RBI eases liquidity; keeps key policy rates unchanged

Mumbai: With the declining trend in inflation and amid reports of liquidity crunch, the Reserve Bank of India (RBI) today announced pumping in Rs48,000 crore into the system while keeping the key policy rates unchanged, reports PTI.

In its mid-quarter review of monetary policy, the apex bank kept its short-term lending and borrowing (repo and reverse repo) rates to banks unchanged at 6.25% and 5.25%, respectively.

It maintained the mandatory cash reverse ratio (CRR) at 6% of the banks’ total deposits.

The RBI policy position is in line with the Prime Minister's Economic Advisory Council’s observation that the system was feeling the pinch of liquidity shortage. It also coincides with inflation coming down to below 8% from double digits till recently.

Accordingly, the RBI decided to reduce the Statutory Liquidity Ratio (SLR), the portion of deposits that banks park in government securities, by one percentage point to 24% with effect from December 18.

It has also decided to buy government securities from banks to the tune of Rs48,000 crore in the next one month to inject more funds into the system.


Food inflation rises to 9.46% for the week ended 4th December

New Delhi: Food inflation rose to 9.46% for the week ended 4th December on account of higher prices of rice, vegetables, milk and fruits, reports PTI.

Food inflation stood at 8.60% in the previous week. This is the second consecutive week in which food inflation has increased.

The data came just half an hour before the Reserve Bank of India’s (RBI) mid-quarterly review of the monetary policy today, where it is expected to take stock of the inflation situation and decide on an appropriate course of action.

While prices of rice rose by 1.47%, vegetables went up by 1%, milk by 17.76% and fruits by 19.75% on an annual basis, pulses and wheat prices declined by 4.24% and 11.46%, respectively.

In addition, the fuel and power product index rose by 10.67% on a year-on-year basis.

Furthermore, onions became costlier by 29.93% on an annual basis.

Meanwhile, overall inflation declined to 7.48% in November from 8.58% in the previous month.


Insurance through SMS, a Sick Marketing Strategy

Agents are luring customers through SMSs to buy insurance, using gold as a bait. These fly-by-night operators even insist that you sign up for the policy in the first meeting itself. But don’t fall for this, whether it is insurance, pension or any other investment

Dubious investment, insurance and pension plans are being sold via SMS.  Over the past couple of months we have been receiving a steady stream of SMSs with a variety of options. One message offers a gold coin on signing up, while another is promising Rs1 crore after 21 years with no market risk if you pay Rs14,000 per month for 16 years. Some are incorrectly calling it a monthly deposit scheme, to hint that it is like a fixed deposit. Most of these messages contain numerous spelling mistakes in the names, writing Bajaj Allianz as Bajaj Alliance, Future Generali as Future Generalli and so on.

This writer followed one of these messages, to meet with a person who turned out to be a dubious agent who handed over details of a scheme explained on cheap pamphlet paper, the type they distribute outside railway stations. The sales pitch was, “Just sign at these four places and I will get you a policy.” Insurance agents seem to be devising newer and more devious ways to mis-sell policies to gullible investors.

During the conversation over the phone, we inquired how the scheme managed to pay over 10% per annum returns with no market risk, but the agent was not interested in talking about it. We quickly learned that it help to act dumb, when talking to agents.

Some phone numbers we dialled we found were disconnected. A couple of callers promised to get back to us with details of Aviva and Tata AIG plans, but they never did. Still, we managed to meet one insurance agent to understand the offerings.

According to the agent, LIC Saral Pension plan was a combination plan that he had devised. The customer pays Rs5,000 per month for 10 years to get Rs1,20,000 every year from the 11th year to the 20th year, Rs60,000 every year from the 21st year for a lifetime, and Rs9 lakhs as an insurance fund for the family.

The reverse of the pamphlet had a risk cover table (normal and accident) for ages up to 20 years, so they show the benefits that were offered. He claimed the returns were risk free and that he could give a guarantee for it. Needless to say, this is a verbal guarantee that does not mean anything. After 10 years of payment, who does the policyholder turn to if he does not get any money back? The exact plan details are also on the internet and this has a warning about returns not guaranteed. It is obviously sold by many agents.

Interestingly, this agent did not have an LIC agent badge, because he claimed to be mere distributor. He had a genuine LIC form and said that the cheque payment would be made in name of LIC. However, the Saral Pension plan is not specified on the LIC website. Neither was Jeevan Bachat mentioned by another agent we called over the phone. When we called him a couple of months ago, he had told us that this was a new plan from LIC, and when we called him recently he said the plan had started a month ago. The gist of all this is that these combination plans are hard sold today. It is hard to pin down the policy details as there are none. All promises of investments being market risk free are baloney. Neither the agent nor any insurer will give any promise in writing.

Interestingly, combination plans are openly marketed on the internet. www.licofindiainsurance.com is a website of an LIC agent. It says “Retire & Fun II is a combination of LIC plans specially designed to provide tax-free, high returns and high risk cover after retirement. It’s not an LIC Plan.” Another website www.mylicindia.com says, “Jeevan Anand is a combination of Endowment Assurance and Whole Life plan.”

According to Vipin Anand, chief of corporate communications, LIC, “LIC does not promote combination plans. The plans we offer are only the ones that we publicly put on our website and have official brochures. If an agent, for example, proposes a combination of three plans and it is acceptable to the customer, we can only underwrite three plans separately and not a combined plan. We will need three separate proposals.”

Mr Anand recommended that customers visit the LIC website, to know about the firm’s insurance plans, contact the office or customer service for verification and ask the agents for proper documentation and brochures of plans offered. LIC also advertises its plans in newspapers. When asked about the dubious agent we met as well as other LIC pamphlets we received by post, he said, “We have forwarded the details to relevant zonal offices and if they are LIC agents then we will take appropriate action.”

About six months ago, Moneylife contacted a senior official at the Bajaj Allianz headquarters in Pune for an official response about an SMS, which we again received recently. At the time, he said, “We are investigating the case and will take appropriate action.” After six months, the SMS offer is still doing the rounds and this time we are told that the SMS just says Bajaj and not Bajaj Allianz, so they are not really sure about it and no one is picking the phone now. When we called the number (9840047516), it was answered by a person who spoke in broken English, saying he is based in Chennai. He did not understand Hindi. When we called again the following day, the same person said that if it is about the Bajaj Allianz scheme someone will call back. We tried to ask about the gold coin offer, but further conversation was not possible.

Is this a case of insurance company managements turning a blind eye to dubious marketing schemes set up by agents, or managements caught unawares as their policies are being grossly mis-sold by agents to susceptible customers? Are such combination plans allowed by IRDA? Insurance is simply a promise for tomorrow with no tangible product to hold against the premiums one pays. Then, why risk buying this from dubious agents selling dubious plans?



Bhujang Kulkarni

6 years ago

Misleading pamphlets are mostly distributed by LIC agents or so called LIC agents.
The LIC intelligence, if exists, should book such culprits.

nagesh kini

6 years ago

When people claiming to be LIC agents/distributors displaying LIC brochures, collecting cheques payable to LIC lay persons are bound to be taken in when they are promised more than normal returns and safety. It is for LIC to locate and nip the rot in the bud, when specific cases are brought to its notice. IRDA ought to act suo moto too to prevent such blatant mis-selling.

Prem panjwani

6 years ago

all this is happening with the pressure from insurance company specially from PVT sector to show the volume with IRDA about number of policies....since no agent have a long carrer with them and they mis sell and it is been tought to them to sell like this ... Since pvt sector do not have any good product compare to LIC and since they can not declare bonus or their profit is yet to be earned in books...they lure market with unethical ways of appointing non approved ways of marketing which IRDA do not recognise....hence image of insurance industry and agent is been effected...
By hook r crook way they need premium to underwritten in the books without any ethics...it is misselling or overselling and money at risk of common investor because of these practice......

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