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Tax Savings

What Are ELSS Funds and How Are They Helpful for Tax Savings?

Equity-linked savings schemes (ELSS) funds are a type of mutual fund. The amount invested in these funds is locked in for a minimum of three years. However, the lock-in period for some schemes may be five years. ELSS funds offer tax deductions under Section 80C of the Income Tax Act, 1961. The maximum deduction available from ELSS investments is Rs 1.5 lakh per fiscal year. ELSS funds have the shortest lock-in period as compared to other tax-saving investments such as PPF, NSC, etc. The returns from ELSS are also exempted from tax. ELSS is thus a better investment option as it offers both tax savings and capital appreciation. If you are looking for a good investment option to save taxes, then you should consider investing in ELSS funds. [B-01] What is an ELSS Fund? An ELSS fund is an equity-linked savings scheme that is offered by many mutual fund companies in India. ELSS funds are similar to other mutual fund schemes, but they have a lock-in period of 3 years. This means that you cannot withdraw your money before the 3-year period is up.ELSS funds are invested in stocks and equity-related instruments. This makes them riskier than other types of mutual fund schemes but also potentially more profitable. The returns from ELSS funds are taxed at 10%, which is lower than the rate for most other investments.ELSS funds are a good option for investors who are looking for a long-term investment with the potential for high returns. They can also be helpful for taxpayers who want to reduce their tax liability. How Do ELSS Funds Work? ELSS is a great option for new investors who are looking to make investing a habit. This is because the lock-in period discourages the investors from slacking off or prematurely withdrawing the money. One of the best things about ELSS funds is that they come with a low-income threshold of Rs 500. The Benefits of Investing in ELSS Funds ELSS funds are a great way to save on taxes. With the help of these funds, you can save up to 30% on your income tax. Moreover, they also offer a higher return than most other investment options.There are many benefits to investing in ELSS funds. Some of the most noteworthy benefits are listed below:Higher returns: ELSS funds offer higher returns as compared to most other investment options. This is because they are equity-based, and, hence, their value appreciation potential is high.Tax saving: As ELSS funds offer income tax benefits of up to 30%, they help you save a significant amount of money on taxes.Flexibility: ELSS funds offer great flexibility in terms of investment tenure and withdrawal. You can choose to invest for a minimum period of 3 years or for a longer duration at your convenience. Similarly, you can also withdraw your investments before the maturity period if needed.Diversification: ELSS funds provide an opportunity to diversify your investment portfolio as they invest in a variety of asset classes like stocks, bonds, etc. This helps reduce your overall risk and maximize returns. No need for a lump-sum investment: One of the best benefits of ELSS funds is that you do not need to have a lump-sum amount ready. You can choose the systematic investment plan (SIP) method and systematically compound your investment over months or years. You can select a date on which you will invest a predetermined amount in ELSS funds every month. An option to invest twice a year (every 6 months) is also available to investors. It is important to note that each SIP payment is considered a new investment, and the lock-in period will apply to it. Two payout options: ELSS funds offer two payout options, namely, growth option and a dividend option. In the growth option, the investor gets the option to either withdraw the investment along with the accumulated profit at the end of the lock-in period or reinvest. As far as the dividend option is concerned, there are two alternatives. The first one is the dividend payout option, where the investor receives payment in the form of dividends at fixed intervals. The second option is the dividend reinvestment option. As the name suggests, in this option, the payout is reinvested and treated as a fresh investment. This fresh investment will be eligible for tax deductions. How to Invest in ELSS Funds There are a few things to keep in mind before investing in ELSS funds:– Consider your investment goals and risk tolerance. As with any investment, it’s important to align your investment with your financial goals and risk tolerance. With ELSS funds, you can expect higher returns than fixed deposit investments but also greater volatility.– Research different ELSS fund options. Not all ELSS funds are created equal; there will be variations in terms of performance, fees, and features. It’s important to compare different options and select the one that best suits your needs.– Read the fund’s offer document carefully. This document contains important information about the fund, such as its investment strategy, objectives, risks, and charges. Make sure you understand all of this before investing. [B-02] Conclusion If you’re looking for a way to save on taxes and grow your money at the same time, ELSS funds are definitely worth considering. Talk to your financial advisor to see if they’re right for you. The moderate risk and the option to systematically invest every month make ELSS funds a favorite among both new and seasoned investors. The multiple payout options, like the dividend and growth options, give investors more control over their portfolios. Depending on your personal financial goals, you can choose the suitable payout option. Investing can be a daunting task for those with no prior experience. We list in this blog everything you need to know about ELSS funds to make investing easier for you. If you liked this blog and found it helpful, you can read more such blogs on our website. Piramal Housing Finance is a one-stop solution for all your personal and business finance needs.
08-11-2023
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Personal Loan

What is a Flexi Personal Loan? How Does it Work? 

Facing a financial emergency can be very daunting. In such times, accessing funds at the last minute can become very difficult. For ease during such a situation, various types of loans are available. However, the process can be tiring if you do not know the amount you need. Loans like a flexi loan can be relied upon to meet your financial needs. As you can predict from its name, a flexi loan has excellent flexibility. The flexibility makes this type of loan an ideal choice for many. However, what exactly is a flexi personal loan? [B-01] What is a flexi personal loan? A flexible personal loan, or a flexi personal loan is a loan that allows you flexibility on how much you can borrow. A flexi loan usually comes with a pre-approved credit limit. This credit limit is decided by the financial institution that grants the loan, and the loan limit is determined individually for each application. You can borrow any amount until you reach this credit limit. Since these are types of personal loans, you can use the money to pay your debts, fund a vacation, or meet other expenses. Like other loans, you will have to pay interest on the loan. This fixed interest amount is decided based on the principal amount and other factors. Some factors that affect your eligibility for a loan include your income, credibility, CIBIL score, etc. You get benefits like the freedom to withdraw any amount, low interest applicable on the consumed amount, prepayment without any extra charges, etc. Features of a flexi loan If you are considering applying for a flexi personal loan, you must know the features: A flexi personal loan usually has no restrictions regarding end-use. You can use the money for any expense. The loaned amount can be paid at your convenience; however, the interest amount must be paid every month. Flexi personal loans differ from lender to lender. You based on factors like CIBIL score and loan tenure. How does a flexi personal loan work? If you need money, you can undoubtedly apply for a flexi loan. Before applying for a flexi personal loan, check your CIBIL score. Most lenders have a minimum CIBIL score requirement. Once you have checked your CIBIL score, you can contact a lender. You will have to provide proof of income, address, identity, and other similar documents. Provided you meet the eligibility criteria, you will receive the principal amount. Once you get the loan, your interest charges will be calculated only on the used amount. Why should you get a flexi personal loan? A personal flexi loan is the best financial support you can get if the situation has flexible monetary demands. However, it is advisable to understand your needs beforehand. Because, in most cases, people take a personal loan for instant and non-necessary expenses. There are a few advantages to flexi personal loans that make them attractive options. You can receive instant loans if you meet the eligibility criteria. You can get the loan amount you need. A flexi loan allows you to repay at your convenience. The interest rates are applied only to the amount you spend. This makes flexi personal loans affordable. Flexi personal loans could be withdrawn based on your needs. So, you need not use all the principal amount. What is the interest rate? The interest rate on loans is one of the major deciding factors. Flexi loan interest rates range from 12% p.a. to 28% p.a. Another thing to remember is that you might have to pay more if your tenure period is longer. Interest rates are decided based on your creditworthiness and income. Eligibility criteria There is no doubt that each loaning institute has a different criterion. Thus, you have to understand the eligibility criteria before applying: You must be an Indian citizen to be eligible for flexible loans. For salaried applicants, your age must be between 21 and 70 years old, and for self-employed applicants, your age must be between 23 and 70 years old. Salaried applicants can work in the private sector, public sector, government institutions, or related companies, such as proprietorships, partnership firms, NGOs, or other organizations. If you are self-employed, you can be a business owner, partner, proprietor, member of a partnership firm, or self-employed professional like a doctor, architect, etc. Documents required for flexi personal loans The documents required may vary from lender to lender. You have to provide the following documents with your application form. Identity proof (PAN card, Aadhar card, or passport) must be provided. You will have to provide your Aadhar card, voter ID, and utility bills as your address proof. You will also have to provide 3 to 6 months’ salary slips as income proof. Self-employed professionals will have to submit bank statements to prove their income. You can be asked for additional documents based on your application. It is recommended to provide them with a swift approval experience. [B-02] Conclusion If you are considering applying for a flexi loan, know that the procedure is straightforward. A flexi personal loan is a viable option if you need a loan with a flexible borrowing amount and repayment period. Piramal Finance can be of great help if you’re unsure where to start. They have an experienced team to help you with flexi personal loan-related needs. If you wish to read more such blogs about personal loans and financiers, visit the official website of Piramal Finance to learn more.
08-11-2023
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Mutual Funds

What is an ETF? Advantages of Exchange Traded Funds

Exchange traded funds (ETFs) are a type of investment fund that trades on a stock exchange, just like shares. ETFs are usually designed to track an index, such as the ASX 200, or a commodity, such as gold. An ETF can be bought and sold throughout the day on the stock exchange, and its price will fluctuate with the underlying asset. This makes ETFs very liquid investments. Investors often choose to invest in ETFs because they offer many of the same benefits as shares but with added diversification. ETFs also tend to charge lower fees than other types of managed funds. In this blog post, we will explore what ETFs are, their advantages, and how to start investing in them. [B-01] What is an ETF? An ETF is a type of investment fund that trades on a stock exchange. They are quite similar to mutual funds in that they hold a basket of assets; however, they are traded like stocks. ETFs can be used to invest in various asset classes, including stocks, bonds, commodities, and real estate.ETFs offer several advantages over other types of investments. First, they are very liquid, meaning that they can be bought and sold quickly and easily. Second, ETFs tend to be very low-cost. Mutual funds often charge high fees, but ETFs typically charge much lower fees. Finally, ETFs expose investors to a wide range of asset classes in one investment. What are the benefits of ETFs? Investing in ETFs has a number of benefits.1. ETFs offer diversification: When you invest in an ETF, you are buying a basket of securities, which helps spread your risk and diversify your portfolio. This is especially useful if you don’t have the time or expertise to pick individual stocks.2. ETFs are cost-effective: ETFs typically charge lower management fees than actively managed mutual funds. They also incur fewer trading costs because they are traded on an exchange like a stock.3. ETFs provide access to difficult-to-reach markets: There are ETFs that track just about every market imaginable, including hard-to-reach markets like foreign markets or emerging markets.4. ETFs are flexible: You can buy and sell ETFs at any time during the trading day, unlike mutual funds, which can only be bought or sold at the end of the day. This flexibility can be helpful if you need to quickly adjust your portfolio in response to changes in the market. What are some of the best ETFs to invest in? There are a number of different factors to consider when choosing the best ETF in India to invest in. Some of the most important factors include the following:The type of ETF: There are different types of ETFs available, each with its own set of benefits and risks. Some of the best ETFs in India include index funds, sector funds, and commodity funds.The expense ratio: This is the annual fee that you will pay to invest in an ETF. The lower the expense ratio, the more efficient your investment will be.The track record: It is important to look at the historical performance of an ETF before investing. This will give you an idea of how well the fund has performed in different market conditions.Your investment goals: It is important to align your investment goals with the type of ETF you choose. For example, if you are looking for long-term growth potential, you may want to consider investing in an index fund. If you are looking for short-term income generation, you may want to consider investing in a sector fund or a commodity fund. Difference between active and passive ETFs Active ETFs are funds that are actively managed by a fund manager. Passive ETFs are index funds that track a benchmark index.The main difference between active and passive ETFs is the way they are managed. Active ETFs are managed by a fund manager who actively buys and sells stocks in an attempt to beat the market. Passive ETFs tracking a benchmark index simply aim to match the performance of the index.Active ETFs tend to have higher expense ratios than passive ETFs because of the active management fees. Passive ETFs have lower expense ratios because they do not have any active management fees.Active investing generally requires more time and research than passive investing. For example, a fund manager of an active ETF may need to spend time analyzing different stocks before making any trades. Passive investors simply need to choose an index fund that tracks their desired benchmark and then let the fund manager do all the work.Which type of ETF is right for you depends on your investment goals and how much time you are willing to spend on your investments. If you want to beat the market, you may be better off with an active ETF. However, if you are content with matching the market’s performance, a passive ETF may be a better choice for you. Different types of ETFs There are three main types of ETFs: equity, commodity, and fixed income. Each type of ETF has its own advantages and disadvantages.Equity ETFs track a basket of stocks, allowing investors to diversify their portfolios and reduce risk. However, they are subject to the same volatility as the stock market.Commodity ETFs offer exposure to commodities such as gold and oil. They can be used as a hedge against inflation or economic uncertainty. However, commodity prices are notoriously volatile, so investors need to be aware of the risks involved.Fixed-income ETFs track a basket of bonds, providing exposure to the bond market without the need to purchase individual bonds. They offer stability and income, but they might not be as good for growth as equity or commodity ETFs. [B-02] Conclusion If you’re looking for a way to invest in the stock market without having to pick individual stocks, then investing in ETFs might be a good option for you. ETFs offer many of the same benefits as traditional index funds, but they trade on an exchange like stocks, which makes them more accessible and flexible for investors. With all of these advantages, it’s no wonder that ETFs have become one of the most popular investment options in recent years. For more informative articles, log on to Piramal Finance.
08-11-2023
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Personal Loan

What is Flexi Loan and What Are its Benefits?

What is a Flexi Loan? A Flexi loan is a type of personal loan. It credits money to your account instantly. You can use the loan amount as per your requirements. Unlike other loans, Flexi personal loans don’t charge interest on the amount sanctioned to you. Instead, interest is charged only on the money you spend. In other words, you will pay interest only for the amount used by you and not for the total amount credited. Flexi Loans allow you to use the funds and repay the interest whenever you wish. They are often referred to as Flexi personal loans. Flexi personal loans are similar to the overdraft facilities provided by banks and other financial institutions. [B-01] What is the Difference Between Personal Loans and Flexi Personal Loans? Here is how personal loans and Flexi loans differ: Personal Loans Let’s assume you have borrowed Rs. 1,00,000 as a personal loan from a bank or any other financial institution. You are charged an interest rate of 10% p.a. for this principal amount, and the total period of the loan is 1 year. The bank, in general, will charge you an interest rate of Rs 12,000 for the one-year tenure. Thus, you will be required to pay Rs. 1000 as interest per month. Flexi Personal Loans For example, if you borrowed Rs 1,00,000 as a flexible personal loan from a bank or an institution at an interest rate of 10% p.a., you are not required to pay an interest rate of Rs 12,000 as you did in a personal loan. Instead, you will be paying interest only on the amount that you withdrew or utilized. Assume that you have used only Rs. 50,000 out of the total Rs. 1,00,000 credited to your account as a Flexi loan. As a result, you will pay only Rs. 6,000 in interest over the course of a year, i.e., Rs. 500 per month. What are the Eligibility Criteria for Flexi Personal Loans? The eligibility criteria for Flexi personal loans depend upon various factors. These include the type of employment you have, your age, income, financial obligations, credit score, citizenship, any criminal records you may have, etc. You can opt for a Flexi loan if you are a salaried employee or a self-employed individual. But the above criterion is subject to change from bank to bank or from institution to institution. Another major factor that determines your eligibility for getting a Flexi loan is your total credit (CIBIL) score. In general, to avail of any type of loan from banks and other financial institutions, it is recommended to maintain a minimum credit score of 700. What are the Benefits of Flexi Personal Loans? Below is a list of the advantages of a Flexi loan: Unlimited Withdrawals: Once the loan amount is credited to you, no one can question you on the number of withdrawals. It is because there is no limit on the number of times a Flexi loan can be withdrawn. No Need For Multiple Applications: In Flexi personal loans, whenever you withdraw money, you will not be required to fill out any application. Hence, no lengthy paperwork or approval is required for using the loan amount credited by the lender. Lower EMI: With Flexi personal loans, you are not required to use the entire loan amount. As a result, the interest rate and EMIs will be lower, compared to other types of loans. Pre-payment Option: Whenever you have a cash inflow or a lump-sum amount, you can pre-pay towards the total value of the Flexi loan. Furthermore, you will not be charged or penalized for making partial prepayments on the borrowed loan. Bullet Repayment Option: Flexi personal loans not only allow you to make partial prepayments but also provide a bullet repayment option. Bullet repayment is when you can pay back the loan principal and interest rate all at once at the end of the loan’s maturity period, also called its “tenure.” Helps You in Unexpected Situations: Flexi personal loans are a great aid in your unforeseen or unexpected circumstances. The loan amount is credited to your account instantly. Thus, a Flexi loan helps meet both your planned and unplanned needs. Minimum Documentation: As compared to ordinary personal loans, a Flexi loan needs a few documents at the time of application. Usually, an application for a Flexi loan asks for your Aadhaar card, address proof, income tax returns, salary slips, etc. No Need for Collateral: To avail of Flexi personal loans, you do not need to pledge any collateral, assets, or other financial securities. Closing of Loan Before Tenure: If you repay the Flexi loan amount before the maturity date, your loan will be closed. The main advantage of closing the loan before the term is that the interest payments are reduced. However, some banks or institutions may impose charges for early loan repayment. Easy Cash Flow Management: As your monthly EMI is reduced, you will be better able to manage your cash flows. This helps reduce your cash outflows and expenditures. [B-02] Final Takeaway Flexi personal loans are flexible not only in their name but also in their usage. We hope this article has helped you understand Flexi loans and the importance of maintaining a high CIBIL score. You can easily apply for and get a flexible personal loan with Piramal Finance. We, at Piramal Finance, will guide you through each and every step. Our executives are available to answer any queries related to Flexi loans. You can visit Piramal Finance‘s website to learn more about loans and related topics.
08-11-2023
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Other

What Are Floating Interest Rates and What Are Their Advantages and Disadvantages?

Getting a loan calls for crucial decision-making skills. Among other things, one must consider interest rates. Generally speaking, interest rates are pretty high nowadays. Getting a loan at a low-interest rate requires thorough research. Once decided, the borrower needs to choose from two options: fixed interest or floating interest rates. Unlike fixed interest rates, floating interest rates vary throughout the term of a loan. Want to know how? Here’s everything you need to know. [B-01] What is a Floating Interest Rate? An interest rate that varies with the market or is based on an index is referred to as a “floating rate.” Several times during the repayment period, this interest rate may fluctuate. The base rate, which is the minimum interest rate, is decided by the Reserve Bank of India. The market’s current condition affects the base rate. Now, the interest rates are also linked to the base rate. The lender determines the interest rate by multiplying the repo rate by the “spread” (extra interest). The repo rate is the rate at which the RBI lends money to commercial banks. Any increase or decrease in interest is first passed on to the borrower. Then, they are adjusted to match the loan’s current interest rate. Floating rates may change often, depending on the terms and parameters of a loan. They could change every quarter, half-year, or annually. The amount of the EMI will not alter if the interest rate changes at any point throughout the loan’s term. Instead, the floating rate loan’s term is adjustable. On the other hand, when the floating rate declines, so do the loan terms. According to RBI regulations, lenders cannot impose a prepayment penalty on a loan with a floating rate. Who Should Opt for a Floating Interest Rate? When a borrower believes that the base rate will either stay the same or go down over time, a floating interest rate loan is for them. In such cases, he will either benefit from the same rate for the duration of the loan or pay less interest. For example, one can benefit from lower rates, until the next RBI revision, if the interest rate is reduced. As a result, low rates make floating-interest loans more alluring than fixed-interest loans. Additionally, choosing a Flexi loan will enable them to make prepayments. Pay growth, cash bonuses, year-end bonuses, sales incentives, etc. are a few examples. One will be able to pay off the loan more quickly and pay less interest overall as a consequence. A variable interest rate will be advantageous if one can anticipate having the potential for increased income in the future. In other words, one may pay off his debt more quickly as his earnings rise. If one is ready to accept interest rate volatility and wants to take advantage of speedier loan payments, floating interest rates could be a major benefit. Pros of Floating Interest Rates For the record, floating interest rates come with many benefits, including: Cheaper Floating rates are volatile in the short term since they depend so heavily on the market. However, floating rates are less expensive than loans with fixed interest rates in the long run. With a floating interest rate, there is no maximum hike allowed. Even if interest rates increase by 1% to 2% or more, one will still save more money. The floating interest rate often changes as rates spike. Simply put, the loan’s duration increases rather than the monthly payment. Pegged to the Repo Rate For starters, floating loan rates are closely related to the repo rate. As a result, fixed-interest rate loans are more expensive than long-term loans with floating interest rates. Moreover, lending institutions also increase the repo rate using “spread.” It is an additional interest charge over and above the repo rate. No Prepayment Penalty RBI rules say that the lender can’t charge fees for loans that are paid off early. Cons of Floating Interest Rates Like everything else on the market, this too has its disadvantages: Inconvenient Additionally, it is challenging to keep up with the EMI payments due to fluctuating interest rates. As a result, EMIs with fluctuating rates lack consistency and predictability. Financial planning Due to the erratic nature of interest rates, financial planning is challenging. Unfavorable market circumstances might result in higher premiums, which would be more expensive. May can be required to pay more than one can manage With fluctuating interest rates, it is difficult to establish a set monthly payback schedule. Sometimes the EMI amount may be higher than one anticipated or felt comfortable paying. This may also have a high impact on one’s monthly savings. Market conditions affect the interest rate The interest rate on loans with floating interest rates is heavily influenced by market circumstances, which are frequently erratic and dynamic. It may do a lot of harm if the interest rate rises to the point that making EMI payments. It might affect one’s overall credit history. The lender may identify them as a defaulter. If this happens, the chances of getting a loan in the future cease. [B-02] Wrapping up In a nutshell, interest rates are the most crucial factor that needs to be considered. The decision between a fixed interest rate and a floating interest rate is entirely subjective. Moreover, before choosing Flexi personal loans or any other loans, remember that they are highly volatile. It will be very difficult to pay off interest if the rate goes up. However, one can benefit from it too. The rates could go down as well. So, there is always a probability of risk that remains. Lastly, don’t forget to check Piramal Finance for loans at the best interest rate online.
08-11-2023
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Stocks Markets

What is Floating Stock in the Share Market?

Welcome to this roller coaster world of money, loss, profit, shares, and stocks! In general, one can either make or break themselves in the stock market. It is such a volatile space that all assets can be gone in a blink of an eye. On the flip side, one can even become a millionaire. With that said, the intention is to make good profits in the stock market. After all, who wants to bear losses? But investors need to stop themselves from making a mistake. That is jumping on the bandwagon with little or no knowledge. If someone is into randomly buying and selling stocks, bearing losses is inevitable. This is where a deep understanding of the stock market is necessary to minimize losses and maximize returns. One must be familiar with the structure and operations of the stock market. One such term that one needs to understand is “floating stocks.” Don’t worry, the concept is not that difficult. Let’s understand it in more detail. [B-01] What is floating stock? The number of shares available for trading on stock exchanges is referred to as “floating stock.” The shares that are represented by floating stock are referred to as the “floats” of a company. Generally, a company with fewer floating shares experiences lower demand from sellers. As a result, it could be challenging to locate buyers and sellers for such businesses. A stock with a low floating percentage is a penny stock. It is far more volatile than a stock with a high floating percentage. However, one needs to understand that floating stock does not stay the same over time. The corporation may issue more shares to raise money, which would increase the floating stock. If the company buys back the shares on the open market, the floating stock price will again decrease. Understanding floating stock The total number of shares issued by any company in an IPO enters the secondary market once it goes public. As a result, investors get free access to the shares here. This includes a diverse range of organizations, including big financial institutions, and non-retail and retail investors. The amount of shares purchased by these groups reduces the number of outstanding shares of a company. Floating stock, which is now accessible in the market for new investors, is the remaining stock that is not held by the business. For instance, the corporation ABC has 20 million shares in existence. Institutional investors may own 8 million of the 20 million shares, while employees may own 3 million, and management and connected parties may own 7 million. 10%, or 2 million, would be the only quantity that could be traded openly. Importance of floating stock The free float of a company is crucial for investors. Companies with low floats typically have stocks that are more volatile and have wider spreads. One may find it challenging to enter and exit low-floating equities. A substantial portion of the shares of low-float businesses are held by a small number of organizations. It may not be exposed to frequent buying and selling. Due to the lack of available shares for trading, large institutional investors frequently steer clear of businesses with low-float stocks. When investors purchase many stocks, a low floating stock diminishes liquidity and influences the share price. Limitations of floating stock Understanding floating stock is essential in order to safeguard one’s assets. With that said, floating stocks do have various restrictions, such as: Negative Investor Sentiment If a firm has few floating shares, investors can get discouraged from investing, as they might think there aren’t many stocks available. Even if the business is financially sound and runs well, one should probably avoid investing. It is because the stock will likely be extremely volatile or have little liquidity. Stock Dilution Even when there is no need for capital raising, some corporations issue extra shares to raise their floating stock. Such a move enlarges the company’s outstanding shares, thereby diluting the stock. The primary factor affecting the firm’s share price is stock dilution, which may require one to sell their current holdings. What impact does floating stock have? Individual investors, specifically those who participate in pools like mutual funds and ETFs, are not directly impacted by the stock float. Additionally, long-term stock investors experience no direct effect on their investments. This is due to the possibility of a major improvement in performance, which might cause the high float stock to drop. In that case, the marketer must accurately evaluate the company’s future, vision, performance, growth, and other aspects. Also, the short-term volatility of stocks has a direct effect on investors, who often buy or sell stocks based on the volatility. It is not wise for any short-term trader to invest heavily in floating stocks. While investing in cheap stock floats, one can end up selling the stocks at a lower price. For short-term investment, this heavily depends on the company’s future goals and success. [B-02] The key takeaway There are only a few Indian companies with high floats. One may invest in low-floating companies but should always avoid sudden price fluctuations. Also, one should avoid small companies with low-flow floating stock. The price is bound to be vulnerable to manipulation. All in all, investing in low-float stocks is not a great idea. You might look for a buyer for your investment for a long time and never find one. Also, your investments might see high volatility, which increases the chances of loss. For more finance-related information, do not forget to visit Piramal Finance. We aim to simply finance better understanding.
08-11-2023
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Personal Loan

What is FOIR: Meaning of FOIR & its Effect on Personal Loan Approval

Personal loans are unsecured loans. To ascertain the borrower’s repayment capability, lenders have set certain parameters. One of the most common parameters is FOIR. The full form of FOIR is a Fixed Obligation to Income Ratio. It plays a key role in personal loan online approval. FOIR checks the payment obligations you have in relation to your income. This helps in determining your disposable income and whether you will be able to repay the loan without defaulting. FOIR is calculated considering a borrower’s Equity Monthly Instalments (EMIs). It tells the proportion of your EMIs to your income. Thus, it becomes an important factor while processing a loan application. Other factors that a lender considers while approving a loan are credit history, income records, instalment of current loans, etc. [B-01] How is FOIR Calculated? FOIR has a simple calculation formula. It is calculated by dividing a person’s total debts or existing obligations by their total monthly income multiplied by 100. Some lenders also consider the applicant’s rent and insurance premiums along with their EMIs as a fixed obligation. The EMIs could be for a home loan or a car loan. Other financial obligations can include: Credit card payments Monthly living expenses EMI of the loan the borrower is applying for However, the debt amount does not include tax deductions and contributions to Fixed Deposits and Recurring Deposits. FOIR = (sum of total debts/sum of total monthly income)*100 Now, let’s look at it with an example. Suppose a person’s total monthly income is Rs. 50,000. And their total existing obligations in a month are Rs 20,000. The FOIR will be 20000/50000*100=40% Effects of FOIR on Personal Loan Eligibility FOIR is considered in all types of loans, such as personal loans, home loans, etc. Since there is no asset security in personal loans, FOIR plays an important role. It is one of the most common parameters lenders consider while providing a personal loan. A lower FOIR signifies the borrower has fewer monthly fixed obligations or debts. This shows their repayment capability is strong. Hence, the chances of getting a personal loan increase. The average FOIR may vary from lender to lender and from case to case. Ideally, a FOIR must be between 40% and 55%. This makes securing a loan easy. However, people with a FOIR of at least 60% can get a loan too. But, this is usually the case with people with high net worth. Low FOIR Effects on Your Finances A low FOIR means that you have fewer obligations or debts. This shows you have a good amount of disposable income, making you capable of repaying a loan on time. These factors can help in securing a loan as they reflect favorable creditworthiness. Maintaining a low FOIR impacts your finances by: Reducing your total liabilities Increases your disposable income Improves the repayment capacity How to Improve Your FOIR FOIR on the higher side can cause trouble while securing a loan. It is one of the parameters that lenders consider. However, you can take some measures to improve your FOIR. These include: Pay off your outstanding debts. A lesser amount of debt will result in a higher FOIR. This will also result in a better credit score. Disclose other regular sources of income, if any. This will further help in improving FOIR. Do not take multiple loans at the same time. This leaves an impression of higher debt, which can result in lower chances of securing a loan. Maintaining a low credit utilization ratio is another way to improve your FOIR. The credit utilisation ratio compares the total amount of credit available to the amount of credit used. It calculates the maximum amount of credit that can be used. It is best to keep your credit utilization ratio under 30% before you apply for a personal loan. Loans are frequently denied when the credit utilisation ratio is high. Increasing your loan tenure can reduce your EMIs. This will further help in improving your FOIR. Maintain your credit history. Adding a co-applicant can also help in reducing the FOIR as the EMI burden is divided. Usually, adding an earning family member is advised. Do not switch jobs frequently within a short period of time. This leaves a negative impression on the lender. Ratio Impacting Loan Eligibility Generally, three ratios influence loan eligibility. These are: Fixed Obligation to Income Ratio (FOIR) Instalment to Income Ratio (IIR) Loan-to-Value Ratio (LTV) Conclusion A lender usually expects you to repay the loan on time. To be sure of this, they check your monthly income and see what portion of it is spent on repaying other debts. FOIR helps them ascertain this. Typically, a borrower should not be spending more than 50% of their income on repaying debts. These debts can include EMIs from home loans, car loans, credit card bills, and so on. A lower FOIR indicates that the borrower has healthy finances. Thus, securing a personal loan becomes easy. FOIR is one of the parameters that a lender checks. So, make sure you meet other criteria as well. We hope that this article has helped you understand the FOIR meaning. To learn more about personal loans, you can check out other blogs at Piramal Finance. Also, explore the various products and services they offer. [B-02] Bank Criteria for FOIR FOIR margins can differ from bank to bank. There is no set standard margin. However, a FOIR between 40% to 55% has the maximum chance of securing a loan. Lenders do consider people with higher FOIR for loans. These are generally people with a high net worth.
08-11-2023
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What is FPO and How Does it Work?

An FPO (Follow-On Public Offer) is a fresh issue of shares by a listed company. It comes after an IPO (Initial Public Offering) when a company’s shares are listed for the first time on a stock exchange. There is a significant difference between an FPO and an IPO. Companies usually announce an FPO to raise fresh equity or bring down their debt. Public companies take advantage of FPO using an offer for subscription documents. All proceeds from such an offering belong to the company that issues the stock. However, a company must fulfill various regulations to execute an FPO. Let us start by understanding the different types of FPO. [B-01] Types of Follow-On Public Offerings There are two main types of FPO based on the extent of dilution. Also, there is another route to go about getting an FPO. It is known as an “at-the-market” offering. Diluted Follow-On Offering This type of offering occurs when a company issues additional shares to raise funds. These shares are offered to the public for subscription. In this type of offering, the number of shares increases. This leads to a decrease in the earnings per share (EPS). The funds received through an FPO are used to reduce the company’s debt. They may also be used to alter the capital structure of the company. From a long-term perspective, the additional cash influx benefits the company and the shares. Non-Diluted Follow-On Offering In this case, the holders of existing shares bring their stock of privately-held shares to the public. Any proceeds from the sale of such shares go to the holders who place the shares on the open market. Generally, such shares are offered by the founders of the company. Or, company board members may come forward to offer such shares. In this case, since no new stock is offered, there is no effect on the EPS. Another way to create an FPO is by using an at-the-market offering (ATM). A company can raise the desired capital with this method. Another name for such an offering is controlled equity distribution. “This is because shares can be sold at prevailing prices in the secondary stock market. Raising additional funds through an FPO has many advantages for a company. The proceeds from such an issue can help a company pay off its debt. Consequently, it will help them improve their debt-to-value ratio. A company can even use such funds to finance different growth projects. Why Does a Company Issue an FPO and How Does it Work? The purpose of issuing an FPO is to raise fresh capital. Every company requires capital to conduct its operations. Additionally, capital is also needed to finance the purchase of various assets, expand plans, and pay off liabilities. After launching an IPO, a company can raise an additional round of funds from the public through an FPO. This is done by offering new shares to the general public, which generates money for the company. From a financial standpoint, the issue price of an FPO is generally lower than the prevailing market price of a share. The idea behind such pricing is to attract as many subscribers for the share as possible. The listed shares of the company face lower demand in the market. Due to this, their market price falls. Their price eventually converges on the issue price of the FPO. There are many factors that determine the success of an FPO. Here are a few examples: Profitability of the company Sentiments in the market and among investors Current trends in the market Potential for growth for the company From the perspective of an investor, an FPO is far more beneficial. As an investor, you can understand the company’s management. Having established itself, the company is an example of its business practices and growth prospects. Thus, if you are willing to invest your money in the company, an FPO is a safe path for you. A publicly traded company easily provides the historical reference needed to estimate its earnings report. Also, you can check the company’s performance in the stock market with reliable data to bank upon. So, if you were keen on investing in a company but were holding back due to uncertainty, a Follow-on Public Offer will still give you a chance. An FPO works simply. A company, which is already listed on the stock market, decides that it wants to raise new capital. If they have already raised funds from the public, this subsequent round will be termed an FPO. The company will need to file draft documents with the registrar of companies and issue a prospectus. Additionally, it will have to comply with any legal requirements of an FPO. After obtaining clearance, they can offer shares to the general public. The public can subscribe to the company’s shares at discounted prices during the offer period. It is how FPO works. As an investor, you can benefit by subscribing to an FPO. So, now you must have understood how FPO and IPO are different. Also, it is clear how FPO works and why it can benefit investors. [B-02] Conclusion So, an FPO is a method to raise funds from the public. There are two basic types of FPO. An investor can build confidence in a company by monitoring its performance. Later, they can apply to be a shareholder through the FPO. If you want more knowledge about an FPO or IPO, check out Piramal Finance. It is a premier destination for all types of financial products. You can explore the website to understand more about equity and debt and how companies structure their capital after raising funds through an FPO.
08-11-2023
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What is Form 16? How to Get Form 16? 

Form 16 is a certificate issued by an employer on behalf of the employees. It presents information on the tax deducted at source (TDS) by the employer. This is why it is also known as a “salary TDS certificate.” The form helps the taxpayer while filing income tax returns. Thus, every employer must provide their employees with Form 16 as it works as proof of tax paid. Generally, the form is not issued for employees that don’t fall under the tax bracket, as they don’t have to pay taxes or file returns. Form 16 is issued under Section 203 of the Income Tax Act, 1961. [B-01] What is Form 16? Form 16 has two parts: part A and part B. Part A contains information on tax deducted by the employer and other TDS-related information. Part B has details like your total income, taxes paid, tax deductions, other income, etc. Let’s take a detailed look at what both parts contain. Form 16, Part A Personal information of the employee and employer like name and address Permanent Account Number (PAN) of the employee PAN and TAN (Tax Deduction Account Number) of the employer. TAN is a number assigned to the account that collects or deducts tax. Assessment year. It is the year when the income earned is taxed. If the income is earned in the financial year 2019–20, then the assessment year will be 2020–21. Period during which the taxpayer was employed in the financial year Summary of salary with details like gross salary, incentives, deductions, etc. Summary of tax deduction and deposition throughout the year The date on which the tax was deducted from the salary The date on which tax was deposited in the account of the government Form 16, Part B Taxable salary of the employee. Here, the total salary is divided into additional sections like Leave Travel Allowance (LTA), House Rent Allowance (HRA), Leave Encashment, Gratuity, and others. Exemptions under Section 10 of the Income Tax Act are also mentioned in Form 16. These include hostel expenditure, conveyance, children’s education, etc. Deductions from salary under sections 80C, 80CCC, 80CCD, 80D, 80E, 80G, and others. These are contributions made to the Public Provident Fund (PPF), pension plans, life insurance policies, tax-saving mutual funds, etc. The maximum limit for deductions is Rs. 1,50,000 Gross income. This includes the total salary of the employee along with income earned from other sources like a house or property, etc. Net taxable salary. Total of all the deduction amounts that are reduced from the gross income. The tax liability is calculated on this amount. Education cess, surcharge, rebate under Section 87, relief under Section 89 The total amount of tax payable on income deducted TDS amount and balance tax due How to Get Form 16? Form 16 reflects the employee’s total earnings and tax deducted at source. Thus, it must be issued by the employer every year on behalf of their employees. You can get your Form 16 from your employer. In cases where you have quit the job, the employer must provide you with Form 16 for the period during which you received your salary. The employer or tax deductor can log in to the TRACES portal. A login ID and password are required for this. People logging in for the first time are given a user ID and password based on their TIN and TAN. One can also register as a new user in TRACES. Once logged in, go to the Downloads tab, where one can find Form 16/16A. Enter the required details to download Form 16. Fill in the details of the employee. The employer will have to fill in their details as well. Importance of Form 16 Form 16 has many benefits for the employees. Some of them are highlighted below. Form 16 acts as proof of tax paid. It ensures that the tax has been paid to the government on your behalf. It also acts as proof of income earned by an employee, which is recorded with the Indian government. The information helps in filing the income tax return (ITR). It also lets the taxpayer prepare their ITR without the help of a CA or a financial planner. Form 16 helps immensely during the verification process while securing a loan. It also helps during a foreign trip, as it serves as an essential document during visa processing. Some organizations, at the time of hiring new employees, ask for Form 16 issued by the previous employer. [B-02] Conclusion Form 16 is a very useful and important document. It contains all the details regarding the income earned and the tax deducted from it. Therefore, it proves to be helpful at the time of filing an income tax return. Apart from serving as proof of tax paid and income earned, it has other benefits as well. Many financial institutions ask for Form 16 at the time of securing loans or even term insurance. So whenever you receive Form 16 from your employer, make sure to save a copy. If you need help with your finances or want to read more such blogs, head over to Piramal Finance. Our experts there will help in solving your queries.
08-11-2023
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