The Infrastructure Leasing and Financial Services (IL&FS) contagion is spreading. After mutual funds and non-banking financial companies (NBFCs), it is the turn of the exempt pension funds to be worried about their investment in bonds from the beleaguered institution. The story is: as non-performing asset-laden banks dried up lending to firms, these companies turned to other sources of money as a firm needs working capital to keep the wheels of business turning. Money comes from two sources—extra funds that other firms have and household savings. Institutions such as banks, mutual funds, insurance firms, pension funds, and NBFCs act as intermediaries between households, who are the lenders, and firms who are borrowers. In the IL&FS case, there are bonds that have not kept to the interest payment schedule and were, thus, classified as below investment-grade by credit rating firms. Once that happened, the exposure to such bonds held by mutual funds came to light. Next came the exposure of NBFCs to these bonds.
It takes as much time to get from the airport in Bengaluru to the Indian Institute of Management Bangalore (IIMB) as it does for my flight from Delhi to the city of snarly traffic. I was going to speak to a mixed bunch of students at IIMB later that day and to pick me up was a first-year MBA student. The journey was long and before long we were deeply immersed in the tricky topic of gender. I was curious to know how the gender equation has changed for a generation that was born after I had graduated from college. I remember the faces of all the girls in my class, both in undergrad and postgrad, who were married off before they finished the degrees. Those who survived the ceremonial kick-off got into jobs and then into married life. They spoke about doing two jobs—one at work and the other at home. The Indian marital household that sits in the top 1% of the population in education and wealth was happy to accept a “working” woman and her income, but did not like it when work got in the way of the household chores and duties.
Money With Monika: Personal finance expert Monika Halan explains the importance of asset allocation in this episode of the weekly show. “Equity, debt, cash, gold and real estate are all asset classes. Each comes with its own attribute and has a specific role in your portfolio,” she points out. Monika Halan is the Consulting Editor of Mint; and author of Let’s Talk Money. She also takes questions every week from viewers on their financial worries. If you have a question, write to MoneyWithMonika@livemint.com. Watch the full video for more.
The Reserve Bank of India has cut the benchmark policy rate by 25 basis points (one basis point is one-hundredth of a percentage point) in line with the expectations of the market and economists. Should an average household be happy or sad? An average household catches cues from newspaper headlines and worries when the central bank holds interest rates high for very long without really knowing why. But often the interest of the household is different from that of the corporate sector or banks. This is how it works and why we don’t need to celebrate a rate cut just yet.
Money with Monika: Understanding mutual fund investment options
In Season 2, Episode 8, personal finance expert Monika Halan explains the various options through which you can invest in mutual funds. She explains the difference between a Systemic Investment Plan (SIP), a Systemic Transfer Plan (STP) and a lump sum investment. If you have a question, write to MoneyWithMonika@livemint.com.
Livemint decodes the implications of tax proposals in interim budget 2019 with personal finance expert Monika Halan. The budget proposed rebates for all those with taxable income of up to Rs. 5 lakh per annum. Tax burden has also been reduced due to the proposed increase in standard deduction from the earlier Rs. 40,000 to ₹50,000. Watch the full video where Monika Halan unpacks how the tax proposals will impact your pockets.
The 8,153-word speech by finance minister Piyush Goyal, who was stepping into the shoes of the ailing Arun Jaitley, had some giveaways and some promises to both India and Bharat. But if you look for a subtext, it is this: “We inherited a struggling economy that was crying for structural reform after years of policy paralysis. Our macro report card is good—inflation is down, deficit numbers are within a whisker of the glide path recommended in the FRBM Act and the economic growth numbers are strong. To fix the micro, that means things that will make a difference in your life, give us another chance. And, by the way, to help you help us, here are some rewards targeted at those who most need them.”