Askketul

Factors effecting Gold price in 2011

2011-10-15T15:47:00.002+05:30

Let us look at some of the factors affecting prices of Gold in India:

Gold Mining: The quantity of gold mined in a year will directly affect its price by the simple application of supply and demand mechanics. 2008 and 2009 saw a decline in gold production and it again picked up in 2010. But the production is still less than the 2006 production. The production number in 2011 is not out but doesn't seems very encouraging. Grasberg mine, Indonesia facing two strikes this year, the second of which is still unresolved.
Currency Fluctuations – Gold is traded all over the world, hence its price is maintained in USD. The recent USD prices have been fluctuating as it has its bearing on gold price. The US has seen major turmoil in its economy and this has affected the USD adversely. It is not expected to stabilize in the near future although it looks to strengthen a little on good job numbers.
Global Scenario – The current global economy is in doldrums. Europe is still clouded with uncertainty, US is still not stabilizing, China is not as strong as it was a year ago and India is also reflecting the unrest. This led to gold acting as a safe haven.
Inflation and Interest rates – With inflation on the rise and RBI hiking interest rates frequently, gold prices have become unstable. Rising inflation to increase in gold prices while rising interest rates lead to a fall in gold prices. The gold has still risen as the effect of inflation has been substantial as compared to interest rates.
Weak Financial markets – Gold is inversely related to stocks, bonds and real estate. The stock market has been showing volatile behaviour and this has again reflected in gold prices. Gold is still preferred as the others are not as safe as investments as gold.
Growing middle class - A factor unique to India is the growing middle class. This has also led to an increase in demand of gold thus leading to increasing gold prices.

With the current economic scenario gold will continue to remain a preferred investment option. The only word of caution to investors would be that gold is heading towards a bubble and thus needs to be handled with care.

Next: Gold demand trend in Q2, 2011

Read More: Gold Loan - easier financing option

Credit: Ms N Khanna

Gold Price in India - Diwali effect

2011-10-14T06:27:00.004+05:30

India is waiting for its most celebrated festival of the year i.e. Diwali. Over last many years, we have seen that Diwali bring steep increase in Gold price. There is Saying that Gold makes the Indian economy go round during the festive season won’t be too much of a stretch. Since time immemorial gold has been the choice of investment for Indians; Diwali season is just one of the biggest excuses to buy it. Unfortunately the recent economic scenario has made it impossible for everyone to afford Gold. It has risen more than INR 1,000/GM since last year. In last 60 days, gold price is moving between INR 2500/GM to INR 2800. In this uncertain economic time, Gold is really the metal for the pallet?

Let us look at why Gold has been such a favourite among the buyers. Buyers can roughly be classified into two categories:

People looking at Gold as a family heirloom – Every Indian family at one point or the other has bought gold, not because they like it or because they think it makes a good investment option, but purely because it is an heirloom that can be passed down to the coming generations.
People looking at Gold as an investment – The prices of gold over a period of time generally tend to move up. Especially in a country like India where gold is bought keeping the long term perspective in mind, it becomes even more lucrative.

For the first category, Diwali will be a big sale season (irrespective of the prices) as the amount bought is usually smaller compared to that bought by investors.

For the second category, the question that begs to be asked is, will the gold prices stabilize or will it go down further before beginning its climb again. At the end of the day, its climb is inevitable.

Next Page: Let us look at some of the factors affecting prices of Gold in India.

Read More: Smart Investment tips

Credit: Ms N Khanna

Gold Demand Stats and Data Q2, 2011

2011-08-25T05:58:00.006+05:30

Previous Page - Gold Demand Trend

Here are some interesting status and data for Gold Demand.

On count of volume, global gold demand in the second quarter of 2011 stood at 919.8 tonne in comparison to 1107 tonne in Q2 2010. Demand has reduced by 17% from
In terms of value, gold demand grew by 5%. In Q2, 2010 value of Gold purchase was USD 42.64 bn and now it is USD 44.5 bn. year-on-year reaching US$44.53 bn up from US$42.6bn in the second quarter of 2010.
Average gold price rose by 26% on quarterly basis. This quarter gold price has reached USD 1506.13
Q2 2010 has seen unprecedented demand of 574.2 tonne. Q2 2011, the demand is reduced to 359.4 tonne which is 37% lower on year on year basis.
ETFs witnessed solid net inflows of almost 51.7 tonne during the second quarter of 2011, which compared well to the previous 12 quarters (excluding two record peaks) where ETF inflows have averaged 41.4 tonne.
Investment in gold bars & coins reached 307.7 tonne in Q2 2011 with rise of 9% on year on year basis again 282.6 tonne in Q2 2011.
Jewellery demand in the Q2 2011 was 442.5 tonne. It is 6% more on year on year basis.
India, China & Turkey are accounted for nearly 60% demand of global jewellery demand in Q2 2011
The highlighted dip in case of Gold has come from Gold Supply. It has declined by 4 % in 2010 and stood at 1058.7 tonne in Q2, 2011. The main reason for dip is net purchasing by Central banks
Central banks’ purchase has increased 4 times in comparison to Q2 2010.

More: Next Investment Option - Lithium

Gold Demand Trend Q2, 2011

2011-08-18T05:41:00.022+05:30

Gold has turned out to be investor's favorite in this crunch time. Q2 2011 shows unprecedented demand of Gold reaching to 919.8 tonnes. But surprising fact is more than half of the Gold demand comes from only two countries i.e. China and India. Two emerging economies is purchasing Gold more than rest of the world.

Gold Demand Trend report for Q2, 2011 shows that Gold will continue to be in demand for next half year in 2011. Here are the key reasons.

Higher gold price has failed to cut Gold demand in India and China. It grew by 38 % and 25 % respectively during Q2, 2011 on year on year basis. There is no sign of slowing down demand from India and China.
With European debt crisis, US Debt downgrade and higher inflation, Gold is turning out ot be a favorite investment in coming year.
With net purchase over 69 tone in Q2 2011, Central banks will remain one of the top purchasers of Gold to keep their reserves diversified.

Marcus Grubb, Managing Director, Investment at the World Gold Council said “The strength of demand in India and China, coupled with an overall drop in recycling activity this quarter, demonstrates that consumers have adjusted to the current price environment and expect the upward price trend to continue. In addition, ongoing macro economic uncertainty, the continued sovereign debt crisis and widespread inflationary pressures, will result in gold demand remaining strong.”

Next Page: Gold Demand Statistics Q2, 2011

More: Gold Loan, an easy financing option

Unprescedented Loss by New India Assurance

2011-08-12T17:11:00.000+05:30

The public sector general insurance company - New India Assurance- has shown a net loss of more than `421crore, during the financial year 2010-2011. Government of India has started the investigation of it.

A senior government official said that the biggest public sector insurance company is shaken by such a heavy loss. The company is in operation for last 90 years and it had shown loss for the first time.

The finance ministry has asked for the reasons, responsible for such a heave loss. This information is disclosed by the senior official of the New India Assurance. The company has on its board of directors a senior official from finance ministry and a head of a public sector bank. The reasons for the losses have been put up in front of the board. Mr. R Gopalan, secretary, Department of economic affairs, is also a member of the board.

Out of the total loss of Rs. 421 crore, Rs.300 crore loss is contributed from company’s international operations alone!

New India Assurance was re insurer for some companies in Australia, and New Zealand. Floods and earth quakes hit both the nations. This created loss to the Indian insurer. The government of India is very much anxious about this loss.

Next: Family Floater, best health insurance plan

Credit: Mr S Kulkarni

Impact of Interest Rate hike by RBI

2011-08-08T19:36:00.002+05:30

We have read interest rate hike, inflation and its direct impact.

The indirect implication or the ones not affecting the customers directly will be:

Inflation – While the rates have been hiked to control inflation, prices of real estate and cars will see a rise. This is because the lending rates have been increased, so now it costs the corporate more to produce the same amount.
Common Goods – Common Goods in the short run should see a price hike but it should not be too steep, while in medium run the prices should stabilize due to this move.
Jobs and wage rate – With the increase in the interest rate, the probability of defaults by infrastructure project and other high leveraged firms will increase. If they default the wage rates of those firms will be affected.

While the need for increase in interest rates is understood; inflation is a major problem. The worry point here is that even the interest rate hikes have not been enough to curb inflation. This is definitely not the last interest rate hike by the RBI.

Let us wait and watch what the effect of this will be on the economy.

Next: Inflation, a burning issue

Credit: Ms. N. Khanna

Rate hike by RBI to check Inflation

2011-08-02T19:31:00.007+05:30

Interest rates hiked 11 times since March 2010. Repo rate becomes 8% and reverse Repo Rate is at 7%. These are the headlines doing the round since 26th July, 2011 when RBI, the premiere bank of our country, raised the interest rates by 50 basis points. This was the 11th such hike in 16 months.

All this has been done to keep a check on the ever rising inflation which still hasn’t been reigned in. The question that begs to be asked is – What does this mean for the common man?

The answer, albeit simple, is a little long. The effects essentially can be divided into direct and indirect implications. The ones that affect the consumer directly are:

Loans have become more expensive – With the continuous rise in the rates by RBI, all the banks have raised the interest they charge on loans, including home loans and car loans. This means that your dream car or the flat you just saw which was affordable suddenly became more expensive to finance. Educational loans have also become dearer resulting in a higher cost of education.
Deposit interest rates have gone up – It pays more to save now than to consume, but it still falls short of the inflation rate, so in the long run your money may fetch you more value if it is spent. If the inflation can be curbed then savings in the long run will become more lucrative.

Next: Indirect affect on consumer

Credit: Ms. N. Khanna

Brokerage and Charges at ICICI Direct

2011-07-29T22:17:00.001+05:30

Charges:

Account opening fees: Rs.750/-

Brokerage Charges:

Margin Trades: 0.1% to 0.15%
Squared off trades: 0.2% to 0.425%
Delivery based trades: 0.4% to 0.85%
ICICIDirect.com brokerage varies on volume of trade and inclusive of demats transaction charges, service taxes and courier charges for contract notes.

Credit: Ms. R. Kanse

Read More: Equity investment with ICICI direct

Read More: NRI Services at ICICI Direct

Demat Account Charges Comparison

2011-07-28T10:20:00.002+05:30

Broker Firm	Demat Account Opening	Demat Account Maintenance Charges	Dematerialisation Charges			Account Closing Charges
Broker Firm	Demat Account Opening	Demat Account Maintenance Charges	Per Request	Per Certi - ficate	Courier	Account Closing Charges
SBICAP Securities	Rs.500/-	Rs. 400/- p.a.	Rs. 35/-	Rs.2/-		NIL
Sharekhan	Rs.750/-	Rs. 300/- p.a.	Rs.15/-	Rs.3/-		Rs.100/-
Motilal Oswal	Rs.400/-	Rs.100/- p.a.	Rs.25/-	Rs.5/-		NIL
Angel Broking	Rs.491/-	1^st year free then Rs. 300/- p.a.	Rs.30/-	Rs.4/-		NIL
ICICI Direct	Rs.975/-	Rs.500/- p.a.	Rs.35/-	Rs. 2/-		NIL
HDFC Securities	Rs.799/-	Rs.500/- p.a.	Rs. 35/-	Rs. 3/-		NIL
Reliance Money	Rs.750/-	Rs.50/- for Individuals		Rs.2/-	Rs.30/-	NIL
Indiainfoline	Rs.750/-	Rs.300/- p.a.		Rs.10/-	Rs.40/-	NIL
Kotak Securities	Rs.750/-	Rs.30/- p.m. (Individual) Rs. 50/-p.m. (Corporate)	Rs.25/-	Rs.3/-		NIL
Geojit	Rs. 800/-	Rs.300/- p.a.	Nil		Rs.35/-	NIL
IDBI Paisabuilder	Rs.700/-	1^st year free then Rs.350 p.a.		Rs. 3/-	Actual

Note:

1. Data is take in Jul 2011.

2. This is not intended to be used for financial or non financial decision making purpose.

3. Refer to respect company's website for recent updates

Credit: Ms. R. Kanse

NRI Services by ICICI Direct

2011-07-26T21:56:00.010+05:30

ICICI Direct, being market leader in Online Share Trading, leads its way in NRI Services for Online Investment. It provides following services to NRI.

For Equity Trading

· NRIs are offered equity trading on both NSE and BSE exchanges on delivery basis.

· NRIs can make PINS and non-PINS transactions online.

· Funds or Shares are credited directly to customer’s bank or demat account.

· Transaction details are sent to the authorities concerned by the customer.

For Mutual Fund

· NRI can invest in various MF companies using online facility.

· NRI can redeem their funds online.

· NRI can switch between the schemes offered by an MF company.

· Systematic Investment Plan (SIP): This allows automatic investment at regular intervals in a particular scheme. Entry load or exit load will be charged by the AMC.

· Systematic withdrawal plan (SWP): This allows automatic redemption at regular intervals from a particular scheme.

For IPO Investment

NRIs can use their ICICIdirect account for online investment in IPOs offered by Indian companies.

Credit: Ms. R. Kanse

Next: Equity Investment with ICICI Direct

More: Smart Investment Tips

ICICI Direct, Pioneer in Online Investment

2011-07-24T21:13:00.005+05:30

ICICI Direct is the leader in Online share trading in India. It has more than 6 Lakh customers. The key features of ICICI Direct's product is 3-in-1 Account. Here is ICICI Direct investment products.

1. Equity Trading

Cash Trading: It is a delivery based trading which takes delivery of shares or monies.
Margin Trading: Using margin trading customer can do an intra-settlement trading up to 3 to 4 times of their available funds. By squaring off the position within the same day settlement cycle customer can take long buy or short sell positions in stocks.
Margin PLUS Trading: Customer can do an intra-settlement trading up to 25 times of their available funds using margin plus trading. By squaring off the position within the same day settlement cycle they can take long buy or short sell positions in stocks. They will gain a much higher leverage in their account against their limits.
CallNTrade®: Using CallNTrade option customers can trade on the telephone through ICICI’s customer Service Executives. This facility is currently available in over 11 major states across India.
Trading on NSE/BSE: Both NSE and BSE exchanges are available for trading.
Market Order: Trading will be done by placing market orders during market hours. Customers can trade at the market best price and at the order execution time.
Limit Order: This option allows placing a buy or selling order at a price defined by customer. The execution can happen at a price more favorable than the price which is defined by customer. They can place limit orders during holidays and non market hours.

2. Mutual Funds

Customer can invest and manage Mutual fund investment via ICICI Direct. Customer has more than 2000 funds. Customer can make one time investment or start a SIP.

3. Initial Public Offer (IPO)

Customer can invest in IPOs online through ICICI Direct. It's really convinient way of investing in IPO. It is almost a paperless investment opportunity. ICICI Direct has features like IPO calendar, recent IPO listings, prospectus/offer documents and live prices etc.

4. More

Next: Brokerage and Charges at Kotak Securities

Who will be RBI Governor after Mr Subbarao ?

2011-07-22T20:22:00.005+05:30

Mr.D.Subbarao, present RBI governor is completing his service period on 5th of September this year. Many people believe that he will get the extension. Yet who will take the charge of the governor’s office, is not clear.

There are three names, who can be the successor of Mr.Subbarao. Mr.Kaushi Basu who is the Professor in the University of Chicago, an economic advisor to the Prime Minister and ex chief economist of IMF (International Monetary Fund). Mr.Raghuram Rajan is also a likely name. The third name under consideration is Mr. R Gopalan; he is chief advisor of economic matters in the finance ministry. He is secretary to economic affairs.

Read About Financial Inclusion and Indian Banks

In the past history of RBI, many governors have got extension. Mr. Bimal Jalan got an extension; after the completion of his six years of services. Similarly the governor before Mr.Jalan was Mr.C.Rangrajan. He also got an extension, after the completion of five years of his services.

There is no formal procedure or the selection committee as such, for choosing the governor for RBI. The Prime Minister’s office appoints the governor. For that matter, the recommendations and the feed back data from the retiring governor and the finance ministry is taken in to consideration. The political members of the ruling party and strong regional parties too influence in this selection process. The corporate houses have no stand in this process. Generally the economist or the bureaucrats are taken in to consideration for the post.

Read More: Inflation, Effect and Curbs

Credit: Mr S. Kulkarni

NATGRID, National Intelligence Grid

2011-07-20T20:15:00.022+05:30

Government of India has formed National Intelligence Grid (NATGRID). The aim of this grid is for anti terrorism. Banks was asked to give information of their customers to the NATGRID. But banks have denied to do so, saying it is the violation of privacy right of the customers and the possibility of miss use of the information. The banks will not pass any information about their customers to NATGRID, until any law is passed and the banks are forced to do so.

NATGRID was formed after the terror attacks on Mumbai, to design the system which will share the information. The project got clearance in May this year. Fund of `1200/- crore is sanctioned by the Cabinet Committee on Security. This will help in creating the basic infrastructure over next 18 months. NATGRID is linking 21 data sources from 11 intelligence agencies to collect actual information, which will support NATGRID to fight against terrorism.

NATGRID is a tool for security agencies to find and capture information on suspects of terror. It uses the data from Telecom companies, Banks, and Immigration department. This will help a query on information. With information, investigative process will fetch responses in a timely and secure manner. Hopefully, the law enforcement and intelligence agencies will be able to reduce the number of terrorist incidents as they will be able to identify, capture and prosecute terrorists in a more efficient manner.

Banks was asked to give information of their customers to the NATGRID. But there is a news that banks have denied to do so, saying it is the violation of privacy right of the customers and the possibility of miss use of the information. The banks will not pass any information about their customers to NATGRID, until any law is passed and the banks are forced to do so.

More: Citibank fined by RBI

Credit: Mr. S. Kulkarni

Inflation - Effect & Curbs

2011-07-18T19:27:00.006+05:30

So far, We read the simplistic definition of Inflation. There are multiple solutions to Inflation. Here are few ways to curb Inflation

Monetary policies – Increase interest rates when inflation is high so that money flow is reduced in the market and thus demand decreases leasing to a decrease in inflation. This is what RBI has been doing in the last one year – increasing the interest rates so as to curb inflation.
Fiscal policies – Increase taxes so that people buy less and but reduce export and import duties so that the product becomes cheaper. Also taxes levied on corporations should be reduced so that cost of production decreases thus reducing prices of goods and services.

A combination of fiscal and monetary policy has been implemented by the Indian government. This, while not taming inflation, has caused side-effects which are hurtful for the economy.

Long term inflation hurts the middle and lower class of an economy. India, as a country, is comprised majorly of these two sections and thus its growth will be severely impacted with high inflation.
High inflation also leads to an unstable economy. Equity and debt markets become bearish and this hurts the economy.

Inflation, currently not at its worst, is not at a good place either. If India wants to become an economic superpower in the near future it needs to get a grip on its inflation numbers.

More: Ultra NHI banking with SBI

Credit: Ms. N. Khanna

Inflation, a burning issue

2011-07-16T19:26:00.003+05:30

“Inflation keeps Tata worried” – You won't have missed this headline in a leading newspaper. If we look at the recent past inflation has been a constant worry point for not only the governments but also the industry and the general population. So, "What is inflation?" In simple terms Inflation is the rise in price of a good or service with time due to

Increase in prices of raw material
Increase in demand as compared to supply
Increase in import costs
Monsoons – In a country like India which is highly dependent on agriculture monsoons play a very important role in keeping inflation at bay.

Any rational consumer will say that inflation is part of the normal working of the economy and he would be right. A certain percentage of inflation is not only present but is also required for the economy to grow and develop. Unfortunately, that mark has been crossed long ago.

Currently we are experiencing inflation which is not good for the economy. This is because with increasing inflation the purchasing power of the population decreases and thus consumption falls. Consumers either refrain from buying or reduce the amount they consume as they are not able to afford the goods and services at the prevailing prices.

Next: Effects & Curbs of Inflation

More: Online banking survey

Credit: Ms. N. Khanna

RBI fined Citibank for AML rules violation

2011-07-14T21:34:00.004+05:30

Citibank has noticed by Reserve bank of India about Rs. 25 lakhs fine. This is in reference to breaking Anti Money Laundering (AML) rules, and Know Your Customer (KYC) norms. Citibank’s one of the branch in Gurgaon has faced a fraud of Rs. 400 crore. The RBI stated that Gurgaon branch landed in this case because it had overlooked the rules of KYC guidelines at the time of opening new accounts. RBI has issued show cause notice to Citibank on 21st April 2011. The possible fine could be Rs. 50 lakh.

Citibank has submitted a written reply to this notice on 6th May 2011. Citibank had a personal hearing with RBI on 7th June. The violations of rules by the Citibank were proved and hence the notice for fine warranted to the bank.

RBI has asked all banks to disclose the details about policy, procedures and the business quantum of the wealthy customers. Financial Stability and Development Council (FSDC) is headed by the finance minister. Mr.Pranab Mukharji is the chairman of FSDC. Indian government has set up FSDC in December 2010. FSDC has created the rules for the wealth management business of the banks.

Read More: Read credit report from CIBIL

Brokerage and DP Charges Comparison

2011-07-12T10:48:00.004+05:30

Broker Firm	Delivery Brokerage	Intraday Brokerage	DP Charges
Broker Firm	Delivery Brokerage	Intraday Brokerage	Buy	Sale
SBICAP Securities	0.50%	0.10%	NIL	NIL for SBICAP, else 0.03%	Min Rs 30 /-
Sharekhan	0.03% - 0.50%	0.03% - 0.10%	0.02%	0.04%	Min Rs 15 /-
Angel Broking	0.50%	0.02% - 0.03%	NIL	0.01%
ICICI Direct	0.75%	0.15%	NIL	NIL for ICICI Direct, else 0.04%
Indiabulls	0.25% - 0.50%	0.05% - 0.10%	NIL	0.06%
HDFC Securities	0.50%	0.15%	NIL	0.04%	Min Rs. 20 /-
Reliance Money	0.01%	0.01%	NIL
Indiainfoline	0.50%	0.10%	NIL	0.04%	Min Rs. 23 /-
IDBI Capital	0.35%	0.050%	NIL	Rs. 6 - online Rs. 100 - Delivery
Geojit	0.10% - 0.30%.	0.01% - 0.03%	NIL	0.02% for POA delivery 0.03% for DIS delivery	Min Rs. 20 /- Max Rs. 40 /-

Note:

1. Data is take in Jul 2011.

2. This is not intended to be used for financial or non financial decision making purpose.

3. Refer to respect company's website for recent updates

Credit: Ms. R. Kanse

Next: Comparison Demat Account Charges

Financial Inclusion & Banking in India (Part 3)

2011-07-10T08:39:00.007+05:30

We read that UN expressed its concern about Financial Inclusion of many segments of society. Further to that, we have seen areas at which Indian banks have to improve.

Now, lets see what is the problem that the Indian banks are facing?

Absence of technology – Due to lack of technology and infrastructure it becomes difficult to extend the reach of financial institutions in the remote parts of the country
Absence of reach and coverage – Fragmentation of population means that at times it is unfeasible to open up bank branches due to low population in an area
Difficulty of implementation and use by the people the system it is intended for – It is easier to obtain a prepaid phone connection than it is to open up a bank account due to the Know Your Customer (KYC) forms.
These are the problems at the basic level and once they are overcome we shall have a fresh set of hurdles but it is imperative for financial inclusion to be realized if we want India to truly witness a wholesome progress.

Read More: Online Banking Survey

Financial Inclusion & Banking in India (Part 2)

2011-07-08T20:31:00.002+05:30

We read UN has shown its concern over Financial Inclusion.

RBI has also sought for a detail report and started taking action since 2004. Even after starting on the path to financial inclusion in 2004, India is still lagging behind. Some of the recent facts:

Approximately more than 50% of the population doesn't have access to financial institutions
Out of a total of 5,165 new branches opened in 2011, only 21.86 per cent are rural branches - only 3,500 villages have brick and mortar branches and even if another 73,000 habitations are brought under the net through the financial inclusion project, there would still be about 5 lakh habitations left uncovered
The total number of no-frill accounts as of March 2011 stands at 74.3 million but the number of active accounts reported by various banks varies between a 3 and 20 %. This statistic is disturbing as it points out that while people opened the accounts adequate planning was not done because they were not able to sustain their accounts.
Declining growth rate of Self Help Groups, negative growth in total loans issued by co-operatives and deceleration in growth in agriculture credit to 10.6 per cent during 2010-11 from 22.9 per cent in 2009-2010. One might say that it is good if people are as it means that they have enough funds but sadly the indication here is that the availability of affordable credit is declining instead of rising.

Let's see the problem bank facing in India around Financial inclusion.

Next Page

Read More: How to revive lapsed policy

Financial Inclusion & Banking in India (Part 1)

2011-07-05T20:22:00.006+05:30

29th Dec, 2003 saw the UN waking up to the harsh realities of the financial condition of millions of people around the world. According to the then UN Secretary General, Kofi Annan - "The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives."

What is Financial Inclusion?

According to the United Nations the main goals of Inclusive Finance are as follows:

Access at a reasonable cost of all households and enterprises to the range of financial services for which they are “bankable,” including savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances
Sound institutions, guided by appropriate internal management systems, industry performance standards, and performance monitoring by the market, as well as by sound prudential regulation where required
Financial and institutional sustainability as a means of providing access to financial services over time
Multiple providers of financial services, wherever feasible, so as to bring cost-effective and a wide variety of alternatives to customers (which could include any number of combinations of sound private, non-profit and public providers).

Looking to this, in 2004 RBI set up a commission, Khan Commission, to look into financial inclusion. Read more details on next page.

Next Page

Read More: Smart Way of Tax Planning

BSE will train Indian Bank employee in coming decade

2011-07-02T09:04:00.019+05:30

Bank employees will get training from the experts of the Bombay Stock Exchange (BSE) very soon. The report further says BSE is planning to provide training for about 65 lakh people, working in the Banking, financial services and Insurance sector, (BFSI), within next 10 years.

Read: Save Tax, Invest in Infrastructure Bond

Finance ministry has created public private partnership in the year 2008. National Skill Development Corporation (NSDC) has brought in BSC for the job. The BSE will get amount of Rs. 5 crore as a grant for the development of this pilot program. BSE will set up 200 training centers in the country. It has its own training institute and it is busy in conducting the certified courses in the Capital Market studies.

The survey conducted says that in the next two years the public sector banks will require minimum 400,000 new employees. This requirement is solely of public sector banks.
This information is published by the Institute of Banking Personnel Selection (IBPS). Last year 48000 candidates got jobs through IBPS, in the Public Sector Banks.

The Chief Executive Officer and the M.D. of BSE, Mr.Madhu Kannan told that the banking sector is really in a need of the skilled work force. There are vacancies at all level in this sector, he further added. BSE will invite other exchanges, depositories, banks, and insurance companies to join hand, and will ask to do investment, if necessary.

Read More: Smart Investment Tips

NSDC has involved 30 companies and six sector skill councils and has approved 36 projects. Funds valued Rs. 1016 crore have invested for the training of 50 lakh people. By year 2022, NSDC has finalized to train 15 crore people in 20 sectors.

Basel III impact on Indian Banks

2011-06-30T19:08:00.017+05:30

How does this affect the Indian Banks and hence the Indian consumers?

According to D. Subbarao, Governor RBI, Indian banks are not going to be hit hard with Basel III as they already follow stringier standards as compared to their US/UK counterparts. This is not to say that the banks won’t be affected at all.

Previous Page: Basel III Features

Here are some areas of impact

With introduction of capital buffers the cost of credit for consumers is going to increase. This will definitely affect the firms who will borrow but will it affect the consumers also is something that remains to be seen. The positive side of it is that it will ensure a cushion in times of crisis.
Stricter capital requirements along with changes in structure of Tier 1 and Tier 2 capital will result in lowering the Return on Equity (ROE) of banks. This is bound to be passed on to the consumers in a slow but steady manner. This will also help in weeding out the less efficient banks and thus strengthening the banking sector.
Reduced lending – Banks will look at reduced lending i.e. funds available for loans to ensure that their Capital Adequacy ratio (CAR) is within the specified norms. This is because of two reasons:

o Higher requirement of capital - Banks will need to enhance the minimum core capital along with a capacity to absorb shocks such as the one observed in 2008-2009.

o RBI granting new licenses to new banks

Introduction of new leverage ratios will make long term borrowing more profitable as compared to short term borrowing. NSFR provides incentives for banks to fund their activities with more stable long term sourcing.

The effects of Basel III look to be more on the financial institutions and businesses but in time this will be definitely passed onto the consumers. The availability of easy lending will be a thing of the past if the authorities manage to execute the guidelines correctly. The aim is to stabilize the economy and avoid another.

Read More: New Loan recovery provisions

Basel III Features

2011-06-28T18:38:00.009+05:30

The Financial Crisis of 2008 rocked the world and set the ball rolling for the introduction of Basel III. Basel I and Basel II had laid down some norms for the banks and their operations; Basel III aims to tighten the norms so as to avoid another meltdown. To simplify Basel III below given are the key points:

· Definition of capital made stringent i.e. the risks of each capital is being given high importance. They aim to raise the quality, consistency and transparency of the capital base by introducing stricter eligibility rules on instruments included in Tier 1 (core) capital

· Introduction of capital buffers to absorb shocks i.e. Regulatory capital = Core Capital + Buffer Stock. The buffer stock will consist of two components:

o Capital conservation buffer – current requirement is 2.5% which makes the total regulatory capital requirement as 7%.

o Counter-cyclical buffer – Will be introduced if there is a high credit growth scenario. If the stress increases the counter-cyclical buffer will be increased raising the total capital requirement. It can range from 0%- 2.5% of Risk Weighted Assets (RWA).

· Loss absorbing capacity of Tier 1 and Tier 2 capital of banks operating internationally enhanced

· Liquidity standard to be globalised with the introduction of a common standard

· Net Stable Funding Ratio (NSFR) to be introduced in 2019 and Liquidity Coverage Ratio (LCR) to be put in effect from 2015 under Leverage Ratios

o NSFR = (Available amount of stable funding/ required amount of stable funding) > 1. It calculates the proportion of long term assets which are funded by long tern stable assets.

o LCR = (Stocks of high quality liquid assets/Net-cash outflows over a 3-day time period) > 1. This ratio ensures that there is adequate high quality liquidity to survive a 30-day high stress scenario.

· Increased RWA requirements for Counterparty Credit Risk (CCR). This is put into place so as t hedge against uncertainties in the market. This is being done by

o capitalizing Credit Value Adjustments (CVA) risk i.e. add on charge to cover market-to-market risk

o extending time horizons for exposure calculations on OTC derivatives and margined securities finance and

o increasing asset correlation for exposure to major financial institutions

Read More: Credit Card debt and CIBIL

Equity Investment Product with Motilal Oswal

2011-06-25T05:31:00.001+05:30

Equity Investment:
Motilal Oswal Securities Limited (MOSL) set up Equity Advisory group (EAG) to provide customized and integrated equity solutions to high Network Investors. This group has highly trained equity professionals, who act as customer’s Equity Advisor. MOSL Equity Advisor proactively helps customer to informed equity investment decisions and builds a healthy portfolio. Advisor determines each EAG customer's profile before deciding the ideal asset allocation that takes into consideration issues like customer’s attitude towards risk, investment horizon, life stage, and return expectation and investment objectives. Advisors are experts in providing value based investment solutions as well as advising customer in positional trading, as per their profile. MOSL use integrated approach in their investment strategy using a combination of cash, derivatives and other leverage products to help customers to reach their investment goals.

Derivatives:
Derivatives can multiply customer’s capital if a right call is made but can even wipe out their capital if the trade goes against customer’s decision. Hence this product is advisable only for those who have a high risk appetite.

Futures and options are two types of derivatives, which use equity as their underlying. Equity Advisory Group, will also act as customer’s advisors for Future and Options. Advisor help customer to take informed decisions while trading in derivative instruments. EAG will help customer also with the trading calls for Future & Options.

Commodities:
Motilal Oswal Commodities Broker Pvt. Ltd. (MOCBPL) is a fully owned subsidiary of Motilal Oswal Financial Services Ltd. It has been providing commodity trading facilities and related products and services on MCX and NCDEX exchanges. Besides access to the best of research in the form of Daily Fundamentals & Technical Reports on highly traded commodities, MOSL’s customer also get access to MOSL exclusive Customized Trading Advice on both the trading platforms. MOCBPL customer gets access to the best of research in the form of Daily Fundamental and Technical Research Reports on highly traded commodities. MOCBPL provides end-to-end advice for all the commodities to all their prestigious individual customers. Privileged customers also get exclusive & customized advice. MOSL provide personalized service through dedicated relationship managers for quick and efficient execution of transactions and for regular follow ups.

The commodity based products offer a huge array of benefits that include offering risk-return trade-offs to investors, providing information on market trends and assisting in framing asset allocation strategies. Commodity investments are always considered as defensive because during the times of inflation, which adversely affects the performance of stocks and bonds, commodities provide a defense to investors, maintaining the performance of their portfolios.

Initial Public Offerings (IPO’s):
It is use when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. Book Building and Online IPO are the two types of IPO.
Book Building is a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built up and the price of the security is assessed on the basis of the bids obtained for the quantum of securities offered for subscription by the issuer. This method provides an opportunity to the market to discover the price for securities. In case of a fixed price issue the issue price is fixed. MOSL facilitates the IPO application for all of its clients through online platform.

Read More: Equity Investment products at Kotak Securities

Kotak Securities - an Investor's choice

2011-06-20T05:22:00.004+05:30

Kotak Securities is a subsidiary of Kotak Mahindra Bank and one of the largest stock broking firms in the Industry. Kotak Security is the first and only NBFC to receive the license to be converted into a bank. It has more than 150 technology professionals constantly working on upgrading and speeding up all the systems. Also it has a centralized risk management system. This system allows Kotak to offer the same levels of service to customers across all locations. Kotak securities have branches in more than 450 cities with more than 1400 offices all over the country and its employee strength extends beyond 4000.

Kotak securities have their own in house research team. This team members have years of experience in the financial markets. They scan through the plethora of stocks and find the scrip that have a high potential of providing customer good returns. Customers get research Technical, Fundamental, Derivatives, Macro-economic and mutual fund research.