RaagVamdatt.com

Back in India!

Tue, 22 Dec 2009 07:47:20 +0530

As many of you would be aware, I was in New York for the past 3 years. (Please check out �About the Author�) In fact, this website was started while I was there!

Now, I am back in India for good. I am sure I would be able to serve you even better now that I am in the country.

Some hiccups...

Regular readers would have noticed that the frequency of new articles has gone down in the past month or so. This is because I was in the process of winding up everything back in USA (which was especially difficult with an infant).

New articles would remain slightly infrequent for a few more weeks � while I am still setting up in India. (Right now, I don't even have an internet connection to publish the articles!)

You have always provided support and encouragement to me in times good and bad. I request you to bear with this for a few more weeks.

Thanks!

Other articles you might be interested in:

Always wondered what the MICR code in a cheque is, but didn�t know whom to ask?

Mon, 07 Dec 2009 21:01:37 +0530

Want to know the full form of MICR? Want to know the MICR code of any / all bank branches in India? Read on.

All of us have heard about the MICR code � it is present on all our cheque leaves. The MICR code is also essential for online money transfers.

But what does MICR stand for? What is its full form? How is it useful? Let�s find out.

Full form of MICR

MICR is an abbreviation for �Magnetic Ink Character Recognition�.

Ok, that is one mystery solved!

MICR on your cheques

The MICR code is a 9 digit code, which is printed at the bottom of a cheque.

Here�s how it looks:

Composition of the MICR code

A MICR code is unique to each bank branch. Thus, a MICR code can be used to uniquely identify any bank branch.

It comprises of 3 parts:

The first three digits represent the city (City Code). They are aligned with the PIN code we use for postal addresses in India.
The next 3 digits represent the bank (Bank Code)
The last 3 digits represent the branch (Branch Code)

Example 1

Let�s say you have an account in the Andheri (West), Mumbai branch of State Bank of India (SBI). What would be its MICR code?

City code for Mumbai: 400
Bank code for SBI: 002
Branch code for Andheri (West): 003

Thus, the MICR code is: 400002003

Example 2

Say you have an account in the Indira Nager, Bangalore branch of ICICI Bank.

City code for Bangalore: 560
Bank code for ICICI Bank: 229
Branch code for Indira Nagar: 013

Thus, the MICR code is: 560229013

If you have the MICR code, you can find out the bank name, branch and city by just reversing the process!

How a MICR code makes cheque processing faster

As we saw, MICR stands for �Magnetic Ink Character Recognition�. Thus, it is actually the name of the technology using which the code is printed. And therefore, the code is known as MICR code.

So, how does this MICR technology work, and how does it help?

On the cheque, the MICR code is printed using a special kind of ink or toner � an ink that contains magnetic material (usually iron oxide). The code is also printed using a specific font.

This ink is machine-readable due to the presence of the magnetic material (just like the strip at the back of a credit or debit card).

When the cheque is inserted in a reading machine or a cheque sorting machine, it can read the MICR code even if there are other marks or stamps on it. Thus, the machine can easily find out which branch the cheque belongs to.

This helps a lot in automating the cheque clearing process. And since this is automated, there is little possibility of any error!

Bottomline: Cheques get cleared faster, and you get your funds earlier!

List of MICR Codes of all bank branches in India

Want to know the MICR code of a particular bank branch?

Download the spreadsheet containing the MICR codes of ALL bank branches in India.

(Note: The file may take some time to download � it is 3.75MB in size)

http://rbidocs.rbi.org.in/rdocs/content/docs/67440.xls

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RaagVamdatt.com completes two years

Wed, 25 Nov 2009 10:41:44 +0530

RaagVamdatt.com completes two years of its existence today

Hello,

With your encouragement and support, www.RaagVamdatt.com completes two years of its existence today. The very first article on this website - Goal Based Investing - was written exactly 2 years ago on 25th of November 2007.

I'm sure this is just a small milestone considering the long journey ahead, but it is nevertheless an important milestone at this stage. Let me list a few important things that we have done together in this past one year:

The number of registered users crosses 8000

www.RaagVamdatt.com now has more than 8000 registered users. This number stood at 2600 exactly one year back - over 5400 users have registered themselves in this past year alone!

India's first Hindi website on personal finance launched

India's first Hindi website on personal finance - Aapka Paisa, Aapki Planning - was launched about a month back, and has received very good reviews and coverage. This website is currently in its initial stages, but would be at-par with this English version in about two months' time.

Website URL: http://hindi.raagvamdatt.com

Web-based financial planning service launched: My Financial Plan

The financial planning service of www.RaagVamdatt.com - My Financial Plan - was launched towards the end of June 2009. This service has received a very positive response, and has attracted many clients from all over India. In fact, it also has NRI clients from Dubai, Singapore and UK!

If you're serious about your financial health, I strongly recommend that you avail the service. You can find all the details about this service at My Financial Plan (http://www.raagvamdatt.com/myfinancialplan/)

Getting featured in Mumbai Mirror

The website got reviewed by Mumbai Mirror, a very popular mainstream newspaper. It got a very good rating of 4/5. The one thing that pulled rating down was a small issue with site navigation, which was promptly corrected after the review.

Redesign and relaunch of www.RaagVamdatt.com with improved functionality

RaagVamdatt.com got a fresh new look in June 2009. Apart from the better looks, there were many under-the-hood changes that improved the functionality and the overall user experience at the website.

You can read more about this at: RaagVamdatt.com � Redesigned, upgraded and relaunched

Launching the mobile version of www.RaagVamdatt.com

Now there is a mobile phone enabled version of www.RaagVamdatt.com that you can access from your cell phone even when you are on the move. You can check it out at: http://m.raagvamdatt.com/

Articles published in Dignity Dialogue

The article from this website are now getting republished in Dignity Dialogue, a magazine meant for senior citizens.

You can read more about this at: Articles from RaagVamdatt.com published in Dignity Dialogue

Interview published at RanjanVarma.com

I was interviewed by Ranjan Varma, who has been blogging about personal finance for a long time.

You can read more about this at: Interview published at RanjanVarma.com

Website down for 10 days

Due to some technical problem, this website was non-functional for about 10 days in August 2009. But after it started functioning again, it soon regained its popularity - thanks to your support!

Your feedback

This is a short list describing what happened in the past one year at this website.

But what do you think about the website? How has your experience been? What were the things that you liked and disliked? What would you like to see on this website going forward?

Please let me know through your comments below.

The road ahead

As I mentioned earlier, there is a long journey ahead. I have planned many new features, products and services from www.RaagVamdatt.com.

Stay tuned!

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One more avenue to buy mutual fund (MF) units � Stock Brokers

Tue, 17 Nov 2009 20:47:49 +0530

SEBI has announced that now MFs can be traded through stock exchanges. You would be able to buy them through stock brokers.

So far, you were able to but mutual funds (MFs) either through an MF agent, or directly from the fund house.

Now, the Securities and Exchange Board of India (SEBI) has announced that you would be able to buy MFs even from registered stock brokers.

The stock brokers intending to sell MFs would have to clear the certification exam mandated by AMFI (Association of Mutual Fund Investors).

MFs would trade on stock exchanges

MFs would now trade on the stock exchanges. They would not be listed like stocks � that is, their price would not change during the day. They would merely be listed on the stock exchanges � this means that stock brokers can deal in them.

This opens up one more distribution channel for MFs � thus, you would have one more avenue to buy MFs.

Close ended MFs

Don't confuse this with close ended MF schemes � they are already listed on stock exchanges.

Now, even open ended MF schemes would trade on the exchanges.

(To know more about open ended and close ended MFs, please read "Close Ended vs Open Ended Mutual Funds (MFs)")

How does this help you?

Stock markets have a very wide reach � there are more than 2,00,000 stock exchange terminals in more than 1,500 towns and cities.

Since MFs would be available through all these terminals, they would reach a much wider population.

(Should you be buying stocks directly, or invest through MFs? Read "Direct investment in Stocks versus Mutual Funds (MFs)")

Also, if you want to buy MFs, this would ensure that there is someone close by selling MFs!

Dematerialization of MF Units

SEBI has also called for dematerialization (demat) of MF units. The MF units traded through stock exchanges would need to be in demat form.

(Even today, you have an option of holding your MF units in demat form)

This means that you would be able to purchase and sell MF units only if you have a demat account.

Charges

The announcement by SEBI is quite recent, so there is not enough clarity on the charges involved.

However, it is expected that the brokers would levy a small fee on the transactions done through them. This could be the same as the transaction charge levied on share transactions � 0.25% to 0.50% of the transaction value for both buying and selling.

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Interviewing Manish Chauhan from Jagoinvestor.com

Mon, 09 Nov 2009 09:51:03 +0530

Manish Chauhan writes about financial planning at Jagoinvestor.com. Here's his interview that I conducted through email.

If you have been reading about personal finance and financial planning on the internet, you probably know Manish Chauhan.

He is one of the few people who has been writing about financial planning for a long time (at www.jagoinvestor.com), and is furthering the cause of the small investor � a cause that is very close to my heart as well.

Since both of us are working towards the same goal, I though I would interview him, and share it with you. So, here is the email interview.

Since when have you been writing about personal finance?

I have been writing on Personal Finance for more than 2 yrs now . I started in Dec 2007 . I like to call it Financial Planning rather than Personal Finance , because I write not only on Products and their reviews , but mostly on Psychology required for successful Financial Planning and what a common person lacks , How he perceives any Financial information and thinks about it .

What prompted you to start writing about personal finance?

I was aware very well that Most of the Indians lack the ability and interest to handle their Finances . India is a huge market , we dont lack in saving ability but we lack severely in the art of Investing and how to plan our Financial life . We dont plan things well and thats the worst part . I started writing one day and that was the start . I kept writing on different things, Readers came in appreciated and now we are strong community.

What keeps you motivated to keep writing every week?

Mainly I would say

My Passion for Financial Planning and the overall subject .
My readers who appreciate it and love my writing
Career opportunity

Can you suggest a couple of articles on your blog that people absolutely new to personal finance should read?

Some of the must reads are

Recently I wrote an Article which was read a lot and explains the current Situation and problems of Indians (Avoid bad english) Why it makes sense to Kill yourself If you dont do your Financial Planning

Articles are categorised at : http://www.jagoinvestor.com/2009/05/archives.html

What is the one biggest mistake you see people making when it comes to personal finance?

I feel the biggest mistake people make is that They dont value its importance in their Life , They dont understand that Its extremely crucial in their life . I personally feel that by doing you Financial Planning , your success in your proffessional life , Personal Life becomes more valuable and easy because an important part of your life is taken care of and now you are free to take charge of other areas . Just imagine how great is a situation when you exactly know

How your Child Education is taken care of
How are you going to enjoy your life after retirement.
How you are going to manage all your Loans , Buying Car , going on vacations .

Financial Planning is all about �preparedness� .

And what would be the best way to not make such a mistake?

I would say this will happen when you develop some interest and try to learn about these things . Read some good blogs , magazines , Hire a Financial Planner and have your Financial Planning done , Its totally worth to pay your Financial Planner .

How can people utilize various personal finance / finance websites present in India?

Currently There are lot of websites which provide learning materials on Personal Finance , But Truly speaking , very few are providing quality content and just reading some of them is enough . People concentrate a lot of data , products , numbers .. They should rather concentrate on Psychology , Wisdom required for Good Financial Planning .

For Example , Concentrate on understanding that a Term Insurance is Important , once you understand this take a good term Insurance , but dont kill yourself in finding out the cheapest one . I am not saying you should not find the best policy , all I am saying is that its some thing for which people put more than required effort . Choose a good long performing mutual fund . Dont try to find the best one , because there is none .

Is there any specific service / tool you would like to recommend from any of these websites?

There are some good tools

Mutual Fund : http://www.valueresearchonline.com
Insurance : http://www.apnainsurance.com/
Blogs : http://www.subramoney.com/ and http://www.shyamscolumn.com
Home Loan : http://www.bankbazaar.com/

What do you think is lacking in today's personal finance websites? What can be done to improve them?

I think most of them are doing ok , but �Simplicity� is lacking . People want very very simple writing , they come to read and scan things , not concentrate a lot and try to understand . They need examples , tables , pictures etc to learn in a better way . That part is still lacking , Apart from that �Quality Content� is lacking .

The main aim has to be to �empower common people with knowledge� so that they can take their decisions themselves . I am not saying that they can do professional Financial Planning themselves , but they should be able to think in a right way .

Thanks
Manish Chauhan
http://www.jagoinvestor.com/

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RaagVamdatt.com gets featured in Mumbai Mirror � getting a very positive review

Fri, 06 Nov 2009 09:02:36 +0530

RaagVamdatt.com was recently reviewed in Mumbai Mirror, and received a very positive review

On Nov 2, 2009, Mumbai Mirror reviewed RaagVamdatt.com for its readers � and it is full of praises! In fact, a rating of 4 stars (out of 5) was assigned to the website.

You have always known and trusted RaagVamdatt.com for its practical financial advise in simple-to-follow language. Now, there is an affirmation from yet another main-stream publication.

What exactly has been said?

Here is what Mumbai Mirror has to say about RaagVamdatt.com:

�...breaks down jargon and helps you understand your money better�

�If you are new to the world of finance, or simply need a few pointers in the right direction, here is a site that is bound to help you out.�

�...articles which are always well-researched and well-written�

�Every week, Vamdatt writes a blog post on his site that demystifies one of the many terms encountered in daily financial planning that can perplex the average Joe�

The Negative (and why only 4 stars and not 5!)

Mumbai Mirror did not like the part of site navigation in terms of finding the most popular articles � you needed to scroll all the way down to see the list of most read articles.

I could immediately agree with that view � and assuming that you too would find this a little annoying, I have rearranged the navigation structure. Now, the list of the most popular articles can be found right below the list of categories.

(It's so true that you can't see your own flaws � at times, it needs a third person to point out the issues!)

A big thanks

I sincerely thank Mumbai Mirror for reviewing this website and recommending it to its readers with a very high rating.

You can download the review here, or can visit the webpage �Raag Vamdatt - Financial planning demystified � a weekly blog that breaks down jargon and helps you understand your money better�.

(Coincidentally, this review was published on the same day on which the Hindi edition of RaagVamdatt.com �Aapka Paisa, Aapki Planning� was launched)

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Launching India�s first Hindi website on Personal Finance and Financial Planning

Mon, 02 Nov 2009 09:25:52 +0530

I am delighted, and very proud to launch the Hindi version of �RaagVamdatt.com � Financial Planning Demystified�, called �RaagVamdatt.com � Aapka Paisa, Aapki Planning�. It is India�s first Hindi website on Personal Finance and Financial Planning.

Hello,

I am delighted, and very proud to launch the Hindi version of �RaagVamdatt.com � Financial Planning Demystified� at http://hindi.raagvamdatt.com

The Hindi website is called �RaagVamdatt.com � Aapka Paisa, Aapki Planning�

India�s first Hindi website on Personal Finance and Financial Planning

�RaagVamdatt.com � Aapka Paisa, Aapki Planning� is India�s (and therefore, world�s) first Hindi website on financial planning.

Unfortunately, till now there was no website in Hindi that comprehensively wrote about all matters related to personal finance and financial planning.

Yes, there are websites giving out business news, and there are websites focusing on stocks / equities. But there is no website dedicated to the personal finance space.

�RaagVamdatt.com � Aapka Paisa, Aapki Planning� is my humble attempt at filling this space and providing excellent quality content on financial planning to the Hindi speaking people.

It is my fond hope that you would like the Hindi version as much as you have liked the English version of RaagVamdatt.com

The Content

The Hindi version of RaagVamdatt.com would start with the following features:

Articles
Downloads (forms, sample spreadsheets, etc)
Polls

The functionality would be gradually scaled up, and more features would be added.

Articles

The articles that I write form the dominant portion of the English version of RaagVamdatt.com. This is something of great interest to you, my readers. Therefore, articles would be the first to be offered in the Hindi version.

To begin with, all the articles from RaagVamdatt.com � except for news related articles � are being translated in Hindi, and would be published gradually in about 2 months time. (This would be a total of about 155 articles written in English over a period of 2 years)

Once this is done, all subsequent articles would be published in English and Hindi simultaneously, without any delay.

Downloads

Downloads would be available to registered members of the Hindi website. (This registration is different from the registration for RaagVamdatt.com)

Various spreadsheets used as examples in different articles would be available for download here.

Apart form this, various forms � like income tax return (ITR) forms, provident fund (PF) forms, post office scheme forms, etc. would also be available for download.

Wherever the forms are available in Hindi, I have put Hindi forms for download. If Hindi version of any form is not available, it would be available for download in English.

Polls

The Hindi version would run the same poll as the English version � but in Hindi.

The Translation

Please note that the translation of the articles has not been done using any software or tool (like Google translate). The articles have been hand-translated, so that the meaning of the article is well conveyed even in Hindi � in the same easy-to-understand manner that RaagVamdatt.com is famous for.

The translation has been done by Anumeha, and has been proof-read and edited by me.

Your feedback

Please visit the Hindi version of RaagVamdatt.com at �RaagVamdatt.com � Aapka Paisa, Aapki Planning�, and let me know your opinion about it through your comments below.

Thank you for all your support, and hoping for the same for the Hindi version as well.

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An introduction to Universal Life Policy (ULP) for life insurance

Wed, 28 Oct 2009 09:22:35 +0530

Since IRDA has approved the introduction of ULPs, we can expect a flood of such products in the Indian market. Here is all you need to know about this type of life insurance policies.

There are many types of insurance policies available:

Of course, the best form of insurance is term insurance (check out �Term policy (term insurance) is the best policy�). However, if you have decided to invest in an insurance + investment type of a policy, should you invest in Endowment or a ULIP?

Obviously, both these have their advantages, and disadvantages. However, a Universal Life Policy (ULP) tries to combine the best of endowment plans and ULIPs.

What is Universal Life Policy (ULP)?

The hallmark of a ULP is flexibility. You can change its:

Premium amount
Tenure (also called tenor or duration)
Sum assured

As you can see, none of these benefits are offered by the traditional policies. Thus, a ULP brings something totally new to the market!

Features of a Universal Life Policy (ULP)

Premium can be changed

The amount of premium that you pay for your policy can be changed during the life of the policy. This gives you great flexibility to adapt your insurance policy to your changing incomes.

(Initially in India, the premium amount may not be allowed to be changed. However, you should be able to change the premium paying frequency � between yearly, half yearly, quarterly and monthly � which too gives you some flexibility)

Sum assured (SA) can be changed

Again, this is something that gives you tremendous flexibility. You can change the sum assured depending on the changes in your insurance needs � depending on your income, your dependents, etc.

(Please read �How much is your life worth - How much insurance should you buy?� for more)

Tenure can be changed

Just like the premium and sum assured, the duration of the policy can also be changed midway while the policy is already in force.

No cancellation if premiums discontinued

Even if you stop paying the premiums, the policy would not get cancelled. The policy would be kept alive and in force, although with a reduced sum assured.

No flexibility in investments

Here, a ULP would be more like a traditional endowment plan � you would have no control over the investments. The investment manager of the policy would decide where your money is deployed.

Unlike a ULIP, you would not be able to choose from different options like maximizer (equity focused), balancer (mix of debt and equity), etc.

(Check out �ULIP v/s Endowment Plan for Life Insurance� for more)

No transparency of investments

Again, like endowment plans, you wouldn�t know where your money has been invested, and how much return it has obtained. You would just know the �bonus� declared by the insurance company from time to time.

No fund management charge

Since you would not be specifying where your investment would go, there would be no fund management charge deducted from the premiums. This is a big relief compared to ULIPs!

Universal Life Policy (ULP) in India

So, when can we expect ULPs in India?

Quite soon! The Insurance Regulatory and Development Authority (IRDA) has approved application for offering ULPs by some life insurance companies. So, we can expect them any time now!

The companies that should be launching ULPs initially are Bharti Axa Life Insurance and Max New York Life.

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Cost To Company or CTC salary: Understanding and Calculation

Wed, 21 Oct 2009 08:41:03 +0530

What is Cost to Company or CTC salary? How is it calculated? If your CTC package is so high, why do you get so little in hand? This article explains it all.

Your company offered you a salary of Rs. 6 Lakhs per year. That means you should be getting Rs. 50,000 in hand every month. Even if you consider income tax, you should be getting about Rs. 40,000 in hand.

But you get only Rs. 32,000 in-hand every month! Why? Where did the promised money vanish? Is your company cheating you?

No! It is because the company promised you the salary as Cost to Company, or CTC.

So, what exactly is CTC?

The concept of Cost to Company (CTC)

Simply speaking, CTC is the amount that you cost your company. That is, it is the amount that the company spends � directly or indirectly � because of employing you.

Thus, it is the money given to you (your in-hand component), plus the money spent because of you.

You�ll understand this better while we discuss the various components of your CTC salary, so let�s jump into it right away! We will also use an example parallel to the discussion, so that you can understand the concept of CTC better.

Components of Cost to Company (CTC) Salary

In �Understanding components of your salary�, we saw the various components of your in-hand salary.

These are:

Basic
Dearness Allowance (DA)
Incentives or bonuses
Conveyance allowance
House Rent Allowance (HRA)
Medical allowance
Leave Travel Allowance or Concession (LTA / LTC)
Vehicle Allowance
Telephone / Mobile Phone Allowance
Special Allowance

All the above are a part of your in-hand salary, and therefore, are a part of your CTC pay as well.

Example: Let�s understand this using a simple example. Say your basic is Rs. 15,000 per month, DA is Rs. 10,000 per month, you get conveyance allowance of Rs. 800 per month, and you get HRA of Rs. 4,500 per month. So, your package so far is Rs. 3,63,600 per year.

Now let�s look at some of the other components of your CTC pay � the parts that inflate your CTC package but may not be actually given to you!

Company�s contribution to Provident Fund (PF)

It is mandatory for you to contribute 12% of your basic towards provident fund (PF). Your employer makes an equal contribution (12% of your basic) to your PF account.

(Please read �Provident Fund (PF) and Voluntary Provident Fund (VPF)� to know more about provident fund)

So, although this amount is not given out to you every month, for your company, it is an expense that it incurs on you every month! Therefore, this forms a part of your CTC pay.

Example: 12% of your basic is Rs. 1,800 per month. That is, Rs. 21,600 per annum. Your CTC package becomes Rs. 3,85,200.

Reimbursements

Various reimbursements that you get from your company can also form a part of your CTC package.

This includes reimbursement of:

Medical bills
Phone bills
Magazine subscriptions
Book purchases, etc.

Example: Say you get reimbursement of medical bills of upto Rs. 15,000. So, your CTC package becomes Rs. 4,00,200.

Life Insurance and Health insurance

Most respectable employers provide free health insurance cover to their employees and their dependents. Some companies also provide life insurance for their employees free of cost.

The premium amounts paid for such insurance on your behalf can be included in your CTC salary.

Example: Say you get a health insurance cover of Rs. 1 Lakh for yourself and your family. The premium for this is Rs. 2,000. Thus, your CTC package becomes Rs. 4,02,200.

Medical Facilities

Many companies have in-house health centers, hospitals or other health care facilities where medical care is provided free of cost to employees.

Companies work out a per-employee cost for such facilities, and can include that in your CTC pay package.

Transport Facilities

Many companies provide free transport facility to their employees from their place of work to the job location.

The cost of such transportation can be added to your CTC package.

Subsidized Meals

Many companies run canteens or cafeterias for their employees, which provide subsidised meals to the employees. Such subsidy can be included in your cost to company package.

Example: Let�s say your company provides you lunch for Rs. 10, and the actual cost of that lunch is Rs. 25. Thus, there is a subsidy of Rs. 15 per meal.

For 21 working days in a month, this is Rs. 315. Or, Rs. 3,780 per year. Thus, your CTC package becomes Rs. 4,05,980.

Taking it too far

The components of your CTC salary sound reasonable so far, right? After all, this is the money that you get in one form or the other.

But some companies take the concept of cost-to-company too far! Look at the following:

Office phone bill

The bill for the office phone that you use can be included in your CTC salary too.

Office space rent

Shocked? Its true! There are many companies � especially large investment banks � that include your office space rent in your CTC package!! Yes, it defies logic, but it is true!

Example: Let�s say your office is in Churchgate in Mumbai. Your have a small cubicle, say 6 feet by 8 feet (48 square feet). Let�s say the going rate for rent for office space in that area is Rs. 200 per sq. ft. per month.

What is the cost of your cubicle in that case? Its Rs. 200 * 48 = Rs. 9,600 per month, or Rs. 1,15,200 per year.

When this is included in your CTC, your overall CTC package becomes Rs. 5,21,180!

A side note: Remember this when you read about the whopping, exorbitant salaries paid out to fresh management graduates (Like the IIM Ahmedabad MBAs)! Their large salaries might include the office space rent as well!!

A note on government salaries

We often hear people say that the salary of government employees is quite low.

Although there is truth in this, government salaries wouldn't seem too less if we look at it from a �CTC� point of view.

When we talk about government salaries, we only talk about the �in-hand� component. But we forget that on a cost-to-company basis, it can be quite substantial.

What extras do government servants get? Here's a sample list:

The 12% of basic that the government deposits in their PF accounts, just like private companies
Membership of government clubs or gymkhanas
Free stay at various circuit houses and government guest houses
Free telephone connection at home
Free car with driver
Reimbursement of newspaper bills
Free use of many libraries
In case of defense personnel (Army / Navy / Air Force), a huge subsidy on items bought from their �canteens� (like groceries, appliances, etc.)

When these things are taken into account and salaries of government employees is considered on a cost to company (CTC) basis, it won't seem too less compared to the private sector!

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Restrictions on usage of ATMs of other banks

Tue, 13 Oct 2009 05:57:08 +0530

Although free third party ATM withdrawals were announced with much fanfare in April 2009, some restrictions are coming on such transactions from 15th October 2009. Read on for more details.

In April 2009, the Reserve Bank of India made third party ATM usage free. This was true for both withdrawals and balance enquiries.

(Check out �Free cash withdrawals from all ATMs in India from 1 April 2009� for more)

That is going to change from October 15, 2009.

The background

The April directive by the Reserve Bank of India (RBI) stated that transactions on ATMs owned by banks where you did not have an account (third-party ATMs) were free.

That is, any number of withdrawals � for any amount � were totally free for customers. Account balance checks were free too.

The restrictions

Now, at the insistence of banks, and following the recommendations of the Indian Banks' Association (IBA), there are some restrictions coming in.

Starting October 15th, there would be a cap on the free transactions. You would be:

Allowed only 5 free transactions in a month. Subsequent transactions would be charged (the proposed rate is Rs. 20 per transaction)
Allowed to withdraw a maximum of Rs. 10,000 while using the ATM of a third-party ATM

Also, this facility would be available on to savings account holders, and not to current account holders.

Some exceptions

Of course, the banks would be allowed to be more liberal than this.

Thus, for example, a bank can choose to offer unlimited free third party ATM withdrawals to its �premium� customers.

The reason behind this change

When you withdraw money from a third-party ATM, you bank has to pay some amount (around Rs. 18 to Rs. 20) to the other bank for the use of its ATM. Therefore, the banks have been insisting on limiting these transactions to a reasonable number.

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