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Financial rights get a boost

When it comes to money, the two key roles we all have to play at some point or the other is that of a customer and an investor.

Print Edition: June 12, 2008

Word’s worth

Murli Deora
“Some remedial measures should be taken, but I would like to assure the public that there is no need to panic”
— Murli Deora, petroleum minister, on the proposal to hike petrol and diesel prices

“It’s [money invested in US 64 bonds] dream money for any asset management firm as the typical investor used to invest and forget”
— Dhirendra Kumar, CEO, Value Research India

“Credit offtake is not matching liquidity inflows.To me that is a key signal of whether rates will go up or not”
— KV Kamath, managing director and CEO, ICICI Bank

“Investments of over $1,400 billion are being made by REITs globally and we expect these investors to start looking at Indian realty”
— Jayesh Kariya, partner, Deloitte Hakins & Sells

Source: Telegraph, Financial Express and Indian Express

Telling figures

Some figures that have immediate or long-term personal finance implications

Mukesh Ambani
44.02 cr
rupees was Mukesh Ambani’s salary for 2007-8.

There are six companies in BSE 500 with a turnover less than this for the same period

Per second he makes Rs 13.96, or over Rs 12 lakh a day

8,000 cr
rupees is the amount due to the 1.2 million investors in UTI’s US 64 Bond, which comes up for maturity by the end of May

5%
is the increase in direct investment in mutual funds since Sebi scrapped the entry load for direct investors in January this year, going up from 2% to about 7%

When it comes to money, the two key roles we all have to play at some point or the other is that of a customer and an investor. Most of us have a dual thought process, clearly demarcated along these roles. As a consumer, we are very concerned with our rights. However, when it comes to our role as an investor, we let our guard down. But the truth is that even an investor is a consumer because he is “buying” something, be it stocks, insurance or even a loan. And a spate of recent rulings by courts and regulatory bodies proves this point.

Last quarter was particularly exceptional when it comes to rights of financial consumers. The most significant ruling came from the Supreme Court on the matter of recovery agents hired by banks and the strong-arm tactics adopted by them. “We deem it appropriate to remind the banks and other financial institutions that we live in a civilised country,” the court said, dismissing a petition of ICICI Bank.

The Supreme Court also took on insurance companies that try to deny claims on technical grounds by dismissing an appeal filed by the National Insurance Company (NIC) against a consumer forum ruling that ordered it to pay 75% of the insured amount to the insured. NIC had sought to repudiate the claim on the grounds that the vehicle was insured as a private vehicle but used as taxi. This ruling states that “…breach of condition is not germane”.

The Monopolies and Restrictive Trade Practices Commission (MRTPC) too has been coming down strongly on unfair practices. Delhi-based real estate firm Ansal Housing & Construction has come under the scanner for its residential project in Karnal because advertisements promoting the scheme withhold the true cost of plots while favouring a single company (HDFC). The advertisements invited bookings in the township for just Rs 1.25 lakh. But buyers would then have to pay Rs 1 lakh within 30 days from booking plus Rs 15,000 a month for 15 months and the “balance” at the time of possession.

The MRTPC has also ordered an investigation against FMCG firms that are cutting quantity while maintaining the price without adequately informing consumers. So you think you have bought the usual 100 ml shampoo bottle for Rs 50 but actually you’ve bought 80 ml. The companies on their part have said that they are well within legal limits by printing the new weights on the products, but do we ever check the net weight? These rulings are important to every consumer, and not just to those involved in the cases. But the biggest lesson is that even as an investor, you are a consumer—with all the rights and privileges.

Landmark rulings

• SC slams banks for deploying musclemen for recovery of loans
• SC dictates that insurance claims for vehicle theft cannot be denied on technical grounds
• Ansals under MRTPC scanner for promoting scheme without giving true cost of plots
• Investigation against FMCG firms for misleading consumers by reducing quantity for the same price
• Vodafone fined for its contest asking customers to make calls longer than 20 minutes

Loan recovery norms
• Clients to be contacted at their place of choice
• Interaction in a civil manner
• Clients to be ordinarily contacted between 7 am and 7 pm
• Request by client to avoid calls at particular time or place to be honoured
• Time and number of calls to be documented
— Rakesh Rai

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