REGULATING INDEX PROVIDERS IS THE NEED OF THE HOUR
Visa application for most western countries, including Schengen states and US, requires heaps of documents and physical visit to Visa Application Centre. Travellers can look at alternatives with cheaper visa fee and online processes.
Rates are for 30-90 days tourist visa
UAE*
Singapore
Vietnam
Indonesia South Africa
Visa Application Centres (VACs), including the likes of VFS Global, BLS International or Gateway Visa Services, mandatory travel insurance and other ancillary expenses like appointment fee, convenience fee, passport courier service charges, etc.
For instance, the visa fee for France is ₹7,100. VFS Global, the visa outsourcing company that processes Schengen visas, charges a service fee of about ₹1,825 and a convenience fee of ₹150.
The total visa process fee comes to at least ₹9,000 per adult. So, a family of four can expect to lose about ₹40,000 if the visas are rejected.
Optional services, like premium lounge, courier services, printing at the centre or collection of documents ₹3,700. ₹7,500 ₹2,400 ₹2,100 ₹2,600 0** about 18% were rejected India had the third largest number of schengen visa applications from home, among others, add to the total cost.
Moreover, most countries also ask for confirmed air tickets and hotel bookings as part of the visa application process. If you book a non-refundable ticket, you stand to lose the entire airfare in case of visa rejection. To protect against the risk of rejection, you can consider booking refundable tickets, which can cost 15-20% more. For instance, Ashar had paid 15% higher on refundable air tickets. So, she got a refund after the cancellation fees was deducted.
Take note that the convenience fee charged by a VAC is approved by respective governments. “The VFS Global service fee is duly approved by governments as per contractual agreements. For example, in the case of Schengen countries, the service fee for short stay visas can go up to a maximum of €40 (approximately ₹3,500) as per the EU visa code regulation. The service fee is different for each country according to what governments approve,” a VFS Global spokesperson said in an interaction with Mint.
Plan ahead
Visa rejection risk and long waiting periods are typically prevalent where applications to Western countries are concerned. Experts advise that prospective travellers should plan in advance, especially in the case of Schengen visas because the peak travel season for Europe is approaching. “Slots for France, Spain, Netherlands and other countries—where the visa approval rates are higher and are available within a month— are filling up fast,” said Priyesh Sharma, a travel consultant with expertise in Schengen and Canadian visas.
Yudhbir Singh, director-owner, Trimax International, a visa assistance provider, recommends that people apply for visas at least four months in advance. “The processing time across countries is not standard and can take about a month in some cases. Moreover, applying early for the visa will help as it will leave room to reapply in case of rejection or withdraw and apply again if there are delays,” he said.
Going through an agent may help, especially for those who are short on time or are applying for the first time as these agents are aware of the reasons that lead to approvals or rejections.
“Small details like what to include in the cover letter or the minimum balance to show in the bank account can influence the approval chances,” said Nikita Dresswala, founder, Teleport, a tech platform that simplifies visa applications.
Agents typically charge ₹500-5,000 for basic services like sorting the right documents, providing guidance on the cover letter, submitting the application at the embassy, etc. This small premium can help you save on the many ancillary charges that are slapped at the centre if one is not well informed.
“People are typically anxious for Schengen and US visas as these involve a lot of paperwork. For instance, the UK may reject a visa request if the applicant’s bank account statements show sudden withdrawals or deposits. If we notice such activity while reviewing documents, we ask the applicant to explain such transactions in the cover letter so that it doesn’t affect visa approval,” said Dresswala.
Sharma pointed out that some agents charge a higher premium of about ₹10,000-20,000 and get an early appointment slot. But, travellers should not confuse this with a guaranteed visa. “No agent can guarantee a visa, so don’t fall for that pitch and end up paying through your nose.”
If your application gets rejected, Singh advises that the traveller must apply again. “Rejections don’t have a bearing on future applications as long as the rejection is not done on the account of fake documents and misleading information.”
Look at easier options
Several countries, including Thailand, Kenya, Sri Lanka and Malaysia, have lately waived off visa fees for Indian citizens. In some cases, like in Kenya and Malaysia, you have to register online before travelling, and the application gets processed in one day, whereas for Mauritius, Maldives and Sri Lanka, you get free-of-cost visaon-arrival. You may consider these countries to avoid the hassle of taxing visa processes and expensive fees.
Other countries that follow an entirely online visa process, like Singapore, Egypt and Indonesia, among others, are also good alternatives with cheaper visa fee and shorter processing period (see graphic).
Trying to “beat the market” is taking a backseat today as investors seem to find “replicating the market returns” easier and more intuitive. In his seminal paper on ‘efficient market hypothesis’, Nobel laureate Eugene Fama’s theorem posits that it is not possible to beat the market as all information is fully reflected in the stock prices, and neither technical analysis nor fundamental analysis can help one achieve more than market returns on a sustained basis. However, it is possible to achieve market returns by passive investing.
Passive investing involves mimicking the indices and replicating the index components in the investment portfolio. Globally, the assets under management (AUM) under passive funds is growing more rapidly than actively-managed funds and has surpassed the active AUM. In India, passive industry AUM is over ₹6 trillion as on 30 November 2022 and, though still less than active AUM, is fast growing. Besides passive funds, the world of investing has several index-linked products like ETFs (Exchange Traded Funds), and index-linked derivatives. Since, by definition, passive investing involves virtually delegating the job of picking stocks to index providers, they have become akin to fund managers. More than that, the very concept of ‘market returns’ is what the broad market index shows it is. Indices don’t just act as barometers of market performance and as guiding beacons for passive investing, they also serve as benchmarks to gauge the effectiveness of active investment strategies, answering the investors’ question, “Have they beat the market?”
With the growing importance of indices, several questions arise: how reliable are the indices as measures of market performance? Are they constructed without bias? Who constructs and administers them, and most importantly, are they regulated? Indices in India are designed and administered by index providers set up as subsidiaries of the stock exchanges, like NSE Indices Limited, which operates Nifty 50 among other indices, or as a joint venture between a stock exchange and index providers, like Asia Index Private Ltd, which administers Sensex among others. Besides the broad market indices, the index providers also provide other types of indices like thematic indices and sectoral indices, and provide bespoke indices too.
Bringing the index providers under the regulatory fold has been on the cards for sometime now. Questions on integrity of the benchmark administration process came to the fore during the LIBOR (London Inter-Bank Offered Rate) scandal in 2012, which prompted IOSCO (International Organisation of Securities Commissions) to publish a report in July 2013 proposing a framework of principles for financial benchmarks.
Based on IOSCO’s framework, Sebi issued a discussion paper in 2017 to introduce a code of conduct for index providers, and then another in 2020. Then in 2022, a working group presented its recommendations to the Secondary Market Advisory Committee. This resulted in a consultation paper for introducing a full-fledged regulatory framework, based on which Sebi notified on 8 March the regulations which will take effect in 180 days.
While the consultation paper proposed that Sebi registration must be taken by Indian and foreign index providers if the users of the indices are located in India, irrespective of dealing with Indian or global assets, the final regulations are made applicable only to Indian and foreign index providers administering ‘significant indices’ com prising of securities listed on Indian exchanges for Indian users. Registration shall be considered based on fulfilment of fit and proper criteria, minimum requirements for net worth, among other criteria. The 2022 paper, while duly acknowledging that there is transparency to the extent that the methodology and composition are disclosed in the providers’ websites, points out that there is room for discretion, which increases the susceptibility to governance challenges like conflicts of interest and manipulation. Further, news of inclusion or exclusion of stocks in the indices is price-sensitive and, if not properly handled, could lead to insider trading. The regulations provide for mandatory adherence to IOSCO’s principles, constitution of oversight committee to review index design, and powers of Sebi to initiate special audit, among others. Bringing index providers under the regulatory ambit is timely and crucial, even as passive investing is becoming actively preferred.
18% of the total 671,928 applications for Schengen visa from India were rejected in 2022, data shows
The regulations provide for mandatory adherence to IOSCO’s principles