WHO'S GANN             

                            

W. D. Gann  the legendary Financial Prophet in the Early Twenties

To most of the technical analysts and financial traders, the name, William Delbert Gann, is well-known. Gann was one of the greatest traders in the early twenty centuries, who has extremely arcane trading analysis techniques and methods that based on ancient mathematics, geometry and astrology. Yet, as it was never unveiled explicitly, the theory of Gann is admired by most, but grasped by few.   His Methods  According to his followers, the accuracy of W. D. Gann's prediction was up to 85%. His predictions actually were not restricted to financial market, Gann also gave predictions on the election of US President and the beginning and ending of World Wars. Gann claimed that his every forecast was solely based on mathematical principles. With sufficient information, he could forecast the forthcoming events with his cycle theory based on ancient mathematics and geometry. In his mind, the nature of things had not changed, all of the events were based on mathematical principles.   What are the mathematical principles?   W. D. Gann said that the 360 degrees of a circle and the numbers from 1 to 9 were the origin of mathematics. In a circle, there may place a square and a triangle. Outside the circle, we may also construct a square and a triangle. These constructions are in fact the dimensions of the market.  Strange enough? In fact, W. D. Gann believed that the market reversal points (tops and bottoms) were related by the mathematical principles. There are no single market top or bottom cannot be explained by angles and support / resistance levels. In other words, if he was given the time and prices of the historical tops and bottoms of any market, he could utilize the mathematical and geometrical principles to predict futures market turning points. Why were these principles able to be applied to the market trends? W. D. Gann said that he had every proof  from astrology and mathematics!   His Market Predictions  Interesting enough, W. D. Gann lived in the early Twenty Centuries while the economic life of the world was in total chaos. Gann experienced the first World War, the historic stock market crash in 1929, the great depression in the Thirties and the out-break of the World War II. In these years of frustration, conducting investment business was risky, not to mention market predictions.   Since the Twenties, W. D. Gann began to publish annual market forecast reports. These reports provided market forecasts for the whole year to come.  It was nothing new by providing these types of service. The new things were that W. D. Gann actually depicted the market movement of the whole year by providing detailed time and prices of the market reversal points! His annual forecasts were in fact the road maps to wealth. He did not only forecast the market, he also provided forecasts of major social events. Although, he predictions might not be totally correct, his approach turned a new leaf in market forecasting.  Surprisingly, he accurately predicted the stock market crash of the century in 1929 to the date. In his annual forecast published on November 3, 1928, he explicitly predicted that September of 1929 would be the dangerous month. Stock prices would slump on "Black Friday". In fact, the Dow Jones Industrial Average toped out on September 3, 1929 at 386.10. Two months later, the Dow fell to below 200! The bear market brought to the western world the great depression and the Dow eventually bottomed out at only 40.56 in July 1932.   W. D. Gann's Writings  W. D. Gann passed away at 77 on June 14, 1955. He had numerous writings including:   "W. D. Gann Stock Market Course"   "W. D. Gann Commodity Market Course"   "The Truth of the Stock Tape"   "Wall Street Stock Selector"   "Stock Trend Detector"   "45 Years in Wall Street"   "How to Make Profits Trading in Commodities"   "How to Make Profits Trading in Puts and Calls"   "Tunnel Thru' the Air"   "The Magic Words"   Most of his writings are related to investment and trading. "Tunnel Thru' the Air" is however a love story. Gann claimed that the first time you read, it would be a book of love story. The second time you read, it would be a book of parables. The third time you read, it would be a book of market truths!

Data source:- http://www.artoftrading.co.in/

Banks tap RBI for Rs 62,000 cr

Central bank’s repo window sees highest use since the credit crisis

Banks raised nearly Rs 62,000 crore on a net basis today through the two liquidity-adjustment facility (LAF) operations conducted by the Reserve Bank of India to tide over the liquidity crunch.
This is the highest level of net borrowing from RBI since October 31, 2008, when banks raised over Rs 65,000 crore in a day. The huge liquidity support had been sought at the time, as banks were wary of lending to each other at the height of the global financial turmoil and the payment of advance tax in September 2008 had added to the crunch.


WIDENING WINDOW
Date Amount parked via
reverse repo Call
amount

Call
rate
May-21 47,530 139 2.50-3.85
May-24 4,540 12,541 2.50-4.20
May-25 8,890 8,433 2.50-4.20
May-26 5,685 8,879 2.50-4.20
May-28 6,215 352 2.75-4.30
May-31 -3,710 11,362 2.80-5.30
Jun-1 -5,575 9,409 2.90-5.40
Jun-2 -12,775 6,171 2.50-5.40
Jun-3 -8,095 6,456 2.95-5.35
Jun-4 -16,875 393 2.90-5.30
Jun-5 NIL 516 2.90-5.30
Jun-7 -61,920 5,847 2.85-5.40

- Since May 31, banks have availed of funds via the repo route and are net borrowers during the liquidity adjustment facility (LAF) operations
- No LAF operation was conducted on June 5
- Amount in Rs cr, rate in % Source: RBI, Clearing Corporation

But, unlike the days of the financial meltdown, when market players accessed cash at over 20 per cent from the call money market, rates remained in the 2.85-5.40 per cent band and volumes seemed to have stabilised. A dealer said banks were now opting for RBI’s repo window, as rates were marginally lower, at least for some of the banks. Besides, there is uncertainty that banks will be able to get the funds at one go, unlike the repo window.

In the collateralised borrowing and lending obligations (CBLO) space that is also accessed by mutual funds, insurers, bond houses and non-banking finance companies, rates hovered in the 5.25-5.40 per cent band. Volumes were lower at Rs 39,574 crore today as against nearly Rs 45,000 crore since May 21, when the auction for third generation (3g) mobile spectrum ended.

Today, dealers said, banks accessed funds through the central bank’s repo window as they wanted to ensure adequate availability of cash ahead of the reporting fortnight. Typically, banks front-load their borrowings and keep cash in advance.

For the last two weeks, liquidity has tightened due to telecom companies paying nearly Rs 68,000 crore as spectrum fee for 3G services. Liquidity is expected to remain tight as companies have to pay the first installment of advance tax by June 15. “We expect the situation to remain tight this month and even in early July,” said an SBI executive.

Apart from the 3G payments, there is pressure due to foreign institutional investors continuously selling in the Indian markets for the last few days.

As FIIs have been withdrawing rupee from the Indian market to purchase dollars, there is added pressure in the local money market, dealers said. So far, in May and June, overseas investors have sold a net amount of $2 billion (over Rs 9,000 crore) worth of shares. What is expected to add to the liquidity pressure is the auction for broadband wireless access (BWA) spectrum for which companies have already submitted bids in excess of Rs 25,000 crore. The market expects that the government could fetch as much as Rs 40,000 crore. This would mean that the companies will raise funds to meet the payment needs.

While the RBI has announced steps to tide over the crunch, banks said most of them do not need to drop the level of SLR holdings below the 25 per cent level to access additional funds. RBI has allowed a 50 basis point reduction and is also conducting a second LAF. “It is an enabler but at the moment we do not need it,” said a bank chairman. Also, the cash management bills that the government used to raise funds for a short period and the reduction of the treasury bill auction size for June from Rs 37,000 crore to Rs 15,000 crore is expected to have an impact over the next few weeks and will not provide immediate relief to banks.

Short-term securities allowed in IRFs

BS Reporter / Mumbai

The Reserve bank of India (RBI) has allowed trading in interest rate futures (IRFs) on securities with short-term maturities such as two-year and five-year securities and 91-day treasury bills.

The RBI-Sebi Standing Technical Committee will finalise the product design and operational modalities for introduction of these products on the exchanges. At present, only 10-year Government of India securities are available for trading under exchange-traded IRFs.

Golak Nath, senior vice-president, Clearing Corporation of India, said, "When interest rates are rising, people tend to trade at the shorter-end of the market. The introduction of these securities will surely fill the gap in the interest rate futures market."

"The interest rate futures contract on the 10-year notional coupon bearing Government of India securities was introduced on August 31, 2009. Based on the market feedback and the recommendations of the Technical Advisory Committee on Money, Foreign Exchange and Government Securities Markets, short maturity products are being introduced," said RBI in the Annual Policy Statement.

Interest rates futures traded on exchanges are settled physically – the only segment where physical settlement takes place. The other two markets -- equity and currency -- follow cash settlement. Though RBI's policy statement did not give any indication of the introduction of cash settlement in the new product, some market players felt this could be allowed for 91-day treasury bills. Sebi is yet to come out with guidelines on this.

Ashish Nigam, head - fixed income, Religare Mutual Fund, said, "More products will certainly deepen the interest rate derivative market and increase liquidity." At present, the daily volume in IRFs is negligible. The majority of the action takes place in the over-the-counter (OTC) market and most of the volume happens in overnight swaps. The trading also takes place at only one exchange – the National Stock Exchange. Analysts said public sector banks were not very active in this market. Also, given the complexity of the product, even retail investors do not participate.

Regarding the operational framework, RBI is also expecting a final report from an internal working group for the introduction of plain-vanilla OTC single-name credit default swap for corporate bonds for resident entities, subject to appropriate safeguards. The apex bank plans to put the draft report of the internal working group on the RBI website by July.

Piyush Garg
B.Tech, MBA
+91-9958618087

SKS Microfinance IPO sparks debate

Reuters / Mumbai April 9, 2010, 13:38 IST

An initial public offer by SKS Microfinance is likely to set the stage for more such offers in the world's largest microlending market, but it has also sparked a debate on the ethics of profiting from the poor.The IPO, a first in India and one of only a handful by microfinance institutions (MFIs) around the world, is expected to raise about $250-$350 million for SKS and its private equity investors.

It has drawn keen interest from countries with major microfinance industries such as Bangladesh, Mexico and South America, as well as the private equity firms who have recently piled into the sector.

But it has also drawn sharp criticism from some MFIs and non-government organisations who do not favour going to capital markets or the strong flows of private equity that have pushed up valuations.

"The job of microfinance is to alleviate poverty, so the question to ask is: who's going to benefit from the IPO?" said Olivia Donnelly, executive director of UK-based Shivia Microfinance, a non-profit firm that focuses on India and Nepal.

"It's OK to do an IPO because you need to scale up, or upgrade your IT systems, but is it correct to make millionaires out of shareholders when your borrowers are so poor?"

Microfinance has been around since the 1970s, but jumped into the spotlight in 2006 when the Nobel Peace Prize went to Bangladesh's Muhammad Yunus and his Grameen Bank, which pioneered giving tiny unsecured loans to the poor to buy cows or sewing machines.

Some Indian MFIs including SKS have switched to a for-profit model and registered as non-banking financial corporations.

MFIs' expanding client base and near-zero defaults have drawn investors ranging from Singapore's Temasek, CLSA Capital and International Financial Corp to private equity firms Sandstone Capital, Unitus and Matrix, which have put money in SKS, Share Microfin, Spandana, Ujjivan and other MFIs.

HIGH VALUATIONS

Advocates say rapid growth and the drying up of traditional sources of capital have driven MFIs to consider other options.

"When we are growing 75 percent year-on-year, the sort of equity we need to maintain 15 percent capital adequacy ratio cannot come from old-fashioned sources such as philanthropists or banks," said Vijay Mahajan, president of lobby group MFI Network.

"So we've had to move to new sources like PE, the capital market and debt instruments. This is something to be celebrated."

Sumir Chadha, managing director of private equity firm Sequoia Capital India, which holds more than a fifth of SKS, said the IPO would improve the reputation of microfinance lenders.

"MFIs tend to be regarded badly. It is very frustrating. This IPO will dramatically increase visibility and bring in greater trust for the entire MFI eco-system," Chadha said.

Earlier this year, India's finance minister said non-banking financial corporations (NBFCs), including some like SKS, can be granted banking licences, signalling a greater role for MFIs.

But India's central bank has pulled up MFIs for their high interest rates -- about 25-27 percent. That is about double the rate at which they borrow from banks, but still lower than moneylenders.

There is also criticism of high valuations, which private equity has helped push to about 5.9 times book value, or nearly three times the global average, JPMorgan and the World Bank's Consultative Group to Assist the Poor (CGAP) said in a report.

Listed MFIs, including Mexico's Compartamos, have outperformed mainstream banks, but valuations of Indian MFIs are "unsustainably high" and not justified by their recent growth or current and future earnings expectations, it said.

Delinquency levels, kept low because borrowers must repay funds before getting access to more funds, may not be sustainable. Overheating was already evident in some southern Indian states, the report said, and profitability will also decline as operating costs rise as MFIs expand outside the southern states.

Private equity's role in MFIs has also been criticised.

"PEs can bring greater efficiency, development plans and good management, but they can also create tension because investors tend to want to exit in three to five years," Xavier Reille, a co-author of the report, told Reuters from Washington.

"There may be potential rifts because with such high valuations, you obviously want to sell even higher. And the high multiples may discourage fresh capital from coming in," he said.

SOCIAL MISSION

SKS has drawn investors including Sequoia, Kismet Capital, Unitus, venture capitalist Vinod Khosla and Infosys Technologies founder N.R. Narayana Murthy.

Vikram Akula, a former McKinsey consultant, has been named one of the most influential people by Time magazine, and SKS, which he first founded in 1997 as a non-profit, is today India's largest MFI with about 5.5 million clients.

But activists and NGOs see no reason for cheer.

"MFIs are ignoring their social mission. They have a duty to educate their clients and not lend money for buying a TV or pay dowry just to add to their loan books," said Shivia's Donnelly.

"It's the wrong path to take. It's sub-prime all over again."

There are few regulations and no accountability, they say.

"MFIs talk about their valuations, but no one talks about social performance: are we really lifting people out of poverty?" said Royston Braganza, chief executive of Grameen Capital India.

With about half a dozen big Indian MFIs contemplating IPOs, SKS' offering will be a milestone, the JPMorgan/CGAP report said, and could help advance a stalled microfinance bill in India.

"Depending on the outcome, it is quite probable that the spotlight on Indian microcredit will intensify, while triggering renewed discussion around MFIs' profitability and social impact."

CO-OPERATIVE BANKS

Introduction

The Co-operative banks has a history of almost 100 years. The Co-operative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfil, their number, and the number of offices they operate. The co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-operative banks. 

While the co-operative banks in rural areas mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal finance etc. along with some small scale industries and self-employment driven activities, the co-operative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, consumer finance, personal finance, etc.Some of the co-operative banks are quite forward looking and have developed sufficient core competencies to challenge state and private sector banks. 

According to NAFCUB the total deposits & lendings of Co-operative Banks is much more than Old Private Sector Banks & also the New Private Sector Banks. This exponential growth of Co-operative Banks is attributed mainly to their much better local reach, personal interaction with customers, their ability to catch the nerve of the local clientele.

Though registered under the Co-operative Societies Act of the Respective States (where formed originally) the banking related activities of the co-operative banks are also regulated by the Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Overview

Co-operative movement is quite well established in India. The first legislation on co-operation was passed in 1904. In 1914 the Maclagen committee envisaged a three tier structure for co-operative banking viz. Primary Agricultural Credit Societies (PACs) at the grass root level, Central Co-operative Banks at the district level and State Co-operative Banks at state level or Apex Level. The first urban co-operative bank in India was formed nearly 100 years back in Baroda.  Co-operative Institutions are engaged in all kinds of activities namely production, processing, marketing, distribution, servicing, and banking in India and have vast and powerful superstructure. Co-operative Banks are important cogs in this structure.  In the beginning of 20th century, availability of credit in India, more particularly in rural areas, was almost absent. Agricultural and related activities were starved of organised, institutional credit. The rural folk had to depend entirely on the money lenders, who lent often at usurious rates of interest.  The co-operative banks arrived in India in the beginning of 20th Century as an official effort to create a new type of institution based on the principles of co-operative organisation and management, suitable for problems peculiar to Indian conditions. These banks were conceived as substitutes for money lenders, to provide timely and adequate short-term and long-term institutional credit at reasonable rates of interest. In the formative stage Co-operative Banks were Urban Co-operative Societies run on community basis and their lending activities were restricted to meeting the credit requirements of their members. The concept of Urban Co-operative Bank was first spelt out by Mehta Bhansali Committee in 1939 which defined on Urban Co-operative Bank . Provisions of Section 5 (CCV) of Banking Regulation Act, 1949 (as applicable to Co-operative Societies) defined an Urban Co-operative Bank as a Primary Co-operative Bank other than a Primary Co-operative Society were made applicable in 1966.  With gradual growth and also given philip with the economic boom, urban banking sector received tremendous boost and started diversifying its credit portfolio. Besides giving traditional lending activity meeting the credit requirements of their customers they started catering to various sorts of customers viz.self-employed, small businessmen / industries, house finance, consumer finance, personal finance etc. Categories There are two main categories of the co-operative banks.  (a) short term lending oriented co-operative Banks - within this category there are three sub categories of banks viz state co-operative banks, District co-operative banks and Primary Agricultural co-operative societies. (b) long term lending oriented co-operative Banks - within the second category there are land development banks at three levels state level, district level and village level. The co-operative banking structure in India is divided into following main 5 categories :  1. Primary Urban Co-op Banks: 2. Primary Agricultural Credit Societies: 3. District Central Co-op Banks: 4, State Co-operative Banks: 5. Land Development Banks:

Brief History of Urban Cooperative Banks in India

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today. These banks were traditionally centred around communities, localities work place groups. They essentially lent to small borrowers and businesses. Today, their scope of operations has widened considerably.

The origins of the urban cooperative banking movement in India can be traced to the close of nineteenth century when, inspired by the success of the experiments related to the cooperative movement in Britain and the cooperative credit movement in Germany such societies were set up in India. Cooperative societies are based on the principles of cooperation, - mutual help, democratic decision making and open membership. Cooperatives represented a new and alternative approach to organisaton as against proprietary firms, partnership firms and joint stock companies which represent the dominant form of commercial organisation.

The Beginnings

The first known mutual aid society in India was probably the 'Anyonya Sahakari Mandali' organised in the erstwhile princely State of Baroda in 1889 under the guidance of Vithal Laxman also known as Bhausaheb Kavthekar. Urban co-operative credit societies, in their formative phase came to be organised on a community basis to meet the consumption oriented credit needs of their members. Salary earners' societies inculcating habits of thrift and self help played a significant role in popularising the movement, especially amongst the middle class as well as organized labour. From its origins then to today, the thrust of UCBs, historically, has been to mobilise savings from the middle and low income urban groups and purvey credit to their members - many of which belonged to weaker sections.

The enactment of Cooperative Credit Societies Act, 1904, however, gave the real impetus to the movement. The first urban cooperative credit society was registered in Canjeevaram (Kanjivaram) in the erstwhile Madras province in October, 1904. Amongst the prominent credit societies were the Pioneer Urban in Bombay (November 11, 1905), the No.1 Military Accounts Mutual Help Co-operative Credit Society in Poona (January 9, 1906). Cosmos in Poona (January 18, 1906), Gokak Urban (February 15, 1906) and Belgaum Pioneer (February 23, 1906) in the Belgaum district, the Kanakavli-Math Co-operative Credit Society and the Varavade Weavers' Urban Credit Society (March 13, 1906) in the South Ratnagiri (now Sindhudurg) district. The most prominent amongst the early credit societies was the Bombay Urban Co-operative Credit Society, sponsored by Vithaldas Thackersey and Lallubhai Samaldas established on January 23, 1906..

The Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to broad basing it to enable organisation of non-credit societies. The Maclagan Committee of 1915 was appointed to review their performance and suggest measures for strengthening them. The committee observed that such institutions were eminently suited to cater to the needs of the lower and middle income strata of society and would inculcate the principles of banking amongst the middle classes. The committee also felt that the urban cooperative credit movement was more viable than agricultural credit societies. The recommendations of the Committee went a long way in establishing the urban cooperative credit movement in its own right.

In the present day context, it is of interest to recall that during the banking crisis of 1913-14, when no fewer than 57 joint stock banks collapsed, there was a there was a flight of deposits from joint stock banks to cooperative urban banks. Maclagan Committee chronicled this event thus:

"As a matter of fact, the crisis had a contrary effect, and in most provinces, there was a movement to withdraw deposits from non-cooperatives and place them in cooperative institutions, the distinction between two classes of security being well appreciated and a preference being given to the latter owing partly to the local character and publicity of cooperative institutions but mainly, we think, to the connection of Government with Cooperative movement".

Under State Purview

The constitutional reforms which led to the passing of the Government of India Act in 1919 transferred the subject of "Cooperation" from Government of India to the Provincial Governments. The Government of Bombay passed the first State Cooperative Societies Act in 1925 "which not only gave the movement its size and shape but was a pace setter of cooperative activities and stressed the basic concept of thrift, self help and mutual aid." Other States followed. This marked the beginning of the second phase in the history of Cooperative Credit Institutions.

There was the general realization that urban banks have an important role to play in economic construction. This was asserted by a host of committees. The Indian Central Banking Enquiry Committee (1931) felt that urban banks have a duty to help the small business and middle class people. The Mehta-Bhansali Committee (1939), recommended that those societies which had fulfilled the criteria of banking should be allowed to work as banks and recommended an Association for these banks. The Co-operative Planning Committee (1946) went on record to say that urban banks have been the best agencies for small people in whom Joint stock banks are not generally interested. The Rural Banking Enquiry Committee (1950), impressed by the low cost of establishment and operations recommended the establishment of such banks even in places smaller than taluka towns.

The first study of Urban Co-operative Banks was taken up by RBI in the year 1958-59. The Report published in 1961 acknowledged the widespread and financially sound framework of urban co-operative banks; emphasized the need to establish primary urban cooperative banks in new centers and suggested that State Governments lend active support to their development. In 1963, Varde Committee recommended that such banks should be organised at all Urban Centres with a population of 1 lakh or more and not by any single community or caste. The committee introduced the concept of minimum capital requirement and the criteria of population for defining the urban centre where UCBs were incorporated.

Duality of Control

However, concerns regarding the professionalism of urban cooperative banks gave rise to the view that they should be better regulated. Large cooperative banks with paid-up share capital and reserves of Rs.1 lakh were brought under the perview of the Banking Regulation Act 1949 with effect from 1st March, 1966 and within the ambit of the Reserve Bank's supervision. This marked the beginning of an era of duality of control over these banks. Banking related functions (viz. licensing, area of operations, interest rates etc.) were to be governed by RBI and registration, management, audit and liquidation, etc. governed by State Governments as per the provisions of respective State Acts. In 1968, UCBS were extended the benefits of Deposit Insurance.

Towards the late 1960s there was much debate regarding the promotion of the small scale industries. UCBs came to be seen as important players in this context. The Working Group on Industrial Financing through Co-operative Banks, (1968 known as Damry Group) attempted to broaden the scope of activities of urban co-operative banks by recommending that these banks should finance the small and cottage industries. This was reiterated by the Banking Commisssion (1969).

The Madhavdas Committee (1979) evaluated the role played by urban co-operative banks in greater details and drew a roadmap for their future role recommending support from RBI and Government in the establishment of such banks in backward areas and prescribing viability standards.

The Hate Working Group (1981) desired better utilisation of banks' surplus funds and that the percentage of the Cash Reserve Ratio (CRR) & the Statutory Liquidity Ratio (SLR) of these banks should be brought at par with commercial banks, in a phased manner. While the Marathe Committee (1992) redefined the viability norms and ushered in the era of liberalization, the Madhava Rao Committee (1999) focused on consolidation, control of sickness, better professional standards in urban co-operative banks and sought to align the urban banking movement with commercial banks.

A feature of the urban banking movement has been its heterogeneous character and its uneven geographical spread with most banks concentrated in the states of Gujarat, Karnataka, Maharashtra, and Tamil Nadu. While most banks are unit banks without any branch network, some of the large banks have established their presence in many states when at their behest multi-state banking was allowed in 1985. Some of these banks are also Authorised Dealers in Foreign Exchange

Recent Developments

Over the years, primary (urban) cooperative banks have registered a significant growth in number, size and volume of business handled. As on 31st March, 2003 there were 2,104 UCBs of which 56 were scheduled banks. About 79 percent of these are located in five states, - Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. Recently the problems faced by a few large UCBs have highlighted some of the difficulties these banks face and policy endeavours are geared to consolidating and strengthening this sector and improving governance

Piyush Garg
B.Tech, MBA
+91-9958618087
http://finwizbypiyush.blogspot.com/

ABOUT FOREX MARKETS

The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends.

The purpose of the foreign exchange market 'Forex' is to assist international trade and investment. The foreign exchange market allows businesses to convert one currency to another foreign currency. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars. Some experts, however, believe that the unchecked speculative movement of currencies by large financial institutions such as hedge funds impedes the markets from correcting global current account imbalances. This carry trade may also lead to loss of competitiveness in some countries. ^[1]

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

• trading volume results in market liquidity
• geographical dispersion
• continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 UTC on Sunday until 22:00 UTC Friday
• the variety of factors that affect exchange rates
• the low margins of relative profit compared with other markets of fixed income
• the use of leverage to enhance profit margins with respect to account size

Determinants of FX rates

See also: exchange rates

The following theories explain the fluctuations in FX rates in a floating exchange rate regime (In a fixed exchange rate regime, FX rates are decided by its government):

(a) International parity conditions: Relative Purchasing Power Parity, interest rate parity, Domestic Fisher effect, International Fisher effect. Though to some extent the above theories provide logical explanation for the fluctuations in exchange rates, yet these theories falter as they are based on challengeable assumptions [e.g., free flow of goods, services and capital] which seldom hold true in the real world.

(b) Balance of payments model (see exchange rate): This model, however, focuses largely on tradable goods and services, ignoring the increasing role of global capital flows. It failed to provide any explanation for continuous appreciation of dollar during 1980s and most part of 1990s in face of soaring US current account deficit.

(c) Asset market model (see exchange rate): views currencies as an important asset class for constructing investment portfolios. Assets prices are influenced mostly by people's willingness to hold the existing quantities of assets, which in turn depends on their expectations on the future worth of these assets. The asset market model of exchange rate determination states that "the exchange rate between two currencies represents the price that just balances the relative supplies of, and demand for, assets denominated in those currencies."

None of the models developed so far succeed to explain FX rates levels and volatility in the longer time frames. For shorter time frames (less than a few days) algorithm can be devised to predict prices. Large and small institutions and professional individual traders have made consistent profits from it. It is understood from above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of demand and supply. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.

Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economicfactors, political conditions and market psychology.

Economic factors

These include: (a)economic policy, disseminated by government agencies and central banks, (b)economic conditions, generally revealed through economic reports, and other economic indicators.

• Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
• Government budget deficits or surpluses: The market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.
• Balance of trade levels and trends: The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.
• Inflation levels and trends: Typically a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.
• Economic growth and health: Reports such as GDP, employment levels, retail sales, capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.
• Productivity of an economy: Increasing productivity in an economy should positively influence the value of its currency. Its effects are more prominent if the increase is in the traded sector

Financial instruments

Spot

A spot transaction is a two-day delivery transaction (except in the case of trades between the US Dollar, Canadian Dollar, Turkish Lira and Russian Ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a "direct exchange" between two currencies, has the shortest time frame, involves cash rather than a contract; and interest is not included in the agreed-upon transaction. The data for this study come from the spot market. Spot transactions has the second largest turnover byvolume after Swap transactions among all FX transactions in the Global FX market. NNM

Forward

See also: forward contract

One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be a one day, a few days, months or years. Usually the date is decided by both parties.

Future

Main article: currency future

Foreign currency futures are exchange traded forward transactions with standard contract sizes and maturity dates — for example, $1000 for next November at an agreed rate [4],[5]. Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.

Swap

Main article: foreign exchange swap

The most common type of forward transaction is the currency swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange.

Option

Main article: foreign exchange option

A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world..

Exchange-traded fund

Main article: exchange-traded fund

Exchange-traded funds (or ETFs) are open ended investment companies that can be traded at any time throughout the course of the day

wish you all very happy holi




Piyush Garg
B.Tech, MBA
+91-9000417811
http://finwizbypiyush.blogspot.com/

Over-The-Counter Exchange Of India - OTCEI

The first electronic OTC stock exchange provide investors and companies with an additional way to trade and issue securities. This is the first exchange in India to introduce market makers, which are firms that hold shares in companies and facilitate the trading of securities by buying and selling from other participants.


OTCEI was incorporated in 1990 as a Section 25 company under the Companies Act 1956 and is recognized as a stock exchange under Section 4 of the Securities Contracts Regulation Act, 1956. The Exchange was set up to aid enterprising promoters in raising finance for new projects in a cost effective manner and to provide investors with a transparent & efficient mode of trading.

Modelled along the lines of the NASDAQ market of USA, OTCEI introduced many novel concepts to the Indian capital markets such as screen-based nationwide trading, sponsorship of companies, market making and scripless trading. As a measure of success of these efforts, the Exchange today has 115 listings and has assisted in providing capital for enterprises that have gone on to build successful brands for themselves like VIP Advanta, Sonora Tiles & Brilliant mineral water, etc.

Need for OTCEI?

Studies by NASSCOM, Software Technology Parks of India, the venture capital funds and the government's IT Task Force, as well as the rising interest in information technology, pharmaceutical, biotechnology and media shares have repeatedly emphasised the need for a national stock market for innovative and high growth companies.

Innovative companies are critical to developing economies like India, which is undergoing a major technological revolution. With their abilities to generate employment opportunities and contribute to the economy, it is essential that these companies not only expand existing operations but also set up new units. The key issue for these companies is raising timely, cost effective and long term capital to sustain their operations and enhance growth. Such companies, particularly those that have been in operation for a short time, are unable to raise funds through the traditional financing methods, because they have not yet been evaluated by the financial world.

Intrinsic Benefits

A successful market for technology & growth companies has to :

demonstrate an understanding for new technology and concepts

provide capital formation opportunities for young companies without a track record

be national in order to reach and service entrepreneurs and investors

enable access to a wide spectrum of financial intermediaries

be cost effective for issuers

provide an exit route to venture capital & private equity funds for their investments

adopt state of art trading systems and practices in tune with international norms

be well regulated to promote transparent and fair market practices

OTCEI, by virtue of its unique position, is well suited to service the requirements of these companies, making it the natural choice for the emerging technology and growth stocks. In fact, consumer favourites like VIP Advanta, Sonora tiles and Brilliant Mineral Water are made by high growth companies that have benefited by listing on OTCEI



for more details about OTCEI you can visit:
http://www.otcei.net/

FUTURE OF CREDIT CARD

The Future of Credit Card Swiping is Square
by MICROFINANCE BUSINESS on JANUARY 23, 2010

Last month Jack Dorsey the creator of Twitter unveiled his new device and service to make bulky and expensive credit card swiping machines – History.

The Solution goes by the name Square and is being funded by Vinod Khosla of Khosla Ventures fame.(Editors Note – Vinod Khosla is also an investor in SKS Microfinance and Grama Vidiyal Microfinance)


Square - Easy way to recieve credit card payments
Twitter co-founder Jack Dorsey announced his new company in appropriate fashion: with a tweet on the network he created in 2006. His new company, Square, allows merchants and individuals to accept secure payment from credit (and other) cards using a mobile phone.

According to Square’s website, payees can start accepting payments via Square in under 60 seconds, with “no contracts, monthly fees, or hidden costs.” The company donates one cent from every transaction to the charity of the payer’s choice. In order to streamline the process, payees can register for Square and upload a photo, so that payees can verify that you are who you say you are.

The Fourth Dimension of Design

We give you the lowdown on The Design Act, 2000. Read on to familiarize yourself with the intricacies of the Act.
The Design Act, 2000 defines “design” under Section 2(d) as the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device, and does not include any trademark as defined.

Prior to the Design Act 2000, there was no mention of dimension word in the older Act. The new Act says a design can have two or three dimensions. The question arises, what was the need to insert “two-dimensional or three-dimensional or in both”wordings for describing a design in the new Act? The Act is silent about the rationale behind it. So, readers are free to make assumptions. The most basic assumption behind inclusion of dimensions could be the presence of computers. Software, like CAD/CAM, easily uses three-dimensional (3D) graphics over a two-dimensional (2D) interface of the monitor, which was earlier difficult to produce with such ease.

The next question: why only 3D? The time dimension should also be added to the definition of the design. An eye can see 23 frames in a second as a series of still pictures, while the 24th frame makes it a continuous series of frames, where the pictures in the frames seem to be in full motion, making it a motion picture. Indeed motion pictures, where the flow of frames is always equal to or more than 24 frames per second, is not the subject of the design. But, up to 23 frames per second on the time dimension could be a topic for investigation for its suitability for design.

Reasoning behind the law

It is possible through computer programming and other software to convert a static design, that is, two/three-dimensional, into a dynamic design by inserting time dimension. The change in a static design with respect to time makes it a dynamic design. A static design can change its outlook periodically or randomly. If such changes at the interface occur at the rate of less than 23 frames per second, should it be called a design? If yes, then the fourth dimension should be recognized as part of dynamic design.

We have seen holograms as marks on various cartons and wrappers. They are used to stop piracy of products. Similarly, indicators that change their design with the passage of time can be used. For instance, Oral-B toothbrushes, where the bristle color changes with time to indicate time for replacement.

Does mere change in the colour means change in the design? Probably the answer lies in the usage of the colour scheme. Like in the Oral-B toothbrush example, a new brush contains three rows of bristles but when the blue row turns into white, the design changes because now there is just a single row of bristles. This example speaks in affirmation.

The Act is silent on the function of a design: is to just to appeal to the eyes? This provides space to think up more constructive uses of the design. Web designing and indicators make the scope of the definition of the design broader. The application part of a design that controls the appearance of an interface produces designs that change with time. By using Macromedia products like Flash, it is possible to animate. Animations are nothing but an array of frames that change with time. At a point of time one frame appears on the interface. If the rate of change of frames is greater than 23 frames per second, it becomes a movie otherwise we can name it as a dynamic design.

The Act is silent on the function of a design: is to just to appeal to the eyes?

Color can also be used as an indicator of the quality of a product. In drugs and pharmaceutical industry when a particular compound changes it color, it is said that the compound has expired and is not safe for consumption. Many drug flaps carry the standard name of the color of the drug. That drug is safe for consumption only in that particular color. So, it could be deduced that the industry is using color as an integral part of its product’s design.

The interface of all designs used to be 2D. Only simulated 3D figures can be represented over it. So, it is possible to show different permutations and combinations of two dimensions over the interface. This way even without changing the appearance of the 3D design the appearance at the interface can be changed.

Section 4 of the Design Act, 2000 talks about prohibition of registration of certain designs and it nowhere indicates that dynamic designs cannot be incorporated under it. This once again affirms the reasoning for incorporation of dynamic designs in the Design Act. The emerging legal trends will have to follow the advancements in the fields of science and technology.

Information for filling patent application in India

INTRODUCTION TO INTELLECTUAL PROPERTY Intellectual Property refers to creation of mind i.e. inventions, industrial designs for article, literary & artistic work, symbols etc. used in commerce. Intellectual property is divided into two categories: industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indications of source: and Copyright, which includes literary and artistic works such as novels, poems, plays, films and musical works etc. According to the TRIPS Agreement, the intellectual property has been classified into–Patents, Industrial Designs, Trade Marks, Copyright, Geographical Indications, Layout Designs of Integrated Circuits, Protection of Undisclosed Information/Trade Secrets. Different IP Rights vary in the protection they provide.

PATENTS—WHAT IT IS A Patent is an intellectual property right relating to inventions and is the grant of exclusive right, for limited period, provided by the Government to the patentee, in exchange of full disclosure of his invention, for excluding others, from making, using, selling, importing the patented product or process producing that product for those purposes. The purpose of this system is to encourage inventions by promoting their protection and utilization so as to contribute to the development of industries, which in turn, contributes to the promotion of technological innovation and to the transfer and dissemination of technology. Under the system, Patents ensure property rights (legal title) for the invention for which patent have been granted, which may be extremely valuable to an individual or a Company. One should make the fullest possible use of the Patent System and the benefits it provides. Patent right is territorial in nature and a patent obtained in one country is not enforceable in other country. The inventors/their assignees are required to file separate patent applications in different countries for obtaining the patent in those countries.

LEGISLATION The Patent System in India is governed by the Patents Act, 1970(No. 39 of 1970) as amended by the Patents (Amendment) Act, 2002 and the Patents Rules, 2003 effective from 20-05-2003 in India.

ADMINISTRATION The Patent Office, under the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, performs the statutory duties in connection with the grant of patents for new inventions and registration of industrial designs. Patent Offices are located at Kolkata (Head Office), Mumbai, Chennai and Delhi to deal with the applications for patents originating within their respective territorial jurisdictions. Patent Information System (PIS) located at Nagpur maintains a comprehensive collection of patent specifications and patent related literature, on a worldwide basis and provides technological information contained in patent or patent related literature through search services and patent document supply services. Intellectual Property Training Institute (IPTI) located at Nagpur provides training to the officials of IP offices and other users of the system who are working in the field of Intellectual Property Rights.

INTERNATIONAL TREATIES India is a member-state of Word Intellectual Property Organisation (WIPO), an International Organisation, responsible for the promotion of the protection of intellectual property throughout the world. India is a member of the following International Organisations and Treaties in respect of Patents: a) World Trade Organization (WTO) with effect from 01-01-1995. b) Convention establishing World Intellectual Property Organisation, (WIPO). c) Paris Convention for the protection of Industrial Property with effect from Dec.7, 1998. d) Patent Co-operation Treaty (PCT) with effect from Dec.7, 1998. e) Budapest Treaty with effect from 17th December, 2001.

TYPES OF PATENTS a) Ordinary Patents b) Patents of Addition (granted for Improvement or Modification of the already patented invention for the unexpired term of the main patent). c) Convention applications with priority date, claiming on the basis of filing in Convention Countries d) National Phase Applications under PCT.

WHO MAY APPLY Application may be made by the inventor, either alone or jointly with another, or his/their assignee, legal representative of deceased inventor or assignee are entitled to apply.

GENERAL PRECAUTION FOR APPLICANT The first to file system is employed, in which, among persons having filed the same invention, first one is granted a patent, Therefore, a completed invention should be filed promptly. It is common experience that through ignorance of patent law, inventors act unknowingly and jeopardize the chance of obtaining patents for their inventions. The most common of these indiscretions is to publish their inventions in newspapers or scientific and technical journals, before applying for patents. Publication of an invention, even by the inventor himself, would (except under certain rare circumstances) constitute a bar for the subsequent patenting of it.

Similarly, the use of the invention in Public, or the commercial use of the invention in public or even in secrecy, prior to the date of filing patent application would be a fatal objection to the grant of a patent for such invention, thereafter. There is, however, no objection to the secret working of the invention by way of reasonable trial or experiment, or to the disclosure of the invention to other confidentially. Another mistake, which is frequently made by the inventors, is to wait until their inventions are fully developed for commercial working, before applying for patents. It is, therefore, advisable to apply for a patent as soon as the inventor's idea of the nature of the invention has taken a definite shape. It is permissible to file an application for a patent accompanied by a "Provisional Specification" describing the invention. The application may, therefore, be made even before the full details of working the invention are developed. The filing of an application for a patent disclosing the invention would secure "provisional protection", and thereby, enable the inventor to work out the practical details of the invention and to file complete specification within 12/15 months with extension from the date of filing of provisional specification.

WHAT IS PATENTABLE INVENTION Under the Patents Act, an Invention means "a new product or process involving an inventive step and also capable of being made or used in the industry". It means the invention to be patentable should be technical in nature and should meet the following criteria – i) Novelty: The matter disclosed in the specification is not published in India or elsewhere before the date of filing of the patent application in India. ii) Inventive Step: The invention is not obvious to a person skilled in the art in the light of the prior publication/knowledge/ document. iii) Industrially applicable: Invention should possess utility, so that it can be made or used in the industry.

WHAT IS NOT PATENTABLE The following are Non-Patentable inventions within the meaning of the Act: - (a) an invention which is frivolous or which claims anything obviously contrary to well established natural laws; (b) an invention the primary or intended use or commercial exploitation of which could be contrary to public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment; (c) the mere discovery of a scientific principle or the formulation of an abstract theory (or discovery of any living thing or non-living substances occurring in nature); (d) the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant; (e) a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance; (f) the mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way; (g) a method of agriculture or horticulture; (h) any process for the medicinal, surgical, curative, prophylactic (diagnostic therapeutic) or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products. (i) plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals; (j) a mathematical or business method or a computer programme per se or algorithms; (k) a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions; (l) a mere scheme or rule or method of performing mental act or method of playing game; (m) a presentation of information; (n) topography of integrated circuits; (o) an invention which in effect, is traditional knowledge or which is an aggregation or duplication of known properties of traditionally known component or components. (p) Inventions relating to atomic energy and prejudicial to the defence of India. (q) In the case of inventions relating to substances prepared or produced by "chemical processes" (including alloys, optical glass, semiconductors and inter-metallic compounds) and substance intended for use or capable of being used as drug and food, no patent will be granted in respect of claims for the substances themselves, but claims for the method or processes of manufacture will be patented. "Chemical Process" includes biochemical, biotechnological and micro-biological process.

APPROPRIATE OFFICE FOR FILING AN APPLICATION & FOR OTHER PROCEEDINGS Application is required to be filed according to the territorial limits where the applicant or the first mentioned applicant in case joint applicants for a patent normally resides or has domicile or has a place of business or the place from where the invention actually originated. If the applicant for the patent or party in a proceeding having no business places or domicile in India, the appropriate office will be according to the address of service in India given by the applicant or party in a proceeding . The appropriate office once decided in respect of any proceedings under the Act shall not ordinarily be changed. The four patent offices are located at Kolkatta, Mumbai, Delhi & Chennai.

PUBLICATION & EXAMINATION OF PATENT APPLICATIONS i) Publication: Publication of all the applications for patents except the applications prejudicial to the defence of India or abandoned due to non-filing of complete specification within the prescribed time-limit after provisional or withdrawal of the application will be published in the official Gazette after 18 months from the date of filing of the application or the date of priority whichever is earlier. The publication will include the particulars of the date of the application, application number, name and address of the applicant along with the abstract. No application for patent shall be opened for public inspection before publication. After the date of publication of the application, as stated above, the complete specification along with provisional and drawing, if any, and abstract may be inspected at the appropriate office by making a written request to the Controller in the prescribed manner. ii) Request for examination No application for patent will be examined if no request is made by the applicant or by any other interested person in Form-19 with prescribed fee of Rs.1,000/- and Rs.3,000/- for individual and for legal entity respectively, within a period of 48 months from the date of filing of the application for patent. However, in case of applications for patents filed before 20th May, 2003, the request is required to be made by the applicant or any other interested person within a period of 12 months from 20th May, 2003 or within 48 months from the date of application whichever is later. Where no request against the application for patent has been filed within the prescribed period, the aforesaid application will be treated as withdrawn and, hereinafter, application cannot be revived. iii) EXAMINATION Applications for patent, where requests have been made by the applicants or by any other interested persons, the applications will be taken up for examination strictly according to the serial number of the requests received on Form 19. A First Examination Report (FER) stating the objections/requirements is communicated to the applicant or his agent according to the address for service. An applicant shall submit his first reply to the FER within a period of 4 months from the date of FER.. Application or complete specification is required to be amended in order to meet the objections/requirements within a period of 12 months from the date of First Examination Report (FER). No further extension of time is available in this regard. If all the objections are not complied with within the period of 12 months, the application will be deemed to have been abandoned. When the application is in order for acceptance, it is notified in the Gazette of India.

WITHDRAWAL OF PATENT APPLICATION The application for patent can be withdrawn at least 3(Three) months before the first publication which will be 18(Eighteen) months from the date of filing or date of priority whichever is earlier. The application can also be withdrawn at any time before the grant of the patent. The application withdrawn after the date of publication, cannot be refiled as it is already laid open for public inspection. However, application withdrawn before the publication can be refiled provided it is not opened otherwise.

OPPOSITION Notice of opposition must be filed within 4(four) months of notification in the Official Gazette. Extension of one month is available, but must be applied for before expiry of initial four month period in Form-4 with prescribed fee.

GRANT OR SEALING OF PATENT If the application is not opposed or the opposition is decided in favour of the applicant or is not refused, the patent is granted or sealed on making a request in Form 9 alongwith sealing fee within 6 months from the date of notification of acceptance of the complete specification in the Gazette of India at the appropriate office where the application was filed. However, it is extendable by three months. If the sealing fee is not paid within the prescribed period, it will be treated as "NO PATENT". There is no provision in the Act to revive the said patent.

TERM AND DATE OF PATENT Term of every patent will be 20 years from the date of filing of patent application, irrespective of whether it is filed with provisional or complete specification. Date of patent is the date on which the application for patent is filed, irrespective of whether it is accompanied with provisional or complete specification.

RIGHTS OF THE PATENTEE Where a patent covers a product, the grant of patent gives the patentee the exclusive right to prevent others from performing, without authorisation, the act of making, using, offering for sale, selling or importing that product for the above purpose. Where a patent covers a process, the patentee has the exclusive right to exclude others from performing, without his authorisation, the act of using that process, using and offering for sale, selling or importing for those purposes, the product obtained directly by that process in India, wherein product for which no patent is granted is excluded. These rights created by statute are circumscribed by various conditions and limitations as provided in the Patents Act, 1970 as amended by The Patents (amendment) Act, 2002.

REGISTER OF PATENT A Register of Patents will be kept in the Patent Office and its branch offices. Register of Patent can be inspected or extract from it can be obtained on payment of prescribed fee. Register of Patent contains the names and addresses of the patentee, notification of assignment etc., particulars in respect of validity or proprietorship of patent and payment of renewal fee.

RENEWAL FEE To keep the patent in force, Renewal fee is to be paid every year. The first renewal fee is payable for third year of the patent's life and must be paid before the patent's second anniversary. If the patent has not been issued within the period, renewal fees may be accumulated and paid immediately after the patent is sealed, or within three months of its recordal in Register of Patents or within extended period of six months upto 9 months from the date of recordal. If the renewal is not paid within the prescribed time, the patent will cease to have effect. However, provision to restore the patent is possible provided application is made within eighteen months from the date of cessation. Renewal fee is measured from the date of filing of the Patent application. Six month's grace time is available with extension fee for payment of renewal fee. No renewal fees is payable on Patents of Addition, unless the original patent is revoked and if the Patent of Addition is converted into an independent patent; renewal fee, then, becomes payable for the remainder of the term of the main patent.

RESTORATION Application for restoration of a patent that lapses due to non-payment of renewal fees must be made within 18 months of lapse. The application is to be filed to the appropriate office according to the jurisdiction. DOCUMENTS REQUIRED FOR FILING AN APPLICATION 1) Application form in duplicate (Form 1 or 1A). 2) Provisional or complete specification in duplicate. If the provisional specification is filed, it must be followed by the complete specification within 12 months/15 months with extension (Form 2). 3) Drawing in duplicate (if necessary). 4) Abstract of the invention in duplicate. 5) Information & undertaking listing the number, filing date & current status of each foreign patent application in duplicate (Form 3). 6) Priority document (if priority date is claimed) in convention application. 7) Declaration of inventor-ship where provisional specification is followed by complete specification or in case of convention application (Form 5). 8) Power of attorney (if filed through Patent Agent). 9) Fee (to be paid in cash/by cheque/by demand draft). (Note: The cheque or demand draft should be payable to the "Controller of Patents" drawn on any schedule bank at a place where the appropriate office is situated).

PROVISIONAL SPECIFICATION Application for patent may be accompanied by the provisional specification. It should contain the description of invention with drawing, if required. It is not necessary to include Claim. However, the complete specification should be fairly based on the matter disclosed in the provisional specification and should be filed within 12 months (extendable by 3 months) from the date of filing of provisional specification. If the complete specification is not filed within 12 months or within the extended period, the application will be deemed to have been abandoned.

COMPLETE SPECIFATION* The complete specification is an essential document in the procedure of patent application with drawing required to be attached according to the necessity. Complete specification shall fully describe the invention with drawing, if required, disclosing the best method known to the applicant and end with Claim/Claims defining the scope of protection sought. The protection under the Patents Act depends upon the detailed disclosure of the invention as the subject of its protection. The specification must be written in such a manner that person of ordinary skill in the relevant field to which the invention pertains, can understand the invention. Normally, it should contain the following matter- 1) Title of invention, 2) Field of invention, 3) Background of invention with regard to the drawback of associated with known art, 4) Object of invention, 5) Statement of invention, 6) A summary of invention, 7) A brief description of the accompanying drawing, 8) Detailed description of the invention with reference to drawing/examples, 9) Claim(s), 10) Abstract. The specification must start with a title, which is short, and, which describes the general nature of invention. The title should not contain anyone's name, a fancy name and trade name or personal name or any abbreviation etc. *(See Specimen) Description: The specification must be written in good and clear English or Hindi. The specification should indicate those features which are essential for the operation of the invention as well as those features for which a choice can be made. The description must be sufficiently detailed for someone who works in the same area of technology to be able to perform the invention from the information given in the description. The best method of putting the invention into effect is required to be described in the description. In case of biological invention, it is required to mention the source or geographical origin of biological material used for the invention Claim: A set of properly drafted claim is an important part of complete specification. The complete specification must have at least one Claim. The claim is drafted in a number of paragraphs serially numbered. The first claim is the main claim which is made as wide as possible. The subsidiary claims refer to the main claim and include qualifying or explanatory clauses on the various integers of the main claim or optional features. They may also contain independent claims. Although the claim clauses consist of a number of claims, the totality of the claims must relate to one invention only. It should be noted that a claim is a statement of technical facts expressed in legal terms defining the scope of the invention sought to be protected.

for more details visit this website: 
http://www.ipindia.gov.in/