Money & Banking
RBI extends deadline for withdrawing non-CTS 2010 cheques by four months

All cheques currently with customers in the old format (non-Cheque Truncation System) will continue to be valid for another four months till 31st July, the RBI circular said


The Reserve Bank of India (RBI) on Monday asked banks to issue new CTS2010 compliant cheque books under the new format and gave them time till July-end to withdraw the old format cheques.

 

All cheques currently with customers in the old format (non-Cheque Truncation System) will continue to be valid for another four months (the earlier deadline was 31st March), the apex bank said.

 

The RBI also said the system of post-dated cheques and payment via equated monthly instalment (EMI), in either the old or new format, will be banned from now wherever electronic debit facilities are available.

 

“All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing houses (including the Cheque Truncation System centres) for another four months up to 31 July 2013, subject to a review in June 2013,” the RBI said in a circular to bank heads.

 

The central bank has asked them to create awareness about the issue among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in Internet banking and notification on the website so that the deadline can be met.

 

“All cheques issued by banks (including DDs/POs) with effect from the date of this circular shall necessarily conform to CTS-2010 standard,” the circular said.

 

In December, the RBI had extended the deadline to convert to the new standard CTS-2010 by three months to 31st March, based on the representations from stakeholders. Monday’s circular was issued following consultation from the industry body Indian Banks Association and a few lenders.

 

The CTS-2010 eliminates the current practice of physically presenting a cheque to the payee bank, thereby substantially reducing the time for cheque clearance.

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SC bars Italian envoy from leaving India till further orders

The apex court had on 14th March asked the Italian ambassador not to leave the country without its permission, taking exception to his government’s refusal to send back the two marines, Massimiliano Lattore and Salvatore Girone

 
The Supreme Court on Monday extended till further orders its direction restraining Italian envoy Daniele Mancini from leaving the country after Italy reneged on its undertaking that the two marines accused of killing two fishermen off Kerala 
 
The apex court had on 14th March asked the Italian ambassador not to leave the country without its permission, taking exception to his government’s refusal to send back the two marines, Massimiliano Lattore and Salvatore Girone.
 
“Having heard senior advocate Mukul Rohatgi appearing for Italian Ambassador Daniele Mancini and the Republic of Italy, we direct to list the matter on 2 April 2013 for further orders.
 
“The interim order passed on 14th March directing Mancini not to leave India without the permission of this court is extended till further orders,” a bench headed by Chief Justice Altamas Kabir said.
 
The bench, also comprising justices AR Dave and Ranjana Prakash Desai, directed that “all authorities in the country shall take appropriate steps” relating to the order restraining Mancini from leaving India.
 
Before passing the order, the bench said the period of four weeks for which the marines were allowed to go to Italy to cast their vote was yet to be over and still they have time to return.
 
“We respected the undertaking (given by the ambassador) and we allowed them (marines) to go for four weeks which will end on 22nd March. There is still time for them to come. Strictly speaking they have not still violated our order. It is a case where one government is communicating to another government and we have nothing to do,” the bench observed.
 
The two marines were on board an Italian vessel “Enrica Lexie” when they allegedly shot dead two fishermen off the Kerala coast on 15th February, last year. Attorney general GE Vahanvati brought to the court’s notice the latest note verbale sent to the government by the Italian authorities in which it spoke about the issues concerning diplomatic relations contained in the Vienna Convention of 1961.
 
Vahanvati said it was intriguing that the note verbale mentions that no Indian authority will restrict the freedom of movement of the Italian Ambassador.
 
He said, “The ministry of external affairs is fully mindful of its international obligations.”  
 
After Rohatgi said he was appearing for Republic of Italy and the ambassador, the bench told him, “We are concerned with Daniele Mancini. What is your intention about Mr Daniele Mancini?  
 
“We are concerned with the intention. Are you going to comply with this order? We are not concerned with anything else,” the bench said.
 
After the order extending the 14th March direction was passed, Rohatgi again raised the issue of diplomatic immunity enjoyed by the Italian ambassador.
 
His submission anguished the bench which said, “We don’t go by anything. He has given the undertaking. We are not so naive.
 
“He has no immunity. What do you think of our judicial system,” the bench said and added that so many things are being written about the incident.
 
“You went to Italy after giving an undertaking. We never expected and we never believed that the Italian ambassador will renege like this,” the bench observed.
 
As Rohatgi pressed on the issue of immunity, the bench reminded him once again about the undertaking given by the Italian envoy.
 
“We don't accept his statement. We don't believe his statement. He has lost trust,” it said.
 
The court said, “The person who has come to this court as petitioner, we don’t think he has any immunity.”
 

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Axis Dynamic Balanced Fund: Using hedging strategies could be risky

The new scheme from Axis Mutual Fund will use hedging strategies to ‘manage’ risk

Axis Mutual Fund plans to launch a new scheme—Axis Dynamic Balanced Fund. This scheme will follow a new approach to dynamic investing. The new scheme will maintain its allocation to cash equity within the range of 65%-100% of the portfolio (similar to other balanced schemes). But, around 0%-65% will be invested in equity derivatives as a hedging strategy. Therefore, the net allocation towards equity will be around 0%-100%. The debt portion of the scheme will vary from 0%-30%. Similar to other balanced schemes, this scheme will seek capital appreciation by investing in a portfolio of equity or equity-linked securities while the secondary objective is to generate income through investments in debt and money market instruments. The difference here is that the scheme will ‘manage’ its risk by using hedging strategies.
 

In a recent issue of Moneylife magazine (Issue dated: 21 March 2013), we wrote how dynamic equity schemes try and time the market. These schemes vary their allocation to equity depending on either a proprietary method or on the price to equity ratio (P/E) of the Nifty index. Recently ING Mutual Fund filed an offer document to launch a scheme— ING Forward P/E Ratio Fund—which would vary its allocation based on the forward P/E of the index (Read: ING Forward P/E Ratio Fund: Another dynamic scheme with a new concept).
 

Fund managers try and lure investors with strategies that try and deliver superior returns by trying to predict the movement of the market. Unlike other equity schemes that invest a fixed proportion to equity, in dynamic schemes, the percentage allocated to equity is decided by the fund management. Therefore, if the fund management makes a wrong call, it would negatively impact returns. This scheme from Axis Mutual Fund will use derivative hedging strategies which involve high level of risk. Therefore, investing in this scheme may involve a higher risk compared to other balanced schemes.
 

Another aspect of dynamic schemes that we have covered in the past is that apart from getting the asset allocation right, the fund managers have to pick the right stocks as well. In this new scheme the fund manager would have to decide the right hedging strategy as well.

Axis Mutual Fund has a track record of just of three years in managing equity schemes. This is too short a period to comment on the fund management performance of the fund house. This new scheme will be managed by R Sivakumar and Jinesh Gopani, both of whom have an experience of over ten years in the industry.

 

Other details of the scheme:
 

Benchmark
 

50% S&P CNX Nifty + 50% CRISIL Composite Bond Fund Index
 

Minimum Application Amount
 

Rs5,000 and in multiples of Re1 thereafter
 

Minimum Additional Purchase Amount
 

Rs100 and in multiples of Re1 thereafter
 

Exit Load:
 

3% if redeemed/switched out up to 6 months from the date of allotment
 

2% if redeemed/switched out after 6 months & up to 12 months from the date of allotment
 

1% if redeemed/switched out after 12 months & up to 24 months from the date of allotment.

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COMMENTS

Ramesh Poapt

4 years ago

If the benchmark is 50%CNX Nifty,then will it be a 'eqty oriented fund'? Axis schemes performance so far is ok, Tax plan is good performer. Triple Adv. and Midcap has performed satisfactorily.Butit will be very challenging to manage the new scheme for Axis.

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