Banking
RBI tells HDFC Bank not to make up its own KYC verification rules

Many customers, harassed HDFC Bank’s new KYC norms, have complained to Moneylife on the issue. Moneylife followed up with HDFC Bank and the regulator and this is what we found out
 

HDFC Bank, which has been the subject of innumerable customer complaints about harassment to resubmit  Know Your Customer (KYC) documentation, has been told by the regulator, Reserve Bank of India (RBI), not to demand a full re-submission unless there is a significant change in customer profile. Moneylife has received many complaints from customers being harassed by the bank for re-submitting KYC details which have all been forwarded to Aditya Puri, the managing director. Initially, the bank took the stand that it was only following RBI directives on KYC and that continuous re-submission of details was also a global norm. 
 

However, Moneylife pointed out that almost all the complaints received by us were only about HDFC Bank; no other banks seemed to be asking customers to re-submit KYC documents. Kartik Jain, vice-president at the bank said, “KYC is a regulatory requirement and the RBI has a set of FAQs regarding the same published on their website: http://www.rbi.org.in/scripts/FAQView.aspx?Id=82. However, this link does not insist that KYC norms will have to be compulsorily and automatically updated every three years or else customer account will have to be made inoperative.
 

In fact, one customer, Trishul Wadhwa wrote to us saying, “The teller at the other end (HDFC Bank) was not that courteous. He was mildly threatening that I needed to complete KYC formalities for my savings account within the next few days, or else…” Mr Wadhwa says that other banks with whom he is a customer have not made such a demand. Prof Anil Agashe of Pune had similar complaints. He pointed out that his credit card dues and his electricity bills were debited directly from his HDFC Bank accounts, providing ample evidence that there was no change in his KYC details. However the bank found this unacceptable. 
 

Moneylife then took up the matter with the RBI. Senior RBI officials told us that they had only asked banks to “complete the review of risk categorization”. While this involves updating addresses and including photographs, if they do not exist on the records, the address details only need a one-line confirmation from the account holder. This could all be done without harassing customers to re-submit all KYC documents. Moneylife pointed out that many complaints were from high-networth individuals who were assigned relationship managers to sell them third-party products. We asked why these officials could not hand-hold customers to get details. We also learn that most banks have created a check-list based verification that does not require asking customers to resubmit documents to the bank. 
 

Mr Puri also told Moneylife, three months ago, that the bank changed its rules on sale of third party products, in order to deal with the large number of complaints about mis-selling, especially of insurance products. He claimed that this had led to a significant drop in complaints.
 

At our request, Neeraj Jha, communications head of the bank has outlined the following process of “right selling” that has apparently been adopted by the bank. He says, “To ensure that the customer is buying a product he actually needs, we communicate and engage with him at three distinct stages. Each time, the policy features are detailed and the customer has an opportunity to exit, if he thinks the product doesn’t align with his need. At the outset, the insurer (HDFC Life Insurance Co) initiates a verification call to the customer to explain the policy features and benefits and make sure it serves the customers purpose. This call is recorded. Once the customer has agreed to take the policy, he receives a letter from the bank in addition to his policy documents, highlighting policy features, premium, term and charges/commission. A dedicated email ID and address of the bank for grievance redressal is also provided in the letter.”
 

Furthermore, he says, “The customer is given a choice to exit the policy without any charges within the free look-in period, which starts from the receipt of the policy documents. When it comes to identifying our customers, it's pertinent to mention that sale of third-party products is restricted to HDFC Bank customers only, with payments debited from their bank accounts only. Most Important Document (MID) lists key points that need to be noted.“
 

Moneylife invites comments from bank customers on the efficacy of this new initiative by the bank.

User

COMMENTS

Surinder Gupta

8 months ago

Getting threatening calls & mails from HDFC after loan disbursement regarding the completion of IGR process.

There are multiple issues here:
1) I am not informed about the IGR charges and ownership till the loan has been disbursed & first EMI has been deducted so as per banking ombudsman guidelines, with prior information no process & charges can be imposed on customer.

2) I have the mails from HDFC Ltd where it’s stated that no other charges are involved after the loan approval since I have loan approvals from multiple banks like ICICI & HSBC
& wanted to go with the bank having minimal charges involved.

I have been clearly told there are no other process/charges involved & with that confirmation only I went ahead with loan disbursement from HDFC.

Now after loan disbursement & 1st emi payment, I have been told about the IGR process.
I am getting threatening mails now to get that process completed else 30k penalty will be applied.

Checked with other banks have been informed that its sole responsibility of bank to complet the IGR process & not the customer.
In order to get rid of threatening calls & mails from hdfc executive Ranjeet Shetty (Mumbai hdfc head), I paid the required amount for IGR but that was not the end of harassment.

Now they are asking me to go to registrar office & get the loan registered with hdfc which I have no idea.

I am facing unnecessary harassment from hdfc officials, have raised the issue to higher officials but did not get any reply since 20 days.

Can anyone suggest the way out.

SUDHIN

1 year ago

My sister had invested in the Inflation indexed national saving securities-c through HDFC bank on 31-12-2013 and she has a saving account with this bank, the application form states that the bank must issue a certificate of holding once the cheque is cleared, but these people have sent the proper documents with the bank seal to show that this is an original/valid document. Today in spite of writing to the md office around 4 email reminders they have not even bothered to reply, then what is the point of using their services when they are least bothered about the service?
This has been a very very bad experience with this bank, readers please note this and keep in mind the above points when dealing with this bank.

SUDHIN

1 year ago

This bank is again asking for submission of the KYC forms, also a sms has threatened to suspend the online bank if this is not completed, this was done around 2-3 years back then why again now, last time the other banks did not bother, something must be done about this.

RAMU

2 years ago

The Banking Ombudsman Scheme - Annual Report 2012-13

BTW, apart from topping the list for the total number of complaints among about 20 Private Sector Banks (5143 for HDFC Bank out of 16193 for all Private Sector Banks), HDFC Bank also tops in the number of complaints in specific key services such as,

1.DEPOSIT ACCOUNTS,

2. ATM/ DEBIT /CREDIT CARDS,

3. LEVY OF CHARGES WITHOUT PRIOR NOTICE,

4. FAILURE ON COMMITMENTS MADE - BCSBI CODE,

5. NON OBSERVANCE OF FAIR PRACTICES CODE,

6. NON-ADHERENCE TO INSTRUCTIONS ON DSA &RECOVERY AGENTS

More at:
http://rbidocs.rbi.org.in/rdocs/Publicat...

RAMU

2 years ago

"Credit Card User Guide" should be replaced by "Card member Agreement"

RAMU

2 years ago

There are hundreds of serious many adverse remarks made against HDFC Bank by various courts, primarily Consumer Forums and Commissions; and other statutory authorities like the Competition Commission of India. There have been thousands of complaints from consumers against HDFC Bank. The remarks and reports include flouting of rules and guidelines of the RBI and even the laws of the land by HDFC Bank.
HDFC Bank have been devising their own unilateral, arbitrary and exploitative terms and conditions and have been imposing them on customers due to the Bank’s dominant position. The terms and conditions are one-sided and prejudiced against the legitimate interests of customers. The terms and conditions are printed in extremely small fonts, crowded amongst closely laid out lines and running into innumerable number of pages because of verbosity with the intention of making the terms and conditions unreadable for the customers. In contrast, their catchy and alluring promotional messages are printed in large colorful fonts with the intention of luring customers to use the Bank's products/services who often sign in good faith without knowing the risks involved. The terms and conditions are not explained to customers before signing documents / applications. The above practices have resulted in many customers being taken by nasty surprises and shocks when they are deprived of their eligible and promised benefits or when they are asked to pay penalties and charges, or debits are made to their accounts, unknown to them.

Reserve Bank of India’s own 2012 report, of Complaints received against various private sector banks, makes shocking revelations about HDFC Bank.

1. HDFC Bank tops the list with 4976 complaints.
2. It also tops the list on complaints of failure on commitments made to customers.
3. It is also the 2nd highest on complaints of non-observances of Fair Practices Codes, Cards, Deposits, loans and Recovery Agents related Complaints.
4. HDFC Bank has similar history sheets for the previous years, which shows the Bank is adamant in not mending its ways and is bent upon “profiting irrespective of consequences”.
The Banking Ombudsman Scheme Annual Report 2012-13 (Page 88 & 89), carries the following information: http://rbidocs.rbi.org.in/rdocs/Publicat....
Among 20 Private Sector Banks, HDFC Bank tops the list for the number of complaints received. Out of the total about 16000 complaints against these 20 Private Sector Banks, the number of complaints HDFC bank alone is 5143.
It should be noted that for every customer who raises his voice of grievance or lodges a complaint, there are thousands who suffer silently because many will not have the stamina to fight for justice against a mighty company.
The legitimate interest of vast number of the innocent public is at stake and if the RBI, the conscience keeper of banking practices in India, does not take immediate, effective and strict action against HDFC Bank, public will continue to be exploited and made to suffer and grave injustice will result.
There is a strong prima facie case for the RBI to conduct thorough investigations into the policies, practices and conduct of HDFC Bank; and the reasons are explained below as background notes.
1. The Reserve Bank of India should direct HDFC Bank to cease and desist,
a. from sending any promotional communication to any customer through any means unless the customer has given in writing specifying the type of communication and the mode by which he/she would like to receive such communication and the duration for which he/she would like to receive such communication.
b. from luring customers to use HDFC Bank’s Credit and Debit Cards to buy third party products / services for which HDFC Bank does not take responsibility for quality, fair trade practices and fulfillment of service related undertakings related to such third party products.
c. from selling or advertising / promoting any product / service to any customer wherein the specific terms and conditions are not made transparent prior to selling and by publishing all such terms and conditions in their website.
2. The Reserve Bank of India should direct HDFC Bank to,
a. include any adverse remark or specific relevant adverse point made in an Order / Judgment passed by any court / quasi judicial boy / statutory authority, related to any product / service, in the promotional, advertising and selling communications and in the applications issued to customers for such products / services, as long the such Orders / Judgments are final and are not under Appeal to a higher body. (Some such brief mention is made in Annual Reports to shareholders. If shareholders can receive such information, customers should also receive such information routinely specific to product / services to which they are customers. For example, a Competition Commission’s important Order directing HDFC Bank to cease and deist from implementing their Credit Card User Guide is hardly known to customers and they continue to be affected by non-compliance.)
b. inform individually each and every customer of any service / product, of any change in any term or condition applicable to such service / product at least 3 months before such change is implemented except where such changes have been necessitated by statutory / legislative or judicial orders.
3. The Reserve Bank of India
a. should examine and investigate thoroughly every single term and condition applied by HDFC Bank for selling every product / service since the year 2000 and identify those that were / are unfair and in contravention of Rules and Regulations.
b. based on the findings of such examination / investigation, should widely publicize any the findings of wrong policies and unfair practices and those that are in violation of RBI guidelines which have had / have adverse impact on consumers’ legitimate rights and privileges and call for information / reports on genuine grievances / claims of compensation from customers who consider themselves affected by such policies and practices and address such grievances and order HDFC Bank to settle such claims of compensation based on norms to be fixed by the RBI, together with imposing penalties on HDFC Bank and restrictions on permissions and licenses granted to HDFC Bank for any relevant trade activity.
c. should direct HDFC Bank to include all key Terms and Conditions in all promotional / advertising communications of all products instead of merely saying ‘T&C Apply’. Alternatively, website and other sources should be mentioned in such advertisements / promotional communications from where a customer can obtain full information on such Terms and Conditions prior to making a decision and so that informed decision can be made. (As observed by courts.)
d. should identify individual employees / officials for acts of commissions and omissions for initiation of actions for both civil liabilities and criminal culpabilities.
e. Should gather all details pertaining to each of the allegedly millions of unsolicited commercial communications (promotional phone calls, SMS and e-mails) sent to customers and non-customers in violations of RBI guidelines, TRAI rules and of laws pertaining to violations of fundamental rights of customers and non-customers to their privacy and fundamental right ‘not-to-be-disturbed’. (This applicant himself has received more than 500 such communications in about 2 years and has preferred a Complaint in the Consumer Commission limited to Deficiencies of Service and Unfair Trade Practices.)

VPPK

2 years ago

I have been a Preferred Customer of HDFC Bank since 06/08/2005 in Kirti Nagar, Central Market Branch, time the branch opened. Since my current account does not attract any cash deposit charges the current Branch Manager, Sunaina Ahluwalia, have left no stones unturned in duping us of false reasoning for closing the account & move on to new one. The reasons are from initially a better privileged account, non KYC compliance, excess deposits. We have been maintaining all te required documents require to run a high cash value accounts from providing audits & RBI disclosures.
The time bank was new we had enjoyed the services ablaze but now since every old staff have moved on an bank seems to have gained the established momentum we seem to be sore in butt to them.
Her behavior is pathetic as she orders for late cash updates to accounts, asking executives to make close account calls.
We also invested huge amounts in polices ,which were though not a good option for investment, for making a healthier relation but to my surprise they lost the luster of that favor within a month time.
If anybody is listening at HDFC, take as serious note that your bank gonna suffer of valuable customer if such rate of iteration keeps going on.
Internal audits of employees and better training about ethical practices should be done.
Will be closing the Particular Current Account along With 1 Current + 3 Savings + 2 8Yr Old RD +1 8 Yr Policy + 20 FD's + 2 Policies 6Month worth a moolah because of SUNAINA AHLUWALIA
Thanks for your association & distress of your services.

REPLY

RAMU

In Reply to VPPK 2 years ago

The Banking Ombudsman Scheme - Annual Report 2012-13

BTW, apart from topping the list for the total number of complaints among about 20 Private Sector Banks (5143 for HDFC Bank out of 16193 for all Private Sector Banks), HDFC Bank also tops in the number of complaints in specific key services such as,

1.DEPOSIT ACCOUNTS,

2. ATM/ DEBIT /CREDIT CARDS,

3. LEVY OF CHARGES WITHOUT PRIOR NOTICE,

4. FAILURE ON COMMITMENTS MADE - BCSBI CODE,

5. NON OBSERVANCE OF FAIR PRACTICES CODE,

6. NON-ADHERENCE TO INSTRUCTIONS ON DSA &RECOVERY AGENTS

More at:
http://rbidocs.rbi.org.in/rdocs/Publicat....

RAMU

In Reply to VPPK 2 years ago

"Credit Card User Guide" should be replaced by "Card member Agreement"

RAMU

In Reply to VPPK 2 years ago

There are hundreds of serious many adverse remarks made against HDFC Bank by various courts, primarily Consumer Forums and Commissions; and other statutory authorities like the Competition Commission of India. There have been thousands of complaints from consumers against HDFC Bank. The remarks and reports include flouting of rules and guidelines of the RBI and even the laws of the land by HDFC Bank.
HDFC Bank have been devising their own unilateral, arbitrary and exploitative terms and conditions and have been imposing them on customers due to the Bank’s dominant position. The terms and conditions are one-sided and prejudiced against the legitimate interests of customers. The terms and conditions are printed in extremely small fonts, crowded amongst closely laid out lines and running into innumerable number of pages because of verbosity with the intention of making the terms and conditions unreadable for the customers. In contrast, their catchy and alluring promotional messages are printed in large colorful fonts with the intention of luring customers to use the Bank's products/services who often sign in good faith without knowing the risks involved. The terms and conditions are not explained to customers before signing documents / applications. The above practices have resulted in many customers being taken by nasty surprises and shocks when they are deprived of their eligible and promised benefits or when they are asked to pay penalties and charges, or debits are made to their accounts, unknown to them.

Reserve Bank of India’s own 2012 report, of Complaints received against various private sector banks, makes shocking revelations about HDFC Bank.

1. HDFC Bank tops the list with 4976 complaints.
2. It also tops the list on complaints of failure on commitments made to customers.
3. It is also the 2nd highest on complaints of non-observances of Fair Practices Codes, Cards, Deposits, loans and Recovery Agents related Complaints.
4. HDFC Bank has similar history sheets for the previous years, which shows the Bank is adamant in not mending its ways and is bent upon “profiting irrespective of consequences”.
The Banking Ombudsman Scheme Annual Report 2012-13 (Page 88 & 89), carries the following information: http://rbidocs.rbi.org.in/rdocs/Publicat...
Among 20 Private Sector Banks, HDFC Bank tops the list for the number of complaints received. Out of the total about 16000 complaints against these 20 Private Sector Banks, the number of complaints HDFC bank alone is 5143.
It should be noted that for every customer who raises his voice of grievance or lodges a complaint, there are thousands who suffer silently because many will not have the stamina to fight for justice against a mighty company.
The legitimate interest of vast number of the innocent public is at stake and if the RBI, the conscience keeper of banking practices in India, does not take immediate, effective and strict action against HDFC Bank, public will continue to be exploited and made to suffer and grave injustice will result.
There is a strong prima facie case for the RBI to conduct thorough investigations into the policies, practices and conduct of HDFC Bank; and the reasons are explained below as background notes.
1. The Reserve Bank of India should direct HDFC Bank to cease and desist,
a. from sending any promotional communication to any customer through any means unless the customer has given in writing specifying the type of communication and the mode by which he/she would like to receive such communication and the duration for which he/she would like to receive such communication.
b. from luring customers to use HDFC Bank’s Credit and Debit Cards to buy third party products / services for which HDFC Bank does not take responsibility for quality, fair trade practices and fulfillment of service related undertakings related to such third party products.
c. from selling or advertising / promoting any product / service to any customer wherein the specific terms and conditions are not made transparent prior to selling and by publishing all such terms and conditions in their website.
2. The Reserve Bank of India should direct HDFC Bank to,
a. include any adverse remark or specific relevant adverse point made in an Order / Judgment passed by any court / quasi judicial boy / statutory authority, related to any product / service, in the promotional, advertising and selling communications and in the applications issued to customers for such products / services, as long the such Orders / Judgments are final and are not under Appeal to a higher body. (Some such brief mention is made in Annual Reports to shareholders. If shareholders can receive such information, customers should also receive such information routinely specific to product / services to which they are customers. For example, a Competition Commission’s important Order directing HDFC Bank to cease and deist from implementing their Credit Card User Guide is hardly known to customers and they continue to be affected by non-compliance.)
b. inform individually each and every customer of any service / product, of any change in any term or condition applicable to such service / product at least 3 months before such change is implemented except where such changes have been necessitated by statutory / legislative or judicial orders.
3. The Reserve Bank of India
a. should examine and investigate thoroughly every single term and condition applied by HDFC Bank for selling every product / service since the year 2000 and identify those that were / are unfair and in contravention of Rules and Regulations.
b. based on the findings of such examination / investigation, should widely publicize any the findings of wrong policies and unfair practices and those that are in violation of RBI guidelines which have had / have adverse impact on consumers’ legitimate rights and privileges and call for information / reports on genuine grievances / claims of compensation from customers who consider themselves affected by such policies and practices and address such grievances and order HDFC Bank to settle such claims of compensation based on norms to be fixed by the RBI, together with imposing penalties on HDFC Bank and restrictions on permissions and licenses granted to HDFC Bank for any relevant trade activity.
c. should direct HDFC Bank to include all key Terms and Conditions in all promotional / advertising communications of all products instead of merely saying ‘T&C Apply’. Alternatively, website and other sources should be mentioned in such advertisements / promotional communications from where a customer can obtain full information on such Terms and Conditions prior to making a decision and so that informed decision can be made. (As observed by courts.)
d. should identify individual employees / officials for acts of commissions and omissions for initiation of actions for both civil liabilities and criminal culpabilities.
e. Should gather all details pertaining to each of the allegedly millions of unsolicited commercial communications (promotional phone calls, SMS and e-mails) sent to customers and non-customers in violations of RBI guidelines, TRAI rules and of laws pertaining to violations of fundamental rights of customers and non-customers to their privacy and fundamental right ‘not-to-be-disturbed’. (This applicant himself has received more than 500 such communications in about 2 years and has preferred a Complaint in the Consumer Commission limited to Deficiencies of Service and Unfair Trade Practices.)

Suiketu Shah

In Reply to RAMU 2 years ago

wonderful email.A fitting reply to those who think HDFC bank is better than ICICI bank.

I am also saying hdfc securities are serial stalkers who seriously need mental help.I have thrown them out of my life in Jan 2013 and closed all accounts 1 march 2013 still they keep stalking me.They recently called me.Serious mental help top brass of hdfc securities needs.

RAMU

In Reply to Suiketu Shah 2 years ago

If you were a victim of unfair terms and conditions of HDFC Sec, and if you have genuine grievances, you may have sufficient grounds to proceed against HDFC Sec and claim compensation. Don't accept their one-sided rule book which they throw at you when you suffer injustice and complain. I won a case against HDFC Bank in which I contested that their terms are unfair and untenable and void in the eyes of law, and it was accepted by the court.

hari pawar

3 years ago

Dear Sir

I Hari pawar has worked as current account coex with thane teen haath naka branch of hdfc bank from 21/02/2012 to 30/08/2013 I am a very hardworking guy and I had sincerely worked for the branch. But I had to leave the job due to excessive pressure given by the branch manager Rupali Shinde.Emp.code-R3289 She has behaved very badly with every staff of the branch specially the contract staffs.

She has provided false feedback in the HR about me due to which I could not join to other branch of HDFC bank.

She always does wrong practices in the branch. She does wrong comitments to the customers and does miss selling to them.

I would like your notice one most important thing. The then branch manager Rupali shinde has asked me to do CPV of few current account customers which was suppose to be done by the branch staff.

The CPV report was signed by her and was shown that it was done by the branch staff.

The few customers which I know whose CPV was not done as per process are :

I request you to kindly look into the matter as these things are not right in audit point of view and over all image of the bank as many customers of the branch had officially or unofficially complained about the branch manager Rupali shinde.

unnikrishnan

3 years ago

Great Job by moneylife. I too faced similar problem with icici bank and had to fight it out as my account was made inoperative and took ten days to reactivate. Hope this KYC business is revoked. Indian banking has survived so many years without this stuff

MP

3 years ago

I have opened bank account and demat in HDFC bank near Borivali, as my husband insisted for it. Before signing the KYC documents I asked HDFC officer will it affect my all earlier MF investments details, like name and address, The person said no. Therefore, I signed the KYC documents.

I was never intended to change my name to new name.

After few months, I found my address on HDFC MF investment before marriage has changed to new address. As I am still staying at my old address in Pune and working in Pune, I asked them to change it to my Pune address with all Address proof with my before marriage name.

HDFC AMC officer has said your name is changed in CVL data and refused to accept it and said we cannot change it, unless there is a divorce certificate.

As mentioned in the above article, I can retain my before marriage name. What can be done to retain my before marriage name and my own residence address?

Why HDFC is so non-cooperative in sorting this matter?
Being a preganant woman, I am not able to live with this tension. It may affect my child by pre-matuare delivery.

Can you please help me and advise me to sort out this matter as earliest?

REPLY

Dayananda Kamath k

In Reply to MP 3 years ago

it is not know your customer. it is know your customers document. and documents can be manipulated in todays technology. that is why they want everything to be technology driven so that they can harrass gullible people.

T K Patel

3 years ago

Now ICICI Bank has started harrasing customers in Ahmedabad, same way as Hdfc was doing. They send messanges that Re-Submit all KYC formats with latest Photograph otherwise your Internet Banking stopped as of today, next harsher steps will follow !!

Suiketu Shah

3 years ago

WQhat surprises me about the bank is how their "executives" behave as if they own the bank.One Ratan Kesh wrote to me a few months after I left the bank expressing his displeasure in a very crude fashion why I wrote to MD Mr Puri.This is not unexpected as in HDFC Bank the biggest problem is their own exceutives are harming the bank more than any of their rivals or outsiders.

It gives the impression (what Kesh wrote to me) as if Kesh is the MD and Mr Puri works under him or as if one has to take Kesh's permission to write to Mr Puri.

There is a saying -why murder anyone who wishes to commit suicide.Mr Puri ,if you are reading this-pl set yr staff right else they are collectively eroding all the growth,values and culture Mr Parekh and you have got into the bank last 2 decades.

Keshavatunga

3 years ago

I fully agree HDFC is targeting selected customer even when they know the account is active.

Suiketu Shah

3 years ago

One important point of HDFC Bank Wealth management division in Lower Parel I would like to highlight.All their staff wl talk down to customers as regards what 3rd party producet/share to buy as "they are knowledgable and have big rersearch team".

What is the big deal about this?This is why we have called you?However their attitude is "we know everything and you know nothing so shut up and listen to us and spend yr money exactly on what we say as WE KNOW EVERYTHING ABOUT INVESTMENTS."

This culture of their bankers is pathetic to say the least.

Say I manufacture soft drinks and sell them worldwide.I need not talk down on my clients on the manufacturing process,etc.Making soft drinks is my forte and expertise.My customer wl have a different expertise but by insulitng him of his lack of knowledge on how I make soft drinks I am driving him out of buying from me.

I have met a few yr ago several other Wealth management heads of other companies.Noone behaves in this insulting fashion like HDFC wealth Management team lower parel whose own knowledge3 on shares in laughable to say the least,only promoting stocks where they get a fat commission.HDFC Banks wealth managemt divisions's attitude is not only insulitng but therefore also myopic.Avoid thenm at ANY Cost.

nagesh kini

4 years ago

It is noticed that many have something or the other to say about RBI.

Won't it be a great idea that you all participate in the Money Life initiative of a tet-a-tet with RBI Deputy Governor and his Customer Relations head honchos at IMC Mumbai on 2nd June 6pm.

As stakeholders every citizen have a right to make his/her views known to the government appointed Banking Regulator the RBI.

Knowledgeable public participation by physical presence in large numbers can certainly put across a very effective message. They can't say that were not told! Let the aam janata speak!

REPLY

Suiketu Shah

In Reply to nagesh kini 4 years ago

Agree 100% Mr Kini.However must add that I trust moneylife much more than RBI who is insulting the intelligence of the retail customers/investors in India by giving a free hand to banks to behave and act the way they want.

Wl try,if possible, to make it next monday IMC 3 June.

nagesh kini

In Reply to Suiketu Shah 4 years ago

My response to Suiketu & Nilesh
Please make it a point to attend in person and vehemently voice your concerns. This will certainly make a lot of difference. See you there!

Suiketu Shah

In Reply to nagesh kini 4 years ago

I am thankful to Ms Dalal for infoming me about this meeting so early last week.Normally I have lot of responsibilities at work but wl make sure I complete them well in advance and attend on 3 June which is at Churchgate IMC.Thanks Nagesh.See you there too:)

Nilesh KAMERKAR

In Reply to Suiketu Shah 4 years ago

It would be really nice if your strong voice can fall on the right ears.

Sincerely hope your grievance is redressed to your satisfaction.

Suiketu Shah

In Reply to Nilesh KAMERKAR 4 years ago

Good afternoon Nilesh

Do you work for HDFC Bank?

Will T+1 settlement only create more problems?

T+1 settlement appears to be a good idea on paper. However, brokers and small investors are not too happy with it due to lack of infrastructure like banking services

Yesterday, Moneylife published an article T+1 settlement system proposed by SEBI: How will it benefit you? written by Gurpur. However, several of our readers, including brokers and investors have termed the T+1 settlement system as great idea only on paper. The banking system will be a big bottlenck to put T+1 into practice.

 

“Assuming cheque truncation system (CTS) comes into place and I get the cheque from the client at 6pm, where do I deposit it?  Even today, when the client pays on T+1 basis, it is the broker who pays the exchange from his own pocket, because the proceeds are realised only after two days. No tech savvy banks credit the proceeds on the same day. Banks may be tech savvy, people are not.  Even today, I write cheques because it is convenient to pay my bills although electronic clearing service (ECS) is available,” said one of the brokers.

 

Hemant, one of our readers, always get his shares directly from the exchange on pay-out day only. He says, “Even now people are allowed to sell shares, next day of purchase. The only risk is of short delivery, which investors have to bear. As per new system suggested, the buyer will have to pay T-1 (i.e one day before he/she purchases), so that broker has money, to pay-in the market. Hence I feel that, till we rectify the problems of banking system no point in advocating T+1 in the market.”

 

Another issue with the T+1 settlement is the transfer of shares from client’s demat account to brokers account in a short span. The trading closes at 3.30 pm. The process, however, gets over only by 5pm. This means only those who have given a power of attorney (PoA) for debiting shares can survive in this system. In short, small brokers who cannot provide depository participant (DP) services have to shut shop or tie up with clearing members for opening demat accounts to facilitate PoA system, the use and abuse of which is well known. Further the brokers cannot insist on a client to give a PoA or open a demat account where he wants.

 

Arun Adalja, another reader, feels the T+1 system is good but difficult in practice and may create problems for small investors who do not have internet facility readily available. “In such case (unavailability of internet) one has to carry the signed delivery instruction and his cheque book while visiting the DP. The visits to DP would also increase.”

 

There is already an option to pre-pay in case of heavy selling by a single client so that margin is released earlier. Brokers can always pay their clients a day earlier in case there is such requirement, provided the shares come into his account.

 

While the regulator wants to introduce T+1 system, brokers and investors, especially small investors seems to be reluctant to adopt it due to practical difficulties. But, of course, when has the regulator engaged with actual users of system. Retail participation in the stock market is decreasing day by day because of poor regulation and cumbersome rules. The T+1 concept is another step in that direction.

User

DTH industry still adding “value conscious” and not price-sensitive customers

Nomura Equity Research on the media sector believes that that the initial seeding of STB by cable operators, which has not been backed up by proportionate increase in service infrastructure, will mean that a significant part of these subscribers can still churn away to the DTH industry in the medium term

As per the latest data release by the ministry of information and broadcasting (MIB), between 1 March 2013 and 12 April 2013, multiple system operators (MSOs) have seeded 4.45 million set-top box (STB) compared to 0.38 million STB seeded by direct-to-home (DTH) players. This highlights that, in the short term, MSOs have gained more market share versus the DTH industry which is now focussing on profitability (package price increase), cash flows (reducing subsidy on STB) and adding “value conscious” and not “price conscious” customers, which will impact churn positively.

 

Dish TV increased the price of its STB in February, which was followed by similar action from other players like Tata Sky in February. While some of MSOs have also increased prices (Den Network increased the price of its STB by Rs200), but clearly the differential versus DTH has increased as the DTH companies choose to position themselves as an “upgrade option”.

 

Nomura Equity Research in its Quick Note on the media sector believes that that the initial seeding of STB by cable operators, which has not been backed up by proportionate increase in service infrastructure, will mean that a significant part of these subscribers can still churn away to the DTH industry in the medium term.

 

Dish TV

Nomura expects Dish TV’s reported ARPU in 4Q to improve to Rs161.8 (versus Rs160 in 3Q and Rs159 in 2Q). The brokerage has factored in the following impact to arrive at this number:

 

Package price increase of July 2012 to be reflected partially in 4Q ARPU—The company hiked the price of its non-south pack by Rs20 in July 2012 which has been partially captured in 2Q-3Q ARPU. Nomura expects its effect to be visible in 4Q as well (building in Rs3 increase in 4Q).

 

Lower number of days in 4Q—As per the company, billing to customer is done on per day basis. Since 4Q will have two lesser days than 3Q (as February 2013 had 28 days), reported average revenue per user (ARPU) will be depressed by around 2.2% compared to 3Q assuming everything remains same.

 

 Removal of free one-month subscription period for new subscribers—The company has removed the one-month free viewing period on purchase of new connection from February 2013 end (at the time of its latest STB price hike). This would have a positive impact on ARPU.

 

Content negotiation for FY13 between Dish TV and Media Pro was partially (around 27% as per Nomura’s estimate) completed in 3Q. The brokerage expects the negotiation to be complete in 4Q and, therefore, as in 3Q, Dish TV will pay increases pertaining to prior

FY13 quarters as well in content cost to Media Pro in this quarter.

 

On other hand, Zee Entertainment has not yet accounted for any incremental revenue from increase in content cost post partial competition of negotiation between Media pro (JV between Zee and Star) and Dish TV in 3Q. Nomura analysts expect Zee’s subscription revenue to be boosted in 4Q as the company will retrospectively capture increase in content revenue from Dish TV.

 

The brokerage expects no major surprises in the Dish TV results except that subscriber addition will be lower given that it took a lead in increasing the set top box price:

Content cost increase—Assuming 12% y-y increase in content cost as guided for FY13, the brokerage expects content cost to increase by around Rs693 million in 4Q y-o-y.

ARPU—Nomura expects the company to report 4Q APRU of Rs161.8 as it factors in the remaining impact of the July price increase, impact of fewer number of days in February and removal of one-month free subscription period for subscribers in February.

Subscriber addition—As highlighted above, STB price increase will mean subdued subscriber addition in the short term for DTH players. Nomura expects Dish TV to add 0.35 million subscribers in 4Q (versus 0.8 million in 3Q).

 

Zee Entertainment

Strong growth in subscription revenue to continue—The brokerage expects Zee’s subscription revenue to be boosted (it will get around Rs391 million based on Nomura’s assumption of around 40% market share ) in 4Q from increase in content cost post negotiation between Media Pro and Dish TV which Zee will book retrospectively for FY13 in 4Q. In 4QFY12, Zee captured July 2012-March 2013 (nine months) revenue from Media Pro of Rs506 million. Adjusted for July 2012-Dec 2012 revenue in 4QFY12, it expects Zee’s domestic subscription revenue to grow by nearly 30% y-o-y in 4QFY13.

 

Management has indicated increased losses in the sports business in the quarter—In 4Q, Zee broadcast the South Africa-Pakistan (3 Tests, 5 ODIs and 2 T20s) and South Africa-New Zealand (2 Tests, 3 ODIs and 3 T20s) cricket series which will lead to higher losses in the sports business. The brokerage is building in around Rs435 million loss in sports business in 4Q.

 

Steady growth in advertising—The brokerage expects advertisement revenue to grow by around 15% driven by a combination of robust advertising spend especially by FMCG companies, and uptick in advertising revenue from sports.

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