NOMINATION RULES

Nomination Facility is an ideal tool to mitigate hardships of common persons in settlement of claims in the event of death of the account holder.   Nomination is optional for bank customers and the facility is available on a voluntary basis. Nomination facility, if availed, would ensure smooth settlement of claim to the nominee.   Nomination is solely for the purpose of simplifying the procedure for settlement of claims of deceased depositors and does not take away the rights of legal heirs on the estate of the deceased.   The nominee would be receiving the claimed amount from the bank as a trustee of the legal heirs.   Nomination facility is intended only for individuals including a sole proprietary concern.   Nomination can be made in favour of minor also.   There cannot be more than one nominee in respect of single/ joint deposit account. However, nomination in favour of more than one person is permissible in jointly operated locker account with common consent.   Bank allows variation/ cancellation of a subsisting nomination by all the surviving depositor(s) acting together.   In a joint account the nominee's right arises only after the death of all the depositors.

Pledge vs Hypothecation vs Mortgage

These terms are used for creating a charge on the assets which is given by the borrower to the lender as a security for any loan.  Thus, one of these terms will be normally used whenever an individual or a business firm avails any loan and the bank keeps some assets as a security, so that it will be able to sell the same in case that individual or the firm defaults in repayments.

(1) Pledge is used when the lender (pledgee) takes actual possession of assets (i.e. certificates, goods ).  Such securities or goods  are movable securities.  In this case the pledgee retains the possession of the goods until the pledgor (i.e. borrower) repays the entire debt amount.   In case there is default by the borrower, the pledgee has a right to sell the goods in his possession and adjust its proceeds towards the amount due (i.e. principal and interest amount).  Some examples of pledge are Gold /Jewellery Loans, Advance against goods,/stock,  Advances against National Saving Certificates etc.

(2) Hypothecation is used for creating charge against the security of movable assets, but here the possession of the security remains with the borrower itself.   Thus, in case of default by the borrower, the lender (i.e. to whom the goods / security has been hypothecated) will have to first take possession of the security and then sell the same.   The best example of this type of arrangement are Car Loans.   In this case Car / Vehicle remains with the borrower but the same is hypothecated to the bank / financer.   In case the borrower, defaults, banks take possession of the vehicle after giving notice and then sell the same and credit the proceeds to the loan account.  Other examples of these hypothecation are loans against stock and debtors.  [Sometimes, borrowers cheat the banker by partly selling goods hypothecated to bank and not keeping the desired amount of stock of goods.   In such cases, if bank feels that borrower is trying to cheat, then it can convert hypothecation to pledge i.e. it takes over possession of the goods and keeps the same under lock and key of the bank].

(3) Mortgage :  is used for creating charge against immovable property which includes land, buildings or anything that is attached to the earth or permanently fastened to anything attached to the earth (However, it does not include growing crops or grass as they can be easily detached from the earth).  The best example when mortage is created is when someone takes a Housing Loan / Home Loan.  In this case house is mortgaged in favour of the bank / financer but remains in possession of the borrower, which he uses for himself or even may give on rent. 

Difference Between Pledge, Hypothecation and Mortgage at a Glance:

	Pledge	Hypothecation	Mortgage
Type of Security	Movable	Movable	Immovable
Possession of the security	Remains with lender (pledgee)	Remains with Borrower	Usually Remains with Borrower
Examples of Loan where used	Gold Loan, Advance against NSCs, Adv against goods (also given under hypothecation)	Car / Vehilce Loans, Adv against stock and debtors	Housing Loans

What is an Assignment ?  

There is another term  (i.e. Assignment) which is sometimes confused with above terms.  An assignment constitutes an action taken with a contract.  Assignment occurs when the owner of a contract, known as the assignor, gives a contract to another party, known as the assignee.   The assignee assumes all responsibilities and benefits of the contract.  When it comes to loans, assignment can relate to life insurance policies and mortgage contract from one party to another.    Mortgages and other contracts sometimes contain provisions limiting or stipulating conditions for assignment.

One example of assignment is 'transfer by the holder of a life insurance policy (the assignor) of the benefits or proceeds of the policy to a lender (the assignee), as a collateral for a loan'.    In such case in the event of the death of the assignor, the assignee is paid first and the balance (if any) is paid to the policy's beneficiary.      However,  insurance policies other than life insurance,  may not be used for this purpose.

The Right To Set-Off

In order to cover a loan in default, a bank has a legal right to seize funds of a guarantor or the debtor. A settlement of mutual debt between a creditor and a debtor through offsetting transaction claims is also known as setoff. Through this settlement, a creditor can collect a greater amount than they usually could under bankruptcy proceedings. When a setoff clause is entered into, the bank can seize the customer's current deposit. A bank exercising a right of setoff must fulfill the following conditions :

1. the account from which the firm transfers funds must be held by the customer owing the firm money;

2. the account from which the firm transfers the money and the account from which the money would otherwise have come, must be held with the same firm;

3. both account must both be held in the same capacity by the customer; and

4. the debt must be due and payable.

Most banks have the right to transfer cash from your bank or savings accounts to pay off other debts held with them, such as credit cards or loans. It's known as the right to "'set-off", or to combine accounts.

CAPITAL ACCOUNT VS CURRENT ACCOUNT

Capital account can be regarded as one of the primary components of the balance of payments of a nation.

Definition: Capital account can be regarded as one of the primary components of the balance of payments of a nation. It gives a summary of the capital expenditure and income for a country.

Description: The capital expenditure and income is tracked by way of funds in the form of investments and loans flowing in and out of an economy. This account comprises foreign direct investments, portfolio investments, etc. It gives a summary of the net flow of both private and public investment into an economy.

A capital account deficit shows that more money is flowing out of the economy along with increase in its ownership of foreign assets and vice-versa in case of a surplus. The balance of payments contains the current account (which provides a summary of the trade of goods and services) in addition to the capital account which records all capital transactions.

Current account is one of the two component accounts of the balance of payments of a nation.

Definition: Current account is one of the two component accounts of the balance of payments of a nation. It records the trade of goods and services of an economy with other countries of the world.

Description: Current account includes three components - net exchange i.e. exports minus imports of goods, net exchange of services and net transfers to and from the country. The balance in this account before accounting for the transfer component is generally referred to as the balance of trade. In India, current account is reported by the Reserve Bank of India.

The exchange of goods and services is recorded for the current period and hence is called current account. The current account figure reveals the pattern of foreign trade. If the balance of trade is negative, then the country is importing more goods and services than its exports of these. The other component of the BOP is the capital account.

Capital account: Part of a nation's balance of payments that includes purchases and sales of assets, such as stocks, bonds, and land. A nation has a capital account surplus when receipts from asset sales exceed payments for the country's purchases of foreign assets. The sum of the capital and current accounts is the overall balance of payments.

Current account: Part of a nation's balance of payments which includes the value of all goods and services imported and exported, as well as the payment and receipt of dividends and interest. A nation has a current account surplus if exports exceed imports plus net transfers to foreigners. The sum of the current and capital accounts is the overall balance of payments.

Special Economic Zone(SEZ)

Special Economic Zone (SEZ) is a specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs. In order words, SEZ is a geographical region that has economic laws different from a country's typical economic laws. Usually the goal is to increase foreign investments. SEZs have been established in several countries, including China, India, Jordan, Poland, Kazakhstan, Philippines and Russia. North Korea has also attempted this to a degree. 

At present there are eight functional SEZs located at Santa Cruz (Maharashtra), Cochin (Kerala), Kandla and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta (West Bengal) and Noida (Uttar Pradesh) in India. Further an SEZ in Indore (Madhya Pradesh) is now ready for operation.

In addition 18 approvals have been given for setting up of SEZs at Positra (Gujarat), Navi Mumbai and Kopata (Maharashtra), Nanguneri (Tamil Nadu), Kulpi and Salt Lake (West Bengal), Paradeep and Gopalpur (Orissa), Bhadohi, Kanpur, Moradabad and Greater Noida (UP), Vishakhapatnam and Kakinada (Andhra Pradesh), Vallarpadam/Puthuvypeen (Kerala), Hassan (Karnataka), Jaipur and Jodhpur ( Rajasthan) on the basis of proposals received from the state governments.

Any private/public/joint sector or state government or its agencies can set up an SEZ.

Yes, a foreign agency can set up SEZs in India. 

State governments will have a very important role to play in the establishment of SEZs. Representative of the state government, who is a member of the inter-ministerial committee on private SEZ, is consulted while considering the proposal. Before recommending any proposals to the ministry of commerce and industry (department of commerce), the states must satisfy themselves that they are in a position to supply basic inputs like water, electricity, etc.

The objective of the SEZ Act was to create a hassle-free regime and the rules would be formulated keeping this in mind. The ministry is also holding talks with state governments as they have to play an important role in the development of SEZs.

Facts About INDIA

Name	Origin From	Fall into	Length (km)
Ganges	Combined Sources	Bay of Bengal	2525
Satluj	Mansarovar Rakas Lakes	Chenab	1050
Indus	Near Mansarovar Lake	Arabian Sea	2880
Ravi	Kullu Hills near Rohtang Pass	Chenab	720
Beas	Near Rohtang Pass	Satluj	470
Jhelum	Verinag in Kashmir	Chenab	725
Yamuna	Yamunotri	Ganga	1375
Chambal	M.P.	Yamuna	1050
Ghagra	Matsatung Glacier	Ganga	1080
Kosi	Near Gosain Dham Park	Ganga	730
Betwa	Vindhyanchal	Yamuna	480
Son	Amarkantak	Ganga	780
Brahmaputra	Near Mansarovar Lake	Bay of Bengal	2900
Narmada	Amarkantak	Gulf of Khambat	1057
Tapti	Betul Distt. Of MP	Gulf of Khambat	724
Mahanadi	Raipur Distt. In Chattisgarh	Bay of Bengal	858
Luni	Aravallis	Rann of kuchchh	450
Ghaggar	Himalayas	Near Fatehabad	494
Sabarmati	Aravallis	Gulf of Khambat	416
Krishna	Western ghats	Bay of Bengal	1327
Godavari	Nasik distt. In Maharashtra	Bay of Bengal	1465
Cauvery	Brahmagir Range of Western Ghats	Bay of Bengal	805
Tungabhadra	Western Ghats	Krishna River	640

Highest Award	Bharat Ratna
Highest Gallantry Award	Param Vir Chakra
Longest River in India	The Ganges
Longest Tributary river of India	Yamuna
Largest Lake	Wular Lake, Kashmir
Largest Lake (Saline Water)	Chilka Lake, Orrisa
Largest Man-Made Lake	Govind Vallabh Pant Sagar (Rihand Dam)
Largest Fresh Water Lake	Kolleru Lake (Andhra Pradesh)
Highest Lake	Devtal Lake, Gadhwal (Uttarakhand)
Highest Lake	Devatal (Gharhwal)
Highest Peak	Karkoram-2 of K-2(8,611 meters) Highest Peak in the world is Mount Everest which is in Nepal
Largest Populated City	Mumbai
Largest State(Area)	Rajasthan
Largest State(Population)	Uttar Pradesh
Highest rainfall	Cherrapunhi (426 inches per annum)
Highest Watefall	Nohkalikai Falls (335 meters, 1100 ft high) in Shora
State wise largest area under forest	Madhya Pradesh
Largest Delta	Sunderbans Delta
Largest River without Delta	Narmada and Tapti
Longest Cantilever Span bridge	Howrah Bridge
Longest River Bridge	Mahatma Gandhi Setu, Patna
Biggest Cave temple	Ellora
Longest Road	Grand Trunk Road
Highest Road	Road at Khardungla,(in Leh-Manali Sector)
Biggest Mosque	Jama Masjid at Delhi
Highest Gateway	Buland Darwaza at Fatehpur Sikri (53.6 meters high)
Tallest Statue	Statue of Gomateshwar (17 meters high In Karnataka
Largest Public Sector Bank	State Bank of India
Longest Canal	Indira Gandhi Canal or Rajasthan Canal (Rajasthan)
Largest Dome	Gol Gumbaz at Bijapur
Largest Zoo	Zoological Garden at Alipur (Kolkata)
Largest Museum	India Museum at Kolkata
Longest Dam	Hirakud Dam (Orrisa)
Highest Dam	Tehri Dam ( 260 meters , 850 ft )
Highest Tower	Kutab Minar at Delhi (88.4 meters high)
Largest Desert	Thar (Rajasthan)
Largest District	Kutch district
Fastest Train	Shatabadi Express running between New Delhi and Bhopal
State with longest coastline	Gujarat
State with longest coastline of South India	Andhra Pradesh
Longest Electric Railway Line	From Delhi to Kolkata via Patna
Longest Railway Route	From Assam to Kanyakumari
Longest Railway Platform	Kharagpur (W. Bengal)
Highest Railway Station	Ghum (W. Bengal)
Longest Platform	Kharagpur (West Bengal) 833 meters in Length. It is also the longest railway station in world
Longest Tunnel	Jawahar tunnel (Jammu & Kashmir)
Longest Highway	NH-44 (NH-7) which turns from Varanasi to Kanyakumari
Smallest State (Population)	Sikkim
Smallest State (Area)	Goa
Largest State (Area)	Rajasthan
Largest State (Population)	Uttar Pradesh
Densest Populated State	West Bengal
Largest Cave	Amarnath (J&K)
Largest Cave Temple	Kailash Temple, Ellora (Maharastra)
Largest Animal Fair	Sonepur (Bihar)
Largest Auditorium	Sri Shanmukhanand Hall (Mumbai)
Biggest Hotel	Oberai-Sheraton (Mumbai)
Largest Port	Mumbai
Largest Gurudwara	Golden Temple, Amritsar
Deepest River Valley	Bhagirathi & Alaknanda
Largest Church	Saint Cathedral (Goa)
Oldest Church	St. Thomas Church at Palayar, Trichur (Kerala)
Longest River	Ganga (2640 km long)
Longest Beach	Marina Beach, Chennai
Highest Battle Field	Siachin Glacier
Highest Airport	Leh (Laddakh)
Biggest Stadium	Yuva Bharti (Salt Lake) Stadium, Kolkata
Largest River Island	Majuli (Brahmaputra River, Asom)
Largest Planetarium	Birla Planetarium (Kolkata)
Sambhar lake	Largest inland salt lake

Bordering Pakistan(2912 km)	Jammu and Kashmir, Punjab, Rajasthan and Gujrat
Bordering China (3380 km)	Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim and Arunachal Pradesh
Bordering Nepal(1690)	Bihar, Uttarakhand, Uttar Pradesh, Sikkim and West Bengal
Bordering Bangladesh(4053)	West Bengal, Mizoram, Meghalaya, Tripura and Asom
Bordering Bhutan(605 km)	West Bengal, Sikkim, Arunachal Pradesh and Asom
Bordering Myanmar(burma) 1463 km	Arunachal Pradesh, Nagaland, Manipur and Mizoram
Bordering Afghanistan	Jammu and Kashmir (Pakistan-Occupied Area)

Liquidity

Liquidity means how quickly you can get your hands on your cash.

Definition: Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it.

Description: Liquidity might be your emergency savings account or the cash lying with you that you can access in case of any unforeseen happening or any financial setback. Liquidity also plays an important role as it allows you to seize opportunities.

If you have cash and easy access to fund and a great deal comes along, then it's easier for you to cease that opportunity. Cash, savings account, checkable account are liquid assets because they can be easily converted into cash as and when required.

HOT MONEY

n financial markets, 'hot money' is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipatedexchange rate shifts. These speculative capital flows are called 'hot money' because they can move very quickly in and out of markets, potentially leading to market instability

The following simple example illustrates the phenomenon of hot money: In the beginning of 2011, the national average rate of one year certificate of deposit in the United States is 0.95%. In contrast, China's benchmark one year deposit rate is 3%. The Chinese currency (renminbi) is seriously undervalued against the world's major trading currencies and therefore is likely to appreciate against the US dollar in the coming years.

Given this situation, if an investor in the US deposits his or her money in a Chinese bank, the investor would get a higher return than that in the situation in which he or she deposits money in a US bank. This makes China a prime target for hot money inflows. This is just an example for illustration. In reality, hot money takes many different forms of investment.

The following description may help further illustrate this phenomenon: "one country or sector in the world economy experiences a financial crisis; capital flows out in a panic; investors seek a more attractive destination for their money. In the next destination, capital inflows create a boom that is accompanied by rising indebtedness, rising asset prices and booming consumption - for a time. But all too often, these capital inflows are followed by another crisis. Some commentators describe these patterns of capital flow as “hot money” that flows from one sector or country to the next and leaves behind a trail of destruction.

PPF

The full form of PPF is Public Provident Fund Scheme.  It is a scheme of the Central Government, framed under the PPF Act of 1968.   Thus we can say PPF  is a government backed, long term small savings scheme, which was initially started by the Government to provide retirement security to self employed individuals and workers in the unorganized sector.   However, at present it is considered as the best tax saving scheme across all sections of the people who needs to invest to save some tax.  

• Individuals who are residents of India can open an account under the scheme.
• Only one PPF account can be maintained by an Individual, except an account that is opened on behalf of a minor.   Thus, PPF account can also be opened by either parent under the name of a minor.  However, each person is eligible for only one account under his/her name.  Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same minor. Thus, in case a couple has two children, they can maximum open four accounts i.e. two in their own accounts and two in the name of their children under guardianship of either of the parent.
• Non-resident Indians (NRIs) are NOT  eligible to open an account.  However a resident who becomes an NRI during the tenure prescribed under Public Provident Fund Scheme, may continue to subscribe to the fund until its maturity on a non-repatriation basis. (Funds can be transferred via CASH or NRO Account. Funds can be transferred via Internet banking).  However, such an account will not be eligible for extension of five years at the time of maturity.
• Since 13th May, 2005, Hindu Undivided Family can NOT open an account under the scheme.   However, accounts opened prior to that date may continue subscription to their account till maturity.   They also can not extend the account any further.

The PPF account can be opened at either of the following :

(a) Branches of State Bank of India and it subsidiaries;

(b) Select branches of designated nationalised banks;

(c) Select Post Offices across India;

. What is PPF and PF?

EPF/ PF

The Employee Provident Fund, or provident fund as it is normally referred to, is a retirement benefit scheme that is available to salaried employees.

Under this scheme, a stipulated amount (currently 12%) is deducted from the employee's salary and contributed towards the fund. This amount is decided by the government.

The employer also contributes an equal amount to the fund.

However, an employee can contribute more than the stipulated amount if the scheme allows for it. So, let's say the employee decides 15% must be deducted towards the EPF. In this case, the employer is not obligated to pay any contribution over and above the amount as stipulated, which is 12%.

PPF

The Public Provident Fund has been established by the central government. You can voluntarily decide to open one. You need not be a salaried individual, you could be a consultant, a freelancer or even working on a contract basis. You can also open this account if you are not earning. 

Any individual can open a PPF account in any nationalised bank or its branches that handle PPF accounts. You can also open it at the head post office or certain select post offices.

The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000.

2. What is the return on this investment?

EPF: 8.5% per annum

PPF: 8% per annum

3. How long is the money blocked?

EPF

The amount accumulated in the PF is paid at the time of retirement or resignation. Or, it can be transferred from one company to the other if one changes jobs.

In case of the death of the employee, the accumulated balance is paid to the legal heir.

PPF

The accumulated sum is repayable after 15 years.

The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account.

It can be extended for a period of five years after that. During these five years, you earn the rate of interest and can also make fresh deposits.

• Save tax and get rich

4. What is the tax impact?

EPF

The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C.

If you have worked continuously for a period of five years, the withdrawal of PF is not taxed.

If you have not worked for at least five years, but the PF has been transferred to the new employer, then too it is not taxed.

The tenure of employment with the new employer is included in computing the total of five years.

If you withdraw it before completion of five years, it is taxed.

But if your employment is terminated due to ill-health, the PF withdrawal is not taxed.

PPF

The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C.

On maturity, you pay absolutely no tax.

5. What if you need the money?

EPF

If you urgently need the money, you can take a loan on your PF.

You can also make a premature withdrawal on the condition that you are withdrawing the money for your daughter's wedding (not son or not even yours) or you are buying a home.

To find out the details, you will have to talk to your employer and then get in touch with the EPF office (your employer will help you out with this).

PPF

You can take a loan on the PPF from the third year of opening your account to the sixth year. So, if the account is opened during the financial year 1997-98, the first loan can be taken during financial year 1999-2000 (the financial year is from April 1 to March 31).

The loan amount will be up to a maximum of 25% of the balance in your account at the end of the first financial year. In this case, it will be March 31, 1998.

You can make withdrawals during any one year from the sixth year. You are allowed to withdraw  50% of the balance at the end of the fourth year, preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower. 

For example, if the account was opened in 1993-94 and the first withdrawal was made during 1999-2000, the amount you can withdraw is limited to 50% of the balance as on March 31, 1996, or March 31, 1999, whichever is lower.

If the account extended beyond 15 years, partial withdrawal -- up to 60% of the balance you have at the end of the 15 year period -- is allowed.

• The best tax-saving funds 

The better option?

In both cases, contributions get a deduction under Section 80C and the interest earned is tax free. 

Having said that, PF scores over PPF in two aspects.

In the case of PF, the employer also contributes to the fund. There is no such contribution in case of PPF.