On 12th Aug 2013, Reserve Bank of India floated first tranche of Cash Management Bills worth Rs. 11,000 crores for a tenor of 35 days at a price giving annual yield of 12%.RBI will float this instrument every week for Rs. 22,000 crores. RBI hopes to check volatility in forex market. This will reduce currency liquiidity in the market and also will create financial crunch in the short term giving rise in interest rates . Banks will now offer depositors higher rate of interest for tenor of one year or less as compared to longer duration. Mutual Funds have been launching Fixed maturity Plans for one year tenor which invest in only Bank deposits. Expected yield on these Fixed Maturity Plans (Commonly known as FMP) now is around 10% p,a. Benefit of investing in such FMPs are that they are recd with the benefit of long term capital gain tax.This benefit is not there in the case of a Bank deposit. It is advisable to invest now in such FMPs. Minimum investment amount is Rs. 5,000/- and also available in demat mode. However in the case of dividend declaration on these FMPs rate of Dividend Distribution tax is 28.625% irrespective of the tax slab of the receipient.. Therefore it is beneficial to go in for Growth option if regular income is not a necessity.
Posted on: Tue, 13 Aug 2013 15:22:06 +0000
Trending Topics
Recently Viewed Topics
© 2015