Audit glare on SBI provisions

The Institute of Chartered Accountants of India (ICAI) has asked the State Bank of India — the country’s largest commercial bank — to explain the reasons for the surge in the provisions it made against bad loans in its results for the fourth quarter ended March 31. The SBI had raised its provisions against bad loans by 49 per cent to Rs 3,264 crore from Rs 2,187 crore in the year-ago period. Total provisions at the bank rose 82 per cent to Rs 6,059 crore during the same period. The sharp jump in provisions was the principal reason behind the PSU banking giant reporting a net profit of Rs 21 crore compared with Rs 1,867 crore in the same period last year. The resultant fall in the SBI’s profits drew a caustic remark from RBI deputy governor K.C. Chakrabarty recently. Although Chakrabarty did not name the bank, he said whenever the chairman of a bank retired, its profits went down as the successor wanted to start with a clean slate. “If we don’t audit or create the standard then anybody will report anything that will not be meaningful and nobody will rely on that. Books should not be as per the minds of the chairman but reporting should be as per books,” he had said. It is now learnt that the accounting regulator will soon take up the reasons behind the rise in provisions at the SBI during the fourth quarter, not only with the bank, but also with its auditors. ICAI president G. Ramaswamy was quoted as saying that a letter would be sent to the SBI asking it to state the reasons that led to the increase in provisions in the March quarter. The letter is expected to be sent within a week and further action will depend on the SBI’s response, the ICAI chief added. It, however, could not be ascertained as to whether the accounting regulator will look into specifics such as the jump in provisions for NPAs or its overall provisioning procedures. Meanwhile, the SBI has also breached the Reserve Bank of India’s credit exposure norms with respect to loans it provided to Reliance Industries Ltd (RIL) in the past three consecutive years. In its annual report, the SBI has disclosed that its credit to RIL was in excess of the limits prescribed under the RBI’s prudential credit norms. The bank added that apart from RIL, Indian Oil Corporation and Bhel were the other two clients who had benefited from a breach in the prudential credit limits. Under the RBI norms, loan exposure to any entity has to be capped at 15 per cent of capital funds in the case of a single borrower and 40 per cent of capital funds in the case of a borrower group. However, the exposure to a single borrower can go up to 20 per cent if the additional 5 per cent is on account of extension of credit to infrastructure projects.

RIL buys Bharti insurance stake

Mukesh Ambani today stormed into the crowded insurance business arena by acquiring Bharti group’s 74 per cent stake in its life insurance and general insurance entities for an undisclosed sum of money. The move will pit the elder Ambani scion against his sibling Anil Ambani who scrapped a non-compete agreement in May last year that removed virtually all turf restrictions that they had decided on when they carved up patriarch Dhirubhai Ambani’s empire in January 2006. Two Mukesh Ambani companies — group flagship Reliance Industries and Reliance Industrial Infrastructure Ltd (RIIL) —will acquire the stake that the telecom giant held in the two entities: Bharti AXA Life Insurance Company Ltd (Bharti AXA Life) and Bharti AXA General Insurance Company Ltd (Bharti AXA GI). Both insurance entities have raked in losses in 2009-10 with Bharti Axa Life suffering a loss of Rs 478.17 crore and Bharti Axa GI of Rs 142.30 crore. It isn’t clear how much Ambani has had to fork out for the insurance companies but it won’t be hard for him to pay. Reliance Industries is sitting on a $9.5-billion (Rs 42,393 crore) cash mountain and will rake in another $7.2 billion as soon as the government clears the deal it struck with British Petroleum in February under which the UK exploration giant will acquire a 30 per cent participating interest in the 23 oil and gasfields that RIL operates. Under the terms of the deal with the Bharti group, RIL and RIIL will effectively hold 57 per cent and 17 per cent, respectively, in both the insurance companies and will become AXA’s joint venture partners in India. The Paris-based group will retain its current 26 per cent shareholding in the insurance joint ventures and will continue to manage the day-to-day operations. Interestingly, there is an option under which AXA can acquire from RIL and RIIL up to 24 per cent in both the insurance companies if the FDI regulations and other norms permit such a purchase. It is contemplated that if this option is exercised, the two Reliance companies will effectively hold 50 per cent with RIL owning 45 per cent and RIIL the rest. AXA will then hold the remaining 50 per cent in both companies. However, it is assumed the life insurance business of Bharti AXA was alone valued at over Rs 3,000 crore. In March this year, Nippon Life had acquired a 26 per cent stake in Anil Ambani’s Reliance Life for Rs 3,062 crore. Analysts had then said the valuation given to Reliance Life was higher than anticipated. For Mukesh Ambani and Reliance which began with textiles, the acquisition of Bharti’s stake is another instance of it diversifying into areas other than oil and gas or petrochemicals. While RIL has already entered the organized retail business, last year, it had stunned observers when it entered the hospitality business by checking into EIH. In June last year, it acquired a 95 per cent stake in Infotel Broadband for Rs 4,800 crore. In March this year, RIL announced that it was entering financial services by joining hands with the DE Shaw group. Though insurance is a capital intensive business with a long gestation period, for a cash rich company like RIL, it can withstand the challenges in these businesses. Bharti AXA Life started operations in 2006 and has a market share of a little over one per cent in the insurance arena. During 2010-11, it collected total premium of Rs 790 crore. Data from IRDA show that the company’s new business premium income dropped to Rs 362 crore, a fall of 17 per cent. On the other hand, the gross premium underwritten by Bharti AXA GI stood at Rs 551.48 crore, an increase of 77 per cent over that in 2009-10.

Child Brides - Photo Gallery - Pictures, More From National Geographic Magazine

A truly sad things I am sharing with you. We all must stop this sin.Child Brides - Photo Gallery - Pictures, More From National Geographic Magazine

No need to file tax return for income up to Rs 5 lakh

As many as 85 lakh salaried tax payers whose taxable income, including salary and interest income, is up to Rs 5 lakh, will not be required to file income-tax return from now. 

"No income tax returns are required for salaried persons whose annual annual taxable income including salary and interest is up to Rs 5 lakh. We would shortly notify this," a Central Board of Direct Taxes official said. 

However, he said this would not cover income from other sources like house property, capital gains and gains from profession and business. 

The scheme would be applicable from assessment year 2011-12 onwards. This means that salaried persons eligible under the scheme would not have to file returns for the financial year 2010-11 in 2011-12 (assessment year). 

Under the scheme, those salaried persons who want to claim tax refund would have to income tax file return. 

As per the Memorandum to the Finance Bill 2011, the government will be issuing a notification exempting 'classes of persons' from the requirement of furnishing income tax returns. 

Under the scheme, the salaried person wants exemption from filing IT return, has to disclose about the incomes like dividend and interest to his employer for tax deduction. In the scenario, the Form 16 issued to salaried employees will be treated as income tax return. At present, it is obligatory for all salaried persons to file income tax return under the Income Tax Act, 1961. 

The idea behind the move is that in cases where there are no other sources of income, filing of a return is a duplication of existing information. 

Nifty Level

NIFTY INTRA-DAY for 6th June 2011

RESISTANCE.........5555….5585...5645….5680

SUPPORTS............5515...5485...5450....5385

Money can grow on trees!

Even as global businesses and industry are being forced to take a closer look at their negative impact on environment, the 'business of environment' itself is looking up. The focus on global warming and climate change and the campaigns to help save the planet are bringing more people closer to environment than they have ever been. 


Right from increasing attendance at wildlife reserves to the abundance of adventure sports that take people closer to nature, businesses that 'exploit' nature are doing better than ever before. Though, in India at least, questions still persist whether 'ecotourism' or 'environment tourism' really helps the conservation effort at the local level. 


Amol Khante, director of CAC All Rounder an organization that's involved in ecotourism activities, says, "There definitely has been more interest in the outdoors over the last few years, leading to more business. However, not all of the business leads to gains for the local environment or even the local people, whose day-to-day life impacts the environment. More needs to be done to ensure such businesses benefit local tribals or villagers and wean them away from a life living off the forests surrounding their villages." 


Even though such businesses may not always directly contribute finances to save the environment, Khante believes that they do help create awareness among the general population about the importance of environment. "Adventure sports pull you out of your comfort zone. At such times people are more receptive to new experiences. In this state of heightened awareness, say after a strenuous trek of 2-3 hours, any city-bred yuppie will realize the importance of a tree's shadow or the grass under it. He will remember the taste of cool water from a natural spring, and how different it is from his office water cooler. This bonding will stay with the person permanently, prompting him to think a bit more about his environment over the long term." 


Most people closely involved with environmental issues agree that there is a link between tourism and the well-being of the environment, though tenuous at times. Now, with the government making efforts to ensure the negative impact of tourism is minimized, everyone can only hope that tourism and nature grow on each other in a symbiotic relationship. 

5 JUN, 2011, 12.42AM IST, RAHUL SOMAN,TNN 

India to adhere global benchmarks for cell phones radiation

Amid concerns over likely health hazards due to radiations emitting from mobile phones and towers, the government today assured that India would adhere to best global and scientific benchmarks while drafting the final guidelines in the telecom sector . 

The government's reaction comes in the backdrop of a latest WHO report which says cellphone use can possibly cause brain cancer. 

"While telecom is a huge success story in India, we have to ensure that any possible health related effects of radiation emitted by mobile phones and towers are reflected in the guidelines. 

"The final guidelines would take into account the best global benchmarks and scientific evidence on the subject," Minister of State for Communications and Information Technology Sachin Pilot told PTI. 

The government in August last year, had set up an inter- ministerial group to evaluate the evidence, re-visit radiation guidelines for mobile towers and adopt guidelines for radiation emission by cell phones. 

The group had made it mandatory for cellphone manufacturers to declare the radiation level of each mobile handset on the packet itself. 

For mobile towers, the group proposed that radiation norms should be ten times as strict as the existing ones- from f/200 watts per square meter to f/2000 watts per square meter. 

Uptill March 31 this year, 5,88,645 out of 6,05,859 base stations had been self-certified. 

The group had experts from Department of Telecom, Ministry of Health, Department of Biotechnology, Ministry of Environment and Forests and Indian Council of Medical Research (ICMR). 

The report is currently under the consideration of Department of Telecom.

5 JUN, 2011, 01.00PM IST,PTI 

India to emerge as third largest domestic banking market by 2050: PwC

Banking assets of emerging nations are likely to overtake that of G7 economies by the year 2050, with India likely to emerge as the third largest domestic banking market in the world in the next three decades, says PricewaterhouseCoopers . 

According to a PwC report, total domestic credit in the E7 economies (China, India, Brazil , Russia , Mexico , Indonesia and Turkey) is likely to overtake total domestic credit in the G7 economies within the next 40 years. 

The analysis also suggests that India is likely to be the fastest growing of the E7 economies and could grow faster than China in the long run. 

"China will continue to grow somewhat faster than India over the next 5-10 years, but after that Chinese growth will be held back by its rapidly aging population (due in large part to its one child policy) and diminishing returns to its investment-led strategy," the study said. 

In contrast, India and other emerging economies like Brazil, Mexico, Indonesia and Turkey have much younger populations and faster-growing labour forces. 

The banking sector in the seven emerging markets are not going to "rival" those in India and China in terms of size, but by the year 2050, they could be of the same order of magnitude as the banking sectors in countries like France and Italy from the much lower levels today. 

"The banking world in 2050 will look radically different from the one we see today, with the E7 economies becoming at least as important as the G7," the report said. 

Many E7 economies already have relatively profitable banking sectors, and our estimates suggest that total profits from domestic banking in the E7 will be around half those in the G7 by 2025 and larger than in the G7 before 2050, the PwC report said. 

At present, the weight of the E7 in global banking assets is low so the global average looks close to the G7 average. However, overtime, this is going to change with the E7 ratio rising much faster than the G7 ratio so that "near convergence is achieved by 2050". 

Retail banking sectors in emerging market economies are likely to see particularly rapid growth, since mortgage and consumer credit lending is generally not well developed yet in these markets compared with corporate and government lending. 

Besides, in the next few decades E7 banks will also become major competitors in the global "war for talent". 

The signs are already visible, with Russian banks hiring investment bankers from London, Chinese banks importing the US or European executives, and Indian banks attracting staff with experience of working for major G7 institutions. 

"As the E7 banks internalise the knowledge of these staff, so their competitiveness in both domestic and global markets will increase," the report said. 

However, some major E7 banks may also come under foreign ownership, the study said.






5 JUN, 2011, 04.13PM IST,PTI 

Jeevan Arogya ----Table No 903 of LICI

At last LICI found time to introduce a truly unique policy of its own at last. A uniquely defined health Insurance Scheme (Table No – 903) has started form 1 June 2011.

 You alone (Principal Insured) or all your family members including parents-in-law, from age 18 to 65 (75 for parents) and 3 months onwards for children cover up to 80 years for your family and 25 for dependent children.

Hospital Cash Benefit (HCB) – for hospitalization = Initial Daily Benefit amount chosen by you (will increase by 5% every year and No Claim Bonus on completion of 3 years, and will be called Applicable Daily Benefit

Major Surgical Benefit – for major surgeries = 100 times of Applicable Daily Benefit

Day Care Procedure Benefit – for minor surgeries done within one day = 5 times of Applicable Daily Benefit

Other Surgical Benefit – for all surgeries not covered in above two benefits = 2 times of Applicable Daily benefit 

Hospital Cash Benefit (HCB) 

• For hospitalization of more than one day where surgery may or may not be involved
• Choose between Rs.1000 and Rs.4000 as initial daily cash benefit
• Increases by 5% every year
• Additional no claim bonus of 5% every fourth year
• Less than or equal amount for every additional member as per choice
• Can avail 30 days in year one, 90 days every year thereafter not to exceed 720 days total during the policy period
• Double the cash benefit for treatment in ICU

Major Surgical Benefit (MSB) 

• For surgeries that require prolonged hospitalization
• 100 times of applicable daily benefit (including 5% increase and no claim bonus)
• Maximum annual benefit 100% of major surgical benefit per person insured
• Maximum life time benefit 800% or 8 times of major surgical benefit per person insured
• See annexure for full list of MSBs

Day Care Procedure Benefit (DCPB) 

• For surgeries that may not require hospitalization of more than one day
• 5 times of Applicable Daily Benefit
• Maximum annual benefit = 3 surgical procedures per person insured
• Maximum lifetime benefit = 24 surgical procedures per person insured

Other Surgical Benefits (OSB) 

• Where surgery is required but does not fall under the MSB and DCPB category
• 2 times of Daily Benefit Amount for each person insured
• Maximum annual benefit = 15 days in the 1st year and 45 days in subsequent years for each person insured
• Maximum lifetime benefit = 360 days for each person insured

Other things to know:

• Optional accident benefit and term insurance benefit
• Initial premium fixed guaranteed for 3 years and revised every 3 years depending on age and health condition
• All members to be added at the beginning except where new members are through childbirth (next policy anniversary), marriage new spouse and parents in law within 6 months and risk cover starts from next policy anniversary)

Emergency Cash Facility: 
Only for instances where the treatment is from listed network hospitals and for Major Surgical Benefits alone – 50% of the MSB credited to the bank account to be treated as an advance from the claim amount

Exclusions 

• Pre-existing condition unless disclosed and accepted by the insurer
• Routine checkups, cosmetic treatments, epidemics, dental treatment, non-allopathic treatments, reopening of former surgeries, self-inflicted injury, dangerous sports, war, participation in illegal and criminal activities

Premiums: 

• Yearly, Half-yearly, of monthly (ECS)
• 30 days of grace for all modes except Monthly where it is 15 days
• Cooling off cancellation 15 days
• Nomination available
• Approximate premium – Rs.1922/- (age 20) to Rs.3768/- (age 50) for males and Rs.1393 (age 20) to Rs.2849 (age 50) for females

What is different from Mediclaim

• Pre defined benefit- No reimbursement, but lump sum paid based on pre-defined benefit
• Not based on expenses incurred
• This will tend to indirectly reduce the Health care cost, which is rising due to cash less mediclaim benefit
• All benefit is dependent on HCB

Termination of Policy

• If policy is issued on a single life

1. Non Payment of premium within revival period
2. On death
3. On Date of cover expiry
4. On exhausting all the life time maximum Benefits Limits as specified above

• If policy is issued on more than one life

1. Non Payment of premium within revival period
2. On death or Date of cover expiry of the PI and if the Policy does not continue with the IS as the PI
3. On death or Date of cover expiry of IS after Policy continues with the IS as the PI after the PI dies or reaches his/her Date of cover expiry
4. On PI exhausting all the life time maximum Benefits Limits as specified above

Treatments in respect of Specific waiting period

1. Treatment for adenoid or tonsillar disorders
2. Treatment for anal fistula or anal fissure
3. Treatment for benign enlargement of prostate gland
4. Treatment for benign uterine disorders like fibroids, uterine prolapse, dysfunctional uterine bleeding etc
5. Treatment for Cataract
6. Treatment for Gall stones
7. Treatment for slip disc
8. Treatment for Piles
9. Treatment for benign thyroid disorders
10. Treatment for Hernia
11. Treatment for hydrocele
12. Treatment for degenerative joint conditions
13. Treatment for sinus disorders
14. Treatment for kidney or urinary tract stones
15. Treatment for varicose veins
16. Treatment for Carpal tunnel syndrome
17. Treatment for benign breast disorders e.g. fibroadenoma, fibrocystic disease etc.

Identity crisis

A report says number of PAN cards far exceeds the number of tax payers. This raises concern that tax dodgers may be using multiple cards to hide income. The Income Tax (I- T) department has issued close to 10 crore permanent account number (PAN) cards but the number of taxpayers in the country is only one- third of this number, giving rise to serious concern that many tax dodgers are using two or more cards to conceal income.

According to the latest report of the Comptroller and Auditor General of India (CAG), while 958 lakh PAN cards were issued till the end of March 2010 only 340.9 lakh tax returns were filed during 2009- 10.

A senior official told M AIL T ODAY that instances of assesses with two or more PAN cards have been detected which show that multiple cards are being used to hide income.

The PAN card allotted to a taxpayer is the unique identification number that helps track individual tax compliance. It has to be furnished for all major transactions and opening bank accounts so that the IT authorities can trace the money trail of assesses. “However, this prime purpose for which a PAN card is issued gets defeated if taxpayers get hold of more than one card," a senior official pointed out.

An I- T official confirmed that the department has now initiated the exercise to weed out duplicate PAN cards but it is will take a long time given the huge database that has to be sifted through.

According to sources, the Income Tax department is looking for similar names, residential addresses and identical dates of birth to detect such multiple cardholders and check tax evasion.

PAN cards are issued by the Income Tax department, but the front- end of the process has been outsourced to UTI Technology Services Ltd and the National Securities Depository Ltd since July 2003.

The CAG report points out that the Central Board of Direct Taxes (CBDT) needs to identify the reasons for the huge gap between the number of PAN cards and the number of taxpayers who actually file returns. “The gap might be due to the issuance of duplicate PAN cards and death of some PAN card holders," it adds.

According to sources, the death of PAN card holders can account for only a small portion of this gap. “Some of the PAN card holders use them for establishing their identity and may genuinely not be required to pay tax. But there is a huge number of individuals who are misusing multiple PANs to dodge taxes," a senior official said. It is this category that the CAG wants the Income Tax department to crack down on so that tax evasion is checked and revenue collection gets a boost, a senior official said.

The report points out that the growth in direct tax revenue has not been keeping pace with the growth in gross domestic product (GDP). The logic is that a higher GDP growth rate leads to higher incomes, which should translate into higher taxes.

However, this is not happening. The report said, for every unit of growth in the GDP, direct taxes grew from 1.7 per cent in 2005- 06 to 2.6 per cent in 2007- 08. However, this figure came down to 0.5 per cent and 0.8 per cent in 2008- 09 and 2009- 10, respectively. This sharp decline in tax buoyancy is a matter of concern, the report added.

New Technology for Banks

PSU banks are shifting to a technology-based platform to calculate non-performing assets (NPAs) in the fourth quarter — a period the lenders reported fresh defaults and made higher provisioning for bad loans. Bankers and analysts said the shift to the new platform was one of the main reasons for the rise in bad assets during the fourth quarter. The new technology is part of the banks’ core banking solution (CBS), replacing the earlier practice of tracking bad loans manually. According to the Reserve Bank of India’s (RBI) norms, if either the interest or the principal on a loan is overdue for more than 90 days, the account becomes NPA. Banks have to make provisions, or set aside funds, against such loans. Last year, the finance ministry had directed PSU banks to identify bad loans with the help of technology rather than manually. The ministry had asked the banks to migrate to such a system by March 31. This deadline has now been extended till September because of software-related problems. Indian Bank began moving to the new system from April last year, while the Bank of India, Canara Bank, Andhra Bank are in various stages of implementation with agricultural loans and advances up to Rs 50 lakh yet to come under the platform. Bankers say by September, the remaining loans will be covered. Under the technology-based platform, NPAs are tracked on a daily basis through the use of computers.Bankers pointed out that the earlier practice gave some discretion to the officials, which might have led to lower NPAs. However, in the system-generated method, NPAs are immediately identified. This is one of the reasons why PSU banks adopting the new system have shown a rise in bad loans. To me It (the new method) certainly leads to transparency and prevents any form of manipulation. Moreover, it gives an accurate picture compared with the manual intervention. A significant part of BoB’s loans is now under the new method. Recently, bulk of the slips in the fourth quarter was because of the efforts made by public sector banks towards a stringent recognition platform for non-performing loans that disallowed any manual intervention.  I Personally expect more slippages in the first half 2011-12 from this transition as most public sectors are yet to fully complete the transition of their overall loan portfolio.

New role of Yoga Guru

Yoga guru Ramdevji has threatened to go on a hunger strike to protest against black money. Ramdevji is following activist Mr. Anna Hazare by using social network platforms to mobilise support. Around 1.5 lakh people have reportedly been mobilised by Ramdevji’s aides.

Last week, senior officials of the Central Board of Direct Taxes met Ramdevji to explain measures taken to bring black money back to the country.

The government is also amending the existing double taxation avoidance agreements with different countries and entering into tax information exchange agreements with tax havens.

Earlier too, the government had tried to get black money back through amnesty schemes.

The last such scheme was attempted by P. Chidambaram in 1997 when he was the finance minister in the H.D. Deve Gowda government.

Thank you Ramdevji. What you have tried to do was a distance dream to others since Independence. None have bothered to anything significant on this regard.

Satyameva Jayate.

Bid to assess black money

The government today commissioned a study to estimate the amount of black money held within the country and abroad. Yesterday, the government announced the setting up of a committee to strengthen laws against black money.

Three top institutions have been asked to conduct the study — the National Institute of Public Finance and Policy, the National Institute of Financial Management, and the National Council of Applied Economic Research — over a period of 18 months, an official statement released here today said.

There have been wide-ranging estimates of the amount of black money stashed abroad -— from $500 billion to $1.4 trillion, or equal to India’s gross domestic product for a year.

A recent study by the Global Financial Integrity has estimated black money parked abroad at $462 billion.

“These estimates are based on various unverifiable assumptions and approximations. The government has, therefore, commissioned these institutions to get an estimation and sense of the amount of illicit fund generated and held within and outside the country,” said the statement.

Besides assessing unaccounted wealth, the study will profile activities, identify sectors and examine systems that encourage the generation of black money and how they are converted into legal wealth.

The committee announced yesterday would study ways to prevent the transfer of black money abroad, besides recovering such assets.

The government is under immense pressure on black money from the Opposition, the civil society as well as from the Supreme Court.

Growth slows to almost 7.8%

As you all know the high level of inflation is a worrying factor.India’s growth in January-March at 7.8 per cent was the slowest in five quarters as rising prices and interest rates crimped consumption and investment. For the whole of 2010-11, the economy expanded 8.5 per cent, a shade below the finance ministry’s forecast of 8.6 per cent growth. Consumer demand has been slowing down with inflation running at over 8 per cent over the last 16 months, admit finance ministry officials. Car sales, for instance, rose just 13 per cent in April, the slowest since June 2009. India’s inflation rate, fuelled by rising food and commodity prices, is the highest after Russia among the emerging economies. The Reserve Bank of India has been trying to cool down prices by raising key policy interest rates, which sucks excess money out of the system. “The RBI will need to raise interest rates further to rein in inflation. There should actually be simultaneous fiscal and monetary measures,” said N.R. Bhanumurthy of the National Institute of Public Finance and Policy. So it now need of the hour to rein in inflation and predicted that the RBI could raise interest rates by a quarter to half per cent shortly. However, this could curb investments too!!!

Investing where? Gold or silver?

It is really important for an investor to first understand the economy and the financial systems prevalent in the market before he decides what to invest in. With the cost of crude oil having increased considerably per barrel, the GOI has also acted by increasing the price of petrol and diesel severely.

Should an investor buy more gold or silver?

Precious metals were the best performing assets for the second consecutive year and also for the fourth time in the last five years. Investors enjoyed a 42% return by investing in precious metals in 2010. Silver performed much better than other precious metals in the market in 2010 with prices rising by an astounding 80% which is two and half times the rise in price of gold (29%).

Along with being deemed a safe investment, the relatively low supply of the metal as compared to the high demand has also contributed to the steady increase in price. In the first two months of 2011, silver's price has increased at a steady 9.3%.

Judging by the present market scenario, investing in precious metals will be a very wise decision. And it will make more sense to invest in silver than in gold….at least now!

Some parameters one should consider before investing in gold or silver?

One of the main reasons investors prefer investing in these two metals is the stability witnessed in the market. Liquefaction is also an easy process for gold or silver bars and coins. However, purity of the mineral is of utmost priority and should be given due importance.

Another important factor governing the decision on whether to invest in gold or silver is the price. Though the variation in the price of gold or silver is not as unpredictable as that of shares and equities, there still is a noticeable difference on a daily basis. But when you are investing a large sum of money then this can make a lot of difference. Hence, one should study the market carefully and invest when the price is relatively low.

Choosing the right vendor is also very important. If carefully observed then the price variations with wholesalers, retailers and commercial banks can be clearly observed. So one should watch out for the purest gold available at a comparatively low price. For a regular investor, it makes sense to invest at regular intervals. This way one can take advantage of the market volatility. Investing in both gold and silver makes sense for a regular investor as he can diversify and can have a steady return irrespective of market fluctuations.

Different forms of investing in gold and silver:-

Bar: One of the most traditional ways, dealing with bars is very simple too.

Coins: This sort of investment depends on the weight of the gold or silver coins.

Accounts: Swiss banks provide a Gold-account option which aids in transactions involving the precious metal.

Gold Exchange Trade Funds: This method helps gold transactions through the stock exchange.

Spread betting: This involves predicting the rise and fall in the price of gold or silver before investing in it.

Investing with mining companies: This is just like investing in the stock exchange. The only difference is that here one deals with shares from mining companies.

When is the right time to sell gold or silver?

With the current financial slump, people are selling their gold and silver as a means to make some extra cash. But with the price of the two precious metals having reached an all-time high, it would probably be wise to hold on to it and see how far the prices soar and then cash in at the opportune moment.

There are two factors that govern the decision of the timing of a transaction involving gold or silver. The value of the US Dollar at that moment and the investor's financial situation. Usually, the price of gold is inversely proportional to that of the US dollar. But most investors don't have pure gold lying around in large quantities. So unless you are investing or speculating on a really large amount of gold or silver, the drop in the US Dollar's value will not matter.

Govt panel to curb black money

 The government today set up a committee that will examine ways to tighten laws to curb black money.

The panel, which has been asked to submit its report within six months, will be headed by Sudhir Chandra, the chairman of the Central Board of Direct Taxes. The committee will study ways to prevent the transfer of black money abroad, besides recovering such assets.

A report of the Swiss Banking Association allegedly claimed that Indians were among the biggest depositors of black money in Switzerland’s banks. Recently, Wikileaks head Julian Assange had said Indians figured prominently among those having secret accounts in Swiss banks.

India’s black money abroad is believed to be more than its total foreign exchange reserves. A study conducted three years ago by Global Financial Integrity estimated that black money worth $27.3 billion was sucked out of India every year.

The committee will work out a system which will plug the loopholes that help to generate black money. It is likely to suggest measures such as declaring wealth generated illegally as national assets, enacting or amending laws to allow confiscation and recovery of such assets and providing for exemplary punishment against the perpetrators.

Revenue officials said the new measures being considered could verify from where the money actually came from without scaring off genuine investors.

Mauritius ranks first among all countries in FDI inflows to India with cumulative investments amounting to $34 billion, or 44 per cent of the total FDI flows.

Earlier too, the government had tried to get black money back through amnesty schemes. The last such scheme was attempted by P. Chidambaram when he was the finance minister in the H.D. Deve Gowda government.

Chidambaram had announced a voluntary disclosure of income scheme (VDIS) in the Union budget for 1997. The VDIS — which was operational between June and December 1997 — could raise just $2 billion.