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Since Saturday, Krishna Chokhani, a Mumbai-based insurance agent, has been getting calls from worried policyholders
of unit-linked insurance policies (Ulips). ³With both regulators standing firm, investors are anxious if they will suffer,´ said
Chokhani.

n Jamshedpur, the story is no different. ³Some of my high net worth clients, who put in over Rs 1.5 lakh annually in
Ulips, were anxious to know if their investments are safe or not. Many of them wanted to know if surrendering the policy
made sense,´ said a Jamshedpur-based insurance agent.

n fact, on Monday, the first working day after the Securities and Exchange Board of ndia (Sebi) order banning some
companies from selling Ulips, most distributors put fresh applications on hold. ³Some insurance companies told us that
they were filing for a stay order and hence would not take applications in the interim. We told investors to wait for some
time,´ said a distributor, who did not wish to be quoted.

Since Friday, when Sebi fired the first salvo by banning 14 insurance companies from selling or renewing Ulips, investors
have found themselves dragged into a battle of turf between Sebi and the nsurance Regulatory and Development
Authority (rda).

The anxiety got accentuated when rda responded almost after a day and issued a statement late Saturday allowing the
14 companies to conduct their business as usual.

Chokhani, who fielded more than 30 queries in the last two days, said investors were particularly keen to know if fresh
investments or annual premium payments would be accepted.

Distributors tried to soothe the nerves by sending rda¶s communication to insurance companies to their clients.

A top executive of a private sector insurance company said a few customers had contacted the company. ³They wanted
to know why this issue cropped up. mportantly, they are asking if insurance companies will need permission from Sebi
for policies.´ nvestors feared that if old policies had to go for Sebi clearance, their money might get stuck for some time.

Distributors feared a major source of their revenue would be hit if Ulips were to come under Sebi's ambit. ndependent
financial advisors, or FAs, who are already smarting over income loss due to Sebi¶s ban on entry load, are more scared.
They fear that the stock market regulator may reduce their commission, making selling the product unviable. Many of
them shifted from selling mutual fund schemes (after the load ban) to insurance products because of the higher margins.

Most agents are blaming the mutual fund industry for the fracas. Babli Kohli, a New Delhi-based investor, was told by her
insurance agent that mutual fund companies were pushing for this step after Sebi banned entry load on mutual fund
schemes.

³But the agent said the investor base of insurance was too large for any regulator to enforce a ban on Ulips,´ Kohli said.
The government, meanwhile, has asked the regulators to fight it out in the courts



@

  
   


MUMBAI: Unit-linked insurance plans (Ulips) have never quite managed to win over the true blue-
blooded financial advisors. No wonder, these
advisors are firmly on the side of SEBI in its tug-of-war with the
insurance regulator (IRDA) to reign in Ulips. According to them, the
outcome of the tussle - most likely a long-drawn affair - may actually
make Ulips a better product, as, in their current avatar, Ulips fall short
on cost-effectiveness , transparency and flexibility.

Ulips are insurance plans with disparate investment options and have
captured the buyers¶ imagination in the last few years. They also hold
@
 

the dubious distinction of being one of the most grossly mis-sold

 financial products in the country.
 

³I have a problem with Ulips because they are not the best way to buy insurance. It is definitely not the cost-
effective way of buying insurance ,¶¶ says D Sundarajaran, investment consultant, Trendy Investments. He
says with higher first-year charge of 15-20 %, an investor has to continue with the scheme for a long period
to make up for the charges. ³This is especially crucial for people who have opted for the higher equity
allocation and witnessed a market crash.¶¶

Experts say despite IRDA¶s efforts to bring down the cost, these products are ³not inexpensive by any
means¶¶ .

Amar Pandit, certified financial planner, My Financial Planner, says Ulips fail on transparency, too. ³The
portfolio disclosure could be more frequent,¶¶ he says. Also, experts believe Ulips don¶t offer much of an
exit choice to investors. ³Once you buy them, you can¶t get out of them even if the scheme performs badly.
You are stuck with it as it also has an insurance component,¶¶ says Pandit.

 
 
 
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The government on Monday stepped in to end the turf war between insurance regulator IRDA and market regulator
SEBI over their jurisdiction on ULIPs (Unit Linked Insurance Plans) by asking the two chiefs to approach the court and
maintain the status quo on the business and sale of such equity-linked products till the dispute is legally sorted out.

During the day, SEBI Chairman C.B. Bhave and IRDA Chairman J. Harinarayan held discussions with top Finance
Ministry officials to explain their viewpoints. Finance Minister Pranab Mukherjee brokered peace by making the two
warring regulators agree to a ³binding legal mandate.´

Much to the relief of ULIP policy holders and the stock market which witnessed nervousness on account of the spat
between the two regulators, Mr. Mukherjee, in a statement, said: ³The Chairman, SEBI and Chairman, IRDA today
held discussions on jurisdiction over ULIP (Unit Linked Insurance Products). To resolve any ambiguity and to ensure a
smooth functioning in the market, the regulators have agreed to jointly seek a binding legal mandate from an
appropriate court. Meanwhile, the status quo ante is being restored.´

On Friday last week, while the SEBI had banned 14 life insurance companies from selling ULIPs until they obtained
registration from the market regulator, the IRDA asked the companies to ignore SEBI and continue with business as
usual. Its order nullifying SEBI's directive came within 24 hours

Asked which could be the appropriate court, Finance Secretary Ashok Chawla said: ³I believe the High Court.´ While
the SEBI is headquartered in Mumbai, IRDA is located in Hyderabad. The agreement to hold fire came after Mr. Bhave
and Mr. Harinarayan had meetings with the Finance Secretary and other top officials, before agreeing on jointly
approaching the courts.

Earlier during the day, Mr. Harinarayan had told the media that while the IRDA did not have the powers to quash the
SEBI order, it certainly had the powers to give directions to insurance firms. He also questioned SEBI's authority in
banning insurance companies from raising funds through ULIPs. The SEBI chairman, however, refused to comment on
the issue.

The crux of the controversy is whether ULIPs are similar to mutual funds and, therefore, should come under the SEBI
or are insurance products under IRDA's regulation. ULIPs invest a major chunk of funds in stock markets.

Insurance companies, however, stress that ULIPs are not mutual fund products as the main feature is insurance cover
and the mere existence of an additional investment feature cannot convert it into a mutual fund





  
  



For the third month in a row, the country's industrial production maintained a high growth of over 15 per cent,
signalling that the recovery process is on firmer ground.

However, with industrial growth at 15.1 per cent for the month, as measured by the Index of Industrial Production
(IIP) data released here on Monday, it is lower than 16.7 per cent growth achieved in January this year and a robust
17.6 per notched up in December last year. Ostensibly, the slippage is owing to the partial withdrawal of the stimulus
measures coupled with the moderation in output witnessed by sectors such as cement and steel.

According to Crisil's principal economists D. K. Joshi, the growth in industrial production would moderate in the
coming months due to the base effect and further tightening of the monetary policy by the Reserve Bank of India
(RBI) and monetary policy tightening by the RBI. Overall, I expect GDP growth to be around 7.2 per cent in 2009-
10,'' Crisil Principal Economist Mr. Joshi said.

However, the fact remains that the over 15 per cent growth witnessed in February has been led by manufacturing,
especially the capital goods sector followed by consumer durables, showing thereby that the growth ² despite the
advantage of a low base of 0.2 per cent in February 2009 ² is being driven by investment by corporates and higher
consumption. The manufacturing sector, which is leading the recovery, posted a growth of 16 per cent during the
month. The IIP data reveal that consumer durables, the sector that was particularly impacted by the global meltdown,
logged a growth of 29.9 per cent in February while mining and electricity generation also notched up decent growth
rates of 12.2 per cent and 6.7 per cent, respectively. Thus, for 2009-10, the first 11 months of the fiscal year
witnessed a growth of 10.1 per cent as compared to 3 per cent in 2008-09.

³The healthy performance of the industrial sector is likely to reassure policy makers that they can remove stimulus
without disrupting the economic growth momentum,'' Moody's said in a statement while commenting on the IIP data.
 As per the IIP data, 14 out of the 17 industrial groups showed positive growth in February 2010. According to the
use-based classification, the capital goods and consumer durables sectors recorded high growth of 44.4 per cent and
29.9 per cent, respectively.

The slide in specific industries such as cement and steel was expected, as was clear from the core sector data which
had earlier revealed a deceleration in cement output to 5.8 per cent in February as compared to a growth of 8.3 per
cent in the same month in 2009. Likewise, the growth in production of finished steel also slipped to 0.9 per cent from
2.4 per cent during the specific months.

PTI reports:

The March IIP numbers, however, will not have the advantage of a low base and also the impact of withdrawal of
stimulus package in the budget would become manifest.

Finance Minister Pranab Mukherjee in the Budget for 2010-11 partially rolled back the stimulus by raising excise duty


by 2 per cent to 10 per cent and taxes on petroleum goods that pushed up the prices of petrol and diesel by more
than Rs.2.50 a litre.

     !  "

On the third day of the 3G spectrum auction on Monday, the

total provisional winning price at the end of round 16 for all 22
telecom circles stood at Rs. 4,324.19 crore against Saturday's
Rs. 4,085.23 crore.

Delhi, Gujarat, Tamil Nadu, Mumbai, Andhra Pradesh,

Karnataka and Mumbai are among the top telecom circles
where all leading telecom companies are showing keen
interest. Some telecom circles like West Bengal, Orissa, Assam
and Jammu and Kashmir are among the service areas that
have so far failed to draw attention of participants. Telecom
experts say it was just the beginning of the auction process
which might become more intense and take days before the
auction prices are finally settled.

Nine players

Nine leading telecom players, including Bharti Airtel, Vodafone

Essar, Reliance Communications and Tata Teleservices, are
taking part in the e-auction.
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ROLRATA: State-run Allahabad Bank has said its total business touched Rs 1,79,000 crore during the
2009- 10 fiscal, exceeding the target of Rs

1,75,000 crore.

Deposits of the bank stood at Rs 1,06,000 crore, while advances stood at Rs 73,000 crore for the period,
chairman and managing director JP Dua said in a statement.

Dua said that the bank had implemented CBS in 969 branches out of a total of 2,287 planned to implement
CBS fully at all its branches by the end of calendar year 2010.

He said during the current year, the bank would increase credit flow to the MSME sector.

The bank today inaugurated its first branch at Silvassa in the Union Territory of Dadra and Nagar Haveli
under the Ahmedabad zone.

05 6
  0
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Quality of assets could pose a challenge for bank profitability in the coming quarters, with some
borrowers continuing to default on loans even
after they are restructured, said rating agency CARE. But the bad loan losses are likely to be compensated
by a rise in interest margins as high-cost deposits shrink.

As a one-time measure in 2008, RBI had allowed banks to give troubled borrowers more time to repay
without classifying them as defaulters. Borrowers were given more time by restructuring their loan which
involved reducing their debt burden through an increase in the repayment period.

As per CARE¶s analysis, the total quantum of restructured assets as on December 31, 2009, stood at around
Rs 130,000 crore, amounting to around 4% of total advances. Of this, 70% were in the standard advances
category. In its report, Care has warned ³Given the huge quantum of restructured assets on their books,
additional slippage could impact profitability of PSU banks.´

On bad loans, CARE has estimated the absolute level of gross non-performing assets at Rs 80,000 crore as
on December 2009, up 30% over December 2008 levels. ³The overall gross NPA ratio for PSU banks was
influenced by increase in slippage (when a loan slips to sub-standard category) in Bank of India, Bank of
Baroda and SBI.´

CARE Research has said it expects gross bad loans to reach around 2.8% for 2010-11. However, if 15% of
the restructured assets slip into the bad loan category, gross bad loans may rise to 3.5%. Further, from
September 2010, RBI has instructed banks to provide for 70% of the total bad loans on their books,
popularly trend as provision coverage ratio (PCR).

According to CARE, this may eat into bank profits. ³A higher NPA provision coverage may no doubt mean
reduced profitability for those banks who are presently having a coverage far below the stipulated minimum,
but it would at the same time, fortify banks against possible credit losses and thereby strengthen their
balance sheet,´ said the report.

According to CARE estimates, in the first nine months (till December 09) the PCR of all commercial banks
stood at 52.8%, slightly lower than 55.5% a year ago. However, in the same period, the gross bad loan to
total advances has risen to 2.42% from 2.18% a year ago.

Care expects that higher credit offtake may show a positive impact on net interest margins (NIM). The NIM
of most banks improved on a quarter-on-quarter basis over the September 2008 quarter. Many banks had
mobilised huge deposits during the quarter ending December 2008 at rates ranging from 9.5% to 11%.

show further improvements,´ Care said



³The impact of these high-cost deposits should wear off in the current quarter, post which the NIMs should

Infy's muted FY11 EPS guidance leaves experts

disappointed

Software bellwether nfosys Technologies reported a 1.14% jump in its fourth quarter results for the financial
year 2010 which came in at Rs 1,600 crore as against Rs 1,582 crore, on quarter-on- quarter basis (QoQ).
Revenues for the same quarter increased 3.54% to Rs 5,944 crore versus Rs 5,741 crore (QoQ). The numbers
were slightly above market estimates, as a firmer rupee countered the impact of rising demand for outsourcing.

According to CNBC-TV18 estimates, its revenues were expected to go up 1.9% at Rs 5,847.6 crore as against Rs
5,741 crore QoQ and its net profit was expected to be flat at Rs 1,581.2 crore versus Rs 1,582 crore.

The company¶s operating margins for the quarter declined to 34.02% versus 35.5% (QoQ) and FY10 earnings per
share (EPS) stood at Rs 109.72 per share.