Category: Personal Finance

Why betting on stocks based on big-picture themes doesn’t work

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No one can resist the onward march of an idea whose time has come, Victor Hugo said. In bull markets, there are many who apply this to stock investing as well. While conventional investors run screeners, scan company filings and analyse quarterly numbers to identify buys, idea investors believe that to find multi-baggers, all they need to do is latch on to a powerful idea.

So, the moment the Centre announces an Atmanirbhar Bharat push, they’re buying chemical or pharma intermediate companies. In a Digital India push, they’re buying fibre-optic cable makers. When it announces higher FDI in insurance or defense, they’re buying up listed insurers or PSU defense equipment makers. If e-commerce is taking off, they buy logistics stocks and if States are ramping up Covid testing, they bet on diagnostic labs.

But exciting as it may seem, selecting stocks based on such big-picture themes seldom adds durable wealth to one’s portfolio. If you’re itching to try it out, watch out for these pitfalls.

Skipped homework

Most long-term winners in one’s stock portfolio come from understanding a company’s business better than others in the market, spotting a sector trend early or buying a business when the market is under-estimating its potential. But when you’re chasing hot new ideas, there’s often no room for deep study of a company or a sector. Being in a hurry to ride a wave before it fizzles out, can force you to skip necessary homework, leading you to buy lemons.

A recent and somewhat extreme example of an idea stock that proved to be full of hot air is Bombay Oxygen Investments. As the media filled with reports of oxygen shortages during the second wave of Covid, thematic investors scrambled for companies that would gain from this theme. Bombay Oxygen Investments, thanks to the keyword in its name, shot up by 140 per cent between end-March and mid-April from ₹10,000 to over ₹24,000. But after little digging revealed that the ‘oxygen’ in the company’s name was a legacy of the past, the stock crashed 40 per cent.

The company, earlier in the business of manufacturing industrial gases, had discontinued this activity in August 2019 to secure a NBFC license from RBI. Since December 2019, it has been engaged in investment operations that have nothing to do with oxygen.

Shifting focus

While Bombay Oxygen may not have set out to deliberately mislead investors, there are many companies in the Indian market that are ever willing to oblige fickle markets by entering any business that seems to be the current flavour of the season. Scores of obscure firms attached ‘cyber’ to their names during the dotcom boom, construction companies transformed into ‘infra’ firms in the 2007-08 bull market and several new ‘logistics’ companies cropped up in the e-commerce boom. Owning such companies can be quite a roller-coaster, because you may find that instead of sticking to and scaling up in the business you bet on, they are constantly shifting shape to cater to market preferences.

Investors in Vakrangee Software have seen it morph from a company focussed on last-mile financial inclusion, to a play on e-governance and Digital India, to a retailer for Bharat in a short five-year span. Originally a franchisee for the Aadhar UID project in 2010, Vakrangee pivoted to being an e-governance firm that helped folks in tier-3 towns and villages perform internet-related tasks through an extensive network of over 40,000 Vakrangee Kendras in 2016-17. It then made unrelated forays, through subsidiaries into providing logistics for e-commerce giants and retailing gold. Even as the company’s revenues have taken a sharp tumble, it is readying yet another pivot, from e-governance to setting up a pan-India ATM network. While the stock has crashed over 90 per cent from its peak of ₹500, the company has run into governance issues as well after scotching a ₹1000 crore buyback plan, abrupt resignation of its auditor and penalties from SEBI for fraudulent trading in the stock.

To avoid betting on such wrong horses, run a check on the company’s annual reports and management commentary over the years. Frequent business pivots are a sign that the management is more focused on managing its stock price than on building a scalable business.

Execution woes

Idea investors focus a lot on big-picture trends that will play out in future. In the process, they may forget to check if the company they’re betting on has the execution capability to translate its larger-than-life vision into reality.

A good example of a great-sounding idea turning out to be a pipe dream is Educomp Solutions, a favourite stock with idea investors between 2008 and 2010. Listed in 2006, the company’s management successfully marketed the idea that Indian schools mostly using old-world methods of chalk-and-board teaching, were ripe for digital transformation pan-India. The hardware company, engaged in the computerization of schools pan-India, showcased itself as a high-growth play on ed-tech solutions for K-12 education. Within three years of listing, it was reporting 100 per cent revenue growth with operating profit margins of 48 per cent. Having installed its Smartclass solutions in about 2500 schools, it set itself a target of expanding to 15,000 schools and a ₹1000 crore revenue. It later transpired that in its aggressive bid to sign on more schools, Educomp didn’t pay attention to whether these school tie-ups actually translated into revenues. After many delayed or skipped payments, the company faced mounting receivables and debt, defaulted on bank loans and turned an NPA in 2016. It was later subject to CBI raids. The stock which hit dizzying heights of over ₹1000 in its heydays is currently at ₹3.

Educomp’s story is a lesson that captivating big-picture ideas need not translate into profits on the ground. It pays to be particularly wary of managements who set order-of-magnitude targets and sell you big dreams.

Not all idea-based stocks turn out to be lemons on the scale of a Bombay Oxygen or an Educomp or a Vakrangee. Investors in the stocks of diagnostic chains or pharma API companies have for instance, made significant gains in the last one year. But this is more because such companies already had established business models that had evolved over many years and had operating metrics, even before the Covid opportunity came by. Even in such cases, long-term investors may need to ask two questions – whether the big pop in earnings from the opportunity will sustain and whether stock valuations already factor in a best-case scenario.

Overall, even if idea-based investing excites you, it may be best allocate only a fixed portion of your portfolio to such opportunistic bets.

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Pradhan Mantri Jeevan Jyoti Bima Yojana: How Nominees Can Claim The Sum Assured?

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Premium amount

The yearly premium for the policy is Rs 330 if you enroll between June and August, which is auto-debited in one instalment from the policyholder’s bank account on or before the 31st May of each yearly coverage term under the policy. If a person enrols between September and November, the premium is Rs 258; between December and February, it is Rs 172; and between March and May, it is Rs 86. As per the ICICI Bank’s website, the current year’s premium will be Rs 330, and the bank will auto-debit it between May 25 and May 31. For those who open a savings account on or after June 1, the coverage will begin on the date of the account holder’s application and terminate on May 31 of the succeeding year. The cover terminates when the person reaches the age of 55, the account is terminated with the bank if there is an insufficient balance to pay the premium, and the cover is limited to Rs 2 lakh if the individual obtains insurance from other banks.

How to raise a claim?

How to raise a claim?

The nominee must first get a death certificate from the Municipal Corporation before beginning the process of making a claim under the PMJJY scheme. Following the receiving of the death certificate, the nominee must submit a properly completed claim form to the bank branch where the policyholder was registered in the scheme. The nominee must also submit to the bank a signed ‘Discharge Receipt.’ Both ‘Discharge Receipt’ and ‘Claim Form’ can be downloaded from here. A bank or another recognised source, such as an insurance company branches, hospitals, PHCs, BCs, insurance agents etc, can also provide the claim form and discharge receipt. The nominee must then submit a properly completed Claim Form, Discharge Receipt, death certificate, and a photocopy of the cancelled cheque of his or her bank account (if available) or bank account details to the bank where the policyholder had the “Savings Bank Account” through which he or she was covered under PMJJBY.

Steps to taken by the bank

Steps to taken by the bank

The bank shall investigate if the cover for the stated individual was in force on the day of his death, i.e. if the premium for the said cover was deducted and remitted to the Insurance Company involved on the Annual Renewal Date, i.e. June 1st, prior to the policyholder’s death. The bank will then check the Claim Form and nominee details against their records and fill up the necessary fields of the Claim Form.

The bank must then submit the following documents to the Insurance Company’s authorised office:

  • Claim Form duly completed
  • Death certificate
  • Discharge Receipt
  • Photocopy of cancelled cheque of the Nominee (if available).

The bank requires thirty days from the day the claim is lodged to forward the duly filled claim form to the Insurance Company.

Steps to be taken at the designated office of the Insurance Company

Steps to be taken at the designated office of the Insurance Company

  • The Insurance Company’s authorised office verifies that the Claim form is duly filled and that all necessary documents have been attached.
  • If the claim is legitimate, the insurer’s authorised office will verify that the member’s coverage is active and that no death claim payment has been made for the policyholder through any other account. In the event that a claim is settled, the nominee will be notified, along with a copy of the bank.
  • Payment will be sent to the nominee’s bank account and a notification will be issued to the nominee with a copy sent to the bank if the coverage was in effect and no claim had been settled for the mentioned member.
  • The Insurance Company has thirty days from the receipt of the claim from the bank to authorise the claim and release the funds.
  • If the claimant submits the claim form directly to any office of the insurer, the insurer’s office will promptly forward it to the concerned bank of the deceased account holder to initiate the necessary verification from the bank.
  • The Claim Form will be forwarded by the respective bank branch to the authorised office of the Insurance Company for settlement.



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Why Indian banks are banking on the rich

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Picture a lazy Saturday morning. You get a call from a soft-spoken representative of one of the well-known private sector banks, telling you how they have customised a neat deal encompassing services, offerings and add-ons just for you.

Surprised? Don’t be! As the number of rich individuals grows in the country, banks are developing services for the well-to-do so that these customers bank with them. Most of these promised goodies will cost you virtually nothing. Banking services for the rich carry names that contains words such as wealth, privilege, preferred, class, priority, league and premier etc., and this itself is a great ego boost for customers. But remember that beneath the super-slick glib, the grandeur and the goodies, there is always a profit motive. While this is not wrong, you will do well to know what’s at stake before you sign up for such services.

A good hook

Broadly speaking, banks generate money from three areas: interest income, capital markets income and fee-based income. With intensifying cost pressures and rising competition, banks are trying to find clients who can generate a good amount of revenue individually. A high-income professional customer, a highly paid salaried customer or a businessman customer can help a bank bring in more income compared to scores of savings account holders who merelyhold small deposits at a bank.

Customers are segmented based on the total relationship value (TRV). This is an aggregate of the value of the savings balance, fixed deposits, investments, etc. Depending on this total value, banks will offer you various levels of service. Common offerings across banks aimed at rich customers are personalised banking services via a dedicated relationship manager (RM), priority servicing, discounts on many products including lockers and demat accounts, relationship pricing and waivers on a variety of products, including loans, and services. The higher the TRV, the bigger is the range of services and products offered – a client relationship manager, a wealth manager/investment counsellor, invitation-only credit cards, access to exclusive events, etc. All these goodies have a direct relationship with the core revenue areas for the bank.

Measured bet

It may be easy for the bank with which you have an existing relationship to know the details of your ‘relationship value’. But for other banks to attract you, your details need to be dug out. Business intelligence teams, with the use of big data, map prospective customers based on your transactions such as credit/debit card payments, shopping pattern, etc.

It’s an attractive proposition for a bank to become primary bank for a rich customer. Once onboarded, there are ways to ensure that such a customer stays with the bank. One way is by offering loans. Even the rich and high-income people need loans, obviously for different purposes than the hoi polloi. Second, is by selling various investments and insurance products which will result in a sticky relationship. Not only do the investments facilitated by the banks provide fee income, once people have a bank account linked with income tax, mutual funds, stocks or insurance, they hardly change the bank. Third, in case of business or self-employed rich customer, offering a current account gives additional float (money) and keeps the transaction volume up. If employee salaries or vendor payments are paid, then cash management services come into play.

Do your homework

From a customer point of view, getting top-quality banking services is a feel-good experience. But it is important to not let down your guard. Customers who are NRIs, those who play a passive role in terms of decision-making and the elderly are often at the receiving end. While your networth could have attracted banks, you need to shield the same by doing your homework and not making wrong money choices.

Fresh graduates or MBAs are recruited to become RMs and are often given sky-high sales targets and may often sell financial products without fully understanding them. Since customers, even the rich ones, lack proper financial knowledge, the chances of mis-selling are high. The YES Bank case where perpetual bonds were sold to HNI customers is a classic example. Your RM must advise keeping your best interests in mind. On your part, spend time to understand the product well and weigh every investment decision carefully.

Be it taxation, investment, financial planning or even succession planning, it is important to choose a professional whose interests are aligned with yours. In an atmosphere of surplus liquidity and low interest rates, banks may no longer be excited with your deposits alone. They may want to lend to get interest income, see you trade or invest regularly to get a sustainable flow of non-interest income. You can also hire a SEBI-registered investment advisor to guide you.

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UTI Corporate Bond Fund: A Better Opportunity Than Bank Deposits

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Investment

oi-Sunil Fernandes

|

With returns from bank deposits around that 4 to 5.5% range, it’s unlikely that you are going to generate returns. In fact, if you are in the highest tax bracket you might end-up with returns of 2 to 3.5%. It’s time to look at mutual fund schemes that are into corporate bonds and can offer better returns.

Reasons to invest in debt instruments like Corporate Bond Funds

It is expected that RBI is likely to continue to announce Open Market Operations, Operation Twist in addition to G-SAP which would help boost market sentiment. Further, the government likely to continue to borrow massive amounts, yields would remain at reasonably good levels. This presents a good opportunity for a conservative investor to look at UTI Corporate Bond Fund for an investment horizon of more than 12 months.

Returns from the UTI Bond Fund are decent

This corporate bond fund was launched in Aug 2018 and going by the current NAV of Rs 12.84, the returns are to the tune of 9.35%. The 1-year returns are close to 7%, which is pretty decent.

Most of the corpus is invested in debt instruments of government owned entities like National Highways Authority of India, NABARD, SIDBI, Rural Electrification, Power Finance etc. The portfolio is rather strong.

UTI Corporate Bond Fund: A Better Opportunity Than Bank Deposits

The fund predominantly invests in high quality corporate bonds such that minimum 80% of portfolio is invested in AAA and AA+ rated corporate bond and equivalent instruments with an aim to provide reasonable income through accrual strategy. This fund follows conservative approach in security selection and has currently invested 100% of the portfolio in AAA rated securities issued by Public Sector Undertakings, Public Financial Institutions and Corporates with strong parentage & proven track record with various maturities. The fund’s average maturity generally ranges from 3.5 to 4.5 years.

Conclusion

The returns are likely to remain pretty decent at that 6% mark is what we believe. This is still better than what banks are offering currently. If you are looking at diversification and away from bank deposits, UTI Bond Fund could be a good bet.

Story first published: Saturday, May 29, 2021, 14:29 [IST]



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National Pension System: Check Current Withdrawal, Exit & Account Opening Rules

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Investment

oi-Vipul Das

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Subscribers of the National Pension System (NPS) may soon be able to withdraw their whole contributions. According to sources, the Pension Fund Regulatory and Development Authority (PFRDA) aims to establish a new alternative for retirees that would allow them to take their whole investment at once if their corpus is up to Rs 5 lakh. During the current phase of the coronavirus pandemic, the raised threshold of Rs 5 lakh will provide improved liquidity to a particular subset of subscribers. Beneficiaries can withdraw up to Rs 2 lakh from their NPS account presently whereas pensioners can withdraw 60% of their contributions after this limit has been exceeded. According to sources, the regulatory body would allow subscribers to maintain a portion of their pension funds for investment in annuities or by pension fund managers directly. As per the existing guidelines of NPS, check current withdrawal, exit, partial withdrawal and account opening rules below.

National Pension System: Check Current Withdrawal, Exit & Account Opening Rules

NPS current withdrawal rules

If the entire accumulated corpus is less than or equal to Rs. 2 lakh at the time of Superannuation/at the age of 60 years, a subscriber can claim a 100 per cent withdrawal. In the event of an early exit, if the total accrued corpus is less than or equal to Rs. 1 lakh, the subscriber has the option of withdrawing the whole amount. However, one can only exit the NPS once ten years have passed. In the event of a partial withdrawal, the subscriber must have been a member of the NPS for at least three years and the withdrawal amount should not exceed 25% of the contributions made. A maximum of three withdrawals is permitted throughout the subscription period. Investors can withdraw funds in part for their children’s higher education, marriage, the purchase/construction of a residential home (under certain conditions), and the treatment of serious diseases. Subscribers can make a partial withdrawal request online. Subscribers can also submit a physical partial withdrawal form (601-PW) along with supporting documents to POP, which will allow a POP to launch an online application, on the other hand, POP must ‘Authorize’ the withdrawal application in the CRA system. Subscribers can also request an Online Withdrawal by logging into their NPS account. This request must be confirmed and approved by the concerned POP. If a Subscriber is unable to make an online Withdrawal request, he or she must submit a physical Withdrawal form to the POP, with the requisite documents. POP will proceed with the withdrawal request on behalf of the subscriber depending on the subscriber’s preference.

NPS Current Exit Rules

An exit is regarded as the closing of a subscriber’s pension account under the National Pension System. According to the PFRDA (Exits and Withdrawals under NPS) Regulations 2015, subscribers can exit NPS in the following circumstances:

Upon Superannuation: When a subscriber hits Superannuation/60 years of age, he or she must utilise at least 40% of the accrued pension fund to buy an annuity that will give a regular monthly income. The outstanding funds can be withdrawn out in one go. Subscribers can choose for a 100 per cent lump-sum withdrawal if their entire accrued pension corpus is less than or equal to Rs. 2 lakh.

Premature Exit – In the event of a premature withdrawal (before reaching the age of superannuation/60 years of age) from NPS, at least 80% of the Subscriber’s accumulated pension corpus must be used to purchase an Annuity that would deliver a regular monthly annuity. The outstanding money can be withdrawn in one go. However, after ten years, one can exit from NPS. Subscribers who have a total corpus of less than or equal to Rs. 1 lakh can choose for a 100 per cent lump sum withdrawal.

Upon Death of Subscriber: The entire accrued pension corpus (100%) would be given to the subscriber’s nominee/legal heir.

Options for exit from NPS

Subscribers have the option of staying invested in NPS for up to 70 years or exiting NPS. Subscribers of NPS have the following options to opt according to npscra.nsdl.co.in:

Continuation of NPS account: Subscribers can keep contributing to their NPS account once they reach the age of 60/superannuation until they reach the age of 70. This contribution made beyond the age of 60 is also eligible for tax deductions under NPS.

Deferment (Annuity as well as Lump sum amount): Subscribers can delay withdrawals and remain invested in NPS until they reach the age of 70. Subscribers can choose to delay only lump-sum withdrawals, only Annuity, or both lump sum and Annuity.

Start your Pension: Subscribers can exit NPS if they do not want to continue/defer their account. He or she can submit an exit request online and start earning pension according to NPS exit guidelines.

Note: If the Subscriber meets the age and corpus requirements for purchasing an annuity, the pension starts immediately, based on the annuity scheme chosen by the respective Annuity Service Provider (ASP).

NPS new account opening rule

The pension regulator has approved the seamless digital onboarding of new subscribers via Points of Presence (POPs) and Central Record Keeping Agencies (CRAs). CRAs will continue to create soft copies of NPS subscribers’ applications for accounts created digitally in CRA platforms, including eNPS. According to the revised guidelines, NPS subscribers will no longer be required to submit a physical application form to their respective CRAs. Before the activation of a Permanent Retirement Account Number (PRAN), subscribers will have the alternative of e-Sign or OTP authentication. This regulation will apply to NPS accounts registered through POPs as well.

Story first published: Saturday, May 29, 2021, 13:31 [IST]



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3 Tax Saving Mutual Funds That Investors Should Not Miss

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What are these ELSS Funds?

Equity Linked Savings Funds are mutual fund schemes that are run by asset management companies and invest your money in equities. This means your returns are not guaranteed and they can be volatile. However, you get tax benefits under Sec80C of the Income Tax Act. Amounts invested qualifies for tax benefit up to a sum of Rs 1.5 lakhs. However, one important thing to note is that the income earned is not tax free and would see a 10% long term capital gains tax.

There is a lock-in period of 3 years on the ELSS. Interestingly, the lock-in period on the ELSS is the lowest when you can compare to other tax saving instruments like PPF, ULIPs or tax savings bank deposits, where there is a lock-in of 5-years. However, returns on bank deposits and PPF are more certain. Here are three ELSS instruments that you can invest in:

Canara Robeco Equity Tax Saver Fund

Canara Robeco Equity Tax Saver Fund

Canara Robeco Equity Sax Saver Fund has been great on returns and has a sound portfolio. The fund has a very diversified portfolio, unlike several other equity mutual funds, where the assets under management are largely skewed towards the financial sector.

Among the 5 top holdings of the bank you would find names like Infosys, ICICI Bank, HDFC Bank, Larsen and Toubro and Tata Steel. Interestingly, a steel stock is in the top holdings.

The 1-year returns from the fund is a solid 69 per cent, while the three year returns is 18% and 5-year returns is 17% on an annualized basis.

The one thing about equity mutual funds is that they tend to move largely in line with the markets. If the markets move higher, the returns are superior and so on.

Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund

The Mirae Asset Tax Saver Fund like most other funds has given good returns in the last 1-year, thanks to recovery in the markets following Covid first wave. The 1-year returns are a whopping 82%, while the 3-year returns are 20% and the 5-year returns are 22% on an annualized basis.

Again, like most other ELSS, the funds are invested in mostly the largecap pack including names like HDFC Bank, ICICI Bank, TCS, Axis Bank and Infosys. All of these 5-stocks together form almost 30% of the portfolio.

Investors have to note that Equity Linked Savings Scheme have a lock-in period of 3-years and hence it is not possible to withdraw before this term. So, there is no point in suggesting to investors to stay invested for the longer term.

BOI AXA Tax Advantage Fund

BOI AXA Tax Advantage Fund

This is another fund that has generated good returns in the long term and superb returns in the short term, thanks to the market movement. The one reason to pick this fund is the exceptional rating from Crisil of 5-star. Apart from this, it has been rated 4-star by Value Research. The 1-year returns are a solid 80%, while 3-year returns is close to 15% and 5-year returns at 18% on an annualized basis.

It’s always difficult to hazard a guess on which mutual fund could do well and which could be laggards, given the dynamism with which the markets operate. Until a few quarters ago nobody would buy steel stocks. Today, they feature in holdings of mutual funds. While choosing the above, we have kept in mind track record and the rating of the funds.

Disclaimer:

Disclaimer:

Goodreturns.in has taken utmost care in compilation of data for this article. 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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HDFC Bank Revises Interest Rates On FD, Check New Rates Here

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Investment

oi-Vipul Das

|

With effect from May 21, 2021, private sector lender HDFC Bank has altered interest rates on selected fixed deposit (FD) tenures. Following the most recent revision, HDFC Bank now offers 2.50 per cent interest on deposits maturing in 7 to 29 days, and 3% on deposits maturing in 30 to 90 days. 3.5 per cent for 91 days to 6 months, and 4.4 per cent for 6 months 1 day to less than one year. On one-year FDs, the bank offers 4.9 per cent interest. Interest on FDs maturing in 2 to 3 years will be 5.15 per cent, 3.0 to 5 years will be 5.30 per cent, and deposits maturing in 5 to 10 years will be 5.50 per cent. Senior folks will continue to receive a 50-basis-point higher than the general public. Senior citizens, on the other hand, will earn 75 basis points more on fixed deposits maturing between five years and ten years. Senior citizens will get interest rates ranging from 3% to 6.25 per cent on FDs with terms ranging from 7 days to 10 years respectively after the most recent revision.

HDFC Bank Revises Interest Rates On FD, Check New Rates Here

HDFC Bank FD Rates (Below Rs 2 Cr)

Tenure Regular FD Rates Senior Citizen FD Rates
7 – 14 days 2.50% 3.00%
15 – 29 days 2.50% 3.00%
30 – 45 days 3.00% 3.50%
46 – 60 days 3.00% 3.50%
61 – 90 days 3.00% 3.50%
91 days – 6 months 3.50% 4.00%
6 months 1 days – 9 months 4.40% 4.90%
9 months 1 day to less than 1 Year 4.40% 4.90%
1 Year 4.90% 5.40%
1 year 1 day – 2 years 4.90% 5.40%
2 years 1 day – 3 years 5.15% 5.65%
3 year 1 day- 5 years 5.30% 5.80%
5 years 1 day – 10 years 5.50% 6.25%
Source: HDFC Bank, W.e.f. May 21, 2021

Story first published: Saturday, May 29, 2021, 11:32 [IST]



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SBI Vs Kotak Vs Axis Vs ICICI Vs HDFC: Latest Interest Rates On FDs Compared

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SBI Fixed Deposit Rates

General customers will receive 2.9 percent to 5.4 percent on SBI FDs with terms ranging from 7 to 10 years. Senior citizens will get an additional 50 basis points (bps) on their deposits across the same tenure. From 8 January 2021 these rates are in force.

Tenure Regular FD Rates Senior Citizen FD Rates
7 days to 45 days 2.90% 3.40%
46 days to 179 days 3.90% 4.40%
180 days to 210 days 4.40% 4.90%
211 days to less than 1 year 4.40% 4.90%
1 year to less than 2 year 4.90% 5.50%
2 years to less than 3 years 5.10% 5.60%
3 years to less than 5 years 5.30% 5.80%
5 years and up to 10 years 5.40% 6.20%
Source: SBI, W.e.f. 08.01.2021

HDFC Bank Fixed Deposit Rates

HDFC Bank Fixed Deposit Rates

On deposits maturing between 7 days and 10 years, HDFC Bank pays interest ranging from 2.50 percent to 5.50 percent. Senior citizens can get interest rates ranging from 3% to 6.25 percent on FDs maturing in 7 days to 10 years from HDFC Bank. These rates are in force from May 21, 2021.

Tenure Regular FD Rates Senior Citizen FD Rates
7 – 14 days 2.50% 3.00%
15 – 29 days 2.50% 3.00%
30 – 45 days 3.00% 3.50%
46 – 60 days 3.00% 3.50%
61 – 90 days 3.00% 3.50%
91 days – 6 months 3.50% 4.00%
6 months 1 days – 9 months 4.40% 4.90%
9 months 1 day to less than 1 Year 4.40% 4.90%
1 Year 4.90% 5.40%
1 year 1 day – 2 years 4.90% 5.40%
2 years 1 day – 3 years 5.15% 5.65%
3 year 1 day- 5 years 5.30% 5.80%
5 years 1 day – 10 years 5.50% 6.25%
Source: HDFC Bank

ICICI Bank Fixed Deposit Rates

ICICI Bank Fixed Deposit Rates

On deposits maturing in 7 days to 10 years, ICICI Bank offers interest rates ranging from 2.5 percent to 5.50 percent. These rates are effective as of October 21, 2020. Seniors will earn a 50 basis point (bps) higher interest rate than the general public.

Tenure Regular FD Rates Senior Citizen FD Rates
7 days to 14 days 2.50% 3.00%
15 days to 29 days 2.50% 3.00%
30 days to 45 days 3.00% 3.50%
46 days to 60 days 3.00% 3.50%
61 days to 90 days 3.00% 3.50%
91 days to 120 days 3.50% 4.00%
121 days to 184 days 3.50% 4.00%
185 days to 210 days 4.40% 4.90%
211 days to 270 days 4.40% 4.90%
271 days to 289 days 4.40% 4.90%
290 days to less than 1 year 4.40% 4.90%
1 year to 389 days 4.90% 5.40%
390 days to less than 18 months 4.90% 5.40%
18 months days to 2 years 5.00% 5.50%
2 years 1 day to 3 years 5.15% 5.65%
3 years 1 day to 5 years 5.35% 5.85%
5 years 1 day to 10 years 5.50% 6.30%
5 Years (80C FD) 5.35% 5.85%
Source: ICICI Bank

Kotak Mahindra Bank Fixed Deposit Rates

Kotak Mahindra Bank Fixed Deposit Rates

On term deposits maturing in 7 days to 10 years, Kotak Mahindra Bank offers interest rates ranging from 2.5 percent to 5.30 percent. On the other hand, senior citizens will get an additional rate of 50 basis point (bps). These rates can vary from 3.00% to 5.80% for deposits made by senior citizens. With effect from April 26, 2021, interest rates of Kotak Mahindra Bank FD are in force.

Tenure Regular FD Rates Senior Citizen FD Rates
7 – 14 Days 2.50% 3.00%
15 – 30 Days 2.50% 3.00%
31 – 45 Days 2.75% 3.25%
46 – 90 Days 2.75% 3.25%
91 – 120 Days 3.00% 3.50%
121 – 179 days 3.25% 3.75%
180 Days 4.40% 4.90%
181 Days to 269 Days 4.40% 4.90%
270 Days 4.40% 4.90%
271 Days to 363 Days 4.40% 4.90%
364 Days 4.40% 4.90%
365 Days to 389 Days 4.50% 5.00%
390 Days (12 months 25 days) 4.80% 5.30%
391 Days – Less than 23 Months 4.80% 5.30%
23 Months 5.00% 5.50%
23 months 1 Day- less than 2 years 5.00% 5.50%
2 years- less than 3 years 5.00% 5.50%
3 years and above but less than 4 years 5.10% 5.60%
4 years and above but less than 5 years 5.25% 5.75%
5 years and above up to and inclusive of 10 years 5.30% 5.80%
Source: Kotak Mahindra Bank

Axis Bank Fixed Deposit Rates

Axis Bank Fixed Deposit Rates

Axis Bank recently changed the interest rates on fixed deposits (FDs), which are effective as on May 21, 2021. The bank’s interest rates on deposits of less than Rs 2 crore for periods ranging from seven to ten years are now 2.5 percent to 5.75 percent for the general public and 2.50 percent to 6.50 percent for senior citizens, following the most recent revision.

Tenure Regular FD Rates Senior Citizen FD Rates
7 days to 14 days 2.50% 2.50%
15 days to 29 days 2.50% 2.50%
30 days to 45 days 3.00% 3.00%
46 days to 60 days 3.00% 3.00%
61 days less than 3 months 3.00% 3.00%
3 months to less than 4 months 3.50% 3.50%
4 months to less than 5 months 3.50% 3.50%
5 months to less than 6 months 3.50% 3.50%
6 months to less than 7 months 4.40% 4.65%
7 months to less than 8 months 4.40% 4.65%
8 months to less than 9 months 4.40% 4.65%
9 months to less than 10 months 4.40% 4.65%
10 months to less than 11 months 4.40% 4.65%
11 months to less than 11 months 25 days 4.40% 4.65%
11 months 25 days to less than 1 year 4.40% 4.65%
1 year to less than 1 year 5 days 5.10% 5.75%
1 year 5 days to less than 1 year 11 days 5.15% 5.80%
1 year 11 days to less than 1 year 25 days 5.10% 5.75%
1 year 25 days to less than 13 months 5.10% 5.75%
13 months to less than 14 months 5.10% 5.75%
14 months to less than 15 months 5.10% 5.75%
15 months to less than 16 months 5.10% 5.75%
16 months to less than 17 months 5.10% 5.75%
17 months to less than 18 months 5.10% 5.75%
18 Months to less than 2 years 5.25% 5.90%
2 years to less than 30 months 5.40% 6.05%
30 months to less than 3 years 5.40% 5.90%
3 years to less than 5 years 5.40% 5.90%
5 years to 10 years 5.75% 6.50%
Source: Axis Bank



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US ETFs see record money inflow this year, BFSI News, ET BFSI

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Investment into US exchange traded funds (ETFs) has risen to record levels this year, driven by a rally in equities and investor preference for passive index-tracking funds over actively managed peers.

According to Refinitiv data, US ETFs attracted a record inflow of $324 billion in the first four months of this year, which was 180% higher than the same period of last year. At the same time, US mutual funds received an inflow of $318 billion, which was a 58% drop.

This surge in inflows is evidence of growing investor interest in ETFs, due to their lower fees and tax liabilities, and better returns compared with active funds in recent years.

Analysts said proposals by the Joe Biden administration to increase the US capital gains tax had also fuelled interest in ETFs.

“Over the last six months, flows have continued to be robust as the elevated savings pile of the private sector found its way into financial assets, benefitting ETFs,” said Komson Silapachai, vice president at investment management firm, Sage Advisory Services, based in Austin.

“The expected increase in capital gains tax later this year should result in a higher preference for ETFs versus mutual funds for the highest tax brackets.”

As most ETFs are passively managed, there is less amount of buying and selling taking place, which leads to lower capital gains and taxes.

Also, ETF redemptions take place through a mechanism called “in-kind transfer” in which ETFs have to deliver baskets of securities to authorized brokers instead of paying cash, which precludes them from being taxed.

According to Refinitiv data, U.S equity ETFs saw a cumulative inflow of $149.6 billion in the first four months of this year, while debt ETFs obtained $283.6 billion.

The Vanguard 500 index fund led this year’s inflows seeing net purchases of $20.7 billion, while iShares Core S&P 500 ETF and Financial Select Sector SPDR Fund procured $11.8 billion and $9.6 billion respectively.

Analysts said the higher inflows were also due to the availability of a variety of ETFs which are focused on certain themes or sectors.

The surge in ETFs was prompted by an SEC rule in 2019 that eliminated some exemptive relief requirements that has made ETF launches expensive and time-consuming.

“The relaxation of the exemption rule requirements has allowed ETFs to be structured to cover narrower segments of the market such as marijuna stocks, ‘high conviction’ stocks, crypto-focused, etc.,” said Warren Ward, founder of financial planning firm, Warren Ward Associates in Houston.

“I suspect this is the main driver of the higher inflows, he said.

“Why choose a single stock if you can utilize a small basket of them instead?”



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Preparing bank for growth stage once economy opens up: Padmaja Chunduru, MD & CEO, Indian Bank

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Padmaja Chunduru, MD & CEO, Indian Bank

Indian Bank has continued its steady growth in both business and earnings despite the pandemic situation. The capital adequacy ratio at 15.71% is giving good strength to the balance sheet and this will help the bank to lend aggressively when the pandemic-induced lockdown ends and economy opens up.

Padmaja Chunduru, MD & CEO, says that this year her focus will be on leveraging the larger balance sheet size, higher CRAR, wider geographical presence, larger talent pool and enhanced technology. Excerpts from a post-result virtual press:

Having completed the amalgamation process with Allahabad Bank, going forward, what would be the strategy for India Bank?
We will be leveraging the large balance sheet strength achieved by the amalgamation. While the focus will be on capital conservation, there will be potential for increase in corporate exposure. We can take large exposure in corporate sector, we have now much more expertise in due-diligence. We are poised to improve our corporate business as there will be pent-up demand from corporates for loans once the economy opens up. We will be diversifying our asset base. Revenue maximisation and cost optimisation will be another important areas which will be taken up by the bank.

How has been the FY 21 for the bank?
The bank has continued its steady growth in both business and earnings despite the pandemic situation. The capital adequacy ratio was at 15.71% giving good strength to the balance sheet. FY21 has been a special year wherein the bank has successfully completed the amalgamation with Allahabad Bank, including CBS integration of both the banks, with seamless continuity in customer operations. The bank as on date has rationalised 217 branches, 25 zonal offices, 12 currency chests, three large corporate branches, five service branches, six staff training centres and six stressed asset management branches.

What is your recovery target this fiscal? Do you foresee any increased provisioning for the expected slippages due to Covid second wave ?
We expect a recovery of Rs 5,000 crore from both NCLT and non-NCLT this year, but that will also be revised after reviewing the evolving situation. Too early to predict on the likely provision requirement for the coming quarters, whatever will be the situation, we will be able to manage the slippages on the strength of the balance sheet. It is very difficult to project what would be the situation as far as slippages are concerned, given that the RBI has given the dispensation for restructuring. SMEs are the most vulnerable segment and we are offering them restructuring window and a lot of outreach is happening. We expect to keep the slippage ratio below 2%.

Any plans on digital front?
Improving digital penetration, with focus on new age digital products and end- to -end solution for digital lending will also be our focus areas. The investments made by the bank in IT, digital infrastructure security controls during the year are paying dividends. We have implemented strong data analytics models to boost digital business. We are making migration to digital channels in a big way. There has been a 13% shift to digital transactions in FY21. We are bringing in more products on app and net banking.

Any plans to raise capital in FY 22? The growth target for FY22?
We are adequately capitalised, we had raised a total of Rs 4,000 crore during the second and third quarters of the last financial year. We have a board approval to raise around Rs 4,000 crore this financial year. We are not in a hurry, but definitely will look at raising the equity funds. If the market is conducive, we will raise the funds this year itself. As far as growth target is concerned, we could not achieve the target last year as advances did not pick up due to lack of corporate appetite. In the current year, the situation appears to be still uncertain and giving a target would be adventurous. But still, we would expect to have a 10% growth, but of course, we will review it as and when we get some more clarity.

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