New Delhi: The country's most valued firm Reliance Industries (RIL) has raised a loan worth $1 billion (about Rs4,700 crore) from various banks, reports PTI.
According to market sources, Mukesh Ambani-led Reliance Industries has raised term loans worth $1 billion from as many as 31 banks.
However, it could not be ascertained for what purposes the loan would be utilised by the company.
When contacted, a Reliance Industries spokesperson declined to comment.
The banks that were involved in arranging the loan include Barclays Plc, Citigroup Inc, DBS Group Holdings and Standard Chartered Plc.
Central government employees are getting an unfair deal with the NPS as politicians play politics and finance ministry plays safe
Central government employees have missed out on one of the biggest bull runs, which would have given them the desired head start that they needed, and for no fault of theirs. This is all thanks to the indecisiveness of politicians and the ministry of finance playing it safe regarding the New Pension Scheme (NPS) for Central government employees.
Out of the seven asset management companies (AMCs) that manage NPS, only three of them, all of which are state-controlled companies, are allowed to manage the funds for government employees. According to the data available, State Bank of India (SBI), Unit Trust of India (UTI) and Life Insurance Corporation (LIC) offered a return of around 11% to 12% to Central and state government employees between 1st April and 31st March.
While this seems better than the 8% that government employees were getting under the earlier regime, it is a low return given that under NPS, a part of the money can be invested in equities. Between 1 April 2009 and 31 March 2010, the Sensex rose 77%. Now if the employees were allowed to invest 50% in equities, then the returns on their NPS investments would have been that much higher, as the equity portion of their assets would have yielded healthy returns. Instead, the employees got returns as low as 11% on their NPS investment.
The reason the returns are low is because only 15% of the money has been allocated to equities under a diktat. This is because politicians are squabbling over the NPS itself, with Mamata Banerjee hell bent on stalling the full application of the scheme until the West Bengal elections next year. And the ministry of finance lacks the courage to make it a market-determined scheme and has played safe by allowing only 15% to be put in equities. According to officials close to the matter, this directive has come straight from the finance ministry itself. This directive is unfair to government employees because they have been cut loose from a guaranteed pension scheme and have to choose between different plans to create their post-retirement nest egg. However, in practice, they don't have the choice.
NPS is a new contributory pension scheme introduced by the Central government for its own new employees, joining after 1 January 2004. Under the system, each new central government employee will open a personal retirement account on joining service. Every month, and till the employee retires or leaves government service, 10% of the employee's salary will be transferred into this account with matching contribution from the government. When the person retires, he will be able to use these savings to take care of the needs and expenses of his family during old age.
In theory, the NPS offers a choice to investors to put more money under different schemes but in practice, only 15% is going into equities even though the key point of NPS is that it is a defined contribution scheme and the benefits would depend upon the amounts contributed and the investment growth up to the point of exit from NPS. Returns are not guaranteed.
A fund manager handling NPS told us that he is allowed to invest only up to 15% of the amount in equities, while the rest is invested in a mix of government securities and money market instruments. Until a year back (before 1 April 2009), only 5% was allowed to be invested in equities, while the rest went into Central government securities and money market instruments. The change in stance was done not so much as to ensure better returns on investment, but to stay in line with other pension fund products.
The official reason given to fund managers is that the government wants to play it safe. According to a fund manager, there is some logistical issue, because of which the entire government employee database has not flown to the Central Recordkeeping Agency (CRA) till now. Somebody else had to take a call on the asset allocation and to be on the safer side, the government decided not to allocate more than 15%.
The Pension Fund Regulatory and Development Authority (PFRDA) Bill is still to become an Act and as such PFRDA has no legal powers and functions. In fact, the PFRDA Bill 2009 had become the bone of contention among political bigwigs from West Bengal and Tamil Nadu. It was introduced in 2005 by the then finance minister P Chidambaram. The Bill proposed to set up a regulator and give more freedom to subscribers to invest in pension funds. Sadly, it attracted opposition by the Left Front which is against the equity investment option given to investors in the NPS.
Even today, the government faces stiff opposition to the Bill from its own coalition. The Congress-led United Progressive Alliance (UPA), which had to garner the support of different political parties like M Karunanidhi's Dravida Munnettra Kazhagam (DMK) and Mamata Banerjee's Trinamool Congress, had put the legislation into deep cold storage as they were opposed to the Bill. Meanwhile, government employees have missed out on a year of stupendous return and will be forced to earn subpar returns for a few years. The next major market move may be years away and it is not even certain that by that time, government employees will still be suffering from the worst of both - market-determined return but no choice to choose market instruments of high returns.
Pinched by RBI’s scathing criticism of the inordinate delays in pension payouts to its customers, the state-run lender has put up advertisements in leading dailies, saying ‘We care for you’
Four months after Moneylife had reported that the Reserve Bank of India (RBI) had cracked down on the country's largest lender State Bank of India (SBI) and other banks for the inordinate delays in payments faced by government pensioners, SBI has issued an advertisement in leading newspapers that seeks to put customers' worries to rest, asking them to avail of its free helpline services for all pension-related queries.
Earlier, RBI had raised an alarm after a complaint was forwarded by a former highly-placed government officer to the deputy governor of the central bank, outlining the shoddy service given by the country's largest lender, State Bank of India (SBI), in the form of extensive delays in pension payments. Moneylife had written about this development.
(See:http://www.moneylife.in/article/8/4969.html).This former officer had apparently been kept waiting unsuccessfully for ten months to receive his revised pension under the Sixth Pay Commission. This complaint forced the RBI to take a deeper look at the systems put in place by SBI for pension payments. A joint team drawn from both RBI and SBI investigated the matter and found various discrepancies in the way things were being administered.
Taking a serious view of the matter, the RBI has put in a strongly worded letter to the chairman of the bank questioning the lack of customer sensibility despite being a premier bank in the public domain. It has pointed to the absence of an effective system of customer service at the branch level where pensioners normally interface with the front office.
This also forced the RBI to inspect the system at other Agency Banks making pension payments. The findings were more or less the same across all Agency Banks.
In view of the above, the RBI had advised these banks (through a circular dated 9 April 2010), including SBI, to undertake review of the system of attending to customer service and have a pension accounts guide at all branches to assist the pensioners in all their dealings with the bank. Additionally, the RBI had demanded that suitable arrangements be made, to place on the bank website details about the pension calculations, and made available to the pensioners at periodic intervals with sufficient advertisements to that effect.
As with the other banks, RBI demanded that SBI make the payment of the revised pension and arrears within 15 days from the date of receipt of its communication to that effect. Additionally, it also advised the bank to make a penal interest payment of 2% for any delay beyond the due date, which is to be credited to the pensioner's account automatically without any claim from the pensioner on the same day when the bank affords the credit for revised pension or arrears.
RBI sources told Moneylife, "We had asked SBI to look into 1,400 cases where the amount involved was to the tune of Rs30 lakh. These have been satisfactorily dealt with by the bank. SBI makes the largest payouts of pension funds in the country. We are happy that SBI is making efforts to strengthen its customer services."
SBI's advertisement requests customers to call at their helpline number for all pension-related information, including basic and dearness allowance for the past six months, arrears received and commutation. The advertisement also mentions that a pensioner can also register a complaint online by logging on to www.sbi.co.in and filling up the Customer Complaint Form. A Complaint Registration Number will be issued to the complainant.