We all have heard of a famous proverb which says:
Change is the only thing constant in today’s world
Well, the proverb holds true in every sense. If we talk about business, economy, money we will find that the money life went 
through a few changes in 2012. Well the credit goes to the regulatory authorities functional in India. Thanks to RBI, SEBI, IRDA and the income tax department for such change over the period of one year.
Change is something which is not always good. It comes with different flavors, could be sweet as well as bitter. There were few changes to cheer for, where as the others only added pain to the investor. Following is a quick walk through the different changes and its impact, which happened in the year 2012:
Changes in Mutual Fund Industry
There were few changes in the Mutual Fund industry. Out of many, two are noteworthy changes:
- One Scheme One Plan: It is an initiative by Securities Exchange Board of India (SEBI), the Indian regulator for the capital market. Earlier, an institutional investor putting funds and a retail investor parking funds in the same fund had to bear different expense structures. But under the current scheme, the retail investor will get the benefit of a lower expense structure which is currently only applicable to the institutional investors. This will also help the investors invest in a scheme, which had higher investment amounts previously.
- KYC: One of the major changes in the industry is the Know Your Customer or the KYC norms. Under the scheme a person having KYC done on or before January 2012, need to re-file the KYC details to make any fresh investment in the mutual funds. Upon receipt of the KYC only, an individual is liable to invest in MFs from now on. It is mandatory that you are ‘VERIFIED BY CVLKRA’ compliant and not CVLMF to further invest in any sort of Mutual Fund. Though this norm has helped in maintaining customer database, but it has also brought some heart burn, as the processing of KYC is a painful task.
Read more about Mutual Fund Companies in India.
Bank Deposits & Tax on Interest Income
- Pre-Payment Penalty: Well this was something very new introduced by the Reserve Bank of India. Pre-payment penalty is something which you need to pay if you are willing to close your loan earlier. This penalty has been removed by the RBI, thus giving a chance to Home loan borrowers to rejoice in 2012. The apex bank of India asked all the banks to remove all foreclosure charges/ prepayment penalty on home loans which are disbursed on floating rate. The step was taken in order to reduce the discrimination between existing and new borrowers. Currently only the people having loans on floating rate will be beneficial as the charges of fore closure still applies on the fixed rate home loans. For people having hybrid rate including both fixed and floating charges, will bear a fee during the period of fixed rate but as the loan moves to the floating rate period, such a fee won’t be required.
- PPF and SCSS: The small saving schemes saw certain changes making your pocket bulkier. The Government revised interest rates in two small savings schemes namely PPF or the Public Provident Funds and SCSS or the Senior Citizens Savings Scheme. The rate has been revised to 8.8% pa and 9.3% pa, from the existing 8.6% pa and 9% pa respectively.
- Section 80TTA: Income Tax department added a new section in the current year namely the section 80TTA. The section will now enable you to keep small amounts of interest earned on your savings account out of the tax scope. You will be entitled for a deduction of INR 10,000 on interest earned from savings accounts. The saving account can be from a bank, co-operative society or a post office.
Also Read about Top Ten Banks in India.
Some of the other changes included the following:
- Basic savings bank accounts,
- Intra bank portability,
- Rajiv Gandhi Equity Savings Scheme (RGESS)
- Service tax net tightened on various insurance plans
- No advance tax for senior citizens on unavailability of business income.
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