Personal Finance News & Views – Week of July 14 – 20, 2014

In this post we cover the major Personal Finance news that happened in the week of July 14 – 20, 2014. The one in quotes are our views

SBI cuts Interest Rates on Short Term Deposits:

Effective July 18, 2014 SBI (State Bank of India) would cut its term deposit rates to 7% from 7.5% for tenure of 7 to 179 days on deposits below Rs 1 Crore. This is mainly due to huge rush of short term funds to bank fixed deposits from debt mutual funds which are taxed similar to FDs after Budget 2014 if invested for less than 3 Years.

Experts are of the opinion that other banks would also follow SBI and cut short term fixed deposit rates. Check the Best Fixed Deposit Rates across 44 Banks and different tenures!

ICICI Bank Global Banking – Hello Canada launched

ICICI bank has launched “Global Banking-Hello Canada” for the Indians who have already migrated or migrating soon to Canada. This service offers customers to open Canadian Dollar (CAD) Account with ICICI Bank Canada and NRI (Non Resident Indian) savings account with ICICI Bank in India simultaneously.

This would enable customers to transfer money to Canada account from India and they can conditionally withdraw the same when in Canada making the funds safe when customer is in transit.

Axis Mutual Fund launches Yearly SIP Option:

Axis Mutual Fund has now launched option of Yearly SIP (Systematic Investment Plan) on all its schemes. The minimum SIP amount should Rs 12,000 and the SIP should be atleast for 3 years. For its ELSS Scheme – Axis Long-Term Equity fund – the minimum SIP amount has been kept at Rs 6,000.

I am not sure how many investors would enroll for this yearly SIP and how it would help them!  

Birla Sun Life Emerging Leaders Fund NFO:

Birla Sunlife Mutual Fund has launched Birla Sun Life Emerging Leaders Fund – a closed ended fund which aims to generate long term capital appreciation by investing in  small and mid-cap companies. The minimum investment amount is Rs 5,000. The issue opened on July 18 and will close on July 31, 2014.

With the strong rally in stock markets, there have been a flood of such closed ended funds. They do not make a strong case for investment as even the existing open ended funds would be doing the same thing i.e. investing in equities that would generate long term gains. I strongly suggest to keep away from such NFOs!

Axis Enhanced Arbitrage Fund NFO:

Axis Mutual Fund will launch Axis Enhanced Arbitrage Fund – an open ended Arbitrage Fund. This fund would make gains by exploiting arbitrage opportunities in stock market and also invest in debt instruments. The minimum investment amount is Rs 5,000. The issue opened on July 25 and will close on August 8, 2014.

With the changes in Taxation of Debt Funds in the recent budget, experts are of the opinion that investing in Arbitrage Fund would be a better option for 1 to 3 years time frame. There are already few open ended Arbitrage Funds. I would recommend to invest in these existing funds and wait for the Axis Enhanced Arbitrage Fund performance for at least 1 year before investing in it. There is no reason to subscribe to Axis Enhanced Arbitrage Fund NFO.