helping the help

    My domestic help has been with me for many 
    years and I got her PF, medical insurance and paid for the education of her daughter. Today, her daughter has completed her graduation from Wilson College and got a job with an ad film company. I believe people like us are blessed to have been born into families where — with no effort of ours — we've got a roof over our head, three meals on the table and an education. When I started working, I realised that I should share what I was lucky to have 
ALYQUE PADAMSEE 
THEATRE PERSONALITY

    It is an ingenious idea, simple 
    but effective in so many ways. It's not so much charity as it is about making a tangible difference to the lives of those less fortunate. I also truly believe in the power of education, be it a formal degree or training in life skills. I ensure that my staff's children are provided with an education that can help them realize their full potential 
PRIYANKA CHOPRA 
ACTRESS

    Compassion is at the 
    heart of all our endeavours to improve the world. That is what makes us better people. Someone once said that no act of kindness, no matter how small, is ever wasted. Changing the world is easier than you think 
IMRAN KHAN 
ACTOR

    India's biggest and brightest 
    asset is its youth. They are the makers of today and tomorrow. They can start by reaching out to people working for them, help them get an education which will go on to improve literacy levels and, in turn, address many social ills. Small initiatives can yield big results 
GAGAN NARANG 
SHOOTER

Banking licence aspirants firm up deals

Mumbai: Even before the start of the application process, corporates aspiring for a bank licence are striking strategic deals ahead of putting their proposal before the Reserve Bank of India. On Monday, Reliance Capital and Religare Enterprises announced strategic deals with foreign investors as part of their plans to pursue a banking licence. 

    Reliance Capital said that it had entered into an agreement with Sumitomo Mitsui Trust Bank and Nippon Life Insurance, two leading financial institutions from Japan, which plan to take between 4-5% stake each in the bank proposed to be set up by Reliance Capital if it receives the go ahead from regulators. Religare Enterprises, meanwhile, struck a deal with US bank Customer Bancorp offering a stake worth $51 million through a combination of promoter divestment, preferential allotments and issue of convertible warrants. The transaction was aimed at bringing down promoter stake below 49%. 
    With the last day for applications—July 1—drawing close companies are making public their banking ambitions. Three Kolkata-based groups—Srei, Bandhan and Magma—are all set to apply for a banking licence later this week. LSE-listed Srei Infrastructure is one of the leading infrastructure finance companies in the country, while Bandhan is a leading microfinance firm in the eastern region. Magma is a non-banking finance company (NBFC) with interest in different product lines, including general insurance. 
    The Reserve Bank of India will have two levels of screening of the banks. In the first stage, the panel will identify applicants that are fit and proper. RBI has said that this is a process of elimination and not all fit and proper applicants will get a licence. In the second stage, an external committee will go through applications and make their recommendations to RBI. 
    According to sources, RBI has got in touch with former governors and deputy governors to be part of the screening panel. Former RBI governor Bimal Jalan is one of the names doing the rounds as part of the screening panel. RBI sources said that there was disappointment within the central bank over the inability of some private banks to reach out and expand the market. "The feeling is that some of the smaller private sector banks are focusing almost entirely on shareholder value and there is no attempt to expand their reach of banking services," said an official.

IRDA ex-chief’s parting gift helps health insurers

WHAT'S UP

 Health insurers such as Max Bupa, Apollo Munich and Star Health & Allied Insurance are in a celebratory mood. A small change in distribution norms introduced by former IRDA chairman J Harinaryan just before his term ended in February has opened up the entire Indian market to these 'monoline' companies. Till recently, they were bunched up with non-life companies for regulatory purposes as there were no separate guidelines for health companies. Since laws allowed banks and individual agents to sell policies of only one life company and one non-life company, health companies had to compete with non-life giants for bank tie-ups. A recent revision in norms allows banks and agents to sell policies of one health company in addition to one life company and one non-life company. This allows health insurers to tap dozens of banks and millions of agents who are already tied to other insurers.
Rajan emerges as FM's key firefighter
    In a short span of time, Raghuram Rajan, the chief economic adviser to the finance ministry, has emerged as P Chidambaram's go-to man and the key firefighter. Be it the introduction of the development index that is seen as a precursor to giving a special status to Bihar, or the recent case of talking the rupee to stabilize when it was falling like nine pins. In the process, Rajan, himself an economist of repute and a professor at Chicago University, has eclipsed seasoned bureaucrats like finance secretary R S Gujral and revenue secretary Sumit Bose in terms of visibility.

Bringing quality in financial services The industry must ensure that its members are trained better and do not promote mis-selling

There is a peculiar problem in the financial services industry. A large number of distributors empanelled by mutual funds and insurance companies are inactive. Banks and broking houses also report that relationship managers, who have been recruited and trained, are unable to post adequate sales. There is a general hue and cry about a stringent regulatory regime and how it has curtailed the growth of the business. There may be a different story at play—a case of sheer lack of quality and disrespect for process.     In the interest of the investor, it is important that those who sell financial products and services are put through a qualification process. The minimum qualifications required to be able to sell financial products can include age, experience, a certain level of education and mandatory certification. The minimum qualifications prescribed by regulators are also called gatekeeping requirements. The objective is to ensure that those approved by the regulator alone can become authorised selling agents. In the Indian markets, the sellers of financial products preceded the introduction of certification by the regulators. The gatekeeping function came after thousands were already inside. This presented a problem of vested interests.     A stringent qualification process would affect the existing players, their sales, profits and points of presence. The prescribed exams are simple and easy, and mostly cover basic areas of knowledge. There are also exemptions offered based on age and experience, which allow seepage of low quality advisers into the system. There are routine and persistent representations to the regulator to make these qualifying criteria even more lax, under the guise of enabling the 'expansion and penetration' of the industry to a larger population. Everyone implicitly abets the thinking that a large number of people should be let in, as a pre-requisite to achieve growth of the business.     The prescription of an exam creates a market for coaching. There are training programs that help in tackling these mandatory examinations. A good number of these are actually discussions of the test papers. Question banks for most of the mandatory exams are in the public domain, obtained easily from those that attempt the exam. The end result is that the industry is filled up with low quality resources that have not learnt even the basics of what they need to know.     How did this army of sellers become inactive and inert? In the good old days, selling of financial products meant selling 'new' products. Two common features underlying all these products were the push from advertising, publicity and high commissions. This enabled the under-qualified agents to make a sale and also earn attractive incentives, including trips to exotic locations and memberships to exclusive clubs. All they needed to do was approach an investor with a printed pamphlet, rattle out the product features, encash on the familiarity created by ads and the media buzz during the offer period, and make a sale.     Regulators tightened the screws on new products, refused to approve lookalikes, reduced or abolished front-end commissions on selling and made it tough to ride on product proliferation. Quite expectedly, the easy route to revenue, by rewarding performers who lacked in knowledge and competency, is over.     A business with low entry barriers not only holds poor quality people, but also reeks of unfair practices. Mutual funds point out how good the long-term performances of their flagship schemes have been. But investors complain that they have not earned it. This is because a large number of investors were sold NFOs, several of which are still underperforming. The selection of funds in a typical investor's portfolio is mostly a reflection of aggressively offered NFOs, than any careful selection of suitable products with track record. The horror of discontinued policies contributing to the profits of distributors and insurance companies is a shame. Stripped of the ease of selling new products with its incentives and wary of investors who are hitting back, it is not a surprise that a large number of relationship managers and distributors are unwilling or unable to meet investors to do any business.     The responsibility now, is to bring back quality. To do so, financial service businesses need to take two critical steps. First, ensure that both entry-level and ongoing training is relevant, robust and rigorous. If a job requires a defined level of competence, it is foolhardy to expect performance without it. Second, define a sales process that requires sellers of financial products to disclose all relevant details to the investor to enable informed decision-making. The investor needs to know how the product would work, what the risks and returns are, what are the costs, terms and conditions and the suitability of the product to his needs. A good business will prescribe, mandate and implement a sales process that fights mis-selling in its own ranks, without waiting for the regulator to fix the problem.     These measures need serious investment in people and process, and waiting through a period of low revenue and profits. There is no short cut to building trust.

Firm wins legal battle against consumer over insurance policy purchased as an investment

Subject: Have an investment linked insurance policy? Then you are not a consumer.
Backdrop: The Consumer Protection Act includes all services within its ambit except those which have been rendered free of charge or availed for commercial purpose. There are several judgments that observe that even business houses can file consumer complaints for grievances against insurance companies, because the purpose of insurance is not commercial gain or for earning profits, but to indemnify against losses.
    In contrast, there are unit linked or investment linked life insurance policies which are taken by individuals. These policies have a duality— to provide insurance coverage and act as an investment. In a recent judgment, the National Commission has held that such policies involve speculative gains through trading in shares in the stock market and hence are commercial in nature. So a consumer complaint for a grievance regarding such policies would not be maintainable.
    Case Study: Ram Lal Aggarwalla filed a complaint before the Cuttack District Forum alleging that the branch manager of Bajaj Allianz Life Insurance Company had sold a Unit Gain Super Diamond Policy worth Rs 10 lakh for which a premium aof Rs 2 lakh would have had to be paid each year for the next 24 years, totalling Rs 48 lakh. Aggarwalla's grievance was that he was sold the policy with a disregard of his total income and without considering his ability to pay such a high premium. He claimed that the policy was sold by the manager with malafide intent to meet sales targets. Aggarwalla also alleged that the company had played with his money without authorization, resulting in his funds reducing to Rs 1,36,000 for which no details had been furnished.
    Bajaj challenged the maintainability of the complaint before the consumer forum on grounds that a unit or market linked policy is for speculative gain and the holder could therefore not be termed a consumer.
    Bajaj also pointed out that Aggarwalla was a lawyer and a notary, and could therefore not have signed up for a policy without being clear about its terms and conditions. Also, the policy was taken through his wife who is an agent of the company. Bajaj alleged that Aggarwalla wanted his wife to earn the commission and then take back the premium under some pretext. He had hence filed the complaint, the company said.
    Although allegations had been made against the branch manager by name, he had not been made a party to the complaint, which is bad in law. Every policy has a free look-in period of 15 days and it can be returned within this period if the insured is unhappy with the terms and conditions; but in this case, this was not done. The complaint was filed years later instead.
    The District Forum observed that the policy was investment linked, the premium for which is put in the share market for speculative gain. Holding such investments to be beyond the purview of the Consumer Protection Act, the Forum dismissed the complaint as non maintainable. Aggarwalla appealed against this order to the Odisha State Commission which agreed with Forum's view.
    He then filed a revision plea with the National Commission which said that the proposal form had been filled in by Aggarwalla and transactions had been made through his wife. It, too, held that the policy was for speculative gain so the holder would not be a "consumer" defined as per the Consumer Protection Act. The complaint was found to be devoid of merit. The Commission dismissed Aggarwalla's revision petition and imposed a cost of Rs 10,000 to be paid by Ram to the Consumer Welfare Fund within four weeks, along with 9% interest if not paid within the stipulated time (National Commission's judgement dated 23.4.2013 delivered by Ms Rekha Gupta.)
    (The author is a consumer activist and has won the Govt of India's National Youth Award for Consumer Protection. His e mail is jehangir_gai@indiatimes.com)

Man whose mediclaim was rejected wins compensation

'SMOKING DID NOT CAUSE PNEUMONIA'

Mumbai: An insurance company and a third-party administrator will have to pay Rs 69,000 compensation to a central Mumbai resident after wrongly repudiating his claim on the ground that his pneumonia was caused due to alcohol and smoking.
    Holding United India Insurance Co Ltd and Raksha TPA Pvt Ltd guilty of adopting unfair trade practice, a consumer forum directed them to also pay the insured amount of Rs 1.44 lakh. "The opposite parties forgot to note that the complainant was not hospitalized for using alcohol. The complainant was hospitalized for acute pneumonia and not for use of alcohol. The exclusion clause does not apply to the present case and the opposite parties cannot take shelter of this clause and repudiate the mediclaim," the forum said.
    The insurance company came up with an individual health insurance policy in August 2008. The sum assured to the complainant, Shantilal Jain, was Rs 4 lakh and was renewed by him from time-to-time.
    Jain was hospitalized as he was suffering from acute pneumonia on February 8, 2010. Hospitalized for 12 days, he incurred an expense of Rs 1.44 lakh. In September 2010, the TPA told him the claim was not tenable under a policy clause. Jain said the clause was wrongly interpreted and filed a complaint in November 2011. The forum passed an ex parte order as the TPA and insurance company did not file replies.

Mumbai gets freeway today, not without bumps No CCTV Cams Present On Signal-Free, 17-km Route

 Fourteen kilometres of the long-awaited Eastern Freeway will be opened to traffic by 9 am on Friday, making a signal-free drive possible between Chembur and South Mumbai. But there are riders: for a 17-km long bridge (3km to be opened in December), there is going to be little supervision by the traffic police, and the freeway's feeder and arrival routes, including roads leading to the main entrance and exit points,haveobstacleslike encroachments and parking of heavy vehicles. 

    The number of towing vans and traffic cops to be present on the freeway will not be sufficient for such a long route, said a traffic expert. "Hence, there should be a good CCTV camera system, including a control room from where the police willbe ableto monitor the entire length of the freeway and ensure that traffic violators are booked, and, more importantly, ensure quick action in case there are accidents," the expert said. 
    The main challenge will be maintaining the flowof traffic ateither end of the freeway, said an expertworking closely with the government. "Between the freeway's Orange Gate ramp and CST, there are encroachments along P D'Mello Road and also parking of heavy vehicles. I think the solution lies in giving proper space to private truckers and motorists coming to ports and godowns. Their present parking site on P D'Mello Road has to go if smooth traffic flows has to be maintained from the freeway for South Mumbai." 
    Things are not smooth at the other end of the freeway—Shivaji Chowk near R K Studios in Chembur—either. "Here, four roads culminate, bringing a high volume of traffic. Hence, signalling time will go up for traffic coming from the freeway," said Vidur Shah, a resident of Chembur. "This will be a dampener for those hoping for a fast commute towards Navi Mumbai from the freeway." 
    Transport expert Ashok Datar said all entry and exit ramps along the freeway should be made ready at the earliest to achieve the intended benefits of a costly infra project. "Maximum accessibility to the freeway will multiply its success." 1 
Orange Gate landing and 
take-off on P D'Mello Road | Hutment and godown encroachments, parking of heavy vehicles between Orange Gate ramp and CST. Certain stretches are uneven and thus prone to waterlogging 2 
Novelty factor | Since the EFW is 14-km long, motorists will take time to get used to its exit and entry ramps. Ramps in spots like BPT Road toll post and Bhakti Park in Wadala are yet to be built. A 700-metre road between BPT Road and Wadala-Chembur Road, which will provide continuous connectivity along the EFW, is yet to be completed 3 
Points at Shivaji Chowk near R K Studios in Chembur | Four major roads culminate here. Thus Navi Mumbai-bound traffic at the EFW exit at Shivaji Square will have a long wait for the green signal. Parking of heavy vehicles on the Mankhurd-Vashi Road can further reduce traffic flow 
TRAFFIC VIOLATIONS 
The police fear that some motorists may not be able to resist the temptation to speed up on a flyover as long as the freeway, thus leading to accidents BENEFITS Friday onwards | Traffic to Navi Mumbai, Goa, Pune, Chembur, Kurla, Panvel, Deonar and Mankhurd 
December onwards | Traffic to Thane, Airoli, Mulund and Ghatkopar after a 3-km section of the EFW is opened 
General | The EFW's Ghatkopar end is near the Jogeshwari-Vikhroli Link Road and the upcoming Santa Cruz Chembur Link Road 
TRAFFIC RESTRICTIONS 
    Entry to the EFW barred for two- and 
three-wheelers, animal carts, bicycles and tricycles, and pedestrians 
Entry barred for heavy vehicles like trailers and transport vehicles except BEST and state buses. Entry barred for luxury private buses 
Like on JJ flyover, the traffic police are to monitor vehicular speed 
PROJECT PARTICULARS MMRDA engineers involved | Chief engineer: Sharad Sabnis; superintending engineers: D P Deshmukh, V N Ghanekar; executive engineers: J R Dhane, M V Jaitpal, D S Bhaik; deputy engineers: A B Dhabe, G D Rathod, S Vijay Kumar; assistant engineers: J B Patil, V S Kambale, P S Pawar, B V Biradar Consultants | Consulting Engineering Services, STUP Consultants 
Contractors | Simplex Infrastructure, Madhucon Projects, J Kumar 
Times View: Let EFW be used without delay 
    Two days of monsoon have been able to expose the state of preparedness of Mumbai's infrastructure agencies. And it would be unfair to target the BMC; other agencies, too, have not covered themselves with glory. But what we find really galling is the continued wait for a worthy (from Delhi?) to inaugurate the Eastern Freeway even though the roads below are creaking under the combined weight of traffic and water logging. Seeing an empty— and completed—EFW while negotiating traffic and accumulated water on the old roads is a cruel joke. 
This Times View appeared on June 11, following which the government opened the Eastern Freeway to traffic

EXPANDING BIZ Shriram Life may bid for HSBC’s 26% in Canara JV

Mumbai: Shriram Life Insurance is eyeing HSBC's 26% stake in Canara HSBC Life Insurance. The Hyderabad-based life insurer sees the company promoted by banks as a complementary fit to its business, which is concentrated in the south at present with focus on smallticket policies. 

    "We are looking at opportunities as our book is still small with assets under management of around Rs 2,000 crore. One of the reasons for this is that we do not have a bancassurance partner," said Shriram Life CEO Manoj Kumar Jain. He added that the company was also keen on geographic diversification from the South 
which currently accounts for 60% of the company's business. A host of otherinsurance companies are also contenders for HSBC's stake. 
    HSBC has decided to exit its life insurance business in India as part of its globalstrategy. The company is the foreign investor in a three-way joint venture with Canara Bank and Oriental Bank of Commerce. 
    One advantage that Shriram has is that being a small company, the banks will continue to have a majority stake in the event of a merger with Shriram Life. Secondly, Sanlam Life of South Africa — which indirectly holds 26% stake in Shriram Life through its investment in Shriram Capital — will have headroom to make further investments.