October 3rd, 2008 
Tushar Mathur
Investors in India already worry on the newses on the collapse of major US financial firms, Merrill and AIG (American International Group Inc.) put them to utter panic on lose of there money invested through DSP Merrill Lynch Mutual funds and Tata-AIG. Still most of them doesn’t have any idea about the future of there investments. Here is the exact story on how these collapses impact Indian investors:
To cool the mind of all Indian investors invested through DSP Merrill Lynch and AIG, “Your investments are very safe”.
Banking circles says the Lehman-Merrill Lynch effect will be minimal for the banking sector in India. “India’s banking system is largely robust and secure compared to the US banking industry. Mainly, it is because public sector banks continue to be a dominant part of the banking system in India” says a banking sector consultant based in Mumbai.
According to a document from the Reserve Bank of India: “India’s implementation of the reforms process in banking has had several unique features. Our financial sector reforms were undertaken early in the reform cycle. Notably, the reforms process was not driven by any banking crisis, nor was it the outcome of any external support package.”
DSP Merrill Lynch investors are no need to worry because, DSP Merrill Lynch has very little to do with Merrill Lynch because, they have sold there share to BalckRock’s, an another eminent financial firm, US arm by January 2008. It clearly saying that the money invested in the DSP Merrill Lynch has no link with Merrill Lynch’s global company.
Tata-AIG investors need not worry as the financial conditions of insurance subsidiaries of AIG in India is stable, and they can meet all the liabilities arising out of the claims from the policy holders.
AIG is operating in both life and non-life insurance sector. In both the companies, Tata owns 74% stake each and AIG holds the rest 26%. With AIG facing the heat in US, IRDA has asked for a report from both Tata AIG Life Insurance Company and Tata AIG General Insurance Company on the development regarding one of its promoters AIG in the US.
IRDA said accounts of life insurance and general insurance companies promoted by Tata Sons and AIG as on March 31, 2008 indicate that both companies have satisfactory solvency margins, which suggest that it has enough assets to meet their liabilities. The IRDA further clarified that the life insurance and general insurance companies promoted by Tata Sons and AIG are companies registered under the Indian Companies Act and are bound by the provisions of the Insurance Act and other Regulations.
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