Finergo Episode 20 Dt 20apr09

04 KALEIDOSCOPE

Ask your query I am planning to travel abroad next month for a vacation. Is there any limit on the foreign exchange I can get from my bank? What are the rules applicable? Arun Thangavel, Adayar

Dear Arun, The buying and selling of foreign exchange in India is governed by FEMA (Foreign Exchange Management Act). As per the act there are various ceilings for the amount of Forex that you can purchase from Authorised Dealers of RBI. The rules state that if authorised dealers can release Upto $25000 per trip for Business travel, $10000 for one financial year for personal trips, Upto $100,000 for medical visits and for education. Also the maximum currency you can carry in the form of notes or currencies is $2000. Also the maximum that you can buy by way of payment in Rupees is Upto Rs 50,000/- above that you can buy forex only using Cheque or Demand draft. Do you need some unbiased and professional solutions to your personal finance issues related problems? Ask Doctor Finergo. Mail your queries to [email protected], Put subject as Doctor.

Mini Quiz Q1: Nifty is the index of which stock market? New York Stock Exchange National Stock Exchange Bombay Stock Exchange New Delhi Stock Exchange Q2: What is the booking amount for the most basic model of Tata NANO 93000 95000 65000 87000 Send your answers to [email protected] or SMS your answers to 92813 98889. For example if you choose A as the answer to question 1 and B as the answer to question 2 type it as 1A2B and send it. Winner will be chosen by lucky draw from all correct answers and will get a Parker pen.

Answers for last week’s mini-quiz HDFC Standard Life Asset

Word in Word SEBI tightens FMP rules The Securities and Exchange Board of India has asked Fixed Maturity Plans (FMPs) to disclose their monthly portfolios on their websites. This has been done with the intention of bringing in more transparency and creating better disclosure norms to help investors make more informed decisions relating to their investments in these funds. The initial trigger for this move was the liquidity crisis seen in Oct 2008, when many investors started redeeming their investments in FMPS and which led to a drop in liquidity of most funds.

ERGO Monday, April 20, 2009

THE GOLDEN EGG laying duck? Gold lying idle in your bank locker can quite literally lays eggs and give you some additional income

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tate Bank of India has reintroduced the Gold Deposit Scheme (GDS). The scheme aims to help investors earn interest income by depositing their gold holdings at the bank. Apart from the income interest what makes it even more interesting is the add-on benefits that come with it. Egg Laying? The interest in the scheme is calculated in terms of grams rather than in rupees. In simpler terms if you deposit 1000 grams for 1 year, then you get 10 grams as interest on maturity. This can be redeemed as cash or gold. So your 1000 grams becomes 1010! And we never believed in the golden duck! How the scheme works Customers can deposit a minimum quantity of gold in any form with SBI. The bank will convert the gold into bars and assay it at the Government of India mint and issue a Gold Deposit Certificate (GDC). The weight indicated on the GDC will be taken as your deposit. The rate of interest is 1% for 3 years, 1.25% for 4 years and 1.5% for five year deposits. The interest can be withdrawn annually or allowed to compound annually. Upon maturity the depositor has option to redeem both Principal and Interest in either Rupees or Gold. The icing on the cake

Apart from the fact that your gold gets multiplied instead of lying idle, the GDS gives you the investor other benefits too: the entire interest is tax free; the value of Gold deposited is exempt from wealth tax; the deposits are exempt from capital gains tax; you save the money you would have to pay to keep your gold in a locker; and the scheme also allows the depositor to avail of loans. On a comparative basis, the 1 to 1.5 per cent interest looks meager.

But if we allow for the benefits gained by fluctuations in the gold price and the rupee-dollar exchange rates then the return could even be to the tune of 30% (see table) Bottomline In case you are planning to keep gold idle in your bank locker then the SBI Gold Deposit Scheme could be a better option to keep the gold Safe, liquid and growing. Pradeep Yuvaraj with inputs from Nitya Varadarajan