Review of iWish Recurring Deposit from ICICI Bank

Around December last year, ICICI Bank launched a flexible Recurring Deposit scheme called “iWish”. Customers with an ICICI savings account and who have access to Internet banking can use the iWish facility. Here’s how

  • Login to the iWish section in your ICICI saving bank account
  • Define a goal (like buying a laptop, vacation, down-payment on a house, etc.)
  • Define the amount and tenure
  • Make the starting contribution and the iWish goal starts

After this point, you are free to deposit additional money in your iWish account anytime you have surplus funds. Also, you can clearly see how much of goal is completed in % terms at any stage of the process. Interest rates on the iWish scheme range between 7.75% and 8.5%. Rates depend on the tenure of your goal – which can be between 6 months and 10 yrs.

ICICI iWish scheme Interest rates and Penalty rates
Source Page
Where iWish really innovates, is by bringing a social networking aspect into the picture. Users have the ability to share their goals (and the money required to achieve them) on their Facebook account and friends and family can then contribute money to the goal if they wish. By getting users to make a public declaration of their goal, the scheme hopes to prompt greater accountability in individual financial decisions.

To learn more about ICICI iWish Scheme, please watch the video below.

How its different from normal Recurring Deposit ?

Compared to a standard Recurring Deposit, the iWish scheme does not make it compulsory for users to make payments on a fixed date and also gives them the power to categorize savings into goals – which is a more human way to visualize and save your money.

Personally, I see iWish as a mechanism to define goals and save for them through Recurring Deposits. While standard Recurring Deposits just help save money for an unlabeled goal, iWish helps you define and prioritize your goals – helping you decide which goal to save for first. It also helps build a focused saving approach as once someone defines a goal, they are more likely to be serious about achieving it.

The scheme is clearly going to benefit the young generation, who are new to investing. For a generation who rely a lot on visual stimuli, the ability to see defined goals and a visual image of progress towards that goal (e.g. 34% of your ‘new car’ goal has been achieved) is a huge plus.

Fine Prints and things to know

While, on the whole, the iWish Scheme is good, there are few things one should be aware of to avoid a mismatch with expectations.

  • One can create maximum of 10 goals (wishes) and the maximum goal amount can be Rs 10 lacs
  • The minimum installment amount per month has to be Rs 500
  • If you want to withdraw the money on maturity or even before maturity, you need to open a request online for that.
  • There is no compulsion of making payments each month, so you can skip the installments if you want

Disadvantage of iWish from ICICI

By now, you must be wondering what the downsides of the iWish scheme are? Simply put, it is the problem of “manual intervention”.

I am convinced that it takes a great degree of resolve and discipline to properly manage one’s personal finance and investments. Unless the saving process is automated, people are tempted to be a little relaxed about saving in every period. While iWish touts its ‘flexibility’ as an innovative feature, in real life it might not help, as people are more likely to stop ‘voluntarily’ paying into their goals after 2-3 contributions.

With a traditional recurring deposit, the process of investing is compulsory and forced on you and in essence, you are compelled to make payments on a fixed date. Furthermore, the knowledge that there is an auto-debit leads you to ensure the monies are there in the account on the designated date. All this means that over 1-2 years, the Recurring Deposit really works and creates the money pool you need. While iWish is a fancy product, I do not see it as an improvement over the traditional Recurring Deposit.

Only in selected conditions and situations, iWish seems to work better than normal Recurring Deposit. An example would be when the investor’s income is not stable (one does not know if the bank account will really have the required balance on a certain date). For all other cases, I would prefer using traditional Recurring Deposits. Choose a goal, fix the amount, divide it by number of months and just start the RD for that amount. That should get the job done without needing my involvement every month.

What’s your verdict about iWish Feature and its utility? Do you think it’s any better than traditional Recurring Deposits?

UPDATE : Just realised later and came to know that you can have funds debited from your account automatically just like traditional RD, but it was kind of hidden and I never realised it . So mainly iWish has both, traditional RD features and innovative flexible way to accumulate your money and hence is better than what I have projected above.


A detailed information about Inflation Linked Bonds from RBI and investment in it

RBI has announced that its going to issue Inflation Indexed National Savings Securities – Cumulative (IINSS-C) for retail investors where one can invest and get returns equal to Inflation + 1.5%.

These bonds are now coming up in markets, as it was announced in the last budget that govt will bring inflation linked products very soon (RBI link here).

The minimum Investment amount for these inflation linked bonds is Rs.5,000 and the maximum can be Rs.5 lacs per applicant per annum. The inflation linked bonds are going to be available only for 9 days, starting from 23rd Dec to 31st Mar 2014 only (update – This date was earlier 31st Dec, later it was extended to 31st mar).

The best part about these bonds is the hedge against inflation, so you don’t have to worry if your investments will be able to beat inflation or not.

rbi inflation linked bonds national saving securities

Returns from Inflation Indexed Bonds

As per the RBI guidelines, the return you would get is “Base rate of 1.5% + Inflation Rate based on Consumer Price Index (CPI) , compounded half yearly”. So assume that, CPI inflation number is 10%, so your final return would be 11.5% (10% + 1.5%) .

Actually because its compounded half yearly , the returns would be a little more than 11.5% . One important point to note is that in case of negative inflation (which we are all sure will not happen), you get 1.5% guaranteed.

The best part about these bonds is that the benchmark for returns is CPI inflation and not WPI !. Because CPI is one the best measures of inflation parameters available in India. CPI is more close to reality, tracking the change in prices of end-user numbers unlike is sister WPI (Wholesale Price Index), which tracks the price changes in wholesale market. Read more about WPI vs CPI here .

Below is the last 3 yrs history of CPI inflation for you to get an idea about what was CPI in last some years ! .

CPI Inflation India 2013

Taxation Angle ?

This can be disappointing for many, but there is no tax benefit when you invest in these RBI bonds. You do not get any income tax exemption at the time of investing under Section 80C or anything else, nor they are tax friendly at the time of maturity.

You will have to pay income tax on your returns as per your slab rates at the time of maturity. Now that’s the price you need to pay to get the guarantee that your investments will be hedged against inflation.

Can you get Loan by Pledging the Bonds ?

Yes, you will be able to pledge these bonds and get the loan against it. Given that the bonds comes from RBI and govt guarantee’s the returns part, the lenders would not mind lending you against the inflation linked bonds. However you wont be able to sell the bonds in secondary markets, like you can do some of the other bonds which came few years back.

Can NRI’s Invest in These bonds ?

NO. NRI’s are not allowed to invest in these inflation linked bonds from RBI. As per the guidelines from RBI declaration about bonds, only Individuals , HUF’s and Charitable Institutions and Universities are allowed to invest.

Premature Withdrawal

The bonds tenure is 10 yrs, however its possible to withdraw prematurely after 3 yrs of investments (with penalty charges) , however a senior citizen (65+ yrs) would be able to do premature withdrawal after just 1 yr. Note that premature withdrawal rates are high enough to discourage you to do so ! .

How to Invest ? 

One can invest in these bonds at branches of SBI bank , all other nationalized banks (Vijaya Bank, Bank of Baroda, Maharashtra Bank, Bank of India etc etc … all of them) and 3 private banks which are ICICI bank, HDFC bank and Axis Bank.

Subscription to the Bonds will be in the form of Cash/Drafts/Cheque/online through internet banking. Cheque or drafts should be drawn in favor of the bank (those mentioned above), specified in paragraph 10 and payable at the place where the applications are tendered. I think its better to visit the bank for exact procedure incase you are interested.

Full Brochure about these bonds from RBI is below:

Who should Invest ?

At first glance the bonds look very good option to make long term investments who are too scared with inflation and it worries them to core.

Those investors who are approaching retirement and want some kind of security against inflation can surely look at these bonds, but then be ready to pay income tax on the returns part. Truly speaking your final return depends on various things like CPI inflation in future and the Taxation laws at the time of maturity.

I contacted some of the other bloggers and experts to know their opinion about these bonds and their comments and here they are !!

Karan Batra, A Chartered Accountant who writes on Income tax on his blog was not very excited about these bonds and says

These Bonds are only Inflation protected and not Tax protected but sadly the Tax Rates in India are much higher than the Inflation Rates in India. Therefore, it is always advisable that the investor should prefer to invest in tax-free instruments like PPF as they yield a better return.

Moreover, the computation of interest and principal readjustment is complex which leads to an even highly complex tax structure. These Bonds may give slightly higher returns but the complexities are so much that it I’m advising my clients to stay away from this issue and rather invest in PPF/Fixed Deposits

However when I contacted Deepak Shenoy to comment on these bonds from long term perspective, He was positive about these bonds and says

The product makes sense for anyone in income brackets that are less than 30%, but you have to buy the idea that inflation will remain fairly high over the next few years. If the CPI inflation falls, your return comes down appropriately. (In which case the fixed coupon tax-free bonds or PPF is a way better idea).

You can read the detailed posts from Deepak on these inflation linked bonds here and here.

Are you worried about inflation in future? Are your investments hedged against inflation? Please share your thoughts about it in comments section below !

Also be ready for the “Oh My God” Offer coming on 7th Jan, which will be a great one in a year offer from Jagoinvestor you can’t afford to miss. More information about it soon !

Review of book – “Easy Money – Evolution of Money from Robinson Crusoe to the First World War”

Do you want to learn how money evolved in this world ? How did the concept of money took birth ? Today it might look very easy and intuitive to see and manage money, but it has long history and a very interesting one! . I always used to wonder about these topics, but got to read anything in detail untill some months back when Vivek Kaul sent me his book – “Easy Money – Evolution of Money from Robinson Crusoe to the First world war” (buy the book)

In this book, Vivek has shared how this world was first on the barter system and then slowly and steadily the concept of money was born. He mentions various events in history and examples which will how you how money was not just invented in a day, but it slowly took its shape because it was the need of the hour.

easy money book by vivek kaul

Click Here to Buy the Book

Kaul starts with the history of money from time immemorial and traces the development of money and the financial system till around the time of the end of the First World War. He tells us about the various commodities that have been used as money at various points of time. Other than gold and silver, a whole lot of other metals like copper, iron, platinum, lead, nickel, and tin, have been used as money by various civilizations at various points of time.

Other than metals, agricultural commodities like almonds, cacao beans, rice, wheat, and tobacco have also been used as money. In fact, tobacco was used as money in the United States longer than gold and silver were. Salt has been used as money in large parts of Sahara which are dry.

Here is one example sharing from the book

In the prisoner of war camps during the Second World War cigarettes were used as money. Dog teeth and dolphin teeth have been used as money. And in the island of Yap in the Pacific Ocean even large thick stone wheels called fei have also been used as money.

Gold is valueable because its “Useless”

One of the best things I learned from the book is that Gold is valuable in this world, because its Useless. Yes – you heard it right. From the start of my life, I used to wonder that why people love gold and why its so expensive when it cant be used for anything useful, and in the book I learnt that – its the exact reason why its so valuable . The book shares the reason for this and Here is an excerpt from the book

What also helped gold survive as money is its uselessness. “Despite the fact that it is highly malleable (can be beaten into sheets easily), ductile (can be easily drawn into wires), and the best conductor of electricity, gold does not have many industrial uses like other metals have. This is primarily because there is very little of it go¬ing around. Also, what does not help is the fact that gold is as soft as putty. This softness makes it practically useless for all purposes that need metal,” writes Kaul. “When commodities are used as money they are taken away from their primary use.

So, if rice or wheat is used as money for daily transactions and to preserve wealth, it means a lesser amount of rice and wheat in the market for people to buy and eat. This, in turn, would mean higher prices of grains, which are staple food in large parts of the world. Gold does not have many practical uses. So if people hoard gold, it does not hurt anyone,” he adds. Hence, gold survived as money largely till the start of the First World War. Then paper money took over as various European governments had to print money in order to finance the First World War.

Rise of Paper Money and Banking System

One of the most interesting points of Easy Money is the part where Kaul explains the close link between the rise of paper money and the banking system as it has evolved to this day. In fact, the paper money system was at the heart of the profitability of banks. As Kaul writes “The moral of the story is that the lesser the capital the bank had, the greater money it made, but greater was its chance of going bust as well. As Walter Bagehot, the great editor of The Economist once put it, “the main source of profitableness of established banking is the smallness of requisite capital.”

This is a very fundamental point on how the banks as well as other financial institutions have evolved over the years and is at the heart of things as they are currently. Banks as well as financial institutions over the years have figured out that the lesser the amount of capital they have on their books, the more money they make. But this increases the riskiness of the overall financial system as well.”

Note that the book also talks about some of the heavy topics like financial crisis, financial innovations like securitization, collateralized debt obligations, and credit default swaps, how banks evolved etc

The last chapter of the book tries to link the history to way things are happening currently. This chapter could have been little longer and ends a bit too quickly. Another thing that the author could have done is have had takeaways at the end of each chapter, linking them to the current financial crisis.

My personal take on the book

While I enjoyed the book, and its an an excellent read for anyone looking to understand the current financial crisis from a historical view point in simple jargon free English. Be clear that its not a regular personal finance book teaching you about concepts. Also be ready to read few things which you might not be able to digest in a single read. You should read the book only if you love the topic of money evolution and the whole idea which the book wants to present.

Buy the Book by Clicking Here

About Vivek Kaul

Vivek Kaul has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times. His writings have appeared across various other publications in India. These include The Times of India, The Times of India (Crest edition), The Hindu, The Hindu Business Line, The Pioneer, Indian Management, Asian Age, Deccan Chronicle, Forbes India, and Wealth Insight. He has also written regularly for Currently, he is a regu­lar columnist for and a regular contributor to DNA.

Share with us how Jagoinvestor has helped you succeed in your financial life – Click Here

The Shocking story of – How LIC policy was surrendered using Forged Signature

Can someone else surrender your LIC policy and take the money ? I know you have never ever thought this can happen, because this looks so impossible, but I want to share an incident with you all which happened with Muthu (name changed), who is one of our jagoinvestor reader.

insurance fraud surrender

One day, Muthu came to know that 3 of his LIC policies were surrendered by someone else and the money was utilized. He came to know about this only when he got pre-closure letter from LIC for his 3rd policy. Below is the full sharing from Muthu

Hello All,

I was shocked to know that someone has used my identity (signature) to surrender my LIC policies and utilized that money for their benefits.

  • Firstly, my policy # 363934899 was forged and surrendered on 29.01.2013, for which LIC has issued cheque # 926895 dtd 29.01.2013 amounted Rs. 49795/- without my knowledge or consent.
  • Secondly, my policy # 363934900 was forged and surrendered on 29.01.2013, for which LIC has issued cheque # 926894 dtd 29.01.2013 amounted Rs 49795/- without my knowledge or consent.
  • Thirdly, my policy # 364340197 was forged and surrendered on 07.10.2013, for which LIC has issued cheque 959220 amounted to Rs 35645/- without my knowledge or consent.

I came to know about this when I received pre-closure letter from LIC after surrender of my third policy # 364340197. Immediately I raised written complaint to LIC about policies forgery on October 29, 2013. Further to my complaint, LIC recovered forged amount from the concern person and sent a covering letter along with the 4 cheques to me for the forged valve but not specifying the forged person name on the covering letter.

This incident raises some questions which are –

  • When the initial cheques was issued in my name, how the money has been utilized by someone else.
  • Even though requesting, LIC not mentioning forged person name in the covering letter after recovery of the forged amount.
  • Did LIC filed FIR against forged person? If not why?

Who did this Fraud ?

When I came to know about this incident, the first thing which came to my mind was that it was some “insider” from LIC who did this, because its almost impossible to surrender the policy without producing the original policy document, forging the signatures and then redeeming the cheque in your own account. But the truth is that the fraud was not done by anyone from LIC office. Then Who ?

It was his Mother and Younger Brother !

Shocked ! ?

Let me now share in Muthu’s words how his mother and younger brother did this fraud.

The Fraud was done using “re-cycle” procedure

Here is exactly what Muthu shared about the fraud procedure

Dear Manish,

Since the bond was in my mother custody they surrendered that policy with the forged signature (read more about Identity Theft)

When the cheque was issued in my name, LIC agent by name Yeshoda has given a cunning idea to re-submit the cheque received in my name to LIC and another policy to issue for the same value for different name ( This process is called re-cycle procedure).

Finally once the policy has been issued in their name. They can easily surrender that policy and utilized the policy amount.

This is worst ever experience that money can change “ANY ONE”.

Do you have LIC policy ? Are you sure this same fraud can not happen with you ? How will you prevent it ?

Entering ATM PIN is now compulsory when you use Debit Cards

RBI has made it mandatory to punch your PIN number, when you use your debit card on shopping outlets (Big bazaar, Petrol Pumps, Shops) from Dec 1 2013. I realised just few days back that this has already started. I was shopping for household things at a mall nearby and was asked to punch in my Debit card PIN after it was swiped. It was the first time I had to do that in last so may years of my using debit card for shopping. I covered the machine with my hands and entered my PIN and the transaction went through.

mandatory pin on debit card swipe

There are close to 350 million debit card in India right now and you can imagine the quantum of frauds which is possible with so many debit cards in India. Before this rule came into effect, if your debit card was lost – Someone could just take your debit card, go for the shopping and swipe your debit card and would never get caught because the shopkeepers never checked signatures, identity of person etc.

But now with this new rule in place, an additional check of entering PIN number is required and the chances of fraud is lowered to some level

But – there are some Problems due to this

Now from one angle, surely frauds will come down, but then at the same time, this new rule exposes you to some new risks and potential frauds. Like – If you punch your PIN without much thought and others surrounding you are looking at the machine, others can look at the 4 digit PIN number you punched and memorize it.

Forget strangers, but imagine you are with some friend/relative and you punch your PIN, he/she looks at it, memories it and now he can use it later for some online transaction (he still has to find out your Card number and Expiry date, which is clearly mentioned on your card).

Also at some outlets dishonest shopkeepers have skimmers machine which record your data when you swipe the card and they can duplicate your card and use it later to withdraw cash from ATM or do transactions with duplicate cards.

An article from Firstpost also mentions that there is also a possibility of PIN being stored on the Machine after you have punched it.

The next question to ask is can the PIN be stored (knowingly/ unknowingly) on the card reader machine by the retailer? According to this report in the USA, instances have been known where many merchants have incorrectly stored PIN information they should be destroying after customers enter the secret code. While we agree this is a western world report, Indian fraudsters have always been inspired to copy those tricks in the domestic markets. What would stop our fraudsters? And even if your merchant would have stored the PIN inadvertently on his card machine, a hacker can easily access the retailer’s machine to get data about several card holders along with their PINs.

Implementation from Dec 1

The above rule was to be followed by all the terminals from Dec 1, 2013. Anyone not complying is just not following RBI guidelines and breaking the law.

While all the places I have seen has started implementing it, still at some places its not being not followed. Here is one instance which comes from the same first post article comments section, where someone is sharing his experience.

yesterday on 4 Dec, I went to another restaurant and wanted to pay via debit card. While, the merchant was punching into machine, I was waiting for him to hand over the machine. But this is not what happened, I was not asked for the PIN for this restaurant even after the new RBI rule is in effect.

This clearly violates the fact that the new RBI rule is not completely applied for all merchants/banks.

What do you think about this new change ? Are you happy with it, or have some reasons against this change ?

The Journey of 10 part Plan F show (and youtube links)

In this post we want to share our great experience till now working with CNBC 18 and DSP BlackRock Mutual Funds team on the show Plan F. We have been involved with the whole process from start. Me and Nandish keep going to CNBC Office every alternate week to shoot for our part which comes at end of each episode.

Shooting of CNBC show plan F

What you can learn from Each Episode ?

All the 10 episodes have been aired and we have got all kind of reviews about them, what was good, what could be improved, which part audience are liking and what they are not liking. I tell all of them that no one episode can fit someone’s expectations, but it surely has deep learnings for everyone. In one way or other one can surely learn from each episode’s. I am not talking about the numbers discussed or their portfolio, but from each episode’s case study financial life journey.

For example – in 5th episode, Mr Subodh Khare shares how he wants to make his daughter financially wise and wants to give them around Rs 50 lacs so that they can shape their life from there in a more powerful way.

In 2nd episode Sreekumari shared how she is operating from Financial Freedom and how she has already taken so many right decisions.

In 3rd episode Ramakumar shares, how all his life, he used 2nd income in family (his spouse income) only and only for saving and now he is almost financially free.

If you look at each episode, write down what is that one learning you can draw from the episode and you can take some actions to improve it. If you listen to IFA’s, they analyse the portfolio and give some 2-3 core insights they can think about. Either Me or Nandish give 3 tips of the week for all investors which you can apply to your financial life.

Episode 1 – Ramesh Jalan

Watch the first episode, where Mr. Ramesh Jalan talks about his investment journey with financial experts Sumeet Vaid (MD, Freedom Wealth Solutions) and Vijay Bhushan (Partner, Bharat Bhushan & Co.)

Episode 2 – Shreekumari Dholakia

Watch the second episode, where Ms. Shreekumari Dholakia talks about her investment journey with financial experts Lovaii Navlakhi (CEO, International Money Matters) and Surya Bhatia (Managing Partner, Assets Managers)

Episode 3 – Ramakumar Poothrikovil

Watch the third episode, where Mr. Ramakumar Poothrikovil talks about his investment journey with financial experts Ramkumar Barchha (Premium Partner, Ramkumar H Barchha) and Ashish Shah (MD, Wealth First Portfolio Managers)

Episode 4 – Himanshu Jain

Watch the fourth episode, where Mr. Himanshu Jain talks about his investment journey with financial experts Suresh Sadagopan (Founder, Ladder 7 Financial Advisories) and Brijesh Dalmia (Director, Dalmia Advisory Services)

Episode 5 – Subodh Khare

Watch the fifth episode, where Dr. Subodh Khare talks about his investment journey with financial experts Ashish Chadha (CEO,Chadha Investment Consultant) and Pallav Bagaria (Proprietor, Brand New Day)

Episode 6 – Sanjeev Singh

Watch the sixth episode, where Mr. Sanjeev Singh talks about his investment journey with financial experts Hari Kamat (Proprietor, Investment Avenue) and Ullas Shah (CEO, Madhuvan Securities)

Episode 7 – Kavita Sharma

Watch the seventh episode, where Ms. Kavita Sharma talks about her investment journey with financial experts Ranjit Dani (Co Founder, Think Consultants) and Krishnakumar Desai (Chief Investment Advisor, Sri Kotyark Investments)

Episode 8 – M Subrahmanyeswara Rao

Watch the eighth episode, where Mr. M Subrahmanyeswara Rao talks about his investment journey with financial experts Gajendra Kothari (MD & CEO, Etica Wealth Management) and N Krishnan (Director, Value Invest Wealth Management)

Episode 9 – Shefali Doshi

Watch the ninth episode, where Ms. Shefali Doshi talks about her investment journey with financial experts Mrin Agarwal (Founder, Mr investment) and Deepak Chhabria (CEO & Director, Axiom Financial Services)

Episode 10 – Cyrus Broacha & Ramesh Damani

In the Plan F finale (10th Episode), watch the key principles of investing that regular investors can implement in their investing strategy, summarized by the renowned market analyst and member of BSE, Ramesh Damani. These principles have been extracted from the many case studies that were featured over the course of the Plan F season. Also, watch the tables turn as Jagoinvestor takes on the role of the inquisitor, interviewing Cyrus Broacha on his personal finance journey.

Share about your views on Plan
Can you share your learnings from various episodes of Plan F ? Which were the points you learned and have started applied in your financial life ?