MF assets surge 9% in Feb

AT Rs 5,00,973 crore in assets for February 2009, the MF industry has seen a sharp increase of about 8.7% in AUM since the previous month. This is also the third consecutive monthly rise in assets for the industry as a whole.

Income funds are seen as the main drivers of this asset surge. While as many as 23 fund houses have recorded a rise in their assets since the previous month, the most spectacular show was put up by the Baroda Pioneer stable.

Its AUM is up from a mere Rs 38 crore to over Rs 860 crore in a month. According to Rajan Krishnan, CEO, Baroda Pioneer, the newly-launched institutional liquid fund has done the trick. LIC mutual fund, which has been gaining for the past few months, continues its forward march and has now over Rs 24,000 crore in AUM. It has replaced Tata AMC to be the 7th largest fund house of the country.

The lacklustre show of equity markets is just helping MF industry grow further. Prior to the equity bull run of 2004-07, it had always been the income funds that contributed more than half of the industry’s total asset base.

While Amfi is yet to release the detailed report of asset collection for February 2009, it not expected to be much different from that of January 2009 when income and liquid funds together contributed about 73% of the total industry AUM.

While the last three months have definitely boosted the spirits of the MF industry, it would be interesting to watch the events that unfold this month. The month of March - categorized as the month of paying the last installment of the advance tax - has always been a difficult month for this industry every year.

And as most of the fresh influx in the industry is institutional this time, prima facie March may turn out to be a challenging one for the industry.

Source:Economictimes  

India, China, Brazil need to take more responsibilities: USTR

WASHINGTON: As among the fastest growing economies of the world, India, China and Brazil not only have developed a new level of influence at the global level, but are expected to take increased level of responsibilities to smoothen world trade, an official US report has said.

The US Trade Representative (USTR) in its '2009 Trade Policy Agenda and 2008 Annual Report' has identified India, China and Brazil as the key emerging markets of the world.

"As today's fastest growing economies, China, Brazil and India have enjoyed a new level of influence and will be expected to take on an increased level of responsibility to make the trade liberalizing decisions and contributions.

"That would benefit not only their own economic interests, but also promote global economic growth and development to the benefit of all developing countries," USTR said in its report.

The USTR appreciated WTO Director-General Pascal Lamy' decision to convene a G7 leadership meeting at Geneva in July last year to tackle the most difficult issues on agriculture and Non-Agricultural Market Access (NAMA) and including India.

"This was a significant development, effectively providing China, Brazil and India with a seat at this leadership table, in addition to the United States, the European Communities, Japan and Australia," USTR said.

"The inclusion of the three key emerging markets represented an important step forward, moving the overall negotiating dynamic to more closely reflect the dynamic economic reality of today's trading system," said the report.

Five days into the meetings, WTO Director General Lamy put forward to the G7 a package of proposed solutions for approximately 10 of the toughest issues that had divided the membership during the Doha Round of negotiations on agriculture and NAMA.

The solutions were an attempt to capture a balance that shared the pain and gain of the proposed outcomes. Six of the seven members of the leadership group, including the United States, initially indicated that while some of the proposed solutions set out in the Lamy package would be difficult to accept, they could support it as a compromise package.

India, the report said, was initially the only hold-out in accepting the Lamy package, but was subsequently joined by China.

The members' objections focused primarily on two elements of the proposed packages.

One element being their opposition to participating in the negotiation of industrial sectoral initiatives aimed at increasing the ambition of the industrial tariff negotiations through further tariff cuts on certain designated industrial goods such as chemicals, industrial machinery, and electronics.

The other being their insistence on further flexibilities from tariff cuts by lessening disciplines on the so-called Special Safeguard Mechanism, a new measure that would be created under the Doha Round agriculture negotiations, allowing developing countries to raise tariffs beyond their existing allowable WTO limits, it said. 

Source:Economictimes

Aviva LifeShield Plus

MUMBAI: Aviva Life Insurance on Tuesday launched Aviva LifeShield Plus, a pure term plan which ensures comprehensive protection at a nominal cost through: payment of sum assured to the family in case of the unfortunate death of the policy-holder; with a provision of double the sum assured in case of the accidental death, immediate payment of the rider sum assured in the case of critical illness or permanent total disability, while life cover continues till the policy term

India lifts import ban on Chinese toys

New DelhiIndia lifted the ban on importing toys from China provided they conform to international safety norms.

India had earlier on January 23 banned the import of Chinese toys for six months on grounds of public health and safety.

According to a public notice by the Commerce Ministry, the import of toys from China will be allowed if they conform to the standards prescribed in "ASTM F963" or "ISO 8124 (parts I - III) or IS 9873 (parts I - III)".

These regulations primarily deal with safety and health hazards.

The Government further said that the imports from China will have to be accompanied by a requisite certificate from laboratories accredited to the International Laboratory Accreditation Cooperation.

Following the restrictions on toys, the Chinese media had reported that Beijing was contemplating dragging India to the WTO challenging the ban. However, Commerce and Industry Minister Kamal Nath had said the ban was WTO-compatible.

The toys market in India is estimated at Rs 2,500 crore while the volume-driven, price-competitive Chinese toys are estimated to control 70 per cent of the global toys market.

Source:Finacialexpress

RBI left to douse economic bushfire

MUMBAI: With election announcements freezing government policy initiatives, it is up to the Reserve Bank of India (RBI) to deal with the economic crisis.

In the months following Lehman Brothers’ collapse in November 2008, RBI and the government have worked in tandem, with the central bank’s financial packages going together with RBI policy measures aimed at an economic stimulus.

However, after polls are announced by the Election Commission, no new initiatives can be undertaken either by the government or its arms. RBI is an exception to this rule. Its status as an independent entity gives the central bank the freedom to announce measures even during polling.

Bankers feel that given the unprecedented nature of the global crisis, RBI may take measures which are otherwise not taken when there is a government in transition. Topping the measures could be those pertaining to what RBI refers to as asset classification and income recognition norms.

These norms determine when a loan should be classified as bad debt and when a bank should write down its investment. The measures could come in the form of sector-specific packages. For instance, there could be packages targeted at either exporters or developers. Besides income recognition, there could be moves on the interest rate front.

Many economic forecasters have said that RBI might announce rate cuts after election dates are announced. After RBI maintained status quo on its January policy, Citi’s Rohini Malkani saw it as a move to “keep some ammunition available once the model code of conduct comes into play”.

According to HSBC economist Robert Prior-Wandesforde, RBI decision not to cut policy rates further at its January 27 meeting was no surprise and doesn’t mean it has finished easing yet. “A few more negative export and industrial production prints, together with further falls in WPI inflation, could prompt another move as early as February.”

Yet, there are others who feel that RBI might take a longer-term move and postpone major rate cuts for the next year when it will have to support an even bigger government borrowing programme.

Existing guidelines have been relaxed to the extent that banks have been allowed to reschedule repayments without classifying the borrower as delinquent. Bankers feel more industry-specific packages are likely to come from RBI.

Last week, the central bank extended these relaxation to financial institutions such as Exim Bank, Nabard, National Housing Bank and Sidbi. More measures are expected in the next 30 days before banks close their balance-sheets for the current financial year.

Relaxation of some of the prudential norms as a counter-cyclical measure may become necessary to ensure that the net worth of banks is not diluted and confidence in the banking system is not eroded.

Source:Economictimes 

Car cover now costs 20% less

NEW DELHI: ARMED with the freedom to fix tariffs, general insurance companies have driven down auto insurance premiums by 20-40% in their scramble for a larger pie of the shrinking car market. 

Insurers are being forced to increase business volumes by offering huge discounts, especially on policy renewals, with premium collection falling by around 60% due to fewer car sales and lower tariffs. New car sales have fallen by 15.5% in the quarter ended December 2008. Overall, car premium collections have fallen by 20-30%. 

Sample this: A car owner who paid Rs 35,000 premium for a Honda Civic bought last year is required to pay only Rs 15,000 this year. Without a special discount of around 35% from a private insurer, he would have paid Rs 23,000. The renewal premium falls in subsequent years as insurers factor in depreciation in the car's value. Private insurers such as ICICI Lombard and Reliance General are among the players that offer lowest tariffs. 

Private insurers have also been offering substantially higher commissions to auto dealers and insurance agents, compared to public sector insurance companies, in order to push sales. "Market competition is prompting general insurers to offer discounts on car insurance renewals. We are giving around 20% discount on certain models," Iffco-Tokio director (marketing) NK Kedia said. 

Some players believe the price war may be coming to an end with premiums reaching unrealistically low levels. "A price war usually follows the freeing of tariffs globally. That's what has happened in India. Premiums have fallen sharply, but we could be close to the bottom. Our sense is that markets may harden in the next six months," says Oriental Insurance general manager NK Singh. 

It's been two years since Insurance Regulatory & Development Authority (Irda), the regulator for insurance industry in India, gave insurers the freedom to fix tariffs on their own. Following this, insurance companies, mainly from the private sector, went all out to grab market share in an industry dominated by public sector insurers. 

Public sector insurers, including New India Insurance and Oriental Insurance, still control over 70% share in the market that has around 11 players. ICICI Lombard, Reliance General, Royal Sundaram and Cholamandalam are some of the leading private sector players. 

"Earlier, every car owner had to pay the same insurance amount. Now, in a de-tariffed environment, the payment is related to the risk involved," said ICICI Lombard's head (motor insurance) Eshwar Natarajan. 

In India, it is compulsory for car owners to buy insurance. Car owners have the option of buying a comprehensive policy or a third party (TP) insurance policy. Third party insurance covers only the damage caused by the car to other people or property, while a comprehensive policy offers both third party coverage as well as own damage or damage caused to one's vehicle and death of the driver and passengers in the vehicle. 

The premium for third party coverage in the past two years has risen by 30-40%, while premium for own damage component has fallen by as much as 40%. TP comprises around 10-15% of the total premium payable towards comprehensive coverage. Insurance companies charge different premium for different cars depending on their value, engine power and claims history. 

As per a leading private insurance company executive, who didn't want to be named, discounts being offered are the highest (up to 45-50%) on high-end cars such as Mercedes or BMW, while it's the lowest or nil on cars such as Bolero, Scorpio or a Maruti Omni, which are used rough and have large damage claims. Premium for cars generally used as taxis has gone up.

Source:Economictimes 

Aegon Religare Life Insurance focuses on Kerala

KOCHI: Aegon Religare Life Insurance has identified Kerala as an important market for its growth. The company has set a target of Rs 1 crore premium income per branch per month from Kerala. 

Presently the state contributes 4 % of the company income. The company has three branches in the state. It is targeting an income of Rs 70 crore by August 2009. 

“We expect the share of Kerala in our total income to go up to 8 % by next year”, Mr Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance said. 

Source:Economictimes