Issue: 6 In-house magazine of FCFP members Jul — Aug 2023

THE PROGRESSION
ALL FOR THE SAKE
OF FAMILY

FINANCIAL

FORECASTING

NOMINATION

INGENIOUS

SAMACHAAR

The Success Story

INGENIOUS Jul-Aug 2023

Dear Readers,

We are pleased to present our 6th bi-monthly “Ingenious Magazine” for July & August 2023 by
the alumni of Foundation Course in Financial Planning (FCFP) 2022 1st Batch from Gopast Cen-
tre for Learning Pvt. Ltd., under the able guidance of our Guru Shri Gopinath Radhakrishnan Sir.
It comprises of write ups on financial products and latest news articles related to economy, finance
and insurance industry based on our research.

Here are the links for our previous magazines:

https://www.slideshare.net/AnkurShah26/ingenious-sept-2022pdf
https://www.slideshare.net/AnkurShah26/ingenious-nov-dec-2022pdf
https://www.slideshare.net/AnkurShah26/ingenious-janfeb-2023pdf
https://www.slideshare.net/AnkurShah26/ingenious-marapr-2023pdf
https://www.slideshare.net/AnkurShah26/ingenious-may-2023pdf

We are thankful, grateful and blessed for your support till date and wish the same support from you all ahead too.

Wish you a happy reading.

Thanking you & Regards,

On behalf of the Organizing committee of Alumni FCFP 2022

Content Page
The Progression - All for the sake of our FAMILY (Part 2) 3
Know your AWF Qualifiers 6
Did you know? 8
Ingenious Samachaar 9
Cover Story - UPI The Success Story 11
Ar cle - Financial Forecas ng 13
Lets Know -Educa on Loan on Studying Abroad 15
Ar cle - Nomina on 16
Data Centre 18
Minutes of RBI - MPC Meet 19

Magazine designed and compiled by:

BINDRA Inderpal Singh

2
 … the
Progression

R. Gopinath

All for the sake for our FAMILY (Part 2)

I met a young couple in one of my

Financial As-
training sessions. They have been No. of
sets as a % of
married for 10 years and both are Years in
Present yearly
Remarks
working as so ware consultants in a Service or
income range
Earning
big ins tu on. During the discussion
LOW HIGH Lower Than Low Higher Than High
they said that are very careful in INDICATES GOOD SAVINGS
spending money and they give more INDICATES POOR SAVING
HABITS. CAN HELP REACH-
5 50% 100% HABITS, CAN CAUSE BIG
priority for saving money for their ING FUTURE GOALS WITH
STRAIN ON FUTURE GOALS
future. They have two kids of age 7 EASE
and 2. They have been employed for INDICATES POOR SAVING INDICATES GOOD SAVINGS
HABITS. IT CAN POSE HABITS. IT CAUSES GREATER
the last 10 years and the sum total 10 90% 180%
MIGHTY BIG CHALLENGES STABILITY FOR THE FUTURE
of their yearly income is 1Crore. FOR FUTURE LIFE
There are no other dependents on
them like parents or in-laws. Since INDICATES POOR SAVING INDICATES GOOD SAVINGS
HABITS. HAVE TO URGENT- HABITS. IT CAUSES GREATER
their parents are s ll earning well. 15 125% 250%
LY INCREASE IT TO CREATE STABILITY FOR THE FUTURE
Their next financial goal was to buy a A STRONG FUTURE LIFE
3 bedroom flat in the city. Having
considered this much of informa on INDICATES POOR SAVING INDICATES GOOD SAVINGS
HABITS. HAVE TO URGENT- HABITS. IT CAUSES GREATER
I said, “That’s great. If you have been 20 150% 300%
LY INCREASE IT TO CREATE STABILITY FOR THE FUTURE
saving regularly for the last 10 years A STRONG FUTURE LIFE
by now the value of your invest-
ments should be around 90 Lakhs, INDICATES POOR SAVING INDICATES GOOD SAVINGS
HABITS. HAVE TO URGENT- HABITS. IT CAUSES GREATER
that should serve you well for a 25 175% 350%
LY INCREASE IT TO CREATE STABILITY FOR THE FUTURE
strong and stable future”. Both of A STRONG FUTURE LIFE
them were surprised at this figure
and said that they do not have so The principle of Financial Pyra- as those are mostly not nego able
much of savings or investments. In mid plays a vital role in the science goals. You can see the picture of this
fact they are having a mix of savings of Financial Planning and Wealth side of the pyramid named as Finan-
that should be around 20 Lakhs in Management. Out of the four sides cial Priori es:
value. in the pyramid, one side is about
I suggested them they need to Financial Priori es. Since the re-
now sit with a good financial planner sources are limited and mostly hu-
(One who has done AWF/FCFP/ man wants are unlimited, it is wise
QPFPA/MCAFP !!!) and draw a map to priori se the alloca on of money
of life and also decide on their priori- towards those wants and needs. If
es both for spending their money the priori es are not iden fied in
and also for saving money towards. advance then the money will be con-
In the previous issue I had sumed on the first come first serve
men oned about the DTI (Debt to basis, leaving a shor all for more
Income Ra o), Now let me explain to important needs which may occur at THE FIRST PRIORITY
you the STI (Savings to Income Ra o) a later part of the life. This might The priority pyramid starts
can also be called as FATI (Financial also force a person to borrow money with “Du es and Responsibili es”
assets to Income ra o). at big rates of interest to fund them, Contd...

3
 … the
Progression

R. Gopinath

All for the sake for our FAMILY (Part 2)

Contd...
dreams/ goals. Goals and dreams are closer to their ages of re rement.
We all know that animals and birds mostly uncondi onal and are also Ini ally their focus will be on taking
love their children and family and me-bound. care of their family requirements.
are emo onally a ached to them. So EXAMPLES OF THE TWO TYPES OF Since family requirements are elas-
do humans. But what differen ates MONETARY REQUIREMENTS c, they consume all the money that
the animals in rela on to their fami- is available then and there. Even
lies and humans in rela on to their a er spending all the money earned
families is the aspect of on the family (some mes even bor-
“Responsibili es”. Humans carry rowed money), it s ll leaves a feeling
immense responsibili es like ge ng of inadequacy because we constant-
the children educated, setup a good ly compare ourselves with more af-
career prospect for them, arrange fordable persons around. With tech-
for their marriage, take care of the nology developing rapidly many
necessi es of the elders in family household products become obso-
and so on. lete soon forcing to buy the latest.
The monetary requirement to THE SECOND PRIORITY
All these factors result in overcon-
meet the du es and responsibili es The second level of the Priori-
sump on of the income leaving very
can be divided into two major classi- ty Pyramid is Self Reliance.
li le scope of providing for the post
fica ons: When the children grow up,
re rement income.
1. That are on-going which re- start earning, become independent,
It is very much important to
quire a regular cash flow to get married and se le down in their
live a happy, peaceful and healthy
meet. lives, a major por on of the du es
life at the senior ages. It is equal in
2. That are major responsibili es and responsibili es towards the fam-
importance compared to the pre-
which require lump-sum mon- ily would have got fulfilled. But at
re rement age. Living together with
ies to meet. this stage the earning capacity of the
the whole family, the children,
client would have come down sub-
Both these needs have to be grandchildren, great grandchildren is
stan ally. Par cularly in terms of the
met with in all the circumstances. If the best that anyone can ask for
physical abili es. There are also em-
the person is alive and earning, then from God in return for all the hard
ployment condi ons which force-
through his income or with ear- work put in during the younger days.
exits people at a specified age
marked assets. Even if the person But living together is different from
(example: 60years of age). The op-
happens to die, his responsibili es dependent on them for living. The
portuni es to get employed again at
do not die. They get fulfilled only best of those years can be gained by
that age are also limited. Even if a
when they are met with at the right living together while being self-
person is engaged in running his own
me. reliant financially.
business, it is s ll advisable to pro-
When companies run out of The financial planners should
vide for alternate source of income.
money, they close. But when fami- therefore engage the client’s a en-
So that at advance ages he will not
lies run out of money they live and on to this need simultaneously
be compelled to take the stress of
they suffer. As a responsible person, while providing for their du es and
managing the business well to pro-
it does not augur well to leave the responsibili es. Even if it can be dis-
duce income to support himself, his
beloved family to fend the odds of tributed at 20% for self reliance need
spouse and other dependents.
life. An event predictable or unpre- versus 80% towards younger days
Most of the mes people do
dictable can not take away their du es and responsibili es, it is
not realise this need ll the come Contd...

4
 … the
Progression

R. Gopinath

All for the sake for our FAMILY (Part 2)

Contd… and o en comment that it is too his Financial Plan. But in terms of
low, but when it comes to borrowing priority it will be allowed the fourth
be er than using 100% of the in-
they don’t even look at the Rate of space. When we have fulfilled our
come for fulfilling du es and respon-
Interest that they have to pay on the du es and responsibili es we have
sibili es and hoping to catch-up with
amount they are going to spend on a done our best to the children and
the re rement needs a er the chil-
big car or a gadget. People o en mix other dependents, whatever more
dren se le down in their lives. It is
-up with an ambi ous goal with du- we are going to leave behind is only
too big a risk to be taken. We have
es and responsibili es. For example an extra to that. An example of the
covered in detail in the previous is-
a client feels buying a top-end brand misplaced priority is when people
sues of inscrip ons about this as-
car is his duty towards his family. opt for Return of Cash op on in se-
pect.
They will be very happy and proud. lec ng annuity policies for them-
The provisions for Self Reli-
In the process takes more loan to selves. If they would have opted for
ance also will contain two major re-
fund that buy. Whereas he s ll has a Life annuity they would have got a
quirements
gap in his Protec on needs higher annuity amount which at
1. The ongoing requiring regular
(Insurance) Savings needs (for major their old age can be very valuable.
cash flow of monies and
responsibili es) and Self Reliant life That li le extra, would have given
2. Major necessi es requiring
(Re rement). A bigger house, a big more dignity. As far as children are
lump sum monies to meet.
car, a holiday on a luxury cruise are concerned, they have been already
THE THIRD PRIORITY all examples. It is absolutely neces- provided with the best in terms of
The third stage in the priority sary to consider such ambi ons in a educa on and se ling down sup-
pyramid is “AMBITIONS” During the financial plan. Only that the priority port. Any extra cash receipt always
working life and earning period given to be given to funding them brings happiness. But the trade-off
when the earning capacity is at the have to be carefully decided. It can between more dignity and the sur-
peak and the opportuni es around not be done at the cost of first stage prise happiness of this legacy is an
seem to be everlas ng, people find a or the second stage of the priority incorrect stand. Same is the case
big pull towards providing for bigger pyramid. with accumula ng more real estates
things in life. People also compare with a no on of leaving behind for
THE FOURTH PRIORITY
themselves with others and try to the next genera ons. I acknowledge
The fourth stage in the Priority
match their life style (possessions) that it is a good gesture. But if the
Pyramid is “Legacy”. When a person
even it amounts to borrowing money 1st, 2nd and the 3rd stages are not
leaves this world a er having a ful-
to secure them. I have come across yet provided for adequately, s ll fo-
filled life, he would like to leave as-
many clients who while talking about cussing on the 4th stage in the pyra-
sets in legacy to his children/grand
financial plan and the products talk mid can end up as a “Hyperopic”
children to other beloved rela ons.
about the Return on Investments situa on in life.
This aspect has to be considered in

5
INGENIOUS Jul-Aug 2023

Mr. Ankur SHAH Ms. Bharathi SRINIVASAN Mr. Ajay Kumar TYAGI
AWF — 28-Aug-2022 AWF — 29-Sep-2022 AWF — 30-Sep-2022

Mr. Ashok G SUTTAR Mr. Keshav H AGARWALLA Mr. Suresh Kumar ARORA
AWF — 30-Sep-2022 AWF — 07-Oct-2022 AWF — 09-Oct-2022

Mr. Amit Uttam SARANG

AWF — 29-Oct-2022
Mr. Umesh PANCHWAG Mr. Inderpal S. BINDRA
AWF — 17-Nov-2022 AWF — 30-Nov-2022

Ms. Savita PILLAI Mr. Nishith JOSHI Mr. Dwarakanath JAGANATHAN

AWF — 27-Jan-2023 AWF — 18-Feb-2023 AWF — 24-May-2023

6
INGENIOUS Jul-Aug 2023

“
You take efforts to create a
habit, by repeating that act
numerous times.
Then the habit effortlessly
repeats to create immense
results.
R. Gopinath

7
INGENIOUS Jul-Aug 2023

What is…..? limit commi ed in case the insured event occurs.

(The term is majorly used in Life and Health Insurance policies)

Sum Assured Indemnity

The amount that is assured to be paid either to the policy The amount that is indemnified to the policy holder in
holder or his/her nominee on the s pulated date or case of any financial loss happening due to the covered
event. event.
(The term is majorly used in Life Insurance policies)
(The term is majorly used in General and Health Insurance poli-
cies)
Sum Insured
The amount that is paid to the policy holder to compen- Ex gra a
sate the amount of loss occurred; maximum upto to The payment that is paid to the claimant as an act of
amount insured in case the insured event happens. grace, where no contractual en tlement to the claim
(The term is majorly used in General and Health Insurance poli-
exists.
cies)
(The term is majorly used in payments made as a ma er of so-
cial jus ce or some other non-contractual reason)
Fixed Benefit
The amount that is paid to the policy holder upto to the

BINDRA Inderpal Singh

CHANDRAYAAN-3

8
INGENIOUS Jul-Aug 2023

Samachaar
India’s 5 big changes to the I R D A I mo v e s A p e x
Insurance Act C o u r t a g a i n s t S AT

Geeta In my opinion this could be a haz- Rochak

ardous, because whatever capital is
Mohan P. pooled, for the reason of protecting peo- PURI
Visakhapatnam ple’s money for people’s welfare. As I New Delhi
look behind our LIFE INSURANCE
CORPORATION OF INDIA has main-
tained, all the guidelines and with a mar-

I T
velous administration, have been a profit
n a move making company throughout. he
set to re- Another recent example of col- Insurance Regulatory and Devel-
shape the Indian insurance sector, lapse of SVB (detailed article in our pre- opment Authority of India (IRDAI) on
the insurance amendments proposed vious Ingenious magazine). 2nd June 2023 vide its Order no. IRDAI/
by the government are moving closer to F&I/ORD/MISC/119/6/2023 dated 2nd
their final lap. Most probably will be CAPTIVE INSURANCE LICENSE
discussed in the upcoming, monsoon Under this proposal, conglomer- June 2023 decided to tr ansfer the life
session of parliament. ates will be permitted to set up captive insurance business of Sahara India Life
insurance entities. Captive insurance re- Insurance Co (SILIC) to SBI Life Insur-
Let us go through in brief: fers to the practice of an organization ance Company Ltd (SBI Life).
creating its own insurance subsidiary to
COMPOSITE INSURANCE LICENS- provide coverage exclusively to the par- Detailed Order related to this transfer
ES is available on IRDA website vide or-
ent company and its affiliates. This der no. IRDAI/F&I/ORD/
This is a good initiative, as one amendment seeks to provide businesses nd
particular Life Insurance Co / Advisor, with more options for managing their MISC/119/6/2023 dated 2 June 2023.
can sell; Health, General and PA policies risks and insurance needs. The Security Appellate Tribunal
as well, making us say “One stop solu- (SAT) passed a stay order on the insur-
tion” The amendment would allow cross- INVESTMENT REGULATIONS ance regulator's decision to transfer poli-
entry of life, general, and standalone The government proposes to grant cy liabilities of Sahara India Life Insur-
health insurance companies into each the Insurance Regulator, IRDAI, the ance Co Ltd (SILIC) to SBI Life.
other's respective business categories. power to increase or reduce investment The appellate Authority said that
limits for insurers. Currently, insurers are five years since the Insurance Regulato-
DISTRIBUTION OF OTHER FINAN- required to invest a minimum of 50 per- ry and Development Authority of India’s
CIAL PRODUCTS cent in government securities (both cen- decision to transfer policies of Sahara
The government has proposed that tral and state) and 15 percent in equities. Life to ICICI Prudential Life was set
insurance companies should be permitted This amendment would enable the regu- aside, no steps were taken by the insur-
to distribute other financial products such lator to increase or decrease these limits ance regulator to transfer the policies
as mutual funds, loans, credit cards, and based on industry dynamics and market and a decision taken to select SBI Life
bank deposits. This would enable insur- conditions was taken without granting a hearing to
ance companies to diversify, their busi- While the amendments related to Sahara Life.
ness, which will be helpful to generate composite insurance licenses and the The Insurance and Regulatory
more revenues. distribution of other financial products Development Authority of India
In my opinion, both the above are expected to proceed as proposed, (IRDAI) moved the Supreme Court on
moves are good if they are in the hands some adjustments may be made to the Monday challenging Securities Appel-
of the right company and qualified practi- investment regulations and captive insur- late Tribunal (SAT)'s order staying IR-
tioners, and only such are chosen for this ance provisions. DAI's ruling directing Sahara India Life
important responsibility. Changes to investment limits will Insurance Company to transfer its busi-
REDUCTION OF INITIAL CAPITAL be determined by the regulator in consul- ness to SBI Life Insurance Company.
The insurance regulator plans to tation with the government and will apply The Supreme Court on 3rd July
reduce the initial capital required to start to the entire industry rather than on a case 2023 has admitted IRDA’s appeal
an insurance business. Currently, any -by-case basis. The issuance of captive against the Securities Appellate Tribu-
entity planning to start a life, general, and licenses will be within the purview of nal's (SAT) decision staying the insur-
standalone health insurance business IRDAI, although the minimum solvency ance regulator’s order directing Sahara
needs to submit an initial capital of Rs. requirements for these captive insurers India Life Insurance Company to trans-
100 crores with the regulator to secure a will be decided in consultation fer its life insurance business to SBI Life
business license. Entities wanting to start with the government. Insurance Company.
a reinsurance business need to submit an The next hearing on case is pend-
Source: https://www.google.com/amp/s/ ing at the apex body.
initial capital of Rs 200 crore. www.cnbctv18.com/personal-finance/indias-five-
The proposal from the insurance big-changes-to-the-insurance-act-enter-the-final-
regulator and the government is to reduce lap-16874551.htm/amp Source: https://www.business-standard.com
the initial capital on a case-to-case basis.

9
INGENIOUS Jul-Aug 2023

S a ma c h a ar
I R D A I i n t ro d u c e s B I M A VA H A K
Vinay products are a type of insurance that
covers the probability of a predefined
JOSHI event happening instead of indemnify-
Pune ing actual loss incurred.
It is an agreement to make a pay-
Good Bye ment upon the occurrence of a trigger-

B
ing event, and as such is detached from
ima Vahak is an initiative by the an underlying physical asset or piece of
Insurance Regulatory and De- infrastructure. When designed properly,
RBI withdraws velopment Authority of India (IRDAI) parametric-based insurance products
₹2000 notes which would help reach the spread of ensure that claims are paid quickly and
insurance to the last mile. without dispute. The event is pre-
Each Gram Panchayat would covered at a predetermined amount for a
Keshav have a ‘Bima Vahak’ who would be preset trigger event.
Agarwalla tasked to sell and service simple para- The IRDAI will soon introduce a
Golaghat metric bundled insurance products, so new distribution channel, ‘Bima Vahak’
mainly they will work in rural areas. to increase penetration of insurance
Bima Vahak initiative intends to policies in rural India. Bima Vahaks are
form a women-centric insurance dis- expected to distribute life and general

R
tribution channel, means women will insurance policies in rural areas.
eserve Bank of India (RBI) has be preferred to work as Bima Vahak. BIMA VAHAK’S activity may in-
announced the withdrawal of Bima Vahak is one of the com- clude
₹2000 denomination banknotes ponents of IRDAI’s "Insurance for all
from circulation, while emphasiz- à To solicitation of insurance busi-
by 2047” goal, which aims to impr ove ness
ing that they will remain legal tender. These the accessibility and availability of in-
banknotes were introduced in 2016 follow- à To facilitate policy and claims
surance products throughout India. It servicing
ing the demonetization of ₹500 and ₹1000 will serve as a crucial last-mile connec-
notes. However, as other denominations à To sell and service the Bima
tion for insurers by establishing a field
became more readily available, the printing Vistaar pr oduct appr oved by
force of both corporate and individual
of ₹2000 notes was discontinued in 2018- the Authority and such other
representatives. insurance products specifically
19. Parametric bundled insurance
Around 89% of the ₹2000 banknotes approved by the Authority.
were issued before March 2017 and are
approaching their estimated lifespan of 4-5
years. The value of these banknotes in cir-
culation has decreased significantly, now
constituting only 10.8% of the total notes in
circulation. Additionally, it has been ob-
served that the ₹2000 denomination is not
commonly used for transactions. The stock
of banknotes in other denominations is
deemed sufficient to meet public demand.
To adhere to the "Clean Note Poli-
cy," RBI has decided to withdraw the ₹2000 K M Sriram BINDRA
banknotes from circulation. However, indi- Vijayawada Inderpal S.
viduals can still deposit these notes into New Delhi
their bank accounts or exchange them for

I
banknotes of other denominations at any
bank branch. Deposits can be made without ndia aims to land at the south pole

I
restrictions, while exchanges are limited to nsurance Regulatory and Develop- of its natural satellite the MOON,
₹20,000 at a time starting from May 23, ment Authority of India (IRDAI) in through ISRO’s second attempt
2023. its 122nd meeting held on 02nd mission Chandrayaan – 3. The
To facilitate the process, all banks June, 2023 has granted Certificate spacecraft lifted off in a textbook launch
are required to offer deposit and exchange of Registration to a new life insurer from the Satish Dhawan Space Centre in
services for ₹2000 banknotes until Septem- namely, Go Digit Life Insurance Sriharikota on board the Launch Vehicle
ber 30, 2023. The 19 Regional Offices of Limited to carry life insurance business Mark-III.
RBI will also provide the exchange facility. in India. Developed at an estimated cost
The central bank has advised banks to cease Go Digit, a firm funded by Cana- of Rs 615 crore, the mission aims to
issuing ₹2000 banknotes immediately. The da-based Fairfax Group, is already in make India a lunar fairing nation and
public is encouraged to take advantage of the general insurance business. Canadi- join the elite club.
the time provided until the end of Septem- an billionaire Prem Watsa’s Fairfax ISRO will now perform the orbit-
ber 2023 to deposit or exchange their ₹2000 group and industry veteran Kamesh raising maneuvers in the coming days to
banknotes. Goyal, has received a certificate of reg- put the spacecraft on the road to the
istration from regulator Irdai to under- Moon. Chandrayaan-3 is scheduled to
take life insurance business in India. arrive in lunar orbit on August 5 and the
Source: RBI Press Release – 19th May 2023 soft-landing attempt by 23 Aug.

10
INGENIOUS Jul-Aug 2023

C S
U
Bharathi Srinivasan
nified Payments Interface (UPI) is a real- me Driving Financial Inclusion
payment system developed by the Na onal Pay- (2020-2021)
ments Corpora on of India (NPCI). It was intro- UPI's true poten al
duced in India in 2016 and has revolu onized the came to the fore during
way people transfer money, make payments, and conduct the COVID-19 pandemic
financial transac ons. UPI has emerged as a game-changer when contactless transac-
in the Indian payments landscape, transforming the way ons gained prominence.
people transact and revolu onizing digital payments. Since In 2020, UPI recorded sig-
its launch in 2016, UPI has achieved remarkable success, nificant growth, reaching a
surpassing major milestones and con nuing to make signifi- monthly transac on vol-
cant progress in India's evolving financial ecosystem. UPI is ume of over 2 billion. The
set to become India’s next BIG export. Just pick your phone, launch of UPI AutoPay,
scan the QR code and it’s done!!! India’s United Payments which enables recurring payments, further expanded its u l-
Interface (UPI) real- me payments system has been a game ity. UPI also became the preferred mode for transac ons in
changer for the subcon nent. various sectors like e-commerce, transporta on, and u li-
UPI enables individuals to link mul ple bank accounts es.
to a single mobile applica on and make seamless peer-to- Please find the growth Sta s cs of UPI volume and Value
peer (P2P) transfers between them. It eliminates the need below:
for tradi onal methods like entering bank details or IFSC
codes by u lizing a virtual payment address (VPA) that
serves as a unique iden fier for each user. VPAs are typically No. of Banks Volume (in
in the format of username@bankname. Month Value (in Cr.)
UPI provides a secure and convenient payment meth- live on UPI mn)
od that is accessible 24/7, enabling users to make instant May-23 447 9,415.19 14,89,145.50
payments with just a few taps on their mobile devices. It has
gained widespread popularity due to its simplicity, speed, Apr-23 414 8,898.14 14.07,007.55
and reliability. UPI has also fueled financial inclusion by
Mar-23 399 8,685.30 14,10,443.01
providing a digital payment solu on that is accessible to
both urban and rural popula ons, bridging the gap between Feb-23 390 7,534.76 12,35,846.62
tradi onal banking and digital transac ons.
The success of UPI has paved the way for numerous Jan-23 385 8,036.89 12,98,726,62
innova ve features and enhancements, such as UPI AutoPay Current Progress (2022-2023)
for recurring payments, integra on with voice-based com- UPI's success story con nues unabated, with new
mands, and QR code-based payments. UPI has transformed milestones being achieved and con nuous improvements
the digital payments landscape in India, empowering individ- being made. Here are some notable developments:
uals, businesses, and merchants to transact easily, securely,
and efficiently, thereby accelera ng the country's progress Transac on Volumes
towards a cashless economy. UPI transac on volumes have witnessed consistent
growth, crossing the 3 billion mark per month in early 2022.
Major Milestones This upward trajectory is a testament to the trust and con-
venience UPI offers to users. Over more than 8 billion trans-
Launch and Early Adop on (2016-2017) ac on has taken place in India and this is more than the total
The Na onal Payments Corpora on of India (NPCI) transac on of US + UK + France and Germany combined. The
introduced UPI in August 2016, providing a seamless UPI system is used by more than 300 million individuals and
pla orm for instant money transfers between banks using 50 million merchants. UPI hit record 9 billion transac ons
mobile phones. This revolu onary payment method gained worth Rs.14 lakh crore in May 2023. The number monthly
trac on quickly, with several leading banks and payment UPI transac ons rose over 58 % year on year in May, making
apps integra ng UPI into their systems. By December 2017, it the highest volume and value ever recorded.
UPI had facilitated over 145 million transac ons.
Expanding User Base
Scaling New Heights (2018-2019) The number of UPI users has been steadily increasing,
UPI's popularity surged further in 2018 and 2019, with both urban and rural popula ons embracing digital
witnessing exponen al growth in transac on volumes and payments. UPI's user base is expected to con nue expanding
user base. The introduc on of BHIM (Bharat Interface for as more people gain access to smartphones and internet
Money) app, developed by NPCI, added impetus to UPI connec vity. The UPI transac ons sky rocketed more than
adop on. UPI crossed the milestone of one billion transac- 650% in Indian towns and ci es. More than 23 countries
ons per month in October 2019, facilita ng a wide range of have ed up with us suppor ng transac ons with UPI.
transac ons, including person-to-person transfers, bill pay- Contd...
ments, and merchant transac ons.

11
INGENIOUS Jul-Aug 2023
Contd... cross-border flows between the two na ons.
Innova on and Enhanced Features Currently, this access is given to 10 countries like Can-
NPCI and partnering banks have been proac ve in ada, US, UK, Qatar, UAE, Oman, Saudi Arabia, Hong Kong,
introducing innova ve features and enhancements to UPI. Singapore and Australia. The list is expected to grow shortly.
These include integra on with voice-based payments, in-
creased transac on limits, and the addi on of new lan- Future Prospects
guages to enhance accessibility. The future of UPI looks promising, with ongoing
efforts to enhance securi-
Interna onal Recogni on ty, improve interoperabil-
UPI has gained in- ity, and promote financial
terna onal recogni on as inclusion. As UPI evolves,
a pioneering payment it has the poten al to be-
system. Its success has come a catalyst for India's
inspired other countries to transi on to a digital
explore similar solu ons. economy, empowering
The global community has millions with convenient
taken note of UPI's and secure payment op-
achievements, leading to ons.
collabora ons and
knowledge sharing. The Conclusion
UAE accounts for up to UPI has reshaped
18% of India’s inward remi ances, which means US$18 bil- India's payment landscape, offering a convenient, secure,
lion. Singapore is also an important remi ances market for and inclusive pla orm for digital transac ons. Its journey
India though much smaller than the UAE. In late February, from incep on to becoming a global benchmark in instant
UPI hit another important milestone: India linked UPI with payments showcases India's prowess in digital innova on.
Singapore’s PayNow real- me payment system, a move that With its major milestones and con nuous progress, UPI has
could ul mately disrupt the more than US$1 billion in annual cemented its posi on as a transforma ve force, propelling
India towards a cashless future.

A deep connection
with the dreams makes R. Gopinath
it possible to achieve,
inspite of the tough
circumstances.

A shallow connect, al-

lows the circumstanc-
es to decide it.

12
INGENIOUS Jul-Aug 2023

FINANCIAL
FORECASTING
Nayan Bhowmick others will do guess work. higher interest rate (Here equity is 2
Guwaha · Appropriate tools. crores and debt is 8 crores). The project
· Historical data. M will have to be executed within 12
Let’s start with asking “is weather months and he will get profit of 3
· Objec ves

W
crores on successful execu on of pro-
forecas ng essen al” ? Following are 4 primary objec ves of ject M. Return on investment is 30%.
eather warnings are financial forecas ng He pledges his factory, land, his build-
important because they 1. Provide adequate cash flow for ing, his own house and jewelleries to
are used to protect life the need to fulfil at minimum get 8 crores loan from bank and from
and property. Forecasts level. other lenders. An cipa ng profits from
based on temperature and precipita- 2. Protect the source of funds. this project, he has taken the risk on
on are important to agriculture, and 3. Design systems and procedures investment. But by mortgaging most of
therefore traders within commodity to ensure correct legacy. the assets he passes the risk to his be-
markets. Temperature forecasts are 4. Op mize the use of funds to loved family members and also on risk
used by u lity companies to es mate earn a good return on it. of borrowings. Risk taking is in the DNA
demand over coming days.
If promoters are star ng busi- of a businessman (Ambi on in business
Can we change bad weather? is not wrong. Businessman should have
ness (company) or trying to grow an
How can it be useful? the ability to take calcula ve risk. But
exis ng company, all certainly will need
Bad weather cannot be changed. passing the risk to family members is
money. This money generally comes
But if we are fully prepared for bad wrong.) His wife and children become
from two different sources,
weather then the adverse effects of the party to the risk. The dreams and
1. Debt Funding - debt means
bad weather can be minimized or nulli- future of his family members now sole-
money borrowed from lenders.
fied. ly depends on the successful execu on
2. Equity Funding- company can
How does forecast of good weath- sell a por on of the company to of project M.
er help us? investors in return for cash. Human capaci es are unlimited.
Good weather cannot be ad- Equity Funding includes shares A businessman will put all his capacity
vanced. But if we are fully prepared for (Equity/Preference Shares). and skill tenaciously even if any prob-
good weather, then the advantages of lem occurs midway in the business and
good weather can be mul plied. Just as get revert to the right track to get the
weather forecas ng can bring mul ple future profit from the business. But
benefits, so also financial forecas ng is who can foretell the lifespan of a per-
required and in fact is essen al for fam- son? People will work according to
ilies as well as for corporates. Pre- their will, but people live or die accord-
dic ng financial outcomes of invest- ing to their des ny. Let us imagine the
ments/business risks makes us be er hypothe cal situa on that the busi-
prepared for our future financial goals. nessman meets with sudden death.
In the context of financial fore- Now the family members have to repay
cas ng, let us draw our a en on to a Let us take an example of a busi- the loan of 8 crores or they have to
sec on known as Sec on 6 of MWP act. nessman who secured a good oppor- forgo the assets like their home, facto-
But before that it is essen al to under- tunity in a contract like Project M. He ry, jewelries, land etc.
stand that as an individual investor or won the project amidst tough compe - In order to avoid this kind of
as a corporate, the four very important on. To execute the contract, he needs crisis, we need to create a firewall in
supports that are required for financial 10 crores. The businessman invests 2 between the business loan and family
forecas ng. These are: crores from his business, borrows 5 assets, family responsibili es.
· A professional – a professional crores from a bank and the balance 3
gives scien fic es ma ons but crores from private lending firms at a Contd...

13
INGENIOUS Jul-Aug 2023
Contd... situa on the businessman died with A policy of insurance
Let us take an example of anoth- the huge liabili es of loan for his family Meaning that no other type of
er small medium business entrepre- members. As financial advisors, we can asset is covered under this provision.
neur. He has a family asset (shown in help the businessman and his family by
Fig.1 as blue square. introducing a proper life insurance poli- Married man on his own life
cy in between business loan and family The policy of insurance should
assets which would be pledged to bank. be availed by a married man, and the
In the case of sudden death of the busi- risk cover should be on his own life.
nessman, the life insurance’s claim Meaning that policies effected on the
amount will save the family by repaying life of children or others cannot be cov-
the loan amount from the death claim ered under this provision.
(Fig.2). Expressed on the face of it
Otherwise, the family will be in It refers to the policy document.
The policy document should carry the
endorsement to this effect. Agree-
ments made by other arrangements are
The entrepreneur needs money not covered under this provision.
to start his business and bank is also
ready to finance by way of loan, in re- Beneficiaries can be his wife, wife and
turn for some security. Accordingly, the children or any of them
said businessman pledges the docu- Meaning that he can wish to
ments of his family assets in favour of pass the benefit to specific people in
bank to get loan. He could have sold this class. For example, the beneficiary
the assets to start the business but the can be defined as wife and the first
family lives in the house (asset). The trouble by losing the business as well as daughter or wife and second daughter.
businessman keeps the asset with them the family asset. In Fig.2, the life insur- This provision is made to ensure that
for their use and only the documents of ance policy is shown as an asset and the policy serves only to those benefi-
the assets is pledged to bank. Bank has placed in between bank and family. But ciaries and he has the right to exclude,
sanc oned loan; the businessman if we can bring the life insurance policy if he so wants to, any person amongst
starts his business by using the loan inside the blue square as a family asset, his children from the benefi ng from
amount to his factory and earns profits. then it will create a firewall for the be- this policy.
The net profits come to the family and loved family which is our important Deemed to be trust
the cycle starts con nuing. He starts responsibility. By introducing a life in- This means that all the protec-
paying the loan amount to bank and surance policy under MWP act, we can ons normally available for a trust and
a erward by paying full debt amount protect our family from any bad weath- the funds held by a trust will be availa-
releases his documents from bank. er, that is from disastrous situa ons. ble for policies effected under the act,
Business is a con nuous process. He but the formali es which have to be
will apply for further loan to revamp his observed in case of trust, like registra-
business. Loan amount will start esca- on of the trust, audit of the accounts
la ng. of the trust, etc., need not be observed
Now, if the businessman dies here. A simple person without any legal
before he is able to pay off the loan, qualifica ons, can also ensure the ben-
the following possible scenarios can efits are secured easily.
emerge:
1. Take over of the business by According to the interest expressed
family members-spouse or adult This means that he can even
children. prescribe ra os for sharing or even
2. Due to loss of the key person, effect con ngent condi ons by which
the company or the business will Sec on 6 of MWP act defines that, the benefits will flow to the beneficiar-
incur losses, profits will shrink, "A policy of insurance effected by any ies.
loan amount will start increas- married man on his own life, and ex- Not be subject to the control of the
ing, company may go for liquida- pressed on the face of it to be for the husband or to his creditors or form a
on. benefit of his wife, or of his wife and part of his estate
3. Ul mately bank will seize the children, or any of them, shall ensure This is the very essence of this
assets which were mortgaged in and be deemed to be a trust for the act. This helps husband to provide ade-
favour of bank and the family benefit of his wife, or of his wife and quately for his family. A businessman
will be in big trouble. children, or any of them, according to who avails loans and facili es from
the interest so expressed, and shall not, banks and other ins tu ons is under-
What is the solu on for this un-
so long as any object of the trust re- taking a risk, expec ng growth in busi-
certainty? If this type of a bad weather
mains, be subject to the control of the ness.
comes, what is the financial solu on?
husband, or to his creditors, or form
Forecas ng helps people to prepare for
part of his estate." Contd…
both good and bad weather. In this

14
INGENIOUS Jul-Aug 2023
Contd... pand his business, or to make good them jointly.
While doing so he pledges his assets to a shor all in capital, he is taking a 4. It is not just that businessmen need
the bank to avail that facility. While he business risk. He is confident of to avail this provision, the difficul-
can certainly repay the loan in me and making enough profits in a period of es men oned above can be met by
safeguard his assets, the issue becomes me and repay the loans with inter- other professionals and salaried
cri cal if he happens to die before the ests due from out of those profits. personnels also. For example, in-
obliga on is cleared. The bank a er He is certainly capable of fulfilling demnifica ons or damages due to
auc oning the pledged assets, can seek this commitment, even against the acts of omission, or negligence or
to a ach his personal assets to recover odds of the business, due to his acts of accident by a professional or
the loan and the interests thereof. business acumen. His death before employee can ini ate recovery from
Whereas this policy effected under fulfilling this commitment will bring his wealth to coverup. Even in such
MWP act can NOT be so a ached. The down the value of the assets held in circumstances, the policy effected
policy monies will not form a part of his the business and also put his per- under MWP act can protect the
estate. This is not just for businessmen, sonal proper es and assets under rights of the wife and children.
but for anyone who wants to protect stake. The people who have lent the 5. People who stand as sure es, guar-
their family and ensure that monies do money will pursue all op ons to antors or people who operate under
not get into wrong hands even within recover their dues. However, a poli- power of a orney can also protect
the rela ves, who may scheme against, cy effected un der MWP act will their families using this MWP act.
which we have seen happening in many be beyond their reach even
Life insurance policies under
instances. Since the policy benefits are and protect the rights of the wife
MWP act will protect the family respon-
not subject to control of the husband and the chil dren.
sibili es and also through the proper
also, any pressure brought onto him, or 2. Even under pressure from his peers
placing of life insurance policies be-
even by coercion these monies cannot or investors in his business or from
tween right places we can protect the
be taken away by wrong people. The his other rela ves, he will not be
sources of fund.
very purpose of an availing a life insur- able to dilute the rights of his wife
Through financial forecas ng we
ance policy under MWP act is to ensure and children under this policy.
can minimize or nullify the adverse
that the rights of the wife and the chil- 3. A er the death of the life assured,
effects of bad weather and we can mul-
dren be protected and the varia ons in even other legal heirs cannot stake
ply the beneficial effects of good
the business performance of the hus- any claim on these policy monies,
weather.
band need not affect the family ad- not just as a share for being his
versely. heirs, but not even to set off against
Happy planning and forecas ng!
1. When a person avails loan to ex- any common losses incurred by
FINANCIAL FORECASTING

more than 6 Insurance cover: Insurance cover is re-

EDUCATION LOAN months. quired and policy is compulsorily as-
Credit Limit: With- signed to bank.
for Studying Abroad in India between 4
Lakh to 10 lakhs. Documents Required For Educa on

M
For abroad educa- Loan:
y daugh- on 10 lakh to 1CR; which may further Applica on form.
ter Isha is increase as per requirement. Pan Card/ Aadhaar Card/ Latest photo.
planning Collateral: No collateral amount up-to Mark Sheets of 12th/Gradua on.
for going loan amount Rs.750000. A er that 100% Le er from university offering admission
to UK for masters in fine value amount required as collateral secu- with details of all expenses.
arts. Based on my search experience I rity which can be Residen al property, Collateral documents; Cer ficate of mar-
thought to pen my learnings, to help Bank F.D, Gold etc. ket value, search report, tle deed copy
people looking for educa on loans. Educa on Expenses: Like educa on etc.
fees, exam fees, Hostel Fees, Air Ticket, Parents documents - Pan/Aadhaar copy,
Planning for loan for educa on abroad Laptop, Books etc. depending upon photo, Last 3 years ITR/ Form no.16 cop-
Parents who have not been able above expenses eligibility of loan is cal- ies (or last 6 months bank statement if
to make provisions for higher educa on culated. ITR is not available). Kindly note that
expenses for their champion kids form Interest Rates: Interest rates vary from parent is treated as co-borrower.
own funds, approach banks to fund the 7.5% to 10.50%. Usually, it depends on
educa on through loans. prevailing Repo rates, for example cur- Income Tax Benefit
rent HDFC Bank interest rate is 9% and Interest paid is treated for deduc on
Criteria of Bankers SBI is 10%. For female candidates Bank under sec on ‘80E’. This deduc on is
Eligibility: Resident Indians, Non Resi- offers some discount interest rates. available for parents only for two chil-
dent Indians, & Overseas Ci zens of India Tenure of Loan: Generally bank offers dren ll total loan is repaid.
Type of Educa on: Gradua on, Post one year moratorium period, for exam-
gradua on in Engineering, Medical, Ar- ple, if P.G period is 2 years then a er 3
chitecture, Management etc. Also diplo- years loan repayment starts and maxi- Umesh PANCHWAGH
ma courses whose educa on term is mum period is 15 years.

15
INGENIOUS Jul-Aug 2023

Sumita HALDAR

NOMINATION
Kolkata

N
Lets understand NOMINATION In the case of the death of a nominee, NOMINATION IN FAVOUR OF
omina on is a process to the nomina on becomes ineffec ve STRANGER
ensure easy payment of and the nominee's heirs do not have If the person to be nominated is a
money to the right person the right to the policy money. If the spouse, child/children or a parent, the
in the case of a death of the policy holder expires a er the date of cases may be completed as usual.
owner. maturity and the claim is not se led If the nominated person is a distant
HOW TO EFFECT NOMINATION then the claim should be se led in the rela ve or stranger despite the spouse
As per sec on 39 of the Insur- favour of the legal heirs of the de- child or parents are surviving then rea-
ance Act 1938, the holder of a policy on ceased life assured. sons for not appoin ng them as nomi-
his own life may nominate a person or DIFFERENT TYPES OF NOMINATION nees should be asked. If reply is not
persons to whom the money secured There are three ways to effect nomina- sa sfactory a reference should be
by the policy shall be paid in the event on. made to the one - step higher officer.
of his death. Hence nomina on can be SINGLE NOMINATION Further a special MHR should be ob-
affected by life assured only and not by Here life assured appoint one tained at least from a development
any other tle holder or beneficiary of person as a nominee. officer regarding the genuineness of
the policy. At the me of issuing policy, JOINTLY/MULTIPLE NOMINATION the nomina on to ensure that no moral
policy holders appoint a nominee. A Here life assured appoints two hazard is involved.
nomina on can be changed by the poli- or more than two persons jointly as Nomina on rules for different
cy holder by making another endorse- nominees. types of financial products
ment on the policy. If the space is not SUCCESSIVE/ALTERNATIVE NOMINA- LIC In life insurance policy the
sufficient or not available for an en- TION beneficiaries and nominees may be the
dorsement, nomina on can be done on This type of alterna ve nomina- same person or not. If the nominee is
a separate piece of paper and pasted on is provided to appoint more than legal heir then he or she is en tled for
on to the policy with the signature of one nominee in a successive manner. the claim.
the life assured at the edge where the A er expiry of life assured, first nomi- Mutual Funds/ Stocks In Mu-
slip is a ached to the policy. na on will be opera ve and if 1st nom- tual Fund or stock nominees are not
MINOR NOMINEE inee is not alive the second nomina on en tled for the money. When investors
When a nominee is minor, an will and if the 1st and 2nd nominees purchase units they have to appoint
appointee should be appointed by the are not alive the third nomina on will nominees who will receive the units in
policy holder to receive the money in become effec ve. This type of nomina- the event of their death. The nominees
the event of the death of the policy on is highly recommended under all only act as a trustee. They only receive
holder. The appointee should be a ma- type of plans, specially where free the units and manage them.
jor person. Life assured has a right to death cover is extended a er date of
Bank Account Here nominee is
revoke the appointment of the appoin- maturity.
appointed by the account holder. The
tee and appoint a fresh appointee. The CHANGE OR CANCELLATION OF NOMI-
nominee acts as a facilitator and helps
appointee must affix his signature to NATION
in distribu ng the funds to the heirs or
the endorsement either in the proposal A nomina on may be changed
beneficiaries.
form or on the text of the policy in to- or cancelled by an endorsement. The
ken of his having consented to act as an no ce of such change or cancella on
EPF/ PPF Nominee is not auto-
appointee. should be in mated to the LIC office. If ma cally en tled to the EPF all PPF
EFFECT OF NOMINATION a cancella on or change of nominee is money. The role of the nominee is to
A nomina on gives the nominee made in will, the provision of the will receive the balance in case of the EPF
only the right to receive the policy should show clearly. When a policy is or PPF holders death.
money in the event of the death of life assigned whether condi on or absolute People assume the nomina on
assured. A nominee does not have the the exis ng nominee is automa cally alone is good enough as an estate plan-
right to the whole of the claim. He only cancelled. An assignment made in fa- ning tool. Will/Trust/ Assignment will
has the right to give a valid discharge. vour of LIC in considera on for a policy be needed to transfer his assets to the
Life assured can change or cancel the loan, on repayment of loan doesn't right person at the right me for the
exis ng nominee without his concern. cancel the nomina on. right value in the right form.

16
INGENIOUS Jul-Aug 2023

Issue: In-house magazine of FCFP members Sept 2023

Dear Readers,
We invite you to share your ar cles, write-ups, essays
for the upcoming Special Edi on of 1st Anniversary is-
sue.

17
INGENIOUS Jul-Aug 2023

D a t a C e n t re
Latest Policy Rates (Source RBI website) as at 01:30 pm on 11-Jul-2023
Policy Rates Reserve Ra os Exchange Rates Lending / Deposit Rates
8.75% -
Policy Repo Rate 6.50% CRR 4.50 % INR/ 1 USD 82.35 Base Rate
10.10%
Standing Deposit Facility 7.95% -
6.25% SLR 18.00 % INR/ 1 GBP 106.28 MCLR (Overnight)
Rate 8.35%
Marginal Standing Facili- 2.70% -
6.75% INR/ 1 EUR 90.75 Savings Deposit Rate
ty Rate 3.00%
Bank Rate 6.75% INR/ 100 JPY 58.50 Term Deposit Rate > 1 6.00% -

Fixed Reverse Repo Rate 3.35%

Money Market 11-Jul-2023 GDP (US$ million) by country

Call Rates * IMF
Sr. No. Country/Territory UN Region
* as on previous day Es mate Year
Government Securi es Market World — 10,55,68,776 2023
7.26% GS 2033 7.0956% # 1 United States Americas 26,854,599 2023
7.26% GS 2032 7.1364% # 2 China Asia 19,373,586 2023
7.06% GS 2028 7.0776% # 3 Japan Asia 4,409,738 2023
7.38% GS 2027 7.0793% # 4 Germany Europe 4,308,854 2023
6.89% GS 2025 6.9454% # 5 India Asia 3,736,882 2023
6.69% GS 2024 6.8577% # 6 United Kingdom Europe 3,158,938 2023
91 day T-bills 6.7200%* 7 France Europe 2,923,489 2023
182 day T-bills 6.8279%* 8 Italy Europe 2,169,745 2023
364 day T-bills 6.8480%* 9 Canada Americas 2,089,672 2023
* cut-off at the last auc on 10 Brazil Americas 2,081,235 2023
#
as on end of previous working day 11 Russia Europe 2,062,649 2023
Capital Market 12 South Korea Asia 1,721,909 2023
S&P BSE Sensex 65617.84 * 13 Australia Oceania 1,707,548 2023
Ni y 50 19439.40 * 14 Mexico Americas 1,663,164 2023
* as on previous day 15 Spain Europe 1,492,432 2023

Latest Small Savings Schemes Rates

01-Jul-2023 to 30-Sep-2023
6.10% Gross Domes c Product

Mar-23
Compounding GDP
Instrument Rates %
Frequency Index of Industrial
Savings Deposit 4.00 Annually 4.20% Produc on
1 Year Time Deposit 6.90 Quarterly
2 Year Time Deposit 7.00 Quarterly
IIP Apr-23

3 Year Time Deposit 7.00 Quarterly

5 Year Time Deposit 7.50 Quarterly 4.25% Consumer Price Index

May-23
5 Year Recurring Deposit 6.50 Quarterly CPI
Senior Ci zen Savings Scheme 8.20 Quarterly & paid
Source MOSPI (Government of India Ministry of
Monthly Income Account 7.40 Monthly & paid Sta s cs And Programme Implanta on)

Na onal Savings Cer ficate 7.70 Annually

US Fed Rate 5.25% (as on Jun-2023)
Public Provident Fund 7.10 Annually
Kisan Vikas Patra(Matures in 10 Year US Bond yield 3.9463% (as on 11-Jul-2023)
7.50 Annually
115 months)
US CPI 4.60% (as on Jul-23)
Sukanya Samriddhi 8.00 Annually
18
 �ेस �काशनी PRESS RELEASE

भारतीय �रज़वर् ब�क

RESERVE BANK OF INDIA

वेबसाइट : www.rbi.org.in/hindi संचार िवभाग, क� �ीय कायार्लय, शहीद भगत �संह मागर्, फोटर्, मुब
ं ई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : [email protected] Mumbai - 400 001 फोन/Phone: 022 - 2266 0502

June 08, 2023

Monetary Policy Statement, 2023-24

Resolution of the Monetary Policy Committee (MPC)
June 6-8, 2023

On the basis of an assessment of the current and evolving macroeconomic

situation, the Monetary Policy Committee (MPC) at its meeting today (June 8, 2023)
decided to:

• Keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 6.50 per cent.

The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent
and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.

• The MPC also decided to remain focused on withdrawal of

accommodation to ensure that inflation progressively aligns with the
target, while supporting growth.

These decisions are in consonance with the objective of achieving the medium-
term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2
per cent, while supporting growth.

The main considerations underlying the decision are set out in the statement
below.

Assessment

Global Economy

2. In the second quarter of 2023, the global economy is sustaining the momentum
gained in the preceding quarter in spite of still elevated though moderating inflation,

1
tighter financial conditions, banking sector stress, and lingering geopolitical conflicts.
Sovereign bond yields are trading sideways on expectations of the imminent peaking
of the tightening cycle of monetary policy while the US dollar has appreciated. Equity
markets have remained range bound since the last MPC meeting. For several
emerging market economies (EMEs), weak external demand, elevated debt levels and
geoeconomic disintegration amidst tighter external financial conditions pose risks to
growth prospects, although capital flows are cautiously returning to them on renewed
risk appetite.

Domestic Economy

3. According to the provisional estimates released by the National Statistical

Office (NSO) on May 31, 2023, India’s real gross domestic product (GDP) growth
accelerated from 4.5 per cent (year-on-year, y-o-y) in Q3:2022-23 to 6.1 per cent in
Q4, supported by fixed investment and higher net exports. Real GDP growth for 2022-
23 was placed at 7.2 per cent, higher than the second advance estimate of 7.0 per
cent.

4. Domestic economic activity remains resilient in Q1:2023-24 as reflected in high

frequency indicators. Purchasing managers’ indices (PMI) for manufacturing and
services indicated sustained expansion, with the manufacturing PMI at a 31-month
high in May and services PMI at a 13-year high in April-May. In the services sector,
domestic air passenger traffic, e-way bills, toll collections and diesel consumption
exhibited buoyancy in April-May, while railway freight and port traffic registered modest
growth.

5. On the demand side, urban spending remains robust as reflected in indicators

such as passenger vehicle sales and domestic air passenger traffic which recorded
double digit growth in April. Rural demand is gradually improving though unevenly –
motorcycle sales expanded in April, while tractor sales contracted partly owing to
unseasonal rains. Investment activity is picking up as reflected in the healthy
expansion in steel consumption and cement output in April. Merchandise exports and
non-oil non-gold imports remained in contraction mode in April while services exports
sustained a robust expansion.

6. CPI inflation fell sharply to 4.7 per cent in April 2023 from 6.4 per cent in
February on the back of large favourable base effects, with softening observed across

2
all the three major groups. Food group inflation eased, with moderation in cereals,
eggs, milk, fruits, meat and fish, spices and prepared meals inflation and deepening
of deflation in edible oils. In the fuel group, inflation in LPG and firewood and chips
prices fell and kerosene prices slipped into deflation. Core inflation (i.e., CPI inflation
excluding food and fuel) dipped, driven down by clothing and footwear, household
goods and services, health, transport and communication, personal care and effects
and recreation and amusement sub-groups.

7. The average daily absorption under the LAF increased to ₹1.7 lakh crore during
April-May from ₹1.4 lakh crore in February-March. Money supply (M3) expanded by
10.1 per cent y-o-y and non-food bank credit by 15.6 per cent as on May 19, 2023.
India’s foreign exchange reserves were placed at US$ 595.1 billion as on June 2,
2023.

Outlook

8. Going forward, the headline inflation trajectory is likely to be shaped by food

price dynamics. Wheat prices could see some correction on robust mandi arrivals and
procurement. Milk prices, on the other hand, are likely to remain under pressure due
to supply shortfalls and high fodder costs. The forecast of a normal south-west
monsoon by the India Meteorological Department (IMD) augurs well for kharif crops;
however, the spatial and temporal distribution of the monsoon would need to be
closely monitored to assess the prospects for agricultural production. Crude oil prices
have eased but the outlook remains uncertain. According to the early results from the
Reserve Bank’s surveys, manufacturing, services and infrastructure firms polled
expect input costs and output prices to harden. A clearer picture will emerge when the
final survey results are available. Taking into account these factors and assuming a
normal monsoon, CPI inflation is projected at 5.1 per cent for 2023-24, with Q1 at 4.6
per cent, Q2 at 5.2 per cent, Q3 at 5.4 per cent and Q4 at 5.2 per cent. The risks are
evenly balanced (Chart 1).

9. The higher rabi crop production in 2022-23, the expected normal monsoon, and
the sustained buoyancy in services should support private consumption and overall
economic activity in the current year. The government’s thrust on capital expenditure,
moderation in commodity prices and robust credit growth are expected to nurture
investment activity. Weak external demand, geoeconomic fragmentation, and
protracted geopolitical tensions, however, pose risks to the outlook. Taking all these

3
factors into consideration, real GDP growth for 2023-24 is projected at 6.5 per cent
with Q1 at 8.0 per cent, Q2 at 6.5 per cent, Q3 at 6.0 per cent, and Q4 at 5.7 per cent,
with risks evenly balanced (Chart 2).

10. The MPC took note of the moderation in CPI headline inflation in March-April
into the tolerance band, in line with projections, reflecting the combined impact of
monetary tightening and supply augmenting measures. Headline inflation is projected
to decline in 2023-24 from its level in 2022-23 but would still be above the target,
warranting continuous vigil. The progress of the south west monsoon is critical in this
regard. Domestic economic activity is holding up well. Consumer confidence is
improving and businesses remain optimistic about the future. The cumulative rate hike
of 250 basis points undertaken by the MPC is transmitting through the economy and
its fuller impact should keep inflationary pressures contained in the coming months.
Monetary policy would need to be carefully calibrated for alignment of inflation with the
target. Against this backdrop, the MPC decided to keep the policy repo rate unchanged
at 6.50 per cent. The MPC resolved to continue keeping a close vigil on the evolving
inflation and growth outlook. It will take further monetary actions promptly and
appropriately as required to keep inflation expectations firmly anchored and to bring
down inflation to the target. The MPC also decided to remain focused on withdrawal
of accommodation to ensure that inflation progressively aligns with the target, while
supporting growth.

11. All members of the MPC – Dr. Shashanka Bhide, Dr. Ashima Goyal, Prof.
Jayanth R. Varma, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri

4
Shaktikanta Das – unanimously voted to keep the policy repo rate unchanged at 6.50
per cent.

12. Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Dr. Michael
Debabrata Patra and Shri Shaktikanta Das voted to remain focused on withdrawal of
accommodation to ensure that inflation progressively aligns with the target, while
supporting growth. Prof. Jayanth R. Varma expressed reservations on this part of the
resolution.

13. The minutes of the MPC’s meeting will be published on June 22, 2023.

14. The next meeting of the MPC is scheduled during August 8-10, 2023.

(Yogesh Dayal)
Press Release: 2023-2024/364 Chief General Manager

5
INGENIOUS Jul-Aug 2023

O f f i c e B e a re r s

CHAIRPERSON
Mr. R. Gopinath
CONVENOR

MEMBER
SECRETARY

Mr. Ankur Shah Ms. Savita Pillai Ms. Bharathi Srinivasan

MEMBER

MEMBER

MEMBER

Mr. Atul Jain Mr. Ajay Kr. Tyagi Mr. Inderpal S. Bindra

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