Tuesday, December 11, 2012

How Non CTS 2010 Standard cheques will affect your Mutual Fund Investment!



As you all know Non CTS 2010 Standard cheques will not be allowed from January 1, 2013

How it will affect your mutual fund Investment!

With effect from December 31, 2012 (as cheque will go for clearance on next day, that is jan 1, 2013) you would not be able to purchase any mutual fund scheme with non CTS 2010 standard cheques.

In case you have submitted post-dated non-CTS 2010 standard cheques dated 1st January 2013 onwards for your Systematic Investment Plan (SIP) investments in any mutual fund scheme, please replace them with CTS-2010 standard cheques before 31/12/2012.

 If you have opted for ECS instruction in your mutual fund SIP, it will not affect you as this applies to those post dated cheques which are not as per "CTS 2010 Standard Cheques."

Why Non CTS 210 Standard cheques will not be allowed after Jan 1, 2013:

This is with regard to a notification (RBI/2012-13/190 DPSS.CO.CHD.No. 399/04.07.05/2012-13 dated September 3, 2012) issued by The Reserve Bank of India regarding Standardization and Enhancement of Security Features in Cheque Forms - Migration to CTS 2010 standards which has directed all banks to issue only multi-city / payable at par CTS-2010 standard cheques. It has also directed all banks to withdraw the non-CTS-2010 Standard cheques in circulation before December 31, 2012. To identify a CTS-2010 compliant cheque, please check if the letters "CTS-2010" have been printed vertically on the left side of the cheque leaf. 

 You can  also refer:

How to identify a CTS '2010' compliant cheque


As per RBI Guidelines on 'Standardisation and Enhancement of Security Features in Cheque Forms' banks have been advised to issue only 'CTS 2010 Standard' cheques to their account holders. 


RBI vide its circular dated September 3, 2012 has now advised Banks to withdraw non-CTS 2010 standards cheques in circulation before December 31,2012.

Reserve bank of India standardize and increase the security features of the cheque book. This is called CTS 2010 Standard Cheques. This include quality of paper, ink, bank logo and pantograph etc. If the cheques you currently hold have the following features, they will be valid after the given date.

  
  How to identify a CTS '2010' compliant cheque
 
1. Bank’s logo printed with invisible ink
2. Void pantograph
3. Cheque printer details/CTS- 2010
4. Rupee symbol
5. Signature Space Indicator





Update Jan 2013
Extension on RBI notifications about CTS 
(Cheque Truncation System ) 2010 Standards on cheque stationery


This is in continuation to our email dated 10.12.2012 regarding RBI notifications on CTS (Cheque Truncation System) 2010 Standards on cheque stationery.  As per the circular dated 14.12.2012 received from RBI, the CTS 2010 standard Cheques will now be mandatory from 01.04.2013 instead of 01.01.2013.





Thursday, November 8, 2012

Apply for new cheque book if the current cheque book you have, was issued before Aug 2011.







Will your cheque book be valid after 31st December, 2012?

As per RBI guidelines, there have been certain changes made to the cheques issued by the Bank. However, these changes are available only in cheque books issued after August 2011. If you have obtained the cheque book prior to this, the cheques will not be valid after December 31, 2012.

Reserve bank of India standardize and increase the security features of the cheque book. This is called 'CTS 2010 Standard Cheques'.




This include quality of paper, ink, bank logo and pantograph etc. If the cheques you currently hold have the following features, they will be valid after the given date.
  • "Please sign above" is mentioned on cheque leaf on the lower right-hand side.

  • A wave like design is embossed on the left-hand side of Cheque leafClick here to see the new cheque format.





 Also refer
How Non CTS 2010 Standard cheques will affect your Mutual Fund Investment!

Additionally, any post-dated cheques issued by you and due after December 31, 2012 will need to be replaced by the fresh cheques meeting the above mentioned guidelines. 

RBI Notification on Standardisation and Enhancement of Security Features in Cheque Forms-Migrating to CTS 2010 standards



 Reserve Bank of India has advised Banks to withdraw non-CTS 2010 standards cheques in circulation before December 31,2012 and implement 'Standardisation and Enhancement of Security Features in Cheque Forms'.




RBI Guidelines on new cheque 

This information is available on HDFC Bank website under Important Message.
 http://www.hdfcbank.com/

 Customer notice for CTS 2010

How to Identify CTS 2010 complaint cheque book of kotak


Also refer: The introduction of new cheque standards ‘CTS 2010
Update March 2013
RBI extends deadline for withdrawing non-CTS 2010 cheques by four months

Wednesday, November 7, 2012

Mutual fund capital gains in case of merger in mutual fund scheme!


Query of Blog Reader 


Impact on Long Term Capital Gains Tax Exemption and Exit Load, on redemption of units, after transfer of the schemes of Fidelity Mutual Fund to L&T Mutual Fund.


I am taking the liberty to put forth these queries to you since I am in the mailing list of and am an avid reader of "Investing can be interesting".

I have been investing regularly in Fidelity Equity Fund (Growth). I stopped my SIP as soon as I learnt that L&T Mutual Fund was acquiring the schemes of Fidelity. Over 12 months have passed since I made almost all of my SIP investments (barring the last 4 monthly installments) in Fidelity Equity Fund (Growth).Hence, the capital gains on all the units purchased (except the last 4 SIP installments) are long term and hence the long term capital gains from the redemption of these units should be exempt from tax and, furthermore, no exit load should be applicable on these units as they have been held for more than 12 months (1 year). After 15/11/2012, Fidelity mutual fund schemes will be transferred to those of L&T.

Please clarify that even after the units are transferred from Fidelity Equity Fund to L&T Equity Fund, the units purchased by me (except the last 4 SIP installments, mentioned above) will still be considered long term, and hence, even if these units are redeemed immediately after their transfer from Fidelity Equity Fund to L&T Equity Fund, that is, redeemed in the 2ndhalf of November, 2012 itself:
1.the capital gains on redemption of these units will still be exempt from tax
2.the redemption of these units will still not attract any exit load
3.only STT @0.25% on total redemption amount has to be borne by me
I will be thankful to you if you could offer your clarifications at the earliest.

 ................................................................................................................

Reply:  

Yes, even after the units are transferred from Fidelity Equity Fund to L&T Equity Fund, the units purchased by you which completed one year or more, if sold after merger date, will be considered as long term capital gains.

"As even after merger, the actual purchase date is considered for calculation of capital gain of mutual fund units."


When two schemes are merged, the scheme that gets merged is treated as the transferred scheme


In mutual funds, if scheme A is merged with scheme B, then it is treated as redemption by unit-holders of scheme A and issue of units of scheme B to them is considered as purchase of new units. 

The investors of scheme A are liable for capital gains tax as it is considered as withdrawal.


There is no long-term capital gains tax on investments in equity schemes if investments are held for more than a year (as in your above case, units are held for more than year, and above mentioned scheme is equity fund,
you don't need to pay tax as the long-term capital gains in equity funds is nil.

In the case of debt schemes, investors have to pay both short-term as well as long-term capital gains tax on redemption, the long-term capital gains are 10% without indexation or 20% with indexation.

 A merger of two schemes mean a capital gains tax liability for you.

When a scheme gets merged into another, the first scheme ceases to exist. In such a case, units of the first scheme are redeemed, but not returned to unit holders. They are then reinvested in the scheme in which the first scheme is to be merged. So even if you choose to stay invested, it is still deemed as a withdrawal from one scheme to another. In this case, the investor needs to mention his income in his tax returns and pay the capital gains tax wherever applicable.



Your questions:

1.the capital gains on redemption of these units will still be exempt from tax
 Yes, if units are held for more than year, and above mentioned scheme is equity fund, you don't need to pay tax as the long-term capital gains in equity funds is nil.
2.the redemption of these units will still not attract any exit load
 Yes, normally the details are mentioned in merger notification and mostly exit load is paid by fund house. 
3.only STT @0.25% on total redemption amount has to be borne by me
  If in merger notification it is clearly mentioned that STT will be paid by fund house then, you don't have to pay STT, if not mentioned in merger notification then, it will be paid by the investor. In fidelity merger notification it is mentioned the securities transaction tax, if any, which will arise on account of redemption of units during the exit option provided to unit holders, will be borne by FFM.

But you have to exercise this option before November 15, 2012, if you want to avoid exit load and STT as redemption after 15 November 2012, will be subject to load, applicable if any, as may be prevailing at that time in respective scheme. (this is what mentioned in first extract)
 The dissenting unit holders of L&T and Fidelity are given an option to redeem/switch out from the schemes within October 15, 2012 to November 15, 2012 without paying any exit load. 

Now Refer this merger notification



Refer this extract from above notification


Earlier posting on merger

Merger Of Few Schemes Of Fidelity MF with Schemes of L&T MF with effect from Nov 16, 2012

Monday, October 22, 2012

Can I redeem my SIP money before the tenure?

Query: Can I redeem my SIP money before the tenure?

Yes, you can redeem your units purchased in sip mode in all mutual fund schemes, except the one invested in ELSS  or Pension Plan scheme of mutual fund. All SIP installments in ELSS and Pension funds have a three year lock-in period. 


Before redeeming all units which are invested in sip mode, you have to consider following facts that may affect your returns

As said above you can redeem all your units which are purchased in sip mode, but, when you are cashing-in your mutual fund units, there are a couple of factors to consider that may affect if investment is made in sip:


1. Tax consequence
If investment is made in sip mode, each and every sip has to complete one year, if you sell units before completing of one year and If your mutual fund has realized significant capital gains in the past, you may be subject to capital gains taxes that is short term capital gains.

check this:


2. Exit load
If you are an investor who holds a fund that charges a back-end load, the total you receive when redeeming your units will be affected. If your fund has a back-end load, charges will be deducted from your total redemption value. For many funds, back-end loads tend to be higher when you liquidate your units earlier rather than later, so you need to determine if liquidating your units now is optimal. Information about applicable loads in mentioned in account statement, so before redeeming, please check all the details and applicable loads.



 



Thursday, October 18, 2012

How to make changes in bank details in ongoing SIP?



Query of Blog Reader: change in ongoing sip bank details

I have registered an SIP with auto debit. I wish to change the bank from which the amount is being debited as very recently i have changed my job, so now i want to switch my sip to my new salary bank account. Is this possible?

Reply:

Yes, it is possible to make changes in your SIP bank account.



 In order to make changes in your bank account, you need to select the ‘Change bank mandate' option in the auto-debit form and submit it at the mutual fund's branch.

Important point here to note is in this process of change in bank details

1. You are cancelling your existing sip and registering new sip in the same mutual fund scheme.

2. For making changes you need to use "SIP Auto Debit/ ECS Form" and in that form click the option for change in bank details.

3.  In this process you require SIP Auto debit form and not  Multiple Bank Accounts Registration Form.

4.  Some mutual fund houses want SIP Cancellation Form + SIP Auto debit form (with subject Change in bank details on top of application form) and where as some fund houses only ask you sip auto debit form and in that click option change in bank details, along with original cancelled cheque of new bank account (make sure, your name is printed on cheque, if name is not printed on cheque leaflet then along with cancelled original cheque you have to submit any one of following document:
  • Copy of Bank Statement of recent 3 months, or,
  • Copy of Bank pass book containing account number , account holder’s name & address.
 5. Investors may select this option in the form and submit it at either the mutual fund's branch or CAMS or Karvy Service Centre.

6.  It will take approximately 30 days to effect the change, and for debits to go to the new bank. The reverse of the SIP auto-debit form contains instructions on the requirements to change the auto-debit bank. 

7. Some funds have a separate form which can be used for the purpose. Investors may fill in the new bank details in this form and clearly indicate that it is for changing the auto-debit bank.

Sunday, October 14, 2012

Can I Cancel my SIP before the tenure??




Query of Blog Reader:  Cancellation of SIP in midway

I had enrolled for SIP in mutual fund scheme for 36 months. I have completed only 10 months. At this point is it possible to cancel the SIP?

Do I lose any money because of this?

How to cancel my ongoing sip?
Whether i have to pay any charges or penalty for discontinuing the SIP in midway??


I have online access to my mutual fund scheme, whether i can apply online to cancel my SIP, as i am not finding any option online?? (my current sip is created off-line means by submitting sip auto debit form)

I need your help in drafting letter for cancellation of sip if online option is not available for termination of my sip.

Please help me as how to proceed?



Reply
Yes, you can cancel your ongoing sip after 10 months and before 36 months as SIP is a voluntary investment, the AMC cannot levy any charges or penalty for discontinuing the SIP midway.


 Important point here is that discontinuation request should be given at least 30 days prior to the next due date of SIP. (some mutual fund houses take 45 days prior notice, as period differ from AMC to AMC)

Example:
Suppose your sip date is 5th of every month and you have given request on 15th of this month(October), so in this case, sip for November will  get debited (deducted) from your bank account, but their will not be any deduction in month of December.

Also refer

How to make changes in bank details in ongoing SIP?


Do you lose any money if you cancel sip before the tenure?
No,  AMC don't charge you anything, but, if along with cancellation of sip, you withdraw (redeem all units), then in such case amc may charge exit load, if applicable on such scheme.

Whether request will get accepted online in your case?
No, you have to submit written request in physical form and submit to mutual fund office or cams or karvy.As you mentioned above, your current sip is done by auto debit (offline) mode, then in such case you need to submit written request or sip cancellation form in physical mode.



Now how to cancel your Mutual Fund SIP 
An investor can cancel an existing SIP registered through ECS or Auto debit mode with mutual fund by submitting SIP Cancellation request  or written request.



If the SIP was started through an online platform, the cancellation can also be done through the same platform.

SIP Cancellation forms are available with AMCs or registrar and transfer agents.

You need to fill following details in sip cancellation form
1. Folio number
2. Scheme name and Plan
3. Sip amount and sip date
4. Bank account details 


Also refer:

Insufficient funds in your bank account on SIP due date!!


SIP Cancellation format:


Cancellation of Systematic Investment Plan
                                                                                                   
                                                                                                                 Date:

To,                                                                                                            

…………………………………………

…………………………………………


 Dear Sir,

 
I/we had given an instruction for deduction of Rs. -------------- into the following mutual fund scheme:

Folio Number:  --------------------------------------------

Scheme Details: --------------------------------------------

SIP Debit Date: ---------------------------------------------

Investor Bank Details

Bank Name: ---------------------------------------------------

Account No. ----------------------------------------------------


Due to some reason, I/we wish to discontinue my SIP in above mentioned fund.
I/we request you to cancel/stop deducting the sip amount registered with you from my /our above account from the ensuring month…………………………..


Hereby, I request you to kindly stop further SIP installment recovery of Rs.-------------
Kindly forward this instruction to my banker.




Your truly,
 
 
………………………




 

Friday, October 12, 2012

Where to see my Nominee Details in Mutual Fund Account Statements??





As we all know mutual funds houses started sending half yearly account statement for non transacted folio, to keep us updated for our investment in mutual funds. They also request us to update nomination details in that folio if not registered.

Few months back I had applied for mutual fund online access, after access, I got to know that my nomination details were not mentioned in many of my folio's, and till today I was under impression that I have nominee details updated in all my mutual fund investment.

I have good knowledge about mutual fund investment as I am working as Mutual fund Advisor from last 8 years and I know how to read/check mutual fund account statement, so question which surprised me as how this most important information got skipped in my mutual fund investment though I always have habit of checking all the details in my mutual fund account statement.

I guess the problem area is some mutual fund houses don't mention nominee details in mutual fund account statement, so in this situation, how to check nominee details in mutual fund investment???

First where to check details in Mutual Account Statement

If Nominee details are available in account statement, normally information is placed on right/left side of account statement.

Like Example, Mutual fund account statements of HDFC, SBI, PNB, Kotak and Birla Mutual fund













In some Mutual fund Nominee details are mentioned in bottom, like here in this example of Reliance Mutual fund Franklin Templeton Investments.





How to Check Nominee details

1. If nominee details are not available in mutual fund account statement, call mutual fund customer care helpline number, and verify your nomination details.

Refer this:

Toll Free Helpline Numbers of Mutual Funds in India




2. Some mutual fund websites have such option available in website, like in SBI mutual fund website, you can check whether nominee details are registered in your folio or not.
http://www.sbimf.com/Services/View_Nominee_Details.aspx


3. If you have online access to your mutual fund investment, you can check the nominee details by visiting online.

4. The nomination details information will not be available on CAS (Consolidated Account Statement), you need to verify the details individually considering your each and every folio(investment) in mutual fund.




Also refer

Have You Chosen Your Nominee in Mutual Fund Investment!


 Nominee form:



Thursday, October 11, 2012

Dormant Mutual fund Account Statement is now replaced with Half Yearly Account Statement !




Dormant Mutual fund Account Statement is now replaced with Half Yearly Account Statement! 

Very recently i have received email account statement with subject: Half Yearly Account Statement

"Thank you for investing in XXX Mutual Fund. This communication is sent in accordance with SEBI (MFs) Regulations in respect of non-transacted folios for the period 01-04-2012 to 30-09-2012. Please find the enclosed account statement of your folio for the above mentioned period in PDF format. To safeguard the information contained therein, the said file is encrypted and protected with your PAN / Folio Number. We also take this opportunity to request you to please get a nomination registered for your folio, if not already registered"



What is meant by Dormant Mutual fund Account Statement

It actually means update on Non transacted mutual fund folio.
According to para 14.3.4 of the Master Circular for Mutual Funds titled 'dormant account holders', "mutual funds shall also provide statement of accounts to those unitholders who have not transacted during the last six months prior to the generation of the statement of accounts."

This is a measure by SEBI to keep you updated about your mutual fund investments  to those unit holders who have not transacted during the past 6 months prior to the date of generation of the Statement of Accounts’.


What is Purpose of sending this information
The reason for sending this information is to keep investors updated on a half-yearly basis.



 Earlier Posting on Dormant Mutual fund Account Statement

Dormant Mutual Fund Account Statement (CAS) - Don't Get Confused!



Tuesday, October 9, 2012

Merger Of Few Schemes Of Fidelity MF with Schemes of L&T MF with effect from Nov 16, 2012



In March 2012, L&T Finance had acquired the India assets of Fidelity Mutual Fund.  In September 2012, SEBI has issued a no objection certificate (NOC) on the change of ownership of Fidelity AMC .

 SEBI gives green signal to L&T-Fidelity deal,  both fund houses will merge their schemes which have common objectives. L&T has eight equity schemes, two hybrid and seven debt funds while Fidelity runs 15 schemes. L&T MF has a predominant debt book while Fidelity has focused on equity assets. Both, L&T and Fidelity have a common registrar — CAMS. 

Fidelity Mutual Fund has announced the merger of following Schemes. 

The dissenting unit holders of L&T and Fidelity are given an option to redeem/switch out from the schemes within October 15, 2012 to November 15, 2012 without paying any exit load.

Also refer

Mutual fund capital gains in case of merger in mutual fund scheme!


Friday, September 21, 2012

How to get Instant Access to your Reliance Mutual Fund Investment



For your investment in Reliance Mutual Fund, you can now Get Instant access of NAVs, Scheme Balances, Dividend Alerts, Transaction Alerts, SIP debit Alerts, Alerts on change of details, all through SMS on your registered mobile phone.



 You don't pay any additional charges for any of these messages, just the standard SMS price.

Simply send below SMS to 966 400 1111 get SMS instantly.






To register your mobile Number for Alerts on SMS:
You can submit a written registration form duly signed and send it to the nearest RMF branch 'click here' to download Registration Form.




Or

Call the call center -1800-300-11111

Email and Mobile Number Registration Form




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