May 2015 – Page 3

Book Review: Animal Farm

I’ve recently finished reading Animal Farm written by George Orwell, and it is quite an extraordinary book.

It is a classic and I won’t be surprised if a lot of you have already read it, but if not, please pick it up and give it a read. It is brief, thought provoking and although it is an allegorical novel about the Stalin era in Soviet Russia, I’m sure you will be able to relate to the characters and see some of that behavior around you even today.

The story is about a farm in England where animals are fed up of the tyranny of their human lords, and overthrow their rule in a revolution. The animals come up with maxims to govern themselves, and pigs being the smartest animals take the leadership position and govern the farm.

As the story progresses, the pigs become more and more authoritarian, and flout all of the initial maxims established at the time of founding of the Animal Farm.

There are different animals in the farm, and each is used quite cleverly to display certain innate traits that in most cases you can identify with as well. For example, there are sheep who bleat a certain slogan to brainwash the other animals, there is a donkey who is very stubborn and cynical, but perhaps the best of all and my favorite character is the horse named Boxer.

Boxer is a strong horse who works harder than anyone else, and is loyal to a fault. I was very moved with how his character is developed in the story, and how it ends. Boxer is extremely hardworking, loyal and naive. He works harder, and harder throughout the story, is blind to all the injustices around him, choosing only to believe in his simple maxims of hard work, and their leader Napoleon always being right and in the end is met with a cruel fate.

I felt that Boxer’s character correctly represents a lot of us today who work hard, have good intentions, desperately need a leader, and when we find that leader whether he be Kejriwal, Modi or Salman Khan, we are impervious to their flaws, and defend their actions blindly to a fault.

This is quite a quick read, and a wonderful story, I would definitely recommend that all of you give it a try.

Participating Banks & Insurance Companies Servicing Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY)

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Prime Minister Mr. Narendra Modi launched three new social security schemes under his government’s Jan Suraksha initiative during his visit to Kolkata on May 9. As most of us know by now, these schemes are – Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY).

People are keen to know more about these schemes and how to get themselves enrolled/subscribed to get insurance coverage in case of death or disability. Though banks are also aggressive & keen in attracting their customers to subscribe to these schemes, many people are still clueless how to get themselves enrolled and whether banks are providing online subscription facility or not.

Customers of banks, like Kotak Mahindra Bank, HDFC Bank, ICICI Bank, IndusInd Bank and SBI, can subscribe to PMJJBY and PMSBY in any of the following manners:

* Visiting a bank branch nearest to your place, filling the Consent-cum Declaration Form & depositing in the branch itself

* Through Netbanking by filling the online form

* Sending an SMS to the number provided by your bank

I have tried to compile a list of participating banks which have tied up with different insurance companies for providing life insurance and accidental death & disability insurance to their interested customers. Here you have the list of banks along with their partner insurance companies and whether they are providing the online and/or SMS facility to their customers or not:

LIC affiliated Banks for PMJJBY – PNB, Kotak Mahindra Bank, IndusInd Bank, Bhartiya Mahila Bank, Canara Bank, Federal Bank, South India Bank, Bank of Maharshtra, Corporation Bank, United Bank of India, Allahabad Bank, IDBI Bank, Uco Bank, Dena Bank, Punjab & Sind Bank, Syndicate Bank and Kerala Gramin Bank.

Banks affiliated with SBI Life for PMJJBY – State Bank of India (SBI) and Vijaya Bank.

Banks affiliated with New India Assurance for PMSBY – Bhartiya Mahila Bank, Federal Bank, South India Bank, Corporation Bank, Union Bank of India, Bank of India, Central Bank and Punjab & Sind Bank.

Banks affiliated with United India Insurance for PMSBY – HDFC Bank, Canara Bank, Vijaya Bank, Bank of Maharashtra, Dena Bank, Syndicate Bank and Kerala Gramin Bank.

Banks affiliated with National Insurance for PMSBY – State Bank of India (SBI), Bank of Baroda, United Bank of India and State Bank of Travancore (SBT).

Banks affiliated with Oriental Insurance for PMSBY – PNB.

Banks affiliated with ICICI Lombard for PMSBY – Kotak Mahindra Bank and ICICI Bank.

I will try to update this list as & when I get info about more banks joining these schemes. You may visit the respective websites of these banks to download their application forms for getting yourself enrolled. In case you need to get yourself updated with the terms of any of these schemes, here you have the links to our previous posts in which we covered these schemes:

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) – Form in English – Form in Hindi

Pradhan Mantri Suraksha Bima Yojana (PMSBY) – Form in English – Form in Hindi

Atal Pension Yojana (APY) – Form in English – Form in Hindi

If you have any query regarding any of these schemes, please share it share and I will try to respond to it as soon as possible.

What is the BRICS Bank that K V Kamath just became the president of?

Mr. K V Kamath was named the first head of the BRICS Bank or officially the New Development Bank today, and the news was all over today with much excitement and pride (a little misplaced in my opinion).

First, a little history on the acronym BRICS, and then a little history on the bank itself.

“BRICS leaders in Brazil” by Kremlin.ru. Licensed under CC BY 3.0 via Wikimedia Commons.

The acronym BRICs was coined at the investment bank Goldman Sachs in 2003, and the governments of the BRIC countries had nothing to do with it. Mr. Jim O’Neil was the person who coined the term, and in fact he coined another term: MINTs (Mexico, Indonesia, Nigeria and Turkey) , which never became as popular as the first one.

Notice the small ‘s’ in MINTs – BRICs also had a small ‘s’ in the beginning, and it is only later that people started associating South Africa with the BRIC acronym, and now that there is a bank with actual capital – it is fair to say that the ‘s’ can be ‘S’.

Now BRICs is BRICS and the governments of these five countries decided to establish a bank with a capital of $50 billion that each country will contribute equally and this bank will invest in infrastructure projects in the respective countries.

The bank will also also provide an alternative to IMF and World Bank when cash is needed by these countries or in fact other countries who can apply to it. This is interesting and slightly different in funding because the fund for this is a $100 billion funded 41% by China, 18% by Russia, India and Brazil, and the final 5% from South Africa.

This is a great step, and I hope that it becomes successful – why is the pride misplaced then? Simply because the first president had to be an Indian; that much was negotiated months ago, as was the fact that Shanghai will be the headquarters, a Brazilian will be the head of the Board of Directors, and a Russian will be the head of Board of Governors. Notice how all of those are rotating positions but the headquarters are not.

Again, I think the bank is a great idea in itself, and if it becomes successful that will be a major win for the countries involved as well as any smaller countries that may get help from it, but I think sometimes we get carried away with symbolism more than substance, and that’s what’s happening today with the appointment of Mr. K V Kamath.

What is full convertibility of the Rupee?

The RBI Governor, Dr. Raghuram Rajan has brought up the subject of full convertibility of Rupee again recently, and it will be interesting to see what steps he takes to make it happen in the future.

Capital account convertibility of the Rupee means the ability to convert INR into any foreign currency, and the foreign currency back to the Rupee at any time without any restriction on the amount at the market rates.

The obvious benefit of capital account convertibility is that it makes it easier for foreign investors to invest in your country as currency movement has no barriers, and they are assured that they will be able to take their money back to their country when the need is warranted.

The big drawback is that if a large number of investors decide to take out their money from the country at the same time then the local currency crashes. This is what happened in the Asian financial crisis when the currencies of Indonesia, Thailand and South Korea took a big hit, and needed support from the IMF to rescue them.

India has taken steady steps to full convertibility, and steps aimed at NRIs are the most visible with a lot of concessions made in the NRE and NRO accounts in the recent past.

Although full convertibility is sometimes given a shade of nationalistic pride by the media, and since only a handful of countries in the world have currencies that are fully convertible (most of them advanced economies), perhaps it is a matter of pride, but more importantly, it is the ability to access deep capital markets that can be used for investing into infrastructure or other projects that makes full capital account convertibility a desirable thing.

The other big benefit is the ability to settle India’s trade in INR as opposed to a foreign currency which is how almost all of it is done today.

I feel that full convertibility is not a ‘short number of years’ away as the RBI governor stated some time ago, but more likely many number of years away because of the situation the Indian economy is currently in, and in general the power it gives foreign investors over your exchange rate. Even our much bigger neighbor hasn’t been able to adapt a fully convertible Yuan despite their impressive reserves, and much better economic indicators.

Image Source

Pradhan Mantri Suraksha Bima Yojana (PMSBY) – Insurance Sirf Ek Rupay Mein – Rs. 12 a Year Accidental Death & Disability Cover

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

“Insurance sirf ek rupay mein – Aisa Kaise?” The boy asks his father and the father’s response makes his daughter emotional. You must have watched this commercial on your TV sets many a times this week as the government has launched its Jan Suraksha initiative very aggessively.

Prime Minister Mr. Narendra Modi is in Kolkata today and will be launching Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Atal Pension Yojana (APY) from there. These schemes are targeted to provide social security benefits to a large percentage of the low income earning population in India.

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Policy Coverage – The scheme offers to provide you or your family a cover of up to Rs. 2 lacs in case of any mishappening, resulting into death or disability of the insured. In case of death or full disability, you or your family will get Rs. 2 lacs and in case of partial disability, you will get Rs. 1 lac. Full disability means loss of both eyes or both legs or both hands, whereas partial disability means loss of one eye or one leg or one hand.

Age of the Insured – Savings bank account holders aged between 18 years and 70 years are eligible to apply for this scheme. People aged more than 70 years will not be able to get the benefits of this scheme.

Premium Amount – It costs you just Rs. 12 in annual premium for having an accidental death or disability cover of Rs. 2 lacs under this scheme. It works out to be just Re. 1 a month, which is extraordinarily low. Again, your age has nothing to do with the premium payable for your insurance cover under this scheme as the premium is fixed at Rs. 12 for a cover of Rs. 2 lacs.

Period of Insurance – You will remain insured for a period of one year from June 1, 2015 to May 31, 2016. Next year onwards as well, the risk cover period will remain to be June 1 to May 31.

Administrators for PMSBY – The scheme would be offered / administered by many of the general insurance companies, both in the public sector as well as in the private sector. Participating banks will be free to engage any such general insurance company for implementing the scheme for their subscribers. National Insurance Company Limited, Oriental Insurance Company Limited and ICICI Lombard are some of the companies which would be offering this scheme.

Auto Debit Facility – You will be required to provide your consent for auto debit of Rs. 12 as the annual premium from any one of your bank accounts at the time of enrolling for this scheme. This premium of Rs. 12 will get deducted from your savings bank account through auto debit facility every year between May 25 and June 1.

Last Date for Enrolment – May 31, 2015 is the last date for getting enrolled for this scheme, but the government has given an extension of three months up to August 31, 2015 for us to get enrolled and give auto-debit consent for this scheme. This enrolment period may be extended by the government for another period of three months, up to November 30, 2015.

Those joining this scheme subsequent to May 31, 2015 will have to pay the full year’s premium of Rs. 12 and agree to specified terms of this scheme.

Toll-Free Numbers – 1800 110 001 / 1800 180 1111 – These two are the National Toll-Free Numbers for this scheme. You can check the state-wise toll-free numbers from this link – State-Wise Toll Free Numbers

Service Tax Exempt – Yes, Finance Minister Mr. Arun Jaitley has proposed to exempt this scheme from service tax. So, you will not be charged any service tax on the premium payable.

Know Your Customer (KYC) – Aadhaar Card issued by the UIDAI will be the primary requirement for your KYC under this scheme.

Application Form – Here you have the link to the application form for you to enroll yourself for this scheme – Application Form for PMSBY

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Age of the Insured – Bank account holders aged between 18 and 50 years are eligible to apply for this scheme. So, if you are aged more than 50 years, you are not eligible to enroll yourself for this scheme. But, once enrolled, you can continue with this scheme till you attain the age of 55 years.

Premium Amount – Less than Re. 1 a day or an annual premium of Rs. 330 is what you need to pay to get a life cover of Rs. 2 lacs. No matter what your age is, the premium is fixed at Rs. 330 for a life cover of Rs. 2 lacs. This annual premium of Rs. 330 has been fixed for the first three years from June 1, 2015 to May 31, 2018, after which it will again be reviewed based on the insurers’ annual claims experience.

Period of Insurance – June 1st, 2015 to May 31st, 2016 is the period for which this scheme will cover all kind of risks to your life in the first year of operation. Next year onwards as well, the risk cover period will remain June 1 to May 31.

LIC as the Administrator – The scheme would be offered / administered by the Life Insurance Corporation (LIC) and other life insurance companies like SBI, ICICI etc. through their tie ups with the interested banks like SBI, ICICI, Canara Bank etc. Participating banks are free to engage any such life insurance company for implementing this scheme for their subscribers.

Auto Debit Facility – Annual premium of Rs. 330 will get deducted from your savings bank account through auto debit facility. You will have to give your consent for auto debit of premium from any one of your bank accounts at the time of enrolling for this scheme.

Those joining this scheme subsequent to May 31, 2015 will have to pay the full year’s premium of Rs. 330 and submit a self-certificate of good health in the prescribed proforma.

Service Tax Exempt – Finance Minister Mr. Arun Jaitley has proposed to exempt this scheme from service tax. So, you will not be charged any service tax on the premium payable.

Know Your Customer (KYC) – Aadhaar Card issued by the UIDAI will be the primary requirement for your KYC under this scheme.

Application Form – Here you have the link to the application form for you to enroll yourself for this scheme – Application Form for PMJJBY

I covered Pradhan Mantri Jeevan Jyoti Bima Yojana yesterday, a scheme which provides life insurance cover of Rs. 2 lacs to its subscribers for an annual premium of only Rs. 330. I think both these schemes are quite attractive and provide a combined cover of Rs. 4 lacs for a premium of just Rs. 342, which works out to be less than Re. 1 a day.

In a country like India, where many members of a family are dependent on the primary earner’s income to survive and grow, I think these schemes would play a very important role in providing a much required social security comfort to the citizens of India. I think the government is doing a wonderful job in taking these initiatives to attract low income group people to get themselves covered against the risks of untimely death or accidental disabilities. I think you should definitely subscribe to both these schemes.

Application Form for PMSBY

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) – One Rupee a Day Life Cover – Salient Features & Application Form

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Before leaving for his three-nation tour to China, Mongolia and South Korea from May 14, Prime Minister Mr. Narendra Modi will launch three of his government’s social security schemes on Saturday – Pradhan Mantri Jeevan Jyoti Bima Yojana (Life Insurance), Pradhan Mantri Suraksha Bima Yojana (Accidental Death & Disability Insurance) and Atal Pension Yojana (Pension Scheme).

These schemes would be an extension to Pradhan Mantri Jan-Dhan Yojana (PMJDY) and would be covered under the government’s Jan Suraksha initiative. These schemes are designed to be pro poor and promise to provide protection against the risks of dying too early (Pradhan Mantri Jeevan Jyoti Bima Yojana) or living too long (Atal Pension Yojana) or unable to work & earn due to partial or full disability (Pradhan Mantri Suraksha Bima Yojana).

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Those joining this scheme subsequent to May 31, 2015 will have to pay the full year’s premium of Rs. 330 and submit a self-certificate of good health in the prescribed proforma.

Service Tax Exempt – Finance Minister Mr. Arun Jaitley has proposed to exempt this scheme from service tax. So, you will not be charged any service tax on the premium payable.

Know Your Customer (KYC) – Aadhaar Card issued by the UIDAI will be the primary requirement for your KYC under this scheme.

Application Form – Here you have the link to the application form for you to enroll yourself for this scheme – Application Form for PMJJBY

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Period of Insurance – You will remain insured for a period of one year from June 1, 2015 to May 31, 2016. Next year onwards as well, the risk cover period will remain to be June 1 to May 31.

Those joining this scheme subsequent to May 31, 2015 will have to pay the full year’s premium of Rs. 12 and agree to specified terms of this scheme.

Service Tax Exempt – Yes, Finance Minister Mr. Arun Jaitley has proposed to exempt this scheme from service tax. So, you will not be charged any service tax on the premium payable.

Know Your Customer (KYC) – Aadhaar Card issued by the UIDAI will be the primary requirement for your KYC under this scheme.

Application Form – Here you have the link to the application form for you to enroll yourself for this scheme – Application Form for PMSBY

Should you subscribe to Pradhan Mantri Jeevan Jyoti Bima Yojana?

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a term life insurance scheme and we all know that a term plan is the cheapest form of covering ourselves against the risks of untimely death. I think the government is doing a wonderful job in taking the initiative to attract low income group people to get themselves covered against the risks of untimely death.

I think the premium is reasonably justified for people in their middle years, probably between the age of 40-50 years. For younger people, you might still find cheaper life cover policies with some of the private insurers, like Max, Aviva, Aegon Religare etc.

I’ll keep on updating this post as and when I have some interesting data to insert into. If any of you has anything to share about this scheme, please feel free to do that, I’ll update that as well here in the post.

I covered Atal Pension Yojana in March this year and I have covered Pradhan Mantri Jeevan Jyoti Bima Yojana in this post. I will cover Pradhan Mantri Suraksha Bima Yojana also as soon as possible.

Application Form for PMJJBY

Is it better to buy Thai Bahts in India if you are traveling to Thailand?

I recently went on a short holiday to Bangkok and I was wondering if it’s better to convert INR to Thai Baht in India itself, or does it make sense to buy THB once in Bangkok.

Based on my research – I decided to buy USD in India, and then use that to buy THB once in Bangkok.

The factors that made me go with this option are as follows:

The first thing I did was to look for what rate I was getting on THB in India itself, and the best rate I found was 100THB for Rs. 203.25. Quick calculation and some guess work seemed to indicate that this is worse than what you can get from buying USD in India and then converting that to THB in Bangkok.
Money changers are ubiquitous in Bangkok and it seemed very likely that the USD to THB rate that you can get in Bangkok would be much better than the INR to THB rate you would get in India.
You can shop around for a good rate to buy Dollars in India, specially cities like Hyderabad, but you may not get that much of an opportunity to do that once in Bangkok. For instance, I was able to buy dollars at a rate of Rs. 64.4 to a dollar in Hyderabad.
It wasn’t clear to me how much THB I’d actually need in Bangkok and they charge a fee to convert it back to USD, which would be a complete waste, and it would be ideal if you converted only that amount which is close to what you plan to spend.

Eventually, I got the following two rates to get from INR to THB. The first one was Rs. 64.40 to a Dollar which I got in Hyderabad by using BookMyForex and 32.55 THB to a Dollar which I got at Super Rich at a mall in Bangkok.

The rate that I was getting in India to convert INR directly to THB was 100 THB for Rs.203.25 and the effective rate that I got by buying USD in India and THB in Bangkok was 100 THB to Rs. 197.84, so that shows you that the best idea is to buy USD in India, and then use those USD to buy THB in Bangkok.

The table below gives you a comparison.

Transaction	Exchange Rate
Buy THB in India using INR	100 THB = Rs. 203.25
Buy THB in Bangkok using INR	Not a viable option
Buy USD in India and THB in Bangkok (64.40 Rupees to a Dollar and then 32.55 THB to a Dollar)	100 THB = Rs. 197.84

Other things to Consider

You have to pay 1,000 THB as visa fee upon arrival in Thailand and this fee has to be paid in Thai Bahts itself. This is quite an annoying thing as the last thing you want to do after a long flight is to find a currency exchange and change money. However, as annoying as it might be, it is not very hard. You can find money changers before you get in the immigration queue and change a small amount to cover the visa fee and taxi because you will get a better rate once you are outside the airport.

Also, keep in mind that they need you to have a passport photograph to staple on your application, and take that with you or you will have to cough up a ridiculous amount to get that photo.

The last thing I want to point out is that although people told me you could buy THB in INR in Bangkok, I couldn’t see such money changers myself, and I would certainly not recommend that option to anyone. If you are traveling abroad, it is better to change INR to USD at home itself, and not fall into a situation where you have to a pay a ridiculous amount to buy local currency in INR.