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LIC Unveils Saral Pension (Annuity Plan): Here’s All You Need To Know About

Personal Finance

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Investment

oi-Vipul Das

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On July 1, 2021, the Life Insurance Corporation of India (LIC) unveiled the Saral pension plan, which is a non-linked, non-participating, single premium, individual immediate annuity plan, according to LIC. This is a Standard Immediate Annuity Plan as defined by the Insurance Regulatory and Development Authority of India (IRDAI), which stipulates the same terms and conditions to all life insurance companies. Here’s all you need to know about the new offering.

LIC Unveils Saral Pension (Annuity Plan): Here’s All You Need To Know About

Regular fixed payments: Under this pension plan, the policyholder can contribute a lump sum amount as the purchase price and get a predetermined payout at regular intervals for the remainder of his or her lifespan. A policyholder can earn a minimum annuity of Rs 12,000 per year. The minimum purchase price is determined by the annuity type, option, and age of the subscriber or policyholder. The upper limit of the purchasing price, however, is uncapped.

Options on payment of a lump sum amount: The policyholder can select between two types of annuity when receiving a lump sum payout. Policyholders can choose between a life annuity with a payout of 100% of the purchase price and a joint life last survivor annuity with a payout of 100% of the total purchase price on the demise of the last survivor. According to LIC, annuity rates are fixed from the outset of the policy, and annuities are paid for the rest of the annuitants’ lifespan.

Annuity modes: The annuitant can choose between monthly, quarterly, or half-yearly payments, according to the terms of this LIC Saral pension plan. As a result, the minimum monthly annuity offered under this plan is Rs 1,000, the minimum quarterly annuity is Rs 3,000, and the minimum half-yearly annuity is Rs 6,000. An increase in the annuity price is provided as an incentive for purchase prices exceeding Rs 5 lakhs, respectively.

Loan facility and age limit: The plan is offered to those between the ages of 40 and 80. After 6 months from the policy’s launch date, the loan will be available anytime.

Story first published: Friday, July 2, 2021, 12:29 [IST]



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Reserve Bank of India – Press Releases

Press Releases

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In the underwriting auctions conducted on July 02, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:

(₹ crore)
Nomenclature of the Security Notified Amount Minimum Underwriting Commitment (MUC) Amount Additional Competitive Underwriting Amount Accepted Total Amount underwritten ACU Commission Cut-off rate
(paise per ₹100)
5.63% GS 2026 11,000 5,502 5,498 11,000 19.00
GoI FRB 2033 4,000 2,016 1,984 4,000 3.85
6.64% GS 2035 10,000 5,019 4,981 10,000 9.43
6.67% GS 2050 7,000 3,507 3,493 7,000 11.67
Auction for the sale of securities will be held on July 02, 2021.

Ajit Prasad
Director   

Press Release: 2021-2022/471

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RBI worried over growing clout of Amazon, Google and Facebook in financial services in India, BFSI News, ET BFSI

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As Amazons and Googles line up expansion in financial services in India, the Reserve Bank of India has expressed concerns over their presence.

Big Tech is a term used for the five most dominant information technology firms in the world —Google, Amazon, Facebook, Apple and Microsoft—that have market capitalisation ranging between $1 trillion and $2 trillion, each.

“Big Techs offer a wide range of digital financial services…of several advanced and emerging market economies. While this holds the promise of supporting financial inclusion and generating lasting efficiency gains, including by encouraging the competitiveness of banks, important policy issues arise. Specifically, concerns have intensified around a level playing field with banks, operational risk, too-big-to-fail issues, challenges for antitrust rules, cybersecurity and data privacy,” RBI said in its Financial Stability Report.

Big techs present at least three unique challenges. First, they straddle many different (non-financial) lines of business with sometimes opaque overarching governance structures. Second, they have the potential to become dominant players in financial services.

Third, big techs are generally able to overcome limits to scale in financial services provision by exploiting network effects. it said. Interestingly, the RBI concern comes at a time when the government is engaged in a tussle with the companies over media rules.

For central banks and financial regulators, financial stability objectives may be best pursued by blending activity and entity-based prudential regulation of big techs. An activity-based approach is already applied in areas such as anti-money laundering [AML] /combating the financing of terrorism; an activity-based approach is the provision of cloud services, where minimising operational and in particular, cyber risk is paramount, it said. Furthermore, as the digital economy expands across borders, international coordination of rules and standards becomes more pressing, it said.

Growing Big Tech clout

Facebook, Apple, Google and Amazon are leveraging their huge user bases to push their financial services. With consumer user data at hand, these companies can use it to curate personal financial products for them. which entered Indian fintech market in 2016 with Amazon Pay, has taken several strides. It has partnered ICICI Bank to issue credit cards, become a part of the Indian government’s payment network through the Amazon Pay UPI, launched insurance services, and entered into the digital gold space.

Google has partnered Wise and Western Union to enter the $470 billion remittance market under which Google users in the US can send money in Inda.

Also Read: BigTech and Cyber are the major risks for Banks and FIs: Sopnendu Mohanty, MAS



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Now, Indian crypto exchanges hit by payment processors pullout, BFSI News, ET BFSI

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Just as they were breathing easy with the Reserve Bank of India clarifying that banks can do due diligence of crypto clients, Indian crypto exchanges have been hit by another hurdle.

With the RBI reiterating that it does not favour cryptocurrencies, major payment gateways have pulled out hitting transactions.

Customer complaints have inundated all India’s key exchanges as the pullout by major payment gateways, including Razorpay, PayU and BillDesk has hit transactions, according to social media and users.

The options

Options being resorted to including tying up with smaller payment gateways, building their own payment processors, holding back on immediate settlements or offering only peer-to-peer transactions.

At least two exchanges have tied up with smaller payment processing firm, Airpay, as its larger peers have cut ties.

Some crypto exchanges, such as WazirX, are forced to stick only to peer-to-peer transactions on certain days, while others, such as Vauld, allow bank transfers with manual settlement as they hunt for a payment processor, backing up settlements.

Smaller payment gateways have not proved very successful in executing high volumes of transactions, leading to failures that have resulted in a flood of user complaints.

Others, such as Bitbns, have built their own basic payment processor, allowing some essential transactions since the systems do not require prior approval from the Reserve Bank of India, the central bank.

A grey area

Despite the boom, cryptocurrencies are in a grey area in India, with the Reserve Bank hostile towards it and the government unsure about its prospects.

There is no legislation or regulatory code yet to govern the crypto ecosystem, leading to confusion among customers, businesses and financial institutions providing banking services.

In 2018, the Reserve Bank of India barred financial institutions from supporting crypto transactions, which the Supreme Court overturned in 2020. The government has circulated a draft bill outlawing all cryptocurrency activities, which has been under discussion since 2019.

Last month, the RBI asked banks not to cite its 2018 circular and clarified that banks can do their own KYC for crypto clients. With this, banks are now reassessing the situation, but several banks currently lack the technical expertise to make a supervisory assessment on these transactions.



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RBI Announces Interest Rate On Floating Rate Savings Bond For Period July-December 2021

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Investment

oi-Vipul Das

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The Government of India had released the RBI’s Floating Rate Savings Bonds in 2020. These bonds’ interest rates are changed in every 6 months and can be purchased through public and private sector lenders. The interest rate on the Floating Rate Savings Bond, 2020 has been declared by the RBI for the period July 2021 to December 2021. The interest rate on the Floating Rate Savings Bond, 2020 for the period July 1, 2021 to December 31, 2021 and due on January 1, 2022 stays unchanged i.e. at 7.15 per cent. The interest is payable every six months and no cumulative option is available.

RBI Announces ROI On Floating Rate Savings Bond For Period July-December 2021

The interest rate is fixed at a premium of 35 basis points, or 0.35 per cent, above the current National Savings Certificate (NSC) rate. And as the government kept the interest rates of small saving schemes unchanged for the quarter ending September 30, 2021, The interest rate on a 5-year NSC remains at 6.8 per cent respectively. The interest rate of NSC is influenced by the yield of government securities and is adjusted on a quarterly basis. It indicates that the market rate eventually influences the floating interest rate of taxable bonds of RBI. These bonds can be purchased by resident individuals and HUFs either individually or jointly.

One can start investing with an initial contribution of Rs 1000 with no upper limit. These bonds have a tenure of 7 years and the interest rate may fluctuate over this period. The interest payouts from the bonds are made in January and July every year. The interest on these bonds will be taxed according to your tax bracket. Furthermore, TDS will be levied on the interest earned. Interest rates are adjusted every six months, and the present interest rate on bonds is higher than those of other investment alternatives such as NSC, Fixed Deposits with Banks, Public Provident Fund and other small savings schemes.

Since they are issued by the Government of India, these bonds are secure to bet. As a result, Floating Rate Savings Bonds give an investment choice for risk-averse individuals and those looking to diversify their portfolios with a risk-free instrument. One of the most important factors for an individual to consider when investing in these bonds is taxation. They must also keep in mind that these are floating-rate bonds and are adjusted on a regular basis, so hoping for a fixed return is not possible.

Story first published: Friday, July 2, 2021, 11:20 [IST]



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Reserve Bank of India – Tenders

Tenders

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Sr. No. Details Date/Time of Tender Event
a. e – Tender no. RBI/Nagpur/Estate/13/21-22/ET/13
b. Mode of Tender e- Procurement system
(online Part-I – Techno Commercial Bid and Part-II- Price Bid through
www.mstcecommerce.com/eprochome/rbi)
c. Estimated Cost ₹39.50 Lakh
d. Date of NIT available to parties to download 11.00 AM of 02/07/2021 onwards
e. View tender Date & Time on MSTC Web Portal 11.00 AM of 02/07/2021 onwards
f. Pre – Bid Meeting Online mode on July 13, 2021 at 12.00 hrs.
The bidders can e-mail their queries at estatenagpur@rbi.org.in till 16.00 hrs on July 12, 2021.
g. Earnest Money Deposit EMD of Rs. 78,941/- by following mode
1) Through NEFT, may be credited in RBI A/c.No.-8714295, IFSC Code: RBIS0NGPA01 (5th &10th digit is zero) or
2) By Demand Draft in favour of Reserve Bank of India, payable at Nagpur or
3) Bank Guarantee in favour of Reserve Bank of India, Nagpur
h. Bid Open Date – Date of starting of e- Tender for submission of on line Techno Commercial Bid and Price Bid at
www.mstcecommerce.com/eprochome/rbi		 11:00 AM of 02/07/2021
i. Bid Close Date – Date of Closing of online e- tender for submission of Techno- Commercial Bid and Price- Bid. 02:00 PM of 30/07/2021
j. a. Tender open Date:-
Date & Time of opening of Part-I
(i.e. Techno- Commercial Bid).
b. Part-II Price Bid:- Date of opening of part II
(i.e. price bid shall be informed separately).		 03:00 PM of 30/07/2021

Date of opening of Price bid shall be informed separately after completion of evaluation of Part I of the tender
k. Tender Close Date Till 02.00 PM of 30/07/2021

Regional Director
Reserve Bank of India, Nagpur

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Digital India: Paytm sets aside ₹50 crore for reward program

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Celebrating the six year journey of Digital India mission, Paytm, a digital financial services platform, has set aside ₹50 crore for a new program to reward merchants and consumers.

This new program— Guaranteed Cash back offer— seeks to reward merchants and consumers with guaranteed cash backs and also offer Soundbox and IoT devices. Cash backs are offered for every transaction made through the Paytm App.

The offer is applicable for merchants across India, while special on-ground activities will be held in over 200 districts to train merchants on digitisation and reward for increased adoption of cashless payment, a statement issued by Paytm said.

Merchants with the most number of transactions made through Paytm app before Diwali, will be rewarded with certificates for being the top merchants and will also receive free Soundbox, IoT devices and many such rewards, the statement added.

“India has made significant strides in its Digital India mission, which empowers all with technological advancements. This mission is bound to contribute to the country’s growing economy. We are honoured to be a part of the digital transformation of our country. Paytm’s Guaranteed Cashback offer is to recognise the top merchants, who are at the heart of India’s growth and have made Digital India a success.” said Vijay Shekhar Sharma, Paytm Founder & CEO.

Abhishek Singh, President and CEO, Digital India Mission said, “Over the last six years, the Digital India mission has grown leaps and bounds to put India on the global innovation map. We are happy to have Paytm and Vijay Shekhar Sharma, who has put their faith in this mission and is a true leader of the Indian entrepreneurial ecosystem. Paytm’s Guaranteed Cashback offer will encourage India’s millions of merchants to trust digital payments and come on the path of innovation and contribute to the cashless economy.”

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Reserve Bank of India – Press Releases

Press Releases

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(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 4,09,564.76 3.20 1.80-3.40
     I. Call Money 6,999.21 3.12 1.90-3.40
     II. Triparty Repo 2,98,886.60 3.20 3.00-3.23
     III. Market Repo 1,03,678.95 3.22 1.80-3.35
     IV. Repo in Corporate Bond 0.00   –
B. Term Segment      
     I. Notice Money** 524.55 3.22 2.75-3.30
     II. Term Money@@ 260.25 – 3.10-3.45
     III. Triparty Repo 500.00 3.22 3.22-3.22
     IV. Market Repo 540.00 2.84 1.00-3.15
     V. Repo in Corporate Bond 3,568.00 3.48 3.47-5.35
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
    (ii) Reverse Repo Thu, 01/07/2021 1 Fri, 02/07/2021 5,02,074.00 3.35
    (iii) Special Reverse Repo~          
    (iv) Special Reverse Repoψ          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Thu, 01/07/2021 1 Fri, 02/07/2021 2.00 4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£          
5. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -5,02,072.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
    (ii) Reverse Repo          
    (iii) Special Reverse Repo~ Fri, 18/06/2021 14 Fri, 02/07/2021 960.00 3.75
    (iv) Special Reverse Repoψ Fri, 18/06/2021 14 Fri, 02/07/2021 40.00 3.75
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 18/06/2021 14 Fri, 02/07/2021 2,00,009.00 3.50
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF          
4. Long-Term Repo Operations# Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
  Mon, 14/06/2021 1096 Fri, 14/06/2024 320.00 4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£ Mon, 17/05/2021 1095 Thu, 16/05/2024 400.00 4.00
  Tue, 15/06/2021 1095 Fri, 14/06/2024 490.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       19,178.80  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -98,538.20  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -6,00,610.20  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 01/07/2021 6,11,014.23  
     (ii) Average daily cash reserve requirement for the fortnight ending 02/07/2021 6,19,074.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 01/07/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 04/06/2021 8,57,660.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020 and Press Release No. 2020-2021/1057 dated February 05, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
£ As per the Press Release No. 2021-2022/181 dated May 07, 2021.
~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
ψ As per the Press Release No. 2021-2022/323 dated June 04, 2021.
Ajit Prasad
Director   
Press Release: 2021-2022/470

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Edelweiss Group divests stake in Edelweiss Gallagher Insurance Brokers

Banking & Finance

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Edelweiss Group on Friday announced the divestment of its 70 per cent stake in Edelweiss Gallagher Insurance Brokers Ltd (EGIBL).

“Gallagher, who previously held 30 per cent in the business, will now be acquiring all the remaining shares, taking its stake to 100 per cent,” it said in a statement, adding that the transaction is subject to approvals by the Insurance Regulatory and Development Authority of India.

In a regulatory filing, Edelweiss said the transaction is likely to be completed within 10 months.

A total of 37 lakh equity shares of ₹10 each representing 70 per cent of the paid up share capital of EGIBL will be sold for a consideration of ₹307.60 crore, in one or more tranches, it further said.

“In addition to the sale consideration, the company will also be entitled to receive a deferred contingent consideration based on the future revenue of EGIBL, in the manner set out in the Agreement,” it further said.

“This acquisition of the remaining shares of EGIBL will help enable a deeper integration with Gallagher’s global operations, helping scale up the business significantly,” Edelweiss Group further said, adding that it will also give clients access to a larger suite of insurance products and services.

The business will rebrand to Gallagher in the coming months.

Edelweiss Group will focus on growing its life and non-life insurance businesses.

Gallagher and Edelweiss entered into a partnership in May 2019. EGIBL offers general insurance solutions and operates across four areas of corporate, affinity and association, reinsurance and global and digital solutions.

“We believe in doing what is right for the business and the customer and integrating the business with Gallagher will give it a global edge and achieve our objectives. It also provides us with the flexibility to reallocate capital and invest in scaling up our fast-growing life and non-life insurance businesses, making this a win-win for both of us,” said Rashesh Shah, Chairman, Edelweiss Group.

“We view India as a key and strategic market for the insurance industry and for Gallagher, given its scale and growth potential, and we see many interesting opportunities for further development of the business,” said Vyvienne Wade, Gallagher Chairperson of Global Broking in Europe, Middle East, and Asia.

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ED serves notices for Euro Cup betting, games, misuse of cards, BFSI News, ET BFSI

Personal Finance

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The Enforcement Directorate (ED) has shot hundreds of notices in the past one month to individuals for using international credit and debit cards to bet on Euro Cup matches, remitting funds for real money games (RMG) to offshore platforms, and not surrendering pre-loaded forex cards which are often preferred during foreign tours.

Also, several non-resident Indians (NRIs) have received notices for their transactions during the last one year while having overstayed in India in 2020-21 due to Covid-19. The law enforcement agency, which issued the notices under the Foreign Exchange Management Act (FEMA), is also questioning inflow and outflow of money for crossborder trades in Bitcoin and other cryptocurrencies on overseas crypto exchanges.

According to two persons aware of the ED action, the number of notices may have touched 1,000 in the past two months. “Most of the individuals who have come under attention are from Mumbai, Delhi, Pune, and Bengaluru,” said an ED official.

“Many have used international cards to place football bets with sites, which though legitimate services in those countries, may be considered a violation under FEMA. The re-use of preloaded forex cards is mostly out of carelessness, and may not be a conscious violation,” said another person.

Technically, under the regulations, a preloaded card can be used only by a person to whom the card has been issued. Also, a traveller is expected to return the card to the issuing bank. Many, however, let friends, family members and colleagues travelling abroad use their cards if there is unspent money.

“The real money gaming transactions have attracted the agency’s attention with the receipt of funds in several savings bank accounts… banks these days are quick to flag these off in their suspicious transaction report,” said a FEMA consultant.

While use of foreign exchange for online betting and gambling is construed as violation of foreign currency rules, as far as cryptos go, there is some division of opinion in the legal fraternity, with some under the impression that funds can be remitted under the Reserve Bank of India’s liberalised remittance scheme for buying digital assets abroad.

“But it’s unfortunate if NRIs are pulled up for FEMA violation because they could not fly out of India within the required period. Since they were stuck, there have been a higher number of transactions in their accounts during their stay here. This may have drawn ED’s notice,” said one of the sources.

According to current rules, NRIs staying for 182 days or more have to pay tax on their global income, while NRIs spending 120 days or more (but less than 182 days) have to pay tax on the total income, other than the income from foreign sources, as long as such earnings exceed Rs 15 lakh.



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