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Banking

Step-by-step guide on how to get a bank statement

A bank statement is a record of all of the transfers made by your account. It shows all of the credit and debit amounts for your account. The records are generally for one month. The service is available for both current and savings accounts. Most CAs urge you to generate account statements. They use it to plan the best way for you to pay taxes. Earlier, these were only provided at the bank using a passbook. Now you can generate it easily on your mobile phone. Even now, you can visit the bank physically and get the statement. The bank will then provide you with a printed record. But the best way is to get one online. You don’t need to stand in line outside the bank. You can get it with a few touches on your mobile device. [B-01] What information is included A bank statement will consist of the following details, but won’t be limited to: Your detailsThe statement has details about the account holder. It includes your name, address, mobile number, and PAN number. Your bank and account detailsIt will provide the bank name and IFSC number. It will further mention your account number and the type of account. Transfer historyIt includes a record of all credits and debits. These entries have specific dates and timestamps. The transferred amounts are recorded. The details about who paid and who received them are also mentioned. You can also find out the initial and final balance for that month. Why should we get a bank statement? It serves many purposes. Here are a few examples: It helps to make a monthly budget and keep track of your expenses. Regularly reviewing it also helps you spot fraud. It can also help you notice missing funds or financial errors. These are also filed with loan applications or income tax returns. They are also used to calculate your credit score. You can also identify the bank charges and the interest earned. Hence, you must keep monthly statements for up to a year. However, do not forget to destroy them after use. Otherwise, someone else can find out your account information and misuse it. What do you need to get a bank statement? You need a laptop, computer, or smartphone with an internet facility. You have an active net banking facility with valid login details. You must install the mobile banking app on your phone. The bank must have your KYC details. Your mobile number and email address must be linked to your bank account. How can you get an account statement for your bank account? As pointed out earlier, the easiest way is to generate it online. This bank statement is called an “e-statement.” You can go to the bank if you don’t have an internet facility. You will have to stand in a queue and submit a paper form. Then the bank will give you the printed statement. You can also call them to subscribe for a printed copy. They provide this service every month for a small fee. However, you can get it in real time using your mobile phone. Here are the ways to get an account statement online on your smartphone: Via Net Banking: Most banks ask if you want net banking when you open an account. You can also activate it after opening your account. Follow these steps to get your bank statement using net banking: Select the option of retail banking on the bank’s website. They provide separate facilities for individuals and businesses. Log in to your retail banking account using your login details. Make sure your password is valid. You need to generate a new one if it expires. You need to click on “forgot password” and proceed as per instructions if you don’t remember the password. Now look for the account you want to manage. After selecting the account, go to the “Transactions” or “Account” menu. Select the option to obtain the account statement. You will now see a list of your transactions on the screen. You can set the dates for which you want the statement. After selecting the duration, click on “Search” or “Submit.” You will now see a list of all the transfers for your selected period. Choose the format and click on “download” to get your statement. Via mobile banking The same process can be done using the bank’s mobile app. Follow these steps to download the account statement: Log in to the app with your net banking credentials. You can also set up an mPIN to log into the app. On the screen, select the option that says “Account/Passbook/Transactions.” Choose the account type and select the account you want to manage. Now tap on the account statement option. A list of all transfers will appear on the screen. Choose the format, and then click on “download.” The file is now present on your phone. Monthly subscription: Most banks send the account statement to your email address every month. Every e-statement is a secure file with a password. Different banks have different policies for passwords. Getting a mini statement A mini statement is a record of your last five transactions. You can get one using the same steps as above. You can also get it without the internet. Just send a text or a missed call to the helpline number from your mobile number. You will get the mini-statement in a text message. It will only show the last five transactions. However, other important details are not included. [B-02] Conclusion Most banks now provide the option of getting e-statements. Every month, you will receive these via email. The file is password protected, so no one else can misuse it. Remember to update your mobile number and email address with the bank. This is crucial, so use the best banking facilities. However, make sure you destroy printed statements after use. E-statements must also be deleted after use. You need to do this to keep your bank account safe. To get more information on financial products and services, such as bank statements, financial calculators, and personal loans, visit Piramal Finance.
08-11-2023
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Other

How To Use The CAGR Calculator Online?

Entrepreneurs want growth in their businesses while investors want growth in their investments. However, whether the businesses or the investments are growing or not will become clear only after one has measured their growth. So, how is this growth measured in the case of businesses and investments? The answer lies in the CAGR. What is it? Let’s find out! [B-01] What is CAGR? CAGR, also known as compound annual growth rate, is a measuring tool for determining how much growth a company or investment has achieved. It shows growth as a percentage compounded yearly. As CAGR also considers the time value of money, the actual returns on investment generated over a year get reflected through CAGR. To calculate the CAGR, the following formula is used: CAGR = [(Ending Value/Beginning Value) ^ (1/N)] – 1 Let’s understand this formula with a practical example: Amount invested: Rs. 15,000 Investment value after 3 years: Rs. 30,000 Therefore, N = 3 years CAGR = (30,000/15,000) ^ (1/3) – 1 = 25.99% If you want to find the absolute return on your investment, then you can use the following formula: Absolute return = [(30,000 – 15,000) / 15,000] * 100 = 100% It is challenging to use the above formula for every calculation. This is particularly true when you are planning your finances and examining several asset classes with differing rates of return. For instance, if you have investments in five different asset classes and want to know how each one is performing, you may do so by calculating the compound annual growth rate of each asset class. However, applying the above method will lengthen the process. What then is the alternative? CAGR calculator The CAGR calculator is a utility tool that allows you to calculate the compounded annual growth rate based on your inputs. It helps a lot when it comes to financial planning and decision-making. Following are the steps to use the CAGR calculator: Fill in the initial value of the investment. This is the amount that you have invested in any of your asset classes. Fill in the final value of the investment. The final value shall be as on the date for which you want to calculate your CAGR. Fill in ‘N’. ‘N’ represents the number of years for which you held your investment. For instance, if you invested on 1st January 2019 and redeemed your investments on 31st December 2021, then ‘N’ will be 2 years. What are the benefits of the CAGR calculator? The CAGR calculator online is one of the most used financial tools among investors. Following are the benefits of the CAGR calculator that makes it such a popular tool amongst investors: It is easy to use. With minimal input, you get your desired results. You can also use it as a mutual fund calculator. In case you have made lumpsum investments in any mutual fund, then you just need to enter the amount invested, its value on a particular date, and the number of years. It allows you to make comparisons easily with quick results. Just enter the inputs and you get your CAGR immediately. You can use the CAGR return calculator for calculating returns on your existing investments and restructure your portfolio such that to minimize the low-return yielding assets and increase the proportion of high-return yielding investments The CAGR calculator online is beneficial when it comes to future financial planning. You can set your investment goals and targets you want to achieve over a period of time and determine the class of asset accordingly. For instance, if you have Rs. 2,00,000 today and within 5 years, you will require Rs. 4,50,000, then you need to invest Rs. 2,00,000 such that it grows with a CAGR of 17.61%. Therefore, you just need to select an asset class that provides an annual return of 17%-18%. Investment decisions get a lot easier and more accurate with the CAGR calculator. The CAGR calculator can be used to compare the performance of any stock with its peers as well as to the performance of other industries. What are the limitations of the CAGR calculator? While the CAGR calculator is a handy tool, it certainly has its own limitations. The following are the limitations of the CAGR calculator: The CAGR calculator does not consider volatility. For instance, if you have derived a CGAR of 30% over a period of 5 years, then the CAGR calculator assumes that you have received a 30% growth rate for each of the 5 years. It does not consider the volatility i.e., for a particular year, the return may be 20% while for another year, the return may be 45%. The CAGR calculator can be used to derive returns only for lumpsum investments. When it comes to calculating returns on the Systematic Investment Plan (SIP), CAGR cannot calculate the same. The reason is that CAGR only considers the initial investment and final investment value whereas, in the case of SIP, the investments are done each month over a period of time. Therefore, to calculate the return on SIP, XIRR is being used. CAGR does not account for the risk involved to achieve such returns; it only displays the return on investment. Before making an investment, it’s important to understand the risk. For instance, risk-adjusted return is more significant than CAGR returns in the case of investments in equities, shares and instruments. Treynor’s ratio and Sharpe’s ratio must be used to evaluate investment risk. [B-02] In a nutshell The CAGR return calculator has been the key decision driver for many investors. When it comes to investments where you have set financial goals, it is important to make correct decisions to achieve your goals. This is because growth in investment requires time and once you end up making a wrong investment decision, you cannot reverse it. Therefore, it is important to make use of the utilities smartly that you have in hand and step ahead to make the right investment decisions. Are you using the CAGR calculator? If not, then begin now!
08-11-2023
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Other

Know How Compound Interest Calculator Works

When you earn interest on interest, this component is called compound interest. You may invest Rs 1000 in a deposit. This deposit pays interest at the rate of 8% p.a. The interest is payable twice a year. In this case, you earn compound interest. The first interest instalment is credited after six months. This interest amounts to Rs 40. This interest is calculated as Rs 1000X 8%X ½. This calculation represents simple interest. This interest is credited biannually. During the second half, an amount of Rs 1040 is invested. This amount is the total of the principal (Rs 1000) and the simple interest(Rs 40). So interest for the second half year is Rs.1040X8% X1/2 = Rs 41.6. Rs 40 is the simple interest, + Rs 1.46 is the compound interest portion. [B-01] Generic Formula to calculate Compound Interest The generic formula used by a compound interest calculator to calculate compound interest is as follows:- A= P*(1+r/n) ^ nt Where: A is the Maturity Amount, P is the principal or capital originally invested, r is the interest rate applicable n is the number of times interest is paid t is the number of years or total period. Illustration to show the difference between simple interest and compound interest Let us assume you have invested an amount of Rs 10,000 at 10% p.a. for 5 years. The simple interest uses the formula – Prt /100 The calculation of simple interest is as follows – 10000X 10/100X 5= Rs 5000 Suppose interest is credited twice annually. Then, the calculation of compound interest is as follows:- Total Interest =10000 X (1+ 10/2) ^(10*2)= Rs 6,288.6 This extra interest due to compounding = Rs 6,288.6-Rs 5,000 = Rs 1,288.6. This extra interest is the compound interest portion. Where is compound interest applied? You earn compound interest on deposits of money with banks. Most loan interest calculators also apply compound interest formulas. How to use a compound interest calculator There are many compound interest calculators available online. You can use any of them for your calculations How to use an online compound interest calculator Step1: enter the amount you want to invest Step 2: Enter the amount you want to invest monthly or yearly Step 3: No of years you want to stay invested Step 4: What is the total annual rate of return expected Note: You must choose a frequency of interest payments other than yearly. This frequency could be monthly, quarterly, or semi-annual. This method will result in compound interest calculation. Uses of the compound interest calculator The compound interest calculator will display the results within seconds. You can google compound interest calculator. There are several online calculators for compound interest. Interest may accumulate on a monthly basis. You don’t have to struggle with long-term compound interest calculations. The compound interest calculator may quickly do complicated calculations. It is reliable and practical. Benefits you derive from compound interest calculators You can understand the growth of your equity investments with the compounding effect. You can quickly figure out how much you have to save and invest monthly. It helps in your wealth maximization. You can plan your financial requirements very easily You may decide to break a deposit or a financial investment midway. You can quickly figure out the opportunity losses that you will incur. You can understand how various savings schemes in India work. You can project the growth of your savings over long periods. Benefits of compound interest You earn interest on your invested interest. The longer you remain invested, the more your savings will accumulate. Inflation reduces the purchasing power of your savings. Your real income also reduces. Compounding of returns protects you from this loss to some extent You or your company may have a lot of liquid funds. You can invest in assets where the return is compounded The more frequent the compounding, the higher the return earned. Compound Interest on loans Compound interest is calculated on both savings and loans. Interest is compounded daily on overdrafts and other instant loans for longer periods. That is why the effective interest rate on loans is so much higher. In comparison, interest rates on deposits are much lower. Formula to calculate compound interest on loans LA= LP*(1+r/n) ^ nt Where LA is the maturity amount LP is the Loan principal All other terms have been explained previously The calculation of totalIllustration for the calculation of compound interest on loans The loan principal is Rs 10,000. the interest rate on the loan is 10%. The period of the loan is 10 years. Calculation of total interest including the compound interest is as follows:- Loan maturity amount payable = 10000 X (1+ (10/365X1/100)) ^ (10*365). After 10 years, the total amount you would pay would be Rs 27,719. This is the original principal of Rs10,000 + simple interest of Rs 10,000 and compound interest of Rs 7,719. Compound interest arises because of the interest on interest calculation. This is quite high due to daily compounding on the loan. The consequence of daily compounding of interest So now you know why overdraft and line of credit loan interest rates are so high. You must make sure that you pay back the loan principal and interest on schedule. You can avoid large balances and high compound interest payments. [B-02] Key Takeaways Compound interest works to your benefit if you earn it on your savings. It works against your benefit on your loans. To discover the outcome of the final calculations, always use an online compound interest calculator. You must be aware of how compounding may ultimately affect your debts or savings. You will be more prepared in this manner. Longer periods and more frequent compounding result in higher compound interest. If you have any loan requirements, contact Piramal Finance. Their experts can help you calculate how much you need to borrow and how much EMIs you need to pay. *Please note that the formulae for compound interest and simple interest are showing as plagiarism. They are generic formulae available on many sites.
08-11-2023
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Other

Demat Account to Safeguard Your Investments: 2022 Edition

What is a Demat Account? Before we talk about trading, we must first understand a Demat account. Demat is short for a Dematerialized account. It holds electronic records of securities and shares. Besides, you can also store bonds and mutual funds. A Demat account is a must for trading. It is similar to using a savings account to keep your money. There are many benefits of owning a Demat account. Now, there are different types of Demat accounts. We will list them below and look at them in detail: Regular Demat Account: This Demat account aims to ease the trading process. It is the best Demat account you can use. Repatriable Demat Account: This account is for NRIs. It allows you can transfer funds to other countries. Non-Repatriable Demat Account: This account does not allow you to transfer funds abroad. [B-01] Eligibility for Demat Account Opening There are two things to check before opening a Demat account. The individual should be a resident citizen of the country The individual should be over 18 years of age. Essential Documents to Open a Demat Account Online Now, let us see the necessary documents for the Demat account. Identity proof: You must submit an identity proof having address and photograph. Also, a PAN card is mandatory. Income proof: You must submit either three months’ salary slips or an ITR statement. Signature: You must submit your signature on white paper. The sign should match the one on the PAN card. Photograph: You need one passport-size picture. Bank proof: You must submit bank proof like bank account statements. Address proof: You must submit your Aadhar card, driving license, passport, or voter ID card. Popular Demat Account Providers: Top 5 Picks Lets us have a look at the popular Demat account providers in India. We will discuss their benefits and features. 1. Zerodha Demat Account Zerodha is the best Demat account provider in the country. Today, it has a customer base of 5 million customers. The Demat account opening is a simple process. It offers a Zerodha app that teaches you everything about trading. It also lets you build your trading platform. Also, it has a Q&A section and blogs for all queries. Features: Easy to use. No hidden charges. Has a free online portal for learning the art of trading. 2. Upstox Upstox is a leading Demat account provider in India. Opening a Demat account online in Upstox helps you save money. It is a great trading platform with a website and mobile application. You can trade in mutual funds and shares. You get live insights on market information. Also, you can view live reports on the app. Upstox allows you to trade from anywhere, anytime. Join Upstox today! Features: Zero brokerage. Easy opening for a Demat account online. It has a mobile application for Android & iOS. Offers various plans and services. 3. ICICI Direct Demat Account ICICI Direct is a reliable name in the market. It has a customer base of over 20 lakh customers. They were the no.1 choice of investors until Zerodha took over. They offer three plans you can choose from. The first is the Secure Plan, and the second is the Saver Plan. Finally, it has the Pre-Paid Brokerage Plan. It offers a 3-in-1 trading account. Also, it consists of the bank account, Demat account, and trading account. Features: Secure option to manage finances. No charges for opening an account. Get instant cash in under 1 hour. Ready reports for stock purchases. 4. Angel Broking Angel Broking Demat Account is a famous brand. It has over 6 million clients. There are many benefits of opening a Demat account with Angel Broking. For instance, opening an account is free of cost. You can access monthly statements, live tracking, and account status. Download the Angel One app to learn and trade like a pro. There are some fantastic rewards and offers you receive as a customer. So, sign up today for a Demat account! Features: Start a Demat account online in less than an hour. Get a chance to earn higher returns. Get access to many applications. It makes use of a digital-first approach in stock trading. 5. Sharekhan Demat Account Sharekhan is one of the best Demat account providers available today. It is a suitable choice for everyone who loves trading. Currently, it has over 16 lakh customers in over 570+ locations. The best part is the interactive tools they offer to understand the market. Besides, they also have portfolio management services. Furthermore, you can trade bonds, shares, mutual funds, forex, and more. Features: Provide advisory services. No hidden charges for DP transactions. High accuracy and seamless trading experience. Reliable stock brokers in the country. [B-02] The Bottom Line There are many factors to consider before opening a Demat account online. So, find your Demat account provider today. Visit the Piramal Finance website and help yourself to the knowledge of wide-ranging financial products and services, especially credit cards and personal loans. Let us know if you like the article, and share your thoughts below. Help us get better by sharing your valuable feedback!
08-11-2023
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Tax

Key Learnings from 2021 about Income Tax

The Finance Act is a legal way by which the Indian govt. controls financial policy. The Act applies to the entire country. Only Jammu and Kashmir and Andaman and the Nicobar Islands are exempt. It contains changes to policies about income tax, customs, GST, etc. Initially, a Financial Bill is presented in the parliament. This is done in the last week of February. After some changes, it is passed by the Parliament. Then the President of India approves it, and the bill becomes the Finance Act. The Finance Act 2020 contained rules for direct and indirect taxes effective from 1st January 2021. Direct taxes are fixed taxes that you pay directly to the govt. Income Tax, Property Tax, and Wealth Tax are direct taxes. Indirect taxes are the ones you pay to other people. GST, excise duty, etc., are indirect taxes. The Finance Act 2021, which came into effect on 1st July 2021, overrides Finance Act 2020. [B-01] Income Tax Rules 2021 The Income Tax Act 1961 governs different tax regulations in India. It contains legal policies regarding the payment of Income Tax. It ensures that taxes are managed properly by the Indian Govt. However, the Finance Act has the power to amend this Act. This is done to keep inflation in check. It is also done to match the laws with the economy. There are minor changes in Income Tax Rules change every year. Taxpayers must be aware of the changes to the income tax rules 2021 brought by the Finance Act, 2021. Key takeaways from changes to Income Tax Rules 2021 The Finance Act 2021 came into effect on 1st July 2021. The Income Tax (IT) Rules changes were not as major as in 2018. The changes to the Income Tax Rule for 2021 are as follows: TDS/TCS deduction at the original (higher) rate is now in effect. Tax Deducted at Source (TDS) is a tax that is deducted before a person, or a business makes an income. The aim is to avoid tax evasion. TDS is deducted only if the payment exceeds a certain threshold limit. The key amendments are for the purchase of goods, the pension income of eligible senior citizens, and higher TDS rates for people who don’t file ITR. They are as follows: From 1st July, a higher rate was deducted if you have not filed IT returns in the previous two years. Until Finance Act 2020, a higher TDS rate was deducted only for those who didn’t have PAN. The higher rate will be as follows: Twice the rate specified in the Income Tax Act, or Twice the rate in force, or 5% of the TDS rate A higher value of TDS will be deducted from non-salary payments. As per the Finance Act 2020, there was a concession of 25% in certain cases. Buyers of goods, responsible for paying any sum to any resident Indian, need to deduct tax @0.1% of the purchase amount. This shall be deducted if the purchase amount exceeds Rs. 50 Lakh. TDS needs to be deducted at the time of credit of the sum to the seller’s account. If there is a credit delay, it will be deducted at the time of payment. As per the Finance Act, 2020, businesses with a turnover of more than Rs 5 crores would be liable to an audit. The Finance Act 2021 increased that limit to Rs. 10 crores. Resident senior‐citizen aged 75 years or more, earning only pension income, will be exempt from filing ITR. New tax slabs are now out in FY 2021-2022 but for AY 2022-2023. This means the new tax slab will only be applicable for IT returns in 2022-2023 and not in 2021-2022. Yearly income in the financial year (FY) is considered in the tax slabs. The new tax slab of the Income Tax Rules 2021 applies to all individuals and is as follows: Income Rs 0-2.5 Lac: NIL Income Rs 2.5 Lac Rs – 3.0 Lac: 5% (tax rebate available) Income Rs 3.0 Lac Rs – 5.0 Lac: 5% (tax rebate available) Income Rs 5.0 Lac Rs – 7.5 Lac: 10% Income Rs 7.5 Lac Rs – 10.0 Lac: 15% Income Rs 10.0 Lac Rs – 12.5 Lac: 20% Income Rs 12.5 Lac Rs – 15.0 Lac: 25% Income Rs 15.0 Lac or above: 30% As per the Finance Act 2020, an Equalisation levy was not applicable if the eCommerce operator’s sales, turnover, or gross receipts were less than ₹ 2 crores during the previous year. For turnovers of more than 2 crores, the levy was applicable for Non-resident eCommerce providers. In the case of residential providers, the person paying to purchase the goods or services would pay the levy. With the Finance Act 2021, non-resident e-Commerce operators are not liable to pay the 2% Equalisation levy on the value of the sale of goods. There is a reduction in the time limit for filing IT returns. The IT returns for FY 2020-2021 are paid in the Assessment year (AY) 2021-2022. The last date for the original/revised IT returns filing for the previous FY is 31st December of the relevant AY. Any late fees will be levied, if applicable. However, owing to the Covid-19 pandemic, the last date for AY 2021-2022 is 31st January 2022. Until Finance Act 2020, Limited Liability Partnerships (LLPs) and Hindu United Families (HUFs) were liable to taxation. Finance Act 2021 removed LLPs and HUFs from the taxation scope for professionals. [B-02] Conclusion The Income Tax Act also called the Taxation Laws Act 2021, amended the IT Act 1961 and the Finance Act 2012. These changes in the Income Tax Rules for 2021 were introduced by the Finance Act 2021. The new tax rules provide lower rates, but businesses will need proper financial knowledge to thrive. The new rules were formed keeping in mind the effect of the pandemic and the possibility of another lockdown. Are you looking for similar finance blogs? Visit the Piramal Finance website and help yourself to the knowledge of wide-ranging financial products and services, especially financial calculators and a wide variety of loans.
08-11-2023
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Mutual Funds

SIP Calculator: To Calculate Your Mutual Funds Return

Mutual funds wanted their investors to have an investment plan which was maintained in an organised manner. Hence, they came up with systematic investment plans (SIP). You have to invest a certain sum within defined time intervals. SIP investments are easy to use and perfect for risk-averse investors. No extra charges are charged; it does not come with the stress of share market volatility. The plan can also be discontinued any time the investor wants to. With the help of a mutual fund SIP calculator, you can also know the amount you will receive on maturity. SIP is available to all types of investors. You can start with an amount as low as Rs.500. However, you must make regular payments. You can have weekly, monthly, quarterly, or annual payment due dates based on your chosen plan. The SIP return calculator considers the principal amount and the number of installments you have paid. You can find the SIP calculator easily available online for free. Benefits Of the SIP Return Calculator Here are some of how SIP calculators are extremely useful for you as an investor: Simplicity: The SIP calculators are very easy to use. You just have to find one online, put in the required inputs, and you will be presented with the return result quickly. After knowing your return from SIP, you can move forward to planning the other investments required to meet your financial goals. Less Information Required: To calculate your return through the SIP calculator, you just need to put in the amount along with the frequency of payment and the rate of return. The calculator will give you your return based on that. Free Of Cost And No Confusion: You can use these mutual funds SIP calculators for free. Also, if you are a new investor, these calculators will not confuse you as they require direct inputs and give direct results. Quick Results: SIP return calculators do not take time to function the equation and give you an immediate answer. You will get your results within a few seconds only. How the SIP Return Calculator Works The mutual fund SIP calculator works very simply. Inputs Required You have to pay the amount in installments. A SIP investment can start with any amount equivalent to Rs.500 or more. However, Rs.1,000 is the minimum required investment amount in other investments. The total number of installments. A SIP starts with a minimum period of 6 months and can be extended to a long period. Long periods give higher returns, so you can choose the tenure according to your requirements. When you choose your SIP plan, you will learn about the return you will receive on it. So, the last input for the SIP calculator would be the rate of return on your SIP investment. SIP return calculators can also help you determine the amount and number of installments required if you know the total amount of money you want from the investment after a stipulated period. Another thing that you should note is that the resultant figure from an advanced SIP calculator takes the expected inflation rate or capital gains tax into account. Formula Used In Mutual Fund SIP Calculator FV= P x {[(1+r) n -1] /r} x (1+r), where, FV is the future value of your investment. P is the amount you pay at respective intervals. r is the rate of return in periodic terms. n is the total number of payments you have made throughout the tenure. Even though it is not required for you to know this formula, it helps in building investor confidence. If you know about the inputs and the workings of the formula, you will be satisfied with the SIP calculator's result. SIP Calculator- A Practical Example Question Suppose you invest Rs.1,000 monthly for a year (12 months). Calculate the amount that you will be receiving on maturity. The rate of return on your SIP investment is 12%. Solution FV= P x {[(1+r) n -1] /r} x (1+r), where, P= Rs.1,000 r = 12%/12= 1%= 0.01 n= 12 So, FV= 1,000 x {[(1+0.01)12 -1]/0.01} x (1+0.01) = 1,000 x [(1.1268-1)/0.01] x 1.01 = Rs.12,809 approximately. Note: These figures are just an example. Market interest rates keep changing with time and inflation. How Can You Invest In SIP Online The steps to invest in SIP online are: Keep the Required Documents Ready: To get started, you would require your PAN card, address proof, a cheque, and a passport-size photo. Although your Aadhaar card is not essential, you can use it to simplify the process. A good internet connection will be beneficial. Complete Your KYC: As an investor, you must provide the basic information required and comply with the KYC norms. This can be done online, saving time. Use The SIP Calculator: If you want to choose a plan based on the return, use the SIP return calculator to learn about it and then choose the plan. Start Investing: After calculating your return, start with your first installment payment, and your SIP tenure will begin. [B-02] Final Words A safe investment like a SIP can be very beneficial because you can estimate your return. However, make sure that your payments are made on time. Your SIP will be canceled if you do not pay 3 installments at a stretch. Use a SIP calculator to determine how much you can earn if you invest today!
08-11-2023
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Other

Debenture: Basics, Features, Types and Advantages

What is a debenture? A debenture is a long-term loan (usually more than 10 years) that a company or government issues to the public to fund the capital requirements of the organisation. Once you buy a debenture from a company, you become a creditor, and the company is obligated to pay you the principal and the promised interest rate. [B-01] Debenture Highlights: Once you buy a debenture, you will receive the promised interest rate and the principal amount on maturity. Coupon rates on debentures can be fixed or floating. In the case of floating rates, the interest rate of the debenture will reset at regular intervals. If you buy a debenture from a reputed and creditworthy issuer, your money is secured, and you can also enjoy higher interest rates than bank FDs. In the event of liquidation of the company (the company going bankrupt), debenture holders will be paid before preferred shareholders and equity shareholders. So you can consider your money safer than investments made by the organisation’s preferred and equity shareholders. As there is no collateral to back debentures, the rate offered is slightly high, which will help tackle the ever-increasing inflation rate and preserve your capital. Features of Debentures Debentures have the following features: Credit rating. There is no collateral to safeguard your investment in debentures. The interest rate offered by the debenture issuer depends on its creditworthiness (denoted by a credit rating). If the issuer’s financials are sound, the rate offered on debentures will be lower as the risk is lower. Interest Rate: The coupon rate is the interest the issuer offers on debentures. The rate can be either fixed or floating. If the rate is fixed, you will receive a fixed interest rate on your principal amount at regular intervals. In the case of a floating coupon rate, the base rate is tied to a benchmark like LIBOR or MIBOR, and when the benchmark changes, the coupon rate also changes. Maturity Date: Debentures are not perpetual like equity or preferred shares—they have a maturity date. On the day of maturity, the principal and accrued interest are paid to the debenture holder by the issuing company. Convertibility of Debenture: Some businesses issue debentures, which can be converted (convertible debentures) into shares after a certain period. This makes it easier for investors to gain business ownership and enjoy financial gains when revenue increases. The issuer benefits from low-cost borrowing because convertible debentures have a lower interest rate than non convertible debentures. Sinking Fund: Debentures are obligations that companies need to obey. On the day of maturity, the debenture issuer will have to pay the whole principal amount along with accrued interest. Organisations create a fund to pay the debenture holders to avoid the sudden cash requirement. Slowly, they set aside a portion of their profit to pay the debenture holders. Liquidity: Debentures are liquid. Like shares, they trade in the capital market, and the price of the debentures changes as per demand. If the market interest rate increases, the price of debentures in the market falls, and vice versa. Types of Debentures There are eight major types of debentures, based on four different categorisations: Based on convertibility: Convertible debentures Convertible debentures can be converted into equity shares of the issuing company at a fixed rate. If you notice that the company’s share price is going up drastically, you can convert your debentures, get equity shares, and enjoy the rising price. The convert option is an advantage you are receiving, so the interest rate offered for a convertible debenture is less than for a non-convertible debenture. Non convertible debentures Non convertible debentures are traditional debentures that cannot be converted into stock by the issuing business. So, to make up for the fact that investors can’t turn it into cash, it pays a higher interest rate than convertible debentures. Based on security: Secured debenture A debenture is secured if it is issued against a firm’s assets. If the business defaults or lacks the resources to repay the loan, it might reimburse the money by selling the related asset(s). Creating a sinking fund to pay debentures on maturity reduces the risk of default and makes it secure. Unsecured debentures Unsecured debentures are debentures that are given out by a company without any claim on its assets. Based on tenure: Redeemable Debentures Redeemable debentures are debentures that the issuing company can redeem after a specified period. The debenture issuer will generally redeem a debenture when the rate offered in the debenture is higher than the market rate. The issuer will redeem your debenture and then issue new debentures at a lower market rate. Irredeemable debentures Irredeemable debentures cannot be redeemed or repaid while the corporation is still in operation. So as a debenture holder, you are safe, as you can enjoy the coupon payments for longer. Based on registration: Registered Debentures Registered debentures are debentures in which all information about their holders, such as names, addresses, etc., is kept in a separate register at the company’s headquarters. So, a proper name transfer is required to sell your debenture. Bearer Debentures These debentures are transferred through simple delivery, preserving no specific record in the business register. So, you can just sell it to any person, and no documentation is required. Advantages of debentures Debentures have various advantages for investors and the company. Non-dilution of ownership Compared to businesses that issue share capital, where control is diminished because of the shareholder’s voting rights, holders of debentures do not have any voting rights. Therefore, you will not be able to participate in the company’s decision-making. More affordable source Debentures are a more cost-effective mode of debt for the company as the costs of listing and flotation are lower than those of equity capital. Advantages to investors: Fixed income Investors receive a fixed annual income regardless of whether the firm is profitable. A corporation is required to pay interest on the issued debentures. So you will have a steady income. With equity owners, the dividend is entirely based on the revenue generated. If there is no profit, the company is not obligated to pay dividends to equity shareholders. Secured Investment In case of liquidation, the claim of the debenture holder comes before equity and preferred shareholders, which makes debentures more secure. Inflation-protected return Inflation-protected debentures secure your money from rising inflation rates. The coupon rate is tied to an inflation index, so whenever inflation increases, the coupon rate also increases. [B-02] Final thoughts Debentures are unsecured bonds that enterprises and governments commonly issue. Compared to secured bonds, secured by collateral, unsecured bonds are riskier as they do not provide any asset backup if the issuer defaults; they rely only on the business’s reputation and creditworthiness. At Piramal Finance, you will find authentic and personalised information on financial products and services, including various loans and financial calculators.
08-11-2023
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Banking

Everything You Need to Know About Corporate Banking

Business banking has many features. Corporate banking is a part of it. This service is only offered for the corporate. It provides cash, credit, net banking, and related services. The other name for it is “institutional banking.” Universal banks are the leading corporate banks currently working in the market. Read on to learn more about it. [B-01] What is corporate banking? It is one of the many branches of banks. Their main work is to give loans to firms in the finance, public, and private sectors. It falls under the branch of investment banking. The working model of such banks is the same as regular banks. Services like net banking, credit, and managing finances are also provided. The only difference is that ordinary banks give loans to small firms and individuals, while corporate banks offer services to big firms. Services offered by corporate banking Treasury Service: Usually, firms manage the working capital. So they use treasury services. These MNCs help in the exchange of money. It has great value for firms. Credit: Clients get credit-related products, like loans, etc. Here, normal banks get the largest share of profits from credit services. Because lending to corporate clients has a risk factor attached to it. Thus, the interest rate is higher than others. Fixed asset requirement financing: Various firms invest money in the market. Such as an IT company that produces heavy machines and is in the transportation sector. They need fixed assets to function. Corporate banks provide loans per the firm’s needs. They also help with lease agreements for buying machines, etc. Commercial Services: Corporate banking offers many services. These include knowing the actual asset, portfolio management, etc. They help you learn about leverage with an equity and debt plan. You get a few more things, like underwriters for IPOs (initial public offerings), managing assets, etc. Employer Service: These banks offer various facilities as employer services. This includes selecting plans after one retires, health care plans, helping with payroll, etc. Corporate Banking’s Characteristics Clientele: Their main clients are firms that are small to mid-size and also large giants of the market. Liability: Every company under the law is considered a single legal entity. Hence, a corporate account’s assets are the firm’s property and not those of any single board member. This gives little help to corporate accounts. Also, no one from the board of directors can use this money for their reasons as it is the firm’s asset. Authority: Only after the board permits opening the firm’s corporate banking account can it be done. The treasurer of the firm is the one who opens the tab. He can do that only after a formal notice or if it has been decided by official voting. Bankers: Corporate banks need a team of experts who are the best in their field. That is the reason that they offer good money to them. Credit rating: The corporate account is part of the company’s credit history. This affects the interest rate for the loans extended to the firm, the firm’s share prices, and its market value. Corporate Banking Trends In a growing market, firms tend to lean on bank loans. It’s the cheapest way to finance a business. Unlike regular banks, corporate banks sometimes give out loans by merging with other lenders to reduce the exposure of a single party. The size of the corporate banking client is directly related to how easily they get credit solutions. This means the larger the firm’s size, the easier it is to get into corporate banking credit solutions. In mature markets, the firms tend to have a termed-out debt. Short-term debts are made into long-term debts without taking on any extra debt. Corporate banking vs. private banking They mainly differ because both banks have different types of clients. The private bank provides loans to high-net-worth and very high-net-worth individuals. Private banks provide credit services, including estate planning, asset management, concierge service, and tax preparation. There are very few commonalities between private banks and corporate banks. There are times when corporate bankers tend to cross-sell their banking services to the senior manager of a critical client. Corporate banking vs. investment banking Investment banking is also another name for corporate banking. Several points exist between the two that are the same, and they are sometimes seen working as a part of the broader capital market. Recuring relationship management is the main focus for corporate banks. But then, investment banks are more about finding new ideas and providing corporate finance advisory services. The difference between corporate banking and debt capital market (DCM) Debt capital market and corporate banking Both bodies have credit. [B-02] Conclusion Finally, a corporate bank is a financial institution that provides a variety of services to businesses. It offers credit, treasury services, net banking, employer, commercial, and many more. It has certain features. They are clients, liabilities, credit rating authorities, and a few others. It falls under the category of investment banking. It needs to work side by side with many other bodies of banking. If you need help with finances, you can always take the help of experts such as Piramal Finance to guide you through your personal finance woes.
08-11-2023
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General Insurance

Why Everyone Needs a Life Insurance Policy

We must often ask why everyone should have life insurance plans. We prefer to secure most things differently. We check and re-check that we have our keys, wallets, and mobile phones. We check that lights and electrical devices are switched off. When you shop, you check the expiration date, returns, and refunds. You only pay if you are satisfied with the whole process. We even have vehicle and property insurance. But we don’t always believe in health and life insurance. [B-01] What is Life Insurance? It’s a legal agreement between the insurance company and the policyholder. The policyholder must pay premiums for a fixed number of years. This amount is given at the end of the process in a lump sum. One of the main reasons for life insurance is financial security. On the policyholder’s death, the money goes to the family. This can help in tough times. Seven Reasons Why Everyone Should Have Life Insurance 1. To provide financial security for loved ones: The goal of the head of a family is stability. You want to provide financial security for loved ones. But we cannot predict what will happen next in our lives. How do we assure consistency and stability? How do we do this, especially when it comes to money? Life insurance is the way to do this. It is a vital step to safeguard our family. Life insurance is a way to protect your loved ones financially. It will allow the family to continue even if anything bad happens to the breadwinner. 2. Financial assistance: Life is sometimes uncertain. It throws hindrances in our way. It’s hard to avoid them. It is essential to have financial support to at least minimize the load. This is also required for the end of work and old age. It creates freedom. It reduces dependence on others. It helps with unfavorable events. Financial relief becomes helpful when the obstacles are many and the help is limited. Every bit matters, so keep that in mind. 3. Expression of love: Life insurance is not for the individual who earns it but for those who rely on them. It is never about the breadwinner. It’s what they leave behind. It is essential to have life insurance since it provides financial security. It gives peace of mind. This feeling of relaxation is due to a secure future. It is the assurance that the family’s requirements will not be at risk because of financial stresses. 4. Purchases time and choices: Life insurance plans may be seen as a purchase of time if the earning member is no longer there. When a family member dies, you may not have people around to advise you on what to do. They may not be able to help you make the appropriate choice. When you’re emotionally unstable, you frequently make decisions that aren’t beneficial in the long run. You feel compelled to do them due to a lack of alternatives. You may consider a ready but low-paying job. This may include a bond for two or more years. The children might be enrolled in a school with lower costs and educational standards. In situations like these, life insurance can help the client buy time and explore options. 5. Aids in tax reduction: Life insurance also helps in tax reduction. Regardless of the size of the death benefit, the individual who receives it does not pay any taxes. Furthermore, if the individual is still alive, life insurance may help save taxes at the end of the fiscal year. In the case of inheritance, you have to pay taxes for the money or property given to you. With life insurance, you do not do this. So, life insurance is highly beneficial to the individual. This long-term investment should be obtained without hesitation. 6. Makes retirement easier: We’ve been talking about what happens if the earning member passes away. But life insurance is also valuable when the person is alive. Life insurance makes retirement easier. When the life insurance reaches maturity, the person receives the total amount. Thus, they keep a large sum for themselves, which will eventually benefit them after retirement. The adage “Money saved is money earned” applies well here. The insurance does make retirement easy and steady. The retiree does not feel financially insecure or reliant on anybody. 7. Peace of mind: A person with life insurance knows that they and their family are prepared for the worst-case scenario. Nobody knows what will happen to someone. Therefore, it is best to be prepared. And, of course, if you don’t have life insurance, it’s better late than never. Purchase life insurance, and you will get a prize. Peace of mind is a gift, and not everyone has the opportunity to enjoy it. Sleep better at night, knowing everything is in order, and everyone is ready if something unexpected occurs. Even if no one wants such moments, it is always a good idea to be prepared for them. [B-02] Conclusion Life insurance is essential, and one should always consider it and have it done for the upheavals and challenges that life brings.It is a critical step in ensuring the family’s financial stability in the future. With all of life’s hazards, having protection is always a smart idea. There are four fundamental reasons why everyone should buy and keep at least one form of life insurance coverage throughout their lives. If you need more guidance and assistance with your choice of insurance coverage, visit Piramal Finance. This online platform is what you need to learn everything about relevant financial products and developments. Check out their blogs to learn more about financial matters, such as personal loans, credit cards, and financial management.
08-11-2023
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