Citizens' Issues
Traders' body sends legal notice to Salman over use of 'Khan Market' for his portal
CAIT, in the notice sent has asked Salman Khan to withdraw Khan Market from his portal, within seven days or be ready to face legal action
 
The Confederation of All India Traders (CAIT) has said it has sent a legal notice to actor Salman Khan over the usage of "Khan Market" name from his shopping portal to protect the brand name of the market in New Delhi designated as the most expensive retail location in India. Earlier this month, the Confederation had also sent a letter to Salman, which remained unanswered till day, CAIT said.
 
"What to say of withdrawing the name, Salman Khan in past more than 10 days did not think it proper to even to respond to communication which reflects his autocratic and adamant attitude having least botheration for feelings of traders and their natural right for using the name of Khan Market. It has highly disappointed the trading community," said Praveen Khandelwal, Secretary General of the CAIT.
 
CAIT, in the notice sent through its President Sanjeev Mehra, has asked the actor to withdraw the said name within seven days and with a warning that else the Association will left with no other alternative but to resort to legal action, CAIT said in a statement.
 
Salman Khan on his 50th birthday on 27 December 2015 had announced to launch his portal khanmarketonline.com, which was strongly resisted by Khan Market Trade Association. The Association had also made an appeal to the actor to withdraw the name of Khan Market from his portal.
 
Established in 1951, Khan Market was, last month, ranked the 24th most expensive retail location worldwide in a report by global real estate services firm Cushman & Wakefield.
 
"The name chosen by Salman Khan is more deceptive and infringes the rights of traders of Khan Market," Khandelwal had said.
 
In the legal notice, the Association, has charged Salman for fraudulent intention in using the name of Khan Market with a tendency to cause confusion and deception among members of trade, and commerce customers and the public in general as it enables him and his affiliate to pass of goods under the same name which is bound to cause damage and loss to the reputation of traders of Khan Market. 
 
"We will not allow anyone to encroach upon the goodwill earned by traders for the market in the last 65 years," Khandelwal added.
 
CAIT contended that things sold on 'khanmarketonline' would also be construed as sold by traders of the actual and physical Khan Market, leading to confusion and misunderstandings for consumers.
 
Describing Khan Market itself as a brand, CAIT said: "A name by custom/practice/usage over a long period of time by a group of persons becomes an intellectual property right of that group of persons is an integral part of principle of natural justice. Accordingly, the first lien of using the name 'Khan Market' lies with traders of Khan Market only."
 
CAIT National President BC Bhartia said that the act of Salman Khan is nothing short of hijacking the heritage of Khan Market. "He (Salman) is attempting to link his legacy with veteran freedom fighter Khan Abdul Gaffar Khan in whose honour the market has been given the name of Khan Market, which is not only a commercial market but an Institution in itself. Therefore, no one should attempt to encroach upon such a public asset," he added.

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Will IRDAI’s higher incentive to sell term plans, help consumers?
IRDAI has increased commission for selling term plans, which can boost sales, but online term plans will give a stiff competition to the offline ones. Clearly, IRDAI’s move is to boost sales not ensure that customers buy term plans knowing their positive features
 
The Insurance Regulatory and Development Authority of India (IRDAI) has higher commission for selling term plan to individual insurance agents and intermediaries. IRDAI draft guidelines are certainly a welcome move, which can help life insurance penetration in India with much of population grossly underinsured. Making the term plan sales attractive for agents may shift focus away from traditional (endowment, money-back and whole-life) and ULIPs (Unit Linked Insurance Policies). With commission being a percentage of premiums, term plans were less pushed due to lower premium when compared to insurance cum investment products. But, increase in the commission percentage could just do the trick of Indian population getting aware of importance of pure term plans.
 
 
 
IRDAI draft titled “Payment of commission or remuneration or reward to insurance agents and insurance intermediaries, regulations, 2016” have offered following commission structure for term plans –
 
 
 
IRDA draft guidelines states – “Where policies are procured direct by an insurer no commission or remuneration shall be payable either to insurance agents or to the insurance intermediaries.” It means online term plans purchased by consumer directly from insurer cannot earn any intermediary commission. 
 
There can be arguments about competition from online term plan making offline term plans redundant. Agents certainly feel the pinch due to online term plans, which are offered by most life insurers including behemoth Life Insurance Corp of India (LIC). Its online e-Term, with a premium of 15%-40% lower than what LIC offline term plan offers, will make it a tough sell for agents. But, the premium of term plans can be hiked after medical tests and hence online term plan deals are not a final quote and are subject to change during underwriting. Offline term plans, which are already having premium on higher side may also have some increase after medical tests. 
 
Giving the commission incentive by IRDAI is a sensible move. Moreover, even though online term plans may be offered in wider locations, it cannot really reach every nook of India, which agents serve. Smaller cities, rural population may not be still onboard with online term plans. Relying on agents to selling offline term plan will help pure insurance reach even remote locations. Hopefully insurers will not hike premium for offline term plans due to higher commission.
 
IRDAI approved around 97 protection-based plans and/or riders in 2015 as compared to 37 protection-based plans and/or riders in 2014. It means IRDAI has approved more than double such products. Clearly, IRDAI and insurers have given priority to long-term and systematic protection-based plans. 
 
These regulations will be effective from 1 April 2016. IRDAI is seeking comments or suggestions on the proposed regulations for consideration.  The comments or suggestions should reach them by 27 January 2016 in the specific format by e-mail to [email protected] and [email protected]
 

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NBFC-MFIs to take a hit as RBI reins in self-help groups
Banks are asked by RBI to start sharing SHG data with credit bureaus. This move will put a check on overleveraging and borrowings by individuals from multiple sources and can possibly strain the asset quality of a few NBFC-MFIs, says a report
 
The Reserve Bank of India (RBI) has asked banks to collect credit information of members from self-help groups (SHGs) while sanctioning a loan to new SHGs, or renewal of existing loans, and granting of additional loans to existing groups. This move will hit credit growth and asset quality of non-banking finance companies (NBFCs) and micro finance institutions (MFIs). This is because, the data sharing will rein in the prevalence of overleveraging and multiple-source borrowing, thus weeding out persons who are currently borrowing from SHGs to repay NBFC-MFIs, says a research report.
 
In the research note, Religare Capital Markets Ltd, says, "With this move, the RBI aims to put a check on overleveraging and borrowings by individual customers from multiple sources, which will improve the sector’s outlook in the longer run. Though MFI growth and asset quality are likely to suffer in the near term, we believe the central bank’s move will be long-term beneficial for all stakeholders."
 
 
According to Religare, due to the RBI's move, MFI credit growth will take a hit over medium term. As on FY14, SHG credit from banks stood at Rs429 billion and formed 1.5 times of MFI credit. SHGs have a large presence in thriving MFI markets such as Karnataka, Kerala, Tamil Nadu, West Bengal and Odisha, and account for about 60% of total microfinance credit.
 
"The new guidelines will dampen growth over the medium term as the aggregation of MFI and SHG data will lead to a potential shakeout of duplicate customers as many may reach the cap of Rs1 lakh on microcredit that can be availed per person, and a breaching of the cap on the number of institutions permitted to lend to an individual-maximum of two, which may now be applicable on the aggregate data. The above limits currently apply only to joint lending group (JLG) loans, but upon data aggregation the limit is likely to be made applicable to bank as well as MFI borrowings," the report says.
 
At present, the absence of a shared database masks non-performing assets (NPAs) of NBFC-MFIs. Once the database becomes fully operational, it will put a check on such borrowers and can possibly strain the asset quality of a few NBFC-MFIs. Due to this, Religare says it sees repayment difficulties for customers who are currently borrowing from weak public sector banks and paying back NBFC-MFIs.

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