FAQs about FCNR accounts

The importance of saving money cannot be undermined. No matter, what part of the world you are in, it is integral to have savings tucked away. While most of us in India, can park our savings into several different savings accounts, Non Resident Indians, looking to invest their money in India, can do so by opening a Foreign Currency Non Resident or FCNR account. This however, is not a savings account but a term deposit account, which can be maintained by both, NRIs and Persons of Indian Origin (POIs). Here are some common FAQs about FCNR accounts answered.

In what currencies can I maintain my account?
The account can be maintained in any of the major foreign currencies including the US, AUS, Canadian, Singapore Dollar, UK Pound, Euro, Japanese Yen, Swiss Franc etc.

How can I open this account and transfer funds into it?
The funds in your foreign currency account can only come from your overseas income/funds, and the FCNR account can be opened online. Once you’ve opened the account, you can directly transfer funds from your overseas bank account. This can be done either through a cheque transaction or a wire transfer. Furthermore, you can also transfer funds from your existing Non Resident Rupee (NRE) account. You can also open this account on your visit to India by depositing travellers’ cheques or foreign currency notes.

What is the tenure for the account?
Typically, you can open this term deposit account for a minimum of 1 year, whereas the maximum tenure is 10 years.

Can I make a premature withdrawal?
Yes, investors are allowed to withdraw money from the FCNR account, before the completion of the selected term. However, premature withdrawals are subjects to a 1% penal interest. Also, the bank is not obligated to pay interest on the deposit if you choose to make the withdrawal within one year.

Can I use my funds from the account for local payments while I’m in India?
Yes, the balances in the account can be used for making local payments in India. However since this type of account is a term deposit, you must first transfer the necessary amounts into your NRE account and withdraw from the NRE accounts to make the payments.

Can I hold a joint account?
Yes, it is possible to hold a joint foreign currency account with other NRIs or with resident Indians you are related to. In the case of the latter, the resident relative may operate your account, serving as its power of attorney.

Is there a facility for nomination?
Yes, there is a facility for the account holder to nominate anyone he chooses. The nominee can be both, a resident Indian or an NRI. In the case of the unfortunate death of the NRI holding the account, the balance in the account can be credited to the NRI nominee’s FCNR account and the funds can be freely repatriated.

Important steps for getting a business loan

Money is important for a business to survive and thrive. If you have a business idea and are looking to build it into a full-fledged business, you must begin by investing some capital. Once you reach some sort of stability and feel you have proof of sustenance, you can make your business grow by acquiring a business loan. But in order to do so, you must follow the below steps.

Understand the different kinds of business loans available: Depending upon your business needs, term of loan and the length of loan, you can choose from several types of business loans. The most common types of these loans include demand loans, term loans (working capital and corporate), and loan against securities, gold loans and cash-credit facility among others.

Research about the available lenders: In this current age of start-ups, banks, financial institutions and entrepreneurs are willing to lend new businesses money, now more than ever. Loans can be acquired from large commercial banks, local community banks, non-bank finance companies (NBFC) and even investors. Also, a quick google search of your credit scores can help you find sites that offer a business loan online. Banks like HDFC, Axis and Kotak Mahindra are among those that offer this loan online.

Be prepared for the lender to view your credit/risk profile: Your lenders will consider accepting or rejecting your loan application basis your credit and risk profile. A lender often looks at factors like your credit score/report, outstanding loans and cash flow, assets invested in the business, time invested in the business etc., before sanctioning the loan. He may also take a look at the other investors and your financial statements. 

Get your financial statements in order: Since the lender considers your loan based on your financial statements, you must get them in order. Ensure that your income and loss statements, balance sheet and cash flow statements are thorough when you apply for business loan. The lender will analyse your cash flow, gross margin, accounts payable, debt-to-equity ratio and so on. Also ensure that these statements are audited by a certified public accountant.

Present details about your loan and specify the amount you wish to borrow: Apart from statements, you lender will also want to understand the detailed information about your business which include its name, tax ID, legal structure (LLP, LLC etc.), state filings, business plan etc. Furthermore, the lender also attempts to understand how much funding you’d require and how you intend to use the funds provided; for equipment, capital, expansion, hiring, inventory, marketing, R&D and so on.

Determine your collateral: A lender is concerned with the borrower’s ability to repay the business loan. As such, he may ask for a security interest on company assets like equipment, accounts, property, receivables etc. Some lenders may also for collaterals like property documents, while others may insist upon personal guarantee of the business owner to pass your loan.

Opening a PPF account – here are a few things you must know

Public Provident Fund is one of the most sought after tax saving investments that benefits anyone who holds this account. Besides being a tax-free mode of investment, you can also earn interest on the savings you park in this account. The scheme, instituted by the Government of India, is one of the best ways to park away your savings for retirement, while also being the safest. One can open a PPF account in almost all Indian nationalized banks like SBI, Bank of India, and Central Bank of India as well as private sector banks like HDFC Bank, ICICI Bank and Axis Bank.  Here’s a list of things you must know about opening this income-tax saving account.

Who can and cannot open this account?

Indian citizens; self-employed, salaried or unemployed can open a PPF account, whereas Hindu Undivided Families and NRI cannot open this account. However, if an individual opens a PPF account, but later becomes an NRI, he can continue to park his savings in this account.

How much are you allowed to invest?

Resident Indian account holders can invest up-to ₹150,000 annually; in 12 instalments or a single deposit. NRI account holders can invest ₹70,000 annually. You must deposit money into this account, at least once a year, for 15 years.

How many accounts can you have in your name?

You are allowed to hold only one PPF account in your name. In case you’ve opened a second account in a different bank, the bank is obliged to close your account and return only your principal amount, not your interest.

Can you hold a joint account with another individual?

Since these accounts are not like traditional savings accounts, one cannot open joint accounts when it comes to PPF. However, you can nominate more than one individual as a nominee, but the nominee cannot continue to park his savings in the account. If a nominee is not registered, the bank hands over the money to the account holder’s legal heirs.

What is the minimum deposit amount and how much interest do you earn on your savings?

As per the PPF scheme, an investor must deposit a minimum of ₹500 in a financial year to continue earning interest. Failure to do so can lead to your account being discontinued. The account can be regularized by paying the necessary default fees with subscription arrears. Investors can earn an annual interest rate of 7.60% as of 01.01.2018. This is applicable to all your savings and is compounded annually.

What is the maturity period and when can I start withdrawing?

A PPF account ideally comes with a maturity period of 15 years. However, you can start making partial withdrawals from the account after completing 7 years. After the completion of 7 years, you can withdraw 50% of your deposits. You can also choose to withdraw the entire amount at maturity and close the account or extend it for a block of 5 years each time.

7 benefits of loan against shares

There are loans available to fulfil all kinds of requirements such as the wedding, education,  home renovation, setting up businesses, etc. These fall under the unsecured category as they do not require you to pledge any collateral as security. Then there are secured financial investment such as the gold loan, property loans, etc.  They need you to keep gold or your properties as   security. The loan amount is also dependent on the rate of your gold or estate. Another type of secured investment is a   loan against shares .   
 
What is a  loan against shares?

Simply put, investors can get funds from lenders against their existing investment portfolios. The invested money can help you in getting a loan. Often people spend on such a loan    as it is a short and long-term investment option. The securities that you can invest, however, differ from lender to lender. The lenders, in fact, have a list of securities to choose from. 
 
Who can opt for a loan against shares ?
1) Traders
2) Industrialists
3) Businessmen

What are the benefits of opting for a loan against shares?

1) Interest rates: As compared to the unsecured loans the interest rates are generally lower for the    secured ones. In secured loans such as loan against shares, there is some kind of asset kept as secur  ity  that the lender can liquidate in the event of non-payment . Also, you have to pay interest only for the money you utilise and not for the entire loan amount.     

2) Flexibility: Loan against shares function pretty much like personal loans. They can be used for all kinds of purposes.

3) Hassle-free application process: This loan does not require a guarantor. If you have your documents in place such as application form, bank statement, ID proof, address proof, signature proof, age proof, income proof and your photograph in place, then processing of this loan is quick. If you have a  Demat account, then it is an added advantage. Many firms send their representative to your residence to collect the documents and you are done.

4) Instant liquidity: Loan against shares also come handy to fulfil immediate requirements such as medical expenses, unplanned expenditures, etc. Instant money is always beneficial in such circumstances.

5) Short tenures: The tenure period is anywhere between 7 days to 1 year. Some banks also extend the time-frame. Also, if you wish to pay the entire amount before the stipulated period, no pre-payment charges are implemented.

6) Additional benefits: Considering you are the owner of the shares, you will reap its benefits. You will receive the perks from the stock, bonuses, dividends, etc. You get more value for your investment.

Some of the banks that offer the best loan against shares are Axis Bank, ICICI Bank, HDFC Bank, State Bank of India and Bajaj Finserv.

Savings account - 5 reasons to open one

Banks are offering too many financial services to individuals nowadays. Where does savings account fit the bill? To put into perspective, holding hard cash in a gunny sack is not the safest of the options today. When you approach a bank and request for a secure place to store your hard-earned money, banks offer you a facility called the savings account. It is the most basic product provided by the banks when you ask them for storing your cash. 

A saving bank account is best suited for  salaried employees. Also, you can open a savings account with a minimum balance. A savings account inculcates the habit of managing finances smartly. 
Following reasons tell you why you should open a savings account now:

1) Future savings: One of the primary reasons why you should have a one is to   store some funds for your future. You can slowly and steadily accumulate money and save them for you and your family. This comes handy at the time of renovating the home or heading for family holidays , protecting you from  those  extra financial transactions such as loans, etc.   

2) Emergency expenses: You never know what the future holds. Your health could go for a toss; your vehicle could meet with an accident, etc. For such emergencies, you need money on hand. Even if you save for a good six months, the amount can easily cover minor medical expenses. In short, you need not go through economic hardships, thanks to a saving bank account.


3) Online savings account benefits: You can bank anywhere and everywhere with the internet. Plus, you can earn competitive interest rates than the traditional bank. You can also check your transactions on the go with the help of your mobile banking apps.

4) Big-ticket purchases: If you want a lavish wedding, you can start preparing for the same from a very young age. The money in your savings account can be used for your big dreams, be it wedding or education.

5) Healthy financial habits: The moment you receive your first paycheck, the urge to splurge is common. Sometimes it might get impulsive the moment the money builds up in your account. To  avoid last-minute run around for cash or loans, it is advisable to opt for a savings account. The habit of keeping money aside gives you peace of mind and prepares you for the future.  

When opening a savings account, research about the features thoroughly and check the interest rates they offer. Several financial portals allow you to compare these aspects and make it easier for you to make a choice.

10 benefits of world MasterCard credit card

One of the factors that frequent travellers vouch for is  miles and points via their credit cards or membership with an airline. These lucrative deals can be redeemed whenever you travel to your next destination.  Credit cards offer additional benefits apart from the miles and bonuses. If you are using a particular network credit card like MasterCard or VISA, you can avail of other facilities in the country you are visiting.  
   
World MasterCard credit card is a set of premium cards under the network’s portfolio  which provides an array of   perks for travellers. Following are the most valuable advantages that the travellers can earn if they own one:  

1) World Experiences and offers: Several world credit card networks are associated with specific hotels overseas.    MasterCard provides world experiences and offers in partnership with Fairmont, Mandarin Oriental and Relais & Chateaux properties. The moment you use your MasterCard, you are awarded additional built-in benefits.  

2) Card-specific bonus: If you are a World MasterCard credit card user, you can receive some card-specific perks as well such as travel redemptions, specific per cent refund on air tickets, etc.

3) Priceless cities: With the help of the World MasterCard credit card, you can enjoy exclusive deals and offers in countries/cities like New York, Los Angeles, Miami, Chicago, London, Paris, Buenos Aires, Rio de Janeiro, Singapore, Lima, Moscow, Madrid, Istanbul and many others. You also get shopping perks in these countries through their e-commerce websites.

4) Airport Concierge: With the help of the World MasterCard, airport experiences are now smooth and less chaotic. You receive a 15 per cent discount on  MasterCard Airport Concierge services. They will meet you at the flight door, fast-track you through immigration, assist you with baggage and send a chauffeured luxury vehicle on arrival

5) Rental insurance: It is one of the best benefits of owning a world MasterCard credit card. In case your vehicle gets stolen or damaged, then the card is used to pay the entire rental transaction. At the moment, some countries like Israel, Ireland and Jamaica do not provide this service.

6) Master trip: This feature protects your holiday right from travel assistance to replacing lost tickets, papers and luggage. It also helps you locate your baggage. And if you are caught in an emergency such as accidents, they assist you in finding the perfect doctor, ATMs and more.

7) Travel accident insurance: The world credit card offers automatic accident coverage during your travel. They insure you even if you travel by any mode of transport such as bus, aeroplane, railway, etc.

8) Purchase protection: If you purchase any product using the world MasterCard credit card, you get purchase protection instantly.

Apply for a World MasterCard credit card now and experience a hassle-free holiday or business trip.

Loan against gold – everything you need to know

India has a strong affinity towards gold in any form such as coins, jewellery, etc. But ever given a thought that the amount of money that you spend on purchasing gold will someday come handy when you are in urgent need of cash? Gold loan, as they are called, is a form of a secured loan where you keep your gold as security. The loan amount, however, depends on the  rate of gold you have pledged. The documentation procedure is hassle-free and is usually processed within 4-24 hours. 

What are the eligibility criteria for obtaining a loan against gold?

A salaried or self-employed individual can opt for this kind of loan. A gold loan eligibility calculator lets you know the amount of the loan you can borrow on the basis of your salary, existing investments and   interest rate. You should be 21 years old or above to take a gold loan. 

What are the document requirements when applying for the loan?

1) Application form
2) Passport-sized photograph
3) ID, address, age and signature proof
4) PAN card
5) Salary Slip
6) Bank statement

How does the gold loan calculator work?

The gold loan interest calculator is a service offered by several financial portals. Even banks have started offering this tool on their websites to simplify the research of the individuals. The calculator allows you to decide on specific aspects of the loan before taking one such as loan amount,    repayment tenure and interest rates:

1) Loan amount: This is the principal amount that you wish to avail of.

2) Repayment tenure: It denotes the time-frame within which you can pay off the loan. You are allowed to select the number of months as well.

3) Interest rate: It is the interest you will be charged on your loan. This can vary from bank to bank.

What are the salient features of a gold loan?

1) Fulfilment of needs: You can apply for a loan against gold  to finance any of your needs such as education, health, holiday, other financial investments, etc. Remember, the lender is not concerned about the reason behind applying for a gold loan

2) Security: The amount of the gold that you pledge for the loan acts as a security  


3) Tenure: The time period can differ anywhere from 7 days to 36 months. It is again based on the amount of loan you take up   

4) Charges: Some of the fees that may be applicable on the gold loan are the  processing fee, delayed payment, charges for non-payment of interest rate, etc.

5) Repayment: Lenders provide the following repayment options for the gold loan:

- You can repay through Equated Monthly Instalments (EMI)
- You can pay the interest monthly and repay the principal amount at the end of the tenure
- You can also pay the interest immediately and repay the loan amount at the end of the tenure

Some of the top players in the gold loan market are Axis Bank, HDFC Bank, Muthoot Finance, Manappuram Finance Limited and others.