How Bitcoins Are Spawning Black Money In India   Nov 24, 2017

S&P BSE Sensex* Re/US $ Gold Rs/10g Crude ($/barrel) FD Rates (1-Yr)
33,679.24 |336.44
64.57 |0.75
29,485 | 40.00
63.22 |1.74
5.00% - 6.75%
Weekly changes as on November 23, 2017
BSE Sensex value as on November 24, 2017

bitcoin Have you heard of Cryptocurrencies?

In plain language they are alternative and unregulated digital currencies held as assets and exchanged for real goods and services as well.

Bitcoin currently is the largest and perhaps the most popular cryptocurrency. Its value has gone up more than 3 times over last 1 year. Some experts say Bitcoin is in a bubble zone right now and its value may collapse without any prior notice. Others laugh off these concerns.

Guess what? There can be maximum of 21 million Bitcoins—thanks to complex calculations involved in the process of currency creation. Naturally, when the demand for limited currency goes up, prices shoot up rapidly.

In India, the Reserve Bank of India (RBI) has already expressed its discomfort towards virtual currencies including Bitcoins and has denied permission to any exchange of Bitcoins for payments and settlements in India. The central bank has also cautioned against risks associated with owning a Bitcoin and trading in it.

But what’s startling is, despite this, the interest of Indian investors has spiked up in Bitcoins post demonetisation. The popularity of Bitcoins partially stems from anonymity associated with transactions which helps holders to get away with their black wealth. It’s estimated that, those who hoarded cash before demonetisation to growth their black wealth now deal in Bitcoins. Property deals too involve cryptocurrencies.

A real estate broker with the direct knowledge of such instances told media on the condition of anonymity that, “Instead of the cash part, many sellers are now opting for crypto coins for property deals and this is especially true of NRIs, who can, with a few keystrokes, move this money abroad.”

Shedding more light on these developments, Mr Venket Rao, Founder and CEO, Intygrat Business Advisory (P) Ltd said, “With a severe downturn in real estate sector, brokers have either shut shops or moved to other businesses. As cryptocurrencies are attracting speculators with promise of astonishing returns. Speculation is that cryptocurrencies are replacing cash component in real estate and even high net worth individuals are pooling into groups and are investing in these currencies and channelling them into real estate.”

While hearing a plea against the unregulated nature of Bitcoins, the honourable Supreme Court bench of CJI (Chief Justice of India) Dipak Misra, Justice AM khanwilkar and Justice DY Chandrachud on emerging trend of crypto money noted that, “if unchecked and unregulated, is a threat to exchequer’s money and financial sovereignty of the country.”

Should you invest in Bitcoins?

PersonalFN is of the view that, given the findings by RBI and observations of the Supreme Court on virtual currencies and it raising a red flag thereto, it would be best to avoid using Bitcoins to make e-payments or indulge in them even in the form of trading, although it may enable you to transact at high speed and at a low cost. This is because virtual currencies are unauthorised by any central banks or monetary authority, there is no clear legal status for them, the chance of misuse of e-wallet is high (through various ways) and even unintentional breach of anti-money laundering or combating the financing of terrorism laws, can subject one to prosecution. 

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Here’s Why Your Cheque Book Could Get Scrapped


The Government seems to be discontent with the transaction preferences of citizens. 

And in the foreseeable future, it is likely to dismantle the cheque book facility banks offer. 

“In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions”, said Mr Praveen Khandelwal, Secretary General of Confederation of All India Traders (CAIT). 

Does this sound as awful as demonetisation? 

Perhaps it does. 

But don’t take these predictions lightly. 

According to Mr Khandelwal, only about 4 crore debit cards are used for cashless transactions— which is merely 5% of total active debit cards in the country. The rest are merely used to withdraw money from bank ATMs.

Digital transaction picked up pace, but didn’t sustain

Digital transaction Digital transaction
(Source: Reserve Bank of India’s Bulletin)

A cash-oriented transaction system has multiple hidden costs — to your surprise the Government spends nearly Rs 31,000 crore annually to keep the cash economy alive.

Banks charge 1%-2% fees on plastic money and this has been a major deterrent for digital transactions picking up as expected earlier. 

The card companies seem to be lobbying the Government to push for digital transactions. Now it’s up to the Government to decide whether to denounce citizens their right to choose their transaction medium.

Although digital transactions are cheaper and easy-to-perform, it would be unintelligent to completely withdraw cheque book facility. Here are key 4 reasons why:

To read more about this story and Personal FN’s views over it, please click here.

How Fund Managers Are Reading Moody’s Rating Upgrade. Know Here…


Some may call it a minor event, while others may boast of it as an achievement. Nonetheless, one can’t ignore the fact that, Moody’s——a world-renowned credit rating agency——has upgraded India’s rating from “Baa3” to ‘Baa2’. It has changed its outlook on India from ‘stable’ to ‘positive’. This is a shift that perhaps has arrived right on time. Investors were worried about the weakening of Rupee, rising crude oil prices, and potential inflation shocks. Moody’s rating upgrade will help India reduce its borrowing cost on US$ denominated debt and instil confidence among Foreign Institutional Investors (FIIs), who have been bearish on India for a while.

Are FIIs bearish on India?

FIIs bearish on India
(Source: ACE MF, PersonalFN Research)

What might have led Moody’s to upgrade its view on India?

  • Government’s digital push
  • Successful implementation of GST
  • RBI’s focus on curtailing inflation to 4% over the medium term
  • Decisive steps taken by the Government to address resolve the conundrum of Non-Performing Assets (NPAs) of Indian banks
  • India’s improving competitiveness on ‘ease-of-doing-business’

Moody’s has upgraded India for the first time in last 13 years.

To read more about this story and Personal FN’s views over it, please click here.

When Is The Best Time To Sell Your Mutual Fund?


The market seems to have maxed out and you are contemplating on selling your equity mutual funds. But, is now the best time to sell? The same question may have crossed your mind a few months ago.

Had you jumped the gun a few months earlier, you would have lost out additional returns of nearly 10%.

Over the past eight months, the S&P BSE Sensex has set newer all-time highs almost consecutively every month. But the market scaling to higher peaks has not dithered retail investors. In the same period, the net inflows from retail investors totalled as much as Rs 1.05 lakh crore into equity schemes (including Equity Linked Savings Schemes).

Investors purchased Rs 2.25 lakh crore of mutual fund units against redemptions amounting to a mere Rs 1.20 lakh crore. However, the redemptions may not be a complete exit from equity funds as some may have switched from one equity scheme to another.

To read more about this story and Personal FN’s views over it, please click here.

Do you know, Interest On EPF Is Taxable Even Post-Employment


Interest rates are on all fixed income instruments——bank and corporate fixed deposits, Non-Convertible Debentures (NCDs), and bonds——are dropping.

Ever since the Government decided to keep interest rates on Small Savings Schemes (SSS) market-linked, Public Provident Fund (PPF) and National Savings Certificate (NSC) have also started fetching lower returns. However, due to the pressure of trade unions, the Government is not revising downwards the interest rates on Employee Provident Fund (EPF).

The interest earned is completely tax-free in the hands of EPF subscribers. As a reason, many EPF subscribers refrain from withdrawing their balance even after they retire or quit their job with the hope of earning attractive tax-free interest.

To read more about this story and Personal FN’s views over it, please click here.

And Other News...

The National Highways Authority of India (NHAI) is likely to issue bonds to senior citizens and pension funds in the near future. The tenure of the bonds would be 10 years, and the coupon interest rate would be 7.5% or thereabouts. NHAI plans to raise Rs 10,000 through this issuance. However, what’s not clear is whether or not the interest on these bonds will be tax-free.


All About Capital Gains Tax on Mutual Funds 

7 Mistakes To Avoid When Investing In Tax Saving Mutual Funds

Financial Terms. Simplified.

Cryptocurrency: A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

(Source: Investopedia)

Quote: “You can’t value bitcoin because it’s not a value-producing's a real bubble in that sort of thing."-Warren Buffett,

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