Tuesday, May 21, 2019

Muthoot Finance Limited NCD

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Muthoot Finance Limited is the largest gold loan NBFC in India in terms of loan portfolio. The company was established in 1939 headquartered in the south Indian state of Kerala. Company Gold Loan portfolio as of September 30, 2018 comprised approximately 8.15 million loan accounts in India that it serviced through 4,370 branches across 23 states, the national capital territory of Delhi and five union territories in India. As of September 30, 2018 Company employed 23,888 persons in its operations.

The company has come out with an issue of secured redeemable non-convertible debentures of Rs. 100 crores with an option to retain oversubscription up to 900 Crores for issuance of additional NCDs aggregating up to Rs. 1000 Crores.

The issue opens on May 10, 2019 and closes on June 10, 2019. The company is offering an interest rate or a coupon of 10% per annum.

The face value of the NCD is Rs. 1000 and minimum application amount is Rs. 10000 or 10 NCDs and in multiple of Rs. 1000 or 1 NCD thereafter. The issue shall get listed on BSE. DMAT account is mandatory for trading.

CRISIL and ICRA have given a rating of AA/Stable to the issue. Link Intime India Private Limited is the registrar and Edelweiss Financial Services Limited and AK Capital Services Limited is the lead manager of the issue.

Interest rates have gone down so some investors might get tempted for such company fixed deposits. But investors should understand the inherent risks of company fixed deposits. Investors have burnt their money with Jaypee, Unitech etc. So, tread with caution if you want to invest in them. Incase, you want to look at some banks offering higher interest rates than others, checkout: https://www.myfamilyinvestment.com/2012/04/latest-resident-nro-bank-fixed-deposit.html

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Tuesday, May 14, 2019

Best Investment Options for 2019

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Equities had a great run in 2018 and first quarter of 2019 but will it continue till rest of the year? There are many headwinds for stocks in 2019:

1. Global Stock Markets at a record high with Nifty above 11300 having touched 11700 few weeks back.
2. Trade tensions between China and US causing turmoil in global markets.
3. Earning season in India was average and not great which the market was expected and had priced in, though there is some recovery in some of the banks.
4. Political uncertainty is at a high with election results in 10 days. Market had priced in victory for the current establishment but with a lower number.
5. There seems to be some slowdown as reflected by consumption figures and auto sales trend.
6. Crypto currencies and Gold has risen again given the global turmoil.
Even if the markets have come off its all time high, they are still at a premium valuation. It would be safer for markets to correct some more and then start investing in equities and that too in a systematic way with small investments spread every month with a view of long term investment. 

For people, who cannot afford to take the risks that come with volatility of stock markets, one could look at some bank fixed deposit options for rest of this year. There are too many headwinds for the stock markets and it would be much safer to invest in fixed deposits. Have a look at the latest bank fixed deposit rates. NPS is another good option which offers higher return but with much lessor cost than a mutual fund. Though, there are some restrictions in withdrawal, so invest in NPS only if you have a very long term horizon.

For senior citizens, there are some better schemes like Senior Citizens Savings Scheme and PMVVY which offers safety from government of India and higher interest rate that most bank fixed deposits.

There are some high quality company fixed deposit that can be looked at but they come with higher risk and the additional interest rate over bank fixed deposit is not so high to warrant that risk. KTDFC and other NBFCs have come out with their fixed deposit options.

Even though gold doesn't have any cash flow associated with it, but prices have risen over the last few months. So, it may not hurt to buy gold coin or invest in Gold ETF. Even better option is Soverign Gold Bonds from RBI. Given the market uncertainties, gold can be a good investment.

Real Estate market has picked up in the last few months though if there is a slowdown - local or global, real estate market will take a beating as well. 
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Monday, May 13, 2019

Fixed Deposits from KTDFC - 8.75%

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KTDFC is a Kerala Government owned Non Banking Financial Company registered under the Reserve Bank of India. KTDFC accepts deposits from the public and these deposits are guaranteed by the Government of Kerala and ensure 100% security and extra earnings.

Deposits are accepted from the public under two Schemes, viz. Periodic Interest Payment Scheme and Money Multiplier Scheme.

INTEREST RATES:
1 Year: 8.5%
2 Years: 8.5%
3 Years: 8.5%
4 Years: 8.25%
5 Years: 8.25%

For senior citizens, there is an additional 0.25% extra.

PERIODIC INTEREST PAYMENT SCHEME
For deposits under this Scheme, the minimum amount acceptable is Rs.10000/- and further in multiplies of Rs.1000/- and the interest is paid monthly or quarterly.

MONEY MULTIPLIER SCHEME
For deposits under this Scheme, deposits are accepted in multiples of Rs.1000/- with a minimum of Rs.10000/- and the deposits along with interest accruing periodically are paid at the end of the deposit period (MONTHLY COMPOUNDING).

REFUND/RENEWAL OF DEPOSIT
In the case of refund of deposit to the depositor, refund will be made by crossed A/c Payee Cheque / Demand Draft at Company's cost.
In the case of renewal of deposit, the depositor shall return the deposit receipt duly discharged in favour of the Company together with application form duly filled in. In case the deposit is not renewed on maturity, but recalled on a subsequent date, the Company is not liable to pay interest on the deposit amount from the date of maturity. Similarly if the request for renewal is received after 30 days from the date of maturity, renewal will be considered only from the date of receipt of renewal request.

PREMATURE WITHDRAWAL
As per the directions of the Reserve Bank of India currently in force, the deposit shall not be repaid before the expiry of 3 months from the date of deposit. In case of premature withdrawal after 3 months, interest shall be paid at the following rates :-
After 3 months but before expiry of 6 months: No interest
After expiry of 6 months but before the date of maturity: 2% below the contracted rate

REMITTANCE
Application form along with Cash / Crossed Cheque / DD may be forwarded to the registered office of the Company. In case of payment by Cheques/DD, City Cheques/DD payable at Thiruvananthapuram alone will be accepted.

INTEREST
Interest earned by charitable trust is exempted under Income Tax Act vide Section II (5) (Vii).If the aggregate amount of interest payable to a resident depositor in any of the financial year under the schemes were to exceed Rs. 5000/- income tax at the appropriate rates as prescribed in the Finance Act as amended from time to time will be deducted as and when payment is made unless affidavit in the prescribed form is produced for each financial year separately by the depositor.

LOAN ON DEPOSIT
Loans will be permitted only to individuals on deposits up to 75% of the deposit amount under both the schemes, after the expiry of 3 months from the date of deposit Interest will be charged at 2% above the interest payable on such deposits. Interest on the loan will be adjusted out of interest payable on deposits under scheme I and compounded on loan on deposits under scheme II. The loan can be closed either by remitting the loan amount in one lumpsum before the maturity period of the deposit or it wiII be recovered out of the maturity value of such deposits at the time of maturity.

You can download the application form from here!

For more details, refer to the KTDFC website.

Considering that interest rates have gone down significantly, KTDFC still offers higher rate than most bank fixed deposits. Of course, senior citizens should first look at senior citizen saving scheme and PMVVY. Of late, there have been issues with KTDFC and the government is looking at merging KTDFC with other NBFC or infrastructure companies. The merger move was in the wake of the poor cash inflow into the KTDFC and apprehensions over honouring the maturity commitment of fixed deposit for which the government had stood guarantee and to ensure that borrowing capacity of the State was not affected.
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Tuesday, May 7, 2019

Best Tax Saver FD Interest Rates

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One of the popular tax saving instruments under Section 80c is 5 year fixed deposit. Interest rates have come down since last one year. Most banks are offering 7-8% interest rate. For Senior Citizen, it is even higher by 25 basis points to 75 basis points.

There is a lock in period of 5 years in case of tax saver FD. In the case of joint holder deposit, the deduction from income under section 80C of the act shall be available only to the first holder of the deposit. The minimum amount accepted by most banks is Rs 100, and in multiples of Rs. 100 can invest maximum amount  of Rs. 1.5 Lakh.

We will list down the interest rates offered by banks for tax saving fixed deposits.

Bank
  Regular          Senior            Citizen
Lakshmi Vilas Bank 7.85% 8.45%
City Union Bank 7.50% 7.50%
IDFC 7.75% 8.25%
ICICI 7.25% 7.75%
HDFC 7.25% 7.75%
Axis 7.25% 7.75%
IDBI 6.85% 7.35%
Kotak Bank 7.00% 7.50%
PNB 6.25% 6.75%
BOI 6.75% 7.00%
Oriental 6.50% 7.00%
Canara 6.50% 7.00%
SBI 6.85% 7.30%
BOB 7.00% 7.20%
Citibank 6.00% 6.50%
IndusInd 7.50% 8.00%
Yes   7.25% 7.75%


To check other tax saving instruments under Section 80c, click here!

To know interest rates for regular fixed deposits, refer the post here!
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Saturday, May 4, 2019

Senior Citizen Savings Scheme

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Senior Citizen Savings Scheme is one of the few good investment schemes for senior citizens with a regular qyaterly payout. This scheme is available with India Post and can be applied at one of their offices.

Eligibility:
An individual of the age of 60 years or more may open the Senior Citizen Savings Scheme
Account. An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.

Interest Rate:
Currently, Senior Citizen Savings Scheme offers an interest rate of 8.7 per cent. Interest is paid out every quarter.

Maturity Period:
Maturity period of Senior Citizen Savings Scheme is 5 years. Premature closure is allowed after one year on deduction of an amount equal to1.5% of the deposit and after 2 years 1% of the deposit. After maturity, the account can be extended for further three years within one year of the maturity by giving application in prescribed format. In such cases, account can be closed at any time after expiry of one year of extension without any deduction.

Maximum Limit:
A depositor may operate more than one account in individual capacity or jointly with spouse (husband/wife). There shall be only one deposit in the account in multiple of Rs.1000 maximum but not exceeding Rs. 15 lakhs. Account can be opened by cash for the amount below Rs. 1 lakh and for Rs. 1 Lakh and above by Cheque only. Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts. Joint account can be opened with spouse only and first depositor in Joint account is the investor.

Tax Implications:
Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act. TDS is deducted at source on interest if the interest amount is more than Rs. 10,000 per annum. 

This investment scheme is highly recommended for senior citizens. Banks are offering fairly low interest rates these days. This scheme is more secured and offers high interest rate with interest payout every quarter. As mentioned above, there is an option for early withdrawl with some fees. None of the banks are offering such a high interest rate and none of them are as safe as India Post savings scheme which is backed by government. Senior citizens should definitely invest the maximum amount of Rs 15 Lakhs in this scheme before investing in other schemes.

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Friday, May 3, 2019

Pradhan Mantri Vaya Vandana Yojana (PMVVY) Scheme

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Pradhan Mantri Vaya Vandana Yojana (PMVVY) Scheme is one of the few good investment schemes for senior citizens with a different pension payout options. This scheme is available with LIC and can be applied online or at one of their offices.

Eligibility:
An individual of the age of 60 years or more may open the PMVVY Scheme account. 

Interest Rate:
Currently, Pradhan Mantri Vaya Vandana Yojana Scheme offers an interest rate of 8.3% for yearly interest payout, 8.13% for half yearly interest payout, 8.050% for quaterly interest payout and 8% for monthly interest payout.

Maturity Period:
Maturity period of PMVVY Scheme is 10 years. On death of the pensioner during the policy term of 10 years, the amount shall be refunded to the beneficiary. The scheme allows premature exit during the policy term under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases shall be 98% of Purchase Price.

Maximum Limit:
Minimum pension amount is Rs 1000 per month or Rs 12000 per year and maximum pension amount is Rs 10000 per month or Rs 120000 per year. Government of India in the Budget Speech of 2018-19 has announced the enhancement of maximum limit under Pradhan Mantri Vaya Vandana Yojana to Rs. 15 lakhs per senior citizen. The period of sale for this scheme has also been extended upto 31st March, 2020. 

Purchase Price:
The scheme can be purchased by payment of a lump sum Purchase Price. The pensioner has an option to choose either the amount of pension or the Purchase Price.

The maximum Purchase Price under different modes of pension will be as under:
Yearly: Rs. 14,44,783
Half Yearly: Rs. 14,76,015
Quarterly: Rs. 14,90,683
Monthly Rs. 15,00,000

The Purchase Price to be charged shall be rounded to nearest rupee. 

Tax Implications:
There is no tax benefit available on the amount invested. Further, the pension received will be fully taxable in the hands of the individual. The government, however, has exempted PMVVY from TDS.

This investment scheme is highly recommended for senior citizens. Banks are offering fairly low interest rates these days. This scheme is more secured and offers high interest rate with different interest payout options. None of the banks are offering such a high interest rate and none of them are as safe as this scheme from LIC which is backed by government. Senior citizens should definitely invest the maximum amount of Rs 15 Lakhs in this scheme. However, do read the post on Senior Citizens Savings Scheme which offers higher interest rate and offers tax benefit!

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Thursday, May 2, 2019

Capital Gain Bonds - Save Tax

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Long term capital gains arises when you hold any asset for a defined period. This period ranges from one year to three year across different asset classes. For example, in case of equities, it is more than one year and in case of real estate it is more than 2 years. Investors can save tax on long term capital gains by investing the gains in specified bonds. These bonds are popularly known as 54EC bonds, borrowing its name from Section 54EC of the Income Tax (I-T) Act. Under Section 54EC, the capital gains need to be invested in specified bonds within a period of six months from the date of sale of the capital asset in order to qualify for the exemption. The entire gains will be exempt if the equivalent amount is invested in these bonds.

There are 4 bond schemes in which the investor can invest in:
1. NHAI Capital Gain Bonds
2. REC Capital Gain Tax Exemption Bonds
3. IRFC Capital Gain Bonds
4. PFC Capital Gain Bonds

These bonds typically opens at the start of the financial year (1st April) and closes at the end of the financial year (31st March) or if the bond issue target is achieved.

Features of the Capital Gain Bonds:

1. The face value and issue price of the bond is Rs 10,000 per bond.
2. Minimum application size is 1 bond or Rs 10,000.
3. Maximum application size is 500 bonds or Rs 50 Lakhs.
4. Interest Rate is 5.75% per annum and is paid annually.
5. Deemed date of allotment is the last day of each month for application money cleared and credited in NHAI or REC's collection account.
6. These Bonds are non-transferable, non-negotiable and cannot be offered as a security for any loan or advance.
7. Maturity has been increased from earlier 3 years to 5 years now from the deemed date of allotment. So, money is locked in for 5 years with no pre-maturity withdrawal available.
8. No tax will be deducted at source.
9. These bonds are backed by Government of India and are AAA rated.

To calculate long term capital gain, click here!
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Wednesday, May 1, 2019

JM Financial Products Limited NCD

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JM Financial Products Ltd is a NBFC registered with the Reserve Bank of India and operates as the flagship company under the “JM Financial” brand. The company was incorporated on July 10, 1984 and has broadened its services from lease syndication and vehicle leasing to offering financial solutions through lending, syndication, participation in lending for securities issuance and distribution.

The company is focused on offering a broad suite of secured and unsecured loan products which are customized to suit the needs of the corporates, SMEs and individuals. JMFPL broadly operates under four verticals - fixed income division (structured financing), fixed income division (real estate financing), capital market financing and SME financing.

Gross NPAs were 0.4%,1.4%,0.6%,0.1%,0.3% and 0.3% of its gross loan book as of March 31, 2014, 2015, 2016, 2017, 2018 and December 31, 2018, respectively, while Net NPAs were 0.2%, 1.1%, 0.4%, 0.0%, 0.2% and 0.2% of its net advances as of such dates.

The company is offering secured redeemable NCDs with a base issue of Rs. 200 Crores with an option to retain oversubscription up to Rs. 800 Crores aggregating upto Tranche I Issue Size of Rs. 1,000 Crores.

The issue opens on April 22, 2019 and closes on May 21, 2019. The company is offering an interest rate or a coupon of 10.50% per annum.

The face value of the NCD is Rs. 1000 and minimum application amount is Rs. 10000 or 10 NCDs and in multiple of Rs. 1000 or 1 NCD thereafter. The issue shall get listed on BSE. DMAT account is mandatory for trading.

ICRA has given a rating of AA and CRISIL has given a rating of AA/Stable to the issue. Karvy Fintech Private Limited is the registrar and A. K. Financial and JM Financial and Trust Investment Advisors are the lead manager of the issue.

Interest rates have gone down so some investors might get tempted for such company fixed deposits. But investors should understand the inherent risks of company fixed deposits. Investors have burnt their money with Jaypee, Unitech etc. So, tread with caution if you want to invest in them. Incase, you want to look at some banks offering higher interest rates than others, checkout: https://www.myfamilyinvestment.com/2012/04/latest-resident-nro-bank-fixed-deposit.html


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Tuesday, April 30, 2019

SREI Infrastructure Finance Limited NCD

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SREI Infrastructure Finance Limited entered the segment of infrastructure financing in 1989 in a limited capacity as a construction equipment financier. The economic liberalization in 1991 widened the opportunity for SREI Infra to mobilise resource and fund larger number of customers across regions. SREI Infra persisted through the ups and downs of the business cycles emerged as one of the strong players in the infrastructure financing space with an over 25 years track record of performance and credentials.

The company has been one of India’s largest holistic infrastructure institution, constantly and consistently delivering best of services and innovative solutions in infrastructure sector. Company’s net non performing assets as a percentage of the total gross assets of Company as at March 31, 2018, March 31, 2017, March 31, 2016, 2015 and 2014 stood at 2.4%, 2.2%, 3.54%, 3.82% and 2.09%, respectively. As at December 31, 2018 secured loans as percentage of the total source of funds of Company was 5.69%.

The company has come out with an issue of secured redeemable non-convertible debentures of Rs. 100 crores with an option to retain oversubscription up to 400 Crores for issuance of additional NCDs aggregating up to Rs. 500 Crores.

The issue opens on April 9, 2019 and closes on May 9, 2019. The company is offering an interest rate or a coupon of 10.75% per annum.

The face value of the NCD is Rs. 1000 and minimum application amount is Rs. 10000 or 10 NCDs and in multiple of Rs. 1000 or 1 NCD thereafter. The issue shall get listed on BSE. DMAT account is mandatory for trading.

Brickworks has given a rating of BWR AA+/Stable to the issue. Karvy Fintech Private Limited is the registrar and Karvy Investor Services Limited is the lead manager of the issue.

Interest rates have gone down so some investors might get tempted for such company fixed deposits. But investors should understand the inherent risks of company fixed deposits. Investors have burnt their money with Jaypee, Unitech etc. So, tread with caution if you want to invest in them. Incase, you want to look at some banks offering higher interest rates than others, checkout: https://www.myfamilyinvestment.com/2012/04/latest-resident-nro-bank-fixed-deposit.html

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Monday, April 29, 2019

SBI Fixed Deposit Interest Rates

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Following are the fixed deposit interest rates for resident and non-resident ordinary (NRO) accounts as of 29 April, 2019:

7 days to 45 days: 5.75%
46 days to 179 days: 6.25%
180 days to 210 days: 6.35%
211 days to less than 1 year: 6.40%
1 year to less than 5 years: 6.80%
5 years to 10 years: 6.85%

Above Rs 2 crore, following are the interest rates for resident and NRO accounts:

7 days to 45 days: 5.75%
46 days to 179 days: 6.25%
180 days to 210 days: 6.35%
211 days to less than 1 year: 6.40%
1 year to less than 2 years: 6.70%
2 years to less than 3 years: 6.75%
3 years to less than 5 years: 6.80%
5 years to 10 years: 6.85%

Below Rs 2 crore, following are the interest rates for resident senior citizens:

7 days to 45 days: 6.25%
46 days to 179 days: 6.75%
180 days to 210 days: 6.85%
211 days to less than 1 year: 6.90%
1 year to less than 5 years: 7.30%
5 years to 10 years: 7.35%

Above Rs 2 crore, following are the interest rates for resident senior citizens:

7 days to 45 days: 6.25%
46 days to 179 days: 6.75%
180 days to 210 days: 6.85%
211 days to less than 1 year: 6.90%
1 year to less than 2 years: 7.20%
2 years to less than 3 years: 7.25%
3 years to less than 5 years: 7.30%
5 years to 10 years: 7.35%

The interest rate payable to SBI Staff and SBI pensioners will be 1.00% above the applicable rate. The rate applicable to all Senior Citizens and SBI Pensioners of age 60 years and above will be 0.50% above the rate payable for all tenors to resident Indian senior citizens i.e. SBI resident Indian Senior Citizen Pensioners will get both the benefits of Staff (1%) and resident Indian Senior Citizens (0.50%).

Premature payment of term deposits:
Interest to be charged on premature withdrawal of term deposits at 0.50% below the rate applicable for the period deposit has remained with the Bank or 0.50% below the contracted rate, whichever is lower, for tenors above 90 days. Penalty for premature withdrawal of term deposits has been waived for deposits of tenors upto 90 days. However, no interest shall be paid on term deposits that have remained with the Bank for less than 7 days.

SBI savings bank interest rates:
Deposits in SBI savings account get an interest rate of 3.5%.

Comparison of fixed deposit interest rates with other banks can be checked here!

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