Amid disconcerting news of a fall in loan disbursement, production cuts and job losses following the currency crunch, insurance companies and mutual fund houses emerge as the possible bright spots.
Premium collection of life insurance companies has more than doubled in November while investment in mutual funds grew by a three-fourth. Gross written premium for general insurance companies rose 29% year-on-year last month.
Prime Minister Narendra Modi’s demonetisation drive has actually helped these financial services companies attract massive investments while banks were compelled to cut deposit rates amid a deluge of deposits in old Rs 500 and Rs 1,000 notes.
The fact that premium collection and mutual fund payments are mostly done in cheques also helped, while cash-driven sectors are facing collateral damage.
Premium collection for all life insurers taken together rose to Rs 16,061 crore from Rs 7,553 crore a year ago, and according to Life Insurance Council secretary general V Manickam, this was largely driven by the success of Life In surance Corporation of India’s single-premium annuity plan Jeevan Akshay.
LIC amassed a total of Rs 12,528 crore worth of premium in November, compared with Rs 5,182 crore in same month last year, after cash-heavy State Bank of India slashed bulk deposit rates by nearly 200 basis points. The pension scheme offered an average return of 7.5%, attracting investors in droves after LIC announced the new Jeevan Akshay scheme with average return of 7% from December.