Sunday, 13 April 2014

IRDA slaps Rs 1.77 cr fine on Reliance Life

Insurance regulator IRDA imposed a fine of Rs 1.77 crore on Reliance Life 
Insurance for violation of various norms including obtaining business from 
unlicensed entities.
"...the penalty of Rs 1.77 crore shall be remitted by the Life insurer by debiting 
shareholders’ account within a period of 15 days from the date of issuance of this 
order...," IRDA said in an order.
It is observed that the Life Insurer has failed to monitor the activities of the 
corporate agent, it said, adding that this is considered as a serious lapse and 
the insurer is warned for the same.
Insurance Regulatory and Development Authority (IIRDA) examined 47 charges leveled 
against the company including violation of advertisement and product distribution 
Instances are noticed where the business is sourced from unlicensed entities 
through Multi Level Marketing and was logged into the code of licensed entities, 
it said.
Business was procured by forged signatures or without signatures at the space 
specified in the agents confidential report column, it added.
Of the total charges, maximum penalty of Rs 65 lakh was imposed for soliciting 
insurance business from unlicensed entities.
IRDA said the business sourced through unlicensed entities was logged in various 
code numbers of Reliance Third Party Distribution Channel, which is one of the new
business verticals of the insurer.
"Hence, under powers vested in Section 102(b) of the Act, a penalty of Rs 60 lakh 
is levied on the life insurer," it said.
The regulator also slapped a fine of Rs 50 lakh for violation of marketing and 
publicity norms.
There was issue with regard to payments to referral entities under contests.
"It is observed that the insurer has made these payments to referral entities 
under contests in violation of provisions of Circular Ref. IRDA/Cir/004/2003 dated 
14/02/2003 and therefore a penalty of Rs 5 lakh is hereby imposed under Section 
102(b) of Insurance Act, 1938," it said.
Recently, IRDA asked SBI Life Insurance company to refund Rs 275.29 crore to the 
policy holders as the amount was collected from them in violation of norms.

Friday, 11 April 2014

Biting gigolo bait

Greed is so destructive that it destroys everything.  A number of people are losing their hard-earned money due to their greed to earn easy buck. Sizable number of young people appears to have bitten the bait to become gigolos and ‘call boys’ to earn easy money and lost their savings in the process in a Hyderabad-based racket. The ad invites the prospective young people to become members with the promise to earn Rs 50,000 every month by being escort to rich and aged women. The bait is hard to resist-earn money along with pleasure. The young men are asked to deposit Rs 10,000 in a bank account and wait for the call from the rich girl to accompany them. The call never comes and by the time they learnt that they are cheated, they are poorer by several thousands of rupees. They cannot approach the police since they know it is an illegal activity. Several hundreds if not thousands of people have lost their precious earnings in this racket. This is only a single instance. There are several such types of rackets in the classifieds going on every day. One ad offers employment and asks the applicant to deposit Rs 1500 in a bank account and if deposited that is the last of it. The poor people who pay the amount in the hope of securing a job are deprived of the small amount which is big enough for them. They are not in a position to approach the police and no police will swing into action to chase the culprits for that petty amount. Another ad seeks deposits without RBI permission promising to repay everyday certain amount for one hundred days. For instance, if Rs 1 lakh is deposited, the depositor is promised to repay Rs 1250 every day for 100 days. No need to say it is lost. Not only that the losers are asked to enroll their friends and relatives with the promise of handsome commission. Then apart from losing money, they lose relations with their friends and relatives, which is all the more dangerous. The police role in all these activities is questionable. They seldom receive complaints. Even if anyone approaches, the police shoo them away holding the victims’ greed responsible for the loss.
The primary duty of the police is prevention and detection of crime. There is neither prevention nor detection by the police in spite of the existence of a separate wing - Economic Offences Wing (EOW) in the Crime Investigation Department. The EOW is supposed to track the white collar offences. Pathetically, they do not act even if there are written complaints. The Tamil Nadu police had separated the Economic Offences Wing from the CBCID under the leadership of an IG. Andhra Pradesh police need to take a cue from the Tamil Nadu police in this respect. Some years back, there was this proposal to separate the Economic Offences Wing from CID and keep it as an independent identity. For reasons best known to the powers-that-be, the proposal was shelved. As long as there is no pro-active role on the part of the police, such white collar offences continue to thrive cheating the gullible with impunity. It is high time the Economic Offences Wing took initiative to prevent white collar offences.