Why do you need to open a Demat Account today?

What is a Demat Account?

Shares and securities in India are electronically held rather than in their physical forms i.e. in terms of certificates and this is where a demat or dematerialized account comes into play. In order to be able to invest in shares or securities, a shareholder needs to have a demat account.

Being a shareholder you need to open a demat account with your investment broker or at times the sub broker. Your account number acts as your unique identification number and is used for all the electronic transactions of shares. Without this number, transaction cannot be initiated.

This account however is similar to that of a regular bank account but with an exclusive purpose i.e. it is used only for trading shares. To gain access to a demat account, a transaction password and an internet password is however needed.

Features of a Demat Account

There are various rewards of having a demat account. These are mentioned below:

1. A Demat account enables electronic storing of shares and securities saving you from the task of manually storing all the certificates and the relevant documents.

2. Once you have a demat account, the bonus shares or the right shares which you may get occasionally get directly transferred to your account thus nullifying the risk of loss due to untoward incidents like fire, damage or theft.

3. Demat account eradicates all the problems you might have faced in the physical transaction of shares or securities like lost in transit, theft, forgery, delay in receiving, signature mismatching, etc.

4. The brokerage or the transaction cost that you need to pay is minimal often below 1% and this also paves you the way to avoid the stamp duty charges which subsequently reduces transaction costs.

5. A Demat account makes the transaction process easier and hassle free with no minimum number of purchase or sale specified. You can also purchase or sell some shares if you want.

6. You can deal with both equity and debt instruments via a single demat account.

7. You can operate your demat account from anywhere inside the country provided you have an internet access.

8. When you change your address with the Depository Participant (DP) who acts as an intermediary between the investor and the institution (depository) that maintains the huge number of shares from numerous companies, your address automatically get updated in all the companies whose shares you have been holding thus eliminating your task of informing them separately.

Why is internet banking the need of the hour?

With the current government policy focusing on promoting a cashless economy, internet banking has naturally picked up pace. A McKinsey report stated that 7% of the total 200 million bank account holders in India transact online, which is around 14 million people.

So what is Internet banking?

Internet banking is an umbrella term which includes all the banking services that are available online. Some of the services that banks offer online include money transfer, scheduled bill payments and viewing account information. You can avail the benefits of internet banking from a smartphone or a computer which is connected to the internet. Mobile banking, which involves availing banking services via a smartphone is also a part of internet banking.

One of the main advantages that internet banking offers is transfer of funds. Transactions through electronic payment systems like Electronic Clearing Service (ECS) credit & debit and National Electronic Fund Transfer (NEFT) have provided a boost to financial arrangements across and around the country in terms of speed of transactions.

Current Scenario

India has seen a spurt in the number of e-commerce websites, where a good amount of transactions are processed online. A cash intensive economy is difficult to monitor as it provides a conducive environment for unscrupulous transactions. The current dispensation has taken major steps in curbing a cash intensive economy and facilitating a move to a more cashless economy instead.

In order to move to a more cashless economy, internet banking is emphasized. Transactions carried by internet banking are easier to monitor. The other two factors are internet propagation in India and a surge of smartphone users.

With more people having access to internet, internet banking in India is the need of the hour. The increase in the number of smartphone users is another factor that has helped internet banking grow.

Some of the benefits proffered by Internet banking

1. Customers are no longer bound by geographical boundaries. One can access their accounts from any place at any time.
2. Internet based banking services take up little time. You can thus spend less time on banking activities.
3. You can schedule online bill payments like electricity, gas and mobile bills.
4. Transfer funds instantaneously with internet banking. You no longer have to go to the bank to send money to another person.
5. Track the activities in your account simply by the click of a mouse.

While the benefits are there, it is not entirely a rosy picture. Internet banking has its share of problems. The major problem being the security of the backend infrastructure. A robust mechanism and a stronger infrastructure is needed to help internet banking grow to its desired standards.

Benefits of purchasing an insurance policy in your early 20’s

Today’s 20 year olds have realized or fortunately have been made to realize the importance of saving and investing. Life insurance, is an important investment and statistics prove that many mid to late 20 year olds have shown interest in purchasing it. To prepare ourselves for life’s “what if” moments, the knowledge of financial tools is essential and life insurance is one of the most important such.

Additionally starting an insurance cover in your early twenties will eventually pay off in the future. Some benefits include:-Lower premium - when you start an insurance policy you are expected to cover an amount which you pay off, usually by means of an annual premium. This amount paid annually as a premium will be significantly lower, the earlier you start an insurance cover.

Example
For instance, a person aged 24 will have a premium of Rs.7,000 and that particular plan will make a person aged 30 pay Rs. 9,000 as premium for an insurance cover of INR 1 crore.

Why so early?

Support - many 20 year olds have to support their family or a few of their folks along with themselves. In those scenarios, investing money in an insurance plan would prove beneficial in the long run and very helpful in unfortunate circumstances. It will provide those who rely on you with money after and if you are not there. A number of insurance policies offer lower premiums on beginning annually renewable policies. The premium rates do go higher every year but they also include invaluable benefits.

Stronger cash-value - regular payments of premium increases your cash value. This places you in a stronger financial position and enables you to access personal and other loans with flexible terms and conditions.

Exploration and Analysis - if you invest in purchasing an insurance plan during your 20s then you are bound to learn a great deal on the subject. As you keep getting older and observe lifestyle changes, you start evaluating the different types of insurance policies and based on your past purchasing experiences as well as your current lifestyle you could ideally settle for the one that proves to be the most beneficial.
Buying an insurance policy sooner than you plan to will reap you benefits sooner than you expect. Being a policyholder from an early age would coerce you to spend less and earn more, thereby getting into the habit of saving. In today’s world anyone can access information easily and this minimizes the risks of those purchasing insurance policies without prior knowledge.

Car loan vs. personal loan: Which is the ideal solution to purchase your dream car?

Need a loan to purchase your dream car? If yes, then you can either opt for a car loan or a personal loan. These are the two most common loans available in the market today. The entire process of obtaining a loan is very easy once you meet the requirements of the lender.

Now that you can opt for a personal loan as well as a car loan for purchasing a car. It is important to differentiate between the two, and then make an informed decision.

Personal loan

A personal loan allows you to borrow funds from an institution for various purposes. A personal loan is an unsecured loan which means it has high interest rates. Unlike a car loan in India, a personal loan is not restricted to motor vehicles. You can also use a personal loan for renovating your home, debt consolidation or taking a holiday.

Car loan

A car loan, as the name suggests, can only be availed to purchase a car. A car loan is secured, where the vehicle serves as the collateral. When you apply for a car loan, you should do a thorough research of all the interest rates and pick the best rate as per your requirement.

Which is better?

A car loan outscores a personal loan on a number of factors. From the perspective of interest rates, a car loan being secured, has a lower interest rate. Your credit score is important when you apply for a personal loan, so a bad credit score may act as a deterrent. Personal loans also carry high processing charges.

The credit score and higher interest rates are factors that tilt the scales in favor of the car loan. The car loan is also easier to obtain, as the dealer whom you purchase your car from can set you up. They usually have tie ups with banks or other NBFCs who offer car loans. A car loan may also require you to pay an upfront amount as down payment for the loan. A personal may also have variable interest rates as it is an unsecured loan.

Irrespective of what you pick, it is important that you carry out a thorough research and make an informed decision with respect to which loan would be more suitable.

Why a personal loan EMI calculator is essential for a strategic loan application

Personal loans are a great resource for small expenses that need to be handled in a rush. Personal loans of small amounts such as a few thousand rupees are often available from banks at interest rates as low as 2-6% per annum and can be taken out against small fixed or recurring deposits.

More conventional personal loans of Rs.50, 000 and above are available at 10-12% per annum interest rates. Most people can be eligible to apply for a personal loan as long as they are salaried employees of government or other reputed establishments or can show proof of income.

When you decide a loan scheme, your EMI is determined by several factors such as your interest rate, your loan amount, etc. It is crucial to know your EMI options beforehand and choose a payment plan that is suitable to your needs. If you end up with a payment plan that takes too large of a chunk out of your monthly income, it might disconcert the point of taking out a loan. Which is why, before you take out a loan, you should use an EMI calculator for personal loans to figure out your possible monthly payment plan.

Purpose of an EMI calculator

When you’re planning on taking out any sort of loan, you should have a rough idea of how you are going to be paying it back and how long of a commitment you are willing to undertake in terms of a payment plan. A personal loan calculator will help you ascertain these specifics and let you plan ahead accordingly. It will let you calculate the EMI on different loan schemes that you are considering as well as different loan amounts that you might need to consider, giving you a well-rounded idea about the situation.

A personal loan EMI calculator can make your job much easier by taking into account various factors instead of letting yourself account for them. Often while taking out a loan, people do not take into consideration, factors such as the time before they have to start paying back the loan and the interest it accumulates. This can lead to people getting frustrated over a longer span of EMI payments.
Strategizing beforehand using an EMI calculator can eliminate such hassles and let you take out your personal loans without worry.

Why the best time to opt for a personal loan is now!

Demonetization and Personal loan

The demonetization of the Rs.500 and Rs.1000 currency notes witnessed uproar in the country. Citizens of the whole nation deposited their cash in banks. There were many banks that slashed the deposit rates, which bought down the lending rates as well. At present, prevailing interest rate is at a six year low. With such low rate of interests, your monthly EMI will also tend to come down. As such, this is the perfect time to opt for a personal loan if you need one.

Benefits of a personal loan

There are several advantages of taking a personal loan now:

I) The interest rate being the lowest since the last six years.

II) You will be able to get loans with less than 12% interest rates.

III) There is little documentation required for acquiring a personal loan.

IV) It takes very little time to apply and as such you receive your loan within 72 hours.

V) It is possible for you to avail the additional tax benefits on the personal loan.

VI) The repayment options are flexible, allowing you to repay the loan as per your convenience.

Applying for a personal loan

1) Firstly, you need to check the interest rates that are available. You can look them up online to compare and get the most suited deal for you. At the same time, you can also look up the additional fees and charges that are levied.

2) You have to decide on the loan requirements and select the amount. You can select the amount up to 25 lakhs. You have to repay it in a span of 12 to 60 months.

3) Once you provide your financial details to the bank or NBFC, you will receive a customized offer. If you want, you can ask for a loan offer that is pre-approved.

4) A CIBIL score will measure your ability of repaying the loan. If you score well, there is a possibility that you will get a good deal.

5) You can either apply for the personal loan online or at the bank branch. You only need to submit all the necessary documents and pay a small processing fee. You need to submit your identity proof, address proof, your latest salary slip and form 16 (Income Tax). The amount will reach your account within 72 hours.

It would be wise to take advantage of the current prevailing market scenario and apply for the personal loan. The easy application process is sure to remove your doubts and fears of debt, allowing you to reach your financial goals.

All you need to know about the FCNR account and loan benefits

What is an FCNR account?

An FCNR (Foreign currency Non- Resident account) is a type of deposit account which can be used by NRIs and PIOs. As the name suggests, you can only deposit foreign currency in this type of account. Only certain foreign currencies are eligible for deposit in the FCNR accounts. The currencies that are allowed are the –
1. US dollar
2. Euro
3. British pound
4. Australian dollar
5. Canadian dollar
6. Japanese Yen

The FCNR account eliminates the risk of fluctuations in currency conversion, and earn a fixed rate of interest.

Features of a FCNR account

1. FCNR accounts can be only opened by NRIs and PIOs.
2. A regular interest amount is paid on the deposit.
3. You can only deposit foreign currency in the account.
4. The deposit should have a maturity period between 1 - 5 years.
5. It offers nomination facilities.
6. You can convert your deposits into a different currency against an implied cost.
7. This scheme does not permit recurring deposits schemes.
8. You can avail loan facility against an FCNR account.
9. The interest earned on this account is not taxable in India.

Requirements for opening a FCNR account are

1. A copy of Visa
2. A copy of passport
3. An updated bank statement of the foreign country
In case of a premature withdrawal from a FCNR account, a penalty charge of 1% is levied on the account.

FCNR loan

A FCNR loan is usually issued to corporates as per the guidelines issued by RBI. Corporates sometimes prefer FCNR loans as they have lower interest costs. This also does not require the borrower to go to international market for raising funds.

Advantages of FCNR loan –

1. FCNR loans come with very low interest rates.
2. You can use it to hedge currency exposure risk.
3. FCNR loans are easy to obtain.

Eligibility for an FCNR loan

These loans are generally only provided to well-established businesses that operate as a limited or a private limited company. The company should have a good track record of loan payment i.e. a good credit score. This loan can be availed for purposes like purchase of capital equipment or working capital requirement. Most banks usually have a minimum loan requirement amount of USD 100,000 for a loan application.