FOREX - Practical Aspects

Forex market is open 24 hours a day, 5 and a half days a week when currencies are traded worldwide electronically over the counter. This is called foreign exchange market.

What are the ways of trading forex?

Spot market: Where one party delivers an agreed amount of currency at an agreed rate to other party. Settlement is made in cash after the position is closed. The whole process usually takes 2 days.

Futures market: Unlike spot market, actual currencies are not traded instead contracts of delivering/buying the currency are traded.

Forward market: Contracts are the same as future contracts with some differences.

What is the difference between forward and futures?

Futures	Forward
They are exchange traded contracts.	They are private contracts.
Regulated.	Non-regulated.
Rigid terms and conditions as defined by exchange.	Not rigid terms and conditions.
Clearing houses guarantee the completion of contract.	High chances of default due to absence of any clearing house.
They are settled market-to-market which means that any gain or loss occurred are settled daily with the margin amount.	Settlement occurs at the end of the contract.
Futures are used mostly by speculators so delivery usually never happens as contracts are closed prior to maturity.	Forward are used by hedgers i.e. who want to eliminate or minimize their risk. Delivery usually takes place.

Is it illegal to trade forex in India?

It is illegal to enter into contract with unregulated overseas foreign exchange market which more often make fake promises of higher guaranteed returns. Any person residing in India collecting and remitting such payments outside India is liable to be proceeded for contravention of FEMA, 1999; Know your customer (KYC) and anti-money laundering standards (For more on money laundering, read my other article on money laundering).

The RBI clarified that "a person resident in India may enter into currency futures or currency options on a stock exchange recognized under section 4 of the Securities Contract (Regulation) Act, 1956, to hedge an exposure to risk or otherwise, subject to such terms and conditions as may be set forth in the directions issued by the RBI from time to time".

How to read FOREX quote?

I will give basic definition along with an example. 

USD/INR – Currency on the left is called base currency (always equal to 1 unit) and currency on the right is called quoted/counter currency. Here USD/INR means 1 USD = Rs. 62.720 as mentioned. This is an indirect quote where the domestic currency is the one on the right side (for India). A direct quote would be INR/USD for India as a domestic country.

Bid/Ask – In simple words, bid means the price at which the market will buy currency from you and ask means the price the market will sell the currency to you. Bid price is always smaller than the ask price and the base currency is traded. In the given example, base currency is USD so the quote Bid/Ask: 62.710 / 62.730 means 1 USD can be sold for Rs. 62.710 i.e. at the bid price and can be purchased for Rs. 62.730 i.e. at the ask price in the market.

Spread - Spread is the difference between bid and ask price calculated in Pips i.e. Percentage in points. 1 pip can be 0.001 or 0.0001 unit depending upon the number of decimals. Here, as the currency is quoted up to 3 decimals, 1 pip = 0.001 unit. Spread is 20 Pips in the given example.

Cross currency (EUR/JPY) – When one of the currencies traded is not USD we call it a cross currency quote. In the given example EUR/JPY is the cross currency and bid price of 1 EUR is 135.1800 Japanese yen and ask price is 135.2400 Japanese yen.

What is leverage? How can it affect the risk and rewards in forex?

Leverage is a tool used to multiply risk and rewards. In forex, leverage is a margin percentage of the actual contract provided by broker to the investor. For e.g. – if leverage is 100:1 it means that for trading 100,000 units of currency, one has to deposit only 1000 units of currency i.e. 1% of the actual trading amount.

The way it affects the risk and rewards is visible. If there is a decline of even a smaller amount say 0.5% then the portfolio will come down by 0.5%*100,000 = 500 units and your half of the margin money is gone and if there is 1% decline in the portfolio, you will lose all your money.

In the other case if the same is appreciated by 1%, you will double your investment from 1000 units to 2000 units of currency.

How can I avoid that much risk?

Risks can be minimized with the help of 2 techniques – stop and limit orders.

Stop orders – It is an order to buy or sell a certain security when its price falls below a certain limit as specified by the investor. For e.g. – if you have currency account worth Rs. 100,000 and you are moving out for holidays so you won’t be able to monitor your account then you can ask your broker to put up a stop limit of Rs. 80,000 so whenever gross price will hit the 80,000 mark, your security will be sold. It is generally used to limit the losses.

Limit orders – It is an order to buy or sell a certain security when its price surpasses a certain limit as specified by the investor. For e.g. – if you have currency worth Rs. 100,000 and you want to maximize your profits then you can impose a limit by telling your broker that whenever the currency’s worth reaches Rs. 120,000 it should be sold. It is generally used to maximize the profits. It is costly than the market order.

Difference between stop and limit orders is that the stop order is used to minimize losses while limit order is used to maximize returns.

Chiranjiv Kumar

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Making Money out of FOREX and IR Swaps

This is the second article, kindly give a link back to my website under this article

Arbitration in Forex

Arbitration in forex is the possibility that the profit can be made out of exchange trading on the basis of forward rate and prevailing interest rate in 2 different countries.

Profit can only be made if returns made by borrowing from one country and depositing in other country fetches more return that keeping money for conversion at a later date at forward exchange rate. Let me show you this with the help of an example:

1. Suppose the exchange rate in the spot market is 1$ = Rs. 60 and after 1 year i.e. the forward rate would be 1$ = 65$. One can get 10% p.a. risk free return when one deposits funds in US while 20% p.a. when one deposits funds in India. Is there any possibility of arbitration? Let’s see.
2. First we have to check theoretical home currency rate. I have taken home currency INR i.e. Indian Rupee. What we have to do is to check how much times will the exchange rate change creating the possibility of arbitration. For this, use following equation:

1. We have just checked that we are getting 19.16% which is less as compared to actual interest rate we can get by depositing funds in India. How to benefit from it?
2. Buy 100$ from US bank @ 10% p.a. (assuming that the interest on loan is same for the sake of simplicity) and invest it in the Indian bank by converting the US dollar received into Indian Rupee.
3. 100$ in Rupee will be 6000 which will be invested in risk free securities @ 20%.
4. After 1 year one will receive 7200 Rs which will then be converted into US dollar at the prevailing rate at that time (which is the forward rate).
5. After conversion into US dollar one will get 110.77$ out of which 110$ will be used to pay back the US bank (interest included).
6. Profit will be 0.77$ or 50.05 Rs.

This is an example just to explain. Actual arbitration gain may be very high if exchange rates fluctuates less and if there is a difference between the risk free return. Suppose in the above example, forward rate is 1$ = 62 Rs. then a profit of 6.13$ per 100$ can be made by going through the same calculation.

Interest Rate Swaps – Interest Savings

Interest paid by a company on the basis of its preference can be minimized by following a procedure called swapping of interest rate involving a bank called swap bank. Basic concept is that the interest rate paid by a small company and a big company mismatches due to credit worthiness. As large companies borrow huge amounts, interest rates are low for them as compared to a small concern. The difference between the rates is where the swaps come into action.

Interest rates will always be high for a small concern than for a big concern. I will try to explain this simple concept with an example-

Company A is a large company whose aim is to take variable interest rate because its financial analysts think that variable rates will go down below 7%. The banker of company A is Bank A which is offering fixed rate @ 7% and variable rate @ MIBOR (Mumbai Inter-Bank Offer Rate).

1. Company B is a small concern whose aim is to take fixed interest rate because its financial analysts think that the fixed interest rate will save them from future uncertainties in the variable rate. The banker of company B is Bank B which is offering fixed rate @ 10% and variable rate @ MIBOR + 1%.
2. Both companies will approach swap bank to save some interest paid according to their respective preferences. It should be noted that these both companies don’t know each other. There are many companies who deal with swap bank, so the offers are matched and the deals are executed. I will first take Company A to explain the process.
3. Swap bank will advise Company A to take fixed interest rate loan from his banker @ 7%. Now swap bank agrees that it will give 8% interest rate to Company A and in return company A will give MIBOR to swap bank.
4. Total interest given by Company A = MIBOR to swap bank + 7% to bank A

Total interest received = 8% from swap bank

Effective interest rate given = MIBOR – 1%

Savings to company A over its preference = 1%

1. Similarly for Company B, swap bank advise it to take variable interest loan from his banker @ (MIBOR + 1%). Now swap bank agrees that it will give MIBOR to Company B and in return Company B will give 8.5% to swap bank.
2. Total interest given by Company B = (MIBOR + 1%) to bank B + 8.5% to swap bank

Total interest received = MIBOR

Effective interest rate = 9.5%

Savings to company B over its preference = 0.5%

Last question that comes to mind is what the benefit to swap bank is. Well, if you have noted that swap bank received MIBOR from Company A and 8.5% from Company B and gave 8% to Company A and MIBOR to Company B, the net difference is 0.5% which is the profit made by the swap bank.

These percentage may seem small but practically if the loan amount is just 10 Crores then savings would be:

Company A = 1%*10 Crores = 10 Lakhs

Company B = 0.5%*10 Crores = 5 Lakhs

Swap Bank = 0.5%*10 Crores = 5 Lakhs

The money is created due to the difference in the interest rates given by different banks to different companies.

Chiranjiv Kumar

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Mutual Funds - Practical Aspects

What are Mutual Funds?
Mutual funds are nothing but units of investment, like of shares or debentures, issued by a Mutual fund company. They are professionally managed collective investment vehicle which pools investments to purchase securities. An investor can purchase units of Mutual fund instead of directly investing in stock market and get proportional return in the form of dividend.

What are the constituents of units of mutual fund?
Stocks, Bonds, Debentures and other type of investments.

Can I buy or sell them anytime?
Yes, the type of mutual fund talked about is open-end mutual fund. Open-end mutual funds can be purchased or sold anytime directly from/to the mutual fund company.
Talking about the other type of mutual fund which is closed-end mutual fund, they cannot be sold and purchased directly from the mutual fund company instead they can be transacted with other investors in the open market.

At what price will the close-end or open-end units be sold?
1. For open-end – At Net Asset Value (NAV) which is changed daily. Have a look at the NAVs of different mutual fundshttp://www.amfiindia.com/net-asset-value/nav-history
2. For closed-end – Like in share market, may be at premium or at discount.

There are 1000’s of types of mutual funds out there. How can I choose the right one among them?
There are 5 broad categories of mutual funds and an investor can choose the one which may fit her needs:

1. Money Market Mutual Funds – They are consisted of short term debt instruments like treasury bills. They have less return but secured. If you can’t take risk then it is better to park your money in money market funds.
There are 2 types of money funds: Institutional – Made for Govt., Corporations etc. and Retail – Made for Individuals.
Some of the top rated ones are:
• HSBC Cash Fund -Inst Plus (G)
• IDFC Cash Fund - Regular (G)
• Morgan Stanley Liquid - RP (G)
• SBI Premier Liquid Fund - RP (G)

2. Bond/Income Funds – These are for investors who need steady income. They are also called fixed income securities. These funds are invested in high yield or junk bonds (high risk of default but high return), govt. bonds or corporate bonds. Return is generally more than money funds but risk is more.
Some of the top rated ones are:
• HSBC Flexi Debt Fund - IP (G) – Long term
• IDFC Dynamic Bond -Reg Plan (G) – Long term
• SBI Dynamic Bond Fund (G) – Long term
• Birla SL Short Term Fund (G) – Short term
• Morgan Stanley STBF - RP (G) – Short term
• Reliance Money Mgr - IP (G) – Ultra short term
• Religare Invesco Credit Opp (G) – Ultra short term

3. Equity Funds – These funds consist of stocks of the companies. They may focus on specific industry or sector. It can further be classified into capitalization based or investment style based.
• Capitalization indicates the size based on the value of the company’s stock and the types are:
a) Small cap (value less than Rs. 100 Crores)
b) Mid cap (value between Rs. 100 and 1000 Crores)
c) Large cap (value above Rs. 1000 Crores)

• Stock funds are classified into:
a) Growth funds – Investment in stock of fast-growing companies.
b) Value funds – Investment in cheap funds.
c) Blend funds – Unbiased towards growth or value based funds.

• Some of the top rated ones are:
a) BNP Paribas Equity Fund (G) – Large-cap
b) Canara Robeco Large Cap+ (G) – Large-cap
c) Birla Sun Life MNC Fund (G) - Small and mid-cap
d) Mirae Emerging Bluechip Fund (G) – Small and mid-cap

4. Hybrid funds – These funds consist of stocks, bonds and other securities. Balanced funds, MIP (monthly income plan) Aggressive and MIP conservative are types of hybrid funds.
Some of the top rated ones are:
• ICICI Pru Eqty-Volatility Adv. (G) – Balanced
• DSP BlackRock MIP Fund (G) – MIP aggressive
• Birla SL MIP II-Savings 5 (G) – MIP conservative

5. Index funds – Funds with an objective of generating returns that can commensurate with the performance of a benchmark index like CNX Nifty Index and S&P BSE Sensex. Kotak Nifty ETF is an example of such fund.

How to read mutual fund online?

• Fund here is BNP Paribas Equity Fund (G) belonging to the equity large cap category.
• CRISIL ranking is 1. CRISIL mutual fund ranking is the relative ranking of mutual fund schemes within a peer group.
• Assets are worth 127.22 Crores while NAV is 42.2 which is assets in the portfolio less liabilities.
• Returns are stated as average 1.6% in the previous 1 month, 8.7% in previous 3 months and so on. Here, consistency should be seen. A fund with more fluctuations depicts that there are instable returns and therefore carries more risk.

• Fund returns are compared with the return of other funds from the same category by taking average.
• Choosing a fund by looking at previous few months may not be the best option. As you can see that in previous 1 month return was low as compared to other funds, and same is for 3 month’s return. But if you see return in previous 6 months it is more than the standard and in previous 1 year it is nearly 3.9 times the standard return.

• Here you can see the investment objective and scheme details.
• Performance of the fund manager is a critical factor that should be assessed before investing.
• Sometimes there are conditions on the load of the funds like as stated above, 1% exit load will only be levied if the unit will be redeemed or switched out within 1 year from the date of allotment.

• Here you can see where the funds are invested (Top holdings) and in which sector the funds are invested (sector allocation).
• You can also see the proportion (asset allocation %) in which the funds are invested in equity, debt and other funds.

Will there be any tax on dividend and sale of units?
Dividend – No tax in the hands of the unit holder but the tax is deduced from the dividend itself by the mutual fund company. Dividend Distribution Tax (DDT) will be deducted @25% + 5% surcharge + 3% cess = 27.0375%.
Sale of units – Tax treatment will be different for equity oriented mutual funds and other funds.
• For equity oriented mutual funds (funds which have 65% or more equity) – 15% for short term gain (less than 1 year) and 0% for long term gain (more than 1 year)
• For other mutual funds (non-equity oriented funds) – Short term gains at normal slab rate and long term gain 10% without indexation and 20% with indexation.
Note: Indexation means adjustment in value to take into account factors like inflation.

What will be the commission paid while buying and selling units?
In mutual funds, we call commission as load. Very nominal load fees like 1% or 2% need to be paid. While purchasing, entry load is charged and while selling, exit load is charged. There are some mutual funds with even zero entry or exit load.

Why should I invest in Mutual funds?
1. Tax relief – Dividend received from units of MF is exempt u/s 10(35) of Income tax Act, 1961.
2. No professional skills – You need not to worry because there are experts who are trading on your behalf. You need no professional skills.
3. Risk impact – Failing of one or more securities may not have any huge impact on the earnings.
4. Diversification – You don’t have to buy securities in bundles. Indirectly you are investing in a number of companies without any limit.
5. Less investment – You need not to have a huge amount of money to trade. Like in Rs. 10,000 you can get a good deal.
6. High liquidity – If you need money urgently, you can get it within 1 day of sale.
7. Nominal load – You need not to pay heavy brokerage like while dealing directly in securities through broker. MF companies charge a nominal fee as they have their own contract with brokers.
8. Efficient – Sometimes more efficient than to invest in ETFs or closed-end fund.
9. Tax deduction – You can get a deduction u/s 80C of IT tax, 1961 up to Rs. 100,000.
10. Future diversification – You can diversify your portfolio later including more types of mutual fund into the same.

Chiranjiv Kumar

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SENSEX and NIFTY Calculation

Have you ever wondered what the SENSEX and NIFTY is? How are they calculated?

SENSEX i.e. Sensitive Index is the benchmark index of Bombay Stock Exchange (BSE) composed of 30 of the largest and most actively-traded stocks of BSE.

Calculation Method

BSE uses Free-Float methodology (multiplying the number of shares of top 30 companies with their respective equity’s price excluding locked in shares i.e. the ones hold by promoters, government and those having controlling interest in the concern) to calculate the index. For e.g. A company has 2 promoters X and Y and shares held by them are 1000 and 2000 respectively and to take a loan 1500 shares has been issued to government as a collateral. So 1000+2000+1500=4500 shares will be taken as locked in securities and all other shares are used to calculate SENSEX. Now question arises what is the process. Here it is –

1. Each company’s Market capitalization is determined (No. of shares x price)
2. Free float factor of company is determined by BSE. Free float factor (between 0.05-1.00) is a multiple by which company’s Market capitalization is multiplied to arrive at Free-float market capitalization. The factor is determined by details submitted by company. It is a kind of weightage given to companies. Say Capitalization is 36,00,000
3. Now Ratio and Proportion is used. How? Base index of 1978-79 is used. Index of 1978-79 is taken as 100. Say the Free-float market capitalization was 60,000 (may vary) at the time.

When the capitalization was 60,000 index was 100

When the capitalization is 36,00,000 index is 6000

So it means SENSEX is 6000

 

INDEX AS OF 20^th SEPTEMBER 2013

Company Name	Company Name	Company Name
Bajaj Auto Ltd	Hindustan Unilever Ltd	Oil and Natural Gas Corporation Ltd
Bharat Heavy Electricals Ltd	Housing Development Finance Corporation Ltd	Reliance Industries Ltd
Bharti Airtel Ltd	ICICI Bank Ltd	Sesa Goa Ltd
Cipla Ltd	Infosys Ltd	State Bank of India
Coal India Ltd	ITC Ltd	Sun Pharmaceutical Industries Ltd
Dr.Reddy's Laboratories Ltd	Jindal Steel And Power Ltd	Tata Consultancy Services Ltd
GAIL (India) Ltd	Larsen & Toubro Ltd	Tata Motors Ltd
HDFC Bank Ltd	Mahindra and Mahindra Ltd	Tata Power Company Ltd
Hero MotoCorp Ltd	Maruti Suzuki India Ltd	Tata Steel Ltd
Hindalco Industries Ltd	NTPC Ltd	Wipro Ltd

 

NIFTY i.e. National Stock Exchange Fifty is the benchmark index of National Stock Exchange (NSE) composed of 50 from of the largest and most actively-traded stocks of NSE. 50 Top stock are selected from 24 Sectors.

Calculation Method is just like BSE except the Base value is taken of year 1995 and is set to 1000 and base capital of Rs. 2.06 trillion is taken.

INDEX AS OF 20^th SEPTEMBER 2013

Company Name	Industry	Symbol
ACC Ltd.	CEMENT AND CEMENT PRODUCTS	ACC
Ambuja Cements Ltd.	CEMENT AND CEMENT PRODUCTS	AMBUJACEM
Asian Paints Ltd.	PAINTS	ASIANPAINT
Axis Bank Ltd.	BANKS	AXISBANK
Bajaj Auto Ltd.	AUTOMOBILES - 2 AND 3 WHEELERS	BAJAJ-AUTO
Bank of Baroda	BANKS	BANKBARODA
Bharat Heavy Electricals Ltd.	ELECTRICAL EQUIPMENT	BHEL
Bharat Petroleum Corporation Ltd.	REFINERIES	BPCL
Bharti Airtel Ltd.	TELECOMMUNICATION - SERVICES	BHARTIARTL
Cairn India Ltd.	OIL EXPLORATION/PRODUCTION	CAIRN
Cipla Ltd.	PHARMACEUTICALS	CIPLA
Coal India Ltd.	MINING	COALINDIA
DLF Ltd.	CONSTRUCTION	DLF
Dr. Reddy's Laboratories Ltd.	PHARMACEUTICALS	DRREDDY
GAIL (India) Ltd.	GAS	GAIL
Grasim Industries Ltd.	CEMENT AND CEMENT PRODUCTS	GRASIM
HCL Technologies Ltd.	COMPUTERS - SOFTWARE	HCLTECH
HDFC Bank Ltd.	BANKS	HDFCBANK
Hero MotoCorp Ltd.	AUTOMOBILES - 2 AND 3 WHEELERS	HEROMOTOCO
Hindalco Industries Ltd.	ALUMINIUM	HINDALCO
Hindustan Unilever Ltd.	DIVERSIFIED	HINDUNILVR
Housing Development Finance Corporation Ltd.	FINANCE - HOUSING	HDFC
I T C Ltd.	CIGARETTES	ITC
ICICI Bank Ltd.	BANKS	ICICIBANK
IDFC Ltd.	FINANCIAL INSTITUTION	IDFC
IndusInd Bank Ltd.	BANKS	INDUSINDBK
Infosys Ltd.	COMPUTERS - SOFTWARE	INFY
Jaiprakash Associates Ltd.	CONSTRUCTION	JPASSOCIAT
Jindal Steel & Power Ltd.	STEEL AND STEEL PRODUCTS	JINDALSTEL
Kotak Mahindra Bank Ltd.	BANKS	KOTAKBANK
Larsen & Toubro Ltd.	ENGINEERING	LT
Lupin Ltd.	PHARMACEUTICALS	LUPIN
Mahindra & Mahindra Ltd.	AUTOMOBILES - 4 WHEELERS	M&M
Maruti Suzuki India Ltd.	AUTOMOBILES - 4 WHEELERS	MARUTI
NMDC Ltd.	MINING	NMDC
NTPC Ltd.	POWER	NTPC
Oil & Natural Gas Corporation Ltd.	OIL EXPLORATION/PRODUCTION	ONGC
Power Grid Corporation of India Ltd.	POWER	POWERGRID
Punjab National Bank	BANKS	PNB
Ranbaxy Laboratories Ltd.	PHARMACEUTICALS	RANBAXY
Reliance Industries Ltd.	REFINERIES	RELIANCE
Reliance Infrastructure Ltd.	POWER	RELINFRA
Sesa Goa Ltd.	MINING	SESAGOA
State Bank of India	BANKS	SBIN
Sun Pharmaceutical Industries Ltd.	PHARMACEUTICALS	SUNPHARMA
Tata Consultancy Services Ltd.	COMPUTERS - SOFTWARE	TCS
Tata Motors Ltd.	AUTOMOBILES - 4 WHEELERS	TATAMOTORS
Tata Power Co. Ltd.	POWER	TATAPOWER
Tata Steel Ltd.	STEEL AND STEEL PRODUCTS	TATASTEEL
UltraTech Cement Ltd.	CEMENT AND CEMENT PRODUCTS	ULTRACEMCO

Chiranjiv Kumar

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Money Laundering - How is it Done?

Money Laundering, in simple words, is converting your black or “dirty” money (money obtained from illegal activities like drug dealing) into white money. In India, RBI has given certain guidelines to prevent money laundering still the amount of money laundered each year is huge.

Money laundering involves 3 steps, motive is to make the money hard to trace/non-traceable

1. Placement: It is the first step where launderer deposits black money in a number of small proportions with various banks. This is the most risky step as RBI keeps a close eye on transactions above Rs. 10 Lakhs.
2. Layering: In this step motive is to make money as hard as possible to trace. To do that, launderer carries out a series of complex transactions like withdrawing and depositing frequently, purchasing high value items, purchasing forex etc.
3. Integration: This is the final stage of Money laundering. Here creation of white money takes place. Launderer give loans by creating anonymous companies where right to secrecy need to be maintained, issuing fake import-export invoices, and sending money to someone outside the country with legitimate bank account and then withdrawing later.

To make it more difficult to trace, launderer follows different forms of integration, some of which are:

1. Investing in a business where there is difficult to distinguish between legitimate and illegitimate money. Such businesses are generally cash intensive. For e.g.: Strip Clubs and Casinos.
2. In spite of issuing fake invoices, launderer may over-value or under-value invoices.
3. By investing in trusts in tax haven countries. As there is no need to disclose details about the owner of money.
4. Money is deposited in tax haven countries and then invested back as a foreign direct investment.
5. By playing in Casino, launderer buys huge number of chips, plays just to show and then cashes the chips taking payment in cheque which he deposits into bank stating it as a Gambling winning amount.
6. If a company has no rule to pay its employee through bank then money can be laundered by paying black money as a Salary.

RBI is taking steps to prevent Money Laundering practices. One of the recent steps taken was imposing fines of Rs 5 crore on Axis Bank, Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank for violation of anti-money laundering guidelines after inquiring into charges levelled by an online portal Cobrapost. Although the investigation didn’t reveal any prima facie evidence, fines were imposed on the basis of individual bank’s reply and information submitted along with.

As per the statement of Financial Action Task Force (FATF) which is an inter-governmental body that sets standards and promotes policies to combat money laundering and terrorist financing for countries across the world “At its June, 2013 Plenary meeting, the FATF decided that India had reached a satisfactory level of compliance with all of the core and key recommendations and could be removed from the regular follow-up process and its outreach programme to provide guidance to the financial sector on the suspicious transaction reporting obligations and engaging in extensive compliance monitoring, and has brought several of the Designated Non-Financial Businesses and Professions (DNFBPs) within the scope of its preventive Ant-money laundering measures.”

Chiranjiv Kumar

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