August 2024

A dividend equalization fund is a mutual fund that invests in stocks that pay regular dividends. This type of fund aims to provide investors with a consistent stream of income by investing in companies that have a history of paying dividends. The fund manager seeks to maintain a steady dividend payout to investors, regardless of fluctuations in the dividend payments of the individual companies in the fund’s portfolio. What Is an Equalizing Dividend? Equalizing dividends are one-time payments made to eligible shareholders when a company changes its dividend schedule. They are meant to compensate investors for any lost income from the missed dividend payments that would have been received using the previous payment schedule. How Equalizing Dividends Work Equalizing dividends are certain agreements for funds made to ensure that the level of income attributable to each share is not affected during a distribution or accumulation period.  Adjustments to the dividend schedule are usually made by executives at the company or the board of directors. Firms may want to move the payment of dividends back or forward by a few weeks or months to accommodate extenuating circumstances that could arise, such as a shortage of cash on hand due to unforeseen events. In such cases, the firm may compensate shareholders with an equalizing dividend payment to offset the effect of the new schedule. Equalizing dividends are paid to shareholders to adjust for any dividend income thus lost from the change. By and large, equalizing dividends take place mainly in the United Kingdom and parts of Europe rather than in the United States. For background, funds pay out income on or after the ex-dividend date, at which point income is removed from the fund’s net asset value (NAV) and paid to shareholders on a per-share basis. Investors who buy shares in the fund after the last ex-dividend date usually have not held the stock for a full income-generating period. This means newly purchased shares will be grouped separately from those acquired earlier. They are still entitled to the same payment per share as any other owner of the fund, but part of the payment is treated as a return of capital, otherwise known as an equalizing dividend or payment. It makes the per-share amount paid to both groups whole. When that occurs both groups will be treated equally for future dividend payments. FAQs What is a Dividend Equalisation Fund? A Dividend Equalisation Fund is a reserve fund set up by a company to maintain consistent dividend payouts to its shareholders, even during periods of fluctuating profits. This helps provide a stable income stream for investors. Why do companies create Dividend Equalisation Funds? Companies create these funds to ensure they can meet their dividend commitments to shareholders, even in years when profits are lower than expected. It helps maintain investor confidence and can make the company’s shares more attractive.

The Reserve Bank of India (RBI) has introduced a separate channel, namely ‘Fully Accessible Route’ (FAR), to enable non-residents to invest in specified government bonds with effect from April 1. Fully Accessible Route (FAR) The move follows the Union Budget announcement that certain specified categories of government bonds would be opened fully for non-resident investors without any restrictions. Under FAR, eligible investors can invest in specified government securities without being subject to any investment ceilings. This scheme shall operate along with the two existing routes, viz., the Medium Term Framework (MTF) and the Voluntary Retention Route (VRR). Key Points ‘Specified securities’ shall mean Government Securities as periodically notified by the Reserve Bank for investment under the FAR route. The RBI has said that all new issuances of Government securities (G-secs) of 5-year, 10-year, and 30-year tenors will be eligible for investment as specified securities. Non Resident investors can invest in specified government securities without being subject to any investment ceilings. This scheme shall operate along with the two existing routes: The Medium Term Framework (MTF) for Foreign Portfolio Investment (FPI) in Central Government Securities (G-secs) and State Government Securities (SDLs) was introduced in October 2015. FPI consists of securities and other financial assets passively held by foreign investors. The Voluntary Retention Route (VRR) encourages Foreign Portfolio Investors to undertake long-term investments in Indian debt markets. Circular No. RBI/2023-24/81 FMRD.FMID.No. 04/14.01.006/2023-24, Earlier, the RBI vide. Circular Dated 30.03.2020 notified Fully Accessible Route (FAR), through which certain specified categories of Central Government securities were opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well. The RBI has now decided to also designate all Sovereign Green Bonds issued by the Government in the fiscal year 2023-24 as ‘specified securities’ under the FAR Earlier, vide circular dated 30.03.2020, the RBI has notified that all new issuances of Government securities of 5-year, 10-year and 30-year tenors from the financial year 2020-21 to be eligible for investment under the FAR as ‘specified securities’. Later, through circular dated 07.07.2022 and circular dated 23.01.2023, Government securities of 7-year & 14-year tenors and Sovereign Green Bonds were included as ‘specified securities’ under the FAR. Benefits of the Scheme This will ease the access of non-residents to Indian government securities markets. This would facilitate inclusion in global bond indices. Being part of the global bond indices would help Indian G-secs attract large funds from major global investors, including pension funds. This would also facilitate inflow of stable foreign investment in government bonds. FAQs What are Fully Accessible Route (FAR) bonds? Fully Accessible Route (FAR) bonds are government securities that are open to both domestic and foreign investors. They are designed to make the Indian government bond market more accessible and attractive to international investors by providing a clear and straightforward investment route. Why were FAR bonds introduced? FAR bonds were introduced to increase foreign investment in Indian government securities, enhance market liquidity, and integrate India more deeply into the global financial system. This initiative also aims to provide additional funding sources for the government’s borrowing needs.

It is a committee of the United Nations Educational, Scientific, and Cultural Organization. The Committee is responsible for the implementation of the World Heritage Convention, defines the use of the World Heritage Fund, and allocates financial assistance upon requests from States Parties. It has the final say on whether a property is inscribed on the World Heritage List.  It examines reports on the state of conservation of inscribed properties and asks States Parties to take action when properties are not being properly managed. It also decides on the inscription or deletion of properties on the List of World Heritage in Danger. Structure: It consists of representatives from 21 of the States Parties to the Convention elected by their General Assembly. A Committee member’s term of office is six years, but most state parties choose voluntarily to be members of the committee for only four years in order to give other states parties an opportunity to be on the committee. Bureau of the World Heritage Committee: The Bureau consists of seven states parties elected annually by the Committee: a Chairperson, five Vice-Chairpersons, and a Rapporteur. The Bureau of the Committee coordinates the work of the Committee and fixes the dates, hours, and order of business of meetings.  World Heritage Committee The World Heritage Committee meets once a year, and consists of representatives from 21 of the States Parties to the Convention elected by their General Assembly. • The Committee is responsible for the implementation of the World Heritage Convention, defines the use of the World Heritage Fund and allocates financial assistance upon requests from States parties. • It has the final say on whether a property is inscribed on the World Heritage List.  • It examines reports on the state of conservation of inscribed properties and asks States Parties to take action when properties are not being properly managed.  • It also decides on the inscription or deletion of properties on the List of World Heritage in Danger. World Heritage Committee members The current composition of the World Heritage Committee is: Argentina, Belgium, Bulgaria, Egypt, Ethiopia, Greece, India, Italy, Japan, Mali, Mexico, Nigeria, Oman, Qatar, Russian Federation, Rwanda, Saint Vincent and the Grenadines, Saudi Arabia, South Africa, Thailand, Zambia. What is a World Heritage Site? • The United Nations Educational, Scientific and Cultural Organisation (UNESCO) seeks to encourage the identification, protection and preservation of cultural and natural heritage around the world considered to be of outstanding value to humanity.  • This is embodied in an international treaty called the ‘Convention Concerning the Protection of the World Cultural and Natural Heritage’, adopted by UNESCO in 1972. • A World Heritage Site is a place having a special cultural or physical significance and outstanding universal value to humanity. It may be a building, a city, a complex, a desert, a forest, an island, a lake, a monument or a mountain. • Sites recognised as being of Outstanding Universal Value are inscribed each year on the World Heritage List. World Heritage Sites in India • The number of UNESCO World Heritage Sites in India grew to 42 with the ‘Sacred Ensembles of the Hoysala’ finding a place in the coveted list in September 2023. • These sites include 34 in the cultural category, seven in the natural category and one mixed property. • They include Red Fort, Humayun Tomb and Qutub Minar in Delhi; Taj Mahal in Agra; ancient Nalanda university ruins and the Mahabodhi Temple in Bihar; and Santiniketan in West Bengal. • Currently, India has the sixth largest number of (UNESCO) sites in the world. The countries that have 42 or more world heritage sites are Italy, Spain, Germany, China and France. 46th session of the World Heritage Committee (WHC) In July 2024, India hosted the 46th session of the World Heritage Committee (WHC) in New Delhi. This event was a key moment in India’s efforts to protect its heritage. During the event, Prime Minister Narendra Modi announced a $1 million grant to support UNESCO’s global conservation efforts. India’s Commitment to Heritage Conservation India has been a strong supporter of the World Heritage Convention. It has actively participated in the WHC, serving four terms since 1977. India also works with other countries to build skills and provide technical help for heritage conservation. In the past decade, India has successfully added 13 cultural and natural sites to the World Heritage list. This makes India the sixth country globally in terms of World Heritage Sites, with a total of 43 sites. During the recent WHC session, the Moidams from Assam were recognized as India’s 43rd World Heritage Site. Highlights from the 46th WHC Meeting At the session, 24 new World Heritage Sites were added worldwide, including 19 cultural, 4 natural, and 1 mixed property. India also signed a Cultural Property Agreement with the USA to fight the illegal trade in cultural artifacts. Several heritage conservation projects were discussed at the event, including the Kashi Vishwanath Corridor and new initiatives at Nalanda University. India also partnered with international organizations like ICCROM to improve skills related to heritage preservation. A major exhibition at the WHC showcased 25 repatriated historical objects, demonstrating India’s dedication to preserving and promoting its cultural heritage. About World Heritage Sites Number and Distribution: There are over 1,100 World Heritage Sites recognized for their cultural or natural significance, spanning 167 countries, with Italy having the most sites at 58. Notable Facts: The first site listed in 1978 was the Galápagos Islands, and the Great Wall of China is the longest structure on the list. Sites can be added or removed, like Dresden, which was removed in 2009 due to development. Cultural Focus and Purpose: About 80% of the sites are Cultural Heritage Sites. The designation of these sites aims to promote conservation and raise awareness of their importance. FAQs What is the World Heritage Committee (WHC)? The World Heritage Committee is a group of representatives from 21 countries elected by the General Assembly of States Parties to the World Heritage Convention. It is responsible for the implementation of the World Heritage Convention, deciding which sites to inscribe on the World Heritage List, and