Govt to Increase its stake in Union Bank of India upto 58 per cent

State-owned Union Bank of India today said it is expecting Rs 1,150 crore capital infusion from the government by March 2011, which will increase the Centre's stake to 58 per cent.Currently, the government holds 55.43 per cent stake in Union Bank of India."We hope to get the second tranche of Rs 1,150 crore capital infusion by March. This will help us to increase our tier I capital to 8.37 per cent from the current 7.9 per cent.The infusion will raise the government's state in the bank to 58 per cent.The Cabinet has already approved the capitalisation plan of the Union Bank, which received Rs 111 crore about four months back as first tranche.The bank was expecting a deposit growth of 20 per cent and credit growth of 23-24 per cent during the current fiscal.arlier this week Union Bank of India raised its base rate to nine per cent.

Banks are not in favour of the proposal to allow the entry of industrial houses into private sector banking.

Banks are not in favour of the proposal to allow the entry of industrial houses into private sector banking.This is due to the “unsavory past experience in India and abroad and the large capital buffer that would be available to the banks sponsored by industrial/business houses that would create an uneven playing field with the existing banks”, the Reserve Bank of India said on Thursday. However, the federations and associations of industry as well as the NBFC and microfinance institutions were generally in favour of permitting industrial/ business houses to promote new banks.
Releasing the comments received by the RBI on allowing new private banks, the apex bank said, “experience of other countries shows that combining banking and commerce implies there would be a lot of connected lending. India does not have enough experience in supervising in a scenario when banks are owned by diversified corporates, and allowing such ownership could have serious potential disasters.”
Another suggestion received by the RBI said, “industrial houses have the entrepreneurial and managerial talent in running asset management companies, mutual funds and insurance companies and have successfully penetrated into rural India, as such, their talent could be gainfully harnessed in the banking sector”
“If industrial/ business houses are permitted to promote banks, they should not be allowed to have their own banking operations through the bank they have promoted. Banks promoted by industrial houses should be issued only a retail banking license for first 5 years. Subsequently, commercial banking should be allowed with restrictions on annual credit lines, extensive reporting requirements relating to large credits, etc,” said another suggestion.

fund is low for indian banking system

Year 2010 is proving to be a year of fund crunch for the Indian banking system.If use of Reserve Bank of India's overnight funding window is an indicator of things, Monday saw banks use the repo route to raise a record Rs 1.59 lakh crore.The high repo borrowings were despite the central bank announcing measures to inject Rs 48,000 crore into the system last Thursday.While the cash position might be tight, bankers are not losing sleep yet. Probably, reflecting the sentiment, interest rate in the call money market -- which is an overnight market used by banks to lend or borrow from other banks -- reached a high of 7%.

RBI's move to lower the minimum holding level of government securities, referred to as the statutory liquidity ratio , has provided some comfort to the market. Compared to the new floor of 24%, banks have significantly higher surplus holdings of government securities.Bankers had factored in additional tightness in the market and expect it to continue till the end of the month when the government pays salaries and pension and government departments step up spending.Apart from RBI's actions last week, the government, which is sitting on a cash pile of over Rs 1 lakh crore said it had lowered its market borrowing to Rs 6,000 crore this week, from the earlier scheduled Rs 11,000 crore, to ensure that adequate amount of cash was available in the system. Last week, RBI had announced that it would purchase bonds to the tune of Rs 48,000 crore over the next one month.The steps from the central bank and government come in the backdrop of cash being drained out of the system as companies paid taxes for the third quarter on December 15.Though advance tax might be the trigger this time, liquidity has remained under strain ever since companies paid over Rs 1 lakh crore in July for use of spectrum, or radio waves, to offer third generation mobile telephony and broadband services.With growth in bank deposits failing to keep pace with the flow of loans, the pressure has only intensified to make the cash position in 2010 tighter than 2008, the year the financial crisis hit the world.

Life insurence industry made loss in 2009-10

life insurance industry in the country made a total loss of Rs 988.82 crore in the financial year 2009-10, according to the latest annual report of Irda. But the more pertinent point is that the industry has reduced its loss by a whopping 80 per cent from net loss of Rs 4,883 crore in 2008-09.

During 2009-10 is that among 23 private sector companies — the only public sector company is Life Insurance Corporation , 8 companies have reported positive bottom line against 4 in the previous financial year.

Significant improvement in profitability was revealed by some of the companies. Of course, LIC has highest profit of Rs 1060.72 crore in 2009-10, jump of 11 per cent. Among private players ICICI Prudential has turned around with net profit of Rs 258 crore, Bajaj Alianz with Rs 542 crore and SBI Life Rs 276 crore.

Reducing losses by life insurance companies is big news because it is an industry where breakeven takes between 7 to 10 years and companies which are becoming profitable started about 10 years ago when the government opened up insurance for the private sector. Apart from long turnaround time, life insurance is also a cash-hungry business as private sector companies have already coughed up Rs 21,014 crore towards share capital till the end of 2009-10.

Bharti AXA Life launches Aajeevan Anand

private sector insurance company Bharti AXA Life Insurance today launched Aajeevan Anand plan that provides guaranteed regular payouts after every 5 years and life cover until the age of 100 years.

"Aajeevan Anand is a powerful financial solution that provides guaranteed regular payouts to meet various life stage needs until the age of 100," Bharti AXA Life Chief Marketing and Operations Officer (CMOO) Mark Meehan said.

In addition to these lifelong paybacks, the product provides customers with life cover and hence is an ideal savings cum protection plan, he said.

This whole life plan is apt for salaried people since all premium payments are made in the first 10-15 years of the policy, he added.

The nominee of the policy holder would get sum assured in case of death during the policy period which is 100 years.

Bharti AXA Life is 74:26 joint venture between Bharti Enterprises and AXA of France.

Mobile banking is poised to grow rapidly in India.

ATM and internet banking have been around in India for a while. While both modes have had some success, penetration and use levels have been moderate.

While ATMs offer convenience, they pose a perceived security threat in India given instances of mugging around them. Senior citizens and women appear reluctant to use ATMs if they have a choice to go to a branch and withdraw money in safety. The security situation in India shows little sign of improvement and therefore a large scale proliferation of ATMs will remain a challenge. Internet banking, on the other hand, relies on PC and internet penetration. Estimates suggest that there are approx 40 million internet users which is expected to rise to 100 million soon – despite this growth, penetration and use levels remain low, especially in non-metro areas. Research also suggests that internet banking is picking up amongst the target user group.

While internet penetration and use in India is relatively low, mobile phone penetration is much higher and growing rapidly. There are over 200 million mobile phone subscribers in India and the number continues to explode. Financial services companies are now working with mobile payment players like mChek to offer innovative mobile phone solutions to urban and rural Indian population. Reserve Bank of India has restrictions on non-bank involvement in money transfer. Therefore, development of mobile financial services applications is being sponsored primarily by banks in India.

Economic Times reports that Citigroup has tested a proposition which allows brokerage to respond to margin calls or enhance credit limits, by authorising transactions over the mobile phone. Once the customer and broker sign up for the application, the process is carried out by PIN validations. A one-time PIN is generated for each transaction, which is verified by the customer, after which the bank validates the transaction and sends it to the broker. Once the transaction is completed, the customer is intimated on his mobile phone again. Citi and mChek are also exploring the possibility of a similar offer for mutual funds. They have also launched a mobile application which enables farmers to receive money for sale of produce through their mobile phones. These payments take the form of ‘intent to pay’ information that can be cashed at partner banks.

The paper also reports that Visa recently announced the launch of its Visa Money Transfer on Mobile service, which will enable money transfer via the mobile phone. Initially, this service will be a pilot program available to Visa cardholders of Corporation Bank, HDFC Bank and ICICI Bank. The recipient can be a Visa cardholder of any bank in India and the money can be transferred to his/her mobile phone or Visa card.

Mobile banking has the potential to bring a whole host of people that have no/little access to land lines/internet connections onto the electronic platform – an innovative way to generate financial inclusion. To do so successfully will require customer training, technology stabilization and managing carefully the ‘know your customer’ issues.

India having the most versatile Insurance industry

India has registered a tremendous economic growth over the last decade and the insurance sector has grown with it.

India boasts one of the most versatile insurance industries in the world going by the number of insurance policies on offer and continues to portray huge potential.

Today, according to market survey, the insurance sector in India together with the banking industry contribute about a sizeable seven percent of the country’s gross domestic product not to mention that the government owned Life Insurance Corporation (LIC) has access to funds equaling eight percent of the country’s GDP.

Valuated at $10 billion, the insurance industry in India received major encouragement when in 1999 the government of India put an end to its monopoly on the sector by passing the Insurance Regulatory and Development Authority (IRDA) Bill which did away with all barriers on the entry of private investors besides allowing for foreign investors to come on board with however some limits on direct ownership.

Foreign investors are allowed up to twenty six percent ownership in any insurance company although there is a bill pending that seeks to have this figure increased to forty nine percent.

This however has not slowed down the amount of foreign investment since government records show that in that decade the sector has benefited from an injection of up to $193 million dollars while witnessing the inception of twenty seven new insurance companies. The economy in India has gained from this.

The sector derives its success from the fact that most Indian citizens view life insurance as a way to pay less tax and with innovative insurance products and aggression from the competing insurance companies the sector continues to register new clients at an impressive rate. It is no wonder that most state banks in India include insurance services among their products.

The insurance sector can largely be divided into two sub sectors namely life insurance and the non life insurance. The LIC continues to dominate the life insurance sector and has been recording average annual growths ranging at about thirty five percent although the non life insurance sector is doing much better with growths of more than a hundred percent in the same breath over the last few years.

The huge potential for the sector is mainly underlined by the fact that only about a fifth of India’s insurable population has life insurance cover which presents huge avenues for growth in the near future.

india's Q2 gdp

India's economy grew a faster-than-expected 8.9 percent in the September quarter from a year earlier, government data released on Tuesday showed. The economy grew at 8.8% during the previous quarter.

Q2 mining output was at 8% whereas energy output was at 3.4%.

The growth estimates got a leg up as the industrial sectors, which account for approximately 20% of the overall GDP, got a boost in the second quarter due to the lower inflation numbers under the new series.

Lower inflation numbers gave a statistical boost to industrial growth estimates and national income numbers, compared with those estimated using the old series.

Rupa Rege Nitsure, Chief Economist, Bank of Baroda , said: "This indeed is a very strong reading despite the fact that we had seen some easing of industrial production in the second quarter. With this reading, achieving a 8.5 percent for full year growth target is not going to be difficult. From a market perspective, this means that India will attract more capital inflows and it will put upward pressure on the rupee."

"From the central bank perspective, this data will enable them to concentrate on inflation management. I expect the Reserve Bank of India to continue caliberating monetary policy. I expect another 25 basis points increase in both repo and reverve repo rates in the December policy and depending on the intensity of capital flows that the country attracts, there is a strong possibility of a CRR (cash reserve ratio) hike in the fourth quarter," added Nitsure.

Annual headline inflation eased to 8.58 percent in October from a year earlier, lowest in last 10 months. Asia's third-largest economy is expected to grow 8.5 percent in the current fiscal to March 2011.

The economy, which had grown more than an annual 8 per cent in the last two quarters, has been riding on robust manufacturing activity and the outlook for farm output has brightened following good monsoon rains.

The central bank's next monetary policy review is on Dec. 16. Analysts polled by Reuters expect the RBI to raise rates by an additional 25 basis points by the end of the fiscal year that ends in March.


India's economy grew a faster-than-expected 8.9 percent in the September quarter from a year earlier, government data released on Tuesday showed. The economy grew at 8.8% during the previous quarter.

Q2 mining output was at 8% whereas energy output was at 3.4%.

The growth estimates got a leg up as the industrial sectors, which account for approximately 20% of the overall GDP, got a boost in the second quarter due to the lower inflation numbers under the new series.

Lower inflation numbers gave a statistical boost to industrial growth estimates and national income numbers, compared with those estimated using the old series.

Rupa Rege Nitsure, Chief Economist, Bank of Baroda , said: "This indeed is a very strong reading despite the fact that we had seen some easing of industrial production in the second quarter. With this reading, achieving a 8.5 percent for full year growth target is not going to be difficult. From a market perspective, this means that India will attract more capital inflows and it will put upward pressure on the rupee."

"From the central bank perspective, this data will enable them to concentrate on inflation management. I expect the Reserve Bank of India to continue caliberating monetary policy. I expect another 25 basis points increase in both repo and reverve repo rates in the December policy and depending on the intensity of capital flows that the country attracts, there is a strong possibility of a CRR (cash reserve ratio) hike in the fourth quarter," added Nitsure.

Annual headline inflation eased to 8.58 percent in October from a year earlier, lowest in last 10 months. Asia's third-largest economy is expected to grow 8.5 percent in the current fiscal to March 2011.

The economy, which had grown more than an annual 8 per cent in the last two quarters, has been riding on robust manufacturing activity and the outlook for farm output has brightened following good monsoon rains.

The central bank's next monetary policy review is on Dec. 16. Analysts polled by Reuters expect the RBI to raise rates by an additional 25 basis points by the end of the fiscal year that ends in March.

New number for taxpayers for tax filing

The unique Document identification number (DIN), on the lines of numbers like PAN and TAN, will be quoted on "every" income tax-related communication, including returns to be filed next year for the financial year 2010-11. Taxpayers will now have to procure a 'new number' for filing returns and making any communication with the Income Tax department.

According to the new guidelines brought out by the Central Board of Direct Taxes (CBDT), the DIN will be mandatory "in respect of every notice, order, letter or any correspondence" with the department, by the taxpayers.

"The DIN will be generated by the I-T department and will be useful, essentially, for error-free filing of tax returns, claiming refunds and other communication with the department by the assesses," a senior Finance Ministry official said.

The 'Aykar Sampark Kendras' will hand out the DIN from this month, the official said.

Assesses will not be put to any trouble, as the numbers will be generated and allotted by the department itself.

I-T officials will also be allotted the numbers in order to streamline the process, the official said, adding, the number has to be produced thereon for every activity with the department. Taxpayers and tax collectors are currently required to quote Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) among others when returns are filed with the department.

According to section 282B of the Income Tax Act that deals with DIN, if the document sent to the tax authority does not bear this unique computer-generated number then "such document, letter or any correspondence shall be treated as invalid and shall be deemed never to have been received."

DIN is aimed at bringing more transparency in tax administration as the whole exercise involves a number of documents and proformas. Apart from regular filing of taxes, a taxpayer deals with the department for various other financial services, which DIN will help to ease, the official said.

SEBI - Mutual Funds To Ensure Quality Of Debt Papers

SEBI has asked the concerned MFs to disclose in the offer documents how they would protect the investors money in these schemes, sources said, but refused to identify these fund houses.

Future offers would also have to abide by this SEBI directive, the sources said. Sources said the market regulator wants the fund houses to invest in debt papers which have got high grades from rating agencies.

This is to maximise returns of the fund from fixed- income instruments.Equity investment is done by MFs to increase the capital base of the fund.Sebi wanted to ensure that the capital of the investor is protected and that the fund house does not give negative returns.

"Sebi wanted to introduce a stringent capital guarantee provision for such schemes of MFs. They want to ensure that even if the fund house is not able to give positive returns, the money invested should be back," Value Research CEO Dhirendra Kumar said.

Currently new fund offers of two fund houses-- JP Morgan Asset Management and Sundaram-- are open for subscription. Investors to these schemes seek returns and minimise risk of capital loss by investing in a portfolio of fixed income securities.

Diversification of portfolios between fixed income and equities spreads risk across various asset classes and if an investor stays invested for longer term the risk arising out of volatility in the market is reduced, said a fund manager at a mutual fund.

Demat account shortage may take toll on FPOs

New listing guidelines may have set the stage for a rash of companies coming to the market, but an acute shortage of demat accounts threatens to stifle the participation of retail investors in the public issues, a key objective of the exercise.

Companies will have to dilute promoter stakes estimated to be worth Rs 65,000 crore, with 35% of the amount kept aside for retail investors, to comply with market regulator Sebi’s minimum public holding rules. But analysts say that looks unlikely because data from stock depositaries CDSL and NSDL show that there are just 4 million active demat accounts.

The number of demat accounts is not enough to absorb such a flurry of issues. The retail portion translates to Rs 23,000 crore, or Rs 52,500 an investor, (which is) virtually an unviable proposition.

An Edelweiss Securities report says 156 Indian firms will have to shed shares worth Rs 150,000 crore in five years to adhere to the new listing norms under which every company’s public float must be at least 25%. Of this, issues worth Rs 61,500 crore are due to be divested before March 2011.

But the contribution of retail investors in these followon public offers is expected to be low. On an average, only about 2 lakh new demat accounts are added in the country every month. Contrast this with nearly 100 times more mobile connections added a month.

In a country where 20 million mobile subscribers are added every month, the cumulative demat account is just 17 million with only 24% of them active. This means investors are still wary of making fresh investments in the stock market.

The dearth of demat accounts comes at a time when the poor response of retail investors in big FPOs such as NTPC and NMDC is still fresh in mind.

Yet, the issues are in no danger of flopping because help is at hand from foreign investors and retail portion will be insignificant , said an investment banker with a foreign firm. While Indians are turning out to be good consumers, they are not yet shaping up as good investors. Most people still treat the stock market as a place of gambling and casinos.

Govt looking to rejig subsidies

The government is looking to rejig its subsidy mechanism with a view to achieving a high growth rate on a sustainable basis while bringing down the fiscal deficit, Cabinet Secretary K.M. Chandrasekhar said on Tuesday at a Confederation of Indian Industry (CII) function that they are looking at subsidies, how the subsidy system can be re-jigged to ensure it reaches the poorest of the poor on one hand, and at the same time it incentivises production.

The economy is set to register a growth rate of 8.5 per cent in the current fiscal, he said, adding, a good monsoon would help in easing prices and the double-digit inflation would ease in the next few months.

With a good monsoon and good crop, inflation will certainly fall. Experts are saying that inflation will be 5-6 per cent by year end, So there is no reason to disbelieve it.

He said though the Reserve Bank of India could take further monetary steps to address the issue, no measure on the fiscal side is likely to be taken and tax and financial sector reforms would be critical in achieving a double-digit growth.

Chandrasekhar has also said that the fiscal deficit could drop below the budget estimate of 5.5 per cent because of high non-tax revenue receipts.

Bank deposit growth slackens

Apart from the developments in the Euro zone, which continue to cast a shadow over the stock market, there could be trouble from the liquidity situation, in the face of retail banking deposit growth slowing and lending picking up.

The aggregate deposit growth rate has slowed from 20.4 per cent in December 2008 to 18 per cent in December 2009. During the same period, the growth rate of gross bank credit increased significantly from 15.9 per cent to 18.3 per cent.

Deposit rates

Banks will have to take a view on hiking their deposit rates in the near-term. With inflation on the higher side, a negative yield on deposits is not something the depositor is going to take for long. This will impact credit growth in the future and with the Reserve Bank of India hiking repo and reverse repo rates by 25 basis points, liquidity is bound to become slightly tighter.

Banks are waiting for stronger signs of credit off-take before focusing on raising deposits or interest rates, said Mr Suman Chowdhury, Head, Crisil Ratings.

Other segments

Barring infrastructure, telecom and real estate, the credit appetite from other segments is sluggish. This could prove a dampener for banks to immediately raise the deposit rates as they would be saddled with liquidity. The lower growth rate in deposits is indicative of the perception about lower returns as well as the availability of alternative avenues for investment.

Bankers feel the runaway inflation has eaten into the surplus in the hands of the common man, which is reflected in banks' deposit accretion. Apart from this, high networth individuals appear to be looking for better returns and opting for investment in real estate and gold ETFs. In the last one year, gold ETFs have logged 114-per-cent growth.

Market experts say the NCDs issued by Shriram Transport and L&T received a good response from retail bankers. Monthly income plans of mutual funds too are in favour. As for institutional investors, they are pouring money into debt funds.

Trade deficit

Another worry for the economy could be the steadily rising trade deficit. The economy will be back on track only if imports are handled well. Exports need to grow at a much faster pace than the existing 35 per cent. Bank deposit growth slackens

Home loan firms may see new lending rate norms

After banks, it’s the turn of housing finance companies to have a more transparent regime for pricing of loans. The National Housing Bank (NHB), the regulator for these companies, is working on a system that is similar to the base rate regime introduced for banks recently.

The base rate, substitute for the earlier benchmark prime lending rate (BPLR) for banks, was introduced from July 1. The country’s largest lender, State Bank of India, fixed its base rate at 7.5%. The rate for most banks is in the range of 7.25-8%.

Housing Development Finance Corporation and LIC Housing Finance are two major players in the home loan market. Since they come in the non-banking financial institution category, they were excluded from the base rate system.

Analysts said introduction of a base rate was likely to put pressure on housing finance companies because of the transparency it would bring. There are expectations that market forces might put pressure on them to make rates more transparent.

Housing finance firms would be under a lot of pressure to come up with a more transparent mechanism. The floating rate of interest will have to be based on certain parameters that will move in both directions. It cannot remain sticky for too long any more.

The main problem for these companies in moving to such a system is their cost of funds. While banks depend on a more stable system, of deposits from their consumers, home loan companies have to borrow from banks and other sources. Home loan companies are more heterogeneous than banks. Their cost of funds, therefore, is quite different.

These companies are one of the largest borrowers from banks. Also, the pricing of bonds they issue are dependent on market conditions. As a result, they are more impacted by liquidity conditions.

There are also fears that any transparent rate, which is a function of cost of funds, will be highly volatile in nature. For, while their costing can vary widely, the assets they provide are for the long term. There could be a pricing mismatch.

In addition, since banks cannot lend below their base rate in the new regime, there are fears that if the rate is on the higher side, the cost of funds for housing finance firms will go up substantially. This, in turn, will impact their lending rate.

India ready for bank tax at G-20

With the G-20 leaders agreeing that any such levy should be left to individual nations, India's stand against any tax on banks for funding bailouts was vindicated. This was its latest trends in Banking.

Though the financial sector should make a fair and substantial contribution towards paying for any bailouts, policy should take into account each nation's circumstances and options.

In their Toronto declaration, the G-20 leaders, including Prime Minister Manmohan Singh, US President Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy, decided that while the financial sector should make a contribution to prevent a breakdown, the policy approach should differ from country to country.

To protect tax payers: reduce risk from financial system... take into account individual countries' circumstances and options and help promote a level playing field.

While countries like Britain, which has already levied a tax, France and Germany campaigned for such a tax, India has reservations.It pointed out that its trends in banking were conservative by nature and followed healthy norms that prevented any crisis in the country in 2008. India has been in favor of strong financial regulations, rather than imposing a levy on the banks.

All waiting for financial deals between Kotak Mahindra alliance

Japan's Sumitomo Mitsui Financial Group (8316.T) will consider launching retail banking operations in China, Thailand and India through tie-ups with local partners as it seeks to expand in Asia, its president said.

It would be time-consuming to start retail banking operations from scratch on our own. It would be more efficient and effective to enter by tying up with local banks, either through equity stakes or not.

On Wednesday, SMFG's core banking unit, Sumitomo Mitsui Banking Corp, announced that it had agreed to buy a 4.5 percent stake in Indian lender Kotak Mahindra Bank (KTKM.BO) for $296 million.

India has high growth potential and we have determined we need to make a deeper commitment in the market. So far, SMFG and rival Japanese banks' overseas operations have mostly catered to Japanese companies doing business abroad, but they are now trying to reach out to local customers by tying up with local banks.

Portfolio managers hike charges for beating lower returns

Stock brokers have few equals in ingenuity. Even as inflows into their highly-profitable portfolio management service (PMS) schemes have been declining, most large stock broking firms have managed to sustain margins by arbitrarily changing the rules of the game.

Many clients having subscribed to PMS schemes have earned below par returns on their investments in the past few quarters, as stock brokers introduced new charges.

The fee for portfolio management service is higher than plain-vanilla broking transactions, as brokers claim they are giving customised services to their clients.

There is an upfront fee, which the PMS provider partly passes on to the distributor who brings in the business. In addition, the broking firm charges a management fee, performance-linked fee and an exit load if the client withdraws his money before a specified period.

Many broking houses have now introduced charges like allocation fees, custodian fees, incidental charges and also raised brokerage rates and the upfront fee.

Hear the Eko of mobile banking

It was a chance meeting with former president of India APJ Abdul Kalam at Delhi Airport in 2001 that changed Abhishek Sinha’s life forever.

Kalam, who was then a scientific adviser to the government and a recipient of Bharat Ratna, told Sinha that youngsters like him should start something of their own and create wealth not only for themselves but society at large.

Such was the impact of those words that a year later Sinha put his papers in then Satyam Computers to co-start Six DEE Telecom Solutions, a telecom value-added services firm. Though he sold his share in the venture in 2007 due to strategic differences with the partner, a social entrepreneur was born by then.

And along with his brother, Abhinav, he founded Eko Financial Services. The objective being to make banking easy and reachable to the poor people.

This was the time when we as a country were going through a telecom revolution. Even the poorest of the poor has started owning and understanding a mobile banking via phone and our whole idea revolved around promoting it as a financial identity for them.

Today, three years down the line, over 70,000 people in Delhi NCR, Bihar and Jharkhand have opened a no-frills bank account with the help of Eko Financial Services and almost 2,000 people transact currency amounting to Rs 20 lakh on a daily basis using their mobile commerce channel.

Their partners in this venture have been next-door kirana stores, chemists and other such retailers who act as mini bankers or customer service points (CSPs) in the ecosystem. They help accountholders deposit, withdraw and transfer money by punching numbers on mobile phones.

The startup has over 500 CSPs and the total value of transactions exceeds Rs 20 crore. But the journey has been far from smooth. Despite the low-cost financial inclusion model winning TiE-Canaan Entrepreneurial Challenge, a national-level business plan competition in 2006, funding remained a challenge.

We were just not able to raise money. Whatever money my brother and I got from our exit from Six DEE Telecom Solutions soon started drying up.

Though the tale was short-lived. On February 25, the project started and on February 24 the news came of the merger of CBP with the HDFC Bank. By June, the company had to squander its 2,000 accountholders. “We were left like orphans,” he remembers. Our core team of 10-12 people still exists. They never disbelieved the prospects.

The fact that Eko team has nobody from the retail banking experience makes it more unique. The graduate from Birla Institute of Technology, Mesra says the toughest part has been to convince bankers of the SMS-based banking.

In November 2008, American business magnate Bill Gates visited one of Eko’s CSP that offered the much needed visibility. This was a time when Eko found the going really hard as they struggled to pay salaries to their staff and raised money from friends and relatives. Eko now plans to partner 8,000 outlets, targeting to reach a million customers by year end.

Though Eko has started echoing in the market, Sinha says people’s first reaction when they get introduced to SMS-based banking at a mom and pop store is—if it’s a truth or a fraud? Our dream now is to see bank accounts being as popular product categories as pulses or mobile banking via phone recharge coupons are at retail shops

The Govt has cleared 450-cr WB loan proposal for microfinance

Today, the Government has approved a proposal to draw a loan of USD 100 million (about Rs 450 crore) from the World Bank to promote microfinance in the country.

The Cabinet Committee on Economic Affairs (CCEA) cleared the proposal for on-lending to the Small Industries Development Bank of India (SIDBI), which -- in turn -- would disburse the funds to the microfinance sector.

The fund will be used to promote responsible and balanced growth of microfinance outreach, particularly in under-served areas where micro finance penetration is low, thereby serving the larger objective of promoting financial inclusion.

The decision is expected to help broad-base credit disbursals.

Growth in the microfinance sector has been very high in the last few years, with some of the institutions registering 100 per cent year-on-year growth.

Home loan rates may rise

It seems that home loan rates can rise as the base rate regime will come into effect from July 1.

Increase your home loan eligibility

Teaser home loan rates of some banks, including State Bank of India (SBI), which charges only 8 per cent for the first year may rise, as Reserve Bank of India (RBI) has not allowed banks to lend below the base rate. While SBI indicated that its base rate is likely to be around 8 per cent, for others banks the rate will be 8.25-8.5 per cent. SBI will announce its base rate before June 15.

Get a leeway on home loans

In a meeting held last week, bankers have discussed the issue and are of the opinion that they have to increase their home loan rates. The home loan scheme of SBI will be reviewed by the end of the month, as it was extended till June 30, a bank executive said.

Country's largest lender, SBI which pioneered the concept of teaser rate last year and forced others to follow suit, had earlier said the fixed-cum-flexible scheme was launched as the bank was having huge liquidity following the global financial crisis. However, now the surplus liquidity is no longer there as the banks started to access the repo window of RBI since last week.

Fixed deposit rates mey be rising by Sept

It seems that the decline in fixed deposit rates may be ending soon. A bottoming out by September is being expected (and the figure could touch) to 18.2% by March 2011.

The current growth in bank's fixed deposits is way below comfort levels. If this continues, the full-year target of 18% won’t be reached.

RBI’s projection takes into account the resource needed to meet credit offtake by the private sector and government borrowings along with growth and inflation outlook. Not only are government borrowings high this year, credit growth is also expected to be higher than last year at 20%.

Interest rates on deposits are too low now and in some time banks would have to consider their sources of funds and take a decision on deposit rates so that they are in a position to meet credit growth targets.

There is an upward bias in deposit rates because banks will need money to meet credit demand. Union Bank of India has already revised its interest rates on bulk deposits for 1 year to 6.5% from 6% earlier. It had revised its retail deposit rates to 7.5% for 5 years, 7.25% for 3 years and 6.5% for 1 year in mid-April and is continuing with these rates for now and will take a call when markets start showing signs of liquidity crunch.

With inflation expected to ease out by this financial year end, it is expected that RBI will dilute liquidity tightening. The RBI may hike policy rates by 25 basis points in July and October each unless the European contagion spreads.

Easing inflation will also help in cutting the cash demand. Public cash demand is also expected to scale down as softer inflation reduces the demand for money for day-to-day transactions.

Ample liquidity appears to have drained out to someextent as banks have started borrowing from RBI under the repo window daily to meet their creditdemands.

Spectrum fee eases fiscal deficit pressure

All else remaining unchanged, it is now expected the fiscal deficit of the Union government will be a lot lower than the 5.5% estimated in Budget 2010.

The unexpectedly aggressive bidding for spectrum to provide third generation mobile services and wireless broadband has fetched the government Rs 1,06,262 crore, 200% more than what was budgeted. All this money would be available to the Centre by the end of this month, as winners of the spectrum for wireless broadband have to pay up by June 22.

The spectrum fee will, in one stroke, cut budgeted fiscal deficit from Rs 3,81,408 crore to Rs 3,10,146 crore, or about 4.5% of the nominal GDP assumed in Budget 2010.

This is assuming taxes will grow at the projected rate and disinvestment through the year will fetch Rs 40,000 crore. The two major component of direct taxes — tax on personal income and on corporate profits — is estimated to grow by 15% during the current fiscal to Rs Rs 4,21,897 crore.

That’s the rate at which revenues from these two taxes rose even in the last fiscal when the economy grew only 7.4% in real terms. It would, therefore, seem that the estimates for revenue growth is conservative, even after considering the big give-aways for individual tax payers in this year’s budget.

The finance ministry has estimated collection of tax on corporate profits would climb 23.2% and that on personal income would decline by 1.4%.

But given the strength of the recovery, evident from the robust industrial performance — illustrated by the vigorous growth in fourth quarter profitability and 17.6% expansion of the Index of Industrial Production — these targets may be improved. But there are some impediments to surpassing these target.

With pressure on containing fiscal deficit at 5.5% having eased with the completion of auction for spectrum for new telecom services, the tax department runs the risk of slipping into complacency. It may not make enough effort to bring many more evaders into the tax net.

Risks to global growth can resurface, as the European sovereign debt crisis illustrate. That can affect growth in the Indian economy, and therefore tax revenues of the government. Inflationary pressures may prompt the Reserve Bank of India to adopt a tighter monetary stance, and that can choke off growth some bit.

Curbing of the fiscal deficit is also dependent on the government raising about Rs 40,000 crore from sale of equity in the public sector enterprises. Again, there is a risk that these targets may not be met in a volatile market, even with the new rule that all listed entities should have 25% public float. That apart, coalition members could put a spanner in goverment’s plans.

Lastly, any slippage on the keeping government expenditure within budgeted limits too can play a spoiler in bringing down the deficit to 4.4%.

The move by SEBI’s in order to boost MF volumes on stock exchanges has drawn brickbats

Mutual fund distributors say that online trading of mutual funds will leave investors at the mercy of stockbrokers and expose them to further mis-selling

Market regulator Securities and Exchange Board of India's (SEBI) latest effort to shore up mutual fund trading volumes on the stock exchanges has not gone down well with the distributors' community. Industry experts believe that having mutual fund investments in demat form does not serve investors' interests and will expose them to further mis-selling.

No investor is being forced to open a demat account for investing in mutual funds. The article said that the regulator has invited suggestions from the Association of Mutual Funds in India (AMFI) by 15 June 2010, on making it mandatory for all mutual fund investors to open demat accounts.

Recently, the regulator sought banks' help to promote the stock market route for mutual funds. However banks' managements were not keen on SEBI's suggestions. The meeting was attended by NSE's deputy MD Chitra Ramakrishna and BSE's deputy CEO Ashish Chauhan. From the banking side, senior officials from Union Bank of India, State Bank of India, HSBC and Canara Bank were present at this meeting.

The independent financial advisor (IFA) who wishes to make a living from advice will never lose out. His clients may have a demat account but they don't have to trade and transact based on their broker's advice. Brokers provide little value-add as advisors.

The role of an IFA is that of a financial planner, guide and friend to the client. By investing in mutual funds through the demat route; the personalised role of an IFA is diminished. The IFA has to become a sub-broker with a national distributor and work according to the policies and objectives of the national distributor whose objective may not always be in the best interests of the mutual fund customer. The reason for this is that the platform they work on is speculative in nature. The broker (who normally trades for his clients on shares) will have no time to give quality advice to the clients.

Demat totally defeats the very purpose of abolition of loads to bring down the cost of investing in mutual funds. I fail to understand the logic of the suggestion of the regulators

Do you want an insurance for a vintage car?

It is widely reported that classic car insurance is far cheaper than a modern car policy but it is important to be vigilant and well informed. Also, it is important to understand that the condition and scarcity of classic car insurance can vary dramatically, and an owner’s perception as to the value of his beloved car is often at odds with his insurer’s valuation in the event of a claim. It is always better to search for a specialist insurer; they are more likely to provide specialist assistance and provide a better rate.

How many times have we seen a movie scene where a someone or the other is fawning over his car as though it’s his child? Car enthusiasts pride themselves on the car that they drive and care for it as though it’s a part of their family and not just a mere mode of transportation. This is especially true for owners of vintage cars who draw their purse strings together when it comes to taking care of their beloved cars.

Prices of vintage (produced before 1929) and classic cars (up to 1965) are escalating at the rate of 15-20 per cent every year.

Experts say, not more than 1,000-3,000 vintage cars exist in India today, valued at Rs 350 crore (Rs 3.5 billion). Some of the country’s biggest collectors - Pranlal Bhogilal of Ahmedabad, Sharad Shanghi of Indore and UB group chairman Vijay Mallya - own 350-odd vintage and classic cars between them, including the rare Mercedes 540 K and the Rolls Royce Silver Ghost, both valued at over Rs 1 crore.

But when you think about securing such priceless cars, insurance is something that first pops up into your mind. Classic cars often don’t have modern safety features, and are thus prone to damage and possibly expensive to insure. They do not have things like seatbelts, crumple zones, airbags, or any type of rollover protection, as these things were mostly added in the time since the generally accepted “classic” period. The maintenance and repairs can be surprisingly expensive, meaning that any serious owner should definitely think about having insurance.

Though available, providing insurance for vintage and classic cars is not a mainstream option among the many insurance companies in India. Insurance for your classic car is dependent on a number of factors, predominant among which are:

* Age - Cars made up to 1904 are considered “veteran cars,” while the Edwardian period stretches from 1905 to 1918, and the Vintage age lasts from 1919-1930. For the most part, cars are usually called “classics” if they were manufactured at least 25 years ago, but even some relatively recent cars which are thought of as especially rare and collectible are thought of as classics. Therefore, it is important to know what definition of a classic or vintage car does the insurance company follows, since most have different definitions.

* Value of the car - Policies can be sold based on the actual cash value of the car, in which case a book value with depreciation will be paid out by the provider in the event of a claim; then there is the “stated value” policy, which can still depreciate, but is based on the owner’s valuation for the car; and agreed value, which might not necessarily depreciate, and depends on a consensus between owner and provider.

It is important that you take into account the coverage which the insurance company provides. You need to check whether or not the policy liability covers public events; coverage including events and shows; coverage for damages incurred during restoration; and moveable premiums taking into account mileage, which naturally varies significantly for classic cars from year to year.

It is widely reported that classic car insurance is far cheaper than a modern car policy but it is important to be vigilant and well informed. Also, it is important to understand that the condition and scarcity of classic car insurance can vary dramatically, and an owner’s perception as to the value of his beloved car is often at odds with his insurer’s valuation in the event of a claim. It is always better to search for a specialist insurer; they are more likely to provide specialist assistance and provide a better rate.

FMP Vs Bank Fixed Deposit - Which One is Better For Investors?

We all know what is bank fixed deposit. In this article I will present an introduction to FMP or Fixed Income Plan, comparison between FMP and Bank Fixed Deposit and when an investor should invest in FMP.

What is FMP or Fixed Income Plans?

FMPs are closed ended mutual fund scheme with a maturity period ranging from a few days to five years. Most of the FMP plans are debt oriented. But a few scheme may have a small equity component. At the end of the period, the scheme matures, just like a fixed deposit in a bank. FMP schemes have two options. With growth option or with dividend options.

Do FMP provides a guaranteed return?

No, they do not. But investors are informed an indicative return at the maturity. If you select a FMP, which invest only in debt instruments, more often than not, the actual return will match with indicative return.

What is the difference between FMP and Bank FD?

Practically, for an investor, there is no difference. Only difference is that bank FD gives an explicit guarantee on return, where as in FMP, return is indicative. In terms of tax friendliness, FMP are more tax friendly than Bank FD ( see the table below ).

Invested Amount - Rs 100 - Rs 100

Return% -10% - 10%

Investment Tenure - 1 year - 1 year

Interest Earned - Rs 10 - Rs 10

Tax on Interest Earned - Rs 1.416 - Rs 3.4

Net Interest after Tax - Rs 8.6 - Rs 6.6

*12.5% Dividend Distribution Tax + 10% Surcharge + 3% Cess = 14.16% **30% Tax (for income over 10 lakhs) + 10% Surcharge + 3% Cess = 34%

Dividend Options or Growth Option - Which one I should go for?

It depends upon the tenure of your investment. For less than one year investment, dividend option is better. For a less than one year maturity period, you pay 14.16% tax, deducted at the time of distribution of dividend. For more than one year, growth option is beneficial. In case of more than one year, you need to pay 10% as capital gain tax (without indexation) or 20% tax (with indexation). You can also avail the benefit of double indexation by investing in march of a financial year and redeeming the units in April in next financial year ( say - purchase in March'09 and redemption in April'10 ). In case of double indexing, tax liability is further reduced.

Conclusion: If you are doing regular FDs of small amount in Banks or Post Office for the purpose of saving, then do not look at FMP. But if you are looking for a considerable amount of investment for a fixed tenure and also looking for tax efficiency, then go for FMP. FMP is primarily helpful for people in higher tax bracket. Higher your tax bracket, more you should move your fixed investment towards FMP. I would request , next time you think of an fixed deposit, do your quick calculation and then take a decision.

Top 5 Positive Impacts of Indian Budget For Financial Year 2010

• Reduction of Income Tax Slabs
• Thrust on Education, Roads and Agriculture
• Fiscal Deficit Reduction
• Increase in growth
• Formation of FDSC

Reduction of Income Tax Slabs: Since there is a reduction in income tax slabs it leaves the common man, the consumer with more money in hand to spend. So this budget is thought to be a refreshing change for both middle and lower income groups. But according to some of the people, it will help to negate the increasing inflation rate. Acc. to HDFC chairman, Deepak Parekh it is anticipated that reduction in food inflation will be taken care of by increased inflation in fuel, crude products and another round of increase in prices of fuel is also expected by him.

Thrust on Education, Roads and Agriculture: According to the Finance Minister,the main areas which will be focused this financial year are education, roads and agriculture. Increase in education is anticipated to be about 30%, that is an increase from 31,000 crore to a figure of 41,000 crore. Next focus will be on roads and an increase of 20% in the development is expected in the same that is an increase to a figure of 45-46000 crore. But agriculture, which has been the weakest link of our economy last fiscal year will also be focused by introduction of new policies.

Fiscal Deficit Reduction: This is the best part to cheer about as the government borrowings will be less this year. The fiscal deficit figure expected this year is 5.5% which seems to be an achievable target according to Deepak Parekh, chairman of HDFC. Acc. to him, there are many points in Indian Economy that if they are priced properly then these figures and also the figures anticipated for upcoming years that is, 4.8% can be easily achieved and even more. This will be mainly done with the help of disinvestment. And in the coming times it will be tax revenues which will more payable than sharp spending cuts to achieve the figures.

Increase in growth: There will be a good increase in growth about 8-8.5% this financial year, which is expected to be more in Fiscal Y11. Rate hikes, would not dent the growth of Indian Economy.

Formation of FDSC: This new body will be a decision making body rather than a regulatory body like the previous bodies.Actually it was initially proposed by Rajiv Ram committee but came into formation now. Acc to HDFC chairman, Deepak Parekh who waive off the rumors surrounding this body coming into picture that it's just a coordinating body and won't dilute RBI's role in Indian Economy. He says there was a dire need of such a body as RBI's governor is not supposed to take decisions. Its name itself implies Stability as in Fiscal Development Stability Corporation. He says he is happy with its introduction as it will prove to be beneficial for the economy in a longer run.

An Overview on Demat Account Charges in India

Demat account is more or less an essential requirement for all the investors who invest in equities, bonds and debentures. Despite various efforts by the regulators to make electronic transactions as cheap as possible for the ordinary investors, the charges for Demat accounts continue to remain on higher side. Depending upon the individual profile, requirements and suitability, different investors open DP accounts with banks, online broking houses or local brokers. In this article, I have given an overview on the prevailing demat charges in India.

DEMAT Account charges can be broadly divided into the following three main categories.

Account Opening and Documentation Charges

It is a one-time charge that has to be paid at the time of opening of DEMAT Account. Most of the Banks and Stock Trading Brokers do not charge any fees towards account opening but some of them may charge you a nominal fee for stamp paper on which you have to execute the agreements with the brokers.

Folio Maintenance Charges or Annual Maintenance Charges (AMC)

The charges vary from Rs. 200 to Rs.750 per year, which are generally required to be paid at the commencement of the year. However, some of the banks and brokers may charge you every month or quarter.

Transaction Charges

Transaction Charge is the charge for Debit of Shares (when you sell) from your DP account. Please note that as per the regulator SEBI (Securities and Exchange Board of India), no broker or bank can levy transaction charges for Credit of Shares (when you buy), that means, it is free. Therefore, don't be misled by the agents who say that they offer 'Free Credit of Shares'. The transaction charges are in the range of 0.02% to 0.04% of the transaction value subject to a minimum charge of Rs.12 to Rs.25 per transaction. Some of the brokers like Reliance Money, India Bulls and Geojit charge Flat Fees of the order of Rs.10 to Rs.12 per transaction.

In addition to the above three main charges, there are charges for Dematerialization or Rematerialization of Shares, Pledge Services, and off-market transfers. However, for most of the ordinary investors, these charges are rarely applicable.

Few Important Points Worth Noting:

• In addition to the basic charges as explained above, you have to pay service tax and education cess, the rate of which at present is 10.3%
• Many banks waive off annual maintenance charges for the first year.
• You may have to pay extra charges for physical account statements; however, if you opt for E-Statements, you do not have to pay any charges.
• If you have a Trading and DP account with the same broker, you may save substantial amount on AMC and transactions charges.
• Many online brokers offer you low charges initially but they may revise it subsequently. Therefore, while choosing the broker or bank for opening new demat account, you should consider all the factors such as service, convenience, and your frequency and volume of transactions instead of taking the decision based only on the charges.

Why Car Insurance is a Necessity

Car insurance is vital, and is legally required if you want to drive on the roads of New York. So why do you need auto insurance? Firstly, if your care gets damaged or stolen, you can recoup these damages which will help you pay for a new car or get your existing car repaired. Secondly, every driver is required to have 3rd party insurance, which means that they must cover other drivers in case they crash into them (and it is their fault).

This essentially means that everyone is covering everyone else, which is why it works. If you're a first time buyer, or if your existing car insurance policy is expiring then it's time for you to look for a new one. At first it might seem like all insurance companies are the same and will offer you the same price, but this is not true. In fact, every company is different (due to the policies, staff and values), and will therefore charge you a different (or at least a unique) price for your insurance.

The best way to look for car insurance quotes is online, via an insurance website (a comparison website, which takes your details and enters them into every other insurance company. The results are returned to you, and then shown in order of cheapest to most expensive).

Another important point to remember is that your credit history affects the price of your insurance more than you might think. Keeping your credit history in order and at a high level is very important, and the simplest way to do this is basically to make all of your payments (eg. for credit cards and bills) on time and for the full amount.

Why Should I Pay For Portfolio Management?

Chances are, if you are an investor, you have had to deal with the question of whether to manage your own investment portfolio or have it managed for you, in which case a monitoring fee will be charged by your adviser.

Monitoring fees are fees for information and advice given. Generally, monitoring fees range between 0.5% and 1.5% of the funds being managed, depending on the size of portfolio. These fees are generally tax deductible, which reduces the real cost. Fees usually cover not only advice but full quarterly or six monthly reporting showing portfolio valuations and performance, economic updates, and a tax report. If an investor does not wish to pay monitoring fees, advice can be given at an hourly rate. This often works out to be more expensive than the monitoring fee because the adviser has to spend time reviewing the value and performance of the portfolio before giving advice. With a managed portfolio, paperwork is usually kept to a minimum and changes to portfolios can be made at little or no cost.

Generally, the only "advisers" offering "free advice" are nothing more than salespeople who earn a commission on investments they sell. Commissions are paid for by investors indirectly in that without commissions, the return on the investment could be higher.

Advisers have up to date information on what is happening in investment markets. Their key role is to set the "asset allocation" for the portfolio and to review the investments that make up each allocation. There are only 4 types of investment (asset classes) which are cash, fixed interest, property and shares. With each asset class you have a choice as to whether you invest onshore or offshore. It has been shown that over 80% of the return on an investment portfolio is determined by the asset allocation, that is the percentage weighting of each asset class, onshore and offshore, in the portfolio.

The asset allocation for different investors will depend on a number of factors, such as their age, the size of their portfolio, their financial goals, how they feel about risk and volatility in their portfolio and various other factors. It is critically important that the asset allocation be set correctly. If it is set incorrectly, then the investor may have a portfolio that produces too low a return or has too much risk. A good adviser will spend time with clients getting a good understanding of their values, attitudes, lifestyle and goals before recommending a portfolio.

Another important part of the advising role is to support clients through market changes to ensure that any changes made to portfolios are consistent with the investment strategy, in other words, to avoid panic selling or buying of investments. Paying a small percentage of the portfolio return to an adviser in order to potentially increase return and/or reduce risk, along with the various other benefits makes good sense.

Mobile Banking on Your Fingertips

Mobile banking basically refers to the availability of banking services on one's mobile phones. This service may be broadly classified into two broad categories: Mobile payments and mobile information services. Mobile payments include utility bill payments, cash transfers, payments to vendors, etc. Mobile information services include balance updates, transaction updates, etc. These are also at times offered to top customers as separate services, exclusive of mobile banking.

It has been observed that this banking service has been growing at a rapid pace, especially during the last few years.

It is expected to be the next big thing in the banking sector that banks would be increasing this service offered everyday. Some of the services offered by banks under it are: Mini-statements and checking of account history, alerts on account activity, access to loan statements, access to card statements, mutual funds / equity statements, insurance policy & pension plan management, status of cheques, balance checking in the account, recent transactions, blocking of (lost, stolen) cards, domestic and international fund transfers, mobile recharging, bill payment processing, and withdrawal and deposit at banking agent.

Mobile banking truly represents the adage of "Anytime, Anywhere banking". That said, even this banking is not immune to drawbacks. With an increase in number of mobile banking users, especially those making mobile payments, the expectations keep rising. Mobile banking being relatively new and operating in an ever changing arena, banks need to continually update themselves on the emerging trends and changing needs. Banks offering mobile banking increasingly face problems such as handset compatibility, security of mobile payments, transactions and information updates. With users being from all over the world, mobile banking needs a dependable server and system that's up and running 24x7. Programs if any, need to be up to date, and highly user friendly.

This Banking applications found in all parts of the world. People across all walks of life and from different cultures make mobile payments. Though North America and Europe are the established players in this banking, emerging markets are now Asian and South American countries. In India, surveys suggest that 43 million urban users use this service in their everyday lives. That's a reach of 15% in the urban Indian mobile user base. Surprisingly, rural areas aren't very far behind. This service also available in different regional languages, and the spread of mobile phones being far and wide, villages and towns also see a growing trend in this section especially in the banking information services.

The stage seems to be set to move into a new decade of banking from our mobile phones. With services like mchek coming into play, mobile banking may very well force out currency notes in many years to come.

Microfinance - A Tool For Corporate Social Responsibility

Kiva is a leading facilitator in the world of micro-lending. Micro-lending is the process in which an individual can lend relatively small amounts of money to the underprivileged around the world. The benefit of this type of lending is dual. First, it helps individual Internet users become socially responsible and it stimulates the economy and supports families in underprivileged communities by providing the capital necessary to maintain or start a business.

Social Responsibility

Social responsibility is the idea that businesses should account for performance socially and ecologically. Generally, discussions on social responsibility apply to corporations, known as corporate social responsibility or CSR. If you are an entrepreneur and are interested in building a business model around social responsibility, Kiva is a useful tool for investing. By partnering with microfinance institutions around the world, Kiva connects lenders with those who need a financial boost.

The Lending Process

When considering an investment strategy, always spend time researching your venue and assessing your risks. There are important factors to review when considering lending internationally including devaluation and politics.

Kiva enlists microfinance institutions around the world called Field Partners. Field Partners locate members of their community who need assistance. Once an individual is identified, the Field Partner snaps a picture and records their story. They then populate Kiva's website with profiles of selected entrepreneurs who need assistance.

Kiva's website is designed so lenders have total control over the loan selection process. Simply browse the site for an individual you would like to lend to by selecting "fundraising" from the Find Loans drop down menu. Once you find a fundraiser of interest, select their profile for a detailed overview. The site will provide information on how much money is requested, how much has been raised and the number of days remaining to fund the loan.

Once you have selected someone you would like to lend to, you can fund the loan via PayPal or your credit card in increments of $25.00 USD. Loans are repaid monthly to your account over a period of six to twelve months. You have the option of lending to another Kiva fundraiser or receiving the funds to your PayPal account.

Assessing the Risk

With all investments, risk assessment is an important part of the process. Kiva's website provides some tools for assessing the risk of lending through their Field Partners. Kiva utilizes a 5 star rating system based on a number of financial indicators and time. Additionally, you can gain some understanding of Kiva's customer base by sorting by "Ended with Loss" from the Find Loans drop down menu. At this time, there are substantially more loans categorized as "Paid Back" than there are having ended in loss.

In summary, socially responsible investments provide relief to members of underprivileged communities. Making investments with Kiva is a simple process that allows everyone an opportunity to impact someone else's life. Make sure you research your investment venues before you lend.

How To Restructure Or Modify My Home Loan

You can stop your foreclosure by restructuring your mortgage in the most successful way. There will be many questions you may need answers to and I hope this article will be helpful to you.

Do you qualify for a home loan modification? This will be done at the start to avoid any kind of confusion later on.

What you need to do is fill out the proper paper work to express your ideas and needs with your lender and find out their opinion and where they stand with your loan as well and what your options may or may not be based on their current loan guide lines and specifications. An attorney would be good to hire for this so he or she can also help you get to know what your best plan of action and options will be.

The Foreclosure process does cost a lot of money, This is good! why? both the lender as well as the borrower does not prefer foreclosure and they are normally willing to agree on other options due to the fact that they do not want to lose their investment (you in the home)

This is a plus for You because this helps you plead your case and you can easily get back on the right path by restructuring your loan.

If your lender is not willing to do a modification of your home loan or a restructuring, you can ask them to allow you a re-financing option based on your current standing with your credit with them and the current market value of your home. What refinancing actually means is extending the term of your loan over a larger period of time and with this process your monthly payments get reduced ultimately saving you some cash at the end of each month.

Work out with your lender a way that will help you to repay them on time and some what quicker and with a loan that makes sense to both you and your lender.

No lender would like to lose their money and wait even longer periods of time to collect what they have invested.All this is why a loan modification or loan restructure is the best way to stop your foreclosure from starting and destroying your credit.

It is always better to start taking actions in time to avoid any foreclosure proceedings from starting as that will hinder the actual time needed to complete a beneficial and successful home loan modification or restructure of your loan. I have a way for you to restructure your loan and save a lot of money on your principal balance as well. Wells Fargo, Bank of America and Citi mortgage loans will go through very fast now days as they are doing restructures very quickly.

Fixed Deposit - The Best and Secured Way to Save Money

The businessmen in India have positive feeling regarding their financial position. As the economic position of India is mostly based on the government organisations, the speculation and financial crisis have not shown much effect on Indian economy. If you study the present economic position of India, you can come to a conclusion that investing in a stock market or mutual funds will make you to face many problems. A lot of insecurity and confusions are faced by the investors, who want to invest in their money in public or private sectors. In these situations, they are searching for the best alternatives to save or invest their money.

Many of the economists in India say that going for fixed deposit is the right solution, when it compared to all the other sources where you can invest your money. This is the best source to rescue from the present liquidity crisis.

The fixed deposit is nothing but an account that allows the people to deposit their money for a period of some time. Depending on their convenience, people can choose the deposit period that say for a minimum period of 15 days to 5 years and more than that. When the deposit period comes to an end, the depositors will get high amount of interest on their deposited money. Depositing money in Indian banks is safer than other sources as the all the banks in India are under the control of Reserve Bank of India.

The main advantage of going for these deposits is that the depositors get high interest rates than the saving bank account holders. They will get lump-sum of money at a time, after the completion of maturity period of the deposit. Moreover, people do not get any insecure feeling on their deposits. The fixed deposits have been playing a prominent role, since the banking system has been introduced in the Indian economy market. They are one of the beneficial saving methods. Some years ago, people showed great interest for going long term deposits. But, now-a-days, due to the drastic changes that are occurred in the economic position of India, most of the investors want to go for short term fixed deposits.

The interest rates of the fixed deposits vary from one bank to another bank. To extend their services as well as to attract all segments of the investors, most of the banks in India offer many facilities to their customers, who want to deposit money in their banks. One of the main facilities is that the over draft facility which allows the depositors to draw money on the deposited amount, before the completion of the maturity period of deposit. On the request of depositors, some of the banks can transfer the interest amount on fixed money to the current or saving account of the depositor.

The minimum fixed amount can range from RS. 100 to an unlimited amount. If any one wants to open a fixed deposit account in a bank, he should inquire about the interest rates of all the banks. Some of the websites over the Internet help you to find the best bank that offers high amount of interest rates on depositing money.

Fiscal Deficit and Economic Growth

The planning commission deputy chairman rightly opined that growth takes precedence over deficit. In other words, the commission would like to concentrate on the economic growth now and about the deficit later. At present the fiscal deficit in Indian economy is about 11% of GDP. The government's goal is to bring it down to 3% of the country's GDP. The exclusive deficit of the central government is about 7% of the GDP. Some statistical organisations put India among some of the very high fiscal deficit economies.

Five year plans and investment:

The public investment for the development of the country has been increasing since 1951. For better services and to provide employment to the educated and skilled Indian citizens the public sector units came in to existence. Over the years due to mismanagement of these units, these have become a burden on the Indian economy though some of them have been contributing to the growth in the economy.

Rural development, Industrial development, human resource development, etc are some of the priorities in the five year plan periods for the over all economic development of India.

Free technical training for the educated but poor youth to enhance their skills has been one of the primary motives of the government as their skills contribute in producing goods and services and thus the economic growth of the nation.

Electricity, transportation, communication, education, health, credit facilities, marketing, irrigation, etc are some of the vital and basic necessities for the economic development of the nation.

The country's security is of utmost importance. Defence expenditure is very high in India. This is due to several boarder and other territorial disputes with the neighbouring nations like Pakistan, China, etc.

Due to ever increasing fiscal deficit, the government has been privatising and also slashing many subsidies. In other words the government has been moving towards more openness and reforms. Some economists also opined that the government can get Rs.25,000 crores annually if it moves towards disinvestment.

Government's support services:

The human resources development is one of the primary objectives of any government. In India too the government spends huge sums on this sector so that they can contribute to the development and growth of the nation. For instance there are free education schemes for poor, subsidies on fee, lower interest loans for higher education abroad and in India. Similarly there are many kinds of subsidies for the farmers as agriculture has been a source of livelihood for many and also as it contributes to the economic growth and development of the nation.

The government also bears the burden of promoting the exports by subsidising, promoting and supporting the export oriented industries. This measure is to reduce the trade deficit.

Containing the huge fiscal deficit:

The centre's fiscal deficit for the first two months ( April and May) of the current financial year is about Rs. 90, 758 crores. This is mainly due to indirect tax cuts by the government to deal with the economic slow down. For instance, the excise duty on most products was reduced by 6% points and the service tax was cut by 2% points. These measures would induce demand by reducing the prices and thus production and employment.

Fiscal deficit for May 2009 was Rs. 36,600 crores as tax receipts dipped by 10%, this is mainly due to the decline in indirect tax collections.

In the month of April 2009, the fiscal deficit rose to 64% due to increasing government's expenditure. Sixth pay commission awards, declining tax revenues, etc are some of the contributors for this state of affairs.
The government employees have been demanding increase in perks as the prices of essential commodities and other expenditure have been rising.

The declining tax revenues are due to, 1. Cenvat (central value added tax) was cut from 14% to 10% and then to 8%. 2. service tax from 12% to 10%, and 3. The reduction in customs duty on several items resulted in 17% decline in gross tax revenues. Thus in the month of April 2009, the effective collection of personal income tax which has increased by 20% is the only bright spot.

The rise in expenditure bill for April month was due to increase in the non-plan expenditure. This expenditure includes, recurring expenditure on completed projects, salaries, and subsidies. Fertiliser, and defense expenditure contributed for the heavy expenditure.

Spending needs to be better targeted to reduce wasteful expenditure. For instance, 1.The government can withdraw some tax concessions, 2.The third generation mobile licence auctions will yield Rs.25,000 crores to it. and 3. Disinvestment of loss making public sector units will yield about Rs. 80,000 crores. These steps will bring deficit back to about 6.5% of GDP.

Due to political compulsions, the government's task would be tough as it has to make some best choices which are not popular measures to garner votes.

Steps To Follow For Opening A Demat Account

Many banks are taking out there IPOs and most of you must be interested in investing money in the IPOs that are coming up. For this you first have to have a "demat account".

A demat or 'dematerialised' account holds shares in electronic form, thus saving you the bother of holding shares in paper form. Possessing a demat account is now a prerequisite for stock market investments.

You can open demat account in banks, financial institutions and stock broking houses. The broking houses in such cases also act as DPs (depository participants) intermediating between the depositories -- CDSL or NSDL and the investor. To open a demat account, first of all you have to submit an application to a DP and along with it submit required documents. Once you have a demat account to your name, you can open a trading account with a broker of your choice.

The shares bought and sold by you are reflected in your demat account. Any previously held physical share can also be dematerialized and transferred to the account.

The DP, at regular intervals, provides you with an account statement showing the balance of shares in your demat account and transactions during a period.

Following steps can help you open a demat account:

First of all you have to look for the institutions offering DP services. You have two options. Either you choose a bank/financial institution or a stock broker who could provide you the DP services as well. The factors that help you in the selection should be the charges and location convenience. The fees charged for DP services differ across the industry. Though the rates change, the charges normally categorized under the following heads:

Account openingfee

Annual maintenancefee

Transaction fee

Besides the above, depository participants also charge service tax as applicable. A bank or other DP might sometimes waive the initial account opening fees. It is better to choose a bank where you have been holding your savings account for long, then much of the paper work would get simpler and documentation will not take much time, as you are already known to the banker.

The Documents required opening a demat account:

A set of documents needed to be provided to the agent at the time of opening account are:

1. Duly completed account opening form and passport size photos;

2. A copy of PAN card as proof of identity;

3. Personalized cheque/Copy of the bank passbook

4. A copyof passport/voter ID/ ration card as a proof of address

Signing of the DP-investor agreement.

On submitting of the complete set of documents, the agent will complete the other formalities with the depository and facilitate opening of the account. You will be given a unique account number (BO ID- Beneficiary Owner Identity), which will serve as a reference number for all further transactions. After that you, must also collect delivery instruction (DI) slips from the DP. A DI slip has to be filled and sent to the DP on every delivery (sale of shares) you make. DI slip is an instruction to the DP to debit your account and credit the broker's account with the specific stock.

It is very important that the DI instruction should reach the DP the very next day after the sale, failing which the securities won't reach the broker and hence the exchange. This could result in auction of the security. For instance the exchange is able to procure those shares only at a higher price, and then the resultant loss has to be borne by you, as investor. If you have demat account as well with your stockbroker you can escape this irksome process of sending DIs, and give him a standing instruction (POA-Power of Attorney) for delivery of stocks that you sell.

Once you constrict down on a DP and get the documents ready, opening a demat account is very simple process.