RBI is the central bank in India which has the utmost responsibility of making the Indian banking system more strong and modern with the latest technological trend. One of the technological advancement is the electronic payments of amount which is more convenient for the customers and it eliminates the unnecessary paper work and human intervention. The next move by RBS is to eliminate the number of offline transactions through cheque books  and encourage banks to reduce the number of cheque books issued to the customers for free of cost. The following are the few points which is taken from the RBI’s recommendation report.

also read:

• Cheque Truncation System or CTS from April 1, 2013
• Types of Cheques
• Local Cheque Clearance on Same Day

• RBI suggests banks to issue the minimum number of free cheque books to the customers. The number of cheque books issued is vary for each bank. Few banks not offering any free cheque books after the account opening. After the free cheque books, the charges levied for getting the additional cheque books would be expensive compare to the current situation. Normally banks charge Rs. 2-3 per a cheque leaf.
• In most banks, current account holding customers are not given any free cheque books.
• If there is a fresh loans, repaying the loans using the post dated cheque (PDCs) will be stopped and all the repayments would happen through the electronic payments. Existing PDCs should be converted to the electronic payment within a prescribed timeline.
• Another important point is making the credit card payments should be through electronic. If a customer wants to pay his credit card bill through cheque book, there should be a high conversion fees.
• Also RBI suggests that there should be a maximum amount limit for the cheques issued by an Individual.
• If you are having the shares, while receiving the dividend then the amount has to be sent through the electronic route instead of sending the cheques to the share holder. If he deposits that cheque, the conversion of the cheque will be costly.
• Last but not least, the cheque collection boxes should be only at bank branches. The number of collection boxes will be reduced.

The above points clearly shows that RBI is very keen on making the electronic way of doing transaction across country. But, it is not very clear what is the impact on the rural areas. before making this implementation, RBI has to enforce banks to educate their customers to do the online transactions. The awareness is very low and that should be the highest priority. Otherwise, urban areas this move is very good and it reduces the crowd in bank branches. I hops this information would be useful for you. If you are interested in receiving the future articles, please subscribe here.

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After a prolonged wait of over 9 months, RBI has reduced the Repo and Cash Reserve Ratio (CRR) by 25 basis points. This move has taken by RBI to maintain the economic growth by infusing more money into the banking system. Repo rate is the interest rate at which RBI lending to the banks. Cash Reserver Ratio (CRR) is the rate at which banks has to maintain the balance with RBI. By reducing the CRR, it is almost Rs. 18000 crore is infused the banking system. Which enables the banks to give more loans to the industry and stimulate the growth.

One of the worrying factor to reduce the interest rates is the country’s inflation. If the more money is pumped into the system, the inflation would shoot up again. That is the reason RBI did not reduce the rates for the last nine months and now the current inflation looks under control. The cut in the repo rate, at which RBI lends short-term funds to banks, and CRR, the portion of deposits banks need to park with RBI, will immediately translate to cheaper lending rates for borrowers as banks are gearing up for rate cuts.

also read:

• Home Loans Interest Rates Update (Jan / 2013)
• Canara bank increases fixed deposit rates by 1%
• Rupee value, recession, europe problem and global issues coverage

The current Repo rate is 7.75% and the CRR at 4%. Resulting of this rate cut, most likely the lending rates will be reduced by the banks. Firstly the would start cutting their base rates for loans. IDBI bank has already cut the base lending rate by 0.25% to 10.25%. The last time when RBI cuts the repo rate was April 2012 by 50 basis points. In the last one year, RBI has cut the rates by four times to infuse the liquidity into system.

Most investors feels that another rate cut is likely by March 2013 if the inflation is further fall down. As next monetary policy review is happening on March 19, 2013. However, this move would further reduce the loan rates to the consumers, it will stimulate the growth on home loans and would improve the real estate companies profits. If you have any questions on the policy rates, please post it in the comments section. If you are interested in receiving the future articles on investment, please subscribe here.

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The state owned bank Canara bank has increased some of the fixed deposit interest rates up to 1%. The increase is for the maturities 1-2 years and 3-5 years term. However it has reduced the 0.5% for the 180-269 days to 7.5% from 8.0%. In the recent past, most of the banks have reduced the interest rates of the fixed deposits because the tight liquidity.

This move by Canara  bank gives hope that there is a revival of the fixed deposit interest rates in the upside. This month 29th, RBI planning to reduce the interest rates on some of the key policies, if that happens we can see some more changes in the interest rates. The following is the chart of interest rates offered by Canara bank for the amount less than 15 lakhs. The following are some of the good articles on interest rates and how it is determined by the banks.

• Why interest rates are increased by the banks?
• What is CRR?
• Savings bank interest rates de-regulated

• How to better utilze the savings bank account?

If you have any questions, please post it in the comments section. if you want to received future email on interest rates update on other banks, please subscribe here.

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With your new year resolution, add one more item. Request for new cheque book from your banks. The old cheque books will not be honored by RBI. From Jan 1 2013, there is a Cheque Truncation System or CTS 2010 which all the banks has to follow from next year. This post would be a information for you if you are not aware of what is Cheque Truncation System (CTS) 2010. Read the following sections to understand this better, if you have any doubts please post it in the comments section. If you like our articles, please subscribe here.

What is Cheque Truncation System?

It is one of the technique for clearing the cheques. In the current system, the physical copy of the cheques are sent to other banks and then it is cleared by the banks to account holder. This process would take few days depends on the local or outstation cheques. In the  Cheque Truncation System (CTS), your cheques will be sent as the digital files.

• Types of Cheques
• Local Cheque Clearance on Same Day
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That means, your cheques will be scanned and send to the clearing banks. It implies that, there won’t be any physical transfer of the copy, it would sent through digital communication which is very fast compare to the current system. After this process started, the cheques would be cleared on the same day.

The new format cheque will look like this:

What you have to do?

• If you have the old cheque books, please talk to your bank and ask for the new cheque book.
• If any one would have given the cheque in the old format, that will be rejected in the next year. Either you deposit that cheque immediately or ask for the new cheque.
• Note that, these CTS complaint cheque books are issued from last year by some of the banks like ICICI, Axis. So, if you are already holding the CTS 2012 compliant cheque book, there is no need to request for the new cheque book.

Update: In recent announcement, RBI has extended the deadline for banks to implement this facility till March 31, 2013. This has been done due to the request from banks to make arrangements.

I hope this post would have given good idea on the new format of the cheque. If you like this article, please subscribe here for the future articles.

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In the last week, ICICI bank has launched a limited period offer for the new home loan customers. The offer is 1% cash back on the EMI paid by them during the entire tenure. The offer is valid till 31st December, 2012. This initiative is taken by ICICI bank to lure more customers to take home loans from them. It is a good offer new home loan customers. There list of rules and regulations to get the cash back from the bank.

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• This cash back offer doesn’t include the pre-EMI amount.
• The cash back will start accrue from the first EMI. However, the first cash back will be credited to the customers account only after completion of the 36 EMIs. That means after 3 years of the loan repayment.
• After the first cash back, there after every 12 months money will be credited to the customers account.
• If the customer is eligible for the cash back offer, either customer can choose the cash back benefits to credit their account or paying back the principal.

Learn About Home Loans

• For an example, customer can save Rs. 3.50 lakh on a 20 year home loan of Rs. 50 lakh.
• As a part of this offer, customers given the option to renew the fixed interest rate for the entire tenure. The renewal term will come after every 2,3 and 5 years. Customer has to renew the fixed rate within 30 days of the completion of term. Otherwise it will automatically change to the floating interest rates.
• Note: This offer is available till 31 December, 2012.

This initiative is taken by bank to compete with other banks. Most of the banks come up with the offers to attract the customers. Last month, its rival Axis bank launched a scheme wherein a home loan borrower will get 12 EMIs waived if he/she remains with the bank for 15 year or more.

If you or your friends are looking to buy a home loans, please refer them this offer. They would be benefited. If you would like to receive the future email from us, please subscribe here. Are you looking for tips to learn how to save the income tax, there is a good which talks about the 51 Tips for Saving Income Tax. If you have already availed any offers, please post it here.

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You and your spouse has the savings account in the same bank. You also planning to open another account for your son in the same bank. DO you know that, all the savings bank account in the same bank can be clubbed together into the single customers id for the easy access for the family?. There are many advantages of clubbing all the savings accounts like less transaction charges, reduced minimum balance maintenance, transfer money within family member account, etc. This article explores some of the valid points on clubbing the savings account of the family members. If you have any doubts, please post it in the comments section. If you want to receive the updates through your email, please subscribe here.

Good read: Invest Your Money (Stocks, Funds, Gold, Property)

Who can club the account?

Only family members can club the savings bank account. There are limited type of relations can use this facility, the following are some of the examples which are most commonly allowed by the banks.

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• Parents
• in-laws
• Spouses
• Siblings
• Grandparents
• Children
• Grandchildren

Note that the restrictions are differ from each bank. Also it may vary based on the account type. The accounts can be clubbed even if the accounts are held in the

• Different branches
• Different cities
• Non resident (some banks)

These account will be given a common used it to perform any transactions. The person who is given as the primary account holder’s user id will be used as the common user id.

• How to better utilze the savings bank account?
• Savings Bank interest rates deregulated
• What is auto-sweep facility in savings bank account?

Benefits of group savings account

There are plenty of advantages on group savings account.

1. One of the main advantage is flexibility on maintaining the minimum balance on your savings bank account. If you have three account clubbed together into a single id, the minimum balance maintained will be maximum minimum balance on the three accounts. For example, one account has the minimum balance requirement of Rs. 5000 and another has the Rs. 25000, all accounts put together would be Rs. 25000. The penalty on non-maintenance of minimum balance will be for Rs. 25000 including of all the accounts.
2. Facility to sweep from one account to another account in the same group. In cases where if the balance of one specific account goes below certain level, take it from the another account. If you are submitting the cheque for clearing, if that account is not having the enough balance, it will be deducted from the another account.
3. If you are maintain the group accounts, some banks offer good discounts on using the debit card, etc.
4. Even though all the accounts has the common user id, each account will be maintained with privacy. All the account holders will be getting the transactions on their own account.

Restrictions

As already mentioned in the article, not all the banks treat clubbing of accounts in the same manner. Each banks has their own restrictions to clubbing of accounts. Take example, ICICI bank allows customers can club into Savings Family group account, regular savings account, life plus senior citizen, young star, advantage women. Also some banks may not allow the salary account for adding into the group accounts.

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Summary

This article explains in detail about clubbing of multiple savings account into a single user id for same family members. There are lot of benefits on doing that with some limited restrictions. This would be very useful for those maintain the different accounts in the same banks which will be very difficult to operate with different customer ids. If you are already using this feature, please share your experience with us. If you want to receive future articles from us, please subscribe here.

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As we are aware that, if you forget to collect the amount from the ATM’s dispenser while leaving or taking more than the given time to collect the cash, the ATM will automatically pull the money inside and credit your account. This feature is to help the customer for ignorance of collecting the money from ATM. This feature is available with all the banks ATM’s, because this is mandated by the RBI  for all the ATM’s in the country. In the recent announcement, RBI mandated that it is necessary to remove that facility from the ATM’s.

also read:

• New rules on ATM usage
• RBI has announced changes on ATM Transactions fees
• RBI permits non-bank companies to set-up ATM

As per the RBI guidelines, it is mandatory to remove ‘ Cash retract’ feature from the ATMs. In line with the RBI directive, all the banks have taken out the ‘Cash Retraction’ facility from ATM’s machines. So, you should not forget to collect your cash as the cash will not be retracted in the ATM machine and will remain in the mouth of the ATM till the time the cash is not collected. There is no clear reason why this facility has been removed by the RBI. Most likely that this feature has been removed because the ATM machine could not count the retracted amount properly. However, you have to remember the missed currencies will remain in the ATM’s mouth. It is advised to the customers that they should collect their cash as soon as it is dispensed, otherwise someone else might take it.

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If you are customer of ICICI or HDFC banks, you would have noticed that while transferring the money to third party banks, there is a fixed amount of fees is deducted as part of the transactions. This has been implemented very recently by the banks after a long hesitation, sooner we may see most of the banks will follow the action. In a recent announcement, RBI had informed the banks with the limitation of charging for the online transactions.

Though it not a major change, it is important for a customer to know the details of the charges levied on your account. It is come to my attention when discussing with many of the readers, very few aware of the charges for online transactions and many think doing online transactions are free of cost. At least, till now it is partly true, but going forward it may change.

Existing Charges on NEFT

• up to Rs. 1,00,000 — Rs. 5 + Service Tax
• Rs. 1,00,000 to Rs. 2,00,000 — Rs. 15 + Service Tax
• Above Rs. 2,00,000 — Rs. 25+ Service Tax

New Charges on NEFT from August 1, 2012

In the recent announcement, RBI has changed the charges up to Rs. 10000. The new charges as follows:

• up to Rs. 10,000 — Rs. 2.5 + Service Tax
• Rs. 10,000 to Rs. 1,00,000 — Rs. 5 + Service Tax
• Rs. 1,00,000 to Rs. 2,00,000 — Rs. 15 + Service Tax
• Above Rs. 2,00,000 — Rs. 25+ Service Tax

As of now, many of the banks are not levying the charges to the customers. But, looking into the interest if the banks, most of the private banks may start levying the charges on online money transfer. If you are transferring within the same bank, there won’t be any charge. If you have account with HDFC bank and willing to transfer money to another HDFC bank account, there won’t be any charges. Another important point is, as some of the readers noted that, this charges has been levied from the ICICI bank’s salary account too.

It is very bad news for the bank customers since online transfer means saving lot of time and energy. With the advancement of the technology, why there is necessity to charge for the online transactions? Banks want customers to walk in their branches for all the transactions?. RBI needs to review this decision  on charging for the online transfers.

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In a major move to spread the ATM networks in India to the every corner in the country, RBI has permitted non-banking companies to setup the ATM machines across Indian on behalf of the banks. With restriction, a non-banking company which has the minimum net worth of Rs. 100 crore can set up the ATM machines. The Reserve Bank of India (RBI) in a notification said the automatic teller machines (ATMs) operated by non-banking entities will be known as ‘White Label ATMs’ (WLAs). These ATM operators will be sponsored by the bank.

The White Label ATMs have all the features offered by the bank ATM machines. Customers can use their existing credit card and debit card of all the banks in India. This is the first step towards non-bank companies to setup the ATM machines. Till now only banks are operated the ATM machines in India.

If a non-bank company want to setup ATM network under the guidelines issued by the RBI, then that company can seek the authorization from RBI within four months from the data of issuing these guidelines. In the latest financial year’s audit, that company would have maintained the Rs. 100 crore as the minimum net worth, it has to be maintained all the times by that company.

The RBI final guidelines said non-bank entities proposing to set up WLAs have to apply to RBI for seeking authorization under the Payment and Settlement Systems Act, 2007. Five free transactions in a month as applicable to bank customers for using other bank ATMs would be inclusive of the transactions effected at the WLAs, it said.

The WLA operator would receive the fee from banks for using the ATMs by their customers. But, they can not directly charge any fee from the customers. They are allowed to generate revenue through advertisement on their ATM network. The operator would be permitted to display advertisement of financial products confirming to the regulatory framework as laid down by RBI, SEBI, IRDA and PFRDA.

It is good move by the RBI to spread ATM in the rural areas.

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Finance Ministry is working on providing the savings account number portability for the bank customers. Customers of a bank can open account in another bank without changing their bank account numbers. It is very much similar to the mobile number portability. If this feature is implemented in India, unhappy customers can easily switch to another bank. The ultimate benefit would be for the bank customers to get the better service. But, there are lot of challenges on implementing the savings account number portability in our country.

Do you want to change banks?

In the current scenario, people find it difficult to change their bank account only because of the tedious paper work. There is no uniform formalities across the banks in India. To avoid that, people don’t think of changing their bank accounts. But, after the savings bank interest rates deregulation, many banks offering the 6-7% interest rates for the savings bank account. It tempts the people for changing their bank account for higher interest rates.

When you are changing your bank using the savings account number portability, there are not much paper work. When you are opening a bank account, you have to submit the Know Your Customers (KYC)  form to the bank which has all the mandatory documents needed for a bank. If you are changing your bank, this KYC norms will take care of moving to another bank. You need not submit all the documents once again to the new bank.

What are the implementation challenges?

The idea of savings account number portability is looking good, but the practical implementation of this idea is not that simple for the banks. It may take years to complete the implementation. As of now, banks are using their own number of digits for the account numbers and they have the own understanding of the formats like first three numbers for branch code, etc. All the banks in India must have to be changed to the single format of the account number.

Technical Difficulty- This implementation has to be updated in their computerized network. In the current scenario, most of the banks has already moved to the e-banking concept and they are managing everything in their computer server. The upgrade of the current systems to the new format would tale more time and expenses. Also not all the banks would implement in the same pace. Normally private banks may implement it very fast and nationalized banks would take more time for these changes.

But RBI is of the view that portability would be easy to implement once a customer is in the possession of a number given by the Unique Identification Authority of India (UIAI).

What is your opinion? Do you thing savings account number portability is must for Indian customers? Please share your thoughts.

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The banks in a country must be strong enough to come through any tough situations. The reality is we have seen in the 2008 crisis, worlds largest banks needs bailout from the govt. to survive. If the banks itself have such a problems, then how a country’s economy can be stable enough to challenge a crisis?. All the banks in a country is controlled by the central bank of that country. In India it is Reserve Bank, Federal Reserve is for USA likewise each country has its own central bank. Above all, there is a committee formed by all the central banks around the world to monitor the global economy and regulate the banking norms like capital maintenance, etc.

In 1974, Basel Committee (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks.   The Basel Committee formulates broad supervisory standards and guidelines and recommends statements of best practice in banking supervision. The current norms created under the Basel – III is bank capital adequacy, stress testing and market liquidity risk.

What is Basel Committee?

A group of central banks around the world has formed a committee in Basel, Switzerland to regulate and monitor the banks in their respective countries. This committee would discuss the problematic areas for the banks and come up with the new set of rules to strengthen the banks. The main intention of this committee is to strengthen the banks to come through any kind of difficult situations like happened in the 2008 crisis.

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Basel – I

Basel I, that is, the 1988 Basel Accord is focused on the credit risk. It is the initial step by the Basel committee after the 1974 incident of  Herstatt Bank‘s bankrupt. Assets of the banks are grouped and categories based on the risk level. Banks with the international exposure must have the 8% capital. Basel I is outdated and it is not suitable for the modern trend of banks with the huge transactions around the world.

Basel – II

Basel II, which is created on 2004,  is focused on to create the international banks regulations for the banks. It wants to address the problem of capital adequacy based on its risk. The problem was that Basel II is very slowly adopted by the banks, the 2008 crisis could  not be avoided because banks are not followed the Basel II regulations.

What is Basel III  norms?

Basel III is the response to 2008 financial crisis. Basel committee is well understood the problem happened in the 2008, it wants to enforce the set of regulations for the banks and made the Basel III norms. It is created in the year 2010-11. It is expected that all the banks must adhere to the regulations by 2018. The following are the summary of things needs to be addressed in the Basel III:

• The capital requirements for the implementation of Basel III guidelines may be lower during the initial periods and higher during the later years.
• The implementation of the capital adequacy guidelines will start from January 1, 2013.
• The guideline says that banks to maintain a minimum total capital of 9 per cent against 8 per cent prescribed by the Basel committee of total risk weighted assets.
• Common Equity Tier 1 (CET1) capital must be at least 5.5 per cent of RWAs.

Basel III in India

Reserve Bank on India (RBI) is taking the Basel III norms as serious measure and asking the banks to increase the liquidity by the given dead lines.  The milestone given by the Basel Accord is:

Capital Requirements

• 2013 Minimum capital requirements: Start of the gradual phasing-in of the higher minimum capital requirements.
• 2015 Minimum capital requirements: Higher minimum capital requirements are fully implemented.
• 2016 Conservation buffer: Start of the gradual phasing-in of the conservation buffer.
• 2019 Conservation buffer: The conservation buffer is fully implemented.

Leverage Ratio

• 2011 Supervisory monitoring: Developing templates to track the leverage ratio and the underlying components.
• 2013 Parallel run I: The leverage ratio and its components will be tracked by supervisors but not disclosed and not mandatory.
• 2015 Parallel run II: The leverage ratio and its components will be tracked and disclosed but not mandatory.
• 2017 Final adjustments: Based on the results of the parallel run period, any final adjustments to the leverage ratio.
• 2018 Mandatory requirement: The leverage ratio will become a mandatory part of Basel III requirements.

The additional capital requirements of the public banks could be around 3 lakhs crore to meet the basel norms. The Basel III capital ratios will be fully implemented on March 31, 2018. Banks have to maintain Tier I capital, or core capital, of at least 7 per cent of their risk weighted assets on an ongoing basis.

Under the current Basel II norms, banks have to maintain the Tier I capital of at least 6 per cent of their risk weighted assets.  The total capital ratio including Tier -I and Tier-II is 9%. Here Tier I is cash and Tier – II is bonds.

The good thing is we have time till 2018 to achieve the target. When it comes to the public sector banks, if the banks are not able to raise the capital then govt. has to infuse the money into the system. It is going to be another burden for the govt. which already suffering from the current account deficit.

Summary

If you look on the Basel III norms, over all it is very good for the banks. In the initial period, banks (mainly public sector banks) would be under more pressure to raise the capital which would reduce the number of loans sanctioned. It is good for the future. If you are investor choosing the banking stocks, for the long term basel norms would be beneficial. There is no reason to panic. If you have queries on this, please post it in the comments section.

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In the last week, I have posted an article about the home loans interest rates and I have pointed out the reason why the home loans interest rates would go down in the near term. I expected that this would possible go down only when RBI is reducing the key interest rates related to the monetary policies. But, in the last week two banks has reduced the interest rates without waiting for the RBI’s action. It clearly shows that the banks are stepped into the action of reducing the interest rates. In the coming weeks, we can see the other banks to reduce the interest rates.

Central Bank of India has reduce the home loans rates by 0.25% to 10.75% for the loan tenure of 25 years and under Rs. 30 lacs. In the same way, Bank of Maharashtra (BoM) has reduce the home loans rates by 0.25% to 10.60% for the loan tenure of 5 years and under Rs. 25 lacs. 2011 is very difficult year for the banks. The credit growth has fallen down because of the high interest rates.

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• Learn about Home Loans
• Mantri Alphyne in Bangalore

When it comes to buying the homes, please read the following points which would be more useful for you.

1. There won’t be any hike in the interest rates in coming months. The current rate on home loans are the highest and can not go further. It will hurt the country’s economic growth which is already impacted by the rates hike.
2. If you are looking to buy a new house, this would be the right time. Please get the loan in the floating rates if you would repay within ten years of time.
3. If the interest are going down, the home sales would increase. Then there is a chance for the builders to increase the prices of the property.
4. Up and Down of the interest rates are normal and it is part of the cyclic nature of the interest rates. So, don’t blindly plan if the rates are down or high for the short term basis. If you are taking a loan for more than 10 years, this up and down will not affect much on your loan amount.
5. Wait for the budget till next month if you want to know more about the tax rebate. There are rumors that tax exemption for the home loans would be increased.

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Introduction

Earlier I have published an article about the online money management solution Intuit Money Manager and how to use it. It is an standalone application and can be used without logging into any of the bank’s net banking. But, one great advantage is that you can see the transactions of any banks. Intuit money manager is one place for all your banks transactions.

Few months back, ICICI has introduced money manager for its customers those who are using the internet banking.This application is the same Intuit customized for the ICICI bank’s customers. This article explores the features and advantages of using the money manager. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.

ICICI Bank Money Manager

If you are using the internet banking facility from ICICI bank, then you must try this application Money Manager once to understand whether it would be useful for you. If you have more than on ICICI bank account, you can see all the accounts in this interface and check the transactions. In the following sections, we would see the step by step process to use the features of money manager.

Step 1: Login to Money Manager

If you login to the internet banking of the ICICI bank, you would see a menu name “Money Manager“. Money Manager feature of your internet banking is not enabled without your action. If you want to access the money manager, click on the link. The following are the important points to consider:

• Without your action, money manager is not enabled. You have to access the page and enable it for the first time.
• This feature comes with the 30 day free trail period. That means, after the free trial period this feature would cost you Rs. 28 per month. This fees is auto debited from your account. If you don’t want to use the paid version, please login and disable it. Otherwise ICICI bank will start deducting the money from your account.
• The following two screens are the initial screens for the setup.

Step 2: Retrieving Account Details

After the successful authentication, your account details will be retrieved. Money Manager will check for all the accounts linked with the same user id and fetch all the details to the money manager for the further processing. The following screen is the initial screen after the authentication. Once the account details are retrieved, you can click to the next page which is the home page of the money manager with your account details. It will be the first page if you login for the second time.

The home page is called as dashboard which displays summary of all your account details.

Step 3: Manage your ICICI bank accounts

If click on the “Accounts” tab, list of accounts would be displayed with details like bank name, account name, account number, last update, account type, balance, etc. Also you will have the option to add the nae account to the list or delete an account. You can link only the ICICI bank account in money manager. When you are deleting an account, it will be removed from the money manager account. Not only the bank account, you can link credit cards or any other deposits also to be linked with this application.

Step 4: Check your transactions

If you click the “Transactions” tab, it would display the consolidated list of all the transactions held in your bank account and the credit cards. You will have the option to edit the description of the transaction. You can select the month and see the specific dates transactions.

Step 5: Money Trend

If you click on the tab “Money Trends“, it would display the different charts with the details of your spending. This graphical interface provide the clear details on where you are spending more. This helps you to identify the expensive area and can reduce the expenses. You can select the carious types like Income, Expenses and Savings to see the trends.

Step 6: Plan Your Goals

It is important for every one to plan their goals and structure their financial life according to that. If you click on the “Goals”  tab, the screen would display the existing goals created and the option to create the new goals. The advantage of the application is, it has the built-in calculator to give you the future value and change the values according to your plan. Let’s try and find out the details.

Step 7: Tax Planning

It is the difficult for part for every one to calculate the tax eligibility and invest for the tax planning. This application does that for you. Based on your income and expenses, it would display the amount you have to pay as the taxes. It has the latest tax rates and tax exemption details to calculate the tax liability. This would be more useful for everyone.

Step 8: Update your preferences

If you click on the tab “Setting“, the page displays the list of preferences for EMail, Home Page Display, Product Support, Find Missing Transactions, Account for charging subscription fee, status of the money manager account. You would have the option to change these preferences on your interest.

Summary

If you have the number of ICICI bank accounts or maintaining the investment accounts with ICICI bank, then this toll would be more useful. Also note that it is not the free tool provided to your account. You have to pay Rs. 28 per month. If you are willing to pay for it, then it is worth using it. This toll would be more useful for those who are using the bank account extensively with large number of transactions, have credit card  would be very useful to check the transactions. But, every one can try using the 30 day free trial period. Please post your ideas here.

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Last year has been not very good year for the home buyers. Because of the high interest rates for the home loans and high inflation rates. It is negatively impacted the real estate companies with less sales compere to the previous years. It is not only that home loans interest rates are high, all the loans become expensive because of the RBI’s monetary policy to tighten the cash liquidity in the market.

It is good news that RBI may reverse its stance on the monetary policy to increase the liquidity. This would result in the relaxation on interest rates pressure.  This article explores the reason why interest rates increased and how it will come down in the near future?. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.

Why interest rates are increased by the banks?

If the banks don’t have the enough money to lend for its customers then they have to raise money from the public by the way of increasing the fixed deposit interest rates. When banks increasing the interest rates for deposits, the loans have to be more than deposit’s interest rates to be profitable. You may ask the question why suddenly banks become poor and don’t have enough money?. If the cash availability is more in the market, then it leads to the more consumption in the market it leads to the increase in prices. The the inflation will shoot up to the higher level.

• What is inflation?

If inflation is high, it will impact the common man’s daily needs. Govt. has to act and reduce the inflation rates. The only way (not exactly but our govt. think so) to contain the inflation raise is to tighten the monetary policy and reduce the cash liquidity in the market. If you want to understand more on how RBI can tighten the cash flow, please read the following article.

• Why interest rates on loans are increased by the banks?

Current Situation of the market

The current situation of the market is that inflation has come down (RBI thinks like that) and it is time to reduce the tightening of the cash liquidity. The news coming from the higher authority is that in the next meeting RBI would announce the decrease in the key policy rates. If that would happen, slowly banks will start reducing the interest rates in the coming months. In the past one year, RBI has increase the key policy rates for more than 12 times. It is the first time that RBI has increased such a more number of times.

If the inflation is in control for several months, the decrease in the policy rates will continue and the home loans interest rates would come down. But, one thing is that there won’t be any increase in the interest rates because it is already in the peak. We can expect the interest rates to come in the near future.

Summary

If you are planning to buy a house and apply for the home loans, please keep this in mind. It is good news for the home buyers and the builders. We can expect some good news from the market in 2012. Hope that the inflation level is under control so that the interest rates would not go up once again with in a year. This is a cycle and it can not be avoided. Hope this article is useful for you. If you have any doubts, please post it in the comments section.

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Home Loans May Not Include Registeration Expenses

We are aware that while applying for the home loans we are eligible for including the registration and stamp duty expenses as the home price and banks are including those expenses on the total home loans amount. It is the procedure till now for all the banks. Also it increases the eligible amount for the home loans and buyers can use the excess amount for their registration and other expenses.

RBI has recently announced that these expenses are not considered as the value of the purchasing house. It is only the expenses incurred for transferring the documents and legal matters. So, banks are not required to include these expenses for sanctioning the home loans. It is a shocking news for the home buyers and planning to purchase the house recently. In this case, buyers has to arrange the money for these expenses and can not get it from the banks. This would increase the burden of the buyers and may increase the expenses at least 10-15% apart from the down payment.

also read:

• Top 5 Rules for Home Loans
• Home Loans and Income Tax benefits
• Switching Your Home Loans to Another Bank
• What is EMI and pre-EMI?

This topic is more debatable and everyone has their own opinion on these changes. Few has the opinion that to reduce the sales of houses and control the prices, RBI has done changed the rules.  But, how ever finally the end customers who are going to affected on this change. Already home prices are very high and it would make things more difficult for the buyers. We have to wait and how banks are treating these changes.

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In the past decade, world has changed a lot and accessing information become very easy without leaving your house. It helps the kids to learn many new things at the early stage of their life. It is obvious that when we are young we don’t have a mobile phone, but now you can do all the transactions using your mobile phone. It also leads to more competitive world, where accumulating more knowledge become important to survive in the world.

One of the important activities in our day to day life is banking. Take example, if you studying then you may need education loan, while going for job tax planning, then retirement plans, etc. It makes us think about teaching our kid about the banking from early stage of their life. Nowadays many banks has come up with the savings bank account targeting the kids and minor with new features. This article explores some of the kids savings account and its advantages. If you have any doubts, please post it in the comments section. Subscribe to future articles here.

also read:

• How to better utilze the savings bank account?
• What is auto-sweep facility in savings bank account?

 Saving Habits to Children

It is important to teach your children about the savings for the future. Make them realize that lavish spending is not good and part of your pocket money should be saved for the future needs. It helps them to understand the responsibility for their future. The following points must be put into their mind:

• You are responsible for your future. Plan your future and save the money. At beginning they may not understand the seriousness, but time will answer them how important to save for the future.
• Also explain them the uncertainty of future and sudden demises of loved parents would put them in problem. Proper savings would help them in the difficult situations.
• Try to buy their needs from their savings, that would make them proud of their savings habits.

Not only for the parents, it will make the parents realize the important of savings.

Access to ATM / Debit Card

You must take the cautions approach on providing the ATM or Debt Card access to your kids. This can be done only if you feel confident about their knowledge on value of the money. Otherwise they would consider this as excess freedom to spend, would lead to lavish spending. Because of this, many banks provide ATM cards only after certain age. For example, AXIS bank issues debit card to kids account only after they complete the 12 years.

Monitor the spending and Control them

It is parents duty to monitor their kid and how much they are spending every day. Nowadays all the banks provide very advanced features like net banking, mobile banking, etc. to monitor your savings bank without visiting the branch. Also there are options to set the alerts for every transactions done in your debit card.

To control them, you can set the withdrawal limit in their account. Each bank has its unique features to facilitate the customers.

If they reach 18 years

It is mandatory of the parents to provide full access to their kid once they reach the 18 years. They have to submit their own Know Your Customer (KYC) forms to the bank and take the full responsibility of their account.

Bank Offers

Various banks offer different kind of features in their kids savings account. The following are the some of the examples.

Summary

This article provides only the basic idea on importance of the kids awareness on the saving habits. It should be one of the important activity for you to open a new kids savings bank account to teach them. Also don’t forget to monitor them, otherwise it won’t be much useful. If you have any doubts please post it in the comments section.

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Introduction

Increasing numbers of people are finding themselves in need of access to short-term credit, but qualifying for a loan in recent years has become more and more difficult. While it’s important to keep a careful check on repayments and subsequent loans, short-term lending is a viable solution to making ends meet and easing the pressure on household budgets.

What is PayDay loans?

In order to avoid charges for bounced direct debits or unauthorized overdrafts, people can turn to payday loans as long as they do their research and make sure they can pay them off quickly. Small businesses and the self-employed in particular may make use of this facility to complete invoices, while others may use these loans for emergency repairs on vehicles or household appliances. Compare payday loans to ensure you’re aware of the rates, terms and conditions before taking out a loan, so you find one that has a reasonable rate of interest.

Other options include taking out an overdraft on a current account, which may tide you over until your subsequent salary is due. This can be seen as a kind of “advance salary” that is used for unexpected or emergency payments. It’s important to always contact your bank to arrange an overdraft before spending the money.

Others may opt to take out a credit card that has an interest-free period of, for example, up to eight weeks. Smart borrowers will also use this facility to pay back the balance before the interest kicks in and the debt begins to accrue. It’s important not to consider short-term loans as solutions to on-going financial problems. They should be seen rather as a crutch, but which will not become a permanent feature in your financial repertoire.

Summary

PayDay loans are increasing trend in the finance industry. If you don’t have any savings, and have no other forms of borrowing such as family, a credit card or overdraft, you could consider a payday loan.  But, basically this trend is very popular in USA and Europe countries.

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In my earlier posts I have informed the readers that the deregulation of the savings banks account is in the progress. The intention of setting the savings bank interest rates by the banks itself would intensify the competition among the banks and the interest rates would go up. It will be beneficial to the customers. In this article I will write about the prior changes on the interest rates and what is the current situation after the changes announced by RBI. Subscribe to our future articles here.

• How to better utilze the savings bank account?
• Savings Bank Account interest rates derugulation:RBI
• What is auto-sweep facility in savings bank account?
• Banks to give more interest on Savings Bank accounts

History of Savings Bank Interest Rates

• Prior to this change, banks must pay the 4.0% interest for all their savings bank customers. This is same for all the banks. It means that interest rates for the savings bank accounts are regulated by the Reserve Bank of India (RBI) and banks must follow that. This change happened only less than a year.
• The interest rate for the savings bank account was 3.5% for long time and recently only it has been increased to the 4.0%. Also, there was changes in the how the interest rates are calculated. First 10 days of the balance will not be taken for the calculation, also in the remaining days only the minimum balance will be taken for the interest rates calculation. This would result in very less benefit to the customers.
• Prior to making 4.0%, RBI has changed to the daily balance calculation for interest rates of 3.5%.

Deregulation of interest rates

• Effective 25 October, RBI has explicitly sent notification to the banks for changing their savings bank interest rates. Simply, banks are free t0 set their interest rates for their customers. Till now they are compulsory to pay 4.0%.
• The RBI has told banks to pay a uniform rate to all customers having savings account balance of up to Rs 1 lakh. For balances above Rs 1 lakh, banks are free to choose interest rate bands.
• This would benefit the salary bank account holders who maintain the lump sum amount in the saving bank account.

Updated interest rates by banks

However, not all the banks would increase the interest rates immediately. India’s largest bank State bank of India (SBI) has announced that they would not revise the interest rates immediately and it would affect the profitability of the bank. The following are the few banks that has revised the interest rates:

Kodak Mahindra Bank, Yes Bank and IndusInd Bank has set the interest rates as 6% per annum for balances above R1 lakh and 5.5% for deposits less than Rs 1 lakh.

Summary

It is good move by RBI to benefit the customers. Another problem would arise is, banks would start feeling the more expenses and would increase the fees for other services. As per the record, thousands of crores are lying on the savings bank account, now banks has to pay the extra interest for that money. It would result in the more expenses for the bank. However, it is good for the customers to choose the bank which is offering the good interest rates.

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Cheque is playing the important role on money transactions for individual and company. It become the basic standard for any banking transactions. When it comes to the awareness on writing the cheque is not encouraging. I could see the people asking for the help to write cheque. This article explores the basic ideas on writing the cheque and explains the different types of cheques. If you have any thoughts, please post it in the comments section. Subscribe to our future articles here.

Open Cheque

Open cheque means, a person who holds the cheque can receive the money at the counter. The open cheque can be either bearer or order cheque.

• Bearer Cheque

Bearer cheque means who ever holds the cheque can be taken money over the counter in the bank. There is no restriction like the name specified in the cheque leaf. To make it as bearer cheque, you must not strike the ‘bearer’ word in the cheque leaf after the ‘Payee’ name sentence. This kind of cheque is very risky because if some one stolen your cheque or you have lost the cheque, who holds the cheque can take the money from bank. If you want the bank to make money only to the person specified in the cheque leaf, please strike out the word bearer in the cheque leaf. The bearer cheque don’t need any endorsement. But, it is bankers liability to check if they are paying to the right person.

• Order Cheque

An order cheque on the hand is a cheque made payable to a certain person or order. The language of such a cheque runs thus ‘Pay to Mr. X or order Rupees five hundred only’. An order cheque can be transferred only by endorsement and delivery. It must first be endorsed and the bank must take care to ascertain that the person demanding payment is the right person and that the addition of the word ‘bearer’ or ‘order’ thereto it is regarded as an order cheque.

Crossed Cheque

To prevent the cheque to be misused in the wrong hands, it will be crossed. It means that it has special meanings to the banker who pay the money based on the instructions given inside that cross mark. Crossing of a cheque means “Drawing Two Parallel Lines” across the face of the cheque. Normally crossed cheques can not en-cash in the counter. The holder of the cheque must have account in the bank to deposit that cheque.

• Account Payee Only

If you write the words “account payee only” in between the lines, the bank is liable to pay the money only to that person specified in the cheque. It can not be paid to any other person. The person whose name is specified in the cheque, must have the bank account to en-cash the cheque. If he don’t have any account, he must create new account and deposit the cheque.

• Not Negotiable

If the cheque has the words “not negotiable” between the lines, it means that the cheque can not be cashed by any other person then the name specified in the bank. Normally cheques can be transferred to third party by writing the details of the another person in the endorsement column. It indicates that the owner of the cheque directs the bank to pay to another person whose name is specified in the cheque. But, it can not be transferred if the cheque is mentioned as “not negotiable“.

Summary

I hope this article would have been more useful for the readers who are yet to understand the terms used in the cheque. It is very important to know the basic things on the financial life to avoid any loss of hard earned money. After reading this article, if you get any cheque please read it carefully to understand everything written in the cheque. If you have any doubts, please post it in the comments section.

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This article explores few basic ideas on how Non Resident Indian (NRI) can take the credit from India for their investments. It is very common that NRIs don’t have the clear idea on seeking the credit from Indian banks to invest in India. This leads to drop the plan of investing in India. The fact is that it is not difficult for NRI to get the loans and start the investment. This article deals with that topic to bring some good ideas to help the readers to understand how to apply and conditions on getting the loans in India. If you are an NRI and have thoughts, please post it in the comments section. Subscribe to our future articles here.

Who an NRI?

Before getting into the details of getting the loans, it is prudent to understand who an NRI is. In simple terms, a person who is living in foreign land and he is an Indian citizen or Person of Indian Origin (PIO). This definition is provided by the Foreign Exchange  Management Act (FEMA) 1999. If you need more details, please read the below articles:

• How to find status of NRI?

 NRI Bank Accounts

At the starting point, NRI must open a bank account to carry out the transactions. An NRI can open the following accounts:

• Non-resident ordinary (NRO)
• Non-resident external (NRE)
• Foreign currency non-resident (FCNR) account

Read the following articles to know about the NRI bank accounts:

• NRI Bank Accounts
• What is RFC Bank Account?

Loans for NRI

Nowadays banks are more interested to give the loans for NRIs to expand their operations. NRI can take the loans same like the normal resident Indian. But, there are few restrictions applicable to an NRI loans. Under the extant exchange control regulation, authorized dealer (AD) may extend credit in rupees to an NRI against the security of shares or other securities, immovable property.  These loan amount can be used fro the specific reasons like personal use or business activities. It can not be used for re-lending, carrying on agricultural activities, investing on real estate or direct investment in India.

Without keeping any securities, the loans can be taken only for the reason of buying the Employee Stock Options (ESOPs) from an Indian company or buying a house. The following points discuss this in detail.

Loans for ESOPs

An NRI can apply for the loans from outside Indian to buy his companies shares through the ESOPs.  The company must be an Indian company and trading in the Indian stock exchanges.  The following are the two conditions:

• The loan amount should not exceed Rs.20 lakhs or 90 percent of the purchase price of the shares.
• The bank would be directly transfer the money to company’s account.

Housing Loans

Same like how a resident can apply for buying his own house, an NRI can apply for buying a house in India. The rules are same like the resident applicant. But, loan amount may differ based on the age, salary and other eligibility criteria for the NRI applicants. The tenure of the NRI housing loan is shorter then the loan applied from resident customer. The normal duration allowed is from 7 years to 15 years.

• Tax Planning for NRIs 21st Edition

Summary

I hope this article would have been more useful for the NRI readers who are willing to take the loans in India. Most of the NRIs have the plans to invest in India while they are earning outside India. But, they don’t have much idea on taking the loans and procedure for applying for the loans. This article would be more useful for them. If you have any doubts please post it in the comments section.

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Introduction

After the rigorous cycle of increase in the policy rates by Reserve Bank of India (RBI), debt instruments got more lucrative for the investors who are looking for the safe place to park their money. Thanks to the inflation which is making the mandatory requirement to increase the key policy rates. A Steep increase in the key policy rates dent the huge liquidity enjoyed by the banks and they have to increase the interest rates to collect the money from the public. This article explains the current interest rates on the fixed deposits of few banks and possibility of the further increase in the interest rates. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.

Is it good time to open the Fixed Deposit accounts?

Yes. This is good time if you are looking for opening the fixed deposit accounts in the banks. The interest rates are almost in the peak, there is little hope on the further increase of the rates. We can expect the maximum 0.50% increase in the interest rates on the fixed deposit instruments. There are few banks offering the 10% p.a. on fixed deposits for 1-2 years and most of the banks increased the rates to 9.25 – 9.75% which will give the decent return compare to the other debt instruments like PPF, Post Office Savings, NSC, etc. If you are looking for a good time to deposit in the fixed deposit, please use this opportunity to take the benefits.

Banks offering High Interest Rates

The following is the table provides list of banks offering the high interest rates while writing this article.

• Senior citizens would get 0.25 – 0.50% more interest rates.

Bank Deposits Vs Company Deposits

Not only the banks offering the deposit schemes to the public. Nowadays many companies and non-banking financial institutions offering the fixed deposit schemes to collect the money. Normally the interest rates on the company fixed deposits are higher because the risk is higher then the bank fixed deposits. You need to look into the following things while choosing a corporate fixed deposit:

• What is the rating given to the company’s fixed deposit scheme. There are credit rating agencies rate the safety of the investments based on the number of criteria.
• Company is issuing the fixed deposit to raise the money for its operations, find out the liquidity of the company and its financial strength to repay the money at the time of maturity. It is very common that investors have issues on getting back their principal amount.
• Find out where you need to approach them if you want to close the FD and get the money back. Unlike banks, companies not operated every where in the country, it is better to have the proper contact person.
• Read the complete terms and conditions. Whether they allow the pre-close of the fixed deposit before the maturity.

Better than other investments

The following are the list of other debt instruments with interest rates:

Looking into the above debt instruments, the current rates of the fixed deposits are more attractive. It would be good idea to park your money in the fixed deposit rather then above investments.

Summary

I hope this article would be useful for you are looking for the time to invest in the fixed deposits. Since the stock markets are falling down and there is no good investments options, the fixed deposit investments looks more attractive. This will not continue for long time, when RBI start reducing the key rates, the fixed deposit rates will start decrease. Utilize this opportunity and invest your money. If you have any thoughts, please post it in the comments section. Subscribe to our future articles here.

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Couple of weeks back I have published an article about the ATM usage. In that article I have written about the new changes announced by RBI for the transactions conducted in the ATM. Here this article, consolidate all the changes or rules announced related to ATM usage. Most of the customers has the thinking of ATM is only used for the cash transactions. But, it has several other benefits which can be avoided by directly visiting the bank’s branch. RBI is looking to increase the use of ATM machines to avoid crowd in the branches. This would also increase the customers satisfaction. If you have any thoughts, please post it in the comments section. Subscribe to our future articles here.

also read:

• Removal of cash retract feature in ATMs
• RBI has announced changes on ATM Transactions fees
• RBI permits non-bank companies to set-up ATM

List of Changes announce by RBI

The following are the list of changes announced by RBI.

• Beginning 1st July, 2011 five free transactions allowed in the third party ATMs. The free transactions include financial and non-financial transactions. Previously, all the non-financial transactions are free and five cash transactions are charged. For example, HDFC bank charges Rs. 20 per transaction for cash withdrawal and Rs. 8.50 for non-financial transactions from customers who exceed the free usage limit.
• For instance, IndusInd Bank, for savings account holders who maintain an average balance of Rs.10000 or more, all third part ATM transactions are free.For other, charging Rs. 20 for cash transaction and Rs. 10 for other transactions. Basically it is up to banks to decide the fees on the transactions. RBI set the cap on free limit, after that banks will decide the charges and some banks would allow the free transactions if the customers meet specified criteria.
• All the transactions (online, shops or ATMs) done using the card must be sent alert notifications to the registered mobile number. Previously the minimum transactions amount is set to Rs.5000 to send the notifications. From 1st July, every transactions must be notified to the customer. This would avoid the fraud using the card like misuse, stolen,etc.
• As per RBI guidelines, if there is any failure in the ATM transactions and your account got wrongly debited the amount,bank will have to credit such wrongly debited amounts within a period of 7 working days from the date of the complaint. The Bank will pay Rs.100/- per day beyond 7 working days only if the complaint is lodged within 30 days of the date of the transaction. Prior to this, banks are given 12 days to rectify there errors.
• Another important change mandated by the RBI is to ask the PIN number for every new transaction. For example, you have withdrawn Rs.5000 cash and would like to continue another transaction without taking the card from ATM. But, you have to enter the PIN every new transactions. Previously, you can continue many number of transactions by entering the PIN only once.
• Apart from the RBI mandated services, banks have introduced the number of innovative transactions in the ATMs to facilitate the customers. For example, HDFC ATM offers tax payment through their ATM.
• Update: Retract of currencies from ATM machines have been stopped.

Summary

The above rules are newly introduced by the RBI to facilitate the customers. ATMs not just used for the cash transactions, there are many other useful facilities available for the customers. In the coming days, there would be lot more features will be available through ATMs. Hope this article helped the readers to understand the changes introduced in the ATM machines. If you have any thoughts please post it in the comments section.

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Have you ever inquired about the suitable bank account from your banker? or ever had a thought on multiple savings bank options.   It is very rare or lack of knowledge on the different savings bank account options to the customers. Without considering their needs everyone open the normal savings banks account.  But, the fact is that every bank has multiple savings bank accounts based on the customer needs. How many transactions per month? Do you have outstanding check deposits to your account? Do you need debit card?. The above questions are the few sample questions which determines your savings bank account category. This article exposes the various categories with the banks and how it will help you in saving the bucks. If you have any thoughts, please post it in the comments section. Subscribe to our future articles here.

What is No Frills Savings Bank account?

• Savings Bank interest rates deregulated
• What is auto-sweep facility in savings bank account?
• Savings Account number Portability

This is one of the basic savings bank account with all the banks. As we know that all the banks impose the minimum Average Quarterly Balance (AQB), no frills account don’t have the AQB requirement. You can open this account with the free of cost. The reason behind this account is, banks want to reach out to more customers who need only the very basic requirements of the banking. It is simple account and doesn’t have any extra features. Basically the features are different from each banks. For example, few banks offer the advanced feature in no frills account to lure the customers from other banks. But, to open this account there may be any restrictions like annual income of the application. For example, HDFC bank says has an annual income of less than or equal to Rs. 50,000 to open no frills account.

Average Quarterly Balanace (AQB)

It is one of the basic requirements imposed by the banks to the customers. If you are opening the savings bank account, you must keep track of the minimum balance to avoid any penalties. The penalty amount imposed by the private banks are very high compared to the nationalized banks. The AQB is derived from adding the closing day balance of all the days in the quarter and divided by the number of days in the quarter.  The formula looks like:

For example, HDFC and ICICI banks charges Rs.750 for the non-maintenance of the AQB.

Choose the right option for you

Every bank provides the number of savings bank options to the customers. If you want to take better account for your needs, please spend some tom in evaluating the pros and cons of the each account. As I have mentioned in the above section, no frills account has basic facilities and it would not be suitable for those who are willing to do the multiple transactions. If you walk into the HDFC bank for opening a savings bank account, you must go through the following options:

• Regular
• Savings Max
• No Frills
• Pension Savings
• Family Savings
• Kids Advantage
• Senior Citizen

If you are reading out the above list, the name itself give the purpose of the account. Each type of account is designed keeping in mind with the specific category of people. Next time, when you are planning to open a savings bank account, read the options and choose the best one.

Auto Sweep Facility

In my previous article I have explained about the auto sweep facility with the savings bank accounts. It is one of the notable feature which will utilize the excess amount lying in the saving bank account.

Summary

This article would have provided the basic idea on choosing the right savings bank account for your needs. Note that this explanation would benefit some people who are looking for the restricted features. Most of the customers would be satisfied with the regular savings bank account. It provide the basic features one needs for the daily activities. If you have opened any specific account type, please share with us in the comments section.

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Are you busy and not having enough time to effectively utilize the idle money in the savings bank account?. Then, this article would provide you a useful tips to utilize the auto-sweep facility available  in most of the banks to maximize the returns for your idle money. This article explains about the auto-sweep facility and pros and cons of that feature. This would be perfect for the person with busy schedule and not able use the fund sitting in the savings bank account. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.

What is auto-sweep facility in savings bank account?

Auto sweep facility combines the benefit of savings bank account and fixed deposit account. It is normal case where most of the people have huge amount in the savings bank account for the long time which earns meagerly 4% p.a. The intention or benefit of this facility is to attain the high degree of liquidity in your savings bank account with maximum returns.

This facility has the threshold amount of certain limit, if you have the excess of the threshold  amount in the account, this facility automatically move the excess amount into the fixed deposit.  It earns the highest interest rates then in the savings bank account. Auto Sweep is the common term used to mention this scheme, but different banks has different scheme which you can read out in the next section.

What is Super Saver and Sweep-In Facility by HDFC Bank?

How it works?

If you have a savings bank account and the cut-off amount for the auto sweep is set as Rs.25000, when you have excess amount in the account, it will be moved to the fixed deposit with the higher interest rates. The feature of this facility is different from each bank and cut-off amount also will be different. There may be minimum sweep amount will be specified in the some banks.  The following are the steps explaining how it works:

1. You have savings or current account.
2. This account must be enabled with the auto sweep facility. Note that the name of the scheme is different for each bank. The following are the list of scheme names for few banks:
   1. Axis Bank – Encash 24
   2. Axis Bank – Encash 24
   3. Union Bank – Union Flexi Deposit
   4. HDFC Bank – Super Saver Facility
   5. Bank of India – BOI Savings Plus Scheme
   6. Oriental Bank of Commerce – Flexi Fixed Deposit Scheme
   7. State Bank of India – Multi Option Deposit Scheme
   8. Allahabad Bank – Flexi-fix Deposit
   9. Bank of Maharashtra – Mixie Deposit Scheme
   10. Corporation Bank – Money Flex
   11. United Bank of India – United Bonanza Savings Scheme
   12. IDBI Bank – Sweep-in Savings Account
3. Each bank has their won threshold amount to enable the auto sweep facility.
4. The tenure of the fixed deposit booked would be different from each bank. For example, SBI allows the fixed deposit from 1-5 years where as AXIS bank allows maximum of 181 days.
5. If the savings account lacks of the minimum balance after withdrawing the money or lack of money to clear any cheques, the fixed deposit will be broken and move the fund to savings bank.

Advantages of auto sweep facility

• You need not worry on idle cash on the savings bank account.
• Amount in savings bank will be effectively utilized to earn more income.
• Banks automatically park the amount to high interest rates.
• This would be very good option for those who do very less transaction in the savings bank and have the excess amount.

Dis Advantages of auto sweep facility

• There may be service charges applicable to the transactions. Before opening the auto sweep facility, read the instructions carefully.
• This facility will not be suitable for those who do lot of transactions in the savings account.
• When you have multiple FDs created, the order of breaking the FDs might affect the returns. Few banks first break the low earning FDs then will move to the high interest rates.

Summary

Auto Sweep facility is must have for the account holders who have the excess amount in the savings bank account for long time. It is observed that huge number of professionals who are salaried get their monthly salary on their savings bank account. But, they left un-utilized  for the months which kept idle. This facility will benefit you lot to earn higher interest rates. If you have any doubts, please post it in the comments section.

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It is once again, the key rates are increased by the Reserve Bank of India (RBI). This move gave the shocking wave in the market today (sensex down 350 points). It is unexpected move which was expected by the analysts as probably 25 points or there won’t be any changes. But, RBI has hiked the key policy rates repo and reverse repo by 50 points which would trouble the banks to reduce liquidity.

The reason behind the hike is to contain the inflation and reduce the liquidity in the market. But, as we already known the impact would very much negative. It is not going to control the inflation, do you think just increasing the key rates would stop the inflation?.

In the calendar year 2011, it is the fifth hike. The following is the list of rate hikes in the past:

This would affect the home loans and other loan products would become more costlier. Banks will be under pressure to manage the cash efficiently because the borrowing would be expensive.

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