What Are The Benefits Of Priority Banking?

Have you ever thought about applying for private banking from your bank? Many banks offer "Priority Banking Solutions" to their customers who qualify for the eligibility requirements. A private banking client is handled in a more precise manner, and the priority is taken care of by the bank. Let us speak about it in-depth, and does it make sense to apply for priority customer banking for you as a client or not?

The first question that must be understood is, why do banks have a privilege banking model? The reason is relatively simple, being able to treat various customer groups differently. If you want to put it favourably, then it's just a way to maintain a separate list of high-net-worth individuals to focus more on them and service them better, as one private banking customer would give the bank 100 times more business/profit than a regular customer. A preferred banking client will have to meet a few eligibility conditions, usually related to his bank balance.

Similarly, to maintain a high balance in the bank savings account, other banks still maintain requirements. That basically means that the bank can get plenty of money to use on its own business, and they can manage these clients very well.

Facilities provided to Private Banking Customer

A priority banking customer has few advantages over regular clients and gets more features. There are some of these:

• Separate queue at the bank
• No Net Banking charges on NEFT and RTGS transactions
• Free cheque book payable at any branch of the bank throughout the country, so you do not have to ask for demand drafts
• Charges waiver for cancellation of DD, Cheque Return, Duplicate Statement Fees, Demand Draft Charges, Locker Charges discount
• Cheque pick-up facility
• If you are transacting at other bank ATMs in India, no fees on balance inquiries and cash withdrawals

Many individuals have simple banking requirements, particularly after the advent of Internet banking and mobile banking, your reliance on chequebooks, Demand Drafts, and any physical visits to banks have reduced.

Banking is just an insignificant part of their financial life for most people, and they only get most of the equipment and what they need from their simple banking account. For them, it does not make any sense to apply for preferred banking. However, most investors are actively involved in banking for their reasons or professional needs. A few features that come with Priority Banking may mean something essential for many of them. If you are one of them, you have to see how much you need and then take a call.

What Should You Know About Recurring Deposit

Recurring deposit schemes provided by banks are favourite investment choices for many people. Working people, as well as people with smaller incomes, choose RDs as their investment option. Under this scheme, a person must invest a specified sum of money for a fixed period each month and receive interest on their investment. Upon maturity of the RD, the principal sum is returned along with interest.

RD schemes are usually more flexible than FD schemes, which often benefit those who choose to set up an account to save money and build an emergency fund.

How is interest determined for recurring deposit?

To learn more about your investment, use the recurring deposit calculator

For most banks, interest for RD is calculated annually. The formula is:

M = R[(1+i)^n-1]/(1-(1+i)^(-1/3) )

In this,

M is the Maturity value

R is Monthly Instalment

N is Number of quarters

I is Rate of interest/400

Here are some details you need to know about Recurring Deposits:

• The minimum amount of investment required to be deposited each month in an RD scheme is as small as the INR 1000. This is a massive attraction for low-income individuals and wage-earners.
• Since the investor has to spend a portion of his income regularly, inculcating the saving habit is very beneficial.
• Payment may be made directly to one's RD account via the Savings or Current Account.
• You can connect an RD account to your Savings account. Hence it does not require any documentation work in these cases.
• Unlike fixed deposit schemes, where a lump sum amount is to be invested at once, Recurring Deposit does not drain the investor.
• Recurring deposits are the best investment option, especially for those planning to handle short-term financial circumstances such as financing money for a dream holiday or wedding, higher education costs etc. RD interest calculator can help you plan well.
• Most banks allow for the opening of recurring deposits in the name of minor children with the parent or legal guardian holding a joint account. This helps to build investments for future use of the minor.
• Most banks provide loan facility on the recurring deposit amount. This loan is granted up to 95 per cent of the recurring amount of deposit. You can get it in case of any emergency.

To help plan your monthly investment in a recurring deposit, it is advisable to take the help of an RD calculator to plan your investments.

You will find this instrument on your digital banking app as well. This way, banking is on your fingers.

5 Benefits Of Savings Account

Money is a resource which if saved today can benefit the future. It is the only saviour during medical emergencies and other urgent fund requirements. Nowadays, every process and facility requires money for initiation and completion. Without having enough funds and savings, it is impossible to fulfil even daily necessities. Remain prepared for any circumstance with the help of adequate cash and face all difficulties easily.

There are many services offered by banks to their customers, one of which is a savings account. It helps secure all the assets and cash of customers and offers them interest on it. They can also withdraw funds as per their convenience without the fear of loss or theft. Here are six benefits it provides:

1. Creates an emergency corpus: By online saving account opening, customers can prepare themselves financially to face any unplanned emergency during a financial crisis. Whether it is a broken major appliance, automobile repair, or medical emergency, they can always withdraw the funds from the account at any time as it offers lots of liquidity. The amount in the bank account is sufficient to cover the expenses and escape borrowing them from others.
   
   
2. Asset protection: The assets stored in a saving bank account is free from any impact from market volatilities. For instance, if people invest their funds in real estate, bonds and stocks, there are chances of getting higher returns on the investment than bank accounts. But they also risk losing money in unforeseen circumstances where they withdraw the money for a lower return or loss. There is no fear of forced withdrawal in a bank account.
   
   
3. International debit card: When individuals open a bank account, they get a kit from the bank containing the passbook, cheque book, a debit card for cash withdrawals at ATMs and other necessary documents.
   
   
4. Easy bill payments: One of the greatest advantages of having an online savings account is the freedom to pay pending utility, mobile recharge, credit card, and water bills directly from the bank. Customers must enter their bank account and card details on the website of the provider and pay the bill. They also receive an SMS and email alert of the transaction on their registered mobile number and email ID.
   
   
5. Hassle-free operations: Technology has changed the scenario of every sector, including banking. Nowadays, smartphones have become the prime mode of payments and banking with the help of a compatible mobile banking app. It offers 24*7 service and makes funds available at any time of the day. Users can download it and make emergency payments at a tap.

4 Banks Offering Online Saving Account Opening Facility In India

It is essential to earn and secure our future financially. People spend money to fulfil their desires and demands such as buying a house, a car, some gold and invest it in several financial products with secured and guaranteed returns. A penny saved today equals a penny earned for the future. It helps meet all emergency expenses and keep the funds safe and secure in bank accounts.

A savings account is the most remarkable financial product offered by several banks in India for customers to deposit their hard-earned money and relieve them from the burden of carrying it everywhere. They can also withdraw funds anytime and anywhere without any hassle from the ATM using the debit card linked to the account. The interest also gets deposited in it.

With so many options to open a bank account, it becomes challenging to choose which one of them is preferable. There are so many factors that determine the suitability, such as the interest rates offered, services, facilities, and much more. In India, multiple banks are offering various schemes to their customers to promote the habit of saving and investing. Here are popular ones offering this facility:

1. State Bank of India (SBI): It provides a wide range of banking products to the customers and is the largest bank in India. SBI saving bank account is one of the popular products in which individuals can deposit their money safely. When it comes to interest rates, the account offers exciting rates.
   
   
2. DBS Bank: It operates solely online. Opening an online savings account gives you higher interest rates as well. Download the app on the smartphone and fill the required details. With interest rate competitive, customers also get welcome benefits like INR 150 cashback on adding INR 10,000 in the bank account or spending INR 3,000 on the debit card.
   
   
3. Kotak Mahindra Bank: It has an extended range of facilities to help customers manage their money efficiently. They offer a fixed rate of interest on balance above INR 1 lakh. There are no transaction or monthly account fees to pay while opening an offline or online bank account. Individuals can choose an account that meets their needs from a range of options such as 811 Digital Bank Account, Edge Account, Sanman Account, Classic Bank Account, etc.
   
   
4. RBL Bank: It is one of the leading private banks of India that provides a wide range of banking products, including a mobile banking app. Customers can access the banking facilities from any corner of the world at any time. They also get higher interest rates along with zero balance facility.

6 Tips for NRIs To Manage Their Finance

Foreign countries have attracted Indians since forever, with them wanting to visit and probably settle in one of them permanently. For some people, this dream converts into reality, and they plan on becoming NRIs. It is a personal choice whether one wants to be an NRI or not.

The status of an individual as an NRI is different under the Foreign Exchange Management Act and the Income Tax Act. According to FEMA, they become a non-resident when they plan to move overseas professionally or for an indefinite period. They need to revise their bank accounts and convert them into an NRI account for easy transfer and access to money. Here are some tips to help manage your finance:

1. Revision of bank accounts: NRIs who still have income sources in India, for instance, income from ancestral property or a rented-out property, can keep the money in India by opening an NRO bank account.  Get all existing resident bank accounts redesignated to NRO accounts. Moreover, if there are multiple accounts, consolidate them and then convert them into NRO accounts.
   
   
2. Currency rate fluctuations: Those who wish to invest using their NRI bank account should make a note of the currency rate fluctuations which can affect the returns on the investment. A slight change in the value of Indian Rupee against foreign currency can have a significant impact on the rate of returns.
   
   
3. Redesignate Demat accounts: Before thinking of NRI account opening, consider liquidating the equity and investment portfolio or seek professional advice. There are many methods of doing so, including setting up a PIS account to continue gaining exposure even after becoming an NRI.
   
   
4. Mutual fund investments: The NRE account is non-taxable as compared to the NRO account, which is subject to tax as per the applicable rate. Update the KYC status after becoming an NRI and update the portfolio to avoid mismatches. The NRO account include taxes upon repatriation of mutual funds along with other restrictions.
   
   
5. Get a thorough knowledge of the taxation process: While opening an NRI savings account, all applicants should have a thorough understanding of the taxation procedure of both the countries. As an NRI, they need to abide by the tax laws of both countries: where they reside and in India. The tax deduction benefits in India are similar for both NRIs and the residents.
   
   
6. Get a Forex card: These are prepaid cards that individuals can use while making payments abroad. They have funds pre-loaded in them in the required regional currency. It enables users to withdraw cash in foreign currency, check the account balance, and shop. Also, check the NRI account interest rates on term deposits.

6 Advantages Of An NRI Account

People love travelling and exploring new things all around the world. They are always searching for better opportunities for growth and development. They aim at progress and prosperity in their lives. They have some goals and aspirations to achieve and try to make the best use of every chance in life.

When they settle abroad for work or even go there for a vacation, it is safer to be financially prepared. Emergencies and alerts come without warning, whether in India or any country in the world. They can always secure themselves financially by opening an NRI savings account to help them meet their expenses while they are away from their parents residing in India.

There are different kinds of an NRI account to guide Non-resident Indians of different residential statuses. They can open an NRE or an NRO account and enjoy the benefits they offer. According to the Indian government, an NRI is a person who has not stayed in India for a year because the primary source of income and employment is abroad.

Here are the advantages of opening the account:

1. Tax advantages: It is the most significant motive and gain of opening an NRE account. Interest earned on this type of NRI bank account as well on NRE fixed deposit exempts tax in India. They are not added up even in the taxable profits and helps in gaining revenue in India.
   
   
2. Repatriation advantages: Another advantage of NRE account is repatriation. It allows trouble-free movement of cash because it is possible to repatriate both interest and principal overseas. Cash amounts in NRE accounts are fully and completely repatriable.
   
   
3. Low balance required: Nowadays, most of the private and public sector banks have low balance requirement for NRI account opening. The minimum balance requirement is as low as INR 10,000.
   
   
4. Convenience: Another advantage of foreign currency account is handiness. Most of the banks allow individuals to open them online via the Internet. They need to fill a form online, take a printout, and affix the self-attested print of necessary papers and send to the bank in India.
   
   
5. Joint holding: The account allows individuals to apply jointly with relatives having a resident status. They must file a declaration of the status of the NRI and submit the necessary documentation as asked by the bank.
   
   
6. Accessibility: The saving account for NRI typically comes with an International Debit card. It gives convenience benefit of shopping globally, booking air tickets online, buying life insurance, and withdrawing cash abroad. They must also check the NRI account interest rates before applying for any term deposit scheme in the concerned bank. They can always use the bank’s website or app to apply for it no matter where they are.

What Are The Benefits And Challenges Of Private Banking?

Private Banking means personalised financial and banking services to the high net worth individuals. Usually, HNIs are those who own a business, acquire more wealth and therefore, require the private banking services with access to alternative investments. As such, private banks act as mediators and offer their assistance to such individuals regarding their investments. 

Priority banking includes exclusive investment-related advice, protecting, and growing assets in the present, offering specialised financing solutions, planning retirement, and passing wealth on to future generations. 

Benefits: 

• Privacy: The services offered via privilege banking are highly confidential between the institution and the consumer. Their approach is exclusive to their customers so that the competitors do not lure a potential client with a similar solution. 

• Customised services: Prominent banks make sure that HNIs receive tailor-made services based on the assets they hold. An account or relationship manager gets assigned to each who allows accessing mid-level upper management directly. This easy access minimises any obstacles for offering inputs regarding wealth management decisions, and the bank can strategise the decisions according to the client's financial decisions. 

• Incentives: HNIs are the main clientele for banks, solely because of the substantial assets they bring to the institution. They get rewarded with special private banking services like tax preparation and planning, traveller's cheques, or corporate checking at discounted rates. 

• High returns: Most of the HNIs receive higher returns from their investments that outperform the market. 

Challenges: 

• Regulatory restrictions: Regulations in India are not equipped to deal with the kind of products and services that private banks sell. Few investments are not regulated by an authority making it difficult for the investors to redress their grievances. Only a few have the liberty and control do so yet.
   
• Lack of expertise: Preferred banking requires financial analysts who build strong, lasting and trust-worthy relationships with HNIs. There is a shortage of experience and training. Hence, recruiting, training and retaining qualified professionals is a priority for most banks. Such services target keeping the customers when it should be focusing on teaching the right individuals. 
  
  
• Private Banking in India: Banks like  ICICI Bank, HDFC Bank, Axis Bank, DBS Treasures, and Standard Chartered are India's top private banks in which the majority of investments get undertaken by foreign investors even though management control are with Indians.

 

How Are Private Banking And Wealth Management Different?

For any high net-worth person, managing wealth is the most crucial prerequisites. Such people often seek services from private wealth management companies which offer specialised financial solutions. These companies also hire financial experts who lend their expertise to clients, helping them invest in different instruments based on their financial objectives and risk appetites. People often believe that these wealth management services also offer private banking facilities.

However, that is not the case. Here are how both the concepts are different. We shall look at some points that explain the same.

Services offered

While both wealth management and private banking services have asset management as its core, the wealth management companies provide consultation and advisory services. Prominent facilities offered by the wealth management firms include investment planning, portfolio development, asset structuring, tax, retirement, and estate planning, among other things. On the other hand, privilege banking offers banking features like brokerage services, asset management facilities, and essential tax consultation.

Difference in approach

Both banks and private wealth service provides unique products for their HNI and ultra HNI clients. However, both entities have a vast difference in their approaches. Such high-profile clients are provided with customised one-to-one models, wherein the bank representative handles all the banking needs. Such services include doorstep cheque collection, cash deposits, specialised current and savings account with high balance requirement, high-interest rates, and overdraft and loan facilities.

Wealth managers tend to focus on offering financial advice and concerned about maintaining, collecting, conserving, and compounding wealth. These experts primarily monitor their client evolution and assist them in achieving personal and financial goals over the years.

Different in options

The other aspect to focus on wealth management and priority banking is the opportunities offered to the clients. Banks can provide their clients with only a limited number of specific products under their portfolio. There is little room for delivering a host of options for such clients. However, wealth management has the opportunity to leverage and implement tailored solutions. Here, the manager recommends many products from different institutions, thus enabling their clients to select from those which suit your requirement.

Relationship with clients

Building a relationship is considered a virtue in the field of wealth management and preferred banking as well. The wealth manager needs to understand not only the client’s financial goals and aspirations, along with concerns. The wealth manager also needs to work towards offering a financially peaceful and comfortable life for the clients and their family, during and after the client’s death.

As for private banking, bank representatives are more invested in forging a personal relationship with the client. The facilities offered also need little time since they are packaged. The products are adapted according to the high or low-risk appetite, keeping the client’s asset volume in mind.