Friday, 26 November 2010

Third Party Payment are not allowed by Financial Institutions

Now Most financial institutions are not allow the customers to apply  for their financial product with third party payment. In this scenario let us see what is third party payment and how can we solve this problem.

If you make a payment for any financial instruments with cheques from the bank accounts, which are not mentioned in the application form can be termed as third party payment.

If you make payment from a joint account the first holder of the financial instrument must be any one of the joint account holder.

If you make payment through online banking account the online banking account must match with the registered bank account as per application submitted to the financial institution's record.

Cases where third party payments allowed

Payment made by Parents/Grand-Parents/related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding Rs. 50000 (each regular purchase or per SIP installment).

Payment made by employer on behalf of employee under Systematic Investment Plan (SIP) facility through payroll deductions.

Payment made by the Custodian on behalf of an FII (Foreign Institutional Investors) or a Client.

But for getting the exemption both the investor and the person making the payment should be KYC ((Know Your Customer) compliant and also submit “Third Party Payment Declaration Form” duly completed in all respects.

In case of Systematic Investment plan all the old SIPs (SIPs started earlier and still continuing) does not need this third party declaration. But new SIPs require such declaration if it is any one of the above mentioned cases.

What can an Investor do for new purchases

Investor should provide the details of the bank account from which the payment is made.

If the purchase is made through Pay order, Demand draft or Bankers cheque, a certificate from the issuing bank should be attached with the application which includes the name of the account holder and the bank account number from which the amount has been taken form making such payments.

The payment more than Rs. 50000 will not be accepted, if such instruments for payment (Demand Draf, Pay order etc.) made by cash and the above mentioned certificate from the issuing bank with Name, Address, PAN etc also should be needed.

If payment is made by RTGS, NEFT, ECS, Bank transfer, etc., an acknowledged copy of the instruction to the bank stating the bank account number from which the amount has been debited, must attached with the application.

Registration of Multiple Bank Accounts:

If an investor  has multiple bank account, he can register up to 5 bank accounts (for Individual / HUF) and 10 bank accounts (for Non-Individual) by submitting a       Cancelled cheque leaf with investor’s name pre-printed and a Bank statement / Bank passbook with account number, account holders’ name and address.

It is advisable that if the bank details are changed the investor must inform the financial institution as soon as possible but at least 10 days prior to the date of dividend / redemption payment, if any. You can get necessary forms from the financial institution where you purchase the saving instrument or wish to purchase such instruments. You may download the forms from their website also.

Wish all our readers a safe and secure investment deals.

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