Interest rates on PPF, small savings cut by 10 basis points

http://www.thehindu.com/business/Industry/interest-rates-for-post-office-savings-schemes-cut/article4546909.ece

Easing of interest rates, in keeping with a downtrend in inflation, is not a one-way street as lakhs of small savers and PPF (Public Provident Fund) account holders will learn the hard way from the new fiscal year.

Starting April 1, PPF deposits along with most of the post office savings schemes will fetch reduced returns owing to a cut in interest rates by 10 basis points each. According to a Finance Ministry statement here, the interest rate on PPF will stand reduced from 8.8 per cent to 8.7 per cent with effect from April 1. Likewise, the five-year maturity Monthly Income Scheme (MIS) will earn an interest of 8.4 per cent instead of 8.5 per cent during the current fiscal ending March 31.

The only exception, however, has been made in the case of savings deposit schemes and fixed deposits of up to one year run by post offices with their interest rates kept unchanged at 4 per cent and 8.2 per cent, respectively. All other savings schemes falling under the NSSF (National Small Savings Fund) will see a reduction in interest rates by 10 basis points which would be applicable for the entire fiscal year 2013-14.

For instance, the National Savings Certificates (NSC) having five and 10-year maturity periods will now earn interest rates of 8.5 per cent and 8.8 per cent, respectively, as against 8.6 per cent and 8.9 per cent hitherto. The interest rate for SCSS (Senior Citizens Savings Scheme) also stands reduced to 9.2 per cent from 9.3 per cent. The revision in interest rates is in line with the recommendations of the Shyamala Gopinath Committee which, among other things, had suggested that the returns on small savings should be in sync with market rates determined by the returns offered by other securities.

Although the lower interest rates may come as a blow to small savers, Planning Commission Deputy Chairman Montek Singh Ahluwalia sought to justify the reduction. “In real terms, inflation is much lower than it was two years ago. So, in real terms, the interest rate is more favourable,” he said.

Explaining further on the sidelines of an event here, he said: “I don’t believe that interest rate for savers through the post office system can be de-linked completely from the interest rate system in the country…If you want [a] low [interest] rate environment, you cannot say, ‘I want higher interest rate for savers and low interest rate for borrowers’. They have probably moderated [interest rate] a little bit in line with the softening of interest rates.”

A mobile app to keep track of jewellery assets virtually

http://www.thehindubusinessline.com/industry-and-economy/banking/a-mobile-app-to-keep-track-of-jewellery-assets-virtually/article4547227.ece?ref=wl_industry-and-economy

Muthoot Fincorp has launched — My Jewel Box — an android-based mobile application that enables gold consumers to consolidate jewellery assets virtually at one place.

It also helps consumers, a majority of them being women, to evaluate the current value of gold within few seconds.

According to Thomas George Muthoot, Director - Muthoot Pappachan Group, My Jewel Box is a part of the company’s endeavour to offer innovative products and services using new age technology.

The app is a very innovative and a tech-savvy option to store gold jewellery on a virtual platform, and enable customers to assess the value of their jewellery at fingertips. The initial response has been encouraging and the company would be releasing an iOS version soon, he added.

The mobile application’s user friendly interface helps in easily evaluating the current value of gold jewellery by mentioning the total weight of the gold and per gram rate at which it was purchased.

The application immediately calculates the net value of the gold as per the current rate and provides quick information on the eligibility for gold loan.

The data stored is secure as the user’s jewellery is stored only on the user’s phone. The mobile application also allows gold consumers to click pictures of their jewellery and categorise it in segments such as bangles, necklaces, rings etc.

Consumers can download the application on Google Play or give a missed call on 0484 4074668 to get the download link.

Federal Bank to add 100 more branches in 2013

http://www.thehindubusinessline.com/industry-and-economy/banking/federal-bank-to-add-100-more-branches-in-2013/article4538038.ece

Federal Bank would add another 100 branches to its current 1,067 branches across the country this year, a top bank official said on Friday.

The bank has plans to take the branches to 175 from the present 120 in Tamil Nadu, with a business of Rs 7,105 crore representing 7.36 per cent of the Bank’s total business, in the same period, M Manoharan, DGM and Head of the Chennai Zone, Federal Bank, told reporters here.

Manoharan, here to launch 21 branches located in rural unbanked areas across Tamil Nadu, said Tamil Nadu being the preferred destination, another 25 branches would be added by June 2013 and by 2013-end, it would be 175 branches in the State, including tier-two and three towns.

With the addition of 21 branches, the bank today joined hands with Tamil Nadu Agricultural University as sponsors to impart training on Hi-tech Banana cultivation in the State, he said.

The bank proposed to impart training in many other crops in Hi-Tech cultivation across Southern States, Manoharan said.

How to decide when to retire

http://www.thehindubusinessline.com/features/investment-world/money-wise/how-to-decide-when-to-retire/article4516179.ece
B. VENKATESH

Retirement planning is complex. You have to decide on two important factors — when to retire and how much wealth you want to accumulate at retirement. The problem is that both factors are dependent on each other. One way to overcome this problem is to set your retirement date and then plan to accumulate the desired retirement wealth. In this article, we discuss the issues you need to consider before deciding your retirement date.

TRADITIONAL RETIREMENT

Till not so long ago, employers assumed the risk on their employees’ retirement portfolio. In such a world, the employer paid a fixed pension to the employee during her lifetime. At worst, the employee faced inflation risk (the risk that the pension income was not enough to sustain her living expenses because of increase in price levels).

In this world, employees typically retired at 60 because their employment contracted terminated at that age. Besides, pension income was paid to the employees after they turned 60. When to retire was, therefore, never a choice that employees had, unless they wanted to retire early.

But things are different now with even the Government now passing on the retirement investment risk to its employees. Today, your employer makes an annual contribution to your retirement portfolio. This contribution along with your monthly deposits accumulates in your retirement portfolio. At retirement, you are expected to take that wealth and use it to buy assets that will fetch you monthly income in your retired life. In other words, the responsibility lies with you to convert the wealth in your retirement portfolio into a retirement income portfolio.

The passing of the investment risk from the employer to the employee has led to a paradigm shift in retirement planning, for retiring at 60 is no longer relevant. So, how should you decide your retirement date?

MODERN RISKS

Given that the amount of wealth you want at retirement and when to retire are dependent on each other, you should start with a desired retirement age to plan your retirement wealth. As it turns out, the primary factor that you should consider for your retirement date is your health.

For one, if you have moderate-to-high health risk because of illness such as diabetes, you may want to work as long as possible. The reason is simple. The healthcare plan that your employer offers you as part of your employment benefits will prove useful in managing your health risks. Of course, this presupposes that your health condition does not affect your professional work.

For another, if you are healthy and have a family history of living long, you should be concerned with longevity risk (whether the money you have at retirement will be enough to sustain your living expenses through your long retired life). You may want to work as long as possible if you are concerned with longevity risk.

From the above, it may seem that you should work as long as possible, whether you are healthy or otherwise. But you may also have the urge to take an early retirement and pursue your lifestyle desires. Your retirement portfolio should be created with a view to balancing your desire to retire early and the need to manage your longevity risk.

The need to balance early retirement and longevity risk is not easy. One way to overcome this issue is to start with a retirement date, say, 55. This assumption helps in two ways. One, this gives you a handle to calculate how much you need to contribute each month to your retirement account to accumulate wealth you require for early retirement. And two, you can postpone your retirement till, say, 60 if you are unable to accumulate the desired wealth by 55.

Some banks don’t charge a fee for using other bank ATMs

If you use automated teller machines (ATMs) to withdraw cash, you must be aware that after five transactions at ATMs of other banks, sixth transaction onwards is chargeable. However, did you know that there are banks that don’t charge anything for any number of transactions even if you are not their customer?

Who’s not charging fees?

Some banks including Federal Bank Ltd, Yes Bank Ltd and Standard Chartered Bank don’t charge any fee for any number of transactions at other bank ATMs. So even after the fifth transaction at other ATMs, you will not be levied any charge. Federal Bank has been providing this facility to all its customers since October 2011. Yes Bank has been providing this facility to its customers since its inception in 2004. In case of Standard Chartered Bank, if you maintain an average quarterly balance of Rs.25,000 in your account, you will not be charged for any number of transactions at any other bank ATMs for certain account holders. For a certain account holders there is no such conditions and it is completely free.

The norm

According to the Reserve Bank of India, all debit cards issued by banks in India can be used at any bank ATM within India. Now if you are a savings bank account holder, then you can do five transactions free of cost at other bank ATMs in a month. This is inclusive of financial and non-financial transactions. From the sixth transaction onwards, you will be charged a transaction fee by your bank.

Charges: The charges levied sixth transaction onwards at other ATMs vary from bank to bank. For instance, if you are a State Bank of India (SBI) customer, SBI will charge Rs.17 for every financial transaction such as cash withdrawal and Rs.6 for every non-financial transaction such as balance inquiry or mini statement. If you are an ICICI Bank Ltd customer, the bank will charge you Rs.20 for financial transaction and Rs.8.50 for non-financial transaction from sixth transaction onwards at other bank ATMs. The variation is mainly because RBI has asked the banks to not charge more than Rs.20 for financial transactions at other bank ATMs but they are free to decide the fee, however, not more than Rs.20.

How it works

Every transaction that you do at other bank ATMs, the card issuing bank, that is, your bank, has to pay an interchange fee to the other bank. For instance, if you are a X bank customer and have been using your debit card at Y bank’s ATM, X bank has to pay approximately Rs.7-18 per transaction to Y bank as interchange fee. In the case of Yes Bank, Federal Bank and Standard Chartered Bank, this charge is not passed onto you and is absorbed by the banks.

RBI okays Gujarat plan for ATMs in police stations

http://www.thehindubusinessline.com/industry-and-economy/banking/rbi-okays-gujarat-plan-for-atms-in-police-stations/article4478426.ece

The Reserve Bank of India has, in principle, given the go-ahead to a proposal to set up automated teller machines (ATMs) at police stations across Gujarat.

“Out of nearly 1,200 police stations in the State, 300 are in urban areas where these ATMs can be opened,” S.K. Nanda, Additional Chief Secretary (Home Department), told Business Line here on Tuesday.

However, he said, the State Government has not identified any particular bank to embed the ATMs at police stations. “It is for the RBI and the banks to do so,” he said.

The move, apparently, was mooted in view of, among other things, a recent spate of incidents in which criminals either damaged unguarded ATMs, tried to uproot these machines, or simply decamped with these. In one incident, the criminals, despite taking away an ATM at night, could not break it open. Besides, there have also been reports of the people being robbed just outside ATMs.

At a meeting of the Home Department and regional RBI officials last week it was found that more steps were needed to make the ATMs theft-proof. Embedding ATMs in police stations itself was found to be an innovative idea and got support from officials. The Home Department, too, offered the banks place in the police station premises for this purpose.

But the Home Department is asking for a quid pro quo from the banks in return for offering space for ATMs. The banks would equip police stations with closed-circuit television (CCTV) cameras, furniture and water coolers, among other facilities.

A bank official said the people would feel safer to use an ATM in a police station premises.

Many ATMs do not have security guards, or even air-conditioners, as the banks try to cut costs. With police stations having ATMs, they would no longer need to have security guards at such places.