Homework Day 3

Q1. Transaction limit on UPI

Q2. Differentiate between rule-based and principle-based regulatory regimes.

Q3. CAMS and Karvy

Mutual funds are popularly known and invested in as they yield high returns. With the ever-
increasing flow in the number of investments in mutual funds, business in mutual fund
organizations are increasing too. It becomes impossible for mutual fund companies to keep a
track of the activities done by all their investors. Therefore, they outsource these back-end
transactions and record-keeping to trusted institutions known as Registrars and Transfer
Agents.
Registrars and Transfer Agents are basically organizations or companies that register detailed
records of investor transactions and keep a record of it all. They are skilled experts for
maintaining such records professionally.
Investors carry out multiple transaction such as buying, selling, exchanging, redeeming funds,
updating certain personal information, etc. The Registrars and Transfer Agents take care of all
these activities of the investors and store all such information. This is convenient to mutual
fund companies and takes the load off them.

Q4. SAMCO MF controversy

The fund house launched the NFO of its maiden scheme, Samco Flexi Cap Fund, last month. The
stock pick is based on an in-house proprietary investment framework, called the Hexashield
Framework, which shortlists companies on six parameters: competitive strength and pricing
power, balance sheet and insolvency, reinvestment and growth, corporate governance and
leadership, cash flow and regulatory compliance.

The regulator is upset that the fund was sold to investors as a pure equity scheme though as
per the asset allocation table, the scheme shall invest 65-100% in Indian equity, 0-35% in
foreign securities and 0-35% in tri-party repo (TREPS) through Clearing Corporation of India. The
regulator believes that any scheme with a high cash allocation cannot be called a pure equity
scheme. "Since the scheme shall also invest up to 35% in TREPS instruments, the reference of
the word 'pure' was duly removed from the website to avoid any confusion, as per the direction
received from Sebi. Going forward, we will refer to Samco Flexi Cap Fund as an equity scheme,"
said a spokesperson for Samco MF.

Q5. Amount of ULIPS mis sold in India

Q6. Persistency Ratio of insurance companies

The persistency ratio is the number of total policies that an insurer has to the policies that are
renewed or in force. So, for instance, an insurance company sells 100 policies, but out of these,
only 80 policies are renewed or active at a given time. The persistency ratio, in this case, will be
80:100.
Tata AIA Life Insurance Co. Ltd. (Tata AIA) has said it saw better persistency levels in FY2022
than other Indian life insurance companies, despite a challenging business and economic
environment.
Compared to FY21, the 13th month persistency ratio (based on premium) of the company has
improved to 87.75% from 86.48%. The company’s 25th month persistency is now 79.48%, up
from 75.84% in FY2021.

Q7. Wells Fargo Scandal

The Wells Fargo cross-selling scandal is a controversy brought about by the creation of millions
of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their
consent. News of the fraud became widely known in late 2016 after various regulatory bodies,
including the Consumer Financial Protection Bureau (CFPB), fined the company a
combined US$185 million as a result of the illegal activity. The company faces additional civil
and criminal suits reaching an estimated $2.7 billion by the end of 2018. [1] The creation of these
fake accounts continues to have legal, financial, and reputational ramifications for Wells Fargo
and former bank executives as recently as November 2022.

Shivraj Puri Citibank scandal

A banking fraud which could run into a whopping Rs400 crore has been unearthed at leading
multinational lender Citibank's Gurgaon branch in north Indian state of Haryana, reports PTI.
Gurgaon Police Commissioner SS Deswal said on Tuesday that an First Information Report (FIR)
under sections of cheating and forgery against a bank employee and three others has been
lodged and 18 accounts having close to Rs4 crore frozen.Sources said funds amounting to Rs400
crore ($88 million) of 20 high networth individual (HNI) customers has been siphoned off. The
fraud is said to be a handiwork of Shivraj Puri, the employee who is alleged to have sold
investment products to high networth clients claiming that they would generate unusually high
returns. It is also alleged that Mr Puri, who is named in the FIR, showed a forged notification of
market regulator Securities and Exchange Board of India (SEBI) for obtaining funds from
customers.

Q8. C B Bhave
Bhave had irreconcilable differences with D. R. Mehta, the SEBI Chairman, and strong views
about the direction of reforms of the equity market. He left SEBI to lead what was then a
startup, the National Securities Depository Ltd. (NSDL). NSDL had been incubated inside NSE
but for all practical purposes, it was a startup when Bhave took over as managing director. This
was also a highly successful period, where India made the transition into dematerialised
settlement at the depository.

Q9. Family offices in India

India reportedly has an estimated 300 family offices, with an average asset under management
of 100 million dollars each. Some even have multi-billion corpuses. Gautam Adani, Ratan Tata,
Pawan Munjal, Azim Premji, NR Narayana Murthy, and the Mariwala family, all, have family
offices.
India reportedly has an estimated 300 family offices, with an average asset under management
of 100 million dollars each. Some even have multi-billion corpuses. Gautam Adani, Ratan Tata,
Pawan Munjal, Azim Premji, NR Narayana Murthy, and the Mariwala family, all, have family
offices.

Q10. Axis mutual funds problem

Front running is a market malpractice of trading in securities ahead of large client orders for
personal gains. The Securities and Exchange Board of India (SEBI) on February 28 said it has
barred Viresh Joshi, the former chief dealer of Axis Mutual Fund, and 19 others in a front
running case linked to the fund house.
The market regulator said it identified Rs 30.5 crore as wrongful gains accrued due to the
alleged front-running activities and directed that this amount be impounded from the entities.
SEBI further alleged that Joshi conceived a "fraudulent scheme" in "collusion" with other
'unscrupulous entities' to front run trades of Axis MF.

Q11. Liberalised Remittance Scheme (LRS) Latest

Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed
to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current
or capital account transaction or a combination of both.
If you are a person in India you may remit amount outside India for various purposes such as
foreign trip, education, medical facilities, investment abroad, sale proceeds of investment in
India, income earned in India. In order to regulate such remittances laws have been framed
under Foreign Exchange Management Act, 1999 and Income Tax Act, 1961 which have been
discussed in this article. For such remittances Liberalised Remittance Scheme (LRS) has been
framed which is available if you are an Indian resident individual. In that case you may make
remittances up to USD 250,000 per financial year (April-March) for any permitted capital/
current account transactions or a combination of both.

Q12. Open Banking

Open banking is a financial services term within financial technology. It refers to: The use of
open APIs that enable third-party developers to build applications and services around the
financial institution. Greater financial transparency options for account holders, ranging from
open data to private data.