Companies & Sectors
Chidambaram wants specific proposals for general insurance business

Insurance industry representatives are pitching for de-tariffing of motor insurance, development of pricing mechanism for health insurance business and lowering of the MAT

New Delhi: Finance Minister P Chidambaram has asked general insurance companies to come up with specific proposals so that the government could take measures to increase penetration of non-life insurance business which is at present estimated at less than 1% of GDP, reports PTI.
"We will get back to the Ministry within the week with specific proposals for boosting general insurance," said the head of a public sector insurance company after the meeting of industry representatives with the Finance Minister.
To increase penetration of general insurance, Chidambaram has asked CEOs of public and private sector companies to provide suggestions for removing impediments that hamper growth of the sector, said an official release.
The industry representatives during the meeting raised various issues with regards to taxation, loss-making motor insurance business and health insurance, the public sector insurance company official said.
He added the Minister wants them to come up with specific proposals.
Among other things, the industry representatives pitched for de-tariffing of motor insurance, development of pricing mechanism for health insurance business and lowering of the Minimum Alternate Tax (MAT) on the sector.
"Our (general insurance) penetration rate is low. It is 0.7%. How do we improve it to average standard which is 1.5 to 4%? The road map is to be prepared by all of us," Financial Services Secretary DK Mittal told reporters after the meeting.
The basic agenda of today's meeting was to work out ways to increase penetration of non-life insurance and promote financial inclusion, Mittal added.
Chidambaram had earlier in the month held similar exercise with representatives of the life insurance industry with a view to boosting the sector.
The major challenge before the industry, Chidambaram said in his remarks, was to increase reach to maximum number of people along with growth of investment in the sector.
Later, talking to reporters, Bharti AXA General Insurance CEO Amarnath Ananthanarayanan said there was a general feeling that a lot is needed to be done to promote non-life insurance sector in the country.
Among other things, he said, low profitability was also hampering growth of general insurance business in the country.
"...things hindering the growth of insurance sector is lack of profitability among the general insurance companies," he said, adding the government would also need to pursue legislative changes which are awaiting Parliamentary approval.
The government's decision to raise foreign investment in insurance from 26 to 49% cannot be implemented without amendment to the Insurance Act. The amendment bill has been pending in Parliament since December 2008.
The general insurance industry is facing losses mainly due to high claims on third party motor insurance pool and high cost-to-claim ratio in the health insurance sector. The ratio was as high as 140% as on June 2012.
It was pointed out that motor vehicle insurance, which accounts for 41% share of non-life insurance business, faces major challenges because of regulated tariff, unlimited liability and non-jurisdiction restriction for filing claims.
The industry suggested de-tariffing of motor insurance and a cap on liabilities of insurers. Suggestions were also made for improving penetration of home insurance business.
Industry also requested for hike in service tax exemption limit and removal of TDS on payment of reinsurance premium by insurance companies.


BoB Q2 net profit up 11.6% to Rs1,301 crore

Total revenues of BoB, including interest income, rose by 19.6% to Rs9,550.86 crore

Mumbai: Public sector lender Bank of Baroda (BoB) posted 11.6% rise in net profit to Rs1,301.39 crore for the July-September quarter on the back of good growth in core income, reports PTI.
The bank's net profit stood at Rs1,166.08 crore in the same period last year.
Total revenues of BoB, including interest income, rose by 19.6% to Rs9,550.86 crore during the second quarter compared to Rs7,985.78 crore in the same period last year.
"Despite a difficult economic environment, we have consistently performed in all parameters in the recent past and hope to maintain the momentum," Bank of Baroda Chairman and Managing Director MD Mallya told reporters.
While the net interest income (core income) of the bank grew by 11.5% to Rs2,862.30 crore in the quarter, the net interest margin (NIM) stood at 3.22% for domestic operations.
"There was an apprehension in the market that NIM would be impacted due to the current economic environment. However, we were able to protect the NIM," he said.
During the second quarter, the bank, however, witnessed a rise in non-performing assets (NPA).
The gross NPAs rose to 1.98% of loan assets as on September 2012, compared to 1.41% at the end of second quarter of the previous fiscal. Similarly, net NPA stood at 0.82% in the quarter.
"We hope that net NPA will be maintained below 0.9%," Mallya said.
The total restructuring in the second quarter stood at Rs930 crore.
"Restructuring pipeline is not big for the bank and there are only one or two accounts which are considered for restructuring," he said, adding that the fresh NPA addition in the second quarter stood at around Rs 1,340 crore.
The bank also said its current account, savings account (CASA) ratio stood at 32% by the end of second quarter.


Fault Lines in the development models of China and India-Part 1

Globalisation today is limited to economic activity and multinational corporations, their top officials and stock market gamblers have gained the maximum from it. Current policies are tutored by economists, business school faculties and Western thinkers, a significant number amongst them non-resident Chinese and Indians!

In November 2001, I was invited by the Paris-based Organisation for Economic Co-operation and Development (OECD) to present a paper at their conference on “Policies for economic and Social Transitions in the 21st Century”. My theme was very basic: “What is development of a society, and what is its yardstick?” 
Some of us have always wondered about the validity of the current yardsticks of measuring national development in terms of GDP (strength of a country) or GNP (strength of people of a country). When it comes to countries like China and India, we thought this to be certainly inappropriate. Traditionally, Indians and Chinese understand that life is indeed not just about money, but all about the well-being of the people, with money being just one of its dimensions. 
Our societies have never been money-centric as they are being moulded into today. Even then, most of us still believe that development of a human society in each of its aspects is related to the consequential change and development of the individual. In this sense, the development of a country needs to be measured on the basis of the percentage of people living with dignity and honour. Those who are learned and engage themselves in scholarly pursuits, have always enjoyed higher respect than the wealthy in both societies. Confucian philosophy hinges on showing the way to win this respect. 
A modern Chinese scholar has suggested that the core Confucian teaching is contained in these words: “When men wished their virtues to shine throughout the land, they first had to govern their states well. To govern their states well, they first had to establish harmony in their families. To establish harmony in their families, they first had to discipline themselves. To discipline themselves, they first had to set their minds in order. To set their minds in order, they first had to make their purpose sincere. To make their purpose sincere, they first had to extend their knowledge to the utmost. Such knowledge is acquired through a careful investigation of things. For, with things investigated, knowledge becomes complete. With knowledge complete, the purpose becomes sincere. With the purpose sincere, the mind is set in order. With the mind set in order, there is real self-discipline. With real self-discipline, the family achieves harmony. With harmony in the family, the state becomes well-governed. With the state well-governed, there is peace throughout the land”.
Traditional culture teaches Indians and Chinese to pursue knowledge and wisdom in order to live in harmony with one’s surroundings and to try to contribute something of their own till they leave this world. One thus conducts life trying to be fully human. In Asia, there is traditional appreciation of a ‘wise’ person; someone whose wisdom is reflected in his behaviour rather than his utterances. Such a person is a fully developed person. Being informed, being knowledgeable and being wise are the steps in that transformation. No wonder that India and China together have given birth to most of the life philosophies and religions of the world! It also gave the world sages and philosophers in the 20th century such as J Krishnamurthy who has made a profound impact human consciousness giving new meaning and content to our life, going beyond the organized religions. Even for an Indian or Chinese commoner, a wise man is the one who knows what life is all about. The manifestation of wisdom is reflected in his simple living, his enjoyment in giving and living with the minimum. Wisdom, therefore, makes you consume less, derive pleasure in sharing, enjoy harmony and understand the futility of conflict. Harmony with nature is reflected in our traditional healthcare that uses nature to cure, and focuses on living healthily rather than treating the sickness. Rural life in both countries is beautifully entwined with local flora and fauna. Today all this appears unreal when one finds thieves ruling.
Many a times, I have wondered why Indians and Chinese have such similarities in perceptions of life. Somewhere there is a common thread that has conditioned our psyche throughout our history. Respect for parents, teachers, mentors, peers and all others who shape our personal development, comes to us naturally. Like our habit of saving, there are many other similarities in our behaviour and the values we cherish, which are far removed from Western civilisations.
As someone told me, is it because, in India and China, religions and thoughts developed in a more peaceful forest environment with plenty of water and natural food, unlike Jewish, Christian and Muslim religions that took birth in deserts, where survival was the only basic concern. Since ancient times, there was only mutual appreciation by scholars of both countries, never any talk of war. As one can very well see, Buddhism, unlike the Muslim religion, spread in China purely through love and understanding. Not only was there was no violence, it did not even upset Confucius’ teachings.
When I look at the economic development in India and China, I realised that both are striving to achieve human development merely through economic development. A minor portion, one can see, is through social development. Both seem to believe that money will help their political and social objective to achieve inclusive (in the case of India) or harmonious (in the case of China) development of their society. These policies are driven by those who want to push trade and commerce. Globalisation today is, therefore, limited to economic activity. Multinational corporations, their top officials and stock market gamblers have gained the maximum from such development. Social globalisation, like global poverty elimination, is limited to seminars and political speeches!
Two hundred years ago, the world was socially more global as there were no boundaries, passports and visas. Such barriers have increased during the last two decades. The current policies are tutored by economists, business school faculties and Western thinkers. In fact, a significant number amongst them are non-resident Chinese and Indians!
The prescription for economic development consists of increasing per capita consumption and writing economic policies that promote consumption beyond necessity. Businesses, especially multinational ones, love this and they weave media magic to promote it. All of this is done to meet the socio-economic objectives of both governments. There is resultant confusion here, since the chase of money and limitless greed is thought to be the elixir of human happiness and well-being.
To sum it up, in spite of our long-surviving democracy, India has not been doing well even though one can see financial growth in terms of GDP and a growing number of billionaires. Recently, a news item spoke of India scoring high on the happiness index; below the story was a picture of a smiling old beggar! The failure lies in the fact that 80% of Indians share just 20% of the GDP, and the rest 20% enjoy the balance 80%! Even though momentarily doing great, China too has an almost identical situation. In fact, India has had the rich and poor divide since centuries, and society has accepted this divide so far without conflict. In China, however, society has moved from an “all poor and deprived” society during over three Mao decades of PRC, to the Deng Xiaoping era where there is unbridled capitalism in a communist bottle. A select few getting extremely wealthy in a short span of three decades is indeed a little difficult to swallow for many Chinese. The sharp contrast within the population in China is, therefore, alarming. 
(PS Deodhar is founder and former chairman of the Aplab Group of companies. He is also the former chairman of the Electronics Commission of the Government of India and was an advisor to late Prime Minister Rajiv Gandhi on electronics. He also was the chairman of the Broadcast Council in 1992-93 that set in motion the privatisation of the electronic media with metro channels. He can be contacted at [email protected].)



kandakuru sreeni

5 years ago

we should also adapt the effective leadership and effective governance framework (i.e implmentation of law and continuity of government programmes) of the west.

regards sreeni

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