May 2023 - Credmudra

Post Office Monthly Income Scheme

Posted on May 25, 2023June 27, 2024 by Mudra Mentor

The post office has a wide variety of depository schemes offering fixed returns on investment. The schemes are government-backed, making them safer investment choices as compared to shares or other options.

Post Office Monthly Income Scheme (POMIS) is one such investment scheme that lets you earn high interest monthly by investing a certain amount. The scheme is validated and recognised by the Ministry of Finance. Here, we will know about different aspects of POMIS.

Features of Post Office Monthly Income Scheme

Some of the significant features of the scheme are as follows:

Low-Risk Investment

Under POMIS, the amount invested is not subjected to market risks as it is a fixed monthly income scheme.

Joint Account Ownership

The scheme allows you to open a joint account with two or three people with equal contributions. The maximum amount you can invest in a joint account will be a sum total of Rs.15 lakhs.

Multiple Account Ownership

This scheme allows you to open more than one account in your name. However, you cannot save more than the total deposit of Rs.9 lakhs.

Lock-In Period

The lock-in period of the account is five years. You can withdraw early by giving a penalty of up to 2% of the deposited amount.

Maximum Limit

Under this scheme, you can make a maximum investment of Rs.9 lakhs. However, if it is a minor account, you can invest a maximum of Rs.3 lakhs.

Reinvestment

The scheme permits you to reinvest the maturity amount for another five years. It will help you to earn more interest on your deposit in the long run.

Interest Rates of Post Office Monthly Income Scheme

The interest rate of POMIS is revised by the Finance Ministry every quarter. It depends on the cumulative government bond returns generated during the same period.

The following table includes the previous and current interest rates of this scheme to give you a fair idea about how it changes over time:

Period	Interest Rates
1st April 2023 – 30th June 2023	7.40%
1st January 2023 – 31st March 2023	7.10%
1st October 2022 – 31st December 2022	6.70%
1st July 2022 – 30th September 2022	6.60%
1st April 2022 – 30th June 2022	6.60%

Calculation of Post Office Monthly Income Scheme

Calculating the monthly interest earned from POMIS is simple. You can use the following formula to calculate the interest income:

POMIS Monthly Interest = Amount invested in the scheme x Annual interest rate / 12

For instance, you have invested Rs.4,00,000 in POMIS for five years at 7.40% per annum. Using the above formula, you will get:

POMIS = 4,00,000 x 7.40% / 12 = Rs.2,467

Thereby, you will get a monthly interest of Rs.2,467. The total amount you will earn for five years will be Rs.1,48,000.

However, you can eliminate human errors by using an online POMIS calculator to calculate the monthly interest earned in no time.

Eligibility of Post Office Monthly Income Scheme

To open a POMIS account, you need to meet the following criteria:

You can open an account only if you are an Indian citizen.
A POMIS account can be opened for a minor if his/her age is 10 years or more. However, minors can avail the funds after reaching the age of 18.
Non-Resident Indians cannot avail this scheme.

In this regard, once the minor reaches the age of 18, they must apply for conversion of the account in their name.

Documents Required for Post Office Monthly Income Scheme

You need to submit the following documents when opening a POMIS account:

Address Proof: Recent utility bills or government-issued identity cards
Identity Proof: Passport/ Voter ID Card/ Aadhaar Card/ Driving License or any other government-issued identity card.
Photographs: Two recent passport-size photographs.

Comparison of Post Office Monthly Income Scheme with Other Saving Schemes

Following is the comparison of POMIS with other saving schemes:

Savings Scheme	Interest Rate	Tax Deducted at Source (TDS)
Post Office Monthly Income Scheme	7.40%	No TDS deduction
Post Office Time Deposit (1,2,3 year)	6.8% to 7%	No TDS deduction
Post Office Time Deposit (5 years)	7.5%	TDS deduction is applicable
Public Provident Fund	7.10%	TDS deduction is applicable
Post Office Recurring Deposit	6.2%	No TDS deduction
National Savings Certificate	7.7%	TDS deduction is applicable
Senior Citizen Saving Scheme	8.2%	TDS deduction is applicable

The Post Office Monthly Income Scheme is a secure investment option that offers considerably higher returns with a short lock-in period of 5 years. Overall, it guarantees you a fixed monthly income with limited tax liability.

FAQs on Post Office Monthly Income Scheme

1. Can I withdraw the POMIS amount prematurely?

Yes, you can withdraw the POMIS amount post one year of investment. However, if you withdraw the amount before three years, you will be penalised 2% of the deposit and 1% after three years. If you withdraw the amount after the maturity period of five years, you will not have to pay any penalty.

2. What is the minimum amount required for opening a POMIS account?

To open a Post Office Monthly Income Scheme account, you need to make a minimum investment of Rs.1000. You can make subsequent deposits in multiples of 1000 into the account.

3. What happens when I do not withdraw the funds after five years?

If you do not withdraw the amount after the maturity of five years, you will get a simple interest for up to two years. The rate will be applicable as per the interest rate of the post office savings account.

RBI Floating saving bond – Full Details Along with Calculation Process

Posted on May 22, 2023June 27, 2024 by Mudra Mentor

The Reserve Bank of India (RBI) has introduced floating saving bonds as an attractive investment avenue for individuals looking for a safe and stable earning instrument. Designed to provide investors with a convenient way to grow their savings, these bonds have gained popularity among individuals seeking stable long-term investment instruments.

In this blog, we will look into the details of the RBI floating saving bond, and explore their features, benefits, and the calculations involved to help you make an informed investment decision.

What is RBI floating Saving Bond?

RBI floating Saving Bond is a government-backed investment instrument offered by the Reserve Bank of India. It is designed to provide investors with flexibility in choosing both fixed and floating interest rates for growing their funds. It allows them to benefit from potential interest rate movements if they want.

The interest rate on National Savings Certificates (NSC) has a link with the interest rate on RBI floating saving bonds. Any modification to NSC interest rate influences the interest rate on the variable-rate bonds issued by RBI.

Key Features of RBI Floating Saving Bond

Here are some top features of floating-saving bonds by the Reserve Bank of India:

Option to Invest a Large Amount: The minimum investment amount is ₹ 1,000, and there is no maximum limit. So, the bond is accessible to individuals across different income groups.
Semi-Annual Interest Payment: Semi-annual interest on the bonds is due on January 1 and July 1 of each year. The interest rate will be changed every six months, with the first reset taking place in January. The option to pay interest on a cumulative basis is not available.
Income Tax on Interest: Depending on the bond holder’s net taxable income, interest on the bonds will be subject to income tax under the Income-tax Act of 1961.
No Wealth Tax Obligation: Bonds will not be subject to wealth tax under the 1957 Wealth Tax Act.
Non-Tradability: The Bonds are not tradable on the secondary market and cannot be used as security for loans from banks, non-banking financial institutions, or other financial institutions.
Nomination Facility: In accordance with the terms of the Government Securities Act, 2006 (38 of 2006), and Government Securities Regulation, 2007, the holders can denote one or more individuals as nominees.

Calculation of Returns

To understand returns from RBI floating saving bond, let’s consider an example. Suppose you invest ₹50,000 in these bonds for a tenure of 7 years with an interest rate of 8%, compounded semi-annually. Now, check out the following table to understand how much return you would earn:

Investment Amount	Interest Rate	Tenure	Interest Earned	Total Maturity Amount (Principal + Earned interest)
₹50,000	8%	7 Years	₹36, 583.82	₹86,583.82

*Note: Please keep in mind that the calculation assumes an interest rate of 8% for a better understanding of this calculation. It is essential to verify the current interest rate offered by RBI before making any investment decisions.

FAQs on RBI floating Saving Bond

1. How does the interest rate on RBI floating saving bond change from time to time?

The interest rate on RBI floating saving bond is reset every six months considering the changes in the current National Savings Certificate (NSC) rate with a spread of (+) 35 basis points.

2. What is the lock-in period for RBI floating savings bonds?

The maturity period for the bonds is set at seven years. Individual investors who are 60 years of age or older are permitted to make premature withdrawals, subject to a minimum lock-in time based on the age of the respective bondholder.

3. What is the minimum lock-in period of RBI floating savings bonds for senior citizens?

Senior citizens get the option for premature withdrawal from the RBI Floating savings bonds with a penalty after a minimum lock-in period. The lock-in period is six years for senior citizens in the age group of 60 to 70 years, and five years for those aged between 70 to 80 years.

4. Is it safe to invest in RBI bonds?

The Reserve Bank of India issues RBI floating savings bonds on behalf of the Government of India. So, you can stay assured that your investment in these bonds is completely safe.

5. Are Floating Rate Savings Bonds subject to a Collateral Facility?

The Bonds cannot be used as collateral for availing loans from banks, financial institutions, or non-banking organizations.

Things to Know Before Applying for PAN Card Loan of Rs. 50000

Posted on May 18, 2023June 19, 2024 by Mudra Mentor

You can never guess how and when you face credit shortages to meet your needs and goals. During this dire need for credit, you can go for a PAN card loan of Rs. 50,000 to address your requirements immediately. The application process is hassle-free and you can borrow only by filling in the form with your personal and professional details and submitting a few of your basic documents. Let’s know all about this easy-to-avail PAN card loan in detail.

What is a PAN Card Loan?

A PAN card loan is basically a type of personal loan for which you can apply using the Permanent Account Number (PAN) card. Since it is an unsecured lending facility, you do not need to engage any of your items as collateral.

After you complete the loan application process and your lender approves it, you will get a credit limit. To get a PAN card loan of Rs. 50,000, you need to ensure that your credit limit is Rs. 50,000 or more.

Features and Benefits of PAN Card Loan of Rs. 50,000

Following are some important features and benefits of this PAN card loan:

Seamless Online Application: For most lending institutions, the application process for the PAN card loan is online and you can complete it with minimal paperwork. This reduces the hassles and the turnaround time of the borrowing to a large extent.
Multi-Usage Credit: You can use the PAN card loan of Rs. 50,000 to pay medical bills, wedding expenses, and education fees, or to meet any other personal and professional financial goals. The credit has no end-usage restriction.
No Lengthy Documentation: One of the major benefits of a PAN card loan is its easy documentation process. Besides the main document, your PAN card, you will have to produce some other basic documents as proof of your identity, employment, income, and address.
Zero Requirement of Mortgage: You can get the credit without mortgaging your property as it is an unsecured loan. This way, you can ensure that your dear properties stay free from any financial liabilities.

Eligibility Criteria for PAN Card Loan of Rs. 50,000

You will have to meet the following eligibility parameters to opt for a personal loan of Rs. 50,000:

Your age must be between 21 and 66 years
You must hold the Indian Citizenship
Your CIBIL score must be more than or equal to 600
Your monthly earning needs to be at least Rs. 15,000
You need to have a working experience of a minimum of 2 years

How to Apply for a PAN Card Loan of Rs. 50000

Here are the steps you need to follow to apply for the PAN Card Loan:

Step 1: Find the online application form after visiting the website of your chosen lending institution.

Step 2: Enter your mobile number and verify it by giving the OTP

Step 3: State your PAN card details along with other personal, professional, and residential details

Step 4: Mention your required loan details

After this, you will have to wait till the lender verifies your loan request.

Calculate Your Personal Loan EMI

Documents Required for the PAN Card Loan of Rs. 50,000

You will have to keep the below-mentioned documents handy while applying for the PAN card loan:

Identity Proof: PAN card, Aadhaar card, Voter ID card, etc.
Residential Proof: Voter ID card, Aadhaar card, utility bills, etc.
Income Proof: Salary Slips, ITR, or Form 16

Tips to Get Quick Approval on PAN Card Loan of Rs. 50,000

Here are the things you need to ensure to get the PAN card loan without much hassle:

Improve Credit Score: A good credit score indicates that you have been repaying your previous loan obligations on time. Your new lender gets confidence that you will not miss your EMI and as a result, it approves your loan application easily.
Prove Income Stability: Without a steady income source, it may become difficult for you in the future to pay the instalment. This is why a lender checks the employment details along with years of experience in the field before approving a high-amount of PAN card loan.
Reduce Debt-to-Income Ratio: Debt-to-income ratio is a parameter that indicates the total loan amount you pay every month against your income. A high debt-to-income ratio indicates that you are already loaded with the burden of EMIs. A lender, therefore, may disapprove your loan requests. So, before applying for a new loan, pay off your previous dues first.

In case you encounter any sort of financial shortages that need to be addressed immediately, you can take a personal loan through Credmudra. After you apply for the credit, it will find a suitable lender that approves your loan requests without fail.Owing to the digital application process and minimal documentation, it does not take much time to get the PAN card loan of Rs. 50,000. However, you need to ensure that you have met the eligibility parameters set by the lender.

India’s Rising Trend: Personal Loans and Credit for Consumer Goods

Posted on May 1, 2023June 25, 2024 by Mudra Mentor

As per the most recent reports published by Andromeda Loans, the FY22-23 experienced a jump in personal loan disbursements by almost 63% compared to the previous year.

Most borrowers utilised the loan amount either to renovate their homes or buy a household commodity. The very reason they got inclined towards these offerings is because of their fairly-easy EMI options.

In this guide, you will see the topmost reasons behind applying for a consumer durable loan. Also, you will come across certain do’s and don’ts when it comes to managing your repayment course.

How Consumer Durable Loans Got Sold Last Year?

According to some latest reports, people in metro cities across India have increased their loan appetite by almost Rs. 4 Lakhs on average in the previous year. In addition, certain tier-2 cities like Ahmedabad and Indore also saw a growth in the number of big-ticket loan seekers.

As various new lenders stepped in with more flexible and cost-effective deals, borrowers gained more confidence in availing their offers. Such behaviour is prominently got reflected in recent surveys organised by the Financial Express. These results were quite amusing as more than 9% of Indians decided to go for a personal loan to fund their long-awaited vacations.

So, the intentions are quite clear. People these days look for low-interest loan offers that allow reasonable repayment terms and certain personalisation options like pre-closure, balance transfer, etc.

Moving on, you will learn why personal loan requirements are gradually soaring.

Why Consumer Durable Loans are Popular?

The increased number of loan requests after the pandemic’s end clearly speaks about the quick recovery of most citizens’ financial conditions. Moreover, upon analysing this new behaviour one can notice an improved awareness among the masses.

Majority of the Indians nowadays prefer accommodating their daily expenses within a set budget. Thus, they get extremely relieved to buy essentials on affordable EMIs instead of simply delaying their plans owing to a lack of liquid funds.

Besides this primary cause, here are other reasons as well that may make you seem grabbing a consumer durable loan reasonable:

No End Restrictions

The amount credited by your lender can be used anywhere, no questions asked.

Limitless Financing

You may consistently opt for similar financing options from the same lender or any other institution as long as you are making timely repayments.

Dynamic Tenure

Usually, a prolonged tenure of 36 months is awarded to the borrower to pay back the outstanding sum. However, you may also select the minimum tenure, i.e., 3 months. Thus, you remain in control of your finances throughout the loan term.

Easy Approval

Consumer durable loan applicants have gotten used to high approval rates. Once the lender agrees to your proposal, the requested amount gets credited within a few minutes.

Attractive Offers

Many lenders these days sell personal loan products that do not require the customers to pay additional interest. Nevertheless, the ones that come with applicable interest are also highly cost-effective.

Who is Eligible for Consumer Durable Loans?

Both existing and new customers of a lender are eligible for these short-term loans. However, you must have a constant income source and adequate income-proof documents while coming up with the request.

How to Apply for a Consumer Durable Loan?

The application method for a consumer durable loan has never been this easier before. Before you begin following the below-mentioned steps, download the Credmudra app. Then execute these:

Step 1: Enter your mobile number, submit the KYC documents and complete the registration.

Step 2: Adjust the loan terms such as amount, tenure, etc. and proceed to apply.

Step 3: Next up, enter your PAN card number, email address, employment type, gross annual income and bank account details.

Step 4: Fill up your personal information and address details to move forward with the application.

Step 5: Before submitting the application, you will have to mention the total amount of EMIs you are currently serving and if you are planning to opt for a credit card or not.

Upon successful completion of all these steps, our representative will contact you and guide you through the next steps.

Things to Remember While Purchasing a Personal Loan

While relying on a personal loan to meet your daily expenses ensure to:

Check the Credmudra suggestions thoroughly to end up choosing one of the best possible options.
Estimate the overall payable interest.
Opt for partial prepayments whenever possible.

Contrarily, here are the clear-cut don’ts for all the short-duration loan seekers:

Do not extend the loan tenure unnecessarily to avoid paying more interest.
Consider avoiding additional expenses for the time being if you are facing difficulty in managing EMIs.
Do not finalise a deal without verifying the reputation of a lender.

All these pointers have to be borne in mind to manage loan repayment smartly.

We hope the idea about the benefits of opting for a consumer durable loan is clarified by now. No matter how much critical the situation gets, it is always important for you to check the terms carefully before entering a credit relationship. Credmudra will guide you in this regard so that you can follow the precautions properly.

FAQs on Consumer Durable Loan

1. When to consider a consumer durable loan?

If you haven’t qualified for a low-interest credit card then consider depending on a consumer durable loan. These plans do not force you to add any collateral.

2. Can you make a big purchase using a personal loan amount?

Yes, you may buy any big-ticket lifestyle products like supermarket items, electronic gadgets like refrigerators, water heaters, etc. using the loan amount.

3. What are the documents needed for a consumer durable loan?

The documentation needs are very basic. All you must present to the lender is your Aadhaar card (or any other ID proof document) and a valid job ID card or income proof document.