Higher returns from post office savings schemes

The government has announced the freeing up the interest rates on post office deposits and small savings schemes on the lines suggested by the National Committee on Comprehensive Review of Small Savings. The committee had proposed pegging the rates of interest on post office deposits and small savings schemes to government securities with similar maturities, with a spread of 25 basis points in most instruments. What does this mean for interest rates on these schemes? Not much. The post office time deposits may see small increases in interest rates. But long term schemes such as the Senior Citizen's Savings Scheme and the Monthly Income Scheme will not earn much higher returns than now. The rate on another long-term scheme, the Public Provident Fund has however been raised to 8.6 per cent from the current 8 per cent. The investment limit has also been enhanced by Rs 30000 to Rs 1 lakh.

Pension tweaks

After many twists and turns, the insurance regulator has come out with final guidelines for pension products to be sold by insurance companies. It has said that life insurers can offer pension products both as market-linked and non market-linked plans. The original idea of such plans offering a guaranteed return of 4.5 per cent has been done away with. Instead, the regulator says that pension plans should specify the guaranteed maturity benefit at the outset. In short, investors should know the lump sum amount that they will receive on retirement.

No pre-payment penalty

Finally, there's some action on the waiver of pre-payment penalty. With the RBI questioning the incidence of this penalty, banks have now started to waive these charges. Among the early birds are Bank of India, Indian Bank and United Bank of India. SBI, which earlier waived the pre-payment penalty for new customers, has now extended the benefit to existing customers. However, for its fixed rate loans, there is still a pre-payment charge.

Demand your bank statement

Is your bank not providing you a passbook for your savings bank account or where there is statement facility, refusing to provide monthly statements? Then you may demand it under RBI's circular dated October 2006 as the central bank has once again reiterated that banks adhere to the earlier instructions in spirit.

Repayment of fixed deposits now with lesser hassle

Frustrated that your bank is demanding signatures of both depositors for allowing repayment of your fixed/term deposit? If you've opened a deposit account with ‘Either or Survivor' or ‘Former or Survivor' instructions, receiving repayment on your fixed deposits just got easier. In a directive, the Reserve Bank of India has said that if fixed or term deposit accounts are opened under ‘Either or Survivor', the signatures of both depositors need not be obtained for repaying deposits on maturity. In case your instruction is ‘Former or Survivor', the ‘Former' can withdraw the matured deposit even when both the depositors are alive. However, under both mandates, both signatures are required if the deposit is to be paid before maturity.

Cheques to have 3-month validity

With effect from April 1, 2012, you will have to cash your cheques, drafts, pay orders and banker's cheques within three months from the date of the instrument. Currently, you have a six-month period to cash these instruments. The RBI has stated that the six-month period is being misused by some to circulate the instruments like cash until it nears its tenure. Hence, it has decided to reduce the validity of cheques and other instruments.

Double Dhamaka

State Bank of Hyderabad has introduced a deposit scheme which would help investors double the money in 87 months, providing a yield of about 13.84 per cent. The product would be available to all resident and non-resident individuals. The minimum deposit required is Rs 10,000 and multiples of Rs 1,000 thereafter. There will be no premature penalty if the deposit is withdrawn after 60 months. In addition, customers can avail a loan against the deposit as well.

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