All you need to know about FCNR account

Investing in India can be very risky for a non-resident because of the volatility in the exchange rates. With constant fluctuation in the rates of Indian rupee, it may not be beneficial for a non-resident to maintain accounts in India in Indian Rupees.

A Foreign currency account provides a secure option for non-residents to earn income in India without the risk of currency fluctuation. Some of these foreign currency accounts are:

1. Foreign currency non-resident (FCNR) account:
This is a foreign currency account where NRIs can deposit their foreign funds and earn interest income. It is like a fixed deposit account.

2. Resident foreign currency (RFC) account:
This foreign currency account is for returning NRIs who have permanently settled in India. It allows them to convert foreign exchange into Indian Rupees when they want.

What is FCNR account?

1. This foreign currency account is a fixed deposit account. It can be opened by:

• Depositing foreign currency or travellers cheques
• Transferring funds from abroad in freely convertible foreign exchange
• Directly remitting funds to the bank via wire transfer
• Transferring the amount from other FCNR accounts in other banks

2. Funds in an FCNR account can be in 6 international currencies:

• US Dollar (USD)
• British Pound (GBP)
• Euro (EUR)
• Japanese Yen (JPY)
• Australian Dollar (AUD)
• Canadian Dollar (CAD)

3. The funds in an FCNR account can be locked in for a particular period of time. Interest rates differ based on the time period for which they are invested. The minimum deposit tenure is 1 year.

4. The minimum initial deposit for FCNR account for various currencies is:

• USD = $1000
• GBP = £ 2,500
• EUR = € 2,500
• JPY = ¥ 7,50,000
• AUD = A$ 1,000
• CAD = C$ 1,000

5. Funds from an FCNR account can be repatriated on maturity, or it can be transferred to an NRE account. There are no limits on repatriation of funds.

6. The interest earned on FCNR deposits is tax free in India. However, it may be taxable in the country where the NRI is residing.

7. An FCNR account can be opened jointly with other NRIs. It is not possible to open an FCNR account with resident Indians.

8. Funds from an FCNR account can be used to open an NRO/NRE account.

9. It is possible to obtain a loan on the FCNR account balance. This loan can either be in Indian Rupees or in foreign currency. The loan can be obtained for any purpose other than:

• Relending
• Agriculture
• Real estate investment

10. It is possible to withdraw money from an FCNR account before the deposit matures. Some banks may not pay interest if the deposit is withdrawn before completion of 1 year.

5 steps to getting business loans

A business loan is a loan taken for the following purposes:

• Personal expenses
• Business expansion for example hiring more staff, investing in technology, purchase of assets
• Working capital needs
o Short term
o Medium term

A loan for business is an unsecured loan, where lenders sanction amounts up to Rs. 50 lakhs without security. These funds don’t come with any preconditions attached to the use of loans.

A major reason for availing this loan is the business loan interest rate. Business loans are given at lesser interest rates as compared to personal loans, and yet they offer similar if not more flexibilities. Getting a business loan takes a little more effort than a personal loan, but following these steps will ensure you can best utilize loan funds for the business. It will also ensure the business loan interest rate is the best.

Here are 5 steps to getting business loans:

1. Estimate the fund requirement:
The first step to getting a business loan is to estimate the funds that will be required. Whether it is for business expansion or for purchase of assets, knowing the amount that the business needs is the most essential part. There is no point in taking a loan for business and realizing the funds are short of the requirement.

2. Prepare a business plan showing where the funds will be used:
This document will be very useful in ensuring you get the loan for business. Estimating the requirement of funds is the first step, but if the loan funds are to be used for a variety of purposes, it is essential to prepare a document showing their usage over a period of time. This will show the lender that you intend to use the funds judiciously.

3. Check financial health of the business:
Before availing a loan, it is important to check whether the business has the capability to repay the loan. It is not advisable to use business loan funds for assets that take a longer term to generate returns. This will lead to capital getting blocked. It is better to take a loan when the business has some free funds to repay the loan as per the schedule.

4. Collect the required documents:
After estimating the fund requirements, the next step while applying for a loan for business is to collect the required documents. This means identity proofs, address proofs, income tax returns, business accounts, etc. The lender will use these documents to assess the loan amount.

5. Find the right lender:
Finding the right lender will depend on the business loan interest rate and other charges, you can select the lender and make the loan application.

7 things you must know about PPF

Public Provident Fund is an important savings instrument in India. It is the go-to investment for many individuals because of its tax advantages. But before investing in PPF account, you must evaluate whether it is suitable for you.

Following are the 7 things you should know about PPF:

1. It is an Exempt-Exempt-Exempt (EEE) form of investment:
The tax on an investment is considered at 3 different times:
a. On investment
b. When the investment earns income:
c. On maturity

Public Provident Fund has tax benefits at all three stages.
• Investment in PPF scheme gets a tax deduction up to Rs. 1,50,000 under Section 80C of the Income Tax Act
• Interest earned on PPF is exempt. Exempt incomes are not considered as taxable income of the individual.
• Withdrawals from PPF account after maturity are exempt as well.

This makes PPF an excellent investment since the incomes do not incur any tax. The interest on the PPF account is compounded, and hence a sizeable investment over a period of time can earn a substantial sum. This amount is wholly exempt which provides more funds in your hands, especially if you avail it at retirement.

2. The PPF lock in period is 15 years:
The minimum lock in period for PPF account is 15 years. After the period of 15 years, you can renew the account for 5 years at a time. There is no restriction on the number of times the account is renewed.

3. The minimum deposit every year is Rs. 500/-
To keep the PPF account active, a minimum amount of Rs. 500 must be deposited. You can deposit a maximum of Rs. 1.5 lakhs every year in a maximum of 12 installments. 

4. You can take a loan from your PPF balance:
You can avail loan facility from your PPF account after the third year up to the fifth financial year. For example, if you opened your account in 2010, the lock in period would start from 31st March 2011. You will be eligible for a loan on 31st March 2014, for the next 3 financial years. The interest on this loan is 2% above the PPF interest rate.

5. PPF allows partial withdrawal of up to 50%:
When funds are needed, you can withdraw up to 50% of the balance in PPF account. This facility becomes available after the 7th financial year.

6. The PPF interest rate depends on the Government bond rate:
The Government declares the PPF interest rate every quarter.

7. PPF is backed by Government of India and cannot be attached:
PPF scheme is fully guaranteed by the Central Government. The courts cannot attach it in proceedings. However, the Government can attach PPF account to recover taxes.

7 advantages of loans against shares

Loans are a way to raise funds in the time of need. But getting a loan isn’t always easy. Sometimes, it takes a long time to raise funds in the time of need, with lengthy compliances and requirements. One avenue to raise quick funds is personal loans. But loan against shares is more convenient and reliable option to raise funds.

Loan against securities or loan against shares means specified securities are pledged to the lender. Lenders usually specify shares against which loans are given out. Based on the company’s performance and the share price trends, lenders select high performing and stable companies for such loans. The Loan to Value ratio is around 50-60% which means 50-60% of the value of the shares in the market is given as a loan.

Here are 7 advantages of loans against shares:

1. Provides instant liquidity:
Some lenders provide loan against shares with instant approval. After approval, it does not take long for funds to get credited to the borrower’s account. Since the lender selects shares from stable companies, the loan amount is guaranteed. This instant liquidity can be used to meet urgent fund needs.

2. Freedom to use funds:
Like a personal loan, a loan against securities does not dictate the purpose or end use of funds. The borrower can use the funds for business or personal expenses.

3. High loan limits:
The minimum amount for loan against shares is Rs. 1 lakh and the maximum amount that lenders give out is Rs. 20 lakhs. Thus, by pledging shares, a higher value of loan can be easily obtained.

4. Interest only on funds used:
The loan amount is credited to an account and interest is only charged on the funds withdrawn. The period of interest depends on the period for which the funds are used. This means if the drawn funds are less than the disbursed funds, interest won’t be charged on the funds that haven’t been drawn.

5. Borrower retains ownership:
Even though the shares are pledged to the bank, the borrower retains ownership. So dividends on shares, bonus offers accrue to the credit of the borrower.

6. Less rate of interest as compared to personal loan:
There is no collateral in case of a personal loan. That’s why the interest amount is high to cover the risk. But in case of loan against shares, the lender is assured of a return in case of default. This reduces the interest rate on such loans.

7. Instant approvals:
The approval process for loan against shares is short. It is easy to evaluate the quality of the borrower’s portfolio and select the shares against which to lend. The typical approval process hardly takes time.

9 things you can do with your savings account

A savings account is one of the most basic accounts that people open. These accounts are safe avenues for people to park their funds, and the savings accounts offer different flexibilities to people, such as making direct payments, receiving funds, cheque facilities etc.

These days it is very easy to open savings account. Since most of the procedures are online, application can be done quickly. Depending on your needs, you can open the best savings bank account for your needs. There are many different types of savings accounts and whatever account suits your needs best, you can open that account.

Here are 9 things you can do with your savings account:

1. Basic Savings Bank Deposit account (BSBDA account):
A BSBDA  is the best savings bank account for people who need cash and can’t meet minimum balance requirements. A BSBDA account is a zero balance account. It has additional features such as access to internet banking, bill payments, cheque book, debit and ATM card, RuPay card etc.

2. SavingsMax account:
These accounts have a high minimum balance that has to be maintained. Apart from maintaining a high balance, there are other features such as free insurance cover, international debit card, sweep-in facility to earn more on idle funds etc.

3. Women’s savings account:
If you’re a woman, this is the best savings bank account for you. Women’s savings accounts have preferential rates on loans, along with higher withdrawal limits and daily spend limits. There are other advantages on using debit cards and on buying other products from the bank.

4. Children’s savings account:
You can open savings accounts for your children using this feature. It allows them to use a debit card, and has other features such as an auto transfer from your account to maintain balance in the child’s account. It is meant to teach a child the value of savings.

5. Senior citizens account:
These accounts provide free insurance cover and reward point benefits on the debit card. If you’re a senior citizen, you can get preferential rates on deposits and free travellers cheques.

6. Family/Group savings account:
This account offers benefits such as free debit cards for the family and higher interest on account balance.

7. Government/Institutional savings account:
If you need to maintain a zero balance account to collect donations, fees or invoices, this is the best savings bank account.

8. BSBDA small account:
This account has all the features of a BSBDA account. This account is for people who don’t have large transactions in their account. The maximum balance in this account is Rs. 50,000

9. Government Scheme beneficiary account:
This account is used to get benefits from different Government schemes via Direct Benefit Transfer.

Best international credit cards in India

A credit card is a card, which can be swiped to make payments now, and the amount can be paid to the credit card company at a later date. Credit cards are a vastly popular way of making payments. With the increase in international travel, there is a massive demand in the country for an   international credit card.

An international credit card is a card that is accepted for payment at merchants all over the world. If the credit card is not an international card, it may get declined or may incur substantial charges for getting swiped in another country.   

For frequent travellers , taking an international credit card is very beneficial as they can swipe it whenever they travel without worrying about problems in payment. These world credit cards also enable swiping in foreign currency and repayment in Indian rupees.

These are some of the best international credit cards in India:

1. Standard Chartered Platinum Rewards Card:
This international credit card has meagre annual fees, which get waived off in case you meet the minimum threshold for transactions. The card offers 5 reward points for every INR 150 spent.       

2. HDFC World Master Card:
This world credit card has a renewal fee of INR 2,500, but that is waived off in the first year on hitting the minimum purchase requirements.   Annual fees for the next year are waived on crossing minimum purchases for the year. It offers 2 points for every INR 150 spent, and if more than INR 7,500 is paid in one cycle; you get 3 reward points.          

3. SBI Simply Click Credit Card:
This world credit card gives 5x points for online shopping with decided partners. These points can be redeemed online. 

4. ICICI Instant Platinum Credit Card:
This card is straightforward to get approved. I  t is the best option for people with low credit scores. However, you need to have an ICICI account to get this card.  

5. HDFC Infinia Credit Card:
This card is a super-premium card. It has benefits such as unlimited spending, complimentary lounge access at airports, tie up with Vistara airline, discounts at fine dining restaurants etc.     

6. SBI Signature Elite Credit Card:
This card charges minimal forex transaction charges. It is beneficial for someone frequently travelling abroad. The reward system is very generous.
The annual fee is INR 5,000.   

7. Citibank Platinum Credit Card:
There are no joining or annual fees for this card. You can earn 10 reward points for every INR 125 spent at  network retail stores and 1 point for money spent otherwise. 

5 mistakes to avoid while applying for gold loan

A gold loan is a favourite way of raising funds in India. In a   gold loan, gold ornaments are put up as collateral against the loan. These loans are short-term loans with flexible tenure. Most lenders require regular servicing of interest, and principal can be repaid at the end of the mandate. Depending upon the loan agreement, a loan against gold is given out.     

There are many takers for a gold loan in India . Since many people own gold, a credit against gold is a guaranteed way to raise money in case of needs. Banks  and Non-Banking Financial Companies (NBFC) both offer gold loans. 

There are a few important things to remember so that you avoid making mistakes while applying for a gold loan. These pointers make a lot of difference when it comes to repayment.

Following are 5 mistakes to avoid while applying for a gold loan:

1. Opting for a loan with the higher interest rate to get a higher loan amount:
One important term while applying for a gold loan is LTV Ratio or Loan to Value ratio. Most lenders follow an LTV of 65-75% while giving out a gold loan. This means 65-75% of the market value of the gold  is the loan amount disbursed. Some lenders may offer a higher LTV at higher interest rates. Be careful of such schemes from lenders, as the interest rate can be a burden.

2. Not knowing different charges such as interest rate, hidden charges:
The interest rate on a gold loan may come with terms and conditions. When applying for a gold loan, check all the terms and conditions. There may be hidden charges such as processing fees, penalties, prepayment charges, late payment charges. You can take a better decision about the gold loan once you know these charges.

3. Not checking the Repayment schedule:
Depending on the lender, the repayment schedule will change. Some lenders require interest to be paid monthly and the principal amount to be paid all at once. Some lenders take repayment in the form of EMI. Not checking the schedule will lead to problems if you can’t service the gold loan.

4. Checking the creditworthiness of the lender:
There may be many lenders offering gold loans, but before you apply for a loan against gold, it is better to check whether the lender is reputed in the market. During the loan tenure, your gold will be with the lender. This is why the lender should be trustworthy.

5. Checking the quality of gold needed to put up for the loan:
The quality of gold that each lender requires is different. Some give loans only for 22-c arat gold; some provide loans for 18-22 carat gold.