LIC Gyan: Bank Account Details now Mandatory for all LIC of India Policy Payments
Deccan Herald Notification
Bank Account Details Now Mandatory
On 16 September 2011, LIC of India has issued a notification in "The Deccan Herald" and possibly in other national newspapers, stating that starting 01 Oct 2011, all payments will be made to the bank accounts of the policy holders. This is to ensure faster credit with greater security and privacy. The notification says that this is in lines with the Transparency drive of the Government of India.
What this Means to Policy Holders?
All policy holders will be reqested to provide their bank accounts in the prescribed format (Read the Notification at http://www.licindia.in/pop_up_index_NEFT.html).
Individual investors will need the following information to fill the form:
- Policy Number(s)
- Policy Holder's Name
- Bank Details (Name, Address, Type of Account, Account Number, IFS Code, Mobile Number and email address.
A cancelled cheque leaf will have to be attached along with the form. If the Policy holder's name is not on the cheque leaf, a photo-copy of the first page of the passbook with the name and address of the person will also have to be submitted.
As of now, this does not cover NRI customers (or customers with NRI accounts). The account should be active at the time of funds transfer.
This is really a welcome move from LIC of India as it reduces the risk of money falling into wrong hands. It also makes it easier for the person to draw money as he does not have to visit the bank to do the actual deposit of the cheque that was initially sent out. Also the issue of cheque loss in transit is minimized.
However, here are a few problems.
- After the UID project, the Bank Account Bug seems to have bitten LIC of India too. It expects all its policy holders to have Bank Accounts, email ids and a mobile phone. Now that the UID project has driven up the number of people with bank accounts even among the rural India populations, this would seem OK. Mobile penetration is also high. However, when it comes to internet, there are a lot of people who might not have an email id. Not sure at this point if the email id is mandatory.
- In case of claims, if the beneficiary is a minor at the time of the claim and did not have a bank account, not sure if this information will be collected at the time of claim.
- The situation expects every one to stay put in one place through life or keep updating their details whenever they move. For people with mobile jobs, this is going to be a headache, especially if they do not have something like a home-base.
- In India, where the definition of first name and last name is a bit different (North of India, there is a given name and a family name appended to it, and in some cases, a caste identifier. South of India, there are first names, middle names, father's name, town name, given name and family name attached to the name at various places), a person's name as in the Policy and as in the Bank could be slightly different. Also, across policies, a simple name like Suresh Shanmuganathan Iyer could be given as Suresh Shanmuganathan or Suresh Iyer. Also, data entry errors like typing Shanmuganathan as Shanmughanatan or Sanmuganathan are not uncommon. Similarly, Choudhary, Chowdhary, Choudary, Choudhury are used interchangably and data entry errors are not normally corrected in the Insurance Bond. This is going to lead to problems in the future, with the beneficiary having to prove that the person was the same.
This could Help!
A good number of problems would be solved in the Urban areas if LIC of India provides the facility of updating such details online. However, for rural areas, where Cash is the King, the problem remains. LIC Agents could help by delivering the completed forms to the Branch Offices.
Policy holders, who have some sort of internet connectivity, are strongly suggested to register online at www.licindia.in and have policy information consolidated at one place. You can have all policies for your family in the same account.
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