We rarely review a product until it has something new. SBI Bandhan caught my research eyes as it is a simple product with a great idea. We often get into doubt when someone in the family asks or need money. Because of taxation angle. SBI Bandhan is a product which answers this by making it full-proof in eyes of taxation department. Here is SBI Bandhan Features Details Review for you.
SBI Bandhan is an old concept, which is not very popular in India- Systematic Withdrawal Plan or SWP as it is called by Financial planners/Advisors. SBI Bandhan redefines this concept in hope that many will get benefits of this arrangement.
Before we meet SBI Bandhan Features Details Review, let’s first learn or revisit SWP.
What is Systematic Withdrawal Plan or SWP?
If you are aware of SWP, skip this part and start reading below about SBI Bandhan.
SWP is opposite of SIP. In SIP an amount from your account is debited and invested in a scheme of your choice. Similarly, you can make an arrangement with a mutual fund company to debit the scheme and make you a payment on a monthly basis on a specified date.
Apart from the simple fixed date, fixed amount SWP variety also is allowed. You can choose multiple dates or a variable amount (percentage of valuation in the scheme). You may also choose to get paid only the appreciation protecting your original investment.
We have written in detail on SWP here.
Problem with SWPs
Until now, SWP was done in the investor’s name and only he can get the money into his account. MF units can be paid to another person only in case of death.
What if an investor wants to:
- Provide monthly expenses for his son/daughter while he/she is studying in a different city.
- Wants to share funds in EMI with his wife, parents or children which goes from their
- Suppose investor is an NRI wants to support his parents or family in India.
- You brother is setting up his business and he needs financial aid for few months.
In all these cases you have to withdraw and fund the account of your relative. Is it feasible doing every month?
Problem is “MFs do not pay to “Third Party”.
Simple Lessons For the Life Time
Tonnes of E Books, E Courses, Newsletters, Tips & Tricks: Join Us & Feel the Change
Let's us start by sharing 2 E Books on Wealth Creation
When you withdraw or take an SWP, the amount will be credited in your account only. In case you want to give it to your family member, you need to manually transfer it. Here SBI Bandhan comes into action.
As per Law or Income Tax treatment “Gifting among blood relatives” is not prohibited. So SBI Bandhan tries to follow this concept. Lets move to SBI Bandhan Features Details Review.
What is SBI Bandhan?
SBI Bandhan SWP – A Bandhan which will provide long-term capital appreciation to investor & also provide financial support to their family members.
SBI Mutual Fund is the first fund house to offer this kind of plan in Indian MF industry. I think based on response other fund houses will also start this.
Bandhan SWP is an ideal plan for investors who need to provide financial support to their family. Why? it’s…. because every individual has different goals as per their risk appetite & age. It’s important to identify appropriate investment avenue to fulfill these goals.
This is how SBI Bandhan works
An investor can invest in Lumpsum in an open-ended scheme with growth option to start the Bandhan SWP.
Benefits of SBI Bandhan
This plan came up with lots of benefits for an investor. It works as an additional earning hand for your family. Fulfill all financial need in a periodic way. Help your children’s when they are growing up. Our expenses increase when our children’s starts higher education or when they take admission in a reputed institute for professional courses.
It’s an only plan available in MF industry which provides financial help to your siblings also. An investor can add his/her siblings also as a beneficiary.
So, this plan is like a “Kalpavriksha” as depicted in Hindu mythology which has lots branches to support your Parents, Spouse, Children’s & Siblings.
This plan provides a range of product & assorted options to fulfill all these needs. Bandhan SWP works in a systematic way.
An investor can invest a lump sum in any scheme, either Equity, Debt, Liquid or Hybrid as per need & risk appetite.
Features of SBI Bandhan
For setting up a transfer the investor should ensure:
- It gives a set amount to beneficiary & who can be anyone from the following but age above 15 years: Spouse, Parents, Children’s & Siblings.
- The beneficiary must be resident individual only. So investor can be NRI but transfer should go to a resident individual of India only.
- The beneficiary will have to provide his KYC details. This means PAN, Address proof, Bank Details, Aadhar number are mandatory to register a beneficiary.
- You have to submit proof of relationship.
- 7 dates are allowed as choice. These are 1, 5, 10, 15, 20, 25, and 30 of the month.
- Bandhan SWP is available only in Growth option of Regular & Direct options.
- Minimum payout to register is Rs 5000/-.
- A minimum number of transfers is 12.
Taxation & Loads
Investor if opts for SBI Bandhan STP within one year of the initial lumpsum purchase will have to pay 15% on gain as Short Term Capital Gain Tax. After one year it will be 10% as Long Term Capital Gain Tax. Surcharge & Cess will be extra.
Scheme exit load if applicable will be borne by the investor at all times.
My view is that this is just a starting of a new idea. One can definitely look at these options to plan his finances.
Share your views in the comments section below and do share the article if you have liked it.