Money rules that will change from December 2021.

Money rules that will change from December 2021.

Increasing cost of credit card EMIs and rising term insurance premiums of 25-45%, investing unclaimed mutual funds amounts in overnight schemes are some of the key considerations for this month.

1.?Term insurance premiums rise by 25% -45% ?back of rising reinsurance rates in the global market.?

2.???SEBI introduces the Potential Risk Class Matrix for debt fund investors.

3.???SEBI allows investing unclaimed mutual funds amounts in overnight/liquid/money market schemes.

?4.???EMI purchases via SBI credit cards will become expensive.

?5.???Guidelines for investing in silver exchange-traded funds (ETFs)

?6.????New guidelines for mutual fund employees when directly investing in securities.

?1. Term insurance premiums are likely to rise from December.

Pure protection?term insurance premiums are likely to see a spike?yet again in December. This time, the jump is likely to be between 25-45% on the back of rising reinsurance rates in the global market. The absolute rate rise could be stark given the low term insurance rates that the country has enjoyed for the last 10 years. This time round, too, the pandemic-driven higher death rate is the culprit. If you need additional term insurance cover, you should not delay the purchase any further.

2. SEBI introduces the Potential Risk Class Matrix for debt fund investors.

For debt fund investors, Effective from December 1, all existing and new debt schemes will be classified in terms of a?Potential Risk Class Matrix (PRCM), comprising parameters based on maximum interest rate risk (measured by the Macaulay Duration (MD) of the scheme) and maximum credit risk (measured by Credit Risk Value (CRV) of the scheme).

The existing risk-o-meter captures the actual risk in the portfolio of the bond scheme. However, the portfolio may change over a period and the fund manager may choose to take more risk to increase returns. The new system of PRCM will show how much risk the fund manager can take. This will tell investors?how much risk exists in the portfolio and how much risk the fund manager can take. This should help investors take more informed decisions. Like the risk-o-meter of the scheme, the maximum potential risk of the scheme (PRCM cell positioning) will be mentioned in all scheme related communications to the investors.

3. SEBI allows investing unclaimed Mutual funds amounts in overnight schemes.

Effective from December 1, SEBI allows the unclaimed redemption and dividend amounts, which are currently allowed to be deployed only in call money market or money market instruments, to be?invested in a separate plan of only overnight/liquid/ money market mutual fund scheme floated by mutual funds specifically for deployment of the unclaimed amounts.

4. EMI purchases via SBI credit cards will become expensive.

Effective from December 1, 2021?SBI Cards & Payment Services Private Limited (SBICPSL) will charge a flat processing fee of Rs 99 plus taxes?on all equated monthly instalment (EMI) transactions. The company will charge the processing fees for all EMI transactions done at retail outlets and e-commerce websites such as Amazon and Flipkart. These charges are over and above the interest charges for converting the purchase into EMIs. The company informed its customers about the new charge by email. Any transaction done before December 1, with the EMI booking occurring after December 1, will be exempted from this processing fee.

5. Guidelines for investing in silver exchange-traded funds (ETFs)

The regulator prescribed that silver ETFs should allocate at least 95 % of their assets to silver and silver-related exchange-traded commodity derivatives (ETCD). Further, fund houses have been told to limit the tracking error to 2 % and buy physical silver standard 30 kg bars with 99.9 % purity, confirming to the London Bullion Market Association (LBMA). Fund houses shall benchmark silver ETFs against the price of silver (based on LBMA Silver daily spot-fixing price). The silver ETF units will be listed on the stock exchanges. Fund house is told to appoint market makers to ensure ample liquidity on the stock exchanges.

6. New guidelines for mutual fund employees when directly investing in securities.

The employees, board members of AMCs and board members of trustees, including access persons,?cannot take undue advantage of any sensitive information?that they may have about any company or its securities or about AMCs' schemes or their units. The new framework will apply from December 1, 2021. All employees will refrain from profiting from the purchase and sale of any security within 30 calendar days in a personal trading account.