Category: Personal Finance

Senior Citizen Savings Scheme (SCSS)

Senior Citizens Savings Scheme (SCSS) is a government-backed scheme with a current interest rate of 7.40 per cent for the quarter of (April to June 2021). SCSS has a five-year term that can be extended by three more years. The maximum amount that can be invested in SCSS is Rs 15 lakh, and the initial investment must be in multiples of Rs 1000. Under Section 80C of the Income-tax Act, 1961, investments in SCSS are also eligible for a tax benefit of up to Rs 1.5 lakh per year. This option is ideal for senior citizens who are above 60 years of age and want a high fixed return with a quarterly income option. This is the only government-backed scheme that offers a similar term as of tax-saving fixed deposits. Since tax-saving FDs offered by SBI for an example, can currently only provide you with a 6.20 per cent return, this scheme can provide you with higher returns in the form of regular income during your post-retirement years.

Special Fixed Deposit Schemes

For senior citizens, bank fixed deposits have traditionally been a sensible choice as they get interest on a monthly, quarterly, half-yearly, or annual basis. SBI, ICICI Bank, HDFC Bank, and Bank of Baroda (BoB) are among the banks that provide special deposit schemes to elderly persons on deposits of five years or more. These special FDs are valid till June 30, 2021. Although depositors over the age of 60 receive an additional 0.5 percent interest on regular FD, special FD schemes for senior citizens bid a higher rate of return. Let’s evaluate the interest rates on SBI, ICICI, HDFC Bank, and Bank of Baroda’s special FD schemes for senior citizens.

Post Office Monthly Income Scheme (MIS)

The Post Office Monthly Income Scheme (POMIS) has a 5-year term and the interest rate remains unchanged until the maturity date. The interest rate is now 6.6 percent per annum for the quarter ending June 2021 and as the name suggests the taxable interest rates are payable on a monthly basis to the depositor. Under a single account, a maximum of Rs 4.5 lakh can be invested, while in a joint name, a maximum of Rs 9 lakh can be invested in POMIS. By making an initial deposit in multiples of Rs 1000, one can open a POMIS account. You can withdraw from the MIS scheme after one year, but there is a 2% penalty if you withdraw between 1-3 year and 1% penalty after three years.

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The Pradhan Mantri Vaya Vandana Yojana is a retirement scheme for senior citizens where they get a monthly pension in the form of an interest rate. This scheme is managed by Life Insurance Corporation (LIC). Currently, the scheme offers a 7.40 per cent annual guaranteed pension that is paid monthly. If the pensioner survives to the completion of the ten-year policy term, the money invested, together with the final pension instalment, will be paid to him or her. Senior citizens can enroll in PMVVY until March 31, 2023. Only resident Indians are eligible to purchase this policy. PMVVY provides pensions on a monthly, quarterly, and annual basis. This plan’s pension payment is issued at the end of each period, according to the payment option selected by the contributor. By acquiring the policy for Rs 15 lakh, a senior citizen subscriber can earn a monthly income of Rs 9250 for ten years.

The purchase amount of Rs 15 lakh will be reimbursed to the subscriber at the end of the ten-year period. After three years of completion, one can also avail loan of up to 75% of the purchase amount under the scheme. The minimum purchase price for a monthly pension under PMVVY is Rs 1,62,162. This will result in a monthly pension of Rs 1000, with the subscription amount being refunded after ten years. The highest monthly pension buying price under PMVVY is Rs 15 lakh. This would provide a monthly annuity of Rs 9250 for ten years, with the initial subscription amount being refunded at the end of that time. The scheme will give a guaranteed pension of 7.40 percent p.a., payable monthly, for the Financial Year 2021-22. This guaranteed rate of pension will be paid for the entire ten-year policy term for all policies acquired until March 31, 2022. There are a variety of purchase price alternatives available which are as follows. One must remember that once a payment choice has been selected, it cannot be modified.

Stocks that listed weak but now have gained substantial momentum

1. Barbeque Nation (BBQ):

In the previous day’s session the stock of QSR firm hit a new 52-week high of Rs. 953 per share on the NSE. Also, the firm posted Q4 results which came in better with sequential growth in revenues by 16% at Rs. 226 crore. Moreover the low base has also helped here.

Some of the positives of the company

1. In an expansion mode despite the Covid led fall out

2. Planned with a new product to cater to the demand of customers amid the pandemic called Barbeque-in-a-Box (including starters, main course, desserts)

3. Financially better placed in comparison to its standing before launching the IPO.

2. Angel Broking:

Now as we have seen that the Covid 19 crisis also led to record gains for the brokerage industry with record retail participation, Angel Broking is no exception to it. The Angel Broking IPO listed on the bourses on October 5, 2020. Again, this stock hit its 52-week high price yesterday i.e May 27.

ICICI Securities in its report has given a target of Rs. 900 with a buy recommendation. For the investment rationale, it suggest that operating on the flat fee model, its revenue has seen a sharp jump of 98 percent while in client addition also the company saw a tremendous 171 percent growth in FY21. Also, Narayan Gangadhar who has immense tech experience will enable the company to strengthen its digital capabilities.

3. Anupam Rasayan:

The scrip of specialty chemicals company was listed on the bourses on March 24, 2021. On May 19, 2021, the stock hit its 52-week high price of Rs. 799, close to 45% gains in 2 months time.

Talking about the positive for the firm:

1. New contracts: In a filing the chemicals company said, “received and signed contracts amounting to Rs 540 crores from two renowned multinational companies dealing in the fields of life sciences chemicals.

2. FII acquiring stake: Plutus Wealth Management bought 1 percent equity into the firm for Rs. 647 per share.

3. Renewable energy foray: The company announced setting up of 12.5 MW solar power plant for Rs. 43 crore. This will enable to company to save on energy costs and save it a huge Rs. 10 crore per year for 25 years.

4. UTI AMC:

The scrip of asset management company hit a 52-week high price of Rs. 777 on May 18, 2021.

FIIs as well as Mutual funds have been increasing their stake in the AMC stock.

Other positives as highlighted by a brokerage house:

1. Gains in market share in equity segment in addition to flows

2. SIP and folio addition

3. Cost reduction initiatives

4. Hike in pension fund management charges.

5. Lodha Developers:

On April 19, this real estate company made a weak listing at a discount of 10 percent in comparison. Now even as amid the Covid 19 woes, real estate players see robust sales performance in FY22, Lodha Developers is also gaining traction.

6. Easy Trip Planners:

The travel companystock in comparison to its subscription saw the worst listing, listing at a premium of just 13.5% over the IPO issue price. After the company announced dividend of Rs.2 per share and then on heavy volume, the stock has been gaining ground.

As and when the second wave led restrictions ease, the company is expecting pent up demand to provide an impetus to the segment.

GoodReturns.in

1. SBI Magnum Equity ESG Fund – Regular Plan – Growth:

This is a CRISIL 1-star rated ESG fund and is the oldest fund from the category. Expense ratio of the fund is over 2 percent. The 1-year return from this fund has been 63 percent as against the Nifty 50 return of 72 percent.

The fund has over 90 percent investment in Indian stocks, with over 70 percent in large cap stocks. SIP in the fund can be started for as less as Rs. 500

Top 10 stocks in the portfolio of the fund include Infosys, HDFC Bank, TCS, ICICI Bank, Bharti Airtel, L&T, Axis Bank, Page Industries and Divis Laboratories among others.

2. Quantum India ESG Equity Fund – Regular Plan – Growth

This is a thematic fund from the Quantum Mutual fund AMC. The fund has segregated its corpus with 59 percent funds in large cap stocks, 25 percent in mid cap and 4 percent in small cap stocks.

The expense ratio of the scheme is 1.68 percent and is categorized to be a high risk carrying mutual fund as per the Mutual fund risk o meter.

The fund’s 10 top stock holding include TCS, Infosys, HDFC, Wipro, Tata Motors, Tata Chemicals, Tata Consumer Products and Havells India among others. Minimum Lump Sum and SIP investment in this Quantum Fund can be made for Rs. 500.

3. Axis ESG Equity Regular Growth:

The thematic fund carries an expense ratio of 2.11 percent. The fund has 71 percent in Indian stocks of which over 53 percent is in large cap stocks, 9.4 percent in mid cap and over 1 percent in small cap stocks.

For the lump sum and SIP investment, an investor need to park in a minimum of Rs. 5000 and Rs. 1000, respectively.

Some of the top stock holdings of the fund include Avenue Supermart, Bajaj Finance, Kotak Mahindra Bank, Wipro, Nestle, Info Edge, HDFC and Torrent Power among others.

Quarterly numbers were outstanding

Several brokerages have termed the results for the quarter ending March 31, 2021 as superb. “State Bank of India’s 4QFY21 results has been nothing less than spectacular. The bank reported 4QFY21 slippages of just Rs 54.7 billion (a 20 quarter low; surprisingly comparable to other Private Banks), thus taking total slippages for FY21 to Rs 285 billion (1.2% of loans), while restructuring book stands controlled at 0.7% of loans,” Motilal Oswal Institutional Equities said in a report.

An Emkay Global Financials report had a similar view. The broking firm said, “Q4 was an extremely strong quarter, with 9% PAT beat at Rs 64.5 billion, better-than-expected asset-quality performance,” the broking firm said. On most parameters the bank reported numbers that were encouraging according to brokerages, including foreign brokerages.

Price targets on the stock hiked

While several brokerages have hiked the target price on SBI, Motilal Oswal has set a target of Rs 530, while Emkay Global has set a price target of Rs 600 on the stock.

“We expect it to deliver FY22E/FY23E RoE of 13.9%/15%. We maintain our BUY rating with a revised target price of Rs 530 per share (1.1x FY23E ABV+INR187/share from subsidiaries). SBIN continues to remain among our top Buys in the sector,” Motilal Oswal has said.

“Retain Buy/overweight in EAP with a sharp revision in target price to Rs 600 (Rs 460 earlier), valuing core bank at 1.4x FY23E ABV (1x earlier) and subs/investments at Rs 186 (Rs 172 earlier), leading to a strong 50% upside. SBI is our second top pick, along with ICICI, and better-than-expected growth trajectory should provide further upside to its earnings/valuations,” Emkay Global has said.

Improving asset quality

Clearly, it is the dropping non performing assets that has also attracted the attention of investors.

The gross non performing assets of the bank fell 15% in FY21 (43% decline over the past three years), while the coverage ratio has increased to 71% at present from 40% four years back, Motilal Oswal report has noted.

“Gross non performing asset at 5% vs. 5.4% in Q3 and lower RSA pool at 0.7% of loans) and a healthy specific PCR (71%), coupled with a reasonable Covid buffer at 25bps,” Emkay Global has said. However, one will have to wait and watch for the impact of the second wave of the Covid-19 on the first quarter 2021-22 results.

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

Fixed deposits in banks are considered to be among the safest investment alternatives since they are not affected by market fluctuations. Investors can put a large sum of money into a fixed deposit, which provides guaranteed returns in the form of interest rates. Investors have the option of receiving their payouts in a variety of ways. For example, if an investor wants the money to satisfy their regular expenditures, he or she can select the non-cumulative option or can have the principal amount plus interest at the time of maturity through the cumulative option. Normally fixed deposits come with a tenure starting from 7 days to 10 years. But if you have short term goals and want to invest in fixed deposits, let’s say about 1 to 3 years, then you are in the right place. Here we have compiled the top 5 banks which are currently giving higher interest rates on 1 to 3 year fixed deposits.

1 Year Fixed Deposits

Below are the top 5 banks which are currently promising higher returns in 1 year fixed deposits for a deposit amount of less than Rs 2 Cr.

2 Year Fixed Deposits

The top 5 banks now offering higher returns on two-year fixed deposits for a deposit amount of less than Rs 2 crore are listed below.

3 Year Fixed Deposits

The top five banks that are currently giving higher returns on three-year fixed deposits for deposits under Rs 2 crore are given below.