Monday, 4 February 2013

IRDA chief calls investment ceiling expansion imprudent

IRDA's Chief calls raising investment ceiling for LIC imprudent

LIC’s Chairman Mr. J Hari Narayan does not favour the government’s decision to let it invest up to 30% in a company. He stated that this is also under the legal agenda as per the Government of India which is of the view that LIC cannot be treated as the other private insurers as there are certain provisions, which is in accordance with the LIC Act.

As against the existing norm which states that the LIC can invest up to 10% in a company, under the Insurance Act, 1999, after the Government of India stated that the LIC act 1959 supersedes the Insurance act, 1999, the LIC of India will now be allowed to invest up to 30% in a company.

The Chief of IRDA stated that the regulator has enough autonomy and the issue in question about the LIC holds a legal angle too. The new product designs and guidelines will be discussed in a meeting of the board of the Advisory Council. It is a matter of huge concern for the country that the management expenses in the insurance industry is highest in the world.

News for LIC's investment ceiling


LIC to soon have a new 30% investment ceiling

The Government of India with its investment plans all set to come out with a notification which will allow the Life Insurance Corporation of India to make an investment of up to 30 per cent of the fund it has in listed as well as non-listed companies.

According to the Life Insurance Corporation Act, 1959, the LIC can invest up to 30% of the total funds it has, in a single entity. Whereas, as per the Insurance Act allows the LIC to invest only 10 per cent of its fund or it can hold 10 per cent of a company’s stake, whichever is lower. The LIC Act of 1959 supersedes the Insurance Act of 1999 as was cleared by the Law Ministry.
The Government of India aims to raise a sum of around Rs. 30,000 crore from disinvestment, during this fiscal. In its attempt to disinvest, in the last month, the Government divested its 10% stake in NMDC, an iron ore major and raised a sum of Rs.6,000 crore which increased the total of income generated from disinvestment to Rs.6900 crore.

As of now, the LIC has a stake of over 10% in many companies like the Corporation Bank, L&T, etc. LIC will not get more then 25% stake in a company in which case, SEBI’s prescribed Take Over code acts and makes it mandatory for the acquirer to make an open offer of another 26% stake.
The LIC will be allowed to pick larger amounts of equity from state- owned companies during disinvestment process, after the final notification is issued by the government. The investment by the LIC on equities annually presently is limited to Rs. 50,000 to Rs. 60,000 crore. IRDA however would prefer to have LIC under the 10% investment ceiling as it wants LIC to stick to the norms applicable to the private insurers.
The Ministry of Finance has given an approval to invest Rs.12,000 crore in 12 public sector banks like the State Bank of India, Central Bank of India, United Bank of India, etc. The Ministry also wishes to get a nod from the Cabinet on fund infusion in the public sector till March, 2018 and the Ministry of Finance has assessed the capital need of the public sector banks for meeting the norms under Basel III, to be complied in a phased manner. According to the norms currently in existence, any capital infusion beyond Rs.300 crore in a company requires an approval from the Cabinet.

The RBI, last year issued Basel III guidelines to strengthen the risk management system. The implementation of the capital adequacy guidelines based on it have been deferred by three months.

Saturday, 12 January 2013

Jeevan Nischay Table no.- 199

It is a close ended single premium policy for those of you who have an existing policy with the LIC, a risk bearing policy accepted at a standard rate. The premium amount you pay can be chosen by you and the sum you receive on maturity will depend upon the premiums paid by you, your age and the term you have selected.
Following are the eligibility criterion for this plan:
Minimum age at entry
18 years (completed)
Maximum age at entry
50 years (nearest birthday)
Policy term
5, 7 and 10 years
Minimum Single Premium     
Rs. 10,000/-
Maximum Single Premium
Rs. 10,00,000/-



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Aam Aadmi Bima Yojna

This scheme is a start up of central and state governments administered by the LIC aimed to make life easy for the rural landless household. The applicant has to aged between 18 years and 59 years and should be the head of the family or the earning member of the household.

This prestigious plan is an initiative towards making lives easy for the distressed in the rural areas.

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Janashree Bima Yojna

This plan aims at providing life insurance protection to the rural and urban poor, who belong to the group of Below Poverty Line and are marginally above the poverty line. The person has to be aged between 18 years and 59 years to opt for this plan. The state government is the nodal authority concerned with the welfare of such occupation groups or welfare funds. The minimum membership has to be of 25 individuals under this scheme.

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Group Leave Encashment Scheme

Another benefit along with retirement benefit provided by the employers to their employees is leave encashment which is a lump sum amount paid to the employees or their dependants. The amount paid depends upon the leave to the credit of the employee and his/her salary at the time of exit. The liability attached here is increasing in nature and is linked with the salary and leave position.

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Group Savings Linked Insurance Scheme

Those of us staying in the metropolitan cities are occupied all day long and here, the inflation is inevitable. Individual insurance is thus a costly affair. Group savings linked insurance scheme is a low cost alternative to invest and secure. There is no need to provide individual medical evidence and the returns on your savings are attractive, post retirement needs.

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Group Gratuity Scheme

This is a cash accumulation scheme provided by LIC which enables you, as an employer, to meet the gratuity liability in a simple and efficient manner. Many services are attached to this plan such as- fund management under interest accumulation system, built insurance arrangement for the employees for future service, MIS related to income tax and trusts accounts and actuarial valuation, Claim settlement on exit as per company rules.

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Group Insurance Scheme in Lieu Of EDLI (UIN - 512N048V01)

All those employees who can be classified under the Employee’s Provident Fund and Miscellaneous Provision Act, 1952, have to subscribe this scheme. Herein, the insurance benefit will be equal to the average balance to the credit of the deceased employee during the last 12 months. 0.05% of each employee’s salary is payable by the Employer to the Provident fund authorities. If you are an employer you will incur a low cost and as an employee you are only safeguarding your own future, along with your family’s by investing in this scheme.

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