Glossary

     In a loan or a bond, the original amount borrowed is the Principal. It is distinct from Interest, which is the charge paid for borrowing. In general, in a loan, a part of both the Principal and Interest are repaid in every installment. However, in case of a bond, typically the Principal is repaid on maturity– only the Interest portion is paid periodically.

    Repatriation of money means bringing back money from India to the country where you are living presently. Till the mid-1990s, there were draconian controls on taking money abroad, but now rules are far more liberal. FEMA lays down rules on repatriation of funds from bank accounts in India, for instance, regarding money from what sources are repatriable, limits of repatriation for residents and NRIs, etc.

    Senior Citizens Savings Scheme is a debt investment product for retirees launched by the Department of Posts. SCSS has 5 years maturity and presently gives an annual interest of 9.3% paid quarterly.

    National Savings Scheme (NSS) is one of the small savings schemes of India Post. National Savings Scheme, 1987 was discontinued in 1992 after which National Savings Scheme, 1992 was introduced. NSS, 1992 also was discontinued in 2002.

    NSS being a Post Office Savings Bank scheme had maturity of 4 years and interest rate was similar to that of NSC. Interest from NSS was tax exempt and the annual NSS deposit itself could be claimed for income tax deduction under section 88. However since its discontinuation payments received are taxable at the rate of 20% and TDS is applicable on NSS.

    Non-repatriation or non-repatriable money means funds from the concerned investment or bank account cannot be repatriated or transferred to the person's account abroad. Usually money in NRE and FCNR accounts is freely repatriable. FEMA lays down rules governing repatriation and non-repatriation of funds.

    Companies can set up Provident Fund by joining scheme of EPFO or by privately forming a PF Trust according to laws laid down in the Employees' Provident Fund Act, 1952. If such private PF is recognised by the Commissioner of Income Tax then it is a Recognized Provident Fund. Usually firms that employ 20 or more people would have Recognised Provident Fund. Tax benefits on both employer's contribution and employee's contribution is higher in Recognized PFs than in Unrecognized PFs.

    In a joint term deposit the account holders can instruct maturity repayment to be in either or survivor mode. If one of the account holders expires before maturity the surviving account holder will get final amount on maturity. If however deposit is to be paid before maturity then signature of both account holders is required if both parties are alive. If one of them expires then signature of the survivor and legal heirs of the deceased is needed for withdrawing term deposit prematurely.

    When joint account holders give former or survivor mandate to the bank for their term deposit, only the person declared as 'former' can withdraw the maturity amount when both depositors are alive. If the 'former' expires before maturity of the deposit then survivor will be paid. If however deposit is to be paid before maturity then signature of both account holders is required if both parties are alive otherwise of the survivor and legal heirs of the deceased.


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