Thursday, 15 October 2009
Sending Money Within India? Don't Hold Your Breath
Sudip Bandyopadhyay
I still remember an incident which took place
a few years back when my next door neighbor's
son needed a large sum of money for admission
to an engineering college.
[Sudip Bandyopadhyay]
He had only a few hours to complete the formalities
within the deadline. They made a few phone calls to
his uncle in London and within 15 minutes they collected
the money from the neighborhood Western Union outlet
after the uncle remitted money from Britain to our
small town in the outskirts of Kolkata.
Another shocking and quite different incident took
place recently. My driver in Mumbai wanted to urgently
send money to his wife in his native village in Bihar
for some immediate need. The poor guy was running from
pillar to post trying to figure out how to ensure that
the funds reached his wife within 24 hours.
Unfortunately, he cannot use money transfer agents
as they cannot be used for domestic remittance.
Since his illiterate wife doesn't have a bank account
and the village where his family stays, in any case,
doesn't have a bank branch within 10 kilometers,
he had no other option but to ask his family
to borrow money from his village money lender at
an exorbitant interest rate for a week.
Ultimately, he remitted money through a postal money
order and he is hoping that his money reaches his wife
within seven days.
Financial inclusion is one of the main planks
of India's drive to wipe out poverty – equal
to the efforts put in to build physical infrastructure.
Government experts define the policy as the
"delivery of financial services at an affordable
cost to the vast sections of the disadvantaged
and low-income groups." Officials estimate that
more than half of Indian rural households -
about 46 million homes – do not have access to credit.
“Inclusive growth demands providing financial
services to this un-banked population."”
Two thirds of the country's population doesn't
have a bank account and this situation is not
expected to change dramatically in the near future.
Inclusive growth demands providing financial
services to this un-banked population.
The attempt by the government is now rightly moving
towards using alternate non-banking channels to route
financial services into the interiors of the country.
As a part of this process it would be only
appropriate if the domestic remittance market
is opened to recognized money transfer agents
who already are authorized to receive inward
remittance from abroad.
In fact, it is quite paradoxical that a person
sitting in India can receive remittance from
anywhere else in the world but not from other
locations in India. So a person in London can
remit money to a person sitting in a remote
village in Bihar by using the services of
Reserve Bank of India-approved, private money
transfer players, while a person sitting
in Mumbai cannot do the same. The only option
open to him is to use the postal department's
money order service and borrow
in the meantime if necessary.
The problems in India's rural sector are well
documented and the lack of remittance services
is but one of the many inequities that plague
this part of the country and keep its inhabitants
outside of mainstream finance
Consider some of the others.
About 72% of the country's 1.14 billion people
live in rural areas, yet agriculture produces
only about 21% of gross domestic product,
according to the World Bank.
That leaves the majority of the population
living off a small chunk of the economic pie.
While the government has claimed it can
end poverty by 2040, at present,
more than 250 million Indians live
on less than $1 a day.
Small and marginal farmers, with two hectares
(five acres) of land or less, comprise three
quarters of the nation's farming households but
own less than one quarter of its farmland.
In the poorest states, such as Bihar, small
and marginal farmers comprise about 96% of those
working the land, according to industry experts.
A lack of transport and other infrastructure
forces these farmers to sell their produce
to village "aggregators," the middlemen,
at less than market value. With a better
knowledge of prices than many of their
poorly educated clientele, the middlemen
dupe farmers into steep discounts.
They also double up as money lenders,
providing farmers with credit for seeds
and equipment, often at crippling interest rates.
This is where micro-finance and non-bank
financial companies can play a huge role
so that financial inclusion reaches the remotest
levels of the country and India can truly progress.
—Sudip Bandyopadhyay
is managing director of Reliance Money in Mumbai
R B I Notifications about Accessing ATMs of any bank
As request by many of Indian banks
now reserve bank of Indian has announced
the latest norms about the free access to
automated teller machines (ATMs) of any bank.
According to RBI's notifications free access
will be closed from October 15 as the third-party
ATM usage would carry a cap on the withdrawal amount
and the number of transactions each month.
From October 15, a customer can take out
a maximum of Rs.10,000 per withdrawal
from ATMs not owned by the bank in
which the customer has an account.
Going by the IBA guidelines, a savings account
holder may get five free third-party transactions
a month and could be charged from sixth onwards.
However, current account holders might
not get any free third-party usage.
now reserve bank of Indian has announced
the latest norms about the free access to
automated teller machines (ATMs) of any bank.
According to RBI's notifications free access
will be closed from October 15 as the third-party
ATM usage would carry a cap on the withdrawal amount
and the number of transactions each month.
From October 15, a customer can take out
a maximum of Rs.10,000 per withdrawal
from ATMs not owned by the bank in
which the customer has an account.
Going by the IBA guidelines, a savings account
holder may get five free third-party transactions
a month and could be charged from sixth onwards.
However, current account holders might
not get any free third-party usage.
Tuesday, 13 October 2009
Banking sector on fast track
ABOUT four years ago, the then Reserve Bank of India (RBI) governor
Yaga Venugopal Reddy visited four northeastern states - Meghalaya, Assam,
Nagaland and Tripura.
It wasn’t unusual for an RBI Guv to do so.
But this visit was special. It was the first time that Reddy
got a fix on the reasons behind the dismal state of banking
in the North East. Something that prompted him to depute a
key lieutenant - RBI deputy governor Usha Thorat - to draft
a master plan for financial services development in the region on a war-footing.
Never before had RBI taken such a conscious step to shore up banking
penetration in Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland,
Tripura and Sikkim.
The challenges are numerous - the difficult terrain,
the remote habitation zones, the innumerable logistical
cum communication bottlenecks, not to mention the insurgency
problem. All have stifled economic and banking development over the years.
It was with a bid to surmount these hurdles that the
Usha Thorat Committee advocated bigger IT adoption
levels and usage of intermediaries like business correspondents
and business facilitators to serve people in remote areas.
And the good news is that banks - both public sector banks
(PSBs) and new-gen private players - have made conscious
efforts to place the North East in their expansion map following
the RBI’s diktat.
Ever since, the total number of bank branches has seen a
sharp surge. From a sub-1900 level as on June 2005, the
region now has around 2,100 bank branches. Besides,
banks are taking the intermediary route and using IT-enabled biometric
cards to penetrate deeper pockets.
From a purely business perspective, expanding financial
business in the North East would have been lucrative, given
the lack of banking penetration over there. Even today,
bank branches in the region cover an average population
of around 21,000.
According to RBI’s prescription, the average population per
branch should not ideally be more than 10,000. But issues
that blocked banking growth were the lack of economic
activities, besides typical issues like infrastructure and insurgency.
he scene seems to be changing fast.
In fact, government funds appear to be pouring in thick and
fast into this region. "This typically enhances the potential for
banking business," says Satish Chander Gupta, chairman and
managing director of United Bank of India (UBI), which has a
better presence in the region with 250-odd branches. UBI’s
experience shows the region is a goldmine in terms of low
cost current and savings deposits. Mobilization of such deposits
directly boosts a bank’s profitability.
So much so that banks have started making a beeline with
proposals to expand their footprints in the region. Big guns
like State Bank of India, United Bank of India, Allahabad Bank
and UCO Bank will add 55 branches between them in the course
of the next six months to take their collective tally to 1,039.
SBI has over 550 ATMs in the region and it is adding another 500.
It is using intermediaries like Indian Grameen Services as business
correspondents. It has other 300-odd business facilitators too as its
extended arm for offering minimum banking services.
The search of low-cost deposits has even drawn private players
like Axis Bank and HDFC Bank.
Even the tiny Kerala-based South Indian Bank,
which has merely two branches - in Guwahati and
Agartala each - has firmed up plans to open four more
branches, aggressive by its standard.
And yet, the pace of the development could have been faster,
a section of the bankers feel. "The expansion of banking - both
in terms of physical presence and via intermediaries - hasn’t
gathered pace the way we would have liked it to," says National
Bank for Agriculture & Rural Development’s (Nabard) chief general
manager in Guwahati, AK Jain.
This is how UBI’s Mr. Gupta assesses it. "It’s a difficult terrain to
work on. Credit expansion has always been a problem in the
absence of large-scale industry. But with more regulatory focus
of late, the region has started to throw up big opportunities for
banks and financial companies. It’s now a matter of generating
awareness about the region’s potential." Others senior bankers
agree to this view too.
The new entrants in the region are typically looking at capital towns.
"This is quite on expected lines as every one need a base first before
going into deeper pockets of the region," explains Allahabad Bank
chief KR Kamath.
"We are also finalizing plans to have our network in states
where we are not present now," he says. The bank has decided
to open its maiden branch in Arunachal Pradesh shortly. It is also
absent in Mizoram.
There many reasons for banks to take the North East seriously.
Here’s what Allahabad Bank’s zonal head in Guwahati, S Pal Choudhury says:
"The insurgency problem has somewhat fizzled out in Assam.
There is occasional trouble in rural belts but the towns are safer
nowadays. Other states are more peaceful now, excepting Manipur."
HDFC Bank’s regional head (east) Gulzar Singh seconds the emotion.
"Our bank is present in the major cities or towns of Assam where the
effect of insurgency is minimal. The day to day functioning of the bank
is not affected. We do not have a presence in Manipur."
Only recently, RBI took another watershed step to propel financial
services in the North East. Top bankers have always cited that opening
of branches in many parts of this region are commercially unviable.
To address this, RBI has offered a viability gap financing scheme for
new branches in select places. This may also be tried out in other
parts of the country, according to Usha Thorat.
On top of all this, the new-found determination of the Manmohan
Singh government to lift the North Eastern Region to a position of
national economic eminence has created the requisite buzz among
business houses.
The government has earmarked 10% of the gross budgetary support
given to all eligible ministries exclusively for the region. Moreover,
Gail’s Rs5,461-crore Assam Gas Cracker Project has just achieved
financial closure and this is expected to pave the way for more
business in the region.
"The Tea Gardens in Assam, Trade & Commerce in Tripura or Private
Coal mines of Jowai in Meghalaya offer huge opportunities for business.
Moreover, economic parameters like consumer markets, investment
opportunities, infrastructure, urbanization, trade and commerce,
inclusiveness and prosperity of the states offer unique opportunities
for business development for the bank," HDFC Bank’s Mr Singh says.
HDFC Bank is present in four northeastern states - Assam (13 branches),
Meghalaya (2), Sikkim (2) and Tripura (1). In the next six months,
it is going to add six more to this tally.
Its close competitor Axis Bank opened eight branches in the
last 12 months to take the tally to 29 branches. It has promised
to add a couple more by March 2010.
"The North East is poised for accelerated economic development
following the government’s `Look East’ policy. The work of the road
connectivity with the Asian nations has already started. T
his would greatly reduce the distance and also make cross
border trade and commerce with the Asian nations an attractive
proposition," Mr Singh observes.
So far so good.
Nevertheless, the Northeastern region needs
to address the governance issue to further boost
investment flows.
Even, as the Vision 2020 report prepared by
ministry of development of the Northeastern
region says, diplomatic initiatives with the
neighborhood countries needs to be strengthened
to foster border trade.
Which is one of the mainstays
of the otherwise agrarian northeast economy, as 96%
of the borders of the region constitutes international boundaries.
Yaga Venugopal Reddy visited four northeastern states - Meghalaya, Assam,
Nagaland and Tripura.
It wasn’t unusual for an RBI Guv to do so.
But this visit was special. It was the first time that Reddy
got a fix on the reasons behind the dismal state of banking
in the North East. Something that prompted him to depute a
key lieutenant - RBI deputy governor Usha Thorat - to draft
a master plan for financial services development in the region on a war-footing.
Never before had RBI taken such a conscious step to shore up banking
penetration in Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland,
Tripura and Sikkim.
The challenges are numerous - the difficult terrain,
the remote habitation zones, the innumerable logistical
cum communication bottlenecks, not to mention the insurgency
problem. All have stifled economic and banking development over the years.
It was with a bid to surmount these hurdles that the
Usha Thorat Committee advocated bigger IT adoption
levels and usage of intermediaries like business correspondents
and business facilitators to serve people in remote areas.
And the good news is that banks - both public sector banks
(PSBs) and new-gen private players - have made conscious
efforts to place the North East in their expansion map following
the RBI’s diktat.
Ever since, the total number of bank branches has seen a
sharp surge. From a sub-1900 level as on June 2005, the
region now has around 2,100 bank branches. Besides,
banks are taking the intermediary route and using IT-enabled biometric
cards to penetrate deeper pockets.
From a purely business perspective, expanding financial
business in the North East would have been lucrative, given
the lack of banking penetration over there. Even today,
bank branches in the region cover an average population
of around 21,000.
According to RBI’s prescription, the average population per
branch should not ideally be more than 10,000. But issues
that blocked banking growth were the lack of economic
activities, besides typical issues like infrastructure and insurgency.
he scene seems to be changing fast.
In fact, government funds appear to be pouring in thick and
fast into this region. "This typically enhances the potential for
banking business," says Satish Chander Gupta, chairman and
managing director of United Bank of India (UBI), which has a
better presence in the region with 250-odd branches. UBI’s
experience shows the region is a goldmine in terms of low
cost current and savings deposits. Mobilization of such deposits
directly boosts a bank’s profitability.
So much so that banks have started making a beeline with
proposals to expand their footprints in the region. Big guns
like State Bank of India, United Bank of India, Allahabad Bank
and UCO Bank will add 55 branches between them in the course
of the next six months to take their collective tally to 1,039.
SBI has over 550 ATMs in the region and it is adding another 500.
It is using intermediaries like Indian Grameen Services as business
correspondents. It has other 300-odd business facilitators too as its
extended arm for offering minimum banking services.
The search of low-cost deposits has even drawn private players
like Axis Bank and HDFC Bank.
Even the tiny Kerala-based South Indian Bank,
which has merely two branches - in Guwahati and
Agartala each - has firmed up plans to open four more
branches, aggressive by its standard.
And yet, the pace of the development could have been faster,
a section of the bankers feel. "The expansion of banking - both
in terms of physical presence and via intermediaries - hasn’t
gathered pace the way we would have liked it to," says National
Bank for Agriculture & Rural Development’s (Nabard) chief general
manager in Guwahati, AK Jain.
This is how UBI’s Mr. Gupta assesses it. "It’s a difficult terrain to
work on. Credit expansion has always been a problem in the
absence of large-scale industry. But with more regulatory focus
of late, the region has started to throw up big opportunities for
banks and financial companies. It’s now a matter of generating
awareness about the region’s potential." Others senior bankers
agree to this view too.
The new entrants in the region are typically looking at capital towns.
"This is quite on expected lines as every one need a base first before
going into deeper pockets of the region," explains Allahabad Bank
chief KR Kamath.
"We are also finalizing plans to have our network in states
where we are not present now," he says. The bank has decided
to open its maiden branch in Arunachal Pradesh shortly. It is also
absent in Mizoram.
There many reasons for banks to take the North East seriously.
Here’s what Allahabad Bank’s zonal head in Guwahati, S Pal Choudhury says:
"The insurgency problem has somewhat fizzled out in Assam.
There is occasional trouble in rural belts but the towns are safer
nowadays. Other states are more peaceful now, excepting Manipur."
HDFC Bank’s regional head (east) Gulzar Singh seconds the emotion.
"Our bank is present in the major cities or towns of Assam where the
effect of insurgency is minimal. The day to day functioning of the bank
is not affected. We do not have a presence in Manipur."
Only recently, RBI took another watershed step to propel financial
services in the North East. Top bankers have always cited that opening
of branches in many parts of this region are commercially unviable.
To address this, RBI has offered a viability gap financing scheme for
new branches in select places. This may also be tried out in other
parts of the country, according to Usha Thorat.
On top of all this, the new-found determination of the Manmohan
Singh government to lift the North Eastern Region to a position of
national economic eminence has created the requisite buzz among
business houses.
The government has earmarked 10% of the gross budgetary support
given to all eligible ministries exclusively for the region. Moreover,
Gail’s Rs5,461-crore Assam Gas Cracker Project has just achieved
financial closure and this is expected to pave the way for more
business in the region.
"The Tea Gardens in Assam, Trade & Commerce in Tripura or Private
Coal mines of Jowai in Meghalaya offer huge opportunities for business.
Moreover, economic parameters like consumer markets, investment
opportunities, infrastructure, urbanization, trade and commerce,
inclusiveness and prosperity of the states offer unique opportunities
for business development for the bank," HDFC Bank’s Mr Singh says.
HDFC Bank is present in four northeastern states - Assam (13 branches),
Meghalaya (2), Sikkim (2) and Tripura (1). In the next six months,
it is going to add six more to this tally.
Its close competitor Axis Bank opened eight branches in the
last 12 months to take the tally to 29 branches. It has promised
to add a couple more by March 2010.
"The North East is poised for accelerated economic development
following the government’s `Look East’ policy. The work of the road
connectivity with the Asian nations has already started. T
his would greatly reduce the distance and also make cross
border trade and commerce with the Asian nations an attractive
proposition," Mr Singh observes.
So far so good.
Nevertheless, the Northeastern region needs
to address the governance issue to further boost
investment flows.
Even, as the Vision 2020 report prepared by
ministry of development of the Northeastern
region says, diplomatic initiatives with the
neighborhood countries needs to be strengthened
to foster border trade.
Which is one of the mainstays
of the otherwise agrarian northeast economy, as 96%
of the borders of the region constitutes international boundaries.
GST - GOODS AND SERVICE TAX
Sorab Gupta
The central and state governments are discussing
the GST system proposed to be implemented in India
from April 1, 2010.Representing the states in
the discussions is the empowered committee
of state finance ministers.
GST will replace present set of Union, state and local level levies with one single rate for both goods as well as services.
This rate will be inclusive of the share of the Union as well as state and local governments.
BIG TAX REFORM
# The step towards implementation of GST in India is one of the biggest tax reform in Indirect taxation.
# GST is preferred international standard as it has a capacity to raise revenue in the most transparent manner.
# Today, it has spread to over 150countries.
WHY CHANGES
# The main objective of implementation of this new tax reforms is to remove complexity and also to remove effect of tax cascading.
# The objective is also to subsum all those tax which currently levied on goods as well as on services by federal or state government.
WHAT IS GST
# The goods and services tax (GST) is a comprehensive value- added tax (VAT) on goods and services.
# France was the first country to introduce this system in 1954.
# Through a tax credit mechanism, GST is collected on value- added goods and services at each stage of sale or purchase in the supply chain.
# GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, GST is like a last-point retail tax.
# Many countries have a unified GST system. However, countries like Brazil and Canada follow a dual system wherein GST is levied by both federal and state or provincial governments.
# In India, a dual GST is being proposed wherein a central goods and services tax (CGST) and a state goods and services tax (SGST) will be levied on the taxable value of a transaction.
# The central and state governments are discussing the GST system proposed to be implemented in India from April 1, 2010.Representing the states in the discussions is the empowered committee of state finance ministers
GST: KEY FEATURES
# Duel GST: Central GST & State GST
# Destination based State GST
# Common Base, Classification & Forms
# No cascading of Central and State taxes
# Cross credit not allowed
# Tax levied from production to consumption
# Export and SEZ (processing zone) zero rated (excluding
supply to DTA)
TAXES TO BE CLUBBED IN GST
Central Taxes
# Excise duty
# Additional Excise duty
# Service Tax
# CVD, SAD
# Surcharge
State Taxes
# VAT
# Entertainment tax levied by states
# Luxury tax
# Tax on Lottery
# Entry tax other than for local Government
TAXES NOT TO BE CLUBED IN GST
Central Taxes
# Specific Cess
# Excise duty on tobacco products (in addition to GST)
State Taxes
# Items containing alcohol
# Entertainment tax (local Bodies)
# Entry tax for local bodies
# Electricity duty
DUEL GST MODEL
In Duel GST model following tax will be applicable:
# Federal GST on Goods
# State GST on Goods
# Federal GST on Services
# State GST on Services
PROPOSED GST RATES
# 2 Rate structure: Lower and Standard Rate
# Precious metals and stones very low rate
# GST Exemption for some items (less than 100)
# Some Goods at lower rate (excludes Ind. inputs)
# 3 Petroleum products, liquor and narcotics excluded from GST regime
# Single tax rate for services
INDICATIVE GST RATES
Exempted products:
Food Grains, Bread, Salt, Milk, Vegetables, Meat, Fish,
Goods at lower rate:
Tea, Milk powder, Coffee beans, Toy, Beedi, Bicycles
GLOBAL AVERAGE GTC RATES
# Swedon & Denmark - 25%
# U.K. - 17.5 %
# China - 17%
# New Zealand - 12.5%
# Japan & Singapore - 5%
GST: KEY FEATURES
# HSN to be applied for goods
# Uniform return & collection procedure for central
and state GST
# 13 digit PAN based Common TIN registration
# Turnover >15 million: Registration under both GST
# TINXSYS to track transactions
FAVOURABLE IMPACT ON INDUSTRY
# Seamless credit to trade and industry throughout supply chain will improve competitiveness
# Common Tax Base will eliminate tax cascading
# CST phase-out will reduce supply chain cost
# Economy in production scale & efficiency in distribution
# Simplified structure to reduce transaction cost
COST INCREASE IN CERTAIN SECTORS
# Increased tax incidence on distributive trade and services (duel GST)
# Increased tax incidence on infrastructure due to non availability of tax credit
# Continuing electricity duty, entertainment tax & Cess will adversely affect some sectors due to double taxation
# Impact on certain products due to rate increase
Foreign investors can hold 100 per cent stake in Indiabulls Power: RBI news
Foreign institutional investors (FIIs) can now purchase
up to 100 per cent of the paid-up capital, including equity
shares and convertible debentures, of Indiabulls Power
Limited (formerly Sophia Power Company Limited),
through primary markets and stock exchanges under
the portfolio investment scheme (PIS), the Reserve Bank
of India (RBI) said in a notification today.
The purchases of equity shares by a single FII/SEBI approved
sub-account of a registered FII in the company should, however,
not exceed 10 per cent of the paid-up equity capital of the company.
The Reserve Bank has also notified that non-resident Indians
(NRIs)/persons of Indian origin (PIOs) can purchase equity shares
and convertible debentures up to 24 per cent of its paid-up capital
through stock exchanges under the portfolio investment scheme (PIS).
Investments made both on repatriation and non-repatriation basis,
by any single NRI/PIO in the equity shares and convertible
debentures should not exceed 5 per cent of the paid-up equity
capital of the bank or five per cent of total paid-up value of each
series of convertible debentures issued by the above company.
The revised FII limit of 100 per cent and NRI limit of 24 per cent
would be within the overall 100 per cent FDI limit, applicable to the company.
up to 100 per cent of the paid-up capital, including equity
shares and convertible debentures, of Indiabulls Power
Limited (formerly Sophia Power Company Limited),
through primary markets and stock exchanges under
the portfolio investment scheme (PIS), the Reserve Bank
of India (RBI) said in a notification today.
The purchases of equity shares by a single FII/SEBI approved
sub-account of a registered FII in the company should, however,
not exceed 10 per cent of the paid-up equity capital of the company.
The Reserve Bank has also notified that non-resident Indians
(NRIs)/persons of Indian origin (PIOs) can purchase equity shares
and convertible debentures up to 24 per cent of its paid-up capital
through stock exchanges under the portfolio investment scheme (PIS).
Investments made both on repatriation and non-repatriation basis,
by any single NRI/PIO in the equity shares and convertible
debentures should not exceed 5 per cent of the paid-up equity
capital of the bank or five per cent of total paid-up value of each
series of convertible debentures issued by the above company.
The revised FII limit of 100 per cent and NRI limit of 24 per cent
would be within the overall 100 per cent FDI limit, applicable to the company.
Apparel exporters to get 2% interest subsidy
Press Trust Of India / New Delhi October 13, 2009,
Following a rise in garment exports in
September for the first time
since April this year, the government
has decided to give
exporters 2 per cent interest subsidy
on shipments.
The government had earlier announced a 2 per cent interest
subsidy to certain labour-intensive sectors like handicraft,
marine and textiles. However, garment exports were not
included in the list for the fiscal benefit.
Following a communication from the finance ministry, t
he Reserve Bank of India (RBI) in a notification said:
“Banks may pass on the benefit (2 per cent interest subsidy)
to all eligible (garment) exporters....”
It said the benefit would be
effective retrospectively from December 1, 2008,
and would remain in force till March 31, 2010.
Garments exports, which
had seen a decline since April 2009, managed to
register an annualised
growth of 1.39 per cent, to $876 million, in August.
“We are getting orders for the summer season. We are hopeful that
the positive trend will continue in the current financial year as the
exporters are now giving orders,” Apparel Export Promotion Council
Chairman Rakesh Vaid said.
President of the Federation of Indian Export Organisations
A Sakthivel said lowering of interest rate through subvention
would give respite from recent appreciation of rupee against the
dollar, which had lowered exporters’ realisations.
Garments exports declined by an average of 9.5 per cent in the
first four months of 2009-10 due to a slump in demand from
the US and European markets.
The US and Europe collectively account for 70 per cent of India’s
apparel exports, which are close to $10 billion.
The $63-billion Indian apparel and textiles industry is the
second-largest employment generator after the agriculture sector,
which employs about 35 million workers.
Secure your password, protect your privacy
My eyes widened when I read the news earlier last week.
At least 30,000 user passwords of popular Web mail services
like Hotmail, Yahoo and Gmail had been stolen and posted
on the Internet.
Mine could have been one of them, and the prospect of losing
a huge part of my life sent a shiver down my spine.
No, I am not exaggerating.
Information on who I am, who my friends are, what
I do and what I own, is on the Internet, and all it takes
to figure me out and take over my life is to know my e-mail
address and password.
E-mail accounts started off as individual repositories of online mail,
but today they have become the very essence of our online identities.
There are 35,060 e-mail messages in my Gmail account now,
accumulated since I joined the beta in June 2006, and all my
e-mail messages from my Yahoo, Hotmail and office Lotus Notes
accounts are forwarded there.
I have never deleted a single attachment since I started on Gmail
and busted my free 8.2 GB of Gmail space in June, only to sign up
for another 10 GB for US$20 (S$28).
Every Google Talk chat I have ever made is also there. Scanned
images of my IC and passport are there as well, as attachments in
my Sent folder, the first for my bank relationship manager to open
an account and the second sent to a travel agent to apply for a visa.
Since I started using Google phone last month, I have also linked
my SMS messages to my Gmail account, so all my sent and received
SMSes are stored there like Gmail message threads.
I have a unified phone and PC contacts database of about 2,000 people,
some duplicates, and they are all stored online under Google Contacts
(the default address book in Gmail).
You will also be able to find in seconds my credit card’s number and
expiry date, PayPal number, Krisflyer number and more by simply
typing the right keyword under the top-notch search bar in Gmail.
I have never touched Internet banking but if you are like my friend
who sends all his statements to his Gmail account, your net worth is
up there as well.
Knowing so much about a person is just the tip of the iceberg.
Any Web service – from World Of Warcraft to Facebook to Krisflyer –
will ask you for an e-mail address when you sign-up.
If you have forgotten your password to that service, you just need to
click a link on that service’s website and it sends you an e-mail with
a new password. The hacker who has access to your e-mail can do
that too, and even change your password for those Web services to
assume your identity.
Many online services also contain valuable digital property.
World of Warcraft (WOW) players who spent six years of their
lives accumulating virtual loot are huge targets of hackers, simply
because the slay-six-orcs-in-one-stroke swords are worth real money on eBay.
There are hundreds of “WOW moneychangers” online who will
willingly trade your virtual gold for real hard cash.
Online game download sites like Steampowered.com and GOG.com
let you buy video games through your credit-card and if you switch
computers, you can download them again. Anyone who knows your
username and password can simply steal all of those.
And there are definitely people out there trying to. In the last month,
I have received a dozen e-mail notifications from Blizzard
(the makers of WOW) confirming that I have tried to reset my password at the WOW website. I never sent a single one of the 12.
The scary thing is this: A recent report from security firm
Sophos states that four in 10 people use the same passwords
for their different online services. So all the bad guy needs to
do is to figure out your weakest link.
Easy AdSense by Unreal
To complete the takeover of my life, the hacker now only
needs to log in to Account settings of my Gmail and change my
password to his favourite tagline.
I know what you are thinking – the hacker still needs to answer
the secret question correctly to be able to change passwords,
maybe like the name of my first dog or my mother’s maiden name.
That information could be out there if you are a highly social
networking butterfly who shares personal information on Facebook
and Twitter without a second thought.
For hackers, they have other ways.
Maybe they know your phone number?
They can try to pretend to be your bank and
call you to get personal particulars and see if
your answers match those secret questions.
There is a buzzing underground economy that trades just
about anything. According to security firm Symantec’s
recent research, credit card numbers go for as much as
US$30 each and e-mail accounts for up to US$100 each.
There are two main ways that hackers try to get your personal
information – by infecting your computer with a virus that has
a keystroke logger (it records every letter you type and sends
the information back to the hacker) and by “phishing”.
Phishing (which sounds like fishing) is a social engineering
strategy to get innocent chaps like you and me to divulge
our personal information.
The most common method is when the culprits pretend to
be your bank and send you an e-mail asking you to click
on a link there to a website to key in your account details
and password, often ironically on the pretext that they need
to “verify” that your account has not been compromised.
Thankfully, there are defences against these attacks by making
use of what is called a second-factor authentication, often used
by banks here for Internet banking. The usual method is to provide
you with a security token.
Whenever you log in to your account online, you also need to press
a button on the token which generates a random number which you
need to key into the website along with your password.
Since that random number is only valid for a limited time, say one
minute, the thief needs to have that token to break into your account.
This is not foolproof, but it is a lot better than just relying on passwords.
Unfortunately, this added security layer has not been widely adopted
outside the Internet banking sphere.
The only exception is World Of Warcraft, where the hardcore player
can pay extra for the security token.
I say it is time for it to be extended, particularly among the Web mail
services like Gmail, Yahoo and Hotmail.
Make it an option for those, like me, when so much of our lives is in that
e-mail account. Naturally, we will have to fork out extra for it.
But for peace of mind, and to be able to continue to enjoy the convenience
of having all my information stored in my Gmail, I am more than happy
to do so.
Meanwhile, if you haven’t done so, do reset your e-mail account
passwords immediately. Because you could have been one of the
30,000 whose passwords were posted at online forums and if the
hackers haven’t had the time to change your password, you can
still save yourself.
At least 30,000 user passwords of popular Web mail services
like Hotmail, Yahoo and Gmail had been stolen and posted
on the Internet.
Mine could have been one of them, and the prospect of losing
a huge part of my life sent a shiver down my spine.
No, I am not exaggerating.
Information on who I am, who my friends are, what
I do and what I own, is on the Internet, and all it takes
to figure me out and take over my life is to know my e-mail
address and password.
E-mail accounts started off as individual repositories of online mail,
but today they have become the very essence of our online identities.
There are 35,060 e-mail messages in my Gmail account now,
accumulated since I joined the beta in June 2006, and all my
e-mail messages from my Yahoo, Hotmail and office Lotus Notes
accounts are forwarded there.
I have never deleted a single attachment since I started on Gmail
and busted my free 8.2 GB of Gmail space in June, only to sign up
for another 10 GB for US$20 (S$28).
Every Google Talk chat I have ever made is also there. Scanned
images of my IC and passport are there as well, as attachments in
my Sent folder, the first for my bank relationship manager to open
an account and the second sent to a travel agent to apply for a visa.
Since I started using Google phone last month, I have also linked
my SMS messages to my Gmail account, so all my sent and received
SMSes are stored there like Gmail message threads.
I have a unified phone and PC contacts database of about 2,000 people,
some duplicates, and they are all stored online under Google Contacts
(the default address book in Gmail).
You will also be able to find in seconds my credit card’s number and
expiry date, PayPal number, Krisflyer number and more by simply
typing the right keyword under the top-notch search bar in Gmail.
I have never touched Internet banking but if you are like my friend
who sends all his statements to his Gmail account, your net worth is
up there as well.
Knowing so much about a person is just the tip of the iceberg.
Any Web service – from World Of Warcraft to Facebook to Krisflyer –
will ask you for an e-mail address when you sign-up.
If you have forgotten your password to that service, you just need to
click a link on that service’s website and it sends you an e-mail with
a new password. The hacker who has access to your e-mail can do
that too, and even change your password for those Web services to
assume your identity.
Many online services also contain valuable digital property.
World of Warcraft (WOW) players who spent six years of their
lives accumulating virtual loot are huge targets of hackers, simply
because the slay-six-orcs-in-one-stroke swords are worth real money on eBay.
There are hundreds of “WOW moneychangers” online who will
willingly trade your virtual gold for real hard cash.
Online game download sites like Steampowered.com and GOG.com
let you buy video games through your credit-card and if you switch
computers, you can download them again. Anyone who knows your
username and password can simply steal all of those.
And there are definitely people out there trying to. In the last month,
I have received a dozen e-mail notifications from Blizzard
(the makers of WOW) confirming that I have tried to reset my password at the WOW website. I never sent a single one of the 12.
The scary thing is this: A recent report from security firm
Sophos states that four in 10 people use the same passwords
for their different online services. So all the bad guy needs to
do is to figure out your weakest link.
Easy AdSense by Unreal
To complete the takeover of my life, the hacker now only
needs to log in to Account settings of my Gmail and change my
password to his favourite tagline.
I know what you are thinking – the hacker still needs to answer
the secret question correctly to be able to change passwords,
maybe like the name of my first dog or my mother’s maiden name.
That information could be out there if you are a highly social
networking butterfly who shares personal information on Facebook
and Twitter without a second thought.
For hackers, they have other ways.
Maybe they know your phone number?
They can try to pretend to be your bank and
call you to get personal particulars and see if
your answers match those secret questions.
There is a buzzing underground economy that trades just
about anything. According to security firm Symantec’s
recent research, credit card numbers go for as much as
US$30 each and e-mail accounts for up to US$100 each.
There are two main ways that hackers try to get your personal
information – by infecting your computer with a virus that has
a keystroke logger (it records every letter you type and sends
the information back to the hacker) and by “phishing”.
Phishing (which sounds like fishing) is a social engineering
strategy to get innocent chaps like you and me to divulge
our personal information.
The most common method is when the culprits pretend to
be your bank and send you an e-mail asking you to click
on a link there to a website to key in your account details
and password, often ironically on the pretext that they need
to “verify” that your account has not been compromised.
Thankfully, there are defences against these attacks by making
use of what is called a second-factor authentication, often used
by banks here for Internet banking. The usual method is to provide
you with a security token.
Whenever you log in to your account online, you also need to press
a button on the token which generates a random number which you
need to key into the website along with your password.
Since that random number is only valid for a limited time, say one
minute, the thief needs to have that token to break into your account.
This is not foolproof, but it is a lot better than just relying on passwords.
Unfortunately, this added security layer has not been widely adopted
outside the Internet banking sphere.
The only exception is World Of Warcraft, where the hardcore player
can pay extra for the security token.
I say it is time for it to be extended, particularly among the Web mail
services like Gmail, Yahoo and Hotmail.
Make it an option for those, like me, when so much of our lives is in that
e-mail account. Naturally, we will have to fork out extra for it.
But for peace of mind, and to be able to continue to enjoy the convenience
of having all my information stored in my Gmail, I am more than happy
to do so.
Meanwhile, if you haven’t done so, do reset your e-mail account
passwords immediately. Because you could have been one of the
30,000 whose passwords were posted at online forums and if the
hackers haven’t had the time to change your password, you can
still save yourself.
Zero per cent schemes: How consumers get fooled ?
Ashish M
As a child when my first milk tooth fell, I was
told to keep the tooth under my pillow at night.
When I woke up the next morning, I was delighted
to discover a one rupee coin instead of my tooth
under the pillow. When I asked my parents about it,
they told me that a tooth fairy had switched my tooth
for a rupee coin during the night.
As a child the story had lots of appeal for me.
Of course as I grew older I realised that there was
no 'tooth fairy' and my parents placed that one rupee coin.
The stories surrounding zero per cent finance schemes
are perhaps of the same genre. The old adage that
'there is no such thing as free lunch' aptly describes
the zero-percent-interest schemes.
These schemes were widely popular till a few years back.
RBI regulations advising banks to refrain from offering
such schemes as well as the general withdrawal of major
banks from consumer durables financing has meant that
such schemes have not been in vogue for the last 2 to 3 years.
However there are several NBFCs (Non-banking financial
companies) that continue to finance consumer durables purchase
and also have zero per cent schemes. The main attraction of
such schemes is that they influence you to purchase consumer
goods that could be more expensive than your wallet size.
The lure of zero percent interest is an added attraction that
makes you feel that 'YES' I am getting something free and
thus I am able to buy a 'bigger and better' product.
But that is just a smart way in which such schemes fool you. Here's how................................
Unlike their names, most zero percent schemes have
other costs in built. The biggest cost is that you
forfeit the cash discount that you would have got
otherwise from the retailer. Also you will be paying
some processing/transaction fees and/or advance EMIs
(equated monthly instalments).
So let us see how the costs stack up in a so called
zero percent scheme.
Example: An LCD colour television costs Rs 48,000
and is available on zero percent EMI scheme for
six months (thats is, there is a EMI of Rs 8,000
per month for six months). The consumer needs to
pay a processing fee of Rs 1,000. If the customer
had bought the same TV by making a full payment s/he
could have availed of a cash discount of Rs 2,000 which
s/he is not getting if s/he opts for the zero percent
scheme.
So it works out like this:
Cost of television set: Rs 48,000
Amount paid/Cost incurred in advance:
Processing fees: Rs 1,000
Cash discount foregone: Rs 2,000
Total: Rs 3,000
Net finance received: Rs 45,000
Payment made by six instalments of Rs 8,000 each
(aggregating in all to Rs 48,000 against finance
received of Rs 45,000).
The effective interest cost works out to 23 per cent per annum......................
However the popularity of such schemes with consumers
particularly in festive season cannot be denied. Market
sources say that despite being costlier in some ways,
consumers prefer to go for these staggered payment schemes
and have been highly successful in pushing sales and
expanding the market for the durables. This is primarily
because of the fact that purchasing through credit
cards is very expensive as compared to purchasing
through these schemes.
Also, the success of these schemes can be attributed
to the availability of credit at the point of purchase,
minimal paper work, small ticket size and hence a
not-so-stringent eligibility criteria.
So are there any true zero per cent schemes? Yes there are.
Some of them are available on the much-maligned credit cards.
The credit card that I have allows me to convert specific
spends greater than Rs 5,000 into three-month EMIs without
any cost or fees. This is the closest that hard-nosed bankers
come to offering true zero per cent schemes. Some other major
credit card issuing banks also have similar schemes.
All said and done, the best way to check if a zero per cent
scheme is really
worth it ask the following questions:
Any fees or charges?
If I pay full amount do I get a discount that I am not getting
if I take the zero per cent scheme.
If answer to both the question is no then you have a true
zero per cent scheme! So you can now zero in on your zero
per cent schemes and spare yourself from being fooled.
As a child when my first milk tooth fell, I was
told to keep the tooth under my pillow at night.
When I woke up the next morning, I was delighted
to discover a one rupee coin instead of my tooth
under the pillow. When I asked my parents about it,
they told me that a tooth fairy had switched my tooth
for a rupee coin during the night.
As a child the story had lots of appeal for me.
Of course as I grew older I realised that there was
no 'tooth fairy' and my parents placed that one rupee coin.
The stories surrounding zero per cent finance schemes
are perhaps of the same genre. The old adage that
'there is no such thing as free lunch' aptly describes
the zero-percent-interest schemes.
These schemes were widely popular till a few years back.
RBI regulations advising banks to refrain from offering
such schemes as well as the general withdrawal of major
banks from consumer durables financing has meant that
such schemes have not been in vogue for the last 2 to 3 years.
However there are several NBFCs (Non-banking financial
companies) that continue to finance consumer durables purchase
and also have zero per cent schemes. The main attraction of
such schemes is that they influence you to purchase consumer
goods that could be more expensive than your wallet size.
The lure of zero percent interest is an added attraction that
makes you feel that 'YES' I am getting something free and
thus I am able to buy a 'bigger and better' product.
But that is just a smart way in which such schemes fool you. Here's how................................
Unlike their names, most zero percent schemes have
other costs in built. The biggest cost is that you
forfeit the cash discount that you would have got
otherwise from the retailer. Also you will be paying
some processing/transaction fees and/or advance EMIs
(equated monthly instalments).
So let us see how the costs stack up in a so called
zero percent scheme.
Example: An LCD colour television costs Rs 48,000
and is available on zero percent EMI scheme for
six months (thats is, there is a EMI of Rs 8,000
per month for six months). The consumer needs to
pay a processing fee of Rs 1,000. If the customer
had bought the same TV by making a full payment s/he
could have availed of a cash discount of Rs 2,000 which
s/he is not getting if s/he opts for the zero percent
scheme.
So it works out like this:
Cost of television set: Rs 48,000
Amount paid/Cost incurred in advance:
Processing fees: Rs 1,000
Cash discount foregone: Rs 2,000
Total: Rs 3,000
Net finance received: Rs 45,000
Payment made by six instalments of Rs 8,000 each
(aggregating in all to Rs 48,000 against finance
received of Rs 45,000).
The effective interest cost works out to 23 per cent per annum......................
However the popularity of such schemes with consumers
particularly in festive season cannot be denied. Market
sources say that despite being costlier in some ways,
consumers prefer to go for these staggered payment schemes
and have been highly successful in pushing sales and
expanding the market for the durables. This is primarily
because of the fact that purchasing through credit
cards is very expensive as compared to purchasing
through these schemes.
Also, the success of these schemes can be attributed
to the availability of credit at the point of purchase,
minimal paper work, small ticket size and hence a
not-so-stringent eligibility criteria.
So are there any true zero per cent schemes? Yes there are.
Some of them are available on the much-maligned credit cards.
The credit card that I have allows me to convert specific
spends greater than Rs 5,000 into three-month EMIs without
any cost or fees. This is the closest that hard-nosed bankers
come to offering true zero per cent schemes. Some other major
credit card issuing banks also have similar schemes.
All said and done, the best way to check if a zero per cent
scheme is really
worth it ask the following questions:
Any fees or charges?
If I pay full amount do I get a discount that I am not getting
if I take the zero per cent scheme.
If answer to both the question is no then you have a true
zero per cent scheme! So you can now zero in on your zero
per cent schemes and spare yourself from being fooled.
Central Bank kicks off separate retail section
By Abhishek Anand
In an effort to increase its focus on retail business, Central Bank
of India has started a separate retail banking division.
S Sridhar, chairman and managing director of Central Bank of India,
said the bank plans to launch a series of products on the retail portfolio.
“During the past few years, Central Bank has veered away from retail
customers. But, we have decided to do a course correction.
We would be launching several prepaid cards, including travel,
payroll and student cards, among others. By launching these cards,
we hope to regain our hold among retail customers,”
Sridhar said while launching the bank’s prepaid gift card,
‘Cent gift cards’.
The newly launched gift cards can be loaded with
any value between Rs 500 and Rs 50,000 and could be
used at any outlet displaying MasterCard signage.
The bank would focus a lot on mobile banking services
and would utilise this platform for financial inclusion purpose
as well.
Asked about the performance of the bank during the first half
of the present financial year, Sridhar said, “The credit growth
has been sluggish all throughout the period with the exception
of last two weeks of September. Overall, the credit growth has
been to the tune of 18 per cent year-on-year.
As far as deposits are concerned, the growth
has been to the tune of 23 per cent.”
On the interest rate front, Sridhar said, “During our customary
meeting with RBI, most of the bankers favoured status quo and
the banking regulator has to wait for some more time before
concluding whether a recovery is well and truly underway or not.”
In an effort to increase its focus on retail business, Central Bank
of India has started a separate retail banking division.
S Sridhar, chairman and managing director of Central Bank of India,
said the bank plans to launch a series of products on the retail portfolio.
“During the past few years, Central Bank has veered away from retail
customers. But, we have decided to do a course correction.
We would be launching several prepaid cards, including travel,
payroll and student cards, among others. By launching these cards,
we hope to regain our hold among retail customers,”
Sridhar said while launching the bank’s prepaid gift card,
‘Cent gift cards’.
The newly launched gift cards can be loaded with
any value between Rs 500 and Rs 50,000 and could be
used at any outlet displaying MasterCard signage.
The bank would focus a lot on mobile banking services
and would utilise this platform for financial inclusion purpose
as well.
Asked about the performance of the bank during the first half
of the present financial year, Sridhar said, “The credit growth
has been sluggish all throughout the period with the exception
of last two weeks of September. Overall, the credit growth has
been to the tune of 18 per cent year-on-year.
As far as deposits are concerned, the growth
has been to the tune of 23 per cent.”
On the interest rate front, Sridhar said, “During our customary
meeting with RBI, most of the bankers favoured status quo and
the banking regulator has to wait for some more time before
concluding whether a recovery is well and truly underway or not.”
India may lead global private equity recovery: KPMG
The domestic and international private equity players
see India as the second most attractive destination
after China and feel that the country may lead the
global PE recovery, according a survey.
As many as 33 per cent of investors, who participated
in the survey, ranked China as the most attractive market,
followed by India (29 per cent), other emerging markets
(19 per cent) and developed markets (20 per cent).
"India offers immense opportunities for PE investments
and India will likely be at the forefront of a global
PE recovery," said a survey by research firm KPMG.
It said investors find India attractive as a PE destination
because of its robust economic growth, tax environment,
corporate governance and investment structuring.
"The next 12 months should be viewed as an opportunity
to build value in portfolio terms and show that
PE is an integral part of India's future," the survey added.
It projected 2010 to be the year of consolidation with
focus on portfolio nurturing, fewer new deals or
fund raising, smaller investment sizes and fewer exits.
The KPMG survey, conducted along with Stanford University's Shorenstein
Asia-Pacific Research Center, covered 40 General partners
(GPs) and Limited Partners (LPs). Broadly, GPs handle investment
operations directly for PEs, while LPs invest in them.
KPMG said Indian public markets have recovered significantly
since August 2009, and initial signs are indicating that
there is considerable amount of liquidity in the market from
institutional investors for IPOs.
Exit options for PE funds include initial public offering,
public market or strategic sale.
On India's hurdle rates (the rates of return above which
the GP starts to earn the carried interest, about 8 per cent),
the survey said they were in line with developed country averages.
"This is unexpected; because Indian PE should earn higher returns
for developing country risks than developed country PE.
We would, therefore, expect hurdle rates to be higher
than developed country rates." it added.
Source: ET
see India as the second most attractive destination
after China and feel that the country may lead the
global PE recovery, according a survey.
As many as 33 per cent of investors, who participated
in the survey, ranked China as the most attractive market,
followed by India (29 per cent), other emerging markets
(19 per cent) and developed markets (20 per cent).
"India offers immense opportunities for PE investments
and India will likely be at the forefront of a global
PE recovery," said a survey by research firm KPMG.
It said investors find India attractive as a PE destination
because of its robust economic growth, tax environment,
corporate governance and investment structuring.
"The next 12 months should be viewed as an opportunity
to build value in portfolio terms and show that
PE is an integral part of India's future," the survey added.
It projected 2010 to be the year of consolidation with
focus on portfolio nurturing, fewer new deals or
fund raising, smaller investment sizes and fewer exits.
The KPMG survey, conducted along with Stanford University's Shorenstein
Asia-Pacific Research Center, covered 40 General partners
(GPs) and Limited Partners (LPs). Broadly, GPs handle investment
operations directly for PEs, while LPs invest in them.
KPMG said Indian public markets have recovered significantly
since August 2009, and initial signs are indicating that
there is considerable amount of liquidity in the market from
institutional investors for IPOs.
Exit options for PE funds include initial public offering,
public market or strategic sale.
On India's hurdle rates (the rates of return above which
the GP starts to earn the carried interest, about 8 per cent),
the survey said they were in line with developed country averages.
"This is unexpected; because Indian PE should earn higher returns
for developing country risks than developed country PE.
We would, therefore, expect hurdle rates to be higher
than developed country rates." it added.
Source: ET
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