The Indian saver has a plethora of choices. If he wants a loan, hundreds of banks and finance companies will give it to him. To grow his wealth, he has mutual funds or pushy insurance agents. The market infrastructure is world-class — electronic trading, compulsory demat and so on. But is all this working for him, the consumer, or for the seller? Consider these stories.
Unit-linked insurance plans: I took a Ulip in 2006. I have paid Rs 1.2 lakh so far, and the current fund value is only Rs 84,480. I am unable to come out from this policy due to heavy surrender charges. Can you give me some suggestion about what to do with this policy? Do you think it is good for investment and tax savings?
Car loans: We plan to pre-pay our car loan to HDFC Bank. HDFC Bank says that it will levy a prepayment/foreclosure penalty of five per cent if we repay now, or a penalty of three per cent if we pre-pay after August 2012. Attached is an article in a business paper that clearly states that the Reserve Bank of India has told the banks not to recover prepayment charges on car loans. Please guide us.
Share trading: I opened a demat account for trading only in the cash segment. After a few months, the relationship manager (RM) informed me that I had Rs 2,000 as profit on call/put trading. I didn’t know what call/put were, and said OK. Prior to this date he had never traded in futures and options (F&O). So I thought that he would trade only in the cash segment. A few days later, he informed me that my account had a debit balance of Rs 2 lakh. After deducting the margins, I were to pay Rs 1.35 lakh. I was shocked. He never called me after the first call to tell me that I was making losses, or that he was selling, or about the risk associated with F&O trading. My RM did transactions worth Rs 18 lakh on one day and generated Rs 27,000 as commission. He was blindly buying and selling positions within a fraction of a second without my knowledge. With a margin of Rs 65,000-70,000, they can trade worth Rs 18 lakh? I don’t know whether it is permitted. My family and I have been in absolute trauma ever since we came to know about it. Now the matter is in the National Stock Exchange for arbitration. They say that I have signed other documents to get my account activated for derivative trading. To my knowledge I have never signed any such document. I am afraid they would do anything to defend themselves. I have spent lots of money and energy on fighting the case. I also lodged a case in consumer court, but no progress so far. After charging late fines and all, they are now demanding Rs 1.57 lakh from me.
Mutual fund rules: I invested in a tax-saving mutual fund in January 2009 under the dividend reinvestment option. Now I want to redeem all the units (the three-year lock-in is over). I am told that I can withdraw only those original allotted dividend-reinvested units that have completed three years.
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Companies: I had applied to demat my physical share certificates. They came back saying the signature of my wife, who is the joint applicant, was not matching. I applied again with the signature verification by State Bank of India, with whom we both have our bank account. Again, they were rejected. The shares were purchased about 15 years back and we do not know how the signature looked in that application. As per my records, her signature matches. What exactly do I have to do?
Car insurance: My vehicle was recently broken into and the central (factory-fitted) unit, which includes the radio/stereo/DVD player, navigation system, hands-free phone system and air-conditioner controls, was stolen. I am shocked to hear that the insurance company will treat this expensive electronic system as “plastic parts”, and so will only pay 50 per cent of the replacement cost. Can you please tell me if this is standard practice and, if not, how should I challenge this?
Demat: I want to close my demat account because I am not using it. But there are some dud scrips in it, which were sent for re-mat, and there is no response from those companies. Till these scrips are not re-matted, my demat account cannot be closed, and I have to bear the annual fees. I would be grateful if you could suggest a solution to this pain and loss.
Timeshare: I had paid around Rs 84,000 as subscription fee for timeshare. However, I was not able to utilise any holidays due to the overbooking of resorts. I then stopped paying the membership, and want to exit from it. But the company is refusing to return the money I invested. Is there any way I could get the money back?
The companies involved in these complaints are Religare, Aviva, Bajaj Allianz, HDFC Bank and so on. These are large institutions run by excellent people. I am not writing to point fingers at them. Indeed, most likely none of them has done anything illegal. But is that enough? Surely there is a fundamental flaw in the system that leaves the customer at a dead end, feeling cheated and paralysed. Lots of choices and modern infrastructure alone don’t ensure a great marketplace. What should be done? That’s a topic for a future column.
The writer is the editor of www.moneylife.in editor@moneylife.in