S&P BSE Sensex*	Re/US $	Gold Rs/10g	Crude ($/barrel)	FD Rates (1-Yr)
19,317.25 | 84.2 -0.55%	54.47 |(0.3) -0.61%	30,845.00 | 145.0 0.47%	108.91 | 0.2 0.21%	7.50% - 9.00%

Many of you may have encountered horrendous experience of financial products being mis-sold, in times where financial innovation is galore and competition in the financial services industry is severe. Fragmented knowledge on financial products on part of investors often causes this mis-selling to occur and this evil has been prevalent since quite some time now, especially in case of mutual funds and insurance products.

But now to crack the whip on the practice rampant mis-selling in mutual funds, the Securities and Exchange board of India (SEBI) has decided to to bring such activities under the ambit of fraudulent trade practices. The capital market regulator has recently brought in an amendment to the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, to include mis-selling of units of a mutual fund scheme under its ambit.

Mis-selling of a mutual fund scheme under the aforesaid regulation will mean any sale of units of a mutual fund scheme by any person, directly or indirectly, by:
 

• making a false or mis-leading statement, or
• concealing or omitting material facts of the scheme, or
• concealing the associated risk factors of the scheme, or
• not taking reasonable care to ensure suitability of the scheme to the buyer
   

Thus now you could book your mutual fund distributor / agent under a case of fraud, if the he's "mis-selling" a mutual fund scheme to you.

We are of the view that, the move has come at a time, where there are rising numbers of cases of mis-selling of mutual fund products to investors. As investors, it is important to be responsible while making an investment decision, because eventually it could be difficult to prove cases of mis-selling.

We also think that the industry should come-up with less complicated products which are unique in nature and not merely duplicate product by proffering fancy names. In their attempt to widen the reach and penetrate into the markets, the mutual fund industry should impart financial education which can be engaging and interesting for investors.

Can a bounce back in IIP, induce RBI to keeps interest rates high for long?

The Index of Industrial Production (IIP), after showing a slump in growth in the month of September 2012, bounced backed in October 2012. A favourable base effect helped the industrial output to touch 8.2%, it being the highest since the level clocked in June last year. Earlier in the month the core sector data of 6.5% for October 2012 also hinted that IIP could be better, and indeed it did.
 

IIP bounces back smartly

(Source: CSO, PersonalFN Research)

Stronger upticks in manufacturing index, consumer goods index (both consumer durables and consumer non-durable), and capital goods had a bearing on the IIP data.

But we are of view that, going forward industrial growth can occur with a lag, although slew of reform measure have been taken by the Government. There are yet many crucial bills which are awaiting clearance (such as the Pension Bill, Banking Law Amendment Bill, Insurance Bill, Real Estate (regulation & development) Bill), in the winter session of the Parliament; which are needed for inclusive growth to occur.

The bounce back in IIP as mentioned earlier is a result of a favourable base effect and the advantage which the data has enjoyed by it being for the immediately preceding month before Diwali (which was celebrated in November 2012 this year), where industrial output is generally high in order to meet festive demand.

Can the RBI hold the interest rate at elevated for long? Well, the bounce back could be an excuse for the RBI not to reduce policy rates in it 3rd quarter mid review of monetary policy 2012-13 (scheduled on December 18, 2012) since WPI inflation is yet over the comfort zone and not showing signs of moderation. But going forward from the first quarter of the new calendar year, we could see policy rates being cut gradually taking into account growth-inflation dynamic, liquidity condition and external developments.

Ease in KYC norms for banks, could make banking hassle-free

You may have found the whole Know Your Client (KYC) process with banks thus far irksome, as some banks often ask for identification proofs over and over again. Some of them insist on introduction by an existing customer, even if you want to open a new bank account with them; which can be quite annoying if you are already furnished and complied with your KYC.

But recently the Reserve Bank of India (RBI) eased the KYC norms for banks, which can make opening bank accounts and transacting hassle-free task for customers. In a communication to banks, RBI asked them not to insist on introduction by an existing customer while opening a new account, as it is not mandatory under any rule of the central bank. As long as the identity proof has an address that is the same as the address on which an account is being opened, there is no need for a separate address proof, said the RBI.

Thus far banks have been asking for separate documents for the identification and address verification process. Now banking regulator has allowed rent agreements registered with the state Government or any other registration authority as a proof of address, while "Aadhar cards" as proof of residence and identity, if the address on the account opening form and Aadhaar are the same. Moreover job cards given under given under the rural job scheme, would also suffice as a valid document to open a bank account.

We are of the view that, this initiative from RBI would indeed make opening bank account and transacting hassle-free for many individuals, and could aid in its agenda of inclusive banking as wider reach could be achieved with ease in KYC norms.

So far playing 'hide & seek' with the I-T dept.? Read this!

If you as a citizen of our country, are playing a hide and seek game with the income tax department; you ought to read this.

The Government has issued stern warning asking people to disclose their true income, or face the risk of an income tax scrutiny. The Finance Ministry has said, concealment of income while filing tax returns would not go unnoticed as various information of your transaction would be collated. While many of you in blithe or arrogance may think how they can manage to collate the data, let us apprise you that the scanner would be focused on all your transactions. To know more about this news and our view over it, please click here.

SEBI pronounces norms for investment in RGESS. Know what's in store for you!

After a lot of debate over what instruments should be made available for investing in the Rajiv Gandhi Equity Savings Schemes, the Securities and Exchange Board of India (SEBI) finally pronounced norms and clarified (vide a recent circular), which securities will be eligible for participation in the said scheme. It is clarified that the following securities would be considered eligible for RGESS.

• Close-ended mutual funds (which are traded and listed on stock exchanges);
• Exchange Traded Funds (ETFs) (barring gold ETFs);
• Equity shares of:
  • BSE-100
  • CNX-100
  • Maharatna, Navaratna and Miniratna Public Sector Undertakings (PSUs) - including their Follow-on Public Offers (FPOs)
  • IPOs of PSUs with Government stake not less than 51%, having revenue of Rs 4,000 crore in the last three years

To read more about this news and know our view over it, please click here.

FREE Money Simplified Guide Your Definitive Guide To Retirement Planning! Download your FREE copy to know how you can indeed build the corpus for your golden days. Click Here to get this most downloaded E-Guide, Now!

• Now you could be compensated if the Initial Public Offer (IPO) you betted on slipped sharply within a few months of its listing. The capital market regulator, SEBI could make it mandatory for issuers to compensate retail investors in initial share sales if the stocks fall sharply within a few months of listing.
  
  At present SEBI has received extreme views from investors and market participants on the subject, and is expected to soon arrive at a view. "We will start in a soft way," said Mr. UK Sinha (Chairman of SEBI) on the side-lines of the CII capital Markets Summit.
  
  We are of view that if such an initiative is indeed implemented by the capital market regulator, it could act as a safety net for retail investors and could help in bringing realistic pricing and put pressure on promoters.
   
• With direct plans to be provided to mutual fund investors for existing and new schemes with a separate Net Asset Value (NAV) from January 01, 2013, many mutual fund houses are revamping their websites with host of features such as the following amongst others:
   
  • Financial health check-up
  • SIP calculators
  • Goal calculators
  • Asset allocators
  • Portfolio tracker
  • Online transaction.
     
  Recently, ING Investment Management (I) Pvt. Ltd. announced an exclusive website for the investors who look at Multi Manager Funds as an investment option considering they get invested in various funds by single investment. The website allows you to undergo a financial health check-up, obtain a unique statement portfolio update and invest online into a bouquet of all mutual funds through one.
  
  We are of the view that, such revamping of website is done to engage investors and provide answers to some of their questions, with the help of important tools and calculators. This an interesting initiative from fund house side, but what needs to be close watched is how many people indeed use it effectively and number of them opting for direct plans from January 01, 2013.
   
• Now you could get instant approval for your personal loan applications. Standard Chartered Bank India is among the first few banks in the country to launch a unique online personal loan approval solution.
  
  At your convenience you can use the digital application process and apply online for a personal loan, through their official website; and once applied, just within 5 minutes you can get an in principle approval on your loan application. This in principal approval will be followed by a final approval after completion of ‘Know Your Customer (KYC)’ and credit approval processes.
  
  We are of view that such initiative is indeed beneficial for swift processing of personal loans for individuals. This is an advanced step in use of technology that can help do away with the cumbersome paper work process to an extent and provide convenience of time and place for individuals in meeting their requirement of instant fundings.
   

Asset Allocation: An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon. The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.
 

Quote : "If you would be wealthy, think of saving as well as getting."   - Benjamin Franklin