Consumer Rights

Delhi Government held responsible for money for bringing up a child after mother’s failed sterilization procedure

ashish — Mon, 01 Mar 2010 14:05:42 +0000

When a woman undergoes a sterilization procedure, it is with the expectation that any more sexual relationship will not result in more babies, and in today’s world where family planning is required, going in for a sterilization procedure is an act of great responsibility. When the family feels that they have had enough children, then sterilization is way of stopping any further children from coming. To make it easier for poorer families to adopt such a procedure, the various Governments provide camps where sterilization is carried out under the supervision for doctors. When a family adopts such a procedure, they do with the thought that such a camp being sponsored by the Government means a measure of reliability. So what happens when a lady finds out that she has got pregnant even after such a procedure being carried out, who bears the responsibility ? In a recent judgment, the Delhi Court has held that the State Government is responsible for the expenses for rearing the baby, especially when the household is very poor and cannot bear the expenses for rearing the baby. The expenses are to be charged from the Government, but not recovered from the doctors who carried out the operation (link to article):

A Delhi court has held the government responsible for the birth of an unwanted child in a poor household because the mother became pregnant despite undergoing sterilisation under a government-sponsored scheme at a hospital. Asking the government to bear the expenses of rearing the boy, additional district judge Kamini Lau awarded the 40-year-old mother, Nirmala, a compensation of Rs 1 lakh on Tuesday.
While awarding the compensation, ADJ Lau said “The serious problem of population explosion warrants and demands that adequate measures be taken by the government while adopting and implementing the family planning scheme successfully.”

Letting your age guide how you handle your finances

ashish — Fri, 08 Jan 2010 19:54:02 +0000

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

SEBI told to work towards compensating fraud-hit investors

ashish — Mon, 23 Nov 2009 16:13:49 +0000

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.

Car dealers to pay a compensation of 25,000

ashish — Sat, 21 Nov 2009 09:33:54 +0000

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.

Banks levying charge on pre-payment

ashish — Sun, 27 Sep 2009 20:56:01 +0000

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.

Insurance regulator gets strict on orphan policies

ashish — Wed, 09 Sep 2009 19:45:40 +0000

What are orphan insurance policies ? These are policies where the agent who sold these policies has shifter to another company, and the person who bought these policies no longer has an agent or an intermediary to help service them. This is a common problem in the life insurance business, since:
- An agent will do anything to sell a policy, including using charm, threatening about the problems that could occur later in life if you don’t have an insurance policy, using contacts, etc. The agent gets a good commission when the insurance policy is sold, but the amount of commission is drastically reduced in subsequent years, which leaves little incentive for the agent to remain and service the needs of the insurance buyer. If another company offers a better deal, the agent will move.
How can there be a solution that also helps the insurance buyer ? Well, the IRDA (insurance regulator) is making it more difficult for agents to shift so very easily, adding a set of conditions and rules (link to article):

In A bid to ensure that fewer policies get lapsed, the Insurance Regulatory and Development Authority of India (Irda) has made it tougher for agents to shift loyalties . The new agency guidelines ensure that all agents—individuals , corporate as well as banks—continue to sell policies of the same insurance company for at least three years. Historically, lapse ratio has been higher among orphan policies when compared with policies that are serviced by an agent. To ensure that an agent shifting loyalties does not leave behind orphan policies, the insurance regulator has put in a number of preconditions that the agent has to fulfil before he can obtain a no-objection certificate from his principal.
To take care of the policies orphaned by agents, Irda said, life insurers should ensure alternate arrangement, and these measures should go beyond a call centre facility, which is also an essential requirement . Insurance companies have been asked to intimate each policyholder that their agent has quit and there are alternate arrangements being made to service them.

Individual finances: How to manage when loans are killing you

ashish — Wed, 19 Aug 2009 19:49:34 +0000

I read an article that took a situation where a person was in real trouble financially, and what the person can do in such a situation that could help. The situation was one that many of us can relate to – in times of good money and a good job, your finances and projections for the future are good, and you decide to invest for the future. You take a loan for the house that will be an asset for the future, you invest the remaining money in stocks (after all, equity is the way to grow your money for the future), and you get a car to travel in comfort along with your family. And then disaster strikes – your house loan amount was high (higher as a percentage of monthly take home salary that you would like – should not be more than 40% of take home after taxes and other deductions), and it got higher as interest rates went up, the stock market collapsed, and then the worst of all, you lost your job. So, what do you do ? (link to article – read it till the end, the situation may not be exactly the same, but there will be similarities)

He decided to approach a debt counseling centre for his financial hassles. They showed him the right way to manage his finances. They also mediated between him and his bank. He also obtained written consent from the bank that he would resume repaying his loan once he got a job. In such situations banks do oblige you if you manage to repay most of the money or part of the money if not all as it was a better deal than no money at all.
1. Try to lower your interest rate. Negotiate with your bank. One other way is to convert your credit card debt into a personal loan debt. It will definitely be lesser than the credit card interest rate.
2. Calculate your net worth and see if any of your investments could help you prepay a part of your loans.

More tips are there in the article. The main point is that you should be careful of your finances rather than falling in this trap, and if you do, then get help, speak to the bank and explore other means of financing (except for high-interest loans).

Mistakes commonly made by equity investors

ashish — Sun, 09 Aug 2009 18:15:33 +0000

Everybody makes mistakes in the equity market, so one cannot blame retail investors for making many mistakes. Even acclaimed mutual fund and hedge fund investors have made mistakes over the years, but that does not excuse the retail investors from trying to learn about the mistakes that they keep on making so that they reduce the number of mistakes they make in the future. At the minimum, investors should learn about these mistakes so that they can try and learn from these mistakes. Some of these mistakes are:
1. Investors typically join the herd. So, when the stock market crashes, people run to liquidate their holdings, even at a loss. For example, when the market was really down in October, companies that were fundamentally sound were picked up by people who believed in the long term.
2. People look at tips, and even do investment based on tips even if they know nothing about the company or stock.
3. People do not read about the fundamentals of the companies that they are investing in. Typically, company valuations follow the projections of the sectors that these companies belong to, and after that, the company performance also plays a role. However, people do not bother finding out these facts.
4. People invest and forget. There are a number of people who invest in companies or mutual funds and do not re-evaluate the nature of their investments and the performance over a regular period, say every 6 months or every year
5. Diversify your portfolio: Do not invest everything you have in the stock market. Invest in mutual funds, some in debt funds, some in PPF, some in realty, and so on. Make sure that you are properly diversifying your investments, at the same time, make sure that you invest only where are you comfortable in your level of knowledge. Even consider things such as investments in gold and art.
6. Don’t get caught up in greed. When people lost out in January 2008 after markets had climbed to record highs, people were not willing to consider that the market could go down. People were not willing to take some of their investments out of the market, and lock that money in safer investments.
7. Invest for the long term. Don’t get scared by short term movements. Even while tracking them, make sure that if you have invested based on fundamentals, and for the long term, you don’t lose patience.
8. Don’t get tricked by other people. You will always hear people say that they made incredible amounts of money in investing in the stock market, and there is a feeling of being left behind. Remember, you only hear the stories that are positive, and you should never let such stories guide your actions.

Finance: Safety vs. risk in terms of investments

ashish — Sun, 09 Aug 2009 17:39:47 +0000

One typically hears of cases where people have invested money in dubious investment schemes run by scheming and smooth investment gurus who actually end up duping people of their hard-earned money. These smooth operators typically get caught, but this is no consolation for those people who lose their money in these schemes. Similarly, people end up losing their money when they invest in stocks and mutual funds, either if the entire market collapses or if they invest in very risky stocks. So does this mean that people should invest in risk free investments ? No, because there is a ratio between risk and return. It is for every individual to decide their risk – return paradigm based on their comfort levels, and their ability to take risks. Read this article to learn more:

The rating scale starts with AAA (lowest credit risk) and ends at D (default grade, highest credit risk). Going by the normal yardstick, one should always go for the best. So, should all the investors invest only in AAA rated issues? To fathom this paradigm, we have to understand the riskreturn relationship. Risk-return & risk aversion. It is because of the relationship between risk and return — higher the risk, greater has to be the expected return on that investment and vice versa. An investor hoping for higher returns has to embrace the risks that are attached to it.
But how does an investor decide how much risk to be taken? In reality, there is nothing like optimal risk-return trade off. It is often a derivative of various factors like time horizon, liquidity, and some investor specific circumstances. The risk-return trade off is extendable to equities as an asset class also. The relative safety of investing in blue chips may not result in highest returns. In case of IPOs also, the IPO grading is an opinion on the relative fundamentals of the company. The investor decision is guided to a large extent by the valuation and risk tolerance.

So, as they say, the ability of a person to take some risk in their investment is guided by multiple factors. The only thing one should do is to ensure that one has thought through the investment carefully.

Obtaining duplicate copy of documents

ashish — Sun, 09 Aug 2009 17:23:25 +0000

People encounter this problem once in a while. You have invested money in a Fixed Deposit, or in Mutual Funds, or some other such investment method (including investing in a private company). Suddenly you find that you cannot locate the proof of such an investment (you could have lost it, it could have got destroyed in a fire or similar accident, or any other such reason). Panic sets in, after all, what do you do now ? Visions of losing your money come to mind.
The best method to prevent such an occurrence from happening is to make a copy of all your important finance documents and keep them in a safe location so that you have a backup. However, what happens when you have not taken this precaution ? Read this article to learn more (link to article):

To make sure you don’t have to dig deep in such a situation, here’s a guide on the process you can follow to get a duplicate copy of key documents such as NSC, FD, Form 16, Pan Card, mutual fund scheme, insurance policy and home loan papers. “If the papers, however, cannot be traced after reasonable efforts and you suspect they may have been stolen, a report at the nearest police station must be filed immediately,” advises Amitabh Singh, partner — tax & regulatory services at Ernst & Young.
To ensure there is no misuse, instantly inform the respective departments about the loss of original papers/document/policy. The next procedure should be to apply for a duplicate. As a policy, most financial schemes allow for issuance of duplicates on payment of a nominal fee. According to post office regulations, you can get a duplicate certificate issued if loss of the certificate has arisen out of theft, mutilation, defacement. You would be required to send an application to the post office where the NSC was issued.

As recommended, make sure that you keep a duplicate copy beforehand. To get a copy later takes more effort and running around multiple locations, but it is possible and something you should work through.