2017 – Page 4 – My Money Streets

March 6, 2017

Financial Inclusion – A Mission and A Revolution!

The term ‘financial inclusion’ reminds me of the first ethos of democracy that is ‘equality’, equal treatment, equal opportunity and equal availability of resources. It simply means providing financial services at a minimum cost to sections of underprivileged and low-income segments of society, making all individual contributing to the economic growth.

If we go by research reports, India stood in the bottom few countries in financial inclusion until 2011, which caused financial disparity and uneven growth, a major setback for the developing nation. However, the recent multi-layered approach towards financial inclusion indicates a strong step towards eliminating this socio-economic hindrance. According to World Bank data, around 2 billion people in the world don’t use or have access to formal financial service and about 50% of the poorest households are unbanked. The experts believe, the inclusion of these unbanked population would reduce the economic inequality, World Bank aims to complete Universal Financial Access (UFA) by 2020.

The India Scene: Though the term was coined in the year 1994, the history of financial inclusion goes back to the pre-independence era of the first foundation of the modern banks. As time rolled, India, a new democracy did its own bit to include the poor and deprived population to include in the financial system. However, the history of banking in India had its image deep-rooted in Indians as ‘for rich and wealthy’, which restrained the poverty-stricken less privileged to knock the door of banks. They kept relying on unorganised money-lenders who preyed on the poor. Few major steps in this era included nationalising the banks between 1969-1980. It was only the first step towards a long marathon. This era also built the foundation of RRBs (Regional Rural Banks), formed to serve the large unbanked population of rural areas and promoting financial inclusion.

The year 1991 marked the new wave of liberalisation reforms in trade and economic policies in India, which also brought the private banks into existence. The process of opening branches in rural India, however, remained slow.

Real Growth: For long, banks ignored the remote and rural areas of India to focus on their profit and keeping their costs in check. RBI played a catalyst in the modern reform by permitting banks to engage business facilitators (BFs) and BCs as intermediaries for providing financial and banking services, also known as Bank Mitra. To further penetrate rural India, RBI simplified branch authorisation in December 2009, allowing domestic scheduled commercial banks to freely open branches in tier III to tier VI towns and villages with a population of less than 50,000 under general permission.

In the last decade, India has witnessed a paradigm shift in the approach of financial inclusion, from a social responsibility it has turned into a full-fledged ‘mission’. The true essence of financial inclusion is reflected in the series of initiatives under the leadership of PM Narendra Modi. Keeping up with the demand of millennial generation and new economic environment, financial inclusion is now not limited to opening bank branches in rural areas and frill-free bank accounts. There have been multiple action parallely undertaken like a revolution to reach the goal. Besides direct approach, the government also facilitating other institutions in their efforts and keeping up with the need of modern financial reforms.

Year 2011 onwards

The series of new initiatives are compelling the unbanked population to open a bank account and link it to Aadhaar and PAN to receive government subsidies and other assistance. It is not a one-time approach, but the persistent effort can be seen through action at multiple levels attacking the root cause.

During the period 2011 – 2015, the unbanked population of India halved from 57.7 crores to 23.3 crores, as reported in a PwC research. PradhanMantri Jan DhanYojna (PMJDY) and demonisation drive together mobilised about 26 crores of unbanked population to the formal financial ambit further lowering the number.

With PMGDY, the government also introduced term insurance policy for all, Pradhan MantriJeevan Jyoti Yojana (Rs. Two lakh sum assured for An annual premium of Rs. 330) and health insurance scheme Pradhan Mantri Suraksha Bima Yojana (Rs. Two lakh sum insured for a premium of Rs. 12). The Adhaar linked accounts now can also be used for UPI with a smart phone or even feature phones (mobile wallet). To encourage the unbanked population, the consistent efforts are made through the demonetisation drive, direct subsidies and now monetary assistance for pregnant women in the underserved population amongst other. The regulations in microfinance business over last decade have made financial services affordable for the poor. The introduction of payment banks and small banks only ensures a better reach to the rural and remote areas without proper infrastructure facility.

A recent research report by BCG mentioned India to be making the fastest progress in the financial inclusion drive. Including digital mode of banking in the base level is expected to further strengthen the movement as the number of mobile users exceeds the bank account holders with a high margin. Given the infrastructure and resource constraints, digitisation drive will make rural banking viable and efficient.

Communication: The recent moves of PMJDY account and demonetisation was well covered by all media outlets and PM intelligently used media for the benefit of the nation especially with his ‘Mann ki Baat’ on radio and announcements on national TV Doordarshan. Going further, communication will play an important role. Experts will agree, India, the country with the world’s second largest population is known for its diverse culture and socio-economic system. As the focus is to reach the rural and remote areas and include them in the financial system, the communication tool and strategy need to merge with the local flavour while keeping the key message intact. The localisation of communication strategy efforts will further improve the trust of the rural to only open but transact and maintain their bank accounts for their own benefits.

If we think logically, the common mass media used for the tier-I cities would be quite irrelevant for the tier-II and below, however widely it can report the issue. For an effective communication programme, three major aspects would be: 1. Targeting right Influencer group 2.Choosing the right platform/ tool and 3. Designing the key message.

Choosing the right Influencer group will be as important as the messaging. The village communities are largely influenced by their Panchayat, school going or educated children, teachers, doctors, postmen and local heroes. The benefits of bank account and choosing formal financial products can be promoted in platforms like local events through plays, sponsorship programs of self-help groups, training children in the government schools, training volunteers to spread the message in the community etc. Sharing a digital demo should be an important element of the campaign. The content of the messaging should be touching the right cords of the rural population.

An informed society makes a better decision. So, educating them in the right direction is also a core responsibility of powers that be, apart from providing mere services.

February 22, 2017

‘Money order’ days are coming back soon? India Post, the flag bearer of financial inclusion

Launch of #Indiapost #payments-bank and #aadhaar-based-money-transfer – and my childhood memories

I am born and brouht up in a semi-urban locality in Jamshedpur, Jharkhand, and hold some fascinating memories of childhood days with my grand-parents. Holding my grand-mom’s hand, my tours to Post-office and banks comes flashing often. I remember my grand ma calculating her interest earnings, gifting us Indira Vikas patra, Kishan Vikas Patra certificates as birthday gifts. Urging my father to buy NSC certificates was a routine for her without having a proper understanding of product positioning but with a complete knowledge of how to “double” her savings with fixed income products.

Also Read – Airtel Payments Bank

I still vaguely remember, I would be about 8 years old when my cousin cleared his board exams with brilliant numbers. My family was thrilled. My Grand-father enthusiastically summoned my Grand-ma to send “money order” of Rs. 500 to my cousin as blessings. Sending any other gift through courier was a far-fetched dream at that time. And as usual, I enthusiastically accompanied my granny to the Post office and see her write neat requisition slip, speaking to the head post master, giving some extra money as a fee for transfer and done! We received a letter from uncle and brother in receipt and thanks within the month (we didn’t have a telephone yet).

India Post was an important part of our lives with the Postcards and in-land letters, the deposit certificates and occasional money orders. It was a complete financial service destination for my grand mom with their monthly income scheme and senior deposit schemes.

It was such a thrilling experience from my ‘slo-mo’ childhood memories. The visit to Post office was just fascinating!

It may sound weird for a bit that why I am detailing out my childhood experience in a finance-centric blog. Hold on! I will tell you. ☺ I just came across the news yesterday that India Post payments bank plans to launch Aadhaar based money transfer. Though the minute details aren’t out yet, I just recalled the sweet childhood days! It will be fascinating to see how the whole process pan out. India Post one of the oldest entities in India, with more than 1,50,000 point of presence and 3 lakh postmen on its payroll clear winner in the outreach to the rural and remotest places in India. According to reports the India Post has more than 89% branches are in rural areas.

Though #India Post temporarily lost its sheen during the late 90s and early 2000’s, with many service running into losses, closure of its telegram services and thanks to the internet era, postcards and inland letters are history now. But great to see that the old champ is all set to get on with the modern times and give a high competition and contribution in the banking system of India

India Post, older than our formal banking system has served Indian population with various fixed income product and Many times higher return on fixed income products. The institution is a true symbol of financial inclusion in India, quietly working for decades humbly without hogging much lime-light. This is an ode to you India Post, the true torch-bearer of financial inclusion journey.

I welcome you whole heartedly for your newest venture of Payments banking. Despite strong opposition by the banking lobby, you made it there and you truly deserve it. I wish you write an amazing story of financial inclusion in India for people to acknowledge and remember you for your unforgettable contribution to rural India.

February 18, 2017

Different kinds of lesser known bonds with interesting names

Before I resume to my usual dopes on personal finance, I thought today we will discuss something interesing and informative. and stumbled upon an article which talks about some srikingly different names of bonds, very unusual of such a strict financial instrument.

Till recently I thought it’s only the phone makers who were obsessed with food or fruits who named their products as “Apple”, “Marshmellow”, blackberry and so on until I came across ‘Masala Bonds’. But hold on, there are a host of it. On a newspaper, I found names like ‘Panda’, ‘Samurai’ and ‘Kiwi’ used for different bonds. I wished to dig further and present to you the list of such lesser known bonds from across the world with different names.

These interesting bond names are popular in many countries – India, UK, China, Japan, etc. The common factor in these bonds is their features offering. These bonds are mostly used by either foreign country corporates or bonds are sold in foreign country denominations, however with some exceptions like ‘Kiwi’. The bond names amazingly express the love for food amongst the financial community across the globe (on a lighter note). Few names are also attributed to other important symbols of the nations. The cuisine or symbol reflects the connection with the country. And my obsession with financial market and personal finance both grows stronger J

Here I present to you the compiled list, sourced from Wikipedia, newspapers and my own memory. You may not require this list for investment purpose but can serve as informative and interesting read. I would like to go with chronology –

Arirang Bond – Arirang is Korean folk song, used for a won-denominated bond issued by a foreign entity in South Korea. It is a very small segment of their bond market, the Asian Development Bank issued it in 1995.

Baklava bond – Name is taken from a Turkish dessert, Baklava is a bond denominated in Turkish Lira and issued by a domestic or foreign entity in Turkey. Turkish government allowed companies to issue these bonds in the year 2010.

Bulldog bonds – Taken from the national symbol of united Kingdom, Bulldog bonds are sterling-pound based bonds (the third largest reserve currency in the world) issued by non-British institutions that want to sell the bond in the United Kingdom.

Dim sum bond – A popular appetiser even in Indian Chinese restaurants, these are bonds issued outside of China but denominated in Chinese renminbi, rather than the local currency listed in Hong-kong, not in mainland china.

Formosa bond – Formosa, is an alternative name for the island of Taiwan. These bonds issued in Taiwan but denominated in a currency other than the New Taiwan Dollar.

Huaso bond,- Derived from the term referring to Chilean cowboys, a Chilean peso-denominated bond issued by a non-Chilean entity in the Chilean market.

Kangaroo Bond – The name deriving Kangaroo, a national animal from Australia, is the type of bond issued by foreign entities, traded in the Australian market, is denominated in Australian currency, is subject to Australian laws and regulations.

Kimchi Bond – kimchi, name derived from a Korean side dish, is a non-won-denominated bond issued in the South Korean market.

Kiwi Bonds – Derived from the famous fruit from New Zealand, Kiwi bonds are bonds offered directly to the public and available only to New Zealand resident investors, redeemable on maturity or at the option of the bondholder and are issued in 6 months, 1 year or 2 years

period.

Lion city bonds – The name derived from the national symbol of lion head, Lion City bond foreign currency denominated bond issued by foreign company in Singapore

Maple bond – I just love the maple syrup over a hot pancake on breakfast. However, we are here talking about the Canadian dollar-denominated bond issued by a foreign entity in the Canadian market.

Masala bonds – Derived from the Hindi word for spices, these are rupee-denominated bonds

issued outside India.

Matrioshka Bonds – Name derived from the famous Russian dolls, these bonds are referred the Rubble denominated bonds, issued by foreign entities for reaching Russian investors.

Panda Bond – A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People’s Republic of China.

Samurai Bond – a term referred for military nobility from Japan of medieval and early-modern Japan, a samurai bond is a yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.

Shibosai Bond – yen-denominated bond sold directly by issuing company, a bond denominated in yen sold directly to investors by the foreign issuing company.

Shogun Bonds – The term ‘Shogun’ is used for Japan’s supreme military leaders from 1603-1869. It is used for the non-yen-denominated bond issued in Japan by a foreign institution or government.

Yankee Bonds – The word is derogatory a term used to describe Americans by the Brits, Canadians, Australians and the like. A Yankee bond is a bond issued by a foreign entity, such as a bank or company, but is issued and traded in the United States and denominated in U.S. dollars.

Uridashi Bonds – A Japanese word for ‘Sale’, Uridashi Bonds are the secondary offering of bonds, denominated in Yen or issued in a foreign currency. These bonds are sold to Japanese local/ individual investors.

Hope it made an interesting read. will soon be back with my new post. Till then.. enjoy! A very happy weekend to all of you 🙂 see you soon

February 13, 2017

Pay Taxes, for a better India!

Following the demonitisation spree, we had the union budget session 2017-18, where taxation was one of the most debated topics. Its been more than a month of concluding 50 days period of complete withdrawal of Rs. 500 and Rs. 1000 currency notes. We must understand that the primary reason of the demonitisation was to fight corruption and black money, which primarily arises from illegal income and tax evasion. As we are just fresh out of budget announcement, I thought it would be only appropriate to share some thoughts on the importance of taxation for any country.

Government as an entity doesn’t have any money of its own; taxes are the main source of funding for the government. In India, we have two types of taxes, direct and indirect. Direct tax comprises of income tax, surcharge, gift tax, wealth tax, corporation tax etc. Indirect tax is a component added on a particular expense incurred by individuals on service received or buying goods, collected by the service providers or seller of goods in form of service tax or VAT.

The tax earnings are used for administration, infrastructure, education, security and defense amongst others. Government-run hospitals provide services for almost free of cost, government-run schools across the country educate children for negligible fees; provide cooking gasses for subsidized prices. A major part of our tax contribution goes into our security and defense system. The taxes are utilised for maintaining law and order in the country, maintaining cleanliness by the municipal corporation etc. A major area of spending of these tax monies are towards healthcare and medical expenditure of the less-privileged children. All of these things cost money and while not everyone uses them every day, most of us use or benefit from them over time.

What government takes from in form of direct and indirect taxes is spent on the common development areas of the country. So, with increased tax income government can allocate more funds towards social benefits.

India vs. developed countries
One may argue that Indian government doesn’t provide for medical and social securities like other developed countries, but we need to have a fair base for comparison. We must appreciate the fact that the developed countries have higher income tax earning. According to government data, only 4.1% of total Indian population pays taxes, while in the US, 45% population pays tax. The tax rates in these countries are comparable and higher than India.

Tax is the price we pay to live in a civilized society. An increase in a number of taxpayers is only a sign of prosperity of the country. The temptation towards evading tax is a crime (in making) towards the society. There are advocates of lower taxes who says, it helps in economic growth by reducing cost, it only benefits the traders and the upper segment of the society. In a holistic growth of socio-economic environment, taxes pay a key role.

Make use of 80C benefits

Image taken from wealth18

This union budget, the thresold limit for taxable income has been set above 2.5 lakh. Also, an additional benefits of making the first tax slab to 5% and for tax payersearning upto Rs. 3.5 lakh will get a rebate of Rs. 2.5 thousand. A majority of population within the 5% tax bracket, earning up to 4.5 lakh can completely save taxes by the 80C investment instruments. A fair exemption upto 1.5 lakh rupee can be claimed on various investments and expenditure listed by income tax department. Earning arising from long-term equity investment doesn’t attract any taxes, similarly for equity mutual funds. Also, ELSS schemes managed by mutual fund companies are specifically designed to get triple tax benefits with only 3 years lock in period. There are also other investment options like – PPF, Tax Saving Deposits, NSC and few more dedicated towards tax-saving purposes. Additionally, there is a special exemption up to Rs. 50 thousand for citizen who contributes towards NPS. Government also encourages taxpayers to build their homes by offering exemption towards repayment of loan and interest payout. One must utilize these benefits for saving taxes, creating wealth, securing health and donating for good causes.

Higher income from taxes reflect a good health of the economy of the country, similarly, an individual who needs to pay tax only signifies that his income is high enough to contribute towards the wellbeing of the country. Discussion on positives and negative about taxes are debatable, we must look at taxes in a rational and positive light and its contribution towards the country as a whole. The culture of paying taxes need to imbibed in our lives.

February 12, 2017

What is Payments bank? Let us see how AIRTEL Payments Bank work

what are the features? what you can and cannot do at payments bank!

A #Payments bank is a bank where you can deposit money, earn interest on it, use it for remittance services, Payments, transfer, net-banking and third party transfer. However, Payments banks cannot give out loans, issue credit cards. The maximum amount deposit is capped at Rs. 1 lakh.

The main objective of launching these banks is to reach out to the maximum population without much infrastructure requirements, with help of technology. These banks are beneficial for small businesses, low-income households and places where the full-service banks are not present or unable to address the needs of the low-income or small business owners, migrant workforce etc. With this initiative, RBI aims at reaching the remotest areas of the country. For ease of use and stay away from ambiguity, RBI has made it mandatory to use “Payments Bank” mandatorily in the name. As per RBI guidelines, Payments Banks must of 25% of its branches in the un-banked rural area.

Payments Banks work very well in the rural India, complementing government initiatives of financial inclusion. It will empower those citizens who have only transacted in cash, to head towards formal banking.

Presently, we have Airtel Payments Bank and soon PayTM is launching PayTM Payments Bank and IndiaPost Payment Bank.

As Airtel Payments Bank is already functioning, let us just have a glimpse of what it offer?

You have to enter your Aadhaar No. to get started.

Then the page takes you o register your PAN details, annual income and profession

Then next page you have to fill in the nominee details

It takes you to page – Banking points near you

Features

1. An account can be opened with Rs. 100, can deposit upto Rs. 1,00,000. No charges on cash deposits, in case of cash withdrawal,

2. Customers can withdraw money as low as Rs. 10

3. Fee for withdrawal is Rs. 5-25, if the amount is between Rs10 and Rs4,000

4. 7.25% interest on savings account

5. Free accident insurance worth 1 lakh

6. Can be used for mobile recharge, sending money, paying utilities bill, pay in shop etc

7. Intra-bank transfer within Airtel Paymentss Bank via Internet banking, mobile app or USSD is free

Freebies along with it

1. 15% cash back on CCD

2. 5% Extra cash back on Apollo Pharmacy

Convinience come with some charges –
1. Withdrawal charges for customers have to pay Rs5-25 for withdrawal of Rs10 to Rs4,000
2. Customers have to pay 0.65% of the withdrawal amount above Rs4,000, for withdrawing Rs. 10,000, customer needs to pay Rs. 65.
3. Digital transfer of money from Airtel Bank to other bank will charge 0.5%

4. Intra bank transfer to Airtel Payments Bank using bank point – 0.5%

5. Money transfer from Airtel Payment Bank to any other bank using bank point 1%

6. Account closure charges Rs. 50

What you can’t do with Payments Bank?

1. No credit card

2. Cant avail loan

3. No deposits over Rs. 1 lakh

4. NRI deposits will not be accepted.

January 28, 2017

Top 5 tax saving mutual fund schemes (ELSS) for 2017

As we approach year end, our search for the best tax saving instrument under 80c ends at tax saving #ELSS mutual fund schemes. By far the best investment tool with triple exemption benefit (no tax to be paid for buying, accumulation, redemption) with the lowest lock-in period of 3 years and maximum exposure to the capital market for young professionals or anyone who wishes to focus on long-term wealth creation through equity market. For the beginners, ELSS is an actively managed equity fund by an experienced fund managers with an equally equipped equity research team. Over last 5 years, ELSS category has given over 12% tax-free annualised return on an average which is way higher than any other tax saving tools. Hence, it is my favourite tax saving instrument.

Top 10 reasons to invest in ELSS schemes –

Minimum investment for a monthly investment is Rs. 500
No obligation of repeat investment in the same fund every year
No maturity/redemption obligation on completion of 3 years (unless specified by the fund/scheme), can withdraw anytime once the lock-in period is over
It can be held as long as the investor wants, giving it a chance to build long-term wealth
The fund is managed by able fund management teams
Low fee structure and expenses, about 2-2.5% yearly
No long term capital gain tax
Investor has an option to chose between dividend or growth fund
The dividend earned on these funds are tax-free
SIP method of investing would help in cost averaging

Some point of concerns –
As it is a pure equity investment, it carries market risks, highly volatile

The SIP mode of investment signifies each purchase will have a separate lock-in period of 3 years

Top 5 #Taxsaver #ELSS schemes for 2017

ELSS Schemes	AUM in crore	Returns for 3 Years	Returns for 5 years	Ratings
#DSP-BR Tax Saver Fund	1420	25.5	20.8	5star
#Reliance Tax Saver	5579	29.2	21.3	3star
#Axis Long Term Equity Fund	9956	24.1	21.6	3 star
#Birla SL Tax Relief 96	2308	24.1	19.8	4star
#Franklin India Tax Shield	2196	22.9	17.9	3 star

I have listed 5 top ELSS scheme based on 5 parameters–

1. Funds with over 7 years existence

2. AUM over Rs. 1000 crore

3. Among top 10 fund house

4. Return analysis over 5 years

5. Rating consistency by CRISIL/ Value Research

#DSP-BR Tax Saver Fund

This fund is out an out consistent over last 10 years. It has consistently beaten the index over 1 year, 3 year, 5 years return. This fund has out ranked most other funds in ELSS category in the period. Investment details – The fund aims to generate medium to long-term return on majority investment in equity and equity related instruments. The fund has over 20% exposure in banking and finance sector however invested mostly in private sector banks, so less chance of getting affected by NPA. It has some quality cyclic stocks.

#Reliance Tax Saver Fund

ELSS fund with over 10 years existence, AUM over 5.5 thousand crore comes from a good pedigree. Rated 3 stars by CRISIL, the fund has beaten indices over 3 years and 5-year trailing returns. In the 1 and 2 year category, has been below the indices in many cases. It is a good investment with high-risk appetite. It has also given the highest return in the SIP for 10 years category. Investment details – This is a mid-cap, small-cap heavy fund, aims to generate wealth over long term. Fund manager looks for value buy of stocks with bottom-up stocks picking approach. The portfolio is well-diversified and spread across sectors.

#Axis Long Term Equity Fund

With an AUM over 9,900 crores as of 20^th Jan 2017, it leads the ELSS scheme in the top position. It has lagged in last 1 year in comparison to its peers and indices, but over 3 years, 5 years returns it is in the top 5 ranks.

Investment details – The scheme aims to generate regular long-term capital growth from a diversified portfolio of equity and related securities. It invests in companies with strong growth and sustainable business model. It has equity exposure up to 95%, given some trailing returns in the short-term but expected to even out over long term. It is still a good choice. It avoids buying companies which have excessive business uncertainty on account of cyclical, regulatory, political risks.

#Birla Sunlife TaxRelief 96

A fund with good pedigree has a defined track history over20 years has a AUM of 2.3 thousand crore belong to good fund pedigree. In last 1year, it is trailing the index. While in 2, 3, 5 years returns, it has beaten indices return with significant margin. It has generated over 100% return over years. Investment details– It is a multicap fund with well-diversified portfolio. However, fund has a cyclical stock bias, which has its own effect on return cycles. Well diversified in its approach, the top 5 holdings only account for 26% of the portfolio.

#Franklin India Tax Shield

A fund with a track record over 7 years has been at par with index returns for 1 year and for over 2,3 and 5 years it has performed well above indices. This fund tends to be less volatile compared to its peers. Investment details– The process of the fund house is robust. This fund is known for having conservative approach, bottom-up style of stock picking and having growth style of investing. The fund with a large-cap bias which accounts for almost 60% of the portfolio has a 25% exposure in mid-cap, small-cap category. Well diversified in portfolio construction, the top 5 holdings accounts for only 26% of the portfolio.

Don’t break your head over minute investment return details, it is a game of sector allocation, Mkt-cap of companies and economic cycles. Choose a fund with a basic research and your investment style as criteria. #ELSS is nothing but an equity mutual fund and over long-term it is expected to give good returns, which also provide #tax benefits under income tax act, section 80C. However, it is advised to consult a professional financial planner before investing.

http://www.mymoneystreets.com/2016/11/include-dynamic-asset-allocation-funds.html

January 26, 2017

Direct Plan Vs. Regular plans which mutual fund plan to buy?

Direct plan or Regular plan

Amidst the volatile markets and global economic conditions, Indian #mutual fund industry has seen a steady upsurge in investments in last decade. Globally, India has established its position as an investment destination. Though Mutual Funds industry existed in India for last 30 years, its only last decade that individual investors warmed upto this investment tool.

SEBI, the regulatory authorities for equity markets in India has played a major role revamping the mutual fund industry with series of reforms and making mutual funds a transparent, low cost and high yielding instrument for individual investors. I can write a full article on the reformative steps of SEBI for the mutual fund industry which irks the players but it has only helped retail investors in gaining confidence on the investment tool.

But, in this article I would like to focus on the specific reform of splitting schemes in regular and direct plans. The move not only made a lot of news, it opened a new era low cost investing where equity direct plans cost up to 0.5 -1% less than the regular funds and 0.2% on debt funds.

What is a #direct plan and regular plan

Beginning Jan 1, 2013, all the #mutual funds mandatorily split its existing and new schemes into two with different NAVs (Unit price). The funds, when sold by the distributors were put into ‘Regular’ category, which included the upfront/trailing fee and transaction costs for the service of the broker/distributor. This is aimed at rationalizing broker’s cost for rendering his service.

‘Direct’ category for each scheme was created for investors who don’t take service of any distributor/advisor for mutual funds investment and buys from mutual fund office/online/ CAMS/KARVY App. They don’t need to pay for the extra upfront/trailing charges for the services.

Direct Vs. Regular plan

Though over time process of investing in mutual fund has become easy, but selecting the right products requires planning. Every mutual fund scheme has an investment objective and style. It is investor’s prerogative to choose right schemes based on his financial goals. However, brokers are often tempted by the upfront or trailing fee structure while suggesting funds.

The distributors and advisors played an important role here in choosing right product mix for their clients. However, an informed investor need not require assistance on investing. Hence, SEBI proposed separate NAV for Direct funds deducting the distributor related costs.

Illustration on how Rs. 10,000 grew from Jan 1, 2013 to Dc 2016 in direct Vis-à-vis regular plans

Schemes – Largecap equity mutual fund

Birla Sunlife Frontline Equity – Growth	Percentage return in 3 years	Total return
Direct plan	20.11	17624
Growth Plan	19	17014

ICICI Value Discovery Midcap-smallcap fund

ICICI Pru Value Discovery – Growth	Percentage return in 3 years	Total return
Direct plan	18.23	17278
Growth Plan	17.19	16736

HDFC Income Fund – Debt oriented

HDFC Income Fund	Percentage return in 3 years	Total return
Direct plan	12.62	14694
Growth Plan	11.58	14188

Who should buy direct plan?

An informed investor should choose direct plans, as over 5 years the direct plans can give about 3-4 % extra return.

Alternative options?

If you are not financially savvy, take professional help on financial planning from certified advisors for a fee, and then buy mutual funds direct plans. But if you still require assistance in buying and managing your investments, you should buy with help of broker/distributor and choose ‘Regular’ plans.

January 20, 2017

BSE IPO Details – sourced

Source – chittorgarh

#BSE Limited is the owner and operator of BSE Exchange (Bombay Stock Exchange), India’s largest stock exchange by number of companies listed. The Bombay Stock Exchange was established in year 1875 as the first stock exchange in Asia. Today BSE has over 5000 companies listed on it, the highest in any exchange around the world. Worlds two leading global exchanges, Deutsche Bourse and Singapore Exchange are strategic partners of BSE.

BSE offers trading in Equity, Debt Instruments, Derivatives, Mutual Funds and SME Equity. The S&P BSE SENSEX is India’s most widely tracked stock market benchmark index. BSE also offer services including risk management, clearing, settlement, market data services, IT services and solutions, licensing index products such as the S&P BSE SENSEX and financial & capital markets trainings.

BSE Limited Strengths

1. Strong brand recognition with a track record of innovation
2. Diversified and integrated business model and active relationship with market participants
3. State-of-the-art infrastructure and technology

Company Promoters:

The company is professionally managed and does not have an identifiable promoter. There are no shareholders who control individually or as a group, 15% or more of the voting rights of the company.

Company Financials:

Summary of financial Information
Particulars	For the year/period ended (in Rs. Million)
	30-Jun-16	31-Mar-16	31-Mar-15	31-Mar-14	31-Mar-13	31-Mar-12
Total Assets	30,363.5	29,176.7	28,758.0	25,923.0	27,273.6	27,915.7
Total Revenue	1,424.4	5,158.9	4,391.8	3,328.3	3,389.1	4,028.0
Profit After Tax (PAT)	454.3	1,319.1	756.5	747.7	398.2	1,116.0

Issue Detail:

»» Issue Open: Jan 23, 2017 – Jan 25, 2017

»» Issue Type: Book Built Issue IPO

»» Issue Size: 15,427,197 Equity Shares of Rs 2 aggregating up to Rs 1,243.43 Cr
› Offer for Sale of 15,427,197 Equity Shares of Rs 2 aggregating up to Rs [.] Cr

»» Face Value: Rs 2 Per Equity Share

»» Issue Price: Rs. 805 – Rs. 806 Per Equity Share

»» Market Lot: 18 Shares

»» Minimum Order Quantity: 18 Shares

»» Listing At: NSE

An indicative timetable in respect of the Offer:

Bid/Offer Opens On: Jan 23, 2017
Bid/Offer Closes On: Jan 25, 2017
Finalisation of Basis of Allotment: On or about Jan 31, 2017
Initiation of refunds: On or about Feb 01, 2017
Credit of Equity Shares to demat accounts: Feb 02, 2017
Commencement of trading of the Equity Shares: Feb 03, 2017

January 15, 2017

Things you need to know about your Leave Travel Allowance (LTA)

There are dual benefits for Indian employees about traveling. While you take an official break for traveling any destination in India with your family, you also save tax on your travel expenses with LTA, which is provided by employer. It is only smart to make most of this benefit. This post aims to elaborate on certain features of LTA as a savings tool.

What is LTA?

· #Leave Travel Allowance is an allowance provided by employers for domestic travel for the employee and immediate family
It covers only the travel expense by air, train incurred during the travel, it also covers taxi and auto rickshaw only if train route is absent
It covers the travel expenses incurred by the individual and their immediate family. Other family members are excluded from availing Leave Travel Allowance
One can make a claim only twice in a block of four years, the present block is Jan 2014 – Dec 2017
#LTA also can be carried to the next block if it is not utilised, if under utilised the balance amount can be added
International travel expense cannot be claimed under LTA
You can claim your Leave Travel Allowance if you haven’t travelled, but the amount will come under taxable income
LTA is fully tax exempted under Section 10(5) of the Income-Tax Act, 1961, Rule 2B

Limitation of LTA

Like any other exemption rules, LTA also has its limitations. The companies have certain eligibility criteria for LTA. If the allowance of the previous block is not exhausted, then one journey can be carried forward to the next block. However, the balance has to be exhausted within the first year of the next block. The allowance is capped by employers; the claims above the exemption limit will not be processed. LTA can only be claimed if the employee is part of the travel, family including spouse, children, brother and sister if they are dependants.

How you make most of LTA

As you can only claim twice in 4 year block, planning in advance helps. Ensure, you are taking prior written permission from the employer. Though air travel is allowed, it covers the minimum airfare of economy class. The road travel exemption is limited to the AC1 rail fare by the shortest route.

You need to keep the proof of your travel, tickets and copy of e-tickets in place.

Innovations in claiming LTA online – to help HR professionals an employers

Zeta, a Fintech startup, recently launched fully digital Leave Travel Allowance (LTA) solution, #Optima LTA Card, to help organisations manage employees’ leave travel allowance claims/ reimbursements digitally and enable employees to submit claims instantly. Built on digital platform, is designed to process LTA claims the paperless way. Employees are now empowered to submit their travel claims digitally and thereby avoid extensive paperwork. It is compliant with all legal mandates set by the Income Tax Department. Zeta team at the back-end tracks the shortest distance between two destinations using a government-approved database and thereby enable accurate assessment.

Also Read – 10 investment ideas for happy 2017

Organisations can be free of verifying paper bills manually since all verifications will be handled by Zeta Optima at the back end. Human Resource professionals can use this platform to digitally store bills for over seven years and can track LTA bills and claims online.

Happy traveling 🙂

January 11, 2017

Breath-taking panoramic view from the balconies of ultra luxury residences amidst the buzzing city recreated at Malabar Hills of Thane

Nestled in the lap of mother nature, Malabar Hills, a hillock right on the coast of Arabian Sea have been a envied place for many of us. Quite close to the busiest roads of Mumbai, it lives in an eternal peace, where chirping of birds, thick woods coexist with the architectural marvels belonging to the who’s who of the country.

Malabar Hills is a place one doesn’t cross by chance, it is a destination in itself, a place which is in the centre of the buzzing city, yet a world of nature’s very own. With view of beautiful sea coast your senses travels beyond your imaginations.

A similar destination in making is Pokhran road 2, located in Thane. Rightly popular as #MalabarHillsOfThane, surrounded by Yeoor Hills, next to Upavan lake it’s a destination which is treat to the eyes. The green location blends elegantly with the stylish upmarket residential destination.

Easily accessible from the highway, #MalabarHillsOfThane reminds me of Malabar Hills of Mumbai, the similarity of being attached to the city, yet a different world of serenity and class! The purity of nature has blessed the select few affluent nature loving residents. The unaffected greenery of Sanjay Gandhi National Park, just next to the buzzing city promises wellness to your body, senses and soul. The Malabar Hills of Thane, true to its name beautifully balances the purity of its location with the needs of residents of affluent society with super connectivity and fabulous social infrastructure.

The pride is in the address. Tata Housing’s newest project Serein on Pokhran Road 2, is an amalgamation of ultimate luxury and nature’s beauty. Serein doesn’t only boasts of visual pleasure, the project is committed to holistic wellness of its residents. Located in the lap of Yeoor Hills, adored by the Upavan Lake, Serein perfectly justifies it’s name. The residential project by Tata Housing is an exclusively designed luxurious marvel keeping the nature’s elements intact with theme of outdoor living spaces, having abundant sunlight and natural ventilation.

True to it’s name and theme, every home is designed to increase the wellness quotient of its residents. Be it the vitamin C infused shower which soothes skin, hair and nails or the VOC paints for reducing health hazards, or the high quality glass, which significantly reduced the noise is designed to overall contribute to the wellness of its esteemed residents.

The outdoors of the project is designed carefully keeping with the nature. A pet park, nature trail, lotus pond, sand pit and organic farm are few of its many amenities adorning the location.

Over all, I am smitten by the beauty of the location and impressed with the project plan. I am eagerly waiting to see the Malabar Hills Of Thane full bloomed as a destination with the completion of the much anticipated project ‘Serein’ by Tata Housing.