Buying gold in India

Apart from gold ETFs and gold monthly income plans there is a more direct way to invest in gold. That is by buying gold coins. I use the word direct because you buy physical gold, and don’t have to pay fees to the middle-man, thereby eliminating at least one layer in between.

The flip – side is that you will have to store physical gold with you, but most of you would have bank lockers to store jewelry anyway.

Here are a few things you should know about buying gold coins in India:

1. Reputed banks sell gold coins: The most important thing to me is that reputed banks like SBI also sell gold coins, and that reduces the chances of fraud, and someone selling you something which is of less purity than they claim. 

A lot of banks have entered this space, and they sell gold coins through their branches. Not every branch will sell you gold coins, so you need to go to the bank’s website and find out the closest branch that will do so.

2. Different sizes: Gold coins are available in different sizes, so you can buy the ones that suit your needs the most. The usual sizes are coins of 2, 4, 5, 8, 10, 20 and 50 grams. The coins are 24 carats, and the banks guarantee their purity too.

3. PAN needed if you are buying gold coins worth more than Rs.50,000: If you plan to buy gold coins worth more than Rs.50,000 then the bank will ask you for your PAN details. I don’t think a jeweler will ask for similar documentation, and that might be one reason to go to a jeweler to buy a gold coin.

4. Banks won’t buy – back your gold coin: I have not seen any banks that you can sell your gold coins to. They are happy to sell you their gold coins, but you can’t go to them and sell it back to them. You will have to sell the gold coins to the jeweler, and this is probably another reason for buying gold coins from jewelers in the first place.

5. You might pay a premium for buying gold from a bank: Now, I started off extolling the virtues of buying gold coins from reputed banks, and I will end this post by mentioning that if you compare prices between your local jeweler and some banks – you might find a difference.

There will be a difference even when they guarantee the same purity. A lot of people think that this premium is worth it because the price is higher when you go to sell the gold, but that is not always true. 


You don’t get this premium while selling off your gold coin. In effect, buying gold coins from your jeweler might turn out to be cheaper than buying it from a bank. It is up to you to decide whether the difference in price is worth it to you or not.

These were just some points that you should keep in mind while buying gold coins – I am going to write more about this topic in the future because a lot of people are interested in this, and would love to hear if any of you have had any experience with buying gold coins.

Kingfisher loss mounts

Kingfisher Airlines has suffered its worst quarterly loss at Rs 1,151.52 crore during the January-March period of 2011-12. The losses have more than tripled from Rs 355.54 crore in the year-ago period.

The fourth-quarter losses contributed to almost 50 per cent of the Vijay Mallya-owned airline’s losses for the fiscal ended March, which stood at Rs 2,328 crore (Rs 1,027.4 crore).

“The company has a focused fleet re-induction plan and hopes to be back to full-scale operations in the next 12 months backed by a recapitalisation plan that the company is actively pursuing and confident of achieving,” Kingfisher said.

The Kingfisher scrip fell as much as 8 per cent to a new low in morning trade.

The shares have plummeted over 73 per cent from its all-time high of Rs 44.30 on June 8, 2011.

The airline has never made a profit since its inception in May 2005. “Operational cost savings were offset by a steep hike in fuel prices and sharp depreciation of the rupee, which negatively impacted over 70 per cent of the cost base,” Kingfisher said in a statement.

During the quarter, income from operations stood at Rs 741.28 crore against Rs 1,626.65 crore during the same period of the previous fiscal.

The airline has been facing a rough weather for about a year, burdened by a debt of about Rs 7,057.08 crore.

New health cover

Health insurance must be provided to people up to 65 years, and all mediclaim must be settled within a month.

In its draft norms, the Insurance Regulatory and Development Authority has also stated that an insurer must say in writing the grounds for refusing to provide a policy.

The norms come more than a year after consumer rights activist Gurang Damani filed a public interest litigation in the Bombay high court against the regulator pertaining to the settlement of medical insurance claims.

Insurers will have to provide cashless facility to policyholders undergoing treatment in a particular hospital even after it is removed from the list of preferred service providers.

Insurers should ensure that empanelled hospitals — where cashless facilities are offered — are spread across different cities and not confined only to the metros.

The draft also talks about portability, under which a policyholder can migrate to another insurer, without losing any benefit.

It has also proposed special provisions for senior citizens.

All the terms and conditions in the policy document have to be explicitly spelled out in a simple language.

Insurers will have to take into account any cumulative bonus that has accrued to the policyholder to determine the sub-limits on various expenses.

Till now, insurers used to consider only the initial sum assured to determine the sub-limits on expenses such as hospital room rents and daily ICU allowance.

Non-life insurers issuing policies will have to reimburse the policyholder 50 per cent of the medical examination cost prior to providing a cover. If the policy is issued by a life insurer, it will have to bear the entire cost of the check-up.

Insurers will also have to disclose in the policy document any loading charged on the premium through a pre-defined table.

If the individual claim experience for each of the three preceding years is more than 500 per cent of the premium at present, the insurer will load the renewal premium according to the table. A hike in premium must be mentioned in writing and properly justified.

Policies will now cover non-allopathic treatments, provided they are obtained from a government or an accredited hospital.

NAV calculation formula

As stipulated by IRDA, the Net Asset Value (NAV) computation formula for Linked Funds stands modified effective August 18, 2011

Old Formula: (As prescribed by IRDA and as Stated in the policy document) The basis used for calculation of NAV would be the Appropriation Price and Expropriation Price. The Appropriation Price shall apply in a situation when the company is required to purchase the assets to allocate the units at the valuation date  The Expropriation Price shall apply in a situation when the company is required to sell assets to redeem the units at the valuation date.  The NAV per unit of each Investment Fund will be calculated as per the prevailing IRDA guidelines mentioned below When Appropriation Price is applied: The NAV shall be computed as:  (Market Value of Investments held by the fund + The Expenses incurred in Purchase of the Assets + Value of Any Current Assets + Any Accrued Income Net of Fund Management Charges - Value of any Current Liabilities - provisions, if any)  Divided by the number of units existing at valuation date (before any new units are allocated) When Expropriation Price is applied: The NAV shall be computed as: (Market Value of Investments held by the fund - The Expenses incurred in Sale of the Assets + Value of Any Current Assets + Any Accrued Income Net of Fund Management Charges - Value of any Current Liabilities - provisions, if any) Divided by the number of units existing at valuation date (before any new units are allocated) Modified Formula: (As stipulated by IRDA effective August 18, 2011) (Market Value of Investments held by the fund + Value of Any Current Assets - Value of any Current Liabilities & Provisions, if any) Divided by the number of units existing at valuation date (before creation or redemption of any units) Please note that the above change is effective 18th August 2011 and all the policy contracts issued by us (linked funds) stands modified to the above extent.

Stricter prepaid SIM card rules

The Supreme Court today set up an expert panel to examine the feasibility of imposing stricter norms for selling prepaid SIM (subscriber identity module) cards. Two members each from the Telecom Regulatory Authority of India (Trai) and the department of telecom (DoT) will be the members of the committee, which will submit its report in three months, said a bench of Chief Justice S.H. Kapadia. The DoT will then consider the recommendations. In 2010, the department of telecom, in consultation with the home ministry, had issued mobile connection guidelines, which called for strict adherence to the customer acquisition form while issuing SIM cards. However, mobile firms have been unable to adhere to the strict rules, which emphasized on updating the subscriber details in their database and activation of the SIM only by authorized persons. The rules also required companies to revivify subscribers when they changed their tariff plans. Also no customer shall be given more than one prepaid or post-paid connection. If an individual wants more than one connection, the person has to give reasons. Last month, the telecom regulator had argued in favour of easing of the guidelines, pleading before the Supreme Court that the new norms will put “unnecessary burden” on operators as well as subscribers.

Schroder buys 25% of Axis mutual arm

Axis Bank today sealed an agreement to sell a 25 per cent stake in Axis Asset Management Company Ltd (Axis AMC) — its wholly owned subsidiary — to Schroder Singapore Holdings Private Ltd.

Schroder Singapore is a wholly owned subsidiary of global asset management firm Schroders, which had funds worth £187.3 billion under management as of December 2011.

The deal is subject to regulatory approval and is likely to be completed this year.

The deal provides Axis AMC access to Schroders’ global distribution network.

Profit surges

Axis Bank has clocked a 20.3 per cent rise in net profit at Rs 1,277.27 crore for the fourth quarter ended March 31 against Rs 1,020.11 crore in the same quarter last fiscal.

Total income grew to Rs 7,647.94 crore from Rs 5,817.06 crore a year ago.

Interest income improved to Rs 6,060.32 crore from Rs 4,366.6 crore last year.

The bank has proposed a dividend of 160 per cent, or Rs 16 per share, for 2011-12.

For the entire fiscal ended March, net profit grew 25 per cent to Rs 4,242.21 crore from Rs 3,388.4 crore last year.

Tax relief hope for PE funds

The finance ministry seems to have accepted the arguments of private equity funds that they are subject to the same rate of capital gains tax as foreign institutional investors.

Investments of private equity funds in unlisted firms are currently taxed at 20 per cent, while foreign institutional investors pay half of that rate.

It is anticipated that fresh amendments to the finance bill were likely once Parliament takes it up.

India’s proposed general anti-avoidance rules (GAAR), which stop funds from abusing the zero tax status of countries such as Mauritius, while playing on Indian bourses have unnerved the private funds.

GAAR, brought in this year’s finance bill, allows tax authorities to declare any business deal to be an “impermissible avoidance arrangement” if part or whole of the deal has been crafted with the intention of obtaining “tax benefits”.

The move to tax PEs on a par with FIIs was in the works for some time.PE firms, including big names such as Carlyle, Khazanah, Temasek and Warburg Pincus, reportedly sold off shares worth over $1.8 billion in the first three months of 2012, much of it after India announced that it would implement GAAR in the future.

The government would continue to reiterate through policy pronouncements that FIIs who had “substantial commercial interests” in any tax haven would continue to benefit from low or zero tax regimes of these countries as provided by the direct tax avoidance agreements signed with them.

“DTAAs will continue to be valid and are not being sought to be over-ridden,” as per the blog source.

The government will also make it clear that there will be no short- or long-term capital gains taxes for participatory note holders. There were apprehensions that participatory notes would be taxed under the new GAAR rules.

As per the finance ministry, the trading of participatory notes just led to the change of hands of a contract note or a derivative — underlying assets or shares in India do not change hands.

They wanted to set at rest “worries” of participatory holders who have as much as $20 billion of Indian stock assets in their portfolios.

Many investors, who want to test Indian stock markets or who wish to play without the bother of registering themselves with Sebi use these participatory notes, which are certificates with underlying Indian shares.

It’s estimated that FIIs have invested about 10 per cent of their approximately Rs 10,00,000-crore portfolio in India through participatory notes.

IFSC CODE

What does IFSC mean? 

Indian Financial System Code (IFSC) is an alpha-numeric code that uniquely identifies a bank-branch; it’s an 11 digit code.

• The first 4 alphabetic characters represent the bank.
• The 5th character is 0 (zero).
• The last 6 characters represent the branch.

IFSC is used by the NEFT system to identify the originating bank branch and also to route the messages appropriately to the concerned bank branches.

List of IFSC codes, branch wise is available with RBI:

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2009

RTGS VS NEFT

There has been a lot questions about the differences between a RTGS and a NEFT money transfer, get all your doubts clarified here.

Employee Provident Fund

Your ever elusive Employee Provident fund balance can now be checked online, here's how...

A lot of us do not have even an idea on how much money we have in our Employee Providend fund account (EPF) . So in this post we will see how one can check his EPF balance online and get the details back through sms . Earlier I used to search a lot on checking EPF balance online and I came across some links , but most of them never worked. But few months back I successfully got sms with my EPF balance. Let me show you that.

http://www.youtube.com/watch?v=Gc2FyJo6g9I&feature=player_embedded

How to check your EPF balance status online

• Go to this EPFO website link
• There will be a link below the page to check your status online , click on that (direct link)
• You will see a drop down there to select the PF Office State ( like Maharashtra, Karnataka , Delhi etc) . Select your PF office .
• Once you select the State , you will see a list of different cities office, like for Karnataka , you can see one of the options as “Bangalore” along with the “data available upto” date , so you can get your EPF balance till that date only .
• Choose the city office
• You will be taken to the page where you will have to fill in EPF account number , Your Name and mobile number and Submit.

How to enter your EPF account detail ?

For an example lets say Manish Chauhan worked in Bangalore and had a  EPF account with number KN/62345/876 . This name “Manish Chauhan” is the name appearing in EPF slip .

In that case 62345 will be the Establishment Code (which will be first blank column) and 876 will be the account number (third column) . The second column will be blank in most of the cases , it’s actually the sub code or extension of the establishment code.

Important Points

• Note that the name should be exactly same as it appears in EPF slip
• The office and state have to be selected properly , In a single start there can be many offices , make sure you choose the right one.
• The SMS can come a little late , so please be patient
• The amount can be only upto a certain date which will be mentioned in the SMS

Can you share if you have are waiting for your EPF money from long time ? Are you facing problem in getting right information on why your EPF money has not reached you ?

PAN explained

PAN is a 10 digit alpha numeric number, where the first 5 characters are letters, the next 4 numbers and the last one a letter again. 

These 10 characters can be divided in five parts as can be seen below. 

The meaning of each number has been explained further.

1.        First three characters are alphabetic series running from AAA to ZZZ

2.        Fourth character of PAN represents the status of the PAN holder.
•          C — Company
•          P — Person
•          H — HUF (Hindu Undivided Family)
•          F — Firm
•          A — Association of Persons (AOP)
•          T — AOP (Trust)
•          B — Body of Individuals (BOI)
•          L — Local Authority
•          J — Artificial Juridical Person
•          G — Government

3.       Fifth character represents first character of the PAN holder’s last name/surname.

4.        Next four characters are sequential number running from 0001 to 9999.

5.        Last character in the PAN is an alphabetic check digit.

Nowadays, the DOI (Date of Issue) of PAN card is mentioned at the right (vertical) hand side of the photo on the PAN card.

Register your Complaints to IRDA regarding Insurance related matters

• Do you face issues while dealing with your Insurance Companies?
• Do they don’t answer you on time or don’t entertain your genuine concerns on time?
• Are you having a problem with Claims or other issues with an insurance company?

Should you complain?

In case you are facing issues like unsatisfactory answers, no replies on time , delay in replies, taking matters for granted and not treating you properly, any misselling in Insurance, you can complain to IRDA about all this , it’s just a call away, hence better use the facility and don’t feel like you are not powerful enough.

You can also mail Insurance companies and cc the IRDA email id for complaints for faster and better reply, but only in case you are facing issues, don’t spam them 

 .

Call centre

IRDA (Insurance Regulatory and Development Authority) has started a new service where you can approach by phone or E-mail and complain against your Insurer.

There is a call centre started by IRDA for registering grievances on policy-related matters. The call centre will provide an easy and convenient way to bring complaints to the notice of the IRDA.

The Toll Free Number is 155255 and Email for complaints is complaints@irda.gov.in. 

Before the complain, you can approach the Insurance Ombudsman where the dispute involves amount lower than Rs 20 lakh. You can find the contact mail address of the Insurance Ombudsman of your region from IRDA’s Web site http://www.irda.gov.in

Public health investment has substantially increased: Economic Survey

Union Finance Minister Pranab Mukherjee, who presented the Economic Survey 2011-12 in the Lok Sabha on Thursday, said that there has been an increase in public health investment in the country.

The combined revenue and capital expenditure of the Centre and States on medical and public health, water supply and sanitation and family welfare has increased from Rs.53,057.80 crore in 2006-07 to Rs. 96,672.79 crore in 2010-11.

"In addition to increasing resource allocation for the health sector the government is also playing a critical role in facilitating access to health care delivery channels, public and private through subsidized health, insurance schemes like the Rasthriya Swasthaya Bima Yojana(RSBY) for providing basic health care to poor and marginal workers. 

The RSBY is being extended to cover MGNREGA beneficiaries and beedi workers," said Mukherjee.

"A sum of Rs. 1437 crore has been allocated to the states during 2011-12 under the Janani Shishu Suraksha Karyakram (JSSK). In order to reach out to difficult, inaccessible, backward and under-served areas with poor health indicators, 264 high focus districts in 21 states have been identified based on concentration of SC/ST population and presence of left wing extremism for focused attention," he added.

Mukherjee also pointed out that the Janani Suraksha Yojana (JSY), which targets lowering of Maternal Mortality Ratio by ensuring that deliveries are conducted by skilled birth attendants, has shown rapid growth in last three years, with number of beneficiaries rising to 106.96 lakh in 2010-11 from 90.37 lakh in 2008-09, with the issue of governance, transparency, and grievance redressal mechanisms being the thrust areas for the JSY.

Courtsey: ANI

Goodbye Internet

Come March 8, the Internet could stop working for millions of users because of a virus, DNS Changer, which has corrupted millions of computers in more than 100 countries.

Though the US Federal Bureau of Investigation (FBI) has shut down the rogue DNSChanger network and put up surrogate servers following a US court order, it has the mandate to run the temporary network only till March 8.

Unless the FBI obtains a fresh order, the network will be turned off, resulting in millions of computers worldwide no longer having Internet access.

In November 2011, six Estonian nationals were arrested for running a sophisticated Internet fraud ring that infected millions of computers worldwide with the DNS Changer which enabled them manipulate the multibillion dollar Internet advertising industry.

This virus also made computers vulnerable to a host of other viruses. The criminals are said to have siphoned off $14 million, but the amount could be much larger because banks are typically reluctant to reveal how much they have lost. The two-year FBI investigation was code-named Operation Ghost Click.

What is DNS?

DNS stands for Domain Name System. It is an Internet service that converts user-friendly domain names into the numerical Internet protocol (IP) addresses that computers use to talk to each other.

DNS and DNS Servers are a critical component of your computer’s operating environment. 

Without them, you would not be able to access websites, send e-mails or use any other Internet service.

When you enter a domain name, such as www.abc.com, in your web browser’s address bar, your computer contacts DNS servers to determine the site’s IP address. Your computer then uses this IP address to connect to the website.

DNS servers are operated by your Internet service provider (ISP) and are included in your computer’s network configuration.

What is DNSChanger?

A small file about 1.5 kilobytes, DNSChanger is a Trojan that changes the infected system’s DNS settings, in order to divert traffic to unsolicited and potentially illegal sites.

This Trojan is designed to change the “NameServer” Registry key value to a custom IP address, which is usually encrypted in the body of the Trojan.

By controlling DNS, a criminal can get an unsuspecting user to connect to a fraudulent website or interfere with that user’s online web browsing.

DNSChanger malware causes a computer to use rogue DNS servers in one of two ways.

 First, it changes the computer’s DNS server settings to replace the ISP’s good DNS settings with rogue DNS IP addresses operated by the criminal.

Second, it attempts to access devices on the victim’s office or home network that run a dynamic host configuration protocol (DHCP) server (for example, a router). 

The malware attempts to access your router using common default user names and passwords. This is usually “admin” and “admin” respectively.

It converts the genuine DNS settings these devices use to rogue DNS settings operated by the criminals. This is a change that impacts all computers on the corporate network, even if individual computers are not infected.

One consequence of the FBI disabling the rogue DNS network is that victims who unknowingly access the Internet through rogue servers could lose access to the Internet altogether.

So the FBI got a court order allowing them to replace the rogue servers with legitimate stand-ins. The FBI was told to educate the public and Internet Service Providers about the DNSChanger malware.

If your ISP’s DNS server is infected, you, too, will be affected. How do you know if your computer is infected? It is best to have it evaluated by a professional.

You can also check it yourself in Windows 7 by going to the Start menu, typing Run and then cmd. At the command prompt, enter: ipconfig /all. Look for the entry that reads “DNS Servers……….”

The DNS numbers are in the format of nnn.nnn.nnn.nnn, where nnn is a number from 0 to 255. Make note of the IP addresses for the DNS servers and compare them to the table of known rogue DNS servers.

If you are using a Mac, click on the Apple symbol in the top left corner and choose System Preferences, then Network and click on the Advanced button. Choose the DNS tab on top to show the DNS servers you are using.

There is a special website to check if your ISP’s DNS requests are made to the right places: http://www.dns-ok.de. 

This site will tell you if you are affected by the DNS Changer malware or not.

What will happen after March 8?

According to the FBI, it will shut down the surrogate DNS servers over a period of four months, affecting millions of users who are still using rogue DNS addresses.

If your PC is infected by rouge DNS, you can use Avira DNSRepair tool. Download it from: www. avira.com/files/support/FAQ_KB_Download_Files/EN/AviraDNSRepairEN.exe.

Mac users just make sure you are using the correct DNS. And check your computer thoroughly for other malware.

Courtesy: The Telegraph, Kolkata.

RBI hints at another CRR cut also rules out SLR reduction

The Reserve Bank on Monday hinted at another reduction in the Cash Reserve Ratio (CRR) of banks to ease the severe liquidity in the system but ruled out a cut in the Statutory Liquidity Ratio (SLR), saying that such a move will not create any additional cash flow. ”Space for (more) CRR cut still exists as we need to see significant fall in aggregate deficit,” RBI Deputy Governor Subir Gokarn told reporters on the sidelines of a function.He did not indicate any timeline for the cut. Gokarn, however, ruled out any cut in the SLR saying,”Reducing SRL will not create any additional capacity in the system at this point of time, because of there is surplus. If SLR is close to the limit, then a reduction is possible, and may have created capacity. But given the situation all instruments are on the table.” On January 24, RBI had cut CRR by 0.5 percentage points to 5.5 per cent, releasing Rs 32,000 crore into the system. Since then, the fund crunch has only worsened. Last Thursday, the strain on the system rose to high of Rs 1.02 lakh crore. And going forward it will only increase as by March 15 companies will have to make advance tax payments, which will drive out Rs 60,000 crore from the system. Another Rs 12,000 crore is likely to go out of banks due to the ONGC auction last week and companies will drain a similar amount out on account of excise duty payment. Stating that liquidity deficit is partly structural and partly temporary, Gokarn said, “Current call rates suggest that things are relatively stable (since) there is arbitrage in the market. ”Banks which have surplus SLR can borrow at the LAF (liquidity adjustment facility) and lend through call (money) market to banks which do not have excess SLR. So, the fact that SLR is skewed is not a cause of concern.”

Small savings rates fixed till maturity

The government today said interest rates on post office savings schemes, except PPF, would remain fixed throughout the term of the scheme.

It clarified that interest rates for such small savings would be declared on April 1 every year and would remain valid till the maturity of the scheme.

However, in case of Public Provident Fund (PPF), which is a 15-year scheme, interest rates would not remain fixed for the entire period. The annual interest accruals in the PPF account will depend upon the rate for that particular year, the finance ministry said.

“The rate of interest on small savings schemes will be aligned every year with rates of government securities of similar maturity... the rates are fixed and not floating as far as individual investments, except PPF, are concerned,” it said, while responding to media reports that interest rates on all small savings schemes were floating.

With effect from December 1, the government has increased interest rates on PPF to 8.6 per cent from 8 per cent, and also raised ceilings on annual contributions to the fund to Rs 1 lakh from Rs 70,000.

Interest rates on savings account in post offices also rose to 4 per cent from 3.5 per cent. Similarly, interest rates on deposits of other maturities were raised from December.

“The rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revisions in interest rates in subsequent years will only be applicable to the investments made in the relevant period,” it said.

Stage set for life insurance floats

Private life insurers planning maiden issues can submit their proposals from Friday. However, the Life Insurance Corporation of India, the country’s largest insurer set up under an Act of 1956, will have to wait till Parliament ratifies the Life Insurance Corporation (Amendment) Bill.

According to the IRDA notification on regulations governing the issue of capital by life insurers, only those having a track record of 10 years can go for an initial public offering but before that they will have to seek approvals from two regulators — the insurance regulator and then Sebi.

Only after obtaining a written approval from the IRDA can an insurer file its initial public offer document with the Securities and Exchange Board of India (Sebi).

On its part, the Insurance Regulatory and Development Authority will first evaluate the applicants on certain parameters such as the period for which it has been in business, the company’s history of compliance with regulatory requirements and corporate governance, solvency margin and financial strength.

Besides a 10-year business history, the IPO aspirant should have an embedded value twice its paid-up equity capital, including the share premium. Embedded value is measured by the present value of the company’s future profits plus adjusted net asset value.

Though the IRDA regulations have not specified a uniform threshold below which domestic promoters of an insurer cannot dilute its stake, the regulator retained its discretionary powers to decide which promoters can dilute how much of their shareholding.

At present, foreign direct investment is allowed up to 26 per cent in a life insurance company. A domestic promoter thus can hold up to 74 per cent stake in a life insurance venture. To prevent any such situation from arising wherein such a domestic promoter can dilute its stake below 51 per cent, the insurance regulator has made its approval for an IPO application conditional.

“While granting its approval, the authority may prescribe the extent to which the promoters shall dilute their respective shareholding, the maximum subscription which could be allotted to any class of foreign investors, and the minimum lock-in period for the promoters from the date of allotment of shares,” the regulations said.

In its draft regulations for IPOs for life insurance companies in June, the IRDA had spelt out the way companies should compute future profits from the current block of assets, or the embedded value, which would set the benchmark for share pricing.

All insurance companies will have to follow a uniform formula set by the Institute of Actuaries of India for embedded value calculation.

Under the regulations as notified today, all life insurance companies planning an IPO will have to prepare an embedded value report by an independent actuarial expert and that report has to be reviewed by another independent actuary.

The rules specify that the insurer should disclose the embedded value on the valuation date and also one year before the valuation date. This, IRDA officials said, would help investors compare the change in the embedded value.

Though a number of private life insurance companies have evinced interest in coming out with their maiden IPOs, they may not be in a hurry to do so now.

At the company’s annual general meeting this year, HDFC chairman Deepak Parekh had said, “We are planning to come up with an IPO for insurance in two years.”

A recent research report by HSBC noted that “only a brave Indian insurer” will come out with an IPO now, given the impact of the new regulations on unit-linked insurance plans (Ulips) and the pending direct tax code (DTC) bill.

“Besides declining sales, new business margins are also under pressure given the burden of fee and surrender penalty caps in Ulips,” the report said.

Courtesy- http://www.telegraphindia.com/1111202/jsp/business/story_14827638.jsp

Cheer for savers in December

Public provident fund (PPF), small deposits and post office schemes will fetch a higher rate of return from December.

The government today notified an increase in interest rates on PPF to 8.6 per cent from 8 per cent, and raised the ceiling on annual contributions to the fund to Rs 1 lakh from Rs 70,000.

Interest rates on savings accounts in post offices will go up to 4 per cent from 3.5 per cent. Rates on deposits of other maturities, too, will be raised from next month.

The sale of Kisan Vikas Patras (KVP) will be discontinued from November 30.

The maturity period of monthly investment schemes (MIS) and National Savings Certificates will be reduced to five from six years.

MIS will earn an interest of 8.2 per cent, but accounts opened on/after December 1 will not be entitled for bonus.

Further, every Rs 100 invested in an NSC will fetch Rs 150.90 at the end of five years.

Besides, loans taken from PPFs will attract an interest of 2 per cent per annum from December.

The government has done away with the commission paid to the agents for opening PPF accounts and Senior Citizens Savings Schemes, while the commission for Mahila Pradhan Kshetriya Bachat Yojana has been fixed at 4 per cent. The commission for all other schemes has been halved to 0.5 per cent.

The Centre has also notified an increase in the interest rate on recurring deposit schemes of post office. According to the calculation, a recurring deposit of Rs 10 every month will fetch Rs 738.62 after five years.

Insurance ruling

An insured person can be denied a claim if he has concealed relevant facts such as existing ailments, the National Consumer Disputes Redressal Commission has ruled.

The commission gave the ruling while setting aside a judgment of the Kerala consumer commission that had directed the LIC to pay Rs 50,000 as insurance claim to Shakuntala Devi, wife of a policy holder who died of tuberculosis in 2001.

The panel said there was credible evidence that the policy holder was suffering from tuberculosis and he had concealed it from the company, thus entitling the company to deny him the claim.

“Since, an insurance is a contract entered between the parties in utmost good faith, suppression of any material facts by the insuree, as was done in this case, entitled the insurance company to repudiate the claim,” the bench headed by Justice Ashok Bhan said.