Financial Planning

1
Financial Planning Wealth Management

• By CA Rajkumar S Adukia
• 09820061049/09323061049
• rajkumarradukia_at_caaa.in

2
Agenda

• Explaining the essence of Financial Planning
  Wealth Management
• Exploring Investment Planning/Wealth Management
• Knowing about Asset Allocation
• Dos and Donts Mantras in Financial Planning and
  Wealth Management
• Investor Risk Awareness

3
INDIAN FINANCIAL SYSTEM
Financial Intermediaries
Financial Instruments
Regulators
Financial Markets
Credit Market
Capital Market
Money Market
Forex Market
Primary Market
Capital Market Instrument
Money Market Instrument
Secondary Market
4
What is Financial Planning?
5
Steps in Financial Planning
6
Categorizing Individual Investors

• Salary Earners Government/Private
• Self Employed/Entrepreneurs/Traders
• Professionals
• Others Students, Housewives, Retired
  Individuals
• They can further be categorized into
• Beginners
• Middle Level
• Final Level

7
Salary Earners

• Every month Salary is wealth accumulation
• Rule of Thumb Always hold 3 months salary in
  savings (job change/delay in payout)
• Beginners Be more aggressive (no or less
  liabilities, consistent income level)
• Mid career people Be Moderate ( more
  liabilities, commitments)
• HNIs A balance of Moderation and Aggressiveness
  ( More Money)

8
Self Employed/ Entrepreneurs/Traders

• Investment Own Funds/Borrowed Funds
• Average of Income Earned every month
• Insurance cover for business and personal needs
• Surplus funds on savings
• Funds for further investment in business
• Loan repayment

9
Professionals

• Average earnings every month
• Loans for setting up Professional Practice and
  its repayment
• Monthly commitments
• Surplus savings
• Fund for further investment
• Investment in Real Estate
• Sole proprietorship/ Firm/Company

10
Others Students, Housewives, Retired
Individuals etc

• Housewives and Retired individuals should choose
  investments that are safe, followed by returns
  and liquidity. Tax saving aspect of the
  investment is less important
• Students should invest in very safe securities
  that can also yield them high returns, liquidity
  and tax saving aspects can be given lesser
  importance

11
A way to plan

• A Plan is a Must!
• Where Am I Now?
• Net Worth (Assets Liabilities)
• Personal Budget
• Where Do I Want to Go?
• Goals and Objectives
• Major Purchase, Childrens Education, Retirement,
  Marriage, Vacation
• How Do I Get There?
• Recommendations and Implementation
• The Plan!

12
Categorizing Financial Planning

• Tax Planning
• Insurance Planning
• Retirement Planning
• Estate Planning
• Investment Planning/Wealth Management

13
Tax Planning
14
(No Transcript)
15
Tax Saving Sections
Section Quick Description Limit
80 CCC Pension Products Maximum Rs 1 lakh deduction for 80 C, CCC and 80 CCD put together
80 CCD C. Govt Employees Pension scheme Maximum Rs 1 lakh deduction for 80 C, CCC and 80 CCD put together
80D Premium Paid on Medical Insurance for Family and Parents Deduction between Rs 15,000-20,000, additional deduction of 15,000 for parents and Rs, 20,000 if they senior citizens
80 DD Maintenance and medical treatment of disabled dependent Deduction upto Rs 1 lakh
80 DDB Treatment of Certain disease or ailment Deduction upto Rs.60,000
80U Physically Disabled Assessee Deduction upto Rs 1 lakh
16
Tax Saving Sections
Section Quick Description Limit
80G Donation to certain charitable fund, institutions etc 50 to 100 of donation made subject to a max of 10of gross annual income
80 GGA Donations for scientific research or rural development 100 deduction allowed to donations made to scientific research Sec 80GGC
80 GGC Donation to Political Parties Deduction upto Rs 60,000
80 E Interest Payable on Educational loan No limit for deduction
80 EE Interest payable on housing loan Additional deduction up to Rs 1 lakh
80 GG For paying rent in case of no HRA Deduction upto Rs,24,000
80 CCG RGESS Deduction upto Rs 25,000 (50 of amount invested)
80TTA Interested received in Saving Bank Account Deduction upto Rs 10,000
17
Invest in Equity Scheme and Save Tax

• 80CCG Investment under any Equity Saving Scheme
• Eligibility Individual
• Acquires listed equity shares/ units in
  accordance with the central government notified
  Scheme i.e Rajiv Gandhi Equity Savings Scheme,
• maximum deduction 50 of amount invested or Rs
  25000/- whichever is less.

18
Insurance and Health Planning

• Our risks include
• Our Lives
• Medical Contingencies
• Assets
• Insurance Planning the 1st Step
• Opting for adequate life insurance cover is
  essential
• Insurance requirement to be reviewed every 2
  years
• Insurance secures our
• Future
• Finances
• Loved Ones

19
Types of Life Insurance Policy

• Term Insurance
• Whole Life Policy
• Endowment Policy
• Money Back Policies
• Annuities and Pension
• Unit Linked Insurance Plan
• Postal Life Insurance
• Riders Comprehensive Coverage

20
Postal Life Insurance (PLI)

• Covers employees of
• Central and State Governments,
• Central and State Public Sector Undertakings,
• Universities,
• Government aided Educational institutions,
• Nationalized Banks,
• Local bodies etc.
• Officers and staff of the Defence services and
  Para-Military forces  
• Upper limit Rs 10 lacs all schemes put together
• Offers Single as well as Group Insurance
• The policy can be assigned to Financial
  Institutions for taking loan.
• Issue of Duplicate Policy Bond in case of the
  original Policy Bond is lost
• Intra conversion of policies allowed

21
Postal Life Insurance (PLI)

• PLI offers 7 (Seven) types of plans
• Whole Life Assurance  (SURAKSHA)
• Convertible Whole Life Assurance (SUVIDHA)
• Endowment Assurance  (SANTOSH)
• Anticipated Endowment Assurance  (SUMANGAL)
• Joint Life Assurance  (YUGAL SURAKSHA)
• Scheme for Physically handicapped persons
• Children Policy

22
Rural Postal Life Insurance (RPLI)

• RPLI offers following types of plans
• Whole Life Assurance ( GRAMA SURAKSHA)
• Convertible Whole Life Assurance (GRAMA SUVIDHA)
• Endowment Assurance ( GRAMA SANTOSH)
• Anticipated Endowment Assurance  (GRAMA SUMANGAL)
• GRAM PRIYA
• Scheme for Physically handicapped persons
• Min Sum Assured Rs.10,000 Max Sum Assured
  Rs.3,00,000/-
• Max age limit of entry is 55 years in case of
  Whole Life and Endowment Assurance while it is 45
  years otherwise.
• All the schemes have compulsory medical
  examination.
• For the non-medical policies, the maximum limit
  of Sum Assured is Rs.25,000/-, and maximum age is
  35 years.
• Non-standard age proof for Rural PLI policies,
  the maximum age limit is 45 years

23
Points on PLI

• Salaried professionals in Private Sector are not
  eligible but they can have RPLI policies subject
  to fulfilling other conditions.
• If one spouse is working in a Government
  Organization but the other is not, there is
  'Yugal Suraksha' scheme under which both can
  jointly get a policy
•  If one quits the Government service, one can
  continue by making payment at any one of the 1,
  55,000 post offices throughout the country
• If the premia are not paid for 6 months in case
  policy is in currency for 3 years (or) 12 months
  in case policy is more than 3 years old, then the
  policy becomes void.
• No Home Loan available
•  Revival shall not be allowed on more than two
  occasions during the entire term of the policy.
• One forgets to pay ones premium in a month, then
  one can pay the premium in the subsequent month,
  by paying a minimum fine of Re. 1/- per hundred
  of sum assured.
• Surrender value depends on the surrender factor
  and type and term of policy

24
Who can become Insurance Brokers?

• Anyone
• Professional opportunity for Chartered
  Accountants
• CAs can also take up this role given their
  understanding of the benefits of the insurance
  and client base and interaction
• Chartered Accountants advice is much valued upon

25
Retirement Planning

• Allocation of finances for Retirement
• No Government sponsored retirement plan
• Nuclear Families
• Unforeseen Medical expenses
• Estate Planning
• The Flexibility to Deal with Changes
• Systematic investment every month is a way to a
  tension free healthy retirement.

26
Retirement Planning - Steps

• Decide of age for retirement
• Annual income need for retirement years
• Current market value of all the savings and
  investments
• Determine a realistic annualized rate of return
• Consider company pension plan if any
• Now compute the value required on retirement

27
Retirement Investment Options

• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• Employees Provident Fund (EPF)
• Mutual Fund Products
• Insurance Products
• New Pension Schemes
• Reverse Mortgage

28
Traditional Retirement Insurance Schemes

1. Bajaj Allianz Suvarna Vishranti
2. ING Vysya ING New Best Years
3. ICICI Pru ICICI Pru Forever Life
4. HDFC Life Classic Pension Plan
5. Metlife Met Pension-Par
6. Kotak Life Retirement Income Plan
7. SBI Life Lifelong Pension Plus (NP)

29
Traditional Retirement Insurance Scheme

• Tata AIG Life Nirvana
• Aviva Pension Builder
• Sahara Life Sahara Amar Jeevan
• Bharti Axa Wonder Years Retirement Plan
• Future Generali Pension Plus
• Aegon Religare Pension Plan
• IDBI Federal Retiresurance Guaranteed (NP)
• Birla Sunlife Secure 58 Plan (NP)

30
Estate Planning

• Accumulating and Disposing of an estate to
  maximize the goals of the estate owner.
• Distribute wealth to a certain beneficiary or
  beneficiaries to whomever the owner wishes.
• Important to take the help of an attorney
  experienced in estate law

31
Estate Planning Objectives

• Asset transfer to beneficiaries
• Tax- effective transfer
• Planning in case of disabilities
• Time of distribution can be pre-decided
• Business succession
• Selection of Trustee or guardian or the executor

32
Steps and Tools in Estate Planning

• Steps
• Listing of assets and liabilities
• Open family discussion on selecting the guardian
• Update the current beneficiaries like life
  insurance
• Decide upon the distribution of the assets on
  death
• Funeral arrangements with spouse and family
• Assistance of an estate planning authority
• Tools
• Life Insurance
• Will
• Trust

33
Documentation

• Power of Attorney
• Wills
• Title Deed
• Trust Deed
• Partition Deed
• Gift Deed
• Insurance Papers

34
Wealth Management

• Elements of Wealth Management
• Asset Allocation

35
Investment and Wealth Planning

• It is all about weaving an investment net with
• Equity
• Fixed Income Deposits
• Post Office Schemes
• Gold
• Commodities
• Currency

36
Investment and Wealth Planning

• Derivatives
• Mutual Funds
• Exchange Traded Funds
• Real Estate
• Alternative Investment
• Investment Options for Non-Resident Indians

37
The Right Asset Mix

• Asset mix is the balance between stocks, bonds
  and cash, returns and risk level monitor
• Stocks - greater growth greater volatility
• Gold the bumper crop
• Mutual Funds the fund equalizer
• EFTs the norm
• Real Estate the cash cow

38
Life Stage and Right Asset Mix
39
Portfolio Management A Balance

• Containing all the asset classes in well balanced
  proportion.
• Example of well balanced portfolio.
• Equity 30
• Debt 30
• Gold 10
• Real Estate 30
• Find the best that suits you!

40
Asset Allocation - Equity

• Comprises of Shares Stocks
• Variety Blue Chip, Growth Stocks, Income
  Stocks, Cyclical Stocks, Defensive Stocks,
  Speculative stocks
• Advantage Greater returns, diversification,
  liquidity, information, tax benefits,
  appreciation, dividends, pledge, voting
• Regulator BSE, NSE,
• Markets Primary Secondary, Online Trading
• Investors Retail Institutional Investors, Non
  Institutional Investors, Qualified Institutional
  Buyers

41
Asset Allocation Gold

• India is the largest market for gold in the world
• Total consumer demand in India stood at US 44920
  million for 12 months ended Q1 2012
• International Currency
• Why invest in Gold??
• Diversification
• Low Liquidity Risk
• Hedge against Inflation
• Good Returns
• Low Credit Risk
• Safe Haven Investment

42
Asset Allocation Gold

• Avenues of Investment
• Jewellery
• Gold Coins
• Gold Bars
• ETF
• Global Mutual Fund
• Gold Fund of Fund
• Gold Derivatives (Futures) through MCX
• E-Gold
• Gold Accumulation Schemes/Savings for Gold Scheme
• Gold Deposit Scheme

43
Asset Allocation Fixed Income

• Types Government Securities, Public Sector
  Bonds, Private Sector Bonds
• Varieties Government Guaranteed Bonds, Zero
  Coupon Bonds, Treasury Bills, STRIPS, PSU Bonds,
  Commercial Paper, Debentures, Floating Rate
  Bonds, Inter Corporate Deposits, Certificate of
  Deposits
• Status of Holding Investors are Creditors to
  the Issuer
• Market Debt Market (WDM, RDM, G-secs)
• Types of Trade Outright Sale or Purchase, Repo
  Trade
• Regulator - RBI

44
Money Market Instruments

• Certificate of Deposit (CD)
• Commercial Paper (C.P)
• Inter Bank Participation Certificates (IBPC)
• Inter Bank term Money
• Treasury Bills
• Bill Rediscounting
• Call/Notice/Term Money

45
Commercial Papers

• Are short term borrowings by Corporates, FIs,
  Primary Dealers (PDs) from Money Market
• CP when issued in physical form are negotiable by
  endorsement and delivery
• Issued subject to min 5 lacs and in multiples of
  5 lacs thereafter
• Maturity 15 days to 1 year
• Unsecured and backed by the credit of the issuing
  company
• Any private or public sector companies willing to
  raise money through the CP market has to meet the
  following requirements

46
Private Banking

• Classification of bank deposits
• Savings Bank Account
• Current Deposit Account
• Fixed Deposit Account
• Recurring Deposit Account
• Fixed Deposit interest rates in India vary
  anywhere between 7.00 to 9.25
• Monitoring maturity dates
• Policy Changes by RBI

47
Asset Allocation Post Office Schemes

• Post Office Savings Account
• Post Office Recurring Deposit Account
• Post Office Monthly Income Accounts
• National Savings Certificate (VIII Issue)
• Kisan Vikas Patra
• Senior Citizen Saving Scheme (SCSS)
• Public Provident Fund Scheme
• Deposit Scheme for Retiring Government Employees
• Deposit Scheme for Retiring Employees of Public
  Sector Companies

48
PPF Public Provident Fund

• Minimum investment per financial year in PPF is
  Rs 500/- and w.e.f 1.12.2011 the maximum limit
  has been raised to Rs 1 lakh
• Not more than one PPF account in ones name
• PPF a/c can be extended for any number of times
  after the expiry of its tenure of 15 years.  
• The extensions will be for the block of 5 years.
• Interest rate in PPF announced every year in
  April.
• Nomination facility is available in PPF
• PPF has 15 years lock-in but you can get a loan
  and also opt for premature withdrawal after a
  certain period of time.

49
PPF Public Provident Fund

• No HUF or association of person is allowed to
  open PPF a/c.
• Non Resident Indian (NRI) cannot open a new
  Public provident fund account in India.
• The PPF scheme is operated through Post Office
  and Nationalized banks.
• Pvt Banks like ICICI bank offers this account.
• Deposits are exempt from wealth tax.
• The balance amount in PPF account is not subject
  to attachment under any order or decree of court
  in respect of any debt or liability,

50
Asset Allocation - Commodities

• Allow a portfolio to improve overall return at
  the same level of risk
• Who should invest? Any investor who wants to take
  advantage of price movements
• A kicker (side card) in the portfolio

51
Asset Allocation - Commodities

• Commodity market in India clocks a daily average
  Turnover of Rs 120 150 billion (Rs 12,000
  15,000 crores
• Forward Markets Commission Regulates commodity
  trading
• Demand and Supply factor and Inventory drive the
  commodity market

52
Asset Allocation - Commodities

• Major Categories of Commodities Traded
• Industrial Metals
• Precious Metals Bullion
• Agricultural Commodities
• Energy Commodities
• Commodity Spot Market
• Offers effective method of spot price discovery
• Processors, end users. exporters, corporate
  procure agri produce from here
• Helps in Futures exchange
• Promotes grading and standardization in
  agricultural produce

53
Asset Allocation - Commodities

• Commodities are traded in
• National Spot Exchange (NSEL)
• NCDEX Spot Exchange (NSPOT)
• Commodities Derivative Market
• A derivative instrument whose value is derived
  from the underlying commodity
• Example an investor can invest directly in a
  steel derivative rather than investing in the
  shares of Tata Steel

54
Asset Allocation - Commodities

• Where do I need to go to trade in Commodity
  Futures?
• National Commodity and Derivative Exchange
  (NCDEX)
• Multi Commodity Exchange of India Ltd (MCX)
• National Multi Commodity Exchange of India Ltd
  (NMCE)
• ACE Derivatices and Commodity Exchange (ACE)
• Indian Commodity Exchange Limited (ICEX)

55
Asset Allocation - Commodities

• Major categories of commodities one can trade
• Vegetable Oil Seeds, Oils and Meals
• Pulses
• Spices
• Metals
• Energy products
• Vegetables
• Fibres and Manufactures- Cotton
• Other Gaurseed, Guar, Gum and Sugar

56
Asset Allocation Currency

• While trade in international, currencies are
  national
• Exchange rate is affected by the suppy and demand
  for the countrys currency in the international
  forex market
• Trading in Currency Futures allowed on 3
  exchanges
• Multi Commodity Exchange Stock Exchange
  (MCX-SX)
• National Stock Exchange (NSE)
• United Stock Exchange (USE)

57
Asset Allocation Currency

• Currency Options are
• contract
• that grant the buyer
• of the option the right and
• not the obligation to,
• to buy or sell underlying currency
• at a specified exchange rate
• during a specified period of time
• USD-INR Option
• European Call Put Options

58
Asset Allocation Derivatives

• Financial contracts which derive their value from
  a spot price called the underlying
• Derivative Instruments traded are Futures and
  Options
• Derivative Exchange/Segment function as a Self
  Regulatory Organization and SEBI Acts as the
  oversight regulator
• Futures contracts, Index Options, Stock options,
  Stock Futures, Mini Derivative contract on Index,
  Long tenure Index Option contracts, Volatility
  Index, Bond Index and Exchange traded Currency
  Derivatives are permitted by SEBI

59
Asset Allocation Mutual Funds

• Equity Linked Savings Scheme
• Arbitrage Funds
• Dynamic Funds
• Fixed Maturity Plans
• International Mutual Funds
• Monthly Income Plans
• Multi Cap Funds
• Quant Funds

60
Asset Allocation Real Estate

• Guidance on Purchase of Property
• Planning and Budgeting
• Research
• Home Loan
• Safety points in the Home Agreement
• Home Insurance
• Real Estate Investment Includes
• Agricultural Land
• Farm Houses
• Urban Land
• House Property
• Commercial Property

61
Asset Allocation Real Estate

• Real Estate Investment Options in India
• Investment in Real Estate Stocks
• Investment in Property

62
Unique characteristics of Real Estate

• Durability
• Heterogeneous
• High transaction costs
• Long time delays
• Both an investment good and consumption good
• Immobility

63
Home Buying Tips from Start to Finish

• Identifying Your Needs
• Independent House or Apartment
• Budget
• Number of rooms and bathrooms
• Approximate Area
• Proximity to work place, school etc
• Parking availability
• Water supply, power back up etc
• Furnished/unfurnished
• Connectivity
• Vicinity to market
• Special amenities such as club house, pools or
  spas.
• Available utilities such as cable or DSL,
  satellite.
• Sewer, cesspool or septic connections

64
Home Buying Tips from Start to Finish

• Finance
• Own funds
• Loan from Banks/HFCs
• Funds from your employer
• Loan against assets
• Provident Fund Loan
• Scouting for property
• Brokers
• Newspapers
• Websites
• Word of mouth

65
Home Buying Tips from Start to Finish

• Cost Estimate
• Purchase Price
• Stamp duty
• Registration charges
• Khata transfer charges
• Utility Deposits like Water connection deposit,
  Electricity connection deposit, etc.
• Other incidental expenses
• Talk to Banks/HFCs
• Loan Amount
• Loan Eligibility
• Terms and conditions of loan
• Interest Rate
• Borrowing costs like processing fee, commitment
  charges, prepayment penalty, etc.
• Loan tenures and EMI
• Time taken for sanctioning the loan
• Time taken for disbursing the loan
• Freebies and corporate offers

66
Home Buying Tips from Start to Finish

• Short listing Properties
• Site or property visit
• Speaking to the neighbors or occupants
• Clear marketable titles
• Credibility of the seller
• Quality of the construction
• Legal verification
• Monthly payouts like maintenance charges,
  society charges, etc.
• Municipal taxes or property taxes
• Finalizing the Deal
• Negotiate on price and timing of payments (
  upfront / installments)
• Press for price negotiation if there are any
  modifications /repairs /painting to be done
• Do not forget to collect all original property
  documents from the seller
• Before paying the seller, make sure he has
  fulfilled all his commitments and promises
• If the transaction involves a broker, withhold
  some amount of money until he delivers as promised

67
Home Buying Tips from Start to Finish

• Documents required when the property is purchased
  from a builder
• An allotment letter from the developer on paying
  the booking amount
• Agreement for Sale
• Documents required to be checked if you are
  buying a resale flat
• For flats being purchased in a registered
  co-operative society
• For flats being purchased in an unregistered
  society or flats originally allotted by a
  Development Authority
• Check the credentials of your new property
• Invitation of Claims
• Search at the Sub-Registrar's Office
• Enquiry at Municipal Corporation
• Enquiry with the Ward office
• If the owner of the property is deceased

68
Home Buying Tips from Start to Finish

• Property Documents to be collected from the
  Seller
• In case of a direct purchase from a builder
• 1. Copy of Agreement for Sale.
• Copy of Registration Receipt.
• Copies of receipts of payment already made.
• NOC from builders.
• In case of direct allotment in a Co-operative
  Housing Society
• 1. Allotment letter.
• 2. Share certificate.
• 3. Society registration certificate.
• 4. Copy of sale/lease deed in favour of the
  society.
• 5. NOC from society

69
Home Buying Tips from Start to Finish

• In case of direct allotment in a Co-operative
  Housing Society by Public Agency
• 1. Allotment letter, Share certificate, Society
  Registration certificate.
• 2. Lease Agreement.
• 3. Public agency's approved list of members.
• 4. NOC from Public Agency in favour of bank/HFC
• 5. NOC from society.
• In case of Public Agency's allotment to
  individuals
• Allotment letter from Public Agency.
• Tripartite Agreement between the borrower,
  Bank/HFC and the Public Agency in the prescribed
  format.
• In case of resale
• 1. Copy of all previous vendors'
  registered documents along with copy of your
  purchase agreement duly stamped and registered
  and the registration receipt wherever applicable.
  

70
Home Buying Tips from Start to Finish

• Purchase of rentable properties
• Location
• Numbers
• High home prices
• Low maintenance buildings
• Ask to see the rental history
• Owner/Manager out of the country

71
Home Buying Tips from Start to Finish

• A Buyers/Tenants Checklist
• Check if Use of Property would amount to Change
  of Land Use
• Check if Non Residential Activity in Residential
  Premises Is Permissible
• Check if the Municipal Guidelines allow Mixed Use
  
• Certain Professional Activity permissible in
  Residential Areas
• Check if the Building adheres to the Sanctioned
  Plan

72
List of DocumentsSale and Purchase of
House/Building

1. Agreement for Sale of a House
2. Agreement for Sale of Mortgaged House
3. Agreement To Lease Of Land For Construction Of
   House
4. Agreement for sale of a house when purchase money
   is to be paid in installments
5. Deed of Conveyance of freehold property
6. Deed of Conveyance where consideration is to be
   paid in installments
7. Deed of Conveyance of Reversion
8. Deed of Conveyance Subject to Right of Way
9. Deed of Conveyance of an Interest in Property

73
List of DocumentsSale and Purchase of
House/Building

1. Deed of Conveyance of a Part of the Building
2. Sale Deed of Land with Building
3. Deed in respect of Leasehold Land
4. Deed of a House
5. Sale deed by Liquidator in case of Voluntary
   winding up of a Company
6. Sale by Official Liquidator of the company
7. Sale of House by an Executor Appointed under Will
8. Sale of Property to various Purchasers as
   Tenants in Commmon
9. Sale of Property to various Purchasers in
   Different Portions
10. Statement of Transfer of Immovable Property for
    Obtaining no-objection certificate from
    Appropriate Authority, Income Tax Department Form
    No 37-I
11. Sale deed

74
List of DocumentsSale and Purchase of Apartment

1. Agreement for Sale of Apartment
2. Agreement for sale of freehold property
3. Agreement for sale of leasehold property
4. Agreement for business centre
5. Deed of Conveyance subject to mortgage
6. Agreement for sale for Purchase of a Plot for
   Constructing Flats

75
List of DocumentsSale and Purchase of Apartment

1. Development Agreements by Landlords in favour of
   a Builder
2. Deed of Conveyance of a property exclusive of a
   flat or floor in the building
3. Agreement to be entered between a Promoter and
   Purchaser of a Flat
4. Flat ownership Agreement
5. Co-ownership Agreement
6. Co Sign Agreement

76
List of DocumentsMortgage

1. Deed of Conveyance by Mortgage
2. Deed of Conveyance in favour of Mortgage
3. Mortgage deed

77
List of DocumentsGifts

1. Gift Deed
2. Gift Of Land Focr Building A Temple
3. Gift By Father To His Son Of Land With Mortgage
4. Deed Of Gift Of Immovable Property
5. Gift Of A House To The Daughter
6. Gift Of Property For Specified Purpose
7. Gift Of Immovable Property
8. Gift Of A Piece Of Land
9. Gift Of Property For Hospital
10. Gift Of Property To Wife

78
List of DocumentsLease

1. Lease deed
2. Lease Deed Of Land
3. Lease Of Agricultural Land
4. Lease Of A Building For Office
5. Deed Of Surrender Of Lease
6. Deed Of Renewal Of Lease
7. Agreement For Building Lease
8. Perpetual Lease Of A Land
9. Lease Disguised As Licence
10. Sublease Agreement

79
List of DocumentsCooperative Society

1. Deed of transfer in a co-operative society
2. Surrender deed in a Co-operative housing society
3. Agreement for sale of apartment in Co-op. Society

80
List of DocumentsTenancy

1. Tenancy Agreement/Rental Agreement
2. Tenancy In The Form Of Letter By The Person
   Proposing To Take Premises On Rent

81
List of DocumentsOther Agreements

1. Agreement for Transfer of Development Rights
2. Package Deal Agreement for Sale of Flats in Bulk
   to a Purchaser
3. Leave and licence agreement
4. Relinquishment Deed
5. Family Arrangement
6. Deed Of Partition Between Co-Owners
7. Deed Of Partition Between Members Of A Joint
   Hindu Family
8. General Power of Attorney
9. Special Power of Attorney to execute Sale Deed
10. Parking Agreement

82
List of Applicable Laws in Real Estate

• CENTRAL LEGISLATIONS
• The Indian Contract Act, 1872
• The Majority Act, 1875
• The Indian Evidence Act, 1872
• The Transfer of Property Act, 1882
• The Easement Act, 1882
• The limitation Act, 1963
• The Indian Stamp Act, 1899
• The Registration Act, 1908
• The Specific Relief Act, 1963

83
List of Applicable Laws in Real Estate

1. The Land Acquisition Act, 1894
2. The Consumer Protection Act, 1986
3. The Arbitration Conciliation Act, 1996
4. The Income Tax Act, 1961
5. The Wealth Tax Act, 1957
6. The Co-operative Societies Act, 1912
7. The Multi-State Co-operative Societies Act, 1912
8. Finance Act in relation to Service Tax
9. The Foreign Exchange Management Act, 1999/
   Foreign Direct Investment Guidelines (FDI)
10. SEBI norms for Real Estate Mutual Funds
11. Competition Act, 2002

84
List of Applicable Laws in Real Estate

1. The Land Acquisition, rehabilitation and
   Resettlement Bill, 2011
2. Special Economic Zone Act, 2005
3. The Public Premises( Eviction of Unauthorised
   Occupants) Act, 1971
4. The Warehousing ( Development and Regulation)
   Act, 2007
5. Indian Succession Act 1925

85
Investment Planning Private Equity

• Private Equity
• Venture Capital
• Replacement Capital
• Buyout
• Special Situation
• Risk of investment through PE
• Role of Stock Market

86
Investment Planning Alternate Investment

• Rare Coins and Paper Currency
• Stamp Collection
• Art
• Antiquities
• Wine

87
Investment Options for NRIs

• Deposit Schemes
• Investments in Securities and Debt
• Investment in Mutual Funds
• Investment in Immovable Assets
• Investment in Tax saving options

88
FINANCIAL MARKET

• A financial market is a market in which people
  and entities can trade financial securities,
  commodities, and other fungible items of value at
  low transaction costs and at prices that reflect
  supply and demand.

89
TYPES OF FINANCIAL MARKETS

• Capital Market (Both Stock and Bond Markets)
• Commodity Market
• Derivative Market
• Future Market
• Forex Market
• Money Market
• Insurance Market

90
(No Transcript)
91
Types of Investor

• Wealth Creator
• Speculator
• Hedger
• Arbitrageur
• Trader

92
Indias Growth Story

• India Most favored destination for overseas
  companies
• 1 trillion economy Taken 60 yrs
• Next one trillion will take only 6 years
• Provides tremendous prosperity amongst Indians
• Urgent need for professionals to capture this
  rapid growth
• Huge opportunity for CAs in this scenario

93
Jargon Of Equity Market

• Security
• Bond
• Stock
• 1) Common stocks
• 2) Preferred stocks
• Share
• Mutual funds.
• Par value vs. Market value
• BULLISH vs. BEARISH

94
Functioning of Stock Market

• Stock exchanges
• Brokers
• Registrars
• Depositories and their participants
• Securities and Exchange Board of India (SEBI)
• Financial Regulators
• SEBI
• RBI
• Ministry of finance

95
Importance of Capital Market

• Major source of finance for trade and industry in
  India
• Important external source for meeting funding
  requirements
• Facilitates Transfer of Capital
• Provides liquidity
• Transaction price provides a measure of the value
  of the asset

96
Role of Capital Markets

• Mobilization of Savings acceleration of Capital
  Formation
• Promotion of Industrial Growth
• Raising of long term Capital
• Ready Continuous Markets
• Proper Channelisation of Funds
• Provision of a variety of Services

97
Functions of Capital Market

• Disseminate information efficiently
• Quick valuation of financial instruments
• Provide insurance against market risk or price
  risk
• Enable wider participation
• Provide operational efficiency through
• - simplified transaction procedure
• - lowering settlement timings and
• - lowering transaction costs

98
Capital Market Reforms

• Screen based Trading through NSE
• Capital adequacy norms stipulated
• Dematerialization of Shares - risks of fraudulent
  paper eliminated
• Entry of Foreign Investors
• Investor awareness programs
• Rolling settlements
• Inter-action between banking and exchanges

99
Reforms Post 2000

• Corporatisation of exchange memberships
• Banning of Badla / ALBM
• Introduction of Derivative products - Index /
  Stock Futures Options
• Reforms/Changes in the margining system
• STP - electronic contracts
• Margin Lending
• Securities Lending

100
Role in Capital Market

• Equity Analyst
• Media Tracker
• As an internal control specialist
• As an taxation expert
• As an international Accounting Standards
  Convergence specialist
• As an internal auditor

101
Role in Capital Market

• Investment advisor
• Profiling and Positioning of the business
• Formulating Financial Strategy and efficient
  capital structure
• Due Diligence
• Portfolio Structuring and management
• Financial Services Marketing

102
Role in Capital Market

• Market Analysis
• Auditor
• Developing capital market communications
• Risk management
• Investment Banker
• Fund Manager
• Equity Trader
• Research Analyst
• Valuation

103
Internal Audit of Market Intermediaries

• Investment bankers
• Underwriters
• Stock exchanges
• Registrars
• Depositories
• Custodians
• Portfolio managers
• Mutual funds
• Primary Dealers / Satellite Dealers
• Self regulatory organizations

104
Documentation pertaining to Financial Markets

• Risk Disclosure Documents
• Contract Notes
• Internal Audit Report

105
Arbitration in Financial Markets

• Arbitration - Alternative dispute resolution
  mechanism provided by stock exchange
• Resolving disputes between trading members and
  their clients in respect of trades done on the
  exchange
• Every exchange - Panel of Arbitrators
• Option to Choose Arbitrator Investors/Broker
• In case of disagreement - Exchange shall decide
  upon the name of arbitrators.

106
Lessons on Wise Investing

• Invest only in Fundamentally Strong Companies
• Read Carefully
• Follow Life Cycle Investing
• Invest in IPO
• Learn to sell
• Deal with Registered Intermediaries
• Let not greed make you an easy prey
• Do not Over-depend on Comfort factors IPO
  Grading
• Avoid blind decisions based on audited accounts

107
Lessons on Wise Investing

• Cheap shares are not necessarily worth buying
• Corporate Governance Awards still have a
  thought
• Be honest
• Invest and do not speculate
• Dont leverage on the market
• Beware of
• Media
• Advertisements
• Fixed guaranteed return schemes
• Grey market premium
• Sectoral Frenzies
• Companies where promoters issues shares and
  warrants to themselves

108
Lessons on Wise Investing

• Keep surplus funds in Fixed Deposits for longer
  duration especially when the interest rates are
  likely to fall in future
• FDs for smaller denominations come handy for
  immediate cash requirement
• Auto sweeps are a great way for fund availability
  cum savings

109
Investor Awareness - Investor

• Investor One who commits money to investment
  products with the expectation of financial return
• Wealth Creator
• Speculator
• Hedger
• Arbitrageur
• Trader

110
Basic Awareness

• Purpose of investment
• Investment options
• Investment objectives
• Care before making investment
• Market watch after investing
• Exit at right time

111
Need for Awareness

• To Raise Capital
• To Increase Market Exposure
• To Increase Valuation
• To Increase Opportunity for Financing
• To Increase Opportunity for Strategic
  Acquisitions
• Share Liquidity

112
Types of Risks

• Market Risk
• Industry Risk
• Regulatory Risk
• Business Risk

113

• Portfolio Managers/Wealth Managers / Investment
  Advisors (IA) Regulation

114
Who can become Portfolio Managers?

• Chartered Accountants
• Certified Financial Planners
• Chartered Financial Analyst
• Management Graduates with specialization in
  Finance
• Professional Opportunity for Chartered
  Accountants
• Chartered accountants are best suited for this
  role given their financial acumen and knowledge
  in tax and laws

115
Investment Advisors Regulation in India

• On January 21, 2013 SEBI issued The (Investment
  Advisors) Regulation 2013
• These regulations shall come into force on the
  90th day from the date of notification i.e April
  20, 2013.
• Regulating the activity of Investment Advice
• Investment Advice Advice on Investment Products
  and Financial Planning
• Regulation exempts number of intermediaries and
  intermediation activities from Registration
• Consultation on hedging and cash management
  services likely to be covered

116
Investment Advisors (IA) Registration

• Registration with SEBI as Investment Advisor (IA)
• Subject to fulfillment of certain basic Criteria
• Minimum educational qualification
• Affiliation with National Institute of Securities
  Market

117
Regulation of Investment Advisors

• Regulation imposes responsibility on IAs
• Fiduciary responsibility towards client
• Record keeping
• Suitability Appropriateness
• Code of Conduct
• Disclosures of conflict of interests
• Segregation of Activities other than investment
  advisory
• Payment of Commission
• Stock Brokers and Merchant bankers (exempted from
  IA registration)
• Are required to comply with provisions relating
  to
• Manner in which clients are to be boarded
• Investment advice is to be rendered

118
Exemptions

• Any member of
• ICAI, ICSI, ICWAI,
• Actuarial Society of India or
• any other professional body as may be specified
  by the Board, who provides investment advice to
  their clients, incidental to his professional
  service.
• Any stock broker or sub-broker registered under
  SEBI (Stock Broker and Sub-Broker) Regulations,
  1992,
• Portfolio manager registered under SEBI
  (Portfolio Managers) Regulations, 1993 or
• Merchant banker registered under SEBI (Merchant
  Bankers) Regulations, 1992, who provides any
  investment advice to its clients incidental to
  their primary activity.

119
Exemptions

• Any fund manager, by whatever name called of a
  mutual fund, alternative investment fund or any
  other intermediary or entity registered with the
  Board
• Any person who provides investment advice
  exclusively to clients based out of India. Any
  representative and partner of an investment
  adviser which is registered under these
  regulations
• Any other person as may be specified by the
  Board.

120
Registration Fees

• Every applicant shall pay non-refundable
  application fees of five thousand rupees (Rs.
  5,000) along with the application for grant or
  renewal of certificate of registration.
• Applicants which are individuals and firms shall
  pay a sum of ten thousand rupees (Rs. 10,000) as
  registration/ renewal fee at the time of grant or
  renewal of certificate by the Board.
• A body corporate shall pay a sum of one lakh
  rupees (Rs. 1,00,000) as registration/ renewal
  fee
• at the time of grant or renewal of certificate by
  the Board.
• The above fees shall be paid by the applicant
  within fifteen days (15 days) from the date of
  receipt of intimation from the Board by a demand
  draft (DD) in favor of 'Securities and Exchange
  Board of India' payable at Mumbai or at
  respective regional or local office.

121
Registration Procedure

• The Applicant for grant of registration as an
  Investment Adviser under SEBI (Investment
  Advisers) Regulations, 2013 should make an
  application to SEBI in Form A
• the applicant will receive a reply from SEBI
  within one month.

122
Capital requirement

• In Case of Body Corporates Net worth of not less
  than twenty five lakh rupees (Rs. 25, 00,000)
• Net Worth" means the aggregate value of paid up
  share capital plus free reserves (excluding
  reserves created out of revaluation) reduced by
  the aggregate value of accumulated losses,
  deferred expenditure not written off, including
  miscellaneous expenses not written off, and
  capital adequacy requirement for other services
  offered by the advisers in accordance with the
  applicable rules and regulations.
• In Case of Individuals / Partnership firms Net
  tangible assets of value not less than one lakh
  rupees (Rs. 1, 00,000)

123
What about existing investment advisers?

• Existing investment advisers shall comply with
  the capital adequacy requirement within one year
  from the date of commencement of these
  regulations.

124
Period of Validity

• Period of Validity of the Certificate is five
  years (5 years) from the date of issue.
• Renewal of Certificate Three months before the
  expiry of the period of validity of the
  certificate, the Investment adviser may, if he so
  desires, make an application in FORM-A for grant
  of renewal of certificate of registration. The
  renewal application also dealt in the same manner
  as if investment advisor is applying for the
  first time.

125

• Questions???

126

• Thank You!!!