Page 51 - BANKING FINANCE JANUARY 2016 ONLINE

FEATURE

NPS) Regulations 2015, "No pension Section 6 of the MWPA allows indi- keep business and personal assets
or accumulated pension wealth in vidual to buy Insurance policy in his separate, and that too in such a man-
TIER 1 account under national pen- name and create a trust in favour of ner that neither the person loses con-
sion system, shall be liable to seizure, beneficiaries (wife and children). No trol over his assets and nor there's so
attachment or sequestration by pro- separate trust is required to be much control that creditors argue that
cess of any court at the instance of formed under Indian Trust Act. If debtor and the protection structure
creditor for any demand against the done so then the maturity, surrender are one and the same.
subscriber, or in the satisfaction of a or death proceeds out of the policy
decree or order of any court." will be the property of the beneficia- Creating a private trust and transfer-
ries and no creditor of the policy- ring your personal assets into that can
This pension product like PPF comes holder can claim anything. be a good asset protection structure.
with restrictions on withdrawal be- Trust becomes a separate entity and
fore and after 60 years of age. Under- Though it is advisable to buy only it can't be attached by court unless it
stand the minor nuances of the in- term life insurance to cover death is proved that this is created to de-
vestments before you opt for it. risk, but technically even ULIP and fraud creditors. It should be created
endowment policies can be bought with caution and understanding of
Married Women Proper- under MWP Act. Investments and In- pros and cons, since once assets are
ties Act surance should not be mixed, but transferred to it, they cannot be
when the purpose is to protect the taken back.
If a creditor demands recovery of asset along with growth on invest-
dues through court, insurance policies ments, then some investments can be These are legal ways to protect per-
are also entitled to be attached. To made in this structure. sonal assets, but still if there's some-
protect policies from creditors and to thing is done with fraudulent or illegal
the intended beneficiary is get the Trust intention, no product or structure can
claim in case of the insured's death; protect the debtor. So if intention is
individuals should buy life insurance Internationally, this structure is widely right, then start early, understand the
policy under Married Women Proper- used. The belief is that business assets structure, create a financial plan and
ties Act (MWPA). are for business entities but personal start working on it. (Source: BS)
assets are for trust. One should always

RBI meets bankers to discuss ways to improve asset quality

Reserve Bank of India Governor, Raghuram Rajan met with top bankers to discuss on the way forward on various
issues like preparedness for Basel III norms, capital requirement, fund-raising plans and improving quality of assets.
Sources said the possible agenda of this meeting was to understand the progress and implementation of some of the
schemes like strategic debt restructuring (SDR), 5:25 scheme.

Most bankers, however, remained tight-lipped on the exact agenda for the meeting and what transpired. Arun Tiwari,
CMD, Union Bank of India said, "This meeting did not have any specific agenda and was purely for bankers' feedback
on general economy, commodity prices, IRAC norms, capital raising plans and so on".

Currency notes with scribbling on them are legal tenders: RBI

Reserve Bank of India has refuted rumours which is making people believe that currency notes with scribbling on
them would cease to be legal tenders from January, 2016. Rumours are doing the rounds in the social media that
banks would not accept currency notes with writing on them. The central bank has denied having issued any such
communication. It has reiterated that all currency notes issued by it are legal tender and banks and members can
freely and without fear accept them in exchange for goods and services.

BANKING FINANCE | JANUARY | 2016 | 51

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