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
Friday, 27 February 2009
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.
This article that came on rediff explains the need of paying credit card dues on time. It's worth a read.
Wednesday, 25 February 2009
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%
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%
Tuesday, 24 February 2009
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.
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.
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.
Monday, 23 February 2009
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.
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.
Saturday, 21 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%
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%
Friday, 20 February 2009
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)
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?
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?
Thursday, 19 February 2009
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.
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.
Tuesday, 17 February 2009
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!
Rediff has compiled this list of the highest paid CEOs in India. Have a look!
Monday, 16 February 2009
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.
> 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.
Sunday, 15 February 2009
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%
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%
Thursday, 12 February 2009
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.
Wednesday, 11 February 2009
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.
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%.
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%.
Tuesday, 10 February 2009
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
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
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Monday, 9 February 2009
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.
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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)
Sunday, 8 February 2009
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,
More news here.
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.
Saturday, 7 February 2009
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.
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.
Friday, 6 February 2009
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!
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- Credit card and effective interest rate
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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%
Wednesday, 4 February 2009
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.
”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.
Tuesday, 3 February 2009
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,
Banks would have ‘n’ reasons to justify this, but people, bit cautious on your credit card spending from now!
More details here.
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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.
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.
Sunday, 1 February 2009
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
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
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