Category: Knowledge and Concepts

Model Tenant Act, 2021 is very soon going to be a reality in India and it’s mainly to set up the rules and protect the rights of tenants and property owners from each other.

The rental market of properties is a very vibrant and deep market in India and every year millions of people rent out properties (residential and non-residential) in India.

At one end, tenants think that property owners are bloodsuckers, who just want to withhold the security money at any cost and try to dominate them. On the other hand, property owners feel tenants are also horrible who do not care for properties and do a lot of damage which forces them to keep enough security deposit with them.

10 Important Rules under Model Tenancy Act 2021

Many times, though an agreement is made legally, on the ground level things don’t work out and there is a lack of professional relationships. This Model tenancy Act 2021 is trying to exactly solve this and wants to lay down enough guidelines, rules which will help both parties.

Here are some of the most important rules you should be aware of the model tenancy act, 2021

1. Heavy Penalty if the tenant does not vacate premises on time

Once the agreement is over, there is a maximum of 6 months of extension on the same conditions and rules which are mentioned in the agreement. But if even after this 6-month extension, (or if the tenancy is terminated by notice or order) the tenant does not leave the premises, then there are heavy penalties levied on them. They will have to pay double the rent for the first 2 months, and then 4 times rent for another 2 months and then 6 times the rent for another 2 months.

2. The security deposit can’t exceed more than 2 months’ rent

As per the law, the security deposit which homeowners take from tenants can’t be more than 2 months of rent. In cities like Bengaluru, one has to deposit the security deposit as high as 10-12 months of rent, which many tenants complain about. However, at the same time, a lot of homeowners feel, it’s too little money to cover the risk of having the premises damaged by the notorious tenants. Note that this limit of 2 months’ rent is only for residential properties. In the case of non-commercial premises, the security deposit can be a maximum of 6 months’ rent.

On Twitter, Krish gave his real-life example which shows us how 2 months of the deposit is not enough in real life for property owners

All wood work gone, taps broken, geysers gone, electrical wiring got burnt, dampness & cracks on the walls, painting peeled off, tiles broken in bathrooms, huge dust in lot of places.

I was abroad and couldn’t visit. Full interiors redone and sold off for peace of mind.

— Krish (@Krish15178490) July 8, 2021

3. Separate Rent authorities, courts & tribunals set up in each district

A separate 3 tier system will be created in each district for handling the cases related to the rental market. A civil court will not have jurisdiction over these cases which come under Model Tenancy Act. At the first level, there will be rent authority, then a rent court and finally a rent tribunal will be set under each district. This will make sure that a separate resolution system will be set up for these things.

4. Written Agreement is mandatory

Now a written agreement is mandatory when any premise is given on rent. I guess anyways most of the people were making a proper agreement, but now it’s a law in itself. This agreement is also to be submitted to the concerned rent authority within 2 months of the agreement date. There will be some digital platform that will be set up for this as per the current wordings.

5. The landlord cannot stop the essential supplies of the premises

It mentioned that the property owner cannot stop the supply of any essential supply like water, electricity etc. just because there is some dispute with the tenant. In real life, it’s seen that if there is any dispute or argument, the homeowners take these steps to “teach a lesson” to the tenants. It is mainly to protect the rights of tenants as far as they have occupied the premises. If the homeowner still does this, the tenants can complain to the rent authority and order can be passed by them to restore the services and also put a penalty on the homeowner

6. No structural changes or sub-letting of property

The tenant cannot make any structural changes in the property, nor they can sub-let a portion of the property to someone else without the consent of the property owner. If sub-letting is to be allowed, a supplementary agreement has to be made and even that has to be submitted to the rent authority

7. Eviction of the tenant on certain grounds

If the tenant has to be evicted, then the property owner can’t just appear one day and order the eviction. It has to be done only by seeking eviction through the rent authority and it can be done on certain grounds like

• refusal to pay the agreed rent ;
• failure to pay rent for more than two months;
• parting of possession of part or whole of premises without the written consent of landlord;
• misuse of premises even after receiving written notices to desist from such misuse; and
• structural change by the tenant without written consent.

8. Rent Revision can happen only as an agreement

The rents can’t be increased arbitrarily now, it has to happen only as per the agreement which was written and agreed on. This will help the unorganized rental market where many times, homeowners increase the rent many times just to make sure people leave the house on their own.

9. Respect of Privacy and Rights of Tenants

The law also tries to establish the fact that once the tenant has occupied the house, the property owner can’t treat them in the wrong way and can enter the premises anytime without notice just because of the fact that they are the owners. They have to inform that tenant about their visit 24 hrs. before the entry (through an electronic medium). No doubt that this is not applicable if your relationship with the other party is cordial and friendly. This point is mainly there to protect their rights and privacy.

10. Roles and Responsibilities of both parties

The law also defines the roles and responsibilities of landlords and tenants and tells what has to be fixed by whom. For example, It is the tenant responsibility to do most of the repairs and replacement of small components like Wash Basic Repair, Taps, switches and sockets. On the other hand, the landlord is responsible for the whitewashing of walls (hello Bengaluru). In the 2nd schedule of the act, all the details are given which I am putting below

Important Points

• These rules will not be on a retrospective basis and will not impact the old agreements. It’s only for new one’s
• These rules do not apply for premises like hotels, lodges, or any central or state govt owned properties, or even premises owned by corporates, universities or religious entities etc

Download the draft in English

Download the draft in Hindi

Will Model Tenancy Act 2021 really work on the ground level?

Many people raised the point of this act will really work at ground level or not. One person said to me on Twitter that the Indian rental market is a seller’s market and all these laws won’t work, as property owners will also find some other way to get away.

I feel that over time, the law will get implemented, if not in short term. The country is huge and any law like this takes a lot of time to get into the system. But the good part is that at least govt is thinking about this issue and trying to fix things. The law may not be 100% perfect, but things get amended over time and that will happen with this one too.

One feeling which I was getting is that the law is trying to micro-manage many things and in real life, I think it should have not done that.

What do you think about this new law? Please share your opinion in the comments section below

Today I will tell you about loan against property (LAP)

If you have a property that is free from any loan, then you can take a loan by keeping that property as collateral

Loan Against Property (LAP)

A Loan against Property (LAP) is a secured loan availed against a commercial or residential property kept as collateral with the lender. As the funds come with no end usage restriction, borrowers can utilize the funds for various purposes such as business expansion, weddings, child’s education, etc.

Benefits of LAP –

• Simple approval process
• Attractive interest rates
• Continuous ownership
• Easy and hassle-free documentation
• Optimum use of a property
• Claiming the interest as expenses (only for business person)

Eligibility criteria for LAP

A loan against property is offered to the following individuals –

a) Salaried – An individual who is in permanent service in the government or a reputed company. Further, he/she should be above the age of 24 years at the time of loan commencement and up to the age of superannuation.

b) Self-employed Businessmen – Any individual filing Income Tax Return (ITR) and who is over 24 years of age at the time of loan commencement and up to 65 years at the time of maturity.

c) Self-employed Professionals – Professionals such as doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretaries, and management consultants can apply. The age criterion is similar to that of self-employed individuals.

Documents required for LAP

[su_table responsive=”yes”]

Salaried Individuals	Self-Employed Professionals/Businessmen
Application form, photograph attached	Application form, photograph attached
Valid photo identity (such as Voter Id card, Passport, Aadhaar Card, Pan Card, Driving License)	Valid photo identity (such as Voter Id card, Passport, Aadhaar Card, Pan Card, Driving License)
Proof of current residence	Proof of current residence
Latest salary slips (minimum 3)	Proof of business existence, Certificates of educational qualifications
Form 16	For Professionals – Last 3 years IT returns (self and business), Last 3 years Balance Sheets and P&L statements. For Businessmen – The business profile, Last 3 years IT returns (self and business), Last 3 years Balance Sheets and P&L statements. List of Directors and Shareholders with their individual shareholding certified by a CA / CS in case of the business entity being a company. Memorandum and Articles of Association of the Company. A partnership deed in the case of the business entity is a partnership firm.
Bank statements of the last six months	Bank statements of the last six months – both business and personal in case of businessmen
A cheque for processing fee	A cheque for processing fee

 

[/su_table]

FAQs –

What are the types of properties against which LAP can be taken?

• Self-Owned and Self-Occupied Residential Property
• Self-Owned but Rented Residential Property
• Self-Owned Piece of Land
• Self-Owned Commercial Property
• Self-Owned but Rented Commercial Property

Can I take a loan against the property for any reason?

Loans against the property can be taken for the following purposes. They are as follows –

• For Business Expansion
• Getting your son/daughter married
• Sending your son/daughter for higher studies abroad
• Funding your dream vacation
• Funding medical treatments

What is the maximum loan amount a person can get in LAP?

The maximum loan amount a person can get against LAP is up to Rs 25 crore. However, the LAP should not exceed above 60% of the market value of the property. The maximum loan availed will vary from bank to bank.

What is the minimum credit score required to get a LAP?

The minimum credit score required to get LAP is a CIBIL score of 750 and more.

What can be the maximum repayment tenure and interest rate of the LAP?

The maximum repayment tenure of LAP is 15 to 20 years. Whereas the interest rate will vary from bank to bank but the interest rate will range somewhat between 9.80% p.a to 16.60% p.a.

Conclusion –

This was all that I wanted to share in this article. You all can post queries in the comment section.

Shall you buy a single big health insurance policy or divide it between two policies (Base cover + a super top-up policy) for a cheaper premium?

The whole insurance industry is busy promoting and selling super top-up policies as a “cheaper way of upgrading” your health insurance cover. But no one is educating investors on the limitations of such combo or exactly why they are cheaper compared to a single cover.

Today, I will do that to the best of my abilities.

Investors have bought various combinations of base plan + super topup plan

• 5 lacs + 5 lacs
• 5 lacs + 10 lacs
• 10 lacs + 10 lacs
• 3 lacs + 7 lacs
• 10 lacs + 20 lacs

and many more…

Recently, we also saw health insurance policies of “Rs 1 crore” sum assured for unbelievable premiums and many investors have also opted for those. Basically, they are simply a combo of Rs 5 lacs + 95 lacs cover (with 5 lacs deductible).

Was that a great choice?

Let’s dive deeper!

Let’s start with an example!

A family of three people (with age 37 yrs, 36 yrs and 6 yrs) wants to buy a 25 lacs health insurance cover. They can do two things

[su_table responsive=”yes”]

Option	Policy	Premium
1st Option	Buy a single policy of 25 lacs sum assured (Max Bupa Reassure as an example)	Rs 28,091
2nd Option	Buy a base policy of 5 lacs (max Bupa reassure) with a premium of 15,104 And Buy a super topup policy of 20 lacs with 5 lacs deductible (Max Bupa Recharge Plan) with a premium of Rs 2,803	Rs 17,907

[/su_table]

In this case, the premiums of the combo (2nd option) is 37% cheaper.

Most of the investors think that both the policies are a “25 lacs cover policy” and the 2nd option is exactly the same as the 1st option but with a cheaper premium.

This is obviously not true!

How is it possible that you get the exact same thing, but with a cheaper premium?

If a combo is cheaper, surely it will also have its own limitations or will fall short of in some situations? That’s exactly what we are going to look at today.

Disclaimer – “Super Top-up” policies are a great choice

I don’t want to sound against super topup plans. They are a wonderful product and have a great role in health insurance, but problem is that people are buying them as a replacement for a strong base cover policy and living in the illusion that they are getting the exact same deal as a big cover.

Let’s start to get into details now.

1. Two Claims instead of a single claim

What does a person wish for at the time of a health insurance claim?

The answer is a smooth and hassle-free claim experience. 

I have already made 3 different claims (2 in my own policy and 1 in my father in law policy) in the last few years and hence I can tell you that the claim process is something you dont want to complicate.

When you have a single policy, it means a single claim each time.

What happens when you have a combo plan? Let’s see!

If both policies are from the same insurer

If the base policy and super topup cover are from the same company, then it’s quite a smooth and seamless process, as they can internally cross-check things and coordination is much better. Basically, they have to technically anyways settle both claims, so they will combine them and process the whole thing faster and easily.

If both policies are from a different insurer

However, if both your policies are from different insurers, then it can get complicated and confusing. Don’t worry, you are not losing any money here, but surely it’s a bit of hassle and delay in follow-ups and coordination if the super topup plan gets triggered (which will happen when your base plan is not large enough). Also,

• You will have to keep hold of 2 health insurance cards
• Dealing with 2 claim forms especially for pre & post hospitalization claims (even in case of a cashless claim)
• Communication for 2 policies (this may be easy when the insurer is the same)
• And finally, in case of reimbursements, more documentation (hospital bills/prescriptions)
• With 2 insurers, there may also be a wait time involved for getting the xerox of the bills/claim settlement letter

Also, imagine the scenario of how your family will be able to claim if you yourself will get hospitalized (due to any emergency). Will your spouse/family have enough understanding to follow the intimation and claim process from both the policies.

2. Lower Coverage due to NCB missing in Super topup

Contrary to popular belief, the combo (base + super top-up) gives you a lower coverage compared to a single large cover, simply because of the NCB component which many do not consider!

Surprised?

Almost all the policies come with the NCB feature (No Claim Bonus), where your sum assured keeps going up for every claim-free year. Here are some of the examples

[su_table responsive=”yes”]

Policy	NCB
Care Insurance	10% increase in sum assured up to a maximum of 50% of sum assured
Max Bupa Companion	20% increase in sum assured per year up to a maximum of 100% of sum assured
HDFC Ergo Optima Restore	50% increase in sum assured per year up to a maximum of 100% of sum assured

[/su_table]

Now let’s see a case.

Assume a person wants to buy a policy with a sum assured of 20 lacs. He has two options

[su_table responsive=”yes”]

Option	Option 1 – Single Cover	Option 2 – Combo
Combination!	The single policy of 20 lacs	The single policy of 5 lacs (base plan) Super Topup cover of 15 lacs (with 5 lacs deductible)
NCB Benefit	20% each year (up to 100%)	20% each year (up to 100%) applies only on the base plan NCB feature is NOT applicable in Super topup policies
Total Sum Assured at the start (when you buy policy)	20 Lacs	20 Lacs
Total Sum Assured after 5 yrs (claim-free years)	40 lacs (base policy X 2)	25 lacs (base policy X 2 + super topup)

[/su_table]

Now you understand why the premiums for super topup cover is less than the single large cover.

Here is the pictorial representation of the above example

So, you can see how after a few years there will be a gap of 15 lacs in sum assured in the combo plan. Now do the maths for a total cover of 10 lacs. What will happen if you divide it into a 5+5 combo?

3. Lower Coverage due to Recharge Benefit (2 large claims in a single year)

There is something called “Recharge benefit” in health insurance policies these days, which refills your policy again up to the sum assured when the sum assured reduces due to any claim. Like if you have a 10 lacs cover, and you claim for 4 lacs, then the policy will come down to 6 lacs, but then due to recharge benefit, the sum assured will again rise to 10 lacs (the added sum assured can not be used by the same person for same illness for which he/she claimed)

Now, let’s imagine a case

Assume, that in the worst case there are two big claims in the same financial year. Like what happened with few people in this Pandemic. Imagine one person getting hospitalized due to corona and then after 4-5 months, another person in the family also getting hospitalized. Or imagine someone in the family getting treated for a big illness and then after a few months, another family member getting hospitalized due to a severe accident also.

Very low chances of this happening. RIGHT?

Yes, but it can not be ruled out at all!. It’s the extreme end I know.

How will be the claim experience in both cases? Let’s compare the same example (forget NCB for the moment)

[su_table responsive=”yes”]

Option	Option 1 – Single Cover	Option 2 – Combo
What?	Single cover of 10 lacs	Single Cover of 5 lacs (base plan) Super Topup cover of 5 lacs (with 5 lacs deductible)
1st Claim by husband for Rs 8 lacs	The claim will be paid for 8 lacs	5 lacs claim paid by the 1st base policy 3 lacs claim will be paid by super topup policy
2nd claim by a spouse in the same year for Rs 10 lacs	Because of the recharge benefit, the spouse will be able to claim for a total of Rs 10 lacs	Because of the recharge benefit, the base policy will pay 5 lacs But the super topup will pay the remaining 2 lacs only. 3 lacs will have to be paid by policy-holder LOSS of Rs 3 lacs here compared to 1st option

[/su_table]

The point is that recharge benefit can also come into play in some very unlikely situations, but that feature is missing in super topup plans.

4. Difference in room rent limit

One major thing you have to consider is the difference between room rent limits in both base and super top-up.

Here is an example.

• At the time of writing this article MaxBupa Reassure plan (recently launched) has no room rent limits.
• However, its Health Recharge plan (the super topup policy) mentions that you only get a single private AC room in the plan.

Note that there are various types of single private AC rooms in a hospital. What you get from your insurance policies is the cheapest “Single Private AC room”.

Now let’s see 2 cases with an example

• Total health cover: 20 lacs
• The room category: A higher grade single AC room (higher quality and better facilities). Imagine the cheapest AC single room was not available or you wanted to go for the better facilities.
• Final Bill amount: Rs 11 lacs

Case 1: You have a single policy of 20 lacs (Maxbupa Reassure, just for example)

In this case, because there is no room rent limit, your total claim amount is admissible and your claim process will happen smoothly.

Case 2 : Now imagine that you have a 20 lacs cover but in combo form.

You have a 5 lacs base plan (Reassure policy) + 15 lacs of super topup with a deductible of 5 lacs (Maxbupa Health Recharge)

Now the first policy will pay the claim of 5 lacs easily because there was no room rent limit in the policy.

However when you go to claim the additional 6 lacs in the super topup, here is what will happen.

If you had chosen the cheapest AC single room, your total claim of 6 lacs would have got admissible and processed. However, because you choose a higher category room, you will not be paid proportionately only.

If the room rent for the cheapest AC private room was Rs 8,000 per day whereas you choose the one whose rent was Rs 12,000 per day. You will be paid just 66.66% (2/3rd) of the claim amount, which is only Rs 4 lacs

This is called a Proportionate claim in health insurance. This may happen in reality if your base cover is a small amount and a big claim arises. If you choose the cheapest single private AC room, then there won’t be any issues, but otherwise, there can be issues and this can happen even if you bought the policies from the same insurer (like in this example I gave)

Another example is of Care Plan from “Care Insurance” formally known as Religare Care.

In Care Insurance the room rent for a 5 lacs base cover and 15 lacs of super topup cover  is “Single Private AC Room”

Whereas if you take a larger single cover, the room rent is “Single Private AC room (upgradable to next level). This gives you enough flexibility and freedom to enjoy better quality health care and facilities. Sometimes, the single PVT AC room of the lowest category may not be what you wish for.

Imagine you need a bigger space and better facilities in the room, in that case, more deluxe rooms will be required by you. This is where you may lose in a big way (not today, but maybe in future or in case of large claims).

Here is the snapshot from the Care Health Insurance website.

 

Old Policies – If someone has taken 3-5 lacs of sum assured a few years back (especially from PSU companies), there is a good chance that there is a room rent limit of 1% of sum assured (example – Oriental Happy family floater plan). Now if you are buying a super topup plan, there will surely be a difference in the room rent limit.

5. Different Cashless Network of Hospitals

If your base policy and super topup policies are from different companies, there may be a possibility that the hospitals in their cashless network are different to some extent. You may face some issues in future due to this.

Here is an example

I checked for network hospitals between HDFC Ergo and Care Insurance for Pincode 411005, which is Shivajinagar, Pune.

I found that HDFC Ergo has 7 hospitals and Care Insurance had only 5 hospitals in their network (in March 2021). Out of these 4 hospitals were common, the rest were different.

Now, what if your first policy is cashless but your sum assured in the first policy is small. In that case, the 2nd policy (super topup) will get triggered, but here you will first have to spend the money as it’s out of the network of the 2nd insurer)

You will then have to file a reimbursement claim later and do the documentation part too.

This will not be the case if you had a single large cover from the 1st company itself. You may argue that you will plan well before getting admitted to the hospital and try to match the one which is there in both policies, but trust me, in real life it will be tough.

When a doctor tells you or recommends that you get admitted to hospital XYZ (often he is also a practising doctor in that same hospital), it becomes quite tough to challenge that or counter his suggestion.

6. If policy tenures are different for both policies

In some cases, you can face issues in the claim, if you purchased both base and super topup policies in different months (same or different insurer, does not matter).

It may happen in some specific cases that your claim is not admissible under any policy.

This is explained very well by Mahavir Chopra of Beshak.org in his article here. I am just sharing what he wrote originally.

Say you have the following Combo plan.

Base plan of Rs. 2 Lakh (Plan year: January 2021 to December 2021)

Super Top-up of Rs. 5 Lakh with an annual deductible of Rs. 2 Lakhs (Plan year: April 2021 to March 2022). (This means for the Super Top-up to pay, the hospitalization expenses should cross Rs. 2 Lakhs in the policy period in question – which is April 2021 and March 2022.)

Now, say you undergo two hospitalizations in the year 2021.

The first one happens in January 2021, the bill amount is Rs. 2 Lakh. Now this is covered by your base-plan there is no confusion, and the claim amount is paid.

Next – you undergo a hospitalization in April 2021. And the bill comes to 1.5 Lakhs.

Now, take a guess on – who will pay for this?

A. Base-plan

B. Super Top-up

C. You

If you guessed A or B – then you’ll be up for a BIG surprise! Here’s how your two insurance plans will look at the second claim.

Your base plan will not pay: Because – you have already exhausted the cover amount available for the year (January 2021 – December 2021)

Your Super Top-up will not pay: Because the Super Top-up plan pays only when the hospitalization expenses during the policy period of April 2021 to March 2022 crosses the deductible of 2 Lakhs. In this case, the total hospitalization expenses during the period in question (Apr 21 to Mar 22) are only Rs. 1.5 Lakhs – hence the claim won’t be payable.

These were some limitations of the super top-up you should be aware of. It’s better to get educated about this aspect, rather than getting shocked and disappointed in future.

Some other small Differences

Apart from the major points discussed above, there are other minor but important points you should know

• Annual Health Checkup Benefit: With a single large cover, you may get superior annual health checkup packages that cover more tests. But with combo plans, you may get normal test packages in both base policy and super topup, which is of less use as no one will do the test twice just for the sake of it. Some policies also offer health checkups only once in two years for smaller covers.
• Hospital Cash Benefit – In many small base plans like 5-10 lacs, the hospital cash limit is Rs 1,000 per day. However for a bigger sum assured, the hospital cash will be in the range of 3000-4000. If you stay in the hospital for 10 days, this means getting 10k only in combo plan vs 40,000 in a single bigger cover.
• Organ Donor Cover / Ambulance Charges – Again, a lower sum assured plan night have a lower benefit compared to a single big cover.
• Waiting period – It might happen that the waiting period for pre-existing illness is different in both policies, just check that.
• Pre & Post Hospitalization Tenure is different – It may also happen that both policies have different pre & post hospitalization tenure.
• Other Minor Changes – Apart from the points above, there are many other minor differences in the bigger sum assured (single policy) which may be useful for you in some specific cases, which we are not covering here

How to look at Super Top-up policies? What is the right combination?

Everyone shall have a large enough cover with a single policy as the first step.

With NCB benefit, that large cover will also get ballooned to every large cover. And with recharge benefits, you will also get those edge cases covered. This will make sure that for many years to come, this single policy will be enough for you.

There are very low chances that in some worst cases, you may still have a very big claim when this single big large cover will not be enough, and that’s when super top-up cover shall come into the picture and that’s exactly why they were designed for.

To cover those extreme end cases!!!

But investors have just started using them with a small cover for the sake of saving some premiums. No doubt you will have a few thousand for many years to come, but there are also limitations which we talked about.

Considering the point above, the minimum base sum assured which I feel one shall take in 2021 is Rs 10 lacs. With NCB benefit, it may become a 15/20 lacs cover, which is good enough for the majority of claims. Anyways the average claim is quite small!

How big was your last #healthinsurance claim?

(Only for those who filed a claim, irrespective of how much was paid)

— jagoinvestor.com (@jagoinvestor_) March 17, 2021

Does it mean you need to take a 50 lacs cover? NO 🙂

 So what combination to buy?

Speaking for the majority, I think a Rs 10 lacs base policy with an NCB of 50%/100% and a super topup of 30-40 lacs with Rs 10 lacs deductible is a good enough choice right now. This will balance the premiums and coverage. If you want an even high single cover policy like 15-20 lacs, go ahead!

But also remember, that within the next 10-15 yrs, even the 10 lacs coverage may look like a small one and you may feel that the base policy should have been for at least 20-30 lacs. So take your decision after careful thought.

You can always upgrade your base cover sum assured at the time of renewal.

Do let me know if you have any queries or comments?

Credits – Thanks to Mahavir Chopra of Beshak.org to correct me on some points in this article and also give his valuable insights from time to time because of which I was able to bring depth to this article. Mahavir Chopra is a veteran and a well-known name in the insurance industry and they are doing some cool stuff on beshak.org in the area of insurance. Do check out their website!

Lots of people in India want to buy land, especially investors from big cities as land is a scarce commodity and it sounds amazing to build your own house on a piece of land instead of staying in apartments.

However, do remember that there are no specific loans available to buy agricultural land. The only loans available to buy the plot are for “residential plots”, which means that if you take these “plot loans”, you need to also construct a house within 2-3 yrs of buying the plot. You can’t just buy a residential plot and skip building the house.

However, many people do that. Some intentionally and some out of ignorance.

• What exactly happens when you dont build the house on a plot taking on a loan?
• Is there a penalty?
• Can there be any actions against you?

What happens if you dont build the house on the plot?

When you take a plot loan, it comes at a lower interest rate because the assumption is that you will be building the house on that land within 2-3 yrs. But if you fail to do that and dont submit the required documents (completion certificate) to the lender on time, your loan will be converted to a normal loan and the interest rates will be increased by 2-3% with a retrospective starting date as per the agreement between you and the lender.

This means that your loan outstanding amount will go up by some amount due to this change and you will have to now pay that additional amount. At the end of 3 yrs, the bank will ask you for the proofs of construction, and if you fail to submit them, you will have to pay an additional amount.

Here is an example of a Rs 20 lacs plot loan which is taken for 10 yrs @7% interest rate. The interest to be paid in this case will be 7.87 lacs apart from the 20 lacs principal amount.

Now if the interest rates are revised to 9% (2% increase) the interest, in this case, will increase to 10.4 lacs, which is 2.53 lacs more than the original amount.

Is there a single loan for plot and house cost?

Some banks like SBI (as told to me by a representative) first issue a plot loan and then after 2-3 yrs issue another home loan for the purpose of constructing the house (two separate loan account numbers), whereas some banks may issue a single loan itself for both purposes and it will be mentioned in the agreement (for example 40% amount is for plot and 60% for house construction).

Note that you can avail of 80C benefits as these loans are issued as home loans (the part of the loan which will be used for house construction).

Wrong information was given by the bank representatives

Many times you may get wrong and misleading information from the bank representative. They may tell you that “Nothing will happen after 3 yrs, dont worry” or “These are all just formalities..” mainly because he is interested in getting the loan approved due to their targets. This is wrong and makes sure you dont believe them. Always rely on what is written in the agreement.

Note that the loans are given at a cheaper rate for plots because there is a bigger agenda of RBI and govt that everyone shall access to housing. If you are buying the residential plot simply because you can sell it off in future for profits then you cant get the benefit of the lower interest rates.

For you, the interest rates will be revised because you will have to construct a house on the plot after 2-3 yrs as per rules.

Some features of plot loan

• The age requirement is between 18-70 yrs.
• A CIBIL Score of‭ ‬650‭ ‬or above is required (in most cases)
• Up to 60% to 70% of the property price is given as a loan depending on the bank.
• These loans are given for a maximum of 15 yrs tenure

Points to remember before going for the plot loan

Make sure you take these plot loans only in case you are really interested in building the house. You can also ask the bank to first disburse only the loan amount for the plot and later release more amount at the time of house construction. It’s really not worth playing around with bank and playing tricks as it will mostly waste your time and you won’t gain much in case you dont want to build the house.

Here are some more important points which were shared by our reader Jayaprakash Reddy

1. Generally, banks calculate plot value based on the sale deed value, most of the cases sale deed value is lesser than the market value. Also, as mentioned above, banks like SBI will only consider sale deed value but some private banks might also look at market value in that area and which will be derived through their certified valuers. SBI will give a loan on plot purchase (House construction in future is intended) up to 60% of the sale deed value and it is the same with even private banks but that will be on market value.
2. There is no clarity even with bankers about what happens if you sell the plot within a year or two without construction, most of the representatives told me that it will be like closing a home loan but I guess that’s a false statement and depends on the bank and agreement if mentioned specifically in it.
3. The total loan again depends on the construction value in that area. For example in the area where you are purchasing a plot, the construction cost could be 1500/sqft. Then based on the sqft you are planning to construct the total loan amount will be derived. Let me put it in numbers:
   Plot Area: 300 sq yards. – SBI bank loan – Sale deed value is 10000/sqyd – 30 lacs. For plot purchase – 60% of 30lacs will be given to you as a loan. 18lacs loan will be provided by the bank, this is given as cheque payment directly to the seller. For the construction of the house, they will provide it based on the sqft permission you got. For example, in a 300sqyrd plot if you are constructing G+2, then you might get permission to build ~3000sft (not an exact number). So the construction value of the house will be 3000*1500 = 45lacs, out of this bank will give you up to 80% loan, which again depends on your credit rating.
   In total, you can get a 63 lacs (18+45) loan, provided you are eligible for such a loan based on your income.
4. To prevent malpractices, in the case of a home loan, the bank keeps the sale deed of the plot. With documents not available, one can not legally sell the plot. There can be a word of mouth agreement whereby the buyer can give money to the seller to release the loan and documents and then purchase.

Also, here is a checklist before buying a plot in India in case you are planning to buy one!

Do let us know if you have any questions

Do you know what happens when you are unable to repay back your home loan?

After how many missed EMI’s will the lender get hold of your property and throw you out of it? What are your rights as a consumer and what exactly are the steps involved in the foreclosure process?

When we buy a home with a home loan, there is lots of enthusiasm as we are becoming the owner of our dream home, and the future looks bright, but the reality of life is that there are many homeowners who face financial difficulties in their life due to job loss, accidents, medical problems that they are unable to pay back their Home loan EMI’s for many months and eventually get into a situation when they are not able to repay back.

Today I am going to tell you all you need to know about this topic. Let’s start

#1 – When you miss paying 3 months EMI

It may happen that you are miss 1-2 EMI payments due to some reason, in which case the bank will give you a reminder about it or give a small warning to pay back the missed EM next month. But if you miss paying the EMI for 3 consecutive months, that’s a big red signal and at this point, your loan account will be marked as NPA in the lender’s book.

This is a serious situation. The bank will mark you as a defaulter and the bank will send you a notice about it.

At this point make sure you do not ignore the bank notice and reply to them asap explaining to them about your situation and the reason why you missed paying the EMI’s. If your credit history is good and your reasons are very genuine, there is a possibility that the lender may give you some grace period for repayment.

Your CIBIL will also get impacted due to you getting marked as a defaulter.

#2 – Final 60 days’ Notice

If the bank is sure that they want to move ahead after you are marked as Defaulter, they will then send a full and final 60 days notice under a law called SARFESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act).

Sarfesi Act empowers banks and other financial institutions to directly auction residential or commercial properties that have been pledged with them to recover loans from borrowers and lays down all the processes to be followed.

Before this act came into power in 2002, the lenders had to file a case against the homeowner and the matter went to court which was a lengthy process and very time-consuming. But after this act, now the lender can directly auction your property and evict you out of it. Even Co-operative banks are covered under the Sarfesi Act

This 60 days period is your final chance to repay your EMI’s, else the lender can take hold of the property and sell it off after 60 days’ notice. After this 60 days period, you are expected to settle down all the money you owe to the bank which is the outstanding loan amount. Either you pay it back to the lender on your own or the lender will auction the house and recover back their money.

During this 60 day notice period, you can put up your case in front of the assigned officer and share with them what best you can do to pay off the EMI soon. If they accept your explanation, then well and good, otherwise they need to give you a written letter of rejection within 7 days after which the next step starts.

During this 60 day period itself, you may also get recovery agents to your doors who may demand that you settle your dues. Note that as per the RBI rules you have certain rights when it comes to recovery agents like.

• You can ask for the identity of the collection agents if you wish. They need to carry their ID Cards and an authorization letter from the bank
• Recovery agent must be an authorized agent as per the Indian Institute of Banking and Finance
• The recovery agent can visit only between 7 am to 7 pm and shall only talk to the defaulter and not family members (unless the defaulter is out of reach)
• The loan recovery agent cannot be disrespectful or shall use any objectionable language or behaviour

In real life, the above rules are not followed properly and recovery agents are infamous to threaten and humiliate loan customers. If that happens, you shall complain to the bank and also take up the matter with the banking ombudsman

#3 – 30 days’ notice in the newspaper for Auction

As the next step, the lender will get the property valued from their valuer’s to find out the fair value of the property. Now starts the property auction process.

The lender will advertise the property details and mention all details like the reserve price (shall be around the fair value of the property), the date & time, address for the auction of the property.

If the property owner feels that the fair value of the property is too less or not correct, then they can object and talk to the lender.

#4 – Auction of property and refund of excess money

And as the final step, the property will be auctioned in the open market and the bank will recover back all its dues. Note that the bank is only liable to recover the dues and not the excess amount. If there is any balance left, it has to be paid back to the homeowner. So keep an eye on the auction amount. Nowadays most of the home auctions happen online (e-auctions) and you have the data online.

Sell off your house if you become a defaulter

Let me guide you a bit on what you should do if you are unable to repay back your home loan amount and are marked as a defaulter. Yes!, The best thing to do is to sell off your house on your own and pay back the dues to the bank.

Here are 2 reasons why you should sell off the house on your own

• You will not get the best price in Auction – Home Auctions are distress sale from the bank side. Bank just wants to recover back their loan outstanding. Hence their focus is not on getting the best price for your house. If you sell the house on your own, you may get a much better price
• It will take a lot of time as the property will be stuck at the bank hand – The auction process is lengthy and may take a lot of time which may not be suitable for your timeline. If you sell off the house yourself, you may do it faster as you may be open to negotiating and ready to give some great deals to potential buyers. You can also offer the brokers extra or double commission so they can also put all their energy into finding a buyer.

How to avoid getting into the defaulter list in future?

What are some of the best practices you should follow so that you do not get into the defaulter list? Here are some things

• Try to keep your EMI amount less than 40% of your take-home – Always make sure that the EMI is not a big burden for you. Don’t go overboard and take a loan which is like a big burden for you.
• Try to pay as much down payment as you can – If possible, do make sure you pay a big down payment so that your loan outstanding is a smaller amount that is manageable for you. I would suggest that you pay more than 40% in the down payment.
• Restructure the loan – If the EMI is a big amount for you and each month you are on the edge of default, do try to bring down the EMI amount by increasing the tenure.
• If you have any investments in debt assets like FD, Saving account, Insurance policies, PPF or even EPF. you can use that to pre-pay your loan to bring down the loan outstanding. This is only for those people who are overburdened with high EMI amounts each month

I hope this was helpful and you got some new information!. Do let us know if you have any questions!

70-80 yrs.

That’s what most of the investors answer when they are asked – “How long are you going to live?”

Truly speaking, no one knows how long will you live!. We may die at 60, 70,80, and 90,100 or may be 47 or next week!. Who knows?

In most of our workshops and even the online webinars, when we asking this question “How long should you plan your retirement?” . The standard reply is 75-80 yrs. Only 2-3 people among the ground of 40 will murmur a number like 95 yrs. or something like that and obviously face the horror from of those who are confident of not retiring with enough corpus.

Today, we are trying to answer this question from retirement planning perspective. When you plan for your retirement corpus, it depends heavily on how long you are going to live!. If you live for a short period, you need less wealth. If you are going to live for a very very long time, you are going to need a very large corpus.

Your answer to “How long will you live after retirement?” will also vary depending on how happy are you with life overall currently. If you are stuck in your job, where you feel frustrated and also have not been able to reach some milestones in life, your answer will show the pessimism and you might say “75 yrs” is enough for me”

However if you are full of life, very happy right now, in a great health and have been doing great in your financial life, you might say “I would love to live till 90 or 95, Life is so beautiful”

But, Most investors get it wrong

Coming to the main question we are trying to answer today, we want to investigate or rather get enough clues on how long we can expect to live in retirement. Finding a good enough answer is critical for every one of us, because then we can design our life, priorities and investment plan for retirement based on the answer we get today.

I want to convince you today, that if you feel that you will just live till 75-80 yrs. only, then maybe you need to change the way you look at it. May be you are planning is wrong. May be you are taking the best case.

The biggest retirement worry most of the people (who are already retired) is “Outliving their money”. Just think of a situation where a person has planned for just 20 yrs. of retirement (retired at 60 and expects to die at 80), but he has already reached 78 yrs. of age and his money is almost finished.

What kind of mental trauma he/she has to go through?

We all want to make sure that it does not happen to us.

We all want to make sure that in our retirement life, we have enough money, freedom to withdraw enough money for our expenses and have a decent margin in case anything goes wrong, so that you don’t have to depend too much financially on others.

Recently we did retirement planning for a 54 yr old person who was an NRI reader and while we created his plan, we made sure that all these elements like legacy, tax optimization, risk-control and growth was taken care while creating his retirement plan and his action strategy. You also have to make sure that if you are almost going to retire or if your parents are about to retire (or already retired) these elements are present in their retirement portfolio.

 

While we are happy today that India is the youngest country in the world, we also have to remember that in few decades, all we young people will also retire. Many of us may also not have the privilege to live with our children which many senior citizens enjoy. So we need to plan better.

Life Expectancy in India

Let’s start with the basic question – “What is the average life expectancy in India right now in 2020?”

The official answer is around 69.73 in India at birth. For simplicity sake we will take life expectancy as 70 yrs. The life expectancy in India is continuously increasing every year from last many decades (a lot of people have this myth that it’s decreasing)

It simply means that one an average when a child takes birth, He/She is expected to live up to 70 yrs. of age. However we all know someone who died at 85, or 95 and even 53 or 29.

So this 70 yrs. is “Average” – which includes

• All the young people who die because of accidents
• All small children dying of malnutrition
• All people who die of suicide
• All people who die of any illness at young age
• Old age people who die because of illness in age band of 60-70 yrs.
• Old age people who due because of illness in age bank of 70-80 yrs.
• Old age people who die of depression and loneliness
• Old age people who die because of no access of good health care
• Very old age people who die at age 90+ yrs.

So, you now understand that “average” is kind of a fraud number. It gives some idea to you about something, but does not reveal enough to take decision. We also have to look at standard deviation to get a better sense. And people age at death can vary by a big margin.

A big population dies below life expectancy of 70 yrs. and many die above 70 yrs. The average is 70 yrs. Which means that for every person who dies much before 70 yrs. , there is another person who is living till 100 to average it out

You can’t take these 70 yrs. as the base to plan your retirement life.

Moving Life Expectancy in India

A better data to look at is moving life expectancy number, which gives you an idea of what is the expected life expectancy once a person has reached an age. A person who has already reached 60 yrs. of age, won’t have the life expectancy of 70 yrs., it will be much more than that.

And here are the official numbers

So to conclude, a person who reached 60 yrs. of age as per above data can expect to live till 77-78 yrs. (another 17-18 yrs.) and this again is the average. This includes an unhealthy, broke retired person and a healthy, happy and wealthy retired person also. One of them will mostly die before 77 and another one will live longer than that.

You probably will belong to the other side and you know where this whole conversation is going.

Women live longer than Men

Let’s change the track a bit. I want to now talk a bit about Men and Women life expectancy.

Another thing you should know is that women in general live longer than men all over the world. In India also its true, and its truer for couples. You will often see men dying before their wives for simple reason that men generally have higher age compared to women, and men are exposed to more risks like accidents etc. because men mostly drive, get involved into those tasks which often have danger of life.

There are many other evolutionary and behavioural reasons, but it’s out of scope of this article.

So if you are women reading this, you need to understand that you will live much longer and have to plan for your pension. If you are men, you need to understand that while you may not believe that you will live longer, it’s your spouse who will outlive you and you have to do your planning more carefully for her as she may live for another 5-10 yrs. after you on average.

The following memes can give you a small hint (in a funny way) of what we are talking about.

Medical Advancements will contribute to your longer life

Decades ago, people died because of illnesses and diseases/inflections which look very normal today. The medicine and vaccines are available today which were not available few years/decades back (in future people will also talk like this for coronavirus).

Then over time various discoveries and inventions were done in the field of medical science and medicines, vaccines and treatments were available for masses at lower costs. This makes sure that the mortality rate comes down over time.

Check out how the mortality rate for Cancer is coming down (not the number of deaths, but the mortality rate)

Even the other types of mortality rates are coming down from last many years.

If we talk about the current Covid-19 related deaths they are mostly because we have no cure or vaccine available. But very soon, we will have some cure available which will make sure that not too many people die in future because of this virus.

The point I am trying to make is that the whole world is on the mission to make sure that there is further medical advancements and they are constantly trying to find ways to make sure that people live longer and longer.

If you have money with you, it will get tougher and tougher for you to die as no one will let you die easily. Neither your family members nor the hospitals that benefit out of treating you.

India is developing faster

Another angle to the same conversation is that our country is making progress every year and we are on our journey towards becoming a developed nation. India in 2040-50 (When I will be retired) be a different place than today (like its different than 1990)

As a nation develops we have better access to everything. We have more money, we have better healthcare system, we have better roads and infrastructure (imagine less accidents and all the people who didn’t meet accident also adding to the pool of retired people).

If you compare yourself to your parents, you will agree that you have much better access to better housing, quality food (ok this is controversial), quality entertainment, quality travel, quality healthcare, quality roads and infrastructure. They might not have been able to afford a good hospital, but you can!.

All these together contribute to a higher life expectancy. Check out this world map where the developed nations has higher life expectancy

Share of old age people in overall population

If you currently have a look at the share of aged population in developed countries, you will see that it’s very high in developed nations compared to developing or poor nations. For example, Japan has 26% of people who are senior citizen and Italy has 22.4% .. India will reach to that point in next 30-40 yrs.

In Japan, there is a village called Ogimi, where people generally live up to an age of 100 yrs. I am just showing a glimpse of what can happen with a developed country

Here is the data, I found in this report about share of senior citizens in overall population for developed countries. Check below

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Rank	Country	% Share
1	Japan	26
2	Italy	22.4
3	Germany	21.1
4	Portugal	20.7
5	Finland	20.3
6	Bulgaria	20.1
7	Greece	19.9
8	Sweden	19.6
9	Latvia	19.3
10	Denmark	19

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Source : https://www.prb.org/which-country-has-the-oldest-population/

In India, currently the senior citizen population share is around 8-9%, which is expected to rise to 20% of population, which will be quite huge. This might be a disaster unless we all are prepared for with sufficient retirement corpus. Here is what Google tells me about the future

So if you are 30-40 yrs. old person reading this article, you need to be clear on this that once you get older, you will have much higher chances of living longer compared to our parents or much older generation. It’s a different thing that you live long in reality or not. But you have to plan thinking of the longest you can live, not the “average age”

So to sum it up, I will show you what are the recent United Nations, World Aging Population Report 2019 says about all the points I was trying to make above. You can see that they say the same things

Conclusion

I would like to conclude and sum up this article now with some points. Here they are

• You may live for a very long time. It can be 90-100 yrs. and even 105 for some cases. Do plan better
• Life Expectancy is increasing and it will keep increasing in future too.
• Don’t assume or plan that you will be living only till 75-80 yrs. It’s not even happening now, forget about future
• Plan for a big retirement corpus, so that it can last for your lifetime and also leave some legacy for your family.

Please share in comments section, what you feel about this article and whats your views about retirement phase and how long people will live in future?

The investment product which I will be talking about in this article will meet all your requirement as a senior citizen.

It is called as “Senior Citizen Saving Scheme”. It is one of the safest investment products because it is sponsored by the Government of India.

What is SCSS?

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings instrument for individuals above the age of 60. It is one of the safest saving instrument for senior citizens, because it is a government-owned product and there is no risk of the capital loss. The purpose of this scheme is to provide a steady and secure source of income to senior citizens for their post-retirement phase.

The basic requirement a senior citizen will want from his/her investment is two basic things – safety and regular income. The Senior Citizen Savings Scheme (SCSS) meets these two requirements, and you get the tax benefit under section 80C on the amount invested.

Individuals can apply for this scheme from Post Offices, Public and Private Banks. The current rate of interest this scheme is offering is 7.4% (it changes from time to time). Both the spouses can open a single account and joint accounts with each other. Multiple withdrawals from an account will not be permitted.

Features of SCSS –

a) Interest Rates are revised Quarterly –

The interest rate under this scheme is revised every quarter (3 months) which goes to 4 times in a year. The interest rates are determined depending on the economic conditions such as inflation etc.

Past 2 yrs interest rate of this scheme (201 and 2019) –

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2018 – 2019 (Q1)	8.3%
2018 – 2019 (Q2)	8.3%
2018 – 2019 (Q3)	8.7%
2018 – 2019 (Q4)	8.7%
2019 – 2020 (Q1)	8.7%
2019 – 2020 (Q2)	8.6%
2019 – 2020 (Q3)	8.6%
2019 – 2020 (Q4)	8.6%
2020 – 2021 (Q1)	7.4%

 

b) Minimum and Maximum Deposit Allowed under this Scheme –

The minimum contribution a senior citizen can make in this scheme is Rs. 1,000 and a maximum deposit of Rs. 15 Lakh can be made.

For example, if Mr Sharma receives Rs 13 Lakh as a retirement benefit, then he can invest up to that amount in the scheme. This clause applies irrespective of whether the account is held individually or jointly. However, one can only open a joint account with his/her spouse.

But, if an individual holds multiple accounts under this scheme, then the total amount deposited in all such accounts shall not exceed the maximum limit of Rs 15 Lacs.

c) Tenure of this Scheme –

The maturity period for the SCSS scheme is 5 years. However, it can be extended for another 3 years, effectively bringing up the total period to 8 years. In order to extend the tenure by 3 yrs, the individual will have to submit Form B after duly filling it. An extension in the tenure will be allowed only once. Once the extension is approved, the interest rates will be the applicable quarterly basis.

For instance, Ms Sita has deposited Rs. 7 Lakh under SCSS in April 2014, when the interest rate offered was 9.3%. However, when she extended this scheme in April 2020, the interest rate she was eligible to earn stood at 8.4%.

d) Premature Withdrawal and Closure –

An individual can withdraw prematurely from their account under this Scheme only after one year of opening the account. However, for any reason, if an individual closes their account before the completion of 2 years, 1.5% of the deposited amount will be deducted as penalty.

Premature closure of the account is allowed with some penalty. If the account is closed after the first year and before the end of the second year, an amount equal to 1.5 per cent of the deposit shall be deducted as penalty. If the account is closed on or after the second year, an amount equal to 1 per cent of the deposit shall be deducted.

For instance, if Mr Shah deposits Rs. 5 Lakh in Senior Citizen Savings Scheme on 1st March 2018 and closes it on 6th February 2020, he will have to bear a penalty of Rs. 7500. But, if the investor is deceased before the maturity of their account, no penalty will be charged.

e) Mode of Investment –

The mode of investment under this scheme will be either cash or cheque. If the investment amount is below Rs 1 Lac then the amount can be invested through cash. But if the investment amount exceeds Rs 1 lacs then the investment can be done only through cheque.

f) Capital is Secure –

As you all know that this scheme is purely governed by the Government of India that is why the capital invested is fully secured under any circumstances.

g) Interest Payout –

As we know that Interest is calculated on a quarterly basis, the interest will be credited to the account every quarter, on 1 April, 1 July, 1 October, and 1 January. If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.

h) Nomination Facility –

On the time of opening the account, the senior citizens can also attach nominee to this account so that if something happens to the senior citizen then his/her money will go to the nominee.

Taxation of SCSS –

Investments made under SCSS are eligible for tax deduction under section 80C of the Income Tax Act, 1961. According to the current rules, if your interest earnings from SCSS are more than Rs 50,000 in one fiscal year, you are liable to pay TDS (Tax Deducted at Source) for the interest earned.

Eligibility Criteria of SCSS –

a) An individual who is a citizen of India can open this account in an individual capacity or jointly with a spouse.

b) Non-residential Indians (NRIs) or a Person of Indian Origin (PIOs) cannot invest in this scheme. Also, Hindu Undivided Family (HUFs) do not qualify for this scheme.

c) As this is a senior citizen savings scheme, so any resident of India aged 60 years or above is eligible to open an account under this scheme. However, there are few exceptions to the age bar:

• Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation are eligible to avail the scheme if they apply for the same within one month of gaining their retirement perks.
• Retired defence personnel can avail this scheme irrespective of their age, provided they fulfil all other conditions.

d) Nomination under this scheme can be done only in favour of resident Indians.

Documents required for opening the SCSS Account –

a) Proof of ID and address (any one of the following) –

• Aadhaar card
• Passport
• Driving licence issued by Regional Transport Authority
• Voter ID card
• Job card issued by MNREGA signed by State Government officer

Note – The above document has to be self-attested.

b) Additional documentation if the investor is less than 60 years –

• Certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer
• Proof of date of disbursal of retirement benefits (the date of opening of an account under this Scheme should be within one month of the date of receipt of the retirement benefits)

c) In addition to the above documents, PAN card is mandatory.

How to Open an Account under the Senior Citizen Savings Scheme?

An SCSS account can be opened with a post office or any of the private or public banks in India. The procedure for both is similar, and is mentioned below  –

Step #1 – Visit your nearest bank branch or Post office branch

Step #2 – Submit the Duly filled up Form A

Step #3 – Submit the original and photocopies of all the necessary documents mentioned above, broadly address and identity proof.

Step #4 – Submit the age proof with all the above documents.

List of few public sector banks which offers to open SCSS Account to their senior citizen customers –

You can click on the below banks to see the form of SCSS.

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State Bank of India	Bank of Baroda
ICICI Bank	Bank of Maharashtra
Bank of India	Canara Bank
Syndicate Bank	Punjab National Bank
Allahabad Bank	United Bank of India

 

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Conclusion –

So this was all that I wanted to share about Senior Citizen Saving Scheme. If I have missed out on any point then you can highlight in the comment section.