RBI allows NBFCs to trade in currency futures

Mumbai: The Reserve Bank of India (RBI) on Monday allowed non-banking finance companies (NBFCs) to trade in currency futures, giving them the opportunity to hedge their risks against exchange rate volatilities reports PTI.

However, these entities will trade in these instruments only for hedging their forex exposures, the apex bank said in a notification. "It has been decided that NBFCs may participate in the designated currency futures exchanges recognised by the Securities and Exchange Board of India (SEBI) as clients, subject to RBI guidelines, only for the purpose of hedging their underlying forex exposures," the central bank said in a circular.

Currency futures refers to a contract to exchange one currency for another at a specified date and price. At present, trading is allowed in the US dollar, the euro, the pound and the yen pairing with the rupee.

RBI further said NBFCs would have to disclose in the balance-sheets all transactions carried out in this regard.

User

Consumer forum fines developer for not executing conveyance deed

Mumbai-based Navbharat Development Corp did not execute a conveyance deed with a society for over 26 years

The Mumbai Suburban District Consumer Disputes Redressal Forum fined a city-based developer Navbharat Development Corporation last month for failing to execute a conveyance deed with a registered co-operative housing society for over 26 years. The forum also directed the developer to bear the burden of the difference of the charges in the stamp-duty, which was increased from 1984 (from 1980-1984, the stamp duty was 1% of the value of the property), obtain the full Occupancy Certificate (OC) and Building Completion Certificate (BCC) within three months.

"It is a benchmark decision by the forum and now developers can no longer ignore conveying the land to the society. If the purchaser is paying all the charges levied by the government and the developer, he/she should legally owe the property completely," said Vinod C Sampat, advocate and proprietor, Vinod C Sampat and Co.

If Navbharat Development Corp fails to comply with the order, it has to pay a fine of Rs500 per day from the date of expiry of the stipulated period (three months) till all the certificates are handed over to the society. The developer is also expected to pay Rs5,000 as penalty besides the above mentioned charges, the forum said in its order.

The case relates to Bandra-based Natalia Co-operative Housing Society Ltd. While selling flats, Navbharat Development Corp collected Rs500 from each purchaser towards performance of agreement, Rs251 towards share money and entrance fee and Rs20,400 towards stamp-duty.

The buyers were given possession of their apartments in 1983 and within a year's time, they formed a co-operative housing society by registering the same with the regional authorities.

Despite the formation of a registered housing society, the developer was not willing to sign a conveyance deed (a document that conveys the title of ownership of a property from the original owner to the ultimate purchaser, in this case to flat owners). After failing to get a positive response from the developer despite repeated requests and reminders, on 15 July 2008 the society filed a case against the developer in the consumer forum.

Earlier in June, another district consumer forum from Mumbai sentenced a developer to two year's jail for not executing the conveyance deed in favour of a society despite directives by the National Consumer Disputes Redressal Commission.

Similarly, many developers do not provide BCC to flat owners. Instead they issue the OC. Therefore, almost 95% of the buildings in Mumbai do not have BCC and conveyance.

According to another developer, there is no specific definition on what constitutes 'completion' of a property. Every state has a different definition of 'completion'.

Industry sources told Moneylife, developers find it easy to procure the OC rather than spend a huge amount to get a BCC from the authorities. The OC is issued when developers receive civic permission for water connections and sewage facilities. Many developers do not even try to procure BCCs, revealed a source.

The authorities issue the OC only when the property is fit for occupancy. Later nobody really bothers about the BCC, he said. The developers can no more escape from completing all the formalities while selling apartments.
 

User

Alarm bells ring as equity mutual funds lose a massive Rs3400 crore in July

Net outflows from equity funds reach a whopping Rs11,560 crore since entry load ban since August 2009, 30% of it in just July itself!

Equity funds are witnessing continuous redemptions since the entry load ban in August 2009 but in July it has turned into a massive haemorrhage. A humungous Rs3400 crores flew out of mutual funds in July alone. Including the outflow of last month, net outflows since August 2009 stand at a whopping Rs11,560 crore.

The sales of new equity schemes stood at Rs705 crore In (Mirae Asset Emerging Bluechip Fund and SBI PSU Fund were launched) while sales of existing equity schemes was Rs4308 crores in July. But last month, redemptions from existing equity schemes stood at Rs8,413 crore meaning that equity mutual funds suffered a Rs3,400 crore of net outflow in July 2010. In June investors pulled out Rs1,446 crore from equity schemes.

Liquid funds have seen a healthy inflow of Rs34,303 due to improved liquidity situation while balanced funds recorded Rs43 crore outflows in July.  As on July 2010, the assets under management (AUM) of the industry stood at Rs6.68 lakh crore.

Commenting on the severe outflow, Jimmy Patel, CEO, Quantum Mutual Fund said, “distributors seem to be pushing ULIPs as they are more lucrative and their new norms will be implemented shortly. Equity funds are also witnessing new sales but nothing really major as it is still very much a “push product.”

Ever since the Securities and Exchange Board of India (SEBI) banned the entry load for mutual fund schemes, fund companies have been suffering from a steady haemorrhage of cash from their equity schemes. Over the last 12 months, funds have recorded positive inflows only in just two months. This is all the more galling for the fund industry, because mutual funds normally benefit from inflow of funds when the market is rising. Between March 2009 and July 2009 when the Sensex was up 88%, the fund industry saw an inflow of Rs7,429 crore. Indeed, even when the Sensex came down crashing by 39% between April 2008-December 2008, the mutual fund industry still saw an inflow of Rs1,254 crore.

Therefore, the continuous outflow of cash can only be attributed to SEBI’s order of banning entry loads and forcing fund distributors to make money by ‘advising’ investors. Distributors have simply stopped selling funds.

The truth is that, the ban on entry loads has dried up the distributors’ revenues and they are now asking investors to consider Unit-linked Insurance Plans (ULIPs) and company fixed deposits as the next best investment opportunity.

This is unfortunate because ULIPs are no better than equity funds unless they are held for a longer period while fixed deposits are unsecured investments. But the commissions on ULIPs and FDs are extremely attractive which is why distributors are pushing them.

User

COMMENTS

shankar

6 years ago

Bhad mei jai Mutual Fund zur MF investor..ULIP Jindaba...I will sell ULIP...Comiision Kya Mr Bhave dega...Phokat ka kaam karne ke liya..

RAMESHKUMAR

6 years ago

POST AUG 2010 SEBI ,AMFI &MF ALL THOUGHT ON REMOVAL OF ENTRY LOAD MEANS INVESTORS COME IN &DIRECTLY INVEST IN HUGE NOS BUT NOW INVESTOR COME DIRECTLY ONLY FOR REDEMTIONS ,MFS ADMIT 2 OUT OF 3 ARE REDEMTIONS ,ONLY ONE FOR INVESTMENT THAT ONE COME THRO IFA S,THEY ALL THOUGHT ONLY IFA ONLY GET AFFECTED BUT THEY NEVER THOUGHT WHOLE MF INDUSTRY GET AFFECTED ,MOST IFA S COME FROM INSURANCE INDUSTRY,THEY ARE GOING BACK TO INSURANCE IND .MFS AMFI &SEBI SHOULD APPLY LITTLE COMMONSENSE ,,THEY MAKING SELF EMPLOYED IFA S ALSO UNEMPLOYED,BUT BEING INDEPENDENT WE WILL SURVIVE ANYWHERE IN THE WORLD,BUT MF IND SURVIVEL IS QUESTION MARK . RAMESHKUMAR ,IFA ,BANGALORE

prakash K

6 years ago

SEBI should know the dignity of labour.
sebi is there for win-win situation. means investor should be happy n advisor at least should not be unhappy. if the one element is unhappy then definately there wont be
enthusiasm in the industry.& thats what we are seeing in present situation in MF INDUSTRY.

girish prasad

6 years ago

by systematic way small investors are forced towards to ulips from mutual fund.due to this basic concept of mf is vanished. who is doing and why is doing is very clear.when sailer is in mood to sink the boat then who will save it.

6 years ago

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)