Interview in its true sense is an art. The sad thing about me is that I am not an artist. My first major assignment in Dhanam was interviewing Ramdeo Agarwal (the co founder of Motilal Oswal securities limited).
He is a prominent figure in the financial services sector of this country. I was nervous at the beginning of the interview. I prepared well for the interview but didn’t get the desired flow. His answers were crisp and accurate. He was not interested in out of the box questions! Regarding ULIP he skipped that question.
The interview lasted for one hour. If I had showed some more confidence the interview would have been even better.
Lessons
I learned many lessons from the interview-you should be well prepared for the interview. Confidence level should be very high. If you interview someone don’t think about others imagine that only you two are there in the game.
I gave only pass mark for that interview. I believe that there is room for improvement!

Capital Market Clippings

Prospects to have more clarity on directors’ details
The SEBI Board directed companies raising capital to make certain disclosures regarding their board of directors. The offer document of companies raising capital should contain disclosures from their directors on whether they were directors of any company whose shares were suspended from trading for more than three months during the last five years, SEBI said in a release issued after the board meeting. It is learnt that the market regulator is coming out with detailed amendments to its issue of capital and disclosure requirements prescribing the enclosures for such disclosures in the offer document.
The Hindu Business Line, May 20, 2010

SEBI eases listing rules for SMEs
The Securities and Exchange Board of India (SEBI) has relaxed share-listing norms for small and medium enterprises (SMEs) by allowing them to disclose their financial results every six months instead of three months, as is the norm for bigger companies. Companies listed on the SME exchange will not be required to send a full annual report to their shareholders and also need not publish their financial results as required in the main stock exchange. “Companies listed on the SME exchange may send to their shareholders a statement containing the salient features of all the documents,” the regualtor said in its circular. But these companies will have to maintain a public shareholding of at least 25% of the total number of issued shares at all times. A company listed on the SME exchange, having post-issue capital between Rs 10 crore and Rs 25 crore can migrate to the main exchange provided it meets the listing requirements of the stock exchange. For this purpose, the company must first make a proposal to list the specified securities and obtain the prior approval of its shareholders.
The Economic Times, May 19, 2010

SEBI asks brokers to submit report on rollout of new norms
Market regulator SEBI has asked stock brokers to provide the exchanges with a status report on the implementation of new client-broker agreement, which will become effective from June 30. The deadline has been extended a couple of times, as brokers sought time to prepare for the proposed changes, and also due to ambiguity over some of the rules. SEBI had announced the guidelines in December last year. The new rules require brokers to keep records of the people introducing new clients, and regulatory actions against them (clients), detail the systems for settling client funds and securities once a calendar quarter/month, among other things. For existing clients, the broker has to inform the exchanges if he has obtained a signed confirmation letter for the e-mail id to which transactions details will be sent, and the necessary consents for running accounts, annual renewal, among other things.
The Economic Times, May 19, 2010

SEBI panel recommends higher net worth for market intermediaries
A SEBI committee for review of eligibility norms (CORE) for various market intermediaries has recommended increased minimum net worth for market intermediaries, including asset management companies, brokers and merchant bankers. One sub-group of the core committee suggested a minimum net worth of Rs 50 crore for mutual fund asset management companies (AMCs) as against existing networth requirement of Rs 10 crore. “Although the operations of AMCs are in the nature of a pass through, a larger net worth is required to build up the minimum infrastructure that is sufficient to service investors,” said the study paper on the SEBI Webs ite requesting comments by June 14. The sub-group also recommended that existing AMCs be given an appropriate period by SEBI to build up their net worth to Rs 50 crore level.
The Hindu Business Line, May 15, 2010

SEBI proposes stronger disclosure norms for rating agencies
Concerned over the practice of certain companies influencing rating actions, market regulator SEBI proposed a stronger disclosure norms for credit rating agencies (CRA). “It is recommended that all registered agencies be required to disclose publicly on their websites their shareholding pattern and the names of the owners,” said a SEBI sub-group in its recommendation on which the regulator has invited comments from public. Rating agencies, the report added, “have to manage this conflict and prevent it from influencing rating decisions. Both regulations and internal procedures have to be designed towards this end.” On disclosure of rating performance, the sub group recommended that every CRA be required to publish, every six months, a list of its publicly outstanding ratings that have moved by more than one notch over the preceding six months.
The Economic Times, May 13, 2010

Insurance Clippings

IRDA’s new norms to provide strong cover for Ulip holders
Holders of unit-linked policies will in future get more of their money back if for any reason they are forced to surrender their policy within a couple of years. New norms by the Insurance Regulatory & Development Authority (IRDA) now provide very strong incentive to insurers to ensure that policies do not lapse. The regulator unveiled new regulations on unit-linked insurance plans, capping the surrender charge on policies that are returned after a year at 15%. This is a huge benefit for the customer as today there are several plans where the customer gets nothing if s/he surrenders her/his long-term policy after paying the first year premium. For example. If the policyholder paid Rs 100 in the first year, a big chunk of around 40% is deducted by way of various charges. The remaining 60% is allocated to the Ulip fund. If for any reason the policyholder fails to pay the renewal premium, the insured would get back 85% of Rs 60 thereafter, i.e., Rs 51 after the lock-in period.
The Economic Times, May 19, 2010

IRDA seeks financial condition reports from non-life insurers
The non-life insurance companies need to submit financial condition reports on an annual basis from March 2010, the Insurance Regulatory and Development Authority (IRDA) said. In a circular,  Dr R. Kannan, Member (Actuary), IRDA, said the insurers should submit the report for the year ending March on or before September 30. The report should be sent in a prescribed format with details including business projections, analysis of business growth, adequacy of premium/capital, risk management, investment and asset liability management and current and future financial condition. “Based on the experience gathered, the format (of the report) will be reviewed by the end of January 2011, if required,” Dr Kannan said.
The Hindu Business Line, May 17, 2010

Ulip investors face changes in DTC
Holders of unit-linked policies (Ulips) are a troubled bunch these days. The insurance grapevine has it that there may be changes in the tax treatment of Ulips. For instance, if the sum assured for a Ulip is less than 20-times the premium paid for such policies, chances are one may end up paying taxes on the returns from April 2011 onwards. It is exempt now but that could change once the revised direct tax guidelines come. Ulip holders will need to modify their plans accordingly to ease the tax burden. But in case the sum assured isn’t 20 times the premium a Ulip holder pays, returns on Ulips may decline if one has to adjust it to make it tax exempt by increasing the sum assured value. More sum assured means an increased portion of premium going into paying mortality charges which will leave less money to be invested into units — the portion of the money that goes into either equity or debt to earn returns. The draft Direct Tax Code submitted last August proposed a tax on returns for insurance policies where the premium paid is less than 20 times the sum assured. A final version is expected in the next couple of months which will lay down the fineprint on the issue.
The Economic Times, May 18, 2010

Ulips formed half of all life insurance biz!
Private life insurers in the country are lucky that the recent Sebi ban on unit-linked insurance plans (ULIPs) was cancelled. They would have lost almost half their businesses if the market regulator’s ban on 14 insurers from raising funds through the investment-cum-insurance product. That is because Ulips constitute 46% of the total business in the life insurance space. “Ulip has taken a prominent place in the global insurance market and India is not far behind. It has become the growth engine over the years in the Indian insurance market,” said an industry expert. Of Rs 2,00,000 crore-plus life insurance premium collected in the first 11 months of 2009-10, a little over Rs 91,000 crore came from Ulips, according to the Life Insurance Council of India, an industry body representing 23 life insurers. Premium collection from renewal of Ulips registered a 33% year-on-year jump in the April-February period to Rs 46,927 crore, showing that majority of the consumers are banking on Ulips for better long-term return.
The Economic Times, May 14, 2010

No quarterly financial statements for insurers: IRDA
The Insurance Regulatory and Development Authority (IRDA) has directed non-life and reinsurance companies to submit complete details about solvency margins from 2010-11. The date of submission of quarterly solvency reporting would be same as prescribed for public disclosures, Mr R.K. Nair, Member (F&I), IRDA, said in a circular. In a separate circular, the authority had also said all insurance companies need not submit quarterly financial statements as prescribed by a circular issued in November 2007. “As a new system of comprehensive public disclosures was introduced in January, the authority feels that there is no need for separate filing of quarterly financial statements,” it said.
The Hindu Business Line, May 11, 2010

Mutual Fund Clippings

Rally in G-secs has positive impact on MF income schemes
The rally in the Government securities market over the last one month has had a positive impact on the income schemes of mutual funds. These schemes have given investors attractive annualised returns of 15-20 per cent the one-month period. A host of factors including global economic uncertainty, receding probability of the Reserve Bank of India going in for rapid increase in interest rates when major central banks were persisting with an easy monetary policy, a thaw in global commodity and oil prices, and volatility in stock markets have triggered a rally in the bond market, which in turn has boosted the net asset values of income schemes, say market players. Income schemes of mutual funds typically invest 80-100 per cent of their corpus in debt instruments including the Central Government securities, State Government securities, and debt securities issued by public and private sector companies and up to 20 per cent in money instruments such as treasury bills, certificate of deposits, commercial papers, etc.
The Hindu Business Line, May 24, 2010

Sebi may close equity options route for MFs
The Securities and Exchange Board of India (Sebi) may shortly ban mutual funds from selling equity options. Option sellers potentially face unlimited losses if their bets go wrong, because they are obliged to honour the contract if the buyer chooses to exercise it. Conversely, buyers of option contracts lose only the upfront premium should their bets go awry. The logic behind Sebi’s plan to bar mutual funds from selling equity options could be that the market regulator feels some fund houses are taking ‘excessive exposure’ to options, a person familiar with the development told. In a circular sent only to mutual funds late-March, the market regulator sought feedback from asset management companies (AMCs) on proposals such as barring them from selling equity options, reducing their exposure to equity derivatives and disclosing more about their bets in this segment.
The Economic Times, May 14, 2010

SEBI asks MFs to disclose investor complaints
Market regulator SEBI asked mutual fund houses to disclose the details of investor complaints on websites, as well as in annual reports, to enable clients to make more informed decisions. “Mutual Funds shall henceforth disclose on their websites, on the AMFI website as well as in their Annual reports, details of investor complaints received by them from all sources,” the Securities and Exchanges Board of India said in a circular. Following the circular, all Asset Management Companies (AMCs) will have to put up the data for the bygone fiscal by June 30, 2010, and for each new fiscal within two month of the close of the year. SEBI expects the disclosure norms would improve transparency in functioning of the AMCs and would enable investors to take informed decisions.
The Economic Times, May 13, 2010

MF agents flout SEBI rule on sub-brokers
Self-styled distributors, lacking basic qualifications to sell mutual fund units are advising investors as to where they should put their hard-earned money. Distributors need to pass the Amfi Advisors’ Module if they want to sell mutual fund schemes to investors. If industry officials are to be believed, top national distributors, who sell investment products across asset classes, are not insisting on Amfi certification while appointing sub-brokers (sub-advisors or franchisees). This is more prevalent in franchisees or sub-broker offices in tier-II and tier-III cities, according to sources. “Top distributors simply ask for a small membership fee at the time of empanelling as a sub-broker. They are not really concerned about Amfi registration or any certification. The sole criterion is how many investors you can bring into the branch,” said a fund industry source. These distributors are allowed to sell products across asset classes, from equity mutual funds to ULIPs, corporate deposits and even Nabard bonds on certain occasion. For mutual funds, market regulator Sebi has made it mandatory for distributors to pass certification test (advisors module) and obtain registration number from Amfi.
The Economic Times, May 10, 2010

New guidelines to make ultra short-term funds more volatile
Even as ultra short-term funds were the most sought-after investment avenues in 2009-10, the current fiscal could prove challenging for these funds as the returns are likely to get more volatile once the new money market and debt security valuation guidelines are introduced from July 1. For investors, this would result in a trade-off between liquid schemes that provide low returns and stable net asset values (NAV) and ultra short-term funds that provide slightly higher returns with marginally higher volatility in NAV. Ultra short-term funds are popular with investors for the management of short-term surpluses. The increase in assets under management in 2009-10 was due to banks and corporate entities parking their surplus in mutual funds as part of their cash management and treasury operations. In the last quarter of 2009-10, however, the AUM of the industry declined sharply, largely on account of year-end redemptions by institutional investors.
The Hindu Business Line, May 06, 2010

Do you remember the ‘green ad’ from Idea. The base of that idea was protecting the trees. (Personally I don’t like that advertisement, I hate the way it is presented, but the theme was good). In the elaborated form of that advertisement they showcase mobile money transfer. The latest news in this regard is that “RBI says Yes to Nokia mobile money transfer” reports Businessline. The very news marks a leap in the banking and mobile phone technology front of this country.
At the end of 2008, there were an estimated 4 billion mobile phone subscriptions worldwide, according to the International Telecommunication Union. That’s about two cell phone subscriptions for every three people. By 2012, 190 million people will make mobile payments. (I got this information from internet).
In February 2010, BSNL announced the launch of it’s mobile banking platform. Which was in association with post offices across the country. SBI (India’s largest bank) and Yes bank expressed interest in this project. BSNL pilot project happened in Chandigarh. SMS money order will be the main attraction of the project as described by BSNL.
Another joke is that in US money money transfer facility is not in it’s full swing. Technologically advanced countries like Japan and South Korea are well ahead in this regard. Now the pilot project of mobile money transfer using Nokia mobile phones is happening in pune in association with Yes bank. The result of this project is crucial since based on this RBI is going to regulate the facility in the country.
The working mechanism as reports by Businessline
How it works is, you go to any of the two lakh Nokia’s retail outlets across the country and fill a form which makes you an account holder with YES Bank. Nokia promises that the process will not take more than 15 minutes. Then you deposit a amount at the Nokia outlet and in minutes the ‘credit’ appears on your mobile phone. You are ready to go. You can make payments at shops, pay electricity and water bills and even transfer funds to another person.

What will be the advantages: This move will definitely change of the banking system in the country. India has now got an estimated 45 Cr mobile phone subscribers. The market is booming like anything. GPRS enabled mobile phones will be the next attraction and more and more companies will be ready to invest in this sector.
The cost regarding the transaction is not yet finalized. Which is a key factor if we consider India as a market. Once it happens more banks will be participated provided RBI approval. Mobile money transfer will take India to next level of development. The quality of service by the companies will be very important because according to available information company outlets are going to use to collect money. If it is not done properly will lead to a parallel banking system in the country.
Urban area in India will be beneficial for sure, but what about the villages (where majority of Indian population resides). Mobile money transfer project should be an inclusive one.

(I came through this from one of my emails and found it interesting. I compiled it as a post. All married people kindly forgive!!)

Every man should get married some time; after all, happiness is not the only thing in life!!
–Anonymous

Bachelors should be heavily taxed. It is not fair that some men should
be happier than others.
–Oscar Wilde

Don’t marry for money; you can borrow it cheaper.
–Scottish Proverb

I don’t worry about terrorism. I was married for two years.
–Sam Kinison

Men have a better time than women; for one thing,
they marry later; for another thing, they die earlier.
–H. L. Mencken

When a newly married couple smiles, everyone knows why.
When a ten-year married couple smiles, everyone wonders why.

Love is blind but marriage is an eye-opener.

When a man opens the door of his car for his wife,
you can be sure of one thing:
either the car is new or the wife.

I take my wife everywhere, but she keeps finding
her way back to home always.
–Anonymous

I asked my wife, “Where do you want to go for our
anniversary?” She said,”Somewhere I have never been!” I told her,
“How about the kitchen?”
–Anonymous

We always hold hands. If I let go, she shops.

My wife was in beauty saloon for two hours.
That was only for the estimate.
–Anonymous

She got a mudpack and looked great for two days. Then
the mud fell off.
–Anonymous

She ran after the garbage truck, yelling, “Am I too
late for the garbage?”
Following her down the street I yelled, “No, jump in.”
–Anonymous

Badd Teddy recently explained to me why he refuses
to get to married.
He says “the wedding rings look like minature
handcuffs…..”
–Anonymous

If your dog is barking at the back door and your
wife yelling at the frontdoor, who do you let in first?
The Dog of course… at least he’ll shut up after u
let him in!
–Anonymous

A man placed some flowers on the grave of his dearly
parted mother and started back toward his car when his attention was
diverted to another man kneeling at a grave. The man seemed to be
praying with profound intensity and kept repeating, ‘Why did u have to
die? Why did you have to die?” The first man approached him and said, “Sir,
I don’t wish to interfere with your private grief, but this
demonstration of pain in is
more than I’ve ever seen before. For whom do you mourn so? Deeply? A
child? A parent?”The mourner took a moment to collect himself, then
replied “My wife’s first husband.”

A couple came upon a wishing well. The husband
leaned over, made a wish
and threw in a coin .
The wife decided to make a wish, too. But she leaned
over too much, fell
into the well, and drowned. The husband was stunned
for a while but then
smiled “It really works ! “

Fail the LDF government in the coming assembly elections
Today (27 April 2010) the Nation wide Harthal called by left parties is observed across India. Price hike is the reason for this Harthal. For the week ended April 10 the food inflation in this country is at 17.65 percent. Which indeed is a big figure. But observing a Harthal is not a solution. It is another problem.
As always the intensity of today’s Harthal is concentrated only in Kerala, West Bengal and Tripura. Left parties say that they are with the people. But in reality they are against us. We have seen in the last Lok Sabha elections that left parties are loosing their grip in almost all their key areas. In Bengal Mamatha is uprooting them whereas in Kerala congress has emerged winners.
As they say past is past. We can think about present. The LDF government in Kerala is going to complete it’s term next year. Which means they have only less than 365 days left to rule us. History always favored change in Kerala. So as a practice next time UDF will be in power. I have an ambition. It has been a long time that these fronts are ruling us. Nothing better happened. There should be a party to address the common man in this state.
Take today’s Harthal as an example. I get in in the train from Angamaly. I was in Guruvayur-Ernakulam passenger. Until Kalamassery the journey was smooth. When the train started from Kalamassery Harthal supporters came all of a sudden. They sat in front of the train. One Sub-Inspector and two constables came. I asked them whether arrest will take place. He told me that it will take 2 hours. There were only 10-15 Harthal supporters there. About 200-500 passengers were there. Who is at the dead end, the common man. The policeman advised me to go to the road. Two wheelers are going there. Ask for some lift- he said in a pious manner!!!
Today’s Harthal reflected much on rail. Harthal supporters protested at almost all major railway stations. ‘Rail Harthal’ observed across the state with much enthusiasm. This anti people Harthal shows that the mind set of left parties. They behave that they are with the common man. But it is a lie they are against us. Today KSRTC buses also participated in the Harthal. Which means state has taken away one of our fundamental right-the right to live.
I protest against it. And in the coming assembly elections we, the people of this state should fail left parties. But more importantly a party or movement for the common man should be created. Since there is no political party in this country is with the common man. They are with the wealthy and corporates.

Damn with this Harthal, Fail the LDF in the coming elections.

Facts about Lalit Kumar Modi (source wikipedia)
Born :    November 29, 1963 (1963-11-29) (age 46)
New Delhi, India
Occupation :    Businessman, Commissioner of the IPL and Vice President of the Board of Control for Cricket in India (BCCI).
Known for:     Creating and managing the Indian Premier League Twenty20 cricket tournament.
Children :    Karima Burman[1], Aliya Modi and Ruchir Modi[2]

Reserve bank governor D. Subbarao announced the annual credit policy. It was in line with expectations. It raised the key rates by 25 basis points. Another major point is that the run for banking licence for private players now become active. RBI will announce it’s guidelines for the same at it’s first quarter review.
As stated the major concern is inflation. RBI believes that the rate hike will curb inflation. Which is at 9.9 percent for March 10. After the credit policy the renewed rate structure will be the following:
CRR-6%

(which will wipe out Rs.12,500 Cr from the market, and will be effective from April 24,2010).

Repo rate-5.25%

Reverse Repo-3.75%
Central bank predicts that in FY 2011 country will grow at a rate of 8 percent. In FY 2010 the growth rate will be 7.2 (which itself is decent).
After the Goldman Sachs problem and restrictions on reality loans in China global indices tanked a lot. Indian indices followed the trend. But after the policy announcement Indian market came back in style. Buying interest seen in Reality and Banking sector. The inflation estimate by March 2011 is at 5.5 percent. Hard work in all respect is needed to achieve this goal.
Credit policy aims at growth (in a sustainable manner) but there are more shocking figures came out recently. It is 10 crore more Indians are living in poverty than in 2004. Now 37.2 percent of India’s total population lives in poverty. From 2004 onwards the UPA government rules the country. They have been more kind top the rich and the ultra rich. Their policies favored the market but poverty increased. This RBI policy, I don’t think, will address this issue. So more policy changes are needed on an urgent basis. Growth, without considering the common man, is a failure.

Repo Rate
Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI.

Reverse Repo Rate
Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks.

CRR Rate
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.

SLR Rate
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers.

After the global financial crisis now it is the turn of Goldman Sachs. Goldman Sachs is the major financial services company in the world. But the common people in US do not like the company (I came to know about this from Michael Moore’s documentary ‘Capitalism: A love story’). During the days of recession the senators in the US congress also blamed Goldman Sachs.  A minority called US congress as the director board of Goldman Sachs. It is evident that big companies play a very big role in the US in it’s day to day politics. Some former treasury secretaries were ex-employees of this global major. Recent fraud charges in a way will make someone happy for sure.
US securities and Exchange commission (SEC) sued Goldman Sachs for giving improper facts. The 141 year old financial services major denied it. In it’s official statement in the website the company says they had lost $90 million in that particular deal. They reiterated that their products are not designed to make losses for the investors. But the heat is on and the global indices are tanked heavily.
Two things are clear now. One, something is fishing some where. Two, the very incident questions the credibility of the financial institutions across the globe. Stocks and commodities prices plunged after the news. Normal investors are panic now. In India also sell off happened. Goldman Sachs is facing probes in U.K and Germany. German chancellor herself made statement against the company.
Goldman has investments in almost all the major economies. It is obvious that the impact of the news will be much bigger than it is expected to have. In India alone it has investment worth Rs.2000Cr, and has stakes in 27 Indian companies. After the global financial crisis Goldman Sachs crisis will be the major one. This crisis points out the need for proper reforms in the financial services sector. Something should be done to control the panic investors, if not, another major crisis is awaiting!!!

Some facts about Goldman Sachs (Source Wikipedia)
Type                Public (NYSE: GS)
Industry        Financial Services
Founded        1869
Founder(s)    Marcus Goldman
Headquarters     New York City
Area served     Worldwide
Key people       Lloyd C. Blankfein (Chairman) & (CEO)
Products :    Investment banking, Prime brokerage, Investment management
Commercial banking, Commodities
Revenue                        US$ 45.173 billion (2009)
Operating income     US$ 2.34 billion (2008)[dated info]
Net income                    US$ 13.39 billion (2009)
Total assets                   US$ 849 billion (2009)
Total equity                    US$ 64.369 billion (2008)
Employees                         32,500 (December 2009)
Website                            GS.com