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Category: Latest Updates

Easy Steps to Claim Your EPF Covid-19 Advance

The Government has eased EPF withdrawal rules in order to help people access their funds amidst the COVID-19 pandemic. Here’s how you can do just that.

How Much Can You Withdraw?

You can withdraw an amount equal to three times your basic pay, plus Dearness Allowance (DA), or 75% of the credit balance in your account – whichever is lower.

Let’s do the math to understand this better. Assume that your basic salary + DA per month is Rs. 20,000 and your EPF balance is Rs. 2 lakh. You can withdraw the lower of the two:

3 months total of basic pay + DA = Rs. 60,000.
75% of EPF balance = Rs. 1,50,000.

In this example, option 1 would be your eligible amount.

How To Withdraw EPF For COVID-19?

To avail this benefit, ensure you have an active registration in the EPFO portal. You’ll need these three things:

An activated UAN number and portal login credentials
A verified Aadhaar number that is also linked with your PAN
Your bank account and IFSC code should be seeded with your UAN

Now that you have these in place, let’s see how you can go ahead and claim your advance for the COVID-19 pandemic:

Step 1: Log in to the EPFO e-Sewa portal by entering your UAN, password and captcha.

Step 2: From the top menu bar, choose Online Services. You’ll see a drop down menu.

Step 3: Select claim (form -31, 19, 10C and 10D)

Step 4: You’ll now be taken to a fresh page that contains your details such as name, DOB, Aadhaar info, bank details, etc.

Step 5: In the meantime, you’ll see a pop-up prompting you to submit a “certificate of undertaking”. Do as required.

Step 6: You’ll need to enter the last four digits of your bank account and verify it. Once this is done, click ‘Proceed for online claim’.

Step 7: You’ll now see a drop down menu – choose PF advance (form 31) from this menu.

Step 8: Under purpose of withdrawal, select “outbreak of pandemic (COVID-19)” from the drop down menu.

Step 9: Enter the amount you’d like to withdraw (assuming you know how much you can – refer earlier calculation)

Step 10: You’ll also need to upload a scanned copy of your cheque leaf (max. image size is 500 KB) and enter your address.

Step 11: Once all this is done, you’ll get an OTP on the mobile number that’s registered with your Aadhaar.

Step 12: Enter the OTP that you’ve received and click ‘Submit’. The request is now complete. You can wait for SMS updates regarding your claim.

Things to Keep in Mind Before You Apply for EPF:

Your EPF withdrawal amount for COVID-19 is non-refundable, so you don’t need to refund or replenish it at any given time.
This claim can be made only once, so decide your EPF claim amount carefully before going ahead.

Note: While you’re already there, check out the various sections of the UAN portal and see if all your info is accurate. Also, you can access the e-passbook which has all the entries pertaining to your EPF account(s). Do remember your login details, as this portal can come in handy at given time.

Government Updates, Latest Updates, Scheme

National Pension System

National Pension Scheme ( NPS )India is a voluntary and long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) and Central Government. NPS schemes have two options. Tier 1 and Tier 2. Tier 1 has a longer lock-in period (15 years for even partial withdrawal) as it is designed as a pension scheme which aims to provide income after retirement. Whereas investments in tier 2 is more like Savings account where you can withdraw money whenever you want. Tier 2 investments do not offer tax deductions whereas Investments in Tier 1 offer additional deductions of 50,000 per year.

What is NPS ( National Pension Scheme )?

The National Pension Scheme is a social security initiative by the Central Government. This pension program is open to employees from the public, private and even the unorganized sectors with the exception of those from the armed forces. The scheme encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement.

Earlier, the NPS scheme covered only the Central Government employees. Now, however, the PFRDA has made it open to all Indian citizens on a voluntary basis. NPS scheme holds immense value for anyone who works in the private sector and requires a regular pension after retirement. The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD.

Who Should Invest in the NPS?

The NPS is a good scheme for anyone who wants to plan for their retirement early on and has a low-risk appetite. A regular pension (income) in your retirement years will no doubt be a boon, especially for those individuals who retire from private sector jobs. A systematic investment like this can make a massive difference to your life post-retirement. In fact, Salaried people who want to make the most of the 80C deductions can also consider this scheme.

How to Open an NPS Account?

PFRDA regulates the operations of the NPS, and they offer both an online as well as an offline means to open this account.

a. Offline Process

To open an NPS account offline or manually, you will have to find a PoP-Point of Presence, ( it could be a bank too) first. Collect a subscriber form from your nearest PoP and submit it along with the KYC papers. Ignore if you are already KYC-compliant with that bank. Once you make the initial investment (not less than Rs. 500 or Rs. 250 monthly or Rs. 1,000 annually), the PoP will send you a PRAN – Permanent Retirement Account Number. This number and the password in your sealed welcome kit will help you operate your account. There is a one-time registration fee of Rs.125 for this process.

b. Online Process

It is now possible to open an NPS account in less than half an hour. Opening an account online (enps.nsdl.com) is easy, if you link your account to your PAN, Aadhaar and/or mobile number. You can validate the registration using the OTP sent to your mobile. This will generate a PRAN (Permanent Retirement Account Number), which you can use for NPS login.

Types of NPS Account

The two primary account types under the NPS are tier I and tier II. The former is the default account while the latter is a voluntary addition. The table below explains the two account types in detail.

Particulars	NPS Tier-I Account	NPS Tier-II Account
Status	Default	Voluntary
Withdrawals	Not permitted	Permitted
Tax exemption	Up to Rs 2 lakh p.a.(Under 80C and 80CCD)	1.5 lakh for government employees Other employees-None
Minimum NPS contribution	Rs 500 or Rs 500 or Rs 1,000 p.a.	Rs 250
Maximum NPS contribution	No limit	No limit

Note: The Tier-I account is mandatory for everyone who opts for the NPS scheme. Central Government employees have to contribute 10% of their basic salary. For everyone else, the NPS is a voluntary investment option.

Comparing NPS Scheme with Other Tax Saving Instruments

Apart from the NPS, the other popular tax-saving investment options under Section 80C are Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF) and Tax-saving Fixed Deposits (FD). Here is how they are in comparison to the NPS:

Investment	Interest	Lock-in period	Risk Profile
NPS	8% to 10% (expected)	Till retirement	Market-related risks
ELSS	12% to 15% (expected)	3 years	Market-related risks
PPF	8.1% (guaranteed)	15 years	Risk-free
FD	7% to 9% (guaranteed)	5 years	Risk-free

The NPS can earn higher returns than the PPF or FDs, but it is not as tax-efficient upon maturity. For instance, you can withdraw up to 60% of your accumulated amount from your NPS account. Out of this, 20% is taxable. Taxability on NPS withdrawal is subject to change.

Features & Benefits of NPS

a. Returns/Interest

A portion of the NPS goes to equities (this may not offer guaranteed returns). However, it offers returns that are much higher than other traditional tax-saving investments like the PPF. This scheme has been in effect for over a decade, and so far has delivered 8% to 10% annualized returns. In NPS you are also allowed the option to change your fund manager if you are not happy with the performance of the fund.

b. Risk Assessment

Currently, there exists a cap in the range of 75% to 50% on equity exposure for the National Pension Scheme. For government employees, this cap is 50%. In the range prescribed, the equity portion will reduce by 2.5% each year beginning from the year in which the investor turns 50 years of age. However, for an investor of the age 60 years and above, the cap is fixed at 50%. This stabilizes the risk-return equation in the interest of investors, which means the corpus is somewhat safe from the equity market volatility. The earning potential of NPS is higher as compared to other fixed income schemes.

c. Tax Efficiency – NPS Tax Benefit

There is a deduction of up to Rs. 1.5 lakhs to be claimed for NPS – for your contribution as well as for the contribution of the employer.

80CCD(1) covers the self-contribution, which is a part of Section 80C. The maximum deduction one can claim under 80CCD(1) is 10% of the salary, but no more than the said limit. For the self-employed taxpayer, this limit is 20% of the gross income.
80CCD(2) covers the employer’s NPS contribution, which will not form a part of Section 80C. This benefit is not available for self-employed taxpayers. The maximum amount eligible for deduction will be lowest of the below: a. Actual NPS contribution by employer b. 10% of Basic + DA c. Gross total income
You can claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit. The scheme, therefore, allows a tax deduction of up to Rs 2 lakh in total.

d. Withdrawal Rules After 60

Contrary to common belief, you cannot withdraw the entire corpus of the NPS scheme after your retirement. You are compulsorily required to keep aside at least 40% of the corpus to receive a regular pension from a PFRDA-registered insurance firm. The remaining 60% is tax-free now.

e. Early Withdrawal and Exit Rules

As a pension scheme, it is important for you to continue investing until the age of 60. However, if you have been investing for at least 3 years, you may withdraw up to 25% for certain purposes. These include children’s wedding or higher studies, building/buying a house or medical treatment of self/family, among others. You can make a withdrawal for up to 3 times (with a gap of 5 years) in the entire tenure. These restrictions are only imposed on tier I accounts and not on tier II accounts. Scroll down for more details on them.

f. Equity Allocation Rules

The NPS invests in different schemes, and the Scheme E of the NPS invests in equity. You can allocate a maximum of 50% of your investment to equities. There are two options to invest in – auto choice or active choice. The auto choice decides the risk profile of your investments as per your age. For instance, the older you are, the more stable and less risky your investments. The active choice allows you to decide the scheme and to split your investments.

g. Option to Change the Scheme or Fund Manager

With NPS, you have the provision to change the pension scheme or the fund manager if you are not happy with their performance. This option is available for both tier I and tier II accounts.

NPS Withdrawal Process

Exit Rule and Early Withdrawal Under NPS: It is vital that subscribers make investments towards the scheme until they reach 60 years of age as NPS is a pension scheme. However, under certain circumstances, subscribers can withdraw up to 25% of the invested amount if they have invested towards the account for 3 years. Given below are the different cases under which early withdrawal is allowed:

In case the children of the subscriber are getting married
For higher studies
For buying or building a house
In case of medical treatment of the subscriber or his/her family members

NPS Withdrawal is possible for a maximum of 3 times under the scheme and there must be a minimum gap of at least 5 years between withdrawals. The early withdrawal process is applicable to only Tier-I account. Under Tier-II accounts, the entire investment can be withdrawn.

Withdrawal After Attaining the Age of 60: The entire investment made towards the scheme cannot be withdrawn once the subscriber reaches the age of 60 years old. It is mandatory that subscribers retain at least 40% of the investment in order to receive a pension. The pension is given to subscribers from an insurance firm that is registered under the PFRDA. The remaining 60% can be withdrawn and no tax needs to be paid on it.

Documents Required for Withdrawal NPS Amount

Given below is the list of documents that must be submitted in order to withdraw the amount from NPS:

Withdrawal form
Original PRAN card
Proof of identity that has been attested must be submitted
A cancelled cheque must be submitted

Frequently Asked Questions (FAQs)

Q.Following retirement, are employees engaged in government service eligible for leave encashment as per the guidelines of the NPS?

A.No. Leave encashment is not allowed as per the guidelines of NPS laid down by the CCS and does not count as a component of the benefits available to the employee after retirement.

Q.What is the reason behind the compulsory utilization of a minimum of 40% of the accumulated pension funds to buy annuities after retirement?

A.The main reason behind this move is to ensure employees in government service will still obtain a regular and stable income every month following their retirement.

Q.Which body is responsible for the calculation of interest with regards to the NPS?

A.The interest is calculated by the The Pension Accounting Office, who is the official body appointed for this particular task.

Q.Which agency or office will be responsible for contribution deductions In the event of the transfer of an employee during the course of the month?

A.The office that draws the salary of the subscriber for the maximum amount of time during the month will be responsible for the deduction of contribution towards the NPS.

Q.What are the KYC documents required to enroll for NPS through SBI?

A.The following documents are required to be submitted at the time of making the application:

Subscriber Registration Form
Photo ID Proof
Proof for Date of Birth
Proof of Residence

Q.What are the different modes of payments available with SBI Pension Funds Pvt. Ltd.?

A.The following modes are accepted by SBI for NPS premium payments:

Direct payment at an SBI Life branch
Through standing order on credit card
Online payments
Electronic Clearing Service
Payments through SBI Life’s mobile app
Through National Automated Clearing House (NACH)
Through POS terminals at authorized SBI Life branches

Q.How to check the status of your NPS account in SBI?

A.Simply login to the SBI Life customer portal and fill in details such as Customer ID and NPS policy number to view your current status.

Q.What are the minimum contribution amounts for Tier I and Tier II accounts?

A.The minimum contribution amount for Tier I accounts is Rs.500 per month and that for Tier II accounts is Rs.250 per month. Subscribers should also maintain a minimum balance of Rs.6000 for Tier I and Rs.2000 for Tier II at the end of the year.

Q.How does SBI settle the NPS claims?

A.You need to submit the settlement form along with the essential documents for claim settlement at the branch where you maintain your NPS account. For details on claim settlements you can send an email to claims@sbilife.co.in. The final decision on claims will be based on the disclosures made in the proposal form by the subscriber.

Q.Who provides annuity on withdrawal or maturity under NPS?

A.The insurance companies licensed by the IRDA and authorized by the PFRDA act as the annuity service providers to NPS subscribers.

Q.Is NPS an easily accessible system of long term investments?

A.NPS is a cost effective, flexible and portable retirement savings scheme in which the wealth accumulated depends on the contributions made by the individual.

Q.What are the features of NPS app?

A. Using the NPS app, you can raise a request for a transaction statement for the particular fiscal year. You can also view the details of scheme-wise units and update your contact information.

Scheme, TAN, Tax

What is National Securities Depository Limited (NSDL)?

When we talk about the Indian Financial Market, the only reference that comes in our mind is of the National Securities Depository Limited (NSDL). This organization plays a key role, as a mediator and a loyal supporter of investors and brokers who strand their trade in the Indian Financial Market.

NSDL was founded on 8th November 1996. It is India’s largest Central Securities Depository. NSDL based in Mumbai and was the brainchild of a National Economic group. The focus of the group was on building a robust system to handle securities. These securities are used in dematerialized format in the Indian financial market. It is now very much essential to change the practices of paper-based trade settlements which is century old. NSDL is considered a counter to paper-based systems.

History of NSDL

In August 1996, lawmakers introduced, Depositories Act that led to the creation of NSDL. Since then, NSDL has played a key role in creating products and services which benefit stakeholders. Indian Financial Market has been functional for a long time, a while back, the market is facing some issues with this paper-based route of settlement of trades. At that time a reliable and refined system, NSDL became a very popular institution in India because of simplicity associated and the fact that the transacting under the depository system is infinitely cheaper as compared to transacting with certificates.

What do you understand by ‘Securities’?

‘Securities’ are defined as a financial asset that is subject to trading. Securities counted as a financial instrument which comes in the form of common stocks, equity, warrants, fixed income securities such as:

As stocks, ownership in a publicly traded entity
As bonds, relationship with a Government body as a creditor
Ownership rights as represented by an option

Securities comes with a specified financial value which is negotiable, interchangeable and usually segregated into equities and debts.

Debt securities include:

Private-sector bonds and Public sector bonds
Deposit certificates
Stocks

Equities represent:

Shareholder ownership in a corporate entity
Usually comes in the form of stocks

Difference between owner of Debt securities and Equity securities

The major difference between owners of Debt securities as compared to owners of Equity securities is that the latter is making profit generation from capital gains. An entity that generates securities is known as the issuer.

Which banks are the principal shareholders of NSDL?

State Bank of India
Standard Chartered Bank
Axis Bank
Deutsche Bank
HSBC Bank
Union Bank of India
HDFC Bank
Dena Bank
Canara Bank
Oriental Bank of Commerce
Citi Bank

Advantages Offered by NSDL

No More Bad Deliveries: Every buyer in the Indian Financial Market needs to take massive risks of undertaking a transaction without getting any confirmation about the quality of assets that they are going to be purchased. This problem, one does not have to face in the case of using a depository platform. With NSDL, there is no question of being left with a situation of ‘under objection’.

Exemption from Stamp Duty: In traditional means, one must do the transfer of securities but by making use of the depository system, there is no need to have stamp duty in case of equity shares, mutual funds, and debt instruments.

Fast Settlements and Quick Turnarounds: Fast turnover appears in those cases where trades are being settled down on the second working day from the actual trade day. It will result in getting higher liquidity with the investor by using a depository platform.

Elimination of Use of the Paper: In earlier times, using paper certificates to deal with securities led to the creation of many obvious problems. It creates a possibility of certificates being stolen, destroyed, mutilated subject to atmospheric and weather conditions. But now with the help of depository systems, there is a predominant reliance on online solutions.

Fast Transfer and Registration of Securities: Traditionally, when the purchase of securities is done, investor had to forward the information to the company’s registrar to ensure a change of ownership and secondly, to get it duly recognized and registered. It is a time-consuming process. This process usually takes 3-4 months. With the help of a depository environment, as soon as payment confirmation is given, concerned securities are attached with the investor’s account and he or she becomes the legal owner of the transferred securities.

Avoid Maintaining an Offline Repository of Associated Literature: When you are doing online transactions of securities, it leads to using fewer papers and non-existent files and folders. Online, everything is available just with a click of button as per the convenience of the investor.

Easy Maintenance of Periodic Status Reports: With the help of a depository ecosystem, it becomes easier for investors to keep a regular update with regards to transactions and purchase or sale of securities. It will help investors to have a better understanding of the procedures and adjustments that he or she must undertake for a profitable future.

Quick Disbursements of Non- Cash Corporate Benefits: One of the major advantages of the NSDL system is that it offers investors the ability to make quick transfers of non-monetary corporate benefits. Since all the process happens via social media, risk of loss of paper-based certificates is nullified. Transfer of securities has taken place in a safe, quick and accountable manner.

Broker Friendly: The creation of a depository environment eliminates the cost which is incurred in the handling of the lengthy paper trails and eliminates the risk faced by the broker as an introducer.

Easily Changes Can be Made in Address: In the traditional system, when the investor is willing to change the address, the process is that the investor needs to update the same to the registrar through a paper dominated process. It is quite a lengthy process. In the Depository system, address change is reflected in the individual database of the company where the investor is listed as the registered owner of securities.

Transmission of Demat Shares: When it comes to NSDL, transfer of securities held in the Demat Account. It involves simple provision of required documents to the concerned department in a smooth manner.

Sale of Securities for Minors: The guardian is responsible for doing sale of securities for the minor when you are using a depository platform and there is no requirement of seeking approval of court of law for the same.

What are the services offered by NSDL?

Basics services include:

Account Maintenance
Market transfers which help in facilitating of trade settlements
Dematerialization
Rematerialization
Nomination or transmission
Off market transfers

Services targeted to: Investors, Brokers, Banks, other security issuers who participate in the Indian Financial market.

Value added services:

Electronic study and trade settlement services
Special Value-added offerings which includes delivery of securities.
Hypothecation and pledge
Lending of stocks
Online services such as SPEED-e and IDeAS
Distribution of cash and non- cash corporate benefits.

Note: NSDL is known for making electronic innovations which work as a system that allow brokers to transfer the contract notes to custodians or fund managers via online media.

NSDL Consolidated Account Statement

Help subscribers to access all their financial assets that too electronically in the form of a single Demat account.
NSDL CAS statement includes references to a popular instrument such as mutual funds, equity shares, bonds, government securities which are being held in debentures, demats or instruments concerning money market etc.
NSDL CAS is one of the popular tools which helps an investor to track his or her investment portfolios.

Online Services Offered by NSDL

Online services offered by NSDL are also known as e- services which will help players of various stature of Indian Financial market in conducting their business in a better way.

SPEED-e

It is a common form of internet infrastructure which allows depository participants (including clearing members) to offer depository services to the clients. Demat account holders subscribing to this facility for giving delivery instructions to the Depository participants. The users of SPEED-e can also check the latest transactions and balances in their Demat account through another online service that is an Internet-based Demat account statement and it can also monitor the status of execution of their instructions.

The most important benefit of SPEED-e is the convenience of submitting delivery instructions through the internet. Clients can access the SPEED-e website from anywhere in the world and at any point of time.

Internet Based Demat Account Statement (IDeAS): This idea was launched on January 01, 2004. It helps the Demat account holder to view the transactions and balances of the last 30 days regarding his or her Demat account via online media. It is available for the users of SPEED-e. In this, brokers can also download the information and can update in their back offices.

STEADY

When you are looking for transfer and management of securities, for this NSDL introduced STEADY that is primarily responsible for communicating of contract notes that come from a certified broker given to intended fund managers. Services include requisite digital signatures. Apart from that STEADY also recipient fund managers modifying and enhancing the contract notes. STEADY is best for FII and domestic institutional trades.

Depository Account Validation

Depository Account Validation (DAN) is a secured online platform which offers subscribers to do authentication of identities such as DP ID, PAN details of investors or client ID. This option allows the subscriber of NSDL to give confirmation regarding the basic details of the investor community. Also ensure greater reliability and trust to the investor. DAN is applicable for public issues, public offers etc., and is also offering services to lead managers and syndicate members.

SPICE

SPICE stands for ‘Submission of Power of attorney-based instructions for clients electronically’.
Refers to time saving action wherein clearing members (It is for those clients who have bestowed the (Power of Attorney) in favor of respective clearing member).
It can utilize the SPEED-e to give auto pay instructions to participants and get it debit from the Client’s Demat accounts hosted here and consequently credit the pool accounts which belong to the Clearing member.
It also helps in eliminating the cumbersome routine of giving paper-based delivery instructions to the participant.

SIMPLE

It stands for ‘Submission of Instructions Through Mobile Phone’. It is very simple and a fast process.
It is one of the most convenient facilities which allow the users of SPEED-e to utilize a password for login, to ‘simply’ issue Client to Clearing Member Pool Account transfer instructions using their registered mobile phones.
After that, the subscriber also must log on to the website of SPEED-e via GPRS enabled Mobile phone and affect the transaction.

Application Fee: NSDL Services

Here you can check the comprehensive listing regarding the minor and major charges which are applicable for availing the NSDL services to its Depository participants, subscriber and issuers.

Services offered by the NSDL	Application fee charges
Entry Fees	Rs 25,000(It is non-refundable)
Pledge Fee	Rs 25 for each instruction given for the creation of hypothecation or pledge.
Settlement Fee	Rs 4.50 per debit instruction given by NSDL
Fee taken for dematerialization of securities	NIL
Fee taken for dematerialization of securities	NIL
Minimum Fees	Rs.1,00,000 (if fee charged to the Participants is less than this, than the difference will be charged thereof).
Security Fees	Each Participant must pay an interest free refundable security deposit of Rs.10 lakh. However, Clearing Corporation/House of a Stock Exchange will be exempt from this.

Details Regarding Applicable Fee for Issuers

When we are talking about the case of issuer, he or she is applicable to pay an annual custody fees at the rate of Rs 8 per portfolio (ISIN Position) in NSDL, provided the minimum amount (plus service tax) is as listed below:

NOMINAL VALUE OF SECURITIES ADMITTED	AMOUNT
Less than or equal to Rs 5 Crore	Rs 6000
Above 5 Cr but less than 10 Cr	Rs 15000
Above Rs 10 Cr but less than 20 Cr	Rs 30,000
Above Rs 20 Cr	Rs 50,000

In order to make shares available for dematerialization, an issuer of unlisted securities is required to make a payment of joining fees of Rs 30,000(plus taxes). However, if the issuer can make listing of securities in any certified stock exchange within one year of joining NSDL and crediting of the joining fees, then the issuer gets an advantage of adjusting one-time custody fees or annual custody fees, whichever is applicable.

How to Become NSDL Business Partner

NSDL is one of the premier organizations that offer a range of services to Depository Participants (DP), Agents, Stock Exchanges as represented by the clearing houses and issuers. NSDL considered their participants as Business Partners. NSDL requires these partners to be fully integrated into its own depository system. Their aim is to give services to investors and clearing members efficiently and effectively.

Ways to Achieve Status of Privileged Business Partner of NSDL

As a Depository Participant (DP)

NSDL reaches out to its target investors by making use of a medium known as Depository Participant.
These participants are basically entities and organizations that provide financial services.
They have set infrastructure that can be utilized by NSDL to reach its target audience. It includes banks, brokers, financial institutions, custodians etc.
Working of DP and NSDL in combination is considered as a two prolonged process. It also includes both evaluation and confirmation by the Securities and Exchange board of India (SEBI).

As an Issuer

Aim of the issuer is to become a part of NSDL machinery to offer Demat facilities to its privileged shareholders by taking advantage of securities which are listed under NSDL.
In order to become, NSDL business partner, an issuer must submit the required set of documents followed by three blank copies of three-part agreement made by NSDL and R&T agent.
Both R&amp;T agent and issuer must sign the agreement and return it back to the NSDL at the specified contact address.
NSDL issues an ISIN (International Securities Identification Number) to facilitate these activities with an aim of helping with future transactions.

As a R&T Agent

The need for R&T agents (Registrar and Transfer agents) in the NSDL format lies with the fact that issuers may use the computer facility. This facility is basically known as DPM-SHR which is usually built in house by the issuer or borrowed from the R&amp;T agent for the creation of securities in Demat form.
Securities in Demat form can be created in two ways and can extinguish also in two ways. The control of effecting these crucial actions retained by the R&amp;T agent and by the issuer. It will further help in the process of lending out the computer facility which is required to confirm upon and action these activities.

How a R&T Agent Can Align with the NSDL as a Business Partner?

Making introduction through a formal letter issued by NSDL.
Procuring of necessary software and hardware components/configurations.
Procuring of Multi-protocol Label switching (MPLS) Line.
Submitting of Form B to NSDL, preceded by installing requisite software/ hardware/ network systems and peripherals.
Submission of stipulation fees for the procurement of the DPM-SHR software.
Giving of comprehensive training to personnel regarding operations and equipment.
Doing Pilot training to ensure the proper working and response of the configured software system.
Getting confirmation of status of R&amp;T agent at the time when NSDL activates business partner in the form of share registrar.
Post the above actions, the subscriber is an active R&T Agent on the NSDL ecosystem.

As a Clearing Corporation/House

In the business, doing settlement of shares and average stock exchange. It needs a robust settlement mechanism which is offered by a typical clearing corporation which is also known as a clearing house.
Securities and Exchange board of India must have to give approval before said settlement guarantee mechanism can be floated in the larger market.

What are the Admission Criteria to Become a NSDL Business Partner?

NSDL must be convinced that the concerned Clearing Corporation or House will make flawless and timely payment against delivery or guarantee settlement.
NSDL is satisfied with the clearing corporation /house ‘operational acumen to provide services that are directly related to clearing/settlement of transactions in terms of securities and is being given to the depository in its dematerialized form.
Clearing corporation /house is sympathetic to the concerns and queries of the participants and is always ready to address such concerns and queries.
Clearing Corporation House must possess all the necessary software and hardware systems which are deemed crucial to make an interaction with the Depository without timeouts and lags.
Overall modus for a Clearing Corporation house to join the NSDL as business partner is the same as the procedure applicable to become Depository Participant (DP).

As an Investor

Role of an investor is very crucial as it allows the system to work flawlessly. The Indian Capital market has too risen leaps and bounds. It is all possible because of the faith shown by average investors. They are superiorly aided by NSDL to ensure settlement of trades without any glitch.

Procedure to Get Investor Onboard the NSDL Ship Are As Follows:

Investors must open a beneficiary account with a Depository Participant. It is almost the same procedure as opening a bank account.
Investor can deposit, transfer or hold securities from her or his beneficiary account without moving any share certificates. It is similar to managing a normal savings account without physically meeting the cash transactions.
The account which is opened in the depository system is known as; Beneficiary account’ and account holder is known as ‘Beneficial owner’.

As a Broker

When we think about the Stock Exchange, the first thing that comes into our mind is stockbrokers. They are acting as a loud determined warrior in the game of bull and bears.
Brokers are serving as an important and irreplaceable link between investors and the associated Clearing Corporation / House operating in the Depository system.
All sale and purchase of securities are sourced through concerned Clearing and corporation house-based depository accounts.

What a Broker Must Do in Order to Participate in the System and Settle Trades in Dematerialized Securities?

Brokers must operate a clearing account with any Depository Participant (DP) of his or her choice.
Make sure that account is utilized only for reception and transfer of shares from and to the concerned Clearing Corporation /House. So, the broker herself or himself does not retain any ownership over the shares.

Safety and Securities with NSDL

In NSDL, precautions are maintained to ensure safety of the investor holding. Here is the list of safety protocols:

SEBI (Securities and Exchange Board of India) is a watchdog which ensures selection of the Depository Participants and only credible entities are selected. Apart from SEBI evaluation, proposed Depository participants must also pass the strict evaluation which NSDL is conducting on its own.
Every enacted transaction must be duly recorded on the central server of NSDL and on individual databases maintained by various business partners.
All investors should receive periodic account statements from their respective depository participants and are also allowing them to have complete control on their individual securities portfolio.
NSDL conducts a regular check into the activities of Depository Participants and R&T agents.
One of the most interesting precautions taken by NSDL is forwarding of the account statements to a random list of investors as a secondary reference. The investor is now able to make comparison between statements that are issued by his or her depository participant against the one that is issued by NSDL to check discrepancies.
Depository Participants are not allowed to action any credit or debit request to the concerned account without verifying instructions from the client.
Exchange of data between business partners and NSDL is being strictly protected by encryption in accordance with the latest technologies available in the market. The encryption systems implemented by NSDL are more robust that ones which are prescribed by the Securities and Exchange Board of India.
There is a Freeze facility which allows an account holder to freeze the securities that are existing in her or his depository account if he or she wants. Freezing accounts prevents the performance of any desirable/accidental/malicious activity. By requesting the DP (via the proper format), an account holder can activate any of the following freeze options-
- Debits only
- Debits & Credits
- Freezing just an individual ISIN in the account
- Freezing a specified number of securities that exist as part of an ISIN in an account.
Another important action point of NSDL is grievance redressal. All those grievances raised by the investor must be addressed by the concerned business partner. If the business partner will not properly acknowledge the problem of investors, then investors in that case can directly approach the NSDL. Complete contact information is available on the website of NSDL.
NSDL has a potent insurance policy in order to provide compensation to investors for the possible loss that could be incurred by them due to such unforeseen or accidental mistakes as omissions, errors or loss due to the concerned DP’s negligence.
NSDL makes sure that business partners utilize computer hardware and software that is cutting edge and conforms to the set industry standards.
To ensure NSDL presence is available 24×7 and should not get impacted by any natural calamities or manmade calamities, a disaster backup website is maintained. This website features a computer which is identical to the mainframe computer and is always available to take the lead as and when the mainframe computer is rendered non- operational.

Latest Updates, Scheme

Kisan Vikas Patra – Eligibility, Benefits & Interest rates

Kisan Vikas Patra is a certificate scheme from the Indian post office. It doubles a one-time investment in a period of approximately 10 years & 4 months (124 months) according to the latest update. The scheme is designed to encourage long-term investment and savings amongst the masses. It is suitable for investors who are reluctant to risk taking, have surplus money and are looking for assured returns. With an effective interest rate of 6.9% (for Q1 of FY2019-20), Kisan Vikas Patra is a popular investment instrument given its low-risk and guaranteed returns. Interest is compounded annually. The minimum investment is Rs. 1000 and there is no upper limit. However, premature withdrawal can be allowed after 30 months.

What is Kisan Vikas Patra?

India Post introduced the Kisan Vikas Patra as a small saving certificate scheme in 1988. Its primary objective is to encourage long-term financial discipline in people. As per the latest update, the tenure for the scheme is now 124 months (10 years & 4 months) if you purchase the certificate between 1 April 2020 and 30 June 2020. The minimum investment is Rs. 1000 and there is no upper limit. And if you invest a lump sum today, you can get double the amount at the end of the 124th month.

Initially, it was meant for farmers to enable them to save for long-term, and hence the name. Now it is available for all. To prevent the possibilities of money laundering, the 2014 government made PAN Card proof compulsory for investments above Rs. 50,000. To deposit Rs. 10 lakhs and above, you must submit income proofs (salary slips, bank statement, ITR document etc.). It is a low-risk savings platform, where you can safely park your money for a certain period. Further, it is also mandatory to submit AADHAAR number as proof of identity of account holder.

Types of Certificates Available

A Kisan Vikas Patra certificate can be of the following types:

Single Holder Type Certificate: This kind of certificate is issued to an adult for self or on behalf of a minor or to a minor.
Joint ‘A’ Type Certificate: This type of certificate is issued jointly to two adults, payable to both the holders jointly or to the survivor.
Joint ‘B’ Type Certificate: This type of certificate is issued jointly to two adults, payable to either of the holders or to the survivor.

Kisan Vikas Patra Eligibility

The applicant must be an adult and a resident Indian.
The applicant can apply for Kisan Vikas Patra in their own name or on behalf of a minor.
Trusts are eligible to invest in Kisan Vikas Patra. HUFs (Hindu Undivided Family) and NRIs are not eligible to invest in KVP.

How to Apply for Kisan Vikas Patra Online

The process to invest in the Kisan Vikas Patra online scheme is simple. The steps mentioned below can be followed:

You must obtain the KVP application form i.e. Form-A, from the post office.
Furnish all the relevant details on the form and submit it at the post office.
In case the investment is being made with the help of an agent, a second form will be required to be filled up and submitted. The agent must fill in Form-A1.
Both the forms i.e. Form-A and Form-A1 are available for download on the official website as well. The forms can be downloaded online, filled up, and submitted.
You will be required to furnish a copy of one of your identity proofs for the Know-Your-Customer (KYC) process. You can use one of the following documents – Aadhaar Card, Driving Licence, Passport, Voter ID Card, or PAN Card.

Note: Your KVP Certificate will be issued once the documents provided by you are verified and the necessary deposits are made. You can also opt to receive the KVP Certificate through email. In that case, the certificate will be sent to you on the registered email ID.

Documents Required

ID and address proof copy (PAN, Aadhaar, Voter’s ID, Driver’s License, or Passport)

Kisan Vikas Patra Interest Rate

The current interest rate was reduced from 7.6% to 6.9%. The maturity period was also increased from 113 months to 124 months. The principal amount can be withdrawn after this period only.

Kisan Vikas Patra Maturity Period

The maturity period for Kisan Vikas Patra that was introduced in 2014 is 8 years and 4 months. On maturity, the amount invested gets doubled. If you invest an amount of Rs.10,000, after a period of 8 years and 4 months, the amount will increase to Rs.20,000. The current interest rate of Kisan Vikas Patra was reduced from 7.6% to 6.9%. Therefore, the invested amount will double in 9 years and 5 months to 10 years and 3 months (i.e. 113 months to 124 months) for Q1 of FY 2020-21.

The following are the historical interest rates offered by the Kisan Vikas Patra scheme

Time Period	Interest Rate of KVP
Q1 FY 2020-21	6.9%(maturity in 113 months)
Q4 FY 2019-20	7.6%(maturity in 113 months)
Q2 FY 2019–20	7.6%(maturity in 113 months)
Q1 FY 2019–20	7.7%(maturity in 112 months)
Q4 FY 2018-19	7.7%(maturity in 112 months)
Q3 FY 2018-19	7.7%(maturity in 112 months)
Q2 FY 2018-19	7.3%(maturity in 118 months)
Q1 FY 2018-19	7.3%(maturity in 118 months)

Note: Principal has compounded annually

How KVP Doubles the Money

Here is an example of how interest accrues and doubles at maturity upon investment of Rs.1,000 in KVP.

Encashment After	Amount to be Received (Including Interest)
2.6 yrs but less than 3 yrs	Rs.1,176
3 yrs but less than 3.6 yrs	Rs.1,215
3.6 yrs but less than 4 yrs	Rs.1,255
4 yrs but less than 4.6 yrs	Rs.1,296
4.6 yrs but less than 5 yrs	Rs.1,339
5 yrs but less than 5.6 yrs	Rs.1,383
5.6 yrs but less than 6 yrs	Rs.1,429
6 yrs but less than 6.6 yrs	Rs.1,476
6.6 yrs but less than 7 yrs	Rs.1,524
7yrs but less than 7.6 yrs	Rs.1,575
7.6 yrs but less than 8 yrs	Rs.1,626
8 yrs but before 8.6 yrs	Rs.1,680
8.6 yrs but less than 9 yrs	Rs.1,735
9 yrs but before maturity	Rs.1,793
On maturity	Rs. 2,000

Kisan Vikas Patra Form

In order to purchase a Kisan Vikas Patra certificate, one must fill in the application form and furnish the required information. The required information must be provided in the identity slip also. In the application form, you will be required to mention the following details:

The amount for which KVP certificate is to be purchased.
The method of payment which can be either cash or cheque
Type of KVP certificate, whether it is single or joint “A” or joint “B”
The name of combined owners if KVP type is not single
In case of minor, the date of birth of the minor and his guardian who can encash KVP amount
Name of all nominees with full address and date of birth

This form must be duly signed by the investor. The date, address, and signature of witness to nomination will also be specified in the slip.

In the identity slip, information like the serial number of KVP certificate, issue price, date of encashment, and postmaster signature and remarks like that of duplicate issue and transfer will be mentioned. To encash the KVP, one must present the identity slip. Hence, mentioning the right details in KVP identity slip and KVP Form is of utmost importance.

Nomination

Single holders or joint holders of a certificate can make a nomination by filling up the details in Form C at the time of purchase. You can nominate any person so that the nominee will be entitled to the benefits of the certificate in the event of the death of the single holder or both the joint holders.

If the nomination is not made at the time of purchase, the single holder, joint holders, or the surviving joint holder can make a nomination at any time after the purchase of the certificate but before the maturity by submitting the duly filled Form C. Submit it to the postmaster or bank officer where the certificate is registered.

However, no nomination can be made if the certificate is applied for and held by or on behalf of a minor. If a nomination is made in this case by the holder or holders of the certificate will be cancelled or altered using Form D.

When you have more than one certificate registered on different dates, you have to make separate applications for the nomination, cancellation of the nomination, or variation of the nomination. Such an application will be effective from the date of its registration and will be noted on the certificate. Nominations made for the first time are free-of-cost. Subsequent nominations or cancellation will be charged at Rs.20 per application.

How to Transfer Kisan Vikas Patra Post Office Online?

For the convenience of subscribers, the Department of Posts, India has granted access to transfer of certificates from one post office to another.

To initiate the transfer from the registered post office to any other post office, the account holder must fill the KVP Transfer Form-B and submit it along with all the required documents at the registered Post Office:

Download here KVP-Form B

Features & Benefits of Kisan Vikas Patra

Guaranteed Returns

Regardless of the market fluctuations, you will get the sum guaranteed. As this scheme was originally intended for the farming community, the priority was to encourage them to save for rainy days.

Capital Protection

It is a safe mode of investment and not subject to market risks. You will receive the investment and gains when the tenure ends.

Interest

The effective interest rate for Kisan Vikas patra varies depending on the number of years invested in KVP at the time of purchase. The current interest rate is 7.7% for the quarter 1 October 2018 to 31 December 2018 prior to which the rate was 7.3%, compounded yearly. By compounding the interest, you will receive more returns on your deposit.

Tenure

The maturity period for Kisan Vikas Patra is 124 months and you can avail the corpus then. The maturity proceeds of KVP will continue to accrue interest till you withdraw the amount.

Taxation

It doesn’t come under the 80C deductions, and the returns are completely taxable. However, Tax Deducted at Source (TDS) is exempt from withdrawals after the maturity period.

Rules to Premature Withdrawal

You can withdraw the amount after 124 months. But the lock-in period is 30 months. Encashing the scheme early is not allowed, unless in the account holder’s demise or court order.

Ease & Affordability

KVP is available in denominations of Rs. 1000, Rs. 5000, Rs. 10,000 and also Rs. 50,000 for investment. There is no maximum limit. Please note that denominations of Rs. 50,000 are available only at the head post office of a city.

Loan Against KVP Certificate

You can use your KVP certificate as collateral or security to avail secured loans. The interest rate is comparatively lesser for such loans.

Nomination facility

Collect a nomination form from the post office, and fill up the required information of the nominee. If you are nominating a minor, mention the date of birth.

KVP Certificate Issuance

If payment is done through cash, they issue the KVP Certificate on the spot. And for Cheque, Demand Draft or Money Order, you will have to wait till the amount is cleared to the post office.

KVP Identity Slip

This includes the Kisan Vikas Patra Certificate, the KVP serial number, the amount, the maturity date and the amount to be received on the date of maturity.

Q. Can the Post Office issue a Duplicate Kisan Vikas Patra ?

A.In the event of a loss, mutilated, defaced, or stolen KVP certificate, the buyer can apply for a duplicate KVP certificate. To do this, the investor has to provide the identity slip provided to him/her at the time of issue of the original certificate.

Q. Can Kisan Vikas Patra be Encashed Only at the Issuer Post Office?

A.KVP certificates can be easily encashed at the issuer post office. In case of an emergency, the buyer can encash it through other post offices as well. However, the buyer has to produce the identity slip along with the KVP certificate at the time of encashment.

Q. Are Co-operative Banks/Co-operative Societies Permitted to Invest in Kisan Vikas Patra?

A.According to rule 6 of Kisan Vikas Patra, co-operative banks and cooperative societies are not permitted to invest in this scheme.

Q. Can Kisan Vikas Patra be Purchased by Non-Resident Indians?

A.NRIs are not eligible to purchase KVP certificates.

Q. Can Kisan Vikas Patra be Purchased by the ‘Karta’ on behalf of a Hindu Undivided Family (HUF)?

A.There is no provision in the rules for purchase of a Kisan Vikas Patra by the ‘Karta’ on behalf of a HUF.

Q.How to transfer KVP Account?

A.KVP can be transferred from one Post Office to another or from one person to another. In case of transfer from one Post office to another, a set of forms need to be submitted to the Post’s Director General. On the other hand, in case of transfer from one person to another, an application referring to the same needs to be published.

Q. Is Kisan Vikas Patra interest taxable?

A.The interests on KVP are taxable on an accrual basis every financial year and tax is applied on the same as ‘Income from other sources’.

Q. Who should apply for Kisan Vikas Patra?

A.The individuals looking for a saving scheme which gives them 100% security, long-term savings, fixed rate of interest and collateral for loan should apply for Kisan Vikas Patra.

Q. How to encash KVP?

A.The encashment of KVP can be processed from the same post office from which it was issued. If the subscriber wants to encash it from some other post office, certain formalities and applicants need to be completed. The identity slip allocated to the subscriber at the time of issue must be submitted while encashment. Also, the same process is carried out in case of premature encashment.

Q. What is the tax benefit for investing in the Kisan Vikas Patra Scheme?

A.There is no tax benefit under this scheme. KVP is not suitable for individuals looking out for tax-saving schemes. The interests accrued are taxable under ‘income from other sources, paid every year. However, the final maturity is exempted from tax deductions.

Q. What is the maximum investment limit in Kisan Vikas Patra?

A.KVP certificate can be issued in the following denominations- Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000. But, if an individual wants to invest more than Rs.50,000 in the scheme, he/she must submit the PAN card to curb misuse. Hence, there is no maximum limit to investments in the KVP scheme

Q. Can NRIs avail KVP Certificate?

A.Non-Resident Indian’s (NRIs) cannot purchase KVP certificates and apply in the scheme.

Latest Updates, Scheme

How to Generate UAN Number?

Universal Account Number, commonly known as UAN is a unique identification number allotted to a working professional. This account number not only helps in the identification but also keeps your money, information, and assets safe. If you don’t know how to generate UAN number, activating UAN is simple and quick at the website of EPF India. In just a few steps, you would be able to activate your 12-digit identification number hence and reap the benefits of the same in the future. Your UAN comes with many privileges and benefits like provident fund, online passbook facility, partial withdrawal, etc. And, once you link your UAN with Aadhaar, you are entitled to enjoy plenty of other benefits also.

How to Generate/Activate UAN Number Online?

Step 1: Log on to the UAN portal

Step 2: Under ‘Our Service’, Click on ‘Employee Tab’

Step 3: Click on Member UAN/Online Service (OCS/OTCP)

Step 4: Click on ‘Activate UAN’ in the right-hand side of the menu

Step 5: Select your state and EPFO office from dropdown menu and enter your PF number/member ID along with the other details such as name, date of birth, mobile no, captcha code

Step 6:Click on Enter ‘Get Authorization Pin’

Step 7:You will receive a PIN on your mobile number. Enter the PIN and click on ‘Validate OTP and get UAN’

Step 8:Your Universal Account Number will be sent to your mobile number

What is UAN?

UAN stands for Unique Identification Number, which is a 12-digit identification number, issued by the Ministry of Labour and Employment. It is assigned by the Employees’ Provident Fund Organization (EPFO) to you and your employer by virtue of which each of you contributes your respective share in EPF. A member can have one UAN during his working period, where all EPF accounts are linked with his UAN.

If an individual has worked in multiple companies, his EPF Account Number and Member ID will also change but his UAN remains the same. In the case of two UANs, the member should inform his employer as well as the EPFO instantly to deactivate the old UAN and corpus will be transferred to a new PF account.

How to Know Your UAN Status?

An individual can easily know his UAN status online at the official website of EPFO. In just a few steps, you can know the status of your UAN online without any hassle.

Step 1: Visit the official website of EPFO

Step 2: Click on Employee Tab and scroll down the page til Services

Step 3: Click on Member UAN/Online Service (OCS/OTCP)

Step 4: Step 4: Click on ‘Know Your UAN Status’ in the right-hand side of the menu

Step 5: Fill in all the mandatory details

Click 6: Click on Get Authorization Pin

Step 7: You will receive a PIN on your mobile number. Enter the PIN and click on ‘Validate OTP

Step 8: An SMS will come to your mobile number, updating about your UAN status

How to Link Aadhaar with UAN?

Recently Government has made it mandatory to link aadhaar with UAN just to improve things systematically and for better security. Aadhaar being the most valid and universally accepted identity proof helps in the authentication of an Indian citizen. Thus, the Government has made it mandatory for all pf account holders to link aadhaar with their respective pf account.

Step 1: Go to official website of aadhaar

Step 2:Click on ‘KYC Updation’ Tab

Step 3:Login to your PF Account

Step 4:Tick the square in front of Aadhaar and enter your 12-digit Aadhaar number and name

Step 5: Now click on the “Save” option

Step 6: Your request will be displayed in “KYC Pending for Approval”

Step 7: Once UIDAI confirms your details, your current employer’s name is mentioned in “Approved by Establishment” and “Verified by UIDAI” is mentioned against your Aadhaar

Documents Required for UAN Generation

Following documents are required at the time of UAN registration(it is usually taken from you by your employer when you join the service)

Aadhaar Card

PAN Card

Bank Account Details and IFSC

Any Other Proof of Identity or Address (if required)

Why UAN is Important?

A member can have easy access to various online services provided by EPFO, once his UAN gets activated such as managing passbook, knowing claim status,etc.

It acts like an umbrella under which all PF accounts of a member are present. Earlier, it was a big hassle to trace or keep a record of multiple accounts of an employee. But with the introduction of UAN, things have become simpler, easier and systematic.

With the help of a UAN, a member can transfer his PF from old accounts to the new account online

A member can anytime withdraw funds using UAN

Once your UAN is activated, you would be considered as a member, hence access to plenty of services like PF withdrawal requests or submission of PF into your account can be done quickly.

Employee-Specific Benefits of UAN

You can easily keep a track of all your EPF accounts at a single place
The employee can avail the facility of viewing EPF passbook online
Partial/Fully withdrawal can be claimed online
Transfer of EPF accounts can be done online
Claim status can also be checked online through the EPF member portal
Any time you want a PF statement (visa purpose, loan security etc.), you can download one instantly – either by logging in using member ID or UAN or by sending an SMS
UAN ensures that employers cannot access or withhold the PF money of their employees
It is easier for employees to ensure that his/her employer is regularly depositing their contribution in the PF account.

How to Check UAN with Employer: An Alternative Way

In case of first employment, your employer will notify you about your UAN. However, due to some reason, if you don’t have a record of the same, you can also find your UAN on your salary slip from the time your company starts deducting your salary towards PF contributions. It is the most common protocol followed by the Indian Companies, making it easy for you to know your UAN right on your salary slip.

Frequently Asked Questions (FAQs)

Q.Can you activate UAN via offline modes?

A.UAN registration is done for availing online services provided by EPFO. So, UAN registration is done only online.

Q. Can contractual employees register their UAN and avail online facilities?

A.An organisation with 20 or more employees has to generate UAN for its employees (with a salary of Rs.15,000/- and above). Both contractual, as well as full-time employees, can avail UAN facilities online after activation.

Q. I have not linked Aadhaar with UAN. Can I transfer funds online?

A.You cannot transfer funds or claim withdrawal if your Aadhaar is not linked with UAN. You have to mandatorily seed your Aadhaar with UAN.

Q. I have changed my job. Should I activate my UAN again?

A.UAN has to be activated only once. You do not have to re-activate it every time you switch jobs.

Q. Do I have to pay any fee for UAN registration?

A.No, UAN registration is free of cost and you do not have to pay any fee to activate it.

Q.My personal details are incorrect in the UAN card. How can I get these corrected?

A.You should submit the correct information to your employer, along with relevant proof. The employer will validate and submit this information to the concerned field office. Since the UAN card is dynamic, it will be automatically updated.

Latest Updates, RBI Updates, Scheme

What RBI’s Massive Rate Cut Mean for Your Loans and Fixed Deposit?

The Reserve Bank of India (RBI) slashed the repo rate by 75 basis points (bps) in its recent update as an emergency measure to protect the economy from the effects of the coronavirus spread. And following suit, many major banks have announced a reduction in their lending rates as well. While a reduction in lending rates in the economy will clearly benefit loan takers, it also hits those living off income from fixed deposits when the rates on these go down. So, it would be interesting to see how this rate cut will impact fixed deposit (FD) investors and loan borrowers, both existing and new.

Interest Income From FDs Likely to Fall Further

In line with the reduction in key rates, recently, the State Bank of India (SBI) reduced interest rates on fixed deposits (FD). The interest rate cut has been sharper for short-term tenures, i.e., up to 179 days by 50-75 bps. However, for longer tenures, the bank cut rates by 20 bps. The new rates came into effect from August 1.

Latest SBI FD Interest Rates for General Public Effective, 28 March 2020

Fixed Deposit Tenure	Interest Rates
7 days to 45 days	3.5%
46 days to 179 days	4.5%
180 days to 210 days	5%
211 days to less than 1 year	5%
1 year to less than 2 year	5.7%
2 years to less than 3 years	5.7%
3 years to less than 5 years	5.7%
5 years and up to 10 years	5.7%

The latest rate cut is likely to cause more heartache for FD investors, especially senior citizens who are dependent on interest income.

According to reports, this is the first time that the SBI’s fixed deposit rates have fallen below 6% since August 2004, following the directions of RBI. Thus, the rest of the banks will also follow the league and will reduce their FD rates in the future, which is obviously not a good sign for existing and new depositors/investors.

What should fixed income investors should do now- Where should they invest?

Those investors looking for fixed income avenues can consider investing in small saving schemes as an option. These include:

National Savings Certificates (NSC)
Kisan Vikas Patra
Post Office Term deposits etc.

At present, these schemes are earning more than FD rates offered by some of the big banks.

Further, if you are looking for a fixed income avenue, now is the right time to consider small savings schemes as interest rates on these products are due for review on March 31, 2020. There is a likelihood that interest rates on small savings schemes will be reduced given the current state of the economy. However, remember that most of the higher yield small saving schemes come with long lock-in periods.

Impact of the Rate Cut on Borrowers

The unexpected rate cut is likely to reduce equated monthly installments (EMIs) of borrowers, and also make it cheaper to take new loans.

Existing Borrowers

With Loans Linked to External Benchmark

Borrowers whose loans are linked with an external benchmark.i.e.,the repo rate, treasury-bills, etc as mandated by the RBI can expect to see their EMIs coming down in the next three months. This is because as per RBI’s circular on linking of loan interest rates to an external benchmark dated September 4, 2019, the rates have to be reviewed and reset by banks at least once every three months.

Therefore, today’s rate cut will lower a borrower’s EMI outgo in the next three months. This is the second time RBI has cut the repo rate after the new lending rate regime came into effect from October 1, 2019.

With Loans Linked to MCLR

Talking about personal loans, they are usually linked with MCLR, and SBI being a pioneer in this regard has changed the rates immediately. And, offers personal loans-linked with 2-year MCLR.

Here’s an example of how your personal loan is likely to be impacted under the new MCLR regime.

Particulars	Previous Scenario	Current Scenario
Previous Interest Rates	10.45% per annum	10.35% per annum
Loan Amount	20 Lakh	20 Lakh
Tenure	5 Years	5 Years
Previous EMI	42,938	–
New EMI	–	42,839
Yearly EMI Savings	Rs.1,188 (99×12)

However, borrowers whose loans are linked to the marginal cost-based lending rate (MCLR) will benefit only when their bank reduces loan rates. This is because MCLR is dependent on not just external factors such as rate cut but also on the internal factors of the bank. Further, the reduction in MCLR will translate into lower EMIs only when the reset date of your home loan arrives. Recently, SBI reduced the MCLR by up to 15 bps, which now stands at 7.95% from 8.05% with effect from March 10, 2020.

However, if you want to switch from an MCLR-based loan to an external benchmark one, then you can do this by paying an administrative cost. However, financial planners suggest that one should make a switch only when there is a huge difference in the rates as marginal difference won’t create any impact on your EMIs.

With Loans Linked to Base Rate or BPLR

Borrowers whose home loan is still linked to the base rate or Benchmark Prime Lending Rate (BPLR) should consider switching to an external benchmark based loan. The new external benchmark loan regime offers better transmission of policy rates in comparison with a base rate and BPLR rate-linked loans, as per financial planners and industry experts.

What’s in Store for New Borrowers

The latest rate cut will make taking new loans cheaper. While availing a loan linked to an external benchmark, do compare the spread and risk premium charged by the banks over and above the external benchmark, to get the cheapest interest rate.

Also, keep in mind that when RBI starts to hike key rates, your interest rates will go up in tandem. So external benchmark linked interest rates are likely to be more volatile than the MCLR linked rates.

Conclusion

The borrowers can avail the rate cut benefits by enjoying the reduced repayment burden. Whereas, no good news for fixed deposits, especially senior citizens who are dependent on interest income. Thus, if you are looking for a fixed income avenue, you are advised to invest in short-term saving schemes like- National Savings Certificates (NSC), Kisan Vikas Patra, Post Office Term deposits, etc. At present, these schemes are earning more than FD rates offered by some of the big banks.

Government Updates, Latest Updates, Scheme

Pradhan Mantri Jan Dhan Yojana – PMJDY

What is Pradhan Mantri Jan Dhan Yojana (PMJDY)?

PMJDY is a nationwide scheme launched by the Government of India to ensure financial inclusion of every individual who does not have a bank account in India. This scheme aims at providing access to financial services, namely, Banking / Savings & Deposit Accounts, Remittance, Credit, Insurance, and Pension in an affordable manner to all. This scheme was launched in August 2014 and according to reports by the Ministry of Finance, around 4 crore bank accounts have been opened under this scheme till September 2014.

Who Offers This Scheme?

Both public and private sector banks offer this scheme, thus individuals can easily open their accounts under PMJDY with any lender. Further, accounts opened under PMJDY can be opened with Zero balance. However, if the account-holder wishes to get a cheque book, he/she will have to fulfill minimum balance criteria. The account holders under this scheme will be given a RuPay debit card which can be used across all ATMs for cash withdrawal.

PMJDY Eligibility

An individual must fulfill the below eligibility criteria before opening the account:

The account can only be opened by an Indian citizen
An individual can consider opening an account under this scheme with any bank branch or Business Correspondent (Bank Mitr) outlet.
The savings account can be opened at a bank by minors who are above the age of 10 years old.
The account opening form is available in both english and hindi and can easily be downloaded from the official website of PMJDY (https://pmjdy.gov.in/)

Documents Required to Open PMJDY Account

The passport
The driving license
The Permanent Account Number (PAN) Card
The Voter’s ID issued by Election Commission of India
The Aadhar Card
Any other documents that have been requested by the central government after consulting with the regulator must be submitted.
A photograph that has been attested along with a letter from a Gazetted officer must be submitted.
Any ID card that has been issued by the State or Central Government, Scheduled Commercial Banks, Statutory or Regulatory Authorities, Public Financial Institutions, and Public Sector Undertakings must be submitted. However, the ID card must have a photo of the applicant present on it.

Zero Balance Requirements

To open a Jan Dhan account is free of cost and does not require any amount to be deposited initially. Most savings bank accounts require an initial deposit to open a bank account and also a minimum balance to be maintained on a monthly or quarterly basis. But with a Jan Dhan account, these requirements are done away with so that anyone can open this account even if they do not have money to deposit right away.

Interest on Deposits

Deposits made into the Jan Dhan accounts are eligible to earn interest at the rate declared which is subject to change from time to time. Interest rates will be similar to that offered by various public and private banks.

Cheque Book Facility

Account holders can avail a cheque book from their bank if they require. This will be helpful in making payments without cash. To get a cheque book, there is a minimum balance required in the account.

Savings for the family

The Jan Dhan scheme provides for an account for each family. This facility ensures they have some form of financial inclusion that allows them to start saving and growing their money.

Debit Card Facility

Along with the Jan Dhan bank account, every family will get a RuPay debit card. This gives account holders easy access to their money when they need it. They can deposit the money and earn interest on it and withdraw it from an ATM when the need arises.

Overdraft Facility

After completing six months of satisfactory operations of the Jan Dhan account, an overdraft facility of Rs.5,000 might be offered. In case the overdraft availed is paid back promptly, the bank may increase this limit to Rs.15,000, at its own discretion. Although the loan amount seems insignificant as compared to that offered as a standard loan by various banks, it is quite substantial when we think of the economic status of individuals that this scheme is aimed at uplifting. The Pradhan Mantri Jan Dhan Yojana targets the economically weaker section of the society. Most importantly, it aims to cover people from the rural areas as well as the unorganised sector of the urban and semi-urban areas.

Aadhaar-Linked Account

Pradhan Mantri Jan Dhan Yojana is an aadhaar-linked scheme which helps avoid fraud related to account opening. Individuals who receive various benefits under various government schemes like LPG subsidy can now receive the amount directly into their PMJDY accounts. Aadhaar-linking ensures transparency, eliminates fraud and proves to be highly beneficial for the government and the citizens.

Personal Accident Insurance

The scheme also provides for personal accident insurance under the following conditions: The Rupay card holder must have performed at least one financial transaction successfully within 90 days from the date of the accident. Non-financial customer-induced transactions will also be included. Transactions should be carried out at any bank branch, bank mitra, ATM, POS, or E-com channel. This accident insurance is provided under the Rupay Insurance Program 2016-17.

Aadhaar-Linked Account

Access to Pension Schemes

Holding a Jan Dhan account will provide easy access to pension schemes available from the government. It is important for every citizen to start saving even a small amount to ensure a dignified old age.

Easy Transfers

Pradhan Mantri Jan Dhan account can be used to transfer money to and from various other public and private banks across the country. Account transfer for Pradhan Mantri Jan Dhan Yojana can be done from one bank in the country to another. This is possible since all participating banks are connected via the core banking solution or CBS.

Banks That Provide the PMJDY Scheme

Individuals can open an account under the PMJDY scheme at both public and private sector banks. Given below are the list of banks that participate in the scheme:

Private Sector Banks:

Dhanlaxmi Bank Ltd.
YES Bank Ltd.
Kotak Mahindra Bank Ltd.
Karnataka Bank Ltd.
IndusInd Bank Ltd.
Federal Bank Ltd.
HDFC Bank Ltd.
Axis Bank Ltd.
ICICI Bank Ltd.

Public Sector Banks:

Oriental Bank of Commerce (OBC)
Union Bank of India
Allahabad Bank
Dena Bank
Syndicate Bank
Punjab & Sind Bank
Vijaya Bank
Central Bank of India
Punjab National Bank (PNB)
Indian Bank
IDBI Bank
Corporation Bank
Canara Bank
Bank of India (BoI)
Bank of Maharashtra
Andhra Bank
Bank of Baroda (BoB)
State Bank of India (SBI)

Frequently Asked Questions (FAQs)

Q. Is the PMJDY account as same as the BSBD account?

A.PMJDY accounts are BSBD accounts in nature with an additional facility of RuPay Debit card with accident insurance coverage and overdraft facility.

Q. What documents do I require to open an account under Pradhan Mantri Jan-Dhan Yojana (PMJDY)?

A.To open a PMJDY account, an individual is required to submit the required KYC documents to the bank branch/ Business correspondent.

Q. If there are no KYC documents can the PMJDY account be opened?

A. Yes, a Small Account can be opened.

Q. What are the limitations on Small Account?

A.Small Accounts have following limitations:

The aggregate of all credits in small accounts cannot exceed Rs. 1 Lakh in a financial year.
The aggregate of all withdrawals and transfers in small accounts cannot exceed Rs. 10,000 in a month.
Balance in the small account at any point of time cannot exceed Rs.50,000.

Q.How can I convert a Small Account into a regular BSBD account under PMJDY?

A. If a customer wants to convert his/her Small Account into a regular BSBD account under PMJDY, he /she has to request his/her bank along with the submission of the required Know Your Customer (KYC) documents.

Q. Can I open a Joint account under Pradhan Mantri Jan Dhan Yojana?

A.Yes, a joint account can be opened.

Q. Can I avail subsidies/Direct Benefit transfer (DBT) under various schemes of the Government through my PMJDY account?

A. Yes.

Q. How can I link my Mobile Number with my Bank Account?

A. Mobile Number of an account holder is entered in a customer’s account by the Bank on the basis of request/ information by the customer.

Covid 19 Updates, Latest Updates, Scheme

How Can You Withdraw 75% of EPF Amid Corona Crisis

As per the latest announcement by Finance Minister Nirmala Sitharaman, up to 75% of PF money can be withdrawn by PF subscribers or three months of salary, whichever is lower, to face the financial troubles caused by the coronavirus pandemic and the nationwide lockdown until April 14. This decision will help all those EPF subscribers who may face a pay cut, or run short of money amid nationwide lockdown due to corona. PF withdrawal requests can now be submitted online by subscribers. For online application, it is important that your PF account should be interlinked with your Aadhaar and bank account. Once the linking is done, you can easily go through the claim process and get the funds in your linked bank accounts.

Steps to Withdrawal EPF Online Due to Corona:

Step 1: Visit the official website of EPF and sign in with your UAN and password

Step 2: From the top menu bar, click on the ‘Online Services’ and select ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu

Click Claim (Form-31, 19 & 10C) for EPF withdrawal

Step 3: Member Details will be displayed on the screen. Enter the last 4 digits of your bank account and click on ‘Verify‘

Step 4: Click on ‘Yes’ to sign the certificate of the undertaking and proceed further

Step 5: Click on the ‘Proceed for Online Claim’ option

Step 6: Select ‘PF Advance (Form 31)’ to withdraw your funds online

Step 7: A fresh section of the form will open, wherein you have to select the ‘Purpose for which advance is required’, the amount required and the employee’s address

Step 8: Tick on the certification and submit your application

Step 9: You may have to submit scanned documents depending on the purpose for which you have filled the form

Step 10: Your employer has to approve your withdrawal request, after which the money will be withdrawn from your EPF account and deposited in the bank account mentioned at the time of filling the withdrawal form.

Note: An SMS notification will be sent to your mobile number registered with EPFO. Once the claim is processed, the amount will be transferred to your bank account. Although no formal time limit has been provided by the EPFO, the money usually gets credited within 15-20 days.

Who is Eligible for EPF Withdrawal?

As per the new rule, only 75% of the corpus can be withdrawn after 1 month of unemployment. The remaining will be transferred to the new EPF account after gaining employment
Money from the EPF account can be withdrawn only after retirement. EPFO considers early retirement only after the person has crossed 55 years of age
Partial withdrawal of EPF is permitted only in the case of a medical emergency, house purchase or construction, or higher education
EPFO allows withdrawal of 90% of the amount 1 year before retirement
One can withdraw the EPF corpus if he/she faces unemployment before retirement due to lock-down or retrenchment
Employees do not need to wait for approval from their employer for withdrawing their EPF. By linking UAN and Aadhar to your EPF account, you do get the approval online
While making a claim online, you must have-
- An active UAN number
- Bank details linked with UAN
- PAN and Aadhar details seeded into EPF database

Documents Required to Withdraw EPF

Composite Claim Form
Two revenue stamps
Bank account statement (The bank account should be only in the name of the PF holder while he/she is alive)
Identity proof
Address proof
One blank and cancelled cheque with clearly visible IFSC code and account number
Personal information such as father’s name, date of birth, etc. should clearly match with the identity proof

Note: If an employee withdraws his PF amount before 5 years of continuous service, he is liable to facilitate ITR Forms 2 and 3 in order to prove a detailed breakup of the entire amount deposited in the PF account every year.

How to Check EPF Claim Status Online?

You can easily check EPF claim status online at the EPF member portal. You first need to log in to the portal online and select track Claim Status under the Online Services section.

Note: You will not have to enter any reference number to check the status, it will be displayed on the screen automatically.

How to Register EPF Grievance Online?

Individuals dealing with issues or complaints regarding Provident Fund can register their grievance and complaints on the official website of EPF i-Grievance. The individuals can also send reminders for pending complaints and know the status of their request. It would be advisable that members/individuals should have registered/activated Universal Account Number (UAN) along with the verification by aadhaar and bank account as the same will help in processing a request faster. However, to lodge a complaint, an individual must have an EPF UAN Number as the same has been made mandatory by the government. Moreover, an individual can register a complaint for various issues like-PF withdrawal, pension settlement, cheque return/misplacement, issues related to PF balance, etc.

Frequently Asked Questions (FAQs)

Q.Whether an employer can deduct the employer’s share of contribution from the wages of employees?

A.No. It is not permissible. Any such deduction is a criminal offence.

Q.Whether an employer can recover any outstanding dues from the PF amount payable to a member?

A.No. It is totally prohibited.

Q.Whether the P.F. amount credited to the member can be attached against any liability?

A.No. The Provident Fund enjoys protection against attachment by any Court also as per the provisions of section 10 of the EPF & MP Act,1952.

Q.Can a member refuse to part with the payment of contribution to the Pension Fund?

A.The Pension contribution is only a diversion from the employer’s share of Provident Fund. Hence no consent is required from the member and refusal does not arise.

Q.Is there any time limit for withdrawal of Provident Fund dues?

A.Only in the case of resignation from service (not superannuation) a member has to wait for a period of two months for withdrawal of the PF amount.

Q.When the employer is not attesting the claim form how to submit the application for withdrawal of provident fund?

A.It is the duty of the employer to attest the application form. In case of any dispute, the member may attain attestation preferably from the bank in which he has maintained his account and thereafter submit the same to Regional PF Commissioner, explaining the reasons for not obtaining the signature of the employer. The Regional P.F. Commissioner will pursue the matter with the employer wherever necessary. If the member has activated his Universal Account Number and linked his bank account and Aadhaar then he can submit a composite claim (Aadhaar) which only requires the signature of the member.

Q.In case of change in employment whether a member can get his PF account transferred?

A.On change in employment, the member should necessarily get his PF account transferred to his present establishment, duly submitting Form 13(R). A member can submit a claim for transfer online using the member interface at unified portal.

Q.How is a PF member informed of the transfer affected?

A.A copy of Transfer Certificate (Annexure-K) issued to the transferee Regional P.F. Commissioner/P.F. Trust giving full details of the transfer can be requested from the EPF office.

Q.Can an employee become a member of EPF without any age restriction?

A.There is no age restriction for becoming a member of the Provident Fund, whereas an employee who has already attained the age of 58 cannot become a member of the Pension Fund.

Q.Whether an employer can also join the PF?

A.No.

Q.Whether an employee can continue his EPF membership after leaving the employment?

A.Yes.

Covid 19 Updates, Loans, Personal Loan

Personal Loan for Medical Purpose vs Health Insurance, Which is Better?

A health scare or a medical emergency can catch us unawares at any time and can be very expensive. There are ways to handle it without draining your life savings. Banks and Non-Banking Finance Companies (NBFCs) offer personal loans for medical emergencies that can help pay for all healthcare expenses. Another approach is to buy health insurance that covers medical expenses incurred. With different products in the market, you tend to get confused about what to choose and which one will be more beneficial for you. So, which one is a better option, a medical personal loan or health insurance? Let’s look at what these two options mean, the differences between the two, and their respective benefits so you can make an informed decision about your healthcare.

What is Medical Loan?

A medical loan comes under the category of personal loan that can be availed for various contingency situations related to health or urgent medical needs such as an operation, surgical procedure, therapy, or other health concerns. It is extended by both banks and NBFCs.

What is Health Insurance?

Health insurance is insurance that covers the whole or a part of the risk of a person incurring medical expenses. Depending on the terms, either the insured pays for the expenses and is subsequently reimbursed, or the insurance company directly pays the care provider.

What To Choose And Why?

Quick Disbursal and Faster Approval:

Quick disbursal and faster approval for a medical personal loan make it a more favourable option compared to health insurance. A medical loan is a quicker process between the two. The documentation in case of a medical loan is also minimal. It provides a big relief during a medical emergency.

Interest Vs Premium:

Depending on the insurance amount, a high premium is paid in advance, which may or may not be used before the renewal date. Since the medical personal loan is a recent product in the Indian market, the rate of interest is competitive. The repayment options are quite flexible in medical loans.

Cover or Not to Cover:

Medical insurance will not cover procedures like cosmetic surgery etc. The terms and conditions of the medical insurance are sometimes so vague that you end up paying to the hospital even when you are medically insured. On the other hand, a medical personal loan can cover your cosmetic surgery, fertility, and dental treatments, etc. Coverage plays an important role for a potential consumer of either the medical loan or health insurance. Most of the health insurance policies don’t cover STDs (Sexually Transmitted Diseases) like AIDS (Acquired Immune Deficiency Syndrome) or Cancer such as Leukemia or many brain-related ailments. A medical loan covers almost all kinds of medical expenses.

The Timeline:

If a medical emergency strikes and you use the insurance amount, you cannot reuse it in the same year or before renewal. Also, your premium increases the next year. While one can take a medical personal loan as and when required.

Discounts:

Hospitals might not give discounts and try to use the whole amount for a medically insured patient. But, if you are paying yourself, hospitals consider giving discounts.

Usage:

Health insurance makes you pay a high premium lifelong without even using it once since many medical procedures and surgeries are not covered. A medical loan is taken when you need cash for medical treatment. One can take a medical loan for a procedure or check up or surgery. The medical loan amount can also be used as saving for the future.

Risky or Not:

If you are healthy with no medical history, you get health insurance. Age plays an important factor in health insurance and premium. A high-risk individual is someone who has had major surgery or has cancer or other major ailment survivors. Logically, such a patient requires health insurance for the treatment. However, they are denied health insurance because of the high-risk factor. On the other hand, anybody can get a medical loan irrespective of the current or past medical condition. There is no such restriction to avail the medical loan. A reportedly high-risk individual can also get a medical loan.

The Amount Dilemma:

The amount given under the medical loan is as per the requirement of the individual. It can be used to pay the medical bills and expenses, fees of the doctor, admission at the hospital, ICU charges or a surgery where the money is required immediately. Under health insurance, only the ailments and surgeries specified in the terms and conditions of your insurance will be covered. If any other medical emergency strikes, you have to bear the cost from your own pocket. Ayurveda and Homeopathy are alternative medicines that some people believe in. Only a handful of medical insurance covers them. However, a medical personal loan is used for such alternative medicine with no questions asked.

Restrictions:

A person holding a medical insurance policy can go to only partner hospitals. With a medical personal loan, you can go to any hospital of your choice and convenience, be it a non-cashless hospital as you can pay cash from the medical loan disbursed to you.

Medical Loan Vs Health Insurance

Personal Medical Loan	Health Insurance
A medical loan is taken after one is hit by an unexpected illness to help meet expenses.	Health insurance is bought as a precautionary measure in case an emergency strikes.
A medical loan covers literally all expenses – hospitalization, prescription bills, surgeries, or any other treatment. You can use the money as you deem fit for your healthcare.	Health insurance covers expenses depending on the type of insurance and sum insured. For example, health insurance may cover just hospitalization and leave out critical illness. Additionally, if you are insured for say Rs 5 lakh, it will only reimburse that amount. Anything above that will have to be paid by you.
A medical loan is a personal loan that has to be repaid on an EMI basis as is convenient to the borrower.	On the other hand, health insurance is an annual purchase to help mitigate health cost risk exposure.
You only have to get a medical loan in the hour of need.	Health insurance has to be bought every year irrespective of whether you are healthy or sick. This can get expensive as shelling out approximately Rs. 20,000 every year is not easy for all.
A medical loan is extended to any salaried, self-employed individual, or a pensioner.	Health insurance is given to relatively healthy individuals. Anyone who has had a major surgery such as a bypass cannot get health insurance.

Personal Loan-Apply Online for Instant loan Approval

Advantages of Medical Loan or Health Insurance

Medical Loan	Health Insurance
Easy to get approved and processed	Provides cashless hospitalization
Requires only basic documentation	Covers big bills at a small cost
Covers any and all costs	Saves you from financial stress
Is a collateral-free loan	Offers flexibility on the type of insurance and amount
Can be repaid in easy installments	Can easily be bought online
Can be availed by any earning individual	Gets you tax benefits
Is disbursed within a couple of days	Provides free annual basic health checkup
Provides flexible tenure and EMIs	Can be availed up to Rs.1 crore by certain insurance companies
Can be availed up to Rs.25 lakh

The Conclusion: Which One is Better

There are certain drawbacks to health insurance as well. If you have ailments such as high blood pressure or diabetes, the cost of health insurance shoots up. There are chances of it being denied to you altogether. If you have had major surgery, no company will extend a cover to you. There are a lot of technical ‘ifs’ and ‘buts’; so if you don’t understand the insurance you are buying, there is a possibility that you will be left in a lurch in a crisis. For example, your insurance may only cover hospitalization charges and not cover medicines bought. Though there are cashless insurance products available, there are some that ask you to bear all the expenses and then submit documents to get reimbursement. Here, arranging money immediately for your treatment becomes a challenge, and later on, following up with an insurance company to clear your claim is tedious.

If getting health insurance is not part of your plan, does not fit in your budget, or you are not eligible (say, if you have had major surgery), a medical loan can be your saviour. There are a lot of lenders that provide personal loans for medical emergencies, with interest rates starting as low as 10.99% (this varies depending on the loan amount, employment status, etc.). There is minimal documentation required and the amount is handed over in a few days. The company also gives suitable advice on loan repayment based on the borrower’s financial capacity.

So, going for a personal loan to cure your medical illness, is advisable as it is more cost-effective than health insurance. Hope, based on this comparison, you can make a logical and informed choice between the two available options.

Covid 19 Updates, Latest Updates

How to Manage Your Finances in Times of Salary Cuts Due to Covid-19?

The COVID-19 pandemic has brought enormous losses to the $2.8 Trillion Indian Economy. If experts are to be believed, only a quarter of this economic size is functional at the moment due to lockdown, which is in the third stage starting from March 25, 2020. Analysts have estimated losses worth INR 32,000 Crore every day from here on till the lockdown is over. Economist experts have pegged India’s Gross Domestic Product (GDP) to be around 1%-2% in the financial year 2020-21 due to lockdown. They even fear a 0% GDP if the problem deepens more.

As COVID-19 cases near 50,000 and are showing no signs of abatement, the lockdown may well extend beyond May 17, 2020.

All this has mounted concerns for India Inc and most companies have now resorted to either salary cuts or have laid off their employees, causing problems in the daily life of the salaried class. So, if you are witnessing salary cuts, it’s time you change your routine to get through these tough times that are likely to be the case throughout this year.

Cut Down on Your Lavish Lifestyle

It’s a privilege to lead a lavish lifestyle. But given the unprecedented times we are living in, it only pays to cut down on such a lifestyle for the time being and save as much as possible. So, if you see e-commerce stores open, don’t order non-essentials and be left with less to carry on your daily life. Keep saving honestly to accumulate enough to live your day-to-day life without having to ask for help.

Pay Credit Card Bills Without Any Delay

If you have not opted for a 3-month moratorium, which was given as an option to borrowers by the Reserve Bank of India (RBI) amidst crisis due to the ongoing pandemic, on your credit card bill payments, you have done yourself a favour! Keep up the good work of paying credit card dues in full to avoid getting charged at a massive interest rate of 30%-40% a year. As the RBI moratorium norm says that the interest will keep accruing on the unpaid balance, there’s no point in availing it and more so if you already have mountains of credit card debts to pay. Also, put a stop to your credit card purchases till the time the normalcy is back. This will help keep the debt under control.

Rethink on Your Entertainment Plans

In the digital age, everything is available online, be it the blockbuster movie or the most popular television series. There are numerous Over-the-Top (OTT) platforms that bring to you the best of entertainment from around the world. It won’t be surprising to hear that you are a subscriber to one of these. But at the same time, you may be embracing the old tradition of watching television along with your family members at home. Given the challenging times, you can look to discontinue one from TV and OTT. Select the one that saves you more.

Cut Down on Your Mobile Expenses

Mobile recharges come with several data and unlimited calling plans at different prices. All these plans are valid for a specific period. Assuming you are a single earner in the family, you could be recharging for you as well as your family members. The need of the hour is to choose the plan that helps you meet your needs at a bare minimum. You can save further by recharging only one mobile number and contact all your relatives and know their whereabouts. As all of you would be staying indoors due to lockdown, there’s no need to call each other. This makes a single recharge all the more relevant.

Go for Digital Payments Instead of Using Cash

Payments made from digital wallets ensure savings for users with cashback and discounts. If you are still making cash payments, the time has come for you to use online wallets and save on your grocery and other essential purchases.

Make the Most of the Savings on Travel and Fuel

Lockdown has eliminated the commuting you had to do from your home to office and the other way round before March 25, 2020. You must have saved a lot on travel and fuel. Make sure you accumulate as much as you can and avoid using such savings into any non-essential stuff.

Invest in Monthly Income Plans

Above you saw the savings plan that you need to adhere to for the remainder of this year, at least. But savings will need to be complemented with investments to combat the challenge due to salary cuts. So, if you have a bulk amount with you, put it to good use by investing in monthly income plans (MIPs) of banks. Bank MIPs earn you interest at the prevailing rate of the fixed deposit. You will get the interest monthly, and with that, you can take care of your finances. You can open the monthly income plan online.

Banks Updates, Covid 19 Updates, Government Updates, Latest Updates, RBI Updates

RBI Extends Loan Moratorium Period for Another 3 Months; Cuts Repo by 40 bps

Must Read:

RBI extended the moratorium for another 3 months, from June 1 to August 31.
RBI cuts the repo rate by 40 bps to 4% and reverses repo rate to 3.35%
RBI allocated Rs 15,000 crore to EXIM Bank to avail US dollar swap facility
RBI offered 90-days extension to SIDBI for the 90-day term loan facilities

The Reserve Bank of India has announced to extend the moratorium on loan repayments by another three months to 31 August 2020. RBI has also cut policy repo rate by 40 basis points to 4.0% and reverse repo rate to 3.35% after an unscheduled meeting of the Monetary Policy Committee. The earlier three-month moratorium on the loan EMIs was ending on May 31, 2020. This makes it a total of six months moratorium on loan EMIs starting from March 1, 2020. The extension of a three-month moratorium on repayment of term loans by borrowers means that they would not have to pay the loan EMI installments during the moratorium period.

The extension will provide relief to many individuals, especially the self-employed, as they would have found it difficult to service their loans such as car loans, home loans etc. due to loss of income during the lockdown period from March 25, 2020. Missing an EMI payment would mean risking adverse action by banks which can adversely impact one’s credit score.

Talking about policy rates, a reduction in the repo rate from the existing 4.4% came in a surprise move to support the economy. This reduction in the key interest rate will allow banks more room to lower the EMI burden for their borrowers.

Here are the Big Takeaways:

RBI cuts the repo rate by 40 bps to 4%

Reserve Bank of India (RBI) Governor Shaktikanta Das has announced a reduction in the repo rate to 4% from the existing 4.4% in a surprise move to support the economy. That marked the lowest repo rate – or the key interest rate at which the RBI lends short-term funds to commercial banks – recorded since 2000.

RBI reduces reverse repo rate by 40 basis points to 3.35%

RBI announced a reduction in the reverse repo rate – the interest rate at which the RBI borrows funds from commercial banks – to 3.35% from existing 3.75%.

RBI extended three-month moratorium from June 1 to August 31

The Reserve Bank of India extended the moratorium on payment of loans by another three months till August to provide much-needed relief to borrowers whose income has been hit due to the coronavirus crisis. In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020.

RBI allocated Rs 15,000 crore to EXIM Bank to avail US dollar swap facility

The Export-Import Bank of India provides financial assistance to exporters and importers in order to promote India’s international trade.

RBI offered 90-days extension to SIDBI for the 90-day term loan facilities

The central bank offered 90-days extension to SIDBI for the 90-day term loan facilities in order to provide additional liquidity support to the MSME sector.

Covid 19 Updates, Government Updates, Latest Updates, Scheme

20 Lakh Crore Economic Package Announced by the Government

Read Highlights Here

Finance Minister, Nirmala Sitharaman has finally announced the complete details of the mega 20 lakh crore economic package. In the 1st installment of the announcement, the focus was on the relief to the MSME, NBFC and discom sector. Whereas, the 2nd installment was dedicated to the migrant workers, small farmers, street vendors and affordable housing. The Prime Minister had announced the ‘Atma Nirbhar Bharat’ package that will focus on making India self-reliant during his national address.

The finance minister said that the Atma Nirbhar Bharat rests on five pillars: Economy, Infrastructure, Technology-driven systems, Demography, and Demand. The focus will be on factors of production: Land, Labour, liquidity and Laws. The intention is to make local brands global.

Key Takeaways of the 1st Installment of Economic Package: Dedicated to MSME, NBFC Sectors, Power Discoms and Others

Collateral free loan of Rs 3 lakh crores for MSMEs. This will benefit 45 lakh units so that they can resume work and save jobs.

For stressed MSMEs, Subordinate debt provision of Rs 20,000 cr has been announced for 2 lakh MSMEs. It will benefit those which are NPAs or stressed MSMEs.

Rs 50,000 crore equity infusion through Mother fund-Daughter fund for MSMEs that are viable but need hand-holding. A fund of funds with a corpus of Rs 10,000 crore will be set up to help these units expand capacity and help them list on Markets if they choose.

Definition of MSMEs has been revised to allow MSMEs to aim for expansion and not lose benefits. Also, there’ll be no distinction between manufacturing & services sector MSMEs.

New definition: Micro units with investment till Rs 1 cr, turnover up to Rs 5 crore. Small units with investment till Rs 10 cr, turnover up to Rs 50 cr. Medium units with investment till Rs 20 cr, turnover up to Rs 100 crore.

Global tenders will be disallowed up to Rs 200 crore for government contracts.

Will ensure e-market linkages are provided across the board in the absence of non-participation in trade fairs due to COVID. Govt of India and PSUs will clear all the receivables in the next 45 days.

For Employees

A liquidity relief of Rs.2,500 crore EPF support is being given to all EPF establishments, EPF contribution will be paid by Govt. of India for another 3 months till August and will benefit more than 72 lakh employees.

Statutory EPF contribution for all organisations and their employees covered by EPFO has been reduced to 10% from 12% earlier. This doesn’t apply to govt organisations. This will infuse Rs 6,750 cr liquidity into these organisations.

For NBFCs/HFCs/MFIs

Rs 30,000 crore special liquidity scheme for investing in investment-grade debt papers of NBFCs, HFCs and MFIs. These NBFCs are those that are also funding MSMEs. These will be fully guaranteed by the government of India.

Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. The first 20% loss will be borne by the guarantor that is the government of India.

For Discom: A one-time emergency liquidity injection of Rs 90,000 crore against all their receivables. The states will guarantee it.

Other Details

An extension of up to 6 months (without costs to contractor) to be provided by all Central Government Agencies like Railways, Ministry of Road Transport & Highways, Central Public Works Dept.

On real estate, the urban development ministry will issue advisory to states/UTs so that the regulators can invoke force majeure. The regulators can suo moto extend completion/registration dates for six months for projects expiring on or after March 25, 2020.

A reduction of 25% of existing rates of Tax Deducted at Source (TDS) & Tax Collection at Sources (TCS) from tomorrow till March 31, 2021. This will release Rs 50,000 crores.

Due date of all Income Tax Return filings extended from July 31 to November 30. Vivaad se Vishwas scheme extended till December 31,2020. Date of assessments getting barred as on Sep 30, 2020, extended to December 31, 2020. Date of assessments getting barred as on March 31, 2021, extended to September 30, 2021.

Key Takeaways of the 2nd Installment of Economic Package: Dedicated to Migrant Workers, Small Farmers, Street Vendors and Affordable Housing

Help for farmers and migrant workers in the Post-Covid period:

3 crore marginal farmers availed loans at concessional rates. These 3 cr farmers had already benefited from Rs 4 lakh crore of loans given to them. The RBI moratorium has also benefited them.
Interest subvention and prompt repayment incentive on crop loans, due from March 1, extended up to May 31, 2020. 25 lakh new Kisan Credit Cards sanctioned with a loan limit of Rs 25,000 crore.
Central govt released Rs 11,002 crore in advance to states to augment the SDRF funds for helping states to set up shelters for migrant workers and provide them food.
12,000 SHGs at urban centres comprising urban poor have produced 3 crore masks and 1,20,000 litres of sanitisers. 7,200 new SHGs of urban poor have been formed during the period starting March 15, 2020.
For migrant workers who have returned to their homes, work is being made available through MGNREGS. Till May 13, 14.62 cr person-days of work generated. Work offered to 2.33 crore wage seekers yesterday in 1.87 lakh gram panchayats. 40-50% more workers gave work compared to May last year. States have been advised to provide them with work. Annual expenditure till date is Rs 10,000 crore. Average wage rate has risen to Rs 202 from Rs 192 in the last fiscal.

Free Food for Migrants

For those migrants who don’t have NFSA cards or state cards, 5 Kgs of wheat or rice per person and 1 kg channa per family per month for next two months to be provided and it will reach through the state governments. This will entail Rs 3,500 crore and is likely to benefit around 8 crore migrants.

One Nation, One Ration Card

National Portability Ration Cards can be used in any ration shops that will be applicable across the country. By August 2020, 67 cr beneficiaries in 23 states or 83% of all PDS beneficiaries will get covered. By March 2021, 100% will be covered.

Rental Accommodation

Under PM Awas Yojana, a scheme for rental housing for migrant workers. Under the scheme incentives will be offered to private manufacturing units and industrial units to develop affordable housing, converting govt-funded houses into affordable renting accommodations for migrant workers. Shall be done on PPP on concessionaire basis. State government agencies will also be incentivised to develop affordable housing.

MUDRA Shishu Loan

Those who have availed loans up to Rs 50,000, an interest subvention of 2% for the next 12 months after the moratorium period extended by RBI ends. Three crore people will get the benefit of Rs 1500 crore.

Street Vendor

Special scheme for street vendors to avail Rs 5,000 crore loan facility. Will be given Rs 10,000 of working capital.

Affordable Housing

Credit-linked subsidy scheme for middle-income households in the income group Rs 6-18 Lakh extended to March 2021. The CLSS scheme was operationalised from May 2017 and extended up to March 2020. Now, it has been extended till March 2021. This will lead to investments of Rs 70,000 crore in housing and kickstart sectors like steel, cement and create jobs.

For Tribals

Rs 6,000 cr worth of proposals have come from states under CAMPA funds. Tribal people will get employment in forest management, wildlife protection/management and other forest related activities.

For Small/Marginal Farmers

The government is extending Rs 30,000 crore additional capital emergency funds through NABARD for post-harvest Rabi and Kharif related activities for small and marginal farmers.

PM Kisan Credit Card

Rs 2 lakh crore of concessional credit to boost farming activities and it will benefit 2.5 crore farmers. Those in animal husbandry and fisheries will also be included.

Banks Updates, Covid 19 Updates, Latest Updates, Personal Loan

SBI Reduces Lending Rates by 15 bps…

SBI Reduces Lending Rates by 15-bps Across Tenors Comes Out With Special Scheme for Senior Citizens

Must Read:

SBI cuts lending rates by 15 bps across all tenors.

SBI’s 1 year MCLR comes down to 7.25% p.a from 7.40% p.a. with effect from May 10, 2020.

The lender has introduced a new product ‘SBI Wecare Deposit’ for Senior Citizens in the Retail Term Deposit segment.

Under this new product, senior citizens will get an additional 30 bps premium on term deposits with 5 years and above tenor, effective upto September 30, 2020.
The bank has also cut interest rates on retail term deposit by 20 bps for upto 3-year tenor, effective from May 12.

State Bank of India (SBI) has announced a reduction in its MCLR or marginal cost of funds-based lending rate by 15 basis points across all tenors. The one-year MCLR will come down to 7.25% per annum from 7.40% per annum with effect from May 10, 2020. This is the twelfth consecutive reduction in the bank’s MCLR.

After the reduction, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by approximately Rs.255 for a 30-year-loan of Rs. 25 lakh, SBI said.

MCLR rates are based on the bank’s own cost of funds. If your home loan is linked to SBI’s MCLR rate, the latest cut may not bring down your EMIs immediately as MCLR-based loans typically have a one-year reset clause.

SBI also cut its interest rate on bank fixed deposits (FDs), citing adequate liquidity in the system as well as with the bank. SBI cut its interest rates on retail term deposits by 20 bps for tenors up to three years, effective from May 12, 2020. This is the third cut in FD rate in two months.

For senior citizens, SBI has introduced a new deposit scheme called SBI Wecare Deposit. “Under this new product, an additional 30 basis points premium will be payable for senior citizen’s retail term deposits with “5 Years & above” tenor only. This scheme would be in effect up to September 30, 2020,” the bank said.

Thus, the effective rate of interest for retail term deposits of senior citizens will be:

– 5 years and below tenor: 50 bps higher than the rate applicable for the general public (no change in premium)

– 5 years and above tenor: 80 bps higher than the rate applicable for the general public (30 bps extra premium).

Covid 19 Updates, Latest Updates

Impact of Covid-19 on Indian Economy

To tackle the ongoing COVID-19 pandemic the Indian government has taken several steps to flatten the curve, such as imposing a nationwide lockdown along with a complete ban on travel. The importance of these measures notwithstanding, they have brought down the economy on its knees, impacting both overall consumption and investments.

This has prompted several rating agencies to revise downward their FY 2020 GDP growth estimate for India in the range of 2.1–4.0%.The Indian economy is witnessing a significant slowdown, with GDP growth at 4.7% in Q3 2019-20, its lowest in nearly seven years. The COVID-19 outbreak has compounded the challenges and could send the economy hurtling toward a recession.

It is obvious that when the global economy is on a slowdown mode no emerging economy can grow at its normal pace. Moreover, the Indian economy was grappling with its own issues and COVID-19 made the matters worse.

India’s GDP has been on a consistent decline after peaking out at 7.9 in Q4 of FY 2018 to 4.5 in Q2 of FY 2020. The industry was facing demand problems, due to which business houses were reluctant to undertake capex plans, unemployment was at its peak and exports which were consistently down for several months.

A Glance at India’s GDP Growth in the Past Years

Country	GDP Growth in 2017 (in %)	GDP Growth in 2018 (in %)	GDP Growth in 2019 (in %)
India	6.5	6.7	5.3

The impact of the slowing economy was augmented by the pandemic which led to a contraction of around 35 percent in March as all geographical boundaries across the world were closed due to lockdown. Hence, going forward, some individual sectors of the economy can take a big hit. Let’s know more about each sector below.

Sector-wise Impact

A significant spike in Non Performing Assets for Banking and Finance

Bankers and analysts expect a significant spike in NPAs going ahead. Banks in the country are likely to witness a spike in their non-performing assets ratio by 1.9% and credit cost ratios by 130 basis point in 2020, following the economic slowdown on account of COVID-19 crisis

The pain may not be visible immediately since the Reserve Bank of India (RBI) has extended regulatory relaxations. But, that cushion won’t be around for long.

The moratorium period will end soon and companies and individual borrowers will have to resume repayments from June. With no business happening, workforce availability remaining an issue and rampant pay cuts, it is doubtful how many borrowers will have repayment capacity, according to experts.

According to a report by ICRA, about 328 companies have sought moratorium from banks. That tells us about their financial position.

It is quite obvious that we are not going to see improvement anytime soon. The worst part is that there is no assessment on the likely impact, according to banking experts.

After a prolonged bad loan clean-up exercise, Indian banks’ total gross NPAs stood at Rs 7.97 lakh crore as of December-end compared to Rs 8.02 lakh crore a year ago.

Uncertain Times

Banks are already giving distress signals to investors. On April 28, the mood at Axis Bank’s media conference call after the bank’s Q4 results was that of high caution. There was no clear guidance from top management on what lies ahead.

If you look out of the window, all you can see is that the economic activities have come to a standstill.

What caught analysts by surprise was the unexpected Rs.3,000 crore (out of the Rs.7,730 crore total provisions) provisions set aside to cover the likely impact of COVID-19. The signal was clear.

Not just Axis, most other banks expect the likelihood of slippages this year due to the debilitating impact of COVID-19. Private banks like HDFC Bank and ICICI Bank have presented a relatively optimistic scenario while large state-run banks are largely silent on future outlook.

It is almost certain that the industry will see a big spike in bad loans. A number of companies are feeling the heat. This stress is not reflecting so far because of the present RBI relaxations such as moratorium on loan payments. But, once this is lifted, the real picture will emerge, as per banking experts.

According to RBI’s credit growth data, there was a spike in bank lending in March, particularly in the last fortnight of March in some sectors like non-banking finance companies and industries. But, analysts said some of this growth could be due to earlier sanctions. Still, the overall growth largely remains subdued on a YoY basis.

RBI’s Measures So Far

The central bank has announced a slew of measures to help banks and borrowers tide over this crisis. In the first round of measures, RBI announced a 75 basis point rate cut, liquidity measures to the tune of Rs 3.74 lakh crore, including a targeted long term repo operation (TLTRO) worth Rs 1 lakh crore, deferment of interest on working capital facilities and three month moratorium for all term loans extended by lending institutions. In the second round, it announced TLTRO 2.0 worth Rs 50,000 crore, specifically targeting small companies.

No Buyers for Stressed Assets?

The last credit cycle for banks had seen a sharp surge in bad loans. Indian banks are at the end of a prolonged NPAs clean-up cycle. The hidden stock of bad loans buried deep in the balance sheets, accumulated over the years of the easy money era, prompted the RBI to initiate an Asset Quality Review (AQR) in 2015. By now, that process is almost over with banks having disclosed most of the problematic large corporate accounts. Many large cases of corporate loan defaults have been pushed to the Insolvency and Bankruptcy Code (IBC) court for quicker resolution.

But, with the economic activities reduced to nil, it is highly unlikely that there will be buyers for stressed assets, bankers said. In the last round, certain large deals such as Rs.35,000 crore Tata Steel-Bhushan helped bankers recoup some losses.

Among the loan categories, fresh loans given to companies including those given to small and medium enterprises (SMEs) face risk if the cash flows of companies remain under pressure, thus impacting their loan repayment ability, bankers said.

Tedious Road Ahead for Travel & Tourism and Entertainment

The travel & tourism industry was one of the first sectors to be affected by the outbreak, and most likely will also be the hardest hit. The Indian Association of Tour Operators (IATO) estimates the hotel, travel and aviation sectors to incur losses of up to Rs 8,500 crores due to travel restrictions imposed on foreign tourists.

The drop in numbers is already affecting several small and mid-sized players in the tour operating and ticketing space. Liquidity crunch would most likely result in significant job losses in the next few months.

Cancellation of tickets, refunds and low utilization rate of airlines have made matters worse for the already distressed aviation industry in the midst of a cash crunch. The industry association is seeking relief in the form of tax cuts, deferment of GST payment, the addition of jet fuel under GST, reduction in airport charges, a temporary cut in excise duty on jet fuel, and other financial aid to cushion the impact.

The Events and Entertainment Management Association (EEMA) has requested for aid to support its 60 million employees in the wake of postponement or cancellation of all major national events due to the pandemic. The industry has a huge section of blue-collared workers on daily wages, whose livelihood is at risk due to the nationwide lockdown.

The popular movie industry is not behind. All major releases and shooting of films have been put on hold. The Indian cinema industry will likely face a loss of Rs.200–250 crores over the next 2–3 months.

With social distancing becoming a norm, at least for the next few months, both travel & tourism and entertainment sectors are not expected to recover soon. Furthermore, unemployment and fall in income levels would aggravate the situation.

Auto Industry to Witness Massive Revenue Loss Due to Disruption in Supply Chain Globally

The automotive sector is feeling the pinch too. In passenger cars alone, the lockdown is estimated to have reduced production by 240,000 units (10% of total annual production). Each day of loss of production is causing the industry a loss of over Rs.2,300 crores in revenue on average, aggregating to over Rs.48,700 crores (2% of total automotive industry revenue) over 21 days.

After the lockdown is lifted, financial compulsions and low sentiment may drive roughly 35–40% of consumers to defer their vehicle purchase decisions for the next six months (until September 2020). Hence, annual sales of light motor vehicles and motorcycles are estimated to fall by 4.2 million units in 2020.

The spread of the pandemic globally had a whiplash effect across the supply chain. Automotive manufacturers in India depend highly on auto components imported from COVID-19-affected countries such as China, Germany and South Korea. This factor too will adversely impact production.

Low Asset Utilization Rate in Logistics and Ports

With the movement of people/passengers restricted amid the lockdown, revenues have taken a hit in the railways, bus, airline, and cab segments of the transportation sector.

In essential commodities, the Indian government has taken various measures for swift movement of freight across the country. However, players in the logistics sector are struggling to service needs as supply chains across industries have been disrupted. Furthermore, output in factories has decreased dramatically and fewer trucks are on the road. Due to the unavailability of staff, last-mile storage and distribution are also suffering.

Activity at seaports has ceased with a decline in export-import trade. Other issues affecting the sector are slow custom clearance, the inability of clearing and forwarding (C&F) agents to play the required cargo from ports to CFS/ICD, and time-consuming manual stuffing and de-stuffing of containers and documentation/cargo handling.

Rail freight has been affected as the demand and supply of high volume bulk cargo items (such as imported coal for power plants or iron ore exported via rail to various ports in India for steel mills in China) are subdued.

Road freight: According to IFTRT, 50% of the 50 Lakh trucks are off the road due to the unavailability of drivers who fear being stranded as road-side services (restaurants, repair shops) have been crippled.

The impact on the sector would be long-term, reflected in the decline in revenue due to the low utilization of assets. Cash flows and working capital of firms in these businesses will also remain strained.

FMCG and Retail Players on a War Footing; Foodservice and Institutional Business Decimated

Since the imposition of the nationwide lockdown, FMCG companies and retailers are dealing with challenges primarily around three highly interconnected issues: surge in demand & depletion of inventory, reduction in workforce, and supply chain disruption.

Panic-induced stockpiling meant supermarket shelves were getting empty faster than they could be replenished. Both traditional and modern retailers bore the brunt, with the likes of DMart, Big Bazaar and Nature’s Basket eventually having to reduce working hours, put limits on the purchase of essential items (like eggs, milk, flour, etc.), or in some cases, even close down for a few days. E-commerce operations of major brick & mortar retailers as well as Amazon and Flipkart were not spared either.

As retailers struggle to deliver orders, innovative delivery models are emerging. Some examples are Big Basket and Flipkart tying up with Uber and Swiggy for last-mile delivery of essential items, Zomato launching Zomato Market service to deliver groceries from retail stores, and ITC partnering with Domino’s Pizza for zero contact delivery of Aashirvaad brand of atta and spices.

The lockdown has led to the migration of workers to their homes in rural areas, causing a shortage of labourers and, thereby, disruption of supply chains. To contain the impact, some retailers (GROFERS and Spencer’s Retail) are adopting reverse supply chain mechanism, i.e., sending their own trucks and workers to pick goods from distribution centers, while others (DMart and Metro Cash & Carry) are offering additional incentives (Rs.400–500 per day) to their workers.

The decision of FMCG players such as HUL, Godrej, and ITC to restart production of essential goods at select plants, albeit at reduced utilization rates, is a welcome step. However, they need to prepare better to address issues likely to emerge in the medium term.

Restrictions on travel and hospitality services have wreaked havoc on the bulk institutional sales and foodservice businesses of these FMCG companies.

Way Forward: Implications for Companies

The pandemic has paralyzed economies, compelling businesses to re-evaluate their strategies. Companies will need to build their financial muscle and focus on developing a lean structure to stir through the uncertain business environment.

The global nature of the outbreak, coupled with its high intensity and long duration, is expected to change the business landscape by way of shift in trade flows, investments and consumption patterns. Hence, the priority for businesses should be to draft a comprehensive action and recovery plan to mitigate the risks and address the main challenges.

Conclusion: An outbreak of COVID-19 impacted the whole world and has been felt across industries. The outbreak is declared as a national emergency by the World Health Organisation. In India, the three major contributors to GDP namely private consumption, investment and external trade will all get affected. World and Indian economy are attempting to mitigate the health risks of COVID-19 with the economic risks and necessary measures needed will be taken to improve it.

Government Updates, Latest Updates, Scheme

Atal Pension Yojana

What is Atal Pension Yojana?

Atal Pension Yojana (APY) is a Government run pension scheme open to all citizens of India mainly focusing on the unorganised sector. APY is administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the National Pension System (NPS). Under this scheme, a minimum monthly pension between Rs.1000 to Rs.5000 is guaranteed for the beneficiaries.

Subscribers can opt for a monthly pension which could be 1,000, 2,000, 3,000, 4,000 or 5,000 rupees, which will start after the age of 60 years. The amount of pension one receives is directly related to the age at which the individual has joined APY and the monthly amount which is contributed.

Objective of the Scheme

Atal Pension Yojana is focused upon:

Unorganized sector such as House Help, Gardeners, Delivery Boys etc.
Ensure a sense of security and protect the citizens from accidents, illness, diseases

Eligibility Criteria for Atal Pension Yojna

All Indian citizens between the age of 18 to 40 years can enroll for pension after the age of 60 under the APY.

The individual applying for the benefit of the scheme must contribute for at least 20 years
The individual enrolled under Swavalamban Yojana will be migrated under Atal Pension Scheme automatically

Atal Pension Yojana Details

The following are some of the key features of the Atal Pension Yojana:

Available for subscription to all Indians in the age group of 18 years to 40 years.
Pension will start after the subscriber attains the age of 60 years.
Pension amount can be selected as monthly Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000 and Rs. 5000. Contribution amounts will be calculated accordingly.
Bank account is mandatory for the scheme and deposit amount is auto-debited from the account periodically.
Contributions made into the Atal Pension Yojana are eligible for tax deduction under Section 80CCD.

How to Open an Atal Pension Yojana Account?

Fill up and submit the APY registration form, at your local bank branch
Provide your bank account number, Aadhar No. and Mobile number
Your first contribution amount will be deducted from your linked bank account at the time of account opening.
Your bank will issue acknowledgment No./PRAN No. to you.
Subsequent contributions will be automatically deducted from your bank account.

How to Download APY Form

The account opening form for Atal Pension Yojana can easily be obtained offline from your nearby bank branch that participates in the scheme. However, the APY application form can also be downloaded for free from various websites such as the Pension Fund Regulatory and Development Authority (PFRDA) Official Website. Alternatively, the Atal Pension Yojana subscription form is also available online on various banking websites that include most major banks (private as well as public-sector ones) operating in India.

How to Fill Application Form?

The Atal Pension Yojana application form comprises the following key fields that need to be filled out correctly prior to submission of the application form:

Section 1 – Bank details like Bank Account Number, Bank Name, and Bank Branch information.
Section 2 – Personal Details such as Name of the applicant, Date of Birth, Email ID, Marital Status, Name of the spouse, Name of the nominee, nominee’s relationship with the subscriber, Age and Mobile Number of the subscriber’s. Aadhar Card Details of spouse and nominee.
Section 3 – Pension Details to be provided like Pension Amount selected – Rs. 1000/Rs. 2000/ Rs. 3000/Rs. 4000/Rs. 5000
The Monthly Contribution Amount will be calculated and filled out by the bank.
Additional details required if the nominee is a minor include –, Date of Birth, Guardian’s Name and answers to key information like ‘Is the minor a beneficiary of other statutory social security schemes?’ And ‘Is the minor an income tax payer?’

If the APY applicant does not have an account with the bank they are applying through, they have to open a bank account with a scheduled bank with a core banking platform. Once the bank account is up and running, the remaining steps are the same as existing Bank Account holders.

Once filled out completely, the application form must be signed by the subscriber and submitted to the bank. The APY form also contains an Acknowledgement Section which reads – “Acknowledgement – Subscriber Registration for Atal Pension Yojana (APY)”. This will be filled out and signed/stamped by a Bank Official once the application is processed.

Can you Change Your APY Pension Payout?

The subscriber can change the pension amount during the period the contribution is made. This can be done once in a year, in the month of April
In case of downgrade of pension, the differential amount will be refunded to the contributor through direct credit to a bank account that is registered under APY.
Upgrading or downgrading of the APY account is chargeable. An upfront fee of Rs.25 will be charged by the bank.
Long term commitment of the subscriber is imperative since the subscription will be made over at least a period of 20 years (in case subscriber enters scheme at age of 40 years).

How to Contribute to Atal Pension Yojana

Contributions to Atal Pension Yojana are made by setting up an auto-debit instruction with your bank. This is the only way to contribute. If you do not keep sufficient account balance for the auto debit, a penalty will be charged as follows:

If contribution per month is up to Rs.100, then penalty of Re.1 will be charged
If contribution per month is between Rs.101 to 500, then penalty will be Rs.2
If contribution per month is between Rs.501 to 1000, then penal charges will be Rs.5
If the contribution per month is over Rs.1,001, the penal charges will be Rs.10

What Happens If You Fail to Contribute to APY?

If you subscribe to APY and yet fail to make regular contributions to the pension scheme due to failure of auto-debit instruction, the following occurs:

Atal Pension Yojana account is frozen after 6 months of non-payment
Deactivation of the APY account after 12 months of non-payment
Automatic closure of the APY account after 24 months of non-payment
The Bank can recover the due amount any time until the last day of that month. Funds can be recovered as and when there are funds in the APY-linked bank account and at any point of time during the month.

Note: To prevent late payment, periodical mobile alerts are sent to APY subscribers by Banks.

Fees, Charges Pertaining to Maintenance of APY Account

Intermediary	Activity	Relevant Charges
Point of Presence	Registration of APY SubscriberRecurring Charges Per Annum	Rs.120 to 150, which depends on the number of subscribersRs. 100 per subscriber
Central Recordkeeping Agencies	APY Account opening charges Account maintenance charges	Rs. 15 per account Rs. 40 per account per annum
Custodian	Investment maintenance Fee (per annum)	0.0075% for electronic & 0.05% for physical segment of AUM*
Pension Fund Managers	Investment maintenance Fee (per annum)	0.0102% of AUM

How is APY Money Invested?

The investment details matter less in the APY than NPS because you get a guaranteed pension. The investment return only matters if the returns generated exceed the guaranteed pension amount. In such cases, a higher pension amount or higher return of corpus for nominees will be available on death of the subscriber.

Government Securities – Min. 45% and max. 50%
Debt Securities and term deposits of banks – Min.35% and max. 45%
Equity and related instrument – Min. 5% and max. 15%
Asset Backed Securities etc. – Max. 5 %
Money Market Instruments – Max. 5%

Tax Benefits for APY Subscribers

Atal Pension Yojana is a government notified pension scheme hence it offers tax exemption benefits up to the Rs. 1.5 lakh cumulative annual limit under Section 80C of the Income Tax Act, 1961. Additionally, APY also qualifies for an additional benefit of up to Rs. 50,000 annually under the relatively newer Section 80CCD (1) of the Income Tax Act, 1961. This additional benefit of up to Rs. 50,000 annually is the same that applies to National Pension System contributions which is over and above the Rs. 1.5 lakh annual tax exemption benefit offered u/s 80C.

APY Account Closure and Exit

Closure of APY account and exit from the scheme is only allowed in case of terminal illness or death. Upon the death of the subscriber, the APY corpus in its entirety is paid to the nominee as per details provided in the APY account opening form.

Co-contribution by the Government is available in this scheme to make APY more popular among workers in the unorganized sector. The co-contribution by the government would be 50% of the amount contributed by the beneficiary per year or Rs.1,000 per year, whichever is lower will be added by the Government. The Government will participate in this co-contribution for five years i.e., from Financial Year 2015-16 to 2019-20. Subscribers enjoying the co-contribution cannot be members of any statutory social security scheme and should not be paying income tax (meaning their income should be below the income tax threshold).

Monthly Contributions

The monthly contribution depends upon the amount of pension you want to receive upon retirement and also the age at which you start contributing. The following table tells you how much you need to contribute per annum based on your age and pension plan.

Age of Entry	Years of Contribution	Monthly Pension of Rs.1000. Indicative Return of Corpus of Rs.1.70lakh	Monthly Pension of Rs.2000. Indicative Return of Corpus of Rs.3.40lakh	Monthly Pension of Rs.3000. Indicative Return of Corpus of Rs.5.10lakh	Monthly Pension of Rs.4000. Indicative Return of Corpus of Rs.6.80lakh	Monthly Pension of Rs.5000. Indicative Return of Corpus of Rs.8.50lakh
18	42	42	84	126	168	210
19	41	46	92	138	183	228
20	40	50	100	150	198	248
21	39	54	108	162	215	269
22	38	59	117	177	234	292
23	37	64	127	192	254	318
24	36	70	139	208	277	346
25	35	76	151	226	301	376
26	34	82	164	246	327	409
27	33	90	178	268	356	446
28	32	97	194	292	388	485
29	31	106	212	318	423	529
30	30	116	231	347	462	577
31	29	126	252	379	504	630
32	28	138	276	414	551	689
33	27	151	302	453	602	752
34	26	165	330	495	659	824
35	25	181	362	543	722	902
36	24	198	396	594	792	990
37	23	218	436	654	870	1087
38	22	240	480	720	957	1196
39	21	264	528	792	1054	1318

Features & Benefits of Atal Pension Yojana

The main features of the APY scheme are mentioned below:

The Indian Government guarantees the minimum pension that will be paid to the individual after retirement.
Under Section 80CCD, individuals are eligible for Atal Pension Yojana tax benefits for the contributions made towards the scheme.
All bank account holders are eligible to join the APY scheme.
Individuals will start receiving pension once they reach the age of 60.
Private sector employees who are not provided any pension benefits are also allowed to apply for Atal Pension Yojana scheme.
You have an option of receiving a fixed pension of Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000, or Rs.5,000 once you reach 60 years of age.
In case of your demise during the scheme, your spouse can either claim the contributions or complete the duration of the scheme.

Customer Support Toll Free Number

At present there is no centralised Atal Pension Yojana Support toll free number as an APY account can be opened at various leading banks across India. Hence the primary point of contact with respect to APY account-related issues would be the specific bank where you have opened your pension account. Alternatively, in case of Atal Pension Yojana Support you can call the following toll free numbers:

CRA (Central Recordkeeping Agency) – 1800-222-080

NPS Helpdesk – 1800-110-708

Government Updates, Latest Updates, RBI Updates, Scheme

Voluntary Provident Fund

What is Voluntary Provident Fund?

Voluntary Provident Fund (VPF) aka Voluntary Retirement Fund is the voluntary fund contribution from the employee towards his provident fund account. This contribution is beyond the 12% of contribution by an employee towards his EPF. The maximum contribution is up to 100% of his Basic Salary and Dearness Allowance. Interest is earned at the same rate as the EPF. Employers are under no obligation to contribute to their employees’ VPF portfolio. Likewise, an employee is also under no obligation to contribute to the Plan. Once the contribution is chosen in VPF, the same cannot be terminated or discontinued before the base tenure of 5 years is completed. The interest rate of the Voluntary Retirement Plan is decided by the Government of India at the start of each financial year.

Who can Invest in a Voluntary Provident Fund?

A VPF is an extension of the EPF. The VPF option is available only to salaried individuals who receive their monthly payments through a specific salary account.

Documents Required to Open a VPF Account

The below-mentioned documents must be submitted in order for employees to open a VPF account:

The company registration certificate with the Ministry of Finance (MoF) must be submitted.
Form 24 and Form 49 must be submitted.
In case the organisation is an ‘Sdn Bhd’, the memorandum and articles of association must be submitted.
The company profile in details must be given.
The business registration certificate must be submitted.

Employees can check with their employer if any further documents need to be submitted to open a VPF account.

Interest Rate of a VPF

The rate of interest is set by the Indian Government and is revised on a yearly basis. The rate of interest for FY 2018-2019 is 8.65% p.a. The interest has been increased from 8.55%, which was the rate of interest for FY 2017-2018. Investments towards a VPF account is viable because of its high rate of interest and tax benefits.

Process to Withdraw Money from a VPF Account

In case of financial requirements due to medical emergencies, withdrawing money from a VPF account could come in handy. Employees must fill up Form-31 and give a request letter in writing for VPF withdrawal. Employees will be able to get the Form-31 from their employer’s Human Resource (HR) team or on the government’s portal. All required documents, including the details of the employee such as PF number, postal address, and bank details must be submitted. A cancelled cheque must also be submitted. All documents that are submitted must be self-attested.

In case of any unforeseen financial emergencies, employees are allowed to withdraw from the VPF account. Some of the reasons where the VPF can be broken are mentioned below:

In case medical bills of the account holder or his/her children need to be paid.
For the marriage or higher-education of the account holder.
To buy new land or a house or for the construction of the house.

Tax Benefits Available Under a VPF

When it comes to various investment options in India, the VPF account is considered among the best. Under Section 80C of the Income Tax Act, 1961, employees are eligible for tax benefits of up to Rs.1.5 lakh. The interest that is generated from these contributions is also exempt from tax. However, in case the rate of interest is more than 9.50% p.a., the amount will be taxable.

Benefits of Voluntary Provident Fund

The VPF falls under the EEE category ( EEE – exempt on contribution; exempt from the principal; exempt on interest) making it an excellent tax saving option. It also helps the employee amass a sizable savings portfolio and help him during big life milestones.

Other Benefits are:

a. Safe Investment Option

The scheme is managed by the Govt of India with fixed interest accrual. Hence, it is considered as a risk-free investment compared to the long-term investment ones offered by other private players.

b. Easy to Apply

To open a VPF account, an employee has to approach his HR/Finance team and advise them to raise a request for an additional contribution in the VPF through a registration form. The existing EPF account will serve as the additional VPF account.

c. High Returns

Currently, the interest is accrued at 8.65% per annum under this scheme. Contributions up to 1.5 lakhs PA and interest accrued is exempt from tax under Section 80C, resulting in higher returns in a long-term perspective.

d. Easy Transfer

The account can be transferred from one employer to another upon changing jobs.

Rules and Regulations of a VPF

The rules and regulations of VPF account are mentioned below:

When compared to an EPF account, employees are allowed to contribute 100% of their basic salary and dearness allowance towards a VPF account.
It is not compulsory for employees to contribute to a VPF account.
The Indian Government decides the rate of interest of a VPF account at the start of the financial year. The rate would increase or decrease when compared to previous years.
The full amount that is available at maturity can be withdrawn at the time of resignation or retirement. Individuals can also transfer their VPF amount from the previous employer to the current one. In case the account holder passes away, the legal heir or the nominee will receive the total amount that has been accumulated.
Only individuals who work for companies that come under the Employees’ Provident Fund Organisation (EPFO) and have an EPF account are eligible to open a VPF account. Individuals who work for unorganised sectors are not allowed to open a VPF account.
Individuals can open a VPF account at any given time during the financial year. Investments made towards the account cannot be stopped for a period of 5 years.
Partial withdrawals in the form of loans can be made against the VPF account. In case the amount is withdrawn before the maturity period, the withdrawn sum is taxable.

Frequently Asked Questions (FAQs)

Q.Who are ideal candidates for a VPF account?

A.Anyone who is looking to invest in a long term financial instrument is an ideal candidate. VPF accounts are best suited for people who are nearing retirement and/or are looking out for a robust, safe and scalable pension fund option.

Q.What is the maximum and minimum amount that can be invested in VPF?

A.When it comes to investment, there isn’t any maximum or minimum VPF Limit. The same is decided by your individual monthly contributions. You can earmark as much as 100% of your monthly income (salary + dearness allowance) as VPF contribution. Note that your employer isn’t obligated to contribute to your VPF account. Hence, the money accumulated in your voluntary PF account is directly dependent on your monthly contributions and the interest accumulated by the same over the tenure of the investment.

Q.How much amount can I withdraw as loan against my VPF account?

A.Partial withdrawals are possible as also the complete withdrawal of the monies accumulated in the VPF account. Usually, people who are changing jobs are prone to breaking their voluntary pf accounts and accessing the funds. However, note that if such an action is completed before said account has completed 5 years of existence, the accumulated funds are subject to taxation.

Q. Will my VPF account get affected if I change jobs?

A:The VPF account is linked to your Aadhar Card. So, it is very easy to transfer your account from one employer to another.

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What are the Different Heads of Income Under the Income Tax Act?

As per Section 14 of the Income Tax Act of 1961, there can be several modes of income for an individual. The income tax computation is an important part and has to be calculated according to the income of a person. For a hassle-free computation, the income has to be classified properly so that there is zero confusion regarding the same. The government has classified the sources of income under 5 separate heads and then the income tax is computed accordingly. The provisions and rules are according to the details mentioned in the Income Tax Act.

5 Different Heads of Income Under the Income Tax Act

1.Income from Salaries

The first head of Income Tax heads is This clause that essentially assimilates any remuneration, which is received by an individual in terms of services provided by him based on a contract of employment. This amount qualifies to be considered for income tax only if there is an employer-employee relationship between the payer and the payee respectively. Salary also should include the basic wages or salary, advance salary, pension, commission, gratuity, perquisites as well as the annual bonus.

Allowances: An allowance is a fixed monetary amount paid by the employer to the employee for expenses related to office work. Allowances are generally included in the salary and taxed unless there are exemptions available.

Specific tax exemptions are allowances allowed by employers as part of the salary. Some of them are.

Conveyance Allowance: Up to Rs. 800 per month is exempt from tax.
House Rent Allowance (HRA): Salaried individuals can claim House Rent Allowance or HRA to lower taxes who live in a rented house. This can be partially or completely exempt from taxes.

The deduction available is the minimum of the following amounts:

Actual HRA received
50% of [Basic salary + DA] for those living in metro cities (40% for non-metros)
Actual rent paid less 10% of salary
Leave Travel Allowance (LTA): LTA accounts for expenses for travel when you and your family go on leave. While this is paid to you, it is tax-free twice in a block of 4 years.
Medical Allowance: Medical expenses to the extent of Rs. 15,000 per annum is tax-free. The bills can be incurred by you or your family.
Perquisites: Section 17 of the Income Tax Act deals with perquisites which are basically benefits in addition to normal salary to which an employee has a right by way of his employment. Examples of these are rent-free accommodation or car loan. There are some perquisites that are taxable in the hands of all categories of employees, some which are taxable when the employee belongs to a specific group and some that are tax-free.

2.Income from House Property

The second head of Income Tax heads is Income from House Property. According to the Income Tax Act 1961, Sections 22 to 27 is dedicated to the provisions for the computation of the total standard income of a person from the house property or land that he or she owns. An interesting aspect is that the charge is derived out of the property or land and not on the amount of rent received. However, if the property is utilized for letting out the normal course of business, then the income from the rent will be considered.

3.Profits and Gains from Business and Profession

The third head of Income Tax heads is Income from Profits of Business in which the computation of the total income will be attributed from the income earned from the profits of business or profession. The difference between the expenses and revenue earned will be chargeable. Here is a list of the income chargeable under the head:

Profits earned by the assessee during the assessment year
Profits on income by an organization
Profits on sale of a certain license
Cash received by an individual on export under a government scheme
Profit, salary or bonus received as a result of a partnership in a firm
Benefits received in a business

4.Capital Gains

Any profits or gains arising from the transfer of a capital asset effected in the financial year shall be chargeable to Income Tax under the head ‘Capital Gains’ and shall be deemed to be the income of the year in which the transfer took place unless such capital gain is exempt under Section 54,54B,54D,54EC,54ED,54F,54G and 54GA of the Income Tax Act. Capital gains tax is based on the holding period of the capital asset.

There are two categories of capital gains- the Long Term Capital Gain (LTCG) and the Short Term Capital Gain (STCG).

Short Term Capital Gain: Any asset/property which is sold within less than three years of acquisition is considered as short-term assets, hence the profit earned by selling the asset is called to be short-term capital gain. In shares/equities, if you sell the units before one year of the purchase date, the profit would be considered as the short-term capital gains.

Long Term Capital Gain: Here, the profits earned by selling the property or asset after three years are called long-term capital gains. In the case of equities, LTCG is applicable if the units have been held for at least one year.

Capital assets that are classified as long-term capital assets if the period of holding exceeds 12 months include:

Units of UTI & Zero-Coupon Bonds
Equity shares that are listed on any stock exchange
The units of equity- oriented Mutual Funds
Any listed Debenture or government security

5.Income from Other Sources

Any other form of income, which is not categorized in the above-mentioned clauses, can be sorted in this category. Interest income from bank deposits, lottery awards, card games, gambling or other sports awards are included in this category. These incomes are attributed in Section 56(2) of the Income Tax Act and are chargeable for income tax.

The incomes computed under “income from other sources are:

Interest on bank deposits and securities
Dividend
Income from sub-letting a house property by a tenant
Insurance commission
Provident Income
Income from games like lottery, racecourse, etc

Income Tax Act: An Overview

The Income Tax Act was enacted in the year 1961. It is the statue under which all issues regarding taxation are listed and stated. The act includes all forms of levy, administration, collection and income tax recovery. The fundamental aim of the act is to consolidate and amend the rules of taxation in the country to ensure economic stability and proper circulation of wealth throughout all sectors. The act consists of a long list of varied sections with each section having different aspects relating to the taxation of the country. Under the Section Income Tax in the Act, there are a total of 5 heads of income that touch different topics of taxation applicable and the proper consolidation of it.

For your reference below is the form issued by IncomeTaxIndia, giving a detailed description of Income from Different Sources
https://www.incometaxindia.gov.in/Charts%20%20Tables/Treatment_of_income_from_different_sources.htm

Frequently Asked Questions (FAQs)

Q.When do I have to pay the taxes on my income?

A.The taxes on income can be finalized only on the completion of the previous year. However, to enable a regular flow of funds and to ease the process of collection of taxes, Income-tax Act has provisions for payment of taxes in advance during the year of earning itself or before completion of the previous year. It is also known as Pay as you Earn concept.

Taxes are collected by the Government through the following means:

Voluntary payment by taxpayers into various designated Banks such as Advance tax, Self-Assessment tax, etc.
Taxes deducted at source
Taxes collected at source

Q. What is gross total income?

A.Gross Total Income is a cumulative income of a taxpayer which is computed after combining the five heads of income

Q.What is the difference between gross total income and total income?

A.Total Income is the income on which tax liability is determined. It is necessary to compute the total income to ascertain tax liability with deductions under 80C to 80U of the Income Tax Act from total gross income.

Q.Can I claim deductions for my personal and household expenditure while calculating my taxable income or profit?

A.No, you cannot claim the deduction of personal expenses while computing the taxable income.While computing income under various heads, the deduction can be claimed only for those expenses which are provided under the Income-tax Act.

Q.Is there any limit of income below which I need not to pay tax?

A.At this moment (i.e., for the financial year 2019-20) Individual, HUF, AOP, and BOI having income below Rs. 2,50,000 need not pay any Income-tax. In respect of resident individuals the age of 60 years and above but below 80 years, the basic exemption limit is Rs. 3,00,000 and in respect of resident individuals of 80 years and above, the limit is Rs. 5,00,000. For other categories of persons such as co-operative societies, firms, companies, and local authorities, no basic exemption limit exists and, hence, they have to pay taxes on their entire income chargeable to tax.

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Senior Citizens Savings Scheme

Senior Citizens Savings Scheme (SCSS) is a government-backed savings instrument offered to Indian residents aged over 60 years. The deposit matures after 5 years from the date of account opening but can be extended once by an additional 3 years. The SCSS interest rate for April to June 2020 has been set at 7.4%. This is the highest interest rate among the various small savings schemes in India. SCSS is available through Public / Private sector banks and India Post Offices. Being a government-backed savings instrument, the terms and conditions applicable to the SCSS are the same, regardless of the bank/ post office, you invest through. One of the main benefits of the scheme are:

Tax benefits are provided
Safe to invest in the scheme
Interest rate has been reduced from 8.6% to 7.4%
Premature withdrawal is allowed

The scheme comes with various security features and provides individuals with a savings option for the long run. The SCSS is available at post offices and certified banks across the country.

SCSS Eligibility

The Eligibility Criteria for the SCSS are mentioned below:

An individual who has attained the age of 60 years or above at the time of opening an SCSS account.
Individuals who have attained the age of 55 years old, but are below the age of 60 years old and have retired on superannuation are eligible to open an SCSS account.
Individuals who have attained the age of 55 years old and have retired before the implementation of the SCSS rules are eligible under the scheme.
Under the SCSS, retired Defence Services personnel are eligible irrespective of their age. However, certain other specific conditions must be met by these individuals.
Non-Resident Indians (NRIs) are not eligible to open an SCSS account.
Hindu Undivided Families (HUFs) are not eligible to open an SCSS account as well.

How to Open a SCSS Account at Post Office?

You can open a Senior Citizens Savings Scheme account at all India Post Offices. The interest earned from an SCSS account is automatically credited to the investor’s linked savings account at the same post office. The wide reach of India Post ensures that the option of SCSS account is available to Indians across the country- even those located in the most remote parts.

SCSS Account Registration at Banks

Apart from the post offices, the SCSS account is also offered at select Public/ Private sector banks. The following are key benefits of opening a Senior Citizen’s Savings Scheme account at authorized banks:

The accrued interest can be directly credited into the depositor’s savings bank account held with the bank branch.
Standard account statements are forwarded to depositors through post or email.
24×7 customer service through phone banking services.

In case you are a senior citizen and plan to complete your SCSS registration at a bank, you will have to follow the applicable account opening procedure.

Documents Required to Open an SCSS Account

An SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:

1. Form A has to be filled for opening an SCSS Account.

2. Identity proof like PAN card, Passport to be presented.

3. Address proof such as Telephone bill, Aadhar card is mandatory.

4. Document for proof of age is required. This could be in the form of a Passport, Senior Citizen Card, a Birth certificate issued by the Corporation or Registrar of Births and Deaths, Voter ID card, PAN card etc.

5. 2 Passport size photographs.

All the above documents must be self-attested.

SCSS Interest Rate

Currently, the SCSS interest rate has been reduced from 8.6% to 7.4%. The returns of the SCSS is high when compared to savings and Fixed Deposit (FD) accounts. On the first instance, the interest is payable on the deposit date of March 31, September 30, and December 31, thereafter, interest is payable on March 31, June 30, September 30, and December 31. Quarterly interests are paid on the initial working day of April, July, October, and January. However, quarterly interest payments are available only at Core Banking enabled post offices.

Minimum and Maximum SCSS Deposit Limits

Depositors are allowed to make a lump sum deposit with a minimum deposit of Rs.1000. Deposits greater than Rs.1000 have to be made in multiples of Rs.1000. The maximum SCSS limit deposit is Rs.15 lakh.

While deposits in the SCSS accounts can be made in cash, this is allowed only for amounts less than Rs. 1 lakh. If the deposit amount for Senior Citizens Savings Scheme exceeds Rs. 1 lakh, using a cheque/demand draft for making the deposit is mandatory.

Tenure of the Fund and Withdrawal

The tenure of this scheme is 5 years with the option to extend it for 3 more years. In order to extend the scheme for another 3 years after the completion of the 5-year tenure, the investor is required to submit the duly filled Form B for the extension of the scheme. Only one extension is allowed, and such extended accounts can be closed after one year of extension without any penalty.

Taxability on Senior Citizens Savings Scheme

Investments made in a Senior Citizen Savings Scheme account qualify for income tax deduction benefit up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act, 1961.
Interest on SCSS is fully taxable. In case the interest amount earned is more than Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.

SCSS Application Form Download Online

Senior Citizen’s Application Form is available via the offline route at India Post Offices as well as via the online route. If you are planning to open your SCSS account at an India Post Office, you can download the SCSS application form from the official India Post website.

A number of participating public and private sector banks also have the option of SCSS Application form download from their official websites. Alternatively, you may choose to obtain the paper form at designated branches of participating banks in India.

How to Fill Senior Citizen’s Savings Scheme Application Form

Currently, a SCSS account cannot be opened via the online route, thus after downloading the SCSS application form, you have to print, fill it out and submit the completed SCSS Application form (at the post office/bank) along with applicable supporting documents. The SCSS application form requires you to provide some key information at the time of opening a Senior Citizen’s Savings Scheme account such as:

Applicant name and PAN
Name of the primary applicant’s father/mother/husband/wife
In the case of joint SCSS account with spouse, you have to mention the name, age, and address of your spouse.
Cheque/demand draft amount and number (if applicable)
Nominee name, age, and address (If you wish to have more than one nominee, mention detail of individual share of each nominee)

Premature Withdrawal of SCSS Account Deposit

Premature withdrawal of Senior Citizen’s Savings Scheme is allowed but penalties are applicable in such cases based on the time elapsed between account opening and withdrawal. The penalties on premature exit from SCSS are as follows:

1.5% of deposit amount deducted as a penalty if an exit from the scheme occurs before completion of 2 years from the date of account opening.
1% of SCSS deposit deducted as a penalty if an exit from the scheme occurs between 2 years to less than 5 years from the date of account opening

Closure of SCSS Account Before Maturity

In the event of death of the primary account holder before actual maturity of the account, the account will be closed and all the maturity proceeds will be transferred to the legal heir/nominee. For deceased claims, the nominee or the legal heir will have to fill out a written application in prescribed format along with a Death Certificate to facilitate the closure of the account.

Benefits of Investing in Senior Citizen Savings Scheme

Being a government-backed scheme, SCSS comes with all the protection and assertion associated with all government schemes i.e. sovereign debt.
Superior Returns- the scheme has a high-interest rate of 7.4% per annum. This is higher than most tax savings instruments in Sector 80C.
Medium-Term Investment – The account comes with an initial maturity term of 5 years however this can be further extended to another 3 years. This encourages senior citizens to have this saving scheme as a medium or a long term investment product in their financial kitty.
The investment done under this scheme is tax-deductible under Section 80C, of the Income Tax Act, 1961 up to Rs. 1.5 lakh per annum.
Flexibility in Investment amount – One can invest any amount in multiples of Rs. 1,000 up to the maximum cap of Rs. 15 lakhs. However, only one-time lump sum investments are allowed.
The option of premature withdrawal in case of financial emergencies (with applicable penalties).
Easy availability – the scheme may be availed through India Post Offices or designated bank branches located across the country.

Frequently Asked Questions on Senior Citizens Savings Scheme

Q.What will be the share of the joint account holder in the deposit in an account?

A.The whole amount is attributed to the first depositor or applicant. The addition of a spouse as a joint account does not matter in this case.

Q.Can both the spouses open separate accounts?

A.Yes, individual accounts can be opened as well, provided the deposit limit is a maximum of Rs.15 lakh. Of course, it has to adhere to the rules of the scheme.

Q.Any income tax rebate / exemption is admissible?

A.No, not with this scheme.

Q.Is TDS applicable to the scheme?

A.Yes if the interest exceeds Rs.10,000 per annum, TDS is applicable. In this scheme, interest payments are no exemption to deduction of tax at source.

Q.Any minimum limit has been prescribed for deduction of tax at source?

A.As per government regulations, tax has to be deducted at source as per the minimum balance.

Q.Can a person holding a Power of Attorney sign for the nominee in the nomination form?

A.No a person holding a Power of Attorney cannot sign in place for the nominee in the nomination form.

Q.In case of a joint account, if the first holder / depositor expires before maturity, can the account be continued?

A.Yes, the nominee can hold the account of the expired depositor in case of a death, provided it pertains to the SCSS Rules.

Q.Is there any fee prescribed for nomination and / or change / cancellation of nomination?

A.No fee is charged.

Q.Can an account holder obtain a loan by pledging the deposit/account under the SCSS, 2004?

A.Periodic withdrawals for loans is not possible in this scheme as it defies the very nature of the scheme.

Q.Is premature withdrawal of the deposits from the accounts under the SCSS, 2004 permitted?

A.Yes, premature withdrawals are allowed, although a premature closure of the savings account is permitted only after a year, whereby the account holder will be charged 1.5% of the savings and 1% after two years.

Q.Are Non-resident Indians, Persons of Indian Origin and Hindu Undivided Family eligible to invest in the SCSS, 2004?

A.No, it is not possible, though an Indian moving abroad and having a SCSS can continue to maintain it.

Q.Can an account be transferred from one deposit office to another?

A.Using Form G, an account can be transferred from one deposit office to another.

Q.Can an SCSS account be extended?

A.Yes, within one year after maturity a depositor can extend their SCSS for a period of three years.

Q.What happens if an account is opened in contravention of the SCSS Rules?

A.The account will be closed, interest deducted and the deposit money returned to the depositor.

Q.Whether commission is payable to the agents under the Scheme?

A.Payments of commission under this scheme has been discontinued.

Q.Why must I choose to open my SCSS account in a bank rather than a post office? Which is better?

A.The senior citizens savings scheme is an Indian government sponsored program that is administered to the general public through two mediums- a list of certified banks and the offices belonging to the Indian Postal Department. The latter are just the medium and do not possess any control over the terms, rules and regulation of the actual SCSS product. Thus, it will be wrong to put one medium over the next.

However, owing to the rapid advancement of online and digital technology in the banking sector, a number of features are now available that make banking simple and the management of investments, a child’s play. These features will help you manage your SCSS account better, though the difference as compared to the post office hosted SCSS account may not be much. The following features are the highlights-

Facility of direct credit of accumulated interest into the depositor’s savings bank account. In the case of the post office, such a savings account must first be created.
Regular account statements are forwarded to the depositor via post and/or email.
Higher grade of customer service through phone banking facility.

Q.What will happen to my account if I were to pass away?

A.If you have opened an individual account (without any joint investor) and unfortunately, you were to pass away unexpectedly, the SCSS account will be primed up for closure. To affect such a termination, the account holder’s nominee must forward an application in Form ‘F’. The Annexures II & III of such a form must be attested by a public notary or the Oath Commissioner.

Q.Can I cancel or change my nomination?

A.When applying for the SCSS account, you are free to propose a nominee. This activity can also be completed after your account has been in existence for a specified duration of time. Alternatively, the nomination made by you can easily be canceled or edited by submitting a fresh nomination in Form-C to the bank/post office wherein said SCSS account is being maintained.

Q.What to keep in mind before opening a SCSS Account

A.Before you open a Senior Citizens Savings Scheme account, ensure that you provide all the necessary information that has been requested. If it is found that the information provided by you is incorrect or false, the account shall be closed with immediate effect. The deposited amount will be refunded to the depositor after the deduction of interest that has already been paid into the account.

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Post Office Recurring Deposit

India Post offers its customers the facility of a 5-Year Recurring Deposit (RD) Account which is essentially a deposit scheme allowing customers to add to their savings by investing money which earns interest over a fixed period of time. An RD is usually opened for a fixed period of time and deposits must be made at predetermined intervals which may be monthly, quarterly, depending on the terms and conditions of the deposit scheme. Unlike a fixed deposit, an RD is not a one-time investment and may be closed before its maturity date. The India Post Recurring Deposit Account is an ideal investment option for first time investors or young professionals as it does not require customers to invest large sums of money towards installments but does earn you handsome interest at the end of the maturity period.

Post Office RD Eligibility

Recurring Deposit Accounts can be opened by individuals as single or as joint accounts.
An RD Account can be opened in the name of a minor. Minor individuals aged 10 years and above can open and operate their RD accounts.

Post Office RD Interest Rate

This RD scheme offers a Post Office RD Interest Rate of 5.8% per annum which is compounded quarterly.

Particulars	Details
Interest Rate	5.8% p.a. (Compounded quarterly)
Tenure	5 Years
Minimum Deposit	Rs. 100 per month
Maximum Deposit	No Upper Limit (any amount in multiples of Rs.5)
Missed Deposit Penalty	Rs.1 for every Rs.100

Post Office Recurring Deposit Tenure

A Recurring Deposit is an instrument which is used as a medium-term investment option. Most investors opt for it in order to meet foreseeable emergencies in the coming years. Currently, individuals who wish to open a Post Office RD need to ensure that their deposits are active for a minimum period of 5 years, i.e.Minimum Tenure of Post Office RD = 5 years

Individuals who wish to continue with their RD even after this period can do so, for there is a provision which permits an RD to be extended by 5 more years, taking the maximum tenure to 10 years. RDs which have been extended beyond 5 years will continue to earn the interest, which is compounded every quarter, as previously.

Quantum of Deposits

A Recurring Deposit provides individuals with an opportunity to save for the future by using the resources available to them. Unlike other deposits, the minimum deposit amount is kept low, ensuring that millions of rural and lower-middle-class Indians can afford it. The table below highlights the quantum of deposits permitted in an RD.

Particulars	Details
Minimum Deposit	Rs.100 per month or any amount in multiples of Rs.10
Maximum Deposit	No upper limit

Individuals can increase their deposit in multiples of Rs.5, ensuring that they invest whatever amount is feasible.

Deposit Dates

An individual opening a Post Office RD is expected to make a total of 60 deposits during the period, i.e. one deposit every month for 5 years. The first deposit should be made when the account is opened, with subsequent monthly deposits to be made before a particular date, depending on the date on which the account was opened.

Individuals who open an account between the 1st and 15th of a particular month are expected to make monthly deposits before the 15th of the next month. Accounts which were opened after the 15th of a month will require subsequent deposits to be made between the 16th and the last day of a particular month. Deposits can be made either by means of cash or a cheque.

Post Office Recurring Deposit (RD) Online Payment

Currently there is no way that post office RD online payment can be carried out from the account holder’s end except through ECS. You can use Electronic Clearing Service (ECS) to ensure that your deposits are paid. However, if you have an agent, he or she can conduct the post office recurring account online payment on your behalf. This is possible through the post office agent portal.

Premature Withdrawal of Recurring Deposit (RD) in Post Office

There could be instances where an individual is cash-strapped and in dire need of money. While it is not recommended to close an RD before its maturity, there is a provision for premature withdrawal of the amount in an RD. Listed below are the important points associated with the premature withdrawal of an RD.

Premature withdrawal is permitted only after an account has been active for a minimum of 1 year.
A minimum of 12 monthly deposits should have been made into the account before premature withdrawal is permitted.
Only one withdrawal is permitted if the above conditions are satisfied. The quantum of such withdrawal should not be more than 50% of all deposits until said time.
Withdrawal amount can be in multiples of Rs.5.
Amount withdrawn should be repaid, either as a single lump sum amount or through EMIs.
Interest should be paid by the individual on the amount withdrawn.
Amount withdrawn needs to be repaid, with interest, before the RD matures.

Delayed RD Deposits – Fine and Penalties

There could be instances where an account holder is unable to deposit the monthly amount in his/her RD. As per applicable rules, a maximum of 4 such defaults are permitted, post which the account will become a discontinued account. Such discontinued accounts can be revived within a period of 2 months after the next (5th) default.

The rules also state that a default penalty of Rs.1 for every Rs.100 shall be charged. This fine needs to be paid in addition to the missed deposit amount in order for the account to be revived.

Post Office Recurring Deposit Rebate

In order to incentivize people into depositing money in advance, a Post Office RD provides rebates on advance deposits. These rebates might not sound a lot, but can help an individual with meagre resources save a considerable amount for other purposes. The table below highlights the rebate options provided with a Post Office RD.

Post Office Recurring Deposit Rebate Details

Number of Advance Deposits Installments	Quantum of Rebate
6	Rs.10 for every Rs.100
12	Rs.40 for every Rs.100

Frequently Asked Questions

Q.How much can I invest in a Post Office recurring deposit?

A.For opening a recurring deposit account with the Post Office, the minimum amount is Rs.100 per amount or any amount in multiples of Rs.10. There is no cap on the maximum amount that you can invest.

Q.Are Post office RDs tax-free?

A.Yes, they are tax free given that it has a tenure of 5 years.

Q.Is the facility of premature withdrawal available on Post Office recurring deposits?

A.The facility of premature withdrawal is available. However, premature withdrawal is allowed after 3 years from the date of opening the account

Q.Can an RD account be opened in the name of a minor at the post office?

A.Yes, an RD account in the name of a minor can be opened. The minor should be above 10 years of age.

Q.Does Post office offer any kind of rebate?

A.If you make advance deposit of at least 6 months, the post office shall offer you a rebate. Rebate will be paid for denomination of Rs.100.

Q.How is RD interest calculated?

A.Interest is compounded on a quarterly basis when it comes to recurring deposits.

Q.Which is the better option when it comes to opening an RD, in a bank or post office?

A.It is best to open an RD account where you can avail high interest rates.

Covid 19 Updates, Latest Updates

Money-Saving Tips in Lockdown

With shopping malls, restaurants, cinemas, and airlines shut for business due to the coronavirus outbreak, people are discovering an unlikely benefit of the lockdown. They are actually saving money. Yes, lockdown helps in saving a lot of money hence can improve your financial wealth. The money being spent on these leisures can now effectively be saved. Hence, you can further invest this money in a lot of savings instruments to make your financial future strong. future. So, let’s see how this lockdown will be beneficial in terms of saving money.

Cut Down Your Extra Expenses: You can start by writing down your expenses to see how you are spending your money and where you can cut back. If you don’t know where your money goes each month or even how you spend, you won’t be able to know what habits you can change. Now is the time to develop a saving plan for the future.

Don’t Panic Buy: Panic-buying erupted when people heard the word lockdown. Unless you are preparing for a zombie apocalypse don’t do this, as you spend more and are often left with items you don’t need. Identify what essentials are needed and purchase what you need. In a lockdown, we are still able to visit food retailers to purchase what we need.

Manage Your Debt Orders: Pull up your monthly debit orders to see what services and subscriptions you are paying for monthly. You might find out that you are paying for more than you realised. During this period, you might also want to cancel a few unnecessary subscriptions that you won’t use during this time. It’s best to speak to the service provider to determine the terms and conditions. You may be able to re-subscribe at a later stage.

Redeem Your Cashback and Rewards : If you are a credit card holder, you get a lot of rewards and cashback while you shop from your card. Thus, these collected rewards and cashbacks can easily be redeemed online. You can shop using these points and can save your money. Open your credit card account and check how many points you have collected and for what items, you can redeem them.

Where You Can Invest Your Saved Money

Build an Emergency Corpus: This is the first and foremost thing you should be doing with the saved money, particularly in an uncertain economic situation such as the present one.

Some banks allow parking money in FDs and automatically ‘sweep it in’ to savings accounts when there are debits from the latter. This allows you to earn a higher return than savings account interest. Never expect any great returns on your emergency fund. You should be able to access the funds immediately. Learning from the ongoing crisis, one should try and have 12 months’ living expenses in the emergency fund. This will give you a peace of mind and confidence to face any untoward situation.

Invest in Mutual Funds: You can also consider investing some money in mutual funds. For low-risk investors and those with a time horizon of less than three years, debt funds work best. However, if you have a sufficiently high-risk appetite and a time horizon of 7-10 years, you can look at equity mutual funds. However, experts suggest splitting this into staggered amounts through SIPs rather than lump sums.

Contribute in Health and Life Insurance Policy: It would be advisable to buy a health and life insurance policy. This is the right time that you should have one. Make sure that you have a robust health/life insurance policy in place that covers coronavirus treatment. A small monthly contribution will be a life-saver for you in the future.

Look Out For High Return Saving Avenues: There are a lot of saving instruments available in the market such as RD, PPF, NPS, Post Office Savings Scheme, Senior Citizen Savings Scheme, etc. Investing a small sum in any of these avenues can help you get higher returns hence you will have a big corpus ready for future purpose.

Covid 19 Updates, Latest Updates, Personal Loan

How to be Emergency Ready Amid Covid-19 Crisis?

The ongoing pandemic has brought the focus back to our health. But it’s not just your physical health that you need to look after at such a sensitive time. You also need to take certain steps to look after your financial health so that it can effectively tackle any future challenges arising out of this pandemic. So are you emergency ready amid this crisis? Do you have the emergency funds that can effectively be used anytime? Well, let’s find out how to be emergency ready amid COVID-19 crisis.

Your PF Account is Accessible

Recently, the Government relaxed norms surrounding the Provident Fund (PF) accounts. You can now claim an advance in lieu of COVID-19. However, you need to have a functioning UAN and EPF user profile to access and make a claim. If you don’t, now’s the time to visit the EPFO website and have everything set up, so you know your hard-earned PF fund will be within reach on a rainy day.

Consider Your Fixed Deposit

The money saved in your bank’s fixed deposit can come to your rescue amid this crisis. You can use this money anytime to meet your emergency needs. If your fixed deposit has a lock-in period, don’t worry as you can opt for a pre-withdrawal while bearing certain charges. This money is yours hence you can use it whenever you are in need.

Break Your Recurring Deposits

If you have an RD, which is also a famous savings instrument, it can also be used as an emergency fund. You can stop the monthly instalments of your RD anytime and use this corpus for any emergency.

Don’t Forget Your Mutual Funds and SIP Investments

Your mutual funds and SIP investments help in coping up with the emergency crisis. The money parked in this investment avenue can come handy to meet your emergency needs. You can discontinue your SIP instalments anytime and use the surplus amount to cater your emergency needs. However, you need to pay the charges like exit load to stop your SIP instalments.

Your Investment in Gold is Reliable

You can also consider your gold investments as it can also be used for rainy days. Be it physical gold or dematerialized gold, both can be used as an emergency fund. Though, the gold prices have reduced now but still, it is considered to be a good option meeting your emergency, financial needs.

Avail a Personal Loan

Availing a personal loan is also a wise decision as this loan comes handy to meet all your emergency needs. It can be availed at an attractive interest rate and minimal charges. Hence, less loan repayment burden on your shoulders.

Use Your Second Income, If Any

A sudden loss of income can throw your finances and future in jeopardy. Unfortunately, you can’t pause your monthly utility bills and other necessary/emergency expenses because of this. You will still need to pay them. This is where the second source of income will come in handy. It will help you meet these emergency expenses and tide over difficult times. An extra assignment over the weekend or a part-time job in the evenings after work are good ways to earn that extra buck.

Consider Your Other Savings Stored in Bank Accounts

If you have a sum, which you think can be used to meet your emergency needs, it is advisable to use it. Be it cash saved in your bank account or a corpus stored in other saving instrument like-Senior Citizen Savings Scheme, National Pension System, Employee Pension Scheme or Post Office Savings Scheme

So, hope after reading the blog post, you will be prepared for any emergency amid the covid-19 crisis.

Covid 19 Updates, Latest Updates, Loans, Personal Loan

Covid-19 Personal Loan

Why Should You Go For Covid-19 Personal Loans?

To help people tide over any cash crunch during the COVID-19 pandemic, banks and non-banking finance companies (NBFCs) have rolled out personal loan schemes with relaxed norms for their customers. Yes, banks such as Bank of Baroda, Punjab National Bank, Bank of Maharashtra and Bank of India have launched new personal loan schemes for existing customers. These special loans come with relaxed norms for customers like zero or minimal processing fee, attractive interest rates, etc. So, should you then opt for these Covid-19 personal loans to ease your short-term financial pain? If yes, what are the conditions that banks have laid out? And, if not, how you can tackle the liquidity issues with your existing investments and savings.

What are the Covid-19 Personal Loans?

Covid-19 personal loans are a type of personal loan which are especially designed to meet your immediate cash crunch needs during Covid-19 pandemic. These loans are available to the existing customers only having a cibil score of above 650. This loan comes with an attractive interest rate, minimal processing fee and repayment period of up to 3 months.

Which Lenders Offer Covid-19 Personal Loans?

Name of the Lender	Name of the Scheme	Eligible Customers	Interest Rates	Loan Amount	Tenure	Processing Fee
Bank of Baroda	Baroda Personal Loan COVID-19	Existing retail loan customers	10.25% per annum	Rs.25,000-5,00,000	Up to 3 Months	Rs.500
Bank of Maharashtra	Personal Loan COVID-19	Existing housing loan customers of the bank	9.20% per annum	Up to 3,00,000	Up to 36 months	Nil
Punjab National Bank	PNB Sahyog COVID-19	Existing bank customers and housing loan customers	8.05% per annum	Up to 3,00,000	Up to 36 months	Nil
Bank of India	COVID-19 Personal Loan	Existing salary account holders and housing loan customers of the bank	7.25%	3 times of last drawn gross salary OR Up to Rs.5,00,000	6/36 months	Nil

Who Can Avail These Loans?

COVID-19 specific loans are primarily offered to existing customers requiring emergency funds to tackle cash flow disruptions, according to experts.

Consumers facing liquidity related issues due to the lockdown can consider them.

What are the Interest Rates Being Offered on These Loans?

These loans come with lower interest rates than regular personal loans and may also come with a limited version of moratorium. Banks, on an average, are offering an interest rate of up to 15% on these loans.

Typically, personal loans have an interest rate of 18 percent, which can go as high as 24%. Hence, these types of loans may ease out the liquidity crunch in the short run.

How Easily These Loans Will Be Processed?

Most lenders are currently working with limited staff for very limited working hours, which means availing these COVID-19 specific personal loans would anyways depend on the capacity of the lender to process and disburse these loans during the lockdown. But you can apply for them online and send your application, the bank officials will get in You.

What are the Conditions for Availing Covid-19 Personal Loan

Bank of Maharashtra: Offers the loan only to its existing housing loan customers. If you are a salaried person, the loan amount allowed will be 10 times your latest gross monthly salary. In case you are self-employed, then you will get a loan of up to 60 per cent of your latest annual income based on the latest tax filings. The maximum loan amount is capped at Rs 3 lakh for both salaried and self-employed home loan customers.

Bank of Baroda: Offers its own version of COVID-19 personal loan to its home, car, personal, education and other loan customers. Borrowers should have a minimum of six months’ relationship with the bank. And the existing loan amount should have been fully disbursed to the borrower before applying for the COVID-19 product. If the original loan has a moratorium, then the moratorium period should also have been completed. And, at least three installments of the original loan must have been paid before the borrower applies for the COVID-19 loan. A good past track record in repaying loans is crucial to be eligible with you shortly.

Punjab National Bank: The lender is offering COVID-19 specific loans to existing customers who are drawing their salaries through the bank. Also, those who had a salaried account with United Bank of India and Oriental Bank of Commerce, which are now merged with PNB, are also eligible for the loan.

Bank of India: The bank is offering COVID-19 personal loan to only existing salary account holders and housing loan customers of the bank. If you have a salary account in the bank or if your housing loan is already running with the lender, only you are eligible to apply for this special personal loan to meet your financial crisis.

What Works for You?

Interest rates on COVID-19 loans are lower than on the usual personal loans; they start at around 7.25% yearly and go up to as high as 14% annually. Regular personal loans come at interest rates of 14-24% depending on your credit score and income. These schemes are offered purposely at low-interest rates to help many customers whose cash flows may have got impacted due to the lockdown imposed by the government.

What Doesn’t?

The COVID-19 personal loan schemes are only offered to existing customers of banks. In fact, some banks offer it only to their home loan customers. Some have extended it to other bank customers as well.

Banks will mainly lend only to customers who have a decent track record of repayments and good credit score. Also, there are various terms and conditions for eligibility and the disbursal amount in the scheme as explained above.

Banks have linked the interest rate of this loan scheme to repo rates of the Reserve Bank of India (RBI). So, when the repo-rate is increased by the RBI the monthly installment for the borrower will also increase, effective from the subsequent reset date of the bank during the tenure of the loan.

Some of the banks are offering a moratorium of three to six months in this loan scheme. It means a borrower doesn’t have to repay any installment during the moratorium period. During the moratorium, interest is charged and is added to the repayment costs of the borrower. However, there are penalty charges of 2% for non-payment or delayed payment on the outstanding amount. This will be an additional cost if you are unable to repay by the due date.

Should You Go for It?

A personal loan should be your last resort. If you are in a tight financial situation, first try and tap your emergency corpus if you have one. If you don’t, then liquidate your existing investments or even your gold holdings.
Do not opt for these loans just because they are easily available online and carry low-interest rates compared to regular personal loan schemes.
Taking on an additional loan to pay off your existing loan can lead to a financial disaster, especially in these times of salary and job cuts.
According to experts, at this time, be frugal and control your expenses. No one knows how long this contagion is going to last and what shape it will take. Only if it’s a dire emergency should you opt for this loan?

Banks Updates, Loans, Personal Loan

HDFC Bank vs ICICI Bank vs SBI vs Axis Bank vs PNB

HDFC Bank vs ICICI Bank vs SBI vs Axis Bank vs PNB: Personal Loan Interest Rates Comparision

Personal loans are short-to-medium term unsecured loans granted to an individual to meet emergency needs such as medical costs, home renovation, among other requirements. Flexibility, minimal documentation and quick processing make personal loans a preferred financing option. These loans are usually offered for a period between 1 year and 5 years. Personal loans interest rates may vary from lender to lender, which also depends on the loan worthiness of the customer.

While taking a personal loan, one must compare rates offered by various banks. HDFC Bank, ICICI Bank, SBI Bank, Axis Bank, and Punjab National Bank among all other banks, offer personal loans at competitive rates. Even loans at 50 basis point cheaper rate can make a big difference in installments. Therefore, it is always advisable to compare all the available options in the market.

HDFC Bank vs ICICI Bank vs SBI vs Axis Bank vs PNB: Compare Personal Loan Interest Rates

Details	HDFC	ICICI	SBI	Axis Bank	Punjab National Bank
Interest Rates	10.75% to 21.30% per annum	11.25%- 22.00% per annum	10.35%-14.75% per annum	12%-24% per annum	9.20%-12.05% per annum
Loan Amount	Rs.50,000-15,00,000	Up to Rs.20,00,000	Up to Rs. 20,00,000 lakh	Rs.50,000-15,00,000	Up to Rs.10,00,000
Tenure	Up to 5 Years	Up to 5 Years	Up to 7 Years	Up to 5 Years	Up to 5 Years
Processing Fee	Up to 2.50% of the loan amount	Up to 2.25% of loan amount +GST	Up to 1.50% of the loan amount+GST	As applicable by the bank	Up to 1% of the loan amount
Per Lakh EMI	Rs.2,162-2,722	Rs.2,187-2,762	Rs.1,678-1,916	Rs.2,224-2,877	Rs.2,086-2,227

HDFC Bank: The bank offers personal loans at interest rates between 10.75% to 21.30% per annum to salaried people. The bank offers personal loan for a loan amount of up to Rs.15 lakh for a tenure of upto 5 years. The individuals must be working in the private limited companies, employees from public sector undertakings, including central, state and local bodies are eligible to apply for the loan. Also, individuals need to have a job for at least 2 years, with a minimum of 1 year with the current employer. The loan is available at a processing fee of 2.50% of the loan amount.

ICICI Bank: The bank offers personal loans at interest rates between 11.25% and 22.00% per annum. The loan amount offered by the bank is up to Rs.20 lakh for a tenure of up to 5 years. Both salaried and self-employed individuals are eligible to apply for the loan. The salaried applicant needs to have 2 years of total experience in a job/profession. Whereas, self-employed individuals need to have 5 years of business stability. While availing the loan, an applicant needs to pay a processing fee of up to 2.25% of the loan amount.

State Bank of India: The bank offers personal loans at interest rates between 10.35%-14.75% per annum depending upon the credit history of the customers. SBI offers loan to salaried employees and pensioners under the products known as SBI Xpress Credit and SBI Pension Loan respectively. The loan amount offered by the bank ranges up to Rs.20 lakh for a tenure of up to 7 years. The bank charges a processing fee of up to 1.50% of the loan amount.

Axis Bank: The bank offers personal loan starting from Rs 50,000 up to Rs 15,00,000 for a tenure of up to 5 years. The interest rates it charges are between 12%-24% per annum. The bank offers loan to salaried applicants and doctors. Employees need to work in public and private limited companies. Government sector employees including Public Sector Undertakings, Central and Local bodies are eligible to apply for the loan.

Punjab National Bank: The bank offers personal loan to the public and pensioners at an interest rate of between 9.20%-12.05% per annum. The loan amount offered by the bank goes up to Rs.10 lakh for a tenure of up to 5 years. The loan can be availed at a one-time processing fee of up to 1% of the loan amount.

To help you in selecting the best bank for availing a personal loan, here are a few tips:

1. Do an EMI Calculation

Before applying for a personal loan with a lender, try to know the approximate EMI which needs to be paid for the loan availed. So, you can compare the EMI’s and choose that suits you the best. Doing this also helps you in preparing a monthly budget based on income and expenses.

2. Compare the Interest Rates

Always compare the available personal loan offers. There are many online tools available which you can use for the comparison. This is an important step in the process of choosing the best personal loan. Interest rate comparison can enable you to get the best personal loan.

3. Know about all Costs & Penalties involved

Before applying for a personal loan, it is essential to think pretty much about all costs and charges associated with the loan procedure.

4. Check for Documentation Process

The best personal loans can be considered those that you can get with minimal documentation. With online loans, you don’t need to do that, and you can apply for a personal loan online while sitting at your home.

5. The Loan Amount

The best bank for a personal loan can be one that is ready to offer you the exact amount you required.

6. Check the Eligibility

Check the personal loan eligibility criteria of the bank before applying for it. In case a loan application gets rejected, it can harm your credit score. It also helps in increasing the chances of loan approval.

Types of Personal Loan Interest Rates

There are basically two types of Interest rates applicable on a personal loan, these are:

Fixed Rate of Interest
Floating Rate of Interest

a) Fixed-Rate of Interest: In this case, the rate of interest remains constant throughout the loan tenure. Consequently, the monthly EMI amount also remains fixed throughout the loan repayment period. This may help you plan your monthly expenditure in the long term.

b) Floating Rate of Interest: It depends on either the internal benchmark set by the lender or as current market conditions. As a result, the floating interest rate is liable to change periodically which leads to an increase/decrease in loan tenure or monthly EMI payouts depending on whether the rate moves upwards or downwards.

Interest Rates for Different Applicant Types

Most lenders consider a number of factors when deciding the interest rate applicable to personal loan applicants. One of these is the applicant type. The following are some insights regarding how personal loan interest rates tend to vary depending upon the type of applicant:

Salaried and self-employed: Whether the applicant is salaried or self-employed can significantly impact the interest rate applicable to a personal loan. Generally, salaried employees with a stable employment record working with reputed organizations tend to get a personal loan at a lower rate of interest than self-employed. This is because salaried employees working with a reputed company have greater job security, and in most cases better ability to repay their loan. However, self-employed applicants with a stable source of income can also avail personal loans from banks and NBFCs at competitive interest rates.
Women: Certain banks and NBFCs offer preferential rates of interest to women. This is in an attempt to promote salaried women, entrepreneurs and professionals to fulfill their dreams and be financially stable.
Pensioners: Pensioners can avail special personal loan specifically meant for them at a relatively lower rate of interest from many banks. In most cases, a preferential (lower) interest rate on pension loans is available in case the pension account is held with the chosen lender.

Note: Beyond the applicant type, the personal loan interest rate depends on the individual applicant profile. People with a stable source of income, good credit history and high credit score tend to receive a loan at a lower rate,i rrespective of their category.

How to Get a Low-Interest Rate on Personal Loan?

Follow the below-mentioned tips to get low-interest rate on your personal loan:

Maintain a high credit score.
Keep a low credit utilization ratio.
Do not apply for a personal loan with multiple lenders at the same time.
Opt for your personal loan from a bank/NBFC with which you already have a relationship, such as a savings account or a fixed deposit.

Factors Affecting Personal Loan Interest Rates

Credit History and Credit Score: Your credit history and credit score are reflective of your creditworthiness. The higher your credit score, the greater are your chances of getting approved for a personal loan at a low rate of interest.
Income: Higher income typically indicates at a higher repayment capacity which often translates into a preferentially lower rate of interest for your personal loan.
Credit Utilization Ratio: This refers to the ratio of credit used to the total credit available to you. Ideally, this should not exceed 30%. A lower credit utilization ratio typically indicates a higher repayment capability.
Multiple Loan Applications: You should never apply for a personal loan with multiple lenders at the same time, as this portrays you as credit hungry. If multiple enquiries of your credit report are conducted within a short time, it negatively affects your credit score and lowers the chances of getting approved for a personal loan at a low-interest rate.
Pre-existing Relationship with the Lender: Having a previous relationship with a lender also impacts the personal loan interest rate. For example, if you already have a savings account or a fixed deposit with the bank, chances of getting a lower rate of interest on your loan increases.

Latest Updates, RBI Updates, Scheme

RBI Reduces Reverse Repo Rate by 25 bps

Highlights:

RBI cuts reverse repo rate from 4% to 3.75%, repo rate remains unchanged
RBI announces a slew of measures to tackle COVID-19 crisis
LTRO-2.0 to involve Rs.50,000 crore
Rs.50,000 crore special finance facility to be provided to financial institutions such as NABARD, SIDBI, NHB.
90-day NPA norm not to apply on moratorium granted on loans by banks
Scheduled commercial banks and Co-operative banks can’t declare the dividend till the end of September 2020
LCR requirement of banks reduced to 80% from 100%; to be restored in phases by April next year
Banks will need to maintain additional provisioning of 10% on standstill accounts
NBFCs’ loans to delayed commercial real estate projects can be extended by a year without restructuring
Loans are given by NBFCs to real estate companies to get similar benefits as given by scheduled commercial banks

The Reserve Bank of India has slashed the reverse repo rate by 25 bps from 4% earlier to 3.75% now, making it less attractive for commercial banks to park cash with the central bank. This will encourage banks to lend to the productive sectors of the economy. The central bank has also announced a host of measures, including a special Rs.50,000 crore targeted long-term repo operation, called TLTRO 2.0, to address the liquidity needs of the NBFCs and microfinance institutions. Banks availing these funds will be required to deploy the same within one month and 50% of the money has been earmarked for midsized NBFCs and MFIs.

However, earlier on March 27, RBI had slashed the repo rate by 75 basis points to 4.40% from 5.15% to help the economy fight the Covid-19 pandemic. Simultaneously, the reverse repo rate was cut by 90 basis points to 4% from 4.90% to ensure that banks don’t passively park funds with RBI and start lending to the productive sectors of the economy.

Key Measures to Tackle Covid-19

These measures are aimed at softening the impact of Covid-19 pandemic on the financial markets, RBI Governor Shaktikanta Das said, adding that the central bank is closely monitoring the developments and is vigilant.

The other measures unveiled by the RBI include providing Rs.50,000 crore refinance to all India financial institutions, Rs.25,000 crore to NABARD, Rs.15,000 crore to SIDBI and Rs.10,000 crore to NHB, and also increasing the Ways and Means Advances (WMAs) limit to 60% to allow States the flexibility to borrow and ensure that their borrowings are not bunched up in the early part of this financial year.

More Relief

Among the regulatory measures, the RBI has allowed the three-month moratorium period on loans (from March 1, 2020 to May 31, 2020) to be excluded by banks from the counting of days past due (90 days) when it comes to asset classification by banks. However, during this standstill period on asset classification, banks have to make a provision of 10% and the same can be reversed if there is no slippage.

Given the challenges in resolution, the RBI has extended the resolution time period by 90 days. Emphasizing the need to conserve capital during the current challenging times, the Governor said scheduled commercial banks and co-operative banks cannot declare dividends till September-end 2020.

In a bid to provide succor to NBFCs with exposure to the commercial real estate sector, the RBI has aligned the date of commencement of commercial operations with that of commercial banks so that delays in execution of projects in the current environment doesn’t result in the projects becoming non-performing.

Assuring that the RBI will act as and when the need arises, the Governor said with retail inflation expected to go down to about 4% in the second half of FY21, it will open up space for rate action.

Banks Need to Act Fast

According to experts, the reduction in LCR limits for banks to 80% from 100% is a good liquidity measure in the current economic situation. However, banks need to act fast in extending credit to India Inc.

TLTRO 2.0 is an important step in safeguarding the stability of the non-banks. However, it’s equally important to ensure this additional liquidity is available to a wider spectrum of NBFCs and MFIs and not limited to a few. The refinancing measures through NHB, SIDBI, NABARD, etc is a welcome relief to HFCs and NBFCs. Non-banks with limited incremental funding options were facing increasing risks of default.

Latest Updates, Scheme, Tax

What is Form 49A ?

Form 49A is the application form for the allotment of Permanent Account Number for Indian residents. Any individual who is a resident of India and wishes to apply for PAN should compulsorily fill the form 49A as it is the application form. One can download the application form online from NSDL e-Governance official website or UTIITSL website. Once the form is filled with the correct details, the applicant can make the payment online and submit the form with the required documents and photographs.

Structure of Form 49A

Form 49A is neatly structured into different sections to make it easier for the customer to file the form. The form has designated spaces for the applicant to affix their photographs on the top corners of the form. The form is designed with 16 components, each component with a subsection that needs to be filled out. Click here to download Form 49A (https://www.tin-nsdl.com/downloads/pan/download/Form_49A.PDF)

Components of Form 49A

Given below is a detailed explanation of all the components present on Form 49A.

Assessing Officer Code: In this section, the applicant has to mention the Area code, Accounts office type, Range code and Accounts office number
Full Name: This is the part of the form where the individual mentions their marital status, their first name, last name and their Surname.
Abbreviation of the Name: The applicant has to abbreviate their name as they would like to see on their PAN card in this section of the form.
Other Name: In here, the applicant has to mention if they were ever known by any other name than the name mentioned. If they did have another name, the applicant has to provide details such as First name, Last name and Surname of their other name.
Gender: The part of the form where the applicant has to mention their orientation status.
Date of Birth: In case of an individual applicant, the applicant has to mention their date of birth and in case of organisations, they have to mention the date of partnership/incorporation/Agreement or Trust deed.
Father’s Name: The applicant has to mention the first name, last name and surname of their father in this part of the form. This is applicable only to individual applicants including married women.
Address: The applicant needs to enter the details of their residence address and office address in this part of the form. The applicant needs to be careful while filling in the address and should give the correct details.
Address of Communication: The applicant has to choose the address of communication between office or residence.
Telephone number and email id- The applicant has to mention their Country code, State code and telephone/mobile number.
Status of Applicant: In here, the applicant has to mention if they are an individual, a HUF member, Company, Partnership firm, etc.
Registration Number: The registration number indicates the registration number for company, firms, LLPs, etc.
Aadhaar Number: The Aadhaar number should be mentioned if the individual owns an Aadhaar card.
Source of Income:The applicant should mention from where they draw their income.
Representative Assessee: The applicant needs to provide the name and address of the representative assessee.

How to Fill Form 49A?

There are some rules that one should follow while filling in Form 49A. Given below are a few things one needs to be wary of when filling in the form.

Language and Basic Rules: The applicant can fill in Form 49A only in English. There is no provision to fill in the form in any other language other than English. It is also important that the form be filled with block letters and preferably in black ink. Each box provided should be filled in with only a single character, leaving an empty box after each character.

Photographs: The applicant is required to attach two recent colour photographs in the space provided on the top corners of the form. It is very important to note that the photographs should not be stapled or clipped to the form as this will be the photograph that will be displayed on the PAN card. The clarity of the photo on the PAN card will depend on the clarity of this photo and hence, it is important to provide a photograph with good clarity.

Signature on the photograph: A signature or a left hand thumb impression should be provided across the photo that is affixed to the left top corner of the form. The applicant should ensure that the signature or the thumb print is on the photograph as well as the form. For the photograph on the right top corner of the form, the signature or thumb impression should be contained inside the box provided and not on the photograph as the photograph on the right top corner of the form will be the one displayed on the PAN card.
Correct Details: It is important to take your time and fill the form and ensure that you have filled in the correct details. Filling the form with incorrect details might lead to complications during the processing of the form and might even lead to rejection of the application.
Overwriting: Overwriting should be avoided when filing the form.
Contact Details: There are some details that one needs to be aware of while filling in the contact details in the form. While mentioning the address, it is important to provide complete details including details of Town, city and Pin code is mandatory. It is also important to mention the STD code for the phone number provided.

How to Apply for PAN Online via Form 49

To apply for a PAN Card online, visit the website of NSDL where you can fill all the required information.
Click on the “Apply Now” Tab to fill the online Application form for New PAN card.
Fill your PAN application form online and click on Submit Button.
Verify your details and click on Proceed to Payment Button.
Make a payment. This is a one-time fee.
After making a successful Payment, download and print your pre-filled application form (along with the Instruction sheet).
Paste photo, sign, attach documents and post to our address (You will get the postal address on the instruction sheet)

Note

In case you lost your PAN Card, then with the help of PAN number, apply for a duplicate PAN card.

In case you want to make any changes in your PAN card then apply for changes in PAN card (like Name, Father’s Name, Date of birth ,etc).

Who Can Apply for PAN Card

Any Indian Citizen can apply for PAN via 49A
The minimum age should be 18 Years

Documents Needed to Apply for Form 49A

Aadhar Card
Voter Id Card
Driving License
Passport
Recent Passport size photographs
Ration Card Utility Bills
Pensioner Card

Payment

Rs.107 is the minimum fee that you need to pay while applying for a PAN in India. However, during PAN application form submission, an applicant will have to indicate whether a physical PAN card is required. If an applicant opts for a physical PAN Card, then the physical PAN card will be printed & dispatched at the communication address. The e-PAN card in PDF format will be dispatched at e-mail ID mentioned in PAN application form, if the same is provided. If the dispatch of physical PAN Card in India (Communication address is Indian address)

Things to Keep in Mind

The application must be filled using block letters.
The form can only be filled in English.
The application must be filled using blank ink.
All fields marked with asterisk (*) are mandatory.
The application should be devoid of any corrections or overwriting.
Use full names in the first as well as last name section instead of individuals.
The names should not include any abbreviation, salutation or title.
Two photographs must be affixed. The user is not supposed to have it clipped or stapled to the form.
Signature or left hand thumb impression must be provided across the photo on the left side of the form in a manner that the portion of signature/impression is on the photo as well as the form (Thumb impressions must be attested by a Magistrate/Notary Public/Gazetted Officer)
The proof of address and proof of identity must be identical to the ones mentioned in the form.
The appropriate document type must be enclosed as a proof.

Frequently Asked Questions (FAQs)

Q.What is a Form 49A?

A.A Form 49A is an application form that is used for the allotment of a Permanent Account Number.

Q.What are the documents that you can provide as proof for “Date of Birth”?

A.The documents that can be used as proof for “Date of Birth” are listed below:

Birth certificate issued by any office or Municipal Authority that is authorised to issue a Birth and Death Certificate
Order for pension payment
Marriage certificate
Matriculation certificate
Passport
Driving Licence
An affidavit that has been notarised before a magistrate

Q.Can I apply for a PAN with the help of the old Form 49A?

A.No, you cannot. You will have to apply for a PAN using the new Form 49A that has been notified by the Central Board of Direct Taxes.

Q.Can a Form 49A be filled using a typewriter?

A.Yes, a Form 49A can be filled using a typewriter provided that the lettering should be in Capital letters and should also have a good impression on the form.

Q.What if an applicant submits an incomplete Form 49A?

A.Any incomplete Form 49A will be rejected. There are service centres like the IT Pan Service Centre that can assist an applicant with filling up a Form 49A.

Q.Is it necessary to provide your telephone number on Form 49A?

A. The applicant should preferably submit his/her contact details in the form as it would enable the department in contacting the applicant with much ease.

Banks Updates, Government Updates, Latest Updates, RBI Updates

RBI Announced the Mega-Merger of 10 Public Sectors Banks into 4

Must Read:

10 Public Sector Undertaking (PSU) banks will be merged into 4 banks from, 1 April 2020 according to RBI.
Punjab National Bank (PNB) will overtake the Oriental Bank of Commerce and the United Bank of India, forming the second-largest public sector bank in the country.
Syndicate Bank will merge into Canara Bank to form the fourth largest PSB.
Union Bank of India will be merged with Andhra Bank and Corporation Bank, making it the fifth-largest public sector bank in the country.
Indian Bank will be merged with Allahabad Bank to become the seventh-largest PBS.
After the merger, there will be 12 PSUs in India – six merged banks and six independent public sector banks.
Six merged banks – SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India and Indian Bank
Six independent banks – Indian Overseas Bank, UCO Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India and Central Bank of India.
The branches of the merging banks will operate as branches of the banks in which they have been merged.

Customers of merging banks will also now be treated as customers of the banks in which these banks have been merged.

Account Number, Customer IDs Likely to Change

Re-submission of Account Details for Auto-Credits/Debits

Deposit, Lending Rates to be Decided by Merged Entity
Credit/debit cards issued by the merging banks may have to be exchanged for those of the merged entity

Despite nation-wide lockdown due to coronavirus announced by the Government, 10 Public Sector Undertaking (PSU) banks will be merged into 4 banks from, 1 April 2020 according to RBI.

In the statement, RBI said, “The Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank Scheme, 2020 dated March 4, 2020, issued by the Government of India. The scheme comes into force on the 1st day of April 2020.”

With this merger, the number of public sector banks in India will come down to 12 from 27 in 2017 when the State Bank of India (SBI) took over five of its associates and Bharatiya Mahila Bank. In 2019, Vijaya Bank and Dena Bank merged with Bank of Baroda, making it the third-largest state-run bank.

The branches of the merging banks will operate as branches of the banks in which they have been merged. Customers of merging banks will also now be treated as customers of the banks in which these banks have been merged.

Here are key points you need to know about the mega-merger of 10 PSU banks from 1 April:

As per the plan of the merger, Punjab National Bank (PNB) will overtake the Oriental Bank of Commerce and the United Bank of India. After the merger, these three together will form the second-largest public sector bank in the country. The State Bank of India (SBI) is the country’s largest state-run lender. PNB has also unveiled its new logo which will bear distinct signages of all three lenders. The branches of Oriental Bank of Commerce and the United Bank of India will operate as branches of PNB.
Syndicate Bank will merge into Canara Bank to form the fourth largest PSB with a business of Rs 15.20 lakh crore. The bank will have 10,391 branches, 12,829 ATMs and the combined strength of 91,685 employees.
Indian Bank will be merged with Allahabad Bank to become the seventh-largest PBS with a business of Rs 8.08 lakh crore. The combined entity would have 6,060 branches, a network of 2,870 ATMs and a banking correspondent network of 9,000.
Union Bank of India will be merged with Andhra Bank and Corporation Bank, making it the fifth-largest public sector bank in the country. Following the merger, all investments of Andhra Bank and Corporation Bank will come under Union Bank as a combined entity.
After the merger, there will be 12 PSUs – six merged banks and six independent public sector banks.
Six merged banks – SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank
Six independent banks – Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India, Central Bank of India.
Most importantly, all customers, including depositors of merging banks will be treated as customers of the banks in which these banks have been merged with effect from 1 April 2020.
According to the government, the PSUs merger will create seven large public sector entities with scale and national reach-with each amalgamated entity having business over Rs 8 lakh crore.

If you are a customer of one or more of the banks being merged, the mergers can have a few significant implications for you. Here is a look at some of them.

Account Number, Customer IDs Likely to Change

You are likely to get a new account number and customer ID. Make sure your email address/physical address and mobile number is updated with your bank so that you receive official intimations on change of account numbers. Moreover, all your accounts will be tagged to a single customer ID. Let us say you have an account with Oriental Bank of Commerce and one at United Bank of India; the two accounts will be allotted a ..

Re-submission of Account Details for Auto-Credits/Debits

You would have given your bank account numbers and IFSC codes for various financial transactions – auto credit of dividends via ECS, auto-credit of salary, auto-debit of various bills/charges, etc. Unless these accounts are seamlessly merged into the financial system of the anchor bank, you would be required to change the details of your bank account given for these purposes.

Customers who are allotted new account numbers or IFSC codes will have to update these details with various third-party entities where they had earlier given details of their accounts in the amalgamating banks. These will include :

The income tax department for tax refunds
Insurance companies to get maturity proceeds
Mutual funds to get the redemption amounts
National Pension System (NPS), among others

Another thing you will have to keep in mind is that the post-merger entity will have to honour all electronic clearing service (ECS) mandates and post-dated cheques.

Make enquiries with your bank, fund house and insurance companies and issue fresh ECS mandates, if required.
You will have to fill up the ECS mandate forms online or through your branches.
In case of auto-debits for systematic investment plans (SIP), you may have to submit fresh SIP registration-cum-mandate forms.
You will have to fill up the ECS mandate forms online or through your branches.
In the case of auto-debits for systematic investment plans (SIP), you may have to submit fresh SIP registration-cum-mandate forms.
You will have to do the same for loan EMIs.
Customers are usually allowed to use balance cheque leaves and existing cheque books for 6-12 months.

Customers will have to deal with the branch rationalization exercise. For instance, your existing home branch could shut shop if the new acquiring entity has its own branch in the same vicinity. Keep an eye on the new IFSC and MICR code applicable to your branch and account since you will have to quote it for funds transfer and other financial transactions.

A plus point is that hopefully, the branch network would become larger so access to bank branches should become easier provided the merged entity does not shut down all branches of merging banks.

Borrowers: Deposit, Lending Rates to be Decided by Merged Entity

When a bank merger takes place, how does it impact an existing borrower? For instance, those who took a loan from Dena Bank or Vijaya Bank how will their loans get impacted? Is their existing MCLR related loan still operational or will they have to switch to BOB following BOB’s terms and conditions?

A senior banking official explains, “All MCLR linked retail loans are migrated to the MCLR of the amalgamated bank. In the case of Dena and Vijaya bank, MCLR linked retail loan customers have migrated automatically to the Bank of Baroda MCLR, which in this instance was 8.65% as of March 2019. Pre-amalgamation the MCLR of Dena Bank was 8.80% and Vijaya Bank was 8.75%. Hence, customers of Vijaya and Dena benefited from the lower MCLR of Bank of Baroda.” For customers of Bank of Baroda, there was no impact, but for Vijaya and Dena customers there was a positive impact by a reduction in MCLR.

Hence, post amalgamation there was only one MCLR of Bank of Baroda and all loans are now linked to that, which was automatic for loans already linked to MCLR of the erstwhile banks.

It is, however, not clear what will happen to the interest rates payable on loans taken by those who have loans running with the amalgamating banks as the MCLR rates are different for different banks.

Credit/Debit Cards

Credit/debit cards issued by the merging banks may have to be exchanged for those of the merged entity at some stage although the former are likely to remain valid for the interim period or even longer to ensure no disruption in services.

Paperwork

Paperwork and keeping a financial trail of fixed deposits made will increase a bit as these will be transferred into the merged bank.

You simply need to wait and watch in the coming days as more details about these mergers are announced to see the actual impact it can have on account holders.

Income Tax, Income Tax Return, Latest Updates, Loans, Personal Loan, Tax

How to Get Tax Benefits on Personal Loan

Generally, the personal loan is not taxable, as loans are not considered a part of your income when you are filing your IT returns. However, the personal loan must be from a valid source like a bank or other financial institution as loans from unknown sources may be considered as income while computing your taxes. Hence, you can claim the income tax benefits on personal loans. However, there are some conditions attached to it.

Whether you get tax benefits or not will depend on the end-use of the loan amount. If you have used your personal loan amount to acquire, construct, repair, or reconstruct a house or property, you can claim tax benefits. If you can prove that you have used the loan for a valid expense, you can actually claim tax deductions on the interest paid on the loan. You will be required to keep documents like bills and labor charges which will help prove that the loan amount has been used towards home buying or home repairing purposes, as they will be needed at the time of making claims.

Is a Personal Loan Taxable in India?

Generally, the amount you borrow is not taxable. That is, it need not be added to your taxable income while filing income tax returns. However, you have to ensure that you borrow the loan from a valid lender like a bank, NBFCs, or other professional lenders.

Informal loans borrowed from friends and family, or other unknown sources are considered as a part of your income, and you have to pay tax on it.

Do Personal Loans Offer any Tax Benefits?

The short answer – the availability of tax benefits, depends on the usage of the loan amount.

The long answer:

A personal loan can be divided into two components:

Principal – This is the amount the lender provides you. You can use this amount for any purpose.
Interest – This is the amount the lender charges you as a fee, on top of the principal.

While repaying the personal loan, you have to pay back the principal as well as interest.

Now, coming to the taxation rules:

Tax Benefits on Personal Loan in India

The Indian Income Tax Act (ITA) does not explicitly mention anything about personal loans. However, the Income Tax Act offers tax benefits for other loans like education loans, home loans, etc.

This doesn’t mean you cannot avail tax benefits when you take a personal loan. Since the ITA doesn’t mention personal loans explicitly, the purpose of usage of the loan is considered to enjoy tax deductions. As per the Indian Income Tax Act, Income Tax deductions on interest paid on personal loan are allowed when the loan has been availed for the below- mentioned reasons:

1. Personal Loan for Home Improvement

2. Personal Loan for Business Investment

3. Personal Loan for Purchase/Construction of a Residential Property

4. Personal Loan For Purchase Of Any Other Asset

For the construction of a Residential Property

Let’s say; you are in the process of constructing a home. Your construction cost overshoots your initial budget, and you take a personal loan to bridge the shortfall. In this scenario, you are eligible for tax deductions on the interest component of the personal loan.

According to Section 24(b) of the ITA, you can enjoy tax benefits up to Rs.2 lakhs for the interest paid on your personal loan, if you use the loan amount for the construction of a residential property. This tax benefit is applicable only when you reside in the home you’ve just finished constructing.

For Renovation or Improvement of a Residential Property

Let’s say, your home needs repairs and you take a personal loan to avail the funds. In such cases, you can enjoy tax deductions on the interest component of the personal loan you have availed.

However, remember that you have to submit proof showing that you have used the loan amount specifically for home improvement/renovation works. So, make sure to store all bills and receipts carefully, if you plan to avail tax deductions later on.

The maximum amount of tax deductions for personal loans used for home improvement/renovation is Rs. 30,000.

For Business Purposes

You can use a personal loan to meet fund requirements of your business like – stocking inventory, purchasing equipment, expanding the scope of the company, paying salaries, etc. In such cases, the interest component of the personal loan is considered as a business expense, and you can deduct this amount from the gross profit or revenue of your business.

This reduces your overall taxable income, thereby reducing your tax liabilities. When you use a personal loan for this purpose, there is no upper limit on the amount of tax exemption.

For Purchasing an Asset

If you use the personal loan amount to purchase an asset, based on the asset you are buying, you can avail tax deductions. For instance, let’s consider that you use the personal loan funding to purchase an immovable asset like property, shares, land, or jewellery – then the interest you pay for the personal loan is added to the total cost of acquiring the asset. You don’t enjoy any tax deductions during the purchase of the asset.

However, at the time of selling the asset, your overall capital gains liability is reduced, thus, reducing your taxes. In this case, there is no limit on the amount of tax you are exempted. Also, the deduction for this won’t be allowed immediately in the year in which the interest has been paid but would be added to the Cost of Acquisition and Tax Benefit would be allowed in the year in which such an asset has been sold. This will increase the Cost of Acquisition and in-turn reduces the Capital Gains which would arise on the sale of such an Asset.

Tax Slab FY: 2019-20

Tax benefits are something, which can work in your favour and help you save more money as far as availing a personal loan is concerned. Thus, it is also important to know the basic tax slab for the financial year 2019-20 to understand the tax liability.

Annual Income Range	Tax Rate
Up to Rs. 2.5 lakhs	No Tax
Above Rs. 2.5 lakhs to Rs. 5 lakhs	5% + 4% cess
Above Rs. 5 lakhs to Rs. 10 lakhs	20% + 4% cess
Above Rs. 10 lakhs to Rs. 50 lakhs	30% + 4% cess
Above Rs. 50 lakhs to Rs. 1 crore	30% + 10% surcharge + 4% cess
Above Rs. 1 crore	30% +15% surcharge + 4% cess

Points to Keep in Mind Regarding Tax Benefit on Personal Loan

When you take a personal loan, it is not taxable as the amount received on loan is not considered as an income.
In order to be eligible for claiming a tax deduction on the interest paid on your personal loan, you must submit adequate-proof to income tax authorities to support your claim in the form of a bank certificate or auditor’s certificate.
If you want to claim tax benefit on a personal loan, you should keep a copy of all the important documents like sanction letter, expense vouchers, auditor’s report and bank certificate, you might need to submit them to income tax authorities for assessment.
Banks generally check your repayment track record while approving the personal loan. Hence, it is essential that you maintain a good repayment track record with respect to loans and credit card bills. Amongst other considerations, you must check for the quantum of the loan amount, flexibility on repayments of the loan and faster processing of the personal loan.

Conclusion

Though personal loans are not tax-saving instruments directly, you are eligible for tax deductions based on the purpose of usage. Make sure to understand all the taxation rules regarding personal loans and enjoy tax benefits, if applicable in your situation.

Banks Updates, Covid 19 Updates, Government Updates, Latest Updates, Loans, Personal Loan, RBI Updates

Impact of 3 Month Moratorium on Loans Repayment

The Reserve Bank of India (RBI) sought to cushion both borrowers and lenders against the unprecedented disruption engendered by the Covid-19 outbreak, allowing companies a three-month grace period on loan repayments. It means borrowers don’t need to pay the loan EMI during the moratorium period. All term loans, including agricultural term loans, retail and crop loans, and working capital payments, will be covered by the three-month moratorium.

Further, availing the moratorium will not entail any change in the existing terms and conditions of the loan. As per the RBI, repayment of credit card dues can also be deferred under the moratorium mechanism. However, in the case of this moratorium, the borrower’s credit rating will not be impacted in any way, as per the RBI statement. So, what this 3-month moratorium means to the loan borrowers, what impact it will have on their financial journey? Let’s find out the same in this post.

Types of Loans Covered Under Moratorium Period

All term loans, including agricultural term loans, crop loans, working capital and retail loans such as car loan, home loan and personal loan respectively will be covered by the three-month moratorium. Banks will now have discretion in deciding the limits on working capital, with RBI saying that no payment miss should be considered a default and reported to credit information companies. The borrowers of such loans, facing liquidity issues during the 21-day lockdown need not to worry about the EMIs due between 1 March and 31 May 2020.

The Reserve Bank of India (RBI) has asked all financial institutions, including banks, to impose a moratorium on outstanding term loans and credit card dues. Talking more about the update, a moratorium will be provided against both the interest and the principal during this period, which means the moratorium is applicable on your entire EMI.

What is the Moratorium Period?

Moratorium simply means a borrower doesn’t need to pay his EMI to the lender during this period and no penal interest will be charged. The EMI payments will restart only once the moratorium time period gets over or expires. This period is also known as EMI holiday. Usually, such breaks are offered to help individuals facing temporary financial difficulties to plan their finances better.

It is to clarify that moratorium is not a concession given by the banks, it is offered just to provide some relief to the borrowers facing liquidity issues in the lockdown phase. But the interest for the period of a moratorium will be added to the principal. Thus, after the moratorium is over, the borrower will have to pay the outstanding amount, which will also include the interest levied for three months.

What Impact 3-month Moratorium Will Have on Loan EMIs

Once you opt for a moratorium period, you will get the benefit of saving your EMIs for 3 months. Yes, you would have a fair amount of savings hence can use this money for future investments. The borrower’s loan repayment will automatically be reduced as there is no need to pay the monthly installments. But the interest for the period of the moratorium will be added to the principal amount. Thus, no relief for the long-run. Once the moratorium gets over, the borrower needs to pay the due interest of 3 months.

Is It Beneficial for All-Who Should Go For It?

The moratorium is beneficial for those who are facing liquidity issues and cash flow is not regular due to pay cuts, delayed payments or layoffs due to lockdown. Also, this will provide relief to many individuals, especially the self-employed, as they would have found it difficult to service their loans such as car loans, home loans, etc due to loss of income during the lockdown period. In an ideal situation, missing any EMI payment would hit their credit score badly. But Non-payment of loan EMIs during the moratorium will not impact the credit score, as mentioned by the RBI.

What If You Have Already Paid the EMI?

Those who want to continue repaying his loan or credit card dues can easily do so as the moratorium is an optional facility. But those who want to take the benefit of the same can opt for a moratorium but what would be the case if someone has already paid the EMI for March. Well, in such a case, the moratorium would be applicable for only 2 months, i.e. April and May. However, the actual conditions of moratorium may vary depending on how different banks implement it.

Conclusion

If you look at the broader picture, it is advisable to continue with your loan repayments as the interest due during the period of the moratorium will also get added to your outstanding amount. This relief is only for 3 months, once the moratorium period gets over, the more pressure will be on your shoulders as far as repayment is concerned. Thus, if the borrower is in a good financial state, someone who can afford to repay his loan EMIs, should try to set aside that amount or do not opt for a moratorium and continue repaying his loan. Because during this period, your interest will continue to accrue and will also get added to your outstanding amount and therefore will increase your burden.

So, continuing repaying your loan would ensure speedy lowering of loan burden once the moratorium ends. Though moratorium will be made available to all eligible borrowers and going for it would be advisable if you are unable to pay your equated monthly installments. However, the decision completely depends on the borrower whether the borrower wants to avail it or not.

Also, one should get complete clarity with his lender first, how it will impact the loan before reaching a conclusion and don’t assume anything based on hearsay. It is also not clear whether borrowers will have to pay any interest on the loan at a later date for the 3 month moratorium period. In the coming times, one should wait for more clarity on the same.

Frequently Asked Questions (FAQs)

Q.What is the exact announcement of RBI?

A.The Central bank has provided the banks with permission to allow a moratorium of three months on repayment of installments for term loans outstanding between March 1, 2020 and May 31, 2020. This is expected to help those borrowers who may find it difficult to repay their loan installments in the wake of challenges posed by the coronavirus crisis.

Q.Will I have to pay interest on the outstanding loan for three months?

A.Yes. With the moratorium in place, the banks may not ask for a penalty on missed EMIs, but continue to add interest on the outstanding loan. The RBI has clearly instructed banks, that interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.

Q.Will the bank reschedule my EMIs?

A.Yes. The bank will reschedule your EMIs and the due amount will be added on your existing outstanding amount which you need to pay after the moratorium period.

Q.Which bank or lender can offer the three-month moratorium?

A.As per the RBI, the moratorium of three months can be offered by all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies).

Q.Will my credit score be affected if the bank puts a three-month moratorium on loan repayment?

A.No.Your credit score will not be affected for three months as the rescheduling of the payments will not qualify as default as directed by RBI.

Q.Will the terms and conditions of loan agreement change?

A.No. The RBI said that moratorium will be provided only to enable the borrowers to face the economic fallout from Covid-19. Hence, it cannot be treated as a concession thus no change in terms and condition of the loan agreement.

Q.Will the bank waive interest on working capital loan for three months?

A.No. The RBI has stated that in respect of working capital facilities sanctioned in the form of cash credit/overdraft (“CC/OD”), lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 up to May 31, 2020 (“deferment”). The accumulated accrued interest shall be recovered immediately after the completion of this period.

Banks Updates, Government Updates, Income Tax, Latest Updates, RBI Updates, Tax

What RBI’s Massive Rate Cuts For Your Loans and Fixed Deposit

Interest Income From FDs Likely to Fall Further

Latest SBI FD Interest Rates for General Public Effective, 28 March 2020

Fixed Deposit Tenure	Interest Rates
7 days to 45 days	3.5%
46 days to 179 days	4.5%
180 days to 210 days	5%
211 days to less than 1 year	5%
1 year to less than 2 year	5.7%
2 years to less than 3 years	5.7%
3 years to less than 5 years	5.7%
5 years and up to 10 years	5.7%

The latest rate cut is likely to cause more heartache for FD investors, especially senior citizens who are dependent on interest income.

What should fixed income investors should do now- Where should they invest?

Those investors looking for fixed income avenues can consider investing in small saving schemes as an option. These include:

National Savings Certificates (NSC)
Kisan Vikas Patra
Post Office Term deposits etc.

At present, these schemes are earning more than FD rates offered by some of the big banks.

Impact of the Rate Cut on Borrowers

The unexpected rate cut is likely to reduce equated monthly installments (EMIs) of borrowers, and also make it cheaper to take new loans.

Existing Borrowers

With Loans Linked to External Benchmark

With Loans Linked to MCLR

Talking about personal loans, they are usually linked with MCLR, and SBI being a pioneer in this regard has changed the rates immediately. And, offers personal loans-linked with 2-year MCLR.

Here’s an example of how your personal loan is likely to be impacted under the new MCLR regime.

Particulars	Previous Scenario	Current Scenario
Previous Interest Rates	10.45% per annum	10.35% per annum
Loan Amount	20 Lakh	20 Lakh
Tenure	5 Years	5 Years
Previous EMI	42,938	–
New EMI	–	42,839
Yearly EMI Savings	Rs.1,188 (99×12)

With Loans Linked to Base Rate or BPLR

What’s in Store for New Borrowers

Conclusion

Banks Updates, Covid 19 Updates, Latest Updates, Loans, Personal Loan

How to Get Funds Instantly for Medical Emergency Due to Coronavirus

The tremors caused by Coronavirus are felt everywhere around the world. And, to support people in such hard times, banks and NBFCs have started offering loans to meet any unforeseen expense. Yes, if there is any medical emergency due to COVID-19, you don’t need to worry about arranging instant funds. To deal with the situation, many banks and NBFCs are providing quick loans to the people. Talking about quick loans, a personal loan is an ideal product to avail. The loan can easily be availed for short as well as the long-term purpose and covers all your medical expenses.

However, with a nationwide curfew, stepping out of the home is not possible and not even advisable. But nothing to worry as you can apply for a personal loan online, right from the comfort of your home. Send your loan application online, submit the scanned copy of documents on matching the eligibility and finally get instant approval and disbursal of the loan amount in your bank account. If you already have an account in a bank, the process would be much smoother and faster.

Top Banks Offering Instant Funds for Medical Emergency

Banks	Interest Rate (in per annum)	Loan Amount	Tenure
State Bank of India SBI)	10.35%-14.75%	Rs.25,000-20,00,000	Up to 7 Years
ICICI Bank	11.25% to 22.00%	Up to 20 lakh	Up to 5 Years
HDFC Bank	10.75% to 21.30%	Rs.50,000-15,00,000	Up to 5 Years
Axis Bank	12%-24%	Rs.50,000-15,00,000	Up to 5 Years
Kotak Mahindra Bank	10.99% to 24%	Rs.50,000-15,00,000	Up to 5 Years
Induslnd Bank	11.25%-23%	Rs.50,000-15,00,000	Up to 5 Years
Bajaj Finserv	12.99% onwards	Up to 25 lakh	Up to 5 Years
RBL Bank	Starting at 14%	From Rs.1,00,000-20,00,000	Up to 5 Years
DCB Bank	Starting at 10.22%	From Rs.1,00,000-5,00,000	Up to 5 Years
Fullerton India	12.99%-36%	Up to 25 lakh	Up to 5 Years
Tata Capital	Starting at 10.99%	From Rs.75,000-25,00,000	Up to 6 Years
HDB Financials	As applicable by the lender	Up to 20 lakh	Up to 5 Years

How to Apply for a Personal Loan Online

In just a few simple and quick steps you can apply for an instant loan. The online process is really fast and hassle-free and in the times when coronavirus is rapidly spreading, you can apply conveniently for this loan just from your home. Lenders ensure with their secure and easy digital loan process, every borrower should get the required funds instantly to meet the medical emergency.

You just need to follow, 4-simple steps:

Apply Online
Receive Quotes
Submit KYC Documents
Get Instant Approval & Disbursal

Eligibility Required

Salaried

Age: 21-58 Years

Monthly Income:Rs.20,000

Minimum Work Experience: 1 Year

Self-employed

Age: 24-65 Years

Monthly Income:Rs.20,000

Minimum Profit after Tax: 1-2 (annual)

However, the eligibility criteria vary from lender to lender. So it is advisable to check the set norms with your lender before applying.

Instant Loan Will Be a Double Bonus If:

You are a Salaried Professional, working in leading MNCs(CAT A or CAT B), or a Government Employee.
Your monthly income is high and you have less/no financial liabilities(existing loans/credit cards,insurance policy).
You have a habit of saving money or like to invest in saving instruments like PPF, FD, Mutual Funds( SIPs),etc.

However, do not forget the timely repayment of the same to enjoy a hassle-free instant loan journey.

Documents Required

Salaried:

Duly signed application form for personal loan balance transfer along with passport size photograph
Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)
Age Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)
PAN Card copy (Mandatory)
Address Proof (Aadhaar Card/Passport/ Landline Bill/ Latest Electricity bill/Rent agreement etc)
Last 6-month bank statement
Salary slip for the last 3 months
Statement of personal loan from a current lender (a loan that needs to be transferred)

Self-employed:

Duly signed application form to do loan balance transfer along with passport size photograph
Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)
Age Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)
Address Proof (Aadhaar Card/Passport/ Landline Bill/ Latest Electricity bill/Rent agreement etc)
TAN Card
Last 3 years Balance sheet along with profit and loss statement pertaining to business
Last 6-month bank statement of individual and business entity
Statement of personal loan from a current lender (details of the loan that need to be transferred)

Note: If you are an existing customer, no KYC Documents are required as the bank already has your documents.

Why Instant Loan is the Best Option to Meet Unforeseen Expenses of COVID 19

Instant Approval: On applying for a quick loan online, you can get instant approval, if your eligibility matches. Soon after receiving your application, you can get approval instantly.

Fastest Disbursal: As far as a disbursement is concerned, the required amount will be credited to your respective bank as soon as possible. With the fastest disbursement, any medical emergency can instantly be fulfilled.

Less Documentation: The process of getting a personal loan is really easy and quick. And, when it comes to documents, it is a lot easier. With just a few KYC documents, one can get a personal loan.

Minimal Fee & Other Charges: When it comes to a personal loan, one has to pay a one-time processing fee which is also very reasonable, hence lessening your loan burden.

Good Loan Amount: In case of an instant loan, the loan amount ranges between Rs.5,000 to maximum up to Rs.2 lakh which means your instant financial needs can easily be covered.

Flexible Repayment Tenure: A borrower can repay the loan by choosing a flexible tenure of up to 1 year. This repayment tenure allows a borrower to enjoy easy EMIs and less loan burden.

But what should be the action plan for those who had already taken a personal loan? How should one manage his personal loan?

How to Manage Existing Personal Loan After Coronavirus Outbreak

The slowdown will result in the fall in income of not only the owners but even their employees as salaries do come but not the incentives and bonuses. And, with a fall in the income, it is to be assumed that banks might increase their personal loan interest rates to recover their loss. So, if you have taken a personal loan, the increased rate will take out much from your income. So what should you do now? Check out the plan of action here.

Action Plan at a Glance

Go for Prepayment: As hinted above that the rates are likely to increase and make personal loans costlier than before, you could, therefore, think of prepaying the loan with your savings. You have an option either to go for a full prepayment or a part prepayment. The decision to choose from the two will depend on your savings, the remaining outstanding balance, the charges applicable to prepayment, and the income situation you’re likely to face. If the outstanding balance is above 50% of your saving reserves, you should avoid going for full prepayment. You can thus opt for part payment, maybe wipe out 50% of the outstanding balance and accumulate the reserves further. This will decrease the loan EMI and interest outgo substantially over time.

Go for Balance Transfer if You’re Servicing the Existing Loan at a Higher Rate: If you are servicing your personal loan dues at a much higher interest rate and don’t have the tall savings to prepay the loan, you can think of transferring the loan balance to another lender at a lower rate of interest. The new lender will go through your loan track and put forth an attractive balance transfer deal if it finds your credit record good.This will decrease the EMI while giving you more time to repay. Particularly, when you don’t have savings to close your personal loan, a balance transfer at a lower rate could be the option to avail of.

Say No to Excessive Credit Card Purchases: With the income situation has become uncertain because of the lockdown, buying excessively on credit cards will only mount the debt for you if you fail to pay total dues on time. The revolving credit card dues could pile on the debt at a mounting rate of 30%-40% per annum. Instead, be patient and show discretion in your cash purchases.

Miscellaneous Methods That You Should Think of Contemplating for the Short Term

Don’t Fall Prey to Panic Buying: Even as the lockdown is there, the government has clearly told that necessary stuff including medicines and food items will be made available to all. So you must not buy stuff for 2-3 months in advance and end up drying your bank balance. This will only worsen your situation by the time the repayment date comes.

Make the Most of Travel Savings: The lockdown has a blessing in disguise by saving on your travel. The savings might tempt you to spend on other stuff. Avoid doing so and save as much as you can to sail through the difficult times.

Say No to Dining Outside: Even as the lock down is there, you could still find a few dining outlets open. This is the time you should all be staying at your home not only for safety but also for ensuring maximum savings.

Put Curbs on Your Entertainment: Staying indoors will give you the time to think of entertainment. Don’t go for expensive entertainment plans thinking that the lack of travel will create space for expenditure on entertainment.

List Your Products Online: As someone involved in businesses other than Kirana shops, you might be facing a massive pile-up of inventories due to the decreasing sales of your goods. You can thus look to go online, partner with the e-commerce websites and list your products on them. This will help you dispose off your products and earn something out of that, ensuring you get enough to repay the loan EMI on time.