The business leader said said investing in mutual funds should be as easy as buying smartphones on Internet.
PTI | MUMBAI, JUN 29, 2017 | The Hindu Business Line
Urging regulator Securities and Exchange Board of India (SEBI) to simplify investment and advertisement norms for mutual funds, business leader Anil Ambani today said investing in them should be as easy as buying smartphones on Internet.
He said only one in 25 Indians invests in these products at present, but the investor base can be expanded 10-fold to 60 crore in five years. “India’s mutual fund industry is today poised for its Jan Dhan moment,” Ambani said here at an event of the Association of Mutual Funds in India (AMFI).
Reeling out figures, the Reliance Group chief said while 9 out of 10 Indians have a mobile connection and 3 out of 10 have a smartphone, only 1 in 25 Indians has an investment in a mutual fund. “The comparisons in a global context are even more staggering. There are as many as 58 asset management companies in the world which manage more money than India’s entire MF industry put together,” said Ambani whose group firm Reliance Capital runs one of the biggest fund houses of the country.
He said India’s mutual fund industry is a relatively young industry. “In fact, I would claim it has barely moved out of its teens!” he added.
Recalling that the erstwhile UTI started India’s first mutual fund way back in 1964, Ambani said no private player was there for the next 30 years. “And it is fitting that the man who is widely regarded as the father of capital markets and the equity cult in India — my late visionary father, Dhirubhai Ambani — was among the first to sense the potential that lay ahead.
“We at Reliance, together with my late brother-in-law, Shyam Kothari, shared the exclusive privilege of launching India’s first-ever private sector mutual fund in 1993 — Kothari Pioneer Mutual Fund. Our own offering followed soon afterwards with the launch of Reliance Mutual Fund in 1995,” he said.
“From an AUM of under Rs. 60 crore in 1995, and Rs. 2,200 crore in 2002, we have grown our asset base over 100 times to reach Rs. 2.25 lakh crore. As an AMC, we currently manage Rs. 3.58 lakh crore. In the same timeframe, India’s mutual fund industry, with 5.7 crore individual accounts, has expanded its AUM to reach Rs. 20 lakh crore,” Ambani said.
The industrialist said SEBI has historically played a hugely important and proactive role in the development of the capital markets while safeguarding the interest of the small investor. “It is to our regulator’s immense credit that India is today widely perceived as among the most efficiently run markets in the developing world.
“Going forward, we in the industry need to work closely with you (SEBI) to further simplify the on-boarding process for new investors,” Ambani said while suggesting some steps for the the next 100 days.
His suggestions included making MF investment even simpler, allowing anyone with a legitimate bank account to invest in financial products since their bank KYC is already in place and ensuring better utilisation of technology to improve penetration and facilitate faster transactions.
He also urged SEBI to simplify advertising norms to help communicate the value proposition of mutual funds better. “These steps will bring in a new class of investors to the mutual fund industry,” he added.
Ambani urged the industry to give the nation an increase in the number of individual investor folios from 6 crore currently to 60 crore in five years when India will celebrate 75 years of Independence.
He also termed the GST (Goods and Services Tax) as India’s ‘economic freedom’ while noting that it would make “a borderless world of 1.3 billion people — producers and consumers engaged in a seamless exchange of goods and services, skill sets and capital, labour and ideas”.
He said the world has seen nothing like this before as “in less than 48 hours, India will emerge as the biggest free and democratic market in the history of humankind”.
“In tandem with its policy precursor — demonetisation — GST will forever change the ground rules of doing any kind of trade, commerce or business in India,” he added.
(This article was published on June 29, 2017)
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These scores and checks by credit bureaus can help in weeding out violations of KYC or anti-money laundering norms
Nupur Anand | Mumbai July 14, 2015 Last Updated at 00:48 IST | Business Standard
If you fill in the wrong date of birth in a loan application form or have not filled the correct address, there is a chance now that your application may be rejected or take longer to process. For, apart from checking your credit history, banks and financial institutions have also started checking your identity score as a part of their Know Your Customer (KYC) procedure.
The move comes in the backdrop of rising frauds at banks and as a result, lenders have become more cautious. Retail loans have held up at a time when corporate demand is muted but banks are ensuring they are not caught off guard in their endeavour to push these loans.
“The KYC procedure was always being followed but it is now getting integrated with credit score checks as well. Banks and other institutions are opting to go via credit bureaus because it helps in solving logistical issues for the lenders. Moreover, credit bureaus are coming up as a one-stop shop to do credit and identity checks,” said Nimilita Chatterjee, a senior vice-president — products, analytics and data operations at Equifax, a credit bureau.
Mohan Jayaraman, managing director (MD) of credit bureau Experian, says lenders are taking the help of credit bureaus to ascertain identity parameters. “As part of this, we will check if the address you have provided is correct or not. In addition, suppose in the same house there are other people who have defaulted on loans or don’t have a sound credit history, it can raise a red alert for banks,” he explained.
Also, if you change your house very often, that might ring warning bells for lenders, explains Kalpana Pandey, chief executive officer & MD, CRIF High Mark Credit Information Services.
“The idea is to also verify the address stability. Suppose you have a home loan in another address and for your personal loan you have given another address, then it may be a concern for banks. Or if there are times when in one form a customer has mentioned a different birth date than the actual one, even that can lower the KYC score,” she added.
Experts explain these scores and checks by credit bureaus can help weed out violations of KYC or anti-money laundering (AML) norms. In April, the Reserve Bank of India (RBI) slapped a penalty of Rs 1.5 crore each on three public sector banks — Bank of Maharashtra, Dena Bank and Oriental Bank of Commerce — for violating KYC-AML rules, while asking several others to ensure strict compliance with these.
RBI had pointed out that instances of banks opening fixed deposits and granting overdrafts without due-diligence were detected. The credit bureaus say such instances can be reduced by such identity scores.
“We have a solution to authenticate the identity of the applicant, which is now being used by banks and credit institutions. This is a unique solution that allows banks and credit institutions to authenticate a customer in real time by leveraging CIBIL’s vast credit information database, thereby helping drive process efficiency for faster and smoother on boarding of customers,” said Harshala Chandorkar, senior vice-president — consumer services and communication, CIBIL.
Experian’s Jayaraman also said part from identity checks and location, even the tenure of one’s previous loans will affect these background check scores. He explains if the tenure of a loan a customer has been repaying from a particular address is longer, then it will help in affirming the veracity of his address.
Credit bureaus said that not only banks but even Non Banking Financial Companies, Insurance players and even telecom companies are using these background checks. However, considering that these services are limited the number of players using the score is still limited.
“KYC procedure was always being followed by banks but now it is getting integrated with the credit score checks as well. Banks and other institutions are opting to go via credit bureaus like Equifax because it helps in solving logistical issues for the lenders and more over now credit bureaus are coming up as a one-stop shop to do credit and identity checks,” said Nimilita Chatterjee, Senior VP – Products, Analytics and Data Operations at Equifax.
Harshala Chandorkar | Tuesday, 12 May 2015 – 5:20am IST | Agency: dna | From the print edition
Sometimes you may want to buy a house of a greater value, but you may not be eligible for a higher amount of loan from the bank. This is where opting for a joint loan comes handy. Before opting for a join loan with your parents or spouse you must first understand the implications of this loan.
A home of our own is an aspiration that most of us strive for and a home loan is usually the biggest financial liability in an individual’s life that needs to be carefully considered. Sometimes you may want to buy a house of a greater value, but you may not be eligible for a higher amount of loan from the bank. This is where opting for a joint loan comes handy. Before opting for a join loan with your parents or spouse you must first understand the implications of this loan.
Understand the implications
A joint loan is usually taken to meet the eligibility criteria by supplementing the co-applicant’s income along with the applicants for a better and higher loan eligibility. You can consider the option of taking a joint loan with either your parents or your spouse as it proves to be a more convenient approach for qualifying for a higher value loan and also manage your liabilities jointly.
While a joint home loan increases your eligibility it also distributes the liability of payment and impacts the credit history and credit score of both the borrowers. Therefore, it is vital for both the parties to understand their responsibilities towards the loan and its impact on their finances.
Responsibility of the co-applicant
A co-applicant in a joint loan refers to a person who applies along with the primary applicant for a loan. This is done so that the income of the co-applicant can be used to supplement the borrower’s income and increase his/her eligibility or credit limit. As a co-applicant you are completely responsible for the loan if your partner defaults or under any circumstances is unable to pay back the loan. Therefore, a co-applicant’s Cibil TransUnion Score and report is also checked by lenders before deciding on the loan application. If a co-applicant’s score is low, it may negatively impact the loan application.
Both the borrowers’ credit history and score is impacted by a joint loan.
A joint loan account is reported on both the individuals Cibil reports. If the responsible party does not pay on time or does not pay at all, this credit behaviour is reflected on the other party’s credit report as well. In addition, creditors can approach both parties for payments and collections. On the other hand, both the borrowers’ Cibil scores get negatively impacted in case either of the partners default on the payments of the loan EMIs. Hence, it’s imperative that both the borrowers on the loan should ensure paying the EMIs regularly on the due date, month on month.
With a fair understanding of the benefits of opting for a joint loan, given below are some Do’s and Don’ts one must consider before applying for a joint loan:
A joint loan requires both the applicants to furnish the necessary Know Your Customer (KYC) documents, bank statements, employment certificate and IT returns. Ensure that you have the most updated copies of these documents ready with you.
Make sure you both check your Cibil report and score to understand your credit history. If your credit report shows delinquencies and defaults and you credit score is low then make efforts to improve it before you apply for the loan. This will help you avoid unpleasant surprise in the form of loan rejection.
If you have already availed a joint loan then ensure that you keep a track of the repayments and are aware of your liabilities in the event that variations are made to the terms and conditions of the loan
Do not default on monthly instalments as it will have a negative impact on both borrowers’ credit history.
The writer is senior vice-president – consumer services and communications, Cibil
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