Sops might cost the government Rs400 crore in revenues; no rollback declared on fuel prices
The government announced a slew of concessions worth up to Rs400 crore for coffee growers, local tobacco industry, hospitals, cancer drugs and urban housing for the poor, among others, as part of the Finance Bill that was passed today, reports PTI.
Replying to a debate on the Finance Bill, 2010-11, finance minister Pranab Mukherjee said he had decided to lower excise duty on hand-made cheroots priced up to Rs3 per stick to 10% following demands from members and the industry.
He also announced a Rs-241 crore relief package for coffee growers by way of waiving three-fourth of loans taken prior to 2002, especially by small farmers, while restructuring repayments for the rest.
Mr Mukherjee, however, did not roll back the hike in excise and customs duty on petrol and diesel, saying that the government has to look at ways of meeting the Rs85,000 crore revenue loss on fuel sale expected this fiscal.
The measures announced will have a revenue implication of Rs300-Rs400 crore, revenue secretary Sunil Mitra said.
The opposition NDA and the Left parties staged a walkout in protest against the government’s decision not to roll back the Rs2.71 a litre increase in petrol and Rs2.55 per litre hike in diesel rates.
With a view to giving impetus to healthcare, the minister announced tax breaks for construction of hospitals with at least 100 beds anywhere in the country.
On construction of real-estate complexes, which has been brought into the ambit of service tax in this year's Budget, Mukherjee increased the tax concession by offering more abatement.
Abatement (tax rebate) has been increased to 75% from 67% of the gross value of property that includes land value.
The scheme claims to combine benefits of both large-caps and mid-caps by swinging the portfolio in the direction of the more attractive option. If that’s not market-timing, what is?
When it comes to fancy ideas and pushy sales promotions, Indian mutual fund houses would definitely occupy pole position. Here is one such offering from HDFC Mutual Fund that is as strange as they come. Existing investors of HDFC MF are being enticed into a half-baked offering named HDFC Premier Multi-Cap Fund (PMC). It is an open-ended growth scheme, which aims to generate capital appreciation in the long term through equity investments by investing in a diversified portfolio of mid-caps and large-cap ‘blue chip’ companies.
It claims to have a ‘unique’ investing strategy, wherein it will invest a minimum of 35% of the scheme each in large caps and in mid caps. The balance of the scheme will be a ‘swing portfolio’ that can invest in either of the two. How will this operate? Depending on the fund manager’s perception as to which appears more attractive, the ‘swing’ part of the portfolio will be directed towards either large-caps or mid-caps.
The rationale behind this strategy is that mid-caps and large-caps do not always follow a uniform trend. Sometimes large-caps perform better while at other times mid-caps gain the edge. So, investments under these two categories would yield varying results at different times.
So, the fund house suggests that in order to maximise benefit from the movements of each category, one should dynamically manage their portfolio by switching into different categories of the market. For individual investors to do this on their own is not practical as it involves a lot of research, costs and taxes.
That’s where the HDFC Premier Multi-Cap Fund claims to offer a unique edge to investors. Instead of focussing on the movements of the broader indices—the Sensex and the Nifty—the Fund allows investors to play the movements of large-cap stocks and mid-cap stocks. There are several problems with this.
First, this scheme appears a lot similar to HDFC Equity Fund which invests primarily in large-caps but also provides exposure to mid-caps. It seems like an adapted version of HDFC MF’s most popular fund scheme.
Second, how is swinging from one kind of stock to another anything other than market-timing —that the fund companies always frown upon?
Third, more importantly, though, this concept of having flexibility between allocation towards different sub-components is not a new practice. Fund managers are free to realign portfolio allocations as per their whims and fancies.
That is why fund prospectuses are full of vague generalisations. As such, this approach of HDFC PMC Fund is not a ‘unique strategy’ after all. But then fund management is a business, which entirely depends on assets fund companies can gather by such apparently differentiated sales pitches.
Customers are being harassed by banks & AMCs to submit KYC documentation despite furnishing relevant information beforehand
If you are an investor in a mutual fund or a credit card customer of a bank, chances are you have already been contacted by the company concerned to furnish a bunch of documents as proof of your identity. It does not matter if you have already submitted the documents to your broker or agent. This annoying facet is an inevitable outcome of the Know Your Customer (KYC) regime brought upon bankers, mutual fund companies and telecom operators.
Repetitive documentation and filing has ticked off hundreds of investors. An annoyed investor told Moneylife, “Recently, various asset management companies (AMCs) and banks have started asking me to furnish details of KYC certification along with documentary evidence. This was despite obtaining my certification from Central Depository Services Ltd (CDSL) two years back. When I requested them to obtain the same from CDSL directly in order to avoid unnecessary paperwork and duplicated effort to verify/re-verify the KYC particulars, they seemed a bit upset.”
Another investor had a similar experience. He said, “When I open an account with a broker, I submit all the details as required under KYC. In fact, the broker's representative has personally collected all the details after meeting me. So, when you are again asked to submit the same set of documents, it is enough to annoy you. My simple request to SEBI is, when investors have opened trading accounts with large brokerages and after satisfying all the KYC conditions, they should not be made to go through with this procedure again.”
Sources from the Reserve Bank of India (RBI) said that customers should comply with the requirements as it would benefit them in terms of safety, security and seamless flow of transactions. With SEBI piling the pressure on banks and AMCs to furnish KYC documentation of customers, these companies have been forced to round up customers for filing necessary documents.
A credit card customer of SBI recently received a letter from the bank seeking various documents under the KYC norms, despite the fact that all his details are already with the company. The letter stated that as per RBI guidelines issued on KYC norms, it is mandatory to periodically update the records with current information on the customers.
The basic purpose of KYC was to prevent identity theft, money laundering, terrorist financing, etc. This involves verifying customers' identity and address by asking them to submit documents that are accepted as relevant proof.
However, in most cases, KYC has only served to complicate procedures; requiring huge paperwork on part of service providers and making customers run from pillar to post for filing necessary or sometime irrelevant documents. To put things in perspective, an investor is required to sign around 80 times on a KYC form. The sheer volume of documentation necessitated acts as a huge deterrent for many investors.
An independent financial advisor (IFA) had earlier disclosed to Moneylife, “I have a customer who wants to invest Rs50,000 each in five different funds. For this, I have to give five different KYC documents for him and his wife, which is absurd. The issue here is, if you know the person’s surname and father’s name, date of birth and PAN card, there can only be one person whose details match. So why is the need for this unnecessary repetitive work?”