Stocks
Sensex, Nifty to remain under pressure: Friday Closing Report

Nifty crashed through 5,635 and headed sharply lower. More decline may be in store
 

As the Dow Jones Industrial Average crashed yesterday by 226 points and US 10-year treasury yield crossed 2.8%, a 2-year high, the Reserve Bank of India (RBI) measures to control the rupee fall by imposing selective capital controls on outward remittances, failed hopelessly. In the face of such global headwinds, a massive selloff hit the Indian market on Friday. The Sensex and Nifty both opened in the negative and soon they hit their respective intra-day high. After this, both the indices slid continuously and closed deeply in the negative.

 

The Sensex opened lower at 19,297 and hit a low of 18,560 and closed at 18,598 (down 769 points or 3.97%). Nifty opened lower at 5,705 and hit a low of 5,496 and closed at 5,508 (down 234 points or 4.08%). The percentage loss of 3.97% on the Sensex is the maximum since 22 September 2011 while for the Nifty, the loss has been the maximum since 17 August 2009. The National Stock Exchange (NSE) recorded a volume of 68.12 crore shares.

 

All the major indices on the NSE except for India Vix (up 26.42%) and Nifty Dividend which ended flat, closed in the negative. Lix 15 was the top loser, down 5.65%.

 

All the other indices ended in the negative. Realty (down 6.66%); Bank Nifty (down 5.74%); Metal (down 5.47%); PSU Bank (down 5.38%) and Finance (down 5.27%) were the top five losers.

 

Of the 50 stocks on the Nifty, three ended in the in the green. The top gainers were Hero MotoCorp (up 2.17%); Power Grid (up 1.13%) and HCL Technologies (up 0.20%) while Jaiprakash Associates (down 11.09%); BHEL (down 10.92%); Axis Bank (down 9.36%); Bank of Baroda (down 8.63%) and Reliance Infrastructure (down 8.52%) were among top losers today.

 

The RBI on Wednesday increased efforts to stem the rupee’s plunge by cutting the amount local companies can invest overseas without seeking approval to 100% of their net worth, from 400%. Among other measures, the RBI has also announced reduction in the limit for remittances made by resident individuals, under the Liberalised Remittance Scheme (LRS Scheme), to $75,000 from $200,000 per financial year. The present set of measures is aimed at moderating outflows. However, any genuine requirement beyond these limits will continue to be considered by RBI under the approval route.

 

Also on Wednesday, the banking regulator banned import of gold coins and medallions. Now importers of gold will have to pay upfront before getting any of the yellow metal with the condition that at least 20% of the gold imported will have to be re-exported and the balance for domestic use.

 

US market fell sharply on Thursday. The better-than-expected data of jobless numbers heightened fears of imminent tapering of the Federal Reserve's bond-buying program. Market now awaits the reports on US housing starts and consumer confidence.

 

Except for Taiwan Weighted (up 0.48%), all the other Asian indices fell. Jakarta Composite fell the most, 2.49%. Indonesia is in the same situation as India – of rising interest rates and inflation.

 

China’s stocks had a torrid day today ending in a negative territory apparently due to a computer glitch. The Shanghai Stock Exchange (SSE) said this afternoon that the department of investment strategy of Everbright Securities Company encountered a problem in its arbitrage system when it was operating on its own funds during the morning trade on the bourse.

 

So far, there is no official conclusion as to whether there is a direct correlation between Everbright’s trading error and the market’s sudden surge, state-run Xinhua news agency reported.

 

European indices were trading mostly in the red while US Futures were trading in the positive.

 

TVS Motor Company has dis-invested 7.35 crore shares of its unit TVS Energy Ltd, constituting 90.46% of share capital of TVS Energy to Green Infra Ltd. Consequently, TVS Energy and its subsidiaries, viz., TVS Wind Power Ltd and TVS Wind Energy Ltd, cease to be subsidiaries of the TVS Motor from 16th August. TVS Motor fell 4.67% to close at Rs30.60 on the NSE.

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COMMENTS

Nitin N Varia

4 years ago

THE POLICEMAN HAVE DONE ENOUGH TO STEM THE RUPEE NOW ARMY NEEDS TO ACT AND WIN RUPEE.

The RBI have done more than enough to defend the rupee as a policeman of the country. But the army to defend the rupee under field marshal P. Chindarbaram the FM the eloquent dancer of words and twister of policies such as export parity or trade parity for subsidy on Diesel and the smiling face of seeing the rupee fall is the protagonist of the whole drama.

The Indian public is a mute spectator and by having the rupee cross 62 the politicians money will flow from tax heaven to India for the election expense. TO THE ADVANTAGE OF THE PARTY THAT HAS MAXIMUM OF BLACK MONEY PARKED ABROAD.

The protagonist FM needs to be conscious about the present state of affairs and transcend from acting to action and all will be all right. For this he has to have a heart of an Army General and not a mind FULL of fear of consequences to defend Mother India. THE CAD CAN BEST BE CONTAINED BY CURTAILING CONSUMPTION AND NOT GROWTH BY ALLOWING OMC TO HAVE TOTAL DECONTROL OF DIESEL. Today each family have 2 or 3 cars and many with diesel cars. The luxury to the Indians by loose fiscal policy is hurting the average middle class more than the rich. The Gold is a dead investment so the duty may be hiked to 40% or totally banned so that the perception of lucent joy fades. Hiking it by 2%IS A DRAMA TO FOOL THE PEOPLE. During second world war sugar was so expensive that the Britishers started taking tea without sugar to be able to pass the phase of the war. This is what the Chief of Army the FM needs to be working at instead of a drama for the election. By doing so the loss to UPA is guaranteed and by hard decision the success is redeemed.

It is time the media catches the protagonist head on to save the rupee lest the punters in London Singapore and Zurich have vowed to make the FM kneel on his knees by taking the rupee cross 64 on 23.8.2013 and so its time that FM acts in the interest of the country as a chief of Army and not as a protagonist of the rupee fall.

The leading economist all over the world and the man on strip agree on one point that if there is no earning of dollars to bridge the CAD and fiscal the solution is only one to curtain consumption irrespective of how hard the decision is and that fearlessness will earn him the post of PM otherwise he will thrown out to the dust bin.

The FM have to transform himself from PROTAGONIST TO being a chief of army in winning the rupee glory and stop the drama on t.v. of smiling face devoid of action and putting the blame of FED and external factors. The PM have reposed full faith in the FM yet out of fearfulness he PLACATES MORE THAN LIGHT the RUPEE

The Hindu, you are the India's premier reporting with facts without distortion hence this mail to you.

Nitin N. Varia

Nitin N Varia

4 years ago

The RBI have done more than enough to defend the rupee as a policeman of the country. But the army to defend the rupee is under field marshal P. Chindarbaram the FM the eloquent dancer of words and twister of policies such as export parity or trade parity for subsidy and the smiling face of seeing the rupee fall is the protagonist of the whole drama.

The Indian public is a mute spectator and by having the rupee cross 62 the politicians money will flow from tax heaven to India for the election expense.

What the protagonist FM needs to be sincere about is transcend from acting to acting and all will be all right. THE CAD CAN BEST BE CONTAINED BY CURTAILING CONSUMPTION AND NOT GROWTH BY ALLOWING OMC TO HAVE TOTAL DECONTROL OF DIESEL. Today each family have 2 or 3 cars and many with diesel cars. The luxury to the Indians by loose fiscal policy is hurting the averge middle class more than the rich.

It is time the media catches the protagonist head on to save the rupee lest the punters in London Singapore and Zurich have vowed to make the FM kneel on his knees by taking the rupee cross 64 on 23.8.2013 and so its time that FM acts in the interest of the country.

The FM have to tranform himself from PROTAGONIST TO being a chief of army in winning the rupee glory and stop the drama on t.v. of smiling face devoid of action and putting the blame of FED and external factors.

Will RBI allow banks to sell any insurance product?

Even though Finance Ministry and IRDA are gung-ho about banks getting insurance broking license to help penetration of insurance products, it is the RBI which will decide whether banks will continue as corporate agents or become brokers and sell any insurance product

Finance Secretary Rajiv Takru on Wednesday gave a candid speech at 16th CII Insurance Summit in Mumbai. According to him, “Certain sections (insurers) may not be keen on banks getting insurance broking license as it will hurt existing relations. But, to be fair and also to give the customer choice, banks with broking license should be the way forward.” The finance ministry has been in favour of banks becoming insurance brokers. In his budget speech this year, Finance Minister P Chidambaram said banks would be so permitted to help insurance penetration. But will RBI oblige, especially since RBI’s deputy governor Dr KC Chakrabarty is personally against banks selling any kind of insurance?
 

Currently, a bank is allowed to sell the products of only one life and non-life insurance company as a corporate agent. Speaking on the sidelines of 16th CII Insurance Summit, Insurance Regulatory and Development Authority (IRDA) Chairman TS Vijayan, said, “There have been informal discussions with RBI. People have reservations with the word ‘broker’. Broker regulations are more in tune with larger risks like reinsurance. But, we are not expecting banks to sell huge risk. It is a personal line of business for them. This idea will get acceptance widely, among both companies and banks. Today, a bank is the corporate agent of one insurance company (Life and General). While an agent represents the company, a broker represents the customer. As such, banks utilise own customer base and hence represent the customer. With broking license, they can give the best deal and product to the customer.”
 

According to a senior IRDA official, “RBI is not keen on banks becoming brokers as many of them have promoted insurance companies and this could lead to a conflict of interest. With broking license, banks will have a fiduciary responsibility to customers and can be made accountable for mis-selling.” RBI holds all the aces, which at present, points to status-quo of bank continuing as corporate agents.
 

Even if RBI were to relent and allow banks to go for insurance broking license, how many banks that promote own insurance company will really apply for it? In an interview with Business Standard, Canara HSBC OBC Life Insurance CEO John Holden, said, “For us, bancassurance is not a channel, it’s a business model. We have always been a proud 100 per cent bancassurer. That strategy and business model are working.” Top private insurance companies are backed by banks which will find conflict of interest about being open to the broking idea. For example, ICICI Pru Life, SBI Life, HDFC Life, IDBI Federal, SUD Life, Kotak Life and IndiaFirst are backed by banks like ICICI, HDFC, SBI, IDBI, Federal bank, Bank of India, Union bank of India, Kotak Mahindra, Bank of Baroda and Andhra Bank.
 

IRDA Chairman is optimistic about broking model. Mr Vijayan, says, “An insurance company promoted by a good bank is in a comfort zone. It is limited to monopoly situation of one insurance company product sale. But, even bank promoted insurance company has opportunity (if banks opt for broking license) to sell their products through other banks currently not sold through. Today, the insurer may have bank as captive distributor, but with broking license they will have to go out and sell products suitable to the customer.” Time will tell if a bank that promotes an insurance company bites the bait of broking license.
 

According to Shashwat Sharma, partner, KPMG India, “Many banks who have promoted their own insurance company and have signed distribution agreements for promotion of products of their own insurance JV (joint venture) may find it difficult to immediately become a broker as it may impact their proposed breakeven plan and shareholder returns. Also, those banks whose JVs would manage to reduce their dependence on the partner bank through growth of other distribution channels are more likely to become brokers.”
 

RBI's financial stability report’s Chapter III - Financial Sector Regulation and Infrastructure raises several crucial questions on bancassurance model’s use of unfair and restrictive practices. 

  1. While banks are well suited to distribute insurance products because of their wide network, several issues have risen regarding their conduct in the process, pertaining to mis-selling and certain restrictive/ unfair practices (such as linking provision of locker facilities to purchase of insurance products, selling of unsuitable and/or multiple policies etc). 

  2. According to IRDA’s Annual Report 2011-12, the maximum complaints in life insurance related to mis-selling, mainly pertaining to private sector, although state-owned LIC leads the business with over 70% share. Complaints were mainly in the nature of unfair trade practices and mis-selling of products (e.g. malpractices, actual product sold being different from what was proposed, single premium policy being issued as annual premium policy, surrender value being different from projected, free look refund not paid, misappropriation of premiums). 

  3. As a significant portion of private life insurance companies use banks as their corporate agents, there seems to be an urgent need to revisit the marketing and sales strategies used by the banks in pushing insurance products, especially since insurance is among the more complex financial products for common man to comprehend.

Given that this is the current thinking of the RBI, it will be a surprise if the banks are allowed to act as brokers.
 

Read - IRDA allows banks to act as insurance brokers. Will the RBI agree?
 

Banks allowed as insurance brokers: What does it mean to you and me?

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COMMENTS

nagesh kini

4 years ago

A 'broker' will remain a broker by any name called!
I fully endorse Dr. Chakrabarty's opposition. It is absolutely valid. Cobrapost expose has proven that mis-selling of toxic insurance products are some of the main transgressions leading to serious money laundering.
Banks have no business in dabbling in activities beyond core banking like deposit mobilization and financing trade and industry. They are neither qualified nor equipped to hawk insurance policies. They are woefully ill-equipped to render after-sales services for arranging expeditious settlements of claims.
I strongly hold both the RBI and IRDA are absolutely wrong in permitting this brokerage/dalali!

nagesh kini

4 years ago

A 'broker' will remain a broker by any name called!
I fully endorse Dr. Chakrabarty's opposition. It is absolutely valid. Cobrapost expose has proven that mis-selling of toxic insurance products are some of the main transgressions leading to serious money laundering.
Banks have no business in dabbling in activities beyond core banking like deposit mobilization and financing trade and industry. They are neither qualified nor equipped to hawk insurance policies. They are woefully ill-equipped to render after-sales services for arranging expeditious settlements of claims.
I strongly hold both the RBI and IRDA are absolutely wrong in permitting this brokerage/dalali!

Roplekar Sudhir

4 years ago

It will be difficult for banks to sell insurance products, as some times there is a need of medical test required for term insurance, or high value proposal submitted to insurance company,and after sales service, an honest agent provides all this services to the client,attending on him personally, where as banks will not do this.Instead insurance company's should encourage the agent to work full time instead of part time, by providing good training and an petrol allowance.There is no need of pvt. insurance company, all should be merged with LIC, as before 1956, there were only Pvt.companies were existing and the public are aware what happened at that time,at that time also there were miss selling and misappropriation, and because of this LIC was formed.When India has already experienced the pvt. insurance company's before 1956, then again why they want to burn there fingers.Please show me one Pvt. company which has come forward like LIC an announced that those who are affected in recent damage in north, there claims will settled. Instead of encouraging pvt. make strong LIC pillars.
sudhir,

siddhesh

4 years ago

Please publish persistency ratio of all Bank Agents.

siddhesh

4 years ago

Please publish the persistency ratio of Bank Agents.

Baldev Raj Khanna

4 years ago

RBI has rightly said that a bank assuming role of Insurance Broker might lead to a conflict. Bancassurance accounts for 30% total new business premium in life insurance sector. In my opinion mostly it is forced selling and mis-selling. Banks should do pure banking and they should not be permitted to enter in Insurance. It is a good thing that most of the banks are not rushing for insurance licence to become brokers.

Prashant Bansal

4 years ago

RBI should allow banks to only sell Term Insurance and no other policy. All these banks must pay for mis-selling done by them. They pocket huge commissions from insurance companies and their RMs make huge incentives on mis-selling.

You can still file your I-T returns

Only those who have paid all taxes and do not have any refund claim can file their I-T returns by 31 March 2014

The Income Tax (I-T) department has urged all those taxpayers who have not filed their I-Tax returns, even by the extended deadline of 5 August 2013, to file their returns at the earliest to keep away unavoidable difficulties. However, the option to file one's I-T return before 31 March 2014 is available only for those who had paid all their taxes and there are no refund claims.

 

According to a release issued by Press Information Bureau (PIB), if the returns are not filed by 31 March 2014, there will be a penalty of Rs5,000 levied on the taxpayer. Those with tax dues will have to pay late payment fee leviable for every month of delay since April 2013, the release said.

 

While I-Tax department gives taxpayers certain grace period to file their returns, there are certain disadvantages associated with late filing of I-T returns. Those who file their returns late, cannot modify their returns if there are any mistakes. They also cannot carry forward any short term and long-term losses. 

 

All those with total income of Rs5 lakh and above and all those having foreign assets have to mandatorily file their IT returns online. Those with total income less than Rs5 lakh can file their returns off-line. So far, more than 1.23 crore taxpayers filed their returns online this year.

 

According to the release, a person defaulting in filing returns of income could be liable for prosecution under Section 276CC of the Income Tax Act, 1961. Conviction may result in rigorous imprisonment for a term not less than six months but which may extend to seven years and a fine, if the tax liability which has been evaded exceeds Rs25 lakhs.

 

Recently, the additional chief metropolitan magistrate in New Delhi sentenced a taxpayer to six months imprisonment in one assessment year and one year imprisonment in subsequent assessment year for repeating the offence of not filing return of income.

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COMMENTS

S BHASKARA NARAYANA

4 years ago

Does penalty of Rs.5,000/- and prosecution u/s 276CC attract to a senior citizen, who narrowly crossed the limit of Rs.2.5 lacs limit? while most buerocrats, businessmen and politicians go scot free?

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