In your interest.
Online Personal Finance Magazine
No beating about the bush.
HSBC said on Thursday that there will be no immediate pressure on lending rates even if the RBI squeezes money supply to contain inflationary expectations
Foreign lender Hongkong and Shanghai Banking Corp (HSBC) on Thursday said that there will be no immediate pressure on lending rates even if the Reserve Bank of India (RBI) squeezes money supply to contain inflationary expectations, reports PTI.
Calling for retaining fiscal stimulus to carry forward the growth process, HSBC India head Naina Lal Kidwai told reporters that interest rates could only gradually rise in the next six months.
"That (interest rate rise) is going to happen next month? No. In the next six months, (maybe a) gradual (hike)," she said on the sidelines of a micro-finance conference in New Delhi.
The RBI is slated to come out with its third quarter monetary policy on 29th January. She added that inflation is a concern and will be watched. However, monetary policy is not the only way to contain inflation.
Wholesale price inflation rose to 7.31% in December from 4.78% in the previous month, higher than the 6.5% level by this fiscal-end projected by the RBI. Ms Kidwai added that there is lot of liquidity in banks.
"Can some of this (liquidity) be mopped out? Yes. A small Cash Reserve Ratio hike for example of 0.25% would mean just about Rs8,000 crore going out of the system. It may signal an important change," she added.
Yesterday, the country's largest lender, State Bank of India, had said that interest rates are likely to remain stable as there is surplus liquidity in the system.
For an insurance company, it actually helps if clients default on policies that have not acquired any surrender value
A business paper recently carried a story about life insurance policies worth over a trillion rupees which have lapsed. Some of the interesting bits are:
i) A total of 9.1 million policies lapsed in 2009
ii) The lapse ratio for ICICI Prudential Life Insurance Co Ltd, the life insurance arm of India’s largest private sector lender ICICI Bank Ltd, stood at 53% in 2009, up from 40% in the previous year. About 777,000 conventional policies worth Rs25,269 crore lapsed, the highest among private insurers by value. (Obviously, ICICI does not want to miss market share any which way)
iii) In terms of lapse ratio, Aviva Life Insurance Co India Ltd, leads the list with 32,000 policies or 59% lapsed
iv) Reliance Life Insurance Co Ltd saw its lapse ratio almost double—40% in 2009 against 21% a year ago.
iv) Life Insurance Corp of India (LIC) declined to 4% for 2009 from 6% in the previous year. In absolute terms, nearly 7.3 million traditional policies worth Rs52,926 crore lapsed. Almost half the conventional policies that lapsed in the industry in 2009 were sold by LIC.
If this is not rampant mis-selling, I do not know what is. Most insurance companies do not repay or refund anything, if the policies are less than three years paid up. After three years, the agents’ commissions drop to ‘small’ levels of 2.5%-5%, so he cares two hoots. He would rather tell the fool (the client) to take a different policy after ditching the old, since it would give him a higher commission.
The great thing is that the paper quotes the Max New York honcho as saying that it is not mis-selling but “it indicates a lack of understanding on the part of policyholders”. Sir, who delivers the ‘understanding’?
Most insurance companies have a scheme or a process to ‘revive’ lapsed policies within around three years of the last premium paid. After that, they quietly pocket the money. So, for an insurance company, it actually helps if clients default on policies that have not acquired any surrender value. Probably, they must be hoping for this to happen every year and would be part of their business goals for each year. Probably, they reward agents who bring in such kind of clients into their web of deceit.
It is time people woke up. IRDA, being run by retired guys with either LIC or RBI backgrounds, will never help the insured. They are the owners’ representatives. The ideal rules would be:
i) When policies lapse, blacklist the agent/withdraw his IRDA code, so that he can get no more commissions and sell no more policies. This is the best way to ensure that the mis-selling stops.
ii) When there is a lapse, the insurance companies should refund the amounts collected less the charges they have actually incurred. For instance, if I have paid Rs2,000 per year for two years, I should get a refund of something like Rs2,000-Rs3,000. This should be made statutory and any violation should result in a heavy penalty on the insurance company.
iii) A list of lapsed policies should be put online compulsorily.
iv) Surrender values should be made compulsory even for a one premium old policy. Why should the insurance company rob the payer?
The other option is to explore if third-party buyers of lapsed policies can emerge legally. Maybe they can take a call on whether to revive the policy and take the assignment in their favour and continue it. All possibilities exist.
I am sure that the IRDA will do zilch to resolve this issue. It is high time that the finance ministry stepped in and passed the supervision to another body where the insured is also taken care of. If SEBI can handle mutual funds, I am sure it can handle insurance also. After all, every product they sell (except the pure term policy which they hide) is an investment product with some optional insurance.
A United Nations (UN) special rapporteur said that the health and safety situation in many shipbreaking yards in India still remains 'critical' and there is a need to improve training facilities and working conditions for labourers
The health and safety situation in many shipbreaking yards in India still remains 'critical' and there is a need to improve training facilities and working conditions for labourers, a United Nations (UN) special rapporteur (reporter) said on Thursday.
Professor Okechukwu Ibeanu, the special rapporteur of the UN, also noted that only 3% of the 400,000 metric tonnes of e-waste generated in India is recycled in authorised facilities and recommended a national plan for safe management of electronic products.
The UN special rapporteur on the adverse effects of the movement and dumping of toxic and dangerous products and wastes on the enjoyment of human rights, was addressing the media after wrapping up a 10-day visit to examine India's progress in disposal of hazardous wastes.
Prof Ibeanu, who visited shipbreaking yards in Alang in Gujarat and Mumbai and an e-waste recycling facility in Roorkee, acknowledged the 'significant progress' made by India, including in developing an 'impressive' regulatory framework for environmentally sound management of toxic products.
Pointing to the differing opinions on environmental impact of shipbreaking, he also favoured an independent study to assess the adverse effects that may be caused by the discharge of hazardous material into the natural environment.
While noting the 'consistent efforts' being made by authorities in Gujarat to reduce risks to workers, he said, "The health and safety situations prevailing in most of the shipbreaking yards I visited remain critical as witnessed by 12 fatal accidents that occurred in Alang during the course of last year."
The five-day training provided to workers in Alang is 'grossly inadequate' and the facilities should be improved, Pro Ibeanu said. "In Mumbai, workers do not receive any form of training, making them more prone to serious accidents and injuries," he said.
Identifying other "shortcomings", Prof Ibeanu said that medical facilities established on or just outside the yards in Alang and Mumbai do not possess sufficient human, technical and financial resources to provide any treatment other than first-aid for minor injuries.
"The Red Cross facility I visited in Alang is not equipped to deal with serious accidents, and can only count on four medical doctors to provide healthcare not only to some 30,000 workers in the yards, but also the neighbouring villages of Alang and Sosia," he said.
He said he was 'shocked' to see the conditions in which most workers live in Alang and Mumbai. "Semi-skilled and unskilled workers live in makeshift facilities lacking basic sanitation facilities, electricity and even safe drinking water," Prof Ibeanu said.
On e-waste, the UN expert said while the Indian government is making efforts to meet the challenge, the international community should come up with technology assistance.
Prof Ibeanu, who will submit a report to the UN Human Rights Council, said the dismantling of electronic equipment by small-scale informal laboratories can pose health risks and favoured a national implementation plan for proper management of electronic products, with special focus of integrating informal recyclers into the formal economy.