Rise of the rupee
The smile on Indians planning a foreign holiday this summer has just grown slightly broader. And they do not have to thank tour operators and airlines for that. It’s the rupee they earn that is helping them get more of foreign goods and travels than has been possible in the past nine years. Against the US dollar— the world’s most popular and widely used currency—the rupee touched a nine-year high (Rs 40.78 to a dollar) on 26 April. Translated it means that your visit to the Swiss Alps is likely to be 10% cheaper than last year.
This is just one small benefit of more bang getting added to the Indian buck. In the past three years strong rupee has cushioned the impact of the rise in oil prices, without which inflation would have been even more runaway than it has been. Besides, a rupee with muscle means Indian consumers can also look forward to cheaper imports—from plasma TVs to mobile phones to DVDs. With imports becoming cheaper, Indian manufacturers would be forced to lower prices.
The wheel has indeed turned a full circle. In 1991, ONGC couldn’t bid for a Vietnamese gas field because the government refused to sanction earnest money of $7,000. Tourists travelling abroad then had to subsist on an allowance of $500 every 36 months! Investing overseas was a criminal offence. Forex was precious.
Currency appreciation has caused topsy-turvy stock market returns. On 9 February, the Nifty hit an all-time high of 4239 points. Ten weeks later, it is 1.45% lower at 4178. But while rupee investors have lost money, dollar investors have received a positive return of 6.4% purely through currency appreciation. No wonder FIIs have invested over Rs 11,773 crore in Indian stocks since 1 January 2007. Appreciation has a few positives for retail investors too. If you want to use that $100,000 clearance to buy overseas assets, it will only cost you Rs 41 lakh now. A year ago it would have cost Rs 45 lakh. However, it is not as though the rupee is going up a one-way street. While it’s risen versus the US dollar, yen and yuan (see chart), it is down against the euro and British pound.
A strong rupee offers interesting investment choices in the Indian stock market. Net importers—refiners and equipment importers, such as the construction industry—face lower burdens. What about exporters? Export-stocks have been downgraded by investment houses. But the three largest net exporters, Infosys, TCS and Wipro generate 26.8%, 28.7% and 24% of respective revenues from Europe. Euro-denominated profits will actually rise.
Finally, remember currency fluctuations are cyclical. Sooner or later, the rupee will dip again. If you buy assets cheap now, either abroad or in downgraded export-oriented businesses, you will benefit twice over as and when the rupee drops. Your acquisitions will be made cheap and the value of your assets will also rise as the rupee drops.
By Devangshu Datta
The Reserve Bank of India (RBI) has permitted banks to cancel the allotment and break open a locker if it has not been operated for over one year. The guidelines have been issued in the wake of a recent incident where explosives and weapons were found in a locker of a public sector bank.
However, if a locker-hirer has some genuine reasons as in the case of NRIs or persons who are out of town due to a transferable job, banks may allow the locker-hirer to keep the locker.
In a move that would benefit locker hirers, the RBI has asked banks not to insist on fixed deposits (FDs) beyond the permitted limit for issuing lockers—enough to cover three years’ rent and charges for breaking open the locker in case of an eventuality. However, banks have been advised not to insist on such FDs from existing locker-hirers.
RBI has also asked banks to adhere to the “know your customer” norms in respect of nominees. Banks cannot ask for succession certificate or indemnity bond from the survivor or the nominee in case of a locker-hirer’s death for giving them access to the lockers. In fact banks should adopt a customer-friendly approach and give the access of the deceased’s locker to legal heirs.
By Rakesh RaiPlugging into retail
Company: Reliance Retail
Company: Tata's Infiniti Retail
Company: Pantaloon Retail
Move over malls, here come the speciality concept stores. Reliance Retail has recently opened the doors to Reliance Digital, an electronics, appliances and IT store in Ghaziabad. Tata’s Croma and Pantaloon Retail’s Electronics Bazaar and e-Zone have already launched their stores.
The reason why the category has caught the fancy of some of the largest business groups is simple. According to PricewaterhouseCoopers, the market for consumer durables (including entertainment electronics, communication and IT products) in India is estimated at Rs 32,000 crore. It is likely to grow at 10-12% annually. Consumer electronics is expected to see maximum action with global chains firming up an India entry. The US-based chains, Best Buy and Circuit City, already have India on their radar.
By Rakesh RaiCard fraud
|Late delivery of bills/cheque encashment: You pay increased interest rate, late fee and fines on late payment|
|False promises made by DSAs: You are under the impression that promises made by agents are as good as those made by an officer of the bank. DSAs are not bank employees|
|Size of fine print: Some banks’ terms are in the smallest font, against RBI mandated minimum Arial 12 size|
|Mechanical approach by call centres: No expert available to respond to customers’ grievances or explain the billing process|
|Helpline not toll-free: You pay for the calls that are sometimes put on hold or transferred endlessly|
|Terms and conditions only in English: A problem with a lot of people especially in smaller towns|
|Misleading language: Details like interest-free grace period not conveyed properly|
The investigative arm of Monopolies and Restrictive Trade Practices Commission has come out with some startling findings that point a finger at unscrupulous practices of some banks, especially their credit card divisions. For many long-suffering card users the findings may not come as a surprise.
Some banks have been delaying delivery of bills and realisation of cheques toward payment in order to charge increased interest rate, late fee and fines. The probe report also says that these banks run their customer grievance cells mechanically and do not explain the billing process to customers. Other charges include playing around with language as well as the size of the fine print.
By Rakesh Rai