VN Finance Announces Small Ticket Loans – ‘Shramik Loan’ and ‘Rozgar Loan’ for Migrant Workers and Financially Excluded

Small Loans 

* 24X7 service; Within 1-day loan disbursal; minimal no of documents

* Funds even for those who cannot provide security or existing assets

In sync with the Prime Minister and RBI Governor’s clarion call to provide credit/ loans to the financially excluded and the unbanked, VN Finance, a tech-enabled NBFC, has announced small ticket loan offerings – ‘Shramik Loan’ and ‘Rozgar Loan’ for migrant workers and financially excluded small business men and women on the eve of Independence Day 2020. In the aftermath of Covid-19 and the problems faced by lakhs of people, VN Finance's approach is to deploy 24X7 service and disburse loans within a day with the least number of documents and hassle-free interaction using technology.

The ticket size of the loan starts from Rs. 25,000 onwards. Those people, who need unsecured loans and have no security or no existing assets, can directly (or through intermediaries) approach VN Finance and share their creditworthiness and repayment capacity. They will get the funds at the best of terms to achieve their dreams.

VN Finance also offers Secured Loans such as Loan Against Property, Loans against Gold Jewellery and Loans against Inventories. Every business needs ongoing working capital and this requirement keeps increasing with the growth of business. VN Finance's professional team fully understands business needs and provides funding against the goods and inventories already lying in the shops/godown. The small business owner just needs to furnish the inventory list, its value and their needs.

Mohit Kakkad, Director & Founder, VN Finance, said, “We stand committed to our vision of changing the society by helping people to follow the dreams by easy and quick financing. We are focusing on the segments who cannot afford to wait and cannot meet or understand the complex and time-consuming processes of conventional lenders. We work tirelessly to develop delivery mechanisms with technology to make our disbursal process easy, efficient and widespread. We plan to expand aggressively in Mumbai MMR region, Maharashtra State and gradually across India.”

VN Finance is also developing a network of banking intermediaries, Self-Help Groups (SHGs), NGOs and correspondents who can help facilitate credit to migrant workers, unbanked and financially deprived business men and women. Since the target segment is not necessarily highly literate and educated in technology, VN Finance is using technology to help them and the financial intermediaries in the easiest of ways.

Mohit Kakkad firmly believes that if India has to achieve financial inclusion in the true sense, NBFCs such as VN Finance have to play a significant role in enhancing financial literacy, seeking minimal collateral, shorter processing time and building distribution network while grappling with lack of credit history, absence of formal identity, cyclical income and paper work.

The Union Government and regulators have taken various initiatives such as Basic savings bank deposit account (BSBDA), Lead banking scheme (LBS), Pradhan Mantri Jan Dhan Yojana (PMJDY) and set up payments’ infrastructure like BHIM, UPI, DBT to jumpstart the process of financial inclusion. The Reserve Bank of India (RBI) in its National Strategy for Financial Inclusion 2019-24, announced that public credit registry has to be made fully operational by March 2022 so that authorised financial entities can leverage the same for assessing credit proposals. NBFCs can also access and analyze data from Google Pay, Walmart-owned PhonePe and Whatsapp Pay (to launch soon).

About VN Finance

VN Finance Pvt. Ltd. (VNF) is an innovative financial company Incorporated in March 2019 as a Non-Deposit taking NBFC (ND). The company is founded by 31-year old Mohit Kakkad with a vision to use technology to provide finance to hitherto unbanked section of society. The company is mainly engaged is providing the small and medium size ticket loans on secured and unsecured basis. Unsecured loans are being provided based on creditworthiness and repayment capacity of the borrowers. The senior management of the company consists of senior leaders from banking industry and mentored by some of the highly qualified professionals. VN Finance has put in place an interest rate policy, adopted by the Board, taking into account relevant factors such as, cost of funds, margin and risk premium, etc and determine the rate of interest to be charged for loans. It has a robust KYV Policy, Fair Practices Code and Corporate Governance Policy.

PNB MetLife Broadens its Product Portfolio with Three Unique Offerings for Retail Customers

Portfolio

* A guaranteed savings plan, which allows customers the flexibility of pay-out as a lumpsum or supplementary income

* A combined plan, assuring life and health insurance protection, with coverage against Covid-19

* A new Unit Linked Insurance Plan (ULIP), which offers whole life cover along with tailor-made solutions for wealth creation

PNB MetLife Insurance is expanding its product portfolio with three new unique offerings: PNB MetLife Guaranteed Future Plan; Mera Mediclaim Plan and PNB MetLife Smart Platinum Plus. At PNB MetLife customer centricity is the cornerstone that binds all functions. These offerings complement the Company’s concept of “Circle of Life”, which assesses the needs of the customers and offers them with solutions on varied financial needs including - Child Education, Family Protection, Long Term Savings and Retirement.are testament to this approach and was designed keeping in mind the evolving needs of customers across different segments. 

PNB MetLife Guaranteed Future Plan, a guaranteed savings life insurance plan that offers dual advantages of long term guaranteed benefits and financial protection to the family in case of adversities. The plan offers complete control to customer and helps customize the savings schedule based on customer’s needs and affordability. It allows customers the flexibility to choose their future guaranteed pay-out as a lumpsum, income or a combination thereof which will help meeting financial requirements for various goals.

The company, in partnership with Religare Health Insurance, has launched - Mera Mediclaim Plan – that combines benefits of health and life insurance under a single policy. The new solution gives customers access to quality healthcare, cashless hospitalization, along with life insurance coverage.

Additionally, the company has also received approval from the Insurance Regulatory and Development Authority of India (IRDAI) to launch PNB MetLife Smart Platinum Plus, a whole life savings-oriented unit-linked insurance plan (ULIP). The plan also offers life insurance cover to protect ones family in case of an unfortunate demise as well as provides with tailor-made solutions to achieve ones goals, including an option where wealth creation doesn’t take a back seat even during critical illness.

Ashish Kumar Srivastava, MD & CEO, PNB MetLife, said “At PNB MetLife, we believe in “Customer Centricity’ and continuously work towards providing solutions in line with our mantra. As a part of our ‘Circle of Life’ approach, which has been conceptualized to deliver need-based solutions that provide financial wellbeing to the customers during their lifetime, the new products will address the need for life and health protection as well as wealth creation.  PNB MetLife also declared bonus for its participating polices which remains consistent even in these uncertain times. We will continue to invest our efforts in product innovations and introduce more products that will serve the life-stage needs of our valued customers.”  

PNB MetLife Guaranteed Future Plan offers four different options to create a corpus to meet one’s financial goals. The plan comes with a guaranteed income ranging from 103% to 245% of the annualized premium.  Annual premiums higher than Rs.30,000 also receive High Premium Reward ranging from 4% - 12% of annualized premiums.  Besides one can opt for Income plus booster options that will give them an additional income pay-out at specified intervals ranging from 30%-406%. The plan allows customers to time the receipt of maturity amounts on special occasions like birthdays or anniversaries. The policyholder will also be eligible to avail income tax benefit on premiums paid and benefits received under 80 (c) and 10(10d).

Mera Mediclaim Plan offers coverage for comprehensive health and hospitalisation insurance along with life insurance.  The plan features cashless hospitalization cover across Religare Health Insurance’s network of more than 7,500 hospitals. The plan also covers more than 540 Day Care Treatments, alternative treatments such as Ayurveda, Unani, Siddha and Homeopathy and offers a no claim bonus which helps cover to increase upto 220% over two years and 250% over five years. This unique plan provides a cost-effective solution for customers by offering a discount of 7.5% on both life and health insurance premiums, plus dual tax benefits under both section 80 (c) and 80 (d)

PNB MetLife Smart Platinum Plus is a whole life protection and savings oreinted Unit Linked Insurance Plan.  The plan features an unique Care Benefit which helps customers secure their goals against health exigencies and the insurer pays all future premiums in case of diagnosis of any of the listed five critical illnesses. The plan provides additional allocations through features like Return of Fund Management charges of 1st 5 years and Fund booster which is paid at the end of 10th year which enhance the fund value and also incentivise the customers to stay invested for longer. This holistic plan offers the policyholder with the freedom to choose from the benefits, duration of premium payment, the sum assured multiple and also maximise their wealth creation potential through a choice of portfolio strategies and variety of funds. It also offers flexibility of switching between different fund depending on the risk appetite and partially withdrawing money from the fund value after the lock-in period.  The company so far has 22 unit-linked funds in its portfolio of which PNB MetLife Virtue Fund II and PNB MetLife Virtue Fund has been ranked amongst the top 10 in the Insurance Large Cap Category (as of June 30, 2020) by Morningstar, a leading independent investment research organization. This ranking is testimony to the company’s strong fund management prosess and reaffirm the commitment to deliver value accretive growth to its customers investing through market-linked products. 

This trio of products launched by PNB MetLife holistically fulfils the advanced needs and demands of the consumer. Amongst the three products, Mera Mediclaim Plan and PNB MetLife Guaranteed Future Plan are available across PNB MetLife’s bancasurance, agency as well as online channels. As the masses settle to the new normal where protection of health and life and wealth creation have assumed a level of importance like never before, PNB MetLife strives to serve its customers at every new juncture of their lives through its dynamic and ever-evolving approach to customer satisfaction.

About PNB MetLife India Insurance Company Limited

PNB MetLife India Insurance Company Limited (PNB MetLife) has as its shareholders MetLife International Holdings LLC. (MIHL), Punjab National Bank Limited (PNB), Jammu & Kashmir Bank Limited (JKB), M. Pallonji and Company Private Limited and other private investors, with MIHL and PNB being the majority shareholders.

Why are banks in the US on the downfall?

The U.S. economy is showing signs of recovery, but despite that fact, the number of bank failures in the U.S. has continued to increase with 123 entities going out of business so far this year. The authorities shut down three banks - Orion Bank based in Naples, Pacific Coast National Bank in San Clemente and Century Bank F.S.B of Sarasota on November 13, taking the count of failed banks to 123 this year, according to PTI.

The Federal Deposit Insurance (FDIC), which was named the receiver of the failed banks, took over Orion Bank, with about $2.7 billion in assets and $2.1 billion in deposits and Century Bank with $728 million in assets and $631 million in deposits. Pacific Coast National Bank was also shut down. It had $134.4 million in assets and $130.9 million in deposits. In addition, FDIC had entered into a purchase and assumption agreement with Iberia Bank of Lafayette, Louisiana, to assume all of the deposits of Century Bank, FSB.

However, the maximum number of collapses this year took place in July, when 24 banks were closed down, while 20 entities bite the dust last month.

Despite the slowly improving economic situation, soaring unemployment rate have resulted in rising defaults, primarily impacting the small and medium banks.

Agencies

Banks, social networks new target for computer viruses

Cyber criminals are increasingly focusing their attacks on the hundreds of millions of users of social networks and on loopholes in bank security systems, security software vendors said on Wednesday. At the same time, spam e-mail messages rose sharply in the third quarter, Symantec Corp said.

And as Facebook reached 300 million accounts in September, social networks and social media continued to attract criminals, smaller research firm F-Secure said in its quarterly virus report. "As Twitter has grown in popularity, it has been increasingly targeted by worms, spam and account hijacking," F-Secure said.

Cyber criminals choose targets that are widely used, allowing them to go after the largest number of potential victims. "Cyber criminals continue to follow the money," said Yuval Ben-Itzhak, technology chief at a small security software vendor Finjan, who on Wednesday revealed a new method criminals use to steal money from bank accounts and hide their tracks.

Finjan said it expects a growing trend of using new software that forges on-screen bank statements, concealing the true transaction amount to dupe account holders and their banks, and then sends the stolen money to money mules accounts.

"With the combination of using sophisticated Trojans for the theft and money mules to transfer stolen money to their accounts, they minimize their chances of being detected," Ben-Itzhak said.

The amount of spam in all e-mail traffic rose to 88.1 percent in the third quarter from 81 percent a year ago, said Symantec's MessageLabs in its quarterly report. MessageLabs said botnets are now responsible for sending 87.9 percent of all spam. Hackers take advantage of the PC vulnerability by booby- trapping websites with a malicious code that loads onto computers.

Infected PCs are commandeered into a botnet, a network of hijacked computers. They are used for identity theft, spamming and other cyber crimes. "Over the past year, we have seen a number of ISP's (Internet service providers) taken offline for hosting botnet activity resulting in a case of sink or swim and an ensuing shift in botnet power," MessageLabs analyst Paul Wood said in a statement.

"However, this won't always be the case as botnet technology has also evolved since the end of 2008 and the most recent ISP closures now have less of an impact on resulting activity as downtime now only lasts a few hours rather than weeks or months as before," Wood said.

Agencies

Will Kyocera Wireless India be acquired by MindTree

MindTree Ltd said on Tuesday it would buy Bangalore-based Kyocera Wireless India Pvt Ltd and make an upfront payment of $6 million, while
further payments will be linked to revenue in FY11 and FY12.

The IT firm expects the acquisition to contribute about $9 million in revenues for the period Oct 2009 to March 2010, with profit after tax expected to be in the range of 13-15 percent, it said in a statement.

Agencies

Motorola's Android system banks on Google's Web power

Struggling phone maker Motorola unveiled its first device using Google's Android system Thursday, expecting it will power features that promise easier access to hot Internet sites like Facebook and Twitter.

The phone, called Cliq, will go on sale at T-Mobile before the end of the year. Pricing info has not yet been released.

Motorola has reorganized its handset biz around Google's Android system, hoping the partnership with the Web search leader can help it win back customers.

The centerpiece of Motorola's Android development is its MOTOBLUR software, which integrates contacts, e-mails and text messages along with postings and photos from social networks by feeding content from these sources into "easy-to-manage streams."

For example, Motorola's live "Happenings" application delivers updates posted by friends automatically on multiple social sites to one place, and gives the user a choice of ways to reply to those updates instantly.

Agencies

Open Source technologies now sought by Wall Street companies

Economic slowdown had a huge impact on the financial institutions around the world. Recession has forced these financial institutions to take a look at their budget as well as the technology that they are using. In times like this open source technology is growing in the capital markets because of increased cost pressures. Many Wall Street companies are now adopting open source even though there are many who still believe that any software that they develop is proprietary and has a competitive edge.

"What the crisis has done is shattered the orthodoxy in what is accepted as the correct way to build out systems, and it has allowed people to think more creatively about how their software works," comments Graham Miller, Co-Founder and CEO of Marketcetera, an open source platform for building automated trading systems to Wall Street and Technology. Many banks and brokers have been running open source applications like Linux and the free Apache web servers in the back office. Now, open source is finding its way to the front office trading desk as well.

Many open source companies are booming in times like these. One such example is Esper, which provides an open-source event stream processing and complex event processing (CEP) solution. Esper is already built. Instead of being a standalone server product that runs as a separate product, it's a library that companies can link in with their own proprietary stuff.

Recently, many Wall Street IT developers have started participating in open source technology projects. Firms like Credit Suisse, Goldman Sachs, JPMorgan Chase and Deutsche Borse Systems participated in the open source (AMQP) Advanced Message Queing (popular open source project among the financial services industry) Working Group and collaborated on standards for messaging infrastructure. "AMQP is not just a financial service [project], but it's something that has been taken seriously in the financial services space. Tough economy has opened the growth of open source. You get your base products for free, and you're essentially getting innovation in that product for free, because people are contributing and improving the software all the time," said Kevin McPartland, Senior Analyst at TABB Group to Wall Street and Technology.

Cost still remains the most important reason especially when many major vendors have increased the licensing fees of their product. Buying a Trading system from a vendor will require lengthy and costly customization. "We've built out a platform product that provides out-of-the-box components for market data, signal analysis engines, market connectivity and user interface capabilities to exchanges, ECNs, brokers and lots of different destinations," says Miller. Marketcetera launched Version 1.0 of its Trading Platform, which can be downloaded free-of-charge from its Web site. They have tried to follow Red Hat way of providing fee-based service and support. The company integrates several open-source technologies including QuickFIX/J, a messaging engine for the FIX protocol, and QuantLib, a free library for quantitative finance and Esper.

However, despite open source company's claim many experts doubt that open source is cheaper than software vendors. Custom development of open source software can be more costly than proprietary software. "It might look cheaper on paper but if you look at what you want to do with it, and it requires a substantial engineering effort rather than a commercial product, then it's not necessarily the most effective solution," says Adam Honore, Senior Analyst at Aite Group. He further adds that there could be support, maintenance and accountability issues with some open source vendors.

Agencies

From April 1 withdraw cash with no extra charge from any bank across India

Beginning April 1, one can walk into the ATM of any bank and withdraw cash or check the balance, at no extra charge.

This is when the Reserve Bank of India’s guidelines, allowing free access to ATMs, become effective.

It was feared that the move may prompt banks to go slow on ATM expansion, in view of the fee from customers disappearing. But this does not seem to be the case, as most banks plan to continue with their ATM expansion.

This is because, the interchange fee, which is paid between banks, will continue. So, the RBI move could prove to be advantageous for banks with large ATM networks. They could earn more fee income, as more customers access their ATMs. The interchange fee is broadly between Rs 15 and 20 per transaction.

Sanjeev Patel, Head, Direct Banking Channels, HDFC Bank, said the bank, which has about 3,500 ATMs, is not planning to go slow on ATM expansion. “We are a big acquirer. We have a large distribution network and this will benefit us. It is unlikely that my customer will move out. Other banks’ customers will come to us,” he said.

Hemant Kaul, Executive Director, Retail Banking, Axis Bank, said that the beneficiaries of the RBI guidelines would be large banks who have invested money in setting up their own ATMs. The number of ATM transactions per debit card would also register an increase, he added.

Axis Bank, which added close to 400 ATMs this quarter, will have a network of around 3,600 by this fiscal.

For both HDFC Bank and Axis Bank, around 15 per cent of ATM transactions are from customers of other banks.

Banks could see some downward pressure on the network charge, due to the disappearance of the Rs 20 fee charged from customers. But as the interchange fee will continue, a small bank with a smaller ATM network will see more impact.

“Banks that tried to save capital cost by going slow on their ATM expansion would now have to pay for it, as from April 1, customers would not think twice before using another bank’s ATM and their banks would have to pay for it,” said a banking analyst.

Union Bank of India is one of the few banks that already allows its customers to use ATMs of other banks free of cost.

The bank will continue with its own ATM expansion, said M.V. Nair, Chairman and Managing Director.

The bank opened 500 branches and set up 500 ATMs this year. It has set the same target for next year as well.

According to Nair, the decision to expand ATMs will depend on the individual bank. But the RBI move could also give rise to alternative methods of proliferation of ATMs. “I see the distinct possibility of white labelled ATMs, which are present worldwide, catching on in India. The Payment Corporation of India could be the right vehicle to implement this,” he said.

YES Bank also offers its customers free access to ATMs of other banks.

The bank had, in a sense, implemented the RBI move four years ago, when it began operations, as it wanted to increase its retail customer base, said Suresh Sethi, President, Transaction Banking Group.

“We don’t see any change in our core banking operations as our customers already enjoy free ATM use. ATM expansion is critical to improving the visibility of the bank and building its image. Our expansion strategy will be guided by that,” he said.

Source : Business Line

US bank rescue plan likely out on Monday

The US government will announce as soon as Monday a long-awaited plan to try to get bad assets off the books of banks, a cornerstone of its efforts to tackle the credit crisis, The Wall Street Journal reported.

The Obama administration, battling a deepening recession, is set to adopt a three-pronged approach to ridding the financial system of so-called toxic assets, reports said.

The plan would create an entity, backed by the Federal Deposit Insurance Corp, a U.S. banking regulator, to buy and hold loans, the reports said.

It would expand a newly launched Federal Reserve facility -- that lends money to investors to buy securities backed by consumer loans -- to include toxic assets. And it would create new public and privately financed funds to buy such securities under the management of private investment experts.

The Obama administration plans to contribute between $75 billion and $100 billion in new capital to the effort although that amount could be expanded, the Wall Street Journal said.

The Treasury Department and Federal Reserve declined to comment. Sources familiar with the government's thinking have told Reuters details of a plan could be announced next week.

The Bush administration tried without success late last year to set up a mechanism to get bad assets off the balance sheets of commercial banks.

The banks have been hammered by losses incurred by mortgage-related debt that has turned sour amid a fall in house prices and a pickup in defaults, sparking a credit crisis that has strangled the US and global economies.

Obama's Treasury secretary, Timothy Geithner, has outlined a new proposal to soak up as much as $1 trillion in assets through a public-private program.

But investors have grown increasingly concerned that his efforts are running into problems more than a month after he outlined the plan.

The slow start of the new Federal Reserve consumer lending program this week has been seen as a sign that private capital may shun the toxic-asset plan because of public outrage over large executive bonuses.

Many big private investors are worried they could face tough new rules in US financial rescue programs after Congress pressed ahead with efforts to claw back bonuses paid to executives at failed insurer American International Group.

The Wall Street Journal said the Treasury would match private sector finance for the public-private toxic asset funds on a one-for-one basis in most cases.

Washington would be a co-investor also in the new FDIC troubled loans program but could contribute 80 percent in some cases, and would guarantee as much as $500 billion in loans investments, the newspaper said in its report.

The New York Times said the FDIC program could involve government funding for up to 97 percent of the equity.

It also said the plan is likely to offer generous taxpayer subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government.

Agencies

Will US Treasury mull Citi-style rescues to auto giants?

The US Treasury Department has given itself free rein in deciding the rescues of companies in the finance and auto sectors, according to two Treasury statements published this week.

The Treasury on Friday released guidelines for its Targeted Investment Program (TIP), part of emergency legislation enacted in early October to ease a credit crunch from the worst global financial meltdown since the Great Depression.

In the statement, the Treasury outlined the principles of the program under which it rescued ailing banking giant Citigroup on November 23.

Under TIP, the Treasury said it would determine the eligibility of participants and the allocation of resources "on a case-by-case basis."

"Treasury may invest in any financial instrument, including debt, equity, or warrants, that the secretary of the Treasury determines to be a troubled asset, after consultation with the chairman of the board of governors of the Federal Reserve System and notice to Congress," the department said.

Among the criteria in determining a financial firm's eligibility is "whether the institution is sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to credit markets ... or lead to similar losses of confidence or financial market stability that could materially weaken overall economic performance."

Wednesday, the Treasury Department posted on its website a description of its Automotive Industry Financing Program, justifying after the fact its decision to lend a combined 13.4 billion dollars in TARP funds to embattled automakers General Motors and Chrysler to stave off their imminent collapse.

"The objective of this program is to prevent a significant disruption of the American automotive industry that poses a systemic risk to financial market stability and will have a negative effect on the real economy of the United States," it said.

Similar to its approach to the finance industry, the Treasury said it would determine eligibility of participants in the program on a case-by-case basis.

The Treasury announced on December 19 a massive rescue of cash-strapped GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.

Source: Agencies

India gets more room to grow with Stimulus-II package

The government on Friday announced the second and final installment of its fiscal stimulus package. Complementing monetary easing by the Reserve Bank of India (RBI), the Centre enhanced the spending power of states with specific measures to boost credit availability.

It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles.

Credit availability has been hiked in a variety of ways, the interest ceiling on external commercial borrowings has been removed; the cap on foreign institutional investments in the domestic corporate debt market has been jacked up two-and-a-half times from $6 billion to $15 billion; a special purpose vehicle is being created to lend to non-banking finance
companies to the tune of Rs 25,000 crore; Indian Infrastructure Finance Company is being permitted to raise another Rs 30,000 crore by means of tax-free bonds, and states are allowed to borrow an additional Rs 30,000 crore from the market.

In addition, public sector banks would be given additional capital to the extent of Rs 20,000 crore over the next two years, so they can lend roughly 10 times as much additionally.

The latest measures, which come in less than a month after the first package was unveiled on December 7, are aimed at benefiting housing, NBFCs that lend to infrastructure and finance commercial vehicles.

Announcing the measures, Planning Commission deputy chairman Montek Singh Ahluwalia said: “By no measure can we insulate our economy from slower growth, when the external factors are of such enormous magnitude. However, we will be able to manage a 7% growth this fiscal through these measures.”

Mr Singh added that these contra-cyclical steps and fiscal policy “in these truly exceptional circumstances” would ensure that growth momentum would be maintained next fiscal, which, he said, would be tougher than this year. But such counter-cyclical fiscal activism has to pay a price in the form of a higher fiscal deficit.

“Considering the implementation of the Sixth Pay Commission, the consensus within the government was a fiscal deficit of 3%. The mid-term review of the economy said that the fiscal deficit would be over 5%, excluding the below-the-line items such as fertiliser and oil subsidy. If we include these items, the fiscal deficit could exceed by 3% of gross domestic product, what was being targeted,” said Mr Singh.

The budgeted target for the fiscal deficit is 2.5% of GDP. The global financial meltdown has already forced the US and some other major developed countries into recession, and hit India too. This year, the economic growth is expected to be around 7%, down from the 9% average of the past three years.

The first stimulus package, estimated at over Rs 30,000 crore, included a 4% across-the-board cut in excise duty for the remaining part of the financial year and an additional Plan spending of Rs 20,000 crore.

“Because of slowing industrial output and resultant tax receipts, the government will have to forego about Rs 40,000 crore this fiscal. This is a rough estimate in a dynamic situation and improved production because of the steps taken could offset part of it,” said finance secretary Arun Ramanathan.

To facilitate access to funds for the housing sector, companies developing integrated townships have been allowed to borrow overseas with prior approval of RBI. The ceiling on interest rates for all overseas borrowings has been removed to provide flexibility to companies to borrow abroad.

Source: Agencies

Fiscal year 2010 to be more challenging, says RBI chief

Next year will be a more challenging year than this has been but the Reserve Bank of India (RBI) will continue to do everything possible to lessen the domestic effects of the global financial crisis, its chief said.

In speech released on Thursday, RBI Governor Duvvuri Subbarao said the outlook for India and the world remained uncertain and the path of the global crisis and its resolution remained unclear.

While the central bank had a roadmap, it was not possible to deploy it all in one go.

"It would be our endeavour to adapt this roadmap to the evolving global developments and implement it flexibly and pragmatically," he said.

"Our approach, as indeed of every prudent central banker around the world, has been to 'cross the river by feeling the stones'."

Subbarao said India's economic fundamentals remained strong, but developments in the real economy, financial markets and global commodity prices pointed to a period of moderating growth and declining inflation.

"The year 2009-10 will be more challenging than the current one," he said.

"The RBI will continue to be on vigil and do everything possible within its mandate to mitigate the impact of the crisis on the Indian economy."

Since mid-October, the central bank has lowered its key lending rate by 250 basis points to 6.5 percent to shield the economy from the spillover of the global credit crisis.

It has also aggressively slashed banks' reserve requirements to shore up growth, which many expect to slow to 7 percent in the fiscal year which ends in March from 9 percent in 2007/08.

The government bond market is widely expecting interest rates to fall again soon, with the benchmark 10-year bond yield dropping 30 basis points on Thursday to 5.50 percent.

Subbarao noted inflation had been declining for the four weeks before he spoke, pointing to a faster-than-expected reduction in the pace of rising prices, while a recent cut in state-set fuel prices should further ease inflation pressures.

Data on Thursday showed India's wholesale price index, its most widely watched inflation measure, rose 6.84 percent in the 12 months to Dec. 6, sharply below the previous week's 8 percent and lower than a Reuters estimate of 7.49 percent.

Source: Agencies

Madoff crambles out to find friends following scam

Bernard Madoff, the longtime Wall Street executive accused of cheating investors around the world out of $50 billion, scrambled to find friends or relatives to guarantee his bond on Tuesday and keep him out of jail.

In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state's chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.

The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state's Secretary of the Commonwealth, said on Tuesday.

In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.

If he fails to meet all the conditions, prosecutors could seek to have the 70-year-old Madoff jailed, pending trial. A court hearing was set for Wednesday on bail matters after a Tuesday hearing was postponed.

Madoff, a former chairman of the Nasdaq Stock Market, faces up to 20 years in prison and a maximum fine of $5 million if convicted.

The U.S. Securities and Exchange Commission, which has been accused of missing red flags about Madoff's investment business, is asking its internal watchdog to probe the agency's conduct in the case.

SEC Chairman Christopher Cox said he was "gravely concerned" by the agency's "apparent multiple failures over at least a decade" to thoroughly investigate allegations or seek formal authority to pursue them.

As more banks, hedge funds and wealthy investors around the world realize they fell victim to a man long respected on Wall Street for the steady returns that his funds produced year after year, their outrage has grown.

LAW SCHOOL LAWSUIT

"The names and sizes of those exposed to Bernard Madoff keep growing and most remarkable of all is the concentration of investments made by funds of hedge funds which promise their clients a diversified portfolio," said Philippe Bonnefoy, chairman of the asset allocation committee at Cedar Partners, an investment adviser.

A fund of hedge funds is a basket of funds selected by the manager to spread around risk.

New York Law School sued Ascot Partners LP, an investment firm, general partner J. Ezra Merkin and auditor BDO Seidman LLP on Tuesday over investments with Madoff.

Massachusetts Mutual Life Insurance Co acknowledged its exposure to Madoff after a hedge fund unit invested heavily with him. Tremont Holdings Inc's Rye Investment Management unit lost roughly $3 billion, nearly all of the money the unit managed, people familiar with the matter said.

Madoff is also closely tied to Carl Shapiro, a 95-year-old Boston philanthropist who gave much of his fortune to the city's Beth Israel Deaconess Medical Center and the city's Museum of Fine Arts.

Austria's Bank Medici, a closely held bank serving wealthy clients, also said it was affected by Madoff's scheme, but declined to give a total for its losses.

At the same time, prosecutors and regulators asked people who suspect they lost money to Madoff to come forward.

The U.S. Attorney's Office in New York, which is prosecuting the Madoff case, set up a website for investors who may have been victimized. It also posted an FBI hotline number, 212-384-2359, for investors to call.

SIFTING THROUGH THE PAPERS

Investors were asked to gather any documents related to their Madoff investments and to check the website and others set up by the SEC, the trustee of Madoff's brokerage business and the court-appointed receiver in the case.

Lawyers worried that many of the financial statements that Madoff's firm mailed to clients were not accurate, and that it will take months to sift through the papers.

"This is a mess and it will take much longer than normal," said Douglas Hirsch, a partner at law firm Sadis & Goldberg, describing the work facing the trustee appointed to oversee the liquidation of Madoff's firm.

The Securities Investor Protection Corp, a nonprofit organization that provides limited insurance on investors' accounts, was named as trustee on Monday.

Madoff, who was well-known on the charity ball circuit and supported cancer and diabetes research, also gave about $238,200 to political candidates, parties and committees, mostly Democratic, since 1991, according to the Center for Responsive Politics, which tracks political giving.

U.S. Senator Charles Schumer, a New York Democrat, received $12,000, while U.S. Rep. Edward Markey, a Massachusetts Democrat, received $10,000 over the years, the Center found.

The impact of Madoff's alleged fraud may be felt most severely among hedge funds. For example, the Credit Suisse/Tremont Hedge Fund Index fell 4.15 percent in November, far more than the preliminary 0.7 percent decline reported last week.

Standard & Poor's said it will review public sector entities, such as universities, that invested with Madoff, to see whether their ratings should be cut as a result of their likely investment losses.

Source: Agencies

Ten financial frauds that shook the world!

Madoff’s alleged fraud has apparently shook the world. More so because it is stated to the world’s biggest financial fraud till date.

However, it is interesting to know that despite increasingly stringent legislation aimed at combating fraud and increased enforcement efforts by government agencies, the world is hardly seeing any reduction in the number of financial frauds. Instead it is increasing by the day.

Here we take a look at some of the world’s top financial frauds:

1) Madoff fraud

New York hedge fund manager and Wall Street legend Bernard Madoff has been charged with what could be the largest Ponzi scheme in history. Madoff had apparently planned to carve up his last $३००m (थ्२००m) between friends, family and employees before making the shocking confession that his investment prowess was really the result of one of the world's biggest ever frauds.

But, according to the Federal Bureau of Investigation, the ७०-year-old could not implement his plan before his huge pyramid scheme - whose १०-१२% annual returns had attracted top-flight investors around the globe - collapsed with losses of at least $५०bn.

The alleged victims span from the super rich, to pensioners and powerful financial institutions, to local charities. Some investors claim they've been wiped out, while others are still likely to come forward. Among the world's biggest banking institutions, Britainङs HSBC Holdings PLC, Royal Bank of Scotland Group PLC and Man Group PLC, Spainङs Grupo Santander SA, Franceङs BNP Paribas and Japanङs Nomura Holdings have reported to have fallen victim to Madoff's alleged $५० billion Ponzi scheme.

2) Enron

As a result of the massive fraud at Enron, an energy company based in Houston, Texas, shareholders lost tens of billions of dollars. Many Enron executives, Enronङs accounting firm and certain bank officials were indicted. Andrew Fastow, Enronङs former finance chief, testified that many of the banksङ transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow.

Kenneth Lay, the founder of Enron whose spectacular implosion in २००१ lead to one of the biggest fraud cases in history, was convicted of fraud for duping investors over the health of Enronङs finances before it plummeted into bankruptcy. Prosecutors accused Lay of pocketing over थ्४० million of investors' money, and Lay was charged with ११ counts of securities fraud.

3) Charles Ponzi

It was one of the biggest swindlers in US history. In one of Charles Ponzi’s early scams around 1920, he offered investors a 50% return on their money in 45 days, or a doubling of their money in 90 days. By February 1920, Ponzi’s best-known scam had taken in $5,000, by March, he was up to $30,000.

At that time Ponzi began hiring agents to expand his swindle. By pushing his impressive high rate of return, he could often persuade would-be investors to send money. In May 1920, he was up to $420,000 and by July 1920, he was up to millions.

About 40,000 people invested about $15 million all together; in the end, only a third of that money was returned to them. Ponzi was indicted on 86 counts of mail fraud and sentenced to five years in prison in 1920.

4) Parmalat

A massive financial scandal involving Italy’s largest food company Parmalat underscored the fact that corporate fraud was not just an American problem. With the disappearance of about $10 billion in declared assets, the scandal was one of the largest in corporate history.

Parmalat collapsed in December 2003 under 14 billion euros ($27 billion) of debt, after uncovering a 4 billion euro hole in its accounts. Some dubbed the episode ‘Europe's Enron’. It is currently estimated that at least $17 billion of Parmalat funds have simply disappeared and cannot be accounted for.

5) Barings

A lethal mix of massive fraud and malfeasance led to the collapse of Barings PLC in February १९९५. In February, the oldest merchant bank in Britain collapsed because of massive trading losses run up by Nicholas Leeson, २८, a trader whose bosses believed was running a riskless yet highly profitable arbitrage operation in Singapore.

Rather than the large profits the management of Barings thought were being posted in Singapore, the Bank of England's report showed that Leeson's operation lost money almost from the beginning. By the end of १९९३, those losses totaled थ्२० million, rising to more than थ्२०० million by the end of १९९४ and escalating to थ्८२७ million ($१.३ billion) by the end of February.

6) Alves dos Reis

Alves dos Reis was a Portuguese criminal who perpetrated one of the largest frauds in history, against Banco de Portugal in १९२५, often called the Portuguese Bank Note Crisis. Reisङs fraud had enormous repercussions on the economy and politics of Portugal. By the end of १९२५, Reis had managed to introduce escudo banknotes worth थ्१,००७,९६३ at १९२५ exchange rates into the Portuguese economy, which was equivalent to ०.८८% of Portugalङs nominal GDP at the time.

The Portuguese currency, escudo, was fiscally disturbed and lost much of his credibility. After the scheme was found out, the Bank of Portugal ordered the withdrawal of all ५०० escudo banknotes. When Reis's fraud became public knowledge in December १९२५, it brought about a crisis of confidence in the Portuguese government. Reis was finally tried in May १९३०. He was convicted and sentenced to २० years in prison.

7) Hedge fund Amaranth

Branded as the biggest hedge fund collapse in history, Amaranth lost $6 billion of investor’s money in one week alone. Amaranth Advisors, the US-based hedge fund whose investments were hit by a misplaced bet on gas prices, saw its losses reach about $6bn in 2006. The firm sold its portfolio of energy trades and off-loaded other assets in a bid to stave off collapse. Amaranth invested most of its funds on trades that bet the longstanding trend in rising natural gas prices would continue.

However, natural gas prices dropped sharply. According to media reports, the firm and its former head trader Brian Hunter's poor bets on the price of natural gas triggered those losses. As Amaranth's losses mounted, the fund's bankers called in their loans, forcing the fund to sell more assets to avoid defaulting. The collapse in the fund's value raised major questions over the lack of adequate risk management controls at Amaranth, and wider concerns over lax control of hedge fund managers.

8) Jerome Kerviel

The French trader blew billions in catastrophic gambles on the stock market. Jerome Kerviel, ३१, began his reckless dealings after a succession of personal tragedies. The trader was left devastated by the sudden death of his father Charles a year ago and then, while still grieving, his wife of two years walked out on him.

The double heartbreak sparked the beginning of a chain of events which allegedly culminated in one of the worldङs largest frauds in the beginning of २००८, with monumental losses of थ्३.६ billion for Franceङs second largest bank Societe Generale.

9) Bernard Ebbers

Bernard Ebbers, the former CEO of WorldCom, was found guilty in March 2005 for his role in the huge accounting scandal that led to the largest bankruptcy in US history at that time. A federal jury in New York, on its eighth day of deliberations, convicted Ebbers on all nine counts that he helped mastermind a $11-billion accounting fraud at WorldCom, now known as MCI.

Ebbers, 63, had been charged with one count of conspiracy, one count of securities fraud and seven counts of filing false statements with securities regulators.

10) Long Term Capital Management

The brightest star in the financial world, it was a hedge fund that was too big to fail. Built by legends of Wall Street and two Nobel laureates, it spiralled to ever greater heights, commanding unimaginable wealth.

Therefore, when it fell to earth in September 1998, it shook the world. Long Term Capital Management lost more than 90% of its capital and cost loss of at least $4 billion.

Source: Economic Times

More banks reveal exposure to Madoff

Banks and investment funds across the world lined up on Monday to admit investing billions of dollars in the companies of Bernard Madoff, whom US authorities accused of masterminding a massive fraud.

Britain’s HSBC was the latest bank to join the growing list, saying it had exposure of around $1 billion, making it one of the biggest victims of the alleged $50 billion fraud. Royal Bank of Scotland and Man Group in the UK, Japan’s Nomura and France’s Natixis also said they were hit by the worldwide scandal.

Financial companies, reeling after a year of enormous writedowns on bad credit assets, have so far tallied up more than $10 billion in direct and indirect exposure to the possible fraud by Madoff, the 70-year old trader who was arrested on Thursday. “There is a broader danger here for the industry,” an equity analyst said.

“This huge fraud, supposedly in blue-chip funds, is going to make people nervous, and you’ve already seen massive redemptions,” the analyst said. Shares in France’s Natixis were down 4.7% after it said it had as much as E450 million ($605 million) of exposure to the fiasco. The wider DJ Stoxx banking index was 0.9% lower.

US prosecutors and regulators have accused Madoff, a former chairman of the Nasdaq Stock Market, of running the fraud through his investment advisory business, which managed at least one hedge fund. Man Group, the world’s largest listed hedge fund manager, said it was exposed to Madoff through its fund of funds business RMF, which has $360 million invested in funds directly or indirectly sub-advised by Madoff. BNP Paribas and Santander detailed potential losses on Sunday, and others joined at the start of the trading week, with Italy’s UniCredit showing exposure of around E75 million.

RBS said its potential loss could amount to some £400 million ($595 million), if it assumed that the value of its assets in Madoff’s firm were nil.

Its exposure to the scandal was through trading and collateralised lending to funds of hedge funds invested in the group, the bank said in a statement.

Hedge funds are already struggling after a year that has badly damaged their boast that they can make money whichever way the market turns.

Source: Agencies

After credit crisis world now rattled by Madoff scandal

European investors face billions of dollars losses in the wake of disclosure of "Ponzi" scheme run by Bernard Madoff, now being investigated by the American authorities.

European banks, including Spain's Grupo Santander SA and France's BNP Paribas, were quoted by the Wall Street Journal as saying that their clients and shareholders face billions of euros of losses on investments, underscoring the global reach of the alleged Ponzi scheme run by the veteran New York money manager.

A ponzi scheme is a type of securities fraud where the promoter makes some sort of false or misleading statement about an investment (often including a guaranteed high rate of return) and pays off older investors with newer investors money.

Santander, the eurozone's largest bank by market value, said its clients had an exposure of 2.33 billion euros ($3.1 billion) to Madoff's investment funds, mainly through its Optimal Strategic US Equity fund.

The company, which has been relatively unscathed from global financial crisis, said it had hired Madoff's firm to execute the Optimal fund's investments. Santander vowed to "undertake the legal actions which may be needed to defend the interests of investors."

The Journal reported that BNP, France's largest bank by market value, said it could lose as much as 350 million euros as a result of the alleged fraud.

However, the bank said it has no investment of its own in the hedge funds managed by Bernard Madoff Investment Services. BNP Paribas, however, said it is exposed to these funds through its trading business and lending to hedge funds that had invested in Madoff's funds.

The losses, the Journal said, could prove particularly embarrassing for banks' private-banking businesses, which charge high fees to wealthy investors in return for what is supposed to be superior advice and due diligence.

More than two billion euros belongs to institutional investors and international clients of Santander's private-banking business, which provides services to wealthy individuals, it was quoted as saying. The remaining 320 million euros belongs to private-banking customers in Spain, where the bank is based.

Most of the European banks' exposures were on client investments they managed, rather than on the banks' own balance sheets, it said, adding that it's not yet clear how much, if anything, investors in Madoff's funds may be able to recover.

Exposures to Madoff's funds have also emerged among a growing number of smaller European private banks.

In a letter posted on its website, the Swiss private bank Reichmuth and Co said its clients had an exposure of some 385 million Swiss francs to Madoff funds.

The bank said Reichmuth Matterhorn, a fund that invests in other hedge funds, faced a potential loss of about 8.6 per cent on its exposure to Madoff. That amount represented about 3.5 per cent of the 11 billion Swiss francs Reichmuth & Co. has under management, the bank said, the Journal reported.

Source: Agencies

Uncertainty will remain in Indian economy, says RBI chief

The outlook for the Indian economy in the coming months remains uncertain but the Reserve Bank of India (RBI) will take appropriate Subbarao action when needed, its chief said on Thursday.

"The situation way forward is quite uncertain. The RBI will take appropriate action as and when required," Subbarao told reporters after a meeting of the bank's governing board.

"The RBI will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as appropriate."

He also said the central bank would endeavour to minimise the stress on various sectors of the economy which have been hurt by the global economic crisis.

On Saturday, the bank aggressively cut its main rates to support slowing.

Uncertainty will remain in Indian economy, says RBI chief

The outlook for the Indian economy in the coming months remains uncertain but the Reserve Bank of India (RBI) will take appropriate Subbarao action when needed, its chief said on Thursday.

"The situation way forward is quite uncertain. The RBI will take appropriate action as and when required," Subbarao told reporters after a meeting of the bank's governing board.

"The RBI will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as appropriate."

He also said the central bank would endeavour to minimise the stress on various sectors of the economy which have been hurt by the global economic crisis.

On Saturday, the bank aggressively cut its main rates to support slowing.

As crisis drags on; layoffs mount globally

Credit Suisse and Nomura Holdings announced big job cuts on Thursday, further evidence the global financial crisis is unrelenting for an industry battered by heavy losses and weak markets.

The 5,300 layoffs by the Swiss bank and a further 1,000 in London by Japan’s biggest broker are the latest in the global financial sector which has now seen over 150,000 jobs culled since September when Lehman Brothers filed for bankruptcy.

Of these, more than 50,000 were at Citigroup, which has made more writedowns than any other bank in the world during the crisis.

While the axe had been falling for months in the industry, Lehman’s fall sparked carnage in financial markets and reshaped the industry landscape, resulting in job losses from New York to Singapore to Mumbai. “I don’t think people really know what’s next. It depends on sentiment, which will in turn drive credit markets, which in turn will weigh on banks or not,” said a London-based equities trader.

From the United States to Asian export giant Japan to European powerhouse Germany, the world’s top economies are now in recession as the global crisis deepens.

They are not the only ones with Singapore, New Zealand and Hong Kong also joining in. The losses at banks are increasing. Credit Suisse said on Thursday it made a net loss of about 3 billion Swiss francs ($2.5 billion) in October and November.

It has already cut 1,800 jobs this year and said this week it would cut 650 investment banking jobs in Britain. “Investment banking had a significant pretax loss, reflecting the challenging conditions in the financial markets in the quarter and the costs associated with risk reduction,” the bank said.

Credit Suisse’s shares jumped 8% in European trade in a broader market up 1.6%.
In Asia, Nomura, Japan’s biggest brokerage, said the decision to cut as much as 22% of its London staff followed an internal review after the purchase of the Asian, European and Middle Eastern assets of Lehman Brothers.

Nomura had said the purchase of parts of Lehman Brothers would help the Japanese brokerage achieve its profit target despite poor financial market conditions. “This is a natural move,” said Azuma Ohno, a brokerage analyst at Credit Suisse Securities in Japan.

“Once Nomura bought Lehman, it cannot continue Japanese-style life-time employment. It needs to be flexible in costs to be profitable.”Australia’s top investment bank, Macquarie Group, is cutting 10 to 15% of its jobs in Asia, two sources said last week.

Banks are axing jobs across Asia and even in countries such as India, where investment bankers were snapped up feverishly in the last few years in anticipation of strong initial public offerings and M&A markets. “The layoffs will come in phases and will stretch into 2009,” said Singapore-based Will Tan of Webbe International, an executive search firm specializing in the financial sector.

The job cuts from Nomura and Credit Suisse came a few hours after a report of layoffs at Bank of America. Bank of America CEO Kenneth Lewis said the bank is in the “final stage of our analysis” for planned job cuts following its purchase of Merrill Lynch, the Charlotte observer said on its website on Wednesday. Layoffs have also gathered pace at fund management firms.

State Street, one of the world’s biggest institutional money managers, said on Wednesday it plans to lay off as many as 1,800 people, or 6% of its staff, in the first three months of 2009. Private equity firm Carlyle Group is cutting about 100 jobs — around 10% of its staff — a source familiar with the situation said. The reductions are the first major cuts made by a large US private equity firm since the global economic crisis hit.

Middle market investment bank Jefferies Group will slash nearly 15% of its employees worldwide and close offices in Dubai, Singapore and Tokyo as it contends with heavy losses for 2008.

Source: Reuters

AIG to sell its Swiss unit

Troubled insurance giant American International Group will be selling its Swiss arm AIG Private Bank to an Abu Dhabi-based global investment firm.

In this regard, AIG has entered into an agreement with Aabar Investments PJSC (Aabar) to sell its subsidiary, the insurance firm said in a statement.

According to UK daily ‘The Telegraph’, the Swiss subsidiary would be sold for about $254 million.

The move is one of the major sale of asset by the battered AIG, after receiving a lifeline worth $153 billion from the Federal government.

The statement noted that under the new ownership, AIG Private Bank would become an independent financial institution, headquartered in Switzerland along with branches and representative offices in Hong Kong, Shanghai, Singapore and Dubai.

Source: Agencies