Debt Servicing RMD, MHO Frequently Asked Question and their Answers about SIDBI Fixed Deposit Scheme

Frequently Asked Questions What is the name of the Scheme Under what rules / guidelines it is governed Who can deposit/invest money in SIDBI FD

Can Non Resident Indians invest money in SIDBI FD What are the deposit options What is the minimum and maximum tenure of SIDBI FD What is the minimum amount one can invest in SIDBI FD How is the payment to be made

Where one can one submit an application and cheque / draft to be invested in SIDBI FD What are the documents taken Documents required to comply with KYC norms : at the time of accepting the The details are printed on the application form for application various categories of investors. Individual Depositors

Answers The name of the Scheme is SIDBI Fixed Deposit [FD] Scheme. The FD Scheme is governed by RBI guidelines to Financial Institutions, as issued from time to time. Individuals - Resident individuals and Minors through Guardians Others - HUF, Partnership Firms, Proprietary Concerns, Companies, Body Corporates, Banks, Societies, Association of Persons, Trusts, Relief Funds, NGOs, Public Sector Undertakings, Central/State Govt. Departments, PF Trusts, Port Trusts, Mutual Funds, Welfare Funds, Govt. Universities / Institutions, Private Education Institutions, Statutory bodies are authorised to invest in SIDBI FD Yes. NRIs can now invest money in SIDBI FD, subject to certain conditions. Cumulative, Quarterly and Annual Interest Payment Minimum - 12 months and in multiples of 1 month thereafter with maximum tenure of 60 months. Minimum deposit of Rs.10,000/- and in multiples of Rs.1,000/- thereafter. The payment for investment in SIDBI FD has to be made by account payee cheque / demand draft payable at the centre of deposit, drawn in favour of SIDBI. Cash is not accepted. One can deposit an application with cheque at any Branch Office of SIDBI.

Individual Depositors need to submit copy of Passport / Photo PAN Card / Driving License / Voter Identity Card / Photo Ration Card / Any other identification with photograph [subject to satisfaction of SIDBI] as proof of identity. As proof of address, individual depositors, need to submit copy of Latest Telephone Bill / Latest Electricity Bill / Latest Bank Account Statement / Latest Demat Account Statement / Ration Card / Registered rent agreement / Any other proof to the satisfaction of SIDBI.

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Frequently Asked Questions Companies

Answers Certified true copy of Certificate of Incorporation and Memorandum & Articles of Association, Resolution of Board of Directors to place money as FD, identification of those who have authority to operate, identification of authorised signatories should be based on photographs and signature cards duly attested by the Company, Power of Attorney granted to its managers, officers or employees to transact business on its behalf, copy of PAN allotment letter and copy of the latest telephone bill Partnership Firms Certified true copy of Registration Certificate, if partnership is registered, Partnership Deed, Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf, any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses, telephone in the name of the firm/partners. Trusts and Foundations Certified true copy of Certificate of Registration, if registered, Power of Attorney granted to transact business on its behalf, any officially valid document to identify the trustees, settlors, beneficiaries and those holding Power of Attorney, founders / managers / directors and their addresses, resolution of the managing body of the foundation / association, Photograph of operating trustees, Telephone / Utility Bill, Identification and address proof document of the person holding on attorney to transact on its behalf Clubs, Societies and Certified true copy of Resolution for keeping Association money in SIDBI FD, copy of bye-laws, proof of identity of authorised signatories, copy of certificate of registration in the case of registered clubs, societies and associations Hindu Undivided Family [HUFs] Declaration of the Karta, Proof of Identification of Karta, Joint Hindu Family letter signed by all the adult coparceners Unincorporated Association or Resolution of the Managing Body of such a body of individuals Association or body of individuals, Power of Attorney granted to him to transact on its behalf, An officially valid document in respect of persons holding an attorney to transact on its behalf, such information as may be required to establish the legal existence of such an association or body of individuals. 2 How important is the PAN PAN has been made mandatory for all deposits. document This is to obviate the problem of deduction of TDS, and issue of TDS Certificate, when the depositor makes multiple deposits in different branches. Are joint deposits accepted Joint deposits are accepted from individuals.

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Frequently Asked Questions A mother wants to make a deposit in the name of her minor child (U/G of the mother), with the father being alive; can it be accepted. Nomination Is nomination facility available One FD is in the name of HUF / under PoA / name of a minor. Can a nomination be made. Depositor(s) wants to add/delete the nomination, can it be done after FDR has been issued ?

Answers Joint deposit can be made by maximum of three individuals. Yes, it can be accepted. The maturity amount however should be paid in the name of the minor only, with the phrase U/G so and so (name of mother).

Nomination facility is available for single and joint deposits received from individuals No, when deposits are in the name of HUF / under PoA / minor no nomination can be made.

The nomination can be cancelled or substituted at a later date by the depositors. Any request for cancellation / addition of nominee after the submission of application form should be signed by all the depositors irrespective of mode of holding. What is the benefit of In the event of demise of the sole or all joint nomination to a depositor ? depositors, the fixed deposit amount together with interest thereon, will be paid to the nominee as stated in the application or nomination substituted by the investor. What should one do if a In the event of demise of the sole or all joint depositor, though being eligible depositors and in case nomination has not been for making a nomination provided, SIDBI will recognise the title of such wishes not to do so ? person(s) to the deposit who would produce the requisite legal representation to the satisfaction of SIDBI. In case of demise of one of the Joint Depositors, SIDBI will recognise the title of the remaining Depositor(s) for receiving payment relating to the deposits as given in the deposit Application. However, operating office should henceforth take a letter from the investor regarding not making a nomination. Interest How is the interest calculated ? Interest will accrue from the date of deposit. Interest is calculated as at end of every quarter i.e. March 31, June 30, September 30 and December 31 every year. The Bank has moved to a system of quarterly compounding 3wef September 1, 2009. Is the interest compounding Yes, interest accrues from the date of deposit. Interest is compounded at end of every quarter i.e. March 31, June 30, September 30 and December 31 of each year. Income Tax Is the interest on deposit Interest amount of more than Rs.5,000/- per subject to TDS financial year attracts TDS provisions i.e if interest payable / accrued is more than

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Frequently Asked Questions

Answers Rs.5,000/- the same will be taxable [if Form 15 G / H, exemption from IT is submitted, TDS will not be deducted]. In respect of commercial banks, the TDS threshold limit is Rs.10,000/- and in respect of SIDBI FD, TDS threshold limit is Rs.5,000/-. The rules applicable to commercial banks are not applicable to SIDBI, which is a Financial Institution. No. However, SIDBI FD is rated by CARE and the rating available is AAA (pronounced Triple AAA). This rating implies best credit quality, offering highest safety for timely servicing of debt obligation and carry minimal credit risk. This is the highest rating that a long / medium term debt instrument can be assigned by CARE. Interest can be paid quarterly, annually and cumulatively [i.e. at the time of redemption / maturity alongwith principal] on the request of the depositor. No, interest is paid only quarterly, annual basis and cumulative at the time of maturity. Yes At Par cheques are issued for interest payment Wherever possible SIDBI is attempting to pay the interest by way of Electronic Clearing System. BOs have to take this initiative further at their respective centres. Yes, it is being sent 14 days prior to the maturity, if the mobile number is correctly fed in the system. RMD has also circulated a format of reminder letter (bilingual) for informing the investor, 14 days in advance, about the impending maturity. The Senior Citizens get additional 0.50 bps interest on SIDBI FD, as on date. Yes, SIDBI FD can be automatically renewed, only if the investor has opted for same at the time of deposit. 4 The interest rate applicable at the time of renewal is applicable and old rate [whether higher or lower] is not applied for renewal. Premature withdrawal of FD possible only in cases of individual deposits [before completion of one year] if the money is withdrawn for medical treatment, education purpose etc. In respect of other fixed deposits, premature is not allowed before one year from the date of deposit.

What is the threshold limit of applicability of TDS Is the TDS threshold limit comparable with commercial banks Why only Rs.5,000/is exempted for TDS, in case of commercial banks it is Rs.10,000/Is the SIDBI FD covered under deposit guarantee/insurance Is the deposit rated by any credit rating agency.

What are options

interest

payment

Can one get interest on a monthly basis. Are At Par cheques issued for interest payment Is the interest /maturity amount paid by way of ECS Will SMS/Mail alerts will be sent about maturity date of SIDBI FD

What are benefits for senior citizens Is the deposit automatically renewed If renewed automatically, does one get the same old rate or rate of interest will change Is premature withdrawal of FD possible

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Frequently Asked Questions If yes, what are the terms; does one have to pay a penalty for premature withdrawal

Answers If the FD is withdrawn before six months from the date of deposit, no interest is paid. If withdrawn between six months and one year, interest at saving bank interest rate is paid. If withdrawn after one year, applicable rate of interest minus one percent, for similar tenure of FD, on the date of deposit, is paid. In case of premature withdrawal of deposit under non-cumulative interest option, the excess amount, if any, being the difference between the amount of interest already paid at the rate stated in the Term Deposit Receipt and interest payable at the above applicable reduced rate owing to premature withdrawal, shall be deducted from the Principal amount of the deposit and the resultant balance amount shall be paid to the depositor / entitled person. Similarly, for premature withdrawal of deposit under Cumulative Interest option, the maturity value of the deposit will be recalculated on the basis of the applicable interest rate and revised maturity value shall be paid. Is SIDBI FD transferable SIDBI FD is not transferable Is loan facility available against Loan facility is not available against SIDBI FD SIDBI FD Can a SIDBI FD be offered as Yes, only if it is made out of borrowers own a collateral funds. Borrower A has taken a loan No, SIDBI FD as collateral is acceptable only if it from SIDBI. Entity B is is in the name of the borrower. Third party SIDBI agreeable to give a SIDBI FD FDR as collateral is not permitted as per extant as collateral, Is it acceptable guidelines. FD has been placed as No; foreclosure/premature withdrawal of FD collateral against a loan and it placed as collateral is strictly not allowed. turns into NPA. Can the overdues be adjusted from the FD. Brokerage Is brokerage available on Brokerage is available on SIDBI FD to SIDBI FD empanelled brokers for FD amounts of less than Rs.10 lakh. What is the quantum of The brokerage structure is as follows : a] brokerage available5 Brokerage of 15 5bps on deposits of 12 and 13 months, b] Brokerage of 25 bps on deposits of 14 months and upto 60 months. Brokerage is not available for FDs carrying differential rate of interest [if prevalent], FDs given as collateral security, and FDs mobilised from senior citizens and staff. No brokerage is available on renewal of deposit(s). The above rates and eligibility is subject to change from time to time. BOs may refer RMD circulars on the issue. What will happen to brokerage The brokerage is not to be recovered in such

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Frequently Asked Questions paid on a FD if it has subsequently been offered as a security for a loan extended by SIDBI. Is the Form 15 G / H required to be given every Financial Year for exemption from Tax Even after submission of Form 15 G / H, if TDS is deducted/by mistake, can it be refunded to the investor What is to be done with Form 15 G / H

Answers cases.

Form 15 G / H is required to be submitted in duplicate before April 15 every Financial Year for exemption from Tax during that Financial year Refund of tax which is deposited with Govt. is not possible.

Duly filled in Form 15 G/ H is to be submitted to the Income Tax Office. RMD has issued a note dated February 10, 2009 to all BOs. Being a statutory requirement, care should be exercised to see that submission is done in time. When can one get the TDS On filing of ETDS, TDS certificate is issued to certificate investors. Maturity not claimed 14 days prior to maturity date SMS is sent to the investor [if mobile number is provided by the investor and fed correctly by the concerned BO in the system] 14 days prior to maturity date, a letter reminding the investor about the maturity of the FD is sent and investor is requested to surrender the FDR for renewal/redemption. Follow-up and telephone calls to the investor. If not redeemed in 2 years from date of maturity, the amount is transferred to Account Code 1227 - Unclaimed Deposit Account under FDS. An entity has received a The Foreign Contribution (Regulation) Act, 1976 contribution from a foreign requires that the associations having a definite country / entity and wants to cultural, economic, educational, religious and place a deposit with SIDBI. Is social programmes receiving foreign contribution there any extra caution to be should get themselves registered with the exercised. Ministry of Home Affairs, Government of India and receive foreign contribution only through such one of the branches of a bank, as an association may specify in its application for registration with the Ministry of Home Affairs. Further the said Act provides that every association referred to in 6sub-section (1) of Section (6) may, if it is not registered with the Central Government, accept any foreign contribution only after obtaining prior permission of the Central Government. There are also certain organisations of a political nature, not being political parties (including their branches/units) specified by the Central Government under Section 5(I) of the Foreign Contribution (Regulation) Act, 1976. These organisations also require prior permission of the

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Frequently Asked Questions An investor is now sick / old / incapacitated by an accident or other reasons and is not able to discharge the FDR on maturity. What should be done. A depositor has died. What is the procedure for settling the FD.

Answers Central Government for accepting any foreign contribution. A medical certificate has to be obtained confirming the incapacitation and not being able to sign. In such cases a thumb or toe impression of the sick / old / incapacitated depositor should be obtained with two independent witnesses known the BO. The payment can be made to the nominee or wherever the survivorship clause (either or survivor / former or survivor / Anyone or survivor) is there, payment can be effected to the survivors.

For any other issue / clarification , please contact : Resources Management Department, SIDBI, Mumbai (e-mails : rmd_mho@sidbi.in, mmmoghe@sidbi.in, jyotiparmar@sidbi.in, rahulp@sidbi.in) ***** ravik@sidbi.in,

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