THE VOLATILITY CUP

A friend has written about yesterday's match.  I have taken it a step further into the realm of the stock market. Would like to have your reactions, friends.

(1) India scored 85/5 against Pak's 83 all out, but 3 Indian batsmen got out for a duck; none for Pak,

(2) In a low scoring match, India's best bowler Ashwin was the worst of all Indian bowlers 3-0-21-0. Only Wahab Riaz was worse than him in the match. Easy (but completely unfair) to conclude from a single match that Ashwin was the worst bowler

(3) The second highest score in both teams was "extras". If we total up the runs in both innings, "extras" was second highest score after Virat. "Extras" accounted for more than 17% of total runs scored n the match.

(4) Only 18 boundaries were scored in the entire match. Virat hit 7 of those, just one less than the entire Pakistan team's 8. Not a single six in the whole match.

NOW HERE IS MY INTERPRETATION FROM A 'MARKETS PERSPECTIVE'.

What happened yesterday was a complete and unexpected 'sell off' causing severe volatility.

Hence even class players (companies) looked like duds.

Had Rohit Sharma, Ajinkya Rahane, Suresh Raina and Ashwin been companies, would an astute investor write them off???

Similarly when the companies in a mutual fund scheme lose value unusually in a 'sell off' causing the NAV ( total score ) to fall sharply, be smart, be astute, gain the maturity. Never write them off.

Instead think about yesterday's game.

For they will all rise without a warning. Look at Yuvraj and Ashish Nehra. Despite age catching up with them, they continue to deliver.

Invest in the Indian Inc if you believe in them. Ignore volatility caused by some unusual results.

If you believe in the story of India, keep fears of the market in your closet, lock it and throw away the keys.

SPEND TOO MUCH DURING DIWALI ? HERE'S HOW YOU CAN LIMIT EXPENSES

The festive season has begun and it’s time to celebrate Diwali with sweets, gifts, purchases, crackers and lots of happiness. This festival brings families together and people not only enjoy to their heart’s content but also spend in the same manner! We have no control over our expenses and it is only once Diwali is over do we realise the pinch in our pockets.

We list some simple tips which will help you curb expenses during this season without taking away its excitement and grandeur:

1. Prepare a detailed list:
This should be your foremost step before you start shopping for Diwali. Majority of individuals hesitate to do it but making a realistic list is the best way to get a rough picture about the amount of money which will be needed. Invest 30 minutes of your time and note down names of people who would be given Diwali gifts, shopping expenditure, any renovation to be done in the house, vacations, domestic salaries including bakshish and the corresponding amount required. Adhere to this list sincerely.

2. Use your credit/debit cards wisely:
These modes of payments are an individual’s best friend during Diwali shopping! We shop and swipe without even realizing the huge bills these cards will generate. The best way to restrict expenses is to leave your cards at home and carry cash. In case you are out of money, you can always withdraw some from the nearby ATM. For those who can’t do without plastic money should take cards which have lower credit limit or less balance.

3.Do smart shopping:
Whether online or offline, many brands offer tremendous discounts/offers during the festive season. You can save a lot of money by availing these offers. However, you should always compare the prices quoted by different retailers so that you can save maximum money. Banks too come up with attractive schemes for their credit/debit card customers. Keep a watch on promotional e-mails, text messages which we normally ignore and turn into a smart shopper.

4. Keep the larger picture in mind:
Diwali is no doubt a festival where you desire to shop for your favourite merchandise. Nonetheless, you should not purchase goods which you are not going to use or don’t require. For example, you may not require a new washing machine for the next 1 year at least but it’s being offered at jaw-dropping prices so you buy it. The same money can be used to purchase other important things such as sweets or lights.

These guidelines are simple to follow and will surely help in controlling unnecessary expenditure during the festive season. Moreover, Diwali is not just about splurging, it is more important to experience memorable times with your family and friends.

Source : Axis Mutual Fund

TWO LIES THAT KEEP YOUR JAIL DOOR LOCKED

TWO LIES KEEP YOUR JAIL DOOR LOCKED -

 

The jail door has two locks. And both locks are lies.
The first lie is that we're powerless to live our lives fully.
The second lie is that "living for others" justifies our resignation.

Both lies protect us from confronting our fear. Both lies rob us of the opportunity for choosing courage and exercising our creativity.

"I can't leave my abusive husband  because I have no work skills." (I'm powerless.)
 "I should stay with him for his sake, for the sake of the children, in order to set a good example for others, and for the sacrament of marriage." (I'm doing it for others.)
 "I can't move out of my parents' home because I must obey them." (I'm powerless.)
 "I should stay with my parents because I don't want to upset them." (I'm doing it for others.)

 "I can't get the job I love because it's not out there." (I'm powerless.)
 "I should just accept my situation and not expect to have it  better than others." (I'm doing it for others.)

"I can't find the partner I want  because all the good ones are already taken." (I'm powerless.)
 "It would be unfair to go after just any person I want."  (I'm doing it for others.)
 "I don't have enough free time to enjoy my life because I have too many things to do." (I'm powerless.)
 "I can't just cancel out or change my commitments.That would be unfair to others." (I'm doing it for others.)

 In what area of your life do you feel stopped or tied up?

 Can you identify the two locks that keep you in this jail?
 What opportunities for courage and creativity,  if taken, might open these locks and set you free?

Courtsey - Sanjeev Agarwal - Brainbow (AMI)

Expert Take - `Illogic' of Profit-booking in MF Play

May 04 2015 : The Economic Times (Mumbai)

Dhirendra Kumar CEO, Value Research

Booking profits is an equity traders' concept that mutual fund investors must leave behind

Is it time for profit-booking? It's a typical question most investors often ask. If you are a mutual fund investor and you are asking this question, you could be making a big mistake.To be fair, this question is an obvious one in a time like the current one. The stock market has slackened in 2015 after a strong surge in the previous year. This idea of profit-booking (or profit-taking) is an integral part of equity investing culture the world over. Investopedia defines it as “The act of selling a security in order to lock in gains after it has risen appreciably.“ You buy a stock, and when you feel it has risen as much as it is going to over whatever the time period you are interested in, you sell it. That `locks in' the gains.

It is a common saying among equity investors that no one ever lost money by booking a profit. That statement sounds like a clincher, and makes profit-booking a no brainer. The problem is that investors in equity mutual funds have also adopted this idea. Here's a typical query among the ones that I've been receiving from equity fund investors, “I've been investing in XYZ fund for a long time. Now that the market has stopped rising, I have redeemed all my units in order to book profits.Where should I invest the proceeds now?“ What do you think is the correct answer to this question? Here's mine. If the investor has something to spend the money on, he should do so. Otherwise, he should invest it in an equity fund. And since XYZ fund has given him good gains, that's probably a good choice.Sounds like I'm making a joke, but that's probably because in equity funds, profit-booking just for the heck of it is a no brainer, but in a different sense of the phrase.

Booking profits means that you think that an investment has reached a point when it has nothing further to offer in your time-frame, and you would need to move the money to some other stock. It doesn't mean that just because a certain amount of profit has been made, you must `book' it. If you immediately move the money to another investment, then you've un-booked the profit. This makes sense only if, for some reason, it's important for you to count the profitability of each stock separately. If you are thinking of your investments as a portfolio whose gains matter as a whole, then it doesn't make much sense.

In any case, in equity funds, there is already someone -the fund manager -who's mov ing in and out of stocks that are there in the portfolio of the fund, as needed. Selling funds just because the market went up and has now had a bit of a pause makes no sense as an investment strategy.

Apart from a slavish adherence to a misapplied principle, I think the roots of this profitbooking in funds lie in simple nervousness.There is a special breed of investor who gets nervous at every uptick in the nervous at every uptick in the market. Every paisa gained brings to them heightened nervousness about whether it's about to be taken away. And when the markets pause even a bit, they scuttle away like a surprised mouse.

I guess every investor is a slave to his or her own psychology, but the nervous types' behaviour is especially self-destructive. It's likely that most of these people will pull out their money now. At every fluctuation in the market, they'll feel happy that they've saved their profits. However, eventu ally, when the market is much higher, they'll invest again. At that point, they might well be at a higher risk.

At the end of the day, this profit-booking is a way of trying to time the markets -something that rarely works out for investors.

Aadhaar Holders Don't Need to Submit ITR-V After E-filing

New forms also seek more detailed declaration on bank accounts held by taxpayers here and abroad
 

In a change that will impact millions of Indians, the new tax forms released on Thursday have exempted taxpayers with Aadhaar cards from submit payers with Aadhaar cards from ting their ITR-V by post after filing their returns online.This will make the online filing procedure truly paperless even for those who don't have digital signatures. The income tax (I-T) department intends to link the electronic verification code (EVC) system-endorsed Aadhaar card to the ITR (income tax return) form submitted by a taxpayer and the authentication of the return will take place electronically. Till now, online filing was paperless only if the person had a digital signature. Taxpayers who did not have it had to post a physical copy of the ITR-V to the Central Processing Centre in Bengaluru within 120 days of filing tax returns online. This physical submission of the ITR-V acknowledgement slip prevented e-filing from becoming a completely online process. The new forms have removed this anachronism and made e-filing easier.

“A large number of e-filers skipped this very important process, assuming the job was done once their return was e-filed, whereas the I-T department doesn't consider a return filed unless the ITR-V re filed unless the ITR-V reaches them on time,“ said Archit Gupta, CEO and co-founder, ClearTax.in, a Delhi-based online tax filing portal. Moreover, ITR-V had to be signed and printed properly so that the bar code was clearly visible. ITR-Vs that did not conform these specifications got rejected. There have been complaints of postal delays and losses in transit as well.

“It was unfair, to say the least, to expect every single tax payer to have access to a printing facility and then make the time to go to the post office to send the speed post. We're glad the process is being done away with for those who have an Aadhaar card and with this the e-filing process will become fully electronic,“ said Gupta. The refund process should get faster and smoother. “One of the possible mechanisms for EVC could be through an OTP sent on the mobile number of the taxpayer,“ Gupta said.

The new forms also seek a more detailed declaration from taxpayers. It's now mandatory to list bank accounts held at any time during the year in ITR-1, includ ing those that have been closed during the period. Tax payers will also have to provide ac count numbers, name of the bank, IFSC code and list any joint holders along with the closing balance on March 31 of the assessment year.

ITR-2 now seeks particulars of foreign bank accounts and assets held, details of overseas travel and expenses on the trip. travel and expenses on the trip.It also seeks utilisation details of amounts deposited in capital gains account schemes for the year. Unutilized amounts from such schemes are taxed as short-term capital gains when not invested within the specified period. “With this disclosure, the department has eased its process of collecting tax by putting the onus of disclosure on the tax payer,“ Gupta said.

Source : The Economic Times -  April 2015

Retirement - An Unavoidable Event in our Life

Diwali Wishes

GET DETAILS OF UNCLAIMED INSURANCE ONLINE

Come April, You Can Get Details of Unclaimed Insurance Online

 

This will also help nominees not having access to relevant documents - Preeti Kulkarni (The Economic Times – 25/02/2014)

Insurance customers and their nominees don’t have to suffer inordinate delays in claim settlement anymore. A new circular from Insurance Regulatory and Development Authority (Irda) is going to change the current opaque scenario from April 1. 

“While unclaimed amount is not uncommon in insurance sector, a steep increase in unclaimed amount is a cause of concern,” the regulator said in the circular that put out the figures of unclaimed insurance proceeds in the public domain for the first time. The unclaimed amount swelled from . 3,037 crore in 2011-12 to . 4,865 crore in 2012-13 — an increase of over 60%. The unclaimed money is the result of insurance proceeds that have failed to reach policyholders or their nominees in time for various reasons. Needless to say, it completely defeats the entire purpose of buying an insurance cover. 

Transparency in Procedure 

From April, a policyholder or nominee will be able to access information about the policy. Irda has asked insurance companies to display details like policyholders’ names and address, maturity proceeds, death benefit and premium due for refund, among other things, unclaimed for over six months, on their websites. 

“Several thousands of crores of unclaimed amount might be lying with insurance companies. There is no reason why insurers should absorb this amount,” says P Nandagopal, MD and CEO, IndiaFirst Life Insurance. “Now, policyholders or their nominees will be able to access information pertaining to their own policies and claim the amount due to them,” he adds. 

Insurers may not allow unfettered access to their database to prevent frauds, but if you have a cover, you can run a check and obtain the details of your policy. 

Many policyholders often misplace original policy documents, and this could result in them forgetting about a policy. It also could lead to their nominees not having access to the relevant documents when they need them. 

These problems will be solved once companies start displaying details on their website. Once they get the information, they can go ahead with claiming the due amount . “The nominees have to intimate the insurance company about the policyholder’s demise, specifying the reason for the death. Then, the insurer will send across the claim form relevant to the cause of death. The claim processing begins after the nominees furnish the documents asked for in the form,” said certified financial planner Harshvardhan Roongta, CEO, Roongta Securities. 

Benefits of Direct Transfer 

Irda has also asked insurance companies to transfer proceeds from policies to the registered bank accounts of policyholders and nominees. Even existing policyholders will be given the option of receiving the funds electronically. For new policies, insurers will seek these details at the time of buying the policy. In case of non-life insurance policies, these details will be collected at the time of renewals or claims. “This is a very good move. It will curb frauds, where unclaimed cheques are discounted and encashed by others. This is a rampant practice,” says Roongta. 

It will also help claim amounts — maturity proceeds, death benefits, or reimbursement claims in health and motor insurance — to reach you sooner. “The move will improve the efficiency and accelerate the pace of claim disbursal, as the claim amount will be directly transferred to the bank accounts,” says Arvind Laddha, CEO, Vantage Insurance Brokers.  

DEDUCTION IN RESPECT OF MEDICAL TREATMENT UNDER INCOME TAX

Section 80DDB. Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board—

          (a)  for himself or a dependant, in case the assessee is an individual; or

          (b)  for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,

the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :

Provided that no such deduction shall be allowed unless the assessee furnishes with the return of income, a certificate in such form, as may be prescribed^89-90, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital :

Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person referred to in clause (a) or clause (b) :

Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen, the provisions of this section shall have effect as if for the words “forty thousand rupees”, the words “sixty thousand rupees” had been substituted.

Explanation.—For the purposes of this section,—

           (i)  “dependant” means—

      (a)  in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them,

      (b)  in the case of a Hindu undivided family, a member of the Hindu undivided family,

                dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;

          (ii)  “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants;

         (iii)  “insurer”⁹¹ shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

         (iv)  “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.]

Specified diseases and ailments for the purpose of deduction under section 80DDB.

11DD.  (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

               (i)   Neurological Diseases where the disability level has been certified to be of 40% and above,—

        (a)   Dementia ;

        (b)   Dystonia Musculorum Deformans ;

        (c)   Motor Neuron Disease ;

        (d)   Ataxia ;

        (e)   Chorea ;

         (f)   Hemiballismus ;

        (g)   Aphasia ;

        (h)   Parkinsons Disease ;

              (ii)   Malignant Cancers ;

            (iii)   Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

             (iv)   Chronic Renal failure ;

              (v)   Hematological disorders :

         (i)   Hemophilia ;

        (ii)   Thalassaemia.

(2) The certificate in respect of the diseases or ailments specified in sub-rule (1) shall be issued by the following specialists working in a Government hospital—

(a)     for diseases or ailments mentioned in clause (i) of sub-rule (1) - a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;

(b)     for diseases or ailments mentioned in clause (ii) of sub-rule (1) - an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;

(c)     for diseases or ailments mentioned in clause (iv) of sub-rule (1) - a Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;

(d)     for diseases or ailments mentioned in clause (v) of sub-rule (1) - a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India :

Provided that where in respect of any diseases or ailments specified in sub-rule (1), no specialist has been specified or where the specialist specified is not posted in the Government hospital in which the patient is receiving the treatment, such certificate, with prior approval of the Head of that hospital, may be issued by any other specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine, which is recognised by the Medical Council of India.

(3) The certificate from the prescribed authority to be furnished along with the return of income shall be in Form No. 10-I.]

DON'T GET LURED BY LOW PREMIUM, CHECK CO'S SETTLEMENT RECORD TOO....

Claim settlement ratio and other data tell you which insurer is more reliable. Would your life insurance policy really take care of the financial needs of your dependents as insurers promise to do after your death? Don’t take them for granted. Insurance regulator IRDA’s annual reports for 2012-13 reveal that of the total 23 private life insurers, only five have a claim-settlement ratio of over 90% (in terms of number of policies), despite many of them having completed 10 years of operations. The figure tells you that many insurers are tight-fisted when it comes to passing on the benefits to nominees. According to financial advisors, it’s time insurance buyers, especially those considering pure protection-term covers, take their eyes off the claims of lowest premium and highest benefits, and pay a more attention to the claim settlement record of the insurance company. “Claims settlement ratio, along with related data, is the only objective yardstick for the consumer to determine which insurance company is preferable and more reliable,” says consumer activist Jehangir Gai. IRDA’s data reveals LIC had the best claim settlement ratio of 97.73% among life insurers in the country. Private life insurers’ average settlement record was at 88.65%. Of the 23 private life insurers, only five — ICICI Prudential Life, SBI Life, HDFC Life, Max Life and Kotak Life — have a claim settlement record of over 90%. Shriram Life, Aegon Religare, Edelweiss Tokio and DLF Pramerica Life are at the bottom of the list. Insurers say wrong information provided by policyholders in the proposal form or non-disclosure of facts are the key reasons for rejection of claims. Often, they claim, this is because many policyholders leave the paperwork to agents. So, apart from completing the form yourself when you have zeroed in on an insurance product, next time ask your insurance advisor for the claim settlement record of the insurer. Even before asking him for details, you can visit the website of the insurance regulator and go through the industry data to ensure the advisor doesn’t take you for a ride. “Customers should exercise caution while buying a policy. They should select a company which has a claims settlement ratio of above 95%,” says Kalpana Sampat, chief of branch operations (underwriting and claims), ICICI Prudential Life. However, please note the distinction: new companies typically tend to have a high claim-rejection ratio. As older companies see more of non-early claims, their overall rejection ratio seems lower. Insurers are not allowed to reject claims citing non-disclosure of facts, if the policy has been in force for more than two years. For a newer company, which is bound to have more early claims, the overall repudiation ratio seems higher as most claims are likely to be early claims, requiring investigation. However, do not stop at just examining the claim-settlement record. Claim pending ratio would help you in ascertaining the time taken by insurer to settle claims. According to the IRDA annual report, private insurers’ claim-pending ratio stood at 7.68% (pending for 3-6 months). LIC’s ratio was higher at 15.47%. A high claim pending ratio usually points to the company’s inefficiency in processing claims, particularly, if the proportion of claims pending for more than six months is higher. “While considering claims-pending ratio, ageing of claims pending should be considered. There are three bands — within three months, three to six months and greater than six months. As per policyholder protection guidelines, all claims should be decided within six months. There should not be too many claims pending for more than three months,” says P Ravi Kutumbarao, head-technical, Bajaj Allianz Life Insurance. Turnaround time for claim settlement is crucial as well. You will get an indication of the time taken by a company to settle claims. While choosing an insurer, check whether a huge proportion of claims has been settled after a delay of more than 180 days. Source : Preeti Kulkarni – The Economic Times – 16/01/2014

HOW TO BE THE 1% WHO REALISE THEIR DREAMS

Only 1% of you may go on to fulfil your aspiration of becoming a CEO of a large company or leading a successful startup! 90% of you are not likely to get anywhere close to your aspirations and ambitions even 25 years from now!” 

I was speaking to a packed hall of bright youngsters from top Bschools. A pall of silence descended on the room. “You worked very hard to get here. However, do you still have that passion, drive, dreams, determination and a huge appetite to learn what brought you here? Or did you dump it to focus instead on shortcuts like how to “network” and changed your life goals to simply land the best job in campus?” 

I could see some nods in the room. In my experience, only 1% of us are able to realise our original dreams despite the rest being just as capable. To get to your dreams you need to learn to create magic “outside the boundaries of logic and reason” and not be trapped within. So how does one do that? Let me share with you three ideas that have worked for me. The first is to embrace your uniqueness. Think about it. What is that one thing which you have and which no one else in the world has? I believe the answer is, “you”. So why try hard to ape others and be like someone else? In that attitude alone we lose our uniqueness and our ability to create magic. There was once a boy who was born without a right arm. When he grew up he learnt karate and soon wanted to compete in a tournament. His master said he could and taught the boy one single move. The boy won the first round of the tournament and then the next round and the one after that until he found himself winning the entire tournament. Baffled, he asked his master how he did it. The master smiled and told the boy there is only one defence against the move the boy learned and that defence involves grabbing the attacker by the right arm! 

There are 6 billion other humans on this planet. However, there is only one you. There is a reason God made you unique, find it, leverage it and you will win every time. The second is to look beyond distractions. Life is a box of unknown events that appear at random times – some good and some not so good. I call them ‘distractions’. It’s your ability to stay focused through these distractions, fixated on your long-term goal that will help you see beyond trappings like salary, bonus, cars or notso-good ones like the wall of failure, rejection, unfair assessment etc. Remember a magician systematically creates magic by distracting his audience, yet remaining focused on the end game, undistracted. Unless you train yourself to look beyond and outside the distraction box, how will you even stand a chance of getting to your goals? 

The third is having a deep-rooted conviction in your goals. Once there were two trees in a village. One next to a river was green and beautiful. The second stood in an arid patch of land. It was thin and had few leaves and people ignored it. One night there was a storm and the villagers woke up assuming the tree next to the river would have survived and the other tree would have died. But the reverse happened. The reason was simple. The tree next to the river used to get water easily. Therefore, its roots were shallow and were not able to withstand the storm. The other tree had deep roots and survived. If you do not have a deeprooted conviction, won’t you be blown away by the first advent of adversity? So ask yourself again, what is it that you really stand for? The list of what you can do to be in that 1% is long and it all starts with you – actually your mind. The more you have it in your control, the higher your chances of fulfilling your dreams and ambitions. 

Source : Mr. Vineet Nayar – Economic Times – 10/12/2013

(The writer is founder, Sampark Foundation and vice-chairman & CEO, HCL Technologies)

HOW TO STAY SAFE WITH THE NEW CARD PAYMENT SYSTEM

RBI has taken many measures to make the payment infrastructure more secure, but cardholders must also take some basic precaution while using cards at merchant outlets :-

From December 1, 2013, for using your debit card at retail outlets, you need to use your existing ATM PIN. This is as per RBI mandate”.

You may have received a similar SMS from your bank last week. As the message states, you will have to punch in your personal identification number or PIN (the number that you punch at the ATM to carry out transactions) when you use your card at a shop or restaurant (point-of-sale (POS) terminals, in banking parlance) in India. 

“This is a logical extension of the measures the Reserve Bank of India (RBI) has been taking over the last few years to make the payments infrastructure more secure. The second layer of authentication will help debit cardholders carry out their transactions in a secure manner and will certainly reduce frauds as the password is known only to the customer,” says Parag Rao, senior executive vice-president and business head-card payment products and merchant acquiring services, HDFC Bank. However, this does not mean that swiping your card at merchant outlets is totally secure. You still need to take some basic care to ensure that your transaction is completely secure. To begin with, make sure that no one is able to view your PIN while you are entering it. “At present, POS machines at most outlets are installed in such a way that the cashier has a clear view. Ideally, the retailers should provide a separate enclosure for customers to enter the PIN. If such facilities to ensure privacy are not available, you should cover the digits panel while punching in your PIN,” suggests VN Kulkarni, chief credit counsellor with Bank of India-backed Abhay Credit Counselling Centre. 

You also should never reveal your PIN to anyone. Do not let the cashier enter the PIN for you under any circumstances. If you find the entire process cumbersome, it is best to carry cash or withdraw money from the nearest ATM till you get used to the new regime.

In addition, the central bank had also asked banks to replace all magnetic stripe cards that have been used by the holders for international transactions at least once, with the more secure EMV (Europay, MasterCard and Visa) chip-based cards by November 30. If you fall in this category but haven’t received a chip-based card, you need to make enquiries with your bank. Chip cards will also require PIN for POS transactions. The RBI has made it clear that banks will have to bear any loss incurred by the cardholder due to misuse after expiry of the deadlines.

It is not clear whether the compensation structure outlined for customers of banks that failed to upgrade their POS infrastructure will be applicable in case of non-replacement of magstripe cards with chip cards as well. In any case, if you encounter a fraud because of the bank’s failure to issue a chip card, you can always approach the Banking Ombudsman with your grievance. Regular cards used abroad, particularly in certain countries, are vulnerable to skimming and other frauds. Therefore, a chip card, which is not as prone to cloning or hacking, is in your interest. 

“The RBI had given instructions to banks that they should convert all magnetic stripe cards into chip cards and also, that all debit and credit cards will be used domestically only. Those who want to go abroad should get a chip card issued and can spend as per FEMA regulations. Those who have not got chip cards because banks have not issued them will have to get a threshold limit approved, which in any case should not be more than $500 per day. Banks can approve a higher limit after mutual discussions with the customer on the basis of spends made during earlier visits,” says AC Mahajan, chairman, Banking Codes and Standards Board of India. If you intend to travel abroad but do not have a chipbased card, you must inform your bank in advance and have your magstripe card replaced with a chipbased one.

Source : Preeti Kulkarni – Economic Times – 03/12/2013

ARE YOU SAVING TOO MUCH FOR YOUR KIDS ?

Sacrificing for children can jeopardize your retirement planning

The Indian parent is more entertaining than a juggler. Watch the precision with which he handles his limited, disposable income in fulfilling the various needs and wants of his family. He puts away money for his son’s education, his daughter’s wedding and the dream house he is planning for the family. Yet, he tends to leave out a goal, inadvertently perhaps, but one that is the most essential—retirement. 

Given the multiplicity of goals, how should a parent decide which one is more important? “One should prioritise one’s goals based on two main factors—the time on one’s hands and alternate sources of funding the goal,” say financial planners . List your goals and the time in which you need to achieve them. Then, distribute the investible surplus among goals on the basis of the urgency of each goal. 

You should choose to allocate a higher surplus towards your own retirement if you haven’t managed to build a sizeable nest egg. However, if you have a sufficiently large retirement corpus, you can allocate more towards other goals. Experts say retirement planning is paramount because you can get a loan for all other goals, but nobody lends for retirement. Yes, reverse mortgage is gradually catching on, but only the people with a house can go for this option. 

EMOTIONAL INVESTOR 

The Indian parent is also an emotional investor, torn between his responsibility to provide for his children’s needs, and ensuring a golden retirement for himself. This is why child Ulips, despite their high charges, were a big hit with insurance buyers at one time. “Emotion is the last thing that should influence your decision. This is why it is not always prudent to allocate all your savings towards your children’s goals,” says Pai

Don’t get us wrong. We understand that your children’s needs are paramount and you want to give them a leg up in life, but don’t go overboard in doing so. Putting away a large chunk of your investible surplus in a house for your child is not a good idea if you have not built a sizeable nest egg. Besides, who knows whether your child would want to live there 20-25 years from now. So, you are diverting resources today towards things that your child might not want tomorrow. 

In most cases, children may not even need the money you are saving for them. As the HSBC survey shows, 86% of retirees plan to leave an inheritance for their kids, but only 59% of the working people expect something from their parents. 

GIFT FINANCIAL INDEPENDENCE 

The greatest gift you can give your child is financial independence. Delhi-based Apra Jain, 23, learnt the importance of saving as a kid. “Today, I put money in equities instead of the piggy bank,” she says. During her college days, she would get a monthly allowance of `5,000, from which she began to invest in stocks. “I started by putting in 10,000 and gradually increased it to 25,000 a month, all from my savings. Today, I invest `10,000 every month in my portfolio,” Jain adds. 

This financial independence does not come in a day, but is a process that parents must indulge in from childhood. Start by teaching your child the value of money. When you buy him a toy, make him pay the money so that he understands that things come for a price. As your child grows, give him a piggy bank and later you can also open a child-friendly bank account. This will inculcate the habit of saving in him. In his teen years, give him pocket money and ask him to use it for his expenses. This will teach him to spend within his means. These small steps will lead him to the financial discipline that everyone desires, but few actually have.

Source : Sakina Babwani – ET Wealth – 25/11/2013

INSURANCE COs CANT UNILATERALLY CHANGE POLICY TERMS

 Background: Insurance companies unilaterally and surreptitiously change policy conditions without the knowledge of the insured. When a dispute arises, the company claims that it is a yearly contract and it has the right to revise the terms governing the policy. Insurers adopt a “take it or leave it” attitude, and claim that the policy holder can opt out if he/she does not agree to the revised terms. This is patently illegal. 

    Case study: Jayshree Shah had first taken a medical insurance policy of New India Assurance in 1999. Later, the insurance company changed it to ‘Hospital benefit policy/ Mediclaim Policy 2007’, with revised terms and conditions. This policy was also renewed and premiums for 2011-12 were paid. After Jayshree fell ill and was hospitalized, she lodged a claim for Rs 29,155. The insurance company’s TPA, Health India, processed the claim and sanctioned Rs 16,879, disallowing an amount of Rs 12,276 under the revised terms and conditions. Jayshshree protested against this deduction, contending the claim ought to be paid according to the original terms when the policy was first taken. She filed a consumer complaint through the Consumers Welfare Association. 

    The insurance company contested the case, saying that it had the right to change the terms and conditions, and the insured was free to opt out if the terms were not acceptable. The South Mumbai District Forum, 

in its judgment of September 27, 2013 observed that the policy stated that it was issued on the basis of a proposal form and declaration dated February 2, 1999. The original policy as issued in 1999 provided for a claim to be reimbursed up to the sum insured, without imposing any limits under each head of expense. But these terms were changed and limits were not prescribed for various heads of expenses. The forum held that such unilateral change in the terms of the policy was not permissible. It relied on the judgment of the Supreme Court in the case of Biman Krishna Bose v/s United India Insurance Co Ltd, where the apex court had observed that a renewal of an insurance policy means repetition of the original policy. The renewed policy merely extends the period of insurance on identical terms and conditions contained in the original policy. The forum then set aside the revised terms of the policy and directed the insurance company to renew the policy as per the original terms prevailing when the insurance coverage was first taken. It ordered the company to pay Shah the balance claim of Rs12,276 along with 9% interest from May 12, 2011 and Rs 5,000 as litigation cost. 

    Conclusion: Once issued, the policy terms cannot be unilaterally changed, unless specific consent of the insured is obtained for such changes. 

Source : Jehangir B Gai – TOI – 25/11/2013

MIS-SELLING : TREAT CUSTOMERS FAIRLY - RBI TO TELL BANKS

With cases of misselling by banks continuing to come to light, the Reserve Bank of India plans to introduce the concept of ‘treat customers fairly’ (TCF) for sale of third -party products. Under the TCF norms, first introduced by the UK’s financial services authority, it is not enough for banks to merely stick to rules, they must prove that they have acted in the best interest of the customer.  “The intent and basic structure for TCF is in place in India for banking products of scheduled banks. However, it is now being considered to extend the TCF structure to thirdparty products, viz, mutual funds, capital market and insurance products sold by banks and also extending the ombudsman scheme to non-scheduled banks,” the RBI said in a report released on Thursday. 

The issue of mis-selling by banks had come to the fore with Sebi’s recent showcause to HSBC for needlessly churning a client’s MF portfolio. TCF aims to link products with promises 

The RBI’s move to implement the TCF (treat consumers fairly) concept comes in the wake of a case of ‘mis-selling’ by HSBC recently. Sebi found that the unnecessary churn in the client’s mutual fund portfolio could only have been done to earn more commission. Under TCF guidelines, it is not enough for a bank to obtain the signature of a customer on the application form; it also bears the onus to make sure that it is providing correct advice. 

According to the RBI, TCF is a consumer protection policy designed to address the problem where banks know something about the product that the customer does not. “It is a regulatory initiative by which firms are required to consider their treatment of customers at all the stages of the product life-cycle, including the design, marketing, advice, point-of-sale and after-sale stages. By encouraging firms to re-evaluate their company culture and to inculcate the attitude of treating customers fairly, the outcome is likely to result in a more optimal one from the perspective of regulators, consumers and ultimately, firms,” RBI said.

The report said that the desired outcome of the TCF programme is to ensure that consumers are provided products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect; and consumers do not face unreasonable post-sale barriers imposed by firms to change a product, switch providers, submit a claim or make a complaint.

Source : TIMES NEWS NETWORK – TOI – 22/11/2013.

INSURER CANNOT REJECT CLAIM ONLY DUE TO DELAY IN RENEWING POLICY

Consumer Forum rules rejection for this reason ‘completely unacceptable’, directs National Insurance to pay policy holder the amount plus interest

An insurance company cannot reject a claim under the mediclaim insurance policy only on the hyper-technical grounds of a mere 11 days delay in renewing the policy, the Thane District Consumer Forum has ruled.   The forum determined that rejection of the claim for this reason was only to suit the insurance company’s interests, and was therefore “completely unacceptable”. 

    Making these observations, the two-member bench of U V Jawlikar and N D Kadam directed National Insurance Co to pay Virar based Prabha Iyer an amount of almost Rs 1 lakh — Rs 58,000 as claim amount, over Rs 26,000 as interest, and Rs 15,000 as compensation for mental agony and litigation cost.  The insurer, citing 11 days delay in renewing the mediclaim policy by Iyer in 2007,wanted her to undergo a four-year “cooling off period for covering pre–existing diseases” all over again, but the forum thwarted the attempt. 

    In April 2003, Iyer had bought a mediclaim policy for Rs 1 lakh from National Insurance. Thepolicyhadaclausespecifyingawaitingperiod of four years before Iyer could claim expenses incurred on ailments already existing in her body. This meant that she qualified to make such claims only after April 2007.  Iyer kept renewing her policy without a break till April 2007 when, due to some unavoidable circumstances, she could renew it only after a delay of 11 days. 

    She fell ill in June 2007 and was admitted to PD Hinduja Hospital. The next month, she fell ill again and this time was admitted to a hospital in Kalyan. She sought reimbursement of Rs 58,284 from National Insurance for expenses incurred during both periods of hospitalization.     

The insurer, however, rejected the claim saying that Iyer was hospitalized due ailments in existence since 1998, and since she had delayed renewal of her policy in April 2007, it was now a fresh policy and she would therefore have to wait for four years before making claims under the relevant clause. 

    Iyer finally approached the consumer forum in 2009. During hearing of her complaint, the forum found out from her policy documents that even while renewing her policy after an11-day delay in April 2007, the insurer had noted the original proposal date as “April 2004”, which meant that even as per its own records,National Insurance had not treated the policy as “fresh”. Yet, when it came to reimbursing Iyer’s claim, the company rejected it citing the hyper-technical ground just for its convenience. The forum has now directed National Insurance to pay the entire amount to Iyer by December29,or face an increased interest rate.

Source : Sunil Baghel – Mumbai Mirror – 18/11/2013

YOU CAN STILL FILE YOUR TAX RETURNS

Those who have missed the August 5 deadline should file as soon as possible to avoid penalty on unpaid taxes, says Preeti Kulkarni

The last date to file income-tax returns is gone. Okay, the government last week had extended the deadline by a week from July 31 to August 5. As usual, there are many taxpayers who couldn’t meet the deadline this year, too. 

Of course, they also list the usual reasons for not filing returns on time: some could not login to the Income-Tax portal; some received the Form 16 late; some were too busy with their career and life to notice the deadline. 

“A lot of salaried individuals received their Form 16 very late this year. The delay in issuance of Form 16 on the part of the employers was primarily because of changes in the process relating to preparation of the Form 16,” says Vaibhav Sankla, director with tax consulting firm H&R Block India. 

“Further, many faced challenges in accessing the TRACES website for many days. It is estimated that only 50% of those who are required to e-file their returns in Form ITR 2 could actually file it within the due date,” he adds. Even the Income-Tax department concedes that some taxpayers have not been able to log on to the e-filing website” he said. 

Due to a large number of tax-payers accessing the e-filing website on the due date of filing, some cases of tax-payers not being able to access the portal have been reported,” the I-T department noted, while granting an extension till August 5 for such tax-payers. 

You can still file returns
Tax rules permit assesses to file their returns pertaining to two preceding financial years, even after the expiry of the respective annual deadlines. “Tax-payers who haven’t filed their tax return for the financial year 2012-13 can do so until March 31, 2014. However, it is advisable to complete the process as soon as possible to avoid any possible penal interest, if there is tax to be paid. The I-T department charges a penal interest for every month of delay,” explains Nikhil Bhatia, executive director of PwC India.
In fact, returns can be filed even till March 31, 2015. However, you will have to pay a penalty of up to . 5,000 if it is filed after March 31, 2014.
There are other complications, too. “Tax-payers who complete the process before the due date are allowed to file a revised return in case they have filed an incorrect return. However, this leeway is not extended to those filing the returns after the deadline,” says Bhatia. Similarly, you will not be allowed to carry forward any losses incurred under the head ‘Capital Gains’ and ‘Business Losses (other than depreciation loss)’. 

If you are expecting a refund from the I-T department, you will have to be prepared to forgo some benefits. “If the taxpayer is claiming a refund and is also entitled to receive interest on the refund, then the delayed filing would mean that he would not receive interest for the period of delay,” points out Sankla.
Since the delay on your part rules out second chances, it is important to pay extra attention to details to ensure that you get it right in the first instance. Ensure all the required documents — Form 16, bank statements, last year’s return — are at hand before commencing the process to avoid any back-and-forth and loss of time. Make sure you claim all the deductions that do not reflect in your Form 16. 

For instance, section 80G deductions on donations made to approved charities.
“Taxpayers should thoroughly double-check the tax calculations and they should also check whether all the tax exemptions and deductions they are entitled to claim have been actually reflected in the tax return. In certain cases, it would also be a good idea to get the tax return reviewed by another tax professional before it is filed,” says Sankla. 

Source – Preeti Kulkarni – The Economic Times – 07/08/2013

Salaried up to 5L must now file I-T returns

Unlike the past two years, salaried persons earning up to Rs 5 lakh annually will have to file income tax returns, the Central Board of Direct Taxes (CBDT) said on Monday. 

The CBDT had exempted salaried employees with income up to Rs 5 lakh, including income from other sources up to Rs 10,000, from filing tax returns for assessment year 2011-12 and 2012-13. 

“The exemption was available only for assessment years 2011-12 and 2012-13...the exemption is not being extended for 2013-14,” the CBDT said. AGENCIES ‘Exemption revoked as e-returns easy to file’ 

The CBDT had in May made e-filing of income tax return compulsory for assessment year 2013-14 for persons having total assessable income exceeding Rs 5 lakh. 

The CBDT said the exemption was given considering paper filing of returns and their processing through manual entry on system. It said the exemption has been not been extended as the facility for online filing of returns has been made “user-friendly with the advantage of pre-filled return forms”. 

These e-filed forms also get electronically processed at the central processing centre in a speedy manner, it said. “Taxpayers are encouraged to file their returns electronically. E-filing is an easy, fast and secure method of filing of income tax return. Moreover, digital signature is not mandatory for these taxpayers...,” the finance ministry added.

Source – TOI – Mumbai Edition – 23/07/20013

Get an Add-on Motor Cover for a Smooth Cruise This Monsoon

Such schemes can help you get full claim on the value of car parts that are replaced after an accident, says Prashant Mahesh

Your regular motor insurance policy is of little use if you have to replace plastic, glass or rubber parts after an accident. For example, if the windshield of your two year-old car were to be replaced, you may get only . 2,500 from the insurance company. A new windshield would cost you around . 10,000. However, you can overcome this problem if you go for car insurance with added benefits like zero depreciation, engine protection and return to invoice. “Spare parts in high-value cars are costly. We recommend people with cars costing upwards of . 10 lakh to go for add-on covers, as it will lower their risk,” says Arvind Laddha, CEO, Vantage Insurance Brokers. 

ZERO DEPRECIATION 

This add-on cover ensures that you will receive the full claim without any depreciation on the value of parts that are replaced after an accident. “In case of a major accident, a zero-depreciation policy could come in handy,” says Niraj Jain, CEO & Principal Officer, Insurancemall — an online insurance portal. “Remember to buy the zero-depreciation cover in the first year itself, as an insurance company could deny it in the second or third year or ask for a heavy premium,” adds Niraj Jain. If your bumper gets damaged and it costs . 15,000 to replace it, most insurance companies would merely pay around . 7,500. However, if you have a zero depreciation cover, you could get the entire amount back. Most insurance companies offer it for vehicles that are less than three years old. If you were to meet with an accident in an unknown area where a basic service centre is far away, this add-on could be handy. “The facilities included under this would include towing, repairing a flat tyre or a battery, fuel assistance, taxi and accommodation benefits,” says Vijay Kumar, chief technical officer, Bajaj Allianz General Insurance

ENGINE AND ELECTRONIC CIRCUIT COVER 

During monsoon, chances of flooding in many areas cannot be ruled out. If you start your car while it is still submerged in water, the engine could get badly damaged. Since the engine is one of the most crucial parts of a car, repairing it is a costly affair. Trying to start the car repeatedly may cause further damage and it may finally break down. This phenomenon is known as hydro-static lock, and as per experts, is one of the most common reasons for vehicle engines to get damaged during monsoon. “Such damage is not payable under a regular motor insurance policy. You may have to call the towing agency or the insurer who can arrange to tow the vehicle. An add-on such as engine protector may cover such specific claims,” says Vijay Kumar. Same is the case with electronic circuits. “In case of water logging, it is not one or two parts, but the entire circuit may need to be replaced. This cost could be very high, and hence, an add-on policy which covers electronic parts could help,” says Rahul Aggarwal, CEO, Optima Insurance Brokers. 

RETURN TO INVOICE 

This benefit is available only in the first year of buying a car. In case the car is totally damaged, 100% of the value of the vehicle (without deducting 5% depreciation) is reimbursed. 

NCB RETENTION 

No claim bonus is a reward for those policy holders who have not registered any claims against their car insurance policy in the past. Over a period of time, this bonus can be accumulated to claim a discount of up to 50%. However, even a single claim on your policy can bring this down to 0%. By buying an add-on cover, this can be avoided. Under this add-on, even if you have a claim, subject to a certain sum, NCB earned by you remains protected at the current eligible percentage, instead of becoming 0% under a normal policy,” says Banwari Lal Sharma, AVP (Marketing), Carwale, an online automobile portal. 

Many add-ons are bundled as a package by insurance companies. If you end up buying all of them, your premium will increase substantially. “Understand what you need the most and buy accordingly,” says Banwari Lal Sharma. 

Source : Prashant Mahesh – Economic Times – 25/6/2013