The Reserve Bank of India (RBI) relaxed KYC (know your customer) norms allowing self-certification of documents needed for opening bank accounts. RBI has asked banks to “allow self-certification; accept a certified copy of the document by mail/post” for account opening. Banks have also been asked not to seek fresh documents if an existing KYC-compliant customer of a bank desires to open another account.
For periodic updating of KYC, RBI told the banks not “insist on physical presence of the customer” and to also not seek fresh proof of identity and address in case of no change in status for ‘low risk’ customers. If customers are unable to comply within a time period, ‘partial freezing’ may be introduced.
I find the following drawbacks in the newly launched Varishtha Bima Pension Yojana (VBPY) being administered by Life Insurance Corporation of India (LIC). For each drawback, I am giving a suggestion to improve the scheme.
(a) The scheme has maximum pension of Rs5,000 per month. It is insufficient, since it is family-based and not individual-based. A couple can have only one such account.
Suggestion: Monthly pension be increased to Rs20,000 per person, to meet inflation.
(b) It is available to a person who has completed the age of 60 years. A person may go for voluntary retirement at an early age, and s/he may get commutation of pension, gratuity and provident fund. S/he may be interested in investing in a safe avenue, to get a steady income.
Suggestion: Therefore, age limit of 60 years may be brought down to 40 years.
(c) It gives loan up to 75% of the invested amount which is available after three years.
Suggestion: Loan of 75% of the deposit may be made available immediately after its deposit, as the person may want the loan suddenly and may be in dire need of money.
(d) Liquidity of this scheme is poor.
Suggestion: The limit for withdrawal may be reduced to seven years from the date of deposit, for a depositor up to the age of 70 years, and to three years, for depositors above the age of 70 years. This will give good liquidity to a senior citizen who has no other source to meet his immediate requirements.
(e) There is no income-tax benefit on the interest.
Suggestion: Interest may be tax-free up to Rs10,000 per month up to the age of 60 years and fully tax-free after the age of 60 years.
In addition, the 3.09% service tax for depositing the amount in this scheme should be withdrawn. Just like bank deposits, there should be no type of tax for making a deposit in VBPY.
Finally, partial withdrawal in multiples of Rs66,665/- should be allowed.
These are some suggestions which would to make VBPY a popular scheme.
Moneylife Foundation may prevail upon the Government of India to incorporate these modifications in VBPY.
Shirish S Shanbhag, by email
I am a member of Moneylife Foundation and do attend the seminars once in a while—though not as frequently as I would like to.
We are quick to criticise people or institutions, whereas we never take the time to appreciate those who are doing a good job. This is to tell you that you and your colleagues are doing great work and I really appreciate it.
My office is based in Navi Mumbai. I would request you to hold your seminars in Navi Mumbai also. People living there are mostly young couples for whom these financial fundas would be a boon. Do let me know if I could help in any way.
Niranjan Bangera, by email
This is with regard to the article “Ranjit Sinha Is the Symptom” by Sucheta Dalal (Moneylife, 2 October 2014). The article clearly states: “The malaise of corruption and influence-buying is deeply ingrained in the system.” I am thankful to Moneylife.
Our system is depressingly corrupt. But there are brave attempts at trying to stop it by people like Shanti Bhushan, Arvind Kejriwal (AK), and organisations like Moneylife, and a few others.
I have now revived the hope of freeing our system from corruption, thanks to AAP’s (Aam Admi Party) tireless attempts. I would like your opinion on AK and AAP. Can they do some good?
Thanks and congratulations for the bold anti-corruption article.
(Name withheld on request), by email
Details of ECS entries are required
This is with regard to “ICICI Bank offers cardless cash withdrawals at ATMs”(Moneylife, 2 October 2014). There are many mistakes/problems created by some nationalised banks for its customers. And prime minister Narendra Modi wishes that all citizens must have bank accounts. Recently, from 2014, Punjab National Bank has stopped printing the full details of ECS (electronic clearing service) entries.
As we know, practically all dividends of companies are credited directly to shareholders’ bank account. But many companies do not send ECS advice of dividend payments. And banks do not inform customers about the details. Banks have been making entries in the passbook, but full details of such receipts are not entered. They enter incomplete information from which it becomes difficult to reconcile the receipts. It is more cumbersome and time-consuming to relate—get details of such entries, unless one has first-hand information of such receipts.
The Reserve Bank of India must issue a directive to banks to enter full details of all ECS/ direct credits for all entries made in the passbook / account statements-ledger account of parties to facilitate sources /details of each and every entry. It will help the income-tax department also to know the exact and correct details of each entry. The software for making entries in passbook / account statement of account-holders must be changed, if required.
Also, it should be mandatory to send the ECS advice for dividends credited directly to shareholders’ account by all companies by speed /registered post. The necessary changes, if any, required in rules and regulations must be initiated.
Mahesh Kumar, by email
CCTV systems in government offices
This is with regard to “Ranjit Sinha Is the Symptom” by Sucheta Dalal (Moneylife, 2 October 2014).There was a news report in July 2013 headlined “We beat Pak, again”. It said that according to the Global Corruption Barometer, corruption in India is at an all-time high—double the global rate. The cancer of corruption cannot be cut off unless we the citizens refrain from corrupt practices ourselves. Don’t we pay bribes to get work done? Why do we elect candidates who are corrupt? Will government employees stop asking for bribes and honestly do the work entrusted to them? One way to curb this evil would be to install CCTV systems as well as audio recording equipment in government offices. Are we prepared for this?
Mahesh Kapasi, by email
This is with regard to “Every chest pain doesn’t mean a heart attack” by Prof BM Hegde. I have become a big fan of Prof Hegde, as he has busted many myths and malpractices. His ideas on vaccines and excessive medicine usage were eye-openers.
This is with regard to “Jan Dhan: Desi Problem, Videshi Terms” by Sucheta Dalal. Duplicate accounts are surely opened in large numbers, especially in cities. The amount collected is also very large (about Rs1,500 crore). The Reserve Bank of India must find a way to eliminate duplicate accounts before benefits start flowing.
This is with regard to “Timing Your Stock Buying” by R Balakrishnan. The article is clichéd, to say the least. I would not mind reading it on rediff.com, but not here. Quoting Warren Buffett does not a good article make! We have read a lot of Buffett and his way of investing. What we fail to grasp is how to apply those ideas to Indian markets today. Everything makes sense in retrospect. Some examples would have helped.
This is with regard to “Will Narendra Modi Go after Chain-money Schemes?” by Sucheta Dalal. RBI (Reserve Bank of India) always maintains silence. Whether it was the City Limozine or Sahara, RBI always kept silent.
This is with regard to “E-voting Is Here” by SD Israni. Though this is a very good step, most Indian investors are basically lazy and laid back. More than one year has passed, but hardly any investor has taken note of the power of e-voting. Recently, in the Gujarat Ambuja/ ACC matter, investors were advised to vote against the resolution, but no action was taken by investors. Hence, the resolution was passed. Investors wake up only when they are being hit and then they act like cry-babies.
One of the reasons for rejection, or partial settlement, of health insurance claims is ‘decision avoidance’. The insurance staff simply does not want to not be answerable. Borderline cases are rejected. It is unbelievable, but true, that an investigation agency hired by an insurer made up fake documents as ‘indisputable’ proof that the person had HIV, to reject his widow’s claim. Your recourse in such a situation is the office of the insurance ombudsman.
The Mumbai ombudsman, AK Dasgupta who handles the largest number of complaints in India, explained why the 90-day time limit to resolve a case is not adhered to in many case. In Mumbai, he has managed to clear the backlog of cases pending since 2009-10. He did this with the cooperation of insurance companies who agreed to re-look at pending cases and settle those that did not need a hearing. An extremely intense, introspective interaction with Mr Dasgupta has many learnings that form the core of our Cover Story.
Is the venture-funded madness here to stay? Predatory pricing by online retailers, like Flipchart and Snapdeal, led to a hue and cry by several stakeholders. While their aim is to drive traffic to their websites by offering products below cost, the big question is: What happens when the losses pile up? Sucheta writes on the questionable business practices of e-commerce sites in her Different Strokes section.
It may be a long time before we see strong financial regulation. In her Crosshairs section, Sucheta comments on the new task forces and whether any good will come of them for financial consumers. On a related note, the department of banking and financial services is looking to legitimise select multi-level marketing schemes. This certainly raises some questions, writes Sucheta in a companion piece.
As the festive season draws near, the Moneylife Team wishes you and your family a very Happy Diwali and Prosperous Samvat year!! Hope you have already availed our exciting festive season offers from: goo.gl/2zvSMn