Save yourself from the risk of working for a fake company.
Save yourself from being the victim of a dead company.
Save yourself from investing your money in a fraudulent company.
I’m sure, you wouldn’t want to find yourself in a situation where you worked very hard, dedicated your family time for work, sacrificed many weekends for promotions but it all went in vain!
Because one fine morning you show up at your workplace and the company has disappeared.
Worst, that your dues for all your hard work are pending.
How do you save yourself from such a situation?
How can you verify if the company you wish to associate your career with, is legitimate? Can a layman do that? Do you need to shell money for such investigations?
You don’t need to hire a detective for any of the above. The government has done the job for you! For free!
You can figure out adequate details about any company by yourself with just the name of the company!
*drumrolls for the hero*
‘ Ministry of Corporate Affairs (MCA) ‘
MCA administers Companies and Limited liability partnerships registered under Companies Act 2013 (& 1956) the Limited Liability Partnership Act, 2008 respectively.
MCA keeps details of every company that ever gets registered in India, in its database.
Coming to the point!
How can you check the details of ANY registered company?
Step 1 – Google searches for MCA or simply click on the link below.
Step 2 – Go to DATA & REPORTS >> Master Details
Step 3 – Click on COMPANY MASTER DATA >> View Company Master Data
Step 4 – Since most of us wouldn’t know the Company Identification Number (CIN), search for the company name. Make sure you type the correct company/LLP name (as is).
After hitting the search button, you will see the company name with its 21 alpha-numeric digit CIN code.
Copy and paste the CIN or simply click on the CIN, enter the captcha code, and hit ‘submit’.
There you go! Verify the company’s legitimacy and authenticity.
Details of the company, its directors, its registered office address, date of incorporation, capital details, status (active/inactive), assets undercharge (due to loans taken) will appear on your screen!
Now, if none of these appear or the company status says ‘inactive’ or a person is claiming to be a false director of the company, you would know!
You can save yourself from such fishy fraudsters!
You can share the details of your search by using the ‘print/export to excel’ option.
For your safety, always find employment in registered companies/start-ups or LLPs. So that your employer doesn’t disappear one day into thin air along with your salary and dues.
Always check company details before you say ‘yes to the offer letter or even before you apply.
Note- MCA does not cover sole proprietorship or partnership firms (not like LLP).
The Code of Wages, 2019 got an approval from the President of India on 8th August 2019
One section of it talks about capping the allowances at maximum of 50% of total compensation or salary. What would that mean to you as a private sector employee? How would it affect your savings and investments for the future?
I have explained in detail some of the possible effects of the wage revision in this article.
If you are a private sector employee, you’d be habituated to the luxurious facilities as a part of allowances provided by your employer. Post applicability of the Code, you might have to slash those habits.
The Code talks about putting a cap on the allowances that an employer can provide.
Before that if you don’t understand what an allowance is, here it is for you in simple words.
Allowance in the context of employment is – a regular sum of money paid by an employer to his employee for assistance in his job or for his lifestyle.
Some examples could be – travel allowance, house rent allowance, food allowance or entertainment allowance.
These allowances are provided to an employee in the form of coupons/ discounts/ reimbursements or as cash.
Private employers have always believed in the concept of providing their staff with better allowances. This helps them lure their human resource to stick around for a longer period.
The new compensation rules mandate an employer to cap allowances at 50% of the total salary.
Basic salary will be increased in proportion to the cut down of allowances.
You would think, how would it make a difference ? Will your salary still remain the same?
Um, yes salary will remain the same, but your take home salary will reduce.
How is that?
As the basic salary increases, the percentage of money transferred to gratuity and PF (which are calculated on the basis of basic salary) will increase.
Gratuity and PF get accumulated in a separate bank account and will be paid to the employee only after retirement/disability or after 5 years of service.
Resulting in lower take away salary. The in-hand salary of each month will be less.
Less in-hand salary means, lesser savings and lesser scope for investments in various avenues like the stock market/ gold/mutual funds.
So, who gets advantage from the new code? All private sector employees.
Increase in gratuity and PF means, increased retirement corpus.
Those who have no plans of retirement funds, are taken care by the new code.
But for those who understand and invest in the stock market it is partial disadvantage.
Return on investment in various other avenues is higher than just parking money in Provident Fund.
But, less than 2% of the population in India invests in the stock market and understands other revenue generating vehicles.
Thus, this is a logical move from the government to promote better pay-outs during retirement and promote financial security during their old age.
I hope you know this tax slab for financial year 2019-2020
You do not have a tax liability of you fall under any of the above criteria.
Please note, these tax limits are applicable for financial year 2019 -2020.
A new tax regime has been announced in Budget 2020. It is flexible in giving taxpayers an option to choose between the old tax limits and a newly framed tax slab. This option is available from FY 2020-2021.
The new tax regime is a topic of discussion for another day.
As of now, if you think you are escaping filing of income tax returns this year, wait!
There’s more! Read on.
You MUST file your Income Tax return, if you fulfil ANY of the following 3 conditions –
Have you deposited amount or aggregate of amounts exceeding Rs 1 crore in one or more current account during the previous year ?
Have you incurred expenditure of an amount or aggregate of amount exceeding Rs 2 lakhs for travel to foreign country for yourself or for any other person?
Have you incurred expenditure of amount or aggregate exceeding Rs 1 Lakh on consumption of electricity during the previous year?
If you fall under any of the above category and somehow your earning on paper is below the taxable limits, avoid trouble!
File your income tax returns before the due date. I’m sure, you do not want to invite a penalty or notice from the Income Tax department!
Now, let me come to the crux of this article.
Should you file an income tax return if your earnings are below the taxable limits? No. It is not mandatory.
So you may ask, why should I file my ITR if it is not mandatory for me?
The answer is, ITRs help you save yourself from uncertainties.
What? How is that?
I have listed a few situations for you in this article.
Situation 1.If in the future you want to turn your dream of having a house of your own into a reality, but are falling short of capital, what do you do?
You seek a bank’s help for a home loan.
The first thing, a bank will ask you, is to provide for a proof of income or a proof of constant money flow for the past 3 years.
Remember, banks wont risk a loan to a borrower without any income! What if the loan turns into a non-performing asset?
This proof of income, dear friend, is your income tax return!
Imagine situation 2. If you have a brilliant child and want to seek an education loan for his higher studies, the bank would want to check your repayment capacity.
As per the RBI guidelines, banks have been strictly instructed to collect Income Tax returns of borrowers.
Your salary slip or your bank credits will not serve as proof of income. Income tax return serves this purpose. It is considered much credible than salary slips.
Now, if you haven’t filed a ITR, your child might miss an opportunity in his life because of your negligence and ignorance.
3. Imagine you and your friend decide to start a business and be your own boss! Sounds amazing, right?
You work hard, you get more customers and then you decide to scale-up the level of business. Probably, add one more big machine to your factory or hire more employees!
To scale up, you need more capital.
You approach a bank. Your friend has been filing ITRs even though he had income less than Rs 2,50,000 during the past years. But because you have not been filing your ITRs for whatever reason, the bank denies a bigger amount of loan or a business loan.
What a disappointment!
4. For applying to government tenders, some institutions require ITRs of the applicant. Both, the applicant’s business ITR and his individual ITR would be assessed.
5. Say, 5 years from now, you manage to squeeze in your savings, luckily get a small inheritance of property from your ancestors and manage to buy a fancy car. That would be a dream for most of us!
But, if you come under the radar of IT department in future and they question you about the assets you own, would you have an explanation of your accumulated wealth?
If you had filed your ITRs regularly, even if it is below the taxable limit, you can justify the expenses made by you.
Situation number 6. Coming under the scanner of IT department is an uncertainty, but you will only add to the probability of it if you do not disclose your income.
The question is, why not? Why not file an ITR even if you are below the income tax slab of Rs. 2.5 lakhs/ 3 lakhs / 5 lakhs ?
Are you lazy or just choose to be ignorant? That’s a question you should ask yourself!
7. Filing an ITR is a sign of honesty and has its own advantages listed as above. So, why not?
You aren’t hiding your earnings, so why the hesitation of not filing an ITR?
8. More over, if you have taxes deducted at source by your employer, or tax deducted on interest income of your bank account, claim a refund from the income tax department! It is your right!
IT department is very prompt in refunding TDS. File your ITR, claim your refundable money, you deserve it.
Want to know how to file your ITR if you are below the taxable limit? Leave a comment below.
“The trouble with being in the rat race is that even if you win, you still are a rat.”
When I read this quote, it left jitters in my body. It was a moment of long pause. Countless number of frames passed my mind in seconds. A realisation that changed my perception about life, societal norms and how we involuntarily become puppets to its twines. And also how all this in aggregate decays our financial freedom.
By the end of this article, I’m sure you’ll feel the same too.
Let me tell you about it.
From the moment you are born, you are forced with a name and religious beliefs that your parents inherited.
You are thrown on a conveyor belt.
You are forced to go to school, go to college, study subjects that you don’t like at times.
You run to get good grades. You run on the conveyor belt to get a good salary.
You run to find a good mate before you run out of ‘eligible’ age.
You run again to make the ends meet.
You continuously want to upgrade your cars, your house, your gadgets without an end in sight! And before you know, you push the next generation on the same conveyor belt into the rat race!
You push yourself in believing, this is how life works! You feel miserable if you don’t meet societal expectations and timeline.
To get married before 26, to have kids before 30, to own a house by 40. Who made these rules anyway?
Let me break it to you today.
If you yield to the societal timeline and benchmarks, with a constant financial grind, without caring about your abilities to be unique and successful , you my friend, are already a part of this ruthless race!
Oh, you need more clarity to check if you are running this race?
Here you go.
Do you now agree that academics taught in school over 10 years can be learnt in less than 4 years?
Do you agree that you studied some subjects without learning practical application of it, even during your professional courses?
And not to forget, you cribbed about the Indian Education system but did nothing to escape it!
And then you grow up. You enter the adult-life.
With age and with earnings you reach the next lapse of the rat race, called the financial rat race!
Does it really matter if you earn a 6 figure fat paycheck but at the end of the year you have nothing to pay yourself ?
Nothing saved for yourself. Nothing for your retirement.
That’s how this journey of rat race ends. Everything for the race, nothing left for yourself.
You know, I feel pity for my clients who have lived running and racing very dedicatedly throughout this race.
All their life, they were busy paying for livelihood, mini vacations, temporary weekend entertainment and splurging on dopamine rush shopping/gadgets.
Despite having done great at their job, getting promoted, earning a 6 figure package and living with the best of amenities, they got caught in the race.
To earn more, they worked hard. To upgrade their life, they borrowed. To repay the debt, they worked more. Trapped.
They finally retired without much savings or adequate investments.
Imagine working during retirement. Imagine borrowing money or being financially dependent at that age when you want to be stress free. I’m sure that made you uncomfortable.
Do yourself a favour! Be your own superhero and save your world!
Fix that gap between earnings and savings.
I’ll tell you how.
Stick to Standard savings- Make it a rule. 20% of your income MUST go to your savings.
I’ve always told my clients, save first. Save before you spend. It leads to a slow disaster if you think, savings is a residual of your income after you have spent on your expenditures.
Pay yourself first! Always, always, always!
You should try a ‘Dopamine’ Detox- Dopamine is a temporary ‘feel good’ hormone released by your brain when you make that impulsive buy.
To stay in the race, we often get swayed and make wrong decisions. Build patterns around your life that’ll force your brain to accept hard decisions & discipline without Dopamine rush. Next time, if you do not have money budgeted for a party with your friends, say NO!
Don’t let your monkey brain over power you for small moments of pleasure.
Extra source of income-If you have found your Ikigai and you believe in it, monetize it. This way you will have more sources of income.
Put your money, where your mind is!
You will come across people who tell you to focus on one job, one source of income, without understanding your abilities. Don’t let those running the rat race convince you to embrace it yourself. They will not come to your rescue, if you start hating your life later.
Own your decisions, that way you’ll learn to be responsible.
What’s Ikigai? Well, google it 🙂
To make your life simple, here’s a diagrammatic representation of Ikigai.
One more way to escape the rat race, is to live a life of freedom. And freedom comes with money and wealth. Don’t you agree?
Invest for your health and for your financial freedom. Your goal should be to make money work for you by compounding it over a period.
A suggestion for you my friend, up-skill yourself. Even if the return on investment helps you to invest 100$ extra in a year, it’ll compound over time.
I would definitely recommend you to splurge. But do so within your acceptable budgets. Reward yourself for your financial discipline and self control. Gift yourself occasionally. Again, be money-wise.
Hammer this in your head. The ‘cost of cool’ is a heavy regret.
Watch this video about Rat Race from Youtube, that moved me and inspired me to write this article.
Hey! Look at your room, look at your home. Do you feel like you could own atleast ten things less around you which you don’t need?
Do you really need that jacket you bought impulsively at the sale the other day? While you wear it just twice a year or even less.
If you are a woman, ask yourself. Do you really need to splurge on those five lipstick shades that are minutely different ?
Are you feeling guilty? A little, maybe?
You could do perfectly fine even without these things. Right?
Ask yourself, why did you become hoarder of things over time without realising?
What if you had all that money in your bank account right now, that you spent impulsively on unnecessary things?
You could save it for your child’s education fund or plan for a break from work for atleast the next three months! Not just that, had you put that in stocks with adequate management, the same money would have grown 5x!
But you just traded that money for the things lying around you. Loss of opportunity and lost profits !
I am guilty to admit that I was a hoarder of jewellery, clothes, bags, shoes and gadgets in my early 20s. Which eventually became clutter because I hardly used them.
Shopping more gave a sense of pride and control. But without my knowledge, I was losing control over my finances.
Most people in their 20s believe that saving, budgeting and investing is for people in their 30s or people who want to ‘settle’ down.
Wake up buddy! Everyone needs money and money needs management!
Money stays only with those who respect it by planning and directing it.
Haven’t you read about Mike Tyson, the world famous boxing champion?
He had received over 300 million dollars over his career and about 30 million dollars for several fights!
That’s hell-lotta-money, right? Two more generations ahead could live a luxurious life!
He filed bankruptcy in 2003!
But as mismanagement and improper planning had it, he lost it all and got into a debt of 23 million dollars!
It is sad that most people ‘love’ being identified by the things they own.
“That man with the blue car or that woman with Gucci bag”
Objects have become central for personal identity.
Society measures success on the basis of the materials we own.
The so called success measures can be a fancy phone or a car (even though on EMIs) , a big apartment (even though mortgaged) or the dresses(bought on credit cards) you wear without any repetition.
Mostly, we tend to buy objects to seek validation from the people around us. To feel liked. Or at times, to enjoy others’ envy.
Along with the above science has proved that constant and impulsive buying gives our brain shots of dopamine. Dopamine is a temporary shot of ‘feel good’ hormone that plays a pivotal role in addiction and hoarding.
With every purchase, with addiction, dissatisfaction creeps up.
It’s just like drugs, after a point, the addict needs bigger shots of drugs to feel the kick.
Now imagine, instead of buying objects, we buy investments!
There! That’s the solution to all long term money problems!
“But hey, the investment can depreciate and I can lose my money!”
I totally agree! But see the flip side of the coin.
The probability of returns is definitely better on investments like gold or stocks than the probability of getting returns on a dead investment like that jacket.
And of course, higher risk brings higher returns, but needs better education and dedication.
Would you buy a phone just because a friend hyped it? No! You’d do a research yourself and read about it before buying it, correct?
Similarly, why would you buy stocks of a company just because your uncle told you to?
Will you be so careless to invest your hard-earned money on the basis of a non-financial expert’s advice?
Educate yourself about investment and tax saving avenues. The internet can give you the same information, what an MBA gets by paying in lakhs! Just be mindful and pick the right sources.
For managing your money, you don’t have to be an MBA or a CA graduate.
Have the dedication to park money in the right investments for a longer time.
Little investments with regularity and disciplines compounded over time make a huge difference.
Your daily spending habits determine your end goals.
Procrastinating your money planning will procrastinate your financial freedom and retirement.
You should try to achieve balance- a financial balance where you find stability and achieve debt elimination and also have an emergency fund.
Also, don’t get so busy planning your budgets for today that you ignore your retirement plan.
Those fancy stuff in your closet would just weigh you down and make one feel miserable if you still have to work post 60. Right?
Were you dreaming of having a big fat wedding by inviting half the town?
But at the same time were you stressed about the financial commitments and the financial damage it could cause?
Thanks to 2020 and the lockdowns, we are finalising that good weddings can be done in private and life still goes on without a problem.
This has also made us realise – are big fat weddings necessary in the first place?
No need for horses and elephants. No need for over- priced dresses. And no need for diamonds and gold. No one cares.
What looked like a “must-have” until now has gone to “could have” to “ no need”.
In this article I’m going to talk about how you can make use of your wedding day savings and have a great wedding with financial responsibility.
The realisation that weddings are possible without a lakh fresh flowers, hundreds of meters of flowy drapes and red carpets, a gazillion varieties of dishes is absolutely relaxing! Isn’t is?
Relaxing for the couple, their family and for me to list down 😉 Oh wait, I forgot about 20 kilo lehenga worth a lakh and 100 other things!
Point is, chill! It’s the marriage that’s important and not the wedding day of deluding yourself looking like a prince and princess!
Quick tip to get back to the daunting reality- “Wash off that cakey makeup and check your bank balance” Broke and broken?
This is a highly opinionated and logical article about how you can spend your wedding day savings meant for exhibitionist expenditure and gold pots in the right way. Grow love and grow rich!
While the former is partially dependent on you and your spouse, the latter is a reasonably confident goal to achieve!
Hey, have you ever thought, how did the wedding day’s pomp and show become so important?
Blame it on bollywood!
Unrealistic expectations about the wedding day, the neediness to secure every drop of attention on the social media by posting the ‘typical’ and fairytale couple poses in a pre-wedding photoshoot and the slow mo cheesy wedding movies, the burning desire to scure power of status by kilos of gold to please the nosy Indian aunt is what literally pushes people to take stupid decisions about spendings.
GOLD, GOLD, GOLD! GO BABY!
But above all, I feel it is the ‘lack of awareness’ about financial freedom or ‘making money work for oneself’ and ‘overconfidence about uncertain future’ is the core reason for such unreasonable expenses.
“NOOO! You get married once and that’s why it should be king size”
Well, why king size for just a day, instead choose a safe, consistent and balanced married life, an early retirement or multiple honeymoon vacays for years with your better half.
Sounds like a better plan, right?
Honestly, most financial planning is nothing but the use of common sense.
Since you and your partner are a team now, start with communication. Talk about your financial goals, retirement age and lifestyle, discuss spending habits and how differently each one of you define ‘wants’ and ‘needs’.
Surprisingly, most couples and marriage counsellors agree that the number one reason for fights in a married relationship is about money.
Coming to the point- Where can all the wedding day savings be parked?
Contingency Fund and Rainy day fund– Begin financial planning with the smaller things. A portion of your savings can be put into a distinct fund for emergencies like sudden pay cut or loss of job or unavoidable household repairs. This one is called a contingency fund. For the major unforeseen expenses.
Whereas Rainy day funds are usually smaller than a contingency fund. They can be saved for reasons like sudden pet care or to fit the broken door knob or as small as replacing your wrist watch batteries.
Number 2- Use common sense again! As a couple, become debt-free. Pay off the loans taken for buying your vehicles and save yourself from monthly EMIs and the interest thereon. I wouldn’t say pay off your education loan at once, as it helps you claim deduction on the interest on education loan under section 80E of the Income Tax Act,1961.
Also remember, a bad CIBIL score of your partner can affect your chances of obtaining a joint loan. Get rid of that debt, mate!
Savings account to SIP- Park the lump sum wedding day saving into a savings account and command a monthly ECS to your bank to move funds to a Systematic investment plan(SIP).
In this way you’ll earn an interest of 4%-6% p.a (depending on your bank) on your savings and can also have the discipline to transfer equal and regular amounts into mutual funds, trading accounts or retirement accounts rewarding you for long term.
Insurance– ‘We don’t need it, because we are young hail and hearty’.
Instead of making a wasteful expenditure of Rs 10,000 on a white horse that dropped you at your wedding hall in 30 mins, spend the same amount to buy a term or a permanent insurance to protect yourself and your beloved from the unforeseen disasters. Medical disasters or accidents.
If you have a dependent spouse, then undoubtedly head to life insurance.
Carefully note your requirements, analyse the features of medical insurance and its cover ( Critical illness cover, Inpatient cover, maternity cover etc for a cover of Rs 5 Lakhs, Rs. 10 lakhs etc) and decide the premium as per your comfort.
Pro tip- Revisit all your bank accounts and insurances and update your nominee and beneficiary name after marriage. (If you trust your spouse, that is.) 😛
Gold– If you are a person obsessed like the rest of India about gold, buy it!
But let this not be more than 20% of your portfolio. Gold helps in maintaining money during extreme market volatility and is a quick form of liquid cash. Do not buy it from the small shop at the corner! Precious metals can only fetch good resale value if they have attributes of quality and purity.
But hey, for buying gold, I mean, buy gold coins and biscuits for a good resale value.
You can also go for Digital Gold if you don’t have an issue with a lock-in period of 5-8 years. Digital Gold or Sovereign Gold bonds issued by RBI are linked to the gold of 999 purity or 24 carats.
Now you know which one of these is good for your health 😛
With risks comes better returns. A universal principle.
Hire a financial expert, qualified and trustworthy and let him assess on your behalf, for your family’s wealth creation and investments. Investments for your real estate, child education and retirement planning.
A good financial planner is worth it and definitely better than prolonging or delaying good financial decisions.
The one logical advice of the elders from the Indian society that I believe we should all abide by is “Love is not enough”.
Challenges can creep up even before saying ‘I do’ without financial compatibility. Every couple should learn early and openly about practical decisions, marital finance planning and have logical money discussions.
Plan ‘money dates’– a date dedicated to review, handle and discuss money calmly. You owe each other a deep talk about your financial goals, practices and apprehensions.
80% families in India borrow money from either relatives or unregistered lenders to attain the big fat Indian wedding dream. A day’s lavish spending on everything flowery and your expensive trousseau is what can leave you and your family with a financial baggage after you step down the altar and can hamper the future family relationship for a long time afterward.
I’d suggest, save, budget, manage, invest, explore and have the financial freedom to move to cities before you plan a family. What better than a life spent in harmony with a loving partner and a stress free and healthier financial lifestyle.
So last week while conducting one of my webinars on personal finance and financial literacy, an attendee asked me a very interesting question.
The question was- “My name is Mohan. I am a painter. I am from a village and I just moved to a city with my wife, I have never opened a bank account and my earnings are small and are in cash. What is your suggestion for me? Also, how can I financially secure my wife if something happens to me?”
It was a very challenging question for me.
That’s because, I had assumed that all my attendees are making use of the banking system. I was so wrong!
Here, the questioner had never used a bank account because his earnings were small and all in cash.
I could very well ask him to open a new savings bank account and start slowly into the world of banking and finance.
But something just stopped me and pushed me to research and find an easy and better banking facility for him. I particularly wanted to address his concern of securing his wife financially in case of a mishap with Mohan.
I did not answer the question that night. Instead I promised to get back to him with the most suitable option.
Since Mohan had never ventured into banking activities, I wanted to present him with a facility that is easy to begin with.
I researched extensively.
My research lead me to some schemes designed by the Government of India, specially for people like Mohan, who do not have formal education and information about the financial facilities provided in our country.
Pradhan Mantri Jan Dhan Yojana. That’s where my research met its goal.
This scheme was established in 2014 and as on November 2020, 41.20 crore beneficiaries had banked on this scheme.
This scheme aims at providing facilities to the weaker section of the society along with added advantages of easy banking facilities at no added cost.
The primary advantage of this scheme is that the account holder need not maintain a minimum required balance. Which means, this account is a zero balance account.
There will be no bank charges debited to the account holder even if his account balance becomes zero due to no employment or other reasons.
Also, I felt, that the best part about this scheme is that, Mohan can get a RuPay at absolutely no cost! A RuPay card for free! He can withdraw money from ATMs without the hassle of tedious paper-mode money withdrawal from banks.
Hold on, there’s more to the advantage list!
The account holder is covered with insurance in case of accidental death for an amount up to 2 lakh rupees! So, Mohan’s worry about financially securing his wife, in case something happens to him is solved!
Just before I contacted him to educate him about Jan Dhan account, another thought struck me.
Banks usually ask for valid government documents of the applicant before opening an account. I was worried, if Mohan has ever got his Aadhar or other government documents made. As most people in rural India have never got themselves registered as citizens of our country. They don’t have valid documents, as they never find a need for it.
But then, I read, that any person, even without government documents can open this small savings account. Brilliant, right?
He will be issued an identity card along with applicant’s photograph by a department of government, public sector undertaking or scheduled commercial banks.
To make it more secure, a letter of attestation is to be obtained, signed by a gazette officer. If the account is owned jointly, then photographs of both the account holders are required. Okay! Logical.
There’s more! You would be surprised to know that an overdraft facility of 10,000 rupees is also available!
Zero balance account with a 10,000 rupees excess withdrawal facility! Wow! You might have never come across something like this!
This feature is not available in any other savings bank account facility.
Indeed a great scheme for small savings account holders! They can use this excess credit as their emergency fund!
Not just the financial advantages, this account helps the account holder to inculcate some good habits.
There is no limit on the number of deposits but there is a limit on withdrawals. Only four withdrawals in a month can be made including withdrawals through ATMs.
Limit on withdrawals helps in bringing a habit of saving money. Don’t you agree with me? If you don’t, lets blame it on the difference of our perspectives 😉
Well, its not just Mohan who can take the benefit of this scheme. If you are a retired employee or a person owning a small kirana or a medical shop, I’d say this is the scheme you should go for.
Zero balance account, a free RuPay card, Insurance benefits upto 2 lakh rupees and a credit facility of 10,000 rupees! That’s a plentiful for a new banking customer.
Seems too good to be true, right? There is a small catch!
This small savings bank account (SSBA) requires you to not have any other saving account in any other bank. The bank will take a declaration of the same before opening an account in their branch.
But if you wish to open more accounts in other or the same bank with time or growth of your earnings, simply convert this SSBA to a regular savings bank account.
Finding this scheme suiting Mohan’s requirements finally put me into a satisfied place.
I was happy that I could help him make the best use of the banking facilities provided by Government of India in keeping his small savings safe!
Here are FAQs provided by GOI regarding the scheme, for your reference.
This guy’s face might pop in your head when we talk about the circuit!
But no, not Circuit from Munna Bhai movie, we are talking about circuits in the stock market. Spare this poor guy for now.
Imagine stocks getting traded and reaching unaffordable high prices or crashing unbelievably low without any stoppage. Scary right? Who wouldn’t be scared of losing huge sums of money?
Investors with stocks-in-hand would succumb to severe losses if the prices crash too low. On the other hand, where the prices would skyrocket, there would be a scarcity of buyers. Result? IMBALANCE in the market and INADEQUATE buyers or sellers according to the price situation.
Thus, SEBI, the prime controlling authority of the stock markets, came up with this brilliant technique of implementing market-wide circuits to protect the interests of investors with effect from July 2001. Circuit-breakers or simply circuit is basic for understanding the share market. I’m sure by now, you are curious to learn about Circuit breakers.
What is this “circuit”?
Simple: Circuit is a mechanism or a stoppage range, below or above which there can be no trading.
The higher end of the range is called the Upper Circuit and the lower side is called the Lower Circuit. The market is allowed to fluctuate only between this benchmark range of the upper and lower circuits. Such a stoppage on the “market” is called circuit while that on a particular “stock” is called “price band”. This mechanism is used only for intraday transactions.
Stoppage Range on:
Market / Indices is called circuit
Stock is called price band
SEBI decides the circuit on the overall market on a daily basis, by considering the closing market points from the previous day as the base.
Circuits a.k.a circuit-breakers are different for different world markets. But for Indian Stock markets, SEBI has decided 3 points, of 10%, 15% and 20%, on hitting these, the market gets halted for trading, automatically for a stipulated period during a day.
Why is a circuit required in stock markets?
To prevent major loss of capital of retail investors from sudden swings in the market
To control extensive price volatility in the market
To reassess speculations in the market
To curb price manipulations by stock operators
Try to remember your childhood days, when your mother would put you on a time-out because you breached the rules laid down for kids of the house. For example, she restricted you to go out and play with your friends because you watched TV for 2 hours while you were allowed to limit watching TV only for 1 and a half hours. Now, she asks you to finish homework for half an hour and later go to play with your friends. A time-out and sadness for half an hour and things get back to normal!
Similarly, SEBI being the authoritative body for the market disciplines, checks and prevents acute price fluctuations by implementing an automatic time-out. When the market fluctuates immensely and hits the circuit points implemented by SEBI during the day, either by hitting the upper circuit or lower circuit, the market comes to a total halt.
A market halt is a situation where stocks cannot be traded until the halt comes to an end. Duration of market-halt can range between 15 minutes to 1 hour 45 minutes or for the remaining part of the day, depending on the trigger point hit, which means no trading in all equity and equity derivative markets nationwide. The circuit-breakers of 10%, 15%, or 20% are triggered by fluctuations in NIFTY 50 or the BSE whichever hits the circuit points earlier.
For example: Consider on NSE, based on Nifty 50’s closing of 8250 on 10th of April, the Nifty’s circuit trigger limit(movement on the upper and lower side) for 11th April would be 10% (825 points), 15% (1237 points) and 20% (1650 points).
Shortly put The above table shows, that the market will come to a halt for 45 minutes if the circuit breaker is hit by the trigger limit of 10% before 1 pm.
This means, if the market points rise by 10% from the previous day’s closing or fall below 10% from the previous day’s closing level, there shall be no trading across the Indian stock market for 45 minutes.
Imagine the nail-biting tension created by market halts if you hold any stock and are eager to trade it but can’t because of the market halt! You will definitely be under the immense pressure of betting your money based on market movements.
12-year record broken in 2020
You would be surprised to know that there was no market halt for the last 12 years! All jolly and glory! But the rise of the COVID-19 pandemic broke the 12-year-old trend. Markets stopped and so did investors’ hearts on March 13, 2020! Rise in a global panic due to the coronavirus and Wall Street crashing to its circuit limits multiple times in a short span, increasing the number of cases in India and India recording its first death due to the virus are to be blamed on.
All indices in red and red signal for investors too
The stock market had to be temporarily halted due to a steep crash of a 10% trigger. Nifty fell by 10.07% and BSE by 9.4% shortly after the market opened. The market reopened after 45 minutes. However, the negativity seemed to take over again within 2 weeks and the market crashed again by 10% trigger on 23rd March and logged its biggest loss ever!
This could be because of the cumulative effect of the earlier halt, the government imposing lockdown over 70+ districts, and zoom in COVID infected cases. It’s like, you fall while bicycling and when you get up, you realize your cycle chain has splintered! Disappointing, right?
L/U of price-band of a stock
A similar stoppage or circuit for shares of a company is called price-band. The lower end of the price-band is called the lower limit (price below which the share cannot be traded) and the upper-end is called the upper limit (maximum price at which the share can be traded).
Fun fact is, there is no price-band on the first day of listing of share! It can get listed at any high/ low price! Read my article about Rossari Biotech IPO where the share price was recorded at 58% over its issue price!
Let’s discuss price-band in the next article in a detailed but simple manner.
Imagine, 88,82,024 buyers for a share and zero sellers! Anything is possible in the stock market! Wait for it!
As the pandemic hit India around March 2020, most of the stocks in the Indian market including BSE and NSE have seen a major hit. This has impacted investor confidence and has created a negative sentiment in the market. In such times, a company with an exceptional IPO gives hope to the market. The pandemic is not permanent and life will go on.
Hi, I am Stock Sandhya and I am passionate about the financial markets. I track new companies, IPOs, BSE, NSE and more. A detailed introduction about me is for an another day. Today, In this article, let’s look at a classic IPO – Rossari Biotech.
I bought this stock on Zerodha and did quick entry and exit making more than ₹4300 in profit in less than 30 minutes. Not bad right?
Rossari Biotech stepped into the BSE family bringing good omen during the COVID period and reflecting investor’s confidence by breaking many records of the Indian market with its consistency in delivering quality and results. Rossari Biotech issued its Initial Public Offer (IPO) on 13th of July 2020, with a minimum order being for a bid lot of 35 equity shares and in multiples thereof.
The price band was set between ₹423 – ₹425 for each equity share with a face value of Rs.2. The floor price being 211.50 times the face value and the cap price being 212.50 times the face value. Rossari Biotech announced its Rs 500 crores fundraising IPO, being the first mainboard IPO during the pandemic times and inconsistent markets.
Why Rossari Biotech?
The company had an exceptionally successful IPO opening. 79x over-subscription is outstanding! It has a strong support of HNIs (240 times) and Qualified institutional buyers (85 times).
On day one, Rossari Biotech got listed at 58% premium over its issue price, i.e. at Rs 670 a share. share price met the upper circuit at Rs 804 and showed a 75% gain. It also gained its name amongst the top 11 companies that listed with a premium over 50% in the past 5 years. BRAVO!
Rossari Limited has a distributed risk because it does not depend on single space and also has a wide variety of products from animal care, poultry, textile, personal care etc. 2030 products in 18 countries! Whoa!
It is also a manufacturer of disinfectants and sanitizers, which is now considered a necessity during the pandemic times, increasing its revenue share in personal care products up to 47% in FY 2020. Thus, guaranteeing a major portion to the revenue of the company until COVID is here to stay.
The company is already the largest textile specialty chemical manufacturer in India while currently up scaling its capacity at Gujarat.
Pre-IPO, the balance sheet analysis shows low leverage along with exceptional CAGR of 42% (FY 2017-2020) and CAGR EBITDA of 57% (FY 2017-2020) and the proceeds of IPO shall be used for the objectives mentioned above.
About Rossari Biotech: The entity started off as a partnership firm in 2003 and registered itself as a Joint stock company in 2009. It now has a wide variety of products in its portfolio and is one amongst India’s experts in specialty chemical manufacturers.
It also has diversified products in animal health and nutrition, personal care, home and performance chemicals. Rossari Biotech has its roots strongly in 17 countries, major in-house manufacturing units in Silvassa, R&D centers in Silvassa and Mumbai and an upcoming factory with advanced technologies in Dahej, Gujarat in 2021.
Fundamentals and Comparison with Peer Listed Companies
PE ratio based on the diluted EPS for the year 2020 of Rossari Biotech is at 32.12 while the average of its peers in the industry stands at 27.72 times.
YoY Financials (Consolidated)
Comparison of Capacity Utilization
Silvassa Manufacturing Unit (Installed)
Dahej Manufacturing unit(Upcoming 2021) :
Total Capacity utilization expected by FY 2021: 2,52,500 MTPA (1+2)
Big Names Amongst Investors
35.02 Lakh shares are allotted to a total of 15 anchor investors (12 Mutual funds via 48schemes). These anchor investors include SBI Mutual Fund, HDFC Life Insurance, Axis Mutual Fund, Abu Dhabi Investment Authority, Abu Dhabi Investment Authority, Sundaram Mutual Fund.
On 23rd of July 2020, Goldman Sachs India bought 4,81,433 equity shares in the star debutant Rossari Biotech at Rs.692.17 per share and secured 0.92% stake.
The company has low leverage, increased capacity utilization, better PE than the industry average, consistent quality delivery, better met working capital objectives post IPO and better return on the capital employed (ROCE).
[Disclaimer: The views shared in this article is the author’s opinion and does not count as a stock buying recommendation. The content here is curated and we DO NOT sell stock advice on this website. The author and the website bears no responsibility of the profits or losses made by the investor in investing in this particular stock, or any stock showcased on this website.]