Some Important Informations

I have full expectation that Mr. Jaitley and Mr. Modi together will do all their best , far far better than past Finance Ministers Mr. Chidambram , Mr. Mukherjee and Mr. Manmohan Singh like persons who damaged fundamentals of banking during their rule of decades. Leaders of Congress Party has damaged not only banking culture but entire Indian culture. I put stress on fact that , it is they who perpetuated a culture of exploiting banks for vote bank and who injected bad blood in banks under public sector.

Malady is deep rooted and no power on earth can clean it overnight or in a year or two. I therefore always say that corruption flow from top and it is ministers of previous rule who promoted  reckless lending , sometimes in the name of poor and sometimes in the name of development of infrastructure or power . I feel pleasure to observe that present RBI Governor Mr. Raghuram Rajan has taken few initiatives to improve the health of PSBs.


Mr. Chidambram left no stone unturned to use banks for enhancing vote bank of congress party. Now bankers are also cultured to lend without verifying quality of borrower and quality of project. During course of time and under the leadership of Congress Party  bankers also learnt to sanction loan blindly to achieve target and to get quicker promotion. 

Bitter truth even now is that bankers are not ready to say 'NO' to anyone who come for seeking loan from bank. Rather bankers are snatching business of other banks . PSBs are competing with each other and causing loss to public money. Unscrupulous persons get success in getting loans from many banks by offering gifts to top officials in cash and kind. Culture of bribery and flattery in PSB has taken deep roots and to add fuel to fire , even trade Union leaders who are supposed to be protectors of banks also started acting in tune with corrupt bankers .

It has become a culture in PSBs to lend quickly , declare the loan as NPA and then write it off or sacrifice huge amount in compromise settlement. Court cases have become ineffective in recovering loans from defaulters. Cases filed in various courts have been pending for decades undecided . Administrative offices and police do not take care to recover loan from defaulters. And so on..

Even now bankers are not ready to punish corrupt borrowers, corrupt bankers and corrupt politicians. Unless we learn and unless Government learn to punish erring officials in bank, erring officials in administrative and legal machinery and unless the get success in stopping politicians misusing banks for vote , we cannot dream of an improvement. neither in health of bank or in wage structure of bank staff. It will take a long time to change the culture .It is easy to preach sermons to banks for Mr. Modi but it is very difficult to change the deep rooted dirty culture of bankers and politicians he is associated with.

Modi and Jaitley have to first understand that PSBs are not profit making entity and hence there should not be imposed target or pressure for credit growth or profit growth at par with that in private banks. PSBs cannot be used for social welfare schemes and at the same time expect to earn greater profit too. Private banks in same economic condition earn huge profit and achieve large credit growth whereas PSBs fail in all respect , rather they are facing erosion in capital, erosion in profitability and erosion in credit quality and monitoring of assets. It will take long time when government will understand that managing banks  is not as easy as they think for it.

RBI has almost discontinued taking stock of what bankers are doing , they have completely stopped the work of inspection and they have no courage to tell anything to ruling politicians even if they give wrong dictation to bankers. Before 1991, RBI used to inspect various branches of all banks to find out quality of lending and quality of control and accounting in banks. But slowly they left this work. RBI during last three decades trusted certificates , right or wrong submitted by bank officials on various subjects. In the name of liberalisation , government to some extent ended license raj but introduced certificate raj.

Fact is that even Chartered Accountant who are supposed to certify correctness of accounting and write about actual health of bank's assets have become a commodity which top officials buy easily by paying handsome amount to them and by extending red carpet welcome to them . Even vigilance officials and auditors , internal or external , rating agencies , all are submitting reports and issuing certificate of health on the basis of illegal money they get in return.

It is therefore true to say that it is not easy for RBI and GOI to transform and reform public sector banks. Let us however have positivity in our mind at least from current government.

Defaulters must not flaunt money: Raghuram Rajan-Times of India- 23.01.2016

Lashing out against promoters of defaulting companies who continue with lavish lifestyles despite owing thousands of crores to banks, Reserve Bank of India governor Raghuram Rajan has said that these businessmen are sending a wrong message and pushing up the cost of borrowing for others.

"If you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don't care. I think that is the wrong message to send. If you are in trouble, you should be cutting down your expenses," said Rajan in what appeared to be a veiled reference to Vijay Mallya, promoter of Kingfisher Airlines. Mallya had recently celebrated his 60th birthday in style in Goa despite his Kingfisher Airlines owing banks over Rs 7,500 crore.

In an interview to NDTV, the governor said that the clamour for lower interest rates should include efforts to get the banking house in order in respect of default recoveries. "The system has been geared to favouring those who have the ability to work the courts. The policy that you (large businessmen) follow is that during good times you take the upside but in bad times you go to banks and ask how much of a haircut are you going to take?" He said that while the bankruptcy law would be a powerful tool, it had some way to go. In his interview, Rajan said that this was not about being against big businesses or successful businessmen and neither was it a Robin Hood issue. "This is an issue about the wrongdoers among the community who raised the cost of borrowing for everybody."

Read Full Article in Times of India

HOW TO TAKE PRUDENT FINANCIAL DECISIONS IN LIFE?

By Pannvalan

S No	Rules to be followed	Explanation
1	It is prudent to keep a fair amount of liquid cash with oneself always.	Apart from liquid cash, amount kept with banks is also very useful at times of need.
2	Limit your expenditure, within your income.	Lead a life that is free from debts as far as possible. Avoid all wasteful expenditure.
3	Never venture to spend, in anticipation of some receipt in the near future.	Spending before earning is a very bad habit. Suppose the anticipated amount does not arrive in time, you may have to resort to borrowing.
4	Save some amount in proportion to every Rupee spent.	Usually, we try to fix our savings as a percentage of our income.  But, it may not work out as desired always, for everyone. So, you may save 5 paise or 10 paise, as per your convenience, for every Rupee you spend. This is a forced savings that will become a large amount in due course and will be of great help, in case of an emergency.
5	Recurring Deposit is a very wise investment option.	Since we pay small amounts every month so as to receive a lump sum on maturity, RD in a bank is a very wise and attractive investment option for every one of us.  Nowadays, most of the banks offer flexible RD accounts, where the monthly installment is not kept constant and is left to the convenience of the individual depositors.
6	In Savings, the safety of money is the most important criterion.	Be sure that you get back your Principal amount intact, after the period of investment is over.  Aiming at higher returns, you shall not lose the Principal.  It is the foremost guiding factor in an investment decision.
7	If inevitable, borrow from an institution, not from an individual.	Borrowing money from an individual will strain the relationship and may lead to bitter disputes too. So, be careful.
8	A loan is not a simple transaction like receiving and returning money. A loan has many strings attached to it.	Before borrowing, cost of borrowing and one’s ability to repay within the period stipulated by the lender are to be studied in depth.  Besides, the lender may stipulate many other conditions too. So, please think if you can fulfill all those conditions.
9	It is not necessary to borrow always.	Most of us get tempted by getting some lump sum which can be repaid in convenient installments later.  But, unless there is a need to borrow, never borrow. Further, you shall never borrow more amount than what you actually require.
10	Borrowing merely for the purpose of savings/investment is not advisable.	Some people argue that they do not have any surplus money left, so that they can save. So, if they borrow and invest the loan amount, it will be a forced investment for them, they say.  Here, the return on investment and the cost of borrowing are to be compared and if the differential is wide, such a step is risky and preposterous.
11	You must borrow only that amount which you are capable of repaying within a specific time frame.	You must be conscious of your additional resources or any future receipt, to repay the loans taken. Please note that ‘capability’ is different from ‘confidence’.  Here, a dispassionate and realistic assessment must be made, to ascertain your capability.
S No	Rules to be followed	Explanation
12	To the extent possible, invest your loan amount in education and fixed assets.	Do not take loans merely for the purpose of consumption.   Investment in education will give everlasting benefits that are immeasurable. Investment in children’s education will benefit all the future generations. Immovable properties will appreciate in value gradually, but movable assets will slowly lose their value in course of time.  Liquid assets are an exception.  They may or may not appreciate in value, but do not depreciate under normal circumstances.
13	Your EMI for all loans put together shall not exceed 40% of your net income per month.	In case of Housing Loan, you may relax this condition and pay EMI up to 50% of your net monthly income.  The objective of this rule is to ensure that you are left with sufficient surplus money in your hands, to meet your regular needs.
14	A loan must get repaid at the earliest.	Even if there is a longer period available to repay a loan, it is prudent to repay it as early as possible. While small amounts must be repaid within a year, many other loans shall be repaid within 3 to 5 years.  However, in case of a Housing Loan, its repayment may stretch up to 20 or at the most 25 years.
15	If ‘Step up EMI’ option is available for a long term loan taken, you may exercise it.	Those who are very confident of earning progressively higher income in the future years, may exercise their option for ‘Step up EMI’ facility, if such facility is offered by the lender.  This facility will lessen the burden in the initial years of repayment.   One must be sure of linking the EMI to the anticipated income, if steady growth in yearly income is guaranteed.
16	Sacrifices cannot be forever or for a very long period.	You may initially sacrifice some of your basic needs, for certain other commitments towards education or repayment of loans etc.  But if you are unable to meet your regular and basic necessities continuously for a long time, your financial position may go haywire and then collapse ultimately.  Please be cautious.
17	All commitments must end before one reaches the age of 55 years.	It is very important to plan the post retirement life from the age of 55 years.
18	Please remember that as one grows older, one’s expenditure on health and other unforeseen items will keep increasing.	It is very essential to save some substantial amount for the post retirement life.  The basic rule is, we must learn to live from the interest/returns from our savings/investments.  Unless there is some serious need, the principal amount shall not be touched.  It is foolish to make further investments, that for a long term, after 60 years, unless one is left with huge surplus. In our post retirement life, the amount of liquid cash and bank balances must add up to a minimum of our 6 months expenditure.

Date: 24-01-2016                                                                                                                   pannvalan

Appointment Of Executive Directors For Public Sector banks

The Appointments Committee of the Cabinet (ACC) has approved the proposal of the Department of Financial Services for appointment of ten General Managers as Executive Directors in the banks mentioned against their names.

 Mayank K Mehta, General Manager at Union Bank of India has been appointed as Executive Director in Bank of Baroda

Dina Bandhu Mohapatra, General Manager at Bank of India has been posted at Canara Bank.

Vinod Kumar Kathuria and R. Subramania Kumar, both GMs at Punjab National Bank have been appointed as ED at Union Bank of India and Indian Bank 

A S Rajeev (Vijaya Bank) has been appointed as another ED at Indian Bank.

Nageswara Rao Y (Vijaya Bank) has been promoted to ED in the same bank.

Rajkiran Rai G (Central Bank of India) has been appointed as ED, Oriental Bank of Commerce

Ramesh S Singh (Central Bank of India) has been appointed as ED, Dena Bank.

G Subramania lyer (Canara Bank) will move to UCO Bank from February 1

Suggestions for the Annual Budget - 2016- By Pannvalan

S No	Suggestions in Brief	Explanation
1	The Basic Exemption Limit need not be raised this year.	Instead, tax rates may be reduced, by readjusting the slabs.   For instance, the first slab may be revised as “Above Rs.2.50 Lakhs and up to Rs.6.00 Lakhs” for which 10% tax will apply.   The second slab will be reset as “Above Rs.6.00 Lakhs and up to Rs.12.00 Lakhs” for which 15% tax will be levied.   The third slab will be “Above Rs.12.00 Lakhs and up to Rs.24.00 Lakhs” for which tax will be collected at 20%. The fourth slab of “Above Rs.24.00 Lakhs and up to Rs.48.00 Lakhs”, the applicable tax rate is 25%.    People earning more than Rs.48.00 Lakhs a year will be required to pay 30% tax, on the amount exceeding Rs.48.00 Lakhs. Telescopic benefit, as is available now, will continue.
2	Education Cess	The Education Cess which is at 3% now, must be brought down to 2% (1.00% for primary education, 0.50% for secondary education and 0.50% for higher education).
3	Surcharge	Surcharge is now levied at 12% for net income exceeding Rs.1.00 Crore.  It is proposed to change it as follows.   Surcharge will be levied at 6% for net income exceeding Rs.60.00 Lakhs.
4	Concessions to the Salaried Class	For persons belonging to the ‘Salaried Class’ from whom tax is deducted at source by their employer, a flat concession of 25% in the overall tax payable by them is to be offered. However, the total amount of such concession (i.e. reduction in tax liability) is restricted to Rs.0.90 Lakhs. Pensioners are also treated on an equal footing with the salaried persons for this purpose, to the extent of their pension income only.
5	Concessions to Women Assessees	No concession will be allowed for women assessees either in the basic exemption limit or in the tax slabs.
6	Concessions to Senior Citizens	Senior Citizens are to be allowed concession at a flat rate of 20% in their overall tax liability. This is over and above the concession of 25% on their pension income, if any. However, the total amount of such concessions shall be restricted to Rs.1,20,000 per year.
7	Interest Subsidy on Education Loans	The government must provide interest subsidy of 3% on all education loans, up to the limit of priority sector classification, regardless of the family income.
8	Exemptions / Rebates   under various Sections of I.T. Act	Exemptions/Rebates available under various Sections of I.T. Act as of now will continue, without any change in them. They will remain frozen at the same level for the next few years. Some of them will be either phased out or merged with other sections, in course of time.   Ultimately, the total amount of all exemptions will be restricted to 25% of the gross annual income, due to raising of Basic Exemption of Limit and Reduction of tax rates, by readjustment of the slabs, in future.

S No	Suggestions in Brief	Explanation
9	Corporate Tax	‘Corporate Tax’ is to be brought to down to 25% (from 30%), on all types of companies.  Surcharge is to be abolished, while education cess may be retained.   ‘Minimum Alternate Tax’ (MAT) is to be brought down to 15% (from the existing level of 18.50% plus applicable surcharge thereon). ‘Dividend Distribution Tax’ is to be revisited and if possible, the existing rate of 17.65% may be reduced.
10	Service Tax	Until GST is introduced, the Service Tax is to be computed at the following rates, basing on the annual turnover indicated below. Up to Rs.6.00 Lakhs                                   -  N I L Above Rs.6.00 Lakhs to Rs.30.00 Lakhs      -  6% Above Rs.30.00 Lakhs to Rs.120.00 Lakhs  -  9% Above Rs.120.00 Lakhs                              -  12% Telescopic benefit is to be made available, as in the case of Income Tax. Essential Commodities must be subjected to a uniform service tax of 6%, regardless of the annual turnover.
11	Customs Duty	Customs Duty on Life Saving Drugs/Medicines, Medical Equipments and Machinery imported for manufacture of these items must be subjected to a customs duty of 3%, irrespective of their value.  However, beyond certain value, prior approval from Ministry of Commerce is to be obtained. In case of Luxury goods including cosmetics and perfumes, white goods, automobiles (excluding those for mass transport), precious stones and jewellery, stitched clothes and garments beyond certain value per piece,  Entertainment Equipments & Machinery etc. are to be subjected to higher duty than now (These things require further explanation and debate). All other items imported will continue to attract the existing rates of customs duty. Additional Customs Duty is to be abolished totally.
12	Excise Duty	Excise Duty on for all edible items that include food grains and cereals, millets, pulses, edible oil, sugar, jaggery, salt, vegetables, fruits and nuts shall be subjected to a uniform excise duty of 2% only. Tobacco, Tobacco products and Liquor must be taxed uniformly at 20%.   All other products will be taxed uniformly at the rate of 6%.   Additional Excise Duty must be abolished totally.
13	Sales Tax	To the extent possible, multi-point taxation must be abolished.  At the most, a product may be subjected to taxation at 2 stages – production and distribution (first sale). No additional Sales Tax is to be collected under any circumstances. Octroi is to be abolished with immediate effect. ‘Value Added Tax’ (VAT) will continue, until GST is implemented. Hotels, Restaurants, Hospitals, Medical Shops and other units engaged in health services shall be taxed at the uniform rate of 3%.  Educational institutions will be spared from any tax, only in respect of Tuition Fees and Exam Fees collected by them.  On all other receipts, they have to pay tax like any other commercial enterprise.

S No	Suggestions in Brief	Explanation
14	Overall Ceiling	An overall ceiling of 18% is to be fixed for all kinds of duties, taxes and other levies put together, on any product or service.  This ceiling is fixed for all central, state and local taxes and levies. This is the golden rule.   Nonetheless, the central government is empowered to tax Tobacco, Tobacco products, Liquor, Luxury Goods etc. at a higher rate.
15	Others	Professional Tax must be abolished for the salaried class. Honest tax payers must not be harassed under any circumstances. Every year, tax assessment must be completed within 60 days from the date of submission of returns. In case of large assessees and institutions (companies, trusts, firms, societies and associations), this time limit may be kept at 90 days. All tax administration agencies and officials must function transparently and efficiently, respecting the assessees and their representatives. Corruption in the realm of direct and indirect tax administration must be done away with.

Date: 26-01-2016                                                                                                                           pannvalan