Category: Personal Finance

How To Open A Recurring Deposit (RD) Account In SBI?

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SBI RD Interest Rates

Here’re the latest RD rates of SBI for a deposit of less than Rs 2 Cr.

Tenure General RD rates Senior Citizen RD rates
1 year – 1 year 364 days 5.00% 5.50%
2 years – 2 years 364 days 5.10% 5.60%
3 years – 4 years 364 days 5.30% 5.80%
5 years – 10 years 5.40% 6.20%

Key takeaways of SBI RD

Key takeaways of SBI RD

  • One can make a minimum deposit of Rs. 100/- per month (thereafter in multiples of Rs. 10/-) with no upper limit.
  • One can make deposits for a minimum period of 12 months to 120 months.
  • Senior citizens are eligible for a 0.50 per cent additional interest rate compared to the regular rates for non-senior citizens.
  • The bank imposes a penalty in the event of late payments which is Rs. 1.50 per Rs. 100/- per month for an account with a maturity period of 5 years and less and Rs. 2.00 per Rs. 100/- per month for an account with a maturity period of more than 5 years.
  • On Recurring Deposit accounts paid out on or after the maturity date, where three or more consecutive instalments have been missed and the account has not been normalised, a service fee of Rs. 10/- will be imposed. If six consecutive instalments are not issued, the account will be closed prematurely and the remaining balance will be credited to the account holder.
  • The nomination facility is also available for the customers.
  • On the successful opening of the account, the account holder is issued with a universal passbook.
  • SBI provides the option of taking a loan against a deposit; the loan amount can be taken up to 90% of the RD balance.
  • One can easily transfer his or her RD account from one SBI branch to the other.
  • Customers of SBI have the option of withdrawing their RD amount prematurely. A penalty will be charged by the bank if the amount is withdrawn before maturity.

Types of SBI RD schemes

Types of SBI RD schemes

The regular recurring deposit, the SBI holiday savings account, and the SBI Flexi Deposit Scheme are the three forms of recurring deposits that SBI currently provides. Let’s discuss each of them.

SBI Regular Recurring Deposit: This basic RD account can be opened by depositing a minimum amount of Rs 100 for a tenure of 1 year to 10 years respectively. A nominee can be appointed, and a loan of up to 90% of one’s RD account can be taken out.

SBI Holiday Savings Account: This scheme allows you to save money for your holiday through Thomas Cook. While travelling, you can select a Thomas Cook Holiday savings account package and the balance will be divided into 13 EMIs. The EMI amount can be deposited into an SBI Holiday Savings Account on a monthly basis for a period of 12 months, and Thomas Cook will provide the 13th EMI after factoring in the applicable interest rate. This account requires a minimum deposit of Rs100 to open.

Eligibility criteria

Eligibility criteria

Individuals must meet the following eligibility requirements in order to open an RD with SBI:

  • A recurring deposit account can only be opened by Indian citizens or members of a Hindu Undivided Family.
  • The individual must have a savings account with SBI to open an RD account.
  • He or she must have a stable income source
  • NRIs can also open the RD account through NRO and NRE accounts.

Documents required to open an RD account

Documents required to open an RD account

To open an SBI RD account, you need to keep the following documents handy:

Proof of identity: Aadhaar Card, Voter ID Card, PAN Card, Senior Citizen ID Card, Ration Card

Proof of address: Driving License, Utility Bills, Bank account statement

How to open an RD account?

SBI offers two options to open a recurring deposit account: online and offline. To open an RD account offline, go to the nearest SBI branch physically fill out the application form and submit it along with the required documents. To open an RD account online, just log in to SBI net banking account and follow the instructions to create an e-RD. You must first generate an SBI savings account if you do not have one.

TDS on SBI RD

TDS on SBI RD

The interest you receive on your recurring deposit is subject to a 10% TDS (Tax Deducted at Source). If the interest you receive on your recurring deposit is less than Rs. 10,000, no TDS is withheld. If you do not provide the bank with your PAN number, the TDS would be 20%. You need to submit Form 15G if you want to avoid TDS on RD. You will be given Form 16A by the bank regardless of whether you are eligible for TDS on your income. Also, please remember that Form 15G is only available to citizens under the age of 60. Whereas Form 15H is for senior citizens who are above 60 years old.



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RIL Shares Gain Close To 5% In 2 Days; Jefferies Gives Buy With A TP Of Rs. 2600

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oi-Roshni Agarwal

|

Shares of Reliance Industries amid strong market momentum when Nifty has strengthened again to 14600 levels is up in trade by over 2.35 percent. And at the day’s high price, the scrip of RIL has jumped to Rs. 1990 per share on the NSE.

RIL Shares Gain Close To 5% In 2 Days; Jefferies Gives Buy With A TP Of Rs. 2600

RIL Shares Gain Close To 5% In 2 Days; Jefferies Gives Buy With A TP Of Rs. 2600

On April 26, 2021, the oil to telecom conglomerate and BP announced that it has begun the start of production from the Satellite Cluster gas field, in block KG-D6, ahead of schedule. The second of the three deep-water gas developments, planned jointly, was expected to start production in mid-2021.

Now amid positive news surrounding the company, global brokerage firm Jefferies has recommended a buy on RIL with a target price of Rs. 2600. It says that the overseas investors are more constructive on Reliance Industries at this point in time compared to the domestic peers.

A number of investors believe that Reliance is emerging as a local champion with the right to win in retail and telecom.

Some investors believe that event-driven triggers are behind, but Jefferies believes that there are few more triggers left for the stock to re-rate.
– One is the launch of affordable smartphone
– The Future Group deal
– O2C stake sale over the next 12 months.

There is a belief that oil to chemical monetization as well as possible demerger listing would be another triggers for the stock of RIL stock Also, the tariff hike could enable the rerating of the entire Jio platform. But the near-term trigger would be monetisation of the oil to chemicals.

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Top ELSS Funds To Invest In 2021

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What are tax saver mutual funds or ELSS?

Equity linked savings scheme (ELSS) invest majorly in equity schemes and are tax saving as investments in them qualify for tax deduction up to Rs. 1.5 lakh in a financial year under Section 80C of the Income tax Act. And for providing the maximum benefit to investors, these ELSS scheme carry a mandatory lock in period of 3 years.

And on redemption after 3 years, there will be long term capital gains tax implications and will be taxed at the rate of 10 percent.

Here are the top performing ELSS funds for investment in 2021:

1. Quant Tax Plan- Growth:

1. Quant Tax Plan- Growth:

This is a CRISIL 5-star rated fund with an asset size of Rs. 106 crore. The fund’s expense ratio is of 2.48 percent. The scheme’s benchmark is Nifty 50 TRI. 1-year return from the fund has been a huge 115%. Top stocks in the portfolio of this fund include Stylam Industries, Fortis Healthcare, Thyrocare Technologies, Infosys, Sun Pharma and TCS among others.

Investors who are looking to invest money for at least 3 years and looking for additional benefits of income tax saving apart from higher returns expectations. At the same time, these investors should also be ready for possibility of moderate losses in their investments and 3 year lock-in period.

Tax saver funds 1-year return 3-year return 5-year return
Quant tax plan 115% 22% 22%

2. Mirae Asset tax saver funds:

2. Mirae Asset tax saver funds:

This is a 4-star CRISIL rated fund. Fund size is a huge Rs. 6934 crore. NAV as on April 26, 2021 is 25.229. 1-year return from the fund is 69.72 percent. Top 10 stocks in the portfolio include HDFC Bank, Infosys, Axis Bank, ICICI Bank, TCS and Bharti Airtel among others. The scheme is suitable for investors who are looking to invest money for at least 3 years and looking for additional benefits of income tax saving apart from higher returns expectations. At the same time, these investors should also be ready for possibility of moderate losses in their investments and 3 year lock-in period.

Tax saver funds 1-year return 3-year return 5-year return
Mirae Asset tax saver fund 69.72% 15.44% 19.98%

3. Canara Robeco Equity Tax saver fund:

3. Canara Robeco Equity Tax saver fund:

This is a 5-star CRISIL rated fund with a Rs. 1931 crore asset size.Expense ratio of the fund is 2.32 percent. As per the risk o meter, the fund carries a low to moderate risk. The fund is suitable for those looking to invest money for at least 3 years and looking for additional benefits of income tax saving apart from higher returns expectations. At the same time, these investors should also be ready for possibility of moderate losses in their investments and 3 year lock-in period.

Tax saver funds 1-year return 3-year return 5-year return
Canara Rpbeco Equity tax saver fund 58.4% 15.28% 15.85%

For the best selection of ELSS funds, investors shall be better off by sticking with funds that have managed to continuously beat their benchmark returns over the long term. And it shall be useless to go by stocks that have performed good in the past, as the past returns shall not determine the course of future returns from the product.

Tax treatment of ELSS

Tax treatment of ELSS

Long term capital gains of ELSS will be tax exempt up to Rs. 1 lakh and dividend received shall also be tax free in the hands of investors.

SIP In ELSS

You can also make the most of your ELSS investment, by starting a SIP in it. This is to stagger your investments over time as well as invest a small sum at regular interval.

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Gold Prices Seen To Scale To Rs. 50000/10 gm In A Month

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Investment

oi-Roshni Agarwal

|

Gold prices have had a volatile run of late and from a price of over $2000 per ounce hit in august last year, spot gold is once again hovering near $1700 mark internationally and on the MCX at around Rs. 47400 per 10 gm levels. Now a recent spike in Covid 19 and dollar’s losses have again brought about strength in yellow-metal gold which rose in the month of April amid increase in physical demand for gold.

Gold Prices Seen To Scale To Rs. 50000/10 gm In A Month

Gold Prices Seen To Scale To Rs. 50000/10 gm In A Month

Another factor that pushed gold prices higher has been the rupee’s weakness against the dollar.

Apart from the above here are some of the factors that are seen to push gold prices higher in the short term:

Investors’ interest seen picking up

Amid loss in dollar and the US treasury yield and reduced pace of vaccination around the world amid surge in Covid 19 cases, there has been seen increased investor interest.

Notably, the US treasury yield is watched at closely as it provides clues on boroader investor confidence. In a case when the investor confidence is high, bond prices go down and yield surge. At this time, investors feel they can get investments yielding higher returns elsewhere and they don’t need to play safe with investments such as gold.

And at a time when the US yield is seen retreating, there is a pullback in the price of gold.

Covid 2.0 wave does not seems to stop:

Amid Covid 2.0 wave in India and third wave in some of the other nations, gold may fair still better i.e. in uncertain situation. In April, dollar’s weakness has also lent support to gold prices as there was seen a retreat in the US treasury yield from 14-month high levels. Only a week ago, the dollar held near its multi-week lows as there was a decline in US treasury yield which reduced the currency’s interest rate advantage.

Where is gold price set to move?

For restoring economic normalcy, central banks across the globe will maintain accommodative stance while continuing with dovish policy stance. The US central bank infused a stimulus package worth $3 trillion and another $2 trillion infrastructure bill is expected soon.

This liquidity push will make sure that the gold’s appeal as a safe haven continues as global stimulus moves, gives a boost to gold prices. We see spot gold prices in the international markets to move higher towards $1,900 per ounce, and MCX gold futures to move higher towards ..50,000/10 grams mark in a month, says .Prathamesh Mallya is AVP Research Non-Agri Commodities and Currencies at Angel Broking.

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List Of Major Companies Accepting And Adopting Bitcoin

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oi-Sneha Kulkarni

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Despite the fact that we are just a few months into the year, Bitcoin has already had a remarkable 2021. Endorsements from well-known financial leaders increased institutional interest, and Tesla’s $1.5 billion investment in Bitcoin have all helped to boost Bitcoin’s credibility. Institutional investors, investment banks, such as Tesla, Square, and JPMorgan, have continued to support Bitcoin by including the commodity and associated companies in their portfolios.

List Of Major Companies Accepting And Adopting Bitcoin

Tesla

Tesla CEO Elon Musk announced a historic $1.5 billion investment in Bitcoin in February 2021, accounting for 8% of the company’s $19.4 billion in cash and liquid assets.

Microsoft

Microsoft began accepting Bitcoin payments for applications, games, and other Windows content in 2014, including Windows Phone, Xbox Games, Xbox Music, Xbox Shops, and more.

BMW

Despite the fact that BMW has never been associated with Bitcoin on a corporate level, two BMW dealerships in England and Canada embrace Bitcoin for BMW transactions.

Square

Square recently made a $170 million investment in Bitcoin, which is a small sum relative to the other companies on this list, but it is noteworthy. Cash App, which was founded as a payment app to send and receive money, is now owned by Square. Cash App, on the other hand, now allows you to save and invest in Bitcoin.

JPMorgan

JPMorgan will launch a Bitcoin proxy stock fund called the “Cryptocurrency Exposure Basket.” JPMorgan Chase is the first major bank to commit to the volatile cryptocurrency market.

Goldman Sachs

Goldman Sachs’ private wealth management clients will soon be able to invest in bitcoin and other digital currencies. Goldman Sachs Group Inc. (GS) hired trader Justin Schmidt for a new bitcoin trading service earlier this month.

Expedia

Expedia, the online travel agency, has partnered with Coinbase to accept bitcoin as a form of payment.

Burger King

Burger King Venezuela declared in 2020 that it will embrace a variety of cryptocurrencies, including Bitcoin. This is done in partnership with Cryptobuyer, a startup that manages the conversion of cryptocurrencies to fiat currency.

Coca-Cola

Coca-Cola distributor Coca-Cola Amatil announced a collaboration with digital assets platform Centrapay to accept Bitcoin as a payment alternative in the Asia-Pacific region.

Pizza Hut

Another of the company’s restaurant chains, Pizza Hut, has confirmed that Bitcoin and other cryptocurrencies would be accepted in Venezuela. For this project, the company collaborated with Cryptobuyer.

Paypal

PayPal revealed in October 2020 that beginning in 2021, consumers in the United States will be able to purchase, sell, and retain a limited number of cryptocurrencies directly from their Cash or Cash Plus accounts.

Starbucks

Starbucks has stated that Bitcoin payments will be approved in the near future, but not explicitly until mid-2020. Last year, the company began experimenting with accepting Bitcoin payments via the Bakkt app.



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4 Best Recurring Deposits With Good Returns Up To 8%

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Utkarsh Small Finance Bank RD

Utkarsh Small Finance Bank RD comes with a tenure of 6 months up to 10 years. Across the tenure Utkarsh Small Finance Bank is currently providing an interest rate of 6.5% – 8.00% to non-senior citizens and 7.00% – 8.5% to senior citizens. One must make Recurring Deposits in multiples of Rs. 100 only. The below-given rates are in force from September 1, 2020.

Tenure ROI for non-senior citizens ROI for senior citizens
Up to 6 months 6.50% 7.00%
9 months 6.50% 7.00%
12 months 7.25% 7.75%
15 months 7.25% 7.75%
18 months 7.25% 7.75%
21 months 7.25% 7.75%
Above 21 Months to less than 24 Months 7.25% 7.75%
24 Months to 36 months 8.00% 8.50%
Above 3 Years up to 5 Years 7.25% 7.75%
Above 5 years up to 10 years 7.25% 7.75%

Jana Small Finance Bank RD

Jana Small Finance Bank RD

On RDs with terms ranging from 6 months to ten years, Jana Small Finance Bank proposes interest rates ranging from 4.00 per cent to 7.25 per cent. Senior citizens will get an additional 50 basis points for these deposits. In these deposits, senior citizens will earn interest rates ranging from 4.5 per cent to 7.75 per cent. The RD interest rates of Jana Small Finance Bank are in effect from 11 April 2021.

Tenure Regular RD Senior Citizen RD
> 1 Month – 6 Months 4.00% 4.50%
> 6 Months – 12 Months 6.00% 6.50%
> 12 Months – 36 Months 7.00% 7.50%
> 36 Months – 60 Months 7.25% 7.75%
> 60 Months – 120 Months 6.50% 7.00%

10 Things To Know Before Taking A Loan Against FD

Suryoday Small Finance Bank RD

Suryoday Small Finance Bank RD

Suryoday Bank’s RD rate varies based on the tenure from 5.5 percent to 7.25 percent for general customers and 6 percent to 7.75 percent for senior citizens. The bank offers the highest rate of interest on five-year deposits. The general public and senior citizens will get 7.25 percent and 7.75 percent interest on these deposits, respectively. Suryoday Bank’s most recent RD interest rates are with effect from 15 February 2021.

Tenure Regular RD Senior Citizen RD
6 months 5.50% 6.00%
9 months 6.00% 6.50%
12 months 6.75% 7.25%
15 months 6.75% 7.25%
18 months 6.75% 7.25%
21 months 6.75% 7.25%
24 months 6.75% 7.25%
27 months 7.00% 7.50%
30 months 7.00% 7.50%
33 months 7.00% 7.50%
36 months 7.00% 7.50%
Above 3 Years to less than 5 Years 7.10% 7.60%
5 Years 7.25% 7.75%
Above 5 Years to 10 Years 6.50% 7.00%

North East Small Finance Bank RD

North East Small Finance Bank RD

This bank offers interest rates ranging from 4.25 percent to 7.5 percent on RDs maturing in 3 months to 10 years. North East Small Finance Bank is now offering a higher interest rate of 7.5 percent for a two-year maturity term. The current RD interest rates are effective from 19th April 2021.

Tenure Regular RD Senior Citizen RD
3 Months 4.25% 4.75%
6 Months 4.50% 5.00%
9 Months 5.50% 6.00%
1 Year 5.50% 6.00%
2 Year 7.50% 8.00%
3 Year 7.00% 7.50%
4 Year 7.00% 7.50%
5 Years 6.50% 7.00%
More than 5 years up to 10 years 6.50% 7.00%

Note

Note

You must first open a savings account to open an RD account with any of the above-listed banks. The minimum RD term for most small finance banks is six months, and the limit is ten years. You can open an RD account with a minimum deposit of Rs 100 with any of these banks. However, these small finance banks have some terms and conditions that you should consider before opening an RD account. To know more about the terms and conditions click on the link of the respective name of the bank Utkarsh Small Finance Bank, Jana Small Finance Bank, Suryoday Small Finance Bank and North East Small Finance Bank. Recurring deposits are subject to TDS, or Tax Deducted at Source. The interest you receive on your recurring deposit is subject to a 10% TDS (Tax Deducted at Source). But in case you did not submit your PAN to the bank TDS will be deducted at a rate of 20%.



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These Banks Are Recommended A ‘Buy’ For Short Term Gains

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Investment

oi-Roshni Agarwal

|

After ending weak in the previous week on global strong cues which indicated that recovery is at a reasonable pace, Indian indices could sustain some gains on Monday.
Now as per experts, the markets could continue to witness volatility unless Covid 19 threat continues to exists:

These Banks Are Recommended A ‘Buy' For Short Term Gains

These Banks Are Recommended A ‘Buy’ For Short Term Gains

Now there is a advised to adopt a stock-specific approach and look at banking stocks as the sector is in oversold territory. Experts said banks with strong business outlook can provide a 3-5 percent upside in the short term. There is advised a ‘buy’ on stocks of SBI, ICICI Bank and Axis Bank once the market opens today (april 27, 2021).

What does oversold mean in a stock market?

It is a state when the price of a stock crashes too soon and quickly. As per Investopedia, it refers to a condition where an asset has traded lower in price and has the potential of a price bounce. An oversold condition can last for a long time, and therefore being oversold doesn’t mean a price rally will come soon, or at all. Many technical indicators identify oversold and overbought levels.

“These banking stocks have strong fundamentals and in immediate short-term they can showcase 3-5 per cent upside movement”, advises Avinash Gorakshkar, Head of research at Profitmart Securities said.

SBI, ICICI Bank and Axis Bank have strong corporate business outlook and they are expected to improve fast on the NPA front. So, these three banking stocks are expected to show sharp upside move in short-term”, he added.

With regards to SBI “Giving important levels for the stock investors in regard to SBI stocks Ravi Singhal of GCL securities said, “One can buy SBI shares at current market price for short-term targets of Rs. 375, Rs. 400 and Rs. 425 maintaining stop loss at Rs. 310.”

In respect of Axis Bank, buy is recommended at current price levels with a target price of Rs. 725 and Rs. 770.He advised investors to keep accumulating Axis Bank stocks till it is above Rs. 620. Singhal also advised investors to strictly maintain the stop loss at Rs. 620 while taking buy position in Axis Bank shares.
For stock market investors interested in ICICI Bank shares, Singhal advised them to buy ICICI bank stocks for the short-term target of Rs. 770.

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Net profit jumps 110% to Rs 175 cr; revenue declines to Rs 2,309 cr, BFSI News, ET BFSI

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SBI Cards and Payment Services on Monday reported a 110 per cent rise in net profit at Rs 175 crore for the quarter ended March 2021.

The credit card company, promoted by the country’s largest lender SBI, had posted a net profit of Rs 84 crore in the corresponding January-March period of the preceding fiscal year 2019-20.

The company, which operates under the brand name SBI Card, reported decline in revenue to Rs 2,309 crore during the fourth quarter as against Rs 2,433 crore in same period a year ago, it said in a regulatory filing.

Total income too dropped to Rs 2,468 crore from Rs 2,510 crore in the same quarter a year ago.

The total expenses were lower at Rs 2,234 crore as compared to Rs 2,398 crore earlier.

For the full year 2020-21, net profit slipped by 21 per cent to Rs 985 crore from Rs 1,245 crore in preceding fiscal.

With regard to asset quality, the company registered a deterioration with gross non performing assets (NPAs) more than doubling to 4.99 per cent at the end of March 2021, as compared to 2.01 per cent at March 2020.

Similarly, net non-performing assets rose to 1.15 per cent as against 0.67 per cent earlier.

As of March 31, 2021, the company’s capital-to-risk weighted assets ratio (CRAR) was 24.8 per cent compared to 22.4 per cent last year.

During the quarter ended March 2020, the company had come up with its Initial Public Offering (IPO) and was listed on BSE and NSE.



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Tenure of private bank chiefs must end in 15 years: RBI

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The fixed remuneration for an NED other than the chair of the board will be capped at Rs 20 lakh per annum.

The post of MD & CEO of a private bank cannot be held by the same individual for more than 15 years at a stretch, the Reserve Bank of India (RBI) said on Monday in a set of instructions for banks. In case of a promoter-CEO, the tenure will be capped at 12 years.

RBI did clarify, though, that in the interest of a smooth transition to the new requirements, incumbents who have already completed the 12/15-year tenure as bank chiefs will be allowed to complete their current term. Uday Kotak, promoter of Kotak Mahindra Bank, is at present the longest-serving chief of a bank, having assumed charge at the time of the bank’s establishment in 2003. In December, the RBI had approved Kotak’s reappointment as MD & CEO for a three-year term beginning January 1, 2021. Earlier, in October 2020, Aditya Puri stepped down from the MD’s role at HDFC Bank after having held it for over 25 years.

“Subject to the statutory approvals required from time to time, the post of the MD & CEO or WTD (whole-time director) cannot be held by the same incumbent for more than 15 years. Thereafter, the individual will be eligible for re-appointment as MD & CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions,” RBI said in a notification. During this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly.

The existing norms on the upper age limit for MD & CEO and WTDs in private sector banks would continue and no person will be allowed to hold these posts beyond the age of 70 years. Within the overall limit of 70 years, as part of their internal policy, individual banks’ boards are free to prescribe a lower retirement age for the WTDs, including the MD & CEO.

A promoter who is also MD & CEO or a WTD may be allowed to continue up to 15 years only in extraordinary circumstances and at the sole discretion of the RBI. “While examining the matter of re-appointment of such MD & CEOs or WTDs within the 12/15 years period, the level of progress and adherence to the milestones for dilution of promoters’ shareholding in the bank shall also be factored in by the Reserve Bank,” the notification said.

Banks have been permitted to comply with these instructions by October 1, 2021, even though the notification takes immediate effect. The chair of the board who is not an independent director on the date of issue of the circular shall be allowed to complete the current term as chair as already approved by the RBI. Banks with MD & CEOs or WTDs who have already completed 12/15 years as MD & CEO or WTD on the date these instructions come into effect, shall be allowed to complete their current term.

In addition to sitting fees and expenses related to attending meetings of the board, banks will be allowed to provide for payment of compensation to non executive directors (NEDs) in the form of a fixed remuneration. The fixed remuneration for an NED other than the chair of the board will be capped at Rs 20 lakh per annum.

The upper age limit for NEDs, including the chair of the board, shall be 75 years. The total tenure of an NED, continuously or otherwise, on the board of a bank, shall not exceed eight years. After completing eight years on the board of a bank the person may be considered for re-appointment only after a minimum gap of three years.

The board shall constitute a nomination and remuneration committee (NRC) made up of only NEDs and a risk management committee with a majority of NEDs. At least half of the members attending the meeting of the risk management committee shall be independent directors, of which at least one member shall have professional expertise in risk management. The chair of the board may be a member of this committee only if they have the requisite risk management expertise. The risk management committee shall meet at least once in each quarter.

A bank’s audit committee shall be constituted with only NEDs, with the chair of the board not being one of them. At least two-thirds of the members attending a meeting of the audit committee must be independent directors and it shall meet at least once in a quarter. The meetings of the audit committee shall be chaired by an independent director who does not chair any other committee of the board. The chair of the audit committee will also not be a member of any committee which has a mandate of sanctioning credit exposures. All members should have the ability to understand all financial statements and at least one member shall have professional expertise in financial accounting or financial management.

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10 Things To Know Before Taking A Loan Against Fixed Deposit

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Planning

oi-Vipul Das

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Individuals seek loans from a variety of lenders while they are in a fiscal crisis. Applying for loans against fixed deposits (FDs) from banks is one of the options that your bank sanction in just a matter of minutes. Rather than unnecessarily closing your FD, you can conveniently apply for a loan against your FD. Overdraft and loan against FD are the two options for borrowing money against your fixed deposit. The fixed deposit-backed overdraft or OD cap is lower than the deposit amount, but the interest paid is higher than the applicable FD rate. That being said, interest is only levied on the amount borrowed as an overdraft. Here’re the 10 facts to know while applying for a loan against your fixed deposit.

10 Things To Know Before Taking A Loan Against Fixed Deposit

1. A loan against FD (Fixed Deposit) is a type of secured loan in which customers pledge their fixed deposit as collateral in return for a loan. The loan amount is determined by the amount of the FD deposit. This can be somewhere between 90% and 95% of the deposit amount. You don’t have to break your FD to get a loan against it; alternatively, you can borrow against it.

2. In the instance of an overdraft, banks set a cap that can be as high as 90% of the deposit amount. For e.g., if you have a Rs 1 lakh fixed deposit with any bank, the bank will grant you an overdraft limit of Rs 90,000. This ensures you can only withdraw up to Rs 90,000, and you will only be charged interest on the amount that you have withdrawn from your fixed deposit account.

3. Anyone with a savings account, regardless of salary, profession, or credit score, can apply for a loan against their FD.

4. A loan against a fixed deposit can be obtained by any fixed deposit holder, whether an individual or a joint account holder. A loan against fixed deposits cannot be taken out in the name of a minor and also a depositor with a 5-year tax saving fixed deposit cannot apply for a loan against his or her FD account.

5. Loans against FD can be taken out by both salaried and self-employed individuals, regardless of their profession. To qualify for this loan, you do not need to have a decent credit score. Loans against fixed deposits have a lower interest rate than most unsecured loans, such as personal loans, and there are no processing costs or the need to break the FD. The loan balance can be repaid in instalments or as a lump sum, but not until the FD term has ended.

6. For loan against FD, banks usually charge two percent more than the FD rate. However, a few banks, such as State Bank of India and Punjab National Bank, charge an additional 0.75 percent to 1 percent interest on loan against fixed deposits. Thus, if your FD pays 6% interest, you may have to pay up to 8% interest on the loan amount. Some banks still offer online loans against FDs, but online loans against FDs have a cap. If the loan amount is high, the applicant will be required to visit his or her nearest bank branch physically.

7. A corporate fixed deposit can also be used to apply for a loan. There are, though, some terms and conditions. Just three months after opening the FD you can take out a loan against it. In the case of corporate FDs, a loan of up to 75% of the deposit amount is available. These loans can be repaid in one lump sum or in instalments until the fixed deposit matures. In case you didn’t repay the loan before the FD matures, the loan amount, as well as any accrued interest, will be deducted from the remaining fixed deposit amount at maturity.

8. When an individual takes out a loan against a fixed deposit, the bank uses the FD as collateral. If a fixed deposit holder defaults on the loan, the bank will possess the fixed deposit to claim back the funds lent.

9. Banks generate FD Lien, which are similar to charges. Banks are given an automatic claim on the deposit against which the loan was made.

10. If you don’t have a fixed deposit account then a personal loan, an early withdrawal from an FD or credit card against fixed deposit might be a safer and affordable choice. As a result, the loan against fixed deposit option is similar to a short-term loan, though it is preferable to use the loan amount to cover short-term goals.



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