  | | January 03, 2014 | | | | | | | Weekly Facts | | | Close | Change | %Change | | BSE Sensex* | 20,851.33 | (342.3) | -1.61% | | Re/US$ | 62.27 | (0.1) | -0.18% | | Gold Rs/10g | 29,390.00 | (60.0) | -0.20% | | Crude ($/barrel) | 110.82 | (1.2) | -1.08% | | FD Rates (1-Yr) | 8.00% - 9.00% | Weekly change as on January 02, 2014
*BSE Sensex as on January 03, 2014 | |
Impact 
If you have a habit of using Automated Teller Machines (ATMs) quite frequently for withdrawing cash, then you would have to shell out a few more bucks this year. Banks have suggested that the number of free transactions might be restricted to 5 every month for all ATM transactions including those executed at their own ATMs.
At present, you are allowed to perform 5 free transactions at any ATM set up by a bank other than your own bank. Thereafter you are charged Rs 20 per financial transaction and Rs 8 per non-financial transaction, subject to additional fees imposed by your bank over and above these. However, there is no cost associated with using ATM facility of your own bank, irrespective of the number of transactions you perform.
Indian Banks' Association (IBA) has been working on a draft which attempts to address common challenges faced by banks. One among them is viability of ATM network. The working group has been pondering on increasing the security at bank ATMs. The stabbing case that happened recently at the ATM of one of well-known banks in Bangalore raised questions about security of ATMs. As per banks, many state Governments have asked them to provide around-the-clock security guards at ATMs. On this background, there is a demand for raising interchange fee from Rs 15 to Rs 18 per transaction. Interchange fee is paid by your bank to other banks for letting you use their ATMs. Apart from raising physical security, banks are also working on improving lapses in electronic surveillance. This may add to the cost to banks. Banks propose that eventually, all these costs will have to be shared by customers.
PersonalFN is of the view that, allowing 5 transactions free of cost in a month gives banking customers a fair chance of meeting their cash requirements. Making ATM transactions chargeable even at their own networks would give banks a dual advantage. It will help banks in discouraging people from over-using ATMs and improving security standards. To avoid being subject to paying fee to your bank, you may list down your potential cash requirements in advance. Those who follow their financial plan may not have to struggle to get this number. You may then withdraw money at one go if you feel you might exceed the free transaction limit. You may be better off if you don't use ATMs for non-financial transactions such as checking balance and know the account summary. You may prefer to use internet banking instead.
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Impact
Traditionally, insurance has been a pushed product in India. The mind-set of policy buyers to derive atleast some survival benefit led to the proliferation of endowment plans and Unit-Linked Insurance Plans (ULIPs). Insurance companies paid huge commissions to their agents for promoting these products. But over the period of time, Insurance Regulatory and Development Authority (IRDA) felt that the guidelines governing these products needed a face lift. Last year IRDA revamped the guidelines. The new guidelines pertaining to death cover, policy charges, surrender value, commissions and investment related disclosures have been made effective from January 01, 2014.
Following are the changes in the guidelines...
- Now the traditional insurance policies would offer cover equal to atleast 10 times of your annual premium if you are below the age of 45 and 7 times for those who are above 45 years of age.
- Commissions will now be linked to the tenure of the policy. Longer the tenure higher would be the commission.
- Premium paying term would be the basis for calculating the surrender value now. The minimum surrender value would be 30% of all premiums paid including that paid in the first year.
- In case of ULIPs, insurers will have to update investors on monthly returns. Also, asset value related calculation would now also be available on the policy form itself.
PersonalFN is of the view that, although the new guidelines may make traditional plans and ULIPs a little more transparent and customer friendly, term insurance still remains the best form of insurance to cover risk. Term insurance is the purest form of insurance policy. It provides you a high amount of coverage at a very low premium. This type of policy caters to the need for protection. Remember, taking life insurance is more than just identifying a policy and paying a premium annually. It's also important to separate your insurance from your investments. Financial planning helps you insurance as well as investment needs.
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The Most Awaited Tax Planning Guide 2014 - Released!
Waiting till the eleventh hour for tax planning would lead you to the path of mere "tax saving" resulting in sub-optimal tax reduction.
So undertake your tax planning activity well in advance this year.
PersonalFN's Tax Planning Guide (2014 Edition) shows you how you can save your hard earned money prudently from the tax-man.
Download Your Copy Now! (It's FREE!!) | |
Impact 
Many Many of you might know that Foreign Institutional Investors (FIIs) primarily drive the Indian equity markets. This is true particularly when retail participation is very low. While domestic Individual investors dumped stocks on every rise and mutual funds remained net sellers too; FIIs continued to be bullish on India. In the year 2013, FIIs have pumped in about USD 20 billion (Rs 1.13 lakh crore) in Indian equities.
Trends in FII investment...
Data for the month of December is only till 27th of the month
(Source: ACE MF, PersonalFN Research)
Although capital Flows of FIIs into equities remained robust for almost 9 months of the year, those into debt were quite volatile. FIIs remained net sellers of Indian debt for about 6 months of the year while they offloaded more equities than they bought in 3 consecutive months starting from June.
To read more about this news and the view of PersonalFN over it, please click here.
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Impact
Banking facilities have remarkably improved over a last few years. Banks have upgraded their technologies. It could have been just daydreaming till few years ago to expect that your cheque is cleared by the drawee bank on receipt of electronic image of the cheque. Today this is possible through Cheque Truncation System (CTS). People are using internet banking route for booking tickets, paying bills and transferring money to their friends and relatives. Mobile Banking is the latest development. Using banking services has become faster and more convenient. But are banks treating their customers any better? Responses can be diverse. Customers of banks who have been victims of online frauds are unlikely to be impressed with the efforts made by banks to resolve their problems. But this might change soon. Although unwillingly, banks will have to service you better.
To read more about this news and the view of PersonalFN over it, please click here.
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- It was believed that property prices in Mumbai might come under stress sooner or later as there was a pressure of piling inventory. As per the latest available estimates Mumbai property market has the inventory of about 48 months which is very high as compared to the accepted limit of about 15 months. But overlooking all these facts, the State Government in Maharashtra hiked the ready reckoner rate by around 20% for the city. Ready reckoner rates are the Government determined property rates for a particular locality which act as a floor price for any property transaction and calculation of various state levied taxes.
The decision was not only vehemently opposed by the property developers but also by few ministers of the state Government. The property developers felt that, hike in ready reckoner prices might give rise to the cost of developing properties as costs such as property tax, stamp duty and registration among others are linked to the ready reckoner prices. Considering the high inventory level, any price hike at this juncture might result in sales slumping further.
Seeing such a strident protest against the decision, the chief minister of Maharashtra has advised the revenue department to re-examine the decision.
PersonalFN believes that the Government might have hiked the rates to increase the revenue collections. But now as the elections are nearing, the Government might not want to annoy builders' lobby as well as the common man. State Government might have thought that this move could affect the funding from developers to their political campaigns. At the same time they might be worrying about losing votes of the common man for keeping him unhappy.
PersonalFN believes that moves such as hike in ready reckoner rates can potentially affect your decision of buying properties. Also, increasing property tax adds to the maintenance cost, which eventually affects your budgets. We believe taking a note of such developments assists in fine tuning the financial plan.
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Cash Surrender Value: "The sum of money an insurance company will pay to the policyholder or annuity holder in the event his or her policy is voluntarily terminated before its maturity or the insured event occurs. This cash value is the savings component of most permanent life insurance policies, particularly whole life insurance policies. Also known as "cash value", "surrender value" and "policyholder's equity."
(Source: Investopedia)
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Quote : "Buy not on optimism, but on arithmetic." - Benjamin Graham
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