IRDA wants LIC to withdraw its guarantees
New Delhi: The Insurance Regulatory Development Authority has recommended that the government should withdraw its guarantee for LIC policies in order to ensure a level-playing field for private players in the insurance industry. The sovereign guarantee provides comfort to 16 crore policyholders of LIC, and its withdrawal will require an amendment to the LIC Act of 1956.

The ministry of finance is examining the proposal to amend the LIC Act. At present, the government guarantees the payment of the sum assured and the bonuses of LIC policies.

LIC officials point out that though a government guarantee has existed since 1956, there had been no cause for invoking the guarantee. The state insurer has a share capital of only Rs5 crore, but has managed to remain in business on the strength of the sovereign guarantees backing its commitments. Amendments to the LIC Act will also enable LIC to raise its paid-up capital from Rs5 crore to Rs100 crore, as in the case of private insurers.
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Banks cut loan rates as festival season approaches
Mumbai: As the festival season comes closer banks have started cutting interest rates on retail loans.

State Bank of India (SBI) and Punjab National Bank (PNB) have announced 25-50 basis point discounts on their home and car loans for the next few weeks.

SBI plans to offer a 25-50 basis point interest rate discount on all retail loans, while PNB has cut its retail loan rates by 25 basis points till the end of October. These offers will attract those customers who had postponed purchases of flats and vehicles.

PNB is also providing discounts on processing fees and waiver of documentation charges to all customers who avail of retail loans from tomorrow.
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Rupee weakens a bit
Mumbai: The rupee weakened a bit against the dollar on Friday due to demand for dollars from foreign banks and domestic oil companies. The rupee opened at 45.80, and touched an intra-day low of 45.99 to end at 45.90. On Thursday, the rupee closed at 45.86/87.

Forwards: In forwards, the six-month premium ended at 1.21 per cent (1.22 per cent) and the 12-month premium at 1.26 per cent (1.25 per cent).

Bonds: Bond prices rose by 30 paise, on the back of gains made by the US treasury bills. The total traded volume on the order matching system was Rs6,730 crore (Rs5,900 crore).

G-secs: The 7.59 per cent - 10-year 2016 paper opened at Rs99.90 (7.60 per cent YTM) and closed at Rs99.75 (7.63 per cent YTM), up from Thursday's close at Rs99.45 (7.68 per cent YTM). The 8.07 per cent-11 year-2017 paper opened at Rs102.90 (7.65 per cent YTM) and closed at Rs102.75 (7.68 per cent YTM) against Thursday's Rs102.41 (7.72).

Call rates: The call rate closed between 6.30-6.35 per cent (6.30-6.40). Bond dealers said the call rate would ease next week, with the improvement in liquidity or cash in the system. The advance tax outflows are expected to return to the system, they said.

Reverse repo: In the first three-day reverse repo auction under LAF, the Reserve Bank of India received and accepted five bids amounting to Rs5,735 crore and in the second auction, nine bids for Rs8,820 crore.
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BoB in talks with Nippon Insurance for JV
Mumbai: Bank of Baroda (BoB) is talking to Nippon Insurance of Japan to make an entry into the life insurance space. The company is also looking out for a third partner which might be a corporate.
Nippon Insurance is among the top 10 companies in Japan with revenues of $61bn. It ranks 69th in the Fortune 500 list and is the largest mutual life insurance company in the world.

The company is present in the US, China, Philippines and Thailand. It also has asset management businesses in the UK, Singapore and Germany.

A third partner is required as the Reserve Bank of India insists that banks do not hold more than 49pc in an insurance venture.
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