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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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Risk Categorization of Customers


For effective maintenance of Anti Money Laundering (AML), Customers in bank has been categorized in three types based on risk associated with them-

1) Low Risk Customer
2) Medium Risk Customer
3) High Risk Customer

Frequency of Updating Customer Identification Data i.e Photographs and Address Proof

1) Low Risk Customer - 10 Years
2) Medium Risk Customer - 8 Years
3) High Risk Customer - 2 Years


Frequency of Activities of Updating Customer Identification Data - Quarterly (April, July, October and January)

Examples

1) Low Risk Customer - Salaried Employees whose salary structures are well defined, People belonging to lower Economic strata of the society whose accounts show small balances and low turnover, Government Departments and Government owned companies, regulators and statutory bodies

2) Medium Risk Customer - Customers that are likely to pose a higher than average risk depending on customer’s background, nature and location of activity, country of origin, sources of funds etc like

a) Persons who is indulged in such business or industry or trading activities where the area of his residence or place of business has a scope or history of unlawful trading or business activities.

b) Where the client profile of the person who is opening an account, according to the perception of
the branch is doubtful.

3) High Risk Customer - Non-Resident Indian (NRI), High Networth Individual (HNI), Political Exposed Person (PEP), NGOs, Trusts, Hindu Undivided Family (HUF), Exporters, Importers, Co-operative Societies , Unclaimed Deposits, Dealers of Jewelries (Gold, Silver, Diamonds etc)


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