Financial Services – Dutch Uncles

Good Money Habits To Start Off With

Vaishali Das — Sun, 10 Oct 2021 03:35:07 +0000

Millennials who have their entire life in front of them, usually have the zeal of being independent, setting on their own financial choices, and so forth. In the fervour, many young investors miss out on managing bad choices. In the present economic situation, inflation erodes the value of your money over a stretch of time if it is not invested wisely. Having said that, it is usually a dilemma for investors to choose the right financial window and get started with their money making process. This is where we need to acquaint ourselves with wise money management and investment practices that will help an individual to set a firm foundation for a smooth financial future.

In the recent episode of MentorED – a LIVE Workshop Series by Dutch Uncles, the esteemed speaker, Ms. Shweta Jain enlightened the audience who joined LIVE from across four platforms – LinkedIn, YouTube, Twitter, and Facebook – about the good money habits to start our investment journey with and shared some money management strategies as well. Ms. Shweta Jain, Author and Founder of Investography Pvt. Ltd. is a Certified Financial Planner who shares a passion for providing financial literacy to new and existing investors. With an experience of more than 16 years in the financial planning, research, and client services arena, Ms. Jain has conducted 1000+ workshops for more than 35,000 individuals and advisors for corporations like Google, HP, Accenture, JP Morgan, JC Penney, HPCL, etc.

In brief the session had the following takeaways:

Saving versus Investing – How inflation impacts portfolios
Insurance – How it is treated as a stepchild
Starting early versus starting late
How compounding works and why don’t we make money on our money

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Do not save what is left after spending, but spend what is left after saving

- Warren Buffett

Good Money Habits

What do you answer when someone asks you about your well-being? We generally say we are fine or we are doing okay or not so good, if we have any problems, right? Similarly, being financially well is equally important and one should not hide or shy away from seeking help. The foundation for being financially well comes with habits. A habit is something that makes or breaks your future. So when it comes to financial matters everything boils down to what you want out of life and what are the milestones you want to achieve.

Elaborating the concept of having good financial habits, Ms. Jain further mentioned in the session about the meaning of being financially independent, how insurance can be a gateway to a safer life, clarity regarding the savings and investments and the basic good habits that one should follow. Talking about financial independence, Ms. Jain gave few examples about what financial freedom meant to different people. It was surprising to know that everybody might have invested in the same stock but what they want out of those investments is different. This is because when we assign meanings to all these investments, the time frame is clear and one can map out their journey correctly. Once you know what financial independence means to you, you will automatically come to know what to do with your money.

Coming to the topic of insurance, it is divided into three categories: Life insurance, Health insurance, and Critical insurance. Ms. Jain claimed that insurance is her top most priority as it protects not only the individual but also their loved ones. The risks here are totally different from the risks in equity. Life insurance gives you the promise of protecting your family when you are not around anymore. Basically, if you have a sum of money today, your life or your family’s future is protected. If you are hospitalised you get health insurance and if you are recovering from a life threatening illness, a critical illness policy will help you sail through that time.

Having said that, what exactly should be the good habits that an investor should follow? Well, for that Ms. Jain mapped out a basic flowchart explaining how evaluating your insurance cover, evaluating loans is important and should be done periodically. One needs to save for their goals first and postpone spending in order to gain wealth and allocate their assets according to their risk taking capacity. She said, “when you look at your investment, do you want to eat better or do you want to sleep better”, if you want to sleep better then you should invest in safer assets and if you want to eat well, you will have to beat inflation and go for growth assets like equity.

Audience Asks

From my understanding, there’s no right time to invest but can you list some reasons as to why one should start investing early and what all financial options will be beneficial for millennials like us?

Ms. Jain answered this question by giving a personal example of how she started spending more, unconsciously, while owning a credit card. Eventually swiping her credit card became a habit, in her words, “a habit that I want to break”. Ms. Jain explained that there is no right time to invest and it is intertwined with your goals and aspirations. Talking about the beneficial aspect of investment, she said, if you have long term, high aspirations, then you should invest in equity. It is based on choices, whether you want to play safe and invest your entire money at once, for a long term goal, or if you want to take that risk and keep investing in small amounts on a monthly basis to reach that goal. Ms. Jain advised not to fall into the trap of FDs, rather start investing in equity, and be consistent.

I wanted to know something about SIP, which is more profitable – short term or long term, because I have seen people withdraw their money when there is a downward trend in the market.

Ms. Jain chuckled while answering this question and talked about the basic human nature of following a herd. She said, “Although it seems much safer, don’t follow the herd and do what is right for you”. Ideally SIPs in the long term are much more profitable but it is something that should be towards a goal. So if you have a short-term goal, there is nothing stopping you from investing in SIP, for that duration of time. Ms. Jain gave an answer related to her life, about how she is doing SIPs for her son’s school fees, which is a short term goal and for the long term, she is saving for her retirement as well. So it does not have to be an either-or decision, rather it has to be both and has to be oriented towards your goals. Long term SIPs are more profitable but a short term SIP is more beneficial.

I guess, price rise of essential commodities is affecting all of us in the country. How can we make a smart investment considering the circumstances?

Price rise of commodities is what inflation is, infact, the reported inflation and the inflation that we see will be different. For example, healthcare and education inflation are all in double digits. So this means that our portfolios should be giving us double digit returns so that we live well, otherwise, we will be spending more and consuming less. And the only investment option for this is equity, whether it’s equity mutual fund, PMS, direct stocks or portfolios, this is the only asset class that will give you good returns in the long term. Investment in equity is like investment in business and not just “stock tickers”. Whether you are running your own business or are an employee, you can invest in the best businesses by investing in their stocks.

Give your money a chance to grow

Everything in financial planning or life is a trade off, so you need to figure out whether you want a vacation, which is a short term goal, or should you put that money aside for your retirement, which is a long term goal. More often we are focused on how much our equity portfolio has given us rather than how much we have spent on our portfolios. So make sure that you are allocating your assets correctly according to your requirements and do not push your equity to over-perform because with higher returns usually comes the need of taking higher risks. Investment is the journey that you need to learn on and nobody else can do it for you.

The post Good Money Habits To Start Off With appeared first on Dutch Uncles.

Helping The Indian MSME To Go Global With International Cooperation Scheme

Aakash Sharma — Wed, 18 Aug 2021 03:35:10 +0000

The International Cooperation Scheme is a demand-driven programme through which the Government of India provides compensatory financial assistance to small businesses. It assists eligible Central or State government organisations, registered industry associations, companies, and trusts to support and strengthen the Micro, Small & Medium Enterprises (MSME) sector.

The SME division of the Ministry of MSME is primarily responsible for the overall administrative oversight and implementation of the International Cooperation Scheme and assistance to training institutions.

Who have received how many benefits yet?

In 2020-21, the government reimbursed Rs.1.67 crore to 80 micro, small and medium-sized enterprises in the Indian coir sector (an agro-based rural industry) to participate in international activities abroad as part of the International Cooperation Scheme.

Under the plan, Rs.3.59 crore were released in 2018-2019 to promote 454 small, medium and micro-enterprises. During 2017-18, the government released financial aid of Rs.4.08 crore for enabling 723 MSMEs.

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The International Cooperation Scheme aims to realise the goal of ‘Vocal for Local’ and help Indian small businesses to have a robust impact on the formal economy.

Objective of the International Cooperation Scheme

While several government programmes are already in place to support Indian SMEs and MSMEs, which are also hard nailed by the COVID-19 pandemic, the International Cooperation Scheme aims to achieve more specific objectives.

They are:

Technology injection and update of Indian micro, small, and medium enterprises (MSMEs)

Promotion of the export arm of MSMEs

Modernisation of MSMEs

The plan includes the following activities:

Delegating MSMEs to international trade fairs/exhibitions in other countries to explore new areas of technology upgradation, facilitate joint ventures, enhance MSME’s product markets, and cooperate with foreign countries.

Attending and participating in international exhibitions, fairs and meetings of overseas buyers and sellers for Indian SMEs and micro-enterprises.

Participation of Indian MSMEs in International conferences/ trade exhibitions held in India has international participation.

Holding global Conferences and Seminars on topics and themes of importance to the Indian MSMEs.

Organising International Conferences/ Seminars/ Workshops in India by the Ministry of MSME or its subordinate organisations.

Providing financial assistance for airfare and space rent on a reimbursement basis.

Who can apply

Registered public bodies and industry associations involved in promoting and developing the MSME sector can apply for the International Cooperation Scheme.

The qualification conditions for monetary assistance under the program are as follows:

The claimant must be a registered organisation (e.g., companies under the Companies Act, societies under the Societies Act, etc.) whose primary purpose is to promote and develop MSMEs.

The organisation must have been involved in such activities for at least three years and have a good track record.

The organisation should have periodically reviewed the accounts for the last three years.

The activities of a business to be funded under the programme should have a robust international significance.

How to apply: Procedure for accessing financial assistance under the programme

Applicants may request financial assistance in the form prescribed by the Ministry (available at www.msme.gov.in) to the Director (International Cooperation), Ministry of MSME, Udyog Bhavan, New Delhi-110011. An estimated budget for programme proposals and other relevant documents are required for the application.

The post Helping The Indian MSME To Go Global With International Cooperation Scheme appeared first on Dutch Uncles.

Fintech Start-up Fair, Differentiating Itself?

Anju Nambiar — Tue, 18 May 2021 08:35:05 +0000

Khalid Parekh the Founder and CEO of Fair Fintech Inc raised $20 M for his neo-banking start-up ‘Fair’ launched in the US in April this year. Fair is a multilingual neo-banking and Digital Financial Service Platform.

Driven by value and ethical responsibility, the membership based neo bank will target immigrants and the ‘unbanked’ people in the US to address the racial wealth gap in the country. The company is aimed at helping recent immigrants with ethnic minority backgrounds, fresh off the boat. Fair calls itself pro-consumer, equity-based, mobile-first alternative to traditional banking. Asserting, it values people over profit. In a way sounding more like a people’s movement than a start-up. Khalid attributes his vision for the platform to the banking challenges and opportunity gaps he faced as an immigrant from India.

Humble Beginning

Educated at the National Institute of Information Technology (NIIT), Khalid did not fit the description of a typical Fintech entrepreneur. Having emigrated to the US with just hundred dollars he went on to head the AMSYS group, a raging success of a firm valued at $350M, making $155 M in annual revenue. After a successful stint at AMSYS, the next stop for Khalid Parekh was the Fintech sector.

Khalid was taken aback by the absolute lack of banking and financial services available to immigrants. He found it cold and brazen that immigrants were undervalued. He had a clear vision in mind, to offer ethical transparent banking and insurance, retirement services to immigrants, basically people with low income in the United States. Fair aspires to propagate, a fair chance to accessible wealth – to start a business, buy a home and to invest. This level playing ground would be the foundation for the new comers’ future.

With Fair, Khalid is working to close the immigrant wealth gap and to alleviate the dilemmas of people struggling to cope with an unfriendly financial model. He wants to help all newcomers to the US get access to credit, qualify for business loans, and keep away from getting debt trapped. It will be a boon to those who are new to the country, as they have no credit or need access to interest-free loans, they now have options.

How Fair will aim to differentiate itself?

A Costco-like Fintech model

Fair’s portfolio of services resembles a ‘Costco-like’ model. The company is immigrant market friendly which means that it will largely be pro-consumer and very different from a regular neo-bank.

Access to Banks and Retailers

Although Fair is making its way into an over-saturated challenger bank market, it will provide customers access to a network of banks and retailers like Walmart and CVS. Its portfolio of services also goes beyond banking.

Differentiated from a ‘Challenger Bank’

Fair is less of a ‘Challenger Bank’ and more of a finance platform where consumers can do banking, lending, investments, and retirement all in one place. Consumers can avail interest free loans, invest, obtain insurance, and opt for retirement plans from a single platform.

Sustainable financial services

Fair’s biggest differentiator is that they are facilitating Socially Responsible Investing for their consumers. Their customers can enjoy instant access to interest-free micro loans through Fair’s platform. Another major differentiator is that Fair also practises Environment, Social, and Corporate Governance (ESG) investing with a prime focus on sustainability.

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Fair’s biggest differentiator is that they are facilitating Socially Responsible Investing for their consumers.

What’s in it for me?

The story of Fair and its founder shows how start-ups do not need to wait to receive funding from a VC. Fair obtained investors who connected with their story and weren’t necessarily full-fledged investors. Neo banking is a very hot sector in fintech currently. Even without a background or experience in finance, a good vision is all you need to build a fintech product/service that can address a real challenge in the fintech sector. Not to forget the biggest success stories in business has been those who were solution providers to a long existing problem. The membership model works very well in neo banking. Also, a lot of neo banks are targeting specific demographics just like Fair.

The post Fintech Start-up Fair, Differentiating Itself? appeared first on Dutch Uncles.

Can an IRS Officer be a Businessman at the Same Time?

Aakash Sharma — Mon, 19 Apr 2021 06:35:08 +0000

Many people wonder what life is like in civil services. While millions of people dream of entering various Indian civil services like IAS, IPS, IRS and others, some are not happy with life in the system when they get to it. Because of this dissatisfaction, they often turn to the life of business, start-ups and companies.

Let’s see what motivates and allows an Indian Revenue Service (IRS) officer to enter the business world. And can they do it without any difficulties?

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Private companies and corporate start-ups open to having IRS officers on-board have great packages for those with experience in government.

Can an IRS officer be a businessman?

The Indian Revenue Services, often abbreviated to IRS, is a Group A federal government service under the Government of India. Government regulations prohibit IRS officials from personally engaging in direct business acts while serving as bureaucrats.

However, retired IRS employees are allowed to do business. The Code of Conduct prohibits IRS officers from doing any other full-time work while on active duty. There should be no dispute of interest, even for part-time appointments that an officer might have. Besides, any side-vocation of an IRS officer should be non-remunerative.

Why might an IRS officer quit her or his job as a government employee?

The prospect of earning more by vocations like business start-ups, consulting for multinational corporations or the Indian divisions of global accounting firms is attractive. India being a developing economy, the business opportunities and the wealth associated in the country are a large growing behemoth. And everyone wants a part of it.

Talented and experienced people such as IRS officers have great market value in multinationals and start-ups with substantial growth prospects. Consulting roles in these areas generate a much higher income for IRS officers than their public work with the government.

The power and positioning that comes with government posts might be absent in private employment, but higher wages adequately compensate for this. Private companies find government employees’ skills and experience unmatched, as no professional in any other segment is exposed to the experience a government employee faces.

Conditions under which IRS officers can run their business

There are certain conditions under which an incumbent IRS officer can do business, key of which are:

Retired IRS officers can participate directly in any gainful activity.

Active IRS officers can resign to run their business.

IRS officers can use their legal money to make legal investments and buy stock.

Alternative Business Routes

IRS employees can also ask family and friends to work as mentors and start a business for them while sharing their ideas. However, the government should be aware of this effort. IRS officers can engage in certain activities and occupations as long as they are paid only for charitable purposes.

A plurality of rules prohibiting IRS employees from doing personal business is meant to avoid the possibility of a conflict of interest, as IRS employees are primarily designated with the development and implementation of government policies.

The post Can an IRS Officer be a Businessman at the Same Time? appeared first on Dutch Uncles.

What are the New Products and Services in Fintech?

Anju Nambiar — Wed, 24 Mar 2021 08:35:04 +0000

Although FinTech is a relatively new entrant to global finance, it has already made waves in India. The Fintech industry has managed to stay on its feet even through a pandemic despite the violent shaking of world economies.

In fact, one of the most popular developments in 2020 was the arrival of virtual finance products and services which found favour with Indian consumers.

FinTech start-ups need to be in tune with the trends gripping 2021 around new products and services to develop business models that can gain momentum in quick time:

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Fintech in India has garnered the attention and interest of VC’s owing to its sudden accelerated growth. Financial services are increasingly being integrated into enterprise digital platforms. Fintech start-ups in India are tapping into this need.

Automated Financial Decision-Making

Decision making is an integral part of finance which people often fall short of. Technology solutions that perform financial decision making on the user’s behalf are the newest trend. Start-ups looking towards Fintech services can consider this solution that will help consumers perform payments and fulfil their financial commitments. Automated Financial Decision-Making tools are backed by AI and ML technologies which eliminate the need for redundant manual micro decisions so that users can experience more financial freedom.

Regtech:

Regtech involves risk management and regulatory compliance platforms which are a relatively new product/service in the market. Regtech start-ups are partnering with national or global financial institutions to enforce compliance. Regtech products perform tasks like transaction monitoring, fraud, and risk management.

Banks are willing to shell out a whopping $270 B on Risk & Regulatory Compliance as well as $128 B on Fintech year on year.

This goes to show that the market is massive for Regtech and Fintech start-ups. ‘CogNext Analytics’ is one such start-up based in Mumbai which is providing a Regtech-as-a-Service (RaaS) platform for banks and financial institutions.

CogNext Analytics took off with an initial capital of up to 10 Lakhs but achieved a growth rate of 300% in 2020 touching $2M in its annualised revenue run rate.

FinTech Loans:

As banks stepped back from disbursing loans due to the pandemic induced financial crisis, small lending firms saw the opportunity to fill the gap. Tech loan start-ups are the next trend where credit evaluations and borrower sourcing occur to offer digital loans. Peer-to-peer lending and revenue-based lending fall under the tech loans category. The Global Financial Crisis (GFC) brought about by the Coronavirus pandemic rather than hurting Fintech has made financial services more accessible and available for its precise target market. Digital Lending is a service which has received immense capital in 2020. ‘Affirm’ is an example of a Fintech company which offers microloans on a ‘buy now pay later’ scheme. Notable Indian start-ups like ‘LazyPay’ and ‘Simpl’ have managed to scale by handing out tech loans on the ‘BNPL’ scheme. The BNPL sector in India is set to touch $100B by 2023 and start-ups can expect to taste success by venturing into this business model.

What’s in it for me?

Fintech in India has garnered the attention and interest of VC’s owing to its sudden accelerated growth. Financial services are increasingly being integrated into enterprise digital platforms. Fintech start-ups in India are tapping into this need.

A great example is ‘Yas’, a Chennai based start-up which offers customized API platforms to connect businesses with other Fintech platforms. Yas recently received $10M in a series B funding round.

Start-ups can also study the business model of ‘GyanDhan’ (a start-up from Delhi in the Education sector) which follows a one-of-its-kind risk-scoring model offering ‘study abroad’ loans to Indian students. Despite the risk of toxicity around education loans, GyanDhan is ready to welcome $5M in an upcoming angel investment round.

FinTech is currently going strong in India and is not suffering from Covid challenges. If anything, the pandemic has been a boon for the growth of this sector. Start-ups with an idea that can close the gap between Indian consumers and easier access to financial products and services (which are hard to come by through traditional banking) can expect to obtain VC funding.

The post What are the New Products and Services in Fintech? appeared first on Dutch Uncles.

Co-Lending Model: How Will It Help Small Business Owners?

Naina Sood — Wed, 24 Feb 2021 08:35:04 +0000

Co-lending takes place when two lender firms come together to disburse loans. Keeping up with the needs of a growing economy, there is a pressing need to fund the small to medium scale enterprises (SMEs). Recognising the same, the Reserve Bank of India (RBI) came out with a Co-lending model under which banks can provide loans along with Non-Banking Financial Companies (NBFCs) to priority sector borrowers based on prior agreements. How will this decision flare out for small business owners?

What is a Co-Lending Model?

Traditional banks typically struggle with outreach to all sections of the economy, especially small businesses. NBFCs come into play to fill the gap between these untouched sections and banks. In a chain of transactions, banks lend to the NBFCs (at low cost) and these NBFCs on-lend to the priority sector.

How will this benefit small business?

To begin with, co-lending will bring down the interest rate, considering the lower cost of funds from banks to NBFCs, which have a greater reach.

NBFCs process loan applications much quicker than banks and have a good reach among SMEs and small business owners than banks in many geographies. There are areas in Tier 1 and Tier 2 where banks do not even have a branch. Therefore, with a co-lending model, small businesses in these places will have a comfortable access to funds.

The RBI has given special attention to grievance redressal for borrowers in the co-lending model. Suitable arrangement must be put in place by the co-lenders to resolve any complaint registered by a borrower with the NBFC within 30 days. This comes as a huge relief for a borrower.

The process of lending has become much smoother with fintech firms. Now with NBFCs having a bigger pool of funds from banks, they will be in a much better position to lend via these firms who apart from lending along with the banks, provide services like risk assessment, assessing credit quality, This, in turn, will allow banks and NBFCs to lend more to the SME segment as these assessments make them feel more comfortable to lend. State Bank of India is in discussion with dozens of new age  NBFCs, fintech and traditional NBFCs for co-lending. Bank of Baroda and Bank of Maharashtra have entered into similar agreements with JM Financial Home Loans Limited (JMFHL) and Pune-based non-banking financial company LoanTap Credit Products, respectively, for MSME loans.

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SBI, Bank of Baroda and Bank of Maharashtra are in discussion with dozens of new age NBFCs, fintech and traditional NBFCs for co-lending.

What’s in it for start-ups?

The eligible businesses (MSME, export credit, education, housing, social infrastructure, renewable energy, start-ups) or entrepreneurs can apply for loans either through online NBFC platforms like Capital Float, Lendingkart, SMEcorner, UGRO Capital and others, or directly approach the NBFC nearby (Muthoot Finance Ltd, Tata Capital Financial Services Ltd, Bajaj Finance Limited etc) to avail loans.

SMEs will have to digitally fill up the loan application on the online platform, post which the company will match the MSME borrower with the right lender.

The post Co-Lending Model: How Will It Help Small Business Owners? appeared first on Dutch Uncles.

Financial Services – Dutch Uncles

Good Money Habits To Start Off With

‘‘

Do not save what is left after spending, but spend what is left after saving

- Warren Buffett

Good Money Habits

Audience Asks

From my understanding, there’s no right time to invest but can you list some reasons as to why one should start investing early and what all financial options will be beneficial for millennials like us?

I wanted to know something about SIP, which is more profitable – short term or long term, because I have seen people withdraw their money when there is a downward trend in the market.

I guess, price rise of essential commodities is affecting all of us in the country. How can we make a smart investment considering the circumstances?

Give your money a chance to grow

Helping The Indian MSME To Go Global With International Cooperation Scheme

Who have received how many benefits yet?

‘‘

The International Cooperation Scheme aims to realise the goal of ‘Vocal for Local’ and help Indian small businesses to have a robust impact on the formal economy.

Objective of the International Cooperation Scheme

The plan includes the following activities:

Who can apply

How to apply: Procedure for accessing financial assistance under the programme

Fintech Start-up Fair, Differentiating Itself?

Humble Beginning

How Fair will aim to differentiate itself?

A Costco-like Fintech model

Access to Banks and Retailers

Differentiated from a ‘Challenger Bank’

Sustainable financial services

‘‘

Fair’s biggest differentiator is that they are facilitating Socially Responsible Investing for their consumers.

What’s in it for me?

Can an IRS Officer be a Businessman at the Same Time?

‘‘

Private companies and corporate start-ups open to having IRS officers on-board have great packages for those with experience in government.

Can an IRS officer be a businessman?

Why might an IRS officer quit her or his job as a government employee?

Conditions under which IRS officers can run their business

Alternative Business Routes

What are the New Products and Services in Fintech?

‘‘

Fintech in India has garnered the attention and interest of VC’s owing to its sudden accelerated growth. Financial services are increasingly being integrated into enterprise digital platforms. Fintech start-ups in India are tapping into this need.

Automated Financial Decision-Making

Regtech:

FinTech Loans:

What’s in it for me?

Co-Lending Model: How Will It Help Small Business Owners?

What is a Co-Lending Model?

How will this benefit small business?

‘‘

SBI, Bank of Baroda and Bank of Maharashtra are in discussion with dozens of new age NBFCs, fintech and traditional NBFCs for co-lending.

What’s in it for start-ups?

SBI, Bank of Baroda and Bank of Maharashtra are in discussion with dozens of new age NBFCs, fintech and traditional NBFCs for co-lending.