Why we are obsessed with money

What a way to exist!

For most of us, practically the whole day all we are thinking is about money and more specifically how to have more money!

As if money was the only thing in life. Unfortunately for most of us, circumstances just do not permit any other thought!

We are running behind money most of the time which is almost akin to have become obsessed with money. Everything that we are doing in life is centred around money.

Unfortunately, this is because we need money for anything and everything that we do. There’s nothing wrong and what are you doing, however the problem is that over time, it becomes a compulsive habit to keep earning more.

That’s where the danger is. The problem is that there is a point where from we chase money as an addiction, we chase money because we like to do so. If we did not chase money we would not know what to chase now because we get out identity from money and the amount of money we have.

Another thing is that right from childhood we are always taught and our minds are conditioned that everything that we are doing is going to be for the sake of earning money.

There is no one who told you that money is just a means, and then there is something greater in life to achieve. Some examples are legacy; building something, charity; to giving something / helping someone, passion; pursuing something and living; simply to enjoy life and your money

We have got addicted to this and how!

There are three reasons for this:

First, we are what we do. It is the human behaviour. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money.

We live by the laws of inertia, in a pattern which is hard to break. But we have to break it. For ourselves and for the sake of people and reasons for which we are chasing money.

Secondly, we need signals of progress. Money is a measure of how far you have progressed in life. The more the money you have the more you can make sure your progress. It’s simply the logic of evolution. People need validation of their success. Bigger house, bigger car, branded goods and list goes on.

Thirdly, it’s the easy way out. It’s only human to avoid difficult things. Important things are very difficult to measure.  Have I been a good father or husband? Have I groomed my child well?  Such things take years to measure and we still don’t have answers.

So, should we not be focused on creating money for ourselves?

I’m not saying that. Definitely create. Take care of yourself for sure!! Use it to the maximum to make yourself happy!!! You need a certain amount and beyond that is extra.

The definition of their certain amount is naturally different from one person to another. If that extra is going to happen easily, without stress and without your involvement, then its fine. Basically don’t kill yourself for that extra. Be Smart.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a certified financial planner, wealth manager and financial freedom coach.

How the RBI actually helps you

RBI

Most of us in Mumbai, see this huge structure called the Reserve Bank of India and wonder what it really does. It’s also a tourist attraction!! It has so many other offices and again one wonders why they need to have so many offices. I’m going to try and highlight a very interesting part of RBI’s work and how it helps us directly on a day-to-day basis.

The RBI does a review of the monetary policy of the country at frequent intervals during the year. So how does the monetary policy help us investors to take smart decisions?

Monetary policy is a tool by which the RBI decides to raise interest rates or reduce interest rates or keep them steady.

In our country, as we’re an oil importing nation, this decision is very closely linked to Oil. Oil to a large extent contributes to inflation. We all know what happens when inflation keeps rising. We in India unfortunately do not see too much of inflation falling and things becoming cheaper.

Oil is Not Well

So when oil prices rise i.e. we see a rise in crude oil prices almost instantly we can expect rising food prices. This is because there is going to be a rising cost pressure for manufacturing & services. This rise obviously gets passed onto the retail consumers.

When this happens RBI adopts a hawkish stance, tries to pull money out of the system by raising interest rates. Now when interest rates rise no one seems to be interested in borrowing. This immediately puts a brakes on money circulation.  Less money chasing goods decreases the demand for money. This way it controls inflation.

There is yet another tool that the RBI has and that is known as the CRR or the cash reserve ratio.  This ratio in simple words means the amount of cash that the bank must maintain with the RBI as the percentage of the total assets. So when this increases banks are forced to park more with the RBI and this is also a way to control inflation.

On the other hand when things look dull, when there is a recession of sorts, the RBI comes to the rescue and gets into action to kickstart growth in the country. It does this by lowering the interest rates. This we all will understand quite easily because we see a direct benefit of this happening. We see a fall of interest outgo in our EMI’s for the home loan that we are carrying. New loans become cheaper.

Individuals are motivated to go out and make purchases, whether it is for a washing machine or a piece of real estate. Businesses are motivated to go out and borrow to buy more machinery, to expand capacity, to hire more staff and manpower and basically do everything that will add to the growth of business.

Economic growth results as a result of all this. It is also during this time that stock market rises, we see a rally in stock prices and mutual fund NAV’s jumping higher and higher each day. There is prosperity all around.

Critical Role

As you can see that the central bank of the country has a very very important role to play.  If it makes a mistake, things can go really wrong.  Imagine like the USA or Japan if our interest rates were very low; everyone would run to borrow, they would borrow more than they require because it would be cheap and easy to borrow. And that is very individuals would run into what is known as the debt trap, because someday you’ll have to pay back.

Each day the central bank attempts to make sure that everything in our country remains stable and financially there’s nothing that goes wrong dramatically.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

The year of the bond, once again!

We are not talking of James Bond, we are talking of investment bonds.

We are in a situation where the fixed deposit rates are at a general low and there is a lot of discontent among depositors of fixed deposits.

Whenever we see a situation like this, one way or the other, the bond markets come to the rescue. It comes to the rescue of smart depositors, who are agile to move their money from fixed deposits to bond funds.

Let’s understand what is happening and why.

What Exactly is Happening in the Bond Markets?

It is likely that in this year, investors of bond funds will make handsome gains. Bond prices may rise and there may be capital gains. Investors of bond funds not only earn the rate of interest, but also earn capital gains. So that way, they make more than the return they would make on fixed deposits. The returns could be a high single digit or sometimes as high as double digits.

Over three years, this will become practically tax free or the tax would be a very small amount. So, basically, I am thinking that a rally will happen in the bond market. There are three main reasons for this — reduction in government borrowing (which is favourable), recovery of trading losses (which is favourable) and no change in monetary policy (which is neutral).

A word of caution, however, that such bond market investments are also subject to bond-market volatility and should be considered ideally with the help of a financial expert.

Before proceeding further, let us, therefore, quickly explain a bond, bond fund and bond market. We need to do this because few people understand the bond markets and even fewer invest in the bond markets.

Bond is nothing, but a commercial transaction where the borrower is issuing a bond to the lender and the lender will earn a certain rate of interest. When interest rates fall, everyone becomes interested in owning that bond.

As a result, the demand for the bond increases, the price of the bond increases and the bondholder makes capital gains.

A bond fund is a fund where ordinary investors pool in their money and a fund manager buys them a portfolio of bonds.

Moving onto the Reasons For a Rally in Bond Funds…

Now, the fundamental reason for a rally is reduction in interest rates as it stimulates economy and growth.

Firstly, the government is a massive borrower of funds. So a reduction in government borrowing reduces the demand for money in the economy. As a result, prices of bonds rise and this contributes to capital gains for bond holders.

Secondly, the Reserve Bank of India (RBI) recently announced that the commercial banks and RBI, which are the largest lenders to the government, will have another year to offset losses they have incurred on account of buying government bonds in the past. This action will lead to a rise in the price of bonds and this contributes to capital gains for bond holders.

Lastly, on one side due to the rise in oil prices, there is more inflation and thus more money is needed for circulation in the economy. On the other side, many government bonds are maturing, which will provide money supply. So, it is likely that we see a neutralising effect and thus RBI will take no action. This inaction here will support capital gains as explained above. Hence, this year might be a year of good gains for the bond investors.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Five new financial goals for you this summer

I am going to try and explain to you why the summer holidays of April and May are great months to get a lot of things started, financially speaking.

This time period in a way resets the financial clock. You also have the option to hit the reset button on everything you have done so far; financially speaking of course and hope to do better things better than you did last year.

Let’s look at some of the new and unusual things to do in April.

  • Make a learning budget

Learn something about money or anything you like. The best way to make money is to learn something about money. Just like if you wanted to learn cooking you will get into the cooking class. If you wanted to learn swimming you would enrol in the swimming class. If you find learning about money is too daunting task than learn something which is close at to your heart or related to your work. If you learn something new, there’s a possibility that you will use your new ideas to generate new income and in turn that will generate new wealth for you.  So make a budget, enrol somewhere and spend that budget. How about a % of your annual income? Spend it for sure!

  • Plan a unique holiday 

When you’re by yourself and without your mobile phone you will have the opportunity to think! When you have time to think, suddenly good ideas will come to your mind.  You may think this is silly but you can be sure that you will be amazed if your drivers experiment just once. So it might be a good idea to go for a holiday just by yourself. If you find that too intimidating, join a group of strangers. You can combine that with the adventures experience if you like.  Be extra careful if you’re going with your special buddies. Do this only if they are going to be in a position to help you discuss your idea and make it bigger. They must play the role of complimenting your thoughts. So make a schedule to do this holiday and obviously make a budget to make it happen. Think & create new ways of making wealth.

  • Make a prediction and make it happen

Be brave. Let’s aim to grow and multiply net worth by 50% by the time you come to the end of this financial year. This is not a joke and it is easier than you can imagine.  I’m speaking about NETWORTH and I’m not talking about return on investment. If your networth is Rs. 100 today, all I’m saying is that let’s aim to make this a 150 by the end of this year. This networth comprises of all your savings till date. This can be achieved by simply saving aggressively every month for the next twelve months. Just put this into a recurring deposit or liquid fund so you don’t spend it.  We just have to prove to ourselves that this is possible. Where and how we will invest this money will think about that later.

  • Eliminate a negative belief 

I want to give you an exercise here. Write down all your negative beliefs you have about money and wealth. Most people are not able to achieve the desired level of wealth because they think about wealth negatively. So even if you are earning a good amount of income you will never see yourself becoming wealthy. Examples are money causes problems, money causes a fight, managing money is complicated etc. Then for each negative thought, you have written down the positives i.e. the opposite for a few months. Soon negatively biased feelings will evaporate.

  • Make a new investment; something you have not done before

Again here you do not have to be a financial expert. The idea is to learn something new. There are hundreds of investment options. Our objective here is to learn something new. Talk to your advisor and seek his or her guidance. Just a word of caution here; don’t do anything which is speculative or is something that you just can’t understand. Do what do find easy you understand and do that then.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Seeking financial freedom? The time is NOW!

John Lewis famously remarked, “If not now, then when? If not us, then who?” This is so appropriate in the current financial world that we live in.

That statement will leave to rest every other argument that is conservative and against the idea of wealth creation. We are often faced with the situation where there is no option but to create wealth. Read on to know why!

Interest rates are painfully low. For all those diehard fans of guaranteed investment returns, there’s hardly any place to go to. Thinking of fixed deposits? Feeling happy with 7%? And fully taxable? That period is over. Period.

That doctrine of investing into pure fixed deposits and similar instruments is unfortunately standing challenged. There is no option but to sprinkle it with a combination of a little something that will add to the returns earned from fixed income type of securities. In fact this category of investors are in a way, best placed in terms of the current tax laws.

They can earn about 9-10% with minimal or near zero tax over about five years and more. Starting to generate rate of return above the inflation level of 7% is starting to create wealth. So there it is; there is no option but to move in the direction of creating wealth.

For more evolved investors, who invest in equities and who and still sitting on the sidelines tend to run out of patience every now and then. They are sometimes waiting for the right time, sometimes waiting for correction, sometimes waiting for valuation and sometimes waiting for just nothing. Sometimes, just too busy to take action!

I totally understand not wanting to lose hard-earned money. But if the money does not move it will stagnate. That’s the problem with money.

Hit the Ground Running

Inaction and inactivity kills it. Makes it costly to hold. Makes us lose opportunities, sometimes small and sometimes significant. I know of many people including my dad, who just kept investing into equities and holding forever. No doubt they were hugely (big HUGELY) better off then the people in the same time zone. I think they could have done far better with some smart lessons on asset allocation. This is because if they compare the growth rate of their holding over a period of 20 or maybe 30 years the compounded rate of return earned is often not impressive.

It is just marginally better or a few percentage points above the fixed deposit rate. Hence the need for asset allocation, which simply put is not to have all eggs in one basket at any given point in time. These sections of investors anyways create wealth, and, asset allocation is the tool that ensures that the process of wealth creation continues uninterrupted. So again there it is; even for this section there is not option but to start enhancing their wealth creation activities, else returns will continue to remain forever mediocre.

Then there are skeptics and there is nothing much for skeptics of everything, except that they need a serious dose of financial education. Perhaps what if needed is a proof of concept and for that, which better country to live in other than India where financial transparency in investments is so high that I sometimes feel, it comes from another planet.

 Your Money Needs Action

Today, there is a whole lot of variety to choose from and we have never been more spoilt for choice. But the most important thing in all this is to understand that your money needs action. It needs activity and for that the time is now!

And furthermore, if you asked me this question 10 years ago; I would have said that, the Time is NOW. If you ask this question 10 years hence, I will still say the Time is NOW. Any time is the right time to start the process of creating wealth. All that is important is that you take your first step; then continue it all the way with zeal and determination… till you have the level of wealth that you desire. And if you accumulate more than you need, still do it and share it with the world.

If you want your financial freedom; then the Time is NOW!

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager and Financial Freedom Coach.

Young Turks: Here’s the success story of venture fund Aspada

Venture fund Aspada was co-founded by Kartik Srivatsa and Thomas Hyland in 2012 and has made 17 investments so far across Fin-tech, agriculture, health and edu-tech startups.

Young Turks takes a look at their investment thesis, their differentiated VC model and meet three of their portfolio companies – Capital Float that underwrites unsecured loans to startups and SMEs; Dunzo, a hyper local concierge and delivery player that is also Google’s first direct startup investment in India; WayCool, a Chennai-based agriculture-tech startup.

Opposition not letting Parliament function, expose them: PM Modi to BJP MPs

Prime Minister Narendra Modi on Tuesday asked Bharatiya Janata Party MPs to expose the Opposition in the public for not letting the Parliament function. The Monsoon Session of Parliament is being marred adjournments following the uproar by the Opposition and may result in the washout of the session.

The BJP held its Parliamentary Party meeting to discuss the developments in Lok Sabha and Rajya Sabha in the last week. Modi asked party MPs to expose Opposition as it was not coming to the meetings or letting the House conduct any business. The remarks came after Union Ministers Pralhad Joshi and V Muraleedharan briefed BJP Parliamentary Party meeting.

Modi also asked the ministers and MPs to have a good relationship with Opposition MPs, ANI reported.

The Opposition continues to raise the ‘Pegasus Project’ issue in both the House of Parliament. Irked by the ruckus created by opposition leaders in the Rajya Sabha, Chairman M Venkaiah Naidu asked them to rethink their attitude. “I am concerned about the media reports that some sections of the House are determined not to allow the House to function for the remainder of the session. Parliament is meant for making laws and to discuss public issues. Leaders of parties have voiced their concerns to me over the ongoing sorry state of affairs and for being deprived of raising issues of public concerns. I appeal to all of you to rethink this attitude,” Naidu said.

Functioning of both the houses of Parliament has been stalled for the past week due to the opposition’s ruckus, and Parliament has failed to transact any major business. An international media consortium claimed that over 300 verified Indian mobile phone numbers, including two ministers, over 40 journalists, three opposition leaders besides scores of businesspersons and activists in India, could have been targeted for hacking through the Pegasus spyware of the Israeli firm NSO.

The government has denied the allegations levelled by the Opposition in the matter.

Glenmark Life Sciences plans to utilise IPO proceeds to pay off internal debt

The IPO of Glenmark Life Sciences, the API arm of Glenmark Pharma opens for subscription today, July 27. The total size of the issue is around Rs 1,513 crore, which comprises of a fresh issue of Rs 1,060 crore and an offer for sale from Glenmark of up to Rs 453 crore. Yasir Rawjee, MD and CEO, Glenmark Life Sciences, discussed this further with CNBC-TV18.

“In 2019, when the API business was transferred into Glenmark Life Sciences, it was done at a value of Rs 1,162 crore. And this was the debt that we were carrying, that we owed to the parent for transferring the business. Now, we have since paid back Rs 362 crore already, plus servicing. So, from our cash generation of the last two and a half years, we have paid back almost Rs 460 crore back to the parent, which leaves us with this Rs 800 crore. And our plan is to pay back this Rs 800 crore from the funds raised from this issue because that will make us completely debt free,” he said.

Considering it’s an API business, the demand is there, as long as pharmaceutical sector keeps growing.

“There are two factors, COVID and China plus one, that have added a lot of tailwinds to our business. Now, with respect to COVID, there is a need for countries to manage their budgets, and the budgets have obviously shrunk because all economies are under stress. So as a result of that, the requirement for affordable drugs of high quality are in high demand. And API usually is the highest cost contributor to a drug. And so as a result, in our company, we have seen a huge demand in the last five quarters ever since the COVID wave started off,” he said.

“With respect to China plus one, I can say that our customers are not openly talking about it. But yes, there has been a disproportionate demand for all our API’s, except for one travel related to drug where people were not traveling so we had a dip in demand,” he added.

The company is currently operating at about 85 to 90 percent of the facilities, to service the business.

“We are not going to get into the formulations business, because we want to stay with our core and leverage the chemistry platform that we built. There is so much more to do with respect to the API space alone,” he stated.

When asked about the growth triggers for the company for the next three-four years, he replied, “The company has got a very strong portfolio of 120 molecules. This will be one huge lever for us. The overlap with the CDMO side of the business, especially on end-of-life cycle is also very strong. So, this is going to be another lever that is going to help us to drive the business. Then there are markets, such as Brazil, Mexico, Korea, Russia, that are becoming more and more regulated over the years and the kind of service that you need to provide around the API. So, you are not just selling the API, we are selling the entire data package that convinces the Health Authority. So, these are huge growth markets for us apart from the regulated market space in which we already open.”

For more, watch the accompanying video.

A wet winter, a soggy spring: What is the negative Indian Ocean Dipole, and why is it so important?

This month we’ve seen some crazy, devastating weather. Perth recorded its wettest July in decades, with 18 straight days of relentless rain. Overseas, parts of Europe and China have endured extensive flooding, with hundreds of lives lost and hundreds of thousands of people evacuated. And last week, Australia’s Bureau of Meteorology officially declared there is a negative Indian Ocean Dipole the first negative event in five years known for bringing wet weather.

But what even is the Indian Ocean Dipole, and does it matter? Is it to blame for these events?

What is the Indian Ocean Dipole?

The Indian Ocean Dipole, or IOD, is a natural climate phenomenon that influences rainfall patterns around the Indian Ocean, including Australia. It’s brought about by the interactions between the currents along the sea surface and atmospheric circulation. It can be thought of as the Indian Ocean’s cousin of the better known El Nio and La Nia in the Pacific. Essentially, for most of Australia, El Nio brings dry weather, while La Nia brings wet weather. The IOD has the same impact through its positive and negative phases, respectively.

Positive IODs are associated with an increased chance for dry weather in southern and southeast Australia. The devastating Black Summer bushfires in 201920 were linked to an extreme positive IOD, as well as human-caused climate change which exacerbated these conditions. Negative IODs tend to be less frequent and not as strong as positive IOD events, but can still bring severe climate conditions, such as heavy rainfall and flooding, to parts of Australia.

The IOD is determined by the differences in sea surface temperature on either side of the Indian Ocean. During a negative phase, waters in the eastern Indian Ocean (near Indonesia) are warmer than normal, and the western Indian Ocean (near Africa) are cooler than normal.

This causes more moisture-filled air to flow towards Australia, favouring wind pattern changes in a way that promotes more rainfall to southern parts of Australia. This includes parts of Western Australia, South Australia, Victoria, NSW and the ACT. Generally, IOD events start in late autumn or winter and can last until the end of spring abruptly ending with the onset of the northern Australian monsoon.

Why should we care?

We probably have a wet few months ahead of us. The negative IOD means the southern regions of Australia are likely to have a wet winter and spring. Indeed, the seasonal outlook indicates above-average rainfall for much of the country in the next three months.

In southern Australia, a negative IOD also means we’re more likely to get cooler daytime temperatures and warmer nights. But just because we’re more likely to have a wetter few months doesn’t mean we necessarily will every negative IOD event is different. While the prospect of even more rain might dampen some spirits, there are reasons to be happy about this.

First of all, winter rainfall is typically good for farmers growing crops such as grain, and previous negative IOD years have come with record-breaking crop production. In fact, negative IOD events are so important for Australia that their absence for prolonged periods has been blamed for historical multi-year droughts in the past century over southeast Australia.

Negative IOD years can also bring better snow seasons for Australians. However, the warming trend from human-caused climate change means this signal isn’t as clear as it was in the past. It’s not all good news. This is the first official negative IOD event since 2016, a year that saw one of the strongest negative IOD events on record. It resulted in Australia’s second wettest winter on record and flooding in parts of NSW, Victoria, and South Australia.

The 2016 event was also linked to devastating drought in East Africa on the other side of the Indian Ocean, and heavy rainfall in Indonesia. Thankfully, current forecasts indicate the negative IOD will be a little milder this time, so we hopefully won’t see any devastating events.

Is the negative IOD behind the recent wet weather?

It’s too early to tell, but most likely not. While Perth is experiencing one of its wettest Julys on record, the southwest WA region has historically been weakly influenced by negative IODs.

Negative IODs tend to be associated with moist airflow and lower atmospheric pressure further north and east than Perth, such as Geraldton to Port Hedland. Outside of Australia, there has been extensive flooding in China and across Germany, Belgium, and The Netherlands.

It’s still early days and more research is needed, but these events look like they might be linked to the Northern Hemisphere’s atmospheric jet stream, rather than the negative IOD. The jet stream is like a narrow river of strong winds high up in the atmosphere, formed when cool and hot air meet. Changes in this jet stream can lead to extreme weather.

What about climate change?

The IOD as well as El Nio and La Nia are natural climate phenomena and have been occurring for thousands of years before humans started burning fossil fuels. But that doesn’t mean climate change today isn’t having an effect on the IOD.

Scientific research is showing positive IODs linked to drier conditions in eastern Australia have become more common. And this is linked to human-caused climate change influencing ocean temperatures. Climate models also suggest we may experience more positive IOD events in future, including increased chances of bushfires and drought in Australia, and fewer negative IOD events. This may mean we experience more droughts and less drought-breaking rains, but the jury’s still out.

When it comes to the recent, devastating floods overseas, scientists are still assessing how much of a role climate change played. But in any case, we do know one thing for sure: rising global temperatures from climate change will cause more frequent and severe extreme events, including the short-duration heavy rainfalls associated with flooding, and heatwaves.

To avoid worse disasters in the future, we need to cut emissions drastically and urgently.

This article was originally published on The Conversation. Wright, University of Sydney; Andra S Taschetto, UNSW and Andrew King, the University of Melbourne, Melbourne.

Assam-Mizoram border clash: Congress forms 7-member committee to assess ground situation

The Congress has formed a seven-member committee to visit Assam’s Cachar district to assess the situation on the ground after violence erupted along the state’s border with Mizoram on Monday. The committee will submit a detailed report to the party on the matter, Congress in-charge for Assam Jitendra Singh said.

According to officials, at least five Assam Police personnel were killed while defending the “constitutional boundary” of the state with Mizoram and more than 60 people injured, including an SP, in a sudden escalation of the border dispute between the two northeastern states.

On Tuesday, Singh shared on Twitter a party circular dated July 26 that read, “A seven-member committee is to be formed with immediate effect… to visit Cachar and any other area to assess the Assam-Mizoram border dispute on the ground and the ensuing violence that has cost the lives of police personnel, amongst others.”

The panel members are Assam Pradesh Congress Committee (APCC) president Bhupen Bora, CLP leader in Assam Assembly Debabrata Saikia, MP Pradyut Bordoloi, Deputy CLP leader in Assam Assembly Rakibul Hussain, MP Gaurav Gogoi, president of All India Mahila Congress Committee Sushmita Dev, and MLA and APCC working president Kamalakhya Dey Purkayastha.

In a statement on Monday, the Assam government alleged that the Mizoram Police opened fire on its officials and civilians from two dominating high features with automatic weapons, including light machine guns (LMGs). However, Mizoram Home Minister Lalchamliana claimed that the state police responded “spontaneously by firing back” at Assam Police after its 200 personnel forcibly crossed a duty post manned by CRPF personnel and indulged in arson and firing and assaulted unarmed people.

Later, Union Home Minister Amit Shah spoke to Assam Chief Minister Himanta Biswa Sarma and his Mizoram counterpart Zoramthanga and urged them to ensure peace along the disputed border and find an amicable settlement. Assam’s Barak Valley districts of Cachar, Karimganj and Hailakandi share a 164-km border with Mizoram’s Aizawl, Kolasib and Mamit districts.

Debunking myths around use of virtual cards

The way we look at payments is evolving rapidly. With the eruption of the global pandemic, 81 percent of consumers prefer contactless, digital payments overpaying in cash. According to a report by ACI Worldwide, a US-based payment system company, digital payments in India are predicted to form 71.7 percent of the total payments volume by 2025.

These numbers are proof that the rise of digital-first banking solutions has just begun. This boom in banking technology has made virtual modes of payment more popular than before. One such payment instrument is- virtual cards.

The massive popularity of virtual cards has led to approximately 30 percent companies incorporating them into their payments strategy. As more and more organizations invest in contactless payment methods, this number is expected to rise exponentially.

Why are virtual cards favoured by many as a digital solution? The answer is the convenience and accuracy they provide compared to other payment methods. Despite them being the future of digital payments, there’s a lot of fog around virtual cards.

Let’s have a look at some of the myths surrounding them and their actual realities:

They cost more than other payment methods

One of the primary reasons for a relatively low rate of adoption for virtual cards is the misconception that they cost more compared to traditional payment methods. This, however, is far from true. In fact, virtual cards help companies save more.

According to a 2020 study, moving away from paper processes and embracing digital processes helps U.S. businesses save $150 billion annually. Research also suggests that the issuance of 1 million virtual cards can help banks save between Rs 100 to 150 million.

They offer compromised security

Organizations tend to associate virtual cards with high-security risks. In reality, virtual cards are undoubtedly one of the safest payment methods that exist in the market today. They are designed in such a manner that they can be used for specific purchases. Virtual cards have a single-use card number generated for a specific amount. This feature helps ensure that even in case of card data theft, hackers are not able to use them to make other purchases.

They face high payment failure rates

Contrary to popular belief, virtual cards ensure better payment success rates. They allow users to set append limits and provide more visibility and insight into the payment records, thus reducing the chances of a transaction failing.

They don’t offer flexibility with payments acceptance

Virtual cards are one of the most versatile methods of making payments. They are cost-efficient and also act as a great way to pay two highly under-banked segments- suppliers and blue-collar workers.

They block money

There’s a notion about prepaid/virtual cards that in case the balance is not exhausted by the user, the money ends up getting stuck in the card. This is untrue. Virtual cards are meant to be used within a fixed timeframe to make transactions. In case that doesn’t happen, the money gets instantly transferred back to the account without getting stuck in the card.

They offer limited control

The user has the power to fully control their virtual card. They come with the option of getting assigned to a particular vendor and the cardholder gets to decide who gets to access which one of the accounts.

In a nutshell, change can be uncomfortable in the beginning. The gradual shift from the use of physical to virtual/prepaid cards is one such case. When it comes to changing how payments are handled, users are likely to be resistant in terms of acceptance. This, however, doesn’t change the fact that virtual cards are the future of payments and have led to the boom of the BFSI sector. Due to their features like convenience, security benefits and transparency, they have already become a way of life for many and on the verge of garnering more acceptance from others as well.

The author, Murali Nair, is President- Banking at Zeta. The views expressed are personal

Dr Reddy’s Laboratories Q1 results: Profit falls 1.5% to Rs 570.8 crore, revenue up 11.4% YoY

Dr Reddy's

Pharma major Dr Reddy’s Laboratories on Tuesday reported a 1.5 percent fall in net profit for the first quarter of fiscal 2022 at Rs 570.8 crore, hit by lower operating income. The company’s net profit in the corresponding quarter of last fiscal stood at Rs 579.3 crore.

Revenue from operations grew 11.4 percent to Rs 4,919.4 crore from Rs 4,417.6 crore, YoY.

At the operating level, EBITDA decreased 12.3 percent to Rs 1,018.8 crore from Rs 1,162.2 crore, while EBITDA margin narrowed by 560 bps to 20.7 percent from 26.3 percent, on a year-on-year basis.

“The financial performance of the quarter has been driven by healthy sales growth. I am confident about improving our margins in the upcoming quarters which will be led by the scale-up of recent launches, new product launches, and productivity,” said G V Prasad, Co-Chairman & MD, Dr Reddy’s Laboratories.

Dr Reddy’s Laboratories’ Q1FY22 earnings missed analysts’ expectations as the CNBC-TV18 poll had estimated a net profit of Rs 700 crore on revenue of Rs 4,991.4 crore. EBITDA was expected at Rs 1,168.5 crore with a margin of 23.4 percent.

“While we continue to sharpen execution in our core business, we are also conducting pilots in areas such as Nutrition, Di tamer, and Digital Health & Wellness, which can be future growth drivers,” said Prasad.

The company’s revenue from Global Generics was at Rs 4,110 crore, registering a growth of 17 percent YoY, driven primarily by branded markets (India and emerging markets) and Europe.

“The overall growth was on account of new product launches and volume traction in the base business, partly offset by price erosion in some of our products adverse forex rates,” the company said in a regulatory filing.

Revenues from North America witnessed a growth of one percent on-year at Rs 1,740 crore but declined one percent sequentially.

Revenues from Europe at Rs 400 crore grew 12 percent YoY and one percent, QoQ. Revenues from India at Rs 1,060 crore were up 69 percent, YoY and 26 percent, sequentially.

Emerging Markets revenues during the quarter rose 14 percent YoY to Rs 910 crore.

Dr Reddy’s said it has received a subpoena from American market regulator SEC for production of documents concerning Commonwealth of Independent States (CIS) geographies. 

The probability of such actions and outcomes is not reasonably ascertainable currently, the company added.

Singapore will progressively facilitate international travel: Minister

Singapore will progressively facilitate international travel with countries that have managed COVID-19 well to reassert the city-state’s position as a business, travel and talent hub, a senior minister told Parliament on Monday. Minister for Trade and Industry Gan Kim Yong, who is co-chair of the COVID-19 multi-ministry task force, said that as a small and open economy, Singapore cannot close itself off to the world. Many parts of our economy require a steady flow of people in and out of Singapore – be it workers or visitors, the Channel News Asia quoted Gan as saying.

This is a critical move that will allow us to reassert Singapore’s position as a business, travel and talent hub, he said. Fully vaccinated people could also travel and do business more freely, he added. As a business hub, many of Singapore’s executives have to travel, while the tourism and MICE industry, and Singapore’s air hub status, critically depends on international connectivity.

Many in the international community have also not been able to visit their families since the start of the pandemic, he said. Globally, Singapore will likely be one of the highest vaccinated countries in the world. We will be able to regain strong air and maritime connectivity to a large number of countries, while ensuring that our healthcare system is well-functioning and not overstretched by COVID-19 cases, said the minister. He added that businesses have continued to show confidence in Singapore’s strong fundamentals during the pandemic, with investors committing SGD 17.2 billion in investment in 2020. This is the highest in 12 years.

Singapore has also attracted significant investments from major biomedical and electronics companies including Sanofi, BioNTech and GlobalFoundries. Gan sketched out a roadmap for businesses in Singapore to return to normal, offering the possibility of nearly all social and workplace restrictions being lifted.

As our vaccination coverage increases, we will be in a much stronger position to ease our COVID-19 measures safely and confidently, he said in a fifth update on the whole-of-government response to COVID-19. As such, the government will begin to adjust its safe management measures in stages, subject to trends in serious cases. This could mean fewer restrictions on social gatherings, larger dine-in groups and lower requirements and higher capacity for events.

Vaccinated individuals will be able to engage in a wider range of social activities and in larger groups, while unvaccinated individuals may only do so with negative pre-event testing results. Singapore announced tighter restrictions last week, with dining-in suspended and group sizes for social gatherings reduced from five to two people. This was in response to a spike in COVID-19 cases in the community.

Gan outlined the conditions for what he saw as a new normal. If the incidence of severe illness from COVID-19 remains low despite clusters emerging from time to time, we will eventually be able to arrive at a truly endemic state. Practically all social and workplace restrictions can be lifted, although some critical measures, such as mask-wearing and precautions for large events may remain, Gan said. With relaxed safe management measures, food and beverage, retail and other businesses that provide in-person services will see a return in demand, Gan said.

Progressively larger capacity limits will also provide relief to the tourism, cruises and meetings, incentives, conventions and exhibitions (MICE) sectors, although foreign tourists will take some time to return. Under such conditions, workplace restrictions will also ease. More workers will be able to go back to the office and businesses can conduct important face-to-face meetings and hold workplace events important for networking or team-bonding, he said.

Acknowledging that the last one and a half years have been a very difficult ride for business, especially the F&B, retail, sports and gym, and performance arts sectors, Gan said that the impact on them must have been very severe. There are several things businesses can do to prepare for reopening, he added.

They should encourage and facilitate all medically eligible employees, especially those involved in high-touch point activities, to be vaccinated. Those who cannot be vaccinated should be deployed to lower-risk settings. They should also integrate antigen rapid test (ART) into their work processes, especially for businesses providing high-touch point services or have workers that change frequently.

Employers should encourage workers to self-isolate and get tested if they are not feeling well or suspect that they may have been exposed to COVID-19. Doing so can help detect cases early and limit the extent of disruption to your businesses, he said. In addition, businesses should continue flexible work arrangements and introduce business continuity plans to strengthen operational resilience.

Infected cases will create much less disruption domestically than they do now, meaning that businesses can largely return to normal operations, said Gan. In an endemic state, businesses will not have to shut down premises for deep cleaning and the government would no longer need to commit huge resources towards contact tracing.

Those with mild symptoms may be able to recover at home and close contacts will only have to monitor their health without the need for quarantine or self-isolation, similar to how influenza cases are treated today, he said. Noting the tremendously difficult times faced by the people, he said, “We are so close to reaching the end of the tunnel. We will soon achieve a high vaccination coverage, which will allow us to move decisively to a COVID-resilient state. I want to appeal to everyone to not lose heart and work together to press on in our journey”, he said.

Equitas SFB, Equitas Holdings rally on back of amalgamation scheme approval

The shares of Equitas Small Finance Bank and Equitas Holdings were rallying on Tuesday after the board of directors and shareholders approved an amalgamation scheme for the companies on Monday. Equitas Small Finance Bank (SFB) has announced a swap ratio – for every 100 shares that you have in Equitas Holdings, you will get about 226 shares of Equitas SFB.

Currently, the SFBs capital base is about Rs 114 crore and as of July 26; the market cap was a little north of Rs 7200 crore and promoter holding in that equity base is of about 93.4 crore shares.

So, as per the swap ratio, Equitas Holdings will get 77.24 crore shares from Equitas SFB and Equitas Holdings will reduce its promoter holding by about 3 percent, from 81.75 to about 78.74 percent.

The reduction in number of outstanding shares is being done, assuming same market cap will up the price of the SFB’s shares. Therefore, the impact of reduction can boost SFB price to about Rs 73.75 versus Monday’s closing of Rs 63.15, which is an upside of 16-16.5 percent.

For Equitas Holdings, with the promoter holding coming down to 78.74 percent, the stake works out to about Rs 166 per share. So, the current holding of Equitas Holdings is Rs 4,254 crore, which post the scheme of amalgamation can move to about Rs 5681 crore, which is an upside of 33.5 percent. As of Monday, Equitas Holdings was being quoted at a significant discount of 28.1 percent.

For more, watch the accompanying video

Parliament LIVE: If you’re concerned about farmers, allow Lok Sabha to function, Tomar tells Opposition

Parliament session may be cut short as COVID-19 cases among Indian lawmakers rise - sources

Parliament Monsoon Session 2021 LIVE Updates: Lok Sabha was earlier adjourned till noon on Tuesday, the second time since the House convened for the day, after the continuous protest by Opposition members over the Pegasus snooping controversy and farm laws. After the House convened for the day at 11 am, the Opposition members trooped into the Well, shouting slogans and raising banners.

The Congress, CPI, CPI(M), TMC members were protesting over the Pegasus snooping issue, while the BSP, SP and Shiromani Akali Dal were protesting against three farm laws of the Centre.

Speaker Om Birla repeatedly urged them to go back to their seats.

“Do not compete with each other in sloganeering. Compete with each other to raise people’s issues,” he said.

Agriculture Minister Narendra Singh Tomar took a swipe at the protesting Opposition members and said if they are concerned about farmers, they should allow the proceedings of the House to continue.

He made the remarks while replying to a supplementary query related to an insurance scheme for farmers during the Question Hour as the Opposition members continued with their sloganeering on various issues, including the Pegasus spying issue and the agriculture laws.

“There are around 15 questions related to farmers. If the Opposition members are really concerned about farmers, they should listen to what the government has to say,” Tomar said.

“Disruptions are lowering the decorum of the House,” he said.

As the protest continued, the House was adjourned till 11.45 am.

The protest continued even after the House resumed and the proceedings were adjourned again till 12 noon.

Since the start of the Monsoon Session of Parliament on July 19, both Houses have been rocked by Opposition protests over various issues.

Stay tuned with live updates and developments