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| December 05, 2014 |
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| Weekly Facts |
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Close |
Change |
%Change |
| BSE Sensex* |
28,458.10 |
-235.89 |
-0.82% |
| Re/US$ |
61.94 |
-0.06 |
-0.10% |
| Gold Rs/10g |
26,400.00 |
-220 |
-0.83% |
| Crude ($/barrel) |
69.72 |
-6.63 |
-8.68% |
| FD Rates (1-Yr) |
7.75% - 8.90% |
Weekly change as on on December 04, 2014
*BSE Sensex as on December 05, 2014
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Impact 
With the first full budget of Modi-led-NDA Government a little over a couple of months away, mutual fund houses are pinning hopes that investments in Shariah compliant mutual fund schemes be given a tax break.
At present in India, there are only 3-4 mutual fund houses including likes of Goldman Sachs Mutual Fund, Taurus Mutual Fund, Tata Mutual Fund and SBI Mutual Fund (which has recently floated a New Fund Offer (NFO)), that are offering Shariah compliant mutual fund schemes. But compared to the other regions, especially the gulf and Malaysia, where the Shariah-based investment theme have been quite popular; India despite having a sizeable amount of Muslim population has not gathered much interest. Currently, the Assets Under Management (AUM) in such funds are quite negligible. And therefore, mutual fund houses see Shariah compliant funds a great opportunity to tap and grow their businesses in the race to garner more AUM.
However PersonalFN is of the view that, demanding a tax relief for Shariah funds on the lines of ELSS (also known as tax saving funds) is rather irrational for a number of reasons. First, a person who firmly believes in Shariah law and therefore wants to follow tenets of Islamic finance may not necessarily get lured by additional tax relief while investing his / her hard earned money. Under Shariah law, there are a number of industries, which are unfit for investing. For example, a company engaged in the business of alcohol or tobacco. Besides, Shariah funds do not invest in conventional banking and insurance companies. If a person is willing to scarify thriving opportunities offered by some companies belonging to these sectors, taxation may not be an influencing factor.
For Shariah funds to be successful in India, or even elsewhere, performance by following the tenets of Shariah law will be a determining point for investing. They have to generate competitive and a dependable track record for one to invest in such funds. PersonalFN believes selection of a fund matters the most, irrespective of how great the theme is. Moreover at PersonalFN we have always consistently held, that investment in any avenue should not be done simply because it offers a tax incentive.
Do you think additional tax incentive to Shariah compliant funds would make them more popular? Share your views
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Impact 
Servicing the customer efficiently is critical to the success of any bank. But as its said, there are no free lunches. Recently, banks imposed a limit on usage of their own ATMs too for a reason that expenses incurred for letting you use ATMs were detrimental to their business. The secondary objective of the move was to encourage people to transact through non-cash mediums that involve lower costs and provide high transparency. Taking a step ahead, RBI in one important development, has decided to double the single day usage limit of prepaid instruments, including prepaid cards.
What are prepaid instruments?
As defined by RBI, “prepaid payment instruments are payment instruments that facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card.”
Apart from cards issued by your bank, prepaid payment instruments include: smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets and paper vouchers among others.
What is the new limit?
So far, there was an upper limit of Rs 50,000, unless specified limits were given, on the per day usage. This limit has been doubled to Rs 1,00,000 now. Furthermore, now gift cards can be issued with a maximum validity of 3 years as against the maximum validity of 1 year earlier.
Something in store for NRIs too...
If you are an NRI and have a Know Your Client (KYC) compliant account, foreign branches of Indian banks can issue rupee denominated pre-payment cards or they can be co-branded with money exchanges or transmitters. Such cards can only be activated once an NRI arrives in India. One may withdraw upto Rs 50,000 per month and transact upto Rs 2,00,000.
What’s more?
Banks can now issue more than one card for a fully KYC compliant account. Such cards can be issued for the dependants or the other family members of the person holding a KYC compliant account. However, banks would have to ensure that, this facility is not being misused for money laundering. Thus, banks would report suspicious transaction to the Financial Intelligence Unit India (FIU-IND).
PersonalFN is of the view of that, these initiatives may help lower cash transactions and inculcate the habit of using plastic money among investors. Having said this, PersonalFN cautions you of the flip side of this. You may end up spending more since transaction limit has been increased. You should ideally curb expenses to leave you with more saving which can do well to your long term financial well-being. In addition, it is noteworthy that the limit on prepaid payment instruments has been increased, and not the limit of per day cash withdrawal at ATMs.
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Impact
Staying firm on its stance, RBI kept key policy rates unchanged at its fifth-bi-monthly monetary policy review. Falling inflation had given rise to expectations that RBI may provide some relief to borrowers by slashing policy rates. The Finance minister too made a case for rate cut and opined that it would provide an incentive to economic growth.
But RBI maintained a status quo based on its macroeconomic assessment, liquidity situation in the system, trends in inflation along with inflation expectations and fiscal management of the Government among other factors. PersonalFN brings to you in depth analysis.
To read more about this news and PersonalFN’s views on it, please click here.
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Impact
Beating forecasts of sub-5% growth in July-September quarter of Financial Year (FY) 2014-15; India’s GDP advanced by 5.3%. Although growth registered by world’s third largest economy is a tad lower in the second quarter as compared to that in the first quarter of the current fiscal; it is much in line with the full-year estimate of 5.5% given by RBI. During the Q2 of FY 2013-14, Indian economy had grown at 5.2%.
Are better days ahead for Indian economy?
(Source: CSO, PersonalFN Research)
Let’s see how economy performed over the July-September quarter.
In the quarter gone by, robust performance of services sectors and better than expected performance of the agriculture helped the economy partially offset for the lacklustre performance of manufacturing industries and mining sectors.
To know more about this story and to read our views, please click here
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- You delay payment of your outstanding bills and you would start getting back-to-back phone calls requesting you to settle off dues as soon as possible. There would also be late-payment charges. We all live a very fast life. It is not that we want to default our dues but lack of time makes it difficult for us sometimes to make timely payment. Although net banking has made life easy for many, there is still a large population that does not use such facilities for paying bills.
If you encounter this problem often and if you do not use net banking facility, you would soon have a solution.
What is the solution?
Now you can collect all your bills and pay once for all using just one window. Thanks to Bharat Bill Payment System (BBPS).
As envisaged by RBI, there has been a need of an integrated bill payment system that aims to offers interoperable and accessible bill payment services to customers through a network of agents. In addition, RBI believes such payment system should be one that allows multiple payment modes, and provides instant confirmation of payment. BBPS is being conceived to work on similar lines. BBPS would be authorised under the Payment and Settlement Systems Act, 2007 to carry out such a role. Banks and a few other bill payment collectors will operate as BBPS units.
PersonalFN believes it is a fantastic initiative that may really make it easy for consumers to pay off their dues in time and avoid late-payment charges. PersonalFN believes, for one to be able to achieve financial goals peacefully, financial discipline; especially while spending money is essential.
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Islamic Banking: A banking system that is based on the principles of Islamic law (also known Shariah) and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest. Collecting interest is not permitted under Islamic law.
(Source: Investopedia)
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Quote : "Operations for profit should be based not on optimism but on arithmetic." - Benjamin Graham
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