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Rules for non-bank ATMs

The Reserve Bank of India (RBI) today stipulated that non-bank entities wanting to establish automated teller machines — known as white label ATMs (WLAs) — must have a minimum net worth of Rs 100 crore.

It also set stiff targets in terms of how many such money dispensing machines need to be installed.

It may be recalled that the central bank had come out with draft norms on white label ATMs in February. Announcing the final guidelines today after seeking views from banks, public, ATM network operators and non-bank entities, the RBI said non-bank entities, known as white label ATM operators (WLAO), would have to maintain a net worth of Rs 100 crore at all times.

The apex bank said while the WLA operator was entitled to receive a fee from the banks for the use of ATM resources by the bank customers, they could not charge the customers directly for the use of WLAs. Further, the current guidelines on five free transactions in a month as applicable to bank customers for using other bank ATMs will be inclusive of the transactions effected at the WLAs.

While the authorisation for setting up a WLA operation will be initially for one year, the central bank set tough targets as regards the number of such machines that can be installed. Non-bank entities can choose from three schemes.

Under the first scheme, they will have to establish at least 1,000 WLAs in the first year. In the next year, the number will have to be at least twice those established in the first year. In the third year, it will have to be three times the number set up in the preceding year. For every three WLAs installed in tier III to VI centres, they will be allowed to establish one outlet in tier I and II centres.

According to the second scheme, a minimum of 5,000 WLAs will have to be installed every year for three years. Under the third scheme, the entity will have to set up at least 25,000 WLAs in the first year and at least another 25,000 in the next two years.

At present, only banks are permitted to set up ATMs.

According to the RBI, though there has been a 23-25 per cent year-on-year growth in the number of ATMs (over 90,000 now), they have been largely been deployed in Tier I and II centres.

Tax relief for more services

Fourteen more services have been put on the negative list for the purpose of taxes as the government streamlines the administrative procedures of this vital revenue source in its bid to usher in a goods and service tax regime in the country.

The negative list includes those services that will not pay the 12 per cent levy. The new entrants to the roster that take the total list to 38 include advocates serving entities with a turnover of up to Rs 10 lakh, and libraries and entities providing public conveniences. The new negative tax regime will come into effect from next month.

According to the guidance note on the implementation of the negative list of service tax released by finance minister Pranab Mukherjee today, the entities providing merger and acquisition services, too, will be kept out of the ambit of the tax net.

“The new approach to taxation of services is intended to take the country and the economy a step closer towards the introduction of goods and service tax,” Mukherjee said while releasing a 107-page book — Taxation of service: An Education Guide.

Mukherjee said that with the expansion of the service tax base, it would be possible for “the Central Board of Excise and Customs to exceed the collection target of Rs 1.24 lakh crore in the current fiscal”.

The government has collected Rs 97,000 crore by way of service tax in the last financial year. For the current year, the government has hiked the service tax rate by 2 per cent to 12 per cent.

According to the service tax guide, the 14 new services, which will be exempted from payment of tax include services provided to the government, local authorities or a government authority for the repair and maintenance of an aircraft.

It said services provided by way of public convenience such as provision of facilities of bathrooms, washrooms, urinals or toilets would be on the list.

The other services, which would be exempted from tax, include auxiliary educational services and renting of immovable property provided by educational institutions in respect of education.

Expensive Banking service

Banks have increased the service charges as the RBI has imposed several conditions on services, such as the daily interest payment and 5 free ATM transactions.

As a result, the interest outflow of banks has increased and added to the cash flow.

This has to be recovered...

Just go through the link below-

Expensive Banking services

Try to avoid loan against your insurance policy.

Many people for various reason do not want to continue paying their insurance premiums and think of discontinuing their insurance policies.

While for some, the reason for discontinuing their policy would be a scramble for cash, for many others, it would be a sudden realisation that their policy is offering very low returns. 

However, many do not know that if you have not paid your insurance premium for three continuous policy years, you do not get anything back from your life insurer.

So, before buying a policy, you should assess your financial ability to pay your future premiums. You should separate your investment and insurance needs. 

Insurance is not an investment avenue and should not be bought for high returns.

Why is it so?

When a life insurance policy is in force for a minimum of three years, it would acquire a cash value.

The cash value is the savings portion of a life insurance policy. It is derived when your premium payments are more than the cost of insurance, whereby, the excess goes into a cash value account and draws interest.

If you decide to surrender your life insurance policy, the insurer will pay you the cash value, also known as surrender value. You will, however, suffer a loss if you surrender your policy before the maturity period.

Surrender value of a traditional insurance policy:

Surrender value of a policy is the amount you would receive from the insurance company if you surrender the policy to the company before its expiry.

That is, if you want to discontinue (or cancel or terminate – it has different names) a policy before it matures, this is the amount you would receive from your life insurance company.

The surrender value is paid to you at the time of discontinuation of the policy.

The surrender value consists of a portion the premiums paid by you, plus any bonuses accrued.


The surrender value is calculated by the insurance company depending upon the time for which the policy was in effect (the age of the policy), the total duration of the policy, the premiums paid and any bonus accrued.

Surrender value also takes into account any accrued bonuses, but after reducing them by a factor called “surrender value factor”. The surrender value factor depends on the number of premiums paid and remaining.

The policy needs to be in force for at least 3 years before it attains a surrender value. That is, you need to have paid premiums for at least 3 years before you can surrender the policy. Thus, if you surrender the policy after say 2 years, you would lose the premiums paid.

The company may have a condition of minimum years before any bonuses are paid as a part of the surrender value.

In the initial years (say when the policy is 4-5 years old), the surrender value of an insurance policy is usually quite less. This is to discourage you from withdrawing early from your insurance, which is actually a long term contract between you and the insurance company.

Due to high initial costs, a traditional insurance plan does not have a surrender value in the first three years. 


The amount of surrender value will differ across insurance companies and depends on factors such as number of premiums paid and for how many years, full tenure of the policy, type of plan (money back, whole-life plan, endowment plan), and the bonus accrued on the plan.

Most insurers pay the guaranteed surrender value, usually equal to 30 per cent of all the premiums paid minus the first year’s premium, and all premiums in respect of optional rider, if any.

Insurers also offer a special surrender value, or a non-guaranteed surrender value, which depends on the sum assured, bonus, policy term, number of premiums paid, and is higher than the minimum guaranteed surrender value.

In a money back plan, the surrender value will be very low because money is paid to the policyholders in frequent intervals. 


Similarly, in a whole life plan, the maturity tenure is very long and, therefore, the surrender value gets reduced as you have to discount for a long period.

Compared with whole-life and money back plans, endowment plans have a higher surrender value. Most traditional single premium plans pay around 90 per cent of the premium as surrender value, excluding premium for optional rider and extras, if any.

Also, although, in case of single premium policies, the surrender value is accrued immediately, you get the money only after three years.

It is to remember that term insurance plans do not have any surrender value.

Surrender value of Ulips:

Unit-linked insurance policies (Ulips) are a combination of investment and insurance. The insurer will take into account the present net asset value (NAV), number of units left, sum assured and several other factors to decide the surrender value.

Since the major portion of your premium is deduced as charges in the initial years of an Ulip policy, it makes surrendering an Ulip before five years a loss proposition.

Since Ulips have a lock-in of five years, the surrender amount will only be paid after five years from inception of the policy and there will be surrender charges.

With the volatility in the stock market’s today, many who invested in a Ulip in the past one year, are seeing their fund value negative.

Many frustrated policyholders would be thinking of surrendering their plans. In such a case, where your fund value is negative, you should wait till the fund value improves. 

So, pay the premium for three years and then surrender. You can also make partial withdrawal  if allowed in the policy term and invest in some other financial instruments.

Also, remember that Ulips do not have a loan facility.

Using the option of taking a loan against your policy:

To get the loan value, one should know the surrender value, which is dependent on paid up value of the policy.

Paid up value:

Paid-up Value is the reduced amount of sum assured paid by the Insurer, in case the Insured discontinues payment of premiums. This is applicable only when the Insured has paid the premiums in full for the first three years.

1)In a money back plan, the surrender value will be very low as money is paid to the policyholders in frequent intervals 

2) In a whole-life plan, the tenure is very long and, therefore, the surrender value gets reduced as you have to discount for a long period 

3) Compared with whole-life and money back plans, endowment insurance plans have a higher surrender value 

4) Since Ulips have a lock-in period of five years, the surrender amount will only be paid after five years from inception of the policy 

5) In such a case where your see the fund value to be negative, you should wait, pay the premium for three years and then surrender 

Paid up value available at maturity or death = No of premiums paid x sum assured/number of premiums payable.

Unless, you are sure that you will pay back the loan on your policy within a year please do not take a loan.

Also, never take a loan on a paid up policy as you are not paying a premium. So, the surrender value of your paid up policy will not rise as fast as the interest on the loan.

Usually, the interest and the loan amount will become more than the paid up value of the policy in two years. As a result, the insurance company will cancel and forfeit your policy.

If you are sure of paying back the loan fast, then this option can be exercised as the interest rate is 9-10 per cent, compared with a personal loan, which will come at 15 per cent interest rate.

Your loan amount will be maximum 90 per cent of the surrender value.

Compulsory disclosure of overseas assets irks taxpayers

Filing of income tax returns has become more complicated from this year for those having bank accounts or any other assets overseas. The government has made it compulsory for Indian as well as expatriate resident individuals to disclose their overseas assets.

"The overseas assets will not be taxed, but it is an additional hassle for taxpayers," said Neeru Ahuja, partner, Deloitte Haskins and Sells.

Apart from the additional hassle, Ahuja said, expatriate resident individuals find it as an intrusion into their privacy.

"Many people are complaining. Expatriates who have come here to work even for a short period are required to disclose assets back home. It is an intrusion into their privacy," Ahuja told IANS.

The Central Board of Direct Taxes (CBDT) recently notified the new tax return forms for the tax year 2011-12 or assessment year 2012-13, mandating disclosure of foreign assets. In the tax return forms called ITR 2/3, a new section called 'FA' (Foreign Assets) has been introduced to disclose foreign assets.

As per the notification, individuals having taxable income exceeding Rs.1 million (nearly $20,000) and domestic and expatriate resident individuals with assets located overseas have to file their returns through the electronic mode.

"Resident individuals are required to file tax returns in India irrespective of whether they have income chargeable to tax in India or not," said Ahuja.

As per the Finance Bill 2012, resident individuals having assets, including financial interest in any entity located outside India are required to furnish tax returns electronically from financial year 2011-12 onwards giving complete details of such assets.

In other words, income is not the only criteria to file an income tax return in India now. Those resident individuals who have assets outside the country are compulsorily required to file income tax return, irrespective of whether they have any income generated in India or not.

The government has made disclosure of foreign assets mandatory in a bid to trace black money, which has become a big political issue in the country.

Although there is no official figure, some private research puts quantum of illicit money held by Indians to the tune of $1.4 trillion.

The government recently released a white paper on black money, but did not give any estimate.

The government argues that the mandatory disclosure of foreign assets is aimed at preventing generation and circulation of unaccounted money and tracking undisclosed assets.

However, such a disclosure could cause undue hardship to individuals, especially the expatriates' family who qualify as residents due to physical presence in India. For example, spouses of foreigners who work in India or Non- Resident Indians (NRIs) returning to India will invariably need to make disclosures of their foreign assets.

"It is not clear how the additional information may be used, but it will cause hardship to genuine tax payers," said Ahuja.

Courtesy-http://timesofindia.indiatimes.com/nri/other-news/Compulsory-disclosure-of-overseas-assets-irks-taxpayers/articleshow/13897750.cms

Relief in Home loan

The RBI today asked banks to immediately stop charging penalty on the prepayment of home loans taken on floating interest rates.

The apex bank said the Damodaran committee on customer service on banks had observed that foreclosure charges on home loans were resented by borrowers.

This is particularly so considering that banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario.       

The removal of the charges or penalty will lead to a reduction in the discrimination between existing and new borrowers. Besides, the competition among banks will result in a finer pricing of floating rate home loans.       

Some banks were charging prepayment penalty of 1-2 per cent of the outstanding loans.

In the monetary policy for 2012-13, the RBI had proposed “not to permit” banks to levy the charges. It had said detailed guidelines would be issued separately.       

Earlier, the National Housing Bank had directed all housing finance companies to desist from imposing a prepayment penalty.

Buying gold in India

Apart from gold ETFs and gold monthly income plans there is a more direct way to invest in gold. That is by buying gold coins. I use the word direct because you buy physical gold, and don’t have to pay fees to the middle-man, thereby eliminating at least one layer in between.

The flip – side is that you will have to store physical gold with you, but most of you would have bank lockers to store jewelry anyway.

Here are a few things you should know about buying gold coins in India:

1. Reputed banks sell gold coins: The most important thing to me is that reputed banks like SBI also sell gold coins, and that reduces the chances of fraud, and someone selling you something which is of less purity than they claim. 

A lot of banks have entered this space, and they sell gold coins through their branches. Not every branch will sell you gold coins, so you need to go to the bank’s website and find out the closest branch that will do so.

2. Different sizes: Gold coins are available in different sizes, so you can buy the ones that suit your needs the most. The usual sizes are coins of 2, 4, 5, 8, 10, 20 and 50 grams. The coins are 24 carats, and the banks guarantee their purity too.

3. PAN needed if you are buying gold coins worth more than Rs.50,000: If you plan to buy gold coins worth more than Rs.50,000 then the bank will ask you for your PAN details. I don’t think a jeweler will ask for similar documentation, and that might be one reason to go to a jeweler to buy a gold coin.

4. Banks won’t buy – back your gold coin: I have not seen any banks that you can sell your gold coins to. They are happy to sell you their gold coins, but you can’t go to them and sell it back to them. You will have to sell the gold coins to the jeweler, and this is probably another reason for buying gold coins from jewelers in the first place.

5. You might pay a premium for buying gold from a bank: Now, I started off extolling the virtues of buying gold coins from reputed banks, and I will end this post by mentioning that if you compare prices between your local jeweler and some banks – you might find a difference.

There will be a difference even when they guarantee the same purity. A lot of people think that this premium is worth it because the price is higher when you go to sell the gold, but that is not always true. 


You don’t get this premium while selling off your gold coin. In effect, buying gold coins from your jeweler might turn out to be cheaper than buying it from a bank. It is up to you to decide whether the difference in price is worth it to you or not.

These were just some points that you should keep in mind while buying gold coins – I am going to write more about this topic in the future because a lot of people are interested in this, and would love to hear if any of you have had any experience with buying gold coins.

Kingfisher loss mounts

Kingfisher Airlines has suffered its worst quarterly loss at Rs 1,151.52 crore during the January-March period of 2011-12. The losses have more than tripled from Rs 355.54 crore in the year-ago period.

The fourth-quarter losses contributed to almost 50 per cent of the Vijay Mallya-owned airline’s losses for the fiscal ended March, which stood at Rs 2,328 crore (Rs 1,027.4 crore).

“The company has a focused fleet re-induction plan and hopes to be back to full-scale operations in the next 12 months backed by a recapitalisation plan that the company is actively pursuing and confident of achieving,” Kingfisher said.

The Kingfisher scrip fell as much as 8 per cent to a new low in morning trade.

The shares have plummeted over 73 per cent from its all-time high of Rs 44.30 on June 8, 2011.

The airline has never made a profit since its inception in May 2005. “Operational cost savings were offset by a steep hike in fuel prices and sharp depreciation of the rupee, which negatively impacted over 70 per cent of the cost base,” Kingfisher said in a statement.

During the quarter, income from operations stood at Rs 741.28 crore against Rs 1,626.65 crore during the same period of the previous fiscal.

The airline has been facing a rough weather for about a year, burdened by a debt of about Rs 7,057.08 crore.

New health cover

Health insurance must be provided to people up to 65 years, and all mediclaim must be settled within a month.

In its draft norms, the Insurance Regulatory and Development Authority has also stated that an insurer must say in writing the grounds for refusing to provide a policy.

The norms come more than a year after consumer rights activist Gurang Damani filed a public interest litigation in the Bombay high court against the regulator pertaining to the settlement of medical insurance claims.

Insurers will have to provide cashless facility to policyholders undergoing treatment in a particular hospital even after it is removed from the list of preferred service providers.

Insurers should ensure that empanelled hospitals — where cashless facilities are offered — are spread across different cities and not confined only to the metros.

The draft also talks about portability, under which a policyholder can migrate to another insurer, without losing any benefit.

It has also proposed special provisions for senior citizens.

All the terms and conditions in the policy document have to be explicitly spelled out in a simple language.

Insurers will have to take into account any cumulative bonus that has accrued to the policyholder to determine the sub-limits on various expenses.

Till now, insurers used to consider only the initial sum assured to determine the sub-limits on expenses such as hospital room rents and daily ICU allowance.

Non-life insurers issuing policies will have to reimburse the policyholder 50 per cent of the medical examination cost prior to providing a cover. If the policy is issued by a life insurer, it will have to bear the entire cost of the check-up.

Insurers will also have to disclose in the policy document any loading charged on the premium through a pre-defined table.

If the individual claim experience for each of the three preceding years is more than 500 per cent of the premium at present, the insurer will load the renewal premium according to the table. A hike in premium must be mentioned in writing and properly justified.

Policies will now cover non-allopathic treatments, provided they are obtained from a government or an accredited hospital.