FLAME Newsletter - October 16, 2013


QUOTE OF THE WEEK:

"There is no ban on giving loans on credit cards. Don't charge 12 per cent actually and claim that I am charging only zero per cent interest," - KC Chakrabarty, Deputy Governor, Reserve Bank of India

YOUR FINANCE DEMYSTIFIED:

The downside of 0% interest EMI schemes

Often, what we perceive as economical always has tremendous economics behind it. Otherwise why would the seller be interested in selling something that which is fairly cheap to you? The 0% interest equated monthly instalments (EMIs) was one of the few attractive schemes which had received strong acceptance, is a case in the point.

Recently, Reserve Bank of India asked banks to stop 0% interest charging schemes that allowed consumers to buy goods on equated monthly instalments. Banks used to offer these special schemes to consumers to buy anything and everything from kitchen appliances such as induction cookers to even high end electronic gadgets such as smart phones, tablets and LED television sets.

In financial parlance, you should never borrow to consume and worse if you are splurging on some electronic gadgets just to catch up with peers... Read more

DID YOU KNOW?

What is a promissory note?

All of us know what does the term 'loan or debt' mean. A loan is a debt evidenced by an agreement which specifies, among other things, the principal amount, interest rate and date of repayment.

In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount. The below write-up provides details about a promissory note... Read more



TERM OF THE WEEK

Usury: The term "usury" refers to an unlawfully high interest rate. There can be significant consequences for entering into a "usurious" contract. For example, in some states any interest payment made on an usurious loan is applied to the principal balance of the loan—that is, the law transforms the loan into a "zero interest" loan. Most jurisdictions make usury a criminal offense if the rate is particularly high.

IN THE NEWS THIS WEEK

SEBI appoints 5 entities as investment advisers

Life insurance policy for HIV-AIDS patients from Apr 1: IRDA

IRDA extends definition of Key Persons

Equity MF folio numbers decline 2% to 24.3mn in September

ABOUT FLAME

FLAME (Financial Literacy Agenda for Mass Empowerment) is an IIFL initiative to promote financial literacy amongst the masses in order to make them an integral part of India’s spectacular growth story.

In an era of accelerating GDP and rising per capita growth, financial literacy has become more critical than ever before such that we all reap the tangible benefits of the nation’s economic prosperity. Financial inclusion has been quite high on the governmental agenda, given its emphasis on widening the Banking & Financial services network across the country. IIFL’s FLAME initiative stands committed to complement this effort by helping common people gain financial growth and security though better awareness and education on the variety of financial products while avoiding the lure of and loss from unrealistic claims made by unscrupulous agents and ponzi schemes.

Our objective is to light a FLAME, as the name suggests, which will set ablaze a chain of FLAMEs across the country. The new-found light of knowledge will undoubtedly dispel the dark clouds of financial illiteracy and ensure the bright sunshine of financial growth and prosperity.

This portal is but one of the various IIFL initiatives that would be part of FLAME.



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