Want a loan? You can avail it against the fixed deposit
Investing in fixed deposits is very popular in the country given the fact that it is safe and secure and offers guaranteed returns. A feature of FDs is that it lets individuals avail a loan against the investment. The fact that the interest rate charged on the loan taken against the fixed deposit is cheaper as compared to a personal loan makes it a suitable option.
The loan availed against the fixed deposit is sanctioned in the form of an overdraft. Banks allow a loan in the range of 70 – 90 percent of the deposited amount with the interest rate being around 2 percent or above. It needs to be mentioned here that banks do not charge any processing fee on the loan against FDs.
State Bank of India, the country’s largest lender also offer loans against fixed deposits. To avail the facility, the individual can visit the bank’s branch or log on to the bank’s internet banking website.
23 April 2019
Things you should know about Form 15G and Form 15H
Most know that if the interest amount earned from bank fixed deposits exceeds Rs.10,000 in a particular financial year, TDS is deducted. The TDS which is typically deducted by banks is 10%. However, if the total annual income is below the taxable limit, then paying TDS can be avoided by submitting either Form 15G or Form 15H depending on the bank. Here are some of the things you need to know about both the forms.
Form 15G and Form 15H are self-declaration forms. While Form 15G is meant for the use of resident Indians under 60 years as well as for Hindu-Undivided Families (HUFs) and trusts, Form 15H is for resident Indians, who are above 60 years.
Form15H is not required to be submitted by a person above the age of 60 years if the annual income is below Rs.50,000. These forms can be submitted to avoid paying TDS for interest earned on post office deposit and rental income in addition to bank fixed deposits.
With the forms being valid for only one financial year, Form 15G and Form 15H need to be submitted at the beginning of every financial year i.e., the month of April.
16 April 2019
RBI Cuts Repo Rate by 0.25%
The Reserve Bank of India (RBI) today cut the key policy repo rate by 0.25%, reducing the repo rate to 6%. The reduction in the repo rate will lessen the cost of borrowing for the banks, and in turn, consumers will also pay lower interest rates on loans. This also translates to lower interest rate on fixed deposits as well. The Central bank’s six-member committee rate setting panel, which is headed by the RBI governor, on Tuesday began its 3-day monetary policy meet amid expectations of a reduction in the repo rate to enhance the country’s economic activities. Also, this is the first back-to-back cut in repo rate since the Monetary Policy Committee (MPC) was formed in 2016. After the announcement, the RBI governor said that export growth remained sluggish in January and February this year, while imports, especially non-oil gold imports dropped. The RBI’s move was supported lower inflation than the mandate of 4% as well as due to the push towards boosting the economy amid concerns of a global economic slowdown. In February this year, the RBI had cut the repo rate by 25 basis points (bps) after 18 months.
Repo rate is the rate at which the banks borrow from the apex bank, especially short-term money, while a reverse repo rate is the rate at which the RBI borrows from commercial banks. The reverse repo rate has also been cut to 5.75% from 6% earlier. In a statement by the RBI, it said that the decision to cut the repo rate is within its objective of achieving the medium-term goal for consumer price index (CPI) inflation of 4% within a band of (+/-) 2%, while boosting economic activities. The next MPC meeting is scheduled for 3-6 June 2019.
10 April 2019
FD Rates Set To Increase: What Is The Next Move For The Investors? The India Ratings and Research (Ind-Ra) stated that the credit usage rate has increased to 12.90% p.a. as opposed to the growth in deposit of 9.30% p.a. The growth was seen in previous quarter which ended in December 2018. According to growth rate, these growth percentages will encourage the banks to increase the interest rates for Fixed Deposits. Hence, many investors would rush to make investments in Term Deposits. It is recommended to check the terms and conditions associated with Fixed Deposits before making an investment. Jana Small Finance Bank offers a Fixed Deposit rate of up to 9.25% p.a. for a maturity period of 3 years. However, you cannot make premature withdrawals before completing the 3-year tenure. Furthermore, the interest income on FDs can be taxed under Tax Deducted at Source (TDS) as per the guidelines of Income Tax Act, 1961. Hence, it is important to ensure access and check the taxability before locking a large sum of money as Fixed Deposits. It is recommended to invest in an FD of Rs.1 lakh for a tenure lasting between 6 months and 9 months.
19 March 2019
NBFCs Also Increase Interest Rates On Fd
Apart from major banks, Non-Banking Financial Corporations(NBFCs) have also increased interest rates.
NBFCs and small finance banks have increased their interest rates on FD as well. According to reports, the interest rates offered by smaller banks and NBFCs are comparatively higher when compared to major banks.
However, it is must be taken into consideration, the credit rating of the bank or the NBFC. Most major banks and NBFCs have a high credit rating. This indicates a good track record and also regarded safer compared to the ones with a lower credit rating.
It is advised that investors research about the bank, its track record, credit rating and also other customers’ feedback before choosing to invest in a FD. According to credit rating, Mahindra Finance, HDFC Limited, Bajaj Finserv are considered among the best NBFCs in the market.
There are many other NBFCs and small finance banks such as Shriram Transport or Jana Small Finance Bank who are currently offering an interest rate upto more than 9.00% per annum. However, even though the rates of interest are high, an investor must check the credibility of the bank and how is it performing in the market. If a bank or NBFC goes bankrupt, retrieving the money saved in the a fixed deposit is difficult. If insured, an investor will get upto Rs.1 lakh from the fixed deposit.
5 December 2018
Fixed Deposit Interest Rates Increased By Banks
India’s largest bank, State Bank of India has hiked the interest rates offered on fixed deposits by 5 to 10 basis points. The revised interest rates have been in effect from 28 November 2018.
The increased interest rates are applicable for selected tenures and are effective for deposits below Rs.1 crore.
For a tenure ranging from 1 year to 2 years, the interest rate has increased from 6.70% per annum to 6.80% per annum increasing by 0.10%. Whereas, the interest rate for a tenure ranging from 2 years to less than 3 years, is now 6.80% per annum. The interest rate for this tenure has increased by 0.5%. The rate of interest for the other tenure options are the same.
The increase in interest rates is due to the credit growth which banks have been showing on a year-on-year basis. According to the report by the Reserve Bank of India, the bank credit has grown by a whopping 14.9% by the end of 9 November 2018. On 9 November 2017, the growth was at 8.3%.
Following the State Bank of India, the Allahabad Bank, based in Kolkata has announced an increase in interest rate by 10-100 base points.
The bank increased the interest rates for short-term fixed deposit of 7 days to 5.50% per annum which is an increase of 100 base points. However, the rate of interest for a medium-term deposit was increased by 10 base points or by 0.01%. The increased interest rates by Allahabad Bank will be in effect from 1 December 2018.
Before the State Bank of India and Allahabad Bank, ICICI Bank and HDFC Bank had also increased the interest rates offered on fixed deposits earlier this month.
3 December 2018
Should Interest Rate Be The Only Criteria Of Investing In A Fd?
Even though banks have been offering a comparatively lower interest rate compared to NBFCs, the, the credibility of a bank along with its reputation plays an important role.
However, even with NBFCs, there are particular ratings involved. Rating of a particular NBFC should play an important role while choosing to open a FD account.
AAA or Triple A rating is considered the highest rating with regard safety in terms of servicing financial services and obligations. These NBFCs also carry the lowest risk.
There are particular rating agencies who assess a particular NBFC and how they carry out their financial operations and service them. Depending on this and other criterias, they are given a rating of A, AA and AAA.
Many a times, NBFCs offer a higher interest rate, but might be doing so in an attempt to raise funds.
Experts say that even ratings cannot completely determine the credibility of a NBFC and should not be the sole criteria of investment. Investors should read and research on the NBFC adequately and then take the call on investment.
An alternative for FDs by NBFCs are short-term bond funds where the risk of one particular NBFC branches out to various other NBFCs. Apart from that, when the interest rate goes up, yield of the short-term bond funds increase as well.
23 November 2018
Rate Of Interest For Fixed Deposit Increased By Most Major Banks
There are a wide range of options for saving money, investing money as well as gaining interest on the deposited money. Among these options, one of the safest options is fixed deposit which is offered by most major banks.
Due to various factors, RBI has imposed an increase in the rate of interest offered on fixed deposit accounts in order to increase revenue of the banks gained from fixed deposits.
Many major banks are now offering increased rates of interest and greater returns on the fixed deposit accounts along with more number of tenure options to cater to the customer’s needs.
Compared to before, State Bank of India is now offering a minimum interest rate of 5.75% per annum for regular citizens and for a tenure ranging from only 7 days to 45 days. Maximum rate of interest for a tenure of 5 years to 10 years is 6.85% per annum.
Similarly, HDFC Bank has also increased the rate of interest offered on fixed deposit accounts. Minimum rate of interest for a tenure of 7 days to 14 days is 3.50% per annum for regular citizens. 7.40% per annum is the highest interest rate received by regular citizens for a tenure ranging from 2 years to 3 years.
Axis Bank and Kotak Mahindra Bank are also offering a minimum interest rate of 3.50% per annum for a minimum tenure and a maximum interest rate of 7.35% per annum and 7.30% per annum respectively.
Punjab National Bank offers a minimum rate of interest at 5.70% per annum and the highest at 6.85% per annum.
19 November 2018
Switch To Corporate FDs On The Rise As Interest Rates Increase
As various Non-Banking Financial Corporations such as Bajaj Finance and Mahindra Finance, many investors are opting for corporate fixed deposits as a means of investing their money.
With the interest rates having increased by around 25-50 basis points, corporate fixed deposits are believed to be a safer option with assured returns.
Investors have been advised to opt for deposits which have higher rating such as AAA or AA+ as they offer lower risk. Apart from this, a company which has a well established reputation and has a good record, should be considered for corporate FDs.
Shriram Transport Finance, Gruh Finance, Mahindra Finance, HDFC Ltd and Bajaj Finance are the highly recommended options to invest in. As far as interest rates are concerned for one year deposit tenure, 8.55% per annum is the highest and is given by PNB Housing Company. For a 3 year deposit tenure, Bajaj Finance offers the highest interest at 9.1% per annum.
For senior citizens, Mahindra Finance is offering upto a 9.05% per annum interest rate for a deposit tenure of 3 years.
When compared to bank fixed deposits, corporate FDs offer higher rate of interest and also are safer.
2 November 2018
Popular Banks Hike Fd Interest Rates
One of the most popular modes of investment in India is Fixed Deposits (FDs). An FD scheme requires an individual to park a lump sum of funds within a bank or a Non-Banking Financial Company (NBFC). The deposits are held for a specific tenure at a fixed rate of interest. Recently, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) announced a hike in repo rates. This move prompted multiple banks to increase FD rates on select tenures.
State Bank of India (SBI), one of the first banks to increase FD rates, announced a hike on 30 July 2018. The rates range between 5.57% to 6.85% for a tenure period between 7 days and 10 years. HDFC Bank followed the suit and revised its term deposit rates on 6 August 2018. The interest rates lie between 3.50% and 7.25%. One can choose from a tenure period from 7 days to 10 years. ICICI Bank declared a rate change on 14 August 2018. It offers interest rates between 4.00% and 7.25%. The maturity period ranges within 7 days and 10 years. Bank of Baroda changed its interest rates on FD on 22 August 2018. The rates lie between 4.25% and 6.75%. The tenure period for the FD schemes range from 7 days to 10 years. The rates mentioned above for all the banks are for deposits below Rs.1 crore.
25 September 2018