Insurance agents are selling SBI ULIPs with assured returns

Insurance agents in Chennai are distributing pamphlets guaranteeing astronomical returns with assured sums at various SBI branches in the city

Even as the Insurance Regulatory and Development Authority (IRDA) is in a turf war with market regulator Securities and Exchange Board of India (SEBI), insurance agents are offering ‘assured’ market returns of more than 16% under unit-linked insurance plans (ULIPs), literally camping outside various SBI branches in Chennai.

Aniram Bhatt, a Chennai-based independent financial advisor (IFA) received the following SMS (supposedly) from SBI, “SBI Life: Just Pay Monthly Rs1,500 for 5 years, 20th year take Rs10 lakh Child Saving Pension Plan."

“When I called up the person (who sent me the SMS), he told me this is the minimum amount guaranteed by the bank. The market will be very good and you can get more than this. As per IRDA regulations, they are not supposed to guarantee more than 6% to 8%,” added Mr Bhatt.

An e-mail query sent to SBI officials remained unanswered till the time of writing this report.

According to the pamphlets being distributed in Chennai, under the ‘Mahaanand Scheme’, one has to pay Rs12,000 per annum for five years and one is assured a return of Rs99,719 in the sixth year and Rs12,04,995 in 20 years. Nowhere does this pamphlet mention that it’s a ULIP product and that the investment is subject to market risk.

The pamphlet printed in Tamil, mentions that no medical check-up is required. Under another pamphlet touting a ‘Unit Plus 3’ scheme, one has to pay Rs2 lakh premium per annum for three years and get assured returns of Rs13,37,777 in six years; Rs27,64,509 in 10 years and Rs1,70,88,012 at the end of a 20-year term. The lowest annual premium one can pay is Rs18,000 and the highest is Rs5,00,000. The scheme guarantees assured returns of 10 times the premium amount. As per the pamphlet, tax exemption is also available under Section 80C under the ‘Unit Plus 3’ plan.
According to sources, the minimum premium amount of the Rs18,000 scheme is widely sold by these agents to small investors with a systematic investment plan (SIP) option which guarantees Rs1,23,366 in three years; Rs2,55,812 for a 10-year term, and Rs16,29,291 in a 20-year term policy.
These pamphlets are being distributed outside various SBI branches in Chennai. The agents have put up makeshift tents outside these branches. The immediate targets of such products are obviously bank customers.



gsr murthy

6 years ago

what is ulip what is lock in period

pradip gharpure

7 years ago

All sorts of unethical practices are undertaken by many insurance companies. Not only SBI but LIC also has done same things. Their advertisements on tv are also highly objectionable, giving wrong notions to the viewers. Govt and IRDA does not perform their role properly in controlling Govt or Public Insurance Companies. They have biased backing for them.


7 years ago

i am intrest to invest in SIP can u guide me.


7 years ago

unit plus 3

Suresh M

7 years ago

hi,My friend is planned to go with sbi ulip..he also explained us the same plan as this true?is the returns are assured?i dont want my friend to fell into a trap.please help me out.

Ramesh Karel

7 years ago

Here is an email received from agent of Aviva Life. As can be seen, he promises that if I pay Rs. 50000 annually for 10 years, I will get assured Rs. 20 lakhs- that amounts to 24% compounded assured returns pa and that also if i dont deduct any costs. If i assume reasonable costs of 40% for 1st year, 10% for 2nd year and 2% thereafter, the rate of return comes to 26%.

Dear Sir / Madam,

We know that you have already invested in a plan for building up a fund required for your children's higher education.

But check today if this plan can build up a fund of Rs 20 -40 L required for your children's higher education when they become 18 years old with as little savings as Rs 50,000- 1,00,000 yearly in 10 years?

Aviva Young Scholar offers you the plan that guarantees your children's higher education by building up a fund of Rs 20-40 L for your children's education with minimum savings and it comes from a company with over 300 years of history in making that happen successfully.

Aviva is the 5th largest Life Insurance Company in the world with a client base of over 5 Cr clients across 25 countries for past 300 years. It is represented in India through its Joint Venture with Dabur India since 2001.

Pls contact us today for a personal visit by our Field Investment Advisor for more details about the plan

Arun Singhal

Financial Planning Advisor

Aviva Life Insurance Company India Ltd

Tel- 022-65237671, Mobile -9920161582


7 years ago

Dear Sir,
All those who violate the rules of marketting should be debarred from selling any financial product and their licences must be cancelled forthwith. A penalty may also levied on the subject insurance company or MF AMC and the penalty points must be made public just as it is being done for Merchant Bankers in case of IPOs by SEBI.


7 years ago

All that means misselling of high retention products . What s wrong if sebi curtails their mischeif and why the insurance regulator opposes their action . We must need more regulation on selling financial products in coming days . Investor education is also a necessary requirement in the present condition .

R Murugan

7 years ago

I had some time back sent to IRDA nd SBI Life a scanned copy of a SBI Life pamphlet with the name and contact details of the agent which was delivered by keeping the same inside the daily newspaper, The pamphlet promised astronomical sums as assured returns.All IRDA did was to inform me that the mail has been sent to SBI Life.SBI Life informed that the agent has been suitably advised!That is all the action that was taken by IRDA and SBI Life.Why do we need IRDA when we have a post office to do the job of delivering mails is beyond my comprehension.Unless some penalty is levied with the warning that repetition
would lead to cancellation of agency, the mis selling will continue exploiting the gullible public.


7 years ago

I received similar SMSs from Bajaj Allianz, which promised me a gold coin along with assured returns & from Reliance Life, again promising free gold coin with assured return. I called up the numbers mentioned and said that I would be willing to invest about 2 lakhs in these schemes. The respective agents from these companies together with their Sales Managers had come to the office.

During my meeting with them, I took their agency code, IRDA licence number and simply told them that I am also an advisor, what they are doing is against the ethical practice in the industry and that I would complain to IRDA asking them to debar the said agents from doing business.

They apolgised and said that they will not do this again. I have my own doubts on that. Still, calling the said agents and threatening them with action will atleast make them aware that what they are doing is wrong.


7 years ago

4 Years back bank's used to sell MF prodects through their AMFI staff by canvassing their customers. When index falls around 8500 and their customers lost heavily, IBA advised banks not to do MF business. Now when the market is steady, they are coming with different prodcuts and this time, they are recruiting agents for doing marketing. We don't know how long they are going to cheat their customers. Let the Bankers do their banking job and stop doing other than banking.

dillip swain

7 years ago

Well, that is done by agents out side of branch for their survival.Do u know what bank executives are doing inside of branch all india basis??? Simply selling sbi life products to a/c holders for foreign trips & gifts. Pl check.

Prof. Bajaj

7 years ago

I would be highly interested in knowing, what is the stringent action being taken on these agents.

Five-year index options: A viable option?

SEBI has extended the tenure of index-based options to five years. Is there a practical value in this now?

Buoyed by the rising share of index-based options in total derivatives volumes in the past few years, capital markets regulator Securities and Exchange Board of India (SEBI) has allowed exchanges to offer options contracts with tenure up to five years.

However, it will be a difficult task for the stock exchanges to attract enough liquidity on a sustained basis in this segment. Currently, contracts that are even two months away, form only a small portion of the derivatives markets. Shorter duration contracts attract a lion’s share (90%) of the total trades on the National Stock Exchange (NSE).

Monal Desai, VP & head-Institutional Equities (Derivatives), Prabhudas Lilladher Pvt Ltd, does not believe that long-dated options are of any value. “I don’t see how this move will work out given that liquidity is already quite low currently.

Besides, not many investors would want to take a call over the five-year period. Long-dated contracts have a very minuscule part to play in the overall market. I hardly anticipate any growth in volumes as a result of this move,” he said.

Indeed, there is hardly any trading in this space as the contract expiry grows longer. At the strike price of Rs5,100 (the Nifty’s current level), there were 213,878 transactions on Wednesday for the contract expiring on 27 May 2010.
For the 24 June 2010 contract, the volume was just 7,285 contracts. For the September series, there was no volume at all. If this is the situation over near-term contracts, there is no scope for having any amount of liquidity over a five-year period.

Since liquidity is low, the bid-ask spread is so wide, it is difficult to see how one can expect to attract liquidity at such prices. For instance, for the 30 December 2010 contract, the bid-ask spread is Rs325-Rs537. For the contract expiring in 27 June 2013, it runs up to Rs1,213-Rs2,000. The situation is so abysmal that there is not even any open interest at this level.

Not only is there not any trading in long-dated options, it would also create some administrative difficulties while managing the settlement of these contracts, which will be offered on a three-monthly and quarterly basis, besides eight semi-annual contracts being offered with June or December expiry.

Earlier in March this year, the proposal of the derivatives market committee of SEBI to introduce longer-term options contracts was approved by the SEBI board. The committee had suggested in its report, “The growth in turnover of long-dated options is greater than that of short-dated options. With the market having gained sufficient experience in longer tenure options, it is recommended that options with tenures of up to five years may be considered for introduction.”

An option is a contract between two parties wherein the buyer receives a privilege for which he pays a fee (premium) and the seller accepts an obligation for which he receives a fee. An option gives a person the right but not the obligation to buy or sell something.

In January 2008, SEBI had allowed stock exchanges to offer options contracts with tenure up to three years. SEBI has stipulated certain conditions before the exchanges could launch such contracts. It has mandated that there should be eight semi-annual contracts maturing in June or December. In addition, three monthly and quarterly contracts that expire in March, June, September or December must also be offered. SEBI has also stipulated that the exchanges put in place the appropriate risk management framework for such derivative contracts.



B Anand Kumar Naidu

7 years ago

Unless Physical settlement system for the underlying comes into effect it would be difficult to get liquidity into the LEAPS of Index or Stock options.

Centre to set up National Green Tribunal

A new Bill has been introduced which will provide fast-track justice and compensation for loss of life and property due to environmental hazards

Individuals and organisations can expect fast-track justice and compensation for loss of life and property due to environmental hazards such as Delhi’s Mayapuri radiation leak incident, with Parliament today approving a Bill, reports PTI.

The Bill provides for setting up of a National Green Tribunal (NGT) to be headed by a sitting or retired Supreme Court judge or the Chief Justice of a High Court, which is expected to clear over 5,600 cases pending in different courts.

“Anybody can approach the National Green Tribunal. It can be any individual, media organisation or NGO. We are not choking the access,” environment minister Jairam Ramesh said in the Rajya Sabha which passed the Bill. The Lok Sabha had cleared it last week.

Though no limit has been fixed for the compensation, the tribunal “may provide relief and compensation to the victims as it may think fit,” according to the objects of the Bill.

For non-compliance of the order of the tribunal, the Bill provides for imprisonment up to three years and fine that may extend to Rs25 crore in case of companies and Rs10 crore for individuals.

Heads under which compensation can be claimed include death, disability, damage to property and loss of business or employment.

Victims of incidents such as the Mayapuri radiation leak, which resulted in one death and injury to several others, can get compensation once the provisions are operationalised.

To be headquartered at Bhopal, the site of one of the worst industrial mishaps, the tribunal will have five benches.

Appeals against the judgement of the tribunal can be made before the Supreme Court.

In reply to the debate, Mr Ramesh said that the government would take into confidence the leader of the Opposition while appointing the chairperson of the tribunal.

He said that the green courts will have flexibility to award compensation to the victims of environmental neglect.

“There is an increase in environment-related litigation pending in various courts and other authorities. The risk to human health and environment arising out of hazardous activities has also become a matter of concern,” the minister said in the statement of objects and reasons of the Bill.

Earlier attempts to set up similar tribunals have remained non-starters.


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