WHAT ARE MINING STOCKS ???

Nargis:- Have you guys got the news! Due to heavy rainfall in Andhra Pradesh, coal mining has been hampered and as a result, NTPC is not having enough coal reserves as a backup to generate electricity. There may be power cuts for long hours at a stretch throughout India before Diwali.

Harris:- Oho! That’s sad news. Due to power cuts, my small business gets hampered as I don’t have enough pennies to do expense on inverters or generators. But, every now and then, we can hear that Coal India gets some new mining areas for coals. Then, why is this shortfall?

Katrina:- Oh! You people are talking about power cuts and ‘Bijli Blackout’, but, right now, I am having blackout in Sensex and Nifty. Why the hell I invested on those shares! It is a total loss for me. The Indian market is very volatile right now and the global economy is still not recovering well since its downfall in 2008.

Arindam:- Well, Katrina…this time, the global economy is facing the heat of sovereign debts. By the way, why are you not investing on mining stocks?

Katrina:- ‘WHAT ARE MINING STOCKS ???’

Nargis:- Hmm…the stocks of those companies which are engaged in mining of valuable metals or natural resources. Am I right, Arindam?

Arindam:- Yeah! You are. But, unlike India, investors of USA are more interested in investing in these types of stocks.

Harris:- But, there is risk in investing in these stocks. What’s the guarantee that a company will get the desired amount of metals or natural resources, by digging a particular area? Whatever they predicted to fetch, they may get less output than that.

Katrina:- No risk, no gain, dude! Invest on those shares when a company declares about a new area of exploration. Every share in its nascent stage is bound to get higher price due to sensitive human psychology and market hypes.

Nargis:- Hmm…Katrina…it seems that you have burnt your hands in stock markets several times to learn those tips and tricks.

Harris:- Just hang on! Now, I have a valid question. As an amateur investor, should I invest on metal stocks or stocks of natural resources?

Arindam:- Ha ha ha….Harris, you can never ignore the black diamond, it will always have its own demand. But, still, in this global turmoil, the safest investment will be on gold stocks. Gold is such a commodity which will never lose its glitter, though; there may be a temporary crash as per the law of statistics. USA is the dominant holder of gold, but, China has started the race now.

Katrina:- How funny! When I know, that there will be a temporary crash on gold stocks in the near future, why should I buy those stocks?

Arindam:- Don’t worry; the crash will not kick you down from the break-even point, but, look that scenario from the other angle. If gold stocks crashes, there will be new buyers from Middle East Asia and other Afro-Asian countries. As a net result, the eroded soils from USA will have its sedimentation to the banks of Asian markets. That’s none of your headache. As a trader or investor, you will keep on gaining as a ferry-boat owner. So, go for the Mining Stocks. It’s the ideal time for it.

KYC Vs FINANCIAL INCLUSION !!!

Paritosh:- Indian government is targeting to provide banking services to 73000 villages of India by 2011-12. That’s a good initiative. Financial inclusion will surely help to boost the Indian economy.

Satish:- Financial inclusion is only possible after the successful implementation of UID cards, otherwise, even the dacoits, robbers, smugglers and terrorists will open Savings account in their name.

Neelam:- No, no, that’s why; the RBI is giving more stress on the KYC (Know Your Customer) compliance.

Arindam:- But I can show you many people in India who don’t have any identity proof.

Paritosh:- If any person is not having any identity cards like Ration Card, Voter ID Card, PAN Card or Driving License, then we can ask for a letter from the Sarpanch of village or the Councilor of that ward where that person lives.

Arindam:- There lies the game. The Sarpanch or Councilor distributes his blank letter-heads (format) like leaflets with his signature on it. Now, any person can write his/her name and address on that blank letter-head. In many cases, the Sarpanch or Councilor doesn’t even know that person but the resident certificate remains with the Savings Account opening form of that person.

Satish:- Forget about letters. I have seen many people having 2-3 Voter ID Cards. In PSU Banks, yet there have been no machines installed to check the original holograms in a Voter ID card, PAN Card and Driving Licenses. They can copy everything but not the original holograms of Indian government. Also as per the RBI circulars, an introducer should have a Savings/Current Account for more than 12 months in that branch; otherwise he/she cannot introduce another person. Moreover, the introducer should know the person for at least 1 year or above before introducing him/her to open an account. But hardly these things are maintained. At least, in private banks, they don’t issue a passbook to the account holder so easily. They send the thanksgiving letter to both the customer and the introducer. Both Introducer and Customer have to visit the branch to take the passbook. That’s a good practice.

Neelam:- What about the address proof? Nowadays, a person of Kashmir is opening accounts in a branch of Kanyakumari by showing an electricity bill of his landlord/landlady. But, what is the proof that the customer is really living in that particular rented house. No inspection is done in that regard. No question is asked why a resident of Kashmir is opening an account in Kanyakumari. Neither the landlord nor the customer gives an application letter/request letter regarding it. Regarding service holders, no one asks for a letter from his/her respective employers before opening an account. There are still many rural branches where no Form 60/Form 61 is signed up by the customers who don’t have a PAN Card number.

Arindam:- Neelam, the conditions of rural branches in any Muslim infested area are very bad. First of all, Muslim women wear burqahs. They will give you the passport photos where they are wearing burqahs. So, those photos are of no use as you can’t identify anyone with burqahs on her face. Secondly, most of the Muslim women are illiterates and even if they are educated enough also, they will go for left thumb impressions to open the channels of fraud. Thirdly, the illiterate Muslim women intentionally open Joint Accounts where one is literate and another one is illiterate. So, the literate hubby takes the advantage of that account in the long run for illegal fund transfers from Bangladesh or Dubai.

Paritosh:- Oh! The battle of KYC Vs Financial Inclusion will continue, but if we can tighten the KYC norms, then only the financial inclusion will have a positive impact on Indian economy in the long run.

BEWARE! BANKING BILL!

Gopinath:- The Asian markets are having a sea saw effect after hearing the news of USA losing AAA ratings. Even France to lose AAA ratings! I wonder how France can still show the courage to bail out Greece. The recent hooliganism in Syria as well as in UK will also affect the global economy. Moreover, the Spaniards are becoming jobless now. After Greece, many people predicted about Spain & Portugal and it is becoming a reality now. The concept of Euro has failed to revive the European economy.

Manjulika:- So, are we heading for a double dip recession? If yes, then are we ready to face it?

Gopinath:- India and China have learnt the art of investing more on their own core competencies during the recession of 2008. That’s why; Indian Tigers are chasing the Chinese Dragons. As a result, China has started investing in Sri Lanka, Myanmar, Nepal and some countries of Africa to safeguard themselves from Indian Tigers.

Arindam:- So, you want to say that Indian Tigers (common people of Indian economy) are in a very healthy position. Maybe, I think that Indian government is showing too much confidence on FDIs and as a result focusing less on manufacturing and mining industries. The outcome of this complacency factor has indirectly created a gap between poor and rich. Moreover, the UPA-II completely failed to control black marketers & hoarders. Rich people are paying more for foods and the food supply is less in the open market. As a result, the food inflation rises. RBI, being frustrated with the callous initiatives of the UPA-II, has to increase the key rates every time to curb inflation. But, at present, as the USA lost its AAA ratings, some PSU Banks will not try to raise money from overseas immediately. RBI will also not raise any of its key rates in the next meet, as there is a concern of double dip recession. In this hotchpotch scenario, why UPA-II is instructing the RBI to make all banks NPA free? Rescheduling all the suspended loans mean you are increasing the repayment period of loans for another 2 years. As a result, the money is not recovered but the Banks are saying that they are NPA free. After 2 years, when UPA government will not be there, who will be liable for the loss? It is the respective PSU Banks and the RBI only.

Manjulika:- Indira Gandhi nationalized those banks to raise funds for Indian economy. Manmohan Singh went for economic reforms. That was good, but somehow, the recent scams and the black money in Swiss Banks have negated those reforms. India would have become the 3rd largest economy by 2012 had there been no financial corruption at the top level. Now, UPA-II came out with a Banking Bill where they can either privatize nationalized banks or centralize all the PSU Banks. Profitable PSU banks may get merged with loss-making PSU banks or maybe the loss-making PSU banks will be completely denationalized. See, the Manmohan’s cabinet is a puppet of USA. So, it is evident that the UPA-II will blindly follow the policies of USA. The Indian government is saying, ‘If private banks can survive, then privatize all the loss-making PSU Banks.’

Gopinath:- Just hang on! Are those private banks opening no-frill accounts for the poor people? Are they giving subsidies while giving agricultural loans to the poor farmers? Without PSU Banks, banking development of Indian poor society cannot happen. US Banks thought of profit only. That’s why; their unemployment problems at the root level still exist. The best feasible solution will be to merge some loss-making PSU banks under SBI on a trial basis. But still, I will say,”BEWARE! BANKING BILL!”