Regulations
Budget 2015: FMC to be merged with SEBI

The proposed merger of FMC with SEBI would help streamline the monitoring of commodity futures trading and curb wild speculations, Jaitley said 

 

In a significant move, the Union Government Saturday said commodities market watchdog Forward Markets Commission (FMC) will be merged with the market regulator Securities and Exchange Board of India (SEBI).
 
Presenting his maiden full-fledged Budget, Finance Minister Arun Jaitley said the government would merge “FMC with SEBI’’.
 
The proposed merger would help streamline the monitoring of commodity futures trading and curb wild speculations, he added.
 
To implement the merger, the Securities Contracts (Regulation) Act (SCRA) as well as the Forward Contracts (Regulation) Act (FCRA) would need amendments.
 
The Financial Sector Legislative Reforms Commission (FSLRC) had recommended that SEBI, IRDA, PFRDA and FMC should be merged into a single entity into a unified financial agency (UFA).
 
In September 2013, FMC was brought under the Finance Ministry after the emergence of a major crisis at National Spot Exchange Ltd (NSEL).
 
The move came in the wake of the Rs5,600-crore payment crisis at NSEL. Earlier, FMC was with the Consumer Affairs Ministry.
 

User

Jaitley: Aam Admi must save more for tax benefits

While there are no changes in income tax rates for individuals, Jaitley has increased exemption limit for health insurance premium, contribution to pension scheme and transport allowance

 

Finance Minister Arun Jaitley on Saturday kept the tax exemption limits for individual taxpayers unchanged. However, he asked the middle class to save more, by either contributing more to National Pension Scheme (NPS) or buying health insurance.
 
In his first full Budget, the Finance Minister increased the exemption limit for contribution to NPS to Rs1.50 lakh from Rs1 lakh. Health insurance premium exemption is also increased to Rs25,000 from Rs15,000. For senior citizens the health insurance limit would be Rs30,000. “Individual tax payer will benefit to the extent Rs4.44, lakh from the exemptions announced,” Jaitley said.
 
Here are Jaitley’s proposals for the middle class…
 
A.     Increase in the limit of deduction in respect of health insurance premium to Rs25,000 from Rs15,000.
 
(1)   For senior citizens the limit will stand increased to Rs30,000 from the existing Rs20,000.
 
(2)   For very senior citizens of the age of 80 years or more, who are not covered by health insurance, deduction of Rs30,000 towards expenditure incurred on the treatment will allowed.
 
B.     The deduction limit of Rs60,000 towards expenditure on account of specified diseases of serious nature is proposed to be enhanced to Rs80,000 in case of very senior citizens.
 
C.     Additional deduction of Rs25,000 will be allowed for differently abled persons under Section 80DD and Section 80U of the Income-tax Act.
 
D.     The limit on deduction on account of contribution to a Pension Fund and the New Pension Scheme is proposed to be increased to Rs1.5 lakh from Rs1 lakh.
 
E.      To provide social safety net and the facility of pension to individuals and additional deduction of Rs50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80 CCD. This will enable India to become a pensioned society instead of a pensionless society.
 
F.      Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C.  All payments to the beneficiaries including interest payment on deposit will also be fully exempt.
 
G.     Transport allowance exemption is being increased to Rs1,600 per monthly from Rs800 per month.
 
H.     For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.
 
Last year, Jaitley had increased the tax exemption limit to Rs2.5 lakh from Rs2 lakh, while raising the housing loan rebate to Rs2 lakh from Rs1.5 lakh for self-occupied property. 
 

User

The Lone NRI

SEBI and RBI have ensured that NRIs are put through many hurdles before they can invest in Indian stocks. A first-person account of the pains

 

I have lived about half of my life in the United States and the other, in India where I was born. Growing up in a Socialistic country, it was ingrained into me that your education was your passport to a successful future and nothing else mattered. After completing an undergraduate degree, I was drawn towards the share market. These were the ‘80s where every IPO was oversubscribed (the face value of a stock was always Rs10 or Rs100 or Rs1,000 (rare)). Many years later, I worked for a company incorporated in India and to cash my options, I had to get a PAN (Permanent Account Number) from the Indian Income Tax Office. After several mis-steps, I finally got the card (it felt like an achievement after the application was rejected twice on flimsy grounds) and I started looking at what I could do with my PAN number. 

 

It was August 2013 and I was browsing a newspaper when an article caught my attention. The RBI had just released guidelines for NRIs and other foreign investors to invest in the Indian market. This spurred me to think that it is perhaps time to invest in India's equity markets. I was armed with my PAN card and a million passport size photos and other documentation such as my local address, permanent address, etc. I approached HDFC Bank to open an NRI Demat account. And then the fun began...

 

The new accounts manager in the local HDFC Branch was ill-equipped to open this kind of account but help was on the way. I was connected to the NRI accounts specialist at HDFC who offered to come home to help with the application process. He explained to me that there will be 4 accounts created - a PIS NRE account (Portfolio Investment Scheme Non-Resident Rupee and a non-PIS account. Further more, I had to open a PIS NRO (Non-Resident Ordinary Rupee) and a non-PIS NRO account. If this gets your head spinning, it’s just a start!
 
I took a giant leap of faith and signed all the forms in the right places and also gave him a check from my NRO account to get the proceedings started. True to his word, he had the account opened in 72 hours flat and he also connected me with an online trading company who would (for a nominal fees) allow me to trade online, since I lived half way across the world and can't really call my broker to make the trades. (HDFC Securities would not be able to offer an online trading account.)
 
A trip to the online trading company's sales office and I was confronted with another mountain of forms to fill and sign. I had read the fine print in the RBI notification and was told that I could trade not only in equities but also in Futures and Options. But there was a catch... To trade in Derivatives, I needed to get a CP Code from a securities company.
 
After an hour of filling applications and giving another set of copies of my ID, PAN card, passport size photos, my first born (just kidding!) I was told that it would take up to six weeks for the CP code to come through and then and only then can I start trading. It was time for me to return to the US and I began following up from the US. After about 8 weeks and much pushing and prodding I was told that my CP code was ready and the same was notified to my online trading company, who promptly set me up with an account. I was impressed that while it took time, things did move and I could actually trade from my home computer stocks half way across the world! So I traded happily ever after? Not so fast!
 
After about a week or so, I started noticing that I was being penalized for not having enough margin (although I thought I did because there was enough money in the PIS NRx account). When I started inquiring about this, I was slapped with a freeze on my trading account with a terse explanation that my CP Code has not still been issued and therefore I cannot trade! This got me squarely in between the eyes and I was on the phone hollering with the securities company as to how I did not have a "CP Code" and still could trade. A further two weeks elapsed before CP code was issued and this time around, the margins were established by the securities company and I could resume trading. I had started the process in July and it was December before everything was in place.
 
Trading went well for a few days till I hit another snag. Dealing with futures is a high risk, high reward proposition. I had bought a futures block and tried selling it within a few minutes because the stock was dropping. The online trading system registered the Buy but not the Sell for a full 24-hour window during which the price dropped alarmingly. My phone calls were not returned and before I knew it all my profits were wiped out because of a computer glitch at their end. The company issued a general apology to the trading public but the damage was done.
 
There is another wrinkle in this whole thing. Apparently NRIs and Foreign investors cannot trade on any stock! They can only do so from a list that is updated daily by the RBI. So the process is for the trader to look up this list, determine which stocks he/ she can buy and then proceed to do so. This reeks of socialism where a privileged few somehow managed to get on this list. This is a blatantly protectionist view on part of the government and should be done away with or the real companies in need of cash will not get them.
 
So why the title, you ask? Well in the course of my discussions with the online trading company, I found out that they had only five NRI accounts and only 1 was active (that would be me). So I was the guinea pig on which all these companies learnt to follow the RBI directives. Should I be happy about this? I don't know but I will continue to be active in Indian equities because I am at heart an optimist.
 

 

User

COMMENTS

Navin

2 years ago

An eye-opener for anyone who believe that India has become great investment destination. Prime Minsiter Narendra Modi's thrust on ensuring "ease of business" will remain a dream till such hurdles are placed in the path of investors.Navin Upadhyay

Navin

2 years ago

An eye-opener for all of us who are swayed by the noises made by authorities that all efforts are being made to help NRIs trade in the indian equities. The Government must order an inquiry and ensure that such things are not repeated in future.Navin Upadhyay.

Vivek Mahajan

2 years ago

In a country where the regulators take pride in saying that they have never traded or would never trade in stocks/commodities, how do you expect them understand the pain of investors and lay down investor friendly regulations & procedures? Can a virgin ever understand the labor pain of delivering a child? The law makers continue to be guided by a handful of jokers from various Govt. agencies who hardly understand the serious business of trading/investments.

Dr Anantha K Ramdas

2 years ago

Dear Mr Iyer: I am truly sorry to hear about your experience. I have mine too, but I learnt the hard way, and have also returned from Alexandria, Virginia.

I dont know your location, but you can get in touch with me on email via the Moneylife office, and I am located in Bengaluru. I will be happy to share my experience with you, free of cost.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)