Regulations
Banks flout RBI rules on retaining account numbers after the demise of a joint account-holder

In 2008, the apex bank had clearly specified the rules and regulations on the addition or deletion of a joint account-holder’s name under specific circumstances. However, this rule is not being followed 

Reserve Bank of India regulations clearly specify that a bank has to maintain an account in the name of a joint account-holder, on the demise of a primary or joint account-holder. But a few instances have come to light where banks are openly flouting these rules-and putting a number of bereaved families under pressure.   

Take the case of Pune-based resident Anil Agashe, who held a joint savings account along with his father in HDFC Bank's Satara (in Maharashtra) branch. After his father's demise, he approached the bank to delete his father's name and continue with the account in his name. However, the bank informed Mr Agashe that "as per the rules of the bank" the account would be closed on the death of the first account holder and a new account will have to be opened in Mr Agashe's name.

But while this move might seem logical, it actually creates a number of problems for the surviving account-holder. For example, the existing account number might be having an ECS facility for direct credit of mutual fund dividend amounts or a direct debit facility for paying of utility bills.

The surviving joint account-holder will then have to spend time and money informing all the entities linked to the previous account number, the 'new' account number.  

In this case, being an ex-bank employee himself, Mr Agashe demanded in writing about the bank's rules, since the joint account was operating with "either or survivor" status. In fact, the RBI allows simple deletion of a deceased person's name from a particular account.

After many meetings with the bank manger, Mr Agashe was told that there was a "way out" to continue with the account. Later, his account was changed from a senior citizen zero-balance account to a regular savings account.

In the e-mail Mr Agashe had sent to the bank's managing director Aditya Puri, for the trouble he had gone through, HDFC Bank replied to the message, admitting its mistake and blamed the core banking system for the problem.

"As you have correctly stated, regulatory guidelines, vide Master Circular dated 3rd November 2008, allow for such deletion/addition of joint holders in an account if the circumstances warrant. In deference to these guidelines, the Bank has raised a request for suitable changes in its Core Banking system to accommodate this functionality. However, as the Core Banking platform of the Bank itself is undergoing a change to a new system, all systemic developments have been kept in abeyance till the system changeover. Hence, in the interim, we are continuing with our extant practices in this matter," the bank said in the e-mailed reply.

Such a reply comes as a surprise, since these RBI guidelines were issued way back in 2008-and why have they not been implemented? Is blaming the core banking system any excuse?

Mr Agashe told Moneylife, "When I used to work with a bank way back in 1977, we used to simply delete the deceased person's name after verifying the death certificate. There were no such guidelines then, RBI in 2008 just reissued these guidelines. The bank manger himself had no idea about the master circulars.

"My objection is that a bank can't have a procedure which is at variance with RBI guidelines. This will carry an operational risk on part of the bank," he explained.

Sources have confirmed to Moneylife that the RBI would be taking up this issue with the bank. It is also known that these issues regarding consumer banking will be addressed in the report on customer services, which the panel headed by M Damodaran has to table.

Having been a banker himself, Mr Agashe got his issue resolved. But what about other customers who don't know their rights? "Many people are unaware of the rules and regulations of the RBI, which gives an easy route for banks to get away with their poor services," says Mr Agashe.

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COMMENTS

KAIALSH SINGHAL

2 years ago

CAN A PERSON HAVE BANK ACCOUNT IN THE NAME OF ESTATE OF DEMISED PERSON BY OBTAINING PAN NUMBER IN THE NAME OF ESTATE OF DEMISED PERSON SO TO CONTINUE THE BENEFITS OF INCOME TAX LIKE LOSSES TO BE CARRIED FORWARD REMAINS CONTINUE

Colonel Arun Gupta

3 years ago

Banks offer different types of joint account relationships. Here are a few.

EITHER OR SURVIVOR
This is the most common type of joint account and is applicable between any two individuals. For example, if a husband and wife have a joint account with 'either or survivor' clause, either of them can operate the account and in the case of the death of one of the depositors, the other can continue or the final balance in the account along with all interests (as applicable at the time of closure) will be paid to the survivor.
If there is a nominee for the account, the conditions will be the same and the nominee gets access to the funds on the death of both the account holders.

ANYONE OR SURVIVOR
This type of account is normally held when more than two individuals start an account jointly. Here, any of the depositors can operate the account at a time and in case if any of the depositors expire, the others can continue the account and if required, the final balance along with interest will be paid to any of the survivor/s as requested.

FORMER OR SURVIVOR
In this type of joint account, only the first account holder can operate the account. The second depositor gets the right only on the death of the first after undergoing some basic formalities like submission of proof of death etc.

LATTER OR SURVIVOR
This is similar to the former or survivor, but the difference is that, in this type of account, only the second account holder (latter) can operate the account. The survivor or the former account holder gets access to the fund only on death of the latter and on producing the proof for the same.

MINOR'S ACCOUNT
A savings bank account can also be opened in the name of a minor jointly with a guardian. Here, only the guardian is supposed to operate the account on behalf of the minor. The guardian should be parents or in special cases, a legal guardian, as appointed by court. Some banks allow minors above the age of 12 to open and operate accounts independently.

THINGS TO REMEMBER
• Any mandate / power of attorney for operating a joint account or authorizing another person on behalf of the depositors, is to be given by all account holders or with the consent of all account holders.
• All operational instructions and information in connection with the relationships formed is to be given by all the joint account holders irrespective of the mode of operation.
• If there is a nominee to a joint account, the nominee gets access to the account only when all the account holders cease to exist. In case if both the account holder and nominee is no more, the legal heirs of depositor/s will get the funds.
• In case of a joint account, all the depositors are singly and jointly liable for overdraft if any, even if the application / demand promissory note is signed by one of them.

REPLY

nagesh kini

In Reply to Colonel Arun Gupta 3 years ago

Thanks Col. sab,
Please keep updating lay readers with such useful infos. Keep it up, may your tribe increase!

Colonel Arun Gupta

3 years ago

DearAll,

Here are some extracts and definitions for general consumption

RBI Circular Extracts

5.8.8 Addition or deletion of the name/s of joint account holders.
A bank may, at the request of all the joint account holders, allow the addition or deletion
of name/s of joint account holder/s if the circumstances so warrant or allow an individual
depositor to add the name of another person as a joint account holder. However, in no
case should the amount or duration of the original deposit undergo a change in any
manner in case the deposit is a term deposit.

19.6.1 Nomination facility in respect of deposits
(i) Nomination facility is intended for individuals including a sole proprietary
concern.
(ii) Rules stipulate that nomination shall be made only in favour of individuals. As
such, a nominee cannot be an Association, Trust, Society or any other Organisation or
any office-bearer thereof in his official capacity. In view thereof any nomination other
than in favour of an individual will not be valid.
(iii) There cannot be more than one nominee in respect of a joint deposit account.
(iv) Banks may allow variation/cancellation of a subsisting nomination by all the
surviving depositor(s) acting together. This is also applicable to deposits having
operating instructions " either or survivor".
(v) In the case of a joint deposit account the nominee's right arises only after the
death of all the depositors.

19.7 Customer Guidance and Publicity Educating Customers
on the Benefits of nomination / survivorship clause
(i) The nomination facility is intended to facilitate expeditious settlement of claims in the accounts of deceased depositors and to minimise hardship caused to the family
members on the death of the depositors. The banks should endeavour to drive home to
their constituents the benefit of nomination facilities and ensure that the message
reaches all the constituents by taking all necessary measures for popularising the
nomination facility among their constituents.
(ii) Banks should give wide publicity and provide guidance to deposit account holders on
the benefits of the nomination facility and the survivorship clause. Illustratively, it should
be highlighted in the publicity material that in the event of the death of one of the joint
account holders, the right to the deposit proceeds does not automatically devolve on the
surviving joint deposit account holder, unless there is a survivorship clause.

20.1 Accounts with survivor/nominee clause
20.1.1. In the case of deposit accounts where the depositor had utilized the nomination facility and made a valid nomination or where the account was opened with the survivorship clause ("either or survivor", or "anyone or survivor", or "former or survivor" or "latter or survivor"), the payment of the balance in the deposit account to the survivor(s)/nominee of a deceased deposit account holder represents a valid discharge
of the bank's liability provided :
(a) the bank has exercised due care and caution in establishing the identity of the survivor(s) / nominee and the fact of death of the account holder, through appropriate documentary evidence;
(b) there is no order from the competent court restraining the bank from making the payment from the account of the deceased; and
(c) it has been made clear to the survivor(s) / nominee that he would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i.e.,
such payment to him shall not affect the right or claim which any person may have against the survivor(s) / nominee to whom the payment is made.

20.1.2. It may be noted that since payment made to the survivor(s) / nominee, subject to
the foregoing conditions, would constitute a full discharge of the bank's liability, insistence on production of legal representation is superfluous and unwarranted and only serves to cause entirely avoidable inconvenience to the survivor(s) / nominee and would, therefore, invite serious supervisory disapproval. In such case, therefore, while making payment to the survivor(s) / nominee of the deceased depositor, the banks
should desist from insisting on production of succession certificate, letter of
administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s) /nominee, irrespective of the amount standing to the credit of the deceased account holder.

Some Definitions

A deposit account is a savings account, current account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank and represents the amount owed by the bank to the customer. Some banks may charge a fee for this service, while others may pay the customer interest on the funds deposited.

Joint account is a bank account shared by two or more individuals. Any individual who is a member of the joint account can withdraw from the account and deposit to it. Usually, joint accounts are shared between close relatives or business partners.

Joint accounts are often created in order to avoid probate. If two individuals open a joint account and one of them dies, the other person is entitled to the remaining balance and liable for the debt of that account.

PS-Dear Nagesh - if your problems still exist call me.

REPLY

nagesh kini

In Reply to Colonel Arun Gupta 3 years ago

I've no problem Col.
You've done it absolutely right by providing direct quotes from the relevant RBI circular, which are unambigious and crystal clear. The bank officials defaulting need to be hauled over the coals for unnecessary harassment.

Colonel Arun Gupta

3 years ago

Dear Sirs,

I also have had some interesting anecdotes to narrate concerning the Banking and Financial Sectors. Perhaps each incident can be worth an article or so. However, all these incidents bring out one lesson very clearly: If you are prepared to do your homework and pursue your grievance with the appropriate authorities, nobody can take you for a ride.

In my first skirmish with a Nationalised Bank a few years back, they refused to pay me the interest on a decade old fixed deposit. This was despite my clear instructions on the subject (for renewal for a 10 year period in 1997). It was after my complaint to the CMD of the bank and involving the Banking Ombudsman; the FD was renewed retrospectively for 10 years at the interest rate prevailing in 1997.

In another incident, wrong advice by an official of a Bank (concerning my FDs) resulted in a financial loss of almost 40K. Complaints at GM level did not work. However, a complaint to CMD of the bank; involving the Banking Ombudsman; and vigorous follow up, the Bank Official was held personally responsible by the Head Office of the Bank and was ordered to make good the loss.

Another incident involving a leading life insurance company resulted in the insurance company reimbursing me to the tune of 60K.

I came across your article while doing a Google search when a Nationalised Bank refused to close a Joint account (Either or Survivor) where my Late wife was the first holder & I was the second holder; the account balance was NIL. I had submitted the Death Certificate and a copy of my late wife's will as well (Bequeathing everything to me) to them and a request letter.

Similarly in another Joint account (Either or Survivor) where I was the first holder and my Late wife the second, the Bank refused to delete her name from the account. To add insult to injury they even refused to allow me to change the nominee without signatures of both myself and my late wife. When I asked the manager as to how can I get the signatures of my Late Wife without going to heaven and being reborn, he simply replied that he cannot flout Bank Rules. This was simply preposterous and belied all logic.

That evening I came back home feeling a bit frustrated and peeved; did the Google Search, found your article, down-loaded the Master Circular on Customer Service issued by RBI dated 03 Nov 2008, read all 93 pages, browsed the Bank's website for information on the subject and generally educated myself on the rules. Next day (Sunday) I sent a SMS to the Manager to call me back as his phone was not reachable. He called back in a couple of minutes.I apprised him of your article and the RBI Circular and asked him to take appropriate action on my requests. He requested me to mail him the copies of both. The action was completed the very next day itself. Of course the threat of an RTI also helped.

Your magazine is doing a yeomen service in the field of educating the people. However, there is a need to be pro-active so that the common man can approach the right person for redressal of his grievances.

Colonel Arun Gupta (Veteran)
Certified Financial Planner
[email protected]
http://www.ColGupta.com
Mob +91-9810104100
http://www.youtube.com/watch?v=cd2dftEPj...

REPLY

nagesh kini

In Reply to Colonel Arun Gupta 3 years ago

Dear Col.,
You seem to a gold mine for bank and insurance harassments!
You do need to make them out in short writeups that can serve to wake up the Regulators - RBI and IRDA.
It is rightly said - "Latho ke booth batho sey nahi manathey". It is so true. People like you ought to rise in raising your voices. Once shaken things do move!
All the best.

nagesh kini

3 years ago

The HDFC Bank needs to answer as to how they will deal with ECS credits for interests and dividends and debits for utility payments that are standing instructions issued long back and will continue to remit to the account in their record.
That's precisely why the existing account with only the name of the deceased deleted and that of the nominee is addedis required to continue undisturbed. It is plain and simple common sense.
At the most the Customer Services Department/CSD of the RBI needs to reaffirm this by clarifying on its earlier Master Circular.
The HDFC Bank top management blaming the Core Banking or Finacle is just nonsense.
I've had a lenghty discussion on this very issue with a senior banking programming expert from TCS. He tells me that deleting the name with duty authority is no big deal and the anamolies/ glitches if any in the system can easily be rectified as required by the bank managed.
This matter needs to be taken up de novo with the HDFC Bank as well as RBI CSD.

Colonel Arun Gupta

3 years ago

Master Circular on Customer Service - 03 Nov 2008

Saptashree Bondal

5 years ago

HDFC Pune is still making the same "mistake" and I am just the latest casualty. I recently had to open a separate account in my name after I was "blocked" from the Joint Account held in the names of both my parents and myself as my Father- Primary Account holder - recently passed away. My Mother had earlier passed away in late-2009 but her name was still part of the account. The HDFC Officers acted as though they are experts on RBI rules on such matters.

Why is it not possible for RBI to ensure that these "esteemed" banks, esp. one as well known as HDFC, actually know the RBI's rules before causing their innocent and helpless customers even more trouble? I now have to write to every single company/fund house in which my family holds shares/units to request them to change bank details - just as given in the above article.

How can India ever be a real "superpower", esp. in the world of banking and finance, with such ignorant people running/working in supposedly well-run banks??

REPLY

Saptashree Bondal

In Reply to nagesh kini 5 years ago

Thank you very much for your advice, Mr. Kini. I will do so promptly.

Vimal

In Reply to nagesh kini 5 years ago

In my case I wrote to the sbh compaint email id given on their website.I got prompt reply and the mail was forwarded to DGM mumbai.

Next time when I went with the mail of DGM mumbai, the problem was solved and they allowed me to 'add' my name to my mothers account.Thus making it a joint account

What happens in such cases is people at the branch are lazy.As Mr. Kini pointed out, there are generally technical problems with their back end provider.The software probably doesn't allow for deletion/addition of name.The branch and bank won't get these softwares updated, because third party software providers will probably charge them.So they take the convenient route and ask the customer to open a new account.

You case is deletion of name.Please refer to this circular to know what RBI rules state http://rbidocs.rbi.org.in/rdocs/Content/...

Then write a detailed email(attaching scan of death certificate etc.) and send complaint emails to hdfc bank authorities.Tell them that opening a new account is not feasible coz of sending the account nos. to many companies.

They will probably reprimand officials at branch and your problem might get solved.This worked in my case.

Saptashree Bondal

In Reply to Vimal 5 years ago

Thanks very much for your valuable input, Mr. Vimal. Really appreciate your help and Mr.Kini's too.

Nagesh KiniFCA

5 years ago

It is not that the Banks are violating RBI directives.
Catholic Syrian Bank told me that their Finacle Platform has not provided for formal DELETION of names even though they take on record the death after submission of the Death Certificate and make a mention of it by way of a note on the account, the name of the deceased continues.
The account without requiring it to be closed has be continued on account long standing ECS In and Out.
The deletion will have to take place in the event of legal separations like divorce.
Long after one of the depositors is death they insist on the signature of the dead one and say they are helpless even after being told that he is 'upstairs' and the death certificate is the only document and Yama Raj's back office is not programmed to confirm this!
The post-Damodaran RBI has to implement this by bringing in a appropriate programme amendments incl. Finacle which should not be an issue.

vimal

5 years ago

SBH is not allowing my mom to convert her single account to joint.Its saying the same thing." close this account and open a new joint account."I read the master circular on customer service issued by RBI(http://rbidocs.rbi.org.in/rdocs/Content/PDFs/88145.pdf).

In point 5.8.8 it does talk about allowing customers to add or delete names.But the point is valid for only term deposits.(fixed deposits).Can you reference me to the exact circular point where RBI mentions addition of name by single account holder to convert it to Joint account.

REPLY

vimal

In Reply to vimal 5 years ago

Here I was talking about converting single savings account to Joint account.

Nagesh KiniFCA

6 years ago

This has happened with me with two banks.
According to them their Finacle program had no provision for deleting of names including those on dead clients on either or survivor basis nor can they add the names of the nominee. This was possible in the manual system. The core banking ought to be revisited to bring about this correction that is absolutely warranted today. I entirely concur with Mr. Agashe's stand.

Sharad Phadke

6 years ago

Basically RBI is the worst controlling authority over the Banks. Yes, they do make some good rules but then there is no action or control over these rules. If asked under RTI they just reply our circular it self is our rules,regulations, norms, guideline, there are no time limits set, no audit has been conducted on this and so many like this. They have just given the guidelines to Banks! If it is to be adhere then adhere other wise we will look for the bridge when we come to it.
Now the question is how to force RBI on one of such circular?
All the information supplied is true and so no question of going to CIC and getting them enforcement order.
If complaint to Ombudsman he never acknowledge even your mail.
So experts retired from RBI should guide or can suggest remedies on problems with RBI.
In one of my RTI they have said "We have not done any audit under the " Payment & Settlement System Act"
So how do you expect HDFC to adhere to rules? HDFC/ICICI and all other banks including PSU are there to squeeze money from you for one reason or other and make profit.

REPLY

sucheta

In Reply to Sharad Phadke 6 years ago

Dear Mr Phadke

Many thanks for your interest in this. Actually, we at Moneylife have followed this up with the RBI. And I must tell you that RBI is far better than SEBI or IRDA...

RBI has already asked HDFC Bank to change the rules, is what we understand from our sources. The bank's answer is surprising and unacceptable. And its not the first time either!
best regards
Sucheta

Vikas Gupta

6 years ago

Very good article. There is at least one Forum"Moneylife" which is awaring General Public. Please let me know one thing that My Savings Account had been Credited 3 Times in the last F.Y. & the HDFC Bank is unable to tell me the Names of the Persons from whom my Savings Account have been Credited. How should I proceed further as the bank has refused to give me any other information in this context except that the Direct Credits had been effected from Citibank Accounts.

Share prices still lack strength to rally: Thursday Closing Report

Watch for Nifty to close above 5,450 for a possible short rally

The market opened positive, tracking gains across Asia. The Sensex started at 18,167, while the Nifty opened at 5,448, the identical opening level yesterday. A rise in commodity prices in the international market supported gains in metals and oil & gas stocks in early trade. Banking stocks were also in demand, after being down for two days following the dismal numbers by the State Bank of India. Market performance was range-bound and the indices stayed within Wednesday's high and low. The Sensex closed 55 points up at 18,141 and the Nifty closed eight points up at 5,428.

The market remained range-bound, even as weekly food inflation numbers for early May came in lower at 7.47%. Turnkey engineering major Larsen & Toubro's (L&T) better-than-expected numbers helped the company's stock take the top gainer's position on the Sensex, though the market seemed to overlook the development.

The intra-day movement on the Sensex was between 18,058 and 18,198 while the Nifty traded between 5,411 and 5,453. The Nifty will be strengthen for a few days only above 5,450.

The advance-decline ratio on the National Stock Exchange was 548:1142.

The broader markets underperformed the Sensex today, as the BSE Mid-cap index declined 0.70% and the BSE Small-cap index was down 0.54%.

In the sectoral space, BSE Capital Goods (up 2.82%), BSE Oil & Gas (up 1.16%) and BSE IT (up 0.34%) were the top gainers. BSE Realty (down 2.87%), BSE Metal (down 0.98%) and BSE Power (down 0.85%) were the main losers.

L&T (up 5.92%), Reliance Industries (up 1.45%), ONGC (up 1.20%), TCS (up 1.14%) and Mahindra & Mahindra (up 1.11%) were the top performers on the Sensex. The laggards were led by Reliance Communications (down 3.43%), DLF (down 3.35%), Hindalco Industries (down 3.14%), Tata Power (down 2.60%) and Hero Honda (down 2.31%).

Continuing on its downward trend, the country's food inflation slipped further to 7.47% for the week ended 7th May, from 7.70% in the previous week. This is the lowest rate of price rise in food items in the last 18 months, since separate data for food inflation started coming in. It is also the third consecutive week that food inflation has been lower.

Commenting on the decline, finance minister Pranab Mukherjee said, "Both in food inflation and overall Whole Price Index (WPI) inflation there is a declining trend."

Markets in Asia, which opened strong this morning, settled mixed on the decline in Japanese gross domestic product (GDP) in the March quarter. GDP fell to an annualised 3.7% in the three-month period, exceeding analysts' estimates, pushing the country into its third recession. South Korean electronics major Samsung Electronics declined 1.5% after Gartner reported the company's share of the mobile handset market slipped to 16.1% from 18% earlier.

Singapore's benchmark Straits Times closed up 1% on news that its economy grew 22.5% in the first quarter of 2011 on an annualized, seasonally adjusted quarter-on-quarter basis.

The Hang Seng gained 0.66%, the Jakarta Composite rose 0.51%, the KLSE Composite added 0.18% and the Straits Times surged 1%. On the other hand, the Shanghai Composite fell by 0.45%, the Nikkei 225 declined 0.43%, the Seoul Composite tumbled 1.89% and the Taiwan Weighted lost 0.58%.

Back home, foreign institutional investors were net sellers of equities on Wednesday, offloading stocks worth Rs379.44 crore. On the other hand, domestic institutional investors were net buyers of shares worth Rs27.46 crore.

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Can Speak Asia be tried under the Prize Chits and Money Circulation Act?

Although prima facie, the Speak Asia case appears to be fit for trial under the Prize Chits and Money Circulation Schemes (Banning) Act, the question is since it is not registered in the country, how and where would the proceedings be initiated against the MLM company

Speak Asia (SpeakAsiaonline.com) has been collecting large sums of money by rapidly enrolling people with the promise of incredible payments for simply filling out online surveys. We learn from our investigation and this has been confirmed by Speak Asia officials, that the company is not registered in India and so cannot present any legal documentation. Now, a debate has been set off on whether Speak Asia and its multi-level marketing (MLM) scheme can be banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCSB Act).

Only two days ago, the Manipur state government used provisions of the PCMCSB Act to ban MLM companies. The state government said in a notification, "The MLM, though called by very attractive names, squarely falls within the definition of 'Money Circulation Scheme' under the Act and hence is prohibited by the Prize Chits and Money Circulation Schemes (Banning) (Manipur) Rules, 1978."

"This is to inform all the general public, government officials and others concerned that the specific provisions under Prize Chits and Money Circulation Schemes (Banning) (Manipur) Rules, 1978, relevant sections under cheating Section 420 of IPC, Drugs and Cosmetics Act 1940 by the Ministry of Health and Family Welfare, Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 are abundantly available to be invoked and effectively check and prevent progress of such dubious floated companies," the notification said.

"Section 3 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 bans prize chit and money circulation schemes, or enrolment as members to any such schemes, or participation in such schemes. Sections 4 and 5 are penal provisions and prescribe punishment. Section 6 deals with offences committed by companies. Section 7 authorises a police officer, not below the rank of officer in charge of a police station, to exercise power to enter and search premises and to seize things used for such scheme. Section 8 provides for forfeiture of newspaper and publication containing money circulation scheme. The Preamble of 1978 Act declares that it has been enacted to ban the promotion or conduct of prize chits and money circulation schemes and for matters connected therewith and incidental thereto," the notification said.

Not long ago, the Andhra Pradesh government also used the same Act to ban Japan Life,  Amway and GoldQuest. Shyam Sundar Matham of Corporate Frauds Watch (CFW) says, "The Andhra Pradesh High Court stated in its judgement that the business model of Amway India attracts the provisions of the PCMCS Act, 1978 and it asked the police to continue the investigation and file the charge-sheet in six months. Now the case is pending in the Chief Metropolitan Magistrate's Court, Nampally, Hyderabad under the same enactment."

The PCMCSB Act prohibits any entity from promoting, conducting any prize chit or money circulation scheme, enrolling any member of any such chit or scheme, or participating in it otherwise, or from receiving or remitting any money in pursuance of such chit or scheme (Section 3 of the Act). Under the provisions of the Act, the state governments were initially required to frame rules in consultation with the Reserve Bank of India (RBI) for winding up of the companies, which were running in contravention of the Act.

Earlier, the RBI, after receiving a complaint or information, would examine whether there was any prima facie case under the provision of the PCMCSB Act. The central bank would then inform the police, advising investigation and appropriate action. This was done by using the opinion given by the RBI and SR Hegde, the then legal advisor of the central bank, in September 2001.

However, in February 2003, the RBI issued another circular saying that it had no role to play and that its legal opinion (provided in September 2001) should be considered null and void. In the second circular, the RBI said that the PCMCSB Act was to be used by state governments, through consultation with their legal advisors and not depending on the central bank.

This is fine with MLM companies who operate or have offices in a particular state. But, since Speak Asia does not have its own office and is not registered in India, the question is which state government would take action against it? This is why authorities in Uttar Pradesh have taken action against some franchisees, but not against Speak Asia. It is being suggested that the union government, through the Enforcement Directorate (ED) and the Income Tax department (I-T) could initiate proceedings against Speak Asia. (The company says that it has remitted Rs325 crore to Singapore and distributed about Rs250 crore to its agents in India, for filling surveys, without deducting any tax.)

According to media reports, the Ministry of Corporate Affairs (MCA) has started an investigation on Speak Asia and is working together with the RBI and the Securities and Exchange Board of India (SEBI). Last month, Moneylife Foundation sent a letter to Murli Deora, minister of corporate affairs, RPN Singh, minister of state for corporate affairs, the Secretary MCA and other officials, informing them about Speak Asia. (Click to read the letter)

Nowadays, many media organisations are even using our reports on Speak Asia in their stories and correspondence, without acknowledging Moneylife. Its a different story that they all want to take credit for exposing Speak Asia now, purposely forgetting that the content they are using has its origin on the Moneylife website.

The Bharatiya Janata Party's national secretary, Kirit Somaiyaa, who has filed a case against Speak Asia with the Economics Offences Wing (EOW), in Mumbai, too has used Moneylife reports almost verbatim in his correspondence with the finance ministry, SEBI, RBI and EOW

Frankly, as long as it serves the purpose we do not mind anyone taking any credit for anything. Our humble request is at least acknowledge Moneylife, which would boost our efforts in the fight against frauds.
 

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COMMENTS

Sulthan

5 years ago

Why the hell you people are raising more voices against only one company, that makes me to think in other way, Speak Asia Advertisements coming in IRCTC website (central govt.), espncricinfo website, even in NDTV website, rediffmail website, sify, msn (hotmail), sony, even it is coming in yahoo website (same yahoo business has written an article against them!) and also SAOL television commercials came in Sony Set Max in between IPL matches, banners, hoardings outside in major cities, goa tourism joined hands of SAOL & organized the recent GenX Bazaar, no one raising voices / raised voices against those channels or websites or agencies or govt. body, if speak asia is a cheat - those people who helps for the cheating have also to be punished, why you people can't put case against those channels or even write against them all, why still govt. is not taking any steps against them? still speak asia is running from may 11h when star news first started to report speak asia as a fraud company, i'm not supporting speak asia here but i want everyone to raise their voices against all different companies in this same category, it is difficult to separate good companies and bad companies for a common man, but all MLM companies might be bad companies even though MLM is legalized in the world in so many countries, lets indian govt. decides to make MLM as legal or not and also decides speak asia's future by stopping all its activities and stop all investors to take back their money from the company, surely then it'll be a big set back for all investors who have put their hardly earned into companies like these, but surely it'll be an example for future public not to invest in these kind of companies, we need to blame the law, political system in india for these kind of companies comes and takes away public money easily and vanishes one fine day. Cheating is not only happening because of certain cheaters, it is mainly because of the certain politicians, govt. body, political system and many things who gives complete support to them, how many MLM company advertisements coming in TV commercials, anyone knows that? anyone saw that? the same TV which shows NMart Retails Advertisement in Star News, Aaj Tak, (which is not at all registered in any DSA body & it is a pure money circulation plan or concept) shows news against Speak Asia, both are same category of business, difference is Nmart collects less money than speak asia & takes so long period of time to give back that money whereas speak asia collects 10k and gives back within 3 months of time, that was the difference, first one is an indian company and second one is a singapore company.
Now time has come for the Govt. to sit together with many experts in the industry and decide that to allow or accept MLM in India and also if it is not suited to indian culture just ban it, if it can suit to indian culture and develop indian standard of living and also brings some revenue to the govt. then set some guidelines or rules or laws and make them as legal thing with some stringent laws or restrictions. This step has to be taken immediately and implement in future to stop all fraudulent activities happening in the market outside.
What is your name Mr., why you have put as Jutamaro? What does it mean? I think you are not only very keen in stopping SAOL's activity in India but also you are against to the investors of SAOL to get back their money! Keep it up! Jutamaro, your name looks funny Jutamaro, is that your real name?

jutamaro

5 years ago

SAOL is only a front of Haren Ventures Pte Ltd, Singapore, owned by Haren Kaur where all the registration amounts of all panelists go. $20 million in Indian banks of HVP's distributors/franchisees and another $480 million in UOB bank, Singapore have been frozen. RoC must look into HVP too which is the brain behind SAOL and funds the expenses of the latter. SAOL is only opening a 100% subsidiary in India whose objectives as per their Memorandum of Association is marketing, clients for surveys, and product distribution. The bank account that SAOL plans to open in India after registration is to cater only for expenses of such objectives and not to pay accumulated Reward Points (RPs) of panelists. All these gimmicks are being undertaken to fool the panelists that their payments will be from India itself and also fool the governmental and banking authorities both in India and Singapore so that $500 million lying frozen get released to them.

REPLY

Sulthan

In Reply to jutamaro 5 years ago

Why the hell you people are raising more voices against only one company, that makes me to think in other way, Speak Asia Advertisements coming in IRCTC website (central govt.), espncricinfo website, even in NDTV website, rediffmail website, sify, msn (hotmail), sony, even it is coming in yahoo website (same yahoo business has written an article against them!) and also SAOL television commercials came in Sony Set Max in between IPL matches, banners, hoardings outside in major cities, goa tourism joined hands of SAOL & organized the recent GenX Bazaar, no one raising voices / raised voices against those channels or websites or agencies or govt. body, if speak asia is a cheat - those people who helps for the cheating have also to be punished, why you people can't put case against those channels or even write against them all, why still govt. is not taking any steps against them? still speak asia is running from may 11h when star news first started to report speak asia as a fraud company, i'm not supporting speak asia here but i want everyone to raise their voices against all different companies in this same category, it is difficult to separate good companies and bad companies for a common man, but all MLM companies might be bad companies even though MLM is legalized in the world in so many countries, lets indian govt. decides to make MLM as legal or not and also decides speak asia's future by stopping all its activities and stop all investors to take back their money from the company, surely then it'll be a big set back for all investors who have put their hardly earned into companies like these, but surely it'll be an example for future public not to invest in these kind of companies, we need to blame the law, political system in india for these kind of companies comes and takes away public money easily and vanishes one fine day. Cheating is not only happening because of certain cheaters, it is mainly because of the certain politicians, govt. body, political system and many things who gives complete support to them, how many MLM company advertisements coming in TV commercials, anyone knows that? anyone saw that? the same TV which shows NMart Retails Advertisement in Star News, Aaj Tak, (which is not at all registered in any DSA body & it is a pure money circulation plan or concept) shows news against Speak Asia, both are same category of business, difference is Nmart collects less money than speak asia & takes so long period of time to give back that money whereas speak asia collects 10k and gives back within 3 months of time, that was the difference, first one is an indian company and second one is a singapore company.
Now time has come for the Govt. to sit together with many experts in the industry and decide that to allow or accept MLM in India and also if it is not suited to indian culture just ban it, if it can suit to indian culture and develop indian standard of living and also brings some revenue to the govt. then set some guidelines or rules or laws and make them as legal thing with some stringent laws or restrictions. This step has to be taken immediately and implement in future to stop all fraudulent activities happening in the market outside.
What is your name Mr., why you have put as Jutamaro? What does it mean? I think you are not only very keen in stopping SAOL's activity in India but also you are against to the investors of SAOL to get back their money! Keep it up! Jutamaro, your name looks funny Jutamaro, is that your real name?

vinay kumar

6 years ago

Deemag se kaam Lo aur analyse karo.
Ek taraf sarkari sab ROZGAAR YOZNAs ke mukaable mein SPEAKASIA ki Rozgaar Yozna bahut kamyaab aur SAFAL rahi hai. Is mein kisi ko public money LOOTNE ka mauka nahin mila tao Lage SHOR machane. Ilzaam Lagaane walo pehle apne Girebaan mein Jhank ke dekho tau pata chale gaa ki KAUN KALA aur KAUN GOORA. Long Live Speakasia.

BALBEER SINGH LODH

6 years ago

THIS IS ONE &ONLY GOOD SURVEY COMPANY

REPLY

Govindan

In Reply to BALBEER SINGH LODH 6 years ago

lol. are you one of the directors? sir.
Please wait for some more time. you can survey Tihar jail also

Vinay kumar

In Reply to Govindan 6 years ago

Bhai Govindan aap ki soch naam ke anusaar GALAT hai. Sir TIHAR mein Jaane ke DIN Politicians aur unke chamchoo ke hai.

Wilfred DSilva

6 years ago

Dear Ms Sucheta Dalal

I want to THANK YOU IMMENSELY on behalf of the indian people for exposing SPEAK ASIA
May God protect you and your team and all your families
A BIG GOD BLESS and thanks again
Wilfred

GOVINDAN

6 years ago

Please read the press note issued by Andhra Police

http://www.cidap.gov.in/documents/MLM%20...

DKJAIN

6 years ago

It is tregedy of indian people that they can not understand simple math or logic- As per SpeakAsia -each penelist will be given '2' survey in a week which mean in '52' week of year ,'104' surveys will be given. Now multiply those 104 x 19 lac present indian penelist =197600000 (Nineteen crore seventy six lac) total surveys at present membership of penelist (it is but obvious that after a year, number of penelist will increase manifold computing present growth rate of greed). Now, a simple logic, from where the hell this SpeakAsia is gona get all this crores of Surveys and who the stupid company(s) are going to assign survey work to SpeakAsia where only criteria is HONEY THE MONEY ? Is SpeakAsia is so popular and relaible that its surveys are acceptable? Is SpeakAsia are having so much advance order of survey in hand ? Recently, SpeakAsia's Lawyer stated that they may stop surveys at their will, then in such circumstances what about the greedestment (investment just out of sheer greed)amount of Rs11,000/- . Memeber Penelist are paying 11,000/- just for subscription of a e-magazine? can Anyone justify this amount for subscription or this is just another tactice to avoid litigations, evade taxes etc.

DKJAIN

6 years ago

Legal remedy to all those Junior member penelist who feel or few days hereafter may experience cheated is that they can file criminal complaint against their senior penelist member for cheating, abetment of cheating (u/s 418 & 420 of IPC) for inducing them to such scheme. A Criminal complaint can be filed in local Police station and if Police station refuses then a Written Complaint or private complaint can be filed before local Magistrate having jurisdiction. Moreover, they can also file Complaint against SpeakAsia local -Mumbai based Registrant company. Said Complaint can be filed against Executive Director and/or Managing Director of Company. Addresses of directors can be accessed from Memeorandum of Association filed before Registrar of Companies at Marine Lines Office.

PRITHVI

6 years ago

dear Maya ji

koi kisi ko badanam nahi kar raha hai .
jara sochiye ye koi MLM ho ya surevy company ho je sab hamare paise hami ko hi distibute karate hai .
Agar aisa sahi hota to reliance aur tata yahi karate . koi aisa buisness nahi go apake paise ko ek sal me 4 guna ya 5 guna kare. plesae be authentic

prithvi

6 years ago

please i am so surprised of some indian think they maky 5 time of our money in one year .

please think this is a good idea to all world gov filup our deficite and gain also . no one is to be poor . all of them going toi be rich . there is no any probganda and doing "BADANAM"
think what is wrong or right

VIJAI

6 years ago

There are thousands of MLM companies in India and they are paying lakhs of rupees to panelists without doing any thing. Go and investigate them. There are stock companies also who had never done any business were allowed to issue their shares on very high premium and they were responsible for collapsing share market, on the other hand issued bonus shares without earning any profit, why not investigate that?

GOVINDAN

6 years ago

Speak Asia, Nano Excel, Tycoon International, Visarev & Unipay2u – biggest scam is on its way

REPLY

Vinay Joshi

In Reply to GOVINDAN 5 years ago

Mr.Govindan,

The reply recd by you, auto alert to me on the subject, my PC highlighted DNA SCAN WARRNING! C:\Documents and settings\Mr.Vin....\6823682.exe. obviously access was denied & file quarantied.

MONELIFE WEB SITE MONITORS SHOULD INSTALL AUTOMATIC FILTERS SO AS NOT TO PROLIFERATE ATTACKS.

Ms. Sucheta & Mr.Debashish, i eagerly await your earliest response in the matter to thwart any such malicious posts by commentors.

Regards,

GOVINDAN

6 years ago

Supporters of Speak Asia please read the judgment of Supreme Court of India in KURIACHAN CHACKO AND OTHERS Versus STATE OF KERALA (2008)8 SCC 708.

REPLY

Vinay Joshi

In Reply to GOVINDAN 6 years ago

Mr.Govindan,

The funniest part is SAOL does'nt admitt its MLM, neither registered with Direct Selling Association of India. The Income Tax dept has taken up the issue with S'Pore authorities as India has DTAA with S'Pore & that the Bombay HC has summoned SAOL's Mumbai based Directors, PIL filed by Kirit Somaiya.

Regards,

MAYA

6 years ago

what about other MLM like
ramsurvey
admatrix
flc etc.
ya speakasia ne paise nahi diye add ke liye to unke peechhe hi pad gaye

jaswant

6 years ago

koi yogin ka jawab do
.............
..............
kahan ho speakasiaon

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