Budget 2012-2013 Hilights

India is expected to grow at 6.9% of GDP in this union budget 2012-13.
Zero income tax on income upto to 2 lakh.
Income between 2 to 5 lakh to be taxed 10%
Income between 5 to 10 lakh to be taxed 20%
Income above 10 lakh to be taxed 30%
No change in tax structure for corporates and no advanced tax required for senior citizens now.
Subsidies have hit fiscal balance.
The largest expenditure in fuel and fertilizer subsidies.
Food security subsidy proposed to be fully provided.
Direct cash subsidy for LPG and Kerosene to consumers.
Deficit transfer of subsidies to retailer and farmer.
Excise duty on big cars raised to 24% from 22%.
Inclusive Growth in Rural and Urban areas: Pranab Mukherjee
Challenge for this budget year 2012-13 is to get growth rate back to 8%: Manmohan Singh
Luxury item, eating out, air travel became more expensive.
Service Tax rate hiked to 12% from 10%.
Service tax to generate additional revenue of Rs 18,650 crore in the budget year 2012-13.
Baggage allowance raises from Rs 25,000 to Rs 35,000 for the people of Indian origin and from Rs 12,000 to Rs 15,000 for the children
Iodised salt, match-boxes, soya products to become cheaper
Prices of Solar power lamps, LED bulbs are goes down
Excise duty brought down to 6 % on all processed food.
Customs duty on import of aircraft parts, tyres and testing equipment is fully exempted now.
Exemption from basic customs duty for road and highway construction equipment.
Full exemption from basic customs duty on LNG, natural gas and uranium for generation of electricity for two years.
Oil cess on domestic crude raised to Rs 4,500 per ton from Rs 2,500 per ton.
Customs duty increases from 50% to 75% on the import of some vehicle
Cigarettes, diamonds and imported cycles become more expensive
AC, fridge and most of the urban services to cost more
Customs duty is increased on bicycles and its parts
Customs duty raised from 2% to 4% on standard gold.
Standard excise duty rate raised 12% from 10%.
Kisan credit cards can now be used in ATMs also.
27% increase in funds for drinking water and sanitation.
FY13 tax receipts seen up 15%, while FY13 gross taxes at 10.6% of GDP.
Estimates FY13 fiscal deficit at 5.1% of GDP while FY13 subsidy to be under 2% of GDP.
FY13 midday meal scheme outlay at Rs 11937 crore.
FY12 fiscal deficit at 5.9% of GDP.
PSU Banks' recap plan for FY13 is Rs. 15,888 crore.
Agriculture growth is 2.5% this year.
New warehouses for food-grain stocks to be built.
50 MN of tons storage capacity will be created in the year of union budget 2012-13.
Global crude prices have crossed $115/bbl.
Government will set up company to finance minor irrigation works.
Efforts on for retail FDI consensus.
Rs 20,822 crore earmarked for National Rural Health Mission against Rs 18,115 crore this year.
Rs 242 crore project with World Bank assistance to improve dairy production.
ECB for low cost housing projects and ECB cap raised for airlines.
Govt. raises foreign loan limit for aviation sector.
Rajeev Gandhi equity scheme to boost stock market.
Tax-free bonds limit is increased in budget 2012-13.
Expected current account deficit to be lowered next year.
Securities Transaction Tax (STT) reduced from 0.125% to 0.1%.
Withholding tax on airlines, power, road, brides, ports, shipyard, fertilisers, dams and affordable houses lowered to 5% from 20% for 3 years.
10% of IPO, above Rs 10 crore via electronic platform.
This year budget may see FDI in aviation and retail.
New equity saving schemes for small investors and Measures to boost equity market.
Industrial growth holding us back for two years.
Pranab expect smaller current account deficit to be 3.6%.
30,000 crore de-investment target for next year.
GST expected to be operational by August 2012.
Expect inflation to moderate and then stabilize.

ICICI Bank Launches Gemstone Credit Cards

September 2011 and was called Coral Credit Card. While it has a chip embedded in it, the features do not seem to be distinguishing the Coral credit Card from other credit cards except in minor ways.



It makes one wonder why the bank would spend so much marketing effort to launch a credit card that does not add any great or significantly different value to customers. This more or less holds true for many product launches we see across segments not just in banking.

The second card in the gemstone collection is the Rubyx Credit Card. This one seems to offer more value than the the Coral Credit Card.



Here is what the press release says:
India’s first Platinum Credit Card with dual card benefits. Card members will receive two cards – the ICICI Bank Rubyx American Express Platinum Credit Card and the ICICI Bank Rubyx MasterCard Platinum Chip Credit Card. The cards, which are linked to a single card account with a single statement and a single fee, provide access to a host of exciting privileges from American Express and MasterCard. ICICI Bank Rubyx is also India’s first metal membrane card. Designed by acclaimed international designers, the card incorporates a new technology that involves embedding a metal membrane in the card plastic in lieu of conventional printing techniques. The embedded metal construct of the lettering, implemented for the first time in any card product in India, promises to greatly improve its longevity and durability, apart from significantly enhancing the aesthetic value of the card.

While the Rubyx is a step in the right direction (after all the market is saturated with platinum ), we would love to see a diamond-studded card like the one offered by Dubai First. The Dubai First Royale Card has a real diamond embedded into it. This by-invitation-only card epitomizes exclusiveness and luxury.

Bharti AXA Life iProtect

Bharti AXA Life Insurance has just introduced a new plan online, setting up shop in the fastest growing consumer space.

The way e-commerce is developing – especially here in India – makes this an interesting move. At its product launch, the private insurer quoted recent studies on Indian developments, claiming that by 2015 this country will be home to more than 250 million internet users.

More specifically, the company quoted figures showing that, over the past three years, online financial services have increased 30% year on year.

When we also consider regulatory changes, which have recently pushed India’s insurers to reduce their distribution costs, online distribution makes a lot of sense.

So, what does the Bharti AXA Life plan look like?

It’s called iProtect, and it’s being promoted in line with all the things modern customers want – easy access, convenience and affordability. With a straightforward user interface, this plan is about organizing insurance needs with ‘just a click of a button’.

It wasn’t so long ago that financial providers seemed certain that insurance should only be sold face-to-face. However, as consumers grow increasingly comfortable with online purchases, it does look like, ultimately, not exploring digital options would be a mistake.

In many ways, insurers are still working out the best way to offer their products on a virtual platform, but Bharti AXA Life has differentiated itself with a few nice standouts.

One of these is a service guarantee called the Family Care Benefit.

With iProtect, if the family of the deceased need to make an immediate claim, it’s possible to access Rs 100,000 within 48 hours of intimation.

It will be interesting to see how online insurance plans grow in India, how they are innovated, and the ways they’re promoted. How will providers differentiate themselves once the desire for convenience has been met?

RuPay on the Way

What’s RuPay? We’ll need to wait until March to see it in action, but this interesting new development in the world of payments is worth checking out right now.

The National Payment Corporation of India (NPCI) is about to introduce the RuPay debit card, launching this country’s first domestic card network.

The organization aims to support debit and credit card services on the same level as established players like MasterCard and Visa.

These RuPay cards will be PIN-based, making them more secure than the signature-requiring variety. They’ll come with a magnetic strip that can be swiped for payments.

NPCI says that the new cards will be usable at ATMs all over India. Next month we should see more than 200,000 payment terminals; the figure is projected to be 600,000 by mid 2012.

This brings us to the card’s supporters. State Bank of India is already on board, and NPCI is in talks with providers like ICICI Bank and HDFC Bank.

Things look good for banks too, seeing that RuPay charges should be a lot lower than those associated with the big providers.

In fact, NPCI claims they’ll be close to one-third less. Right now banks are paying an estimated Rs. 300 crore to MasterCard and Visa every year, just to process India’s plastic payments.

The idea is that financial institutions will offer RuPay to their new customers, considering that shifting all accounts at once would be too expensive. Over time, however, as cards come in for renewal, RuPay would be the option offered.

For now, the card will only work domestically, but we might see that change next year. By June, online payments will be possible too.

Along with all this, NPCI has said that there will be no minimum usage volume set, meaning that even small banks can incorporate the offering.

What Now for Google Wallet?

When Google Wallet launched six months ago, we were excited about a bright new platform for payments.

Now, while the enthusiasm remains, some of the shine has worn off the app.

What’s changed? There have been a few difficulties.

First of all, the near-field communications (NFC) tool is still sorting out its supporters, from carriers to retailers. But the biggest bump in the road was hit earlier this month, and it’s one that will cause the most concern in the eyes of consumers.

At the beginning of February an engineer at Zvelo managed to crack Google Wallet’s PIN authentication.

Google had shown off this four-digit PIN as an extra layer of security, one that made the payment app safer than a credit card.

However, getting around this layer of verification did manage to undermine the integrity of the offering.

So much so that Google temporarily closed down the app while it addressed the issue. This involved only part of the service, concerning the set up of new prepaid cards, but it could be enough to worry customers.

Without getting into the details of the technology, the problem revolved around the fact that if a user misplaced their unlocked Wallet, it was possible for a thief to reset the PIN.

This would mean, obviously, that the new user had unblocked access to all funds available on the Google card.

Google maintains that this was just a minor glitch, and that the app is still more secure than a standard credit card.

While that may be the case, it’s also true that security is a challenge when getting customers interested in a service like this one. Will the trouble stop progress of the technology? Is NFC still the way of the future, or is that future further off than we thought six months ago?

Axis Bank Rebrands Itself

Axis Bank has launched a new brand campaign – ‘Badhti ka naam zindagi’. The bank has not done anything new on the advertising or branding front for some time now.
Axis Bank’s previous tagline was Aapka Solution. The new one shows the shift of the branding from being functional to aspirational. According to the press release:

The repositioning of Axis Bank from ‘Aapka Solution’ to ‘BADHTI KA NAAM ZINDAGI’ is an important milestone in the journey of the Axis Bank brand. The new campaign marks the evolution of the Axis Bank brand from playing the role of a ‘problem solver’ in the customer’s life, to that of an ‘encouraging and enthusing partner’ by owning an attitude and belief that resonates with the target audience in everyday life.

The press release also said that Axis Bank has also launched two interesting applications, Meri Zindagi ka Safar and Meri Zindagi ki Picture on its Facebook page. The Meri Zindagi ka Safar is an application that lets users mark the places they have travelled to, thus enabling them to find out how much distance have they covered in these journeys of their life.

Meri Zindagi ki Picture is about ‘life’ itself. Our lives are full of milestones, which define an individual, whose memories we capture and cherish throughout our lives. This application lets users compile these images in a showcase of their life’s story.

Mobile Services from MasterCard

Last week MasterCard announced an interesting new idea for mobile money. Designed to bring financial services the underbanked, this initiative is all about speeding up the development of mobile solutions.

Called the MasterCard ‘Mobile Money Partnership Program’, this concept is based on a joint venture between the payment giant and Comviva, Utiba and Sybase 365, all mobile service providers.

We told you earlier this month about Airtel Money. This latest program will work along the same lines, with the intention being that unbanked and underbanked customers can purchase goods and services using just their mobile phones. It looks like they’ll also gain the ability to pay bills, organize remittances and transfer funds.

This initiative is a global one – MasterCard aims to reach more than a billion consumers, through over 200 banks and operators worldwide.

Clearly, mobile payments are a key focus for financial institutions and mobile operators. With so many potential customers to reach, who have a phone but no access to a bank, it makes sense to explore all the possibilities of the platform.

Consider a recent report from Juniper Research, which found that by 2013 the global market for mobile payments will sit at around USD 600 billion. That’s double what it is right now. According to a MasterCard statement at the launch of its new program, the world has around five billion mobile users.

Taking a closer look at the MasterCard scheme, the options it will support include virtual accounts, person to person payments (possible even between different mobile services), and even e-commerce access.

Will mobile money transform financial services, and extend them to that incredibly large underbanked customer base? Introducing the partnership, Utiba spoke about welcoming these consumers into the global economy, and how the intersection of mobile networks and a payment network as large as MasterCard’s will impact the financial world.

MetLife US Woos

MetLife, USA, has a series of advertisements aimed at the Indian Americans. These very entertaining ads have a number of recognizable names and faces from the Indian television industry. These ads were first launched in 2006.

According to an old MetLife press release:

MetLife and IW Group, Inc. produced the spots with renowned film director Prasoon Pandey, lyricist Prasoon Joshi and score composers Ehsaan & Loy. The new commercials were filmed at the heart of Bollywood in Film City, Mumbai, India.


Both 60-second spots will air on national broadcast outlets, as well as in the following regional markets: New York/New Jersey, San Francisco/Los Angeles and Chicago. Print ads will complement the new spots.

“MetLife created the Bollywood-style commercials because we know that South Asians enjoy the genre and fare of Bollywood cinema and, at the same time, the commercials allowed us to get our message across in a entertaining and memorable way,” said Phil Salis, vice president, Individual Business Marketing, MetLife. “We have had a longstanding relationship with, and commitment to, the South Asian community. With this campaign, we wanted to distinguish our approach from the more traditional and nostalgic campaigns that we have seen all too often from other advertisers.”

Here are some statistics to that justify the advertising aimed at this niche audience:

According to the 2010 U.S. Census, the Asian Indian population in the United States grew from almost 1,678,765 in 2000 (0.6% of U.S. population) to 2,843,391 in 2010 (0.9% of U.S. population), a growth rate of 69.37%, one of the fastest growing ethnic groups in the United States. Indians are a large ethnic group of Asian Americans.

Almost 67% of all Indians have a bachelor’s or high degree (compared to 28% nationally and 44% average for all Asian American groups). Almost 40% of all Indians in the United States have a master’s, doctorate or other professional degree, which is five times the national average

New Campaign from IndusInd

IndusInd Bank launched three TVCs. Each promotes a new, ‘innovative’ service, and each is delivered with an attention-grabbing, Bollywood angle.

The Bollywood element comes courtesy of the commercial’s director, Imtiaz Ali, and the featured actors, Jimmy Shergill and Neetu Kapoor.

But to start, let’s take a look at the services advertised by IndusInd: ‘Cash-On-Mobile’, ‘Quick Redeem Service’, and ‘Direct Connect’. The bank says that Cash-On-Mobile, which allows customers to make ATM withdrawals without a card, is a unique, first-of-its-kind offering in India.

Direct Connect and Quick Redeem are about service superiority, indicating that with IndusInd, everything is faster and easier.

The TVCs were created by RK Swamy BBDO, and they’re part of a large-scale, eight week marketing effort, incorporating cinema, radio and digital messages.

More than anything else, the advertising works well to establish the IndusInd brand, and the commercials are fun enough to engage without irritating.

The bank says that the new services on offer are a result of in-depth, customer needs research, and that it’s focused on today’s consumers.

It is possible that the messages are a little too simple – especially ‘Tailor’, in which Jimmy Shergill is measured for a suit, that he expects to be stitched and ready immediately – but they do get the ideas across.

After all, what works best here might not be the concepts or even the products advertised – it’s likely that customers will respond most to the confidence demonstrated by the featured cast.

In the ‘Mummyji’ clip, for example, a shopper who ignores all help, insisting that ‘I know everything’ is forced to call her son when she has no cash or card to pay with. Cash-On-Mobile comes to the rescue (along with her helpful son), setting up the IndusInd service as a clever savoir.

Airtel Money Goes National

A year after it test launched its services in Gurgaon, Airtel Money has finally gone national. We have been seeing Point-of-Purchase (POP) communication at Airtel retailers advertising the launch of Airtel Money.

Airtel Money is a “semi-closed wallet” service. A semi-closed wallet is a prepaid payment instrument that is redeemable at declared merchants who have an agreement with Airtel. These instruments do not permit cash withdrawal or redemption.
In other words, Airtel Money is an account on the mobile phone. You can now deposit money (called loading cash) on to your Airtel Money account and use this balance to pay for various products & services through a simple menu on your phone.

Airtel Money allows customers to open two types of accounts; an Express Account and a Power Account. The Express Account can be opened immediately and has a limit of Rs 10,000. The Express Account can be used to pay for utilities or for purchasing travel.

The second type of account, the Power Account, has a limit of Rs 50,000. It allows you to send cash via the phone or bank and also to spend in merchant establishments. Airtel is aiming at working out discounts with merchants for its customers. To open a Power Account, a detailed KYC is needed as per RBI rules.

American Express Sponsors Hidden Talents

Realize the potential’ – that’s a brand idea from American Express, one that it has promoted since 2009. This year, the payment provider plans to rework the idea, using a new UK documentary series to connect with customers.

The series is all about ‘hidden talents’. It’s being planned as a six-part TV show, in which participants discover previously untapped abilities, learning everything from new languages to extreme scuba diving.

In each 60 minute episode, to screen on the UK’s Channel 4, subjects will be assessed by ‘experts’, and those with talent – an excellent sense of direction, for example – will be trained to do something extraordinary (or at least something entertaining enough to fill an hour).

The series has already been promoted as ‘life changing’, with claims that opening up aptitudes like this, and guiding participants to achieve what at first seems impossible, is inspiring stuff.

The ‘incredible’ element relates to how quickly the person can unlock their talent – like the subject with the mind for direction, who becomes a kind of living Sat-Nav.

This is where American Express comes in. The brand aims to tie itself closely to the feel-good experiences shown, making the most of its sponsorship via ads around the episodes. So far, it’s revealed that the commercials planned are animated animal adventures.

The payment provider is also supporting online promotions for the show.

So what kind of customer does all this appeal to? For the most part, the viewers that should relate are the affluent kind – this variety of customer wants a more rounded, exciting life, and can afford it too.

American Express no doubt hopes to give meaning to its ‘realize the potential’ concept, demonstrating that life can be rewarding when talents and new experiences are explored

Barclaycard US Launches Interactive Option

Ever heard of crowd-sourced credit cards? They exist, believe it or not, thanks to a joint effort from MasterCard and Barclaycard US.

While they’re still brand new, we’re hearing interesting things about what’s on offer.

This latest idea is called the ‘Barclaycard Ring’. It has its own website, which highlights the very unique idea behind the offering, which is simply that customers deserve a say in their how their credit cards work, from terms and features to the rewards and fees involved.

Taking social networking to a whole new level, the Barclaycard Ring – which is still at a testing stage, amongst a select group of members – is being promoted as something brand new in the world of finance.

While there are a few examples of an idea like this in action, the scale shown here is very original.

So how does it all work? Basically, customers are given open access to everything relating to the product, including profits, losses and end-to-end operating expenses.

This means that users will be able to measure the ways that adding or removing features can influence pricing – putting a stop to paper statements, for example, or outsourcing services overseas.

And this is where it gets interesting, because these highly informed users will then be able to discuss it all online, in a specially created forum, to exchange ideas and even vote on product developments.

Real visibility and voice is something very new for financial customers, and the question now is whether it will really work. While transparency on this level can only be positive, how many consumers are experienced enough to fully assess a profit and loss statement? How many will be able to make realistic suggestions?

Still, consumers are always happy to be heard. Do you think the idea will develop? Can Barclaycard really establish a community around a credit card? You can watch the video below to learn more.

Financial Inclusion Reality

An initiative aimed at India’s farmers, introduced by ING Vysya Bank.

The effort – described by some as too simplistic – involves linking ATM access to the provider’s Kisan Credit Card accounts.

The merit of the idea might be open to debate, but when it comes to financial inclusion in India there are bigger questions to answer.

How much is being done to serve the under banked and unbanked? Are providers really interested in solving the many problems associated with reaching the country’s rural population?

On March 9 the Reserve Bank of India held a conference in Pune to explore these questions.

Examining every level of the situation, from branch managers to independent groups and real customers, the meeting attempted to define the complexities, if not the actual answers.

Let’s consider the scale of things. Because, even if branch managers are serious about serving rural customers, it’s all much easier said than done.

Processing paperwork is difficult and time consuming, right from the initial ‘know your customer’ start. With missing or non-existent identification, essential documents can be hard to come by.

Even something as simple as a picture ID can take time, because not every village has the facilities required to produce passport sized photographs.

We’ve seen some great ideas when it comes to technology, such as specially designed ATMs, but what happens when a biometric scanner can’t record a customer’s fingerprints, simply because they’re so calloused by the rigours of farm work? The RBI conference might not have changed the game, but it did at least continue the dialogue on what is a huge but interesting challenge for India’s financial providers.

One thing is clear – banks able to implement real, workable solutions stand to benefit greatly over the coming years.