Investx

Sebi : MF investors to pay Rs. 100-150 fee to invest

noreply@blogger.com (Rahul) — Sun, 07 Aug 2011 08:33:00 +0000

SEBI announced new guidelines for the mutual fund industry. New investors will now have to shell out an additional Rs 150 for investment of Rs 10,000 and above in mutual funds, while the existing investors will be charged Rs 100 as transaction fees. SEBI had banned the entry load in MFs in Aug 2009.

Investors are already paying a commission in some cases, besides up to 2.5% of their investment towards expanses of fund management. SEBI also said that in order to help mutual funds penetrate into retail segment in smaller towns, the distributor would be allowed to charge Rs 100 as transaction charge per subscription. No charge can be made for investments below Rs 10,000.

The per transaction fee would be Rs. 100 for investments above Rs. 10,000 including Rs. 50 per new folio creation i.e. first time Mutual Fund investor. Transaction charge would be imposed on transactions other than purchases/subscriptions relating to new inflows, and direct transactions with the Mutual Fund. For SIPs, the transaction charges can be recovered in 3 or 4 months. However, it is still not clear whether the new SIP transactions of less than Rs. 10,000 would have one-time fee of Rs. 150 only recoverable on 3 or 4 months. Investors investing directly through AMCs shall not require paying any transaction fee or folio creation fee.

IFCI BOND ISSUE - 10year Tier-II Bond Issue.

noreply@blogger.com (Rahul) — Sat, 04 Jun 2011 12:26:00 +0000

IFCI has announced a 10year Tier-II Bond Issue.

1- Interest Rate = 10.5% P.A
2- No LOCK-IN period. You can sell the bonds on BSE after receiving your annual interest even on year 1.
3- If you invest 1,00,000rs (1lakh) today, then it will become 2,71,400rs after 10 years. (The interest accumulates).
4- This product is way better than any Bank Fixed Deposit where the highest interest is 9.25% - 9.4% as of today.
5- There is no entry load and no exit load.

What is ‘Application Supported by Blocked Amount’(ASBA)?

noreply@blogger.com (Rahul) — Thu, 12 May 2011 19:25:00 +0000

ASBA facility
Application Supported by Blocked Amount(ASBA) is a facility wherein the money you intend to invest in an NFO stays in your bank account and consequently earns you the interest. The money leaves your account only when units are allocated to you. While in your account, this amount stays blocked ensuring that you cannot use it for any other purpose.

Procedure of applying in IPO through ASBA
Under ASBA facility, investors can apply in any public/ rights issues by using their bank account. Investor submits the ASBA form (available at the designated branches of the banks acting as SCSB) after filling the details like name of the applicant, PAN number, demat account number, bid quantity, bid price and other relevant details, to their banking branch by giving an instruction to block the amount in their account. In turn, the bank will upload the details of the application in the bidding platform. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected.

Can I make application through ASBA facility in all issues?
Yes, you can make application through ASBA facility in all the issues i.e. public and rights.

Who can apply through ASBA facility?
SEBI has been specifying the investors who can apply through ASBA. In public issues w.e.f. May 1, 2010 all the investors can apply through ASBA. In rights issues, all shareholders of the company as on record date are permitted to use ASBA for making applications provided he/she/it -
a. is holding shares in dematerialized form and has applied for entitlements or additional shares in the issue in dematerialised form;
b. has not renounced its entitlements in full or in part;
c. is not a renouncee;
d. who is applying through blocking of funds in a bank account with the Self Certified Syndicate Bank.

What advantage an investor has in applying through ASBA vis‐à‐vis applying through an application with a cheque?
Applying through ASBA facility has the following advantages -
(i) The investor need not pay the application money by cheque rather the investor submits ASBA which accompanies an authorization to block the bank account to the extent of the application money.
(ii) The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalized.
(iii) The investor continues to earn interest on the application money as the same remains in the bank account, which is not the case in other modes of payment.
(iv) The application form is simpler.
(v) The investor deals with the known intermediary i.e. its own bank.

Where should I submit my Application Supported by Blocked Amount (ASBA)? How shall I know which bank and which branch of that bank is the designated branch for accepting ASBA applications?
List of Self Certified Syndicate Banks (SCSBs) and their designed branches i.e. branches where ASBA application form can be submitted, is available on the websites of BSE (www.bseindia.com) and NSE (www.nseindia.com) and on the website of SEBI (www.sebi.gov.in). The list of SCSB would also be given in the ASBA application form.

What is Self certified Syndicate Bank (SCSB)?
SCSB is a bank which is recognized as a bank capable of providing ASBA services to its customers. Names of such banks would appear in the list available on the website of SEBI.

Can I submit ASBA in any of the banks specified in the list of SCSBs?
No, ASBA can be submitted to the SCSB with which the investor is holding the bank account.

How many applications can be made from a bank account?
Five (5) applications can be made from a bank account per issue.

Whether my bank account will be blocked or only the amount to the extent of application money is blocked?
No. the entire bank account will not be blocked. Only the amount to the extent of application money authorized in the ASBA will be blocked in the bank account. The balance money, if any, in the account can still be used for other purposes.

Will there be any different treatment in allotment for ASBA and Non –ASBA forms?
No. ASBA forms will be treated similar to the non‐ASBA forms while finalizing the basis of allotment.

Is there a better chance of allotment if one applies in IPO through ASBA?
The chance of getting allotment is same for all the applicants whether application is made through ASBA or non‐ASBA.

Save tax with L&T Infra Long-term Infrastructure Bonds

noreply@blogger.com (Rahul) — Sun, 06 Feb 2011 15:32:00 +0000

L&T Infra brings Long-term Infrastructure Bonds that in which you can invest on a long-term basis in infrastructure projects across the country. As per section 80CCF of the Income Tax Act, you get a tax relief of up to Rs. 20,000 by investing in these bonds.
Under the provisions of the Act, such investments are eligible for deduction of up to Rs 20,000 over and above the Rs 1 lakh deduction available under Section 80C of the I-T Act.

More Info - http://ltinfrabond.com/index.html

IDFC Infrastructure Bonds - Save tax under 80CCF

noreply@blogger.com (Rahul) — Mon, 17 Jan 2011 09:28:00 +0000

What are infrastructure bonds?
In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (“Income Tax Act”) to provide for income tax deductions for subscription to long-term infrastructure bonds.These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act.

Face Value - Rs 5000 per Bond
Minimum number of Bonds per application* - Two Bonds and in multiples of one Bond thereafter.
For the purpose of fulfilling the requirement of minimum subscription of two Bonds, an Applicant may choose to apply for two Bonds of the same series or two Bonds across different series.
Interest Rate - 8.00% p.a.
Maturity - 10 years from the Deemed Date of Allotment

Some Important Points

The bonds don't attract any TDS
The interest accrued on the Bonds will be credited to the respective bank registered with the dematerialized account through electronic clearing service (“ECS”) on the due date for interest payments or where Bonds are held in physical form, interest accrued on the Bonds will be credited to the Bondholders whose name appear in the register of Bondholder maintained with IDFC or Registrar to the Issue through cheque, demand drafts or through ECS on the due date for interest payment
The Bonds will be listed on NSE and BSE and can be traded after the 5 year lock-in period
Investors can mortgage or pledge or hypothecate or mark lien over these bonds to avail loans only after the lock-in period.
Investment in the Bonds can be made in dematerialized and physical forms
An investor would need to provide his or her PAN card to invest in these Bonds.
The Bonds will be issued only to resident Indian individuals (major) and HUFs
An applicant may subscribe to both options but the minimum application under each option shall be one Bond i.e., Rs. 5,000
Interest on the Bonds shall be payable on annual or cumulative basis depending on the series selected by the Bondholders

Closing date
Issue closing date is February 04, 2011

IFCI Infrastructure Bond Series II - Save Taxes under Section 80CCF

noreply@blogger.com (Rahul) — Fri, 24 Dec 2010 12:42:00 +0000

IFCI Long Term Infrastructure Bond Series II
ISSUE DETAILS – Salient Issue Features
Issue Period - November 16, 2010 to December 31, 2010
Rating BWA AA – by BRICKWORK RATINGS INDIA PVT LTD
Offering 2,00,000 Unsecured, Redeemable, Non – Convertible Bonds of Rs 5,000 each aggregating to Rs 100 Crores with green-shoe option to retain oversubscription for issuance of additional infrastructure bonds.
TypePrivate Placement basis
InstrumentUnsecured, Redeemable, Non-Convertible Bonds Series II having benefits under section 80CCF of the Income Tax Act, 1961 for long term infrastructure bond

Tax Benefit: Under Section 80CCF of the Income Tax Act 1961, Rs 20,000 per annum subscribed to long term infrastructure bonds shall be deducted in computing the taxable income. This is over and above Rs 1,00,000 tax benefit available under section 80C, 80CCC, & 80CCD.

Benefits as per Tax Slabs:

Slab 10.3% - Tax Benefit 2,060
Slab 20.6% - Tax Benefit 4,180
Slab 30.9% - Tax Benefit Rs 6,180

To receive physical certificate please attach with Application Form

A cancelled cheque of applicant's bank account
Self – certified copy of PAN Card
Self – certified copy of proof of residence (any of the following)
Ration Card issued by government authorities
Valid driving license issued by any transport authority of the Republic of India
Copy of electricity bill (not older than 3 months)
Valid Passport issued by Government of India
Valid Identity Card issued by Government of India
Voter Identity Card issued by Government of India
Passbook or latest bank statement issued by a bank operating in India

* Buyback facility available at the end of 5th, 6th, 7th, 8th, and 9th year
To download application form -http://ifciltd.com/IFCIBonds/RegisterUser/tabid/216/Default.aspx

ICICI Pru Hospital Care II - Review

noreply@blogger.com (Rahul) — Thu, 23 Dec 2010 13:42:00 +0000

ICICI Pru Hospital Care II – a family floater plan covering your spouse and children. ICICI Pru Hospital Care II - this fixed benefit hospitalisation and surgical plan complements your existing coverage by offering payouts over and above any health plan you have, thus availing best possible medical treatment, without having to bother about the cost of the treatment or quality of care.

Eligibility
Min/Max age at entry -
1 year – 65 years(nearest birthday)
(90 days – 24 years for dependent children in case of family floater)
Coverage - Individual / Family floater ( self, spouse, First 3 dependent children)
Policy term - 10 years (Guaranteed insurability at renewal for life)
Premium payment frequency - Yearly, half yearly & monthly
Waiting period - 30 days

Why should you buy Hospital Care II?
Hospital Care II offers the following key benefits:
1. Fixed benefits to cover hospitalisation, ICU admission, surgical procedure and also recuperating benefit
2. Benefit amount in addition to other medical insurance plans, irrespective of actual billing
3. Additional benefits for prolonged stay & non surgical hospitalisation
4. Guaranteed insurability at renewal for whole life
5. Tax benefits under section 80D
6. Cashless claim settlement
7. A family floater option
8. Health check-up

Retail Cap in IPOs/FPOs is Rs 2 lac Now

noreply@blogger.com (Rahul) — Wed, 17 Nov 2010 13:53:00 +0000

The Securities & Exchange Board of India (SEBI) has increased investment limit in IPO (initial public offer) or FPO (follow-on public offer) for retail investors to Rs 2 lakh from Rs 1 lakh.RPP Infra Projects is the first public offer that will get benefited from this investment limit.SEBI had announced the limit last month but will get implemented from now onwards. However, the SEBI has not increased retail investors’ reserved portion, which kept at 35%.

Non-acceptance of Third Party Payments for mutual fund subscriptions effective from November 15, 2010

noreply@blogger.com (Rahul) — Tue, 28 Sep 2010 10:20:00 +0000

Next time you are investing in mutual funds, make sure you issue a cheque from your own bank account, as fund houses will soon start rejecting third-party payments.

The move is part of efforts to check fraudulent activities by mutual fund agents and distributors, some of whom have been found to be collecting cheques from investors and depositing them for investments in their own names.

After receiving several such complaints against agents and distributors, fund houses have decided not to accept third-party cheques for mutual fund investments with effect from November 15.

"In order to protect the interest of the investors, AMFI has issued best practice guidelines to all AMCs advising them not to accept third party cheques in respect of Mutual Fund Investments (with a few exceptions) effective from November 15, 2010," industry body Association of Mutual Funds in India (AMFI) said in a circular to all the fund houses.

The exceptions include payments by "parents/grand-parents /related persons on behalf of a minor for a value not exceeding Rs 50,000, payment by employer on behalf of employee under systematic investment plans (SIP) through payroll deductions and a custodian on behalf of an FII or a client."

To further identify cases of third-party payments, the fund houses would ask investors for details of bank accounts linked to mutual fund investments and get a certificate from the bank for payments through instruments like pay orders, demand drafts and banker's cheques.

Source - Sify.com

Save 40 percent by buying Life Insurance Online

noreply@blogger.com (Rahul) — Wed, 07 Apr 2010 06:05:00 +0000

Looking to buy life insurance but not buying due to high charges -> Go online.

Yes, invest in HDFC Standard Life’s Young Star Super Suvidha, Pension Super, and Endowment Super Suvidha. Just logon to HDFC Standard Life's website -http://www.hdfcinsurance.com/ and buy any of the above products online. By buying these products online you can get discount of 40 per cent on the first and second year premium allocation charges.

Payment can be made through cheque or DD apart from online banking with 15 banks -- HDFC Bank, ICICI Bank, Axis Bank, Bank of Baroda, Bank of Rajasthan and Corporation Bank, among others.

More Info, check here - http://www.hdfcinsurance.com/hdfcops/presentation/landingpage.aspx

Visa Card Insurance service

noreply@blogger.com (Rahul) — Sat, 20 Mar 2010 11:46:00 +0000

You must have heard about the bill pay and online insurance premium services, where you have to register your details and as and when the insurance premium due date is coming, you would get the intimation on mobile as SMS or on email. Then you have to log on to bank or bill payment service and pay the premium. Now in the line of the above, Visa card launched unique service – “Visa Card Insurance service”, where you can pay your insurance premium online with Visa Card Insurance service.

What is Visa Card Insurance service?

Pay your insurance premium by Visa Credit and Debit card. Using -

Insurance Company Website
Call center of Insurance Companies
Standing instructions on your Visa Card

How to use Visa Card Insurance service?

Go to Visa Insurance Website -https://www.visabillpay.in/insurance/

Select insurance company for which you wants to pay the premium. Policy Number, Instalment Premium, Name, Bill Due Date and Payment Amount; than enter your Visa credit and debit card no.

Some Important Points

Partial/Late Payments: You cannot make partial payments or payments after due date to this biller. You need to pay the exact Total Amount Due as displayed in your latest bill received from the biller.Your payment is likely to be rejected by the biller if it does not confirm to this requirement
Time for Payments: You are requested to pay your bill at least 3 working days before the due date to ensure timely remittance of monies to the biller and to avoid any service disruption.
Narration: Your total payment will reflect in your card statement with the narration 'VISABILLPAY-Insurance Company Name'.
For Insurance Premiums, the payment amount limit has been enhanced to Rs 50,000 per transaction.

News - Inflation at 10%

noreply@blogger.com (Rahul) — Wed, 17 Mar 2010 06:04:00 +0000

Still investing in PPF, NSC and KVPs, Just check your return. The interest on your income would be 8.5% every half yearly compounded. So net return you are getting is -1.5% with taking inflation into consideration and chances are strong that inflation will go up more than this in future. So take a call and invest some of your savings in MFs or equity.

Why to avoid investing in life insurance - pension plans?

noreply@blogger.com (Rahul) — Tue, 09 Mar 2010 06:51:00 +0000

In my previous post, I have discussed various methods to build retirement corpus. I was just reading a report on a Mutual fund past performance and thought to share it with you all. It made my old belief “Insurance is for life cover, not for investment” true. It is about the Birla Sun Life Tax Relief 96 Fund. If you would have invested Rs. one lakh in Birla Sun life TAX Relief 96 Fund in March 1996, than you would have received Rs. 21 lakhs as dividend in 12 years (Between year 1996 - 2008) & its current value is approximately 4 lakhs; even after recession and market crash. So in total you would have received 25 lakhs. I don’t think, if it is possible in any pension plan of any life insurance company.

How to build retirement corpus?

noreply@blogger.com (Rahul) — Sat, 20 Feb 2010 09:09:00 +0000

Never put all your eggs in one basket. So diversify your investment in three parts - short term, medium term and long term. Pension plans aren't the only way to build a healthy corpus for retirement, notwithstanding the fact that they contain the word 'pension'. In fact, a combination of Public Provident Fund (PPF) and tax-saving mutual funds(ELSS) can work much better in this regard. So today, I take some investment options for retirement -

PPF -

PPF account matures 15 years after the financial year in which the investment was started and can be extended thereafter. When you withdraw the accumulated corpus, it is totally tax-free. The maximum amount that can be invested in PPF every year is limited to Rs 70,000. The remaining can be invested in other investment options.

ELSS -

ELSS come with a lock-in of three years. The main benefit with ELSS is that if the investor sees that his tax-saving mutual fund is not doing well, he can easily switch to another scheme after three years. If you withdraw after three years, it is totally tax free.

Those who are more risk taker can invest more in tax-saving mutual funds and less in PPF.

MFs -

If you have more money left with you after investing 80C’s 1,00,000 limit, than go for mutual funds. The mutual funds are for short term as well as for long term. There is flexibility for investor to opt to switch from one scheme to another without any exit load after 6 months.

Stocks -

Equity is most important investment option, if one wants to create wealth. But at the same time the risk is very high. So always invest in top stocks and that too for long term.

Bank FDs -

Easiest and safest option. Less risk, so less return. But as a to diversify your portfolio, invest some part in FDs. If you invest for 5 years in Bank FD, you would also get tax rebate under section 80C.

Do Pension plans are good for short term?

noreply@blogger.com (Rahul) — Mon, 15 Feb 2010 14:05:00 +0000

Pension plans offered by insurance companies are for long term. It gives you two time tax saving, once when you are investing and second when you are withdrawing the pension fund and buying annuity.

Tax Rebate Structure for pension plans

Earlier, investments into pension plans used to get a maximum deduction of Rs 10,000/- under Sec 80 D. So effectively, we can claim the tax rebate of Rs. 1,00,000 + 10,000 (Old Sec 88 + Sec 80D). Now, all the investments (ULIP, Pension plan, ELSS, PPF, National Savings Certificates etc) up to Rs. 1,00,000/- are exempt under Sec 80 C. So now no separate tax benefit of investing in pension plan.

The Income tax works differently, when investor decides to get out of the plan midway or holds on till maturity. Suppose after few years down the line, your pension plan has not been performing well in comparison with other plans in the market. Than you would think to get out of the plan. But, here is a catch, you have to pay a price.

1- Midway -The insurance company charge a surrender fee. As per the current tax laws, the investor will have to pay tax on the entire amount the insurance company pays him.

2- Part corpus at maturity - As per the current income tax rules, the investor is allowed to withdraw one-third of the corpus tax-free. The remaining money has to be used to buy immediate annuities. This means that the investor will have to buy immediate annuities even when other kinds of investment might give him a greater return.

3- Entire corpus at maturity - The only way out is to surrender the policy. But again, the problem is that on surrendering the policy, the entire corpus will be taxed at the prevailing tax rates.

Returns of immediate annuities

Currently post-tax return on immediate annuities has been lesser compared with other sources of regular income such as the PO Monthly Income Scheme, Senior citizens fixed deposits etc.

So pension plans are for long term and safe investment. If you exit before the term, you would not get much return. So if you are looking for short term in pension fund... please avoid.

Tax Save - Under Sec 80C, 80CCC, 80D

noreply@blogger.com (Rahul) — Tue, 09 Feb 2010 21:33:00 +0000

March 31st is approaching and everyone is investing to save tax. Just wanted to share some points with you on Sec 80C, 80CCC, 80D tax purpose -

Life Insurance premium

Any Premium in excess of 20% of sum assured is not eligible for tax rebate under sec 80C. E.g. You have policy of sum assured Rs. 4,00,000/- and you are paying premium every year Rs. 85,000/-. Than you can claim maximum up to Rs. 80,000/- under section 80C. So invest in life insurance after keeping in mind the above rule.

ULIPs

If you are looking for tax rebate under ULIPs policies, than you must note that you have a lock-in period of 5 years for 80C deduction purposes. So next time if any sales person tell you that just invest for 3 years, get good return and exit after 3 year. Think twice. Taxman will catch you.

Health Insurance Premium

The annual deduction under sec 80D is of Rs. 15,000/- from taxable income for payment of Health Insurance premium for self, spouse, children. For senior citizens, the maximum deduction is Rs. 20,000/-.

Pension Funds

The aggregate deduction under Sec. 80C and the contributions to annuity plans or pension funds under Sec. 80CCC or Sec. 80CCD should not exceed Rs. 1 lakh.

The maximum amount deductible under section 80C is Rs. 1,00,000. Also the total amount of deductions under sections 80C, 80CCC and 80CCD is Rs. 1,00,000.

Surrender value

Surrender value received is taxable in the year of receipt in the hands of the assessee or nominee.

HDFC Systematic Savings Plan (SSP)

noreply@blogger.com (Rahul) — Wed, 03 Feb 2010 13:05:00 +0000

Looking to invest in safe security and good return

1- Medium(24 months) to long term(60 months) assured market related return product,

2- Through Systematic Investment Method,

3- Invest as little as Rs. 2000 per month,

then HDFC Systematic Savings Plan (SSP) is the product for you. SSP would be very attractive as compared to other instalment product available for medium to long tenures, both for investors and distributors.

Product Features:-

Eligibility:

All Resident individuals can open the SSP account. SSP currently available at select centres where ECS facility is available.

Monthly Savings Plan:

SSP is a monthly savings plan where one can save as little as Rs. 2000 per month and accumulate a larger capital for future needs.

Convenience:

SSP provides the convenience of ECS (Debit clearing) facility where the monthly savings amount is automatically transferred from the account-holder's bank account to the SSP account every month on a pre-determined date.

Flexibility:

Depositor has the flexibility to choose any deposit period between 24 and 60 months to plan the future needs.

Accumulation of interest:

Interest will be accrued and credited (net of TDS) on 31st March every year.

More Info- http://hdfc.com/deposits/systematic_savings_plan.asp

Good time for IPOs in 2010

noreply@blogger.com (Rahul) — Sat, 09 Jan 2010 16:53:00 +0000

Should we start investing?

1. DB Corp Limited (listed on 6th Jan'2010); Issue Price - 212

2. Godrej Properties Limited (listed on 5th Jan'2010); Issue Price - 490

3. JSW Energy Limited (listed on 4th Jan'2010); Issue Price - 95

I am still waiting, not investing in IPOs. Might invest in NTPC FPO. So wait and watch for my view on the NTPC FPO.

SEBI fixes lot size for derivative contracts

noreply@blogger.com (Rahul) — Sat, 09 Jan 2010 10:11:00 +0000

SEBI fixes lot size for derivative contracts and it will come into effect from March 31, 2010.

Happy New Year - 2010

noreply@blogger.com (Rahul) — Fri, 01 Jan 2010 18:07:00 +0000

Happy New Year - 2010

Warren Buffet's advice for 2009

noreply@blogger.com (Rahul) — Wed, 04 Feb 2009 08:51:00 +0000

Hard work: All hard work bring a profit, but mere talk leads only to poverty.
Laziness: A sleeping lobster is carried away by the water current.
Earnings: Never depend on a single source of income. [At least make your Investments get you second earning]
Spending: If you buy things you don't need, you'll soon sell things you need.
Savings: Don't save what is left after spending; Spend what is left after saving.
Borrowings: The borrower becomes the lender's slave.
Accounting: It's no use carrying an umbrella, if your shoes are leaking.
Auditing: Beware of little expenses; A small leak can sink a large ship.
Risk-taking: Never test the depth of the river with both feet. [Have an alternate plan ready]
Investment: Don't put all your eggs in one basket.

Why Lehman and Merrill fell ?

noreply@blogger.com (Rahul) — Thu, 18 Sep 2008 10:40:00 +0000

IT all began with the sub-prime crisis. If you lost your money in the market crash of January 2008, here's the route to your loss, in chronological order.
2001-2005: House prices in the US begin to rise rapidly. Banks lend aggressively and create a sub prime industry.
Sub-prime lending refers to lending (at slightly higher interest rates) to people who may not be eligible for a loan under normal circumstances. Maybe they don’t have a regular job or income, or have defaulted in the past.
Banks traditionally did not lend to such people due to high risk of default. But since these loans were mortgaged against property and property prices were rising continuously, banks started doing so. If customers defaulted, they could sell the mortgaged property.
2005: The booming housing market halted abruptly in many parts of the US.
2006: Prices are flat, home sales fall.
February 2007: Sub-prime industry collapses in the US; more than 25 sub-prime lenders declare bankruptcy, announce significant losses, or put themselves up for sale. While they were lending, banks did not factor in the possibility of a fall in property prices. When the Federal Bank (the US equivalent of RBI) started increasing interest rates, the sub-prime borrowers started defaulting and banks started selling off the mortgaged properties. As more and more properties came into the market for selling, the property prices fell.
August 2007: Many leading mortgage lenders in the US filed for bankruptcy
March 2008: Bear Sterns falls.
September 2008: Lehman Brothers file for bankruptcy. Merrill Lynch sells off to Bank of America.
Between 2001 and 2006, the US financial markets had developed a new product – a bond securitised against the mortgages. In simple terms it means that the mortgage banks borrowed money against the mortgages on the condition that they would repay to lenders as soon as they recovered their mortgages. The lenders in this case were financial institutions (like Bear Sterns, Lehman and Merril Lynch) who in turn sold retail bonds to individuals. Sadly, the repayment never happened. And institutions like Bear Sterns, Lehman, Merrill Lynch and AIG were the casualties. Since the mortgages were not honoured, the banks could not repay these financial institutions who in turn could not repay retail investors.
Link -http://wealth.moneycontrol.com/yourstartupkit/budgeting/why-lehman-and-merrill-fell-/10621/0

Nano

noreply@blogger.com (Rahul) — Thu, 11 Sep 2008 09:26:00 +0000

Bhavishya Nirman Bonds

noreply@blogger.com (Rahul) — Wed, 10 Sep 2008 04:55:00 +0000

High Security CRISIL - AAA
High Liquidity Tradable a BSE
High Return 12.18% Simple Post Tax Return
Offer Min Price 8500/- and Return as 12.18%

By NABARD - National Bank for Agriculturae and Rural Development

website - http://www.nabard.org/#

noreply@blogger.com (Rahul) — Thu, 04 Sep 2008 10:52:00 +0000

DDA has come up with around 5010 flats in various parts of Delhi. Allotment will be decided by computerized draw; result would also be available at DDA’s website: http://www.dda.org.in/

How to apply for DDA Flats ?

The application forms along with brochure will be available from the DDA sales counter at Vikas Sadan, almost all branches of AXIS Bank, HDFC Bank, ICICI Bank and IDBI Bank, besides the Vikas Sadan branches of State Bank of India and Central Bank of India. The cost of the application form and brochure is Rs.100. The registration amount under the scheme is Rs.1.5 lac. The Registration amount has to be deposited along with the application form by a banker’s cheque/demand draft and no payment by cheque is acceptable. The applicant can have five preferences for flats of all categories. Applicant has to submit the self-attested copy of PAN and proof of residence. Those who apply under the reserve category would have to submit a certificate to that effect. The allotment to eligible applicants will be made through a computerised draw based on random number techniques. The results of the draw will be displayed on the notice board at Vikas Sadan and would also be available at http://www.dda.org.in/

The earnest money can be financed by banks. Check net charges on earnest by different banks in Delhi.

Net Loan Charges -

SBI - Rs 5050
Central Bank of India - Rs 5680
AXIS - Rs 5678
ICICI BANK - Rs 5900