A couple of years ago, his neighbour, a trader, told him that the stock was trading again. He then approached a big broking outfit, which is a big advertiser through newspapers and magazines and has huge public hoardings, convinced that it was the right firm to help him encash his investment. He was also impressed by the office interiors and the reception he got at the firm. But his comfort was short-lived. Things changed the moment they assessed the unimpressive size of his portfolio. He was made to wait in the lounge for a very long time and had to make several visits before he could finally open a demat account in order to dematerialise his shares. He was made to sign a lot of papers without proper explanation and cursed himself for entering the capital market. As a senior citizen, he was also apprehensive about the many signatures taken from him.
He was terribly upset at how he was treated by the firm with nationwide branches. Somebody suggested that he try out a ‘small broker’; hence, he came to me. He was happy that he could finally speak directly to somebody responsible and knowledgeable -- the broker himself. I put him on to my dealer after explaining to him about the purpose of the demat account and the latest procedures to open a broker trading account.
Two days later, after collecting his payment from our office, he walked into my room, visibly moved and in tears. He blessed me and my wife, who is a post-graduate and works with me. He was very happy about the way we handled his account. He told us that, at one stage, he wanted to get out of the equity markets due to the earlier experience and, after this interaction, he would like to reconsider his decision. This is not “chicken soup for the equity soul”… it is a real incident. In a country with less than 1% of its population investing in stocks, this breed of smaller traditional brokerage firms, who were instrumental in creating the equity markets in India, are doing a wonderful job to retain and bring small investors to the markets. But in a world that thrives on media glitz, nobody has recognised this fact. I am glad that your magazine has done it.
Traditional broking houses act more responsibly because of their long-term
relationships with clients. In some firms, the relationship dates back a few
generations and they are close family friends. Brokers are a part of the
investors’ family and attend their family functions. This also helps them
jointly plan their investment needs and set goals, based on the family’s
needs. These brokers try to be more sincere in advising clients because, if
things go wrong, they are answerable to the investor as well as his extended
family that calls them ‘uncle’ and ‘bhaiyya’. Thank you, once again
for recognising the need for and the usefulness of smaller and traditional
broking houses.
Nagappan V, (trading member) director, Madras Stock
Exchange and chairman, Federation of Indian Stock Exchanges, by
email
MINDLESS REGULATION
One of my friends wanted to open a demat account. He resides at Bengaluru and
wanted his permanent address in his hometown as his address, since his parents
are settled there. He had a telephone bill as proof of address but it was in
his father’s name. Strangely, the CDSL does not allow this. It needs
proof of address to be in the name of the person opening the account. Since PAN
is now compulsory and it contains the investor’s father’s name,
isn’t it logical to allow the phone bill in the name of the parent to be
a valid proof? I hope you put this view across to SEBI.
I suggested that he should open a bank account by providing the telephone bill
and now his new passbook was ready and his demat account was opened as well.
SEBI needs to look into these small matters that cause a lot of hardship to new
investors.
Working in a rural area has opened my eyes. One of my clients gave me a cheque
for Rs2,000 drawn on a bank in his native place (since we can’t take cash
and a cheque has to be given from a designated account of the client) which was
five kilometres from my town. When I deposited it in my bank, the proceeds were
credited after 15 days with Rs80 as collection charges. Unbelievable but true.
And, the less said about the recent Reliance Power IPO, the better. While one
client got his refund twice, two others got it after a good 100 days and that
too without interest.
Anyway, keep up the good work you do through your magazine. I am happy to see
that the genuine concerns of the investing fraternity are taken up by
MoneyLIFE.
INTERESTING VIEW
MISLEADING RESEARCH by broker
Sucheta Dalal, as usual, pointed to the rigging in Khoday India through
doctored research. Khoday was the top pick of many brokerages. There are many
such stories. Once Prabhudas Liladhar hurriedly brought out a report on Glory
Polyester after the crash in January; it was then trading at Rs120. Within a
few months, the price halved. The scrip was apparently kept stable during the
market correction in January and the stock was distributed to aam aadmi in
February and March when the market had stabilised. Its EPS for FY08 is just two
rupees.
NO HOMEWORK
UTI’s response on scup
HELP US TO HELP YOU
HOW TO REACH US
I am an avid reader of MoneyLIFE. The magazine
really covers a lot of problems faced by small investors. So I just thought I
will mail you this story. I live in a small village in Karnataka where I have a
stock-broking office. I come across problems that investors face when they want
to open demat accounts, since they hold shares in physical format. They ask me
questions like how is it possible that a telephone bill can be an address proof
for opening a bank account but not for a demat account. I have no answers.
Gopinath Prabhu, Guru Nivas, Main Road,
Ujire 574240, Dakshin Kannada District, Karnataka
This refers to your cover story “U
Turn on D Street”. Everything that goes up has to come down and vice versa. It
applies to the Sensex also. Moreover, when international crude oil has touched
$135 a barrel and inflation, rather than growth, has touched double digits, our
economy will be affected and tested because these are tough times. The money
managers’ advice on various issues made for interesting reading.
Hopefully, retail investors will learn a lesson or two from their perspective
and not panic
Bal Govind, Bareilly, by email
The last issue of MoneyLIFE was terrific.
Blue Star is at a tired stage and AurionPro is risky, although it has a good
management and performance. XL Telecom is surely a buy with a one-year view. In
the past two issues, you have provided research on quality stocks such as Nava
Bharat, Genus and XL. I expect you will cover Omnitech, Mercator, Bhagwati and
Brigade, etc, in future. No other magazine covers such a range. In the cover
story, it was fun to read Tushar Pradhan’s views. But if FIIs have not
sold too much and mutual funds are also heavily invested, there is more worry
because the market has great digesting power -- it can eat billions in a single
day.
Santosh Mhamunkar, by email
This refers to the informative column
“Outdoor Training” (MoneyLIFE, 3rd July). Many professionals work from
home where there is no office atmosphere and work culture. There is also
interference in the form of social visits by friends, acquaintances and
relatives. This invariably disturbs the work environment of an office place and
also disturbs family life. It can also affect one’s health, since the
office runs round the clock. You feel, at times, that you have not worked hard
enough for the day. Actually, such a feeling arises because you are working and
living under the same roof. Every human being needs a change of place now and
then. The office should never be situated at home. Get an office near the house
-- either owned or rented.
Mahesh Kapasi, New Delhi, by email
We refer to your article on ‘SCUP: The
Unanswered Questions’ (MoneyLIFE, 3 July 2008) and thank you for guiding
investors who approach you to submit redemption forms. Senior Citizen’s
Unit Plan (SCUP) was terminated at the close of business on 18 February 2008 in
accordance with the established business principles and in the interest of the
unitholders to avoid any capital erosion and after due consideration of all the
facts and circumstances and with the approval of Government of India and SEBI.
A public notice was issued in Business Standard on 8 January 2008 and
individual letters have also been sent to each member. The advertisement also
appeared in the following newspapers on 26 January 2008: Lokmat, Lokmat
Samachar, Lokmat Times, Dainik Jagran, Dainik Bhaskar, Gujarat Samachar,
Sambad, Ananda Bazar Patrika, Daily Ajit, Asomiya Pratidin, Dina Thanthi, Vijay
Karnataka, Malayala Manorama and Eenadu. We have retained the interest of
investors who have completed the age of 58 years, by continuing hospitalisation
medical cover through New India Assurance Co Ltd. Investors who have any query
can contact us on the toll-free number at 1800221230 or can SMS at 5676756 or
email to [email protected]
uti.co.in. We assure our quick reply and guidance to each member on the basis
of the details provided like membership certificate/folio number. We would like
to express our thanks for the interest taken by you to explain the details to
the investors and to provide guidance to them.
KP Ghosh, VP, Department of Investor Service, UTI,
by email
MoneyLIFE offers its readers a unique
service -- of
helping redress individual grievances on a best-effort
basis. However, we have limited resources to devote to
this effort and can only pursue complaints that come
to us by email. We request readers to please send us
crisp complaints with all the facts on email (not as an
attachment) and send us the supporting documents
only if we ask for them. We cannot handle physical
letters. -- Editor
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and may be edited for clarity or space.
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