No surrender fee on Ulips after 4 yrs

Irda also takes mortality, morbidity charges out of overall 3% cap You can now surrender your unit-linked insurance plan (Ulip), purchased from a life insurer, after four years without having to pay any charge. This was announced by the Insurance Regulatory and Development Authority (Irda) today.The regulator has also made some changes to the overall ceiling on Ulip charges, which were fixed at 3per cent of the gross yield. As a relief to insurance companies, Irda has decided to keep mortality and morbidity out of the overall cap on Ulip charges. At present, there is no standard norm for surrender value, which is akin to exit load for mutual funds.With this latest Irda decision, insurers will have to pay the accumulated fund value, if a Ulip-holder surrenders his/her policy after four years. At present, there are around 70.2 million Ulip-holders, of which 25.2 million deal with private players.Insurers had demanded that mortality charges should be in line with the risk they were carrying and, hence, the decision should be left to them. They had argued that capping of charges would lead to changes in the distribution model and reduction in commission and acquisition charges.As per estimates by brokerage firm Edelweiss, for a typical back-loaded policy, the difference between gross and net yields to the policyholder ranges between 2.1 per cent and 4 per cent. This difference, according to Edelweiss, is likely to be higher for high charge front-loaded policies (4-4.5 per cent). According to the revised circular, mortality and morbidity charges will be excluded in the calculation of the net yield. The difference in the net and the gross yield has been capped at 300 basis points. The modifications were made, keeping in view the concerns expressed by the industry on Irda's July 22 circular capping the charges. "The exclusion of mortality and morbidity charges from the cap will ensure that there is no compromise on growth in sales of valuable life cover. In addition, life insurers will not have to resort to cross subsidisation across age groups to meet the charge cap. The decision clearly indicates that Irda wants life insurance to be viewed as a long-term protection product," said Max New York Life Insurance CEO and Managing Director Rajesh Sud. VVaidyanathan, MD and CEO, ICICI Prudential Life Insurance, said that excluding mortality and morbidity charges would promote the core concept of insurance. It has capped fund management charges at 135 basis points for all tenures. Earlier, there were two caps -one below 10 years and the other above 10 years. At present, this charge in equity varies between 125 basis points and 225 basis points, and in debt between 80 basis points and 100 basis points. "Now people in the older age bracket seeking higher assured sum can be insured... Having one cap on fund management charge will result in better administration of the fund as insurance companies will have to manage only one fund," said Kamlesh Goyal, Bajaj Allianz Life Insurance MD and CEO, and Country Manager of Allianz. Sud added that surrender charges and quantum and gradients would need to be prudently shaped in the first four years so that it was fair to all policyholders."This allows insurance companies to continue to provide adequate protection to the policyholders, which is the core objective of a life insurance policy. Moreover, it allows companies to offer older customers the benefits of life insurance without crossing the cap," said TR Ramachandran, Aviva India CEO and MD.

Govt looks to implement new I-T law from 2011

NEW DELHI: The government on Wednesday unveiled the draft of a brand new direct tax law, which will replace the four-decade Income-Tax Act, "... to improve the efficiency and equity of our tax system by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the tax base", said finance minister Pranab Mukherjee.

The tax code makes radical changes in all areas of taxation: it lowers the incidence of tax on corporate and individual incomes but reintroduces wealth tax and capital gains tax, albeit at lower levels. It also proposes to bring a uniform pattern of taxation on all long-term savings in the form of EET—exempt at the stage of contribution, exempt during accumulation and taxed during withdrawal.

Releasing the draft direct taxes code, Mr Mukherjee said if a reasonable level of discussion happens on the code, a bill could be placed in the winter session of Parliament. The government is hoping to implement the new code from 2011.

Home minister P Chidambaram, who during his tenure as finance minister had initiated work on the Code and was intensely involved with its drafting, said this was a brand new Code written from scratch. Mr Chidambaram also said the underlying philosophy behind the Code is the philosophy of the government, which is wedded to a well-regulated free market system.

The code proposes to exempt income up to Rs 1,60,000 a year from tax. Income up to Rs 10 lakh will be taxed at 10%, 10-25 lakh at 20% and beyond Rs 25 lakh at 30%. Currently, there is no tax till Rs 1,60,000 of income in a year. However, there is a 10% tax on income between Rs 1,60,000 and Rs 3 lakh, 20% between Rs 3 lakh and Rs 5 lakh, and 30% beyond Rs 5 lakh.

But under the new tax law, an individual’s gross salary would also include perquisites such as value of rent-free accommodation, medical reimbursements and leave travel encashment. Taxpayers will also not be able to claim tax benefit on interest repayment on housing loans. However, the benefit would be available if the house is rented.

All savings schemes would also come under EET, implying that they would face tax at the time of withdrawal. However, tax exemption would be available to the Public Provident Fund and other pension fund schemes on withdrawals of amounts accumulated up to March 31, 2011.

The Code further proposes abolition of STT. Capital gains on shares and securities has been proposed to be taxed as income, added to other income after indexation with base year 2000. “The capital gains regime is proposed to be simplified by eliminating the distinction between long-term and short-term capital assets,” Vikas Vasal, executive director, KPMG.

Wealth tax provisions are proposed to be overhauled. Net wealth, which would include all wealth of an individual in excess of Rs 50 crore, will be chargeable to wealth tax at the rate of 0.25%. One of the key changes suggested by the Code includes giving supremacy to the Indian tax law in case of a dispute between provisions of a tax treaty and the Code, and introduction of a general anti-avoidance rule to combat tax avoidance.

This would help the tax authorities deal with cases such as Hutch-Vodafone, where if they infer that a tax treaty was being abused for tax benefits, those case be denied.

Besdies, a massive overhaul is suggested for corporate taxation besides slashing the corporate tax rate to 25%. The new rate would not have any surcharge or cess unlike present. Moreover, the current profit-linked tax incentives for businesses will be replaced with investment-linked incentives.

To put it simply, a company would be able to enjoy tax benefit only to the extent it invests. But, all the tax exemptions such as those available to Special Economic Zones would be given time to adjust to new regime. A minimum alternate tax on assets of companies is being proposed as it provides incentive for efficiency at the rate of 2%. It also proposes rationalisation of tax provisions for amalgamations and demerger so that tax remains neutral when businesses reorganise.

Dividend distributed by companies would be taxed at the rate of 15%.

In move that would have major impact on foreign companies or companies that have made investments in foreign countries, the code is proposing to treat a company as an Indian resident even if it is partly controlled in India. Presently, a company is treated an as Indian resident and taxed, only if full control of that company lies here. the measure is primarily aimed at preventing escape of any income from taxation.

“The thrust of the code is to improve the efficiency and equity of our tax system by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the tax base,” Mr Mukherjee said.

Source:ET

India among top 10 world insurance markets

MUMBAI: The life insurance industry might have turned in a poor show in FY09 with almost flat growth, but with the rest of the world shrinking

during this period India has for the first time moved up the ranking to be among the top 10 life insurance markets worldwide.

According to the latest sigma report on world insurance markets, India recorded an inflation adjusted growth of 0.2% in USD terms while the world market shrunk 3.5% in `08 thanks to the global financial crisis. While `08-09 was an exception on account of the crisis, the average growth of the Indian life industry post liberalisation has been very impressive. India was at No 20 at the time of liberalization in 2000 but had moved up to No 17 two years back and was at number 11 position last year.

The economic Survey acknowledges this growth. The report for the year `08-09 states that insurance sector penetration, both in life and non-life segments, has improved since the time the sector has been opened for private participation.

But India’s performance is completely overshadowed by that of China which has overtaken Italy and South Korea to become the sixth largest life insurance market. The middle kingdom has also recorded the highest growth rate among reasonable sized markets.

Indian insurers feel that India can leapfrog to a position just behind China by growing faster than other Asian countries like Korea and Taiwan which are still ahead of India.

According to V vaidyanathan, MD, ICICI Prudential, 40% of the growth in life insurance will come from Asia. Within Asia India and China will contribute to 80% of the growth. "The Indian industry will grow by 12-13% as against 5-6% global growth. India’s ranking will have to go up" he said. He adds that industry growth in India is essential since no social security exists in India.

"Factors like a stable 8 per cent annual growth rate of the economy make India one of the most promising amongst the emerging markets, with the potential to go beyond Korea and Taiwan" said Rajesh Relan, MD, Metlife Insurance India. He adds that with nearly 80% of its 1.2 billion population without life insurance, even a marginal increase in penetration would result in a huge increase in volumes.

The expected hike in Foreign Direct Investment (FDI) cap to 49% is also expected to boost industry growth.

Source: ET

New Jeevan Sathi

Times are changing and so are the needs. LIC, as an insurer, has always been sensitive to the changing needs of the people and introduced products to suit these from time to time. While we have a wide array or products to suit every Indian, we keep on adding variety to take care of the emerging needs like Health, Pension, and Mortgage etc. The innovation and the restructuring of the product portfolio are done with a view to match people’s expectations. Our latest offering is Jeevan Saathi Plus which is the first of its kind in the industry. Unlike our earlier Joint Life plan Jeevan Saathi, which was on Conventional platform, this one is on ULIP platform and offers the insured the benefits of market-linked return.

Jeevan Saathi Plus is a plan wherein the couple can take the insurance cover on their lives under a single policy. The proposer under the plan shall be called Principal Life Assured (P.L.A.) and the other life (wife/husband) shall be called Spouse Life Assured (S.L.A.).

P.L.A. may pay premiums regularly at yearly, half-yearly, quarterly or monthly (ECS) intervals over the term of the policy. The minimum annualized premium (other than monthly through ECS) will be Rs.10,000/- increasing thereafter in multiples of Rs.1,000/-. The minimum monthly (ECS) premium will be Rs. 1000/- increasing thereafter in multiples of Rs. 250/-. Alternatively, a Single premium can be paid subject to a minimum of Rs. 40,000/- . P.L.A. will also have an option to make additional investments under the policy through Top-up premiums.

The P.L.A. can choose the level of cover (Sum Assured) for both lives within the limits, which will depend on whether the policy is a Single premium or Regular premium contract, age and the amount of premium agreed to pay.

For regular premium policies, in case of death of the P.L.A. during the term of the policy, the all future premiums including outstanding premiums, if any, are waived and units equivalent to an amount equal to all future premiums, including outstanding premiums, if any, shall be credited to the policyholder’s fund provided life cover is in force. The policy, however, continues even thereafter and the risk cover on the life of S.L.A. remains intact.

In case of the death of either the P.L.A. or S.L.A. the surviving life shall have an option of not taking the death benefit but can transfer the same to the policyholder’s fund and same may be withdrawn anytime.

On both P.L.A and S.L.A. surviving or either of P.L.A or S.L.A. surviving the date of maturity an amount equal to the Policyholder’s Fund Value is payable. When the policy comes for maturity, the policyholder (i.e. P.L.A. or if P.L.A. is not alive, then S.L.A.) may exercise “Settlement Option” and may receive the policy money in instalments spread over a period of not more than five years from the date of maturity.

Q & A

Question:
How much discount I can expect from my LIC agent. I have come to know from one of my friend that he has bargained on his first premium for his first LIC premium. He had paid almost half of the actual premium. What do you offer.


Answer:
Discounts or Sharing of Commission from Agent is illegal in India under Section 41 of Insurance Act 1938 . This is quoted on each life insurance proposal form available in India.

No doubt everyone wants to save money and this is our right, but commission is the only insensitive to the agent for his services & hard work so when you are asking rebates they will always suggest you a plan in which they are getting higher commissions. And then this is very much possible, that he/she will not suggest you a plan that will be of your requirements.

Now a days there are so many other things you should demand from an agent.
That is

1. how much is he educated,
   
2. is he/she able to understand your actual needs,
3. does he/she have full knowledge of product
4. is he/she able to help you for premium deposits and other services

At last I would like to ask a simple question from the investor still willing to take discount on premium.

Let say I have paid to x% on your premium and I have not earned any thing from you now.
Will you give me back x% of your returns from LIC on maturity or death?
if your answer is no. WHY?

If you are asking discounts on premiums from insurance advisers, you are generating black money in the market.

Jeevan sathi Plus From LIC

LIC is launching Jeevan sathi Plus plan no 197 with effect from 29th june 2009.

Features

1. This is a Unit linked plan wherein Husband and wife can take insurance cover on their lives under a single Policy.
   
2. Age range to take this policy is 18 to 55 years and the Policy term choice is for 10 and 20 years.
   
3. Principal Life assured (PLA) and spouse life assured (SLA) can opt for seperate amount of risk cover.
   
4. Principal life assured can decrease risk cover of self and spouse anytime once duirng the policy year.
   
5. The policy can be surrrendered after three years. The policy fund will be paid as the surrender value and There is NO Surrender charge
   
6. Partial withdrawl permitted after 3 years . But 10% in case of single premium and 2 annual premiums in case of regual premium to be maintained in the fund.
   
7. Reinvestment of claim amount available (on Death of Principal life assured) with partial withdrawl facility without any restriction.
   
8. Option to continue risk cover without paying premiums after three years.
   
9. Four funds that are available with equity
   
   exposure. One fund is to be chosen while taking the policy.
   
10. Switching from one fund to another is permitted. Four switches in a year are FREE and additional switches done in a year carry a charge of Rs100 per switch.
    
11. Top up premiums can be paid in multiples of Rs 1000 and carry an allocation charge of 1.25% . The maximum total top up premium which can be paid is 25% of total premiums paid.
    
12. Lapsed Policy can be revived in a span of 2 years from date of last unpaid premium.

Maturity Benefit
The fund value of the policy will be paid to the PLA or SLA as the case is.
There is an option to recieve the maturity proceed in a settlement option.

Death Benefits

Death of P.L.A while S.L.A is alive	Sum assured is paide to S.L.A. and Future premiums to be paid are waived and is also credited to the policy fund as units and policy continues.
Death of S.L.A while P.L.A is alive	Sum assured is paid to P.L.A and policy continues
Death of P.L.A after S.L.A 's death.	sum assured of PLA + all future premiums to be paid + fund value of the policy is paid to the nominee or legal heir.
Death of S.L.A after P.L.A's death	sum assured of SLA + fund value of the policy is paid to the nominee or legal heir.
Simultaneous death of S.L.A and P.L.A	Both the sum assured's of SLA and PLA + All future premiums to be paid + fund value of the policy is paid to the nominee or legal heir.

Premium
Premiums can be paid in ECS-monthly, quarterly, halfyearly, yearly and in single mode.
Regular premium minimum 10,000 and multiples of 1000 annual for ECS minimum 1.000 and thereafter multiples of 250 No maximum limit for premium
Single premium minimum 40000 and multiples of 1000

Sum assured
Regular premium 5 times of annual premium is minimum and Maximum of 30 times for age below 40 and 20 times for age above 40 in multiples of 5000
Single premium 1.5 times of premium is minimum and maximum of 5 times for age below 40 and 20 times for age above 40 in multiples of 5000

Types of Fund
Bond fund - Secured fund - Balanced fund - Growth fund

Allocation Charges
single premium upto 15 lakhs - 4.25%
single premium above 15lakhs - 4.00%

Regular premium

Premium	First year	2 & 3 year	Thereafter
10,000 to 1,50,000	29%	5%	2.5%
1,50,0001 to 2,50,000	28%	5%	2.5%
Above 2,50,001	27.5%	5%	2.5%

Top up premium allocation charge is 1.25%

Mortality Charges
Life cover charges for Principal life assured and spouse life assured
Premium waiver benefit charge (for regular premium policy only)

Policy administration charge
First year Rs.60 per month.
Second and third year Rs 20 per month
Thereafter Rs 20 per month escalating at 3% Per Year.

Aila causes Rs 500-cr crop damage, but insurers to pay only Rs 7 lakh

Cyclonic storm Aila, which ravaged the eastern part of the country in the last week of May, has caused massive agricultural damage. But the claims under weather-based crop insurance may not exceed Rs 7 lakh.

According to informal estimates by government officials, the total damage in the agriculture and horticulture sectors is pegged at around Rs 500 crore.

Damages in the horticulture segment alone could be around Rs 300 crore, a senior government official confirmed.

State-run Agriculture Insurance Co (AIC), ICICI Lombard General Insurance and Iffco-Tokio are the three companies which offer weatherbased crop insurance in West Bengal.

However, the entire payout of Rs 7 lakh is likely to be made by AIC in two subdivisions (Contai and Egra) of the East Medinipore district, according to company officials.

Even though two of the worst-affected areas in North 24-Parganas (Bashirhat and Baduria) are covered under AIC's weather insurance scheme, there would not be any payout. Reason: The huge damage in the area was caused more by wind and tides, than rainfall. According to AIC parameters, weather-based crop insurance claims are given in areas with over 75 mm of rainfall, whereas in the North 24Parganas, the rainfall recorded by the meteorological department was only 62 mm.

In case of ICICI Lombard, the period of crop coverage expired on May 15, a little more than a week before Aila hit the state.

In case of Iffco-Tokio too, there were hardly any claims, said sources. No comment was offered by the company on the issue.

Also, in areas where AIC provides the facility, crop damage was the highest in case of sesame seeds, which like horticulture products, is not generally covered under weather insurance.

In most farms, paddy was kept in the field after being harvested, and insurance companies provide cover only for standing crops. As a result, a major portion of the summer season paddy crop was damaged in the fields, but was not covered under insurance.

At present, agriculture insurance is mostly based on area approach, like under the National Agriculture Insurance Scheme (NAIS), where payouts are made on yields in defined areas (unit area of insurance).

In view of long delays in claim settlement under NAIS, the government in 2003 had launched the Weather-Based Crop Insurance Scheme (WBCIS) on a pilot basis, giving insurance cover against losses incurred due to unfavourable weather conditions such as deficit, excess or untimely rainfall and variations in temperature. Risk firms escape payouts on technicalities

RIDING ON RIDERS

* State-run Agriculture Insurance Co (AIC), ICICI Lombard General Insurance and Iffco-Tokio offer weather-based crop insurance in West Bengal

* According to AIC parameters, claims are given in areas with over 75 mm of rainfall. North 24-Parganas recorded a rainfall of only 62 mm, thus no compensation

* For ICICI Lombard, the period of crop coverage expired on May 15, a little more than a week before Aila hit the state

* In case of Iffco-Tokio too, there were hardly any claims

Rising life expectancy to help lower insurance premium

Life insurance premium rates are likely to drop over the next few months owing to longer life expectancy, with a new mortality and morbidity table expected to be in place by the fourth quarter of 2009 to replace the current one, which is of 1994-96 vintage.

The new rates will include the claim experience of individual companies and will be based on 2006-08 data.

The Mortality and Morbidity Investigating Centre (MMIC), an affiliate of the Institute of Actuaries of India (IAI), plans to publish the mortality table by October. The institute has been working on the table for the last six months.

Data and statistics are currently being collected from various insurance companies though a handful of large players, including government-owned Life Insurance Corporation of India, are yet to submit data, said IAI President G NAgarwal.

With the risk perception falling, premium rates, which are based on mortality rates, are expected to fall as well. "Over the years, life expectancy has increased, mortality has come down drastically and this gives a room for the rates to drop," said Agarwal, who is the chief actuary of Future Generali India Life Insurance Company, a joint venture between the Future Group and Italy's Generali.

Agarwal said over the last 12 or 15 years, according to data available so far, mortality rates have come down by 25 to 30 per cent in the higher age brackets, which may translate into a reduction of 15 to 20 per cent in certain segments.

Five mutual fund houses get ready to start business

More may follow as market indices gain 80 per cent

The mutual fund industry has started attracting new players after the rebound in the stock markets. Motilal Oswal, ASK Investment Holding, Axis Bank, Indiabulls, Mahindra and Mahindra Financial Services have applied to the Securities and Exchange Board of India (Sebi) to start fund houses and have already received in-principle approval. And sources familiar with the developments said many more names could follow.

This is a sea change from the situation just six months ago when the industry was in consolidation mode. Example: Goldman Sachs shelved its plan to start a fund house and Lotus Mutual Fund got sold.

That's almost a distant memory now with the prime stock market indices going up by over 80 per cent in the last two-anda-half months. The good news for those getting ready to start asset management companies (AMCs) is that there is renewed interest in mutual funds.

In May, average assets under management of the industry rose by 15 per cent to Rs 638,000 crore, the highest ever. Market leader Reliance Capital AMC's assets increased to Rs 102,000 crore.

Even new fund offerings have begun to do well. For instance, ICICI Prudential's Target Returns fund collected Rs 800 crore.

Among the new players, Japan's Shinsei Bank has already got approval from Sebi to start its mutual fund business. Rakesh Jhunjhunwala, the well-known investor, has a15 per cent stake in the AMC. Shinsei is planning to start business in three months with equity, liquid and bond funds.

Piyush Surana, chief executive officer of Shinsei Mutual Fund, said, "The current environment in India is conducive to launching a new asset management business. The next surge in investments in mutual funds, which will be brought about by a sustained rise in the markets, will increase penetration levels for the industry." Other fund managers, who are waiting for a final clearance, have got busy in product development. But they are confident about India's longterm potential because mutual fund penetration is still small at just 4 per cent of the total population.

Nitin Rakesh, chief executive officer, Motilal Oswal Mutual Fund, said: "We are already offering securities trading, commodities trading, private equity, investment banking, venture capital and advice-based portfolio management services to our customers. This AMC venture completes our portfolio." Last year, the mutual fund industry went through a lean period because inflows dried up in both equities and, in the latter half, fixed maturity plans (FMPs). There were, in fact, outflows of almost Rs 100,000 crore in FMPs in the October to December 2008 period.

The outflows, along with the erosion in the value of equities, led to apprehensions about quite afew fund houses because many of them were over-dependent on short-term debt funds and liquid funds.

The market regulator, Sebi, was also concerned about the stress levels in the industry. And there were talks of raising the net worth of fund houses from Rs 10 crore to Rs 50 crore. However, no decision has been made till now.

Hemant Rustagi, chief executive officer, Wiseinvest Advisors, said: "Setting up an AMC business does not depend on the market cycle. Fund houses are looking to tap the high savings rate of our population. But one needs to have deep pockets to survive in the industry as it takes six or seven years to break even."

A layman's guids to the New Pension Scheme

On May 1, 2009, the Pension Fund and Regulatory Development Authority (PFRDA) threw open the New Pension Scheme (NPS) to all Indian citizens. Till then, this pension scheme was available only to the central and state government employees.

• What is NPS?
  
  
  NPS is a defined contribution pension scheme open to any Indian citizen between the age of 18 and 55.
• What is a defined contribution scheme?
  
  
  In a defined contribution scheme, the individual invests a certain amount in a pension scheme till he retires. At retirement, he is allowed to either withdraw the money that has accumulated or buy an immediate annuity from an insurance company to generate a regular income, or do both. The option he exercises depends on the way the pension scheme is structured. Buying an immediate annuity assures a regular payment from the insurance company. This payment can be monthly, once every three months, once every six months or once every year.
• How much do you need to invest?
  
  
  The minimum amount that needs to be invested per contribution is Rs 500. A minimum of four contributions need to be made per year. Other than this, a minimum of Rs 6,000 needs to be invested per year. This means those who plan to invest the minimum amount of Rs 500 need to make 12 contributions per year. There are no upper limits on the amount of money that can be invested as well as the number of contributions that can be made. You need to decide on the frequency of your contributions across the year, at your convenience. The investments can be made through cash, local cheque or a demand draft at the chosen point of presence.
• How will the money be invested?
  
  
  The money you invest in NPS will be managed by professional fund managers. Currently, you have the choice of picking up one of the following six fund managers:
  ICICI Prudential Pension Management
  IDFC Pension Fund Management
  Kotak Mahindra Pension Fund
  Reliance Capital Pension Fund
  SBI Pension Funds
  UTI Retirement Solutions
  It is important to remember that at the point of filling up the form, the choice of one of these six pension fund mangers needs to be indicated. The application will not be accepted if this choice is not made.
• Can you switch fund managers, if you are not happy with the current fund manager?
  
  
  Yes, you can switch fund managers. PFRDA, the pension fund regulator, will declare the value of your investment every year in April. At that point of time, if you are not satisfied with the performance of your fund manager, you can switch to another fund manager between May 1 and May 15.
• Will the money be invested in debt or equity?
  
  
  The NPS currently offers three investment funds to choose from:
  
  
  Asset class E: Investments will be made in thirty stocks that constitute the Bombay Stock Exchange Sensex or the fifty stocks that constitute the National Stock Exchange Nifty. The investments in stocks will be made in the same proportion as the weightage of the stock in the particular index. Reliance Industries currently has around 17% weightage in the Sensex, so if Rs 100 is being invested in Asset Class E, that would mean Rs 17 would be invested in the stocks of Reliance Industries.
  
  
  Asset class G: Investments will be made in debt securities issued by the central as well as the state governments.
  
  
  Asset class C: Investments will primarily be made in debt securities issued by entities other than the state and central government, liquid funds of mutual funds, fixed deposits of banks etc.
  At the time of filling the form, you need to indicate what proportion of your money should be invested in which asset class. You can choose to invest a maximum of 50% in the equity option, i.e. asset class E and a maximum of 100% in the other two options.
• What if you do not have enough expertise to exercise a choice?
  
  
  In case you decide not to exercise any choice regarding the asset allocation, the Lifecycle Fund of NPS kicks in. In this case, your age will decide what fraction of your investment is invested in which asset class and as you come become older, your exposure to the equity class will keep coming down.
  
  
  In fact, for the risk averse, it might be a good option to choose the Lifecycle option, given that exposure to equity decreases as the age of retirement nears. But NPS gives me only a maximum of 50% exposure to equity... Many so-called experts have gone to town criticizing this aspect. But anybody who has been through the stock market crash last year will agree that betting all investment on equity isn't a great idea, always, especially when you are saving for retirement. PFRDA has also done a great job by limiting investments only in Sensex and Nifty stocks. This is an extremely passive form of investment and has taken active fund management by fund managers totally out of the equation. What this ensures is that you will get a rate of return that is equal to the broader market. You may not get a rate of return that is better than the overall market, but at the same time you will not get a rate of return that is much worse than the overall market.
• What if you default on payment?
  
  
  For every year of default you will have to pay a penalty of Rs 100. This will have to paid along with the minimum amount (i.e. Rs 500) that would be needed to reactivate the account. Also during the period you do not pay, NPS will keep charging its expenses against your accumulated corpus. If you continue to default, the account will be closed as and when the value of the account falls to zero.
• Facility of Withdrawing money from the account?
  
  
  The NPS offers two accounts: tier I and tier II. Currently only tier I account is available. This is a non-withdraw able account and investments in this keep accumulating till you turn 60. Withdrawal is allowed only in case of death, critical illness or if you are building or buying your first house. In case of death the nominee can get 100% of NPS wealth in a lump sum. He can however continue with the NPS in case he wishes to.
  
  
  Tier II account, on the other hand, will be a voluntary savings account which will allow you to withdraw money as and when you want to. This option is currently not available.
• Will you get a tax deduction for the investment?
  
  
  Yes, under Section 80CCD of the Income Tax Act investments of up to Rs 1 lakh in the NPS can be claimed as tax deductions. Readers should remember that this Rs 1 lakh limit is not over and above the Rs 1 lakh limit available under Section 80C. In fact, the combined limit of investments made under Section 80C, 80CCD and section 80CCC (for investments made into pension plans of insurance companies) is Rs 1 lakh.
• What happens at retirement?
  
  
  NPS by default sets the retirement age at 60. Once you attain that age, you can use the money that has accumulated to generate a regular pension for yourself. In order to do this, you have to compulsorily buy immediate annuity from a life insurance company with 40% of the money that has accumulated. As explained at the beginning, buying an immediate annuity will assure a regular payment for you. Since a minimum of 40% needs to be used to buy an immediate annuity, a maximum of 60% of the money accumulated can be withdrawn. However, unlike other tax-saving instruments like Public Provident Fund (PPF) and Employees' Provident Fund (EPF), wherein the amount at maturity is tax-free, in case of NPS this amount is taxable.
  
  
  This is one negative feature of NPS. However, the PFRDA, which is running the NPS, has approached the government to given NPS a tax treatment similar to that for PPF and EPF. Currently, the only way not to pay tax is to buy immediate annuities using the entire amount at maturity, which is not bad because you were anyway accumulating the corpus to generate a pension.
• What if you want to withdraw the accumulated amount before you turn 60?
  
  
  If you want to withdraw the accumulated amount before you turn 60, you need to compulsorily buy immediate annuity with 80% of the money that has accumulated. This is another negative feature of the scheme.
• What are the charges?
  
  
  This is where NPS wins hands down against all other modes of creating a corpus to generate income after retirement. The fund management charge of NPS is 0.0009% of the value of the investment, every year. In comparison, pension plans of insurance companies charge 0.75-1.75% as fund management charge, which is 800-2000 times higher. The other expenses charged are also very reasonable.
• Possibility of guaranteed rate of return?
  
  
  No return is guaranteed as it is in case of EPF and PPF. The amount of money you make is dependant on how well the fund managers chosen by you perform. But, the extremely low charges in NPS sure give it an edge over the pension plans of insurance companies.

LIC scans 200 firms for investment

Life Insurance Corporation of India (LIC), the country’s largest institutional investors, is scanning around 200 companies on a daily basis for possible investments, a senior executive said on Wednesday.

LIC managing director D K Mehrotra told reporters on the sidelines of a software launch function that the public sector insurer would look at the the company's credentials and also the industry segments before investing. Its in-house research team was constantly giving feedback on the companies and the industry segments, which were performing well.

In line with its investment plan for the current financial year, LIC was expected to step up equity investment by 25 per cent to around Rs 50,000 crore in equities, as against Rs 40,300 crore during 2008-09.

With the Insurance Regulatory and Development Authority (Irda) asking the life insurer to ensure that there were no fresh companies where LIC’s exposure breached the 10 per cent ceiling, the company was on the lookout for new stocks.

Mehrotra also said that the public sector insurance company would put about 15 per cent of its investable funds in the infrastructure sector though he did not disclose any numbers. "With infrastructure showing signs of recovery, LIC would not shy away from investing in the sector," he said.

"We will not take a short-term call on investments. We are looking for a long-term relationship,'' Mehrotra said, adding that the company would exercise caution in investing in real estate projects in view of the prevailing market conditions.

LIC’s total premium income, which includes renewal premium and first premium income, is expected to be over Rs 1,75,000 crore, around 12 per cent higher than last year’s level of around Rs 1,55,700 crore. The company expected a 4.5 per cent increase in new premium during the current financial year to Rs 50,000 crore, as against Rs 47,828 crore last year.

But if trends over the last few months are anything to go by, LIC would exceed the target with ease. Mehrotra said that over the last two months, premium from the sale of new policies has increased by about 40 per cent. According to the latest Irda data, LIC’s first premium income went up by 69.33 per cent to Rs 2,113.11 crore during April, as against a 10 per cent fall during the last financial year.

Source:business-standard

Wipro bags LIC's 5-yr IT outsourcing deal

In another affirmation of its growing clout in the domestic market, Wipro Infotech, the India and Middle East information technology services business of Wipro Ltd, has clinched an IT outsourcing deal from Life Insurance Corporation (LIC) by piping its large Indian rivals

The contract, which involves upgrade of LIC’s front-end IT application programmes (FEAP) to make these accessible through the web, is said to be worth about Rs 200 crore, and will be done over five years, a highly-placed source told Business Standard. By making applications accessible through the web, LIC expects to reduce the load on its servers and improve the processing time.

Sources said LIC expected to drastically reduce the cost of running the applications by making processing happen on the desktop.

It is understood that most large Indian IT outsourcing companies, including TCS, Infosys and L&T Infotech, had competed for the contract. It was considered prestigious, not because of its size but because it involved a prestigious public sector organisation like LIC.

Anand Sankaran, head of the India and Middle East business of Wipro, said, “Discussions are still under way and therefore it won’t be possible for me to firmly comment on this.”

Analysts say the recent deals that Wipro has won, coupled with the strong pipeline the company has in the domestic market, is expected to make it the second largest player in the domestic market after IBM, which earns over $2 billion revenue from India. Sources in Wipro say that if one discounts IBM’s product revenues in India, the gap between it and Wipro’s services business in India is only about 10 per cent.

LIC is an existing customer of Wipro, which has implemented all the entire data warehousing for the insurance major. In the financial services sector in India, HDFC Bank and Dena Bank are two large customers.

Wipro has become aggressive in the domestic market as deal flows from the US and Europe have waned during the past two quarters in the wake of the global financial meltdown. Last quarter, Wipro won a six-and-a-half year mega outsourcing e-governance deal from Employees State Insurance Corporation (ESIC), beating TCS and Infosys. The deal, valued at Rs 1,182 crore, involves modernisation and automation of the entire healthcare benefits administration set-up of ESIC.

Recently, the company bagged a nine-year contract from telecom services provider Unitech Wireless to set up and manage the company’s entire IT applications. The deal, said to be worth over Rs 2,200 crore, is the largest-ever win by the company in the Indian market. It is also understood to be in the race for a large outsourcing deal from Swan Telecom.

The price quoted by Wipro in most of the recent bids is said to be below industry standards. For instance, the company’s quote of Rs 1,182 crore for the ESIC bid was much lower than TCS’ Rs 1,530 crore and Infosys’ Rs 1,791 crore.

“Wipro was always present in India through Wipro Infotech and is now looking towards the domestic market due to the pressure from other geographies, which is helping them to win significant deals in the domestic market,” said Sabyasachi Satpathy, co-founder and director of Mindplex Consulting. Wipro derives about 22 per cent of the IT business’ revenue from India.

Infocrossing gets $34 million contract extension from Sunoco

Wipro subsidiary Infocrossing has gained a $34-million contract extension for four years from petrochemical company Sunoco, according to a Wipro release on Wednesday.

Infocrossing has been a Sunoco vendor since 1996, providing managed infrastructure outsourcing services, including servers, storage and network devices, to the latter.

Source:business-standard

LIC makes Rs 2,600 cr in bear mkt

In a year when equity markets fell by 38 per cent, the country’s largest insurance company, state-run Life Insurance Corporation of India (LIC), has booked a profit of Rs 2,600 crore through sales of Indian stocks.

According to industry estimates, LIC has sold shares in 75-80 Bombay Stock Exchange (BSE)-listed companies during the past financial year, when most domestic institutions were either booking losses or buying more shares. The 30-stock bellwether BSE index fell from 15,771.72 in April last year to 9,708.50 at the end of March 2009, marking one of the worst-ever falls of Indian stocks during any financial year.

During this period, while most insurance companies and mutual funds were incurring losses, LIC managed to book profit by selling in equities. It had also booked a profit of around Rs 10,000 crore during FY07-08.

“THOUGH the profit booking numbers have come down from that of fiscal 2007-08, LIC still considers that a profit-booking amidst falling markets were possible during FY08-09 because our investments were made for a long term. Now, as the markets tend to improve, given the formation of a stable government, we expect the profit booking numbers to go up again,” said a senior LIC executive.

Apart from the Ranbaxy open offer, where LIC had offloaded a massive 8.56 per cent stake, a sale of about 1.11 per cent in Colgate-Palmolive, about 1 per cent stake sale in Cadila Healthcare, a 1.32 per cent offloading in Bajaj Electricals, a 1.45 per cent sale in Hindustan Unilever, a 5.42 per cent sale in Hero Honda and a 2.56 per cent sell-off in Kirloskar Electric were some of the biggest profit booking deals done by the insurer during the past financial year.

Despite the Sensex rising by about 40 per cent from 9,745.77 since April 1, the insurer could not book much profit, as most of the bull runs have come over the past few days. Monday’s historic jump kept most investors away from profit booking, as the circuit filters were broken in just 60 seconds.

“We have been booking profit even this financial year, but not so aggressively. Also, there were fewer profit booking occasions during April, as the markets were suffering from negatives due to political uncertainties. Now that we have a stable government, the markets look steady. Most of our investments in equities are meant for the long term, so profit booking gains come from those sales where investments were made long back,” said Thomas Mathew, Managing Director.

Source:business-standard

Sensex jumps 14.1% on week; best in 17 years

MUMBAI: The BSE Sensex rose 1.1 per cent on Friday and took gains for the week to 14.1 per cent, its most in 17 years, buoyed by hopes for pro-market reforms after the ruling coalition won general election last weekend.

Manmohan Singh was sworn in as the prime minister for a second term, along with his new cabinet and the outlook for the market would depend on how quickly they are able to push asset sales in state firms, ease rules for foreign investment and boost sagging growth.

Some analysts believe the market is overbought after it leapt more than 17 per cent at the start of the week following the unexpectedly easy election win. The BSE index has risen 73 per cent from a 2009 low in early March and has climbed for 11 weeks in a row in the longest winning streak in four years.

"Valuations have become high, but people are buying because they may be left out otherwise," D.D. Sharma, vice president at Anand Rathi Securities, said.

The BSE index ended up 150.61 points at 13,887.15, with gainers and losers evenly matched. Trading was choppy with the index falling 0.9 per cent at one stage.

Brokerages and investment houses polled by Reuters expected the benchmark to reach 15,750 by the end of December, gaining another 13 per cent.

"There are so many desperate buyers because nobody is betting on the market going down. You will see people buying at every dip from now," Sharma said.

Energy giant Reliance Industries, private-sector lender ICICI Bank and infrastructure firm Larsen & Toubro led the market higher after a lower start.

Reliance, which has the biggest weight in the main index, rose 3.1 per cent to 2,183.10 rupees, while private-sector lender ICICI gained 4.5 per cent to 702.80 rupees.

Larsen & Toubro climbed 4.7 per cent to 1,301.40 rupees.

The market has largely been powered by foreign funds, which have pumped about $5 billion into the market in the past two months, including more than $1 billion in this week.

Outsourcers Tata Consultancy and Wipro, which get most of their revenue from overseas, fell about 2 per cent as the rupee climbed past 47 to a dollar to its highest since December.

The rupee is set to extend its gains in the remainder of 2009 after rising sharply this week following the ruling Congress-led coalition's decisive victory in the elections, a Reuters poll showed.

Asian shares eased after a drop on Wall Street overnight on fears the United States, with its increasing budget deficit and weakened economy could lose its AAA rating.

Japan's Nikkei dropped 0.4 per cent, while MSCI's measure of other Asian markets edged down 0.02 per cent.

European shares were higher after falling more than 2 per cent in the previous session. The FTSEurofirst 300 index of top European shares was up 0.4 per cent at 1117 GMT.

For More Details Click www.acetex.in

Private sector life insurance companies' market share rise

MUMBAI: The market share of private companies in life insurance business has gone up from 36.4 per cent in 2007\08 to 39.2 per cent in 2008\09, according to Bajaj Finserv, a major private insurance player.

The company while releasing the results today said in 2008\09, the life insurance industry declined by 6.3 per cent against a growth of 23 per cent during the year before.

New business premium for the industry as a whole was around Rs 87,108 crore compared to Rs 92,989 crore the year before, the company said.

While LIC had to contend with a negative growth of 10.5 per cent , the private sector companies grew marginally by one per cent in 2008\09.

"Accordingly, the market share of private players increased from 36.4 per cent last year to 39.2 per cent in 08\09", the company said.

Bajaj Finserv itself reported new business premium of Rs 4,492 crore compared to Rs 6,674 crore in the previous year.

Sanjiv Bajaj, managing director said the company chose not to pursue businesses that were not profitable which led to fall in the company's market share but it helped the company post a profit of Rs 45 crore against a loss of Rs 16 crore last year.

Source:ET

Switch In Time

Through switching, you can rebalance your Ulip portfolio to adjust to market movements and maintain the desired asset allocation Deepti Bhaskaran-outlook

How To Switch Step I Fill up a fund switch request form Step II Fax or deposit the form at the nearest branch. You could also contact your agent Step III The request will be processed the same day if the insurer receives it before 3 pm. Otherwise, it will be processed the next day Online investors can log in with their ID and password, provide policy details and fill up the request form online. Worried that the returns on your unit-linked insurance plan (Ulip) will nosedive along with the market? Planning to pull out from the plan to cut future losses? Don’t take that step yet. Ulips come with various fund options, ranging from pure equity to pure debt, and give you the freedom to move between these. In insurance parlance, this is called switching. Ulips give long-term investors the option to rebalance their portfolio in accordance with the movement of the markets. Says G. Murlidhar, chief operating officer, Kotak Mahindra Life Insurance: "Markets are still bottoming and one could systematically switch from debt to equity if the horizon is long." Fund options All Ulips offer three basic fund options—debt, equity and balanced. A debt fund primarily invests in government securities, company deposits and money market instruments. An equity fund invests in equities and a balanced fund invests both in equity and debt instruments. Among other fund options are security-specific funds like money market and gilt funds, and sectoral equity funds like mid-cap and energy funds. At the time of buying a policy, the premiums are invested in one or more funds of your choice. Switching Typically, up to four switches are free in a year. Once you have exhausted your free switches, the insurer charges Rs 100-500 from your fund value for every switch. Says Murlidhar: "Switches enable customers to rebalance their portfolio to maintain their asset allocation in the long term. There is a limit on the number of free switches as there is a cost implication. If an investor switches more than four times in a year, he could be actively trading and timing the market. Such cost should be borne by him as he could be gaining from the exercise." However, some policies offer a very high number of free switches in a year. For instance, HDFC Standard Life’s Unit Linked Endowment Plus II offers 24 switches per year, while Reliance Super InvestAssure Plan offers 52 free switches in a year. "For a long term investor, frequent switching makes little sense as that would border on trading," says Murlidhar. You can also redirect your fund allocation at the time of policy renewals. Says Sanjay Tripathy, executive vice-president and head (marketing), HDFC Standard Life: "Policyholders can stagger the premiums in various funds as per their choice. Rebalancing of existing funds can be done through switching and new premiums could be redirected." When to switch? "Switches should be seen as a tool to maintain asset allocation," says Murlidhar. Financial planners advise that those with an investment horizon of 20 years or more should have a debt-equity ratio of 20:80. As they approach the fag end of their term, the allocation should slowly change to the exact opposite—80:20. Switching gives the opportunity to maintain this allocation. Switching can also be used to secure your investments as you come closer to your policy’s maturity year. Says Murlidhar: "Switching should be based upon factors like the time left for policy maturity or the time left for one’s income to stop as that would determine one’s risk-taking ability. The principle of more debt with higher age is applicable here. Also, when one approaches a goal, one could lock in the returns from equity by switching to debt." Use switching smartly to get over the downturn blues and to stick to the desired asset allocation. Source.outlook

Tax exemption limit may go up

NEW DELHI: The full budget to be presented by the new government in the forthcoming session of Parliament to begin sometime next month may come packed with some concessions for the middle class by way of raising the tax exemption limit to up to Rs 1.75-Rs 2 lakh from the current Rs 1.50 lakh.

The other benefit in the direct tax segments could be withdrawal of the Fringe Benefit Tax. If through, both these measures will result in a tax outgo of around Rs 10,000 crore. Proposals in this regard are under active consideration, indicated a senior official in the finance ministry.

Raising of the tax exemption limit along with the withdrawal of FBT will act as another stimulus since the large middle class population will be left with more money in hand, especially at a time when the government is likely to release the remaining 60% salary arrears of the 6th Pay Commission.

The removal of FBT has also been mooted by the commerce ministry. It had also sought continuation of interest rate subsidy while seeking to further raise it from the existing 2% to 4%.

Sources in the finance ministry said there is no scope for any further cuts in excise duty, customs or service tax as the indirect tax collections had slipped into negative domain towards the end of the last fiscal. With the widening fiscal gap, it is equally important for the government to keep its revenue stream rejuvenated to fund its developmental and social schemes.

The commerce ministry is firmly backing industry's proposals for extending tax sops to export-oriented units, besides the continuation of interest rate subvention till March 2010. In their proposals to the finance ministry, industry chambers had asked the government to include measures in the budget that would promote investment and create additional demand.

Source:E.T

LIC to invest Rs 1.05 lakh cr in equity, debt this fiscal

MUMBAI: Life insurance major LIC plans to invest a whopping Rs 1,05,000 crore in equity and debt instruments in the current financial year, a top company official said.

"In FY 10, our gross investments in equity will be Rs 50,000 crore while we plan to invest Rs 55,000 crore in debt instruments," Life Insurance Corporation of India (LIC) Managing Director Thomas Mathew told media here.

During the last financial year, the company's gross investments in equity was Rs 40,300 crore and around Rs 48,000 crore in various debt instruments, Mathew said.

For the current financial year, LIC increased its investments in debt instruments and equity by around 20 per cent, sensing an opportunity with Indian companies looking at raising funds from domestic sources.

The company would invest in various debt instruments like corporate loans, non convertible debentures and project loans, he said.

"Our investments in debt instruments will be demand-driven," he said

Source: E.T

LIC Health plus Vs Health protection plus from LIC

Life Insurance Corporation of India (LIC) launches Health Protection Plus, a unique long term health insurance plan that offers health insurance covers for the entire family (husband, wife and the children) – Hospital Cash Benefit (HCB) and Major Surgical Benefit (MSB) along with a ULIP component (investment in the form of Units) that is specifically designed to meet Domiciliary Treatment Benefit (DTB)/ Out Patient Department (OPD) expenses for the insured members. Hospital Cash Benefit (HCB) is a daily benefit payable in case of hospitalization. It can range from Rs.250/- to Rs.2500/- for the Principal Insured (the person who proposes for insurance). For the Spouse or the children, the maximum amount of HCB is Rs.1500/-. The amount of daily benefit doubles in case of hospitalization in ICU. The IDB (Initial Daily Benefit) is applicable during the first year of risk cover. The amount of daily HCB will increase @ 5% simple per annum every year on policy anniversary until it hits a cap of 1.5 times the initial benefit. Major Surgical Benefit (MSB): In the event of the insured undergoing one of the major surgeries defined in the policy, a lump sum benefit (regardless of the actual costs incurred) equivalent to the percentage of the sum assured mentioned against that surgery will be payable. The sum assured for major surgical benefits will be 200 times of the HCB you choose. Domiciliary Treatment Benefit (DTB): The Principal Insured can claim an amount equivalent to the actual expense he or she has incurred in respect of any domiciliary treatment or to meet the medical expenses incurred over and above the hospital cash/major surgical benefits in respect of either oneself or the others insured under the policy. Both HCB and MSB covers are available subject to a waiting period from the commencement of the risk cover – in respect of each insured member. No death insurance cover is available under the plan. All eligible existing family members are to be covered at the beginning (proposal stage) itself. New members can however be added under certain specified conditions. Modes of Payment allowed are, yearly, half-yearly, & monthly (ECS mode only). The premiums allocated to purchase units will be strictly invested in a Health Protection Plus Fund (Income and Growth – Low Risk). The premiums paid under the policy are eligible for Tax Rebate under Section 80(D) of Income Tax Act, 1961.

Comparing Major differences between the two Health plans from LIC

Health Plus (plan 901)	Health Protection plus Plan (902)
Income tax exemption under sec 80D is only for the premium portion paid for major surgical benefit and Hospital cash benefit.	Here the total premium paid under the policy subject to a limit of Rs.15000 is taken for exemption under section 80D of income tax
----	Lesser health risk charges for major surgical benefits from age 61 onwards
----	Maximum Hospital cash benefit of Rs 2500 can be taken independently, apart from what ihas been already availed under health plus plan 901
Policy ends at age 65 of Principal insured	Policy is for whole life for each of the insured. However you can terminate the policy after age 75 by claiming full fund value as Domiciliary treatment benefit.
Premium is paid till end of term, viz age 65	premium to be paid only till age 65. MSB, HCB cover till age 75 and domiciliary cover for life.
HCB, MSB cover only available upto for Principal insured age 65, spouse age 65, children 25	HCB, MSB cover only available upto for Principal insured age 75, spouse age 75, children 25
Cover stops if premium payment ceases before three years from date of commencement of policy. If premium payment ceases after three years from date of commencement of policy then risk cover condinues until policy fund sufficient to cover regular charges subject to minimum of one annualized premium in the policy fund.	Health cover continues for all insured until fund sufficient to cover all health risk charges.
Policy can be revived with payment of arrears of premium and interest but if within 3 years from date of commencement then have to provide satisfactory evidence of health of all the lives.	Policy can be revived with payment of arrears of premium and interest
Policy can be surrendered after completion of three years from the date of commencemtn of the policy	Policy cannot be surrendered
Fund value if any is paid at the end of the term	Policy continues for the whole life as long as fund is available to recover health risk charges.
In the last policy year no limit for the balance of the fund value to be retained for claiming Domiciliary treatment benefit.	No restricition in the minimum balance in the fund value for claiming Domiciliary treatment benefit after age 75. Policy can be brought to an end immediately by claiming the full amount as domicilary treatment benefit.

Source: www.sunilrams.blogspot.com

LIC won’t take part in open offer

LIFE Insurance Corp-oration of India (LIC) will not participate Tech Mahindra’s open offer for Satyam Computer Services. LIC holds a 4.34 per cent stake in the company.

“We will not be participating in the open offer,” a senior LIC official, who did not want to be named, told Financial Chronicle.

However, when contacted, LIC managing director Thomas Matthew said, “There is still enough time for the open offer. We have not decided on it (participation) yet and will take a call later.”

Meanwhile, ICICI Prudential Life, which held 2.87 per cent stake in Satyam Computer Services at the end of December 31, 2008, has sold its entire stake in the company.

“There is no question of participating in the open offer as ICICI Prudential does not have a single share in the IT company (Satyam),” an ICICI Prudential official said on conditions of anonymity.

The private insurer, however, did not respond to email.

Larsen and Toubro and Fidelity Management & Research Company hold 12 per cent each. L&T would not be allowed to participate in the open offer as it was one of the bidders for Satyam Computer, and hence privy to inside information.

A Fidelity spokesperson said the company would not comment on share transactions.

According to Manish Santhalia, fund manager at Motilal Oswal, if these three institutional investors are not going to participate then there are close to 37 crore shares left.

“This will bring the acceptance ratio to 1:2 compared to 1:3 assuming these two institutional investors participate,” he said.

At Rs 58 a share, Tech Mahindra will have to shell out Rs 1,132 crore for the 20 per cent open offer. This is in addition to Rs 1,756 crore it will pay for 31 per cent stake.

Meanwhile, Tech Mahindra deposited Rs 2,900 crore in independent escrow accounts on Saturday, clearing the final hurdle for taking over Satyam’s management control.

“Tech Mahindra has deposited Rs 1,756 crore in an escrow account of HSBC Bank, the balance is deposited in an escrow account for the public offer,” said an investment banker, who has direct knowledge of the transaction.

The Satyam board is meeting in Hyderabad on Monday to approve the formal transfer of ownership to the Mahindra group company.

Mahindra group chairman Anand Mahindra is expected to unveil his vision before the board and senior management on Monday.

The board meeting will see the formal induction of four Tech Mahindra nominees and long discussions on the business plan for Satyam. The board will again meet on Tuesday if critical issues are not thrashed out properly, said a member on Satyam board.

Tech Mahindra is likely to appoint some senior executives, including a chief operating officer, to manage the transition, according to a senior executive close to the Mahindra group.

Tech Mahindra’s vice-chairman and CEO Vineet Nayaar, director Ulhas N Yargop, international operations president CP Gurnani and strategic initiatives president Sanjay Kalra are joining the board.

Source:.mydigitalfc

SBI Life to go slow on expansion

SBI Life Insurance Company, the second largest private life insurer in the country, has decided to go slow on its expansion plans.

“We will go slow on adding more branches and agents. The focus will now be on improving efficiency and consolidation of the existing business as we don’t see growth happening immediately,” Mr U.S. Roy, Managing Director and CEO, SBI Life Insurance, said.

Mr Roy said he expects growth to pick up only by January 2010. Yet, the current year could see a growth of 25-30 per cent as for insurance business the last quarter is always the best.

“We will take a call on increasing the number of branches and agents only by the end of 2009, when growth picks up,” he said.

The company will target Tier-2 and Tier-3 cities to aid its growth, capitalising on the huge branch network of its parent — SBI, he said.

Growth

In 2007-08, SBI Life grew by over 90 per cent. However, in the just ended fiscal, the company grew by around 20-25 per cent, against a targeted growth of 70 per cent, Mr Roy said.

Growth has been much slower than what was estimated. The growth started to slow down only in the last part of the third quarter of 2008-09, he said. The company has collected around Rs 6,000 crore in fresh business premiums in 2008-09.

The company, which has bancassurance and the agency channel, is planning to improve the efficiency of its existing channels rather than exploring other channels.

SBI Life has around 70,000 insurance advisors at present. It will try to increase the activisation rate of the agents, that is, the number of active agents who sell policies.

With a paid-up capital of Rs 1,000 crore, the company is adequately capitalised. “We don’t have to fund our accumulated losses. Our solvency ratio is around 2.5 per cent. Keeping the economic environment in mind, we will not need funds in the first quarter of 2009-10. In the second quarter, we will review the solvency margin and will infuse capital only if it falls below 2 per cent,” he said.

Product plans

The company is also looking to bring out products later this year. “The product plan for the year is being put into place. We are looking to launch both ULIP and traditional products that will catch the public eye,” Mr Roy said.

The company collected Rs 300 crore through its SmartULIP within a three week period which was much more than the target. The product guarantees that the highest NAV over the next seven years or the NAV at maturity, whichever is higher will be protected, he added.

Importance of Positive thinking

Positive thinking is a mental attitude that anticipates happiness, success and favorable outcomes in every situation or action you do. The thoughts get registered in your subconscious mind and you start taking action to create favorable change.A positive outlook can help you to cope better with stressful situations and can change your life for the better.

A positive outlook can help you to cope better with stressful situations and can change your life for the better.

Why think positively?

Ever wondered why some people find learning an enjoyable and exciting experience? Why are some people disinterested and find it an unpleasant experience while others use it merely as a road to fetch a good job? The difference between these people lies in their attitude and their approach towards life. Your mindset plays a huge role in every aspect of your life. Your mind can control your body for better or for worse. A negative mindset can mar your life while a positive mindset can make your life happy and peaceful.

Ways to develop positive thinking

You cannot change your thoughts and attitude overnight. Positive thinking takes practice. Persistence would make your mind to think positively and ignore negative thoughts.

Benefits of positive thinking

Decreases stress. Helps you cope better in stressful situations. Strengthens your Immune System and reduces the risk of certain diseases.  Improves your self-esteem and confidence. Brings inner peace, happiness and a sense of well-being. Motivates you to accomplish your goals. Helps you have greater inner strength and energy. Helps you live longer.

Listen to your inner voice

Listening to your inner voice or instincts is one of the most common ways to develop positive thinking. Whenever any negative thoughts enter your mind, try to replace it with a constructive one. For example, “I won’t be able to do it” will be put forward as “I will do it”. Practice this regularly and you will soon be able to master your mind.

Learn to meditate

Meditation calms your mind and relaxes your body Meditation gives you inner strength, peace of mind, relaxation and a sense of bliss, which will help you to think positively.

Always see the brighter side of life

Try to believe that everything happens for a reason and embrace the concept that something good will come out of every situation that momentarily seems bad. Always look on the bright side of life and it will work wonders for you.

Learn to communicate effectively

Not saying the things you feel can give a sense of frustration, anxiety and anger, thus giving way to negative thoughts. Hence, communication is an important aspect of positive thinking.

Believe in yourself

Believe in yourself and your capabilities to become more confident. Make a positive commitment to yourself and to the people around you. Praise yourself and be enthusiastic.

Tips to positive thinking

Be optimistic and expect favorable outcomes in every situation. Cultivate the habit of reading inspiring books. Find reasons to smile more often. It’s a great stress buster. Try to use positive words, e.g. “I can”, “it will be done”, “it is possible” while thinking and talking. Engage yourself in enjoyable recreational activities. Interact with people who have a positive outlook in life.

Positive thinking needs consistent effort as you are creating a new habit. On the other hand, negative thoughts can rip your focus from your goal. There is no greater joy than living a healthy and positive life. So take charge of your mind and think positive. Remember, you are what you think Powerd By -eCR Magic