iFinancier

Problem of similar assets in CERSAI

noreply@blogger.com (Vijayalekshmi Omana) — Fri, 12 Oct 2012 13:21:00 +0000

Cersai eventhough developed into Phase Two, do not address some common issues. In this post I am trying to bring into light the problem of similar assets which always pop up as an error.

A person having a very vast area under one plot/survey number may transfer parts of his property to different persons under different documents in different times. While such a transfer, the plot/survey number in all documents remains the same. He cannot change it. Only the extent, boundaries differs. The real problem arises when we enter such a property in Cersai. The present search system of CERSAI seems to corner around plot/survey number to detect multiple transactions. If CERSAI detects plot number/survey

number which is already registered with it, it throws an error. CERSAI will not see whether the subsequent transfer is of another part of property of the same survey number. Boundaries are also not made important fields in the site. So genuine transactions are also coloured as fraudulent and multiple ones by CERSAI.

However, there are certain tips and tricks to avoid the errors of CERSAI in such cases. You cannot change the survey/plot number. But you can definitely change the way of entering it.For instance 543/12 is the survey number of a plot which contains larger extent of property. The prior owner transferred a part of that property and it has already been registered with CERSAI. Later he transferred other part of the same survey number. This when going to be registered with CERSAI, change it by adding some space

before or after the oblique. Otherwise, you can write the number descriptively. For eg:sub division 12 of Survey 543. This will ensure that you can finally register the transaction. Knowing this tip is extremely important as in some cases CERSAI will ask us to delete the entire transaction and register a new one.

This problem is a big one and it needs to be addressed soon by CERSAI. It must also detect the boundaries and document number, the extent and other factors to verify if a transaction is duplicate or multiple or fraudulent one. We can hope for a better interface and data collection in the future. Till then, share your valuable views on the post. Thank you.

Pitfalls in Phase Two of CERSAI

noreply@blogger.com (Vijayalekshmi Omana) — Fri, 03 Aug 2012 01:18:00 +0000

In the earlier version of CERSAI we will be getting an Asset ID which can be used in future for correction, modification and satisfaction of the loan/property transaction details.

Now in Phase Two, we should note the Security Interest ID which are given to us on successful confirmation of transaction. If we noted only the Asset ID like we used to in the Phase One, it will not be possible for us to use it for future transactions like correction, modification and satisfaction. CERSAI will give the message that such a Security Interest ID is not registered with the system.

The site only asks the Security Interest ID for correction,modification and satisfaction. There you have to give the security interest ID and not the Asset ID. If you give the Asset ID, the system will throw error messages. Any how there are certain measures which can be used to for noting the Security Interest ID:

Make a register of your own noting the Institution, Branch, Borrower, Property details, loan details etc. There should be space for writing Queue Reference Number, Transaction Date, Security Interest ID and Asset ID.
Note down in your register the Security Interest ID and Asset ID after successful confirmation of Queued Transaction.
Download Challan after successful confirmation of Queued Transaction. This is a shortcut method for storing the Security Interest ID. The Challan or Security Receipt will show the Transaction Reference Number, Asset ID, Security Interest ID and other details.

Since the system of CERSAI is new and the launched website/database is still lacking perfection and may contain bugs to be fixed, a systematic approach to every finished transaction is required to prevent the pitfalls.

Borrower co-owner with thirdparty-CERSAI

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 24 Jul 2012 18:32:00 +0000

In CERSAI provision is made for entering the details of third party who is mortgaging the property. If you select Property owner as 'NO' in Borrower Tab, then you will have to mandatorily fill up the Third Party details. Otherwise the site will not accept the transaction. If the borrower itself is the owner, then you need not enter details of third party. But you should select Property owner as 'Yes' in Borrower tab page.

A special circumstance may occur when both the borrower and third party will be co-owners of property. In such cases, you should enter property owner as 'Yes' in Borrower tab page and then in the third party details the names of third parties can be entered. The site will accept this with no problem.

Need for modification-Property details tab in CERSAI

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 24 Jul 2012 18:32:00 +0000

Property details page can be accessed through 'Property Details' tab in CERSAI. This is the only page where you will find 'Locality' as a mandatory field. It is been asked in other tabs also. But those are not mandatory. The Locality field in Property Details is made mandatory considering the importance of identification of property.

But I have a disagreement regarding other fields. Why it does not make the boundaries important. It is more crucial thing than locality to identify and locate the property. With the help of locality you can go near the property, but with boundaries you can surely be inside of the property. So please make boundaries an important area.

I still not find the importance of Latitude and Longitude in the tab.

Problem of Partnership Firm as Borrower in CERSAI

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 24 Jul 2012 18:30:00 +0000

A partnership firm may or may not have property of its own. Sometimes, the partners may have properties which may be mortgaged to the Bank for securing a loan. We are now dealing with the case of third party mortgages, ie. neither the firm nor its partners are mortgaging their respective properties or they are not having such properties to be mortgaged. So it is clear that we are dealing with a third party mortgage.

The anomaly can be seen when we enters details in the Borrower/s tab in CERSAI.If there is a sole borrower ie. the partnership firm the details asked by the site are as follows:

When we select 'Partnership Firm' as the 'Borrower Type' the site asks the Partnership Firm Name and Name of the authorised person/partner who is signing the papers on behalf of the firm. Here we can enter the person so authorised by the partnership deed or as mutually agreed by the partners.

The real problem comes when there are two borrowers. Say one is an individual/partner of the firm who has taken a loan on the same security property of third party. The site allows adding multiple borrowers. We selected individual first as the Borrower type. We entered details of the individual. Then for adding the partnership firm, we clicked 'Add Borrower' button and selected Partnership Firm in Borrower Type of Borrower 2. There you will find that the site is asking for the name of the partner who is mortgaging the property belonging to the Partnership firm. We will have to take this by surprise since the partnership firm is not mortgaging its property how could we enter these details.

This is a problem of the site. I hope the developers correct this thing immediately.But there is a solution for this. Whenever there are more than one borrowers and a partnership firm is one of the borrower and it is not mortgaging any of its properties, you have to add the details of firm as Borrower 1. Then go to the second borrower. If you enter the name of the partnership firm first, the site will not ask for name of the partner who mortgages the property. If you have accidentally selected individual or any other as Borrower 1 and then selected Partnership as Borrower2, then you can't revert. Even if you delete the Borrower 1, then also the site will ask Name of the partner who is mortgaging the property. So you will have to start afresh. To avoid this always care when uploading details in CERSAI with multiple borrowers and having Partnership firm as one borrower.

What is new in Cersai Phase Two?

noreply@blogger.com (Unknown) — Thu, 19 Apr 2012 16:42:00 +0000

Central Registry of Securitisation Asset Reconstruction and Security Interest of India is a company licensed to register all securitisation transactions. Phase I of Cersai has been very difficult, especially when coupled with the slow response of server. We have to navigate to every individual page without a chance of going back to the previous page. There was a time limit for the session also. If you do not enter the informations within a specified period of time, the page will stop and you will be redirected to the homepage.

In the new Cersai We could see that there is a change in the interface.After entering the user id and password we enter the home page. In your left handside we could see the link for adding security interest.

Now we will have to choose certain Yes or No radio buttons.

The first question is whether the security interest correspond to an immovable financial asset. The second question is whether the security interest correspond to a non-agricultural financial asset. This is a new feature which was absent in the previous version. If we enter agricultural asset, we will not be permitted to proceed further. The third question is whether the financial asset is under joint security interest or consortium agreement. After selecting all this we have to select certain details from a drop down box. This specifies the nature of the property.Seven categories are included in this. If we select plots, three check boxes viz plot number, state and pin code will appear. if we select buildings,another check box namely house number also will appear.Please note that if we do not check these boxes, the page will not proceed since these are the mandatory requirements.

Some of the new changes in the newest form of Cersai is as under:

Addition of tabs

Now there are ten tabs in the homepage of Phase II cersai while there were only eight in the old one. The new tabs are Cersai Circulars and Verify signed files. Till the time of publishing this post, there were no released circulars. In the second tab, we can browse and verify files by uploading data files and signature files.

Adding Security Interest afresh and on existing asset.

A notable development which erased many anomalies and questions associated with the old version(Phase I) is addition/creation of security interest afresh and upon an existing asset.We can choose between the two. Correction and modification is still possible.

Pages

There are seven pages in total for entering the details. These pages can be accessed through seven tabs which provides easy navigability. This feature enables us to go back to any previous page. There is no NEXT button in each page. After entering the details(either in part or full) we can move to another page by clicking the respective tabs. Thus it is more convenient now. The tabs are viz Borrower, Third Parties, Nature of Security Interest, Security Interest Holder, Property Details, Property Documents and Loans.

Increased speed and time limit

The new version of Cersai has extended time limit for entering the details. It wont expire even if you go at a slow pace. This is a new improvement. Perhaps they have upgraded their server.

Correction Indicator

If the information entered in any tab(page) is not correct or required information are not given, then the tab colour changes to red from grey. If all the information are correctly given then the tab colour changes to green from grey.

Submit Button

There will be a submit button at the end tab page. When you click the submit button you will be getting a Queue Reference Number. This is the evidence for entering the details by the maker. Now the checker has to approve this. So a message shows in this regard.

Conclusion

The very convenient improvement which I notice in the new Cersai is the possibility to move to every page by clicking the tabs. This is a great relief. Note that still it got the 'Other details' space. So you can add additional details in this space at the last tab page.

There is still so much to be improved in the new Cersai and hence I am temporarily stopping this post. Thanks for reading. Share your comments please.

Registration of Mortgages with Cersai by Banks

noreply@blogger.com (Unknown) — Thu, 16 Feb 2012 17:50:00 +0000

Section 20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act(hereinafter referred as Sarfaesi Act) directs the Central Government to set up a Central Registry for the purpose of registration of every transaction of securitisation and reconstruction of financial assets and creation of security interest under the Sarfaesi Act. In plain words, every mortgage of immovable property for securing a loan is to be registered with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (hereinafter referred as CERSAI).

As per the directive of the Sarfaesi Act, the CERSAI was set up vide Government notification and it is now located in New Delhi.

Registration Process.

After every mortgage of immovable property, the details has to be registered with the CERSAI by going to the website www.cersai.org.in after remitting prescribed fees. This has to be done within thirty days of creation of mortgage by deposit of title deeds. You may need to enter the borrower's name, his details, property details, loan details, guarantor's details etc. After successfully submitting the informations you will get an Asset ID. This should be saved for future modification of transactions. The officers of the Banks need a member user identification number and password to enter the website.

Important Details

PIN code or ZIP code of the domicile address of the borrower, guarantor, charge holder/bank, registry of title deeds, property etc is needed. Permanent Account Number is mandatory. In case of absence of PAN numbers, a dummy PAN number can be used. Account Number is also important. Like wise the limit of loan, survey number of property, extent, date of registration of title deed etc is important. Taluka, Tehsil, District, State etc are important. The borrowers' name is important. There are so many things which I may discuss in another post. Non-mandatory things like Date of Birth of borrower, guarantor, their phone numbers etc is also there.

Time limits and Fees

The registration of every transaction of mortgage should be done within thirty days. Otherwise you will be required to pay additional fee for registration. The fee limit for loans below five lakh rupees are two hundred and fifty rupees and for limits more than five lakhs, the fee is five hundred. This is same in the case of future modification also.For condonation of delay, the fee limits are two thousand five hundred for limits below five lakh rupees and five thousand for limits above five lakh rupees.

Priority of Charges

The registration in Cersai will not affect the existing charge created over the property by operation of other enactments. This is clearly stated in Section 20 of the Sarfaesi Act.

CERSAI is going to be revamped. So things may change. I may have to put another post in that regard. Till that time, enjoy my blog. Thanks.

Hassle-free Repayment of Educational loans

noreply@blogger.com (Vijayalekshmi Omana) — Wed, 15 Feb 2012 18:05:00 +0000

The Indian Banks Association in consultation with the Central Government and RBI formulated new scheme for the granting of Educational Loans. Loan is a boon and a bane at the same time. It is a profit/asset in the case of bankers and a liability in the case of customers.

Students are a fragile category when banks are considered.(at least for some banks) The risk is more. Banks tend to give loan to those students whose parents' networth are more than 5 to 10 times of the loan amount. If that criterion fits, the Banks may give loan to any students irrespective of the merit. But the new scheme provides a merit based selection for the loan eligibility. But since it is a liability upon the borrowers(both students and parents) and guarantors, the terms of repayment is the key thing which should be looked into in detail.

Rate of Interest also to be looked into. The institution which is more suitable for the borrower has to be chosen.

Repayment

The repayment has to be made promptly. But if the student is unable to complete the course within the stipulated time, happy thing is that extension of time may be provided. A maximum extension up to two years will be provided. But in other cases which are beyond the control of the student, the sanctioning authority may have discretion to extend the time. Even in the case of discontinuing studies in the middle, the repayment schedule will be worked out by the Banks in consultation with the student/parent.

IBA Caution List of Third Party Entities

noreply@blogger.com (Vijayalekshmi Omana) — Wed, 15 Feb 2012 17:46:00 +0000

Banks and other financial institutions are approaching Frauds seriously. This post is about the role of third party entities in Frauds and importance to maintain a record of it.

Banking is the business of taking money and lending money. Different types of customers approach regularly at the Banks for taking loans. The Banks make use of certain Third Party Entities for the purpose of their daily banking business. It mainly happens when some person approaches a Bank for a loan. For example, in case of a loan one party wants to mortgage his landed property. The Bank manager may not know the correct status of the title of the borrower. In such cases the services of a lawyer will be required to find out whether there are any legal impediments in accepting the said property as security for the advance to be granted. It must be known that the title to the property is clear. So an advocate can be said to be a third party entity. Like wise, a valuer who values the property for the purpose of determining the sanction limit of loan and for knowing the amount of security comes into the hands of Bank at the time of recovery of the loan by sale. There are other third party entities.Third Party Entities can be defined as individuals or group of individuals,

whether incorporated or not, used by bank or its customers/agents, for their product/service/expertise, based on which these entities sell products/provide services/give opinions/certify the accuracy of statements/valuation of assets/ownership of assets, etc. The Bank takes a decision based on the documents /opinion/certification given by these entities and enters into a financial transaction with the customer. The transaction could be related to any service the bank provides to its customers. When any problem occurs it will adversely affect the Bank's business.

Reserve Bank of India conducted an analysis about the frauds committed by such third party entities for their own selfish purposes thereby putting the Bank's stand in stake. The analysis revealed that there is an increasing trend of fraud being committed in this area especially those pertaining to retail loans such as housing

loans, commodity financing against warehouse receipts, loans for purchase of agricultural implements from dealers, vehicle loans and credit card cases. The main role of third parties such as builders, warehouse/cold storage owners, tractor/car dealers, travel agents etc is found out. Similarly, advice given by professionals like

Chartered Accountants, Valuers, Architects, Advocates etc seem to have impact on the fraud cases. They tend to collude with the fraudsters by giving fake/questionable certificates.

Reserve Bank of India has now asked banks to build up an internal database on such third parties in a systematic manner and resort to mutual exchange of data on an ongoing basis. But the Banks should first know whether there is any role of such third party entities in the fraud committed. Then the Banks should prepare a Caution List of these entities involved in fraud cases. A centralised database of all such entities is

maintained with full details like name of agency, names of partner/proprietor/directors, registration number if applicable, address and Permanent Account Number.

If any third party entity is found engaged in any case of fraud of a particular Bank, that Bank can upload that information which will be a caution for other Banks for not using their services.

Formalities for granting educational loan by Banks

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 14 Feb 2012 18:40:00 +0000

As per the new scheme developed by the Banks, the formalities for taking an educational loan is as under:

The scheme applies only to Indian nationals. The parents should be joint borrowers to the loan.

Guarantee

If the net worth of the parents do not meet the respective security quantum prescribed by each bank (for eg.3 times or 5 times of loan amount), third party guarantee may be required. However, banks can always waive it in their discretion. In case of married woman student, personal guarantee of husband may be taken. If either or both parents are not alive, then personal guarantee of other persons will be required.

Execution of documents

The student as well as parents should execute the documents as joint borrowers.

Security

The loan has to be secured by personal guarantee. Other than the guarantee, it has to be secured by immovable properties like land and building. Other securities like government securities, public sector bonds, national savings certificate, insurance policies, gold, shares, mutual funds, bank deposits etc can also be accepted.

If the property is already encumbered with some other loans, charge may be accepted to the unencumbered portion. The future income of the student will be assigned towards the repayment of the loan.

There will be processing charges also depending upon the quantum and place of study. Certificate for solvency of sponsor may also be granted in eligible cases.

The Banks may not insist 'No dues' Certificate from the borrowers. In the alternative you may be required to give an affidavit/declaration regarding your liabilities.

Settlement of Death Claims by Banks

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 14 Feb 2012 18:37:00 +0000

This post is meant to help those who are having an account with the Banks. This post will generally explain how most of the Banks; either Public or Private, are settling Death Claims.

First we will see what a Death Claim is. In simple words, claiming money/amount in an account by the legal heirs of the deceased account holder is a Death Claim. The account holder may hold different types of accounts. The nature, amount, operational condition, etc may vary. Banks follow almost similar method in settling the claim application submitted by the claimants. According to the nature and other things, certain requirements will vary.

When a claim application will arise

A Claim Application will rise when there is no nomination registered with the account. If the nomination is registered in the account, the amount after the death of the account holder will go to the nominee as per the procedure. So if there is no nomination the claim will be settled as per the guidelines followed by each Banks as per the general procedure as follows:

Claim Application

First of all the Bank will require the Claimant/s to file an application to get the amount in the account of the deceased account holder to them. There will be prescribed formats for each Banks. The form will include space for entering the name of the deceased, full address of the deceased, date of death, place of death, proof of death, names of the claimants, their age, relationship with the deceased account holder etc.

Declarations or affidavits

The application will have to be accompanied by declarations by two or more independent persons who know the deceased person and not related with him or the claimants. The declaration form will include spaces for entering the name and full address of the deceased persons, names of the claimants, their ages, etc. The declaration will add trustworthiness to the claim preferred by the applicants. However the declarants have to be respectable persons known to the Bank and are worthy of the claim amount. They may need to have sufficient account balance with the bank or have net worth either equal to the claim amount or higher than the claim amount and should have recent transactions. The account must be running.

Proof of Death

The proof of Death is to be provided by the applicants along with the claim application. Documentary evidence need to be given by the claimants in proof of the death of the account holder.The Death Certificate has to be obtained from the Registrar of Births and Deaths. Even if the Bank has direct knowledge of the death of the customer, the provision is mandatory.

Receipt, Indemnity Bond and Affidavit

The Bank should obtain a signed receipt from the claimants while disbursing the amount. Indemnity Bond in stamp paper properly notarised is also needed. An affidavit declaring that the claimants are the only legal heirs of the deceased also may be required.

What are the courses eligible for education bank loan?

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 14 Feb 2012 18:16:00 +0000

The Government of India in consultation with Reserve Bank of India and Indian Bank's Association has framed new Educational Loan Scheme to ensure better treatment of loan applicants who want to pursue higher studies both in India and abroad. The aim is to provide affordable terms and conditions while taking loan.

The courses eligible under the loan are mentioned below:

The courses in India are,

i) Graduation courses like Bachelor of Arts, Bachelor of Commerce Bachelor of Science, etc.

ii) Post Graduation courses like Masters Degree & Ph.D.

iii) Professional Courses like Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer, etc.

iv) ICWA, CA, CFA, etc.

v) Courses conducted by IIT, IIM, IISC, XLRI, NIFT, etc.

vi) Courses offered in India by reputed foreign universities

vii) Evening Courses of approved institutes.

viii) Other courses conducted by colleges, universities, approved by UGC, Govt./AICTE, AIBMS/ICMR etc. leading to diploma/degree.

ix) Courses offered by National Institutes and other reputed private Institutions.

x) Regular Degree and Diploma courses like aeronautical, pilot training, shipping et cetera approved by Director General of Civil Aviation / Shipping

xi) Teacher Training Course / Nursing Course / B.Ed where the training institutions are approved either by Central or State Government and leading to Degree or Diploma.

xii) The Aircraft Maintenance Engineering/ Pre Sea training courses are eligible for the loan only if it is either a Degree Course recognized by a competent University or Diploma Course recognized by appropriate State Body.

Studies Abroad

i.Job oriented professional and technical graduation courses offered by reputed universities.

ii.Post Graduation courses like MCA, MBA, MS etc.

iii.Courses conducted by CIMA – London, CPA in USA etc

iv.Regular Degree and Diploma courses like aeronautical, pilot training, shipping et cetera recognized by the competent local aviation / shipping authority.

Educational loans to reach out for your goal

noreply@blogger.com (Vijayalekshmi Omana) — Mon, 13 Feb 2012 18:46:00 +0000

Nowadays education has become hitech and every meritorious student can pursue his dream of higher education in India and abroad with the help of Banks who is on the verge of liberalising the norms for the grant of educational loans. As Indian Banks Association took the initiative for a better treatment of the students seeking higher education, things may go easier now. They have devised a new scheme for educational loan.

The new scheme envisages merit as the sole criteria. Management quota seats will be out of the purview of the scheme.There will be consensus between quantum of loan and employment potential of the studies.The term also will be extended providing a sigh of relief for the borrowers.

The policy promises to be a relief in the times of cost of education touching whopping heights. The main change is the assessment of loan. It will be based on the future earning capacity of the student and not the wealth of the parent.

The policy is meant for Indian nationals. The student should have passed some merit selection test. In certain cases banks can also look the employability and reputation of the institution.

Mainly the scheme targets job-oriented courses in technical and professional fields. Fees, caution deposits, transportation charges, amount required for purchase of study materials etc will be the key things in the loan. The parents will have to become joint borrowers. There is an incentive for girl students. Anyhow the interest portion is left with the individual banks. It is linked to the base rates.

Non-Resident Borrower Housing Loan Repayment

noreply@blogger.com (Unknown) — Sat, 17 Sep 2011 07:50:00 +0000

Reserve Bank of India notified very helpful measure in the matter of repayment of loans taken by Non-Resident Indians.The notification was meant to all the Banks authorised to deal in Foreign Exchange.The notification empowers residents to repay the loan taken by theirs close relative non-resident Indians. However the facility is only extended to the Housing Loans.

RBI had already notified Foreign Exchange Management Act provisions in 2000 wherein housing loan provided to a non-resident Indian or a person of Indian origin resident outside India by an authorised dealer or a housing finance institution in India approved by the National Housing Bank for acquisition of a residential accommodation in India, may be repaid by any relative of the borrower in India. The amount can be repaid by crediting the borrower's loan account through the Bank account of such relative. A relative has the same meaning in Section 6 and Schedule IA of Companies Act, 1956. The relatives enlisted in these provisions will be coming under this notification.

The directions are issued by RBI under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.

RBI hikes Policy Rates-Inflation Control

noreply@blogger.com (Unknown) — Fri, 16 Sep 2011 08:04:00 +0000

Inflation is continuing to show its dark faces. Reserve Bank of India again hiked its Repo Rate which now stands at 8.25%. Repo Rate is the rate in which bank's borrow money from RBI. Hence a hike in this rate will definitely affect the Banks.However experts are of the view that the hike will not affect the business of Banks. Most of the Banks stated that they will not increase the lending rates. But there is always a possibility of hike in interest rates for advances by Banks which will affect the people. Loans will become costlier.RBI is of the view that inflation figure is a big matter of concern and that a rate hike was always in the picture. The rate hike was on the basis of current macroeconomic assessment. The previous rate was 8% and this change is made with immediate effect. Department of Communication of RBI said in a Press Release on 16.09.2011. Crude oil prices remaining high, food inflation etc are key factors.

Finance Minister said in a press meeting that the rate hike by RBI will hopefully help the measures to bring down inflation. Inflation has almost touched double digit. Wholesale Price Index is 9.8 as on August 2011. Although India's exports have sustained several setbacks in Global economy in the present times, it is very difficult to continue as the Global scenario has worsened much more.

RBI is confident that the present hike will contain inflation as it has done in the past.

The present rates of RBI are as follows:

Repo Rate - 8.25%

Reverse Repo Rate-7.25%

Bank Rate-6%

Cash Reserve Ratio-6%

Statutory Liquidity Ratio-24%

IFRS India Some Facts

noreply@blogger.com (Unknown) — Wed, 20 Apr 2011 04:00:00 +0000

The implementation of International Financial Reporting Standards(IFRS) has been deferred by the Government of India.

First of all take a quick look about the IFRS.

A committee named International Accounting Standards Committee was founded in 1973 in London which developed the International Accounting Standards. Later in 2001, the International Accounting Standards Board was formed as a successor to the International Accounting Standards Committee. This Board was responsible for developing International Financial Reporting Standards(IFRS) and to promote its use and application. The IFRS are certain standards based on some principles.

The IFRS provides a global set up for preparing and disclosing of financial statements of companies. The IFRS will help large companies which have many subsidiaries in different countries in the world. A unique set of standard can be followed by these companies to report their finances. So this is a set of accounting

standards which is to be followed globally.

The main aim or benefit of IFRS is the convergence of accounting standards. This will help the potential investors to invest at a lower cost. Different accounting standars will only make it difficult for the investors to compare the different financial results of different companies. If we follow IFRS the difficulty will be removed. So it is all about eliminating the differences between national and international standards and adopting a unique standard for financial reporting. This will be of great help for multinational companies.

Most economies are now following the historical cost accounting system. The Ministry of Finance(MoF) in India has taken a view that the companies should continue to follow the historical accounting practices for taxation purpose. Historical cost is the original monetary value of an economic item as on the date of its acquisition. It may not generally reflect the current market valuation. But the use of fair market value is the more accepted principle and IFRS is based on the same. The MoF in India thinks that there will be some play by the industries in fixing the fair value which will lead to a loss in revenues for the government.

However India had agreed to implement IFRS in three phases. Th first phase will cover 30 Sensex and 50 Nifty companies with a net over 1000 crore. But most of the countries like US and Japan are still to make IFRS mandatory.

A unique standard for financial reporting is necessary. A good understanding by investors globally is a necessity for any company.

IRDA Distance Marketing Impact Part IV

noreply@blogger.com (Unknown) — Sat, 09 Apr 2011 10:30:00 +0000

The Insurance Regulatory and Development Authority has framed certain regulations regarding distance marketing of Insurance Products. The regulations are meant to be followed by various agencies and persons who are carrying out the distant mode of insurance business.
The guidelines are meant to be followed at all the stages of business viz offer, negotiation and conclusion of sale of policy. The guidelines will come to use whenever a policy is marketed via distance marketing which includes lead generation, solicitation etc. Any request by clients for information or sale of insurance products will also come under its purview.
The regulation tells the need of training the telecallers and telemarketers for a good and smooth functioning of insurance business through distant mode. The regulation mandates the use of standardized script while using the distance marketing technique.
Following the guidelines will definitely allow the insurers to know the customer better and the need of persons in various strata. This will benefit the business and policy formation in the future. The process will further ensure transparency. The same will attract more people to the business of insurance. The insurance sector has been more heightened to the level of service by laying down these guidelines. But the public comments is yet to come. Hope IRDA sticks to its policy of healthy and orderly growth of insurance sector.
Read the other three related posts also:
Part I : Important Terms
Part II: Duties and Liabilities
Part III: Standardized Script

Standardized script Distance Marketing IRDA Part III

noreply@blogger.com (Unknown) — Sat, 09 Apr 2011 10:12:00 +0000

In the process of selling insurance products through distance marketing, various methods are used. Television, E-mail, postal mail, Telephone etc. The process of distance marketing is the indirect method ie apart from the 'in-person' direct market techniques. Read also the related stories of this post Part I, II and IV by going to the links shown below.
This post discusses the specific norms created by the regulation of IRDA in collection of details of clients inorder to ascertain the intention in purchasing the insurance product and the inducement of the client to purchase the product etc. The process is to be carried out with the help of standardized scripts.
The standardized script shall be prepared by the insurers or brokers who presents the benefits, features etc of the insurance products to the clients. Every solicitation and lead generation of insurance in distant mode shall be in line with the standardized script.
What things are required in a standardized script?
The script shall contain the important features of the product and it must get the approval of compliance officers of the insurer and within 15 days of the said approval it shall be filed with the IRDA.
It shall cover the specific response of the client relating to name of the product, nature of the product and its parameters. The script shall also contain the response of the client in the scope of the insurance coverage, its full features, deductibles, discounts and premiums, warranties, clauses etc.
Thus the whole process is a very disciplined and smoother inorder to make the distance marketing convenient both to the insurer and the insured.
Read also Related Post: IRDA Part I-Important Terms
IRDA Part II-Duties of Various Agencies
IRDA Part III-Distance Marketing Regulation Impact

IRDA Distance Marketing Duties Part II

noreply@blogger.com (Unknown) — Sat, 09 Apr 2011 07:30:00 +0000

If you have read the first part of the IRDA Regulations defining certain important terms(link below) contained in the Regulations relating to Distance Marketing of Insurance Products, you can read this post which describes the various duties, liabilities and functions of different persons and agencies engaged in Distance Marketing of Insurance Products.

What are the Duties of Telemarketer as per the Regulations?

The Telemarketer has to maintain every recordings of calls until the same is transferred to the insurer. It shall preserve the records of tele callers and authorised verifiers. The Telemarketer shall only employ those persons who are permitted for soliciting and concluding the sale of insurance products in distance mode.

What are the Duties of Telecaller?

The tele caller shall ascertain the interest of the client in the process. The name of the caller should be disclosed. The telecaller has also the duty to inform the client that the voice copy of the recording of solicitation is available for him upon his request.

What are the Duties or Liabilities of Authorised Verifiers?

The authorised verifiers cannot solicit insurance in their individual capacity. The authorised verifier must try to know the client's interest in continuing with the process. The process may only be continued upon the consent of the client.

What are the Duties of Insurers?

The insurers shall not pay any remuneration other that brokerage to the brokers on the solicited or sold policies using distance mode. It is the duty of every insurer to obtain all the records pertaining to insurance policies procured by distance mode by identifying the same. The insurer has to preserve a voice copy of the entire process in an easily retrievable form for a period of six months beyond the policy term or until settlement of claim.

What are the Duties of Insurance Brokers?

The insurance broker has to suggest the best option which is perfect for the needs of the client.

Common Duties

The insurers, brokers and corporate agents shall maintain the register containing every identification details and documents of person whom are employed by them for lead generation, solicitation etc. Insurers and brokers will have to prepare standardized scripts for presentation of products. The communication shall give information about the insurer and the purpose. The telecaller, authrized verifier etc have to give the identification information to the client also for future verification purposes. The insurers and brokers shall monitor the calls live.

Read also Related Post: Important Terms in Distance Marketing Regulations IRDA Part I
Read also Related Post: Standardized Script in Distance Marketing Part III
Read also Related Post: Distance Marketing Impact Part IV

IRDA Regulation Distance Marketing Terms Part I

noreply@blogger.com (Unknown) — Fri, 08 Apr 2011 17:14:00 +0000

This post will enlist the most important terms in Insurance Regulatory Authority of India's latest regulation about Distance Marketing.

The Insurance Regulatory and Development Authority of India(hereinafter referred as IRDA) has exercised the powers under Section 14(1) of the IRDA Act, 1999 and issued some guidelines on 5/04/2011 about Distance Marketing of Insurance Products.

Now we should understand certain terms first.

Distance Marketing

This is the soliciting and selling of insurance products through telephone-calls, short messaging service, e-mails, interactive television, postal, news papers, magazine inserts etc. So this is the type of marketing technique which is indirect.

Tele Marketer and Tele Caller

These are the persons engaged in Distance Marketing. Tele caller interacts with the clients over distance mode upon the instructions of a Tele marketer. “Telemarketer” as per The Telecom Commercial Communications Customer Preference Regulations, 2010 means a person or legal entity engaged in the activity of transmission of commercial communications. Every Telemarketer has to register with the Telecom Regulatory Authority of India as per the above Telecom Communications Regulations.

Authorised Verifier

He is a person employed by the Tele Marketer for soliciting or selling insurance products over telephonic mode.

Lead Generation

This is the process of collection of details of the prospect client and includes all activities which leads to solicitation of insurance products. This is done to know the interest of the client in purchasing the policy.

Solicitation

This is the process of approaching a client by the insurer/intermediary in order to persuade him to purchase a policy.
Read also Related Post: IRDA Distance Marketing Duties of Various Agencies Part II
Read also Related Post: Standardized Script in Distance Marketing IRDA Part III
Read also Related Post: Distance Marketing Impact Part IV

RBI-Money Mules-NBFC-Money Laundering

noreply@blogger.com (Unknown) — Wed, 06 Apr 2011 03:41:00 +0000

Reserve Bank of India reiterated their firm stand against Money Mules whom are used for Money Laundering by various elements. In this regard the central bank of India has issued a notification for creating awareness against using Non Banking Financial Companies by money mules for laundering illegal money. The notification dated April 5, 2011 asks the NBFCs to follow the guidelines issued to create awareness regarding money laundering in a Master Circular issued by RBI in July 1, 2010. Also various other regulations are also in place in this regard.

First of all we should understand some terms.

Money Laundering

This can be ultimately defined as the process by which illegally obtained money is made to appear legitimate. The money obtained is transferred through an outside party to hide the exact source. The cash is injected into the financial system by some means firstly. Then some activities or transactions are carried out just for

the sake of showing that this is legitimate money. Then the culprits earns more money by placing the illegal money in various transactions.

Money Mules

He is a person who transfers the illegal money from one place/country to another. One could find various kinds of scammers in internet who are mules or use mules. They will not have a true identity. They may be using fake one also.

Now there is a Know Your Customer policy or standard being followed by every bank or other financial institution. This is to prevent such institutions from being used by criminals for money laundering. The KYC policy stands on four key elements which are (1)customer acceptance policy;(2)customer identification procedures;(3)monitoring of transactions; and (4)risk management.

The NBFCs must ensure that they follow strictly to the KYC guidelines. Apart from that the NBFCs must carry out a uniform policy regarging appointment and verification of brokers and agents connected with them. All records relating to them should be kept ready for inspection at any time. There are guidelines laid down in case of some persons in rural areas who are unable to produce documents of identity and proof of address as required. Sometimes an introduction from another account holder who has gone through full KYC procedure and whose account is old enough and containing satisfactory transactions is required.

The guidelines are very detailed. But still it require some things which should ensure an efficient prevention of money laundering. RBI is framing various guidelines from time to time relating to money laundering. Hopefully we can achieve better results. RBI has in time sensed the involvement of "money mules" who can be used for fraud schemes.RBI asks the NBFCs to protect the customers from the fraudsters by strictly following to the guidelines.

Calling in Twenty Five 25 Paise-Impact

noreply@blogger.com (Unknown) — Sun, 03 Apr 2011 08:16:00 +0000

Bid adieu to the light and simple 25 paise coins. The stainless steel version of the 25 paise coin was introduced in 1988 in India. The style of the coin is moulded in Ferratic Stainless Steel with a weight of 2.83 gms and circular shape and size of 19 mm.The coin changed its appearance and nature from nickel to steel in the long run. But even the same appears to the government, RBI, and the economy to be old both in style and value.

25 paise

The Department of Economic Affairs in the Ministry of Finance by way of Extraordinary Gazette Notification dated 20/12/2010 published that the Central Government has determined to call the coins of 25 paise denomination and below from circulation with effect from June 30, 2011. This was done by way of the power conferred on the Central Government under Section 15A of the Coinage Act, 1906.

The Reserve Bank of India has instructed the banks maintaining small coin depots to make every arrangement for exchange of coins of denomination of 25 paise and below for their face value at their branches. The deadline for exchanging in these banks as also the offices of the Reserve Bank is till the close of business on June 29, 2011. Coins of denomination of 25 paise and below will not be accepted for exchange at the bank branches from July 1, 2011 onwards and will cease to be a legal tender thereafter.

The Consequence

The entries in books of accounts, product prices, and everything including services and taxes shall be rounded off to 50 paise or whole. You will pay extra for all these products and services.

Well the reason may be the rise of steel prices and manufacturing costs. Any how we all can move our favourite last 25 paise to our antique collection or exchange it for value. Whatever may be your decision, here is a list of Banks(in alphabetical order)where the coins will be exchanged.

Allahabad Bank

Andhra Bank

AXIS Bank Ltd

Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Central bank of India

City Union Bank

Corporation Bank

Dena Bank

ICICI Bank Ltd

IDBI Bank Ltd

Indian Bank

Indian Overseas Bank

ING Vysya Bank Ltd

Karnataka bank Ltd

Oriental Bank of Commerce

Prathama Bank Ltd

Punjab and Sind Bank .

Punjab National Bank

Standard Chartered Bank

State Bank of Bikaner and Jaipur

State Bank of Hyderabad

State bank of India

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

Syndicate Bank

Tamilnad Merchantile Bank Ltd

The Catholic Siriyan bank Ltd

The Dhanalakshmi Bank Ltd

The Federal Bank Ltd

The HDFC Bank Ltd

The Jammu and Kashmir Bank Ltd

The Karur Vysya Bank Ltd

The Laxmi Vilas Bank Ltd

The Nainital Bank Ltd

The Rajasthan State Cooperative Bank Ltd

The South Indian Bank Ltd

Tripura Gramin Bank

UCO Bank

Union Bank of India

United Bank of India

Vijaya Bank

Health Insurance Portability Problem Solved

noreply@blogger.com (Unknown) — Sun, 03 Apr 2011 06:49:00 +0000

Many of us have already taken various health insurance policies and many are yet to take a proper health insurance policy. Of course, the right ways of choosing good health insurance plan and various checklists before choosing the plan are available in the web for your reference. I am here posting a simple problem relating to Health Insurance Policies which are experienced by everyone. In fact, this problem was cured by the circular of Insurance Regulatory and Development Authority.

The problem relates with the portability of health insurance plans. Portability means the quality or state of being movable. In relation to insurance it means the ability of an insured to retain benefits when switching insurers. Generally health insurance policies do not take into account pre-existing diseases for a specified period of cover during the starting years of the plan. The same thing gets worse when the insured changes to another insurer. Most often the insured will not get any credit for the period with the previous

insurer when changing to new insurer.

Now the Insurance Regulatory and Development Authority of India(IRDA), as per its circular dated 10-02-2011 dealt with this issue of portability of Health Insurance Policies. Now the waiting period in the previous insured plan will have to be accounted or credited when changing to the new insured. The example quoted by IRDA is "...if under a previous policy, the condition was excluded from coverage for two years and under a new plan with a different insurer the exclusion period for the same condition is three years, the new health insurance policy can only exclude the condition from coverage for one extra year." Here the condition is that the previous policy should have been maintained without breaks. However, discontinuance of the policy because of the delay caused by the insured in accepting the proposal has to be avoided. For furthering this the IRDA has asked the insurers to speed up the process of communication of proposals by reference to its regulation dated 26-04-2002 where in Regulation 4(6) it is mandated that the proposals shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposals by the insurer.

The insurers have been asked to acknowledge the applications for the portability within three working days. However it is upon the policy holders to give the application much earlier to the renewal date of the policy to avoid any delays.

In concluding the Insurance Regulatory and Development Authority has done a great job sticking to its mission to protect the interests of the policyholders and ensure orderly growth of the insurance industry.

Check Process Service Charge Impacts

noreply@blogger.com (Unknown) — Fri, 01 Apr 2011 06:35:00 +0000

Nowadays most people have a bank account. There are various types of bank accounts. Most of the common people have savings account. Many of them uses check facility for their financial transactions. The time taken for check processing varies in each case. The RBI have always been taking steps for encouraging electronic transactions. The consumers are advised to make good use of technology and core-banking system for reducing the clearing cycle and movement of check. Check can be both local and outstation. Both require various time period for clearance and their service charge also varies.

The Reserve Bank of India issued certain directions by exercising the powers conferred by Section 18 of the Payment and Settlement Systems Act, 2007 regarding service charges for check clearance.

Before going to that aspect a little knowledge of the collection of checks through bank accounts is essential.

Collection in earlier days

When you gets an outstation check, you gives it to your bank known as the presenting bank. Then the check will be sent for collection to the place where it is payable. This is called the Destination or Drawee place. The bank in the destination place is called Collecting Branch. Then after the payment the collecting bank remits the money to the Presenting branch. Then the customer's account is credited with that amount.

Speed Clearing Arrangement

Speed Clearing is the collection of outstation checks through local clearing. It uses the help of technology. Now the banks have got a specialized network called Core Banking Solutions; in short CBS. In this system the checks can be paid at any location. The process is speedier. The RBI has mandated speed clearing service for all outstation checks.

Revising of charge structure

The RBI has planned to revise its charge structure by issuing a circular in January 19, 2011. By this circular the RBI intend to change the current structure which was set up in 2008-2009 years.

The present rate is shown in the following table.

Service (Processing) Charges for Local Clearing (by Clearing Houses from Member Banks) for Checks

System	Revised Rate in Rupees
System	Presenting Bank	Drawee Bank
Clearing at MICR-CPCs	1.00	1.50
Cheque Truncation	0.50	1.00

Service Charges for Outstation Check Collection

Revised Rate in Rupees
Value	Service charge from Savings Account customers
Up to and including 1,00,000	Nil*
Above 1,00,000	Left to the banks to decide
Above 10,000 and up to and including 1,00,000	100*^
Above 1,00,000	Left to the banks to decide

Service Charges for Check Collection under Speed Clearing (by Collecting Banks from customers

Revised Rate in Rupees
Value	Service charge from Savings Account customers
Up to and including 1,00,000	Nil*
Above 1,00,000	Left to the banks to decide

The impact of new structure

The impact of new circular is that the banks will get more freedom to fix charges in large amount financial transactions. RBI only mandates that the service charges should be fair and it should be levied in a transparent manner.

The consumers will love to choose the electronic mode transactions.

Conclusion

However let us pray that the new system introduces a fair amount of transparency and efficiency in check clearances.

Keep Your Money Safe Email Alert

noreply@blogger.com (Vijayalekshmi Omana) — Thu, 31 Mar 2011 16:43:00 +0000

The Reserve Bank of India issued guidelines to inform consumers of their cash transactions with cards via emails. The central bank has acted in the correct and most needed time. The mankind has evolved from the ancient times in a drastic way. These are days where we get large results from small things. There was an age of stones. This is the age of cards. Most people whatever be their social status, financial condition etc, holds many a number of cards for their daily transactions. In the case of financial transactions there are different types of cards for their credit solutions. The credit and debit card are familiar to all doing cash transactions.

One of the leading public sector bank in India has opened its 25000th ATM in a rural area. This is the sign of growing public trust and confidence in the easiest way of handling cash. People love to carry the power in their hands. The power of money in a small card gives them security. But these cards have many negative points. I am not going to describe them as many of us would be familiar with them. The timely intervention of RBI can be treated as a good one, but I seriously doubt that it is belated.

The aim of RBI by issuing the guideline to give alert the customers of their financial card-based transactions is to check fraud. It is undoubted that the internet has been a big revolution. But as every good thing begets many bad things, the internet is also a place of great frauds. Email is an easy way to communicate. But what is to be communicated gains much importance. We gets many mails in our spam folders. It is sometimes very difficult to identify which are the legit things and which are not. Email scam is known to the netizens. Most people fell pray even now in these communications. Even RBI has warned people of such fraud mails given under the colour of public authorities like RBI.

People love to move faster during this age. This is because the world is fast changing. There is a lot of commercial transactions. Every single individual carries out many transactions with his money on a single day. The internet is a fastest place for him for carrying out his financial transactions. The banks have also turned on its green signals for internet banking. The present guideline by RBI is based on many incidents of fraudulent withdrawals in ATMs. The central bank also like to inform every online transactions. This will encourage people to do more transactions with their cards. The point I could gather from this guidelines is that RBIs initiative is good and will stick to its essence. But I can only say that this is a method of showing transparency in banking transactions. I don't think that this will stop fraud. It will continue in some way. The initiative of RBI is only aimed at transparent consumer relationship. Encouraging the use of cards will further ease the business pressure of every banks. So the pressure is back on the customers once again. We have to keep our money safe. They are still using the an insecure medium to show their transparency. On the other hand by increasing ATM cabins and holding many number of powers in our hand will only increase the pressure and tension in us. It is the customers who have to be careful now. Any how I am backing the measure of RBI to inform people of every financial transactions. But never forget that we have evolved drastically. So keep your money safe. It is your turn to act.