In your interest.
Online Personal Finance Magazine
No beating about the bush.
When a banker comes to your home, exploits your trust and dupes you, he is called a bankster. Why doesn’t such systematic criminal exploitation of hapless depositors move the government and the banking regulator? This 79-year old has resorted to Gandhigiri to get justice
In the past couple of days 79-year old Mangelal Sharma goes to his bank (IndusInd Bank, Preet Vihar Branch, New Delhi) wearing a specially made T-shirt. It carries his photograph and says “BEWARE IndusInd Bank is a cheat. It has cheated me and may cheat you”. He says there was a lot of commotion when he first walked in and some said that they too had been cheated by the bank. On Saturday he wore the T-shirt and danced at the branch singing “Kya mil gaya sirkar toomhen meri FD (fixed deposit) toodake, mujhe mutual fund mein fansa ke, mujhe choona lagakey”. This parody of this song from the film Kissa Kursi Ka has Mr Sharma asking the bank what it achieved by entrapping him to invest in a mutual fund.
The story behind this protest will make you furious. It is about how banks have turned into banksters and send out armies of managers to entrap, con and lure trusting account holders to invest their saving in instruments that earn them a high return. ML Sharma, like the majority of senior citizens in India, has his money in fixed deposits. The risks are low and the interest income provides him with the income security someone at his age and in his circumstance requires. He is 79. His wife, at over 70 years, has recently undergone second knee replacement surgery, after the first operation in October 2012 was unsuccessful. He is, in his own words, an “old man with an ailing wife”. Yet, his bank, IndusInd Bank, thought it fit to sell him a mutual fund product with a lock-in period of five years by persuading him to withdraw his fixed deposit of no less than Rs7 lakh and invest it in what they told him would simply be another low-risk banking product. This is no doubt a shocking example of how far banks will go to earn commissions. Mr Sharma approached the Banking Ombudsman for justice, but his case was rejected outright because Mr Sharma had signed the investment form. Apparently nothing else matter. This gives banks and their agents the license to lie and cheat any of us out of our savings so long as the signature on the form is ours.
Yet, this 79-year old hasn’t given up. In his reply to the banking ombudsman, after his case was dismissed, Mr Sharma has written, “I beg to knock on your door for justice again. Sir, I am totally unable and devoid of energy to take legal action in a court and count only on your sense of justice and mercy. Even a judge considers the relevant circumstances under which a person commits a murder to arrive at the correct judgment. Just the fact that I had signed the investment documents is insufficient. It must also be considered under what circumstances I had signed the form.”
It is very apparent what transpired. Mr Sharma says, “I never approached the bank for investment advice. Jyotirmay Sharma, the branch manager, came to my house, along with another officer, Mr Kesharwani. Yet, the bank still claims that they came to my house on my request. That they came to my residence to tender advice on my seeking is unthinkable. If I had sought any advice, the branch was the proper place, not my residence. They had gone on a hunting spree for a gullible person like me for earning profit for the bank.”
While at Mr Sharma’s house, the bank representatives found out that he had no money to invest. Knowing that he would object to breaking his fixed deposit, as he would have to pay a penalty on premature withdrawal, they offered to waive the premature withdrawal fees. They then proceeded to tell him about a cooked up product name—Development of Wealth Scheme or DWS, which they said was also offered by IndusInd Bank. What they did, in fact, sell him was DWS Hybrid Fixed Term Fund Series 10 Growth, which is sold by Deutsche Asset Management India Pvt Ltd (DWS).
Mr Sharma says, “They did waive the premature withdrawal fees. But at no point was I told that I was investing in a mutual fund. I was told it would be a scheme of the bank itself. They told me I could quit the scheme at any time and that the proceeds would be credited in my savings account the very next day. I did not think of a mutual fund or lock-in period at all.”
At the time, Mr Sharma appreciated the service of the bank employees. The service, of course, included filling up the form as well. All Mr Sharma needed to do was sign the form. Today he regrets trusting the IndusInd bank employees. Mr Sharma says, “I had signed the cheque in the name of DWS and the rest was written by the bank personnel. Had I written full name of the mutual fund, I would have known. I am ready to bear the fees of a handwriting expert for examination. I am even ready to pay a penalty of Rs1 lakh if it is proved that the full name of the scheme on the cheque is in my handwriting.”
It was only when an email, sent by IndusInd Bank on 11 October 2012, was received by Mr Sharma that he realized what had been done to him. He said, “I raised an objection the very same day I received the email. Had I known the terms and conditions of this investment earlier, I wouldn’t have raised the objection immediately after receiving the email.”
Given that it was a mutual fund that was sold to Mr Sharma, various standards laid down by Securities and Exchange Board of India (SEBI) should apply. In 2008, SEBI issued rules that said that stockbrokers “owe their clients a duty to provide suitable investment advice in the best interest of the clients”. Very soon financial advisors will also have to ensure that people get appropriate advice. But bank relationship managers continue to indulge in brazen misselling and con people into buying mutual funds, unit-linked insurance products and hybrid-derivative products on the promise of higher returns.
I wrote to the RBI governor Dr Subbarao, SEBI chairman UK Sinha, RBI deputy governor Dr KC Chakrabarty and the revenue secretary Sumit Bose about Mr Sharma’s case on 12th April. As usual, they have maintained a complete silence. To us, the deliberate cheating of senior citizens and women—who are the biggest targets for banksters—is a bigger problem the same bankers laying out a red carpet for those with political black money to be laundered.
For us, this is not just another article, especially since the depositor/investor himself is making all efforts to get justice. Moneylife Foundation, the voice of savers, wants to start a campaign to stop such criminal malpractices. Here is what we propose. We want to collate all such cases of mis-selling by banks and represent to the regulators to stop the abuse. We need as many examples as possible.
Call to action
If you know of similar cases of mis-selling by banksters, please write to us with details at [email protected].
To improve the technology in use for driving tests, necessary hardware such as simulators will be installed at the three RTO offices on a pilot basis, and will be eventually installed at all RTO offices, says the HPC report
While the city of Mumbai is working towards better infrastructure and superior vehicles on the roads to have more orderly traffic, it is important to observe that driving is a necessary skill which must be improved in the city of Mumbai through improved quality driving test, says a report by High Powered Committee (HPC) appointed by the Home ministry.
A public interest litigation (PIL-18/2010) was filed in the Bombay High Court by the Bombay Bar Association, dated 29 January 2010. This PIL primarily addresses various issues of traffic management in the city of Mumbai. The petition is regarding improper regulation of traffic, several issues related to traffic operations, technology, enforcement, manpower, road markings, etc. In the 17 hearings held by the high court, several issues related to enforcement and infrastructure was raised. The high court held a chamber hearing of all agencies on 7 May 2012 where in everyone was asked to put forth their views. Subsequently, to look into these issues, the high court directed that a High Power Committee (HPC) be appointed. This article is based on the HPC report.
Improving Quality of Driving Test: In order to ensure that the quality of
driving test conducted by the Transport Department is improved, necessary
infrastructure to conduct proper driving test as per the provisions of Rule 15 of Central Motor Vehicle Rules (CMVR), 1989, such as the test tracks to test the driving skills of the drivers, will be provided. Provision of such infrastructure in Mumbai only will not suffice as the drivers from all over the state and even from outside the state drive the vehicles on Mumbai roads. Improvements are needed state-wide, according to the HPC report.
Action proposed: Providing infrastructural facilities like test tracks etc. throughout the state for better quality of driving test as per Rule 15 of CMVR, 1989. This must be completed in a time frame of four years.
Modern Technology for Driving Test: Use of modern equipment such as driving simulators is being considered to assess the driving skills and relevant behavioural aspects of a candidate in different situations by simulating the scenes. Presently, the provisions of the Motor Vehicles Act, 1988, do not provide for the use of simulators in assessment of the driving skills.
Action proposed: Government of Maharashtra may consider sending the proposal to MORTH (ministry of road transport & highways) and to further follow up for amendments to Motor Vehicles Act & Rules. Once the proposal for amendment is submitted and approved, necessary hardware such as simulators will be installed at the three RTO offices on a pilot basis and will be eventually installed at all RTO offices. This must be completed in a time frame of three years.
Capacity Building in RTOs for Driving Tests: Sufficient number of the technically qualified and properly trained personnel to utilize the modern systems and tools to make accurate assessment and evaluation of the driving skills of the applicants appearing for driver’s license test also needs to be made available to the department as a part of the policy to improve the quality of drivers. Such measures shall help reduce accidents and ensure better compliance of the traffic rules.
Action proposed: Central Institute of Road Transport (CIRT) to develop suitable training courses for officers conducting driving tests. Additional manpower is needed in the cadre of IMV/AIMV. This must be completed in a time frame of three years.
Refresher Training for Drivers: The Motor Vehicles Act does not provide for a efresher training to the driver, once a driving license is obtained.
Action proposed: Transport Commissioner’s Office to send a proposal to the government for amendment in Motor Vehicles Act for introduction of the concept of refresher training for drivers and further test of driving skills and behavioural aspects for commercial vehicle drivers. Appropriate policy changes are being recommended to make the drivers undergo a refresher training and further test of their skills and relevant behavioural aspects periodically. This must be completed in a time frame of three years.
MCGM has invited an Expression of Interest (EOI) for implementation of “Web Based Paring” for on-street parking, which involves electronic hand -held devices capable of issuing the e-challans of parking fees and storing data to the central server of MCGM
In Mumbai the proportion of free parking on roads is ample while the parking cost is low, between Rs5 and Rs20 per hour (Source: Municipal Corporation of Greater Mumbai— MCGM). Mumbai is at the lower end in terms of pricing for parking. And with the annual addition of more than 50,000 cars (Source: TCO) excluding a larger number in two -wheelers, as well as substantial increase in water tankers, school buses and commercial vehicles, there will be a high requirement of new parking spaces per year. The effect is clear and visible, most of these vehicles land up on the roads for parking in an unregulated manner. The situation is getting alarming.
A Public Interest Litigation PIL-18/2010 was filed in the Bombay High Court, by the Bombay Bar Association, dated 29th January 2010. This PIL primarily addresses various issues of traffic management in the city of Mumbai. The petition is regarding improper regulation of traffic, several issues related to traffic operations, technology, enforcement, manpower, road markings, etc. In 17 hearings held by the HC, several issues related to enforcement and infrastructure was raised. This article covers aspects of parking from the HPC (High Power Committee) Report of the Bombay High Court.
According to the HPC report, excessive vehicles and consequential parking beyond available space has increased traffic congestion severely. Narrow roads and random parking on both sides of the roads has been causing inconvenience for the commuters and pose safety concerns for commuters and pedestrians. A large number of vehicles are parked on the roads, in many cases on both sides of a narrow and high volume road. On some of the arterials, out of four lanes only two lanes are available for an effective carriageway leading to considerable slowing of traffic and additionally resulting into stop -start operation, leading to very high exhaust emissions.
Devising Strong and Effective Parking Policy: A strong and effective parking policy needs to be formulated and implemented, recommends the HPC report. The policy and enforcement needs to ensure restricted on-street parking along major corridors. Parking should be allowed at designated locations only. Strict enforcement of provisioning of mandatory parking spaces by the establishments is required. No “change of use” permission should be given unless provision of mandatory parking requirements is followed.
Action proposed: The MCGM will appoint the consultants/ transport planners to prepare the Parking Policy for Greater Mumbai in consultation with Traffic Police Department. Necessary assistance for hardware required by Traffic Police
Department for effective enforcement of no-parking zones will be provided by the MCGM. This must be completed in two years.
Establishing Comprehensive Parking Unit: A comprehensive parking unit (CPU) for Mumbai should be established that will look after all on road/off road and vertical parking, management, personnel management for operation, marking, metering as well as use of smart cards, other electronic devices for information and effective controls. It can work towards a regime of close to market driven prices (over a period of time) and develop compliance mechanism.
Action proposed: According to the HPC report, MCGM has invited an Expression of Interest (EOI) for implementation of “Web Based Parking” for on-street parking, which involves electronic hand -held devices capable of issuing the e-challans of parking fees, taking photograph of vehicles, noting registration numbers of vehicles and transferring and storing all data to the central server of MCGM. These devices will also have extendibility to use smart cards, etc. in future. The system can be extended to include private parking in malls, large commercial establishments etc. This must be completed in three years.
Pay and Park policy for old and congested areas as well as night time
on-street parking in residential areas: CPU should also work towards establishing area pay and park for night time with preference for local residents.
Parking needs of local residents in old buildings should be considered where there is very little parking inside the premises but that need not be free.
Action proposed: In the near future, MCGM will have many off street parking lots under the provisions of Development Control Regulation and work must be completed in two years, concludes the HPC Report.