Companies & Sectors
Bajaj Finserv to raise Rs941 crore through rights issue

The Pune-based company has priced the proposed issue at Rs650 per share and would use the money to fund its non-banking unit


New Delhi: Diversified financcial services company Bajaj Finserv said it plans to raise Rs941 crore through a rights issue to fund its business growth, reports PTI.


Issue of equity shares on a rights basis to its existing equity shareholders would aggregate to Rs941 crore approximately, Bajaj Finserv said in a filing on the BSE.


The Pune-based company has priced the proposed issue at Rs650 per share. The rights issue entitlement ratio is one equity share for every 10 shares held as on the record date.


The holding company, which is present in segments like lending to finance consumer durables, equipment and both life and general insurance, plans to plough the money to fund its share in its non-banking subsidiary.


The company has fixed 8 September 2012, as the record date for the purpose of proposed rights issue of equity shares.


The special committee constituted by the board also took note of the approval received from the Foreign Investment Promotion Board (FIPB) on 2 August 2012, it said.


FIPB's approval is for the issuance and allotment of equity shares up to 10.4% of the equity of the company to persons resident outside of India including FIIs, NRIs and holders of Global Depository Receipts pursuant to the rights issue, it added.


Growing trend of governments adopting e-payments: MasterCard

According to MasterCard, several governments across the globe are using e-payments as an alternative to cash and cheque-based benefit programme

New Delhi: Governments world over are increasingly adopting electronic payment (e-payment) methods as an alternative to cash and cheque-based benefit programme, as a measure to save money and improve financial inclusion, reports PTI.
The United States, Italy, Canada, United Arab Emirates and Romania are some of the latest examples of governments going paperless as a cost-savings opportunity and a method of addressing financial inclusion, MasterCard Worldwide said in a statement.
Most recently, the South African Social Security Agency distributed more than 2.5 million debit cards to social grant recipients across the country with a target of 10 million cards by March 2013, the statement added.
"By supporting governments around the world with electronic payment programmes we are helping save money and improve efficiencies. But more importantly, together we are opening up a world of inclusion for those who have previously not had access to traditional financial services," MasterCard Worldwide Chief Products Officer Tim Murphy said.
According to Mastercard, the United States Department of the Treasury is also moving towards all electronic payments, including the Direct Express debit card, which is used to deliver social security and other federal benefits.
The programme is expected to save the US government $1 billion over the first ten years, the statement said.
Some of the other examples include the Italian central government's launch of the "Carta Acquisti" social card programme to assist citizens in need. In Romania, the Poste Romania also began distributing prepaid cards across the country to social benefit recipients.
Meanwhile, the Toronto Employment and Social Services (TESS) recently launched prepaid benefits cards for the delivery of social assistance disbursements. In Mexico, a pilot is underway for the residents of Oaxaca to access a variety of financial instruments through their mobile phones SMS functions.


Death takes a policy: We answer questions from readers

The story of Joseph Caramadre moved dozens of ProPublica readers to debate the ethics of insurance and corporate behaviour

Readers reacted strongly — and thoughtfully — to our story about how a Rhode Island man recruited terminally ill people so he could cash in on lucrative annuity contracts offered by life insurance companies.
A few scorned Joseph Caramadre, now facing a 66-count criminal indictment, for what they saw as his exploitation of the terminally ill. Most saved their ire for the insurance companies and took less moral offense at Caramadre, noting that the dying participants received money, even if it was much less than Caramadre and his investors made.
Readers also raised some good questions; here are our answers. We will update as we get more.
How is this different from "Dead Peasant” insurance policies? via Dean Muller
So-called "dead-peasant” policies, or corporate-owned life insurance policies (COLI), involve companies taking out life insurance on their employees. This practice landed a number of companies in court a few years ago when employees complained that they didn't know what their employer was doing. More recently, Louisiana's legislature considered allowing the state retirement system to take out life insurance on state employees — as a way to reduce pension debt. The bill appears to have been dropped.
Regular life insurance covers an individual and is paid out when that person dies. Caramadre worked with variable annuities, which are different than life insurance. There are three players in a variable annuity contract: an investor, a beneficiary and someone called an annuitant. The annuitant acts as a "measuring life,” whose death triggers a payout — either the return of an original investment or the value of the investment account, whichever was greater — to the beneficiary. In Caramadre's case, the investor and the beneficiary were one and the same.
One potential similarity to the dead peasant policies involves the allegations made by prosecutors against Caramadre. They maintain that the terminally ill annuitants whose deaths triggered the payouts did not fully understand Caramadre's scheme or their role in it.
How did investors other than Caramadre make money on the scheme? via Justin Burke
There were two ways to profit. Caramadre's investors would put money into a variable annuity, which would then be invested in one of the funds offered by the insurance company. If the fund's value rose, so would the investment. Potentially it could grow to be worth more than the death benefit. But many of the companies also offered death benefit sweeteners, such as bonuses or ratchets. These could make the death benefit worth more than the original investment. For example, if the company offered a 6 percent bonus, investors who put in $1 million would automatically have $60,000 added to the death benefit. When the annuitant died, if the death benefit was greater than the amount of the investment account, the investor would pocket the bonus.
What exactly do prosecutors allege was illegal about this? via Chris
The indictment asserts that Caramadre and his associates obtained the identity information of terminally ill people without their knowledge or consent through misrepresentations and in some cases forgery. They then used this identity information to obtain millions of dollars from insurance companies and bond issuers. The indictment does not allege that the terminally ill people were defrauded of any money themselves. Rather, their identity information was misappropriated so that Caramadre and his associated could profit from their deaths.
Where did Caramadre come up with the $2,000 figure? via Zach
I don't know how Caramadre arrived at $2,000 for the initial payment. In an effort to identify people with terminal illnesses, Caramadre in 2008 advertised that he would give $2,000 to every dying person who contacted him whether or not they agreed to become an annuitant. According to court records, more than 150 received the $2,000. If they wished to participate, they received even more money, typically between $3,000 and $10,000 depending in part on how many contracts they did.


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