FYI: Banks pay you Rs 100 per day as fine when…

Fees and fines are part of our life, especially when it comes to banks. You are slapped with a fee, if you don’t maintain the minimum balance in your savings account. You pay a credit card bill late; there is a late payment fine.

If a cheque is bounced for financial or non-financial reasons (forgot to write the date on a cheque) and you have to pay up for that. 

There are hundreds of reasons as to why you could land up paying a fee to a bank. But, did you know, as per the Reserve Bank of India, banks too have to pay you a fee? To know more, read on.

Under what circumstance: Ideally, when you visit an ATM to withdraw cash, you insert your debit card into the machine. Provide your PIN number. And after a few seconds you get the cash and corresponding cash withdrawal receipt. 

But, at times, the ATM machine fails to spit out the cash, but you get a receipt stating that the amount has been withdrawn.

What’s the rule: In such a circumstance, you call up the bank’s call center or visit the nearest bank branch and inform them about the incidence of the failed ATM transaction.

The bank assures you that the wrongly debited amount will be credited into your account. As per the Reserve Bank of India, banks have to credit this wrongly debited amount into your account within seven working days from the date of your complaint.

Banks pay you a fee: If your bank fails to comply with this rule, they have to pay you a fee of Rs 100 per day after the seventh working day.

Keep in mind that you are entitled to such a compensation for delay from your bank (the bank that has issued your debit card used to withdraw the cash), only if you lodge such a claim within 30 days of the date of transaction. If you are lucky, you won’t ever face such a situation.

But, there have been many such cases in the past with failed ATM transactions and the bank’s delay in paying the wrongly debited amount. The RBI observed that at times, some banks took as many as 50 plus days to re-credit the wrongly debited amount. Hence, this rules, to pay you a fee.

Tip: Irrespective of which bank’s ATM you use, ensure that you get in touch with your bank (the bank which has issued your debit card) and file the complaint. The call center’s number will be at the back of the debit card.

Delhi eye on Israel ‘Dome’

As Israeli missiles shot down two rockets aimed at the city of Ashdod this afternoon, an officer in the defence establishment in New Delhi totted up the scores.

India is closely watching missile defences deployed by Israel in its “Operation Pillar of Defence”, the latest flare-up between the Hamas and Israel across the Gaza Strip.

These are systems that the Indian military is evaluating. Chiefly, the Indian military is focusing on the performance of a system called “Iron Dome” that is the defence mechanism for a clutch of cities and settlements in Israel — including the southern suburbs of Tel Aviv — that are within range of the rockets fired from Gaza.

Southern Israel this week has been the true test for Iron Dome — a system touted by Israeli military officials as a “game changer”. Iron Dome first became operational last year and intercepts rockets fired from short distances of up to 80km with up to 80 per cent effectiveness.

The system, largely funded by the US and developed by the Israeli company Rafael, works by using a radar detection and tracking system to determine whether rockets will fall in areas needing protection. It then fires interception missiles that destroy the warheads and engines of incoming rockets.

The Jerusalem Post newspaper reported today of 83 missiles fired from the Gaza Strip in the hours after the killing of a Hamas commander, a majority were neutralised by a missile shield.

In 2009, the Indian Air Force was Israel’s first foreign customer for the Spyder missile defence system — a Quick Reaction Surface to Air Missile (QR-SAM) — that is replacing vintage Soviet-origin OSA-AK system. The value of the contract was not disclosed.

India’s requirement of missile defence systems are huge and Israel has been a steady supplier. It supplied the Barak I that the Indian Navy has installed or is installing on almost all its frontline ships. The Defence Research and Development Organisation (DRDO) also has a project with Israel to develop the Barak NG (next generation) that will be deployed on ships that the Indian Navy has on order.

An estimate of India’s missile defence requirements is difficult to make because of the secrecy involved. The army and the air force’s missile defence systems largely made up of outdated Pechora and OSA-AK systems procured from the Soviets.

In March this year, through a letter that was leaked, the then chief of army staff, Gen. V.K. Singh, had told Prime Minister Manmohan Singh that missile defence systems were 97 per cent obsolete and that they could not protect high value targets.

India’s own short-range missile defence programmes — the Akash and the Trishul — have not been able to meet the requirements of the armed forces.

Since 2010, Rafael Advanced Systems is known to have offered two missile defence projects — the “Iron Dome” and another called “David’s Sling” to the Indian armed forces.

A developer of Iron Dome at Rafael’s headquarters said that one of the problems with the system was its high cost.

Each time an Iron Dome missile is fired it costs about $70,000 (Rs 9.3 lakh). Israeli police reported that in the first few hours of Israel’s current operation in Gaza, Iron Dome shot down 18 rockets that would have hit civilian areas.

“The problem with Iron Dome is that it is not a solution. It is not the final answer but rather assistance to the communities under fire,” the Rafael developer said.

Courtesy- http://www.telegraphindia.com/1121117/jsp/frontpage/story_16205013.jsp#.UKeA4bWcVIo

SBI to introduce new mandatory Cheque standard from 01/01/2013

India's largest lender the State Bank of India (SBI) will implement the cheque truncation system (CTS) 2010, the new standard of cheques as mandated by the Reserve Bank of India; from January 01, 2013. The measure is primarily aimed at serving duel objectives: preventing frauds related to cheque and speedy clearing of the same.

"All the customers of State Bank of India are hereby informed that as per directive issued by the Reserve Bank of India, for standardization and enhancement of security features in cheque form and its migration to 'CTS-2010' standard, all branches of our bank will now issue only 'CTS-2010' standard cheques to their customers," the banking behemoth on Monday said in a public notice.

With this, the bank will not accept all the non-CTS cheques (that you issue from your existing cheque book) and those will be out of circulation from December 31, 2012. Hence, the existing customers are now required to surrender their existing cheque book and ask for CTS-2010 benchmarked cheques.

This move is a kind of alternative to physical cheque clearing. Some key security features are added to it. Now, the paying bank will send the scanned image of a cheque instead of physically presenting it. This form of cheques will prevent fraudulent activities as well. Cheques cannot be altered under this new system. All SBI group banks too will introduce it from January 01, 2013.

SBI's move is widely expected to prompt other big banks to execute the new process. Some foreign and private sector banks already commenced the process of migration from the existing to new standard. According to a spokesperson at SBI, the bank may issue further clarification on Tuesday in this regard.

Earlier in December, 2011; RBI had issued a notification relating to the implementation of CTS 2010 standard.

The introduction of new cheque standards 'CTS 2010' was warranted on account of several developments in the cheque clearing viz. growing use of multi-city and payable-at-par cheques at any branch of a bank, increasing popularity of speed clearing for local processing of outstation cheques and implementation of grid based cheque truncation system (CTS) for image-based cheque processing

What is cheque truncation?

Cheque truncation system (CTS) was implemented by RBI at New Delhi Bankers Clearing House on a pilot basis. Chennai of late, too executed the same process.

Cheque truncation, according to National Payment Corporation of India (NPCI) is the process in which the physical movement of cheque within a bank, between banks or among banks and the clearing house is curtailed or eliminated, being replaced in whole or in part, by electronic records of their content (with or without the images) for further processing and transmission.

Some roots of corruption in India

Corruption in India is a major issue and adversely affects its economy. A 2005 study conducted by Transparency International in India found that more than 62% of Indians had first-hand experience of paying bribes or influence peddling to get jobs done in public offices successfully.

In its 2008 study, Transparency International reports about 40% of Indians had first-hand experience of paying bribes or using a contact to get a job done in public office.In 2011 India was ranked 95th out of 178 countries in Transparency International's Corruption Perceptions Index.

Some of the largest sources of corruption in India are entitlement programs and social spending schemes enacted by the Indian government. Examples include Mahatma Gandhi National Rural Employment Guarantee Act and National Rural Health Mission.

Other daily sources of corruption include India's trucking industry which is forced to pay billions in bribes annually to numerous regulatory and police stops on its interstate highways.

Indian media has widely published allegations of corrupt Indian citizens stashing trillions of dollars in Swiss banks. Swiss authorities, however, assert these allegations to be a complete fabrication and false.

The causes of corruption in India include excessive regulations, complicated taxes and licensing systems, numerous government departments each with opaque bureaucracy and discretionary powers, monopoly by government controlled institutions on certain goods and services delivery, and the lack of transparent laws and processes.

The economy of India was under socialist-inspired policies for an entire generation from the 1950s until the late 1980s. The economy was characterized by extensive regulation, protectionism, and public ownership, policies vulnerable to pervasive corruption and slow growth. In 1960s, Chakravarthi Rajagopalachari suggested License Raj was often at the core of corruption.

The Vohra Report, submitted by the former Indian Union Home Secretary, N.N. Vohra, in October 1993, studied the problem of the criminalisation of politics and of the nexus among criminals, politicians and bureaucrats in India.

The report contained several observations made by official agencies on the criminal network which was virtually running a parallel government. It also discussed criminal gangs who enjoyed the patronage of politicians — of all political parties — and the protection of government functionaries.

As of December 2008, 120 of India's 523 parliament members were facing criminal charges. Many of the biggest scandals since 2010 have involved very high levels of government, including Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam, the 2010 Commonwealth Games scam and the Adarsh Housing Society scam, Coal Mining Scam, mining scandal in Karnataka and cash for vote scam.

A 2005 study done by Transparency International (TI) in India found that more than 50% of the people had firsthand experience of paying bribe or peddling influence to get a job done in a public office.

Taxes and bribes are common between state borders; Transparency International estimates that truckers pay annually 22,200 crores. Government regulators and police share in bribe money, each to the tune of 43% and 45% respectively.

The en-route stoppages including those at checkpoints and entry-points take up to 11 hours in a day. About 60 percent of these (forced) stoppages on road by concerned authorities such as government regulators, police, forest, sales and excise, octroi, weighing and measuring department are for extorting money.

The loss in productivity due to these stoppages is an important national concern. The number of truck trips could increase by 40%, if forced delays are avoided.

According to a 2007 World Bank published report, the travel time for a Delhi-Mumbai trip can be reduced by about 2 days per trip if the corruption and associated regulatory stoppages to extract bribes was eliminated.

A 2009 survey of the leading economies of Asia, revealed Indian bureaucracy to be not just least efficient out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines and Indonesia; further it was also found that working with India's civil servants was a "slow and painful" process.

Corruption may lead to further bureaucratic delay and inefficiency as corrupted bureaucrats may introduce red tape to extract more bribes. Such inadequacies in institutional efficiency could affect growth indirectly by lowering the private marginal product of capital and investment rate.

Levine and Renelt showed that investment rate is a robust determinant of economic growth.

According to the neoclassical growth model, institutional variables contribute to determining steady-state per capital income levels and speed of convergence to its steady state, hence affecting its growth rate.

Bureaucratic inefficiency also affects growth directly, such as through misallocation of investments in the economy. Additionally, corruption results in lower economic growth for a given level of income.

Lower corruption, higher growth rates

If corruption levels in India were reduced to levels in the developed economies such as the United States, India's GDP growth rate could increase by an additional 4 to 5 percent, to 12 to 13 per cent each year. C. K. Prahalad estimates the lost opportunity caused by corruption, in terms of investment, growth and jobs for India is over US$ 50 billion a year.

The level of corruption varies in different parts of India. In a July 2011 report, The Economist for example, claims the state government of Gujarat has kept red tape to a minimum, does not ask for bribes, and does not interfere with entrepreneurial corporations.

The state, the article claims, has less corruption, less onerous labour laws and effective bureaucracy. With growth rates matching some of the fastest growing economic regions of China, Gujarat continues to outpace growth in other Indian states.

Festive time for SBI loans

The State Bank of India today took the battle to its rivals by slashing the processing fees for home and car loans by 50 per cent. The country’s largest commercial bank recently sparked a rate war by offering one of the lowest interest rates on home loans in a bid to corner business in the festive season when borrowers traditionally scout for deals.

The reduction in the processing fees is seen as an attempt not only to attract new customers with the festival season around the corner but also poach on the base of its rivals. The country’s regulators — the Reserve Bank of India and the National Housing Bank — have done away with the levy of pre-payment penalty, thereby providing home loan borrowers a good opportunity to shift to lenders such as the SBI who charge a lower interest rate.

In August, the country’s largest bank brought down interest rates on housing loans up to Rs 30 lakh to 10.25 per cent from 10.50 per cent. Similarly, interest rates on home loans above Rs 30 lakh and up to Rs 75 lakh were revised to 10.40 per cent against 10.75 per cent earlier. 

Subsequently it reduced the benchmark base rate by 25 basis points, thus making home and auto loans even cheaper. The housing loans provided by the SBI are at least 25 basis point lower than those offered by its larger peers.

In a statement issued today, the bank said the new processing charges would be applicable to loans availed from October 17 to December 31. “With this reduction, the bank is quoting the lowest processing fee on both home and auto loans to our customers,” it said.

For home loans up to Rs 25 lakh, the processing charge has become 0.125 per cent of the loan amount from 0.25 per cent earlier. Similarly, in case of loans between Rs 25 lakh and Rs 75 lakh, the processing fee would now stand at Rs 3,250 against Rs 6,500, while for loans above Rs 75 lakh, it would be a flat Rs 5,000 compared with Rs 10,000 per application earlier.

With regard to auto loans, the processing charge has been slashed to 0.255 per cent of the loan amount against 0.51 per cent. It will come down to Rs 510 on the lower side.

FDI and Indian scenario

Foreign direct investment (FDI) is direct investment into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

Foreign direct investment is done for many reasons including to take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive to gain tariff-free access to the markets of the country or the region.

Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

As a part of the national accounts of a country, national income equation is Y=C+I+G+x-m, [(Y = real GDP, C = consumption spending, DI = disposable income, I=investment expenditure, G=government spending, T = tax revenue, X = exports, M = imports,)].

 FDI refers to the net inflows of investment (inflow minus outflow) to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.

It is the sum of equity capital, other long-term capital, and short-term capital as shown the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise.

There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares. FDI is one example of international factor movements.

There are four main working pillars of FDI. They are financial collaborations, technical collaborations and joint ventures, capital markets via Euro issues, and private placements or preferential allotments.

In Indian scenario, FDI in retail is an economic reform, which would allow global chains like Wal-Mart Stores Inc and Carrefour to own up to 51 percent of retail ventures.

The policy would let foreign retailers own up to 51 percent of supermarkets and 100 percent of single-brand stores. The policy doesn't require parliamentary approval, but foreign retailers must get approval from state governments where stores will be located.

The government, as a measure of protection, has said foreign retailers would have to source 30 percent of their goods from small industries.

Multi-brand retail in India is largely in the unorganised sector dominated by neighbourhood kirana stores and there is a concern among political parties and traders that these stores would be affected by the entry of global retailers.

India's stellar economic growth is slowing, the rupee has skidded to record lows and inflation is stuck close to a double-digit clip. Faced with this predicament, Prime Minister Manmohan Singh seems to have weighed the benefits of opening a $450 billion market to foreign investment.

Kaushik Basu, one of Singh's close advisers, once said allowing global chains to open their first stores in India would be one of the most effective ways to help the country deal with food inflation, which stands close to 10 percent.

But the UPA seems to have misjudged the political mood on this reform decision. The Trinamool Congress and the DMK, allies which give the UPA government a parliamentary majority, have opposed FDI in retail. The opposition, of course, has united to reject the idea and it has stalled Parliament.

The government failed to convince the opposition, and even some allies, on the reform. The government is likely to allow global supermarkets such as Walmart, Tesco and Carrefour to set up deep discount stores in India, but with a few conditions. 

Corporate India, expectedly, cheered the move terming it as a "game changer" that will reduce wastage, bring down costs and create millions of jobs.

While some shop owners cheer the FDI in retail, small retailers fear loss of livelihood and income from mega stores of transnational corporations terming the move as "a bailout package for large corporations".

Advantages

• ·       Increase economic growth by dealing with different international products
• ·       1 million (10 lakh) employment will create in three years - UPA Government
• ·       Billion dollars will be invested in Indian market
• ·       Spread import and export business in different countries
• ·       Agriculture related people will get good price of their goods

Disadvantages

• ·       Will affect 50 million merchants in India
• ·       Profit distribution, investment ratios are not fixed
• ·       An economically backward class person suffers from price raise
• ·       Retailer faces loss in business
• ·       Market places are situated too far which increases traveling expenses
• ·       Workers safety and policies are not mentioned clearly
• ·       Inflation may be increased
• ·       Again India become slaves because of FDI in retail sector

This is a very complex scenario as per FDI is concerned in Indian context  as consumers will pay lower prices to buy products on the other hand a huge number of person will be affected directly or indirectly by losing their job.

The ultimate question is who is Patriotic those who support this movement or those who don’t! Only time will tell.

Net Currency Bitcoins

A hacker group has recently claimed that it has stolen Mitt Romney’s tax returns. The files were allegedly obtained from the Tennessee office of the big accounting firm, PricewaterhouseCooper, on August 25.

The hackers have threatened to make the files public on September 28 — unless they are paid $1million in Bitcoins, the online currency. Bitcoins are difficult to trace or identify.

Bitcoin is a decentralised digital currency. It is money that can be transferred directly from one person to another on the Net, without going through a bank or clearing house. It is the cheapest way to move money around because you just have to pay a voluntary fee.

You can use them in every country, there are no prerequisites or set limits and your account can never be frozen. Anybody can generate Bitcoins on the Internet by running a free application called the Bitcoin Miner.

Mining requires a certain amount of “work” for each block of coins. The amount that is mined is automatically adjusted by the network so that only a limited and predictable number of coins is generated. They are then stored in your digital wallet.

When you transfer Bitcoins, an electronic signature is added. Bitcoin verifies transactions with a state of the art encryption that is used in military and government applications. After it is verified it is permanently and anonymously stored in the network.

Bitcoin is open source. Unlike a normal bank, the Bitcoin database is a decentralised database. No individual owns it. It is maintained by a community of open source developers.

If the Bitcoin idea takes root, it will revolutionise business on the Net and beyond it just the way Steve Jobs and Steve Wozniak changed computing with their personal computers, or the web changed publishing.

Bitcoins have a checkered past. Where the Euro failed, it is really conditioning people to a single world economy as well as currency. There is still a lot of work to be done on it and many questions are unanswered.

For example who determines the mining work that is required to make them? How secure is it? Wouldn’t it be easy to hack and manipulate accounts if you are careless?

Even with all these questions, it has a devoted following among libertarians and techies. Above all, trading in Bitcoins is becoming popular even in India.

New visa processing system for Indians travelling to US

The United States embassy here Wednesday announced a new visa processing system under which Indians travelling to the US can have easier visa procurement and fee payment system.

"The new visa processing system will streamline appointment scheduling, simplify fee payments and provide the applicants with new delivery options.

Under our new system, we have more payment options available for visa application fees," said Julia Stanley, minister counsellor for consular affairs.

While the changes in procedure are a part of global support strategy programme by US state department across the world, the new system will be implemented in India Sep 26.

Under the new system, the US visa applicants will be able to pay application fees through electronic fund transfer, mobile phones and collect their documents from 33 document pick-up locations in the country.

The moves comes after the launch of interview waiver programme back in March which allowed certain qualified applicants to renew their visas without coming for the interview.

In 2011, the US consular office processed around seven lakh visa applications witnessing an increase of 11 percent over 2010.

According to Stanley, a significant change in the processing system is that applicants will need to schedule two appointments -- one for fingerprint collection at an Offsite Facilitation Centre and one for consular interview at the Embassy or consulates.

The consulate has also launched its new website in Hindi and English where applicants can also track their application status.

"Applicants can also contact us; schedule their appointments through telephone, e-mail or online chat. The call centre service, free for all, can answer questions in Hindi, English, Punjabi, Gujarati, Tamil and Telugu," Stanley added.

Applicants renewing their visa may not have to give their fingerprints more than once.

Courtesy- http://in.news.yahoo.com/visa-processing-system-indians-travelling-us-104129544--finance.html

Chit fund

A Chit fund is a kind of savings scheme practiced in India.

A Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982. 

According to Section 2(b) of the Chit Fund Act, 1982, "Chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount".

Such chit fund schemes may be conducted by organised financial institutions or may be unorganised schemes conducted between friends or relatives.

There are also variations of chits where the savings are done for a specific purpose. Chit funds also played an important role in the financial development of people of south Indian state of Kerala, by providing easier access to credit.

In Kerala, chitty (chit fund) is a common phenomenon practiced by all sections of the society. A company named Kerala State Financial Enterprise exists under the Kerala State Government, whose main business activity is the chitty.

Chit Funds are also misused by its promoters and there are many instances of the founders running what is basically a Ponzi scheme and absconding with their money.

Chit funds have been a popular savings scheme in several parts of India for generations together now.

It has paved it’s way as a convenient finance option amongst businessmen, small scale industrialists, and other small time investors. Though very often shrouded by news of fraudulence, they have still managed to retain their popularity.

So what exactly are chit funds and how efficient a financial tool is it? Read on to find out more.

The Beginning of Chit Funds

Chit funds evolved years ago, when the present system of banking did not exist. Few families in a village would get together to form a chit or a group, to save money and to avail of loans amongst the group formed.

A sensible person is chosen to manage the group. This informal system of saving prevailed only on trust. Gradually, as groups became larger and the money involved became huge, many companies started chit fund schemes with attractive offers. 

To thus provide for the regulation of chit funds and for matters connected therewith, the government introduced the Chit Funds Act in 1982.

What is a Chit Fund?

A chit fund is a kind of savings borrowing scheme, in which a group of people enter into an agreement to contribute fixed amounts periodically, for a specified period of time. 

The amount so collected (or the chit value) is distributed among each of the persons in turns, which is determined by way of lots or an auction. Chit funds provide an opportunity to save excess cash on a daily, weekly or monthly basis, and give an easy access to it in case of emergency.

How Does a Chit Fund Work?

Different chit funds operate in different ways; and there are also many fraudulent tactics practiced by many private firms. The basic necessity of conducting a 'Chitty' is a group of needy people called subscribers.

The foreman - the company or person conducting the chitty - brings these people together and conducts the chitty. Foreman is also the person responsible for collecting the money from subscribers, presiding the auctions and keeping records of subscribers.

He is compensated a fixed amount (generally 5% of gross chitty amount) monthly for his efforts; other than that the foreman does not have any specific privileges; he is just a subscriber of the chitty.

The general pattern of the chitty can be readily noticed by a simple formula:

Monthly Premium × Duration in Months = Gross Amount

E.g.: 1000 * 50 = 50,000/-. Where 1000 is the maximum monthly contribution needed from a subscriber, 50 is the duration of the chitty in months and 50,000 is the maximum sum assured. 

The duration also equals the number of subscribers, as there must be (not more or less) one subscriber to receive the price money every month.

The chitty starts on an announced date, every subscriber come together for the auction/lot. As per Kerala chit act, the minimum prize money of an auction is limited to 70% of the gross sum assured that is 35,000 in the above example.

When there is more than one person willing to take this minimum sum, lots are conducted and the 'Lucky subscriber' gets the prize money for the month. 

If there is no person is willing to take the minimum sum, then a reverse auction is conducted where subscribers open-bid for lower amounts; that is from 50,000 >> 49,000 >> 48,000, and so on. The person bidding lowest sum get bid amount.

In both the cases the auction discount, that is the difference between the gross sum and auction amount, is equally distributed among subscribers or is deducted from their monthly premium.

For example if the auction is settled on a sum of 40,000, then the auction discount of 10,000 (50,000 - 40,000) is divided by 50 (the total number of subscribers) and everyone gets a discount of 200. The same practice is repeated every month and every subscriber gets a chance of receiving some money.

Drawbacks

Chit-funds do not offer any pre-determined or fixed returns. Higher returns are earned when there are more number of members in the group or if the duration of the scheme is longer.

One would earn more, when more members need emergency funds. Thus returns cannot be calculated and decided when one joins the scheme.

Safety of Chit Funds

With the plethora of chit fund companies around, the safety of a chit fund lies in choosing the right one. In a registered chit fund company, under legal binding, the activities are regulated and institutionalized by the Chit Fund Act. 

And hence could be considered safe. However, other unregistered companies operating informally do exist. One needs to exercise caution while choosing where he desires to invest.

 

Chit funds definitely are an attractive option for regular saving. It inculcates a disciplined approach to financial planning. 

It has the added advantage of bringing a combination of savings as well as hassle free borrowing. This dual purpose investment tool could be a friend in need at times of unexpected financial emergencies.

Should you invest?

A big “no”

These chit funds are not at all proper and reliable investment vehicles where you park your hard earned money.

So, please avoid them unless you want to exactly take that kind of risk.

Sahara told to refund investors

The Supreme Court ordered two Sahara group companies to refund all the money they have collected through so-called optionally fully convertible debentures (OFCDs) to investors in three months, ending a three-year tussle between India’s capital market regulator and the Subrata Roy-owned business.

The apex court upheld the orders passed by the market regulator and the Securities Appellate Tribunal (SAT) that had directed the two firms—Sahara India Real Estate Corp. Ltd (SIRECL) and Sahara Housing Investment Corp. Ltd (SHICL)—to refund the money they had raised through OFCDs.

The apex court verdict will require the two Sahara firms to refund Rs.24,029.73 crore along with 15% annual interest to all OFCD investors within three months. The companies had collected the money from at least 29.61 million investors between April 2008 and April 2011, the order said.

The 270-page order passed by justices K.S. Radhakrishnan and Jagdish Singh Khehar brings to a close the battle between the Securities and Exchange Board of India (Sebi) and the Sahara group, with the strongest possible endorsement of the regulator’s decision and emphatically upholding the sanctity of the country’s securities law. The money that has to be returned is among the highest restitutions the Supreme Court has ordered.

The court order is a landmark judgment that upholds securities regulations and investor rights, and will encourage better disclosures by companies raising funds from investors, said Akil Hirani, managing partner of Majmudar and Partners, a law firm.

“The Supreme Court order is a victory for rural investors as they are the soft targets of such kinds of fund-raising and will set a precedent of immense significance as it reinforces compliance of securities norms,” he said. “This order will impact all the companies that have raised public money through chit funds or any other means without adequate disclosures.”

Sebi had in 2010 accused the Sahara group firms of violating certain regulatory norms by raising money through OFCDs from the public in the guise of private placement. Sebi’s former whole-time member K.M. Abraham had restrained the two firms, their promoter Subrata Roy and their directors from accessing the capital market till the the entire OFCD money was refunded to the investors with interest. Subsequently, the order was challenged at SAT, which upheld Sebi’s argument in its verdict in October 2011.

Following the SAT order, the two Sahara firms had moved the Supreme Court in November.

According to a recent affidavit filed at the apex court, SIRECL owed Rs.17,656.53 crore and SHICL Rs.6,373.2 crore to their OFCD investors as of 31 August 2011.

“It is clearly apparent that the appellant companies (the two Sahara firms) had clearly taken upon themselves to tread a path different from the mandate of law delineated under the Companies Act,” said the Supreme Court order.

The court supported Sebi’s argument that there was a pre-planned attempt by SIRECL and SHICL to bypass the regulatory and administrative authority of the market regulator.

Sebi will be the custodian of the deposits collected by the two Sahara companies. The court has also appointed retired Supreme Court justice B.N. Agarwal to oversee the refund process to be carried out by the market regulator.

The watchdog has been authorized by the apex court to take recourse to all legal remedies, including attachment and sale of property, and freezing of bank accounts of Sahara firms for recovery of the OFCD money if it is not refunded in the next three months.

The court further directed the two Sahara firms to furnish every detail of their OFCD issuances, subscriptions and refunds within 10 days.

The two companies will then have to “furnish all documents in their custody, particularly the application forms submitted by subscribers, the approval and allotment of bonds, and all other documents to Sebi”.

The refund process will start after Sebi verifies the authenticity of the documents produced by Sahara. If the documents are found incorrect, Sebi can proceed with the refund process on the assumption that the companies have not paid any amount to subscribers who had invested money in OFCDs through six types of bonds issued by the two firms in 2008 and 2009.

According to the order, if Sebi is doubtful about the bonafides of the subscriber, it will have to give the Sahara firms a chance to establish the legitimacy of the investor. Sebi’s decision in such a case will be final.

Following Sebi’s verification, the money of investors that can’t be traced will be credited to the Union government’s account, said the apex court order.

This is not the first time the Sahara group has been ordered to repay investors. In 2008, the Reserve Bank of India (RBI) had banned Sahara India Financial Corp. Ltd, the country’s biggest residuary non-banking financial company, from taking deposits from the public and asked it to wind down its operations by 2011. RBI had set a three-year sunset window on Sahara India Financial, allowing it to accept fresh deposits maturing until 30 June 2011.

A 4 June 2008 RBI release had said Sahara “continuously” violated investment norms; payment of prescribed minimum rate of interest to depositors; asset-liability management guidelines; “know your customer” norms for opening deposits, and had failed to intimate depositors when their deposits matured.

The central bank wanted Sahara India to wind down its close to Rs.20,000 crore public deposit base. It directed Sahara India to repay the deposits as and when they mature and bring down the aggregate liability to depositors to zero on or before 30 June 2015.

According to a Sahara group advertisement in newspapers, in August 2011, Sahara India Financial accepted Rs.73,000 crore of deposits until June 2011, but didn’t say anything about outstanding deposits.

Courtesy- http://www.livemint.com/2012/08/31212631/Sahara-told-to-refund-investor.html?atype=tp

SBI slashes deposit rates

The State Bank of India (SBI) lowered interest rates on domestic term deposits of maturity of five years and more by 25 basis points to 8.50 per cent.

The deposit rate cut came just a day after the country’s largest bank brought down interest rate on auto and car loans. 

The SBI expects its NIMs (net interest margins) to be around 3.75 per cent during this fiscal year. NIM is the percentage difference between interest earned on advances and that paid on deposits.

The SBI said it had decided to revise downwards the interest rate on domestic term deposits for tenors 5 years and above to 8.5 per cent with effect from August 7.

The bank now offers an interest rate of 8.75 per cent on deposits below Rs 15 lakh, and 9 per cent on deposits from Rs 15 lakh to less than Rs 1 crore.

In June, the SBI had raised interest rates on deposits by 25 basis points for those in the three to five-year maturity bucket.

However, the SBI’s decision came in contrast to that of another PSU lender — Punjab National Bank, which raised deposit rate by 25 basis points.

The second largest nationalised bank said it was increasing the rate of interest on the single domestic deposit of less than Rs 1 crore to 8.75 per cent for maturity of one year.

The SBI reduced lending rates by up to 60 basis points on home and auto loans. It however, kept the base rate unchanged at 10 per cent, and this will mean that its existing customers will not enjoy the interest rate relief.

Sweet news for pre-diabetics

A healthy life is a universal goal. Disease is inconvenient; it affects the quality of life and shortens your life span. Illness does not mean just infections or accidents.

It includes chronic lifestyle diseases such as obesity, diabetes and hypertension. These diseases form a group, with one (usually obesity) appearing first and then rapidly progressing to the other two. Combined, they are responsible for more morbidity and mortality than infections.

Twenty per cent of our children and 15-40 per cent of adults are obese. They have a body mass index (BMI) of over 30. The highest levels are in the urban areas. 


In addition, 10-15 per cent of the population over the age of 30 is either frankly diabetic or in the pre-diabetic stage.

There are no obvious signs of pre-diabetes. It is suspected in:

 A person with a family history of diabetes

 Women who developed diabetes during pregnancy or delivered a big baby (more than 4kg) or who have been diagnosed with polycystic ovarian syndrome (PCOS), which is manifested by an obesity, acne, hirsuitism and irregular periods

 A person who is relatively inactive. This means less than one and a half to two hours a week of leisure time (not work) activity such as walking, jogging, running, swimming or cycling

 A person whose sleep rhythm is disturbed. It is either excessive (more than nine hours a night) or insufficient (less than six hours). These are only average values as healthy sleep habits vary widely

 A person whose skin at the neck, elbows, knees, armpits and knuckles become dark and velvety, a condition called acanthosis nigricans. 


It looks like dirt but it is a change in the skin itself. No amount of scrubbing removes the colour, nor does talcum powder mask it

 A person with a BMI of more than 30

 A person whose blood pressure has been found to be high (more than 135/90) on three occasions

 A person with abdominal obesity who has a waist-hip ratio above 0.90 if male and above 0.85 if female. The waist can be measured at its narrowest point, and the hip at its widest

Pre-diabetes is confirmed when the glycated haemoglobin test (A1C) in the blood shows a value between 6-6.5 per cent, fasting blood sugar is between 100-120mg, the two-hour post prandial value is between 140-190mg. 


Additional abnormalities are high-density lipoprotein (HDL) cholesterol below 35 milligrams per decilitre (mg/dL) and triglyceride level above 250 mg/dL.

As soon as the biochemical abnormalities occur, damage to the blood vessels and internal organs like the eyes, heart and the kidney are set in motion. 


The early diagnosis is a warning, a wakeup call. There is a 10-year window period to reverse the trend.

The good news — a “pre-diabetic” has a good chance of turning back the clock, reversing the metabolic changes that have occurred and becoming biochemically normal.

The first step is to control the weight, by eating a sensible 1,500-2,000 calorie diet with less refined carbohydrates and at least 4-6 helpings of fruits and vegetables. Reduce the salt intake to 5gm (1 level teaspoon) a day. 


Avoid salted snacks and deep-fried items. Oil consumption should be reduced to 500ml per person a month.

If the lipid profile does not return to normal ask your physician about low dose medication (usually the statin group) to control it.

Physical activity plays a very important role. The minimum requirement is one and a half hours a week. This will not give you a six pack or help you run a marathon, but it will slow your progression to diabetes.

The ideal amount of exercise is an hour a day, seven days a week. If you can only spare the minimum amount of time, the intensity of the exercise (pace) needs to be increased.

Aim to reach your target heart rate, which is 80 per cent of 220-age. There are various schedules for this high intensity interval training (HIIT).

The simplest (requiring no equipment at all) is continuous stair climbing for 10 minutes at a time.

Exercise can also be split into 10-15 minute segments spread out during the day.

There will be days when the weather is not conducive to going out doors, you just don’t feel up to it, or social commitments preclude activity. Exercise is more likely to be adequate and consistent if “rest days” are unplanned inevitable events.

These simple lifestyle changes can drastically bring down the risk of progression to diabetes and the risk of strokes, heart attacks and other complications by more than 50 per cent.

Courtesy: http://www.telegraphindia.com/1120723/jsp/knowhow/story_15760665.jsp#.UA0jC7Ue6ac

US approves drug ‘slashes’ virus transmission by 75%

The Food and Drug Administration approved a drug yesterday that could dramatically reduce the risk of contracting HIV, the virus that causes AIDS, among high-risk groups.

Truvada, a little blue pill taken once a day, was shown in clinical studies to slash transmission of the virus by up to 75 per cent. “This is a big step,” said Marjorie Hill, chief executive of the AIDS group GayMen’s HealthCrisis. “If people are looking for the magic bullet, the cure-all, we don’t have it yet. What we do have is an increasingly growing tool kit.”

Many HIV and AIDS researchers and activists say the pill is a promising way to reduce new infections, which have remained stubbornly high for years.

“It’s going to save lives,” Hill said.

But others worry it will have the opposite effect by encouraging unprotected sex. “Today marks a catastrophe in the fight against HIV in America,” Michael Weinstein, president of the AIDS Healthcare Foundation in Los Angeles, told reporters in a conference call. “If you look back five years from today, you will see this decision by the FDA will cause there to be more infections, not less.”

Truvada, made by the Foster City, California, pharmaceutical firm Gilead Sciences, was first approved in 2004 to help treat people infected with HIV. In those who are not infected, it can prevent the virus from getting a foothold in the body.

In a clinical study of heterosexual couples in Africa in which one partner was infected with HIV, taking the pill reduced transmission rates by 75 per cent. In a separate study of gay men, the drug reduced transmission by 42 per cent. The pill is most effective when taken every day — something even study participants struggled with — and when combined with condom use.

The FDA will require that patients have an HIV test before getting a prescription to ensure they are not already infected. If they are, the virus could develop resistance to Truvada, which is combined with another drug to treat those already infected.

The annual rate of new HIV infections in the US has remained about 50,000 since at least 2004, and rates have risen among young, gay black men. The Obama administration pledged to cut the number of new infections 25 per cent by 2015, but existing methods of prevention — essentially condoms and abstinence — have not budged the number.

The FDA has been searching for alternatives. Debra Birnkrant, director of the agency’s Division of Anti-viral Products, said yesterday’s approval would spur progress toward the administration’s goal. “The hope is over time it will reduce the rate of new infections or incidence in the US,” she said.

Treating HIV has been shown to reduce a patient’s likelihood of transmitting the disease. But offering new ways for HIV-negative people to protect themselves is important because a disproportionate number of infections are caused by people who have not been tested and are unaware they are infected.

“If you’re an HIV-negative person, you sure can’t rely on the fact that your partner is being treated,” said Dr Joel Gallant, vice-chairman of the HIV Medicine Association and an HIV/AIDS doctor in Baltimore. The pill’s cost could be a problem: A year’s supply costs $13,900, according to the manufacturer.

Courtesy- IAN DUNCAN, Los Angeles Times.