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Telecoms, Banks, RuPay, and Your 1 Cr. Dream
Talking points for November:
RuPay - You must have heard this word a little too much lately.
It's everywhere! Bank notifications, reward offers and of course your favourite finfluencer’s content.
What exactly is RuPay?
RuPay is India’s very own Card Network. For decades, we used to depend on foreign card networks like Visa, Mastercard etc.
In 2014, NPCI (National Payments Corporation of India) came up with RuPay - a multi literary payment network with a tagline of “ONE LIFE. ONE RuPay”
But RuPay cards struggled. Despite grants and awareness campaigns, none of it really worked. RBI also made UPI payments possible for RuPay credit cards.
They went down the rabbit hole to find out what’s wrong and found 2 problems:
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Existing card holders were not willing to apply for another card
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Applicants found RuPay cards less desirable as other cards came with attractive rewards.
So, RBI came up with a master solution.
It made the card network a matter of choice - a choice that the customer gets to make and not the Banks.
So now you can walk into a bank and select a card based on the rewards and then YOU get to select the card network of your choice!
What amount do you want to retire with?
(also called your Retirement Corpus)
People often reply with “a Crore rupees”.
But how to make sure you get to this figure?
Let's assume you aim to retire at the age of 55-60. You will be needing a Retirement Corpus of approximately 25-30 years.
Your retirement savings should be:
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Covering personal expenses and medical bills
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Adjusted for inflation.
What is adjusted inflation?
It refers to the fact that an item you purchase for ₹1000 today may cost higher in 10-15 years.
Once your goal is set, next step is the Action Plan. You need to develop the discipline to invest a small sum each month towards your corpus. Consider it as your monthly expense, but never miss any month.
Where to invest?
It depends on your risk appetite. If you are young, you can invest in high risk options and stocks which can yield better results. Similar for slightly older individuals, consider investing in low risk instruments like bonds and PF.
Whatever you choose, remember that your taxes will play a role.
If this sounds overwhelming, I welcome you to connect with our tax experts. Click here to talk to an expert and plan your taxes based on your goals.
India’s 6 banks are battling a high-stakes loan battle with a Singapore
subsidiary of the GVK group in London court.
Here's the timeline:
2011
Bank of Baroda, Bank of India, Canara Bank, ICICI Bank, Indian Overseas Bank and Axis Bank provide GVK Coal Developers from Singapore with a $1 billion loan, a $35 million letter of credit facility.
2014
The same 6 Indian banks provide GVK Coal Developers (Singapore) with an additional $250 million loan.
2020
Banks initiate legal proceedings against GVK Coal Developers (Singapore) in the London High Court for defaults on loan repayments.
2023
Judge Dame Clare Moulder rules in favor of the six Indian banks. GVK Coal Developers (Singapore) is ordered to pay $2.1 billion, including $1 billion in interest and $1.1 billion in principal.
Remember the Movie Veer-Zaara?
“22 Saal Guzaar Diye” is An Iconic dialogue from an iconic movie.
Let me share something similar - A 20-year-long legal battle between Telecom companies and the government over the classification of an expense - License Fees.
Telecom companies pay License Fees each year. As per these companies, this is a Revenue Expense and as per the government, it is a Capital Expenditure.
The Supreme Court ruled that it should be classified as a capital expense which resulted in a tax bill of ₹14,000 Cr!
That's all for now. Hope you have a great week!
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Best regards,
Team TaxBuddy.com