What type of bank accounts can NRIs invest in?

Being an NRI has its plus points and drawbacks. While you do get to pursue your dreams and aspirations, you also have to ensure your family members are safe and sound not just physically but also financially. Indian banks have a plethora of investment options to offer  the non-resident Indians (NRIs) such as different bank accounts, investments in the forms of securities and debts, and investments in immovable properties like real estate.

Bank accounts are generally the safest options as you can either open them individually or in joint form. The types of accounts that NRIs can operate are NRE account, NRO account and FCNR account.

Let us learn in detail about each account:

1) NRE accounts: You can save money in rupees on this account.  You can also freely move your asset from a foreign  country to your home country through NRE accounts. They can be in the form of savings, current, recurring or fixed deposits. Since it is a rupee dominated account, you have to change your foreign currency to rupees before depositing. Also, whenever you wish to transfer the funds to your overseas account, you have to convert them to the respective country currency.

Some of the critical features of an  NRE account are: 
- You can freely move your NRE balances
- The balance held, and interest earned through NRE accounts are tax-free
- You can withdraw deposits prematurely from NRE accounts
- NRE accounts can be operated through power of attorney, although for a limited period, for the purpose of withdrawal and remittance

2) NRO accounts: This is also a rupee dominated account. You can invest in such accounts if you receive income in India such as rent, dividend, commission, etc. Such revenue cannot be deposited in   an NRE account. Unlike the NRE accounts, the interest earned through NRO account is taxable. Any NRI or Person of Indian Origin (POI) can open the NRO account barring people from countries like Nepal and Bhutan.  

3) FCNR account: The Foreign Currency Non-Resident (FCNR) account allows only foreign currency. It is similar to a fixed deposit on which interest is paid. You can open a joint FCNR account with other NRIs as well as with Indian residents. One of the significant   advantages of opening an FCNR account is that they do not have to bother about currency fluctuations. Moreover, the interest earned via FCNR account is exempted from tax. You can deposit the following currencies in the account:  

- US dollar
- Australia dollar
- British pound
- Euro
- Japanese Yen
- Canadian dollar
Some other investments options for NRIs include shares and real estates. Make a wise decision and be rooted in your country in a hassle-free manner. 

5 reasons why you should close surplus bank accounts

We tend to open different types of bank accounts for various reasons. It could be because you want to maintain your salary, savings, investments, etc. separately. There could also be an account for the various jobs you have done.  If you have worked in other cities, there are chances you have your accounts in those places as well. The question here is, ca n you keep track of these accounts?  Are they even useful?   

Often, we tend to forget to close these surplus accounts. This is a matter of concern. In the post-demonetisation era, it is necessary to close the bank account that does not serve any financial purpose in your life.  

Following are the reasons why you should close your surplus accounts right away:

1) Monthly balance: Every bank requires you to maintain a certain amount of balance in your savings account  on a monthly basis. In rural areas, the limit is around INR 5,000- INR 10,000. However, the limit is higher in urban areas, i.e. INR 20,000 per account. This can lead to financial stress. Even public banks have imposed monthly balance limit off late. If you have zero balance in your salary account, it will turn into a savings account. The transition takes place within three to six months.  Remember, banks can also charge a penalty for  non-maintenance of the bank account. 

2) Low interest: In continuation of the above point, handling several types of bank accounts could lead to you earning less interest. You can instead generate higher returns through mutual funds, fixed deposits, etc. To  avoid lower interest, you need to close your old accounts and turn the money in them into investments. 

3) Mis-usage of accounts: Before the fraudsters find a way to siphon funds from your account, you should shut the old accounts. People with multiple accounts usually do not pay attention to them regularly. And if any of the accounts have lump-sum money, it could turn into a loss for you.  

4) Tax filing confusion: Managing too many bank accounts could complicate your Income Tax Return filing  process. It is a task for the tax filer to go through all the bank account statements. If the tax filer finds issues with any of your accounts that even you are not aware of, it could lead you to trouble.  So, minimise your accounts. 

5) Impact on services: If you have not used your bank account for more than 12 months, they are deemed as inactive. And if it crosses beyond 12 months, then it turns into a dormant account. If your account becomes inactive, you cannot conduct any service with that concerned bank   such as ordering chequebooks, making any transactions, etc.
   
So, simplify your financial handlings and have a consolidated bank account in place.

5 factors you must consider before applying for a car loan

Owning a car is a major life goal for many of us. Most of us, aspire to gift ourselves a car when we start earning. Driving a car is one of the first steps we take as we enter adulthood. The best part is that buying a car today is easier than it has ever been. Car loans are processed by banks and non-banking finance companies (NBFCs) in a matter of minutes. With a few documents, a simple EMI plan and a low rate of interest, you can bring home your dream car. But before you apply for the loan, here are a few factors you must consider.

Compare the loan rates across all lenders: Depending upon the make and model of the 4 wheeler of your choosing, the interest rate on auto loans begin at 8.7% per annum. It also depends on your repayment capacity and the organization you are employed with. You should first begin by checking the interest rates offered by your existing bank since there is a high chance that as bank customers you could get special offers on the loan. You can also check with NBFC’s and dealer finance companies and then choose your lender.

Check if the EMI is affordable: Apart from the interest rate charges on the loan, your EMI depends on the loan amount and the tenure. You must check the EMI you can afford by deducting the necessary monthly expenses, insurance premiums, SIP contributions and other existing EMIs, if any. A higher EMI certainly lead to lower rate of interest charges, however it should not cost you your emergency funds or take a dip in other investments.

Consider a low loan amount: You will find many lenders who are willing to finance 100% of the car’s cost; it makes more financial sense to opt for a lower auto loan amount, if you wish to pay low interest rates. It is a good practice to first plan and come up with funds for down-payment before booking your car, but you must refrain from using your emergency fund to obtain the down-payment.

Opt for shorter tenures: Most lenders are willing to offer car loans for as many as seven years but that may not necessarily be in your best interest. Opting for a shorter tenure on the loan reduces you interest cost. While that is ideal, you should note that short tenures leads to higher EMIs so you must ensure that the loan tenure doesn’t affect your overall liquidity.

Read the fine print about processing fees: Lenders charge processing fees to cover the costs incurred when they evaluate your loan application. Opting for car finance during festive seasons is a good idea since a majority of lenders either reduce or completely waive off the processing fees. But you must check that they are not charging higher interest rate to make up for the loss incurred from reducing or waiving off the fees.

The differences between NEFT and RTGS Payments that you need to know

Internet banking is a blessing. It has brought with it, a world of convenience when it comes to conducting everyday banking transactions, from transferring and receiving funds to paying bills online. These funds can be transferred by using simple and effective payment systems like RTGS (real time gross settlement), NEFT (national electronic fund transfer) and IMPS (Immediate Payment Service).The Reserve Bank of India maintains all these systems, which are applicable for transferring money to any corner of the country. Here are some differences between NEFT and RTGS payment solutions that you should know.

Time taken to transfer funds: As the name suggests, under the RTGS system, funds are transferred on a real time basis i.e. at the time a transfer request is received. RTGS is one of the fastest modes of money transfer available through Indian banking channels, with the beneficiary receiving the fund credit within just 30 minutes. NEFT on the other hand, is also a swift mode of fund transfer but it operates on a deferred settlement basis and fund transfers are settled in batches in hourly slots, not in real time.

The need for a bank account: Both NEFT and RTGS transfer systems can be availed by customers who have a current or a savings bank account. While individuals who do not have a bank account cannot avail RTGS services, they can still deposit cash at bank branches that are NEFT-enabled. Note that such NEFT remittances are restricted to a maximum of ₹50,000 per transaction.

The minimum transaction amount: While there is no minimum amount of funds that can be sent using the NEFT payment solution, the RTGS facility is basically meant for transactions of larger values. As such, retail customers must remit a minimum of ₹2 lakhs on every RTGS transaction. Since RTGS was specially designed for large payments to and for businesses, transactions below ₹2 lakhs are not permitted.

The charges: On an average, you will be charged a small amount of ₹25, excluding the service tax on every transaction done via NEFT. However, for an RTGS transfer, you must pay approximately ₹55 with an additional service charge. Customers who use internet banking services for both NEFT and RTGS are typically charges a lower fee as compared to those individuals who carry out the NEFT transaction through the bank branches.

Option for stop payment: Both RTGS and NEFT payment solutions do not offer the option for stop payment instructions. Since the transactions in RTGS payment solutions happen on a real time basis and the settlement of funds takes place immediately in the books of the RBI, the payments made are considered irrevocable and final. While NEFT transfers are made in hourly slots, there is still no facility for the sender to giving any instructions to stop the payment, if the transaction has already been initiated by the bank.

Top 5 reasons to buy a life insurance policy

No one knows what the future holds. People lose their lives to accidental deaths and illnesses every year. If the deceased is the family’s sole breadwinner, his/her family is left to face devastating consequences. Purchasing a life insurance policy is one of the most significant financial decisions you can make, to ensure that you family remains financially secure in case of unforeseeable circumstances. However, the sad fact is that despite it being so important, only 10% of the Indian population understands its importance as almost 90% Indians refuse to see the benefits of buying this policy. Here are 5 genuine reasons why you must buy life insurance.

It provides your family with financial security long after you are gone: People, who are the sole breadwinners of the family, need to understand that their families can fall into financial difficulties in their absence. The family usually depends upon the breadwinners to provide them with financial security and in the unfortunate case of the breadwinner’s demise, the dependants of the family are left to face with several financial difficulties including loss of income and paying for children’s education. The policy provides your spouse and children a cushion of money to go on living.

It helps in achieving the family’s long term goals: Since insurance policies last over a set period of time, making the annual investment in the policies in the long term can help you achieve many of your long term goals. These could include planning your retirement, buying your home, sending children abroad for further studies and so on. Furthermore, many life insurance plans are also tied with certain investment products which pay dividends based on their performance. As such, you can opt for investment linked insurance policies.

It takes care of your business: Typically, insurance policies help you take care of yourself, your family as well as your business. If you own a business in partnership with another individual, then your business partner can buy your portion of the business without any hassles. The business partner can enter into a buy-sell agreement and the pay-out would be sent to the deceased partner’s chosen nominees. However, the nominee may lose the stake in the business.

It helps to deal with debts: A life insurance policy helps your family deal with financial crises that arise due to the loans or debt you’d have taken, but were unable to pay them off. Outstanding debts on home, car, credit-card and personal loans can be paid off from the funds your family receives from the insurance policy.

It helps you save taxes: Irrespective of which insurance policy you buy, you are eligible for tax savings with your life insurance. You are eligible for an annual tax benefit of maximum ₹ 1.5 lakhs on the premiums you pay on your insurance policy, under Section 80C as well as for tax-free proceeds on maturity/death under Section 10 (D) of the IT Act of 1961.

Planning your retirement with fixed deposit schemes – interest rates, features and benefits

For most senior citizens, the income to run their homes from their savings comes from fixed deposit schemes. All the savings made throughout the years are converted into bank and Non-Banking Financial Companies (NBFC) fixed deposits as they are regarded as the safest kinds of investments by seniors. Most investors opt to earn monthly or quarterly income from their FDs and the interest earned is dedicated towards running the household in their years as retirees. Senior citizens also receive additional benefits on their FDs.

Features of the senior citizen FD scheme

While some of the features of a senior citizen fixed deposit are the same as those of regular FDs, others may differ. Both, regular investors and senior citizens can invest in FDs ranging from a period of 7 days to 10 years. However, senior citizens have the option to close their FDs prematurely, at any time. 
Furthermore, the interest rate depends upon the chosen deposit period. For most senior citizen FDs, the interest rate is calculated on a quarterly basis. Typically, you can invest up to ₹1 crore in senior citizen FDs. Some FDs which come with a 5 year lock-in period can prove to be a tax-saving option for the investors.

Interest rates under FD schemes for senior citizens

Both banks and NBFCs provide senior citizens with special interest rates on their fixed deposit schemes. While the interest rates on FDs offered by banks are slightly lower as compared to NBFCs, banks are still the safer option. Also remember that some lenders (mostly NBFCs) usually have certain terms and conditions that the investor must follow. These terms and conditions vary from bank to bank and NBFC to NBFC, although the general principal remains the same. Also, to avail the special interest, you must invest in an FD for a period more than 1 year as short-term deposits are not eligible for senior citizen interest rates. Here are the top 5 banks of 2018 that offer the best interest rates to senior citizens on their fixed deposit in India.


Bank  Less than 1 year 1-5 years 5 years and above
ICICI Bank 4.50% to 7.00% 7.00% to 7.25% 7.00%
SBI 6.25% to 6.90% 6.90% to 7.25% 7.25%
HDFC Bank 4.00% to 6.75% 6.255 to 7.00% 6.00%
Canara Bank 4.70% to 6.85% 6.50% to 7.00% 6.50%
HSBC Bank 3.50% to 5.50% 5.50% to 6.50% -

Keys benefits
Senior citizens can avail several benefits on their fixed deposits which include
• Accumulation and steady growth of their investments
• Higher interest rates as compared to regular fixed deposits
• Interest earned on FD schemes can be turned into monthly and quarterly income schemes, which is ideal for retirees with limited cash-flow
• FDs for senior citizens can also help them save taxes and the tax deductions can be claimed under Section 80C of the Income Tax Act of 1961

Top 3 premium credit cards in India and what makes them premium

A credit card is convenient. It allows the users to borrow money from banks for large and small purchases. The borrower must pay off the money taken on credit, back in time so as to avoid paying interest. Most credit cards come with several benefits, but users can get exclusive benefits only on premium credit cards. Sure, the user has to pay substantial annual fees for the premium cards, but the benefits offered make them worthwhile. While some common benefits of premium cards include complimentary airport lounge access, travel insurance and concierge services, many other exclusive privileges differ from card to card. Let’s find out the Top 3 best credit cards in India.

Standard Chartered Bank Ultimate credit card: The SBC Ultimate card is one that matches the holder’s premium lifestyle. It offers the best reward point value along with exclusive travel and dining privileges. This card is available for an annual fee of ₹5000. Here’s what makes it premium:

• Discounts of 25% at more than 250 restaurants in India
• 5% cashback on duty-free expenses
• Free priority pass membership which allows access to over 1000 airport lounges worldwide
• 24*7 concierge service
• Free air accident travel insurance worth ₹1 crore
• 25- 35% savings on international car rental with Hertz and Avis respectively

HDFC Regalia Credit Card: HDFC Bank’s luxury card, the HDFC regalia has some of the finest privileges on offers. You pay a small annual fee of just ₹2,500, waived off on annual spending of ₹3 lakh and above. This card is ideal for people who love to travel. You can also apply credit card online for HDFC regalia. Privileges on this card include:

• Free air accident travel insurance worth ₹1 crore
• Emergency hospitalization cover worth ₹15 lakhs overseas
• Option to convert reward points into air miles
• Exclusive dining privileges at top fine-dine restaurants in India
• 12 Complimentary accesses to airport lounges per year on the lounge program and additional priority pass membership
• 24*7 travel concierge service

American Express Platinum Reserve Credit Card: One of the best credit cards in India, American Express Platinum Reserve Card is a super-premium card. Card holders must shell out ₹5,000 as annual fees for the first year, and ₹10,000 as fees from the second year onwards. It is one of the premium cards for business travellers who require air travel and hotel benefits.

Here’s what makes the AmEx Platinum card a premium card:
• Multiple benefits and savings on booking travel packages via MakeMyTrip.com
• Privileges at some of the most luxurious hotels in India and abroad, including the Taj Group of Hotels, Oberoi Hotels and resorts and several other luxury hotels
• Free access to airport lounges especially designed for AmEx card holders
• Free Priority Pass membership
• Special wellness and health benefits at health care centres like Fortis Healthcare and Max Healthcare
• Complimentary access to several premium golf courses in India
• 24*7 dedicated concierge services for round the clock assistance on the credit card