IRDA slaps Rs5 lakh fine on HDFC Standard Life

While imposing a penalty of Rs5 lakh on HDFC Standard Life for delaying settlement of claim, IRDA has asked the insurer to take all such measures that deem fit for both pro-active and timely settlement of all types of claims

New Delhi: The Insurance Regulatory and Development Authority (IRDA) on Wednesday imposed a penalty of Rs5 lakh on HDFC Standard Life for delaying settlement of claim and has asked the insurer to streamline its processes, reports PTI.

“Considering the nature of the violation, the authority has come to the conclusion that it is just and proper to impose a penalty of Rs5 lakh on HDFC Standard Life Insurance,” IRDA said in its order.

It has also directed the private life insurer “to put in place (within 15 days) effective claim settlement procedures and take all such measures that deem fit for both pro-active and timely settlement of all types of claims.”

The order was issued on a complaint filed with IRDA in April 2009 for delay in settlement of death claims by HDFC Standard Life.

Upon investigation the insurance regulator found that HDFC Standard Life did not have the effective mechanism to comply with the IRDA regulation for settlement of claims.

“On examining the documents and submissions of the life insurer it is observed that the Insurer did not have in place effective procedures to comply with the above regulation” IRDA observed.

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Growth in commercial credit offtake steady at 19.8% in Aug

According to experts, the marginal rise in credit offtake is on account of the festive season which has led to an increase in personal borrowings

Mumbai: Growth in non-food credit offtake from banks was marginally higher at 19.8% in August this year, against 19.7% in the same month of last year, despite the high interest rate regime, reports PTI.

While the farm sector and industry reported lower credit offtake in August, 2011, vis-à-vis the same month of 2010, growth was higher in case of services and personal loans, as per the data released by the Reserve Bank of India (RBI).

Total outstanding non-food credit disbursement stood at Rs37.59 lakh crore in August this year, up from Rs31.39 lakh crore in the same month of the previous fiscal.

Credit offtake of all the sectors combined was Rs26.23 lakh crore in August 2009.

“On a year-on-year basis, non-food gross bank credit increased by 19.8% in August 2011 as compared with 19.7% in the previous year,” RBI said.

The RBI had earlier revised its non-food credit growth projection for this fiscal downward to 18% from the earlier estimate of 19%.

While revising the figure, it has taken into account the high interest rates prevailing in the economy. The apex bank has raised its key policy rates 12 times since March 2010, in a bid to tame inflation, which is currently above 9%.

According to experts, the marginal rise in credit offtake is on account of the festive season which has led to an increase in personal borrowings.

Gross bank credit, which also includes food credit, grew by 20.2% in August on an annual basis, as against a growth of 19.3% in the same month of 2010.

This is on account of a massive 50.9% jump in food credit offtake during the month under review, as against a decline of 2.8% growth in August last year.

Food credit offtake stood at Rs70,312 crore in August this year compared to Rs46,604 crore in August last year.

Food credit offtake had stood at Rs47,959 crore in August 2009.

Last fiscal, non-food credit offtake increased by 21.5%, much above the RBI’s projection of 20%.

As per the latest data, there was a moderate increase in the rate of growth of credit offtake from banks by the services sector.

“Credit to the services sector increased by 20.6% (year-on-year) in August 2011, up from 18.2% in the previous year,” the RBI said.

The sector saw bank credit offtake rise to Rs9.01 lakh crore in August this year from Rs7.47 lakh crore in the corresponding month last year. In August, 2009, the figure was Rs6.32 lakh crore.


Within services, while segments like transport, computer software, tourism and wholesale trade witnessed slower growth in the offtake of credit during the month, disbursements to non-banking financial companies saw a big jump.

“Credit growth to non-banking finance companies NBFCs at 55.2% on a year-on- year basis in August 2011 was significantly higher than that of 11.3% growth during the corresponding period of the previous year,” the apex bank said.

Bank credit disbursement to the NBFC segment stood at Rs1.74 lakh crore in August this year, as against Rs1.12 lakh crore in the same month last year. Credit disbursement to NBFCs stood at Rs10.12 lakh crore in August 2009.

Credit extended to the personal loans sector also went up by 15.7% during August 2011, compared to a growth of 7.9% during the same month a year ago.

During the month under review, total credit offtake by the sector stood at Rs7.04 lakh crore, as against Rs6.88 lakh crore in August 2010. In August, 2009, the sector had availed credit to the extent of Rs5.64 lakh crore.

However, total credit disbursement to agriculture and allied areas grew by only 11.1% in August 2011, as against a growth of 19.9% in the same month of 2010.

It was Rs4.39 lakh crore in August 2011, compared to Rs3.95 lakh crore in August last year. In August, 2009, it stood at Rs3.29 lakh crore.

“Credit to industry increased by 23.6% (year-on-year) in August 2011 as compared with 26.5% in the previous year,” RBI said.

On an annual basis, total credit disbursement to industry—which includes infrastructure, metals, food processing, rubber, plastic and their products and engineering—was Rs17.14 lakh crore in August, compared to Rs13.87 lakh crore in the same month last year.

It stood at Rs10.96 lakh crore in August 2009.

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SEBI to study STT impact for stock market

SEBI is assessing the estimated gains in terms of the overall stock market turnover volumes as also for the savings that investors and traders might realise from the withdrawal of the securities transaction tax, which is being levied on stock market transactions since October 2004

New Delhi: Capital market regulator Securities and Exchange Board of India (SEBI) is reviewing the impact on the stock market turnover from a possible scrapping of securities transaction tax (STT), which is levied on all sale and purchase in the equity market, reports PTI.

The regulatory authority is in favour of a complete or phased withdrawal of the levy and it expects any such move to positively impact the market turnover, a senior official said.

SEBI is assessing the estimated gains in terms of the overall stock market turnover volumes as also for the savings that investors and traders might realise from the withdrawal of this tax, which is being levied on stock market transactions since October 2004, he added.

The regulator would submit the findings of its review to the finance ministry at the time of its submissions for the next year’s union Budget proposals.

The ministry’s capital markets division is said to be in favour of reviewing the STT framework with a view of either scrapping it altogether or in a phased manner, but a final call is likely to be taken by the revenue department as such a proposal would lead to loss of tax revenues for the government.

The government is estimated to have garnered about Rs7,500 crore through STT in the fiscal year 2010-11, while about Rs7,400 crore was collected during 2009-10.

Market players have been demanding withdrawal of STT ever since it was introduced in 2004 and they claim that removal of this levy would help the market grow further.

The rate of this levy has anyway come down considerably since its introduction at the rate of 0.15%.

Currently, the rates range from 0.025 % to 0.125% depending on different market segments such as cash dealings, intra-day trade and derivatives markets.

The tax was introduced during the Budget proposals for the year 2004-05 by the then finance minister P Chidamabram as part a strategy to rationalise the tax structure for the capital market.

However, the levy has faced opposition for all these years and SEBI, as also the stock exchanges and various market entities, have been demanding a review of the STT regime by the government.

Even a high-powered expert panel on potential of Mumbai as an international finance centre had suggested scrapping of the STT levy, saying it was a dampener for the international investors' interest in Indian markets.

The panel— which comprised eminent persons like former SEBI chairman CB Bhave, former SBI chairman OP Bhatt, KV Kamath, Ravi Narain, Nimesh Kampani and PJ Nayak—had also suggested withdrawal of stamp duty levied on the value of instruments used in various market transactions.

A previous draft of the proposed DTC (Direct Taxes Code) bill, which seeks to streamline all the direct taxes in the country, also suggested scrapping of the STT, but the proposal was removed from the bill that was finally introduced in Parliament.

The opponents of this levy argue that the markets should not be subjected to a turnover-based tax as it hampers the business, but the tax has been a good revenue-earning tool and has also helped the tax authorities keep a track for any black money flow into the stocks.

The tax authorities use the STT returns for populating the transacting party data into the ITS (Individual Transactions Statement) of the transacting party for verification with their income-tax returns, an official said.

He added that a possible STT withdrawal would require them to set up an alternative mechanism for an additional check on stock market transactions, besides the PAN-based and other tracking tools.

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