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IRDA: For IPOs life insurers should be in business for 10 years

October 25th, 2010

The Insurance Regulatory and Development Authority (Irda) is not in favour of allowing initial public offers (IPOs) by life insurers who have been in business for less than 10 years, a condition holding up the IPO guidelines for the sector.

The companies who have been operational for less than 10 years, but want to come out with IPOs, have been lobbying hard against this rider, but have not succeeded in their efforts so far. Industry sources said that this is among the key issues delaying the IPO guidelines.

“Insurers can come out with IPO only after completion of 10 years of operations,” a senior official with Irda said.

As per the Insurance Act, promoters having a 26 per cent stake can offload equity after 10 years of operation.

EPFO not to invest in equity, will focus on high-quality debt paper

October 25th, 2010

Ruling out any change in investment policies, the Employee Provident Fund Organisation (EPFO) has said it will continue to focus on investment in high-quality debt paper and keep away from equities.

There is debate whether EPFO should invest in equity for higher returns or not. However, it will not take the risk of doing so, according to Samirendra Chatterjee, Central Provident Fund (CPF) Commissioner.

He was addressing a seminar for bankers and fund managers of mutual funds on Retirement Funds’ organised by A K Capital Services.

It will continue to go for state development loans (state government bonds), bonds of triple-A rated companies, as

RBI advise govt for lock-in period for FDI in hotels, tourism

October 25th, 2010

The Reserve Bank of India (RBI) has advised the government to impose strict new riders and set up a monitoring mechanism to prevent a real estate bubble. That, the central bank fears, may be created due to diversion of foreign funds meant for hotels and tourism to acquisition of immovable property, circumventing foreign direct investment (FDI) rules.

At present 100 per cent FDI is allowed in the hotel and tourism sector through the automatic route.

The new riders suggested by RBI include a lock-in period for the original investment, which means foreign investors cannot sell and walk out of the Indian company whenever they choose.

In telecom, new operators which were given unified access services licences in 2008 had to agree to the clause

FinMin & RBI agree to retain 74% foreign holding in banks

October 25th, 2010

The Union Ministry of Finance and the Reserve Bank of India have agreed to retain the 74 per cent cap on foreign holding in banks.

In the RBI paper on setting up new banks in August this year, one of the proposals was to reduce the cap on aggregate foreign holding to 50 per cent from 74 to avoid a likely concentration of foreign ownership.

However, the Department of Economic Affairs (DEA) feels such a cap would be a retrograde step and inconsistent with the overall policy of foreign holding in Indian entities. “It would be inconsistent with the overall tenor of liberalisation, which is to move in a liberal and minimal interventionist direction,” said DEA.

The issue was discussed at a meeting of a group constituted by the finance ministry recently. The RBI

IRDA: Stop selling ULPs till Nov 4

October 25th, 2010

In the face of alleged violations in sale of universal life policies, insurers would stop selling these products from Saturday till November 4 in accordance with a stiff direction by regulator IRDA.

ULPs are basically hybrid products, having the flexibility of unit-linked products and traditional plans.

“The authority has received several complaints on the sale practices of the insurers regarding universal life products.

After examining the complaints the Authority is satisfied that the ULPs need a better regulatory framework for

C B Bhave’s term ends in Feb, successor to face tough time

October 25th, 2010

A few senior bureaucrats from two northern states and the chairman as well as the MD of a non-glamorous financial institution have so far applied for the post that will fall vacant once Chandrasekhar Bhaskar Bhave’s term comes to end in February. The more obvious names, and also the ones with greater clout, are waiting in the wings, perhaps trying to sense the drift and figure out their chances.

Mr Bhave became Sebi chairman three years ago when the Sensex was about to take a U-turn after a stunning rally. Ask a star monger or a broker today, and chances are she will tell you that the person who succeeds Mr Bhave will have to battle with disappearing hot money.

That’s typically when the market as well as the government push regulators to play a ‘developmental’ role, open a few more doors for investors and, may be, even ‘relook’ at some of the sterner rules. A year after Sebi clamped

IRDA: For IPOs life insurers should be in business for 10 years

EPFO not to invest in equity, will focus on high-quality debt paper

RBI advise govt for lock-in period for FDI in hotels, tourism

FinMin & RBI agree to retain 74% foreign holding in banks

IRDA: Stop selling ULPs till Nov 4

C B Bhave’s term ends in Feb, successor to face tough time

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