Category: Personal Finance

4 Special FD Schemes For Senior Citizens Which They Can Opt Before 31st March 2021

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SBI Special FD Scheme

The interest rate on SBI’s special FD scheme for senior citizens will be 80 basis points (bps) higher than the general public rate. SBI currently offers a 5.4 percent interest rate on five-year deposits to the general public. For the same tenure under this special FD scheme of SBI senior citizens will be granted with an interest rate of 6.20%.

Tenure ROI for senior citizens
7 days – 45 days 3.40%
46 days – 179 days 4.40%
180 days – 210 days 4.90%
211 days – 364 days 4.90%
1 year – 1 year 364 days 5.40%
2 years – 2 years 364 days 5.60%
3 years – 4 years 364 days 5.80%
5 years – 10 years 6.20%

HDFC Special FD Scheme

HDFC Special FD Scheme

On 5 year deposits, HDFC Bank pays a 75 basis point higher interest rate. The interest rate on a fixed deposit for senior citizen under the HDFC Bank Senior Citizen Care FD is capped at 6.25 per cent whereas non-senior citizens will get an interest rate of 5.5% respectively.

Tenure ROI for senior citizens
7 – 14 days 3.00%
15 – 29 days 3.00%
30 – 45 days 3.50%
46 – 60 days 3.50%
61 – 90 days 3.50%
91 days – 6 months 4.00%
6 months 1 day – 9 months 4.90%
9 months 1 day < 1 Year 4.90%
1 Year 5.40%
1 year 1 day – 2 years 5.40%
2 years 1 day – 3 years 5.65%
3 year 1 day- 5 years 5.80%
5 years 1 day – 10 years 6.25%

ICICI Bank Special FD Scheme

ICICI Bank Special FD Scheme

On the same deposits for 5 years, ICICI Bank pays an 80 basis point higher interest rate. The ICICI Bank Golden Years FD scheme pays a 6.30 per cent annual interest rate to senior citizens whereas non-senior citizens will get an interest rate of 5.5% for the same tenure.

Tenure ROI for senior citizens
7 days to 14 days 3.00%
15 days to 29 days 3.00%
30 days to 45 days 3.50%
46 days to 60 days 3.50%
61 days to 90 days 3.50%
91 days to 120 days 4.00%
121 days to 184 days 4.00%
185 days to 210 days 4.90%
211 days to 270 days 4.90%
271 days to 289 days 4.90%
290 days to less than 1 year 4.90%
1 year to 389 days 5.40%
390 days to < 18 months 5.40%
18 months days to 2 years 5.50%
2 years 1 day to 3 years 5.65%
3 years 1 day to 5 years 5.85%
5 years 1 day to 10 years 6.30%
5 Years (80C FD) – Max to Rs 1.50 lac 5.85%

BOB Special FD Scheme

BOB Special FD Scheme

Senior citizens will get 100 basis points more on these deposits at Bank of Baroda (BoB). If a senior citizen places a fixed deposit in the special FD scheme (over 5 years to up to 10 years), the return he or she will get is 6.25%.

Tenure ROI for senior citizens
7 days to 14 days 3.30%
15 days to 45 days 3.30%
46 days to 90 days 4.20%
91 days to 180 days 4.20%
181 days to 270 days 4.80%
271 days & above and less than 1 year 4.90%
1 year 5.40%
Above 1 year to 400 days 5.50%
Above 400 days and up to 2 Years 5.50%
Above 2 Years and up to 3 Years 5.60%
Above 3 Years and up to 5 Years 5.75%
Above 5 Years and up to 10 Years 6.25%
Above 10 years 5.10%

Note

Note

Deposit Insurance and Credit Guarantee Corporation (DICGC) is a completely owned affiliate of RBI. Customers’ deposits in a commercial or small finance bank are insured by deposit insurance by this subsidiary. You are covered by the DICGC insurance cover up to Rs. 5 lakh for both principal and interest in an organised bank.



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NPS Vs APY: Where To Invest In Terms Of Good Returns?

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A glance at National Pension System (NPS)

The National Pension System (NPS) is a market-linked retirement savings plan that provides market-based returns. Until the age of 60 you can invest in this scheme. The NPS scheme offers four different categories of funds and two different investment methods. You can invest in any of four available funds using the Active choice strategy, or you can use the Auto choice strategy and to get your investments automatically allocated to the various funds. The scheme’s return is determined by the financial market. You can withdraw 60% of the accrued corpus in a lump sum at maturity, and the remaining 40% of the corpus will pay you annuities for the rest of your life.

A glance at Atal Pension Yojana (APY)

A glance at Atal Pension Yojana (APY)

The Atal Pension Yojana (APY) scheme, which was introduced by the government, is also a retirement-oriented fund. The scheme sought to support low-income individuals in the unorganised sector with assured pensions. You can invest in the scheme before you reach the age of 40, and the scheme matures until you reach the age of 60. There are five options for fixed pension amounts under the system. The amounts vary between Rs 1000 and Rs 5000. You select the amount of pension you receive when you invest in the scheme. The pension amount is chosen based on age, and the amount you will contribute to the plan is determined based on the frequency of contributions.

Similarities between APY and NPS

Similarities between APY and NPS

Many similarities exist between the APY and the NPS system. The following are some of them:

  • Both are retirement-oriented investments that assist you in building a retirement fund.
  • The Pension Fund Regulatory and Development Authority (PFRDA) regulates both the schemes
  • Both NPS and APY have a guaranteed amount of pension for the rest of your life until the plans mature.
  • Contributions to both schemes are tax-deductible up to a maximum of INR 1.5 lakhs under Section 80 CCD (1). Furthermore, contributions of up to INR 50,000 to both schemes are eligible for an additional deduction under Section 80 CCD (1B).
  • The pension benefit received under both the initiatives is taxable in your pocket as per your slab rates.

Difference between APY and NPS

Difference between APY and NPS

Despite the fact that the aforementioned findings prove that both of these schemes have certain similarities, the fact remains that they are somewhat distinct. The following points illustrate the key distinctions between the NPS and APY:

Eligibility- You must be between the age of 18 and 40 to participate in the APY scheme. Furthermore, the scheme is only open to Indian citizens who reside in India. The age limit for the NPS program, on the other hand, is 18 to 60 years old, and it is open to both Indian citizens and non-resident Indians.

Contribution cap– The amount of contribution to the APY scheme is determined by the age when you join, the guaranteed pension amount you select, and the frequency at which you contribute to the scheme. The monthly contribution starts at Rs 42 and can go up to Rs 8581 half-yearly. The amount of the contribution under the NPS scheme is determined by the account chosen. If you just want to open a Tier I account, the minimum donation is Rs 500. Following that, a minimum contribution of Rs 1000 per year is required to keep the account operational, with a minimum contribution amount of Rs 500 per contribution. If you also select the Tier II Account, you must deposit a minimum of Rs 1000 to open the account. After that, you must make a minimum contribution of Rs 250 to keep the account functioning. The maximum contribution cap under NPS has no upper limit.

Payable pension amount– The amount of pension due under the APY scheme is fixed in advance, and the contribution is set depending on the pension preferred. A pension of INR 1000, INR 2000, INR 3000, INR 4000, or INR 5000 can be selected. As a result, the plan is also known as a fixed benefit pension plan. The pension amount under the NPS scheme is determined by the accrued corpus available at the scheme’s maturity date as well as the pension option chosen. As a result, the pension is not assured and is based on the amount you have spent.

Taxation- Since both schemes have equal tax benefits, NPS has an advantage over APY because it helps salaried employers to seek tax benefits. If the employer contributes up to 10% of the employee’s basic salary, with dearness allowance, to the NPS scheme, the contribution is also permitted as a deduction under Section 80 CCD (2). This deduction is in addition to the deductions permitted by Sections 80 CCD (1) and 80 CCD (1B). Furthermore, even if you choose the current tax regime that eliminates deductions and exemptions, the employer’s allocation to the NPS scheme is always permitted under Section 80 CCD (2). This additional advantage is not provided by the APY scheme.

Pension options- The APY scheme provides you with a guaranteed pension for the rest of your life. Furthermore, if your spouse is still alive at the time of your death, the pension is accrued to her. On the other side, there are seven annuity plans available under the NPS system. You will get lifetime annuities based solely on your life or joint-life annuities. By selecting an increasing annuity alternative, the annuity balance will be increased annually. Furthermore, in some cases, the purchase price is refunded in the event that you or your spouse dies.

Types of account- Only one account is allowed per investor under the APY scheme, while the NPS scheme allows for two types of accounts: Tier I Account and Tier II Account. Tier I Account is mandated, whereas Tier II Account is optional for an investor.

Premature withdrawal option- Partially withdrawing funds before the maturity date is not permitted under the APY scheme. Only in the event of the investor’s death or serious illness is it possible to withdraw the account’s accrued balance early. In the event of the investor’s death, the spouse can elect to keep the account open until maturity and then receive the promised pension. Premature withdrawals are even permitted under the NPS. Withdrawals from the Tier II Account are unrestricted and can be made at any time. However, there are certain limitations with the Tier I Account. Withdrawals from the Tier I Account are permitted beginning in the third year of investment and are limited to specific circumstances such as marriage, medical emergencies, home purchases, and so on. Partially withdrawing funds from a Tier I Account is permitted up to 25% of the account’s balance. You can withdraw 20% of the accrued corpus in a lump sum if you close the scheme prematurely. The remaining 80% will have to be maintained for annuities.

Asset allocation- The contributions in the APY scheme are only allocated in government securities in a specific way. The funds invested in the NPS scheme, on the other hand, are invested in four types of funds named A, C, E, and G i.e. ultra safe, conservative, balanced and aggressive. To get attractive returns on your investments and build a strong corpus, you can opt to invest in equity and debt through NPS funds.

Maturity benefits- The pension amount promised by the APY scheme is paid upon maturity. That being said, under the NPS, 60 per cent of the accrued corpus can be withdrawn as a lump sum, with the remaining 40% of the corpus being used to fund an annuity for the pension benefit.

Our take

Our take

The equity market has a lot of upsides, and the NPS pulls more salaried people than the APY, which is suitable for citizens from the unorganised field. A subscriber under NPS can diversify his or her portfolio. However, he or she cannot invest only in equities. They can also invest in other asset groups such as government bonds, corporate debt, and other. The APY pension plan is ideal for low-income individuals who cannot afford market volatility. As both pension saving schemes are tax-saving savings strategies, a salaried person can opt for both. Investors’ capital is directly linked to the market in NPS, but it’s just for investors with a moderate risk appetite. There are two types of NPS accounts: active mode and auto mode. The first is a debt option, while the second is a market-linked alternative. With an additional tax benefit, the performance of NPS schemes has soared from 9% to 17% (source: NPS Trust) in the last five years as of now, which is a fantastic return over a longer period of time. So, depending on your risk appetite, choose one or both to build a retirement fund for yourself.



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We will end FY22 with Rs 6,000-crore loan book, says Ravi Subramanian, MD & CEO, Shriram Housing Finance

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So, yes, it’s a trend which I see sustaining, particularly for small and medium-ticket home loans.

The growth in the home loan market is being driven by the post-Covid realisation of the need to own homes and it will sustain, Ravi Subramanian, MD & CEO, Shriram Housing Finance, tells Shritama Bose. The company’s portfolio in the 30-90-days past due (dpd) segment has dropped to 4.9% from 8% two years ago, he adds. Excerpts:

Do you see the pick-up in the home loan market in the second half of 2020 sustaining?

If you look at the kind of transactions that have happened not just in Mumbai and Delhi, but across the country, it augurs well for the industry. Whether it is a pent-up demand being fulfilled now or people are genuinely going after buying houses and securing their future, time will tell. Based on the kind of transactions we’ve been funding – first-time home purchases rather than second or third ones by speculators – we see a distinct change in the approach to a house. Today, a house has become a combination of a home and an office. So, the trend we have seen in this market is that people are building an additional room, so our self-construction loans are going up. People are trying to upgrade from a 1BHK to a 2BHK and from a 2BHK to a 3BHK. So transactions are going up. Our assessment is that because of Covid and the inherent issues which Covid raised, people have started seeing the need for having a house. So, yes, it’s a trend which I see sustaining, particularly for small and medium-ticket home loans.

We are now in a hypercompetitive environment where banks are bringing home loan rates down. Your rates start at 8.9%. How are you ensuring portfolio quality in such a scenario?

The market itself is large enough for multiple players to survive at the same time. But, more important than that is the fact that there are multiple segments, including those which don’t interest large banks or some public sector banks. For them to apply their underwriting practices and policies to the self-employed segment in the Rs 10-15-lakh range of ticket size is very difficult and expensive. They will never be able to operate in that space. Self-employed people, particularly small and mid-sized self-employed, are never touched by banks. Having said that, that is the reason banks’ home loan business runs at 0.5-0.6% RoE (return on equity), whereas mine runs at 2.5% RoE. The other point is that I work with a lot of new-to-credit customers, while banks don’t touch people who don’t have a credit history.

What is the size of your loan book right now and how much would you like to grow it in FY22?

I ended December 2020 at roughly Rs 3,000 crore. We’ll end March at about Rs 3,600 crore and FY22 will end closer to Rs 6,000 crore. We are hoping to leverage our Shriram group network for this. My distribution points are going to rise to 175 from the current 75. That is planned for the first six months of next year. Secondly, we’ve made a lot of investments in people and distribution over the last six-seven months. Those will all fructify in the coming year. We are focusing on specific geographies. We are clear that there are six states we want to dominate – AP (Andhra Pradesh)-Telangana, Tamil Nadu, Karnataka, Rajasthan, Madhya Pradesh and Chhattisgarh in the affordable housing space. In NCR (National Capital Region), Mumbai, Maharashtra and Gujarat, we’ll dominate in the mid segment.

To what extent has Covid hit your borrowers’ repayment capacity?

My collection efficiencies were back to pre-February 2020 levels in December. My 90-dpd (days past due) has gone up by 18 basis points (bps) from pre-Covid levels. The entire Covid provisioning more than covers for this. I will end up reversing some of it in March. The bounce rates today are lower than February 2020. We changed our entire operational procedures, credit processes, assessment techniques, product policies and diversification strategy in January 2019. We started tracking that portfolio separately from the rest of the book and it is now 65-70% of the total book. On that portfolio of Rs 2,300 crore, I had only two 90-dpd accounts, which add up to Rs 10 lakh.

What do the 30-90-dpd numbers look like?

Our retail 30-90-dpd book is 4.9% and the 1-30-dpd is 3%, as of December 2020. Compared to that, two years ago, the 30-90-dpd was roughly 8%. So it has come down dramatically.

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10 Best Online Startup Ideas for Women in India

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Yoga Trainer

Today’s yoga industry is booming, and many women are too preoccupied with their daily lives to devote time to their physical health. Women entrepreneurs in India can focus on their health and wealth by turning their passion for yoga into a lucrative market. With pandemics hovering around the world, an online yoga class is the best choice for most people. Because of the work-from-home culture, people are more interested in fitness than ever before. Yoga studios are now switching to digital lessons, allowing yogis the opportunity to stay away from the crowds and teach peacefully.

There is no huge investment for design studios, you can teach from anywhere. Your students can be from all over the world. The only investment you have to make is to invest in your certification as it is very important. People usually trust trainers who are certified from a reputed institution.

Image Consultancy Business

Image Consultancy Business

Image consultancy is one of the trending businesses in India. Now more people are conscious of the value of a good image, resulting in a greater demand for skilled Image Consultants in the industry. And this is reflected in the enormous business opportunity for Image Consultants, which is estimated to be worth thousands of crores. Image consultancy does not confine you to a cubicle. As an Image Consultant, you can work from home and connect with clients all over the world through the internet. You can recruit and handle professionals. This helps you to earn a consistent income without having to work a certain amount of hours per day.

Graphics Designing

Graphics Designing

The offers will start flowing at once you’ve built your portfolio and established yourself as a credible individual. This is one of the best home business ideas for women with your creative mind and expertise. Visual designs are created by graphic designers to express ideas that empower and educate customers. Graphic designers are required in almost all the field as it is very vital to show their business in pictures. Professional graphic designers are required by businesses to create successful marketing materials such as brochures, business cards, leaflets, and banners. Graphic design entails the creation and development of a logo that can aid in the development of a brand image. There’s a fair chance that a company would need a logo, t-shirt design, website, or some other design project that you can assist with at some stage.

Financial Advisory

Financial Advisory

Women financial planners will be better able to interact with their female clients. This makes it easier for them to find the right options for their clients. Women advisors acknowledge and can contribute to women’s problems, such as job advancement, work-home dilemmas, and child college savings versus retirement savings. Although both men and women will benefit from consulting with a female advisor, women can benefit more because they take the time to connect. Start your career by advising your family and friends and slowly start charging a fee for a consultation.

Language Instructor

Language Instructor

Children and teenagers, business executives, doctors and nurses, and people who simply enjoy the adventure of travel are all potential students for a foreign language instruction business. Offering lessons in one or more world languages are how a foreign language business makes money. Students may pay for individual classes or buy a set number of classes in advance. The selling of language-learning resources such as books, study material may be another source of revenue. Providing online classes allow you to meet an almost limitless number of people. Online learning is a rapidly growing industry, with Skype, Google Hangouts, and other internet networks providing easy and effective ways to host classes over the Internet.

Blogging

Blogging

Businesses of all types are beginning to blog as a means of establishing a long-term audience. Blogging is more than just a way for companies to advertise their goods and services. It may potentially be the driving force behind a variety of companies. There are many options if you want to start your own blogging company.

Freelance Blogger, Ghost Blogger, Affiliate Marketer, Blogger with Advertisers, Online Course Creator, Business Blogger, Social Media Blogger to name a few. Bloggers, mostly work backward, first creating an audience by regularly producing high-quality material, and then looking for ways to monetize their traffic.

Online Tuition

Online Tuition

Being an online tutor is currently in high demand, and it gives a lot of space for advancement. Online tutoring is a huge business opportunity for both individual tutors and training companies. By making it easier for tutors to meet students, the increasing number of online tutoring platforms and innovations has significantly bolstered the online tutoring industry.

Music Instructor

You should start tutoring children and adults in these art forms if you are a talented artist with skills in art, music, or dance. Becoming a private tutor does not entail a large financial commitment, and the benefits far outweigh the costs. You can open a franchise in major cities and towns in India and abroad for organizations truly involved in the promotion and growth of performing arts – music and dance.

Life Coach

Life Coach

As a Coach, you’ll be able to assist yourself and other women in finding the answers they’re looking for. You’re not only making a living as a life coach. You are making a difference in the lives of tens of thousands of people.

Cook/Baking

Many bakers began selling cakes, cupcakes, and cookies from their homes and have since expanded into regular retail bakeries and even franchises.

Conclusion

Women’s entrepreneurial skills have influenced the country’s economic standing. They’ve carved out a place for themselves in all walks of life, contributing to their families and the economy. Starting a company comes with its own package of risks and difficulties. These low-cost business ideas for a startup in India are suitable for getting started, and they also encourage female entrepreneurs to expand their businesses over time without having to leave their homes.



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NPS: Current Withdrawal, Exit And Taxation Rules Explained

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NPS premature withdrawal rules

The NPS Tier 1 account matures once the subscriber reaches the age of 60, but you can keep your deposits until you reach the age of 70. You can withdraw up to 60% of your NPS corpus tax-free under current NPS withdrawal regulations for withdrawal after maturity. You must use the remaining 40% of the retirement savings to purchase an annuity. Upon retirement, the annuity gives the NPS subscriber a monthly pension. The monthly pension received is taxed at the investor’s slab limit. This levy, though, would not take place at the time of withdrawal, but rather at the slab rate in the fiscal year in which the pension payouts are generated. In comparison to the NPS Tier 2 account, the NPS Tier 1 account has a number of withdrawal limits guidelines. The type of withdrawal and the amount withdrawn from the NPS Tier 1 account are the primary determinants of these withdrawal limits for the NPS.

NPS partial withdrawal rules

NPS partial withdrawal rules

Partial withdrawal is an alternative if you want to withdraw before reaching the threshold of superannuation, which is 60 years old. As a result, you are not permitted to withdraw fully. However, you can only withdraw to a certain amount. As a result, you can use this option to partially withdraw funds while keeping your NPS account active. You have the option to withdraw 25% of your accrued corpus at any time (with exception to employer contributions). To be eligible for a partial withdrawal, the subscriber must have completed three years of NPS service. He or she is allowed to withdraw up to 25% of his or her contributions. During the subscription period, the subscriber is only allowed to withdraw a limit of three times. He or she must submit this withdrawal application, along with the necessary documents, to the central recordkeeping agency or the National Pension System Trust, as the case may be, for approval. However, Tier II accounts allow you to withdraw only a part or the whole corpus without any restrictions respectively. There are no limitations on NPS Tier 2 withdrawals under new National Pension System regulations, but the restrictions on NPS withdrawal and withdrawal cap only extend to NPS Tier 1 withdrawals. Though it could seem to be a reason to spend more in the Tier 2 NPS account than the Tier 1 account, bear in mind that optional NPS Tier 2 contributions do not have tax benefits under Section 80C.

NPS withdrawal can be made for the following reasons

NPS withdrawal can be made for the following reasons

You are not permitted to withdraw funds from your NPS account according to PFRDA. There are some reasons to be met which are as follows:

  • For your children’s higher education or for yourself.
  • Those who want to start a new business or buy a new business will be able to withdraw a portion of their contributions.
  • For the marriage of your children
  • You can consider taking a partial withdrawal for the purchasing or renovation of a residential house or flat which is on behalf of your name or your spouse. If you already have a residential house or flat, either individually or jointly, rather than ancestral property, you will not be able to withdraw under these rules.
  • A partial withdrawal request can be made by you or any of your family members if you, your spouse, children, including legitimately adopted children, or dependent parents suffer from any specified disease.

NPS withdrawal rules in case of death of the subscriber

NPS withdrawal rules in case of death of the subscriber

Upon the subscriber’s death, the entire accrued pension corpus will be provided to the subscriber’s nominee/legal successor in full. Along with the completely filled Withdrawal forms, the nominee/claimant must submit the following documents:

  • Valid PRAN Card
  • The Claimant must fill out the advance stamped receipt and cross-sign it on the Revenue stamp.
  • Identity and residence proof
  • As per the bank’s authentication, a cancelled cheque with the claimant’s name, bank account number, IFSC code, bank certificate is needed. A copy of a bank passbook is mandated, but it must include the claimant’s photograph, name, and bank IFSC code, as well as be self-attested by the claimant.
  • Valid death certificate
  • All nominees registered in the CRA system must submit the withdrawal form.

How partial withdrawal under NPS can be made?

How partial withdrawal under NPS can be made?

Subscribers can file a partial withdrawal request online. Subscribers can also submit a physical partial withdrawal form (601-PW) along with supporting documents to POP, which will enable POP to conduct an online request. POP, on the other hand, should ‘Authorize’ the Withdrawal request in the CRA system. At this time, eligible Subscribers must submit their partial withdrawal application to their respective nodal officers/POPs, along with supporting documents to validate their request for partial withdrawals. In an effort to allow the partial withdrawal process easier for subscribers through online, and paperless, it has now been agreed to encourage Subscribers to allow partial withdrawal based on self-declaration,’ mitigating the need to provide supporting documents to validate the reasons for partial withdrawal. To smooth up the procedure and ensure prompt settlement of partially withdrawn funds into Subscribers’ bank account, partial withdrawal requests submitted electronically will be handled directly in the Central Record Keeping Agency (CRA) system, eliminating the need for authorization at the nodal office/POP point. You should log into your NPS account using your PRAN and password to trigger an exit request if you are exiting NPS via the online way. Though withdrawals from the tier 1 account are subject to certain limitations, withdrawals from the NPS Tier 2 account are not limited – you can request a withdrawal on any working day.

NPS Tax Benefits

NPS Tax Benefits

NPS withdrawals, unlike certain other section 80C provide tax benefits. Contributions to Tier 1 are tax-deductible which qualify under Section 80CCD(1) and Section 80CCD(1B). This ensures that you can place up to Rs. 2 lakh in an NPS Tier 1 account and claim a deduction for the whole sum, i.e. Rs. 1.50 lakh under Sec 80CCD(1) and Rs. 50,000 under Sec 80CCD(1B). Over and above the benefit of Rs. 1.50 lakhs allowed as a deduction under Sec 80CCD(1), an additional deduction of Rs. 50,000/- is available under Section 80CCD(1B). Over and above the benefit of Rs. 1.50 lakhs allowed as a deduction under Sec 80CCD(1B), an additional deduction of Rs. 50,000/- is available to determine (1). As a result, Section 80CCD(1) and Section 80CCD(1B) raises the cumulative exemption limit to Rs. 2.00 lakhs.



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Top 5 Banks Providing The Lowest Interest Rates On Gold Loans

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Procedure to apply for a gold loan

The process for obtaining a gold loan differs from one lender to the next. The essence of a gold loan is straightforward: you pledge your gold items and receive the loan amount in return. To do so, take the gold you want to pledge and the relevant documents to a lending institution. The lender measures the purity of the gold and calculates its weight before determining its valuation. Gold loans of up to 80% of the calculated value of the pledged gold will be authorised. The documents are checked after the worth of the pledged gold is determined. Your lender will accept your loan once everything appears to be in order and satisfying. You can apply for a gold loan via a bank’s or NBFC’s mobile application or official website. You must contact your lender at least once to deposit your gold articles in order to take advantage of the online gold loan. After that, you must register and link your bank account to the lender’s online portal or mobile application. So, in the potential, if you need funds quickly, you will apply for a gold loan and get the available credit disbursed in your bank account in a matter of minutes, no matter where you are.

Key benefits of a gold loan

Key benefits of a gold loan

Below are some key advantages of a gold loan you need to consider while applying for a gold loan:

  • Since gold loans are secured loans, they have fewer eligibility requirements and require less paperwork. It doesn’t even request for a credit score to approve a loan. As a result, lenders usually disburse loans within a few hours.
  • Usually, gold loans can be availed up to two years, after which the loan can be renewed.
  • Gold loans, which are secured loans, have a lower interest rate than unsecured loans such as personal loans. You must keep gold articles as collateral for a gold loan. Banks will lend you up to 80% of the worth of your gold. The interest rate will be higher if the loan-to-value ratio is higher.
  • You have adjustable repayment options for a gold loan. In the case of a gold loan, partial repayment is also possible.
  • The approval of a gold loan is not dependent on your credit score. The loan amount is determined in the case of other loans based on the borrower’s repayment potential and credit history, whereas in the case of a gold loan, the loan amount is determined based on the current market price of gold.
  • Due to the fact that gold loans are secured by gold, lenders rarely ask for proof of income. As a result, anybody, whether or not they are employed, can apply for a gold loan.
  • On gold loans, several banks and NBFCs charge no processing fees. And if a lender charges processing fees, they are usually 1 percent of the loan amount.
  • Some lenders do not impose prepayment penalties, while others charge a 1% penalty.

    • Taxation on gold loan

    Taxation on gold loan

    Literally, millions of individuals around the country have been affected financially as a result of the latest pandemic. The effect has been much more severe in India. Already many individuals are yet to recover a solid financial foothold, despite the fact that the central and state governments are gradually easing the lockdown and enabling economic operations to resume. Under the terms of the Income Tax Act of 1961, you can receive tax benefits on loans such as a home loan. For a gold loan, though, this is not the same. If you have major home repairing costs or need to make upgrades depending on changing needs, you might be able to get tax incentives on your loan against gold. You can take out a loan on your gold assets to cover these costs, and thereby benefit from tax advantages on gold loans. You can use a gold loan to get tax benefits on assets other than property investment. When you sell those assets, though, the said advantage comes in during the fiscal year.If the total amount of gifts or gold earned within the year reaches Rs 50,000, the gold or a gold asset will be taxed at the time of receipt under the heading “Income from other sources.” If you sell gold assets that were given to you or that you received, you must pay capital gains tax. Because the cost of purchase in the case of gifted or inherited gold is zero, you will have to pay capital gains tax on the entire sale amount of gold assets.

    Gold Loan Interest Rates

    Gold Loan Interest Rates

    Below are the top 5 banks that are currently providing the cheapest interest rates on gold loans:

    Banks ROI in %
    Punjab & Sind Bank 7.00
    Bank of India 7.35
    SBI 7.50
    Canara Bank 7.65
    Union Bank 8.20



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Tips to invest in ready to move in property

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Investment

oi-Sunil Fernandes

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One of the first options to make if you are looking to buy a home is whether to go for a ready to move in property or a flat in under construction properties in India. The option will primarily rely on the condition and level of your finances and needs. Both property types have their own perks and drawbacks. The chance of a ready to move property in India is almost zero and before you buy it, you can cross check any truth and fiction, fitting and faucet. Here are some aspects of your finances and lifestyle that can help you make a choice between being ready to move in and building property:

Check your financial preparedness

Do you have a major savings chunk and are you all set to make an investment? If yes is the answer, go for a ready-to-move property in India. On the other hand, if you have found a good location and a good house, but you may need a couple of years to work on your finances to become ‘real estate ready’ in India, go for under construction properties. To make the down payment, secure a loan and take a few years to save, you can stress yourself financially a little bit. By then, the property will be ready and the EMIs will begin.

Assess your urgency

If you live in a rented apartment and are searching for a property to purchase, a ready-to-move home could serve the purpose and help you save on rents, although it could cost you a little more. As witnessed by many home buyers caught up in project delays, waiting for under construction properties in India while paying rent is frustrating.

Tips to invest in ready to move in property

Check location & property

If your investment is in an area that is all set to grow, while the ongoing project in India is being built, it would be wiser to go for it. As the property is being developed, services, accessibility, shops, schools and other facilities can catch up, making it an easy ride for you when you move in later. If you move into the property before the area is fully built, with any small purchase and bad access roads, you will have to live through the tough stage where travel is needed. In the meantime, property prices could pick up, raising the investment’s capital value.

Check tax implication

In compliance with Section 24 and Section 80C of the Income Tax Act, when you buy a ready-to-move house, the principal of Rs 1.5 lakh charged is deducted from revenue. The interest paid is also entitled to a deduction of up to Rs. 2 lakh. But if you purchase a property under construction, you can only assert tax deductions until the property is turned over to you, in five instalments over the next five financial years.

The Author Dhiraj Bora is Head Marketing & Corporate Communication, Paramount Group



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HDFC cuts RPLR by 5 bps, home loans now at 6.75%

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HDFC said its adjustable rate home loans (ARHL) are benchmarked to the RPLR and the revised rates will come into effect from March 4.

The spree of mortgage rate cuts continues with Housing Development Finance Corporation (HDFC) on Wednesday reducing its retail prime lending rate (RPLR) by five basis points (bps) to 6.75%, irrespective of the loan amount. The move follows similar rate cuts on home loans by State Bank of India (SBI) to 6.7% and Kotak Mahindra Bank to 6.65%.

HDFC said its adjustable rate home loans (ARHL) are benchmarked to the RPLR and the revised rates will come into effect from March 4. “The change will benefit all existing HDFC retail home loan customers,” the mortgage lender said in a statement. Prior to the rate reduction, HDFC was charging between 6.8 and 7.3% for home loans.

In the absence of loan demand in other segments, banks have taken to lowering their home loan rates. On Monday, SBI lowered home loan rates by 10 bps to 6.7%, a concession that would be available till March 31, subject to the loan amount and Cibil score of the borrower. KMB cut its home loan rate to 6.65%, taking it below that of market leader SBI. ICICI Bank home loans start at 6.8%, while the home loan rates for both Axis Bank and LIC Housing Finance begin at 6.9%.

Even as housing loan growth shrank to 7.7% year-on-year (y-o-y) as on January 29 from 17.5% a year ago, it remains one of the faster-growing credit segments and exceeds the rate of overall non-food credit growth in the banking system.

In a report on Wednesday, Care Ratings said during the last few months, housing loan growth was healthy amid a retail credit push, concessions on home loan interest rates and low stamp duties till December 2020 in Maharashtra. “In January 2021, the housing loan growth moderated to 7.7% partly due to the end of festive season offers and increase in stamp duty from January 1, 2021 in Maharashtra,” the report said, adding that housing loans continue to remain the single-largest segment with a 52% share of lending in banks’ outstanding retail portfolios.

In the meantime, housing finance companies (HFCs) and other non-bank lenders in the segment have been losing market share to banks as their lending rates have not dropped as steadily as that of their banking peers.

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Digital banking: Tapping the power of cloud to empower financial institutions

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Rajashekara Maiya, vice-president, global head – Business Consulting, Infosys Finacle

By Srinath Srinivasan

The dependence on digital financial services during the Covid-19 pandemic has led the BFSI segment to accelerate the digital transformation process. In the coming days, more enterprises, small, medium and large, are expected to come into the ambit of digital financial services forcing financial institutions and fintech companies to prepare for the inevitable demand explosion.

“Leveraging advanced technologies such as deep analytics and machine learning will empower banks with a more sound understanding of customers and their preferences,” says Rajashekara Maiya, vice-president, global head – Business Consulting, Infosys Finacle. “Learning from the past interactions with the end-user and their actions, banks can build adaptive solutions and drive contextual engagements.” Finacle is a core banking product developed by Infosys that provides universal digital banking functionality to banks.

Today Maiya and his team focus on helping banks build new business designs to bridge the divide between the digital and physical worlds and embed banking into their business processes seamlessly. This includes comprehensive digitisation of businesses through the full stack modernisation of digital engines, engagement and experiences systems, powering digital-only banks, supporting a bank-in-a-bank strategy where incumbent players are setting up distinct digital entities, helping fintechs offer banking services (for example, PayTM), helping non-financial institutions (such as India Post) to offer banking products, aiding multiple telcos who are launching banking services, and even an insurance company.

In order to provide digital transformation, Finacle has invested in cloud native offerings, co-innovating with seven clients to create a pilot blockchain based network to process trade finance transactions, expanding coverage for RESTful APIs to enable ease of collaboration with customers, partners and fintechs, co-innovating with large and fintech partners, embedding advanced analytics and AI in its solution suite, and leveraging Robotic Process Automation and cognitive automation.

The cloud native digital solution suite helps traditional (ING, DBS, Emirates NBD) and emerging financial institutions (Marcus by Goldman Sachs, Digi bank by DBS, Paytm) address digital engagement, omnichannel banking, origination, digital product development (core banking, payments, cash management, wealth management), analytics, artificial intelligence, and blockchain requirements of financial institutions to drive business excellence. According to Maiya, banks in over 100 countries rely on Finacle to service more than a billion consumers and 1.3 billion accounts.

Finacle is also doubling down on the current opportunities to implement blockchain. “Banking industry is expected to account for 30% of total blockchain spending through 2023, if not beyond,” says Maiya. Finacle has launched several deep domain solutions in partnership with banks including Remittances, Payments, KYC, Trade Finance, Digital identity management. “More than 17 banks are part of our network and actively piloting the solutions we provide. The key differentiator for our solutions is that these are built in a ledger agnostic manner and can work on any major blockchain technology, for example, Corda, Ethereum, Bitcoin or Hyperledger,” he says.

Are bank employees ready for these new technologies? “Banks will do well in setting up multidisciplinary programmes to maintain their talent pipeline,” says Maiya. “They will need to map competencies across functions to identify skill gaps and bridge those employing a combination of tools, technological enablers, and on-demand contextual learning platforms.” He predicts business process synergies between the workforce and machines will gain momentum.

With new technologies comes the ability of institutions to handle cybersecurity. “Mission-critical infrastructure tests, remote defense capabilities, centralised user administration, transaction authorisations, best practices for remote and secure working, AI, and other technology augmented fraud management techniques will be some of the key trends banks will prioritise,” says Maiya.

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YES Bank gets shareholders’ nod to raise Rs 10,000 crore

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The bank had taken approval of the board on January 22 for raising the capital.

Shareholders of Yes Bank have approved a proposal for raising Rs 10,000-crore capital with the requisite majority. The lender has said in a regulatory filing that 98.78% votes were cast in favour of the resolution to raise capital. Yes Bank intends to raise the funds through various modes, including a qualified institutional placement (QIP) and foreign currency convertible bonds (FCCBs).

Yes Bank said a stronger capital base would further strengthen the bank’s ability to deal with unanticipated contingencies or market disruptions which may arise due to the pandemic. The bank had taken approval of the board on January 22 for raising the capital.

Yes Bank MD and CEO Prashant Kumar had earlier said the board’s approval to raise Rs 10,000 crore was an enabling provision for raising funds as and when required.

In its notice for the postal ballot on the capital-raising plan, the bank said it wants to further strengthen the common equity tier 1 (CET 1) ratio and ensure that it has enough capital to support growth and maintain adequate buffers to deal with any unforeseen impact. Yes Bank’s CET1 ratio stood at 13.1% at the end of December 2020.

The capital adequacy ratio of the lender improved 1,110 basis points (bps) to 19.6% during the December quarter, compared to 8.5% before its reconstruction in March 2020. Yes Bank was revived in March, 2020 with the help of State Bank of India and other lenders according to a reconstruction plan of the Reserve Bank of India. Within four months of its reconstruction, Yes Bank had successfully raised Rs 15,000 crore through a further public offer in July 2020.

In November 2020, rating agency Care had revised Yes Bank’s infrastructure bonds rating to ‘CARE BBB’ from previous ‘CARE B’. In its rationale note, Care Ratings said the revision in the ratings assigned to the debt instruments factors in the improvement in the credit profile of the bank after implementation of the reconstruction scheme.

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