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Newsupdates (12-April-2012)

Committee on Banking, Insurance and Pension
The Insatitute of Chartered Accountants of India
(Set up under an Act of Parliament)
‘ICAI Bhawan’, PO Box No. 7100, Indraprastha Marg, New Delhi – 110 002
www.icai.org

Banking, Insurance and Pension Update

This update has been endeavored to cover news related to India with a focus on banking, insurance and pension sectors.

Update: 12th April, 2012

 

 

INDEX

Banking                         

 

Rejigged loans to figure high in bank earnings

Indian Overseas Bank eyes 16 to 18 percent credit growth in FY13

Deutsche bank hires agency to hunt for new CEO

Life Insurance

 

LIC can adhere to 10 percent stake norm at ‘its own pace'

Life insurance sector declines marginally in 2011-12: IRDA

LIC PSU investments may give rivals edge

 

General Insurance

 

Indonesian earthquake aftershocks: Insurers may impose new restrictions

 

IFFCO Tokio infuses Rs 125 crore capital               

Cholamandalam MS bags best insurance co award

Bajaj Allianz CEO may move to Allianz

Pension/PFs

Old-age pensioners to get biometric cards by June

Cancer: Pension limit raised

Govt announces pension for transgenders above 40 years

 

 

 

                                     

 

 

 

 

 

Banking

Rejigged loans to figure high in bank earnings

Manju AB, Mumbai

 Financial Chronicle 

There is unlikely to be any alarming increase in bad debts of banks when they declare their fourth quarter results over the next few weeks. But there will be a sharp rise in the restructured portfolio with several large corporate accounts restructured. This is expected to depress earnings, but strong net interest margins (NIMs) will help most banks to report profits, as they have had a pricing advantage in a liquidity shortage situation. Ashwin Parekh, partner and national leader for financial services at Ernst & Young, said, “I do not think NPAs will rise alarmingly as many accounts will be restructured. But high restructuring will be offset by the rise in NIMs. The bad debt problem will gradually even out as banks move into the next quarter.” According to senior bankers, restructuring of debt of some state electricity boards (SEBs) will be reflected in the fourth quarter results of some banks.

 

 

Indian Overseas Bank eyes 16 to 18 percent credit growth in FY13

Mumbai

 The Financial Express 

Public sector lender Indian Overseas Bank (IOB) Wednesday said it is aiming a credit growth rate of 16-18 percent and a deposit growth rate of 18-20 percent in the current financial year. “Currently, we aim 18-20 percent deposit growth and 16-18 percent credit growth in FY13,” IOB chairman and managing director M Narendra said. He added deposit growth for the bank stood at 18-19 percent for the last fiscal against 13-14 percent witnessed by the banking system. “Luckily, for us, even though CASA (current account, savings account) has not given us much growth, we had a good retail growth. Our deposit growth is around 18-19 percent against the systemic growth of 13-14 percent,” he added. Total deposit of banks grew by 13.4 percent to R60.72 trillion as of March 23, which is below the RBI’s projection of 17 percent for the last fiscal. Referring to expectation from the upcoming credit policy, Narendra said the central bank would take a view after considering inflation number along with current tight liquidity situation.

 

Deutsche bank hires agency to hunt for new CEO

Sabarinath M, Mumbai

 The Economic Times  

Deutsche Bank has hired executive search firm Egon Zehnder International to help it find a successor to Gunit Chadha, chief executive of India, who moves up as the co-head of Asia Pacific operations of the German bank to be based in Singapore. The head hunter will look at rivals within the country for possible candidates and also evaluate the possibility of elevating an insider, said two people familiar with the plans. The appointment may be announced by June 1 when Chadhda, who led the India operations since 2003, starts on his new assignment. A Deutsche Bank India spokesperson declined to comment either on the selection process or the hiring of a head hunter.

 

Life-Insurance

LIC can adhere to 10 percent stake norm at ‘its own pace'

G. Naga Sridhar, Hyderabad

 The Hindu Business Line  

The Life Insurance Corporation of India need not rush to bring down its current stake in various companies to below 10 percent. “I advise LIC to bring down the stake to below 10 percent in a company. But, I don't want to put any timeframe for this. It can do so at its own pace,” J Hari Narayan, Chairman, IRDA said here on Wednesday. As per the current norms of the regulator, no insurance company is allowed to have more than 10 percent stake in a company. The regulator did not want to pressure LIC to adhere to existing norms by bringing down its stake in various companies in view of the likely adverse impact on market/investors, he added. However, the state insurer has over 10 percent stake in many companies, including State Bank of India, MTNL, ITC and Tata Steel. The issue has come to the fore after LIC had invested Rs 12,000 crore in the auction of ONGC stake by the Government in February.

 

Life insurance sector declines marginally in 2011-12: IRDA

G. Naga Sridhar, Hyderabad

 The Hindu Business Line  

The life insurance industry has declined only marginally in 2011-12 compared to the year-ago period, according to IRDA. “The overall business during last financial year may decline only by about one percent,” J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority said here on Wednesday. The first-year premium, however, has declined by about 14 percent, he added. “About 75 percent of the income of companies comes from renewal premiums and group sales. So, some decline in new business cannot impact the overall growth of the industry significantly,” the IRDA chief said. In 2010-11, the total premium collected by the life insurance industry was Rs 2,86,500 crore as against Rs 2,65,450 crore in the previous year. On the expected growth during 2012-13, he said it would depend on a variety of factors, including the tax laws. “At present, tax laws are more oriented towards young people with standard health patterns. They are not sympathetic to others,” he said.

 

LIC PSU investments may give rivals edge

Shilpy Sinha, Mumbai

 The Economic Times  

Life Insurance Corp invested more than half its equity portfolio last fiscal in state-run companies, raising fears that returns may lag rivals as price controls eat into the profitability of some public sector undertakings (PSUs). The state-run insurer invested around Rs 22,000 crore, or 55 percent of the total permitted equity investment of Rs 40,000 crore, in companies such as Oil and Natural Gas Corp and Punjab National Bank, said two people familiar with the investments. These are provisional numbers, which may be revised, they said. A final number and the investment target for this fiscal will be finalised in a few days. Some of these investments, which exceed the limit stipulated by the insurance regulator to avoid concentration risk, could drag overall returns for LIC's 29-crore policyholders, say investment experts. "Time and again LIC has been violating prudent investment norms," said Arun Kejriwal, an investment advisor whose public interest litigation against LIC's investment practices was rejected by a court recently. "LIC has a different mandate and follows a different diktat. Since there is no shareholder involved, there is no shareholder activism."

 

General-Insurance

Indonesian earthquake aftershocks: Insurers may impose new restrictions

Shilpy Sinha, Mumbai

 The Economic Times </FONT< div>

The Indonesian earthquake may force reinsurers to impose new restrictions and lead to increase in premium and deductibles. Reinsurance rates in India have gone up 5-15 percent, depending on treaty experience. Also, reinsurance firms have imposed limit on maximum liability that non-life insurers can claim for a catastrophe, called event loss limit in insurance parlance. "Going by trend of claims, insurers will use this incident to impose new restrictions like per event limit and increase premium and deductibles," said Dinayar Manekshaw Jivaasha, head of group and global health insurance, Essar Group. He said the extent and impact of the earthquake on insurance would be known after insured losses are calculated. "Till now reinsurers have not been tested in the Asian market with such magnitude of claim."

According to a Swiss Re report, total insured losses have doubled in 2011 compared with previous year. The insurance industry worldwide saw a hit of $108 billion from natural catastrophes and man-made disasters in 2011 against $48 billion in 2010. Claims from natural catastrophes alone reached $103 billion in 2011 compared with $43 billion a year ago. "Asia will be part of the high risk zone. Rates in Asia went up when companies renewed their policies but with limits and restrictions," said a senior executive of a large general insurance company. Another impact would be on business interruption of companies operating overseas.

IFFCO Tokio infuses Rs 125 crore capital

New Delhi

 Financial Chronicle | The Financial Express | The Times of India | The Hindu Business Line  | The Economic Times  |  Business Standard  

Private sector general insurer Iffco Tokio today said it has made fresh capital infusion of Rs 125 crore to fund expansion. With this, the total capital infusion by promoters stands at Rs 526.2 crore at March 2012, Iffco Tokio General Insurance said in a statement. "At a time when the insurance market is both competitive and growing, we have plans to increase market share and sustain profitable growth," Iffco Tokio managing director S Narayanan said. The infusion has come from Indian and foreign promoters in respective proportion of their share holding, it said, adding that Iffco and its associates hold 74 percent stake in the general insurance venture while the remaining 26 percent is with Japan-based Tokio Marine Asia Private Ltd.

 

Cholamandalam MS bags best insurance co award

Abhishek Law, Kolkata

 The Hindu Business Line  

Cholamandalam MS General Insurance Company has been awarded the best insurance company for ‘In time Claims Settlement for 2011-12’ under the Rashtriya Swasthya Bima Yojana scheme of the Ministry of Labour and Employment. The award was conferred on April 9 by the Union Labour and Employment Minister, Mallikarjuna Kharge, at a worskshop in Ranchi, Jharkhand. Cholamandalam was awarded for its timely settlement of claims for hospitals offering cashless treatment facilities to BPL families. Cholamandalam MS General Insurance is a joint venture between Murugapppa Group of India and Mitsui Sumitomo Insurance Group of Japan.

 

Bajaj Allianz CEO may move to Allianz

Mumbai

 The Economic Times (Mumbai edition) 

Hemant Kaul, chief executive at private general insurer Bajaj Allianz General Insurance, is likely to move to global financial services firm Allianz SE, said people familiar with the matter. Tapan Singhel, the current chief marketing officer, will replace Kaul as the chief executive and managing director.

 

Pension/PFS

                Old-age pensioners to get biometric cards by June

Chennai

 The Times of India (Chennai edition) 

To put an end to fleecing of elderly pensioners, the state has announced an ambitious plan to introduce smart card-based pension scheme in 4,176 villages, covering seven lakh pensioners by June this year. This will bring to a close the tie-up the state has with the postal department, as reports of large-scale irregularities involving postmen keep pouring in from various districts. Moving the demands for grants for her department, social welfare minister B Valarmathi said all villages with a population between 1,000 and 2,000 based on the 2001 census would be taken up for introducing smart cards. Subsequently, all the other villages and urban areas would be covered for disbursement of pension through banks using biometric-based smart cards. The decision to disburse social security pension schemes through banks was announced by the AIADMK government as soon it came to power.

 

Cancer: Pension limit raised

Thiruvananthapuram

 Deccan Chronicle (Bangalore edition) 

The state cabinet on Wednesday raised the income limit for pension for those suffering from cancer and kidney ailments to three lakhs. The income limit was earlier on par with the BPL standards and many of the deserving people could not avail the pension because of the lower income limit. Chief minister Oommen Chandy told the media after the meeting that the raise in the limit would help a large number of patients.

(Page 4)

 

Govt announces pension for transgenders above 40 years

Chennai

 The Times of India (Chennai edition) 

Taking the lead in offering sops to transgenders, the Tamil Nadu government on Wednesday said it would soon implement yet another welfare scheme for the third gender. Transgenders, who are forty years and above, will get a monthly government dole or pension of Rs 1,000. The initiative is aimed at helping members of the community who have been deprived of support from their families. “The government has already taken efforts to bring members of the transgender community into the mainstream and help them get their due. The state has also offered a subsidy of 25 percent on loans up to Rs 15 lakh for entrepreneurs among them,” social welfare minister B Valarmathi told the assembly, while moving the demands for grants for her department". 

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Information published in the newsletter are taken from publically available sources and believed to be accurate.  COBIP of ICAI takes no responsibility of accuracy and reliability of information published in the newsletter. No part of this newsletter may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise without the permission of COBIP of ICAI.

Feedback

 The daily news updates is an endeavour of the Committee on Banking, Insurance and Pension to apprise the readers about the developments in the banking, insurance and pension sectors.  We welcome your feedback on the news update and its contents.

Please email cobip@icai.org for feedback on the news content.

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Secretary,

Committee on Banking, Insurance and Pension,

The Institute of Chartered Accountants of India,

'ICAI BHAWAN',

Post Box Number 7100,

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NEW DELHI - 110 002.

Telephone -Direct+91 11 30110566 ,Board +91 11 39893989 Extn: 566

 

 

     
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