Best Chance to Invest-Government PSU's Disinvestment

The government on Thursday announced a bold disinvestment plan that seeks to list all profitable Central public sector enterprises (CPSE) , a move that may see public offers by over 100 companies, including telecom behemoth Bharat Sanchar Nigam Limited (BSNL).


The funds from such sales will be directly deployed for social sector schemes, instead of being routed through the National Investment Fund (NIF).
The divestment plan also requires already listed CPSEs to ensure at least 10 per cent public holding, Home Minister P Chidambaram told reporters after a meeting of the Cabinet Committee on Economic Affairs (CCEA), which was chaired by Prime Minister Manmohan Singh.

According to the CCEA’s decision, unlisted firms with a three-year track record of net profit and positive net worth will have to come out with Initial Public Offerings.
In its second term, the Congress-led government has already paved the way for listing of two PSUs––the NHPC and Oil India— and Thursday’s decision may result in more CPSEs hitting the capital market.
Now, there are over 40 listed state-run companies and over 100 others, including the BSNL, qualify for listing.

Chidambaram said CPSEs going to market would involve “some disinvestment” of the government. This would be done at an “appropriate” time.
In another policy shift, the proceeds of the disinvestment can now directly fund the capital expenditure of the social sector programmes such as education and health care and need not be routed through the NIF.
“Because of fiscal constraints, a special dispensation is made for three years to directly channelise the money into the capital expenditure for social sector,” Chidambaram said.

The unlisted companies which will be required to go public will include blue chip firms like BSNL, Rashtriya Ispat Nigam Limited and Coal India Limited. As regards the listed companies, Sebi regulations require all listed companies should have a minimum public float of 10 per cent. Several listed public sector companies, however, have less than 10 per cent public holding.

What is CIBIL ? Credit Information Bureau of India Ltd?

Q.1 What is CIBIL?

CIBIL - India's first credit information bureau- is a repository of information, which contains the credit history of commercial and consumer borrowers. CIBIL provides this information to its Members in the form of credit information reports.

Q.2 Who owns CIBIL?

CIBIL's equity was held by State Bank of India, Housing Development Finance Corporation Limited, Dun & Bradstreet Information Services India Private Limited and Trans Union International Inc. The shareholding pattern was in the proportion of 40:40:10:10 respectively.

Current Shareholding

The shareholding pattern has now been diversified to include the following entities representing varied categories of credit grantors : -



Q.3 On which segments does CIBIL provide credit reports?

CIBIL is a composite Credit Bureau, which caters to both commercial and consumer segments. The Consumer Credit Bureau covers credit availed by individuals while the Commercial Credit Bureau covers credit availed by non-individuals such as partnership firms, proprietary concerns, private and public limited companies, etc.

Q.4 Who are Members of CIBIL?

Banks, Financial Institutions, State Financial Corporations, Non-Banking Financial Companies, Housing Finance Companies and Credit Card Companies are Members of CIBIL.
Operations Of CIBIL

Q.5 How does CIBIL function?

For credit grantors to gain a complete picture of the payment history of a credit applicant, they must be able to gain access to the applicant's complete credit record that may be spread over different institutions. CIBIL collects commercial and consumer credit-related data and collates such data to create and distribute credit reports to Members.

Q.6 Where does CIBIL get the information from?

CIBIL primarily gets information from its Members only and at a subsequent stage will supplement it with public domain information in order to create a truly comprehensive snapshot of an entity’s financial track record.

Q.7 What is a Credit Information Report?

A Credit Information Report (CIR) is a factual record of a borrower's credit payment history compiled from information received from different credit grantors. Its purpose is to help credit grantors make informed lending decisions - quickly and objectively.
Information Security at CIBIL

Q.8 What are the measures taken by CIBIL to ensure the security of Member's data?

The security of the Members' data is of paramount importance to CIBIL. CIBIL's security measures are aligned with global ‘best practices’, stringent risk management standards and are subject to regular audits by independent auditors. CIBIL has adopted state-of-the-art technology to provide information security. The important aspects are detailed below:

* Information in our database is accessed only on a strictly ‘Need to Know’ basis. For example, the access to the Data Center is available only to authorized personnel engaged in regular systems and database administration.
* Access control devices, surveillance cameras installed at strategic locations and biometric access system at the Data Center with the highest levels of security.
* Comprehensive perimeter security solution consisting of a Firewall, Intrusion Detection and Vulnerability Assessment System to secure the network infrastructure from external security risk.
* Installation of the following devices to deal with fire hazards:
o State-of-the-art (VESDA) smoke detection system to provide early warning and isolation of potential fire hazards.
o FM200 based Fire Suppression System to extinguish fire with minimal damage to the IT systems.
* Anti -Virus software installed on all servers in the Data Center. Security patches and necessary configurations are continuously applied to the Servers and Network appliances.

Another vital area in which security is of the utmost importance is the two-way transmission of information between CIBIL and it's Members. In this regard, CIBIL uses:

* 128-bit SSL encryption for all Web-based transactions including FTP.
* Cryptographic solutions for all information sent or received through any physical media i.e. CD, DAT and DLT.

Q.9 What is encryption?

Encryption is technique used to mask proprietary information in order to prevent it from being accessed by unauthorized individuals. Only authorized individuals who have been provided with the appropriate decoding software can unscramble the information. Thus, encrypted information that our Members provide us with is extremely secure.
Type Of Information Held By CIBIL

Q.10 What type of information on a borrower is available in the CIR?

The CIR includes the following information:

* Basic borrower information like:
1. Name
2. Address

In case of individuals:
3. Identification numbers
4. Passport ID
5. Voters ID
6. Date of birth

In case of non-individuals
7. D-U-N-S® Number
8. Registration Number
9. Legal Constitution
* Records of all the credit facilities availed by the borrower
* Past payment history
* Amount overdue
* Number of inquiries made on that borrower, by different Members
* Suit-filed status.

Q.11 What type of information is NOT included in the CIR?

The CIR does not contain:

* Income / Revenue details
* Amount(s) deposited with the bank
* Details of borrowers' assets
* Value of asset(s) mortgaged
* Details of investment(s)

Q.12 When is a credit facility classified as 'default'?

CIBIL does not classify any accounts as default accounts. It merely reflects this information after the Member has classified it as such. The Number of Days Past Due and / or Asset Classification as per RBI definition as submitted by Members is reflected in the CIR.

Q.13 How do I ensure that a CIR drawn on me as an individual / organisation does not contain negative information?

The best preventive measure is to exercise good money management practices and make repayments on time. Please see 'How to improve your credit' section for more details.

Q.14 If I am a first-time borrower, will I be at a disadvantage as there will be no information on me?

As a new borrower, there will be a new file created for you. It will then be in your interest to build up a favourable repayment track record for future credit applications.
Access To CIBIL Information

Q.15 Who can access CIRs?

Reports can be accessed by Members on the principle of reciprocity ie only those Members who have provided all their data to CIBIL are permitted to access CIRs. Members can do so only to take valid credit decisions. Disclosure to any other person or entity is prohibited.

Q.16 Can the borrower obtain his own CIR from CIBIL?

No. However, if a Member has drawn a report on that borrower, a copy of the same can be obtained from the Member.

Q.17 Can CIBIL provide CIRs to credit providers in other countries?

No. CIBIL will provide credit information reports only to it's Members in India.

Q.18 Whether Right to Information Act, 2005 is applicable to CIBIL?

No. The reason being that the CIBIL is not a “Public Authority” as defined under Sec 2(h) of the Right to Information Act, 2005.
Lending Decisions

Q.19 Does the CIR indicate if credit should or should not be given?

The CIR only provides available factual credit information and does not provide any opinion, indication or comment pertaining to whether credit should or should not be granted. The credit grantors who have received an application for credit will make the credit decision. CIBIL does not grant or deny credit.

Q.20 If my credit application has been rejected, will this fact appear in my credit record?

The Members do not provide this information to CIBIL and hence it will not be in the CIR.

Q.21 If a credit grantor has denied me credit, could others reject my application?

Not necessarily. Different credit grantors may use a CIR differently, or take into account other factors when they assess your application. Although one bank may deny you credit, another bank could take a different view and accept your application.

Q.22 What benefits does a borrower get from CIBIL?

CIBIL's CIRs are aimed at helping credit grantors make fast and objective lending decisions. This will contribute to a more competitive credit marketplace among Credit Grantors. With a Bureau in place, responsible customers can expect faster and more competitive services at better terms from the Credit Grantors.
Rectifying Inaccurate Information In Your Credit Report

Q.23 How do I rectify information in a credit report drawn on me?

Please contact the credit grantor from whom you have availed the loan and request the necessary changes. The credit grantor will then report the change to CIBIL and we will subsequently make the necessary updates in our records.

Time to Invest in gold - RBI buys 200 Metric tonnes gold from IMF

The Reserve Bank of India (RBI) has bought 200 metric tonnes of gold from the International Monetary Fund for about $6.7 billion.

The IMF targets to sell about 403.3 metric tonnes of gold to shore up its finances so that it can lend money to the poorest countries at concessional rates.

“This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales programme, which are to help put the Fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries,” IMF managing director Dominique Strauss-Kahn said.

The transaction, which is still in the process of being settled, was carried out on a daily basis over a period of two weeks October 19-30. Each daily sale was conducted at a price set on the basis of market prices prevailing that day.

“The total sales proceeds are equivalent to $6.7 billion or SDR 4.2 billion,” the IMF said. As per IMF rule, all gold sales must be conducted at prices based on market prices, including direct sales to official holders as in the case of this transaction.

At its meeting on September 18, the IMF Executive Board had approved to sell 403.3 metric tonnes of gold, which is one-eighth of the Fund’s total holding, to increase the its resources for lending to low-income countries under a strategy endorsed by the Board in July.

Gold Price are rising,,Expected to cross the 17k mark in near future,,So start investing in gold..

Where to Invest in india?

Today choosing a best investment plan is difficult because there are so many investment options available. These days we are getting more money compared to last decades.

Bank Fixed Deposits (FD)

Fixed Deposit or FD is the most preferred investment option today. It yields up to 8.5% annual return depends on the Bank and period. Minimum period is 15 days and maximum is 5 years and above. Senior citizens get special interest rates for Fixed Deposits. This is considered to be a safe investment because all banks operated under the guidelines of Reserve Bank of India.

National Saving Certificate (NSC)

NSC is backed by Govt. of India so it is a safe investment method. Lock in period is 6 years. Minimum amount is Rs100 and no upper limit. You get 8% interest calculated twice a year. NSC comes under Section 80C so you will get an income tax deduction up to Rs 1,00,000. From FY 2005-'06 onwards interest accrued on NSC is taxable.

Public Provident Fund (PPF)

PPF is another form of investment backed by Govt. of India. Minimum amount is Rs500 and maximum is Rs70,000 in a financial year. A PPF account can be opened in a head post office, GPO and selected branches of nationalized banks. PPF also comes under Section 80C so individuals could avail income tax deduction up to Rs 1,00,000. Lock in period for PPF is 15 years and interest rate is 8%. Unlike NSC, PPF interest rate is calculated annually. Both PPF and NSC considered to be best investment option as it is backed by Government of India.

Stock Market

Investing in share market is another investment option to get more returns. But share market investment is volatile to market conditions. Before investing you should have a thorough knowledge about its operation.

Mutual Funds

Mutual Fund companies collect money from investors and invest in share market. Investing in mutual funds is also subject to market risks but return is good. To know more about mutual funds visit Mutual Funds

There are many investment options available like investing in Gold, Real Estate etc.

How to trade in Commodities Futures?

You may have your debt and equity funds in place, but investing in commodities could just be the one element to improve your portfolio. Commodity trading provides an ideal asset allocation, also helps you hedge against inflation and buy a piece of global demand growth.

In 2003, the ban on commodity trading was lifted after 40 years in India. Now, more and more people are interested in investing in this new asset class. While price fluctuations in the sector could get rather volatile depending on the category, returns are relatively higher.

However, as this is not a primary area of investment for most, there is a lot of apprehension about when and how to invest. Outlook Money seeks to answer some of these questions and help you assess a whole new turf for making money.

Why invest in commodities?

Commodities allow a portfolio to improve overall return at the same level of risk. Ibbotson Associates, a leading US-based authority on asset allocation estimates that commodities increased returns between 133 and 188 basis points, at no extra risk.

Who should invest?

Any investor who wants to take advantage of price movements and wishes to diversify his portfolio can invest in commodities. However, retail and small investors should be careful while investing in commodities as the swings are volatile and lack of knowledge may result in loss of wealth.

Investors must understand the demand cycles that commodities go through and should have a view on what factors may affect this. Ideally, you should invest in select commodities that you can analyse rather than speculate across products you have no idea about.

Investing in commodities should be undertaken as a kicker in your portfolio and not as the first destination for your money.

What is commodity trading?

It's an age-old phenomenon. Modern markets came up in the late 18th century, when farming began to be modernised. Though the trade's mechanisms have changed, the basics are still the same.

In common parlance, commodities means all types of products. However, the Foreign Currency Regulation Act (FCRA) defines them as 'every kind of movable property other than actionable claims, money and securities.'

Commodity trading is nothing but trading in commodity spot and derivatives (futures). If you are keen on taking a buy or sell position based on the future performance of agricultural commodities or commodities like gold, silver, metals, or crude, then you could do so by trading in commodity derivatives.

Commodity derivatives are traded on the National Commodity and Derivative Exchange (NCDEX) and the Multi-Commodity Exchange (MCX). Gold, silver, agri-commodities including grains, pulses, spices, oils and oilseeds, mentha oil, metals and crude are some of the commodities that these exchanges deal in.

Trading in commodities futures is quite similar to equity futures trading. You could take a long position (where you buy a contract) or a short position (where you sell it). Simply speaking, like in equity and other markets, if you think prices are on their way up, you take a long position and when prices are headed south you opt for a short position.

How big is the Indian commodity trading market as compared to other Asian markets?

The commodity market in India clocks a daily average turnover of Rs 12,000-15,000 crore (Rs 120-150 billion). The accumulative commodities derivatives trade value is estimated to have reached the equivalent of 66 per cent of the gross domestic product and the future will only see the percentage rising, says ICICI [ Get Quote ] direct.com vice-president Kedar Deshpande.

What do you need to start trading?

Like equity markets, you have to fulfil the 'know your customer' norms with a commodity broker. A photo identification, PAN and proof of address are essential for registration. You will also have to sign the necessary agreements with the broker.

Is there a regulator for the commodity trading market?

The Forward Markets Commission is the regulatory body for the commodity market in India. It is the equivalent of the Securities and Exchange Board of India (Sebi), which protects the interests of investors in securities.

What kind of products can be listed on the commodity market?

All commodities produced in the agriculture, mineral and fossil sectors have been sanctioned for futures trading. These include cereals, pulses, ginned cotton, un-ginned

cotton, oilseeds, oils, jute, jute products, sugar, gur, potatoes, onions, coffee, tea, petrochemicals, and bullion, among others.

What are the risk factors?

Commodity trading is done in the form of futures and that throws up a huge potential for profit and loss as it involves predictions of the future and hence uncertainty and risk. Risk factors in commodity trading are similar to futures trading in equity markets.

A major difference is that the information availability on supply and demand cycles in commodity markets is not as robust and controlled as the equity market.

What are the factors that influence the commodity prices in the market?

The commodity market is driven by demand and supply factors and inventory, when it comes to perishable commodities such as agricultural products and high demand products such as crude oil. Like any market, the demand-supply equation influences the prices.

Variables like weather, social changes, government policies and global factors influence the balance.

What is the difference between directional trading and day trading?

The key difference between commodity markets and stock markets is the nature of products traded. Agricultural produce is unpredictable and seasonal. During harvesting season, the prices of these commodities is low as supply goes up. There are traders who use these patterns to trade in the commodity market, and this is termed directional trading.

Day trading in commodity markets is no different from day trading in the equity market, where positions are bought in the morning and squared off by the end of the day.

Does commodity speculation affect agricultural income in India?

The vision for the commodity market in India is to reduce information asymmetry and make a robust market available to the end producer or farmer. It is also expected to balance out price information and give the producer a better price and a platform to hedge.

The futures market will allow the farmer to see the upside of the price over two to three months and help him decide where to sell.

How to keep updated?

Most commodity trading firms have a research team in place that prepares commodity charts and conducts detailed study on the trends of the commodity in question.

Investing strategies based on this research are usually provided to clients.

They usually provide daily market reports before the market opens and intra-day calls during trading hours, along with monthly and weekly research reports.

Rules to Trade in Stock Market

These are some of the trading rules which are universally valid for stock trading


* Never risk more than 10% of your trading capital in a single trade.
* Always use stop loss orders.( Here you should know your loss you can give in a situation where the trade starts going against you.)
* Never do overtrading.
* Never let a profit run into a loss.
* Don't enter a trade if you are unsure of the trend.
* When in doubt, get out, and don't get in when in doubt.
* Only trade active markets.
* Distribute your risks equally among different markets.
* Never limit your orders. Trade at the markets.
* Extra monies from successful trades should be placed in a separate account.
* Never trade to scalp a profit.
* Never average a loss.
* Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
* Avoid taking small profits and large losses.
* Never cancel a stop loss after you have placed it.
* Avoid getting in and out of the market too soon.
* Be willing to make money from both sides of the market.
* Never buy or sell just because the price is low or high.
* Never hedge a losing position.
* Never change your position without a good reason.
* Avoid trading after long periods of success or failure.
* Don't try to guess tops or bottoms.
* Don't follow a blind man's advice.
* Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
* When you lose don't blame it on luck.

Before to take a Loan or Credit Purchase

Anytime that you borrow money you need to carefully consider if it is the right decision for you. Borrowing money means that you are committing to pay the money back within a certain time frame. You need to consider how borrowing money will affect your finances in the future. You should ask yourself these questions before you borrow money.

Do I Really Need to Make This Purchase Now?

You can postpone most purchases until you have saved up the money to buy the item outright. While it may not be convenient to go to the laundry mat to do your laundry, you will save money by paying cash for the item. If it is for something that is recreational such as boat or jet skis, you really can save up the money to buy the items, because they are not necessary purchases. In fact you may save up the money more quickly than you expect because you are motivated to make those purchases.

Can I Purchase Something Less Expensive Instead?

Often when you are making a big purchase your want to buy the nicest that you possibly can afford. However you can achieve the same results by scaling back how much you really need. For example if you are purchasing a car, you may consider spending five thousand on the car instead of ten thousand. You can still find a reliable car for five thousand, and you save yourself that money to use towards saving and investing in your future.

Can I Afford to Make the Payments?

This is an essential question to answer honestly. You should consider the limits that this purchase may make on your ability to do things in the future. You may not be able to take as many vacations because you do not have the ability to save money as quickly. Additionally you may be squeezing the budget so tight that it is extremely difficult to do anything. You may come to resent the purchase, and wish that you had never made it.

How Fast Can I Pay It Off?

When you take out a loan you should focus on paying it off as quickly as possible. It is important to realize that it is very difficult to build true wealth when you are consistently paying interest to others. When you can turn this around and begin earning money with your money, you will be able to reach your financial goals. That is why it is important to carefully consider all options before you borrow money.

What Happens If I Can't Pay It Off?

You should also consider the long-term effects if you were to lose your job. This means that you have extra pressure to find a new job quickly, because any late payments or skipped payments will affect your credit score. Depending on the industry you are in, you may have a difficult time finding a job if you have a poor credit history. You need to consider how you will pay this loan off if you were to lose your job.

How much Insurance an individual needs?

After deciding to go in for a life insurance policy one has to make up his/her mind how much life insurance he/she needs. Ideally the sum assured should provide for all the needs of your family like children’s education and marriage while meeting the daily basic expenses when the insured person is no more. It may not be an easy decision to make. Firstly, your income level has to permit you to opt for the policy that you want to take. Your need may be more than the disposable income you can spare for paying premiums. Even if you want a higher sum assured the insurer need not oblige you citing your present income.

There are many factors that are relevant in determining the amount of life cover you should buy. One way of doing it is to calculate the level of income a family needs to maintain its standard of living when the breadwinner is not around. Suppose a family’s present need is Rs 30,000 p.m. The extent of life insurance for its earning members should be such that interest income from the sum assured can meet the family’s monthly expenses of Rs 30,000. To compensate for the fall in value of the rupee one needs to take policies for higher amount.

Changing need

Life insurance needs change through different stages of life. Young people with no dependants may not have much need for life insurance. As one’s family responsibility grows, life insurance needs too increase. When one is single he may not bother much about life insurance. However, at middle age a person having children will feel the need to have more life insurance as the need to give good education to children and marriage expenses will dog him. Thus, a periodic review based on your family circumstances is required in order to ensure that the coverage is adequate. A person employed in some hazardous profession will need more life insurance cover than an ordinary individual.

Basically, the amount of insurance one should buy is dependent on his/her economic value, which is also called human life value. This varies from person to person. Human life value is the capitalized value of the net earning of an individual for the rest of his working life. It is the present value of the total income of the individual, which is lost to the family in the event of his untimely death. Imagine a 25-year-old person earns a gross income of Rs 3 lakh per annum. He is due to retire at 60. If he passes away now his family will be losing Rs.1.05 cr., his future income. The human life value of the person is Rs.1.05 cr.

Age factor

Your age is a crucial factor in deciding the quantum of insurance that you can afford. The rates of premium go up, as you grow older. One can buy more insurance for the same premium at a younger age than at an older age. The need for protection may be quite high, but the present need for disposable income may not permit buying adequate insurance. Premium payment means a regular outflow of disposable income. Not many would like to buy more insurance as it will overstretch the resources. You can then think about buying extra insurance as and when you can afford it.

Some experts say that 8-10 times your annual income will be a good sum to insure. If a person’s annual income is Rs.3 lakh he can take a life insurance policy in the range of Rs.24 lakh to Rs 30 lakh. Another approach is to assess the percentage of income you can spare for paying premium. This can help you to decide on the quantum of life insurance. If you expect to spend a particular amount for the education or wedding of your children, you may like to buy an insurance policy for a specific sum to meet such a need.

One must always remember that life insurance is primarily a protection and is no substitute for investment as returns are negligible. Considering the depletion of value of the rupee due to inflation the actual return at the time of maturity of an insurance policy may well be in the negative. Of course one needs adequate life insurance to safeguard the financial needs of the family members if the unforeseen happens. But it won’t be wise to over-invest. If your family is wealthy you need only a smaller amount of insurance. If the family members are earning independently you can reduce your insurance.

How to Buy a Health Insurance?

The rising cost of medical care is becoming a big problem in urban India today. Treatment for a serious illness in a private corporate hospital can wipe out your entire life’s earnings at one go. Everybody definitely needs health insurance coverage to avert such a situation. In India awareness on health insurance is very low. Even well employed persons some times ignore the need for health insurance. A health insurance policy not only covers expenses incurred during hospitalization but also before and after hospitalization. This may include money spent for conducting medical tests and buying medicines. The cover is to the extent of the sum insured.

Health insurance is insurance that pays for all or part of a person’s health care bills. Group health plans, individual plans, workers’ compensation etc are among the health insurance plans prevalent. So long as you pay your premium regularly the insurance company will take care of your medical expenses. Cover extends to pre-hospitalisation and post-hospitalisation for periods of 30 days and 60 days respectively. Domiciliary hospitalisation is also covered. It is crucial for you to read the fine print before taking any health insurance policy. Various clauses relating to pre-existing illness and claims have to be thoroughly looked into to avoid disappointment later.

Reimbursement & cash plan

Broadly there are two types of health insurance contracts. The common one is reimbursement of medical expenses or hospitalisation charges subject to a prescribed ceiling. The second is the cash plan. This plan provides for payment of a fixed amount per day for hospitalisation. In such cases, the amount received by the insured may not be enough to meet the actual expenses always. Only the first type is a real health insurance contract. The health insurance contracts marketed by general insurance companies suffer from one serious drawback. The contracts are renewable every year and the insurer has the right to refuse renewal.

Benefits

Considering the mounting cost of doctors’ fees, medicine and hospitalization charges by taking a health insurance policy a person can safeguard himself and his family from the burden of high cost of treatment. In case of a sudden illness or accident, the health insurance policy takes care of the hospitalization, medical and other costs incurred. If you start young the premiums will be lower. It reimburses the medical expenses. Discount on insurance premium is available on family package. The premium paid up to a maximum of Rs.15,000 is exempt from income tax. A patient can be treated at home when he is not in a condition to be moved to the hospital.

Coverage

Based on the coverage offered, health insurance plans can be divided into the following categories:

Hospitalization Plans: These plans cover your expenses in case you need to be hospitalized. Within this category companies offer different payout structures and limits for various heads of expenditure. The hospitalisation coverage can be reimbursement based plans or fixed benefit plans. These plans aim to cover the more frequent medical expenses. Now health insurance companies offer many innovative policies and schemes. ‘Cashless hospitalisation’ is one such product. Under this plan, individuals insured do not have to pay for their hospital bills in case of hospitalisation; the insurance company settles the bill directly. But, certain terms and conditions have to be met. The hospital needs to have a tie-up with the insurance company.

Critical iIllness plans: These health insurance plans provide you coverage against critical illnesses such as heart attack, organ transplants, stroke, and kidney failure among others. These plans aim to cover infrequent and high cost medical expenses.

Specific conditions coverage: These plans are designed specifically to offer health insurance against certain complications due to diabetes or cancer. They may also include features such as disease management programmes, which are specific to the condition covered.

Costs of medical insurance policies vary from company to company. Insurance firms have introduced more innovative policies with riders that cost more. Here is a typical health insurance policy. Parivar mediclaim of National Insurance is a family floater health insurance policy wherein entire family will be covered under single sum insured. The eligibility is from 3 months till the age of 60. The policy covers reimbursement of hospitalization expenses for illness contracted or injury sustained by the insured person not exceeding the sum assured. The sum assured can be from Rs.2 lakh to Rs.5 lakh in multiples of 50,000.

For a Rs.2-lakh policy till the age of 35 the annual premium will be Rs.2469. An additional 25 percent will be charged for spouse and 20 percent each for two children. For 46-50 years the corresponding figures will be Rs.4290 plus 35 percent extra for spouse and 20 percent each for two children. For Varistha Mediclaim for senior citizens the ceiling of sum assured is 1 lakh. The annual premium costs Rs. 4180 for 60-65 age group. For critical illness benefit the sum assured is Rs.2 lakh. Annual premium for the same age group is Rs. 2007.

Get A Business Loan in India

Every entrepreneur has aspirations to make it big in business. But paucity of finance is a hurdle quite often. Now business loans are offered by almost all banks to help traders, businessmen and professionals to start or expand their commercial activities. Loans to self-employed professionals such as chartered accountants, architects and doctors also form part of this. These loans are available at competitive interest rates and low EMIs to widen the customer base. Every small and medium sized enterprise needs access to working capital. Simple unsecured business loans are available to small and medium enterprises for all the working capital needs.

No uniformity

Business loans are both secured and unsecured. Banks give business loan in the form of business installment loan, overdraft, loans against property, security and fixed deposits. The minimum tenure is 12 months and maximum 48-60 months. There are wide variations in the schemes provided by different banks and the amount of loan granted. It can be anywhere from Rs.25,000 to Rs.5 cr. SBI’s Traders easy loan scheme provides loans to entrepreneurs, professionals and self-employed. Standard Chartered Bank has a business installment loan. A business installment loan (BIL) is a loan, which allows you to borrow cash to accommodate your business needs whether for short-term working capital funding or to support your expansion plans. Repayment is by EMI through post-dated cheques.

Loan under SBI’s scheme is sanctioned against equitable mortgage of property. The loan can be repaid in monthly or quarterly, or half yearly installments in a period up to 5 years. Minimum and maximum amount of loan is Rs 25,000/- and Rs 5 crore. Business requirement is assessed on the basis of projected business turnover. Interest at floating rate is charged at monthly intervals on daily reducing balance. Standard Chartered Bank offers two borrowing options: Borrowing against the fixed deposit and taking an unsecured loan. When your enterprise requires urgent finance, an overdraft against your investments may be just the right option. An advantage is that you pay interest only on the amount utilized.

Every lender wants to make sure that loan will be paid back. Collateral property is the common way. But risk factor is always there. Banks will analyse your previous experience in the business and your success chances of your new business plan. If you want to take a loan for expanding your business the lenders will analyze your business history, tax returns, revenues and liquid assets. If you are planning to start new business the process may be complicated. How you present your business plan plays key role in getting a loan.

Eligibility

Business credit is generally offered to the following types of concerns: Sole proprietorships, partnerships and private limited companies. Income requirements: Net Income of the concern should be more than Rs. 1,50,000 per annum for business credit up to Rs. 15 lakh and over Rs.3 lakh for business credit above Rs. 15 lakh and up to Rs. 35 lakh. A maximum of two incomes of the partners / directors holding a minimum of 25% stake each can be clubbed to the income of the concern.

Documents

There are differences in the documents required for sole proprietorship firm, partnership firms and private limited companies.

• Proof of identity of the sole proprietorship firm.
• Proof of individual identity to be submitted for the proprietor.
• Proof of residence address to be submitted for the proprietor.
• Certified profit and loss and balance sheet for last two years.
• Copies of IT returns for the last two years.
• Bank statements for last 6 months for business credit up to Rs. 15 lakh and last 12 months for business credit above Rs. 15 lakh.

In the case of partnership firms proof of identity of the partnership firm as well as proof of individual identity for the all partners have to be submitted along with a copy of the partnership deed. For a limited company proof of identity of the limited company, copies of memorandum and articles of association, certificate of incorporation, board resolution, copy of annual return establishing the shareholding pattern have to be submitted.

Charges

A processing fee of minimum one percent of the loan amount is generally charged. There are variations. Banks deduct it from the loan amount, which will then be credited to the current account of the borrower. Some banks charge prepayment charge of up to 5 percent while others don’t charge anything. In the case of overdraft there is an annual review and lender will charge an annual fee every year.

Use Credit Card Wisely

Credit cards are one of the few products which have dedicated users and aggressive critics. While those who use it efficiently swear by its comfort, those who have been put to discomfort, don’t miss an opportunity to blame the plastic money for their financial problems. Are credit cards then a product which can land you in a mess eventually? The answer, obviously is NO provided you understand its nitty- gritty. In fact, just understand the fine print associated with your credit card and chances are that you will have lesser opportunity to make it a scapegoat for your financial troubles.

There are two important dates for every credit card user as the product’s entire dynamics revolves around these two dates. One is the statement date and the other is the payment date. As a card user, if you manage to remember the statement date, it will do a lot of good as you can effectively use your credit card. As the name states, this is the date on which the card company generates a statement of all your transactions. Hence, the credit card bill amount will be the sum of all transactions made from previous statement date to the latest statement date. Now, why should you remember the statement date?

Let us assume that the statement date of your credit card is 10th of every month and payment date is 30th of the same month. If you make a purchase on your credit card on 9th or 10th, chances are that you will be required to make the payment during the same month (as per payment date). That would mean you can enjoy a free credit period of only a maximum of 20 days. Instead, if you had made the purchase on 11th of the month, your purchase transaction would be after the statement date of the same month and hence would get reflected in the statement of the following month. Since the payment date is on 30th, you would effectively enjoy a free credit period of 50 days! Now, such smart shopping can be done at least for big ticket purchases though you can’t really plan your restaurant or movie ticket bills. However, a good memory of statement date surely will come in handy as you can make a better use of your card.

Even if you are unable to remember the remember statement date, make sure to remember the payment date as missing this date with respect to this date can land you in trouble. Credit card companies are pretty severe on defaults and can slap you with hefty charges. As you would have noticed, the interest rate on credit card outstanding amount is pretty high and in recent times, has gone up to as high as 50%. In addition, card companies also charge late payment fees if the statement amount is not paid on time. For those who struggle to remember the due (payment) date, ECS (electronic clearing service) is the best option. Generally, credit card companies will debit the bank account on the payment date. If the account does not have the required amount, the minimum balance would be debited from the savings account.

And finally, make it a habit to keep your credit card spends according to your ability to repay. Sure, credit card allows you the flexibility of paying only 5% of the statement amount but the flexibility has a huge price as the card company will slap an interest on the entire amount even if you pay only a portion. This interest would be as high as over 4%on a monthly basis and if you take into account other charges, the final penalty will be over 50% per annum. All this of course, can be avoided if you get into the habit of clearing the entire statement amount by the payment date. That will also help you realise that credit card is a product which allows you to enjoy free credit for a certain period.

Get a Student Loan in India

Students perusing Higher Education don’t have to struggle hard anymore to finance their Studies as now many Banks in India have are providing student loans. Not only loans, private foreign banks also seem to be interested in funding students, enthusiastic enough to announce scholarships for bright and deserving students.

With expensive professional education becoming mandatory for people across the country, a student loan seems the most effective way to tide over these expenses. Most students expect to land high salaries at the end of their professional training and are likely to be in a position to repay these loans over a period of time

What does one needs to look at in order to choose a loan?

Ideally, take a loan from a bank located at your place of study than one located where you reside, unless it concerns overseas studies. This is because you will have better access to funds if you take a loan from the place of your study. Secondly, Make sure the repayment period starts only after six to twelve months after you begin your working life. And thirdly, Banks typically prefer to finance students who opt for traditional courses.

For What Professional Courses do Banks generally provide education loans ?

Management students are among the top choices for most of the banks. Technology students from the country's premier institutions can also get student loans from Banks and Medical and engineering college students.

Banks don’t provide loans for students with a bachelor's/master's in Arts . Also, for courses where employment prospects are less (as per Bank’s own evaluation), loans are sanctioned on the basis of the parents' income.

How much Loan you can get ?

Loan for Studies in India Most of the Public Sector Banks in India have categorized Student Loans in two categories. For Studies in India , Students can borrow up to Rs 4 lakh without providing any security or margin. A loan amount of Rs 4 lakhs to Rs 7.5 lakhs can be availed against a third-party guarantee. This loan comes with a five percent margin (what this means is that you will get five percent less the amount sanctioned as loan; you will have to put together the rest of the money). The third-party guarantee can come from an uncle, neighbor or friend standing guarantee for the full amount.

Overseas study loans : Amounts worth Rs 7 lakhs and above are usually sanctioned against fixed deposits, NSC certificates, property worth the loan amount and a margin amount of 15 percent (what this means, again, is that you will get 15 percent less the amount sanctioned as loan; you will have to put together the rest of the money). Also, if a loan below Rs 4 lakhs comes at x rate of interest, the loan over Rs 4 lakhs is usually charged one percent higher interest. The Reserve Bank of India prescribes the specifics (amount, rate, repayment period) of education loans and the government provides a two per cent subsidy on these loans to the banks.

Important Note : Indian Banks’ Association (IBA) has recently formed a working group to address the issue of student loans and the rising rate of default. The group has submitted its findings to the Reserve Bank of India and the main suggestion is to make it mandatory for parents or guardians, of the student borrowing loans, to be co-borrowers thereby making them liable for repayment.

Repayment - Course period + 1 year or 6 months after getting job, whichever is earlier.

What are the Documents Required?

All students are required to submit mark sheets of last qualifying examination, poof of admission scholarship, schedule of expenses for the specified course, his/her bank account statement for the last six months, an income tax assessment order for the previous two years, a brief statement of assets and liabilities, of the co-borrower, which is usually the parent or guardian and proof of income, if any.

Some banks require all or any of the following documents as pre sanction documents:

To furnish the following documents along with the completed application form. Relevant information would relate to the guardian and the student both, when the loan is jointly taken.

1)Mark sheet of last qualifying examination for school and graduate studies in India
2)Proof of admission to the course
3)Schedule of expenses for the course
4)Copies of letter confirming scholarship, etc.
5)Copies of foreign exchange permit, if applicable.
6) 2 passport size photographs
7) Statement of Bank account for the last six months of borrower.
8) Income tax assessment order not more than 2 years old
9) Brief statement of assets and liabilities of borrower.
10)If you are not an existing bank customer you would also need to establish your identity and give proof of residence.

What is the Interest rate charged for Student/education loan ?

Most banks are vying with each other to aggressively market personal loans. The student loan segment is being viewed as vast untapped potential. Citibank and ICICI Bank are offering equally competitive schemes. Almost every prominent bank in the country has a student loan scheme in some form. What matters the most to an individual is obviously the cost of credit the terms and conditions for education loans. These, like any other loan, vary among banks. Besides pricing of the product, the most important thing is documentation requirement and the quality of service offered by the bank and the speed at which the loan is approved.

Some banks, such as SBI, also give you a choice between fixed and floating interest rate. Whereas, private and foreign banks offer loans with a fixed interest rate, some banks charge interest on a daily or monthly reducing balance.

Eligibility for getting a loan:

The applicant should be an India National
The applicant must have secured admission to professional/ technical courses through Entrance Test/ Selection process
Secured admission to foreign university/ Institution

Which Banks are offering Education Loans in India ?

Most of the Private Sector banks, Foreign Banks and Public Sector Banks in India are providing Student Loans. You can visit Banks offering Student Loans in India for an overview of various loan Schemes offered by banks in India

Manag Money & Set Financial Goals

How to Manage Your Money by Setting Financial Goals

The best way to avoid financial problems is to establish financial goals and a household budget to help achieve them. Your financial goals should be specific, realistic, time based, and flexible. As you put together your financial plan, place each goal into one of three categories:

• Short-term goals: These are goals that you believe you can accomplish within the next six months to one year, such as putting a certain amount of money in your savings, paying off a loan, outfitting your kids for the start of school, or having enough money to join a health club.

• Medium-term goals: These are goals that you feel you can achieve within the next five years, such as having enough money for a down payment on a home, paying off a car loan, or putting a certain amount of money in your retirement account.

• Long-term goals: These are goals that you project will take you longer than five years to achieve. They may include sending your kids to college, having enough money to retire, taking your dream vacation, and so on.

Be realistic about your goals and about how long it will take you to achieve each one. If you are not, you’ll be setting yourself up for frustration and disappointment.

Unless you are lucky enough to come into a financial windfall, you probably can’t afford to work toward all your goals at the same time. If you try to do so, you may spread yourself so thin financially that you don’t achieve any of them. Instead, prioritize your goals so you know which goals to focus on first.

Most likely you will begin working toward short-term goals first because they are probably the most pressing, but you may be able to work on some of your medium- and long-term goals at the same time. For example, maybe you want to pay off your car loan over the next six months, and you also want to start stashing money away for a down payment on a home with the goal of having the money you need in two years.

After you decide which goals to work toward first, decide how you’ll achieve each goal and set a realistic time frame for doing what you’ve set out to do. For example, you may decide to get a second job and put all the money you earn from it toward a certain goal. You may decide to finance another goal through a combination of cash and credit. Revise your budget as necessary.

Plan your Finacial Future

The guide to personal finance basically shows the path in which a family can formulate their budget. It also helps them to optimize savings and spending taking into consideration future financial risks.

The guide to personal finance shows how personal financial planning is accomplished.

Assessment: The personal financial status of an individual can be assessed by maintaining financial balance sheets and income statements. A personal balance sheet shows the personal assets and liabilities. The cash flow statement shows the personal income on one side and expenses on the other.

Setting Goals: One should set both long and short-term goals in any financial planning.

Formulate your Plan-

Monitoring and Re-adjustment: The personal financial plans should be checked from time to time and necessary adjustments should be made.

The guide to personal finance highlights the following issues in personal finance:


Budgeting: One should keep an account of the income and expected expenditures to meet the different financial goals. For this budgeting is required to make use of every cent spent.

Banking: Money sitting idle would not earn any interest. Again one should avail the various lucrative savings options of banks. For all these purposes banking is required.

Investment Planning: For money to grow and protect it from the rising inflation, the best way out is to invest. The rate of investment should exceed the rate of inflation in order to benefit. Investment must be done early, at regular intervals and both for the long and short terms.


Banking: Money sitting idle would not earn any interest. Again one should avail the various lucrative savings options of banks. For all these purposes banking is required.

Investment Planning: For money to grow and protect it from the rising inflation, the best way out is to invest. The rate of investment should exceed the rate of inflation in order to benefit. Investment must be done early, at regular intervals and both for the long and short terms.

Retirement Planning: This process determines the amount of money that will be required at the time of retirement.

Credit and Debt: One should try to get out of bad debts and save. He should also keep track of his credit report.

Insurance: Death of any earning member in the family gives a severe financial jolt to the family as a whole. Such risks can be hedged by opting for a life insurance policy. Not only is the life of humans subject to accidents but commodities like cars, houses as well, they can also be insured to avoid any risk of their accidental destruction. This is another way of managing personal finances.

Mortgage and other loans: Property mortgage and other loans can be taken to pay back debts .

Tax: It is very important to plan taxes at the beginning of the current year rather than be burdened by the investment load. By investing in mutual funds one can save taxes.

Estate planning: Investing in real estate can also be very much beneficial.

The guide to personal finance also informs us about the host of financial services provided by banks and other financial