Government has not worked out a policy on implementation of amendment to development control regulations; residents of Sewree housing complex get no help from government departments on application of rule
People living in buildings that are part of mill redevelopment projects must talk to the developers to employ erstwhile mill workers for various services in their residential blocks. Otherwise, they could be pulled up under the law, as has turned out to be the case for residents of Dosti Flamingoes complex, in Sewree. The residential complex has been built on land of the erstwhile Standard Industries and China Mill.
According to an amendment of the Development Control Regulations, DCR 58 of 3 October 2007, redevelopment projects must employ former mill workers or their relatives, and the responsibility rests with the mill owner, the developer and the present occupier of the premises. However, despite a high court directive, the government has not yet worked out a concrete policy to clarify the clause. This ambiguity has resulted in all parties concerned looking the other way on this matter of providing employment, while the residents have been left confused.
Residents of Dosti Flamingoes complex were surprised when they were issued a notice by the state labour commission, which stated that they must employ retired mill workers or their relatives for various services in the housing society. This was followed by visits by local labour unions demanding employment for the workers in such activities as security guards. Residents say they were not told about the rule before and that the government and developers have been passing the buck.
"It is not that we are against hiring these workers. But most of the workers are old and not fit to perform duty as guards or other laborious jobs like housekeeping. They want minimum wages and we cannot even decide the quality of work for which we would be paying, which in any case is as per market rates/minimum wages, no cost arbitrage," explained a resident of the complex.
A spokesperson of the state labour commission could not confirm the controversial legislation. It is also unclear who must inform the residents about this. Dosti Corporation, the developer of Dosti Flamingoes complex, insists it was unaware of the clause, but said that it has nonetheless employed 64 mill workers. Mill owners, on their part, do not feel they are responsible for the mill workers as they have sold the mill.
A property lawyer said, "Housing societies don't fall under the jurisdiction of the labour commission, but if there is a rule pertaining to the workers, it must be followed. However, it is unclear as to who must take the responsibility, since 'occupants' mean flat dwellers." Ideally, the occupants should be notified about this before they take possession of the properties.
Ms Neera Adarkar, urban researcher and housing activist, said, "Even the workers who have got their VRS and compensation are entitled to a job, and I don't see anything wrong in employing them. However, it is between the developer and the purchaser to decide on who is to take the responsibility, and who must crosscheck whether such rules exist."
The confusion leaves room for further debates in similar cases. The residents also approached Maharashtra Urban Development Department secretary, TC Benjamin, seeking clarity on the matter, but have not made any headway. An RTI query on the legislative status of DCR 58 has also not been answered so far.
"We are quite confused, and even though we don't have to employ more than 70 guards in two shifts, we have to hire 110 because of the pressure from the labour union," a resident said. "We paying almost one crore rupees a year, and we don't even know whether we have to do it."
Mutual funds have lost 22.61 lakh folios over a period of two years. There has also been a huge outflow of Rs1,365 crore from equity mutual funds in April—the highest outflow since October 2010
The total number of folios in equity-oriented mutual funds for the retail category (which was 4.03 crore at the end of financial year 2009-10), has declined to 3.87 crore at the end of 2010-11. This decline has been continuous over the past two years. The financial year 2009-10 saw an exit of 6.13 lakh folios from equity-oriented schemes. The following year witnessed an exit of another 16.48 lakh accounts. Added to this, there has been a huge outflow of Rs1,365 crore from equity mutual funds in April-the highest outflow since October 2010. New folio creation has not been up to the mark either. This just shows that retail investors are withdrawing from equity investing in a big way at a time when income and prosperity are rising.
In the past two quarters, from October 2010 to March 2011, the folio tally for equity-oriented funds increased marginally by 21,573 accounts. A week back, Moneylife analysed a report from Computer Age Management Services (CAMS), a transfer agent for mutual funds, saying that new folio creation has not been as good as it should have been (CAMS research on creation of MF new folios throws up debate). Proving this right, we see that the addition of new folios has not made any difference in the total number of folios; in fact, the total number of folios has declined over the years. In the CAMS report, we saw that the average new folio creation over a period of two years, from August 2007 to July 2009, was 4.6 lakh new folios per month and from August 2009 to July 2010, the period post the ban on entry load, it averaged just 2.8 lakh new folios per month, even when the markets were doing well.
All these symptoms point to a much deeper problem. The equity market has turned hollow and the equity cult is shrinking, instead of spreading. This is a sorry situation against the backdrop of 8% economic growth, continued new listing of companies, rapid spread of broking networks and NSE terminals and massive inflows of money from foreign institutional investors. The regulator has done nothing about it either. The preamble of the Securities and Exchange Board of India (SEBI) mentions "To protect the interest of the investors in securities and to promote the development of, and to regulate the securities market".
SEBI has certainly failed to promote the development of the stock market and that is because it has failed to protect the interest of investors. The ban on entry load in August 2009 was intended to protect investors but this left distributors with no incentive to sell mutual funds. Mutual fund sales are continuously declining-and the investor has been left stranded.
Mutual fund units don’t come as physical certificates. They exist only in electronic form. So, why is SEBI (the Securities and Exchange Board of India) hell-bent on popularising demat of fund units, ignoring more pressing issues like common account statements?
SEBI has just issued a circular making it mandatory to provide demat option for all funds effective 1 October 2011. In a circular dated 19 May 2010 on the transferability of mutual fund (MF) units, SEBI has directed all AMCs (Asset Management Companies) "to clarify by way of an addendum that units of all mutual fund schemes held in demat form shall be fully transferable." The circular says, "It has been observed that in their close-ended schemes, many mutual funds provide an option to hold units either in physical or in demat form, but offer no such option in case of open-ended schemes. In order to facilitate investors, mutual funds should provide an option to the investors to receive allotment of mutual fund units in their demat account while subscribing to any scheme (open-ended/close-ended/interval).
Therefore, Mutual Funds/AMCs are advised to invariably provide an option to the investors to mention demat account details in the subscription form, in case they desire to hold units in demat form. Mutual Funds/AMCs shall ensure that (the) above-mentioned option is provided to investors in all their schemes (existing and new) from 1 October 2011 onwards."
The SEBI circular also says that "It has also been observed that often investors' request for dematerialising their units is rejected as Depository Participants are not having/or having incorrect ISIN (International Securities Identification Number) of each option of the scheme. In this regard, Mutual Funds/AMCs are advised to obtain ISIN for each option of the scheme and quote the respective ISIN along with the name of the scheme, in all Statement of Account/Common Account Statement (CAS) issued to the investors from 1 October 2011 onwards."
All this would have made sense if currently MF companies were offering physical certificates like how companies used to issue shares. But MF units are already offered by fund companies in electronic form. Why would anyone want to demat something that already exists in electronic form? The market regulator has given this foolish idea a bigger push with a circular.
Although all SEBI is saying is that the demat option should be made clear, distributors are wondering as to why is the regulator giving a thrust continuously in this direction? Does SEBI want to encourage the fund industry to take the stock route (exchange-broker-demat)? This is what the distributors suspect, but we don't think SEBI is necessarily working for the brokers.
SEBI's decision to continuously push the demat route stems simply from the fact that the regulator is living in an ivory tower and has no touch with what is happening on the ground. It does not talk to investors or distributors.
One of the distributors argued, "What investors really need is a common account statement (as mentioned earlier). Would that serve SEBI's purpose? A CAS and an online platform to advisors would ensure more reach and reduce the expenses." But unfortunately, SEBI has no mechanism to listen to people who have actual ground-level experience.
A few months ago, NSDL (National Securities Depository Limited) came out with an ad claiming that it is 'smart' to use the demat route for MFs. But the problems of using the broker-demat route and the cost of taking this route for no added benefit will continue to keep investors away. Moneylife recommends one should make one's financial life simple-avoid MF demat as long as it is not compulsory. But the way SEBI is headed, you may be forced to demat your paperless units!