Money & Banking
RBI to train its focus on mis-selling of insurance policies by banks
The Reserve Bank of India (RBI) will train its focus on "mis-selling" of insurance products by banks to their customers and also see whether new regulations are needed for protection of banking customers, Governor Raghuram Rajan said.
 
In his foreword to RBI's annual report for 2015-16, released on Monday, he said as more institutions and technologies bring more people into the financial system, the RBI has to make sure they are adequately informed and protected.
 
Referring to the code - Charter of Customer Rights - that banks had to follow in dealing with the customers, brought out by RBI in 2015, Rajan said the banks were asked to appoint an internal ombudsman to monitor grievance redressal process.
 
"We now will examine how banks are faring, and whether further regulations are needed to strengthen consumer protection. In particular, we will focus this year on the issue of mis-selling, especially of insurance products," he said.
 
Complaints are heard from life insurance policyholders against banks for mis-selling of policies.
 
"We will also focus on enhancing our communication with the broader public, with a view to informing them on what they need to do to take best advantage of financial opportunities, as well as protecting themselves," Rajan said.
 
He said the RBI will work to enhance grievance redressal procedures, both within the financial institutions, and if the customer is still unsatisfied, subsequently through the RBI's ombudsman scheme.
 
Rajan said the grievane redressal mechanism in the rural areas as well as to the weaker sections of the society will be strengthened.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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RBI calls for ownership change of companies with sticky loan accounts
Reserve Bank of India (RBI) Governor Raghuram Rajan on Monday called for ushering new owners or managers for companies whose loans accounts have gone sticky, to improve their operational efficiency.
 
In his foreword to RBI's annual report for 2015-16, released on Monday, he said the asset quality review initiated during the year under review has improved recognition of non-performing assets (NPA) and provisioning in banks enormously.
 
"Now more focus should move to improving the operational efficiency of stressed assets, and creating the right capital structure so that all stakeholders can benefit. This implies simultaneous action on two fronts," Rajan said.
 
According to him, where it is necessary, new management teams have to be brought in, sometimes as owners, and where not possible, as managers.
 
"Creative search for new management teams, including the possible use of public sector firms or private sector agents, is necessary, as are well-structured performance incentives such as bonuses for meeting cash flow/ profit benchmarks and stock options.
 
"If the loan is already an NPA, there is no limit to the kind of restructuring that is possible. If standard but the project is struggling, we have a variety of schemes by which a more sensible capital structure can be crafted for the project," Rajan said.
 
Adding a rider Rajan said some of the current difficulties faced by banks are due to an unrealistic application by banks of a scheme so as to postpone recognition of a loan turning NPA rather than because of a carefully-analysed move to effect management or capital structure change.
 
"RBI will continue monitoring to see that schemes are used as warranted," he said.
 
Rajan also called for more competition in the financial sector so as to increase efficiency.
 
"The most appropriate institutions will prevail when the competitive arena is level, so we have to remove regulatory privileges as well as impediments, wherever possible, especially those that are biased towards some form of ownership or some particular institutional form," he added.
 
According to him, one of the critical components of the medium term strategy in the financial sector will be to strengthen the public sector banks in all aspects, including governance, cost structure, and balance sheets.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Adani's Australian coal project cleared, work from 2017
Adani Enterprises on Monday said it has overcome one of its last legal hurdles over the $16.5 billion dollar Carmichael coal project in Australia's Queensland state, and said construction will begin next year.
 
The country's Federal Court dismissed an appeal by the Australian Conservation Foundation that had argued that the authorities had failed to take into account the impact of burning coal and climate pollution on the Great Barrier Reef.
 
The $16.5 billion coal project in the state's Galilee basin is the largest in Australia but has suffered multiple setbacks from green groups' legal action.
 
Adani Australia, in a statement, said that it had welcomed the Federal Court ruling, adding that the decision closely follows an August 19 dismissal of another activist-driven legal challenge designed to delay the project.
 
Consistent with earlier decisions of Queensland's Land Court and the Federal Court affirming the company's approvals, it has determined that due process has been followed, the statement added.
 
"A recent report by PwC quantified the cost of these delays as being some 3 billion Australian dollars ($2.26 billion) to the economy and over 1,600 jobs annually over the first 10 years of the intended projects," it said.
 
"In local communities, a state and a national economy crying out for growth, this represents a significant cost to the community, not just to Adani."
 
The company said it has been consistently pointing out that these projects will supply better-quality coal for an increased thermal demand, in conjunction with significantly increased solar demand, in a growing Indian economy that will lift hundreds of millions of people out of energy poverty.
 
"If the better-quality, better-regulated coal from Australia is not sourced in Queensland, it will simply mean lower-quality, higher-emitting coal from elsewhere in the world will be used," Adani said.
 
"So the activists will not only harm local jobs, but if they get their way (it) would ensure higher emissions as well."
 
The company said activist-driven challenges were part of a known minority campaign, adding that they fly in the face of the strong support its job-creating projects have from local communities and other stakeholders in North and Central Queensland.
 
"Indeed, over six years, there have been multiple approval processes, some two years of cumulative community consultation and submissions as part of the processes and over 10 appeals and judicial processes brought on by activists," the statement said.
 
"There can be no question that there has been more than ample opportunity for consultation, input and appeal, and for activists to have their say," it said. The time, it said, has come for those who want the projects to be heard -- and not just the activists from out of town.
 
"Adani stands ready to deliver on its long-term future with Queensland, pending the resolution of a small number of outstanding legal challenges. As the company has previously indicated, if those issues are finalised, construction can commence in 2017."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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