IRDA announces client persistency norms for corporate agents

Under the persistency ratio, which would be effective from 1 July 2014, IRDA has made it for corporate agents to retain 50% of their clients

New Delhi: The Insurance Regulatory and Development Authority (IRDA) on Friday came out with guidelines for persistency ratio under which it would be mandatory for corporate agents to retain 50% of their clients. The guidelines would be effective from 1 July 2014, reports PTI.

Extending the guidelines, already in place for individual agents, to the corporate agents, IRDA said the norms are applicable for those who solicit life insurance business.

“The stipulated persistency rate requirements will be effective for all corporate agency renewals that are due from 1 July 2014,” IRDA said in a circular.

For computing the persistency ratio, the policies which continue to provide insurance cover to clients after the end of premium payment (auto cover policies) can be included.

However, the policies which have already matured, or wherein death or surrender has happened, would be exempted from calculating persistency ratio for the agent.

Further, employees of both life and general insurance companies cannot engage their relatives as corporate agents.

The term relative in this case is defined as spouse, sisters, brothers, parents, sons, daughters-in-law, daughters and sons-in-law, besides spouse, dependent children or dependent step children whether residing with the employee or not.

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HC reserves verdict in MCX-SEBI case over stock exchange

During the hearing on Friday, MCX-SX lawyer said Multi Commodity Exchange and Financial Technologies India—promoters of the exchange—would give an undertaking that they were ready to bring down their collective shareholding to 5%, and it would not exceed this limit in future

Mumbai: The Bombay High Court on Friday reserved the judgement on the petition filed by MCX Stock Exchange (MCX-SX), challenging market regulator Securities and Exchange Board of India’s (SEBI) refusal to allow it to trade in stocks and other securities, reports PTI.

Last September, SEBI rejected MCX-SX’s application seeking permission to start a stock exchange, saying the bourse had not complied with the norms on shareholding structure.

During the hearing yesterday, MCX-SX lawyer said Multi Commodity Exchange (MCX) and Financial Technologies India (FTIL)—promoters of the exchange—would give an undertaking that they were ready to bring down their collective shareholding to 5%, and it would not exceed this limit in future.

The court asked if the market watchdog was ready to reconsider its stand in view of the undertaking. SEBI lawyer, additional solicitor General Darius Khambata, replied in the negative and said the court should pass the order.

The division bench of justices Dhananjay Chandrachud and Anup Mohta noted that the issue of share-holding was at the heart of the matter.

The SEBI norms restrict the promoters’ stake in the exchange, and the regulator alleged that in MCX-SX’s case, the shareholding was higher than the stipulated level.

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RBI highlights major challenges before growth story

Noting that unemployment was another biggest challenge to make growth inclusive, RBI governor D Subbarao said there was an enormous amount of unemployment and underemployment in rural sector, though the size and nature of problem remaining unclear

Chandigarh: Reserve Bank of India (RBI) governor D Subbarao on Friday highlighted major challenges, including raising farm productivity, infrastructure deficit, unemployment, financial inclusion and governance, which needed to be addressed to move up the “growth ladder”, reports PTI.

“... for India to regain its growth momentum and indeed accelerate it further, we need to address several challenges that we need to move up the growth ladder,” he said while delivering Haksar Memorial Lecture here on Friday.

Underlining the need to step up farm production to meet shortages, he said it was necessary to launch the second green revolution and increase investment in rural infrastructure and supply chain.

“Even as its (farm sector) share may be small and declining, agriculture still accommodates 53% of labour force. Besides, agriculture has very vital supply demand linkages with other sectors of economy,” he noted.

Noting that unemployment was another biggest challenge to make growth inclusive, he said there was an enormous amount of unemployment and underemployment in rural sector, though the size and nature of problem remaining unclear.

“India's high-end IT service sector might be dazzling the world but contrary to popular perception, it employs no more than three million. So the problem of jobs is that a lot of people are out of work...” he said.

“Even as demand for skills increases, the supply side is lagging far behind. India churns out 3,50,000 engineers every year, but barely a quarter of them are employable. We have 7,000 ITIs but their curriculums are woefully outdated,” he said.

Mr Subbarao also favoured liberal labour laws and employment regulations to exploit the full job potential offered by the National Manufacturing Policy.

Presenting financial inclusion as another big challenge for the growth, he said that financial inclusion was important because it was necessary for sustaining equitable growth.

He also took banks to the task for not contributing enough towards financial inclusion. “By far the biggest factor inhibiting financial inclusion is that banks continue to see it as an obligation and not an opportunity. If banks take a slightly longer term view, they will change their perception.” 

Informing about the extent of financial exclusion, he said just about 40% of population across the country has bank accounts and this ratio is much lower in north east of the country.

The challenge of providing good governance was also cited by Mr Subbarao, saying that good governance promotes economic development.

“... we have seen vast differences across states in development outcomes from out of same mix of development policies. These differences across ... across regions arise because of difference in governance,” he said.

Emphasising on the importance of a stable macroeconomic environment, he said the fiscal deficit needs to be controlled and inflation must come down.

“The first is reduction of fiscal deficits ... The second task is to bring inflation down first to 5% and then even lower (for stable macro-economic environment)....”

The governor said the current inflationary woes are a consequence of both supply shocks and demand pressures.

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