Reliance Securities settles SEBI probe for Rs25 lakh

The company was being probed for various violations of rules between April 2007 and March 2009. These included lack of documentary proof for a branch office, collection of excess securities transaction tax and collection of cheque in the name of Reliance Money, among other irregularities

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) today agreed to settle a probe against Reliance Securities (RSL) for a suspected breach of regulations, after the Anil Ambani group firm offered to pay Rs25 lakh among various settlement terms, reports PTI.

Brokerage firm RSL will also not register any new clients for the next 45 days and would spend Rs1 crore on investor education and awareness programs, as per the terms of the settlement with SEBI.

The company was being probed for alleged violations of rules concerning code of conduct for brokerage entities between the period from April 2007 and March 2009.

SEBI said that its inspection of the books of RSL for the aforesaid period prima facie revealed various irregularities.

These included lack of documentary proof for a branch office, collection of excess securities transaction tax and collection of cheque in the name of Reliance Money (another group company), among other irregularities.

Reacting to the SEBI consent order, an out-of-court like settlement procedure, the company said that the consent was reached at voluntarily without admission or denial of guilt.

The company adopted the consent route voluntarily to avoid long drawn litigation, legal costs, etc, RSL said, while adding that the order would not have any impact on its existing customers. It also said that it voluntarily agreed to all the terms of the settlement.

"RSL voluntarily agreed to spend Rs1 crore on investor education and awareness programs. RSL has already announced extensive Investor Awareness Program to cover over 1.5 lakh investors across 200 cities in India within this year," it added.

Earlier in January, two other Anil Ambani group firms Reliance Infra and Reliance Natural Resources (RNRL) had reached a settlement with SEBI after paying consent charges of Rs50 crore for settling a probe into alleged unfair market dealings by the two firms.

Besides, the two companies also agreed to abstain from investing in secondary market till 2012, while their top officials, including chairman Anil Ambani, agreed to abstain from investing in secondary market till December 2011.

SEBI said that its probe into RSL also prima facie found irregularities like the company not informing its clients about changes in their registration, which led to large number of investor complaints.

Also, frequent disruptions were noticed in internet trading platform, while the company was found to be equipped for handling only 50% of its customer base, while it issued undated letters at times to different organisations.

Also, RSL did not update its client master data despite being pointed out by the stock exchanges BSE and NSE and took power of attorney in the name of Reliance Commodities.

In other suspected violation of rules, RSL did not maintain clear segregation between broking and other activities of the group, did not take adequate steps to redress complaints within 30 days, outsourced its call centre activities for calls related to phone trading.

Also, the company used the name 'Reliance Money' at various places, thus creating a confusion about the identity of the registered entity.

After noticing these irregularities, SEBI began its enquiry as also cease and desist proceedings and a show cause notice was issued on 31 August 2010.

Subsequently, RSL requested on 14 September 2010 for a settlement through a consent order and later submitted its revised settlement offer on 7 December 2010.

A high-powered advisory committee of SEBI accepted the terms of conditions for the settlement and the same was informed to the company on 19 April 2011.

The company paid Rs25 lakh towards settlement fees and expenses on 1st June, paving the way for the consent order being passed today, SEBI said.

The regulator said that the consent order was without prejudice to its right to take enforcement action, including commencement or reopening of the pending proceedings, against the company.


Individuals must be vigilant about their credit history to avoid being put on list of defaulters, says CIBIL

It appears from complaints that names may be included among list of defaulters due to inaccuracies in the details submitted by institutions to the credit information bureau

How many of us have had applications for loans rejected by banks because our names figure in the default list of the Credit Information Bureau of India (CIBIL) which provides reports on commercial and retail borrowers? There would be quite a few cases. But it also appears that a number of names may have been included in the list due to inaccuracies in the details reported.

It has been revealed in a series of such instances that customers themselves are unaware of their loan repayments and defaults, which leads to such rejections of loan applications. Therefore, it is necessary that they should be more vigilant about their credit history.

Take the case of Delhi-based Mr Khanna, whose name appeared in the defaulter's list. His credit card application was rejected four times. The reason? His name was on the CIBIL list. So, Mr Khanna decided to get a copy of his credit report from CIBIL. He was assured he would receive a copy within 15 days, but even after 20 days there was nothing. Then, after numerous e-mails and phone calls, he was able to collect the package containing his credit report from the local post office. (Mr Khanna's full name has been withheld on his request.)

Mr Khanna explains that he was marked out with a credit default that happened when the credit card issuing company did not send him the bill on time and the payment was delayed. "I have three other credit cards. I also have a loan that is being paid on time. Just this one instance has resulted in my name being entered in the defaulters list. The trace of the actual start of default is not given, whereas monthly charges as per the agency are given. This might see the payment default amount increasing on a monthly basis and there is a likely scenario for a credit card default case."

CIBIL has maintained that it does not make changes to any information on its own. It is only a custodian of information received from credit institutions. Clearly, in the case of Mr Khanna there was no fault of CIBIL. Rather, it is probably the bank that has not updated its records. Blaming CIBIL for late receipt of the credit report may also not be justified as they are sent by Speed Post.

"CIBIL is not a defaulters list. This is a very common misconception. It is an information repository of both positive and negative information about the borrower, pertaining to individuals who are making their payments on time, as well as those who are in default," a CIBIL official told Moneylife, in response to an e-mail.

Mr Khanna's is not the only complaint. There are several complaints regarding credit reports. A majority of the complaints are about the difficulty in getting the reports within a stipulated time and the errors in the data. There are also complaints about a mismatch in the PAN numbers, names and address.

Other complaints relate to details such as outstanding loan, credit card default, which are often incorrect, resulting inclusion in the defaulter's list. People also complain that changing the status of the report or some details, like updating the loan record from 'outstanding' to 'written off', is again a task in itself.

However, industry experts believe that people must be more vigilant about their credit history. For instance, an individual should regularly check whether the bank is sending correct data on loan repayments, credit card payments and so on, because CIBIL gets its data from the lenders.

The credit information institution says, "CIBIL collects and maintains records of an individual's payments pertaining to loans and credit cards. These records are submitted to CIBIL by banks and other lenders. These organisations are members of CIBIL on a monthly basis."

Aparna Ramachandra, managing partner, Rectify India, speaking to Moneylife, explained some cases. "Maruti Sharma faced a problem with his report because his PAN number did not match. Biraj Saxena had closed his loan but his status continued to show the loan as outstanding. CIBIL changed this immediately after we approached them."

Ms Ramachandra also explained that there must be some amount of onus on the customer as well. "For instance, when a PAN card is lost, most people apply for a fresh PAN number instead of getting a card on the old number. This adds to the chaos," she said.

A CIBIL official explained to Moneylife, "Once CIBIL receives the CIR request application form, the fees and the requisite identity proof and address proof documents, a mandatory 'Know Your Customer' check is made on the applicant and the CIR is delivered within 10 business days."

It explained, "In the cited example of your reader, his CIR will reflect the information reported to CIBIL by the credit grantor. If the reader would like to dispute this information then CIBIL can help him and coordinate with the credit grantor for this through our 'dispute resolution' process. Data is submitted to CIBIL by its member institutions on a monthly basis with due quality checks. CIBIL also ensures that high levels of data quality are maintained in its database through is data quality monitoring process. CIBIL's consumer relations service is completely at the consumer's behest on all working days (Monday to Friday-10am to 6pm)."



jitender sharma

6 years ago

kindly send me the cibil list


6 years ago

I would rather say that, all the banks who are the member of CIBIL should integrate a short description on the customers online banking, about the credit history provided by CIBIL or they can also just highlight an information that as the loan/credit card payment has not been settled, this will be maintained in the CIBIL record. This will remove all the decripancies between Banks, CIBIL and customer and can be easily found out who is the defaulter.

P D Bhutia

6 years ago

Why cant CIBIL send a copy of the report to the concerned Client so that if there are mistakes done by the Bank then the Client can approach and get the thing rectified.
One time Report CIBIL can send free to the Client and if the Clients approaches for rectification then they can charge some Fees.

Govind Shanbhag

6 years ago

Boss - CIBIL does not generate any data on customers. All the banks, who are the members of CIBIL have been given a format which the branches are required to update/ reconcile/ fill up/ complete and send the data to them. While data being sent by private sector/foreign banks is generally correct (may be due to less numbers) public sector/govt sector banks just try to push the data with incorrect/ unchecked data ( as this data is time bound) which is leading to certain discrepancies. When you bring such discrepancy to CIBIL, they generally respond within 48 hours but for getting clarification from public sector/ government sector is herculean task


Sameer Zodgekar

In Reply to Govind Shanbhag 6 years ago

Govindji, I am talking about banks like HDFC bank and HSBC. These banks do not respond. HSBC is like Super Private bank, because it's Pvt and Multinational. What more, if you keep portrait of say Indira Gandhi, at your home, the investigation people see it, conclude that you have political affiliations, and your file will be summarily rejected; even when your CIBIL record is clear! I reiterate, private banks do not update records, and we have no recourse.


In Reply to Sameer Zodgekar 6 years ago

Sameer Jee - For getting your own report including credit card issuing banks, you have to download the application from from cibil site, fill it up, pay Rs.128/- by way of draft and/or online (pl confirm the amount now) and full report about is in your hand in 15 days. Why not try once.


6 years ago

All the bank should send copy of the data to the customer and get it first confirmed whether any changes within 15 days then bank should reporte to CIBIL. Because in most of the cases, bank is reporting wrong and negative data to CIBIL which is affecting the customer heavily. Getting it corrected procedure is very difficult.

Sameer Zodgekar

6 years ago

The banks are notorious about sharing credit history with customers. It's only now that CIBIL provides you your own credit history. Previously, Bank used to reject your application because you have an adverse remark in your CIBIL record. When asked, CIBIL used to ask customers to approach institutions, who sais, "we don't give CIBIL report to customers". It is naive to believe that such institutions will share credit report with customers. Lending institutions do not bother to update records, resulting in many wrongful rejections. Besides, even when you clear debt, adverse remark stays. There must be a good remark as there are adverse remarks.

Anchoring?: The fund industry continues to invest in just a few selected stocks

A recent research done by Moneylife shows that stock picking of the mutual fund industry hasn’t changed much

In a previous article dated 10 February 2010 ("Herding & Bonding"), we showed that the mutual fund industry was driven by just 39 key stocks in 203 equity diversified schemes. This figure has marginally increased to 42 stocks in 215 equity diversified schemes, which have disclosed the names of company stocks held in their portfolio.

All schemes put together invested in a total of 715 company stocks which is just 14% of the 5,069 companies listed on the Bombay Stock Exchange (BSE) and barely 50% of the companies listed on the National Stock Exchange (NSE). Only 213 of these 715 company stocks are present in more than 10 mutual fund schemes. On increasing the number of schemes, it is seen that 50 or more schemes invest in just 42 stocks, showing that the majority prefer just a limited set of companies.

ICICI Bank continues to be the favourite of the fund managers. A total of 154 funds invest in the company. State Bank of India (SBI) was the second-most preferred stock, with 137 funds. This number has increased from a total of 108 schemes which were invested in it last year. Infosys and Reliance Industries continue to be in the top five picked stocks, with 134 and 131 funds investing in them respectively. Following closely behind is Bharti Airtel which has been picked by a total of 129 funds.

On analysing the top 10 holdings of each fund, we find that 316 stocks are the most preferred for the fund schemes that have disclosed the names of the company stocks in which they have invested. Ten or more funds put a majority of their assets in just 47 companies. A total of just 10 companies are present in 50 and more schemes.

Here, ICICI Bank, being the obvious favourite, makes it to the top 10 holdings of 127 funds, averaging 5.58% of the total net assets. Reliance Industries and Infosys are the next two which are widely chosen by 109 and 103 funds respectively, getting an average share of 6% and 5.59% respectively of the total net assets. HDFC Bank which was picked by 121 companies is one of the top ten holdings of 91 companies, with an average of 4.80% of the total net assets.

With respect to the stock performance, ICICI Bank, which was priced at around Rs900 in February last year, shot up to Rs1,200 in November, a growth of almost 33%. The price has fallen since and is now hovering at around Rs1,000. For SBI and Infosys too, the story has been similar. HDFC Bank has done well, moving from a price of around Rs1,600 in February to a current price of around Rs2,300—a growth of around 44%. Surprisingly, Bharti Airtel has shown a relatively good stock performance in the past one year, despite the fact that the Indian telecom market is saturated. What's surprising is that a highly volatile stock such as Reliance Industries is amongst the most picked stocks and features in the top 10 holdings of a majority of funds.

Surprisingly, when fund managers in a survey were asked to rate their most preferred sector (read: Fund managers' survey indicates that equity might outperform other asset classes), pharmaceuticals were on top of their list with BFSI (Banking, Financial Services and Insurance) as their third preference. Considering the top 20 most picked stocks, Sterlite Industries was the only pharma company present, with just 80 funds investing in it. The list constituted of five financial institutions—ICICI Bank, SBI, HDFC Bank, Bank of Baroda and HDFC Ltd.

The analysis on the top 10 holdings of the funds showed that Lupin and GlaxoSmithKline were the only two pharmaceutical companies present in the top 20 most preferred stocks. They were present in the portfolio of 22 funds. Whereas for the financial sector, the names remain the same.


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