When your bank messes up…

GONE are the days when you had to wait in queue to finish your bank work.

These days you have smarter options. You can transfer money, online, check your savings account balance on your cellphone and track the status of your cheque at your local ATM.

Yet banks still mess up. An extra charge, here. A cheque which takes forever to clear. We show you how to address these issues.

Step 1: If you have a complaint, visit the bank’s web site and file it here. Mention your e-mail id, correctly and wait for the bank to revert.

Step 2: If you do not receive a response from your bank or are not satisfied with the response, then file a complaint with the banking ombudsman (BO), a body supported by the Reserve Bank Of India (RBI).

The BO provides speedy solutions to grievances faced by customers from various banks.

What can you complain about?

You can complain if your bank does the following things:

• Does not clear cheques, drafts and bills. Or clears them late
• Refuses to accept without sufficient cause, small denomination notes (like Re 1, Rs 2 etc) or coins. Or if it charges a commission for this
• Delays the payment of deposits into your account
• Refuses to or delays issuing your drafts, pay orders or bankers’ cheques
• Does not stick to the prescribed working hours
• Fails to honour guarantees or letter of credit commitments
• The bank agents fail to provide or delay providing a banking facility (other than loans and advances) that has been promised in writing
• Does not follow the RBI directives that are applicable to rate of interest on deposits in any savings, current or other account maintained with the bank
• Refuses to open deposit accounts without a valid reason for refusal
• Levies any charges without informing you
• Does not stick to RBI guidelines with regards to ATM/debit card operations or credit card operations
• Delays payment of your pension money
• Does not accept or delays accepting amounts, that you pay as taxes
• Does not service you when it comes to investments in Government securities
• Forces you to close your deposit accounts without proper reason or notice
• Refuses or delays to close any accounts
• Does not adhere to the fair practices code as adopted by the bank
• Violates any other directive issues by the RBI in relation to banking or other services

How to file a complaint

• You can file a complaint by on a plain paper and submit it to the ombudsman’s office in your city. Click here for list of offices.
• You can also file it online: access the form.
• There is also a prescribed form for filing a complaint, which is available at all bank branches. However, it’s not necessary to use this format.

Can the ombudsman reject your complaint?

Yes, it can in the following cases.

1. Your complaint seems frivolous, dishonest or is filed without sufficient cause.

2. If you have not done your homework before filing your complaint, or do not have relevant proofs, the ombudsman will not entertain you. So, make sure you have a record of all your communication with the bank

3. There is no loss or damage or inconvenience caused to the complainant.

4. If the office of an ombudsman falls outside the purview of your case, he can reject your complaint. In this case, you must make sure you go to the correct office.

5. If your complaint sounds too complicated to the banking ombudsman, he may ask for elaborate documentation.

List of documents

Submit these along with your complaint:

1. Name and address of the complainant.
2. Name and address of the branch or office of the bank against which the complaint is filed.
3. All facts that support your complaint and if possible, quantify the amount of loss you suffered.
4. If the ombudsman has asked you to comply with some conditions, attach proof of such compliance.

The damages: There’s no cost involved!

Author: Harsh Roongta, Ceo, ApnaLoan.com
Source: Wealth, MoneyControl

Top learning from Sahara fiasco…

Last week, the Reserve Bank of India (RBI) pulled the plug on India’s largest Residuary Banking Company (RBC), Sahara India Financial Corporation. (What happened??)

An RBC is a financial company, which is not really a bank. It’s just that getting a license to set up an RBC is easier than getting a banking license; it calls for fewer regulations and compliances.

So, companies that don’t want to go the banking way opt to be an RBC. In Sahara’s case, they appear to have failed these compliances.

What went wrong according to RBI

• Sahara did not comply with the minimum interest rate requirement. The minimum interest rate that an Non Banking Financial Corporation must offer is 5 per cent per annum on term deposits and 3.5 per cent per annum on daily deposits. If reports are to be believed, some depositors got interest as 1 per cent per annum.
• They did not have the complete details of the agents involved in deposit collection.
• They did not follow all KYC (Know Your Customer) norms. Under these, the company must collect documents like PAN card copy, address proof etc, from depositors.
• They did not inform depositors about when their deposits would mature.

Note: It is essential for RBCs to follow these rules, so that you, the depositor or investor, are protected. Read all rules.

RBI’s verdict

Though initially, RBI put a complete ban on all future deposits, it later toned down the sentence. Now, Sahara needs to wind down its deposit base within seven years. Sahara will also no longer issue fresh deposits that mature beyond June 2011.

With this, once again, the spotlight is on the millions that investors pour into various avenues, without adequate knowledge and research. What’s more disheartening is that most investors and depositors don’t know their rights are.

Now, for those who have their monies locked into Sahara, there’s no cause to worry. The RBI is here to protect the rights of investors and depositors. Even if there had been a complete ban on Sahara to accept any fresh deposits, common investors will not suffer.

But there’s an opportunity to learn, here. Being aware of what’s happening around you will help you to avoid making mistakes with your money. Here’s what I learned: four cardinal rules of investing.

Exercise your rights

Every time you give your money to somebody else, you have a right to know what is going to happen with it. You have the right to see balance sheets, offer documents and other financial documents and ask any question you might have. When you see these documents, look at these four important details of the company finances:

1. Case flow statement: Every company has an annual report with the balance sheet, profit statement and a cash flow statement. A company with positive historic cash flows, is preferred.

2. Revenues: Look at sales/ revenues and see if they are growing at a healthy rate. Compare this with peer companies.

3. Profit margin: Is the company maintaining a steady profit margin? This will tell you if it is controlling costs. Again, compare with peers.

4. Loans: A company with less loans is always better. Imagine you have two friends, one who is always in debt and the other who borrows less and repays fast. Who would you lend to? The answer: obviously, the latter! Same logic for companies.

Now, these are just basic guidelines. It always helps to learn more. Learn the business model, profits, cash flows, the total assets and how much debt they have taken and what are the risks related to the business.

Get real!
Take promises of high, guaranteed returns with a pinch of salt.

If anyone does promise you a high guaranteed return, which is significantly more than what the Government or nationalised banks are offering, try to find out what’s different here.

Ask yourself, ‘Iif I was running a deposit scheme like this how would I be able to guarantee returns of 200 per cent? What is my business model? Is it logical or is it just a scam?’ Don’t forget that the RBI is not liable to protect you, if you behave irresponsibly and lose your money to dubious companies.

Check management credibility
Whom would you give your money to? A company ridden with controversies? So, check for management credibility when you invest.

Read magazines and newspapers, regularly. The Internet has made life easier, too. Look up the company’s name on search engines and read all the information, it throws up.

Check credit ratings
RBCs are required to get a rating from a rating agency like CRISIL or ICRA, without which they cannot raise deposits. So, check the offer document to see the rating. However use this only as a tool to help you decide. It must not be the only basis for your decision. In the past, several Initial Public Offerings (IPO) with excellent credit ratings, have failed.

Play detective!
Being an investor is akin to being a detective who needs all the information. The better you get, the more you will be rewarded. The world of finance is extremely rewarding for those who know the rules of the game. For those who don’t, it’s pretty risky. So, respect your money and keep your eyes and ears open.

Keep smiling. And yes, happy wealth creation!

Author: Yogesh Chabria, GSIFS.com
Source: Wealth, MoneyControl.