99% of Banned Rs.500 and Rs.1000 currency notes returned

On Dec 1^st, 2016, there was an article by IANS, the headline of which was ‘Demonetisation’s rude shock: There may not be any black money’ and it goes on to argue that 8,44,962 crores have been deposited with the banks from November 10, 2016 to November 27, 2016., in Rs.500 and Rs1000 banned notes.

On August 30, 2017, Reserve Bank of India’s annual report gives the following figures on demonetisation and the total money deposited with it.

Following are the excerpts from the annual report:

The notes issued decreased by 11.79 per cent from ₹17,077.16 billion as on June 30, 2016 to ₹15,063.31 billion as on June 30, 2017. The decrease is the net impact of withdrawal from circulation of the old ₹500 and ₹1000 notes issued till November 08, 2016 and subsequent remonetisation efforts made by the Reserve Bank.

The report further states that:

Until June 30, 2017, SBNs (Specified Bank notes) were received by the Reserve Bank either directly or from bank branches/post offices through the currency chest mechanism. Some of these SBNs are still lying in the currency chests. Subject to future corrections based on verification process when completed, the estimated value of SBNs received as on June 30, 2017 is ₹15.28 trillion.

Moreover, vide notification no G.S.R. 611 (E) dated June 20, 2017, Government of India allowed District Central Cooperative Banks (DCCBs) to deposit SBNs accepted by them from their customers within the period of 10th November to 14th November, 2016.

Reserve Bank is in discussion with Government of India with regard to the acceptance or otherwise of SBNs held by citizens/Financial Institutions in Nepal.

If one were to add the total SBNs received and counted, SBNs received still to be counted, SBNs from Cooperative banks, and those from Nepal, the total amount would just about close the gap of 11.79%.
Under the heading of ‘Expenditure’, in ‘Analysis of Income and Expenditure’, the annual report states:

 iv) Printing of notes

Expenditure incurred on printing of notes during 2016-17 was ₹79.65 billion as compared to ₹34.21 billion in 2015-16.

The increase was mainly on account of following reasons:

a. Supply of notes during the year at 29,043 million pieces was 37 per cent higher than the total supply during previous year (21,195 million pieces). Supply of higher denomination notes during 2016- 17 was 13,702 million pieces as against 5,268 million pieces supplied in 2015- 16, higher by 160 per cent.

b. In the wake of withdrawal of SBNs, there was an increase in the number of remittances in our remonetisation efforts resulting in higher freight and forwarding expenses. For urgent supply of notes across the country, notes were also remitted by air resulting in increased expense on freight charges.

c. Reimbursement of cost for finished banknotes, work in progress, raw materials, etc. as the printing presses had to discontinue printing of ₹500 and ₹1000 denomination banknotes which were withdrawn in November 2016.

If one were to add the expenditure incurred towards printing of the new currency notes of Rs.500 and Rs.2000, and distributing them in the limited period, to the total amount, RBI could have taken a loss, and the headline on Dec 1^st, 2016, ‘Demonetization rude shock: There may not be any black money’, may have come true.

Multiple Sources of Income

Desire more money?

I had once attended a workshop on ‘Prosperity’ by a trainer from Louise Hay teachings. I was struggling with finances back then, and the 25 others who attended, all seemed to have some sort of issue with money / earnings / savings etc.

Among others things, one topic which caught my attention was ‘How to have more money?’

For example: You have a job and earn a decent income, but somehow feel it is meeting your needs but there is not enough surplus. Or the job is unreliable and how to meet your needs in case there is a downturn. Or you have been wanting to buy / upgrade a vehicle/ electronic item etc. But don’t have the money, Or simply want to have more savings and investments. 

Back to the question, ‘How can one have more money?’   

The answer is to Have Multiple streams of income!!! And this has changed the way I looked at money since.

First let us look at why multiple streams. Some of you must already be struggling to manage one job or one source and two sources in some cases. You already tried working longer hours and it was eating into your other duties or not producing nearly enough income; or tried getting a better paying job, which may not have been so easy, so on so forth. So, you may want to ask that you are finding it difficult to increase one income leave alone several incomes?

It is not as difficult as it seems. First let us understand -

What do I mean by Multiple streams of income? It simply means income from several sources.

You may say that you spend all your week days at a job and get a salary, where are these other sources of income coming from. Valid question.

1.       You may already be receiving income from few other sources other your salary / wages / commissions (whichever is your main source of income), which you are not aware of.

Eg: Interest on savings bank account. It is too less to be counted? May be...

2.       Cash gifts that friends and family give

3.       House hold items you were planning to chuck, but some one pays for it and takes it off your hands etc.

From the above examples, you will notice that money is coming from other than your primary source. These are all incomes. They may not be much in terms of amount and may not be regular or consistent, BUT they still are INCOMES. Become aware of them! The point is not whether a source of income is big or small. Never look down on small amounts of money. Remember that money grows with time. A small amount over a longer period grows to big amounts. I look at it another way, small amount fulfill smaller goals, but goals nevertheless.

Maintain a record of your incomes with dates and sources. You will notice to your pleasant surprise, how much it all adds up to, by the end of the year; Rs.240 in quarterly bank interest goes unnoticed; Rs. 1800 at the end of the year is something! 

Possible multiple sources of income could be:

1. Interest on savings bank deposits
2. Interest from fixed deposits
3. Cash back from insurance schemes
4. Cash back from purchases
5. Dividends from investments in stocks
6. Dividends from investments in Mutual funds
7. Interest from investments in government securities or Bonds or company CDs
8. Rental income from real estate investments
9. Rental income from any of your possessions
10. Income from sale of securities / stocks (if you made a profit)
11. Income from redemption of mutual fund schemes (if you made a profit)
12. Cash Gifts from family and friends
13. Income from 2^nd job / weekend job / odd job
14. Income from royalties (on books, music, content, art etc.)
15. Income from internet or blogging
16. Income from teaching classes (music/art/driving/cooking/sewing/computer skills or anything else)
17. If you have skills and monetise them, you can build a study source of income over time

      These are some of the streams I am working on. Do you know of any more? I am very interested. Do drop a line.

Thanks for reading. Rest in the next capsule ....

Know your Money - Rs.500 note

All of you have seen a Rs.500 bank note.

Can you identify an original currency note from a fake one? 

 Obverse side

 Reverse side

Every original currency note has 9 security features. If your note doesnot have one or more of these feature, then your note is a fake one. 

According to the Reserve Bank of India, all original Rs.500 bank notes should have the following security features:

1.  Watermark: The portrait of Mahatma Gandhi,  multi-directional lines and an electrotype mark showing the denominational numeral “500” appear in this section and these can be viewed better when the bank note is held against the light.

2.  Security Thread: 3.00 mm Security thread with inscriptions “Bharat’ (in Hindi), RBI and colour shift from green to blue when viewed from different angles. It will fluoresce yellow on the reverse and the text will fluoresce on the obverse under ultraviolet light. The thread is visible as a continuous line from behind when held up against the light.

3.  Latent Image: The vertical band contains latent image showing the numeral 500 when the banknote  is held horizontally at eye level. 

4.   Microlettering: The letters ‘RBI’ and the numeral ‘500’ can be viewed with the help of a magnifying glass in the zone between Mahatma Gandhi portrait and the vertical band. 

5.  Intaglio Printing: The portrait of Mahatma Gandhi, the Reserve Bank seal, guarantee and promise clause, Ashoka Pillar Emblem on the left, RBI Governor's signature on the bank note and the identification mark for the visually impaired persons are printed are printed in intaglio which can be felt by touch.

6.  Identification Mark: A circle with Intaglio which can be felt by touch helps the visually impaired to identify the denomination.

7.  Flourescence: When the notes are exposed to ultra violet light, the number panels, which are printed in flourescent ink and optical fibers of the notes can be seen. 

8. Optically Variable Ink

The colour of the numeral 1000/500 appears green when the note is held flat but would change to blue when the note is held at an angle. The font size is reduced.

9.   See Through register: Floral design printed both on the front and reverse in the middle of the vertical band next to the water mark window has the denominational numeral “500”. Half the numeral is printed on the observe and half on the reverse. Both the printed portions have an have an accurate back to back registration so that the numeral appears as one when viewed against light.

Note: Currency notes printed before 2005 do not have the year of printing printed on the reverse side of the note. Those printed after 2005, have the year of printing at the bottom on the reverse side. RBI said all such notes printed before 2005 have to be exchanged for newer notes from banks. The deadline ended on April 1, 2015.  

What is an FD?

Most of you must have heard the word FD. Let us understand what it means and how it affects our investments.

·         FD is short for ‘Fixed Deposit’. In India it is called ‘Fixed Deposit’ or a ‘Term Deposit’. It is called Term Deposit in New Zealand, Australia, and Canada, or a ‘Certificate of Deposit’ (CD in USA).

·         A Fixed Deposit is a financial instrument for investment. As the word suggests, a Fixed Deposit is fixed in nature, i.e. you are depositing your money for a fixed length of time and at a fixed rate of interest.

·         Banks accept Fixed Deposits and some companies too accept them. Generally the interest rates issued by Companies are higher than those given by Banks. Similarly, the interest rates given by private banks and Co-operative banks will be higher than Nationalised banks.

·         A Fixed Deposit is a Bond. The Bank or the Company who accepts the Fixed Deposit from an investor, issues a receipt for the same.

On the receipt are mentioned:
     Name of the Bank / company
     Investor’s name and address
     Nominee’s name
     PAN card number of the investor
     Deposit number
     Period of deposit
     Date of maturity
     Maturity amount
     Annualized yield (p.a) or Rate of Interest – 8. 5% etc.
     Interest frequency – Quarterly etc.

·         At the end of the time period of deposit, the original investment amount plus the interest will be returned to the investor.

Simple Calculation to show the interest received for a Fixed Deposit:
A.     For an initial deposit of Rs.10,000,
At the Rate of interest of 8.5% and
If time period for which the investment is made is 1 yr., and
Interest compounded Quarterly,
Amount received at the end of 1 yr. will be Rs.10,877
At the end of 1 year, Rs.10,000 becomes Rs.10,877. ie. an increase of Rs.877 on the initial investment.

Looks good, right?

Is it the actual case?

No.

·         Because, there is something called TDS or Tax deducted at source. All banks & companies deduct tax before returning your money, if the interest exceeds Rs.10,000 (as per SBI).
Take for example, TDS is 20%. On Rs.877, the tax deducted is Rs.175.40. You will only receive Rs.10,701.60.

Supposing Inflation is at 5.1%. It means, that Inflation eats into the interest earned on the Fixed deposit. Effectively, your Rs.10,000 one year back, invested at the rate of 8.5% interest is worth only Rs.10,191.60 today.
If the interest rate is lower than 8.5%, you can imagine how much you will be earning on your Rs.10,000!

Not very inspiring and motivating, is it?

So, should you invest your money in a fixed deposit for an effective 1.91% interest per year?

Yes and No.

·         If there is a requirement for cash in the next few years, then it is prudent to hold the money in Fixed deposits. On the other hand, if you don’t need cash in the next few years, and you can invest for the long term, it is wise to consider other financial investment options which give better returns.

Some important formulae useful in day-to-day life

    Here are some important formulae that we need to know in our day-to-day life.

          1.  Compound Interest:

    CI (Compound Interest) = P(1 + r/100)ⁿ

Where

P = Principal 

r = rate of interest (per year)

n = no. of years

    2. The Rule of 72:

Number of years it takes the Principal to double is -

N = 72/r

where

r = rate of interest

n = no. of years

eg 1: 

If rate of interest is 6%

No. of years for the money to double = 72/6 = 12 years.

eg 2: 

If you want the money to double in 5 yrs.,

The rate of interest should be: 72/r = 5,

r = 72/5 = 14.4%

The Rule of 72
Total return %	Years required to double investment
1%	70
4%	18
5%	14
6%	12
8%	9
10%	7
12%	6
14%	5
16%	4.6
18%	4
20%	3.8
24%	3

3. Recurring Deposits:

Maturity value based on quarterly compounding:

M =R [ (1+i)ⁿ – 1]
         --------------------  
         1- (1+i) ^-1/3

where

M = Maturity value
R = Monthly installment
n = Number of quarters
i = Rate of interest/400