The Bank, which collected Rs30 crore from investors, is believed to have charged an entry load of Rs25,000 for every Rs10 lakh invested
ABN AMRO Bank customers who had invested in the Osian Art Fund through the bank are now upset over the low returns and have accused the bank of not taking ownership of the entire process. According to sources, the Bank garnered Rs30 crore from its customers for the art fund, which totally raised Rs100 crore.
The 36-month close-ended scheme launched in July 2006 made a quiet exit with returns of 5% per annum. However, investors believe the actual returns could be lower at 3% to 4% per annum. As of July 2006, the fund’s total corpus was Rs102.40 crore and it had 656 unit-holders across 39 cities.
According to investors, the bank had charged an entry load of Rs25,000 for each Rs10 lakh invested in the fund, thus netting Rs75 lakh from the total collection of around Rs30crore from its customers.
The bank had reportedly assured investors that it is was a ‘safe investment’. But three years later, investors are disappointed with the poor returns of 5% per annum and a delay in the redemption of the fund.
An investor who did not wish to be identified said, “Three years back, the bank had advised us to invest in the art fund. ABN AMRO assured everybody that it is a safe investment. We were told that Osian is quite reputed and there is nothing to worry about the money. The investment process and the refund will be done in a very transparent manner.”
Investors say they are still uncertain about the exact redemption date. As per the fund’s prospectus, the fund distribution was to commence from 10 July 2009 and redemption of the fund had to be completed by 10 November 2009.
However, some investors claim that the redemption process has not been completed till date. “Last week I was told the money will be transferred through electronic transfer by Saturday. It has not been done as yet. The excuse is always that the audit is being done, the audit has been delayed,” said one investor. “I was told the cheques would be dispatched in three to four days last week, (but) I have not received it yet,” claimed another investor.
Investors are also upset with the bank’s ‘attitude’ towards this issue. “Once the investment was made from our side, we realised that things are not so good, the communication from the bank is not proper. I started noticing that ABN AMRO is not taking ownership of the whole process. There is no proactive communication from the bank’s end, it is always reactive and that too, after the investor has waited for a very long time. Each time we were told by the bank’s relationship manager that the issue has been the resolved. The money would be given in three to four days’ time,” said an investor.
A spokesperson for ABN AMRO Bank told Moneylife via email, “In keeping with our philosophy of providing a range of investment options to our clients suitable to their risk appetite and personal goals, we present various funds across different asset classes. The Bank however weighs investment options extremely cautiously and puts in safeguards and processes in place to ensure that clients take an informed decision when choosing to invest in any fund. At every step, our endeavour is to keep our clients briefed and updated on market-related information and fund performance. In view of client confidentiality, we would not like to comment on Client and Fund portfolios.”