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The India International Exchange also known as India INX, is soon going to introduce the gold kilogram contracts. As of now the gold contracts on the India INX are in the denominations of the troy ounces where one troy ounce amounts to 31.10 grams.

India INX is a wholly-owned subsidiary of the BSE that started its trading activities on January 16, 2017 and it operates out of the Gujarat International Financial Services Centre (IFSC) GIFT City, Gandhinagar. The exchange, India International Exchange, operates from the International Financial Services Centre (IFSC) GIFT City, Gandhinagar. It has the advantage of the residential products all across the asset classes under its roof. It is the country’s first international exchange to be set up at GIFT City.

The exchange has already started trading in 53 additional single stock and futures contracts, taking the total number of likewise derivatives offerings to 107 on its platform, to view NSE option chain. Also, recently the exchange had commenced trading in 33 new single stock derivatives.

The gold contracts on the India INX which are already achieving the daily average turnover of USD 30 million, the Managing Director and Chief Executive Officer of INX, V Balasubramaniam, says that we have seized the opportunity to further entrench our position in this market by launching the gold KG contract.

Mr. V Balasubramaniam also details the analogy of the retail revolution what the India International Exchange is trying to do. He explains that in the previous scenario, one used to go to the grocer, garment shop or the electronic store, but now we go to a supermarket today as we get everything under one roof. Likewise, he believes to have built up the exchange in nothing but in the way of a financial supermarket where you can get all financial products you need at one single place without any trouble.

To explain further, what happens in an exchange is that if you wish to buy a particular product let’s say X and sell a product Y, then you are expected to have separate contract notes, separate bank accounts, settlements, and arrangements. But under this new concept, all of this is blended here seamlessly. Here, it is a single transaction and we also have a portfolio approach to facilitate the international investors.

In the India International Exchange, all the contracts are settled in US dollars. With the single stock futures of foreign stocks such as Apple, Google, and Microsoft, along with others, the INX also offers top Indian stocks too.

It offers precious and expensive metals contracts of gold and silver too along with the base metals like zinc, lead, copper, nickel, aluminium, and many more. The exchange feels that this will grow even more in the second phase. The exchange has also believed to have applied to the market regulator Sebi to introduce crude oil futures as well as natural gas contracts as the latest legal news points out.

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Sebi has recently expanded the position limit for farm commodity futures across all the levels of the client, member and the exchange. This is done by the board in order to expand the base for traders and investors in the agricultural commodity nifty futures.

The market regulator SEBI, had issued a circular in the last week of the month of July’17 saying that the stakeholders have given a feedback that the present quantitative value of client segment position limits for agri commodity derivatives is not sufficient and hence is not in agreement with the deliverable supply of the agri commodities.

After an intense discussion with the stakeholders based on Commodity Derivatives Advisory Committee, the exchange board has come up with the division of the client-level position limit for agri commodities, the legal news confirms. The three categories suggested are sensitive, broad and narrow. Since the sensitive commodities, which have had frequent instances of price manipulation in the past five years, would need regular government intervention in terms of stock limits, import and export restrictions, and other trade barriers, therefore the clients under sensitive commodities will enjoy a position limit of 0.25% of deliverable supply. In case of the broad commodities, which are not characterized as sensitive but have an average deliverable supply for the last five years as 10 Lakh metric tonnes in numerical term and Rs 5,000 Cr in value term, the clients under broad commodities will avail a position limit of 1% of deliverable supply. The last or the narrow category includes the commodities that are not part of either of the aforesaid two categories, such category will attract a client level position limit of 0.5% of the deliverable supply. The deliverable supply would include production and imports.

Sebi has directed Commodity exchange to revise the position limit and declare the details by July 31 every year after gathering data from concerned departments. After the declaration every year, the revised position limit for agri commodities will apply for all contracts starting from Sep’ 1. For this year, the exchanges like NCDEX, MCX and NMCE are expected to complete this in the time span of 20 days and make the revised position limit starting from Oct’ 1.

Coming on to the next level, the member level, the position limit in agri commodities would be 10x the numerical value of client level position limit of 15% of the market wide open interest, whichever is higher. Another segment, the exchange level position limit shall be kept at 50% of the annual estimated production and import of the commodity.

As far as clubbing of position limits is concerned, the regulator has directed Comex to jointly issue a uniform norm and declare the same in next 30 days. NCDEX has finalized position limits across chana contracts that expire in Sep’17 and beyond at 30000 tonnes for clients. For black pepper, it is 900 tonnes, liquid commodities like castor have a limit of 12000 tonnes, and guarseed at 2400 tonnes.

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NTPC Bets On Solar To Power Renewable Energy Biz

by Vinaya HS on August 18, 2017

in Finance

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The National Thermal Power Corporation, NTPC, is the country’s largest producer of the thermal power. NTPC aims to concentrate more on the renewable energy in the years to come and also wishes to increase its presence in the arena of solar power generation. The corporation believes this is their bit towards a better planet and a greener world.

The chairman and managing director of NTPC, Gurdeep Singh, has expressed in the business news that the corporation is redefining their strategy and their business plan. As they move forward, the capacity addition of the corporation will be less in the coal and will be more in renewable energy space.

The company is clearly going to focus on the solar photovoltaic plants and not on the windmills for the reason that the prices of solar equipment that includes the prices of the photovoltaic plates have reduced considerably. This has made the solar power more reasonable and much more affordable as compared to the windmills.

As the legal news India confirms, this year there was an intense bidding for the solar power projects. The bidding was recorded as low as the bid of Rs 2.44 per kilowatt hour or kwH for Bhadla Solar Park in Rajasthan. Projecting the future prices, NTPC anticipates that the price of the solar power per kilowatt hour will be somewhere between Rs 3 to Rs 3.25 kwH. This increase in the price of the solar power per kilowatt is due to the impact of the new taxation structure Goods and Services Tax or GST on solar power generation. GST is expected to increase the rate of solar power marginally.

Gurdeep Singh further pointed out that they are contemplating to add renewable as early as possible which is up to 25 gigawatt (gw) by 2025. The company has already added 4 gw currently. NTPC has already opened tenders for 10 gw of renewable power projects.

NTPC has been assigned to develop 15 gw solar power through National Solar Mission’s second phase in three tranches between 2014-15 to 2018-19. The first tranche constitutes to about 3 gw or 3,000 megawatt and the second tranches consists of 5 gw and the last tranche consisting of the 7 gw. Talking about the first tranche, 1,380 mw of solar power has already been commissioned.

Along with this, the thermal giant is also considering on the co-firing biomass with coal for electricity generation. It is not only the part of the wish list of the NTPC, but the corporation is extremely aggressive on its work regarding the development in the carbon-free power.

The corporation is considering to install electric vehicle charging stations in the Metro cities. After already commissioning two charging stations for electric vehicle in the city of Delhi and Noida, the NTPC is planning to add 20 more soon. The corporation wishes to set up stations in New Delhi Municipal Corporation area initially and later expand its business across the country. The corporation is in discussion with the different state governments for the fulfillment.

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Government has been recommending the exporters from the pharma industry to look for newer markets for the pharma export. This recommendation from the government has come due to the multiplicity of the same drug in Indian market. There are many pharma companies in the country and the competition is intense. Hence there has to be some other way out to increase the production of pharma. Increasing the exports and that too to a newer destination which is untapped but has a potential for the Indian drugs must be contemplated and executed. This is why the government has suggested the drug exporter to hunt for new markets. India has been already exporting half of its total pharma produce.

In the last 5 years, India has consistently beaten China in pharma exports to Latin America. India is 4th largest pharma supplier to US. Now, the Indian exporters of pharma products must focus on rather smaller but emerging and untapped markets to sustain. The ministry of commerce and industry has issued guidelines to export regulation bodies to convey to the drug exporters to think about the diversification of their plans into young markets. It is believed that India will do fairly well in the countries like Myanmar, Peru, Ecuador, Colombia, Turkey, and Venezuela.

In fact, to believe the business news, Myanmar has approached the Indian market for the same. This is an amazing opportunity that looks highly lucrative for the country as the country has expressed an interest in buying the generic drugs from India to cater to the country’s government hospitals. The proposal from Myanmar to buy generic drugs has resulted a very positive response. As many as 60 Indian pharma companies have expressed their inclination in catering to the country’s requirement. To quote some past figures and data, the pharma exports to Myanmar during the period of April to February was about $162 million whereas the exports to the country was $152 million in 2015-16.

As per the recent data shared by the Pharmaceutical Exports Promotion Council (Pharmexcil), the pharmaceutical exports reduced though marginally to $16.4 billion during the FY’17from $16.89 billion during the FY’16. The reason of the fall is quite evident and is known to all. The reasons which was cited for the lack of growth in the pharma exports was a price erosion and the absence of the blockbuster drugs.

The country’s economy had high hopes from Pharmaceutical exports especially after the success of information technology (IT) industry. As per the industry figures, in FY’17, IT services exports was at $160 billion which was 10 times of drugs and pharma and equal to 60% of India’s goods exports. The pharmaceutical exports from India in the year 2016-17 was not very pleasing. It was only $16 billion which was 4.7% low year on year basis and accounted for 5.8%in FY’17 of India’s total goods exports as compared to the 6.4% in the FY’16.

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India has got the position of 88th in the list with 676 million Swiss francs or CHF (about Rs. 4500 Cr) money parked by the citizens of India with Swiss banks. In the previous year of 2015, India was placed at 75th position while in the year 2014, India had occupied a position of 61st.Before 2007, India used to be in the list of the top 50 countries as far as money in the Swiss banks is concerned. The year 2004 was exceptional when India was closest to the top of the list when it was ranked on the position of 37th.

It is believed that the Indians have allegedly held a mammoth amount of illegal or black money in Swiss banks which they have transferred in past to other places when there was a global suppression began on the banking secrecy practices in Switzerland.

The Swiss National Bank (SNB) had compiled a data in the December month of the year 2016, according to which as per the figures, the money which is officially parked by the Indians in the Swiss bank accounts only contributes to a nominal share of 0.04%as compared to the share of 0.08% in 2015 of the total funds kept by all the foreign clients in the Swiss banks. This data comes from the Zurich based SNB. A rather new framework has been established for the automatic exchange of the worthwhile information like black money related data is shared between the two countries. The Swiss authorities disclose only the official figures which as per them are ‘liabilities’ or ‘amounts due’ to their clients. These figures, however, do not clarify the magnitude of the alleged black money which is parked by the Indians in the Swiss bank accounts. Also, these official figures as confirmed by the SNB does not include the money that is held by the Indians, NRIs or other people who have an account in Swiss banks in the names of entities from different countries.

The business news states that the amount of total money that the foreign clients have held in the Swiss banks has increased nominally from 1.41 trillion CHF to 1.42 trillion CHF.The number one position in relation to the money parked with swiss banks is held by the citizens of United Kingdom. UK has accounted about 359Bn. CHF which means a whopping share of 25%alone of the total foreign money with Swiss banks. The United States has closely followed the league with CHF 177 bn. or around 14%share of the total foreign money.Others countries that hold the top ten positions include West Indies, France, Bahamas, Germany, Guernsey, Jersey, Hong Kong and Luxembourg with a single digit number shares.

The legal news confirms that the total money that belongs to the developed countries is around CHF 824 bn. Whereas the developing nations account for CHF 208 Mn.

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Information Technology industry has been the most aggressive recruiter in past. The market news has confirmed that the IT industry has been firing many of their employees lately in order to reduce their workforce in a measure of cost cutting. But in spite of that, the IT services industry has remained to be the most aggressive hirer in May of this year.

As per the study by the job platform TimesJob, in the month of May’17, where the overall talent demand increased by 4%, the IT or BPO industry has witnessed a magnanimous 24% rise in the demand for talent workforce as compared to the previous month of April’17.

TimesJobs study also revealed that the industry of BFSI or the combined industry of banking, financial services and insurance was the second most aggressive recruiter. BFSI has a 14% growth in talent demand. The third spot was grabbed by the consulting services. The consulting services sector recorded a 13% growth in talent demand. The fourth most aggressive recruiter was found to be the automobiles sector which had registered a 12% increase in the talent demand.

The business head of TimesJob, Mr. Ramathreya Krishnamurthy, has stated that the job cut in some of the departments of the IT and BPO industry has been due to the automation where the need of the man power is replaced by the machines or technology. But at the same time, since the new jobs that are hugely created due to the economic growth and technological revolution, the demand for manpower has risen too. This neutralizes the automation effect, in fact it ends up in creating more job.

As the business news says, as per the Nasscom figures, the IT industry has added 1.7 Lakh new jobs in the year 2016-17. Team Lease, a manpower solutions firm, said that the company has witnessed an aggressive hiring from the IT industry in both the services and the product companies in the departments of data science, 3D modelling, cloud and block chain. The IT industry has also laid off people who have been working for the redundant roles but they have also hired new work force with the latest technology needed. The company believes that the sector that includes IT, BPO, and product companies combined would have recorded a growth of about 15% in recruitments in May this year as compared to Apr’17.

Ciel HR Services, another recruitment firm, says that IT services hiring has reduced but if we talk about overall IT industry, the manpower has increased in a good demand. Also, if we talk about the location or city-wise, it is observed that the talent demand increased more in the tier-II cities as compared to tier 1 cities. For example, Jaipur had recorded a 20% hike in the talent demand.

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Good news is in store for the start-ups and small companies. Now the insolvency process for small companies and start-ups can be completed within a maximum of 135 days as the Insolvency and Bankruptcy Board of India (IBBI) creates rules for fast track insolvency resolution.

The exact definition of small companies is clearly stated in the Companies Act2013. Also, the definition of startups was stated by the Commerce and Industry ministry via a notification about a month before. The legal news confirms that the small companies or start-ups are those who have a share capital of less than Rs. 50 Lakhs and their annual revenue lower than Rs. 2 Cr and their total borrowings is also less than Rs. 2 Cr. These rules pertaining to fast-tracking insolvency process have been specified and clearly mentioned in the Insolvency and Bankruptcy Code. Along with the startups and small companies, an organization that is unlisted, also called as Limited Liability Partnerships (LLPs) that has a total asset of up to Rs. 1 Cr in the preceding fiscal would also be part of this new rule of fast-track insolvency process.

According to the business news, the fast track insolvency process will be completed within a timeline of 90 days. Normally in the other cases like for the bigger firms, the insolvency tracking process takes about 180 days. But, the arbitrating authority on the approval of National Company Law Tribunal (NCLT) may also give an extension of 45 days to the period of 90 days if he deems it necessary. In that case, the completion of the process will take a total of 135 days.

The Insolvency and Bankruptcy Board of India has also stated the norms for ‘Fast Track Insolvency Resolution Process for Corporate Persons’. The norms include the details like the process which must be followed starting right from the initiation of insolvency resolution of eligible corporate debtors till it reaches the decision along with the approval of the resolution plan by the arbitrating authority. A corporate debtor will have to write an application to the arbitrating authority or NCLT for starting fast track resolution process with the proof of default. After the application is acknowledged, the IRP will be appointed. And if the interim resolution professional (IRP) holds an opinion that in this case, the fast track process does not apply for the applicant, the IRP will have to communicate the same to the adjudicating authority within a maximum of 21 days.

Thereafter, the concerned authority will pass an order to transfer the corporate insolvency resolution process from fast-track to the normal corporate insolvency resolution.

These norms are created to help resolve the bad debt situation in our country. Especially the small firms and start-ups by this rule will be hugely benefitted. The norms of IBBI also comes along with the details on the procedures and deadlines to be followed like appointment of interim resolution professionals (IRPs) and submission of claims of financial dues to help in fast track resolution of insolvency as early as possible.

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Task Force Formed On Aviation

by Vinaya HS on August 2, 2017

in Finance

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There is a lot to cheer for the civil aviation industry. The U.S.-India Business Council (USIBC) has recently formed a task force. This task force is set up with an intention of finding out new and lucrative opportunities in the sector of civil aviation in India.

The panel has been constituted which will be headed by the engine maker Pratt and Whitney’s Managing Director of India, Palash Roy Chowdhury who will be the Chairman of the panel. The panel of the task force will also be co-chaired by Amber Dubey, who is global consultancy KPMG’s partner and India head of aerospace and defense.

The business news confirms that the USIBC or the U.S India Business Council has launched its India-Task Force on Civil Aviation which will be responsible for recognizing the opportunities for the implementation based on the NCAP or National Civil Aviation Policy.

USIBC said in a statement that the task force has been set up to have themselves involved with different stakeholders to encourage global best practices and resolve the several potential glitches that may come up as a result of the United States and Indian company’s deep involvement to strengthen the India’s mushrooming civil aviation market. One of the panel’s KRA will be to work towards providing an encouragement to the scheme UDAN, which is a Centre’s regional connectivity scheme. They are also expected to concentrate equally on the airport maintenance and boosting its infrastructure, enhancing and monitoring airport security, maintenance repair and overhaul or MRO, and skill development.

Since last two years, India’s domestic civil aviation industry has recorded a growth of a double-digit which makes the country’s domestic aviation sector as one of the fastest growing in the world. USIBC believes that their member companies are devoted to the make the various schemes and government’s flagship programs such as the “Regional Connectivity Scheme” and “Make in India” highly successful by bringing the best in technology in place and concentrating on equally important matters of airport infrastructure and security.

We all are aware of the increase in the flight traffic in India. The reasons have been the affordable air tickets, various discounts, deals, and offers offered by various airlines, etc. making the country witness an annual growth of more than 20% in the domestic air passenger traffic. Also, there is an increase in the total passenger throughput which is soon going to touch as much as 270 million passengers by the end of this year.

The market news also points out that this task force is also aimed at promoting bilateral dialogue between civil aviation industry of India and the government and partnering with governments. As the chairman of the panel shares, that with this newly constituted task force, the panel wishes to support the growth of U.S. corporations in India. They intend to do this by aligning with the priority areas of the Indian government and also cultivate the spirit of entrepreneurship and creation of job opportunities. The panel believes that this will surely contribute to the global economy in the coming times.

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Digital Payments

A couple of years back, my sister introduced me to online stores. And, since then I have remained glued to online shopping for almost everything such as apparels, grocery, food, footwear, books, accessories, kitchen utensils and appliances, home décor – you name it and I will have it ticked off. Initially, I used to select the Cash on Delivery option for payment, simply because I wasn’t confident about sharing my credit and debit card details with a website – thanks to all the news revolving around about phishing and data insecurity. But, this payment method soon started becoming a hurdle in my daily routine because many times either I had to postpone my schedule or rush back home to receive a delivery. This encouraged me to attempt online payment, and I was glad at the way it simplified shopping. And, trust me, now I prefer digital payment over cash transaction- at both physical stores and online stores!

This personal experience left me wondering, if digital payment had such an impact in my life, how it must have revolutionised the business sector. To begin with, banks and non-banking financial companies have been gradually moving away from the four-walled brick and mortar set-ups by embracing digitization for their services. For instance, to apply for a personal loan, or any other loan, you need walk up to the bank; rather choose to conveniently apply online. This development in the financial sector has made it imperative for corporates and vendors to realise the benefits of conducting business digitally.

One of the main challenges faced by businesses is delayed payments. Delayed payments adversely affect the entire business cycle – operations, inventories, management, and miscellaneous expenses. Factors such as postal time for cheques/Demand Drafts to reach you, formalities for clearance of cheques/Demand Drafts, approvals on payment orders, and other such long processed formalities results in the overall delay of payment in entire the trade cycle. In such a scenario, digitisation of payments makes way for a hassle-free payment process by:

i. Enabling instant payments regardless of whether the sender and receiver are in the same town, district, or country;
ii. Increasing the speed of payments by easing the process of making and receiving payments;
iii. Reducing processing and transaction cost by up to 90% as compared to cash payment;
iv. Becoming more efficient in tracking and controlling expenditures;
v. Improving traceability and controlling of expenditures;
vi. Increasing privacy and security of payments, and reducing associated crimes;
vii. Increasing the transparency of payments and providing a first entry point into the formal financial system;
viii. Increasing risk management capacity of corporates or individuals.

Needless, to say the above-mentioned will remain advantageous provided we have adequate infrastructure for a universal, affordable, easy, integrated, and secure platform for digital transactions. Digital payments have already started revolutionising the business arena, and with changing economic landscape it is pertinent that all businesses move towards digitisation. And, remember, efficient use of this technology can effectively transform the financial lives of not only businesses but individuals too!

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Know How a ULIP Works

by Vinaya HS on July 29, 2017

in Finance

Offering the dual benefits of investment and insurance, Unit-Linked Insurance (ULIP) plans play a major role in financial planning. In addition to offering a life cover to the family of the person who has purchased, it acts as an investment mechanism for wealth creation.

How ULIPs work?

When you invest in a ULIP, a portion of the premium is allocated towards providing the life cover, while the rest is invested in different fund options.

As per your investment objective, you can invest in different fund options. Here are some of the examples of the fund options offered by ULIP plans:

Name of Fund Risk Element Type
Equity Funds Medium to High Risk Invest in company stocks with the prime motive of capital appreciation.
Income, Fixed Interest, and Bond Funds Medium Risk Money is invested in government securities, corporate bonds, and other fixed income instruments.
Cash Funds (or money market funds) Low Risk Money is invested in bank deposits, cash, and other money market instruments.
Balanced Funds Medium Risk Invest both in equity and fixed interest instruments.

The insurance company pools money from all ULIP policyholders and invests the remaining amount (i.e., after deducting expenses and life cover amount) in the funds chosen by investors. Once the money is invested, the total corpus amount is divided into different ‘units’ with a face value. Then each investor is assigned ‘units’ in proportion to the invested amount. At any point in time, the value of each unit is called the Net Asset Value (NAV).

Any increase or decrease in the value of underlying assets is also reflected in the NAV. The fund value represents your growing corpus by way of NAV. At maturity, the insurer pays the fund value. In the case of the untimely demise of the policyholder during the policy tenure, the higher of the sum assured, fund value or death benefit is paid.

Know How a ULIP Works

Charges and Fees

ULIP charges are levied by insurers by deducting the number of units. The premiums you would pay are subject to certain charges before they are invested in the fund chosen by you. These charges are deducted either monthly or yearly, as per your policy and its terms.

A quick look at some of the charges levied on ULIPs:

Charges Levied on a ULIP Meaning
Administration Charges A fee is levied for administrating the policy every month.
Fund Management Charges These are charged towards managing the fund.
Switch Charges As per your goal or market condition, you can switch between different funds. In a policy tenure, a fixed number of fixed switches are given and subsequent to this, each switch would attract charges.
Surrender Charges These are levied for premature encashment of units.
Mortality Charges Depending on the age and the coverage amount, these are levied towards providing a death cover to the policyholder.
Premium Allocation Charges These are deducted upfront from the premium.

Partial Withdrawals

Though it is always recommended to stay invested for a longer duration; one can make the partial withdrawals from ULIPs to meet any financial requirements without hampering the continuity of the plan. This withdrawal can be made any time after the completion of five policy years, and a limited number of free withdrawals are offered by insurers in a policy tenure.

Top-Ups
ULIPs also offers the flexibility of making additional investments through top-up. It means, the policyholder can invest the excess funds in the plan and reap the benefits of market conditions.

ULIPS like ICICI Pru Guaranteed Wealth Protector offer the dual benefits of a capital guarantee and life cover. Though returns in ULIPs are market-oriented, with capital guaranteed feature, in any case, you will not get less than what you have invested.

Conclusion

In addition to saving money, tax planning is an imperative part of financial planning. Not only your insurance premiums, in fact, not only death benefits paid under ULIPs along with maturity amount, but top-up investments are also tax-free under the Income Tax Act.

Investing in a ULIP is the simple and easy way to enjoy the triple benefits of life cover, high returns and tax savings with ease to invest online. So, now when you understand the nitty-gritty of ULIPs, there is no point of holding yourself back.

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In a latest survey conducted by the FISTM, a financial services technology leader, the results show a stupendous increase in the use of mobile devices and other digital banking by Indians as compared to the last year. One of the prime cause of the increase in the mobile banking and digital payment was demonetization as per the business news.

As per the FIS Performance Against Customer Expectations (PACE) report, where about 1000 banking consumers were surveyed, it was found that more than 60%of the respondents have used mobile devices in this year to check their account balances, view latest transactions, in the paymentof various bills, transferring the funds,and other banking transactions. Last year in 2016, the same report gave the figure of 39% and last to last year i.e. 2015, the figure was 34%.

Other findings of the report were,

• 18% respondents use their bank’s credit cards exclusively
• The significance of the primary bank providing digital payment options has increased for all age groups.
• More than 30% of the payments of the respondents are done with mobile apps
• Consumers wish to have better connectivity with their banks
• 64% use their banks mobile app to make payments
• 84% make bill payments from their bank accounts

NITI Aayog recently said that digital payments rose 55%in 2017 as compared to 28% increase in five-year period ending 2016.

The recent demonetization of high-value currency notes to phase out black money has added fuel to the fire, the market news says. This led to adoption of digital modes of payments. If we compare the figures pre and post demonetization, the numbers on digital solutions are eye popping with more than 100% increase in usage in terms of the number of transactions. Paytm alone recorded more than 435% increase in mobile payments. These include mobile wallets, pre-paid cards as well as paper vouchers like Sodexo. The average value on digital payment solutions also increased by 62%. Also, the value of transactions for mobile banking increased by 30% (from 780.8 lakh transactions with value of Rs. 1,13,578 Cr. pre-demonetization to 896.1 lakh transactions with value ofRs. 1,48,583 Cr post-demonetization.

Though demonetization is not the only contributor in the rise of mobile banking and digital payments. One of the reports clearly shows that the people are anyway moving towards digitalization. A study shows a rise of 22% in cashless payments in Oct’2016 (before demonetization) as compared to the last year’s figures of October 2015. This clearly shows the increased acceptance for digital payments in the country.

India is all set for a revolution in digital payment and mobile banking. The digital payments in India are expected to hit $500 billion by 2020 which will contribute about 15% to India’s GDP, as per the ‘Digital Payments 2020’ report by Google and BCG. This trend that has already gained ground and is expected to continue and become more expansive in future.

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Uncertainty Plagues NSE’s Much Awaited IPO

by Vinaya HS on July 29, 2017

in Finance

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It has been a while since we are expecting the country’s largest stock exchange, National Stock Exchange, to release its much-awaited IPO. As per a recent share market news, Securities and Exchange Board of India (Sebi) has asked the stock exchange to refile the offer document for its initial public offer (IPO). It is anticipated that the IPO of NSE will beraising more than Rs. 10,000 Cr. from the investors.The IPO will witness existing shareholders offloading 20-25% shares to the public through the OFS.

NSE had filed its prospectus for the approval from the regulator, Sebi last year in the month of December. Since then the exchange went through many material changes and latest updates in the offer document. Moreover, as per the rule, the financial numbers for a company which is going to have an IPO cannot be more than two quarters old. The IPO of NSE is now stuck on the ‘unfair access’ controversy at its co-location facility.

Now, unless the issue co-location facility is resolved, the IPO of the NSE cannot proceed as communicated by both the board and the exchange. The business news says that the co-location controversy may take another six months to resolve and till then we will have to wait.

However, the exchange has been trying to make the process quick and controversy to end by settling the case through the consent mechanism. The exchange believes that this may avoid lengthy procedures and case will be resolved soon. Though the board is not sure if the NSE issue will be able to get settled through the consent mechanism.

The rules of consent mechanism says that an alleged wrongdoer settles the matter with the regulator without admitting or denying the guilt. As a consequence, Sebi in that case may either levy a penalty on the wrongdoer or mayban the wrong doer from the stock market, or sometimes even both. Various companies have resorted to this “consent mechanism” in past. The firms that have used the consent mechanism in past to settle disputes with Sebi include Reliance Infrastructure, Suzlon, RBL Bank, and JP Morgan. But, as a matter of fact,all the matters are hardly settled through the consent mechanism.

The experts of this matter believe that the board will be able allowing the consent mechanism after it determines the gains made by brokers and associated entities due to the lapses at NSE’s co-location facility. But the news says that even after numerous audits on NSE, none of the audits have been able to ascertain the gains made by the entities involved. This has also been followed by the appointment of forensic auditor by Sebi to find out the gains made by brokers or other entities involved.

It may take another 2-3 months to get clarity that whether Sebi will be go for the penal action or will settle the matter through consent. Only after this, NSE will be able to come out with an update on its IPO document.

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SEBI Cracks Down On Fake Stock Tips

by Vinaya HS on July 29, 2017

in Finance

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The market regulator, The Securities and Exchange Board of India (Sebi), has asked the support of Telecom Regulatory Authority of India (TRAI) to help them act against the malpractice of fake investment advices which are sent to the people by unknown entities. The legal news India confirms that Sebi has lately requested TRAI to develop a special software which can curb such mobile messages and the investors can be saved from misleading messages.

These unknown entities claim to be a part of some leading Indian brokering houses like Motilal Oswal and HDFC Securities. But these broking houses have denied all the allegations and have stated clearly that they are not the ones who have been sending these messages. These broking firms claim that some unknown entities are using their names to their advantage. The broking firms had raised a complaint against these fake messages, seeking an action from the board. The broking houses had also raised a similar complaint with the Mumbai police cyber-crime cell as well.

Contemplating on the seriousness of this issue, Sebi wants TRAI to develop a software that can scan some chosen keywords and then they can further decide whether to broadcast the message or not. The board strictly wishes to find out how such misleading and fake news related to the stock market is circulating without any authorization.

The share market news also reveals that the board has had a discussion with the cyber cell that is responsible for crime investigation under the economic offence wing of Mumbai Police and has thought what can be done about this issue. The cyber cell spokesperson has said that they are trying to find the location of the sender of the messages and they also said that the software used by them to generate these messages is quite complicated. But they hope to reach the defaulters soon as their expert team is working on it.

The fake messages that the phone users have been receiving is regarding buying shares of a penny stock, the entry price, stop loss, trade quantity, the target price and the holding period. Some of the stock operators give a reason too like the company is going to receive a big order from a MNC or it is on the verge of being acquired by a well-known firm. These messages have been successful in trapping some investors because the phone subscribers think that these messages are being sent by top broking companies and hence are genuine. One of the securities head believes that the organizations who send these messages are mostly promoters of substandard companies who do not have a good trading volume. While the rulebook of Sebi says that only the registered investment advisors and research analysts can give advices that are related to investment.

The same thing has also happened in past when this kind of unauthorized activity had happened. For this reason, the regulator had always warned investors through electronic broadcasting platforms to not fall in prey of such messages.

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The capital market regulator is all set to revise the norms for equity derivatives segment. The Securities and Exchange Board of India will soon finalize the details on revising the rules and regulations for the equity derivatives, the futures and options (F&O) segment. Some other proposals will also be passed, as the legal news in India says. For example, Sebi may suggest the lot size to be made double for a contract from Rs 5 lakh to Rs 10 lakh for the time being. This move is directed at deterring the retail investors to invest in F&O. A double lot size would mean a bigger amount of money to be deposited with the broker. Though this may not affect the high net worth investors but this would definitely make F&O trading costlier for retail investors. In the past as well, the regulator had increased the lot size from Rs 2 lakh to Rs 5 lakh in the year 2015.

The regulator is trying to make the futures and options unattractive for the retail investors because they indulge in speculative bets by investing in F&O and hardly understand the risks factors that are associated with it. The board states that as per their survey, the retail investors were found absolutely unaware of the risk factors associated with the derivatives market to an extent that some of the investors believe that derivatives are actually safer than the bonds.

However, the story does not end here. The bigger picture is, the regulator wishes to discourage the retail investors in investing in future and option chain because the board wants the retail investors to invest in the shares.

The board has gone one step ahead and has been trying to launch various products that suit the investors wherein they can invest with more confidence and the products are lucrative for them. The chairman of Sebi, Mr. Ajay Tyagi had said in a recent meeting that the regulator wishes to revise the derivatives market framework and bring more suitable products for the investors that involve global best practices.

The commodity and capital market regulator is deliberating on the minimum net worth limit for traders who wish to trade in equity derivatives. As of now, F&O traders are expected to provide six months of bank statement or ITR as a proof of their financial condition.

The board may also take into account the opinions on Securities Transaction Tax (STT) on options trades. After which, Sebi will make recommendations to the Finance Ministry since STT falls in their purview.

Also, the board will invite recommendations on the matter of deliveries in options trades. Currently, all the options trades are dealt in cash which also means that buyers of call and put options do not have a say in making deliveries of the underlying shares if the price moves against them. If they had a choice of not making the deal in cash, they would have saved themselves from the manipulations by operators.

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The Metropolitan Stock Exchange of India has decided to extend the closing time of trading hours. Earlier the closing time of the trading hours on its equity capital market segment was 3:30 pm. After the announcement of the extension of the trading hours by MSEI, the trading will be open till 5 pm. The brokers believe that this extension of one and a half hours of trading hours is given to re-launch MSEI in the market.

Until now, Bombay Stock Exchange and National Stock Exchange of India, who are the competitors of MSEI, have not declared any change in the trading hour timings. While NSE has kept mum on this matter and has refused to make any comment, a BSE spokesperson has said that only after studying the circular, will they make a decision as to whether to follow the MSEI and extend their closing timings too. However, it is believed that these two will have to follow MSEI and they will finally end up extending the trading hours, sooner or later.

As per the Indian stock market news, National Stock Exchange had a discussion with the brokers about the extension of the trading hours, and they have not responded in the favor. The stock exchange believes that if the brokers are fine with the idea, then NSE does not mind changing the closing timing.

The capital market regulator, SEBI had already offered the stock exchanges to extend the trading hours till 5 pm back in 2009, to which the exchanges had not responded. Though, BSE had then announced that it will open the trading at 9.45 am in the morning and will keep the evening hours the same. NSE was quick to respond to this move from BSE and declared to start their trading hours 55 minutes earlier. This led to a consensus between the two stock markets when both of them made a decision to open their respective stock exchanges at 9 am. But the closing hours was kept at 3:30 pm only. They both had decided not to extend the closing hours beyond 3.30 pm as a result of confrontation from the brokers due to the cost implications.

Out of MSEI, BSE, and NSE, MSEI is the smallest player while NSE has the major chunk of market share with a share of 85% in the cash segment and a whopping 99% share in the derivatives segment. The stock market brokers believe that MSEI is aiming to revamp the exchange trading in a hope to increase their market share and volume and hence they wish to extend the trading hours. But, the experts also hold the opinion that if the bigger players follow the suit and they also extend their trading timings, it will not help MSEI. Moreover, this move will result in more cost of the manpower and the increase in revenue is also not likely. Even if there is a slight benefit, the cost will nullify the impact, the brokers said.

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How To Buy And Sell Futures Contracts?

by Vinaya HS on July 29, 2017

in Finance

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Buying and selling of the futures contracts are similar to that of buying and selling of the number of units of stock from the market without taking the advantage of any quick delivery. There are numerous traders who do not know how to buy and sell in futures; the reason could be that either they are not so keen interested or they fear the risks in futures. No matter what the reason is, futures are not at all a risk.

How Does It Work?

The very first step towards the futures contracts is to buy a contract. When you buy shares, the number of shares can be just one or anything. In futures and options, you can buy a contract that has a proper lot size depending on the stock. The lot size is set for each of the futures contracts, and it might also differ from one stock to another.

Next Step Is Margin Payment

When you buy a futures contract, you do not pay for the entire amount of the contract but simply the margin. The margin amount is supposed to be as prescribed by the exchange. The margin depends on the exchanges that are set for the day. Depending on certain types of parameters, the margin payment of each stock is declared.

How Can You Make Or Lose Money?

For example, you purchased an HDFC futures contract, and the underlying amount is Rs. 511 for each share. And suppose that the price moved to 512 the other day. You will get a difference of Rs. 1, and eventually, you get a credit of Rs. 650 as Rs. 1 per share x 650 shares. Assume that on the following day, the price falls to 510. You get a difference of Rs. 2 per share. Since the price has fallen, Rs. 1,300 (Rs. 2 per share x 650 shares) will be debited from your account. This will continue until you sell the Futures contract or else it gets expired.

Why Is The Futures Contract So Popular?

It is popular because there has no delivery. Another reason for its popularity is its lower brokerage in the futures and that you don’t have to pay for the lot. You only make the payment of the margin, not the entire amount. Futures and options trading should be undertaken with a risk capital that will not change your life if you lose your investment. If you are on a losing platform, you can stand to lose more amount of money that you decided for the margin, and you are only one who is responsible for the entire contract value because of the high leverage nature of the investment.

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A futures contract is nothing but a systematic contract between the two consecutive parties for the trading of an asset at a reasonable price and a specified date. The seller delivers the repressed, and the client or the buyer takes the delivered asset and pay the amount. The price, in which the deal gets cracked, is known as future price or the delivery price. As the future’s price relies on the asset’s price, it is a derivative instrument. A future contract is quite equivalent to that of a forward contract. The market of the futures contract has evolved to minimize the state of the asset along with the counter party risk of the forward contract.

What Are Stock Futures?

A stock future is a contract that needs to be sold or purchased at a specific amount for a specific price at a standardized date. In the recent years, the stock market has been rapidly changing its position. The stock futures are the best concepts in protecting your investments so that not a single market fluctuation varies your portfolio. Nifty option chain is a listing of all the call and put option strike prices including their premiums for a particular specified maturity period. Most of the online brokers display their options in the option chain form.

How Do Stock Futures Work?

To understand the concept of stock futures, imagine you own a popcorn company, and you need to buy fresh corn to make your product. The price of the corn fluctuates on every business day, and you want to make a good deal at the lowest price possible to make the most profit while selling your finished product. In the process, you realize that the corn price might be different in today’s market that it was a year from now. So, here you enter into a futures contract with a nearby farmer to purchase his corn at a reasonable price at a certain fixed date. The farmer is not ready to sell his corn at such a low price that is below the current market value. So, you have to agree with making a fair price deal ensuring none of you get pounded by the market fluctuations, and both of you are satisfied with the transaction in a year.

Significance Of Stock Futures

The two parties in the stock futures decide to make a deal to buy or sell a specific amount of stock at a reasonable price that doesn’t affect any of them financially, at a future date. The difference between the tangible commodities such as corn, wheat, pork bellies and the stock futures is that the stock future contracts are never set till the expiration date. These contracts are purchased and are eventually sold on the futures market.

Understanding The Concepts Of Index Futures

Index futures are an investment in which the buyers and sellers deal in paying or receiving the payment in the future for the money value of an underlying stock index. As the nifty option chain nears its date of expiration, the time value edges closer to $0, and the intrinsic value represents the difference between the repressed security price and the contract’s strike price.

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GST Extended To Jammu and Kashmir

by Vinaya HS on July 29, 2017

in Finance

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Jammu and Kashmir was the only state in India where GST was not implemented on July 1’2017 like it was in rest of the country. The President of India Pranab Mukherjee recently agreed to an order regarding to the enactment of the Goods and Services Tax in the state of Jammu and Kashmir and the clearance of different levels for the state assembly for implementation of a State GST law.

After the order from the President, the order was sent to the Ministry of Home Affairs for the action ahead, the GST news states. The move came when the PDP-BJP government had passed a resolution in the state assembly after which the state cabinet with the chairmanship of the Chief Minister of J&K Mehbooba Mufti passed the draft order for correspondence of the President.

The Finance Minister of J&K, Haseeb Drabu, had also said that after receiving the order of GST from the President, the state government will discuss it with the Assembly for implementation of a State Goods and Services Tax (SGST) bill. Though the finance minister of the state believes that the government need not bring the resolution in assembly but it did so in the favor of democracy and also to get an idea how the house reacts on the issue. However, this move was termed by opposition as a “sham”.

For the first time ever in the history of the state of Jammu and Kashmir assembly, a resolution which had a presidential order on a constitutional amendment was discussed and passed, the legal news confirms.

The president’s nod was also in the concurrence by the state Governor N N Vohra. The order initiated by the President is closely related to the application of some provisions of the Constitution of India through an order of the President issued under Article 370 which makes the state of J&K, a special state.

The state of J&K finally on July 7th passed the GST bill though the opposition had boycotted this move. The GST bill was adopted by a voice vote because the opposition members had boycotted the proceedings. They accused the government of discouraging the special status of the state by seeking a presidential order on GST.

Before moving the GST bill for discussion and passing by the state assembly, the finance minister of the state had read out all the contents of the presidential order regarding the special status of the state and its exclusive taxation powers. The order read that the powers of the state of Jammu and Kashmir as per Section 5 of the Constitution of Jammu and Kashmir, will remain intact. The order further said that the state legislature will have the powers to make laws with respect to goods and services tax levied by the state.

The finance ministry said that because J&K is a special state, some extra steps had to be taken to pass the GST bill, hence the delay. With this rule, the GST is now applicable all across the country making GST as “One nation, one tax”.

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With effect from Aug 1 trading is set to become more expensive as the share market news confirms. Bombay stock exchange is all set to make changes in the transaction charges on the equity segment next month onwards. BSE has decided to review the transaction charges for trading in equities. The trade in equities that are traded in lower volumes will be charged a comparatively higher fee from 1st August. The stock exchange has announced a new slab wise structure for the transaction fees for securities traded under various group of A, B and other non-exclusive scrips. Group A is the most tracked group involving around 300 scrips and the Group B contains more than 3,000 stocks, the legal news confirms.

Until now, the trade volumes up to 5 lakh was levied a fee of Rs.1 per trade, which now stands revised to transaction fee of Rs 1.5 per trade for the trade volumes up to 1 lakh as per BSE. As per the new slab structure shared by BSE, the transaction charges vary from Rs.0.50 to Rs. 1.5 per trade. Previously, since April 1, 2017, the stock exchange was charging the transaction fees from Rs. 1 per trade to Rs.0.30 per trade for different slabs.

BSE has communicated to all the traders that starting 1 August, 2017, the slab based rates for the transaction levies on per trade criterion for Group A, Group B and other non-exclusive scrips will be revised. The new transaction charges per trade will keep coming down with the raise in the number of monthly trade volumes.

As per the new trade slab, now the trader members of the stock exchange will have to pay Rs. 1.5 per trade for doing the monthly trades between the slab of 0 to 1 Lack. The transaction charges will be Rs1.25 per trade for the slab of1 Lack to 3 Lack number of transactions. Talking about the further monthly trade count slabs, the trading members will be levied a transaction fees of Rs 1 per trade for a monthly trade count between the slab of 3 Lack to 5 Lacks whereas a fee of Rs. 0.75 will be levied to the trade members for a monthly trade count between the slab of 5 Lack to 20 Lacks. The transaction fees will be Rs. 0.50 to the trading members if their monthly trade count is more than 20 Lakh. Previously, there were more monthly trade count slabs. For the monthly trade count between 30 Lakh to 40 Lakh, the transaction rate was Rs. 0.4 per trade for the traders and for the trade members who exceed their monthly trade count for more than 40 Lakh, the transaction rate was Rs. 0.3 per trade for them.

The basis of this classification is several. Some of the factors being market capitalization, trading volumes, trading count, the track records, profits and dividends, shareholding patterns, and some other qualitative aspects.

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SEBI (The Securities and Exchange Board of India)is considering tweaking the norms in the case of family trust structures. This is being done to avoid any misuse of the family trust structures by the promoters. SEBI is more vigilant when it comes to corporate trustees who wish to transfer the listed companies shares.

The business news confirms that there has been a recent upsurge in the number of promoters who wish to transfer their business assets that also includes the shares of listed entities, to such trusts. But now, the promotors will have to get a nod of SEBI before they can get the transfer of shares of the listed companies to a trust. SEBI has been quite watchful in giving the permission for the same. The apprehension that the trust structure would be in the benefit of a non-family member or the transfer control will happen outside a family is keeping the SEBI selective. SEBI is all the more doubtful in the cases when the trustee is an external corporate entity and not the beneficiary or a family member. But there is no doubt in the case of an open offer when shares are transferred in a trust. As per the takeover rules, the thing that creates a trigger for an open offer is if an entity acquires at least 25% in a listed company. Then the entity has to buy another 26% stake in the company from the public shareholders.To state clearly, there is no exemption given by the Sebi on trigger of open offer if the trustee is a corporate trustee.

Many market experts hold the opinion that Sebi should think upon the simplification of this process of forming a trust so that the transfers can be done without taking a prior approval. There is also a call for more clear and specific rules and norms that makes sure that the control of shares in a trust is in no way passed to an external party. One of the important things to know is, that the contribution of assets to a trust is not taxable for either the contributor or the trust.

It is seen that there are several promoters who have started forming family trusts recently to restrict their personal assets from business liabilities. Moreover, they speculate the advent of estate duty or inheritance tax which is already the norm in few developed countries like US and UK. The legal news in India has seen the cases where the rich people have started depending hugely on family trusts as a tool for succession planning because this is the simplest, least costly and easiest way of holding the assets rather than owning them in their own individual names or through other entities.Hence, the trust is adjudged as the effective succession planning tool because it is a lasting entity that separates proprietorship and administration of a business and also helps in the caseof any casualty like death or breakdown.

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