CBI books LIC officials for graft in death settlement

It said Rs1.14 crore was allegedly paid by LIC against 570 false claims during 2008-2011

New Delhi: Two former branch managers and another official of Life Insurance Corporation of India (LIC) have been booked by Central Bureau of Investigation (CBI) for alleged irregularities in settlement of death claims worth Rs1.14 crore, reports PTI.

A CBI spokesperson said a case has been registered against then branch managers H K Gadpal and Anil Kumar, the then Higher Grade Assistant of LIC Divisional Office, Raipur, R K Netam, dealing official of Nagar Nigam, Bilaspur Ashok Kumar and another person Vijay in connection with the case.

“In pursuance of the criminal conspiracy, they had committed fraud in the settlement of death claims under the Janashree Bima Yojana of LIC under various different policies of Nagar Nigam Palika, Bilaspur,” the spokesperson said.

It said the insurance amount to the tune of Rs1.14 crore was allegedly paid by LIC against 570 false claims during the year 2008-2011 which had resulted into loss of Rs1.14 crore to the LIC.

“Searches were conducted at official & residential premises of the accused in Bilaspur and Raipur. The incriminating documents recovered during searches are being scrutinised,” it said.

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Gold loan firms setting up self-regulatory body

RBI has not been comfortable with the fast growth of gold loans, which led the regulator to tighten norms on banks' exposure and also bring down loan-to-value ratio

Mumbai:  Under lens of the Reserve Bank of India, leading gold finance companies have decided to form a self-regulatory organisation (SRO) which will frame a fair business practices code for the industry, reports PTI.

The move is being spearheaded by industry leader Muthoot Finance's managing director George Alexander Muthoot and has Manappuram Finance, Muthoot Fincorp, Sriram Citi Union, and Kosamattam Financiers as members, among others.

“We feel that the RBI has not been comfortable with the fast growth of our industry, which led the regulator to tighten norms on banks' exposure to this industry in April and also bring down loan-to-value ratio," Muthoot told PTI from Kochi over the phone.
"We want to send out a message to the regulator that we are complying with all its regulations. We are giving them (RBI) time to understand our business model," he added.

Muthoot expressed hope that the proposed SRO, under the banner of the Association of Gold Loan Companies, will represent the sector better at the Reserve Bank of India (RBI).

The SRO will represent about 85% of gold loan portfolio, he added.

Muthoot said his company has seen its volume sliding by over 5% following RBI's tightening and said same would be case with other players.

This year, he is expecting a tempered growth of 10% to 25%. “But we expect the pace to pick up steam by Q3,” he said.

Muthoot Finance has also decided to curtail its expansion this year. The company which has 3,700 branches will be opening only 250-300 branches this year, Muthoot said, adding that he expects consolidation in the industry as general slowdown in volumes will hit the margins.

On fund raising, he said the company will not need much. “The focus will be on concentrating more on growth of existing branches, rather than adding more branches,” he said.

However, towards the later part of fiscal, the company will go in for some fund raising, primarily through an NCD issue of around Rs500 crore. Last fiscal, it had raised Rs1,500 crore three NCD issues, he said. Notably, the RBI has been tightening screws on the industry for quite some time.

While in late-March, the RBI tightened norms for gold loan NBFCs by asking them to increase their tier-I capital to 12 per cent and capped loans at 60 per cent of the market value of gold, in April, it had asked banks to reduce their exposure to gold loan NBFCs.
The move came as the RBI was concerned about rising gold imports, which touched $66.1 billion last fiscal against $40.5 billion in FY2011, widening the trade and current account deficit.

The RBI had also set up working group to suggest ways to deal with the industry.
While capping the LTV at 60%, the RBI had said, “The rapid growth of the gold loan segment, which grew 50% last fiscal, had increased risks to the banking system and retail investors.”

Accordingly, the RBI has directed that gold loan NBFCs having half their assets in gold should have a tier-I capital of 12% by April 2014. Further, these companies can not lend more than 60% of the value of gold jewellery.

The RBI is worried that since these companies lend 70%-75% of the value of gold, a fall in prices could destabilise the system.

The central bank has also banned these companies from lending against bullion, primary gold and gold coins, leaving just jewellery.

The RBI, in its annual policy had also asked banks to set up internal exposure limits for these NBFCs who have gold loans portfolio of over 50% of the total financial assets.

It also asked banks to reduce their exposure to a single NBFC, having gold loans to the extent of 50% or more of its total financial assets, from the existing 10% to 7.5%.

In the wake of huge spurt in gold imports and its impact on balance of payment, the Budget increased Customs duty on standard gold bars, gold coins of purity exceeding 99.5% and platinum from 2% to 4% apart from doubling customs on non-standard gold to 10%.

For FY2012, Muthoot Finance's total volume of gold under its custody rose 22% to 137 tonne from 112 tonne.

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I-T starts probe against political parties, trusts to check tax evasion
Political parties, a variety of charitable organisations, scientific research associations, educational institutes and certain hospitals have been found to have 'huge receipts' of funds by way of donations, contributions and payments

New Delhi: The Income Tax (I-T) department has launched a probe against a number of political parties as well as charitable and religious trusts after it found that they were receiving "huge funds" beyond the exemption cap for filing tax returns, reports PTI.
 
The department has compiled a list of those non-filers of I-T returns who are exempted to pay tax up to a certain limit of funds under Section 139 of the Income Tax Act.
 
Political parties, a variety of charitable organisations, scientific research associations, educational institutes and certain hospitals have been found to have "huge receipts" of funds by way of donations, contributions and payments in an I-T analysis report.
 
According to the report, a number of organisations under this exempted category are "potential assesses" but the I-T could not scrutinise their accounts as they do not file returns as mandated under the Act.
 
"Any such exempted organisation has to file I-T return if it exceeds the threshold of income that was set for the charitable organisation category. But many institutions are not doing so," sources privy to the development said.
 
An earlier I-T probe had found that close to 300 registered political parties in the country had never filed their tax returns, which they should be doing as they receive large donations from a host of contributors, they said.
 
"By scrutinising these returns and donations, not only the organisation which is violating the exemption norms could be checked, but also the department will get to know the people who are making undercover donations," I-T sources said.
 
The department has already begun an exercise asking its exemptions directorates across the country to track such bodies and develop actionable information about the source and quantity of funds received by them.
 
"The enforcement units of the department have been asked to check non-filers of returns categories to look for possible cases of tax evasion," a senior I-T official said.

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