Citizens' Issues
Supreme Court suggests Gavaskar's name as BCCI president

The Supreme Court has proposed Sunil Gavaskar’s name as replacement for N Srinivasan as BCCI president while expressing its intention to bar CSK and RR from participating in IPL7

The Supreme Court in a big setback to N Srinivasan, proposed name of legendary cricketer Sunil Gavaskar as president of Board of Control for Cricket in India (BCCI).


The court said it is intending to bar Chennai Super Kings (CSK), owned by India Cements, which is promoted by Srinivasan, and Rajasthan Royals (RR), whose players and team officials are allegedly involved in the scandal, from participating in the Indian Premier League (IPL)-7 tournament slated to begin on 16th April.


A bench headed by Justice AK Patnaik proposed the name of veteran cricketer and commentator Sunil Gavaskar to head the Board during the pendency of the case in the apex court.


The bench asked the Board to give its response by Friday on its proposals after which it will pass an interim order.


Reacting to the apex court's proposal, Gavaskar said he will be 'honoured' and 'happy' to adhere to the directives of the highest court of the land. “First and foremost, if the highest court suggests something, you have to do so but that has to be on record. I am currently contracted with BCCI as a commentator. But if Supreme Court wants me to do that, I will do it,” he told reporters.


The bench also proposed to pass an order barring India Cements officials from getting involved with the functioning of BCCI after senior counsel Harish Salve, appearing for Cricket Association of Bihar, pointed out that many such officials are at present part of the BCCI team.


Salve also raised questions on the conduct of captain of Indian Cricket team, MS Dhoni, who is also vice-president of India Cements, saying that he is guilty of corrupt practices.


Sensex, Nifty on an uptrend: Thursday closing report

Market highly overbought soon may see some decline

In spite of being a day of expiry of futures and options, the market witnessed a range bound session until 2.00pm today. After that the indices suddenly spurted and then slumped again. The Indian benchmarks continued to hit an all time high for the fourth consecutive session.


Sensex opened at 22,116 and moved in the range of 22,094 and 22,308 and closed at 22,214 (up 119 points or 0.54%) while the Nifty which opened at 6,613 moved between 6,600 and 6,674 and closed at 6,642 (up 40 points or 0.61%). The NSE recorded a volume of 96.26 crore shares. Volume was high because of expiry.


Banking shares mainly public sector undertakings (PSUs) are in focus after Goldman Sachs upgraded ratings of state-owned banks. Macro recovery and potential for post-election reforms could lead to a gradual reduction in stressed loans, it said. Significant reforms under a stable government could lead to valuation re-rating in particular for PSU banks, that could provide a 66% average upside as stressed loans could fall sharply to 4.7% from 10.5% by FY18, Goldman says. Among the top 10 gainers in the ‘A’ group on the BSE were, Indian Overseas Bank (4.91%) to close at Rs50.25 on the BSE while SBI rose 4.04% to close at Rs1839.55.


Today again, Dr Reddys Lab was among the laggards in the BSE-30 stock.  Dr Reddys Lab fell 1.86% to close at Rs 2,587.10 on the BSE.


Suzlon Energy, one among the top 10 losers in the ‘A’ group on the BSE, fell 1.94% to close at Rs9.62 on the BSE. A proxy advisory firm, Institutional Investor Advisory Services India (IiAS) which gives voting recommendations to shareholders on company resolutions, has communicated to the shareholders to vote against the re-appointment of the chairman Tulsi Tanti as its managing director. “Under Tulsi Tanti’s leadership, the company’s performance has continued to falter and the company is now under a corporate debt restructuring (CDR) programme. IiAS believes that promoters’ interests will also be served by bringing in new management,” the advisory firm said, in a press release.


US indices closed in the negative on Wednesday. Orders for big-ticket items rose 2.2% in February, powered by higher bookings for autos and aircraft. Stripping out the volatile transportation sector, orders rose a smaller 0.2%.


Asian indices closed mostly in the green. Nikkei 225 (1.01%) was the top gainer while Shanghai Composite     (0.83%) was the top loser.


On Thursday, data showed mainland China industrial profits increased 9.4% in the two months through February year-on-year, compared with 17% growth a year earlier.


European indices were trading in the red while US Futures were trading in the green.


UK retail sales rose more than three times as much as economists forecast in February as Internet sales and spending on food surged, signaling the recovery maintained its momentum in the first quarter.


Inflation bond investment limit doubled, but why it is a failure?

RBI has tried to push the inflation index bonds with additional commission for distribution and doubling the investment limit. But the product has not caught the fancy of investors. Find out why different customer segments shunned the product that is open till 31st March

Reserve Bank of India (RBI) Inflation Indexed National Saving Securities-Cumulative (IINSS-C) is open for subscription till 31st March, but there is no rush from investors. Troubled by muted response from investors, on 26th March, RBI has doubled the investment limit for individuals from Rs5 lakh to Rs10 lakh and increased it by five times for other types of investors (Rs5 lakh to Rs25 lakh). In mid-March, RBI decided to offer an additional incentive of 0.5% on the investment amount to Stock Holding Corporation of India and agency banks that collect subscriptions of Rs100 crore or more by 31st March. It is in addition to the 1% commission to be paid on subscription collections. Is it helping to sell the product?

Recently, Moneylife received an email which states - "I approached my bank Indian Overseas Bank D.G. Branch, Pune 41104. They had received no circular. Then I approached SBI Pune City Branch. They also did not have any information." A visit to Bank of Maharashtra branch last week revealed that they have not been able to make a single sale of the product. An existing bank accountholder still has to go through fresh KYC (know your customer), which can also put off customers. Even the nominee of IINSS-C has to do fresh KYC.
IINSS-C interest rate comprises of two parts - fixed rate (1.5%) and inflation rate based on Consumer Price Index (CPI). IINSS-C could have been a game changer for investors, but as the financial year comes to a close it is clear that the product has flopped. What went wrong? After all, when the product was launched in December 2013 the November CPI was 11.24%. It meant that you could expect to get 12.74% pa assuming inflation stays at the same level. CPI climbed down over last quarter to reach 8.1% in February, which is at 25-month low. It did not help investors as it can mean that IINSS-C returns can go down to 9.6%pa if inflation continues to stay low.

There were three major flaws in the product and the combination of the three issues made the product worse-off. Apathy of banks to sell the product is already mentioned earlier. It could be due to various reasons including competing banking or insurance products to sell. One of the bank managers stated that RBI has given branch staff training by videoconferencing. But, he did not have clarity on the redemption process. According to the bank manager, "The banks would sell and RBI will be the registrar of the holdings. The customer may need to approach RBI for any request of early or final redemption." It means that banks don't have complete product awareness.

The other two reasons for IINSS-C debacle are as follows:

"Cumulative option: Inflation Index Bonds only has cumulative option with maturity after 10 years. It means customers needing regular flow of income from interest will not subscribe to the product. This includes senior citizens who opt for monthly or quarterly interest payment from bank Fixed Deposits (FD) to survive. A period of 10 years cumulative is a long period for even regular customers. How many people buy 10 year cumulative bank FD even though it will give higher yield than FD paying interest annually? At the time of IINSS-C launch RBI stated that it will come up with non-cumulative option in future, but it has not materialised till now.

"Taxation: A product is as good as the post-tax returns it can give. Even if the pre-tax returns of IINSS-C can be good, the taxation as per tax slab means it suffers from same tax disadvantages as FD. The interest cannot be treated as capital gains and benefit from "indexation". Those in 20% and 30% tax bracket can still find tax-free bonds offering near 9% pa attractive. The critical issue for those in higher tax bracket and high-net-worth (HNI) individuals will be the taxation on accrued interest.

One drawback with cumulative FDs is that you have to pay tax on the interest that you don't receive in hand. You get the interest only on maturity of the cumulative FD, but tax on the accrued interest is payable for each financial year in which it accrues. This is generally done because bank will deduct 10% TDS on cumulative FD every financial year and it appears on your Form 26AS submitted to Tax authority. Those in higher tax bracket will have to pay the remaining tax liability in the same financial year tax filing. It means you have to pay from your pocket as the interest from cumulative FD will not be given till the end of term.

The same will be an issue with IINSS-C. The government will earn the tax payment on accrued interest without paying you any interest for 10 years. As bonds are issued in the nature of government security, no TDS will be deducted. It means that the person in highest tax bracket will have to pay 30.9% tax on the accrued interest each year without any interest paid by the product for 10 years!

The higher the inflation, the higher the accrued interest and hence more tax will be collected. If the inflation dips, the government will benefit by having to pay lower interest on product maturity.



Gopalakrishnan T V

3 years ago

Simply put middle class and lower middle class people have no savings due to persisting inflation and erroneous taxation policies of the Government. RBI could have very well avoided the issue of this inflation indexed bond which is neither attractive nor supported with the surplus funds with the masses on whom if it is targeted.RBI has played to the tunes of the government which unfortunately has not been found acceptable by the savers.

Sunil Bhagwanji Kapadia

3 years ago

I appreciate the analysis made. Worth the efforts !!



In Reply to Sunil Bhagwanji Kapadia 3 years ago

thank you!


3 years ago

Because sixty six years of Indian rule have taught us never to trust the Government? (Particularly with out wealth)

P b Sarma

3 years ago

Retired middle class people are interested in investing inflation indexed bonds.But they want monthly income.But there is no such provision in the scheme.So the scheme of Inflation indexed bonds is not attractive to this section of people.

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