Top gold loan rates and comparison, BFSI News, ET BFSI

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To take care of a financial emergency, an individual has various options. These include taking a personal loan or redeeming their investments in financial instruments like the provident fund, mutual funds etc.

When it comes to borrowing from a financial institution, other than availing a personal loan, one can also opt for a gold loan. If you are planning on taking a gold loan (or a loan against gold), here is what you need to know.

What is a gold loan?
A gold loan is a loan against gold. It is a secured loan where gold articles such as gold jewellery, ornaments etc. are taken as collateral by the lending bank/NBFC. The loan is given to the borrower against this gold as collateral.

Where to avail gold loan?
Apart from banks such as SBI, ICICI Bank, HDFC Bank etc., non-banking finance companies (NBFCs) also offer gold loans to individuals. NBFCs which offer gold loans include Muthoot Finance, Manappuram Finance etc.

Minimum and maximum gold loan amount
The amount of loan that an individual can get against a gold article will vary from lender to lender. For instance, ICICI Bank offers gold loans between Rs 10,000 and Rs 1 crore. Whereas the State Bank of India (SBI) offers gold loans between Rs 20,000 and Rs 20 lakh. While Muthoot Finance offers gold loans starting from a minimum amount of Rs 1,500 with no maximum limit.

Tenure of gold loan
The tenure of the gold loan will also vary from lender to lender. For instance, HDFC Bank offers gold loans with tenures between three months and 24 months. Maximum period of repayment of an SBI gold loan is 36 months. Muthoot Finance offers different types of gold loan schemes that come with different tenures.

Interest rate on gold loan charged by bank and NBFC

Bank / NBFC Gold Loan Interest Rate Processing Fee
Bank of Maharashtra 7.00% Rs.500 to Rs.2000 + GST.
SBI 7.00% to 7.50% 0.50% + GST
Punjab & Sind Bank 7.00% to 7.50% Rs.500 to 10000 max
Union Bank 7.00% to 9.90%
Canara Bank 7.35% Rs.500 to Rs.5000
Indian Bank 7.50% to 8% 0.56% of the limit sanctioned
South Indian Bank 8.00% – 21.87%
Karnataka Bank 8.49% to 8.79%
Uco Bank 8.50% Rs.250 to 5000 max
Federal Bank 8.50% onwards
HDFC Bank 8.50% to 15.97% 1% of disbursal amount
Punjab National Bank 8.75% to 9% 0.75% of loan amount
Bank of Baroda 9.00% to 9.15% Applicable charges + GST
ICICI Bank 9.00% to 19.76% 1% of loan amount
Central Bank of India 9.05% 0.75% of loan amount
City Union Bank 9.50% Nil
Karur Vysya Bank 9.50% to 10.00% 0.50% (inclusive of Appraisal charges)
Dhanlaxmi Bank 9.65% (Fixed) 1% + GST
J & K Bank 10.00% Rs 500 + GST
Indusind Bank 10.00% to 16.50% 1% of loan amount
Kotak Mahindra Bank 10.00% to 17.00% Upto 2% + GST
Bandhan Bank 10.99% to 18.00% 1% + GST
Axis Bank 13.50% to 14.50% 0.5% + GST
Muthoot Finance 22% p.a. with 4% rebate if 100% interest is paid monthly
AU Small Finance Bank Up to 24% 1% or Rs. 500 whichever is heigher

All data sourced from Economic Times Intelligence Group (ETIG)
Interest rate on gold loan sorted based on increasing order of maximum interest rate charged by bank/NBFC
Interest rate data as on December 4, 2021What are the documents required?
To avail a gold loan, the bank or NBFC will ask you to provide various documents. Documents normally required include your proof of identity such as PAN, Aadhaar etc. and proof of address like Aadhaar, passport, Voter-ID card etc, and your photograph. Any additional documents required would vary from lender to lender.

What are the charges?
For loans like home, auto and personal loans, the borrower is usually required to pay processing charges/fees to avail the loan. While taking a gold loan, apart from processing fees, an applicant may be asked to pay for valuation of gold which will be used as collateral by the lending institution. For instance, HDFC Bank charges Rs 250 as valuation fees for loan up to Rs 1.5 lakh and Rs 500 for loan over Rs 1.5 lakh.

Apart from processing fees and valuation charges, a bank can also charge documentation and foreclosure charges.
Therefore, you should check with the bank and/or NBFC for all the charges that will be levied before availing the loan.

Disclaimer: The data/information given above is subject to change, hence before taking any decision based on it, please check terms and conditions with the bank/institution concerned.

For any queries or changes, please write to us on etigdb@timesgroup.com or call us at 022 – 66353963



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Stocks To Buy: Bluechip Stocks That Are Down More Than 30% From Highs

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LIC Housing Finance

Current market price 52-week high Fall
Rs 382 Rs 542.5 30.00%

LIC Housing Finance is among the top housing finance companies in the country. The stock has also fallen into bear territory with the present drop in price as the stock is below its 200-day moving average of Rs 431 and also below its book value of Rs 417. The dividend yield on the stock is more than 2%.

Aurobindo Pharma

Aurobindo Pharma

Current market price 52-week high Fall
Rs 674 Rs 1063 36.59%

The fall in the stock price of Aurobindo Pharma from 52-week highs is even sharper at 36%. Like LIC Housing Finance, this stock also has gone into bear territory with the 200 day moving average higher at Rs 849.

A fully integrated pharma company, Aurobindo Pharma features among the top 2 companies in India in terms of consolidated revenues. Aurobindo exports to over 155 countries across the globe with more than 90% of its revenues derived from international operations. The stock could be an interesting defensive stock to buy if the markets fall due to the spread of the Omicron variant.

Amara Raja Batteries

Amara Raja Batteries

Current market price 52-week high Fall
Rs 632 Rs 1021 38.34%

The stock of Amara Raja Batteries is now down nearly 38% from 52-week highs. Amara Raja Batteries is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry.

The Company is a leading manufacturer of automotive batteries and home UPS/Inverter batteries under the brands Amaron. The company supplies automotive batteries under OE relationships to Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, Ashok Leyland, and Tata Motors, Honda Motorcycles & Scooters India Private Ltd, Royal Enfield, Bajaj Auto Ltd among others.

L&T Finance Holdings

L&T Finance Holdings

Current market price 52-week high Fall
Rs 78.85 Rs 113.45 30.47%

This stock is also down more than 30% and is below its 200 day moving average of Rs 90. In case the shares see a further downside due to the Omicron virus risk, it could be an interesting stock to buy, given its strong pedigree.

L&T Finance Holdings is a leading, well-diversified Non-Banking Financial Company (NBFC) with a focused range of financial products and services across rural, housing and infrastructure finance along with mutual funds. The company is promoted by Larsen & Toubro Ltd.

Disclaimer

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, and the author, are not liable for any losses caused as a result of decisions based on the article.



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Top 5 Bank Offering Highest Interest Rate On Fixed Deposits To Senior Citizens

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Top 5 Senior Citizen Bank Fds for 1 year tenure

For a one-year tenure, senior citizens from Fd can secure a maximum of up to 6.5 percent p.a. interest compounded quarterly. Here again Yes Bank, IndusInd Bank and RBL Bank top the chart.

Bank- Tenure 1 year Interest rate % compounded qtly
Yes Bank 6.5
IndusInd Bank 6.5
RBL Bank 6.5
Bandhan Bank 6.25
DCB Bank 6.05
Axis Bank 5.75

Top 5 Senior Citizen Bank Fds for 2 year tenure

Top 5 Senior Citizen Bank Fds for 2 year tenure

The highest rate again for the said tenure is maximum 6.5 percent per annum provided by the banks listed in table.

Bank- Tenure 2 year Interest rate % compounded qtly
IndusInd Bank 6.5
Yes Bank 6.5
RBL Bank 6.5
Bandhan Bank 6.25
Axis Bank 6.05

Top 5 Senior Citizen Bank Fds for 3 year tenure

Top 5 Senior Citizen Bank Fds for 3 year tenure

Here Yes Bank is offering the highest interest rate of 7 percent per annum followed by RBL Bank and IndusInd Bank which offer 6.8 percent and 6.5 percent p.a. interest respectively for a three year FD.

Bank- Tenure 3 years Interest rate % compounded qtly
Yes Bank 7
RBL Bank 6.8
IndusInd Bank 6.5
DCB Bank 6.45
IDFC First 6.25%

Top 5 Senior Citizen Bank Fds for 5 year tenure

Top 5 Senior Citizen Bank Fds for 5 year tenure

Here again Yes Bank is topping the chart and offering the highest interest rate of 7 per cent per annum for 5 year FD with the bank. In fact the bank for a FD maintained with the bank for 3 years to less than or equal to 10 years offers the same rate.

Bank- Tenure 5 years Interest rate % compounded qtly
Yes Bank 7
RBL Bank 6.8
Axis Bank 6.5
IDFC First Bank 6.5
IndusInd Bank 6.5

Conclusion:

Conclusion:

So, as a conclusion we can see Yes Bank is offering the highest FD rate on a tenure of between 3 to 10 years of 7 per annum. While other banks such as the private sector HDFC Bank has also hiked interest rates, the new revised rates are still lower and do not fall under the top 5 FDs for senior citizens.

Other than these Fds that offer a maximum of 7 percent for a tenure of between 3-10 years, senior citizens can also consider other investments such as Post office senior citizen scheme that offers 7.4 percent interest rate, MIS that is a 5-year investment scheme with monthly returns at interest at 6.6 percent.

Important pointers for Senior Citizens with FD investments

Important pointers for Senior Citizens with FD investments

Senior citizens in order to avoid TDS on FD interest income need to file Form 15 H at the beginning of every fiscal year with the banks. If they do not do so they can make the claim for the refund only upon filing their income tax returns.

FD interest is fully taxable for individual assesses, nonetheless senior citizens are allowed rebate and they can claim a deduction to the tune of up to Rs. 50000 against the interest realised on savings and FD income in a fiscal year. But this necessarily needs to be shown in the ITR under the head ‘income from other sources’ and the deduction by senior citizens can be claimed as part of the Section 80TTB by senior citizens.

In case the interest accrual is above Rs. 50,000 for senior citizens in a year then banks are liable to deduct TDS at the rate of 10 percent. This TDS deduction will then be shown in 26 AS.

Though Indian banks have always been bailed out in case of a crisis like we have seen in the latest case of Yes Bank and there is this DICGC which insures all of the deposits including savings, fixed, current, recurring, etc., you can split your FD investment in may be 2 or 3 banks instead of maintaining a large corpus with just bank.

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Buy Bharti Airtel For Rs. 820 Price Target: Axis Securities

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Rationale for a ‘Buy’ on Bharti Airtel:

–Encouraging performance in the Africa business: The Africa business continues to perform well and it has been adding significant value in terms of consistent growth in operating profits and cash flows. The company’s relentless focus on stepping up customer experience led to Africa revenue growth of 7.6% QoQ to reach Rs 8,177 Cr. Operating Margins for the quarter, too, improved by 30bps to 48%. The management is optimistic about gaining momentum and generating free cash flow as it treads ahead.

Industry-leading ARPU in India: Bharti Airtel is to maintain an industry-leading ARPU in India with leading per-user data consumption (16.4 GB/month). We expect the company to benefit from the operating leverage as ARPU improves with 60-70% of the revenue pass-through to EBIT. Enterprise revenue was up2.2% QoQ while the operating margin expanded by 145bps QoQ.

Axis Direct said “We recommend a BUY rating on the company with SOTP based valuation at Rs 820/share aided by superior margins, stronger subscriber growth,

and higher 4G conversions. TP indicates an upside of 13% from CMP.

Q2fy22 results of Bharti Airtel

Q2fy22 results of Bharti Airtel

For the September ended qtr. of Fy22, the company reported a Consolidated Total Income of Rs. 28435.20 Crore, up 5.07 % from last quarter. Company’s reported net profit after tax came in at Rs 1399.30 Crore in the latest quarter.

About Bharti Airtel

About Bharti Airtel

The company incorporated in the year 1995, is a Large Cap company from the Telecommunications sector. Of late the sector as a whole is under tremendous financial crisis due to spectrum fee and AGR dues.

Slowly and gradually after hiking its tariff plans for the pre-paid offerings the company and its peer expect to offset the financial crisis at hand gradually.

Disclaimer:

Disclaimer:

The stocks is taken from the report of Axis Securities. Stock market investment is risky, investors should engage in their own analysis and research and then take on any investment call.



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3 IPOs To Hit Next Week For Public Subscription

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Shriram Properties IPO:

IPO offer period- December 8-December 10

Issue details- Fresh equity issuance worth up to Rs. 250 crore, while it shall be an OFS of Rs. 350 crore.

Bid lot- 125 shares and in multiple thereof

Price band-Rs. 113-Rs. 118

Employee discount and reservation: For equity shares aggregating in value up to Rs. 3 crore

Employee discount: Rs. 11 per share

Registrar-KFin

Book running lead manager: Axis Securities, ICICI Capital, Nomura

Issue objective: From the proceeds, the company shall pay-off the debt and for general corporate purposes.

Part of the Shriram Group of companies, the company ranks 5th in the whole of South India in terms of units launched between 2012-Q3CY21.

MapmyIndia IPO

MapmyIndia IPO

Offer period: December 9, 2021- December 13.

Lot size shall be released next week

Price is expected to be Rs. 1033 per share.

The issue is completely an offer for sale of 1,00,63,945 equity shares by shareholders including investor Qualcomm Asia Pacific Pte Ltd.

The company shall not receive any proceeds as the mopped up funds will go to the selling shareholders.

CE Info Systems or MapmyIndia is a data and technology products and platforms company that offers proprietary digital maps as a service (MaaS), software as a service (SaaS) and platform as a service (PaaS). The company is the top entity offering advanced digital maps, geospatial software and location-based IoT technologies.

Metro Brands IPO:

Metro Brands IPO:

IPO Date : 10 to 14 Dec, 2021

Fresh equity issuance : ₹ 295 Crore

OFS : 21,450,100 Shares

Retail Quota : 35%

The proceeds from the issue worth ₹225.37 crore will be used for opening new stores of the company.

The firm is among the leading Indian footwear specialty retailers. As of the quarter ended September 2021, the company runs 598 outlets across 30 states in around 136 cities.

The firm retails footwear under its own brands of Metro, Mochi, Walkway, Da Vinchi and J. Fontini, together with third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop that complements its in-house brands.

Axis Capital, Ambit Pvt Ltd, DAM Capital Advisors, Equirus Capital, ICICI Securities and Motilal Oswal Investment Advisors are the book lead managers to the issue.

For the September quarter, the firm’s net profit came in at Rs.43.09 crore versus a loss of Rs. 41.43 crore last year in the same quarter.

Disclaimer

Disclaimer

Here in are collated all the important details on the public issue that shall open up next week between December 6-December 11. Investors need to do their own analysis and research before making any such investment bet.

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Tax Query: How to file ITR for the deceased

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I lost my brother to Covid-19 in May 2021. Do we need to file income tax returns on his behalf for the last financial year? Advance tax was deducted from his salary during April 2021 and May 2021 for bonus received in April 2021 and projected annual income. Is it possible to claim excess tax paid?

A. R. Chintha

As per the provisions of Section 139(1) of the Income-tax Act, 1961 (‘the Act’), every person (other than a company or a firm) whose total taxable income during the previous year exceeds the maximum amount which is not chargeable to income-tax ₹250,000 for FY 2020-21 and FY 2021-22) is required to file income tax return. As per the provisions of Section 159 of the Act, where a person dies, his / her legal representatives shall be liable to pay any tax liability due, on behalf of the deceased and are deemed to be assessed to tax on behalf of deceased. Accordingly, the legal representative shall also be eligible to file the income tax return on behalf of a deceased person. In order to do so, the legal heir would be required to register as the Representative assessee of the deceased through his/her e-filing profile.

Below are the steps to register as a legal representative:

· Legal heir will have to log in to his/her income tax e-filing account.

· Click on Authorised Partners on the home page

· Select Register as Representative Assessee

· Click on ‘Let’s get started’ and create New request

· Select the category as ‘Deceased (Legal Heir)’ in the ‘category of assessee who you want to represent’ and Continue

· Fill in the requisite details. Details like PAN of deceased, date of death, reason for registration (please select the same ‘Others’ and then mention the reason of registration), details of legal heir etc. would be required. Also, documents like copy of PAN card of the deceased, copy of death certificate, copy of legal heir proof and copy of letter of indemnity would be required to be uploaded.

Once the legal representative is registered, he/ she can file the income tax return on behalf of the deceased for the FY 2020-21. The extended due date to file the Income tax return for the FY 2020-21 is 31 December 2021 (for individuals who are not required to get their accounts audited).

For the FY 2021-22 also, the return of income would be required to be filed (even if tax has been deducted at source / advance tax has been paid) in the similar manner and any excess deducted/ paid, can be claimed as refund.

How to download the copy of Income Tax Return filed online for the financial year 2020-21 (Assessment Year 2021-22)? Please inform me the steps to be followed online to download the I.T. Return.

M.Ramanathan

I understand that you have already filed your return of income for FY 2020-21 (i.e. AY 2021-22), the extended due date for filing of which is 31 December 2021 for non-audit cases.

In order to download copy of Income, you will need to login to the income-tax e-Filing website with the following link: https://www.incometax.gov.in/iec/foportal. Please log-in with your credentials (user ID is your PAN) and follow the below steps to download the income tax return filed:

· Click on ‘e-file’ tab on the home page

· Select ‘Income Tax Forms’

· Select ‘View Filed Return’

· Select ‘Download Form’ option under the Assessment Year (AY) 2021-22

· The income tax form would be downloaded

The writer is a practising chartered accountant

Send your queries to taxtalk@thehindu.co.in

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How ‘Human Life Value’ is calculated

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Balaji is buying his first life insurance policy and comes across the term, ‘human life value’ while doing online search. He approaches his colleague, Vishwa who just purchased a life insurance policy to understand what the term means.

Balaji: Hey Vishwa, can you pull up your chair and help me with this term, ‘human life value’ or HLV and why it matters in insurance.

Vishwa: Yes sure. I was also boggled by the term, initially. But far from being a concept in high art, it is a widely applied tool in the drab field of life insurance. See, in the same way that you insure your car or home only to the extent of its value, HLV is a metric that estimates the value of the asset to be insured – in this case the value of your life, in economic terms. This is done to estimate the economic value needed as a replacement to ensure that your family is able to sustain its current standard of living, even after you pass away.

Balaji: So, it is about objectively valuing my income to replace it if the need arises?

Vishwa: Close, but accurately stated many more factors go into the approximation. Income-based estimation for instance, uses your occupation, age, benefits and income to arrive at your earnings potential from which your expenses are netted. These are then combined with your net worth which include financial assets, again net of liabilities. You can also compare it with output of the needs-based approach, where you simply estimate the funds that will be required to meet your needs and goals.

Balaji: With so many moving parts, estimating the right amount needed seems difficult.

Vishwa: It is not about a correct number, but about addressing all your assets, liabilities and net earnings and in estimating an amount which can economically replace it. Also, these are not stationary factors. As one moves along in life, all the factors, personal and macro-economic, too will change. So more often that not, a person would be required to increase the estimate later and hence increase the amount covered in life insurance. For instance, once an earning member takes a loan for a property purchase, his liabilities will increase significantly which will need to be covered with an additional life cover.

Balaji: Wouldn’t it be beneficial to just buy a cover high enough that addresses all needs and not be bothered about specifics?

Vishwa: If you can spare the extra premium amount, sure go for it. But if you ask me, I would rather pay a premium for a sum assured, that is most relevant to my current situation and not purchase a policy which is beyond my means for a sum assured that is way above my current life style.

Balaji: Ahh yes, no free lunch I suppose, always a catch. So how exactly did you go about estimating the HLA when buying your insurance?

Vishwa: I did indeed rely on ready-to-use interfaces that most life insurance portals now have. But since I know the mechanism of the calculations and the purpose of the estimation, I weighed my inputs accordingly. My wife’s parents have kept aside a fund for my kids’ education, so I was able to adjust for those obligations. This little piece of information lowered my sum assured and hence my yearly premium amount.

Balaji: Well, part of becoming an adult is to quantify your actions for better planning and control.

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Indiabulls Housing Finance to raise up to ₹1,000 crore via NCD

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Indiabulls Housing Finance Ltd (IBHFL) has decided to raise up to ₹1,000 crore via public issue of secured, redeemable, non-convertible debentures of face value of ₹1,000 each.

The base size of the public issue is for an amount up to ₹200 crore with an option to retain over-subscription up to ₹800 crore. The issue is within the shelf limit of ₹2,000 crore.

The minimum subscription amount is ₹10,000 (10 NCDs) across all 10 series of NCDs. Investment thereafter will be in multiples of ₹1,000 (one NCD). The NCDs will be issued for three tenors — 24 months, 36 months and 60 months.

Depending on the tenor and series of NCD, the effective yield per annum ranges from 8.35 per cent to 9.26 per cent, as per IBHFL’s exchange filing.

The NCD issue opens on December 9 and closes on December 20, 2021. The NCDs are proposed to be listed on BSE and NSE.

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There is action in property fractions

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Fractional property ownership is an idea that is seeing increasing traction in the last few years. One route is listed Real Estate Investment Trusts (REITs) that allow retail investors to purchase shares in a larger property such as office building. Besides, there are platforms that facilitate private REITs. In just the last five years, ₹750 crore has been transacted through these fractional ownership companies, with ₹350 crore worth of deals in just the last year, as per JLL India.

Owning a fraction and getting rental income and potential capital appreciation has many merits. You get geographic and property diversity, minimizing risk. Property selection and management is done by professionals – reducing hassle. You can earn 8-10 per cent rental yields and only invest a smaller amount than in purchase. Also, the concept has worked well globally and can be a game changer in India too. That said, do understand how it works and critically evaluate various risks.

How fractional property ownership works

The investment platform service provider starts out by finding a pool of investors as well as suitable properties for investment. Some examples of providers include PropertyShare, RealX, Strata and hBits. Property developers also offer this service, with or without a technology platform.

A special purpose vehicle (SPV) is formed (typically for each property) that becomes the property owner with the investments received. Investors own shares or compulsory convertible debenture (CCD) in the SPV. The property is managed by the service provider on behalf of the SPV. The property is managed by the SPV and rental income received is distributed to investors – as interest on CCDs or dividend on shares. After the holding period (typically 5 years), the property is sold, and money returned to investors. You may also sell holdings in the SPV to other investors.

There are different types of costs for the services. Annual fees, for property maintenance may be about 1-2 per cent of investment amount or 8-15 percent of rents collected. When the property is sold, the platform may take a share – about 20 per cent of the gains. In some cases, this is only charged if the profits are above a certain limit. There may also be transaction fees – in buying and selling – and property tax, actual maintenance costs and other overheads.

Providers may also have a minimum investment size. Strata and hBits require ₹25 lakh to get you started. The amount may be smaller for others or based on the cost of the property being invested in (to limit the number of investors).

You are liable for taxes on interest income and dividend. The income is subject to tax deducted at source (TDS). The capital gains on sale is taxed at a rate based on the holding period (long-term or short-term). There is also GST on the rent, paid by the tenant.

Risks in fractional real estate investing

One key risk that is often overlooked is the fact that these entities do not yet fall neatly into a specific regulation. While the legal structures are valid and meet the required law, the concept of private REITs and fractional ownership is not yet directly regulated. Hence, even as you may be provided a property title report and get periodic disclosures, there are no distinct standards for it – making it difficult to compare or enforce.

Two, as the underlying asset is real estate, the issue of illiquidity cannot be eliminated. Also, you may not find a buyer for your shares if you want to exit during the holding period. As the concept is new, the potential issues that may arise when the property is sold are not yet known. You may have to hence account for delays in selling large commercial property in your analysis.

Three, as the segment is new, there may also be provider related issues. For one, smaller players may fold, leaving investors in a lurch. They may also not be experienced in selecting the best property – without legal issues, giving the best rent and occupancy. Or they may lack the ability to maintain it well, resulting in tenants leaving or higher repair costs as well as lower resale value. There may also be conflict of interest, related party transactions and such governance issues that may be difficult to unearth.

Four, there are no guarantees on returns. While the calculations may show a certain level of occupancy and rent, market situations in that location may change and what you may get may be much lower. So, you should do your homework to understand the nature of the asset – warehouse, office building – and the market demand as well as assess if the purchase price is right.

What to check

Before you take a plunge, be sure to ask about the due diligence done on the asset, selection criteria and the platform’s investment experience. You must get clarity on the lock-in period, exit options as well as the nuances in taxation.

If you want liquidity, find out the restrictions in the SPV structure on share transfers and an assessment of market demand for the shares. It also helps to get a handle on potential legal liabilities – from tenants and others.

On expenses, work out the actual return after fees and other costs.

On income side, calculate potential revenue based on market demand, rent escalation possibilities, lock in period and quality of tenant. Factor in vacancy risks, especially as office space demand and rents in some segments have taken a hit with the pandemic.

The author is an independent financial consultant

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Why home insurance is your shield against nature’s fury

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Until a few years back, home insurance would have primarily been associated with protection from fire, burglars, or earthquakes. But after witnessing nature’s fury unfurl with increasing frequency in coastal and other rain prone areas in the country, incessant rains, flooding and storms seem to be a big risk.

If the climate change predictions hold true, the risk should manifest with an even more increasing frequency in coming generations. General insurers faced ₹4,800 crore claims, mainly from motor and home insurance, from 2015 floods in Tamil Nadu. The claims from recent floods in late-2021 are yet to surface. Similarly, Uttarakhand faced a similar wrath in 2013 and again in 2021. Home insurance may become a necessary purchase for most, in this scenario.

Inclusions and exclusions

Home insurance broadly covers three different assets – building, content and a combination of the two, which appeals to either home-owners or tenants. Content generally refers to furniture and other immovables like television, ACs and even desktop computers. It is important to note that portable electronics and valuables do not automatically fall in the purview of content. Building or structure refers to the physical units and accounts for the largest part of the sum insured. Cover for content is either a percentage of the building cover or provided on disclosure of contents.

Most home-insurance policies offer protection from risks which can be grouped into, natural and man-made. Natural risks arising from earthquakes, fire, floods-storms & inundation, and landslides are covered for both building and contents. Man-made disasters, including riots and malicious damage and terrorist activities as stated under India penal code are covered. The general exclusions, across policies cover the obvious conditions of self-damage, unmaintained properties, pre-existing damages, loss due to wear and tear and damages to property on order from government authority or court. The not so-obvious exclusions that one has to take note of include seepage losses (from water seepage), breakdown of electrical items, war, rodent damage and equipment related to home business. Cash stored at home is also excluded. Jewellery and portables are covered as an add-on or as a nominal cover.

Bharat Griha Raksha a standardized home insurance was introduced by IRDAI in April-2021 which all general insurers should offer. The policy differs from other customized products in two main aspects. The cover for content is provided for up to 20 per cent of the sum insured without the need for disclosure, under a comprehensive cover (building and content). The policy also disallows proportional claim servicing, wherein claims disbursed to claimed amount will be in the same ratio as sum insured to property value. Cover for jewellery and other valuables and also content cover in excess of 20 per cent is available on disclosure of the asset as well as its value. This cover will come for an additional premium.

Product pricing

For a building insurance cover of ₹1 crore and content cover of ₹5 lakh (which excludes jewellery and portable electronics) annual premiums would range from ₹4,000-5,000 per annum (for pincode in Chennai) compared to Bharat Griha Raksha’s price range of ₹2,000-₹5,000. Iffco-Tokio’s comprehensive plan for the same parameters would charge ₹4,062 per annum. Here, jewellery up to ₹50,000 is only covered, for a nominal additional cost while portable electronics up to ₹50,000 would add ₹330 to the annual premium. HDFC Ergo’s comprehensive cover has a premium of ₹4,883 per annum but also includes alternative accommodation and other emergency related benefits. The terms include a deduction of ₹5,000 for every registered claim. Electronics cover, limited to ₹1.5 lakh costs ₹2,250 extra and a ₹1 lakh jewellery cover costs ₹800 additionally per year. Go Digit General insurance offers Jewellery cover of up to 20 per cent of content cover or ₹5 lakh whichever is lower, for an annual premium of ₹4,119 ( for the same building cover of ₹1 crore and with content cover pre-determined at ₹10 lakh).

Pricing in Bharat Griha Raksha (see table) varies on differences in services, pricing ability, claims processing and settlement ability even as the basic structure is common across companies.

Other factors

In case of burglary, claims have to registered as soon as possible for most policies (7 days for Bharat Griha Raksha). Jewelry insurance may be best served by a specific insurance as Home insurance may be inadequate to cover valuables above ₹2 lakh, stored at home. Premiums are highly dependent on pincodes, so even across the same city premium rates can vary significantly Some policies also reject insurance for homes which have faced a flood in the last five years. The premiums will also be lower if security features like closed circuit cameras and 24/7 security personnel are available.

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