According to a groundbreaking research, it is nearly impossible to impart financial literacy...
Medical developments from around the world
Ugly Side of Statins
Researchers from Ireland undertook an objective review of the PubMed, EM-BASE and Cochrane review databases relating to statins. Lifestyle modifications trumped statins hands down. For a drug that does precious little for primary prevention, the side-effects are alarming.
It was found that for every 10,000 people taking a statin, there were: 307 extra patients with cataracts, 23 additional patients with acute kidney failure, 74 extra patients with liver dysfunction. However, there was no evidence for statin therapy in primary prevention. The flip side of the study was that statins, in fact, increased the risk of heart diseases in women, the young and people with diabetes.
Other findings were:
• Muscle fatigability increased 30% with more than 11% incidence of rhabdomyolysis, a life-threatening muscle condition;
• Coronary artery and aortic calcification;
• Erectile dysfunction which is 10 times more common in young men taking the lowest dose of statin;
• Diabetes, cataract and cancer, all increased in statin-taking people, especially if they are young.
All side-effects are dose-dependent and persist during treatment. These findings on the major adverse effects of statins had been under-reported.
Low levels of cholesterol might result in your brain not having the raw materials it needs to make bio-chemicals critical for memory and cognitive function. High cholesterol levels may, in fact, be protective, as has been found in the case of elderly and heart failure patients.
Too Much Medicine Is Not Good
A recent conference organised by British Medical Journal and other universities in Hanover, NH, where more than 500 scientists and interested people gathered, came to the conclusion that too much medicine is bad for people.
Sports Stars Mislead the Younger Generation
Young audiences, especially teenagers, look up to sports and film stars as role models of fitness and athleticism. A new study, scheduled to appear in the November issue of Pediatrics, finds that sports celebrities are routinely misleading young audiences because of their commercial endorsements of unhealthy junk foods. When TV ads come with celebrity sports or film personalities extolling the virtues of junk food and drinks, an entire generation is misled. These twinkling stars do not realise their folly in converting a whole generation into junk food addicts.
Much of the educated class no longer sticks to Indian healthy foods and drinks. I was shocked to hear, through BBC, that India imports 800 million pork sausages from the United Kingdom!
Celebrity athletes cover up the acidifying effect of dye-injected, sugary junk composition of drinks and highly salted preserved junk foods like pizzas, cornflakes, fruit juices loaded with sugar or sugar equivalents and so on.
Since these celebrity athletes have plenty of money, why do they compete to endorse junk food brands for multi-crore rupees? Getting more does not satisfy them. How much money does one need after all? Why this lust for more money, even at the cost of changing the eating habits of a whole generation with disastrous health consequences? Today, young boys and girls are diagnosed with high blood pressure and diabetes!
My fervent appeal for celebrity athletes is to desist from money.
While the RBI governor is trying to energise the corporate bond market, he may like to know the scope for non-banking non-financial companies to issue corporate bonds. It is almost completely dried up, with the new rules for the public deposits, draft of which was unveiled by the Ministry of Corporate Affairs recently.
In the RBI’s second quarter Monetary Policy released on 29th October there were two proposals in the Mid-term policy to invigorate the bond market. One is credit enhanced bonds. The RBI will be bringing in guidelines for credit enhancements and liquidity facilities for bonds. While details will be known only after the relevant guidelines are available (no timeline laid in the Policy), it is stated that these enhancements will not be guarantees. Currently, it is possible for corporates to get a credit default swap for listed bonds or infrastructure bonds. May be the credit enhancement may come in form of credit default swap. Or it may come in form of a liquidity support to enable the repayment of corporate bonds.
The second is inflation-indexed bonds, ideally suited for retail investors. These bonds will provide a rate of return over and above inflation, and therefore, assure investors a real rate of return. Of course, these will be issued by the Govt of India – these will be national savings certificates, with inflation linkage. They do not assist the corporate sector; corporates will not even be allowed to invest. Usually, such securities do not come to the capital markets, but nevertheless, they will provide investors with an alternative mode of investing money.
The RBI also proposes to introduce cash–settled interest rate futures. The modalities of this are to be worked out by end-November, with the objective of operationalising this by end-December. This also may provide an effective interest rate risk management instrument.
However, much contrary to the RBI’s intent of encouraging the bond market, the scope for non-banking non-financial companies to issue corporate bonds is almost completely dried up, with the rules for the public deposits, draft of which was unveiled by the Ministry of Corporate Affairs recently. For those who are wondering as to why public deposit rules affect corporate bonds, it must be understood that in India, public deposits include corporate bonds too, unless the bonds fall in one of the exempted categories.
The exempted categories are now being pruned, virtually to leave no scope for non-banking non-financial companies to issue bonds at all.
The rules provide that the bonds have to be secured by first charge on assets. This itself is a sharp contrast to the international scenario. Internationally, most corporate bonds are unsecured. If the issuer had security to offer, the issuer would rather borrow money under traditional banking channels. In any case, if the issuer had to offer first charge, the issuer will surely have to seek the consensus of existing lenders, who will never grant the same as it impedes their security interest.
Another interesting instrument of corporate funding – optionally convertible bonds – has completely been guillotined, since Sahara had evidently misused the instrument. But for Sahara, which is a failure of implementation, what is wrong with optionally convertible bonds is an open question.
Non-banking finance companies are not subject to these rules – of course, they are subject to the RBI’s rules. The essence of this will be that in future, much of the incentive for bond issuance will remain limited to NBFCs. Non-financial companies will have to continue to look at NBFCs for financial support in addition to traditional limits of borrowings.
The changes in the bond market are not the only reason to set NBFCs smiling. There are several other reasons – the mid-Term Policy entitles NBFCs to join corporate debt restructuring system too. In addition, a recent amendment of the Companies Act puts NBFCs at par with banks to charge borrowers with fraud provisions, if the particulars supplied at the time of availing credit facilities were either wrong or misleading.
Indian bond market is in an extremely under-developed stage, completely inappropriate for the otherwise fledgling state of the economy. The penetration rate for corporate bonds in India, that, is corporate bonds as a percentage of total debt is only 4%, whereas China is at about 17%, not to speak of the Western markets.
Indian corporate bond market mopped up some Rs16,982 crore during financial year 2012-13. For the first 6 months of 2013-14, the number is Rs5,762 crore. If REC’s bond issuance of Rs3,440 crore is taken out, this leaves a paltry amount of only Rs1,300 odd crore, that too with only five issuers.
Vibrant bond markets are important both for the corporates as also for investors. For corporates, bonds provide an alternative to traditional banking sources. Bank money is typically comes at a floating rate of interest, and is usually short term, thereby exposing the borrower to both interest rate risk as well as liquidity risk. As opposed to this, corporate bonds may provide a long-term, fixed interest option.
As for investors, corporate bonds provide alternative to equity investments. Fixed income investments are safe, carry lesser market risk, and may provide regular income to the investors. Investors may either invest directly, or through mutual funds or other institutional investors.