Ramanisblog

Category: Finance

  • Insurance Malpractices LIC Withdraws 34 Policies

    I have seen people, in the middle of an Insurance Agents sales talk, inform him/her, to set some parameters like safe,good returns Policy.

    Merrily the Sales person obliges.

    Insurance policies change.
    Changes in Insurance Policies.

    What happens next is that you are sold a Policy on which the Agent gets a hefty commission.

    Though the commissions are said to be uniform some policies do attract a better commission than the others because of the high risks to the insured and better returns to the insurer.

    Many simply sign on the dotted lines, asking the agent to fill in the necessary details, and hand him over the originals even for photocopying.

    As it is there is fine print, where your risks are mentioned in such a corner and in such a font type you can not read it, even if you read you can hardly understand it, such is the jargon.

    The Agent if asked to explain will normally say it is just for the records and you will get your returns or use further confusing arguments.

    So much so the complaints against Insurance mal practices, forgery have increased, as disclosed by IRDA.

    Insurance complaints,
    Insurance Complaints received by IRDA.

    Now LIC has decided to stop selling 34 Policies from January 2014.

    One big lie currently doing the rounds is that some of the best-selling plans from LIC are going to be discontinued after the new Irda guidelines come into effect. From 1 January 2014, claim the rumours, policies will become costlier because you will have to pay service tax as well. In the following pages, we separate the facts from the fiction.

     Agents have effectively used these half-truths to make people rush to buy insurance before the guidelines come into force. In September, the LIC sold new policies worth Rs 8,434 crore. This was 55% higher than the premium from new plans sold in September 2012. Sources reveal that Rs 2,000 crore of this amount was collected in the last two days of the month. Private insurance companies, too, were not far behind. They sold policies worth Rs 2,785 crore, up 29% from the previous year.

    The original deadline of 30 September has now been extended till 31 December. This has given a lease of life to insurance companies. In fact, the Life Insurance Council says it may seek a further extension if companies are not able to launch new products that comply with the revised guidelines. The period from January to March is considered the festive season for insurance in India and no insurer wants to miss the party…

    Soon, these good plans will not be available.

    Some of the most widely sold endowment policies and money-back plans will soon go off the shelves. However, if you buy them before 31 December, you can enjoy their benefits. The first statement is true. The second is only partially true. While many insurance policies will be discontinued, they will be replaced by better, more customer-friendly plans. Irda’s new guidelines for traditional plans have not only enhanced the surrender value of a policy, but also lay stress on longer terms and higher covers.

    LIC to withdraw 34 Policies.

    Insurance giant Life Insurance Corporation (LIC) has decided to stop selling as many as 34 policies, including Jeevan Anand, Jeevan Madhur and Jeevan Saral, to comply with new regulatory guidelines. 

    These policies are withdrawn in December as they are not in conformity with the provisions of new regulations on non-linked insurance products, linked insurance products and health insurance products, a senior LIC official said. 

    Of the 34 products, LIC will stop sale of Jeevan Am .. 

    Of the 34 products, LIC will stop sale of Jeevan Amrit from December 7, Jeevan Surabhi from December 14 while two other schemes from December 21 and December 28 respectively. 

    Remaining 28 policies will go off LIC’s shelves from December 31. 

    Last month, LIC had withdrawn 14 policies including Convertible Term Assurance, Children Deferred Endowment Assurance. 

    These policies are being discontinued as part of regulatory compliance. 

    The Insurance Regulatory and .. 

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  • Secret Files Expose Offshore Funds ICIJ Story.

    International Consortium of Investigative Journalists (ICIJ) was founded in 1997.

    Its mission is to expose the polluting industries, transnational crime networks, rogue states, and the actions of powerful figures in business and government.

    For details Link is provided at the end of the post.

    Most of us know that ill-gotten wealth by all and sundry, which includes lawyers, Doctors, Business houses and of course Politicians.

    Thanks to a series of mind-boggling scams in India, like 2G,ISRO, CWG,Maharashtra Irrigation,Helicopter and the forerunner Bofors, even a barely literate person knows that the money is being kept in Swiss Banks and that these banks are very secretive about disclosing the identities of their Customers.

    What many may not know is the fact that there are countries which house these Funds under greater secrecy than the Swiss Banks.

    A map of key “tax haven clients” around the world, including the daughter of Ferdinand Marcos and top Spanish art collector Carmen Thyssen-Bornemisza.
    A map of key “tax haven clients” around the world, including the daughter of Ferdinand Marcos and top Spanish art collector Carmen Thyssen-Bornemisza.

    A List.

    • Bahamas
    • Cyprus
    • Liechtenstein
    • Luxembourg
    • Monaco
    • Panama
    • San Marino
    • Seychelles

    Non-sovereign jurisdictions commonly labelled as tax havens include:

    • Campione d’Italia, Italy
    • Jebel Ali Free Zone, United Arab Emirates
    • Labuan, Malaysia
    • Curaçao (Netherlands)
    • Bermuda
    • British Virgin Islands
    • Cayman Islands
    • Jersey
    • Guernsey
    • Isle of Man
    • Turks and Caicos Islands
    • Alaska, United States
    • Delaware, United States
    • Florida, United States
    • Nevada, United States
    • Texas, United States
    • South Dakota, United States
    • United States Virgin Islands (United States)
    • Wyoming, United States
    • Washington, United States
    • Note that the US is included in the Tax havens list

    The funds are held in an Offshore Trust in these tax-havens.

    The Company address will be a ramshackle building, it may house many such Companies(Trusts)

    Detailed blog on how an offshore fund is created and operated follows.

    Look at the Office of offshore Company holding Millions of Dollars.

    Thousands of offshore entities are headquartered on this building's third floor, which houses TrustNet's Cook Islands office. Photo: Alex Shprintsen
    Thousands of offshore entities are headquartered on this building’s third floor, which houses TrustNet’s Cook Islands office. Photo: Alex Shprintsen

    ICIJ obtained secret files from these banks, Countries, Trusts.

    The statistical highlights of the size of the Documents.

    2.5 Million Files.

    1,20,000 Offshore Companies.

    170 Countries.

    In gigabytes, more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010..

    86 Journalists from 46 Countries were involved in ferreting out the details.

    #0 Years records  unearthed.

    Document Highlights.

    • Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.
    • The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
    • Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.
    • A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.
    • Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.

     

    Who are exposed?

    • Individuals and companies linked to Russia’s Magnitsky Affair, a tax fraud scandal that has strained U.S.-Russia relations and led to a ban on Americans adopting Russian orphans.
    • A Venezuelan deal maker accused of using offshore entities to bankroll a U.S.-based Ponzi scheme and funneling millions of dollars in bribes to a Venezuelan government official.
    • A corporate mogul who won billions of dollars in contracts amid Azerbaijani President Ilham Aliyev’s massive construction boom even as he served as a director of secrecy-shrouded offshore companies owned by the president’s daughters.
    • Indonesian billionaires with ties to the late dictator Suharto, who enriched a circle of elites during his decades in power.

     

    Tony Merchant, one of Canada’s top class-action lawyers, took extra steps to maintain the privacy of aCook Islands trust that he’d stocked with more than $1 million in 1998, the documents show.

    In a filing to Canadian tax authorities, Merchant checked “no” when asked if he had foreign assets of more than $100,000 in 1999, court records show.

    Between 2002 and 2009, he often paid his fees to maintain the trust by sending thousands of dollars in cash and traveler’s checks stuffed into envelopes rather than using easier-to-trace bank checks or wire transfers, according to documents from the offshore services firm that oversaw the trust for him.

    One file note warned the firm’s staffers that Merchant would “have a st[r]oke” if they tried to communicate with him by fax.

    Tony Merchant.

    It is unclear whether his wife, Pana Merchant, a Canadian senator, declared her personal interest in the trust on annual financial disclosure forms.

    Under legislative rules, she had to disclose every year to the Senate’s ethics commissioner that she was a beneficiary of the trust, but the information was confidential.

    The Merchants declined requests for comment.

    Other high profile names identified in the offshore data include the wife of Russia’s deputy prime minister, Igor Shuvalov, and two top executives with Gazprom, the Russian government-owned corporate behemoth that is the world’s largest extractor of natural gas.

    Shuvalov’s wife and the Gazprom officials had stakes in BVI companies, documents show. All three declined comment.

    In a neighboring land, the deputy speaker of Mongolia’s Parliament said he was considering resigning from office after ICIJ questioned him about records showing he has an offshore company and a secret Swiss bank account…

     

    Source: ICIJ

    http://www.icij.org/offshore/secret-files-expose-offshores-global-impact

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  • 90% Financial Services, Interest Rate Swaps, Mis-Sold UK

    The following is a Guest Post by Mr,Paul Simms from Reflect Digital UK.

    Interest Rate Swaps.
    Interest Rate Swaps.

    The Guest Post.:

    ‘Unsophisticated’ British firms due to be compensated for mis-sold interest rate swaps

    British companies hoping to file a claim against the banks after being mis sold interest rate swaps are said to be running out of time to do so. The Financial Services Authority have estimated that around 90% of interest swap contracts over the last six years may well have been done so illegally. The FSA has attempted to establish a distinction between ‘sophisticated’ and ‘unsophisticated’ businesses, with the former being likely to have been aware of the risks that they were taking when they signed up for the products. It’s also been claimed by many sources that by introducing products that successful businesses were unlikely to sign up for, the banks were in effect targeting vulnerable businesses that were only ever likely to be harmed by the services.

    It’s hoped that the full reviews will be completed within a six month period. Companies that did not sign up for the hedging products before 2007 are not permitted to take action due to the Limitation Act 1990, which demands that claims must be put forward within six years of the products being signed up for. Companies that suspect that they may be eligible for compensation have been urged to act at the earliest opportunity to ensure that their claims will be dealt with.

    The interest rate swaps scandal is the second mis-selling scandal to hit the UK’s banks in recent years. It comes after scores of British customers were compensated after being tricked into signing up for Payment Protection Insurance – a scheme that was supposed to protect customers if they could not make credit repayments after falling ill for instance. Many customers found that they were signed up for products when they didn’t want, need or ask for them, often without their consent.

    The UK arm of Barclays Bank has already set aside some £850m for compensating the victims of mis sold interest rate swaps. UK Solicitors like Lamport Bassitt have set up specialist departments within their firms to deal with swap mis-selling claims. The FSA have ordered a number of UK banks to review cases of interest rate swaps and to provide redress if the products were found to have been sold unfairly. With the interest rate swaps, customers were promised a ‘fixed rate’ of interest on loans by being compensated by the banks if interest rates went up, and paying extra to them if they went down.

    However, when interest rates started to fall to historic lows, customers were hit hard, being forced to pay substantial amounts to the banks and finding that the costs involved in ending the contracts were also exceptionally high. Businesses were also alarmed to find that the ‘swaps’ and ‘loans’ were two different products. This meant that even when a loan was paid off, they were still obliged to continue funding the ‘swaps’.

    – http://www.swapmissellingclaims.co.uk/

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    CH.

  • Banks May Seize Your Small Savings

    Most of us are aware of the Financial Crisis, when the Government seized amounts from the Bank account of small investors to manage its financial crisis, which triggered of a run on Banks . by people rushing to ATMs to withdraw their cash.

    To defuse the situation the EU ,along with the creditors mainly Germany, made out a Bail plan and since it was suggested as being unworkable, a new package was devised.

    Under this dispensation,Deposits under 100,000 euros will be protected.

    The reasoning behind this is that these amount are (small amounts) are protected by Insurance!

    I fail to understand that the Government will be losing the money appropriated ((or Misappropriated) by way of  the payment by the Insurers.

    Even if the Insurance firms belong to private Sector, it will drive inflation further.

    I do not know which Economic Genius thought out this plan!

    More than this  is an interesting perspective from the ‘Business Insider”

    Now banks in EU may tap and seize your savings!

    How long will it take to reach India?

    I have been voicing about the inefficacy of the Keynesian Economics in my columns for quite some time.

    First came Argentina,then Greece, Ireland,now Cyprus.

    Western countries rm down an economic system which is not savings oriented, but spending oriented  on unsuspecting Nations by way of lending and squeeze when the Note is due, like Germany has done now to Cyprus.

    Story:

    Cyprus Crisis
    Cyprus Crisis

    As expected, Cyprus and the EU reached a new late-night bailout deal last night that will reduce the chance that Cyprus’s financial system and economy will completely implode.

    The new deal is better than the last deal in one key respect:

    • Deposits under 100,000 euros will be protected

    That’s very important. Those deposits were ostensibly “insured.” To seize them, the way the last bailout deal would have, would have been grossly unfair and would have set a truly alarming precedent.

    Now, small depositors in European banks can breathe more easily. At least in this case of gross malpractice on the part of reckless bank managers, their life savings have been preserved.

    Alas, the good news ends there.

    Although deposits under 100,000 euros will be spared, deposits over 100,000 euros will be seized and subjected to an as-yet undetermined haircut–with the confiscated money going to bail out the gambling losses of the aforementioned reckless idiots who run some of Cyprus’s banks.

    This seizure, needless to say, will dampen the enthusiasm of rich depositors for keeping money in banks that get themselves into financial trouble.

    And because many, many banks in Europe have gotten themselves into financial trouble, this will create a general state of unease among rich depositors throughout the Eurozone.

    And it should wig out some bank lenders, as well.

    After all, never before in the history of this global financial crisis has a major banking system allowed depositors to lose money, no matter how reckless and stupid and greedy their bank managers have been. And only rarely have bank lenders–those who hold bank bonds–been asked to pony up.

    In this case, however, the depositors will lose money. Perhaps a lot of money. And if there had been big bank debtholders in Cyprus, they probably would have been socked with losses, too.

    It’s possible that everyone will just laugh off Cyprus, viewing it as an exceptional one-off. After all, the Cyprus banking system was notorious for being the offshore money-laundering arm of many Russian oligarchs, so many folks will likely view this asset seizure as a case of “just desserts.”

    But this optimistic view of the Cyprus horrorshow overlooks one key fact:

    The main reason that Cyprus depositors will lose their cash is because it has become politically difficult (impossible?) for leaders in Germany and other rich European countries to bail out their brethren in the “periphery” without taking many pounds of flesh.

    And it is that precedent, in addition to the fate of big depositors in Cyprus, that should spook Europe’s big bank depositors and lenders.

    If Germany is done bailing out countries and banks without having those countries and banks cover some of the cost, it’s not clear why Germany will relent next time Spain, Italy, Greece, and other countries in near-desperately bad financial shape come rushing to the EU with their hands out.

    Unlike Cyprus, the banking systems in these countries do have bondholders that can get haircut before the depositors get haircut, but the effect will be the same.

    For the first time since the collapse of Lehman Brothers, those who lend their money to banks or keep their money in banks are at risk.

    Because the neighborhood loan shark (Germany) is now extracting much more onerous terms.

    http://www.reddit.com/tb/1az48w

  • Home EMI Default,Taking Corrective Action

    Buying a Home through Home Loans is the norm of the Day.

    Days are past when being a Debtor was  considered a Sin and attracted social ostracism.

    Now if you do not have a Credit card or Loan EMI, you do not belong to the uppity group.

    Now that you have availed of Home Loan, it is prudent to know what action to take in case of unforeseen default.

    EMI Default Points, Home Loans.
    EMI Default Points, Home Loans.

    1.Temporary problem in Repayment of EMI.

    This might arise due to unexpected loss of job or expenses incurred in the Family due to Death, Illnesses.

    In these cases represent the cases to the Lender the details in writing and request them for a minimum break from payment of EMI.

    This may not be possible,

    However ,depending on your credit rating, the managers may use their discretion in granting you relief.

    This also may not be enough.

    Make sure , if this request is granted, to stick to accepted schedule of payment.

    You may also request them for a reduced EMIs at longer period of repayment.

    This may be considered favorably ;this depends on your credit rating, qualifications company you work for or the number of years you have served in a company.

    2.Permanent Failure to pay EMI.

    You have no other option but to ask the Creditor to realize the mortgage and debit your account the balance if any.

    Handling Collection Agents.

    Inform th Collection Agent the position and confirm the details in writing to the Creditor.

    Do not use abusive language.

    In case the Collection Agents behave rudely including use of abusive language, report to the Link provided here below.

    RBI is very clear on this.

    “Lenders are willing to negotiate 

    Attaching a property is the last thing a lender wants to do. Though banks have the power to enforce the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI) to recover non-performing assets without the intervention of a court of law, this is the last step they prefer to take. A bank usually lets one mortgage payment default slip by, but for the next one, it will mail you a reminder to inform you that your payments are late. After three defaults, the bank will send a demand notice, asking you to pay your dues as soon as possible.

    “If the borrower doesn’t respond to any of the mails, the bank sends a legal notice through its legal department,” says VN Kulkarni, chief counsellor at Abhay Credit Counselling Centre, which is sponsored by the Bank of India. A bank waits for three months before declaring an asset a non-performing one. “After the end of this period, the bank can officially term thehome loan an NPA and start the process of recovering the property through the SARFAESI Act,” says Kulkarni. Even after invoking the Act, the bank gives the borrower a 2-month notice period to repay the dues.

    “Finally, five months after the first default, the bank sends a notice, stating that it has valued the property for a certain sum and that it will auction the house on a particular date. This is usually set for a month from the date that the bank mails you the auction notice,” adds Kulkarni.

    http://economictimes.indiatimes.com/personal/finance/loan/centre/home/loans/analysis/What-to-do-if-you-cant-pay-your-home-loan-EMI/articleshow/19143152.cms

    On Collection Agents.

    http://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=4141

    3. The bank would respect privacy of its borrowers.
    4. The bank is committed to ensure that all written and verbal communication with its
    borrowers will be in simple business language and bank will adopt civil manners
    for interaction with borrowers.
    5. Normally the bank’s representatives will contact the borrower between 0700 hrs
    and 1900 hrs, unless the special circumstance of his/her business or occupation
    requires the bank to contact at a different time.
    6. Borrower’s requests to avoid calls at a particular time or at a particular place
    would be honoured as far as possible.
    7. The bank will document the efforts made for the recovery of dues and the copies
    of communication sent to customers, if any, will be kept on record.
    8. Inappropriate occasions such as bereavement in the family or such other
    calamitous occasions will be avoided for making calls/visits to collect dues.
    3. Giving notice to borrowers
    While written communications, telephonic reminders or visits by the bank’s
    representatives to the borrowers place or residence will be used as loan follow up
    measures, the bank will not initiate any legal or other recovery measures including
    repossession of the security without giving due notice in writing. Any genuine
    difficulties expressed/disputes raised by the customer will be considered by the banks
    before initiating recovery measures. Bank will follow all such procedures as required
    under law for recovery/repossession of security.

    http://www.iba.org.in/Model%20Policy/d)%20IBA%20Model%20Policy%20on%20Collection%20of%20Dues%20&%20Repossession%20of%20Security.pdf

    Still you have problems report to Consumer Forums.

    Plese read my blog posts filed under consumer forum.