Monday, July 29, 2013

Enrol with credit info firms, RBI tells RRBs




BL :KRSrivats:28july 2013

This move comes in the wake of large number of RRBs not becoming members of any credit bureaus despite a specific legal requirement since December 2006.

The law governing credit information companies requires every credit institution to become a member of at least one credit information company.

As RRBs are also credit institutions, they are required to take membership of at least one credit information company.

Currently, India has three main credit information companies — CIBIL, Experian and Equifax.

Welcoming the RBI's latest directive, Sanjay Patel, Managing Director and CEO, Equifax Credit Information Service, said his company was eager to grow in the RRB space.

As for the benefits, Patel said a credit bureau such as Equifax can help RRBs in booking better quality assets and managing their existing asset quality.

This can help reduce the NPAs (non-performing assets) in the segment and monitor the delinquency among rural customers across lenders, Patel told Business Line.

JRD TATA




Quote by JRD Tata

"Take your decision and go-ahead. Rest, the experiences themselves will teach you more as you proceed ahead in life." - JRD Tata 

J.R.D. TATA 
(1904 - 1993)
Born in Paris in 1904, J.R.D. Tata had his early education in France, Japan and India. He began his career as an Assistant with Tata Sons Limited in 1922. He was made a Director of the Company in 1926 on the death of his father, R. D. Tata, and in 1938 became its Chairman.


With his charismatic leadership, Tata has contributed to the industrial development of India for over 53 years. He passed on the Chairmanship of Tata Sons to his younger colleague, Ratan N. Tata, on March 25, 1991 and was unanimously elected by the Board of Tata Sons as Chairman Emeritus for life.

Till he passed away in Geneva on November 9, 1993, he was Chairman Emeritus and Director of Tata Industries Limited, The Indian Hotels Company Limited and The Tata Oil Mills Company Limited. He was also Chairman Emeritus of Tata Chemicals Limited and a Director on the Board of The Tata Iron and Steel Company Limited, The Tata Engineering and Locomotive Company Limited, Tata Unisys Limited, Tata Incorporated, New York and Tata Limited, London.

Widely recognised as the founder of civil aviation in India, J.R.D. was the first pilot to qualify in this country and held a Pilot’s License since March 1929. In 1932, he founded India’s first national carrier, Tata Airlines, renamed Air-India Limited in 1946 and personally piloted the Karachi-Bombay sector of its inaugural Karachi-Madras service on October 15. In 1948, J.R.D. founded Air-India International Limited as a joint venture with the Government of India to undertake long-range international operations, which he headed as Executive Chairman until it was nationalised in 1953. On his recommendation, the Government of India created two air corporations, Air-India and Indian Airlines, to run international and domestic operations respectively. He was appointed Chairman of Air-India, which position he held till February 1978. To commemorate the 50th anniversary of Indian civil aviation, J.R.D. at the age of 78 re-enacted his inaugural flight of 1932 in a 50-year old De Havilland Leopard Moth on October 15, 1982 to instill a spirit of adventure among the younger generation. His simple minded devotion to every aspect of the airline was legendary.

J.R.D. Tata was the recipient of several awards for his contribution in the field of aviation. He was made honorary Group Captain of the Indian Air Force in 1948 and was elevated to honorary Air Commodore of the IAF in 1966. Several international awards for aviation were given to him - The Tony Jannus Award in March 1979, the Gold Air Medal of the Federation Aeronautique Internationale in 1995, the Edward Warner Award of the International Civil Aviation Organisation, Canada in 1986 and the Daniel Guggenheim Award in 1988.

Millions regarded J.R.D. as a symbol of integrity and forth righteousness as the country’s most distinguished and adventurous citizen. In 1943, J.R.D. spelt out the structure of industrial relations in Jamshedpur. He felt that companies took greater care of their machines than of their men. This resulted in the establishment of the Personnel Department of Tata Steel and because of the partnership between labour and management at various levels.

When J.R.D. took over the Chairmanship of Tata Sons, the Group had 14 companies, and when he completed his half a century at the helm on July 26, 1988, there were nearly 95 enterprises which Tatas had either started or had a controlling interest in. Under his stewardship the Group has expanded to cover a range of power, engineering, hotels, consultancy services, information technology, consumer goods, consumer durables and industrial products.

J.R.D. has over the years crusaded with causes which he believed to be in the national interest, such as family planning and population control. His contribution in the sphere of population control received due recognition when he was given the UN Population Award in September 1992. He also firmly believed that through the rapid spread of literacy and education, particularly among women and children, would help in raising the standard of living of the people of India. He is Founder Chairman of the Family Planning Foundation.

His interest in science is reflected in the pivotal role he played in the establishment of the Tata Institute of Fundamental Research of which he was the Chairman of the Governing Council. He has been a Member of the Atomic Energy Commission since its inception, and is President of the Court of the Indian Institute of Science, Bangalore. He was on the Governing Council and the Executive Committee of the Rajaji Institute of Public Affairs and Administration.

His broad concern for education is seen in the interest he took as Chairman of the J. N. Tata Endowment for the Higher Education of Indians and the Homi Bhabha Fellowships Council. He was the Chairman of the Sir Dorabji Tata Trust, the J.R.D. Tata Trust and the Jamsetji Tata Trust.

J.R.D. was the recipient of several national and international honours and decorations, including the Padma Vibhushan; French Legion of Honour (Commander); Order of Merit of the Federal Republic of Germany (Knight Commander’s Cross); Institute of Metals, London (Bessemer Medal); Dadabhai Naoroji Memorial Prize Fund (Dadabhai Naoroji Memorial Award) and Honorary Doctorates from the Universities of Allahabad, Benaras, Bombay and Roorkee.  J.R.D. was the recipient of the Bharat Ratna, the highest civilian honour bestowed by the Government of India on Republic Day, 1992.

Last 3 days to file I-T returns: 7 changes you must be aware of



Reuters
Reuters

 FP :Bindisha Sarang Jul 29, 2013

Change is inevitable – except from the vending machine, is a funny internet one-liner. But, at times a few minor changes do impact life, take for instance the ones in filing your income tax returns (ITRs). As usual, this year too the income tax (IT) department has brought about a few such changes which you have to be aware of while filing your ITRs. To know more, read on.
The most important change this year is with compulsory e-filing.
Filing returns online was compulsory for firms, companies and individuals earning more than of Rs 10 lakh last year. This limit has been brought down to Rs 5 lakh this year, that is assessment year 2013-14. “E-filing is compulsory for people earning more than Rs 5 lakh. This is total income i.e. income amount after claiming tax deductions such as Section 80 deductions,” said Archit Gupta, Founder, Cleartax.in, an online e-filing portal. So, if you fall in this category, you can e-file your ITRs at the tax department’s website or use portals like Cleartax.in, Taxspanner.com, or Myitreturn.com, to name a few.
Reuters
Another change is in the forms you have to fill. While choosing the form many choose the ITR 1 form, but going forward if you have exempt income exceeding Rs 5,000, you will have to choose the ITR2 form. Common examples of exempt income, is interest earned from Public Provident Fund (PPF), dividend earned from shares, interest earned form tax free bonds and the like. So, ensure you choose the correct form, you can get more info here.
Last year, the IT department had said that all those who hold foreign assets have to compulsorily e-file. You had to provide details of all foreign assets on the form and this was brought about with a new schedule in the ITR2 and ITR4 forms. This year, you will have to give details of all income earned from foreign countries on your relevant the ITR form. This is over and above the declaration of all foreign assets which you have to declare on your ITR form.
There is a change in the declaration of assets and liabilities for business people. “If you earn income from business or profession and your total income exceeds Rs 25 Lakh, you have to provide the details of all your personal and business assets and liabilities in the ITR form itself. This is for people filling in ITR-3 and ITR-4,” said Gupta.
The budget for 2011-12 had added a new section 80 TTA in tax rules, under which you will be able to get a tax benefit for interest income of up to Rs 10,000 from savings accounts in any bank. For this, you just need to declare you interest income. Keep in mind, it’s for savings account and not for savings-cum-FD accounts aka sweep-in accounts.
*Another minor, but important change comes in the bank account detail that you have to provide on the ITR form. From this year, you don’t need to provide the 9 digit MICR number, instead you will have to give your branch’s IFSC code. You can get this code from your bank’s website. Also, if you are eligible for a refund, you can also get it directly transferred (ECS) into your account. But you have to provide a 11 digit bank account number. If your bank account number is not 11 digits, then you will receive the refund via a cheque at your mailing address.
* And finally, from this assessment year, you can claim within the existing limit a deduction of up to Rs 5,000 for preventive health check-up. So if you have done any kind of preventive health check-ups, like blood tests and the like, keep the bills and you will be able to use the same to get a tax deduction. There is a good possibility you’ve missed claiming this deduction, make sure you make use it while filing returns.
These are a few changes you should be aware of while filing tax returns. The IT department is getting stricter by the day. We suggest you take the help of a tax professional or tax portal to ensure you get it right.

All lending banks have been advised not to accept any fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques





RBI/2013-14/158
DPSS.CO.CHD.No./209/04.07.05/2013-14
July 24, 2013

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks/Local Area Banks

Madam / Dear Sir

Migration of Post-dated cheques (PDC)/Equated Monthly Instalment (EMI) Cheques to Electronic Clearing Service (Debit)

We invite a reference to our circular DPSS.CO.CHD.No.1622/04.07.05/2012-13 dated March 18, 2013 wherein all lending banks have been advised not to accept any fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques in locations where the facility of ECS/RECS (Debit) is available and convert existing cheques in such locations into ECS/RECS (Debit) by obtaining fresh mandates.

2. However, instances of banks obtaining fresh cheques (both CTS-2010 and non CTS-2010 standard) in locations where the facility of ECS/RECS is available have been brought to our notice, thus necessitating a reiteration of our earlier instructions in this regard.

3. Accordingly, banks are advised to adhere to the following instructions with immediate effect:
No fresh/additional Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted in locations where the facility of ECS/RECS (Debit) is available. The existing PDCs/EMI cheques in such locations may be converted into ECS/RECS (Debit) by obtaining fresh ECS (Debit) mandates.

As indicated in our circular DPSS.CO.PD.No.497/02.12.004/2011-12 dated September 21, 2011, Section 25 of the Payment and Settlement Systems Act, 2007 accords the same rights and remedies to the payee (beneficiary) against dishonor of electronic funds transfer instructions under insufficiency of funds as are available under Section 138 of the Negotiable Instruments Act, 1881. Considering the protection available, there is no need for banks to take additional cheques, if any, from customers in addition to ECS (Debit) mandates.

Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS/RECS is not available.

4. The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).


5. Please acknowledge receipt.

Yours faithfully

(Vijay Chugh)
Chief General Manager

Saturday, July 27, 2013

Some Income tax provisions to know, to avoid service of I-T notice at your door


CA Sunil Hukkeri : T G :27 july 2013

Central Processing Center of IT department is smart to detect small transactions also
CPC for electronic tax returns in Bangalore and CPC (Vaishali in Ghaziabad) for tax deducted at source (TDS) are working as the right hands of Government for detecting cases of incorrect income reported by tax payers knowingly or unknowingly.  It was published by leading news paper that some of Assessee received notices for filing incorrect return of income or for not furnishing correct particulars of income like not reflecting income from other sources, claiming deduction twice and so on
…………
Till now the mindset of tax payers towards income tax notice was “bite will not be followed by bark” but because of above matching concept it can be read as “bite will be followed by bark”. Therefore it is always better to file return of income and also to know some provisions of income tax before the income tax notice is at your door.

File your return of Income Voluntarily before due date :-

The due date for filing return of income for assessment year 2013-14 is as follows
I.A company which is required to furnish transfer pricing report u/s 92E30th November of relevant Assessment Year.
II.i. Any other company (other than company referred to in point I. above)

ii.i. Any other company (other than company referred to in point I. above)ii. Any person whose accounts are required to be audited under income tax act or any other lawiii. Any working partner of a firm whose accounts are required to be audited.


iii.
 Any working partner of a firm whose accounts are required to be audited.
30th September of relevant Assessment Year.
III.Any Other Tax payer (other than above) This includes salaried employees 31st July of relevant Assessment Year.
If return is not furnished within the time then file belated return:-

Belated return of income: – If return is not furnished within the time allowed under section 139(1) or within the time allowed under notice issued under section 142(1), the person may before assessment is made, furnish return of any previous year at any time before end of one year from end of relevant assessment year.

Example 1: -
For financial year 2012-13 relevant assessment year is 2013-14. In case a person who has not filed the original return of income in pursuance of section 139(1) [i.e. before 31st July-2013], a belated return can be filed under section 139(4) on or before 31st March 2015.

If a return is submitted after the due date, then following consequences gets attracted:
1. The assessee will be liable for penal interest under section 234A.
2. A penalty of Rs 5,000 may be imposed under section 271F for failure to furnish return of income before the end of relevant assessment year.
Example 2:-
If there is failure to file return of income on 31st July-2013 then it can be filed on or before 31st March 2014 along with interest if any but without penalty.  But if you file return after 31st March-2014 then you are triggering the provisions of section 271F in which case penalty has to be paid.

Interest for late filing or non furnishing of income tax return. (Section 234-A)
For delay in furnishing income tax return, a simple interest @ 1% for every month or part thereof from the due date of filing of the Return to the date of furnishing of the return & in case return is not filed, it is up to the date of completion of assessment u/s 144. The interest is calculated on the amount of the tax on the total assessed income as determined under sub-section (1) of section 143 or on regular assessment u/s 143(3) as reduced by the Advance Tax, if any, paid and any tax deducted or collected at source.

Example 3:-
Interest under section 234A is not levied where tax has been deposited prior to due date of filing return even if return is filed after due date of furnishing return of income provided the return is not filed for reasons beyond the control of Assessee as was held in case CIT v. Pranoy Roy. In absence of information to file tax return this option seems to be good to save interest on tax.
If there are omissions or wrong statements in return of income then what to do.

A return can be revised provided it is filed first under section 139(1) or filed in response to notice issued under section 142(1). It means you cannot file revised return in other situations. Even the belated return filed above cannot be revised. Revised return of income can be filed within one year from the assessment year or before completion of assessment.

Example 4:-
A revised return can be filed only if omission or wrong statement in original return must be due to a bona fide inadvertence or mistake on the part of assessee. If you have filed original return knowingly false then in that case return cannot be revised [ Sunanda Ram Deka Vs CIT ]

Penalties for default in furnishing inaccurate particulars or concealing income particulars in return of income
Return of income filed concealing particulars of income or furnishing inaccurate particulars of income is liable for penalty
Minimum penalty :-  100 % of tax sought to be evaded  OR
Maximum penalty: – 300% of tax sought to be evaded.
Example 5:-
Incorrect calculation of capital gains on basis of mistaken indexation cannot be treated to be an indirect concealment or a wrong furnishing of particulars [ Udayan Mukherjee v CIT 2007]
Few other examples which may help you:-
Example 6 Always be member of a recognized provident:-
An employee, who is member of recognized provident fund resigns from company having recognized provident fund before completing period of 5 years of continuous service, should join a Company which also has recognized provident fund. This will ensure that accumulated balance of provident fund with former employer will be exempt from tax, provided the same is transferred to the new employer who also maintains a recognized provident fund and balance period of 5 years is under gone under new employer.
The balance in recognized provident fund due or payable to salaried employee will be EXCLUDED FROM HIS TOTAL INCOME in the following situations.
a)    Continuous period of service for 5 years :-
If accumulated balance includes any amount transferred from his individual account in any other recognized provident funds maintained by his former employer then, in computing the period of 5 years, the period for which the employee rendered continuous service to his former employer is also to be included.
b)    Continuous service of 5 years not fulfilled beyond the reach of employee :-
If continuous service of 5 years is not rendered due to ill health  or by reason contraction or discontinuance of employers business or due to some other reason beyond the control of employee.
c)    Retirement and joining with company having recognized provident fund: -
After retirement if employee obtains employment with any other employer ensure that accumulated balance of provident fund with previous employers get transferred to his individual account in any recognized provident fund maintained by new employer.
IF PROVIDENT FUND balance becomes taxable due to not complying with above conditions then total income of employee will be recomputed by income tax department as if the fund was not recognized from beginning.
Consequences if above conditions (a) to (c) are not satisfied:-
Payment received for employee’s own contribution: – Is exempt from tax.
Interest on employee’s contribution :- Taxable under head “Income from other sources”
Employers contribution and interest there on :- Taxable under the head “Salaries”
Example 6 More than one house for own residence:-
If employee has more than one house for his own residence, only one house as per his selection will be considered as self occupied property and other house will be treated as deemed to be let out property. For example employee owns two or more house properties meant for self occupation, he can select to treat one such house property as self occupied. The remaining houses shall be deemed to be let out properties. This option can be changed year after year in manner beneficial to assessee.
Now next question is which house to be selected as Self occupied property :-
House with the higher gross annual value to be selected as self occupied property. By doing this automatically house with lesser gross annual value shall be liable to tax as deemed to let out property. In addition to this, one more aspect to be considered before selecting the self occupied property i.e. the amount of interest on borrowed loan in respect of each property can be claimed without any limit in case of deemed to be let out property as against restricted limit of Rs 150,000 in case of self occupied property.
Example 7 Housing Loan from outside India :-
In case of interest paid on housing loan from outside India, benefit under section 24(b) is available only if the interest is paid after tax deduction. To get deduction for interest it should be ensured that interest is paid after deduction of tax.
Example 8 Capital Gains :-
To minimize the tax incidence on transfer of capital assets, tax payers should plan to transfer the capital assets after 36 months in which indexation benefit is available. In case of share, securities, Units of UTI, the period of holding should be more than 12 months.
Further, it is always beneficial for the tax payer to transfer long term capital asset at the beginning of the financial year instead of at end of the previous financial year. By doing so tax payer can claim cost inflation of next year which will be higher than cost inflation of previous year.
Example 9 Deduction in respect of life insurance premium:-
In case of Individual a policy may be taken on his own life, life of spouse or any child (child may be dependent / independent, male / female, minor / major or married or unmarried).
In case of Hindu undivided family, policy may be taken on the life of any member of the family.
Minimum period of holdings is two years for life insurance premium. In other words if life insurance policy is terminated before completion of two years then the quantum of deduction already taken in the preceding years would be deemed as income of tax payer in the year in which LIC is terminated.
Similarly minimum holding period of different periods is applicable for Unit Linked insurance plan [five years], Cost of purchase of residential house property [five years], Time deposits in post office [five years], Deposit under senior citizen saving scheme [five years].
Tax payer has to ensure that premium paid in any year during the term of policy should not exceed 20 % of actual sum assured for 80C deduction.
Example 10 Exemption for sum received from LIC: –
Any sum received on life insurance policy (including bonus) is not chargeable to tax.
This exemption is not available in respect of any sum received under insurance policy which is issued after 31st March-2003 in respect of which any premium paid in any year during the term of policy, exceeds 20 % of actual sum assured.
Any sum received on death of person under policy is exempt from tax even if premium paid exceeds 20 % of actual sum assured is exempt from tax.
The premium value which is agreed to be returned or benefit given by way bonus (or otherwise), over and above the sum actually assured, which is received under policy by any person, shall not be considered for purpose of determining the actual capital sum assured.
Illustration: – An employee took life insurance policy worth Rs 10.00 lacs. He paid a sum of Rs 5 lacs in 2009-10; Rs 2 lacs in 2010-11; Rs 2 lacs in 2011-12 and Rs 1 lac in 2012-13 as premium over the life of insurance policy. Policy amount has been received to extent of Rs 12 lacs.
In this case, exemption under section 10 (10D) will not be given as premium paid 2009-10 is more than 20 % of life insurance sum assured. Accordingly the amount of income accruing on policy less premium paid will be subject to tax. Therefore, Rs 2 lacs is taxable. [i.e Rs 12 lacs sum assured less 10 lacs premium paid]
Example 11 Lowering of tax incidence on retirement benefits:-
Incidence of tax on retirement benefits like gratuity will be lower if they are paid in beginning of the financial year. Therefore try that retirement, termination, or resignation takes place in beginning of financial year.
Example 12 Perquisites other than electronic items, cars, computers:-
If employer gives perquisites in respect of movable assets (other than electronic items, cars, and computers) after using it for 10 years or more are not taxable.
Employee can get these benefits without paying any tax on perquisites.

Example 13 Capital gains account scheme:-  (herein after called as “CGAS”)_

There are few sections [** see below] under head “Capital Gains” where capital gains are exempt if such gains are re-invested in purchasing eligible assets within time limit prescribed in those sections. In cases where the purchase of these eligible new assets is not made before the date of furnishing the return of income then the unutilized amount is required to be deposited in account called “CAPITAL GAINS ACCOUNT SCHEME”
[**] For example section 54 [transfer of residential house], section 54B [transfer of land used for agricultural purpose] section 54F [transfer of long term capital asset other than house property]

IMPORTANT NOTE 1 for CGAS: –
Deposit in CGAS shall be made before filing return of income or within the due date for furnishing the return of income whichever is earlier. In case if return is not filed then assessee should ensure to deposit unspent amount in CGAS on or before 31st July-2013.
IMPORTANT NOTE 2 for CGAS: –
The deposit shall be made in an account with a bank or institution approved for purpose.
IMPORTANT NOTE 3 for CGAS: –   
The amount deposited to be withdrawn for utilization in accordance with scheme for specified purpose & the copy of proof of such deposit should be always be kept with you.
IMPORTANT NOTE 4 for CGAS: –   
If the amount is not utilized fully for reinvestment of eligible assets within the prescribed period mentioned in section 54, 54B, 54F then amount not so utilized shall be treated as gain of previous year in which the time period given for reinvestment in eligible assets expires.

Last but very important  :- 

Always keep the backup of documents, receipts, tax challans and some other documents based on which benefit is claimed in return of income because later on some surprise notice are expected from department.

The above content is general information and is not intended to be advice on any particular matter.

Reader should seek appropriate professional advice before acting on basis of above information.

Home loans – A primer


BB : 27 july 2013


Home construction loans are used to finance for the construction of newly acquired home or if you are planning to build a home. But, with so many home construction loans available in the Indian market you should decide the best one that would suit you the most and is favorable to you.


There are different types of home loans tailored to meet one’s needs. The most important thing is one should know each and every term related to Home Loans before applying for a loan. It is always advisable to consult a home loan expert or financial consultant before applying for a home loan or purchasing a property.\

You can take different types of home loans like Home construction Loans, Mortgage Loans, Home Extension Loans, Home Improvement Loans, Bridge Loans, Land Purchase Loans etc for different schemes available in the market.
  • Home Purchase Loans: These are the basic forms of home loans used for purchasing of a new home.
  • Home Improvement Loans: These loans are given for implementing repair works, healing and renovations in a home that has already been purchased.
  • Home Construction Loans: These loans are available for the construction of a new home.
  • Home Extension Loans: These loans are given for expanding or extending an existing home. For eg: addition of an extra room, etc.
  • Home Conversion Loans: These loans are available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.
  • Land Purchase Loans: These loans are available for purchasing land for construction purposes. But there are some strict rules related to this loan, though, as earlier many investors has used this loan for leveraging their investments and then selling the land in a short time.
  • Bridge Loans: A short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. The loans are short-term (up to one year) with relatively high interest rates and are backed by some form of collateral such as real estate or inventory.
What are Home Improvement Loans?
Home improvement loans are used to finance improvements and add on to the existing set of credentials of beauty on your owned house, recently purchased property or rented accommodation. Home improvement loans are used to maintain or enhance the value of your house.

In general it includes: repairs, remodeling, energy savings related items (permanent in nature), repairs, a new kitchen, a new bathroom, terrace, an extension or general property improvements. Many improvements in landscape and even swimming pools are nowadays considered to be a part of home improvement.

What are Home Construction Loans?
Home construction loans are used to finance for the construction of newly acquired home or if you are planning to build a home. But, with so many home construction loans available in the Indian market you should decide the best one that would suit you most and most favorable to you.

What is Bridge Loan?
A short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. This type of financing allows the user to meet current obligations by providing immediate cash flow. Bank of Baroda has introduced the ‘Bridge Loan’ for top rated corporate clients against expected equity flows/issues. Bank can also extend bridge loans against the expected proceeds of Non-Convertible Debentures, Global Depository Receipts and funds in the nature of Foreign Direct Investments, provided the borrowing company has already made firm arrangements for raising the aforesaid resources/funds. This facility would be available for a period not exceeding 12 months.

What are Home Extension Loans?
Home extension loans are used by customers to get loans from the banks to extend their houses, by adding more rooms, kitchens, wash rooms, terraces, or any other rooms for your growing family. It may also be used to enclose open balcony/terrace space, or constructing a Puja ghar. Home extension loan thus falls under the category of Home loans. The difference between home extension loan and home improvement loans is decreasing in the Indian market.

Maximum Amount of Home Extension Loans:
Banks generally offers about 70-85% of the total amount of home extension as loan. The amount of loan sanctioned also depends on a number of factors such as the age of the applicant at the time of loan; tenure of the loan; repayment capacity of the borrower; his/her credit history, etc.

What are Mortgage Loans?
Mortgage loans (Home Equity Loans) helps customer to en-cash the market value of the property by taking a loan by mortgaging the property. So, Home equity loans are availed by customers, who wish to mortgage his/her property to the bank for taking some loan for some other purpose. Then, it’s up to the bank’s discretion to consider the market value of the property and accordingly decide how much to pay to the customer.

Both the residential as well as non residential property can be considered for the approval of the loan, provided the mortgager is a licensed title holder and the land is free form any kind of dispute.

Home equity loans don’t restrict one to use the loan money in specific ways. It might also be used in marriage, higher education, medical expenses, etc. However care should be taken that it should not be used in any illegal or speculative purposes.

Conditions of Home Equity Loans:
  • Applicants: An individual or someone with joint account can apply for the Home equity loans. However the co-applicants need not be co owners of the property.
  • Amount of Loan: About 60-65% of the actual value of the property can be had from the bank in the form of loan, which may go as high as a few crores for commercial and residential property and its repayment period may range from 10 to 15 years, depending on individual bank’s policies.
  • Types of Interest: The rate of interest in the home equity loans can both be fixed as well as floating, according to the requirement of the customer. Banks now-a-days however are preferring the floating rate loans, as their risk is lesser with these loans.
What are Land Purchase Loans?
Land Purchase loans are used by customers who wish to purchase a plot of land for commercial or residential purpose. Everyone has his/her dream perfectly sketched in his souls and so is his ambition to get his house erected on the exact location he dreamt that to be.
Loans that are strictly for land purchase can be as scarce as good residential plots. While many lending firms around the nation compete to provide mortgages for the purchase of a house on a lot, only few institutions typically will be interested in lending for an empty plot.

Eligibility:
21 Years and above having regular income is applicable.
Maximum Loan:
85 % of the cost of the plot and is also based on the repayment capacity of the customer.
Maximum Term:
15 years, this of course takes into consideration your retirement age.
Terms for the Loan:
  • You can purchase your land, then take your time building your home (typical limits set here are that the work has to start in about 3 months and the construction has to be finished within 12 to 24 months)
  • Separate loans will also be available to construct the house. Some banks will sanction the loan for the plot based on the complete project (land + building). So the building approval also will need to be given at the time of applying for the land loan itself.
Disadvantage(s):
  • Land loans can carry higher interest rates and bigger down payments than conventional mortgage loans, to reflect the increased risk.
Documents Required by Banks for the Approval of Most Home loans:
Salaried customers:
  1. Application form with photograph
  2. Identification and Residence proof
  3. Latest salary slip
  4. Form16 or Last Income Tax Returns
  5. Last 6 months / One Year’s bank’s statement
  6. Processing fee cheque
Businessman/ Self employed professional:
  • Application form with photograph
  • Educational qualification
  • Identity and residence proof
  • Proof of business existence with business profile and last 3 year’s income tax returns
  • Last 3 years income statement and balance sheet.
  • Last 3 month’s / 6 month’s personal and business bank statements.
  • Processing fee cheque
Summary
This article has explained the different types of housing loan products available in the market and also the eligibility and documents that you will require to approve the loan from the financial institutions.

Wednesday, July 24, 2013

Kumar Mangalam Birla resigns from RBI central board




BL :Mumbai, July 23: 2013


Birla has been on the RBI’s central board for the past six years. 

The RBI’s updated list of Directors of the Central Board does not mention Birla’s name, according to the RBI Web site.

Earlier this month, RBI Governor D. Subbarao said the central bank would consult the government on the same.

Tuesday, July 23, 2013

RBI tightens gold import norms, prices may go up




PTI    New Delhi   Last Updated: July 23, 2013  | 09:15 IST

Seeking to tighten gold imports in the face of a widening CAD, the Reserve Bank of India on Monday set stringent conditions for importers, linking inward shipments to future exports, a decision that will make it costlier.

Under a notification issued by the RBI, banks and authorised agencies will have to ensure that at least 20 per cent of imported gold is made available for exports.

The importers, it said, will be required to keep 20 per cent of the consignment with customs bonded warehouses.

"It shall be incumbent on all nominated banks/nominated agencies to ensure that at least one fifth of every lot of import of gold (in any form/purity including import of gold coins/dore) is exclusively made available for the purpose of export.

"Further, they shall make available gold in any form for domestic use only to entities engaged in jewellery business/ bullion dealers supplying gold to jewellers," the RBI said.

The RBI said banks and other authorised entities will be permitted to undertake fresh imports of gold only after the exports have taken place to the extent of at least 75 per cent of gold remaining in the customs bonded warehouse.

Traders and jewellers said the restriction is likely to make gold costlier in the coming days.

"As the government has made it mandatory to export 20 per cent of imported gold, the exporter will be under pressure to export at any given price. If there is any export loss, the exporter will try recover it from domestic sales," Bombay Bullion Association ex-President Suresh Hundia said. 

However, exporters hailed the RBI move, saying gold availability for exports will increase.

Gems and Jewellery Export Promotion Council Chairman Vipul Shah said: "The ratio of 80:20 is a welcome step. It means 80 per cent of imported gold would be available for domestic use, while 20 per cent of it would be exported. This step will boost exports and foreign revenue."

The restriction comes when gold imports, in addition to oil, are putting pressure on the current account deficit, which soared to record high of 4.8 per cent in 2012-13