New Delhi: Telecom operators in the country added 18.18 million subscribers in August this year, taking the total number of mobile users in India to 670.60 million, reports PTI quoting the Telecom Regulatory Authority of India (TRAI).
According to data released by the telecom regulator, the wireless subscriber base increased from 652.42 million in July, 2010, to 670.60 million by the end of August, 2010, translating into a growth of 2.79%.
The total number of telephone subscribers (both mobile and landline) in India increased to 706.37 million by August-end from 688.38 million in July, it added.
With this, the overall teledensity (telephones per 100 people) in India touched 59.63%.
The growth in the wireless category was led by Vodafone, which added 2.30 million users to take its subscriber base to 113.77 million users.
Hot on the heels of Vodafone, state-run operator Bharat Sanchar Nigam Ltd (BSNL) added a whopping 2.25 million users in August, taking its total user base to 76.03 million.
Market leader Airtel added 2.03 million users, taking its subscriber base to 141.25 million, while Idea Cellular and Aircel added 1.98 million and 1.61 million subscribers, respectively.
Reliance Communications (RCom) added two million new subscribers in August, while Tata Teleservices added 2.09 million users during the month.
Another state-run firm, Mahanagar Telephone Nigam Ltd (MTNL), which operates in Delhi and Mumbai, added 27,594 new users during the month.
The wireline subscriber base declined to 35.77 million in August, 2010, from 35.96 million at July-end, it said.
State-run firms BSNL and MTNL enjoy an 83.68% share of the wireline market.
The total broadband subscriber base in India increased by 3.17% from 9.77 million in July to 10.08 million in August 2010, the data showed.
A recently-held special seminar for senior citizens at the Moneylife Foundation discussed the various problems faced by the elderly in matters relating to finance, healthcare and insurance, and the solutions for the same
Senior citizens slowly find themselves left in the wilderness with regard to various matters, and especially those relating to finance, health and insurance. The bad news is that there are no easy solutions and the scenario isn't encouraging. Take the case of insurance. According to statistics available, insurance companies have made lower payouts on claims by senior citizens than they have towards group policies of large corporate.
This was discussed at a special seminar on healthcare insurance for senior citizens at the Moneylife Foundation on 25 September 2010. Rohan Dukle, director, Magus Corporate Advisors Pvt Ltd, an insurance claims consultancy firm, said during his presentation on the subject that there were no great options for senior citizens, but there could be some solutions through aggregation. He suggested that a holistic solution could help improve the situation for seniors who have almost no cover at all.
The programme was attended by senior citizens, some knowledgeable persons representing senior citizen groups, insurance and hospital professionals and members of the Moneylife Foundation.
Mr Dukle explained that in working towards an aggregated solution, it was necessary to focus on ways to enhance protection for each person as individuals have different needs, levels of protection and finance. "There can never be a single solution that fits everybody who has crossed 60," Mr Dukle said. The Magus director proposed the constitution of an 'aggregated' group, and offered the services of his team to analyse individual needs and structure a solution.
The argument for setting up an aggregated group is that it would have increased negotiation power with insurance companies. The services offered did not imply dealing with a particular insurance company or loading a premium for senior citizens based on the claims ratio of the group. The 'aggregation' would consider each policyholder independently, while using the power of the group to negotiate with multiple insurance companies. Mr Dukle's team that would provide services to the aggregated group includes insurance professionals, chartered accountants, doctors, lawyers and claims experts.
Sanjay Datta, head of customer services for health and motor insurance at ICICI Lombard, echoed the remarks by Mr Dukle on the limited mediclaim options for senior citizens. He also said that the healthcare industry was going through a lot of changes. "The escalating costs of medical costs, coupled with de-tariffing and new competition, has put pressure on the industry. The cashless spat between PSU insurers and hospitals reflected the high claims ratio," he said. "ICICI Lombard has been able to continue the cashless facility across 4000-plus quality hospitals to date, but we do have the concept of Preferred Provider Network (PPN) where we drive the business on properly negotiated rates. We have moved to in-house claims processing that is working out well. We have had no increase in premium, except due to change in service tax and cess."
One of the problems senior citizens face is the difficulty in increasing the sum assured. For example, if one were to increase the sum assured from Rs1 lakh to Rs3 lakh, the pre-existing conditions would not apply on the increased amount of Rs2 lakh for the rest of the stipulated period. More importantly, after a certain age limit (like in the case of senior citizens) insurance companies could refuse to increase the sum assured, Mr Dukle pointed out. Therefore, he underlined the need to plan insurance coverage-especially for the silver years-in the 30s, or at least in the 40s. (The American Association of Retired Persons begins enrolment of members from the age of 50. The association provides a slew of services and educates its members on various matters of interest.)
Another aspect that was discussed was on how insurers linked pre-existing ailments and current illnesses to reject claims. Also, unlike vehicle and property insurance, healthcare insurance payments/ denials are hotly contested by both sides. Therefore, it is necessary to ensure that the documents submitted to the insurer have no errors on the doctor's certification for the date when the ailment was diagnosed. It has huge ramifications on the benefit payment.
Legal redressal for the policyholder is another important area. Mr Dukle explained that in the insurance sector recourse was slow and justice often delayed or denied. Among the options available to the policyholder if claims are denied or slashed is approaching the grievance cell of the insurance company, or the grievance cell of the Insurance Regulatory Development Authority (IRDA), the Insurance Ombudsman, or consumer court and finally the civil court. All are expensive and time-consuming, with no certainty of a positive result.
Mr Dukle said customer ignorance was also a big problem as there is very low awareness about the basic issues that are key to picking proper insurance cover.
"With total de-tariffing of the non-life industry post-2006, resulting in major price wars in hitherto profitable segments such as fire, engineering and so on, there is increased pressure on the bottom lines of insurers," Mr Dukle said. "This coupled with lower ceding commissions has resulted in tremendous pressure on the insurers, forcing them to reconsider pricing." With the constant entry of new players in the non-life segment, this pressure is not expected to reduce immediately. As such, therefore, insurers are becoming more stringent in passing of claims. This is even more evident in the case of Mediclaim which is repeatedly seeing high incurred claim ratios.
The Margus director said, traditionally, in a tariffed regime, insurers followed the policy of "pay if you can, reject if you must". In the current scenario insurers are rejecting claims at the slightest opportunity, taking advantage of weak redressal mechanisms. This is why he often recommended insurers who charge a higher premium with an assurance of hassle-free claim settlement, for clients who are not price sensitive and want quick settlement for genuine claims.
Medical care is one of the three main causes of impoverishment in the country. Treatment costs of major ailments like cancer, heart attack, stroke, renal failure are galloping. It is estimated that senior citizens will make up 10% of the population by 2015, with old age dependency increasing from 8.1 in 2000 to 22.6 in 2050.
In this scenario, Moneylife Foundation intends to work with service providers such as Mr Dukle to find ways to obtain holistic solutions for senior citizens through the power of aggregation. Those interested to know about our initiatives can write to [email protected] and we will be in touch with you when a product or service is worked out. We also welcome ideas and suggestions to take this initiative forward.
Even as the Sensex scales a 32-month high, thousands of crores are flowing out of equity funds while data from the NSE proves that the Indian equity market is extremely hollow. But regulators are in an ivory tower. In this second part of a three-part series, we look at what investors have to say on a wide range of issues that affect them directly
A Moneylife Foundation survey reveals that mindless measures by financial regulators are perhaps scaring away investors from the capital market.
The survey, conducted in August 2010, covered more than 3,000 Foundation members countrywide, on issues and policies that affected investors. The responses offer new evidence on how far-removed our regulations are today from investors' needs. Here are the highlights from the responses of 471 investors.
Sharing financial information with brokers
In August, a SEBI diktat asked brokers to collect income details of investors, ostensibly to check black money in market transactions. Brokers will be required to collect
documents such as income-tax returns for three years, salary slips and bank statements for six months. The objective of collecting this information may have been rationalised by SEBI, but has it factored in the crucial aspect of lack of trust? Or concern about the information being misused? In any case, why should a person be forced to provide information on his/her financial status to anyone but a statutory body? It is no surprise that a massive 70% of respondents said they were uncomfortable with providing their personal financial information to brokers.
Fear of misuse of information
Many asked how providing tax statements to brokers would help to check black money when all trading transactions are through PAN-registered bank accounts and depository accounts, and know-your-customer (KYC) checks are conducted before opening these accounts. "What is the need for a broker to record such financial data when a risk management system is already in place?" asks one respondent. Another respondent argues: "I am not borrowing from a stockbroker. The broker does not give me any credit, but is in fact collecting margins. Why then should I provide all my financial details to him?"
Many investors are concerned about the possible misuse of such information provided to brokers. "What about the security of information provided to the broker? Who will guarantee that it is not misused?" asks one respondent. Another points to the nuisance of telemarketing calls: "I receive several marketing calls everyday from broking houses seeking to sell their services. Is my personal information being sold to outsiders? Can the regulator guarantee that this will not happen?"
One investor says his broker sold a database of his clients' mobile phone and email details to credit card companies and marketing agencies. Another respondent focused on the privacy issue. "Why should I risk my financial position being exposed to other people? Risk assessment should be done through a margining system and not by authorising brokers to demand my income details." This is just a sample of the concerns expressed on the controversial matter of divulging financial details.
Will I-T returns track black money?
The ostensible aim of collecting financial details from investors is to check black money. Most investors find it ridiculous. If KYC, PAN (Permanent Account Number) and such other systems have not been successful in tracking black money, they wonder how providing income details to brokers would help.
"Policies of the government and statutory bodies are always half-baked, confusing, repetitive and inefficient. It is an unnecessary burden on brokers as well as customers," writes one respondent in the survey. "Black money is not generated in the capital market; rather it's the outcome of real-estate dealings. The government should tighten requirements (like asking for the income-tax returns for the last three years) for registration of real-estate sale deeds for both buyers and sellers." Another investor was critical of the stock market regulator. "SEBI has never cared for the retail investor - if it has done something, it has been a secondary outcome. They have absolutely no clue about what is happening in the market. It is time we got some professionals there."
Real source of black money in the market
Well over half of the respondents (59%) believe that maximum black money is routed through FIIs. "A large part of the funds in the parallel economy is stashed abroad, and this has regularly found its way back into India through FII investments. Many (FIIs) structure products specifically for such money," says a respondent. Another explains: "Black money can be routed through dummy companies registered in tax havens such as Monaco, St Kitts, Mauritius, and, of course, unaccounted Swiss accounts." One respondent writes, "There is no tracking of domestic black money, but it may be negligible compared to (that in) FII flows." There were more critical responses too. "If it (generation of black money) is happening here, then are our banks, the Reserve Bank of India (RBI) and the income-tax department sleeping?" Clearly, the recent SEBI directive requiring brokers to collect more personal financial details from investors is hardly going to flush out black money, but it has become a serious irritant for investors.
Lack of awareness
The survey also revealed a lack of awareness among investors about dispute resolution and arbitration cases. Only a third of the respondents were aware that as many as 84% of the arbitrations conducted by stock exchanges had gone in favour of stockbrokers. Comments by several investors indicated that they have not used the arbitration mechanism and they are clueless about how the process is loaded against them. "No, I did not know this... But I am hardly surprised. Money and power talk," says one respondent. But there were some who had used the system. "As a victim, I should know better. My impression is that it is not 80%, but over 90% of arbitration cases that go against investors. SEBI is hand in glove with the stock exchanges and brokers and it is making things worse for investors with new rules that are anti-investor." This may be an expression of anger, rather than a serious allegation, but it expresses investor sentiment about regulation.
Mutual funds, the favourite option but…
As many as 94% of the respondents said they have invested in mutual funds at one time or the other; a large section (72%) believed that this was the best option for retail investors to participate in the capital market. However, a significant number (64%) of the respondents said that they had also withdrawn some of their investments after SEBI banned entry-loads in August 2009, virtually killing the business of many independent financial advisors (IFAs). In the year since then, over Rs14,000 crore has been withdrawn from mutual funds. It's proof of how poor policy directly hurts investors.
"Mutual funds seem to be the best route for retail investors, but recent regulations have puzzled investors, even frustrated them," one respondent says. Another investor had a contrary view. "No. Mutual funds are not the best route. I am a victim. I lost much of my money that I had invested in mutual funds in 2006-07, based on bullish statements made by the (then) Union finance minister P Chidambaram." A respondent also advised investors to be cautious. "Investors must take pains to monitor and analyse mutual funds' performance on a regular basis, instead of just looking at the net asset value (NAV) alone." Some others expressed worries over 'mis-selling' and 'churning'; some others advised avoiding sector funds.
Other issues with brokers
There have been at least a couple of other investor issues on dealing with brokers that have been festering for a long time. Under pressure from a four-year campaign by investor protection groups, SEBI agreed recently that the power of attorney (PoA) that investors sign with brokers is one-sided and is often misused. Now, the regulator has also consented to prepare a new standard PoA.
In December last year, SEBI had issued new guidelines to tighten clauses in the client-broker agreement in an attempt to curb the misuse of clients' money by brokers. But it has not been able to ensure the implementation of these rules, as brokers have pleaded difficulties particularly with the clause that requires them to settle the funds and securities at the end of the calendar quarter/month. The survey found that investors continue to be worried about these and related issues. The question is: Is the regulator open to hearing what investors have to say? And how?
(In the next and concluding part of this series, we examine the track record of various portfolio management schemes)