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June 16, 2017

Coming to Terms with Bankruptcy

details about bankruptcy filingIt can be difficult to make the decision to file bankruptcy because most people are afraid of the unknowns associated with actually filing a bankruptcy claim and becoming insolvent. It’s scary to think that you could lose your house or your car, or any other valuable asset you have, and so a lot of people put off filing for bankruptcy for as long as possible; unfortunately, this usually only perpetuates the situation. What’s more, some people finally make the decision to file for bankruptcy and then find out they don’t actually qualify for it. It’s important to get the facts straight so you can decide what is right for you. Once you do make the decision to file for bankruptcy, you’ll want to start working toward the rest of your life.

Get Passed the Shame

There is no shame in reaching out to a Licenced Insolvency Trustee to discuss the option of bankruptcy. Once you have discussed your options and it is decided that you will file for bankruptcy, your credit counsellor can help you determine how to move forward. They will talk you through what the next few weeks, months or even years may look like for you in terms of your financial standings, and you can start to put together a plan to get back on your feet.

Work Toward Goals

Now that the bankruptcy has been filed, it can seem overwhelming to think that you need to start rebuilding your financial status. It’s important to have a list of things you want to work toward; for example, make a long term plan for holding a credit card again. Make a short term plan of building a savings account for yourself so you can cushion unforeseen financial issues in the future.

Talk to Your Family

Part of declaring bankruptcy is that you’ll need to attend some kind of counselling sessions; it will be important to your claim that you do this. What’s more, you should have a frank and honest conversation about your finances with your closest family members so they can understand what is happening to you and perhaps can help you. At the very least, having someone to talk to about what is going on can help you deal with it.

Don’t Give Up

Some people think that filing for bankruptcy is the end of the world. It is just a process by which you can hit the refresh button on your finances – in its simplest terms. Good and honest people often find themselves having to file for a bankruptcy because their finances have gotten out of their control. It doesn’t mean you are a bad person or you don’t deserve to have anything ever again. A series of bad choices or circumstances got you here, but you don’t have to stay in that place.

If you aren’t sure if bankruptcy is right for you, consult a Licensed Insolvency Trustee and they will walk you through the criteria and help you determine if you need to file a bankruptcy claim. While it seems like it’s very unfortunate, you will be able to get through it with the help of your credit counselor.

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March 2, 2017

How Digital Money Transfer affects Cash Management System in SME Banking

digital money bankingIn the recent years, there has been a surge in the number of e-commerce startups. This has resulted in a higher usage of payment gateways. These gateways are beneficial in developing customer trust through easier transactional capabilities.

A large number of studies show that the demand for reliable payment gateways will continue to rise. Businesses may choose from several gateway service providers to ensure safe, quick, and easy monetary transactions.

Digitalization of different processes, new payment platforms, and demand for finance provide challenges and opportunities to payment ventures operating in India. Here are four reasons for the growth of payment gateways in the country.

1. Increase in service providers that are taking advantage of opportunities with advanced technical apps
2. Extension of financial inclusion using mobile-based solutions
3. Newer innovations that are reaching the masses at quickly
4. Digitalization for the development of new lending and payment models

Traditional banks are adopting innovative payment-linked ecosystems for the convenience of their customers. Banks are especially providing specialized solutions for catering to the needs of the Small and Medium Enterprises (SMEs).Several mobile platforms allow payments across different categories, such as bill payments, shopping, and peer-to-peer payments.

Most of the large companies have adopted digitalization since many years. These companies conduct their various processes, such as accounts management, treasury management, and payments electronically. Such large enterprises consider advanced technologies while selecting their banking partners.

Importance of digitalization in the SME sector

In the last few years, most banks have developed cash management systems that are convenient for their customers. Almost every bank offers mobile-based cash management tools that are used by companies for not only managing their accounts but also initiating payments.

As larger companies embrace digitalization, the SME ventures still rely on cash and branch banking. The banks are offering several initiatives to encourage SMEs to move to digital platforms. One of these includes enabling merchants to receive card-based receipts using low-end mobile devices. This offers a non-cash alternative for several SME businesses. Another initiative benefiting many customer-orientated companies is the Immediate Payment Service (IMPS) that makes transacting quick, transparent, and efficient.

Banks are offering several cash management services to help SMEs improve operational efficiencies. Here are four categories of such services offered by banks.

1. Management

• Optimal collection and payment systems on behalf of customers
• Wide network access, clearing infrastructure, special software, and correspondent banks’ tie-ups for timely and efficient operations

2. Products

• Receivables management
• Information technology (IT) solutions for customized multiple electronic payment mechanisms
• Collection of cheques in bulk
• Cheque purchasing facilities
• Management of post-dated cheques

3. Payable management

• Refund of Initial Public Offerings (IPOs), interest and dividend warrants
• Bulk demand draft with entire correspondent banking network
• Remote printing of different instruments including cheques

4. Escrow services

• Availability of escrow depository accounts
• Dedicated team of legal and financial product personnel for assisting complex transactions
• Transaction structuring with lawyers, clients, or investment bankers
• Customization of reports and Management Information System (MIS) as per customer requirements

Streamlined processing mechanisms and real-time data integration make it easier for SMEs and large companies to gain access to various solutions as per their needs.

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January 18, 2017

How to Open a Savings Account

creating a savings accountA savings bank account is where most people begin their journey of savings. There is no safer place than a bank to store your money. It also pays you for keeping your money there in the form of interest. But, there are several banks around and each have their own benefits, so before you open a savings account decide a bank to go to. Following are steps on how to open a savings account –

– Select a bank

Inquire about banks that are situated in your locality. Better will be to research about them online as there is an abundance of information available online. Each bank will have a distinctive service and offer, decide which one’s best for you. Important points to consider is the presence of the bank and their ATM networks. Also remember that you will be needing several services of your bank at random hours so there has to be an availability of online and mobile banking as well. Be it physically or digitally, your bank should be within reach all the time.

– Check out their website

If you like a bank then go ahead and check out their website and find out more about their services. You can check out each and every service of theirs by just sitting on your desk. The advent of mobile and online banking has made life convenient, also ATMs can be accessed 24/7 making banking simpler and hassle free. Plan your visit to the bank on weekdays at 9.30 a.m. to 3.30 p.m. and on Saturdays at 9.30 a.m. to 1.30 p.m. Banks remain closed on Sundays and other public holidays.

– Type of account

Although we know that we’ve to open a savings account, there are several types of savings account out there catered specifically to match your needs. Some options are Easy access accounts, Basic savings accounts, Joint savings accounts, Women’s savings accounts and Youth account. Best option for you will be to get in touch with bank representative and ask for details.

– Keep information ready

To open any savings account you will have to submit certain documents and information to the bank. This is a norm that is followed by all banks, some banks will require more information and several documents will be asked, it will be better if you keep these documents handy.

– Depositing your opening amount

Several banks require a minimum amount deposit to open a new account. The amount depends on the bank, some may have a greater minimum amount deposit and same may have none. Find out these details in advance and have the amount ready when you’re about to open a new account.

– Read and understand the terms

Do not hesitate to ask questions, you should be clear about each and every aspect of the account. Also read the information available online on the bank’s website, inquire about service charges, benefits and services available on the account.

– Sample signature

You will asked for a sample signature while opening your account. This signature will be used in all of your future transactions related to the account, like withdrawing money or signing a check. If there are noticeable differences in your signature then the transaction won’t be permitted. This a procedure done to keep your account safe and to avoid any issues with the signature, you can practice it on a piece of paper for several times.

– Account opened!

Congratulations, you’re now a valued bank customer. After the verification of your form and documents, your account will be opened. You will receive a welcome kit from the bank that will include important information about your account like information leaflets, cheque book and customer relation number. The kit may also include your debit card, with the pin number, also attached will be your net banking and phone banking pin.

With the advent of technology on the banking front, you can also opt for online account opening, the procedure is easy and the steps are hassle-free.

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December 16, 2016

NPS and How to Maximize Asset Allocation

asset allocationsThe National Pension System (NPS), introduced by the Indian government in the year 2004 is mandatory for all government employees except the armed forces personnel.This scheme was extended to the private sector in 2009. It is a portable retirement savings account, which can be efficiently used to provide financial security to senior’s through a pension income.

This scheme offers benefits such as tax deduction of INR 1.5 lacs under section 80CCD (1) of the Income Tax Act (IT). An additional tax deduction of up to INR 50,000 under section 80CCD (1B) of the IT Act is also available. Subscribers also have the flexibility of choosing asset allocation between equity, fixed income instruments, and government securities.

NPS is known as a defined contribution scheme because returns under this scheme are market driven. The NPS interest rate changes based on the performance of the market and the asset allocation chosen by the subscribers.

Asset allocation under NPS

Funds invested in NPS can be invested into 3 types of assets namely equity, corporate bonds, and government securities. There are two investment options available under this plan;auto choice and active choice.

Under auto choice, funds are automatically allocated in a pre-determined proportion based on the age of the subscriber. For example for subscribers under the age of 35 years, funds are allocated as follows: 50% in equity and balance amongst corporate bonds and government securities. As the subscribers age, the exposure to equity is reduced and investment in government securities increase.

Under the active choice option, subscribers may choose the asset allocation as per their preferences. The NPS scheme allows subscribers to allot upto 50% of their contributions to equity. Subscribers may use this option to their advantage to maximize the potential returns. For instance, an Investor approaching retirement age (between 45 to 50 years) may opt for a conservative allocation by investing a substantial portion of his funds in government securities.

Maturity and Annuities

The primary objective of NPS is to create a corpus that is used to buy an annuity plan for regular income during the post-retirement years. At the age of 60, the subscriber may with draw a maximum of 60% of the funds as a lump sum. The remaining corpus is used to purchase an annuity that will provide regular income to the subscriber.

Subscribers may choose not to withdraw any funds and use 100% of the corpus to buy an annuity. However, if the corpus at the time of exit from NPS at the age of 60 years is less than 2 lacs, the subscribers may withdraw the entire amount in lump sum. To determine the potential income, individuals may use an online pension plan calculator.

Joining NPS

In order to join the NPS scheme, the subscribers must submit the NPS application form, along with Know Your Customer documents to a Point of Presence (POP). Upon submitting the documents, the subscribers are issued with a Permanent Retirement Account Number (PRAN), T-Pin and I-Pin. Subscribers are informed of their PRAN application status via email and SMS. They may also know their application status by contacting the issuing bank. However, the subscribers may get in touch with the Central Record Keeping Agency (CRA) which manages the issuance of PRAN, in case the PRAN card is not received.

NPS is focused on offering financial security to the individuals after their retirement. The flexibility available for investors to allocate their contributions in different asset classes allows them to maximize the returns and accumulate a higher post-retirement income.

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December 13, 2016

Why you need Good CIBIL Score for Home Loan Approval

approved loan for your homeCIBIL Score is a crucial aspect in determining your home loan eligibility. Every time you apply for home loan, your lender checks this score for approving/disapproving your application. It is a summary of your credit history as per your credit behaviour. It depends on the following factors:

Past payments: All your previous payments, whether on time or delayed, are recorded with CIBIL. Consistency in making payments is considered good whereas more recent delays are seen negatively.

Settlements, defaults and write-offs: Multiple write-offs, defaults on previous loans and more recent write-offs (as opposed to older ones) have negative effects on your credit score. Defaults and delays on secured loans are worse than on unsecured loans.

Credit as proportion of income: The higher the loan balance you have, the lower your credit score will be. Less loan balance shows smart credit utilization on your part.

Credit cards: If you have high credit card balances, your credit score will be low. Consistency in repaying credit card debts improves the score. Credit cards (unsecured loans) are viewed negatively by lenders as compared to secured loans.

Different ranges of CIBIL Score

Every person with a financial history has a CIBIL score and it can range anywhere between 300 and 900, with 900 being the highest. A person can also have a score of 0 or -1, which means that they have no credit history in terms of loans and credit cards. So to get the credit history started, you must have at least one credit card or applied for a loan. Here is a breakup of CIBIL scores and what it means:

  • 550 – 650: It is a fair score and accepted by many lenders. This score shows that you have been quite regular with your repayments, other than a few exceptions. Most lenders trust borrowers with this score and approve their home loans but usually with a higher interest rates.
  • 300 – 550: This is the worst score anybody can have and it means that you have been defaulting on your payments. With such a score, getting credit is extremely difficult.
  • 650 – 750: For home loan eligibility, this score is very promising. And if you have this credit score, you will not face any issue regarding approval of application.
  • 750 – 900: It is the best possible score anybody can have and it indicates your expertise at managing your finances. Lenders will approve even a larger loan amount to you at great rates when you apply for home loan.
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