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RBI policy review key for stock markets this week
HSBC says ready to follow RBI norms
DoT asks CDMA cellular operators to pay one-time spectrum fee
BIZ TALK |
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RBI policy review key for stock markets this week
"It was quite a volatile week for the Indian markets that saw the Sensex dropping most in two weeks before rising again on back of rate cut hopes. The RBI's policy review is likely to decide directions for the markets this week and expect range-bound movement ahead of the policy," said Aditya Trading Solutions founder Vikas Jain. A 25 basis points cut may not surprise the markets, while a 50 bps reduction may infuse a new lease of life into bulls, he added. Experts said the policy review will set the trend for the markets this week. In the case of manufactured goods, inflation moderated to 4.51% in February, compared to 5.82% in the same month previous fiscal making case for easing of the monetary policy by the central bank in its midquarter review on March 19. However, overall inflation increased marginally to 6.84% in February driven by costlier food items and petrol. According to Motilal Oswal AMC senior VP & co-head of equities Taher Badshah, "A 25 basis points cut in repo rates is expected on Tuesday. Overall, strength in global markets led by a strengthening US economy and rising appetite for risk assets and currencies will also likely reflect positively on emerging markets including India." "This week, 5,925 shall be crucial deciding level in near term for Nifty and the index is likely to witness further buying above this level," said Rakesh Goyal, senior vice president, Bonanza Portfolio. The Bombay Stock Exchange 30-stock Sensex slumped by 255.67 points or 1.29 per cent to end the week at 19,427.56.
— PTI |
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HSBC says ready to follow RBI norms
Mumbai, March 17 "We will move whichever way the RBI requires us to do," HSBC India Country Head Naina Lal Kidwai told PTI on the sidelines of an event here, when asked if the bank will be fine with going the subsidiary way. The comments come in the wake of recent reports that RBI had firmed up its mind on the way forward for foreign banks and would be insisting on them to operate as subsidiaries. A formal announcement from the RBI is likely soon as it has already come out with the final guidelines on new private banks. Experts say this will help ring-fence operations here by insulating them from the risks taken by their parents in other home markets or elsewhere. The prospect of an increase in the regulatory gaze and stricter adherence to local laws creates some of the lenders uncomfortable to run as subsidiaries, according to experts. On the taxation front, there are reports that the government has granted a one-time exemption if multinational banks convert their branch offices into local arms.
— PTI |
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DoT asks CDMA cellular operators to pay one-time spectrum fee
New Delhi, March 17 The department of telecom has sent a notice to the CDMA (code division multiple access) operators in which it said they will have to pay one time spectrum charges for excess spectrum held by the incumbent cellular service providers. "For CDMA spectrum holding above 2.5 Mhz in 800 Mhz band, the rate for one-time spectrum charges shall be applicable from January 1, 2013," DoT said. It added the charges will be levied on additional spectrum for the rest of the licence period and operators not willing to pay these charges will be allowed to surrender their spectrum held over 2.5 megahertz. |
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BIZ TALK
Q: What is the current operational scenario and loan book of the company? The vision for us is to build comprehensive financial services play, in a very methodical and structured manner and expand the range of products and services that we offer. The loan book for the last quarter has shown a very healthy growth on a year on year basis. On a year-on-year basis we have grown by 24% to Rs 18,000 crore. Our current net worth is Rs 2,300 crore. Q: What is the the company’s diversification strategy? The idea is to be present across the chain in terms of customer needs and become a comprehensive player. We identify gaps & decide to grow either organically or inorganically. We rely on inorganic growth primarily to acquire scale & skills in terms of systems & knowhow. Acquisition of Indo-Pacific helped us in acquiring scale whereas acquisition of Family Credit helped in acquiring skill sets. Q: What are your views on the capital requirement and provisioning norms to be followed by NBFCs? Tier 1 capital norms will not affect us as we are adequately capitalized with capital adequacy ratio of above 15%, most of it being Tier 1. However, NBFCs don’t have the advantage of full range of risk weightage that bank enjoys. The risk weightage for NBFCs is 100% whereas banks enjoy risk weightage as low as 20% on some of its assets. The RBI should lower risk weightage in productive & low risk assets for NBFCs. Although we welcome the provisioning norms as it will bring equality in the industry however, we believe they need to be reconsidered. Q: How does the company focus on quality assets and maintain returns and profitability? This is a three-pronged process which includes credit appraisal systems for evaluation of loan proposals, strong analytics team to constantly monitor portfolio & improve quality of sourcing and collection and strong asset management system to reposes asset and close the account with minimum losses. Q: What are the plans for entry into rural markets? We are strongly present in rural areas for tractors, harvesters and for last mile connectivity, i.e., small commercial vehicles. Tractors & mall commercial vehicles contribute 35% of the total retail book. Q: What are the plans for the firm’s recent acquisitions? We plan to derive synergy out of the two acquisitions. We want to be present across the chain in terms of customer needs. Housing finance is an industry which has grown steadily and currently NPAs are also low. Similarly, we decided on two wheeler loans. In both, we decided to grow inorganically primarily to get system and people who already have the knowhow of these segments, which are relatively different from what we were doing till now. We want to be a significant player in these spaces. With Indo Pacific (already renamed to L&T Housing Finance), we will be looking at developing relationship with builders & tap our wide network of existing clients. Family Credit is already value accruing because of the price at which we bought. Further, we are looking at branch rationalization as many branches of Family Credit overlaps with L&T Finance. |
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personal finance
Life insurance is a long-term contract typically ranging from five years to may be 15-20 years, or even longer, at times. During the course of this long policy tenure, you may need to get in touch with your insurer for various purposes like updating details about significant changes in your life, making a fund switch or any other query on the product. Even though several insurers offer the option of online portals that enable you to view or update your details as and when required, there may be moments when you have a concern or query requiring direct contact with your insurer. Common issues with customers
On the basis of our experience of over ten years in the market, listed below are some of the most common issues customers face. Policy document hasn't been received
Once you have paid the first premium and signed the proposal form, it should take an average of 2-4 weeks for you to receive the policy bond or hard copy of the policy. In case you have not received the policy within this period, check with your insurer where the issue is. It could be that the policy has reached a wrong address or has been returned to the company since the courier company could not reach you at the mentioned address. It is important that you have a physical copy of the policy, as proof of your association with the insurer, while filing a claim. Policy doesn't meet financial requirement
Once you have received the policy, it is important that you review the document and the terms and conditions immediately. In case you find a discrepancy with any of the conditions as explained by your agent/IMD, or realize that this policy may not meet the financial requirement for which it was bought initially, you can return the policy. Insurers provide a free-look period, which is a window of 15 days after receiving the policy, during which it can be returned and the premium would be refunded. Printing of incorrect contact details
One of the most common issues that you could face is that of wrong contact information being printed on the policy document. This could be anything from a misspelled name, address, or an incorrect contact number. Such details are important aspects of the policy document, as they are taken into consideration at the time of making a claim by verifying the details on the policy with your identification/address proofs. One way to ensure that your contact information is printed correctly is to fill in the proposal form yourself, rather than relying on your agent/IMD. Claims related issues
Since life insurance claims are usually made at a traumatic time in one's life, all insurers strive to make this process as smooth as possible. However, there may be instances where you face certain problems along the way. This could vary from queries on the claim intimation process, documents required for a claim submission, or the claim amount payable. In case your claim has not been settled within the mentioned timeline, or has been rejected, you could make a complaint to the insurer. Renewal queries
Another common query that may arise is those related to renewal of your policy. These queries would normally include questions such as when is the policy due for renewal, how much is the renewal premium going to be and what are the modes of payment that can be used? Getting in touch directly with your insurer through their call center or nearest branch office is the best way to get an accurate answer to all such questions. Fund switching
As a customer of a unit-linked plan, you may wish to modify the apportionment of the selected funds available in the plan to safeguard yourself from market volatilities. Most insurers offer online portals which allow you to make fund switches on your own free of cost, and also provide NAV and other fund based information on the website. In case you do not have a login ID for the online portal, you can get in touch with your insurer to provide you one. In addition to this, you may also need to make fund value related enquiries or get an account statement. For all such documents, it is essential that you get in touch with your insurer, as they will be able to provide you with all such details. What you can do
These days, most companies offer their customers an efficient solution to get in touch with them, in case of any complaint or query. These solutions usually include self help portals, call centers, and official websites. However, in case of further assistance, there are other options that you could choose from.
The author is head of the customer
focus unit at Bajaj Allianz Life Insurance Co. The views expressed in this
article are his own |
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MF dividend option doesn't make sense
Normally dividend is declared when there is good appreciation in net asset value due to better performance by a scheme compared to the benchmark. But, in practice it is misused to garner new business, which is what is happening at present. Most people do not understand this sales pitch and are lured to invest in a mutual fund without understanding the risks involved in the scheme. What exactly happens if dividend is declared can be understood by an example. Suppose equity fund scheme 'X' has a NAV of Rs 20 in growth option as well in dividend option. The scheme was launched at a face value of Rs 10 a few years back. Suppose the fund house today decides to declare Rs 2 as dividend in the dividend option and you opt to invest Rs 10,000 looking at an attractive 10% dividend income, which most of the lay investors do without understanding the impact and implications on your investment. In reality what happens is the scheme’s NAV under the dividend option comes down by the amount of dividend declared (in this case by Rs. 2) whereas NAV of growth remains the same. In above case after the ex-dividend NAV of growth option in "X" fund will remain the same at Rs 20 but NAV under the dividend option will come down to Rs 18 as Rs 2 is paid back to you by way of dividend. Most lay investors think they have made profit of 10% in just one week and feel happy about their investment decision but this is not true as is apparent from the above example. In effect it is you money only which is paid back to you thus is not income but your net investment in the fund come down from Rs 10,000 to Rs 9,000 According to me, dividend option does not make any sense in both equity and debt. Let us understand the implications for both separately. First if you want regular income periodically than equity is not the correct asset class to invest. Equity investment comes under high-risk high return category. You should invest in equity after understanding the risk involved in it. You must invest in equity only if your time horizon is long term, say five years or more, so that you get better inflation-adjusted returns. So if you want to take the advantage of India's GDP growth you should stay invested in equity for longer period of time. Dividend option reduces your investment in equity so is not advisable. If you review your portfolio periodically and rebalance your equity proportion as per your asset allocation, there is no need of dividend option in equity. It is not timing the market but time spent in the market is more important. On the other hand, you should know that there is a dividend distribution tax in debt mutual fund schemes, which reduces your overall return. The DDT is 28.325% including surcharge and education cess with effect from June 1, 2013 in all debt funds. In the FY2014 budget, DDT in debt funds was raised from 12.5% to 25%. I think this is a right move by the finance minister to plug the loophole available to big investors falling in the 30% tax break bracket. If you opt for dividend option in debt funds you are already taxed at a higher bracket whether you fall in that slab or not. So even in debt funds the dividend option does not make sense. In conclusion, making a new investment in mutual funds on the basis of the dividend declared is not at all a good idea. You should take an informed decision before investing in mutual fund schemes. You should consult a professional if you want a regular flow of income every month or periodically. Each of your investments should be made according to your future needs and goals. Investing for short term gain without understanding the long-term impact may hit you badly. The author is head of financial planning at Apnapaisa.com. The views expressed in this article are his own |
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Mumbai, March 17
L&T Finance Ltd, a subsidiary of L&T Finance Holdings is a nonbanking financial company offering a spectrum of financial products and services for trade, industry and agriculture. The company's focus segments are corporate products, construction equipment, CVs and tractors. In an interview to
Sanjeev Sharma, Dinanath Dubhashi, CEO of L&T Finance, talks about the recent acquisitions, the need to relook at the capital requirements for NBFCs and the strategy for becoming a comprehensive financial services play.
Mutual fund houses are aggressively marketing dividend payouts to increase their assets under management. You might have also come across this in the last few days through mobile text messages or emails. Even mutual fund distributors might have contacted you to take advantage of taxfree dividends declared by fund houses.