TRAI to look into 3G roaming pacts of leading telcos

In July this year, Vodafone, Bharti Airtel and Idea Cellular had entered into a bilateral roaming agreement, both inter and intra circle, to provide 3G services to customers in the circles where they cannot build their own 3G network as they do not have the licence, in order to bring a pan-India experience of 3G services to their users

New Delhi: The Telecom Regulatory Authority of India (TRAI) has sought information from leading service providers on their bilateral agreements for entering into third generation (3G) roaming pacts, to ensure that there is no violation of licence terms and conditions, reports PTI.

"TRAI is investigating into 3G roaming agreements of telecom operators," a source in the regulator body said.

The watchdog is looking at as to how these companies are selling their 3G spectrum services under the agreement, TRAI sources said.

Earlier, Department of Telecom (DoT) had also raised doubts over 3G roaming pacts of companies, which are not having 3G services on pan-India basis. The pacts help them reduce cost.

In July this year, in an effort to reduce cost and offer pan-India 3G services, Vodafone, Bharti Airtel and Idea Cellular had started sharing their networks to provide seamless service to their customers.

These companies had entered into a bilateral roaming agreement, both inter and intra circle, to provide 3G services to customers in the circles where they cannot build their own 3G network as they do not have the licence, in order to bring a pan-India experience of 3G services to their users.

Airtel, Aircel and Reliance Communications each own 3G spectrum licence in 13 of the 22 telecom circles, while Vodafone has it in 10 circles and Idea and the Tatas in nine circles.

Bharti Airtel had bagged 3G licence for Delhi and Mumbai metros besides states like Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (West), Rajasthan, West Bengal, Himachal Pradesh, Bihar, North East, Jammu and Kashmir and Assam.

Idea Cellular holds 3G spectrum for 10 telecom circles-Maharashtra & Goa, Gujarat, Andhra Pradesh, Madhya Pradesh & Chhattisgarh, Himachal Pradesh, UP (East) UP (West), Punjab, Haryana and Kerala.

Vodafone Essar had acquired 3G spectrum in 10 circles including Delhi, Mumbai, Chennai, Kolkata, Maharashtra, Gujarat, Tamil Nadu, Haryana, Uttar Pradesh (E) and West Bengal.


Share prices may see weak recovery: Friday Closing Report

Nifty may see a small bounce-back after hitting 4,800 but more selling likely

The events of Wednesday still played on investors' minds resulting in the market closing lower for the third day in a row. The Nifty today closed 56 points down at 4,868, which is very close to the level of 4,800; it also crossed its first level of support at 4,900. We may expect a small bounce-back from here. The NSE fell on a volume of 64.32 crore shares which was above its 10-day moving average.

The market continued its downtrend today on weak global cues on fresh worries that the global slowdown would lead to another recession. The Nifty opened 50 points lower at 4,874 and the Sensex started the day at 16,222, down 139 points from its previous close. All sectoral gauges, led by metal, realty and banking, were in the red. Choppiness persisted in the entire session with the indices fluctuating in the negative terrain.

The market fell to the day's lows in late-morning trade with the Nifty dipping to 4,929 and the Sensex going back to 16,052. However, bargain hunting lured investors to lap up stocks at lower levels, thus pushing the indices higher.

The market ventured into the green for a brief moment, which also marked the intraday highs for the benchmarks. At the highs, the Nifty touched 4,929 and the Sensex rose to 16,368. But choppiness capped the gains leading the indices back into the red.

A positive opening of the European bourses after the recent bashing also soothed investors' nerves back here. But with the European markets paring early gains, the domestic indices closed down, lower for the third day in a row. Finally, the Nifty fell by 56 points to settle at 4,868 and the Sensex closed at 16,162, a cut of 199 points.

The advance-decline ratio on the National Stock Exchange (NSE) was a negative 503:1186.

Among the broader markets, the BSE Mid-cap index fell 0.84% and the BSE Small-cap index declined 1.13%.

Barring the BSE Fast Moving Consumer Goods index (up 0.15%), all other sectoral gauges settled lower. The top losers were BSE Metal (down 2.28%), BSE Capital Goods (down 1.84%), BSE Auto (down1.59%), BSE Consumer Durables (down 1.44%) and BSE Bankex (down 1.35%).

The key gainers on the Sensex were Cipla (up 2.09%), Tata Power (up 1.37%), State Bank of India (up 1.03%), Bharti Airtel (up 0.77%) and Jaiprakash Associates (up 0.67%).  The laggards were led by Tata Motors (down 4.81%), Hindalco Industries (down 3.77%), HDFC Bank (down 3.10%), HDFC (down 2.82%) and Larsen & Toubro (down 2.70%).

The Nifty leaders were Reliance Power (up 3.37%), Cipla (up 2.09%), Grasim (up 2.02%), Reliance Capital (up 1.61%) and Tata Power (up 1.47%). Tata Motors (down 5.37%), Hindalco Ind (down 4.02%), SAIL (down 3.48%), HDFC Bank (down 3.45%) and Cairn India (down 3.42%) settled at the bottom of the index.

Recent negative developments in the US and the ongoing debt crisis in Europe pulled down the markets in Asia again today. Comments from finance ministers and central bankers from the Group of Twenty (G-20) nations that they would take steps to stabilise the global financial system did not help matters, either.

The Shanghai Composite declined 2.78%, the Hang Seng slipped 1.36%, the KLSE Composite contracted by 1.58%, the Straits Times fell 0.80%, the Seoul Composite tumbled 5.73% and the Taiwan Weighted settled 3.55% lower. Bucking the trend, the Jakarta Composite gained 1.70%. Markets in Japan were closed for a local holiday.

Back home, foreign institutional investors pulled out a huge Rs1,305.55 crore from the equities segment on Thursday. On the other hand, domestic institutional investors were net buyers of shares worth Rs743.47 crore.

Farm equipment major Mahindra & Mahindra (M&M) on Thursday said it would raise tractor prices by 1.5% soon in the wake of spiralling input costs. Asserting that the company has not been passing on the full impact of rising cost by absorbing major portion of rise in cost, M&M chief executive, Tractor and Farm Mechanization Business, Bishwambhar Mishra said that there was now need to pass on some portion of cost to consumers by raising rates of tractors. The stock settled at Rs777.70, down 0.75% on the NSE.

Diversified PSU Balmer Lawrie & Co today said it will make a foray into the Rs1,800 crore construction chemical business and plans to use Chinese technology for this purpose. The company has invested Rs3 crore on establishing construction chemicals capacities at its Chennai facility and trial production has begun. The stock declined 1.22% to close at Rs618.10 on the NSE.

Hindustan Petroleum Corporation has earmarked capital expenditure of Rs 45,000 crore over the next six years. Of this, Rs32,000 crore will go towards setting up new refineries and expanding existing ones. The balance will be spent on exploration & production, gas distribution, tankages, pipelines and retail infrastructure. The stock was down 0.84% to Rs370.20 on the NSE.


IRDA chairman not convinced on opening up bancassurance to two insurance companies

In 2009, an IRDA Committee had recommended opening up bancassurance to two insurers. But IRDA chairman J Hari Narayan does not seem convinced. IRDA may also allow brokers to offer consultancy services, even for insurance products that they have not sold themselves

The Insurance Regulatory and Development Authority (IRDA) had set up a committee in 2009 to examine whether banks could be allowed to sell policies of more than one life and one general insurer. The report of the committee suggested allowing two life and two general insurers to tie up with a bank. But at the recent ASSOCHAM global insurance summit, IRDA chairman J Hari Narayan told Moneylife that he was not convinced if the solution to the problems identified by the 2009 study lie in opening up bancassurance to two insurers.

Mr Narayan told Moneylife, "We need to enable insurance outreach by increase in number of bank branches to sell insurance products. As of today, a small percentage of bank branches are pursuing the same. If the number of branches selling insurance does not increase, there is less value with the same branch selling two insurers' policies. IRDA has not finalised its decision."He suggested the possibility of looking at state-wise or segment-wise regulatory changes to open up bancassurance.

Media reports have quoted the IRDA chairman as saying, "Banks have a problem in understanding insurance products. There are issues to deal with before banks can sell insurance correctly with proper advice to customers." Some insurance company heads seem to be in agreement. (See: Bancassurance: The more the merrier?).

 But the subject is still open for debate. We found varying replies from the insurance industry, based on the insurance companies' dependency on bancassurance. Insurers who have little business from bancassurance have less to lose and, hence, don't mind allowing banks to sell products from more than one life and one general insurance company. On the other hand, some insurance companies with significant support from bancassurance even refused to talk about the issue.

The jury is still out on this important debate. We have to wait to see what IRDA finally comes up with.

IRDA is also considering permitting broking consultancy. It will allow brokers to provide consultancy services for claims processing for anyone, and not just when the policy is sold by them. Obviously, there is keen interest from the broking community as it will allow brokers to expand and offer additional services without an increase in infrastructure and they can piggyback on the contacts developed in the industry for further business.

A recent McKinsey study states that an agency force is "all pervasive", but least productive. Having a persistency ratio of less than 75% is unhealthy for the industry. There are few insurers with greater than 75% persistency ratio and an equal number with less than 50% persistency ratio. The IRDA chairman touched upon the possibility of improving persistency ratio with a proper business model and an effective communication channel. He told Moneylife that 75% persistency ratio was too a high number to ask for.

According to an IRDA circular, "The average agent persistency rate is uniformly set as 50% which is to be reckoned only on number of policies. The persistency rate requirements will be effective for all agency renewals that are due from 1st July, 2014." In February, IRDA had pegged the persistency ratio at 50% with a rider that it should go up to 75% by 2015-16. Now the watchdog has relaxed these persistency norms for insurance agents, by removing the rider that the ratio should go beyond 50%.



Avinash Datta

6 years ago

The expereince of LIC in bancassurance is very bad. Many Banks haa switched over their loyalty and how many customers are snatched by these Banks are matter of study. It seems that LIC has not take any lesson from this.

Sunil Date

6 years ago

Banks are forcing their customers to buy policies for safe deposit lockers or for loans etc. More the merrirer. Now they wil sell one each policy of both the companies. Has IRDA done any independant survay of how policies are sold by banks and customer satisfaction ?

My friend and customer was persuaded (forced) to buy a 50K 10 yr pension product for his spouse who is a H/W; all for a safe deposit locker.

My colleague suggested to his friend to get the loan sanctioned and then cancell the hardsold insurance plan in free look period. This advise, because, the bank manager was not ready to compromise on the friend buying a pure term policy.

Melvin Joseph

6 years ago

It is nice to hear some sensible comment from the IRDA chairman against the industry body who is lobbying for distribution of insurance products of multiple companies.
Why banks want to sell multiple products. Is it in the interest of the customers? Absolutely No. They have already tied up with some insurance companies and now better terms and conditions are offered by other insurance companies! So, they want to go for it. If it is allowed, nobody in the bank will be selling the products of the first company.It is an accepted fact that bank employees are hard core missellers, because they cannot sell an insurance policy in the professional way.
The solution lies with the regulator.At the product approval stage, it should ensure that only genuine policies are approved. There should not be any hidden charges in the policies and make the charge structure transparent. Later, ensure that no insurance company is in a position to pay anything more than the approved commission to the agents/brokers/bancassurance partners.If such a rule comes, there will be product standardisation and simplification.In such a situation, no banks will be interested in selling multiple brands, because their benefits will be the same.If IRDA can do this, customers will benefit in the long run. Till that time, it will be a golden chance for some bank employees/managers to win foreign trips by selling wrong policies to the customers. Please read the attached link for more details on bank misselling.

Vikas Gupta

6 years ago

The Banks should not be allowed to sell insurance of even single insurance company. Most of the policies sold by the Banks are missold. Data is available about the Surrender & non-renewal of policies sold by Banks which is very high in comparision to other policies.

Deepak Khemani

6 years ago

Finally some sense in the decisions take by IRDA, if bank has tie up with more than 1 Insurance Co. then they will sell products wherein they get the highest Comission, customer be dammed.
The other day I was standing in a branch of SBI and a "poor" customer walked in to open a Savings Account so that he could send back his monthly earnings to his family at his native place, the concerned person told him clearly " take a single premium plan(ULIP) of 30,000/= only then will I give you an Account Opening form"


Raj Pradhan

In Reply to Deepak Khemani 6 years ago

that's hardselling. Not just ULIP, but also FMP. Banks try to sell FMP instead of FD.

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