CS Financial Management Starter Pack

Yes,

CS Final FTFM gets a life over here. These are the few pages, which created very exciting interests to study & pass Financial Management even to a person like me, who hates finance subjects.

Salutes to the author Mr. Pattabhiram, whose every style right from scripting every letter in the page is awesome. He narrates a story of Financial Management here.

Find http://www.primeacademy.com/mafachapter1.pdf here.

Friends, dont get carried away by this, as it contains lots of informations, as far as, CS Final is concerned, just get the idea from this, as this makes the concept very clear, then you may proceed with your study material and guideline answers.

Just read it....atleast for the sake of readin it....you feel the passion then.

Enjoy Passin....Vj

Special Purpose Acquisition Companies (SPACs)

Special Purpose Acquisition Companies (SPACs): on the rise

Thank you Amit Yadav...

Special Purpose Acquisition Companies (SPACs) that are also known as "blank check companies" are gradually acquiring prominence in the Indian markets. It is worth briefly examining these entities and their advantages as well as the risks surrounding them.

SPACs are essentially shell entities with no business operations, and which raise funds from the public through an initial public offering (IPO). These funds are raised on the basis that they will be utilised by the SPAC to acquire one or more companies in the future so as to provide returns to their shareholders. The details of the future acquisitions or even the identity of the target entities are not known at the time of the IPO. The investors in the IPO largely rely on the management skills and reputation of the founders of the SPAC while making investments. SPACs are usually committed to a time-frame within which they are required to make acquisitions. In case the committed time elapses without any acquisitions, the investments will have to be returned to the shareholders with certain carrying costs..

SPACs have acquired prominence internationally, especially in the US and in Europe. last year, there were 66 initial public offerings for SPACs, raising a total of $12 billion. Many of these SPACs have also successfully implemented acquisitions. What is important to note, however, SPACs are yet not traded on the main stock exchanges around the world. For example, neither the NYSE nor NASDAQ permits listing of SPACs, resulting in most of the existing US listings taking place on the American Stock Exchange (AMEX). Even on the London Stock Exchanges, SPACs are usually listed on its AIM segment. The cautious approach adopted by the more prominent exchanges is owed to the innate risks and uncertainties involved in listing entities that do not have existing businesses (or even fairly concrete business plans) at the time of their public offering of securities.

The SPAC phenomenon is catching on in India as well. It has been reported by VC Circle that several SPACs have been formed in order to pursue acquisitions of Indian companies. These SPACs have been listed on both the AMEX as well as the LSE AIM. The reverse trend is also assuming importance, whereby Indian companies are contemplating SPACs that would be used to aid their acquisition of foreign companies. This trend can be gathered from HCL's plans to set up an SPAC for overseas acquisitions. HCL's example is important on two counts. First, it indicates the utility of SPACs for Indian companies as a means of financing overseas acquisitions. Second, it indicates that SPACs are not confined to financial investors, and that it can be used by strategic investors as well for acquisitions. With more avenues being made available for SPAC listings (in case the current NYSE and NASDAQ proposals to allow SPAC listings take effect), it is likely that SPACs would become more prominent in acquisitions both by Indian companies and of Indian companies.

That leaves the crucial question of whether SPACs can be listed in India. It seems to me that the current disclosure requirements of SEBI as well as the listing requirements of the stock exchanges would not permit a company such as an SPAC to be listed on the Indian stock exchanges. This is because the SPAC has no business whatsoever or even a track record, but only certain broad business plans to acquire target companies that are yet to be identified. This creates uncertainties and risks to investors. Unless the existing regulations are amended to create a separate category of listings for SPACs, or unless specific waivers are granted from the applicability of the disclosure guidelines for IPOs to such companies, Indian listings would be unlikely. At the same time, it would be prudent for the regulatory authority (being SEBI) and the Indian stock exchanges to tread cautiously on this front, and to permit such listings only after assessing the experience (and success) of SPACs world-over and those specifically involving Indian promoters or Indian target companies. SPAC investors need proper protection as they are signing "blank checks" after all.

Grievances - IR

GRIEVANCES – claims concerning individual/collective RIGHTS under contract of employment/laws/usage;

Causes – ARISES from day-to-day working relations; LEADS to embitterment of working relationship;

PROCEDURE for settlement – fairness & justice through determination of respective Rights & Obligations of parties; a substitute for or a delaying factor in respect of direct action in the form of strikes; has successive steps @ different levels which is binding & final unless appealed.

Essence of MODEL GRIEVANCE PROCEDURE – not only be settled but also seem to be settled in the eyes of aggrieved;
Ä Settlement @ LOWEST level;
Ä Settlement as EXPEDITIOUSLY as possible;
Ä Settlement to the SATISFACTION of aggrieved.

Time-bound THREE TIER SYSTEM

BIPARTITE GRIEVANCE COMMITTEE (highest)à<= 7days
\ lack of satisfaction
DEPARTMENT/FACTORY HEAD à <= 3 days
/ lack of satisfaction
IMMEDIATE SUPERVISOR (lowest) à <= 48 hours

Bipartite Grievance Committee will have representatives from both Management & Workers.
APPEAL lie to Organisation Head <= 3 days of decision.

Understand this for Industrial Relations (IR) - CS final Group III.

What is a recession?

What is a recession? Recession means...

It is a protracted slowdown of the economy. T
The slowdown is usually classified as a recession if it lasts at least six months [means, >= 6m].

The technical definition is ‘two consecutive quarters in which the gross domestic product (GDP) decreases’.

The GDP is all the goods, services and products a country produces.

The typical symptoms of a recession are:
1. People buying less (retail decline).n Decrease in factory output.
2. Growing unemployment (In the US, unemployment recently rose to 5 per cent, another sign of an imminent recession).
3. Slump in personal incomes.
4. A dipping stock market.

Continue http://www.hindustantimes.com/StoryPage/StoryPage.aspx?id=711bb451-c39e-44bb-87ca-273b479fe172

Courtesy - Hindustan Times

Policy,Procedure,Principle,Ethics

Yes,

You got to very clear with these terms for Human Resource Management (HRM) paper of CS Final Group-III or Ethics Paper in Module-IV of CS Professional Program

POLICIES = Guide: Plan of action – statement of intention & commits management to a definite course of action. MORE Specific. Say, to provide healthy plant by giving adequate attention to cleanliness, temperature, ventilation, light, etc…

PROCEDURE: Detailed method for carrying out a Policy.

PRINCIPLE/OBJECTIVE = Fundamental Truth: TOO General. Say, to provide a safe plant & a healthy working environment.

ETHICS = Philosophy: Set of belief, standards accepted & practised. As to,

1. What is Right?
2. What is Wrong?
3. What ought to be?

Enjoy Writin..... CS Final

Banking for CS

SECTION 5(i)(b) of The BANKING REGULATION ACT, 1949: “Banking”:
1.Acceptance of deposit from public;
2.for the purpose of lending/investment;
3.repayable on demand/otherwise; &
4.withdrawable by means of any instrument whether cheque/otherwise.

NARASIMHAM COMMITTEE - - LIBERALISATION - - BANK
PHASEI:
1.The objective is to promote diversified, efficient & competitive financial system;
2.Thrust on improving the operation & allocates efficiency by focus;
3.Monetary control reforms & restructuring the financial condition;
4.Building infrastructure & reviewing HR policies;
5.Reduce intermediate cost & promote competition;
6.Create an environment & infrastructure for Government securities;
PHASEII:
1.Mergers & closure of banks: introduce Narrow Banking;
2.Create three tier banking structure AS TO International, Large & Medium and Cluster of districts;
3.Separate regulatory role of RBI & supervisory role of GOI;
4.Revamp bank functioning by inducting professionals, depoliticising, right sizing, VRS, review HR policies, etc…
5.Strengthen Bank Balance Sheet – revamp bank laws.

NARROW BANKING: Invest deposits in safe & liquid assets, thereby reduction of risk of failure. It is for weak banks. The advantages include,
1. Stable returns; 2. Easy monitoring by RBI; 3. Immune to runs.
The disadvantages include,
1.Divide banking sector into specialised Deposit & Loan making institutions;
2.Split depositors into Risk averse/loving or a combination;
3.Limited area of operations.

RELATIONSHIP BANKING: “Transaction oriented”, hence each transaction is weighted against profit & cost and decisions are taken. Thus focus on value based relations & mutual growth.

SOCIAL CONTROL – “additional control & restrictions” as to,
1.Whole time chairman & Board of directors should have special knowledge & practical experience.
2.Restriction on loans/advances to its directors or to interested firm/individuals (S-20) & also loans not against its own shares.
3.Punishment for obstructing any one from entering/leaving bank or holding demonstration within bank or acting to undermine depositors confidence in banks.Report of RBI & Central 4.Government to acquire undertakings of banking company.

Must Know Terms...
1. SECTION 17 – Reserve Fund >=20% (Profit as per S-29) before declaring dividend. The Central Government on recommendation of RBI, declare by order in writing to exempt from this provision only if Reserve Fund+Share Premium >=Paid up capital. The appropriation from Reserve Fund/Share Premium, then report to RBI within 21 days.
2. SECTION 18 – Cash Reserve >=3% of total demand & time liability as on last Friday of II-preceding fortnight with itself or balance in current a/c. with RBI or Net balance in current a/c. & submit return within 20th of every month.
3. SECTION 24 – Statutory Liquidity Ratio (SLR) ranging between 25-40% of demand & time liabilities as on last Friday of II-preceding fortnight by way of cash/gold/unencumbered securities.
4. For sections 18 & 24, the liability does not include, Paid up capital or Reserves or P/L credit, advance from RBI/Development/EXIM/Nationalised bank and if Regional Rural Bank, the loan from its sponsor bank; RBI may specify the liability & its decision is final; “Fortnight” means Saturday to II-following Friday (both inclusive). SECTION 19 – Bank can hold shares as pledgee or absolute owner or mortgagee <= 30% if PC+FR of its own or PC of that other company, whichever is lower; PC=Paid Up capital; FR=Free Reserves. It also permits to form subsidiary company. RETURNS TO RBI:
S-24: Monthly return of liquid assets & liabilities;
S-25: Quarterly return of assets & liabilities in India; Annual statement of all Inoperative accounts for 10years within 30 days of Calendar Year to RBI;
S-26: Unclaimed deposits >= 10years; S-27: Monthly return of assets & liabilities.

SECURITISATION
Simulating, Assets into Securities & Securities into Liquidity on an on-going basis, increasing turnover of business & profits
Under SARFAESI (Securitisation And Reconstruction of Financial Assets & Enforcement of Security Interest) Act, “securitisation” means acquisition of financial assets by an securitisation/reconstruction company from any originator, WHETHER by raising funds by such securitisation/reconstruction company FROM QIB by issue of Security Receipt (SR) REPRESENTING undivided interest in such financial asset or otherwise.
Thus, it is a process of conversion of illiquid non-negotiable & high valued financial assets into securities of small value which are tradeable & transferable.
STEP1: Company sells receivables to SPV (Special Purpose Vehicle) & takes cash;
STEP2: SPV converts assets into securities & sells in marketable lots;
STEP3: Repayment directed by company to SPV A/C.
STEP4: SPV pays by way of returns.
STEP5: Shortfall in non-recovery borne by company in a separate a/c.
TYPES include,
1. Mortgaged Backed Securitisation – by NHB through SBI Caps to LIC HFC.
2. Debenture Securitisation – ICICI close ended scheme.
ADVANTAGES include,
1. Matched funding as to asset maturity;
2. Raise additional resources;
3. Trims Balance Sheet of company;
4. New opportunity to investors.

ALM – Asset Liability Management or Balance Sheet Management is the process that helps the management to protect & preserve business providing damage control, enhance returns & strengthen the institution; It means, (managing business after assessing the risk involved)
1. Identifying the “asset-liability mismatch” risk;
2. “Quantify” the risk;
3. Deciding the “Acceptable” level of risk;Monitoring & “controlling” such risk.

RULE OF CLAYTONS CASE:
When there is only one a/c., current a/c. payments are presumed to have been appropriated to the debit items in the order of date. The presumption of law being “the first item on debit site is discharged/reduced by the first item on the credit side; the credit entries in the a/c. adjust/set-off the debit entries in chronological order”. As a safeguard (to escape from Clayton’s rule),
1. The banker should break the a/c. & open fresh a/c. on death/retirement/insolvency of a partner;
2. If the guarantor/surety of debt becomes insolvent/dies, the Claytons rule would prevail.

DECISION:
PROCESS1: Debtor making payment has the right to appropriate;
PROCESS2: Otherwise: Creditor has the right to appropriate;
PROCESS3: Otherwise: Appropriation by presumption of law.

M/S. KHARAVELA INDUSTRIES (P) LTD v. ORISSA STATE FINANCE:
FIRST, adjust/set off towards interest & then to Principal.
If both trust & personal monies deposited, the money first drawn treated as personal money & then trust money.

Also read The Negotiable Instruments Act from http://www.dateyvs.com/gener10.htm

Enjoy passin...

Power of Attorney (PoA) - nice FAQ

As a Power of Attorney may relate to substantial
monetary dealings, clarity on the nature of the
document is vital

— Photo: H. Vibhu

Care and caution: A Power of Attorney becomes an
important document in property transaction.

A Power of Attorney, especially, when relating to real
estate transactions, is a very important document. As
it may relate to substantial monetary dealings,
clarity on the nature of the document is vital. Many
queries have also been raised with regard to the Power
of Attorney. Attempt is made to address these issues
in this FAQ.

1.What is a Power of Attorney?

A Power of Attorney is a document under which one
person known as "Principal" or "Donor" grants an
authority to another person, known as "Agent",
"Attorney" or "Donee" to do or undertake the acts,
deeds and things specified in the document, on behalf
of the Principal or Donor.

2.What are the various types of Powers of Attorney?

There are many types of Powers of Attorney. A broad
classification would be General Powers of Attorney and
Special Powers of Attorney. A General Power of
Attorney confers substantial powers for effecting the
transactions contemplated. A Special Power of
Attorney, on the other hand, is given for specific
purposes only and is often restrictive in scope.

3.What are the ingredients for grant of a valid Power
of Attorney?

The Principal and the Agent must be competent to
contract. It has to be given voluntarily. The Power of
Attorney should be given for legal purposes. It must
be duly stamped, notarised or registered or
adjudicated, as the case may be. Powers of Attorney
executed abroad may also be authenticated by a
Consulate Officer. Minors and other persons
disqualified by law cannot grant a Power of Attorney.
There are certain acts which can be done only by the
persons concerned. For these acts, Powers of Attorney
cannot be granted.

4.What are the acts which can be done only by persons
concerned, referred to above?

These are acts which a person concerned alone can
perform. For example, take the case of a singer or a
musician contracting to perform. The performance has
to be given by the singer or musician only and
obviously cannot be performed by a Power of Attorney.
This is an extreme example to give a broad idea as to
what the personal acts can be. There are any number of
such matters which are to be performed or executed by
person concerned only.

5.Is registration of Power of Attorney mandatory for
exercising the powers?

A Special Power of Attorney under which the Principal
authorizes the Agent to present for registration, a
document executed by the Principal has to be
compulsorily registered. In other cases, it is
sufficient if the power is notarised or authenticated
by an Indian Consul or Vice Consul or by a Court,
Judge or Magistrate. However, in respect of local
Powers of Attorney, it is advisable to have the same
registered as notarization or authentication may not
meet market acceptance.

6. Can a Company grant a Power of Attorney?

If so authorised by its Memorandum and Articles of
Association, a Company can grant a valid Power of
Attorney.

7.Can a Partnership Firm grant a Power of Attorney?

This can be given. Subject to the terms contained in
the Partnership Deed, it may be binding on all
partners, if given by one of the partners.

8.What are the important features of a Power of
Attorney?

One would have noticed that in matters relating to
commercial transactions, there is usually a payment or
passing of consideration. For a Power of Attorney to
be valid, no consideration is required. Further, many
documents would be irrevocable in nature. However, a
Power of Attorney can be normally revoked.

9.Is there a type of Power of Attorney called
"Irrevocable Power of Attorney"?

As already stated, normally a Power of Attorney can be
revoked. In matters where the Agent has acquired an
interest, the Power of Attorney is known as a power
coupled with interest and cannot be revoked without
the express consent of the Agent. This is an usual
parlance referred to as an "Irrevocable Power of
Attorney". In certain cases, the Power of Attorney may
amount to a conveyance and these Powers of Attorney
can also be brought within the ambit of Irrevocable
Powers of Attorney.

10.How are the wordings in a Power of Attorney
construed?

This depends on the clarity of the wordings employed.
The general construction is that the Agent is
empowered to do or undertake only acts which are
clearly authorised. However, certain incidental powers
can be inferred to give effect to the terms contained
in the Power of Attorney. If the Power of Attorney
confers power of sale, then it can be inferred that it
includes necessary powers for completing the sale
transaction. In the same case, though the Agent may
have the power to sell, the Agent, unless,
specifically authorised, will not be entitled to
mortgage the property.

12.What are the matters to be noted in respect of
Powers of Attorney executed abroad?

The Power of Attorney can be executed in a green sheet
or a white sheet and stamped or adjudicated, within
three months after receipt in India. It has to be
authenticated by an Indian Consul, Vice Consul or a
Notary.

In many cases, the Power of Attorney executed abroad
is sent with only last page signed by the Principal.
This practice is not desirable and every page has to
be signed by the Principal. This will save a lot of
time and avoid unnecessary delay and expense.

13.While dealing with an immovable property, is it
sufficient only to take a Power of Attorney
containing, among other powers, the power to sell?

Considering that the nature of the Power of Attorney
is such that it can be revoked, it is advisable to
back this Power of Attorney with a proper Agreement.
This will be give better rights in matters relating to
commercial dealings.

14.What the general precautions to be taken while
granting a power?

Please check the wordings. Understand the
implications. If the Power of Attorney contains power
to mortgage, one has to exclude personal liabilities
wherever the intention is not to undertake such
personal liabilities. Try and get periodical feedback
from the Agent. If you are revoking the power,
consider all the facts and circumstances and the
impact that this may cause before venturing into this.

15.What are the general precautions to be taken while
acting as an Agent?

Understand the scope of the power. Note that you are
actually acting on behalf of somebody else and protect
the interest of the Principals. Do not exceed the
powers granted under the document. Provide periodical
feedback to the Principal. Get necessary further
documentation to ensure that the Agent does not suffer
on account of unexpected revocation. In case of death
of Principal, act promptly to obtain suitable
documentation to cover the situation. If possible, get
periodical confirmations of the validity of the power.
Powers of Attorney, especially those covering
commercial transactions, are intended for short
durations and keeping the powers unused for a long
time may not be in the best interest of the Agent.

The author is Partner, RANK Associates, Advocates.

Stamp Duty on sale registration (SC)

The Supreme Court has held that the stamp duty on property has to be paid according to its market value on the date of registration of the sale deed.

In a ruling with wide ramifications for property buyers, a bench comprising Justices A K Mathur and Markandey Katju held that if a property is in litigation for a long time and during the pendency, if prices of the property have shot up, the buyer shall have to pay stamp duty at the enhanced market value of the property.

The bench, in its judgement dated November 16, while setting aside the judgement of the Rajasthan High Court noted, '' it is true that no one should suffer on account of the pendency of the matter, but this consideration does not affect the principles of interpretation of a taxing statute. A taxing statute has to be construed as it is in all these contingencies that the matter was under litigation and the value of the property which by that time shot up cannot be taken into account for interpreting the provisions of a taxing statute. If a taxing statute has to be construed strictly, then the plea that the incumbent took a long time to get a decree for execution against the vendor cannot weigh with the court for interpreting the provisions of taxing statutes. In this case, Khandaka Jain, jewellers in Jaipur, had purchased a property from a seller and paid an advance of Rs 20,000. The total value of the property was Rs 1,40,000. The property vendor did not execute the documents including the sale deed which prompted the buyers to file a suit for specific performance of the contract. In 1991, the suit was filed by the buyer and decreed in his favour ]on February 2, 1994. The buyer also deposited Rs 40,000 as per the directions of the court but even then, the seller did not execute the sale deed. Later, the collector issued orders making demand of additional stamp duty in view of the increased market value of the property. Jain Jewellers moved the High Court against the order of the district collector and their petition was allowed by the court holding that stamp duty was liable to be paid on the date of agreement to sale and the buyer could not be penalised for the time taken in the litigation.

The apex court, however, has taken a different view and directed the respondents, namely Jain jewellers, to pay stamp duty and surcharge as per the market value of the property determined by the collector as per the provisions of the Stamp Duty Act and allowed the appeal of the State of Rajasthan.

RBI launches Financial Education Site

Reserve Bank of India (RBI) & its initiative on Financial Education
Press Release : 2007-2008/663
To commemorate Children's day, the Reserve Bank of India today launched a financial education site. Mainly aimed at teaching basics of banking, finance and central banking to children in different age groups, the site will soon also have information useful to other target groups, such as, women, rural and urban poor, defence personnel and senior citizens.
To explain complexities of banking, finance and central banking in a simple and interesting way, the Reserve Bank has used comic books format for children. It has created two special created characters for this purpose – 'Raju' who learns all about banking and 'Money Kumar' who explains subjects dealt with by the Reserve Bank of India, such as monetary policy, bank regulations and currency notes. Two comic books are already available on this site – 'Raju and the Money Tree' explains basic banking and 'Money Kumar and Monetary Policy!' explains the role and relevance of the Reserve Bank's monetary policy for the common person.
The site has films on security features of currency notes of different denominations and an educative film to persuade citizens to not to staple notes. Interestingly, the site also has games section. This section aims at educating children through entertainment. The games currently on display have been especially designed to familiarise school children with India's various currency notes.
The site will soon be available in Hindi as well as in 11 regional languages.
The site can be accessed at http://rbi.org.in/financialeducation/Home.aspx or from the quick link provided on the home page of the main RBI website at http://rbi.org.in/home.aspx

Insurance & its Concepts

The PRINCIPLES of Insurance include,

1. UGF – Utmost Good Faith: A duty to disclose accurately & fully ALL material facts whether requested or not. It is a Reciprocal Duty;

2. II – Insurable Interest arises out of LEGAL/FINANCIAL relationship; The striking feature being,

- BENEFIT (from existence) from safety, well being, freedom from liability;

- PREJUDICED (by loss) by damage or existence of liability;

LI: Uberrima Fidei i.e., Utmost Good Faith & Insurable Interest;

GI: UGF + II + Indemnity & Proximate clause.

TIME WHEN INSURABLE INTEREST SHOULD BE PRESENT:

I. FIRE & MISCELLANEOUS INSURANCE: EXIST @ the time of taking policy; CONTINUE during the currency (period) of policy; EXIST @ the time of loss for a valid claim;

II. MARINE CARGO INSURANCE: ONLY @ the time of loss.

III. MARINE HULL & MOTOR INSURANCE: EXIST @ the time of taking policy; EXIST @ time of loss.

INDEMNITY: To place the insured after a loss in the Same Financial Position as far as possible as he occupied immediately before loss, Neither better Nor worse. The measurement of Indemnity based on Intrinsic Market Value of property @ the time & place of damage/loss;

SUBROGATION – Corollary to Indemnity: "The transfer of rights & remedies of insured to insurer who has indemnified the insured in respect of loss". Insured does not receive more than actual amount of loss & any recovery effected from III-party goes to insurer.

CONTRIBUTION – Corollary to Indemnity: NOT for personal/accident insurance. Using "several insurance", to make profit out of loss. It is the right of insurers who have paid a loss under a policy, to recover a proportionate amount from other insurers, who are liable for the same loss. The pre-requisites include,

1. Common Peril (all policies) 2. Common interest & insured

3. Policy in force 4. Policy is legally enforceable.

PROXIMATE CAUSE: To provide indemnity for such losses as are caused by insured perils. The loss may be the result of two or more causes acting simultaneously or one after other; the most important, the most effective, the most powerful cause that has brought the loss. Otherwise, it will be a remote cause

POLICY CONTRACT:

A Policy Document as an evidence of contract. The policy document has,

1. Preamble: Proposal & declaration form part of policy.

WARRANTY = Truth of Statement.

2. Operative Clause: Mutual Obligation; Pay Premium & Pay Benefits.

3. Provisio: Subject to conditions (printed on back of the policy).

4. Schedule: Identifies the proposal referred in Preamble. Have contents like FPR.

5. Attestation: @ the end of first page – the signature & date.

6. Condition & Privileges: Explanatory/Restrictive/Privileges/Benefits.

RIDERS – Additional Covers: Helps to increase the clarity of policy; It defines the fate of policy in case of certain defined circumstance.

NOMINATION: (advisable)

1. Nominee does derive a right to sue only after Policy Proceeds become payable.

2. One can change nominee without consulting previous nominee/insurer.

3. Liable to legal heirs of deceased having proof of right to claim.

GUARANTEES:

1. Guarantee additions: Sum Assured get enhanced each year.
2. Guaranteed Surrender Value (SV): On payment of premium for 3 full years, Minimum SV = 30%[Premium paid (-) 1 ^st year Premium (+) Bonus additions].

ASSIGNMENT = Legal Transference – "passing interest in policy": Assignment cannot be altered; Assignee has the right to sue only after giving Notice to Insurer & receiving acknowledgement. It may be,

1. By endorsing Policy Document which is exempt from Stamp duty;
2. By separate Assignment Deed which is liable to be stamped.

ASSIGNMENT OF,

SNO.	ASSIGNMENT OF	CONDITION
1.	Fire & Marine Insurance	ONLY with the consent of Insurer & subject to conditions.
2.	Marine Cargo	Freely assignable.
3.	Marine Hill or Motor Policy	With the Consent of Insurers.

I think this will help Company Secretary, CS Final, friends when preparing for their Banking & Insurance paper (BILP).

Stamp Duty, QIP,

Ready Referencer Series... Credit to the Authors...
1. Stamp Duty Chart
http://thisisvj.googlepages.com/STAMPDUTYCHART.pdf
2. QIP... from Chartered Secretary
http://thisisvj.googlepages.com/Qualified20Institutions20Placement20.pdf

Enjoy referring...

IRDA FAQ on Insurance Product - to know more

Dear All,

IRDA has come out FAQ for Insurance product, whoever investing in Insurance product, this might be uesfull to know more information about insurance product. The same is reproduced below for your perusal.

Unit Linked Insurance Products ( ULIPs)

Unit Linked Insurance Polices (ULIPS) Frequently Asked Questions (FAQs) Unit linked guidelines were notified by IRDA on 21st December 2005. The main intent of the guidelines was to ensure that they lead to greater transparency and understanding of these products among the insured, especially since the investment risk is borne by the policyholder. It is the endeavor of IRDA to enable the buyer to make the most informed decision possible when planning for financial security. We hope the following FAQs will enable a better insight to all buyers about the character and features of Unit linked Products. 1. What is a ULIP? ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. REMEMBER THAT IN A UNIT LINKED POLICY, THE INVESTMENT RISK IS GENERALLY BORNE BY THE INVESTOR. 2. What is a Unit Fund? The allocated (invested) portions of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund. 3. What is a Unit? It is a component of the Fund in a Unit Linked Policy. 4. What Types of Funds do ULIP Offer? Most insurers offer a wide range of funds to suit one's investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund. The following are some of the common types of funds available along with an indication of their risk characteristics. General Description Nature of Investments Risk Category Equity Funds Primarily invested in company stocks with the general aim of capital appreciation Medium to High Income, Fixed Interest and Bond Funds Invested in corporate bonds, government securities and other fixed income instruments Medium Cash Funds Sometimes known as Money Market Funds — invested in cash, bank deposits and money market instruments Low Balanced Funds Combining equity investment with fixed interest instruments Medium 5. Are Investment Returns Guaranteed in a ULIP? Investment returns from ULIP may not be guaranteed." In unit linked products/policies, the investment risk in investment portfolio is borne by the policy holder". Depending upon the performance of the unit linked fund(s) chosen; the policy holder may achieve gains or losses on his/her investments. It should also be noted that the past returns of a fund are not necessarily indicative of the future performance of the fund. 6. What are the Charges, fees and deductions in a ULIP? ULIPs offered by different insurers have varying charge structures. Broadly, the different types of fees and charges are given below. However it may be noted that insurers have the right to revise fees and charges over a period of time . 6.1 Premium Allocation Charge This is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge normally includes initial and renewal expenses apart from commission expenses. 6.2 Mortality Charges These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc 6.3 Fund Management Fees These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV) . 6.4 Policy/ Administration Charges These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate. 6.5 Surrender Charges A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions. 6.6 Fund Switching Charge Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge. 6.7 Service Tax Deductions Before allotment of the units the applicable service tax is deducted from the risk portion of the premium. Investors may note, that the portion of the premium after deducting for all charges and premium for risk cover is utilized for purchasing units 7.What should one verify before signing the proposal? One has to verify the approved sales brochure for • all the charges deductible under the policy • payment on premature surrender • features and benefits • limitations and exclusions • lapsation and its consequences • other disclosures • Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the life insurance council. 8. How much of the premium is used to purchase units? The full amount of premium paid is not allocated to purchase units. Insurers allot units on the portion of the premium remaining after providing for various charges, fees and deductions. However the quantum of premium used to purchase units varies from product to product. The total monetary value of the units allocated is invariably less than the amount of premium paid because the charges are first deducted from the premium collected and the remaining amount is used for allocating units. 9. Can one seek refund of premiums if not satisfied with the policy, after purchasing it? The policyholder can seek refund of premiums if he disagrees with the terms and conditions of the policy, within 15 days of receipt of the policy document (Free Look period ). The policyholder shall be refunded the fund value including charges levied through cancellation of units subject to deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover. 10. What is Net Asset Value (NAV)? NAV is the value of each unit of the fund on a given day. The NAV of each fund is displayed on the website of the respective insurers. 11. What is the benefit payable in the event of risk occurring during the term of the policy? The Sum Assured and/or value of the fund units is normally payable to the beneficiaries in the event of risk to the life assured during the term as per the policy conditions. 12. What is the benefit payable on the maturity of the policy? The value of the fund units with bonuses, if any is payable on maturity of the policy. 13. Is it possible to invest additional contribution above the regular premium? Yes, one can invest additional contribution over and above the regular premiums as per their choice subject to the feature being available in the product. This facility is known as "TOP UP" facility. 14. Whether one can switch the investment fund after taking a ULIP policy? Yes. "SWITCH" option provides for shifting the investments in a policy from one fund to another provided the feature is available in the product. While a specified number of switches are generally effected free of cost, a fee is charged for switches made beyond the specified number. 15. Can a partial encashment/withdrawal be made? Yes, Products may have the "Partial Withdrawal" option which facilitates withdrawal of a portion of the investment in the policy. This is done through cancellation of a part of units. 16. What happens if payment of premiums is discontinued? a) Discontinuance within three years of commencement – If all the premiums have not been paid for at least three consecutive years from inception, the insurance cover shall cease immediately. Insurers may give an opportunity for revival within the period allowed; if the policy is not revived within that period, surrender value shall be paid at the end of third policy anniversary or at the end of the period allowed for revival, whichever is later. b) Discontinuance after three years of commencement -- At the end of the period allowed for revival, the contract shall be terminated by paying the surrender value. The insurer may offer to continue the insurance cover, if so opted for by the policy holder, levying appropriate charges until the fund value is not less than one full year's premium. When the fund value reaches an amount equivalent to one full year's premium, the contract shall be terminated by paying the fund value. 17. What information related to investments is provided by the Insurer to the policyholder? The Insurers are obliged to send an annual report, covering the fund performance during previous financial year in relation to the economic scenario, market developments etc. which should include fund performance analysis, investment portfolio of the fund, investment strategies and risk control measures adopted. In case, you need any clarification, you may address your query to the following e-mail id: premkunnel@irda.gov.in

Thanks & Regards
Alagar
Asst Manager - Merchant Banking
Karvy Investor Services Limited
G-1 Swathi Court
22, Vijayaraghava Road
T.Nagar, Chennai - 600 017
Tel: 044-28151034/3445/3658
Moble: 919884731993
e-mail: alagar.muthu@karvy.com
website: karvy.com

IRDA Licensing Relaxation R5

Insurance Regulatory and Development Authority (Licensing of Insurance Agents) (Amendment) Regulations, 2007 - Amendments in regulation 5

NOTIFICATION F.NO. IRDA/REG./2/ 39/2007, DATED 8-10-2007

In exercise of the powers conferred by section 42 and section 114A of the Insurance Act, 1938 (4 of 1938), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations to amend the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regula­tions, 2000, namely :—

1. (1) These regulations may be called the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) (Amendment) Regulations, 2007.

(2) They shall come into force with effect from 1st Novem­ber, 2007.

2. In the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000—

(i) In sub-regulation (1) of Regulation 5 the words, "one hundred hours" and "three to four weeks" shall be substituted by the words "fifty hours" and "one to two weeks" respectively.

(ii) In the proviso to sub-regulation (1) of Regulation 5, the words, "one hundred fifty hours" and "six to eight weeks" shall be substituted by the words, "seventy five hours" and "two to three weeks" respectively.

(iii) In sub-regulation (2) of Regulation 5 the words, "fifty hours" shall be substituted by the words, "twenty five hours".

(iv) In the proviso to sub-regulation (2) of Regulation 5, the words, "seventy hours" shall be substituted by the words, "thirty five hours".

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Garnishee Order - Mr. KS Anantharaman

GARNISHEE ORDER

ü When the plaintiff obtains a Decree, he is known as Decree Holder (DH);

ü The defendant is known as Judgment Debtor (JD);

ü The plaintiff DH may execute the decree against the defendant JD;

ü One of the modes of execution is by getting Garnishee Order;

ü A garnishee is a JD's Debtor à "person sought to be warned" (i.e) the banker;

ü Order restraining garnishee from parting with any monies due or accruing due to JD & order for appearance to show cause;

ü The Court may direct the GARNISHEE to pay the money under the decree to the DH;

ü The Garnishee shall be added as a party to the execution proceedings; He shall be given an opportunity for making his representation;

ü 2 types of Garnishee Order:

v Garnishee Order nisi – opportunity to the banker to prove that order could not be enforced;

v Garnishee Order absolute – attaches the account of customer straight away (no opportunity is given to banker).

That's all about Garnishee – a sure shot question in GCL & Banking.

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Vj
Trezrrr every pulsss
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MIS in MP3

Now, first time ever, CS Inter Group-1 subject MIS is available in mp3 format to listen, study & win exams.

"YehHearYes" study with mp3.

YEHsee(HEAR)YES -> Management Information Systems
http://audio.isg.si/audiox/?q=node/14322 MIS is audible; do give your reviews
http://audio.isg.si/audiox/?q=node/14334 MIS sequence2; do give your reviews
http://audio.isg.si/audiox/?q=node/14335 MIS sequence3; do give your reviews
http://audio.isg.si/audiox/?q=node/14338 MIS sequence4; do give your reviews

Your interests can make it more interesting....


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Vj
Trezrrr every pulsss
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Check Cheque

DISHONOUR OF CHEQUE- What to Do

Thanks to CSMysore
Q1. What can I do when a cheque is dishonoured for the reason of insufficient funds. What legal action I can take to get the amount cleared?

A. On the dishonour of a cheque, one can file a suit for recovery of the cheque amount along with the cost & interest under order XXXVII of Code of Civil Procedure 1908 ( which is a summary procedure and) can also file a Criminal Complaint u/s 138 of Negotiable Instrument Act for punishment to the signatory of the cheque for haring committed an offence. However, before filing the said complaint a statutory notice is liable to be given to the other party.

Q2. I have got my cheque dishonoured few months back. It was issued by a Company. What can I do now?

A. On the dishonour of cheque by the company you can file a suit for recovery of the amount under Order XXXVII of CPC. As you have stated that cheques were dishonoured few months back and you have issued no notice to the company bringing to their knowledge the dishonour of cheques and the life of the cheque is still valid which is usually six months from the date of issue. You please present the cheque again and on receipt of the information about the dishonour of the cheque you immediately issue notice within 30 days from the receipt of the information of dishonour of cheque to the company. If the company does not pay the amount within 30 days from the receipt of the notice, you can file complaint under Section 138 of the Negotiatble Instrument Act. The said complaint is to be filed within one month on the expiry of 30 days period of notice.

Q3. Our is the software distribution co. During course of our business we had supplied software worth Rs.3 lacs. But our client dishonoured the cheque. We have filed court case on him after that he paid us Rs. 1 lac and then he has run away. We do not have any idea about his where about. Court has issued proclaimed offender notice, but we do not now how to trace him. He has closed his account and bankers are not cooperating with information like his other address. Pleas advice?

A. Let the proceedings of declaration of proclaimed Offender be completed. The accused will be declared Proclaimed Offender and can be arrested at any time. At this stage, you can not do anything else. However, simultaneously you can file Suit for Recovery with the last known address of the accused.

Q4. I have a cheque dishonoured. I have informed the person in writing, but no response, what should be done to register a case of cheating, and which place it should be filed? The place of the bank, where the cheque was dishonoured or the place where the cheque was handed?

A. When you have informed the person about the dishonour of the cheque, in case the information is given within 30 days from the dishonour of the cheque, you can file a Complaint under Section 138 of Negotiable Instrument Act within one month after the expiry of notice period of 30 days. The Complaint for cheating is not maintainable legally. However, in certain cases the police have been registering cases of cheating against the accused.

Q5. I have blank cheques given to me by a partnership firm. Since they owe me some money which I had given to them as a loan. Besides the cheques and the statement of accounts. I do not have anything else. Suppose one day, I suddenly get to know that they have closed the partnership firm and dissolved it, Can I deposit the cheques now and legally raise a claim on them and how?

A. You should fill the cheques and present for encashment. The Partnership Firm as well as partners are personally liable and even after dissolution also the firm and partners are liable. Once the cheques are dishonoured you have to file a suit for recovery of the said amount under the summary procedure provided in Order 37 of Code of Civil Procedure, 1908. You should also file a complaint under Section 138 of the Negotiable Instruments Act. For this you will have to first give a notice, within 30 days of the dishonouring of the cheques. Then if payment is not made within 30 days of receipt of notice a complaint has to be filed within 30 days thereafter.

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Vj
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RBI & ITS CONTROL ON COMMERCIAL BANKS

The Reserve Bank of India (RBI)

RBI ACT 1934 – to regulate the issue of bank notes & keeping reserves, to secure monetary stability in India & to operate currency credit system to its advantage.

v RBI & COMMERCIAL BANKS – RELATIONSHIP:

1) Supervisory & controlling authority over banks: S-22 to issue licenses; S-23 previous approval of RBI for new branches.

2) Inspection: Suo motto or as per CG. The Central Government (CG) may order prohibiting fresh deposit or direct RBI to wind up.

3) Power to issue directions: S-21 to regulate advances, rates, etc…

4) Control over Top Management: S-36:- Remove/terminate/appoint with RBI approval, the manager, CEO, chairman, etc…

v ORGANISATIONAL STRUCUTRE:

The Central Board of Directors who acts as CEO/Governor & <= 4 Deputy Governor; 4directors nominated by Central Government (CG) with 10other directors & 1 Government of India (GOI) official.

v RBI – LIQUID ADJUSTMENT FACILITY (LAF):

LAF allows RBI to adjust in system depending on its monetary policy stance & its reading of country's macro economic fundamentals. LAF operated through Repos & Reverse Repos in order to set a corridor for money market interest rates.

The rates that influence the conditions in money market are,

REPO or floor rate: @ which RBI is willing to borrow money against security; it is flexible & reflect market conditions; it SQUEEZES the liquidity.

REVERSE REPO or cap rate or Bank's re-finance: lending against security held by banks; it INJECTS liquidity.

Thus, LAF is the same day auction & settlement system.

v INTERVENTION IN FOREIGN EXCHANGE BY RBI –

It is to stabilise rupee by buying & selling in foreign exchange market. The choices include, Foreign exchange intervention, International Policy Co-ordination & Capital controls.

The currency intervention (sterilised/un-sterilised) is to dampen the volatility & to prevent misalignment. The un-sterilised intervention is to affect the size of money supply. The sterilised intervention is the effect of changes in money supply offset through Open Market Operation (Sell forex & Buy G-sec).

The objective includes,

Ø Reflection of economic fundamentals in external value of rupee;

Ø Reduce excess volatility in exchange rates;

Ø Help maintaining an adequate level of forex reserves;

Ø Help eliminating market constraints.

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