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| October 21, 2016 |
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Impact 
One more proof that Indians love gold.
More than a 100 gold savings schemes are running across the nation raising more than Rs 100 crore each.
They prominently come in three genres which are as follows:
- Pay a fixed number of instalments and the Jeweller will contribute the remainder.
- Freeze the gold prices for each payment and pay in a lump sum while actually buying gold at the end of the tenure.
- Buy gold every month for a pre-specified time period and avail deep discounts in making charges.
Big jewellery brands operating through retail chains have managed to pull in many subscribers to these schemes. They are either investors or potential buyers who try to accumulate gold for special occasions such as their marriage anniversary, the wedding of children, or something as important as that. The smaller jewellers too have been floating similar schemes. In other words, many people irrespective of their financial circumstances and social status are exposed to gold savings schemes.
Therefore, their smooth functioning is not only essential for the progress of the jewellery sector but also from the perspective of avoiding any financial upheaval within households.
SEBI is taking proactive steps…
To ensure they are not operating against set guidelines and aren't compromising on the investors' interest, the Securities and Exchange Board of India (SEBI) has brought them under the scanner. The schemes offered in the past were not tightly regulated or monitored. These did not involve Know Your Customer (KYC) compliance and were not even subject to tax deducted at source. To top it, chit fund scams are not new to India. Although most of the gold savings schemes operate as private commercial contracts, there's a thin line between they being classified as CIS (Collective Investment Schemes).
This time SEBI is not taking any half-measures.
These days SEBI officials are busy collecting brochures and pamphlets from prominent jewellers having a reach to raise such large sums. In the past, many people have burned their fingers by falling prey to the false promises of privately managed Collective Investment Scheme (CIS).
What is a Collective Investment Scheme?
SEBI has defined CIS as, "Any scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilised with a view to receive profits, income, produce or property, and is managed on behalf of the investors is a CIS. Investors do not have day to day control over the management and operation of such scheme or arrangement." Rs 100 crore has been set as the floor limit for any scheme to be classified and regulated by SEBI. However, any scheme or arrangement under which deposits are accepted under section 58A of the Companies Act, 1956 (1 of 1956) is not classified as CIS.
What does this imply?
SEBI's initiative might act as a deterrent for the big players having a relatively large corpus under management, but the smaller jewellers may escape the scrutiny. Unfortunately, the network of smaller jewellers is deeper and denser than that of big players who are restricted to prominent urban areas.
Time to say NO…
Lesser the regulations, lower the transparency. Thus, PersonalFN is of the view that, investors should avoid getting lured by gold savings schemes offered by the jewellers and instead consider investing in gold funds offered by the mutual funds. The mutual fund industry is tightly regulated and thus reduces the chances of cheating and frauds.
If you want to accumulate precious yellow metal from the investment perspective, gold Exchange Traded Funds (ETFs) and Sovereign Gold Bonds are the most suitable options for buying gold. PersonalFN believes you should hold about 10%-15% of your portfolio in gold.
On the other hand, if you want to buy gold for consumption in the form of jewellery, you should consider the purity of gold and transparency of the jeweller as the most crucial factors.
Do you consider gold savings schemes offered by jewellers as transparent and safe? Share your view here Facebook | Twitter
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Impact
Even after the success of Jan-Dhan Yojana, India still remains an under-banked nation. The key hurdle in spreading the banking network and achieving financial inclusion has been the lack of infrastructure—both soft and physical, and costs associated with running banking operations. To overcome this challenge, banks are coming up with novel ideas. A newly found tendency among banks is the use of cutting-edge technology to improve the operational performance and reduce overheads.
State Bank of India (SBI), nation's largest lender, has planned to hire nearly 400 I.T. professionals to modernise e-platforms, automate the routine work, and improve the delivery of banking services. Its private sector counterparts are not far behind. HDFC Bank is joining hands with a Singapore-based company, Tookitaki, which is known for developing predictive software, to upgrade its technological base. While the largest Private sector lender, ICICI Bank has automated 200 processes so far, executing over 10 lakh transactions. It aims to use the artificial intelligence to take the total of man-less operations to 500 by the end of this year.
Those who believe deploying robots in the banking industry may kill jobs may breathe a sigh of relief if they read the comments of an ICICI bank official who told media that, "As we make artificial intelligence software do mundane jobs, we save time for our employees freeing them to do advisory jobs and increase our business. The 200 operations which are now being done by AI software constitute 10% of our back office operations. By year end we would increase it to 500 operations." Addressing a question about automation killing jobs, he added that, "We continue to add about 5,000-6,000 employees every year. That intake would continue as our operations become more diversified."
PersonalFN is of the view that, along with saving costs and enabling more staff available for skilled jobs, the use of artificial intelligence in the banking industry may also contribute to curbing fraudulent practices. The ongoing process of automation may slowly change the face of Indian banking as more processes get streamlined. Surveillance and risk management may get a boost too.
The Indian banks have already embarked on their journey towards becoming more competent at a global stage.
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Impact
Mega malls in India's metro cities have triple-storied parking spaces, but during peak times there's a space crunch. With the pre-Diwali shopping frenzy these days, tens of cars keep getting in and out every minute causing some commotion near the parking area. The situation isn't different once inside. Food courts are often flooded with people and a half-an-hour wait outside your favourite restaurant is commonplace. The staff at the retail outlets have to be on their toes during the festive season, and consider yourself lucky if you find no queues at the trial rooms. Earlier, one witnessed this scene during festival time, but even weekends pull in foodies and shoppers to malls.
If you move to a remote place, you will find consumers are equally enthused as their counterparts in the metros and tier-1 cities. So it's not a surprise that many automobile companies, especially the two-wheeler manufacturers are focused on capitalising on the rural markets. Brands in the consumer non-durables segment are coming up with unique strategies to capture the rural market.
And yes, any discussion about growing consumerism can't be complete without having a mention of buzzing online marketplaces. The online shopping in India is no more a monopoly of a few prominent players. In fact, smaller marketers have become tough competition to well-established brands. Similarly, consumers across economic classes shop online. Although Cash-On-Delivery (COD) remains the most preferred option for many Indians, the trend of using e-wallets and other electronic payment mediums is catching fast.
Clearly, consumerism in India is on the tipping point. The Indian consumer is not only maturing, but also open to experimentation.
These days Indians are primarily spending on
- Automobiles
- Air travels
- Mobile phones
- Consumer durables such as air conditions, TVs, Fridge, and machines
- Clothing
- Fast food and hotels
Although some of these items have traditionally been customers' favourite, the noticeable change is in the price cautiousness. Therefore, when people go shopping for a television set nowadays, they are not keen on buying cheap Cathode Ray Tube (CRT) televisions, but they enquire about expensive LCD and LED televisions. Among these categories they might still buy the cheaper one, but the price is no longer the only deciding parameter, quality is. Similarly, you can see a gradual shift in how we spend on eatables. Earlier people spent Rs 20-30 on coffee, then came a period when coffee shop chains proliferated, wherein typically a cup of coffee cost Rs 80-100. Now we are witnessing entries of premium brands in the segment. Today, people are willing to pay even Rs 150-200 for a cup of coffee. The same holds true in the case of multiplexes. Individuals who are in their 70s laugh at youngsters when they hear about paying as high as Rs 200 for popcorn at multiplex cinema halls.
To read more about this story and Personal FN's views over it, please click here.
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Impact
The response to the
Income Declaration Scheme (IDS), 2016, has been overwhelming. As mentioned by the Finance Minister in a press conference, 64,274 Indian citizens revealed Rs 65,250 crore worth black money under the scheme. As 45% of this amount will go to the Government, its coffers are set to get heavier. However, if you think the action against black money will end with the cessation of IDS 2016, you have more surprises in store. The Government has already warned tax evaders of more stringent actions had they not disclosed their income under IDS 2016.
Stock markets are on the radar now
Now the income tax department is focusing on tax evaders investing in stock markets. The large-scale investigation, of a magnitude that we haven't seen before, carried out by the income tax department has exposed some startling data. The department has examined the Securities Transaction Tax (STT) returns submitted by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for the Financial Year (FY) 2013-14 and FY 2014-15.
What are the revelations?
Daily News and Analysis dated October 13, 2016, reported this, as per which the total trading turnover on the stock exchanges jumped from Rs 32 lakh crore to Rs 66 lakh crore between FY 14 and FY 15. Moreover, the turnover worth Rs 5,000 crore was carried out using duplicate or bogus PAN cards in 2014-15. Interestingly, the investments worth close to Rs 61 lakh crore attributed to 3.0% of total investors. Out of these top 3% High Net Worth Individuals (HNIs), approximately 47% didn't file I-T returns in FY 2014-15. The number of investors evading the tax went up 150% in FY 15. According to the reports of the tax department, 1,21, 423 stock market investors haven't disclosed their source of income but have investments ranging from Rs 2 crore to Rs 10,000 crore in the equity markets. Most of these tax evaders come from 3 states—Maharashtra, Gujarat, and Tamil Nadu.
To read more about this story and Personal FN's views over it, please click here.
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Only a few months ago, Telangana and Andhra Pradesh were fighting a claim game after P.V. Sindhu won a silver medal for India at the Rio Olympics. Which side does she belong to was the question. She was born in Hyderabad which is now the Capital of Telangana, but was in Andhra Pradesh at the time of her birth.
Such a feud between these two Southern states is unlikely to happen over a person who disclosed Rs 10,000 crore the Income Declaration Scheme (IDS), 2016 which concluded on September 30, 2016. Hyderabad alone has contributed 20% of the total Rs 6,50,000 disclosed under IDS. As the core characteristic of the scheme, we will never be able to know who the mysterious person is that?
Waking up to the need of the hour, the CM of Andhra Pradesh, Mr Chandrababu Naidu stated that, "Politics has become a shelter for corrupt people and black money earners. Some people who are in politics are misusing the people's mandate. I'm writing a letter to the Prime Minister today asking that Rs 1,000 and Rs 500 notes be abolished and total bank transactions be encouraged."
Whether it's new found wisdom or an attempt to cover up the embarrassment, it's a sensible suggestion. RBI might have made a note of it indeed.
Responses from the Government will make it clear as to how serious this Government is about routing out black money.
Manci Pani, Mr Naidu…
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Branch Automation: Form of banking automation that connects the customer service desk in a bank office with the bank's customer records in the back office. Banking automation refers to the system of operating the banking process by highly automatic means so that human intervention is reduced to a minimum. Also referred to as platform automation.
(Source: Investopedia)
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Quote: "It would be wonderful if we could avoid the common setbacks with timely."-Peter Lynch
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