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Federal Bank, LIC tie up for paying maturity proceeds of LIC policies

The proceeds will be credited directly to the beneficiary’s account by way of NEFT on due date

Federal Bank has signed an agreement with Life Insurance Corporation of India for paying maturity proceeds of LIC policies. Hitherto the maturity proceeds were paid by cheques from the respective branch offices of LIC across the country and it used to be sent to the beneficiaries one month prior to the due date.

Now the proceeds will be credited directly to the beneficiary’s account by way of NEFT on due date. This move will be cost effective for LIC and improve the payment system. Clients need not wait for the cheque to get cleared since the payment is credited directly into the account. Question of cheques lost in transit or fraudulent encashment etc would not arise.

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Experts advised RBI not to hike rates to fight price rise

In its second quarter mid-quarter review of the monetary policy for the current fiscal held last month, the RBI indicated that it may not increase the key policy rates in December

Mumbai: Almost all external experts on the Reserve Bank of India’s (RBI) monetary policy advisory committee were opposed to increase in policy rates to combat inflation amid concerns that tight policy had proved ineffective in moderating price rise, reports PTI.

“On monetary measures, while one external member suggested an increase in repo rate by 25 basis points, other five external members were of the view that repo rate should not be changed,” said minutes of October 19 meeting of RBI's Technical Advisory Committee (TAC) on Monetary Policy.

Six days later, the central bank increased the repo rate by 25 basis points in its bid to tame inflation. It was the 13th increase since March 2010.

While all members of the committee chaired by RBI governor D Subbarao observed that inflation was a major concern, they said it would not ease immediately.

“... some other members felt that inflation was driven by external/supply side factors and, therefore, the monetary policy tightening was impacting investment and growth and not inflation,” the minutes said.

Besides top RBI officials, the TAC comprises external members, including Hangar Acharya, Rakesh Mohan and Errol D’Souza.

The members, however, hoped in view of slowing global economy, international commodity prices would soften gradually and help in moderate inflation.

Some others, while suggesting a pause in hike in further hike in interest rates, felt that the message of the Reserve Bank’s policy should be hawkish.

In its second quarter mid-quarter review of the monetary policy for the current fiscal, the RBI indicated that it may not increase the key policy rates in December.

Amidst global developments, the TAC members also observed the economic growth in the country was moderating.

In particular, investment activity was slowing down due to tight monetary policy and other factors, including global uncertainty and delay in clearing the projects, they felt.

RBI has lowered its gross domestic product (GDP) projection for the current fiscal to 7.6% from 8%.

A concern was also expressed during the TAC meet on the service sector, which was showing signs of moderation. Some members felt that exports growth will slow down, going forward, as a result of which trade deficit may widen, the central bank said.

The minutes further said that some members raised concerns over the high fiscal deficit and the risk of it slipping in the current financial year.

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