After repeated articles by Moneylife highlighting multi-level marketing and other illegal schemes being run by insurance agents, we have finally received information on some action taken by an insurer
Birla Sun Life Insurance has come out with an official statement on posters being plastered on local trains, advertising a dubious scheme being offered to potential agents to sell life insurance products
(see: http://www.moneylife.in/article/81/5641.html). According to the company’s statement, “appropriate action” is being taken against the concerned person.
We have reported on numerous occasions
(see: http://www.moneylife.in/article/78/5761.html) about such illegal schemes, including multi-level marketing (MLM), and this is the first time an insurer has responded. What’s more, officials from the company have admitted that the concerned person was associated with the company.
Selling insurance translates into big money for agents. A number of agents have been coming out with devious plans to sell policies to gullible investors. From operating MLM schemes, blatant mis-selling of unit-linked insurance products (ULIPs), plastering of fake job applications and sending misleading text messages—every trick in the book is being tried to peddle insurance products. The common factor in all of these dubious schemes has been the inaction of companies.
In its statement to Moneylife today, Birla Sun Life Insurance said, “We thank you for bringing this matter to our notice. We have investigated the case and have taken necessary action against the concerned person.”
An official from Birla Sun Life Insurance, who did not want to be named, admitted that the person advertising the scheme was associated with the company. The official said, “He was associated with the company and his act was one of negligence and not knowing the rules prescribed by the company.”
However, it is not clear what kind of action was taken. An executive from the corporate communications department of the company said that disclosing the nature of the action “would be against company policy.”
This issue throws up three matters. First, these schemes are being run by employees from various companies or at least by individuals associated with various insurers. Second, more often than not, firms have hardly ever responded to such issues—Birla Sun Life is an exception—and if they do respond, the response is tepid (“We will be looking into the matter”). Third, both insurance companies and the Insurance Regulatory and Development Authority (IRDA) have still failed to take action against such persons.
On 11th May, Moneylife had sent a mail to IRDA about various MLM schemes in operation. We were told that such schemes were not allowed by the regulator and action would be taken against such companies.
The decision was taken at a meeting of the Cabinet Committee of Economic Affairs today
The government today approved disinvestment of 10% equity each in mining companies Coal India Ltd (CIL) and Hindustan Copper Ltd (HCL), reports PTI.
The decision was taken at a meeting of the Cabinet Committee of Economic Affairs (CCEA) earlier today.
"Disinvestment of Coal India Ltd would be through book building process in the domestic market. 1% of the equity will be offered to the employees of Coal India Ltd and its eight subsidiaries," home minister P Chidambaram told reporters after the CCEA meeting.
The committee also decided to allow 5% price concession to retail investors and employees of CIL. The paid up equity capital of CIL is Rs6,316.36 crore and the government owns 100% stake in the coal major.
For the disinvestment of Hindustan Copper Ltd, there will be a fresh issue of equity to extent of 10% of the pre-issued paid up capital.
"In conjunction with the issue of the equity, government will also disinvest its 10% pre-issued paid up capital of the company (Hindustan Copper)," Mr Chidambaram said.
The disinvestment in HCL, 0.41% stake of which is already with the public, will see the government holding coming down to 81.45% from 99.59% at present.
HCL's follow-on public offer (FPO) will see the firm issuing fresh shares aggregating up to 9.25 crore shares of face value of Rs5 each, with government selling a similar quantum of shares.
Shares of HCL jumped 11.15% to Rs523 on BSE during mid-day trade.
Copper mining firm HCL turned profitable last fiscal and is looking to expand its operations, for which it plans to fund its Rs4,200-crore augmentation programme.
HCL plans to raise copper ore production from 3.15 million tonne per annum (mtpa) to 12 mtpa and has plans to expand capacity of its mines and projects including the Khetri mines in Rajasthan, Malanjkhand Copper Project in Madhya Pradesh and Surda mines in Jharkhand.
The divestment and fresh equity issue is likely to fetch Rs4,000 crore, half of which will go to the government, mines minister B K Handique had said last week.
The IPO had received bids for 53.63 lakh shares from the total quota of 61.25 lakh shares on offer despite slashing the offer price and extending the offering
After getting a poor response from investors, Fatpipe Networks India Ltd (FNIL) has withdrawn its initial public offering (IPO).
FNIL’s listing plans remained a pipe dream as investors shunned the IPO due to the company’s weak track record. Moneylife had earlier reported on how the IPO was expensive in comparison with its peers. (Read here: http://www.moneylife.in/article/8/5842.html).
On 9th June, FNIL managed to get only 0.73 times subscription on the National Stock Exchange (NSE), thus falling short of the 90% subscription required as per the Securities and Exchange Board of India (SEBI) rules. The company had to slash its price band from Rs82-Rs85 to Rs80-Rs85 per share and extend the bidding period to 14 June 2010.
There were also controversies surrounding its products. According to Vickram Crishna of Radiophony, some of the technology claims were exaggerated. One of the key issues here is TCP/IP. This defines how the packets are assembled, at either end of the pipe. Once they are assembled, the pipe is just that, a conduit, and cannot change the packets. One can modify a closed circuit and use some other protocol for the duration of the circuit, but then it won't help transmit packets that originate or terminate outside the closed network any faster (slower, if anything, due to the extra processing). TCP/IP is critical, because that is the protocol governing nearly all data services nowadays, and all of the services running on the open Internet.
FNIL claims to hold patents on a technology called 'Router-Clustering', which enables customers to obtain highly redundant and fast Internet or Wide Area Network (WAN) access. It provides global corporations and government offices with technology that increases the security and reliability of WANs, corporate extranets, Virtual Private Networks (VPNs) and all last-mile Internet connections, including wireless connectivity.
The IPO received bids for 53.63 lakh shares from the total quota of 61.25 lakh shares on offer as on 14 June 2010 on the National Stock Exchange (NSE). Retail investors subscribed to just 25% shares on 14 June 2010. Brickwork Ratings had assigned an 'IPO Grade 2' to FNIL’s IPO.