HDFC Bank launches travel credit cards

The range of cards will be available on both Visa and MasterCard platforms

HDFC Bank has launched a pack of three premium credit cards. With the Global Indian logging thousands of air miles, the three premium credit cards-Regalia, Superia and Platinum Edge-will offer them a complete solution to all their travel needs.   

The cards come loaded with unique privileges with the USP being its reward point redemption system which gives one the freedom to choose from a wide array of airlines to cash in on the air miles accumulated on the card.

The range of cards will be available on both Visa and MasterCard platforms. The Bank has a credit card base of 50.5 lakh as of 31 March 2011.

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IDFC Mutual Fund unveils one year fixed maturity plan

IDFC Mutual Fund new issue closes on 3rd August

IDFC Mutual Fund has launched IDFC Fixed Maturity Plan-Yearly Series 45, a close-ended income scheme.

The investment objective of the scheme is to generate income by investing in a portfolio of debt and money market instruments maturing on or before the maturity of the scheme. The tenure of the scheme is one year.

The new issue closes on 3rd August. The minimum investment amount is Rs10,000.

Crisil Short Term Bond Fund Index is the benchmark index. Anupam Joshi is the fund manager.

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NMart runs CIS-based MLM under guise of a retail chain

NMart Retail is collecting money from people under the guise of giving them an opportunity to shop at its retail chains, offering huge returns on their investment. But it admits there is no guarantee that anyone joining will make money and that its system is purely dependent on new joiners

Surat-based NMart Retails, a division of Newlook Multitrade Pvt Ltd, is running a collective investment scheme (CIS) based on the multi-level marketing (MLM) business, under the guise of selling products through its retail chain. What is stunning is that the company openly says there is no guarantee that anyone joining would make money and its system is purely dependent on new entrants expanding the chain.

Here's what the company says under the disclaimer page on its website: "The owner/owners of this website (www.NMart.co.in) inform the distributors and would-be distributors that there is no guarantee that anyone joining the system would make money. The system purely depends on the number of distributors joining the system and distributor referrals."

In addition, NMart says that the payment would not be refunded under any circumstances.

Unfortunately, no one seems to be reading the fine print on the NMart Website. Most of the new distributors are blinded, or fooled by the lure to buy daily-need items from the company's retail chain, which may or may not be there in their local area. This also means that you not only have to enrol new distributors in your down line, but also continue to buy products from the retail chain.

NMart offers a return that works out to about four times the original investment over a period of 48 months, without taking into account other income like binary, spill-over or royalties. The highest income that a distributor can earn, as presented by the company, works out to Rs48 lakh, or 873 times of the original Rs5,500 invested and this is simply not possible.

'Business' plan

According to information available on the company's Website, anyone wanting to join the NMart Retail system or business plan, has to invest or deposit Rs5,500. The company provides 48 vouchers of Rs220 (it needs to be consumed each month over a period of four years), a 'smart' card, credit facility of Rs1,500 per month (provided you settle the bill by the 7th of the following month), and last but not the least, a bonus of Rs11,000, if at all you remain with the company (and continue to enrol new recruits and buy products from its shop) for 48 months. Not satisfied, yet? The company also promises to pay other incomes, like binary income, spill-over income, royalty and repurchase incomes.

For any two new joinees, on either your left or right leg or down line, you would get Rs600 as pair income for an unlimited depth. (But it is capped at 100 pairs, or a payment of Rs60,000 per week.) So, the company says, enrolling 8,000 new distributors below your rank can earn a binary income of Rs24 lakh. If your success percentage is just 1%, you could still earn Rs24,000 just as binary income!

It, however, does not mention that for this you still need to enrol 80 new people with an investment of Rs5,500 each, or a total Rs4.40 lakh, of which the company would pay you Rs24,000. That's about 5% only and it keeps the rest with itself! If this is not enough, then the company promises to pay you spill-over income, or Rs200, for every new joinee below your line for an unlimited depth. In addition to this, NMart also promises to pay royalty and repurchase income.

The company projects an income of Rs48 lakh for a down line of 16,000 distributors, with 8,000 associates on the left and right legs, each earning Rs24 lakh. But the next presentation slide suggests that you to do 'smart work' and instead recruit your own family members (like your spouse and your mother) instead of outsiders, to you can keep all the money (Rs48 lakh + Rs24 lakh + Rs24 lakh = Rs96 lakh) within the family!

According to Consumerfraudreporting.org, one must analyse the compensation plan to determine whether participants are paid from actual sales to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is an illegal pyramid or Ponzi scheme, the website said. This is exactly what NMart is doing.

Promoters

The company is promoted by Gopal Shekhawat, who is also said to be chairman for Asia of the International Human Rights Association. In some places, Mr Shekhawat is also referred to as being the nephew of the President of India, Pratibhai Patil, but this cannot be confirmed.

Among other promoters and officials of NMart Retail are Akil Patrawala, CEO; Pratik Desai, business head for retail; Hiren Devani, HR head; Dr Riyaz Mushrif, marketing head for network; Bharat Handifod, business head for network; Prashant More, training in-charge and Dashrath Mali, insurance in-charge.

Newlook Multitrade, the parent of NMart Retail, has its corporate office in Surat and mentions a Mumbai address in the records of the Registrar of Companies (RoC). According to information available on its Website, NMart operates around 51 retail stores across the country and plans to increase that to 135.

Regulators silent

Some questions about NMart, put to the Securities and Exchange Board of India (SEBI) by Moneylife were not answered. In May 2011, the market regulator asked Kolkata-based Sun-Plant Agro to wind up its CIS and refund the money it had collected.

Sun-Plant Agro was raising funds in the name of 'sale of plants'. It allegedly sold plants to purchasers, maintained the plants and thereafter provided returns on the amounts invested at the end of the scheme in the form of wood, although investors were not provided any identity or reference to the particular plant sold.

SEBI said such activities had the characteristics of a collective investment scheme, as specified under Section 11AA of the SEBI Act read with Regulation 3 of the SEBI (CIS) Regulations. Sun-Plant Agro ought to have wound up the scheme in 2003 pursuant to rejection of the application for provisional registration by SEBI and the filing of the 'Winding Up and Repayment Report' by it.

"The activities of Sun-Plant Agro and the details of amounts received by it against the cost of trees from 2003 to 2010 prima facie indicate that even after submission of the Winding Up and Repayment Report in 2003, the company carried out activities of a CIS without obtaining a Certificate of Registration from SEBI," the market regulator had said.

In addition to collecting money from people, NMart also paid them commissions for recruiting new people. On the issue of MLMs, the United States Federal Trade Commission states, "Steer clear of multi-level marketing plans that pay commissions for recruiting new distributors. They are actually illegal pyramid schemes. Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people-except perhaps those at the very top of the pyramid-end up empty-handed."

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