The Complete List of Personal Finance News

The year 2010 draws to a close today. There has been massive volatility as far as the news in the personal finance space is considered in India. Here is an attempt to jot those personal finance news of 2010 that made headlines, for good or for bad reasons !

Let me know if I have missed out on any.

2010 Personal Finance News from the mutual fund industry

1. Securities and Exchange Board of India (SEBI) directed all Asset Management Companies (AMCs) not to pay upfront commissions to distributors from their loads accounts effective 1^st April 2010. The money in loads accounts are meant to be invested  but AMCs were using this for marketing and for paying commissions. They need to now pay the commissions from their own expenses.

2. SEBI has directed mutual fund houses to disclose investor complaints on its website in a move to usher in greater transparency. This is effective 30^th June 2010. The same information will be available on Association of Mutual Funds in India (AMFI) website too. MF houses received 3.94 lakh investor complaints in 2009-10 out of which non-receipt of dividends topped the chart.

3. SEBI is working on drafting a standard set of rules for mutual fund houses These rules are around advertisement and scheme information. Currently all AMCs use their own definition of some parameters in their annual reports – SEBI is looking to standardize these.

4. Investors have pulled out as much as Rs 28,000 crore from mutual funds this year after SEBI played spoil sport with regulations on mutual funds that were not timely and practical.

5. The mutual fund industry’s asset under management crossed the Rs 8 lakh crore mark in the middle of this year.

6. SEBI has asked mutual funds to quote the dividend declared on their various schemes in absolute Rupee terms, and not as a percentage.

2010 Personal Finance News from the insurance industry

1. ULIPs (Unit Linked Insurance Plans) are set to be managed by IRDA(Insurance Regulatory and Development Authority) after the ugly tussle that ensued between SEBI and IRDA. In April, SEBI issued a notice to 14 life insurers asking them justification on how they could sell investment products without its approval. The tussle landed at the government doorsteps and has led to some major changes to ULIPs.

2. Escalating claim ratios in health insurance forced the 4 insurance providers National Insurance, New India Assurance, Oriental Insurance and United India Insurance to launch a preferred provider network (PPN) from 1 July, fixing the rates of treatment and procedures for the hospitals. Cashless facility was offered only to those hospitals that joined the PPN network. Hospitals that agreed to their demands were kept in the PPN framework while the others were left out. The TPAs (Third Party Administrators) are still fighting their battle with these insurers as they fear they will run out of business. Government-owned insurers have decided to float their own third-party administrator (TPA) for better management of claims by reducing the high-claims ratio. Even private insurers are joining the band wagon.

3. IRDA has finally banned ULPs(universal life policies), a product that saw the insurer charging a premium allocation charge as high as 80% in some cases !

4. The Insurance Regulatory and Development Authority (IRDA) has asked life insurers to disclose the commission paid to agents for unit-linked insurance plans (ULIPs) amid a debate over huge payouts given to agents as against mutual funds. This is effective 1st July 2010.

Personal Finance News from the stock markets

1. Coal India Ltd, India’s largest coal producing company, received a good subscription on India’s largest IPO. The company raised more than Rs 15,000 crore through the IPO with an issue price fixed at Rs 245 a share. The scrip saw a spectacular listing as well.

2. Indian bourses introduced extended trading house starting business at 9.00am IST instead of 9.55am IST since January 4^th 2010.

3. The fees currently charged by PMS (Portfolio Management Service) finally caught the eye of SEBI and it has come out with a “high water mark” principle which means that if the portfolio values tanks then the fees will not be charged till all losses have been compensated for. PMS will have to give an illustration on fees charged when the portfolio value increases by 10 per cent, decreases by 10 per cent, or remains unchanged.

4. In 2005, SEBI raised the amount of money retail investors could dump in initial public offers (IPOs) and follow-on public offers (FPOs) from Rs 50,000 to Rs 1,00,000/-. That was jacked upto Rs 2,00,000/- in October 2010.

5. SEBI gave its approval in Q4 2010 to brokers to introduce mobile trading. This will allow investors to place buy and sell orders through their cell phones using a software that is loaded onto their phones.

6. SEBI made it mandatory beginning May 2010 for companies to list their shares within 12 days of issue closure against the 22 that they used to get earlier.

7. Foreign investment in the Indian stock market crossed the magic Rs 1 trillion mark ($22 billion) for the first time in history.

8. In order to check share price manipulation and attract more investors, the government made it mandatory in June 2010 for listed companies to raise public shareholding to 25%, with at least 5% dilution a year.

9. The BSE Sensex closed above 20000 for the first time this year on Sep 21, 2010. The last time it crossed this magical mark was on January 15, 2008.

10. National Spot Exchange Ltd (NSEL) launched e-Silver, a medium of investing in silver through Exchange Traded Funds.

Personal Finance News on banks and loans

1. The RBI(Reserve Bank of India) has stepped up pressure on NBFC’s(Non-banking financial corporations) on the way they handle credit cards and has asked them to streamline and cap late payment charges and varying interest rates; advertise their charges on their websites; put in place a grievance redressal mechanism and provide proof if a complaint is lodged against improper billing.

2. The derugalation of interest rates could possibly make the interest rate on small savings basket of PPR, KVP and NSC market linked. Therefore, the returns on these instruments might no longer be fixed.

3. RBI has voiced concerns over teaser rates on loans and in its November policy review has asked banks to provision for more money for such products in case of defaults. While such a policy review might push lenders to stop such products (ICICI Bank and HDFC did withdraw teaser home loan scheme), not all of them seem to be obliging which has forced RBI to mull a regulator for such products.

4. SEBI has mandated that post 1st July 2010, all MF investors who apply in NFOs (New Fund Offers) can do so by the ASBA (Application Supported by Blocked Amount) facility which will be made available by the MF houses. This facility was already available to IPOs. ASBA is an alternative mode of payment where your money leaves your bank account only after you get the units or share that you applied for.

5. Central Bureau of Investigation sleuths uncovered a multi-crore corporate housing-loan racket on 24^th November involving several public sector lenders including LIC Housing Finance and Bank of India. The CEO of LIC Housing Finance, Ramachandran Nair was arrested  on charges of corruption and criminal conspiracy. The lenders overlooked regulatory guidelines while granting loan approvals to corporates.

6. The Reserve Bank of India (RBI) has directed banks not to honor cheques with overwriting effective 1st December. It also requested banks to create awareness among customers on this issue.

7. Starting 1st July 2010, banks moved to a system of “base rate” from the existing system of “benchmark prime lending rate (PLR)” that was effective since 2003.

8. Your savings account used to earn interest on the minimum balance in your account between the 10th and the 30th of each month. The interest was calculated once a month at the end of every month. Effective 1^st April 2010 the interest will be calculated every day on the balance you have – this will lead to a bit more savings.

9. Limit on tax slabs were changed by the finance minister in the budget 2010-2011 leading to more tax savings for almost all taxpayers.

Miscellaneous Personal Finance News

1. Employees’ Provident Fund’s (EPF) which has a corpus of Rs 3,00,000 crore could invest only in bonds of public sector companies, 3 banks and 2 finance companies. In May 2010, the EPFO’s (Employees’ Provident Fund Organization) Central Board of Trustees (CBT) decided to invest in bonds of private companies where the Government has a minimum 26 per cent stake and with the caveat that these corporate bonds need to be AAA rated by at least 2 rating agencies.

2. EPF interest rates were increased from 8.5% to 9.5%  in September for the year 2010-2011 as EPFO had Rs 1700 crore of money lying in the suspense account, an account which has all unclaimed PF money.

3. Having failed to get Points of Presence (POP) like banks to push NPS sales, the PFRDA is now expecting fund managers to drive the sales of NPS. The struggle with the NPS continues with the PFRDA failing to take it to the masses as no single entity between PFRDA, PFM, POP, and CRA (Central Recordkeeping Agency) is seen as responsible for sales. Clearly, it’s not going anywhere as of now.

4. Know-Your-Customer (KYC) guidelines are set to be effective for everyone. From 1st January 2011, it is will be mandatory for all retail investors – existing and new to comply to the KYC irrespective of the amount you are investing.

5. The Union Budget 2010 has introduced a new section 80CCF under the Income Tax Act of 1961. Section 80CCF will provide an additional tax deduction, over and above the existing 80C deduction, in respect to investments made in long term infrastructure bonds. This is effective 1st April 2010.

6. SEBI has asked credit rating agencies to formulate a code of conduct and be transparent in its fee structure and rating methods. This is to make sure rating of companies by agencies is done in a fair manner. Agencies will need to reveal the kind of moolah they receive from the companies they rate.

7. The revised Direct Taxes Code (DTC) bill that is going to replace the Income Tax Act, 1961 will be effective April 1^st 2012 in India. It is going  to enforce changes in income tax slabs; exemptions available under Section 80C will undergo changes; as will income tax benefit on home loans; short term capital gains will fall under a slab structure and much more.

8. A Bill to raise the ceiling of gratuity for employees to Rs10 lakh from Rs3.5 lakh was passed by the Lok Sabha in May 2010.

9. Rating agency CRISIL launched CRISIL Real Estate Star Ratings in 2010 with the aim to provide assessment of projects in select cities in India to improve transparency and benchmarking. The rating will be specific to each city- from ‘City 7-Star’, the highest, to ‘City 1-Star’, the lowest.

10. Effective April 2010, an additional amount in the form of service tax is being collected from buyers on under-construction properties – this means that real estate has become more expensive for you.

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