How a youngster can build a balanced portfolio for life needs

Personal Finance

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Arun is 27 years old. He started working about four years back.

His parents do well financially and are not dependent on him. Both are in government sector and have pensionable jobs.

He wants to contribute ₹5 lakh towards his sister’s wedding that is scheduled after six months. Additionally, he wants to set aside ₹5 lakh for own wedding that he expects to happen in the next 3-5 years. Any excess can go towards retirement.

Arun has bought life cover for ₹1 crore and a private health insurance plan of ₹10 lakh. His parents and sister are covered under separate plans.

His only savings are ₹8 lakh in EPF and ₹15 lakhs in bank fixed deposits. Of this, he has set aside ₹10 lakh towards emergency corpus. This can cover 12-15 months of his expenses.

Further, every month, ₹20,000 goes towards EPF. He can invest another ₹80,000 per month.

He knows he can invest aggressively given his age and income profile, but he is not clear about whether he will be comfortable with portfolio ups and downs.

Recommendations

Arun has got his insurance covered. He must, however, revisit the insurance portfolio once he gets married or assumes a financial liability such as loan. The emergency fund of ₹10 lakhs is robust too.

For his sister’s wedding, he can set aside ₹5 lakh from his fixed deposits. The wedding is too soon to take any investment risk.

For his wedding, he has just given a ballpark. Additionally, the timing is also not very certain. Assuming we have four years to save for his wedding, he will need to invest about ₹11,500 per month to accumulate his wedding fund. He can put this money in a bank recurring deposit or a debt mutual fund.

The rest of the amount (around ₹68,000) can go towards his long-term goals, including retirement. He is already contributing to EPF. Given his age, he must consider allocating money to growth assets such as equities.

At this life stage, it is important not to get bogged down with retirement planning calculations. Many life milestones are yet to come, and the best earning years are ahead of him. His time and energy are better spent on enhancing career and income prospects. From an investment perspective, he just needs to continue investing regularly.

He is new to risky investments and is unsure about his risk appetite. There are a few things that you can learn only through experience. Risk appetite is one such thing. While his age ensures this risk-taking ability is high,behavioural DNA defines his risk appetite otherwise. He wouldn’t know his true risk appetite unless he experiences market ups and downs first-hand.

Two approaches

There are two approaches he can take.

1. Not take any risk. Stick with EPF, PPF and bank fixed deposits. Given his age, such a conservative portfolio is not warranted. Moreover, he would never discover his risk appetite.

2. Take risk but reduce portfolio volatility. This is a better approach.

He can work with an asset allocation approach. From the incremental investments, he can route 50 per cent of the money towards equity and the remaining towards fixed income. He can start with a small allocation and inch up to 50-60 per cent in the equity investments.

After saving for his marriage expenses he can invest another ₹88,500 for long-term savings, out of which ₹20,000 already goes towards EPF. Assuming he wants to go with 50:50 allocation, ₹44,000 from his monthly savings can be in equity products.

For equity investments, he can

1. Start with a large-cap or a multi-cap fund. A simple large-cap index fund will do. Or

2. Pick a dynamic asset allocation fund or a balanced advantage fund. Or

3. Pick a single asset allocation fund that invests in domestic stocks, international stocks, and gold. Or

4. Pick a large-cap index fund, an international stock fund and a gold ETF/mutual funds. This replicates the third approach but is cumbersome to invest for a new investor.

The first approach is simple since picking up an index fund is an easy decision. For the second and third approach, he will have to pick up an actively managed fund and choosing one can be tricky. However, the second and third approaches are likely to be less volatile and easy to stick with. This is just the initial choice. As he gets more comfortable with equity investments, he can add different types of funds in the portfolio.

In the fixed income portfolio, he is already contributing to EPF. He can also invest in PPF. Beyond these two products, he can consider bank fixed deposits or a good credit quality and low duration debt mutual fund. For his income profile, debt MFs will be more tax efficient than bank FDs. However, debt funds carry higher risk than bank FDs.

The writer is a SEBI-registered investment advisor and founder of www.PersonalFinancePlan.in

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Tax Query: How to calculate capital gains tax set off and carry forward loss

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For FY 2020-21 income tax returns, I have to report under the head capital gain/loss: (a) Sale of domestic debt mutual funds – short term capital gain of ₹14,892, long term capital gain with indexation of ₹1,30,250 (b) Sale of domestic equity mutual funds – long term capital gain of ₹31,044, long term capital loss of ₹99,509 (c) Sale of foreign non-equity mutual funds – short term capital loss of ₹1,21,630 (d) Sale of domestic unlisted equity shares – long term capital loss of ₹31,635. Kindly explain to me the computation of capital gains tax set off and carry forward loss as applicable.

Srishyla Melkote V

I understand that the capital gain / loss as mentioned in your query above, has been calculated after taking into account the appropriate provisions of the Income-tax Act, 1961 (‘Act’). As per the provisions of Section 71 of the Act, losses under head capital gains can be set-off against income under the head capital gains only. Further, as per the provisions of Section 70 of Act, short-term capital loss can be set off against long-term or short-term capital gain. However, long-term capital loss can be set off only against long-term capital gains. Please find below computation of income chargeable under the head capital gains.

Further, as per the provisions of Section 74 of the Act, loss under the head capital gains to the extent not set off in the FY can be carried forward to eight years immediately succeeding the year in which such loss is incurred. Carried forward short-term capital loss can be set off against long-term or short-term capital gain. However, carried forward long-term capital loss can be set off only against long-term capital gains. In the instant case, you have net short-term capital loss which can be carried forward to eight years i.e. upto FY 2028-29 to be set off against short-term or long-term capital gain, for those years. Further, it is pertinent to note that capital loss can be carried forward only if the return of income for the concerned subject year is furnished on or before the due date of filing of original tax return under section 139(1) of the Act. The extended due date, as of now, for filing the income tax return for FY 2020-21 is 30 September 2021 (for cases where no audit is required to be done under provisions of section 44AB of the Act).

I am working in a private company and fall under 20 per cent slab. I own a small quantity of shares in 30 odd companies and received ₹12500 as dividends. What will be the tax implication?

V. Ganesa Moorthy

Finance Act 2020 has shifted the taxability on dividend income from the hands of the company declaring the dividend to the individual investors. The taxability of dividend and tax rate thereon depends upon factors like residential status of the shareholders, nature of activities of shareholder (whether dealing in securities, salaried individual, etc. to determine nature/ head of income). In case of a non-resident shareholder, taxability of dividend income / tax rates are to be seen in light of the provisions of respective Double Taxation Avoidance Agreements (DTAAs), if applicable. Since, you are a salaried employee and are not engaged in dealing with securities, the dividend income would be considered as “Income under the head other sources”. Further, assuming you would qualify as a resident in India, dividend income received shall be subject to tax at the rates applicable you i.e. 20 per cent (plus health and education cess at 4 per cent).

The writer is a practising chartered accountant

Send your queries to taxtalk@thehindu.co.in

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When interest u/s 234 A, B, C can be levied by the taxman

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A coffee time conversation between two colleagues leads to an interesting explainer on tax jargons.

Vina: Thank God, the due date to file our tax returns has been extended up to December 31, 2021. I can now shift my focus on other things, instead of racing to finish this annual obligation.

Tina: True that. But I hope your tax dues for 2020-21 which you have left unpaid, are less than ₹1 lakh?

Vina: That calculation I am yet to do. What’s so special about this ₹1 lakh limit?

Tina: The extension in return filing date does not apply to those who have an unpaid tax liability of more than ₹1 lakh.

Unpaid tax liability here implies one’s tax liability in a year, reduced by advance tax instalments paid, any tax collected or deducted at source, any relief of tax allowed under sections 89, 90, 90 A or 91, or any alternate minimum tax credit allowed to be set off under the IT Act.

Thus, the due date of filing returns for whom the unpaid tax liability exceeds ₹1 lakh, is still July 31, 2021.

Interest at the rate of one per cent per month is levied on your unpaid tax amount, under section 234 A of the Act if tax returns are not filed by the due dates.

Vina: What? So, by not furnishing returns by July 31, 2021, I am liable to pay interest at the rate of one per cent on my tax liability for every month since July 31?

Tina : Yes. But if you have outstanding tax of less than ₹1 lakh, this provision will not be applicable.

Vina: Let me hurry up and check where I stand.

Tina : But wait… Whether your return filing date is July 31 or December 31 this year, you also need to check if interest under sections 234 B and 234 C are applicable.

Vina: Oh, what do these ask for ? More tax, am sure!

Tina : You are partly right. If your tax liability after TDS in any financial year amounts to ₹10,000 or more, then you need to pay advance tax in four instalments during the course of the financial year itself.

Vina: And, if I’ve completely missed this…what happens?

Tina: You will be required to pay interest on any shortfall in advance tax payments under section 234 B and 234C of the Income Tax Act, at the rate of one per cent per month (under each section), for every month of delay.

So, if you file your returns anytime until December 31 due to extension of the deadline (even if your dues are within ₹1 lakh) and decide to pay all the taxes due when filing the return only, the charges under 234 B and C will go up.

While interest is levied under section 234 C for defaults or delays in quarterly payments of advance tax, section 234 B applies when the tax payer has not paid at least 90 per cent of the tax for any financial year as advance tax by April 1 of the following year.

Vina: That’s a lot of insight Tina. Thank you very much for enlightening me. Will go and file my returns ASAP!

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3 things you should know about corporate fixed deposits

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With the interest rates at multi-year low, corporate fixed deposits (FDs) which usually offer higher rates than the banks, have been gaining investor attention. Here, we look at three factors that investors should note before investing in corporate FDs.

Beware of yield claims

Many corporates offering fixed income products try to woo customers by advertising high yields.

For example, take the recent fixed deposit offer by Hawkins Cookers. The company offers eight per cent interest rate for a 36-month deposit and for a cumulative deposit, the interest is being compounded monthly. Here, while the coupon rate is eight per cent, the yield on the investment will be higher.

The annualized yield is generally determined by finding out ‘rate’ in the compound interest formula – Final amount = principal (1+rate/period)^period; period in the form of number of years. By using this, the Hawkins Cookers FD yield comes to 8.3 per cent

Beware, yields announced by some of the corporates are calculated differently, as a result of which they look higher than what they actually are.

Muthoot Capital Services’ 5-year fixed deposit, for instance, offers eight per cent interest for the annual cumulative option.

Since the interest is being cumulated annually,the yield will be the same as the coupon rate.. However, Muthoot has indicated that the yield on this FD is 9.39 per cent. This could be because the firm calculated yield based on the simple interest formula where Interest = Principal * Rate of interest * Period.

Thus, it is imperative to verify if the yield advertised by the corporate is right, before falling for high advertised yields on cumulative deposits.

For this, one can use the ‘Rate’ function in Excel that calculates the yield using compound interest formula.

Check our detailed article on how to use the Rate function here – https://tinyurl.com/Rate-function .

Safety aspect

Looking out for an AAA rating for the corporate deposit is one way in which you can ensure higher safety levels. But a high credit rating does not mean your FD is secured or is backed by a guarantee.

Corporate FDs generally come as unsecured debt products. Since the debt given by you is not backed by any assets of the company, investors will have little recourse in case of any default of any principal or interest by the company.

For example, DHFL fixed deposit holders had to take significant haircut as the company went bust in 2019. The company, taken over by the Piramal group, is paying only part of the total outstanding dues to its creditors including fixed deposit holders.

Dues here will be paid under the waterfall mechanism, under which secured creditors get the top priority followed by employees (salaries) and only after that, unsecured financial creditors like FD holders come in.

Bank FDs score higher in this aspect, as the DICGC (Deposit Insurance and Credit Guarantee Corporation) is required to pay the depositors the insured amount of up to ₹5 lakh (inclusive of principal and interest).

Hence, it is essential that you spread your deposits across banks, corporates and NBFCs and not put all your eggs in one basket.

Stiffer lock-in rules

One must keep in mind that corporate fixed deposits come with slightly more stiff withdrawal conditions than banks

For most corporate fixed deposits, one cannot withdraw the deposit within three months from the date of deposit (unless on the unfortunate event of death of the subscriber).

If withdrawn after three months but before six months, no interest will be payable on the fixed deposits. Even after that, a penalty of about two percent is charged by many.

On the other hand, the pre-mature withdrawal conditions for an FD with SBI includes a penalty of 0.5 per cent (1% for deposits above Rs 5 lakh) and an interest rate 0.50 – 1 per cent below the contracted rate. However, no interest will be paid on deposits which remain for a period of less than 7 days.

For premature withdrawals, HDFC Bank levies a penalty of 1 per cent on the applicable rate. However, penalty for premature withdrawal will not be applicable for FDs booked for a tenor of 7-14 days.

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Takeaways from Evergrande crisis for Indian investors

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Want to know how the Evergrande crisis may play out for Indian investors? Listen in on this fictitious water-cooler conversation between Sarojini the equity analyst, Balan the investor and Mukherjee the banker.

Sarojini: What a rally in the Sensex! I think its partly relief that Evergrande didn’t default (technically) on interest payments this week.

Mukherjee: The relief is premature, if you ask me. What’s a $36 million interest payment, when a company owes $300 billion? Evergrande has a series of repayments coming up in the next year and the market’s going to be on tenterhooks every time. Remember that rating agencies such as S&P and Fitch now rate Evergrande’s bonds CC negative, which means highly vulnerable to default.

Balan: But as China’s second largest property developer, it has plenty of assets, no? Evergrande sold property worth RMB 723 million last year and is sitting on a 231 million square metre land bank.

Mukherjee: Like many Indian developers, Evergrande’s main problem is that it has sold most of its homes against advances from customers, who are now wondering if they’ll ever get their apartments. It also seems to have promised high returns to folks on some wealth management products. So Evergrande’s problem really is about whether it has liquidity to meet short-term dues to customers, suppliers and investors. It is not assets, but cash that it is short of. I read that it has liquidity to meet just half its short-term obligations.

Balan: I expect the Chinese government to bail it out. They surely wouldn’t want something of this size to fail!

Sarojini: I’m not so sure. It is the Chinese government that set the match to the Evergrande fuse by creating new rules to cool down China’s over-heated property market last year. In 2020, the Ministry of Housing brought in a new ‘three red lines’ policy which restricted banks from lending to a developer if it crossed three red lines – a liabilities to assets ratio of 70 per cent, 100 per cent net debt to equity and a cash-to-short term liabilities ratio of 1. Evergrande’s fund-raising troubles started because it had crossed these red lines.

Mukherjee: Yes, S&P agrees. It has said that the Chinese government may let events take their course, as Evergrande may not threaten financial stability in China. Evergrande’s loans at RMB 571 billion apparently account for small fraction of China’s bank loans of RMB 160 trillion. Evergrande’s suppliers already knew of the company’s financial troubles. Any Chinese government bailout may help retail homebuyers or investors, but not bond-holders.

Balan: Why are the global markets so jumpy then?

Sarojini: I think they are worried about what this will do to rosy growth projections for the Chinese economy, on which global revival hinges right now. Global agencies were pegging China’s growth at 8.5-9.5 per cent for 2021. After Evergrande, they’re hastily downgrading it to 8 per cent or so. Residential property investments accounts for 10 per cent of China’s GDP and real estate is said to indirectly contribute a fourth of GDP.

Balan: Oh, that’s awful news for the recent party in iron ore, steel and metal stocks based on the commodity ‘super-cycle’ story. China’s property sector accounts for about 20 per cent of global steel and copper offtake and 9 per cent of aluminum demand, I was reading in FT. So this engineered implosion in China’s property sector may mean lower demand projections for these commodities.

Mukherjee: Don’t forget how such events can impact India’s bond markets and the rupee. This will dent the popularity of emerging market (EM) bonds with foreign investors. Chinese developers make up a big chunk of the ‘high-yield’ EM bonds that have been such a hit with foreign investors. If they suddenly develop cold feet, India’s bond markets could see outflows too. Global bond investors already have Fed’s taper plans to contend with. I think Evergrande may affect Indian bonds and the rupee more than the stock market.

Sarojini: Yes, Foreign Portfolio Investor (FPI) participation in Indian bond markets has gone up vertically since the taper tantrum. FPI debt assets in India were about ₹15 lakh crore in 2013, today they’re at ₹42 lakh crore! Unlike our stock markets where domestic retail investors and institutions may be waiting to lap up equities at lower levels, bond investors may be wary of entering at these levels.

Balan: RBI hai na! Its sitting on record forex reserves and will rescue the rupee.

Mukherjee: It’s not that simple. If RBI sells dollars to rescue the rupee, that sucks out liquidity from the system and leads to a spike in local interest rates. You know how hard RBI has been working to keep borrowing costs low for the government.

Balan: You guys are such pessimists, man. There’s a good side to a commodity cool off too. If crude oil, metal and steel prices fall globally, that would be good for India Inc.’s earnings and for the Budget too. Aren’t you reading all the foreign broker reports saying that this is not a Lehman moment for the markets?

Sarojini: Balan, you are too young to remember this. But just before the Sensex crashed 50-odd per cent in 2008, we had very well-argued research notes about how India was ‘decoupled’ from developed markets and couldn’t be hurt by the global financial crisis because its banks or bond markets didn’t have derivative exposures.

Mukherjee: I would agree. When a market is over-valued, it needs a trigger to correct. The trigger need not be logical or even have a deep fundamental impact. It only needs to topple the first card for the Dominoes effect to kick in. I certainly wouldn’t panic and sell all my equities. But I’d surely be taking some money off the table.

Balan: Just like the FPIs!

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This Company Has Declared Rs 80/Share As Its Final Dividend: Know Details

Personal Finance

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Investment

oi-Roshni Agarwal

|

The company pays a part of its profits to its shareholders as dividends and for investors it may become a steady source of additional income besides stock price appreciation.

This Company Has Declared Rs 80/Share As Its Final Dividend: Know Details

This Company Has Declared Rs 80/Share As Its Final Dividend: Know Details

Dividend pay out ratio of the company is calculated as dividend paid/ net earnings

So as investors are on the lookout for high dividend paying stocks, this company from the personal care segment, Procter & Gamble Hygiene and Health Care Limited via an exchange filing dated August 25, 2021 informed that the Board of Directors of the Company, have recommended a final dividend of Rs. 80 per Equity Share (Nominal Value of Rs. 10/- each), for the Financial Year ended June 30, 2021. The dividend shall be paid between November 18, 2021 to December 14, 2021, on approval of the Members at the 57th Annual General Meeting.

Note final dividend is recommended by board of the company and approved by its shareholders in the Annual General Meeting (AGM).

For this particular dividend pay-out the stock will turn ex-dividend on November 9, 2021. The ex-dividend date is the day the price of the equity share of the company gets adjusted for the dividend payout. It is usually one day one working day prior to the Record Date

About the company

Procter & Gamble Hygiene and Health Care Limited, incorporated in the year 1964, is the country’s fastest growing FMCG company that is into manufacturing personal and beauty care and health care products. The Company’s product line includes cosmetics, personal care products, soaps and detergents etc. The company also offers ayurvedic products.

The company is a large cap scrip commanding a market capitalization of Rs. 45,657 crore. Other important financials are as below:

TTM P/E- 70.05

Sector P/E- 75.24

Dividend yield-1.67%

Last traded price- Rs. 14065 per share

RoE-91.25

Debt to equity-0

GoodReturns.in



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Are festive home loan offers worth it?

Personal Finance

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With stamp duty cuts by several state governments adding to the allure of benign property prices, the time seems ripe to buy your dream home. Home buyers also stand to benefit from the prevailing low interest rates on retail loans, that peg up the affordability of home purchases. Despite the status quo adopted by the RBI on policy rates, interest rates on home loans have dropped by 10-120 basis points (bps) since the start of the year, across lenders. To top it up, some banks and HFCs (housing finance companies) are offering limited period offers in the form of further rate cuts and processing fee waivers to cheer up home buyers this festive season.

However, borrowers should keep in mind that these offers pertain to floating rate loans. These rate are likely to be revised upwards during the tenure of the loan, more so, since we are already at the bottom end of the rate cycle. Hence, however enticing the interest rates may seem, the decision to take on debt must be taken with utmost caution, after considering the payouts that you will have to make during the 20-30 year loan tenure.

Here’s a lowdown on some of the festive home loan offers.

Special rates

Kotak Mahindra Bank now offers home loans starting from 6.5 per cent per annum for loans sanctioned and disbursed between September 10 and November 8, 2021. This is the lowest rate on offer in the market currently. However, the right way to compare offers from different lenders would be after considering everything – the rates, processing fees and other charges applicable on a case to case basis. The interest rates are offered according to one’s credit score and income profile.

Kotak’s offer, however, translates into only a 10 bps savings over the bank’s existing interest rates for borrowers with the best credit profile. Let’s bring in some perspective. For example, for every ₹10 lakh of home loan availed during the offer period (say for a 30-year tenure), borrowers can save only ₹790 in their EMIs every year. This offer is valid on all loan products (balance transfer, fresh home loans, etc.) and the interest rate is linked to the credit profile of the borrower.

HDFC has also slashed its interest rates by 10 bps for floating rate home loans sanctioned and disbursed (either partially or fully) until October 31, 2021. Customers with a credit score of over 800 can avail home loans at the rate of 6.7 per cent per annum, irrespective of the type of customer (salaried or otherwise) and the amount of loan availed. Earlier, the HFC offered home loans at 6.8 per cent to 7.3 per cent per annum for loans of up to ₹30 lakh and at 7.05 per cent to 7.55 per cent, for loans over ₹30 lakh but less than ₹75 lakh. For loans above ₹75 lakh, interest was charged up to 7.65 per cent. The HFC, however, offers its women home buyers a discount of at least 5bps on the prevailing interest rate, which can now not be clubbed with the limited period festive offer.

LIC housing finance, another leading HFC has followed suit and now offers home loans up to ₹2 crore at interest rates starting from 6.66 per cent to borrowers having a CIBIL score of 700 and more, irrespective of whether they are salaried or professionals/self-employed. This deal however benefits customers with higher ticket sizes only. This is because until now, the company was already offering interest rates starting from 6.66 per cent on its home loans of up to ₹50 lakh. For higher amounts, the HFC was offering loans at 6.9 to 7.9 per cent per annum.

The offer translates into savings of ₹13,417 (on your annual EMI payments), for customer who borrow ₹70 lakh during the offer period for a tenure of 30 years. The offer is available for home loans sanctioned from September 22 to November 30, 2021, provided the first disbursement is availed on or before December 31, 2021.

The country’s largest lender, SBI too has slashed its rates by up to 45 bps (concessions based on credit score of the borrower) during the offer period. Earlier, the bank offered loans at the rate of 6.7 to 7.3 per cent for loans up to ₹75 lakh and in the range of 6.95 to 7.4 per cent for loans over ₹75 lakh. Now, during the offer period, SBI offers home loans at 6.7 per cent, irrespective of the loan amount.

While 6.7 per cent might not be the best rate offered, the festive offers of SBI do mean substantial savings for customers when compared to the rates offered by the bank hitherto. For a borrower availing a home loan of ₹75 lakh for a tenure of, say 30 years, this would translate to a saving of ₹27,000 on EMI payments on an annual basis. Besides, for non-salaried borrowers, this offer period could mean an additional saving of 15 bps on the annual rate of interest charged.

Fee waivers

Besides lower rates, many banks and HFCs are also offering waivers on processing fees. LIC Housing finance, for instance, has capped its processing fee at a maximum of ₹10,000 or 0.25 per cent of the loan amount, whichever is lower for loans up to ₹2 crore. Outside of the offer period, the HFC charged a fee in the range of 0.25 to 0.5 per cent of the loan amount. The maximum fee charged was pegged at ₹15,000 for loans up to ₹1 crore and up to ₹50,000, for loans in the range of ₹1 crore to 3 crore.

HDFC too has slashed its processing fee to ₹3,000 for customers who are salaried and self -employed professionals, and to ₹5,000 for self-employed non-professionals, from the earlier ₹10,000. SBI also is offering a complete waiver on its processing fee for home loan buyers, during the offer period.

Bank of Baroda is also offering a 25 bps cut in the interest rates charged on its Baroda Home Loans, along with a 100 per cent waiver in processing fee for loans availed until December 31, 2021.

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2 Equity Mutual Funds Rated 1 By CRISIL To Initiate SIP In 2021

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Canara Robeco Equity Tax Saver Direct Growth

This ELSS mutual fund scheme was launched by the fund house Canara Robeco Mutual Fund in the year 2013 and has been in existence for 8 years. According to Value Research, Canara Robeco Equity Tax Saver Direct-Growth gains over the last year have been 71.15 percent, with an average annual return of 17.67 percent since inception.

The fund’s expense ratio is 0.81 percent, which is lower than the expense ratio charged by most other funds in the ELSS fund category. The fund has a major equity allocation across Financial, Technology, Construction, Healthcare, Automobile sectors and the fund’s top-performing holdings are Infosys Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Larsen & Toubro Ltd., Tata Consultancy Services Ltd..

In terms of delivering consistent returns investing in Canara Robeco Equity Tax Saver fund can be a decent bet as it has been rated 1 or 5 star by CRISIL, 5 star by Value Research and again 5 star by Morningstar. As of 24th September 2021, the Net Asset Value (NAV) of the fund is Rs 116.85 and the Asset Under Management (AUM) of the fund is Rs 2,679.66 Cr.

The fund comes with a lock-in period of 3 years and definitely no exit load. Investments in this fund up to Rs 1.5 lakh under section 80C would be tax-free and capital gains above Rs. 1 lakh will be subject to LTCG (long-term capital gains) tax at a rate of 10%. One can start SIP in this high-rated equity fund with a minimum monthly contribution of Rs 500.

Canara Robeco Bluechip Equity Fund Direct Growth

Canara Robeco Bluechip Equity Fund Direct Growth

This Large Cap mutual fund scheme has been actively performing for the last 8 years having been launched in the year 2013 by the same fund house. Canara Robeco Bluechip Equity Fund Direct-Growth Returns in the previous year were 64.72 percent, according to Value Research, and it has generated 16.75 percent average annual returns since its inception.

The fund’s expense ratio is 0.36 percent, which is comparable to the expense ratio charged by most other funds in the large-cap fund category. The fund has its equity allocation across Financial, Technology, Energy, Construction, Healthcare sectors. The fund’s top-performing holdings are HDFC Bank Ltd., ICICI Bank Ltd., Infosys Ltd., Reliance Industries Ltd., Housing Development Finance Corpn. Ltd..

Canara Robeco Bluechip Equity fund has been granted a 1 or 5 star rating by CRISIL, 5-star by Value Research and again 5 star by Morningstar which simply indicates its historical performance in the same category i.e. large-cap. The fund’s Net Asset Value (NAV) is Rs 42.58 as of September 24, 2021 and its Asset Under Management (AUM) is Rs 4,271.67 Cr.

The fund charges an exit load of 1% if units purchased are redeemed within 1 year of the investment date. If you withdraw your allocated units within 1 year of investment then a 15% of Short-term capital gains tax will be applied, whereas you are required to pay a Long-term capital gains tax of 10% on the sale of your allocated equity shares of more than Rs 1 lakh. You can start SIP in this fund with a minimum amount of Rs 1000.

Best Performing Canara Robeco Mutual Funds

Best Performing Canara Robeco Mutual Funds

Apart from the factors discussed above, here are the past returns of 2 high-rated Canara Robeco Equity Mutual Funds that you need to consider before initiating SIP in 2021.

Funds 1 mth returns 6 mth returns 1 Yr returns 3 Yr returns 5 Yr returns
Canara Robeco Equity Tax Saver Direct Growth 6.54% 26.63% 71.15% 25.22% 19.88%
Canara Robeco Bluechip Equity Fund Direct Growth 6.65% 23.76% 64.72% 23.83% 18.68%

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Disclaimer

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ED, BFSI News, ET BFSI

Personal Finance

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The Enforcement Directorate (ED) on Saturday said it has frozen shares worth Rs 700 crore after raids against Karvy Stock Broking Limited (KSBL) CMD C Parthasarathy and others as part of a money laundering investigation against them.

He is currently lodged in the Chanchalguda jail of Hyderabad after being arrested by the Telangana Police last month.

The ED searches were carried out on September 22 at six locations in Hyderabad and on various premises of Karvy group of companies, connected entities and the residential premises of C Parthasarathy, the agency said in a statement.

“Several incriminating evidences in the form of property documents, personal diaries, electronic devices, email dumps, etc have been seized and are being analysed,” it said.

“It is reliably learnt that C Parthasarathy is trying to off-load his shares in the group companies through private deals and thus, in order to preserve the proceeds of crime till further investigation, ED has issued a freezing order on September 24 and the estimated value of these shares has been arrived at Rs 700 crore as per the valuation for the year 2019-20,” it said.

These shares of the Karvy group are being held “directly and indirectly” by CMD Comandur Parthasarathy, his sons Rajat Parthasarathy and Adhiraj Parthasarathy, and their entities.

The ED case, filed under the criminal provisions of the Prevention of Money Laundering Act (PMLA), is based on a Telangana Police FIR alleging KSBL had “illegally pledged the securities of its clients and taken a loan of Rs 329 crore and diverted the same.”

“Another FIR has been registered by central crime station of Hyderabad Police for defrauding IndusInd Bank to the tune of Rs 137 crore and one more FIR has been registered by Cyberabad Police authorities for defrauding ICICI Bank to the tune of Rs 562.5 crore,” it said.

The ED has clubbed all these FIRs as part of its probe and has also recorded the statement of C Parthasarathy in jail.

KSBL under the leadership of C Parthasarathy had committed “gross irregularities” and all the illegally taken loans have become NPA, the agency said.

It is learnt that more FIRs are being registered by other banks and also individual shareholders/ investors, the ED said.

The total loan proceeds taken from multiple banks using the same modus operandi is around Rs 2,873 crore, it said, adding that the NSE and SEBI are also investigating the affairs of KSBL.

The agency said its probe found that KSBL “did not report” the depository participatory or DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE), in the filings made from January-August, 2019 with regulators/exchanges.

“KSBL fraudulently transferred shares belonging to its clients to its own demat account (which is not disclosed to the exchanges) and pledged the shares held in these accounts with the lenders/banks (HDFC bank, ICICI bank, IndusInd bank, Axis Bank, etc.).”

“The securities lying in the aforesaid DP account of KSBL, actually belonged to the clients who were/are the legitimate owners of the pledged securities,” the agency said.

It said KSBL did not have any legal right to create a pledge on these securities and generate funds.

“The quantum of such loans taken by KSBL from illegal pledge of shares is to the tune of Rs 2,873 crore. KSBL credited the funds raised by pledging of client securities to 6 of its own bank accounts (stock broker-own account) instead of the “Stock Broker-Client Account” and further has not reported these 6 own bank accounts (stock broker-own account) held with various private banks to the Sebi,” it alleged.

Prima facie, the ED said, a net amount of Rs 1,096 crore was transferred by KSBL to its group company–Karvy Realty (India) Ltd– between April 1, 2016 to October 19, 2019.

It accused KSBL of conducting “large-scale trading activities in the names of 9 companies that included Karvy Consultants Limited (KCL), which is a group company of Karvy, and 8 other shell companies, in the guise of doing insurance business.”

“Several crore of rupees were diverted for acquiring immovable properties through the group company, KRIL, and to other group companies as well.”

It also came to light that recently deletion of files and emails from the computer servers by using anti-forensic tools had been done, under the instructions of C Parthasarathy,” it claimed.

The bank statement analysis of these companies revealed that there is “large value rotation of funds” between the Karvy group companies and the bank accounts of certain shell companies.



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What’s new in China’s crackdown on crypto?, BFSI News, ET BFSI

Personal Finance

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China‘s most powerful regulators have intensified the country’s crackdown on cryptocurrencies with a blanket ban on all crypto transactions and crypto mining.

The move sent bitcoin and other major coins lower, as well as pressurising crypto and blockchain-related stocks.

What’s new?

Ten Chinese agencies, including the central bank and banking, securities and foreign exchange regulators, have vowed to work together to root out “illegal” cryptocurrency activity.

While China has been putting in place increasingly stricter rules on virtual currencies, it has now made all activities related to them illegal and sent a signal of intent they plan to get even tougher on enforcing the rules.

China’s central People’s Bank of China (PBoC) said it was illegal to facilitate cryptocurrency trading and that it planned to severely punish anyone doing so, including those working for overseas platforms from within China.

The National Development and Reform Council (NDRC) said it would launch a nationwide crackdown on cryptocurrency mining as it tries to phase the sector out entirely.

What’s come before?

China does not recognise cryptocurrencies as legal tender and the banking system does not accept cryptocurrencies or provide relevant services.

In 2013, the government defined bitcoin as a virtual commodity and said individuals were allowed to freely participate in its online trade.

However, later that year, financial regulators, including the PBoC, banned banks and payment companies from providing bitcoin-related services.

In September 2017, China banned initial coin offerings (ICOs) in a bid to protect investors and curb financial risks.

The ICO rules also banned cryptocurrency trading platforms from converting legal tender into cryptocurrencies and vice versa.

The restrictions prompted most such trading platforms to shut down with many moving offshore.

The ICO rules also barred financial firms and payment companies from providing services for ICOs and cryptocurrencies, including account openings, registration, trading, clearing and liquidation services.

By July 2018, 88 virtual currency trading platforms and 85 ICO platforms had withdrawn from the market, the PBOC said.

Why does it keep tightening the rules?

The huge run-up in price in bitcoin and other coins over the past year has revived cryptocurrency trading in China, with investors finding ways round the existing regulations. That’s come as the country is trying to develop its own official digital currency, becoming the first major economy to do so.

Earlier this year, Chinese regulators tightened restrictions that banned financial institutions and payment companies from providing services related to cryptocurrency. An industry directive said that speculative bitcoin trading had rebounded and was infringing “the safety of people’s property and disrupting the normal economic and financial order”.

Many Chinese investors were now trading on platforms owned by Chinese exchanges that had relocated overseas, including Huobi and OKEx. Meanwhile, China’s over-the-counter market for cryptocurrencies has become busy again, while once-dormant trading chartrooms on social media have revived.

China-focused exchanges, which also include Binance and MXC, allow Chinese individuals to open accounts online, a process that takes just a few minutes. They also facilitate peer-to-peer deals in OTC markets that help convert Chinese yuan into cryptocurrencies.

Such transactions are made through banks, or online payment channels such as Alipay or WeChat Pay, though these have since promised to conduct due diligence on clients and set up monitoring systems targeting key websites and accounts to detect illegal crypto-related transactions.

Retail investors also buy “computing power” from cryptocurrency miners, who design various investment schemes that promise quick and fat returns.

What’s the impact of the crackdown?

While cryptocurrencies fell on Friday, the fall was less pronounced than the slide seen in May when China’s State Council, or cabinet, vowed to crack down on bitcoin mining.

The test will be whether China is able to find and punish platforms and people breaking the rules.

Some analysts said that based on what’s gone before, determined investors would still likely find a way to trade.

“While retail traders in China may no longer be able to access online exchange platforms that are now illegal, crypto funds may be able to move management of their funds offshore,” said Ganesh Viswanath Natraj, Assistant Professor of Finance at Warwick Business School.



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