Budget Announces NPS ‘Vatsalya’ Scheme: ₹10K SIP Grows to ₹63L, ₹20L Loan Under Mudra Yojana
NPS ‘Vatsalya’ Scheme, Parents Can Arrange Pension for Their Children
The NPS Vatsalya scheme has been designed to help families ensure their children’s financial security as they grow up. Parents can invest in this scheme on behalf of their children. The account will be converted to a regular NPS account upon reaching adulthood.
When the child turns 18, the scheme can also be converted into a non-NPS scheme. The regular NPS scheme aids in building a retirement fund. Contributions to NPS are invested in market-related instruments such as stocks and bonds for higher returns.
63 Lakh Fund with a 10,000 SIP in 15 Years
Suppose your child is 3 years old. If you do a 10,000 SIP in this scheme, approximately 63 lakhs can be accumulated by the time the child turns 18.
NPS Launched in 2004 to Provide Regular Income Upon Retirement
NPS was launched in 2004 to provide retirement income for all citizens of India. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Subscribers can choose fund allocation between equity, corporate bonds, and government bonds as per their preference. There is also an option for Auto-Choice Lifecycle Funds.
A portion of the corpus is used to purchase an annuity upon retirement. NPS also provides tax benefits under sections 80C and 80CCD(1B) of the Income Tax Act. Two types of NPS accounts can be opened through banks.
Employee Contribution Limit in NPS Increased from 10% to 14%
For private sector employees, the NPS contribution limit has been increased from 10% to 14% of the employee’s basic salary. The new limit applies to both private and public sector employees. Employer contributions to NPS are optional. However, many companies now offer NPS facilities to avail tax benefits under Section 36(i)(IV) of the Income Tax Act, 1961.
MUDRA Loan Limit Doubled, Now MSMEs Can Avail Loans Up to 20 Lakhs
MUDRA Loan Limit Increased from 10 Lakhs to 20 Lakhs
The MUDRA loan limit has been doubled in the budget. Previously, MSMEs could avail loans up to 10 lakhs under this scheme, which has now been increased to 20 lakhs. However, this benefit will only be available to those who have taken a loan under this scheme and have repaid it.
Currently, Loans are Provided in Three Categories Under this Scheme
Under the MUDRA scheme, those starting their business are given loans in three categories. The first category is ‘Shishu,’ under which people get loans of 50,000 rupees. The second category is ‘Kishore,’ where loans ranging from 50,000 to 5 lakhs are provided. The third category is ‘Tarun,’ under which loans ranging from 5 lakhs to 10 lakhs are provided.
No Collateral Required for Loans
Started in 2015, the purpose of this scheme is to provide loans to street vendors and small traders without any collateral. Anyone wishing to start their own business can take a loan under this scheme. Additionally, if someone wants to expand their existing business, they can also get a loan under this scheme.
Submit a Business Plan to Avail Loan
Firstly, the applicant needs to prepare a business plan. In addition, all necessary documents for the loan must be prepared. Along with the usual documents, the bank will also ask for documents related to your business plan, project report, and future income estimates, to understand your requirements and how you will benefit or increase your profits.
Loans at an Annual Interest Rate of 10-12%
The special feature of the MUDRA loan is that there is no fixed interest rate. Different banks can charge different interest rates on loans. The interest rate is determined based on the nature of the business and the risks associated with it. Generally, the interest rate is between 10-12% per annum.
Process to Apply for MUDRA Loan in 4 Steps
- First, decide from which bank/financial institution you want to take the loan. The applicant can choose more than one bank. Fill out the loan application form and submit it to the bank along with the documents.
- To apply for a MUDRA loan, you need to submit a business plan or project report, photocopies of identification documents like PAN card, Aadhaar card, voter ID card, etc., along with the application form.
- Apply to the government or any other bank or financial institution that offers MUDRA loans. You need to submit complete information/plan of your business and other necessary documents for the application.
- If the application is found correct, the bank or financial institution will approve the MUDRA loan and provide the applicant with a MUDRA card (debit card). You can spend as per your convenience.
