Trade War and its Impact on Indian Economy

China and the US have embarked upon a full-scale trade war as both sides lob threats of new trade
tariffs. Both the countries have already imposed 25 % tariff on $34bn worth of goods and are ready with a list of
proposed tariffs on $200bn of imports, ranging from auto parts to food ingredients to construction, which will likely
raise prices for consumers, inflate importing costs for companies, rattle financial markets, cause some layoffs
and slow business investment.
In such a trade war scenario, multinational corporations are postponing their investment decisions and global foreign direct investment is on the decline, which is turning out to be negative for the growing economies like India. The continuous outflow of FDI, rising crude prices and freefall of Rupees is making conditions worse for the country. Although the RBI and govt are taking measures to reduce the trade war impact, but since the war is between two biggest economies in the world, countries like India would get affected more adversely than it should. There is the possibility of a recession, or a drop in jobs, incomes or defence of protectionism by
the country.
One of the big immediate risks of the U.S.-China trade war for India may be “trade diversion”. That means
products and merchandise hit with retaliatory tariffs will get diverted or even dumped on markets like India, affecting domestic market. Although, India has a large internal market but the external pressure is really building at the moment. So, India should start considering the trade defence instruments they might use against this prospect.

– Shivam Daga
MBA-FA(2018-20)

SMART CONTRACTS

Execution in Banking and Financial services

Introduction: Smart Contract is a software developed to execute commercial transactions and enforces legal agreements which can eliminate the need for intermediaries and their associated transaction costs. It is simply a digital version of traditional agreements.

For instance, suppose you rent an apartment from me. You can do this through the block chain by paying in
cryptocurrency.

You get a receipt which is held in our virtual contract; I give you the digital entry key which comes to you by
a specified date. If the key doesn’t come on time, the block chain releases a refund.

If I send the key before the rental date, the function holds it, releasing both the fee to me and key to you
respectively when the date arrives. The system works on the If-Then premise and is witnessed by hundreds of
people, so you can expect a faultless delivery. If I give you the key, I’m sure to be paid.

If you send a certain amount in bitcoins, you receive the key. The document is automatically cancelled after
the expiry of the period of agreement, and the code cannot be interfered by either of us without the other
knowing since all participants are simultaneously alerted. Impact on Banking Industry: When it comes to syndicated
loans, the clients could expect settlement periods to be shorter. Instead of 20 days, they would be reduced to 6, for instance. It would lead to an increase in annual income and to a reduction of operational expenses.

Within mortgage loan industry, the lower operational costs of every
loan would reduce expenses for banks and cut fee
expenditures of the clients.

Today, a few banking startups already make their way in the market. One of them is Polybius, a digital bank based on the Ethereum blockchain. Their ICO technically supported by Ambisafe Software was extremely successful – they
collected BTC 12,380 (over $31,00,000, as of 2017).
Issues to consider before smart contracts may be widely used in banking are that Smart contracts cannot initiate wire transfers from one account in a regular bank to another. There are no interfaces that would bring together blockchain-based banks, tax regulator, and compliance monitoring institutions. The data stored on the public blockchain has no privacy. When it comes to financial operations, not all the clients would be happy about it.
The legal status of smart contracts is not as clear as it should be. The blockchain is vulnerable to some extent

-Ayush S. Mazumdar
MBA-FA(2018-20)

Income Tax Saving For the Salaried

Remember the feeling you have when you receive your salary and then you realize a chunk of it has been cut as tax and then you proceed to create other sources of income which at the end of the year you are rudely informed will be taxed too. We all know that our taxes go towards the development of the nation and it is our patriotic duty to pay our taxes and watch our nation grow. But don’t you sometimes have a nagging feeling that it would be nicer if you could just pay a little less of your salary as income tax. What we mean is that you earn a fixed salary every month and wouldn’t it be nicer if you could save a larger part of it. While saying this at no point do we recommend for you to evade taxes or not disclose income as that would land you a significantly large stay with the Indian Prison Board. So, the following are a few ways the government allows you to save on your taxes in a manner it does frown upon.

Section 80C of the income tax act
This section is the most commonly used and recommended by tax consultants. It is a relatively straightforward thing to do where you are allowed to invest up to ₹1,50,000 which will then be deducted from your total taxable income

Section 80 CCD
This section is for those who have a pension account of sorts and it allows up to 10% of the individuals salary or ₹1,50,000 whichever is less.

Section 80 TTA
A not commonly utilized section, it allows you to deduct up to ₹10,000 against your interest which you will earn from a savings bank account.

Section 80D
An amount of up to ₹25,000 can be deducted under this section as payment towards the payment of premium for medical insurance.

Section 80 G
One for the philanthropists out there. This section rewards you for contributing you to a social cause. Various slabs of deductions are available based on the cause you donate towards. It ranges from a total 100% to a more modest 10%.

Home loan
Firstly, congratulations on the purchase of your new home and now lets make that home loan work for you. Under section 24 of the income tax act you can claim benefits towards interest on the interest payment of the loan.

Allowances
Your salary is also something which can be utilized to cut down on your total taxable income. Sounds counterintuitive right? It is not so. Allowances like your House Rent Allowance (HRA), conveyance/travel allowance and your telephone bill reimbursement are some things which can be adjusted against your salary and will then allow you to reduce your total taxable income.

So go ahead and use these smart techniques to save some of that hard earned money as we are sure that you wouldn’t want to let go of an opportunity like this.

Top 5 Short Term Courses in Finance in India

The world is getting tougher, and the competition is getting fierce. Mere graduation or a post-graduation degree in your arsenal would not help you stand out and secure the job of your dreams. And this is no less than the truth in the world of finance as well. While graduation or post-graduation is necessary, in today’s world, it won’t help you gain a competitive edge over everyone else. To get decent opportunities with respect to securing jobs, one can do specialization or professional courses. But one must have a very clear vision regarding where their interests lie. This will help you to choose the optimum course for yourself. There are many short-term courses available in India which you can use to hone your skills.

To help you choose your interest, we have compiled a short list of courses highly preferred by students and employers alike:

1. Certified Financial Planner (CFP):
If your interest lies in Financial Planning, Wealth Management or Banking, this is the perfect course for you. Many people lack awareness regarding Personal Finance, but things are changing, people are looking for professionals who can help them with it. This is where you come in. This course is internationally recognized and can fetch you some really good opportunities to excel in your career.

Click here for full details: Certified financial planner course

2. National Institute of Securities Market (NiSM) Certifications and NSE’s Certification in Financial Markets (NCFM)
The NiSM/NCFM Modules offered by the NiSM or National Stock Exchange Academy (respectively) are one of the most recognized certifications in the capital markets industry. If you want to work in a Stock Brokering Firm or a Bank in wealth management or equity trading or fixed income trading desk or support functions, these certifications can provide an added advantage.

3. Financial Modelling:
Financial Modelling can be termed as the backbone of the financial market. Your job in this field will be to analyse historical data, and performance of an industry/company, and build financial models to improve their performance in the future. So? Do you want to become a Financial Modeller?

4. Financial Risk Manager (FRM):
As a Financial Risk Manager, you are expected to identify and manage the risks that can get along with any investments or any business. The certification will also help you in roles like Risk Assessment, Financial Risk Consultant, and Asset Liability Management.

These short-term courses will definitely help you in improving your skills and securing good jobs. Although, if you are looking for something much more comprehensive and detailed, you can always go for a CFA Program:

5. Chartered Financial Analyst (CFA):
CFA is not a short-term course but it is one of the most comprehensive professional courses available. It is one of the few courses that can give an MBA Finance a serious run for their money. It is a globally recognized program that mainly focuses on imparting Investment knowledge to students. The program covers a broad range of topics relating to investment management, financial analysis, corporate finance, stocks, bonds, and derivatives, and provides a generalized knowledge of other areas of finance. So? Is this the course for you?

Click here for full details:  Chartered Financial Analyst® (CFA® Program)

The opportunities in the world of finance are huge, the only question is, are you ready to take on the challenge?

‘MANTRA’ TO CLEAR CFP IN ONE GO

There are no shortcuts to true excellence. So in order to secure the Gold Standard certification in the field of finance, you have to be extremely dedicated towards the same. By just following the mantra below, you can clear your CFP exams in one shot –

Rigorous Practice: It is recommended to practice on a daily basis. Even if you are a working professional, give at least one hour every day to the preparation. The idea is to be in touch with the subject regularly.

Cover everything: Since the board allows you to book a slot as per your convenience, it is highly recommended that you book your exam only if you are sure that you’ll be able to cover everything (as per the FPSBI syllabus) before that date. You may generally be able to book a slot within a gap of a month. So, prepare yourself accordingly.

Sequence of Preparation: It is advisable to cover the syllabus in the sequence prescribed by FPSBI, i.e. Introduction to Financial Planning, Risk Analysis and Insurance Planning, Retirement Planning and Employee Benefits, Investment Planning, Tax Planning and Estate Planning and finally Advanced Financial Planning. Though you can take the first four exams in any order, it is recommended to follow the above sequence.

Hands on Financial Calculator: The calculator that is allowed in the examination is FC – 200V. It is important to know the functionality and various formulae that can be applied using the financial calculator. It is recommended to practice the numericals using the financial calculator (multiple times) to be hands on.

Revision: No preparation is complete until revised thoroughly. Revision plays an important role as you’ll review important topics and formulae at this stage. Hence this step is not to be missed at all. 

Practice Sample tests & Mock Exam: In order to assess your preparation, you should take up Sample tests and Mock Examination. Sample Tests would give you an idea about your understanding of individual concepts. On the other hand, Mock Exams would help you boost for Exam environment and would give you an understanding of Exam pattern, time management in the examination and much more. 

Be updated with the market: Keep in touch with the financial market news as you may see questions on general economics as well as current affairs related to finance.

Be thorough with your concepts: Whatever you learn, just do so thoroughly. Once you are thorough with the concept, you can easily attempt the questions.

Do not miss any session: If you are preparing for your CFP certification with the help of an educational partner, it is recommended not to miss any of the sessions as each session would have important concepts to grasp. So do not take it easy.

Do not panic: The most important of all, do not panic on your exam day! Take required sleep a day before examination day. Do not take up a new topic before the exam day. Also, do not forget to carry your financial calculator in exam.

All the best!!

____________________________

Blog Written by :

Manya Kakkar
Associate Financial Planner

MBA Finance vs MBA Financial Planning

“If you want to thrive in today’s economy, you must challenge the status quo and get the financial education necessary to succeed.” – Robert Kiyosaki.

The banking, financial services and insurance sectors have picked up in a big way over the past years with right manpower being at the heart of growth. Companies look for super specialised and competent professionals to build competitive advantage over others. With millions of applications flooding the industry, how does one stand out? MBA alone as a qualification is no longer enough. It has been outperformed by several other specialised certifications and programs that employers look for today. MBA in Financial Planning is one such program.

An MBA degree will open up opportunities, but going for a super specialised degree in finance along with MBA will be an investment that will take you all the way. Master of Business Administration (MBA) in Financial Planning provides students with comprehensive business training, building the relevant competencies and prepares them for in demand careers such as financial advisors, wealth managers and more. Mentioned below are points that will explain how a course like MBA in Financial Planning could help an aspirant make a successful career –

  • Access to top-notch companies: This program is designed in such a way that it opens up placement opportunities in top companies in financial planning, wealth management, banking, equity research, AMCs, portfolio management, brokerages, etc.
  • International Recognition: MBA in Financial Planning incorporates the curriculum of internationally recognized CERTIFIED FINANCIAL PLANNERCM as well as NISM certifications that are widely accepted across various industries.
  • Practical exposure: The program provides a lot more exposure to practical training than a regular MBA. It is more hands-on with inclusions such as financial plan construction, industry workshops, guest lectures, projects and practical assignments, case studies to enhance practical skills and personality enhancement sessions significantly enhances career prospects in India as well as abroad.
  • Earn while you learn: While an MBA program indulges one for complete 2 years, MBA in Financial Planning covers up most of the syllabus in year one with focused and intensive learning, hence gearing up the student to start work right after the completion of first year.
  • Become an entrepreneur: Unlike a regular MBA, MBA in Financial Planning will help you start your own financial planning or consulting firm.

So the benefits of doing MBA in Financial Planning are manifold. All we can say is that individuals looking to become successful financial professionals should consider MBA in Financial Planning, a program that incorporates the globally accepted CFPCM curriculum valid in 26 countries along with an MBA degree which assures the candidate the “RIGHT PLACE” in the industry.

Manya Kakkar
Research Associate

ICoFP – Atrusted education brand in financial world

“Quality education should be prioritised along with literacy campaigns. We have been focusing on the outlay, now it is time for us to concentrate on the outcome of our education systems” Prime Minister of India, Shri Narendra Modi.

With over 53 years of value-based investment solution services across the nation, Bajaj Capital Limited emerged as India’s premier “Investment Services” company through its pioneer service based on the guiding principle of honesty, ethics and values. Bajaj Capital Limited being the oldest and largest investment service Company; has contributed to Indian capital market at every phase of its journey since its inception. Bajaj Capital Limited contributed to the finance industry by introducing Financial Planning Standards Board (FPSB) India and propagated globally acclaimed Financial Planning certification program CFPM in India. In order to mobilise the vision of creating awareness among investors for financial planning, International College of Financial Planning (ICoFP) was set-up in the year 2002 to provide specialised financial service education. Within a short span, ICoFP has received various accolades and awards for disseminating quality education in the domain of finance and in just a decade’s time, ICoFP has become a premium financial education institution and preferred destination for companies to recruit talent. 

“ICoFP students along with CFP, working with us, are doing a good job and meeting our requirements. We hope to continue our association with this institute in future. Wishing them all the success in future too” Ms. Bindu Govila, COO, Hum Fauji Initiatives.

A study conducted by IIM Bangalore reveals that employability is one of the main reason among students preferring foreign destination for higher education (2012). When most of the educational institutions were set up to deliver basic higher education to the aspirants with not much value to the industry, ICoFP emerged as a unique education institute with a foresight of need of specialised education in India. It started its journey in 2002, with the vision to deliver trained professionals to the industry.

ICoFP offers full-time MBA and PG Diploma courses in Financial Planning and Financial Analysis which are recognised by UGC.

  • The MBA in Financial Analysis course incorporates all 3 levels of Chartered Financial Analyst (CFA ®), the globally acclaimed certification.
  • MBA in Financial Planning incorporates Certified Financial Planner (CFPCM) certification which is valid across 26 countries. The students are also expected to clear certain modules of NISM and MCX Certifications within this programme to qualify for screening process in recruitments.

Roopesh S Naidu (Assistant Vice President – Global Business Operations) cFirst Global Background Check asserted “Learning about facts and theories are not really of any use unless you are aware of their application in real life, he further added you cannot explain gravity without dropping a thing.”ICoFP firmly believes that real-world needs real exposure. 

 In today’s scenario, finance is more beyond just planning; it includes – rigorous valuation, rationale and product research. Understanding the complexity of the market environment, our curriculum is vetted by industry experts and updated proactively with an ever-changing need for market scenario.

“Our graduates are our best recommendation and we look forward to contribute to create real wealth for the nation by imparting value education to the future generations” Ms Vani Bajaj – Chief Mentor, ICoFP

As per the data by All India Council for Technical Education (AICTE), more than half of MBA graduates are not hired in campus placement (2016-2017).We strive to outreach this upsetting data with 100% placement each subsequent year. ICoFP carry’s the flagship of success stories of both students and satisfied recruiters. ICoFP has become the trusted partner among financial world to hire the right talent. Our students are placed with the prominent brand like KPMG, EY, ICICI Pru AMC, Edelweiss Broking, Religare Securities, Ameriprise, Cians Analytics, Care Rating, Aurum Equity and the list is endless.

Recruiter’s Speak

“We hire people, who can transform the financial knowledge to the clients. ICoFP is an institution which offers specialised courses. Our company  always prefer to hire MBA Financial Analysis students from ICoFP. The basic understanding about Risk & Investment Analysis of the students is very good. We are happy to see the efforts being put by ICOFP in shaping the career of students” Rajiv Nayar, Director – JRG Financial Advisors Pvt Ltd

 Alumni Acknowledgement

 “It was a great time we spent in International College of Financial Planning. ICoFP has very wonderful faculty and they are very cooperative and campus environment is very positive. Training  and placement department continuously providing assistance regarding the placement. ICoFP has made the best efforts to provide all the facilities for the students like Faculties, events, projects etc. The days which has been spend in ICoFP was the golden days of my life and will remember it for rest of my life. ICoFP rocks……..”

 Saksham malhotra , Credit Manager – HDFC Bank, Singapore

Soumya Sahadevan
Research Associate
ICoFP

ICoFP – A Trusted Education Brand In Financial World

India will be the world’s youngest country by the year 2020 (NDTV 2017) and, also the third largest country with maximum enrolments in higher education. Despite such a remarkable trend, the employability prospects in our country are very upsetting. With 15 million youngsters entering the work force each year, more than 75% are not job-ready (The Hindu, 2016). As per All India Council for Technical Education (AICTE), more than half of MBA graduates are jobless and major reason behind is outdated curriculum (The Economics Times, 2017). Sunny Jain (Manager Finance & Accounts) working with conglomerate expressed that “Our Professional education system still lack industrial exposure. He further added that we always prefer students with real-time exposure and specialized skill-set instead of hiring just a degree holder”. Gurmukh Singh (Head –Operations and Projects, Romsons Group) further added that “The gap between industry and education institutes must be bridged; to improve the employability of students and the quality of higher education”

Industries are more inclined to hire specialized talent rather than just a degree holder. CA Tarun Kumar (Consultant – Ministry of Finance) stressed that “while it is crucial for fresh graduates to have knowledge in their own discipline when seeking employment, it is becoming increasingly important that their skills are complemented with wider and deeper understanding of real market trends”.

Being a premier “Investment Services” company, Bajaj Capital Limited with the legacy of 52 years in financial planning and investment advisory; promotes International College of Financial Planning (ICoFP) one of the India’s leading financial educational institutions, established in the year 2002; with the aim to cater qualitative education by fostering the employability skill of the students through its benchmark quality education practice. ICoFP model is based on the ideology of making its students “Ready for Real World”. ICoFP started its journey in 2002 with the concept of empowering students with employable skills. ICoFP offer full-time MBA and PG Diploma courses in Financial Planning and Financial Analysis which are recognised by UGC. ICoFP is one of the renowned education institution which has integrated globally acclaimed certifications with its MBA programme. The MBA in Financial Analysis course incorporates all 3 levels of Chartered Financial Analyst (CFA ®) program by CFA Institute, USA. Also MBA in Financial Planning incorporates international Certified Financial Planner (CFPCM) certification which is valid across 26 countries. Our courses are exclusively designed in collaboration with industry and based on experiential learning, while focusing on the area beyond academic through our student clubs; emphasizing on leadership, networking and personality enhancement.

With our pioneered services in financial education, we have been awarded with “Best Education Brand 2017” by Economics Times. ICoFP has become the chosen destination for companies to hire specialized talent. With 100% placement each subsequent year, we succeed to deliver qualified professional to the financial service industry.

If you want to experience academics with real world exposure; ICoFP is a right choice. At ICoFP we firmly believe “real world needs real exposure”. Explore the pioneer world of education at www.icofp.org

 

Submitted by
Soumya Sahadevan
Research Associate – ICoFP

CFA meets MBA: The Amalgam

Well I am a CFA level III Candidate and quite naturally so I chose to write about my current subject of interest, CFA. Kids these days have to do so much to increase their employability and be abreast with the current industry standards and requirements. If I talk about myself I started my Masters in Financial Management in 2012 and while pursuing the course I was quite certain that I also wanted to do CFA. But I finally sat for my Level I exam in the June of 2016. What I am really talking about here is the lapse of time, 5 of the most crucial years of the early 20s of a person’s life. So my advice to you if want to do CFA and you are quite sure of it, Start Early!!

So recently I stumbled upon International College of Financial Planning and discovered their unique, integrated MBA program in Financial Analysis. This super-specialized MBA program covers 100% of the curriculum of all the three levels of the CFA program and also has additional subjects relevant to the Indian context. It is such a win-win. While you get your MBA degree from the University of Mysore (UGC certified) you are also academically equipped to sit for the CFA exams. How cool is that!

Started in the year 2011, this is a one of its kind program. For one it is based on an industry oriented international curriculum of CFA that is globally recognized and acclaimed. The international recognition that comes with this highly sought after qualification for investment professionals, opens the doors of global financial markets making international placement opportunity quite possible.

Some of the highlights of the program include a 2-month internship that allows students to take a glimpse of how the financial world actually functions and associate closely with the roles and activities keeping the choice of career path in mind. Focus is also on combining theoretical knowledge with the practical application in such a way that it increases employability of the students. Semester 1 contains CFA level 1, semester 2 is all about CFA Level II and Level III is covered in Semester 3 and Semester 4.Some of the practical aspects of the course include imparting the basic know-how of share trading and capital markets and basic and advanced learning of financial modeling, a tool that complements the learning of the CFA program and is high on the employer’s list of required skills.

Globally the various job profiles most suited for a CFA include Investment Banking, Portfolio/Fund Manager, Credit & Risk Analyst, and Equity Research among others. So if this is the kind of career you are looking for yourself I would highly recommend that you enroll yourself in the MBA-FA program at ICoFP.

 

Blogger details:

Diksha Dumra
CFA Level III candidate

Reverse Mortgage – The loan that pays you

“The tool of reverse mortgage is a tailored product to monetise the locked up ‘equity’ in the asset and lends support to the liquidity starved home owners.” To make things simple the lender makes monthly payment to the borrower instead of as with a traditional mortgage where the borrower makes monthly payments to a lender that too without having to dispose of the property. Doesn’t it sound a bit strange? Yes it does and it’s quite simple too.

Let us first understand what reverse mortgage is and how it works?

Suppose a retired couple with children settled in abroad and with the only possession that is their house. Though retired means living on pension, but what if they need more money for daily expenditures or for one time heavy expenditure for some luxury. They can’t sell the house, if they where are they going to stay? “Hey! Reverse mortgage is out there to help you”. The government has valued their property to be worth of 50lacs and present-day picture tells that they still owe 2.5lacs on an ongoing mortgage. So they went to bank asked for a loan in the scheme of “reverse mortgage”. And this couple decided to borrow 65% of the total property value i.e. 32.5 lakh worth. Next, set off the remaining mortgage balance that you still owe of 2.5lacs plus the processing charges and other fees of another, say 1lac. Now you have 29lacs in your hand. Either you receive this amount as monthly payments or lump sum for a one time heavy expenditure is up to you. What happens with the couple with a loan of 32.5lacs?

A reverse mortgage loan typically does not require repayment until the last homeowner has passed away or has moved out of the property. Consequently, life expectancy is a huge part of the calculation in regards to how much money the borrower will receive. In general, the older you are, the more equity you have in your home and the lower your mortgage loan balance; the more money you can expect from a reverse mortgage loan.

Reverse mortgage loans are insured by the Federal Housing Administration (FHA) and it requires the borrower to be a minimum of 62 years of age. Borrowers must also meet financial eligibility criteria as established by HUD. If there is an existing mortgage on the home, it may be paid off with the proceeds from the reverse mortgage loan.

Explaining reverse mortgage does not give an idea of the mortgage structure and the different sorts or the featured benefits or the disparaged drawbacks. That is coming up in the next session…