Invest In India » High Interest

Intnl investment on the rise in infra sector

Ziaulla Namani — Tue, 07 Feb 2012 07:15:18 +0000

According to PHD Chamber, industry body, the international investors have been majorly investing into the Indian infrastructure sector, mainly in the power, oil and gas, telecom and iron and steel segments, due to the high returns prospects.

The flow of external commercial borrowings (ECBs) that consist of bank loans, suppliers’ and buyers’ credits, fixed and floating rate bonds and borrowings from private sector windows of multilateral financial institutions like International Finance Corporation rose 50% to $36 billion during 2011 as against $24 billion in the previous year, according to the Reserve Bank of India data.

A report from PHD Chamber, said, “A closer look at the pattern reveals that the lion’s share in ECB is held by the infrastructure sector, contributing to about 80 percent of the total, which includes the telecom, power, oil and petroleum and iron and steel. The strong external funding can be attributed to high interest differentials available to foreign resources, vis-a-vis India, supported by high unexplored development opportunities in infrastructure within the country.”

Moreover, the external commercial borrowings are used as extra source of funds by private and public sector companies for financing expansion of the current capacity and also for fresh investment. These have become major source of funding for the development of the core sectors in India, mainly in the bad years when India had witnessed tight interest rate regimes due to the rising inflationary situations.

Use FD overdraft to pay for big purchase deals

Tushar Mathur — Fri, 19 Feb 2010 11:04:00 +0000

To make payment of big purchase deals go for overdraft facility rather than taking personal loan or swiping a credit card. In case of personal loan or credit card you have to pay high interest. Whereas in overdraft facility you can place a fixed deposit with a bank and avail this facility.

When you place your fixed deposit with bank you earn return on investment and can use the same money to leverage funds at a low interest rate which can be used for the payment of purchases.

Moreover in overdraft facility you can borrow funds at 1 per cent to 2 per cent above the fixed deposit rates. Currently, the deposit rates of most of the banks range from 6 per cent to 7.50 per cent for a one to three years time period. However, SBI is offering 6 per cent, ICICI Bank 6.25 per cent and HDFC Bank is offering 6.50 per cent interest on fixed deposits for a one-year period.

If the payment is done through credit card, it is split into equated monthly installments for over a period of one year, which means you might have to pay an interest of 36 per cent to 45 per cent per annum. Whereas personal loan is an unsecured loan, the interest rate can range from 16 to 18 per cent.

According to an official of Oriental Bank of Commerce, “It is always better to take an overdraft facility against a fixed deposit than pay through a credit card for long-term repayments’ because it will carry a minimum interest rate, even lower than personal loans”.

An official of United Bank of India said, “During the time when interest rates were very high, many customers who had placed their long-term fixed deposits managed at a very low rate to take the advantage by financing their purchase of cars.”

According to Financial planner Kartik Javeri, “During an emergency, it (overdraft) is the best source for financing, but one should also have the capability to pay money quickly.”

©2009 Copyright by Invest In India

Older mutual funds mean better returns?

Tushar Mathur — Mon, 07 Jul 2008 13:36:48 +0000

Keeping an eye on daily finance news and tips, I’ve realized something: of late, many companies have set up mutual fund houses in order to capitalize on India’s booming economy. But do you know which of these were the first to set up shop in India? And how are they doing now?

The Indian mutual fund industry boasts of some of the most popular names of the business world, both Indian as well as foreign. Reliance, ICICI-Prudential, Fidelity and HSBC are some of the leading fund houses offering mutual funds that have yielded stupendous returns. But there are some funds that have a long history of existence.

UTI: Unit Trust of India was the first mutual fund established in India by the Government of India. It offered many guaranteed return schemes that were in vogue during the 1980s and early ‘90s. These schemes invested exclusively in debt instruments that offered high interest in order to generate high returns for investors. The fund started offering equity funds that invested a major part of their corpus in the stock market and stock market instruments. But sadly, all the funds from this fund house have been laggards, partly due to the bureaucratic approach of the fund and partly due to the risk-averseness of the fund manager.

SBI: The State Bank of India, the country’s largest bank, ventured into the mutual fund business by establishing SBI Mutual Fund. It offers many funds such as Magnum Contra, Mangum Taxgain and Magnum Comma. Initially, none of the funds from SBI gave magnificent returns. But then the fund manager changed his approach and revamped his fund offerings. As a result, some of SBI’s funds like Contra and Taxgain became the most popular funds due to their ability to generate high returns.

Franklin Templeton: The story of Franklin Templeton is slightly different. Basically, Franklin Templeton is an American mutual fund house. When it wanted to enter India in 1996, it bought out Kothari Pioneer ITI Mutual Fund that had been in operating since 1994, thus giving it a presence of over 17 years. Franklin has some of the best performing mutual funds in the country — Franklin Taxshield is one of the most consistent tax-saving mutual funds. Besides, Franklin Prima Plus, Prima and Bluechip have brought smiles on the faces of their investors by giving astounding returns. This is the only private sector mutual fund in the country to offer a pension plan, the Templeton India Pension Plan.

HDFC: The Housing Development Finance Corporation marked its entry by taking over Zurich Mutual Fund in 2001. HDFC Equity (previously Zurich India Equity Fund) has been a consistent performer and has outperformed its benchmark index every year. Hence, it finds a place of pride in every investor’s portfolio. HDFC Taxsaver, Long Term Advantage Fund and Top 200 are other funds from this house that have yielded spectacular returns.

Birla: Birla Mutual Fund is the fund house belonging to the Aditya Birla Group. One of its funds, Birla Advantage Fund is the oldest in the country. It gave spectacular returns till 2000. However, it made the mistake of concentrating its portfolio on the IT sector and with the bust of this sector, the fund’s performance deteriorated. Some of its other funds, however, such as Birla Equity Fund, have yielded handsome returns.

Have you invested in any of these funds? Were you happy with the returns generated?

I personally have bought funds from HDFC and SBI and they are doing pretty well.

©2009 Copyright by Invest In India