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February 2019
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Digital India: Everything you need to know
Digital India is a campaign launched by the Government of India to ensure the Government’s services are made available to citizens electronically by improved online infrastructure and by increasing Internet connectivity or by making the country digitally empowered in the field of technology. The initiative includes plans to connect rural areas with high-speed internet networks. Digital India consists of three core components: the development of secure and stable digital infrastructure, delivering government services digitally, and universal digital literacy. Digital India was launched by the Prime Minister of India Narendra Modi on 1 July 2015 with an objective of connecting rural areas with high-speed Internet networks and improving digital literacy. The vision of Digital India programme is inclusive growth in areas of electronic services, products, manufacturing and job opportunities. It is centred on three key areas – digital infrastructure as a utility to every citizen, governance and services on demand, and digital empowerment of citizens. Some of the facilities which will be provided through this initiative are Bharat net, digital locker, e-education, e-health, e-sign, e-shopping and national scholarship portal. As part of Digital India, Indian Government planned to launch Botnet cleaning centers. National e-Governance Plan aimed at bringing all the front-end government services online. MyGov.in is a platform to share inputs and ideas on matters of policy and governance. It is a platform for citizen engagement in governance, through a “Discuss”, “Do” and “Disseminate” approach. UMANG (Unified Mobile Application for New-age Governance) is a Government of India all-in-one single unified secure multi-channel multi-platform multi-lingual multi-service freeware mobile app for accessing over 1,200 central and state government services in multiple Indian languages over Android, iOS, Windows and USSD (feature phone) devices, including services such as AADHAR, DigiLocker, Bharat Bill Payment System, PAN, EPFO services, PMKVY services, AICTE, CBSE, tax and fee or utilities bills payments, education, job search, tax, business, health, agriculture, travel, Indian railway tickets bookings, birth certificates, e-District, e-Panchayat, police clearance, passport, other utility services from private companies and much more. eSign framework allows citizens to digitally sign a document online using Aadhaar authentication. Swachh Bharat Mission (SBM) Mobile app is being used by people and Government organisations for achieving the goals of Swachh Bharat Mission. eHospital application provides important services such as online registration, payment of fees and appointment, online diagnostic reports, enquiring availability of blood online etc. Digital attendance: attendance.gov.in was launched by PM Narendra Modi on 1 July 2015 to keep a record of the attendance of government employees on a real-time basis. This initiative started with implementation of a common Biometric Attendance System (BAS) in the central government offices located in Delhi. Back-end digitisation Black money eradication: The 2016 Union budget of India announced 11 technology initiatives including the use of data analytics to nab tax evaders, creating a substantial opportunity for IT companies to build out the systems that will be required. Digital Literacy mission will cover six crore rural households. It is planned to connect 550 farmer markets in the country through the use of technology. Facilities to digitally empower citizens Digital Locker facility will help citizens to digitally store their important documents like PAN card, passport, mark sheets and degree certificates. Digital Locker will provide secure access to Government issued documents. It uses authenticity services provided by Aadhaar. It is aimed at eliminating the use of physical documents and enables the sharing of verified electronic documents across government agencies. Three key stakeholders of DigiLocker are Citizen, Issuer and requester. BPO and job growth: The government is planning to create 28,000 seats of BPOs in various states and set up at least one Common Service Centre in each of the gram panchayats in the state. e-Sampark Vernacular email service: Out of 10% English speaking Indians, only 2% reside in rural areas. Rest everyone depends on their vernacular language for all living their lives. However, as of now, email addresses can only be created in English language. To connect rural India with the Digital India, the Government of India impelled email services provider giants including Gmail, office and Rediff to provide the email address in regional languages. The email provider companies have shown positive sign and is working in the same process.
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Payment Banking in India2/4/2019 Payment Banking in India
The payment banks are new age banks which give limited services but these are easy to access. These banks have rarely a physical branch. Instead, a payment bank works through the existing vendors, shopkeepers. It has more focus on the online platform. You may get a higher interest rate from the payment bank saving account. Also, It opens only saving and current account. Payments banks, launched to make the country more financially inclusive, seems to be giving the regulators and investors a cause for concern as they continue with their second straight year of losses with little signs of turning the corner. Payment banks are the latest initiative from the Reserve Bank of India (RBI) with the primary motive to promote digital, paperless and cashless banking in our nation. It is an approach in which other non-banking financial organisations are granted the authority to offer basic bank services to every Indian citizen. A payments bank is a differentiated bank with the specific objective of catering to the unbanked and underbanked. Although the Pradhan Mantri Jan Dhan Yojana has brought down the number of unbanked individuals in the country, there are still millions who do not have bank accounts. According to a World Bank report, India is home to 21% of the world’s unbanked adults. Payments banks aim to service these customers, especially migrant workers and those from lower income households, as well as bring them into the formal financial system. It also has the added benefit of secured, technology-driven transactions which can easily be tracked without any loop hole for black money. Traditional banks can do everything payments banks can, but due to their structures and business priorities they may be unable to cater to certain segments and geographies. For instance, while it’s impossible for a bank to open branches in every village across the country, payments banks can fill this gap through the use of mobile phones. There are two main ways in which payments banks are different from traditional banks: they can accept deposits of only up toRs 1 lakh, and they cannot lend. Since payment banks aren’t allowed to lend, they make their profits by selling third party products. While payments banks themselves cannot offer certain services to customers, they can always partner with traditional banks for providing loans and selling investment products. This is the first time in Indian history the RBI has granted banking authority to other non-banking financial sectors and has provided a second set of differentiated licenses to small-scale banks already. This initiative is aimed at redefining the Indian economy by providing a secure payment gateway for all transactions. It also reaches out to the migrant labourers and lower income groups by providing all services on mobile phones and issuing a very low transaction fee for every service.
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What are Liquid Funds?2/4/2019 What are Liquid Funds?
Liquid funds are simply debt mutual funds that invest your money in very short-term market instruments such as treasury bills, government securities and call money that hold least amount of risk. These funds can invest in instruments up to a maturity of 91 days. The maturity is mostly much lower than that. They are least risky as well as least volatile in the category of mutual funds for the following reason: one, mutual funds mostly invest in instruments with high credit rating (P1+). Two, unlike other funds, the NAV of liquid funds is not volatile as the only change in their NAV is mostly as a result of the interest income that accrues. In other words, given their short-term maturities, these instruments are hardly traded in the market. They are held until maturity. Hence, their NAV only sees a change to the extent of interest income accrued, everyday, including weekends. Liquid funds are ideal parking grounds when you have a sudden influx of cash either because you have received money from any legal settlement or from maturity of investments. It is noteworthy that liquid funds cannot be a full-fledged substitute for a savings bank account. Another way to make use of liquid funds is invest your lump sum receipts in them and then opt for a systematic transfer plan to invest in equity funds of your choice. Often, you would use SIPs to invest in equity funds. That is fine when you invest out of your monthly savings. But if you receive a large sum at one go, you can use liquid funds in such instances, to enhance your returns. Liquid funds could also be used when you have a sudden influx of cash, which could be a huge bonus, sale of real estate and so on. Many equity investors also use liquid funds to stagger their in vestments into equity mutual funds using the systematic transfer plan (STP), as they believe this method could yield higher returns. Liquid funds score over traditional investment options like savings bank account and short term fixed deposits as they have the potential to provide higher returns. However, one must choose the right option out of the ones offered by mutual funds like dividend payout, dividend re-investment and growth to enhance post tax returns. It is important because being a debt fund by definition, a liquid fund is required to pay dividend distribution tax (DDT), before distributing dividends to investors. It is also important to mention here that most liquid funds offer only dividend reinvestment (daily, weekly and/or fortnightly) and growth option. Some liquid funds do offer dividend payout options, but only for large investments on a weekly and fortnightly basis. Liquid funds are also a type of debt fund. Compared to other debt funds, liquid funds are the least risky. Liquid funds are unique with respect to the applicability of Net Asset Value (NAV). This is one of the most important numbers you should look at while choosing a liquid fund. Most liquid funds perform similarly. But their expense ratios can vary. The expense ratio shows the operating efficiency of a mutual fund scheme. It indicates how much of your invested amount is being used to manage the expenses of the fund.
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What are balanced funds?2/4/2019 What are balanced funds?
A balanced fund combines a stock component, a bond component and sometimes a money market component in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate, or higher equity, component, or conservative, or higher fixed-income, component orientation. Balanced funds are geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. The amounts this type of mutual fund invests into each asset class usually must remain within a set minimum and maximum. Although they are in the “asset allocation” family, balanced fund portfolios do not materially change their asset mix. This is unlike life-cycle, target-date and actively managed asset-allocation funds, which make changes in response to an investor’s changing risk-return appetite and age or overall investment market conditions. Investors who have dual investment objectives favor balanced funds. Typically, retirees or investors with low risk tolerance utilize these funds for growth that outpaces inflation and income that supplements current needs. While retirees generally scale back risk as age advances, many individuals recognize the need for equity exposure as life expectancies increase. While the equity holdings of a balanced fund tend to lean toward large, dividend-paying companies, those issues typically provide long-term total returns that track the S&P 500 Index. Balanced funds are custom-made for new investors and those looking for relative stability for their savings. Choosing a balanced fund that suits the investor’s long-term goals is very important. The history of the funds is not the only factor to be considered. Experts are of the view that when choosing a balanced fund that contains both the asset classes, the deciding factors of both asset classes have to be taken in to account. When assessing the equity part, the investor should look for factors like the fund house, fund manager, asset value, constancy of portfolio, diversification, risk taken by the fund, asset size, and the historical returns. When assessing the debt funds, they should pay attention to the asset quality, fund manager’s qualification and sensitivity of the fund to rate changes. Because balanced funds rarely have to change their mix of stocks and bonds, they tend to have lower total expenses. The Vanguard Balanced Index Fund, for example, has an expense ratio of only 0.19%. Moreover, because they automatically spread an investor’s money across a variety of types of stocks, they minimize the risk of selecting the wrong stocks or sectors. Finally, balanced funds for retirement allow investors to withdraw money periodically without upsetting the asset allocation. However, debt fund returns can be expected in a predictable range, which makes them safer avenues for conservative investors. Debt funds invest in different securities based on their credit ratings. A security’s credit rating signifies whether the issuer will default in making the promised payments. The fund manager of a debt fund ensures that he invests in high credit quality instruments. A higher credit rating means that the entity is more likely to pay interest on the debt security regularly as well as pay back the principal amount upon maturity. This is why debt funds which invest in higher-rated securities will be less volatile as compared to low-rated securities. Additionally, the maturity also depends on the investment strategy of the fund manager and the overall interest rate regime in the economy. A falling interest rate regime encourages the manager to invest in long-term securities. Conversely, a rising interest rate regime encourages him to invest in short-term securities.
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What are Securities?2/4/2019 What are Securities?
Securities are traded on the exchange markets. Although the term refers to all types of financial instruments, there are differences in its legal definitions, which mostly consider equities and fixed income as securities. Nevertheless, securities can be stocks, bonds, mutual funds, interest-bearing Treasury bills, notes, derivatives, warrants, and debentures. Furthermore, interests in oil-drilling programs are also considered securities. The legal entity that issues securities is the issuer of the security. Securities differ in their level of inherent risk. For example, equities are considered riskier than bonds, but also some equities are riskier than other equities. Depending on the level of risk that an investor wants to accept, he selects the relevant securities. Moreover, securities differ in their level of liquidity. Highly liquid securities like bonds, equities and money market instruments are traded more frequently because investors can increase their price by buying more securities and realizing a higher return on investment. Securities are negotiable financial instruments issued by a company or government that give ownership rights, debt rights, or rights to buy, sell, or trade an option. The entity that creates the securities for sale is known as the issuer, and those that buy them are, of course, investors. Generally, securities represent an investment and a means by which municipalities, companies and other commercial enterprises can raise new capital. Companies can generate a lot of money when they go public, selling stock in an initial public offering (IPO), for example. City, state or county governments can raise funds for a particular project by floating a municipal bond issue. Depending on an institution’s market demand or pricing structure, raising capital through securities can be a preferred alternative to financing through a bank loan. Certificated securities are those that are represented in physical, paper form. Securities may also be held in the direct registration system, which records shares of stock in book-entry form. In other words, a transfer agent maintains the shares on the company’s behalf without the need for physical certificates. Modern technologies and policies have, in some cases, eliminated the need for certificates and for the issuer to maintain a complete security register. A system has developed wherein issuers can deposit a single global certificate representing all outstanding securities into a universal depository known as the Depository Trust Company (DTC). All securities traded through DTC are held in electronic form. It is important to note that certificated and un-certificated securities do not differ in terms of the rights or privileges of the shareholder or issuer. Bearer securities are those that are negotiable and entitle the shareholder to the rights under the security. They are transferred from investor to investor, in certain cases by endorsement and delivery. In terms of proprietary nature, pre-electronic bearer securities were always divided, meaning each security constituted a separate asset, legally distinct from others in the same issue. Depending on market practice, divided security assets can be fungible or (less commonly) non-fungible, meaning that upon lending, the borrower can return assets equivalent either to the original asset or to a specific identical asset at the end of the loan.
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Ministry Of Corporate Affairs in India1/15/2019 Ministry Of Corporate Affairs in India
The Ministry of Corporate Affairs (MCA) is an Indian government ministry. This Ministry is primarily concerned with administration of the Companies Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008 & other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the corporate sector in accordance with law. It is responsible mainly for regulation of Indian enterprises in Industrial and Services sector. The current minister of corporate affairs is Arun Jaitley. The current Minister of State for Corporate Affairs is Mr. PP Choudhary. Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 are substantive provisions for regulating private placements by Indian companies. These provisions are, of course, in addition to applicable regulations prescribed by the Securities and Exchange Board of India (“SEBI”) for listed companies. Recently, both Section 42 and Rule 14 have undergone amendments by way of the Companies (Amendment) Act, 2017 and the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018, respectively (the “Recent Amendments”). The Ministry is also responsible for administering the Competition Act, 2002 to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers through the commission set up under the Act. Besides, it exercises supervision over the three professional bodies, namely, Institute of Chartered Accountants of India(ICAI), Institute of Company Secretaries of India(ICSI) and the Institute of Cost Accountants of India (ICAI) which are constituted under three separate Acts of the Parliament for proper and orderly growth of the professions concerned. The Ministry also has the responsibility of carrying out the functions of the Central Government relating to administration of Partnership Act, 1932, the Companies (Donations to National Funds) Act, 1951 and Societies Registration Act, 1980.
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Stock Market in India1/15/2019 Stock Market in India
Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc. At the last count, the BSE had about 4,700 listed firms, whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only about 500 firms constitute more than 90% of its market capitalization; the rest of the crowd consists of highly illiquid shares. Almost all the significant firms of India are listed on both the exchanges. NSE enjoys a dominant share in spot trading, with about 70% of the market share, as of 2009, and almost a complete monopoly in derivatives trading, with about a 98% share in this market, also as of 2009. Both exchanges compete for the order flow that leads to reduced costs, market efficiency and innovation. The presence of arbitrageurs keeps the prices on the two stock exchanges within a very tight range. The Securities & Exchange Board of India (SEBI) manages the overall responsibility of development, regulation and supervision of the stock market in India. SEBI was formed in 1992 as an independent authority to lay down market rules in line with the best market practices. In case of any breach, Sebi reserves the right to impose penalties on market participants. There is total 23 different stock exchanges in India, but not popular as NSE and BSE.
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Shop And Establishment Act1/8/2019 Shop And Establishment Act
The Shop and Establishment Act is regulated by the Department of Labor and regulates premises wherein any trade, business or profession is carried out. The act not only regulates the working of commercial establishments, but also societies, charitable trusts, printing establishments, educational institutions run for gain and premises in which banking, insurance, stock or share brokerage is carried on. This act regulates areas such as working hours, rest interval for employees, opening and closing hours, closed days, national and religious holidays, overtime work, rules for employment of children, annual leave, maternity leave, sickness and casual leave, etc., The Shop and Establishment Act regulates a number of aspects relating to the operation of a shop or commercial establishment. Some of the key areas regulated by the shop and establishment act include: Hours of work Interval for rest and meals Prohibition of employment of children Employment of young person or women Opening and closing hours Close days Weekly holidays Wages for holidays Time and conditions of payment of wages Deductions from wages Leave policy Dismissal Cleanliness Lighting and ventilation Precautions against fire Accidents Record keeping In case the shop or establishment would like to close down the business, the occupier should notify the Chief Inspector in writing within fifteen days of the closing. The Chief Inspector after reviewing the request for closure can remove the shop or commercial establishment from the register and cancel the registration certificate.
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Ministry of Finance in India1/1/2019 Ministry of Finance in India
The Ministry of Finance is an important ministry within the Government of India concerned with the economy of India, serving as the Indian Treasury Department. In particular, it concerns itself with taxation, financial legislation, financial institutions, capital markets, centre and state finances, and the Union Budget. The Ministry of Finance is the cadre controlling authority of the Indian Revenue Service, Indian Economic Service, Indian Cost Accounts Service and Indian Civil Accounts Service. Department of Economic Affairs The Department of Economic Affairs is the nodal agency of the Union Government to formulate and monitor country's economic policies and programmes having a bearing on domestic and international aspects of economic management. A principal responsibility of this Department is the preparation and presentation of the Union Budget (including Railway Budget) to the parliament and budget for the state Governments under President's Rule and union territory administrations. Other main functions include: Formulation and monitoring of macroeconomic policies, including issues relating to fiscal policy and public finance, inflation, public debt management and the functioning of Capital Market including Stock Exchanges. In this context, it looks at ways and means to raise internal resources through taxation, market borrowings and mobilisation of small savings; Monitoring and raising of external resources through multilateral and bilateral Official Development Assistance, sovereign borrowings abroad, foreign investments and monitoring foreign exchange resources including balance of payments; Production of bank notes and coins of various denominations, postal stationery, postal stamps; and Cadre management, career planning and training of the Indian Economic Service (IES). The Foreign Investment Promotion Board (FIPB), housed in the Department of Economic Affairs, Ministry of Finance, was an inter-ministerial body, responsible for processing of FDI proposals and making recommendations for Government approval. FIPB is now abolished as announced by Finance Minister Arun Jaitley during 2017-2018 budget speech in Lok Sabha.[4] Department of Expenditure The Department of Expenditure is the nodal Department for overseeing the public financial management system (PFMS) in the Central Government and matters connected with the finances. The principal activities of the Department include pre-sanction appraisal of major schemes/projects (both Plan and non-Plan expenditure), handling the bulk of the Central budgetary resources transferred to States, implementation of the recommendations of the Finance and Central Pay Commissions, overseeing the expenditure management in the Central Ministries/Departments through the interface with the Financial Advisors and the administration of the Financial Rules / Regulations /Orders through monitoring of Audit comments/observations, preparation of Central Government Accounts, managing the financial aspects of personnel management in the Central Government, assisting Central Ministries/Departments in controlling the costs and prices of public services, assisting organisational re-engineering through review of staffing patterns and O&M studies and reviewing systems and procedures to optimize outputs and outcomes of public expenditure. |