Reliance insurance bid for Air India unfair: NIACL

NEW DELHI: Public insurer New India Assurance has accused the troubled NACIL of flouting the tender norms for about Rs 45,000-crore insurance

cover for Air India's fleet to favour a consortium led by an Anil Ambani group firm, which refuted the allegation.

While NACIL declined to comment on accusations contained in a letter sent to it by New India Assurance, Reliance General Insurance said it had supplied all the information and documents desired by the aviation company for the tender.

In its letter to National Aviation of Company of India of India Ltd (NACIL), New India Assurance Co said, "Tender norms laid down by NACIL have not been adhered to and have been relaxed to the disadvantage of two bidders."

NACIL is the holding company of Air India. Three bidders -- a consortium of four public sector insurers New India Assurance Co Ltd (NIACL); ICICI Lombard and another consortium of private players led by Reliance General -- were in the fray for the fleet insurance programme.

Air India which has a fleet of 153 aircraft is in deep financial crisis with losses of over Rs 7,000 crore and the government is working on a revival package for it.

New India Assurance accused NACIL of delaying the opening of bids, which were submitted on August 24, slated to be opened the same day, for 4 days without assigning any reason.

It also said certificates accompanying the bid for the consortium led by Reliance General were opened without a written assurance from its lead underwriter, which is required as per the norms.

How to choose the right insurance policy

With the increasingly uncertain times, what with terrorist attacks and tumultuous financial markets, getting an insurance cover for you and your family has become imperative. However, many of us do not take decisions because of it being such a big ball of wax.

Choosing the right kind of insurance cover not only determines the care that we receive should our health take a wrong turn, but it can be the wild card in your financial plan.

There are many benefits of an insurance cover; however, topping the list of benefits is the financial support that a family gets in the event of the untimely death of the income provider. As getting the insurance cover is an important aspect of a sound financial future, choosing the right insurance cover is equally important.

First and foremost, choosing an insurance policy must be based on your current and projected income or simply put your current and projected ability to pay the insurance premiums, your medical state, your age, future financial plans, etc.

Secondly, you also need to look at:

Cost-Benefit Ratio

The cost of the insurance cover depends upon many reasons, some mentioned above and other factors depending on what is covered in the cover or its riders. Thus, you have to keep a close eye on the cost of buying insurance and ensure that it justifies the benefits covered under the policy. Simply put, a right balance must be struck between the cost and benefits available.

Cover

You need to ensure that the insurance covers all your dependants and that it also covers the majority of health problems.

Tata Motors invites FDs from public to raise Rs 1,500 cr

NEW DELHI: Within less than a year, the country's largest auto maker, Tata Motors, has come to the public for the second time to raise about Rs

Some common investment rules India's ten biggest wealth creators Co FDs good bet for low-income investors

1,500 crore via fixed deposit schemes, offering up to 9.88 per cent annual interest for a three-year deposit.

In a public announcement, the firm today said on a minimum fixed deposit of Rs 20,000 for two and three years, it would offer 8 per cent and 8.75 per cent interest respectively under the quarterly income plan.

Under another scheme of cumulative deposit plan, Tata Motors, which met with cold response from investors to its two separate rights issues last year to raise Rs 4,147 crore to partly fund its Jaguar and Land Rover deal, would offer 8.58 per cent interest on a minimum deposit of Rs 20,000 for two years and 9.88 per cent for three years.

Though the company has not said how much it plans to raise through this exercise, sources close to the development said Tata Motors is likely to raise about Rs 1500 crore from the public. It would be a part of the company's capex plan for the next few years.

No depreciation on bourse membership card value, rules HC

MUMBAI: In A judgement that could have a bearing on the tax outgo of many stock brokers, the Bombay High Court on Friday ruled that depreciation

cannot be claimed on stock exchange membership cards, while calculating tax liabilities.

The I-T Department’s contention was that a membership card is not capable of diminishing in value due to its use, wear and tear and obsolescence.

Counsel Vimal Gupta, assisted by advocate Suresh Kumar, who argued for the department, submitted that the card was a personal privilege, and not a licence or a commercial right. The stock broking firms, they said, were not owners of the membership cards and thus could not categorise the same as capital assets.

Counsel for the brokers pointed out to the court that like a licence, which is depreciable, a membership card entitles brokers to trade on the exchange. The rights conferred by the ownership of the stock exchange card constituted business or commercial rights and would therefore be entitled to depreciation, they said. According to Section 32 of the Income-Tax Act, depreciation can be claimed either in respect of tangible assets or certain intangible assets such as patents, copyrights, trademarks, or similar intangible assets.

The division bench of Justice VC Daga and Justice JP Devadhar was hearing over a hundred applications filed by the I-T Department against brokers, including Techno Shares and Stocks, Credit Suisse, ICICI Brokerage Services, JM Morgan Stanley Fixed Income Services, Tata TD Warehousing Securities, Kotak Securities and Net Worth Stock Broking.

They observed in the judgement that the membership card cannot be construed as a licence or a commercial right. The court held that Section 32 allowed depreciation on the listed categories of assets only and were related to acquisition or user of intellectual property rights, while disallowing depreciation on the cards.

Credit card cos revisit their revenue model

NEW DELHI: Credit card companies are revisiting their revenue models to sustain usage of cards and attract new clients. What could be in the

offing is a lower or differential interest rate on credit cards. To make up for revenue loss on this front, companies may be levying a variety of fees, including an annual fee, annual or monthly maintenance cost, charges for direct services provided such as cheque representation charges and cash collection fees.

Credit card issuers such as State Bank of India Cards, ING Vysya Bank, and Deutsche Bank have all hinted that they are giving this option a serious thought, given the dynamics of the industry. “We are always evaluating ways to enhance the value proposition for our customers. As a part of this process we are looking at the option of bringing down interest rates,” Diwakar Gupta, CEO of SBI Cards told SundayET.

As a step in this direction, SBI Cards had initiated the reintroduction of charging the annual membership fees earlier this year. “The annual fee-paid card encourages a much better customer connect and promotes need-based issuance of cards. Such customers appreciate the value proposition of the offering better and builds a better and healthier credit card business,” Mr Gupta said. With the company’s new card numbers not dipping since reinitiating fees, Mr Gupta said it validates their belief in the strategy.

In the credit card industry, experts said the typical business model has two options, ‘roll over’ of outstanding with Annual Percentage Rate (APR) of over 35% and annual renewal fees ranging between Rs 2,000 to Rs 5,000 for high end cards. The card portfolio assumes a much higher default rate than other credit portfolios and calls for additional provisions, particularly during economic downturns.

“A large part of the operating costs are incremental collection costs, and one way to keep out poor profiles coming in and managing higher collection costs is to impose a variety of fees,” Robin Roy, associate director — financial services, PricewaterhouseCoopers (PwC) said.

Sonalee Panda, product & marketing head at ING Vysya Bank believes the growing delinquency among credit card holders, coupled with increased administration costs, are compelling reasons for the banks to increase fee. “The fee structure on credit cards in the country has been constant for more than two years, now,” she said.

Home loan sops, DA to bring cheer

NEW DELHI: Here’s good news for serving and retired civil servants. The government has increased dearness allowance (DA) for government employees

and dearness relief (DR) for pensioners by 5% with effect from July 1.

This will put additional purchasing power in the hands of civil servants to the tune of Rs 2,903.55 crore, up to end-February, after which another instalment of DA would kick in. This comes as good news for marketers gearing up for an action-packed festive season, and would increase consumption in the economy.

The Union Cabinet’s decision to increase DA to 27% is in accordance with the accepted formula under the Sixth Pay Commission recommendations, an official release said. The Cabinet also cleared one percentage point interest subvention for home loans up to Rs 10 lakh.

According to DK Joshi ,principal economist at ratings agency CRISIL, the additional DA and the interest rate subvention announced on the housing loans will add incrementally to the ongoing economic recovery.

While an increase in DA to 27% will cost the exchequer Rs 4,355 crore in a full year and Rs 2903.55 crore in the financial year( for a period of eight months from July, 2009 to February, 2010), it will give that much more spending power in the hands of over eight million central government employees and pensioners and boost the economy, threatened by an erratic monsoon. The additional DA will also help them weather the impact of rising prices. Consumer price inflation is currently in double digits.

The 1% interest subvention on home loans of up to Rs 10 lakh for houses costing up to Rs 20 lakh will not just stimulate demand in the construction sector but also give a relief of up to Rs 10,000 to borrowers. “The 1% subvention would be for the first 12 EMIs (equated monthly instalments) on the loans,” information and broadcasting Minister Ambika Soni told reporters in the capital after a Cabinet meeting.

The government said interest rate subsidy scheme was in line with the announcement by finance minister Pranab Mukherjee during a debate on the budget for 2009-10 in July. The first twelve instalments all loans sanctioned and disbursed during the twelve months from the date of publication of the scheme will be eligible for interest subvention.

The scheme will be implemented through scheduled commercial banks and housing finance companies registered with the National Housing Bank. While the government has provided 1% subsidy on home loans, it slashed the interest subsidy given to farmers on crop loans by one percentage point to 2% for this fiscal, a move that is expected to bring down burden on the central exchequer by Rs 311 crore.

UM gets $20M gift for genetic research

Author : jignesh

Economist and investor John P. Hussman pledged a $20 million gift to fuel genetic research at the University of Miami Miller School of Medicine

In exchange, UM’s main genetics center has been renamed the John P. Hussman Institute for Human Genomics.

This is the second major funding infusion for the institute, which received an $80 million funding commitment from the state in 2007.

“This gift will accelerate the growth of the institute,” UM President Donna Shalala said. “We can’t slow down scientific research because of the economic downturn.”

The institute’s new Miami headquarters opened 10 months ago. More than 200 people are employed there.

Hussman, who lives in Maryland and is president of Hussman Econometrics Advisors, became interested in genetics as he was researching autism. His son is autistic and he has been working with Margaret Pericak-Vance, director of the institute, since 2001 on crunching massive amounts of genetic data in a search for the cause of autism.

By lending his financial resources and his expertise, Hussman has co-authored several research papers on autism with Pericak-Vance. Last year, she and her colleagues at UM released a groundbreaking paper that identified genetic factors that placed people at risk for autism.

Hussman describes searching for the genetic causes of autism as a massive coin-flipping experiment. The human genome has 3.4 million base pairs of DNA and some can go one way or the other. The research he’s working on samples thousands of people and looks for patterns that occur in people with autism.

The gift will expand UM’s capability to handle such a huge amount of data.

Failure of Corus Bank puts condo loans up for sale

Author : jignesh

Chicago’s Corus Bank, which made a disastrous bet on condo towers in South Florida, was closed by federal regulators on Friday.

MB Financial Bank of Chicago is assuming Corus Bank’s 11 branches and $3 billion in cash and marketable securities. That would leave about $4 billion more in assets, which the FDIC plans to sell within 30 days in a private placement. Corus has about $1 billion of loans in South Florida.

There has been speculation that Miami Dolphins owner Stephen M. Ross might be interested in acquiring the Corus property. Ross is CEO of New York real estate giant Related Cos. and is also a business associate of Jorge Perez – the Miami condo king who runs Related Group.

Federal regulators have preliminarily approved a shelf charter for New York-based SJB Bank, which is led by Ross, Related Cos. President Jeff T. Blau and Bruce A. Beal Jr., an executive VP at Related Cos.

However, any buyer of the Corus assets could presumably just use equity investments or other financing without having to form a bank.

Should SJB Bank be formed, Adolfo Henriquez, former CEO of Florida East Coast Railway and chairman of Gibraltar Private Bank in Coral Gables, would serve as its CEO and president.

The application lists Michael J. Brenner and Richard L. O’Toole as organizers. It names former Goldman Sachs real estate investment head Stuart M. Rothenberg, Robert G. Eubanks and Jeffrey S. Quicksilver as directors.

Corus Bank’s failure is expected to cost the FDIC $1.7 billion. It is the 90th FDIC-insured institution to fail this year.

Corus Bank ramped up its condo construction and conversion lending in South Florida in 2002 at the start of the real estate boom. It rode the wave hard and funded dozens of projects, including 13 with mortgages of more than $100 million.

The bank also funded projects in other real estate markets that got caught in the bubble, such as Las Vegas, California and other parts of Florida.

The Corus branches were all in the Chicago area, but it attracted most of its deposits from high-rate certificates of deposit over the Internet. This helped it to raise money to lend out from all corners of the country.