All you need to about PPF account

Every month we have a certain amount of income left out. Everyone follows some or the investment option to save the balance amount. Apart from keeping it as cash or depositing in the savings account, others prefer investing in a manner that provides them returns to increase their wealth. There are avenues such as fixed deposit, mutual fund, etc. Another such investment option is Public Provident Fund. 

What is Public Provident Fund?

It is a tax saving instrument launched by the Indian government. The Public Provident Fund Act of 1968 governs the PPF scheme. Any deposit made on PPF can be claimed as a deduction and the interest on these are tax-free. The objectives of PPF schemes are to cultivate saving habit be it small or big. It also aims to secure the future of the individual post-retirement by saving a lump sum amount.

You can open a PPF account at the post office or public/private sector banks. Some benefits of holding a PPF account is:

1) There is no major fluctuation in interest rate
2) Investment, interest earned, and maturity proceeds are non-taxable
3) You can make pre-mature withdrawals after 7 years. In case of emergencies, banks allow pre-mature withdrawals before the 7-year period

Who can hold a PPF account?

1) Anyone who is a resident of India can have a PPF account
2) You can be a salaried, self-employed or belong to any other category to own a PPF account
3) For minors, either of the parent’s can open a PPF account
4) PPF account to Hindu Undivided Families has been stopped since 2005
5) NRIs are not entitled to a PPF account as they do not reside in India
6) A person can manage only one account. Holding multiple accounts is prohibited. Also, opening joint PPF account is not allowed.
7) Grandparents cannot open a PPF account for their minor grandchild. Similarly, both parents cannot open different accounts under the name of the same minor.

What documents are required to create a PPF account?

1) PPF account form that can be obtained from the bank branch or online
2) ID proofs such as PAN card, Aadhaar, passport, Voter’s ID, etc.
3) Address proof such as ration card, etc.
4) Your photograph
5) Nomination form

How to apply for a PPF account?

You can create a PPF account by either visiting the post office or online. Let’s understand it in detail:

1) Post office: Carry the application form along with other supporting documents to open a PPF account. An initial deposit of INR 100 has to be made to the account.
2) Online: You can visit the banks' website and open an account. You can save time and effort by opening a PPF account online. It comes with additional benefits such as checking statements, transacting funds and linking other savings accounts.

What are the features of a PPF account?

1) The PPF investment account is a 15-year product and comes with lock-in period of 16 years.
2) You must hold investment of minimum INR 500 per annum. However, the maximum investment limit is INR 1.5 lakh. The deposit can be made monthly or annually.
3) Earlier, the government had a fixed rate of interest for the tenure of the account. Now, the RBI guidelines say new interest rates will be announced quarterly.
4) You can also apply for a loan against PPF during the 3rd and 6th year. However, these loans can be availed on 25 per cent of the balance in your account.
5) As mentioned, it is necessary to invest INR 500 every year. If you fail to do so, your account will be discontinued. Also, you will have to pay a penalty of INR 50 and subscription outstanding of INR 500 annually to regularise your account.

7 facts about NRE accounts

You cracked the job abroad; your visas are done, and the remaining preparations are on. Before you board the flight and bid adieu to your family, have you thought about how you are going to manage your funds in India? Have you made arrangements as to how your loved ones can access those funds in your absence?

Some of the appointment letters provide the time frame as to when you will receive an NRI status. Whether you are or not an NRI, you can create an account in the bank. Banks call you ‘First Time Travellers’ and assist you in opening an NRI account.

Types of NRI accounts:

According to Foreign Exchange Management Act (FEMA) guidelines, it is illegal for NRIs to hold savings account in India. To manage their funds in a secured place, banks offer the provision of NRO and NRE account. By owning these accounts, NRIs can send the money they earn overseas to their family and can retain their assets from India in the residing country.

What is an NRE account?

The NRIs can hold Indian currency investments such as savings, current, recurring and fixed deposits in this account. Your foreign currency gets converted into INR while depositing in an NRE account. The account is tax-free as well.

Also, transferring money from the overseas country to India is free. Another benefit is that mutual funds get instant and easier if NRE account number is linked. NRIs also have the liberty to conduct financial transactions on the banks portal. If you open NRE account online, you can get the operations done on the go.

Points to remember before opening an NRE account:

1) The account should be maintained in Indian denomination
2) You can have a joint NRE account only if both the members are NRIs
3) NRE accounts can be opened as savings or current account. The average monthly balance to be maintained in the account should be around INR 75,000
4) Interest rates offered NRE account differs from that of NRO account. Currently, banks are offering similar rates on both the accounts
5) Exchange rate fluctuations can result in loss of currency. With that in mind, NRE accounts are open to two kinds of loss: daily volatility in the form of rupees and conversion loss.
6) An NRI’s primary concern is fund transfer. Through an NRE account, NRIs can not only transfer money to one NRO account but to n NRO accounts.
7) Income earned in a foreign country can be deposited in NRE account. Withdrawals are, however, made in INR.

Before you head overseas, open NRE account online and add a mandate holder who can handle your financial dealings while you are away. Once you start earning in dollars, you can remit the amount in your NRE account. If you handle these basics, you can head to your destination with no pressure.

Bank accounts and its types

With technology constantly improving, banks are offering custom-made services to the customer based on their needs and budget. These are in the form of different accounts, bonds, debentures, investment schemes, etc. Such products vary as per the user’s age, income and gender. Not just that, there are services offered to non-resident Indian (NRI) as well.

Let us learn in detail about the different bank account offered in India:

1) Senior Citizen Savings Bank Account: As the name suggests, it caters to customers who are over 60 years old. You can make pre-mature withdrawals here. However, a minimum penalty is levied. Regular interest is paid on the account. The account mainly focuses on fulfilling the needs of senior investors such as guaranteed returns, capital safety, etc.

2) Women Savings Account: Women are increasingly having a say in the businesses nowadays. Some run their show in the form of boutiques/business such as travel, beauty, etc. Such bank account is offered by private banks and provides several benefits such as internet banking, online bill payment, insurance cover, child account, etc. Besides, they also offer shopping and entertainment benefits.

3) Basic savings account: Everyone owns such an account today. An average quarterly balance needs to be maintained in such accounts. If a minimum balance is not found in these accounts, a penalty is charged by the banks. They come with features such as passbook, net banking, chequebook, debit cards, etc.

4) Student savings account: It handles all the financial transactions of the students. This account is particularly useful for those who are away from their family and need to manage their expenses. Only a few banks offer this service. No minimum balance needs to be maintained.

5) Current account: Another very commonly used bank account, especially useful for those who run businesses. Such account can be opened in public/private banks. Such accounts are ideal to carry day to day businesses.

6) Salary account: They are nothing but a type of savings account. Bank offers more benefits to those owning a salary account because it is the most used investment tool today. Every month a fixed amount of income is transferred to the account.

7) NRE savings account: Such kind of bank account caters to NRIs. In these accounts, rupee denominations can be maintained. The account can be run individually or jointly, provided all the account holders are from India.

8) NRO savings account: This also allows rupee denomination and are generally in the form of current, savings, recurring or fixed deposit. It can be in the name of the individual or joint account. It can be managed jointly by people residing outside India as well. You have the liberty to transfer money from an NRO account to any other account.

The banking industry is incorporating all technologies and methods into their scheme of the affair to make financial transactions smoother for users. With the trend of smartphones and online banking in the rise, you can also get an online bank account opened in a jiffy. All you have to do is get your bank customer ID and password in place for the same.

7 best investment options in India in 2018

Everyone needs some sort of a financial shield at every stage of life. Precisely why banks have various kinds of investment plans in place. It is considered to be the best and only way to secure money for an extended period. As per people’s perspective, to acquire more wealth, you need to work for longer time. Ask this question to yourself, is that hard-earned cash going to be of any use if you do not enjoy it? Investment is a way that enables you to celebrate your hard work at a later stage.

For this very purpose, banks are offering some of the best investment options in India for the year 2018:

1) Public Provident Fund (PPF): It is one of the safest investment tools in India. You can secure your money for over 15 years through a PPF account. There is also the benefit of increasing the security period. You can create the account via banks or post office. You also earn compound interest from this account. However, you can withdraw the money from PPF only in the 6th year. If you wish to remove money before, you will have to take a loan on the balance of PPF account.

2) Mutual fund: The business-minded individuals opt for mutual funds. It is one of the investment plans that give better returns compared to any other investment option in the market. In fact, investing in the stock market with the help of mutual funds is a market trend.

3) Investing in gold: India loves gold by not just wearing them but also investing in them. If you go for a loan against gold, it involves less paperwork, and the rate of interest is low. That means EMI is also lower, which also leaves less holes in your pocket. You can also look for other investment policies concerning gold such as gold deposit scheme, gold mutual fund, etc.

4) The company fixed deposits: It is one of the best investment options in India currently as this scheme does not fall under Reserve Bank of India (RBI) and is not like bank FDs. Remember, do not withdraw money before maturity under this scheme. Companies who wish to invest for long-term and are ready to bear some risk can opt for corporate fixed deposits.

5) Initial Public Offering (IPO): It is a long-term investment plan with low risk. It is especially useful if offered by reputed organisations. Such investments happen only once in every company.

6) Investment in bonds: If you feel investing in mutual funds and direct equity is risky, you can opt for bonds. Many bonds provide a high rate of return on investments. These bonds come under government regulation.

Apart from the schemes mentioned above, banks offer small investment plans as well such as bank fixed deposits, equity shares, stocks, etc. You can choose the one that is suitable to your budget and future needs.

What are professional loans? Its eligibility criteria and benefits

At one point or the other, we all wish to pursue our skills and do away with working under an authoritative figure. Professionals such as doctors, journalists, accountants, engineers, architects, management consultants, etc. practice their trade eventually. Just like personal loans are available for all kinds of needs and requirements, professional loans assist you setting up your own business by funding you for equipment, construction, business premises, renovating premises, working capital, etc.
Government banks generally offer these loans. Certain private banks also provide loans for professionals.

Eligibility criteria for professional loans:

1) Applicants should be between the age range of 18 to 65 years
2) People who are practising trades in different professions can avail the loan
3) Group of people who are practising one profession, provided everyone is licensed
4) Copy of professional certificate
5) Professionals can include people who have completed diploma/degree
6) Individuals, joint borrowers, partnership companies and firms can apply for the loan

Documents required to obtain loans for professionals:

1) Membership certificate copies issued by professional authorities
2) Firm registration certificate
3) Papers or documents that act as proof for repayment capacity
4) Latest utility bill statement showing your name and address

Some of the features of acquiring professional loans are:

1) Half loan amount should be provided as security with one guarantor, preferably your spouse
2) Immovable properties or equipment can be given as a collateral/security
3) Some other acceptable collaterals include land and buildings, bank deposits, etc. as per bank policies
4) Personal guarantee of partners/friends/family/title holders of collaterals/securities etc. is required
5) The repayment tenure of the loan is generally 5 years
6) There is no penalty for delaying repayment of professional loans
7) Business expenses such as travel, airfare, seminar, etc. are managed by the loan
8) The loan does not finance self-assembled electronic goods
9) The loan is approved and disbursed quickly
10) Loans for professionals come with attractive interest rate and include simple application procedure

Interest rates offered on professional loans:

1) Interest rates fall anywhere between 10 to 18 per cent. It is subject to vary from bank to bank
2) Marginal interest rate is usually around 15 to 25 per cent of the loan amount
3) The maximum loan amount that you can deposit is INR 10 to 30 lakh
4) The processing fee is charged within 0.20 to 1 per cent of the amount

Some banks might ask how you will be using professional loans. Some banks might even process the loan in instalments. Each instalment will be processed if the bank finds the business is running satisfactorily.

5 benefits of converting credit card purchases to EMI

Credit cards are your best ally at the time of emergencies. It saves you the worry of paying cash immediately and helps you to fulfil your needs instantly. Simply put, a credit card is where you borrow money from the bank to make payment for small or big purchases. You then go on to repay the amount to the lender within a stipulated period.

If you do not pay it on time, you will incur a penalty of late fees, your credit score will drop, and the interest rate piles on the original debt. To avoid going through all the hassle, banks and financial organisations have simplified the transactions through Equated Monthly Instalments (EMI) services on credit cards.

What is a credit card EMI calculator?

Some financial institutes provide you an option of converting payments via credit card into EMIs. Credit cards are used for large transactions many times. In such circumstances, banks offer you a choice of converting your extensive dealings into easy EMIs. Based on the amount, the user can choose to pay off the debt over a period of time.

How does converting credit card purchases into EMIs work?

This service works exactly like a loan. For making complete use of credit card EMI option, your amount should be more than the minimum money specified by the bank. You will have to include details such as amount payable and interest rate added to your actual credit card bill in the credit card EMI calculator. This will help you gauge how much of money will shell out from your pocket every month.
Banks nowadays have the calculator available on their website. The tool can limit your spending’s drastically.

What are the benefits of converting the credit card purchases into EMIs?

1) The moment you convert your credit card purchases into EMIs, you are no longer burdened to pay the entire amount on one go. By calculating the EMI, you can manage your finances better.
2) It also improves credit history as there are fewer chances the customer will goof up with impending dues.
3) As we know, all EMIs have a specific interest rate attached to it. The same gets low when your purchases are converted into EMIs. Certain banks may not apply any interest on your purchase EMI.
4) Customers can choose a tenure of their choice. Usually, the tenure period ranges anywhere from 3 months to 6 months to 9 months or a year.
5) The credit card purchases into EMI service involves minimum or no paperwork at all. You can make huge payment without worrying about the documentation process.

Points to remember before opting for credit card EMI option:

1) Not all banks provide the facility of credit card EMI calculator
2) The bank charges a fixed fee when you opt for this service. The cost depends on aspects such as the type of card, purchase amount, etc.
3) You might be charged a penalty if you pay the amount before tenure. You can get this waived by showing your loyalty to the bank offering them your credit card along with your credit profile.
4) Do not leave any outstanding dues of your credit card debt. It can mount your interest rate by 25-40 per cent at the end of the year.

What products are available under the scheme of credit card EMI calculator?

1) Electronic devices
2) Travel expenses
3) Apparels
4) Lifestyle expenses
5) Insurance expenses

Several banks are offering this service at present such as HDFC, ICICI Bank, State Bank of India, Axis Bank, IndusInd Bank, Citibank, Kotak Mahindra and so on.

All you need to know about Demat Account

We all have a bank account, be it current or savings. Maybe you hold multiple bank account. If you are an entrepreneur or a business person, you might be quite interested in stock market. So, where do you invest them? Ever heard of a Demat account? It is quite similar to a bank account. Just like how a bank account safely secures your money, a Demat account holds your securities in the form of bonds, debentures and shares. If you wish to buy shares from the stock market, you first need to have a Demat account in place.

What is a Demat account?

It is an electronic account where all your securities are held, like an alternative to all your physical certificates. If you want to sell and buy stocks, you should have a Demat Account with a Depository Participant (DP). Now, who are depository participants? They are organisations who provide electronic services for a Demat account. They also facilitate transactions.

At present two organisations are registered under Securities and Exchange Board of India (SEBI), National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

What are the benefits of having a Demat account?

1) The transaction cost is less as you do not have to pay stamp duty
2) Convenient and fast settlement of electronic settlements
3) Reduced paperwork concerning transferring of securities
4) Risks such as theft and fake certificates are eliminated
5) Can sell any number of shares
6) Can invest through your Demat account online

Note: The DPs do not charge a fee for opening a Demat account. Some provide refundable charges while some have fixed fees.

Prior to opening a Demat account, you need to fulfil the KYC norms. The following documents will be required from your end for completing KYC:

1) ID proof – Passport, PAN card, Voter ID and Aadhaar card
2) Residence proof – Ration card, bank statement, utility bills, driving license
3) Your bank account number
How to open a Demat account?
1) Choose your depository participant
2) Fill the Demat Account application
3) Submit the related documents
4) The DP will conduct verification process personally
5) You will be given an account number/ID by the DP
6) You can also open Demat account online through the DP’s portal

Remember, you can open multiple Demat accounts on the same name with different/same DP.

There are two types of Demat accounts:

1) Basic Services Demat Account (BSDA): These accounts are designed for small investors. The investors do not hold values/securities beyond a few lakh. Thus, the maintenance charge of this account is lower annually. This service was introduced in 2012.

2) Regular Demat Account: Compared to BSDA, these accounts can incorporate higher values/securities. The charges are also higher to that of BSDA. However, it offers many services and is convenient to use.

Along with opening Demat account online, ensure you open a trading account as well to conduct buying and selling of shares. If you do not have any of these, go to your bank manager and open one now.