Category Archives: Investment

China’s ICBC Opens Account in India

World’s largest lender in terms of market cap is the first Chinese bank to open a branch in India

Industrial and Commercial Bank of China, or ICBC — the world’s biggest lender by market value, has set up business in India, which could potentially open up the market for firms from Beijing, boost investment in infrastructure sectors and foster the growth of a rupee-yuan market. 

The bank will be the first of four Chinese lenders to start operations in India. India and China had signed a memorandum of understanding, or MoU, during Chinese premier Wen Jiabao’s visit, which will facilitate Chinese banks to open branches in India. “We have received a commercial banking licence. In the first stage, we would like to focus on wholesale banking services and products to Chinese enterprises and related parties,” said Sun Xiang, chief executive officer of ICBC, Mumbai branch. The bank, which is now expanding in Europe and other countries, will gradually offer personal banking to local customers and private banking services.

Four Indian banks — SBI, Bank of Baroda, Bank of India and Canara Bank — have a branch each in China. Chinese banks had sought regulatory approval to start commercial operations on grounds of reciprocity.

“ICBC would facilitate the investment of Chinese companies in India’s power, telecom and infrastructure sectors. We would also help companies raise yuan-denominated bonds if there is a demand,” said Yang Kaisheng, president of ICBC. “Corporates can get 3-5 funds by issuing dim sum bonds at an interest cost in the range of 1-3%. A similar issue in India could cost firms an interest rate of 9-10%,” said a treasury head with a private sector bank.

In 2010, China emerged as India’s biggest trade partner with a trade volume of $61.7 billion, which is nearly 20 times of what it was almost 10 years ago, while India is also China’s biggest trade partner in South Asia. ICBC has accelerated its overseas expansion plans. At the end of June 2011, the bank’s overseas assets stood at $140 billion, which account for 4% of its total assets.

“We are still a new comer in the international market when compared to other global players. In future we would like to see the share of international assets go up to 10%,” said Kaisheng. “This would be difficult as our domestic assets are growing faster,” he said.

On potential investments in India, Kaisheng said it would hinge on two factors — the bank’s capital adequacy and the proportion of funds allocated by the head office. “It is true that we operate as a branch instead of a subsidiary. However, as and when regulations demand, we would be open to converting into a wholly-owned subsidiary,” he added.

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Truth, Integrity Should Be the Hallmarks of Financial Planners

Truth and integrity are words we hear a lot, but hardly find in real life. Politicians talk a lot about it and almost have nothing to show for it. Their oath of allegiance when they assume office is hollow, as politics today is a game of private enrichment at public cost. 

It is surprising that people have this conviction that integrity and truthfulness do not have a place in the present-day world. In fact, integrity does have a place in today’s world and those who are practising it know it and are doing extremely well. There are many who practise the highest levels of integrity in their personal lives and in their corporate avatars.
Infosys, Wipro, Tatas, Godrej, and the TVS group are some of the wellknown companies/groups, which come to mind when we are on the subject of integrity. For some of them, it is their calling card. For Tatas, apart from their management acumen, they are sought after by any company looking for an India entry, due to their impeccable credentials.
Integrity can be an actual differentiator. In the finance field, which deals with people’s money, it is even more important. The field has received a severe battering in the past three years and the integrity of this industry is in tatters. To this day, we read stories of deceit and wanton misleading of various participants.
Integrity is at the heart of building longstanding relationships. Integrity is difficult to maintain at all points. It is easier to bend the rules a bit, to suit one’s convenience. But that would bring down the moral stature a person has and their allweather dependability. Trust is built over time. One wrong move and their integrity is compromised.
Trust is a word that is often used by many in business. It is used even more in the world of finance — to allow another person to handle your money and with it your future requires quite a leap of faith. Hence, trust and integrity have even more relevance in the financial space.
Come to think of it, this can be one’s calling card. It will be an effective one at that. Each one of us operating anyway require something to distinguish us from the rest. Why not integrity? Why not actually take the moral high ground and stay there, where the clients like us to be?
Think of this as a long-term strategy. An insurance agent might lose some potential income by foregoing on the opportunity to push a product with juicy commissions — especially to a client who anyway does not know much about insurance. That is where integrity comes in. Integrity is what you do when no one is looking. What does the agent gain by doing the right thing? On an immediate basis, nothing. But the agent can always communicate to the clients all the options available to them and educate the client why, from among the various options, he is suggesting a particular product. This willingness to spend time to engage and do the right thing will certainly be appreciated and remembered. These are the agents who will go on to become the star agents of the branch, region, company, because a happy client recommending the agent to 10 others.
It works. Not just in insurance. It will work everywhere. It is even more fundamental in the financial planning profession, where I come from. Integrity is the backbone of this profession. Financial planners get to handle complete client information, unlike any other who may only get to see bits and pieces. Hence, integrity needs to be of the highest order here — not just beyond reproach. Trust is the currency here. And trust needs to be earned.
Earning trust is a relentless, dogmatic pursuit. Talking the truth all the time is immensely tough. But it needs to be done, because that is the highroad that one needs to take if success of the highest order needs to be achieved.
Quite simply, it is in our own self interest – enlightened self-interest. Doctors take the Hippocratic Oath to always act in their patients’ interest. A similar oath is what we all require. Both professions have a fiduciary responsibility. Done right, finance is as much a noble profession as medicine is – for one treats the body and the other takes care of the other most important part – money.
We all need to think about it. Each of us has to attest to the highest standards of honesty, integrity and truthfulness. This is not some utopia that I’m talking about. It’s what regulators are trying to create. It is what we can create ourselves and reap the benefits, too. And be counted as some of the best professionals there are. The choice is ours.

Seven Things You Should Look for in a Financial Planner

Recently, a new breed of professionals has emerged who are making financial plans for everyone and are not restricting themselves to investment planning. A financial plan includes planning for your taxes, retirement, kids’ education and marriage, buying a home, estate planning or any other goals you may have. 

This new breed of professionals, known as financial planners, writes a plan for you with all your goals specifically laid down and then provides you with a road map on how to achieve these goals. They always give you a holistic account of all your finances, taking into account all your assets and liabilities, besides taking care of all the risks associated with you and your family and also the assets owned by you. These financial planners will first collect all the data related to your finances and the goals you have for future. These goals may be anything ranging from buying a home, to planning for your child’s education to going on a vacation. After this exercise of data collection, the financial planner will analyse your goals and accordingly write a financial plan for you.
This financial plan will carry recommendations you need to follow as they will help you achieve all the goals. These financial planners may charge professional fees for making this plan for you. You will find various planners who can do this job for you.
But how to choose a financial planner who can handle your finances in the best possible way for you? Below are seven pointers you can keep in mind while scouting for a professional who can write a complete financial plan for you.
1. The planner should start by collecting data relating to your finances, analyse your goals and then recommend through a written financial plan and not just recommend a plan to you without understanding either your finances or your goals. Your financial planner should provide you with a holistic picture of your personal finances and provide you with a road map for your finances rather than just trying to sell you products.
2. Ideally, you should always go for a ‘fee only’ financial planner. This will ensure that the planner doesn’t have any interest in selling any particular product along with the plan. Along with that, this will also make sure that the recommendations provided to you in the plan are completely unbiased and to your benefit. A fee-only financial planner will disclose his fees upfront.
3. The financial planner should analyse all your goals and take a holistic picture of your finances. Once the analysis is done, he should draw out an asset-allocation plan for your goals. All the product recommendations should follow the asset allocation suggested. The financial plan may or may not carry any product recommendation. In case the plan is carrying product recommendations, then be sure that you have an option of buying the product from any other broker or distributor.
4. The financial planner should be well qualified to take care of all the decisions concerning your money. You must verify if your planner holds professional degrees like a certified financial planner (CFP) qualification or chartered accountancy and has specialised in financial planning. Both knowledge and qualifications will build up your confidence in the financial planner and will assure you of good management of your money.
5. If your financial planner is suggesting you to buy products like a traditional insurance policy, then be sure that he is just trying to make money for himself through commissions for himself or some of his associates. Stay away from a financial planner who suggests you to buy such dead products, which cannot be justifiably recommended by any financial planner.
6. Do some research on your planner and his reputation in the market. You can go on Google and search for his/her name. A financial planner with good reputation will always be very popular with the media and you will find enough to read about them over the Internet.
7. Stay away from a financial planner who starts off with advising you a product without analysing all your goals.
Most importantly, go with your gut feeling after the first meeting.