Resident to NRI

Have You Taken These Financial Steps Before Becoming An NRI? 

Are you planning to go abroad and become am NRI? Today you are a Resident Indian. Tomorrow you may become an NRI if your employer provides an opportunity. When an opportunity like this knocks at our door, are we ready to face the change? Are we prepared?

Creating a Checklist or ‘to-do list’ helps to ensure consistency and completeness in carrying out a task. Becoming an NRI is a major transition which definitely needs a checklist. Here is a personal finance check list to be taken care before departing from India.

NRO & NRE ACCOUNT:

The first thing to do is to convert your savings bank account to an NRO or NRE account. An NRO or non-resident ordinary account is like an ordinary savings bank account that gives a domestic rate of interest. This account can be used for depositting your domestic earnings like rent, interest and dividends and remittances from abroad into this account. Cheques can be issued for EMI and investment, but there are restrictions for transferring money to the country of residence. Money in this account is non-repatriable.

You can transfer current income earned in India, but transfer of sales proceeds of property and investments can be only to the extent of 1 million $’s a year. A certificate from a chartered accountant, declaring that all taxes have been paid has to be furnished. It is important noting that an NRO account invites a tax of about 30.9% at source.

An NRE or non-resident external account can be opened with foreign currency when you wish to transfer substantial money to the country of your residence. There is neither restriction to remittance nor any taxes in this account, but you would only get a low rate of interest. This account offers no facility to receive incomes in the shape of rent, interest and dividends, but you can make local payment in rupees, invest money and receive proceeds from sale of investments and property.

It is much easier to open both these accounts in India, with you requiring giving 2 passport size photographs along with a copy of your passport and visa. In case you are already abroad, it is mandatory to get an attestation from the Indian Embassy or Notary before sending it to the bank branch.

DEMAT ACCOUNT:

The next step is to close your domestic demat account and open a non-resident ordinary (NRO) demat account under the Portfolio Investment Scheme (PINS). This is mandatory, as there are restrictions to the amount of investment that an NRI can make in the shares and stocks in Indian companies; it should not exceed 5% of the paid–up capital of any Indian company. You need to transfer your existing share holdings also into this account.

You have the option of 2 types of separate demat accounts namely for repatriable and non-repatriable shares and this account is to be separate from other bank accounts. Your demat service provider would help you on submission of copies of passport and visa. Once you return back to your country you can close the PINS demat account.

Power Of Attorney:

The third step is to give the power of attorney to someone you trust in India to manage financial transactions in bank accounts, buying and selling real estate, renting out property and signing up tax forms. The power of attorney could be general, where the authority entrusted holds good for banking as well as real estate transactions or could be specific, where the authority is restrictive to only certain transactions. Consulting a lawyer and submitting attested copies to the concerned people like banks and mutual funds proves essential.

Update your NRI status in Various KYCs:

The last step is inform the mutual fund, bank and insurance companies by submitting the updated Know Your Customer forms stating your change of status as a non-resident Indian. Your Financial Planner and Agent and bank branch could help you best regarding the different formalities that are required.

Now you are all set to assume your NRI status.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Indian Automotive Brands & Segments

There was a time (1980s) when we had only two Indian Automotive brands - Padmini & Ambassador. The consumers had only two options and the estimate Annual Sales used to be around 20000 numbers. Maruti pitched in the year 1983 with its legendary Alto which challenged the monopoly of HM & Premier Automobiles. Post liberalization many foreign auto makers set shop in India. Fiat, Ford, Peugeot were the early entrants into the Indian market realizing its potential. Soon we saw an upsurge in demand and our home-grown Tata Motors jumped into the bandwagon. Within a short span of 25 years the number of OEM's in the Indian market grew to 25! The market which was churning out 20000 numbers now grew to a level of more than 20 Lakh vehicle sales annually.

With demand grew competition, so did the complications. Customers were spoilt for choice! There were so many options in the market, that it had to be regularized. Hence, SIAM decided to divide it into SEGMENTS. It was primarily a division based on the length of the vehicle. The Segmentation as per SIAM (considering the length) and the Indian Brands in the segments is as follows -

1) Mini (A1) / A Segment

The stalwart segment which boats of the most popular brands such as Maruti 800 & Tata Nano. This segment had grew very fast in the initial years of expansion of Indian Automotive Industry. It started shrinking with the formation of new segments. It was recently revived with the entry of Tata's Nano and has also triggered other OEMs to bring products in this table. Bajaj/Nissan/Renault JV is expected to bring another offering in this segment. All would depend on how Nano sales progresses.

Brands:

2) Compact Hatchback (A2) / B Segment

This is one of the fastest growing segments in India and accounts to more than 50% of Automotive Sales. This Segment has a never-ending number of brands lined up and the list keeps growing. The value-for-money, city friendly and practical qualities of products in this segment has made it the peoples favorite. We expect this segment to stabilize now and predict the dynamic growth of value for money sedans in the next few years. The Brands in this Segment are -

3) Midsize (A3) / C Segment

This segment also has many models today catering to a wide price bracket. It is classified into entry-level and premium 'SEDAN' categories. 2011 saw maximum launches in this space. This highlights the importance OEMs are giving to this segment and is bound to grow exponentially in near future. Models -

4) Executive (A4) / D Segment

Majority of the models in this segment were brought into the Indian market as CBU's. As volumes increased, localization and price rationalization were the after effects. This Segment has become the obvious choice of successful professionals and stands as an attractive option between Sedans and Premium Saloons. The offerings in this segment are -

5) Premium (A5) / E Segment

The Luxury or the high end segment is the only segment which has shown signs of sustainable growth in past 2-3 years. This has attracted a lot of Premium Auto Manufacturers to explore Indian terrain and India has emerged as one of most important Strategic Markets for these OEMs.  

6) Luxury (A6) / F Segment 

The choice of CEO's, Managing Directors and the ultra-luxurious chaffuer driven car - would be the right definition for the offerings in this space.

7) SUV / MPV / MUV

Considering the poor infrastructure and road conditions - this segment has been the most rational choice for all. This segment has always been the obvious choice for Rural masses and is still bound to grow further. With immense people carrying capacity, off-road capability, driven by diesel and with the 'image' factor attributed to it; it has grown leaps and bounds throughout. You'll not be amazed to see the number of offerings in this segment -     

9) Convertible/Coupe/Supercars

This is an extension of E & F segments. With the advent of Ferrari, Bentley, Lamborghini, Porsche, etc in last few years the number of offerings have amplified. After the popularity of F1 and with the increasing number of billionaires in India, we are sure to see a much of these on Indian roads - 

The exhaustive list of Brands mentioned above are the right indicator of the Indian Automotive Growth story. But the million dollar question is - how many of the brands mentioned above are going to remain in the next few years. 

2011 also saw the demise of the iconic Fiat Palio. Auto makers need to understand the competitiveness of the Indian Market - and there is no room for failure! 

Insurance For Home Makers

Is it necessary to have Insurance For Home Makers?

It has always been a question of common belief that the male member or the bread winner of the family only needs to be insured. This belief has emerged due to the fact that the financial interests of the other dependent family memebers had to be protected in case of death of the bread winner. However changes of lifestyles and with more women being employed in lucrative professions both in big cities and towns the perception of insurance has changed.

In addition the entry of many MNC-Indian insurance joint ventures, and their bringing out unique solutions and products, it is time that we all looked into taking insurance policies for home makers too. Home mekaers have been neglected all these years with regard to insurance.

It would be interesting to study why home makers too need insurance:

Ø  It is significant to note that in a country like India, homemakers contribute to households in the form of cooking, education of children and other menial work. But their importance and value of services evaluated in monetary terms is greatly neglected. It is true that the absence of these services on the death of the homemaker a big financial impact on lower and middle income families.

Ø  Another noteworthy factor that places a value on insurance of homemakers is that they provide great counsel to their spouse and children. So losing them would mean that lots of money would have to be spent on counseling services proving that loss of love and companionship is priceless. 

Ø  It is also true that no one could replace a home maker mother and her loss could make it difficult to get competent and loving people to look after the family and children. It is also significant to note that the cost of competent daycare centers could be high and the cost of not insuring a home maker in lower and middle income families could be pretty high.

Ø  There is a money value behind each and every household work performed by the home maker. In case of any eventuality to the home maker, one need to shell out more money to upkeep the house in order.

Considering various aspects like paying expenses out of the pocket, remarriage and insurance, insurance proves to be the most reliable and safest solution. The insurance cover should be proportional to the amount of financial loss that would be suffered or through a need based cost replacement analysis.

In addition to insurance to guard against financial liabilities in case of death of a home maker it is vital to also plan for a dream retirement home and college education funds through various insurance linked plans.

Health Insurance:

It is also true that insurance needs to be taken for critical illness, prolonged illness, accident or a major hospitalization for all family members. It would also be beneficial to take health insurance policies early in life to gain benefits like full cover of all ailments and lower premium.

However each family could have their own unique insurance needs, so taking the advice of a trusted financial planner in the form of an insurance advisor or trusted bank would help. They would render you correct information, best skills and advice based on your family’s financial circumatances, priorities and risk profile.

Insurance for the whole family also requires that all the adult family members be fully aware of all the insurance policies taken, their benefits and exclusions and where they are kept. Having an open discussion about long term savings and insurance plans both for the bread earner and home maker and for children build a better family understanding and bond. They also convey the message that proper life insurance coverage should form an integral part of financial planning in families.

(The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.)

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Shootout: Entry-level Luxury Bikes Segment, India

Indian 2 wheeler Market was the only rejoice in the ailing Indian Automobile Industry. While Industry experts believed that Hero Motor Corp would suffer after its divorce with its Japanese partner Honda, Hero proved all the analysts wrong by beating the market expectations. During the first half of the year Hero's market share grew marginally to 73 percent from a market share of 70 percent last year. HMP also recorded its all time highest retails of 6.5 Lakh units in October 2011.

Now coming to the Luxury Performance Bike market in India, Hero again has been the first mover in this category. It launched Karizma way back in 2003 and can be easily crowned as India's first 'realistic' superbike. It not only marked the entry of performance biking but also allowed Indian Bikers to elevate from the traditional 100cc/150cc category. But volumes were minimal, Indians weren't ready to shell out the money just for the premium price tag and was meant unsuitable for the Indian roads.

But as our Infrastructure & Economy improved, the bike found many takers. Indian Bikers were slowly inclined towards much powerful and good-looking bikes. Larger and Meaner bikes found place in the garages of many Indian homes. Such was the craze that motivated much premium brands like Harley, Ducati, Hyosung, etc.. to set shops in Indian soil.

As we all know, Indians like to be 'spoilt for choice'. Hence there was the launch of India's first of its kind 'super sport bike' - Yamaha YZF R15. This 150 cc monster instantly won hearts over and became the face of Yamaha's performance oriented culture. It also played a vital role in reviving Yamaha's identity in the Indian terrain. This slowly turned out to be the crowned jewel in Yamaha's stable. It re-defined the ways of Indian 2-wheeler enthusiasts thought about a performance bike. R15 set many benchmarks in terms of design, ride-quality, performance and overall appeal. It also proved to be a crowd puller in many of its showrooms which also improved the sales of its sister brands too.

And 2011 saw the competition heated up. Indian 2-wheeler space generated interest in Bike Manufacturers throughout the world and these manufacturers were pretty serious about the size the country had to offer. Honda's R&D gave birth to a product that was specially designed and manufactured keeping developing countries into mind. The overall proportions of the new baby - CBR 250R never made it look like a 250cc segment bike. It put the elder siblings to shame. It was launched in early 2011 and garnered tremendous bookings in the Indian soil.

The sales numbers were as follows -

Although the overall size of the luxury bikes market accounts to around only 1% of the Industry; it is bound to grow exponentially . This is evident from the fact that Honda sold more than 11000 of CBR 250R just within 6 months of its launch - even though there were major supply issues after the Japan earthquake. And the recent upgrade of the Yamaha R15 (version 2.0) clearly signifies the seriousness of the manufacturers in this space. Even Bajaj is planning for a 250cc Pulsar anytime soon in early 2012. Also Suzuki would be launching a 250cc bike in the same space. 

Keep looking for much activity in this segment. This is obviously the most sought after space in the Indian market now (not for generating volumes, but for creating the brand for the manufacturer).

Critical Illness: What a Disaster?

Ursula K. LeGuin quotes “The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next.”

I agree with Ursula K. LeGuin for critical illness could strike anyone at anytime and in any place with the modern trend of rise in lifestyle diseases that call for prompt and costly medical care. The necessity of critical insurance or health insurance with critical illness riders was strengthened with my friend Mr. Karthik being diagnosed with multiple blocks in his heart that involved a treatment of 3lac. Then one more friend told us all about the necessity of critical illness insurance and health insurance with critical illness.

Understanding all about critical insurance and health insurance with critical insurance riders would tell us that most such health insurance policies would cover 12 critical illness besides others. They could include heart attack, coronary artery bypass surgery (CABG), cancer, kidney failure, stroke, coma, liver failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, aorta graft surgery and total blindness.

These diseases and surgical procedures could be wanted by anyone, at any time and anywhere and hence cannot be neglected at all. Health insurance companies generally undertake to pay a lump sum for the treatment of these diseases irrespective of the amount spent. Some companies may include such coverage on payment of additional premium every year. This could vary from company to company and also between companies dealing in life and general insurance. 

Features of Critical Illness Insurance

Ø  It is quite possible to take up critical insurance policies or health insurance with critical insurance riders. When a critical insurance policy is taken the entire amount of the sum assured is paid on treatment of the critical insurance irrespective of the amount actually spent. Such a policy is a benefit plan.

Ø  The benefit payment under the Policy will generally be paid to you on survival for more than 30 days on post diagnosis of the critical illness.

Ø However critical illness insurance will not cover ordinary hospitalization and medical expenses. While health insurance policies with critical illness riders would offer extra protection against critical illnesses with payment of additional premium. They would also pay the lump sum on the treatment of the critical illness.

Ø  However one needs to understand that critical illness insurance does not have any maturity value and just offer cover in case of critical illness. Such amounts may lapse on their not occurring. Life insurance policies offering critical insurance riders have a maturity value but no maturity value is allotted for riders. Riders merely cover the risk of critical insurance. However this need not deter one from taking up critical illness insurance, as it is well worth to cover risk of high expenses with critical illness.

Ø Having a look into the premium on these policies would give us information that the amount of premium on critical illness insurance and riders for critical illness would vary depending on the age of the insured and the illnesses that are covered.

Ø Critical illness insurance could have exclusive coverage for all critical diseases or for only some, the terms and conditions varying from company to company. A check would prove useful before taking up a critical illness insurance or life insurance with critical illness riders.

Ø Tax benefits under Sec 80D or Sec 80C of the Income Tax Act are available. 

Get critical insurance today

“Caution is a most valuable asset in fishing, especially if you are the fish.”

I am sure you would not prefer to be the fish that is not cautious, for life is so sweet and short. Mr. Karthik and his family are now out to advice families like them, for they believe their experience could educate others too.

What are you waiting for to take protection today? Information is nothing more than mental garbage if it doesn't transfer an individual. Unimplemented knowledge is a burden. Our problem is not ignorance; but inaction. Don’t fall into this trap.

One of these days is none of these days; today is the day to start the big job. Just browse the net, discuss with financial planners for better understanding of the coverage required and product clarity, and get quotes and rest in peace with the best critical illness insurance for you.

(The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.) 

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Felt like throwing rocks at this star!

It would be the first time I would be expressing my review on a movie on a public forum; but I couldn't stop myself from doing this. It is with great expectations and after reading fantastic reviews I decided to step into the theater. It wasn't a pleasant experience at all, I anticipated a lot more from the veteran Imitiaz Ali after watching his previous masterpieces - Jab We Met & Socha Na Tha. I had always been a fan of Imitiaz's way of describing a tale - peppy, unpredictable, intriguing and with lot of fun.

Although Rockstar's ending was unpredictable though; the story seemed a lot humdrum. I wished it would have been more straighter to our senses. At one point I couldn't make out why Ranbir disappeared from Heer's marriage and why his parents suddenly dis-owned him. And how our JJ (Janardhan Jhakhad) gets so serious about Heer (was that one HUG that changed the feelings altogether?). Why does JJ become a Devdas - was it separation from Heer / feeling of being rejected from his family? Why does Heer name our JJ 'Jordan'? What made Jordan crave to go to Prague (was this the confidence Jordan had that he could get intricate with Heer)? I couldn't solve a mystery and another question would pop up.

Rockstar's tale starts with a 'JHAPAD' for entertaining the crowd at the Bus Stop. This is the moment where i wish it would have been better if he was named as Janardhan Jhapad. To be fair, I somehow loved the first half of the movie. I could relate the madness of Heer to that of Jab we Met's Kareena. The idea of fulfilling one's dark desires clicked me. Heer's idea of 'enjoying' her life before marriage by - watching Jungli Jawani, drinking desi alcohol, driving a motorbike, roaming around the most scenic places was just exciting to watch. Another thing (and also the most important factor) that worked well for the movie - MUSIC! I was transformed to a different world when our JJ touch the highest note while singing "Kun Faya Kun". Also I also sang in chorus "Nadaan Parindey Ghar Aa Jaa" without realizing! My feets were tapping to the songs all the time.  To sum it all - it was a one man show - Ranbeer Kapoor. He is undoubtedly one of the most mature actors of his time. The way he has carried his role is above all. And the costumes/hair style has added the oomph that no one could miss.

What disappointed me was the second half. I just totally lost the track here. I couldn't realize whether it was JJ's separation or Bone Marrow that had caused Heer the critical illness. Why couldn't the 'magical touch' revive Heer off the tragedy. And how did JJ notice Heer's sister in the crowd when he was totally disconnected from the outer world. Imitiaz totally lost out in the second half. The movie would have been a disaster if AR Rahman wouldn't have graced with the lovely songs. Nargis Fakhri was another weak link in the movie - I could see similar expressions in her face all throughout the movie. If I was asked to rate the movie, I would rate it 2 out of 5. If you really want to enjoy the music; only then step into the cinema hall. Else it is a total waste of time.  

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New Skoda Citigo - For The City

When the government announced the hike in fuel prices the automobile companies have started to focus more on small cars that consumes less fuel and thus have lower maintenance / operating costs. The Czech automaker Skoda Auto is now planning to bring its hatch Skoda Citigo. As the name suggests 'citygo', the new car will be a city car and is going to hit the Indian Car market soon.

The new Skoda Citigo is based on the Volkswagen Up. When we compare the two cars the difference lies in the headlamps, newly stylised tail lamps, different alloys wheels and refurbished bumpers. Moreover, Citigo is one of the cars to offer emergency braking functionality.

European Version - 3 door Citigo

 The car will be available in a three door version but it can be assumed that India will get a 5-door version. The design of Citygo is unique and doesn’t look like the trademark Skoda models (especially that traditional familiar grille). In three door version, the 'Easy Entry' system allows easy access to the rear seats. The same can be expected in the India bound 5-door version. The engines also will be available in two trims; one with three-cylinder 1.0 litre petrol engine will be producing 60 HP and 75 HP for the international markets. There are rumours also that the car will be available in electric version in future as well. Citigo is expected to deliver a decent mileage and with very low emissions.

The car looks sporty, compact, muscular body panels and narrow vertical tail lamps. When you look it from inside, the interiors of Citigo looks fresh and lively. It has same two-tone color theme as seen on other Skoda models and to keep the costs on the lower side it’ll have same parts as that of the Fabia. The steering and the gear lever both have similar looks as that of Fabia and moreover, the two smaller pods in the speedometer console have also been derived from the Fabia.  When we talk about its safety - the top-end Citigo will come with ABS and air-bags. It’ll also come fitted with head-thorax side air bags – ‘a first time for India’, to protect the head of both the driver and the front seat passenger.

The Skoda Citigo price will be range from Rs 3.5 lakh for the base model and the top end is expected to be around Rs 5.0 lakh. This pricing can work wonders in Indian market if bought to reality. The design is fresh from the Skoda stable and seems a lot inspired from its “Mission L” concept. Citigo is a perfect example of Skoda’s new philosophy ‘Simply Clever’.