RBI said the NSEL episode has emphasised the need for ensuring that no single shareholder or a group of shareholders is permitted to dominate the functioning of the exchange or exercise management control
With a solution to the five-month-old Rs5,600 crore crisis National Spot Exchange Ltd (NSEL) still elusive, the Reserve Bank of India (RBI) has said that it is not advisable to let a single group of shareholders to dominate the functioning of any exchange.
In its half-yearly Financial Stability Report, the central bank said, “The (NSEL) episode has emphasised the need for ensuring that no single shareholder or a group of shareholders is permitted to dominate the functioning of the exchange or exercise management control”.
The case, which encircles the Jignesh Shah-led companies, has “revealed certain systemic concerns with regard to ownership and governance arrangements in exchanges and common ownership of exchanges and existing technology platforms.”
The RBI view comes within a fortnight of the commodities market regulator Forward Markets Commission (FMC) stating that promoters Shah and Financial Technologies (India) Ltd are not eligible to run the crippled exchange, an order challenged by the group in the Bombay High Court.
The RBI report says the NSEL case highlighted the gap in the regulation of commodity spot exchanges and added that “we need to comprehensively address the problems in commodity spot markets.”
It can be noted that the government had on 30th July ordered the closure of NSEL following irregularities, which later revealed that the spot exchange owed Rs5,600 crore in dues to thousands of investors and dozens of brokers/ intermediaries.
On 18th December, in a severe indictment of the NSEL promoters, commodity market regulator FMC said Shah and his company Financial Technologies were not ‘fit and proper’ to run any exchange in the country and charged him with being the “highest beneficiary” in the NSEL case.
Fear-mongering works well in finance. LIC offices and their agents are making last ditch efforts to push sales with display boards stating that your “favourite” traditional products are getting over.
You may have seen Life Insurance Corporation of India (LIC) agent offices putting up display boards stating that your “favourite” products like Jeevan Anand, Jeevan Tarang, Bima Bachat, etc are getting over and hence this is the time to make a buy. The limited time offers are always enticing for customers. LIC advertisements in print and TV are geared to ensure that customers bite the bait of buying the known than waiting for the unknown next year.
It matters little that new traditional products from 2014 will be better than the existing products. The prior deadline of 30th September was fabulous business for LIC with three times the monthly business for individual single premium and two times for individual non-single premium business when compared to monthly figures for pre-September 2013.
Read about the new changes in traditional products from January 2014 - LIC agents’ last hullabol for selling traditional products before service tax regime
LIC September 2013 figures show Rs2,153 crore business for individual single premium and Rs3,603 crore for individual non-single premium. The pre-September 2013 monthly numbers were approximately Rs700 crore for individual single premium and Rs1,500 crore for individual non-single premium. It is clear that LIC benefitted with Insurance Regulatory and Development Authority (IRDA) previous deadline of 30th September to make way for traditional products compliant with new guidelines. IRDA postponed the deadline to 31st December, which gives LIC another opportunity to make another last push. The sales pitch, with service tax to be levied separately, also helped with increased business and will continue till the end of December 2013.
A sudden spike in life insurance sales would make one wonder if IRDA new guidelines for traditional products are good for customer or it is just agents’ mis-selling for own benefit. LIC advertisements actually undermine IRDA efforts to make traditional products better for consumers. ‘Make a quick sale’ seems to be the mantra as insurance companies belie the benefits that new guidelines for traditional products will offer.
It is unfortunate that many single insurance products are mis-sold as the consumer is made to believe that the corpus at end of the policy term will be tax-free. These products offer low insurance cover of 1.25 times the single premium and hence tax-free corpus is out of question and even 80C benefits will be minimal.
Insurance products give you deduction of up to Rs1,00,000 from taxable income under 80C, subject to the life cover being at least ten times the premium. If it is less than the minimum, the amount that can be claimed under Section 80C for tax savings reduces appropriately. For example, if you take a single premium insurance policy with life cover of 1.25 times, then the amount claimed under 80C will be only Rs12,500 for Rs100,000 premium paid. The tax benefit at the time of maturity is not applicable in this example.
So, why are some investors putting lakhs in single premium products like LIC Bima Bachat? Are these investors under impression that they can just show the returns from the product as tax-free? So, people just don’t put the corpus as taxable? No TDS also helps as there is no tracking. Taxable corpus just flies below the radar of IT department as tax-free life insurance corpus?
Usha Sangwan, first woman MD of LIC recently told Business Standard “Our blockbuster products that are launched every year had been closed-ended products. However, one particular policy - Bima Bachat - has been our evergreen blockbuster product with risk coverage and decent returns. So, we did not feel the need for any blockbuster product this year. We will be looking at launching a variant of this product.”
“Our performance in September was excellent. Earlier rules had said the new product regime would be implemented from October onwards, and September was supposed to be the last month in the old regime. In September, we had 91% market share in number of policies. We had 100% increase in business, despite volatility in the market. We collected Rs6,000 crore of new business premia for September. With old products being phased out, we are expecting a huge rush in December too.”
Bitcoin-mining malwares are rising in APAC with India coming at fourth place in infected systems
Bitcoin-mining malware is spreading and the countries most affected by it are from the Asia-Pacific (APAC) region with Japan at the top, followed by Australia, India and Taiwan at the 3rd, 4th and 6th position, respectively.
According to Internet security vendor Trend Micro, about 12,000 PCs globally were affected by Bitcoin-mining malware which were causing severe slowdown of PC systems. Trend Micro had detected three malwares called BKDR_BTMINE, TROJ_COINMINE and HKTL_BITCOINMINE which turned infected systems into a Bitcoin miner, making them virtual assets for the criminals.
"Bitcoin users have become the hot target for cybercriminals as Bitcoin transaction is permanent and has no reversal of charges. If you are the victim of credit card fraud, you can appeal to your bank to reverse the transaction and in many cases, they will. On the other hand, once your Bitcoin wallet is compromised by hackers there is no recourse to undo the transaction. In fact, there is no regulator or authority that Bitcoin users can appeal to if they fall victim to theft or fraud," says Dhanya Thakkar, managing director for India & SAARC at Trend Micro.
Executing malwares into the victims' computer to mine Bitcoin is a new type of cybercrime. Bitcoin mining, the process which creates new Bitcoin, is resource-intensive hence Bitcoin-mining malwares can slow down the infected computer due to the increased CPU load and subsequently raise power consumption.
To protect themselves from cyber threats, Trend Micro advised Bitcoin users to understand the way Bitcoin is being transacted and to manage it with the same caution and prudence that applies to real currency.
Besides using security software to filter malwares, Trend Micro also suggests Bitcoin users not to put all Bitcoin in a single wallet. They should divide their Bitcoin into income account for inbound transaction, and expense account for outbound transactions. For additional precaution, they should also consider managing all the wallets offline. Although Bitcoin is claimed to be "anonymous", the transaction records are still in public and it leave traces, Trend Micro said.