of ₹33.76 crore for the quarter ended June 30, 2021 against ₹79.38 crore in the corresponding period last fiscal.

Total income was up by 1.6 per cent to ₹965.67 crore in the first quarter of the fiscal from ₹950.7 crore a year ago.

Net interest income saw marginal growth of 0.6 per cent on a year-on-year basis to ₹308.7 crore in the quarter ended June 30, 2021 from ₹306.73 crore a year ago.

Provisions surged by 85.9 per cent to ₹155.54 crore in the April to June 2021 quarter as against ₹ 83.69 crore in the first quarter of last fiscal.

During the quarter ended June 30, 2021, the bank holds contingency provision of ₹107.53 crore towards further likely impact of Covid-19 on standard restructured and stressed assets.

Asset quality deteriorated

Gross non-performing assets rose to 4.87 per cent of gross advances as on June 30, 2021 versus 2.44 per cent a year ago. Net NPAs also increased to 2.82 per cent of net advances as on June 30, 2021 compared to 0.99 per cent a year ago.

During the quarter, the bank sold certain non-performing loans of net book value of ₹43.99 crore to an asset reconstruction company for consideration of ₹38.77 crore.

The bank has implemented resolution plans for Covid-19 related stress under Reserve Bank of India’s August 6, 2020 circular for 2,149 accounts.

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How a small change in date can impact interest income

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If you are grappling with low interest rates on fixed income products, you may want to do every little bit to enhance your interest income. For that, it is important to understand how interest income is calculated.

The date on which deposits and withdrawals are made in a month can have an impact on the interest income you earn. Here we talk about the interest calculation for a few fixed income instruments – Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), Post Office Savings Account (POSA) and Employees’ Provident Fund (EPF).

Post Office Schemes

PPF and SSY are two long-term saving products from the Post Office offering attractive interest rates today.

Both the accounts require minimum amount to be deposited every financial year (₹500 for PPF and ₹250 for SSY) to keep them active.

Under these accounts, the interest amount gets credited at the end of the financial year and compounding of interest happens annually. However, the interest is calculated for each calendar month on the lowest balance in an account between the close of the fifth day and the end of the month.

Say, the balance in your PPF/SSY account as on July 2021 end is ₹2 lakh and you plan to deposit ₹10,000 in August. If the deposit is made on August 6, the interest for the month of August will be calculated on ₹2 lakh only. The deposit amount of ₹10,000 will be considered for interest calculation only from the month of September 2021. If you slightly tweak the deposit date to some time before August 5, you can earn a slightly higher interest income on PPF/SSY. This may translate to a reasonably good amount over time due to the compounding effect.

The Post Office Savings Account (POSA) too comes with similar conditions. The interest, here too, is credited at the end of each financial year, but the lowest balance between the tenth and the last day of the month is considered.

Rules for POSA also state that on withdrawal of the entire balance interest on the corpus will be calculated up to the last day of the month preceding the month in which the account is closed. Thus, one can plan the withdrawals from POSA at the beginning of a month as you would have maximised the interest earnings at the end of the previous month.

Employees’ Provident Fund

If you are a salaried , both the employee and the employer together contribute 24 per cent of the basic salary plus dearness allowance on a monthly basis towards EPF.

On all the contributions made, interest is calculated from the first day of the month (succeeding the month of credit) to the end of that fiscal year.

For example, if, say, the EPF contribution for April 2021 is made by your employer to the EPFO towards the end of the April itself, then this contribution will earn interest for eleven months in the fiscal FY22 (May 2021 to March 2022). But say, the employer deposits the amount in the beginning of May 2021, then interest will be calculated only for ten months, that is, from June 2021 to March 2022.

Though credits to the PF account are not in your control, understand that your employer transferring the monthly PF contribution at the end of that relevant month is beneficial over transfer at the beginning of the next month.

On the other hand, in case of withdrawals, interest is calculated on the withdrawn amount up to the last day of the month preceding the month of withdrawal.

On maturity

You can consider continuing your investments in fixed-income products such as PPF/SSY and EPF account even after the contributions come to an end. This is because the interest rates offered by EPF (8.5 per cent for FY20), PPF (7.1 per cent now) and SSY (7.6 per cent now) have so far been attractive compared to other products considering the risk-return metrics.

When the subscriber retires after 55, interest will continue to be credited to the PF account until three years from the time fresh contribution to the account are stopped. Even when the EPF account becomes dormant (with no fresh contributions) before retirement age of 55, the account continues to be operative and interest will be paid until the subscriber turns 58, in most cases. In case of PPF/SSY, the account holder may retain his account after the minimum contributory period of 15 years, without making any further deposits upto 21 years from account opening in case of SSY or any period in blocks of five year in case of PPF and the balance in the account will continue to earn interest at the rate applicable to the scheme.

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Bank of Baroda back in black; logs ₹1,209-crore profit in Q1

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Bank of Baroda (BoB) is back in the black in the first quarter of FY22, reporting a standalone net profit of ₹1,209 crore on the back of robust growth in other income and decline in provisions towards bad loans and standard assets.

The public sector bank had reported a net loss in both the year ago quarter (₹864 crore) and the preceding/ Q4FY21 quarter (₹1,046 crore). NIM improvesNet interest income (difference between interest earned and interest expended) was up 16 per cent year-on-year at ₹7,892 crore (₹6,816 crore in the year ago quarter).

Other income, comprising commission, exchange & brokerage, treasury income and recoveries in written-off accounts, jumped 63 per cent yoy to Rs 2,970 crore (Rs 1,818 crore).

Sanjiv Chadha, MD & CEO, said “The operating profit has shown a very sharp uptick, moving up nearly 41 per cent (to ₹5,707 crore). With the provisioning also contained, the net profit moved up to more than ₹1,200 crore.”

“.…The asset quality has been fairly resilient, with sequential lowering of gross NPAs as well as net NPAs by a tad. The improvement in the corporate credit cycle should benefit the bank as we forward.”

Global net interest margin improved to 3.04 per cent in the Apri-June quarter against 2.52 per cent in the year ago period.

Provisions, including towards bad loans and standard assets, declined 23 per cent yoy to ₹4,112 crore (₹5,349 crore).

The Bank made additional provision of ₹373 crore during the quarter ended June 30, in compliance with RBI’s June 7, 2019, circular on “Prudential Framework for Resolution of Stressed Assets issued guidelines for implementation of Resolution Plan”.

Slippages were lower at ₹5,129 crore in the reporting quarter against ₹11,655 crore in the preceding quarter. The slippages came mainly from MSME (42.5 per cent of the slippages), retail (24 per cent),and agriculture (21 per cent).NPAs declineGross non-performing assets (GNPAs) declined by ₹3,642 crore during the reporting quarter to stand at ₹63,029 crore as at June-end 2021. The Bank recovered ₹530 crore from the defunct Kingfisher Airlines account.

Gross NPA position improved a tad to 8.86 per cent of gross advances as at June-end 2021 against 8.87 per cent as at March-end 2021.

Net NPA position too improved to 3.03 per cent of net advances as at June-end 2021 against 3.09 per cent as at March-end 2021.

Global deposits declined a shade (0.34 per cent yoy) to ₹9,31,317 crore. However, the proportion of low-cost current account, savings account (CASA) increased to 43.21 per cent of domestic deposits against 39.49 per cent in the year ago quarter.

Global gross advances were down 3.40 per cent yoy to ₹7,11,487 crore, with retail advances growing about 12 per cent, agriculture about 9 per cent and MSME about 7 per cent. However, corporate advances contracted about 12 per cent yoy.

Bank of Baroda (BoB) is back in the black in the first quarter of FY22, reporting a standalone net profit of ₹1,209 crore on the back of robust growth in other income and decline in provisions for bad loans.

The public sector bank had reported a net loss in both the year ago quarter (₹864 crore) and March quarter (₹1,046.50 crore).

Net interest income (difference between interest earned and interest expended) was up 16 per cent year-on-year at ₹7,892 crore (₹6,816 crore in the year-ago quarter).

Other income, comprising commission, exchange & brokerage, treasury income and recoveries in written-off accounts, jumped 63 per cent yoy to ₹2,970 crore (₹1,818 crore).

Provisions, including towards bad loans, declined 23 per cent yoy to ₹4,112 crore (₹5,349 crore).

Additional provision

The bank said it has made additional provision of ₹373 crore in June quarter in compliance with RBI’s June 7, 2019 circular on “Prudential Framework for Resolution of Stressed Assets issued guidelines for implementation of Resolution Plan”.

Gross non-performing assets (GNPAs) declined by ₹3,642 crore during the reporting quarter to ₹ 63,029 crore as of June-end.

Gross NPA position improved a tad to 8.86 per cent of gross advances as at June-end 2021 against 8.87 per cent as at March-end 2021.

Net NPA

Net NPA position too improved to 3.03 per cent of net advances as at June-end 2021 against 3.09 per cent as at March-end 2021.

The number of borrower accounts where modification (restructuring) were sanctioned as per RBI’s circular (May 5, 2021) circular on “Resolution Framework – 2.0: Resolution of Covid-19 related stress of individuals and small business” was sanctioned and implemented stood at 8,544 and the aggregate exposure to such borrowers was ₹665 crore.

The bank has purchased PSLC (Priority Sector lending Certificates) of ₹3,500 crore under the category of Small and Marginal Farmer and sold PSLC of ₹1,000 crore under the category Micro Enterprises during the current quarter.

Deposits declined a tad (0.34 per cent yoy) to ₹9,31,317 crore. Advances were down 2.66 per cent yoy to ₹6,68,382 crore.

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