Monday, 25 June 2018

Get More Than 9% on These Fixed Deposits in 2018

It is possible to earn 9% and more on your fixed deposit (FD) this year. Yes! You heard that right. There are many small finance banks that offer a very high rate of interest. Let us take a look at some of them here:

  • Fincare Small Finance Bank is one of the most highest paying banks as far as fixed deposits are concerned. The banks pays 9.50% per annum to senior citizens who invest money from 24 months 1 day to 36 months. For the same tenure, regular deposit holders will be able to get up to 9% per annum. 

Given below are the highest interest paying tenures for Fincare Small Finance Bank:

  • Another bank that pays up to 9.50% per annum interest for regular deposit holders below the age of 60 years is Mahaveer Bank. A rate of 9.50% per annum can be earned for holding a deposit anywhere from above 2 years to 5 years. 

Given below is the updated table of Mahaveer Bank FD rates:

  • Mahaveer Bank pays up to 10% per annum on fixed deposits for a tenure that ranges from more than 2 years to 5 years, making it one of the most lucrative investments for people in this age group.
  • Ujjivan Small Finance Bank pays a rate of 8.00% per annum on deposits that are kept in the bank from 1 year to 2 years.
Given below is the updated table of Ujjivan Small Finance Bank FD rates:

  • Senior citizens who invest in Ujjivan will be able to get paid at the rate of 8.50% per annum.
  • ESAF Small Finance Banks pays 7.50% per annum to senior citizens for an investment duration of 1093 days to 1819 days and 1821 days to 3652 days. For the same duration, regular deposit holders will get paid at the rate of 7.00% per annum.
  • Suryoday Small Finance Bank pays those who are 60 years and above an interest rate of 9% per annum for a time frame of more than 24 months to 36 months and 8% per annum for above 36 months to 60 months.
  • Regular depositors will get paid  8.75% per annum for 24 months to 36 months and 7.75% per annum for above 36 months to 60 months.

Things to know about small finance bank FDs:

  • The interest rate paid is generally much higher, making it a well-paying investment.
  • The risk associated with this type of investment is definitely higher than other type of investment classes.
  • The features and benefits that are offered by small finance banks are very similar to that given out by other/regular banks.
  • With mobile banking, opening a time deposit in such a type of a bank has become more and more easier.
  • Online banking and net banking facilities can also be used for premature closure or for premature withdrawal.
  • Loan or overdraft can be taken against the term deposit easily just like other bank FDs.

The final call

For those who are willing to take a slight risk, the results can be quite rewarding if you invest in small finance bank term deposits.

Monday, 28 May 2018

Everything You Need to Know About FD Overdraft

So, you need some money. As simple as that. What can you do? Take a loan. Why not take an overdraft against your Fixed Deposit (FD). Yes! The good old FD will come as a saviour in times of a financial crisis. All term deposit holders are eligible to take a personal loan using their term deposit as a collateral. A loan can thus be availed without any hassle for up to 90% of the deposit amount. 

What are the benefits of taking a loan/overdraft against a term deposit?

Easy and hassle-free: When it comes to availing credit against your own time deposit, the whole process becomes more simple. It is quite simple to apply for this facility and some banks even offer the facility to do it online. All customers have to do is to submit the documentation.

Less time consuming for approval: Compared to the time and effort taken to apply for a traditional loan, the process involved in taking a loan/overdraft is much more speedier. The loan approval process is pretty fast and there is no long wait involved. In most cases, this loan will be granted in less than 24 hours

Lesser interest rate: Probably one of the advantages of this facility is that the rate at which the loan is granted is much lesser that what is offered to other loans. For instance, if you are getting paid around 6.00% per annum on the term deposit, you will have to pay an additional 1% to 2% interest rate for the loan. This is much lesser when compared to other loans, for which the rates range from 16% to 24% per annum.

No need to break FD: The best part about this type of loan is that there is practically no need to close or break the term deposit that you hold. The deposit holder will be able to take a loan and also earn interest on the deposit at the same time. This is one of the advantages that customers can gain from holding a time deposit and taking a loan on it as well.

With a lot of technological developments that are taking place, overdraft can now be taken even by applying online. For example, those who hold a State Bank of India (SBI) FD, can avail a loan/overdraft through the SBI YONO app. In this case, the customer does not have to go to the bank branch physically and can go and loan/overdraft will be granted online at the click of a button. Here are some important things to know about the SBI overdraft facility:

  • All those who have what is called a single account will be able to take a loan or an overdraft through the YONO app
  • As of now, those who hold a joint account with bank will not be able to avail this particular facility
  • The minimum loan amount that will be granted is Rs.25,000, while the maximum is Rs.5 crore
  • Only an interest rate of 1% more will be charged for taking a loan this route
  • As of now, there are no processing charges involved in this type of loan facility that is granted by the SBI
  • Those who are taking this loan can get up to 90% of the deposit amount as a loan

Wednesday, 29 November 2017

PF Withdrawal Online by Providing IFSC Code, UAN Details

One can easily withdraw money from their Provident Fund (PF) account online by providing IFSC code, Universal Account Number (UAN), mobile details and PAN card.
After the introduction of the online Employee Provident Fund (EPF) facility, withdrawing money from PF accounts has become a much simpler, hassle-free and convenient process. Before the launch of this facility, it used to take several months for employees to get their PF money. PF can be withdrawn under 3 categories: Full Withdrawal, Partial Withdrawal, and Pension Withdrawal Benefit. The withdrawal request can be made through the UAN website. It is necessary to have Aadhaar linked with the EPF account to avail this facility without any hassle.

After the PAN-Aadhaar linkage, it is now mandatory to link PF with Aadhaar
The Employees’ Provident Fund Organisation (EPFO) has now made it mandatory to link Aadhaar with the Universal Account Numbers (UAN) of provident fund members.
After attending a Tiranga Yatra organised by the EPFO, Bandaru Dattatreya, the Union Labour and Employment Minister said that the UAN, apart from Aadhaar, must also be linked with bank account, IFSC code and mobile number as well.

Wednesday, 19 October 2016

TDS - Tax Deducted at Source for Non-resident Indians

Non-resident Indians battle many challenges in India and high tax deduction at source is just one among them. TDS can be annoying considering the innumerable taxes that we all deal with already. When tax is deducted at source, it becomes a mandatory method of collecting taxes and makes the taxpayer feel choked and pushed against a wall. Moreover, income tax is deducted in the way of TDS for an entire year in advance and later tax returns are claimed which is a tedious process for both Indian nationals and NRIs.

What is TDS?

TDS stands for Tax Deducted at Source. It is an indirect tax collecting method followed in India according to the Income Tax Act, 1961. Managed by the Central Board of Direct taxes, TDS, falls under the Indian Revenue Services.

TDS norms for Indian Nationals

Indian nationals enjoy low TDS rates compared to NRIs. Salary, interest on securities, land rent and any other income earned by Indian Nationals who possess Permanent Account Number (PAN) is taxable at about 10% of the amount earned. Whereas, income earned through lotteries or any other games of that sort is taxed at 30%.

TDS norms for NRIs

More often than not, in many articles nowadays you might read about the whooping TDS rates for Non-resident Indians. TDS rates for NRIs ranges from 10% to 30%. Apart from general taxable income like salary, rent or interest on securities, NRIs are taxed for various other income categories like earnings under National Savings Scheme, repurchase of Mutual Fund and royalty income.

Changes made to NRI tax norms in Budget Meeting 2016

Addressing high TDS rates for NRIs, The Central Board of Direct Taxes (CBDT) reformed the taxation norms which now allows NRIs to avail lower tax rates under Section 206AA of the Income-Tax Act. CBDT has included a new rule, section 37BC, according to which non-residents can claim TDS benefits even without submitting their PAN. Previously, residents had to submit PAN under section 206AA to avail any tax benefits. In Budget Meeting, 2016, Arun Jaitley, Finance Minister confirmed that PAN is not mandatory for non-residents to enjoy tax benefits. In his speech, Jaitley addressed the 7 pillars which will support India’s economic growth and tax reforms to reduce compliance burden was one among them.

Saudi Indian Business Network (SIBN) recently conducted a lively debate with experts in the taxation industry to explain the budget meeting in layman’s terms. During the debate Vijay Soni, treasurer, SIBN, spoke about taxation policies in India and rationalization of TDS for NRIs without PAN. Echoing him, CA, S. C. Lekhwani, a senior practitioner from India joined the debate via video conferencing and explained the taxation provision for NRIs and foreign investors in India. After years of debating and procrastinating, The Government of India has ruled in favor of the NRIs which is definitely a good news for all the non-resident Indians out there.

Saturday, 10 October 2015

Reaping the profit out of compound interest

Did you know you compound interest can help you increase your savings? Yes, it can do wonder by adding to your existing savings. Compound interest can help you earn more than what you invested initially and fulfill your long term savings goals by providing higher and assured returns.
So, what is compound interest?
It is a kind of interest on interest; an addition of interest to the principal amount of your deposit.  Compound interest which is added to the principal amount of your deposit or a loan, helps a loan or a deposit grow at a faster pace. Compound interest is calculated on the initial principal amount as well as on the accumulated interest of a deposit or a loan. This addition of interest to the principal as well as accumulated interest of the previous years  is known as compounding. The compounding frequency determines the interest you will receive on your deposits. The higher the frequency of compounding, the higher the compound interest is.
Compound interest rate is particularly beneficial for investing in fixed deposits. By using a compound interest calculator, you can calculate the compound interest on your deposit or a loan.
How compound interest helps you earn more:
You can be rich gradually by investing at compound rates of interest. The compounding rate of interest may work for you in the following ways:
Reaping Profit out of Compound Interest

Start your investments early:  When your start your investments early in your career at compound rate of interest, the possibility is very much there that it will add to your returns. So don’t wait, make your as early as possible to add more value to you your investment
Invest regularly:  Make it a habit to make regular investments. In the initial years, you may not be able to see the difference. But if you keep on investing at compound interest rates, you will see the difference. Investments giving lower returns in the initial stages may produce higher returns in the long run. Always, it’s important to look at the bigger picture, not short term goals. Besides, a proper asset allocation plan will also help you add more value to your savings  by managing the risk factors. A well – thought out asset allocation plan always helps in long term wealth generation.
Stay invested for a longer time: It is very important to be patient and keep your investments intact for a longer time.  The magic of compounding works only when you invest your savings for a longer duration. Do not withdraw or touch your savings, unless you really need them. Let them remain invested for a longer time and grow. Although, you will witness slow progress in the initial stage, it will pay off in the long run.
So, if you are intending to earn more profit from compounding rate of interest, invest regularly and invest for a longer duration. Make your investments at the early stage of your life and give time to your investments. Definitely, compounding will show its magic and double your returns.

Tuesday, 8 September 2015

Unusual Investments that Will Ensure a Comfortable Post Retirement Life!

After working hard for years, everyone deserves a peaceful comfortable life. But a post retirement life with no or limited income can be hard. The best way to ensure a good post retirement life is to invest in the right policies. Surprisingly, investments like Fixed Deposits, Gold and other investments can ensure a good life post retirement. Listed below are some unusual investments that might help you sail a lot smoother during your post retirement days.

Fixed Deposits:
Fixed deposits are term deposits wherein money is deposited as a single payment for a certain period of time and interest is earned on the same. The FD Interest Rates depends on the amount deposited and the deposit term. Fixed deposits can actually act as a retirement investment tool. FD can act as a retirement tool if you plan it the right way. Investing idle savings in an FD when you are earning a regular income can benefit you later in life. It can be planned in such a manner that the Fixed deposit matures during the time of your retirement thus granting you a lump sum amount for your post retirement days.

Precious metals:
Investing in precious metals is a wise decision and can also serve as a source of finance post retirement. The price of precious metals is always inflating thus making your investment a valuable one. Precious metals like gold, diamonds can be purchased in the pre retirement days and this will act as a valuable asset of a much higher price post retirement.

Real estate:
The value of real estate never goes south. Investing in real estate in your younger days is probably the most unusual but wisest retirement plan ever. This piece of real estate can later be sold off post retirement or it can act as your shelter.  Since the price of real estate is always inflating, this investment plan will never fail you.

Emergency fund:
It is important to have an emergency fund irrespective of your 
age. Small savings over a longer time in an emergency fund can prove to be very valuable during tough times like a medical emergency, house repair, etc post retirement.

Specific health insurance plan:

With old age comes old-age ailments. Having a health insurance plan that covers a particular ailment can be very beneficial. For example, if you are suffering from cardiac-related ailments, it is best to choose a Cardiac health insurance plan that covers for risks against cardiac related ailments. This can save you from huge medical expenses.

Wednesday, 27 May 2015

Top Bank FDs in India for 2015

Bank fixed deposits have been an investment staple for most Indians and as the year 2015 gets underway, we find these fixed-income options have not lost their allure.

What makes bank FDs a favorite among Indian investors?

Even as financial markets in India develop and diversify, bank FDs continue to win over other channels of saving. The main reasons for this are:

Simplicity - FDs are easy to understand. Money is deposited with a bank for a particular period of time in return for a fixed amount of interest. At the end of the deposit period, account-holders receive their principal investment along with the interest earned on it.

Safety - Banks are considered to be the safest financial institutions in India, operating within a well-monitored framework, under the watchful eye of a regulatory authority viz. the RBI.

Guaranteed returns - Interest rates on fixed deposits are pre-determined and remain unchanged throughout the deposit period. This makes it easy for an investor to calculate how much is due on maturity. Interest rates currently vary between 3.5% to 9.25% for holdings between 30 days to 5 years.

Flexibility - Bank FDs let investors balance returns and liquidity. Deposits can be held with banks for varying tenures, starting as low as 7 days and going as high as 10 years. Additionally, depositors can choose to have interest credited to their accounts at regular intervals (usually every quarter). This creates a regular income stream without affecting the principal investment; this is especially useful for retired persons.

Accessibility - Opening a fixed deposit account is easy with a multitude of options available from different banks located across the country. Paperwork is almost negligible and with more FD schemes being made available online, the application process is now quicker and more convenient than ever before.

Easy to manage - There is little need to monitor bank deposits since investors know exactly how much is due to them on maturity. Interest rates don’t have to be tracked as they remain unchanged from the start to the end of the deposit period. Interest rates only have to be reviewed on renewal.

Best Bank FDs Rates for 2015

Below is a round-up of the highest interest rates offered on different FD schemes across the country and the banks that offer them. Interest rates depicted are the highest returns offered for a particular tenure, on a per annum basis. These schemes are categorised from a collective perspective i.e. all the sectors combined and further broken down to depict the best schemes for each sector i.e. public, private and foreign banks.
(Rates shown are those in effect during the last week of January 2015* for a deposit amount of Rs.1 lakh)

(All sectors)
Medium and Long-Term Deposits

5 years            9.25%              TMB
1 year              9.1%                TMB
1.5 years.        9.00%              Central Bank of India, Dena Bank, J&K Bank, Karur Vysya Bank,
                                                State Bank of Mysore, TMB
2 years            9.00%              Dena Bank, J&K Bank, Karur Vysya Bank, State Bank of
                                                Mysore, TMB
3 years            9.00%              Dena Bank, TMB
4 years            9.00%              Dena Bank, TMB

Short-Term Deposits

90 days           8.80%              ING Vysya Bank
6 months         8.75%              TMB
9 months         8.75%              Indian Bank,IndusInd Bank,TMB,Yes Bank
120 days         8.70%              ING Vysya Bank
60 days           8.00%              TMB
30 days           7.75%              State Bank of Mysore

*Interest rates are subject to change.

     Best Public-Bank FD Rates 2015

Medium and Long-Term Deposits

1 year              9.00%              Dena Bank, Central Bank of India, State Bank of Mysore
1.5 years.        9.00%              Dena Bank, Central Bank of India, State Bank of Mysore
2 years            9.00%              Dena Bank, State Bank of Mysore
3 years            9.00%              Dena Bank
4 years            9.00%              Dena Bank
5 years            9.00%              Dena Bank

Short-Term Deposits

9 months         8.75%              Indian Bank,IndusInd Bank
120 days         8.70%              ING Vysya Bank
6 months         8.55%              Syndicate Bank
90 days           7.75%              State Bank of Mysore
60 days           7.75%              State Bank of Mysore
30 days           7.75%              State Bank of Mysore

*Interest rates are subject to change.

     Best Private-Bank FD Rates 2015

Medium and Long-Term Deposits

5 years            9.25%              TMB
1 year              9.1%                TMB
1.5 years.        9.00%              J&K Bank, Karur Vysya Bank, TMB
2 years            9.00%              J&K Bank, Karur Vysya Bank, TMB
3 years            9.00%              TMB
4 years            9.00%              TMB

Short-Term Deposits

90 days           8.80%              ING Vysya Bank
6 months         8.75%              TMB
9 months         8.75%              TMB,Yes Bank
120 days         8.70%              ING Vysya Bank
60 days           8.00%              TMB
30 days           7.50%              TMB

*Interest rates are subject to change.

     Best Foreign-Bank FD Rates 2015

Medium and Long-Term Deposits

1 year              8.25%              Standard Chartered Bank
3 years            7.75%              Citibank
4 years            7.75%              Deutsche Bank
1.5 years.        7.50%              Citibank, Deutsche Bank
2 years            7.50%              Citibank, Deutsche Bank
5 years            7.25%              Standard Chartered Bank

Short-Term Deposits

9 months         8.25%              Standard Chartered Bank
90 days           8.00%              HSBC
6 months         7.75%              Citibank
120 days         7.75%              Standard Chartered Bank
60 days           7.50%              Deutsche Bank
30 days           7.00%              Deutsche Bank

*Interest rates are subject to change.

How to choose a good fixed deposit scheme

Although Bank FDs make great fixed-income options, they are not as simplistic as they appear. When choosing an FD scheme, don’t look at interest rates in isolation but consider the following as well:

     What is the minimum amount required as initial investment? The initial investment required to open an FD account varies from bank to bank. For e.g. HDFC Bank stipulates a minimum amount of Rs.10,000 to open a regular FD account.

     What is the penalty levied on premature withdrawals? Banks charge a penalty for breaking an FD i.e making premature withdrawals or closing account before maturity. Penalties are applied to the interest rate and can go up to 2% in some cases. This can greatly compromise expected returns. E.g. a penalty of 1% on a deposit featuring interest rates at 6% will earn account-holders net returns of 5% in case of early closure of the account.

     How well does the bank service its customers? How a bank services its customers is important. Some banks delay crediting interest to depositors’ accounts while still others require constant follow-ups for renewals and issuing of fixed deposit receipts. Foreign and private banks are generally known for their promptness in providing information and processing transactions.

     Does the bank provide loans against FDs? Most banks grant loans against fixed deposits. These loans feature interest rates which are lower than those of most personal loans. The interest payable on the loan is usually set off against the interest earned on the FD. This is an advantage for those who require funds but do not wish to break their FDs and lose out on returns.

     Does the FD feature cumulative options? Under cumulative options, interest earned, instead of being credited to the account-holder, is compounded or reinvested at regular intervals. This maximises returns as interest earned is added to the principal for subsequent interest calculations.
The longer the tenure and more frequent the compounding, the higher the returns under cumulative options. Some banks offer quarterly compounding while some offer half-yearly compounding.

     Does the bank offer special senior citizen / employee rates? Most banks offer special FD rates for senior citizens and bank employees. Senior citizens are generally offered an extra 0.25% - 0.50% on rates offered to regular customers while employees generally earn 1% over standard rates. Retired persons can create a regular income stream by having interest earned on deposits credited to their account.

     What is the effective rate of return post taxes? Interest earned has to be declared as part of an account-holder’s overall income and is taxable according to the appropriate tax slab. While determining the desired rate of return, taxes should be considered. For e.g. If a depositor earns 9% on a deposit and is liable to pay tax at the rate of 30%, his/her effective rate of interest is 6.3%. This information is useful when comparing schemes to choose the one that provides optimum returns.
(For interest earned on fixed deposits over Rs.5,000 in a financial year, tax will be deducted at source, by the bank @ 10%.)

Outlook for bank fixed deposits in 2015

Given the changing economic scenario in India, the question on most investors’ minds is - ‘Is it a good time to invest in bank FDs?’

Rate cuts are already signalling a downward trend in the interest rate cycle and banks are expected to bring down interest rates on fixed deposits in the coming quarters. Some banks have already acted on this by reducing rates between 25 to 50 bps over the last month.

In view of these developments, long-term FDs appear to be the best option for those who can trade-off on liquidity and lock-in funds for a period of 3 to 5 years at current rates, before returns are lowered in line with market changes. Investing in tax-saving FDs, which have a minimum lock-in period of 5 years will also reap long-term benefits at current rates.

This will prove most beneficial to those in the lower tax brackets or those whose incomes fall below the tax exemption limits. It is also an advantageous prospect for senior citizens / retirees who can lock-in interest income at current high rates for the next few years.