Provident Fund regulatory and devopment authority

Provident fund regulatory and development authority was established  by Government of India on 23^rd August, 2003.  The       PFRDA Bill, 2005 is awaiting approval of Parliament. Pending passage of the Bill, the Government has, through an executive order dated 10^th October 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is development and regulation of pension sector in India.

The New Pension System reflects Government’s effort to find sustainable solutions to the problem of providing adequate retirement income.  As a first step towards instituting pensionary reforms, Government of India moved from a defined benefit pension to a defined contribution based pension system by making it mandatory  for its new  recruits (except armed forces) with effect from 1^st January, 2004. Since 1^st April, 2008, the pension contributions of Central Government employees covered by the New Pension System (NPS) are being invested by professional Pension Fund Managers in line with investment guidelines of Government applicable to non-Government Provident Funds.

Twenty two (22) State/UT Governments have also notified the New Pension System for their new employees. Of these, six states have already signed agreements with the intermediaries of the NPS architecture appointed by PFRDA for carrying forward the implementation of the New Pension System.   The other States are in the process of finalisation of documentation.

Government has announced that NPS would be available to every citizen from 1^stApril, 2009 on a voluntary basis.  Accordingly, PFRDA is in the process of extending the NPS architecture so as to make it available to all citizens.  The NPS architecture is transparent and will be web-enabled.  It would allow a subscriber to monitor his/her investments and returns under NPS, the choice of Pension Fund Manager and the investment option would also rest with the subscriber. The design allows the subscriber to switch his/her investment options as well as pension funds. The facility for seamless portability and switch between PFMs is designed to enable subscribers to maintain a single pension account throughout their saving period.

PFRDA has set up a Trust under the Indian Trusts Act, 1882 to oversee the functions of the PFMs.  The NPS Trust is composed of members representing diverse fields and brings wide range of talent to the regulatory framework.

The New Pension System has been designed to enable the subscriber to make optimum decisions regarding his/her future and provide for his/her old-age through systemic savings from the day he/she starts his/her employment.  It seeks to inculcate the habit of saving for retirement amongst the citizens.

Posted by- Gitika Geetu

Commoditiy price and Interst rate?

Commodities*

Gold              Rs18,670 per 10 gm
Sliver             Rs30,760 per Kg
Ind. Crude     Rs $71.09 per barrel

Interest Rate*

10-YR Govt. paper-      8.04%
Call Rate-                      4.65%
PLR Range-         11.0-15.75%

*As on 26 Aug. 2010

FII inflow

Conutry                  Net Inflow($ mn)*

India                          2,073.90
Indonesia                           269
Janpan                       1,273.70
Philippines                         172
S Korea                        -294.3
Taiwan                          -518.9
Thailand                          390.7
Vietnam                               23
Pakistan                            37.5

Source- Bloomberg
*Month to Date

Download NCFM course material?

National Stock Exchange launched various course about capital market.Some of the course material you can download from below link.For more information about NCFM log on to nseindia.com

Financial Markets: A Beginner's Module

This is a basic level programme for those who wish to either begin a career in the financial markets in India or simply learn the fundamentals of capital markets. The course is structured to help understand the basic concepts relating to different avenues of investment, the primary and the secondary market, the derivatives market and financial statement analysis. Mutual Funds: A Beginner's Module Mutual funds have become a much sought after investment product in recent years. This course demystifies the concept of mutual funds and helps create awareness and knowledge about the industry and its functioning

WHAT IS ULIP?

A person named as chintamani has lots of dependants in his family .and  he was the only source of earning in his family. So his income was not enough for his family and he was looking for some extra earning . At that time  he thought about investment and which should give a high return also. But as he also wants to secure his life because if anything happens to him who will take care of his family. At that time he thinks about his life insurance and plus mutual fund for the investment. But he saw the charges and the premiums will be high if he invest for a long term in this way . At last he got a new product in the market that is ULIP(unit linked insurance plan) which give insurance plus investment with high commission comparing to other product available in the market. When he listen about this product and became very happy and removed CHINTA from his name and keep only MANI. 

Posted By- JANAKI CHOUDHURY

HOW TO CALCULATE SENSEX POINT?

SENSEX is calculated on the basis of free float market capitalization (30 stock)by taking base year 100(1978-19879).  Free float market capitalization is define as the the value of all the share available for public trading excluding,FDI holding, employee holdings(employee welfare fund), private corporate,the promoter equity.

How 30 stock is selected.

       

       Listing history

       Trading volume

             Market caplization(No of outstanding share * market price)

             Weight in sensex

              Sector etc

Formula:

SENSEX=Sum of free float market cap of 30 benchmark stock * Index factor

Index Factor= 100/Market Cap Value in 1978-79

100 is the index value of 1978-79

Let us assume SENSEX has only 2 stocks namely TATA STEEL and  AIRTEL.Total share in TATA STEEL share 600 out of which 200 are held by promoter and only 400 are available for pulic trading . AIRTEL has 1000 shares out of which 500 are held by promoterd and 500 are available for trading . Assume price of AIRTEL stock is Rs150 and TATA STELL is Rs 300 then free-floating market cap of these 2 companes.

(400*300+500*150)=1,20,000+75,000=1,95,000

 Sensex = 1,95,000*100/30,000=650

Let assume market cap. during 1978-79 was 30,000

Same technique is applied to measure sensex but difference is -instated of 2 stock we take 30 stock for sensex.

Source-http://www.bseindia.com/about/abindices/bse30.asp

How understand stock market digit?

SENSEX 18,15050 .......?

Sensex indicate the overall performance of BSE (Stock Market).First 18,150 point indicate market performance ,green  arrow indicate increase of stock market and 50 indicate how much it increased today. If we deduct 50 point from 18,150 then it is Sensex's yesterday's performance i.e 18,100.If it red with down arrow then sensex performance is negative in comparison with yesterday

                                                            

What is REPO?

One day I was required with money and I asked  my father for it . My father gave me the required sum and in return I promised him to pay back the said amount after a short while.

Here we can say that the FATHER is the regulatory authority of bank i.e RBI

The son is any commercial bank ( like SBI, ICICI, AXIS BANK etc )

Repo Rate - The interest rate at which banks take money from the RBI 

MORAL OF THE STORY

Any commercial bank borrowing money from the RBI is REPO MARKET

What is call money market?

Mr.Popat Lal is a friend of my father and stays near our residence.One day  few guest arrived at  Popat Lal's home but unfortunately Popat Lal did not had sufficient money to meet for dinner requirements. He went to our house and asked for some monetary help from my father and promised to repay the taken amount along with interest after few days.

Portraying this picture into our finance terms we can say that Mr Popat Lal is a bank (like SBI, HDFC etc) and my father is another bank (like PNB, UCO, UNION BANK etc)

CALL RATE

The rate of interest by which one bank takes the money from another bank

MORAL OF THE STORY

 It is an inter-bank lending system for few days 

What is Mutual Fund?

Suppose three friend are interested to invest in stock market but no one have any idea about stock market.They gave this money to one the friend's father who has good experience in stock market operation.The father invested this  money in stock market and gave return plus capital to these three friend. This system is called Mutual Fund.

So the three friends are investor and the father is the mutual fund institution who took the money to invest  in stock market.

Moral of story-Mutual fund is a vehicle by which you can invest your money in stock and debt market.

Difference between NSE and Nitfy

 Many students ask the difference between NSE and Nifty.We are giving you an example where you can understand the difference.Most of the Sunday we visit BigBazzar to buy dress,CD,book etc.In bigbazzar you find dress material at ground floor,food in food court and cosmetic in cosmetic section so as to have convenience for buyers.

So National Stock Exchange is just like Bigbazzar i.e stock market and inside the market different store are there like Nfity,S&P CNX Nifty,Nifty Junior.

S&P CNX Nifty / Nifty--Combination  50 company.

S&P CNX 500 Nifty--Combination  500 company.

Moral of Story -NSE stock market.Nifty and CNX NIFTY 500 equity are Index.

Welcome to Finclub

Dear friend,

Thank you for visiting this blog.The basic objective of this blog is to enhance the finance literacy between us.We will be extremely happy if you will share finance related article with us.Simply send your article in our mail i.e finclub.asbm@gmail.com