The government and financial sector regulators are finally moving on to reform and develop the corporate bond market.

The high-level co-ordination committee on financial markets (HLCCFM), comprising regulators and senior finance ministry officials have put forth a schedule for the oft-proposed reforms, which have been in the pipeline for several years. “The HLCCFM reviewed the recommendations made by various committees and market participants, measures taken so far for developing the corporate bond market and the way forward,” the Reserve Bank of India (RBI) said.

According to sources, RBI was asked to prepare the road map for strengthening the domestic bond markets to enable Indian companies access funds from non-bank sources. At present, banks meet most of the debt requirements of companies. With access to long-term funds limited, many lenders have reached the exposure cap to corporate houses, impeding the flow of funds to infrastructure.

RBI would present a working paper to the HLCCFM, but no time frame had been fixed. The paper would address the issues raised by a host of expert committees. Among others, lowering of stamp duty by state governments is often cited as a big impediment.

A committee under Raghuram Rajan had even raised the issue of regulation and made a case for the Securities and Exchange Board of India to regulate the market.

Source: Business Standard

The Insurance Regulatory and Development Authority (IRDA) issued a new set of guidelines on Unit Linked Insurance Products (ULIPs). These guidelines will be coming into effect from July 1, 2010.

Accordingly, all ULIPs, including pension or annuity products, must have a minimum assured sum payable on death. However, IRDA clarified that the provision of death benefit will not be mandatory in case of ULIPs providing health insurance cover.

The minimum policy term would be five years for individual products, while the group products would continue to be renewed annually. Partial withdrawal from the policies would be allowed only after the fifth policy anniversary for all unit linked products, except pension or annuity products. For pension or annuity products, no partial withdrawal will be permitted and the insurer will be allowed to convert the accumulated fund value into an annuity only at maturity.

Further, IRDA stated that ULIPs cannot be used to obtain loans. Also, every top-up premium will have a lock in period of three years from the date of payment of that top up premium and they will not be allowed during the last three years of the contract.

Source: financialexpress.com

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