SEBI widens the scope of investment by Foreign Venture Capital Investors

With this amendment, the bottleneck for investment in the infrastructure sector through the FVCIs route has been removed


As per an amendment to its regulations, the Securities and Exchange Board of India (SEBI) has substituted the definition of “Venture Capital Undertaking.” 
According to the definition stated in Regulation 2(m) of the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, “Venture Capital Undertaking” meant a domestic company, not having its shares listed on any recognised stock exchange in India; engaged in the business of providing services, production or manufacture of articles or things, with central government’s approval by notification in the Official Gazette. It excluded the activities or sectors of the negative list, mentioned hereunder:
Non-Banking Financial Companies (NBFCs) [Except those registered with the Reserve Bank of India and categorised as Equipment Leasing or Hire Purchase Companies].
Gold financing (Except the companies engaged in gold financing for jewellery).
Activities that have been disallowed under the industrial policy of Government of India.
Any other activity specified by the Securities and Exchange Board of India (SEBI) in consultation with the Government of India.
With the new amendment dated 30 December 2014, the new definition encompasses Core Investment Companies (CICs) in the infrastructure sector, Asset Finance Companies (AFCs) and Infrastructure Finance Companies (IFCs) through the Foreign Venture Capital Investors (FVCIs) route, which were excluded before. 
Leasing as a proportion of total asset finance is negligible. The inclusion of NBFCs categorised as Equipment Leasing or Hire Purchase Companies did not hold much significance practically because they were unpopular concepts, contributing a meagre share to the total asset finance. The previous regulations were at loggerheads with the practical scenario.
In most infrastructure projects, funding is through Special Purpose Vehicles (SPVs) which are basically CICs. Thus, representations were made by the relevant sectors and SEBI also proposed that the FVCI Regulations be suitably modified to replace Equipment Leasing and Hire Purchase Companies with AFCs and IFCs as the latter entail broader concepts which are indispensable to align the Regulations with reality.
The benefits of the amendment:
With this amendment, the bottleneck for investment in the infrastructure sector through the FVCIs route has been removed. It will boost the infrastructure sector of our economy through the injection of funds from overseas. As India is a developing economy, it will give a positive impetus to the economy.
A possible new wave of foreign capital:
Since the advent of liberalisation, foreign investments have been the backbone of the Indian economy. The financial crisis in the global markets and consistently volatile markets made the outlook of the Indian economy grim. This Amendment might be the magic wand to pull India out of the economic slump and ensure development of the country by infusing funds into the infrastructure sector. It also has positive spill-over effects over various other sectors and the entire economy.

(Neha Somani works with Vinod Kothari and Company)



Personal Finance Exclusive
Health insurance claims ratio plunges over 30% in just 2 years

Health insurance claims ratio which peaked at 105% in 2007-08 was at 99% in 2010-11. It has dropped to 68% in 2012-13. Does it mean more insured's claims were rejected?


In a 16 December 2014 hearing of a PIL filed in Bombay High Court (HC) by social activist Gaurang Damani, he argued that data compiled by Insurance Information Bureau (IIB) shows that claims ratio had dropped from nearly 100% to 68% after cashless mediclaim was stopped in 2010 and the Preferred Provider Network (PPN) introduced.


Mr Damani said it led to reduction of claims payout by nearly Rs3,000 crore per annum. Claim ratio is total claim paid against the total premiums earned.

According to Arvind Laddha, CEO, Vantage Insurance Brokers and Risk Advisors, “There could be three reasons – First that we have seen some evidence of reduction in claims cost in some cities where the implementation of the GIPSA PPN rates has taken place.


However, this is in limited cities and my own sense is that the impact has been more in slowing the pace of increase in claims cost, rather than significant reduction in claims cost itself. Secondly, Increase in premium rates – this is another factor that can influence claim ratios. If the premium rate for a group goes up more than the claims amount, the claim ratio does improve. Thirdly, Improvement of mortality / morbidity trends – if the number of claims from a group reduces due to improvement in group health or by matter of chance, other factors being steady will result in improvement of claims ratio.”

An interesting set of figures can help us understand the reasoning behind discontinuation of cashless in July 2010 by government insurers. In 2008-09, the percent of excess for cashless over reimbursement was 35%. This number had a whopping jump to 83% in 2009-10. It means the average claim size for cashless was 83% higher than the average claim size of reimbursement. Is it that the insurers were paying too much to hospitals for cashless? It could be one of the reasons that government insurers stopped the cashless facility in July 2010.

There is no doubt that the insured suffered due to discontinuation of cashless by government insurers. Cashless was restarted only at preferred provider network (PPN) hospitals that agreed to negotiated rates on 42 or more specified procedures. The key point is that insurers like ICICI Lombard's PPN have tertiary care in major Mumbai hospitals like Lilavati hospital, P D Hinduja National hospital, Breach Candy hospital, Kokilaben Dhirubhai Ambani Hospital, Asian Heart Institute and so on. These hospitals are missing from the government insurer PPNs, which only has a lot of eye hospitals and smaller nursing homes.

But, does the whopping reduction in claims ratio mean higher claims rejection or partial settlement? Does it mean the consumers suffered? We will discuss in the fourth part of this series discussing the context of Gaurang Damani's PIL and the data and questions it throws up.

Read -

First part of the article -

Second part of the article -



Gaurang Damani

2 years ago

Thanks for posting the article, Raj.

Ralph Rau

2 years ago

The limits provided by Indian Health Insurers are a joke.

Inernational Group medical covers typically have an individual limit of USD 1 million or GBP 1 million or EUR 1 million.

A friend's son was treated for blood cancer in the USA and it cost USD 1 million at a premium around 0.5% to 1.0%. (The same procedure in India would have cost USD 100,000.That is 60 lakhs.)

In India the insurers like ICICI Lombard are only able to offer limits of 2-5-10 lakhs. That too at relatively high premium of 2.0% to 3.0%

The Indian public needs an index of Cover Limits and Rates by age-group and provider so that the public can take an informed decision.

Ralph Rau

2 years ago

India must learn from the mistakes of countries like the USofA.

Medical fraud happens at the largest of institutions. Some years ago Tenet Health Care, the Number 2 Hospital Operator was found guilty of massive over-billing as well as un-necessary heart procedures. It paid out fines and restitution of over USD 2 billion

Setting agreed prices for specified procedures is a very good practice. These need to be governed strictly. If not India may end up like the USofA where almost 1/5th of the national GDP is taken up by "Health Care" or should we call it "Medical Exploitation" ?

Sabapathy Narayanan

2 years ago

Health insurance claims ratio plunges over 30% in just 2 years & reduced to 68% during 2012-13.The Main reason for this is Repudiation/Rejection of number of genuine/right claims in an unethical way. For eg., In Max Bupa, Day Care Procedures are not listed in the Policy wordings whereas number of other companies have listed their procedure to be covered. One real example is "Removal of sebacious cyst is included in number of companies as Day Care procedure...Whereas in Max Bupa, if anybody claims for this, the claim experts at Max Bupa say " it can be treated as OPD also and hence OPD is not payable under Policy conditions and so we are unable to pay and rejected". Only in such a way number of companies are doing the rejections to reduce the rate of claim and increase the profit. Only Regulator has to look after!


Sabapathy Narayanan

In Reply to raj pradhan 2 years ago

Sent details of Rejection letter for this claim during 2014 and approval letter for the same treatment during 2012.
Also sent a copy of the letter addressed to Max Bupa.
All the documents were sent by soft copy to your official mail id [email protected]
I am ready to provide if you require anything further. Rgds.,

Sabapathy Narayanan

In Reply to raj pradhan 2 years ago

I will give you the full details within a day

NITI Aayog: A Stronger & More Powerful Body

The Planning Commission is dead. Long Live the Planning Commission


On the first day of 2015, prime minister (PM) Narendra Modi took to twitter to say that the Planning Commission of India was being transformed to NITI (National Institution for Transforming India) Aayog. A volley of tweets from the PM, followed by a detailed press release, make it clear that while the Planning Commission is dead, it will live long. In its new avatar as NITI Aayog (NA), it will probably be bigger and significantly more powerful. It will be a parallel force in policy-making headed by the PM himself and will include a governing council comprising all state chief ministers and lieutenant governors of Union territories.


Mr Modi tweeted that having been the chief minister of a state himself, he understands the need for such interaction to ‘foster a spirit of cooperative federalism’. But, effectively, with such a composition, NA will be a body that will be just as powerful and, probably, more significant than the Union Cabinet. Why more significant? Because, NA will give Mr Modi direct and unfettered opportunity to deal with state chief ministers, especially those from other parties on financial matters. It is also a way to ensure support, which will be crucial in the Rajya Sabha, where the government has been facing some embarrassment.


The Cabinet resolution ushering in NA, quoting Mahatma Gandhi, BR Ambedkar, Swami Vivekananda, Deen Dayal Upadhyaya, the sage-poet Tiruvalluvar, among many others, says that NA will bid farewell to a ‘one size fits all’ approach towards development and celebrate India’s diversity and plurality by embracing specific demands of states, regions and locations. The description of NA’s role is vague and all-encompassing, at the same time. The press release calls it a ‘think tank’ of the government and a ‘directional and policy dynamo’ that will play a pivotal role in India’s ‘development journey’. It will be all things to all people at the Centre and the states. It will provide ‘provide key inputs on various policy matters’, will be pro-urbanisation and work at using technology to create ‘wholesome, secure and economically vibrant habitats’, provide ‘relevant strategic and technical advice across the spectrum on matters of national and international import’ and so on and so forth.


On 15 August 2014, many of us listening to the PM’s independence day address at the historic Red Fort, thought that the Planning Commission would be shut down. At the least, we expected that this high-profile sinecure for people close to the ruling government, with no accountability (remember Rs35 lakh spent on two toilets?) will be drastically downsized. But the rambling Cabinet resolution on NA suggests otherwise.


Apart from the powerful governing council, NA will have regional councils to be formed on a need basis to address ‘specific issues and contingencies’ with a specified tenure. The regional councils too will comprise the PM and chief ministers. Domain experts and specialists with relevant knowledge will be special invitees nominated by the PM.


The full-time organisational structure will comprise a vice-chairperson appointed by the PM, full-time members, two part-time members from leading universities/institutions, and up to four Union ministers nominated by the PM as ex-officio members. There will also be chief executive officer (CEO) appointed by the PM for a fixed tenure who will have the rank of a Union secretary with a secretariat.


Is there any doubt at all that NA is envisaged as the second most powerful body in the country after Narendra Modi’s PMO (prime minister’s office) and probably on par with the Union Cabinet? Appointments to NA will be keenly watched in the coming days.


Sources say that many BJP supporters, including academics and ideologues from the south, will find a berth at NA.


NOTE: This article was written before the PMO announced names of the NITI Aayog members.



MG Warrier

2 years ago

Media analysis so far have not gone deep into the rationale of the revamp of Planning Commission, which in reality has come about as part of the reform process which India is undergoing. But for the change in name and the announcement in Modi’s maiden Independence speech on August 15, 2014, perhaps the changes would not have been subjected to the criticism by the mainstream media or opposition political parties. The previous regime has done damages to the system silently, like the withdrawal of pension scheme.
After Nehru, planning has remained an arithmetical exercise factoring in whatever was happening in the economy without much involvement of, or concern for, those affected by planning.
The new dispensation which claims to be a ‘bottom up’ approach, hopefully will allow more participation of stakeholders at ground level and ensure distributive justice. So far, higher share of resources are cornered by more developed geographical areas and the development needs of states which did not have a ‘hold’ at the centre were neglected. By and large, the change takes care to retain the essential roles played by the erstwhile Planning Commission while bringing focus on decentralisation and wider role for states.
The responsible opposition should, instead of ‘crying foul’, do more homework and suggest corrections where they feel the revamp goes against the broad interests of the country and the people.

Muki Rana

2 years ago

The article is vague just like the official announcement over NITI Aayog. How it would be stronger how it will help in growth -- no answer

Kiran Aggarwal

2 years ago

ML Try to avoid posting old and dated articles like these once .

A lot of water has been passed since the article is written .

New information changes - message of info .

You should have published this article when it was first written to serve its objective .

Abhijit Gosavi

2 years ago

This sounds eerily like a limb of a presidential system attached to a parliamentary system body.

We are listening!

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