Bill to replace ULIP ordinance soon: Finance secretary

The bill is expected to be tabled in the forthcoming session of Parliament beginning 26th July

Amid the Reserve Bank of India (RBI) expressing reservations over the Unit Linked Insurance Plan (ULIP) ordinance, the finance ministry today said a bill to replace the ordinance would be placed in the forthcoming session of Parliament beginning 26th July.

"Regulators have raised their points of view. The finance minister has taken note of those issues. The ordinance in whatever form has to be placed before Parliament. It is matter of a few days when this (bill) will be tabled and everybody would know what the future course of action on this particular piece of regulation is," finance secretary Ashok Chawla said.

After market watchdog Securities and Exchange Board of India (SEBI) and insurance regulator Insurance Regulatory and Development Authority (IRDA) locked horns over the jurisdiction of ULIPs, the government issued an ordinance giving IRDA the powers to regulate these schemes.

ULIPs are insurance schemes whose value is linked to the market value of shares they have been invested in.

However, a few days later RBI governor D Subbarao met finance minister Pranab Mukherjee and suggested the government to reconsider the ordinance.

"I have come to meet the finance minister in connection with the ordinance that they have issued regarding settlement of the dispute on regulatory jurisdiction. The RBI has certain reservations and concerns, which we have expressed in the letter," Mr Subbarao had said after the meeting.

Currently, inter-regulatory issues are looked into by a High Level Coordination Committee (HLCC), comprising financial sector watchdogs and finance ministry officials and is headed by the RBI.

Later, Mr Mukherjee said his ministry will not intervene in the autonomy of regulators, amid reservations expressed by the Reserve Bank over the ordinance on ULIPs.

"The intentions are quite clear. We are not going to intervene in the autonomy of regulators," Mr Mukherjee had said.

To a query on sovereign wealth fund, Mr Chawla said on the sidelines of a Confederation of Indian Industry (CII) conference that the government has taken no decision in this regard.

"Proposal has been mooted by some people. We will consider carefully as there are both points, in favour and against. At this point, no decision has been taken," he said.

On the status of the proposed Financial Stability and Development Council (FSDC) announced in budget 2010-11, Mr Chawla said, " supposed to be non-statutory forum of finance ministry and the regulators. So, its work is in progress. It will start meeting as and when necessary but it is not as if it has to go through any legislative process."

Some regulators are understood to have expressed reservations over any kind of role as an arbiter for the proposed body.



muralidhar s a

7 years ago

The opinion of the Governor of Reserve Bank of India, Mr.Subbarao has rightly opined that the Government has to reconsider the decission about regulation of ULIP as now the ball is in the court of IRDA. We have to consider the tax point of view, according to Mutual Funds wherein more amount of the installments of ULIP is in equity and equity oriented instruments and debts and money market instruments and a very little sum out of contribution is paid towards insurance premium on the basis of age at entry into ULIP. Therefore, SEBI being a watchdog of trading securities and debentures and money market is being controlled by RBI, the part of Insurance is of group insurance, just for which, IRDA need not regulate ULIP of Mutual Funds, but ULIP of Insusrance companies also has portfolio of equities and equity related instruments, SEBI may have SEBI (Insurance) Regulation may start up or IRDA(Equities) Regulation may start up or a Seperate entity in collaboration of SEBI and IRDA may be started up another regulatory in order to be transperent to the investors. The commission structure to the agents should also be similar without discrimation between mutual funds and Insurance ULIP products in order to empower the investor or policy holder as the case may be.

Drug wholesellers form firm to foray into organised retail

The 13,000 members belonging to the All India Organisation of Chemists & Druggists have formed a joint firm to counter the threat from large players in the drug retail biz

To counter the challenge posed by big players' entry in the drug retail business, countrywide pharmacy owners have formed a company — All India Origin Chemists and Distributors — to foray into organised retail, reports PTI.

"With the entry of large players a challenge is emerging for small traders. To counter that our 13,000 members from across the country have come together to form a joint firm, All India Origin Chemists and Distributors (AIOCD)," association of pharmacy owners All India Organisation of Chemists & Druggists (AIOCD) president J S Shinde told PTI.

He said the members have contributed around Rs13 crore to create the drug retailing firm. The sum would be mostly spent on providing training to members and in purchasing software for standardising the procedures.

"Currently, we are providing training to our members in standardised procedures of organised retail, so that they could also modify their business accordingly to become a partner in the trade," Mr Shinde said.

After getting trained, AIOCD members would rebrand their shops under a single identity to join the retail pharmacy chain.

AIOCD has also announced the launch of its own generic products through a separate division — Java.

The company has launched around 100 products, mostly in chronic, acute and lifestyle disease segment in 15 states. It is eyeing revenue of Rs100 crore in the next financial year through private label products.

"We are getting these medicines produced under contract manufacturing from excise free zones like Uttarakhand and Himachal Pradesh, and these products would be sold at a lower price then existing branded generics," Mr Shinde said.

The All India Organisation of Chemists & Druggists claims it has over 5.5 lakh members from across the country and they account for almost 95% of the overall pharma business in India.




7 years ago

AIOCD dicission is anti-democratic. All kings cannot form one kingdom and have regional heads of their own!
They cannot have monopoy power because, the big question arises as to who should be the head of their organisation and on other hand they cannot reach nook and corner of the country. Its only a Utopian effort. Better, let it be as it is now. If they try,
A new doctor and new patient and a fresh garland story would be. If operation is successful, the doctor would be garlanded, if the patient dies on account operation, the dead body would be garlanded. Garland is useful in both case,since, this would be a Drug controller.

PE investments forecast to touch around Rs80,000 crore this year

According to 'India PE Report 2010', private equity and venture capital flows are projected to reach $17 billion in India this year, the same as the peak year in 2007

Private equity (PE) and venture capital (VC) investments riding on the strong economic growth in the country are projected to reach $17 billion (around Rs80,000 crore) this year, a level last seen in pre-downturn times, reports PTI.

According to 'India PE Report 2010', released by global consultancy Bain & Company, there is renewed confidence among the leading PE investors about the Indian market.

"Private equity and venture capital flows are projected to reach $17 billion in India this year, the same as the peak year in 2007," reads the report forecast.

The report includes a survey conducted across over 75 leading PE investors globally. The survey revealed number of respondents planning to invest in the range of $200-$500 million in the next two years has risen four-fold to 27% this year.
"The number of PE firms, both foreign and domestic, continues to grow. This increasing population of hungry deal makers is wielding a lot of dry powder and they're eager to put it to work", Bain & Co's head of the private equity practice India Sri Rajan said.
"Our estimate is that current investment reserves are deep enough to finance between two and four years of PE deal making," Mr Rajan added.
The report, prepared in partnership with Indian Venture Capital and Private Equity Association (IVCA), forecasts strong growth for the PE industry in the country over the next three years.
Nearly two-thirds of respondents surveyed said they expected the industry to grow between 10% and 25% into early 2011, the survey revealed.
However, though the macro-economic picture is far rosier today than two years ago, PE fund managers face rising acquisition costs and intense competition to land the best deals.
These factors are increasing pressure on them to become more directly involved in value addition to their portfolio companies over a typical 3-5 year ownership period.
"To succeed, it is not enough for PE investors to just be a source of funds. They must be able to position themselves as providers of expertise, in addition to funding," Mr Rajan said.


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