5 Common Mistakes People Make When Planning For Retirement

Retirement may be many years ahead, but what you do today will determine how smoothly you handle your post-retirement life.

Dreaming about your retirement is the first step; planning and working towards your retirement goals is what will actually get you there.

Here are some of the common mistakes to avoid and what to do instead.

Mistake #1: Not creating a retirement road map

Mistake #2: Not knowing how much you need at the time retirement

Mistake #3: Not starting early enough

Mistake #4: Not including contingencies such as health care expenses in your retirement plan

Mistake #5: Not making smart investment decisions

When planning for retirement, it’s important to realize where you want to be, in order to know what you need to do to get there.


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RBI cautions on ‘All Bank Balance Enquiry’ App

It has come to the notice of the Reserve Bank of India that an app (application) is doing rounds on What’s App purportedly to facilitate checking of balance in customers’ bank accounts. The application has an RBI logo with the title ‘All Bank Balance Enquiry No’ and has listed several banks with either a mobile number or call centre number.
The Reserve Bank wishes to clarify that it has not developed any such application. Members of public are, therefore, advised to use the application, if at all, at their own risk.
Alpana Killawala
Principal Chief General Manager
Press Release : 2014-2015/2148

Tax benefit for Sukanya Samridhi Scheme

Depositors in the ‘Sukanaya Samridhi’ scheme, notified by the government in November 2014, can now avail tax benefits under Section 80C of the Income Tax Act.

The maximum deposit under the scheme for planning the future of the girl child will be ₹1.50 lakh in a financial year. Apart from this scheme, an individual also has the option of getting tax benefits through investments in National Savings Certificates, five-year Post Office Time Deposits, Public Provident Fund, Life Insurance, Equity-Linked Tax Saving Scheme, Five-year Tax Saving Bank Fixed Deposits or even principal repayment of home loan under Section 80C.

Scheme specifics

As per a Finance Ministry notification, tax benefits for the Sukanya Samridhi scheme have come into effect from January 21, which means anyone investing on after the said date will get tax benefits.

The scheme prescribes opening of a deposit account with post offices in the name of girl child by her biological parents or legal guardian. One girl will have one account, while the parent can open such an account for a maximum of two girl children till the age of 10.

However, if there are twin girls, then the facility will also be available for the third girl child.

Though the account will mature in 21 years from the date of opening of account, one can withdraw half the balance (at the end of preceding financial year) for higher education and marriage.

There is one condition — this withdrawal will be possible only after the girl attains the age of 18 years. The account will be closed if a girl marries before the scheme’s maturity period.


Check your Employees’ Provident Fund Balance Online

Now, an easy way to get your money out of dormant PF account.

The EPFO now has an online facility to trace and recover PF money lying in dormant accounts from old jobs

While shifting jobs, many employees don’t transfer their Employee Provident Fund to the new organisation as they either forget or find the procedure too complex.

The numbers are surprising. As of last financial year, about Rs 26,496 crore of provident fund money was lying with Employees Provident Fund Organisation (EPFO) in inoperative accounts. The government body stops crediting interest to those accounts which fail to make contributions for 36 months continuously and classify them as inoperative or dormant.
Until now it required lot of paperwork like filling up forms and attestation of claim from previous employer and so on. This has changed now. From January, the retirement fund body has launched a special drive to help such account holders. The organisation has asked field offices to identify the beneficiaries of inoperative PF accounts and settle those either by making payments, or transferring money to their active accounts. And to help them in this process, EPFO has launched an online helpdesk.

All you need to do is log onto EPFO’s website www.epfindia.com. Under the section ‘For Employees’ there’s a link to ‘Inoperative A/c Helpdesk System’. You need to put in your details and the organisation will communicate you the further procedure.
The web helpdesk is meant to help EFPO members trace out their provident fund numbers or find the total fund accumulated. The organisation has seen that the biggest problem with subscribers is that they don’t remember their account numbers.
When you click the link, it first asks to fill in the problem. Then you have to fill in details such as the name of the employer, PF account number, date of joining and leaving the company, personal details and so on. One done you will receive a reference number. Make sure to make a note of it as it’s not communicated through email or mobile.

If the details are traced, then the helpdesk will guide the subscribers for transferring the amount lying in inoperative account to their existing accounts. The subscribers can also withdraw money from the inoperative accounts by filling the claim form. EPFO has a web facility which helps users to transfer their old account dues to existing accounts.

Account holders should immediately act if they have not transferred or claimed provident fund when they changed jobs. PF is the key to retirement planning. “Even if a person has not earned interest for a year or two, it can drastically impact retirement corpus,” said a certified financial planner. He also suggested that it’s better to transfer the balance to the new account rather than withdrawing it.

It’s not just about losing interest and consequently not benefitting from power of compounding. Dormant accounts can be targets of fraudsters. For example, two years back EPFO discovered that fraudsters siphoned off money from inactive PF accounts by forging documents and by opening bank accounts using forged identity documents. This was prominent in establishments where remittances had not been received for many years, records not updated and the establishment had not submitted statutory returns.

…………Tinesh Bhasin – Business Standard


Loan settlement? Here is what you need to be careful about

loans, borrower, loan settlement, loan repayment, ABN AMRO Bank, NOC, Dadar Police Station, Delhi Police

Seven years after he settled a loan, a borrower is being subjected to numerous calls, notices and even arrest warrant. The only mistake, he committed was not to collect the NOC and account statement from the lender after his settlement 

Mumbai-based trader Ramnik Patel (name changed) was happy and relieved when in 2007 he repaid Rs58,000 to ABN AMRO Bank as full and final settlement against his loan outstanding. Seven years down the line, he is receiving calls from recovery agents, and notices from lawyers and warrants from places located thousands of kilometres away from Mumbai. He is not only disturbed, but feels like being mentally tortured just because a small mistake committed by the bank while updating its record.

In 2005, Patel took a personal loan of Rs2.15 lakh from ABN AMRO Bank. However, during 26/7 monsoon fury, he suffered heavy loss and could not repay his loan on time. Then on 21 March 2007, he received a letter from the Bank offering him a settlement. As per the offer letter, he was asked to pay Rs58,000 in two tranches of Rs29,000 each. The Bank also promised him that it would hand over all his unused post-dated cheques (PDCs) and no-objection certificate (NOC) within seven working days of the loan being closed on its system.
After accepting the offer from the Bank, Patel, promptly paid Rs29,000 each time on 28 March 2007 and 20 April 2007 to ABN AMRO Bank as per the settlement offer.
Meanwhile, ABN AMRO Bank was sold to Royal Bank of Scotland (RBS). RBS then sold all the debts of ABN AMRO to Kotak Mahindra group. Phoenix Asset Reconstruction Co Pvt Ltd, a unit of Kotak Mahindra group handles the recovery of these debts acquired from RBS.
Suddenly, in 2012, he received a phone call from somebody called as Choudhary from Patiala Parliament Police Station informing that there was a case filed against him and warrant was also issued by the Court. The warrant was sent from Delhi Police to Dadar Police station in Mumbai for execution. When Patel reached Dadar police station, he was told that a case was filed against him in 2011, which was transferred to Delhi Court. This was related with the loan he took from ABN AMRO Bank, he was told.
Here is a Checklist if you are going for a settlement with a lender…
  1. Keep copies of all your written communication with the lender
  2. Always have everything in writing (Even if you receive a phone call, send an acknowledgement mentioning points discussed during the call)
  3. Keep copies of the settlement letter, cheque/DD or pay order you submitted
  4. After the settlement, obtain a NOC and collect all your post-dated cheques, if any
  5. Do no forget to collect your loan account statement that shows zero balance

Interestingly, Patel never received any notice, memo or any warrant for his arrest from anybody until the phone call from Choudhary. Patel, then asked his lawyer to send reply to all concerned, including one lawyer called S Gupta from Delhi and police stations at both Delhi and Mumbai.

Again, in November 2013, Patel received a notice from Mumbai-based lawyer on behalf of Phoenix ARC Pvt Ltd. The lawyer, in the notice invited Patel to settle his loan in a conciliation camp (for settlement) organised by Kotak Mahindra Bank on 2 December 2013. The lawyer claimed that as on 30 April 2012, Patel had an outstanding of Rs42,811.95 that would have to be repaid along with an interest of 2% per month. Patel, then again had to reply to this notice and submit all the documents.
Next year, on 3 April 2014, Patel received a notice from the Mumbai District Legal Services Authority to be present during a hearing in the Lok Nyayalaya on 12th April. Phoenix ARC had approached the Lok Nyayalaya to take up the matter.
Patel went to the hearing and put forward his case. After looking at the documents and hearing Patel’s side, the representative of Phoenix agreed to verify his account and get back to him within seven days. They even gave an undertaking in writing.
This has been about nine months, since Patel went to the Lok Adalat and yet there is neither any response from the Bank nor any respite to him from the recovery agents.
So what went wrong with Patel? From his side, he did not collect the NOC and unused PDCs from ABN AMRO Bank, while the Bank failed to make necessary changes into its account books. This also raises big question, on how can a big lender like ABM AMRO forgets to update its loan book and record the settlement and passes on the same as dues to the buyer. In addition, since ABN AMRO no longer exists, how and where the borrower, who is being shown as defaulter, and harassed for recovery of dues that he had already paid, would go?
If you are facing similar issues, then you may want to take help from Moneylife Foundation’s free Credit Helpline  which offers free counselling to help you get out of this trap. In Mr Patel’s case, he approached the Credit Helpline and Moneylife Foundation’s trustees have also taken up this case with the Reserve Bank of India’s customer services department.

How Listed Companies Launder Money

The Securities and Exchange Board of India (SEBI) has set anti-money laundering guidelines to put in place stronger checks against possible laundering of funds through capital markets. Despite the regulations in place, SEBI recently sought help from various investigative agencies under the finance ministry on alleged money laundering in listed companies. According to reports, the markets regulator had written to the finance ministry, highlighting the method used by certain low-value companies to evade taxes.

The quantum of the alleged tax evasion is said to be pegged at Rs 20,000 crore

Such manipulative trades involves an entity seeking long-term capital gains exemption by approaching an operator, who finds out an illiquid stock on the exchange platform and gets an allotment of shares done to the entity. Over a one year at least period the operator rigs the stock price up to a pre-determined level. This is when the foreign entity gets in, and gullible investors get in taking the stock higher as the earlier entity gets out. This enables conversion of unaccounted money into tax-free long term capital gains. Watch the video:

Click Here for the full article


Changes in Provident Fund rules: 7 things to know

Planning for retirement is as important as planning for one’s career and marriage. Everybody wishes to have a secure, independent retirement life, where you would not depend on others for your needs. Investments and allocations are accordingly channelized in this direction to achieve the desired goals. The Employee Provident Fund (EPF), Employee Pension Scheme (EPS) and Public Provident Fund (PPF) are some of the popular products to invest for the retirement years.

In the past few months, radical changes have been introduced in these schemes. Let us have a look at them.

1) PF portability

2) Bank account and PF portability

3) Higher PF wage ceiling

4) Minimum monthly pension

5) Insurance limit hiked

6) PF interest rate

7) Tax on PF withdrawal

Click Here for the full story

Seminar on ‘Investment Management and Investor Grievance Redressal’

Seminar on
‘Investment Management and Investor Grievance Redressal’
on 20th August at 5.00 pm at Walchand Hirachand Hall, IMC, Mumbai

The IMC’s Capital Market Committee has organised a seminar on ‘Investment Management and Investor Grievance Redressal’ on 20th August from 5.00 pm at Walchand Hirachand Hall IMC, Mumbai, Mumbai. This seminar will focus on two important issues i.e. Investment Management and Investor Grievance Redressal issues.

Investment Management
Any investment decision requires professional investment management advise, asset allocation at various securities shares, bonds and other securities/assets in order to meet specified investment goals for the benefit of the investors. Investors may be institutions insurance companies, pension funds, corporations etc. or private investors. It is always advisable to seek guidance from professional Investment Management that helps you understand and control risks. This session will be addressed by Mr. Mehrab Irani, General Manager – Investments, Tata Investment Corporation Limited.

Investor Grievance Redressal
Investors come to the markets to make money on their investments. However due to carelessness and lack of knowledge get into various problems wherein their capita gets stuck due to systemic problems. Mrs. Deena Mehta will speak on precautions to be taken for keeping your investments secure. Mrs. Mehta will also guide you on legal remedies available within the securities market frame work for addressing various queries. Mr. T. Pandian, Registrar of Companies (ROC) will also share the session and guide investors on steps taken by ROC to protect the interest of investors.

There are no registration charges. Registration is compulsory. To register please email following details to priyanka@imcnet.org:

Email ID:
Phone No:

With regards,

Arvind Pradhan
Director General

Top 50 loan defaulters in India

All India Bank Employees’ Association (AIBEA) has announced a list of top 50 loan defaulters, mainly the corporate firms, whose total default amount to the banks is allegedly to be around Rs 40,528 crore (Rs 4056.28 billion).

The association demanded a remedy for the bad loans at the earliest to safeguard the public money in the banks.

The list, released by the association, is on the data on loan not paid from Public Sector Banks except State Bank of India, IDBI and foreign banks. The association also plans to come out with top 30 defaulters in each Bank.

The biggest defaulter according to the list is Kingfisher Airlines.

Click Here to Read More

Conned Indian Financial Consumer

As these examples from Moneylife Foundation’s Helpline show, the consumer has little chance of being treated fairly by companies, regulators and intermediaries

Mr Mallick from Sambalpur in Orissa runs an NGO. He has 17 insurance policies, sold to him by eight banks through their Bankassurance partners, with large premiums. He claims to have borrowed funds from various banks for a project (which we gather involves lending to the rural poor like a banking correspondent) and was persuaded to buy insurance policies. Since Mr Mallick’s English is poor, it is not clear if there was coercion; he alleges ‘gross mis-selling’.

The real question is: Why would anyone, in his right senses, buy 17 insurance policies and commit to the payment of such high premiums? We believe he was made false promises by his bankers, taking advantage of his financial illiteracy. Like Suchitra Krishnamoothi, he too made the mistake of trusting his bankers and did not suspect that they would mislead him.

Moneylife Foundation took up the issue of mis-selling of third-party financial products with RBI governor, Dr Raghuram Rajan. We are most upbeat that Dr Rajan, once he applies his mind to the issue, will begin to see how people’s finances are decimated by bankers who prey on their ‘trust’.

We are especially heartened by the speed with which he has directed banks not to levy penalties for failure to maintain minimum balances on inoperative accounts. He has also implemented the long-pending demand to scrap foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, through a directive.

Click Here to read the full article by Sucheta Dalal.