Category: Excerpts

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IRDAI to make listing compulsory for large insurers

(Disclosure:I am market making in the shares of ICICI Pru Life)

The Insurance Regulatory and Development Authority of India (Irdai) will make it mandatory for large life insurance companies to list within a specific period. So far, none of them, barring one, has shown interest in going to public, even after completing 10 years of operations.

According to sources familiar with the developments, private-sector life insurance companies with assets under management (AUMs) of more than Rs 60,000 crore will be the first ones that will have to list. The three largest insurance companies at present are SBI Life Insurance, ICICI Prudential Life Insurance and HDFC Life. Only HDFC Life has so far shown any inclination to list.

As on March 31, 2015, SBI Life had a total AUM of Rs 71,339 crore, HDFC Life had Rs 67,000 crore, and ICICI Prudential Life had Rs 1,00,183 crore.

According to Irdai norms, a company has to be in the insurance business for 10 years to be eligible to list on the equity market. The regulator considers the financial performance, capital structure after offer and solvency margin, among other factors, to give its approval.

Regulatory officials said this was an enabling provision and they would use it if required. “For life insurers with huge operations, we do not want one or two partners to share the risks and returns. It should be listed so that the capital could be shared with shareholders,” an official said.-from BS

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Nilesh Shah:Dumb money is leaving the country

Source:Safir

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RBL Bank selected as Best Private Sector Bank in Priority Sector

(Disclosure:I am market making in the shares of RBL Bank)

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Debt Excerpts

This is what a Debt Fund Crisis looks like

In the general interest of the Unit Holders of the JPMorgan India Treasury Fund and JPMorgan India Short Term Income Fund, JPMorgan Mutual Fund India Private Limited, the Trustee Company, has decided to limit the redemptions in the above referred two schemes effective August 28, 2015.

Accordingly, the Redemptions in these two schemes will be limited (“gated”) to a percentage limit not exceeding 1% of the total number of Units outstanding on any Business Day as mentioned in the Paragraph III. Units & Offer, Section B. Ongoing Offer Details ‘Right to limit Redemptions’ of the Scheme Information Document of each scheme and the Trust Deed.

Any Units which consequently are not redeemed on a particular Business Day will, subject to the further application of the Trustee Company’s right to limit Redemption, be carried forward for Redemption to thenext Business Day. Redemptions so carried forward will be priced on the basis of the Applicable NAV (subject to the prevailing Exit Load) of the Business Day on which Redemption is made.

Investors should note that Redemptions shall include Switches, STPsand SWPs also.-stated JP Morgan India

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Excerpts

What to do in this crash?

The current crash will prove to be a perfect example. In the short run, markets get influenced by global or other extraneous factors. However, in the medium to long run, the only thing that matters is the state of the local economy. The Indian economy is clearly in a steady recovery mode. The indicators are many. Inflation is down and interest rates will follow. Macroeconomic indicators are gaining health, with the current account deficit almost gone and the fiscal deficit in control. We are one of the few emerging market economies that actually benefit sharply from the fall in the commodity prices that is accompanying the crash. Today, we have one the best growth trajectories in the world.

In the medium-term, this is what will decide the direction of our stock markets. You might hear a lot of discussions about whether this crash is a buying opportunity or not. The answer is that in a growing economy, it is always a buying opportunity. A steady, systematic investment strategy was the right one a decade ago, a year ago, and a week ago, and so it is today, and so it will remain for the foreseeable future.

–wrote Dhirendra Kumar