Reliance Life’s goodwill gesture of refunding Rs3 lakh to an illiterate widow, having a handicapped son, made a wonderful New Year gift. The fund value of her ULIP was only Rs1 lakh. The case which was taken to the insurer on humanitarian grounds was solved in a couple of days
Reliance Life has refunded Rs3 lakh to an illiterate 70-year old widow with totally handicapped son. She was mis-sold Reliance Super Market Return Plan (ULIP) in December 2009. Within a couple of days of Moneylife Foundation approaching Reliance Life with the humanitarian request, the policyholder has been offered a full refund of three years (Rs3 lakh) even though the fund value is a mere Rs1 lakh. The widow has been living on a meagre income along with her handicapped son. The refund has been completed, which is like a New Year’s gift to the old widow.
An insurance agent had approached the widow four years back and explained that if she pays one lakh premium annually, the policy will provide an insurance cover of Rs8.50 lakh. In case of her death, the handicapped son will get Rs8.50 lakh and he will not have a problem of livelihood. He also explained that if she pays for three years then she can withdraw all the money, however, coverage will continue for rest of her life. On this explanation, the poor widow took the insurance with the hope that her son will have a peaceful life after her death. She thought that she would get back Rs3 lakh after three years and the insurance cover will continue till her death.
It was a clear case of mis-selling. After four years, the fund value is Rs1.06 lakh due to hefty mortality charges, other charges and equity exposure. Would the old lady have known that in the last four years, Rs1.41 lakh went towards the risk cover? Does the agent who sold the policy even understand the risk cover charges at old age; why make promise of getting full money back after three years? Does illiterate person even understand what is meant by equity exposure let alone know anything about ULIP?
But, this is how ULIPs have been mis-sold by several life insurance companies. ULIPs sold before September 2010 had gigantic front-loaded charges, which made it lucrative for agents to make false promises to sell the product by hook or crook. It did not matter whether the buyer is getting a raw deal; getting big agent commission was the sole objective.
Recently, Reliance Life call centre told the old widow that if the fund value goes below one lakh then insurance policy would auto-surrender. She was asked to make fourth premium payment to keep the policy in-force. She and her son were shocked to hear that she can only get Rs1.06 lakh back in case of policy surrender. Moneylife Foundation Insurance Helpline was approached by one of her acquaintance as she was not in a position to write.
Moneylife Foundation is glad that Reliance Life took only couple of days to make offer for refund of full premium of Rs3 lakh. She has been given the full refund. A nice gesture from Reliance Life to the old widow will be remembered by her and son for a lifetime.
The year 2013 began with Reliance Life refunding Rs12 lakh investment along with Rs1.75 lakh interest, which is about 7.5% per annum to Arvind Injamuri. He was given justice after Moneylife Foundation fought for his case for nearly a year. Mr Injamuri, 65 years old, a standard 9th failed, retired railway employee living at Solapur, put his retirement kitty in insurance products. He was given false lure of TVS Scooty Pep which was part of agent “Fantastic Contest”.
All the nine policies had been issued in the names of his family members as Mr Injamuri did not qualify for highest NAV policies. He was seriously, and correctly, worried about inaccurate personal details, wrong or unidentifiable photos, PAN details of sister when she had never applied for one and forged signatures in the policy documents have rendered them worthless, since there are bound to be issues if and when a claim has to be made.
Moneylife Foundation’s Insurance Helpline was started in 2013. We have received and solved all the 24 cases of Reliance Life insurance policy sold with a bait of fraudulent “interest-free loans” of 10 times the premium from Reliance Capital. In 23 out of 24 cases, Reliance Life’s corporate agent AB Capital was involved. The total refund made by Reliance Life has been Rs12.74 lakh. Three more AB Capital fraud selling cases have been taken up last week and we are awaiting response for the same.
The US had made it clear that visa fraud charges against Khobragade will not be dropped
The US has rejected India’s contention that it has misconstrued the salary details in the visa application of senior Indian diplomat Devyani Khobragade’s domestic help. The US has asserted that there was no goof up and that the case against her is on a firm footing.
Making it clear that visa fraud charges against Khobragade will not be dropped, US sources has been quoted as saying, “The strength of the fraud in the case is very strong. The case will be there against her, it will not be dropped. The charges will remain,” the sources said, adding that if the 39-year-old diplomat gets full diplomatic immunity, she can travel outside the country.
However, if she were to return to the US later on a visit and if she then does not have the immunity, she could face arrest on the charges against her and be prosecuted.
On the allegation made by Khobargade’s lawyer that the $4,500 amount written in the visa application was Khobragade’s salary and not the amount promised to be paid to the domestic worker Sangeeta Richard, sources have said that Khobragade did not understand the form correctly.
“No federal agent goofed up in reading the form,” sources said, rubbishing allegations made by Khobragade’s lawyer Dan Arshack.
“It is clear that the salary details required on the visa application form are that of the employee and not the employer,” they said.
There is no question of apology to India over the arrest of Khobragade, the then Deputy Consul General of India, in New York on 12th December which has led to strong protests by the Indian Government and widespread indignation in India.
Khobragade was later released on a $250,000 bond after pleading not guilty in court. The Indian Government has demanded withdrawal of the case and an apology for the treatment meted out to the diplomat.
Sources also added that Khobragade’s domestic help Sangeeta’s family was evacuated to the US because the Justice Department was compelled to make sure that victims, witnesses and their families were safe and secure while the cases were pending.
Looking at the issues faced by MSMEs in borrowing money from banks, one really wonders why this happens when there is a code of banks commitment to micro and small enterprises
Micro, Small and Medium Enterprises (MSMEs) are often hailed as the pillars of Indian economy. Their contribution both in terms of production of goods and services and employment generation is immense. Surprisingly, success achieved by most of the MSMEs is because of their own endeavours, and there is very limited support from the system in which they operate. MSMEs face problems at all stages right from the setting up of a business entity to the selling of goods in the market.
However, the toughest task for MSMEs today is to get a loan approved from a bank to fund their project. In absence of collateral, raising loans is impossible for a small enterprise. This happens in spite of the fact that a popular government scheme called as, ‘Credit Guarantee Fund Trust for Micro and Small Enterprises’ is in place to help borrowers, who do not have the collateral to offer. This is not the only issue. Getting a loan application acknowledged is also a gigantic task. Looking at the issues faced by MSMEs in borrowing money from banks, one really wonders as to why this happens, when there is a code of banks’ commitment to micro and small enterprises. These codes are set by Banking Codes and Standards Board of India (BCSBI).
Let us look at some of these codes to see how seriously these codes are followed by the banks:
Code on Lending
We will inform you about salient features including benefits available and charges payable and terms of Credit Guarantee Scheme of CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES which is extended by eligible banks and is popularly known as CGTMSE guarantee scheme for MSEs and which is available at present to new as well as existing Micro and Small Enterprises including Service Enterprises with a maximum credit cap of Rs100 lakh (Rupees One hundred lakh) per borrower, excluding retail trade, educational institutions, training institutes and Self Help Groups (SHGs) as per the said Scheme.
Reality: Most of the MSMEs crib that bank officials very rarely talk about the scheme. Even dedicated SME branches of banks discourage lending under the scheme. This happens even in cases, when the scheme is advertised by a bank. The RBI data below shows it all. Considering that India has more than three crore MSMEs, the number of loans sanctioned is miniscule.
Code for loan application:
Acknowledge, in writing, the receipt of your loan application, whether submitted manually or online, indicating therein the time frame within which the application will be disposed of.
Reality: Banks rarely acknowledge a loan application. Acknowledgement for loan application is given only in such cases where banks found some scope for granting of loans. If a small or medium enterprise comes up for a loan proposal which has some new ideas, banks tend to reject the loan application on the grounds of viability without acknowledging the loan application.
Code for credit assessment:
Reality: As mentioned above collateral free loan remains a dream for MSME borrowers. While there are risk perceptions of lending to MSMEs, the fact remains that banks have agreed to promote MSME business by adopting this code. Hence non-adherence to the code raises questions about the bank’s seriousness about the code.
There is a need to empower MSMEs with respect to their rights and duties when they deal with banks. It is true that loans cannot be disbursed in a callous way by the banks without following due diligence. But the fact remains that MSMEs need financial help which can be provided only through institutional framework of financing. While approval of disbursement of loans come only at a very advanced stage, banks do need to share the details of banking codes so that MSMEs understand their rights and also ensure that they follow duties that this code expects them to do.
(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)