The Sensex’s 28 per cent gain was not the only thing that brought smiles to investors in 2014. Developments in other asset classes, such as debt, gold and real estate, and even in mutual funds and chit funds, added to the cheer.
From new products to stiffer regulations to make your investments safer, 2014 has proved to be a good year for investors.
An exchange-traded mutual fund made up of stocks of top public sector companies such as ONGC, Coal India, Indian Oil, Engineers India and so on, the launch made stakeholders at both ends happy. On one hand, it helped the government raise a bit of cash when the economy was in dire straits. And on the other, it paved the way for investors who believed in the PSU story to spend less, as well as spread risks by investing in a basket of stocks. Goldman Sachs Mutual Fund, which launched the CPSE ETF in March 2014, has so far seen about ₹2.500 crore of inflows.
The Budget in July 2014 also brought the much-awaited Real Estate Investment Trusts or REITs closer to reality. Through REITs, you will soon have a route to invest in a big property with a smaller outlay and also earn regular income (dividends) from it.
Toward the end of the year, one of the most popular Post Office savings schemes – the Kisan Vikas Patras -- was relaunched after a hiatus. The new version of the KVP retained much of the old charm, that of being a bearer instrument, having no limits on maximum investment, no tax deduction at source and promising doubling of the amount in 100 months. Added to this were easier norms for investing with no PAN requirements. The new KVP can be purchased in denominations of ₹1,000, ₹5,000, ₹10,000 and ₹50,000.
Tightening the screws The year also saw a host of measures to protect investors brought in by SEBI, the RBI and the new Companies Act. Thanks to the Saradha and Rose Valley scams, SEBI amended regulations related to Collective Investment Schemes (CIS) in January 2014 to cast the net wider. Now, any entity which manages a corpus of ₹100 crore becomes a CIS by default, whether it collects money toward livestock rearing or timeshare. A certificate of registration is essential. Subscriptions to CIS schemes must be done only through banking channels and KYC norms need to be followed.
The fallout of the Sahara scam also saw rules being tightened for non-convertible debentures (NCDs). While the RBI said that NCDs issued by NBFCs have to necessarily be secured against the assets of the company, SEBI laid down rules relating to the floor size for NCD issues, the need to obtain minimum subscription before they list on an exchange and the need to make greater disclosures on reasons for raising the money.
The new Companies Act too laid down several rules for company deposits, applicable from April 2014. These include the issue of deposits only for tenures of 6-36 months, a ceiling on interest rates at levels specified by the RBI, mandatory disclosure of credit ratings, details on security for the deposits, if any, and details of defaults in payments by the company.
Besides, the new Companies Act subtly brought the popular gold savings schemes offered by many jewellers under its fold and laid down permissible tenures and returns on these schemes. The new Act also gave more power to minority shareholders and tightened criteria regarding related party transactions.
Though investment reforms hogged the limelight, insurance was not left behind. Policy-holder friendly guidelines brought in towards the end of 2013 by IRDA saw insurers re-launch their traditional products in consonance with the new directive in 2014. Some of the changes include a higher death cover (minimum 10 times of annual premium), an increase in surrender value on traditional plans and linking of agents’ commission to premium paying term.