Debashis Nath

Achivement independence day trophy

New tax rule

Explained | Tax dept's new rules to calculate income from high-premium life insurance policies The Income Tax department has prescribed a mechanism for calculating income proceeds from life insurance policies where aggregate annual premium exceeds Rs 5 lakh.

Lic will continue some stake in IDBI bank

Exclusive: LIC will continue to hold some stake in IDBI Bank even after the sale, says chairman Siddhartha Mohanty The government and Life Insurance Corporation, together, hold 94.71 percent stake in the bank.

Bandhan Financial Holdings to acquire Aegon Life Insurance

According to an agreement, BFHL will acquire entire stake of Aegon India Holding BV and Bennett, Coleman & Company Limited (BCCL) in Aegon Life Insurance. Aegon India Holding owns a 49 percent stake, while BCCL owns 46.09 percent

Upon completion of the deal, this will mark BFHL’s foray into life insurance sector in India in addition to their presence in banking and mutual fund sectors.
Bandhan Financial Holdings Ltd (BFHL) has entered into an agreement with Aegon India Holding BV and Bennett, Coleman & Company Limited (BCCL) to acquire the entire stake of Aegon and BCCL in Aegon Life Insurance Company.

The deal, subject to regulatory approvals, will mark BFHL’s foray into the life insurance sector in India in addition to their presence in banking and mutual fund sectors, Bandhan Financial Holdings said in the press release.

Jefferies acted as the exclusive financial advisor to Aegon and BCCL on the transaction while AZB & Partners acted as the legal advisor to Aegon. Khaitan & Co. acted as the legal advisor to Bandhan on the transaction.

As per an Aegon statement, Aegon has 56 percent stake in Aegon Life Insurance.

“Aegon Life, being a leading digitally-focused life insurance company serving around 300,000 customers, had a competitive bidding process which witnessed participation from various investors," the company said. "BFHL was selected as the successful bidder to acquire Aegon Life,” the company said.

Quoting sources, CNBC TV18 had earlier reported that the embedded value of Aegon Life Insurance is around Rs 430-450 crore. The deal will enable the group in creating a diversified financial services group, the release added.
"The agreement envisages continuity of the current management team and existing employees, which would help in actively developing and supporting Aegon Life’s strategy under BFHL’s ownership," the company said.

This will be supplemented by Bandhan’s brand and distribution reach, which will aid Aegon Life to enhance its customer base, it added.

BFHL will leverage its learnings from, and experience of promoting financial inclusion in India to expand the existing life insurance business of Aegon Life and provide financial security to the underinsured population, the company added.

"The acquisition of Aegon Life provides us an opportunity to enhance our portfolio of products and services in the financial services sector," said Karni S Arha, Managing Director of Bandhan Financial Holdings.

"Looking ahead, BFHL plans to make affordable insurance coverage being made available to a wide spectrum of customers across the country for their financial protection,” Arha added.

BFHL is a wholly-owned subsidiary of Bandhan Financial Services Limited (BFSL). Incorporated in 2014, BFHL is the promoter and associate company of Bandhan Bank.

BFHL currently holds around 39 per cent stake in Bandhan Bank.

BFHL is also the sponsor of Bandhan Mutual Fund holding around 60 per cent stake in Bandhan Asset Management

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Uberrima Fides ke principal follow Nehi hua.....isliye claim hua reject






NCDRC Rejects Death Insurance Claim Due to 'Enhanced' Income by Insured in Proposal Form
Moneylife Digital Team 04 May 2023

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While setting aside orders passed by fora below, the national consumer disputes redressal commission (NCDRC) says the death insurance claim rejected by Reliance Nippon Life Insurance Company Ltd was valid due to wilful misrepresentation of facts by the insured about his income in the proposal form.

In an order, the bench of justice Sudip Ahluwalia (presiding member) says, "…this Commission finds merit in the submission raised on behalf of the insurance company and is, therefore, of the view of that both the fora below acted with material irregularity in allowing insurance claim of the complainant without properly appreciating the defence of the insurance company, that it was justified in repudiating the claim on account of wilful misrepresentation of facts on the part of the insured about his Income, on the basis of which he had obtained the coverage to the extent of the sum assured."

Jaswinder Singh, the husband of Manjeet Kaur, had bought an Rs16.94 lakh insurance policy, 'Reliance Life Long Savings', from Reliance Nippon Life and paid Rs39,999 as a premium in March 2018. However, in just over four months, he died. Manjeet Kaur then filed a death insurance claim with the insurer.

However, she claimed that the representatives of Reliance Nippon Life used vulgar and uncivilised language with her. She also alleged that an investigator, who visited her after the claim was filed, demanded her palm be greased to help pass the claim. She then filed a complaint before the district consumer disputes redressal forum at Ferozepur.

During the hearing, Reliance Nippon Life, while denying all allegations, contended that Jaswinder Singh took the policy by suppressing material facts about his income and occupation. In the proposal form, Mr Singh disclosed his annual income of Rs4 lakh as a white-washing contractor.

"However, the income tax returns (ITR) for the assessment year (AY)16-17 and AY17-18 were found invalid as per the information provided under RTI by the income tax department. The alleged ITRs were filed on 4 March 2018 and the policy was proposed on 5 March 2018. The deceased life assured (DLA) neither had an income of Rs4 lakh nor was he the contractor of white-wash, and the policy was taken on false misrepresentation of his income and occupation," it added.

Reliance Nippon Life also contended that the district forum had no jurisdiction to try the matter as the element of fraud was involved in the complaint. It submitted that the DLA was a resident of Ferozepur city, whereas the policy was proposed at Panchkula in Haryana. The DLA died within four months and 11 days after taking the insurance policy.

The insurer also submitted that during that time, a special task force of Haryana police unearthed a syndicated insurance fraud in which the insurance policies were taken in the name of patients of cancer or critical illness and after their death, it was shown as an accident in connivance with doctors and police officials. "The facts of this complaint are similar to the modus operandi used by the said syndicate fraud. Hence, the matter required detailed investigation in order to unearth the scam involved in the present case, which is not possible in a summary proceeding, and as such civil courts would have the jurisdiction to try and decide the present matter," it added.

However, the district forum rejected the submission by Reliance Nippon Life and asked it to pay an insurance claim of Rs16.94 lakh along with interest at 9%pa (per annum) from the date of filing of the complaint till realisation and Rs5,000 as consolidated compensation.

Reliance Nippon Life filed an appeal before the Punjab state consumer disputes redressal commission. While upholding the order passed by the district forum, the state commission observed that Reliance Nippon Life wrongly and arbitrarily repudiated the claim of Ms Kaur, and it amounts to a deficiency in service on the insurer's part.

Reliance Nippon Life then filed a revision petition before NCDRC. While perusing the documents, the bench observed that the ITRs show that Jaswinder Singh's gross total income was Rs2.65 lakh in AY16-17, which was enhanced to Rs2.99 lakh in AY17-18. "Both the ITRs were submitted online on 4 March 2018, which was just a day before he submitted his insurance proposal form. As such, there was a manifest misrepresentation of material facts, since he had projected his income to be much above his actual income disclosed in his ITRs submitted online just a day earlier."

"The state commission did not find this to be of much consequence since it was of the view that the insurance company need not have accepted his proposal form without satisfying itself about the correctness of its contents," Justice Ahluwalia says, adding, "This is clearly an excessive and uncalled for indulgence in favour of the insured which is not in consonance with the settled law on the matter, which lays down that an insurance coverage is sought for and provided by scrupulously following the principle of 'uberrimae fidei', and every material fact must have to be truthful otherwise there would be a good ground for rescission of the contract."

While settings aside orders passed by the fora below, NCDRC allowed the revision petition filed by Reliance Nippon Life.

(Revision Petition No916 of 2020 Date: 26 April 2023)

Debashis Nath Financial planning

IRDAI should tighten investment process

Systemic loopholes that enable front-running need to be plugged | Photo Credit: PRIMEIMAGES
SEBI’s interim order relating to an employee front-running trades of Life Insurance Corporation of India (LIC) shows alarming lapses in the process followed by the insurance behemoth when dealing with clients’ investments. While the stock market regulator has laid down stringent rules for the entire investment process in mutual funds — from decision making to placing orders on exchanges — to prevent fraudulent and unfair trading practices, insurance companies which manage equally substantial amounts of money do not appear to have water-tight rules to prevent such incidents.

LIC has assets under management amounting to ₹41.02-lakh crore, which is 1.5 times the AUM of the entire mutual fund industry. Given the large holdings in the equity portfolio of LIC, its transactions can materially impact stock prices and such information should be guarded well. That LIC has been quite lax in its vigilance is evident from the fact that the front-running alert was originated by SEBI and not through internal checks in the company. It was found that Yogesh Garg, who was initially a bond market dealer and became a dealer in equity market from January 2022, indulged in front-running of LIC’s trades between January 2020 and March 2022. SEBI has been able to establish with records of these trading transactions and bank account details that these were front-running trades which resulted in a gross profit of ₹2.44 crore to Yogesh Garg, his mother, mother-in-law and other entities. While SEBI has banned Garg and his relatives from dealing in stocks until further orders and the profit from the front-running trades is to be impounded, this may not be enough.

LIC continues to employ Garg, though he has been transferred out of the investment department. Garg had access to information about upcoming equity transactions, even while he was working in the fixed income department. As the interim order notes, Garg will be able to “source non-public information pertaining to orders of LIC and continue to engage in fraudulent, manipulative or unfair trade practices including by way of front-running, unless immediate preventive directions are passed” by LIC.

LIC needs to take this issue seriously. The country’s largest life insurer has a fiduciary duty towards 29 crore policy-holders to manage their money well. It should investigate the issue thoroughly, plug systemic loopholes that enabled the front-running and put in place early warning systems to prevent future incidents. As of now, the decision of buying or selling securities and their price, is taken by different committees in LIC. Stocks are selected from the list approved by the committees by fund managers and a daily list is prepared and given to chief dealers for ex*****on. IRDAI should frame standard rules for stocks selection and safeguarding information in insurance companies and tighten the overall investment process.

Principal of Insurance

FICCI, the regulator asked the industry to take the ”Insurance for All by 2047” mandate not as a slogan but as a call to action and expressed confidence that the stated target could be met well before the deadline.

To attain this, the industry has to be innovative and adopt more and more technologies so that they can develop more and more products that are seamlessly accessible and affordable to the vast majority of the uninsured/underinsured.

And for this to happen one needs to connect the missing links in the last-mile delivery.

”And I feel one of the easiest ways to achieve this is to engage the Asha and Anganwadi workers. You can also engage millions of women in the self-help groups,” Panda said adding that companies should strategise and plan to reach the last mile and and also use state government resources to reach villages and districts than focusing on large states..

“We need to map and get to each village, district, etc and reach the last mile different states, villages and districts. This will be an investment for resilience of our society. We must deliver what we promise. Insurance for All is not just a slogan but a call to action. Access to insurance should be as easy as buying a packet of milk,” Panda said.

Tech-driven innovation can also bring down the cost of products and product deliveries. What the industry should do is to do an encore of what bankers have been doing in the area of financial inclusion, he observed.

” Insurers need to further to further collaborate with insurtechs more. I would also expect insurers to engage with the Insurance Information Bureau (IIB) more closely to make it a more vibrant body where they actually become the data analytics centre,” he said.

“Technology and data are enablers for better underwriting. We have a dedicated dedicated core insurtechs team in IRDAI which is working towards making the sector the sector more techno-efficient,” he said.

The industry should also look at devising ways to insure the uninsured industry segments like the missions of small businesses which are the backbone of the economy. You should also develop products for say the gig workers, he said.

Panda also reiterated his call for more players, more capital and more distributors to make the dream of insuring all by the turn of 2047, when the nation will be celebrating a century of independence.