August 29, 2008
Are you aware of the latest turf going on between the Life Insurance companies and Mutual Fund Companies? There are chances that you would have missed it since Olympics is taking most of the space in papers and news channels. Let me give you a brief idea about this ongoing war.
I was reading the Economic Times the other day when I got to know that the mutual fund companies feel that Life companies lack transparency and involve high charges in unit linked insurance plans. So, they will come with SIPs (Systematic Investment Plans) that have in-built insurance cover. The insurance cover is going to be small and will be given without any charge to the investor. As a lay man, who has limited understanding about financial market, I felt this was a good proposal.
But the Life Insurance companies are not happy about the sale cover of insurance being sold by mutual fund companies. They feel that if they are allowed to do so, it could have serious implications. According to them selling of insurance by mutual fund distributors could violate the sanctity of training given to insurance agents. They also feel that if mutual fund companies are given too much flexibility, it could weaken the quality of underwriting and safeguards followed by life insurance companies.
The other issue raised by life insurers is that of the social obligation of insurance companies. The life insurance companies sell over a fifth of their policies in the rural sector which diminishes their profit margin, wherein mutual funds being urban centric gains an upper hand in this regard.
I feel that both, Life companies and mutual fund companies, are fighting for personal benefits. But, whosoever wins the war, must keep common man in their mind. They should not forget that their policies must be in interest of common man and should benefit him in the long run. Even they should keep in mind the 23 percent of those population who are fighting every day to earn their bread and butter. What about them? Don’t these companies have any obligation towards them? I think inspite of fighting for the bigger market pie, they should also device some insurance policy which covers this section of people as well.
August 25, 2008
Me and my husband have been planning to purchase a car, as our workplaces are situated at a large distance from each other. So, after deciding upon the particular model of car, we made up our minds to get a car loan, as we did not have ready cash to make the whole payment at one go. After this, we would pay up the monthly loan installments to the lending company for the next two years, which was the tenure of loan we had decided upon. Since we had also taken up the home loan from the Mahindra group and were very satisfied with it, we also decided to ask about the car loan rates from there. However, much to our dismay, we got to hear that the loan rates offered by Mahindra were to increase very soon. This would mean that the car we had dreamed of purchasing would also cost us much more, with the increase in auto loan prices.
This announcement was made by the company following the announcement by the Reserve bank of India to hike all the home and auto loan rates by 0.50 per cent. This came in wake of the hike in inflation in the Indian economy in the past few months. With such steps, the RBI plans to curb inflation and stabilize the economy in the next few months. This has led all the banks to hike their loan lending rates by September ‘08.
Although such an announcement would be in favor of the economy, but it hits the common men like us very dearly. Due to lack of proper infrastructure in most of the non-metros and small towns, the traveling conditions are very poor. In such a case, if people from the middle class plan to purchase vehicles by availing a car loan then the overall cost of the car would increase much more for them. Apart from this, with the upsurge of home loan rates by 0.05 per cent also, staying in a self owned home would also appear to be and unapproachable dream for all and one.
August 14, 2008
I have been diligently investing into shares for as many the last twenty years of my life. It amuses me and also makes me happy to see how the markets today have changed and opened up for investors like me. In fact today the Indian market offers a wide choice in terms of investment. The Dalal Street is no more the single option for Indian investors looking to invest in stocks. Today, leading brokerage firms such as Anagram has attained the stature of the third major domestic player that offers investors a chance to invest in foreign equity markets.
An overseas transaction has been on my mind since a long time. However, I have always been deterred keeping in mind the elongated procedures and limited choice. Now the scenario is different with the advent of many such investment firms. These enable an Indian investor to trade on real time basis in stocks listed on as many as 12 bourses in the US, Europe, Asia and Middle East. With Anagram launching a new e-trading initiative, it is now going to become a cake walk. This has been made possible through the agreement that Anagram has recently signed with a Dubai based firm Mubasher Financial Services to offer real time online trading for Indian investors in big internal markets as well as international exchanges. It is one of the leading market information and e-trading platform provider in Dubai.
As the company, Anagram is targeting High Net worth Individuals (HNIs) and Super HNIs for its new services. I think it is good decision to target these investors as they are likely to become a key driver for this platform. It is also good news for smaller investors as now they can spread their tentacles in various countries. It would help to decrease the monopoly of the Dalal Street in the Indian share market, thus eliminating the role of a middle man as all transactions would be made online.
This service is probably a part of Anagram’s constant endeavor to provide their clients with value added services. Further, I also feel that the new offering would also provide investors an opportunity to alter their risk and assets in a bid to avail newer opportunities and help tap their gains.
August 11, 2008
In recent times, when every common man in India is suffering from an inflationary pressure on their budget, a policy to check it from mounting further taken by our Reserve Bank of India has resulted into another sad picture. Yes, I am talking about a further rise in home loan interest rate resulting into a figure of unimaginable 12%. While on one hand, such a policy is a well known prescription to treat inflation, it proves to have a detrimental impact on all those people who have always dreamt of buying their own house, on the other.
The rise in the home loan interest rate has shattered the dreams of middle class people like me, who wish to live in a house that they can call their own. With this deep desire into my heart, this April only, I have booked a 3 bedroom flat with a prestigious real estate builder. I have opted for the flexible interest scheme which at the time of booking was 10.25%. Now that the interest rate has risen to 12%, I am left with two options, both of which keep me into the most disadvantageous position I have ever thought. The first option by default is an increase in the period of repayment tenure. This means, the house for which the entire loan amount along with interest could have been repaid to the bank at the end of 15 years will now take around 20 years at the new interest rate. It could be even more if the interest rate continues to rise in future. The second option is the rise in monthly outgoing by way of interest payment along with a fixed component of the Principal amount. This is something which I really can not afford at this time as my income even after being clubbed with that of my husband’s does not reach an amount where we can think of paying even Rs100 more as monthly installment, given the fact that there are many more monthly obligations such as car installment, personal loan installment and usual monthly home expenditure. For those who have to bear the education expenses for their children, paying house installment at the increased rate of interest is even more difficult.
The real plight is for those people who have yet not booked a house. For instance, a close friend of mine had been planning to get a house of his own. But, the rise in the home loan interest rate has become a de-motivating factor. He has now decided to continue living in the rented apartment. For most of the people like him, it is quite a gloomy picture as the current scenario seems to offer no relaxation in the rate of interest even in near future. It means their dream of owning a house which they can call their own is being drowned by this increasing home loan rates.
