20-20 rule in stock selection? Interesting!

ET has this interesting article on stock selection in a bearish/bullish market. The idea it churns out is something like this.

When the markets are declining, people don’t buy stocks because they doubt that the stock prices would decline further, resulting in a loss or else they will wait to buy the stock at the lowest point. But the article argues that waiting to buy stocks at the lowest point may not be fruitful because, less and less people sell stocks as its price nears the lowest point.

On the other hand, when the markets are bullish, people don’t sell stocks because they doubt the stock prices would go higher or they wait for the stock prices to reach the highest point. And, here the article argues that at the highest point there would be less and less people willing to buy the stock and hence selling it at the highest price may not be possible.

Due to this phenomenon, the article suggests that in a bear market, buy stocks when the market goes down by 20%, rather than waiting for it to touch the lowest point and in a bull market, sell stocks when the markets goes up by 20% rather than waiting for it to touch the peak.

Interesting though!

Related Articles
- SEBI makes IPOs more transparent
- Now Interest Rate Futures can be traded in National Stock Exchange
- SEBI mandates Rs. per share dividend declaration
- How does Short Term Capital Gain/Loss work?
- What are the 30 Stocks of BSE SENSEX

New system for inflation rates in India

No, the government is not moving towards implementing CPI based inflation calculation, but from October onwards, instead of releasing weekly inflation figures, the full data on wholesale price index will be released only on a monthly basis.

As per the decision taken by the government, the weekly index figures will not be released for manufactured products, but will be limited to primary articles and fuels. Manufactured products have a weightage of 63.74851%, while primary articles and fuel have weightages 22.02525% and 14.22624% respectively in inflation calculation.

The government says that the practice of releasing weekly inflation rates is scrapped to curb "volatility" in the markets. But, is it a gradual shift towards adopting CPI, where CPI figures are generally released on a monthly basis?

Related Articles
- Inflation rates of India (2009)
- Inflation rates of India (2008)
- How is WPI inflation rate calculated in India?
- Commodities and their weight-ages in WPI calculation of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

India moving closer to adopt GST

The 13th Finance Commission (TFC) has endorsed its proposal for single goods and services tax (GST) and recommended a “revenue-neutral” rate of 12% – Livemint.

Of the 12%, 5% will go to the center and 7% to the states. From the state’s share, 2% will go to third tier of governments made up of panchayats and local bodies.

Currently different states charge different tax rates for the same goods and services and there’s an incentive for an individual to purchase goods from a state where tax rates are lower. The difference in tax rates sometimes lead to the smuggling of goods as well.

Once adopted, GST will enable uniform tax rates for similar goods and services across the country. It would economically unify the country, reduce the incidence of tax and ensure greater revenue through better compliance. Most of developed countries of the world use GST.

The union government had promised to adopt GST by 1st April 2010, but has been unable to get the states to agree to the schedule. Some states fear that they would lose their existing tax revenues if they adopt GST.

To take care of this apprehension, the commission recommends creating a ‘safety net’ (a compensation fund with a corpus of Rs. 30,000 crore) in five years by the center. Any state which suffers a revenue loss from implementing GST shall be compensated using the safety net.

Related Articles
- New Income Tax Slabs
- How does Short Term Capital Gain/Loss work?
- No proof required for LTA & Conveyance allowance claims
- How to file Income Tax returns online
- How to check whether your employer/financial institution have deposited your TDS?

Online car insurance rates

It is unavoidable to have insurance for our car when we own one. Car insurance not only covers the money required to do rework on a car after an accident, but it also covers the life of the passengers inside. Hence, driving without car insurance is a huge risk that a person is taking. And most of the times a car insurance is mandated by the laws of a nation. Then it becomes all the more important to have insurance for our car.

There are umpteen insurance companies that offer car insurance to the public. They offer various schemes with varying options. So much so that sometimes we have to do a thorough research before finalizing on a particular insurance company. That’s where websites that provide auto insurance reviews come to our rescue. They provide all the information one would need when he is going for car insurance.

The site allows us to compare car insurances offered by several companies so that we can make an informed decision before we purchase one. It also helps the users to evaluate insurance coverage and rates of various insurance policies and has good articles that can educate an interested person. Thus finding car insurance that is appropriate for one’s personal needs would be quite easy while using the site.

SEBI makes IPOs more transparent

The Securities and Exchange Board of India, SEBI, issued a new investor protection guideline that prevents companies doing IPO from sharing information, which is not available for the outside world, with their IPO arrangers.

Previously, a company going for an IPO shared key financial information with the investment bank arranging the IPO; information which is available only to the bank and not to others. The investment bank would then prepare research reports which are based on this extra information. The reports are shared with institutional investors prior to the filing of the prospectus and are not available to retail or ordinary investors.

So, one could easily make out that the additional information would make IPO estimations by the investment bank dealing with the IPO more accurate and give institutional investors an unfair advantage against other investors. Given this situation, the tweak from SEBI which says,

“no selective or additional information or information extraneous to the offer document shall be made available by the issuer or any member of the issue management team/syndicate to any particular section of the investors or to any research analyst in any manner whatsoever including at road shows, presentations, in research or sales reports or at bidding centers”

shall provide a level playing ground for investors alike and would bridge problems associated with information asymmetry.

Related Articles
- Now Interest Rate Futures can be traded in National Stock Exchange
- SEBI mandates Rs. per share dividend declaration
- How does Short Term Capital Gain/Loss work?
- Application Supported by Blocked Amount for IPOs
- Money no longer gets locked in IPOs

Now Interest Rate Futures can be traded in National Stock Exchange

After a gap of six years, the National Stock Exchange (NSE) of India re-launched trading in Interest Rate Futures. This will give the investor an opportunity to speculate and trade with these advanced financial instruments.

Interest Rate Futures allow institutions to hedge risk associated with interest rate fluctuations. They can reduce the risk associated with cash flows resulting from underlying assets such as home loans, long term fixed deposits etc.

However, in India, the underlying asset on which the interest rate future is based on is a 10 year notional coupon bearing government security. Have a look at this small series that came in ET, which talks about few things one has to consider before trading in interest rate futures.

Inflation rates of India (2009)

This post tracks inflation rates of India for the year 2009, like Inflation rates of India (2008) did for 2008. Before that, a few facts about inflation rate calculation in India.

- Inflation in India is based on Wholesale Price Index
- A set of 435 commodities are used for the WPI based inflation calculation
- The base year for WPI calculation is 1993-94
- WPI is available at the end of every week (generally Saturday), for a period of 1 year ended that day
- It has a time lag of 2 weeks (WPI for the year ended two weeks back will be available this week)

Latest Inflation Rate
- 2009 Nov - 4.78% (via)
(for 12 months ended on the given month)

Previous Inflation Rates (for 12 months ended on given date/month)
- 2009 Oct - 1.34% (via)
- 2009 Oct 17 - 1.51% (via)
- 2009 Oct 10 - 1.21% (via)
- 2009 Oct 03 - 0.92% (via)
- 2009 Sep 26 - 0.70% (via)
- 2009 Sep 19 - 0.83% (via)
- 2009 Sep 12 - 0.37% (via)
- 2009 Sep 05 - 0.12% (via)
- 2009 Aug 29 - (-0.12)% (via)
- 2009 Aug 22 - (-0.21)% (via)
- 2009 Aug 15 - (-0.95)% (via)
- 2009 Aug 08 - (-1.53)% (via)
- 2009 Aug 01 - (-1.74)% (via)
- 2009 Jul 25 - (-1.58)% (via)
- 2009 Jul 18 - (-1.54)% (via)
- 2009 Jul 11 - (-1.17)% (via)
- 2009 Jul 04 - (-1.21)% (via)
- 2009 Jun 27 - (-1.55)% (via)
- 2009 Jun 20 - (-1.30)% (via)
- 2009 Jun 13 - (-1.14)% (via)
- 2009 Jun 06 - (-1.61)% (via)
- 2009 May 30 - 0.13% (via)
- 2009 May 23 - 0.48% (via)
- 2009 May 16 - 0.61% (via)
- 2009 May 09 - 0.61% (via)
- 2009 May 02 - 0.48% (via)
- 2009 Apr 25 - 0.75% (via)
- 2009 Apr 18 - 0.57% (via)
- 2009 Apr 11 - 0.26% (via)
- 2009 Apr 04 - 0.18% (via)
- 2009 Mar 28 - 0.26% (via)
- 2009 Mar 21 - 0.31% (via)
- 2009 Mar 14 - 0.27% (via)
- 2009 Mar 07 - 0.44% (via)
- 2009 Feb 28 - 2.43% (via)
- 2009 Feb 21 - 3.03% (via)
- 2009 Feb 14 - 3.36% (via)
- 2009 Feb 7 - 3.92% (via)
- 2009 Jan 31 - 4.39% (via)
- 2009 Jan 24 - 5.07% (via)
- 2009 Jan 17 - 5.64% (via)
- 2009 Jan 10 - 5.60% (via)
- 2009 Jan 3 - 5.24% (via)

Related Articles
- Inflation rates of India (2008)
- How is WPI inflation rate calculated in India?
- Commodities and their weight-ages in WPI calculation of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

New Income Tax Slabs

In the union budget for financial year 2009-10, the Finance Minister has announced new tax slabs.

General
Till 1,60,000 – 0%
1,60,001 – 3,00,000 – 10%
3,00,001 – 5,00,000 – 20%
Above 5,00,000 – 30%

Women
Till 1,90,000 – 0%
1,90,000 – 3,00,000 – 10%
Remaining tax rates are same as general

Senior Citizen
Till 2,40,000 – 0%
2,40,001 – 3,00,000 – 10%
Remaining tax rates are same as general

As you can see, compared to the last change, there is a 10,000 rupees increase in the first slab across all categories, while the remaining slabs remain unchanged. This would lead to a maximum savings of 1000 rupees for a tax payer whose income falls above Rs. 1,60,000. This may not be a significant saving for many.

However the interesting thing to note is that there is no 10% surcharge for incomes above 10 lakhs. This is a welcome move because I feel progressive taxation is counter productive to an aspiring population. Eventhough these tax sops would make holes in government's revenues, I guess the government is looking to increase the expendable surplus of the populace so as to boost up the economic downturn.

Indian Inflation turns negative

For the first time since 1977, India's WPI Inflation rate fell to -1.61% for the week ended on June 6 2009!

SEBI mandates Rs. per share dividend declaration

In a good move, the Securities and Exchange Board of India, SEBI, has asked listed companies to declare dividends on a per share basis rather than on a percentage basis. For example, a company having shares of face value Rs. 10, and declaring a dividend of Rs. 5, will have to say that it has declared a dividend of Rs. 5 per share and not a dividend of 50%.

This is meant to bring more clarity to an average investor who sometimes gets caught up in the jugglery of percentages and values when companies declare dividends. Thus, it will bring uniformity in the declaration of dividends by listed companies.

The move will clear the confusion among share holders whether the dividend declared was a percentage of the face value or the market price. It also becomes relevant when companies reduce the face value of shares over a period of time, which some investors might not be able to track.

Also, the calculation of actual returns in terms of Rupees becomes much easier, when the dividend information is available on a per share basis. Share holders will just have to multiply the number of shares they own by the dividend per share amount that the company declares. And for the mathematically inclined, they can just go ahead and calculate the dividend percentage if they want.

The change will be with immediate effect. More news here.

Related Articles
- How does Short Term Capital Gain/Loss work?
- Application Supported by Blocked Amount for IPOs
- Online share trading websites of India
- What are the 30 Stocks of BSE SENSEX

The Stock Markets may be on Recovery

The Indian Stock Markets have performed promisingly well in the last few weeks. Though the performance wasn’t an all-round one comprising many different stocks, few of them upped the ante of the markets and had set the mood.

While it can’t be said with certainty that the economic slowdown and the stock markets are on a recovery path, there are few factors which may make it happen.

1. The economic stimulus packages issued and to be issued by countries world-wide would have created confidence in investor minds that the markets may not go down further if they put their money in.

2. Monetary policies (reduction in CRR, prime lending rates etc.) by governments that result in more money in the hands of people there by increasing their spending and investments (or, increasing liquidity in the economy), improving the economic situation.

Meanwhile, here’s a list of 10 stocks, compiled by Economic Times, which rose by more than 100% in the current market recovery.

India’s new Bimetallic 10 Rupee Coin

I might be a little late on this news, but here’s the picture of the new (and first ever) bimetallic coin of Rupees 10 denomination issued by the government of India. The outer ring of the coin is made up of Aluminum and Bronze alloy while the inner section is made up of Nickel and Copper alloy.

There are two themes for the coin.
1) Unity in Diversity and
2) Connectivity and Information Technology.

The coin in the picture has the first theme, Unity in Diversity.

What makes Swiss Bank Accounts safe and secure?

Recently, discussions about Swiss Bank Accounts came into prominence in Indian media further to the revelation that Indian nationals have a whopping 1456 billion US dollars in Swiss Bank accounts. This means Indians have more money in Swiss Bank Accounts than the rest of the world combined. Leaving aside this story, let’s concentrate on Swiss Bank Accounts and what makes them safe and secure.

In many novels and films, we have seen intriguing stories associated with Swiss Bank Accounts, like in Bourne Identity, Da Vinci Code etc. Even though most of these actually don’t happen in a Swiss Bank Account, lots of people consider Switzerland to be a place where they can keep their money safe and secure. There are a few factors that make it so.

The Banking Act of 1934 was passed in Switzerland to prevent Swiss Banks from divulging depositor information to other countries during world war period, with which those countries tried to confiscate the assets owned by the customers of Swiss Banks, especially the Jews, in the name of “the good of state”. But then the Act stayed on and provided enough privacy to depositors of Swiss Bank Accounts.

Switzerland is a very stable country and it maintains a policy of neutrality with other countries. It maintained neutrality in both World Wars, is not a member of the European Union and was not even a member of the United Nations until 2002. That’s why many of the world organizations have their headquarters in Switzerland. Thus the country doesn’t have a need to succumb to pressures from international treaties and obligations. All these make its economy robust and the banking system highly stable.

Also, Switzerland is a tax haven for depositors of other countries. For nonresident depositors of Switzerland there are no taxes if they don’t reside in EU or don’t invest in Swiss companies, making it a promising place to put their money in.

Good Reads
- How Swiss Bank Accounts Work?

What is SWIFT?

Being an NRI (Non Residential Indian), once in a while I sent money to India. Unlike before, nowadays it all happens online and is quite easy. Within the comforts of my home, I just need to login to my internet banking account, do some clicks and money will reach my bank account in India in a couple of days. My bank makes it possible through SWIFT!

SWIFT or the Society for Worldwide Interbank Financial Telecommunication is a worldwide network for financial messages through which its members (i.e. financial institutions such as banks) can exchange messages related to money transfer for their customers. The messages are sent securely and reliably to the target member financial institution of SWIFT.

By the way, SWIFT is just a messaging service and it doesn’t facilitate actual cash transfer between banks. For doing that, the banks that exchange authorization message for money transfer shall have an external banking relation between them and normally they settle the actual cash transfer in parallel.

But the point is, once the authorization for the release of funds are sent through SWIFT, the target bank can release the money to the end user’s account and the bank is assured of the money from the sending bank. Sometimes, the target bank will have a branch in the sending bank’s country or vice versa and they may settle it within the purview of a single country.

Thus, the end user will receive the money without needing to know the hassles of exchange rate conversion and various other formalities, which happen in parallel between the banks. Also, the user will receive money, irrespective of the time taken for all these.

Over 8,700 banking organizations, securities institutions and corporate customers in more than 209 countries use SWIFT for transferring financial messages, making it the most widely used network for international financial messaging. Each financial institution registered with SWIFT is identified by a bank identifier code popularly known as the ‘SWIFT Code’.

Through SWIFT, transfer of funds to various countries can be completely automated; where the core-banking solution of the bank can directly communicate with SWIFT to do the transfer. This makes the process of money transfer more efficient, secure and with lower cost. Thus, SWIFT makes the process of transferring funds across the globe a lot easier.

Related Articles
- Online money transfer to India for NRIs
- What is a Core Banking System?

New Symbol for Indian Rupee

The Government of India has invited the public to suggest a symbol for the Indian Rupee. Just as the Dollar is universally denoted by $‚ the government thinks that the Rupee should also have its own unique symbol that captures a sense of India’s history and culture.

ToI has put up a list of symbols for Rupee on their website and would present the top voted ones before the government. They also have an option through which people can suggest a different symbol.

You could also vote for one of those symbols or can also send in your suggestions. Personally, I prefer ‘ru’ written in Sanskrit/Hindi without a bar on top. Long time our currency had a symbol of its own.

Related Articles
- The Rupee

Certified Financial Planner (CFP)

The Certified Financial Planner (CFP) designation is a certification for financial planners granted by the Certified Financial Planner Board of Standards in the United States and several other organizations affiliated to Financial Planning Standards Board (FPSB), the international owner of the CFP designation outside of the US. The CFP designation helps a person to advance his career as a financial planner.

In order to gain the CFP designation, the candidate must meet certain requirements in the areas of Education, Examination, Experience and Ethics (known as "the four Es").

Education: To complete a set of financial planning courses. Other than completing courses in financial planning, applicants for the CFP certification must also have a bachelor's degree (or higher), or its equivalent, in any discipline, from an accredited college or university in order to obtain CFP certification.

Examination: The CFP exam is held three times a year, and is conducted over a day and half through three sessions having a total duration of 10 hours. The fee for CFP is USD 595 and there is an extra site fee if the exam is conducted outside US.

Experience: There is a three years full time or equivalent part time related experience required for the candidate. The details of experience requirements can be found here.

Ethics: The candidate has to agree to be bound by CFP Board's Code of Ethics and Practice Standards.

Once you have successfully met the requirements and completed the initial certification process, you will need to meet ongoing education and disclosure requirements to maintain the CFP certification.

Related Articles
- A career in Finance through CFA
- Financial Risk Manager (FRM) certification for a career in Risk Management
- Certified International Investment Analyst (CIIA)

L, V and U Recessions

These are the types of recessions according to economists worldwide; i.e. L-shaped, V-shaped and U-shaped ones.

L-shape recession is a recession that goes down and then stays there for a long period of time without a recovery. It could last for 20 years like it happened in Japan. A V-shape recession goes down pretty fast and recovers in very less time. A U-shape recession goes down slowly and then stays there for a few years before recovering slowly. It could last anywhere from 2-10 years, like in the 70s in US where it lasted for 8 years.

Most of the times, it is the economic policy adopted by a government before recession, which determines what type of recession it is; where wrongly calibrated economic policies leading to L-shape recessions, the worst of all.

Now, EMIs can be covered on Job Loss

The global economic downturn has created uncertainty in employment in India as well. In such a situation, what if one has a couple of EMIs to pay, say home loan and auto loan, when the retrenchment strikes?

Like it exists in other developed countries, ICICI Lombard has introduced in India, a cover that will pay three equated monthly installments (EMIs) on any individual loan when the policy holder faces job loss. Considering the severity of the economic situation, ICICI Lombard is even reviewing the possibility of increasing the three month EMI cover.

The job loss cover is sold as an add-on cover with the company’s critical illness policy. However, one thing to be noted is that the policy does not cover retrenchment due to underperformance, voluntary resignation or early retirement. But then, it’s a great product that came at a crucial time.

Related Articles
- Endowment Policies – when it comes to maximizing returns
- Term insurance to become cheaper
- How to protect yourself from credit card theft or loss?

Indian Inflation Rate @ 0.44%

India’s WPI inflation rate fell to an recent low of 0.44% for the year ended March 7, 2009. What is more comforting is the fall in prices of food articles, which greatly eluded the public in the previous declines.

Quoting ToI, the higher base effect along with low demand in the economy is expected to keep inflation in negative territory for 5 to 6 months. This, if happened, will make us witness deflation after a very long time.

One thing that I noticed in WPI is the fall in jet fuel prices by 8%. With this it’s high time that the flight operators reduce their fuel surcharge which currently stands at more than 2000 rupees. And, I guess it would require an intervention from the government to reduce the fuel surcharge amount, which masquerades as ‘taxes’ to the government in flight booking receipts.

Related Articles
- Inflation rates of India (2009)
- Inflation rates of India (2008)
- How is WPI inflation rate calculated in India?
- Commodities and their weight-ages in WPI calculation of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

How do banks make money through credit cards?

Credit cards are ubiquitous substitutes for cash. Ever wondered in how many different ways banks make money through credit cards issued by them?

1. Commission: When we use our credit card at a shop, the shop keeper gets paid by the bank who issued that credit card. But the bank reduces a certain percent (generally 2%) from the transaction amount before paying the money to the shopkeeper. That’s why some shopkeepers give discounts when you use cash instead of credit card for payment, especially on high value purchases such as gold.

2. Interest Charges: Interest charges are levied by the bank from its credit card owner for the revolving credit they maintain. This interest is one of the highest, and in India it can be up to 49%. According to the Reserve Bank of India, the outstanding credit on all the credit cards issued in India stands at Rs. 29,359 Crore at the end of December 2008. This amount, coupled with the high interest rate will give you an idea how much money the banks get from interest charges.

3. Fines & Penalties: Various fines such as late payment fee, check bounce penalty etc. are levied by the bank on its credit card customers. These amounts are also huge (more than 500 bucks).

Related Articles
- Credit card and effective interest rate
- How to best manage your credit card?
- Interest rate on credit cards to increase to 49%

Inflation dips further

India's WPI based inflation rate fell to a 7 year low of 2.43 percent for the year ended on 28 Feb 2009. However, this fall in inflation for the sixth straight week was largely because of the fall in prices of manufactured items like metals, machinery and textiles. Food items are still 8% costlier than what it used to be one year ago.

The inflation rate is expected to fall further. It is likely to reduce below 1% mark next week and closer to zero by end of March. Thus, the new financial year 2009-10 is likely to begin with negative inflation.

Experts say that, the negative inflation that would come is due a steep surge in commodity and fuel prices in the corresponding months last year, which they call high base effect. Once this high base effect wanes in later months of 2009, inflation may enter into a positive territory.

Related Articles
- Inflation rates of India (2009)
- Inflation rates of India (2008)
- How is WPI inflation rate calculated in India?
- Commodities and their weight-ages in WPI calculation of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

How does Short Term Capital Gain/Loss work?

I found this interesting snippet circulated through email by ICICIDirect, which describes in simple anecdotes how Short Term Capital Gain/Loss works in India. I am posting it straight away, without any modifications.

1. Mr. Sharma purchased some securities on May 7, 2008 at a total cost of Rs. 100,000. On July 3, 2008, he sold these securities for Rs. 130,000. Here the Short Term Capital Gain, STCG (gain arising from sale of securities which is less than 12 months old) was Rs. 30,000 (a) and STCG tax (15% as per current laws) for this gain calculated to Rs. 4,500.

2. But Mr. Sharma had also purchased securities worth Rs. 90,000 on June 12, 2008 and had sold them at Rs. 40,000 on February 10, 2009. Hence there is a Short Term Capital Loss (loss arising from sale of securities which is less than 12 months old) and equal to Rs. 50,000 (b).

3. Now as per the tax laws, Mr. Sharma’s Short Term Capital Gain (a) is offset by Short Term Capital Loss (b). Hence there is no Short Term Capital Gains tax payable by Mr. Sharma for the financial year 2008-09. Also, he carried forward Rs. 20,000 loss for offsetting any Short Term Capital Gains he makes in the next 8 years.

Thus a person needs to pay STCG tax only for the difference between Short Term Capital Gain and Short Term Capital Loss if the difference is positive; no tax if the difference is zero or negative. Moreover, if the difference is negative, he can even carry forward and offset the loss to gains in the next 8 years, until the loss is completely used off to offset those gains.

Thanks to ICICIDirect.com

RBI cuts repo and reverse repo rates

The Reserve Bank of India lowered its Repo Rate and Reverse Repo Rate by 50 basis points to 5% and 3.5% respectively, with immediate effect. The Repo Rate is the rate at which RBI lends money to banks and the Reverse Repo Rate is the rate at which banks park funds with RBI.

This move will help RBI to maintain enough money in the economy as it will allow banks to reduce their interest rates on various loans, thereby making credit available easily to the population, at lower interest rates.

The inflation rate, which is already low, would come down further with the rate cut. Meanwhile, the central bank has asked banks to monitor their loans and assets quality as concerns grow over non-performing assets in the banking system.

Related Articles
- Effects of CRR hike on Inflation seen through money multiplying effect

Top 10 financial centers of Asia

According to the six-monthly Global Financial Centers Index (GFCI) compiled by Z/Yen Group, the top 10 financial centers of Asia are,

1. Singapore
2. Hong Kong
3. Tokyo
4. Shanghai
5. Taipei
6. Kuala Lumpur
7. Mumbai
8. Bangkok
9. Beijing
10. Seoul

More details here.

Related Articles
- Top 10 companies of India
- Best banks of India

The Great Depression

The Great Depression of the 1930s is the economic slow down that everyone often compares with other economic slumps.

ET has compiled this pictorial ride of The Great Depression. Have a look!

How is EMI calculated?

The Equated Monthly Installment (EMI) of a loan is calculated according to the following formula.

EMI =
(P x i) (1+i)ⁿ
(1+i)ⁿ - 1

Where,
P is the loan amount
i is the monthly interest rate (i.e. the yearly interest rate divided by 12)
n is the loan tenure in months

For example, if you have a Personal Loan of 5 Lakhs (500,000) for an yearly interest rate of 13% and a tenure of 5 years, then,

P = 500,000
i = (13/100)/12 = 0.010833
n = 5 x 12 = 60

EMI =
(500,000 x 0.010833) (1+0.010833)⁶⁰
(1+0.010833)⁶⁰ – 1
= 11376.54

Thus the EMI of the loan is Rs. 11,377

Credit Card Dues

With the interest rate on credit cards increased to 49%, paying credit card dues on time has become more important than ever.

This article that came on rediff explains the need of paying credit card dues on time. It's worth a read.

Is Average Quarterly Balance Fine ripping us off?

In India, most of the private sector banks charge a hefty fine on their customers for not maintaining the required Average Quarterly Balance (AQB) amount in their savings accounts. When the AQB itself is quite high at 10,000 rupees for most of the private banks, the fine comes to more than 800 rupees (including surcharge) and is not a small amount by any means.

To have a comparison with other countries, in Singapore, the amount banks generally charge for not maintaining the monthly average balance is 2 Singapore Dollars, which comes to around 65 Indian Rupees. And that means the AQB fine banks charge in India is 12 times that of in Singapore!!

With the AQB amount made double that of what it was previously, the probability of a person defaulting on it also increases. And when the fine is levied on a huge number of customers, it results in tremendous income for the banks, probably what they are eying at.

I guess it’s high time that the Reserve Bank of India intervenes and put an end to this day time robbery, like it put a cap on ATM withdrawal fee a year back.

In the mean time, what we can do is,
1. Have less number of savings accounts as possible with private banks
2. Move your savings accounts to nationalized banks, that have lower AQB and charge less default fee

Meanwhile, this link shows how the average quarterly balance is calculated by banks.

Related Articles
- What is a Core Banking System?
- Online money transfer to India for NRIs
- Avoid owning multiple savings bank accounts
- Interest rate on credit cards to increase to 49%

Investing in times of recession

One of the reasons why the stock markets are taking time to comeback is the lack of ‘investible’ money in the hands of people. Most of the money is tied up in various investment options such as shares, mutual funds etc. and are not in a position to be liquefied through their sale and reinvested.

Adding to this, people are losing their jobs due the retrenchments that are happening these days, which significantly affect their income. But for those who have money, there is not a better time to invest. The markets are low, shares are trading low.

But then, there is one entity that seems to have enough money to invest in the times of recession; Life Insurance Corporation of India (LIC). The firm had increased its stakes in ICICI Bank, IOB, GAIL etc.

This might be due to the job insecurity that the people feel, which makes them insure themselves and their assets through insurance companies making the companies have enough money to invest. And not to forget the cash reserves they have.

India’s GDP growth slipped to 5.3% in the third quarter

India’s GDP growth slipped to 5.3% in the third quarter (October ~ December 2008) of the financial year.

There were speculations that India would beat China in the third quarter where the latter initially clocked 6.8% GDP growth in the same time period. With that not happened, the message that could have been sent to the investor community that India being the fastest growing big economy didn’t materialize.

Government cuts excise duty and service tax

The Government of India has reduced excise duty and service tax by 2 percent in its Interim Budget. The general excise duty has been reduced from 10 percent to 8 percent while service tax has been slashed from 12 percent to 10 percent.

The service tax cut will have a profound impact, both on people as well as on government, as it is levied on almost all services that we exercise in our day today lives, right from eating out in a restaurant, to watching a movie, to the charges on services given by various institutions such as banks, etc. For the government, the implications will be of Rs. 28000 crore.

"The measures will lead to revenue loss of Rs 13,000 crore in service tax, Rs 8,500 crore in excise duty and Rs 6,600 crore in customs duty" says Central Board of Excise and Customs Chairman P C Jha.

Even though tax cuts are inevitable in a recession hit economy, I wonder how much we can have of these as the government’s revenues are taking huge blows while giving away these. With the UPA government in the brink of completing its term, the next government is definitely going to bear the brunt of these.

The cut will be effective from midnight of Tuesday, 24th February 2009.

How to protect yourself from credit card theft or loss?

Credit card/debit card theft or loss may happen to anyone, anywhere, any time. To its worst case, consider a situation where a theft or loss of your wallet happens when you have traveled along with your family to a foreign city and all that you have with you is a little cash for your daily expenses! And that the wallet contains your credit/debit cards, travel documents, travel tickets etc.

The stolen or lost card could end up in mischievous hands and we have been hearing stories of what all happen afterwards. Generous swipings, exorbitant buyings and what not! And the loss of travel documents and tickets would be another nightmare. So is there a service to tackle this? To protect us from the trauma associated with a card loss?

Card Protection is a new service offered in India, which helps credit card customers from the ordeal associated with credit card or debit card loss or theft. In collaboration with CPP Assistance Services, banks such as Kotak Mahindra, Citibank, Standard Chartered, HSBC etc. are offering card protection service for theft and loss for their customers who opt for the service for a nominal fee. A customer can register all his cards, not just the bank's ones, for the service.

All financial and non-financial cards (credit, debit, loyalty cards etc.), fraud protection insurance, emergency hotel and travel assistance, emergency cash assistance etc. are covered under this service. A person who had lost his wallet will just have to call the helpdesk of CPP and they will do the rest; like contacting all the respective banks to block his cards, arranging for the money etc. I guess it’s a good service one can opt for especially the ones who are constantly on the move.

Related Articles
- Credit card and effective interest rate
- How to best manage your credit card?
- Interest rate on credit cards to increase to 49%

Certified International Investment Analyst (CIIA)

The Certified International Investment Analyst (CIIA) is a designation offered by the Association of Certified International Investment Analysts (ACIIA) to financial professionals. It is a globally recognized advanced professional qualification for individuals working in the finance and investment industry.

To be awarded the CIIA, candidates must pass two levels of common knowledge exams and a national/regional exam, and have 3 years of experience working in the domain of financial analysis, portfolio management, and/or investment in general.

The common knowledge exams are divided into two levels - the Foundation Level and Final Level. The essential skills and knowledge required for professionals working in investment markets common in all countries are examined in these levels. The exams are conducted in more than 10 languages and take place in every March and September.

The national/regional exam is set by individual national/regional societies and examines the knowledge of specific markets. The legal, regulation, taxation, local market practices and the cultural environment of the financial market of study are covered in this level. This is something unique to CIIA as it tests the candidate’s knowledge at the local level as well.

Since the certification requires 3 years of working experience in Financial Analysis, it may not be an option for an aspiring candidate to enter into a career in Financial Analysis, which, in general, is possible through the CFA exam. However, it is highly valued across the world, especially in the European region and is often described as the ‘the European Version of CFA’.

Related Articles
- A career in Finance through CFA
- Financial Risk Manager (FRM) certification for a career in Risk Management
- Certified Financial Planner (CFP)

What is Interactive Financial eXchange (IFX) Standard?

The advent of Information Technology (IT) has helped the Financial Services Industry in more number of ways than we can ever imagine of. From the very fact that it helps me write this post related to finance, read by those unknown readers of The Finance Blog, belonging to geographies far across the world, to the valuation of companies that results in multi billion dollar deals; IT had unarguably made its stronghold in the Finance world!

Various IT applications catering to the same domain/sub-domains of Finance are made/being made. For example, there are umpteen number of applications that can handle the tasks of a bank alone (core-banking applications); Profile, FlexCube, Finnacle, Hogan, Temenos, Tieto Enator, to name a few. Since each of these applications are made by different owner companies, each of them follow their own standards for maintaining bank data (eg. name, a/c no, principal, interest rate etc.) in its databases. For example, some applications store date in DD/MM/YYYY format while others store it in MM/DD/YYYY format (as followed in UK and US respectively). This could lead to certain problems.

Consider a case in which two banks, a US and a non-US bank, are merging to form one single bank. After the merger, the customer base or transaction data of the two banks might need to be combined together. Quite obviously, if the two banks’ applications follow different data standards, then the merger would be difficult and may not even be possible at all.

Some times, the same bank may purchase applications from various vendors to create a combined IT environment to service the bank’s needs. I.e., the core-banking application may be from vendor A, the loan servicing application may be from vendor B and the portfolio management application may be from vendor C, so on and so forth.

The above situations point out the need for having some sort of a standard for storing financial data in applications meant for Banking and Financial Services industries. The Interactive Financial eXchange or IFX does just that. To put it simply, a financial application that follows the IFX standard is interoperable with any other financial application that uses the same standard and can be easily made to work in concert.

According to its promoters, IFX is an open, interoperable standard for financial data exchange that is designed to meet the business requirements of the global financial services industry.

Thus, IFX is a data standard that sets the norms for the usage of financial data in the global financial services industry. With the world economy growing towards one without barriers, IFX would probably set the tone in financial data handling, making the process a tad easier.

Further reading
- IFX Framework
- IFX Standard

Related Articles
- What is a Core Banking System?

Tax

The Internal Revenue Service (IRS), which is the tax collecting authority in the United States, demands that 30 percent of the winning amount on casinos and other gambling establishments by international visitors shall be withheld by these establishments. This amount will have to be submitted as tax to the government.

But residents of certain countries outside the US are eligible to get a refund of tax on such casino winnings as a result of a few tax treaties that have been made with these countries by the US government. Casino tax rebate is an agency who is experienced in this.

They can help an international visitor on US tax recovery and provide assistance for getting a refund from the federal gambling winnings tax withheld by the particular establishment. I guess this would be a service particularly greatly useful for those international visitors planning spend some time in the US casinos.

The Rising Gold

The markets seem to hold a Midas’ touch these days. Don’t get me wrong as I am not talking about the volatile stock markets, but about all those markets/financial products associated with the effervescent precious metal, Gold!

The yellow metal, which is an obsession for Indian’s, costs more than 15,000 rupees a 10 gram block. This is close to 100% more than what it was worth a year and a half back. This rise in Gold prices is reflecting in various financial instruments associated with it.

Gold backed Exchange Traded Funds (ETF) are rising sharply in the last few days (9% in 7 days). So is the case with Gold Futures, which according to ET, is on a record breaking spree.

This story of glory seems to continue for some more time as the Gold demand in India is in tact as it increased by a whopping 84% during October ~ December 2008. Also, investing in Gold would be a reliable alternative for many an investor, as the global economic crisis and it’s after effects continue to loom large over Indian markets. These would be the reasons why experts say that despite the rise, one can still invest in gold.

Highest paid CEOs in India

The global economic crisis is holding strong and CEOs across the world are taking pay cuts (forced, or by their own free will) as a means to cut costs. Back in India, how the CEOs are dealing with the situation? Are they following the path of their western counterparts?

Rediff has compiled this list of the highest paid CEOs in India. Have a look!

Highlights of India's Interim Budget

Here are the key points of Pranab Mukherjee's interim budget.

> Economy grew at 9% for 3rd straight year
> Per capita income grew 7.4% during UPA regime
> Farm growth at 3.7% in last 4 years
> Foreign trade at 35.5% of GDP during 2007-08
> Agriculture growth outlook for 2009 looks encouraging
> Growth rate of exports down to 17.1% in 9 months
> India second fastest growing economy in the world
> Outlook for 2009 encouraging if rainfall normal
> Record FDI of $32.4 billion in 2008-09
> Govt may consider additional fiscal measures in budget
> Need to accelerate pace of policy reforms
> Govt to expand employment generation schemes
> Planned allocation for agriculture up by 300% between 2004-09
> MSP for paddy increased to Rs 900 per quintal in 08-09
> Farmers' debt waiver of Rs 65300 crore till now
> Outlay for higher education rose 900% in 11th 5-year-plan
> State-run PSU profits up 72% to Rs 91,000 crore in 08-09
> 55 loss-making PSUs against 73 when UPA took over
> Have taken steps to deepen, widen securities market
> Revenue deficit seen at 4.4% vs 1% earlier
> Fiscal deficit at 6% of GDP vs 2.5% in the Budget Estimate
> Infrastructure spending to be 9% of GDP by 2014
Courtesy: NDTV

The full text of Pranab Mukherjee's budget speech is available here.

How to best manage your credit card?

Credit cards are very useful and handy if used wisely and if not used wisely, it can give so much of a head ache. So the knack is to use the credit card cleverly.

This article that came in rediff is worth a read as it explains how to best manage your credit card. Have a look.

Related Articles
- Credit card and effective interest rate
- Interest rate on credit cards to increase to 49%

Legal help for taxation issues

Generally, people tend to see taxation as a meager formality and presume that it is something that is mostly unnoticed by the tax authorities. Due to this, sometimes they end up defaulting on filing tax returns and not taking seriously those initial legal notices from the tax authorities, especially in cases where they are outside the country for a long period for some assignments abroad or for various other reasons. But when the taxmen knock at the doors for a tax returns default, or when a directive comes from the court to appear before a judge, more often than not, they run in to panic.

Thus, taxation, with its intricacies and umpteen formalities, may sometimes turn out of control and result in a life fearful of the tax department (Internal Revenue Service, IRS, in the United States) and the legal proceedings that might follow after that. That is when the professional help from a tax help attorney comes to the rescue of the people who face the legal proceedings. With their proven expertise in the field of taxation and also in dealing with similar cases for a long period of time, they can assist a person to overcome the dilemma of being under the IRS scanner.

Tax Solutions offered by the tax help attorney may vary depending up on the exact situation a person is in. Some issues would be associated with the non-filing of tax returns where as other issues may vary from unpaid payroll taxes, wage or bank levy, audits, asset seizure etc. They maintain a huge collection informational taxation related articles and also have a blog on tax laws through which one gets to read the latest on the area of taxation. Thus, tax help attorney would be able to offer a major helping hand for people in distress due to tax legalities.

Avoid owning multiple savings bank accounts

A large number of people own savings accounts in several banks. Some are inherited from their previous jobs while some are opened to avoid tax deduction at source on fixed deposits. As the minimum average quarterly balance required to maintain these savings accounts increases in private sector banks, owing multiple savings accounts become a costly affair.

An increasing number of banks have hiked the average quarterly balance (AQB) in metros to Rs. 10,000; while most of them have the minimum AQB amount as Rs. 5000 in smaller cities. Thus, a lot of customer’s money is blocked to keep their savings accounts alive. For example, consider the case of a person having 5 savings accounts of AQB Rs. 10,000 each!

Secondly, having too many savings accounts and the need to maintain minimum AQB in each one of them pose the danger of not being able to meet the minimum AQB in one or two accounts, which leads to penalty charges. This is usually a huge amount in private sector banks (ICICI Bank charges Rs. 750 + Service Charge) as a penalty for not maintaining minimum AQB.

But above all, earning a paltry interest rate of 3.5% for your money in savings account, when you can earn a much higher interest of around 10% in Fixed Deposits, would not be a great idea. That is, if you have less number of savings accounts, less would be the money needed for maintaining minimum AQB in those and more would be the money available for Fixed Deposits.

“If you notice that your savings account balance is over Rs 50,000, normally you would think of transferring some money to a fixed deposit. But if there is Rs 20,000 in multiple accounts, the thought many not cross your mind”, says a financial advisor, which is very true. So it’s better to own as less savings accounts as possible.

Govt. gives Rs. 3800 crore to 3 banks to raise capital adequacy

The Government of India has announced a Rs. 3800 crore (Rs. 38 billion) fund infusion into state run banks, UCO Bank, Central Bank of India and Vijaya Bank to increase their capital adequacy.

Under the recapitalization package, Central Bank of India will get Rs 1,400 crore, while UCO Bank and Vijaya Bank will get Rs 1,200 crore each, said home minister P. Chidambaram. He added that the infusion will be done in two steps, where the first will be in the current fiscal year and remaining in financial year 2009~10. The amount will form a part of Tier I Capital and adding the infusion will increase the government holding in the three state-run banks.

In the first stage, UCO Bank will get Rs 450 crore, while Central Bank of India and Vijaya Bank will get Rs 700 and Rs 500 crore, respectively. This will help the banks to raise their capital adequacy over 12%, much above the Basel II norms of 9%.

Lessons from the sub-prime crisis

On Tuesday, the US senate passed the $819 billion economic stimulus bill, the second of the rescue package for the drowning US economy. Other governments have also come up with/are coming up with such measures to counter the financial crisis.

Even while issuing such packages, neither the US senate nor the other governments across the world can say with certainty that the financial crisis will be harnessed with these. Such is the size of the crisis and one might wonder how can we ensure that a crisis like this won’t happen again? What are the lessons learnt from the financial crisis?

In the case of sub-prime securities, risks were often under-estimated due in part to product complexity and over-reliance on quantitative analysis, including by rating agencies. Thus early detection and cure, which would have reduced the spill over effects of the crisis, didn’t happen in this case. Financial institutions were trying to cover up their losses till the last moment. The failed ones got uprooted in no time.

A major factor that contributed to the crisis is the use of standard risk assessment models used by risk management professionals by which they underestimated the systematic nature of risks. To put it in simple words, if everyone uses the same techniques, every one will be affected by the same issue. Independent assessment of risks using custom developed models would be one of the key lessons to be learnt from the crisis.

Derived from, Financial Risk Management: Lessons from the Current Crisis ... So Far

Related Articles
- US Sub-prime Crisis

Financial Risk Manager (FRM) certification for a career in Risk Management

The Financial Risk Manager (FRM) is a certification in Financial Risk Management conducted by the Global Association of Risk Professionals (GARP). The certification allows a person interested in financial risk management to gain the required knowledge to be successful in the field. It is also a niche certification highly valued by financial institutions operating in risk management worldwide.

To be conferred the FRM designation, a candidate not only have to pass the exam, but should also have an active membership in GARP and a minimum of two years of experience in the area of financial risk management or another related field including, but not limited to, trading, portfolio management, academic or industry research, economics, auditing, risk consulting, and/or risk technology.

The FRM exam is conducted every November (only once in a year) and the registration usually starts from March of that year. The registration can be done online. The registration fees range between USD 550 and USD 950, depending upon whether one registers early or late.

The FRM Examination is a 5 hour comprehensive examination consisting of approximately 140 multiple-choice questions. The examination is split into two sections; each is 2.5 hours in length with a lunch break in between. The exam is given in booklet form. The exam is conducted at designated test sites across the world.

Compared to Chartered Financial Analyst (CFA), the FRM is a niche exam exclusively for Risk Management Professionals. So, those who are aspiring for a Risk Management profession shall prefer FRM to CFA.

Related Articles
- A career in Finance through CFA
- Certified Financial Planner (CFP)
- Certified International Investment Analyst (CIIA)

India could soon beat China in GDP growth rate

The current global economic decline and a sharp fall in an export dependant China’s GDP growth rate could make India the fastest growing among large economies, at least for a quarter. China’s GDP growth rate was 6.8% during October ~ December 2008 quarter, well with in India’s reach.

ToI says,

If India achieves a better growth rate than China even for one quarter, the message will go across to the world and help India in wooing foreign capital, waiting to chase growth stories.

The Indian economists are hopeful because of the fact that China’s export constitutes 37% of its economy against 13% in the case of India; which would make India suffer less. India had achieved 7.9% and 7.6% growth in April ~ June and July ~ September quarters, according to provisional numbers and it is expected that the softening of interest rates will stimulate demand and ensure a faster growth rate than China for the quarter October ~ December 2008.

More news here.

Can we compare credit cards?

When it comes to credit cards, one should be choosing it very wisely as there are umpteen numbers of credit cards on offer by various financial institutions, having more varied number of features. Low interest credit card, one with highest rewards scheme, longer zero interest period, so on and so forth.

When the choices and features of credit cards are high, sites allowing you to compare credit cards available in the market become extremely useful. They allow a prospective credit card owner to find out the one card that suits his needs or an existing credit card owner to find out and keep the one best serving his requirements.

Sites like this will help its users to take an informed decision while going for credit cards. Whether to go for a card with the lowest interest rates or the lowest cost on balance transfer or the highest rewards; the decision can be easily made with help of such sites.

Finacial Control

Even though the plastic money has lot of advantages, credit cards are one of the dreaded financial instruments as far as consumers are concerned, due to the sheer amount of money he/she has to pay in terms of interest for revolving credit and other charges. So, no doubt, this shall be the first of the liabilities a person has to repay.

Considering the ongoing economic down turn, apart from reducing credit card spends, there are a few other things that one may follow to lead a safer ‘financial’ life. This includes maintaining and emergency fund, having a strictly followed budget etc.

This article from rediff explains about various things that you may consider for yourselves to lead a financially safe live in the economic decline. Worth a read!

Related Articles
- Credit card and effective interest rate
- Interest rate on credit cards to increase to 49%

HDFC Bank MD Aditya Puri is CNN-IBN Indian of the Year 2008 (Business)

HDFC Bank Managing Director Aditya Puri is the CNN-IBN Indian of the Year 2008 (Business category). Given in six categories - Politics, Sports, Business, Entertainment, Public Service, and Global Indian - these awards “recognize, celebrate and honour Indians who have contributed to our country and in turn have strengthened our society and contributed to building Brand India in 2008”, says the official CNN-IBN website.

”This year's awards are even more significant as they personify the undying spirit of a billion free Indian minds, in the wake of terror, natural disaster and economic challenges," the website adds.

Each category had six nominees. Mssrs Ratan Tata, Baba Kalyani, C.B.Bhave (SEBI), S.Ramadorai (TCS) and Uday Kotak (Kotak Group) were the other nominees in the Business category.

Mr. Puri won, as CNN IBN puts it, for “steering HDFC Bank well in a tough time, ensuring growth without taking risks and leveraging his customer-base well.”

The winners in the other five categories are Nitish Kumar (Politics), Abhinav Bindra (Sports), Aamir Khan (Entertainment), G. Madhavan Nair & Team Chandrayaan (Public Service) and A.R. Rahman (Global Indian).

In December 2008, leading financial daily Business Standard declared Mr.Puri as Banker of the Year (2008) for successfully leading his bank in tough times.

Interest rate on credit cards to increase to 49%

Banks can now charge an annual interest rate of up to 49% from credit card customers for late payment (revolving credit). Earlier it was capped at 30% by a consumer court order, which the Supreme Court has put on stay on pleas from banks such as HSBC, Standard Chartered, Citibank, American Express etc.

Citibank, in its petition, says,

The facility of credit cards is availed of without any interest for a certain stipulated period and it is only after the expiry of that period that interest is levied on a credit card account for non-payment or late payment of dues. It is also relevant to note that credit card transactions de-facto constitute unsecured credit availed of.

But the question is, how much return (or interest rate charged) would a bank want for unsecured credit through credit cards? Also, the so called ‘stipulated period’ varies with respect to one's date of purchase and payment due date, and can be as less as one day as well.

Banks would have ‘n’ reasons to justify this, but people, bit cautious on your credit card spending from now!

More details here.

Related Articles
- Credit card and effective interest rate

Balance Sheet, Cash Flow Statement and Saving Tax

The balance sheet is one of the key financial statements of a company and is of particular interest to an existing or prospective shareholder of the company. Here’s an article from Rediff, which explains how to read a balance sheet.

Similar to balance sheet, cash flow statement is another key financial statement of a company and is a mandatory part of the company’s financial reports since 1987. It tells an investor how the company’s operations are running, where the money is coming from and how it is spent. This article describes what is a cash flow statement?

Two months from now, the financial year will come to and end and then starts the proceedings for filing tax returns. So, various ways for saving tax should be done in these two months. This ToI article, explains 10 smart ways to lower your tax bill.

Rise in NRI remittances to India

Despite economic recession, Indians working abroad had sent a record $40 billion as remittances to India in just 9 months of calendar year 2008. As the last quarter is a festival period, the total remittances for the year may even exceed $50 billion. This would be way ahead of World Bank’s prediction of $30 billion for India in 2008.

In 2007, with $27 billion as remittances, India was placed as the number one recipient of inward remittances globally by World Bank, with China in close second ($25.7 billion). And the story would be no different this year as well.

Inward remittances (unlike FII) are considered ‘sticky’ as this money is sent to India primarily for savings and family spending, and hence would remain in the economy. Thus it plays a major part in boosting the economy, in particular, during the ongoing recession. Hence, as a policy measure, government is also promoting NRI remittances through higher interest rates on NRI deposits. This could offset the FII outflow to some extent and thus could reduce the dependence of the economy on FII money.

Even though the recession is progressing, remittances had not/may not fall due to the following reasons.

1. The fear of job loss forces people to save more, especially in the safer Indian financial markets
2. Rise in rupee dollar exchange rate would fetch more rupee than ever when transferred to India
3. Rise in interest rates of FCNR and NRE deposits

More details here.

Related Articles
- Online money transfer to India for NRIs

Online money transfer to India for NRIs

With the advent of SWIFT and other international inter-bank money transfer networks, the importance of other retail value transfer systems such as Western Union etc. have probably come down. As with the case of any internet based systems, online money transfer systems also offer convenience, speed, traceability etc. to its customers. Also, it allows remittances to be done within the comforts of home.

Following is a non-comprehensive list of varoius Indian banks offering online money transfer to India.

AxisRemit – This is a service offered by Axis Bank.

Money2India – This service is offered by ICICI Bank.

QuickRemit – This service is offered by HDFC Bank.

Citi Online Remit - This service is offered by Citi Bank.

Remit2India - This service is offered by Times Money

Most of these banks charge a nominal service fee and allow money to be transferred to any bank in India, not just the bank doing the transfer.

Related Articles
- What is a Core Banking System?

Educational Loans

The global economic recession and subsequent job loses allow for a good time (I’m not sure I should be saying as curtly, but it depends on how you look at it) to advance on one’s career by upgrading their educational skills by joining a good institution for higher studies. In such a situation, the expenses are well met through student loans; if you don’t have enough savings.

Private student loans are handy for the knowledge seeker in the sense, they generally have no collateral requirements, have an interest rate that’s fairly manageable and may need to be paid back once the applicant secures an employment (or may be six months from the time of course completion, as the case may be) once he/she has completed his/her studies.

College loans have always been a helping hand for the aspirers of knowledge. Most of the times, the availability of the loan depends very much on the institution in which one has secured an admission. It also allows students to not depend on their parent’s worth for pursuing higher education.

No proof required for LTA & Conveyance allowance claims

In a landmark ruling, the Supreme Court has said that employers are not under any statutory obligation to collect supporting evidence and furnish it to tax authorities while assessing Conveyance and Leave Travel Allowance (LTA) of their employees. Currently, claims without supporting bills are taxed.

The verdict came as a result of a plea from companies including L&T and ITI.

Quoting Times of India,

In its defense, the revenue department had argued that assessee companies were under statutory obligation under Income Tax Act, 1961, and relevant rules, to collect documentary proof to show that their employee(s) had actually utilized the amount paid towards the leave travel concession and conveyance allowance.

Rejecting the plea, the court in its order said: “The beneficiary of exemption under Section 10(5) (of the Income Tax Act) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s).”

So, until the tax authorities come up with a circular/amendment to clear this out (which I guess they might), claim all your LTA and Conveyance allowances without showing any bills.

More details here.

India’s Per Capita Income grew by 12.7% in 2007-2008

According to Central Statistical Organization (CSO), the per capita income of India has increased to Rs. 33,283 in 2007-08; a healthy growth of 12.7%. The per capita income has been growing above 10% since 2003-04, rising almost 60%.

This is the result of the impressive economic growth rate recorded by India during this time period and is supposedly the indication of an overall improvement in the living standards of people.

I’m not sure how representative a figure this is, in a country that has 4 out of the top 10 richest people in the world, a fair amount of income inequality and a third of the population still living below the poverty line.

More details here.

Inflation rates of India (2008)

This post tracks inflation rates of India for the year 2008. Before that, a few facts about inflation rate calculation in India.

- Inflation in India is based on Wholesale Price Index
- A set of 435 commodities are used for the WPI based inflation calculation
- The base year for WPI calculation is 1993-94
- WPI is available at the end of every week (generally Saturday), for a period of 1 year ended that day
- It has a time lag of 2 weeks (WPI for the year ended two weeks back will be available this week)

Inflation Graph


Inflation Rates (for 12 months ended on given date)

- 2008 Dec 27 - 5.91% (via)
- 2008 Dec 20 - 6.38% (via)
- 2008 Dec 13 - 6.61% (via)
- 2008 Dec 6 - 6.84% (via)
- 2008 Nov 29 - 8.0% (via)
- 2008 Nov 22 - 8.40% (via)
- 2008 Nov 15 - 8.56% (via)
- 2008 Nov 8 - 8.90% (via)
- 2008 Nov 1 - 8.98% (via)
- 2008 Oct 25 - 10.72% (via)
- 2008 Oct 18 - 10.68% (via)
- 2008 Oct 11 - 11.35% (via)
- 2008 Oct 4 - 11.44% (via)
- 2008 Sep 27 - 11.98% (via)
- 2008 Sep 20 - 11.99% (via)
- 2008 Sep 13 - 12.23% (via)
- 2008 Sep 6 - 12.09% (via)
- 2008 Aug 30 - 12.1% (via)
- 2008 Aug 23 - 12.34% (via)
- 2008 Aug 16 - 12.40% (via)
- 2008 Aug 09 - 12.63% (via)
- 2008 Aug 02 - 12.44% (via)
- 2008 Jul 26 - 12.01% (via)
- 2008 Jul 19 - 11.98% (via)
- 2008 Jul 12 - 11.89% (via)
- 2008 Jul 05 - 11.91% (via)
- 2008 Jun 28 - 11.89% (via)
- 2008 Jun 21 - 11.63% (via)
- 2008 Jun 14 - 11.42% (via)
- 2008 Jun 07 - 11.05% (via)
- 2008 May 31 - 8.75% (via)
- 2008 May 24 – 8.24% (via)
- 2008 May 17 – 8.1% (via)
- 2008 May 10 – 7.82% (via)
- 2008 May 03 – 7.83% (via)
- 2008 Apr 26 – 7.61% (via)
- 2008 Apr 19 – 7.57% (via)
- 2008 Apr 12 – 7.33% (via)
- 2008 Apr 05 – 7.14% (via)
- 2008 Mar 29 - 7.41% (via)
- 2008 Mar 22 - 7.0% (via)
- 2008 Mar 15 - 6.68% (via)
- 2008 Mar 08 - 5.92% (via)
- 2008 Mar 01 - 5.11% (via)
- 2008 Feb 23 - 5.02% (via)
- 2008 Feb 16 - 4.89% (via)
- 2008 Feb 09 - 4.35% (via)
- 2008 Feb 02 - 4.07% (via)
- 2008 Jan 26 - 4.11% (via)
- 2008 Jan 19 - 3.93 (via)
- 2008 Jan 12 - 3.83% (via)
- 2008 Jan 05 - 3.79% (via)

Addendum
Reuters maintain this graph on WPI, India.

Related Articles
- Inflation rates of India (2009)
- How is WPI inflation rate calculated in India?
- Commodities and their weight-ages in WPI calculation of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

Originally posted on Tuesday, June 24, 2008