@Leisure - Vol-35 | srei

@Leisure - Vol-35

Newsletter
 

What happened to the old 500 and 1000 rupees notes?

With the passage of time, it is routine to recycle money; the Reserve Bank of India takes out damaged money from circulation and reintroduces fresh and clean notes into the system. However, on November 8, 2016, after Prime Minister Narendra Modi announced the demonetisation of Rs. 500 and Rs. 1000 bank notes, there was a massive removal of circulating currency from the country. Have you ever wondered what happened to these demonetised Rs. 500 and Rs. 1000 notes?

Verification and diligence

The Reserve Bank has a currency verification and processing system (CVPS), which has been in place since 2003. This system ensures that the notes which are returned to the central bank are genuine. At the moment, the CVPS is capable of handling 60,000 notes per hour.

Shredding en masse

RBI has been busy shredding and compressing old notes into briquettes that are being further processed into various items like greeting cards, stationery, egg trays and brown paper. In order to make paper, various chemicals are added to the briquettes of old notes; these notes are then turned into a pulp. This pulp can be processed into cardboard and paper products.

Souvenirs and memorabilia

There are some creative uses for old notes as well. Old bank notes are being converted into souvenirs as well. Products such as weights, files and calendars are being made out of the old currency.

Environment friendly

The new age recycling of bank notes is a friendly way of recycling currency and reflect a 'waste not-want not' attitude. It is a far better approach than trashing the briquettes of shredded currency as was done in the past. Since the notes are not being burnt, there is no air pollution either.

It is heartening to see this 'waste not, want not' constructive approach being taken in the demonetisation process. These new creative ways of disposing old currency will ensure that the old notes serve a useful purpose and do not end up in heaps of trash where they may pose a security threat or contribute to environmental degradation.

 

About Public Financial Institutions (PFIs); Srei as a PFI

Srei was recognised as a Public Financial institution (PFI) by the Ministry of Corporate Affairs (MCA). A PFI is a company which has a net worth of at least Rs. 1,000 crore and has at least half its income derived from industrial and/or infrastructural financing. A company that is deemed as a PFI should also give an undertaking that the main business of the company shall remain industrial/infrastructural financing.

Why you should consider investing in a PFI?

There are some unique benefits to investing in a PFI. Here is why you should invest in a PFI:

  • Low Tax Liabilities: Companies like Srei, which have PFI status are subject to lower tax liabilities because they benefit from Section 36 (1) (vii c) of the Income Tax Act. This law allows PFIs to claim doubtful debts as deductions.
  • Ideal for certain organisations: Non-Convertible Debentures (NCDs) issued by PFIs are ideal investments for superannuation and gratuity funds as well as provident fund trusts because they can invest up to 40 per cent of their corpus in them. By investing in NCDs or securities issued by a PFI, your organisation can either choose the Public issue or the Private Placement route.
  • Participate in Nation-building: If you invest in a PFI like Srei, you as an individual or your organisation are contributing to the nation-building effort. Infrastructure financing directly helps build infrastructure like seaports, airports, roads, bridges and more. Srei has worked on a number of projects that have contributed significantly to Indian infrastructure.
  • Reliability: PFIs are organisations that have been recognised by the Reserve Bank of India and are registered with them. These companies have to maintain a net worth threshold and should have been in existence for at least 3 years.

If you are considering making investments, you should definitely think about public financial institutions (PFIs). You will not only be investing in a company that is solid and dependable but also be helping in the future prosperity of India and its development.

 
 

GST - a likely boon for foreign investment in bonds

The Goods and Services Tax (GST) can be the factor that pushes vigour into Indian debt markets. This simplified tax regime is likely to create a unified market across India and remove the present system of tax-on-tax. This favourable tax environment is likely to reduce the cost of doing business in India, make it easier to set up a business in the country and carry out trade, and make goods and services cheaper in the mammoth Indian market.

Foreign investors excited by GST

The new tax regime is likely to spur Indian growth in the next half-decade. GST is being viewed positively by foreign investors. According to a survey of corporate India conducted by Feedback Business Consulting Services, 72 per cent of all the respondents polled think that investments will rise across sectors and a boost will be especially seen in Foreign Direct Investments (FDI) particularly in the engineering and automotive sectors.

Efficiencies to be drivers of growth

GST is likely to be a harbinger of efficiencies such as reduction in costs attached to tax and regulatory compliance, deeper penetration of markets and increased export effectiveness, efficiencies in supply chains, lower logistical costs, etc. All of these factors will drive up India's competitiveness and make it more attractive for foreign investors. GST will come as a shot in the arm of the Indian bond markets. Foreign investors are likely to flock to India and take advantage of the new simplified tax regime.

Attractive Indian markets

Indian bond markets are situated in a sweet spot where they offer attractive returns to investors. There are low or negative interest regimes prevalent in developed economies in the European Union, Japan, etc. Further, international uncertainties like Brexit and the political climate in the United States will make India seem even more attractive.

A better tax regime will not only benefit local businesses but will also create opportunities for foreign investors as companies and governments in India turn to debt markets to raise capital for further expansion. GST is likely to play the role of the proverbial cherry on the cake and add to the shine of India.

 
 

Buddy Jokes

Jokes / Quotes

Bankers never die...They just lose interest.

Q: What's the key difference between men and government bonds?
A:Bonds mature.

"Money, if it does not bring you happiness, will at least help you be miserable in comfort." Helen Gurley Brown

"Finance is the art of passing money from hand to hand until it finally disappears." Robert W. Sarnoff

 

Buddy Quiz

1) Currency __________ and processing has been in place since __________.

2) Superannuation and gratuity funds can invest up to __________ per cent of their corpus in NCDs of PFIs.

3) Costs attached to __________and regulatory compliance will come down with the introduction of GST.

4) NCDs of PFIs are subject to __________ taxes under Section 36 (1) (vii c) of Income Tax Act.

5) Rs. __________ and Rs. __________notes were demonetized on November 8, 2016.

Answer:1. Verification, 2003; 2. 40; 3. Tax; 4. Lower; 5. 500, 1000.