Lock-in period for FIIs in infra bonds may be cut to one year

As per RBI’s recently liberalised the norms SEBI-registered FIIs are also allowed to invest in non-convertible debentures and bonds issued by non-banking financial companies categorised as ‘Infrastructure Finance Companies’ (IFCs) by the RBI, within the overall limit of $25 billion

New Delhi: With a view to attracting more foreign funds into the economy, the government is weighing the pros and cons of reducing the lock-in period of long-term infrastructure bonds for foreign institutional investors (FIIs) to one year, reports PTI.

“India is toying with the idea of reducing lock-in period of long-term infra bond for FIIs from three years to one year,” a senior finance ministry official said.

The Reserve Bank of India (RBI) had recently liberalised the norms allowing FIIs to invest up to $25 billion, up from the earlier limit of $5 billion, in bonds and debentures of Indian infrastructure companies.

FIIs registered with the Securities and Exchange Board of India (SEBI) were also allowed to invest in non-convertible debentures and bonds issued by non-banking financial companies categorised as ‘Infrastructure Finance Companies’ (IFCs) by the RBI, within the overall limit of $25 billion.

However, this is subject to conditions that such instruments shall have a residual maturity of five years or above and the investments would have a lock-in-period of three years.

This lock-in-period is computed from the time of first purchase by FIIs.

The official said if the lock-in period is reduced, FIIs will find it more attractive to invest in such bonds.

To channelize savings for development of infrastructure sector, the government in 2010-11 introduced the concept of long-term tax savings bond. It provides tax exemption on investments up to Rs20,000 in long-term infrastructure bonds.

This is over and above the existing tax saving limit of Rs1 lakh.

The government proposes to double investment in infrastructure to $1 trillion during the 12th Five Year Plan (2012-17).

A host of companies like IFCI, REC and IDFC had raised about Rs8,000 crore through issue of tax-savings infra bonds in the last fiscal.

Foreign funds withdrew over Rs3,200 crore from the Indian securities market in November amid concerns over the worsening debt crisis in the euro zone.

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Guidelines regulating role of advisers soon: SEBI

SEBI, which had put up a discussion paper on the role of investment advisors, has received detailed feedback.  The market regulator is set to announce norms for regulating these entities soon

New Delhi: Capital market regulator Securities and Exchange Board of India (SEBI) on Tuesday said it will soon come out with norms for regulating the role of investment advisors, reports PTI.

“We have received a very detailed feedback and we are undergoing a process of discussion and shortly we will come out with regulations (on investment advisers),” SEBI whole-time member Prashant Saran said here.

“It is very difficult to give a time-line. We do need to build a consensus,” he said on the sidelines of an Assocham event here.

In September this year, SEBI had proposed to bar investment advisers from acting as agents for promoting financial products.

The entities, which include banks and fund managers, would have to be registered with a self-regulatory organisation (SRO) as investment advisers, said the concept paper on Regulation of Investment Adviser issued SEBI.

“No financial incentives/consideration would be received from any person other than investors seeking advice. In case of advice regarding investment in entities related to the investment adviser, adequate disclosures shall be made to investor regarding the relationship,” the paper had said.

It had said, “The person who interfaces with the customer should declare upfront whether he is a financial adviser or an agent of the manufacturer.”

Mr Saran said mutual funds must increase their penetration in smaller cities and rural areas while financial literacy should spread among the uneducated also.

The focus should be on small investors so that the base widens. Financial education should be sector-specific and product-neutral, he said.

Most of the money parked in mutual funds comes from institutional investors which include corporates, banks and foreign institutional investors (FIIs).

Many financial products are becoming complicated and it is not easy for even an educated person to understand and analyse them, he said.

At the same time, Mr Saran said financial structures across the world do not command as much respect as they used to in the past.

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Getting the most of your mobile phone plans

 

Every which way, as India heads rapidly into what can be defined as an Age of Austerity, every rupee saved will be a rupee earned was never truer now than before. Bringing down small expenses starts with you, and the communication bill is one element here

When was the last time you compared your mobile phone plans, prepaid or postpaid, with other plans from the same or other service providers, to see if you could achieve lower rates?

If you thought that the putting this as a query to customer care at your telecom company was going to get you a solution, then forget it, the call centres are trained to deflect this. Getting on the website or visiting a dealer outlet is a better idea.

In this correspondent's case, a review of plans about two years ago and then once more a few days ago brought about a saving of around 40% each time. Of course, each time this took a lot of research, and that can get your head spinning. But there are easier ways.

Here’s how to do it:-

  1. Ask for details of your present plan from customer care. If it is in the “not available any more” list, then chances are that it was either too expensive to survive or it is such an amazingly low-cost plan that you have nothing to worry.
  2. Call a competing telecom service and ask them to guide you on competing plans. They will ask for copies of your old bills and guide you accordingly. After this, call your existing telecom service and ask for information on how to migrate, and when they ask you why—give them the competing rate plan you are getting and watch them match it.
  3. Check out the MTNL/BSNL websites for rate plans in your areas, or pay a visit to their customer service offices—they are indeed very helpful and can be compared to the Mother Dairy of vegetable shopping in terms of reliability and cost. Take your existing bills along. They also have interesting options combining land lines, mobile phones and broadband/internet/GPRS as well as true third generation (3G).

Every which way, as India heads rapidly into what can be defined as an Age of Austerity, every rupee saved will be a rupee earned was never truer now than before. Bringing down small expenses starts with you, and the communication bill is one element here. Good luck!!

 

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