Finance

History of Credit Cards: The root of the word ‘credit’ comes from the Latin word for ‘trust.’ This is as simple as selling something to someone and trusting them to pay you the money in the given time gap. In this article, we will look into credit cards, where the idea came from, how they evolved and much more.

History of Credit

The ancient civilisations of Egypt, Babylon, and Assyria were the first to use credit, and this was about 3000 years ago. This began to spread across to Europe as trade routes began to be developed, thereby putting Europeans in contact with those from the Arab areas, which meant that during the Middle Ages, the concept of credit took off.

12th Century Europe commonly saw large trading fairs with people travelling from afar to take part and buy and sell products. Credit was very important to traders as they moved from one fair to another using credit to buy a few things at one spot, and then they would get money for this by selling the goods at another spot at a profit. Trade agents were found at every large fair in Itlay, and their duty was to record the details of buying, selling, and repayment, a process that was constant.

The idea of paying in installments also gained popularity and acceptance in this area. From the 18th to the 20th century, tallymen now began to sell clothes for weekly payments. As their name suggests, they were called so because they kept a tally of what was bought on sticks of wood. One side of it showed payments and the other side debts. Before organised consumer credit came to be, the major lending sources were limited to mortgage lenders, friends and family, retailers, illegal small-loan lenders, and pawnbrokers.

Credit Cards

Let’s talk about credit cards now, as this is the credit system that is followed today. What laid the foundations for these were actually the earliest plastic credit cards. They were far from what we have today, but, as was said, they laid the foundation of what we have today. In the US, the 1920s saw the introduction of the ‘buy now, pay later’ system but could only be used in the stores that were issuing it. The Encyclopedia Britannica also states that around the same time, credit cards were originated when individual firms like hotel chains and oil companies were issuing these cards to their customers for use, but only within these firms. Western Union is one such firm that began to do so in 1921 for their frequent customers.

The ‘Charge-It’ program was invented by John Biggins of the Flatbush National Bank of Brooklyn for use between local merchants and bank customers. The Charge-Plate, as it was called, was the early predecessor to the current credit cards and was used in the 1930s and the late 1940s. This rectangle sheet metal was 2 1/2″ x 1 1/4″ was embossed with the name, city, and the state of the customer. It looked like a military dog tag too. This card was first laid in the imprinter, then a charge slip was placed on top of which, and finally, the ink ribbon was pressed on.

It was actually very similar to the current credit cards, but the purchases were limited only to being local, and the cardholders of the Charge-It needed to have an account at the Biggins’ Bank. The sales slips were deposited into the bank by merchants, and the customer who used the card was billed by the bank. New York’s Franklin National Bank was where the first bank credit card appeared in 1951, and this was for loan customers. But this too could only be used by the account holders in the bank.

The First Credit Card

Frank McNamara, in 1949, had a business dinner to attend to at the Cabin Grill in New York. Unfortunately for him, when the bill arrived, he realised he hadn’t got his wallet with him. While he managed to settle the bill, he decided that cash required an alternative. This sparked off the idea of the first credit card. The small cardboard card was then invented and was called the Diners Club Card to be mainly used for entertainment and travel. This card holds the title of the very first credit card that was used in a widespread manner.

Origin of the Idea of the First Credit Card

A merger with Dine and Sign was what caused the partial creation of the Diners Club, and they produced the first charge card that they termed ‘general-purpose,’ where the entire bill had to be paid with every statement. This Diners Club card was replaced with plastic by the 1960s.

1850 saw the formation of American Express, and 1958 was when they emerged into the industry of the credit card with their own product that was a purple card charge for entertainment and travel expenses. The BankAmericard bank credit card, now known as Visa, was issued by the Bank of America in 1958. The next year, the first card made from plastic was introduced by American Express as an alternative to celluloid or cardboard.

The Interbank Card Association was formed in 1966by a number of banks. In 196, the First National Bank of Louisville, Kentucky, licensed the name Maser Charge.  The banks joined the ICA with the help of New York’s Marine Midland Bank, which is now called the HSBC Bank USA, to create the Master Charge: The Interbank Card.

Evolution of Credit Cards

At this age, it takes a few seconds barely to pay for a purchase with a card. Most of the time, there is no need to sign, and multi-layered security can be counted on to keep information safe. Let’s look at a brief timeline about how credit cards have evolved.

• In the early 1900s to the 1940s, the cards we made from paper, cardboard, and metal only later on. These cards were issued by retail stores and oil companies to only be used there.
• The Diners Club was started in 1950 for entertainment and travel expenses. This is where the first widely used credit card is said to have been used. A plastic entertainment and travel card was issued later on in the decade by American Express. Both cards needed the balance to be aid of f monthly.
• The MasterCard and Visa cards joined the marker in the mid-1960s but were called general-purpose credit cards then.
• Electronic credit card processing was introduced in 1973, allowing merchants to have access to information from the banks to make sure that the users actually had sufficient credit for the purchase. This gave consumers more places to use the credit card, along with more flexibility in using it.
• The Discover card was launched nationally in 1986 with a television commercial that was played in the Super Bowl XX. This card aimed at the delivery of consumer-friendly services and features like no annual fee and the very first cash rewards program.
• The EMV chip was developed and launched in the mid-1990s in Europe, giving more security. And this technology caught on to the rest of the world.
• Today, holders of credit cards can use them across the country and also internationally. There is flexibility to pay balances each month or make monthly payments that fit their budgets. What’s moe is that these cards can be linked to smartphones, and they offer rewards for purchases.

There is constant work done to increase the security of the personal information of cardholders and security in general. The EMV chip is being adopted by merchants in the US as well. The cards with chops feature bot the traditional magnetic strip along with the chop itself, which makes them usable even if the merchant doesn’t have a reader that can support chip technology. If the card issuer and the merchant both supper this technology, the card can simply be inserted into the terminal to go through with the transactional process.

India and Credit Cards

The market for credit cards begun in India in 1981 when the cards were issued by VISA. And the pioneer of these cards in India was Andhra Bank.

Post Office Savings Bank: A public facility that provides email services, including accepting parcels and letters, contributing post office boxes, and vending postage stamps, packaging, and stationery, is known as the post office. Post offices also grant additional services, which differ from country to country. These involve proffering and receiving government forms (like passport forms), processing government services and expenses (like postal savings, road tax, or bank post office). Postmaster is the chief administrator of the post office.

People opening accounts in different Post office schemes are dealing with Post offices near their house. But the Post office has become modernised. They are proposing a Core Banking Solution. The CBS (Core Banking Solution) Project brings amenities of ATM Banking, Internet Banking, Phone Banking and Mobile Banking to the Post Offices Savings Bank (POSB). Clients can make transactions 24×7 in ATMs and transfer money from their account to any bank account through National Electronic Fund Transfer (NEFT) and Real-Time Gross Settlement (RTGS). This article will inform you about the Modernisation of the Post office, its features, Apps for Banking and Postal Information and CBS in detail.

Core Banking Solution (CBS)

The networking of bank branches, which allows customers to maintain their accounts and use various banking facilities from any part of the world, is known as Core Banking Solutions. In simple terms, there is no obligation to visit the branch to do banking transactions. One can do it from any location, any time and enjoy banking services. Execution of CBS across all units helps speed up most of the everyday transactions of banks and customers. Any depositor of Savings, TD, RD, MIS, SCSS, PPF or Certificates can initiate transactions either Financial or Non-Financial at any CBS Post Office.

When the Account Holder of MIS/SCSS/TD scheme addresses CBS Post Office, the Supervisor or Postmaster inquire the Account holder that, since CBS is implemented in the office, there is no obligation for alteration of Accounts as on maturity, one can receive payment from any CBS Post Office after presenting fresh KYC documents. CBS is expected to adhere to the dynamically changing market & client requirements and develop & simplify banking processes to focus on sales & marketing stuff. In order to expand the presence of postal banking in rural and remote areas and also to improve banking speed, the core banking solutions are convenient for customers.

Post Office Savings Bank and Internet Banking

Post office savings scheme is among the many secure options for those seeking a higher interest rate than banks. Post office investment schemes such as PPF, NSC, and KVP offer a considerable rate of interest. The POSB (Post Office Savings Bank) accounts have reinvented themselves with uncertain times. One can now quickly transfer funds from the Post Office accounts using internet banking. Besides an active post office bank account, one needs an active mobile number and ensures all the KYC documents are in order; a PAN number and an e-mail ID are required for transferring information.

Details on How To Activate Internet Banking for Post Office Account

Here are complete details of how to activate Internet Banking for Your Post Office Savings Account

• Step 1: Visit the post office branch with the internet banking form. Submit it along with required documents. Once internet banking is activated, an SMS will be sent to the given mobile number.
• Step 2: The next step after getting the SMS is to visit https://ebanking.indiapost.gov.in and then click on ‘New User Activation’.
• Step 3: Here, one needs to enter Customer ID, the CIF ID printed on the first page of the passbook. The account ID is the savings account number. One needs to enter the password carefully, as, after five wrong attempts, the user id will be disabled.
• Step 4: After completing all of these steps, the internet banking account will be activated and is ready to make a fund transfer from the Post Office account. Also, you aren’t required to visit the branch to deposit money in your PPF account or the post office recurring deposit (RD) account.

Withdrawal of Money From Post Office Vs PPF

You can withdraw or encash your money from where you have enrolled for an NSC account. You will have to authorise the person with a signed letter if you send a person to withdraw the NSC on your behalf.

When it comes to PPF Withdrawal, you can get your amount credited to the bank and make a bank withdrawal (if your bank has the facility). You can also visit and download Form C or its corresponding application for cancellation on NSI India.

Mobile App for Post Office Saving Account

To complete the registration for the mobile app, one needs to visit their nearest post office, where your POSB account is present. Once the registration has been completed for mobile banking, you can use the Department of Post Mobile banking application services.

• Firstly, download the Mobile Banking Application from the Google Play store, open the application, and click on the Activate Mobile Banking button.
• Next, enter the Security Credentials provided by the Department of Post. The Registered Mobile number will receive an OTP. Enter the OTP and continue further.
• Once successfully verified, you will be asked to enter a four-digit MPIN. Please enter the four-digit MPIN of your choice, and you will be activated for Mobile Banking Application.
• The user ID and the newly generated MPIN is needs to be entered to login in the mobile app
• In situations when one faces any difficulties or have any query, it is advised to contact the postal helpline service at their customer care 18004252440

Post Office and Small Saving Schemes

India Post, which regulates the postal chain of the country, also presents several deposit avenues for investors, generally recognised as post office saving schemes. These schemes were proposed to inject savings discipline and give investment avenues among Indians from across economic classes. Every post office provides these savings schemes to allow individuals from all over India to apply and register quickly. People funding in Small Saving Schemes in the Post office are restrained to dealing only with post offices. India has a network of 154,866 post offices across the nation. Of these, 139,040 are in rural areas. In 1947, there were only 23,344 post offices, which were in the urban areas. The department of posts collects over Rs 6 lakh crore of long-term savings under the numerous postal savings schemes. At present, there are nine postal schemes related to savings offered by the govt. Of India to the masses.

They are mentioned below.

• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• Post Office Monthly Income Scheme
• 5-Year Post Office Recurring Deposit Account
• Post Office Time Deposit Account
• Sukanya Samriddhi Account
• Senior Citizen Savings Scheme
• Post Office Savings Account
• Kisan Vikas Patra (KVP)

Conclusion on Post Office Savings Bank

Post offices are developing. with the Core Banking Solution, the experience of a Post Office Customer has become compliant. Going to the Post office would now be minimal; submitting a KYC document or Registering for the Internet has become manageable.  The core banking solutions comprising Internet banking and the mobile app are steps in the positive direction of customer convenience and digitisation from the Indian postal service. This article gives the reader a succinct understanding of the steps and procedures involved in availing the core banking service of the post office of India.

Transfer Of Shares on Death Now Same as Physical Shares: In the event of a security bearer’s demise, the Securities and Exchange Board of India (Sebi) has successfully transitioned of physical and Demat shares equal.

Transfers of dematerialized shares following the expiration of an individual will presently need to follow a similar technique as transfers of physical shares.

This law permits a succession certificate or probate of will or will to be issued as a statutory prerequisite for the transmission of assets allocated in physical mode. Demat shares will now be required to follow these guidelines in line with the Indian Succession Act 192.

As of recently, the conversion of Demato shares to a beneficiary was monitored by the respective depositories’ bylaws and guidelines, National Securities Depository and Central Depository Services.

What’s Precisely a “Transmission”?

The phrase “transmission” works on the principle of transferring the ownership in shares to the legitimate beneficiaries.

Per Section 56(2), “nothing about subsection (1) shall influence the company’s ability to file, on receiving of an acknowledgement of transmission of any privilege to protections by the activity of law from any individual to whom those rights have been transmitted.”

Throughout the instance of the shareholder’s passing, the following protocol is followed for the transfer of shares:

Case 1 – When a previously mentioned nominee is present

For shares in Demat mode, you must submit the necessary documentation to the Depository Participant (DP).

• A photocopy of the death certificate that has already been authenticated or notarized
• Transmission Request Form, duly completed (TRF).
• Client Master Report for the beneficiary’s Demat account

You will be asked to deliver any of the following documents to the Registrar and Share Transfer Agent (RTA) if you own physical shares.

• Share credentials and certificates that are original.
• Dutifully completed Transmission Request Form (TRF).
• The candidate’s affidavit/declaration of his interests.
• An authorized copy or notarized copy of the death certificate is necessary.

Case 2 – When there is no Nominated Candidate

You must submit the supporting paperwork for shares owned in Demat mode.

In case the amount of the assets is below Rs. 5,00,000, each one of the supporting documents must be forwarded to the DP:

• A copy of the death certificate which has been notarized
• Request for Transmission Type (TRF)
• Court documents or concerned affidavit– to definitively prove legitimate possession of the shares.
• Indemnity agreement – Indemnifying the depository and the Depository Participants (DP)
• NOC* by the lawful heir(s), if relevant, or a family agreement document signed by all legal heirs of the deceased beneficial owner
• Where the benefits outweigh Rs 5,00,000, the Depository Participants (DP) may also demand one or all of the following documents:
• Probated will, along with a surety form.
• A succession certificate.
• The following documents must be submitted where the worth of the shares is up to Rs. 1 lakh.
• Accordingly filled transmission request form (TRF)
• An authorized or notarized Death Certificate
• Indemnity Deed
• Affidavit or relevant court papers for the shift of legal ownership
• No Objection Certificate from the legitimate beneficiaries.
• The accompanying documents must be submitted when the worth of the shares exceeds Rs. 1 lakh.
• Certificate of Succession
• Surety Form along with the Probated Will

For shares held in physical form, you will have to provide proper documents.

Documents Required for RTA

In the case of physical shares, the RTA (Registrar/Share Transfer Agent) may include any of the relevant certificates and documents:

• First-hand copy of the Share certificates.
• Appropriately filled Transmission Request Form (TRF).
• Notarized or authorized copy of the death certificate.
• Succession document or
• Probate or letter of administration reasonably authenticated by a Court Officer or Notary.

Procedure to be Adopted for Non-Compliance With The Act

Any organization must essentially and strictly follow such protocol, approve such applications from shareholders, and sell such shares within the time limit prescribed.

In the event that the organization is discovered to have been in default in such circumstances, a compensation of no less than Rs. 25,000 and which can stretch out up to Rs. Five hundred thousand (5,00,000) can be enforced.

Any officer is hence likewise be supposed to be in default if he or she is proven guilty, for which a fine of not less than Rs. 10,000, which the concerned authorities can hike up to Rs. 100,000 is implemented.

Crucial Aspects to Consider About the Subject Matter

• If there arose an occurrence of shared ownership of shares, the other owner would indicate joint ownership by showcasing the share certificate and transmit the shares in his name.
• Once the corporation accepts the applicant’s submission, there are two alternatives. One benefit is that it will both authorize the application and acknowledge it and sell the assets.
• In the event that the organization is not pleased, it will not pass, but it must report that information to the concerned individual within 30 days from the date of receipt of the application.
• Stamp duty would not even be relevant to the sale of those shares because the transfer is in the transmission process.

Revive Lapsed Insurance Policy, LIC Revival Camp: Life Corporation of India (LIC) recently has come up with a new Revival Campaign which can be used for the revival of the lapse policies. This type of revival provides concession in late fees as well as relaxation of medical checkups. Many people don’t have explicit knowledge of this campaign and have certain questions in their mind such as what is Lapsed Insurance Policy, What is Revival of Insurance Policy, How to revive an Insurance Policy which has lapsed and about LIC Revival Camp. In this article, we will cover some of these areas in order to provide the readers with a better understanding of lapse policies.

What is a Lapsed Insurance Policy?

When a policyholder is unable to or fails to pay his/her premium within the grace period, then his/her life insurance policy lapses. This type of policy is termed the lapsed policy. Lapsation of policy is considered to be dangerous because, in this case, the policyholder and his/her beneficiaries might not get any benefit for which they have started the life insurance cover.

When Does a Policy Lapse?

An insurance policy is considered lapsed when the policyholder fails to pay the premium within the grace period. The grace period is considered to be 30 days in case of annual, half-yearly and quarterly renewals and 15 days for monthly renewals.

How Can You Prevent The Policy From Getting Lapsed?

Some ways to prevent lapsation of an insurance policy are as follows:

• The policyholder must pay his/her premiums within the due date or the grace period.
• Never wait for a premium due notice because it is only given as a courtesy from the insurance company’s side. It is the duty of the policyholder to pay the premium before the due date without waiting for the notice.
• Never depend on a second person or an intermediate for submitting the cheque to the insurance company. They might forget to do so because it is not their responsibility. The policyholder must always make his/her own arrangements for paying the premium.
• If the policyholder has shifted and there is a change in the address, then he/she must inform the insurance company as soon as possible.

Can One Still Have The Rights To File a Claim on a Lapsed Policy?

Policies that are less than three years old but lapses, and if something happens to the policyholder after the lapsation of the insurance policy and a claim is filed to the insurance company; the insurer is not obliged to pay anything to the policyholder. The insurance company might agree to return the premium payments the policyholder had made in the past, but they will not approve the whole insurance amount if the insurance policy has already lapsed due to non-payment of premium. Returning the premium amount is totally upon the insurer’s decision.

If the policy is more than three years old, but lapses and something happens to the policyholder, then there is some chance that the policyholder might still get the benefits promised at the time of the insurance agreement. However, the policyholder will not get the full amount, but a small part of it as decided while signing the agreement.

What If a Policyholder is  Facing A Cash Shortage and Can’t Pay The Premiums?

In this case, the policyholder must inform the insurance company about his/her issues regarding the premium payments and ask them to reduce the insurance amount; thus, the premium amount will also decrease automatically. Once the premium amount is not that huge, it will become easy for the policyholder to continue with the premium payments without any trouble.

Revive Lapsed Insurance Policy

As we all know, revival means getting something back to life; similarly, reviving a lapsed insurance policy means getting the insurance cover back. In order to revive a lapsed insurance policy, the policyholder is entitled to pay the outstanding premiums along with certain interest to the insurance company. The rate at which the policyholder will pay the interest depends on the insurer and its policies. If the policy has lapsed for more than six months, then the person whose life is insured has to go under medical tests one more.

Can an Insurance Policy Revive at Any Time?

One can revive the insurance policy at any time, but sometimes it depends on how many days have passed since the policy has lapsed. According to the insurance laws, if the policy was in force for at least three years, then the policyholder got up to two years to revive the lapsed insurance policy. Some insurers like LIC have special schemes using which one can revive his/her lapsed policy even after 5 years.

If the policyholder revives his/her lapsed insurance policy within six months, then the process might get simpler because he/she only need to pay the premium due and the interest for reviving the policy, but if the revival takes more than six months, then the process might get more complex as it involves penalty fees and interest might go up to 10% depending upon the insurer.

After Revival One’s Insurance Policy is Same?

If the policyholder had purchased the policy before 2013, when the new guidelines were issued, then the same policy will get renewed with the same terms and conditions. This is as per the contractual guidelines, which are governed by the regulator.

If the policyholder has purchased the policy after 2013, then the new premium and policy conditions of the revived lapsed insurance will depend on the periods during which the dues were not being paid, the policyholder’s age and the sum that can be revived with the policy. So if the policyholder’s age band has changed from the date his/her premium was due, then the insurer might increase the mortality rate.

LIC Revival Camp

Like always, Life Insurance Corporation of India, which holds most of the market share in the insurance industry, has come up with a new LIC Revival camp for all its customers. This campaign was started with the objective to reduce lapsation of policies and to renew the relationship with the old customers in order to increase the customer base.  Under this campaign, policyholders can revive their lapsed policies with a concession in the late fee, and they also get some relaxation in different medical requirements. The different types of revival schemes that one can find under LIC are as follows:

• Ordinary Revival Scheme
• Special Revival Scheme
• Loan-cum Revival Scheme
• Survival Benefit cum Revival Scheme
• Revival by Installation Method

How to Nominate Bank Account, Mutual Funds?: Every time an individual fills up a form for an investment, whether it is a mutual fund, shares, fixed deposit, or bank account, there is a separate section to mention a nominee. The nominee is only the custodian of the investment until the legal heir claims them legally. It means that the process of nomination enables the appointed person to take care of one’s investments when he/she dies refers to the nomination. All financial institutions and banks of India have standard processes for settling death claims, where the nomination is specified clearly in the folio or account. Learn more about how to nominate, cancel or change the process of nomination in a bank account and mutual funds.

What Exactly Is the Nomination Process?

The nomination facility permits an investor in a mutual fund or a deposit account holder to nominate an individual who can claim the investment of the safe deposit locker or the earnings of the deposit account. The nominee can be anyone a person considers to be the first relative- spouse, parents, siblings, children, or other. Before nominating anyone, an individual must be familiar to:

• Start of Investment: There is a separate column in an application form. So, a person should appoint the nominee while opening an account or during investment.
• Multiple Nominees: Some investments like mutual funds enables a person to have multiple nominees where he/she can assign money percentage to each of them.
• Minor Nominee: If the guardian is mentioned in the form, then a minor can be a nominee.
• Nominee Change: One can change the nominee assigned at any time or multiple times without even notifying the earlier nominee about the change.
• Cancellation of Nomination: One has the right to cancel the nomination at any time without even informing the individual nominated.

How To Make Nomination in Savings Bank Account?

Nomination is the right of the bank account holder to appoint one or more persons who will be allowed to receive money upon the account holder’s death. While opening the saving account in any Indian bank, an individual can apply for nomination. The opening form of every bank account has a different section for nomination.

• Appoint the Nominee: One should fill the nomination form DA-1 to appoint a nominee for any saving account. A person can appoint a nominee while opening an account or later. If an individual did not nominate anyone during the account’s opening and wants to nominate in the future, then he/she has to visit the bank. From the bank, they will get the DA-1 nomination form. An individual should fill the form and then submit it to the bank.
• Changing the Nominee: In case, if anyone wants to change the nominee made already, he/she has to fill the DA-3 form. One can download the DA-3 form from the official website of the bank or can obtain it by visiting the bank. The form involves the signature of two witnesses. After filling the form, one needs to submit it to the bank.
• Nomination Cancelling: An individual has to fill the form DA-2 to cancel the nomination made already. One can get the DA-2 form from the bank or can download it from the website of the bank. The form that involves two witnesses’ signatures should get submitted to the bank once filled completely.

Making A Nomination In a Bank Account

Some points to remember while making a nomination in a bank account:

• The facility of nomination is available for accounts opened as single or joint accounts. It is not accessible for a representative account. It is vital to note that the nomination forms either for opening, change, or cancellation should get filled up by all joint holders.
• The account holder can add a new nominee during their lifetime. DA-1 form allows the account holder to make a nomination if he/she has not made it yet. This form requires the details of the account holder and the nominee’s information.
• A nominee is eligible to receive the funds on the death of the account holder. In the case of joint accounts, a nominee will obtain the funds on the death of all account holders.

How to Make Nominations in Mutual Fund Investments?

Securities and Exchange Board of India (SEBI) revised its Mutual Funds Regulations in 2002. The regulations amended permit the nomination option to the unitholders of mutual funds. Since that time, Asset Management Company (AMC) offers a facility to the unitholder to choose a nominee in whom the units held by an individual shall vest if he/she dies. However, nomination asset does mean that nominee acquire title or any beneficial interest in the mutual fund.

• Only those individuals can make nomination who are holding or applying for units on their own behalf.
• If the unitholder is choosing a minor as a nominee, then he/she must provide the name and address of the minor nominee’s guardian.
• Nomination is compulsory and since April 2011, different investors are applying in solo holding.
• A non-resident Indian can become a nominee in regard to the force exchange controls from time to time.
• Non-individuals such as trust, partnership firm, society, body, holder of Power of Attorney, corporate, and, Karta of Hindu Undivided Family can neither become a nominee nor can nominate.
• When an individual is a nominee, KYC requirements are not necessary during that time. However, due to the death of the unitholder, when a nominee steps into the shoes of a unitholder, then he/she has to complete the KYC necessities. If the nominee is still a minor at that time, then the guardian should be KYC compliant.
• The process of nomination is at the folio level. If an investor has various schemes in a folio, then all units get transferred to the nominee. The nomination becomes valid to the new units also if an investor makes more investment in the same folio.
• One can select the multiple nominees for mutual funds with a percentage to be allocated to each individual mentioned. In case, if the percentage is less than 100% and there are multiple nominations, then the balance gets rebalanced to the first unit holder. However, if the percentage is more than 100%, then nomination gets forbidden.
• The unit transfer in courtesy of a nominee would be legal discharge as per the asset management company against the legal beneficiary.
• Individuals who hold units on their own behalf or made the original nomination hold a right to cancel the nomination. On the cancellation, the nomination should get considered as canceled. The Asset Management Company should not be any compulsion to transfer the units in the nominee’s favor. Generally, it takes 7 working days from the receipt date of filled forms in the process of change or cancellation of nomination.

Can One Make Nomination Later After Filling the Form?

While filing the form, if someone forgets to appoint a nominee, then they can do it later by filling the form for the Asset Management Company. The investor can request the registrar or transfer agent for the form or can download it from the websites of mutual funds.

Benefits of Nomination Registration

With the registration of nomination, the process of funds transferring becomes trouble-free to the nominee or nominees in the event of the investor’s demise. However, if no nomination is made, the claimant/ heir has to create different documents like a legal heir certificate, a will, or a no-objection certificate from other legal heirs to get the units transferred. Thus, a nomination facility is an efficient way to lessen the hardships of the legal heirs in claim settlement.

Conclusion

Nomination is not mandatory; however, it is advisable to nominate a person in a saving bank account or mutual fund investment. It simplifies the process of claim settlement and gives a nominee right of legal heirs of the investor. One can nominate anyone- an acquaintance, a friend, or a relative.

Premature Withdrawal or Breaking of Fixed Deposit: Fixed Deposits (FD) are long-term deposits with a non-changing interest rate that gives you the accurate amount of your investment in the future. Fixed Deposits are there for a fixed period or till the maturity period. Fixed Deposits are the instruments that provide maximum safety and security and there is no risk of loss. Even if there are fluctuations in the market interest rates, it does not affect your investment. An individual/business can opt to earn the interest on his/their investment periodically. In this article, we will learn about premature withdrawal of Fixed Deposit and other topics related to premature withdrawal of Fixed Deposit.

Premature Withdrawal of Fixed Deposit

Premature withdrawal of Fixed Deposit means the withdrawal of your investment before the maturity period of the investment. This allows individuals/businesses to withdraw their money in the hour of need or if they found better investment schemes/offers somewhere else. Under the guidelines of the Reserve Bank of India(RBI), it is legal to withdraw Fixed Deposit before its maturity period.

Reasons for premature withdrawal of Fixed Deposit

An Individual or a Business may opt for premature withdrawal of a Fixed Deposit if they need money in case of an emergency or they may have found a better and higher rate of interest somewhere else. In case of market fluctuations, when/if the interest rate is higher than the prevailing rate at which the individual/business opened their recent Fixed Deposit, they may opt for premature withdrawal and then open a new Fixed Deposit to enjoy the higher interest rate returns.

Premature withdrawal of Fixed Deposit is severely discouraged by the banks and hence, they may impose a penalty on the interest rates(applicable).

Interest Rate on premature withdrawal of Fixed Deposit

In case of premature withdrawal of Fixed Deposit, interest is paid on the investment to the investor for the period between the date of deposit and the withdrawal date(before the maturity period) of the Fixed Deposit with the bank. A premature withdrawal penalty is also charged during the process.

Let us take the help of an example to understand the process thoroughly;

An individual invests in Fixed Deposits on 1st March 2014 at an 8% interest rate for 5 years. Now due to some reason, he opted for premature withdrawal of his investment after one year i.e. on 1st March 2015. Now, during this investment on Fixed Deposit kept by the bank which was withdrawn prematurely within one year, the interest applicable was 5%. Hence, he will earn only 5% per annum on his investment rather than the original rate of 8% per annum for 5 years.

In some cases, no interest is payable on the premature withdrawal of a Fixed Deposit. For instance;

The State Bank of India(SBI) states that interest of 0.50% below the applicable rate for the period with which the deposit was kept with the bank will be paid below the invested amount of 15 Lacs when there is a premature withdrawal of Fixed Deposit.

The Industrial Development Bank of India (IDBI) has a lock-in period of one year on premature withdrawal of Fixed Deposit which means no premature withdrawal of Fixed Deposit up to one year.

Premature Closure Penalty

Banks impose or charge a penalty of 0.5-1% interest on premature withdrawal of a Fixed Deposit. In case of premature withdrawal of Fixed Deposit during an emergency, few banks relinquish the penalty. The emergencies are not defined exactly by the banks and the freedom from penalty is given on a case-to-case basis. If the individual reinvests the withdrawn amount with the bank, he may get freedom from bearing the penalty.

Let us consider an example to ease up the process;

An individual invested Rs.2,00,000 in Fixed Deposit with an interest rate of 7% for 5 years. The total interest he will receive after the maturity period will be Rs.82,956. Now, the individual’s Fixed Deposit is withdrawn prematurely within 3 years and at that period, the interest rate was 5.75% per annum. Now, taking into consideration the penalty of 1%, he will earn the interest amount on the interest rate of 4.75%(5.75% prevailing rate-1%penalty) which comes to Rs.30,457. So, the total amount including the investment amount becomes Rs.2,30,457.

Penalty Rate In Different Banks On Premature Withdrawal of Fixed Deposit

The Reserve Bank of India provides the guidelines to banks through which the banks can finalize their penalty interest rates on premature withdrawal of Fixed Deposits. It is the duty of a bank to ensure and inform their depositors about the penalty rate they face on premature withdrawal of Fixed Deposit.

Penalty Charges of Some Banks are as follows;

BANK	PENALTY ON PREMATURE WITHDRAWAL
HDFC Bank	1%
ICICI Bank	0.5%-1%
State Bank of India(SBI)	0%-0.5%

How to Withdraw Fixed Deposit Before Maturity?

An individual has to submit the certificate or receipt of Fixed Deposit duly signed by all the account holders at the branch for premature withdrawal of Fixed Deposit. If the individual does not hold the certificate or receipt of Fixed Deposit he/she has to fill in and submit the Fixed Deposit Liquidation form.

If the individual has booked through net banking, he/she can withdraw the Fixed Deposit prematurely through net banking and it is a quite easier process.

When is Breaking off a Fixed Deposit Helpful?

An individual should break off a Fixed Deposit after analyzing all the aspects and factors related to the Fixed Deposit at that particular time. The individual should not just go for a premature withdrawal of Fixed Deposit after noticing a higher rate of interest. Let us study 2 cases that will prove that doing the math to analyze the returns on an investment is crucial.

CASE-1 (Breaking off an older Fixed Deposit)

A person has invested Rs.20,000 to open a Fixed Deposit at a 4% rate of interest for 1 year. Compound interest of 5.25% is earned which comes to Rs.1,050. He withdraws the invested amount within 7 months when the rate of interest was 5%. So, after a penalty rate which is 1%, he will earn an interest amount on the interest rate of 4% which comes to Rs.677. The total value received including invested amount becomes Rs.20,467.

Now, the individual reinvests the amount Rs.20,467 for the remaining 5 months at a higher interest(which is exactly what he went for) rate of 7%. The interest amount he will earn is Rs.602. So, the total amount including the invested amount becomes Rs.21,069.

But, the amount which the individual would have received Rs.21,872(Rs.20,812+Rs.1,050) if he/she didn’t withdraw the Fixed Deposit before maturity. This is the sum of the total value of Fixed Deposit after one year at 4% which comes to Rs.20,812 and the compound interest earned which comes to Rs.1,050. Therefore, an individual should always do his/her math to analyze and interpret all the facts and figures before the premature withdrawal of his/her Fixed Deposit.

CASE-2 (Breaking off a new Fixed Deposit)

An individual has invested Rs.1,00,000 for 4 years at a 5% rate of interest. Now, he withdraws the invested amount within 6 months at a 7% rate of interest. The penalty rate is 1%. He will earn an interest amount on the interest rate of 6% which comes to Rs.3,000. Now, the new Fixed Deposit interest rate is 8% and the new Fixed Deposit duration will be 3.5 years. The new interest amount comes to Rs.33,279 + Rs.3,000 = Rs, 36,279. So, the total amount including the invested amount comes to Rs.1,36,279. If the premature withdrawal didn’t occur, the value of the Fixed Deposit after maturity would have been Rs.1,21,989. Therefore, the individual would have made a profit of Rs.14,290.

Conclusion After Analyzing Both The Cases

Continuation of the Fixed Deposit is the best option when the Fixed Deposit is old and near the maturity period whereas breaking off a new Fixed Deposit is considered best to earn a significant amount of profit but it is still advised to do the math for analysis before breaking off Fixed Deposit.

Alternative to Premature Withdrawal of Fixed Deposit

There is an alternative to premature withdrawal of Fixed Deposit which is taking a loan against the Fixed Deposit. An individual after taking a loan against his/her Fixed Deposit goes through the following;

• He/She will earn the interest on his Fixed Deposit. This implies that the effective rate of interest is around 1-2% on the loan.
• Many banks offer around 70-90% of his/her Deposit as a loan but there are some banks that may offer a higher amount. It depends on the bank and the amount of Fixed Deposit on how much loan he/she will get.
• There is a fee involved which is charged on loan against the Fixed Deposit but only collected by private sector banks and not government banks.
• The Fixed Deposit amount is the maximum limit of a loan tenor to get and can never exceed the Fixed Deposit amount. The individual is not allowed by most of the banks to close his/her Fixed Deposit when he/she is availing the loan. To settle the loan dues, few banks use other Fixed deposits of the individual.
• The individual can select his/her repayment method himself/herself. He/She can payout a fixed amount monthly or as decided with the bank. Few banks even allow the individual to settle his/her loan after the maturity period of the Fixed Deposit.
• There are almost no documents involved and the individual can visit the bank and make a request.

The individual has to pay around 1-2% rate of interest over the interest rate of the Fixed Deposit. Taking a loan against Fixed Deposit is better than the premature withdrawal of a Fixed Deposit. Premature closure penalty is imposed on premature withdrawal of Fixed Deposit which is around 0.5-1% and it is applicable for the period in which the Fixed Deposit was kept with the Bank.

Let us understand this process with the help of an example;

An individual opened a Fixed Deposit of Rs.1,50,000 at an 8% rate of interest for 2 years. He opted for premature withdrawal for some reasons within 6 months duration. The interest rate during that period was 6% and the premature penalty rate was/is 0.5%. So, he earned an interest amount on the interest rate of 5.5% which comes to Rs.4,125. The total amount earned including the invested amount comes to Rs.1,54,125.

If he had invested the Fixed Deposit for 2 years which was the maturity period he would’ve earned Rs.1,75,749 (Rs.75,749 being the amount of interest earned). Now, the individual took out a loan against his Fixed Deposit of Rs,1,00,000 at the end of 6 months on a 9.5% rate of interest and he repaid the principal amount at the end of 1.5 years, he would’ve paid Rs.15,250 as loan interest and net interest income at the end of maturity period i.e. 2 years would be Rs.5,501. So, while the principal amount remains intact, there is a profit even after paying the loan.

Costs Involved in Buying a House: When you finally come across a favourable mortgage offer for the perfect home, you might think that you can afford it for the price you see. You might be able to do so, but other costs are associated with buying a home that people need to know about. These costs extend beyond the mortgage payment.

If you wish to determine how much you can afford for your home, it is essential to factor in the additional expenses. These include charges such as closing costs, insurance, taxes, and these come before committing to a mortgage.

Overview of the Complete Costs of Buying a House

If you are genuinely trying to save up for a house, you need to consider all the costs and plan your monthly expense budget accordingly. The actual price goes well beyond the exact purchase amount. If it is your first time buying a home, you might feel a little extra queasy about the last line of your estimate when it turns out to be several lakh Rupees.

Real estate is one of the most meaningful investments an average person makes. Since banks do not fund the entire cost of the property, you can get up to seventy to eighty per cent of the total cost from them as a loan. If you have the required eligibility criteria depending on your income and credit score, you will get a home loan. Knowing what you are paying for when you buy a home will help you in so many ways. You can make a checklist to ease the process and make yourself ready.

Down Payment

Down payment is the amount of the money that you have to pay upfront rather than financing it through your mortgage. For example, if you buy a home for Rs. 200,000, you will have to put down around Rs. Forty thousand or precisely 20% of the total amount as the mortgage. You can avail of different home loans that give you the down payment you need to pay. It will depend on the property’s variety and the loan type as well.

If you go for conventional home loans, how much you get will depend on the lender and the loan type. You could get three percent, ten percent or more. You can also get home loans without any down payment involved. It is best to do your research about the property you want to buy.

Closing Costs

To finalise the deal on your home loan and get the keys to your property, you need to pay for the closing costs. These are all the fees associated with the mortgage. It can range from two percent to five percent of the loan principal. These include the following fees.

• Application fee
• Appraisal fee
• Credit check free
• Origination and underwriting fees
• Title search fee
• Title insurance see
• Transfer tax fee if applicable

If you don’t have a lot of profits to rely upon, you can get the no closing cost mortgage option where the closing costs are added to the total loan amount or the principal, and you can pay it in the form of higher interest rates. You can save money from either of these plans according to your situation. It can be more reliable if you intend to stay in that home for a long duration.

Property Taxes

People who wish to become homeowners need to pay their city or the government some property taxes on your home as long as you own it. They spend some percentage on the authorities, and it is not always the same price. It differs in different areas and can increase if the property gets a higher market value. If the market value increases, you will have to pay more in property tax.

Again, the property tax is generally included within the monthly mortgage, but you pay it separately from the interest and principal.

Homeowners and Mortgage Insurance

There are two kinds of insurance a new homeowner has to consider; first, the homeowner’s insurance and second, the private mortgage insurance (PMI).

The homeowner’s insurance is there to protect you from financially unexpected incidents that can damage your home. These accidents include natural disasters, theft, vandalism, etc. Most mortgage lenders require you to have the home insurance in some form, though it isn’t necessary, i.e., the law doesn’t require you to have one compulsorily. There are many options for insurance at different price points. Hence, it is best to compare the offers and keep the expenses the lowest while getting most of the benefits.

If you get a conventional loan, then the private mortgage insurance or PMI requires you to generally deposit less than twenty percent down. It is the kind of insurance that protects the lender if you happen to default on the loan. You can also know that it can substantially increase the mortgage payment. As time goes on and you pay down on your mortgage and build the equity in your home, you can eventually get rid of PMI. Home maintenance, utilities and repairs

No matter where you live, you will have to plan some amount for future home maintenance and repairs. The wear and tear of a house are natural, and it is vital to have some extra funds on hand for the future repairing or replacing of appliances, significant structures and systems. Some major maintenance charges come from repairing the roof, HVAC, etc.

Previous homeowners and experts recommend budgeting around one percent of your home’s value for repair and maintenance each year. You can also keep it as an emergency fund to address no-budgeted concerns or urgent requirements as they crop up.

Apart from maintenance, every person will have to spend some money for utilities such as water, sewer, electricity and gas. These costs will depend on your service provider and your location, but the general rule is that the larger the property, the more you will send on the utilities.

Current Home Prices

An undoubted factor in the total cost will be the actual cost of the house. It is the fundamental factor in your overall cost. If you want to buy a home now, then you should expect higher prices and more competition. The prices are always increasing than the previous year. Generally, the costs increase day today. The price you pay in the market can be high or low according to the type of property you buy.

GST for a Property Under Construction

The GST council has taken the real estate area under the GST too. These taxes will be at twelve percent under the current regime. All other indirect taxes will come under the umbrella of the GST and the buyer can purchase the property. The only additional fee is that of the stamp duty. These are only for ready-to-move-in apartments but not on other completed ones.

Process of Buying a Property in India

The typical steps involved in purchasing a property, either through agents or through direct contacts, are as follows.

1. Finalise a property you want to purchase through an agent or your direct contacts.
2. Hire an attorney who will lay out the draft of the Agreement of Sale. It is the legal agreement between the buyer and the seller that mentions the complete details of the property, such as the location, area, amenities, etc. and the final price you agreed upon.
3. After signing the sale agreement, the seller will get a deposit of ten per cent to twenty per cent of the purchase price you will pay.
4. The seller will share the legal title of the documents with you, and in due diligence, the title deeds should be conducted by the attorney.
5. If you want a mortgage loan for the purchase, then you will approach the bank and present them with your property details and the agreement of sale. After they verify the documents, they will process the bank’s fees and determine your eligibility to get a loan. You will get a loan sanction letter stating that they are willing to finance your home purchase.
6. After you have paid the entire amount, then you can go for the registration. The sale deed document has to be registered at the Office of Sub-registrar. You might have to spend on stamp duty and the official registration charges to the government through the office of the sub-registrar.
7. In some states of India, you need to get the ‘Khatta/ Patta’ certificate from the local municipal corporation. When you obtain the Khatta, then all the details of the area, locality, the type of construction will get updated in the governmental records. A legal Khatta/ Patta certificate will identify you as the legal owner of the property. You can use it to pay for the property tax and other municipal taxes.
8. If you purchase a newly constructed apartment or villa, then the builder should get an Occupancy certificate from the municipality. It would help if you had it before moving in there. As the builder receives this certificate, they are legally obliged to let you occupy the property. The certificate will also confirm that the house is suitable and safe for occupation.

Hence, as you can see, there are multiple additional expenditures you have to pay to different entities such as the government, the banks, legal advisors, etc., and most of these charges are mandatory.

Aside from these, if you buy a residential property, you will need to pay some more fees to the builder. Some of them are as follows.

1. Car parking space– The builder will require a fee to let you purchase a parking space for your car. It is a separate charge from the essential construction cost you pay to the builder.
2. Builder Floor Charges– The price for different apartments on different floors is extra. Some are more than others. For example, the topmost floor might cost you lesser than the rest of the floors. Again, it varies from apartment to apartment.
3. Preferential Locality Charges (PCL)- PCL is an extra charge you pay to get a better view of your apartment. For example, if you want a garden-facing view, you pay extra.

Conclusion On Costs Involved in Buying a House

The cost of buying and keeping a house can quickly add up, and you can prepare yourself for the inevitable expenses. The more money you save, the better credit scores you have; you will get the best deals from the mortgages.

One of the primary human needs is shelter. It would be best if you put a lot of effort to plan for a home purchase. If you know what you need to pay for, you will not be overwhelmed by the additional charges and other fees that will keep coming your way.

How to get UAN Missing Details Updated by Employer: UAN stands for “Universal Account Number.” We have created a UAN profile. To withdraw or transfer your EPF account, you have to update your PAN Card Aadhaar Card with your EPF Account (As it is now mandatory to link your Aadhaar Card and PAN Card). But most of the employees can not be able to update their details. They are capable of updating their changed Mobile Number, Email ID, and other KYC documents. But can not update their missing information. To make changes in missing details, the employee can request to the employer. Further, an employer can update the UAN missing details. Updating the missing information does not require the permission of the EPFO Regional office etc.

Check your UAN Profile and Find the Missing Details

You have to visit ‘View -> Profile’ to see your details. Let us take an example of the missing element of the employee’s Father/Husband name and the relation. So, at the time of withdrawal, the employee shows up with the pop-up notification that “Please, update your Father/Husband’s name in member details through your employer or unified portal.”

If you have missed any one of the information (like):

1. Name,
2. Gender,
3. Marital Status,
4. Father’s Name or Husband’s Name,
5. Date of joining,
6. Date of birth, etc

Then you might not update or activate your UAN profile, and hence, you can not withdraw online and update KYC.

Sadly these updates can not be updated by the employee or yourself, but the employer can update the missing details and then approve it.

EPF members can check PF missing details at the UAN portal. In the UAN portal on the right-hand side, we have Member Profile Details to contain the essential missing information there.

You can request your employer to update your missing details. Every employer has the right to add or edit employee’s missing information with the help of the employer portal.

Employer Updates The Missing Pieces of Information In Employee’s UAN Profile

The employer has the company login ID and password through which the employer can access the UAN website and make changes to the respective employee’s missing details.

The employer search for the employee using their UAN Account number or PF Account Number.

The employer and the employee have a different website to access.

Information is available in four tabs (These tabs are open on the employer website):-

1. Profile
2. Missing Details
3. KYC
4. Mark Exit

The employer can make changes by visiting the Missing Detail tab. After entering the invoice, the employer clicks on the ‘Update Missing Details.’

By clicking on ‘UPDATE MISSING DETAILS,’ a notification pops up “following data updated successfully” written on it. Then website asks to approve the missing details of the employee by the employer. After the employer ratifies the details of the respective employee on the website, the website then starts showing the remaining missing information. The employer can view the changes by clicking on “View PDF.” After all the changes, the employer clicks on the “Approved” button.

The final message, “Missing details approved successfully,” appears on the screen. Digital signatures are not required to approve the unified PF.

Pros

• If the EPF member is eligible, then he or she can withdraw the PF amount within 10 to 15 working days.
• If the EPF member is suitable, then he or she can transfer the PF amount within 7 to 10 working days.
• If the EPF member is appropriate, they can advance against their corpus fund and benefit within 5 to 7 days.
• There is no documentation needed for the above.

Cons

• EPF members can not withdraw their money online.
• EPF member can not transfer their EPF account to their new employer PF Account through an online process.
• In case of any emergency, EPF members can not avail of the advance against the PF accumulated.
• The EPF member can not withdraw the PF amount. For claiming the PF amount, the employee needs to submit the claim form with EPFO Office.

StreeDhan: The most widespread evil that has plunged into our society even today is the “Dowry System”. Dowry is the property or any other asset that a woman is offered during her marriage by her parents. Often terms like Dowry, Streedhan, and Alimony are associated with the property of a married Hindu woman. However, there is a significant difference between all of these terms. On the one hand, Dowry is illegal as per Indian laws, and, in contrast, Streedhan is legal.

Everyone, especially women, should have a proper understanding of these terms that will help them to settle any dispute in their married life. In times of settlements in court over disturbances in marriage, women lose their part of the property under emotional pressure.

According to the Supreme Court of India, A Hindu married woman has absolute ownership of Streedhan and can utilise it as per her wish. Even if the property is under the custody of her husband or in-laws, they will be deemed, trustees. And they will be bound to return the same when and as demanded by her. A woman has all rights on the property of Streedhan and can demand it from her husband even after separation.

We are here with this article to help you understand the terms Dowry, Streedhan, and Alimony. Here we will also discuss the comparison between Dowry and Streedhan and the laws relating to women and Streedhan.

What is Streedhan?

Before moving to the laws relating to women and Streedhan, we need to understand the meaning of Streedhan. People often misunderstand Streedhan with Dowry or Alimony, but one should know that Dowry is illegal, forceful, and unethical. On the other hand, Alimony is the right of a woman to support herself after marriage separation.

StreeDhan is an Indian word derived from the combination of two words, “Stree” meaning woman and “Dhan” meaning property. So, to sum it up, Streedhan means the property of a woman. Streedhan may include any property or asset such as land or ornaments before or after her marriage.

As per the Indian Laws and Hindu Philosophy, Streedhan is considered wholly as the property of a woman, and she has full rights on all that comes under Streedhan. A woman can utilise all the property or money under Streedhan in any way she wants. The husband or in-laws of a woman are considered as trustees of the property of Streedhan and cannot use it without the permission of the woman. If they use the property, they have to return it as and when demanded by the woman.

Constituents Or Elements of Streedhan

The concept of Streedhan has been there in Hinduism for centuries, but today, it is seen in all forms of marriage, caste, and religion. The word Streedhan includes all kinds of immovable and movable property received by a woman in her lifetime, and it can be during her maidenhood, marriage, or widowhood. The following are the constituents or elements of Streedhan:

• Gifts such as jewellery made up of gold, silver, diamond, or platinum, any immovable or movable property such as land. It also includes precious items, such as cars, paintings, appliances, artifacts, etc. All other gifts received by a woman before, during, or after marriage are a part of Streedhan.
• The gifts which form a significant part of the Streedhan can be received from parents, relatives, friends, or even in-laws.
• The earnings of a woman before or after marriage also constitute the Streedhan.
• Any investments or savings made her a woman are considered as a part of the Streedhan.
• Any property acquired or inherited by a woman becomes the part of Streedhan.

So, in the points mentioned above, we discussed the things included in Streedhan. Let’s see what is excluded from being considered as Streedhan:

• Any item such as valuable jewellery, or car, etc., gifted to the husband of the woman by her parents at the time of marriage or during the course of the marriage cannot be a part of Streedhan.
• Any movable or immovable property bought by the Husband in his wife’s name and not passed on as a gift to her. Such property cannot be treated as a part of Streedhan.
• Earnings of the woman which she spent willingly on household cannot be claimed as Streedhan.

What Can A Woman Do for Streedhan?

Every woman should be educated about her rights and duties towards property and financial stability. A woman should record all the assets that she has received before, during and after marriage. She should keep a record of all the assets that have been sold or used and all those left with her. They should be aware of the security of their property and take necessary steps in order to protect their Streedhan. Here are some of the precautionary steps that a woman can prefer to keep a check on her Streedhan:

• The first thing a woman can do for her Streedhan is to make a list of all the property or gifts that she received before, during, or after marriage from her husband, parents, in-laws, friends, or other acquaintances.
• A woman should also generate evidence proof of the gifts that she received, and the evidence can be a wedding photograph or bills of the items. She should make sure that the bill is made in her name and are well preserved as proof.
• The women should make sure that they have witnesses who can identify that the property was gifted. Eyewitnesses act as strong evidence in the court of law.
• Every woman should take part in family financial decision-making and always keep a record of her Streedhan being utilised by the family members.
• For the security of her valuables, a woman should keep them in a bank locker.
• A woman can ask her parents to gift her an income-generating property rather than an expensive consumer good. The proof for income-generating property can be easily acquired than an expensive consumer good.
• A woman should make sure that all the property and investments bought from her Streedhan are entitled in her name to avoid future disputes.
• Lastly, an earning woman should maintain a separate account for her salary or business-related income.

Tax And Laws On Streedhan

Streedhan is always in the form of a gift, i.e. it is offered to a woman without consideration or return thereof. Hence, there is no provision for Stredhan under the Income Tax Act. In the Indian court of law, Streedhan is used to protect the property possessed by a woman.

As we know, every citizen of India is liable to pay income tax as their duty. Similarly, if a woman is earning and has received property as a gift from her parents, that property would be added to her asset and computed for tax purposes.

Now moving on to the laws of Streedhan, to ensure that a woman’s right to property is safeguarded, The Supreme Court has made certain laws and regulations. As per the laws, any person who tries to prevent women from exercising their rights on Streedhan can be punished and penalised. Some of these laws include:

• Hindu Succession Act 1956: According to section 14 of the Hindu Succession Act 1956, Streedhan is the property acquired by a woman during her marriage. She acts as the sole owner of the property, and her husband or any other person does not have any share in the property. If the property is under the custody of her husband or in-laws, then they have to return that property to her as and when demanded.
• Domestic Violence Act 2005: According to section 3 of the Domestic Violence Act, 2005, If a husband or any other in-laws of a woman deny her to give the property of Streedhan, they could be held under custody and punished strictly as it accounts to economic abuse of the woman. The law is also made to protect women from any form of physical, mental, sexual, verbal, or economic abuse.
• Criminal Breach of Trust, IPC: Section 405 of the Indian Penal Code, deals with the matters relating to dishonesty and misappropriation of Streedhan and protection of woman from breach of trust. According to section 405, if a woman’s jewellery or other valuable items are misappropriated by her in-laws, in such a case, the woman can take legal action, and the court can punish the in-laws.

Comparison Between Streedhan, Dowry, And Alimony

Streedhan, Dowry, and Alimony are there separate and different terms but are often misunderstood. These three terms must be understood clearly to give clarity to a woman at the time of disputes. Streedhan is a legal concept and part of our society that deals with women’s empowerment and property rights. In comparison, Alimony is the right of a woman after the separation of her marriage. The husband is liable to pay a certain sum of money or property to his wife as Alimony to support her and the children after their separation. It is also a legal concept as per the Indian Court of Law. On the other hand, Dowry is an evil and illegal practice in our society. Dowry can be defined as the forceful demand of property or money from the bride’s parents or family during a marriage ceremony.

However, there are laws for all three that safeguard a woman from the Dowry system and help them to exercise their rights over Alimony and Streedhan freely. Let’s see all the differences and similarities between Dowry, Streedhan, and Alimony;

Basis of Comparison	Streedhan	Dowry	Alimony
Definition	Streedhan can be defined as the property or asset that a woman receives during her lifetime. She is regarded as the sole owner of the property.	Dowry can be defined as a system where the Groom’s family demand money forcefully from the Bride’s family during the marriage.	Alimony can be defined as the money or property offered by a husband to his wife to support her after their separation.
Received From	Streedhan is generally by a woman as a gift from her parents, relatives or any other acquaintances.	Dowry is received from the bride’s family.	A woman receives Alimony from her husband after separation.
Legality	Streedhan is considered legal in the Indian society	Dowry is an evil practice and is strictly against legal practices	Alimony is again a legal concept in the Indian Court of Law.
Obligation	Streedhan is given to a woman out of love and affection by her close ones.	The Groom’s parents or in-laws forcefully acquire Dowry.	A husband gives Alimony to his wife as his duty towards her.
Rights To Claim	Streedhan can be claimed legally by a woman at any time, maybe before or after marriage.	Dowry has no legal rights to be claimed by any person.	Alimony can be claimed by a woman only after separation from her husband.
Requirement to claim	As per law, to claim Streedhan, the property should solely belong to a woman.	Dowry can not be claimed as it is illegal.	Alimony can be claimed by a wife only if there is a substantial difference between the income of the husband and wife.
The Time to Avail	A woman can avail of Streedhan at any time.	Dowry should not be availed or claimed by anyone, but the Groom’s family mainly claims it during the marriage.	Alimony can be availed by a woman only after separation from her husband.

What Is Auto Sweep Bank Account: Banking facilities in modern times have seen an enormous number of developments. Today, we can operate our bank accounts simply sitting at home or anywhere in the world. All these developments in the banking systems have opened a lot of risk-free investment opportunities for the public, such as Fixed deposits, Recurring Deposits, Savings account deposits, etc. But, these deposits yield a lesser interest as compared to that of stocks, debentures, etc. People must be aware that money kept idle in a savings account never grows, and it hardly earns an interest of 4% on average.

Today, people search for the best and risk-free investment opportunity to earn them a lot of profit in less time. In search of such opportunities, they often turn to more complicated investments and ignore the simple and easy ones. Auto Sweep Bank facility is one such easy and simple investment activity provided by banks that converts your savings bank deposits into fixed deposits, thus generating a more significant percentage of interest.

Auto Sweep bank facility is most recommended for people who want to earn more interest on their savings bank deposits. With the Auto Sweep facility, one can have the ease of withdrawing money combined with a higher rate of interest on fixed deposits linked with the savings account.

This article will discuss the Auto Sweep Bank Account, how does an Auto Sweep bank facility works, and other terms related to Auto Sweep Bank Accounts.

Basics of Auto Sweep Account

Auto Sweep Bank account can be defined as a combination of a Savings account and a Fixed Deposit account. When one opts for an auto sweep facility, the bank links the savings account of that person to a fixed deposit account. In the process of auto sweep facility, the amount above a certain limit in the savings account is automatically transferred into a fixed deposit account, earning a greater rate of interest. Being a combination of a savings account and a fixed deposit, auto sweep facilitates both withdrawal and investment of a person’s fund simultaneously.

With the Auto Sweep facility, when the balance in the savings account becomes low, the fixed deposit thus created would be broken down to move the amount into the savings account. While savings account yield an interest of 4%, fixed deposits earn up to 8% interest per annum, and with a sweep facility, a person can enjoy the benefits of both.

Working of Auto Sweep Bank Account

When a person opts for an auto sweep account facility, he/she is offered to choose a limit of the amount which he/she wants to be held in his/her savings account. Thus, the limit chosen is called the threshold limit, and any money above the threshold limit is transferred to the fixed deposit account. The banking term for the transfer is “sweep out.” In an Auto Sweep account, both the deposits earn interests differently.

The key advantage of a sweep account is that the money never loses its liquidity, i.e., it can be withdrawn at any time without losing the interest on the fixed deposit of the auto sweep. The money withdrawn in an auto sweep facility is from the threshold limit and not from the fixed part. Let us take some examples to help you understand better.

Let’s take the example of Raghu, who has an auto sweep account with a minimum balance of ₹3,000 and a threshold limit of ₹30,000. The interest on his savings bank account is 4%, and on 1st June, he has ₹22,000 in his savings account.

Now, the points mentioned below are to be considered:

• On 1st June, as it is seen, Raghu has a balance of ₹22,000 in his account. So, this amount will remain on his savings account, earning him 4% interest as the amount is below the threshold limit.
• On 10th June, Raghu deposits another ₹20,000 in his account. Now, his total balance is ₹42,000, which is more than the threshold limit. The excess amount, which is ₹12,000, will be transferred to a fixed deposit, and the remaining ₹30,000 will continue to be in the savings account.
• On 14th June, Raghu withdraws ₹10,000 from his savings account. The withdrawal won’t affect his fixed deposit amount.
• On 16th June, Raghu draws a cheque of ₹30,000, but his savings account balance is ₹20,000. In such a case, the bank won’t dishonour the bill, but it will break the FD and deposit the money back into the savings account.

So from the above example, it can be seen how an Auto Sweep account works.

Terms Related To Auto Sweep Account

In earlier paragraphs, we discussed the basics and working of an auto sweep account. Now, let’s understand some of the basic terms related to auto sweep account.

• Threshold Limit: The threshold limit is the amount set by a person opting for a sweep account. It is the amount to be held in the savings bank account, and the bank will transfer any amount exceeding the threshold limit to the fixed deposit.
• Sweep Out: Sweep out is the most common term used in a sweep account. It signifies the transfer of money above the threshold limit to the fixed deposit. In banking terms, it is also called a Sweep.
• Sweep In: When money from the fixed deposits is transferred to the savings account to facilitate withdrawals, it is termed Sweep In. It is also called a reverse sweep, as it is a reverse transfer of money from FD to savings.
• The tenor of Fixed Deposit: The period or tenor of the deposit varies from bank to bank. Some banks allow only one year of fixed deposit in an auto sweep facility, while others allow a flexible maturity period.
• LIFO and FIFO: These are the standard methods adopted by banks while breaking FDs in Auto Sweep accounts. LIFO means Last In First Out, and in this method, the most recently created FDs are broken first to be transferred to the savings account. In contrast, FIFO means First In First Out, and under this method, the first created FD is broken and transferred to the savings account.

Breaking FD In Auto Sweep Bank Account

Auto Sweep accounts may seem convenient as it utilizes the excess money lying idle in the savings banks account thus earning a higher interest rate. In auto sweep accounts, when money is deposited in excess of the threshold limit in a savings banks account, it is automatically transferred into a fixed deposit account. The threshold limit in a bank can be anywhere between ₹25,000 to ₹1,00,000. However, it differs from bank to bank and also depends on the customer.

The FD thus created under the auto sweep account will have a minimum maturity period. But, when the savings bank account falls short due to withdrawals, the amount from the FD is broken and transferred into the savings account. However, it should be noted by the customer that frequent withdrawals from the FD might lead to a loss of profits or interests. Here are the points banks consider while calculating interest on FD in auto sweep:

• The interest on FD in an auto sweep account is calculated based on the number of days the FD was in the bank. For example, an FD has one year period for maturity, but it is liquidated with 24 days, then the interest would be calculated for 24 days.
• Banks apply a penalty on premature FD withdrawals. The penalty is between 0.5-1% of the total interest.

Tax On Auto Sweep Account Interest

Interest earned on bank deposits is taxable under the Income-tax act. In auto sweep accounts, there are different rates of interest for both accounts that create complications during tax filing.

In an auto sweep account, the interest earned under a savings account is exempted up to ₹10,000 under section 80TTA of the income tax act. In contrast, interest earned on fixed deposits is taxable as per the income tax slabs. In addition, if the interest earned on a fixed deposit exceed ₹10,000 in a year, then a TDS rate of 10% is applicable on the total interest amount.

Demerits of Auto Sweep Bank Account

Like every coin has two sides similarly, auto sweep accounts also have certain disadvantages with all the advantages. Here, we have listed some of the disadvantages of an Auto sweep account:

• Most of the time, the interest rates of regular Fixed deposit and auto sweep fixed deposit is equal. But, banks charge a penalty rate on the fixed deposit of auto sweep account in case of premature liquidity of the deposits.
• In some cases, banks adopt a simple interest method on the fixed deposits in an auto sweep account. In contrast, the compound rate is charged on regular fixed deposits.
• When a person creates multiple FDs under an auto sweep account, his/her rate of return might be affected due to the order of breaking of the FDs.
• Interest earned on FDs in auto sweep account is taxable as per the income tax slabs.