The group met to discuss future course of action including legal options available for the government, following the apex court’s 2nd February decision of cancelling 122 licences issued to mobile phone companies in 2008
New Delhi: An informal group of ministers, including finance minister Pranab Mukherjee and telecom minister Kapil Sibal, today met for the second time in as many weeks to discuss fallout of the Supreme Court order quashing 122 telecom licences, reports PTI.
The meeting, also attended by Planning Commission deputy chairman Montek Singh Ahluwalia and telecom secretary R Chandrashekhar, was however inconclusive due to the absence of law minister Salman Khurshid and attorney general GE Vahanvati, sources said.
The group met to discuss future course of action including legal options available for the government, following the apex court’s 2nd February decision of cancelling 122 licences issued to mobile phone companies in 2008.
The government has already sought the attorney general’s opinion on filing a review petition and the ministers were supposed to deliberate on the issue at today’s meeting.
Mr Sibal, however, refused to comment on the deliberations.
“If anything happens, we will let you know,” Mr Chandrashekhar told reporters here.
Prime minister Manmohan Singh had on 11th February discussed the fallouts of the Supreme Court ruling with the senior ministers.
Mr Sibal had last week stated that the government was studying the implications of the judgement as it had impact on other sectors as well.
“I have been saying this repeatedly that the impact of the judgement is far-reaching. It has implications not only on the (telecom) sector but on other sectors as well,” Mr Sibal had told PTI.
The apex court, cancelling licences allocated by the then telecom minister A Raja, had stated that auction was the best way for allocation of scarce natural resources. The court had also defined natural resources as both renewable and non-renewable.
Mr Sibal had said that after the government studies the implications of the judgement, it would take a view on the way how it should proceed.
Today’s meeting also assumes significance as two foreign companies—Bahrain Telecom and Abu Dhabi-based Etisalat—have announced their exit from India.
Another operator Loop has written to the prime minister, asking the government to return the licence fee paid by the company along with interest.
This is expected to put pressure on the government as the operators are waiting for clarity on rules to safeguard the multi-crore investments made by these players.
Another operator Telenor has, however, re-iterated its commitment to continue operations in the country, although as part of a new venture.
The move by the insurance regulator is in the interest of customers as it would bring transparency in the way insurance is pushed by intermediaries. Many times the customer does not even know the insurance company’s name whose product he may be forced to buy
Insurance Regulatory and Development Authority (IRDA) has come out with a discussion paper which details the aspects of tying and bundling insurance products. Insurance mis-selling or forced selling is a reality that cannot be easily wished away. Often, the customer ends up with a product with little knowledge of insurance company as there may not be a choice. “White labeling” of insurance products makes it difficult for customers to differentiate between the core product and the incidental one. There is a conflict of interest in most of these cases as the seller is often a corporate agent or their group entities are insurance brokers. These areas, therefore, need attention from the consumer-protection point of view.
Buying a new car usually ends up with the auto dealer pushing the insurance product of his choice down the customer’s throat. The product is from the insurance company which gives a hefty discount for getting volume sales, which the dealer undertakes. Life insurance against home loans is classic example of a customer either taking what the bank offers or going to another bank. There is no other option. In both these examples, the intermediary commission is paid by the insurance company.
According to Avadhoot Mavlankar, principal officer at Shinrai Insurance Broking, “This is not new to the insurance market. The classic example was a credit card, which used to have in-built personal accident cover. But its shortcomings were discovered when there were serial blasts in the Mumbai local trains. The personal accident policy did not cover terrorism. Tying and bundling insurance policies with other services is mostly coming as a mandatory requirement especially by banks; which is not a healthy practice.”
Arvind Laddha, chief executive officer of Vantage Insurance Brokers and Risk Advisors, brings another perspective. According to him, “Tying or bundling of products helps customers by reducing the transaction effort and also opens the possibility of some savings for them. However, occasionally we do see that the insurance intermediary is able to exercise undue influence on the customer, due to the extended relationship they enjoy. The regulator should consider allowing the distributor to bundle the insurance product but should ensure that the customer can transparently see the value he is getting. It may also be appropriate to issue guidelines that do not allow a bundled product to be highlighted largely as an insurance product, as it could result in formation of groups with a view to merely enjoy the benefits of bulk purchase of insurance.”
According to Kamalji Sahay, managing director and chief executive officer, Star Union Dai-ichi Life "Bundling of products evolved for adding more value for the customer through one life insurance policy. In fact, this offers the customer better benefits than what he would be able to receive through a core product. This suits the need of large number of customers; of course, not every customer." Moneylife tried contacting several other insurance companies to get feedback on IRDA initiative, but there was no response till the time of writing this article.
IRDA’s discussion paper comes down heavily on group insurance covers that are bundled with mutual fund products. According to the insurance watchdog, “One of the concerns that arise here is the manner in which this is advertised by the service provider. Providing information regarding the insurance cover is okay but highlighting that more than the core service being provided misleads the public. This violates the IRDA (Insurance Advertisements) Regulations, 2000. The insurance cover will have to be incidental to the other financial product. There could be instances where the public is led to believe that the insurance cover is the main feature of the product that is being sold.”
Mr Mavlankar says, “Some insurers who have big retail outlets have tried it through mall assurance, but it has not been successful. IRDA should come up with very clear guidelines and should specify the minimum cover such policies should offer, further the drafting of such policies should also be simple.”
Tying is defined as two or more products packaged together where at least one of the products is not sold separately while bundling occurs when products are packaged but are also available separately. The discussion paper is a great initiative from IRDA which will delve whether it should stop bundling of insurance products with other goods or services or allow this activity with some checks built-in. IRDA has sought feedback on its discussion paper, which is available on its website www.irda.gov.in. Kindly mail your opinion to [email protected] on or before 15 March 2012.
Nifty may move in the range of 5,390-5480 unless the uptrend resumes
The market settled lower on institutional selling in blue-chips, which resulted in the capital goods, realty and banking sectors ending as the biggest losers today. Today’s closing finally broke the seven-week rally, the first weekly close in the negative since the beginning of 2012.
As we guessed yesterday, today the Nifty slipped below 5,425 and closed a tad above that level. The decline in the past three days may now lead to some buying. But any rally may be met with selling. From here, if the pattern of a lower low and lower high continues, as it did today for the second consecutive day, we may the Nifty finding support at 5,390. At the higher level, index may get resisted in the 5460-5480 area. The National Stock Exchange (NSE) saw a volume of 102.82 crore shares.
Despite positive cues from its global peers the domestic market opened flat for the second day. US stocks closed higher overnight on better-than-expected economic news which also boosted the Asian pack in early trade today. The Nifty opened four points lower at 5,479 and the Sensex was unchanged from its previous close at 18,079.
Initial across-the-board buying saw the indices touching their intraday highs in early trade. At the highs, the Nifty rose to 5,521 and the Sensex climbed to 18,198. However, institutional selling soon led the market into the negative.
News of Citigroup selling its entire stake in mortgage lender HDFC and Etisalat’s exit from the telecom joint venture with DB Realty pulled down individual stocks. Among the sectoral gauges, capital goods, realty and banking suffered the most today.
The losses kept expanding as trade progressed with the market falling to its mid-session low in post-noon trade with the benchmarks dipping below their psychological levels. At the lows, the Nifty slipped to 5,406 and the Sensex dropped to 17,849.
A minor recovery in the dying minutes enabled the market close off the lows. At the end of trade, the Nifty closed 54 points lower at 5,429 and the Sensex was down 155 points at 17,924. Nifty futures was trading at 40-50 points higher which shows remarkable optimism among the bulls. This alone would be a reason for the market to remain under pressure.
The advance-decline ratio on the NSE was negative at 561:1224.
Among the broader indices, the BSE Mid-cap index fell by 0.64% and the BSE Small-cap index dropped 0.71%.
BSE Metal (up 1.08%); BSE TECk (up 0.56%); BSE IT (up 0.55%); BSE Consumer Durables (up 0.31%) and BSE Fast Moving Consumer Goods (up 0.28%) were the sectoral gainers today. The main losers were BSE Capital Goods (down 2.96%), BSE Realty (down 2.28%); BSE Bankex (down 1.95%); BSE Oil & Gas (down 1.71%) and BSE PSU (down 1.22%).
The top-five Sensex stocks were Sterlite Industries (up 3.83%); Tata Power (up 2.10%); Coal India (up 1.47%); Bharti Airtel (up 0.96%) and Tata Steel (up 0.95%). The main losers were HDFC (down 3.83%); DLF (down 3.44%); Larsen & Toubro (down 3.38%); BHEL (down 2.80%) and State Bank of India (down 2.44%).
Sterlite Ind (up 3.78%); Tata Power (up 2.15%); Coal India (up 1.46%); Power Grid Corporation (up 1.38%) and Jindal Steel (up 1.20%) were the toppers on the Nifty today. The laggards were led by IDFC (down 4.48%); DLF (down 3.66%); Reliance Infrastructure (down 3.63%); HDFC (down 3.62%) and Kotak Mahindra Bank (down 3.30%).
Markets in Asia closed mostly higher, riding on positive economic news. In the US, home sales in January climbed to a nine-month high and weekly jobless claims fell to a four-year low. This apart, the South Korean central bank stated that consumer confidence rose to a three-year high.
The Shanghai Composite gained 1.25%; the Hang Seng added 0.12%; the KLSE Composite rose 0.14%; the Nikkei 225 surged 0.54%; the Straits Times rose 0.33%; the Seoul Composite climbed 0.60% and the Taiwan Weighted settled 0.28% higher. Bucking the trend, the Jakarta Composite tanked 1.62%. At the time of writing, the key European indices were trading with modest gains and US stock futures were in the positive.
Back home, foreign institutional investors were net buyers of shares totalling Rs104.55 crore on Thursday. On the other hand, domestic institutional investors were net sellers of shares amounting Rs640.93 crore.
Pharma major Strides Arcolab today said it has received USFDA approval for its Brazilian plant that produces sterile dry powder anti-biotic injectables. The plant has already been approved by other international regulatory agencies like MHRA and ANVISA and with this approval the company is in a position to commercialise products worldwide in the second half of 2012. Strides closed 0.25% higher at Rs545.15 on the NSE.
Leading steel pipe manufacturer Welspun Corp plans to spend $100 million (Rs500 crore) and add 200 jobs at its 3,50,000-tonne Little Rock production unit in Arkansas state of the US.
Through this expansion, the company will expand its product line of steel pipes to include the production of 6-inch to 20-inch ERW steel pipes, it said. The ERW pipes are largely used by oil and gas companies. The stock tumbled 3.63% to close at Rs141.95 on the NSE.
Panacea Biotec has launched polio vaccine POLPROTEC in Nigeria to help combat the spread of the debilitating disease in the country, one of the last nations still to eradicate the virus. To make the vaccine easily available, Panacea is partnering Emzor Pharma, which has a strong footprint across Nigeria. Panacea settled 3.06% lower at Rs77.50 on the NSE.