Banking: RBI Allows More Time to Exchange Pre-2005 Currency Notes

The Reserve Bank of India (RBI) extended the period to exchange pre-2005 series currency notes to 30 June 2015 from 1 January 2015. The notes can be exchanged for their full value.The old notes will continue to be legal tender until the new deadline, RBI said in a notification on its website.


Secure Future?

One of the must-have insurance covers is a personal accident (PA) policy which you need in case of disabilities due to accidents. Premiums are low and you get lifelong renewal.


But while buying PA, you need to understand the fine print of what is covered and whether the insurer offers flexibility in case your disability does not fall within the pre-defined table. Turn to the Cover Story where our insurance expert, Raj Pradhan, explains all the intricacies of PA in his deeply-researched article.


While awareness of term plans is fast increasing, awareness about PA cover is woefully low or absent. Instances of death due to mosquito bite have increased in recent times; but most insurers do not believe death due to mosquito bite can be termed ‘accidental’. Any insurer who wants to be the first to cover it?


With the Planning Commission of India being transformed to NITI (National Institution for Transforming India) Aayog, which is expected to be a significantly more powerful, Narendra Modi will have an unfettered opportunity to deal with state chief ministers, especially those from other parties on financial matters, points out Sucheta, in her Crosshairs column. This will have important political and economic implications. In her Different Strokes column, Sucheta reviews various recent decisions of the Modi-led government, including the multiple ordinances, and underlines the need for the government to communicate its plans more effectively.


There is no dearth of advice on buying stocks. But advice on selling is rare. Which is why you cannot miss the article by R Balakrishnan in this issue.


Moneylife Foundation starts the New Year with a “Back to Basics” seminar on insurance and investing on 10th January. Dr Rajeeva Karandikar, an eminent Indian mathematician, statistician and psephologist, speaks on 23rd January on whether opinion polls really predict the outcome of an election Go to to register online. As always, keep writing to us with your views.


Is Health Insurance Affordable for All?

As a layman, what I understand is that there are life and health insurance policies. About health insurance, I understand that it is an assurance to come to the policyholder’s rescue in the hour of need.


People, who are capable and can afford it, want their future to be safe and secure. Those who cannot afford, have to reconcile to their fate. The need to keep oneself hale and healthy may arise at any time for any person, irrespective of age and economic status. Out of our 1.25 billion popula-tion, how many have health insurance policies and are covered by their employers under hospitali-sation schemes? I do not think not even 500 million population are covered under the insurance or hospitalisation.


It is unfortunate that the remaining 750 million people have nowhere to go in the hour of their need. Is it not the primary duty of the government—both state and Central—to ensure that the medical facilities are available to each and every one?


The need, or greed, or weakness of a human being to keep himself free from problems offers an excellent business opportunity that is exploited by corporate hospitals and insurance companies. For whose benefit is opening of corporate hospitals or selling of health insurance policies? Is it not exploiting the situation? We are recommending 49% of FDI participation in insurance sector, but it is only to help limited sections of our population. Why should a foreign commercial organisation invest its money? Will it do so for welfare or commercial exploitation?


When 40% of the population lives below the poverty level, how can they buy the insurance poli-cies? Can they afford to buy insurance, that too when they are buying the very essentials of life like, grains, oil, dal, etc, through public distribution on subsidy basis? We are all aware how the cor-porate hospitals charge once they know the patient has health insurance cover. We are also aware the insurance agents sell the policy to earn a fat commission or a foreign visit, rather than the utility to the policyholder.


The State, which is expected to provide basic requirements like food, security, health or medical facilities, education, etc, to all citizens of the country, is making it available only to those who can afford it. Yet, the government claims it as a great achievement.

SM Ravipati, by email


Worshipping film stars?

In an era where inflation has been rising, it is annoying to see fans of film stars like Rajnikant pour-ing litres and litres of milk on his cut-outs whenever any new movie releases. Can’t the film star educate his audiences and request them not to indulge in extravagance? Even 100 years of aca-demic research cannot explain why there is so much adulation for film stars like Rajnikant and MGR in Tamil Nadu.


Is it because the people are innocent? Is it because such fans have nothing else to do? What to say of people, who pledge their jewellery with a moneylender, take a loan and build a temple for their film stars?


It is very sad. Nowadays, many temples in south India have started doing these abhisheks of milk to appease the ‘Gods’. Even Lord Vishnu has said that you can see God in the smile of a poor child, then why this craze? Many of the so-called charitable hospitals are anything but charitable.


Hope Moneylife can do a feature on this.

Bhagyalakshmi Seshachalam, by email


Will Maruti Become A Mere Distributor For Suzuki?

I was reading comments on the Maruti Suzuki deal which have raised concerns among mutual fund (MF) houses. MF houses felt dismayed with the selective or ‘no information sharing’ about the deal.


Maruti (Suzuki 56%) wants to hand over its new car plant in Gujarat (built on land given by the state) to Suzuki of Japan to make cars which will, in turn, be sold by Maruti Suzuki. This simply means that the profits will be skimmed by Suzuki and Maruti will pick up the crumbs. Maruti Suzuki is a corporation registered in India in which Indian shareholders hold 44% of the equity. Suzuki is a 100% foreign-owned company. They are two entirely different entities.


If Suzuki wants to own its manufacturing business in India entirely, the legal way to do it is to make an open offer to Indian shareholders and buy them out. But, by doing what is being conspired, it will effectively get the profits without having to buy out local shareholders. In due course, Maruti will just become a distributor of Suzuki cars. Government of India is facilitating this by even going as far as amending the Companies Act to allow a resolution to effect the transfer of the plant from Maruti to Suzuki by a simple majority. The law, at present, requires three-quarters of the share-holders to support an enabling resolution. This is to expressly protect the interests of minority shareholders.

Arvind Hasija, by email


Faith In Cooperative Banks

Thank you, Moneylife for waging a relentless battle in favour of individual investors. This advocacy is sorely required.


I would like to draw your attention to a running sore in banking industry that relates to cooperative banks. These banks are a peculiar animal as they have two jurisdictions—RBI (Reserve Bank of In-dia) and respective state governments. Most of these banks are financially weak and do not have the expertise to run a bank. Several of them have run into difficulties and their operations have been suspended.


Whilst RBI and ex-RBI officials will admit to all the problems with regard to which they have not tried to improve matters, having allowed them to operate as banks (a term which gives some sort of assurance to lay public), it is RBI’s responsibility to ensure that they are well run and depositors’ money is safe. This is all the more important given that a large clientele of these banks comprises the lower economic strata. Customers of these banks are expected to accept ‘erosion’ of their deposits—so the concept of ‘bailing out’ is being applied without any public debate whatsoever.


These problems are bound to erode public faith in banking industry.


RBI could enforce rules like higher SLR (statutory liquidity ratio) requirements, graded growth in business, keeping growth in line with growth in capital of the bank, etc.


I would strongly urge you to focus your attention on this sector.

Girish G Vaidya, by email


Misuse of Trust

This is with regard to “E-commerce offers convenience but what about warranties for consumer?” by Sucheta Dalal. There is a lack of consumer awareness of what to do when things go wrong. Talking specifically about online shopping, the majority does not know what happens next if sellers fail to honour their commitment. They blatantly abuse the consumer’s interest.


For example, I bought a laptop in October 2014 and found that it was a used item and had warran-ty for nine months against the promised 12 months. Customer care said they would recall the product and refund my money (harassment apart in the whole process). After a month (TrustPay policy —Snapdeal promises resolution in a month), they declined to help. I had to literally threaten them; it was the fear of consumer court that made them budge and recall the product. Then I had to wait for another month to get my money back. They violated their own policy and were unapol-ogetic. I wanted to take them to court but it was the lack of knowledge and the fear of courts that stopped me.


When I took the issue via twitter/FB (Facebook), I found that I was not the only one. There were hundreds like me (in a week’s time). Is court/law the only forum that can help consumers like me sort issues out? In such cases, consumers have to rely solely on sellers who misuse their trust.



Rational in the Real Sense?

This is with regard to the book review of Unthink by Anand Desai. It looks interesting. I am looking forward to glancing through it, when I stumble on the book. But I have a comment:

“Throughout the book, Paley comes across as a young teenager who believes he always knows better than the old grandfather. The grandfather smiles and continues to smoke his pipe,” says it all. No, I am not that grandfather, still...


Empirical evidence and ‘statistics’ can mislead you; so the thinking being branded as ‘rational’ need not be necessarily rational in the real sense. A little bit of confusion helps us to forget some of the really painful realities.

MG Warrier


Well Said!

This is with regard to “The Science of Pranayama” by Prof BM Hegde. Well said! It is a timely re-minder for the New Year resolution for many of us.

Narendra Doshi


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