Shift From Cash To Cashless Transactions With E-Wallets

As cash-driven economy finds itself crippled in the aftermath of demonetisation, it is the digital savvy citizens that continue to attend to their daily chores without spending time standing in serpentine queues outside ATMs and banks. 

While many of the millennials had started shifting to digital transactions already, the demonetisation is expected to speed-up the process. As per the Boston Consulting Group (BCG) report, digital transactions in India surged by 50% per year in 2013, where bill payments and mobile plans occupied the highest share. However, the recent step to discourage cash hoarding will see many Indians transitioning to digitalised economy in many ways. 

Digital Age Solutions

Internet banking, debit and credit cards continue to be a common mode of completing transactions, e-wallet services are growing as another alternative. Now, most of the payment gateways accept e-wallet as a mode of accepting payments. At the same time, a range of services are covered under the e-wallet payments such as mobile bills, insurance premiums, taxi services, grocery bills, etc. 

How e-wallet functions?

A user has to load money into e-wallet in advance to use it later for making various payments. Unlike other payment modes, e-wallet does away with the need of sharing bank details every time you do a transaction as money directly gets deducted from the pre-loaded amount. 

Even payments to offline merchants, who support e-wallet, can be made by scanning the QR code through the phone’s app. In these transactions, you have to enter only the payment amount and the transaction is done in a jiffy. 

How secure are e-wallets?

E-wallets are embedded with an additional security layer as payments made through it does not require sharing of bank or card details with merchants. In this way, you have no worries about losing your bank or credit/debit card details to anybody. 

How to create an e-wallet? 

To access e-wallet services, you can either download the app or visit the service provider’s website, where you can register using your email ID and mobile number. Before start using your e-wallet, you will need to enter your debit, credit or net banking details to fund your e-wallet account. 

There are several third-party e-wallets available in India whereas few banks have also launched similar services. You will need to check the tie-ups of various businesses with an e-wallet service provider to choose best-suited one for yourself.

How e-wallet is beneficial?

An e-wallet not only lets you pay for various services but it also allows you to transfer fund to family and friends by just keying in their phone numbers. You can request money in a similar way too. 

Secondly, e-wallets offer discounts as well as cash backs on certain transactions that automatically gets credited to your e-wallet account, which is a big plus.

Lastly, e-wallets also help you to keep track on your spending irrespective of the size of the spending amount, which otherwise remains unnoticed in cash transactions. 

About The Author: Reenika Avasthi is associated with Inverika Investment Solutions LLP as a Content Writer and Financial Planner. She is a Certified Financial Planner and a freelance content writer in the field of personal finance. Her interest in writing and spreading investor awareness motivated her to start blogging.

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Decoding Demonetisation Impact On Key Asset Classes

Over the last one week, ‘Demonetisation’ has suddenly become the most used word in India. Everyone, right from day labourers to celebrities are not shying away from analysing the impact of this phenomenon as per their own understanding. Everyone has a say on the subject, which in itself, proves the widespread impact of this drive on the general public. 

Before moving ahead on the outcome of demonetisation exercise on various financial assets, it will be relevant to know what exactly is demonetisation. 

“Demonetisation is withdrawal of currency as an official mode of payment.”

Although demonetisation could disproportionately affect the various income groups of India in many ways, the recent one was mainly targeted at unaccounted cash holders. Also, the move was to disrupt fake currency circulation by terror groups. 

Let's take a brief look at the impact of demonetisation across key asset classes. 

1. Equity Market - Demonetisation could have eroded the optimism from equity markets on short-term, but it may not hurt equities over long-run as the market digests the uncertainty triggered by the move. However, some of the sectors are likely to underperform, given their dependency on the unorganised economy. Despite this, the move should not at all deter long-term equity investors, who might come across several buying opportunities in the coming days and months. 
2. Real Estate - Real estate sector, which is notoriously known for high-value cash transactions and involvement of black money in tier II and III cities, is certainly going to take a hit, following the Demonetisation move. This asset class might see a steep correction as many of the investors, who would have planned to reap profits by investing unaccounted cash, would withdraw from the system. However, projects undertaken in Metro cities are not likely to face the heat as this fragment has already shifted to the organized system long back.  The liquidity crunch might haunt the sector for a while, but transparency in the sector is apparent that will benefit legitimate investors in future.Over and above, expected drop in home loan rates following demonetisation is also seen positive for the sector. 
3. Debt Market - The return potential and attractiveness of debt market has only improved following the demonetisation move. Inflation is likely to ease, which will provide room for the Reserve Bank of India to cut policy rates, thereby, leading to higher bond prices. Under the present scenario, debt investors might benefit the most from several positive aspects that come into play for this asset class alongside rate cuts. 
4. Gold - The asset class made the most of the Demonetisation move and is likely to retain its glitter in the upcoming days. The sudden abandoning of high-denomination currency by the government has once again reinforced the public’s faith in the yellow metal. Gold will continue to be among the most preferred investments for Indians, who await more bold steps from the Government during its tenure. 

In a gist, the cessation of currency will have only little impact on digital-savvy investors and they can continue to move ahead with their planning as usual, unfazed by the recent chain of events. 

About The Author: Reenika Avasthi is associated with Inverika Investment Solutions LLP as a Content Writer and Financial Planner. She is a Certified Financial Planner and a freelance content writer in the field of personal finance. Her interest in writing and spreading investor awareness motivated her to start blogging.

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Why Nominations Are Must In Any Financial Transaction?

While most of the financial institutions have made it mandatory for investors to fill in the nomination details, yet it has been the most ignored aspect of investment than anything else. The urge to complete documentation and proceed with investments force investors to simply ignore the need and basic requirement of nomination. 

At the same time, people continue to nominate same person for years without considering the life changes that one goes through such as marriage, becoming a parent or death of existing nominee. Despite being a powerful tool to help transfer of assets, it is seldom used by anyone. 

Understanding Nomination

Nomination is a process of authorizing a person as a nominee by the owner or prime holder of the asset. This authorization is meant to ensure that the asset is duly received by the nominee in the event of the death of the owner or holder of the asset. A nomination simplifies the claim process for the authorized person in case of an unfortunate event caused to the owner. In absence of these details, a legal heir is required to complete lengthy legal formalities even if he/she is the rightful claimant of the wealth. Thus, nomination is the best mode to keep things simple throughout the investment tenure. 

Function of Nomination

It should be noted that a nominee does not necessarily become the owner of the asset. Rather nomination empowers nominee to receive funds from financial institutions or banks as a trustee, after which, a will or Indian Succession Act, decides the lawful distribution of those assets. 

At times huge sums of money remain unclaimed due to the absence of nomination or unawareness of legal heirs about the whereabouts of investments by the deceased owner. This can be understood from the glaring unclaimed amount of Rs 4,426.72 crore as on December 31, 2015, with Life Insurance Corporation of India (LIC) that in itself should be an eyeopener. 

Nomination Does Not Supersede Will

It is important to underline that nomination only facilitates transfer of asset, whereas Will takes precedence over nomination during distribution of assets. Let’s understand the functioning of will and nomination using this example. 

• Case A - Raj nominated his brother Rajeev to receive all of his mutual fund holdings in case of his death. However, Raj also made a Will, where he clearly stated that all of his mutual fund holdings should be distributed equally among his children and wife. In this case, Rajeev will only have the right to receive mutual fund proceeds, which is required to be distributed in accordance with Will. 

• Case B - Raj nominated Rajeev and died without leaving a will. Now, in this case, the assets will be distributed in accordance with the Indian Succession Act. However, if there are no legal heirs of Raj then Rajeev will qualify to retain the assets with himself. 

There is an exception to the rule that nominee under shares and debentures gets the entitlement to the assets, unlike other financial assets. 

Final Takeaway

After knowing the above points, the importance of having a nominee is well understood. After all, it is better to enable legal heirs to have rightful ownership of assets rather than leaving them into years of struggle to claim the same. Lastly, do not forget to review and update nominations wherever required to match it with changed life circumstances, if any. 

About The Author: Reenika Avasthi is associated with Inverika Investment Solutions LLP as a Content Writer and Financial Planner. She is a Certified Financial Planner and a freelance content writer in the field of personal finance. Her interest in writing and spreading investor awareness motivated her to start blogging.

Like us at https://www.facebook.com/Inverika/