Consumer Rights

If you want to invest money, and talk to any skilled financial planner or read the numerous articles on this area, all of them talk about having an asset allocation in place. What this means is that when you do your investment, you should consider that you have considered all the different investment possibilities – property, stock market, debt funds, safe stocks, fixed deposits, gold / jewelery etc. At the same time, you should also consider the difference that your own age can have on the matrix. For example, when you are younger, you can afford to take risks in terms of a higher focus on equity, but as you increase in years, you should also consider that safety of your money becomes much more important, and hence you may away from equity.
Consider the following article that explains the age factor in terms of investments (link to article):

If you are below 30, with minimal family responsibilities, equities are for you. Life insurance may not be a top priority but health insurance is a must, even if you are covered under corporate mediclaim. You would do well to direct a major part of your savings (roughly 40 per cent of your income) into equity.

Investor profile: 30-45-years old. Couples with kids
Equity Allocation: 35-50%
Must have: Term insurance, goal-oriented savings

Investor profile: 45-55, inching closer to retirement
Equity allocation: 25-35%%
Must have: Health and critical illness cover

January 8th, 2010 | Tags: Age, Finance, Health, Investment, Mediclaim, Personal Finance | Category: Finance, Investing | Leave a comment

SEBI (the Securities and Exchange Board of India) has the mandate to protect investors, especially the retail and small investors who can get defrauded on various stock market deviancies, fraud, and management frauds. And SEBI has taken a number of actions in the past to act against people who have sought to defraud investors, such as banning people from the market, or preventing access to the market for such white collar criminals.
However, there have been a number of cases where investors, especially the smaller investors have got defrauded in the past, and when calls have been made for SEBI to either act on behalf of getting compensation to these hapless investors or being more proactive, the actions of SEBI leave some room for improvement. Some of these cases are related to vanishing companies, or to frauds, or to price manipulation (link to article):

Undoubtedly, SEBI has done a lot to protect the interest of investors. There are, however, some areas where action needs to be initiated to ensure that investors, particularly small gullible ones, are protected from unscrupulous promoters, conniving auditors and mercenary manipulators.
The limited punitive actions taken by the department of corporate affairs and SEBI against the companies and their directors do not answer the basic question of compensating the investors who for no rhyme or reason are the losers. The argument that investment in equities is a matter of risk and reward cannot be extended to the frauds committed by these companies. Small investors, at least up to Rs 25,000, need to be compensated.

November 23rd, 2009 | Tags: Fraud, Investor, Price Manipulation, Protection, SEBI, Securities and Exchange Board of India, Small Investor, Vanishing Companies | Category: Cheating, Companies, Complaint, Consumer, Equity, Fraud, Grievance, Investing, Punishment, SEBI | Leave a comment

The second hand car market in India is increasing, to the extent that the business of re-sale and purchase of second hand cars now has a greater volume than that of first car purchase (direct purchase of vehicles from the dealers). However, a lot of people who decide to buy or sell their vehicles do not follow proper procedures, and can land in a lot of trouble while doing so. While indulging in second hand transactions, it is absolutely essential that purchasers or sellers ensure that they are going through reliable people, and that the transactions also mean a settlement of all the documentation required (RC, Insurance, any outstanding traffic fines, pollution control certificates), etc.
Here is a case whereby a person gets into trouble by not following through on the documentation needed in the case of a second hand transfer of a vehicle. He gets cheated when the car dealers actually do not transfer the car to him, but instead transfer the car to a third person. It helps that there is a consumer forum which can help in ensuring that the car dealers follow through on the required steps (link to article):

Holding two car dealers guilty of unfair trade practice, the district consumer forum has directed them to pay a compensation of Rs 25,000 along with litigation cost of Rs 5,000 to sector-38 resident Manjit Singh. The forum headed by Jagroop Singh Mahal directed Prithi Pal Singh and Sukhwinder Singh, dealers of second-hand vehicles in Car Bazaar, to return Rs 1,20,000 with interest to Manjit for not providing him necessary documents of a car purchased from them.
Despite repeated requests, nothing was done in this regard which forced Manjit to report the matter to the police. Later, the complainant approached the Registering and Licensing Authority, Haryana, and was shocked to learn that the vehicle was under the process of transfer in the name of one Mahesh Kumar of sector 40-D, Chandigarh. Following this, Manjit filed a complaint before the forum alleging cheating, fraud, deficiency in service and unfair trade practice.

November 21st, 2009 | Tags: Compensation, Consumer, Consumer Forum, Deficiency of Service, Document Transfer, Documentation, Documents, Fine, India, Penalty, Purchase, RC, Registration Certificate, RTO, Sale, Second Hand Car, Second Hand Vehicle | Category: Cheating, Compensation, Complaint, Consumer, Consumer Court, Fraud, Grievance | Leave a comment

For people who take loans from banks, there is always an urge to try and get rid of the loan early. I know a number of colleagues and friends who have taken loans to buy properties, and once they have taken a loan, there are always trying to use excess money that they have to try and reduce the amount of loan amount outstanding, and there are a number of them who pay off the money long before the final EMI is due. Banks really don’t like prepayments too much; if you are a customer who has the credit rating to retain the loan amount till the end, they would rather encourage you to pay the regular EMI’s. Banks have a loan portfolio, and a certain balance in terms of accounting for regular loan repayments. It disturbs this short term and long term money and funds forecast of the bank if their customers start pre-payment, and hence banks charge a fee for pre-payment.
A few days ago, the RBI had apparently sent a reply under RTI that it did not really approve of banks charging a penalty for pre-payment; the latest clarification was meant to even remove this statement. The RBI is stating a more hands-off policy, since these are private banks with their own management; apparently the RBI expects that market competition is enough to ensure that banks do not heavily over-charge, and that they should not charge customers more than their standard rates (link to article):

According to RBI, while banks have the freedom to levy service charges on all matters pertaining to banking transactions, including pre-payment/ foreclosure of loans, banks are required to ensure transparency in displaying information regarding such charges.
RBI said it is expected that freedom given to banks will foster healthy competition amongst banks to keep service charges at reasonable levels, which would ultimately benefit customers. It said, banks generally levy charges for foreclosure of loans as it adversely impacts their asset-liability management.

At the same time, one expects that the RBI will get involved if banks start collaborating to recover standard charges from customers.

September 27th, 2009 | Tags: Bank, Consumer, India, Interest, Loan, Penalty, Prepayment, RBI, Repayment | Category: Uncategorized | Comments (1)