MUMBAI: In a bid to strengthen the health insurance industry, the Insurance Regulatory and Development Authority (IRDA) has laid down terms and conditions for health insurance such as entry age, claim settlement period and specific reasons for denial of claim.
The regulator has said that companies will have to provide health insurance for up to 65 years and that it should be renewed for life once it is accepted and premium is paid regularly.
Life insurers can offer products with four-year term while non-life companies can offer up to three years. The regulator has asked all stakeholders to give their feedback by June 30.
In the exposure draft, the regulator has asked insurers to reimburse at least 50% of cost incurred by the insured in pre-insurance medical examination, if the policy is accepted.
IRDA has proposed to establish a separate channel to address health insurance-related claims and grievances of senior citizens.
Insurers are allowed to provide coverage to non-allopathic treatment provided the treatment is done at a government hospital or in any institute recognised by government. Also, the regulator has specified that all policies offering critical illness should have standard definitions.
Companies will have to offer a new product before withdrawing a plan. IRDA has asked insurers to file an uncomplicated one page customer info sheet in simple language. The regulator has discouraged companies from asking the insured to shift to another plan. If a claim has to be rejected, the insurer will have to do it within 30 days giving reasons for denial.
FINANCE MINISTRY FOR 10% CUT IN NON-PLAN EXPENDITURE
NEW DELHI: The finance ministry on Thursday announced a 10% cut in non-plan expenditure in the current fiscal as part of austerity measures aimed at containing its ballooning fiscal deficit. The Centre is aiming to bring down its fiscal deficit to 5.1% of GDP in 2012-13, from 5.76% in the previous fiscal. It also hopes to cut its subsidy bill to below 2% of GDP this year. The ministry has argued that there is tremendous pressure on government resources, which necessitates rationalisation and optimisation of resources. The cut will not apply to interest payments, repayment of debt, defence capital expenditure, salaries, pensions and grants to states. The total non-plan expenditure is Rs 9.7 lakh crore, but after the exclusions the government could only save at most Rs 20,000 crore. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/finance-ministry-for-10-cut-in-non-plan-expenditure/articleshow/13694821.cms)
RBI PANEL CALLS FOR GREATER FII PLAY IN G-SECURITIES
MUMBAI: A working group set up by the Reserve Bank of India has made a strong case for higher investments in government securities, or G-Secs, by foreign portfolio investors and doing away with withholding tax on such investments to boost liquidity and fuel higher inflows. The group, headed by the executive director of RBI, R Gandhi, has said the government and regulators could raise the investment limits for foreign portfolio investors, or FIIs, in phases. “FIIs, by being global players, can provide the much-needed diversity of views in the market, thereby providing more opportunities for trading,” the draft report on enhancing liquidity in G-Secs and interest rate derivatives markets said. The group has also called for participation by overseas portfolio investors in the interest rate derivate market. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/rbi-panel-calls-for-greater-fii-play-in-g-secs/articleshow/13694550.cms)
FINMIN ANNOUNCES AUSTERITY STEPS
NEW DELHI: Amid the economy growing the slowest in nine years during 2011-12, the government on Thursday announced various austerity measures to cut expenditure and instil confidence among investors. The finance ministry has asked all government ministries and departments to help cut non-Plan expenditure by 10 per cent. It also barred these from holding conferences in five-star hotels, buying new vehicles and travelling abroad, unless absolutely necessary. A ban on the creation of new government posts has also been imposed. A memorandum to implement Finance Minister Pranab Mukherjee’s statement in Parliament on Thursday came at a time when growth in India’s gross domestic product (GDP) for 2011-12 plummeted to 6.5 per cent, the lowest since 2003-04. Reacting to the GDP data, Mukherjee said the government would take measures to address fiscal concerns, revive investor confidence and help capital inflows. (For details log on to : http://www.business-standard.com/india/news/finmin-announces-austerity-steps/475979/)
RUPEE HITS ALL-TIME LOW, BOUNCES BACK
MUMBAI: The rupee fell to an all-time low of 56.52 against the dollar but closed 0.2 per cent up over the previous close on talk that the Reserve Bank of India (RBI) had facilitated a special window to meet foreign exchange requirements of oil companies through public sector banks. The rupee bounced back to 55.74 in the latter part of the day to close at 56.11 against the dollar. The euro had touched an 11-month low of 1.2367, while the dollar index was trading at a nine-month high levels of 83.02 when the rupee opened for trade on Thursday. “All happened in a matter of minutes…exporters were quick enough to take advantage of low levels when the rumours that oil companies will not buy dollars from foreign banks hit the markets at around 3 pm,” said a senior treasury official of a private bank based here. The official added the central bank might appoint four large public sector banks to meet the dollar demands of oil companies. Also, the banks would be required to report the dollar buying by oil companies hourly to RBI. (For details log on to : http://www.business-standard.com/india/news/rupee-hits-all-time-low-bounces-back/475970/)
CORPORATION BANK CUTS HOME, VEHICLE LOAN RATES
MANGALORE: Corporation Bank has reduced interest rates on home and vehicle loans with effect from June 1. The reduction varies from 10 basis points to 75 basis points for different tenors and the amount of loans sanctioned. Following are the floating rates of interest for home loans. For loans up to 10 years tenor, the new rate will be 10.50 per cent for amount up to Rs 25 lakh; 10.75 per cent for loans above Rs 25 lakh and up to Rs 50 lakh; and 11 per cent for loans above Rs 50 lakh and up to Rs 1 crore; and 11.25 per cent for loans above Rs 1 crore. In the loans above10 years and up to 25 years tenor, the new rates will be 10.75 per cent for amount up to Rs 25 lakh; 11 per cent for loans above Rs 25 lakh and up to Rs 50 lakh; and 11.25 per cent for loans above Rs 50 lakh. (Previously, there were two tenors of above 10 years and up to 15 years, and above 15 years and up to 25 years.) The fixed rate of interest for amount up to Rs 25 lakh remains unchanged at 13.35 per cent, and for loans above Rs 25 lakh at 13.85 per cent. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3477881.ece)
UCO BANK STOPS LENDING TO POWER, ROAD, REALTY SECTORS
KOLKATA: Kolkata-based UCO Bank has put a halt on lending to power, road and real estate sectors. The bank also plans to do selective lending to sectors like iron and steel and textiles to de-risk its portfolio. “If economic growth slows down then there could be some stress on assets. So we have decided to go slow on certain sectors,” said Mr Prabir K Datta, General Manager, Flagship Corporates, UCO Bank. The bank is also taking corrective measures to improve its skewed loan book which has very high exposure to large corporates. “No bank can sustain with such a lopsided portfolio. We are focusing on correcting the lending mix by improving our retail loan book,” Mr Datta told Business Line. Corporate loans account for almost 60 per cent of the bank’s total advances at present. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3477880.ece)
YES BANK LAUNCHES ONLINE GOAL-BASED RECURRING DEPOSITS SCHEME
MUMBAI: Private sector lender Yes Bank has launched an online recurring deposits (RD) scheme which will enable customers to calculate their monthly installment to achieve financial goals. Based on the systematic investment plan (SIP) model, using the bank’s net banking services, this feature can calculate the monthly installment amount required to achieve the customer’s financial goals, the bank said. It will be done by computing targeted amount, time horizon, inflation, prevalent interest rates and recommending a tailor-made SIP, a bank release said. This would encourage disciplined savings among customers, it said. “The goal-based recurring deposits will encourage customers to commit themselves into disciplined savings,” the bank’s Senior President and Country Head, Savings Liabilities Management, Cards and Direct Banking, Chitra Pandeya said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/yes-bank-launches-online-goal-based-recurring-deposits-scheme/articleshow/13692192.cms)
J&K BANK REWORKS WHOLESALE LENDING STRATEGY
MUMBAI: Jammu & Kashmir Bank has revamped its wholesale banking strategy to increase its emphasis on working capital finance as against term loans. Keeping in mind the slowdown and challenges in the economic and business environment, the bank will be selective in extending project finance assistance. While the earlier focus was on term loans, it will now be on working capital and fee-based income. But, this did not mean that the bank would stop long-term funding. It would continue to look for opportunities in project and term-lending space, said Mushtaq Ahmad, its chairman and chief executive officer. The present mix of term-loan and working capital is 60 per cent and 40 per cent, respectively. The Srinagar-based bank will work to improve share of working capital to 50 per cent. Its advances rose 26.28 per cent to Rs 33,077 crore in March 2012. (For details log on to : http://www.business-standard.com/india/news/jk-bank-reworks-wholesale-lending-strategy/475977/)
LAKSHMI VILAS BANK Q4 NET FALLS 9%
COIMBATORE: The net profit for Lakshmi Vilas Bank dropped by 9 per cent to Rs 24.96 crore, while its business grew 32 per cent during the last quarter of 2011-12. Calling it a year of mixed performance, Mr P R Somasundaram, Chief Executive of LVB, said, “It has also been a year of consistent growth amidst challenges. While there is huge satisfaction, there is some disappointment as well. I am happy because few fundamentals have been addressed, but there is a setback on account of some temporary NPAs.” “We raised Rs 250 crore tier II capital during the fourth quarter. This pulled down our profits as costs were high. However, we have invested this (capital raised) very well,” he explained. The overall performance in 2011-12 showed a 6 per cent growth in net profit after absorbing higher interest costs and operating investments for future growth. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3477878.ece)
DEUTSCHE BANK PROMOTES GUNIT CHADHA TO CO-CEO, ASIA-PACIFIC
MUMBAI: Deutsche BankIndiachief executive officer Gunit Chadha has been promoted to co-CEO, Asia Pacific. With this promotion, Chadha has also become a member of the global Group executive committee, which comprises the top 18 people in the bank. Incidentally, Chadha is only the second Indian to be a part of the committee, the other being Deutsche Bank co-CEO Anshu Jain.
CANARA BANK LAUNCHES ULTRA SMALL BRANCHES
Bangalore, May 31: Canara Bank will be opening 105 ‘ultra small’ branches, and 101 ultra small Shreyas Gramin Banks, which it sponsors. Executive director Archana S Bhargava, on Thursday inaugurated an ultra small Canara Bank, and an ultra small Shreyas Gramin Bank in in UP.
RS 1.18-CRORE FINE ON ICICI PRUDENTIAL LIFE FOR BREACH OF AGENT FEE NORMS
MUMBAI: The insurance regulator has slapped a fine of Rs 1.18 crore on ICICI Prudential Life, India’s second-largest private life insurer, for violating norms pertaining to commissions paid to corporate agents, referral agents and brokers. The insurer was charged on six counts after the Insurance Regulatory and Development Authority (Irda) conducted inspections between November and December 2010 for 42 possible violations. Irda found eight instances of ICICI Prudential paying commissions beyond prescribed limits to its corporate agents, and was fined Rs 40 lakh. The beneficiaries included India Infoline Services, Nandi Financial Services, Netambit Value First, Sharekhan Financial, FullertonIndia, Soft Insurance, Yule Investments and Alacrity Financials. (For details log on to : http://www.business-standard.com/india/news/rs-118-cr-fineicici-pru-for-breachagent-fee-norms/475974/)
DINESH KUMAR MEHROTRA APPOINTED AS LIC CHAIRMAN
MUMBAI: Dinesh Kumar Mehrotra has taken over as the chairman of the country’s largest insurer – Life Insurance Corporation of India- ending months of uncertainty at the largest domestic financial institution. The appointments committee of the Cabinet approved his appointment on Thursday morning. He has been serving as the acting chairman of the institution for a year. After TS Vijayan superannuated from this position in May, Mehrotra was appointed acting chairman a few days later. The delay in appointment was partly due to investigations into LIC’s investments in previous years. He is due to retire on May 31, 2013. Mehrotra was a contender for the chairman’s post in 2006. He joined LIC as a direct recruit in 1977 and became its MD in July 2005. In his career spanning over 30 years, he has held various important positions, including as head of LIC’s three zones and its corporate office. (For details log on to : http://economictimes.indiatimes.com/news/news-by-company/corporate-announcement/dinesh-kumar-mehrotra-appointed-as-lic-chairman/articleshow/13696006.cms)
SHRI KSHETHRA DHARMASTHALA RURAL DEVELOPMENT PROJECT WINS GREEN OSCARS
LONDON: An Indian microfinance organisation based in Karnataka has won two Ashden Awards, popularly known as Green Oscars for helping poor people invest in renewable energy projects. The Shri Kshethra Dharmasthala Rural Development Project (SKDRDP) was chosen for the International Award for Financial Innovation and this year’s overall Gold Award. The Ashden judges said: “SKDRDP is fantastic example of how ethically managed microfinance can deliver sustainable energy to the poor, demonstrating that providing consumer loans for energy makes sound social, environmental and economic sense. “We were bowled over by the scale SKDRDP has achieved so far, along with the responsibility it takes for lending to the poor, nurturing users to take out effective loans. SKDRDP has huge potential to expand its work even further, and to inspire many others to follow its lead.” (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/shri-kshethra-dharmasthala-rural-development-project-wins-green-oscars/articleshow/13689800.cms)
INVESTOR APATHY TRIPS REAL ESTATE PE FUNDS FROM INDIAREIT, OTHERS
MUMBAI: Indiareit Fund Advisors, the private equity arm of the Ajay Piramal-promoted Piramal Healthcare, has put its recently announced $500-million offshore fund on hold. Indiareit MD & CEO Ramesh Jogani said the fund “did not see good response from investors”. Indiareit, which has three domestic funds managing R1,950 crore and an offshore fund of $200 million, had said in February it would begin roadshows for the latest fund in June. The move to hold back the launch underscores the caution exercised by foreign investors in the Indian real estate market on economic uncertainties, policy paralysis and a weakening rupee that devalues investments. Kotak Realty Fund, which started raising money for a $300-million offshore fund a month back, has had a similar experience. “The issue right now is not who is interested in Indiabut how many want to invest here. The list of investors has shrunk,” V Hari Krishna, director (investments), Kotak Realty Fund, said. The fund has $811 million in assets under management. (For details log on to : http://www.financialexpress.com/news/investor-apathy-trips-real-estate-pe-funds-from-indiareit-others/956522/0)
SEBI PLANS DATA FORMAT CHANGE FOR FII REPORTS
MUMBAI: Foreign institutional investors (FIIs) would soon have to follow a new data reporting format known as eXtensible Business Reporting Language (XBRL). This format is being followed by domestic mutual funds. The Securities and Exchange Board of India (Sebi) plans to implement this move as one of the measures to strengthen the know-your-customer norms for FIIs and to bring in more transparency on the use of participatory notes (P-notes) in Indian markets. Implementation of XBRL, say experts, will help Sebi spot FIIs inconsistent in reporting data regarding their investments, involving various parameters. Verification and counter-verification of claims with regard to business or financial reporting would become easier for Sebi. (For details log on to : http://www.business-standard.com/india/news/sebi-plans-data-format-change-for-fii-reports/475945/)
ING LOOKS TALKS TO GLOBAL GIANTS TO SELL MUTUAL FUND BUSINESS
MUMBAI: Three global giants are interested in purchasing Dutch firm ING Asset Management’s Indian mutual fund business, which may be carved out of the Asian operations and sold separately. South Korea’s Mirae, Vanguard and US-based Pramerica have held talks with ING on the issue, people close to the transaction told ET. ING is selling its Asia-Pacific insurance and asset management businesses to help repay the assistance provided by the Dutch government in 2008 at the time of the global financial markets meltdown. The company is hoping to raise $7 billion. The Indian business is tiny compared with the Asian operations, having assets of only 797 crore as of April this year according to numbers put up by rating agency ICRA’s in their website mutualfundsindia.com, and is barely profitable. However the company has denied these figures and has said that its assets under management are worth Rs 2459cr, as on April this year. This includes assets from mutual fund and portfolio management services. (For details log onto: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/ing-looks-talks-to-global-giants-mirae-vanguard-and-pramerica-to-sell-mutual-fund-business/articleshow/13688360.cms)