Number Portablity service starts in Haryana

After a delay of more than two years, Mobile Number Portability (which allows subscribers to retain their existing mobile telephone numbers when they switch from one operator to another) will debut today starting from Rohtak in Haryana.

Consumers who are not happy with their existing operator can move to another, irrespective of mobile technology or from one technology to another of the same operator within a circle. The system is likely to be launched in other parts of the country by the end of December provided the operators are ready with their network.

Process

For porting, a subscriber has to send an SMS (PORTMobile Number) from the number he wishes to be ported, to number 1900. The subscriber will receive a Unique Porting Code (UPC) by SMS from his current service provider.

The subscriber will need to apply in the prescribed application form to the chosen new service provider quoting the UPC which will act as a reference while filling up the application form with the new service provider. The new service provider will then take action to get the required processes completed to enable the subscriber get connected to his network. Porting has to be completed within seven working days. TRAI has fixed a ceiling of Rs 19 on porting charges which the new service provider may collect from the subscriber. Post-paid subscribers, before making the porting request, have to make sure that their last bill has been paid failing which the request for change to new service provider shall be rejected.

In the case of pre-paid subscriber, any balance amount left will not be carried forward when the number is transferred to the new service provider. Once a subscriber ports his number to the new operator, then, he will have to wait for at least 90 days before he can change his operator again.

According to TRAI estimates, about 10 per cent of the mobile subscriber base is expected to avail itself of the service in the first year, which will fall down to just 5 per cent by the third year. But the system will force operators to improve their quality of service and create differentiation in services not only to retain their existing subscriber base but also to attract customers from other players. New operators are looking at MNP as an opportunity to wean away high-end customers cornered by incumbent players, especially in the post-paid segment. On the other hand, incumbent players are planning to leverage their pan-India network and reach to attract subscribers.

3G services

Industry watchers say that there could be a significant movement from CDMA network to GSM. MNP will also play a significant role in the 3G space as not all the operators have spectrum. So, a subscriber of a mobile operator which does not have 3G services may look to move to an operator who has.

IFRS expected to be notified by Dec-10

The government on Tuesday said it will notify the new accounting norms in sync with international practice IFRS for India Inc by the end of this year, and ensured that the April, 2011 deadline will not be missed.

Speaking at an Assocham conference on International Financial Reporting Standards (IFRS), Corporate Affairs Secretary R Bandyopadhayay said the accounting standards are almost ready and all issues, including the tax implications for the convergence, will also be resolved.

"By the end of December, we will notify the converged accounting norms...all issues are almost resolved and we are confident that by the next fiscal, that is April, 2011, Indian companies will prepare their accounts books as per the IFRS," Bandyopadhayay said.

The taxation committee of Institute of Chartered Accountants of India (ICAI), which is helping the government with preparing the IFRS convergence, is almost ready with the recommendations, said Corporate Affairs Joint Secretary Renuka Kumar.

Another issue that needs a re-look is projecting value of an asset in account books. While some are in favour of arriving at the value in terms of historical cost, others believe in the fair value concept.

In accounting, fair value is defined as an estimate of the potential market price of a good or service, taking into consideration factors like acquisition, production and distribution costs and replacement costs.

However, the historical cost does not consider these factors and instead, is calculated at the initial value.

Soon after the issues are resolved, the National Advisory Committee on Accounting Standards (NACAS), the final recommending body for IFRS, will notify all the 37 standards.

In the ongoing winter session of Parliament, the government is also expected to come out with an amendment to the Companies Act, 1956 to pave way for the convergence of the Indian accounting norms with the IFRS.

According to the roadmap laid out by the Ministry of Corporate Affairs , companies with a networth of over Rs 1,000 crore, will have to prepare their account books as per the IFRS from April, 2011.

Further, while scheduled commercial banks and urban cooperative banks will adopt it from April 1, 2013, all insurance companies will convert their opening balance sheets with IFRS from April, 2012.

Listed large non-banking finance companies (NBFCs) will converge their opening books of accounts with IFRS norms from April 1, 2013.

Lower Lock in period in Insurance

Insurance regulator IRDA on Tuesday said that all universal life products, a new kind of insurance which entered India recently and gives greater flexibility to customers, will not have any unit-linked component in them.

IRDA also said that from now, all such products will be named variable insurance products (VIPs) and have a lock-in period of at least three years.

The regulator prescribed that all VIPs should provide death benefits equal to the guaranteed sum assured plus the balance in the policy account while the maturity benefit should equal the balance in the policy account together with a terminal bonus, if any, as applicable. It also said that the sum assured under these policies should be at least ten times the annual premium.

As of now, no group insurance is allowed by IRDA to operate under these policies. Single premium or limited premium structures are also not be allowed for VIPs.

Specifiying on the cost structure, IRDA said that the maximum expense, including commission, should not be more than 27.5% of the premium, while for the second and the third year, this will be capped at 7.5%. From the fourth year onward, the expense is capped at 5%. The regulator also said that the minimum policy and premium payment term shall be five years.