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How to Secure Credit Card? CVV and OTP is enough?

Shitanshu Kapadia
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0
How to Secure Credit Card? CVV and OTP is enough?

credit card

Credit card is one of the most used financial products now a day. You spend a lot of time to select best credit card, but do you really spend a time to understand how to secure credit card? Do you know the importance of CVV and your credit card number?  Credit card frauds are increasing at the jet speed. Social Engineering, skimming, phishing are some of the methods used by fraudster for credit card fraud. Let me share one recent incident of social engineering with you.

My friend received a call from Credit Card Company. A caller explained that your credit card usage history is very good and company decided to give you 50% cash back offer for every transaction. In order to avail this offer, you need to send scanned copy of your credit card for verification. You will receive offer letter after verification. Without thinking twice, he forwarded scan copies of a front and back side of a credit card as required. But the caller didn’t turn up after that. A couple of days later he received a big bill of the credit card. While inquiring he came to know that his card was used in doing a couple of unauthorized transactions. He immediately filed complaint at a police station and cyber-crime cell were able to trace cheater. Fraudster also confesses that he has done a couple of frauds like this. He used most popular social networking site Facebook to get personal information for this type of frauds. This incident is an eye opener for the people who keep all personal information open on social networking sites.

Although we have additional security features like OTP, 3D Secure PIN etc. How come someone with credit card number and CVV can do credit card transaction? Well, it is because many sites allow online transactions without OTP. You must be thinking what is meaning of CVV and OTP?

What is CVV?

CVV is known as credit card verification value code. The CVV is 3 digit number mentioned at the back side of credit card nearby magnetic strip. In order to do any financial transaction online, you need to enter CVV. CVV is proof that card is physically in your possession. Other agencies also refer CVV as CVV2 or Credit Identification number CID.

CVV is enough for all credit card transactions?

Apart from CVV many banks and credit card companies ask for OTP, 3D Secure PIN to complete the transaction.

What is OTP?

OTP is one-time password sent to your mobile number. Before completion of online credit card transaction, you need to enter OTP. Unless you enter the OTP transaction will not be completed.

What is 3D Secure PIN?

3D secure PIN or password is additional security layer applied to your credit card. This 3D secure PIN is required whenever you want to use a card to make an online purchase. The requirement of 3D secure PIN prevents unauthorized usage of your credit card. It is also termed as Verified by Visa password or SecureCode.

How to Secure Credit Card? – Useful Tips

There is always a risk of credit card frauds. However, you can take the following precaution to avoid it.

  1. Don’t give Credit Card Details to anyone.
  2. Never respond to unsolicited phone calls, visits or email messages from individuals asking about personal information, unless you verify its authenticity.
  3. Do not respond to emails from unidentified sources.
  4. Scratch your CVV number from Card. Memorize CVV number.
  5. Do not write CVV or Credit card number anywhere.
  6. Do not share your credit card password (3D Secure PIN) with anyone ever.
  7. Sign back credit card immediately after you receive it.
  8. Beware of Forged websites. A website where it is safe to enter personal information begins with “https” — the “s” stands for secure.
  9. Regularly monitor your credit card transactions.
  10. While making an offline transaction at a petrol pump, hotel etc make sure a card is swiped in front of you.
  11. Make sure that card is used on a machine which is authorized machine/POS by banks and not on a machine which looks doubtful; it can be “Skimmer” which can steal your data.
  12. Use credit card with an inbuilt limit of 20,000 Rs. or 30,000 Rs.

So, Next time when you receive any call related to credit card do remember what you have read here!

How to Invest in Direct Mutual Funds Plans?

Shitanshu Kapadia
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5
How to Invest in Direct Mutual Funds Plans?

Direct Mutual Funds

What is Direct Mutual Funds Plan? How to Invest in Direct Mutual Funds?  If this question is bugging you here is the answer. Once you have decided to invest in mutual funds you have two ways of making Investment (1) Invest via distributor or advisor (2) Invest in Direct Mutual Funds. It is generally observed that Investor opt for the first option and go ahead with the distributor, however, it is advisable to opt for direct mutual funds. Here are some pointers in this direction.

(1)    Invest via distributor or advisor

In this investment option, distributor or advisor will provide you assistance in the selection of mutual funds and earn commission or fees.

(2)    Direct Mutual Fund Investment

Direct Mutual Funds schemes allow you to purchase mutual funds directly from the fund house. No intermediator or distributor comes into the picture. i.e. Investments under this scheme is not routed through a distributor and you can save commission or fees.

Why Direct Plans are cheaper?

Direct Plans are cheaper than the Regular Plans. No distribution fees, a commission shall be charged on the direct plan hence, the said plan shall have lower expense ratio.

Expense Ratio Direct Vs Regular Plan –

The expense ratio of the direct plan is 0.4-0.75% lower compared to regular plans. Let’s take an example of ICICI Prudential Value Discovery Fund – Growth. The expense ratio of Regular Plan in case of ICICI Prudential Value Discovery Fund Growth is 1.75%, whereas under Direct Plan expense ratio is 0.84%. Effective difference is 0.91% which seems to be very small however for the long-term this will bring huge savings and increase your returns.

For example, you invest Rs. 2 lakh in ICICI Prudential Value Discovery Fund – Regular Growth and if the fund returns 12% in the year. This amount will grow to Rs.2,24000. As expense ratio of the regular fund is 1.75%, 1.75% of Rs.2,24000 (Rs. 3920)will be deducted and Rs. 2,20080 will be shown in your mutual fund statement. Effective return will be 10.04%. If you have invested the same amount in the direct fund this amount will reduce to Rs.2,22118 and effective return will be 11.06%. Over the period, this small difference leads to a big difference in growth and return of your portfolio.

Mutual Fund Expense Ratio

I hope it is clear why advisor insists on investing in Direct Mutual Funds.

How to Invest in Direct Mutual Funds Plans?

In order to invest in direct mutual funds, you can follow the procedure given below.

(1) Visit the AMC office or appointed Register Transfer Agent (RTA) like CAMS, Karvy. Submit application form of the direct plan along with PAN copy and cheque.

(2) Register online to respective AMC website and purchase the direct plan online using online payment gateway.

How to switch from Regular Plan to Direct Mutual Funds?

You can switch from regular plan to direct mutual funds any time. Follow process given below for switching.

(1) In order to switch to Direct Mutual funds you need to submit the form for the conversion of future SIP instalments to Direct Plan. You can find this form online for all AMC’s. Sample form for ICICI AMC is given here.

(2) While filing the Form you need to mention Folio Number, Scheme detail and other information carefully.

(3) On submission of this Form you will get acknowledgement slip.

(4) It generally takes 10-15 days for this conversion. You will able confirm this conversion once you receive your next mutual fund statement.

Remember:- Approval or Permission from distributor is not required for this conversion. You will not able to convert ELSS in lock in period.

Direct Plans is available for all schemes?

Yes, Direct Plans are available in majority of schemes which includes –

(1) All open-ended scheme except ETF

(2) New Fund offer, Fixed Term Plans

(3) Interval Income Schemes

Can I do SIP in Direct Mutual Funds?

Yes, You can do SIP with Direct Mutual Funds.

Where I can see NAV for Direct Plans?

Fund NAV will be available on AMFI website as well as on the company’s website.

Where I can find Expense Ratio of Direct Plans?

You can find Expense Ratio on AMC website.

Hope you find above information useful. Do share your queries in comment section I will be happy to answer that.

For more information about Direct Plan refer to FAQ given on CAMS online Site.

Invest Direct Mutual Funds

Deductions under 80G – IT Act 1961

Shitanshu Kapadia
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0
Deductions under 80G – IT Act 1961

The need of charity in a resource crunched country like India cannot be undermined. Therefore, in order to encourage charity, the government has made a provision for deduction under 80G. At the same time, in order to prevent misuse of the tax benefit, the government only gives out tax soap for charities that meet a certain criteria. The amount donated can be subjected to either full or partial exemption.

Any taxpayer – be it Individual or Company, can claim for deduction under 80G. It is important to note that only monetary donations are exempted. Hence, value of any other donation – like blanket, food supply in natural calamity, is not exempt.

Also, only donations made to institutions that have valid 80G certificates are considered for exemption, so you must ensure that the charity or trust which you are donating to, has a valid 80G certificate. With effect from 1st October 2009, it is not important for charity institutions to apply for renewal of 80G certificate, so any certificate valid till 1.10.2009 is valid unless specifically withdrawn.

Maximum amount deduction under 80G – It is capped to 10% adjusted gross total income, however there are certain institutions to which the donations are fully exempt or are eligible for 50% of the total benefits, irrespective of your adjusted gross total income.

Donation under 80G

Deductions under 80G – Scenarios

A. Donations to Institutions without Any Qualifying Limit

Suppose your adjusted gross total income is 10 Lakhs, and you donate 3 lakh to various institutions where donations are exempted without any qualifying limits, then here is how it works:

  1. For all donations made to institutions with 100% exemption (Prime minister’s National relief fund), total donation of Rs 3 Lakhs shall be exempted from taxation.
  2. For donations made to institutions with 50% exemption (Indira Gandhi Memorial Trust), 50% of the donation amount i.e. Rs 1,50,000 shall be exempt.

B. Donations to Institutions With Qualifying Limit

Now suppose, with the same adjusted gross total income (Rs 10 lakhs) you donate Rs 1,50,000 to various institutions where donations are exempt subject to qualifying limits (which is 10% of your gross total income)

  1. For donations made to institutions with 100% exemption (Charity institutions like CRY), Rs 1 lakh shall be exempt (As only a maximum exemption of 10% of your total income is allowed)
  2. For donations made to institutions with 50% exemption (Charity institutions Oxfam), Rs 75,000 shall be exempted from taxation (Rs 10 lakh minus 75,000 – 50% of Rs 1,50,000)

The Process to claim tax benefits under 80g: In order to claim benefits, you – the donor, would need to furnish a proof of payment. A trust, charity or institution receiving your donation will issue you a stamped receipt, and you would need to produce the receipt while filing your returns.

Charitable organizations that take online payments like CRY and Oxfam India, they will mail you the receipt once the donation is made. The receipt should contain your name, name of the charity, amount donated and the registration number of the charity/trust. You can simply make a donation to some of these charities while e-filing your IT return.

Deduction under 80GDeduction under 80G

You can claim deduction under 80G through employer only for the donations made to institutions or charity that don’t have any qualifying limits. Therefore, if you donate Rs 10,000 to Prime Minister’s relief refund, you can claim tax benefits for the same through your employer. But, if you donate the same amount to a charitable institution like CRY or Oxfam India, then you would need to claim the tax benefit at the time of filing your tax returns.

You also can claim tax benefits for any donation that you make through your employer. Such donations will be a part of form 16, through which you can file your tax returns and claim tax benefits.

Payment Banks India – Features and Benefits

Shitanshu Kapadia
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0
Payment Banks India – Features and Benefits

Ever heard of payment banks and wondered what they are and why they’re such a big deal in India? Don’t worry; you’re not alone. Payment banks might sound like some complicated financial jargon, but they’re actually quite simple and incredibly useful. In this article, we’ll break it all down for you – what they are, how they work, and why they matter. So, let’s dive in!

Payment Bank India

What Are Payment Banks?

Imagine a regular bank, but with fewer services and a sharper focus on making banking accessible to everyone. That’s what payment banks are. These are a special category of banks introduced by the Reserve Bank of India (RBI) to bring banking services to the masses, especially in rural and unbanked areas.

Payment banks can accept small deposits (up to Rs. 2 lakh per individual as of now), provide savings and current accounts, issue debit cards, and facilitate online and mobile banking. However, they don’t offer loans or credit cards, making them a unique addition to India’s banking ecosystem.

Why Were Payment Banks Introduced?

The concept of payment banks was born out of a need to promote financial inclusion in India. Let’s face it; traditional banking isn’t always accessible to everyone, especially people in remote areas. Many individuals don’t have a bank account or access to formal financial services, leaving them out of the economic loop.

Payment banks aim to bridge this gap. By leveraging technology and simplifying banking processes, they’ve made it easier for people to manage their money, transfer funds, and even save for the future. Pretty cool, right?

Key Features of Payment Banks

Now that you know the basics, let’s take a closer look at the features that make payment banks stand out:

1. Small Deposit Limits

Payment banks can accept deposits up to Rs. 2 lakh per individual. This makes them perfect for small savers who don’t need a full-fledged bank account.

2. Savings and Current Accounts

You can open both savings and current accounts with a payment bank. The interest rates on savings accounts are often competitive, making them an attractive option for individuals.

3. No Credit Facilities

Unlike traditional banks, payment banks don’t offer loans or credit cards. This keeps their operations simple and focused.

4. Digital Banking Services

Payment banks are all about convenience. They provide mobile banking apps, online services, and easy fund transfers through NEFT, RTGS, and IMPS.

5. Issuance of Debit Cards

You can get a debit card from a payment bank, which allows you to withdraw cash from ATMs and make online and offline payments seamlessly.

6. Focus on Financial Inclusion

Their primary goal is to bring banking to the unbanked and underbanked segments of the population, particularly in rural and semi-urban areas.

Benefits of Payment Banks

So, why should you care about payment banks? Here are some of the benefits they bring to the table:

1. Accessible Banking

Payment banks have revolutionized banking by making it accessible to people in remote areas. Thanks to their mobile-friendly approach, you can open an account and manage your money from the comfort of your home.

2. Cost-Effective

With low maintenance fees and no hidden charges, payment banks are a cost-effective alternative to traditional banks. This is especially beneficial for people with limited income.

3. Fast and Easy Transactions

Need to send money to a friend or pay a bill? Payment banks make it super quick and hassle-free, thanks to their digital-first approach.

4. Encourages Savings

By offering attractive interest rates on savings accounts, payment banks encourage people to save more. Even small savings can add up over time.

5. Enhanced Security

Payment banks use cutting-edge technology to ensure your money and personal information are secure. From encryption to two-factor authentication, they’ve got your back.

6. Bridging the Digital Divide

With their mobile-first strategy, payment banks are helping to bridge the digital divide in India. Even people without smartphones can access their services through SMS and IVR.

Popular Payment Banks in India

Several players have entered the payment bank space since the RBI gave the green light. Some of the most notable ones include:

  • Airtel Payments Bank: Known for its extensive reach in rural areas, this bank offers a range of services, including savings accounts and money transfers.
  • Paytm Payments Bank: A favorite among tech-savvy users, Paytm Payments Bank integrates seamlessly with the Paytm app for easy transactions.
  • India Post Payments Bank (IPPB): Operated by India Post, this bank leverages the vast postal network to deliver banking services to every corner of the country.
  • Fino Payments Bank: Focused on providing hassle-free banking solutions, Fino Payments Bank caters to both urban and rural customers.
  • Jio Payments Bank: Backed by Reliance, this bank is slowly but steadily gaining traction with its innovative offerings.

How to Open an Account with a Payment Bank

Opening an account with a payment bank is as easy as pie. Here’s what you need to do:

  1. Choose a Payment Bank: Decide which payment bank suits your needs best.
  2. Download the App or Visit a Branch: Most payment banks have mobile apps for easy account opening. Alternatively, you can visit a branch or agent point.
  3. Provide KYC Documents: You’ll need basic KYC documents like your Aadhaar card and PAN card.
  4. Complete Verification: The bank will verify your details, which might include biometric verification.
  5. Start Using Your Account: Once your account is set up, you can deposit money, make transactions, and enjoy the benefits of digital banking.

Are There Any Drawbacks?

While payment banks offer plenty of advantages, they do have a few limitations:

  • No Loan Facilities: If you need a loan or a credit card, you’ll have to look elsewhere.
  • Deposit Limits: The Rs. 2 lakh deposit cap might be restrictive for some users.
  • Limited Investment Options: Payment banks don’t provide investment products like mutual funds or fixed deposits.

The Future of Payment Banks in India

Payment banks have already made a significant impact, but their journey is far from over. With advancements in technology and increasing smartphone penetration, the future looks bright. As they continue to innovate and expand their reach, payment banks could play a pivotal role in shaping India’s financial landscape.

Final Thoughts

Payment banks are more than just a buzzword; they’re a game-changer for India’s banking sector. By making financial services accessible, affordable, and user-friendly, they’re empowering millions of people to take control of their finances. Whether you’re a tech enthusiast, a small saver, or someone looking for a no-fuss banking solution, payment banks have something to offer.

So, what are you waiting for? Explore the world of payment banks and see how they can make your life easier. Who knows? This might just be the financial revolution you’ve been waiting for!

FAQ

1. Can I open multiple accounts with different payment banks?

Yes, you can open accounts with multiple payment banks, but keep in mind the Rs. 2 lakh deposit limit applies per individual per bank.

2. Are payment banks safe to use?

Absolutely! Payment banks are regulated by the RBI and follow strict security protocols to protect your money and data.

3. Can I get a credit card from a payment bank?

No, payment banks don’t offer credit cards or loans. You’ll need to approach a traditional bank for those services.

4. How do I withdraw cash from a payment bank?

You can use the debit card provided by the payment bank to withdraw cash at ATMs or access agent points for cash withdrawals.

5. What happens if I exceed the Rs. 2 lakh deposit limit?

If your deposits exceed Rs. 2 lakh, the payment bank may freeze the excess amount or transfer it to your linked account in a traditional bank.

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