Author: root

Loan Against Shares & Mutual Fund; Why Use Loan Against Securities?

Personal Finance

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Why Use Loan Against Securities?

You keep ownership of your investment and continue to get benefits like as dividends and bonuses from it. A loan against securities allows you to receive a large loan amount, up to 80% of the deposited collateral. Easy renewal and quick eligibility without the need for an extra document or evidence of income. Individuals can contribute instant liquidity, which greatly increases their investing potential. Repayment options are flexible, and there are no penalties for foreclosing. Apply for a LAS at any time using our simple online application process.

Benefits over unsecured loan

Benefits over unsecured loan

  • These loans are quick and simple to obtain, with minimal paperwork required due to the fact that this is a secured loan. The loan value is always lower than the investment’s cash value; if the cash value approaches the outstanding loan value, the lender may request further security or liquidate the collateral and close the loan.
  • The loan value might range from 50 percent to 90 percent of the underlying asset (50 percent for equity shares and 90 percent for bank deposits, insurance policy surrender value)
  • When compared to unsecured loans and credit cards, this has the lowest interest rate. Unlike unsecured loans, there are no EMIs to worry about; only interest must be paid. Only the amount of the approved loan that has been used is used to calculate interest (pay as per use). There are no prepayment penalties or foreclosure fees.

Loan against shares

Loan against shares

This loan can be used as an overdraft or a demand loan against the eligible securities list. This keeps you involved in the stock market while also allowing you to obtain a loan in the event of a financial emergency. The amount of your loan varies depending on market conditions. In the event that the share’s value falls, the lender may ask you to increase the security’s worth by pledging more shares or replacing them with cash money. Typically, you can raise up to 50% of the value of the shares pledged.

Loan against Mutual Funds

Loan against Mutual Funds

Loans Against Mutual Funds in the Digital Age (LAMF). You can put up an overdraft limit in your account by pledging mutual fund investments online. Benefits include instant fund access, the option to keep mutual fund returns without having to liquidate them, and more. With our Insta Loan Against Mutual Funds feature, you can now get paperless and fast liquidity against your mutual funds. In a few simple clicks, a lien can be placed on mutual funds managed by asset management businesses registered with Computer Age Management Solutions Private Limited (“CAMS”).

Loans against insurance

Loans against insurance

Loans against insurance are available from banks and insurance firms. However, it is not permitted in the case of Unit Linked Insurance Plans (Ulips) or term insurance contracts. The loan amount is between 60% and 90% of the insurance policy’s surrender value. Only if you purchased your policy at least three years before to the loan application can you apply for a loan against it.



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Reserve Bank of India – Notifications

Notifications

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RBI/2021-22/108
IDMD.CDD.No.S930/11.22.003/2021-22

October 5, 2021

All SGL/CSGL Account holders

Madam/Sir,

Value Free Transfer (VFT) of Government Securities – Guidelines

A reference is invited to Notification No.78 dated November 16, 2018 on Value Free Transfer (VFT) of Government Securities – Guidelines under which separate guidelines for VFT were issued to enable more efficient operations in the Government securities market. On a review, it has been decided to issue revised Value Free Transfer Guidelines to further streamline VFT of government securities.

2. VFT of the government securities shall mean transfer of securities from one SGL/CSGL to another SGL/CSGL account, without corresponding payment leg in the books of RBI.

Eligible Transactions for VFT:

3. The following transactions shall be eligible for VFT of government securities:

  1. Transfers on account of gifts and inheritance, between one CSGL account to another.

  2. Inter-depository transfers (between CSGL accounts of depositories) arising out of the following:

    a) own account transfer of securities by investors/brokers holding accounts in more than one depository.

    b) trades in exchanges between constituents of different depositories.

  3. Transfer from CSGL accounts of clearing corporations to the CSGL account of the depositories or to other CSGL holders for onward transfer to clients for distribution of securities allotted during primary auction settlement;

  4. Transfer of securities on account of mergers/demergers, acquisitions and amalgamations;

  5. Transfer of securities on account of change of custodians by Foreign Portfolio Investors, subject to approval by SEBI;

  6. Own account transfer of securities from SGL/CSGL accounts to SGL/CSGL accounts where there is no change in beneficiary ownership;

  7. Transfer of Gilt Account Holder’s (GAH) securities from one CSGL account to another CSGL account, in case a GAH decides to close his gilt account with one CSGL account holder and open a new gilt account with another CSGL account holder.

  8. Transfer of securities pertaining to margin requirement/collateral posting, including in the following cases:

    a) Transfer of margin/collateral between Clearing Corporation of India Ltd (CCIL) and members of CCIL.

    b) Transfer of margin/collateral under the Credit Support Annexes (CSA) and the Global Master Repurchase Agreement (GMRA)

    PROVIDED that the margin/collateral should be kept in a separate CSGL account opened with RBI’s specific permission for the purpose. All such transactions should have an RBI regulated entity at least on one side of the transaction and should be subjected to concurrent and management audit. Appropriate documentation should be maintained.

    PROVIDED FURTHER that the SGL account holders as recipients of Variation Margin (VM) under CSA/GMRA, may receive the same into their SGL accounts, subject to their obtaining one-time approval from RBI to accept VM in their SGL accounts.

    c) Posting of Government securities as margin/collateral in all segments of the recognized stock exchanges.

  1. Transfers as below:

    a) Deposit/replacement of securities in terms of clause (b) of sub-section (2) of Section 11 of the Banking Regulation Act, 1949

    b) Transfers to the Employees’ Provident Fund Organisation (EPFO) under the Employees’ Provident Funds Scheme, 1952

    c) Transfers of securities to the Deposit Insurance and Credit Guarantee Corporation (DICGC) under provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961.

4. Permission for VFT for any other purpose may be granted on a case-to-case basis by the Bank. Applications for the same may be submitted to Public Debt Office, Mumbai Regional Office, RBI, Fort, Mumbai – 400 001 by email.

5. Eligible VFTs (i.e., transactions listed under para 3) and permitted VFTs (in terms of para 4) can be initiated through Core Banking System of RBI viz., e-Kuber. The VFTs so undertaken shall be subject to concurrent audit by SGL/CSGL holders on a 100% sampling basis. The auditor shall verify that the transactions fall under eligible VFT transactions under para 3/para 4 of the Guidelines, as above. Any deviations may be brought to notice of the Bank by the SGL/CSGL holders immediately.

6. These guidelines are issued by the Bank in exercise of the powers conferred under Notifications dated September 22, 2021 on Subsidiary General Ledger Account: Eligibility Criteria and Operational Guidelines and Constituents’ Subsidiary General Ledger Account: Eligibility Criteria and Operational Guidelines and supersede earlier instructions issued on the subject matter vide Notification No. 78 dated November 16, 2018. Any violations of the conditions specified therein shall attract provisions of Section 27 of the Act, in addition to inviting penalties as provided in Section 30 of the Act.

Yours faithfully

(Rajendra Kumar)
Chief General Manager

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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Merchants hit by revision in payment norms form an alliance, BFSI News, ET BFSI

Banking & Finance

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Hit by a revision in payment norms by the RBI, online merchants like Netflix, Facebook and Future Generali on Tuesday announced the formation of a grouping to take up common causes. The changes on e-mandates effected by the RBI from October 1 are intended to make the ecosystem more robust but with only six banks complying with the revised norms, the preparedness of the banking sector is questionable and there is bound to be value erosion in the merchant-customer relationships as the latter face inconveniences, as per an official statement from the body.

The Merchant Payments Alliance of India (MPAI), which also has other members including Disney+Hotstar, Bookmyshow, Microsoft, Spotify, Times Internet and Zoom, will work towards such causes by addressing and constructively engaging with the payments regulator and industry.

“The MPAI sees itself as a collective, using the operational experience of merchants, to engage on policy matters such as the e-mandate issue, which will help reduce transaction-related frictions and improve the efficiency of digital markets,” Vivan sharan from its secretariat, said.

The alliance will enhance the value of India’s digital markets, provide public interest research and thought leadership on digital payments, and build consumer awareness, the statement said.

The MPAI statement said it also aspires to become a resource platform for merchants and the payments ecosystem “to contribute to policy conversations involving matters that help reduce transaction-related frictions and improve digital markets’ efficiency” while ensuring data protection and fraud prevention.

“The group’s purpose is to be a collaborator to the digital payments policy discourse and Microsoft is excited to be part of this initiative,” the American tech giant’s Vishal Mehta said.

The alliance is open for memberships to merchants that use digital payments and align with the alliance’s vision in India, the statement said.



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Kotak Mahindra Bank becomes 1st scheduled private sector bank to collect direct, indirect taxes, BFSI News, ET BFSI

Banking & Finance

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Kotak Mahindra Bank Ltd (KMBL) has received approval from the government for collection of direct and indirect taxes, such as income tax, Goods and Services Tax (GST) etc, through its banking network.

With this, the bank becomes the first scheduled private sector bank to receive approval after the announcement by Finance Minister Nirmala Sitharaman allowing all banks to participate in government-related business.

After technical integration, KMBL customers will be able to pay their direct and indirect taxes straight from KMBL’s mobile banking or net banking platforms as well as through KMBL’s branch banking network, resulting in immense ease and convenience for customers, the bank said in a statement.

Kotak Mahindra Bank’s Joint Managing Director, Dipak Gupta said: “We are delighted to receive the necessary approvals permitting Kotak to collect direct and indirect taxes on behalf of the government, making tax payments more simple, convenient and efficient for our customers. We look forward to a long-standing relationship with the government, providing a wide range of services, backed by our strong technology platform, digital capabilities and customer-first approach.”



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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India (RBI) has, by an order dated October 04, 2021, imposed a monetary penalty of ₹1.00 lakh (Rupees one lakh only) on The Pragati Co-operative Bank Ltd., Thara (Gujarat) (the bank) for contravention of directions issued by RBI on ‘Loans and advances to directors, relatives and firms /concerns in which they are interested’ and ‘Loans and advances to directors etc. – directors as surety/guarantors – Clarification’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The statutory inspection of the bank conducted by the RBI with reference to the bank’s financial position as on March 31, 2019, the Inspection Report pertaining thereto and examination of all related correspondence revealed, inter alia, non-compliance with aforesaid directions issued by the RBI. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the aforesaid directions issued by the RBI. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the aforesaid charge was substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/988

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Reserve Bank of India – Notifications

Notifications

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


Next

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Seeing early signs of rising private investments, says BSE Chief, BFSI News, ET BFSI

Personal Finance

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Structural reforms along with Centre’s high capital expenditure has triggered private investments to flow into the economy, said the chief of the Bombay Stock Exchange (BSE).

In a conversation with IANS, BSE MD and CEO Ashishkumar Chauhan pointed out that macro-economic growth indicators have painted a healthy picture of the economy which coincides with the accelerated pace of India‘s vaccination rate.

“With the Indian government putting focus on structural reforms and capex, we are seeing early signs of increase in private investments.”

“That coupled with monetary stimulus provided by RBI aimed at boosting growth is only going to help India remain amongst the fastest growing economies in the world.”

According to Chauhan, India’s economy has recovered more strongly than it was halted by the pandemic.

“The economic toll from a deadly second wave of Covid-19 outbreak in India last quarter wasn’t as bad as feared, with the nation still very much on track to achieving the world’s fastest growth this year.”

“High-frequency data showed the impact of pandemic restrictions were less severe than last year, enabling demand to recover quickly in the consumption-driven economy.”

The optimism over India’s economic rebound pushed the benchmark S&P BSE Sensex above the 60,000-mark.

New investors along with healthy inflows of foreign funds and receding impact of Covid 2.0 have been cited as the key propellants of the equity market.

Besides, he expects the localised approach to contain the second Covid wave would continue to allow majority of business activities to continue and cushion the economic blow.

“The economic indicators clearly suggest that the Indian markets shall continue to perform well in in the coming days and achieve newer, greater milestones as we move forward.”

Furthermore, he said the pandemic has led in new market participants in the country.

“During the pandemic, we observed that the markets provided liquidity for investors in the worst of times. The government did not force the markets to close which allowed people who were in need of funds to sell their assets like stocks or mutual fund units, collect their money, use it for other purposes and that would not have been possible if we had closed down the markets.”

“Also, another reason is the rapid digitisation of processes that occurred during this time, it has made the investment process much easier for new comers and veterans alike.”

Recently, the BSE crossed the 8 crore Registered Investor Accounts (UCC).

The journey from 7 to 8 crore users took only 107 days making it the fastest addition in the history.



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Seeing early signs of rising private investments, says BSE Chief, BFSI News, ET BFSI

Personal Finance

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Read More/Less


Structural reforms along with Centre’s high capital expenditure has triggered private investments to flow into the economy, said the chief of the Bombay Stock Exchange (BSE).

In a conversation with IANS, BSE MD and CEO Ashishkumar Chauhan pointed out that macro-economic growth indicators have painted a healthy picture of the economy which coincides with the accelerated pace of India‘s vaccination rate.

“With the Indian government putting focus on structural reforms and capex, we are seeing early signs of increase in private investments.”

“That coupled with monetary stimulus provided by RBI aimed at boosting growth is only going to help India remain amongst the fastest growing economies in the world.”

According to Chauhan, India’s economy has recovered more strongly than it was halted by the pandemic.

“The economic toll from a deadly second wave of Covid-19 outbreak in India last quarter wasn’t as bad as feared, with the nation still very much on track to achieving the world’s fastest growth this year.”

“High-frequency data showed the impact of pandemic restrictions were less severe than last year, enabling demand to recover quickly in the consumption-driven economy.”

The optimism over India’s economic rebound pushed the benchmark S&P BSE Sensex above the 60,000-mark.

New investors along with healthy inflows of foreign funds and receding impact of Covid 2.0 have been cited as the key propellants of the equity market.

Besides, he expects the localised approach to contain the second Covid wave would continue to allow majority of business activities to continue and cushion the economic blow.

“The economic indicators clearly suggest that the Indian markets shall continue to perform well in in the coming days and achieve newer, greater milestones as we move forward.”

Furthermore, he said the pandemic has led in new market participants in the country.

“During the pandemic, we observed that the markets provided liquidity for investors in the worst of times. The government did not force the markets to close which allowed people who were in need of funds to sell their assets like stocks or mutual fund units, collect their money, use it for other purposes and that would not have been possible if we had closed down the markets.”

“Also, another reason is the rapid digitisation of processes that occurred during this time, it has made the investment process much easier for new comers and veterans alike.”

Recently, the BSE crossed the 8 crore Registered Investor Accounts (UCC).

The journey from 7 to 8 crore users took only 107 days making it the fastest addition in the history.



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