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New Issue Market

Submitted to: Rutvi MamSubmitted by: Ashish Sakariya

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New Issue Market

Non-security form of investment

In India, the household sector's investment in non-security forms

constitutes a major proportion of its total investment in financial assets.

There are a large number of non-security forms of financial assets that

are available to investors in India. These are more in the nature of

savings of individuals and households, particularly for the benefit of

small savers. These investments are guided more by conveniences

safety and tax benefits rather than a strong desire to earn a very

attractive rate of return.

Cont….

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New Issue Market

Non security forms of Investment

• National Saving Scheme (NSS)

• National Saving Certificate (NSC)

• Insurance plans

• Post office small saving scheme

• Corporate fixed Deposits

• Units Schemes of UTI

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New Issue Market

National Saving Scheme

• NSS offers an assured return & tax rebates under sec. 88 of the Income Tax Act 1961.

• NSS units are issued with the minimum investment being 100 Rs.

• This scheme offers the coupon rate of 9% p.a.

• Time duration for this scheme 4 years & no premature withdrawal facility except in the case of death of the holder.

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New Issue Market

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New Issue Market

National Saving Certificate

• It is also an under sec. 88 of the Income Tax Act,1961 for tax rebates.

• This forms are available at all post office.• This scheme offers the coupon rate of 9.5%

p.a.• Time duration for this scheme is 6 years.• Payment of purchase of NSC can be made by

either cash or cheque.

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New Issue Market

Types of NSC

• Single holder type CertificateThis certificate can be issued to

• 1. an adult himself or on behalf of the minor• 2. A Trust

• Joint ‘A’ type Certificate• This can be issued to the two adults payable to

both holders jointly or to the survivor.

• Joint ‘B’ type Certificate • This can be issued to the two adults payable to

both holders either or the survivor.

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New Issue Market

Insurance Plans

• Children plans• Whole life plans• Money back plans• Plans for handicapped• Endowment Assurance plans• Life plan• Pension plans• Units plans

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Post office small savings schemes

1) Kisan Vikas Patras (KVP)* This instrument can be obtained in

denominations of Rs. 1000, 5000 & 10000.

* The maturity period is 5 to 12 years but in this premature encashment is possible.

* The interest payable is on KVP is compounded annually but its taxable

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New Issue Market

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2) Post office Recurring Deposits

* The scheme covers free life insurance cover after receiving contribution for the 2 years on a/c of denomination of Rs 5, Rs 10, Rs 15 & Rs 20.

* In the event of death of the depositor after a minimum period of 2 years, from the date of opening a/c the heir or nominee will get the full maturity value of the a/c.

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New Issue Market

3) Post office Saving Account• It can be opened minimum of Rs. 200 but

previously it opened of Rs. 50 & maximum of Rs. 100000 for an individual.

• For the joint a/c the upper limit is Rs. 200000 but there is no limit for the group.

• Withdrawal from the a/c is by cheque.• The interest is tax free & is 0.5% more than

that offered on saving bank a/c by commercial bank.

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New Issue Market

4) Post office time deposit* A time deposit is an investment option that

pays annual interest rates compounded quarterly & is available through post office.

* They are suitable for capital appreciation that money grows at a pre-determined rate.

* So, time deposits are one of the better ways to get a relatively high interest rate for saving.

* They are bound for some specific period of time.

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New Issue Market

5) Post office Monthly Income Scheme

* The MIS provides for monthly payment of interest income to investor.

* Investor who want to invest a lump sum amount initially & earn interest on a monthly basis for their livelyhood.

* This scheme have been very popular in view of tax benefits & also it’s a boon for retired persons.

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New Issue Market

Corporate fixed Deposits

1) Private Corporate Sector

* The rate of saving of the PCS also shows steadily increase

* During the period of 1999 – 2000 to 2004 – 2005 non financial companies on an average accounted for about 85 % of gross saving of the investor.

Year Rate of saving

1950 1%

1980 1.80%

1990 3.70%

2005 4.80%

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New Issue Market

2) Public Sector

* The rate of saving of the public sector, which an increasing trend till 1970s, started declining then after & turned negative since 1998 – 1999.

* The rate of public sector saving is currently going more than 6 % but the previous year rate are as under

Year Rate of saving

2003 - 04 1%

2004 - 05 2.20%

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New Issue Market

Units Schemes of UTI

• The units of the Unit Trust of India provide investment facilities to small investors for giving them a good current income and also capital appreciation. The UTI is required by law to distribute not less than 90% of its income. Individuals, companies, corporate bodies, etc. through direct agency, bank or post offices can open accounts. Investments in units enjoy tax benefits. Units can be considered as a channel of investment on a very moderate scale. So long as the special tax concession is available, it is attractive to high-income investors.– Unit-linked Insurance Plan (1971)– Reinvestment Plan (1966)– Unit scheme (1964)– Children Gift Growth Fund, 1986 The interest of this scheme is near about 12 to 12.5% p.a.

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New Issue Market