Companies & Sectors
NCDRC slaps Rs50,000 fine on Sahara for lapse in tracking investor’s payment

The NCDRC passed the order while pulling up Sahara for not updating its accounts regarding the repayment of a loan availed by one of its investors against the investment he had made in the scheme

The National consumer redressal commission has penalised Sahara India with a fine of Rs50,000 for failing to put in place a proper accounting system to keep track of the money invested by people in one of its schemes.

 

“It is indeed a sad state of affairs where the petitioner was taking money for the scheme launched by them (Sahara) for the benefit of the customers and they failed to put in place a proper accounting system to support this scheme,” the National Consumer Disputes Redressal Commission (NCDRC) said.

 

The NCDRC passed the order while pulling up Sahara for not updating its accounts regarding the repayment of a loan availed by one of its investors against the investment he had made in the scheme.

 

According to Jatakishore Das, he had invested Rs1 lakh in Sahara’s Swarna Yojana Scheme and availed a loan of Rs80,000.

 

Das, who resides in Odisha’s Deogarh district, claimed that he had repaid the loan with interest and it was endorsed in his passbook-cum-certificate by then branch/scheme manager of Sahara India’s Deogarh branch.

 

On the other hand, Sahara contended that the loan availed by Das was outstanding as its alleged repayment was not shown in the company’s ledgers.

 

The petitioner’s claim, however, was upheld by the district forum and the Odisha State Commission in their orders against which Sahara India had moved NCDRC.

 

The NCDRC bench presided justice VB Gupta, while slapping the fine of Rs50,000 on Sahara, found “no jurisdictional error, illegality or infirmity” in the state commission’s order and dismissed the company's plea.

 

The bench observed that if the company had indeed been keeping their accounts accurate, “they would not need to plead ignorance of entries regarding respondent’s (Das) loan in the passbook-cum-certificate due to lack of corresponding entry in the ledger book of the petitioner.”

 

It directed Sahara to pay half of the fine amount to Das and deposit the remaining in the consumer welfare fund.

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COMMENTS

ashwin bahl

4 years ago

too little!

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Toxic ULIPs: Less than 2% return after 8 years!

Insurance policy holders trapped in ULIPs are still paying the price for products approved by IRDA and then banned in September 2010. Should you continue with the policy based on long-term benefits propagated by the insurance company?

Insurance company spokespersons, their incentivised agents and financial planners have always been saying that while ULIPs (Unit Linked Insurance Plans) don’t offer great returns in the short run, staying with it long term will fetch you great returns. Millions of ULIP buyers are finding out that this is a blatant lie.

 

How will you feel if your investment gave less than 2% p.a. return on investment after staying with the policy for eight years? Suresh Kumar (name changed), father of the managing director of a Fortune 100 company for Asia-Pacific,  approached the Moneylife Insurance Helpline regarding Birla Sun Life Classic Life II ULIP policy purchased in 2005 to cover his son for Rs1 crore. The funds were equally split between equity and debt investment.

 

He paid a premium of Rs1.82 lakh for five years and paid Rs30,000 for another three years. The account statement shows the total fund value to be Rs9.23 lakh. The total premium payment over the period of eight years was Rs9.98 lakh. Should Mr Kumar still believe in insurance propaganda to keep paying premiums long-term to get benefits? It seems that the insurer is getting benefitted and the insured is trapped in a loss-making proposition.

 

In the case of Mr Kumar, we have calculated the mortality charges for providing a cover of Rs1 crore and hence the return on the investment, which is different than the return on premium, will give less than 2% p.a. return. Mr Kumar is lucky that the product did not have any surrender charges after completing five years, but some toxic old ULIPs have surrender charges up to the end of policy term.

 

Many of the Moneylife Insurance Helpline queries are related to similar cases. The insured person is ensnared between the high front loaded charges of an old ULIP and steep surrender charges which prevent them an easy exit. The solace of the insurance product being long-term disciplined savings seems ludicrous with these policyholders who are ready to throw in the towel.

 

Moneylife’s message of keeping insurance and investment separate seems to resonate with these policyholders, but there is little that can be done for the existing policy unless the surrender charge has come down to zero, based on number of policy years completed.

 

Even though the Insurance Regulatory and Development Authority (IRDA) has banned old ULIPs since September 2010, what is the recourse for the policyholders who have been already trapped? It is time IRDA takes stock of the situation and offer relief to policyholders who are trapped in products it approved only to be banned later. It is especially true for old ULIPs which continue with atrocious premium allocation, policy administration and surrender charges even after completion of three policy years.

 

Read - Are you trapped in toxic ULIPs? Blame IRDA - I

 

Anita Borges (name changed), an employee of an international NGO, wrote to Moneylife Insurance Helpline on a query about Life Invest ULIP from Max New York Life (now called Max Life). Ms Borges, writes, “On a recent review of the policy statement, I find that from April 2009 till date, I have paid Rs2,08,333 as premium. The current NAV is Rs33.51. The total administrative charge, premium allocation charge, mortality charge and service tax amounts to Rs21,000. I find that I am not benefiting with any increase in the NAV which I am told is due to the share market not doing well. Even if I had invested in a Recurring Deposit (RD), I would have got some amount of interest, whereas in this case, I am losing as the various charges are a huge amount. I would greatly appreciate your advice to me on this so that I can at least get back my money that I have paid without undergoing loss due to the various charges, which were not made clear to me at the time of investment.”

 

Are you trapped in toxic ULIPs? Blame IRDA – Part II

 

In a ULIP, a policyholder can see the performance and make judgements. But, it is wrong to evaluate returns on premium as the mortality charges need to be excluded. An insurance company is providing the service of risk cover against the mortality charges you pay. In a child plan, there is additional feature provided by the insurer which is Waiver of Premium (WoP) in case of your unfortunate death. Due to this, there are additional charges to provide WoP feature. Just calculating returns on premium paid is inaccurate.

 

It is not just queries about ULIPs, but also traditional products like endowment, money-back and whole life that have steadily coming to the helpline. People are buying long-term products of 25-30 years and suddenly want to surrender. Traditional products offer low guaranteed surrender value and hence it’s not best option. Read Moneylife cover story (8 March 2012)
 

Life Insurance: Surrendering policy? Think again

 

Traditional products are opaque on charges which keeps the insured blissfully ignorant about their actual returns. The bonus declared every year is an indication of it to some extent, but many traditional policyholders do not keep track of bonuses. Moreover, the final addition bonus can only be known at the time of maturity.

 

In case you have an insurance issue, please write to Moneylife Foundation. Click here

User

COMMENTS

Sunil Kumar

4 months ago

Sir.I need a loan
Sir please accept my request
contact number 9891 757 629

Ravi Narayana Rao

1 year ago

Surely an organised scam

Tushar

3 years ago

I do not Understand, Why IRDA does not take any initiatives to educate investors?

ABHIK DE

4 years ago

BANK ASSURANCE MEANS MISSELLING OF ULIPS IN CONNIVANCE BETWIN THE BANK&INSURER.CORPORATE,FOR THAT MATTER ANY INSURANCE AGENTS ARE SUPPOSED TO BE ADVISORS.SHOULD PROVIDE AFTER SALES SERVICES I.E. TIMELY RENEWAL PREMIUM PAYMENT BY CLIENTS.BUT,THEY ARE ONLY INTERESTED ABOUT SELLING NEW ONES,EVEN AFTER WITHDRAWING FUNDS AFTER PAYING CHARGES,WITHOUT BOTHERING ABOUT EXISTING POLICIES.HOW CAN INSURER LIKE BAJAJ ALLIANZ SELL POLICIES,EVEN EHEN EXISTING POLICIES IN LAPSED STATE,WITHOUT REVING IT.HOW CAN THEY SELL NEW ONES WITHIN 3YS.OF SURRENDERING EXISTING POLICIESTHATS THE CONNIVANCE BETWIN BANK&INSURER.

ABHIK DE

4 years ago

CAN A NEW ULIP POLICY SOLD WITHIN 3YRS OF SURRENDERING A ULIP POLICY?

ABHIK DE

4 years ago

MAX LIFE/BAJAJ ALLIANZ/ALL ONLY CONTACT CUSTOMERS YEARLY FROM THEIR RENEWAL VERTICAL TEAM FOR PAYMENT OF PREMIUMS.THEY DONT BOTHER TO CONTACT IN BETWIN ,FOR FREE SWITCHING ETC.WHEN THE MARKET REACHES ITS PEAK,TO BOND FUND/AND SWITCH BACK TO EQUITY ,WHEN MARKET BOTTOMS OUT.I.E. NO AFTER SALES SERVICES BY THE AGENTS ,AGAINST IRDA GUIDELINES.WHO CARES!IT HAPPENS MAINLY WITH THE BANKASSURANCE/MIS-SELL AND DISAPPEAR!

Debaprasad

4 years ago

Excellent revelation, but who'll bell the cat?

NAGARAJA KAULAGI

4 years ago

It is wonderful to read about the ULIPs sold by all the insurance companies. Insurance came to India through LIC and GIC which are since 57 and 40 years respectively. I am still not able to understand how many policy holders have knowledge of insurance and the industry was managed till IRDA came into existence. Even after IRDA came into existence insurance still has to find the "actual" or "real" meaning in India. "Kya woh din aayega jab bima, bima ke roop me bikega".

Khubir

4 years ago

Even I had an Investment of Rs15000p.a Now its valued at 59700 after 5 Years..........

ABHIK DE

4 years ago

M.F.s ARE NOT ONLY SUBJECT TO MARKET RISKS,BUT MORE SO FROM THE DISHONEST PORTFOLIO /FUND ADVISORS,AND THEIR TOXIC CONNIVANCE WITH AMCs.THEY ARE NOT WARY OF REGULATORS'CODE OF CONDUCT/GUIDELINES.THEY ARE NOT SATISFIED WITH THE ADVISORY FEES/WILL CHURN YOUR FUNDS LIKE CHALK OUT OF CHEESE/MIS-SELL ULIPS/EARNING REVENUE FOR THE BANK THROUGH COMMISSION DRIVEN MALPRACTICES TO ACHIEVE TARGET TO EARN INCENTIVES/PROMOTION/FOREIGN TRIPS.IT ONLY ALLOWED TO HAPPEN HERE.

sachchidanand

4 years ago

NDTV appears to be a classic example of "How to lose others money". I am sure if some one researches on IBN & TV18, similar things will be found. My only worry is : who is funding these loss making ventures & WHY some one wants to lose money ? I suspect a serious case of money laundering. Please enlighten me on this.

Pandharinath Prabhu Rajivadekar

4 years ago

Why should you blame the Insurance Company? It was made ample clear in scheme documents about the charges of the scheme. Indian Investors have no habit to read anything they sign on the dotted line and then keep on cursing the company. They cant say company has cheated them , How far they are honest in their job? A person selling goods will always talk only good about his product its duty of the buyer to check the authenticty of sellers claim.

REPLY

NAGARAJA KAULAGI

In Reply to Pandharinath Prabhu Rajivadekar 4 years ago

Perfect.

NAGARAJA KAULAGI

In Reply to Pandharinath Prabhu Rajivadekar 4 years ago

Perfect.

ABHIK DE

In Reply to Pandharinath Prabhu Rajivadekar 4 years ago

WHEN ULIPS ARE SOLD/MISSOLD BY BANKASSURANCE,WHO IS THE (THE BANK),INVESTMENT ADVISOR TOO,CHARGING FOR INVESTMENTS.THE ADVISOR CAN NOT MIS-SELL ULIPS,WHEN EXISTING POLICIES IN LAPSED STATE.CAN NOT SELL POLICIES AFTER SURRENDERING RUNNING POLICIES.I AM NOT TALKING ABOUT SINGLE POLICY,THAT SMALL PRINTS TO BE READ CAREFULLY.INTENTION OF THE ADVISOR TO SELL ULIPS AT HIGH UPFRONT [email protected]%ALLOC.CHARGES.TALKING ABOUT 2006-2009.AS SOON AS LOCK IN PERIOD IS OVER NEW ULIPS SOLD TO EARN MAXIMUM COMMISSION BY THE BANK ADVISOR/INSURER IN CONNIVANCE.

S BHASKARA NARAYANA

In Reply to Pandharinath Prabhu Rajivadekar 4 years ago

do u advocate the insurance company to black mail its investors, on presumption that every investor is not honest at all in his life?

sachchidanand

In Reply to Pandharinath Prabhu Rajivadekar 4 years ago

Very sorry to point out that giving false promises , amounts to cheating and is an offence under Indian Penal Code. If Insurance Policies are mis-sold, the onus is on the Insurance Company. In my own case, I had taken out traditional Endowment Insurance policy with Profits, at the tender age of 20 and at maturity when I received final maturity amount, I realised that my savings earned just 2.75% compounded return. If I had placed the same money in RD, I would have received 11% return. My only fault is that I did not die within 10 yrs from taking the policy ! Fortunately, I have taken Term Insurance policy for which I pay just Rs. 8000 per year and I am covered for Rs. 1 crore. I am quite happy that as long as I am alive , I do not have to worry about my family.Why such policies are not sold in India ! The only reason is that Commissions on such policies are very low & Agents do not want to popularise such policies where they earn low commissions

ABHIK DE

4 years ago

CAN A CORPORATE AGENT ADVISE TO SURRENDER EXISTING RUNNING POLICIES AND ADVISE AND SELL NEW ULIPS WITHIN 3 YS.OF SURRENDERING ULIPS ?AS PER IRDA GUIDELINE,NO ULIPS CAN BE SOLD WITHIN 3 YS.OF SURRENDERING RUNNING ULIPS.CAN ULIPS BE SOLD/MISSOLD ,WHEN EXISTING ULIPS ARE IN LAPSED STATE?CAN THE INSURER ACCEPT THOSE POLICIES?ITS ALL ABOUT TOXIC MIS-SELLING OF ULIPS BY BANK ASSURACE/CONNIVANCE BETWIN THE BANK AS PORTFOLIO MANAGER &THE INSURER.2006-2009.IT CAN ONLY HAPPEN HERE.

Anil Agashe

4 years ago

i believe there are thousands who have bought these products. I have also heard stories where a client on being to go for a traditional insurance product demanding a ULIP saying so and so has benefited so much and that the returns are so great. No need to cry for such fools. Most people who bought this product had no idea of how markets work. They were convinced by an Excel sheet showing 15% 18% 29% returns and they believed all that! They must suffer, no one can help them! Majority of investors are from IT and then professionals like doctors! No sympathy needs to be showed to them!

REPLY

ABHIK DE

In Reply to Anil Agashe 4 years ago

C.R.M OF A BANKASSURANCE!

sachchidanand

In Reply to Anil Agashe 4 years ago

Only SADIST people can think like this. It is the Agents who , out of greed , cheat the innocent public only to earn heavy commissions. High time some one who has time & some money starts prosecuting Insurance Company & Agents for cheating.

NAGARAJA KAULAGI

In Reply to sachchidanand 4 years ago

Very good. You are right. Insurance companies should be shut down. Your words ".the Agents who , out of greed , cheat the innocent public only to earn heavy commissions." are appropriate. No one blames the manufacturer and the licenser of the product.

ABHIK DE

In Reply to sachchidanand 4 years ago

NO FAITH ON REGULATORS!?

ABHIK DE

In Reply to Anil Agashe 4 years ago

THEREFORE MIS-SELLING SHOULD GO ON!

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