When we made research reports in the 1990s, we used to have one page on risk factors. One of the risks was ‘Regulatory Risk’ – never bothered about it much..
Now if you are the promoter of a life insurance company, your purse will know what is regulatory risk. Thanks to IRDA’s diktat, all life insurance companies are cutting costs, and cutting costs drastically.
So nice to know that I am not in the top management of a life insurance company! Because one of the jobs would have been to sack people – say 780 people out of my team size of 2355 or something like that. Not that sacking should not be done, but even if one of the 780 people had asked me “Joker, why did you recruit just because the others were recruiting, I would not have known where to look!!”.
A couple of companies did it well and started it about 5-6 months back. However all of them are not doing it with the same degree of finesse.
Why a company cannot tell a divisional head: “You need to reduce your total expenses by X Rs. – do it” really beats me. Many people in the financial services industry KNOW that they are grossly over paid (they may not admit it to you!!) – and will be happy to take a 30% cut in salary :). Now suddenly you have 20,000 ex employees of the life insurance companies searching for jobs in banks, brokerage houses, distribution houses, or just about anywhere..
And to think there are some smart people who have a Citibank personal loan (hold your breath) used for funding ESOPs at prices that are currently not worth the demat charges that they are paying…man it hurts.
One stroke of the pen of the Regulator has led to 10,000 (?? not confirmed) sacking of employees, landlords sitting on empty blocks – at least 1000 branch offices have been shut down, EMI on housing loans, EMI on cars…are all under some threat…God what next?
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