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What is a Credit Card CVV Number? Why You Need to Worry About It?

A credit card CVV number is an added layer of protection for your card information and your identity. While shopping with credit cards, there is always a risk of fraud and phishing as you share your card details. To protect against such risks, issuers apply many protective measures. One such measure is a CVV number for credit cards.

Read on to learn more about it and how it prevents fraudulent activities online or at POS terminals.

What is CVV?

Before moving ahead, you should know the full form of the CVV code. It stands for Card Verification Value. It is also mentioned by another name such as:

Card Security Code
Card Validation Code 2
Card Identification Number

It is a three-digit code on your card, which is important for completing transactions. Know that it is also mentioned on debit cards, as it is an essential feature for security.

Also Read: Credit Card Vs Debit Card

How It Works to Protect Against Fraud?

Depending on whether you are making payments online or offline, the CVV number performs a dual role. Here is how it protects you during different modes of payment.

In Online Payments

To make an online payment using your credit card, you need to enter a few details, which include:

Credit card number
Cardholder’s name
The expiry date of the card
Card security code, CVV

Upon entering these details, the payment gateway verifies the information. Since it is against the Payment Card Industry Data Security Standard, merchant payment portals cannot save your details on the platform. Therefore, every time you make a transaction, you have to enter these details manually.

This ensures that the card is present with the shopper while making the transaction and that they are not using someone else’s details. In case you enter the wrong CVV number, the payment will be declined. As such, it acts as an authentication checkpoint.

In Offline Payments

If you’re making a payment by swiping your card, the POS machine reads all your card details. It cross-verifies the detail on the front of the card with the information on the back. If both the details match, only then will your transaction be successful.

Where Can You Find It?

The location of your card security code, CVV, depends on your credit card payment network. If your payments are authorised by Mastercard, Visa or Discover payment network, then you can find it on the back of your card. It is located under the magnetic strip and on the right side of the signature.

However, if you are an American Express credit card holder, it is at the front, above your card number. Since such critical information is accessible directly on your card, it becomes crucial to keep your card safe.

Also Read: Visa Master Card vs Rupay Credit Card

If you can avoid it, do not hand over your card at reception, restaurant, hotels or any other place to make the payment. Besides, it is best that you swipe your credit card yourself. Additionally, for online payment, ensure that the merchant is reliable and the payment platform is secure.

However, the best way to ensure that there is no breach of data and nobody can see your credit card information is to opt for a numberless credit card. Such credit cards do not have any information printed on your card. This way, even if you hand over your card to the receptionist for payment, there is no risk.

One such card is the Fibe Axis Bank Credit Card. It’s India’s first numberless credit card. As a cashback card, it gives up to 3% cashback on food orders, travel and entertainment expenses. Additionally, you can get 1% cashback on all other spending categories.

It is a RuPay-based credit card, which allows you to conveniently make UPI payments at a lower cost. Its other features include one complimentary domestic lounge access per quarter and a fuel surcharge waiver of 1% up to ₹400 per billing cycle. To apply, download the Fibe App now on your smartphone and get started!

FAQs on CVV Number

How do I find my CVV number?

You can find it on the back of credit cards. However, this only applies to Mastercard, Visa and Discover credit card users. If you have an American Express Card, then your credit card CVV no. is on the front.

What is the CVV number on an ATM card?

It is similar to the number on a credit card. Both perform the same function of protecting your card details against fraud. Depending on your payment network and issuer, it can be three to four digits long.

Is CVV a password?

No, it is a detail mentioned on your credit card, similar to your card number, cardholder’s name and expiry date.

Is CVV private?

Yes! It is a confidential detail that you should not share with anyone, not even the customer care executive of your issuer.

National Common Mobility Card: All You Need to Know About NCMC Card

The NCMC card is a revolutionary option that makes travel easy with a complete payment solution. To reach any destination, you need to switch multiple modes of transport. While you can efficiently book train, aeroplane and even bus tickets, local transport requires you to carry cash.

With an NCMC Debit Card, you don’t have to worry about it. The card allows you to make cashless travel-related payments without worrying about any interest or credit. Read on to learn how it works, what its features are, what its benefits are and more.

What is a National Common Mobility Card?

The Ministry of Housing and Urban Affairs introduced it as an interoperable transport card. This card was launched on March 4, 2019, under the ‘One Nation, One Card’ initiative. It aims to simplify payments across various public transport systems in India.

You can use the NCMC Prepaid Card after loading it with money using funds from your bank account or digital wallet. Since it is a RuPay-based card, all the payments are made through UPI. For this, it uses a Near-Field Communication (NFC) chip that stores user details.

Here are some of its features that you should know about:

It is a UPI-integrated RuPay card
You can add a minimum of ₹200 with multiples of ₹100 onwards
You can use it for buying tickets for flights, metro and bus
It is also useful for toll and parking ticket payments
Banks levy an annual fee and other charges that vary from one bank to another
You can make up to 5 contactless payments per day

Also Read: Virtual Credit Cards

What are the benefits of NCMC Cards?

Here is an overview of some perks you can enjoy with this debit card.

Interoperability: You can use this single card to cover the costs of transporting through multiple modes
Cashless Transactions: Avoid the hassle of carrying change or the risk of misplacing cash to enjoy a stress-free travel
Cash Withdrawals: It allows you to withdraw money from your nearest ATM
Contactless Transactions: Simply with its tap-and-go facility, you can make payments without scanning or swiping your card
Multi-purpose: You can also use it to pay for retail purchases and dining

Also Read: Credit Card Vs Debit Card

How to Apply Online?

Approximately 25+ partner banks offer this card. You can choose from any of these banks and apply by visiting their nearest bank branch or accessing their website. Here are the steps to can follow to apply online for an NCMC card or at the bank branch:

Step 1: Visit the bank’s branch or website
Step 2: Fill out the application form with the necessary details
Step 3: Submit the supporting KYC documents and form
Step 4: Wait for verification by the bank
Step 5: Collect the card and activate it as per the instructions
Step 6: Add funds to your NCMC card

Once added, you can use the money to make cashless transactions on various modes of transport and retail outlets.

While an NCMC card is a prepaid or debit card, carrying a credit card while travelling is also a smart way to have a hassle-free experience. This is because it provides you with instant funds in case you’ve exhausted your savings. One such card you can consider is the Fibe Axis Bank Credit Card.

This is India’s first numberless credit card, which also offers up to 3% cashback on all your transactions, online as well as offline. It also provides other travel benefits, such as 4 annual domestic lounge visits and a 1% fuel surcharge waiver.

Similar to NCMC, it’s a RuPay card which allows you to link it with any UPI app to make payments effortlessly. To apply for this lifetime free credit card, download the Fibe App from the Google Play Store or App Store.

FAQs on National Common Mobility Card

How to get a National Common Mobility Card?

You can visit any of the partner bank’s websites to apply online for an NCMC card. Alternatively, visit the nearest branch to get the application form.

How to apply for a National Common Mobility Card?

You can apply online for an NCMC card by visiting any of the 25 partner banks’ websites. Filling up the form and providing the required KYC documents will help you complete the application process and you will get the card shortly.

Which banks issue the NCMC card?

Here are some of the top banks offering NCMC:

Axis Bank
Canara Bank
City Union Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank
Bank of Baroda
Oriental Bank of Commerce
Punjab National Bank
State Bank of India
Central Bank of India
Syndicate Bank
YES BANK
Bank of India
Union Bank of India

What is the use of a mobility card?

While it is a versatile card useful for many travel purposes, it aims to make travelling cashless and streamlined. Thus, you can use it to pay for your tickets and travel fares easily.

For example, when travelling via the Delhi metro, you need a DMRC metro card. If you’re travelling to Mumbai, you need an MMRC metro card, as DMRC cards cannot be used. The global NCMC card eliminates this issue.

Indexation Meaning and Its Role in Taxation

The indexation meaning is simple, it lets you adjust the cost of your investment based on inflation. This reduces your taxable gains when you sell a long-term asset. It was especially useful in areas like property, gold and mutual funds. But recent Budgets have changed where you can use this benefit.

Read on to understand what is indexation, how it works, how to calculate it, which assets still qualify and what the latest tax updates mean for you.

Indexation in Mutual Funds

The indexation meaning is about adjusting the value of your investment as per inflation. It helps you understand the real profit when you sell an asset after a few years. In short, it compares your investment cost with current prices to show true returns.
Let’s understand this with an example. Say you made a lump sum investment in a debt mutual fund scheme for ₹2 lakh. After 3 years, you sell it for ₹2.5 lakh, earning a total profit of ₹50,000. This earned profit is subject to taxation according to tax norms.

However, the current price of the same mutual fund scheme for the same number of units is ₹2.1 lakh due to inflation. As per the current rate, your total taxable profit is ₹40,000. Thus, you can save tax on the difference of ₹10,000 between the indexed and unindexed value of gains.

Why Indexation Matters in Capital Gains Tax?

To have a better understanding of Indexation, here’s a simplified look at how capital gains are taxed based on how long you hold an asset:

Short-term capital gains (STCG): Applied when you sell assets before the minimum holding period, generally within 12 months for listed shares and equity mutual funds. From 23 July 2024, STCG on these is taxed at 20%.
Long-term capital gains (LTCG): Applies to assets held longer, typically over 12 months for equity and over 24 months for others. From 23 July 2024, LTCG across all asset classes is taxed at 12.5%, without indexation benefits. However, equity gains get an ₹1.25 lakh annual exemption.

There is a grandfathering rule: If you bought property or other assets before 23 July 2024, you can still choose to pay 20% with indexation instead of the flat 12.5%, if that results in lower tax.

Calculation of Indexation

To adjust your investment cost for inflation, the government provides the Cost Inflation Index (CII). It’s released every year by the Income Tax Department and helps you work out how much your investment’s original cost would be worth today.

Here’s how the calculation works:

Let’s suppose Aditi invested in 1,000 units of a debt mutual fund at ₹22 per unit in the financial year 2015-16. She sells them for ₹34 per unit in 2024-25. Since she held them for more than 3 years, this qualifies for indexation.

Total Purchase Cost: ₹22 × 1,000 = ₹22,000
Total Selling Value: ₹34 × 1,000 = ₹34,000
CII for 2015-16: 254
CII for 2024-25: 363

Now, adjusting the purchase cost for inflation using the CII:

Inflation-adjusted cost = ₹22 × (363 ÷ 254) = ₹31.44 per unit
Total Adjusted Cost = ₹31.44 × 1,000 = ₹31,440

So, the long-term capital gain is ₹34,000 – ₹31,440 = ₹2,560

So, instead of paying tax on the entire ₹12,000 profit, Aditi will pay tax only on ₹2,560.

What is the Cost Inflation Index (CII)?

Cost of acquisition means the price at which you started an investment or purchased a property, including all charges. To get the CII, you can use the following table:

Financial year	Cost Inflation Index
2001-02	100
2002-03	105
2003-04	109
2004-05	113
2005-06	117
2006-07	122
2007-08	129
2008-09	137
2009-10	148
2010-11	167
2011-12	184
2012-13	200
2013-14	220
2014-15	240
2015-16	254
2016-17	264
2017-18	272
2018-19	280
2019-20	289
2020-21	301
2021-22	317
2022-23	331
2023-24	348
2024-25	363
2025-26	376

If you have all the information available, simply use this formula:

Indexation = Cost of acquisition x (CII of the base year / CII of the sale year)

Since inflation is always rising, your indexed cost of acquisition (ICoA) will be higher than the original investment amount. Therefore, when you subtract this ICoA from your long-term capital gain, the subtracted amount is the profit you do not have to pay tax on.

Also Read: What is Advance Tax?

Indexation Benefits

This system was beneficial in lowering the tax outgo on profits from capital gains. Here’s how it helped:

To adjust your asset value according to the inflation in the economy during your year of investment
To encourage investors to opt for long-term investment, thanks to savings on taxes
To ensure maximum benefit due to long-term capital gain

Assets Eligible for Indexation Benefits

You can still get indexation benefits on some older investments. But, this is only applicable if they were made before specific dates:

Real estate: If you bought it before 23 July 2024
Debt mutual funds: If you invested before 1 April 2023
Gold and other assets: Only if purchased before their respective cut-off dates
Unlisted shares: If held long enough and meet the tax rules

If your investments were made after these dates, indexation won’t apply.

Revision in Indexation Benefits

Budget 2023 and Budget 2024 brought major changes. Here’s a quick summary:

Debt Mutual Funds: No indexation on funds bought after 1 April 2023. Gains taxed as per income slab.
Real Estate: For property bought after 23 July 2024, indexation no longer applies. You pay flat 12.5% LTCG tax instead.
Other Assets: Indexation on gold, ULIPs and more have been withdrawn gradually.

Today, indexation benefits are no longer valid on investments in property, mutual funds, gold and more. However, you now pay lower long-term capital gains tax, which helps to adjust the benefit.

In this scenario, if you are looking for finances to pay taxes or require funds for urgent or unplanned financial needs, consider opting for a convenient option such as a Fibe Instant Cash Loan.

It gives you up to ₹5 lakhs without any end-use restrictions, allowing you to manage any emergency or big-ticket expenses easily. With Fibe, you can apply with minimum documentation, enjoy a speedy digital application process, meet simple eligibility criteria, and benefit from swift disbursal.

We also offer loans to applicants who are ineligible for traditional bank loans due to a low credit score. Simply download our Personal Loan App on your smartphone or visit our website to apply now.

FAQs on Indexation

What is an example of indexation?

Here are the steps to understand the process:

Assume you invested ₹20,000 between 2014 and 2015 and decided to sell the investment in 2024, where the total earnings come to ₹35,000
During the investment year, the cost inflation index was 240, which has now risen to 363. Considering this, your index cost of acquisition will be ₹30,250
Since you calculate capital gain as the difference between the selling price and the indexed cost of acquisition, total capital gain is ₹4,750

As such, you can reduce your tax liability significantly.

What is the 20% indexation benefit?

This means that your total long-term capital gains from debt fund investment are taxable at a 20% rate after indexation. This benefit has now been abolished by the Indian Government.

What is indexation in the case of property?

When you sell a property, you have to pay tax on the total gains. By indexation, you get the benefit of adjusting your profit against inflation. This lowers your taxable profit and, thus, your total tax. As per the Budget 2024, this benefit is no longer applicable. However, if you have purchased a property before July 23, 2024, you can choose between paying 20% long-term capital gains tax with indexation benefits or a 12.5% tax.

Custom Duty, Gold Tax and Import Duty on Gold in India

Gold is something that people in India really like to invest in. They buy it as jewellery, coins or bars. Some people even buy gold when they travel to countries because it is cheaper there and they can find exclusive designs. When you bring gold to India, you have to pay customs duty, GST and other taxes.
One should know about these taxes, so you do not get into trouble. You can figure out how much the gold really costs and make sure you are following the rules.

In this space, you can learn about the gold import duty rates how much gold you can bring in without paying duty, how to calculate the duty what documents you need and what is new, after the Union Budget 2024. Gold import duty rates are important to understand if you want to buy gold from countries and bring it into India so learning about gold import duty rates and other things will help you with your gold purchases.

Custom Duty Rates on Gold in India (2026)

Type of Gold	Quantity	Applicable Custom Duty Rate
Gold Jewellery	Up to permissible duty-free limit	No duty
Gold Jewellery	Above duty-free allowance	6% customs duty + applicable charges
Gold Bars	Less than 20 grams	No customs duty
Gold Bars	20 grams to 100 grams	3% customs duty
Gold Bars	Above 100 grams up to 1 kg	6% customs duty
Gold Coins	Less than 20 grams	No customs duty
Gold Coins	20 grams to 100 grams	6% customs duty
Gold Coins	Above 100 grams	6% customs duty
Gold Import through commercial channels	As per government norms	Customs duty + IGST applicable

Note: Customs duty rates are subject to change based on government notifications and Union Budget announcements.

What is Customs Duty on Gold?

When you bring gold to India from other countries the Government of India charges a tax called customs duty. This tax is on the things people import. When people travel to India with gold, they must inform the customs about it and pay the tax if they have gold than they are allowed to bring in without paying tax.

The Central Board of Indirect Taxes and Customs is in charge of the customs duty on gold. This helps control how much gold comes into India and makes sure trade is fair. It also helps the government get money from the taxes people pay on gold. The customs duty on gold is a thing, for the Government of India. Gold imports are controlled by the customs duty.

Type of Gold Allowed in India

Indian passengers are allowed to carry certain forms of gold while entering the country under the provisions of the Passport Act, 1967 and customs regulations.

The permitted forms of gold include:

Gold jewellery

Gold bars

Gold coins

Gold biscuits

Travellers must declare the quantity and value of gold at the airport customs counter upon arrival in India. The customs officer calculates the payable duty based on the declared value, purity and quantity of gold carried.

Duty-free Gold Limit in India

The Government of India provides a limited duty-free allowance for travellers bringing gold into the country.

Male Travellers

Up to 20 grams of gold can be carried duty-free

Maximum value allowed under exemption: ₹50,000

Gold exceeding the exemption limit attracts customs duty

Female Travellers

Up to 40 grams of gold can be carried duty-free

Maximum value allowed under exemption: ₹1 Lakh

Customs duty applies on quantities exceeding the limit

Children Below 15 Years

Same allowance as female travellers

Supporting purchase invoices and documents are mandatory

How to Calculate Customs Duty on Gold in India

The customs valuation process is governed by Rule 3(i) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Authorities calculate the customs duty based on:

Type of gold item

Quantity of gold

Purity level

International purchase price

Applicable customs duty rate

GST and cess, wherever applicable

Formula to Calculate Gold Import Duty

Gold Import Duty = Assessable Value of Gold × Applicable Customs Duty Rate

If GST is applicable:

Total Import Cost = Customs Duty + IGST + Other Applicable Charges

Step-by-Step Calculation

Step 1: Determine the Assessable Value

The assessable value refers to the total value of the imported gold, including:

Purchase price

Insurance cost

Freight charges (if applicable)

Step 2: Apply the Customs Duty Rate

Multiply the assessable value by the applicable customs duty percentage.

Step 3: Add Applicable GST or IGST

After customs duty is calculated, GST or IGST may be charged on the total taxable value.

Step 4: Calculate the Final Payable Amount

Add all duties and taxes to determine the final import cost.

Example of Gold Import Duty Calculation

Suppose a traveller imports a gold bar worth ₹5,00,000.

Particulars	Amount
Assessable value of gold	₹5,00,000
Customs duty rate	6%
Customs duty payable	₹30,000
Taxable value after customs duty	₹5,30,000
Applicable IGST (example 3%)	₹15,900
Total payable amount	₹45,900

Therefore, the traveller will pay approximately ₹45,900 as total import duty and taxes.

Documents Required for Declaring Gold at Customs

Travellers carrying gold into India should keep the following documents ready for customs verification:

Passport

Boarding pass

Purchase invoice of gold

Purity certificate

Payment receipts

Customs declaration form

Travel documents

Import permits, if applicable

Having valid documents helps avoid confiscation, penalties or delays during customs clearance.

Revisions After the July 2024 Budget

During the Union Budget 2024, Finance Minister Nirmala Sitharaman announced a major reduction in customs duties on gold, silver and platinum imports.

The customs duty on gold was reduced from 15% to 6%, making gold imports more affordable for travellers and investors. Following this revision, domestic gold prices also witnessed a noticeable decline.

This reduction aimed to:

Boost legal gold imports

Reduce smuggling activities

Support the jewellery industry

Make precious metals more affordable

Since gold prices fluctuate regularly based on international rates, currency exchange and taxes, checking the latest customs notifications before travelling is advisable.

Why Understanding Gold Import Duty is Important

Knowing the latest import duty on gold in India helps you:

Estimate the total cost of imported gold

Avoid customs penalties

Make informed investment decisions

Comply with Indian customs laws

Plan international purchases more efficiently

Manage Short-term Financial Needs with Fibe

While gold remains a strong long-term investment option, immediate financial needs often require quick access to funds. In such situations, the Fibe Instant Cash Loan can help you get up to ₹10 lakhs with minimal documentation and a fully digital application process.

With affordable interest rates, easy eligibility criteria and zero foreclosure charges, Fibe helps you manage urgent expenses conveniently. You can apply through the Fibe app or website in just a few minutes.

FAQs on Customs Duty on Gold

How much is the customs duty on gold in India?

Currently, the customs duty on gold imports in India is 6%, subject to applicable GST and government regulations.

How much gold is allowed through Indian customs?

Male travellers can bring up to 20 grams of gold worth ₹50,000 duty-free, while female travellers can carry up to 40 grams worth ₹1 Lakh duty-free.

What is customs duty?

Customs duty is a tax imposed by the Government of India on goods imported from foreign countries.

How did gold prices change after the Union Budget 2024?

After the reduction in customs duty announced in Budget 2024, gold prices fell by over ₹4,000 per 10 grams in the domestic market.

How is custom duty on gold calculated in India?

Custom duty on gold is calculated based on the assessable value of the gold, which includes the purchase price, insurance and freight charges. The applicable customs duty percentage is then added along with GST or IGST, if applicable.

Is GST included in gold import duty calculation?

Yes, GST or IGST is usually calculated after adding the customs duty to the assessable value of the imported gold.

What is the formula to calculate gold import duty?

The basic formula is:

Gold Import Duty = Assessable Value × Applicable Customs Duty Rate

If GST applies:

Total Import Cost = Customs Duty + GST/IGST + Other Applicable Charges

Difference Between MCLR Rate and Base Rate You Should Know

With the Reserve Bank of India changing its policy, knowing the difference between base rate and MCLR is important when you are planning to take a loan. Since July 2010, the base rate structure has been in use. As per its provisions, banks had to update the rates for loans and deposits every quarter.

However, after five years, the RBI’s new rate system has replaced it. The new system ensures better transparency, as financial institutions cannot change the interest beyond a margin. Therefore, it is crucial to understand how the new lending rates are a step up when compared to the older rates and how they make your loan affordable.

Guide to the Base Rate

This is the minimum interest rate set by the RBI, below which financial institutions cannot charge interest on the loan. This sets a benchmark to ensure transparency, fairness and consistency among lenders.

It also directly affects the economy, as it concerns borrowing activities. For example, if the RBI increases the base rate, loans become expensive for individuals and businesses. This way, people avoid borrowing due to the high interest rate. Alternatively, if it’s reduced, it stimulates economic activity as the loans become cheaper.

Meaning of MCLR

Marginal Cost of Funds Based Lending Rate is the new benchmark for determining the minimum interest rate for financial institutions in India. It was introduced on 1st April 2016 to replace the base rate.

Difference Between Base Rate and MCLR

Both these rates work on the same principle as they help calculate the lowest interest for loans. Previously, some banks were using the average cost of funds while others relied on the marginal cost of funds. This created an unsystematic standard and nullified the role of repo rates.

Therefore, the RBI decided on a new system which uses the cost of all the banks’ new loans and the cost of new deposits. As such, the difference arises due to the factors used in calculating both these rates.

Also Read: Personal Loan RBI Guidelines

Base Rate and MCLR: Affecting Factors

Know all these factors to better understand their differences and know how lenders calculate them.

Base Rate	MCLR
Interest rate depends on the average cost of funds	Interest rate depends on the marginal cost of funds
Expenses of operating and maintaining the cash reserve ratio determine the rate	Operating costs and cost of maintaining the cash reserve determine the rate
Independent of repo rates	Depends on the repo rates
Changes every quarter	Depends on the loan tenure

Can you switch to the MCLR rate?

If your loan was approved and disbursed before 1st April 2016, then you have the option to switch to MCLR. This rate automatically applies if you had a loan sanctioned after this date. However, you should compare if switching is a good option for your loan before requesting your lender.

Since this rate depends on the repo rate decided by the RBI, your interest rate may go down. However, if RBI increases the repo rate, you may have to pay higher interest. Moreover, you cannot switch to the base rate once you’ve opted for the new rates. Analyse your current interest rates and the risks of higher rates to make a smart decision.

With these updates, loans become more affordable, allowing you to get competitive rates to make informed decisions. This way, you don’t have to worry about stable lending rates as Banks and NBFCs must follow the benchmark set by the RBI.

If you are looking for a flexible loan to finance urgent needs or any of life’s goals, consider the Fibe Instant Cash Loan. With Fibe, you can get up to ₹5 lakhs without any end-use restrictions. You can use the amount for debt consolidation, planning a wedding, travel, covering medical expenses and more.

Our affordable interest rates, comfortable tenure options of up to 36 months and swift digital application ensure you can enjoy easy repayment. Moreover, you can foreclose the loan anytime you have funds available without any penalties.

Download the Fibe Personal Loan App on your smartphone or visit our website to get started!

FAQs on Base Rate vs MCLR

How do I change my base rate to MCLR?

You can switch to MCLR by requesting your bank. Know that once you switch, you cannot return to the base rate.

Is MCLR better than the base rate?

Yes, it has a lower rate despite the fact that they are based on similar principles. This is because it depends on the marginal or incremental cost of funds, while the base rate depends on the profit margin or return rate.

How is MCLR calculated?

To calculate it, banks consider the following factors:

Marginal cost of funds
Operating costs
Tenor premium
Negative carry-on cash reserve ratio

Who decides the base rate?

Banks decide the base rates for the interest rate. However, it is influenced by the guidelines of the Reserve Bank of India. For this calculation, they determine many factors. So, even if it is the bank’s jurisdiction to set the base rate, it is based on a regulatory framework established by the central bank.

What is the MCLR Rate? How does it affect a Loan?

Highlight: Find what the MCLR rate is and how it can impact various loans. Know how MCLR impacts your best personal loans if they show changes in interest rates.

The MCLR or the Marginal Cost of Funds based Lending Rate system owes its introduction to the RBI or the Reserve Bank of India. Launched in April 2016, this new MCLR rate lending system is a modified version of the old regime for base rates. Here, the new interest rates are calculated based on the repo rate and the bank’s interest rate on customer deposits. With the new rules in place, commercial banks are now obliged to set up new benchmarks for internal rates for lending based on the marginal cost of funds.

Need for MCLR

With the old base rate system for banks, whenever there were changes in repo rate, the banks were reluctant to align their interest rate promptly as per the change. Therefore, though RBI introduced rate changes periodically, banks were not keen enough to change their own lending or deposit rates.

With the introduction of the MCLR, the banks have to adjust their interest rates as per their risk factor for various customer segments. There are different benchmark rates for different loan tenures. So, first, the banks set rates for terms starting from 1 day or one month to 1 year. Based on them, the banks can also charge interest rates for more than one year.

Also Read: How Repo Rates Affects Interest Rates

What do you mean by the MCLR Rate?

The Marginal Cost of Funds Lending Rate is the minimum rate for lending below which a bank cannot lend or issue a loan. Here ‘marginal’ means additional or a change or margin in the current state, economic sense. The MCLR rate is thus based on any changes in the banks’ marginal cost conditions.

The MCLR is revised monthly based on the repo and other borrowing rates. Banks generally cannot lend below the MCLR, except in a few exceptional conditions.

In the following conditions, banks can lend below the MCLR:

For loans against deposits
Loans to bank employees of the respective bank

Type of MCLR-linked Loans

With the latest RBI guidelines, all floating-rate loans sanctioned after 01.04.2016 will follow the MCLR, including their credit renewal. Existing borrowers with floating-rate loans can also switch to the MCLR rate as per the options given. These floating-rate loans include home loans, corporate term loans and loans against property.

MCLR is related to banks so any floating interest rate loan sanctioned by them will be linked to the MCLR. Some banks link their educational loans and auto loans with the MCLR. So, if you have a floating interest rate for your best personal or car loan, it will also be connected to MCLR.

Also Read: Floating Interest Rates vs Fixed Income Rates

Does MCLR impact personal loans?

Personal loans are a good option for short-term liquidity. It is important to note that the MCLR will not affect your best personal loans with a fixed interest rate. The variable rate of your best personal loans will become more affordable in the long run with lower EMIs.

Components of MCLR Rate

The MCLR rate is composed of different components. They are as follows:

The marginal cost of funds that includes return on net worth and the marginal cost of borrowings
Operating costs incurred by the banks
Negative carry due to cash repo rate. All banks have to pay a cost to keep their reserves with RBI, which constitutes this carry.
Tenor premium or the risk premiums charged by banks for long-tenure loans.

The banks charge the marginal costs as per the new guidelines set by the RBI based on these factors:

Savings, current, term, and foreign currency deposits interest rates.
Borrowings that include the short-term and long-term interest rate, and the repo rate
Return on net worth

The marginal cost of funds, repo rate, and deposit rates determine 92% of the MCLR, while the return on net worth comprises the remaining 8%.

* 18% GST will be applicable on banking services & products w.e.f 01 July 2017.

Impact of MCLR Rate on Loans by Banks

The various loans offered by banks will have the following impacts given the MCLR.

Regulated Interest Rates – With the old base rate lending system, the banks were quick to increase interest rates on floating-rate loans whenever there was an increase in rates, as announced by the RBI. However, when the RBI cut down the interest rates, they did not slash the rates with the same promptness. This resulted in a discrepancy in the interest rates. With the introduction of the MCLR rate, banks need to regularly change their rates as per changes in marginal cost conditions.
Impact on the spread – Before introducing the MCLR, banks charged low spreads for low-interest rate loans. This would initially attract many customers, but later, banks unreasonably increased the space without valid reasons. This resulted in increased interest rates for the customer, as there was an increased spread even if the base rate was not increased.
With the MCLR system, banks are mandated to fix a spread while sanctioning the loan. This spread will not be subject to increase until there is a change in the customer’s credit profile. Also, banks are required to reset their loan interest rates at least annually.

Transparent Loan Pricing – The MCLR system has proved to be more transparent from the customer’s point of view with a special price of floating-rate loans. The banks are now required to set the spread when sanctioning the loan without unreasonable increases during the loan tenure.
Bank Margins – The MCLR rate brings about a more fair and transparent system for interest rates and loan pricing in the case of variable interest rate loans. RBI requires banks to publish their lending rates every month for a minimum of five different tenures. This has to be followed strictly by all banks. Banks can now not increase the spread they charge customers during loan tenures.

Exemptions for MCLR Loans

MCLR rate arrangement is only applicable to banks. It does not apply to loans taken from Non-Banking Financial companies and other financial institutions or NBFCs like HDFC, LIC Housing Finance, DHFL, Indiabulls, etc.

Banks need to apply the MCLR system for all loans except car loans, fixed-rate home loans and personal loans with fixed interest rates.

Loans given by banks under the Central Government or State Government schemes are also exempt from MCLR, where the banks charge a specified interest rate as per government directives.

Conclusion

As applicable, banks cannot charge their lending rate below the MCLR rate for any loan maturities. However, most secure loans, Government of India special loan schemes, loans to bank employees and fixed-rate loans for more than three years are exempted from MCLR.

Difference Between Direct and Indirect Tax: What you need to know

Direct tax and indirect tax are the two primary categories of taxes that the Government of India levies. They are the main sources of revenue for the government, which plays a crucial role in funding public services and infrastructure development. You need to pay these taxes on whatever you earn or whenever you purchase a good or service.

Understanding the distinction between these types of taxes – direct and indirect is essential. This is because it impacts individual and business financial planning. To learn about the differences between the two, read on.

What are Direct Taxes?

The government levies them on your income and profits. Direct taxes have to be borne by the person who has to pay the tax. They cannot pass the burden of payment to someone else. The Central Board of Direct Taxes (CBDT) administers and regulates the direct taxation system. You will have to pay these direct taxes for various purposes, including-

Income Tax
Property Tax
Fringe Benefit Tax

Types of Direct Taxes in India

These taxes are considered a progressive form of taxation. This is because you will have to pay higher taxes on higher income. Check out the details of some of the important types of direct taxes-

Income Tax

It applies to the income that individuals and corporations need to pay. Under the Income Tax Act of 1961, you will have to file an income tax return (ITR) declaring your sources of income. You can calculate taxable income based on applicable tax slabs and deductions.

Capital Gains Tax

The government imposes this tax on the profit you earn from the sale of a capital asset. Such asset classes include stocks, real estate and other investments. The capital gains tax rate depends on the type of asset, the period of holding and your income bracket.

Securities Transaction Tax (STT)

These apply to the purchase and sale of securities listed in a recognised stock exchange.

What is an Indirect Tax?

The government imposes these taxes on goods and services. Hence, one tax-paying entity can transfer its burden to another. The Central Board of Indirect Taxes and Customs governs and administers the indirect taxation system.

Types of Indirect Taxes in India

These taxes are generally passed on to the consumers as part of the product or service price. The following are some of the important indirect charges-

Goods and Services Tax (GST)

It is a consumption-based taxation system which replaced a number of central and state indirect taxes. The implementation of GST has simplified the indirect taxation system in India.

Customs Duty

It refers to a tax the Union Government levies on goods imported into India. It helps the government protect domestic industries from unfair competition.

Difference Between Direct and Indirect Tax

While both contribute to the government’s treasury, they differ in many respects. Check out the differences between direct tax and indirect tax below-

Parameters	Direct Taxes	Indirect Taxes
Meaning	Need to be paid directly to the government	Need to pay these taxes indirectly to the government through an intermediary
Applicable to	Income and Profits	Goods and Services
Tax Rate	Depends on your income and profits	Same tax slab rates for everyone
Type of Taxation as per the Burden	Progressive, as taxpayers with higher income or profits need to pay higher taxes	Regressive because the tax rates are the same for everyone
Types	Income tax and capital gains tax	GST, customs duty, Value-added Tax (VAT)

Understanding the nuances of direct tax and indirect tax is crucial for individuals and businesses in India. By comprehending how these taxes impact your finances, you can make informed decisions about investments, savings and overall financial planning.

In case of urgent financial needs, you can secure funds of up to ₹5 lakhs with the Fibe Instant Personal Loan. You can enjoy pocket-friendly interest rates and a tenure extending up to 36 months. Download the Fibe Personal Loan App or visit our website to register and apply in just a few clicks with minimal documentation.

FAQs on Direct Tax and Indirect Tax

Is TDS a direct or indirect tax?

Tax Deducted at Source is an indirect tax. You have to pay TDS as you earn or at the point of receiving income.

What are the examples of indirect taxes in India?

Here are the types of indirect taxes-

Goods and Services Tax (GST)
Customs Duty
Tax Collected at Source (TCS)
Tax Deducted at Source (TDS)
Service Tax

Is GST a direct tax?

No, it is a unified indirect tax, which was brought to simplify the older indirect tax system in India.

Is stamp duty a direct tax?

It is an indirect tax that the government levies on property transactions.

Payment Gateway Vs Payment Processor: Differences you need to know

Choosing payment gateway vs payment processor options depends on your business size and payment options to the customers. In this digital day and age, you can easily choose from cash, cheque, credit card, debit card or bank transaction options. This allows you to make secure payments with the method you are comfortable with.

Since digital payments are becoming the norm, businesses are looking for options to streamline customer processes. Additionally, cost saving is a priority. When exploring such options, you will come across two terms: payment processors and payment gateways.

Knowing their differences is important to help you choose services that suit your business requirements.

Understanding Online Transactions

Before understanding the payment gateway vs payment processor features, you should know how online transactions work. This transaction process involves four entities, which include:

Customer
Merchant
Issuing bank
Recipient bank

You may already know that when a customer initiates a payment, the issuing bank sends money to the recipient bank. Then, the money is transferred into the merchant’s bank account. However, there is a fifth entity involved which connects all of them. This can be either the payment gateway provider or payment processor.

What is Payment Integration?

Payment Integration is a software-based system which processes all transactions online and from the POS solution. This process encapsulates payment gateway services, payment processing, logging and data entry keeping.

In simple words, understand that these processes perform the same function in the financial ecosystem. They mean to simplify and speed up the payment process for the consumer. For merchants, it allows them to provide their customers with payment solutions for different types of transactions.

What is a Payment Gateway?

Payment Gateway is software or a POS solution that reads the customer’s card details to approve or decline the payments. It plays a key role in detecting fraudulent transactions. Note that simply having the gateway is not enough to complete the transaction.

This is because after you have verified the payment, you need a solution to connect the merchant’s and issuer’s banks. The customer’s bank must release the payment and the merchant’s bank must accept the payment to complete the process. This is where a payment processor comes in.

Also Read: What is Digital Payment?

What is a Payment Processor?

This is a settlement system that acts as an intermediary between the banks. To use their services, you need to create a merchant account and pay a subscription amount. Some payment processors also provide gateway services to provide an all-around POS solution.

Difference Between a Payment Gateway and a Payment Processor

To summarise, if you are a merchant, you need both these services to receive payment from your customer’s bank account into yours. When the customer enters their credit card details, the gateway verifies this information to authorise the payment.

Once the processor receives the confirmation, it establishes a communication between the merchant and customer bank accounts. This sets up the cycle for release and receipt of payment, the process taking less than a minute.

Payment gateways can work independently by connecting to multiple processors. On the other hand, a processor cannot work without a gateway. However, more and more companies are providing a bundled solution for streamlined processing and reducing the merchants’ costs.

It also benefits customers as they can complete their payments faster and without much hassle. Another way you can enjoy better services on your credit card payment is to opt for an issuer with best-in-class service. One such card that helps you save money and gives you maximum rewards is the Fibe Axis Bank Credit Card.

It is a RuPay credit card that ensures secure payments through UPI. To further improve its security features, it is a numberless credit card; this means that your credit card number is not printed on the physical card. This way, fraudsters cannot use your details to make online transactions.

The card offers many other benefits that enhance your user experience. For example, it gives you up to 3% cashback on online and offline transactions. You can also access domestic airport lounges four times a year and enjoy a 1% fuel surcharge waiver as a customer benefit. To apply online, download the Fibe App now!

FAQs on Payment Gateway vs Payment Processor

How many payment processors are there?

There are many processors in India; some of the well-known companies are:

Cashfree
PayU
PayPal India
Paytm
Bill Desk
PhonePe
Razorpay
Instamojo
PayKun
DirecPay Payment

Can a payment gateway function without a payment processor?

No! Both work together to make any payment successful, especially online credit card payments. However, a payment gateway can link to multiple payment processors but payment processors only require one payment gateway.

What role do payment processors play in risk management?

It helps manage risk in the following ways:

Aiding in detection and prevention
Ensuring Payment Card Industry Data Security Standard (PCI DSS) compliance
By tokenising the payment
Implementing end-to-end encryption
Adopting multi-factor authentication

Personal Loan for a Home Loan Deposit: A comprehensive guide

By getting a personal loan for making a home loan deposit, you can book your dream house even if you have budget restrictions. When you plan on buying property, it is a big commitment that brings in other expenses. In such cases, using your entire savings just to make the initial down payment can be risky.

This is where a personal loan for a house deposit comes as an intelligent solution to maintain cash flow without overburdening your finances.

Read to learn more about using a personal loan for making a home loan deposit.

Can I Use a Personal Loan for a House Deposit?

Yes, getting a personal loan for any requirement is a flexible solution. As such, you are allowed to use it to make a deposit for your house. Here are some other reasons why it’s a good option.

Collateral Free

It is an unsecured type of loan, meaning you don’t have to pledge any valuable asset as collateral to get the funds. This helps when you don’t have other means to arrange the funds. The only condition is that you must have a good credit profile.

Quick Approval and Disbursals

Most digital lenders approve your loan request immediately after application. In addition to that, you may receive the funds in your account in just a few hours after approval. So, if you find a suitable property, you can immediately arrange the money to make a deposit.

Foreclosure Options

Most lenders give you the option to repay your loan before the tenure is complete, known as foreclosure. If you have additional funds, you can prepay your loan to save on paying unnecessary interest.

Things to Consider Before Applying

Apart from all the benefits you can enjoy, there are some limitations that you should be aware of before getting a loan for a deposit.

Credit Requirements

Since it is an unsecured loan, applying with a good credit score is a must. In case of insufficient credit eligibility, you may get rejected. This will further affect your home loan application. To avoid this, ensure you meet the lender’s eligibility criteria or improve your score before applying.

Also Read: Steps to Improve Credit Score

Increased Cost of Purchase

It generally has a higher interest rate compared to other loans. Thus, opting for it adds to the total value of your property. In the long term, you may end up more than the intended property value. Therefore, consider this option only if you can afford to pay high interest.

Deciding on a Loan Amount

While you can use it for any purpose without restrictions, you should be aware of the high interest it attracts. Thus, you must choose the right amount and not more than required.

Fees and Charges on the Loan

Be wary of the processing charges, late payment charges, documentation fees, and other charges that the lender levies during the application process. This is because it affects your total borrowing costs.

Increases Your Debt-to-Income (DTI) Ratio

If you have an existing loan, getting another loan can be difficult due to the increased debt-to-income ratio. Similarly, getting a home loan at a lower interest rate may be difficult if you have an ongoing personal loan.

Considering all the perks and drawbacks, you can get a personal loan to make a minimum down payment for a home loan. If it fits your budget, then you can apply online to get funds quickly without hassle. One such option you can consider is the Fibe Cash Loan.

We offer up to ₹5 lakhs to meet all your financial needs, whether planned or unplanned. Our easy-to-meet eligibility criteria and streamlined process allow you to get funds swiftly. Even if you are not eligible for a traditional loan from a bank, you can apply with us to meet your umpteen requirements.

This is because we rely on alternative credit score mechanisms. You can enjoy a flexible repayment tenure of up to 36 months. We also offer competitive interest rates to make borrowing more affordable. Download our Personal Loan App or simply visit our website to get started on your application now!

FAQs on Personal Loan for House Deposit

Can I take a personal loan for rental security?

There are no restrictions on how you can use it. Therefore, you can use it as rental security for a home or to make a down payment for buying property.

How to use a personal loan to buy a house?

You can use it to make a minimum down payment for a home loan, which will finalise your purchase. After that, you can pay the outstanding amount with a home loan.

Is it safe to take a personal loan to buy a house in India?

Since it doesn’t require collateral, there is no risk of collateral loss in the case of default. However, it can hurt your credit profile, making your future borrowing a hassle.

How to Meet Spine Surgery Costs in India with a Quick Loan

The spine surgery cost in India starts from ₹1.4 lakhs, going up to ₹5 lakhs, depending on your diagnosis. This can be for a variety of ailments, including the following:

Disc Replacement
Foraminotomy
Kyphoplasty
Microdiscectomy
Scoliosis Surgery
Spinal Fusion
Traumatic fractures

In addition, the cost of surgery, patient care and medicare can add to your financial burden. In some cases, you may require urgent additional funds despite having savings available in the first place. That’s where personal loans can offer a flexible solution.

Read on to learn how to get a loan for surgey, how to compare the best options and more.

Applying for a Personal Loan for Surgery

The cost of medical procedures can drain you physically and mentally. Here are the steps to follow for applying for an instant loan to cover the spinal cord surgery cost in India.

Choose the Right Lender

For this, compare financial institutions offering the lowest interest rates and maximum loan amount. This way, you can arrange funding without worrying about the repayments. Ideally, applying for a loan online will speed up the process.

Check the Eligibility Criteria

Before completing the application, ensure you fit the lender’s eligibility criteria. For this, verify the minimum requirements mentioned on their official website. You can also find the list of documents to help you prepare and speed up the application process.

Fill the Form

You need to provide your details to the lender online, which include the following:

Name
Occupation
Residential address
Required loan amount
Mobile number
Banking details
Email address

After submitting these details, you must choose your preferred loan amount and repayment tenure.

Submit the Documents

After completing the form, provide lenders with essential paperwork to prove your eligibility. These documents verify your identity and financial capacity to repay the loan. This includes identity documents, such as Aadhaar cards and income documents, like salary slips or ITRs.

Wait for Disbursal

Once approved, the lender will deposit the amount in your designated bank account. In most cases, digital lenders disburse the amount within a few minutes. However, depending on the lender’s policy, it can vary up to a few hours.

Factors to Consider for a Loan

Taking out a loan is a big financial decision. To make an informed choice, consider several key factors. Here are some points to consider when applying for loans for surgery.

Compare the Interest Rates

Since the spine surgery cost in India is already very high, it is best to avoid the burden of high interest. Therefore, while choosing a lender, prioritise the lowest interest rate to keep the loan affordable.

Consider the Approval Speed

Another point to remember when applying is the approval and disbursal speed. The spine is a delicate organ and you don’t want to delay the surgery due to lack of funds. Quick disbursal allows you to save precious time.

Know the Maximum Amount

When you opt for a surgery, hospitals give you an estimated cost of the procedure. However, the price may vary depending on the post-op care required by the patient. This is why you must have additional funds available to avoid last-minute hassle. Therefore, consider the lender with the maximum loan amount.

Choosing the Right Terms

Your interest rate is proportional to tenure. This means that the interest rate increases with the tenure. A longer tenure will lower your EMI but increase your interest rate. Similarly, a shorter tenure can increase your monthly burden but you will save more on interest.

Check for Foreclosure

If you have funds available, you can close the loan to avoid paying high interest. Therefore, choose a lender that gives you the option to close the loan early without a hefty penalty for your financial benefit.

Whether it is for surgery or any other medical expense, you can get a personal loan. One such option is the Fibe Instant Personal Loan, offering ₹5 lakhs for all your personal needs.

With Fibe, enjoy minimum documentation, flexible tenure and budget friendly interest rate. You can also foreclose without paying any additional charges. Download the Fibe Personal Loan App or go to our website to apply online and secure a loan for surgery.

FAQs on Spine Surgery Cost

How to get ₹2 lakhs immediately for spine surgery?

You can opt for an online personal loan from a digital lending platform like Fibe to get funds immediately.

What document is required for a loan for spine surgery?

Most lenders offering instant medical loans require minimum documents such as:

Identity proof such as an Aadhaar card, voter ID, driving licence and passport
Income proof such as the last six months’ bank statements and the last three months’ salary slips
Address proof such as voter ID, ration card, passport and utility bills

Who is eligible for a loan for spine surgery?

Any Indian resident between the ages of 21 and 55 years is eligible for an instant medical loan. Additionally, steady employment with a good credit score is crucial. Lenders also have a minimum salary criterion, which you need to meet to get approval.

What are the uses of a loan for spine surgery?

It allows you to provide additional funds for planned or unplanned medical requirements, including the following-

You can get a loan for surgery to cover the cost of any operation
Since personal loans do not have an end-use restriction, you can use the extra money to cover related medical expenses, such as medicine and tests

How much time does it take to approve a loan for surgery?

It depends on your lender and your credit profile. If you apply with a sizeable and steady income with a good credit score, then you may get approval faster.