Those not completing five continuous years of service should transfer their PF balance to new employer to avoid TDS and reversal of tax benefits, writes Sunil Dhawan The employee provident fund amount withdrawn before completing five years of continuous service was always taxable. However, at times, employees failed to show it up in their income tax return and thus did not pay tax on it. Starting 1st June, those employees who withdraw their provident fund corpus before completing five years of continuous service will not receive the entire amount as there will be a tax deducted at source (TDS) on the amount.TDS ApplicabilityTDS will apply if PF balance is more than or equal to Rs. 30,000.TDA will apply if there is less than 5 years of continuous service.TDS of 10 percent of amount will be deducted provided PAN is submitted else 34.608 per cent if one fails to submit PAN (and no Form No 15G or 15H).Existing Provident Fund 5-year RuleAny PF amount received before completing 5 continuous year of service is taxable in the year of receipt. If there is a change in employment and the amount has been transferred to the new employer, then the duration/period of previous employment will also be considered as part of continuous service. Say, an employee works for an organization for 4 years and withdraws his PF, then it becomes taxable. However, if he joins another firm and transfers the balance from previous firm to the new one, and leaves the second firm after 2 years, his service would be for 6 years. The amount withdrawn after 6 years is not taxable as he has rendered more than five continuous of service.Further, the tax benefit that the employee has availed on self contribution towards his EPF as deduction under section 80C would be subject to tax as salary. Also, interest earned on the PF contributions during the years would be added to one’s income. In nutshell, all tax benefit s gets reversed if an employee withdraws before 5 years of continuous serviceWhat to do: Instead of withdrawing the amount, transfer the amount to the PF account with the new employer. EPFO has made it easy by getting things done online. Transfer of PF balance from one employer to another is possible online and it takes around 30-45 days to happen. Keep transferring funds whenever you change jobs and avoid the temptation to withdraw. After all, it’s your money stashed away for your retirement years.
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The science of customer relationships is simple - the value you get is proportionate to the value you give, says Sanjay GuptaCustomer loyalty within the banking industry is dipping the world over. And with cutthroat competition, banks are finding it even more difficult to retain clientele. Banks need to rethink their service strategy as this will not only help ensure quality customer experience, but also positively affect its bottom line. By anticipating and addressing customer needs before they can become inbound contact center expenses, banks will be able to increase customer retention and loyalty as well as boosts agent retention and job satisfaction.Proactive customer care enables banking players to delight customers with convenient, useful information at their moment of greatest need and meet the challenge of striking the right balance between containing costs and delivering value through a highly differentiated customer experience. Here are four reasons why this strategy makes good business sense.1. Customers Repay Proactive Service with Greater Loyalty and Long-Term ValueThe science of customer relationships is simple - the value you get is proportionate to the value you give. To achieve and maintain this harmony, banks today must establish a dialogue with customers that demonstrate awareness of their needs and respect for their communication preferences. The more contact made with a customer, the "stickier" they become. When customers are consistently given valuable information, this stickiness can form a durable bond of loyalty.A few banking players are already looking at new ways to measure their customers' long-term value or profitability. Lifetime value is based on the profit earned from a customer over the total lifespan of an active account. Exceeding customers' support demands maximizes their longevity and, as a result, helps increase value. For example, it may take 30 seconds to reach out to a customer to satisfy a need with differentiated service. If that time costs $1 million a year, it can yield twice that amount in new or continued business, as well as word-of-mouth referrals to new customers.2. Winning New Customers Cost More than Retaining Existing CustomersHere's where proactive customer care can put a real dent in customer churn. What if banking contact center representatives proactively engaged customers to advise them in advance when their loan's EMIs are due? Or inform them about more appropriate savings schemes based on their earnings? Although customers might switch to other schemes, the value of up-selling or cross-selling to already existing customers is easy to measure.3. Contact Center Efficiency Improves with Reduced Call Volume and Automated OutreachBy evaluating current business processes for customer service patterns, banks can preempt interactions and reduce inbound contact volume by proactively reaching out to customers to report on progress. The convenience delivered through this process creates more positive customer experience that helps build loyalty, and with fully automated transactions can also help save costs.4. Agent Job Satisfaction and Retention Increase, Reducing Turnover CostsIt is common knowledge that the customer service representative's job is traditionally marked by rapid burnout and high turnover. According to recruitment firm Spherion, the turnover of one job costs a company an average of 1.5 times the employee's annual salary when separation costs, overtime payments to temporary workers, loss of productivity and replacement costs are factored.The though behind personalised, live interactions with proactive care agents is to humanize the customer experience as well as the agent's interaction experience. By providing useful information to preempt or resolve issues, agents develop more meaningful relationships with customers. This exchange leads to a win-win situation that provides a more satisfying work experience for agents and influences job satisfaction. This in turn leads to lower employee turnover for the bank while strengthening customer relationships.The Difference is Relevant ValueThe real value of proactive customer care is in building and maintaining a healthy bottom line over a longer time frame through ongoing and elevated focus on the experience. Proactively delivered, customer care allows a bank to provide differentiated, high-touch services that reinforce the brand's identity and customer value proposition. Even if these services cost more, it is a known fact that customers are willing to pay more for higher perceived value in any economy and appreciate being consistently treated like valued clients. In a nutshell, it is the differentiated service that can pay real dividends.The author is Managing Director, South Asia and Middle East, Aspect Software
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Former Goldman Sachs Group Inc director Rajat Gupta failed to persuade a U.S. judge to overturn his insider trading conviction for passing tips about the bank's financial results and a crucial investment from Warren Buffett's Berkshire Hathaway Inc. U.S. District Judge Jed Rakoff in Manhattan on Thursday rejected Gupta's argument that his tips to Galleon Group hedge fund founder Raj Rajaratnam were not illegal because his longtime friend gave him nothing valuable in return. Gupta, 66, who is also a former McKinsey & Co global managing director, is serving a two-year prison term, and eligible for release next March. Evidence against him included a Sept. 23, 2008 phone call during the financial crisis, minutes before Goldman announced a $5 billion investment from Berkshire, in which Rajaratnam told a trader that "something good might happen to Goldman," based on a source whom prosecutors said was Gupta. Gary Naftalis, a lawyer for Gupta, was not immediately available for comment. In seeking to void his conviction, Gupta cited a Dec. 10 ruling by the 2nd U.S. Circuit Court of Appeals that overturned the insider trading convictions of hedge fund managers Todd Newman and Anthony Chiasson. That court said insider trading required knowledge that insiders who passed confidential tips did so in exchange for personal benefits "of some consequence." It also said that if close friends are involved, there must be evidence of an exchange that is "objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature." Rakoff concluded that the Newman ruling addresses the liability of tippees like Rajaratnam, not tippers like Gupta. And even if it did cover tippers, Rakoff said the necessary benefit existed because Gupta and Voyager Capital Partners Ltd, in which Gupta held a $10 million stake, invested in Galleon and stood to benefit if Rajaratnam traded successfully. "It is thus clear even on Gupta's own reading of Newman, let alone on the reading this court gives it, that Gupta cannot satisfy any part of his claim," Rakoff wrote. Rajaratnam also invoked the Newman ruling in trying to throw out a $92.8 million penalty in a related U.S. Securities and Exchange Commission civil case. He is also trying to void part of his conviction and shorten his 11-year prison term. The U.S. Department of Justice is weighing whether to appeal the Newman ruling to the U.S. Supreme Court. The case is U.S. v. Gupta, U.S. District Court, Southern District of New York, No. 11-cr-00907. (Reuters)
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Building up a decent credit history helps. Nowadays, for any kind of loan, credit history is essential to get loans from banks, says Sunil DhawanGetting loans from banks or other financial institutions have not only become easy but even quicker. HDFC had recently come out with a 10-second loan disbursement offer. With loans being offered literally on a plate, we are lapping it up it seems. Recent Reserve Bank of India data shows personal loans increased 16.6 per cent in May 2015 as against 14.8 per cent in the same period a year ago. Even credit card outstanding grew to 23 per cent in May this year against 14.2 per cent in the corresponding period a year ago. The credit card spends and personal loans are unsecured loans and carry a high interest rate. They are primarily taken for purchase of consumer goods or on lifestyle expenses. This makes them qualify as ‘destructive loans’ unlike home loans that helps in creation of an asset. Over-dependence on debt for upgrading your lifestyle by acquiring consumer goods leads to a debt trap, which, if mismanaged, becomes irreversible. Stick to thumb-rule: Keep your EMI’s around 40 per cent of your take-home pay. This includes all loans such as car loan, personal loans and even home loans. Over leveraging could land one in a soup. Tips for credit card: On the due date, it is mandatory to pay up 5 per cent of the outstanding and the balance can be rolled over to next month. The amount rolled over is charged an interest rate to the tune of 36-42 pe rcent per annum. Never revolve credit on your credit card. Whatever is the outstanding at the end of the free-credit period, one should pay the entire amount on the due date. There is another disadvantage of rolling over. The fresh purchases made in the next month (if there is an outstanding on your card) do not get free-period. There is a 45-51 days free credit period on cards before the due date arrives. Avoid impulsive buying at all cost and avoid the temptation to stretch your purchases. Give standing instructions to your banker and keep paying entire balance on due date electronically. If there is a big purchase done on the card and you are unable to pay-off entire amount in 2-3 months, go for EMI option and ask your credit card issuer to convert the amount into EMI’s. At least you will cut on interest cost by half. If you have already piled up huge outstanding on credit card, make it your first priority to clear it off. Stop any further purchases on card. Create a plan to pay off the dues as quickly as possible. This may take few months but getting the loan off your back will help. End note: Building up a decent credit history helps. Nowadays, for any kind of loan, credit history is essential to get loans from banks. If you are living on debt, there is a bigger damage to your investment portfolio. The returns on your investment portfolio would get set-off by the interest burden that you would carry. Lead a debt-free life and create your net worth.
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The Reserve Bank of India (RBI) is committed to steadily increasing how much government debt foreign investors can buy, but will proceed cautiously to avoid becoming too reliant on overseas capital, Governor Raghuram Rajan said on Thursday (03 July). Rajan added India would examine debt limits twice a year, hinting at a more formal decision-making process. At present, the government decides on the caps in consultation with the Reserve Bank of India and capital markets regulator Securities and Exchange Board of India. India's current limit of $25 billion for ownership of government bonds by foreign institutional investors (FIIs) is fully utilised, leading to calls for increasing it. The country has also set aside another $5 billion for long-term foreign investors. According to media reports last month, the RBI had proposed setting these limits in rupees instead of dollars, which would effectively increase them given the domestic currency has weakened considerably since the country last set the cap. "We are committed to a steady expansion in the absolute value of FII participation while ensuring we don't go overboard and become overly reliant on FIIs for financing in government bond markets or corporate bond markets," Rajan said at a news briefing after an RBI board meeting in the southern city of Chennai. India recognises overseas capital as critical to financing its current account deficit, but it worries that high levels of foreign inflows can be followed by destabilising outflows. INTENSE SELLING IN 2013In 2013, intense selling of stocks and bonds by overseas funds sent the rupee to a record low and ushered in the worst market turmoil since a 1991 balance of payments crisis. But last year's election of Prime Minister Narendra Modi and a sharply improving current account deficit has helped spark a surge in overseas investments, leading to calls for reducing some of the current restrictions on overseas capital. Rajan has repeatedly said he welcomes foreign investments but has proceeded slowly on raising debt limits or taking steps such as allowing settlements of government bonds in overseas markets. At the briefing, for example, Rajan reiterated his often-repeated comments that he hopes foreign investors would be attracted to India despite ongoing volatility over Greece, given the growth prospects of Asia's third-largest economy. Separately, Rajan noted the government was in talks with the central bank about injecting capital into state lenders. A finance ministry official said last month the government was planning to inject a bigger-than-budgeted $3 billion into state-owned banks this fiscal year.(Reuters)
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BankBazaar.com, a financial marketplace, raised Rs 375 crore in Series C round of funding led by Amazon with participation from Fidelity Growth Partners and Mousse Partners. Existing investors Sequoia Capital and Walden International also participated in the Series C funding round. "With the rapidly evolving online consumer segment across categories, we have seen great demand for this platform. We are currently looking to expand the category as we reinvest all earnings in growing the business intelligently," said Adhil Shetty, Chief Executive Officer, BankBazaar.com The funds will be primarily deployed towards technology integration, hiring and strengthening partner relationships and to creating a truly phenomenal end-to-end customer experience in order to grow in the online financial services category as a market leader. The company will also invest to upscale its marketing and branding effort to reach out to a larger number of consumers and create a house-hold financial services brand in India. BankBazaar is also investing in mobile App. The App delivers a more customized, stable and seamless experience to the consumer. The BankBazaar App, available on both the Android & iOS platforms, not only helps consumers get financial products with ease, but also educates them and helps them manage their finances better. "With this fund raise, BankBazaar plans to innovate even more to provide the best and fastest experience for consumers", said Gautam Mago, Managing Director, Sequoia Capital. Since the last round of funding, BankBazaar's business model has evolved. The number of transactions on the platform have grown five times since then. The company is actively expanding its product portfolio and depth of its partnerships in each product line. The company is also focusing on made-for-mobile web service and mobile platforms in order to enable larger connect with the audience. Presently, 40 per cent of the users connect to BankBazaar through smartphones. Additionally, online loan applications across home, personal and auto loans are growing by 90 per cent, compared to 15 per cent growth in offline.
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Dena Bank has cut interest rates to 10.5%, reports Haider Ali KhanDena Bank launched Vehicle Carnival from 1st July 2015 till 31st August 2015 for their customers from JVPD Mumbai on Wednesday. During this period loan will be sanctioned at affordable rates with reduced processing fee. “Dena Bank has set an ambitious target of twenty three thousand vehicles all over India during this period. Customers across India can avail this offer. And if we find the entire necessary documents ready then the loan will be processed within two days” said R.K Takkar, executive director of Dena Bank. He also informed that the interest rates have been reduced from 11.5 per cent to 10.5 per cent and women customer will be charged with 10.4 per cent.
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India has the third largest internet user base in the world, after the US and China, and the country is likely to surpass the US by 2015, says Richard CandayIndia israpidly migrating towards atruly digital economy where businesses must reinvent their delivery channels to provide value to their customers. This phenomenon of digital transformation has impacted the baking and financial sector in a big way. An increasing number of customers are choosing to make their payments online through their computer screens or mobile devices. This stage of connectivity is driving digital payments transformation - the migration of cash payments and plastic card payments to payments made over digital channels, either from digital wallets or through new digital payment mechanisms.RBI Initiatives For A Cashless EconomyIn 2012, RBI proactively envisioned and encouraged electronic payment systems for ushering in a less-cash society in India and to ensure payment and settlement systems in the country are safe, efficient, interoperable, authorised, accessible, inclusive and compliant with international standards. The overall regulatory policy stance was oriented towards promoting a less cash/less paper society, the "green" initiative.Since then, according to a report by IAMAI & PCI, digital payments in India was expected to touch Rs 1.2 trillion by December 2014, a 40 per cent increase from Rs 85,800 crore in 2013, driven by growing internet penetration, growth in e-commerce and the ease of online payments adopted by the tech-savvy populace of India. The market for payments made through digital medium has grown at a CAGR of 10 per cent in between 2010 - 2013.According to latest reports by industry analyst PWC, India has the third largest internet user base in the world, after the US and China, and the country is likely to surpass the US by 2015. More significantly, approximately 74 per cent of Indians own a mobile phone, and prefer the mobile medium of internet access. By 2020 the number of smartphone users are expected to equal the number of active bank accounts in the country.The rising digital economy presents a tremendous business opportunity for banks to tap in to, and private banks are rising to the occasion. In a multi-channel ecosystem, the ability to engage thecustomer through the most relevantchannels has become key to predicting customer behaviour, maximising customer value, and as a result, creating newer and deeper revenue streams forbanks.Reserve Bank of India (RBI) mobile banking data for the month of May 2015 reveals that the top five private sector banks have conducted transactions of close to Rs 1.4 lakh crore, almost four times that of those conducted by the top five public sector banks, based on total value.Challenges GaloreIndustry players have been quick to seize the digital opportunity, with many banks launching their own payment applications that integrate big data analytics with the mobile interface. E-commerce players like Flipkart and Snapdeal have their own payment gateways, and the digital wallets industry is replete with entrants like Apple Pay, Google Wallet, Samsung Pay, Mobikwik, Paytm, etc.As opportunities flourish, a successful digital transformation by banks will require execution excellence, controlled risk-taking, innovative distribution and careful customer relationship management. More importantly, however, it will demand solid understanding of the facets that truly distinguish this market from others and a genuine openness to innovation and building strategic alliances. The world of digital payments is fast evolving and industry stakeholders must take concrete strategic steps to position themselves strongly within it.The author is Associate Vice President - Corporate Affairs at Electronic Payment And Services Pvt Ltd
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