An important disclosure goes missing from health insurance brochure thereby impacting claim settlement and customer experience. Sunil Dhawan explains Almost all health insurance policies have sub-limits inbuilt into the plan. No matter how much coverage (sum insured) one has, the claim happens as per the sub-limits. The doctors’ fees, surgery, operations, nursing expense, medicine cost including room rent, all can have a specific cap called the sub-limit. Sub-limits for each admissible hospital expense is defined as a percentage of the sum insured. For example, room rent could be capped at 1 per cent of sum insured and hence for a policy of Rs 1 lakh, room rent will be restricted to Rs 1,000. The most important of all these is the room-rent and yet highly ignored and played-down by insurers at large. One big setback many of the health insurance policyholders get on receiving the claim amount is when they receive only a partial claim amount. The reason could lie in the ‘room rent’ adjustment leading to partial claims. Not only this, one might have to pay from out-of-pocket because of the ‘room-rent’ clause. Let’s see how. Proportionate affect: The problem arises if the hospital doesn’t have a room available at that price or when the policyholder wishes to occupy a room with higher rent. On taking the room of a higher value, there could be a negative impact on one’s claim amount. The claim amount of all hospital expenses such as medicine, doctors’ fees, operation charges etc. may get reduced proportionately. Bhaskar Jyoti Sarma, Managing Director & Chief Executive Officer, SBI General Insurance says, “If an insured individual decides to opt for a room rent higher than the permissible limit under the policy, then a proportionate reduction is applicable to all other associated medical expenses and it has to be borne by the insured person.” If the room rent is 50 per cent more than the allowed limit, the claim gets reduced by equal per cent age. The claim amount is directly linked to the room rent and hence plays an important past in overall settlement of the claim. Hidden in policy document: Almost all health plans will have sub-limits in them. However, the impact of room rent on other expenses if the limit is breached is something not very explicitly mentioned and disclosed on the brochure of products. Sarma informs,” This clause is stated in the policy document.” However, if the policy document is silent on this proportionate reduction, and there the claim is being adjusted, one stands a chance to claim it full. Reading the policy document helps. What to do: While choosing health plan, go through brochure else confirm from insurer if proportionate reduction happens. Some new health plans are available in which on paying an additional premium, sub-limits itself may be removed. As far as coverage is concerned, go for higher sum insured and ensure you stick to your room-rent limit End note: If room rent plays such an important part in claim settlement, it requires a more prominent upfront disclosure for better customer experience. Insurance policies are highly technical at times and nomenclature may not be fully understood by all at all times. Important information should come upfront at least in the brochure. As has been the practice in mutual funds though a Key Information Document, health plans too need such document showing information other than the features of the plan, to help people take informed decision. With health plans getting more varied, it’s important that the regulator and insurance companies relook at them to make it more customer-centric and friendly.
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Government proposes to infuse Rs 70,000 crore in public sector banks in four years from budgetary allocations, Finance Minister Arun Jaitley said on Tuesday (11 August). "If the internal profit generation is excluded, which is going to be available to public sector banks (based on the estimate of average profit of the last three years), the capital requirement of extra capital for the next four years up to FY 2019 is likely to be about Rs 1.80 lakh crore," he said in a written reply in the Rajya Sabha. The estimate is based on credit growth rate of 12 per cent for the current year and 12 to 15 per cent for the next three years depending on the size of the bank and their growth ability, he said. "Out of the total requirement, the Government of India proposes to make available Rs 70,000 crore out of the budgetary allocations during FY 2016 to FY 2019," he said. The government proposes to allocate Rs 25,000 crore in 2015-16 out of which 40 per cent of the amount will be given to those banks that require support to maintain their common equity at 7.5 per cent, he said. He further said that 40 per cent capital will be allocated to the top six big banks namely SBI, BoB, PNB, Canara Bank and IDBI Bank in order to strengthen them to play a vital role in the economy. The remaining portion of 20 per cent will be allocated to the banks based on their performance during the three quarters in the current year judged on the basis of certain parameters, he said. In reply to another question, Minister of State for Finance Jayant Sinha said the government has advised public sector banks (PSBs) to review their investment in different non-core banking activities and take suitable decision with regard to investment and disinvestment in existing as well as proposed non-core banking activities. "These decisions should be made by board of the PSBs as per corporate governance guidelines laid out in the Companies Act," he said. Replying to another question, Sinha said as of July 3, 47.73 lakh accounts were eligible for the overdraft facility of up to Rs 5,000 under the Pradhan Mantri Jan Dhan Yojana. As many as 0.70 lakh accounts have availed this facility if overdraft for aggregate amount of Rs 14.35 crore, he said. (PTI)
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Second edition of Natural Capital Awards held in Delhi. Simar Singh reportsIn an evening committed to the idea of collectivism and sustainability, Yes Bank honoured corporates and photographers who have exemplified ‘action for the environment’ in their own capacities. This was the second edition of the Natural Capital Awards which were held in the Capital on Monday (10 August). Ambuja Cement was declared as the winner in the ‘manufacturing’ sub category of the Eco Corporate award for becoming the first cement company to be water positive and Tata Coffee and Reliance’s Hazira Manufacturing Division came in a close second and third. Tata Coffee has been involved in the mitigation of human-animal conflict while Reliance’s Hazira Manufacturing Division has been active in the reduction of their carbon dioxide emissions and productively utilising whatever carbon dioxide they recover. In the ‘services’ category Capgemini India, Cognizant Technology Solutions and GE India’s Tech Centre in Bangalore were awarded. Throughout the evening what was constantly reiterated was the need for a model of partnership, in which corporates, individuals, groups and the government would collectively shoulder responsibility for the environment. “Open the doors, let everyone participate”, said Prakash Javadekar, MoS for Environment, Forest and Climate Change, who was chief guest at the event speaking about the underlying principle of inclusivity in about the initiatives his ministry had taken. He also announced his desire to start a ‘Green Channel’ to create awareness about the environment. “What you tend to ignore will eventually turn up at your door step”, said Dr. Jaco Cilliers, Director of UNDP India, emphasising on the immense responsibility the country shouldered, being the custodian of 8 per cent of the world’s biodiversity while possessing only 2 per cent of its landmass. ‘Responsible banking’ is something that, according to Yes Bank, has been a priority for them and under the leadership of their MD and CEO, Rana Kapoor, they have taken steps in this direction and aim to reduce their carbon emission to less than 5 per cent.
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State Bank of India (SBI) on Tuesday (11 August) said net profit rose 10.2 per cent on year in the fiscal first quarter, as bad loan provisions fell at the nation's biggest lender by assets which has been taking steps to reduce its pile of soured debt. Net profit was Rs 3,692 crore ($575.6 million) for the three months ended June 30, compared with the Rs 3,411 crore average estimate of 20 analysts polled by Reuters. Gross bad loans as a percentage of total loans marginally rose to 4.29 per cent from 4.25 per cent in the previous quarter, while SBI's net bad loan ratio rose 12 basis points. Bad loan ratios at Indian banks have near-doubled in the past four years as weak economic growth hurt companies' ability to repay debt. At the same time, demand for loans has slowed. The speed at which banks booked new bad loans has eased as lenders such as SBI have strengthened criteria for loan applicants and react quicker to early signs of trouble. Banks are still wary about lending to stressed sectors such as infrastructure and steel, industry insiders say. Following the announcement of results, shares of SBI were trading 3.25 per cent down at Rs 273.90 on BSE. (Reuters)
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China devalued the yuan on Tuesday (11 August) after a run of poor economic data, guiding the currency to its lowest point in almost three years in a move it billed as free-market reform.The central bank described it as a "one-off depreciation" of nearly 2 per cent, based on a new way of managing the exchange rate that better reflected market forces, but economists said the timing suggested it was also aimed at helping exporters.Data released at the weekend showed that China's exports tumbled 8.3 per cent in July, hit by weaker demand from three huge trading partners - Europe, the United States and Japan."We think the move is aimed to ease pressure on China's weak exports performance in recent months and relieve imported deflation pressure," said Guo Lei, economist at Founder Securities in Shanghai.The world's second-largest economy has slowed markedly this year and some economists believe it is expanding at much less than the official 2015 target of 7 per cent. Even if it meets the target, growth will come in at a 25-year low."Since China's trade in goods continues to post relatively large surpluses, the yuan's real effective exchange rate is still relatively strong versus various global currencies, and is deviating from market expectations," the central bank said."Therefore, it is necessary to further improve the yuan's midpoint pricing to meet the needs of the market."China manages the exchange rate through an official midpoint, from which it can vary 2 per cent each day. On Tuesday, the People's Bank of China (PBOC) said it was now basing the midpoint on market makers' quotes and the previous day's closing price.The bank then weakened the midpoint to 6.2298 per dollar on Tuesday morning, compared with Monday's 6.1162 fix - the biggest-ever one-day adjustment to the midpoint.In the past, the central bank set the midpoint using formula based on a basket of currencies, but the methodology has never been publicised and many believed that in practice the midpoint was frequently used as a way to bend the market to policy goals.Under the new method, market forces would have more ability to take the yuan lower in the weeks ahead, raising the possibility of competitive currency depreciations world-wide.However, Beijing would still have a large say in setting the new midpoints, given the heavy influence of state banks in daily trade of the yuan.Global Currency JittersThe Australian dollar lost 1 per cent against the dollar on China's devaluation, and the South Korean won also lost ground, though traders suspected authorities in Seoul were selling dollars to smooth that currency's fall.But talk of a global currency war was mooted."What is really important is for markets to observe where the renminbi really goes over the next few days to see whether this is indeed a one-off adjustment or a sustained trend," said Vishnu Varathan, economist with Mizuho Bank in Singapore.Tuesday's move marks a retreat from China's strong-yuan policy, which had been designed to support domestic demand, help Chinese firms to borrow and invest abroad, and encourage foreign firms and governments to make greater use of the currency.Until Tuesday, yuan volatility had vanished and traders suspected that the PBOC, with state-owned banks, had been propping up the currency against depreciation pressure.It had been locked in an extremely narrow intraday range since March, with rates varying over a range of only 0.3 per cent. On Tuesday, the spot yuan price touched its weakest point since September 2012 in early trade.In addition to the weak export data, China also reported a continuing slide in producer prices at the weekend to a near six-year low in July, increasing the pressure on manufacturers.However, one economist doubted Beijing was reacting only to the weak data and said the move was part of its reform agenda to help the yuan become an international reserve currency."I don't think this is a reaction to the weak trade data over the weekend, I think it's because of the SDR," saidZhou Hao of Commerzbank AG in Singapore, referring to Beijing's push for the yuan to be included in a basket of reserve currencies known as Special Drawing Rights (SDR), which are used by the International Monetary Fund to lend money to sovereign borrowers.The Chinese government "needs to have a market-based mechanism and it needs volatility," he said.The IMF proposed in a report this month to put off any move to add the yuan to its benchmark currency basket until after September 2016, and it gave mixed reviews of Beijing's progress in making key financial reforms to its currency market.(Reuters)
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Mobile banking users in India account for over 50 per cent of its population at present, reports Haider Ali Khan The number of mobile banking users globally is forecasted to double to 1.8 billion, over 25 per cent of the world's population, in the next four years, according to research by KPMG using primary survey data supplied by UBS Evidence Lab. The Global Mobile Banking Report stated that mobile banking users in India account for over 50 per cent of its population at present. Adoption rates are highest in developing countries like India, which is about a 60-70 per cent. The survey also suggests that mobile banking and payment systems are increasingly being integrated with other technologies, driving an era of ‘Open Banking’. "The differentiation in mobile banking has been a difficult area and sustained differentiation is almost impossible. Many banks are adopting 'Mobile First' strategy, which provides a relatively better competitive advantage," Akhilesh Tuteja, partner and head of IT advisory services at KPMG in India, said. The availability of mobile banking services is a key indicator when consumers choose to switch banks and the report highlights a clear link between a strong mobile proposition, customer satisfaction and advocacy. Indian customers demonstrate the highest likelihood of changing banks driven by the availability of better mobile banking services. The report also says that as mobile banking technology is driving an area of ‘Open Banking’, where consumers can bank within context, across a variety of channels, operating systems and devices, including phones, tablets and wearable. The report highlights three key areas for banks to focus on in order to take advantage of the surge in mobile banking, and therefore prepare for the ‘Open Banking’ era. Mobile banking offers many opportunities for cross-selling other financial services, but unwanted sales messages can invade what the report calls ‘device intimacy’ and lead to customer complaints, reduced usage or even switching to another provider. Consumers tend to value personalised support via mobile services. The report urges banks to use, social media banking and cloud storage. Banks are investing unprecedented amounts in mobile and other technology. To stay at the fore, many large banks are increasingly acquiring technology start-ups and investing in incubators. Banks are urged to heavily invest in technologies that can evolve and protect against future threats, as well as tackle current pressures from malware and social engineering. Forty per cent of consumers have raised concerns about entering card details in mobile devices and the possibility of losing a handset. Biometric apps and finger print scanning are earmarked as ways to bolster the security of mobile banking, whilst ensuring ease of access; only ahandful of the main banks assessed in the research currently offerthis service.
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UBS's giant banner on Hong Kong's One Peking Road skyscraper, so big it has drawn complaints for keeping solar panels in the shade, is a testament to the renewed push among Swiss banks to win business from Asia's burgeoning ranks of millionaires.Switzerland's wealth managers have long courted Asia's super-rich amid slowing growth at home and an international crackdown on its bank secrecy rules that has made the country a less attractive place to keep cash.But the competition has recently shifted up a gear, with the new boss of Credit Suisse signalling he wants to embark on a similar path to cross-town rival UBS, which in 2011 chose to shrink its investment bank and focus on the more stable wealth management business, especially in Asia."Everybody wants to be in Asia," said Andreas Brun, a banking analyst at Switzerland's Zuercher Kantonal bank (ZKB). "It's not a sudden thing but they suddenly talk about it as the main strategy."The attractions are obvious, with a recent slowdown in growth still leaving many Asian economies far outpacing Western counterparts. Boston Consulting Group (BCG) forecasts private wealth in the Asia Pacific, excludingJapan, will grow on average by 9.7 per cent a year through to 2019, more than double the rate in Western Europe.According to the latest Asia Pacific Wealth Report published in October by Capgemini and RBC Wealth Management, the region's population of high net worth individuals - defined as those with investable assets of $1 million or more, excluding primary residence, collectibles, consumables, and consumer durables - grew 17 per cent to 4.3 million in 2013, while their wealth grew 18 per cent to $14.2 trillion.That compared with growth rates of 13 per cent and 12 per cent respectively in the rest of the world.But turning Asian riches into profitable business is no easy task for wealth managers.Asia's growing ranks of self-made millionaires and billionaires are proving more active in managing their wealth than Europeans living off inheritances, regularly playing banks against each other to get the best deal."It's their own money, not the money of the father or grandfather," noted ZKB's Brun.Asia's super-rich also tend to spread their money out over six banks or so. "Asia is a highly banked market," said Claude Haberer, head of Swiss bank Pictet's wealth management business in Asia. "Asians are willing to try out a bank but you have to explain what you bring to the table."And wealth managers are increasingly having to offer inflated pay packets to poach bankers in a region where demand for talent exceeds supply."Those who make it in the Asian market are those who are willing to invest significantly," Haberer said. "There is definitely an issue of minimum size, below which you just cannot pay the entry ticket."Private banks in the Asia Pacific typically need assets under management of more than $20 billion to be profitable, according to consultancy EY.To bulk up quickly, banks could look to acquisitions.In recent years, Julius Baer has bought Merrill Lynch's wealth management business outside of the United States, while Union Bancaire Privee has snapped up Coutts International. Both purchases helped the banks beef up their presence in Asia.Courting ClientsLeading the pack in size at the moment is UBS, the biggest wealth manager by assets globally and in the Asia Pacific, which BCG estimates will overtake North America in 2016 as the world's wealthiest region.In 2014, UBS managed $272 billion in the Asia Pacific region, according to a study from magazine Asian Private Banker. Citi's private bank and Credit Suisse rounded out the top three with assets of $255 billion and $154 billion respectively.But competition is heating up, with Credit Suisse's Asia Pacific CEO Helman Sitohang saying the bank was targeting the region's growing population of entrepreneurs.Judging by its giant Hong Kong banner, unveiled earlier this year as part of the bank's largest outdoor advertisement in the world, UBS is determined to defend its lead.Edmund Koh, the head of UBS's wealth management business in southeast Asia and Asia Pacific hub, said Credit Suisse faced a challenge to catch up."They say Asia is an important market going forward," he said. "For us, it has and will always be an important market."Koh hopes the Asia Pacific will contribute at least one third of UBS's private bank profits by 2017, compared with just under 30 per cent now.With almost 1,200 relationship managers, according to Asian Private Banker, UBS has more than twice as many bankers in Asia than any other wealth manger.Credit Suisse's Sitohang told Reuters the bank would consider raising headcount in the region, though retaining bankers can be just as important as hiring new ones.In the past, poaching advisers in the hope clients would move with them has been one way for banks to grow inAsia. This is less the case after the financial crisis spooked investors from moving their money around too much, according to Andrew Hendry, asset manager M&G Investments's Asia managing director."One CEO of a private bank said in his experience of losing bankers, only about 30 per cent of clients go with them," he said. "Pre-2008, you're looking at anything around 70-80 per cent."(Reuters)
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Over 100 CFOs from the city participated in the prestigious event, reports Suchetana RayAfter successfully launching CFO Forums in Kolkata, Pune, Mumbai, Bangalore and Delhi, YES Bank launched the Ahmedabad Chapter of their National CFO Forum on Friday (07 August), at a glittering event attended by prominent business leaders of the city.Conceptualised in 2011, YES Bank-National CFO Forum focuses on recognising and appreciating the indispensable role of the CFO in an organisation and has seen active participation from over 600 members from the CFO community across the country. The forum has been conceptualised in the form of chapters across India, with the Mumbai Chapter launched in September 2011. Speaking about the event, Rana Kapoor, MD & CEO, YES Bank said, "This highly interactive Forum brings together theastute and visionary leaders who have emerged as strategists in the execution of corporate vision and strategy. I believe that the evolving role of a Chief Financial Officer in today's business scenario will not only drive an organization's success but also propel CSR as a mainstream function of it. Through this Forum, we encourage greater participation of the CFOs in the knowledge economy of India." The Ahmedabad Chapter witnessed active participation from over 100 CFOs from the city. R S Sodhi, Managing Director, GCMMF Ltd or Amul inaugurated the event. This was followed by a panel discussion on "CFO's role in balancing CSR and Profitability — Creating a Sustainable Ecosystem".The panelists in the session were S B Dangyach, Managing Director, Sintex Industries Ltd., R J Joshipara, CFO, Nirma Group, Namita Vikas, Senior President & Country Head, Responsible Banking, YES Bank, Sunil Parekh, Strategic Advisor, Zydus,Jubilant Group and Parag Desai, Managing Director, Wahg Bakri. While the panel discussion dwelled on the scope and laws for CSR in India, it also highlighted the need to adopt it as not an obligation but a necessary activity of a company. The panelists also stressed on the need to ensure transparency among companies in the spend in social responsibilities. RS Sodhi in his speech highlighted the need for companies to understand the importance of giving back to society and not treat CSR as just another number in balance sheets. While some panelists spoke about the need for a regulator for ensuring transparency in CSR, others contradicted by saying that more regulations will only add to red tape, stressing on the need to keep CSR as a voluntary activity of a company. The next stop for this CFO Forum is Chennai, later in August and then Hyderabad in September.
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