The farmers of India have been dependent on Rainfall for immemorial time to irrigate farms and grow the harvest, but the lack of adequate rain is taking trolls not on the health of farmers but the well being of the Indian economy as well. The nonseasonal rains have impacted and plunged the crop production in India leading to scarcity of pulses, oil seeds, vegetables and fruits. This leads to a vicious circle of fall in incomes not only of the farmer but impacts the manufacturing and service sector as well. Due to fall in the income of farmers, the demand for tractors and two wheeler also fall. It further leads to a surge in downfall of IIIP in core manufacturing. In case of a monsoon failure, while ample stocks of rice and wheat can be released to kerb inflation, there is fear that the prices of commodities such as pulses and oil-seeds – where buffer stocks are not available in the central pool, and fruits & vegetables, where extended entrepot is not executable – could flare up. Similarly, some reliance on imports can be sought for commodities like oil-seeds where global prices have trended downfield. But, for pulses – where production is estimated to be 11% below target in FY15, sowing so far is lower and where inflation is already high this year – imports may not render assuagement. Global pulses prices have been fixing up and unless imports are subsidised by the government, could feed into domestic inflation. Also, despite the threat of a weak monsoon, the government can take proactive manoeuvre to keep a tab on food prices – the use of buffer stocks, anti-hoarding regulations, inclining transportation losses and resorting to imports. Unseasonal rains have impacted the rural economy and agricultural growth this quarter, with some ripple effects. This is reflected in falling tractor sales in the last few months, more recently embarking a negative growth of 19%. Adding on, two wheeler sales remained negative at 0.2%. Therefore, going forward, core sector will have to buckle up first to patronise overall growth as the government’s focus on infrastructure spending gathers speed. And put back India to rail to the expected growth rate of 8% for FY16.

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Forensic accounting is the specialty area of the accountancy which anticipates disputes or litigation.  The forensic accountants generally have to investigate information which is suitable to be presented in the court.

Forensic accounting uses accounting, auditing, and investigative skills to undertake enquiries into theft and fraud. The work of forensic accountants is to surprise the perpetrators of the estimated theft and fraud. This includes money laundering, window dressing and identity theft activities as well as tax evasion. Insurance companies engage forensic accountants to detect insurance frauds and law firms employ forensic accountants to identify marital assets in divorce cases and family’s power of attorney.

Forensic accounting has been pivotal in the corporate agenda after the financial reporting scams which took place in some companies around the world and shook the investor and the customers (see, for example, Enron, Coal India, Satyam, Tyco, and WorldCom, just to mention a few). These scandals resulted in the loss of public trust and huge amounts of money. In order to avoid fraud and theft, and to restore the badly needed public confidence, several companies took the step to improve the infrastructure of their internal control and accounting systems drastically. Thus leading to the inception of “forensic accountants.”

Forensic accounting relies on the fraud triangle to identify fragile points in the business organisation and locate possible defaulters. It consists of three core concepts: incentive, opportunity, and rationalization. People must have the incentive and opportunity to commit financial fraud, as well as the ability to justify it. Recent analysis has suggested adding a fourth concept to make a diamond—capability. Just because someone has the opportunity or incentive to steal does not necessarily mean that they have the capability to do so.

The job of a forensic accountant involves assessing the risk of fraud and illegal acts , evaluating the adequacy of internal control systems, substantive testing of transactions during an attest or a general consulting engagement and designing and implementing internal control procedures. It also consists of preparing company codes of business ethics and conduct and developing corporate compliance programs.

Forensic accounting has made it to the list of top 20 future jobs in articulation with the growing financial scams worldwide in public finance, corporate finance and insurance sector. In India, CAG is an external auditor for the government of India which has faithfully delivered excelled services in the field of Forensic Accounting

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Decade post the 2008 financial crisis, investment professionals still remain vary about unchecked market bubbles that could burst and trigger fresh economic shocks anytime.

The accelerating progress of student loan debt in the United States compared equivalent to the pre-crisis growth of subprime lending activity, has become a cause for concern. Reports suggest that the total amount of student loans outstanding in the United States exceeds 1 trillion USD.

A recent report from the US Department of Education found that the class of 2015, the most recent class of graduates, is the most indebted in the US history graduating with “a total of about $56 billion in public and private loans,” and the average student borrowing will be more than $35,000 in debt. Average tuition, fees, and room and board at a private, non-profit, four-year college were $42,419 for 2014-2015, up from $30,664 in real dollars in 2000-01 .Holders of undergraduate degrees, who tend to borrow less, may be able to meet their loan payments if they successfully find employment at the standard starting wage.

Though there are no derivatives or complex securitized products tied to student loans that could trigger a sudden, unexpected collapse in financial markets. However, the size of the total debt outstanding means that debtors changing their repayment behaviours could still have profound economic consequences. There is increasing holding back by indebted student when it comes to auto spending, home ownership, and general economic activity dragging the economy, adversely impacting the household spending behaviour of younger Americans. Ultimately, the reduced consumer spending resulting from excessive student loan debt could likewise have serious consequences.

Owning a home used to be a key indicator of adulthood and maturity. But homeownership has plummeted among Americans under age 35. Mortgage lenders look at all debt obligations, and student debt would count toward that, which downgrades their housing expectations, and take out a loan lower than what they intended. The burden of student debt hinders innovation and entrepreneurship, a core component of the economic prowess of the United States. And it can have a ripple effect on the market.

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Exchange Traded Funds (ETFs) are mutual fund units which investors buy/ sell from the stock exchange, as against a normal mutual fund unit, where the investor buys / sells through a distributor or directly from the AMC.

Practically any asset class can be used to create ETFs. Globally there are ETFs on Silver, Gold, Indices (SPDRs, Cubes, etc), etc. In India, we have ETFs on Gold, Indices such as Nifty, Bank Nifty etc. Traditionally, Indians are known to be big buyers of Gold; an age-old tradition. G-ETFs can be said to be a new age product, designed to suit our traditional requirements. We buy Gold, among other things for children’s marriages, for gifting during ceremonies etc. Holding physical Gold can have its’ disadvantages:

1. Fear of theft
2. Payment Wealth Tax
3. No surety of quality
4. Changes in fashion and trends
5. Locker costs
6. Lesser realisation on remoulding of ornaments

G-ETFs score over all these disadvantages, while at the same time retaining the inherent advantages of Gold investing.

In case of Gold ETFs, investors buy Units, which are backed by Gold. Thus, every time an investor buys 1 unit of G-ETFs, it is similar to an equivalent quantity of Gold being earmarked for him somewhere. Thus his units are ‘as good as Gold’

Secondly, all these years, the investor need not worry about theft, locker charges, quality of Gold or changes in fashion as he would be holding Gold in paper form. As and when the investor needs the Gold, he may sell the Units in the market and realise an amount equivalent to his holdings at the then prevailing rate of Gold ETF. This money can be used to buy physical gold and make ornaments as per the prevailing trends. The investor may also simply transfer the units to his child’s demat account as well! Lastly, the investor will not have to pay any wealth tax on his holdings. There maybe other taxes, expenses to be borne from time to time, which the investor needs to bear in mind while buying / selling G-ETFs.

The G-ETF is designed as an open-ended scheme. Investors can buy/ sell units any time at then prevailing market price. This is an important point of differentiation of ETFs from similar open-ended funds. In case of ETFs, investors can buy (or sell) units at a price which is prevailing at that point of time during market hours. Thus for all investors of open-ended schemes, on any given day their buying (or redemption) price will be same, whereas for ETF investors, the prices will vary for each, depending upon when they bought (or sold) units on that day. When required, the investor can pay Portfolio Deposit and/ or Cash Component and get Creation Units in return.   .

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The term ‘Derivative’ stands for an agreement which derives its price from or is dependent upon an underlying asset. The underlying asset can be a financial assets like currency, stock and market index, an interest bearing security or a physical commodity. Derivative contracts are traded on electricity worldwide today.

Financial derivatives have emerged as one of the biggest markets of the globe during the past two decades. A rapid change in technology and has acted as a key vehicle for information processing in financial markets. Globalization of financial markets has forced several countries to change laws and introduce innovative financial contracts which have made it easier for the participants to undertake derivatives transactions.

A group of Chicago businessmen formed the Chicago Board of Trade (CBOT) in 1848 gave birth to the concept of Derivatives. In 1865, the CBOT went one step further and listed the first ‘exchange traded” derivatives contract in the US. These contracts were called ‘futures contracts”.

Types of Derivative Contracts

Derivatives consists of four basic contracts namely Forwards, Futures, Options and Swaps.

1. Forward Contracts: These are agreements to deliver an asset at a pre-determined date in future at a predetermined price. Forwards are highly popular in currencies and interest rates. The contracts are traded over the counter (i.e. outside the stock exchanges, directly between the two parties) and are customized according to the needs of the parties.
2. Futures Contracts: A futures contract is an agreement within two parties to buy or sell an asset at a certain time in future at a certain price. They are exchange traded, standardized contracts. The exchange stands guarantee to all transactions. The counter party risk is significantly eliminated.The buyers of futures contracts are considered having a long position whereas the sellers are considered to be having a short position. Futures contracts are available on commodities, currencies, interest rates, stocks and other tradable assets stock indices, interest rates and foreign exchange.
3. Options Contracts: Options give the buyer (holder) a right but not an obligation to buy or sell an asset in future. Options are of two types – calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.
4. Swaps: Swaps are private contracts between two parties to exchange cash flows in the future according to a prearranged formula. The two commonly used swaps are:

• Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency.
• Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction.

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Amalgamation is combining of two or more companies to form a single company. It can happen is three ways which are Amalgamation, Absorption and external Reconstruction. Amalgamation provides benefits of economies of large-scale, tax savings, increase in cash resources, monopoly and elimination of duplicated product. The two terms significantly involved in amalgamation are transferee and tranferor. Transferor is the company which is amalgamated into another while transferee is thecompany into which the transferor is amalgamated. Amalgamation can be in nature of merger or purchase depending upon the terms of transaction. The consideration for amalgamation can be paid out via the method of Pooling out of interest method for amalgamation in the nature of merger and purchase method for the later. When consideration is more than the net asset value than, it gives rise to Goodwill. If the consideration is less than the Net asset value than the difference is credited to capital reserve. Factors which are considered while determining the goodwill at the time of amalgamation are:

• the foreseeable life of business or industry
• the effects of product obsolescence, changes in demand, and other economic factors.
• the service life expediencies  key individuals or group of employees
• Expected actions by competitions or potential competitors; and
• Legal, regulatory or contractual provisions affecting the useful life

Whenever expenses are incurred by the transferee at the time of amalgamation b y the nature of purchase, the expenses are debited via the goodwill account and the Bank account is credited.

The list successful amalgamation in the past consists of:

• Microsoft/Nokia acquisition
• Cairn/Vedanta
• Sum Pharma/Ranbaxy
• Lafarge/Holcin
• Pfizer/Warner-Lambert
•  Verizon/Vodafone
• AOL/Time Warner
• Exxon/Mobil
• Actavis & Forest Laboratories

Amalgamation has become the trend of the hour and many companies actively look forward for the same. M&A has both benefits and losses. On one hand it reduces the cost of production and increases shareholders wealth, but simuntaneously it disables local and small manufacturers sales. Meanwhile the product is available at cheaper rate but as the competition in the economy reduces, the big companies are in a better position to exploit it’s customers in the long run.

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Algorithmic trading is a  trading system that operates on a very advanced mathematical models for making transaction decisions in the financial markets by following a set of predefined instructions so as to generate profits at a speed and high frequency that is impossible for a human trader. The strict rules built into the model attempt to confirm the right time for an order to be executed that will cause the least amount of impact on a stock’s price. Algorithmic trading is most commonly used by large institutional investors as they purchase a large amount of shares every day. Complex algorithms allow these investors to obtain the best possible price without significantly affecting the stock’s price. Trades get executed at the best possible prices in Algo trading. They happen to be instant and accurate to avoid significant price changes. It leads to reduced transaction costs and risk of manual errors in placing the trades

The greatest portion of present day algo-trading comes from high frequency trading (HFT),

To undertake algorithmic Trading, one needs to have the following:

• Computer programming knowledge to program the required trading strategy
• Network connectivity and access to trading platforms for placing the orders

• Access to market data feeds that will be monitored by the algorithm for opportunities to place orders
• The ability and infrastructure to back test the system once built, before it goes live on real markets
• Available historical data for back testing

However, the practice of algorithmic trading is not that easy to maintain and execute. Prices fluctuate in milli- and even microsecond. If you do not manage it well, you will end up sitting with an open position, making your arbitrage strategy worthless. Additional risks like system failure risks, network connectivity errors, time-lags between trade orders and execution, and, most important of all, imperfect algorithms also make it to the list.
One must make sure the system is thoroughly tested and required limits are set. Analytical traders should learn programming and building systems on their own and be confident about implementing the right strategies in foolproof manner. Cautious use and thorough testing of algo-trading can create avenue of infinite profits.

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Millions of Americans are in vulnerability of not having enough money to housekeep their standard of living in retirement. The problem is getting worse over time. The consequences of these growing savings shortfalls could be severe for both American families and the national economy, as a large share of households may be forced to significantly reduce consumption in retirement and will have to rely heavily on their families, charities, and the government for help to make ends meet. Rather than staying in control of their economic lives, millions of Americans may be forced to muddle through their final years partially dependent on others for financial support and to accept a standard of living significantly below that which they had envisioned.

But what has led these one third American populations to the current miserable condition?

It was the inclusion defined contribution pension plan like 401k and the rapid and near-total disappearance of defined-benefit pensions which has left many U.S. workers unprepared. Almost one-third of all workers have no savings at all which has led to an impoverished future for the retiring population. The average monthly expenditure by Americans is about 2700 USD whereas the pension plan pays out only 1300 USD monthly cumulating to be 14500 USD annually. The major reason for why people fell easily for the 401(k) pension plan was the fact that it was tax deductible. Tax deductible means that the tax was paid on the income which was left after paying the instalment for future pension.

The burden of Retirement crisis is solely not on the retiring age but also on the Social Security of US as nation. This untimely crisis is likely to be a major expense on the Federal Reserve. The social security expense for the elderly retiring age majorly forms of health services and medicine. The fiscal deficit for US this financial year is likely to be broadened. Also considering the decrease in purchasing power of these elderly people, the demand for goods is likely fall, further pulling the nation towards the adverse aftermath of crisis and in direction of deflation.

To combat the crisis, the federal budget has on hold a big gob of budget reserved for the aged group but haze prevails on how it will be commuted.

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Everyone is on a look out to be a billionaire in a short interval of time. But is the industry you are dreaming to be a part of call of the future prosperity?

Well many sectors come and go, but the field of finance is always blooming with everlasting opportunities and is evergreen in property. Being an Indian student we just know a few career opportunities in the arena of finance like Chartered Accountant, Chartered Financial Analysis, Investment Banker and Actuaries. But finance has many more unexplored wonders beholden to be just explored by you. So let’s discover them.

• Chartered Financial Analyst (CFA): A professional designation given by the CFA Institute that measures the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas such as accounting, economics, ethics, money management and security analysis. To enrol in the program, you must hold a bachelor’s degree. The CFA charter is one of the most respected designations in finance,
• Certified Market Technician (CMT): A professional designation given by the Market Technicians Association (MTA) to financial professionals who prove their proficiency in technical analysis. To be granted the designation, a candidate must pass three examination levels and agree to be bound by the MTA code of ethics. A CMT is generally a skilled trader and deals in High Frequency Trading.
• Financial Risk Manager (FMR): A financial designation, obtained through the Global Association of Risk Professionals (GARP) by achieving a passing score on the Financial Risk Manager (FRM) examination, having an active membership in GARP and by having two years of experience in financial risk management. It polishes the candidate in the major strategic disciplines of risk management: market risk, credit risk, operational risk and investment management. The FRM designation is designed to measure a financial risk manager’s ability to manage risk in a global environment.
• Chartered Financial Planer (CFP): A certification exam administered by the Certified Financial Planner Board of Standards Inc. that focuses on topics of concern to the financial planning field, such as retirement, estate, and investment planning. The CFP certification mark represents your proven expertise within the financial planning profession. And adheres to personal finance needs of an individual.
• Chartered Public (CPA): An individual who has passed the uniform CPA examination administered by the American Institute of Certified Public Accountants, and who has received state certification to practice accounting. He is basically a CA certified from US.
• Chartered Certified Accountant (ACCA): An individual who has passed the exams by Association of Chartered Certified Accountant is a professional accountant. Chartered Certified Accountants work in all fields of business and finance. Some are engaged in public practice work, others work in the private sector and some are employed by government bodies. In short he is a CA certified from UK.

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Commercial bank branches are retail locations of resident commercial banks and other resident banks that function as commercial bank that provides financial services to customers and are physically separated from the main office but not organised as a legally separated subsidiaries.

Access to finance can expand opportunities for all with the higher levels of access and use of banking services associated with lower financing obstacles for people and businesses. A stable financial system that promotes efficient savings and investment is also crucial for a thriving democracy and market economy.

There are several aspects of access to financial services: Availability, cost, and quality of services.

The development and growth of credit markets depend on the access to timely, reliable, and accurate data on borrowers’ credit experiences.

Access to credit can be improved by making it is to create and enforce collateral agreements and by increasing information about the potential borrowers’ credit worthiness. Lenders look at the borrower’s credit history and collateral. Where credit registries and effective collateral law are absent, as in many developing countries, banks make fewer loans. Indicators that cover getting credit include the strength of legal rights index and the depth of the credit information index.

In a recent survey by the World Bank group it was found that the number of commercial bank branches per 100000 adult citizens is highest in San Marino i.e 211.8 whereas the same in India is 12.2. The commercial bank branches survey concludes that the number of commercial banks per 100000 adult citizens has gone up in India from 9 in 2004 to 12.2 in 2013. Whereas the range for San Marino stands within 195 to 211.8. India comparatively has shown a better growth rate of about 30% whereas it is 8.61% for San Marino.

Assumption:

The survey is based on the ratio of the number of branches and ATMs assuming a uniform distribution of bank outlets within the country’s area and across it’s population, while in most countries bank branches and ATMs are concentrated in urban centers of the country and are accessible only to some individuals. However the commercial bank branch reach is weak in rural areas.

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