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<div type="image" title="Are Indians depositing less money in banks, or more in mutual funds? Turns out, it&amp;#39;s neither of those." msid="113663806" hostid="261" sizebytes="1121785"></div> Over the past few months, there’s been a lot of brouhaha about the lagging pace of <keyword id="20202062" type="General" weightage="20" keywordseo="bank-deposits" source="keywords">bank deposits</keyword> in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialisation of <keyword id="20751315" type="General" weightage="20" keywordseo="household-savings" source="keywords">household savings</keyword> in the country or the rising preference of Indians towards <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian <keyword id="19949641" type="General" weightage="20" keywordseo="equity-markets" source="keywords">equity markets</keyword> through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by Franklin Templeton, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are household deposits really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. <div type="image" title="Yes, household deposits (as % of total deposits) have dipped, but the drop is far from significant" msid="113663882" hostid="261" sizebytes="306706"></div> Also, we can’t forego the fact that the share of Indian households in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and <keyword id="114757" type="General" weightage="20" keywordseo="savings-account" source="Orion">savings account</keyword> deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (Central Board of Direct Taxes) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of Securities Transaction Tax (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell <keyword id="6361918" type="General" weightage="20" keywordseo="equity-mutual-funds" source="Orion">equity mutual funds</keyword>, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by <keyword id="45369" type="General" weightage="20" keywordseo="equities" source="Orion">equities</keyword> can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in <keyword id="19998084" type="General" weightage="100" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the Fed recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next MPC (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day. Do you have insights or personal experience to share on your personal finances or money? Contact us at <a target="_blank" class="c-link" href="mailto:businessinsider@timesinternet.in">businessinsider@timesinternet.in</a>.

Simply Put: A Deposit Dilemma — What's the fuss about a crisis in Indian bank deposits? Are mutual fund investments to blame?

<ul class="summary-list"><li>My bank has lowered the APY on my high-yield savings account by almost half a percent recently.</li><li>I'm not happy that my cash is generating less returns now, and I don't know what to do.</li></ul>It's never pleasant to receive an email from your bank informing you that the interest rate on your <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/best-high-yield-savings-accounts-rates-right-now">high-yield savings account</a> is decreasing.Unfortunately, like many Americans happy to collect a robust yield on their savings, I've gotten three of these notifications in the last three months as the Federal Reserve has begun to lower interest rates. From August until the end of October, the annual percentage yield (APY) on my high-yield savings account has fallen from 4.6% to 4.2%.I opened this bank account almost two years ago, right after graduating from college. Back in 2023, with inflation still elevated, interest rates were at their highest levels since the Great Financial Crisis, and it seemed like most banks were offering near-5% yields on savings. After paying off my bills every month, I would put the remainder of my paycheck into my high-yield savings account and watch the number creep up.Now, it looks like the days of a 5% APY are in the past. In September, the Federal Reserve dished out a 50 basis-point rate cut, signifying the beginning of the end for high rates. Continuing this trend, the central bank's chair, Jerome Powell, announced a <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">25 basis-point cut</a> last week, and is expected to slash rates further in the months ahead.Is there anything I can do about the state of my savings account, or do I have to watch my yield erode away slowly? Curious, I asked three financial experts for their advice on this topic.As a famous politician once said, we didn't just fall out of a coconut tree. Context is important. Patti Black, a financial advisor at Savant Wealth Management, reminded me that the recent high interest rate environment is a marked departure from the last decade, where interest rates were near zero and there was no yield on cash to be found. So, while yields dropping from nearly 5% might seem like a tough pill to swallow for someone like me who just opened an account in the last couple of years, it's still a pretty good deal when you consider where rates have been in the past.I didn't have a bank account during the post-2008 zero-interest rate policy era, so this was helpful context to have. Perhaps my generation is indeed coddled — first by our parents and now by Jerome Powell's post-pandemic rate hikes.Black also suggested that I switch up my perspective. While a rate-cutting cycle means less return on my cash, it also means lower borrowing costs for a car loan or a mortgage, which is good news for the housing market.But there are other options for where I can have my money sit, Black said. Of course, one alternative is a <a target="_blank" href="https://www.businessinsider.com/cd-rates-certificate-deposit-high-interest-where-to-invest-now-2024-10">certificate of deposit</a> (CD), which is essentially a savings account that holds money at a fixed interest rate for a fixed period of time. CDs generally pay higher interest rates than savings and money market accounts in exchange for locking up your money for anywhere between three months to many years. However, my hands are a little tied. A well-known rule of thumb is to keep three to six months of living expenses available in your bank account as an emergency fund (read: liquid and highly accessible), so it's not a good idea to lock up money in my high-yield savings account for a prolonged period time. I could withdraw my money from the CD if needed, but I'd have to pay back some or all of the interest I'd generated up until that point as a penalty.With this in mind, Black said that sometimes it doesn't matter what the rate on the high-yield savings account is — it's the best place to park cash for easy access.Armed with this context, I still wanted to see if there were more ways to put my cash to work for me.Daniel Milan, financial advisor at Cornerstone Financial Services, had some more thoughts on CDs. A three-month CD could be a good option if I were comfortable locking up my money for that period of time, according to Milan.My bank didn't offer CDs, so I would need to open up a new bank account, which isn't necessarily a bad thing. Some financial experts recommend having <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/how-many-savings-accounts-can-you-have">multiple bank accounts</a> for different savings goals. Searching online, I saw <a target="_blank" href="https://www.businessinsider.com/personal-finance/banking/best-3-month-cd-rates">multiple options</a> yielding over 4.6%.However, Milan didn't recommend locking up my money for longer. Usually, the longer the term of the CD, the higher the rate. But that's not always the case in today's market."In this current environment, it makes no sense to go further out than three months on a CD because the three-month CD is paying you more than a one-year or two-year right now," Milan said.Looking at CD offerings from a variety of banks, I discovered that this was indeed true — generally, the longer the CD duration, the lower the rate, especially after a 1-year duration. Rates on 6-month and 9-month CDs were also attractive depending on the bank, but again, my liquidity needs take those off the table.Many of the banks I looked at didn't offer short-term CDs, either. For example, one option offered a 4.5% APY on an 11-month CD, 3.7% on a 2-year, and 3.5% on a 5-year.It wouldn't make sense to move my money out of my savings account without high enough compensation for the lower liquidity."You're not getting paid for that illiquidity," Milan told me.Short-term <a target="_blank" href="https://markets.businessinsider.com/bonds">Treasury bills</a> are another investment option for higher yield, and they offer more liquidity than CDs, according to Richard McHorter, a private wealth advisor at SRM Private Wealth. A three-month Treasury bill currently yields 4.43%.There's also the added benefit of tax savings, which is especially appealing for McHorter, who lives in California: "If you're a resident of a high-income tax state, I would be looking at Treasury bills."As a resident of New York City, the idea of lower taxes certainly appeals to me. If I were to buy Treasury bills, I would only need to pay federal taxes, bypassing state and local income taxes.McHorter also said that there's a lot of uncertainty about interest rates right now, and they could actually start going back up again. Trump's proposed <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariffs-hit-company-stock-profits-hardest-china-investing-manufacturing-2024-11">tariff policies</a> could increase inflation, in which case the Fed would probably increase rates to combat an overheating economy, he said.If I buy a three-month Treasury bill, I can reassess the inflation situation when I get my money back in three months and reinvest it accordingly, McHorter said.When it comes to interest rates and inflation, pay attention to the data and don't try to predict the market with your money, Milan advised. <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">Jerome Powell</a> himself has said that it's too soon to say how the election results could reshape markets and interest rates."My advice to anybody would be: just be diligent in reading and interpreting the data as it comes out," Milan said. Watch inflation data and Fed commentary, and base your investing decisions on the information you have at hand.It feels like the market is a bit in limbo as everyone waits for the effects of the election to ripple through, but as Black mentioned, not taking any action right now isn't the worst decision.What's next? For starters, I'm going to sit down and crunch some numbers for what three to six months of living expenses look like for me and keep that in my high-yield savings account. With the money I have left over, I have some good options.Are you a Gen-Zer who has recently been faced with an investing predicament? Feel free to reach out to Christine at <a target="_blank" href="mailto:cji@businessinsider.com">cji@businessinsider.com</a> to share your story.

The interest rate on my high-yield savings account keeps dropping. I asked 3 experts how to earn more on my cash.

New Delhi [India], July 19 (ANI): Households are choosing the <keyword id="20033427" type="General" weightage="20" keywordseo="capital-markets" source="keywords">capital markets</keyword> over the <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> to park or invest their <keyword id="25450" type="General" weightage="20" keywordseo="savings" source="Orion">savings</keyword>, highlighted <keyword id="64190" type="General" weightage="20" keywordseo="RBI-Governor" source="Orion">RBI Governor</keyword> <keyword id="3083263" type="General" weightage="20" keywordseo="Shaktikant-Das" source="Orion">Shaktikant Das</keyword> during his address at FE Modern BFSI (Banking, Financial Services, and Insurance) Summit 2024 on Friday. Governor Das highlighted that traditionally, banks were the primary choice for households to invest their money. However, there has been a noticeable change in consumer behaviour, with a growing preference for capital markets and other <keyword id="5869841" type="General" weightage="20" keywordseo="financial-intermediaries" source="Orion">financial intermediaries</keyword>. He noted, "Households and consumers who traditionally leaned on banks for parking or investing their savings are increasingly turning to the capital markets and other financial intermediaries." This trend indicates a broader diversification of <keyword id="22469312" type="General" weightage="20" keywordseo="household-investments" source="Orion">household investments</keyword> into <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and other savings tools, moving away from traditional investment tools. The Governor stated, "While bank deposits continue to remain dominant as a percentage of the financial assets owned by the households, their share has been declining, with households increasingly allocating their savings to Mutual Funds, Insurance Funds, and Pension Funds." Governor Das also pointed out that this shift in investment patterns has significant implications for the banking sector. Banks now need to explore alternative methods to bridge the gap between credit and deposits. He added, "On their part, banks have sought to fill the credit-deposit gap by increasing their reliance on other sources like short-term borrowings and certificates of deposit, etc. This increases their sensitivity to interest rate movements and poses challenges to liquidity management." The Governor further elaborated on the implications of the shift from CASA (Current Account Saving Account) deposits, stressing that banks must remain vigilant and adaptive. He stated that banks need to continuously focus on improving and refining their credit underwriting standards and the pricing of risks to maintain stability and profitability. Reflecting on recent global banking events, Governor Das drew attention to the banking crises in the US and Switzerland in 2023, which highlighted the risks and vulnerabilities inherent in certain business models. He emphasized the importance of learning from these crises to enhance the resilience of the banking sector. "The banking crisis in the US and Switzerland in 2023 has again brought into focus the risks to banking stability from certain business models and their inherent vulnerability," he added.

Household savings are choosing mutual funds over banks to invest savings: RBI Governor

<div type="image" title="For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire" height="900" width="1200" msid="114064202" hostid="261" caption="&amp;lt;p&amp;gt;For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire&amp;lt;/p&amp;gt;"></div> Once upon a time, there thrived a wild, wild land. Here, it was all about super high monetary stakes, lightning-fast trade deals, and bucketloads of money shifting hands every single second. This wilderness lured millions of individuals with the promise of super duper high returns. But, at what cost? Welcome to the unforgiving, ultra-risky wild west of <keyword id="19991165" type="General" weightage="20" keywordseo="Indian-equity-markets" source="keywords">Indian equity markets</keyword> called the <keyword id="145718" type="General" weightage="100" keywordseo="Futures-and-Options" source="Orion">futures and options</keyword>. Here, everyone seems to just fly right through the bright red-flagged warnings of financial risks to earn even a fraction of these promised returns. Most burn themselves in the process, but carry on nevertheless, as if nothing ever happened. <h2>Chasing the cloudy profits</h2>The data conclusively proves that every 9 out of 10 individuals only lost their hard-earned money in this land. But hey, what do the numbers know? Some hide their losses out of shame, some out of fear. The proponents, meanwhile, proudly boast unusually high returns on their investments, some open social media channels while others encourage their friends and family to take the plunge. Naturally, news of this unstoppable and humongous en-masse migration to the F&amp;O (futures and options) town has reached sheriff <keyword id="19901201" type="General" weightage="20" keywordseo="SEBI" source="keywords" meta.keywordsubtype="org" meta.entityname="SEBI" meta.hostid="261" meta.entityid="SEBI">SEBI</keyword>, galvanising them into action. After all, it was time to put a leash on this madness and save the common man. The inhabitants of this town doubled in the last 2 years, from 51 lakh in FY22 to 96 lakh in FY24—99.8% of whom were small and mid-income traders. But profits? Well, that's a different, rather completely absent story. <h2>Que Sera Sera, much?</h2>A recent report by SEBI (Securities and Exchange Board of India) that studied profits and losses made by traders in the equity derivatives segment between FY22-24 exposed the mad mania of futures and options trading in India, especially since the pandemic. Per the report, 91.1% of individual traders, or about 73 lakh traders had only lost money trading in futures and options in FY24. Between FY 22-24, over 1 crore traders, or about 92.8% of individual traders, had lost Rs 2 lakh each. But once bitten, twice shy? Well, not in this case. More than 75% of individuals, who had only made losses trading in F&amp;O in FY22 and FY23, continued to trade vigorously in FY24 as well, without any changes in the bottom line, which remained deep in red and negative. So, then all these traders must be uber-rich, with tons of cash and not much care to spare? Nope. 76% of traders in the F&amp;O space in FY24 had an annual income of less than Rs 5 lakh. 2 years ago, their share stood at 71%. And their choice of poison? Options! In FY24, 60% of traders made losses trading in futures, but a whopping 91.5% burnt their funds trading in options. Mind you, futures are riskier than options. With futures, which require significant capital investment, the buyer and seller both are contractually bound to adhere to the pre-determined strike price of the futures or options contract, irrespective of whether the prevailing prices are higher or lower (and thus, resulting in losses for either the buyer or seller). With options, since this adherence ain't necessary, individuals end up taking debt to take highly leveraged positions while trading here. <h2>Scale of the explosion</h2>Anyone who trades even infrequently will tell you that a demat account is the mitochondria or powerhouse of the trading cell. As of August 2024, India had over 17.1 crore <keyword id="20957284" type="General" weightage="20" keywordseo="demat-accounts" source="keywords">demat accounts</keyword>, which are a prerequisite for trading in the markets. India is the 9th biggest country in the world, in terms of total demat accounts. Did you know that our demat accounts are at par with the entire population of Bangladesh? Talk about scale! Just 4 years ago, in March 2020, this number was a mere 4 crore. Naturally, the total F&amp;O turnover on both <keyword id="20004725" type="General" weightage="20" keywordseo="NSE" source="keywords" meta.keywordsubtype="org" meta.entityname="NSE" meta.hostid="261" meta.entityid="NSE">NSE</keyword> and BSE has hit the roof, and also broken it. As of October 4, 2024, the total futures and options turnover on NSE stood at a massive Rs 4,78,27,27,750.30 crore. Good luck counting the thousands! <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total Turnover (Both Futures and Options) (In Rs Crore) </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2020-21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">64,36,03,951.51 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2021-22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1,69,52,33,134.47 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2022-23 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3,82,23,26,468.06 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2023-24 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7,99,27,67,152.43 </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source : NSE Another metric that underlines the meteoric growth of trading in India is the collection of STT or <keyword id="20930760" type="General" weightage="20" keywordseo="Securities-Transaction-Tax" source="keywords">Securities Transaction Tax</keyword>. As of September 2024, India's STT mop-up had gone past Rs 26,000 crore. Traders have to pay STT whenever they buy or sell any security in the market. So, more trading brings in more STT, and hence, more revenue for the government, so they're not really complaining. After all, this is certainly what they'd call enviable growth. As of August 2023, our STT collection stood at about Rs 21,599 crores. And in FY20-21, India's STT collection had been Rs 16,000 crore. If only our salaries also managed to grow at this rate! <h2>So, what's happening?</h2>Two things. One, it's the big bulls who are raking in all the moolah. And it's the younger lot (those aged under 30) who are propping them up for this. In FY24, 43% of individual traders in the market were less than 30 years of age. In just one year, this number has swelled by 12 percentage points from just 31% of individual traders. But who says ageing is bad? Wrinkles and silver hair seemingly have a propensity of incurring lesser losses in the market. In FY24, only 79% of traders aged above 60 years made losses, as compared to 93% of those aged below 30. Small and mid-income traders, which make up 98% of the total trader base, witnessed average losses per person of Rs 65,000 and Rs 1.5 lakh in FY24 in futures and options, respectively. The winner here? Clearly, the big bulls, who declared an annual income of over Rs 1 crore, ended up with average profits of Rs 96,000 per person this year. <h2>What’s the sheriff up to?</h2>The government has finally swung into action, hiking the STT rate for F&amp;O during this year’s budget. Effective October 1, 2024, the STT on futures stands at 0.02%, up from 0.0125%. For options, it was upped to 0.1% versus 0.0625% previously. Small margins, but huge impact oncoming. Says Puneet Sharma- CEO and Fund Manager at Whitespace Alpha, “SEBI aims to enhance market stability while safeguarding investor interests, reflecting the regulator's intent to balance risk management with market participation”. But this might come with its own share of challenges, too. “Stricter norms around leverage, transparency, and capital adequacy could limit the ability of investors to determine their own risk appetite, thereby stifling innovation in trading strategies. Over-regulation in an environment that thrives on strategic flexibility and creativity could dampen the market’s dynamism, affecting India's competitiveness in the global derivatives landscape”, he observes. SEBI recently came out with a set of guidelines that aim to thwart <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword>' participation in futures and options and hinder them from taking undue risks. Here's a quick recap of what's to come for the residents of the F&amp;O town Margin Requirements: To battle the high volatility and chaos which is generally seen on expiry days(i.e the last mandated date, post which an option becomes invalid), SEBI will put in place an extreme loss margin (ELM) of 2% for all open short options on the day of expiry. Translation? Traders will need to pony up more cash upfront, leaving them with fewer funds to take on risky bets. It ain't a choice: No more of one expiry every single day! Going ahead, an exchange like BSE or NSE will just be able to offer weekly expiries, that too, only on one benchmark index, as opposed to an entire buffet it currently offers. At present, NSE offers weekly options contracts for its financial index, bank and midcap indices. But say goodbye to this, and hello to derivatives on only 1 index per exchange. Raising the bar: Effective November 30, 2024, the minimum contract value for index derivatives will be upped to Rs 15 lakh, from the present Rs 5-10 lakh. The hope is that by making it ultra-expensive to enter these trades, investors will be dissuaded from taking on risky trades. Pay upfront: Starting February 2025, those trading in options will have to pay the entire options premium upfront, even before their trades are executed. This is because options generally carry very high leverage, and paying a significant sum upfront can force traders to think twice. Invigilation Pro Max: Starting April 1 2025, to make sure that the number of positions for equity index derivatives does not slyly slip over the mandated limit, especially on expiry days when trade volumes are huge, the exchanges will have to take a minimum of 4 position snapshots randomly. The question is, will these injections of sobriety be enough to calm down the steroid-fed bull of the futures and options market in India? Well, only time and market turnover will tell! For more insights into the financial markets and business news, stay tuned to our site and social media handles. And don’t forget to subscribe to Business Insider India’s newsletters for your weekly dose of Simply Put! Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice.

SIMPLY PUT: SEBI is on a mission to take on the wild, wild west of futures and options in India. Here’s why, what, and how

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Welcome back to our Sunday edition, a roundup of some of our top stories. Before we get into it, some weekend inspiration: This guy was a CEO with $1 million in his bank account before turning 40. Then he packed it all in to run <a target="_blank" href="https://www.businessinsider.com/left-ceo-job-pursue-passion-career-change-2024-9">a medieval Renaissance fair</a>.On the agenda today:<ul><li>We've been doing promotions in <a target="_blank" href="https://www.businessinsider.com/truth-promotions-companies-picking-managers-wrong-new-study-2024-9">the worst possible way</a>.</li><li>The biggest mistakes people make <a target="_blank" href="https://www.businessinsider.com/retirement-saving-why-half-retirees-could-run-out-of-money-2024-9">when preparing for retirement</a>.</li><li>Inside the island fortress of <a target="_blank" href="https://www.businessinsider.com/billionaire-bunker-miami-bezos-tom-brady-ivanka-trump-security-2024-9">America's mega-billionaires</a>.</li><li>Meta is winning <a target="_blank" href="https://www.businessinsider.com/meta-new-ray-ban-smart-glasses-apple-vision-pro-2024-9">the glasses wars</a>.</li></ul>But first: IsMrBeast the ultimate "founder mode" leader?If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today-sunday-edition">sign up here</a>. Download Insider's app <a target="_blank" href="https://www.insider.com/app">here.</a><h3 id="58506b3b-b008-4ead-9e90-71439c9e98dd">This week's dispatch</h3><div type="image" title="MrBeast" height="975" width="1300" msid="113787189" hostid="261" sizebytes="35876"></div><h2 id="2a7b4701-4b9e-48dd-b7c6-5bd656268197">MrBeast mode</h2>MrBeast is YouTube's biggest star, a <a target="_blank" href="https://www.businessinsider.com/new-mrbeast-trademark-filing-philanthropy-charity-project-team-water-2024-9">philanthropist</a>, and a <a target="_blank" href="https://www.businessinsider.com/youtube-star-mrbeast-expects-700-million-revenue-this-year-2024-6">snack entrepreneur</a>. You can now add Silicon Valley thought leader to the list.The social media star, real name Jimmy Donaldson, put together a handbook breaking down his <a target="_blank" href="https://www.businessinsider.com/leaked-mrbeast-guide-reveals-youtube-secret-weapons-for-success-2024-9">secrets to success</a>. The 36-page guide, intended for staffers at MrBeast Production, says Donaldson wants a team of obsessives who are coachable, don't make excuses, and "are the best in the goddamn world at their job."The guide includes lines such as "take ownership and don't give your project a chance to fail," and "own shit so we can address how to fix it and then move on."When the document leaked, fans and wannabe employees poured through the pages. But so did Silicon Valley, where techies likened Donaldson's approach to the hardcore "<a target="_blank" href="https://www.businessinsider.com/founder-mode-manager-dividing-silicon-valley-2024-9">founder mode</a>" style of leadership."I think this is resonating because it's so counter to the current trends in work culture today, which seem soft by comparison," one marketing advisor <a target="_blank" href="http://businessinsider.com/tech-world-captivated-with-mrbeast-training-document-founder-mode-2024-9">told Business Insider</a>.<div type="image" title="An employee in a spotlight that also acts as a megaphone" height="1500" width="2000" msid="113787188" hostid="261" sizebytes="39338"></div><h2 id="3fd3d286-9128-4fdf-98a7-cb928cbf9001">The truth about promotions</h2>We might be doing promotions all wrong. In a new study, researchers found that in some cases, the practices businesses use to hire managers are so bad that they'd actually be better off picking names out of a hat.Those practices, like hiring top performers or people who really want to be promoted, don't translate to effective managers. Instead, researchers found, selecting managers based on intelligence and decision-making skills can result in stronger leaders.<a target="_blank" href="https://www.businessinsider.com/truth-promotions-companies-picking-managers-wrong-new-study-2024-9">How to hire a manager</a>.<h2 id="fa1eb3c8-10a8-42fd-b4f7-5b00f5a61a5b">Retirement savings no-no's</h2>About 45% of Americans will run out of money in retirement — even those who invested and diversified. In particular, single women face a 55% chance of depleting funds, even higher than single men and couples.If you're aiming to retire at the standard age of 65, avoid these mistakes so you can keep your golden years golden.<a target="_blank" href="https://www.businessinsider.com/retirement-saving-why-half-retirees-could-run-out-of-money-2024-9?utm_source=Iterable&amp;utm_medium=email&amp;utm_campaign=campaign_Insider%20Today%20-%20Thu,%20Sep%2026,%202024&amp;Utm_content=LimitedPromo">The four biggest retirement mistakes</a>.<div type="image" title="Cameras and boats surrounding a residential island" height="1000" width="2000" msid="113787194" hostid="261" sizebytes="176844"></div><h2 id="2a39b74f-b08c-4bc8-9a21-ed6c87a6f9e0">Welcome to Billionaire Bunker</h2>Indian Creek Village is more than just a private island city in Florida. It's home to the elite of elites: Tom Brady and Jeff Bezos both have mansions there.But approach at your own peril. A large chunk of Indian Creek's budget goes to its police department, which patrols the island's sole entrance and perimeter 24/7. Through federal funding, the town has amassed an abundance of other security measures, making it the most gated community in a country of gates.<a target="_blank" href="https://www.businessinsider.com/billionaire-bunker-miami-bezos-tom-brady-ivanka-trump-security-2024-9">Inside America's wealthiest town</a>.<div type="image" title="a brain wearing Meta's smart glasses" height="1500" width="2000" msid="113787192" hostid="261" sizebytes="288714"></div><h2 id="83973c79-472c-4429-97bb-4d74e0dda2ff">Glasses rule, phones drool</h2>Meta CEO Mark Zuckerberg announced Orion, a prototype pair of augmented-reality glasses this week. The specs reportedly cost about $10,000 a pair to make, but aren't currently for sale.The glasses mark the latest attempt by a Big Tech company to break into a hard-to-crack industry: AR and VR wearables. And with Meta's smart Ray-Ban glasses doing better than expected, the company appears to be winning the glasses wars.<a target="_blank" href="https://www.businessinsider.com/meta-new-ray-ban-smart-glasses-apple-vision-pro-2024-9">What Meta got right</a>.Also read:<ul><li><a target="_blank" href="https://www.businessinsider.com/orion-meta-ar-smart-glasses-review-2024-9">I tried out Meta's Orion AR glasses. I'd buy them in a heartbeat — if they were actually for sale</a>.</li></ul>This week's quote:"We are not a normal company."— Sam Altman in a note to OpenAI staff <a target="_blank" href="https://www.businessinsider.com/sam-altman-openai-note-more-staff-exits-barret-bob-2024-9">announcing executive exits</a>.More of this week's top reads:<ul><li>The turmoil at OpenAI is a bad look <a target="_blank" href="https://www.businessinsider.com/openai-implosion-investors-vcs-2024-9">for its huge funding round, VCs say</a>.</li><li>Jamie Dimon isn't a fan of junior bankers with <a target="_blank" href="https://www.businessinsider.com/jpmorgan-jamie-dimon-junior-bankers-private-equity-jobs-unethical-2024-9">hush-hush private-equity jobs</a>.</li><li>Nvidia's days of absolute dominance in <a target="_blank" href="https://www.businessinsider.com/nvidia-competition-sambanova-groq-cerebras-show-faster-inference-speed-2024-9">AI could be numbered</a>.</li><li>Salesforce is going to <a target="_blank" href="https://www.businessinsider.com/salesforce-closing-hillsboro-oregon-office-amid-rto-push-2024-9">close its Portland office</a>.</li><li>South Korea is going big on American manufacturing. <a target="_blank" href="https://businessinsider.com/south-korea-companies-jobs-manufacturing-evs-chips-batteries-2024-9?sd">The Battery Belt could benefit the most</a>.</li><li>America's business giants are <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-recession-economy-american-companies-profits-trade-war-2024-9">starting to lose faith in China</a>.</li><li>Leaked email shows Twitch is <a target="_blank" href="https://www.businessinsider.com/twitch-not-following-amazon-rto-policy-2024-9">not following Amazon's new RTO policy</a>.</li><li>The Olivia Nuzzi-RFK Jr. story is still spinning out. <a target="_blank" href="https://www.businessinsider.com/olivia-nuzzi-rfk-jr-reaction-vox-media-new-york-magazine-2024-9">New York magazine staffers still have questions</a>.</li><li>Microsoft just punted on a big AI decision. <a target="_blank" href="https://www.businessinsider.com/microsoft-punts-365-ai-bundle-pilot-tests-copilot-2024-9">It could be a bad sign</a>.The Insider Today team: <a target="_blank" href="https://www.businessinsider.com/author/dan-defrancesco">Dan DeFrancesco</a>, deputy editor and anchor, in New York. <a target="_blank" class="" href="https://www.businessinsider.com/author/jordan-parker-erb">Jordan Parker Erb</a>, editor, in New York. Grace Lett, editor, in Chicago. <a target="_blank" class="" href="https://www.businessinsider.com/author/amanda-yen">Amanda Yen</a>, fellow, in New York.</li></ul>

Insider Today: Retirement savings mistakes

<ul class="summary-list"><li>JPMorgan and Wells Fargo kick off bank earnings on Friday.</li><li>Expect lots of questions about how lower rates will impact business going forward.</li></ul>When Wall Street's biggest banks report earnings this week, led by JPMorgan Chase, investors will be listening closely for clues about how a changing interest-rate environment could impact business in 2025.The Federal Reserve in September cut the so-called federal funds rate by 50 basis points — <a target="_blank" href="https://markets.businessinsider.com/news/stocks/fed-interest-rate-cut-ai-stocks-nvidia-broadcom-asml-tech-2024-9?_gl=1*1ax8rwf*_ga*MzQwMzI0MDQ1LjE3MjEzMDM4ODI.*_ga_E21CV80ZCZ*MTcyODQ5MTE5OC4yOTAuMS4xNzI4NDkxMjEwLjQ4LjAuMA..">the central bank's first cut</a> in more than four years. The September 18 move took place too late to impact third-quarter results, but stock research analysts are expected to pepper executives this earnings season about what a lower interest-rate environment might mean for business going forward.Lower rates can be a mixed blessing for banks. On the one hand, the Fed's campaign to increase the cost of borrowing has contributed to an era of sky-high returns for traditional lenders like JPMorgan, which have been making more money on loans than they have been paying for deposits. But that party was never going to last forever. (Indeed, top JPMorgan exec <a target="_blank" href="https://www.ft.com/content/c11b59f6-4827-4c4e-9f24-2f075b85f665">Daniel Pinto warned last month</a> that stock analysts' so-called NII expectations were too high.)Plus, lower rates could help unleash <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-2q-earnings-david-solomon-investment-banking-forecast-2024-7">the dealmaking backlog</a> that investment bankers have been talking about since the pandemic-era M&amp;A boom started to slow in 2022. Their bonuses are counting on it.Speaking of bonuses, third-quarter results will also be closely watched on Wall Street as an indication of how well investment bankers may get paid this year.JPMorgan and Wells Fargo will kick off earnings on Friday, followed by Goldman Sachs, Citi, and Bank of America on Tuesday. Morgan Stanley will report its earnings on Wednesday. Here are the top four things to look for this bank earnings season:<h2 id="629d7158-9393-4502-a5a4-b8a898b107c5">Investment banking</h2>Investment bankers have been predicting dealmaking will return since it started slowing in 2022. But this year, there are strong signs that companies are ready to start going public and merging again.<a target="_blank" href="https://www.businessinsider.com/megamergers-deals-m-a-wall-street-comeback-2024-9">Preliminary data compiled by LSEG</a> shows 425 mergers globally so far this year valued at more than $1 billion. That's up 24% from the same period in 2023. What's more, deals valued at greater than $10 billion were recently up 39% compared with the same period last year.The number of companies going public is also soaring. 106 US companies have gone public through the third quarter, raising a total of $24.7 billion, according to IPO tracker Renaissance Capital. That's up from 71 in 2022 and 108 in 2023 and on track to beat the $27 billion raised in those two years.Third-quarter results — and commentary about 4Q dealmaking so far — will be closely watched for further signs of progress in M&amp;A, equity underwriting, and debt underwriting.<h2 id="bf745d80-abee-4488-881c-e8551a17811c">Trading</h2>At the Barclays Financial Services conference in September, big bank executives warned that trading revenues may be muted compared to 2023.Goldman Sachs CEO David Solomon described a "more challenging macro environment, particularly in the month of August," and warned that the bank's trading business "is trending down close to 10%." Solomon cited the bank's revenues for FICC, or fixed-income, currencies and commodities, saying that results were "very, very strong" in the third quarter of 2023.At the same conference, JPMorgan's president and chief operating officer, Daniel Pinto, predicted that trading revenues would be "flat to slightly up 2%." "It was a bit more challenging environment to monetize client flows, particularly in rates," he said.<h2 id="723af9a4-99cc-49fd-b909-2fc736985cbb">Lending</h2>Stock analysts will be watching what banks say about net interest income, which is how much banks earn off the difference between what they pay on deposits and what they earn on loans. When the Fed started raising rates, banks were making out like bandits because they were able to charge more for loans more quickly than they were raising rates on savings accounts.But banks have been warning that this dichotomy wouldn't last forever, and loan growth has indeed been slowing as the economy slows. Lower rates could boost lending yet again, but that could take time. In the meantime, JPMorgan's Pinto in September warned that Wall Street stock analysts' 2025 predictions for NII of between $91.5 billion and $90 billion were too high, sending the bank's stock down."I think that that number will be lower," Pinto said at the Barclays Financial Services conference. "We are not going to guide on that now, but the $90 billion is a bit too high."<h2 id="b126e3af-7e38-4ed0-b6d7-4e67905737f9">Bonuses</h2>Banks tend not to talk about bonuses on earnings calls, but how bankers will be paid will be reflected in C-Suite comments about dealing and trading generally — as well as their predictions for the rest of 2024 and into next year.In good news, compensation expert Johnson Associates sees bonuses up this year across the board, an analysis that's reflective in part of <a target="_blank" href="https://www.osc.ny.gov/press/releases/2024/10/dinapoli-wall-streets-2024-first-half-profits-232b-were-793-higher-last-year">Wall Street's earnings results</a> so far this year. See here for the compensation expert's views on bonuses for debt underwriting, equity underwriting, sales and trading, and more.<div type="image" title="Wall Street bonus predictions" height="630" width="1950" msid="114096916" hostid="261" sizebytes="88820"></div>

4 trends to watch this bank earnings season

<ul class="summary-list"><li>Mastercard, an international card-payment-services company, interacts with banks worldwide.</li><li>The company has used AI to try to identify when customers may be about to be defrauded.</li></ul>For "CXO AI Playbook," Business Insider takes a look at mini case studies about AI adoption across industries, company sizes, and technology DNA. We've asked each of the featured companies to tell us about the problems they're trying to solve with AI, who's making these decisions internally, and their vision for using AI in the future.Since 1966, Mastercard has been a provider of payment-card services to the world's biggest banks and millions of consumers. The company is adapting to the constantly evolving threats scammers and criminals pose to its customers.<h2 id="ec04abf8-6dc5-4015-93f4-02f9ad5ed95c">Situation analysis: What problem was the company trying to solve?</h2>"For decades, payment fraud used to be people using your card details that they'd either bought, found, or counterfeited, either in person or online," Chris Reid, the executive vice president of identity solutions at Mastercard, told Business Insider.But trends in payment fraud have changed — and banks and card providers have to keep up. One of the key new trends in fraud, Reid said, is what's known as authorized-push-payment fraud, where a scammer persuades someone to send them money by pretending to be a reliable figure, such as a bank, public authority, or romantic partner.Understanding when a card user is about to send a lot of money — and lose it — to a scammer is tricky, Reid said. "How can we detect you are a victim or about to be a victim of crime?" he asked. The company believes artificial intelligence can help identify when that fraud is about to occur.<h2 id="b3cf2d12-27c1-409c-b92f-616d9a187a34">Key staff and partners</h2>The development of an AI fraud-detection system began as a pilot program in the UK. At Mastercard, the teams working on the project included Reid's identity group, the security and cyberinnovation team, and the open-banking team, which works on connecting competing banks with one another.<div type="image" title="chris reid headshot" height="1463" width="1951" msid="111691425" hostid="261" sizebytes="75034"></div>Reid said he believed the work couldn't have been done without buy-in from banks in the UK, including Lloyds Bank, NatWest, and TSB Bank, which put aside their rivalries to work together."This only works when we all come together," Reid said. "The nice thing we see around fraud and security is, every day, the banks are competing to win. On fraud and security, we're all competing to beat fraudsters."<h2 id="6fd30701-463a-4b66-b855-30c65acda283">AI in action</h2>With the support of those banks, the teams at Mastercard began developing an AI system to identify signs in the accounts of both victims and scammers that someone was about to be defrauded."We give our bank customers a three-dimensional view of the two accounts in question," Reid said.Mastercard's AI system is trained on data from both legitimate and fraudulent payment activities. Using this information, it monitors and identifies suspicious transaction behaviors and looks at data, such as payee names, to identify suspect transactions.It can also look at secondary and tertiary relationships linked to a fraudster's bank account."Crime needs to find a way out of the legitimate financial ecosystem," Reid said. "You tend to find funds flow out into various mule or drop accounts."The system provides an AI-powered risk score for transactions and accounts in real time, alerting the banks if Mastercard suspects a payment is being made to a known fraudster.<h2 id="0de6e3ad-c6e8-47ff-8ec6-6585acb0a367">Did it work, and how did leaders know?</h2>Reid said TSB "has been really transparent in helping us understand the efficacy of the solution."Based on the scale of the fraud prevented among TSB's customers, if it was extrapolated across the UK banking sector, "everything else being equal," the AI system would save an estimated £100 million, or $126 million, in the UK alone, Reid told BI.He added that Mastercard's tech was "really good" at identifying "impersonation scams, romance scams, and purchase scams."<h2 id="4b10d7e8-3d1f-4e76-a240-334aa7a6ce4a">What's next?</h2>Mastercard needs to keep up with scammers, Reid said."Fraud is an incredibly successful industry," he added. "Fraudsters are investing in product development and their own efficiency."For that reason, Mastercard plans to expand its AI systems. Currently, the system provides an AI-identified risk score for the potential victim's account. By the end of 2024, Mastercard wants to provide a risk score for scamming suspects to try to raise awareness among banks about their customers."That doubles the ability for us to stop the money getting to the criminals," he said. "We can tell the scammer's bank, 'This is a high-risk transaction; you might want to delay releasing the funds."Mastercard is also working to create more practical applications for the risk score, which is useful to banks at a high level but perhaps not for rank-and-file bank employees tasked with supporting victims."Contact-center agents, in this case, are trained and knowledgeable in fraud, but we need to be able to turn the score into something that's useful," he said. "We're working to be able to ultimately stop that crime."We want to hear from you. If you are interested in sharing your company's AI journey, email <a target="_blank" href="mailto:jhood@businessinsider.com">jhood@businessinsider.com</a>.

Mastercard's AI system is helping banks keep fraudsters in check — and it could save millions of dollars

<ul class="summary-list"><li>Laurie and Rich Ramelow were scammed out of $63,000 while buying a home in Texas.</li><li>A fraudster impersonated their escrow officer near the end of the buying process.</li></ul>Earlier this year, Laurie and Rich Ramelow decided to leave California and move to Texas to be closer to their daughter. Laurie, a former real-estate agent, and Rich, a project manager for a telecommunications company, found a 1,901-square-foot, four-bedroom home in San Antonio that seemed perfect. After their offer was accepted, they were sent instructions on a Friday in April to wire the escrow money. The following Monday, they heard from the escrow officer asking them to send the money they'd already sent. "She called and said, 'Where's the money?" Laurie, 55, told Business Insider. "I said, 'What?'" The Ramelows were <a target="_blank" class="" href="https://www.businessinsider.com/millennials-lost-down-payment-to-real-estate-wire-fraud-scam-2024-7">victims of a scam</a>. <a target="_blank" class="" href="https://www.businessinsider.com/millennial-buying-home-got-scammed-by-real-estate-wire-fraud-2024-3">A fraudster had impersonated</a> the Ramelows' escrow officer and swindled about $63,000 from them. "The timing was right, and the fraudster knew the address and all the parties involved," Laurie said. The Ramelows still ended up closing on the house in San Antonio, but it cost them a chunk of their future. <h2>They felt rushed to finish the deal when they didn't have to</h2>Prior to being scammed, the Ramelows were living in a house in Simi Valley, California, a city near Los Angeles, and weren't in a serious rush to buy their new home. The California home — also four bedrooms and just over 1,900 square feet — was their primary residence for over 30 years after they purchased it from Rich's parents. That buying process was a lot different. "It wasn't escrow with all these parties and everything transpiring," Rich, 55, told BI. "It was a quick and easy process with escrow because it was among family." The San Antonio purchase was, essentially, the Ramelows' first time buying a house on their own. They received wiring instructions — <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-score/wire-fraud">having never wired money before</a> — and noticed a certain urgency from the other side. But they kept going. <div type="image" title="San Antonio skyline" height="339" width="508" msid="112633835" hostid="261"></div>"There was an urgency to get escrow closed that day, which, for us, didn't really matter," Rich said. "We were buying it while we still had our house in California, so we shouldn't have fallen for being pressured into it. We should have just slowed down and taken our time." "We were just trying to go with the flow and we didn't want to be the ones holding up escrow," Rich added. Even Laurie, who was a real-estate agent until 2017, was unfamiliar with the escrow process. "I wasn't involved so much with escrow — escrow handled all that," she said. "I made sure they walked clients through and I never had that experience." Laurie had noticed a few grammatical errors in the email containing the fraudulent wiring instructions, but since she hadn't communicated much with the escrow officer beforehand, she chalked them up to harmless mistakes. <h2>The Ramelows' story follows a common pattern</h2>Lisa Plaggemier, the executive director at the National Cybersecurity Alliance, a nonprofit organization that advocates cybersecurity awareness and education, said the Ramelows' case followed <a target="_blank" class="" href="https://www.businessinsider.com/land-fraud-home-title-theft-prevention-tips-2023-9">a pattern she's seen before</a>. "The telltale signs of the language being a little bit off and that sense of urgency," Plaggemier told BI. "Those are two consistent things that we see very often." Small mistakes that can sometimes be telltale signs of a scam — like a missing letter in a word — went unnoticed. "I think that a lot of banks train their frontline staff to look for things like this," Plaggemier said. "It sounds like obviously there was a missed opportunity there," she added. <div type="image" title="A man and woman taking a selfie." height="1024" width="768" msid="112633837" hostid="261"></div><h2>The Ramelows had to liquidate retirement accounts to revive the deal</h2>The Ramelows still wanted to be closer to their daughter, so the sale continued, but they had to <a target="_blank" class="" href="https://www.businessinsider.com/real-estate-wire-fraud-scam-cost-homebuyer-life-savings-2024-3">sacrifice accumulated wealth</a>. "It was pretty devastating," Rich said. "We had to liquidate some funds from IRAs from retirement. It did have to cost penalties and that sort of thing, but we didn't want it to drastically fall through so we could still move on." Laurie and Rich weren't the only ones affected by the scam. Laurie's parents had contributed $20,000 to the $63,000 that was lost. They were able to retrieve that $20,000, save for a couple thousand dollars. The Ramelows, however, are still waiting to recover their money. They're working with <a target="_blank" class="" href="https://www.certifid.com/">wire-fraud-protection company CertifID</a> and the Secret Service to recover the funds, but their window is closing. "Usually the 90 to 120 days is when they would release funds back," Rich said. "We're still hoping, we're hopeful, but we understand, and we've learned our lesson." Correction: August 20, 2024 — An earlier version of this story included the name of a bank the wire-fraud scammer mentioned in their email to the Ramelows. It has been removed because Business Insider was unable to verify the bank’s involvement in the fraudulent wire transfer. A statement from a spokesperson for the bank was also removed.

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