Year: 2009 Month: July Mr. C B Bhave abolishes mutual fund loads.

This event of abolishing loads by SEBI (on the mutual fund sales) there is increasing pressure on other regulators to reduce charges / fees. So the following scenario can emerge:

IRDA has decided that all life insurance products – term, unit linked insurance, endowment and pension products will be available to the customer directly from the company. Such sales will not include any marketing costs so it will be cheaper by 85%. Many people were surprised at the fall in the pricing. On some probing it was found that since the sales force was not needed, all life insurance companies sacked their sales force, training staff, sales support, etc. A few of these employees were absorbed in the marketing department. However the fall came as a pleasent surprise for the end customer. In all 2343 offices belonging to all life insurance companies were now available for being given on rent. Last heard of one life insurance company had shifted its head office from Mumbai to Sikkim – rents were affordable only at Sikkim

Food and Drugs Regulator of India has decided on the amount of ‘cost to selling price’ ratio. Thus the price of Lays chips came down from Rs. 10 for 22 gms to Rs. 1.24 per 22 gms. Retailers however have a choice of whether to keep it or not. Since the FDR of India was not applicable to small enterprises it is believed that most retailers would buy potato and make chips at home. Last seen Pepsi was lobbying in Delhi for a price increase as the wastage ratio in potato was taken at an unrealistically low figure of 14%, the actual figure Pepsi wanted was 76%.

The Institute of Chartered Accountants of India was resisting a ‘Super Regulator’ who wanted to set pricing norms for filing income tax returns (they wanted to cap it at Rs. 350 per annum in urban India and Rs. 185 in rural India). A committee was appointed to decide how audit fees was to be fixed. However two of the committee members could not attend the meeting because they were in a jail in Hyderabad. The institute wanted to know how they had negotiated fees at Satyam, so that the benchmark could be set. The committee will meet again in 2011 after the 2 members are released. Hopes of them being released was quite high because the main accused had joined the Congress party.

The car regulator re priced Nano at Rs. 93,700 and the Jaguar at Rs. 12,00,000. Mr. Tata said nationalisation was perhaps better, and he joined General Motors on their board.

However, there was a lot of downsizing in banks, life insurance companies and mutual funds. 29 out of the 42 mutual funds had decided to close shop and start share broking out fits, 9 out of the 14 life insurance companies had shut shop. Crisil had down graded LIC from AAA to BBB+ with a ‘caution’ out look. This was because when LIC decided to shut one office in Gauhati there was a nationwide protest. So the closure was withdrawn.

The Doctors Regulator had priced each visit to the doctor at Rs. 65 in urban India and Rs. 38 in rural India. Doctors practising Unani, Ayurvedic and Homeopathic streams were thrilled because the regulator had not put a pricing formula for the medicines. Last known one homeopathic doctor had decided to price each white globule at Rs. 45. He said at this price he did not mind even if the visit was made free.

A super super regulator reporting to Ms. Pratibha Patil and Mr. Obama was appointed to review the taxation structure. On reviewing the quality of infrastructure, ability to fight against terrorism, etc. the abolished service tax (Obama asked ‘where is the service’?) reduced Income tax to Rs. 38 per person per annum in urban india and Rs. 14 in rural India. Ms. Patil said Government had no servants and no civility so all the civil servants salaries were reduced by about 94%.

Last heard my friend was rejoicing – his son had got admission in Manipal Medical college – and the fees was reduced from Rs. 54 lakhs to Rs. 2.4 lakhs. However on reaching home his wife told him that the bank where he had kept 6 lakhs from his PF had just declared bankruptcy. Ms. Pratibha Patil could not be reached for comment whether nationalised banks would be bailed out. Mr. Obama had already invested all his money in Citibank.