Documentation and Eligibility for PPF account in India

Introduced in 1968, the public provident fund is a savings-cum-tax saving investment vehicle. The scheme is one of the most sought-after investment plans to park your savings for retirement. PPF is a 15-year plan, which can be extended for a block of 5 years. You can open the account in a designated post office or a bank branch. One can open a PPF account in almost all Indian nationalised 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. 

One of the advantages of investing in a ppf scheme is the tax benefits. Under Section 80C of the Income Tax Act, 1961, PPF contributions made every year are eligible for tax deductions. The tax deductions are eligible only for PPF contributions up to Rs 1.5 lakh in a financial year. Interests earned on PPF deposits are tax-free, while wealth tax is not applicable on PPF accounts. Therefore, PPF benefits you triple exemptions– the deduction on deposits, tax-free returns and no wealth tax. To claim these benefits on your public provident fund account, you need to submit the details of the PPF investments made in a year in your income tax returns.

Therefore, if you are looking for a safe investment option, you should consider opening a PPF account and earn guaranteed returns. Here is the documentation and eligibility process for the ppf scheme.

Eligibility:
Residents of India can open a Public Provident Fund account. A minor can open the account as well, but parents or guardians will operate it. Minor can hold their accounts after attaining the 18 years of age.

 Documents:
1) An identity proof & passport size photographs:
PAN card, driving license, aadhar card, passport or Voter ID card.

2) A residence proof:
Electricity bill, telephone bill or ration card

3) Nomination form:
You can fill the nomination form for the ppf scheme so that the amount will be paid to the appointed nominee, in the unfortunate event of your death or due to any permanent disability.

4) Pay-in-slip:
These slips are available at the bank branch or the post office.
You are advised to carry the original documents along with the Xerox copies. The authorities will verify the original documents but submit them along with the self-attested xerox copies of the certificates.
After opening the ppf account, the bank will issue a passbook to you. It will contain accountholder’s information such as name, number, photograph and the balance. The transactions made within the account will reflect in the passbook. You can also access the account if you have an online banking facility.

Benefits of education loan for abroad studies

You are happy to receive the acceptance letter from your choice of university abroad. I am pretty sure you are excited about starting the new chapter in your life in a new country. Though the prospect of having an overseas education is thrilling, it may get tedious to manage funds. Pursuing studies outside your home country is a costly proposition. Hence, an education loan is an essential element to control funds to study abroad. We curate a list of benefits about study loans so that you clear all your inhibitions and help you make an informed decision.

1) Loan amount:
Lenders grant education loan for abroad studies depending on the fees and other costs involved in the course. Usually, you can gain a credit up to Rs 75 lakh for studies within the country, and up to Rs 1.5 crore for abroad. The loan is granted on the basis of borrower’s necessity and financial condition. Loan amount, in this case, can be as high as Rs 40 lakhs.

2) Moratorium period:
Moratorium Period or EMI holiday states to the time when borrowers don't have to pay any EMI. It usually lasts for a year after completion of the course. Education loan, hence, saves borrowers from the burden of loan repayment, and give them enough time to find a job before loan repayment starts. However, consider paying the interest during the moratorium period to avoid accumulation of interest.

3) Loan tenure:
You can avail an education loan for up to 15 years. The repayment period begins after the moratorium period, hence, you get additional time to create sufficient corpus for paying off your educational loan. You can further request your financier to extend the tenure if you are unable to service EMIs. Keep in mind that you cannot continue the tenure beyond 15 years.

4) Tax benefits:
You can gain tax benefits on interest paid towards study loan under section 80E of the Income Tax Act of India, 1961. The tax advantage is available only for consecutive 8 years or until the loan is paid in full, whichever is earlier. If you take an educational loan on behalf of your child, only the parent would be eligible to avail tax benefits on repayments. The child cannot claim tax benefits even if he/she takes responsibility for repaying the education loan. Therefore, it is recommended to try a joint loan instead.

5) Rate of interest:
The education loan interest rate is usually lower than other loan options such as a personal loan. You can get an educational loan for as low as 8.85% per annum. Female applicants can receive an additional allowance of up to 0.5% on interests. Some lenders provide credit at a lower interest rate if you seek admission in a specialised course or institute. Hence, make sure you research and compare all available options before applying for a loan.

How to make the most out of your credit card?

Credit cards have a bad reputation, and most people consider it a worthy investment. A credit card is a type of a loan, where the money is borrowed from the card rather than debiting it from your personal account. However, several benefits are associated with credit cards as well. Using credit card responsibly will improve your credit score, and this will allow you to be eligible for the lowest interest rates on new credit cards and loans. We bring you a few tips on how to use credit cards and save from costly fees and high interest rates.

1) Make sure you have enough credit:
Using your credit card for all purchases requires you to have a credit large enough to support your spending. Make sure you are responsible enough while using the credit card. You can make purchases but also pay them in full and on time each month. With time, your credit card issuer will raise your credit limit. You can also pay off the amounts often during the month to free up credit so you can continue spending with your card.

2) Try not to withdraw cash:
Credit cards in India allow you to withdraw money from ATMs. However, it is advisable not to do so. There’s usually a fee associated with cash withdrawals, and it typically derives with a higher rate of interest and no interest-free period. 

3) Keep a check on credit card limit:
The best way to check your monthly statement is to maintain all of your credit card receipts each month, then tick them off against the charges on your statement. It will help you keep a tab on the things you bought, and the fees applied.  If you find your bill overstated, contact your credit card provider immediately and get it sorted.

4) Choose the best credit card:
You don’t have to approach your bank for a credit card. Lending institutions in the market issue various types of credit cards. Users may choose the one suited best to his/her needs and lifestyle. However, the very best deals are usually reserved for customers with a sound credit record. If you’re looking to make a big purchase, then a credit card with a 0% interest rate is what you need.

5) Cashing the rewards:
One of the popular benefits of using a credit card is receiving rewards at every purchase. You can score hundreds in cash rewards, miles, or points by using your credit card for all your monthly expenses. Of course, if your credit card issuer has a cap on the number of rewards you use, you may have to switch to another card to maximise the rewards you can earn.

Are you a first-time personal loan borrower? Read this

Personal loans will act like a true friend in times of an unforeseen situation of financial crunch. Whether you have to pay off for marriage expenses, home renovation or even sponsor travel plans, a personal loan is the best option. These loans are unsecured in nature that means you don’t have to pledge any securities to get them. Hence, personal loans in India come at a higher interest rate compared to home loans.

So it is advisable for the first-time personal loan borrowers to be careful while applying for a loan to receive better offers.

1) Keep a tab on your credit score:
A credit score is an essential parameter that lenders check while issuing personal loans to the applicants. Given that these are unsecured loans, banks will favour the applicants with a higher credit score. A higher credit score indicates the repaying capacity of the applicant. To improve your credit score, make sure you pay your bills on time and use your credit card as less as possible.

2) Pick your lender carefully:
Before applying for personal loans, it is important to conduct thorough research about the lending institutions. It is wise to pick the lender who offers you a lower rate of interest with better terms and conditions. You can shop around for the personal loan by applying online using an online aggregator. Know that interest rates differ widely from lender to lender, so explore your options.

3) Check your repayment capacity:
Banks usually ask for EMI payments during repayment of personal loans. You can calculate your monthly instalments capacity using an online Personal Loan EMI calculator to assess the right amount of EMI for your corresponding loan amount. Banks also conduct the repayment capacity valuation of the borrower at the time of yielding the loan. Hence, if you request for the right loan amount in the first instance, chances of your loan sanction becomes higher.

4) Eligibility:
Most banks require you to be employed for at least two years, and at least one year with the current employer. If you change your job often, the chances of your loan getting approved will be lesser. Also, your loan will not be accepted if you are serving a notice period. Banks also require a minimum income of Rs. 15,000 per month to consider you for a personal loan.

5) Proper documentation:
Lack of appropriate documentation can lead to rejection of your personal loan application. Documents required by banks include:
• Signed application form
• Residence proof (Passport, Driving License, Election ID card)
• Income proof (last 3 months salary slips, Form 16 or IT Returns)
• Identity proof (Aadhaar card, PAN Card, Voter ID, Driving License)

An investor’s guide on demat and trading account

Introduction:

A demat and trading account is just like a bank account. However, instead of holding money in your account, demat holds your securities – such as shares, bonds, or debentures. It is essential to maintain a demat account if you are planning to trade in securities. This electronic account will hold your securities serving as an alternative to the physical certificates. To continue trading in securities of the Indian market, the investor must open a Demat and trading account with a Depository Participant (DP).

Who is a Depository Participant?

While depositories are organisations that hold your securities electronically and also facilitate transacting, a Depository Participant (DP) act as agents between depositories and investors. The two depositories registered with SEBI for demat services are National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

The benefits of a Demat account:

1) Physical securities are prone to risks like thefts, losses, or damage. These risks are eliminated with the opening of a demat and trading account, that allows holders to save all their investments in electronic form.
2) The transaction cost is significantly lesser compared to the physical segment since here you don't have to pay stamp duty.
3) With the elimination of the paperwork, the time required for transactions is reduced. It enables the account holder to avail more of demat services and use it with more efficiency.
4)  We know it is a tedious task to maintain physical certificates. Moreover, keeping track of their performance is an extra responsibility. Through a demat account, users can track all their investments through a single account.
5) With physical certificates, buying and selling of securities were possible only in the specified quantities. The convenience of dealing with odd lots or single security was also not available. Demat accounts help investors this issue.

How to open a demat account?

Following are the steps on how to open a demat account and trading account with a depository participant (DP) registered with SEBI.

• Choose a Depository Participant (DP). Most financial institutions and brokerages offer this service.
• Fill the demat account opening form. Submit along with copies of the required documents and a passport-sized photograph. Also, carry the original documents for verification.
• During the process, an In-Person Verification would be conducted out. A member of the Depositary Participant’s staff would contact you to verify the details containing in the account opening form.
• Once the application form is processed, the DP will deliver you with an account number or client ID. You can use this details to access your demat services online.

How to do RTGS and what are its benefits

RTGS or Real Time Gross Settlement is a mean of money transfer that allows you to transact large sums of money instantly. It is an online process where the minimum amount of transaction has to be Rs.2 lakhs. There is no upper limit to the transactions. However, both the banks paying and receiving the money must be RTGS enabled. It is among the fastest and most secure means of financial transaction in the country with more than 100,00 bank branches offering the service.

How to do RTGS?

• You should activate the internet banking facility on your bank account if it is not already activated. Check if your bank and the bank you are transferring the money to are RTGS enabled.
• Log into your account and go to the page for RTGS transfers.
• Input details of the beneficiary such as name, account number, IFSC code etc. You also have to provide data such as the bank and the branch that holds the account.
• Enter the amount you wish to transact. All RTGS transfers charge a nominal fee, between Rs.25 and Rs.55, which depends on the amount being transacted.
• After you confirm the transaction, you will receive a password that you will have to enter to proceed with the transaction. This is an added level of security.

You get notifications on the successful completion of the transaction. In case you face any difficulty with the transaction, it is best to consult a representative of your bank.

Benefits of using RTGS

• It is an instant process, which does not require your physical presence in the bank. You can also do an offline submission at your branch in case you are not comfortable with online transactions.
• The charges for a transaction are lower as compared to other instruments for large money transfers such as a demand draft.
• It is a paperless transfer. Therefore, it avoids the complications that can arise from the loss of a cheque or demand draft. In case a transfer is not successful, the entire amount is credited back to your account in no time.
• The online process ensures that there is no forgery.
• The chances of default are eliminated, unlike cheques.
• The facility of instant transfer helps businesses to go about their daily transactions smoothly without any delays.

RTGS payments is a safe and secure mode of money transaction that has become extremely popular since its introduction by the Reserve Bank of India. Since there are no delays in the transfer, it helps new businesses to build a strong supplier and buyer relation.  The risk of loss and theft of money is also minimised with several levels of security checks. If you are looking to transfer huge sums of money in a hassle-free manner, RTGS payment is the most reliable transfer mechanism you can opt for.

Features and benefits of NRO account

NRO or Non-Resident Ordinary Accounts are for Indians who reside outside India for employment, business or any other purpose. These accounts are opened in Indian banks with funds that are sent from abroad. As the Foreign Exchange Management Act (FEMA) you cannot have a savings account in India if you are an NRI. However, if you live and work abroad, an NRO account can help you track and transfer money to your home account. To open an NRO account you have to show evidence in terms of visa permitting residence in a different country.

Features of NRO bank account

• An NRO bank account allows you to have a savings account, recurring account, current account as well as fixed deposit.
• An NRO account accepts deposits of money earned in India.
• The deposits in the account can be made using foreign currencies, traveller’s cheques, cheques in any currency as well as from any legitimate form of income in India.
• You can transfer the funds from a different Non-Resident Indian account or Foreign Currency Non-Repatriable account.
• If you are depositing foreign currencies, they will be deposited into your account as Indian currency at the existing exchange rate.
• 30% Income Tax is deducted at source on the interest earned in NRO account.
• You can easily invest in mutual funds and other investments through the NRO account.
• A minimum amount must be maintained in the account for it to remain active.

Benefits of NRO account

• You can retain your income and assets in India with an NRO bank account.
• Your dependents in the home country can access your funds in the NRO account.
• You can send money to India or withdraw money at any time.
• Transfer of money to the NRO account is free.
• NRO accounts have higher rates of interest.
• Every account holder gets a free chequebook and an ATM card. An additional ATM card is issued for use by a relative or friend in the home country.
• A local representative can manage the account. However, they must have a letter allowing them to do so.
• Free e-mail statements are issued.
• There is no restriction or upper limit on the withdrawals as long as you maintain the minimum balance in your account.

NRIs can only deposit their earnings in India in an NRO account. It is illegal to deposit such money into any other account. If you have a source of income in India, despite being settled abroad, an NRO account helps you to manage and organise your finances in India better and in a more efficient manner.