Easy steps to open a FD Account now

A fixed deposit is an essential financial tool that can be used to increase assets over time. However, prior to generating returns on the investment, one has to open such an account with a bank. Such an account can be opened both online and offline. Here is the procedure that needs to follow in case one is trying to invest in a fixed deposit.

How to open online FD account?

With the emergence of the internet, people can easily visit the online webpage of their banks and elect to open an FD account from there. In the fixed deposit related section of the webpage, the banks offer an online form to the customers. You need to fill up the entire form and submit it. Once submitted, you will receive an email from the bank, where the completed form is attached.

Take a print out of the completed form. A representative from the bank in question will contact you shortly and fix an appointment for the collection of the application along with the other documents needed for opening such an account. Alternatively, you can also elect to visit the nearest branch of the bank and submit the documents there yourself.
Before submission, ensure that you have signed the printed out application form. Paste your photograph in the appropriate slot as indicated in the form.

Finally, keep a photo identification handy for the completion of the procedure. Aadhaar card and PAN card may be the most preferable ID in such a case.
Submit the documents along with a CTS compliant cheque so that the funds are cleared faster. This ends the online procedure for creating an FD account.

How to open offline FD account?

If you do not have access to the internet or want to complete the procedure manually, you can visit a branch of the bank itself. Once you are in the bank enquire on how to open an FD account. The staff will provide you with the application form. You have to fill it up and submit the required documents to the bank to open the account.

The CTS compliant cheque, which carries the FD amount can also be handed over to the bank alongside the completed form and documents. Once the cheque clears, the FD account will be created. In some cases, the offline method is faster when compared to the online procedure. However, before opening the account, one should ensure that they are aware of the interest rates offered by the bank. Conduct research to select the best fixed deposit investment.

What are the types of deposits available in India today?

Banks in India, offer quite a few services to their customers, ranging from money savings options to loans as well as investments. One can open a savings account in a bank to save up some cash, or opt for any type of loan be it a home loan or even a car loan. Investments through banks may be done via banks deposits, bonds or mutual funds etc.

When it comes to the various types of deposits that are available in India today, the first 2 types that one may be aware of are fixed deposits and recurring deposits. Fixed and recurring deposits are the most common types of deposits.

Bank deposit has been divided into 3 specific types. They are-

1. Time deposit
2. Demand deposit
3. CASA deposits
These 2 deposits have been further categorized into other forms of bank deposit.

Time Deposit

In case of time deposits, the money is deposited with the bank for a certain period of time. An individual cannot withdraw the amount before the tenure is over. If a depositor does withdraw cash from the bank deposit account before maturity a penalty fee is charged. Time deposits are thus also known as term deposits. The time deposit that is most commonly opted for is fixed deposit. Other time deposits include re-investment deposits and recurring deposits.

Those opting for time deposits can save as well as enjoy returns in the form of interest. The interest rate offered on time deposits varies from one bank to another. Longer the term of the deposit, higher will be the rate of interest that the bank will offer.

Demand Deposit
 In case of demand deposits, the money deposited with the bank can be withdrawn anytime. The bank does not need to be given a notice in advance. The funds can be withdrawn via a cheque, ATM or from the bank directly.

Those who opt for a demand deposit may or may not receive interest from the bank. Even if interest is given, the rate is generally quite low.
There are 2 types of demand deposits, namely savings account and current account.

CASA Deposits
A savings account and current account deposit together is known as a CASA deposit. These deposits pay low interest and are quite beneficial for banks. Banks want to increases the number of CASA deposits they have, thus they offer services to companies like salary accounts etc.

Other types of deposits in the country also include NRO, NE (E) RA as well as FCNA (A) accounts. One can also avail insurance for deposits in India.

Features of the NRE account and how it can benefit you

Non-residential Indians (NRIs) can maintain a rupee account in India. NRIs have two options available to open and operate a bank account in India – NRE or Non-resident Rupee account and NRO or Non-Resident Ordinary Rupee account.

A NRE account allows a person to transfer or convert Indian currency and also allows him/her to park their money in various savings accounts. The primary reason why a person would want to open this account is if he/she wants to convert his/her overseas earnings into Indian rupees. This account allows a person to maintain a savings account in Indian currency, he/she can hold a joint account with another NRI or if the person wants his savings in rupees to be fully repatriable.  

The features of a NRE account are:

• The amount that is saved in this type of an account can be repatriated overseas as well.

• A NRI can open this account and he/she can hold it jointly with another NRI or PIO.
The deposits in this account can be done in the following ways:
• A NRI can deposit money in this account personally when he/she visits India and the deposit can be made in Indian currency and a few other foreign currencies.
• Deposits can also be made in a NRE account through the foreign exchange transfer while in a foreign country.
• A person can also deposit in such an account by transferring funds through NRE account or FCNR account that are held in financial institutions apart from banks.
You can open NRE account online to enjoy the features of NRE account such as:
• A person does not have to pay taxes on the interest that he/she earns from the deposits in this type of account.
• The Reserve Bank of India has set some guidelines about how to document the transaction procedures and how to submit those to the governing body. NRIs have to fill in the Form A4 when he/she is depositing money in foreign currency through remittance or via demand drafts or cheques. A person who does transactions above Rs 1, 00,000 needs to submit proper documentation.
• The credit and debit flows into and out of this account are regulated by FEMA by imposition of a set of permissible transfer types.
• A person having Power of Attorney can only perform limited tasks like withdrawing money and remitting money across the border so that it can reach the account holder.
The advantages of NRE account are as follows:
• This account allows a non-residential Indian to invest in different deposit schemes and saving schemes of banks in India.
• You can also open NRE account online to avail a loan from foreign as well as Indian banks. Moreover, the amount of loan that a person can get is much higher in comparison to loans provided to other types of accounts.
• You can transfer funds from one country to another without incurring any cost.
• You can also transfer funds from this account to other FCNR/NRE accounts of the same person or even of a different person.

A person can avail facilities like cheque book, international credit card and also pay bills if he/she has a NRE account.

How to manage your education loan EMI’s?

Education loans are essential for students who wish to pursue higher studies or go abroad to complete their education. Most banks now provide these loans to students, but also charge a substantial interest when it comes to paying back the sum. While taking a loan itself may be easy, paying off the debt may prove to be difficult for some students.

The bank usually allows the student some time after he/she has completed their education before asking for the EMI repayment. This period of time is known as repayment holiday. Usually the bank allows a period of one year from the time of completion of education to the time of the first EMI payment. However, this period may be shorter if the student manages to get a job within six months of the degree completion.

Here is a look at some of the guidelines to follow if you want to manage the repayment of your education loan in India.

Ways to reduce burden
For education loans above Rs.4 Lacs, the student has to pay a certain percentage of the expense, while the rest is lent out by the bank. For studying in India, the student has to pay 5% of the loan while for education overseas the student has to furnish 15% of the expense. However, if you are a good student, some banks may relax these rates.

It is also better to take the loan amount through small payments over time instead of taking the entire amount at once. This reduces the interest that you will have to pay once the repayment period starts.

Start saving prior to repayment
If you have taken out an education loan, it is highly advisable that you start saving money during your education. You can opt for a part-time employment in order to start saving early. The repayment holiday can also be utilized to save up enough money so that there is no issue while repayment of the debt.

Keep an eye on the rate of interest
Education loan in India is given out on a floating rate of interest. This means that the rate of interest may change over time. So, it is highly recommended that you keep a backup savings for emergencies if the rate of interest suddenly escalates. However, to do this, you need to earn enough to save some money after paying EMI and meeting monthly expenses.

These are some of the easiest ways of ensuring that education loan EMI does not get too difficult to manage. Keeping expenses in check during the loan repayment tenure is the best way to handle the burden of the loan.

Gold Loan: Why it is a popular option in India?

India is a country that loves gold. Indians are the largest importers of gold in the whole wide world. This precious metal is not only useful as an ornament to be worn at festivals but a good gift option as well. These days banks and non-banking financial institutions are offering loan against gold.

Gold loan is granted by a lender against the gold that is kept as mortgage and hence, this loan is a secured loan. The gold needs to be deposited with lenders before the loan is availed. The lenders will conduct a few checks and may offer loans for as high as 80% of the metal’s value. Most households in India have at least some gold at their home or in a bank. They can utilize this loan to meet emergency requirement of funds such as expanding a business, a medical emergency, child education or even for down payment to purchase a vehicle.

The various benefits of applying for a gold loan are:

• As the gold loan is a secured loan, banks are generally non-hesitant in granting it. Banks or other financial institutions always have the option of selling off the gold in case of any default on the payment.

• Banks or financial institutions may even allow a person to only pay the interest for the loan. The person can pay back the principal amount at the end of the tenure.

• Gold loan interest rates are generally lower in comparison to the interest rate that is charged by a bank or a financial institution on any unsecured loan. Thus, this provides some relief to the borrower.

• As the gold is kept as collateral, a person is eligible for a loan against gold even if his/her credit history is not so commendable. A person’s repayment capacity is also not considered. Thus, it is often easier for a person to avail a gold loan to meet his/her urgent requirement of money.

• Lenders also generally do not ask for an income proof to be submitted by the borrower. This is because the physical gold is kept with them.

• A person availing such a loan does not generally lose ownership of the gold that he/she is mortgaging. He/she will get it back after repaying the loan.

• Many banks and non-banking financial companies charge less or no penalty for prepayment of the loan. Sometimes, they do not even charge processing fees. Thus a borrower is not overburdened with the task of paying more money.

In India, the government has also made it easier for women and agriculturists to get gold loan by announcing special goal loan schemes. Gold assets usually increase in value and hence, it is easier for lenders to trust a person who wants a loan against gold. These are the reasons why gold loan is a popular option in India.

The ideal guide to choosing the best insurance policy

A person always needs a back-up plan to deal with any contingencies in his/her life. There may be a sudden death in the family or there might also be some medical emergency. A death of a working member of a family may result in the family being plunged into a world of plight. This is where a life insurance policy can prove to be extremely beneficial. Such a policy entails that that an insurance company will provide death benefits to the beneficiary of a policy in exchange for some payments that are to be made on a regular basis.

There are a number of life insurance policy plans that a person can choose from in accordance with his/her needs.

There are a number of factors that a person should consider before deciding which plan should work best for him/her.

• A person who does not want a complicated plan can opt for a simple plan. Such a plan normally comes with single premium options and guarantees a beneficiary that is assured a lump sum after the death of the policy holder. The assured sum is normally 15-20 times the present annual income of the policy holder.

• A person should insure himself/herself or any other member of his/her family who is suffering from any critical illness. Health insurance may not suffice in such cases as such a policy only pays for the hospitalization costs. However, a person suffering from a critical illness will generally require a lot of other funds as well. Thus, it is of vital importance for such a person to get a financial shield in the form of critical illness clause when he/she is applying for an insurance policy.

• A person can also avail accident cover with his/her life insurance policy. This will be hugely beneficial for a person as it can provide security in a number of uncertain situations like road accidents. This cover only costs a little extra and offers extra benefits to the family of the deceased in addition to the one-time payment.

• A life insurance will also enable your family to earn a monthly income even after your death.

• Different insurers even allow a person to choose how that person wants to receive the pay-out.
He/she can choose from multiple pay-out options to suit his/her different financial requirements.

• Do not always opt for the life insurance policy plan that requires the payment of the lowest premium. This may result in the loss of various benefits and also cause you to adopt a policy that does not meet your requirements.

• Choosing a proper insurance provider is also a key facet.

A life insurance policy lets a person provide financial security to his/her family and also enables the person to live a peaceful life.

How to qualify for the best business loan?

Business loans are extremely useful when one is investing in a new business. These loans may help set up the business, so that one can easily repay the debt as the business starts generating profits. However, as with any kind of loans, not everyone is qualified to receive a business loan. Most lenders have a list of stringent eligibility criteria that the borrower needs to fulfill in order to get a loan sanctioned. Here are some steps through which one can easily qualify for the best bank loan for business.

High credit scores
Credit scores are a form of measurement, which assesses how good you are at repaying loans. There are two kinds of credit score that the bank may check, prior to sanctioning a business loan. The personal credit score keeps track of the past loan repayments of the loan applicant. For instance, if you pay your credit card bills and other loan EMIs on time, your personal credit score will be higher.

The bank may also checks the business credit score. This is the credit score of an established business and includes the past repayment of business loans for such an organization. However, in case you are applying for the loan for a new business, the banks will not check the business credit score.

Meeting the eligibility criteria of the lender
Each lender will have their own requirements and minimum qualification criteria for a business loan. Ensure that you are aware of these criteria and also fulfill each of them. This will allow you to get your loan sanctioned easily and without any added hassle. In some cases, the lender may be flexible if you have high performance in certain sections and are under the eligibility limit in another.

Financial and legal documents
Before applying for the business loan, ensure that you have all of the financial and legal documents ready with you. Some of the paperwork which might be needed include personal income tax returns as well as business income tax returns, balance sheet along with income statement and personal/business bank statement, photocopies of personal identification, financial projections for your business and other documents. Check with your bank or lender prior to application regarding the documents that need to be provided.

Collateral
Most banks will demand a collateral in case of bank loans for business. Collaterals are financial assets that you possess. For instance, you may put up your house as a collateral for the business loan that you are applying for. The bank may then take possession of this house in case you are unable to repay the business loan.

The above factors should be kept in mind in order to qualify and easily get a business loan.