"More than 90% of all the pensions are actually in the Life Insurance Corporation of India (LIC). There is such a huge concentration in one institution. I think that is a recipe for high risk. Therefore, we must build up mechanisms which allow other companies also to participate actively in the pension market," IRDA chairman, J Hari Narayan, said at an insurance summit in Mumbai
Mumbai: The Insurance Regulatory and Development Authority (IRDA) on Friday said that domination of one company in the pension market could be risky and it was important for other insurance companies to participate actively, reports PTI.
"There is a structural problem that will unwind for the regulator and the industry as a whole, and will affect the country. More than 90% of all the pensions are actually in the Life Insurance Corporation of India (LIC). There is such a huge concentration in one institution. I think that is a recipe for high risk," IRDA chairman, J Hari Narayan, said at an insurance summit here.
"I think it is too much of a risk to be allowed to continue. Therefore, we must build up mechanisms which allow other companies also to participate actively in the pension market," he added.
Mr Narayan further said that pension funds should offer life annuity and companies that sell pension products should have a guaranteed capital.
"I think at the very minimum that every product that is sold as a pension product should have a capital guarantee so that the principal is safe," he said.
Pension plans are estimated to account for about 30% of the life insurance industry's business.
Meanwhile, Mr Narayan said that the regulatory body was working towards creating an exchange for re-insurance, but did not divulge when the mechanism would be in place.
"We have tried to create a platform on re-insurance, which is more transparent and more like a re-insurance exchange. Initial work is going on. What we visualise is that all matters on re-insurance will be routed only through the exchange. The advantage will be that transactions are clear and there cannot be any glitches in terms of the fine print of the policy," he said.
Mr Narayan said the insurance industry was more like a teenager going through exciting times but said there were a few challenges that needed to be addressed.
He said in case of insurance firms floated by banks, the average cost of premium was higher than that of LIC. Though there are some recommendations to allow a bank to have stakes in two insurance firms, he did not agree with this, he said.
"The problem that I have in two insurance companies operating in the same space is the premium is perverse to the bank as to which product they will be selling at branch level.
The perverse incentive at branch level is not correct. And I don't think that is a healthy practice. We cannot be having two across the same space," he said.
Mr Narayan pointed out that banks have huge potential to market insurance products.
"From the 80,000 branches across India, only 7,000 sell insurance policies. The bulk of the branches have not been used for selling insurance. We will be failing in our duty, certainly as a regulator, if we don't enable the greater use of the branch outreach," he said.
On distribution front he said that many agents were not happy as the pay was low, but said it was not possible to increase the commission.
"Is it wise to so largely front load commission? Should we look at flattening the commission differentials? At present, we cannot assess it because we are bound by the present Insurance Act," he said, adding that the amendment bill if passed could bring about some changes.
RIL had on 21st February agreed to sell 30% stake in 23 out of its 29 oil and gas blocks to London-based BP Plc for $7.2 billion, and may get an additional $1.8 billion if the two explorers find more hydrocarbons
New Delhi: After nearly five months wait, the government today cleared UK's BP Plc buying 30% stake in most of Reliance Industries' (RIL) oil and gas blocks, including the showpiece KG-D6 gas fields, for $7.2 billion, reports PTI.
The Cabinet Committee on Economic Affairs (CCEA), headed by prime minister Manmohan Singh, today approved BP buying stake in RIL's 21 blocks, sources said.
The CCEA could not meet on its scheduled day yesterday as the oil ministry had not circulated the agenda in time.
RIL, India's most valuable company, had on 21st February agreed to sell 30% stake in 23 out of its 29 oil and gas blocks to London-based BP Plc for $7.2 billion, and may get an additional $1.8 billion if the two explorers find more hydrocarbons.
The CCEA approved sale of stake only 21 blocks as exploration status in the two remaining blocks was in dispute.
BP will have to furnish a bank guarantee and performance guarantee as has been prescribed under the production sharing contract.
The deal, which may increase to $20 billion with future performance payments and investment, will give RIL access to BP's expertise in deep-water drilling and accelerate development and production at its fields particularly the under-performing eastern offshore KG-D6.
For BP, which has been struggling to battle back from the disastrous Gulf of Mexico oil-spill disaster last year, the transaction is a chance to enter a market where energy demand is growing at 5%-8%.
Officials said RIL had on 25th February applied for government nod for the stake sale. The New Exploration Licensing Policy, under which RIL had won the oil and gas blocks, allowed for sale or assignment of participating interest (farm-out), which is routinely approved by the oil ministry.
But the ministry, even though competent to approve the deal, decided to refer it to the CCEA.
Non-banking fiduciary products, whether cash to/from ATMs, or bill payments, or anything else, are still at a stage where you have to be prepared to bend over backwards to work on matters if things go wrong
The menace of unsolicited telephone calls appears to get worse when one travels. It is almost as though telecom providers keep track of the movement of their customers, and then the moment they are out in roaming jurisdictions, the number of calls and SMS messages are notched up, probably as a means of generating additional revenue. In addition, all sorts of new plans for voice, data and text/SMS, add other options like GPS and more, and now mobile payment platforms-and you have a situation where the already incoherent bill is guaranteed to be even more difficult to understand—should you accept.
Broadly, as anybody in design will tell you, if the designers would just play around with the fonts, it would be so much easier for customers to understand things. But no, take a close look at most telecom bills, and you will see that the fonts as well as colours used are chosen to confuse rather than make things easier. And then, in the midst of all this, you will get some random voice asking you to subscribe for more connections, more plans, and pay some more.
As a subscriber and customer, there is, in real terms, not much you can do about it beyond registering with the DND (do not disturb) facility, which in itself is more like a game the telecom providers play with their customers. When a proposal was made to have a simple alternative that worked the other way around—wherein all customers were supposed to be on a DND registry unless specifically stated otherwise—the biggest opposition came from (you guessed right), the telecom providers.
Likewise, as far as the bill is concerned, it helps if you keep your plan as simple as possible. And hold on as far as mobile phone-based mobile wallets or whatever new buzzword they give it are concerned, as the technology is far from stabilised and the billing is far from accurate at this juncture. Sincere advice from somebody who has been in the technology end of this product is, stay away till further notice.
Non-banking fiduciary products, whether cash to/from ATMs, or bill payments, or anything else, are still at a stage where you have to be prepared to bend over backwards to work on matters if things go wrong. And should you end up using your mobile wallet when roaming, the heavens may not be able to help you unless you go back to the merchant for resolution.
And as I said at the beginning, telecom providers appear to keep a very sharp eye on your phone when you are in roaming areas.
Certainly, online payments appear to have stabilised, and for that we have the Indian Railways to thank. The standards they have set online, especially with reference to the usual bugbears of refunds and clarity in showing transactions, mean that the others have to match them, or go bust. As a result, utility bills, for example, paid online are a boon. If your mobile phone helps you do so, all good luck to you; this does appear to be working well and the resolution mechanisms through your credit card or debit card have been finessed over time.
But to start using the mobile phone as a payment facilitator, with a brand new payment processor known as your telecom company? Hang in there. It is nobody's contention that our telecom providers are customer-friendly with their basic telecom services. When they can't implement even a simple DND, would we trust their databases with our bank accounts, and a mandate for them to play around with our life's savings?
The root of the issue that the telecom companies do not address is this bothersome business of unsolicited calls. And be assured that if you get into their databases as somebody who spends with his or her mobile phone, then you could well be a target for more calls to buy this and buy that, mostly stuff you don't need. Sometimes, finding that you have been billed for something you didn't buy either. And they can prove you were there, too.
But the problem of unsolicited calls still remains unresolved.
There are a few ways to counter this. One is to, for example, get hold of the mobile numbers of the senior people at the telecom companies and then involve them in these unsolicited calls by either bringing them into conference mode or by calling them back subsequently. This was what Dhaval Valia did with Vodafone, who initially slapped him with a legal notice and a threat of Rs20 crore, and after a big furore online and elsewhere, had to withdraw.
But one of the methods I have always recommended has been that of becoming a small shareholder in the company that runs your mobile phone. Not only do you remain informed of how and what they are doing as an investor, but you also have certain rights as a shareholder, which are way above that of a consumer. And reminding them does not seem to hurt, as a matter of fact it gets faster resolution. I have helped people do this with Airtel, Reliance and Vodafone-and it always works. Nobody wants a consumer who is also a shareholder to make a formal complaint to the board of directors.
That is, nobody other than Idea Cellular Ltd and Pankaj Kapdeo, who is something or the other with a fancy title at Idea.
Here's my first message to him:-
"Good morning and Jai Hind, This is to inform you that I am receiving telephone calls from 0-98914-62227 claiming to be from Idea Cellular, despite my placing my number 09xxx-xxxx4 on the DND list. Please take suitable action and advise. I am a shareholder as well as subscriber to Idea and will escalate this to the board of directors at the next AGM/meeting/as required. Sincerely."
The reply I got is this:
"Gentleman, Being a shareholder and being a subscriber are two different things and have nothing to do with AGM of the company where only the business relating to the agenda contained in the AGM notice is taken up. However, u have raised an issue relating to DND facility and rest assured that it would be handled by correct person to your satisfaction, in case your complaint falls into that category. Thanks. Pankaj Kapdeo."
What do you do in such cases?