Tag: banks

PIN compulsory for Online Payments


Reserve Bank of INDIA (RBI) has made PIN mandatory for online credit card or debit card payments. 

  • PIN is in addition to other information we provide like Card No., Name, Expiry Date & CVV no.
  • Since it is a notice issued by RBI it is applicable to cards issued in India only. If your card is issued from any other country it will have a normal authorization process.

So this comes into effect from August 1st, 2009.

Insights about New Pension Scheme (NPS)


India has come a long way from being considered conservative to moderate type of a country. Though it takes time for things to materialize here we can be sure it happens one day and one such example is the arrival of New Pension Scheme.

 

Let me point out some information I gathered about this plan.

 

  • Concept of NPS was initiated in the year 1993 and it has finally come true during May 01, 2009. It took 16 years to come into existence.
  • Old plan is termed as defined benefit plan where we know what the return we will get. Where as in the New Plan it is called defined contribution and the return is based on how well the fund performs.
  • The system has a simple framework;
    • There are designated Point of Presence (POPs) at this point these are mostly banks. These POPs will be the frond end where we can get the account opening procedures.
    • All records will be managed by National Security Depository Limited (NSDL).
    • Pension Fund Regulatory and Development Authority (PFRDA) has appointed six entities which will manage the funds (Fund Managers). At present six fund managers are State Bank of India, UTI, ICICI Prudential, Kotak Mahindra, IDFC and Reliance.
  • Fund types vary from equity, government securities and bonds.
  • Investment management fee is as low as 0.009 percent per annum.
  • Anyone between the age group of 18 – 55 can join the scheme.
  • After opening the account we will be given Permanent Retirement Account Number (PRAN) along with telephone and internet passwords.
  • No ceiling on investment but the minimum amount to be invested is Rs.500/- per month or Rs.6000/- per annum.
  • If we fail to invest the minimum amount we have to pay a penalty of Rs.100/- to reactivate the account.
  • Money we deposited cannot be withdrawn until we become 60 years old. Also after 60 years we can withdraw only 60 percent and the balance must be used to buy an annuity.
  • Gains from NPS are taxable.

Like wise this scheme has many advantages and disadvantages and by time those glitches will also be fixed. Things that prompt me to invest in this scheme are;

 

  • Government regulators have always safe guarded the interest of public.
  • Since this is a social security underperformance or corruption will become an election issue and government will not entertain any mess-ups with this scheme.
  • Power of Indian population will play economies of scale and hence this fund will not fall short of liquidity.
  • Any government backed entity will raise people’s confidence. Examples: LIC, Bank Savings etc.

So, these are some points I collected about NPS and reasons why I’ll invest in it. If I missed some point please be generous enough to post them as comment.