Tata Steel plant celebrates Founder’s day celebrations

Tata Sons chairman Ratan Tata celebrated the 172nd birth anniversary of Jamsetji Nusserwanji Tata at the Tata Steel factory in Jamshedpur

The 172nd birth anniversary of Jamsetji Nusserwanji Tata was celebrated at the Tata Steel factory in Jamshedpur, with Tata Sons chairman Ratan N Tata participating in the celebrations organised to honour the multi-billion dollar group's founder.

Tata, along with a host of dignitaries, including Tata Steel managing director HM Nerurkar, former managing directors B Muthuraman and JJ Irani and other officials, paid floral tribute to the founder.

A two-minute silence was observed in remembrance of the 1989 fire incident at the plant, in which several persons watching the Founder's Day celebrations lost their lives.

Tata spent about two hours in the works, watching the tableaux taken out by various divisions of Tata Steel, its associated companies and social organisations.

Later, the chairman interacted with employees of the company, as well as citizens of the 'Steel City'.

On Thursday, Tata Steel ended 1.72% down at Rs623.40 on the Bombay Stock Exchange, while the benchmark Sensex gained 0.23% at 18,489.76.

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ICICI Bank expects over 20% credit growth in 2011-12

ICICI Bank expects over 20% growth in loans in the next fiscal against 18% in 2010-11

Private sector lender ICICI Bank Ltd said it expects over 20% growth in loans in the next fiscal against 18% in 2010-11.

"...it (credit growth) would be upward of 20%," ICICI Bank managing director Chanda Kochhar said on the sidelines of an interactive session organised by industry body CII. She also said that the overall credit offtake in the country is likely to be over 20% in the next financial year.

"We are seeing a strong credit growth which is universal across the segment so it would be upward of 20%," she said. Credit offtake from public and private sector banks in the country grew by over 24% to Rs38.98 lakh crore for the one-year period ended 11 February 2011, as against Rs31.43 lakh crore in the corresponding period a year ago.

The Reserve Bank of India (RBI), in its annual monetary policy at the beginning of the current fiscal, had estimated credit offtake to grow by 20% in 2010-11. Loan offtake has been higher this fiscal on account of large borrowings by telecom firms to pay for 3G spectrum licences.

Participating in the interactive session, also attended by Lael Brainard, Under Secretary in US Department of Treasury, Kochhar said India and the US should increase bilateral economic cooperation.

Sharing his wish list from the US, she said, "find ways of working together...because even in the given set of policies other countries have more investments in infrastructure (in India) as compared to the US."

She also asked the US authorities to allow more Indian banks in America so that they could play "larger role" there. "Ability of Indian banks to grow in the US is very strong," she said. Brainard said the US is an open market and welcomes participation of foreign financial institutions. Talking about capital cushion to be raised for financial institutions in the US, the visiting official said her country is very supportive of BASEL III capital requirements. "Banks will get thicker capital cushion...we are in track to implement BASEL III," she said.

On Thursday, ICICI Bank ended 0.81% down at Rs1,017.60 on the Bombay Stock Exchange, while the benchmark Sensex gained 0.23% at 18,489.76.
 

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Without entry loads, will foreign distributors sell Indian mutual funds?

The FM has generously allowed domestic fund companies to solicit foreign money. But SEBI bans mutual funds from offering entry loads to distributors. Will foreign distributors touch Indian schemes?

The finance minister has allowed Indian mutual funds to take a big leap. For 20 years after the Indian markets were opened up to foreign investors, only institutional investors were allowed to invest in India. In this year's Budget speech, the finance minister has allowed the mutual fund industry to solicit foreign retail investors' money. The question is, who will sell the schemes to foreign investors and why?  

Remember, in August 2009, the Securities and Exchange Board of India (SEBI) decreed that mutual funds will not pay entry loads to distributors to sell mutual funds. Distributors would enjoy only the trail commission and that too if the customer stays with them. This ban on entry loads was revolutionary. Hardly any country in the world has it. The short-term impact has been disastrous.

Upfront commission or entry load formed an important portion of distributors' revenue. With a ban on upfront commission, distributors have shifted to selling other products like Unit-linked Insurance Plans (ULIPs) and company fixed deposits (FDs). ULIPs are no better than funds unless they are held for a longer period and corporate fixed deposits are unsecured. But the commissions on ULIPs and FDs are extremely attractive, which is why distributors are pushing them.

The question is-will foreign distributors sell Indian mutual funds only for trail commissions? After all, entry loads are a fact of life around the world. In fact, they are quite steep in the US.

Says Motley Fool (a website that provides investing information) , "The day that you buy the mutual fund, you pay a sales fee, usually around 5%, and somewhere between 3% and 8.5%." The question is, if distributors normally charge loads of 3%-8.5%, will they sell Indian funds for free?

Moneylife questioned several heads of fund companies on this issue. All of them were categorical that without sales load or entry load, there was no question of being able to sell Indian schemes-not even through the own network of parent companies (like Templeton and Fidelity).

Ever since the ban on entry load by the market regulator from 1 August 2009, the mutual fund industry has seen a massive outflow of investments. This was 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. For over a year after that, fund companies suffered huge outflows.

Only in the last two months, December 2010 and January 2011, equity mutual funds saw a net inflow of Rs887 and Rs881 crore respectively.

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COMMENTS

prudent investor

6 years ago

SIP is one of the main reason for increasing the no of investors into MF . Entry load ban may be helping the cause.

http://www.financialexpress.com/news/mut...

REPLY

Naina

In Reply to prudent investor 6 years ago

U K Sinha is a visionary and it is his firm conviction that agents play an important role in this sector.He has already made beginning on load structure.He understands that at the end of the day small investors from Jumri Talia & Malkangiri are important than FDI,FII and foreign investors.He is all set to give face-lift to this important sector.He has worked in UTI which has highest number of retail investors.He fully knows that out of 1 lakh IFAs only 40,000 have registered for foolish KYD norms so he has given extention till April'11.He will also get rid of Vaidyanathan who is acting like Bhave.

Prabir Sharma

6 years ago

The Foreign investor more knowledgeable than Indian mutual fund investor. They Understand all that and pay to distributor. There receptive fees Or entry load. Here Story is different, They all have interested in direct application. They more believe in mutual fund relationship manager. They Think Mutual Fund Distributor is a Product Vending Machine. They Don't Believe in Financial Planning & Asset Allocation Procedure.

REPLY

SUBHASH MEHTA

In Reply to Prabir Sharma 6 years ago

Yes. Foreign investors can pay fee to distributors. You had righlty stated that story in India is quite different. In order to bring both kinds of investors at same level, their may be introduction of reasonable entry load or enhancement the expense limits of AMCs in order to compensate IFAs or to hire more relationship managers. I think that IFAs are not against the hiring of Relationship Managers. MF industry provide employment avenues to youngsters by engaging them as relationship manager. But more managers can be recruitted if there will expansion in industry and there will more investment in MFs. This can be achieved if all distribution channels will be used effectively. Fee & expenses should be common for all kinds of investors. In my view, this can be achieved by introduction of 1% entry load or 0.5% increase in expense limit of AMCs.

Prabir Sharma

6 years ago

The Foreign investor more knowledgeable than Indian mutual fund investor. They Understand all that and pay to distributor. There receptive fees Or entry load. Here Story is different, They all have interested in direct application. They more believe in mutual fund relationship manager. They Think Mutual Fund Distributor is a Product Vending Machine. They Don't Believe in Financial Planning & Asset Allocation Procedure.

Prabir Sharma

6 years ago

The Foreign investor more knowledgeable than Indian mutual fund investor. They Understand all that and pay to distributor. There receptive fees Or entry load. Here Story is different, They all have interested in direct application. They more believe in mutual fund relationship manager. They Think Mutual Fund Distributor is a Product Vending Machine. They Don't Believe in Financial Planning & Asset Allocation Procedure.

SURENDER SINGH

6 years ago

I think there should be two types of KIM ( Common application forms ).
(1) WITHOUT ENTRY LOAD KIM/ FORMS :- These forms should be kept with AMCs. If any investor feels he/she is the master or he/she does not required any service provided by brokers, so why should he/she pay the brokerage. Any investor who does not need any type of service from intermediate IFA; he/she can personally approach the different AMC offices for all types of free services provided by AMCs.
And (2) KIM/ FORMS WITH ENTRY LOAD:- Forms with entry load should be available with SERVICE PROVIDERS (IFAs/brokers). If a investor required the services provided by broker/IFA then he/she should fill the forms with entry load. And if he does't satisfy with one broker he/she can easily change the broker.
I think this system should appeal to all types of investors, regulator SEBI, all AMCs and my all IFA friends.
This is the only way where the both investors as well as IFAs (the SERVICE PROVIDERS) are protected.
Thanks and Regards,
Surender Singh
Mobile 9814186640

REPLY

SUBHASH MEHTA

In Reply to SURENDER SINGH 6 years ago

I think that my earlier comments and now Roopsingh's comments are elevant. Govt. & SEBI is working on a pre-written script of Foreigners (may be foreign banks who want to distribute MFs of India in other countries) and/or some influencial body. Small IFAs will gradually wipe out.

prudent investor

In Reply to SUBHASH MEHTA 6 years ago

Because of entry load IFA would churn the portfolio of the customer from one scheme to other, thereby causing benefit to the IFA at the the expense of customer. This has stopped and people are now investing via SIP

I believe that there should be no entry load for entering a scheme. The existing policies are for the benefit of the investor.

http://articles.economictimes.indiatimes...

Roopsingh

In Reply to prudent investor 6 years ago

Mr Prudent-so you want to say that exchange route which SEBI has allowed never does portfolio churning?they are all SADHUS(SAINTS)who never churn any portfolio?MR Prudent dont show your foolishness by arguing without thinking and think twice before making arguments against TRUTH-dont make FOOLISH COMMENTS which has no testinomials-

SUBHASH MEHTA

In Reply to prudent investor 6 years ago

IFAs who is/will churn the portfolios of investors will ultimately loose their reputation, goodwill and thus loose business. I think that they'll not do so for a petty commission. There may be some reasonable entry load or expense limits of AMCs may be enhanced to some extent in order to compensate the IFAs for their services. There is nothing wrong in it. SEBI introduce the method of compensation by charging the fee from investors, which is not practiceable in India, where the investors are used to get some part of Agent Commission. Nobody is ready to give fee to IFAs but interested to claim part of their petty amount, which they get from AMCs. Now some Banks had started debiting their fee into the accounts of M.F.investors, even without informing them. This has caused undue hardship to investors. Similarly the Stock Brokers will charge their usual commission from the investor for investment in MFs. But independent IFAs who are working in the streets and provide valueable service at their doorstps are feeling shy to demand a fee from their clients, since the relation of a client and IFA is like a family member. IFA feel shy to demand a fee but client openly demand some part of fee, in advance, which the IFAs likely to receive from AMCs. In order to save the investors from paying fees for investing, it will be better to introduce some reasonable entry load or increase the expense limits of AMCs.

Roopsingh

6 years ago

Dear IFA friends,
I think all these changes are done according to PRE WRITTEN SCRIPT whose writer is either a foreign hand or some lobby which has influence in finance ministry plus SEBI-these are all steps taken to wipe out retail investor from investing during lows and then allow them in high markets-so that they can be LOOTED easily with pre plan-
I have settled in MFCG distribution business after 4-5 months of working and i now feel i did a WISE decision while switching to new business-bcos i understood that IFAs will be slowly wiped by pre planned script.

REPLY

Madhusudan Thakkar

In Reply to Roopsingh 6 years ago

Roopsingh Ji SEBI has launched Investors education campaign in the print media wherein it has resorted to agents bashing.Some of the the points mentioned are a]Investors can change existing distributors without NOC from existing distributor[Read:Change your IFA and deprive him/or get rebate from him on trail commission]2]Hold mutual funds units in demat a/c and Depository participants should be contacted[Read:Don't trust your agent trust DP]3]Buy/Sell mutual funds through STOCK BROKERS[Read:SEBI wants to promote stock brokers instead of IFAs]4]Approach mutual funds directly without involvement of distributors[Read:Run pillar to post ]
Yesterday in his keynote address at the seminar on "Changing face of Regulations" Vaidyanathan who heads SEBI investment management dept.including mutual funds said that in the matters of weeks new guidelines for investments in mutual funds by foreign investors will be in place.
Nothing is mentioned about retail participation.
This is latest attempt by SEBI in resorting to distributors bashing.

Roopsingh

In Reply to Madhusudan Thakkar 6 years ago

Mr Vaidthyanathan is another guy who keeps a smiling face after hunting(off course IFAs being hunted as he played key role in advising(misguiding) the former SEBI chief and Mr Sinha should remove this masked wolf with immediate effect if he wants to save indian retail investor and IFAs who played most vital role in popularising mutual funds to indian people(i never liked the smiling face of this guy who played dirty games with a smiling face and working on some hidden agenda for FIIs.

SUBHASH MEHTA

In Reply to Roopsingh 6 years ago

Yes, I also think so. Foreign Banks and Stock Exchanges will distribute MFs in foreign countries by charging their fees. IFAs working in India will be wiped out.

There is another question of KYC compliance of foreigners. Govt. & SEBI had recently introduced stringent KYC rules in order to check the inflow of black money to be routed through MFs.

Now when there exist too much hue and cry of black moey lying in foreign bank accounts. It is common belief that a considerable amount lying in such foreign bank accounts belong to politicians and other influentials worked on constitutional posts. Govt. is giving time to such accountholders to make some arrangement of their money lying in foreign accounts. It seems that introduction of MF investment by foreigners in the budget speech is a step towards helping such accountholders to bring their money back to India through MF investment.

SUBHASH MEHTA

6 years ago

on March 05.03.2011, I hd seen a talk of some experts at CNBC TV18. Though I hd'nt listen entire discussion thoroughly, yet one view was listened to my ears that Foreign Investment in M.F.s will likely be enrouted through stock exchanges.

So there may be least requirement of distributors for marketing in Foreign Countries.

I had already apprehended that entire exercise of SEBI headed by its previous chief, regarding abolishen of entry & introduction of KYC & KYD, introduction of new platform through stock exchanges etc., is to vanish all small IFAs.

Small IFAs can do nothing but Broker's Lobby is very strong and influlence the Government and SEBI. Rules can be changed according to wishes of such lobbies. Govt. had announced the introduction of MF investment by foreigners, through its budget speech. In my view that this is not a subject of budget speech. Budget is only an account of receipts & expenditure. Why the FM had introduced this through his budget speech? I think that my apprehension is true that Govt. & SEBI want to abolish small IFAs & enroute all MF transactions through stock exchanges, steadily.

tushar shah

6 years ago

why cant we give more incentive to indian investors to invest in mf as exposure of indian household to equity markets is very low, it will also benfit capital starved economy and genrate employment if investments made by entreprenures increases on availlable of capital

REPLY

girish prasad

In Reply to tushar shah 6 years ago

it seems that amcs are also not interested in small investors.
to pacify to amcs due to set back of entry load ban , goverment have allowed fi investment in MF.one investor may be equivalkent to 1000 retail investors.but in this case thought behind formation of mf industry in vanished .it is very deficult to proove .as our central vigilance commissioner itself is under vigilence of supream court.

anu

6 years ago

yes I agreed with it.

Madhusudan Thakkar

6 years ago

Apart from entry load and KYC issue for foreign investors the important question we should ask is what needs to be done for small investors? what is the relevance of mutual funds for small investors? How participation of small investors can be increased.Even after two decades the contribution is less than 1% of GDP.This is classic case of misplaced priority.We are obsessed with FIIs,FDIs and foreign retail investors

SUBHASH MEHTA

6 years ago

A big question before the industry and regulators is about KYC. Will the Foreign Investors will exempt from KYC? If not, what will be norms of authenticate the information provided by the foreign national? What will be done if there occured something against law, by the foreign investors?

The regualtors shall reconsider the provisions of Entry Load and KYC before implementation the provisions of Budget Speech regarding entry of Foreigners for investment in MFs.

javahar kp

6 years ago

Congratulations moneylife foundation for the writeup on reality, wehereas, all the so called financial intermediaries never realised this and still advacate a fee based module system.

wadia

6 years ago

Why not impose a stiff exit load on FII investing in indian mutual funds?
May be that will make FII think twice before exiting in droves as they seem to do at the slightest uncertainity in indian market.

REPLY

SUBHASH MEHTA

In Reply to wadia 6 years ago

Stiff Exit Load will destroy the spirit of MF investment. Investor will shy from investment in MFs. MF investor is already loosing due to market behaviour given by wrong policies of Govt. & their regulators. One cannot think of MF investment if stiff Exit Load will be imposed. Every investor will think that at the time of redemption at the time of urgency, he will loose (i) his value due to market behaviour and (ii) due to stiff Ext Load.

So stiff Exit load is not in the interest of MF industry as well as of Distributors.

CS

In Reply to wadia 6 years ago

Exit load cannot be imposed on funds already invested.... however it can be done for fresh investments which wud mean they wud not invest.

Bhavesh Damania

6 years ago

Hi Moneylife Team, I dont know of the countries where entry load(in MFs) exist.. Would appreciate if you can share names of some developed /well known countries

REPLY

Samir

In Reply to Bhavesh Damania 6 years ago

It exists in every major Western country. The article makes a reference to the US. I hope you have the read the article

Bhavesh Damania

In Reply to Samir 6 years ago

Samir, Thanks for reply..If it exist in all major countries, than why does SEBI cite this example for entry load ban in India??? Are we misleded by regulators.

Samir

In Reply to Bhavesh Damania 6 years ago

Sebi wants to show the way for the rest of the world

Subramanyam

6 years ago

in the long run the distributor makes MORE money. Say in 8 years time he makes more money in a mf sale than a ulip sale. How many investors stay in the same scheme for 8 years? NONE. literally none. So in practice, theory is different :-) - adapting this line from Debashis..

REPLY

Debashis Basu

In Reply to Subramanyam 6 years ago

Did I say this? Thanks for remembering.
There is another saying, "In theory there is no difference between theory and practice. In practice, there is." This is attributed to Yogi Berra and Jan L. A. van de Snepscheut

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