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CREDIT SCORE Every time a person applies for a loan, the lender checks the credit score and conducts a thorough enquiry. Excellent credit scores ensure positive results in loan applications, and low credit scores result in rejections. Credit scores, though seem a little challenging to maintain, can be appropriately built by merely being regular and responsible in your payments and expenditure. What is a Credit Score? A credit score is a numerical marking system based on which a loan is granted. Banks do not approve loans for people with a low credit score. Credit scores are built by making payments on time to prove that you are capable of returning the borrowed amount. The CIBIL or Credit Information Bureau India Ltd. keeps track of the credit score of citizens of India. The Range for Credit Score Credit score varies from 0/-1 to 900 -1/0 score – Means that the person has no credit history. 300-500 – Bad credit score. The person is unlikely to be approved for a loan. 551-649 – Poor credit score. The person might be approved for a loan. 650-699 – Fair credit score. This is an average credit score, it's easy to drop below from this, and the person must be careful. 700-749 – Good credit score. The person can easily apply for loans and is very likely to be approved. 750 and >750 – Excellent credit score. A credit score in this range means that the person is very punctual with their returns. Factors That Affect Credit Score Certain factors affect the increase and decrease of a credit score. They are: The first factor is past credits, whether the amount was paid in full and on time or are there any discrepancies in the credit history of a person. Any disparity in the past can result in a lowered credit score. Second, the remaining debt is checked. The amount remaining to return the debt as well as the amount that has been paid back. The time taken to pay the said amount. Third, the types and number of loans a person has taken. Credit score falls if suspicion arises or if the person is irresponsible in paying the loans back. Fourth, how long has the person been maintaining their credit? And finally, whether the person has applied for a new loan or has previous unpaid debt. How to Maintain a Credit Score? A credit score is easy to maintain and very easy to sabotage. A few unpaid/late payments or any suspicious activity can affect the score badly. The following things must be kept in mind if you want to maintain a good credit score: Regular payments Making regular payments on credit cards and previous loans are a vital factor. These affect your credit score the most. If a person has difficulty in making EMI payments and credit card bills, they should not take a personal loan as non-payment or late payments will decimate your credit score. It would help if you try not to default on even the smallest payments. Take the loan amount with care Do not make hasty or greedy decisions while choosing the loan amount. Decide on a suitable amount that you can quickly return. Otherwise, the credit score will drop and prevent you from future loans. Avoid prepayment of loans Do not rush into paying back the loan amount, if you want to build the credit score. On-time payments are the best if you're going to increase your credit score. Varying amounts might hurt the credit score. Avoid numerous loans As credit score build-up, a person gets eligible for more and more loans. Although it is tempting, getting multiple loans must be avoided as each loan comes with an enquiry. Too many enquiries will result in you appearing as a credit-hog in front of the banks. Ensure less expenditure For the best score, a person should spend under 50% of their credit limit. Spending less credit implies that the person is responsible about their finances. It shows that they do not waste and can be trusted. Don't apply after rejections. If a person with a low credit score applies for loans in a lot of places and receives a rejection, their credit score is affected very negatively. With each new application, the credit score drops. Avoid bulk return If you aim to build an excellent credit score, do not return the loan amount in bulk before the loan term ends. Even if you have the means to pay the remaining amount, try to pay only the required instalments on time. Check your paperwork A lot of times, a clerical error can cause a drop in credit score. Maintain your credit records and ensure that each payment is correctly updated on your record. There have been many instances where people have fulfiled their payments, but their record shows faulty payments. In the current economy, it is essential to try and maintain a good credit score. Good credit scores make people eligible for all kinds of loans like housing, vehicle, business, personal and education. A person does not need to have a lot of money to have a good credit score, as long as they are responsible in payments and process them on time, a healthy credit score can be maintained.

Insurance policies are widely accepted as the preferred mode of risk management today. Employers offer them and even government interventions to provide security to the population. Just like there are many different kinds of insurance, we are also familiar with various payment plans of insurance premium, just like monthly, quarterly, annual etc., but it is also possible to opt for a one-time premium payment, known as single premium insurance. How Does Single-Premium Insurance Work? When you buy single premium insurance, you would be paying the entire premium in one lump sum amount upfront. The policy provides cover for the specified term period. The death benefit is paid to the nominee should the policyholder happen to pass away during the term, while maturity benefits are paid at the term end, otherwise. There are many innovations and variants introduced by insurance companies nowadays to suit customers’ unique needs. The single-premium policies are an example of flexibility in premium payment because it tends to be a limiting factor for many buyers. To illustrate with an example, suppose you buy a single premium term life insurance policy. You have chosen a policy that has a term of 10 years and provides a cover of INR 10 lakh for a premium of INR 80,000. You will have to pay this entire amount of INR 80,000 at one go. If you had opted for annual premium payment, you would have had to pay every year for ten years. Usually, the one-time amount of single premium policy is smaller than the cumulative premium of a regular policy. In this example, by opting for an annual premium, you would pay INR 9000 every year, i.e., INR 90,000 over ten years. The single premium policy has saved you INR 10,000. Why should you choose a single premium insurance policy? If you have a good amount of idle money, then this option helps build savings. There are various other benefits which you can see next. How Single-Premium Insurance Optimally Uses Idle Money The single premium insurance policy has become the go-to choice for those who can afford the lump sum premium payment and want to park their idle funds while availing tax benefits. Most people choose the life insurance-endowment policies which provide death and maturity benefits, but at higher returns than traditional policies. Therefore, these also function as wealth enhancement policies. Some single premium insurance policies give the policyholder the option to decide the instruments for investing. They may be equity as in a unit-linked insurance plan or debt as in an endowment plan. Hence, there is a good possibility of earning great returns on idle funds. Investing in a single premium insurance policy also diversifies the buyer’s portfolio, which minimises the risk exposure. Buying from a reputed institution which is ‘too big to fail’ also keeps the funds secure till maturity. Tax Benefit As per the Income Tax Act, life insurance policy premium payments are eligible for deduction from annual income, under Section 80C. However, note the following caveat. The exemption applies only if the premium amount does not exceed 10% of the sum assured (the amount the policyholder receives at maturity before the addition of bonuses). If it is more than 10%, the exemption will only be given up to the 10% amount. The Insurance Regulatory and Development Authority of India rules that the maturity benefit from a single premium insurance policy is tax-free under Section 10D of the I-T Act. Here also the caution is that the sum assured must be 10 times the premium amount. This is useful for those who have large funds to buy a single premium policy. An assured sum of even two times the premium may be cheaper but will not bring tax benefit, whereas a policy giving an assured sum at least 10 times will be tax-free. So, you can get higher returns, rather than just let the funds stay idle. Loan Benefit Such policies allow optimal use of idle funds in another way. You can avail of loans in the future against the policy while the term period is running (after the 1st year of the policy). Therefore, you can hedge for the future by building an asset out of idle funds, against which you can borrow should you ever need to. Other Benefits of Single-Premium Insurance A single premium insurance policy eliminates the hassle of keeping track of regular payment, such as in a monthly or annual policy. It helps regular travelers. Since the entire amount is paid upfront, there is no worry of the policy lapsing. It is useful for people who don’t have the regular cash flow or those who may find it difficult to sustain regular premium payments. It allows last resort tax saving at the end of a financial year. There are a couple of drawbacks. You shouldn’t have an immediate need for those funds, since you can’t fully access/utilise them till maturity, and you also can’t change the terms of the coverage. Also, note that purchasing life cover is more expensive in single premium insurance. If the holder dies during the term, a higher premium would have been paid for the similar death benefit amount. However, all risks considered, single premium insurance provides optimal use of idle money with investment advantages and assured care for the beloved nominees.

How NPS is Outperforming Other Investment Schemes National Pension Scheme is an investment vehicle sponsored by the Government. The scheme allows individuals to contribute funds regularly until retirement. On retirement, subscribers can withdraw 60% of their corpus, and 40% goes towards an annuity for a regular income afterward. Any Indian citizen who is between the age of 18 and 60 can join the National Pension Scheme. Launched in 2004 for government employees, the scheme was opened for all in 2009. You can join the scheme through entities known as Point of Presence (POP). Most private and public sector banks, as well as financial institutions, are enrolled as POPs. One can find POPs on the Pension Funds Regulatory and Development Authority (PFRDA). People often can’t think far ahead when investing. Retirement schemes are not preferred since they think the money would be locked in for a considerable amount of time. There are a lot of advantages to saving for retirement. With a portion of your money saved every month, you can build a substantial corpus and won’t need to work after retirement to sustain the same lifestyle you were living while working. People should look ahead into the future and start investing in NPS investment vehicles. NPS has two accounts: Tier I and Tier II. Tier I accounts have many tax benefits, but there is a significant restriction on withdrawing money from the account before retirement. On the other hand, Tier-II accounts offer no tax incentives, but the withdrawal policy is not rigid. Tier II is a voluntary account. Those who have Tier I accounts can choose to open a Tier II account. Tier I accounts can be opened with only Rs. 500, while Tier II accounts can be opened with Rs. 1000. The triple tax benefit attracts a lot of people towards National Pension Schemes. NPS contributions are deductible under Section 80C. Next, after exhausting the 1.5 lakh ceiling on 80C, one can claim Rs.50,000 additional deduction under Section 80CCD (1B). Lastly, if the employer signs up for NPS and contributes 10% of the employee’s salary towards NPS, there is an additional tax deduction under Section 80 CCD(2). There are three lifecycle funds - aggressive, moderate, and conservative. The aggressive fund allocates 75% to equity, the moderate fund allocates 50% to equity, and the conservative fund allocates 25% to equity. Studies have shown that rebalanced portfolios do better than static portfolios in the long run. A portfolio should be rebalanced every year to accommodate the various shifts in a market. The corpus is automatically rebalanced every year to suit the dynamic financial environment. There are a lot of misconceptions about NPS schemes. They are often seen as low risk - low reward. In reality, they provide better returns than other favored investment schemes. Let’s look at the most common form of investment: Fixed Deposits (FD). 10-year FD returns of the most popular banks are: SBI - 5.40%; HDFC - 5.50%, ICICI - 5.50%, Axis - 5.50 %. Even when inflation stays low, you’ll barely beat it. With coronavirus strangling the economy and people flocking to conventional investments, FD rates will fall more in the future. On the other hand, SBI NPS Tier-1 Scheme A has had an annualized 3-year return of 10.94% since inception. The low-risk UTI NPS Tier-1 Scheme C has an annualized return of 9.22% in the last five years. HDFC Tier-1 scheme C has given an annualized return of 10.01% in the last five years. The lowest risks Tier-1 schemes consistently beat the market, and the higher risk schemes provide returns well worth the risk. NPS Tier II schemes may not provide tax incentives, but they are a highly lucrative investment vehicle. With 11.11% returns in the past one year, they have outperformed FDs and many liquid funds. NPS Tier II accounts have given an annualized return of 9.53% in the last three years, while the annualized return in the last five years stood at 10.20%. Both NPS Tier-1 and Tier-2 funds beat the market consistently. Ultra-safe NPS investments have fared well over the last few years. Those who have had less equity have had good returns. The equity market has been volatile since the coronavirus outbreak began. Sometimes they may not get high returns relative to other funds when markets tumble, but they do manage to stay safe. In March, most funds suffered when stocks took a nosedive after the first lockdown was announced. Schemes with less exposure to equities came out unscathed from the advent. Low risk and high return have been the hallmark of NPS investment vehicles. Funds invested in Tier-II provide higher returns than other major investment schemes. The returns are substantial and by the time retirement comes, the corpus is worth its weight in gold. Savings in Employee Provident Fund schemes grow at a snail’s pace. EPF cannot even beat the rate of inflation, let alone the market. Use the various characteristics and benefits of Tier I and Tier II NPS accounts to your advantage. NPS schemes are managed by highly qualified professionals as well as regulated closely by the PFRDA. There is an investment guideline that has to be followed by fund managers. Investing in NPS is not only safe, but it is also highly lucrative. One should start saving and investing for retirement as early as possible, and investors will not be disappointed by opening an NPS account.

Every now and then, the Government of the country tries to offer financial assistance to the Senior Citizens. The purpose of such financial schemes is to make the individuals above 60 years economically independent. They can invest directly in pension schemes and get benefited with a guaranteed monthly income. Elderly people are also free to make their choices of getting monthly, quarterly, half-yearly, or else yearly mode of pension in proposition to their financial requirements. PM Narendra Modi has commenced Pradhan Mantri Vaya Vandana Yojana (PMVVY) in collaboration with Life Insurance Corporation of India (LIC). The newly inaugurated pension scheme comes under non-participating and non-linked subsidies by the Central Government for all senior citizens who are aged 60 years and above. The terms and conditions of the PMVYY pension scheme were modified recently by the finance ministry to enlarge the scope of the benefits. The benefits of the scheme were extended till March 31, 2023, along with a guaranteed interest rate of 7.40 percent per annum for FY 2020-21. According to some sources of LIC, the pension scheme provides an assured monthly income of up to Rs 10,000 for 10 years (Economic Times). Annuity or retirement plans offer the double advantage of speculation and protection spread. By contributing a specific sum normally towards your benefits plan, you will amass an extensive aggregate in a stage-by-stage way. This will guarantee a consistent progression of assets once you resign. Public Provident Fund is one of the most famous retirement arranging plans in India. At the point when you begin adding to your retirement early, the assets fabricate protected brilliant year cash savvy throughout the long term. A wisely picked retirement plan can assist you with transcending money returns because of the intensity of interest generated. With a tenure of 10-years, the scheme can be bought both offline as well as online. During the next two financial years, the applicable assured rate of interest for the policies sold will be thoroughly reviewed as well as decided at the starting of each financial year by the government. The minimum investment has also been revised to ₹1,56,658 for a pension of ₹12,000 per annum and ₹1,62,162 for getting a minimum pension amount of ₹1000 per month under the scheme. The maximum pension to be received by the individuals as per their choice will be: Rs 9,250 per month, Rs 27,750 per quarter, Rs 55,500 half-yearly Rs 1,11,000 on annual pay-out basis The noticeable features of the Pradhan Mantri Vaya Vandana Yojana (PMVVY) are: On the demise of the person insured inside the policy duration, the price tag of the arrangement will be directly given to the nominee of the policy The pension scheme can be procured by both the mediums, offline by visiting a branch of LIC or online from the official website of the LIC In case an individual requires the assets for a terminal disease or basic sickness, at that point he can give up his policy arrangement and 98% of the sum put resources into the pension scheme will be discounted back. At the same time, a loan can also be taken against the purchased policy plan after the fulfilment of 3 years of the term of the approach. The greatest credit of 75% of the approach cost will be conceded. The eligibility criteria in detail to buy Pradhan Mantri Vaya Vandana Yojana (PMVVY) is: The term of the pension plan is ten years. The method of annuity instalment incorporates yearly, half-yearly, quarterly, or month to month. The yearly least purchase price is INR 144,578, and the Maximum purchase price is INR 14,45,783 The minimum monthly pension sum is INR 1000, and the Maximum benefits’ sum is INR 10,000 This LIC Pension Plan, however, does not offer Tax benefits under segment 80C of the Income Tax Act. This implies the sum put resources into the plan can't be asserted as a derivation from salary under area 80C to diminish charge risk in the time of speculation. The money obtained from the plan is additionally available according to annual assessment laws. The plan is also exempted from the rules of Goods and Services Tax (GST). Each individual has distinctive monetary objectives and requirements. The beneficial thing, however, is that today there are a lot of benefit plans accessible in the market; you can pick the one that best suits your retirement plans. If you have surplus assets, you can put the sum in a single amount and get annuity instalments right away. For individuals who can't bear the cost of paying in a singular amount and lean toward a regularly scheduled instalment approach, you can decide to put your money in the Pradhan Mantri Vaya Vandana Yojana (PMVVY).

NACH MANDATE The current Govt. has the dream of making digital India. Cashless transactions is one of the significant factors to be fulfilled for making India digital. For this, a smooth flow of digital transactions is needed. But there was a loophole in the ongoing system. So to make the flow of transactions smooth and fast, the current system ECS was updated to NACH. In the Indian banking system, there was an automated system, i.e. ECS (Electronic Clearing Service) which facilitates the debit and credit of payments and receipts. In 2016, ECS was replaced by the newly developed "Nach Mandate". NACH stands for National Automated Clearing House. It provides the fast and automatic transfer of money within banks and its branches across the country. The transactions are executed on the same day on which they are made. NACH is introduced by NPCI over ECS. NACH is basically used to perform electronic transfers, large amount transactions and recurring periodic transactions. It is used to pay dividends, salaries, subsidies, pension, telephone bills, Electricity bills, loans’ EMI, policy premiums etc. It is suitable for large Financial Institutions, Banks, Govt. and Corporates who make payments in large amounts. Currently, above 82000 institutions are linked with NACH according to stats. NACH Mandate Management System: It is a service provided by NACH Debit for managing debit mandates of clients. It facilitates Manage, Amends and Cancellation of mandates. NACH Registration: Registration under NACH is a quick process. Following are the steps: The first step in NACH registration is filling the OTM form. Then the form is submitted online for registration and verification. After that, the form is sent to the customer’s bank by the NACH for further processing. The bank will send a notification to the customer for confirming registration. The confirmation gives the authority to the institution to auto-debit the amount from the customer's account. The whole process takes 10-15 days. While registering for NACH, various details are needed to be given by customers like bank name, account number, branch name, contact details and the daily debit limit from the account. There are two types of NACH: 1. NACH Debit: This facilitates the automated collection of bills, SIPs payments, insurance premium payments etc. from the holder's account in the account of NBFCs, Banks, Govt. 2.NACH Credit: It is mainly used to pay salaries, commissions, interest etc. to the banks, financial institutions, Govt. etc. Objectives of NACH: It focuses on facilitating electronic transactions by covering all banks across the country. It aims at bringing down the cost of transactions. Reducing the time taken in the execution of transactions. Reducing the burden of people as it makes automatic deduction of payments on a specified day. Avoiding delay of payments as the account is auto-debited on a specified date. Advantages of NACH: Below can be seen the various advantages of NACH: It makes the transactions efficient as it takes very minimal cost in making transactions. As the execution is done online, it reduces a lot of paperwork. It helps in faster debit and credit of money. The auto-debit function allows the individual to make payments of various bills on time. It’s linking with Aadhar facilitates direct transfer of pension and subsidies in the account. How NACH is better than ECS: NACH facilitates execution of transactions the same day while it takes three to four days in ECS. There is less paper working involved in NACH as compared to ECS. Rejection of transaction chances in NACH are less as compared to ECS as the most functions are automated. Maximum limit of transaction in NACH is ₹10lac as compared to ECS, i.e. ₹1lac. There is a Mandate Registration Reference Number provided in NACH which can be used for future transactions, but no such number is provided in ECS. There is an online dispute settlement system provided by NACH to resolve disputes which is not in the case of ECS. NACH is available across the country while ECS is still available at limited areas only. People who are currently registered under ECS need not change their registration. They can register under NACH after expiring of their ECS mandate. New customers are required to register under NACH only. Loan Repayment through NACH: After raising money from banks or other financial institutions, an individual needs to pay back that money in equal instalments, i.e. EMIs periodically. So if the payment is needed to be made on a monthly basis, the individual needs to transfer the amount in the lender's account. There are chances that the customer forgets to transfer the money on the due date or ignores the notification of reminder. A new system is developed, which is NACH Mandate; it provides the ease in repaying the loan by automatically debiting the amount from the customer’s account in the lender’s account. For getting the auto-debit alternate, the customer needs to fill NACH mandate form. It gives the right to banks to deduct the amount from a customer's account. Processing of NACH for SIP: For investors investing in mutual funds, they need to use NACH. Now mutual funds are registered using NACH mandate only. NACH provides an investor to register for systematic investment plans in mutual funds. After registering under it, a fixed amount is debited from the investor's account periodically. Every folio needed a different mandate. One mandate is applicable only for one folio. There can be multiple mandates generated on NACH. Earlier with ECS, it used to take around 30 days for investors in the processing of registration. Now, after the introduction of NACH, it only takes 15 days to register.

Gold BuyBack Scheme by MMTC The precious yellow metal - Gold has always had a fair amount of attention from its seekers. Be it the market or the many Indian families for various reasons of their own. And the most important one being its accountability. It is worn with pride in our happy times, and it is also reliable in times of hardships. Given that the world is fighting a pandemic, it is evident that many will approach the money lenders, investors to get hold of some capital backed by their gold. And as a safe and reliable solution offering to the people of the country, MMTC has come up with the Gold BuyBack scheme. It has been launched in Delhi with the plan to be made available to the entire nation. So, let’s learn all about this newly tossed scheme and why everyone is talking about it. What is MMTC? Since we know about the power and scope gold offers, it is a rather sensitive matter with whom we share it. Hence, before moving to the scheme, here’s a brief of the bullion refiner. MMTC – the Metals and Minerals Trading Corporation of India, is the country’s largest trading body managed by the government. It handles diverse trade activities like link deals, third-country trades and joint ventures across the globe. The Gold BuyBack scheme that has rendered you curious is also launched under the umbrella of MMTC-PAMP on 26th September 2020 in New Delhi. All about the MMTC-PAMP Gold BuyBack In the wake of accepting the new normal, several measures and steps are being taken by the organisations as well as the people associated. And the Gold BuyBack scheme is one of the recent examples. If you wish to or know someone who would consider liquidating their assets to get back as financially strong, then this option, offered by the government, must be considered . It offers the ones with gold assets or sellers to avail the maximum benefit of their gold. It can be received as a direct bank transfer or even in the form of gold bars, as per the seller’s choice. The purity levels offered for the gold bars under this scheme are 9999, 999 and 995. Given that the MMTC-PAMP is technologically advanced, their purification centres have earned a name for their quality testing and satisfactory results. It also offers assurance to the seller as the entire testing process can be witnessed by them using CCTV footage. The entire process is made transparent in the seller’s trust and to provide maximum benefits of buyback or the exchange value. However, it does incur a nominal transaction fee. Highlights of the Scheme The gold prices offered will be as per the updated market rates. The yellow metal can be brought in any form as such jewellery, coins, bars and others. The entire procedure is expected to be completed in under 60 minutes. In case, the exchange process is not completed for any valid reason, the seller will be charged a fee of INR 1000. This will be charged for the services provided in the evaluation of the gold offered initially. Several purification testing cycles might be needed if the weighted gold surpasses 2 kg. This is because the machines at MMTC-PAMP centres have rigid load capacity. To make sure maximum transparency is maintained and benefit is offered, the gold brought by the seller is weighed at each stage during the 5-stage process. It involves melting, casting, cooling, pickling and rinsing in deionised water. Witness the entire testing process through CCTV footage. The scheme is available only at Lajpat Nagar branch in New Delhi for now. There are no transactional charges or additional charges incurred for the completed buyback process. Requirements of the scheme The seller should have a PAN card, an Aadhar card as well as a cancelled cheque from his/her bank account. These documents are required at the time of gold purification verification. The scheme imposes a condition that a minimum of 10 grams to be tested at once from each seller. However, each seller can bring as much as 2 kgs of gold for each verification process or per visit under the exchange plan. Agreement with the seller that the amount of gold once weighed and tested will be melted to form bars. It does not offer a storage facility in its initially issued form by the seller. Conclusion MMTC-PAMP has been in the sector of dealing with precious metals and stones for decades and is accredited by the world’s finest regulatory institution. With no hidden costs and entirely focusing on the seller’s financial well-being, the improved Gold Buyback scheme has been crafted and launched. Make sure everyone around you knows about it and takes the benefit if need be.