Ingenious July August 2023.pdf

Issue: 6 In-house magazine of FCFP members Jul — Aug 2023
The Success Story
THE PROGRESSION
ALL FOR THE SAKE
OF FAMILY
FINANCIAL
FORECASTING
NOMINATION
INGENIOUS
SAMACHAAR

2
Magazine designed and compiled by:
BINDRA Inderpal Singh
Content Page
The Progression - All for the sake of our FAMILY (Part 2) 3
Know your AWF Qualiﬁers 6
Did you know? 8
Ingenious Samachaar 9
Cover Story - UPI The Success Story 11
Ar cle - Financial Forecas ng 13
Ar cle - Nomina on 16
Lets Know -Educa on Loan on Studying Abroad 15
Data Centre 18
Minutes of RBI - MPC Meet 19
Jul-Aug 2023
INGENIOUS
Dear Readers,
We are pleased to present our 6th bi-monthly “Ingenious Magazine” for July & August 2023 by
the alumni of Foundation Course in Financial Planning (FCFP) 2022 1st Batch from Gopast Cen-
tre for Learning Pvt. Ltd., under the able guidance of our Guru Shri Gopinath Radhakrishnan Sir.
It comprises of write ups on financial products and latest news articles related to economy, finance
and insurance industry based on our research.
Here are the links for our previous magazines:
https://www.slideshare.net/AnkurShah26/ingenious-sept-2022pdf
https://www.slideshare.net/AnkurShah26/ingenious-nov-dec-2022pdf
https://www.slideshare.net/AnkurShah26/ingenious-janfeb-2023pdf
https://www.slideshare.net/AnkurShah26/ingenious-marapr-2023pdf
https://www.slideshare.net/AnkurShah26/ingenious-may-2023pdf
We are thankful, grateful and blessed for your support till date and wish the same support from you all ahead too.
Wish you a happy reading.
Thanking you & Regards,
On behalf of the Organizing committee of Alumni FCFP 2022

3
… the
Progression
R. Gopinath
All for the sake for our FAMILY (Part 2)
I met a young couple in one of my
training sessions. They have been
married for 10 years and both are
working as so ware consultants in a
big ins tu on. During the discussion
they said that are very careful in
spending money and they give more
priority for saving money for their
future. They have two kids of age 7
and 2. They have been employed for
the last 10 years and the sum total
of their yearly income is 1Crore.
There are no other dependents on
them like parents or in-laws. Since
their parents are s ll earning well.
Their next financial goal was to buy a
3 bedroom flat in the city. Having
considered this much of informa on
I said, “That’s great. If you have been
saving regularly for the last 10 years
by now the value of your invest-
ments should be around 90 Lakhs,
that should serve you well for a
strong and stable future”. Both of
them were surprised at this figure
and said that they do not have so
much of savings or investments. In
fact they are having a mix of savings
that should be around 20 Lakhs in
value.
I suggested them they need to
now sit with a good financial planner
(One who has done AWF/FCFP/
QPFPA/MCAFP !!!) and draw a map
of life and also decide on their priori-
es both for spending their money
and also for saving money towards.
In the previous issue I had
men oned about the DTI (Debt to
Income Ra o), Now let me explain to
you the STI (Savings to Income Ra o)
can also be called as FATI (Financial
assets to Income ra o).
The principle of Financial Pyra-
mid plays a vital role in the science
of Financial Planning and Wealth
Management. Out of the four sides
in the pyramid, one side is about
Financial Priori es. Since the re-
sources are limited and mostly hu-
man wants are unlimited, it is wise
to priori se the alloca on of money
towards those wants and needs. If
the priori es are not iden fied in
advance then the money will be con-
sumed on the first come first serve
basis, leaving a shor all for more
important needs which may occur at
a later part of the life. This might
also force a person to borrow money
at big rates of interest to fund them,
as those are mostly not nego able
goals. You can see the picture of this
side of the pyramid named as Finan-
cial Priori es:
THE FIRST PRIORITY
The priority pyramid starts
with “Du es and Responsibili es”
Contd...
No. of
Years in
Service or
Earning
Financial As-
sets as a % of
Present yearly
income range
Remarks
LOW HIGH Lower Than Low Higher Than High
5 50% 100%
INDICATES POOR SAVING
HABITS, CAN CAUSE BIG
STRAIN ON FUTURE GOALS
INDICATES GOOD SAVINGS
HABITS. CAN HELP REACH-
ING FUTURE GOALS WITH
EASE
10 90% 180%
HABITS. IT CAN POSE
MIGHTY BIG CHALLENGES
FOR FUTURE
HABITS. IT CAUSES GREATER
STABILITY FOR THE FUTURE
LIFE
15 125% 250%
HABITS. HAVE TO URGENT-
LY INCREASE IT TO CREATE
A STRONG FUTURE
LIFE
20 150% 300%
A STRONG FUTURE
LIFE
25 175% 350%
A STRONG FUTURE
LIFE

4
… the
Progression
R. Gopinath
Contd...
We all know that animals and birds
love their children and family and
are emo onally a ached to them. So
do humans. But what differen ates
the animals in rela on to their fami-
lies and humans in rela on to their
families is the aspect of
“Responsibili es”. Humans carry
immense responsibili es like ge ng
the children educated, setup a good
career prospect for them, arrange
for their marriage, take care of the
necessi es of the elders in family
and so on.
The monetary requirement to
meet the du es and responsibili es
can be divided into two major classi-
fica ons:
1. That are on-going which re-
quire a regular cash flow to
meet.
2. That are major responsibili es
which require lump-sum mon-
ies to meet.
Both these needs have to be
met with in all the circumstances. If
the person is alive and earning, then
through his income or with ear-
marked assets. Even if the person
happens to die, his responsibili es
do not die. They get fulfilled only
when they are met with at the right
me.
When companies run out of
money, they close. But when fami-
lies run out of money they live and
they suffer. As a responsible person,
it does not augur well to leave the
beloved family to fend the odds of
life. An event predictable or unpre-
dictable can not take away their
dreams/ goals. Goals and dreams are
mostly uncondi onal and are also
me-bound.
EXAMPLES OF THE TWO TYPES OF
MONETARY REQUIREMENTS
THE SECOND PRIORITY
The second level of the Priori-
ty Pyramid is Self Reliance.
When the children grow up,
start earning, become independent,
get married and se le down in their
lives, a major por on of the du es
and responsibili es towards the fam-
ily would have got fulfilled. But at
this stage the earning capacity of the
client would have come down sub-
stan ally. Par cularly in terms of the
physical abili es. There are also em-
ployment condi ons which force-
exits people at a specified age
(example: 60years of age). The op-
portuni es to get employed again at
that age are also limited. Even if a
person is engaged in running his own
business, it is s ll advisable to pro-
vide for alternate source of income.
So that at advance ages he will not
be compelled to take the stress of
managing the business well to pro-
duce income to support himself, his
spouse and other dependents.
Most of the mes people do
not realise this need ll the come
closer to their ages of re rement.
Ini ally their focus will be on taking
care of their family requirements.
Since family requirements are elas-
c, they consume all the money that
is available then and there. Even
a er spending all the money earned
on the family (some mes even bor-
rowed money), it s ll leaves a feeling
of inadequacy because we constant-
ly compare ourselves with more af-
fordable persons around. With tech-
nology developing rapidly many
household products become obso-
lete soon forcing to buy the latest.
All these factors result in overcon-
sump on of the income leaving very
li le scope of providing for the post
re rement income.
It is very much important to
live a happy, peaceful and healthy
life at the senior ages. It is equal in
importance compared to the pre-
re rement age. Living together with
the whole family, the children,
grandchildren, great grandchildren is
the best that anyone can ask for
from God in return for all the hard
work put in during the younger days.
But living together is different from
dependent on them for living. The
best of those years can be gained by
living together while being self-
reliant financially.
The financial planners should
therefore engage the client’s a en-
on to this need simultaneously
while providing for their du es and
responsibili es. Even if it can be dis-
tributed at 20% for self reliance need
versus 80% towards younger days
du es and responsibili es, it is
Contd...

5
… the
Progression
R. Gopinath
Contd…
be er than using 100% of the in-
come for fulfilling du es and respon-
sibili es and hoping to catch-up with
the re rement needs a er the chil-
dren se le down in their lives. It is
too big a risk to be taken. We have
covered in detail in the previous is-
sues of inscrip ons about this as-
pect.
The provisions for Self Reli-
ance also will contain two major re-
quirements
1. The ongoing requiring regular
cash flow of monies and
2. Major necessi es requiring
lump sum monies to meet.
THE THIRD PRIORITY
The third stage in the priority
pyramid is “AMBITIONS” During the
working life and earning period
when the earning capacity is at the
peak and the opportuni es around
seem to be everlas ng, people find a
big pull towards providing for bigger
things in life. People also compare
themselves with others and try to
match their life style (possessions)
even it amounts to borrowing money
to secure them. I have come across
many clients who while talking about
financial plan and the products talk
about the Return on Investments
and o en comment that it is too
low, but when it comes to borrowing
they don’t even look at the Rate of
Interest that they have to pay on the
amount they are going to spend on a
big car or a gadget. People o en mix
-up with an ambi ous goal with du-
es and responsibili es. For example
a client feels buying a top-end brand
car is his duty towards his family.
They will be very happy and proud.
In the process takes more loan to
fund that buy. Whereas he s ll has a
gap in his Protec on needs
(Insurance) Savings needs (for major
responsibili es) and Self Reliant life
(Re rement). A bigger house, a big
car, a holiday on a luxury cruise are
all examples. It is absolutely neces-
sary to consider such ambi ons in a
financial plan. Only that the priority
given to be given to funding them
have to be carefully decided. It can
not be done at the cost of first stage
or the second stage of the priority
pyramid.
THE FOURTH PRIORITY
The fourth stage in the Priority
Pyramid is “Legacy”. When a person
leaves this world a er having a ful-
filled life, he would like to leave as-
sets in legacy to his children/grand
children to other beloved rela ons.
This aspect has to be considered in
his Financial Plan. But in terms of
priority it will be allowed the fourth
space. When we have fulfilled our
du es and responsibili es we have
done our best to the children and
other dependents, whatever more
we are going to leave behind is only
an extra to that. An example of the
misplaced priority is when people
opt for Return of Cash op on in se-
lec ng annuity policies for them-
selves. If they would have opted for
Life annuity they would have got a
higher annuity amount which at
their old age can be very valuable.
That li le extra, would have given
more dignity. As far as children are
concerned, they have been already
provided with the best in terms of
educa on and se ling down sup-
port. Any extra cash receipt always
brings happiness. But the trade-off
between more dignity and the sur-
prise happiness of this legacy is an
incorrect stand. Same is the case
with accumula ng more real estates
with a no on of leaving behind for
the next genera ons. I acknowledge
that it is a good gesture. But if the
1st, 2nd and the 3rd stages are not
yet provided for adequately, s ll fo-
cussing on the 4th stage in the pyra-
mid can end up as a “Hyperopic”
situa on in life.

6
Mr. Ankur SHAH
AWF — 28-Aug-2022
Ms. Bharathi SRINIVASAN
AWF — 29-Sep-2022
Mr. Ajay Kumar TYAGI
AWF — 30-Sep-2022
Mr. Ashok G SUTTAR
AWF — 30-Sep-2022
Mr. Keshav H AGARWALLA
AWF — 07-Oct-2022
Mr. Suresh Kumar ARORA
AWF — 09-Oct-2022
Mr. Amit Uttam SARANG
AWF — 29-Oct-2022
Mr. Umesh PANCHWAG
AWF — 17-Nov-2022
Mr. Inderpal S. BINDRA
AWF — 30-Nov-2022
Ms. Savita PILLAI
AWF — 27-Jan-2023
Mr. Nishith JOSHI
AWF — 18-Feb-2023
Jul-Aug 2023
INGENIOUS
Mr. Dwarakanath JAGANATHAN
AWF — 24-May-2023

7
You take efforts to create a
habit, by repeating that act
numerous times.
Then the habit effortlessly
repeats to create immense
results.
R. Gopinath
“
Jul-Aug 2023
INGENIOUS

8
BINDRA Inderpal Singh
Jul-Aug 2023
INGENIOUS
What is…..?
Sum Assured
The amount that is assured to be paid either to the policy
holder or his/her nominee on the s pulated date or
event.
(The term is majorly used in Life Insurance policies)
Sum Insured
The amount that is paid to the policy holder to compen-
sate the amount of loss occurred; maximum upto to
amount insured in case the insured event happens.
(The term is majorly used in General and Health Insurance poli-
cies)
Fixed Benefit
The amount that is paid to the policy holder upto to the
limit commi ed in case the insured event occurs.
(The term is majorly used in Life and Health Insurance policies)
Indemnity
The amount that is indemnified to the policy holder in
case of any financial loss happening due to the covered
event.
(The term is majorly used in General and Health Insurance poli-
cies)
Ex gra a
The payment that is paid to the claimant as an act of
grace, where no contractual en tlement to the claim
exists.
(The term is majorly used in payments made as a ma er of so-
cial jus ce or some other non-contractual reason)
CHANDRAYAAN-3

9
Samachaar
I
n a move
set to re-
shape the Indian insurance sector,
the insurance amendments proposed
by the government are moving closer to
their final lap. Most probably will be
discussed in the upcoming, monsoon
session of parliament.
Let us go through in brief:
COMPOSITE INSURANCE LICENS-
ES
This is a good initiative, as one
particular Life Insurance Co / Advisor,
can sell; Health, General and PA policies
as well, making us say “One stop solu-
tion” The amendment would allow cross-
entry of life, general, and standalone
health insurance companies into each
other's respective business categories.
DISTRIBUTION OF OTHER FINAN-
CIAL PRODUCTS
The government has proposed that
insurance companies should be permitted
to distribute other financial products such
as mutual funds, loans, credit cards, and
bank deposits. This would enable insur-
ance companies to diversify, their busi-
ness, which will be helpful to generate
more revenues.
In my opinion, both the above
moves are good if they are in the hands
of the right company and qualified practi-
tioners, and only such are chosen for this
important responsibility.
REDUCTION OF INITIAL CAPITAL
The insurance regulator plans to
reduce the initial capital required to start
an insurance business. Currently, any
entity planning to start a life, general, and
standalone health insurance business
needs to submit an initial capital of Rs.
100 crores with the regulator to secure a
business license. Entities wanting to start
a reinsurance business need to submit an
initial capital of Rs 200 crore.
The proposal from the insurance
regulator and the government is to reduce
the initial capital on a case-to-case basis.
In my opinion this could be a haz-
ardous, because whatever capital is
pooled, for the reason of protecting peo-
ple’s money for people’s welfare. As I
look behind our LIFE INSURANCE
CORPORATION OF INDIA has main-
tained, all the guidelines and with a mar-
velous administration, have been a profit
making company throughout.
Another recent example of col-
lapse of SVB (detailed article in our pre-
vious Ingenious magazine).
CAPTIVE INSURANCE LICENSE
Under this proposal, conglomer-
ates will be permitted to set up captive
insurance entities. Captive insurance re-
fers to the practice of an organization
creating its own insurance subsidiary to
provide coverage exclusively to the par-
ent company and its affiliates. This
amendment seeks to provide businesses
with more options for managing their
risks and insurance needs.
INVESTMENT REGULATIONS
The government proposes to grant
the Insurance Regulator, IRDAI, the
power to increase or reduce investment
limits for insurers. Currently, insurers are
required to invest a minimum of 50 per-
cent in government securities (both cen-
tral and state) and 15 percent in equities.
This amendment would enable the regu-
lator to increase or decrease these limits
based on industry dynamics and market
conditions
While the amendments related to
composite insurance licenses and the
distribution of other financial products
are expected to proceed as proposed,
some adjustments may be made to the
investment regulations and captive insur-
ance provisions.
Changes to investment limits will
be determined by the regulator in consul-
tation with the government and will apply
to the entire industry rather than on a case
-by-case basis. The issuance of captive
licenses will be within the purview of
IRDAI, although the minimum solvency
requirements for these captive insurers
will be decided in consultation
with the government.
Source: https://www.google.com/amp/s/
www.cnbctv18.com/personal-finance/indias-five-
big-changes-to-the-insurance-act-enter-the-final-
lap-16874551.htm/amp
India’s 5 big changes to the
Insurance Act
Geeta
Mohan P.
Visakhapatnam
Jul-Aug 2023
INGENIOUS
The
Insurance Regulatory and Devel-
opment Authority of India (IRDAI) on
2nd
June 2023 vide its Order no. IRDAI/
F&I/ORD/MISC/119/6/2023 dated 2nd
June 2023 decided to transfer the life
insurance business of Sahara India Life
Insurance Co (SILIC) to SBI Life Insur-
ance Company Ltd (SBI Life).
Detailed Order related to this transfer
is available on IRDA website vide or-
der no. IRDAI/F&I/ORD/
MISC/119/6/2023 dated 2nd
June 2023.
The Security Appellate Tribunal
(SAT) passed a stay order on the insur-
ance regulator's decision to transfer poli-
cy liabilities of Sahara India Life Insur-
ance Co Ltd (SILIC) to SBI Life.
The appellate Authority said that
five years since the Insurance Regulato-
ry and Development Authority of India’s
decision to transfer policies of Sahara
Life to ICICI Prudential Life was set
aside, no steps were taken by the insur-
ance regulator to transfer the policies
and a decision taken to select SBI Life
was taken without granting a hearing to
Sahara Life.
The Insurance and Regulatory
Development Authority of India
(IRDAI) moved the Supreme Court on
Monday challenging Securities Appel-
late Tribunal (SAT)'s order staying IR-
DAI's ruling directing Sahara India Life
Insurance Company to transfer its busi-
ness to SBI Life Insurance Company.
The Supreme Court on 3rd
July
2023 has admitted IRDA’s appeal
against the Securities Appellate Tribu-
nal's (SAT) decision staying the insur-
ance regulator’s order directing Sahara
India Life Insurance Company to trans-
fer its life insurance business to SBI Life
Insurance Company.
The next hearing on case is pend-
ing at the apex body.
Source: https://www.business-standard.com
IRDAI moves Apex
Court against SAT
Rochak
PURI
New Delhi

10
R
eserve Bank of India (RBI) has
announced the withdrawal of
₹2000 denomination banknotes
from circulation, while emphasiz-
ing that they will remain legal tender. These
banknotes were introduced in 2016 follow-
ing the demonetization of ₹500 and ₹1000
notes. However, as other denominations
became more readily available, the printing
of ₹2000 notes was discontinued in 2018-
19.
Around 89% of the ₹2000 banknotes
were issued before March 2017 and are
approaching their estimated lifespan of 4-5
years. The value of these banknotes in cir-
culation has decreased significantly, now
constituting only 10.8% of the total notes in
circulation. Additionally, it has been ob-
served that the ₹2000 denomination is not
commonly used for transactions. The stock
of banknotes in other denominations is
deemed sufficient to meet public demand.
To adhere to the "Clean Note Poli-
cy," RBI has decided to withdraw the ₹2000
banknotes from circulation. However, indi-
viduals can still deposit these notes into
their bank accounts or exchange them for
banknotes of other denominations at any
bank branch. Deposits can be made without
restrictions, while exchanges are limited to
₹20,000 at a time starting from May 23,
2023.
To facilitate the process, all banks
are required to offer deposit and exchange
services for ₹2000 banknotes until Septem-
ber 30, 2023. The 19 Regional Offices of
RBI will also provide the exchange facility.
The central bank has advised banks to cease
issuing ₹2000 banknotes immediately. The
public is encouraged to take advantage of
the time provided until the end of Septem-
ber 2023 to deposit or exchange their ₹2000
banknotes.
Source: RBI Press Release – 19th
May 2023
Samachaar
Good Bye
RBI withdraws
₹2000 notes
Keshav
Agarwalla
Golaghat
Bima Vahak is an initiative by the
Insurance Regulatory and De-
velopment Authority of India (IRDAI)
which would help reach the spread of
insurance to the last mile.
Each Gram Panchayat would
have a ‘Bima Vahak’ who would be
tasked to sell and service simple para-
metric bundled insurance products, so
mainly they will work in rural areas.
Bima Vahak initiative intends to
form a women-centric insurance dis-
tribution channel, means women will
be preferred to work as Bima Vahak.
Bima Vahak is one of the com-
ponents of IRDAI’s "Insurance for all
by 2047” goal, which aims to improve
the accessibility and availability of in-
surance products throughout India. It
will serve as a crucial last-mile connec-
tion for insurers by establishing a field
force of both corporate and individual
representatives.
Parametric bundled insurance
products are a type of insurance that
covers the probability of a predefined
event happening instead of indemnify-
ing actual loss incurred.
It is an agreement to make a pay-
ment upon the occurrence of a trigger-
ing event, and as such is detached from
an underlying physical asset or piece of
infrastructure. When designed properly,
parametric-based insurance products
ensure that claims are paid quickly and
without dispute. The event is pre-
covered at a predetermined amount for a
preset trigger event.
The IRDAI will soon introduce a
new distribution channel, ‘Bima Vahak’
to increase penetration of insurance
policies in rural India. Bima Vahaks are
expected to distribute life and general
insurance policies in rural areas.
BIMA VAHAK’S activity may in-
clude
à To solicitation of insurance busi-
ness
à To facilitate policy and claims
servicing
à To sell and service the Bima
Vistaar product approved by
the Authority and such other
insurance products specifically
approved by the Authority.
I
nsurance Regulatory and Develop-
ment Authority of India (IRDAI) in
its 122nd meeting held on 02nd
June, 2023 has granted Certificate
of Registration to a new life insurer
namely, Go Digit Life Insurance
Limited to carry life insurance business
in India.
Go Digit, a firm funded by Cana-
da-based Fairfax Group, is already in
the general insurance business. Canadi-
an billionaire Prem Watsa’s Fairfax
group and industry veteran Kamesh
Goyal, has received a certificate of reg-
istration from regulator Irdai to under-
take life insurance business in India.
Jul-Aug 2023
INGENIOUS
IRDAI introduces BIMA VAHAK
Vinay
JOSHI
Pune
K M Sriram
Vijayawada
I
ndia aims to land at the south pole
of its natural satellite the MOON,
through ISRO’s second attempt
mission Chandrayaan – 3. The
spacecraft lifted off in a textbook launch
from the Satish Dhawan Space Centre in
Sriharikota on board the Launch Vehicle
Mark-III.
Developed at an estimated cost
of Rs 615 crore, the mission aims to
make India a lunar fairing nation and
join the elite club.
ISRO will now perform the orbit-
raising maneuvers in the coming days to
put the spacecraft on the road to the
Moon. Chandrayaan-3 is scheduled to
arrive in lunar orbit on August 5 and the
soft-landing attempt by 23 Aug.
BINDRA
Inderpal S.
New Delhi

11
U
nified Payments Interface (UPI) is a real- me
payment system developed by the Na onal Pay-
ments Corpora on of India (NPCI). It was intro-
duced in India in 2016 and has revolu onized the
way people transfer money, make payments, and conduct
financial transac ons. UPI has emerged as a game-changer
in the Indian payments landscape, transforming the way
people transact and revolu onizing digital payments. Since
its launch in 2016, UPI has achieved remarkable success,
surpassing major milestones and con nuing to make signifi-
cant progress in India's evolving financial ecosystem. UPI is
set to become India’s next BIG export. Just pick your phone,
scan the QR code and it’s done!!! India’s United Payments
Interface (UPI) real- me payments system has been a game
changer for the subcon nent.
UPI enables individuals to link mul ple bank accounts
to a single mobile applica on and make seamless peer-to-
peer (P2P) transfers between them. It eliminates the need
for tradi onal methods like entering bank details or IFSC
codes by u lizing a virtual payment address (VPA) that
serves as a unique iden fier for each user. VPAs are typically
in the format of username@bankname.
UPI provides a secure and convenient payment meth-
od that is accessible 24/7, enabling users to make instant
payments with just a few taps on their mobile devices. It has
gained widespread popularity due to its simplicity, speed,
and reliability. UPI has also fueled financial inclusion by
providing a digital payment solu on that is accessible to
both urban and rural popula ons, bridging the gap between
tradi onal banking and digital transac ons.
The success of UPI has paved the way for numerous
innova ve features and enhancements, such as UPI AutoPay
for recurring payments, integra on with voice-based com-
mands, and QR code-based payments. UPI has transformed
the digital payments landscape in India, empowering individ-
uals, businesses, and merchants to transact easily, securely,
and efficiently, thereby accelera ng the country's progress
towards a cashless economy.
Major Milestones
Launch and Early Adop on (2016-2017)
The Na onal Payments Corpora on of India (NPCI)
introduced UPI in August 2016, providing a seamless
pla orm for instant money transfers between banks using
mobile phones. This revolu onary payment method gained
trac on quickly, with several leading banks and payment
apps integra ng UPI into their systems. By December 2017,
UPI had facilitated over 145 million transac ons.
Scaling New Heights (2018-2019)
UPI's popularity surged further in 2018 and 2019,
witnessing exponen al growth in transac on volumes and
user base. The introduc on of BHIM (Bharat Interface for
Money) app, developed by NPCI, added impetus to UPI
adop on. UPI crossed the milestone of one billion transac-
ons per month in October 2019, facilita ng a wide range of
transac ons, including person-to-person transfers, bill pay-
ments, and merchant transac ons.
Driving Financial Inclusion
(2020-2021)
UPI's true poten al
came to the fore during
the COVID-19 pandemic
when contactless transac-
ons gained prominence.
In 2020, UPI recorded sig-
nificant growth, reaching a
monthly transac on vol-
ume of over 2 billion. The
launch of UPI AutoPay,
which enables recurring payments, further expanded its u l-
ity. UPI also became the preferred mode for transac ons in
various sectors like e-commerce, transporta on, and u li-
es.
Please find the growth Sta s cs of UPI volume and Value
below:
Current Progress (2022-2023)
UPI's success story con nues unabated, with new
milestones being achieved and con nuous improvements
being made. Here are some notable developments:
Transac on Volumes
UPI transac on volumes have witnessed consistent
growth, crossing the 3 billion mark per month in early 2022.
This upward trajectory is a testament to the trust and con-
venience UPI offers to users. Over more than 8 billion trans-
ac on has taken place in India and this is more than the total
transac on of US + UK + France and Germany combined. The
UPI system is used by more than 300 million individuals and
50 million merchants. UPI hit record 9 billion transac ons
worth Rs.14 lakh crore in May 2023. The number monthly
UPI transac ons rose over 58 % year on year in May, making
it the highest volume and value ever recorded.
Expanding User Base
The number of UPI users has been steadily increasing,
with both urban and rural popula ons embracing digital
payments. UPI's user base is expected to con nue expanding
as more people gain access to smartphones and internet
connec vity. The UPI transac ons sky rocketed more than
650% in Indian towns and ci es. More than 23 countries
have ed up with us suppor ng transac ons with UPI.
Contd...
C S Bharathi Srinivasan
Month
No. of Banks
live on UPI
Volume (in
mn)
Value (in Cr.)
May-23 447 9,415.19 14,89,145.50
Apr-23 414 8,898.14 14.07,007.55
Mar-23 399 8,685.30 14,10,443.01
Feb-23 390 7,534.76 12,35,846.62
Jan-23 385 8,036.89 12,98,726,62
Jul-Aug 2023
INGENIOUS

12
Contd...
Innova on and Enhanced Features
NPCI and partnering banks have been proac ve in
introducing innova ve features and enhancements to UPI.
These include integra on with voice-based payments, in-
creased transac on limits, and the addi on of new lan-
guages to enhance accessibility.
Interna onal Recogni on
UPI has gained in-
terna onal recogni on as
a pioneering payment
system. Its success has
inspired other countries to
explore similar solu ons.
The global community has
taken note of UPI's
achievements, leading to
collabora ons and
knowledge sharing. The
UAE accounts for up to
18% of India’s inward remi ances, which means US$18 bil-
lion. Singapore is also an important remi ances market for
India though much smaller than the UAE. In late February,
UPI hit another important milestone: India linked UPI with
Singapore’s PayNow real- me payment system, a move that
could ul mately disrupt the more than US$1 billion in annual
cross-border flows between the two na ons.
Currently, this access is given to 10 countries like Can-
ada, US, UK, Qatar, UAE, Oman, Saudi Arabia, Hong Kong,
Singapore and Australia. The list is expected to grow shortly.
Future Prospects
The future of UPI looks promising, with ongoing
efforts to enhance securi-
ty, improve interoperabil-
ity, and promote financial
inclusion. As UPI evolves,
it has the poten al to be-
come a catalyst for India's
transi on to a digital
economy, empowering
millions with convenient
and secure payment op-
ons.
Conclusion
UPI has reshaped
India's payment landscape, offering a convenient, secure,
and inclusive pla orm for digital transac ons. Its journey
from incep on to becoming a global benchmark in instant
payments showcases India's prowess in digital innova on.
With its major milestones and con nuous progress, UPI has
cemented its posi on as a transforma ve force, propelling
India towards a cashless future.
A deep connection
with the dreams makes
it possible to achieve,
inspite of the tough
circumstances.
A shallow connect, al-
lows the circumstanc-
es to decide it.
R. Gopinath
Jul-Aug 2023
INGENIOUS

13
FINANCIAL
FORECASTING
Let’s start with asking “is weather
forecas ng essen al” ?
W
eather warnings are
important because they
are used to protect life
and property. Forecasts
based on temperature and precipita-
on are important to agriculture, and
therefore traders within commodity
markets. Temperature forecasts are
used by u lity companies to es mate
demand over coming days.
Can we change bad weather?
How can it be useful?
Bad weather cannot be changed.
But if we are fully prepared for bad
weather then the adverse effects of
bad weather can be minimized or nulli-
fied.
How does forecast of good weath-
er help us?
Good weather cannot be ad-
vanced. But if we are fully prepared for
good weather, then the advantages of
good weather can be mul plied. Just as
weather forecas ng can bring mul ple
benefits, so also financial forecas ng is
required and in fact is essen al for fam-
ilies as well as for corporates. Pre-
dic ng financial outcomes of invest-
ments/business risks makes us be er
prepared for our future financial goals.
In the context of financial fore-
cas ng, let us draw our a en on to a
sec on known as Sec on 6 of MWP act.
But before that it is essen al to under-
stand that as an individual investor or
as a corporate, the four very important
supports that are required for financial
forecas ng. These are:
· A professional – a professional
gives scien fic es ma ons but
others will do guess work.
· Appropriate tools.
· Historical data.
· Objec ves
Following are 4 primary objec ves of
financial forecas ng
1. Provide adequate cash flow for
the need to fulfil at minimum
level.
2. Protect the source of funds.
3. Design systems and procedures
to ensure correct legacy.
4. Op mize the use of funds to
earn a good return on it.
If promoters are star ng busi-
ness (company) or trying to grow an
exis ng company, all certainly will need
money. This money generally comes
from two different sources,
1. Debt Funding - debt means
money borrowed from lenders.
2. Equity Funding- company can
sell a por on of the company to
investors in return for cash.
Equity Funding includes shares
(Equity/Preference Shares).
Let us take an example of a busi-
nessman who secured a good oppor-
tunity in a contract like Project M. He
won the project amidst tough compe -
on. To execute the contract, he needs
10 crores. The businessman invests 2
crores from his business, borrows 5
crores from a bank and the balance 3
crores from private lending firms at a
higher interest rate (Here equity is 2
crores and debt is 8 crores). The project
M will have to be executed within 12
months and he will get profit of 3
crores on successful execu on of pro-
ject M. Return on investment is 30%.
He pledges his factory, land, his build-
ing, his own house and jewelleries to
get 8 crores loan from bank and from
other lenders. An cipa ng profits from
this project, he has taken the risk on
investment. But by mortgaging most of
the assets he passes the risk to his be-
loved family members and also on risk
of borrowings. Risk taking is in the DNA
of a businessman (Ambi on in business
is not wrong. Businessman should have
the ability to take calcula ve risk. But
passing the risk to family members is
wrong.) His wife and children become
the party to the risk. The dreams and
future of his family members now sole-
ly depends on the successful execu on
of project M.
Human capaci es are unlimited.
A businessman will put all his capacity
and skill tenaciously even if any prob-
lem occurs midway in the business and
get revert to the right track to get the
future profit from the business. But
who can foretell the lifespan of a per-
son? People will work according to
their will, but people live or die accord-
ing to their des ny. Let us imagine the
hypothe cal situa on that the busi-
nessman meets with sudden death.
Now the family members have to repay
the loan of 8 crores or they have to
forgo the assets like their home, facto-
ry, jewelries, land etc.
In order to avoid this kind of
crisis, we need to create a firewall in
between the business loan and family
assets, family responsibili es.
Contd...
Nayan Bhowmick
Guwaha
Jul-Aug 2023
INGENIOUS

14
Contd...
Let us take an example of anoth-
er small medium business entrepre-
neur. He has a family asset (shown in
Fig.1 as blue square.
The entrepreneur needs money
to start his business and bank is also
ready to finance by way of loan, in re-
turn for some security. Accordingly, the
said businessman pledges the docu-
ments of his family assets in favour of
bank to get loan. He could have sold
the assets to start the business but the
family lives in the house (asset). The
businessman keeps the asset with them
for their use and only the documents of
the assets is pledged to bank. Bank has
sanc oned loan; the businessman
starts his business by using the loan
amount to his factory and earns profits.
The net profits come to the family and
the cycle starts con nuing. He starts
paying the loan amount to bank and
a erward by paying full debt amount
releases his documents from bank.
Business is a con nuous process. He
will apply for further loan to revamp his
business. Loan amount will start esca-
la ng.
Now, if the businessman dies
before he is able to pay off the loan,
the following possible scenarios can
emerge:
1. Take over of the business by
family members-spouse or adult
children.
2. Due to loss of the key person,
the company or the business will
incur losses, profits will shrink,
loan amount will start increas-
ing, company may go for liquida-
on.
3. Ul mately bank will seize the
assets which were mortgaged in
favour of bank and the family
will be in big trouble.
What is the solu on for this un-
certainty? If this type of a bad weather
comes, what is the financial solu on?
Forecas ng helps people to prepare for
both good and bad weather. In this
situa on the businessman died with
the huge liabili es of loan for his family
members. As financial advisors, we can
help the businessman and his family by
introducing a proper life insurance poli-
cy in between business loan and family
assets which would be pledged to bank.
In the case of sudden death of the busi-
nessman, the life insurance’s claim
amount will save the family by repaying
the loan amount from the death claim
(Fig.2).
Otherwise, the family will be in
trouble by losing the business as well as
the family asset. In Fig.2, the life insur-
ance policy is shown as an asset and
placed in between bank and family. But
if we can bring the life insurance policy
inside the blue square as a family asset,
then it will create a firewall for the be-
loved family which is our important
responsibility. By introducing a life in-
surance policy under MWP act, we can
protect our family from any bad weath-
er, that is from disastrous situa ons.
Sec on 6 of MWP act defines that,
"A policy of insurance effected by any
married man on his own life, and ex-
pressed on the face of it to be for the
benefit of his wife, or of his wife and
children, or any of them, shall ensure
and be deemed to be a trust for the
benefit of his wife, or of his wife and
children, or any of them, according to
the interest so expressed, and shall not,
so long as any object of the trust re-
mains, be subject to the control of the
husband, or to his creditors, or form
part of his estate."
A policy of insurance
Meaning that no other type of
asset is covered under this provision.
Married man on his own life
The policy of insurance should
be availed by a married man, and the
risk cover should be on his own life.
Meaning that policies effected on the
life of children or others cannot be cov-
ered under this provision.
Expressed on the face of it
It refers to the policy document.
The policy document should carry the
endorsement to this effect. Agree-
ments made by other arrangements are
not covered under this provision.
Beneficiaries can be his wife, wife and
children or any of them
Meaning that he can wish to
pass the benefit to specific people in
this class. For example, the beneficiary
can be defined as wife and the first
daughter or wife and second daughter.
This provision is made to ensure that
the policy serves only to those benefi-
ciaries and he has the right to exclude,
if he so wants to, any person amongst
his children from the benefi ng from
this policy.
Deemed to be trust
This means that all the protec-
ons normally available for a trust and
the funds held by a trust will be availa-
ble for policies effected under the act,
but the formali es which have to be
observed in case of trust, like registra-
on of the trust, audit of the accounts
of the trust, etc., need not be observed
here. A simple person without any legal
qualifica ons, can also ensure the ben-
efits are secured easily.
According to the interest expressed
This means that he can even
prescribe ra os for sharing or even
effect con ngent condi ons by which
the benefits will flow to the beneficiar-
ies.
Not be subject to the control of the
husband or to his creditors or form a
part of his estate
This is the very essence of this
act. This helps husband to provide ade-
quately for his family. A businessman
who avails loans and facili es from
banks and other ins tu ons is under-
taking a risk, expec ng growth in busi-
ness.
Contd…
Jul-Aug 2023
INGENIOUS

15
Contd...
While doing so he pledges his assets to
the bank to avail that facility. While he
can certainly repay the loan in me and
safeguard his assets, the issue becomes
cri cal if he happens to die before the
obliga on is cleared. The bank a er
auc oning the pledged assets, can seek
to a ach his personal assets to recover
the loan and the interests thereof.
Whereas this policy effected under
MWP act can NOT be so a ached. The
policy monies will not form a part of his
estate. This is not just for businessmen,
but for anyone who wants to protect
their family and ensure that monies do
not get into wrong hands even within
the rela ves, who may scheme against,
which we have seen happening in many
instances. Since the policy benefits are
not subject to control of the husband
also, any pressure brought onto him, or
even by coercion these monies cannot
be taken away by wrong people. The
very purpose of an availing a life insur-
ance policy under MWP act is to ensure
that the rights of the wife and the chil-
dren be protected and the varia ons in
the business performance of the hus-
band need not affect the family ad-
versely.
1. When a person avails loan to ex-
pand his business, or to make good
a shor all in capital, he is taking a
business risk. He is confident of
making enough profits in a period of
me and repay the loans with inter-
ests due from out of those profits.
He is certainly capable of fulfilling
this commitment, even against the
odds of the business, due to his
business acumen. His death before
fulfilling this commitment will bring
down the value of the assets held in
the business and also put his per-
sonal proper es and assets under
stake. The people who have lent the
money will pursue all op ons to
recover their dues. However, a poli-
cy effected un der MWP act will
be beyond their reach even
and protect the rights of the wife
and the chil dren.
2. Even under pressure from his peers
or investors in his business or from
his other rela ves, he will not be
able to dilute the rights of his wife
and children under this policy.
3. A er the death of the life assured,
even other legal heirs cannot stake
any claim on these policy monies,
not just as a share for being his
heirs, but not even to set off against
any common losses incurred by
them jointly.
4. It is not just that businessmen need
to avail this provision, the difficul-
es men oned above can be met by
other professionals and salaried
personnels also. For example, in-
demnifica ons or damages due to
acts of omission, or negligence or
acts of accident by a professional or
employee can ini ate recovery from
his wealth to coverup. Even in such
circumstances, the policy effected
under MWP act can protect the
rights of the wife and children.
5. People who stand as sure es, guar-
antors or people who operate under
power of a orney can also protect
their families using this MWP act.
Life insurance policies under
MWP act will protect the family respon-
sibili es and also through the proper
placing of life insurance policies be-
tween right places we can protect the
sources of fund.
Through financial forecas ng we
can minimize or nullify the adverse
effects of bad weather and we can mul-
ply the beneficial effects of good
weather.
Happy planning and forecas ng!
FINANCIAL FORECASTING
M
y daugh-
ter Isha is
planning
for going
to UK for masters in fine
arts. Based on my search experience I
thought to pen my learnings, to help
people looking for educa on loans.
Planning for loan for educa on abroad
Parents who have not been able
to make provisions for higher educa on
expenses for their champion kids form
own funds, approach banks to fund the
educa on through loans.
Criteria of Bankers
Eligibility: Resident Indians, Non Resi-
dent Indians, & Overseas Ci zens of India
Type of Educa on: Gradua on, Post
gradua on in Engineering, Medical, Ar-
chitecture, Management etc. Also diplo-
ma courses whose educa on term is
more than 6
months.
Credit Limit: With-
in India between 4
Lakh to 10 lakhs.
For abroad educa-
on 10 lakh to 1CR; which may further
increase as per requirement.
Collateral: No collateral amount up-to
loan amount Rs.750000. A er that 100%
value amount required as collateral secu-
rity which can be Residen al property,
Bank F.D, Gold etc.
Educa on Expenses: Like educa on
fees, exam fees, Hostel Fees, Air Ticket,
Laptop, Books etc. depending upon
above expenses eligibility of loan is cal-
culated.
Interest Rates: Interest rates vary from
7.5% to 10.50%. Usually, it depends on
prevailing Repo rates, for example cur-
rent HDFC Bank interest rate is 9% and
SBI is 10%. For female candidates Bank
offers some discount interest rates.
Tenure of Loan: Generally bank offers
one year moratorium period, for exam-
ple, if P.G period is 2 years then a er 3
years loan repayment starts and maxi-
mum period is 15 years.
Insurance cover: Insurance cover is re-
quired and policy is compulsorily as-
signed to bank.
Documents Required For Educa on
Loan:
Applica on form.
Pan Card/ Aadhaar Card/ Latest photo.
Mark Sheets of 12th
/Gradua on.
Le er from university offering admission
with details of all expenses.
Collateral documents; Cer ficate of mar-
ket value, search report, tle deed copy
etc.
Parents documents - Pan/Aadhaar copy,
photo, Last 3 years ITR/ Form no.16 cop-
ies (or last 6 months bank statement if
ITR is not available). Kindly note that
parent is treated as co-borrower.
Income Tax Benefit
Interest paid is treated for deduc on
under sec on ‘80E’. This deduc on is
available for parents only for two chil-
dren ll total loan is repaid.
Umesh PANCHWAGH
EDUCATION LOAN
for Studying Abroad
Jul-Aug 2023
INGENIOUS

16
Lets understand NOMINATION
N
omina on is a process to
ensure easy payment of
money to the right person
in the case of a death of the
owner.
HOW TO EFFECT NOMINATION
As per sec on 39 of the Insur-
ance Act 1938, the holder of a policy on
his own life may nominate a person or
persons to whom the money secured
by the policy shall be paid in the event
of his death. Hence nomina on can be
affected by life assured only and not by
any other tle holder or beneficiary of
the policy. At the me of issuing policy,
policy holders appoint a nominee. A
nomina on can be changed by the poli-
cy holder by making another endorse-
ment on the policy. If the space is not
sufficient or not available for an en-
dorsement, nomina on can be done on
a separate piece of paper and pasted
on to the policy with the signature of
the life assured at the edge where the
slip is a ached to the policy.
MINOR NOMINEE
When a nominee is minor, an
appointee should be appointed by the
policy holder to receive the money in
the event of the death of the policy
holder. The appointee should be a ma-
jor person. Life assured has a right to
revoke the appointment of the appoin-
tee and appoint a fresh appointee. The
appointee must affix his signature to
the endorsement either in the proposal
form or on the text of the policy in to-
ken of his having consented to act as an
appointee.
EFFECT OF NOMINATION
A nomina on gives the nominee
only the right to receive the policy
money in the event of the death of life
assured. A nominee does not have the
right to the whole of the claim. He only
has the right to give a valid discharge.
Life assured can change or cancel the
exis ng nominee without his concern.
In the case of the death of a nominee,
the nomina on becomes ineffec ve
and the nominee's heirs do not have
the right to the policy money. If the
policy holder expires a er the date of
maturity and the claim is not se led
then the claim should be se led in the
favour of the legal heirs of the de-
ceased life assured.
DIFFERENT TYPES OF NOMINATION
There are three ways to effect nomina-
on.
SINGLE NOMINATION
Here life assured appoint one
person as a nominee.
JOINTLY/MULTIPLE NOMINATION
Here life assured appoints two
or more than two persons jointly as
nominees.
SUCCESSIVE/ALTERNATIVE NOMINA-
TION
This type of alterna ve nomina-
on is provided to appoint more than
one nominee in a successive manner.
A er expiry of life assured, first nomi-
na on will be opera ve and if 1st nom-
inee is not alive the second nomina on
will and if the 1st and 2nd nominees
are not alive the third nomina on will
become effec ve. This type of nomina-
on is highly recommended under all
type of plans, specially where free
death cover is extended a er date of
maturity.
CHANGE OR CANCELLATION OF NOMI-
NATION
A nomina on may be changed
or cancelled by an endorsement. The
no ce of such change or cancella on
should be in mated to the LIC office. If
a cancella on or change of nominee is
made in will, the provision of the will
should show clearly. When a policy is
assigned whether condi on or absolute
the exis ng nominee is automa cally
cancelled. An assignment made in fa-
vour of LIC in considera on for a policy
loan, on repayment of loan doesn't
cancel the nomina on.
NOMINATION IN FAVOUR OF
STRANGER
If the person to be nominated is a
spouse, child/children or a parent, the
cases may be completed as usual.
If the nominated person is a distant
rela ve or stranger despite the spouse
child or parents are surviving then rea-
sons for not appoin ng them as nomi-
nees should be asked. If reply is not
sa sfactory a reference should be
made to the one - step higher officer.
Further a special MHR should be ob-
tained at least from a development
officer regarding the genuineness of
the nomina on to ensure that no moral
hazard is involved.
Nomina on rules for different
types of financial products
LIC In life insurance policy the
beneficiaries and nominees may be the
same person or not. If the nominee is
legal heir then he or she is en tled for
the claim.
Mutual Funds/ Stocks In Mu-
tual Fund or stock nominees are not
en tled for the money. When investors
purchase units they have to appoint
nominees who will receive the units in
the event of their death. The nominees
only act as a trustee. They only receive
the units and manage them.
Bank Account Here nominee is
appointed by the account holder. The
nominee acts as a facilitator and helps
in distribu ng the funds to the heirs or
beneficiaries.
EPF/ PPF Nominee is not auto-
ma cally en tled to the EPF all PPF
money. The role of the nominee is to
receive the balance in case of the EPF
or PPF holders death.
People assume the nomina on
alone is good enough as an estate plan-
ning tool. Will/Trust/ Assignment will
be needed to transfer his assets to the
right person at the right me for the
right value in the right form.
NOMINATION
Sumita HALDAR
Kolkata
Jul-Aug 2023
INGENIOUS

17
Issue: In-house magazine of FCFP members Sept 2023
Jul-Aug 2023
INGENIOUS
Dear Readers,
We invite you to share your ar cles, write-ups, essays
for the upcoming Special Edi on of 1st Anniversary is-
sue.

18
Data Centre
Money Market 11-Jul-2023
Call Rates *
* as on previous day
Government Securi es Market
7.26% GS 2033 7.0956% #
7.26% GS 2032 7.1364% #
7.06% GS 2028 7.0776% #
7.38% GS 2027 7.0793% #
6.89% GS 2025 6.9454% #
6.69% GS 2024 6.8577% #
91 day T-bills 6.7200%*
182 day T-bills 6.8279%*
364 day T-bills 6.8480%*
* cut-oﬀ at the last auc on
#
as on end of previous working day
Capital Market
S&P BSE Sensex 65617.84 *
Ni y 50 19439.40 *
* as on previous day
GDP (US$ million) by country
Sr. No. Country/Territory UN Region
IMF
Es mate Year
World — 10,55,68,776 2023
1 United States Americas 26,854,599 2023
2 China Asia 19,373,586 2023
3 Japan Asia 4,409,738 2023
4 Germany Europe 4,308,854 2023
5 India Asia 3,736,882 2023
6 United Kingdom Europe 3,158,938 2023
7 France Europe 2,923,489 2023
8 Italy Europe 2,169,745 2023
9 Canada Americas 2,089,672 2023
10 Brazil Americas 2,081,235 2023
11 Russia Europe 2,062,649 2023
12 South Korea Asia 1,721,909 2023
13 Australia Oceania 1,707,548 2023
14 Mexico Americas 1,663,164 2023
15 Spain Europe 1,492,432 2023
Latest Policy Rates (Source RBI website) as at 01:30 pm on 11-Jul-2023
Policy Rates Reserve Ra os Exchange Rates Lending / Deposit Rates
Policy Repo Rate 6.50% CRR 4.50 % INR/ 1 USD 82.35 Base Rate
8.75% -
10.10%
Standing Deposit Facility
Rate
6.25% SLR 18.00 % INR/ 1 GBP 106.28 MCLR (Overnight)
7.95% -
8.35%
Marginal Standing Facili-
ty Rate
6.75% INR/ 1 EUR 90.75 Savings Deposit Rate
2.70% -
3.00%
Bank Rate 6.75% INR/ 100 JPY 58.50 Term Deposit Rate > 1 6.00% -
Fixed Reverse Repo Rate 3.35%
Latest Small Savings Schemes Rates
01-Jul-2023 to 30-Sep-2023
Instrument Rates %
Compounding
Frequency
Savings Deposit 4.00 Annually
1 Year Time Deposit 6.90 Quarterly
5 Year Recurring Deposit 6.50 Quarterly
Senior Ci zen Savings Scheme 8.20 Quarterly & paid
Monthly Income Account 7.40 Monthly & paid
Na onal Savings Cer ﬁcate 7.70 Annually
Public Provident Fund 7.10 Annually
Kisan Vikas Patra(Matures in
115 months)
7.50 Annually
Sukanya Samriddhi 8.00 Annually
Source MOSPI (Government of India Ministry of
Sta s cs And Programme Implanta on)
US Fed Rate 5.25% (as on Jun-2023)
10 Year US Bond yield 3.9463% (as on 11-Jul-2023)
US CPI 4.60% (as on Jul-23)
Gross Domes c Product
Mar-23
6.10%
GDP
Index of Industrial
Produc on
Apr-23
4.20%
IIP
Consumer Price Index
May-23
4.25%
CPI
Jul-Aug 2023
INGENIOUS

1
June 08, 2023
Monetary Policy Statement, 2023-24
Resolution of the Monetary Policy Committee (MPC)
June 6-8, 2023
On the basis of an assessment of the current and evolving macroeconomic
situation, the Monetary Policy Committee (MPC) at its meeting today (June 8, 2023)
decided to:
• Keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 6.50 per cent.
The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent
and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
• The MPC also decided to remain focused on withdrawal of
accommodation to ensure that inflation progressively aligns with the
target, while supporting growth.
These decisions are in consonance with the objective of achieving the medium-
term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2
per cent, while supporting growth.
The main considerations underlying the decision are set out in the statement
below.
Assessment
Global Economy
2. In the second quarter of 2023, the global economy is sustaining the momentum
gained in the preceding quarter in spite of still elevated though moderating inflation,
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2
tighter financial conditions, banking sector stress, and lingering geopolitical conflicts.
Sovereign bond yields are trading sideways on expectations of the imminent peaking
of the tightening cycle of monetary policy while the US dollar has appreciated. Equity
markets have remained range bound since the last MPC meeting. For several
emerging market economies (EMEs), weak external demand, elevated debt levels and
geoeconomic disintegration amidst tighter external financial conditions pose risks to
growth prospects, although capital flows are cautiously returning to them on renewed
risk appetite.
Domestic Economy
3. According to the provisional estimates released by the National Statistical
Office (NSO) on May 31, 2023, India’s real gross domestic product (GDP) growth
accelerated from 4.5 per cent (year-on-year, y-o-y) in Q3:2022-23 to 6.1 per cent in
Q4, supported by fixed investment and higher net exports. Real GDP growth for 2022-
23 was placed at 7.2 per cent, higher than the second advance estimate of 7.0 per
cent.
4. Domestic economic activity remains resilient in Q1:2023-24 as reflected in high
frequency indicators. Purchasing managers’ indices (PMI) for manufacturing and
services indicated sustained expansion, with the manufacturing PMI at a 31-month
high in May and services PMI at a 13-year high in April-May. In the services sector,
domestic air passenger traffic, e-way bills, toll collections and diesel consumption
exhibited buoyancy in April-May, while railway freight and port traffic registered modest
growth.
5. On the demand side, urban spending remains robust as reflected in indicators
such as passenger vehicle sales and domestic air passenger traffic which recorded
double digit growth in April. Rural demand is gradually improving though unevenly –
motorcycle sales expanded in April, while tractor sales contracted partly owing to
unseasonal rains. Investment activity is picking up as reflected in the healthy
expansion in steel consumption and cement output in April. Merchandise exports and
non-oil non-gold imports remained in contraction mode in April while services exports
sustained a robust expansion.
6. CPI inflation fell sharply to 4.7 per cent in April 2023 from 6.4 per cent in
February on the back of large favourable base effects, with softening observed across

3
all the three major groups. Food group inflation eased, with moderation in cereals,
eggs, milk, fruits, meat and fish, spices and prepared meals inflation and deepening
of deflation in edible oils. In the fuel group, inflation in LPG and firewood and chips
prices fell and kerosene prices slipped into deflation. Core inflation (i.e., CPI inflation
excluding food and fuel) dipped, driven down by clothing and footwear, household
goods and services, health, transport and communication, personal care and effects
and recreation and amusement sub-groups.
7. The average daily absorption under the LAF increased to ₹1.7 lakh crore during
April-May from ₹1.4 lakh crore in February-March. Money supply (M3) expanded by
10.1 per cent y-o-y and non-food bank credit by 15.6 per cent as on May 19, 2023.
India’s foreign exchange reserves were placed at US$ 595.1 billion as on June 2,
2023.
Outlook
8. Going forward, the headline inflation trajectory is likely to be shaped by food
price dynamics. Wheat prices could see some correction on robust mandi arrivals and
procurement. Milk prices, on the other hand, are likely to remain under pressure due
to supply shortfalls and high fodder costs. The forecast of a normal south-west
monsoon by the India Meteorological Department (IMD) augurs well for kharif crops;
however, the spatial and temporal distribution of the monsoon would need to be
closely monitored to assess the prospects for agricultural production. Crude oil prices
have eased but the outlook remains uncertain. According to the early results from the
Reserve Bank’s surveys, manufacturing, services and infrastructure firms polled
expect input costs and output prices to harden. A clearer picture will emerge when the
final survey results are available. Taking into account these factors and assuming a
normal monsoon, CPI inflation is projected at 5.1 per cent for 2023-24, with Q1 at 4.6
per cent, Q2 at 5.2 per cent, Q3 at 5.4 per cent and Q4 at 5.2 per cent. The risks are
evenly balanced (Chart 1).
9. The higher rabi crop production in 2022-23, the expected normal monsoon, and
the sustained buoyancy in services should support private consumption and overall
economic activity in the current year. The government’s thrust on capital expenditure,
moderation in commodity prices and robust credit growth are expected to nurture
investment activity. Weak external demand, geoeconomic fragmentation, and
protracted geopolitical tensions, however, pose risks to the outlook. Taking all these

4
factors into consideration, real GDP growth for 2023-24 is projected at 6.5 per cent
with Q1 at 8.0 per cent, Q2 at 6.5 per cent, Q3 at 6.0 per cent, and Q4 at 5.7 per cent,
with risks evenly balanced (Chart 2).
10. The MPC took note of the moderation in CPI headline inflation in March-April
into the tolerance band, in line with projections, reflecting the combined impact of
monetary tightening and supply augmenting measures. Headline inflation is projected
to decline in 2023-24 from its level in 2022-23 but would still be above the target,
warranting continuous vigil. The progress of the south west monsoon is critical in this
regard. Domestic economic activity is holding up well. Consumer confidence is
improving and businesses remain optimistic about the future. The cumulative rate hike
of 250 basis points undertaken by the MPC is transmitting through the economy and
its fuller impact should keep inflationary pressures contained in the coming months.
Monetary policy would need to be carefully calibrated for alignment of inflation with the
target. Against this backdrop, the MPC decided to keep the policy repo rate unchanged
at 6.50 per cent. The MPC resolved to continue keeping a close vigil on the evolving
inflation and growth outlook. It will take further monetary actions promptly and
appropriately as required to keep inflation expectations firmly anchored and to bring
down inflation to the target. The MPC also decided to remain focused on withdrawal
of accommodation to ensure that inflation progressively aligns with the target, while
supporting growth.
11. All members of the MPC – Dr. Shashanka Bhide, Dr. Ashima Goyal, Prof.
Jayanth R. Varma, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri

5
Shaktikanta Das – unanimously voted to keep the policy repo rate unchanged at 6.50
per cent.
12. Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Dr. Michael
Debabrata Patra and Shri Shaktikanta Das voted to remain focused on withdrawal of
accommodation to ensure that inflation progressively aligns with the target, while
supporting growth. Prof. Jayanth R. Varma expressed reservations on this part of the
resolution.
13. The minutes of the MPC’s meeting will be published on June 22, 2023.
14. The next meeting of the MPC is scheduled during August 8-10, 2023.
(Yogesh Dayal)
Press Release: 2023-2024/364 Chief General Manager

Office Bearers
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Mr. R. Gopinath
CHAIRPERSON
Mr. Ankur Shah
CONVENOR
Ms. Savita Pillai
SECRETARY
Ms. Bharathi Srinivasan
MEMBER
Mr. Atul Jain
MEMBER
Mr. Ajay Kr. Tyagi
MEMBER
Mr. Inderpal S. Bindra
MEMBER
Jul-Aug 2023
INGENIOUS

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