Stocks
Nifty, Sensex maybe trapped in a range – Weekly closing report

Nifty may move in the range of 8,600-8,900

 

The S&P BSE Sensex closed the week that ended on 30th January at 29,183 (down 96 points or 0.33%), while the NSE’s CNX Nifty ended at 8,809 (down 27 points or 0.30%).
 
Last week, we mentioned that Nifty’s sharp upmove may slow down and the index may turn volatile around 8,800.
 
The Indian stock market was closed on Monday for Republic day, 26 January 2015.
 
On Tuesday, Nifty opened in the positive. After a range bound session at end the session, the index regained strength and hit a new all-time high. Nifty closed at 8,911 (up 75 points or 0.85%).
 
Reports were there that senior officials from India and the US will meet after the forthcoming budget session to identify and prioritise sectors for investments and technology sharing. Finance Minister Arun Jaitley has said that fiscal deficit targets for current year are likely to be met and that the manufacturing sector is showing turnaround signs.
 
Wednesday marked a slowdown in the on-going upmove with the Nifty recording marginal gain. Nifty closed at 8,914 (up 4 points or 0.04%).
 
On Thursday, the moves of the index were highly volatile. Huge volume on NSE may be due to the expiry of January futures and options. Nifty closed at 8,952 (up 38 points or 0.43%).
 
Global credit rating agency Moody's Investor Service on Thursday said the recommended reforms in food subsidy and distribution will reduce India's inflationary pressures and fiscal deficit.
 
On Friday, the Nifty moved in the negative after hitting a new life time high bringing a pause to the 10 days of upmove. Nifty closed at 8,809 (down 143 points or 1.60%). Weak results of Bank of Baroda further adversely affected the market sentiments. However, on the other hand Minister of State for Finance Jayant Sinha said the Indian economy has the potential to become a $4-5 trillion economy in the next 10-12 years and it is a great time to invest in India. A UN report says India's FDI increased by 26% in 2014 to nearly $35 billion with maximum growth in the services sector.
 
Among the Nifty stocks, the top five stocks for the week were BPCL (11%); HCL Technologies (9%); DLF (8%); Lupin (6%) and ITC (5%) while the top five losers were Bank of Baroda (-13%); Coal India (-9%); Punjab National Bank (-8%); Mahindra & Mahindra (-7%) and Cairn India (-6%).
 
Of the 1,492 companies on the NSE, 583 companies closed in the green, 869 companies closed in the red while 40 companies closed flat.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 
 

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Fadnavis sanctions BKC like business district for Thane
The new CBD, similar to Bandra-Kurla Complex in Mumbai, would be set up on a 72-acre land at Kalwa-Kharigaon near Thane
 
Close on the heels of the plush Bandra-Kurla Complex (BKC) in Mumbai, Devendra Fadnavis-led Maharashtra government has decided to set up a Central Business District (CBD) in Thane.
 
In an official release, Eknath Shinde, Guardian Minister of Thane, said that following persistent demands by elected representatives of Thane to undertake various development projects in the district on priority, Chief Minister Fadnavis was urged to sanction one more business district in the Mumbai Metropolitan Region (MMR).
 
At a joint meeting held in the Sahyadri Guest house on Friday under the leadership of Fadnavis, the decision to go in for the new business district for Thane district was taken, the release said.
 
Mumbai faces heavy population growth and basic amenities there are under extreme pressure it was stated. Similarly due to geographical conditions there is no more expansion possible in Mumbai. Hence the demand for one business district in Thane grew louder.
 
Shinde and MLAs Sanjay Kelkar and Jitendra Awhad reiterated the urgent need for a business district in the meeting which was supported by the CM, who made it clear that the state government would take positive steps towards the same.
 
The CBD is to be set up on a 72 acre land at Kalwa-Kharigaon and the place will be developed taking into confidence the local elected representatives, it was stated.
 
The setting up of this business district will decentralise the population and also help generate employment, Shinde said.
 

 

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Not just customers, bank staff are also fed up with unrealistic targets and mis-selling of insurance products
These revelations are part of a letter written by Harshavardhan Madabhushi, general secretary of Associate Banks' Officers' Association-SBH unit to the MD of SBI’s Associate Banks Department
 
While customers accuse bank staff of mis-selling and arm-twisting them to buy insurance policies, a revealing letter from a State Bank of India (SBI) Officers’ Association exposes the pressure tactics employed by banks on their own officers to earn meagre commissions. 
 
The letter also makes the interesting point that bank officers and staff face tremendous pressure to sell insurance, which involves huge manpower costs and time of the parent bank, for meagre commission earned from the insurance subsidiary, which is a separate entity. The letter further says that it would be far more fruitful to have bank officers and field agents putting in the same time and effort in recovering non-performing assets (NPAs) of banks. 
 
The contents of the letter provide clear proof of how Reserve Bank of India (RBI) continues to ignore consumers and non-governmental organisation (NGOs), which have protested against the mis-selling of insurance policies by banks without regard to customer harassment. The travails of bank officers forced to meet targets and the cost of selling insurance, which is transferred from the insurance subsidiary to the public sector entity and its staff, are also issues brought out in the letter.
 
All these revelations are part of a letter written by Harshavardhan Madabhushi, general secretary of the Associate Banks' Officers' Association (State Bank of Hyderabad Unit) to managing director (MD) of SBI Associate Banks Department. It was uploaded on the Facebook Page on the SBOP Officers' Mitra Mandal (Patiala) on 28 January 2015. In the letter, the Secretary lists issues that plague cross-selling portfolios in associate banks of SBI, and also makes few recommendations to address them. 
 
According to Mr Madabhushi, crossselling is the main source of income for most associate banks. Hence, the certified insurance facilitators (CIFs) are mandated to meet unrealistic targets in a limited time, putting them under extreme pressure. They end up selling policies in haste – they are unable to provide proper information or advice to their customers. The poor customers are left saddled with an insurance scheme that offers no real benefits. The CIFs are also given monetary incentives for cross-selling schemes. However, the performance pressure far supersedes any positive motivation that may result from these incentives. They often end up resorting to unethical practices such as arm-twisting the borrowers to purchase SBI Life Policies in order to get a loan sanctioned, or debiting insurance premiums to the borrowers' account without their knowledge. 
 
Moreover, associate banks receive no separate commission for after-sales service, because of which it is mostly neglected. On top of that, yearly renewals also take a backseat, when the original CIF, who sold the policy, is transferred to another location. Either there is no CIF appointed in time to take over from his predecessor, or the new appointee is too busy meeting his own targets to spare any time for the existing customers. There is no commission offered for renewals. Therefore, the CIFs have neither the time not the incentive to look into them. 
 
The Secretary, in his letter, insists that is important to ensure that no officer in the entire hierarchy is offered any commission from the sale of SBI Life products. He cites the example of Life Insurance Corp of India (LIC), where the field staff is offered incentives without keeping the administrative set-up in the loop. If any officer is offered a commission, he is sure to pressure his juniors and other field staff to meet targets that would end up benefiting him more than any customer. Moreover, when the field staff finds themselves in such impossible situations, they end up resorting to unethical practices, as mentioned above. 
 
Another observation in the letter is that since cross-selling accounts for most of the income for associate banks, a large fraction of their resources are concentrated towards it. Consequently, the core business of banking is neglected. 
 
Furthermore, the bank staff are specifically trained and recruited to discharge only banking services. Moreover, these people sell us insurance policies after they pass an examination to become CIFs. They have neither the training nor the technical knowledge to even understand the business of insurance and all its nitty-gritties, let alone explain that to customers. It is not surprising, then, that mis-selling of insurance is so rampant in our country. How can somebody who is himself largely ignorant of the nuances of insurance be expected to provide sound advice to all customers? 
 
The Secretary offers a few suggestions in order to address these issues. Firstly, it is important to set realistic targets for all branches and ease the unnecessary pressure on the field staff. They will be able to focus better on each of their customers, and have the time for providing after-sales service. Secondly, apart from just insurance products, banks can focus cross selling of other products such as credit cards in order to increase their non-interest income. Lastly, it would be useful to set up a separate vertical in all associate banks that focus on cross selling. It would ensure that the regular officers are able to focus solely on banking services, while ‘specialised’ officers can work on facilitating cross selling other products. 
 
Another significant point to be noted here is that the commissions earned from cross-selling are meagre when compared to the number of man hours spent on it. It would perhaps be more fruitful to channelise these efforts in the recovery of NPAs, rather than exhausting all resources in something that provides neither a proportionate income nor any consumer satisfaction.
 
Here is the letter sent by the Associate Banks' Officers' Association…
 

 

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COMMENTS

Dayananda Kamath k

2 years ago

It is strange that IRDA is silent on my complaint about how banks are selling even compromising credit decisions. violating their own regulations regarding eligibility of a person to sell insurance. where there are no licensed/approved insurance advisers also are given insurance targets by banks.

R S Murthy

2 years ago

When bankers were asked to open accounts under JANDHAN yojana, none commented.

Selling of insurance products all reactions are coming.

Both AP and Telengana CMS wanted to implement rural debt waiver and pressurised all bankers to provide details, the pressure was not felt.
Any subject matterbecomes an issue according to our perception.

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