Byapaar.com -The Indian Business Blog

First of all, my heartiest congratulations to Abhinav Bindra J who made India proud by winning gold medal for the 10m Air Rifle section at the Beijing Olympic. It is the first ever individual gold that India won in the history of Olympic.

Now, this post is a little bit personal as I’ll try to put a point across by taking example of one of my friend. But before I dwell into that, let me give a brief update on the latest business scenario.

Inflation is at 18 years high that stands more than 12 percent. Stock market has recovered to some extent and has been on a bullish run for last 10 days or so. Tatas and Reliance Infocom have decided to invest huge sum to create GSM based network while keeping their CDMA services. The central government has decided to come to the exporters’ aid and has announced that it would return taxes already paid.

Well, that’s what I call brief update. J

Now the main topic! The other day I was called by my fried who got some exorbitant Credit Card bill and didn’t know where he spent the money. He called me because we went to some websites one night and used it to get membership. It was quite late in night and he didn’t know how to browse the net properly. L So I told him not to browse the net any more after I left. He did!

For the next 3 months he kept receiving those bills and soon he was in debt. I repeatedly asked him to contact the issuing branch to block the card. He didn’t! But when the bill piled on, he was desperately looking how to get out of debt and this mess. Finally he called the customer service of the issuing bank and they did oblige his request.

I am blogging on this because this might happen to anybody who is regularly using credit cards for online purchase – especially from phony sites. There are lots of instances of unauthorized use of credit cards by hackers who steal the card access codes. So everybody must first check how reputed and trusted the site is (Verisign verification is one of those) before putting the sensitive personal data.

While plastic money in the form of credit or debit cards is of great convenience, one must use it judiciously even if they are not using them online. As one does not have to carry and dish out lots of cash, it is very easy to spend a lot by swiping the card at various counters. Its only after that you start worrying how you pay off credit card debt that is now quite a huge amount.

Read the rest of this entry »

Finally the turbulence of politics is over with the UPA led by the Indian National Congress withstanding a tight no-confidence motion in the Lok Sabha on 22^nd July. The Left Front has been blocking almost all major reforms which are so badly needed to push the economy to the next level. It has been frustrating 4 years for both pro-reform Prime Minister Mr. Manmohan Singh and also the business community. Now that all is over, the UPA government is determined to push through reforms in many fields like insurance, telecom etc. despite the alarmingly high rate of inflation that stands @ 11.98% today!

High rate of inflation has also made the apex bank (Reserve bank of India) to raise interest and thereby make bank deposit attractive. On the other hand, the long bull run of the stock market also ended with the start of the turbulence of government instability and skyrocketing international fuel price.

So as an individual – where do I put my money? Most banks are offering an attractive 10% annual interest rate. But is it long lasting? Despite forecast of an economic slowdown, businesses remain upbeat on long-term economic prospect of the country.

So the ideal way to invest your money is to divide your funds and put them into both the markets. While it is not guaranteed that bank rates will always remain the same, one can not also say for sure when the equity/stock market is going to recover! Read the rest of this entry »

Just imagine what happens if the “title” of this post comes true sooner than later in India. Heard of Credit Rating? Being an Indian, I have only read about it on newspapers occasionally and sometimes found irritating SPAM mails on my inbox by some companies who were enticing me to make my credit score higher even if I had bad debt.

But don’t be surprised if you are denied a bank loan in the near future because of your bad credit score caused by intentional default or irresponsible financial management by you. On the other hand your loyal driver has been paying his mobile bills, gas bills regularly and hence he gets a a very high credit score. He gets cheaper bank loans, but you are denied.

Yes you guessed it right. If everything goes according to the plan the biggest names in credit rating industry ( such as Equifax and Experian ) will be opening their shops very soon infront of your office desk and decide on your eligibility for loans Quite scary! But thats what Indian government has been contemplating based on an assessment by a consortium of banks and financial institutions. They have already filed an application with the Reserve Bank Of India (RBI). So far there has only been one credit rating agency operating in India known s Credit Information Bureau Of India Ltd. (CIBIL). But its work has been limited due to absence of proper regulations. The government passed The Credit Information companies Act. only in 2005 that enables banks and financial institutions to reduce risks of bad debt and fraudulent activity. They can now share sensitive personal information of consumers with a recognized agency without taking permission from the person concerned. These agencies are to analyze the data and collect further information to build profiles of individuals to judge their eligibility for loans. People who gets higher score are to receive bank loans quicker and cheaper. On the other hand those with low scores might even get denied.

However the concept is still new in India and it remains to be seen how willing are banks and other institutions to part with the database. Another factor in this regard is how serious will the bank take on the analysis provided by these credit rating agencies. The government on the other-hand is trying to formulate a more detailed regulation making it mandatory for all banks to subscribe to at least one such agency.

So its going to be bad times for loan defaulter pretty soon. Be careful!