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Union Bank of India net zooms 254% on higher NII, other income

July 30, 2021 root Banking & Finance

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The lender has strengthened its balance sheet by increasing provision coverage ratio (PCR) by 156 bps to 81.43% in June 2021. Cost to income ratio of the bank improved by 320 bps y-o-y to 46.51% during Q1FY22.

Public sector lender Union Bank of India on Thursday reported a 254% year-on-year (y-o-y) jump in its net profit to Rs 1,181 crore for the quarter ended June 2021 due to a rise in core income and other income.

The bank’s net interest income (NII) increased 10% y-o-y and 30% quarter-on-quarter (q-o-q) to Rs 7,013 crore. Similarly, other income of the bank surged 98% y-o-y to Rs 2,901 crore, which included Rs 256 crore recovery from Kingfisher Airlines during the quarter. The rise in core income and non-interest income boosted operating profit of the lender by 31% y-o-y to Rs 5,303 crore.

The strong performance was despite an 11% y-o-y and 7% q-o-q increase in provisioning to Rs 4,122 crore. Net interest margins (NIM) also improved 30 basis points (bps) y-o-y and 70 bps sequentially to 3.08%. Rajkiran Rai G, MD and CEO of the bank, said that the collection efficiency of the bank had dipped to 82% during the month of April 2021 due to Covid-19 restrictions. “However, the collection efficiency has now improved to 92%,” he said.

Non-interest income of the lender surged due to higher fee-based income and treasury income, among others. Core fee based income increased 41% y-o-y to Rs 1,064 crore. Similarly, treasury income surged 92% y-o-y to Rs 1,214 crore.

The asset quality of the lender remained a mixed bag during the June quarter. Gross non-performing assets (NPAs) ratio of the lender improved 14 bps to 13.6%, compared to gross NPAs of 13.74% in the previous quarter. However, net NPAs ratio increased 7 bps to 4.69% from 4.62% in the March quarter.

Advances remained flat at Rs 6.55 lakh crore. “With the expectation of normalcy by September 2021, the bank expects a credit growth of 8-10% by March, 2022,” Rai said.

Deposits grew 2% y-o-y to Rs 9.08 lakh crore, but declined 2% sequentially. The share of current account savings account (CASA) in total deposits improved 309 bps y-o-y to 36.39%, compared to 33.3% in June, 2020. The capital adequacy ratio (CAR) improved 170 bps y-o-y to 13.32% during the June quarter, compared to 11.62% in the year-ago period.

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Punjab & Sind Bank back in black on higher other income, lower provisions

July 30, 2021 root Banking & Finance

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Provision coverage ratio (PCR) strengthened further at 84.22%, compared to 69.2% in June 2020. The bank was able to cut down the cost to income ratio to 55.73% in the June quarter, compared to 67.33% in Q1FY21. (File image)

Public sector lender Punjab & Sind Bank on Thursday reported a net profit of Rs 174 crore for the quarter ended June 2021 (Q1FY22). It had incuured a loss of Rs 117 crore in Q1FY21. The lender was back in black due to a surge in other income and reduced provisioning. Total provisions were down 31% year-on-year (y-o-y) to Rs 237 crore, compared to Rs 343 crore in the corresponding quarter last year (Q1FY21). Other income of the lender grew 127% y-o-y to Rs 349 crore.

S Krishnan, MD and CEO of the bank, said that lender has shown robust and resilient performance in almost all the business parameters, despite the pandemic. He added that bank continued its special focus on NPA recovery and, thus, recovered Rs 858 crore including recovery of Rs 124 crore in technically written-off (TWO) accounts.

The asset quality of the lender improved during the June quarter. The gross non-performing assets (NPAs) ratio of the lender improved 43 basis points (bps) to 13.33%, compared to gross NPAs of 13.76% in the previous quarter. Similarly, net NPAs ratio also improved 43 bps to 3.61% from 4.04% in the March quarter.

While the advances of the lender grew 10% y-o-y to Rs 67,933 crore, deposits grew 16% y-o-y to Rs 98,478 crore. Current accounts and savings account (CASA) deposits grew by 14.29% y-o-y to Rs 30,832 crore.

The capital adequacy ratio of the lender remained at 17.62% at the end of June quarter, compared to regulatory requirement of 10.875%.

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IFC investment to raise green portfolio financing: Federal Bank

July 30, 2021 root Personal Finance

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In addition, the investment also marks IFC’s first in India aligned to the greening equity approach, which will enable the bank, an IFC partner for over a decade, to reduce its exposure to coal and increase climate lending.

Federal Bank said on Thursday the equity investment by World Bank arm IFC is expected to increase green portfolio financing for projects related to energy efficiency, renewable energy, climate-smart agriculture, green buildings and waste management.

IFC and two investment funds managed by IFC Asset Management Company – IFC Financial Institutions Growth Fund, LP and IFC Emerging Asia Fund, LP – have made an equity investment of $126 million (Rs 916 crore) for a 4.99% stake in the Kerala-based lender.

The investment will support the bank’s commitment to environmental, social and governance standards, while strengthening its tier 1 capital adequacy ratio (CAR) and expanding MSMEs and climate finance portfolios.

Shyam Srinivasan, MD & CEO of Federal Bank, said: “After the bank’s board approved issuance of shares to the IFC group to an extent of 4.99% of the bank’s paid-up capital, IFC has become a significant shareholder. The addition of this marquee name to the list of our prominent shareholders reinforces the trust and confidence reposed by the IFC group in the bank and its management. The infusion of quality capital further strengthens tier 1 and overall CAR of the bank.”

“This move is in line with IFC’s strategy to support green growth by spurring investments to build back better and greener, seizing opportunities to help India meet its climate goals and build a greener, resilient future,” said Roshika Singh, acting country manager for IFC in India. “The investment is also expected to create tens of thousands of jobs, with micro, small and medium sized enterprises gaining access to much needed financing, which will help ensure an inclusive recovery.”

IFC estimates a total climate-smart investment opportunity of $3 trillion in India till 2030.

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UBI net profit soars by 255% at ₹1,181 cr

July 29, 2021 root Banking & Finance

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Union Bank of India (UBI) soared 255 per cent year-on-year (yoy) in the first quarter standalone net profit at ₹1,181 crore on the back of robust growth in other income.

The Bank had reported a net profit of ₹333 crore in the year ago quarter.

In the first quarter ended June 30, 2021, net interest income (NII) was up about 9.50 per cent yoy to ₹7,013 crore (₹6,403 crore in the year ago quarter).

Other income, comprising income from activities such as commission, fees, earnings from foreign exchange and derivative transactions, profit and loss from sale of investment and recoveries from written off accounts, jumped 98 per cent yoy to ₹2,901 crore (₹1,462 crore).

Slippages in the reporting quarter were higher at ₹7,049 crore (₹1,750 crore in the year ago quarter). MSMEs accounted for 45 per cent of the total slippages, followed by ”large corporate & others” and agriculture (about 20 per cent) and retail loans account (15 per cent).

Loan loss provisions nudged up a tad to ₹2,492 crore (₹2,451 crore). Standard assets provisions soared 167 per cent to ₹1,096 crore (₹410 crore).

Rajkiran Rai G, MD & CEO, said the Bank expects reduction in gross non-performing assets (NPAs) through recovery & upgradation at ₹13,000 crore, including ₹5,600 crore via the National Company Law Tribunal route, in FY22. In the reporting quarter, the recovery & upgradation was at ₹4,341 crore.

The Bank identified 17 accounts aggregating about ₹7,700 crore so far to transfer to the National Asset Reconstruction Company Ltd.

Gross NPAs declined to 13.60 per cent of gross advances as at June-end 2021 against 14.95 per cent as at June-end 2020.

Net NPA position, however, improved to 4.69 per cent of net advances as at June-end 2021 against 4.97 per cent as at June-end 2020.

Total deposits increased by 1.79 per cent yoy to ₹9,08,528 crore, with low-cost current account, savings account (CASA) deposits proportion in domestic deposits rising to 36.39 per cent from 33.30 per cent as on June-end 2020.

Gross advances declined 0.77 per cent yoy to ₹6,45,091 crore. Within this, domestic advances edged up 0.16 per cent yoy to ₹6,30,237 crore and overseas advances declining 29 per cent yoy to ₹14,854 crore.

Global net interest margin rose to 3.08 per cent from 2.78 per cent in the year ago quarter.

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Special Long-Term Repo Operations: SFBs slow to borrow via RBI window

July 29, 2021 root Banking & Finance

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Small Finance Banks (SFBs) seem to be in no hurry to borrow from the RBI’s special liquidity window , if one goes by the amount they have drawn since this facility was operationalised in May.

In the Special Long-Term Repo Operations (SLTRO) conducted by the Reserve Bank of India in May, June and July, SFBs cumulatively borrowed only ₹1,640 crore against the notified amount of ₹10,000 crore. They can still borrow the unutilised amount of ₹8,360 crore till October.

Industry experts attributethise to many SFBs having ample liquidity and the muted credit demand from the micro, small and medium enterprise (MSME) segment.

Some even cited constraints in terms of pledging SLR (statutory liquidity ratio) securities (investments made by banks in Government Securities/G-Secs and State Development Loans/SDLs) with the RBI to borrow three-year money via the special liquidity window. (SLR is the slice of deposits Banks have to invest in G-Secs and SDLs. Currently, it is at 18 per cent of deposits.)

In early May, the RBI had announced that it will conduct three-year SLTRO (one each every month from May through October) of ₹10,000 crore at the repo rate (4 per cent) for the SFBs. The unutilised amount is carried forward to the subsequent auction. This is to provide further support to small business units, micro and small industries, and other unorganised sector entities affected by the Covid second wave.

The SLTRO funds drawn by SFBs have to be deployed for fresh lending of up to ₹10 lakh per borrower. This facility is available till October 31, 2021.

“Though SLTRO is an excellent facility as it brings down our cost of funds and incentivises us to lend, liquidity-wise, most SFBs are currently comfortable. In our case, we have not found a direct use case for the facility at this point of time,” said a senior official of an SFB.

The official observed that if credit demand were to pick up, then instead of disposing off excess SLR securities that SFBs have, SLTRO may offer a better route to raise resources.

A senior executive with another SFB underscored that when a bank pledges SLR securities with the RBI, they become encumbered. Since the pledged/encumbered securities are deducted for the purpose of arriving at SLR, banks are mindful of maintaining SLR above the minimum threshold of 18 per cent of deposits.

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Vauld raises $25 million Series A led by Valar Ventures

July 29, 2021 root Banking & Finance

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Cryptocurrency platform Vauld has raised $25 million Series A led by Valar Ventures, a VC firm founded by Peter Thiel, Andrew McCormack, and James Fitzgerald. Other investors like Pantera Capital, Coinbase Ventures, CMT Digital, Gumi Cryptos, Robert Leshner, and Cadenza Capital also participated in the round.

The funding will be used to support its international growth and licensing as well as expand its retail crypto banking and investing platform. Vauld will also use this capital to hire at least a hundred new team members.

Vauld has built a platform for people to globally access and grow capital through lending and trading cryptocurrencies. In partnership with its respective exchange and custody partners, Binance and BitGo, Vauld claims to have users in over 160 countries. The company has raised a total of $27 million in funding till date.

“We’ve seen great momentum with Vauld and we attribute it to both our technology as well as our customer support. This capital will help propel Vauld to the next level of growth,” said Darshan Bathija, Vauld co-founder and CEO.

While Vauld is headquartered in Singapore, the majority of its team is based in India. The company claims to have seen more than 200x growth in its global user base over the last year. Vauld reported 124.4 per cent quarter-over-quarter growth in AUM between the first quarter of the fiscal year 2021 to the second quarter of the fiscal year 2021.

“Valar’s focus is on transformative financial services companies. What cemented the deal is Vauld’s global positioning and ambitions and the vision Darshan and his team have. We look forward to Vauld benefiting from our understanding of how to build a global business across Europe, Asia, and North America,” said Andrew McCormack of Valar Ventures.

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Best 5 Top-Ranked Short Term Mutual Fund SIP For Parking Your Funds In 2021

July 29, 2021 root Personal Finance

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Nippon India Short-term Fund

Nippon India Short Term Fund Direct-Growth is a Nippon India Mutual Fund Short Duration mutual fund plan. Nippon India Short Term Fund Direct-Growth is a medium-sized fund in its category, with assets under management (AUM) of 9,249 crores. The fund’s expense ratio is 0.33 percent, which is comparable to the expense ratios charged by most other Short Duration funds. The latest NAV declared is Rs 44.092. The fund is benchmarked against CRISIL Short-Term Bond Total Return Index. There is no charge on withdrawal.

The fund’s top holdings are in India Infradebt Ltd., Reserve Bank of India, Housing Development Finance Corpn. Ltd., GOI, India Grid Trust.

Funds rating

ValueResearch: 4 Star

Morningstar: 4 Star

1-Year	3-Year	5-Year
6.63%	9.02%	8.06%

HDFC Short Term Debt Fund

HDFC Short Term Debt Fund Direct Plan-Growth is an HDFC Mutual Fund Short Duration mutual fund. HDFC Short Term Debt Fund Direct Plan-Growth is a medium-sized fund in its category, with assets under management (AUM) of 18,017 crores. The fund’s expense ratio is 0.24 percent, which is comparable to the expense ratios charged by most other Short Duration funds.

HDFC Short Term Debt Fund Direct Plan has a one-year growth rate of 6.06 percent. It has returned an average of 8.72 percent per year since its inception. The und is benchmarked against CRISIL Short-Term Bond Total Return Index.

The fund’s top holdings are in GOI, Rural Electrification Corpn. Ltd., Housing Development Finance Corpn. Ltd., State Bank of India, Mahanagar Telephone Nigam Ltd..

Funds rating

Value Research: 4 Star
Morningstar: 5 Star
CRISIL: 2 Star

1-Year	3-Year	5-Year
6.01%	9.05%	8.24%

ICICI Prudential Short Term Fund

The ability of the ICICI Prudential Short Term Fund Direct Plan-Growth scheme to provide consistent returns is better than most funds in its category. It has a strong capacity to limit losses in a down market. ICICI Prudential Short Term Fund Direct Plan-Growth has a total asset under management (AUM) of Rs. 20,921 crores and is a medium-sized fund in its category. The fund has a 0.39 percent cost ratio. The CRISIL Short-Term Bond Total Return Index serves as the fund’s benchmark.

The growth returns of the ICICI Prudential Short Term Fund Direct Plan during the last year have been 6.03 percent. It has had an average yearly return of 9.13 percent since its inception. Reserve Bank of India, Uttar Pradesh State, Housing Development Finance Corpn. Ltd., State Bank of India, and Pipeline Infrastructure (India) Pvt. Ltd. are among the fund’s top holdings.

Funds Rating

Value Research: 5 Star

Morningstar: 5 Star

CRISIL: 4 Star

1-Year	3-Year	5-Year
5.38%	7.55%	7.87%

Canara Robeco Short Duration Fund

Canara Robeco Short Duration Fund Direct-Growth has assets under management (AUM) of 1,078 crores,, making it a medium-sized fund in its category. The cost ratio of the fund is 0.42 percent. The Scheme invests in a variety of debt securities and money market instruments with varying maturities and risk profiles in order to generate profits.

The fund’s credit record is outstanding, indicating that it has lent to borrowers of high quality. Because most funds in this category lend to similar borrowers, the risk of default is similar across the board.

Funds Rating

Value Research: 3 Star

Morningstar: 5 Star

CRISIL: 4 Star

1-Year	3-Year	5-Year
4.69%	8.07%	7.88%

Axis Short Term Fund

Axis Short Term Direct Fund-Growth is an Axis Mutual Fund Short Duration mutual fund plan. Axis Short Term Direct Fund-Growth is a medium-sized fund in its category, with assets under management (AUM) of 12,182 crores. The fund has a lower cost ratio than its peers, at 0.3 percent.

Returns for Axis Short Term Direct Fund-Growth over the last year have been 5.50 percent. It has generated an average yearly return of 8.84 percent since its inception.

The fund’s top holdings are in GOI, Food Corporation of India, Maharashtra State, Mahindra Rural Housing Finance Ltd., Housing Development Finance Corpn. Ltd..

Funds Rating

Value Research: 5 Star

Morningstar: 5 Star

CRISIL: 3 Star

1-Year	3-Year	5-Year
5.47%	9.07%	8.31%

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in

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We have a deep conviction in the India growth story: Uday Kotak

July 29, 2021 root Banking & Finance

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Private sector lender Kotak Mahindra Bank is ready to grow at a substantially faster pace and plans to invest more in technology and digital platforms, and also look at opportunities in the unsecured retail finance.

In his message to shareholders in the bank’s annual report, Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank said the lender has undertaken a mindset shift to make retail and commercial lending the focus, in addition to the corporate and deposit franchise.

Home loans

“For example, we are leveraging our low cost of funds to offer a competitive interest rate on home loans. Home loans give us an opportunity to build a longer-term relationship with customers,” he said, adding that the bank will get bolder in unsecured retail finance too. The bank will hold its AGM on August 25.

Also read: Strata raises $6-mn Series A from Kotak Investment Advisors, et al

Kotak further said that the bank “will not shy away” from taking bolder bets. “Today, we have a much lighter balance sheet and with sufficient capital in our hands, we are ready to grow substantially faster, but on our terms,” he said, adding that it has a deep conviction in the India growth story and confidence in risk management capabilities.

Emphasising on the importance of technology, he said it is the epicenter around which businesses will revolve and so needs more investments.

“The other area that takes precedence for us is higher investments in strengthening our digital and technology platforms and offerings. The future may be uncertain, but we can be confident that it belongs to technology,” he said.

‘Customer-centric’

The bank will also shift its business model towards being even more customer-centric.

“While customer-first was always the byword that we lived by, the needs of the customer are now even more front and centre. Our model will revolve principally around customers and business decisions will be taken with the customer at the core,” he said.

Also read:Kotak Mahindra Bank launches emergency personal loans for Covid treatment

He also stressed on the need for inclusive and sustainable growth. “Growth that is inclusive and that takes into account the environment, is socially responsible and scores high on governance and ethics. Doing good and doing well go hand in hand,” he said.

He also underlined that for the financial sector, the disproportionate importance of risk management has come to the fore.

“The industry also needs to stop postponing the inevitable and kicking the can down the road,” he said, adding that upfront action with an eye on enduring, sustainable growth, not swayed by quarterly, short-term results is a must for the future of a healthy Indian financial sector.

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Covid effect: Rise in claims impacts insurers

July 29, 2021 root Banking & Finance

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Insurance companies have been battling a deluge of Covid-related claims that impacted their bottomlines in the first quarter of the fiscal.

While general insurance companies have seen a spike in health claims since the start of the pandemic last year, life insurance companies have reported higher claims after the second wave.

Future claims

Apart from a drop in net profits in the quarter ended June 30, 2021, life insurers also increased provisions and reserves for future Covid-related claims. A number of companies are looking at another round of price hikes – both in health and term policies.

SBI Life Insurance, in an analyst call after the first quarter results, indicated that it received over 28,000 death claims in the first quarter of the fiscal, with gross claims of ₹1,576 crore and net of reinsurance claims of ₹1,315 crore.

“For the quarter, gross Covid claims stood at ₹732 crore, while net of reinsurance claims stood at ₹570 crore,” said Motilal Oswal in a report on SBI Life Insurance.

HDFC Life Insurance also reported a steep rise in death claims, with peak claims in the second wave at around three to four times the peak claim volumes during the first wave.

“We paid over 70,000 claims in the first quarter,” it said in a regulatory filing. The gross and net claims provided for amounted to ₹1,598 crore and ₹956 crore, respectively.

ICICI Prudential Life Insurance registered total claims for the first quarter of the fiscal at ₹1,119 crore compared to ₹354 crore last fiscal. Net of reinsurance claims amounted to ₹500 crore for the insurer.

Non-life insurers

Similarly, Covid-related claims also impacted non-life insurers.

For ICICI Lombard General Insurance, Covid-related health claims shot up to ₹600 crore in the first quarter of the fiscal from ₹340 crore a year ago.

In an analyst call after its results, the insurer said that given the adverse claims experience, it has raised its pricing on selective renewals and in group health business by about 15 per cent to 20 per cent.

In the investor presentation, Bajaj Allianz General Insurance said that though the severity of Covid claims was lower than the peak severity observed in 2020-21, the frequency of Covid claims has increased – 82 per cent of the total Covid claims of last fiscal were already booked during the first quarter of 2021-22.

Experts point out that premium growth has been good and is slowly reverting to pre-pandemic levels.

“The impact of Covid is evident on insurance companies in the first quarter, but we will have to see how the pandemic plays out and whether the expected third wave is as intense as the second wave.

“We are yet to reach pre-pandemic level, but premium growth is likely to see traction in the fiscal,” said Saurabh Bhalerao, Associate Director – BFSI Research, CARE Ratings.

Most insurers, however, stress that they are well placed to deal with Covid-19 claims, but are also watchful of a possible third wave.

“The mortality claims were in line with expectations for life insurance companies. There could be some more claims in the coming months from the first wave due to a lag in reporting,” said an executive with a life insurance company.

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3 Top Rated Best Performing Liquid Funds To Invest Now For Short Term

July 29, 2021 root Personal Finance

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Why should you consider investing in liquid mutual funds now?

For now bond yields in the country have headed northwards and was last seen at 6.199% and now as the economy picks up pace owing to vaccination and ceasing of Covid second wave related ill effects, the talks around policy normalization will gather steam. And this shall only provide a boost to bond yield going forward over the next 1-2 years time.

And now as interest rates may see an upturn, liquid funds can be an ideal choice in the debt category as the impact shall be favourable for it. In a rising interest rate scenario, liquid funds get re-priced higher.

What parameters to look at when choosing a liquid mutual fund?

1. You invest in a liquid fund to redeem in the short term, hence liquidity of the underlying portfolio needs to be a prime concern.

2. Credit quality: There should be no risk to your principal investments as well as on the return part.

So, as against to opting for low-rate bank deposits you can park short term surplus in liquid funds. Also, fixed deposits are not able to gain the benefit of rising interest rate as the interest gets locked in for the entire term.

Objective with which liquid funds work

These mutual funds aim to provide short term investment avenue as well as preservation of capital and moderate income. Short term investments invested into by these funds include treasury bills, certificates ofdeposit, commercial paper and inter-bank call money, government securities, etc. Important point to note here is that these funds as against other funds do not witness high volatility.

1. JM Liquid Fund -Direct (Growth) Plan

This liquid fund offering is from the house of JM Financial Mutual Fund and commands an asset size of Rs. 1351.95 crore. The expense ratio for the fund is a meagre 0.22%.

The fund is CRISIL 5 star rated and is mainly invested into debt that comprises mostly G-securities together with low risk securities.

Started in the year 2013, the fund’s benchmark is CRISIL Liquid TRI and has given a return of 7.2% since inception. SIP in the fund can be started for Rs. 500 while for lump sum one needs to dole out a minimum of Rs. 500.

The top debt investments of the fund comprise T-Bills, Commercial Paper, CDs etc.

Further as per the Morning Star rating agency the fund enjoys a high credit rating.

Liquid fund	SIP 1-year return	SIP 3-year return	SIP 5-year return
JM Liquid Fund direct Growth	3.32%	4.35%	5.28%

2. Canara Robeco Liquid – Regular Plan – Growth

The fund commands an AUM of Rs. 2399 and an expense ratio of just 0.15%. The NAV of the fund as on July 28 is 2484.8217. The fund is classified as a low risk investment option.

Fund aims to enhance the income, while maintaining a level of liquidity through, investment in a mix of MMI & Debt securities. However, there can be no assurance that the investment objective of the scheme will be realized.

Now coming to its investments, the fund’s corpus is mostly parked in debt of which over 50% is in G-securities. Note the fund enjoys a rating of 5-Star by CRISIL.

Again the fund carries a high credit quality implying low risk in the underlying instruments. Launched in the year 2013, the fund since inception has offered a return of 6.99%.

In a 1-year period the fund has offered a return of 3.12% and SIP in the fund can be started for a minimum of Rs. 1000.

Liquid fund	SIP 1-year return	SIP 3-year return	SIP 5-year return	SIP 10-year return
Canara Robeco Liquid – Direct Plan – GrowthLiq	3.18%	4.08%	5.01%	6.39%

3. Edelweiss Liquid Fund – Direct Plan – Growth

The CRISIL 4-Star rated fund commands a low expense ratio of just 0.11% and an AUM of Rs.1064.23 crore.

NAV or net asset value of the liquid fund by Edelweiss as on July 28, 2021 stands at 2683.91. Mutual fund risk-o-meter defines the mutual fund to be low to moderate in risk.

Investments of the fund are primarily parked in debt (over 85%).Benchmark of the fund is CRISIL 10 year Gilt Index.

The fund kicked off again in the year 2013 had since inception generated a return of 7.11%. SIP in the fund can be started for Rs. 500 while for lump sum minimum investment needed is Rs. 5000.

SIP annualised return

Liquid fund	SIP 1-year return	SIP 3-year return	SIP 5-year return
Edelweiss Liquid Fund – Direct Plan – Growth	3.48%	4.57%	5.44%

Taxation of liquid funds

If the mutual fund units are sold after 3 years from the date of investment, taxed at the rate of 20% applies after providing the benefit of inflation indexation.

If the mutual fund units are sold within a period of 3 years from the date of investment, entire amount of gain is added to the investors’ income and taxed according to the applicable slab rate.

No tax is to be paid as long as you continue to hold the units.

In respect of the dividend, this income is added to investors income and taxed as per his or her tax slab. And in a case if dividend income exceeds over Rs. 5000 in a financial year then TDS at the rate of 10% is deducted by the Mutual fund.

Disclaimer:

The mutual fund investment is risky too and herein the discussed mutual fund category is to reap a better return than bank savings accounts. Investors can channelise their short term surplus into the funds category. Nonetheless, the investments listed on the website need not be construed as investment advice.

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