Term plan, preferably an online term plan, is the best form of life insurance. Sadly, there have been few takers of term insurance because insurance companies don’t sell these aggressively. What they sell aggressively are unit-linked insurance plans, or traditional plans like money-back plans. Savers buy these and realise a few years later that they have been sold a lemon. They are left wondering about how to get out of the bad life insurance policy they have bought.
If you want to close your policy, do it in a manner that your losses are minimal. In the first such article ever, Raj Pradhan details the way out for different products taking into account the regulations and the tax implications.
Missed the Bull Run? Still wondering if it is the right time to invest? R Balakrishnan’s advice is not to go by the noise that the market is turning overvalued, but to pick good stocks at an attractive price. How should you do it? Turn to our Smart Money section to know more.
Sucheta, in her Crosshairs section, writes on the fast-spreading menace of paid news and how you can differentiate between paid and unbiased journalism. She also writes on how the Narendra Modi government was expected to put CSR rules under the Companies Act, 2013 on hold and rework some of its more draconian provisions. Instead, the Modi government is headed in the opposite direction—of enforcement and penalties.
Will the ‘Make in India’ campaign launched by Narendra Modi be successful, considering India’s notoriously turgid bureaucracy? Sucheta, in her Different Strokes section, cites the recent examples of roadblocks faced by Amazon and Uber to show how ingrained the systemic harassment of Indian businesses is.
We are launching two extremely attractive offers for this festive season—a discounted price for Pathbreakers and referral offer for Moneylife subscription. Don’t miss them.
In order to attract Foreign Direct Investments (FDI), it is essential and imperative that we devote the time to First Develop India and to do so effectively, we need to First Discover India, in what it can offer!
Prime Minister Narendra Modi launched his "Make in India" campaign in the presence of host of Indian and foreign business tycoons. There was no standing space in the Vigyan Bhavan at Delhi and millions watched the proceedings in the comfort of their own homes, and heard the PM speak with awe and attention.
In his hour-long extempore speech, Modi mentioned that the government had identified 25 sectors in which India has the potential of becoming a world leader. This list included automobiles, Information technology, pharma, ports, aviation, tourism, hospitality, wellness and railways.
Narendra Modi assured the audience that the government would take steps to make governance more effective and investor friendly, both in the states and at the Centre. These, he said would be fully visible soon on the ground.
The campaign highlights global vision through both "look east" and "link west" approach. "Such a move would be mutually beneficial for many countries, for employment generation. It will enable exchange of talent and expertise," according to Naomi Isshi, managing director of Toyota Kirloskar Motors.
The cream of the Indian business community was present. Among them, mention may be made of Cyrus Mistry of Tata Sons; Mukesh Ambani of Reliance; Azim Premji of Wipro; KM Birla of Aditya Birla group and bankers like Chanda Kochhar of ICICI Bank, besides a host of government officials who would make the wheels go into motion. Among the foreign dignitaries, mention may be made of Keruchi Ayukawa of Maruti-Suzuki, Franz Hauber of Bosch India, Vittorio Colao of Vodafone, Kemichiro Hibi of Sony India and Phil Shaw of Lockheed Martin.
It may be noted that, in the World Bank's "Ease of Doing Business Rankings", out of 189 countries in the list, India stands pitifully by holding 134th rank. India's manufacturing sector accounts only for 16% of the GDP, and is posting a negative growth now, while it is 36% in China, 34% in South Korea and 22% in Germany. We need to catch with these countries, as our aim is to reach 25% by 2022, as stated in the National Manufacturing Policy as well as create 100 million jobs. At the moment, it takes, according to the press reports, 12 procedures and 27 days to start a business; 35 procedures and 168 days to get construction permits and 1,420 days to enforce contracts in India. All these have to change and be brought down to the least possible levels, if we are to succeed in "Make in India" campaign a success.
The reaction from the leading executives present on this occasion has been encouraging. Mukesh Ambani, CMD of Reliance, confirmed that, in the next 12 to 15 months, they have plans to invest Rs1.8 lakh crore and create job opportunities for 125,000 people. Cyrus Mistry, chairman, Tata Sons, felt that stable policies and competitive tax structure would be needed apart from giving priority to e-governance, cost effective energy and flexible labour laws with safety net for workforce.
Arvind Panagariya, professor of Indian Political Economy at Columbia University is reported to have said, "Indian labour laws and interventions have gone too far even by the standards of democracies. Today, Indian corporates avoid labour-intensive industries such as apparel like the bubonic plague! When they do invest, they go for machines for tasks that workers could readily perform. It is time we reconsidered our labour laws."
There were other favourable reactions too. Phil Shaw, Lockheed Martin India CEO spoke of how, within a year, the company's joint venture with Tata Advanced Systems set up a factory and was manufacturing parts of the company's Hercules C 132 J aircraft.
Sony India MD Kemichiro Hibi mentioned that they had shut down operations in 2004, having preferred to import their needs from Thailand, Malaysia, china and Japan, may now reconsider India as a potential base to restart a manufacturing base. This is also because of the free trade agreement India has with some countries.
Overall, industry experts and analysts have termed the "make in India" campaign as "extremely progressive", but to make this happen, they point out, rightly, hurdles in infrastructure development; bottlenecks in environmental clearances and unfriendly tax regime have to be removed to create a level playing field. The scrapping of coal licences, for instance, due to the Supreme Court's verdict may also instil fear in the minds of investors. They would need some kind of guarantee that these would not happen again.
There is no doubt in the minds of investors, both domestic and foreign, that the government needs to create a sense of "trust" in its policies. Government needs to bring about a goods and services tax (GST) regime to reduce the cascading of taxes and comprehensive labour reforms.
However, in order to attract Foreign Direct Investments (FDI), it is essential and imperative that we devote the time First Developing India and to do so effectively, we need to First Discover India, in what it can offer! If it is coal as a source of energy supply, we need to completely overhaul this sector by inviting the very best in the world to begin the coal mining operation in the country. Licence to operate should cover both coal and methane gas that is being needlessly wasted and which evaporates into thin air at a great loss to the country. This has to be tapped. With a heavy hand, power pilferage that goes undetected needs to be stopped. Solar power, which is perennial and free, needs to be tapped on a national scale.
Let us First Discover India and its potential. Armed with this information, we can Develop India.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
A confidential report and a fired examiner’s hidden recorder penetrate the cloistered world of Wall Street’s top regulator—and its history of deference to banks
Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards.
The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown.
New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better? So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret.
After interviews with dozens of New York Fed employees, Beim learned something that surprised even him. The most daunting obstacle the New York Fed faced in overseeing the nation's biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.
The report didn't only highlight problems. Beim provided a path forward. He urged the New York Fed to hire expert examiners who were unafraid to speak up and then encourage them to do so. It was essential, he said, to preventing the next crisis.
A year later, Congress gave the Federal Reserve even more oversight authority. And the New York Fed started hiring specialized examiners to station inside the too-big-to fail institutions, those that posed the most risk to the financial system.
One of the expert examiners it chose was Carmen Segarra.
Listen to excerpts from the recordings Carmen Segarra captured at the Federal Reserve Bank of New York.
Segarra appeared to be exactly what Beim ordered. Passionate and direct, schooled in the Ivy League and at the Sorbonne, she was a lawyer with more than 13 years of experience in compliance – the specialty of helping banks satisfy rules and regulations. The New York Fed placed her inside one of the biggest and, at the time, most controversial banks in the country, Goldman Sachs.
As ProPublica reported last year, Segarra sued the New York Fed and her bosses, claiming she was retaliated against for refusing to back down from a negative finding about Goldman Sachs. A judge threw out the case this year without ruling on the merits, saying the facts didn't fit the statute under which she sued.
At the bottom of a document filed in the case, however, her lawyer disclosed a stunning fact: Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses.
Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed's culture at a pivotal moment in its effort to become a more forceful financial supervisor. Fed deliberations, confidential by regulation, rarely become public.
The recordings make clear that some of the cultural obstacles Beim outlined in his report persisted almost three years after he handed his report to Dudley. They portray a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority while integrating Segarra and a new corps of expert examiners into a reorganized supervisory scheme.
Segarra became a polarizing personality inside the New York Fed — and a problem for her bosses — in part because she was too outspoken and direct about the issues she saw at both Goldman and the Fed. Some colleagues found her abrasive and complained. Her unwillingness to conform set her on a collision course with higher-ups at the New York Fed and, ultimately, led to her undoing.
In a tense, 40-minute meeting recorded the week before she was fired, Segarra's boss repeatedly tries to persuade her to change her conclusion that Goldman was missing a policy to handle conflicts of interest. Segarra offered to review her evidence with higher-ups and told her boss she would accept being overruled once her findings were submitted. It wasn't enough.
"Why do you have to say there's no policy?" her boss said near the end of the grueling session.
"Professionally," Segarra responded, "I cannot agree."
The New York Fed disputes Segarra's claim that she was fired in retaliation.
"The decision to terminate Ms. Segarra's employment with the New York Fed was based entirely on performance grounds, not because she raised concerns as a member of any examination team about any institution," it said in a two-page statement responding to an extensive list of questions from ProPublica and This American Life.
The statement also defends the bank's record as regulator, saying it has taken steps to incorporate Beim's recommendations and "provides multiple venues and layers of recourse to help ensure that its employees freely express their views and concerns."
"The New York Fed," the statement says, "categorically rejects the allegations being made about the integrity of its supervision of financial institutions."