inspection and Certification System

Inspection and Certification System The Government approved a scheme for a uniform inspection and maintenance system during the 11th Five Year Plan by setting-up of model Automated Inspection & Certification Centres one each in ten states namely Andhra Pradesh, Karnataka, Gujarat, Maharashtra, Rajasthan, Himachal Pradesh, Haryana, Madhya Pradesh, Uttar Pradesh and National Capital Territory of Delhi on a pilot basis. The Government also intends to put in place a nominated National Audit Agency so that the established Centres may be audited periodically.  Under the scheme of inspection and maintenance system, one model Automated Inspection And Certification Centre would be established in each states on a pilot basis. The state will further replicate such center based on motor vehicle population with the Under section 56 of the Motor Vehicles Act, 1988 State Governments are empowered to authorize private or public garages as testing stations for the purpose of granting certificate of fitness to transport vehicles.

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Measures for Unfit Vehicles

Measures for Unfit Vehicles Certificate of fitness from the prescribed authority is a condition precedent for renewal of registration of a motor vehicle, other than a transport vehicle, under Rule 52(2) of Central Motor Vehicles Rules, 1989. With regard to transport vehicles, Section 56 of the Motor Vehicles Act, 1988 provides that subject to the provisions of Sections 59 and 60 of the said Act, a transport vehicle shall not be deemed to be validly registered for the purposes of Section 39, unless it carries a certificate of fitness in the prescribed form issued by the prescribed authority or by an authorized testing station to the effect that the vehicle complies for the time being with all the requirements of this Act and rules made there under. Enforcement of provisions of Motor Vehicles Act, 1988 and Central Motor Vehicles Rules, 1989 comes within the purview of State Governments/UT Administrations.

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Representation of Women

Representation of Women

The Minister of State in the Ministry of Corporate Affairs Shri R.P.N. Singh today informed the Lok Sabha that the Government is considering to make it mandatory to have at least one woman director in the Board of Directors. 

Replying to a written question the minister said Clause 149 of the Companies Bill 2011 provides that such class or classes of companies to be notified from time to time shall have at least one woman director. 

Replying to another question whether it is also true that the Government is considering to increase the representation of women in Indian Companies by eight per cent the Minister said no such increase in percentage is under consideration

Intellectual Property Centres

Intellectual Property Centres                                                                                      Under the National Manufacturing Competitiveness Programme, the Ministry of Micro, Small and Medium Enterprises (MSME) is implementing a Scheme “ Building Awareness on Intellectual Property Rights (IPR) for Micro, Small and Medium Enterprises”. In this scheme, setting up of Intellectual Property facilitation center (IPFC) is one of the main activity, besides other defined activities.   Under the scope & coverage of the scheme IP facilitation Centers for MSMEs are setup in different regions of the country. The aim  of setting up of IP centers are to assist the MSMEs and other prospective entrepreneurs to have an access to best practices for identification, protection and management of IPR as a business tool. The objective of setting up of IPFC is to guide MSME and other target beneficiaries regarding utilisation of IP tools and technologies for better management of their intellectual property related needs.  As on date, Ministry of Micro Small and Medium Enterprises has sanctioned 24 IP facilitation centres for MSMEs, out of which, 16 are operational. The Government has put in place, the following inbuilt monitoring mechanism: ·         The implementing agency for IPFC  constitutes a Steering Committee to supervise its activities and to submit the quarterly progress report to the Central Govt. to monitor the  functioning of IPFC. The said Steering Committee has representatives from Industry, State Government, MSME-Development Institute of the concerned region and other experts in the field of IPR. ·         A representative from the Ministry of MSME / Member(s) of Project Implementation Committee (PIC), constituted for implementation of IPR scheme, may visit IPFC to get information on the progress being made and verify the services being provided by the  IPFC.  ·         Separate accounts in respect of funds released by Government of India for setting up of IPFC are maintained by implementing agency and the same is subjected to test check by the PIC through its representatives.

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Establishment of Supreme Court Benches

Recommendation Regarding Establishment of Supreme Court Benches in Various Parts of the Country The Government has said that representations have been received from time to time from various sources, for establishment of Benches of the Supreme Court in various parts of the country. The Law Commission in its 229th Report, in addition to its 95th Report, has recommended as under:  (1) A Constitution Bench be set up at Delhi to deal with constitutional and other allied issues; and (2) Four Cassation (Zonal) Benches be set up in the Northern region/ zone at Delhi; the Southern region/ zone at Chennai/ Hyderabad; the Eastern region/ zone at Kolkata and the Western region/ zone at Mumbai to deal with all appellate work arising out of the orders/ judgments of the High Courts of the particular region.  Must read please: Giving this information in written reply to a question in the Lok Sabha today, Shri Salman Khurshid, Minister of Law & Justice said that the opinion of the Attorney General was obtained and the matter was referred to the Chief Justice of India, who informed that after consideration of the matter, the Full Court, in its meeting held on 18th February, 2010, unanimously resolved that the recommendations of the Law Commission cannot be accepted.

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Reduction of Interest Rate on EPF

Reduction of Interest Rate on EPF The Union Labour & Employment Minister Shri Mallikarjun Kharge has informed the Rajya Sabha that as per para 60(1) of the Employees’ Provident Funds Scheme, 1952, rate of interest on the Employees Provident Fund is determined by the Central Government in consultation with the Central Board of Trustees, Employees Provident Fund. Central Government declared 8.25% rate of interest on EPF accumulation for the year 2011-12 based on the earnings of the Fund during the year.  Replying to a written question the Minister said however, requests from various Central Trade Unions have been received to maintain the existing rate of interest.  There is no proposal under consideration to restore the Employees Provident Fund rate of interest at 9.5 percent for the year 2011-12.  The interest rate on the Employees Provident Fund in a particular year depends on the earning of the Fund during that year. Based on the earning of the Fund during the year 2011-12, 8.25 percent rate of interest on the Employees Provident Fund has been approved by the Central Government.

Industries where Employing Child Labour is banned

Industries where Employing Child Labour is banned              The Union Labour & Employment Minister Shri Mallikarjun Kharge has informed the Rajya Sabha  that the Government of India has banned employment of children below 14 years for dhabas and domestic work. As per 2001 census, the total number of working children between the age group 5-14 years in the country was 1.26 crore out of which 12 lakhchildren were working in hazardous occupations and processes including domestic workers, Dhabas/Restaurants etc. However, as per NSSO survey 2009-10, the working children are estimated at 49.84 lakh which shows declining trend. The details of the industries where employment of children as per the Child Labour (Prohibition & Regulation) Act, 1986 is prohibited is at Annexure-I.               States/UT Governments are appropriate Government for implementation of the Child Labour(Prohibition & Regulation) Act, 1986 in the areas comes under their jurisdiction. Under Section 3 of the Child Labour (Prohibition & Regulation) Act, 1986, prohibits the employment of children below the age of 14 years in 18 Occupations and 65 Processes. Any person who employs a child in any occupation or process where employment of children is prohibited under the Child Labour (Prohibition & Regulation) Act, is liable for punishment with imprisonment for term which shall not be less than 3 months but which may extend to one year or with fine ranging from Rs.10,000/- to Rs.20,000/-. ****** ST/- ANNEXURE-I List of Occupations & Processes prohibited under the Act. Part A Occupations (Non Industrial Activity) Any occupation concerned with: - (1)                                   Transport of passengers, goods or mails by railways; (2)                                   Cinder picking, clearing of an ash pit or building operation in the railway          premises; (3)                                   Work in a catering establishment at a railway station, involving the movement of a vendor or any other employee of the establishment from the one platform to another or in to or out of a moving train; (4)           Work relating to the construction of a railway station or with any other work where such work is done in close proximity to or between the railway lines; (5)                                   A port authority within the limits of any port; (6)    Work relating to selling of crackers and fireworks in shops with temporary licenses; (7)    Abattoirs/Slaughter House; (8)    Automobile workshops and garages; (9)                                   Foundries; (10)                                Handling of toxic or inflammable substances or explosives; (11)                               Handloom and power loom industry; (12)                               Mines (underground and under water) and collieries; (13)                               Plastic units and fibreglass workshops; (14)  Domestic workers or servants; (15)  Dhabas (roadside eateries), restaurants, hotels, motels, tea shops,       resorts, spas or other recreational centers; and (16)  Diving. (17)   Caring of elephant. (18)   Working in the circus.  Part B  Processes (Industrial Activity) (1)           Beedi-making. (2)           Carpet-weaving including preparatory and incidental process thereof”; (3)           Cement manufacture, including bagging of cement. (4)                                   Cloth printing, dyeing and weaving including processes preparatory and incidental thereto: (5)           Manufacture of matches, explosives and fire-works. (6)           Mica-cutting and splitting. (7)           Shellac manufacture. (8)           Soap manufacture. (9)           Tanning. (10)       Wool-cleaning. (11)                               Building and construction industry including processing and  polishing of granite stones” (12)   Manufacture of slate pencils (including packing).  (13)              Manufacture of products from agate.  (14)              Manufacturing processes using toxic metals and substances such as lead, mercury, manganese, chromium, cadmium, benzene,   pesticides  and asbestos.  (15)              “Hazardous processes” as defined in Sec. 2 (cb) and ‘dangerous        operation’ as notice in rules made under section 87 of the Factories  Act, 1948 (63 of 1948)  (16) Printing as defined in Section 2(k) (iv) of the Factories Act, 1948 (63    of 1948) (17)               Cashew and cashewnut descaling and processing. (18)               Soldering processes in electronic industries. (19)               Aggarbatti’ manufacturing. (20)       Automobile repairs and maintenance including processes incidental thereto namely, welding, lathe work, dent beating and painting. (21)                                  Brick kilns and Roof tiles units. (22)                                  Cotton ginning and processing and production of hosiery goods. (23)                                  Detergent manufacturing. (24)                                  Fabrication workshops (ferrous and non ferrous) (25)                                  Gem cutting and polishing. (26)                                  Handling of chromite and manganese ores. (27)                                  Jute textile manufacture and coir making. (28)                                  Lime Kilns and Manufacture of Lime. (29)                                  Lock Making. (30)                                  Manufacturing processes having exposure to lead such as primary and secondary smelting, welding and cutting of lead-painted metal constructions, welding of galvanized or zinc silicate, polyvinyl chloride, mixing (by hand) of crystal glass mass, sanding or scraping of lead paint, burning of lead in enamelling workshops, lead mining, plumbing, cable making, wiring patenting, lead casting, type founding in printing shops.  Store typesetting, assembling of cars, shot making and lead glass blowing. (31)                                  Manufacture of cement pipes, cement products and other related work. (32)                                  Manufacture of glass, glass ware including bangles, florescent tubes, bulbs and other similar glass products. (33)                                  Manufacture of dyes and dye stuff. (34)                                  Manufacturing or handling of pesticides and insecticides. (35)                                  Manufacturing or processing and handling of corrosive and toxic substances, metal cleaning and photo engraving and soldering processes in electronic industry. (36)                                  Manufacturing of burning coal and coal briquettes. (37)                                  Manufacturing of sports goods involving exposure to synthetic materials, chemicals and leather. (38)                                  Moulding and processing of fiberglass and plastic. (39)                                  Oil expelling and refinery. (40)                                  Paper making. (41)                                  Potteries and ceramic industry. (42)                                  Polishing, moulding, cutting, welding and manufacturing of brass goods in all forms. (43)                                  Processes in agriculture where tractors, threshing and harvesting machines are used and chaff cutting. (44)                                  Saw mill – all processes. (45)                                  Sericulture processing. (46)                                  Skinning, dyeing and processes for manufacturing of leather and leather products. (47)                                  Stone breaking and stone crushing. (48)                                  Tobacco processing including manufacturing of tobacco, tobacco paste and handling of tobacco in any form. (49)                                  Tyre making, repairing, re-treading and graphite beneficiation. (50)                                  Utensils making, polishing and metal buffing. (51)                                  ‘Zari’ making (all processes)’.  (52)  Electroplating; (53)       Graphite powdering and incidental processing; (54)                           Grinding or glazing of metals; (55)                           Diamond cutting and polishing; (56)                           Extraction of slate from mines; (57)                           Rag picking and scavenging; (58)                           Processes involving exposure to excessive heat (e.g. working near   furnace) and cold; (59)                          Mechanised fishing; (60)                          Food Processing; (61)                          Beverage Industry; (62)                          Timber handling and loading; (63)                          Mechanical Lumbering; (64)                          Warehousing; (65)                          Processes involving exposure to free silica such as slate, pencil industry, stone grinding, slate stone mining, stone quarries, and agate industry.

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business standard updates 28-4-2012

Investors may sway state-run banks’ boardroom dynamics

ABHIJIT LELE Mumbai, 27 April The Cabinet-approved Banking Amendments Bill proposing a rise in public sector bank shareholders’ voting rights may see investors vie for larger stakes and a greater say. The cap on voting rights is proposed to be raised from one to 10 per cent in public sector banks (PSBs) and from 10 to 26 per cent in private sector banks. The Bill will now go to Parliament. In essence, it means the government is opening doors for investors who want to have voting rights and a say in the working of PSBs — a move many see as positive. Earlier, even if an investor held more than one per cent in a PSB, their voting rights were limited to one per cent. For instance, Lazard Asset Management LLC (a foreign institutional investor) held 4.6 per cent in Punjab National Bank at March-end. However, its voting rights were limited to one per cent. Now, the FII may feel encouraged to raise its stake for more voting powers. Ashwin Parekh, partner (financial services), Ernst & Young, said, “This is a constructive change, as there has been improvement in the working of state-owned banks due to competition. The increase in investors’ interest (institutional investors) will bring in further improvement in governance.” Industry officials said domestic and foreign institutional investors (FIIs), with substantial holding, would get a chance to seek a board seat. There could be one board seat that may come to FIIs or nongovernment shareholders. With PSBs accounting for over 70 per cent of banking assets, their equity capital requirement is going to be huge. But given the state of government finances, it may think of lowering the threshold for its minimum stake below 51 per cent to facilitate fund-raising from the market. The move may be a precedent to that as well because it will encourage institutional investors to participate in any equity offering by PSBs. There could be a couple of hurdles. For one, according to Reserve Bank of India guidelines, any investor can hold stake in a bank only up to five per cent. Any investor wanting to hold above this limit needs the banking regulator’s permission. Another hindrance, many say, could be the government’s tight grip on the working of PSBs. The government has been asking banks to hike exposure to retail loans, review rate policies (effectively, cut lending rates) and so on. That may sour any potential investor’s mood. An industry official said, “Decisions like waiving off farm loans would be debated more in board meetings if there are nongovernment officials present.” A senior India Banks’ Association official says at present it is the government that calls the shots through its board nominees. Plus, the CMD and executive directors are its employees. “It will be a good beginning but it is going to be long-drawn process to see a shift in corporate governance at PSB boards,” added the official. Hemindra Hazari, head of institutional equity research at Nirmal Bang Securities, said the move should give shareholders some say in management. ECONOMY, P4 >CCI ambitto shrinkafternewlaw Higher voting rights, possible board representation likely to boost investor participation, subject public sector banks to unfamiliar shareholder activism THEIR SLICE OF THE PIE FII holding in selectpublic sector banks Bank The largestFII shareholder Total FII and its stake holding (%) Andhra Bank Genesis Indian Invest 13.45 Company (6.05%) Punjab Lazard Asset 17.38 National Bank Management (4.61%) BankofIndia Lazard AssetMgmt (4.25%) 14.71 Dena Bank Acacia Partners (2.40%) 11.63 Canara Bank HSBCInvestmentFunds 14.49 (1.56%) Oriental Bank Mackenzie Cundhill 10.28 of Commerce (1.47%) BankofBaroda Copehill Mauritius (1.37 %) 13.54 Allahabad Bank Mathtews India Fund 12.54 (1.31%) Indian Bank Stitchting 9.03 Pensidenfonds (1.07%) SBI None with 1%-plus stake 8.70 Figures in % as on March 31, 2012; FII: Foreign institutional investor Compiled by BS Research Bureau Source: Bombay Stock Exchange

With ~40k-cr tax at stake, FinMin firm on I-T amendments

BS REPORTER New Delhi, 27 April Pressure from various quarters notwithstanding, the government is sticking to its guns on retrospective amendments to the Income Tax Act, as it eyes ~35,000-40,000 crore tax realisation from deals similar to the $11-billion VodafoneHutchison deal in 2007. Finance ministry officials said if the government did not opt for the amendments, those who had paid tax in such deals would ask for refunds. The merger and acquisition deals pending in courts include the $150-million Idea CellularAT&T deal, the GE’s $500-mn deal with Genpact, the $981million Mitusi-Vedanta Sesa Goa deal, the SABMiler-Fosters deal and the $770-mn Sanofi Aventis-Shanta Boitech deal. Though officials said other deals were also being investigated, they refused to divulge the details. According to the Income Tax Department’s estimates, deals similar to the VodafoneHutchison one would yield ~35,000-40,000 crore. Officials, however, said these were rough calculations. In the $6-billion Cairn India deal between Cairn Plc and Vedanta, the parties concerned have already made an arrangement to pay capital gains tax to the government. In fact, London-based Cairn Plc has already paid more than $500 million to the Indian government. In the recent Max New York Life deal, Japan’s MS&AD Insurance Group withheld tax while acquiring 26 per cent stake in the company for ~2,731 crore. New York Life Insurance Company said the capital gains should not be subject to tax in India, as it held the shares in the life insurance joint venture with Max India through a holding company in Mauritius. However, it has allowed the Japanese company to withhold the tax as a precaution, and would file for a refund with the tax department later. Meanwhile, officials claimed retrospective amendments would not impact foreign direct investment in India, as investors do not look at only taxes, but the overall economic environment. Vodafone, however, does not agree. A source in Vodafone said even as tax rates may not be minutely assessed while investing, the certainty of tax laws and the policy environment what certainly looked at. He also contested the finance ministry’s view that retrospective amendments to income tax laws were not being carried out in India alone, but in the UK as well In the Barclays deal, the UK government had amended a tax law in 2009 to clarify certain assistance given to companies in distress would not qualify as tax deductions. But when Barclays continued to avail of that exemption, UK authorities clarified the company would have to pay tax for these for the period when the tax laws were first clarified. “It was not as if the law was amended with retrospective effect, as is being done in India. In no other country is it done after a court verdict and that too, with a retrospective effect. You cannot change the rule of the game in between,” the source said. At a meeting between Finance Minister Pranab Mukherjee and his UK counterpart George Osborne, Mukherjee had mentioned the UK’s move to amend its tax law a day before Mukherjee presented the Budget in Parliament. Osborne had told Mukherjee investors were anxious, as India proposed to amend the Income Tax Act retrospectively. VODAFONE-TYPE DEALS IN COURTS: |Idea Cellular-AT&T’s $150-mn deal pending in Bombay HC |GE-Genpact $500-mn deal pending in Delhi HC |Mitsui-Vedanta $981-mn Sesa Goa deal pending in Goa HC |SABMiller-Fosters 2006 deal pending in Bombay HC |Sanofi Aventis-Shantha Biotech $770-mn deal pending in Bombay HC

Business standard updates 26-4-2012

Cabinetto take up Bill on bankvoting rights



SANJEEB MUKHERJEE

New Delhi, 25 April

The Cabinet is likely to take up a Bill tomorrow to increase voting rights of stakeholders in banks. The development comes less than a week after Finance Minister Pranab Mukherjee exuded confidence that key financial sector reforms Bills would be legislated this year.

“The Cabinet may deliberate on the Banking Laws (Amendment) Bill 2011, on the basis of recommendations by the parliamentary standing committee on finance,” sources privy to the development told Business Standard.

The Banking Laws (Amend-ment) Bill, 2011, clubs various banking amendment Bills, including changes in the Banking Regulations Act, to increase the voting power of shareholders in banks.

According to the Bill, tabled in Parliament in 2011 and sent to the parliamentary panel, the voting power of stakeholders in nationalised banks would be capped at 10 per cent, against the current one per cent.

In private sector banks, the cap on voting rights of a single entity are scheduled to be increased in proportion to their stakes, against the current cap of 10 per cent of total voting rights.

However, the standing committee, headed by former finance minister Yashwant Sinha, recommended capping this right at 26 per cent. So, the Cabinet is likely to consider a cap of 26 per cent for private sector banks.

Last week, the finance minister had said in Washington, “On the legislative front, we have already committed the preliminary legislative process for the Pension Fund Regulatory Act, the Insurance Act and the Banking Amendment Act. These three Acts, I do hope, would get legislated this calendar year. If not in this Parliamentary session, then in the next.” His remarks followed Chief Economic Advisor Kaushik Basu claiming he had been misquoted as implying major economic reforms in India would have to wait till the 2014 Lok Sabha elections.

After Standard & Poor’s downgraded India’s rating on today, all eyes would now be on the government’s reforms programme.

For2011-12, while coal demand is estimated at 696 mt, only 554 mt is likely to be available

Decks cleared, CFAInstitute to expand in India



KALPANAPATHAK Mumbai, 25 April

As the nearly six-year-long battle between the US-based Chartered Financial Analyst (CFA) Institute and the All India Council for Technical Education (AICTE) has ended, the former plans to expand in India.

In an email statement to

Business Standard ,the institute said, “With the AICTE case behind us, we will explore more partnership and collaborations with universities and business schools in India. More than 200 scholarships a year will be offered in India.” At a hearing on April 17, AICTE declared that its executive committee had concluded that the existing AICTE Regulations do not apply to the CFA Programme.

This means CFA Institute can offer Indian test centres the same advanced schedule, and with the same certainty, as its other test centres worldwide. There were more than 20,400 exam registrations in India in 2011.

In 1997, it filed a case against Hyderabad-based Institute of Chartered Financial Analysts of India (ICFAI), which had launched its certification programme for financial analysts in 1985, over the use of CFA in its name.

In August 2006, the Delhi High Court issued an interim injunction asking ICFAI to drop the word CFA from its name by the end of May 2007.

In March 2007, ICFAI filed apetition in Gauhati High Court alleging AICTE and the University Grant’s Commission were not taking any action against the CFA institute for allegedly running "an unapproved technical programme in India”. The Gauhati HC directed AICTE to look into the matter, following which AICTE issued a regulation notice to CFA institute, asking it to cease operations with immediate effect.



EASIER NORMS ON ANVILFOR QUALIFIED FOREIGN INVESTORS

Sebi eyes greaterfund flows from abroad



SAMIE MODAK

Mumbai, 25 April

To improve the framework for qualified foreign investors (QFIs) and facilitate broad-based participation, the Securities and Exchange Board of India (Sebi) is working on large-scale changes to the framework notified earlier this year.

It has convened an informal forum with key market participants, such as custodians, qualified depository participants (QDPs), brokers and tax consultants. Representations on an ongoing basis have been made to Sebi and the finance ministry by various entities to iron out issues. Market players have also sought clarity on certain issues related to taxation and qualification of investors.

The market regulator, in January, had issued guidelines for direct entry of QFIs. However, flows have not started to come through this route, which experts say is due to lack of clarity on the subject.

According to sources, QDPs have strongly opposed the norm asking them to file tax returns on behalf of QFIs. They want Sebi to transfer the responsibility to QFIs themselves. By the current rules, QDPs are responsible for deduction of tax at source on profits or dividends or any other income made by QFI.

CR Sasikumar, managing director of SBI-SG Global Securities Services, said, “Sebi is clearing ways and removing bottlenecks to realise QFIs’ full potential and is supporting the QDPs with active discussions in various forums.” “A QDP is just apass-through, who would overlook the money entering and leaving Indian shores. Deducting tax is a huge responsibility to take for a small fee. It is a risk QDPs don’t want to take,” said Naresh Makhijani, partner, KPMG.

Another major move contemplated is to permit QFIs to place orders directly with a broker and take confirmation from custodians, as allowed in foreign institutional investor trades. The present rules require QFIs to place orders directly with QDPs, who are to process these through the broker. Also, the tax framework could be tweaked to bring it at par with those for non-resident Indians.

Another change discussed in recent meetings



PE firms notkeen to become ‘nominated investors’ forSMEs



MEHULSHAH & REGHU BALAKRISHNAN

Mumbai, 25 April

Private equity (PE) and venture capital (VC) firms are not keen to become “nominated investors” for firms planning to list on the exchanges for small and medium enterprises (SMEs).

Market regulator Securities and Exchange Board of India (Sebi) has allowed qualified institutional buyers (QIBs) and PE/VCs to become nominated investors for companies planning to list on an SME exchange.

The nominated investor enters into an agreement with the merchant banker to subscribe to the issue in case of under-subscription or to receive or deliver the specified shares in the market making process.

Market makers infuse liquidity in a stock by providing both bid and ask quotes. According to Sebi norms, merchant bankers are required to ensure compulsory market making in the SME counter through the stock brokers of the exchange for a minimum period of three years from the date of listing.

In case of firms listed on the SME exchange, market makers are allowed to buy from or sell to the nominated investors the required number of shares for market making. However, not many PE firms are willing to do this.

“PE & VC firms are essentially ‘pooled investments’, where the primary job of the general partner (GP) is that of a professional investment manager. The role of a nominated investor is to provide liquidity, a totally different paradigm within the overall market system of alternative exchanges,” said S M Sundaram, partner and chief financial officer at Baring Private Equity. “Unless generating returns to their investors explicitly includes such ‘market maker’ roles also as part of their investment management strategy, PE and VC funds may not just be uninterested in performing this role, but they may also not have the organisational capability to do that” he added.

Being a nominated investor for SMEs is not the investment thesis of PE/VC firms, experts say. “PE/VC firms don’t buy or sell shares on a daily basis. They don’t operate that way,” said Avinash Gupta, leader, financial advisory, Deloitte India.

“PE

E-insurance likely by June



NEHAPANDEYDEORAS

Amonth down the line, you may be holding insurance policies in electronic form. According to sector experts, the regulator is in the last lap of checking repositories preparedness and infrastructure, and is likely to allot licences by May-end or early June. Though e-policies will be available across life, health and motor insurance segments, the service will first start for life covers.

Experts say companies, such as ICICI Prudential Life Insurance and Birla SunLife Insurance are ready to launch. “Five to 10 insurance companies are ready for issuing einsurance,” says an industry official. “The rest may start by September.” The industry initially expects customer traction to be low. It sees two to five per cent of the new business premium in the electronic form in the first year of e-policy. This may increase to 10 to 15 per cent in the second year. “Policyholders will understand the ease of owning an epolicy and gravitate towards it once they own one,” feels K R Chandrasekaran, head (insurance and banking), CAMS, an insurance repository with NSDL, CDSL and Stockholding Corp. Insurance repositories, like share depositories or mutual fund transfer agencies, will hold e-policy records.

If you buy an e-policy and do not want to continue with it, you can convert it to paper, and vice versa, too.

How to buy an e-policy?

You can approach an insurer and ask it to issue an e-policy in your name, explains Chandrasekaran. The company will inform the repository, which, in turn, will call you and complete the know your customer (KYC) norms for an einsurance account (e-IA). Once the policy is issued, the insurer will share the details with the repository, who, in turn, will update it in your account. Then, you will be given a receipt with your transaction summary. Or, you open an e-IA and then buy a policy either online or offline. The repository service will be free of cost; the insurer will pay them. You will need your identity and address proof for KYC.

For policy conversion, you can open an account and send the policy conversion request and policy document alongwith the repository. Each e-IA will get a login ID and password to access one’s account and electronic policy details online on the repository’s website.

Benefits

Convenience, mainly. You can hold multiple policies in a single e-IA. You can access any of your policies at any time by logging on to the repository site. And, pay premium(s) online.

Also, a single KYC window means less paper work. If you want to make changes to your personal details, you cam change it in your e-IA with one request. The repository will inform all the companies with whom you hold electronic policies.

All policies can be serviced just by providing your e-IA by placing a request to your repository instead of visiting different insurers.

Buy e-policy either through insurer or by opening an e-insurance account