Mutual Funds
MFs to get single SRO, AMCs access to exchanges, courtesy SEBI
SEBI Board in its meeting approved new norms for buyback, creating a single SRO for mutual fund distributors and allow AMCs and distributors access to stock exchanges 
 
Market regulator Securities and Exchange Board of India (SEBI) on Tuesday approved setting up of a single self-regulatory organisation (SRO) for mutual fund (MF) distributors while allowing asset management companies (AMCs) to trade directly in the debt segments of exchanges.
 
The SEBI Board, which met today in Mumbai, said, “...in order to facilitate the recognition of single SRO for distributors of mutual fund products and to avoid delay, it has been decided to have a cut off time for accepting applications for being recognised as SRO.”
 
The Board also approved AMCs managing schemes of mutual funds to take membership of debt segment of stock exchanges under 'proprietary trading member' (PTM) category. However, SEBI said, this (the membership) will be only to undertake trades directly on behalf of such schemes managed by the AMCs.
 
Appointment of custodian for mutual funds from the same group
Presently, mutual funds are not allowed to appoint a custodian belonging to the same group, if the sponsor of the mutual fund or its associates hold 50% or more of the voting rights of the share capital of such a custodian or where 50% or more of the directors of the custodian represent the interests of the sponsor or its associates.
 
The Board has decided that the custodian in which the sponsor of a mutual fund or its associates are holding 50% or more of the voting rights of the share capital of the custodian, would be allowed to act as custodian subject to fulfilling the following conditions... 
(a) the sponsor should have net worth of at least Rs20,000 crore at all points of time, 
(b) 50% or more of the directors of the custodian shall be those who do not represent the interests of the sponsor or its associates, 
(c) neither the custodian nor the asset management company of a mutual fund shall be a subsidiary of each other, 
(d) no person shall be a director of both the custodian and the asset management company of a mutual fund and 
(e) the custodian and the asset management company of a mutual fund shall sign an undertaking that they will act independently of each other in their dealings with the schemes.
 
Membership to exchanges for MF distributors
SEBI Board decided to allow mutual fund distributors to take limited purpose membership of stock exchange with lesser financial and compliance burden to use infrastructure of the exchanges for distribution and redemption of mutual fund units.
 
To reduce the financial and compliance burden on these limited purpose members requirements such as SEBI registration, compliance as member of a stock exchange, paid up capital and base minimum capital would not be applicable. However, stock exchanges may prescribe suitable eligibility criteria in this regard including net worth requirements, membership fee etc. This limited purpose membership would be granted based on AMFI Registration Number (ARN), granted to mutual fund distributor by Association of Mutual Funds in India (AMFI). 
 
Further to address the possible risk of default by these limited purpose members, they will not be allowed to handle pay in and pay out of funds as well as units on behalf of investor. Pay in and pay out of funds and units would be directly from or to the account of the investors, SEBI said. 
 
Companies to achieve minimum 50% of target amount under buyback
SEBI Board has increased the mandatory minimum buyback to 50% from 25% of the amount earmarked for this purpose. If the company fails in the mandatory buyback of 50% of the target amount, then SEBI said it would forfeit the amount in the escrow account to a maximum of 2.5% of amount earmarked. Companies will have to create an escrow account with an amount of at least 25% of the money earmarked for buyback. The maximum buyback period is also reduced to six months from 12 months. Here are the new norms for buyback...
 
(i) The mandatory minimum buy-back has been increased to 50% of the amount earmarked for the buy-back, as against existing 25%, failing which amount in the escrow account would be forfeited subject to a maximum of 2.5% of the total amount earmarked.
(ii) The maximum buy-back period has been reduced to six months from 12 months.
(iii) The companies shall create an escrow account towards security for performance with an amount equivalent to at least 25% of the amount earmarked for buy-back.
(iv)The company shall not raise further capital for a period of one year from the closure of the buy-back except in discharge of subsisting obligations as against the existing six months.
(v) The company shall not make another buy-back offer within a period of one year from the date of closure of the preceding offer.
(vi)The disclosure requirements have been rationalized requiring disclosure of the shares bought back on a cumulative basis on the website of the company and the stock exchange, only on a daily basis instead of the current requirement of disclosure on daily, fortnightly and monthly basis. 
(vii) The companies can buy-back 15% or more of capital (paid-up capital and free reserves) only by way of a tender offer.
(viii) Procedure for buy-back of physical shares (odd-lot) has been modified which includes creation of separate window in the trading system for tendering the shares, requirement of PAN/Aadhaar for verification, etc.
(ix) The companies are permitted to extinguish shares bought back during the month, within fifteen days of the succeeding month subject to the last extinguishment within seven days of the completion of the offer.
(x) The promoters of the company shall not execute any transaction, either on-market or off-market, during the buy-back period.
 
New norms for angel investors
Following Budget announcement, SEBI in its Board meeting provided a framework for registration and regulation of angel pools under a sub-category ‘Angel Funds’ under Category I- Venture Capital Funds. Here are the features of this new amendment...
 
‘Angel Funds’ shall be included in the definition of “Venture Capital Funds” under the 
SEBI (Alternative Investment Funds) Regulations, 2012.
Individual angel investors shall be required to have early stage investment experience/ experience as a serial entrepreneur/ be a senior management professional with 10 years’ experience. They shall also be required to have net tangible assets of at least Rs2 crore. Corporate angel investors shall be required to have Rs10 crore net worth or be a registered AIF/VCF.
Angel Funds shall have a corpus of at least Rs10 crore (as against Rs20 crore for other AIFs) and minimum investment by an investor shall be Rs25 lakh (may be accepted over a period of maximum three years) as against Rs1 crore for other AIFs. Further, the continuing interest by sponsor/manager in the Angel Fund shall be not less than 2.5% of the corpus or Rs50 lakh, whichever is lesser.
For ensuring investments are genuine angel investments, angel funds shall invest only in investee companies which:
o are incorporated in India and are not more than three years old; and
o have a turnover not exceeding Rs25 crore; and
o are unlisted, and 
o are not promoted, sponsored or related to an industrial group whose group turnover is in excess of Rs300 crore, and
o has no family connection with the investors proposing to invest in the company. 
Further, investment in an investee company by an angel fund shall be not less than Rs50 lakh and not more than Rs5 crore and shall be required to be held for a period of at least three years.
 
Listing of start-ups and SMEs without an IPO
Lack of exit opportunities for existing investors and restricted access to new investors is one of the problems faced by start-ups and small and medium enterprises (SMEs). With a view to provide easier exit options for informed investors like angel investors, venture capital funds (VCFs) and private equities (PE) funds to provide better visibility, wider investor base and greater fund raising capabilities to such companies, the Board approved the proposal to amend the SEBI (ICDR) Regulations to permit listing of start-ups and SMEs in Institutional Trading platform (ITP) without having to make an initial public offering (IPO). 
 
Such companies eligible to be listed on this “Institutional Trading Platform” shall be accessible for investment to the informed investors only. Therefore, the minimum amount for trading or investment on the ITP will be Rs10 lakh. These companies shall be exempted from the requirements of rule 19(2)(b) of SC(R)R 1957 under which companies have to offer up to 25% of its shareholding to public through an offer document in order to get listed. Therefore, the listing can be done without an IPO and the expenses associated with it. While such companies are listed on the ITP they will not be permitted to raise capital though they can continue to make private placements, SEBI said.
 
Listing on ITP by start-Ups and SMEs is expected to offer their existing investors better chances to find alternate buyers than if they search using their own network in the investment community. Standardized norms of entry for companies, eligibility criteria, continuous disclosure requirements, simplified exit rules and corporate governance norms will be prescribed, the market regulator said in a statement. 
 
According to the new norms, an investment beyond 10% will be considered a foreign direct investment (FDI). Any investment by investors must not be less than Rs25 lakh, SEBI said.
 

User

SAT asks Fresenius Kabi to file fresh reply with SEBI for delisting
Earlier this month, SEBI had asked more than 100 firms including Fresenius Kabi to submit their replies related to non-compliance with the mandatory requirement of 25% public shareholding
 
The Securities Appellate Tribunal (SAT) has directed Fresenius Kabi Oncology to make a fresh representation to market regulator Securities and Exchange Board of India (SEBI) regarding its delisting plan.
 
Fresenius Kabi had approached SAT after SEBI refused the firm’s proposal to delist from stock exchanges.
 
In its order dated 24th June, the tribunal has asked Fresenius Kabi to file a representation with SEBI detailing the facts and circumstances regarding its delisting plans.
 
“The SEBI is expected to take a rational and reasonable decision on such representation within a period of four weeks and convey it to the appellant after granting an opportunity of hearing to the appellant,” the order said.
 
Disposing of the appeal at the “admission stage itself”, SAT said, “It is made clear that no opinion is expressed by the tribunal on the merit of the case.”
 
According to the tribunal, the company has voluntarily decided to delist its stock and has progressed a lot in this direction as required by law.
 
“There are about 25 legal formalities/steps to be complied with by the appellant in this regard and we are told that more than 15 such conditionalities have since been complied with,” it noted.
 
Therefore, it is a matter of another couple of months that the delisting process is expected to be completed, the order said.
 
Further, SAT said, “We are of the opinion that it is apparently a case which stands on different footing than other companies...”
 
Earlier this month, SEBI had asked more than 100 firms including Fresenius Kabi to submit their replies related to non-compliance with the mandatory requirement of 25% public shareholding.
 
Fresenius Kabi had sold 9% promoter shareholding through an Offer for Sale (OFS), for complying with the minimum public shareholding norms, it later proposed to delist its shares from the bourses rather than selling a further 6% to meet the listing requirement.
 
The regulator, however, refused permission to the company for its delisting plans, as it had benefited from a specially designed OFS route for expanding the public float of shares.
 
The company has been saying that its decision to get delisted was triggered by certain sudden ‘extraneous’ events.
 
The total promoter holding in Fresenius Kabi currently stands at 81%, as against a maximum of 75% as per SEBI’s minimum 25% public shareholding requirement for the listed private sector companies.
 

User

New India Assurance pays Rs34,313 for mediclaim initially rejected: Another Moneylife success
New India Assurance has paid Rs34,313 towards a mediclaim that was earlier rejected by the TPA on flimsy grounds. The insured senior citizen has been a customer for 20 years, but that did not help to get the claim paid. Moneylife Foundation’s intervention helped
 
Sujit Banerjee (name changed), a retired senior citizen of 73 years, had approached the Moneylife Insurance Helpline of Moneylife Foundation seeking help with his rejected mediclaim on flimsy grounds by the TPA (third party administrator). The TPA alleged that the insured suffered from hypertension for 15 years without having any documentary support. The TPA even chose to ignore medical certificate of the illness from a doctor with super speciality degree in neurology. Inadequate medical expertise of the TPA staff has been reported by the media for a long time.
 
Taking the complaint to the grievance cell was the next step followed by the Moneylife Insurance Helpline in escalating the matter to the GM, grievance cell of New India Assurance. The claim was paid for Rs34,313, overturning the TPA’s debatable decision.
 
The case proves that TPAs should not be settling claims, which is included in the new health insurance guidelines from IRDA (Insurance Regulatory and Development Authority). Insurance companies have much more expertise on medical intricacies than a TPA. The regulations put the onus on the insurer to give specific grounds of settlement and denial of claim. In short, the insurance company cannot play the blame game that the TPA is making decisions on the claims.
 
MD India (TPA) had repudiated Mr Banerjee’s for a claim related to illness of reversible ischemia with neurological deficit, arguing that the “Current illness is a complication of hypertension which is since 15 years as per indoor case papers’’. According to Mr Banerjee, “I do not know from where the TPA got this information as neither the case papers nor the discharge card made any reference of 15 years history of hypertension. Somewhere a mention is made of mild hypertension which is natural as an age-related problem.  I am a customer of New India Assurance for the last 20 years or so.”
 
On receipt of the TPA repudiation letter, Mr Banerjee contacted Dr Neeta A Mehta, under whom he took treatment at Nanavati Hospital in Mumbai. She readily issued a certificate mentioned that the illness was “more like Transient Ischemic Attack” and further added that “mild fluctuation of blood pressure is not the cause of this attack’”. Mr Banerjee says, “Dr Neeta Mehta is an eminent neurologist of repute and besides being an MD also holds a super speciality degree of DM in Neurology. I wonder how the TPA can ignore the opinion coming from such an eminent doctor.” Moneylife’s contribution helped to get justice for Mr Banerjee.
 
Interestingly, at a January 2013 high court hearing of a public interest litigation (PIL) filed by Gaurang Damani, IRDA member (non-life) M Ramaprasad admitted that even veterinarians are appointed by the TPAs in addition to ayurvedics and homeopaths to assess claims. There have been cases where specialist doctors were not able to convince the need of specific procedure to TPA doctors, who may be well qualified in their respective field but not in the specialised allopathic stream.
 
Mr Banerjee also pointed out that all New India Assurance mediclaim policies showed no pre-existing diseases except for the policies for the years 2009-10 and 2010-11 which erroneously showed ‘’pre-existing hypertension and diabetes’’. Mr Banerjee thinks that it may be due to a clerical error inadvertently inserted and the loading was recovered. He had to protest for such a fallacy and the pre-existing illnesses were removed in the subsequent policies till today. It affirms what Moneylife suggests about the importance of checking your policy document so that there is no discrepancy in the product renewed or sold to you.

 In case you have an insurance issue, please write to Moneylife Foundation. Click here

User

COMMENTS

ABHA CHAWLA MOHANTY

4 years ago

THE PUBLIC SECTOR INSURANCE COMPANIES ARE NOT SERIOUS ABOUT CUSTOMER CARE, AND ,POLICY PERCEPTIONS THEREIN FOR DOING GOOD....,NEED ,STRINGENT CHECKS FOR CALLOUS WORKING...!

revribhav

4 years ago

The General Insurance sector of india is virtually without any regulator.
(a) The IRDA: It's grievance redressal is without any teeth.It has told the Central Information Commission that it is not an authority over a particular insurance company.
A particular divisional manager of an insurance company who got me dismissed from insurance company has made himself millionaire on account of suspicious mediclaims.
(b) GIPSA: It is not registered with any statutory authority,you cannot legally sue GIPSA,though it is virtually an authority over 4 general insurance companies and GIC
(c) Ministry of Finance Insurance Division:It has told me in writing that it is not a complaint redressal authority over insurance company,though as per the General Insurance Act,it exercises administration over the insurance companies.

REPLY

ABHA CHAWLA MOHANTY

In Reply to revribhav 4 years ago

THE INSURANCE SECTOR ESPECIALLY PSU NEEDS A VERY UPRIGHT VIGILANCE AND ,AUDIT TEAMS WITH CAG MONITORING....?

SATISH BHATIA

4 years ago

Dear Money life Team, Thank you very much for sharing the experience of Mr. Banarji. I has really given so many points to re-check with policy, which will definitely be an eye opener for us.
It has marked a big question on TPA's and their services. As now days many cos are working without TPA.. can be a better solutions for customers.
Thanks n Regards,

Satish Bhatia
Advisor
Max Bupa

revribhav

4 years ago

While filing right to information I discovered a horrible fact about the said insurance company.
The well known bribe taker obiviously protected at the highest level showered with public money who was caught red handed demanding gratification during January 2003 near Jaipur regional office by a reputed law enforcement agency against corruption enjoys an altered name.
His present name is altered,that is,not the name with which he entered the services of insurance company.

REPLY

ABHA CHAWLA MOHANTY

In Reply to revribhav 4 years ago

DUTY OF DISCLOSURE STILL APPLIES...MAY THE NAME SURFACE FOR GOOD,,,,

revribhav

4 years ago

The said insurance company dismissed me on a so called grave allegation of leaving headquarters,the company chairman was seen in the company of a well known bribe taker who still receives public money of about 50K salary under salary roll no. 26019.Evidence may be seen at the following URL:
https://twitter.com/revribhav

Arun M Purohit

4 years ago

MANY THANKS TO MONEYLIFE FOR SUCH A HELP TO NEEDY SR.CITIZENS , CONGRATS , MONEYLIFE ALSO NEEDS TO TAKE UP THE MATTER REGARDING AGENTS / EMPLOYEES WHOSE DOESN'T HAVE IRDA LICENSE RECRUITED MOSTLY BY PVT. INSURERS , THEY ARE JUST A 10th / 12th PASS / GRADUATE ONLY. AS PER MY OBSERVATIONS AND LOOSING MINE BUSINESS TOO BY MY RELATIVES. I PERSONALLY POINTED OUT TO PVT. INSURERS , THEY CONVIENNCED ME THAT FOR HEALTH INSURANCE SELLING , LICENCE NOT REQUIRED. TILL DATE I LOST A PREMIUM OF Rs.50,000/- , MY COUSIN SELLING A RELIGARE HEALTH INSURANCE POLICIES AND TARGETTING MY CLIENTS ,HIS RM FROM RELIGARE ALSO DOESN'T HAVE IRDA LICENSE. THEY ARE MISSELLING A PRODUCT WITHOUT DISCLOSING IT'S NORMS. I AM EXPECTING A PROMPT ACTIONS FOR THE BENEFITS OF ENTIRE INDUSTRIES.

ARUN PUROHIT - IRDA QUALIFIED / AGENT OF THE ORIENTAL INSURANCE M : 09377702264 ,

Venkatesh

4 years ago

They shd also be fined for a few crores as penalty for rejecting a genuine claim. This will only make them more accountable. With this case what has been achieved? THe insurance company number crunchers will tell the TPA to reject over 75% of the claims, of which only 50% will fight back of which they can still reject 25% and end up with 50% claim rejection thereby lining their pockets. What I would also like to know is, does IRDA monitor these claim rejection percentages and is there transparent data on this available anywhere companywise ???

raj

4 years ago

Thanks for all the comments!

vinay kashelkar

4 years ago

As per my knowledge (if New India's terms and conditions are not different) any disease pre-existing at the time of proposal is not covered for first 4 years if continuous renewals without break are done. But from the 5th year all pre-existing diseases are automatically covered. There is no question of denying any claim for pre-existing diseases/tendencies.

vns

4 years ago

Retired people belonging to PSUs and having Mediclaim Insurance must thank Moneylife which stands to help those who are sr. citizens and really needy for such a help.Alternative is that Mediclaim Insurance companies combined with the TPAs will fleece the poor chaps.

vivek sharma

4 years ago

Great work Raj! Moneylife team believes in helping needy which is indeed great.

Anil Paranje

4 years ago

Great work MoneyLife! God bless!

N Kanitkar

4 years ago

Well done Moneylife. Hearty congratulations. Shoddy job from New India Assurance. Thanks to your earlier article on Mediclaim, chose the same from OBC at half the premium.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)