BEWARE! IT’S (NOT) FREE BANKING
On your TV screens we often see one add that the employee of bank listening patiently all the non-sense stuff of an old lady even though the banking operations are closed & all the employees goes home except him. You are right that’s ICICI Bank’s add, India’s largest private sector bank. It has a timeline saying, ‘Khayal Apaka’. Sate Bank of India (India’s largest bank) saying: ‘With you- all the way’, while IDBI Bank timeline: ‘Some relationships grow deeper with time’. In real sense the scenario is altogether different. The fact is that the do not even entertain their customers. Most of the customers feel like harassed.
In today’s world nothing is free; same is the case with banks. For every service you get you have to pay. Even entering a bank is costlier. The banks levy charges as ‘consultation charges.’
If you think that you haven’t tasted it, that’s false. You have tasted it unknowingly. Just go through your bank statement you will find various such charges have been levied by bank.
Last week when I was in bank for some official work, I saw my friend Akash quarreling with bankers. When I enquired about it I found that bank had debited his account with various charges like service charge, DD charges and many more.
Being a Financial & Tax consultant with curiosity I audited his bank passbook & bank statements. I found one such interesting charge that the bank has levied. This was the most illogical & stupid charge I have seen until now. It was ‘non transaction charge’ the bank had levied to his account by debiting Rs.50/-. Akash had not been using that bank account since from last 2 years.
This charge varies from bank to bank. SBI charges Rs.25/- if you have not withdrawn even a single penny from your account within 6 months. Another nationalized bank, Bank of Maharashtra charges Rs.50/- for same if no transaction have been done within 3 years.
The list of bank charges doesn’t end by 5-10 entries; it’s a 1-3 pages long.
Contradictory to above example SBI charges for excessive transaction done from your account. State Bank will charge Rs.5/- for each debit transaction in after you have crossed the limit of 30 debit transactions in 6 months, if done at a branch. Other banks like BANK OF MAHARASHTRA charge Rs.50/- if no transaction has been done from you’re a/c.
Its being a common complaint of ICICI Bank & HDFC Bank customers these bank levy hefty charges ranging from Rs.100/– 300/- for a duplicate statement. Although now you have freedom to withdraw money from another banks ATM not more than 5 times in a month. Some banks will charge Rs.12- 25.In case your transaction at other bank is rejected because you do not have the required balance then Kotak Mahindra Bank & ICIC Bank will charge Rs.25/- per transaction for certain types of saving A/c.
We often ask our clients/relatives to deposit money/cheque or to withdraw money near by bank branch closer to them. Bank levy charges for using non home branch, meaning a branch apart from where your account is registered. Kotak Mahindra bank will charge Rs.50-10000 on the basis of Rs.2.5 per Rs.10000 deposited or withdrawn at non home branches. HDFC bank levies a charge for third party transaction on your behalf for cash transaction at non home branches. ICICI Bank allows the first cash deposit in a non city branch per month free, but later Rs.5 per Rs. 1000 subject to minimum Rs.150/- will be levied. SBI charges Rs.25 per 10000 for non home transaction.
A mater of fact that most banks are trying to discourage its customers not to visit the bank branches. So its imperative to have internet banking and telephone banking.
TAX PLANNING: AN ESSENTIAL ELEMENT OF FINANCIAL PLANNING
Financial planning is considered to be most essential element of life. It has been rightly said that ‘Future is Uncertain’. Financial planning plays an important role in overcoming your financial uncertainties. Tax Planning is considered to be an essential part of Financial Planning.
A survey conducted by Rights Horizon among IT/ITES employees with the age group of 25-30 yrs. in major southern cities of India reveals that these employees are very poor in financial as well as in tax planning. The survey was conducted amongst 1169 salaried individuals in 3 cities viz. Bangalore, Chennai, Hyderabad. It found that nearly 70% of salaried individuals are not utilizing the Chapter VI A deductions (max. deduction available upto (INR) Rs. 1, 00,000/-) of Indian Income Tax Act 1962.
Chapter VI A (commonly known as sec. 80C) is an important sec in Income Tax Act which helps you to save taxes as well as money.
The study has found that many of them pay more income tax which could have been saved through financial & tax planning. In Chennai only 24% IT people completely used the Rs. 1 Lac limit. Nearly 58% people invested in Public Provident Funds/ National Saving Certificate while 35% in Equity Linked Saving Scheme (ELSS) & 12% in home loans. Most of the individuals have a habit of investing at the last moment of financial year when you are running out of your finances.
As no one can predict future we should be prepared for it. Every one should make a habit of saving right from the college days. Your investment portfolio & savings should be diversified so that it will maintain right balance between risks as well as earnings. To have a better and secure life consult your Financial Advisor, Chartered Accountant. For more contact us:
Mr. Vilas V Kulkarni
(Chartered Accountants),
259, IInd Floor, Bajaj Nagar,
Nagpur (India) 440025.
(M) +91 982 358 3667.
Mr. Harshal V Kulkarni
(Financial Consultant)
(M) +91 976 599 9467