Month: September 2021

Survey of Foreign Liabilities and Assets of Mutual Fund Companies – 2020-21

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Today, the Reserve Bank released the results of the 2020-21 round of the Survey of Foreign Liabilities and Assets of the Mutual Fund (MF) Companies[1].

The survey covered 44 Indian MF companies and their Asset Management Companies (AMCs), which held/acquired foreign assets/ liabilities during 2020-21 and/or in the preceding year (list given in the Annex). The stock of external assets and liabilities of their AMCs is taken from the annual census on foreign liabilities and assets of direct investment companies and the information on face value and market value of units held by non-resident, unit premium reserve and other foreign liabilities were collected under Schedule 4.

Highlights:

I. Mutual Fund Companies:

  • Foreign liabilities of MF companies stood at US $14.5 billion in March 2021, which were mainly in form of units issued to non-residents. Foreign assets of MF companies increased due to rise in equity security and other foreign assets during the year and stood at US $ 2.9 billion at end-March 2021 (Table 1).

  • UAE, UK, USA and Singapore together accounted for nearly 45 per cent of the total MF units held by non-residents, both at face value as well as at market value (Table 2 and 3).

  • Overseas equity investments of MF companies were largely concentrated in the USA and Luxembourg (Table 4).

II. Asset Management Companies:

  • Foreign liabilities of AMCs stood at US $ 5.7 billion in March 2021 whereas their foreign assets were much lower at US $ 0.1 billion (Table 5).

  • Non-residents in Japan and UK together held nearly 89 per cent of FDI of the AMCs (Table 6).

  • The relatively small overseas investments by AMCs were largely held in Guernsey, Singapore and Mauritius (Table 7).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/866

Table 1: Mutual Fund Companies – Foreign Liabilities and Assets
Item End-March 2020 (R) End-March 2021 (P) % Growth
(₹ terms)
₹ crore US$ million ₹ crore US$ million
1 2 3 4 5 6
Foreign Assets 5,864 778 20,982 2,854 257.8
(a) Equity Securities 5,808 770 20,865 2,839 259.3
(b) Debt Securities – –  – –  – 
(c) Other Foreign Assets 56 8 117 16 108.9
           
Foreign Liabilities 72,564 9,626 106,249 14,455 46.4
(a) Market Value of Units 72,366 9,599 106,069 14,430 46.6
(b) Other Foreign Liabilities 198 26 180 24 -9.0
           
Net Liabilities 66,700 8,848 85,267 11,600 27.8
Face Value of Units 31,184 4,137 34,348 4,673 10.1
Notes: 1. The amount in US $ terms is arrived at by using the RBI reference rate (end-March).
2. Liabilities / Assets are valued at market prices unless stated otherwise.
3. Sum of constituent items may not add up to total due to rounding off.
4. – Nil/negligible.
5. R: Revised; P: Provisional.
6. These are also applicable for the remaining tables.

Table 2: Foreign Liabilities in Units of MF Companies at Face Value – Major Countries
(Amount in ₹ crore)
Country End-March 2020 (R) End-March 2021 (P) % Share in 2021 Annual Variation
Absolute Per cent
1 2 3 4 5 6
United Arab Emirates 5,640 6,376 18.6 736 13.0
United Kingdom 3,300 3,538 10.3 238 7.2
United States of America 2,898 3,093 9.0 195 6.7
Singapore 2,094 2,184 6.4 91 4.3
Oman 821 931 2.7 110 13.5
Qatar 614 797 2.3 183 29.8
Hong Kong 783 670 2.0 -113 -14.4
Saudi Arabia 553 645 1.9 92 16.6
Kuwait 544 629 1.8 85 15.6
Mauritius 600 486 1.4 -114 -19.0
Others* 13,338 14,999 43.6 1,661 12.5
   Of which: India 6,858 7,819 23.0 961 14.0
Total 31,184 34,348 100.0 3,164 10.1
*Others (comprised 241 countries) also includes non-resident Indians (NRIs), who use their Indian permanent address.

Table 3: Foreign Liabilities in Units of MF Companies at Market Value – Major Countries
(Amount in ₹ crore)
Country End-March 2020 (R) End-March 2021 (P) % Share in 2021 Annual Variation
Absolute Per cent
1 2 3 4 5 6
United Arab Emirates 12,247 19,232 18.1 6,985 57.0
United States of America 7,836 11,575 10.9 3,739 47.7
United Kingdom 6,616 9,565 9.0 2,949 44.6
Singapore 5,324 7,365 6.9 2,041 38.3
Mauritius 2,915 3,477 3.3 562 19.3
Oman 1,794 2,848 2.7 1,052 58.6
Qatar 1,369 2,534 2.4 1,165 85.1
Kuwait 1,237 1,961 1.9 724 58.5
Saudi Arabia 1,159 1,949 1.8 790 68.2
Hong Kong 1,501 1,807 1.7 307 20.4
Others* 30,368 43,756 41.3 13,391 44.1
of which: India 16,155 21,592 20.4 5,438 33.7
Total 72,366 106,069 100.0 33,703 46.6
*Others (comprised 241 countries) also includes non-resident Indians (NRIs), who use their Indian permanent address.

Table 4: Equity Securities held Abroad by Mutual Fund Companies at Market Value– Major Countries
(Amount in ₹ crore)
Country End-March 2020 (R) End-March 2021 (P) % Share in 2021 Variation
Absolute Per cent
1 2 3 4 5 6
United States of America 2,427 9,029 43.3 6,602 272.0
Luxembourg 2,536 8,867 42.5 6,331 249.6
Ireland 89 1,469 7.0 1,380 1550.6
Japan 125 340 1.6 215 172.0
Canada 180 308 1.5 128 71.1
Cayman Islands 83 287 1.4 204 245.8
United Kingdom 69 112 0.5 43 62.3
Taiwan 30 82 0.4 52 173.3
Hong Kong 22 66 0.3 44 200.0
Singapore 35 58 0.3 23 65.7
Others 212 247 1.2 35 17.5
Total 5,808 20,865 100.0 15,057 259.2

Table 5: Foreign Liabilities and Assets of AMCs
Item End-March 2020 (R) End-March 2021 (P) % Growth
(₹ terms)
₹ crore US$ million ₹ crore US$ million
1 2 3 4 5 6
Foreign Liabilities 33,300 4,417 42,257 5,750 26.9
(a) Direct Investment 28,130 3,731 34,279 4,664 21.9
(b) Portfolio investment 5,141 682 7,974 1,085 55.1
(c) Other Investment 29 4 4 1 -86.2
           
Foreign Assets 468 62 644 87 37.6
(a) Direct Investment 433 57 606 82 40.0
(b) Portfolio investment – – – – –
(c) Other Investment 35 5 38 5 8.6
           
Net Liabilities 32,832 4,355 41,613 5,663 26.7
Source: Annual Census on Foreign Liabilities and Assets of Direct Investment Companies, RBI
Note: – Nil/negligible.

Table 6: Foreign Direct Investment in AMCs – Major Countries
(Amount in ₹ crore)
Country End-March Variation
2020 (R) 2021 (P) % Share in 2021 Absolute Per cent
1 2 3 4 5 6
Japan 11,514 15,606 45.5 4,092 35.5
United Kingdom 13,436 14,748 43.0 1,312 9.8
Mauritius 1,270 1,389 4.0 119 9.4
Singapore 135 337 1.0 202 149.6
France 735 951 2.8 216 29.4
Netherlands 95 111 0.3 16 16.8
Canada 660 844 2.5 184 27.9
Hong Kong 179 192 0.6 13 7.3
United States of America 106 101 0.3 -5 -4.7
Total 28,130 34,279 100.0 6,149 21.9
Source: Annual Census on Foreign Liabilities and Assets of Direct Investment Companies, RBI

Table 7: Overseas Direct Investment by AMCs – Major Countries
(Amount in ₹ crore)
Country End-March Variation
2020 (R) 2021 (P) % Share in 2021 Absolute Per cent
1 2 3 4 5 6
Guernsey 326 494 81.5 168 51.5
Singapore 52 66 10.9 14 26.9
Mauritius 48 39 6.4 -9 -18.8
United Arab Emirates 7 7 1.2 0 –
Total 433 606 100.0 173 40.0
Source: Annual Census on Foreign Liabilities and Assets of Direct Investment Companies, RBI
Note: – Nil/negligible.

1 The results of the previous survey round for the year 2019-20 were released vide press release dated October 20, 2020.

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MFs sold YES Bank, Vodafone Idea; tweaked stakes in these Jhunjhunwala stocks, BFSI News, ET BFSI

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NEW DELHI: Domestic fund managers pared stakes in retail favourites Vodafone Idea and YES Bank, and tweaked their holdings in certain Rakesh Jhunjhunwala-backed companies, the monthly data for August suggest.

Data showed MFs held YES Bank shares worth Rs 137 crore as on August 31 compared with Rs 155 crore at the end of July. During the month, they trimmed their holding in the private lender to 15.15 crore shares from 17.67 crore shares. Retail and HNI investors owned 32.32 per cent stake in the lender at the end of the June quarter.

Vodafone Idea — where retail and HNI investors account for 17.73 per cent of the total 27.95 per cent public holding — also saw selling by mutual funds. These funds held 13.10 crore shares in the telecom operator as on August 31 compared with 30.04 crore shares as on July 31. In value terms, MFs now hold Rs 80 crore worth of Vodafone shares compared with Rs 248 crore shares earlier.

Lupin, where Rakesh Jhunjhunwala holds shares worth Rs 700 crore, was among the top MF buys for the month. Mutual funds held 5.92 crore Lupin shares as on August 31 compared with 5.13 crore in July. In value terms, they owned Rs 5,668 crore worth of Lupin shares compared with Rs 5,676 crore in July.

In Escorts, MFs held 88 lakh shares worth Rs 1,184 crore at August-end, against 73 lakh shares worth Rs 860 crore as of July-end. Jhunjhunwala owns about Rs 880 crore worth of Escorts shares as of today.

MFs sold YES Bank, Vodafone Idea; tweaked stakes in these Jhunjhunwala stocks
Jhunjhunwala, often called Big Bull, entered Indiabulls Housing and SAIL in the June quarter. While SAIL was the funds’ biggest sell in the largecap pack, Indiabulls Housing was their biggest buy in the smallcap pack, data compiled by ICICI Direct suggests.

MFs held Rs 1,962 crore worth SAIL shares at August-end, against Rs 2,987 crore at July-end. They owned Rs 344 crore worth Indiabulls Housing shares as of August-end, up from Rs 277 crore at July-end. Jhunjhunwala owns about Rs 700 crore worth of SAIL shares and just over Rs 200 crore worth of Indiabulls Housing shares.

MFs sold YES Bank, Vodafone Idea; tweaked stakes in these Jhunjhunwala stocks
Jubilant Ingrevia, another stock Big Bull has invested in, was on MFs’ sell radar. Funds cut their holding in this stock to Rs 38 crore from Rs 73 crore on a month-on-month basis. In Edelweiss Financial Services, mutual funds’ holding fell to Rs 55 crore from 95 crore.



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Reserve Bank of India – Press Releases

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I. T-Bill 91 days 182 days 364 days
II. Total Face Value Notified ₹9,000 Crore ₹4,000 Crore ₹4,000 Crore
III. Cut-off Price and Implicit Yield at Cut-Off Price 99.1829
(YTM: 3.3044%)		 98.3356
(YTM: 3.3944%) 		96.5529
(YTM: 3.5800%)
IV. Total Face Value Accepted ₹9,000 Crore ₹4,000 Crore ₹4,000 Crore

Ajit Prasad
Director   

Press Release: 2021-2022/865

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Auto debit transactions: Bounce rates in August near pre-second wave levels

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Bounce rates for auto-debit transactions in August were at similar levels as March 2021 as businesses and borrowers shrugged off the impact of the second wave of the Covid-19 pandemic.

According to data from the National Payments Corporation of India from the National Automated Clearing House (NACH), the bounce rate or percentage of unsuccessful auto-debit transactions in August 2021 was 32.98 per cent.

This is the lowest since March 2021 when the bounce rate was 32.76 per cent. In all, a total of 8.76 crore auto-debit transactions were reported on the NACH platform in August, of which 5.87 crore were successful and 2.89 crore were returned or unsuccessful.

Also read: Resilient demand keeps driving India’s world-beating growth

Typically, auto-debit transactions are for recurring payments such as EMIs and insurance premiums although it does not capture intra-bank transactions. With the second wave of the pandemic leading to localised lockdowns and impacting economic activities, bounce rates had started to climb up from April 2021 after easing from December 2020.

In the last two months, as Covid cases have come down in most parts of the country and the economy has opened up again, bounce rates have started coming down again. Many lenders have reported that collection efficiencies have returned to normal and are at the pre-second wave levels.

“The collection efficiency was reported at about 97 per cent for August 2021, further improving on 95 per cent reported in July 2021 (collection efficiency in April, May and June was 72 per cent, 67 per cent, 90 per cent respectively),” Mahindra Finance had said, recently.

Also read: Latest PLFS suggests India’s labour market is reviving post-pandemic but some segments are hit

With the opening of the economy and improved mobility, it witnessed a meaningful reduction in the NPA contracts during the month as customer cash flows improved and said it expects the downward trajectory to continue in September.

Similarly, CreditAccess Grameen reported that standalone collection efficiency including arrears improved to 99 per cent in August 2021 from 97 per cent in July 2021 and 84 per cent in June 2021, indicating consistent improvement in overdue collections.

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Will LIC Kanyadan Policy Be Apt For Accumulating Wealth For Your Daughter’s Wedding?

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Planning

oi-Roshni Agarwal

|

LIC- the IPO bound, largest public and most trusted insurance company has plan to meet each of the financial goal. Lately, to meet the marriage goals of your daughter and to have an adequate sum ready by that time, LIC has come up with LIC Kanyadan plan.

Will LIC Kanyadan Policy Be Apt For Your Daughter's Wedding?

Will LIC Kanyadan Policy Be Apt For Accumulating Wealth For Your Daughter’s Wedding?

Here’s in detail about the plan

Notably, there is no such plan by LIC in the name of LIC Kanyadan, rather in a bid to attract more and more customers and target parents of a girl child towards the investment, LIC Jeevan Lakshaya has been marketed with the ‘LIC Kanyadan’ tagline.

Notable features of the plan:

1. Eligibility: The subscriber or the policyholders needs to be between 18-50 years of age.
For the girl child, the minimum age criteria is set at 1 years.

2. Minimum sum assured : Rs. 1 lakh
3. Premium waiver available in case of untimely and sudden death of the insured parent
• Rs lakh payable in case of accidental demise, Rs. 5 lakh in case of non-accidental demise
• Benefit of Rs. 50000 payable every year till the maturity
• LIC cover of up to 3 years before the maturity.
• NRIs can also avail of the policy.

Different benefits of the policy under the plan

-Limited premium paying term which is 3 years less than the policy maturity term
-In case of death of the policyholder, 1% of the sum assured shall be paid annually until one year before the maturity date.

Maturity tenure can be 13years to 25 years

Premium calculation:

Say if wish to opt for a Rs. 10 lakh sum assured under the plan, for a term of 13 years, the premium paying term will be for 10 years and it would offer
DAB – Rs. 10 lakh
Death sum assured – Rs. 11 lakh
Basic SA- Rs. 10 lakh

1st year premium based on All in one Calc app will be Rs. 102937 annually
Half yearly- Rs. 52003
Qtrly- Rs. 26269
Mthly- Rs. 8756
Yearly average per day premium – Rs. 282.

Note this insurance premium is inclusive of 4.5% tax.

Additionally the disability rider is applicable in case of tenure of atleast 5 years for the policy.

Illustration for the maturity benefit

Supposing you take the policy term to be 15 years then for a SA of Rs. 5 lakhs with a premium payment term of 12 years, the maturity amount in case the sum insured survives will be Rs. 8.17 lakhs.

Comparison with Sukanya Samriddhi Scheme

While the Sukanya Samriddhi scheme targeted to meet the financial obligations towards a girl child offers a good interest rate and the compounding will enable you to aggregate wealth down the line, it lacks in the sense that there is no security extended in case the parent meets an untimely death. Nonetheless the same is available with LIC Kanyadan as immediate relief is granted on financial terms considering the SA amount until one year before the maturity term and also premiums are waived in case of death of the insured parent.

GoodReturns.in



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LIC Saral Pension 2021: Suitable Lifetime Pension Option For Senior Citizens

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Insurance

oi-Kuntala Sarkar

|

LIC’s Saral Pension Plan, 2021, which has been launched recently is being noticed largely. This Annuity plan is a non-linked, individual immediate policy, that can be purchased only by paying a lump sum amount to get a fixed payment at regular intervals for the rest of the life. LIC has designed this plan to provide “for annuity payments of a stated amount throughout the lifetime of the annuitant.” Earlier, the IRDAI, the apex insurance regulatory authority of India, had advised all insurance companies to introduce this scheme, hence LIC has now launched this Saral Pension Plan, 2021.

LIC Saral Pension 2021: Suitable Lifetime Pension Option For Senior Citizens

Benefits and rules under the plan

An immediate annuity policy like Saral Pension Plan means, when the policyholder will take the plan, the pension will start immediately. It is a single premium pension plan, which means, the policyholder will have to pay the total lump sum amount once at the time of policy purchase. People who are aged between 40 and 80, years can purchase the LIC Saral pension plan, However, it is an appropriate plan for the people who have a lump sum amount to invest, to secure the rest of the life.

Annuity or pension options

A major benefit of this plan is it will offer 2 annuity options after a one-time lump sum amount payment. The 1st one is the ‘life annuity with return of 100% of purchase price’, which is a single life option. Till the policyholder will be alive, the fixed pension amount will be paid, after his/her death the base premium will be given back to the nominee. However, the GST paid at the time of premium will not be payable, only the base payment will be given back. The second option is the ‘joint life last survivor annuity with return of 100% of the purchase price on death of the last survivor’, which includes 2 life partners under the plan. Any one of the partners, who will live longer, will get the fixed pension. The pension amount is given to the primary policyholder, the same fixed amount will also be given to the secondary policyholder. Like the earlier one, the base premium amount will be given back to the nominee.

Annuity or pension modes

It is quite a simple plan to understand by every citizen, who is willing to secure their sunset days as it is a whole life policy-term plan. The minimum sum assured is of this plan is Rs. 1,00,000. Like other insurance and pension plans, LIC’s Saral Pension Plan also has the provision of monthly, quarterly, and half-yearly annuity or pension modes. If the policyholder chooses the monthly mode, the pension will start one month after the policy is taken, similarly to other modes.

In case of critical illness, the policyholder can surrender the plan and take the money back. In case of that, 95% of the purchased plan will be paid to the policyholder.

Loan facility

The policyholder can avail of the loan facility after 6 months of commencement of the plan. However, the maximum amount of loan that can be granted shall be such that the effective annual interest amount payable on the loan does not exceed 50% of the annual annuity amount payable. If the loan is taken within April 30, 2020, the interest rate of the loan will be 8.44% per annum.

Calculation of annuity amount (both options)

Sum Assured (INR) Single premium Annuity (Yearly) Annuity (Quarterly)
500000 509000 25000 6100
1000000 1018000 50650 12363

These calculations have been done by GoodReturns, through the ‘All in one CALC’ mobile application.

This LIC’s Saral Pension Plan, 2021 is a suitable plan for senior citizens who have a lump sum amount of money to pay at once. At the time of retirement, (ex: at the age of 60), an investor can take this policy. When the person will retire and get her/his Provident Fund amount, Gratuity amount at once, it will make a lump sum amount. The amount can be placed to a Fixed Deposit option, but in the case of LIC’s Saral Pension Plan, 2021, the policyholder will get a fixed regular pension from LIC, with the assurance of base premium paid to the nominee. The FD interest rates are being reduced by the banks now, and this pension will be a better alternative for those senior citizens who are interested to secure their old age.

Story first published: Wednesday, September 15, 2021, 14:28 [IST]



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SBI’s Amit Saxena joins RBI Innovation Hub as CTO, BFSI News, ET BFSI

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Amit Saxena, Global Deputy CTO of State Bank of India joins RBI Innovation Hub as the CTO today.

On Aug 6, 2020, the Reserve Bank announced that it would set up Reserve Bank Innovation Hub (RBIH) to promote innovation across the financial sector by leveraging on technology and creating an environment that would facilitate and foster innovation.

The RBIH shall create an ecosystem that would focus on promoting access to financial services and products. This will also promote financial inclusion. The Hub will collaborate with financial sector institutions, the technology industry, and academic institutions and coordinate efforts for the exchange of ideas and development of prototypes related to financial innovations. It would develop internal infrastructure to promote fintech research and facilitate engagement with innovators and start-ups.

As the CTO of Reserve Bank Innovation Hub, Saxena will be tasked with building an innovation ecosystem for India’s banking and financial services industry. In his new position, Saxena will be based in Bangalore and will report to Rajesh Bansal CEO of RBI Innovation Hub.

Saxena has over 22 years of experience in IT Strategy formation, Application development, Stakeholder Management, and product development. At SBI played a leading role in driving digital initiatives and innovations in customer-centric journeys. Before joining SBI, Saxena worked for companies like Syntel, HCL technologies, TechMahindra, and Quark.



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Damodaran says ESG investing is a mistake, will not make you money, BFSI News, ET BFSI

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Renowned academician Aswath Damodaran says the trend of ESG (environment, social and governance) investing that has caught on rapidly around the world would end up costing companies and investors dearly.

“I believe ESG is not just a mistake that will cost companies and investors money, while making the world worse off. It creates more harm than good for society,” Damodaran, professor of finance at Stern School of Business at New York University, wrote on his blog Musings on Markets late Tuesday.

ESG investing has been one of the defining investment trends of the 21st century with nearly $3 trillion of assets currently being managed under some form of ESG mandate or other by asset managers around the world. In India too, ESG investing has taken off in a major way over the past three years, with more mutual funds coming out with “ESG only” schemes to cater to the rising demand.

The Securities and Exchange Board of India (Sebi), taking note of the rising demand for more ESG-related disclosures, recently revamped the business responsibility reporting standards on issues such as environmental impact, social welfare and corporate governance by companies.

“Why is ESG being sold so aggressively? Because accountants, measurement services, fund managers and consultants are on the ESG gravy train, with stockholders and taxpayers paying. Corporate CEOs are buying into ESG, because it makes them accountable to no one,” Damodaran said.

The rising sway of ESG funds around the world has been driven by ‘millennials’ and ‘Generation Z’ investors, who want to invest in companies that are taking action on climate change and social welfare. The movement received a further push when some of the biggest names in finance came together to move towards stakeholders’ capitalism from shareholders’ capitalism.

Damodaran drew a parallel between the current wave of ESG investing to the corporate governance wave seen two decades ago in the aftermath of the Enron scandal. The Enron episode pushed proxy advisors, accountants and ruler writers to ask for more disclosures for companies in the name further enhancing shareholder power.

“The fact that the corporate governance movement only enriched services, consultants and bankers, but left shareholders more powerless than they were before the movement started, holding shares in companies with dual class shares or worse, should act as a warning for the advocates of ESG disclosure/measurement,” Damodaran said.

For investors who are gobbling up ESG funds in the hunt for higher returns that puts less burden on their social consciousness, Damodaran said if the market is over-enthused about ESG and is overpricing how much being “good” will add to a company’s profitability or reduce risk, then investing in ‘good’ companies will generate lower risk-adjusted returns than investing in ‘bad’ companies.

“If being good makes companies less risky, investors in good companies will earn lower returns than investors in bad companies, before adjusting for risk, and equivalent returns after adjusting for risk,” Damodaran said.

‘The Professor’, as many of his admirers call him, is part of a growing list of investors who are becoming increasingly skeptical of investment decisions that are giving too much weightage to what a company’s ESG score is, than to its fundamental intrinsic value.

“I am certainly not willing to concede, without challenge, that a corporate CEO knows my value system better than I do, as a shareholder, and is better positioned to make judgments on how much to give back to society, and to whom, than I am,” Damodaran said.



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Resources for developing financial literacy at a young age to ensure entrepreneurship-led growth, BFSI News, ET BFSI

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Financial literacy, like every other life skill, is crucial. The earlier you expose it to your children, the better their money management abilities will be later in life. This money management practice lays a solid foundation for concepts like saving, spending, and investing in children.

Learning how to invest and manage money wisely will eventually become an important life skill for teenagers to master to achieve their goals. This becomes all the more important as India’s growth and development is going to be entrepreneurship-led in the future and learning the ropes of money management skills is very crucial at a young age.

Unfortunately, financial literacy is often left out of the traditional educational system’s curriculum. Children and teens enter adulthood without knowing how to manage their resources properly. As a result, parents are the primary educators when it comes to teaching teenagers money management skills.

Following are some ways parents can teach their kids about financial literacy:

  • To start, parents can give kids money to buy food in the school canteen to be able to keep a check on their expenses.
  • You can also help them understand the cost of things so that they will understand the value of money.
  • Piggy banks can be a great start for kids to learn about savings. They will cut out on expenses to start saving a little every day, thus beginning their journey towards financial education.
  • If kids list a few things, try not to buy them everything. Let them instead choose a few things to buy from that list. This will help them to spend wisely.
  • Monopoly and other business games will also make them proactive about money matters.
  • Take your kids to the supermarket, let them know your budget, and sit with them while preparing a rough list of things you want to buy in the supermarket.
  • Let them know if you’re facing any financial crisis, they might cut down their expenses and learn to spend wisely on things that matter.
  • Gradually introduce them to the world of investments, starting with an FD; open a bank account for them as well.
  • Once they learn about the benefits of investing in FDs, they gradually introduce them to other investment instruments.
  • Technology has also made investing simple with just one click, allowing consumers to invest with simplicity. Introduce your child to the concept of digital finance and help them make informed financial decisions.

Several organizations have taken the following actions to ensure that the teens are financially literate as part of the government’s financial literacy strategy.
1. Project Financial Literacy
The Reserve Bank of India (RBI) has undertaken a project, “Project Financial Literacy.” The project’s objective is to impart information regarding the central bank and banking concepts to various target groups, including school- and college-going children, defence personnel, senior citizens, women, and the rural and urban poor.The project is implemented in two modules. One module lets users get acquainted with the role and functions of the Reserve Bank of India. In the other module, users are introduced to banking concepts.
2. NCERT – Personal Finance Supplementary Reading Material
There are a total of 9 modules covered in this sequentially: Financial Plan, Budgeting, Managing your Money, Financing Assets, Protecting your Assets, Investing Money, Retirement Planning, Taxes & you, and Career Planning.
3. Pocket Money – the student’s Guide to Money
It is a financial literacy initiative by the Securities and Exchange Board of India (SEBI) and the National Institute of Securities Markets (NISM). The objective of this is to help school-going children to understand the importance of financial management and the value of money.
4. Financial Education for School Children
This material was developed under the guidance of the Advisory Committee for the Investor Protection and Education Fund (IPEF) of the Securities Exchange Board of India (SEBI) and by the National Stock Exchange (NSE). It covers modules on the following: Money Matters, Planning, Budgeting, Investment, and Stock Market.
5. Introduction to Retirement Planning for School Students
This material is developed by the Pension Fund Regulatory & Development Authority. It aims to explain retirement and how to plan for retirement with various pension schemes effectively.
6. Commodity Futures Market for Students
This resource helps students understand the basics of commodity markets.
7. Material on Insurance for Children
The resource is available as comics and videos and is developed by the Insurance Regulatory and Development Authority (IRDA). It aims to explain the basics of insurance, several types of insurance, insurance ombudsman, ULIP (Unit Linked Insurance Plan), etc.

Allow your children to learn about money, regardless of their age. They can grow into financially responsible individuals and entrepreneurs who make sensible financial decisions with the proper guidance and healthy money management habits. Adults who are skilled at budgeting build family relationships while also contributing to economic progress.

(The writer is Co-founder & CEO, Pencilton)



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Will banks clamp down on cryptocurrency transactions again?, BFSI News, ET BFSI

Banking & Finance

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Banks which had started processing cryptocurrency transactions after RBI clarification may be again shying away from virtual currencies.

The country’s largest lender, State Bank of India, has blocked the receipt of funds by crypto bourses on its UPI platform. The bank has told payment processors to disable SBI UPI for crypto merchants, according to a report.

With this, traders cannot buy Bitcoin or any cryptocurrency by transferring funds via UPI, as none of the processors which handle funds for

exchanges will be unable to receive money sent for crypto purchases on their SBI accounts.

The largest domestic crypto bourse, WazirX, has already been impacted by the decision, with the processing agency following the directive of SBI. Industry circles said payment processors may stop accepting payment for other exchanges as well, unless SBI does a rethink.

With UPI blocked, many traders on WazirX are using one of the e-wallet services to transact.

But due to wallet charges and limits on fund transfer, traders prefer UPI in the absence of other payment modes like credit and debit cards, NEFT (national electronic fund transfers) and net banking.

After SBI’s decision, many banks may be reluctant to onboard crypto merchants on their respective UPI platforms.

The RBI decision

After the Reserve Bank of India told banks that they no longer can use the regulator’s 2018 circular prohibiting dealings in virtual currencies, as the direction has been struck down by the Supreme Court, banks were allowing crypto transactions.

Lenders including HDFC Bank, ICICI Bank and Axis Bank are allowing transactions in virtual currencies through the UPI platform.

According to crypto exchanges, more banks are now warming up to them and several channels are available for customers to buy crypto assets.

Till June this year banks were sending official notices to many customers warning them of curbs, including permanent closure of accounts.

Lenders were asking customers to clarify the nature of transactions and warning credit card users that transactions of virtual currency will lead to suspension/cancellation of card.

While trading in cryptocurrency is not illegal as per existing Indian laws, individual institutions can enforce their terms based on their risk assessment.

A grey area

Despite the boom, cryptocurrencies are in a grey area in India, with the Reserve Bank hostile towards it and the government unsure about its prospects.

There is no legislation or regulatory code yet to govern the crypto ecosystem, leading to confusion among customers, businesses and financial institutions providing banking services.

In 2018, the Reserve Bank of India barred financial institutions from supporting crypto transactions, which the Supreme Court overturned in 2020. The government has circulated a draft bill outlawing all cryptocurrency activities, which has been under discussion since 2019.

The RBI asked banks not to cite its 2018 circular and clarified that banks can do their own KYC for crypto clients. With this, banks are now reassessing the situation, but several banks currently lack the technical expertise to make a supervisory assessment on these transactions.



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