Latest personal finance news and trends in India
- Insurance Premiums: Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.
- Deferred Annuity Payments: Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity
- Deferred Annuity Deductions from Pay: Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary.
- Provident Fund (PF) or Public Provident Fund (PPF) Contributions: Any contribution made:
- by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;
- to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05.]
- by an employee to a Recognized Provident Fund;
- by an employee to an approved superannuation fund; It may be noted that “contribution” to any Fund shall not include any sums in repayment of loan;
- National Savings Certificates: Any subscription :-
- to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf.
- to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05.]
- ULIP Plan contributions: Any sum paid as contribution in the case of an individual, for himself, spouse or any child,
- for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India
- for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10 and as notified by the Central Government. [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.]
- New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I, New Jeevan Akshay-II, Jeevan Akshay-III: Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]
- Equity Linked Savings Schemes (ELSS): Any subscription made to any units of any Mutual Fund, referred to in clause(23D) of section 10, or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf;
[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]. The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.
- UTI Retirement Benefit Pension Fund: Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in clause (23D) of section 10, or, by the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf. [The Central Government has since notified UTI-Retirement Benefit Pension Fund vide Notification S.O. No. 1564(E) dated 3.11.05.]
- National Housing Bank deposits or pension funds: Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf.
- HUDCO Fixed Deposit Scheme: Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)].
- Home Loan Principal Payments: When you take a home loan, you have to make monthly payments towards repayment of the loan. This monthly payment (also known as EMI or Equated Monthly Installments) consists of a principal part and a interest part. The principal part of your EMI payments can be used for 80c deductions (The interest part of your EMI can also be used for tax benefits under section 24 of IT Act).
- Tuition Fees for education: Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee. Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes. It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.
- Subscription to equity shares or debentures: Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.
- Subscription to mutual funds: Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.
- 80C eligible Term deposits: Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes. [The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]
- Subscription to NABARD bonds: Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.
- Senior Citizens Savings Scheme: Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.
- Post Office Time Deposits of 5 years duration: Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.
i) the value of any premiums agreed to be returned, or
ii) any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy.
State Bank of India (SBI), India’s largest public sector bank, has cut its fixed deposit rates effective from April 13, 2009. The rate cuts range from 0.25% to 0.50% on various deposit terms. With these cuts, the highest interest rate offered by SBI is for a term of 8 years to 10 years with the rate being 8.50%. You can get 8.25% for fixed deposit terms of 1000 days and 5 years and above to less than 8 years.
Other banks are expected to follow SBI’s lead and cut their deposit rates soon.
Bank of India has already announced a reduction in its interest rates from April 15. Corporation Bank, Bank of Baroda and UCO Bank are expected to follow soon in cutting the interest on FDs.
Given the impending cuts, fixed deposit investors would be well advised to take advantage of higher rates that are being offered currently. Good interest rates on fixed deposits can still be obtained from private sector banks such as Development Credit Bank and Tamilnad Mercantile Bank.
Bank of India, a public sector bank in India, has announced reductions in fixed deposit rates effective from April 15, 2009. Customers still have time to book their fixed deposits at the existing higher interest rates until that date.
The interest rate cuts range from 0.25% on fixed deposit term of 7-14 days to a reduction of 1.00% on fixed deposit term of over 5 years. The following table illustrates the new rates in comparison to existing interest rates.
|Maturity||Rates for FD Amounts Less than Rs. 15 Lakhs|
|Existing Rate||New Rate effective from April 15,
|07 days to 14 days||3.25||3.00|
|15 days to 30 days||4.25||3.25|
|31 days to 45 days||4.50||3.50|
|46 days to 90 days||6.00||5.00|
|91 days to 179 days||6.25||5.50|
|180 days to 269 days||7.25||6.50|
|270 days to 364 days||7.50||6.75|
|1 year to less than 2 years||8.00||7.25|
|2 years to less than 3 years||8.25||7.25|
|3 years to less than 5 years||8.25||7.25|
|5 years and above||8.25||7.25|
Other banks are also expected to cut their fixed deposit interest rates in the coming days. According to an article in Hindustan Times, the chairman of Corporation Bank said that fixed deposit rates would be cut in Corporation Bank also from April 15. Hence, people interested in investing in fixed deposits would be advised to lock in their rates as soon as possible.
Most banks in India offer both floating rate home loans and fixed rate home loans. Floating rate means that the interest rate on the housing loan can ‘float’ or change based on certain criteria while fixed rate means that the interest rate will not change during the entire loan term.
However, borrowers will be well advised to read the fine print of their home loan contract before signing up for a fixed rate home loan. Many banks have now added a interest rate reset clause to their fixed rate home loans allowing the banks to change the interest rates after a few years. In other words, a fixed rate home loan really does not imply that the interest rates will be fixed for the entire duration of your loan term. Your Equated Monthly Installment (EMI) that you may have budgeted for when purchasing your house with a fixed rate loan may actually go up in the future.
State Bank of India, India’s largest bank, has a reset clause which states that fixed rate home loans are subject to a interest rate reset at the end of every two years on the basis of fixed interest rates prevailing at that time. In other words, if you take the home loan today, you will have your monthly payments fixed only for the next 2 years. It’s possible that the interest rate on your loan will go up at the end of 2 years making your monthly payments higher.
United Bank of India, another public sector bank, has a similar reset clause on fixed rate home loans after every two years. Indian Bank also has a reset clause after every 2 years. There are several other banks with reset clauses on their fixed rate home loans.
Why do these banks call them fixed rate when the rates can be changed at the sole discretion of the banks after a set period? It would be better for banks to change the name of these loans to clearly reflect the adjustable nature of the interest rates. A borrower who is busy with a lot of things when purchasing a home should not have to read the fine print to figure out that their loan interest rates and monthly payments can go up after a few years.
Your fixed rate home loan contract will also typically have a force majeure clause. Force Majeure (French for “superior force”), is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term “act of God” (e.g., flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract. This clause again gives the right for banks to alter the rate of interest due to unforeseen or extraordinary changes in financial market conditions during the period of the loans. There is not much you can do about the force majeure clause since it’s a standard clause in most contracts.
It’s typical for banks to raise the fixed rates for new applicants when the Bank’s Prime Lending Rate (BPLR) that governs the floating rates goes up. Existing fixed rate home loan borrowers will see their interest rates go up under such circumstances at their next reset period.
It’s not clear if banks give the same priority to reducing fixed home loan interest rates when the BPLR falls. You may be stuck with your existing interest rate in such a situation. Check with your banks and read the fine print before taking a final decision on your home loan.
There is a excellent deal for travelers being offered by online travel booking site Cleartrip. You can get 10% off on all hotel bookings made between April 1 and April 20, 2009 using a Mastercard credit card for any date of stay.
The cash back amount is calculated on the total room tariff (exclusive of taxes and fees). You can avail of the offer more than once during the promotion period. Cleartrip notes that in case you cancel your booking the cash back amount shall be deducted from the refund amount.
City Union Bank term deposit rates have been reduced effective from April 2, 2009. City Union Bank is a private sector bank in India with over 180 branches spread out mainly in the southern states of Tamilnadu, Andhra Pradesh and Karnataka with some branches in Maharashtra and Gujarat.
Fixed deposit rates for a term of 5 years have come down from 9.00% to 8.00% while those for a term of 3 to 5 years have come down from 9.50% to 9.00. The latest fixed deposit rates offered by City Union Bank as of April 2, 2009 are as follows:
|Duration||Rate||Deposit Amount Rules||Additional Interest for Seniors|
|15 days-45 days||5.50%||-|
|46 days-90 days||6.00%||-|
|91 days-180 days||7.00%||-|
|181 days-1 year||8.50%||-|
|1 year-3 years||9.75%||0.25%|
|3 years-5 years||9.00%||0.50%|
|5 years-10 years||8.00%||0.50%|
Term deposit interest rates in India have been cut by a number of banks in India recently. South Indian Bank (for a term of 1170 days), Development Credit Bank (for a term of 1 year) and Tamilnad Mercantile Bank (for a term of 1-3 years) are offering the highest fixed deposit interest rates in India of 10.00% as of April 2, 2009.
DBS Bank, a foreign bank operating in India, has announced significant cuts in its fixed deposit interest rates effective from April 1, 2009.
The most significant cut has been made for deposit periods of between 1 and 2 years where the interest rate offered has been cut from 9.00% to 7.25%.
The interest rates for a deposit period of 271 days to 1 year has gone down to 6.00% from 7.25% being offered earlier.
The following table shows the latest interest rates offered on FDs by DBS Bank:
|Duration||Rate||Deposit Amount Rules||Additional Interest for Seniors|
|7 days||4.10%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|7 days||3.00%||Must be atmost Rs. 15 lakhs||0.50%|
|8 days-14 days||3.40%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|8 days-14 days||3.00%||Must be atmost Rs. 15 lakhs||0.50%|
|15 days-29 days||4.05%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|15 days-29 days||3.75%||Must be atmost Rs. 15 lakhs||0.50%|
|30 days-45 days||5.00%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|30 days-45 days||4.50%||Must be atmost Rs. 15 lakhs||0.50%|
|46 days-60 days||5.00%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|46 days-60 days||4.50%||Must be atmost Rs. 15 lakhs||0.50%|
|61 days-90 days||5.15%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|61 days-90 days||5.00%||Must be atmost Rs. 15 lakhs||0.50%|
|91 days-180 days||5.25%||Must be atmost Rs. 15 lakhs||0.50%|
|91 days-180 days||5.25%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|181 days-270 days||6.00%||Must be atmost Rs. 15 lakhs||0.50%|
|181 days-270 days||5.85%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|271 days-1 year||6.30%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|271 days-1 year||6.00%||Must be atmost Rs. 15 lakhs||0.50%|
|1 year-2 years||9.00%||Must be between Rs. 15 lakhs - Rs. 50 lakhs||-|
|1 year-2 years||7.25%||Must be atmost Rs. 15 lakhs||0.50%|
|1 year-2 years||7.00%||Must be between Rs. 50 lakhs - Rs. 1 crore||-|
|2 years-3 years||7.50%||Must be atmost Rs. 15 lakhs||0.50%|
|2 years-3 years||7.50%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|3 years-4 years||7.50%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|3 years-4 years||7.75%||Must be atmost Rs. 15 lakhs||0.50%|
|4 years-5 years||8.00%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
|4 years-5 years||7.75%||Must be atmost Rs. 15 lakhs||0.50%|
|5 years||8.00%||Must be atmost Rs. 15 lakhs||0.50%|
|5 years||8.00%||Must be between Rs. 15 lakhs - Rs. 1 crore||-|
DBS Bank based out of Singapore is one of the largest financial services groups in Asia, providing the full range of services in corporate, SME, consumer and wholesale banking activities across Asia and the Middle East. With one of the highest credit ratings in the region, DBS is ready to serve customers in 16 markets as a bank that specialises in Asia. It has only 6 branches in India.
The rates shown above are those effective on April 1, 2009. You can compare current fixed deposit rates here to get the best fixed deposit rates in India.
Non-Resident External (NRE) and Foreign Currency Non-Resident fixed deposit rates have been cut by banks in India effective from April 1, 2009.
The new NRE interest rates are as follows:
|1 year to less than 2 years||3.72|
|2 years to less than 3 years||3.15|
|3 years to less than 5 years||3.45|
The new FCNR fixed deposit rates are as follows:
|1 year to less than 2 years||2.97||2.83||3.07||2.98||4.92||1.94|
|2 years to less than 3 years||2.40||2.82||3.12||1.92||4.38||1.78|
|3 years to less than 4 years||2.70||3.16||3.50||2.22||4.83||1.85|
|4 years to less than 5 years||2.99||3.45||3.82||2.43||5.23||1.92|
NRE accounts are held in rupees and both the deposit amount and interest are completely repatriable. FCNR accounts are held in a foreign currency and in these accounts as well both the fixed deposit amount as well as interest earned are repatriable. Both NRE and FCNR accounts are not subject to taxes in India and that forms one of the attractions of these accounts to NRIs.
Note that all banks in India (public sector, private sector and foreign) offer the same interest rates on NRE and FCNR fixed deposit accounts. Note that you can also open a NRE savings account for which the interest offered is 3.5%. There is no savings account option for FCNR accounts.
Ratekhoj is a source for the latest NRE and FCNR fixed deposit interest rates.
Allahabad Bank, a public sector bank in India, has announced interest cuts on their fixed deposits effective from April 1, 2009. The cuts impact a number of their fixed deposit terms and affect fixed deposit amounts below Rs. 1 crore only.
The highest interest rate offered by Allahabad Bank of their fixed deposits after this change is a rate of 9.00% for a term of 900 days which is a term of about 30 months. This applies to non-senior citizens who are below 60 years age. Senior citizens get a interest rate of 9.50% for the 900 days deposit.
The second highest fixed deposit interest offered by Allahabad Bank is 8.50% for a term of 850 days applicable to non-seniors with senior citizens getting 9.00% for the same term.
Interest rates have been cut from 5.50% to 5.25% for terms between 46 days and 90 days. Rates have been reduced by 0.50% for a term of 91 days to 179 days with the interest now being 6.25% down from 6.75%.
The fixed deposit interest rates have been cut by Allahabad Bank of all terms ranging from 6 months to 10 years by between 0.25% and 0.50%.
Online travel site Cleartrip.com is offering a cashback deal for people booking train tickets between April 1 and April 20, 2009 for any travel date. You can book a train ticket using a MasterCard credit card and get 10% off your ticket price or Rs. 100 whichever is less.
The cash back amount shall be calculated on the total amount of your booking. You can avail of the offer more than once during the promotion period.
This is an exclusive offer from Cleartrip and certainly seems like a good offer for MasterCard credit card holders. Cleartrip has recently introduced online booking of train tickets on its site.