50 Common Investment Questions

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50 Common Investment Questions
Himali Patel - 07 January 2019



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Mutual Funds | Insurance | markets | Taxation | banking

From reintroduction of 10 per cent tax on long-term capital gains (LTCG) on sale of equities to SEBI’s decision to reduce the total expense ratio (TER) across mutual fund schemes, the regulatory changes that were brought in 2018 will directly impact the investment climate. Having said that, any investment decision always starts with asking the right kind of questions. And, most investment-related fiascos can be averted by finding the right answers.

As we step into 2019, Outlook Money got various experts across the financial sector to answer most common queries or concerns raised by investors.


Wealth Creation With Mutual Funds?

Being benchmarked against the indices, mutual funds are considered safer than stocks or derivatives. However, since this asset class is also a subject to market risk, it is better to know the subject well before jumping into it. By Himali Patel


Should I invest directly or through an agent?

It is each individual’s choice. As an industry, we have seen an increase in SIP investment being made directly. There are many online sites, blogs which demystify the concept of SIP. Investing is easy especially in a good market. It is only in times of volatility that an investor’s nerves are tested. And, it is in such times that we have seen SIP closures, which means direct investors stop buying when the markets are selling at low levels. On the other hand, an advisor will be there to handhold the investor, reason out the benefits of long-term investing and rupee cost averaging. In direct investment, chances are emotions may get the better of you to decide to discontinue SIPs. 

Manish Mehta, National Head Sales and Distribution Alliances, Kotak Mahindra Asset Management


I have been investing in a SIP for two years and yet to see returns, should I continue?

SIPs diversify over time and meet the risk of timing cost. Benefit of rupee cost averaging kicks in over  a period of time, especially when you get an opportunity to buy at lows. If an investor has started a SIP it is probably to achieve some long-term goal.

It is imperative to stick to the plan. Hence, our advice would be to stick to it rather than taking a short-term decision.  (See table: Page 62)

Manish Mehta


What should my ideal mutual fund portfolio look like?

When it comes to making investments, it has to be unique and customised as per individual investors’ needs. One should take into consideration various factors such as one’s risk appetite, investment horizon and financial goals. Hence, it is often advised that the best way to go about financial planning is with the help of a financial advisor. However, an ideal mutual fund portfolio should have schemes diversified across various asset classes and market capitalisations. Also, one should not ignore debt and gold funds.

S Naren, ED and CIO, ICICI Prudential AMC.



How to select a good mutual fund to earn maximum returns?

When making investments, one should consider risk-adjusted returns rather than focusing on maximising returns, since the latter could result in taking undue risks. The factors to be mindful of are the pedigree of the fund house, their track record in managing investments across market cycles, to name a few. Being invested in a good scheme over the long-term can surely aid the investor in having a good investment experience.

S Naren


How many mutual funds should an investor have?

Ideally one must have five to six schemes in their mutual fund portfolio across asset classes. As a sample case, for a moderate-risk investor, two schemes can be from debt (one liquid fund for emergency purposes and one medium to long-term fund) and three to four schemes in equity split between large and mid cap or may be one or two multicap schemes. On an average every mutual fund scheme (specially equities) own at least 40-50 stocks in the portfolio and by over diversifying you may own way too many stocks which will dilute the portfolio level returns. Thus, one must put a lot of emphasis of what they own (scheme selection) and how much they own (allocation). This will definitely have an impact on your final outcome - the returns.

Akhil Chaturvedi, Associate Director, Head – Sales& Distribution, Motilal Oswal AMC


What is the difference in returns between dividend and growth options while selecting  a mutual fund?

An investment under ‘growth’ gives you fixed number of units and its value grows with the growth in its net asset value (NAV) over a period of time. So when you sell these units after one year there is LTCG and if they are sold before completing the one-year term then there is short-term capital gains and thus it is quite simple in its concept.

Now coming to the dividend, there are two options - dividend payout and divided reinvestment. In the first case, the quantum of dividend declared by the scheme is paid out to the investors directly and to that extent the NAV of the plan falls down. In the second, dividend are reinvested and the process.

Dividend plans in the current times are unfriendly. First, they are tax inefficient as dividends now attract 10 per cent dividend distribution tax on both dividend payout and reinvestment plan Second, dividends from mutual funds does not mean incremental profit from the scheme as is the case when you get dividend out of the profits of the company. In fact it is your own capital which is returned to you as and when there are distributable surpluses in the fund albeit with tax which is even more  of a disadvantage.  

Akhil Chaturvedi


Which is the best mode to select in mutual funds - monthly, half-yearly or annually?

There is nothing as the best mode of investment in SIPs, as investment is a factor of many attributes such as investment objective, risk appetite, liquidity and long or short-term plans. The return on investment in SIP depends upon the amount of investment made by you and the fund’s performance.

Suresh Surana, Founder, RSM Astute Consulting


What are the various options that can boost a portfolio?

SIP Pause: For a investor, it is always a worry, when one is not able to invest consistently during a SIP tenure. To avoid such a senario, many fund houses are offering “SIP pause”, wherein investor can pause an SIP for one to three months.  SIP Booster: Today, one has the facility to choose for SIP amount enhancement at regular intervals – yearly or half-yearly while enrolling for the SIP. The SIP Booster or Top-up as it is called by some, helps an investor increase his or her SIP amount at a pre-determined time interval for example every year.  Systematic transfer plan (STP):  The investors can judiciously use it to maximise benefits from the market. This is best used when you have a lump sum to invest, such as a yearly bonus. Rather than deploying the entire amount at one go into say equity mutual funds, one can invest in a liquid or ultra-short-term fund and then do a monthly STP into an equity diversified fund of one’s choice.


What are the charges that I should keep in mind while investing in mutual funds?

Investing in mutual funds includes one-time charges like entry load, exit load and transactions charges. Entry loads is usually deducted from NAV at the time of investing. SEBI has made it mandatory to discontinue charging entry load, and this practice has been stopped by the fund houses. Exit load is charged when an investor exits from a mutual fund scheme before the lock-in period. The charges are different as per different fund houses. Asset management companies (AMC) charge transaction fees once during an investment when it is starting. They are also known as one time charges. Apart from this, investors also have to pay recurring charges for the maintenance of the portfolio on a yearly basis. All expenses related to mutual funds together are called TER. It is charged by the AMCs to manage a scheme and is expressed as a percentage of the assets managed by the fund manager.


Are debt funds better than fixed deposits?

Debt funds are subject to taxes but the dividend or interests received from these funds are tax free in the hands of investors. This is a big advantage when compared with investment in fixed deposits which is subject to TDS (if it is more than Rs10,000) and is taxed at a marginal rate. Further debt funds are taxed at 20 per cent with indexation when the funds units are held for three years or more before being sold.






Protecting The Loved Ones With Insurance

As per a recent economic survey, insurance penetration in India has risen to 3.49 per cent in 2016-17 compared to 2.71 per cent in 2001. However, many of us still continue to look at it as a save tax instrument. An unplanned life is full of risk and the role of an insurance policy cannot be undermined. Apart from having a disciplined investment approach, it is essential to insure oneself and family  to live a full life.


  Family floater health plan or individual policy – which is a better option?

Both family floater health plans and individual health policies are good as these serve different needs for distinct segments. In family floater, sum insured floats amongst all the members covered in the policy. The individual plans have per member sum insured. The only concern in case of family floater plan is that, if one of the members utilises the sum insured then the other members are left without any cover. Generally in case of accidents or any infectious diseases, if more than one family member may be hospitalised, then the cover will be inadequate. Hence, one should ideally opt for an individual health insurance plan so that each family member is covered. In case of family floaters, the cover has to be much higher.

Bhaskar Nerurkar, Head – Health Administration Team, Bajaj Allianz General Insurance

  As per IRDA, what are the most recent changes in motor insurance segment?

Buying a new four-wheeler and two-wheeler is going to cost you more, as per the new Insurance Regulatory and Development Authority of India (IRDAI) rule. It announced to increase the compulsory accident cover to `15 lakh, in case the owner dies while driving or riding.  This cover is available for a third-party policy as well. IRDAI has fixed the CPA cover for all classes of vehicles at the premium rate of `750 per annum for annual policy. 


Is it necessary to buy accident insurance policy separately?

One can buy it along with a term insurance policy as a rider or as an independent accident insurance policy; the benefits are similar.  The one advantage of buying a rider as against a stand-alone policy is the ease of documentation, both at the application stage and during claims.

Rushabh GandhiDeputy CEO, IndiaFirst Life Insurance


How often should I review my insurance policies?

You should review your insurance policy whenever there is any change in your future needs.  For example, one might need to add to one’s bouquet of insurance policies in the event of a birth of a child. Similarly, one needs to review insurance policies in the instance of a promotion leading to an increase in income as one will get used to a better standard of living. Here, I wish to clarify that most insurance policies realise their full value if the customer stays invested through the contract period.

 Rushabh Gandhi


What average return can I expect on my insurance policies?

Insurance should not be taken for returns, but more for protecting loved ones and their goals. The return on traditional policies is usually close to six per cent per annum and ULIPs are market linked, but more like eight to nine per cent per annum even if equity exposure is on the higher side.

Shweta Jain, Founder, Investography


In case of conflict with my insurance provider, whom should I approach to resolve the dispute? 

The customer should first approach the customer care centre of the insurance company with the grievance. They can call at the call centre, email their grievance to the customer care email id or register their complaint on the insurance company’s website. In case they are not satisfied with the solution, they can approach the Insurance Ombudsman, the IRDAI or the Consumer Court for resolution  of the dispute.

Bhaskar Nerurkar


What happens to my policy if I discontinue my premiums?

In that case, if your policy has not attained its surrender value that happens after you pay premium for two or three years, your policy will lapse. With that you also lose all your policy related benefits depending upon which plan you have opted for.  However, now a days, most insurance companies allow you to revive your policy if you pay late fee along with pending premiums.


Should I buy insurance policies online or offline?

Buying insurance online has its own set of advantages as it involves lesser paperwork, higher transparency, conveniences in overall buying process and so on. Whereas buying insurance offline through an agent or going direct has been one of the oldest methods with equally beneficial features. When it comes to deciding between both the methods, your premium should be the deciding factor. Also, some online term insurance plans don’t add covers like critical illness, accidental deaths or permanent disability benefits. So, you should opt for an online insurance plan only when you have done your research.


Are guaranteed insurance products good?

Guaranteed plans are must-haves in your portfolio. The proportion may depend on the age of the investor and the timing of requirement of the funds. It is always wise to park a part of your money in plans providing guaranteed returns so as to fence it against market volatilities. Further, guaranteed insurance plans give  tax-free returns which other financial instruments in this  space do not provide.

Karthik Raman, CMO & Head – Products and Strategy, IDBI Federal Life Insurance


When investing in ULIPs, what should the ideal duration be before switching?  When one expects interest rates to rise, he or she may consider switching. When interest rates are falling, it may be apt to stay put in the funds one has already invested in. The impact on profitability when one switches funds depends on its market valuation where funds  are being switched-in or switched-out of, and also the quantum  of switching. Karthik Raman




Know The Markets Better

Investing directly in stocks is certainly not for everyone. It requires knowledge, skill and time, making it a specialised activity. First, because research is the only tool for the trade, irrespective of your ‘gut feeling’ or rumours that you come across. Second, stock returns are impressive over a long term. However, without understanding such aspects, most of us jump in to it once in our lifetime, lose money and then refrain from it completely. However, basic financial knowledge, like consulting a financial advisor, can help us pick up healthy investment practices.


What are the good parameters while selecting a good blue-chip company stock? 

One needs to look at both qualitative and quantitative aspects while looking at any good quality company. Many softer features get covered under the qualitative aspect, such as track records of the management, corporate governance, ethics and also the image of the company. Other factors to look into qualitative aspects are company’s moat in the sector, market share, expansion plans and execution capability. On the quantitative side, the financials and ratios play a big role. One needs to analyse the company’s profit and losses and also the balance sheet. Good blue-chip companies need to have the following financial parameters – low debt-equity ratio, good returns ratio like return on equity and return on capital employed, healthy working capital cycle, decent operating and net profit margin, high-tax rates and healthy dividend pay-out ratio.

Rusmik Oza, Senior VP and Head of Fundamental Research, Kotak Securities


How to analyse whether a new IPO will succeed or not while going forward?

 One must look at the company’s past track record of management pedigree, execution, and financials. Other aspects are whether the company wants to use the funds for expansion or for retiring debt. Whether promoters are selling along with any private equity player is also worth noticing. If the IPO is just to facilitate exit for private equity players, then one needs to seriously look at the valuations and whether there is any upside potential left in the stocks post listing. The most important aspect is the company’s valuation and return ratios vis-à-vis its listed peers. Is the IPO reasonably valued for making money post listing - this is important to derive. If the management track record is good, company is well placed in the industry, IPO funds will lead to business expansion, financials are good and lastly, if valuation is reasonable then the probability of making money in that particular IPO is very high.

 Rusmik Oza


How should market investors play during elections 2019?

The only thing which should matter to investors and investment specialists pertaining to equities are earnings of companies, quality of earnings, and consistency of earnings. That’s what drives the stock markets and stock prices in the long-term. However, in short-term, that is, for a period less than two years, the only thing that drives the equity market is news.

Generally news doesn’t make money, but Lok Sabha elections in India is one such event where probability of making money through this event is very high. Historically, whoever has invested six months before the general elections and has held on to  Sensex for next 18 months, an investment horizon of two years,  has never lost money.       I would advise investors tostack up high quality, consistently growing companies both in terms of revenue and profit after tax growth with clean accounting practices and no political linkage to make handsome profits.

Siddhartha Rastogi, Managing Director, Ambit Asset Management


What are global and domestic cues to watch for in 2019?

Investors should look at the US economic growth peaking in Calendar Year (CY) 2019. Over the last 15 years, the US has never witnessed a growth over four per cent. For Q2CY 2018, the US saw a GDP expansion of 4.2 per cent which cooled off to 3.5 per cent in Q3 CY 2018. The expectations are that the US economy will cool off further pushing the largest economy into recession in 2020. Among the other international cues that investors should look at are heightened trade tension between the US and China, lack of consensus on climate control and climate change.

I would mention that historically when inflation and unemployment rate converges, it reflects overheated economy. Differential in unemployment rate and inflation is merely 100 basis point in most developed economies including the US, Japan, Germany and the UK, which indicates problems in the world economy. The yield curves have flattened out indicating borrowers are uncertain on long-term rates and liquidity crunch. The withdrawal of easy liquidity and rising interest rates, although at slower pace, can bring asset prices across classes under pressure.

However, I am optimistic about the domestic economy. India will provide support to the world economy and is expected to become $5.2 trillion economy in next six years. There would be more consumption by 450 million India, in the age bracket of 15 – 45, as they will earn, consume and save more. The financialisation, formalisation, and growth of financial intermediation will ensure double digit GDP growth for Indian economy in the next three years.

Siddhartha Rastogi


What are the sectors I  should consider investing in 2019 and why?

Financials, healthcare, capital goods, and automobile sector are likely to show robust earnings in 2019, after correction in stocks are available at attractive valuations. Then there are new and upcoming sectors like insurance, where the private players are gaining market share. AMC can also be looked at.

 VK Sharma, Head PCG and Capital Markets Strategy, HDFC Securities


Should I continue my investments for now?

Yes, remain invested by all means. How long can a correction last is a difficult question to answer, but it is sufficient to say that a bear market in our country has never lasted more than 18 months. The state elections results have some investors worried. Don’t panic. This uncertainty before the Lok Sabha elections is nothing new. There is value only as long as there is uncertainty. Earnings are going to rise, interest rates are near peak levels and a new Government that comes in the summer of 2019 will drive the economy and the markets higher.

VK Sharma


Will buy and hold strategy give me good returns?

Investing in stocks requires investors to understand the true value of a stock and forecasting its future value. In addition, it also requires a deeper understanding of the company’s business, financial statements like profit and loss account, balance sheet and cash flow. From a retail client perspective, it is important to buy and hold equity portfolio for a long-term. Having simple yardsticks, like the return on capital, could help in putting an intrinsic value to the shares of a company. Further a few days of upswing in a year can have a big impact on the overall returns in your investment for that year. This means that in case if you are not invested during those days, you also lose on that chunk of returns.


How to plan investments to buy a house?

Let’s assume you want to buy a flat that costs `50 lakh. Since banks and any housing company will readily give you a loan of `40 lakh, which is 80 per cent of the house value, you will have to arrange `10 lakh as margin money. Start an SIP of `15,000 in a large cap mutual fund and you can expect a return of around 16 per cent on a CAGR basis. In 45 months the value of this could be around `12 lakh, ready to buy a house worth `60 lakh. Go for a higher amount than required, as the house value could appreciate before you decide to finally buy it.

VK Sharma


Between Gold ETF and physical gold, which option is better?

India’s love-affair with yellow metal is one of the oldest, as it is considered to be best hedge against rising inflation and especially against volatile market.  However when it comes to selling most of the time you have to end up paying premium over the current market value of gold. Further it also poses a risk of theft, concerns over its purity is a big issue again. On the other hand, gold ETF is considered safe to hold, easy to transact, and provides high liquidity. Investors can buy or sell them in real time basis during the trading session on the stock exchanges. Your gold ETF investments are always deposited in your demat account. However you need to pay annual charges for holding a demat account.  


What is the goal-based investment approach?

Unlike the traditional approach of setting financial goals, which focuses solely on retirement, goal-based approach has a holistic view and covers all domains of your investments. Under this approach, an investment plan is created on the basis of your set objectives and planned goals. Investments across all financial segments are evaluated on the basis of your objectives, needs and priorities. This approach identifies your risk profile for each goal along with your expected returns at defined points in life. It factors in all kinds of risks including inflation risk. The performance is measured on goal specific expectations.




Having Your Way With Taxes

If data is to be believed, in India, more and more people have started paying their taxes. India’s tax-to-gross domestic product or GDP ratio has risen from 10.2 per cent to 11.6 per cent over the last four years. For the current financial year (FY), the estimate set by finance ministry is 12.1 per cent. Considering the fact that tax is a complicated subject, we often end up paying extra money without even understanding them. A proper knowledge of the taxes can be beneficial in the long run.


How do I pick the right tax saving (ELSS) funds?

First, look at the past performance of the fund. A common mistake that most investors make is looking at a fund’s current performance. It’s important to view the past performance of the funds to see how they have behaved during market volatility. Look at its returns for the past three to five years.

Second, know your risk appetite. ELSS are known to generate high returns. While high-risk funds will give you big returns, the risks are high as well. Analyse your risk tolerance and the risk involved with the fund you are planning to invest. Pick a fund that is well diversified and compliments your risk profile.

Third, decide between Growth and Dividend Options. ELSS gives you both the options. There is now a 10 per cent dividend distribution tax on equity mutual funds, deducted by the fund before paying a dividend. On the other hand, growth options equity funds’ LTCG of over Rs1 lakh are taxed at the rate of 10 per cent. Choose your fund keeping this tax element in mind. Investing your money in growth is certainly a better thing to do, to improve accumulation. (See the table:  Top ELSS Funds)

Archit Gupta,  Founder and CEO, ClearTax


How does the taxation on redemption of SIPs work? 

 SIPs are taxed on first-in-first-out basis when a redemption request is made by the investor. It implies that the SIP which entered initially in the scheme will be considered first towards taxation when an investor redeems his investment. The subsequent SIPs are treated for taxation in a chronological order. This is applicable for all categories  of mutual funds.

Archit Gupta


How to calculate gains on sale of equity funds?

Any profit arising from sale of equity funds or any other scrip is chargeable to capital gains tax in the year in which such securities are sold. Any notional profit due to increase in current market price of a security is not taxable unless profit is actually realised from its transfer. The calculation of capital gains  from sale of securities depends on the nature of capital asset, which  can be either short-term or long-term capital asset (if held for 12 months or more).  If equity fund is transferred through a recognised stock exchange and security transaction tax is paid on its transfer, the resultant capital gains shall be taxable at a  concessional rate.

Naveen Wadhwa, DGM, Taxmann.com


How deductions can be claimed from rental income?

A landlord can claim up to three deductions from the rental income taxable under ‘Income from House Property’, namely, house taxes actually paid during the year, 30 per cent standard deduction of net annual value and interest up to  `2 lakh paid on funds borrowed for acquisition, construction or repairs of the property.

In addition to above, a landlord can also claim general deductions under Section 80C to 80U. These deductions are available to every eligible individual not withstanding whether he earns any rental income or not.

Naveen Wadhwa


Can I stop insurance mid-way and still get tax benefits as well as policy benefits?

The insurance proceeds are tax free provided the premium is less than 10 per cent of the sum assured. The benefits cease once the premiums stop. If one wants the death benefit to continue, he or she needs to make it a paid up policy where premiums stop, but benefits continue till the end of the term. 

Shweta Jain, Founder, Investography


Which is better option - fixed or recurring deposits?

There is no difference except that fixed deposits of  five years or more, qualifies for  deduction u/s 80C within the overall limit of  Rs150,000 per year from the taxable income.

Kuldip Kumar, Partner and Leader, Personal Tax, PwC


How are my dividends taxed across shares and mutual funds?

Dividend income from shares and SEBI registered mutual funds (debt and equity both) is exempted from tax in the hands of recipient individual u/s 10(34) and 10(35) respectively. However, where the amount of dividend exceeds Rs10 lakh, the recipient individual is required to pay tax at 10 per cent.

Kuldip Kumar


How can I save tax other  than through 80C?

There are other deductions apart from 80C which investors can claim in order to lower the amount of tax payable. (See the table: Maximum deduction allowed to an employee under Income-tax Act)


What kind of tax benefits can senior citizens avail?

A senior citizen, who is 60 or above, gets a higher exemption. As per the Financial Year (FY) 2018-19, a resident senior citizen gets an exemption limit of Rs3 lakh, which is Rs2.5 lakh in case of non-senior citizen. Also, for people of 80 years or above gets an exemption limit of `5 lakh as per the FY 2018-2019. 


What is the penalty on late filing of ITR?

Finance ministry has extended the deadline to file your Income Tax Return (ITR) from July 31, 2018 to August 31, 2018, and post that you will be liable to pay penalty. (See the table: Late Filing Penalty)




The Role Of Banks In Time Of Digital Lending

With the advent of digital platforms, banking is now at our fingertips. Digital lending in the Indian banking industry stood at  $75 billion in Financial Year 2018, as per IBEF. You can open an account or a fixed deposit, pay bills and transfer money all from your mobile phone. However to manage multiple bank accounts smartly, one needs to understand the hidden charges that come with the convenience.


What is an MAB and how does it affect me?

In a savings account, customers need to maintain a monthly average balance (MAB) as mutually agreed with their bank to avail a certain set of services. MAB represents the amount of liquid money one would typically hold in a savings account to meet monthly household needs, including EMI and SIP obligations. It also earns interest ranging from 3.5 per cent to six per cent.

MAB is computed basis the sum of the daily balance in the account, divided by 30.

Puneet Kapoor, Senior Executive . VP, Kotak Mahindra Bank


How should I get a fix on the EMI and tenure when going for a home loan?

Typically, the EMI amount for a home loan should not exceed 40 per cent of one’s monthly disposable income. Once the EMI is established, one needs to calculate the minimum tenure required to repay the loan. The tenure for a home loan usually runs for 15-20 years. If a customer receives some bullet inflows that enables him/her to prepay, one should reset the tenure because longer the tenure, higher is the total outlay. For guidance, one can refer to the EMI table. This illustration assumes an interest rate of 8.5 per cent on a Rs30 lakh loan for a 15 and 20-year tenure and shows EMI payable per month.

Puneet Kapoor


In the increasing interest rate regime are the fixed deposits better than small saving schemes? 

I always recommend my customers, no matter whether they are risk-takers or risk-averse -- to opt for a fixed deposit simply because it not only protects the capital, but also offers assured returns. Fixed deposits offer the same safety and returns like small savings schemes, but provides superior liquidity options. Small savings schemes, due to their inherent nature, are better suited for long-term goals. Convenience to open for any tenure (ranging from a week to 10 years) and any amount are biggest positives of fixed deposits as compared to small savings. Moreover a fixed deposit can also be easily bought at the click of a button through a mobile phone or online. As a prudent asset allocation strategy, customer segments like senior citizens, homemakers,  small business owners among others, where primary requirement is to protect their capital, should deploy sizeable chunk of their investments in fixed deposits. In fact, customers who do not track stock markets on a  regular basis should also park a substantial amount of their savings  in fixed deposits.

We are witnessing volatility in the equity markets coupled with increasing interest rates for fixed deposits over the last six months. Keeping this in view, fixed deposits can be a good hedging tool for risk taking customers.

Pranav Mishra, HeadRetail Liabilities Group, ICICI Bank


What are the different ways I can book a fixed deposit?

You can go to your nearest bank branch and open a fixed deposit with documents of your identity and address proof. Now you can also book them online in a few simple steps. You need to login to your online banking account and select the type of fixed deposit you want to open. Then choose the source account, from which the money has to be debited in case you have multiple accounts, the principal value and date of maturity. Once you have made all the selections, you can click on the submit button to open a fixed deposit.


What are the charges related to debit and credit cards that I should be aware of?

Many credit cards come with a joining fee and annual charges though they can be waived off in some cases. Overdue interest on cash advances and extended credit (if only minimum balance is paid by due date) can be as high as three to four per cent per month. Some debit cards too come with a joining and an annual fee. Cash withdrawal beyond a certain number at the bank’s ATM or at third party ATMs cost Rs20 per transaction plus GST. Some banks also charge a fee if a transaction is declined due to insufficient balance or for changing the PIN.


What are the various things that I should consider before taking a personal loan?

First be sure if you really need a personal loan. Make a budget and see how much EMI you can afford every month without stretching your finances. Once you have decided on the amount compare with different lenders and decide which one is the most suitable. The next is to get a fix on the EMI and the loan payment tenure in such a way that your EMI is manageable, yet you do not end up paying too much interest. Read the fine print to be aware of hidden charges and fees.


While using digital banking how do I ensure security?

For some of the indicative precautionary measures to ensure safety with reference to digital banking and online payments refer table: Ensure Digital Security while Banking.


What can be expected in terms of interest rates in 2019? Will home loan rates go up?

Inflation is expected to remain stable  in India in 2019 and it will give an opportunity to RBI for rate cut. Following the rate cut, banks will pass it on to their customers. It will result in reduction in interest rates on fixed deposits, but will be positive for loan customer. Less interest on loan will help the customer to repay their loan faster with same EMI they pay. Since the interest rates on retail loans including home loans will be linked to the external benchmark from April 2019, customers will get the benefits of rate cut faster.

 Pankaj Mathpal, Managing Director, Optima Money Managers


How does one ensure that bank charges are kept to a minimum?

Maintain only one or two saving bank accounts and maintain the required minimum balance in them to avoid penalty. Banks offer limited free transaction for using other bank’s ATM. Always try using ATM of your own bank. Most banks charge fees for fund transfer through NEFT and RTGS but some banks offer these services for free online. In such cases, it is better to use the netbanking facility instead of visiting the branch. Also, in case of a joint account, banks provide a separate ATM cum debit cards to each account holder. Since annual charges are applicable on your card, you may retain only one card to reduce the charges. Also, banks issue multiple variant for debit cards and fees vary from one card to another. Select the card as per your need.

 Pankaj Mathpal, Managing Director, Optima Money Managers


What are the special services that come with privilege banking?

Privilege banking customers get priority access at the branch and the customer care office. Over the counter services is offered to the customer for processing their requests and dedicated relationship manger is available to provide personalised service. They get higher daily cash withdrawal limit from ATM and higher spend limit at merchant outlets.  In addition to that, they may also get discount on their locker rental, lesser interest rates on their credit card and loan products, waiver of their demat annual maintenance charges and demand draft charges.

Pankaj Mathpal)

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