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RBI Policy (September 16, 2011)

The RBI hiked repo rate by 25 bps today to 8.25%. As a result reverse repo rate has been automatically raised to 7.25%, while rate under Marginal Standing Facility (MSF) has also been automatically raised to 9.25%. CRR, SLR have been kept unchanged. The move was in line with consensus market expectation. Market price action post the move is very muted given that the action was widely expected.

RBI’s View Point
The tone of the policy seems to indicate that the RBI is broadly comfortable with the pace of slowdown as underway currently. It notes that the global macro outlook has worsened considerably and lead indicators suggest there will be further moderation in economic activity in Q3. This will impact India ’s export performance which has been strong recently. Lead indicators of the domestic economy are also suggesting moderation. Hence, the RBI acknowledges downside risks to its 8% growth projection made in July.

However, inflation continues to be high and sticky and inflationary expectations as well remain outside the RBI’s comfort zone. The fresh rise in non-food manufacturing inflation in August also suggests demand pressures. Furthermore, there is still an element of ‘suppressed’ inflation in form of incomplete pass through of global oil prices into domestic prices as well as possible hike in administered electricity prices. Food inflation also is no longer a temporary phenomenon as it reflects structural demand supply imbalances.

In terms of forward guidance, the RBI notes that stance will be influenced b signs of downward movement in inflation trajectory, and implications of global developments. It notes also that the cumulative impact of policy actions should now be increasingly felt in further moderation in demand and reversal of inflation trajectory towards later part of 2011 – 12.

Given the stickiness of inflation at elevated levels, it was unlikely that the RBI would tone down its stance significantly. Even so, there seems to be general comfort with the way growth is already slowing, and some optimism that demand moderation will continue and would also contribute to easing of inflationary pressures.

Importantly, the inflation trajectory from here is very likely down (due to base effect, falling demand momentum, etc) barring a major commodity uptick. Whereas, implications of global development on local growth are also unlikely to turn positive. Hence, a plain reading of triggers influencing RBI’s future stance seems to suggest that its policy rate cycle may have topped out provided there is no further shocks from commodity price adjustments. The outright voices of disagreement on further rate hikes from influential quarters of the government also seems to suggest as much.

The last 125bps of rate hikes have been almost completely absorbed by short end rates (benchmark 1 year CD) owing to continued falling credit to deposit ratio of banks. This is a point that we have been making for some time and forms the basis of our product recommendation of the IDFC SSIF- ST . Today’s hike has also done little to change this view. While credit growth may improve going into busy season from October, deposit base continues to grow healthily and incremental credit to deposit ratio is unlikely to be impacted adversely. This should support an eventual curve steepening over the next 6 – 8 months thereby benefitting the short term fund trade.

PayPal Finally Started Auto Withdrawal option for Indian PayPal users!!!

This is good news to share with all PayPal friends from India that PayPal stated executing auto withdrawal option and more so they have waived off the fees that is Rs.50 which they use to charge earlier from us.

In the month of May 2011, PayPal sent an email to confirm account details and in that email PayPal explained that now following information is now compulsory for all account PayPal account holders in India that is ...

In order to comply with the RBI Guidelines, all PayPal users in India receiving payments from cross-border sale of goods and services and withdrawing money, are required to update their PayPal account by adding:
  • PAN or Permanent Account Number
  • Purpose Code
  • Bank account in India
 By adding this information, you will continue to receive payments into your PayPal account and your account will not be limited from receiving future payments. You will also be able to withdraw money to your bank account in India. Or, allow your money to be auto-withdrawn into your bank account. If you currently have a PayPal balance, you will also need to update your PayPal account with the information.

And the last date of confirmation was Aug 22, 2011 and failing which will result in limited account access of your PayPal account...

Today that is September 15th 2011,  PayPal finally executed the auto withdrawal option as many friends from India got the confirmation from PayPal that amount is transferred to bank account registered in paypal and will be received by them in 3-4 working days....

I am very happy with move and now we don't pay the charges for transfer which we use to pay....

This link related to FAQ on automatic withdrawal with solve all your queries related to paypal...
Refer this link to for detailed information about this topic....

If you have any doubt feel free to ask or share your experience with PayPal...

Update on New Fund offers and FMP (Fixed Maturity Plans) September 2011

Update on New Fund offers and FMP (Fixed Maturity Plans)
**** click Image to see the actual size of this image.....

Best Gold ETF (Exchange Traded funds) in India!!

Tax Free Incomes in India

Source from which you earn income but don't pay tax.....

  • Dividends from equity mutual funds and stocks 
  • Long-term capital gains on stock transactions are not taxed if you have paid the securities transaction tax on the sale
  • Interest earned on PPF 
  • Amount received on Maturity of LIC Insurance Policy 
  • Gifts Received from relatives. 
  •  Agricultural income
  • Scholarship granted to meet cost of education
  • Death-cum-retirement gratuity received by employees

Income Tax Rates (Tax Slab) for 2011-12

Merger in Kotak Select Focus Fund (from Sep 10, 2011)

Merger of Kotak Lifestyle Fund and Kotak Indo World Infrastructure Fund into Kotak Select Focus Fund; 

With effect from September 10,2011, Kotak Lifestyle Fund and Kotak Indo World Infrastructure Fund will be merged into Kotak Select Focus Fund.

Please find enclosed the following :Notice-cum-addendum for merger of Kotak Lifestyle Fund and Kotak Indo World Infrastructure Fund into Kotak Select Focus Fund;

Deposit Limit will be Raised from Rs. 70000 to Rs. One Lac in PPF Scheme

Modification in PPF Scheme : Deposit Limit Raised from Rs. 70,000 to Rs. One Lac while Rate of Interest on Advances Against Deposits in PPF Scheme Raised from 1% to 2 Percentage Points 

The Committee on Comprehensive Review of National Small Savings Fund (NSSF) headed by Deputy Governor, RBI has recommended revision of certain provisions of PPF Scheme, 1968 and benchmarking of interest rates on various small savings schemes with the secondary market yields on Central Government securities of comparable maturities with suitable spread.

The Committee has recommended increasing the deposit limit under PPF Scheme from existing Rs. 70,000 to Rs. 1 lakh per annum and fixing of rate of interest on advances against deposits in PPF scheme at 2 percentage points as against the prevailing interest rate on such advances at 1%.

The Committee has further recommended benchmarking interest rate on small saving schemes to interest rate on Government securities of similar maturities with a positive spread of 25 basis points on all schemes except for 50 basis points for 10 year NSC and 100 basis point for Senior citizens Savings Scheme. Recommendations of the Committee have been referred to State Governments and concerned Ministries/ Departments of Central Government for their comments.

This information was given by the Minister of State for Finance Shri Namo Narain Meena in a written reply to a question raised in Rajya Sabha today.

source: Central Govt. Employees News

Axis Tax Saver fund is now "Axis Long Term Equity Fund"

With effect from September 2, 2011, Axis Mutual Fund had changed name of its Axis Tax Saver Fund to Axis Long Term Equity Fund. The new scheme will be an open ended equity linked saving scheme with 3-year lock in.

Below are the scheme details:
Old Scheme Name
New Scheme Name
AXIS Long Term Equity Fund Growth
AXIS Long Term Equity Fund Dividend Reinvestment
AXIS Long Term Equity Fund Dividend Payout

Tax Treament for fund of funds???

The tax treatment on a fund of fund (FoF) scheme is similar to those of debt funds, because all FoFs are treated as debt funds as far as tax treatment is concerned.
Tax treatment for fund of funds:
Gains from FoFs are taxed on a par with debt MFs even if the underlying funds are all equity funds.
  • Long Term Capital Gain Tax(after 1 year) of 11.33 % without indexation or 22.66 % with indexation will be applicable
  • Short Term Capital Gains (before 1 Year) applicable as per tax slab for the investor
check this article Fund of Funds

    How to Verify your PayPal Account???

    Verification of paypal is nothing but increasing the withdrawal limit, Once you're Verified, the preset limits on your account will be removed.PayPal encourages its members to become Verified to increase trust and safety in our community. PayPal's Verification process is also an additional step to increase security to your account.

    Members with a 'Verified' account status have successfully completed our Verification process by either confirming their credit/debit card or bank account details. Verification lets PayPal know that your credit/debit card or bank account is in your control. It also prevents your details from accidentally falling into the wrong hands. This helps increase security of the PayPal network and prevent fraud such as identity theft. Plus, like other payment service providers, we're complying with the financial regulations required by law.

    Methods to Verify your PayPal account
    Option 1: Link and confirm your credit card with PayPal
    Option 2: Confirm your bank account with PayPal

    To become Verified, you must: Confirm your email address. Add a bank account or credit or debit card to your account. Link and confirm your card or bank details.

    Why to verify (when your paypal account is verified)
    • More spending power: The sending limit on your account is removed 
    • Higher withdrawal limits: The withdrawal limit on your account is removed 
    • Increased security and credibility: Offers greater security and lets others know you're an authenticated PayPal member 
    • More buyer and seller confidence: Buyers and sellers value your 'Verified' status. It shows you have successfully passed PayPal's checks which help to increase network security.

    Process of verification with credit card:
    Step 1: Add your credit/debit card to your PayPal account. (All information is encrypted for maximum security.)
     Step 2: Authorise PayPal to make a small, refundable charge to your card which will generate a 4-digit PayPal code (similar to a pin number) needed to complete the verification process.
     Step 3: Retrieve your 4-digit code from your card statement and enter it in to your PayPal account - this completes the verification process.

    **About 4-digit code:
    The PayPal code is a unique random four-digit code (like a pin number) generated by PayPal when you begin the process of linking and confirming your credit or debit card.
    For example: PP*1234 EXPUSE or 4321PAYPAL -- *EXPUSE
    Please note that PayPal does not have access to the code, so we cannot provide it by email or by phone.

    The PayPal code will appear on your credit/debit card online statement within 2-3 business days. You may also find the four-digit code in your next mailed monthly statement from the day you authorise PayPal to make a small, refundable charge to your card.

    On your statement, please look for a 70.00 THB charge from PayPal. In the same line, you will see the four-digit code displayed.

    For example: PP*1234 EXPUSE or 4321PAYPAL -- *EXPUSE

    Process of Verification with Bank details
     This process is about set up/add bank details and they confirm bank details.

    1.Add your bank account to your PayPal account

    2.PayPal sends two small deposits to your bank account.

    3. Check your bank account statement for the two deposits (credits) from PayPal. Then, go to your PayPal account.

    4. Enter the amounts to complete the final step in our verification process.

    What is PayPal's transaction limit?
    The maximum amount allowed for a single transaction is $10,000 USD by a PayPal member.

    If you don’t have a PayPal account, you can send a maximum of $4,000 USD for a one-time, single transaction.

    For PayPal members living outside the US, the maximum transaction limit depends on the currency in use:
    EUR - 8000
    CAD - 12500
    GBP - 5500
    JPY - 1.000.000
    AUD - 12500
    CHF - 13,000
    NOK - 70,000
    SEK - 80,000
    DKK - 60,000
    PLN - 32,000
    HUF - 2,000,000
    CZK - 240,000
    SGD - 16,000
    MXN - 110,000
    ILS - 40,000
    HKD - 80,000
    NZD - 15,000
    TWD - 330,000
    THB - 360,000
    PHP - 500,000
    BRL - 20,000
    ARS - 30,000
    MYR - 40,000If you live outside of the US and do not have a PayPal account, your transaction limit may vary.

    Source: PayPal

    How to Set Purpose Code in Your Paypal Account?

    Before set up you need to check information as what is Purpose code and why we need to add that in our PayPal account???? visit this Article :Purpose Codes of Paypal for withdrawing funds!

    In order to comply with the RBI Guidelines, all PayPal users in India receiving payments from cross-border sale of goods and services and withdrawing money, are required to update their PayPal account by adding:

    • PAN or Permanent Account Number 
    • Purpose Code 
    • Bank account in India
     Our account will be limited from receiving payments, in case you fail to do so.

    How to add Purpose code:
    Step 1: Log in to your PayPal account.
    Step 2: Click on Profile on top of the page.
    Step 3: Click on My Money under My Profile.
    Step 4: Click on Add next to Purpose Code. Read the instructions and enter your information on subsequent pages.

    There are the various Purpose Codes you can select one from -
    Content and Journalism
    - Freelance Journalism
    - Newspaper Content
    Information Technology
    - Hardware Consulting
    - Software Consulting
    - Data Processing Consulting
    - Travel Related Purchase
    Licensing of Creative Works
    - Licensing Revenues
    Export of Goods
    - Cross Border shipment of Goods and Services
    Other Services
    - Legal
    - Accounting and Tax
    - Business & PR
    - Advertising and Market Research
    - R&D

    One of the above codes can be selected as a default one, until you select another code. Once you select the Purpose code, you would be directed to the following page as below -


    All you want to Know about PayPal Auto withdrawal option for Indian PayPal Users???

    PayPal has now provided Make Auto Withdrawal feature to their Indian users since they are no more allowed to keep any money within their account. It’s become mandatory to transfer any PayPal money to their respective bank account immediately.

    Auto withdrawal is the process of automatically transferring your funds from your PayPal account into your bank account in India.

    FAQ Related to Auto Withdrawal option:

    Where will my funds be auto withdrawn to?
     Your PayPal balance will be auto withdrawn to your bank account in India. If you have one bank account added to your PayPal account, it will be set as your auto withdrawal account. In case you have more than one bank account added to your PayPal account, you will have an option to set your auto withdrawal account.

    Why are my funds being auto withdrawn?
     This is an Indian regulatory requirement and applies to all PayPal users in India.

    When does auto withdrawal happen?
    Your PayPal balance is auto withdrawn to your local bank account in India daily. You can check your bank account within 5-7 working days after your funds have been auto withdrawn from your PayPal account.

    Can I withdraw my funds?
     You can also withdraw your funds. Here's how:
    Log in to your PayPal account and click Withdraw at the top of the page.
    Select the bank account you want to use.
    Enter the amount and click Continue.
    Select your purpose code for withdrawals.
    Make sure that your information is correct and click Continue.

    Can I use my PayPal balance?
     When you receive payments and it is available as balance in your PayPal account, you must withdraw your funds or let withdrawals happen automatically. In accordance with Indian regulations, you can’t make purchases or send payments with your PayPal balance. Please use your card linked to your PayPal account to make purchases or send payments. 

    When does auto withdrawal happen?
    The transfer of funds to the bank account happens daily, and you get the amount to your selected bank account after 5-7 days and you can check that regularly if you are getting the payments daily to your Paypal account.

    Where will my funds be auto withdrawn to?
    If you have set a bank account for your Paypal account, then it would become the Auto Withdrawal account where the funds would be withdrawn to. If you have more than one account set up for your account, then you can select one of them for the Auto withdrawal of funds into that account.

    How to set your Bank account for auto withdrawal???
    Log into your PayPal account. 
    Go to My Account -------------->> Profile ------------>> Add/Edit Bank Account.
     Select the bank account and click Make Auto Withdrawal.

    *If foreign exchange or currency conversion is required to complete any transaction, this will be performed by a licensed financial institution. The foreign exchange rate is adjusted periodically on a daily basis to reflect market conditions and includes a 2.5% processing fee which is retained by PayPal. The exact exchange rate that applies to your transaction will be displayed to you at the time of the transaction.

    Source: PayPal

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