If Bharti Axa customers are defrauded with fake offers, surely that should concern the company and if the company does not care, the regulator should send a message that hits home. Will the IRDA do it?
Bharti AXA Life policies worth Rs3.8 lakh were sold to Vishv Raj Singh, a senior citizen allegedly with the bait of installing a mobile tower of Airtel that would give him monthly rent. This is part of the racket that insurance agents and brokers have been indulging in – selling insurance with the inducement of lucrative deals of different kinds.Bharti AXA Life: Senior citizen sold policy with lure of rent from Airtel tower?
As regular readers of Moneylife will know, HDFC Life, Reliance Life products too were mis-sold, but they gave refunds after finding out the truth. Bharti AXA Life is turning out to be stubbornly on the side of such fraudulent life insurance selling, rejecting complaints of such selling on flimsy reasons.
Apart from the above example that hit the Moneylife Foundation helpline, Insurance Regulatory and Development Authority (IRDA) got a complaint of six policies of Rs5 lakh annual premium sold with similar offers. When customers complained, Bharti AXA declined to deal with it, without giving specific reasons.
However, based on the correspondence turned over by IRDA, the regulator has written a couple of letters seeking number of complaints of this nature received, resolved and pending, but it seems that Bharti AXA Life has not bothered to respond even to the IRDA.
We have come to know this through long and persistent efforts. Moneylife Foundation had written to the chairman of IRDA about the first case of cheating on 31 July 2013, but there was no response. Finally, on 23 January 2014, we filed an RTI application to find out what the IRDA has been up to. To our utter disbelief, IRDA’s CPIO responded stating that the information sought is ‘third party information’, which needs a written consent from ‘Raj Pradhan’, who had written letters to the IRDA chairman on behalf of Moneylife Foundation!
Anyway, Moneylife Foundation got the necessary “consent from Raj Pradhan”, its own staff, and filed the first appeal. After this, the IRDA has shared the required information. What comes out is quite startling.
It appears that IRDA did follow up with Bharti AXA Life based on Moneylife Foundation memorandum in July 2013. Bharti AXA responded to IRDA on 27 August 2013 giving flimsy reasons for denying claims of Vishv Raj Singh. It tried to question how his son’s name is Ominder Rana. Bharti argues that the contact number shared by the customer of his son is a registered number of BMA Wealth an insurance broker. Bharti alleged that the customer was instigated by BMA Wealth Insurance broker. Moneylife has never seen an example of insurance broker trying to help customer to recover fraudulently sold policies. In fact, the reverse is true. Insurance brokers today are fraudulently selling policies.
IRDA has found that Bharti AXA had given no reply to the complaint or it was not updated in IRDA’s IGMS (Integrated Grievance Management System). Bharti AXA’s response is – “We were unable to sync the complaint status in time. The server certificate was expired on Bharti AXA gateway server. Due to this IGMS service was not accessible. There was an issue with IGMS URL on one of Bharti AXA internal servers connecting to the gateway.” Clearly, based on the correspondence handed over to us by IRDA, Bharti AXA did not bother to respond to customer complaints until IRDA wrote the letter to it based on Moneylife Foundation memorandum and even then it did not bother to respond to the complaint adequately.
Apart from this individual complaint, IRDA asked Bharti AXA Life to give “The data of total no. of complaints of this nature (mobile tower rent offer) received, resolved and pending as on date.” It appears that Bharti AXA Life has not given the required information. On 1 November (original letter date of 24 October overwritten), IRDA again asked for the same information to Bharti AXA Life, but there is no information in the RTI docket about Bharti AXA ever giving IRDA the required data. In the same letters, IRDA asked about measures taken by the insurer to prevent recurrence of such incidents in future and action taken on intermediaries on such complaints. But, astoundingly, Bharti AXA has ignored this question from IRDA.
There are other examples of mobile tower rent offer to sell life insurance. Ramswaroop Beniwal, Hanumangarh, Rajasthan was sold six policies of Bharti AXA Life of Rs5 lakh annual premium was by offering him installation of Airtel Tower to get a rent of Rs15 lakh in five years and subsequently a bonus. Again, Bharti AXA brushed this complaint too with a mere one line reply in IGMS stating “We are declining client concern and standing on our decision.” IRDA has asked for internal investigation report on the complaint of Ramswaroop Beniwal in its letter to Bharti AXA on 1 November (original letter date of 24 October overwritten). Bharti AXA Life does not seem to have responded to this letter. We have not got a copy of Bharti AXA Life's response in our RTI.
It is time for IRDA to up the pressure and assert its role as a regulator against Bharti AXA Life. If customers are defrauded with a fake mobile tower rent offer, surely that should concern the company and if the company does not care, the regulator should send a message that hits home. Will the IRDA do it?
It would be a healthy practice at making monetary policy and banking system more transparent to being accountable and answerable to the people instead of being hush-hush secretive in its operations
Our Reserve Bank of India (RBI) successfully stands up elegantly at par with its western counterparts like the Bank of England in the UK and the Federal Reserve (Fed) of the US. Having come into existence in April 1935, the RBI is the earliest of all India’s financial regulators; the others like the Securities and Exchange Board of India (SEBI) for capital markets and Insurance Regulatory and Development Authority (IRDA) for insurance came in much later and Pension Fund Regulatory Development Authority (PFRDA) only recently.
During its long journey since 1935 through 2014, it has seen many a vicissitude that included face-offs with the Finance Ministers of the day. Though technically, for all practical purposes, RBI is an autonomous institution, it holds consultations with the union Ministry of Finance and of late is called upon to testify before the Standing Committees on Finance of the Parliament. This is more or less on the same lines as the Fed in the US, where the appointment of its chairman by the President has necessarily to be ratified by a majority voting in the Senate after the candidate proves capability at a tough open hearing. Indeed this is a healthy practice at making monetary policy and banking system more transparent to being accountable and answerable to the people instead of being hush-hush secretive in its operations. This practice needs to be replicated in India too.
It is only thanks to some astute governors at the RBI who had the courage of their convictions to stand firm in their efforts to insulate the Indian economy from outside shocks. The country has been able to withstand the South-East Asian and Argentinean financial crisis earlier and later the 2008 Wall Street downturn of the sub-prime lending crisis and stressed assets that resulted in a virtual collapse of American banking system requiring the US President to pour in billions to bail it out.
It is now time that our complex governance and policy making functions be shielded against the vagaries and tumult of our not-so-clean netas and sarkari babus who are bereft of the sense or integrity. This calls for the induction into RBI the selection process for top level appointments and functioning more of non-partisan and apolitical professionals and technocrats with impeccable reputation in their respective fields.
This was exactly what RBI’s Ujit Patel Committee prescribed in its recommendations proposing the setting up of a Committee of Wise men where the RBI governor would have a vote and could also be overruled. Under the present autonomy dispensation the right vested in the governor to take the final call makes it less democratic over the decision of an appropriate committee of multi-disciplinary professional experts. This can ensure that the government of the day doesn’t make arbitrary demands on the functioning of RBI.
On 20 March 2014, speaking at a conference on the banking structure for India conducted by the Centre for Advanced Finance Research and Learning, governor Dr Raghuram Rajan said there was considerable introspection within RBI on the new regulatory architecture required for the country… at issues including the level of supervision required, how seamless the regulations should be and the level of regulatory arbitrage for its functioning. He also said that the ‘fit and proper’ criterion for directors has to be applied to ascertain their grasps over basics of the business, annual reports and risk management. He went on to say that bankers need to change their image of being poor at structuring debt with little powers over borrowers and cautioned against letting borrowers playing the bankers against each other adding that the most important step is in making effective use of the regulators well rather fragmenting them and cutting their powers.
Now that Dr Rajan, the RBI governor has spoken his mind, the top brass has to go out in seeking the active participation and intellectual inputs of a fresh lot of outside professionals and/ or experts in the fields of accounting, audit, corporate law, financial journalists, banking activists , technocrats, insurance and valuers for their various committees. This goes a long way in making available to the RBI their valuable inputs arising out of their experiences and exposure at the ground level that the RBI officials living in their ivory towers so woefully lack!
The RBI’s in-house drafted Discussion and Study Papers are put out on the websites for public comments and suggestions much later in the day. They don’t give enough time. The Department concerned does not even have the courtesy to acknowledge the painstakingly complied submissions listing suggestions and comments sent in by the professionals in banking and audits.
(Nagesh Kini is a Mumbai-based Chartered Accountant turned activist.)
Weibo, ‘China’s Twitter’, started offering shares on NASDAQ last week. Its regulatory disclosures reveal a company’s balancing act between censoring too much and too little.
Starting 17th April, investors can purchase shares of Weibo, sometimes called “China’s Twitter,” on NASDAQ. The company’s regulatory filing with the SEC reveals details not previously known about Weibo’s censorship apparatus, which we wrote about last year.
Weibo, like all Internet publishers and providers in China, is prohibited from letting their users display content that is obscene, fraudulent, defamatory or otherwise illegal under Chinese laws. The content prohibitions also forbid material that “impairs the national dignity of China,” “is reactionary,” “superstitious,” or “socially destabilizing.”
As required under SEC regulations, the company must list for investors’ potential risks that might affect its share price. Weibo is up front about the risk the Chinese government’s regulation of content poses to its ability so succeed. “Failure to [censor] may subject us to liabilities and penalties and may even result in the temporary blockage or complete shutdown of our online operations.”
Under a section titled "Risks Relating to Doing Business in China," the company cites as a material risk not being able to censor user content quickly enough for the Chinese government, and describes a three-day period in March 2012 when Weibo disabled commenting completely so censors could "clean up" all content regarding a topic. The company did not disclose the topic but the Wall Street Journal reported in March 2012 that China put temporary restrictions on Sina, Weibo's parent company, as well as Tencent, a rival microblogging service, and that it was “detaining individuals that it accused of spreading rumors of a coup attempt in Beijing.” That week, according to the Journal story, Sina and Tencent placed identical notices on their web sites, warning users that the ability to comment on posts was being shut down for three days.
In the regulatory filing, Weibo says it doubts it can censor its users adequately enough to satisfy the government. “Although we attempt to monitor the content posted by users on our platform, we are not able to effectively control or restrict content (including comments as well as pictures, videos and other multimedia content) generated or placed on our platform by our users.”
For Weibo, censorship that’s adequate for the government may alienate consumers. As Wired reported today, after a government crackdown threatening to jail users who post “inaccurate” messages if it is viewed over 500 times, Weibo's users started to leave the service. Censorship, according to Weibo’s filing, can “adversely affect our user experience and reduce users’ engagement and activities on our platform as well as adversely affect our ability to attract new users to our platform.”
Also new in Weibo’s filing is a sense of the scale of their operations. Little was previously known about how many human sensors Weibo employs, or how much it costs the company to maintain the staff and the technology to monitor the over 100 million posts its users create per day, though this has been the subject of much research. Weibo’s filing with the SEC claims they have a little more than 2,000 employees total, which is fewer than the number of censors alone researchers believe Weibo employs. That might mean the researchers’ estimates are wrong or that the censors are employed by a contractor.
A ProPublica investigation last year republished images deleted by censors on Sina Weibo, along with translations and explanations of the images themselves.
To see the most recent censored posts detected on Sina Weibo, visit freeweibo.com.
Read Weibo's section on risk related to censorship below, or read the full regulatory disclosure.
Risks Relating to Doing Business in China
Regulation and censorship of information disseminated over the internet in China may adversely affect our business and subject us to liability for information displayed on our platform.
The PRC government has adopted regulations governing internet access and the distribution of information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, impairs the national dignity of China, is reactionary, obscene, superstitious, fraudulent or defamatory, or otherwise violates PRC laws and regulations. Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses and the closure of the concerned websites. The website operator may also be held liable for such censored information displayed on or linked to the website.
In addition, the MIIT has published regulations that subject website operators to potential liability for content displayed on their websites and for the actions of users and others using their systems, including liability for violations of PRC laws prohibiting the dissemination of content deemed to be socially destabilizing. The Ministry of Public Security has the authority to order any local internet service provider to block any internet website at its sole discretion. From time to time, the Ministry of Public Security has stopped the dissemination over the internet of information which it believes to be socially destabilizing. The State Administration for the Protection of State Secrets is also authorized to block any website it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the dissemination of online information.
Although we attempt to monitor the content posted by users on our platform, we are not able to effectively control or restrict content (including comments as well as pictures, videos and other multimedia content) generated or placed on our platform by our users. In March 2012, we had to disable the Comment feature on our platform for three days to clean up feeds related to certain rumors. To the extent that PRC regulatory authorities find any content displayed on our platform objectionable, they may require us to limit or eliminate the dissemination of such information on our platform. Failure to do so may subject us to liabilities and penalties and may even result in the temporary blockage or complete shutdown of our online operations. In addition, the Judicial Interpretation on the Application of Law in Trial of Online Defamation and Other Online Crimes jointly promulgated by the Supreme People’s Court and Supreme People’s Procuratorate, which became effective on September 10, 2013, imposes up to a three-year prison sentence on internet users who fabricate or knowingly share defamatory false information online. The implementation of this newly promulgated judicial interpretation may have a significant and adverse effect on the traffic of our platform and discourage the creation of user generated content, which in turn may impact the results of our operations and ultimately the trading price of our ADSs. Although our active user base has increased over the past several years, regulation and censorship of information disseminated over the internet in China may adversely affect our user experience and reduce users’ engagement and activities on our platform as well as adversely affect our ability to attract new users to our platform. Any and all of these adverse impacts may ultimately materially and adversely affect our business and results of operations.