Page 50 - BANKING FINANCE JANUARY 2016 ONLINE
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FEATURE
Creditor-proof
instruments
L oans and debt are now part protect your family in such situations. consider opening PPF account in the
of a consumer's life. And why These products cannot be attached name of all family members. Do in-
not? It has made life conve- by any court. But be sure that what- vest only after understanding the
nient while buying goods. A ever you do, it should be proactive product for PPF has 15-year lock-in
person gets discounts using credit and not reactive. This means, all mea- and also has few restrictions on with-
cards; there are reward points, and sures to protect the assets should be drawal.
sometimes zero per cent finance done before creditors come knocking
schemes that can help in managing at the door and even before the liabil- New Pension Scheme
the repayment effectively. Even big- ity arises, otherwise your arrange-
ticket items such as property and car ment can be termed as fraudulent Popularly called as NPS, the scheme is
are now easily bought because of the and can be attached. slowly gaining popularity among in-
easy finance schemes. vestors. Indian Government is trying
Public Provident Fund hard to convince people to start plan-
Debt, however, also brings along an ning their retirement through this
equal quantum of responsibility along This is not new to investors. In fact, cost effective instrument. In financial
with it. Things are good until repay- this is among the first few invest- year 2015-16, NPS has gained atten-
ments are regular. If a person starts ments that individuals make in their tion as it offers additional deduction
defaulting or if the borrower dies, the financial life. Along with generating of Rs 50,000 under section 80CCD
lenders arrive at the doorstep and safe and tax-free returns, Public (1b). This is in addition to Rs 1.5 lakh
they have the power to snatch assets Provident Fund (PPF) account has pro- in section 80C.
to recover their dues. tection against attachment.
NPS comes with different asset allo-
For those who run their own firm and According to the PPF Act 1968, "The cation schemes, being managed by
have secured a loan against personal amount standing to the credit of any professional fund managers under the
or business assets, things can get subscriber in the fund shall not be li- regulatory supervision of Pension
tougher. Businesspersons and profes- able to attachment under any decree Fund Regulatory Authority of India
sionals work under risk of litigations, or order of any court in respect of any (PFRDA). Investor can gain exposure
which endangers their personal in- debtor liability incurred by the sub- to equity and debt both through this
vestments. Professionals can some- scriber." instrument.
times mitigate such risks by buying
professional indemnity insurances, Besides tax saving, PPF also offers an Besides the cost-effective invest-
but there's no such product available attractive benefit for those who want ments structure, regulatory supervi-
for businesspersons. to be protected from monetary liabili- sion and tax benefits, NPS also re-
ties. All business persons whose busi- stricts court attachment. As per the
But there are instruments which can ness operates on borrowing should PFRDA (Exits and Withdrawals under
50 | 2016 | JANUARY | BANKING FINANCE
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