SWEEP TRANSFER YOUR FUND-MAKE YOUR UNUSED FUND EARN MORE

 Sweep Image

SWEEP TRANSFER YOUR FUNDS – MAKE YOUR UNSED FUNDS EARN MORE

So what is Sweep Account? A sweep transfer account is integration of your normal savings account to an investment account. There are a lot of unused funds laying in your savings bank account which earns a negligible rate of interest. These unused funds can give much more return with no effort.

How Does this Facility Work?

Any amount that exceeds (or fall of) a certain level the pre-set limit in a savings account is automatically transferred to the fixed deposit earning higher interest earning option at the close of each business day. This excess cash is swept into money market funds.

If one needs to withdraw a sum that is more than the pre-set limit, the required amount gets swept back into his account.

This is done to provide the customer with greatest amount of interest with minimum amount of personal intervention. Investor using this facility enjoys liquidity of savings accounts and at the same time earns extra return from fixed deposit account.

MINIMAL LOSS OF INTREST IN CASE OF PREMATURE BREAK OF FIXED DEPOSIT

The FD is broken only to the extent of amount required and usually on the LAST IN – FIRST OUT (LIFO) basis which means that one does not lose the interest amount on entire FD rather only on the amount prematurely withdrawn. The LIFO method of transferring funds back into your savings account on demand ensures minimal interest loss, as the amount swept in last is withdrawn first.

 

TOOL TO PREVENT OVERDRAFT

 In case of insufficient funds, bank will automatically break unit of term deposit held sweep-in savings/ current account to clear the demanded funds. This facility of Sweep-in gives the customer high interest rates of a fixed deposit account and liquidity of a current account.

BENEFITS OF SWEEP-OUT FACILITY

Maximize Returns: Money is never idle, creation of a linked FD ensure a higher rate of interest as against savings bank interest rates.

Hassle free FD Booking: Automated FD booking based on threshold. Customer does not have to visit / contact branch to book FD and thus making the same hassle free.

Maximize Flexibility & Liquidity: Sweep-out comes along with the sweep-in facility. Thus the shortfall of funds in customer’s savings bank a/c can be addressed through sweep-in of funds from FD booked through sweep-out.

Sweep Example

Reverse Mortgage: A Retirement Tool

Meaning:

A Reverse Mortgage (or lifetime mortgage) is a loan available to senior citizens.  Reverse mortgage, as its name suggests, is exactly opposite of a typical mortgage, such as a home loan.

Under the reverse mortgage arrangement, senior citizens can unlock the value of their home, by mortgaging it and enjoying a monthly pension during the lifetime while continuing to live in it until their death or sale of property.

 How does it work?

In a typical mortgage, you borrow money in lump sum right at the beginning and then pay it back over a period of time using Equated Monthly Installments (EMIs).

In reverse mortgage, you pledge a property you already own (with no lien against it). The bank, in turn, gives you a series of cash-flows for a fixed tenure. These can be thought of as reverse EMIs.

 Annuity assessment

The Amount of money available as reverse mortgage is based on these key parameters:

>The appraised value of the property
> Prevailing interest rate

> Age of the senior / life expectancy – the older the senior, more money he will  receive

> The Location of the property

The Key thing to note is the loan-value ratio; most banks provide around 60% – 70% as loan of the market value of the property. On an average one can expect about 12% – 15% which is the approximate interest rate against property.

 Termination of Arrangements/ Loan

The reverse mortgage ends when the homeowner dies, sells the house, or, depending on the loan conditions, moves out of the house for 12 consecutive months. When the arrangement ends, the reverse mortgage can be paid off with the proceeds of the sale of the house, or if the borrower has died, the property can be refinanced by the heirs of the homeowner’s estate with a regular mortgage. If the proceeds exceed the loan amount including compounded interest and fees, the owner of the house receives the difference.

 

Why is the scheme not popular in India?

> Recent reports seem to indicate that a very small percentage of senior citizens only seem to have taken advantage of the facility since its inception. This could be perhaps because better awareness has not been created about the product.

> Secondly, the Indian banking industry caps the available loan amount at Rs 50 lakh (Rs 5 million), instead of providing for an equitable percentage of the property’s value, and limits the loan period to a tenure of 15 years.

Conclusion
Reverse mortgage is best suited for someone who is looking forward to financial independence and intends to generate the pension from ones own investments. Senior citizens are of beingace the risk of abandoned by their kith and kin. In such cases reverse mortgage could help generate a decent cash flow and help live a life of dignity.

Non-XBRL BS and PL filling date extended by MCA

The Ministry issued General Circular No.30/2012 Dated 28.09.2012, In order to ensure smooth filing and to avoid last minute rush, the due date of filing of e-forms 23AC(Non-XBRL) and 23ACA (Non XBRL) as per new schedule VI is extended in following manner without any additional fee :-

  • Company holding AGM or whose due date for holding AGM is on or before 20.09.2012, the time limit will be 03.11.2012 or due date of filing, which ever is later.
  • Company holding AGM or whose due date for holding AGM is on or after 21.09.2012, the time limit will be 22.11.2012 or due date of filing, which ever is later.