investments in bank

7/29/2019 investments in bank

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INVESTMENT IN

VERIOUS SCHEMESOFFERED BY BANKS


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SAVING DEPOSITS

This type of deposits encourages saving habit

among the public. The rate of interest is low.

At present it is about 5% p.a. Withdrawals of

deposits are allowed subject to certain

restrictions. This account is suitable to salary

and wage earners. This account can be

opened in single name or in joint names.

SAVING DEPOSITS

This type of deposits encourages saving habit among the public. The

rate of interest is low. At present it is about 5% p.a.

Withdrawals of deposits are allowed subject to certain restrictions.

This account is suitable to salary and wage earners.This account can be opened in single name or in joint names.


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FEATURES OF SAVING DEPOSITS

The main objective of saving account is to promote savings.

There is no restriction on the number and amount of

deposits.

Withdrawals are allowed subject to certain restrictions.

The money can be withdrawn either by cheque or

withdrawal slip.

The rate of interest payable is very nominal on saving

accounts. At present it is about 3.50% p.a in India.

A minimum amount has to be kept on saving account.

No loan facility is provided against saving account.


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ADVANTAGES OF SAVING DEPOSITS

Saving account encourages savings habit among salary earners

and others who have fixed income.

It enables the depositor to earn income by way of interest.

Saving account helps the depositor to make payment by way ofcheques.

The bank offers number of services to the saving account

holders.


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FIXED DEPOSIT ACCOUNT

Lump sum amount is deposited at one time for a

specific period.

Higher rate of interest is paid, which varies with the

period of deposit.

For eg: Withdrawals are not allowed before the expiry of the

period. Those who have surplus funds go for fixed

deposit.


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FEATURES OF FIXED DEPOSITS

The main purpose of fixed deposit account is to enable the

individuals to earn a higher rate of interest on their surplus

funds (extra money).

The period of fixed deposits range between 15 days to 10

years.

A high interest rate is paid on fixed deposits. The rate ofinterest may vary as per amount, period and from bank to

bank.

Withdrawals are not allowed. However, in case of

emergency, banks allow to close the fixed account prior to

maturity date.The depositor is given a fixed deposit receipt, which

depositor has to produce at the time of maturity.


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ADVANTAGES OF FIXED DEPOSIT ACCOUNT

Fixed deposit encourages savings habit for a longer period of

time.

Fixed deposit account enables the depositor to earn a high interest

rate.

The depositor can get loan facility from the bank.

On maturity the amount can be used to make purchases of assets.The bank can lend such funds for short term loans to

businessmen.

Fixed deposits indirectly boost economic development of the

country.

The bank can also invest such funds in profitable areas.


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CACULATION OF FIXED DEPOSIT

Deposited amount 50000

Interest Rate 9.25%

Period of deposit(in months) 60

Total Interest Receivable 289849

TOTAL MATURITY AMOUNT 789849


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CURRENT ACCOUNT

This type of account is operated by businessmen.

Withdrawals are freely allowed. No interest is paid.

In fact, there are service charges. The account holders

can get the benefit of overdraft facility.


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FEATURES OF CURRENT ACCOUNT

The main objective of current bank account is to enable the

businessmen to conduct their business transactions smoothly.

There is no restriction on the number and amount of

deposits. There is also no restriction on the withdrawals.

Generally bank does not pay any interest on current account.

Nowadays, some banks do pay interest on current accounts.

Current account is of continuing nature and as such there isno fixed period.


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RECURRING DEPOSITS

This type of account is operated by salaried persons and petty

traders.

A certain sum of money is periodically deposited into the

bank.

Withdrawals are permitted only after the expiry of certainperiod.

A higher rate of interest is paid.(rate of interest varies from

bank to bank)


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The main objective of recurring deposit account is to develop regularsavings habit among the public.

The period of deposit is minimum six months and maximum ten

years.

The rate of interest is higher.

No withdrawals are allowed.

The bank provides the loan facility. The loan can be given upto 75%

of the amount standing to the credit of the account holder.

FEATURES OF RECURRING DEPOSITS


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ADVANTAGES OF RECURRING DEPOSITS

Recurring deposit encourages regular savings habit among

the people.

Recurring deposit account holder can get a loan facility.

The bank can utilies such funds for lending to businessmen.

The bank may also invest such funds in profitable areas.


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RECURRING DEPOSIT CACULATION

Monthly Instalment Amount Rs: 1000

Annual Interest Rate 10%

Period in Month(s) -

(Must be divisible by 3)

60

Maturity Amount (Approx) Rs 77911

Interest Amount -(included in

Maturity Value) : Rs

17977


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NON BANKING ACTIVITIES BY BANK

Mutual funds are very popular because of expansion and diversification

of the financial sector.

The Unit Trust of India (UTI) was the first financial institution to start

mutual funds in India.

Many other banks now have mutual funds such as ICICI Mutual Fund,

SBI Mutual Fund, HDFC Mutual Fund, etc.

Mutual Funds are controlled by SEBI.

Mutual Funds are purchased by investors because they offer minimum

risk, maximum return and liquidity.

MUTUAL FUNDS


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Mutual funds with their resources and expertise invest on behalf ofindividual investors giving them capital appreciation with minimum risk.

Mutual funds publish the NAV (Net Asset Value) of their funds daily.

They also repurchase the units issued by them based on their NAV.

Investors who like to play safe go for mutual funds.

MUTUAL FUND


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INSURANCE

Banks are now allowed to offer insurance services

through separate branches. Many Indian banks such

as ICICI, IDBI, HDFC, etc., have entered into foreign

collaborations to provide life insurance service in India.

ICICI has joined Prudential Life, HDFC with StandardLife, IDBI with Fortis (now Federal) to provide life

insurance services to Indians.


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Public Provident Fund (PPF) is a savings-cum-tax-saving

instrument in India. It also serves as a retirement-planning

tool for many of those who do not have any structured

pension plan covering them.

The account can be opened in designated post offices, State

Bank of India branches and branches of some nationalised

banks. ICICI Bank was the first private sector bank which

was authorized to open PPF accounts.

PPF Accounts

(Public Provident Fund)


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Deposits made in PPF accounts up to prescribed limits are

eligible for relief under section 80C of Income Tax Act.

Interest earned on deposits in PPF accounts is exempt from Income Tax.

The entire balance in a PPF account is exempt from Wealth Tax.

The balance in a PPF cannot be attached under a court decree

PPF Accounts(Public Provident Fund)


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PPF Calculator Results

Year Opening Balance Your investment Interest Earned Closing Balance

1 Rs. 0.00 Rs. 50,000.00 Rs. 4,300.00 Rs. 54,300.00

2 Rs. 54,300.00 Rs. 50,000.00 Rs. 8,969.80 Rs. 113,269.80

3 Rs. 113,269.80 Rs. 50,000.00 Rs. 14,041.20 Rs. 177,311.00

4 Rs. 177,311.00 Rs. 50,000.00 Rs. 19,548.75 Rs. 246,859.75

5 Rs. 246,859.75 Rs. 50,000.00 Rs. 25,529.94 Rs. 322,389.69

6 Rs. 322,389.69 Rs. 50,000.00 Rs. 32,025.51 Rs. 404,415.207 Rs. 404,415.20 Rs. 50,000.00 Rs. 39,079.71 Rs. 493,494.91

8 Rs. 493,494.91 Rs. 50,000.00 Rs. 46,740.56 Rs. 590,235.47

9 Rs. 590,235.47 Rs. 50,000.00 Rs. 55,060.25 Rs. 695,295.72

10 Rs. 695,295.72 Rs. 50,000.00 Rs. 64,095.43 Rs. 809,391.15

11 Rs. 809,391.15 Rs. 50,000.00 Rs. 73,907.64 Rs. 933,298.79

12 Rs. 933,298.79 Rs. 50,000.00 Rs. 84,563.70 Rs. 1,067,862.49

13 Rs. 1,067,862.49 Rs. 50,000.00 Rs. 96,136.17 Rs. 1,213,998.66

14 Rs. 1,213,998.66 Rs. 50,000.00 Rs. 108,703.88 Rs. 1,372,702.55

15 Rs. 1,372,702.55 Rs. 50,000.00 Rs. 122,352.42 Rs. 1,545,054.97

PPF CALCULATER


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Any person who has completed the age of 60 years istreated as a senior citizen for obtaining the benefit of the

additional interest.

Senior citizen may deposit jointly with other persons

below the age of 60, under the special scheme for senior

citizen. In such cases the name of the senior citizen is to be

given as the first name in the application.

Senior Citizens Savings Scheme Details


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Senior Citizens Savings Scheme (SCSS) is a Government ofIndia Product.

9% interest offered to depositors.

Since the product is offered by Govt of India, this product is

one of the most Safest Investment Option.

Premature closure of account is possible after one year from

the date of opening the account.(Charges applicable)

Senior Citizens Savings Scheme Details


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