49.1% bank deposits are not under Rs 5 lakh insurance cover: Check if your bank deposit is protected


When a bank fails, the only respite a depositor has is the insurance cover offered by the DICGC. This cover was raised to Rs 5 lakh from Rs 1 lakh, effective from February 4, 2020.


According to the Reserve Bank of India's (RBI) latest annual report the number of fully protected accounts in banks stood at 247.8 crore at end March 2021, which is 98.1 per cent of the total number of accounts (252.6 crore). What this means that around 4.8 crore accounts do not enjoy the deposit insurance cover offered by Deposit Insurance and Credit Guarantee Corporation (DICGC).


Deposit amount coverage much lower than account coverage

As per the annual report released by RBI the total insured deposits stood at Rs 76,21,258 crore as at end-March 2021. This is only 50.9 per cent of the assessable deposits of Rs 1,49,67,776 crore. What this means that around 49.1% of the amount deposited with banks do not enjoy the DICGC cover.


While the deposit insurance cover on bank deposits has been raised to Rs 5 lakh, not all deposits are covered. Though this cover is available to all banks, they have to register for this facility and pay the corresponding insurance premium to keep enjoying the financial protection under this deposit insurance.


Banks not being registered with DICGC or not paying premium are the main reasons for deposits not being covered, according to the RBI annual report. However, this can also happen in case of a higher deposit amount held by an account holder in the same right and capacity. For instance, if you hold a total deposit of Rs 25 lakh in same right and capacity then the maximum cover will remain only Rs 5 lakh and remaining R s20 lakh deposit will not have this protection.


Failure mainly in co-operative and local area banks

As per the annual report, five cooperative banks and one LAB (or Local Area Bank) were liquidated during the year 2020-21.


As per the un-audited data, the DICGC has processed claims amounting to Rs 993 crore during 2020-21 with a view to ensuring payment to insured depositors of liquidated banks under the prevailing pandemic situation. Of Rs 993 crore, the Corporation has settled claims amounting to Rs 564 crore in respect of nine co-operative banks during 2020-21.


An amount of Rs 330 crore has been settled in case of one cooperative bank in April 2021. However, the net outgo of funds towards settlement of claims from the Corporation was also lower as there was a recovery of Rs 568 crore during 2020-21.


Added to this, there was an amalgamation of a struggling private sector bank Lakshmi Vilas Bank and a foreign bank Development Bank of Singapore (DBS) during 2020-21.


Check if your bank deposit is protected

Deposit insurance provided by the DICGC covers all insured commercial banks, including LABs, PBs, SFBs, RRBs and co-operative banks. As per the report, the number of registered insured banks stood at 2,058 as on March 31, 2021. This includes 139 commercial banks out of which 43 are Regional Rural Banks (RRBs), 2 are Local Area Banks (LABs), 6 are Payment Banks (PBs) and 10 are Small Finance Banks. Apart from this 1,919 co-operative banks are also registered out which 34 are State Co-operative Banks (StCBs), 347 are District Central Co-operative Banks (DCCBs) and 1,538 are Urban Co-operative Banks (UCBs).


Despite this there are good number of banks mostly co-operative which are not registered with DICGC to offer the insurance cover to their depositors. 

If you have a deposit in a co-operative bank, you need to check if it is registered for the deposit insurance. 

You can click here to find out 

https://www.dicgc.org.in/FD_ListOfInsuredBanks.html

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Procedure to Settle a Claims in Deceased Depositors Account.


(1) Settlement of Claims in Single Account with or without Nomination.

(a) SB / CD account with Nomination – The balance amount will be paid to the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of depositor.

(b) SB / CD account without Nomination -  The balance amount will be paid to the legal heir(s) (or any one of them as mandated by all of the legal heirs) on verification of the authority of the legal heir(s) and proof of death of depositor.

(c) Term Deposit account with Nomination – The balance amount will be paid to the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of depositor on maturity date of deposit.

(d) Term Deposit account without Nomination -  The balance amount will be paid to the legal heir(s) (or any one of them as mandated by all of the legal heirs) on verification of the authority of the legal heir(s) and proof of death of depositor on maturity of deposit.

(e) Premature termination of Term Deposit account with nomination – Premature termination of term deposit account as per terms of contract will be permitted at the request of the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of depositor.

(f) Premature termination of Term Deposit account without nomination – Premature termination will be permitted on joint request by all legal heirs (or any of them as mandated by all the legal heirs) as per the terms of the contract on verification of the authority of the legal heirs and proof of death of depositor.

(2) Settlement of Claims in Joint Account with or without Nomination and without Survivorship Mandate (operated jointly).

(a) SB / CD account with Nomination.

(i) In the event of death of one (or more but not all) of the joint account holders, the balance amount will be paid jointly to survivor(s) and the legal heirs of the deceased joint account holder (or any of them as mandated by all the legal heirs) against their joint claim on verification of the authority of the legal heirs and proof of the death of the depositors.

(ii) In the event of death of both / all joint account holders, the balance amount at the time of death of the depositors will be paid to the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of depositors.

(b) SB / CD account without Nomination.

(i) In the event of death of one (or more but not all) of the joint account holders, the balance amount will be paid jointly to survivor(s) and the legal heirs of the deceased account holder (or any one of them as mandated by all the legal heirs) against their joint claim on verification of the authority of legal heirs and proof of death of depositor.

(ii) In the event of death of both / all joint account holders, the balance amount will be paid jointly to the legal heir(s) of all the deceased depositors (or any of them as mandated by all the legal heirs) on verification of authority of the legal heirs and proof of death of all the depositors.

(c) Term Deposit Account with Nomination.

(i) In the event of death of one (or more but not all) of the joint account holders, the balance amount will be paid jointly to survivor(s) and the legal heirs of the deceased joint account holder (or any of them as mandated by all the legal heirs) on verification of identity of the legal heirs and proof of the death of the depositors on maturity of the deposit.

(ii) In the event of death of both / all joint account holders, the balance amount at the time of death of the depositors will be paid to the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of depositors on maturity of the deposit.

(d) Term Deposit Account without Nomination.

(i) In the event of death of one (or more but not all) of the joint account holders, the balance amount will be paid jointly to survivor(s) and the legal heirs of the deceased account holder (or any one of them as mandated by all the legal heirs) against their joint claim on verification of the authority of legal heirs and proof of death of depositor on maturity of the deposit.

(ii) In the event of death of both / all joint account holders, the balance amount will be paid jointly to the legal heir(s) of all the deceased depositors (or any of them as mandated by all the legal heirs) on verification of authority of the legal heirs and proof of death of all the depositors on the maturity of the deposit.

(e) Premature Termination of Term Deposit account with Nomination.

(i) In the event of death of one (or more but not all) of the joint account holders, premature termination of term deposit will be permitted against joint request of the survivor(s) and the legal heir(s) (or any one of them as mandated by all legal heirs) as per the terms of contract on verification of identity of the legal heirs and proof of death of depositor.

(ii) Premature termination of term deposit account as per the terms of contract will be permitted at the request of the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of depositors.

(f) Premature Termination of Term Deposit account without Nomination.

(i) In the event of death of one (or more but not all) of the joint account holders, premature termination of term deposit will be permitted against joint request by the survivor(s) and the legal heir(s) of all the deceased depositors (or any one of them as mandated by all legal heirs) as per the terms of contract on verification of authority of legal heirs and proof of death of depositor.

(ii) In the event of death of both / all the joint account holders, premature termination of term deposit will be permitted against joint request by all legal heirs of the deceased depositors (or any one of them as mandated by all legal heirs) as per the terms of contract on verification of authority of legal heirs and proof of death of depositors.

(3) Settlement of Claims in Joint Account with mandate “Either or Survivor” / “Former or Survivor” / “Anyone or Survivors” / “Latter or Survivor” with or without nomination.

(a) SB / CD account with Nomination.

(i) In the event of death of one (or more but not all) of the depositors, the balance amount will be paid to survivor(s) on verification of proof of death of the depositor.

(ii) In the event of death of both / all the joint depositors, the balance amount will be paid to the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of all depositors

(b) SB / CD account without Nomination.

(i) In the event of death of one (or more but not all) of the deposits, the balance amount will be paid to survivor on verification of proof of death of the depositor.

(ii) In the event of death of both / all the joint depositors, the balance amount will be paid jointly to the legal heirs (or any one of them as mandated by all the legal heirs) on verification of authority of legal heirs and proof of death of all depositors.

(c) Term Deposit Account with Nomination.

(i) In the event of death of one (or more but not all) of the depositors, the balance amount will be paid to survivor(s) on verification of proof of death of the depositors on maturity of deposit or as agreed at the time of opening of deposit.

(ii) In the event of death of all joint depositors, the balance amount will be paid to the nominee on verification of nominee’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of all depositors on maturity of deposit or as agreed at the time of opening of deposit.

(d) Term Deposit Account without Nomination.

(i) In the event of death of one of the depositors (or more, but not all), the balance amount will be paid to the survivors on verification of proof of death of the depositor on maturity of deposit or as agreed at the time of opening of deposit.

(ii) In the event of death of all joint depositors, the balance outstanding will be paid to the legal heir(s) of all the deceased depositors (or any one of them as mandated by all the legal heirs of joint holders) on verification of authority of legal heirs and proof of death of all depositors on maturity of deposit.

(e) Premature termination of Term Deposit Account.

(i) In the event of the death of one (or more but not all) of the depositor(s), the balance amount will be paid to the survivor(s) after premature termination of term deposit account on verification of proof of death of the depositor(s), only if, there is a joint mandate from all the depositors to this effect given either at the time of placing the fixed deposit or subsequently during the tenure of deposit or there is suitable clause in this regard in deposit account opening form which is accepted and signed by all the depositors at the time of opening of fixed deposit account.

(ii) In the event of the death of one (or more but not all) of the depositor(s), the balance amount will be paid jointly to survivor(s) and the legal heir(s) of the deceased joint account holders (or any of them as mandated by all the legal heirs) against their joint claim on verification of authority of the legal heir(s) and proof of death of depositor(s). If there is no joint mandate from all the depositor(s) / suitable clause in account opening form to this effect as stated in above para ((3) (e) (i)).

(iii) With Nomination – In the event of death of all the joint depositors, the nominee will have right to seek premature termination of term deposit account as per the terms of the contract on verification of claimant’s identity (such as PAN Card, Election ID Card, Aadhaar Card, MANREGA Card, Passport, Driving License etc) and proof of death of all depositors.
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Sukanya Samriddhi vs FD vs RD vs PPF vs MF vs insurance: Suitability and pros & cons


From study to choosing a desirable career to marriage, upbringing a child is a huge task, which, apart from care, also needs money. As the rate of inflation in education is more than the rate general inflation, you need to chalk out a financial plan to meet the expenses. There are many financial products available, which you may use judiciously to meet your financial targets. There are also some exclusive financial products available for girl child that the government launched as a part of its ‘Beti Bachao Beti Padhao’ campaign.


Sukanya Samriddhi Yojana
Small deposit scheme Sukanya Samriddhi Yojana (SSY) is aimed at meeting the expenses of higher education and marriage of your daughter. The parents or legal guardians of a girl child may open an account till 10 years of the age of the girl. The account may be closed after 21 years. However, normal premature closure is allowed after completion of 18 years, provided that girl gets married.

Currently, the maximum amount may be invested in an SSY in a financial year is Rs 1,50,000. The amount invested is eligible for tax deductions u/s 80C as well as the interests earned and the maturity amounts are also tax free.

The government declares the rate of interest for SSY accounts on quarterly basis and generally keeps it higher than other small savings schemes like NSC, KVP, PPF etc. At present, the rate is 8.5 per cent, which if continues to remain same, would generate a corpus of Rs 74,96,802 at the end of 21 years, if Rs 1,50,000 is invested at the beginning of every year for 15 years.

Sukanya Samridhhi Yojona is a very suitable product for girl child, as it is tailor made for them. It also provides handsome rate of return and overall tax benefits. However, the long tenure and restrictions on withdrawals make it an illiquid investment.

Bank Fixed Deposits
For investing in fixed deposits (FDs) you need to have lump sum money in your hand. FDs are one of the most popular choices in India. Most people invest in FDs because they are easy to get from the banks that have created immense trust in the mind of the account holders. However, FDs don’t provide protection against inflation and the interest earned are also taxable.

With highest interest rates on FDs varying between 6 and 7 per cent apart from tax and inflation inefficiency, FDs may not create enough wealth that is needed for your daughter’s higher education and marriage purpose. So, you may use FDs only to park small amount of excess money to meet the associated expenses.

Recurring Deposits
Although, recurring deposits (RDs) are a modified version of FDs, where you may invest periodically on small amount instead of lump sum one, but it is a better option to park the small amount of money that you may save every month. As it may not be convenient for you to save large amount in FD regularly, the small amounts in vested in RD may come handy when you need some lump sum money for expenditure. However, like FDs, RDs are also tax and inflation inefficient.

Public Provident Fund (PPF)
It is a good idea to open a PPF account in the name of your girl child and divide the money you want to invest in it between your and your daughter’s account (maximum Rs 1,50,000 may be invested by a PAN card holder, be it in one account or more accounts). However, it would be even better if you open an SSY account for your daughter instead of bifurcating your investment for retirement. Otherwise, with tax deductions on investment and tax-free interest and maturity, along with pretty good interest rate, PPF is a good vehicle for accumulating a corpus.


Mutual Fund (MF)
As the goal of higher education and marriage of your daughter are a long-term goal, you may start SIPs in equity mutual funds safely to get a return that beats the inflation. But you should not get panicked by daily turmoil in markets, which affect the NAVs of mutual funds in short term. Start monitoring the NAVs of the funds a year before your daughter is about to get admission for higher education or about to get married, so that you may redeem you funds at good value. There are also some child specific funds available with longer lock-in period and higher exit loads if redeemed before the duration for which the fund is taken to discourage early withdrawal of money for any other purpose than meeting the needs of the child.

Insurance
There are many child insurance products available in the market in the form of money back plans or regular plans. One of the important feature of child insurance is the premium waiver benefit (PWB), which allows the insurance to continue even without paying premium in case of untimely demise of the earning member, who used to pay the premium. However, there is no point in taking insurance on child’s life, as it is not the motive of child insurance to get lump sum money in case of death of the insured child. So, it’s better to take insurance on your life, making daughter the nominee.

So, along with other investments, better to take a term insurance plan. Otherwise, even a unit-linked insurance plan (ULIP) would be a good option. There are, however, options available to take PWB in some endowment plans even on your life, which also provide additional risk covers like instant payout of sum assured (SA) along with yearly payout of certain percentage of SA apart from the maturity benefits, if taken judiciously with term rider, accidental rider, PWB etc. For example, in case of a 20-year policy of Rs 10 lakh SA, taken with all the riders, if the insured person dies due to accident in the very first year, total payout would be as much as 6 times the SA, that is Rs 60 lakh. Such plans may prove even better than term plans because the nominee would get immediate lump sum payment to clear debts, if any, and to make some investments, then regular yearly payments to bear child’s expenses and finally, lump sum payment again on maturity to meet expenses for higher education and marriage. In case the life insured survives the full policy term, he or she will get lump sum maturity benefit, which, along with bonus, would be around twice the SA, that is around Rs 20 lakh. But such plans are expensive due to high risk cover.



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NPAs on the decline, credit growth rising, says Arun Jaitley after key review meet with PSBs


Finance minister Arun Jaitley on Tuesday said bad loans for public sector banks are on a decline and that the economy is passing through a phase of good growth.




“Banks are very confident that under the circumstances they will maintain liquidity for the various sections of the economy, the liquidity which is required,” Jaitley said after reviewing the annual performance of public sector banks. The FM also inaugurated a website of public sector banks — psbloansin59minutes.com — where MSMEs can avail loan of up to Rs 1 crore in less than an hour.



Banking activity is bound to pick up as consumption has moved up and growth figures are encouraging, he said. Jaitley also launched the Financial Inclusion Index. Financial services secretary Rajiv Kumar in a presentation said banks expect cash recoveries of Rs 1.80 lakh crore in 2018-19. PSBs will also be able to monetise non-core assets worth Rs 18,665 crore, he said. “There is equal focus on arresting fresh slippages,” he added.



Earlier in the day, Jaitley told chief executives and senior officials of state-run financial institutions that banks must strive to be always seen as institutions of clean and prudent lending.




Jaitley exhorted the banks to ensure all steps at their end for clean lending and effective action in cases of fraud and wilful default to justify the trust reposed in banks, the finance ministry said in a statement. He observed that formalisation of Indian economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks.



Coupled with inclusive growth through massive financial inclusion, this has unlocked purchasing power which will drive India’s growth,” Jaitley said, adding that this should help India sustain a growth rate of around 8%. The FM flagged the need to revisit efficacy of the Debts Recovery Tribunal mechanism, particularly in view of long lead times in disposal of cases. “Amendment of IBC to debar wilful defaulters has had the unintended positive consequence of defaulting borrowers stepping forward to make payment to participate in the resolution process,” he said.



The perception regarding the health of PSBs has become more positive as banks have posted positive results in terms of resolution, recovery, provisioning and credit growth, Jaitley said.

Source- Economic Times
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Government clears bills to amend IBC and withdraw FRDI

The government is likely to withdraw the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 in the ongoing session of Parliament to calm jittery investors and avoid any popular backlash before the 2019 elections.

Introduced in Lok Sabha on August 11, 2017, the proposed bill had made depositors nervous due to a 'bail in' clause.

In a bid to prevent banks from going bankrupt, the draft bill proposed 'writing down of liabilities' (referred by many as a bail-in), which most thought had potential to harm deposits in savings bank accounts.


Authorities had also planned to raise security cover for bank deposits, amid fears over deposits being used to ‘bail in’ ailing banks in extreme situations.

At present, each depositor is protected only up to a limit of Rs 1 lakh by the Deposit Insurance and Credit Guarantee. Deposit beyond Rs 1 lakh does not have any protection and is treated at par with claims of unsecured creditors as of now.

The bill had proposed to set up a resolution corporation to monitor financial firms, anticipate the risk of their failure, take corrective action and work out a resolution plan. In case of a failure, the proposed corporation would also provide deposit insurance up to a certain limit, which was not specified.

The bill had also proposed that once a financial services company, including a bank, slips into critical category, the Resolution Corporation would take over the firm and prepare a resolution during a year, extendable by another 12 months.
government had assured depositors several times that it was committed to protecting the interest of them and financial institutions and had slammed opposition parties for triggering “a needless controversy.”


It had said that 70 per cent deposits are in public sector banks and most of the rest in well-capitalised private banks, so there's no likelihood of losing deposits for over 98 per cent depositors. The remaining will be subject to a 'bail in' only if the depositors consent.

“In an election year, the government does not want to do anything which appears to be anti-people,” said a source.
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Growth in bank deposits falls to five-decade low



Bank deposit growth fell to a five-decade low in fiscal year ended March 2018 as the demonetisation bonanza withered away and the lure of other savings instruments such as mutual funds and insurance eroded banking competitiveness. 


Data from the Reserve Bank of India (RBI) website shows aggregate deposits in the banking system grew a mere 6.7% in 2017-18, the lowest since fiscal 1963. Bankers say the reversal from the huge deposits collected in light of the November 2016 demonetisation together with the steady movement of savings away from bank deposits has hit growth. 


“Deposits soared after demonetisation, which is why growth last year was higher. But most of that money has gone out of the banking system last fiscal and that is reflecting in the slower deposit growth numbers,” said PK Gupta, managing director, retail and digital banking, SBI. 

During November-December 2016, banks received Rs 15.28 lakh crore as people deposited highdenomination currency notes that were withdrawn from circulation. As a result, aggregate deposits in the fiscal ended March 2017 grew 15.8% to Rs 108 lakh crore. 

This pace of growth has now come down by 6.7% with deposits aggregating Rs 114 lakh crore. Savings have also moved to other asset classes from bank deposits. 

Total mutual fund assets under management have increased 22% to Rs 21.36 lakh crore in March 2018 from Rs 17.55 lakh crore in March 2017. 


This had grown 42% from Rs 12.33 lakh crore in March 2016 to Rs 17.55 lakh crore in March 2017. This trend is also visible in insurance investments as first premiums have increased to Rs 1.93 lakh crore in March 2018 from Rs 1.75 lakh crore in March 2017 and Rs 1.38 lakh crore in March 2016. 

“The base effect post demonetisation has played a large part as money came back into circulation. Though clearly there is a move towards MFs. This year, with interest rates moving up and equity markets likely to remain soft, we could see some uptick in deposits though not a sharp rise,” said Karthik Srinivasan, head-financial sector ratings, Icra. 

Bank rates are already rising. Last week, HDFC Bank hiked fixed deposit rates in select tenures for deposits under Rs 1 crore by up to 100 basis points. One basis point is 0.01percentage point. 

Bankers say bank deposits are still seen as a liquid investment option which mutual funds and insurance schemes cannot compare with. Also, mutual fund investments ultimately make it to bank deposits. “Ultimately, debt funds will invest in bank certificates of deposit and fixed deposits and that is also captured in aggregate bank deposits. Growth in deposits is also a function of the GDP growth and includes dynamics like nominal rates, cash with public and real growth,” said Rajat Monga, head-liabilities product management at Yes Bank. 
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Bank Fixed Deposits (FDs): Five Rules You May Not Know

For investors looking for a guaranteed or regular income, bank fixed deposits or bank FDs remain very popular investment options. Many banks offer the options of opening fixed deposits online. Maturity period of up to 10 years are also offered by some banks. Premature closures of fixed deposits are subjected to applicable charges. Investors can earn interest monthly/quarterly/half-yearly or yearly basis according to their convenience. Fixed deposits also come with loan/overdraft facility against fixed deposits. SBI, for example, offers loans/overdraft facility of up to 90 per cent of the principal deposit, according to the bank's website.

1) From this financial year, starting April 1, 2018, senior citizens will get higher interest income exemption limit on deposits in banks and post offices, including recurring deposits. Under the new tax laws, a new Section 80TTB has been inserted to allow a deduction up to Rs.50,000 in respect of interest income from deposits held by senior citizens. Currently, a deduction up to Rs.10,000 is allowed under Section 80TTA of the Income Tax Act to an individual in respect of interest income from a savings account. However, no deduction under Section 80TTA shall be allowed for senior citizens.

For senior citizens, it does not matter whether deposit with banks or post offices in question was made before or after April 1, 2018, says Srinivasan Anand G of Taxmann. Interest income is deductible only if it is from deposits with a bank or co-operative bank or post office, he says.
2) TDS Provisions: Banks deduct TDS or tax deducted at source at the rate of 10 per cent on the interest earned on fixed deposits, if the interest income for the year is more than R
s.
10,000. From 2015, TDS provisions have also been made applicable on the interest earned on recurring deposits. For senior citizens, Budget 2018 raised the threshold for deduction of tax at source on interest income to Rs.50,000 from Rs. 10,000.


3) You can access the details of TDS deducted by viewing your Form 26AS. This is basically your tax credit statement which shows all taxes received by the Income Tax Department. You can access Form 26AS from the tax department's website. This helps you ascertain whether the tax deducted has been correctly deposited with the government. "It is extremely important to go through the Form 26AS to ensure that all due credits for TDS deducted from a person's salary, FD interest, etc. are duly accounted for," said Sandeep Sehgal, director of tax and regulatory at Ashok Maheshwary & Associates LLP. In case of mismatch in tax credit, investors should approach the banks, says tax experts

4) It should be noted that all bank fixed deposits are not eligible for income tax benefits. Under Section 80C on the Income Tax Act, investment in a bank FD in a scheduled bank with maturity of five years or more is eligible for deduction, subject to a maximum of Rs. 1.5 lakh. For example, SBI offers tax-saving fixed deposit for a minimum tenure of five years and maximum of 10 years under tax-saving scheme. There is lock-in period of five years in case of tax-saving bank FDs and you can't avail any loan against the term deposits opened under tax savings scheme.


5) Form 15G/ Form 15H: Many banks allow fixed deposit holders to submit their 15G/15H forms online. Forms 15G/15H are self-declaration forms by an individual stating that his or her income is less than the taxable limit. To prevent the bank from deducting TDS, depositors can submit Form 15G /15H with the bank. If one fails to do so, the person will need to claim the tax refund by filing his/her income tax return.
Source- NDTV
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TDS limit on bank interest raise for senior citizens

Finance Minister Arun Jaitley has given a big relief to the lakhs of bank fixed deposit investors. Union Budget 2018 has proposed that the threshold for TDS on interest earned on bank fixed deposit and recurring deposits to be raised to Rs 50000 for senior citizen as compared to Rs 10000 earlier. The rate of TDS, however, is kept constant.

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Why bank fixed deposits are a good avenue to park your money

Most of us keep some money in saving banks account because of two reasons – it is safe and can provide regular income via interest. It is also liquid and can be accessed in times of need.  However, the returns on savings bank are not high and may not meet the regular income needs.
Banks offer comparatively low rate in savings bank deposits which simply means that your money is not growing at the right pace. Therefore, you need to think that how you can earn more returns provided you are getting safety and guaranteed return by keeping your money in banks only. Within the bank deposit space, a better alternative is fixed deposits. Bank FDs are one of the safest investment-cum-savings avenue which can help you get 7-9% return annually. These days, you do not even need to go to the bank to open an FD, but can do it online.
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Private sector banks cut rates for savings deposits

Having improved their ratio of low-cost current and savings accounts (CASA) in the past six years, new age private sector banks are now rationalising their deposit rates by steadily raising their deposit slabs, which is likely to help them improve margins from here on. IndusInd Bank, Yes Bank and Kotak Mahindra Bank have either fully or partially tweaked their savings rates since September after seeing a sharp rise in CASA ratio since the RBI allowed banks to set their own savings rate in October 2011. 
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Types of Bank Accounts in India (Deposit Accounts)


CURRENT DEPOSITS / ACCOUNTS
SAVING BANK / Saving Fund  DEPOSITS / ACCOUNTS
RECURRING DEPOSITS / ACCOUNTS
FIXED DEPOSITS / ACCOUNTS OR TERM DEPOSITS

 
Traditionally banks in India have four types of deposit accounts, namely Current Accounts, Saving Banking Accounts, Recurring Deposits and, Fixed Deposits.   However, in recent years, due to ever increasing competition, some banks have introduced new products, which combine the features of above two or more types of deposit accounts.  These are known by different names in different banks, e.g 2-in-1 deposits, Smart Deposits, Power Saving Deposits, Automatic Sweep Deposits etc.  


What is  a Current Account ?  Who uses current accounts? 

Current Accounts are basically meant for businessmen and are never used for the purpose of investment or savings.  These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day.  Most of the current account are opened in the names of firm / company accounts.   Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties.  No interest is paid by banks  on these accounts.  On the other hand, banks charges certain  service charges, on such accounts.   

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