Funny Rules
I have come across some cases of banks and insurance companies asking customers to do some ridiculous things. I wish to point them out here because many of your readers may be encountering similar demands.

1. Can a receipt for payment be dated 15 days after the date of payment with no payment details being mentioned on the receipt?

2. If the date of an ECS mandate is prior to the due date, such a mandate cannot be accepted, but if you pay before the due date by cheque, it is fine!

3. If you pay before 31st March but the debit in your account is in April, you can still claim tax benefit for such payment, even though the law requires you to make payment before 31st March. What happens if such a cheque bounces? You may still get credit in tax! Some people may be using this loophole deliberately.

4. State Bank of India says that signature verification can be done only by the branch manager. It says, even their existing customers must furnish a photocopy of their passbook for past one year while applying for a loan. When I pointed out that the branch is on core banking mode and they can see the whole account at their end, I was told this is the procedure and must be followed.

5. A private sector bank says that a company is not an entity in law! If you want a car loan on a company’s name, then the MD must be a co-borrower because that is the policy. Also, you must get your signature verification on four different forms; one form will not do because that is their procedure.

6. Salary accounts cannot be in joint names of husband and wife. Some banks allow this and some don’t. So what is the real position? If you want to protect the salary-earner, then the operating authority could be given to the first-holder only. Why not have the account in joint names?
Anil Agashe, Pune by email

PRO-INVESTOR REFORMS NEEDED
The last issue of MoneyLIFE was very good. The stocks selected for analysis are all quality stocks. Nava Bharat is showing good strength. About Shree Cement, all we can say is that in a bearish market, people forget values and in a bull market they chase euphoria. Thanks for your piece on Genus with its unique features. About the unusual re-listing price of KGN and Sylph Technologies, the regulators stand exposed once again. Also, in Shyam Telecom and SVPCL, investors will be the only losers. There is a lot of work to be done for our market to be fair. Events like KGN, Sylph or English Indian Clays make a lot of investors lose confidence in the market. They believe realty and gold are much safer investments, even if they are more expensive. These incidents should be seen as trust-breakers rather than just a single act of over-speculation. I remember one incident of 1995-96. I bought shares of Gujarat Fun and Water Park after reading an article in The Economic Times and looking at its financial results. The stock was hitting upper circuits. Just a week after my buying, trading stopped and remains so until today. I don’t know why. That was my first step in the market. It was a lesson to study stocks, before purchasing any. I also believe that, in general, all IPOs need to be regulated and IPOs from government companies should be banned. People invested in these companies and lost 40%-80% of their capital in just a few months. Even without the crude oil price factor, how can a company valued at Rs5,000-Rs10,000 crore during its IPO trade at just Rs2,000-Rs4,000 market-cap after few months?
Santosh Mhamunkar, by email

UNWANTED DEPOSITORS
Please refer to Crosshairs under the heading “Not Wanted” (MoneyLIFE, 8th May). It is true, that when organisations are small, they run after new customers to prove their customer-friendliness. When they become bigger, they have scant regard for the same customers on whose shoulders they rode. ICICI Bank is no exception. They were keen to welcome people to open an account when they came out with the new concept of ‘Quantum Flexi Account’. Many, like me, opened such accounts. Things went very well for a few years. Now, they indirectly dissuade customers from continuing their Quantum Flexi accounts. To harass customers, they started deducting TDS on interest for every swipe from FD - despite customers submitting their TDS exemption form (15G or 15H, as applicable). Their contention is one must submit the TDS exemption form for every withdrawal where tax becomes applicable on the interest. They categorically confirmed that we need to submit 12 forms for each month!

Despite my submitting 15H (being a senior citizen and a high net worth customer from the beginning of April 2007), this is the third year when TDS has been deducted. This compels us to file the IT return just for the TDS refund; otherwise it is not required as income is less than taxable limits. Of course, getting IT refund is the other pain. Many customers have closed their Quantum Flexi accounts. I had it taken up to the highest level but in vain. Even the Income Tax department specifies one TDS exemption form for one financial year. Other banks, like Axis Bank and HDFC Bank, ask for only one form. It is all due to ICICI Bank’s scant regard for small customers. Also, despite reminders, if one does not get the IT refund, then what is the recourse? Is there a way one can approach CBDT or the IT Ombudsman? How effective is the IT Ombudsman? I congratulate MoneyLIFE for taking up issues normally ignored by other publications.
Bipin I Shah, 403, Dimple Heights, Asha Nagar, Thakur Complex, Kandivali (East), Mumbai

LOST MONEY IN FUNDSS
I am enclosing the list of mutual funds in which I have invested as an SIP (systematic investment plan) or a one-time investment. In your recent analysis of fund houses (cover story, MoneyLIFE, 22 May 2008), I did not find any of my mutual funds among the top five. I am worried that I may not have picked the right fund houses and the right schemes. Also, in the past year, I have lost money in whichever fund I invested in as SIP. Although I am in no hurry to withdraw my money and am a long-term investor, please advise me on what I should do?
Commander Samir Gupta, by email

Our ranking of fund houses does not favour those that make too many NFOs. (This is because NFOs are usually planned when the market is bullish. As we have pointed out time and time again, what is a good time for funds to raise money may not be the best time for investors to subscribe.) However, this kind of ranking may not be correlated to short-term fund performance. Unfortunately, we do not offer recommendations on individual portfolios and that too of mutual funds. The problem with your approach of investing in many diversified equity funds is that they have very similar exposures and they fall and rise often at the same time. In short, collectively, they don’t offer any diversification. -- Editor

FINE PROGRAMME
We thank MoneyLIFE for the music concert of Begum Afroz Bano on 1 June 2008. The music was just great and nostalgic, taking us back to the great musical times of yesteryears. Your magazine has done a great service not only to the senior music stalwart but also to listeners and lovers of such music which is hardly heard these days. Pt Birju Maharaj commented very rightly that if the corporate world spent even one-tenth of the amount they spend for cricket, to promote a few cultural activities of our country, they would do a good service to our rich heritage. We hope you continue in this direction to serve the society and provide an inspiration to other corporates. After all, performing arts need patronage to thrive and will not then die, as we all fear.
Drs Rodhan and Rekha Shroff, by email

DUPED BY RELIGARE FRANCHISEE
I have worked for ONGC for 31 years and resigned at the level of executive director, corporate planning. I have joined Reliance Industries in their petroleum division as senior vice president, geosciences. I am an account-holder with Axis Bank and I also hold a joint account with my wife Dr Anjana Sen in the same bank for portfolio management. Sandeep Roy Choudhury is our wealth manager. My wife and I opened a pair of trading accounts with Religare, recommended to me by an old colleague in Nov/Dec 2007 for Rs five lakh each. I am regretting the decision. Supradip Ghosh, who has a franchise with Religare, made great promises. Even as late as April 2008, he stated that all my capital investment would be returned to me by June 2008 with profits. He kept me in the dark about my investment and went about trading recklessly. I was able to get the Excel sheets showing statements of transactions only at the intervention of their corporate office. These clearly indicate how recklessly the investments have been made. Mr Ghosh now callously states that ‘everybody else has suffered like that’ and has no plans to redeem such losses. This is in total contrast to what he had promised when he came for the sales talk.
I am a service-class person and all this money is tax paid. My wife has booked a flat in Faridabad and this money would have come in handy for paying my loan instalments. I had sent mails to Religare but other than their usual form letter and the account statement, they have nothing else to say. I had a discussion with Sandeep (Axis Bank) who suggested that I seek your help. I would like to discuss the matter with a senior person in Religare who could take up the issue seriously, own the responsibility for such erosion of capital and suggest means to redeem the loss. The account needs to be shifted from an incompetent franchisee like Supradip Ghosh to a more conscientious wealth manager. A plan of action to redeem this loss needs to be worked out. I need your personal intervention to take up the matter at the highest level with Religare. Small investors like me need protection and should be made aware of the risks involved before tall claims are made by Religare or their representatives. Kindly also advise if this matter should be brought to the notice of SEBI, unless it is resolved.
Gautam Sen, by email

Help Us to Help You
MoneyLIFE offers its readers a unique service -- of helping redress individual grievances on a best-effort basis. However, we have limited resources to devote to this effort and can only pursue complaints that come to us by email. We request readers to please send us crisp complaints with all the facts on email (not as an attachment) and send us the supporting documents only if we ask for them. We cannot handle physical letters. -- Editor

HOW TO REACH US
Letters to the Editor can be emailed to [email protected] or
can be posted to:
The Editor, MoneyLIFE Magazine, 7 Nagree Terraces, Soonawala
Agiary Lane, Mahim (W), 400 016 or faxed to 022-24442771.
Letters must include the writer’s full name, address and telephone no.
and may be edited for clarity or space.
New Subscription & Customer Service
For new subscription requests, complaints about current subscription
and books, write to [email protected] or to
Subscription Manager, 9, Nagree Terraces, Soonawala Agiary Lane,
Mahim (W) 400 016 or Call 022-24441060 or
fax to 022-24442771
Advertising
For information and rates email us at
[email protected] or call 022-24441060

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Family Relationships
Please refer to Mind Your Broker by Sucheta Dalal (MoneyLIFE, 24th April). I would like to narrate a real-life story. One day, a senior citizen walked into my office; he was emotionally disturbed and upset about something. As a member of a regional stock exchange, and hailing from a family having its roots in the share-broking business from as early as the 1930s, we retain the habit of personally meeting new clients/first-time investors, before we hand over their affairs to our dealers. Used to this ‘bad’ habit, I met this gentleman, who was in his 70s, and I spent almost an hour with him. This was his story: He retired from military service about two decades ago and has all his savings in his bank account. Fifteen years ago, his bank manager, whom he trusts, suggested that he apply for a new issue and he did. Although he was allotted a small number of shares, he soon found there were no trades in the stock after the stock market crashed in the 1990s.

A couple of years ago, his neighbour, a trader, told him that the stock was trading again. He then approached a big broking outfit, which is a big advertiser through newspapers and magazines and has huge public hoardings, convinced that it was the right firm to help him encash his investment. He was also impressed by the office interiors and the reception he got at the firm. But his comfort was short-lived. Things changed the moment they assessed the unimpressive size of his portfolio. He was made to wait in the lounge for a very long time and had to make several visits before he could finally open a demat account in order to dematerialise his shares. He was made to sign a lot of papers without proper explanation and cursed himself for entering the capital market. As a senior citizen, he was also apprehensive about the many signatures taken from him.

He was terribly upset at how he was treated by the firm with nationwide branches. Somebody suggested that he try out a ‘small broker’; hence, he came to me. He was happy that he could finally speak directly to somebody responsible and knowledgeable -- the broker himself. I put him on to my dealer after explaining to him about the purpose of the demat account and the latest procedures to open a broker trading account.

Two days later, after collecting his payment from our office, he walked into my room, visibly moved and in tears. He blessed me and my wife, who is a post-graduate and works with me. He was very happy about the way we handled his account. He told us that, at one stage, he wanted to get out of the equity markets due to the earlier experience and, after this interaction, he would like to reconsider his decision. This is not “chicken soup for the equity soul”… it is a real incident. In a country with less than 1% of its population investing in stocks, this breed of smaller traditional brokerage firms, who were instrumental in creating the equity markets in India, are doing a wonderful job to retain and bring small investors to the markets. But in a world that thrives on media glitz, nobody has recognised this fact. I am glad that your magazine has done it.

Traditional broking houses act more responsibly because of their long-term relationships with clients. In some firms, the relationship dates back a few generations and they are close family friends. Brokers are a part of the investors’ family and attend their family functions. This also helps them jointly plan their investment needs and set goals, based on the family’s needs. These brokers try to be more sincere in advising clients because, if things go wrong, they are answerable to the investor as well as his extended family that calls them ‘uncle’ and ‘bhaiyya’. Thank you, once again for recognising the need for and the usefulness of smaller and traditional broking houses.
Nagappan V, (trading member) director, Madras Stock Exchange and chairman, Federation of Indian Stock Exchanges, by email

MINDLESS REGULATION
I am an avid reader of MoneyLIFE. The magazine really covers a lot of problems faced by small investors. So I just thought I will mail you this story. I live in a small village in Karnataka where I have a stock-broking office. I come across problems that investors face when they want to open demat accounts, since they hold shares in physical format. They ask me questions like how is it possible that a telephone bill can be an address proof for opening a bank account but not for a demat account. I have no answers.

One of my friends wanted to open a demat account. He resides at Bengaluru and wanted his permanent address in his hometown as his address, since his parents are settled there. He had a telephone bill as proof of address but it was in his father’s name. Strangely, the CDSL does not allow this. It needs proof of address to be in the name of the person opening the account. Since PAN is now compulsory and it contains the investor’s father’s name, isn’t it logical to allow the phone bill in the name of the parent to be a valid proof? I hope you put this view across to SEBI.

I suggested that he should open a bank account by providing the telephone bill and now his new passbook was ready and his demat account was opened as well. SEBI needs to look into these small matters that cause a lot of hardship to new investors.

Working in a rural area has opened my eyes. One of my clients gave me a cheque for Rs2,000 drawn on a bank in his native place (since we can’t take cash and a cheque has to be given from a designated account of the client) which was five kilometres from my town. When I deposited it in my bank, the proceeds were credited after 15 days with Rs80 as collection charges. Unbelievable but true. And, the less said about the recent Reliance Power IPO, the better. While one client got his refund twice, two others got it after a good 100 days and that too without interest.

Anyway, keep up the good work you do through your magazine. I am happy to see that the genuine concerns of the investing fraternity are taken up by MoneyLIFE.
Gopinath Prabhu, Guru Nivas, Main Road, Ujire 574240, Dakshin Kannada District, Karnataka

INTERESTING VIEW
This refers to your cover story “U Turn on D Street”. Everything that goes up has to come down and vice versa. It applies to the Sensex also. Moreover, when international crude oil has touched $135 a barrel and inflation, rather than growth, has touched double digits, our economy will be affected and tested because these are tough times. The money managers’ advice on various issues made for interesting reading. Hopefully, retail investors will learn a lesson or two from their perspective and not panic
Bal Govind, Bareilly, by email

MISLEADING RESEARCH by broker
The last issue of MoneyLIFE was terrific. Blue Star is at a tired stage and AurionPro is risky, although it has a good management and performance. XL Telecom is surely a buy with a one-year view. In the past two issues, you have provided research on quality stocks such as Nava Bharat, Genus and XL. I expect you will cover Omnitech, Mercator, Bhagwati and Brigade, etc, in future. No other magazine covers such a range. In the cover story, it was fun to read Tushar Pradhan’s views. But if FIIs have not sold too much and mutual funds are also heavily invested, there is more worry because the market has great digesting power -- it can eat billions in a single day.

Sucheta Dalal, as usual, pointed to the rigging in Khoday India through doctored research. Khoday was the top pick of many brokerages. There are many such stories. Once Prabhudas Liladhar hurriedly brought out a report on Glory Polyester after the crash in January; it was then trading at Rs120. Within a few months, the price halved. The scrip was apparently kept stable during the market correction in January and the stock was distributed to aam aadmi in February and March when the market had stabilised. Its EPS for FY08 is just two rupees.
Santosh Mhamunkar, by email

NO HOMEWORK
This refers to the informative column “Outdoor Training” (MoneyLIFE, 3rd July). Many professionals work from home where there is no office atmosphere and work culture. There is also interference in the form of social visits by friends, acquaintances and relatives. This invariably disturbs the work environment of an office place and also disturbs family life. It can also affect one’s health, since the office runs round the clock. You feel, at times, that you have not worked hard enough for the day. Actually, such a feeling arises because you are working and living under the same roof. Every human being needs a change of place now and then. The office should never be situated at home. Get an office near the house -- either owned or rented.
Mahesh Kapasi, New Delhi, by email

UTI’s response on scup
We refer to your article on ‘SCUP: The Unanswered Questions’ (MoneyLIFE, 3 July 2008) and thank you for guiding investors who approach you to submit redemption forms. Senior Citizen’s Unit Plan (SCUP) was terminated at the close of business on 18 February 2008 in accordance with the established business principles and in the interest of the unitholders to avoid any capital erosion and after due consideration of all the facts and circumstances and with the approval of Government of India and SEBI. A public notice was issued in Business Standard on 8 January 2008 and individual letters have also been sent to each member. The advertisement also appeared in the following newspapers on 26 January 2008: Lokmat, Lokmat Samachar, Lokmat Times, Dainik Jagran, Dainik Bhaskar, Gujarat Samachar, Sambad, Ananda Bazar Patrika, Daily Ajit, Asomiya Pratidin, Dina Thanthi, Vijay Karnataka, Malayala Manorama and Eenadu. We have retained the interest of investors who have completed the age of 58 years, by continuing hospitalisation medical cover through New India Assurance Co Ltd. Investors who have any query can contact us on the toll-free number at 1800221230 or can SMS at 5676756 or email to uticustomercare@ uti.co.in. We assure our quick reply and guidance to each member on the basis of the details provided like membership certificate/folio number. We would like to express our thanks for the interest taken by you to explain the details to the investors and to provide guidance to them.
KP Ghosh, VP, Department of Investor Service, UTI, by email

HELP US TO HELP YOU
MoneyLIFE offers its readers a unique service -- of helping redress individual grievances on a best-effort basis. However, we have limited resources to devote to this effort and can only pursue complaints that come to us by email. We request readers to please send us crisp complaints with all the facts on email (not as an attachment) and send us the supporting documents only if we ask for them. We cannot handle physical letters. -- Editor

HOW TO REACH US
Letters to the Editor can be emailed to [email protected] or
can be posted to:
The Editor, MoneyLIFE Magazine, 7 Nagree Terraces, Soonawala
Agiary Lane, Mahim (W), 400 016 or faxed to 022-24442771.
Letters must include the writer’s full name, address and telephone no.
and may be edited for clarity or space.
New Subscription & Customer Service
For new subscription requests, complaints about current subscription
and books, write to [email protected] or to
Subscription Manager, 9, Nagree Terraces, Soonawala Agiary Lane,
Mahim (W) 400 016 or Call 022-24441060 or
fax to 022-24442771
Advertising
For information and rates email us at
[email protected] or call 022-24441060

User

Hidden Interest Cost
Only six months ago, the mood was one of great confidence and celebration. George Soros was investing heavily into India, putting money into both sides of the Ambani divide and then some more. The Arabs were supposed to pour money into India to diversify their asset base. The Indian corporate sector was borrowing, taking over companies globally (there were hardly any local takeovers – everybody was a buyer) and planning large expansions. But six months later, 11% inflation and the relentless rise in oil prices have exposed the vulnerability of India. Fiscal deficit is shooting up, interest rates are rising and cost increases of various items are feeding into each other in an upward spiral.

Is this just the beginning of tough times? For the corporate sector, yes. The excesses of a bull market take a long time to be purged. Correction of stock prices is just one kind of rectification. Indeed, it brings in its wake other problems. For instance, according to some estimates, Indian companies have foreign currency convertible bonds (FCCBs) of $25 billion outstanding. FCCBs are debt which gets converted into equity if the share prices go above a certain level. Those levels are distant now – given the condition of the market and the global economy, 2008 looks like a washout. This means that FCCBs will start becoming actual debt. Companies that have unconverted FCCBs issued from early 2007 onwards are in danger of having to start paying interest on them. The silver lining is that they would not be tempted to borrow more and, indeed, would want to cut down on debt. We are just at the beginning of a process of adjustment.

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