07 Sep 2002

IDBI not enthused qith mof bid on asset merger with IFCI 
New Delhi: The ministry of finance's attempts to push forward a proposal for merger of good assets of the Industrial development Bank of India and IFCI Ltd to form a new development financial institution does not seem to have gone down well with IDBI's top brass.

State Bank loan book touches Rs 3,000 crore in fiscal till date 
Mumbai: State Bank of India has witnessed an uptick in its incremental credit offtake to the tune of Rs 3,000 crore in the first five months till August 31. Full story 

UWB plans new integrated treasury branch in Mumbai 
Mumbai: United Western Bank has taken an initiative to set up an integrated treasury branch in Mumbai in a bid to bring the dealings in the domestic and forex treasuries under a single roof. 

SBI Life joins hands with BNP Paribas for marketing 
Mumbai: SBI Life Insurance Company has signed a memorandum of understanding with BNP Paribas to distribute its group insurance products across India. 

Sanchayani director remanded to custody 
Kolkata: One of the directors of Sanchayani Savings and Investments Ltd, Kolkata, Sunil Ganguly, who was arrested by police in connection with misappropriation of deposits, has been remanded to police custody till September 12. 

BoI hikes FCNR rates 
Mumbai: Bank of India has raised FCNR deposit rates by 15-20 basis points in some maturities effective September 7. Rates on dollar US deposits are 1.70 per cent (1.50 per cent) for one year to less then two years. 

It's never been that good on home loans front, go for one now 
Mumbai: That dream home may not be so distant now. The past few years have seen a free fall in interest rates across the board and the home loan sector has been no stranger to this. From 15-16 per cent five years back to 9-11 per cent today, the home loan industry has come a long way. 

14 subsidiaries going to UTI I 
New Delhi: The division of assets between the government-held UTI I and UTI II of UTI is beginning to take shape. The 14-odd subsidiaries of mutual fund like UTI Bank, UTI Investor Services, UTI Investment Advisory Services, UTI Securities Exchange, UTI Institute of Capital Markets, UTI International, Unit Securities Exchange of India, and the real estate of UTI would go to the government-held UTI I. 

SBI Life Insurance unveils two new products 
Mumbai: SBI Life Insurance Company Ltd (SBI Life) has launched two new insurance products: a home loan group insurance policy and Sudarshan, an endowment plan.
SBI Life managing director and CEO R Krishnamurthy says: "One of the major concerns facing a housing loan borrower is to ensure the welfare of his family and protection of housing property. This scheme will enable home loan borrowers to secure financial protection for their families with the repayment of the outstanding loan met by SBI Life, in event of any untoward happening."
The home loan insurance scheme will initially be offered to the home loan borrowers of State Bank of India (SBI). It will provide life insurance cover, accidental death and total permanent disability benefits to those who have availed of home loans.
"This scheme may eventually be rolled out to cover borrowers from other housing finance institutions once the bancassuarance laws are in place," says SBI chairman Janki Ballabh.
Sudarshan is designed to provide policyholders with protection as well as savings for the future and has a host of flexible features that can be customised to meet specific requirements. "We are confident that given the basic buoyancy of household savings in the Indian market, Sudarshan will become a prominent long-term savings instrument," says Krishnamurthy.
The optional benefit attached to Sudarshan will enable savers to multiply their savings consistent with the increase in cost of living over the duration of the plan, he says. The scheme has a critical illness rider (Dhanvantri) that will provide flexible benefits to policyholders to insure against six dreaded diseases.

Insurance firms to trade in derivatives soon
New Delhi: Insurance companies will be allowed to invest their funds in swap and other derivative products. The Insurance Regulatory and Development Authority (IRDA) is considering making amendments to the investment regulations to pave way for such investments. 
"We are considering derivatives and swaps as additional methods of investments. We will announce amendments to the investment norms for the purpose," says IRDA chairman N Rangachary.
Rangachary says the first set of insurance brokers should be in operation by November 2002. "According to the programme charted out by the IRDA, brokers' regulation and those relating to corporate agencies are to be issued by the end of September 2002, after which the applications will be invited."
He says no changes are likely to be incorporated in the draft regulations on brokers that the IRDA had put up on its website for comments.

RBI relaxes EEFC account norms for EOUs
Mumbai: The Reserve Bank of India (RBI) has liberalised the procedures for the release of foreign exchange for medical treatment abroad and loans from close relatives outside India. It has also further liberalised the Exchange Earners' Foreign Currency (EEFC) account scheme for export-oriented units (EOUs).
"With a view to enabling residents to avail themselves of foreign exchange for medical treatment abroad, it has now been decided that authorised dealers may release foreign exchange up to $50,000 for medical treatment outside India, without insisting on any estimate from a doctor or hospital, on the basis of a declaration of requirement given by the applicant," says the RBI.
on loans from close relatives outside India, the RBI decided to allow up to $250,000, provided the loan is free of interest and is repayable after one year instead of the earlier minimum non-payment seven-year period.
As a further measure towards giving boost to export-oriented units and rationalisation of the EEFC account scheme, there will be only two categories of EEFC accountholders. One, those who can retain up to 100 per cent of their receipt in foreign exchange and others who can retain up to 50 per cent of their receipt in foreign exchange.
Accordingly, a 100-per cent EOU or a unit situated in export processing zones (EPZs), software technology parks (STPs) and electronic hardware technology parks (EHTPs) will now be eligible to credit up to 100 per cent of their foreign exchange receipts to their EEFC account against the existing eligibility of credit up to 70 per cent.
So far, the facility of crediting up to 100 per cent of receipts was available only to status-holder exporters and professionals who rendered services in their individual capacity, to entities outside India.
s a result of this liberalisation, the facility of crediting up to 100 per cent of foreign exchange receipts to their EEFC accounts will now also be available to status-holder exporters, professionals, 100-per cent EOUs and units in EPZs, STPs and EHTPs.

ICICI Pru Life set to exploit pension market
Mumbai: ICICI Prudential Life Insurance, the No 1 private life insurer in India, has emerged as a key player in the retirement solutions market, garnering over 25 per cent of premium contributions to pension plans during April-June 2002.
The company's penetration into the retirement market was driven by the launch of a slew of retirement products and a focused approach towards driving awareness of the category and expanding the market.
ICICI Prudential entered the retirement space with the launch of ForeverLife and ReAssure just one year ago. It subsequently launched two unit-linked pension plans, LifeTime Pension and LifeLink Pension, in April 2002.
Says ICICI Prudential Life Insurance managing director Shikha Sharma: "Increasing longevity, lower working tenures and an increasing dependency ratio are some of the factors that make retirement planning a must for everyone in India. We recognised this need and decided to focus our efforts on educating consumers about the need for retirement planning, and then meeting the need with a range of products. We've complemented this effort with extensive and specific training for our advisors, and also held seminars for consumers on the topic of life insurance and retirement planning, which were met with an encouraging response."
The comprehensive regulations laid down by the Insurance Regulatory Development Authority for life insurers operating in the pension space have also been instrumental in driving category growth, she says. "In fact, life insurers are a natural fit for pensions market as they have the expertise in managing long-term savings, which is critical for any pension operator."
There are some trends that testify to the importance of retirement planning. Nearly 90 per cent of the working population does not have any formal provision for old age, so the retirement planning category becomes relevant to a wide section of the population.
With a sharp improvement in life expectancy rates, individuals are expected to live longer, but work for a shorter fraction of their lives. With age come health-related expenses, which are highly inflationary and must be provided for. And with the overall costs of living continuing to rise, it's essential to plan for a steady income stream post-retirement.
The company's retirement solutions are designed according to the varied needs of consumers. "Our product bouquet serves the appetite of both risk-taking and risk-averse categories of consumers along with life protection, and most importantly, a regular income guaranteed for life," Sharma says.
ICICI Prudential sold more than 150,000 policies as of 30 June 2002 with a sum assured in excess of Rs 4,100 crore and a premium income of over Rs 165 crore. 

New York Life gets its strengths reaffirmed
New York: Even as the credit rating agency Standard & Poor's (S&P) is downgrading ratings of several life insurers worldover, the New York-based New York Life Insurance Company got its financial strengths affirmed.
The affirmation comes despite the company's exposure to some of the most notable problem credits at the beginning of 2002. In the first six months of 2002, as a result of these credit issues and the decline in the equity markets, it suffered realised and unrealised losses of $625 million.
The company has been able to sustain these losses because of its diversification and extremely strong capital base, which even after such losses remained extremely strong as indicated by a risk-based capital ratio on S&P's model of approximately 316 per cent.
A combination of several positive features - extraordinary strong business position in individual life and annuities, growing track record of enhancing the productivity of its career agency force, continued improvement in individual sales, disciplined approach to asset and liability management and small but rapidly growing presence in the global markets - satisfied S&P to affirm its double-A-plus counter-party credit and financial strength ratings on New York Life.
S&P also affirmed its ratings on life insurer's affiliates with stable outlook. "New York Life is one of the most respected names in the domestic life insurance business," says S&P's credit analyst Thomas Upton.
The company's individual life and annuity sales were up 42 per cent and 6 per cent, respectively, in 2001 versus 2000, with the former resulting in about a 7 per cent market share nationally. In 2001, the company was the number one US life insurer based on new sales, as reported by Limra.
Slightly offsetting the positive factors mentioned above are the developing business position of New York Life's investment management subsidiaries and the ongoing process of maintaining and enhancing the operational efficiencies that have been gained in recent years.
New York Life reorganised all its investment management business operations under a separate subsidiary to integrate all related functions within its group. S&P believes the insurer has begun to show cohesion in its strategy for this business, as demonstrated by total sales in 2001 of $16.4 billion, roughly 20 per cent above those of the previous year.
Growth in agency life sales increased by 18 per cent in year 2001. There has also been substantial growth in individual life and annuity business now being sold by alternative means, including distribution through banks, stockbrokers, and independent agents. Brokerage sales increased 125 per cent in 2001 and have continued to increase by 58 per cent for the first half of 2002 compared with the first half of 2001.
In addition, S&P believes New York Life has established a good foothold in several foreign markets, most prominently Mexico, with its international sales increasing 29 per cent from December 2001 to June 2002 and now account for 25 per cent of all life sales.

New York Life now projects breakeven for this business in 2002, which is one year ahead of its former schedule. S&P expects that New York Life's total individual life insurance sales will be up over 15 per cent for 2002, while individual annuity sales will remain flat despite the volatile equity markets. Any losses in the asset portfolio through the remainder of 2002 will be modest, reflecting the overall high quality of that portfolio.

06 Sep 2002

United Western Bank NPAs rise Rs 35 crore to Rs 424 crore
Mumbai: The gross non-performing asset level of United Western Bank has increased by Rs 35.19 crore to Rs 424.27 crore at the end of quarter ended June 30 compared to Rs 389.08 crore at end-March 2002.

IIB to go global soon
New Delhi: The Indian Institute of Bankers, which caters to the education needs of banking and finance professionals and institutions in India, proposed to go global by tying up with institutes in UAE, Afghanistan and Sri Lanka, Mr RH Sarma, IIBs CEO, said on Wednesday.

Way2Wealth plans foray into insurance broking
Bangalore: Way2Wealth Securities, the Bangalore-based multi-locational investment-consulting firm, has chalked out an aggressive growth plan to expand its network and enter new businesses of insurance broking and Internet broking.