27-Apr-2011
Source : Business Standard
By Niladri Bhattacharya & Viveat Susan Pinto.
Brand LIC got a 100% recall in a recent nationwide study by a market research agency.
When a leading private insurance company recently commissioned a market research agency to do a survey on India’s most famous brands, the findings didn’t come as a surprise.
There was a cent per cent recall (which means 100 out of 100 Indian consumers know it) for only one Indian brand:LIC. And 93 per cent of those surveyed said if they buy insurance, it has to be from LIC. So much for private sector competition.
Numbers justify this mega presence. LIC still accounts for nearly 70 per cent of the life insurance market and is also the largest domestic institutional investor in the country.
So what makes brand LIC tick? Why is it that the private sector peers have not been able to come anywhere near this public sector behemoth despite spending huge amounts of money on promotions?
A combination of factors, say ad agency heads. Jude Fernandes, executive director, Mudra Group and chief executive officer, Mudra India, says the stature of the organisation is what counts. "When you think LIC, you think insurance. It defines the category in India. And when you come from that position, there is a certain tone and style in which you present the brand,&" he says.
It helps that the insurance giant spends as much as Rs 300 crore annually on ad spends. Geeta Prabhakaran, an officer at LIC associated with brand development, says "we are present everywhere across gender, class and demographies -- be it a village fair or puppet shows, or a cultural evening in a posh Bandra locality. We have no problem in talking about our products anywhere – whether it’s a festival in IIMs or a small town district college&". LIC even shows short movies in rural theatres to create awareness about insurance.
LIC is present through television commercials in 12 different languages and is getting its act together in the digital space as well through promotions in four social networking sites.
Mudra has the honour of coining LIC’s famous baseline - Zindagi Ke Saath bhi, Zindagi Ke Baad bhi, over a decade ago. Fernandes says, "The baseline stands to this day. LIC has felt no need to change it because it epitomises what it is all about - With you during Life. With you after Life.&"
The challenge, says Fernandes, when working on the LIC business is to keep in mind both the urban and rural clientele of the insurance giant. "Its customer cuts across segments, which is why one has to keep in mind both the India and Bharat when devising ads for LIC.&"
The point is endorsed by Nitin Karkare, chief operating officer, DraftFCB Ulka, Mumbai, "The two important factors about LIC is trust and scale. If the trust wasn’t there, the insurer wouldn’t be able to scale up its business. Both go hand in hand, but trust matters the most,&" he says.
"Ultimately it boils down to trust,&" says Vipin Anand, Chief, Corporate Communications, LIC, adding, "We are still servicing some of the polices given by the erstwhile insurers and our rejection ratio is by far the lowest in the industry.&"
According to data provided by the Insurance Regulatory Development Authority (Irda), the number of claims rejected in case of claims for LIC is just above 1 per cent — much lower than its peers.
These are the things which are carefully injected into the process when it comes to marketing the product. "The tone of LIC’s ads is sincere,&" Karkare says.
To make sure that its agencies have understood what it wants, LIC has devised an elaborate procedure for its advertising. It briefs at least two or three of its roster agencies. This includes RK Swamy/BBDO, DraftFCB Ulka, JWT and Mudra. The agencies then have the task of presenting the creatives based on the brief given. The best one is eventually selected.
"This encourages the empanelled agencies to come up with the best creative,&" says Fernandes. "The beneficiary eventually is LIC.
Our Mission is to enrich the lives of the people we touch upon; by providing them an ethical advice on the highest quality of financial products that helps them fulfill their responsibilities & build better tomorrows.
Friday, April 29, 2011
Thursday, April 28, 2011
Balanced portfolio helps LIC dominate new business growth
28-Apr-2011
Source : Financial Chronicle
First year premium data, which indicates the growth in insurance sector, clearly signals that the individual policyholders have maintained distance from the sector.
While the industry was growing at 25.47 per cent in FY10, the growth has dropped to 15.13 per cent in FY11. Although the government-run Life Insurance Corporation of India, managed a growth of 21.94 per cent, the private insurers grew at only 2.56 per cent.
The 22 private life insurers has contributed only 31.3 per cent or Rs 39,381.30 crore of the total first year premium of Rs 1,25,826.03 crore compared to Rs 86,444.72 crore by LIC of India, almost 69 per cent.
The premium collected by private insurers at the end of financial year 2008-09 was Rs 34,153.71 crore, approximately 40 per cent of total premium of Rs 87,107.62 crore and by the end of year 2009-10, although premium had increased to Rs 38,399.33 it accounted for 35.14 per cent of total industry premium of Rs 1,09,290.37.
“LIC having balanced portfolio of traditional and Ulip plans was able to increase its market share this year after the change in Ulip norms, however, we hope that private players by introducing right mix of Ulips and traditional plans will get back their due share,” said Vinay Taluja, principal officer, Bajaj Capital.
The new Ulip norms have forced insurers to restructure their product portfolio, which hurt individual regular premium policies. The total collection from individual regular premium policies is Rs 46,781.08 crore this year, showing a fall of 10.13 per cent, as 15 out of 23 insurers saw negative growth. In FY10, the segment was, however, growing at 16.49 per cent with total premium of Rs 52,056 crore.
“At present, the shift is towards traditional and single premium policies, however, the insurers have now factored in the change and are coming out with regular premium products,” said MN Rao, MD and CEO, SBI Life Insurance Company.
“The guideline has made Ulips a very viable option for policyholders and once they understand the product and cost structure the sale will rise,” said Joseph Thomas, head of investment advisory and financial planning at Aditya Birla Money.
Source : Financial Chronicle
First year premium data, which indicates the growth in insurance sector, clearly signals that the individual policyholders have maintained distance from the sector.
While the industry was growing at 25.47 per cent in FY10, the growth has dropped to 15.13 per cent in FY11. Although the government-run Life Insurance Corporation of India, managed a growth of 21.94 per cent, the private insurers grew at only 2.56 per cent.
The 22 private life insurers has contributed only 31.3 per cent or Rs 39,381.30 crore of the total first year premium of Rs 1,25,826.03 crore compared to Rs 86,444.72 crore by LIC of India, almost 69 per cent.
The premium collected by private insurers at the end of financial year 2008-09 was Rs 34,153.71 crore, approximately 40 per cent of total premium of Rs 87,107.62 crore and by the end of year 2009-10, although premium had increased to Rs 38,399.33 it accounted for 35.14 per cent of total industry premium of Rs 1,09,290.37.
“LIC having balanced portfolio of traditional and Ulip plans was able to increase its market share this year after the change in Ulip norms, however, we hope that private players by introducing right mix of Ulips and traditional plans will get back their due share,” said Vinay Taluja, principal officer, Bajaj Capital.
The new Ulip norms have forced insurers to restructure their product portfolio, which hurt individual regular premium policies. The total collection from individual regular premium policies is Rs 46,781.08 crore this year, showing a fall of 10.13 per cent, as 15 out of 23 insurers saw negative growth. In FY10, the segment was, however, growing at 16.49 per cent with total premium of Rs 52,056 crore.
“At present, the shift is towards traditional and single premium policies, however, the insurers have now factored in the change and are coming out with regular premium products,” said MN Rao, MD and CEO, SBI Life Insurance Company.
“The guideline has made Ulips a very viable option for policyholders and once they understand the product and cost structure the sale will rise,” said Joseph Thomas, head of investment advisory and financial planning at Aditya Birla Money.
Thursday, April 21, 2011
Cibil makes credit scores available to individuals
21-Apr-2011
Credit Information Bureau (India) Limited (Cibil), the agency gathering data on credit histories of individuals, has now made credit scores available to individuals for a fee of Rs 450 per request. An individual’s credit score would be a three-digit numeric summary of his credit history for the last three years, and this would be rated on a scale of 300-900.
The higher an individual’s score, the better would be his chances of securing a loan. Banks have, for the last two years, used this data as an important factor in deciding on whether to approve or reject a loan.
In August 2009, Cibil had made credit information reports available to individuals for a fee of Rs 142. “The response was huge and these customers started requesting for their credit scores too. Hence, we decided to make the score available to them,” said Cibil Managing Director, Arun Thukral. The format of the report was revised this month and the reports would now also show whether nor nor the data provided by banks is accurate.
Through Cibil’s website, individuals can request for their credit scores online. They can also make the payments online, after which, they would have to send proofs of their identity to Cibil. The score, along with the report, would be delivered to them in seven-ten days. “We are working towards an online authentication system. Once this is done, it would help in delivering scores and reports online,” Thukral said.
Making credit scores available to borrowers can also be seen as a step towards risk-based pricing, a trend not practiced by retail borrowers in India. Risk-based pricing essentially means the interest rate on a loan is also determined by the lender’s estimate on whether or not the borrower would default on the loan.
“Banks might consider such an approach only in a scenario of intense competition. Presently, barring a few, not many banks are aggressive on retail loans. This may happen, but will take at least two years,” said Sanjay Agarwal, senior vice-president and group head (retail strategy and branding), ARCIL.
Credit scores give banks an estimate of an individual’s ability to repay a loan, since they are based on parameters like the loan amount, the nature of the loan, payment frequency and prior delinquency. Cibil research shows 58 per cent of individuals with credit scores of 800 or above were able to secure loans in 2010.
| Source : The Economic Times | |
The higher an individual’s score, the better would be his chances of securing a loan. Banks have, for the last two years, used this data as an important factor in deciding on whether to approve or reject a loan.
In August 2009, Cibil had made credit information reports available to individuals for a fee of Rs 142. “The response was huge and these customers started requesting for their credit scores too. Hence, we decided to make the score available to them,” said Cibil Managing Director, Arun Thukral. The format of the report was revised this month and the reports would now also show whether nor nor the data provided by banks is accurate.
Through Cibil’s website, individuals can request for their credit scores online. They can also make the payments online, after which, they would have to send proofs of their identity to Cibil. The score, along with the report, would be delivered to them in seven-ten days. “We are working towards an online authentication system. Once this is done, it would help in delivering scores and reports online,” Thukral said.
Making credit scores available to borrowers can also be seen as a step towards risk-based pricing, a trend not practiced by retail borrowers in India. Risk-based pricing essentially means the interest rate on a loan is also determined by the lender’s estimate on whether or not the borrower would default on the loan.
“Banks might consider such an approach only in a scenario of intense competition. Presently, barring a few, not many banks are aggressive on retail loans. This may happen, but will take at least two years,” said Sanjay Agarwal, senior vice-president and group head (retail strategy and branding), ARCIL.
Credit scores give banks an estimate of an individual’s ability to repay a loan, since they are based on parameters like the loan amount, the nature of the loan, payment frequency and prior delinquency. Cibil research shows 58 per cent of individuals with credit scores of 800 or above were able to secure loans in 2010.
Saturday, April 16, 2011
ICICI Prudential denies widow’s policy claim by ‘forging papers
Consumer forum directs company to pay Rs 11.48 lakh policy amount with interest to wife of late BSNL superintendent
Her happiness knew no bounds when the widow of Ashok Deshpande, a superintending engineer with the Bharat Sanchar Nigam Ltd (BSNL), won a four-year battle against the ICICI Prudential Life Insurance Company on Monday.
Vaijayanti Ashok Deshpande, a resident of Pimple Gurav, proved in the District Consumer Redressal Forum that the insurance company produced fake documents of her husband’s medical history to deny her the policy claim of Rs11.48 lakh.
The forum has directed the company to pay the policy amount along with interest to Vaijayanti, whose insurance policy was rejected on the grounds that her husband was an alcoholic and had a history of several diseases.
The insurance company failed to prove that the medical documents were original as it had submitted photocopies of the papers and also did not provide the affidavit of the concerned doctor to support the legality of the documents.
According to the complaint, Ashok Deshpande had obtained a home loan of Rs 10.70 lakh in 2007. To give security to the loan, he had also obtained an insurance policy from ICICI Prudential Life. In April 2007, he had also deposited a one-time premium of Rs 78,000.
Ironically, Deshpande suffered a massive heart attack and died eight months after availing the loan. Later, his widow applied for the insurance claim. But the company refused to settle the claim saying that the policy-holder did not divulge his previous ailments in the medical history while taking the policy. Vaijayanti then approached the consumer forum through her lawyer Srikant Gawali to get the insurance amount and compensation.
The company argued in the forum that Deshpande did not reveal that he was an alcoholic and had blood pressure and diabetes. To prove its claim, the company provided photocopies of the treatment Deshpande undertook from a Nagpur- based doctor.
However, the forum observed that the documents were photocopies and cannot be considered as original evidence. It also said that the doctor’s affidavit with the certificate was not attached. Thus, the company acted in an illegal manner and also showed deficiency in its service.
“The insurance company shall pay to the policy holder a sum of Rs 11, 48,303 along with nine per cent interest since the day of policy denial letter, on account of policy expenses Rs 10,000 (compensation) towards harassment and mental agony and Rs 3,000 as litigation charges,” the forum’s order stated.
The official company spokesperson said, “We are not in receipt of any official communication from the relevant authorities. Therefore, it would be premature to comment at this point of time. However, we will decide the future course of action after evaluating the order.
We would like to reiterate that at ICICI Prudential Life Insurance, the claims philosophy is to ensure faster settlement of genuine claims and we handle every claim with utmost sensitivity and ensure complete hand holding of the claimant at every step of the settlement process.”
► We will decide the future course of action after evaluating the order
- Official spokesperson, ICICI prudential life insurance
Pune Mirror
Vijay Chavan
Vijay Chavan
12-Apr-2011
Her happiness knew no bounds when the widow of Ashok Deshpande, a superintending engineer with the Bharat Sanchar Nigam Ltd (BSNL), won a four-year battle against the ICICI Prudential Life Insurance Company on Monday.
Vaijayanti Ashok Deshpande, a resident of Pimple Gurav, proved in the District Consumer Redressal Forum that the insurance company produced fake documents of her husband’s medical history to deny her the policy claim of Rs11.48 lakh.
The forum has directed the company to pay the policy amount along with interest to Vaijayanti, whose insurance policy was rejected on the grounds that her husband was an alcoholic and had a history of several diseases.
The insurance company failed to prove that the medical documents were original as it had submitted photocopies of the papers and also did not provide the affidavit of the concerned doctor to support the legality of the documents.
According to the complaint, Ashok Deshpande had obtained a home loan of Rs 10.70 lakh in 2007. To give security to the loan, he had also obtained an insurance policy from ICICI Prudential Life. In April 2007, he had also deposited a one-time premium of Rs 78,000.
Ironically, Deshpande suffered a massive heart attack and died eight months after availing the loan. Later, his widow applied for the insurance claim. But the company refused to settle the claim saying that the policy-holder did not divulge his previous ailments in the medical history while taking the policy. Vaijayanti then approached the consumer forum through her lawyer Srikant Gawali to get the insurance amount and compensation.
The company argued in the forum that Deshpande did not reveal that he was an alcoholic and had blood pressure and diabetes. To prove its claim, the company provided photocopies of the treatment Deshpande undertook from a Nagpur- based doctor.
However, the forum observed that the documents were photocopies and cannot be considered as original evidence. It also said that the doctor’s affidavit with the certificate was not attached. Thus, the company acted in an illegal manner and also showed deficiency in its service.
“The insurance company shall pay to the policy holder a sum of Rs 11, 48,303 along with nine per cent interest since the day of policy denial letter, on account of policy expenses Rs 10,000 (compensation) towards harassment and mental agony and Rs 3,000 as litigation charges,” the forum’s order stated.
The official company spokesperson said, “We are not in receipt of any official communication from the relevant authorities. Therefore, it would be premature to comment at this point of time. However, we will decide the future course of action after evaluating the order.
We would like to reiterate that at ICICI Prudential Life Insurance, the claims philosophy is to ensure faster settlement of genuine claims and we handle every claim with utmost sensitivity and ensure complete hand holding of the claimant at every step of the settlement process.”
► We will decide the future course of action after evaluating the order
- Official spokesperson, ICICI prudential life insurance
Wednesday, April 13, 2011
Coming Soon!! Biometric PAN cards
12-Apr-2011
Source : Magicgyan Team
The government has decided to issue biometric PAN cards to taxpayers across the country.
A decision to this effect was taken recently by the Finance Ministry and it comes in the wake of a Comptroller and Auditor General (CAG) report that asked the Income Tax department to ensure that a single tax payer is not issued multiple cards.
The proposed new biometric Permanent Account Number (PAN) cards would bear the I-T assessee’ fingerprints (two from each hand) and the face.
An option to existing PAN card holders to opt for the biometric cards would also be offered.
Source : Magicgyan Team
The government has decided to issue biometric PAN cards to taxpayers across the country.
A decision to this effect was taken recently by the Finance Ministry and it comes in the wake of a Comptroller and Auditor General (CAG) report that asked the Income Tax department to ensure that a single tax payer is not issued multiple cards.
The proposed new biometric Permanent Account Number (PAN) cards would bear the I-T assessee’ fingerprints (two from each hand) and the face.
An option to existing PAN card holders to opt for the biometric cards would also be offered.
Losses accompany insurance sector growth cumulative red ink Rs 46k cr
11-Apr-2011
Source : Business Standard
India is likely to count among the top three life insurance and 15 general insurance markets in the world by 2020. However, private insurance companies are yet to find a way to operate profitably.
Their cumulative losses are Rs 46,000-crore, says an industry report, prepared by industry chamber Ficci and The Boston Consulting Group (BCG). To be released tomorrow, it said: “The insurance industry is expected to reach $350-400 billion in premium income by 2020.”
There are 24 general insurance and 23 life insurance companies in India. Before August 2000, the insurance sector was closed to private companies.
According to the report, titled ‘India Insurance – Turning 10, Going on 20’, the total penetration of insurance (premium as percentage of GDP) has increased from 2.3 per cent in 2001 to 5.2 per cent in 2011.
In addition, there has been a vast increase in coverage. The number of life policies in force has increased nearly 12–fold over the past decade and health insurance nearly 25–fold, the report said.
The progress has been aided by the dramatic shift in the availability of products such as better term, Unit-linked, whole life, maximum Net Asset Value guarantee, auto assistance, auto pay per km insurance, disease management, wellness. However, the industry is yet to find a profitability solution. “Private life insurers accumulated losses of Rs 16,000 crore till March 2010. Similarly, the non–life industry has cumulative underwriting losses of nearly Rs 30,000 crore,” said Alpesh Shah, Partner & Director, BCG India, and author of the report.
The report said multiple elements contribute to this profitability challenge. For example, it said, insurers’ fascination for top line growth at any cost has resulted in inefficient operating models and, hence, inferior operating expense ratios as compared to global benchmarks, in both life and non–life.
The economics of various channels are challenged, be it agency model, bancassurance, brokers, auto dealers, corporate agency or in–house salaried sales force. The report said claims costs in the case of non–life are very high because of third-party liability claims and fraud in the case of auto and health insurance. There is limited focus on the end customer and the intermediary is being given a more prominent position by insurers, with insufficient focus on maximising value from existing customers, according to the report.
A bill to raise the foreign direct investment cap in private insurance from the current 26 per cent to 49 per cent is pending in Parliament. The report calls for relaxing the ownership norms.
Source : Business Standard
India is likely to count among the top three life insurance and 15 general insurance markets in the world by 2020. However, private insurance companies are yet to find a way to operate profitably.
Their cumulative losses are Rs 46,000-crore, says an industry report, prepared by industry chamber Ficci and The Boston Consulting Group (BCG). To be released tomorrow, it said: “The insurance industry is expected to reach $350-400 billion in premium income by 2020.”
There are 24 general insurance and 23 life insurance companies in India. Before August 2000, the insurance sector was closed to private companies.
According to the report, titled ‘India Insurance – Turning 10, Going on 20’, the total penetration of insurance (premium as percentage of GDP) has increased from 2.3 per cent in 2001 to 5.2 per cent in 2011.
In addition, there has been a vast increase in coverage. The number of life policies in force has increased nearly 12–fold over the past decade and health insurance nearly 25–fold, the report said.
The progress has been aided by the dramatic shift in the availability of products such as better term, Unit-linked, whole life, maximum Net Asset Value guarantee, auto assistance, auto pay per km insurance, disease management, wellness. However, the industry is yet to find a profitability solution. “Private life insurers accumulated losses of Rs 16,000 crore till March 2010. Similarly, the non–life industry has cumulative underwriting losses of nearly Rs 30,000 crore,” said Alpesh Shah, Partner & Director, BCG India, and author of the report.
The report said multiple elements contribute to this profitability challenge. For example, it said, insurers’ fascination for top line growth at any cost has resulted in inefficient operating models and, hence, inferior operating expense ratios as compared to global benchmarks, in both life and non–life.
The economics of various channels are challenged, be it agency model, bancassurance, brokers, auto dealers, corporate agency or in–house salaried sales force. The report said claims costs in the case of non–life are very high because of third-party liability claims and fraud in the case of auto and health insurance. There is limited focus on the end customer and the intermediary is being given a more prominent position by insurers, with insufficient focus on maximising value from existing customers, according to the report.
A bill to raise the foreign direct investment cap in private insurance from the current 26 per cent to 49 per cent is pending in Parliament. The report calls for relaxing the ownership norms.
Saturday, April 2, 2011
Friday, April 1, 2011
Seven rules to improve your Cibil CIR
31-Mar-2011
By Harshala Chandorkar, Senior Vice President Cibil
Your Credit Information Bureau (Cibil) credit information report (CIR), other than your income, is the single most important tool used by a lender to evaluate your application for any loan or credit card application.
Naturally, it’s important that you understand your Cibil CIR and what it takes to maintain a credit history, so that it is viewed favourably by lenders .
A good credit history can be maintained by following these seven simple rules:
RULE 1
Always pay your bills on time. Late payments are viewed negatively by lenders and may affect the chances of your loan getting approved. In addition, if you do not make payments on loans for more than 180 days, the lender may "Write Off " the amount in question. The lender then proceeds to report this on your Cibil CIR. Moreover, in the event that you make a payment which is less than the amount the lender believes it is owed, the lender will report this as ’settled’ to Cibil.
For example, if the lender tells you that you owe it Rs 100 but you pay only Rs 80 to the lender, it will then report your account as ’settled’ to Cibil. Both ’write off ’ and ’settled’ accounts may be viewed negatively by lenders while evaluating your loan application because this status implies that you haven’t been able to adequately repay your lender.
RULE 2
Keep your balances low. Most lenders review the total outstanding debt of a potential borrower (across all types of accounts ) and the amount of debt used in proportion to the amount of debt sanctioned to the borrower by the lender. While the balances on your loans will only reduce over time as payments are made, you must be diligent about controlling your credit card utilisation.
For example, if your "Current Balance" is Rs 90,000 with a "High Credit" of Rs 1,00,000, this may be viewed negatively by a lender. While it is always prudent to not use too much credit, if you are already approaching the boundaries of your existing sanctioned amounts and credit limits the lender may be reluctant to provide additional loans to you.
RULE 3
Maintain a healthy mix of credit. Your Cibil CIR should contain a mix of a home loan, auto loan and a couple of credit cards. A high number of just credit cards may affect the chances of a loan approval. You may wonder why. Although a credit card offers easy access to finance, it’s also by far the most expensive form of credit.
The more the number of credit cards with high utilisation, the larger are the payments resulting from the high interest rate charged on credit cards. This may affect your ability to service additional debt obligations.
RULE 4
Apply for new credit in moderation. If you have made many applications for loans, or have recently been sanctioned new credit facilities, a lender is likely to view your application with caution.
This ’credit hungry’ behaviour indicates your debt burden is likely to, or has, increased and you are less capable of honouring any additional debt.
RULE 5
Think twice before closing credit card accounts. While using credit cards may negatively impact your Cibil CIR, unused credit cards actually imply that you are financially secure.
This makes lenders view your application more favourably.
RULE 6
Monitor your co-signed and joint accounts monthly. In cosigned or jointly held accounts, you are held equally liable for missed payments.
This is extremely important because your joint holder’s negligence could affect your ability to access credit when you need it.
RULE 7
Review your Cibil CIR frequently throughout the year. Unpleasant surprises in the form of rejected loan applications can be avoided by ensuring that your Cibil CIR accurately reflects your current financial status. So reviewing your Cibil CIR 3-4 times each year is important in order to keep you financial health in good stead.
Though these general rules are important to keep in mind, each lender has its own policies to sanction a loan to an applicant
| Source : Economic Times |
By Harshala Chandorkar, Senior Vice President Cibil
Your Credit Information Bureau (Cibil) credit information report (CIR), other than your income, is the single most important tool used by a lender to evaluate your application for any loan or credit card application.
Naturally, it’s important that you understand your Cibil CIR and what it takes to maintain a credit history, so that it is viewed favourably by lenders .
A good credit history can be maintained by following these seven simple rules:
RULE 1
Always pay your bills on time. Late payments are viewed negatively by lenders and may affect the chances of your loan getting approved. In addition, if you do not make payments on loans for more than 180 days, the lender may "Write Off " the amount in question. The lender then proceeds to report this on your Cibil CIR. Moreover, in the event that you make a payment which is less than the amount the lender believes it is owed, the lender will report this as ’settled’ to Cibil.
For example, if the lender tells you that you owe it Rs 100 but you pay only Rs 80 to the lender, it will then report your account as ’settled’ to Cibil. Both ’write off ’ and ’settled’ accounts may be viewed negatively by lenders while evaluating your loan application because this status implies that you haven’t been able to adequately repay your lender.
RULE 2
Keep your balances low. Most lenders review the total outstanding debt of a potential borrower (across all types of accounts ) and the amount of debt used in proportion to the amount of debt sanctioned to the borrower by the lender. While the balances on your loans will only reduce over time as payments are made, you must be diligent about controlling your credit card utilisation.
For example, if your "Current Balance" is Rs 90,000 with a "High Credit" of Rs 1,00,000, this may be viewed negatively by a lender. While it is always prudent to not use too much credit, if you are already approaching the boundaries of your existing sanctioned amounts and credit limits the lender may be reluctant to provide additional loans to you.
RULE 3
Maintain a healthy mix of credit. Your Cibil CIR should contain a mix of a home loan, auto loan and a couple of credit cards. A high number of just credit cards may affect the chances of a loan approval. You may wonder why. Although a credit card offers easy access to finance, it’s also by far the most expensive form of credit.
The more the number of credit cards with high utilisation, the larger are the payments resulting from the high interest rate charged on credit cards. This may affect your ability to service additional debt obligations.
RULE 4
Apply for new credit in moderation. If you have made many applications for loans, or have recently been sanctioned new credit facilities, a lender is likely to view your application with caution.
This ’credit hungry’ behaviour indicates your debt burden is likely to, or has, increased and you are less capable of honouring any additional debt.
RULE 5
Think twice before closing credit card accounts. While using credit cards may negatively impact your Cibil CIR, unused credit cards actually imply that you are financially secure.
This makes lenders view your application more favourably.
RULE 6
Monitor your co-signed and joint accounts monthly. In cosigned or jointly held accounts, you are held equally liable for missed payments.
This is extremely important because your joint holder’s negligence could affect your ability to access credit when you need it.
RULE 7
Review your Cibil CIR frequently throughout the year. Unpleasant surprises in the form of rejected loan applications can be avoided by ensuring that your Cibil CIR accurately reflects your current financial status. So reviewing your Cibil CIR 3-4 times each year is important in order to keep you financial health in good stead.
Though these general rules are important to keep in mind, each lender has its own policies to sanction a loan to an applicant
LIC plans Rs 75,000-cr market booster for next year
31-Mar-2011
Source : Business Standard
By Shilpy Sinha.
Life Insurance Corporation of India (LIC), the country’s largest institutional investor, is planning to pump in at least Rs 75,000 crore in equities during the next financial year.
This will be 25 per cent higher than the Rs 60,000 crore it invested in the stock markets this year.
Senior company executives said investment in the forthcoming initial public offers and the government’s Rs 40,000-crore disinvestment programme will be key elements of the equity strategy, as the insurer is looking to acquire a sizeable stake in companies of its interest.
During the current financial year, LIC had originally targeted to invest around Rs 50,000 crore in equities but with the markets recovering and investors returning to buy unit-linked insurance plans (Ulips), the target was breached. As a result, the public sector player ended up investing a higher than budgeted amount in equities.
What also helped matters this year was LIC scaling its projections on total premium income, which includes funds generated from the sale of new policies as well as from renewals. Against a target of around Rs 1,75,000 crore, the life insurer is likely to close the year with premium income of close to Rs 2,00,000 crore.
Against LIC’s investment in the equities segment, foreign institutional investors are expected to pump in around Rs 90,000 crore ($20 billion) during 2010-11. So far in the current financial year, against LIC’s Rs 60,000 crore, FIIs have invested Rs 1,09,000 crore.
In 2008-09, FIIs had sold around Rs 48,250 crore in the equities space, while LIC had invested Rs 40,300 crore. “If LIC is putting in Rs 75,000 crore and another Rs 40,000-50,000 crore is expected to come from other insurance companies and mutual funds, this will mean that the ratio of investment in capital markets will change,” said Rashesh Shah, chairman edelweiss group.
Earlier, FIIs invested 60-70 per cent of the institutional resources, while domestic institutions accounted for the rest. “With insurance companies led by LIC emerging as large investors in equity markets, perhaps for the first time the ratio will change, where over 60 per cent investment in the equity capital markets will come from domestic institutions. In the next two years, 75 per cent of the money will come from domestic institutional investors,” Shah added.
Over a period of two years, LIC’s investment in equities has increased by over 86 per cent.
“Our investment is a function of how our policyholders want us to invest and how we are expected to invest as per the guidelines. For us, the bottom line is safety,” a senior LIC executive said.
“It is a significant amount. LIC is known to be a long term player and more stable compared to FII or other domestic investors. It provides long term cushion to the market,” said Elara Capital Head-Institutional Equities & Global Research Harendra Kumar.
This year, apart from allocating Rs 60,000 crore to equity papers, around Rs 35,000 crore is in corporate debt instruments, while another Rs 65,000-Rs 70,000 crore has been invested in government securities. The remaining 35,000 crore have been invested in other instruments and in infrastructure sector. While the details of investment the infrastructure sector were unavailable, the company is expected to fall short of the 15 per cent exposure norm for want of quality papers, a senior LIC executive said.
During the next financial year, company executives said, LIC’s total premium income was expected to go up by around 15 per cent, which will result in a total mop up of around Rs 2,30,000 crore. Of this Rs 75,000 crore will flow into equities, while details of other investment are still being finalised.
LIC expects its premium collection from new business to go up by 25 per cent. Between April and February, first premium income was estimated at Rs 54,320 crore.
Source : Business Standard
By Shilpy Sinha.
Life Insurance Corporation of India (LIC), the country’s largest institutional investor, is planning to pump in at least Rs 75,000 crore in equities during the next financial year.
This will be 25 per cent higher than the Rs 60,000 crore it invested in the stock markets this year.
Senior company executives said investment in the forthcoming initial public offers and the government’s Rs 40,000-crore disinvestment programme will be key elements of the equity strategy, as the insurer is looking to acquire a sizeable stake in companies of its interest.
During the current financial year, LIC had originally targeted to invest around Rs 50,000 crore in equities but with the markets recovering and investors returning to buy unit-linked insurance plans (Ulips), the target was breached. As a result, the public sector player ended up investing a higher than budgeted amount in equities.
What also helped matters this year was LIC scaling its projections on total premium income, which includes funds generated from the sale of new policies as well as from renewals. Against a target of around Rs 1,75,000 crore, the life insurer is likely to close the year with premium income of close to Rs 2,00,000 crore.
Against LIC’s investment in the equities segment, foreign institutional investors are expected to pump in around Rs 90,000 crore ($20 billion) during 2010-11. So far in the current financial year, against LIC’s Rs 60,000 crore, FIIs have invested Rs 1,09,000 crore.
In 2008-09, FIIs had sold around Rs 48,250 crore in the equities space, while LIC had invested Rs 40,300 crore. “If LIC is putting in Rs 75,000 crore and another Rs 40,000-50,000 crore is expected to come from other insurance companies and mutual funds, this will mean that the ratio of investment in capital markets will change,” said Rashesh Shah, chairman edelweiss group.
Earlier, FIIs invested 60-70 per cent of the institutional resources, while domestic institutions accounted for the rest. “With insurance companies led by LIC emerging as large investors in equity markets, perhaps for the first time the ratio will change, where over 60 per cent investment in the equity capital markets will come from domestic institutions. In the next two years, 75 per cent of the money will come from domestic institutional investors,” Shah added.
Over a period of two years, LIC’s investment in equities has increased by over 86 per cent.
“Our investment is a function of how our policyholders want us to invest and how we are expected to invest as per the guidelines. For us, the bottom line is safety,” a senior LIC executive said.
“It is a significant amount. LIC is known to be a long term player and more stable compared to FII or other domestic investors. It provides long term cushion to the market,” said Elara Capital Head-Institutional Equities & Global Research Harendra Kumar.
This year, apart from allocating Rs 60,000 crore to equity papers, around Rs 35,000 crore is in corporate debt instruments, while another Rs 65,000-Rs 70,000 crore has been invested in government securities. The remaining 35,000 crore have been invested in other instruments and in infrastructure sector. While the details of investment the infrastructure sector were unavailable, the company is expected to fall short of the 15 per cent exposure norm for want of quality papers, a senior LIC executive said.
During the next financial year, company executives said, LIC’s total premium income was expected to go up by around 15 per cent, which will result in a total mop up of around Rs 2,30,000 crore. Of this Rs 75,000 crore will flow into equities, while details of other investment are still being finalised.
LIC expects its premium collection from new business to go up by 25 per cent. Between April and February, first premium income was estimated at Rs 54,320 crore.
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