S&P BSE Sensex*	Re/US $	Gold Rs/10g	Crude ($/barrel)	FD Rates (1-Yr)
33,157.22 | 572.87 1.76%	64.82 | 0.21 0.32%	29,360 | -255.00 -0.86%	58.30 | 0.86 1.50%	5.0% - 7.0%

Recently, the Government made an announcement of infusing Rs 2.11 lakh crore of capital in Public Sector Banks (PSBs) over the next two years.

“For the first time in the last decade, we now have a real chance that all the policy pieces of the jigsaw puzzle will be in place for a comprehensive and coherent, rather than piecemeal, strategy to address the banking sector challenges. It bodes us well that this step has been taken in a time of sound macroeconomic conditions for the economy on other fronts.” This reaction of the RBI Governor speaks about the magnitude of implications recapitalising PSBs can have, not only on the industry, but on the economy as a whole.

While the structure and details of the scheme aren’t presently available, it appears, the Government is likely to opt for the route that doesn’t put much strain on the public finances. At the end of FY 2016-17, the pile of Non-Performing Assets (NPAs) of the PSBs was around Rs 6.8 lakh crore—of which nearly 70% were the big-ticket corporate loans.

Investors have been giving big thumbs up to the move of recapitalisation of banks.

Reacting over this development Mr Gopal Aggarwal, CIO, Tata Mutual Fund said, "The recapitalisation move is really positive for the banks. They can lend further. There is definitely a positive sentiment in the sector after the move." Mr Amit Premchandani, Fund manager, UTI Banking Fund appeared cautiously optimistic and said, "Recapitalisation is a pleasant surprise for the banking sector. The credit growth has a demand and a supply attached to it. The supply side has been taken care of but the demand side is yet to be seen. But overall, things look positive for the sector."

NIFTY PSU Bank Index up 31% in October so far…

Data as on October 26, 2017
(Source: NSE, PersonalFN Research)

Now for the pertinent question, Should you invest in a banking sector fund at this juncture?

While this has given a fillip to the banking sector, NPA problems still persist. Bank balance sheets haven’t been cleaned completely. And this poses a risk in the long-run. Hence, one can’t hinge on steroid shots always to financial health. Prudent corrective measures are a must!

Investing in a sector fund is always risky and you should avoid taking undue risks.

As an investor, do not get carried away; look deeper into the fundamentals. To reap benefits of the recapitalisation move (and even the stimulus package of 70,000 crore), diversified equity funds are well poised to create wealth for you in the long run. However, it is imperative to prudently select winning mutual fund.

For superlative research-backed guidance to select best mutual funds, count on PersonalFN’s unbiased mutual fund research services.  FundSelect Plus, PersonalFN’s model mutual fund portfolio service has a decade-long market-beating track record. You get access to 7 high-performing, time-tested readymade portfolios. Apart from four equity-oriented portfolios, you get access to three readymade debt mutual portfolios. The debt portfolios have been formulated using the investment tenure as the cornerstone. Depending on your investment horizon — less than 3 months, 3-12 months, or more than 12 months, you can choose the portfolio of your choice.

PersonalFN’s track record speaks for itself, as all three portfolio have comfortably beaten their respective benchmarks. Don’t miss the Special Anniversary Discount. Subscribe now!

Here’s Why The Government Is Going Easy With Aadhaar Linking

The Government is likely to extend the deadline to link the Aadhaar number with various Government schemes from December 31, 2017 to March 31, 2018. In other words, the extension will be applicable to linking Aadhaar to bank accounts and mobile connections. Mr K. K. Venugopal——Attorney General (AG)——recently communicated this intent of the Government to the Supreme Court. Nonetheless, this concession will be given only to those who have not registered for the Aadhaar number, but are “willing to enroll”. 

As you might be aware, Mr Arun Jaitley——the Finance Minister——lately revealed that 52.4 crore Aadhaar numbers have been already linked to 73.6 crore bank accounts. The Finance Minister also shed light on Government’s ambitious plan "one billion-one billion-one billion ".Simply put, 100 crore Aadhaar numbers must be linked to 100 crore bank accounts and 100 crore mobile phone accounts. He believes once this milestone is achieved “India can be a part of the digital mainstream.” 

Needless to say, there are more reasons other than financial inclusion for the Government’s keenness to link Aadhaar with mobile connections, bank accounts, Employee Provided Fund (EPF), mutual fund investments, demat account, and insurance policies, etc.

The Government aims to curb money laundering practices and issues critical to national security including terror funding, etc.

It expects to arm the Income Tax (I-T) Department with more teeth to identify and desist tax evaders. Nonetheless, skeptics believe the Government and agencies authorised to carry out biometric verification could misuse the information. Moreover, they also fear the Government may use Aadhaar as a means of spying on citizens. As a result, the Supreme Court is flooded with cases challenging the move of the Government to link Aadhaar on various grounds — one of them, and perhaps, the most important one is, personal privacy.

Clearing the air, the Supreme Court has already termed, Privacy, as the “Guaranteed Fundamental Right”.

Here’s what it said, “Privacy, in its simplest sense, allows each human being to be left alone in a core which is inviolable. Yet the autonomy of the individual is conditioned by her relationships with the rest of society. Those relationships may and do often pose questions to autonomy and free choice. The overarching presence of state and nonstate entities regulates aspects of social existence which bear upon the freedom of the individual."

“The right to claim a basic condition like privacy in which guaranteed fundamental rights can be exercised must itself be regarded as a fundamental right. Privacy, thus, constitutes the basic, irreducible condition necessary for the exercise of ‘personal liberty’ and freedoms guaranteed by the Constitution.”

In other words, while acknowledging privacy as a fundamental right, the Supreme Court didn’t make it an absolute right.

Earlier, on the issue of linking the Aadhaar with various Government schemes, senior lawyer, Mr Harish Salve, had submitted in the court, on behalf of Gujarat government, “If somebody wants to live in the forest with no contact with the government, it is perfectly all right for them to do so... But you have to understand that the government is the trustee of the taxpayers' money”.  Aadhaar may help transfer the benefits directly to citizens through their bank account and monitoring of the efficiencies of the schemes is likely to improve with direct transfers.

The opponents of linking Aadhaar to various schemes also criticised the Government on discriminating between “Aadhaar willing” and “Aadhaar unwilling citizens”. As a result, Supreme Court asked the AG, “Can we say you (government) will take no coercive action till March 31?” The AG has given an affirmative verbal assurance to this request. However, that didn’t satisfy the opponents. The Government has been given a time to communicate the official response by Monday, October 30, 2017.

Moreover, the Supreme Court also reprimanded the petitioners insisting on setting up the constitution bench to fix the issue for good.  Rebuking them, the Supreme Court said, “You cannot command us... come back and mention on Monday.”

The Government might have to extend the deadline for all. But as of now, it’s anybody’s guess. Stay tuned till Monday.

7 Smart Ways To Use Your Tax Refund

Mr Shah has been with the diamond jewellery manufacturing industry for more than 3 decades. And he is among the highest tax paying citizens. With November almost here, he anticipates a huge chunk of tax refund. He is planning a 10-day family vacation to South Africa in December. He is relying on the tax refunds to finance for this trip.

Many like Mr Shah equate the refunds as a windfall income. But the fact is, this is your own hard-earned money in the Government’s kitty. This is something you had probably forgotten about and/or stopped counting on. Most people can get overwhelmed by such unexpected flow of money. And spend their fortune recklessly on expensive trips, luxury cars, or other extravagant things.

Read more.

What Are Arbitrage Funds And How They Have An Edge Over Debt Funds

Over past few months, most major banks cut their Savings Bank interest rates. In some cases, the savings interest that you earn may be as low as 3%-3.5% per annum (p.a.). Interest rates offered by major banks on 1-year fixed deposits too, have dropped to as low as 6.25%. In such low interest rate regimes, Indian savers are scurrying for better income generating options.

Debt mutual fund schemes were often touted as an ideal alternative. However, post Budget 2014-15, which changed the taxation policy for non-equity schemes, debt mutual funds took a back seat for short-term investments.

Under the present tax rules, gains on units of non-equity schemes redeemed before the completion of 36 months is considered as Short-term Capital Gains (STCG). These gains are added to your income and taxed accordingly. Therefore, if you fall in the highest tax bracket, the tax liability can go up to 35.54% (30% tax plus 15% surcharge and 3% cess). Long Term Capital Gains in case of debt mutual funds are taxed at 20% with indexation (23.69% including surcharge and cess).

Read more.

Should You Resist Linking Aadhaar With Your Bank Account? Know Here...

The debate over Government’s adamant stance on linking Aadhaar with mobile connections and bank accounts took another twist recently.

As you might be aware, the Government has made it mandatory for citizens to provide their Aadhaar number along with PAN details for new bank accounts and should be quoted for a transaction above Rs 50,000. For the existing account holders, December 31, 2017, is the deadline to link their Aadhaar number with their bank accounts. Those who would fail to do so will end up making their bank account non-operative. 

Read more.

5 Reasons Why Mutual Fund Folios Are On The Rise

Between September 2016 - 2017, the retail AUM (Assets Under Management) of mutual funds jumped massive 39% — from 7.49 lakh crore to Rs 10.40 lakh crore. The total AUM of the mutual fund industry grew at 30% — from 16.51 lakh crore to 21.45 lakh crore, over the same timeframe. Individual investors have been increasingly taking the mutual fund route to channelise their savings. During the first six months of the Financial Year (FY) 2017-18, the industry attracted nearly 66 lakh new investors. This was largely because of the growing participation of individual investors in equity-oriented schemes. From 31.8% in September 2016, equity AUM of the mutual fund industry as a percentage of total AUM has jumped to 36.9% in September 2017. During the same time period, participation of individual investors has increased to 48.5% from 45.3%. Moreover, 84% of the investors in equity-oriented schemes are individuals and the rest are institutions.

Read more.

India's pension system is one of the worst in the world. Only about 7.4% Indians are covered with the formal pension system compared to 65% in Germany and 31% in Brazil. India ranked 28 (on the list of 30), on the parameter of 'adequacy' of the pension system. The blessing in disguise with India's pension system is more sustainable than that of many other countries — and, primarily, because it covers a meagre portion of the population. To live a peaceful life after you retire, start planning for it as early as you can.

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Capital Adequacy Ratio: The capital adequacy ratio (CAR) is a measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures.

Quote: "Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it."- Peter Lynch

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