Picking the Winners

The raison d’être of fund houses is that they use their knowledge and expertise to choose the best stocks for investors. However, at Moneylife we believe that asset management companies can do much better if they are less callous with your money. Often, schemes have overvalued stocks, or stocks that were picked only because they have a high weightage in their benchmark index. We think mutual fund portfolios can have fewer and better quality stocks. Therefore, over the past few years, we have been compiling a ‘Super Stock’ portfolio—a portfolio of the top stocks of top mutual fund schemes that excludes the stocks that are unlikely to add value. Our unique approach to stock-picking has done well in the past. We have not only beaten the Sensex but have outperformed a majority of ‘professionally managed and constantly monitored’ equity schemes. Turn to our Cover Story to see the top bets of best equity schemes and a review of how our portfolio has performed in the past.


While mutual funds pick index stocks, such that their performance is in line with that of benchmark, one cannot blindly invest in companies simply because they are in the index. Our columnist, R Balakrishnan, points out in our Smart Money section, on how one should have a method for stock-picking.


The malaise of corruption and influence-buying is deeply ingrained in the system. Sucheta, in her Different Strokes section, writes about the sordid episode of the goings-on at the residence of CBI director Ranjit Sinha and how high-ranking bureaucrats misuse their power. Like Mr Sinha, many of our top bureaucrats, including bank chairmen, seem compromised. Will the government do something about it?


On 16th September, Moneylife Foundation proudly received the 10th MR Pai Memorial Award. This Award, in the memory of well-known consumer activist MR Pai, is given to a consumer activist or consumer organisation each year by the All India Bank Depositors Association. We thank you for being with us on this eventful journey.


Why Penalise the Account-holder?

Capping free transactions is totally contrary to justice to account-holders. On the one side, RBI (Reserve Bank of India) has made a provision to charge account-holders for having certain number of specified transactions. On other side of the story, which is either un-discovered or un-recognised, is that:

(a) Public sector banks have maximum number of bank accounts.

(b) Public sector banks have largest accountholder base.

(c) Public sector banks have the largest ATM network.


The darker side is that they are lethargic in maintaining their ATMs. When an account-holder visits the nearest ATM of his bank, most of the times, he finds the ATM out of order. Due to the inability to complete the transaction at that ATM, the account-holder is forced to visit a nearby ATM of a different bank, where he is forced to pay beyond the specific limit of transactions.


Under these circumstances, RBI’s action has doubly penalised the account-holder: (a) he has to pay for travel expenses as the second nearest ATM could be at sizeable distance (b) he is forced to pay for the transaction at other banks’ ATM as his bank’s ATM is unable to serve him.


One of the questions which RBI must have ignored is: What is the customer’s fault if currency is stuck in the ATM while withdrawing; subsequently, the customer uses a different bank’s ATM to withdraw to meet the need of the hour. This is one place where RBI has ready data on record to analyse. RBI must not permit banks to arbitrarily penalise account-holders where the fault is on the part of the banks only. The need of the hour is to improve the banking system.


RBI should collect data on failed transactions, denied transactions, out-of-order machines, etc. It must order banks to indemnify customers for all such cases on a per-transaction basis with the same Rs25 per-transaction basis (or an enhanced value) so that banks are taught to maintain their ATMs in the best banking interest.

Trivendra Sharma, by email



Struggle of a Bank Customer

It is disappointing to note that Dr Raghuram Rajan’s tenure as RBI governor seems to be nothing to write home about. When he was appointed governor, he attracted attention for all the wrong reasons (smart & suave, handsome personality, an individual with international exposure, etc).


However, after several months, one does not see any remarkable change in the banking system. Any action taken is directed at causing further mental torture to the average middle class.


A news report on 16 August 2014 mentioned that banks are going to levy charges for withdrawing your own money from ATMs. Tomorrow, you might be charged for requesting to update your passbook. The working of PSU (public sector undertakings) banks has plunged to abysmal levels, even as private sector banks have a field day charging customers for different services and misguiding them on services like mutual funds.


Vijaya Bank has started charging Rs10 for sending account updates on mobile phones. When I asked the HAL stage III manager the reason for this, he said it is a small price to pay for all the effort that goes into it. As a customer, I would urge all the readers of Moneylife to update their passbooks regularly and look out for debits in the account. Banks, it seems, are under liberty to change rules and charge you without your permission or approval.


I had a bad time recently with recovering my original home loan document from Indian Bank. My loan tenure had got over but the staff in the branch was constantly playing musical chairs. Can you believe this? For close to a month, the concerned branch of Indian Bank, Indira Nagar, 80-ft Road, had a notice stuck on the entry to the home loan department. The notice said: “Home loan department closed for two weeks. By order.” Is RBI even aware of this? On an earlier occasion, one of the office staff asked me not to open a fixed deposit in the bank!


Every week, my visits to the branch proved futile with explanations ranging from so & so is not well to so & so’s daughter is getting married and so she had to go on leave. Confronting the branch manager proved to be another exercise in futility. “If there is anything, please call me on my mobile” was her retort. But when we called up on her mobile, she was more keen to disconnect than to talk.


After struggling for close to six weeks, I thought enough is enough and decided to contact their head office near MG Road in Bengaluru. Prior to that, I had sent an email copying some of their directors, whose emails I could trace from the Indian Bank website. The regional/zonal officer was so rude on the phone that I could not believe my ears. It appeared as if he wanted to say: “why are you calling me and disturbing me? I have so much work to do!”


I had to resend my email twice or thrice and then, as a last resort, I marked the email to their chairman’s office. It was then that things started progressing at a faster pace. I got my documents within a week. The branch staff explained to me how they were saddled with all the work and the clerical staff shirked work because they belonged to some union.


After I received the document, I thanked the branch staff and also copied the directors and the branch managers. I even made some valid suggestions to Indian Bank as a customer. But I did not receive any response from them later on.


The question is: Do I have to struggle so much to recover my own document? That too after paying all my EMIs (equated monthly instalments) without fail! How much patience should I have to deal with Indian Bank’s internal problems with its employees? Look at the treatment that I got and look at the treatment people like Vijay Mallya get.


Of course, I do not pay bribes to get loans sanctioned/ approved by banks. There lies the difference.


During the entire process, I was worried sick about the safety of my original home loan documents. A ‘floating’ bank employee population does little to reassure you!

Venkatesh Ganapathy, by email


Definitely an Improvement

This is with regard to “Will Narendra Modi Go after Chain-money Schemes?” by Sucheta Dalal. A comprehensive and holistic approach to financial inclusion is yet to emerge. The present initiative is definitely an improvement, if we compare with earlier efforts. Here, life cover, a conditional loan (overdraft) facility, a credit card and a proposal for continued relationship, which both sides will have to nurture, are factored in. Several informal and formal arrangements for credit, especially in the rural areas and among small ‘borrowers’, do not get space in the picture emerging.

MG Warrier


Complacent Fiat Management

This is with regard to “The Evo Arrives” by Veeresh Malik. There is something fundamentally wrong with Fiat management... their engines and AMT gearbox (from Fiat's sister company) are more successful compared to those of the rivals. Fiat is sitting on the fence and applauding them, being happy to sell engines/gearbox/spares to them. Fiat needs be the leader rather than just be a spectator. Manufacturers like Maruti and Tata source the same engine from Fiat and tune it for more power in their cars... shame on you, Fiat management!



Let the Chips Fall?

This is with regard to “What next for coal mining sector post Supreme Court ruling” by AK Ramdas. It is interesting to read that suddenly the Supreme Court has decided to take some action after sleeping for almost a decade in the case of Coal-Gate. Media has been shouting, but our judges slept. It is time to wake up our democratic system. Have the Hon'ble judges taken measures to protect the power and industry sectors? The Supreme Court must show its independence and show some teeth in taking action.

Shadi Katyal


Creating confusion!

This is with regard to “Non-filing of I-T return for assessees is subject to tax audit before

30th September” by Girish Borkar. Be it company law or income tax law, the authorities seem to excel in creating confusion where none exists. So much for simplification!



Fortnightly Market View: A Step Back, To Move Forward

A short-term decline and then a rally?

Last fortnight, I had suggested that...
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