When top brokerage firms were approached for opening a trading account, we found that there were differences between the views of official spokespersons and what customer service executives tell would-be clients
Market regulator Securities and Exchange Board of India (SEBI) has firm rules regarding the procedure for opening trading accounts for retail investors.
One of the rules is that a customer can have his demat, trading and savings accounts in different banks or financial institutions, and is not bound to have them all with the same bank.
Yet, brokers linked to banks continue to offer such 3-in-1 accounts not as a choice, but as a compulsion. While this is clearly against SEBI regulations, and official spokespersons of these brokerages state that such accounts are optional, their sales and customer service staff tell a different story.
Moneylife decided to do a survey of four brokerage firms associated with banks, all of whom offered online accounts, to see if this was true. The brokerages surveyed were ICICI Direct, Kotak Securities, HDFC Securities and HSBC InvestDirect.
As individuals, we cannot trade shares on a stock exchange, but must do so through brokers. While some old time brokers still follow traditional methods of trading on behalf of customers where you personally tell your broker what shares to buy and sell at what price, many firms, foremost among them banks and online portals, employ high-tech facilities where you trade from online accounts and can observe prices in real time, get access to reports and recommendations, have automatic withdrawals and deposits from bank accounts and much more. While some argue that high-tech brokerage houses are less flexible and lack the all-important human factor, no one can deny that they are faster, more convenient and more easily accessible.
The first few steps for opening a new trading account were common across all the firms, with the customer service executive informing us that we would be called back by a sales representative. While most customer service executives assured us that we would be called back within a few hours, some were more candid and told us to expect the call within a day or two. Upon asking we were also informed that on giving our details to the sales representative, we would be visited at home by a sales executive.
We were then told that we had to provide certain documents such as proof of identity, proof of address, a PAN card and photographs, standard documents outlined in the SEBI guidelines.
When it came to opening the account, whether it was ICICI, HSBC, HDFC or Kotak, all extolled the virtues of opening a 3-in-1 account, essentially involving opening a savings account, demat account and trading account, all within the same bank. The banks claim that as these accounts are with the same bank, trading would be simplified and hassle free.
When we informed them that we already had savings and demat accounts, and just wanted to open a trading account, we were told that opening a 3-in-1 account was mandatory, though their official spokespersons had a different opinion.
While a Kotak customer service executive told us that the bank had a tie-up with certain other banks (all private and foreign banks) when we informed her that we had a savings account with SBI, India’s largest bank, she politely told us that they couldn’t link it.
The others just refused outright.
When contacted, a spokesperson from ICICI Direct said, “We have designed our products within the regulatory framework as well as keeping in mind our customers’ needs. Hence we offer both 3-in-1 accounts as well as trading accounts through an Active Trader Service account.”
This is a complete contradiction to what their customer service executives told Moneylife.
At the time of writing this article, officials of the other companies were not immediately available for comments.
The most disturbing thing about this whole process is that opening a 3-in-1 account means you have to pay opening and annual maintenance fees for the savings and demat accounts in addition to the fees you pay for the trading account. To top this, you have to maintain an Average Quarterly Balance (AQB) amounting to Rs5,000 for Kotak and ICICI Bank, and Rs10,000 for HDFC Bank. This means that they are forcing you to avail of a service that you neither want nor need, and pay for it too!
While all these banks maintain an official stance that such 3-in-1 accounts are optional, the ground reality is that their call centre executives do not communicate the same to potential customers. The average customer will never contact the official spokespersons, assuming that the companies’ own employees are aware of their respective organisation’s policies.
This is a clear case of large companies thinking that they can blatantly disregard regulations and make their own rules, all the while dictating terms to customers.
The Asia-Pacific region, led by China and India, will be where most new HNIs are created, driven by the strength of the underlying economies and a strong entrepreneurial spirit
The depth of the financial crisis and the various speeds at which various regions are recovering will accelerate the tectonic shift in global wealth distribution to the East, with China, India and the Middle East emerging as new wealth centres, management consulting firm Booz and Company said in a recent study, reports PTI.
While majority of the industrialised countries are just beginning to recover from the financial crisis, most emerging markets have already returned to pre-crisis growth rates, the study said.
"These varying rates of recovery will persist for the next few years, shifting the global wealth concentration to the East," it said, adding that the slump in the construction sector is likely to see Dubai's economy contract another 0.5% this year.
According to the study, countries rich in natural resources will likely return to accelerated wealth creation even before the global economy fully recovers.
"Emerging markets—led by China, India and the Middle East—will be the main places where new wealth is generated in the coming years. With fundamental private banking needs in these regions underserved today, wealth managers should be looking for ways to penetrate these markets.”
"However, the Asia-Pacific region, led by China and India, will be where most new high networth individuals (HNIs) are created, driven by the strength of the underlying economies and a strong entrepreneurial spirit," the study said.
Government-led infrastructure projects will further boost the HNI population in these regions, and many affluent/HNIs will prosper directly, via family businesses and small and medium-size enterprises, or indirectly by inheriting wealth from older generations.
"By 2011, the number of HNIs in Asia/Pacific is expected to surpass those in Europe and North America, with China moving ahead of the UK in absolute number of HNIs. By the end of 2011, nearly 3.6 million (33%) of the global HNIs are expected to live in the Asia-Pacific region, up from 2.6 million in 2008.
"While the underlying dynamics are fundamentally promising for private banks, the industry must navigate through a number of significant changes going forward," it said.
Polo is being promoted with a clutch of television commercials, each highlighting the car’s road-worthiness, with a healthy dose of humour thrown in
At last, a car ad campaign that makes road sense. Usually all we are stuck with is those predictable shots of cars zooming across the city streets (and this needs to be banned!) and/or women fawning over macho car men (can’t be banned!). And sometimes, a list of technical features (most of which don’t get registered in a 30-second TV commercial).
German engineering is perfectly suited for India’s pathetic road conditions. This is all that Volkswagen promises for its hatchback, Polo. And it does that admirably well. This is a good marketing tack. So far, no auto giant has promised this to us, despite the fact that the one thing most of us worry about is this: “Oh, all this tech, the chicks and the razzmatazz is all very well, par yeh gaadi hamaare bakwaas roads par chalegi kya?”
Polo is being promoted with a clutch of television commercials, each highlighting the car’s road-worthiness. And the good thing is they have tried to inject some humour in each advert to get rid of the boring road stories. One commercial features the chubby owner checking out the car's ground clearance level by placing an ostrich egg below the car, and then driving over it. The egg is left unharmed, but Mama Ostrich isn’t amused. In another ad, the same chap tests the ruggedness of the car, by taking on a rhinoceros. And yes, nothing happens to the car, but the man runs for his life. And it goes on. Basically the idea is that since the Volkswagen engineers have already tested the Polo in Indian conditions, their customers don’t need to carry out their own tests.
Good strategy, it makes sense. And a decent creative execution too. Indian consumers will buy into this. Sure, the production values of the commercials could have been superior (the rhino commercial in particular is pretty shoddily made) but this blemish can be overlooked. Hopefully, other auto makers will take the cue and tell us stories we want to hear. And not lay out cold catalogues and hot babes on the tube.
On last thing: I think the trickery of employing wide angle shots to film small cars needs to be banned, as it misleads the consumers on the car’s actual width. The car appears a lot spacier than it is in reality. The Polo commercials are guilty of this subterfuge, and so are those of other car makers, especially when it comes to the hatchbacks. Hope the usually laid-back ASCI (Advertising Standards Council of India) is reading in.