February 15, 2010

Credit crisis

In the current scenario, when interest rates are soaring high & inflation is in double digits, credit card issuers are taking extra care while issuing credit card. Recently, world has witnessed the worst credit crisis. Defaults were among one of the prime reason behind collapse of the financial institution in US. This has made bankers to think many times before lending money, in any form. We use home loans, car loans, two wheeler loan, education loans & unsecured credit cards & personal loans. Credit card is one of the most common forms of lending money.

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February 15, 2010

Profit for life insurers in India

In India, where the market for private sector was opened ten years in back in 1999, most of the private insurance companies are still in loss and are waiting for break up. Last year’s recession made the ride a bit more difficult for them but this years April-Sep results tells a different story. Companies like SBI, Bajaj Allianz posted net profit where as companies like reliance life insurance showed reduction in losses. Companies have gained from the appreciation in values of their investment and reorganizing their business model like cost cutting and slowing down in expansion. Decline in new business also helped as it reduce their cost of doing business as they have to set aside the cost of underwriting.

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February 15, 2010

Changing global financial system

World is witnessing a change in global financial system. Finance chiefs are preparing for the meet of world leaders in G20 summit, who are fighting against world’s worst financial crisis in last 80 years. In last few months, there has been unstoppable selling of stocks in various share markets. Central banks have launched a range of initiatives to hold the fall in markets which has resulted in recession in various economies across the globe. It has really shattered the confidence of investors. People have lost big portion of their hard earned money. People are losing their jobs, delayed hiring, projects getting postponed & many more things are happening which are against economical growth. It’s been a series of months of downfall. Shares of Indian firms listed in united states have lost more than 3 billions. Everyone is desperate to know the bottom, central banks heads & policy makers have been scratching their head to have some clue about “how to recover from here?”

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February 15, 2010

Life Insurers stretching to Break even

Life Insurance Companies in India are trying very hard to maintain profit and consequently, Break even. Ten years ago, a survey has predicted that life insurance industry will grow at rate of (CAGR) of 18.9 per cent. The actual growth has been much faster than anticipated and sector has grown at rate of (CAGR) 25.16 per cent. From the annual premium collection of Rs 21,581 crore in 1998-99, the sector has grown to Rs 2,21,688 crore last year.

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February 15, 2010

Know your Cibil Score

Scores are very important aspect of today’s life and today it’s CIBIL Score. Since our childhood, we all have seen the importance of scores in our life. First, in school, then competition, college and finally ratings in our annual appraisals, scores play an imperative role in our growth. Similarly, when you avail credit in any form, your payment track records are updated and monitored by a national credit agency CIBIL or Credit Information Bureau India. Banks or lending institutions share your payment history with the CIBIL and CIBIL helps them in making the decision. Based upon the payment history, CIBIL assign a score or rating to the individuals.

Cibil Score Importance-When you apply for a credit line, the lending institution checks your credit score and based upon that, makes the offer. Better credit score helps in cracking the better deal. CIBIL assign score at a scale of 100 to 999. A low score of around 100 may result in direct decline by the bank and a good score of around 800 would help applicant in bargaining a good deal like negotiating interest and processing charges. Earlier, the credit score was only open to banks and lending institutions, but now it is open to consumers also.

The credit information contains information about the borrower’s name, address, PAN, Passport number, voter’s ID and date of birth. It has record of all credit line that individual has availed like credit cards, loan etc, along with past payment history, overdue amount and other information like status of any suite or defaults. This score is regularly updated and if someone is having a bad score it doesn’t mean that it can’t be changed. In today’ world, when we have to depend a lot upon credit for various needs like credit cards, Personal loans, auto loans or Home loans, it is very important not only to maintain a good score, but also knowing own score.

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February 15, 2010

IRDA to allow life insurers to invest in equity derivatives

The insurance and regulatory authority of India is thinking to allow life insurance companies to invest in equity derivatives. Equity derivatives are a category of financial instruments. Their value is derived from partly from one or more underlying equity derivatives. Traders invest in equity derivatives to hedge their risk which they acquire due to exposure to the equity market. Options are the most common form of equity derivatives being traded in today’s market. The matter is under consideration and the guidelines for the matter have not been finalized yet. Currently insurance companies are allowed to invest 50 percent of their funds in government securities, 15 percent in infrastructure related projects, and the remaining 35 percent in non-approved instruments for traditional policies.

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February 15, 2010

Investor’s watchman-Things to look for

This year has seen a lot of upsurge in stock market. If last year was a year of great fall, sorrow and depression, this year has seen the confidence coming back to streets. Things might be looking in a good shape, but we need to ask one question, ‘Are they really in good shape?’ because something, as devastating as recession, cannot be healed in few months. It’s a process which should take more time than it has, so we need to be more vigilant while looking for truth. The global economical situation has stabilized but still remains delicate. USA registered a positive GDP for quarter end September but analyst are not sure whether it’s temporary change or sign of recovery. In India, things have been quite different from west, recession has not been here at such a large scale but country has witnessed a slowdown in its economical growth. There has been a complete turnaround in last six months or so.

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February 15, 2010

India’s growing wealth

One more evidence of growing India’s wealth came with the publishing of Forbes’ rich list. Forbes published the list of billionaires in India. In one year, India has doubled the number to 52 in comparison of 27 in previous year. This has to do a lot with the surge in stock market and a robust economy. Stock markets have gained around 75 percent this year itself and country’s GDP have been around 7 percent. Mukesh Ambani being the richest Indian with 32 billion USD. India has shown that if conditions are favorable, it has potential to produce billionaires at a faster rate than other countries. The combined net worth of top 100 wealthiest Indian stands at $276 billion which is more than china’s $170 billion.

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February 15, 2010

Get ready to bear more pain

This might be the message to the people who have taken insurance for their domestic losses. Consumer may have to bear higher loss when they take any insurance policy for their losses. Insurance regulatory and development authority have given permission to domestic insurance companies to fix their compulsory deductibles. Compulsory deductibles are the amount which a insurer reduces from the claim amount. This means that consumer would bear that amount of loss. Till 2007, these deductibles were prescribed by the regulators. Though, after free pricing, premiums went down because of the competition, the deductible remains same.

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February 15, 2010

G-20 Summit

Top officials from developed and developing nations in London advocated various stimulus packages to boost the global economical recovery. G-20 group was also concerned about the participation of developing nations in international economy as they assured that developing nations will get greater say in international financial institutions. They were also concerned about high pay packs of the bankers. They mentioned that fiscal and monetary policies to help economy are here to stay for as long as they are required. The international fund has said that global economy is beginning a sluggish recovery from recession and increased the forecast of global economic growth to 2.5 percent from the earlier stated 1.9 percent.

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February 15, 2010

Flying business of life insurance

The Indian life insurance sector has seen robust growth for last 8-10 year. That is the primary reason why industry has seen so many new entrants and still so many applications with the regulator. The large portion of Indian population is insurable, but still the insurance penetration is very low and it provides a huge opportunity to increase their business. The Indian life insurance is expected to grow by about 15 percent in the current financial year. The industry is expected to make approximately Rs 2,55,000 crore for this financial year. Recently life insurance council Secretary General S B Mathur said that ‘Despite the slowdown in the economy, Life insurance industry has continued to grow as policyholders are realizing the value of insurance. We continue to be optimistic about the insurance business in India and expect the industry to grow approximately at 15 percent.’

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February 15, 2010

Energy efficient industry

Energy consumption, its preservation and environmental factors have been quite a hot topic of discussion among developing nations and industries. Developed nations have been putting a lot of pressure on developing nations over carbon emission norms but all that not well among developed nations also. They still contribute maximum towards total carbon emission. It’s not that easy to compromise on these issues as it requires a lot of compromise on industrial front. Developing nations as well as developed nations can’t afford to compromise on industrial growth at this level of economical turn. Industries have already been pushing hard for relaxation in these norms as it complicates the process the doing business for them.

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February 15, 2010

Economical Insurance for aquaculture

Aquaculture in India has growth very rapidly in last two decades. The fresh water aquaculture accounts for nearly 95 percent of the total aquaculture. The production involves carp in fresh water and shrimps in brackish water. The technologies of induced carp breeding and poly culture in static ponds have given a big boost to business. This has attracted a lot of farmers and small scale businessmen towards this business. This requires investment and sometime it may not yield desired returns or complete loss of that. There are insurance policies for aquaculture. It is currently 4.5 percent and 7.5 percent of the sum assured.

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