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| February 05, 2016 |
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Impact 
As the day of budget draws near, the Finance Minister (FM) seems to be receiving a ever-growing wish-list. Various industry bodies are making suggestions to the FM expecting some “favours” for the further progress of their respective industry.
Association of Mutual Funds of India (AMFI) is batting for mutual fund houses.
What do Mutual Fund Houses seek from the Finance Minister?
This time round, it expects the Government to allow for higher exemption on the investments made in Equity Linked Savings Schemes (ELSS) by first-time investors. AMFI believes ELSS should be treated on par with Rajiv Gandhi Equity Savings Scheme (RGESS), under section 80CCG of the Income tax Act that offers exemption of Rs 25,000 to the latter. Moreover, it cites the example of a special exemption of 50% on their investments of upto Rs 50,000, offered to people opening demat accounts for the first time.
How has AMFI presented its case?
The Mutual Fund industry body found that this exemption goes underutilised every year and thus opined that if ELSS are allowed to offer an exemption under 80CCG as well; it would result in a win-win situation for the industry and investors.
AMFI tried to further strengthen its case by referring to some typical scenarios. While speaking to media CVR Rajendra, CEO, AMFI said, “80C is over-crowded with exemptions for provident fund investments, housing loan repayments, and insurance premium expenses, among others.” He further added that, “The investment limit gets used up very quickly and investors are unable to claim tax benefits for their ELSS investments. By allowing ELSS under Sec 80CCG, all retail investors and those under the high-tax brackets will benefit from it and can claim higher deductions on their equity investments.”
PersonalFN believes although it is fair to demand additional exemptions for ELSS investments, mutual fund houses can’t bank on them to increase their reach. Instead, they should try to create awareness among potential investors and perform across schemes. Mutual fund houses would be better off if they avoid thoughtlessly launching New Fund Offers (NFOs) and taking shortcuts to grow their Asset under Management (AUM).
In case you wish to make your first investment in a mutual fund, but are unsure about which one to put your hard-earned money in; reach out for expert advice. PersonalFN provides unbiased mutual fund research services that can assist your decision making process.
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Impact
The cases of misleading and cheating buyers are on the rise these days. Take the case of Vishal, a frequent e-consumer fond of shopping on e-commerce websites for international brands and perfumes. Receiving promotional mailers, one day an e-mail popped up in his inbox offering a branded perfume for a steal. The sender of the mail was a well-known e-tailer and Vishal requested for a 100-ml bottle, paying upfront.
When the perfume was delivered at Vishal’s address, he was disappointed; the product wasn’t the same as it was described. There wasn’t a problem with the packaging but the fragrance notes were quite different. Fortunately, when he contacted the e-tailer, Vishal was offered his money back or a replacement of the product. Not all online shoppers are as lucky as Vishal. The discomforting factor is the inadequate legal framework. The overhaul of the legal framework governing online shopping has failed to match the exponential growth of e-commerce businesses mushrooming in India. These days, it’s rare to find a consumer centric company that doesn’t want a presence in the online space. As the Assocham-PricewaterhouseCoopers study reveals, India’s e-commerce industry is likely to see a compounded annualised growth of 35% over next 4-5 years.
Since India is still at a very nascent stage of the development of online retail, companies are fighting among themselves for market share. There have been instances where a few e-commerce companies cheat buyers by selling them substandard or even defective products.
average time taken for disposing a case in a consumer court is about two years. Considering the time and effort, consumers are a bit hesitant to approach consumer courts and sometimes the value of the disputed product or a service is not worth giving the e-tailer a chase. Consumer protection is an important aspect for the further development of e-commerce companies. Taking cognisance of problems that may arise in the future, the Maharashtra Government has tried to remedy this.
It has authorized an online portal consumerconnect.co.in to offer all-inclusive solutions to unsatisfied e-consumers who want to file a complaint against e-tailers in consumer courts. Complaints pertaining to e-payments can also be registered through this portal.
Given below is the process to make a complaint...
As reported by the Business Line dated February 02, 2016, the company (website) has trained over 200 court staff across 43 courts and 50 advocates to ensure that they can handle consumers’ cases efficiently.
What will change for the complainants?
Consumerconnect.co.in endeavours to stay with the complainant throughout the life cycle of his / her case. It will not only provide assistance in filing the case but would also communicate important updates to them. This will give them peace of mind that complaints are taken seriously and followed-up on. It will enable e-consumers living in far off places to save time and money commuting.
Although the site was supposed to start operations on February 01, 2016; it seems it hasn’t been made live as yet. Nonetheless, its usefulness can be gauged only after it’s open to consumers and starts handling real-time cases. As for the question of it coming into being, PersonalFN believes, it’s a first step taken in the right direction. Whether or not it helps save time taken to dispose of cases swiftly is something that remains to be seen.
The company intends to replicate this model in other states as well including likes of Gujarat and Karnataka.
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Impact
In a cricket match, especially in the T20 format, the opening batsman plays a very crucial role. If they get off to a flying start, the chances of their team getting into a commanding position are higher. This is similar to what Foreign Institutional Investors (FIIs) mean for Indian markets. They take the initiative in driving markets up or dragging them down. This year, FIIs might be bearish. They have pulled out Rs 11, 126 crore from Indian markets in January 2016—the largest outflows for the month of January in the last 8 years. Prior to this, the FIIs had shunned Indian equities worth more in January 2008.
Bear Grip...
Data as on January 31, 2016(Source: ACE MF, PersonalFN Research)
The highest ever monthly outflows were recorded in August 2015, when FIIs had withdrawn Rs 17,000 crore from Indian equities. The outflows recorded in January 2016 have been the second highest in the last 5 years. Such a sharp move in FII activities must have taken many by surprise, a nasty one though. Now the discussion about Indian markets entering a bear phase has started making the rounds in the market’s inner circles. How much merit does such arguments hold? Only time may tell. But the saddest part is Domestic Institutional Investors (DIIs) and the Indian retail investors still appear complaisant about new developments. Their investments in the Indian markets still remain fairly strong. The NFO factory of mutual fund houses has been raising money from retail investors. DIIs have roughly invested Rs 12,875 crore in January 2016. To ready more about this story and PersonalFN’s views over it, please click here.
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Impact
The job of a flight pilot and that of the RBI Governor is quite similar. They are the ones that have to run the show—irrespective of foggy or clear skies. At present, the Indian economy is passing through the clouds of uncertainties. Unfortunately this time it is denser than one would imagine. Now, the job of the RBI Governor is to not only land the flight of the Indian economy safely, but to also ensure a smooth landing, avoiding any chance of post-landing accidents. So it’s a team effort between the Government and the RBI. The role of the Government, like the Air Traffic Control and ground staff, is very crucial as it has to do all the groundwork, provide accurate and timely signals, and clear up the runway for a smooth landing. The RBI has already done its job and is now waiting for the Government to play its part.
In the case of the sixth bi-monthly review of monetary policy, the RBI has maintained the policy rates unchanged. To ready more about this story and PersonalFN’s views over it, please click here. |
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The insurance giant, Life Insurance Corporation of India (LIC) has recently set up its in-house insurance repository—LIC E-services. This platform intends to help LIC insurance policyholders avail of a number of value added services free of cost. The process is very simple. First, one has to register with the repository and upload policy details on the website. Thereafter, insurance policy holders can view their policy schedule, premium payment calendar, and know the status of policy claim, bonuses and loans, among others. The LIC has decided to launch every new policy online along with offering these in the offline route.
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Capital Flight: A large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, currency devaluation or the imposition of capital controls. Capital flight may be legal, as is the case when foreign investors repatriate capital back to their home country, or illegal, which occurs in economies with capital controls that restrict the transfer of assets out of the country. Capital flight can impose a severe burden on poorer nations, since the lack of capital impedes economic growth and may lead to lower living standards. Paradoxically, the most open economies are the least vulnerable to capital flight, since transparency and openness improve investors’ confidence in the long-term prospects for such economies.
(Source: Investopedia)
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Quote : “The Stock Market is designed to transfer money from the Active to the Patient.”
- Warren Buffett
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