letter to GIPSA on Housing Loan Revision - oicoa

THE ORIENTAL INSURANCE COMPANY OFFICERS ASSOCIATION(Central Committee)Regn. No. 2916/CNI(AFFILIATED TO THE NATIONAL CONFEDERATION OF GENERAL INSURANCE OFFICERS' ASSOCIATIONS)OICOA/CC/GS/2010/L/05725 th November'2010Shri G.Srinivasan,Chairman, <strong>GIPSA</strong>Re.: Revision and Simplification of Housing Loan SchemeDear Sir,The Housing Loan was introduced in our industry in 1978 and subsequently the scheme has undergonevarious changes and the last major change was done in 2002. Although the Officers and Employeeshave been benefited over these years by the in-house Housing Loan Scheme and the Supplementaryloan from GIC Housing Finance Limited but the whole scheme got quite complicated. As a result afeeling of outsourcing this activity was considered at some point of time. As per the IRDA guidelineson Investment at least 5% of the investment funds should be earmarked for Housing loan of the State.Taking a cue from the spirit of this core function guidelines the Housing Loan Scheme for the officers& employees of the industry needs a major restructuring. Apart from the cue from the spirit this inhousefunction is an Income earning proposition and as such the Industry is earning around 45-50Crores of Interest Income every year. As compared <strong>to</strong> the net profit from the Investment ingovernment securities which is around 6.5%, the income from supplementary loan is 7.5% which is 1%higher. We have the following suggestions <strong>to</strong> make the in-house Housing Loan Scheme a Win-Winproposition from the Organisation as well as for its employees & officers and all the stake holders:1. There should not be any explicit limit of Housing loan- The Housing loan limit should bedetermined intrinsically based upon the Net Take home salary or the repaying capacity. If his/her spouse is also earning, the income of the spouse should also be taken in<strong>to</strong> account fordetermining the maximum loan eligibility of the officer.2. Second Housing Loan <strong>to</strong> all the Officers & Employees without any rider – An Officer mighthave taken a H/Loan when the Eligibility was low or the Maximum loan was low, as a resul<strong>to</strong>fficer has purchased a house which is neither as per his status nor suitable for his family. Itis requested that all the officers & employees be allowed <strong>to</strong> take second Housing loan withoutany precondition whether he has the property in the same city or he has retained or disposedoff the first property or not. Even if an officer has availed housing loan from any otherfinancial institution, he/she may be allowed <strong>to</strong> sanctioned housing loan from the companyenabling him <strong>to</strong> repay the other loan.3. Permission <strong>to</strong> take additional loan on pari-persu basis from other financial institutions - Ifthe officer or employee desires <strong>to</strong> take additional loan for property or for education of his/herwards, it should be allowed from any other financial institution without any complicated process.ADDRESS: web www.oicoa.net e-mail: viveksaxena@orientalinsurance.co.in; wewakesaxena@gmail.comOffice: C/O IT Dept., 2 nd Floor, Oriental House, The Oriental Insurance Co. Ltd., Head Office, New Delhi 02Cell - 09871278625; LL 011-43659216 (Off) ; FAX – 23269087 (C/O DGM – IT)Association Office: 2 nd Floor, Mittal Building, 4/12, Asaf Ali Road, New Delhi 110002 Phone: 011-23268595

THE ORIENTAL INSURANCE COMPANY OFFICERS ASSOCIATION(Central Committee)Regn. No. 2916/CNI(AFFILIATED TO THE NATIONAL CONFEDERATION OF GENERAL INSURANCE OFFICERS' ASSOCIATIONS)4. Collateral Security by way of Housing Loan Redemption Insurance Policy - The housing loangranted <strong>to</strong> the officer/ Employee should be secured by way of collateral security in the form ofHousing Loan Redemption policy <strong>to</strong> be purchased by the company. This will not only serve as akind gesture <strong>to</strong>wards the aggrieved family members as they will not be bothered <strong>to</strong> repay thebalance loan but it will also serve as a firm security <strong>to</strong> the loan granted by the company.It is requested that the idea of outsourcing the Housing Loan function in our Industry should berejected for all times <strong>to</strong> come because of the following:1. Housing Loan <strong>to</strong> Staff is not shown under “Non-Performing Loan” in the public disclosure,meaning thereby it is a performing loan. In Oriental itself an interest of about Rs. 8 Crores+ isearned every year against a loan of Rs. 120 Crores granted <strong>to</strong> its staff.2. Housing Loan <strong>to</strong> officers/ employees is not a loosing proposition, it is profit making venture byway of interest earning. Approximately Rs. 45-50 crores of interest is earned by way of housingloan <strong>to</strong> officers/ employees across the industry.3. Housing Loan function deploys hardly 7-8 officer/employees on full time basis at Head Officelevel. At Regional office level it deploys officers/ employees of personnel dept. on part timebasis. There is hardly any expenditure on maintaining housing loan in-house function.4. Out sourcing of housing loan activity will involve a subsidy <strong>to</strong> the financial institution involvedand would cost about Rs. 100 Crores by rough estimates <strong>to</strong> the industry. Which is not arecommended by any means.We hope that these recommendations shall be deliberated with a positive frame of mind during thenext Governing Board Meeting at <strong>GIPSA</strong> and the Housing Loan Scheme shall be simplified andrestructured as proposed above. Even if an officer/ employee gains monetarily, organisation will alsogain in tangible and intangible forms both as only a happy & satisfied internal cus<strong>to</strong>mer can make theexternal cus<strong>to</strong>mer happy and ultimately keeps the organisation growing.Thanking you,Yours faithfully,CC.: Dr. R K Kaul, CMD, The Oriental Insurance Co. Ltd.Shri M. Ramadoss, CMD, New India Assurance Co. Ltd.Shri NSR.Chandraprasad, CMD, National Insurance Co. Ltd.Shri Yogesh Lohiya, Chairman, GICShri M. Pershad, CMD, Agriculture Insurance Co. Ltd.(VIVEK SAXENA)GENERAL SECRETARYADDRESS: web www.oicoa.net e-mail: viveksaxena@orientalinsurance.co.in; wewakesaxena@gmail.comOffice: C/O IT Dept., 2 nd Floor, Oriental House, The Oriental Insurance Co. Ltd., Head Office, New Delhi 02Cell - 09871278625; LL 011-43659216 (Off) ; FAX – 23269087 (C/O DGM – IT)Association Office: 2 nd Floor, Mittal Building, 4/12, Asaf Ali Road, New Delhi 110002 Phone: 011-23268595