Disclose top 100 loan defaulter businessmen: CIC to RBI

While the RBI had objected to making the information public saying it is held by it in fiduciary capacity and disclosing it would adversely affect economic interest of the state, information commissioner Shailesh Gandhi said that such exemption does not stand when there is larger public interest in the disclosure

New Delhi: The Central Information Commission (CIC) has directed the Reserve Bank of India (RBI) to make public the names and other details of top 100 industrialists of the country who have defaulted on loans from public sector banks, reports PTI.

The commission also directed the central bank to post on its web site complete information on all such industrialists as part of suo-motu disclosure mandated under section four of the RTI Act before 31st December and asked it to update it every year.

The RBI had objected to making this information public saying it is held by it in fiduciary capacity and disclosing it would adversely affect economic interest of the state.

Information commissioner Shailesh Gandhi agreed that information is fiduciary in nature but said that such exemption does not stand when there is larger public interest in the disclosure.

“There can be no doubt that the information on defaulters received from banks are held by the Reserve Bank in a fiduciary capacity and are confidential in nature,” an RBI official had said while deciding RTI application of PP Kapoor of Panipat, Haryana.

Mr Kapoor had sought to know from the RBI the details of default in loans taken from public sector banks by various industrialists besides list of defaulters, top 100 defaulters, name of the businessman, address, firm name, principal amount, interest amount, date of default and date of availing loan.

During the hearing, Mr Gandhi asked the RBI if the information about loan defaulters is held by it as part of statutory requirements. The public information officer admitted that the banks were providing the information in fulfilment of statutory requirements.

Mr Gandhi in his detailed order said, “In fact, information about industrialists who are loan defaulters of the country may put pressure on such persons to pay their dues. This would have the impact of alerting citizens about those who are defaulting in payments and could also have some impact in shaming them.”

He said there is no doubt that details of top industrialists who have defaulted in repayment of loans must be brought to the citizens’ knowledge and there is certainly a larger public interest that would be served on disclosure of the same, hence clause of fiduciary information does not stand.

“This (disclosure) could lead to safeguarding the economic and moral interests of the nation. The commission is convinced that the benefits accruing to the economic and moral fibre of the country far outweigh any damage to the fiduciary relationship of bankers and their customers if the details of the top defaulters are disclosed,” he said.

He said the commission is aware that information on defaulters is being shared by RBI with an organisation called CIBIL adding that “it is difficult to understand the reluctance to share this information with citizens using RTI”.

The commission also rejected the contention that disclosure would adversely affect economic interest of the state saying “if it means that such borrowers would not bank with public sector banks for fear of exposure, it would in fact be in the economic interest of the nation.

“It is also unlikely that the economic well being of the nation could get affected adversely by disclosing the names and details of defaulters. The Indian economy is dependent on far stronger footings,” he said.


Online term life insurance – Race to the bottom?

The online term life insurance market is heating up with more players entering the fray. The premium is now similar to personal accident cover offered by non-life insurance companies. Is it sustainable? Are the products priced too aggressively? 

Many insurers like LIC, HDFC Life, Bharti AXA Life, Tata AIG life are set to come out with term plans which may be pure online or combined with offline mode of distribution.

Term life insurance used to be almost three times expensive than personal accident cover offered by non-life insurers. Not anymore. It is now at par and if the trend of race to the bottom continues, term life premium can be unsustainable. While personal accident covers disability as well as death, the trigger has to be accidental which needs a lot more documentation like police first information report (FIR), post-mortem report and so on. Term life without a rider will cover death which may or may not be due to accident. The current online term premium rates are a good deal for customers, but the competition is just getting started.

Some of the current online term plans may re-price the products with 10% to15% lower premium for a specific target segment based on lifestyle. Increasingly insurance companies are offering discounted premiums for non-smokers, female policyholders and now will start looking at detailed lifestyle like occupations to arrive at a reduced premium. There may be a proportionate increase in sum assured for existing customers to ensure they get benefit of the re-pricing initiative.

According to Deepak Yohannan, “There are sceptics who scoff at this claiming it to be un-sustainable—that only time can tell. At least it has forced the large players to sit up and play the game with the new rules being set by others. Complete disruptiveness at it best and I think the life insurance industry will see a lot more and it will not all be restricted to pricing.”

A new product ICICI Pru Life iCare tries to address the major hiccup with the online term insurance buying process. The medical tests which online term insurance products require for all (or higher age groups) has been done away with this innovative product. There were issues like premium hike after medical tests which used to catch customers by surprise. This one-of-a-kind product will have no medical tests and no surprises of premium hike. This is online term plan in complete sense.

Recent entrants DLF Pramerica U-Protect and Edelweiss Tokio Life Protection have premiums which are the lowest in offline term plan space. Their premium is Rs5,956 and Rs5,984 respectively for Rs50 lakh sum assured for a 27 year old non-smoker male based in Mumbai for policy term of 25 years. Both the products are offline as of now.

Select term life plan options for Rs50 lakhs sum assured for 27 year old non-smoker male based in Mumbai for policy term of 25 years. AR – Accidental death rider, CI – Critical Illness rider, DR – Accidental Disability rider, WP - Waiver of Premium rider.

According to Akshay Mehrotra, chief marketing officer, PolicyBazaar.com, “Online term insurance has become very popular today; we get close to 3,500 active interested queries on our website everyday. Currently the estimated number of online policies sold per month is close to 6,000. This growth in online term insurance has been fueled by the drastic drop in premium rates online over the last three years.”

There has been talk about online term plans having low renewal ratio due to price-sensitive customers getting lured with ever decreasing premium offered by competitors. There are some deterrents like medical exam and increasing premium with age which may prevent a customer from jumping the ship. According to Aegon Religare, they have 91% of policies renewed which is healthy renewal.
It is estimated that Rs50 crore sum assured of life insurance is sold through the online channel everyday. According to PolicyBazaar.com data analysis of leads, the main trend which is very sharply visible over the last couple of years is that the average sum assured on health and term insurance has almost doubled and increased to Rs5 lakh on health and Rs50 lakh (even up to Rs1 crore) on term insurance across all markets. Women are still non-existent in searching for life insurance products while 10% of visitors looking for health insurance are women. A high number of visitors from metros are looking for insurance products; 74% of the visitors looking for car insurance are from metros, 60% of the visitors looking for health insurance while 62% of the visitors looking for term insurance are from metros. The maximum searches for any insurance are done by people from age 26 to 35 years.





5 years ago

The cheapest among the slot is Aviva.
Glad I bought it


6 years ago

its high time insurance companies sell term products which is true insurance instead of loading people with products which the consumer fails to understand. As regards pricing its the risk appetite of the insurance company. Also one must access the claims settlement ratio going forward.

Govt clears changes in PFRDA Bill, allows 26% FDI in pension

The Bill, which has already been scrutinised by the Parliamentary Standing Committee on Finance, is likely to be taken up for consideration and passage in the Winter Session beginning 22nd November

New Delhi: The government today approved amendments to the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011 while agreeing to the proposed 26% foreign investment in the pension sector but refrained from providing assured returns to subscribers in the proposed law, reports PTI.

The government had decided not to mention FDI cap in the legislation itself for retaining the flexibility of changing it through an executive order. The 26% FDI cap is to be mentioned in the regulations to the legislation.

The changes to the PFRDA Bill were approved by the Union Cabinet at its meeting here.

The Bill, which has already been scrutinised by the Parliamentary Standing Committee on Finance, is likely to be taken up for consideration and passage in the Winter Session beginning 22nd November.

“The government is of the view that FDI cap in the pension should be at 26% at par with the insurance sector. However, it would like to retain the flexibility of changing the cap of FDI as and when required and that is why it has not been kept as part of the bill”, an official spokesperson said.

The proposed legislation, the official said, will not provide assured returns to the subscribers of pension schemes.

The committee, which is headed by senior BJP leader and former finance minister Yashwant Sinha, wanted the government to specify the FDI cap in the legislation itself and provide minimum guaranteed return to subscribers.


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