e-banking services offered by different banks

Penalty due to non-payment of bill is not new to anyone of us. And quite obviously, who likes the long procedure of writing a cheque, standing in a long queue and then ensuring that the particular amount is available in your bank account? Similarly, Mr Sharma, who is on business tour for at least 25 days a month, finds it difficult to clear his dues on time because of his busy schedule.

He, like many of us, was possibly not aware of the online services, banks are offering these days. With just a click, all his dues would have been cleared long back. However, it's never too late to mend.

Indian banks are trying to make your life easier. Not just bill payment, you can make investments, shop or buy tickets and plan a holiday at your fingertips. In fact, sources from ICICI Bank tell us, "Our Internet banking base has been growing at an exponential pace over the last few years. Currently around 78 per cent of the bank's customer base is registered for Internet banking."

To get started, all you need is a computer with a modem or other dial-up device, a checking account with a bank that offers online service and the patience to complete about a one-page application--which can usually be done online. You can avail the following services.

Bill payment service

Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. You can facilitate payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills.

To pay your bills, all you need to do is complete a simple one-time registration for each biller. You can also set up standing instructions online to pay your recurring bills, automatically. One-time standing instruction will ensure that you don't miss out on your bill payments due to lack of time. Most interestingly, the bank does not charge customers for online bill payment.

Fund transfer

You can transfer any amount from one account to another of the same or any another bank. Customers can send money anywhere in India. Once you login to your account, you need to mention the payees's account number, his bank and the branch. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services.

Credit card customers

Credit card users have a lot in store. With Internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. Not just this, they can also apply for an additional card, request a credit line increase and God forbid if you lose your credit card, you can report lost card online.

Railway pass

This is something that would interest all the aam janta. Indian Railways has tied up with ICICI bank and you can now make your railway pass for local trains online. The pass will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nashik, Surat and Pune. The bank would just charge Rs 10 + 12.24 per cent of service tax.

Investing through Internet banking

Opening a fixed deposit account cannot get easier than this. You can now open an FD online through funds transfer. Online banking can also be a great friend for lazy investors.

Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account.

Moreover, some banks even give you the facility to purchase mutual funds directly from the online banking system.

So you need not worry about filling those big forms for mutual funds, they will now be just a few clicks away. Nowadays, most leading banks offer both online banking and demat account. However if you have your demat account with independent share brokers, then you need to sign a special form, which will link your two accounts.

Recharging your prepaid phone

Now you no longer need to rush to the vendor to recharge your prepaid phone, every time your talk time runs out. Just top-up your prepaid mobile cards by logging in to Internet banking. By just selecting your operator's name, entering your mobile number and the amount for recharge, your phone is again back in action within few minutes.

Shopping at your fingertips

Leading banks have tie ups with various shopping websites. With a range of all kind of products, you can shop online and the payment is also made conveniently through your account. You can also buy railway and air tickets through Internet banking.

Internet banking versus traditional method

Inspite of so many facilities that Internet banking offers us, we still seem to trust our traditional method of banking and is reluctant to use online banking. But here are few cases where Internet banking will turn out to be a better option in terms of saving your money.

'Stop payment' done through Internet banking will not cost any extra fees but when done through the branch, the bank may charge you Rs 50 per cheque plus the service tax.

Through Internet banking, you can check your transactions at any time of the day, and as many times as you want to.

On the other hand, in a traditional method, you get quarterly statements from the bank and if you request for a statement at your required time, it may turn out to be an expensive affair. The branch may charge you Rs 25 per page, which includes only 30 transactions. Moreover, the bank branch would take eight days to deliver it at your doorstep.

If the fund transfer has to be made outstation, where the bank does not have a branch, the bank would demand outstation charges. Whereas with the help of online banking, it will be absolutely free for you.

As per the Internet and Mobile Association of India's report on online banking 2006, "There are many advantages of online banking. It is convenient, it isn't bound by operational timings, there are no geographical barriers and the services can be offered at a miniscule cost."

Security Precautions

Customers should never share personal information like PIN numbers, passwords etc with anyone, including employees of the bank. It is important that documents that contain confidential information are safeguarded. PIN or password mailers should not be stored, the PIN and/or passwords should be changed immediately and memorised before destroying the mailers.

Customers are advised not to provide sensitive account-related information over unsecured e-mails or over the phone. Take simple precautions like changing the ATM PIN and online login and transaction passwords on a regular basis. Also ensure that the logged in session is properly signed out.

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Buying home for NRIs is now easy

In recent years, India has been witnessing unprecedented growth in the real estate sector fueled by the increased business activity.

Real estate development in India is estimated at $12 billion and growing at 30% every year. Though all segments of real estate business such as corporate, retail and residential have been driving this growth, investment in residential property itself constitutes 80% of this sector.

Non-Resident Indians (NRIs) are one of the key contributors to the growth of the real estate industry and considering the immense potential in India, they are likely to step-up the investment in future.

In this article, senior tax professionals with Ernst & Young -- Gaurav Taneja and Rajesh S -- provide an overview of the key exchange control and tax implications that should be considered by NRIs while investing in house property in India.

Exchange control regulations

The Indian government has considerably eased the restrictions relating to investments by NRIs in house property. There is virtually no restriction or approval required for an NRI to invest in properties in India from funds received in India through normal banking channels or held in Non-Resident External (NRE) account/ Foreign Currency Non-Resident (FCNR) account (B)/ Non-Resident Ordinary (NRO) rupee account.

However, investment in agricultural land / plantation property / farm house is currently prohibited. The recurring rental income earned on letting out of property is also freely repatriable.

Sale/ Repatriation

An NRI can freely sell or gift his/ her property to another Indian resident or NRI or person of Indian origin. However, there are certain restrictions imposed on repatriation of sale proceeds.

In case of investments made from inward remittances or out of NRE account or FCNR account (B), the repatriation of sale proceeds is permitted only up to the amount of initial investment.

In case the repatriation is made out of balances held in NRO rupee account (balances include sale proceeds of house property), then an amount of $1 million per calendar year can be repatriated.

One of the significant restrictions placed on repatriation is that the NRI can repatriate the sale proceeds only up to two residential properties. This could dampen the interest of NRIs in residential property, as investors would like to have free flow of capital while making such investments.

Income tax

The income tax implications on house property income in India would be dependent on whether the property is kept vacant or let out. In case an NRI has only one property in India and if it is kept vacant, then it would be possible to say that there should not be any rental value for such property as the NRI was not able to occupy the same owing to his employment, business or professional carried out at any other place.

However, if he owns two properties and both of them are kept vacant, then he is required to pay income tax on one of the properties as if the property had been let out. The tax laws do not provide clear guidance on how the rental value is to be determined for such property.

It simply states that the annual rent should be the sum which the property might reasonably be expected to let from year to year. Though there are judicial precedents that are available which suggest adoption of municipal value/ fair rent, there could be some practical difficulties in ascertaining such value in the ever increasing rental market.

In case of let out properties, the actual rental income (after reducing the municipal taxes) would be subject to tax. The tax law allows a general deduction of 30% on the rental income and also allows for deduction towards interest subject to certain conditions.

Tax payments

Under Indian tax law, the payer is required to withhold tax on rental income paid to a non-resident @ 30.6% where the income of the non-resident does not exceed Rs 10,00,000, otherwise at 33.66%.

In case an NRI wishes to have a lower rate, then he has to apply to the tax authorities in a specified format for obtaining a certificate for deduction of tax at lower rate. The NRI would be required to file a return of income at the end of the year if the taxable income exceeds Rs 100,000.

In case the NRI is taxed in the home country on the rental income derived from India, then he could consider claiming exemption or tax credit in the home country based on the double tax treaty agreement entered into India with such country, if any.

Other aspects

It is common practice to have joint ownership of properties by a husband and wife. However in case an individual intends to split the income between himself and his wife for tax purposes, then it is important to establish that both of them contributed for the investment in property and the share of ownership is clearly outlined.

In case the entire investment is made by one person, then in all likelihood, the entire income would be taxable in that individual's hands on account of the clubbing provisions that exist in India though the property may be jointly held.

Wealth tax

Tax implications are not restricted only to income tax and NRIs have to keep in mind the wealth tax implications as well.

Wealth tax is levied on the value of specified assets in excess of Rs 15,00,000. Specified assets include house property. However, the Wealth Tax Act provides an exemption in respect of one house property. In case of more than one property, the NRI would have to pay wealth tax @ 1% on the value (value determined based on the prescribed valuation rules) in excess of Rs 15,00,000 and file the required return.

There is a specific exemption available for returning Indians in respect of investment made in house property out of money brought from outside India or from balances held in NRE accounts as on date of return to India.

The value of such house properties would be exempt from wealth tax for a period of seven consecutive years starting from the year when he/ she returned to India. This exemption is available only if the NRI has come to India with the intention of 'permanently residing in India.'

As may be discerned from the above, the liberalised exchange control regulations provide unrestricted access to NRIs to invest in house property in India, thereby helping them to capture the great potential available on such investment.

There are, however, some restrictions imposed on the repatriation of sale proceeds. NRIs also need to understand the tax implications in India on their proposed investment both from an income tax and wealth tax perspective, to ensure full compliance with the statutory requirements.

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Know all about Medical Insurance

Health is wealth. That's old wisdom. We do not know if it is true in today's world. What we do know is that the corollary holds. For, if you lose your health, your treatment can be a major drain on your resources and leave them severely crippled.

And, given that healthcare costs are rising at more than 15 per cent a year, you should try to guard against such a hit. "It should no longer be a choice, but a necessity in view of the escalating cost of medical treatment," says Antony Jacob, managing director, Royal Sundaram Insurance Company.

Says Shreeraj Deshpande, assistant vice-president (health insurance), Bajaj Allianz General Insurance: "With increasingly stressful lifestyles, even the young are prone to illnesses such as heart attacks. Health insurance provides adequate protection during medical exigencies." A Kolkata-based businessman, Pabitra Das, 56, understood the utility of the cover and got one early in his life.

Better safe than sorry: Das took his first medical insurance from Calcutta Hospital and Nursing Home Benefits Association in 1977. It turned out to be one of his most prudent moves.

In the past 29 years, all major medical costs for his family -- mother, wife and two children -- have been covered. For a current premium of just Rs 12,000 a year, Das has been able to cover hospitalisation costs of up to Rs 50,000 each time in two consecutive years.

What's on offer: In India, general insurance companies sell stand-alone health policies though life insurance companies are beginning to offer these too. In the past, they covered hospitalisation costs, but now private insurers offer products that also pay pre- and post-hospitalisation expenses. Some policies, like Health First from Tata AIG Life, pay a fixed amount for every day of the hospitalisation, apart from the medical expenses.

These policies have become much more convenient than in the past with the advent of cashless settlements. Also, large hospital chains now have tie-ups with companies which help policy-holders get free outpatient visits to the consultants in their hospitals, besides cashless claims like Max Healthcare's tie-up with United India Insurance.

You can also get cover for critical illness under riders that come with life covers from life insurance companies. They provide up to 30 per cent of the sum assured for illnesses such as renal failure, stroke, paralysis and heart attack. Unlike general insurance policies, where treatment has to be in specified hospitals, for critical illness riders, you can get treated anywhere in the world.

Define your needs: Given the variety of offerings, it is wise to first define your needs. One way of doing that is to identify medical emergencies that could hit you hard financially.

Examine policy benefits and coverage: It is important for you to realise that not all medical expenses are covered by the products available. For instance, many policies from general insurers don't cover dental procedures, non-surgical care, or consultation.

The cover is also available till a certain age, for instance, age 80, for Mediclaim policy by PSU insurers. You should also know that critical illness riders that come with a life cover cease to exist, once used.

Determine your affordability: After you have figured out the product that will give you the best possible cover and benefits, you will have to get a fix on the premium that you can afford. Health covers from general insurers and critical illness riders from life insurance companies are entitled to tax deductions under Section 80D. Depending on your pocket, take the widest coverage possible.

Be an early bird: It pays to start early when it comes to buying health insurance. If you procrastinate, diseases surface later in life and remain out of policy coverage due to the existence of the clause of pre-existing diseases. Of course, lately there have been products where pre-existing diseases are being covered but that is subject to specific conditions.

You also get the benefit of no-claims bonus if you don't make claims, and that adds to 15 per cent of the coverage every claim-free year. You also need to keep in mind that general insurers show reluctance to insure anyone aged 45 years or older since such people are more prone to health risks.

Get cover: Even if your employer offers a perk of medical insurance, get your own cover. A change of job could leave you without healh insurance, as could retirement. Getting fresh cover after 45 is difficult.

As the longevity of the average Indian goes up, health expenses of families would mount. That is why you can expect the role of health covers in our lives to increase. We'll modify the old adage. Health cover is wealth.

Tax kick: Deduction under Sec. 80D up to Rs 10,000; Rs 15,000 for individuals aged 65 or more.

Smart tip: Get your own mediclaim even if your company offers one. Change of jobs or retirement could leave you without a cover. Also, after 40 years of age medical tests become essential.

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Why do we need Insurance

As complexity of the task of managing personal financial risks increases, households will require a reasonable degree of financial literacy. Households, in particular, will need to use insurance mechanisms in an informed manner, and become adept at using financial advice.

There are many events, such as sudden death of the main income earner, or a catastrophic illness, whose chances of occurring are relatively low but the financial loss is substantial.

Assuming the value of each additional rupee is less as income increases (a well-off individual values an additional rupee less than a poor person), buying a policy can help smoothen income or wealth of households. This in turn improves the household's welfare.

When the probability of an event occurring is high, but amount involved is relatively low, such as routine medical needs, buying insurance may not be worthwhile. Self-insurance by households, involving regular savings, is more appropriate.

A household, therefore, must examine whether their cover for life, health, property, travel, and vehicle meet the above criteria. Often households purchase insurance (or their employers provide) for routine, predictable, small expenditures, but not for low-probability but high-expenditure events. In general, households must buy that kind of insurance, which is not already provided by their employers.

A policy is worthwhile if given its product features, it is actuarially fairly priced and if the providers are well regulated with appropriate standards of service and corporate governance. Tax advantages, and investment features associated with insurance products, while helpful for certain income groups, should not be elevated as prime considerations for most households.

Life expectancy in India in 2001 at age 60 was 16 years for men and 17 years for women, and this will rise. Longer life expectancy should lead to cheaper life insurance policies, but also to higher costs for health insurance and annuities.

There are additional contributory factors. India's morbidity pattern is undergoing a shift from communicable to lifestyle diseases.

India is also at early stages of introducing technology in its healthcare sector. The health insurance industry is also in early stages of development, and so are the regulatory structures. Its weak public sector health institutions are not able to check private sector costs. All these factors are likely to lead to rapid increases in healthcare costs.

For retirement financing, households must manage longevity and inflation risks. The former involves the probability that retirement resources may be exhausted before a person dies. At present, in India insurers do not have sufficient financial instruments to invest in to make annuities more affordable for a wider section of the population. There are also no instruments available to provide protection against inflation risks.

Appropriate risk sharing arrangements among insurance companies, households and the government will need to be evolved if longevity and inflation risks are to be addressed satisfactorily. 

The Insurance Regulatory and Development Authority needs to be much more proactive in educating people about the benefits and pitfalls of insurance mechanisms so that they can better manage their financial risks and in enhancing professionalism and ethical standards of service providers. 

It should also promote greater competition in both life and non-life insurance sectors. It should encourage product and process innovations, including micro-insurance and group insurance schemes, with a view to enhance access and affordability of insurance products for households, and assist them in managing livelihood risks.

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Booking Air tickets made easy through SMS

After movie tickets and cooking gas cylinders, now you can book your airline ticket through an SMS. And it's all so easy -- send an SMS to 6858 or 4242 saying, for example, 'FLY Delhi Mumbai 20 December'.

In 15 seconds, you will get a reply listing top 11 flight options with the lowest fare on top. Another SMS by you saying 'FLY book' will get you a reply promising a call from their executive, this time within 15 minutes. Alternatively, you could visit the website (www.flightraja.com) and complete the formalities. Your ticket is done!

And if all goes as planned, in a few months it will be possible to book a ticket through SMS without any human interface, says Ashwini Kakkar, partner, flightraja.com. According to Kakkar, 6 million mobile connections were added in India in October alone.

"Over 90 per cent of the bookings are single-ticket bookings and we would like to keep it simple for this segment," says Kakkar. For more complicated bookings, involving many passengers and many sectors, users will have the option to go through a call centre.

Says Vinay Gupta, CEO, flightraja.com, "At the moment, the service is routed through a call centre. However, the automated feature will be integrated very soon."

In fact, to make the human interface safer, the company will soon integrate an IVR menu through which the customer can feed in his credit card details using a mobile phone instead of speaking it out to a call centre executive.

Other mobile-based options are also available in the market. India's national carrier, Indian has teamed up with Reliance Infocomm to offer mobile bookings of domestic air tickets on the carrier. This offer though is limited to Reliance India mobile customers only.

Low cost carrier Air Deccan, too, launched a similar service earlier, but the daily bookings have not been that high -- "only 50-100 bookings a day", says Samyukth Sridharan, principal sales and marketing manager, Air Deccan. To access the service, a user needs to first register with Air Deccan.

Ashwini Kakkar claims that flightraja.com is already doing business worth Rs 10 lakh a day and by the end of this fiscal year they aim to get to at least Rs 1 crore a day through the service.

The firm also plans to add more products to the service in the near future, such as cruises, hotel rooms, packages and railway ticketing.

International air tickets and packages are a different proposition all together. For international package trips, travellers require visas which must be obtained offline. To handle this segment, flightraja.com is extending its network of franchisees in different cities from the existing 100 to 700 by March 2007.

The customers will be directed to the closest franchisee by a call centre. "In most cases, people want their packages customised, for which human interface is absolutely necessary," explains Gupta. Time to change

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Insurance for your Home

I shell out just Rs 10 every day to cover the valuables of my home." This was the quick response of Viswanathan Iyer, when asked why he took a home insurance. His residence has had a cover for the last five years. Iyer says: "I own a house in Mulund West, Mumbai, and have insured it - including valuables such as jewellery, television and other electronic items in the house - or Rs 20 lakh (Rs 2 million). My premium payout is Rs 3,240 a year."

Everyone would recall the deluge that wrecked Mumbai on 26 July last year. It is interesting to note that while motor claims were piling up, insurance industry says, claims for home insurance were few and far between.

Smart tip
Get discounts of 15-20 per cent on the premium by buying cover under four to six sections of the home insurance policy and above 20 per cent for coverage in more than six sections.

Most insurers say there has not been any drastic increase in the number of people taking home insurance this year, despite the experiences of the past year, and its penetration is still very small. Insurance Regulatory and Development Authority chairman C S Rao points out that the awareness about taking home insurance is low compared to life insurance and health cover. Most people don't know that the premium to be paid is considerably small for the value insured.

Does your home need insurance?

If your answer is yes for the following questions, then you would probably require an insurance cover for your home.

• Is the structure of your home worth over Rs 500,000? (The value of the building and not the market value of the property.)
• Does your home have valuable plate glass doors and windows?
• Do you own electronic gadgets worth over Rs 200,000?
• Is your house located in an area that is prone to the risks of floods, earthquakes or burglaries?
• Are you living in a rented house, but own high-value domestic and electronic appliances? Do you have expensive furniture?

Though Iyer has not made any claims, he continues to renew his policy every year. The 40-year-old man's line of reasoning is that with hard work he managed to build a home and acquire valuables, the loss or damage of which will be large. "I see it as Rs 10 a day, less than the minimum auto rickshaw fare. I earn over Rs 10 lakh a year and the premium payout is a small fraction of my income," he says.

If you are wondering why, despite its benefits, your agent is not pushing for a home insurance, here's your answer: the premiums are small and so are the commissions. And commission largely drives agents.

S S Gopala Rathnam, president (operations) Cholamandalam MS General Insurance, says the agent feels there is an opportunity loss in selling home insurance. He would rather choose to sell a cover that fetches him more returns. In fact, agents usually insist that customers choose more segments under the home cover so that the ticket size increases and becomes attractive for them. Enhanced cover also ensures discount for the customer. 

What can be covered

Home insurance can cover losses to the structure and contents of your home from any natural or man-made calamity. The disasters that can be insured against are fire, earthquakes, storms, cyclones, tempests, tornadoes, hurricanes, floods or inundation, lightning strike, explosion, landslides, impact by vehicles or aircraft, and bursting or overflowing of water tanks and pipes.

Burglary cover. Loss due to burglary or an attempted robbery of valuables such as jewellery and silverware can also be covered.
Alternative accommodation. In case the family is forced to shift to an alternative accommodation because of an insured peril, the cost of the additional rent will be taken care of.
Breakdown of domestic appliances. Home insurance covers the breakdown of ACs, and refrigerators. If there is accidental electrical or mechanical failure of domestic appliances, losses that can be repaired will be settled by repaying repair cost without applying any depreciation by the insurance company. But items that are over 10 years old will not be insured.

Benefits of taking home insurance

Cost of premium is small. The cost of the insurance premium in comparison with the value and cost of the structure and contents, domestic and electronic appliances, is less than one per cent.

Policy covers a range of segments. Home insurance covers almost all kinds of catastrophic risks, from damages arising from terrorist attacks to breakdowns of water tanks. The choice is yours - if you think your home is not going to be damaged by a terrorist attack, you don't need to cover it. In case you are living in a rented house, you can choose to insure only the contents. 

Covers cost of temporary shelter. In case of fire or damage to your home, which makes it unlivable, the cost of temporary rental for six months not exceeding Rs 1 lakh will be covered.

Buy it online. It is simple and easy to buy home insurance. You can buy it online as well. Just log on to any of insurance companies' websites and fill the necessary details to buy a policy.

How to claim

• Call the insurance company call centre or your agent immediately. Keep these phone numbers in the emergency list.
• Write a letter stating all the damages in detail and take a copy of it before sending it to the insurance company.
• Take photographs before cleaning up and salvaging what is left.
• Keep damaged material for proof of loss.
• In case of burglary, report it to the police.
• Ensure that you keep a copy of all information and receipts.

On The Platter
	Building (20 lakh)	Contents		Domestic				Premium
		(against fire,		Plate electronic			Personal
		burglary) (4.25 lakh)	Jewellery (1 lakh)	Glass (1 lakh)	appliances (1.5 lakh)	Computer -75,000	Accident (6 lakh)
Bajaj Allianz	1,000	1,169	1,000	1,000	1,125	-	900	6,194
Cholamandalam MS	1,000	425	1,000	1,000	750	750	350	5,275
ICICI Lombard	1,200	680	750	500	375	750	600	4,855
Royal Sundaram	1,200	1,275	1,010	1,010	375	773	-	5,643
Tata AIG	1,000	1,233	1,000	1,000	1,125	-	540	5,898
All figures in rupees; figures in parentheses denote insurance cover; The figures in bold are the cheapest option The segment and benefits under home insurance vary from company to company. The above table does not include the special discounts offered by insurers and service tax of 12.25 per cent.

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