Govt asks SBI to submit report on Moody’s downgrade

Global ratings agency Moody's on Tuesday downgraded its rating of SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality

New Delhi: The government has asked State Bank of India (SBI) to explain the reasons behind the downgrade by global ratings firm Moody's, reports PTI quoting the bank's chairman, Pratip Chaudhuri.

"The government has asked us to give report on reasons for the downgrade," Mr Chaudhuri told private news channel CNBC-TV18 in an interview.

Global ratings agency Moody's on Tuesday downgraded its rating of SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.

"It is a downgrade of a small segment of the bank's debt," Mr Chaudhuri said, adding SBI's overall rating is still a notch above sovereign rating.

Mr Chaudhuri also said the State Bank of India's (SBI) rights issue will restore the bank's rating.

"We will get capital from government by December or March next year," he said, adding, "...expect SBI's capital adequacy to be above 9% by March 2012."

As per Moody's, a 'D' rating suggests "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".

Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade.

The stock continued to be an underperformer in today's trade, as well, and was down 2.38% to Rs1,744.20 on the BSE in late morning trade, after hitting a fresh 52-week low of Rs1,731.40 earlier.



R Balakrishnan

5 years ago

This has to be a joke! How can someone explain a third party action? In any case, SBI cannot hope for a better rating simply by bringing additional capital. Its bad loans and its poor banking practices are a trait that will not vanish. Every departing chairman cooks up profits and every incoming one makes the books look bad.

IRDA asks insurers not to reject health insurance on a routine basis, but don’t pin much hope on this directive

IRDA has asked insurance firms to pay claims, even if they are submitted late due to genuine reasons. The intention is noble, but don’t lose sight of the ground realities of claims rejection, and the absence of penalty for insurers

The Insurance Regulatory and Development Authority (IRDA) circular to life and non-life companies asking them not to reject claims on technical grounds of delay in filing may come as a relief to policyholders. But keep this fact in mind —the primary target for this circular is mediclaim insurers, some of whom have stringent filing deadlines. There have been a number of complaints to IRDA of rejection of claims that are genuine. Various media reports have been published that indicate that insurance companies can't refuse a claim, even if the request comes in late. Obviously, these articles may make readers feel that all the problems of stringent deadlines imposed by mediclaim insurers will be solved. However, if you make a late filing of your claim, you'll be doing so at your own risk.

Some insurance companies have been stringent about hospitalisation intimation, and claims filing, by imposing unrealistic deadlines. These 'tight' norms have been formulated under the garb of protection against mediclaim 'fraud'. On the other hand, insurers don't have any deadline for payment of claims. The customer is the one who gets hit by such a one-sided contract.

Genuine customers who have been paying premiums consistently every year for decades, have also been at the receiving end with outright claims rejection.

has reported on numerous such cases. Claims have sometimes been tossed around in different offices of an insurance company for almost six months—in some cases, customers only end up getting the thumbs-down to their request.

If the policyholder believes that the IRDA circular will change the ground reality, it's time he does a rethink. For starters, there is no penalty for the insurance company if claims are rejected on a mechanical basis on the grounds of late filing. There is also no incentive for the higher authorities in insurance companies to accept genuine claims. On the contrary, the incentive is for some TPAs (Third Party Administrators) and insurers to keep the claims ratio low, and let the insured approach the Ombudsman or a consumer court.
This is possible only if customers are capable of taking the fight to the next level. But most of the insured don't do it—either because they cannot physically handle extensive litigation, or because they don't have the financial wherewithal for the battle—and they let go of the fight. Those who want to fight have to spend one to three years to get any result, favourable or otherwise. This end-result may be achieved after a huge gap of two to four years from the initial filing of the claim. In such cases, where the onus is clearly on the insured, the insurance company stands to benefit.

The Insurance Ombudsman has been helpless in these cases till now, as the timelines are specified in the insurance policy document in fine print-often overlooked by the policyholder or glossed over by the insurance agent. Will the IRDA circular give the Ombudsman the authority to overturn the insurance contract's wordings? This is something that can be inferred only over a period of time.

Even though the problems detailed above may not applicable to all insurers, claim-filers have to be aware of these stipulations, rather than be sorry later. Justice may not be served easily—and, as the dictum goes, justice delayed is justice denied—especially in the case of insurance claims. Of course, redressal may eventually come about, but it may take many years before you get it. Therefore, it's better that you file your mediclaim hospitalisation intimation and claims on time, rather than expecting speedy redressal because of the IRDA diktat. Caveat emptor should be the guiding policy—and mediclaim is certainly not a contract you can experiment with.




5 years ago

I’ll be back soon on your site again so please continue sharing your great tips.

Nagesh Kini FCA

5 years ago

First and foremost the TPAs should be closed down en masse. They resort to fiddling with the money that the collect from the insurance companies - they part with small sums to the hospitals and insured individuals and corporates. They are a law unto themselves They reject claims, the doctors that they hire to scrutinize the claims are unqualified or homoes, unnani or ayurveds not conversant with the ailments and procedures. They are a source of harassment plain and simple. .


5 years ago

This comment isnt related to the post but this being the latest article ive posted here

Nirmal Kotecha is back he is using the Onelife Capital advisors ipo as a backdoor entry moneylife pls warn your readers
the fraudster might take onelife all the way to 1000 before he dumps it

its priced at 100 rs

Harish Shah

5 years ago

Those who have filed the claim late let them be in the que. There are hundreds of claims whose claim intimation was sent before 24 hrs. and claim submitted within 7 days from the date of discharge from the hospital. Still their claims are made non payable by inefficient T.P.A. who claims not have received intimation or document as per clause in the policy. How much of a strain and litigation a person has to do to get the claim passed.


5 years ago

intimation in24 hours,file submissin in 7 days otherwise rejection or panelty.why company not bound for claim settlement penelaty also for company .irda also make rule for similar intimation time & file submission.


5 years ago

I am really grateful to moneylife and to Raj Pradhan who has done a very detailed job. I had written to them about problems that I had with my insurer, Apollo Munich and he went beyond the bounds to help me with right advice. Apollo Munich is now willing to process my claim and also reconsider their network hospitals as the hospital authority in Raheja - Fortis had done a wrong diagnosis initially resulting in my claim being rejected for cashless and despite the CMO ratifying the report, it was not considered. Now it is...


5 years ago

My comment is not directly related to the above article. But I am compelled to post a comment here. A general insurance company, a government of India undertaking, is giving legitimacy to Ponzi Company. Three days ago Moneylife published an article about this ponzi company. Please see the link:

How this has happened? Will the authorities explain?



In Reply to LOL 5 years ago

National Insurance Company needs to clarify

Kishore N

In Reply to P 5 years ago

I request MONEY LIFE to take up this issue with National Insurance company.

Apple mania gets a reality check—iPhone 4S fails to excite the street

The stock has taken a beating and die-hard Apple fans are not very enthused by the latest offering. It might be time for Apple to go back to the drawing board

Amidst much frenzy and fanfare, Apple's new CEO Timothy Cook took centre-stage at 10:00AM local time inside the town hall in Cupertino, even as doting fans inundated Apple's website till they brought it down to its knees.

Unfortunately though, Mr Cook did not have enough brewing in the kitchen to make his fans wobbly in the knees. The much anticipated fifth-generation iPhone turned out to be an upgrade of the iPhone 4. As Shakespeare would say, "Oft expectation fails, and most oft where most it promises; and oft it hits where hope is coldest; and despair most sits."

The iPhone 4S will go on sale on 14th October in three variants—16GB, 32GB and 64GB, with two-year contracts on AT&T, Verizon and Sprint in the USA. The phone will debut in over 25 countries by the end of this month. There is no word yet on when the phone might be available in India. Apple announced that about 70 other countries will have the instrument on sale before the year is out.

Instead of altering the form of the phone, Apple chose to focus on the innards— the 4S will sport the A5, the same chip that drives the iPad 2. Apple claims that the chip will help the 4S achieve twice the CPU speed of its predecessor and the dual-core graphics chip will enable 7 times better performance with graphics enriching the multimedia experience for users. And unlike the iPhone 4 which was either GSM or CDMA, the new version is a dual-band global phone which means it will work on both networks.

The 4S will run on iOS 5, Apple's new mobile operating system with cutting-edge messaging and data synchronisation capabilities that seek to leverage the iCloud and create a seamless experience for customers across Apple's various device forms. Apple also integrated Siri, the company it acquired last year, to offer a voice-enabled personal assistant that is capable of taking notes, managing a calendar and even checking the weather or stock markets for its master.

And then there is the camera—it is an 8 megapixel beast with a backside illuminated (BSI) complementary metal-oxide-semiconductor (CMOS) sensor. BSI sensors are low light optimised, helping them deliver quality images even when the general light condition is poor. The camera also has a wide aperture of f2.4 and good shutter speed, making clicking a breeze. Users can click pictures even when the phone is locked; Apple claims that the first picture can be shot in 1.1 seconds and the next in just 0.5 seconds. With the resolution set at 3264 x 2448, you can expect 30% sharper images than from the previous version. The 4S is also capable of HD 1080p video.

But all of this failed to excite the market—at one stage Apple shares fell $19.25 to $356.14 before recovering to close at $372.50, a fall of $2.10 from Tuesday. There were mixed reactions from analysts—Colin Gillis of BGC Partners said, "It's been 16 months and all you've got is an A5 processor in the existing iPhone 4. It's a mild disappointment, but they're still going to be selling millions of units."

Piper Jaffrey, the analyst firm estimates that Apple will sell over 25 million units in the final quarter of 2011. Apple is also looking outward as it seeks to capitalise on growing markets such as China, India, Russia, Brazil and Mexico. But there is growing competition from handsets such as the Samsung Galaxy S II and HTC Slide in particular, and the Android platform in general. At the moment, Android handsets are outselling the iPhone two to one. In this scenario it is baffling why Apple did not make 4S compatible with 4G, as is the case with S II, for instance.

There is no doubt that there is enough demand in the US and globally for Apple to once again sell a large number of these phones. But by most accounts and the lofty standards set by Apple, this event in Cupertino failed to meet expectations. The device may be quick and nimble, but the iPhone has many worthy competitors. Now the legions of people, who follow Apple's every move with a cult-like madness and place it on a pedestal, will wait in anticipation for a product that can spin them into an exclusive orbit. For now, they will have to co-exist with the growing flock of mortals who are getting cosy with Android.


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