RBI not to intervene in forex market required as of now: Deputy governor

"If we do intervene at all, it would be with a very narrow perspective or narrow objective of smoothing of what might be a very volatile market situation, but nothing beyond that," RBI deputy governor Subir Gokarn said

New York: The Reserve Bank of India (RBI) on Friday said its intervention in the forex market, if any, would be limited to curbing volatility, but as of now, the situation does not call for any action even though the rupee has fallen to its weakest level in 28 months, reports PTI.

"We, at this point, do not see any intervention from a rate targeting view point. That is something that would reflect a change in policy stance, which we are not doing at this point," RBI deputy governor Subir Gokarn said in an interview to a private Indian news channel here.

Economists and experts have suggested that the central bank should intervene in the Indian forex market to halt the sharp depreciation in rupee value.

The falling rupee has become a cause of concern for policymakers as it could further push up inflation, given that the country imports about 80% of its crude oil requirement and pays for the same in US dollars.

"If we do intervene at all, it would be with a very narrow perspective or narrow objective of smoothing of what might be a very volatile market situation, but nothing beyond that," he further said.

The deputy governor's remarks came even as the Indian currency fell to Rs49.90 per US dollar, its lowest level since 14 May 2009. Thursday, the rupee had shed 2.5% to post its biggest single-day loss in nearly three years.

Tracking the meltdown in global stock markets, the rupee had yesterday plummeted by 124 paise to close at Rs49.57/58 per US dollar, setting off alarm bells in policymaking circles, as the weak domestic currency will make imports costlier and fuel inflation.


For Mumbai Airport is a private bus shuttle the only solution?

Transport experts say that a private or public-private partnership for a shuttle service connecting Mumbai with the airport would be an ideal option

We have been reporting over the past few days (please scroll down for details) on how Mumbai Airport, the country's busiest and situated in the financial capital, is surprisingly without any dedicated shuttle service. Passengers are left stranded at the arrival terminals due to scarcity of prepaid taxis and constant refusals by regular cabbies and auto-rickshaws to ply to the metropolis.

Again, BEST, the public bus transport provider, having a monopoly in the city, demands dedicated lanes to provide a shuttle service. The state government is completely silent on this issue.

Considering these factors, should private players be allowed to start a shuttle service to the airport?

Transport experts are in near consensus on privatising the airport bus shuttle, considering its economic viability. In terms of providing overall road transport, private services in the past have proved to be efficient.

"A special purpose vehicle (SPV) should be formed which should be a public-private partnership (PPP), between public transport agencies and private companies, with the objective of providing an efficient shuttle service. It will have an element of profitability and competition; therefore the service would be viable," said Sudhir Badami, a transportation expert.

One such example is a private bus service from Pune which picks passengers from the terminal of the international airport and drops each of them at their doorstep. Often, international flights land in the wee hours of the morning, and such a bus shuttle is gaining popularity, because it provides adequate luggage space, along with safety.

Nagesh Kini, a Mumbai-based social activist, agrees that privatisation of the airport shuttle would be a good option. "When ONGC (the Oil and Natural Gas Corporation) can have a private bus fleet between Panvel (Navi Mumbai) and Bandra (western Mumbai) and schools use private operators, then why can't private operators be utilised for city-airport shuttles?"

Ashok Datar, a transport expert, told Moneylife, "Let BEST have the first option to provide the shuttle service. If it is not ready, then it can't come in the way of private operators (who might offer an airport shuttle service)."

Experts also point out that there could be possible opposition from the taxi unions for allowing private players to operate. For instance, when prepaid taxi service Meru was introduced, it saw stiff opposition from taxi unions. In fact, Meru still does not operate from the international airport. Similarly, when Damania Airlines introduced a free bus service between its city office and the Goa airport, these buses were attacked and the company was forced to discontinue the service.

"To prevent private buses from being pelted with stones, the system has to be an SPV or PPP with the BEST (for local services) and the MSRTC (Maharashtra State Road Transport Corporation) for a Pune-Mumbai airport shuttle. This arrangement can include all airline companies and the Airports Authority of India," added Mr Kini.

Mr Badami said, "I am bound to oppose anything which directly affects my earning. So there is a need to have a possible dialogue with these (taxi) unions to address the issue of their employability. One way of doing so is to ascertain the income of these drivers earned from airport fares. If it is minuscule compared to their income from other fares, then their opposition is not justified. Overall, the objective of the government should be to provide efficient public transport."

You may also want to read:

1)    Mumbai Airport does not have a shuttle service while other metros have excellent connections from their airports to cities

2)    You have landed at Mumbai. Where's the shuttle to go home?

3)    BEST will start a dedicated Mumbai Airport shuttle but it wants a dedicated lane

4)    Why is the government of Maharashtra reluctant to address the Mumbai Airport transport issue?



Adi Daruwalla

5 years ago

IF a SPV for a PPP is to be designed for Mumbai Airport then the jumbo buses are not required. What you then need is the Tempo Traveller or Mini Vans with 9 - 13 seating capacity and luggage space and 2000 of them (approx) for the Mumbai Metro to be serviced properly. There cannot be a home drop possibility but to gateway connecting points with taxi and rickshaw services from those points. If there are home drops there will fights amongst passengers and create more administartive problems. The next option is to have mini shuttles 4 -5 passengers with home drops. In this way full families can be accomodated or people staying in the same region. Even here if it is 4 -5 individuals there will be problems.

Future Generali India Life Insurance: “ULIP charges are squeezed; wonder if any insurer charges less than the maximum allowed”

Future Generali believes that the life insurance market is big enough for all the players to compete in newer areas and segments. Deepak Sood, MD & CEO, Future Generali India Life Insurance, says that good claims settlement ratio and quick claims turnaround time are the main drivers of customer satisfaction and retention. Excerpts:

You have an online term plan, but the premium pricing is higher than competitors. Is the pricing aggressive by your competitors?

Every company is doing calculations based on actuarial analysis and submitting justification for it. It is approved by IRDA with checks and balances. Mortality improvements are envisaged and hence charges have dropped. It's not an assumption. Policy lapse in term plans could be a worrying thing.

Insurance companies' view of the future could vary. There could be different assumptions for different aspects like customer-acquisition costs, cross-selling, time horizon (for profitability), aggressive or conservative approach. If there are too many assumptions it could be dangerous, but IRDA keeps a tab of on the solvency ratio closely, with asset-liability management. I don't foresee any problem for the customer even if premium rates for term plans are low. There is no question on ability and will to pay claims by insurance companies.

Is there an assumption that online term plan buyers are an educated class of people with better access to healthcare and hence will live longer? Some insurers allow only specific cities to buy online term plans at a cheaper rate.

I don't buy that concept. In Mumbai alone, you have people from everywhere (low and high income) having access to the Internet who can buy online term plans. E-channel and the Internet will pick up in all the cities and offer access to a wider range of people for online purchases.

Will insurers with aggressive online term plans have low or zero tolerance for any discrepancy while settling death claims?  

I don't think there is any insurance company which sell policies to decline claims. At the same time, insurance companies owe to other policyholders a fair settlement of claims (with checks & balances) as claim payment comes from the pool of premium collected. Claims settlement ratio and claims turnaround time are public information. We would like to offer easy and fast claims settlement.

But your claim settlement ratio is low and claims pending are high.  

As a new insurance company goes beyond three financial years, these ratios improve and sample size becomes big. 2011-12 will be much better for us. For a death claim, a customer with us for 10 months will not have the same treatment as someone with us for 10 years. The early claims (within three years of policy purchase) do take time for investigation and claims settlement. The onus is on the insurer to be fair in claims settlement as well as to the other policyholder (to not pay unfair claim). Quick turnaround time for claims also mean more manpower is needed.

The premium allocation and policy administration charges are also high for the recently-launched Future Generali Bima Advantage ULIP.   

There is a squeeze on ULIP charges with regulatory caps. The surrender charges are also low. I wonder if there is any insurer charging less than the maximum allowed. Everyone is stretching to the maximum. Charging less is not possible. Over the period of five years, insurers will have different structures for spread of charges based on their product design. Everyone will be more or less the same.

Insurance industry mortality charges for ULIPs are high when compared to premium for term plans. Should there be a cap on mortality charges for ULIPs?

ULIP mortality charges depend in different parameters like commissions, margins, medium of sale and pricing philosophy. As markets continue to mature, there will be more than one morality table. One for the population as a whole, and another developed by the insurer based on its own experience, and segments targeted to provide right and rational pricing. (I am) not in favour of bringing in regulations for it.

How do you compete with LIC?

We are small when compared to LIC. The market is large for LIC and also for other insurers. There are newer areas and newer segments to improve penetration level. With growing disposable income, there is room for our plans and aspirations. Due to smaller size we can move faster for making investments. We want to give good customer investment returns and retain customers.

Lot of agents have left the business. Any layoffs in your company or closing of offices?

We don't lay off agents, no one in the industry does. Agents work on commission; they are not a fixed cost to the company. Increase in the number of agents is welcome to the company. Agents leave the business when it is not remunerative for them or they find other sources of income. They leave when their personal time to benefit ratio is not working. In this case, we just stop hearing from them. We try to activate them and see if they continue in the business. We have 56,000 agents and some of them will have licence expiration soon (they have a validity for three years). We have not closed any office.



Tax Savings

5 years ago

ULIPs are indeed a good investment vehicle from tax savings perspective as well. But the purpose should not be confused with that of Term insurance. Although ULIPs provide life cover to the insured, term insurance is very critical from the amount for which the person is covered. For the same sum assured, ULIPs can be quite expensive. Moreover, they are dependent on Market risks, so it is critical to assess one’s risk appetite before buying ULIPs.

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