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Understanding ETFs Uses, Returns and Comparison with Mutual Funds and Stocks

 Exchange-Traded Funds (ETFs) have gained popularity among investors for their unique features and benefits. In this blog, we'll explore the uses of ETFs, their potential returns, how they differ from mutual funds and stock investments, and their safety profile. What is an ETF? An ETF is a type of investment fund that trades on stock exchanges, much like individual stocks. It holds a collection of assets, such as stocks, bonds, or commodities, and aims to track the performance of a specific index, sector, or asset class. Uses of ETFs Diversification : ETFs allow investors to gain exposure to a wide range of assets without having to purchase each individually. For instance, an ETF tracking the S&P 500 gives you exposure to 500 different stocks, reducing the risk associated with individual stock investments. Cost Efficiency : ETFs often have lower expense ratios compared to mutual funds. They typically pass on lower management costs to investors since they are often passively man
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Some Important Points from RBI Master Circular 2015 for AML-KYC certificate exam

·       *  Objective of KYC/AML/CFT guidelines is to prevent banks/FIs from being used intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities.
    
     *  Bank/FIs should frame their KYC policies incorporating the following four key elements –
o   Customer Acceptance Policy (CAP)
o   Customer Identification Procedure (CIP)
o   Monitoring of Transactions
o   Risk Management

  • Maintenance of KYC documents and Preservation of records
    • Maintenance of Records as per PML rules, 2005
      • All cash transactions of the value more than Rs. 10 lakh or its equivalent in foreign currency
      • Series of all cash transactions individually valued below 10 lakh or its equivalent in foreign currency done within a month and monthly aggregates which exceeds 10 lakhs or its equivalent in foreign currency.
      • All transactions involving receipt by NGO of value more than 10 lakhs or its equivalent in foreign currency.
      • All suspicious transactions whether or not in cash.
      • All cash transactions, where forged or counterfeit currency notes or bank notes have been used as genuine.
    • Preservation of Records
      • As per PML amendment Act 2012, banks/FIs should maintain at least 5 yrs from the date of transaction between bank/FI and client.
      • All the documents taken for identification from customer should be preserved for at least 5 yrs after the business relationship is ended.
      • Banks/FI may maintain record in soft or hard copy.

Reporting Requirement

 General Guidelines

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