World credit crisis roils Indian equities; Sensex below 13K ; 29 Sep, 2008, 1651 hrs IST, ECONOMICTIMES.COM
MUMBAI: Equities ended on a bleak note Monday, tracking the fall of European financial giants like UK’s Bradford & Bingley Plc, Belgium’s Fortis Financial, and Germany’s Hypo Real Estate Holding AG swept in the wake of the US credit crisis. National Stock Exchange’s Nifty ended at 3869.65, down 115.6 points or 2.90 per cent from Friday’s close. The 50-share index sank to a low of 3777.30 intraday. Bombay Stock Exchange’s Sensex closed at 12,629.60, below the 13K level, losing 472.58 points or 3.61 per cent. It slumped to the day’s low of 12,402.84. All eyes are on the financial market turmoil sweeping across the world. Bear Stearns, Fannie Mae, Freddie Mac, Lehman Bros, AIG, Washington Mutual, Fortis Financial, Bradford & Bingley... and more are expected to join this list of banks and investment firms seeking bailout. In the latest development, the UK government seized the biggest lender to landlords after its failure to get funds and competitors refused to buy mortgage loans gone bad. It is the second British bank after Northern Rock Plc to be nationalised this year. Spain's Banco Santander has agreed to pay 612 million pounds ($1.1 billion) for Bradford & Bingley's 197 branches and 20 billion pounds of deposits. Meanwhile, regulators in Belgium, the Netherlands and Luxembourg injected 11.2 billion euros ($16.3 billion) to save Fortis. In Washington, the House of Republicans authorised spending $700 billion to buy assets impaired by the collapse of the subprime mortgage market. Banks worldwide have reported writedowns and loan losses $554 billion since the crisis started. Back home, the losers were led by ICICI Bank (-12.11%), JP Associates (-11.85%), Satyam Computer (9.13%), TCS (-8.4%), Tata Power (-6.95%), among others. Hindustan Unilever was the only stock standing among the 30 index components. It was up 0.79 per cent. Advances across BSE were 357 against declines of 2,287. Stocks unchanged were 41. (All figures provisional)
Monday, 29 September 2008
RUPEE FALLS past 47.04 to 5-year low
Rupee falls past 47.04 to 5-year low
29 Sep 2008, 1512 hrs IST,REUTERS
MUMBAI: The rupee fell past 47.04 per dollar to its weakest since June 2003 on Monday as month-end dollar demand from importers and oil refiners weig hed and sharp losses in the share market raised worries about capital outflows.
At 2:37 p.m. (0907 GMT), the partially convertible rupee was at 47.10/11 per dollar, its weakest since June 2, 2003, and more than 1 per cent weaker than its close of 46.545/555 per dollar on Friday, data showed. India's main share index was down more than 5 per cent, hitting its lowest in 1-½ years.
Oil firms, the largest buyers of dollars in the domestic market, usually make payments for their imports at the end of each month. Oil was trading around $104 per barrel.
- 'TIMES OF INDIA'
29 Sep 2008, 1512 hrs IST,REUTERS
MUMBAI: The rupee fell past 47.04 per dollar to its weakest since June 2003 on Monday as month-end dollar demand from importers and oil refiners weig hed and sharp losses in the share market raised worries about capital outflows.
At 2:37 p.m. (0907 GMT), the partially convertible rupee was at 47.10/11 per dollar, its weakest since June 2, 2003, and more than 1 per cent weaker than its close of 46.545/555 per dollar on Friday, data showed. India's main share index was down more than 5 per cent, hitting its lowest in 1-½ years.
Oil firms, the largest buyers of dollars in the domestic market, usually make payments for their imports at the end of each month. Oil was trading around $104 per barrel.
- 'TIMES OF INDIA'
Sunday, 28 September 2008
KNOW YOUR FINANCES
Cash-crunch to cash-Rich
KNOW YOUR FINANCES
Meenakshi Subramaniam / Mumbai September 28, 2008, 0:54 IST
www.business-standard.com
In times of rising interest cost and prices, falling cash balances are a common feature. There are times when one finds oneself in a situation where raising cash becomes a serious problem. At such times, some people go the whole hog and break their fixed deposit, withdraw from provident fund, exit from existing mutual funds and even go for a personal loan. These are methods that are quick-fix solutions that provide immediate liquidity, but they hurt your finances in the long run.
Holding on to your investments, as far as possible, will help in ensuring that you provide for extreme situations. Also, going for a personal loan will mean paying interest at 18-20 per cent a year – something that may provide immediate relief, but hits your bank balance in the months and years to come. In dire need, if you want to make use of the investment portfolio, here’s how to do it to ensure lower interest payout. Besides, it does not erode the value of your asset completely.
Property: If you have a second property, don’t put it on the block. Instead, if you are earning rent on it, borrow against rent receivables. Banks give a lump-sum loan to the extent of 80 per cent of the rent amount. This arrangement can be continued for 1-3 years. And it’s still your house.
Salary: If it is a short-term need, just for a month, approach the bank where salary gets deposited every month. Banks usually grant you an overdraft of the entire one month's pay. Of course, that implies that the next month they would recover the entire sum and the interest charged is high. But the advantage is that it solves you immediate cash needs.
Fixed deposits: If you have a fixed deposit with a bank, utilise the option of taking an overdraft against it and do not break it. The overdraft facility allows you to get 80-85 per cent of the deposit amount and the interest charged will be only on that amount. That is, if you have Rs 50,000 in a fixed deposit and you withdraw Rs 20,000 as an overdraft, you would have to pay interest only on Rs 20,000. The good news is that the fixed deposit will continue to earn interest, albeit a lower one on the remaining balance.
Insurance: Another method of raising cash is through borrowing against the insurance policy. Once the insurance policy reaches a surrender value, usually after three years with private insurers and five years with Life Insurance Corporation of India (LIC), you can borrow up to 85 per cent of the surrender value from the insurance company. The interest rate charged is as low as 10-11 per cent. Better still, you can take time to repay the loan.
In case of a simple LIC policy, there is no repayment hassle either. If you are unable to repay, the balance can be deducted, when the policy matures. But you need to be punctual in paying the half-yearly interest amount. You can also take a loan on policy to pay premiums and invest the rest in better-paying schemes like gold exchange-traded funds.
Provident fund: Do not fold up the provident fund, at any cost. Take a loan against it, if you have held it for over 3-6 years and repay the amount in a long duration of three years. The sum sanctioned is 25 per cent of the balance standing to your account at end of the first year. The best part is the interest to be paid is just 1 per cent a year! Delay is no problem, as the interest goes only up to 6 per cent.
In case there is a cash crunch, another way to keep the provident fund going is by withdrawing the amount in the eighth year and reinvesting the same for the remaining 7 years. Thus you can escape making fresh contributions for all those years. The provident fund remains the most important asset because even if all assets are liquidated, it can't be attached, even through a court decree.
Small savings: As it's easy to invest in small savings, enter schemes with proper planning. For instance, invest in National Savings Certificate and Kisan Vikas Patra every month for 6 years and reinvest maturity amounts. You can earn a monthly sum, as they keep on maturing. What happens is that the same maturity amount keeps on getting invested. In this way, your funds are not under any pressure on a monthly basis.
Another way is to invest in Post Office Monthly Income Scheme and
Senior Citizens’ Savings Scheme every month and transfer interest to a recurring deposit, as both schemes give a 10.5 per cent return.
And now a few do nots. Pensioners should, by no means, take an overdraft against their pension money, as the repayment duration is just 2-3 months. The penalty is stiff, also touching a hefty 2 per cent a month. Also, it is not too smart to take a loan against gold. The cost works out to more than interest you can earn on gold investment.
Be active, while investing, but don't be anxious to withdraw. A sale of any asset can hurt. You need not sell your car too, as you can get an overdraft against the car from Rs 50,000 to Rs 7 lakh, if required. It is more important that you unlock the wealth of your assets, rather than sell them.
KNOW YOUR FINANCES
Meenakshi Subramaniam / Mumbai September 28, 2008, 0:54 IST
www.business-standard.com
In times of rising interest cost and prices, falling cash balances are a common feature. There are times when one finds oneself in a situation where raising cash becomes a serious problem. At such times, some people go the whole hog and break their fixed deposit, withdraw from provident fund, exit from existing mutual funds and even go for a personal loan. These are methods that are quick-fix solutions that provide immediate liquidity, but they hurt your finances in the long run.
Holding on to your investments, as far as possible, will help in ensuring that you provide for extreme situations. Also, going for a personal loan will mean paying interest at 18-20 per cent a year – something that may provide immediate relief, but hits your bank balance in the months and years to come. In dire need, if you want to make use of the investment portfolio, here’s how to do it to ensure lower interest payout. Besides, it does not erode the value of your asset completely.
Property: If you have a second property, don’t put it on the block. Instead, if you are earning rent on it, borrow against rent receivables. Banks give a lump-sum loan to the extent of 80 per cent of the rent amount. This arrangement can be continued for 1-3 years. And it’s still your house.
Salary: If it is a short-term need, just for a month, approach the bank where salary gets deposited every month. Banks usually grant you an overdraft of the entire one month's pay. Of course, that implies that the next month they would recover the entire sum and the interest charged is high. But the advantage is that it solves you immediate cash needs.
Fixed deposits: If you have a fixed deposit with a bank, utilise the option of taking an overdraft against it and do not break it. The overdraft facility allows you to get 80-85 per cent of the deposit amount and the interest charged will be only on that amount. That is, if you have Rs 50,000 in a fixed deposit and you withdraw Rs 20,000 as an overdraft, you would have to pay interest only on Rs 20,000. The good news is that the fixed deposit will continue to earn interest, albeit a lower one on the remaining balance.
Insurance: Another method of raising cash is through borrowing against the insurance policy. Once the insurance policy reaches a surrender value, usually after three years with private insurers and five years with Life Insurance Corporation of India (LIC), you can borrow up to 85 per cent of the surrender value from the insurance company. The interest rate charged is as low as 10-11 per cent. Better still, you can take time to repay the loan.
In case of a simple LIC policy, there is no repayment hassle either. If you are unable to repay, the balance can be deducted, when the policy matures. But you need to be punctual in paying the half-yearly interest amount. You can also take a loan on policy to pay premiums and invest the rest in better-paying schemes like gold exchange-traded funds.
Provident fund: Do not fold up the provident fund, at any cost. Take a loan against it, if you have held it for over 3-6 years and repay the amount in a long duration of three years. The sum sanctioned is 25 per cent of the balance standing to your account at end of the first year. The best part is the interest to be paid is just 1 per cent a year! Delay is no problem, as the interest goes only up to 6 per cent.
In case there is a cash crunch, another way to keep the provident fund going is by withdrawing the amount in the eighth year and reinvesting the same for the remaining 7 years. Thus you can escape making fresh contributions for all those years. The provident fund remains the most important asset because even if all assets are liquidated, it can't be attached, even through a court decree.
Small savings: As it's easy to invest in small savings, enter schemes with proper planning. For instance, invest in National Savings Certificate and Kisan Vikas Patra every month for 6 years and reinvest maturity amounts. You can earn a monthly sum, as they keep on maturing. What happens is that the same maturity amount keeps on getting invested. In this way, your funds are not under any pressure on a monthly basis.
Another way is to invest in Post Office Monthly Income Scheme and
Senior Citizens’ Savings Scheme every month and transfer interest to a recurring deposit, as both schemes give a 10.5 per cent return.
And now a few do nots. Pensioners should, by no means, take an overdraft against their pension money, as the repayment duration is just 2-3 months. The penalty is stiff, also touching a hefty 2 per cent a month. Also, it is not too smart to take a loan against gold. The cost works out to more than interest you can earn on gold investment.
Be active, while investing, but don't be anxious to withdraw. A sale of any asset can hurt. You need not sell your car too, as you can get an overdraft against the car from Rs 50,000 to Rs 7 lakh, if required. It is more important that you unlock the wealth of your assets, rather than sell them.
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