Are you aware of the different factors of the NRO account?

As per the Foreign Exchange Management Act, any individual is a resident of the India, if he or she stays within the country for more than 183 days, preceding the financial year. If the individual does not satisfy this condition, then he or she is considered a non – resident Indian, commonly known as NRI.

While this definition may determine the status of NRI, it also determines the financial requirements and functioning of the individual. As an NRI, and the individual can enjoy the benefits of earning in foreign currency and investing in banking products that offer the best benefits of currency conversion. One such main benefit and requirement is the NRI account.

In this case, an NRI can either opt for NRE or an NRO account. Amongst the two options, the Non-Resident Ordinary (NRO) will provide to be a beneficial investment. As an NRI, whose also earning in Indian income, this is the best option to invest your earnings.

Given below are some of the features of the NRO accounts and how it can benefit you:

• This account has a restricted reparability. An amount of only 1 million USD can be repatriated per financial year for any bonafide purposes.
• Unlike the NRE account, the interest that is earned in this account is fully taxable.
• TDS also known as tax deducted at the source is also applicable to the interest that is earned here. This is also subjected to DTAA also known as the Double Taxation Avoidance Agreement with other countries.
• This account can be maintained in Indian rupees
• It can also be held jointly with another Non-Resident or Resident Indian as well.

Given below are some of the FAQ’s asked and answered about the account:

Can I repatriate the funds from my NRO accounts?
The interest that is earned in your NRO account, especially if you have opted for a savings account is repatriable. However, the payment of taxes will be made before the repatriation happens. Additionally, you can repatriate only up to a maximum of 1 million USD per financial year.

What are the funds or assets that can be repatriated from this account?

The following funds or assets can be repatriated from the savings account:

• Proceeds from the sale of immovable property, shares and securities
• Assets acquired by inheritance or any legacy
• A fixed deposit with a bank, firm of company
• Provident fund balance or superannuation benefits.
• Amount of claim or maturity proceeds of an insurance policy
• Any assets held in India in accordance with the provisions of the Act, Rules or Regulations made by the government.

Will be required to pay tax on the interest income earned?

As per the current regulations, a tax that is deducted at the source on the interest earned on your account will have to be paid.

Bank account and marriage: How to ensure a balanced financial life

Amongst the several challenges newlywed couples will face, is not only living together but also money management. This will be a delicate task, something very few couples will master with ease and cooperation. After all, there will be a considerable difference between spending styles, financial independence and how and where the funds should be spent.

Amongst the several dimensions of spousal financial management, decisions about the bank account will be the most important. Choosing the right choice amongst the several types of the bank to account for yourself and your partner will go a long way to build a financial future.

Given below are certain steps for newlyweds who want to start a firm financial future and also build the right banking approach and account this year:

Consider respective banking styles and roles: As like any other issue in a relation, communication is the key to financial management. You will need to consider your respective availability, interest, and aptitude in handling your bank account. In most cases, such a decision will be shaped by your spending independence you each want and the level of trust you share between the both of you’ll. Compare your banking habits regarding physical bank accounts or whether you would prefer an online bank account. You need to understand that each relationship will be unique and therefore, every couple will most likely end up with a different financial organization.

Should you opt for a joint or separate accounts?

Another one of the key decisions you and your spouse would need to decide the right types of bank account. This would mean deciding between owning individual accounts or a joint bank account. In most cases, a joint account will be most beneficial for several reasons. For one, consolidating your deposits and withdrawals in one place will simply the financial management. Additionally, it can also be used to invest in a large balance, thus reducing fees and maximizing interest and account features. It can also be used to know how much funds is withdrawn from the online bank account, especially if it is concerned with joint spending. However, owning individual accounts will help in individual expenditures, especially if one individual does not approve of personal purchases of the other.

Customize automatic transfers to your account

Certain banks allow you to establish recurring automated transfers from and to your accounts. Such transfers will help you pay off your bills, replenish your funds and build your savings. All this can be done without any conscious effort on your part. In the case of individual bank accounts, you will need to assign various deposits and payments to your appropriate accounts. This would require you to split everything proportionally or establish a combination of the two accounts. In either case, automatic transfers can lighten your administrative burden, thus giving your sufficient time and resources to focus on other tasks.

Personal Banking: What is it and how can it help you?

Banking services are classified into different services, namely the personal and private banking. With personal banking, it refers to the wealth of services that are available to individuals from different financial institutions. To those who have some experience with any of the banking services such as savings and checking accounts and lending options such as loans, mortgages and lines of credits, you are facing a personal service of the banking institutions.

With the advancements in the digital and internet technology, plenty of new features has been added to this form of banking. For one, you will have the ability to view and interact with accounts online and make deposits and payments via phone or online services. You can even access any ATM’s from around the world and at any time. These banking services are also progressing furthermore to include other new banking services such as financial advising, retirement, planning and automatic bill payment at the most modern institution. 

Given below are some of the features of the personal banking services you can look out for:

Customer Management: Banking personnel from the personal service are well equipped and trained to ensure that you make only the best investment and financing decisions. They ensure that a good communication bridge is built and maintained with their clients, in order to understand their needs and preferences. In the end, they ensure that their clients only receive that which is best suited to their financial personality. If you need to make any investment, you can always ask for a personalised investment proposal, which will offer you the best options based on the current market trends and performance.

Quality: Quality is said to be not a coincidence, but a result of effort and efficiency. Today’s financial needs by each individual are not unique but also sophisticated and demanding. Not only are the products and services provided by banking institutes designed in such a manner to suit the needs of customers, but also ensure that the best of quality is presented to them. Flexibility yet fluidity is the much-needed requirements of the financial market, which banks aim to capture and provide in their offerings.

Special products and services: As previously mentioned, the financial needs and requirements of an individual will differ from person to person. Banks follow an objective to ensure that their customers make the most of their funds and the consecutive financial decisions. These very same banks are also coming up with different products and services that offer the best outcome, in terms of investment and financing.

Personal treatment: The key to an efficient and long-lasting relationship with clients is flexibility, transparency and sincere management. Most banking institutes aim to follow a basic mainstay where personalised management services and empathic communication is a focus.

Converting to NRI: 5 money matters you must consider before travelling abroad

When you leave India to settle abroad, there are plenty of factors you need to take into consideration, especially when it comes to your financial requirements. One factor you need to consider is that your current funds are secure, and accessible, especially when you travel abroad. While the country you may be travelling to will have their own laws regarding their banking, you will need to adapt to their new environment without losing control over your own finances.

Keeping this in mind, here are a few steps you can take:

Update your bank account: If you have any bank accounts in India, it is only meant for resident Indian. Therefore, when you travel abroad, your residency status will change. This, in turn, will affect your ability to hold a resident bank account. You will need to change your resident accounts into any of the NRI accounts namely the NRO or the NRE account. Each of these accounts has different properties and functionalities. For example, the NRO account allows you to hold income accrued from India and will pay interest on your investment. On the other hand, the NRE account can be used to repatriate funds without any limitations. Additionally, rupee currency can be invested in this account.

Manage your investments: You will need to take stock of all your investments before moving out of India. Before you do so, you will need to make a decision about the investments you want to hold and which you wish to liquidate. For example, if you have a demat account, you will be required to relinquish your hold on the account. You can even open a portfolio investment scheme where you can transfer all your holding before you get your NRI status. If you cannot make these decisions on time, you can appoint someone and give them a power of attorney to act on your behalf and execute your transactions.
  
Update your KYC status: It is crucial that you update the KYC status for every financial product your hold. This can include bank accounts, insurance policies and mutual funds. Once you leave the country and settle abroad, your address and residency status will change, and therefore, you will need to update your KYC.

Evaluate and update your insurance cover: Before you change your status to an NRI, you will need to ensure that all is covered in your health insurance policy, especially outside the country borders. While health insurance companies allow treatment within the country, it would also include medical treatment abroad. However, you will need to evaluate your cover size and increase it before you change your residency status.

Debt management: As far as possible, try and close all existing debts before you shift to another country. If you have any outstanding loan balances after shifting, you can try for timely repayments from your NRO or NRE account. You can appoint a POA to manage your debt, as it will help you immensely after you leave the country.

Are you eligible for an education loan?

The education loan has a big market, considering that several students are interested in pursuing a higher education both, within the country and abroad. Several banks offer a study loan to the meritorious and deserving students who require finance to continue their studies.

Not only has such an education loan helped boost careers, it also helps individuals afford the payment, something which they wouldn’t be able to do on a normal basis. However, before even accessing this loan, you would first need to be eligible for it.

Most banks set down certain criteria for applicants who would want to purse this form of financial assistance. They consider a certain set of factors before reviewing the application. It includes:

• Student’s academic background and qualifications. It would also include the track record of the marks, credits and achievements.
• The course that is being sought. These courses must be accredited and worthy of studying. Additionally, it should also possess a good chance of placement and job prospects, which allows the applicant an opportunity to repay the loan.
• The institution where the course will be pursued. Whether it is a school, college or even a university, it should possess a good reputation along with the right accreditation.
• The collateral offered during the loan application. The bank will consider the value of the collateral, whether or not the applicant can afford it.
• Whether the applicant has potential co – borrowers or guarantors of the education loan. Furthermore, lenders will also check the job profile and credibility of these co – borrowers.  

Apart from these factors, certain set of courses are also eligible for education loans. Lenders will offer the loan to students to study in almost anything, so long as the course and the institute are accredited by the concerned authorities or possess a good reputation. Courses that are eligible for this financial assistance include:

• Undergraduate degrees/diplomas and special courses
• Postgraduate degrees/diplomas and special courses
• PHD’s and doctoral programmes
• Specialised courses, training and diplomas.

Alternatively, certain banks will sponsor a study loan for special courses, especially if there is a prospect of a job, or an enhancement in the current employment. Some of the courses include:
• Agri diploma
• Certificate courses from ITI
• Computer certification courses
• Courses run by State Skill Missions, State Skill Corporations, or National Skill Development Corporation
• Data entry operator course
• Degree or diploma courses for aeronautics, pilot training, shipping held by recognized regulatory bodies. This course is normally associated for the purpose of employment in India or abroad.
• Engineering diploma
• Nursing or teacher training certification courses and B.Ed
• Veterinary diploma
• Vocational courses run by government organization or certain departments.

Apart from the courses, certain institutes are also taken into consideration when it comes to their eligibility. Lenders will look at the institute’s reputation. Additionally, they may also have a pre – approved list of universities and even a blacklisted one. Some of the universities that are preferred for the studies in India and abroad include:

• Educational institutes that have been recognized by the UGC, Govt., AICTE, AIBMS, IMCR, etc.
• Polytechnic institutions that have been approved
• Reputed foreign educational institutions
• CPA in USA, CIMA-London, etc.

What are the tips to keep in mind when sending funds to India?

It could be very simple to select any money transfer service and send money to India. However, there are several important factors you will need to consider before taking this step. For one, you need to consider the foreign exchange rates as they are constantly fluctuating. At the same time, you also need to be aware of the charges and fees before initiating a transfer. Apart from these factors, there are plenty more that can make a difference to your money transfer.

Given below are some tips you can consider to help you make an informed decision that will help you save time and funds with any international money transfer to India:

• Compare the different money transfer services available in your destination. It will only take a few minutes, especially if the services and rates are presented online. In this way, you can compare for the beset exchange rates, transfer fees and the most reliable service.

• If you must, make a single large money transfer as compared to multiple transfers. Large money transfers will attract fewer fees and charges, as compared to smaller and multiple charges. If you most, look out for services that offer specialised services for small transfers for better exchange rates and fees.

• You need to be aware of the transfer limits. Normally, the transfer fee will be incurred depending on the amount of the transfer. So the more you transfer, the higher the fees will be.

• Pay close attention to the total cost you will be spending to send money to India. While the incurred fees may be low, the exchange rates could be high. On the other hand, a higher fee could be worth your expenditure, if the exchange rate will benefit you. In order to get a true comparison, calculate the final amount the recipient will obtain

• Don’t pay additional fees to make the transfer, unless there is an urgent requirement to do so. If the funds don’t have to be wired urgently, you can opt to choose a standard transfer, which will save your money and unnecessary charges.

• Keep a look out for fluctuating or indicative rates, especially when making an international money transfer to India.  The foreign exchange market is always active and always changes by the second. In other words, you can experience a significant plummeting or soaring of rates in a short span of time. Any transfer made during this time will benefit you or affect you. The only way to avoid such a situation is to be observant of the rates.

• Always stay informed about the procedures, alternative options and liabilities you may face in case your funds are not transmitted promptly. Don’t be afraid to ask for clarification or details whenever required. If you must, keep the second option in consideration so that you are prepared for any transfer during emergencies.

Credit cards: Common FAQ’s answered

Amongst the several banking cards that are available, the credit card has always been a popular choice for several reasons. While the requirements and reasons of the usage of the credit cards would differ from person to person, some of the common reasons would include convenient payment access, the means to access large sums, and the ability to repay back the borrowed funds with a low interest rate.

However, like any other banking card usage, there will be several questions and queries asked about the credit cards in India. Given below are some of the FAQ’s and their respective answer about credit cards:

Do I need to opt for a co – signer when applying?

If you don’t have the appropriate credit history or even little credit history, it is not uncommon for the lender to ask for a co – signer before your approval. As a co – signer, the individual must have an established credit history that would share the financial responsibility for the card. Normally, these individuals can be anyone who is a close friend or even a family member. This individual is equally liable for any debt that the principal card owner may gain when using the card. Therefore, the co – signer must be as responsible to using the card, as the primary card holder.

Is opting for a credit card a wise choice for my financial future?

While credit cards can be used for payments and transactions, it can also be used for another purpose, building a credit history. By building a credit early in life, you build a credit history right in the beginning itself, where rates are more affordable. In the future, a good credit would mean lower rates on loans, mortgages and a wide variety of credit cards. One way to start off, is by opting for the student’s credit card where you can opt for small and affordable purchases, while increasing your card limit as your expenditures and income increases.

What are the risks of a credit card?

Applying for the credit cards in India is often the first step to building a credit history. However, the expenditures you make it on is still a choice that depends on you. If you indulge in any irresponsible activity on the card, it will lead to the logging of negative information, which can stay on your credit report for a maximum of seven years. This in turn, will eliminate credit options for certain time lengths. Therefore, it makes sense to keep things easy right from the beginning than to get into trouble later on. However, there are a few steps you can take to ensure that you don’t risk your card:

• Pay your bills on time and in full to avoid added interest and fees
• Always create a budget as it will help you stay within your means
• Do set up account alerts as a security feature.