SAVE TAX !!!

ULIP business down by 15% during 2010-11: IRDA

noreply@blogger.com (admin@employmentnewsindia.net) — Mon, 11 Apr 2011 12:49:00 +0000

Amid a row between Sebi and insurance regulator IRDA over control of unit linked products, the ULIP business declined by 15 per cent during 2010-11.

"The proportion of sale of ULIP products has certainly come down. When compared to last year, ULIP business has gone down by about 15 per cent," IRDA Chairman J Harinarayan told reporters on the sidelines of FICCI National Conference on Insurance.

ULIPs -- which are hybrid insurance products in which a portion of the investor's premium is invested in equity -- became a subject of controversy after market regulator Sebi in April last year banned private life insurance companies from issuing such schemes. Soon after, IRDA issued a order asking insurers to ignore Sebi order.

After the government directed that IRDA would have jurisdiction over ULIPs, the insurance regulator came out with new guidelines for such equity-linked products in September last year.

ULIPs, which used to be around 60 per cent of life insurers business prior to the guidelines, saw a decline as agents shifted focus to traditional products.

As per the new IRDA guidelines, the commission paid to distributors and expenses charged by insurers will no longer be front-loaded and will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier.

Though the new rules will benefit policy holders, reduce the first-year agent commission and help in curbing rampant mis-selling, insurance firms will be required to underwrite more losses, infuse more capital and cut costs to sustain ULIP sales.

Furthermore, IRDA has fixed the floor on guaranteed returns from ULIP pension plans at 4.5 per cent, which will greatly benefit policyholders saving up for retirement.

Along with these changes, the regulator has fixed stringent minimum disclosure guidelines for insurers.

Under the new disclosure norms, agents cannot take policyholders for a ride, as they can now see the financial position of the company over the website and do not need to depend on agents, said an industry expert.

The life insurance industry has grown 8-fold in the past decade--from a total premium income of Rs 34,892 crore in 2000-01 to about Rs three trillion in 2010-11. Over Rs one lakh crore of total premium is estimated to have come from ULIPs in 2010-11.

'India to be among top 3 life insurance markets by 2020'

noreply@blogger.com (admin@employmentnewsindia.net) — Mon, 11 Apr 2011 12:25:00 +0000

MUMBAI: India's insurance sector, which is witnessing a rapid growth, is likely to touch about USD 400 billion in premium income by 2020, making the country one of the top three life insurance and top 15 non-life insurance markets by 2020, according to a report.

"The insurance industry will continue to outpace the rapid economic growth to reach USD 350-400 billion in premium income by 2020 (approximately Rs 17-22 lakh crore), making India amongst the top three life insurance markets and top 15 non-life insurance markets by 2020," the report by Federation of Indian Chamber of Commerce and Industry (FICCI) and the Boston Consulting Group ( BCG) has said
The total penetration of insurance (premium as percentage of GDP) has increased to 5.2 per cent in 2011 from 2.3 per cent in 2001, said the report titled 'India Insurance - Turning 10, Going on 20'.

In addition, there has been a surge in insurance coverage due to availability of more products like better term plan, ULIPs, whole life, maximum NAV guarantee, auto assistance, disease management and wellness, it said.

The number of life policies had increased nearly 12- fold over the past decade and health insurance nearly 25-fold.

Progress has been made with emergence of multiple channels like bancassurance, broking, corporate agency, direct and auto dealers to complement the existing third party agency and in-house salaried sales force, ICICI Prudential Life Insurance Managing Director and CEO Sandeep Bakhshi said.

Along with the emergence of multiple channels, the distribution reach has also gone up, nearly 6-fold for life, and 1.5 times for non-life, evolving the Indian market from a monopoly to a competitive one, he said.

Said Rajiv Kumar, director general,Ficci, "The report estimates the total insurance premium at approximately Rs17 lakh crore to Rs 22 lakh crore in 2020(with life being Rs 15 lakh crore to Rs 20lakh crore). This massive growth will have a significant impact on India's ranking in the global insurance industry and is based on strong fundamentals."
"While the industry has come a long way over the past decade, the big c h a l l e n g e w i t h t h e i n d u s t r y i s profitability. Private life insurers have accumulated losses of over Rs 16,000crore till March 2010. Similarly, the nonlife
industry has cumulative under -writing losses of nearly Rs 30,000 crore,"said Alpesh Shah, partner & director,BCG India and author of the report.The report highlights the importance ofIninsurancein India's economy, the progress made in the last decade, key challenges associated with the sector and an action agenda for insurance companies and the government," said Sandeep Bakhshi, chairman, Ficci's insurance and pensions committee and managing director & CEO, ICICI Prudential Life Insurance Co Ltd.Progress has been made on the channel front with the emergence of five distinct channels — bancassurance,broking, corporate agency, direct and auto dealers to complement the existing third-party agency and in-house salariedsales force.

"Along with the emergence ofmultiple channels, the distribution reach has increased manifold, nearly 6-fold for life, and 1.5 times for non -life. During the same time, the Indian market has evolved from a monopoly to a truly competitive market," the study said.

MONTHLY NEWSLETTER.......

noreply@blogger.com (admin@employmentnewsindia.net) — Wed, 25 Nov 2009 08:06:00 +0000

Monthly Newsletters... It really surprises me that most insurance agents, financial advisors and financial planners are not in regular contact with their Clients, Family, Friends and Prospects! "Out Of Sight, Out Of Mind" Is A Deadly Mistake... Especially For Anyone In Life Insurance Sales!!! Life Insurance Sales is tough enough without you giving away the easy sales! Consider, everyday, your friends, neighbors, relatives and even some of your clients are buying the same products and services you're selling. But, they're not buying them from you! Why are these people going to your competition? Is it because they don't know you're in the business, or if you're still in the business? Is it because they never hear from you? Maybe the agent just happened to call them at the right time? Or, maybe they called the agent with a question? By sending a monthly newsletter to your friends, relatives, neighbors, clients and prospects, you are constantly reminding them of what you do (or in some cases, who you are) in a very non-threatening way. It's non-threatening, because there's no pressure to buy anything. Note: Remember, the average person buys life insurance 7 times during their lives. On top of that, many of them will buy DI Insurance, Long Term Care, Annuities, IRA’s, and other investments. When they are ready to make their next purchase do you want them to buy it from the first agent who contacts them, or do you want them to buy from you?

Offering Information Booklets and Free Reports...

noreply@blogger.com (admin@employmentnewsindia.net) — Tue, 24 Nov 2009 08:05:00 +0000

Offering Information Booklets and Free Reports... Another big mistake agents often make is they try to sell themselves directly in every communication they produce. And as a result, they generate large amounts of prospects that lead to little or no business. They end up dealing with a lot of people who are merely curious, but never serious. As we are now in the "information age", giving away a free report, or a free booklet is a great way to make your target market come to you. It's the "try-before-you-buy" approach. Done right, the people who come forward, have been indirectly screened and are qualified prospects for your products and services. You should be offering your free report, or a free booklet in everything you do. (even on your business card) The problem most agents have with this lead generation method, is they expect everyone who steps forward to buy right now. Unfortunately, people buy when they are ready to buy, not when you are ready to sell. Note: To make this work you must keep in front of these prospects, so when they are ready to buy, you are the one they contact. And, you should be inviting them to your seminars and/or workshops.

LEAD GROUPS......

noreply@blogger.com (admin@employmentnewsindia.net) — Mon, 23 Nov 2009 08:04:00 +0000

Lead Groups... Another great way to get high quality leads is by joining or forming a lead exchange group with local business professionals that cater to your ideal prospects, and who have already built strong relationships with them! A lead exchange group is a formal group of successful business people who get together every week, or every two weeks for breakfast or lunch, for about an hour to exchange leads. At every meeting, 2 or 3 members give a 10 minute talk about what they do and who their ideal prospect would be. Then, someone might share an idea that is helping them grow their business. They only allow one person from each industry into the group, so there is no competition. The criteria is they must bring in leads each month for another member, to remain in the group. Note: I'm not sure why more agents are not joining or forming a lead exchange group. However, they are missing out on a great opportunity. Lead exchange groups are a great way to get known in your community, and set up joint ventures.

EDUCATIONAL WORKSHOPS......

noreply@blogger.com (admin@employmentnewsindia.net) — Sun, 22 Nov 2009 08:03:00 +0000

Educational Workshops... One of the most overlooked and very best ways to find new prospects and introduce them to the services you provide, is with an educational workshop. Would you agree no one wants to meet one on one with a salesperson! The beauty of an educational workshop is that for the prospects there is safety in numbers. People feel much safer coming to a workshop than meeting one on one with a salesperson. It’s a non-threatening way for them to get to know you, see the type of work you do, and the help you provide. The beauty of the educational workshop for you is that you can offer them in small groups. They cost very little to hold, at generally less that $200 per event. And, because they are considered a public service you can hold them almost anywhere - in your local library, association rooms, conference rooms, etc. However, most agents have no idea how to get the right people to attend their workshop. Note: To get the right prospect there involves personally inviting the people you already know; friends, family, relatives, people you do business with, client referrals, joint venture referrals, people who have asked for your free information booklet and more.

JOINT VENTURES.......

noreply@blogger.com (admin@employmentnewsindia.net) — Sat, 21 Nov 2009 08:00:00 +0000

Joint Ventures... Joint venture marketing is the ultimate ‘insider secret’ to generating literally thousands of new life insurance prospects, in your area, rapidly and with the utmost credibility. Are you looking for a way to be in front of more prospects? Are you looking for ways to attract high quality prospects to you? Then, consider sharing your clients and prospects with other successful business people... in return for them sharing their clients and prospects with you. When done right, with the right businesses, it can make your search for new and better prospects much easier! As you know, most businesses maintain lists of their best prospects and customers. They use those lists to send helpful information to them, to build positive relationships. Why? Because people prefer to do business with people they know and trust. If you are thinking; “I’ve tried that before and it doesn’t work.” The reason it didn’t work is because most agents are going about it all wrong! Note: Most agents are just setting up a passive referral system where the business will refer people to them only if someone asks for information, or a referral. To make a joint venture work you must set up an active contact system that gets people to call you looking for help, more information, or gets them to come to your free educational workshop.

DINNER SEMINARS......

noreply@blogger.com (admin@employmentnewsindia.net) — Sat, 21 Nov 2009 07:58:00 +0000

Dinner Seminars... While dinner seminars are somewhat expensive, ($4,500 - $5,000 with the mailing and dinners) they are still one of the best and quickest ways to generate lots of new prospects each month. When done right, you can be in front of 50 or more high quality prospects in less that 6 weeks from now. Unfortunately, there are two critical mistakes that 90% of the agents make with dinner seminars. One is they try to go cheap on the restaurant and/or invitation. For example, they'll run an ad in their local newspaper, to save money. The problem is the newspaper goes to everyone, and not just to your best audience. So, you generally end up with a lot of the wrong people attending. To get the right people to attend your dinner seminar, you have to specifically invite them. You need to target your message to a specific group of people meeting the right criteria. However, the biggest reason why advisors struggle with dinner seminars is they are only able to set appointments with 10 to 30 percent of their seminar audience. And, then half of those appointments are canceling or are no shows. There are several reasons why this occurs, but the predominant reason is the advisor is not getting their audience emotionally involved in the seminar. If the prospect does not see and understand how the information relates to their situation, and how they'll benefit by meeting with you, then why should they set an appointment? Note: With a little coaching and some small changes we've been able to help agents to set appointments with 70-90 percent of their seminar audience, and those appointments are sticking.

EDUCATIONAL WORKSHOPS......

noreply@blogger.com (admin@employmentnewsindia.net) — Fri, 20 Nov 2009 08:03:00 +0000

ANNUAL REVIEWS.......

noreply@blogger.com (admin@employmentnewsindia.net) — Fri, 20 Nov 2009 07:56:00 +0000

Annual Reviews... If you ask these same "million-dollar" producers where they get most of their new life insurance sales from each year, they'll tell you it's from annual reviews with their existing clients. Did you know that, according to LIMRA, the average person buys life insurance seven times throughout their life? And, that's not counting the other sales you'll get, such as Long Term Care Insurance, Disability Insurance, Annuities and Investments. Working with, and coaching hundreds of agents each year, I'm shocked at how many agents are not doing annual reviews with their existing clients. Most agents are so focused and busy with bringing in new clients they are totally neglecting their existing clients. (And, then they wonder why they aren't getting any calls from their existing clients or referrals) Note: If you are one of the few agents who does offer your clients an annual review, and your clients are refusing your offer, is it because they view you as just another salesperson trying to make a sale, and not as a trusted advisor?

What Are The Best Ways to Generate Life Insurance Leads, To Get New Sales...

noreply@blogger.com (admin@employmentnewsindia.net) — Fri, 20 Nov 2009 07:48:00 +0000

Many of the agents, advisors and planners who call us are looking for the quickest, most cost effective and best ways to generate a constant stream of the highest quality life insurance leads, to make more sales. These people have tried purchasing leads, preset appointments, using information booklets and free reports, client newsletters, direct mail, postcards, joint ventures, dinner seminars, educational workshops, asking for referrals, articles for the newspaper, press releases, being a guest on a local television or radio program, lead groups, etc., without much success.
The reason they are struggling with these life insurance lead generation methods isn't because they don't work. It's because they were never given or learned the little 'insider secrets' and 'tricks of the trade' to making these proven methods work. Plus, they didn't follow through. They tried one method at a time. They were looking for 'one quick way' to generate a consistent flow of life insurance leads, instead of learning how to combine each of these proven lead generation methods into a complete life insurance marketing program that will consistently put them in front of more of the 'RIGHT' life insurance prospects in one month, than most agents will see in an entire year. (In spite of this economy)
What follows is a list of the best and the worst lead generation methods being used today, and the primary reasons why they aren't working for most agents, advisors and planners!

The Best Lead Generation Methods

Referred Lead Programs... There is no question that among the "million-dollar" producers that referred leads are the best prospects you can get. However, the majority of agents I talk to are frustrated with them, and aren't using them. Why? The main reason most salespeople have trouble with referred leads, is they haven't made themselves referable! People are not going to refer their family, friends, relatives, or associates to just another salesperson. If you want people to give you a referral, then you must earn the right to receive it, by providing ongoing service, following through on your promises, and establishing a relationship of credibility and trust. Note; The ultimate goal of every agent, advisor and planner (or any other businessperson) should be to put their prospecting on automatic, as quickly as possible. You want to be spending 90% of your time in front of prospects, making sales. One of the best, easiest and most cost effective ways to accomplish this is by making yourself referable and setting up a referred lead system that constantly generates high quality prospects...

SUCCESS=HABITS

noreply@blogger.com (admin@employmentnewsindia.net) — Sat, 22 Aug 2009 11:13:00 +0000

Over the many years I have read many excellent books for developing and achieving a Success Mind Set. One of those books is Law of Success by Napoleon Hill. We know, that when one begins to repeatedly do an action or activity over and over, it becomes a HABIT (good or bad).
Using the Law of Habit is powerful for one to be able to create their Success Mind Set through auto-suggestions and affirmations. For the past 30 or more years I have been making it a daily HABIT to read an hour per day, plus speak, visualize and take appropriate ACTION on my own affirmations based upon my Definite Chief Aim (goals and targets).
Be sure to look at your own Habits and make sure they are moving you towards the direction you want. If they aren't, then you should make the appropriate actions to change it through replacing it with a new habit.

"Success isn't a matter of chance!
It's a matter of the choices you make!"

How To Get More Sales from the people you meet before

noreply@blogger.com (admin@employmentnewsindia.net) — Fri, 21 Aug 2009 11:01:00 +0000

Would you like to learn how to have more people buy from you, buy more and buy more often, then you must understand the reasons 'why people buy?' All of the leading sales trainers will tell you that; "People buy based on emotions and then justify their decisions based on logic."

So, if you want to increase your sales, then it's about you locating and pushing the right emotional buttons to get your prospect to make the decision to buy? The most prevalent reasons for people to buy are... to avoid pain, or to gain pleasure. But what pain and what pleasure?

Of course, locating and pushing the right emotional buttons only works if you are in front of the right prospects. The people who actually need what your are offering. These are the people you have the best chance of selling, if you learn how to push these emotional buttons.

Emotional Button #1. People buy... To Make Money or Save Money

There is no question that today, money is a factor in almost every one of our buying decisions; What does it cost? Where will I make the most money? Why is this a good deal? How can I save more? You have to answer their questions about money to help them to buy, and to make them feel good about their buying decision.
However, making money or saving money are not the only buying factors. If you want people to buy, then you'll need to find and push multiple emotional buttons.

Emotional Button #2. People buy... To Protect The People They Love

Most people have an innate sense of obligation to the people we love. We want to make sure our family will never want for the basic physiological and safety needs, such as water, food, clothing, shelter, etc. The lack of money, now or in the future, can put our family's basic needs in jeopardy, which can cause us great emotional pain.

What will happen to my family if they lose my income? How will they put food on the table? Where will they live?

Emotional Button #3. People buy... To Provide More For Their Family

Everyone wants to do better for their family, than they already have. They want their family to have more. They want their home to be in a better neighborhood, bigger and nicer. They want a new car, every two years. They want to see their kids attend and graduate from a top college. They want to provide for their loved ones, so that they are all comfortable.

How can you help them to do better for their family, now and in the future? Can you help them to set better priorities and become better managers of their money?

Emotional Button #4. People buy... To Feel Worthwhile and Good About Themselves

People want to feel good about what they do. "I work hard - I've earned it - I deserve it." They want to eliminate the stress in their lives. Can you help them to eliminate their debts and have the money they want, so they can take their family on vacation, or to the aquarium? Buy a flat screen TV?

How can you help them to enjoy life more? How can you help them to feel good about their decisions? Help them to see the decisions they make really matter?

Emotional Button #5. People buy... To Have More Free Time (Save Time)

Today, we live in a society that is unwilling to wait for anything. We want overnight success. We want to work less and have more time for other things.

Can you put their mind at ease, and help them to make quicker decisions? Can you help them to retire early?

Emotional Button #6. People buy... To Build A Secure Financial Future

People want to have enough money, so they don't have to worry about the future. People want their home paid off. They want to have the money to make their retirement years one big playground of fun and games.

How can you help them to accomplish their goals?

Emotional Button #7. People buy... To Have Beautiful Possessions (To Stand Out)

Most people enjoy having the nicer things in life. New furniture for their home. The home itself ... it's style, the yard, the neighborhoods are all "beautiful!" Nice cars, trucks and motorcycles, something you can be proud of. Fashionable clothes that make you look nice and feel good. "Clothes make the man!"

How does purchasing your product or service make them stand out from the crowd?

Emotional Button #8. People buy... To Be Recognized and Appreciated

Writing a book no one reads, fails to give much of a boost to the writer. Building a house from the ground up and not sharing the end result with friends and family gives little reward. Practice, practice, practice without actually getting a chance to perform is totally unfulfilling. Whether it is for the theatre, a musical instrument, a speech. People like to know that other people appreciate their efforts. The Oscars, the Emmys, the Boy Scout Eagle Scout award are each a form of recognition. And, each is a reason people make a decision to do something, to take action, to buy.
What can you do to help people to be recognized for their efforts?

Emotional Button #9. People buy... To Feel Important

Whether it's cooking a meal for your family or reading a book to your kids, building a storage pen for the local school or changing a flat tire for a damsel in distress, writing a speech for the boss or donating your time to a charity, everyone wants to feel what they do makes a difference.

What can you do or say to make them feel important?

Emotional Button #10. People buy... To Take Advantage of Current Opportunities

Many people are looking to take advantage of a new or special opportunity that comes along. They are looking for a reward.
What's special, new and exciting about your product or service takes make it an exceptional opportunity?

Emotional Button #11. People buy... To Have Friends, Be Popular and "Belong"

Everyone needs to have family and friends, a sense of belonging. That's why so many people become part of a group, a club, or an association.
How can you help them feel like they belong to a special elite group?

Emotional Button #12. People buy... To Have Options and Gain Control

Back someone into a corner and most often you'll have a fight on your hands. Give people only one way to do something and you're leaving money on the table. People like options. They want options on how to buy, how to pay, when to pay. At the same time, they want to be in control. They want to make the buying decision. No one likes to be sold. When I am buying, I am in control. When you are selling me, you are in control. I want to be in control.

What options can you give people? Can you encourage your prospect to become your customer by allowing them the opportunity to make the final decisions?
Emotional Button #13. People buy... To Develop a Unique Identity (Feed their Ego)

People buy things and justify them for many reasons. Shopping at premium stores establishes an identity and feeds ego. Flying first class and eating fat free low calorie foods are 2 more activities that say who you are. They make you feel good about making those buying decisions... and about yourself.
What can you do to make people feel they are unique and important, feed their ego?

Emotional Button #14. People buy... To Express Their Love

Loving is difficult to measure and more easily "felt". A box of candies, a bouquet of flowers, a piece of jewelry on Valentines Day. A surprise birthday party. This "Stuff" doesn't express love, yet is an expression of love. Whether your product or service is "hard" or "soft", small or large, new or old, upscale or inexpensive, no matter its' content, you do want your buyer to be happy.
How can you help people to see their gift is an expression of their love for their family?

Happiness... Love. If you've got it, flaunt it!
Use these emotional buttons in your sales message, and you'll attract more prospects to you.
Use these emotional buttons in your appointment scripts and you'll set more appointments.
And, finally use these emotional button during you fact-finding process and you'll have more people buy from you, buy more and buy more often!

Equities: A great tool for retirement planning

noreply@blogger.com (admin@employmentnewsindia.net) — Sun, 19 Apr 2009 07:22:00 +0000

Equities: A great tool for retirement planning

Retirement can be a great joy. If you can figure out how to spend time without spending money.”

Retirement can be the beginning of a new life, but what comes in way of fun is the money. What’s needed is retiree ability to maintain his/her lifestyle and monetary pride even after monthly salary cheques stop arriving. This requires a long-term investment strategy, spanning at least 15-20 years.

Though capital appreciation matters, key is to plan for post-retirement cash flows. Here I am assuming that a typical retiree would have done with big-ticket expenses, such as buying a house, kids’ marriage, among others, by the time he/she turns 60. This needs choosing a matching asset class.

Equities are considered to be classic long-term assets. Companies raise shareholders equity and use it to build up businesses that may typically last a life-time or longer. And shareholders are rewarded for their patience with regular and dividends payments. Over time share price also appreciates as the earnings and dividends grow.

This means that equities are both a store of wealth (or value) and a source of consistent cash flows. This separates equity from other asset classes, such as commodities and gold, which are only store of wealth with no underlying cash-flows. This aspect of equities is, however, not equally highlighted. For equities, the only principle that discussed is buying when it’s low and selling at high. Trading advisors, however, forget to mention that (trading) profit is a slave of timing that you may or may not get right. Further, trading also requires constant monitoring and portfolio churning to stay ahead of the market swings. This is beyond the capacity of a typical retail investor, who has a regular job to attend to.

Given this, a retirement plan should depend on dividend-income rather than capital returns. But you may ask, can dividend payments be sufficiently large to help you retire with pride. We at ETIG decided to test this idea by building a model portfolio of 20 stocks and tracked their dividend record over the last 15 years. The portfolio is equally divided between defensive stocks (belonging to non-discretionary consumer goods sector) and cyclical stocks. Further, we gave equal weightage to every stock in our portfolio, i.e. investor will invest equal amount in all stocks. (Visit www.etintelligence.com to view the list)

What we found out that, the dividend strategy works the best, when you invest in bear phase as was the case in 2002-03 or now. As stock price falls, dividend yield improves dramatically.

If you had invested Rs 1,500 per stock (Rs 30,000 in all) in 1994, you would have earned a total dividend of Rs 4,381 during the year ended March 2008. In contrast, if you have invested in 2002, a year before the market bottomed out, your dividend income at the end of 15 years would have topped Rs 15,000 for the same rate of growth.

This is shown in the chart (Money Plant) where we show the relative growth in dividend and market-cap of our portfolio of companies. As is evident, in the last 15 years, dividend receipts jumped by 15 times, while capital value of the portfolio grew by 9 times its initial value. The total annual dividend payments by our portfolio grew at a compounded annual rate of 21.2% during the period between FY94 and FY08.

A HYBRID APPROACH

Now that the model is tested, we are suggesting investors to follow a “hybrid-approach” for retirement planning. This means taking an advantage of both the equities and the fixed-income instruments for example public provident funds (PPF). For example, if your investment horizon is 20 years, deposit an amount equivalent to your annual dividend income in PPF for the next 20 years and let its grow there.

The cumulative impact of this strategy is shown in the second chart (Figure Watch). The chart is based on the following two assumptions. You invest one and for all Rs 200,000 in the first year (equally divided between 20 stocks) and that dividend receipts grows at the historical rate. Additionally, we expect you to invest when dividend yields high as in 2002-03.

As can be discerned from the chart, in the first year, total dividend income is just Rs 7,000, which works to be yield of just over 3.5%, too low to be noticed. But if you wait, the annual booty steadily grows to Rs 3.2 lakh in the 20th year. But what makes this strategy magical is growth in accumulated dividends, which are invested in PPF in the interim period (earning an annual interest of 8%). By the end of 20th year, the cumulative dividend income grows to a whopping Rs 25 lakh. And remember, this is over and above the then market value of the stocks in your portfolio.

Another beauty of our “hybrid-model” is that the entire gains are tax-free. Both dividend income and PPF are tax-free , which saves you from the hassle of filing returns every year. Besides, there is hardly any cost of time involved in managing this strategy. Dividends are credited to your bank account electronically.

This brings us to the current market situation, where the dividend yield on most stocks has shot up to historic highs levels. This is the time you start thinking of retirement planning. You should not necessarily copy our “model” portfolio. We picked this portfolio just to illustrate the point. The exact composition of your portfolio should depend on your specific requirement and risk appetite. So, what are you waiting for?

Don't Worry, about failure

noreply@blogger.com (admin@employmentnewsindia.net) — Thu, 09 Apr 2009 15:22:00 +0000

You've failed many times, although you may not remember.

You fell down the first time you tried to walk. You almost drowned the first time you tried to swim, didn't you? Did you hit the ball the first time you swung a bat? Heavy hitters, the ones who hit the most home runs, also strike out a lot.

R.H. Macy failed seven times before his store in New York caught on.

English novelist John Creasey got 753 rejection slips before he published 564 books.

Babe Ruth struck out 1,330 times, but he also hit 714 home runs.

Don't worry about failure. Worry about the chances you miss when you don't even try.

Question, Question,only Questions

noreply@blogger.com (admin@employmentnewsindia.net) — Wed, 08 Apr 2009 15:19:00 +0000

A salesperson who does all the talking is one who shows little regard for what the other party thinks.

Get the prospect to talk and he or she will have an immediate--and crucial--sense of empowerment.

Using questions is the best way to elicit the information you need and to put customers at their ease. The right questions when calling to set an appointment will tell you whether a prospect is worth your time and resources.

Questions that clarify information during the fact-find will also demonstrate that you are "in touch" with your prospects and prepared to deliver on all agreed-upon conditions to a sale.

Ask enough questions and the prospect will sell themselves!

for more articles kindly visit www.creditcardin.blogspot.com

NEVER GIVE UP !!!

noreply@blogger.com (admin@employmentnewsindia.net) — Thu, 12 Mar 2009 15:24:00 +0000

Here's something that I've learned to be true in my 26 years of being self-employed and starting various businesses. I should warn you that this may sound a little corny, but the absolute truth of the matter is that you can't fail, if you don't give up!

If you're determined to take control of your financial future, just keep trying until you find something that works for you - whether this is it or not. The secret is not to give up, and the harsh reality is that most highly-successful people failed numerous times before they made their fortunes.

The only difference between winners and losers is that winners learn from "failure" and losers give up

Discover what your prospect want?

noreply@blogger.com (admin@employmentnewsindia.net) — Wed, 11 Mar 2009 15:22:00 +0000

If you want to close more sales, then have a genuine conversation with your prospects. You will soon discover what it is that they really want. The problem is that most people don't know what they want. Or they have trouble expressing it. Some people know what they want but they're unsure of how to get it. And, that's where you come in.

By asking pertinent questions and paying attention (listening) to their answers, you can discover a lot about your prospect. Then, you can guide by asking more questions to help them to get what they want.
That's the role you fill as an advisor and that's how you help your prospect to sell themselves. And, you'll keep customers coming back to buy more from you.

For more articles please visit www.savetaxindia.blogspot.com

INTRODUCTION TO INSURANCE SECTOR

noreply@blogger.com (admin@employmentnewsindia.net) — Thu, 05 Mar 2009 16:06:00 +0000

Impact of the Global Financial Crisis on India

noreply@blogger.com (admin@employmentnewsindia.net) — Wed, 04 Mar 2009 15:14:00 +0000

Impact of the Global Financial Crisis on India Collateral Damage and Response
(Speech delivered at the Symposium on "The Global Economic Crisis and Challenges for the Asian Economy in a Changing World" organized by the Institute for International Monetary Affairs, Tokyo on February 18, 2009 By Duvvuri Subbarao, Governor)

Global outlook
1. The global economic outlook deteriorated sharply over the last quarter. In a sign of the ferocity of the down turn, the IMF made a marked downward revision of its estimate for global growth in 2009 in purchasing power parity terms – from its forecast of 3.0 per cent made in October 2008 to 0.5 per cent in January 2009. In market exchange rate terms, the downturn is sharper – global GDP is projected to actually shrink by 0.6 per cent. With all the advanced economies – the United States, Europe and Japan - having firmly gone into recession, the contagion of the crisis from the financial sector to the real sector has been unforgiving and total. Recent evidence suggests that contractionary forces are strong: demand has slumped, production is plunging, job losses are rising and credit markets remain in seizure. Most worryingly, world trade – the main channel through which the downturn will get transmitted on the way forward – is projected to contract by 2.8 per cent in 2009.

2. Policy making around the world is in clearly uncharted territory. Governments and central banks across countries have responded to the crisis through big, aggressive and unconventional measures. There is a contentious debate on whether these measures are adequate and appropriate, and when, if at all, they will start to show results. There has also been a separate debate on how abandoning the rule book driven by the tyranny of the short-term, is compromising medium-term sustainability. What is clearly beyond debate though is that this Great Recession of 2008/09 is going to be deeper and the recovery longer than earlier thought.

Emerging economies

3. Contrary to the 'decoupling theory', emerging economies too have been hit by the crisis. The decoupling theory, which was intellectually fashionable even as late as a year ago, held that even if advanced economies went into a downturn, emerging economies will remain unscathed because of their substantial foreign exchange reserves, improved policy framework, robust corporate balance sheets and relatively healthy banking sector. In a rapidly globalizing world, the 'decoupling theory' was never totally persuasive. Given the evidence of the last few months – capital flow reversals, sharp widening of spreads on sovereign and corporate debt and abrupt currency depreciations - the 'decoupling theory' stands totally invalidated. Reinforcing the notion that in a globalized world no country can be an island, growth prospects of emerging economies have been undermined by the cascading financial crisis with, of course, considerable variation across countries.

Questions that will be addressed

4. India too has been impacted by the crisis – and by much more than it was suspected earlier. What I propose to do in the rest of my speech is to address the following four questions:

Why has India been hit by the crisis?
How has India been hit by the crisis?
How have we responded to the challenge?
What is the outlook for India?

Why Has India Been Hit By the Crisis?

5. There is, at least in some quarters, dismay that India has been hit by the crisis. This dismay stems from two arguments.

6. The first argument goes as follows. The Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. So, the enigma is how can India be caught up in a crisis when it has nothing much to do with any of the maladies that are at the core of the crisis.

7. The second reason for dismay is that India's recent growth has been driven predominantly by domestic consumption and domestic investment. External demand, as measured by merchandize exports, accounts for less than 15 per cent of our GDP. The question then is, even if there is a global downturn, why should India be affected when its dependence on external demand is so limited?

8. The answer to both the above frequently-asked questions lies in globalization. Let me explain. First, India's integration into the world economy over the last decade has been remarkably rapid. Integration into the world implies more than just exports. Going by the common measure of globalization, India's two-way trade (merchandize exports plus imports), as a proportion of GDP, grew from 21.2 per cent in 1997-98, the year of the Asian crisis, to 34.7 per cent in 2007-08.

9. Second, India's financial integration with the world has been as deep as India's trade globalization, if not deeper. If we take an expanded measure of globalization, that is the ratio of total external transactions (gross current account flows plus gross capital flows) to GDP, this ratio has more than doubled from 46.8 per cent in 1997-98 to 117.4 per cent in 2007-08.

10. Importantly, the Indian corporate sector's access to external funding has markedly increased in the last five years. Some numbers will help illustrate the point. In the five-year period 2003-08, the share of investment in India's GDP rose by 11 percentage points. Corporate savings financed roughly half of this, but a significant portion of the balance financing came from external sources. While funds were available domestically, they were expensive relative to foreign funding. On the other hand, in a global market awash with liquidity and on the promise of India's growth potential, foreign investors were willing to take risks and provide funds at a lower cost. Last year (2007/08), for example, India received capital inflows amounting to over 9 per cent of GDP as against a current account deficit in the balance of payments of just 1.5 per cent of GDP. These capital flows, in excess of the current account deficit, evidence the importance of external financing and the depth of India's financial integration.

11. So, the reason India has been hit by the crisis, despite mitigating factors, is clearly India's rapid and growing integration into the global economy.

How Has India Been Hit By the Crisis?

12. The contagion of the crisis has spread to India through all the channels – the financial channel, the real channel, and importantly, as happens in all financial crises, the confidence channel.

13. Let us first look at the financial channel. India's financial markets - equity markets, money markets, forex markets and credit markets - had all come under pressure from a number of directions. First, as a consequence of the global liquidity squeeze, Indian banks and corporates found their overseas financing drying up, forcing corporates to shift their credit demand to the domestic banking sector. Also, in their frantic search for substitute financing, corporates withdrew their investments from domestic money market mutual funds putting redemption pressure on the mutual funds and down the line on non-banking financial companies (NBFCs) where the MFs had invested a significant portion of their funds. This substitution of overseas financing by domestic financing brought both money markets and credit markets under pressure. Second, the forex market came under pressure because of reversal of capital flows as part of the global deleveraging process. Simultaneously, corporates were converting the funds raised locally into foreign currency to meet their external obligations. Both these factors put downward pressure on the rupee. Third, the Reserve Bank's intervention in the forex market to manage the volatility in the rupee further added to liquidity tightening.

14. Now let me turn to the real channel. Here, the transmission of the global cues to the domestic economy has been quite straight forward – through the slump in demand for exports. The United States, European Union and the Middle East, which account for three quarters of India's goods and services trade are in a synchronized down turn. Service export growth is also likely to slow in the near term as the recession deepens and financial services firms – traditionally large users of outsourcing services – are restructured. Remittances from migrant workers too are likely to slow as the Middle East adjusts to lower crude prices and advanced economies go into a recession.

15. Beyond the financial and real channels of transmission as above, the crisis also spread through the confidence channel. In sharp contrast to global financial markets, which went into a seizure on account of a crisis of confidence, Indian financial markets continued to function in an orderly manner. Nevertheless, the tightened global liquidity situation in the period immediately following the Lehman failure in mid-September 2008, coming as it did on top of a turn in the credit cycle, increased the risk aversion of the financial system and made banks cautious about lending.

16. The purport of the above explanation is to show how, despite not being part of the financial sector problem, India has been affected by the crisis through the pernicious feedback loops between external shocks and domestic vulnerabilities by way of the financial, real and confidence channels.

How Have We Responded to the Challenge?

17. Let me now turn to how we responded to the crisis. The failure of Lehman Brothers in mid-September was followed in quick succession by several other large financial institutions coming under severe stress. This made financial markets around the world uncertain and unsettled. This contagion, as I explained above, spread to emerging economies, and to India too. Both the government and the Reserve Bank of India responded to the challenge in close coordination and consultation. The main plank of the government response was fiscal stimulus while the Reserve Bank's action comprised monetary accommodation and counter cyclical regulatory forbearance.

Monetary policy response

18. The Reserve Bank's policy response was aimed at containing the contagion from the outside - to keep the domestic money and credit markets functioning normally and see that the liquidity stress did not trigger solvency cascades. In particular, we targeted three objectives: first, to maintain a comfortable rupee liquidity position; second, to augment foreign exchange liquidity; and third, to maintain a policy framework that would keep credit delivery on track so as to arrest the moderation in growth. This marked a reversal of Reserve Bank's policy stance from monetary tightening in response to heightened inflationary pressures of the previous period to monetary easing in response to easing inflationary pressures and moderation in growth in the current cycle. Our measures to meet the above objectives came in several policy packages starting mid-September 2008, on occasion in response to unanticipated global developments and at other times in anticipation of the impact of potential global developments on the Indian markets.

19. Our policy packages included, like in the case of other central banks, both conventional and unconventional measures. On the conventional side, we reduced the policy interest rates aggressively and rapidly, reduced the quantum of bank reserves impounded by the central bank and expanded and liberalized the refinance facilities for export credit. Measures aimed at managing forex liquidity included an upward adjustment of the interest rate ceiling on the foreign currency deposits by non-resident Indians, substantially relaxing the external commercial borrowings (ECB) regime for corporates, and allowing non-banking financial companies and housing finance companies access to foreign borrowing.

20. The important among the many unconventional measures taken by the Reserve Bank of India are a rupee-dollar swap facility for Indian banks to give them comfort in managing their short-term foreign funding requirements, an exclusive refinance window as also a special purpose vehicle for supporting non-banking financial companies, and expanding the lendable resources available to apex finance institutions for refinancing credit extended to small industries, housing and exports.

Government's fiscal stimulus

21. Over the last five years, both the central and state governments in India have made a serious effort to reverse the fiscal excesses of the past. At the heart of these efforts was the Fiscal Responsibility and Budget Management (FRBM) Act which mandated a calibrated road map to fiscal sustainability. However, recognizing the depth and extraordinary impact of this crisis, the central government invoked the emergency provisions of the FRBM Act to seek relaxation from the fiscal targets and launched two fiscal stimulus packages in December 2008 and January 2009. These fiscal stimulus packages, together amounting to about 3 per cent of GDP, included additional public spending, particularly capital expenditure, government guaranteed funds for infrastructure spending, cuts in indirect taxes, expanded guarantee cover for credit to micro and small enterprises, and additional support to exporters. These stimulus packages came on top of an already announced expanded safety-net for rural poor, a farm loan waiver package and salary increases for government staff, all of which too should stimulate demand.

Impact of monetary measures

22. Taken together, the measures put in place since mid-September 2008 have ensured that the Indian financial markets continue to function in an orderly manner. The cumulative amount of primary liquidity potentially available to the financial system through these measures is over US$ 75 bln or 7 per cent of GDP. This sizeable easing has ensured a comfortable liquidity position starting mid-November 2008 as evidenced by a number of indicators including the weighted-average call money rate, the overnight money market rate and the yield on the 10-year benchmark government security. Taking the signal from the policy rate cut, many of the big banks have reduced their benchmark prime lending rates. Bank credit has expanded too, faster than it did last year. However, Reserve Bank’s rough calculations show that the overall flow of resources to the commercial sector is less than what it was last year. This is because, even though bank credit has expanded, it has not fully offset the decline in non-bank flow of resources to the commercial sector.

Evaluating the response

23. In evaluating the response to the crisis, it is important to remember that although the origins of the crisis are common around the world, the crisis has impacted different economies differently. Importantly, in advanced economies where it originated, the crisis spread from the financial sector to the real sector. In emerging economies, the transmission of external shocks to domestic vulnerabilities has typically been from the real sector to the financial sector. Countries have accordingly responded to the crisis depending on their specific country circumstances. Thus, even as policy responses across countries are broadly similar, their precise design, quantum, sequencing and timing have varied. In particular, while policy responses in advanced economies have had to contend with both the unfolding financial crisis and deepening recession, in India, our response has been predominantly driven by the need to arrest moderation in economic growth.

What is the outlook for India?

24. The outlook for India going forward is mixed. There is evidence of economic activity slowing down. Real GDP growth has moderated in the first half of 2008/09. The services sector too, which has been our prime growth engine for the last five years, is slowing, mainly in construction, transport and communication, trade, hotels and restaurants sub-sectors. For the first time in seven years, exports have declined in absolute terms for three months in a row during October-December 2008. Recent data indicate that the demand for bank credit is slackening despite comfortable liquidity in the system. Higher input costs and dampened demand have dented corporate margins while the uncertainty surrounding the crisis has affected business confidence. The index of industrial production has shown negative growth for two recent months and investment demand is decelerating. All these factors suggest that growth moderation may be steeper and more extended than earlier projected.

25. In addressing the fall out of the crisis, India has several advantages. Some of these are recent developments. Most notably, headline inflation, as measured by the wholesale price index, has fallen sharply, and recent trends suggest a faster-than-expected reduction in inflation. Clearly, falling commodity prices have been the key drivers behind the disinflation; however, some contribution has also come from slowing domestic demand. The decline in inflation should support consumption demand and reduce input costs for corporates. Furthermore, the decline in global crude prices and naphtha prices will reduce the size of subsidies to oil and fertilizer companies, opening up fiscal space for infrastructure spending. From the external sector perspective, it is projected that imports will shrink more than exports keeping the current account deficit modest.

26. There are also several structural factors that have come to India's aid. First, notwithstanding the severity and multiplicity of the adverse shocks, India's financial markets have shown admirable resilience. This is in large part because India's banking system remains sound, healthy, well capitalized and prudently regulated. Second, our comfortable reserve position provides confidence to overseas investors. Third, since a large majority of Indians do not participate in equity and asset markets, the negative impact of the wealth loss effect that is plaguing the advanced economies should be quite muted. Consequently, consumption demand should hold up well. Fourth, because of India's mandated priority sector lending, institutional credit for agriculture will be unaffected by the credit squeeze. The farm loan waiver package implemented by the Government should further insulate the agriculture sector from the crisis. Finally, over the years, India has built an extensive network of social safety-net programmes, including the flagship rural employment guarantee programme, which should protect the poor and the returning migrant workers from the extreme impact of the global crisis.

RBI's Policy Stance

27. Going forward, the Reserve Bank's policy stance will continue to be to maintain comfortable rupee and forex liquidity positions. There are indications that pressures on mutual funds have eased and that NBFCs too are making the necessary adjustments to balance their assets and liabilities. Despite the contraction in export demand, we will be able to manage our balance of payments. It is the Reserve Bank's expectation that commercial banks will take the signal from the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing to productive sectors. In particular, the special refinance windows opened by the Reserve Bank for the MSME (micro, small and medium enterprises) sector, housing sector and export sector should see credit flowing to these sectors. Also the SPV set up for extending assistance to NBFCs should enable NBFC lending to pick up steam once again. The government's fiscal stimulus should be able to supplement these efforts from both supply and demand sides.

When the turn around comes

28. Over the last five years, India clocked an unprecedented nine per cent growth, driven largely by domestic consumption and investment even as the share of net exports has been rising. This was no accident or happenstance. True, the benign global environment, easy liquidity and low interest rates helped, but at the heart of India's growth were a growing entrepreneurial spirit, rise in productivity and increasing savings. These fundamental strengths continue to be in place. Nevertheless, the global crisis will dent India's growth trajectory as investments and exports slow. Clearly, there is a period of painful adjustment ahead of us. However, once the global economy begins to recover, India's turn around will be sharper and swifter, backed by our strong fundamentals and the untapped growth potential. Meanwhile, the challenge for the government and the RBI is to manage the adjustment with as little pain as possible.

Speed Clearing

noreply@blogger.com (admin@employmentnewsindia.net) — Tue, 03 Mar 2009 14:59:00 +0000

Speed Clearing – Frequently Asked Questions (FAQ)

Question 1
What is Speed Clearing ?

Answer
Speed Clearing refers to collection of outstation cheques through the local clearing. It facilitates collection of cheques drawn on outstation core-banking-enabled branches of banks, if they have a net-worked branch locally.

Question 2
Why Speed Clearing ?

Answer
As of now, outstation cheques are paid through two channels viz. on Collection basis or through National Clearing (Inter-city Clearing). This requires movement of cheques from the Presentation centre (city where the cheque is presented) to Drawee centre (city where the cheque is payable) which elongates the realisation time for cheques. Speed Clearing aims to reduce the time taken for realisation of outstation cheques.

Question 3
What is “Collection basis” ?

Answer
A person who has an outstation cheque with him deposits it with his bank’s branch. It is called Presenting branch. This cheque is sent for collection to the city where it is payable / drawn called Destination centre or Drawee centre. The branch providing the collection service at the Destination centre is called Collecting branch. On receipt of the cheque, the Collecting branch presents it in local clearing to the Drawee branch or the Destination branch. Once the cheque is paid the Collecting branch remits the proceeds to the Presenting branch. On receipt of realisation advice of the cheque from the Collecting branch, the customer’s account is credited. This, in short, is the process of Collection. When a cheque is taken on Collection basis by a bank, it credits the customer’s account after realisation.

Alternatively, in the absence of a collection arrangement at the Destination centre, the Presenting branch will send the cheque directly to the Destination branch for payment.

Question 4
How long does it take for getting credit of an outstation cheque sent

(i) on Collection basis and through
(ii) National Clearing (Inter-city Clearing) ?

Answer
Generally, it takes around a week to three weeks time to get outstation cheques realised through Collection basis. In case of National Clearing, it takes around a week's time. National Clearing is an arrangement under which the Clearing Houses managed by RBI provide inter-city cheque collection service to member banks of those Clearing Houses.

Question 5
Is National Clearing available in all cities ?

Answer
No. It is available at fifteen cities viz. Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram.

Question 6
How does the Local Cheque Clearing work ?

Answer
In Local Cheque Clearing in 61 major centres, cheques are processed at the Clearing Houses on mechanical sorters, using Magnetic Ink Character Recognition (MICR) technology.

Local Clearing handles only those cheques that are drawn on branches within the jurisdiction of the local Clearing House. Generally, the distance between the Clearing House and the participating branches is defined, taking into account the local transportation and communication facilities as the cheques have to physically move to and from the Clearing House. For example, for a cheque to be processed in Local Clearing in Mumbai, both the presenting and drawee branches should be within the jurisdiction of the Clearing House in Mumbai.

Question 7
How does the Speed Clearing work ?

Answer
Banks have networked their branches by implementing Core Banking Solutions (CBS). In CBS environment, cheques can be paid at any location obviating the need for their physical movement to the Drawee branch. The concept Speed Clearing combines the advantages of MICR clearing with CBS.

Cheques drawn on outstation CBS branches of a Drawee bank can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee bank has a branch presence at the local centre.

Question 8
When will the beneficiary get funds under Speed Clearing ?

Answer
As on date, the local cheques are processed on T+1 working day basis and customers get the benefit of withdrawal of funds on a T+1 or 2 basis. 'T' denotes transaction day viz. date of presentation of cheque at the Clearing House. So, the outstation cheques under Speed Clearing will also be paid on T+1 or 2 basis.

Question 9
How is Speed Clearing an improvement over National Clearing ?

Answer
In case of National Clearing the cheque is realised in around a week's time. Under the Speed Clearing, it would be realised on T+1 or 2 basis viz. within 48 hours.

National Clearing is restricted to cheques drawn on the specified locations. Speed Clearing has no geographical limitation. Cheques drawn on any location may be cleared as long as the branch is in CBS.

National Clearing necessitates movement of the cheque to the Drawee centre. Speed Clearing facilitates the clearing of such cheques locally without the need to move the cheques to the Drawee centre.

Question 10
Which are the centres where Speed Clearing is presently available ?

Answer
Speed Clearing is currently available in 41 MICR centres.

Question 11
What about charges for cheques cleared through Speed Clearing ?

Answer
Presenting branches are currently permitted to levy charges at a rate not exceeding Rs.150 per cheque (inclusive of all charges other than Service Tax) for cheques of above Rs. 1 lakh presented through Speed Clearing.

Payment of Pension to Government Pensioners by Authorised Banks - Frequently Asked Questions (FAQs)

noreply@blogger.com (admin@employmentnewsindia.net) — Mon, 02 Mar 2009 15:06:00 +0000

Reserve Bank of India monitors disbursement of pension by its agency banks in respect of all Central Government Departments (except the Department of Post) and certain State Governments. It has been receiving several queries/ complaints from pensioners in regard to fixation, calculation and payment of pension including revision of pension/ Dearness Relief from time to time, transfer of pension account from one bank branch to another, etc. We have analysed the queries/ complaints, rights and duties of pensioners and put the same in the form of answers to these Frequently Asked Questions. It is hoped that this will cover most of the queries/ doubts in the minds of pensioners.

1. Can the pensioner draw his/ her pension through a bank branch?

Yes. Even the Government employees earlier drawing their pension from a treasury or from a post office will have the option to draw their pension from the authorized bank’s branches.

2. Who is the pension sanctioning authority?

The Ministry/ Department /Office where the Government servant last served is the pension sanctioning authority. The pension fixation is made by such authority for the first time and thereafter the refixation of pay, if any, is done by the pension paying bank based on the instructions from the Central/ State Government authorities.

3. Is it necessary for the pensioner to open a separate pension account for the purpose of crediting his/ her pension in authorized bank?

The pensioner is not required to open a separate pension account. The pension can be credited to his or her existing savings/ current account maintained with the branch selected by the pensioner.

4. Can a pensioner open a Joint Account with his/ her spouse?

Yes. All Central Government Pensioners (except the pensioners of the Telecom Department) and those State Governments which have accepted such arrangement can open Joint Account with their spouses.

5. Whether Joint Account of the pensioner with spouse can be operated either by ''Former or Survivor" or " Either or Survivor".

The Joint Account of the pensioner with spouse can be operated either by ‘‘Former or Survivor" or “Either or Survivor".

6. What is the minimum balance required to be maintained in the pension account maintained with the banks?

RBI has not stipulated any minimum balance to be maintained in pension accounts by the pensioners. Individual banks have framed their own rules in this regard. However, some of the banks have also permitted zero balance in the pensioners’ accounts.

7. Who sends the Pension Payment Orders (PPOs) to the authorized bank branch?

The concerned pension paying authorities in the Ministries /Departments/ State Governments forward the PPOs to the bank branches wherefrom the pensioner desires to draw his/her pension.

8. When is the pension credited to the pensioner's account by the paying branch?

The disbursement of pension by paying branch is spread over the last four working days of the month depending on the convenience of the pension paying branch except for the month of March when the pension is credited on or after the first working day of April.

9. Can a pensioner transfer his/ her pension account from one branch to another branch of the same bank or to the branch of another bank?

(a) Pensioner can transfer his/ her pension account from one branch to another branch of the same bank within the same centre or at a different centre;

(b) He/ She can transfer his/ her account from one authorized bank to another within the same centre (such transfers to be allowed only once in a year);

(c) He/ She can also transfer his/ her account from one authorized bank to another authorized bank at different centre.

10. What is the procedure for payment of pension in the case of the transfer of PPO to another branch or bank, as the case may be?

Pension will be paid on the basis of the photocopy of the pensioner’s PPO at the transferee (new) branch from the date of the last date of payment made at the transferor (old) branch. During this time, both the branches (old and new) are required to ensure that all the required documents are received by the transferee branch within the period of three months.

11. Is it necessary for the pensioner to be present at the branch of the bank along with documents for the purpose of identification before commencement of pension?

Yes. Before the commencement of pension, a pensioner has to be present at the paying branch for the purpose of identification. The paying branch shall obtain the specimen signatures or the thumb/toe impression from the pensioner.

12. What is the procedure to be followed by the bank branch if the pensioner is handicapped /incapacitated and is not in a position to be present at the paying branch?

If the pensioner is physically handicapped/incapacitated and unable to present at the branch, the requirement of personal appearance is waived. In such cases the bank official visits the pensioner’s residence/hospital for the purpose of identification and obtaining specimen signature or thumb/toe impression.

13. Has the pensioner got right to retain half portion of the PPO for record and to get it updated from paying branch whenever there is a change in the quantum of pension due to revision in basic pension, dearness relief, etc.?

Yes. The pensioner has right to retain half portion of the PPO for record and whenever there is a revision in the basic pension/DR etc. the paying branch has to call for the pensioner's half of the PPO and record thereon the changes according to government orders/notifications and return the same to the pensioner.

14. Whether the paying branch has to maintain a detailed record of pension payments made by it in the prescribed form?

Yes. The pension paying branch is required to maintain a detailed record of pension payments made by it from time to time in the prescribed form duly authenticated by the authorized officer.

15. Can the pension paying bank recover the excess amount credited to the pensioner’s account?

Yes. The paying branch before commencement of pension obtains an undertaking from the pensioner in the prescribed form for this purpose and therefore, can recover the excess payment made to the pensioner's account due to delay in receipt of any material information or due to any bonafide error. The bank has also right to recover the excess amount of pension credited to the deceased pensioner’s account from his/ her legal heirs/nominees.

16. Is it compulsory for a pensioner to furnish a Life Certificate/Non-Employment Certificate or Employment Certificate to the bank in the month of November?

Yes. The pensioner is required to furnish a Life Certificate/Non – Employment Certificate or Employment Certificate to the bank in the month of November. However, in case a pensioner is unable to obtain a Life Certificate from an authorized bank officer on account of serious illness / incapacitation, bank official will visit his/her residence/ hospital for the purpose of recording the life certificate.

17. Can a pensioner be allowed to operate his/ her account by the holder of Power of Attorney?

The account is not allowed to be operated by a holder of Power of Attorney. However, the cheque book facility and acceptance of standing instructions for transfer of funds from the account is permissible.

18. Who is responsible for deduction of Income Tax at source from pension payment?

The pension paying bank is responsible for deduction of Income Tax from pension amount in accordance with the rates prescribed by the Income Tax authorities from time to time. While deducting such tax from the pension amount, the paying bank will also allow deductions on account of relief to the pensioner available under the Income Tax Act. The paying branch will also issue to the pensioner in April each year a certificate of tax deduction as per the prescribed form. If the pensioner is not liable to pay Income Tax, he should furnish to the pension paying branch, a declaration to that effect in the prescribed form (15 H).

19. Can old, sick physically handicapped pensioner who is unable to sign, open pension account or withdraw his/ her pension from the pension account?

A pensioner, who is old, sick or lost both his / her hands and, therefore, can not sign, can put any mark or thumb/ toe impression on the form for opening of pension account. While withdrawing the pension amount he/ she can put thumb/toe impression on the cheque/withdrawal form and it should be identified by two independent witnesses known to the bank one of whom should be a bank official.

20. Can a pensioner withdraw pension from his/ her account when he/ she is not able to sign or put thumb/toe impression or unable to be present in the bank?

In such cases, a pensioner can put any mark or impression on the cheque/ withdrawal form and may indicate to the bank as to who would withdraw pension amount from the bank on the basis of cheque / withdrawal form. Such a person should be identified by two independent witnesses. The person who is actually drawing the money from the bank should be asked to furnish his/ her specimen signature to the bank.

21. When does the family pension commence?

The family pension commences after the death of the pensioner. The family pension is payable to the person indicated in the PPO on receipt of a death certificate and application from the nominee.

22. How the payment of Dearness Relief at revised rate is to be paid to the pensioners?

Whenever any additional relief on pension/family pension is sanctioned by the Government, the same is intimated to the agency banks for issuing suitable instructions to their pension paying branches for payment of relief at the revised rates to the pensioners without any delay. The orders issued by Govt. Departments are also hosted on their websites and banks have been advised to watch the latest instructions on the website and act accordingly without waiting for any further orders from RBI in this regard.

23. Can pensioners get pension slips?

Yes. As decided by the Central Government (Civil, Defence & Railways), pension paying banks have been advised to issue pension slips to the pensioners in prescribed form when the pension is paid for the first time and thereafter whenever there is a change in quantum of pension due to revision in basic pension or revision in Dearness Relief.

24. Which authority the pensioner should approach for redressal of his/ her grievances?

A pensioner can initially approach the concerned Branch Manager and, thereafter, the Head Office of the concerned bank for redressal of his/her complaint. They can also approach the Banking Ombudsman of the concerned State in terms of Banking Ombudsman Scheme 2006 of the Reserve Bank of India (details available at the Bank’s website www.rbi.org.in) This is applicable only in respect of complaints relating to services rendered by banks. For other issues the complainant will have to approach the respective pension paying authority.

25. Where can a pensioner get information about the changes in the pension/ Dearness Relief or any pension related issue?

The pensioner can visit the Official Website of the concerned Government Department as also Reserve Bank of India Website (www.rbi.org.in) to get the information about pension related issues.

HOW TO SELECT AN INSURANCE COMPANY?

noreply@blogger.com (admin@employmentnewsindia.net) — Mon, 02 Mar 2009 06:43:00 +0000

There are some points that can help you to weigh a company before you associate yourself with an insurance company.

1. Financial track record of the insurance company
The most important factor of an insurance company is the financial well-being that can attract you to take an insurance policy from a particular company. In the Indian context where an experienced foreign player is involved, the financial performance of the foreign partner is equally important. One can judge the company’s financial performance on the basis of the claim amount settled, frequency of claims, rating given by an independent international rating agency such as Standard & Poor.

2. Financial underwriting norms
Financial underwriting means to assess the extent to which an individual should be insured in monetary terms. Generally, an individual should be insured sufficiently enough so that he can continue to lead a lifestyle post-retirement as he was leading before retirement. With this perspective, he should probably look at getting himself insured up to 10-15 times his annual salary. So, ideally you should stick with an insurer that follows prudent financial underwriting norms. Many insurance companies in their enthusiasm to expand their policy base may undertake to insure a larger quantum of risk than necessary. In this way, they overexpose themselves for enhancing the risk levels. Insurance being a matter of sharing risk, financial underwriting becomes an important factor to determine the future liabilities of the companies.

3. Insurance agent
The insurance agent of the insurance company is the link between the insurance company and the individual applicant. Often it is observed that applicants freely discuss various issues with the agent including medical ones such as a heart problem running in the family or hereditary diabetic problem. Some agents are also co-operating by not revealing these sensitive details to the insurance company. An applicant must understand that the agent is putting the premiums contributed by other applicants at risk by not disclosing your true medical condition. He could well cooperate with another applicant in future by concealing his true medical history, and put at risk your premium. So, when you apply for an insurance policy you ought to consider these things.

4. Management’s pedigree
Another factor that coincides with financial stability is the management of the insurance company. Financial stability is generally a direct consequence of good management. As in other industries, life insurance also thrives on good management and if anything, given the sensitive nature of the industry, it needs a solid management at the helm more than the others. In the Indian context, both partners should have a lot of integrity and experience in the financial sector. If the Indian partner already has a history in a financial field like housing finance and banking and also has an AAA rating to boot, that should tell you something about the company’s proficiency.

If you are planning to purchase a life insurance policy, you may want to weigh these factors. You must understand that purchasing a life insurance policy needs a different approach than investing in a bond or a fixed deposit. Life insurance involves a longer commitment and a larger amount that will you or your survivors at a time when they need it the most. So don’t get carried away by what your agent tells you, do a little homework on your own for a change.

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LIFE INSURANCE BUSINESS- AS A SELF EMPLOYEE

noreply@blogger.com (admin@employmentnewsindia.net) — Sun, 01 Mar 2009 06:38:00 +0000

LIFEinsurance is a particularly valuable resource for the self-employed. Life insurance can protect your family as well as your business too. As a business owner, you can use your policy to insure the security of your business and your family.

Cover your debts
As the sole proprietor of a business, it is likely that you are also entirely liable for the debts assumed by business endeavors. In the event of your death, you are still held accountable for any business liabilities.

If you do have substantial business debt, and you have no life insurance for the self-employed, your personal assets will be liquidated in order to satisfy these financial responsibilities. Without some type of protection, you run the risk of leaving your family with nothing.

To ensure the future of your business, you should consider for purchasing a permanent life insurance policy as part of a small business plan. Your death benefit should be large enough to cover all your business debt and provide necessary funds for the future success of your business as well as your family.

With this protection, you can rest assured your business will not drive your family into debt after your death. Instead, there will be ample funds to settle your business debts so the business can flourish as it did under your direction.

Protect your co-owners
As a business co-owner, purchasing a life insurance policy on each of the key employees is a good part of a small business plan. The beneficiary of these policies should be the business itself and should cover the cost of finding a suitable replacement for the loss of an exceptional business partner.

Although it is difficult to imagine the effect the loss of one person can make in the success of a business, such occurrences often result in slowed production and reduced earnings. Having extra funds to finance the search for a new knowledgeable business partner, make up for lost profits, and weather the possible tough transition is crucial for your business. To avoid this, we recommend purchasing a permanent life insurance policy naming the business as the beneficiary of the death benefit.

Other advantages
Life insurance can also fund a buy or sell business agreement. These arrangements benefit the family of a business co-owner in the event of their death.

In essence, it is a contract between the business owners to purchase a co-owner’s portion of the company at certain price if the co-owner dies. Often these agreements are funded with a life insurance policy. The proceeds of the policy are used to buy out the deceased's share of the company.

There are several types of buy sell agreements which may vary in who have purchased the policy for example, the corporation, the owners, or a trust.

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USE LIFE INSURANCE FOR MORTGAGE PROTECTION

noreply@blogger.com (admin@employmentnewsindia.net) — Sat, 28 Feb 2009 06:30:00 +0000

A mortgage is a considerable financial responsibility, one which most likely hinges upon a steady income. The payments may become difficult to make without your assistance or, even worse, impossible to meet. Life insurance can help you to protect your home and family.

A life insurance policy can protect your family from the financial obligations of making mortgage payments without your salary. In the event of your death, your family will still be accountable for mortgage payments, which may be unaffordable without your contribution.

For protecting your family from bearing such a burden and possibly losing the house, you should purchase a life insurance policy. Although there are other insurance options available too, for example, mortgage protection insurance, the wisest and most economically sound choice is to buy a life insurance policy.

The death benefit of your life insurance policy should include your mortgage’s amount. On the occurrence of your death, the proceedings of the policy will cover the entire cost of your mortgage, your house will be paid off, and your family will have one less thing to worry about.

If taking out a mortgage has already substantially cut into your finances, life insurance is even more important. Although your mortgage payments may make paying premiums for a whole life insurance policy unimaginable, there are cheaper options.

As an alternative to purchase a permanent life insurance policy or mortgage protection insurance, explore the option of buying a term insurance policy for the same duration as your mortgage. This alternative is much less costly. The premiums will be considerably lower, but the coverage will remain the same.

At the end of the life of the policy, you can decide whether you want to convert or renew the policy or if you would rather discontinue the policy. This approach guarantees mortgage protection at the lowest cost.

In terms of cost, the best choice is decreasing term life insurance. If the main reason for purchasing a life insurance policy is for mortgage protection, investing in this type of term insurance is your best bet.

At the start of your mortgage, you owe the most to your lender and your mortgage protection should reflect that. However, since after a few years of making payments, you will owe significantly less, decreasing your protection is a logical move. A decreasing term life insurance policy allows this.

You can also design your life insurance policy so that your protection is the same amount as your debt. Although the premiums do not decrease over time, your mortgage life insurance quote will be considerably lower than if the quote you would receive and if the coverage of the policy were level throughout its term. Some policies annual premiums are the same as the level coverage, but the payments end earlier than the end of the policy. For e.g., the premiums on a 20 year mortgage protection insurance policy are required to be paid for only 16 years even thought the coverage will last all 20 years.

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