Friday, September 19, 2008

Getting things done - my current savior

Warning : This really isn't a personal finance blog entry but sort of related ...

I have recently been adopting David Allen's - Getting thing done a philosophy of how to do work in a productive manner, it has been quite an interesting journey and really been helpful. It has also helped me get in control of various aspects of my life including my personal finance management. Google around, you will definitely find a lot of material about GTD as it is called.

This post was created by Vivek Venugopalan at

Monday, September 15, 2008

Public provident fund in India - the rules of the game

I have been on and off asked questions about PPF account and all the details behind it. Here are a quick summary of the rules for Public Provident fund (PPF) in India - hope this helps you folks out.

  1. Non Resident Indians are not eligible to open an account under the Public Provident Fund Scheme.
  2. If a resident who subsequently becomes Non Resident Indian during the currency of the maturity period prescribed under Public Provident fund Scheme, may continue to subscribe to the Fund till its maturity on a Non Repatriation Basis
  3. Minimum amount that should be deposited in a year is Rs 500
  4. You can’t transfer money from your EPF account to your PPF account
  1. Investment per year should range between Rs. 500 and not more than Rs. 70,000 in a year.
  2. You cannot do more than 12 transactions in a year in a PPF account.
  3. You can transfer the account from one "office" to another "office" (never tried this one. Can someone let me know their experiences here?)
  4. If you don't pay the minimum Rs. 500 in a given year, you will have to reinstate the account for a fees of Rs. 50.
  1. The account should be held for 15 years.
  2. Any time after the expiry of 15 years, you can extend the account for another 5 more years, to a total of 20 years maximum.
Opening an account

According to the RBI website, the list is given below. Obviously your luck will be in the fate of the employee who is going to deal with you when you walk in to one of these banks :).

  1. State Bank of India and its Associates
  2. Allahabad Bank
  3. Bank of
  4. Bank of India
  5. Bank of Maharashtra
  6. Canara Bank
  7. Central Bank of
  8. Corporation Bank
  9. Dena Bank
  10. Indian Bank
  11. Indian Overseas
  12. Punjab National Bank
  13. Syndicate Bank
  14. UCO Bank
  15. Union Bank of
  16. United Bank of India
  17. Vijaya Bank

  18. ICICI Bank Ltd
  1. Currently the interest is 8% tax free. This would equate to 12% roughly on the highest tax bracket.
  2. Interest is credited on the lowest balance on the account on the 5th of each month. It makes sense to deposit the whole Rs. 70,000 on or before April 5th of
    each year so that your money earns interest over the full year.
  1. You can avail a loan anytime after one year after opening the account and upto five years from the year of opening the account. The loan amount cannot be greater than twenty five percent of the balance on the account at the end of the second year immediately preceding the year in which the loan is applied
  2. After 5 years, you can withdraw upto 50% from the balance in the account at the end of the 4th year.

This post was created by Vivek on

Sunday, September 07, 2008

Funds during an emergency - how do we get it?

We all need emergency funds in our life. We never know when we need it but we all know that we need it some time or other. There was a detailed post on CNN some time back on how to get hold of emergency funds when we need them. I have adapted it to the Indian context since a lot of avenues that we have a are very specific to personal financing in India. So without much ado here is my list.
  1. Tap emergency funds : You did save for the rainy day somewhere didn't you? This would be the right time to start using it. If you have not started doing this as a habit. It might be worth doing something like this after you get out of this crisis. So what is next, let us look forward.
  2. Sell long term equity investments : Long term equity investments are investments over a year's timeframe. They have most probably given you handsome returns given that stock market has done well for quite some time now. So far the sources of emergency funds that we have looked at were
  3. Ask parents for a gift : If your parents were planning to give you a gift in cash / money, this would be a good time to do it. Gifts from parents wont be taxable and would help you tide over the current crisis.
  4. break into a FD : Fixed deposits can provide the next level of quick access to money that comes with some penal interest for early withdrawal. You probably wont lose the principal but definitely a large portion of the interest when you do this one.
  5. Take a loan on Jewels : Jewel loans are not a pawn broker domain anymore. Many banks will help you with a jewel loan. All that jewelery you have lying around in a locker can actually come in handy. Talk to your bank and close the transaction right there from your locker to the banker's locker. Gold has in recent times appreciated well so this option makes it even more worthwhile.
  6. Borrow on your PPF : Your public provident fund could be a good source of income from the third year onwards of establishing the account. The loan amount
    should not exceed 25 per cent of the balance in your PPF account at the end
    of the preceding financial year.
  7. Loan against shares : This is an option that comes with specific risks. If the stock under lien goes down in value, the institution providing the loan will automatically liquidate it and you will be responsible for tax implications on the same. This option also has a higher cost associated with it as compared to some of the previous options.
  8. Loan against property : If you hold property that is not in lien already , then you can go for a loan against property. This is low on our options list since this option is probably going to take some time to work and not exactly going to help in an emergency situation.
  9. Personal loan : The ubiquitous personal loans with their so called low rates are your next best option if you have reached down so far in selecting a source for your funds. There are quite a few options available but none of them can be qualified as cheap. The costs are just "structured" well so you can never find them :)
  10. Cash advance on your credit card : You got to be kidding right? This is really not a real option given the cost of this loan.
Hope this helped you in coming to an easy conclusion on what are your sources of money. Good luck.