Announcing the launch of the HDFC Systematic Savings Plan, Mr. V.S. Rangan, Executive Director, HDFC Ltd. said, “HDFC has always been quick to recognize the market pulse and set higher benchmarks of service delivery through introduction of pioneering products and services. HDFC SSP is a disciplined approach to wealth creation. It allows the investor to adopt a systematic and dedicated approach to financial planning by inculcating a regular savings habit according to his convenience and ability. We have developed this unique installment plan keeping in mind the safety and growth requirements of especially the younger working individuals. For investors looking at earning assured returns over a 2-5 year horizon, SSP will surely emerge as an attractive investment avenue.”

HDFC Systematic Savings Plan offers medium to long-term installment options, where the depositor can choose any period between 24 and 60 months and monthly installment amount can range from Rs. 2000 to Rs. 50,000. Being a variable interest rate plan, the rate of interest applicable is linked to the benchmark rate, reset at the beginning of each calendar quarter. The current interest rates for this plan with effect from February 3, 2010 are 7% p.a., 7.25% p.a. and 7.75% p.a. for 24-35 months, 36-59 months and 60 months respectively.

The key-differentiating factor of HDFC SSP is that it offers depositors a secure and steady way to grow their savings. HDFC SSP is also safe from the volatility of the capital market and the variable interest rate offering ensures that the depositor gets the benefit of higher rate when interest rates increases. The ECS (debit clearing) facility makes investing in HDFC SSP convenient for all.

Product Features:

– Variable Rate of Interest
– Attractive Rate of Interest
– Wide Tenure
– Easy Payment Mode

HDFC Ltd., has displayed consistent performance for over three decades and today is the largest deposit mobilizer outside the banking system in India. With a deposits base of over Rs. 22,000 crore, depositor base of over 10 lakh and a strong distribution network of over 25,000 deposit agents, HDFC is well equipped to offer a host of deposit products with different maturities catering to the unique needs of every investor be it individuals, trusts, institutions or corporate bodies.

HDFC Deposits provide Highest Safety, Attractive Returns and Impeccable Service Standards. HDFC is the only institution in India to have received ‘AAA’ rating from 2 leading credit rating agencies – CRISIL and ICRA for fifteen consecutive years for its deposits program, thus building maximum trust and confidence year-on-year.

Speaking at the launch of Max New York Life Secure Dreams Mr. Manik Nangia, Corporate Vice President & Head Product Management, Max New York Life Insurance Co. Ltd. said, “The exclusion of mortality and morbidity charges from the cap has ensured that there is no compromise on life cover, which is of critical importance in a country like India where 96% of the households are vulnerable. The same sentiments are also reflective in our products where we have paid emphasis on the protection element and also introduces guaranteed loyalty bonuses which clearly indicates on life insurance being viewed as a long-term protection product.”

ULIP Suite:

Fortune Builder

Max New York Life Fortune Builder is a unit linked endowment plan that provides a unique combination of protection with potentially higher returns to fulfill goals.

Features

– Guaranteed Loyalty Bonus which can be as high as 290% of ATP*
– Comprehensive protection through high sum assured multiples and inbuilt Family Income Benefit
– Increasing premium option to counter inflation along with increasing sum assured benefit
– Choice of Seven funds for investors of different risk profiles
– Life Stage based Asset Allocation – Dynamic Fund Allocation
– Flexibility to make partial withdrawals to meet unplanned expenses
– Flexibility to opt for Personal Accidental Benefit and Dread Disease riders

Unit Builder Plus

Max New York Life Unit Builder Plus, is a limited pay ULIP, which is designed to not only give you guaranteed returns but, also has an annual income plan for that little extra income to enjoy life to the fullest.

Features

– Guaranteed Loyalty Additions which injects 100% of Annual Target Premium to the Fund Value on the 10th Policy Anniversary, and Annual Income through which 25% of the Annual Target Premium returned back to you from 11th Policy Anniversary till the Maturity Date in form of addition to the fund value
– Added Protection and inflation cover with increasing Sum Assured @ 5% with Increasing Premium Payment Option and in case of Level Premium Payment Option with Progressive Auto Cover Enhancement (PACE)
– Policy issuance without any medical tests
– Limited premium payment option for only 10 years to get covered for 20 years
– Life Stage based Asset Allocation – Dynamic Fund Allocation

Smart Invest Pension Super

This premier ULIP pension plan, helps build retirement corpus makes retirement an event to look forward to.

Features

– 100% Allocation of premium from Year 1
– Guaranteed Loyalty Additions on completion of 11 years of the policy
– Flexible premium paying terms through choice of Regular premium paying, 5 Pay Premium Paying term and single premium paying term.
– Dynamic Fund Allocation
– For the first time with pension plans protection against critical illnesses and accidents in form of Dread Disease and Personal Accidental Benefit rider
– Increasing Premium payment Option

Smart Xpress

A flexible Unit Linked insurance Plan (ULIP), with Systematic Transfer Plan option, which offers secured returns even during market volatility. SMART Xpress has been specially designed to address the consumers’ need of capital preservation and growth.

Features

– 7 fund options including the Money Market Fund and one exclusive fund for STP
– The systematic Transfer Plan to ensure that the consumer’s investment hits the market in 12 equal installments.
– Flexibility
- Premium payment options through 3 years, 5 years or single payment options
- 12 re-directions
- 12 switches
- 12 partial withdrawals
– Protection through increased Sum Assured, which can stretch upto 30 times of annual premium. Persistency units during last 5 policy years.

The newspapers have made us believe that 2009 was a bad year. But, think about it, did you ever make 75% + on your investments? Have you got brands at such dirt cheap price? Didn’t you figure out if your employer is the one to rely on? Didn’t you figure out how good is your financial adviser?

I am very happy. Many of my guesses, intuitions and analysis proved right. Its gods grace. May 2010 be as good as the last year. God bless us all.

Exploitation of Consumers

Problems of defective goods, deficiency in service, spurious and duplicate brands, misleading advertisements are rampant and often the gullible consumer falls prey to it. A majority of the consumers, especially in the rural areas are uneducated and lack awareness and knowledge. Consumers face many risks during purchase and consumption of goods and services.

Moreover, financial risks are involved where the consumers may not get the value for money spent or they may be overcharged or there may be hidden price components which may leave them exploited. Instances abound where a claim on an Insurance Policy takes an unduly long time to be settled, or there may be over-billing, double debit, billing delays, pension disbursement, non-rectification of wrong bills, misleading advertisements and non-adherence to offers made. The granting of possessions of flat may be delayed; cases of wrongful dishonor of cheques, loss of cheques that have been deposited in a bank, cheques with forged signatures, etc.

Instances bound where companies advertise lucrative schemes offering attractive rates of return or make offer for doubling of money in a short period of time, and, after having collected funds, have shut shops and vanished. People have invested money in plots of land only to find later that the plot bought was either already sold or subsequently sold to someone else. Flats are allotted to two people simultaneously, leaving the genuine buyer to fight a protracted legal battle to get something that belonged to one of them. Similarly, consumers applying for shares have faced situations where they have neither been allotted the shares nor refunded payment. In most of these situations, the consumer has to wash his hands off a sizeable part of his investment or hard earned savings. Some of the type of complaints received in credit cards are issue of unsolicited cards, non-despatch of account statements in time, levy of excessive service charges, levy of late fees despite payments being done on time, refusal to cancel credit card, freezing of cards without informing the card holder, and harassment by recovery officer. Consumers also are victims of malfunctioning of ATMs. This year the Ministry of Consumer Affairs theme is to make the consumers financial literate so that they are not mislead by the marketer.

Consumer Protection Act, 1986

India is a country which never fell behind in introducing progressive legislation. The most important milestone in Consumer Movement in the country has been the enactment of the Consumer Protection Act, 1986. December 24th is an important day in the history of India as on this day in 1986 the Consumer Protection Act, received the assent of the President of India. The Act has set in motion a revolution in the field of consumer rights that perhaps cannot be paralleled anywhere else in the World. The Act applies to all goods and services unless specially exempted by the Central Government, in all sectors whether Private, Public or Co-operative.

The Act enshrines all the consumer rights which are internationally accepted. As per the Act, the consumer protection councils have been established at Central, State and District levels to promote and protect the consumer rights. Further adjudicatory bodies which are commonly known as consumer courts have been established for easy redressal of consumer complaints.

Consumer Guidance and Education

An aware consumer is an asset for any society. Whenever a consumer takes an insurance policy he should read the fine print carefully, gather full policy details, engage a reputed agent, know the policy’s insurance cover and the process of filing a claim.

Further while applying for a bank loan the consumer should read the fine print carefully, confirm the Interest Scheme applicable, know the repayment plan and timeline and compare other loan options / plan. One should always check the hidden charges and penalty clause, always check the rate of interest, penalty etc and read terms and conditions and other details and check bill carefully before subscribing to a credit card service. For problems relating to banking and insurance Ombudsman is a free, fair and fast method of seeking redressal.

One should never be swayed by advertisements which violate consumers’ right to information and choice and thereby have the potential to cause financial loss and mental agony. Always be careful about slick advertisements such as “double your money”, etc.

Thus, a balance has to be made between free market forces and consumer protection. Any consumer movement can be successful if the consumers are satisfied; they receive value for their products and services. This in turn requires a synergy and support of the government, judiciary, traders, and consumers.

[Dr. Sheetal Kapoor is Associate Professor and Convenor Consumer Club, Department of Commerce, Kamala Nehru College, University of Delhi.]

Disclaimer : The views expressed by the author in this feature are entirely her own and do not necessarily reflect my views.

Borrowers in distress and seeking credit counselling may directly apply to BCSBI in the prescribed application form. Member banks may also encourage borrowers whose loan accounts are in default and who, in their opinion, need credit counselling to approach BCSBI.

If the applicant’s case requires debt restructuring, the Counsellor will formulate a debt restructuring plan in consultation with the concerned bank(s). It is not obligatory for a bank to accept the debt restructuring plan drawn by the Counsellor and the concerned bank is free to accept the solution in full or with modifications.

BCSBI offers credit counselling services free of charge. Credit Counsellors will maintain confidentiality of the information received from member banks/borrowers. Member banks are also asked to assure their borrowers on this to encourage them to avail of the credit counselling services. In order to ensure that there is co-ordination between Credit Counsellors and the banks and also to ensure that the objectives of the Credit Counselling are met with speed and efficiency, each member bank will identify a Nodal Officer, preferably from the Credit Department.

Counselling services will be available between 10.00 AM and 5.30 PM from Monday to Friday at the following address:

Banking Codes and Standards Board of India
C-7, Reserve Bank of India Building
Bandra Kurla Complex Bandra (East)
Mumbai – 400 051
Tel No (022) 2657 1105 Fax No (022) 2657 3719
Website: www.bcsbi.org.in
e-mail : creditcounselingbcsbi@rbi.org.in

For all the folks who need some intensive Credit Counselling and hand holding, I can also do it for a fee. If you are serious about it you can call me on 9702062111. You do not have to live to pay up your EMI, learn to live for yourself.

Raghuleela Leasing and Real Estates Pvt. Ltd. Limited is a Special Purpose Vehicle (SPV) formed to develop “The Capital” Project at plot no. C-70 at Bandra-Kurla Complex (BKC), Mumbai. The equity holders for the project are:

– Wadhwa and Associates Realtors Pvt. Ltd. (90%)
– Vishwaroop Infotech Pvt. Ltd. (9%)
– Shree Naman Developers Ltd. (1%)

The first two parties in the above agreement are part of the Vijay (Wadhwa) Associates Developers. The Wadhwa group has, over the past 40 years completed a number of projects across Mumbai and Navi Mumbai and has now expanded to Pune. Over the last couple of years they have completed a total of 49 residential projects with total saleable area of over 35 lac sq.ft. In case of commercial real estate they have completed a total of 21 projects with a saleable area of 44 lacs sq. ft. These include commercial projects like The Platina, Trade Centre in BKC as well as IT parks, malls and office spaces across Mumbai.

M/s Raghu Leela Leasing P. Ltd proposes to issue NCD to the extent of Rs. 500 Crore to partly fund its commercial real estate project ‘The Capital’ which is expected to involve a total cost of Rs 2482 crore. The project cost will be met in the following manner- Rs. 715 crores will be funded by Promoters, Rs. 800 crores in the form of debt through bank loans and NCD issue and the rest from sale of saleable area of about 10 lakh sq. ft. Construction has already started and is expected to be completed by March 2013.

BWR has considered various risk factors and is of the view that the project has average financial risk.

An important stipulation of MMRDA while granting approval is that any delay in construction beyond March 2013 could expose the Company to a heavy monetary fine by them from whom the land has been acquired on lease for 80 years. However, given the reputation for quality work and good track record of the promoters in completing projects in the past, the company is expected to take appropriate steps to ensure completion of the project as per schedule and generate adequate cash flow to service the debts.

Rating Outlook:

The promoter group of Raghu Leela Leasing & Real Estate P Ltd. has a good track record in executing high profile commercial and residential real estate projects in Mumbai and their current projects are a good mix of residential and commercial in up market areas of Mumbai with recent expansion to Pune. The project itself is located at prime location of BKC which is touted to be the next financial hub of Mumbai. The rating is however constrained by the current bearish scenario in commercial real estate, the price risk and funding gaps in case of slowdown in advance sales.

If you do not have a will, then the legal hires can recover the money from the nominee.

Making a will is very cheap. If you know how to form the words, just write it down in a piece of paper and get signatures from 2 witnesses. You can also get your doctor to sign on the will that you were in stable mental health when you made the will. You need not get it registered. But, if you want to get it registered and engage the services of a lawyer, it might cost you little amount of money, for example Rs. 1000/-.

The rating factored inter alia, the majority stake held by the Govt of India, essential characteristics of the Lower Tier II bonds, comfortable capital adequacy and Tier I capital, performance, well diversified credit profile, and higher loan loss coverage.

The bank has been consistently improving its total business over the years. During FY09, the bank has adopted several business development initiatives to grow its business and one important initiative is to bring all the branches under core banking solution (CBS). With 100% CBS branches, the bank competently managed the challenging economic conditions during FY 09, to grow its total business by 23.60% to reach Rs 103,818 crore in FY09 as compared to Rs 83,993 crore during FY 08, which has further increased to Rs 110,461 crore in Q2 FY 10.

During the year, the bank has gradually grown its asset base aided by robust growth in deposits and advances. With the help of several new deposits schemes and marketing channels, the bank’s total deposits increased to Rs 59,390 crore during FY09, from Rs 49,437 crore in FY08, reflecting a good growth rate of 20.13%. Low cost deposits increased to Rs 18,653 crore in FY 09 as compared to Rs 16,593 crore in FY08, representing 31.41% of the total deposits. However, in percentage term, the bank’s low cost deposits to total deposits had come down by 2.16%.

The bank’s gross advances has posted excellent growth by 28.56% to reach a level of Rs 44,428 crore in FY09 from Rs 34, 557 crore in FY08. The bank has a well diversified loan profile of agriculture credit, SME (Small, and Micro Enterprises) credit and large corporate credit.

Andhra Bank is one of the highly profitable mid-sized public sector banks in India in spite of economic down turn witnessed in the domestic market during financial year 2009. The bank’s total income increased by 26.96% to Rs 4,836 crore during FY09, reflecting the significant buoyancy in core banking operations, excellent fee based income and focus on healthy earning assets which contributed to improvement in the profitability. As a result, the bank’s operating profit and net profit surged 21.86% and 13.46% respectively. Interest income recorded a growth of 27.68% to Rs 5,374 crore in FY09 from Rs 4,209 crore in FY08 as against the interest expenses which grew from Rs 2,869 crore during FY08 to Rs 3,747 crore during FY09.

The Bank’s tier-I capital ratio stood at 8.67% as on 31st March 2009, which is marginally higher than the previous year figure of 8.54% under Basel II. Overall, the Bank has achieved capital adequacy ratio of 13.22% under Basel II in FY 2009 (11.61% in FY08) which has increased to 14.03% in Q2 FY10. During FY 09, the bank’s Return on Assets (ROA) had decreased marginally to reach 1.09% as compared to 1.16% in FY08. It has, however, increased to 1.53% in Q2 FY10.

BWR calculates the ‘leverage’, which assesses the bank’s net worth with reference to on and off balance sheet items. During FY09, the bank’s leverage though higher was still comfortable at 18.31 in FY09 as compared to 16.4 in FY08. When compared with its peers’ average, the bank’s leverage was lower by 274 bps.

During FY09, the Bank has restructured nearly 58,612 accounts, which is 3.5% of its gross advances during FY09. This ratio is comparatively high. Consequently, the bank’s asset quality could be affected slightly in the coming year.

The bank’s operations are largely concentrated in the state of Andhra Pradesh which might be a limiting factor for growth.

Brickwork Ratings (BWR) Issue Rating is based on CAMEL-TP framework. The rating assigned is specific to the proposed lower Tier II bonds issue of Rs 500 crore and has taken into consideration the essential features of such type of Bonds. The rating also factored Andhra Bank’s ownership structure, (majority stake held by Government of India), performance, capital adequacy as well as asset quality and has assigned a stable rating outlook for the issue.

The grading reflects the company’s dominant position in the build-operate-transfer (BOT) road space and its established track record, with most of its projects having witnessed timely completion. The grading has also taken into consideration the strong management background with domain expertise, robust industry prospects due to significant investment expected in roads and power transmission and distribution (T&D) segments, proven execution capabilities in the engineering procurement construction (EPC) segment, integrated business model and adequate corporate governance practices. The grading also reflects the company’s strong order book of Rs 17,850 Mn as well as healthy revenue growth potential from the BOT segment.
The grading takes into account the fact that Ashoka’s BOT (toll) projects are restricted to Maharashtra and Madhya Pradesh. Moreover, despite having the early mover advantage, company has only few large projects in its portfolio.

converted into a public limited company on April 22, 2002, and was renamed Ashoka Buildcon Ltd (Ashoka). Ashoka is in the business of undertaking EPC contracts in roads, bridges, commercial buildings, industrial buildings and power T&D contracts. Apart from building roads and bridges, it also operates them on a BOT basis. Promoters, Mr. Ashok Katariya and Mr. Satish Parakh, and their groups, currently own 84.4 per cent of Ashoka.

Ashoka has 16 operational road projects (1,088 lane km), four projects under construction (1,423 lane km) and third-party orders worth Rs 12,673 Mn. The company has recently ventured into EPC – power T&D contracts, where it has outstanding orders of Rs 9,682 Mn from Maharashtra State Electricity Distribution Company.

Ashoka’s board comprises eight directors, four of whom are independent directors and one is nominee director. The board is chaired by its promoter and executive director, Mr. Ashok Katariya, who has more than 33 years of experience. The managing director, Mr. Satish Parakh has over 28 years of experience in the construction industry. Other board members include nominee director of Infrastructure Development Finance Company (IDFC) Private Equity (PE). The key management team has an average work experience of more than 20 years and has been with the company for more than 10 years on an average.

Ashoka is planning to raise Rs 2,250 Mn from the IPO. Of this, Rs 700 Mn would be utilised for purchasing capital equipments and for working capital requirements and Rs 1,150 Mn would be used to prepay the loans of the company and its subsidiaries. The balance would be utilised for general corporate uses.

Ashoka registered top line and net profit CAGR of 39.4 per cent and 35.0 per cent respectively from 2004-05 to 2008-09. In 2008-09, the company reported net profit of Rs 312 Mn on a turnover of Rs 5,205 Mn, translating into a net margin of 6.0 per cent. It posted an EPS of Rs 5.3 during the same period, while its book value per share stood at Rs 59.1. Ashoka’s return on capital employed (ROCE) and return on equity (ROE) for the year stood at 11.7 per cent and 9.5 per cent, respectively.

Equity: Maximum exposure to equities is capped at 15% to 30% (depends on fund aim). The objective is to maximize returns through a well-diversified equity portfolio with tightly defined internal guidelines. As a risk management tool, concentration in holdings is avoided and normally, maximum exposure in a single stock is capped at 1-3% of the portfolio value. Booking of profits is regularly done once price target has been achieved.

Debt: Fixed income part of the portfolio has a mix of government securities, high grade bonds and money market instruments.

Is the Monthly Income Plan for me?

If you are risk averse or on retirement it will work in your favour. I advice it for a different reason. Normally, even if a person is insured, he should have MIP in portfolio too, so that he builds a “near” monthly (or quarterly) income for his family. You could do that with bank fixed deposit too. Just that the MIP dividends are tax-free. You could choose how risky your MIP should be. This can be done looking at the equity exposure of the MIP.