Let’s talk about Women and Inheritance today. Our Indian culture, has for thousands of years treated men as someone who lead families and be the heads of next generation and women as someone who will go to some other family after marriage and start a new life. This has been deeply rooted in all our minds for years and years. This is one big reason why women in India are not aware about inheritance laws and their rights in property.
Some families, where there are sons and daughters both, do not even raise the point of dividing the property equally among all of them equally. Daughters who are married are not even in picture at the times, the wealth is divided and it’s considered natural and something that makes sense. Women on the other hand also do not take any lead or don’t bother asking for their fair share in the family wealth.
Brothers do not share wealth with Sisters
You must have seen cases like these and might be experiencing them in your family as well.
Case 1 : I know a family which had 1 brother and 3 sisters and who had a huge property in Mumbai at a central location, lots of shares, mutual funds and bank accounts, When the father died, people cried and after a month every body was back at home, all 3 daughters who are married didn’t even think for a second that they have a huge 25% share in the wealth, which is a decent amount by today’s standards. All 3 daughters are not so well off and struggling day in and day out, but they are just not considering the option to ask for their share. Legally if they want, it would be just a matter of a few months or years and some bitter experiences, but they might reach their financial freedom if they go to court. But they are too emotional to take that step and worry about relationships and the problems which arise out of it.
Case 2 : In another case, there are 2 brothers and 2 sisters (all married), and after the father’s death, the brothers are fighting with each other for property “Father spend so much on your education, my career was affected because of that, So I should logically get more now.” Fair point logically, but from legal point of view, it does not matter much how father treated whom . The sad part of this story is that brothers are fighting for their share and also sharing their plight with their sisters, but not for a second do they think that even sisters are legal heirs and should also get their share. (Incase you didnt knew – Hindu Succession Law is applied when a WILL is not written)
It’s not Fair!
Just because now they are part of another family, they are not seen as valid heirs. I am raising this point today because this is wrong practice. Women now have to raise their voices and ask for their share from their parents and brothers. If required, ask for it legally. Just because father has spend lot of money on wedding of sister and given her gold does not mean she can be cut off from the family wealth sharing.
If father writes a WILL saying that he wants to give his wealth in some specific proportion, then it’s fine, it’s your father wish. But if a WILL is not present, then you are a valid legal heir, you should ask for your share and you will get it.
Look at it as part of your Financial Plan
If you are a man, your wife might be entitled for her share of wealth from her parents’. In today’s world where money has become so important, see if you can convince her to ask for her share. It might get her valid share of money and can help you in leading a better financial life. I am not saying this because you should be money minded, but because its a fair thing to ask for.
We have created a 2 part video program for Women and Money for our wealth club members. If you are a member there, please show this video series to your spouse.
Do you have any personal experience like this? Can you share?
Do you make a choice or take decisions in your financial life ? A lot of people have not taken lots of important actions in their financial life, which they should have taken long back!. You have to understand that you are making a choice by not taking those actions. When you take some action or do not take an action, deep down you are actually making a choice in your financial life, which we will see now.
Let me give you some examples
1. Buying Endowment & Moneyback Policies
Most of the people who take the decision of buying endowment and moneyback insurance policies , they say that they are buying it because they trust the company and want safe returns. Now that’s their decision, however they have to be understand that deep down they are making some choices which are unspoken …
They are choosing to get below inflation returns on their investments
They are choosing to put money in something which is illiquid and might not help them in emergencies
They are choosing not to cover their family with a higher life cover
2. Not buying a Term Plan
“I don’t think I will die” or “It does not give back money at the end” – this is the general reasoning behind not taking a term insurance plan by many people. Now, again, it’s their decision based on their belief, but deep down they are making some choices which are
They are choosing a life of struggle for their family, in case they are no more in this world
They are choosing to pass on all the debt and tension to their spouse and children in future
They are choosing that their children and family might not lead a great comfortable life in future if they are not around.
3. Not buying Health Insurance
“I will take is next month” and “I drive carefully and I am healthy , so I don’t need it” are the top most reasons given by those who avoid taking health insurance. Again, they feel it’s a right decision and I am not commenting if it’s right or wrong, but surely they are choosing few things in their life and for their family …
They are choosing to get into a situation where they might have to run around for money to fund health related expenses
They are choosing to constantly worry about big ticket health related expenses if any
4. Not creating a WILL
It’s a decision taken by almost all of us. “We are still young”, “I will do it once my net-worth is at least 1 crore” etc., are the common reasons behind not making a WILL. However deep down you are making few choices and you have to accept them …
You are choosing a lot of frustration, chaos and running around for your legal heirs
You are choosing, that your family will have to meet lawyers, go to courts and spend lots of money and effort to get what they deserve
You are choosing to create a confusing situation, where your legal heirs fight with each other and try to justify who deserves what
5. Not hiring a Financial Planner (when you really need it)
“I can do it myself, I was a bright student all my life”, “They charge a lot for what they do”, are some of the reasons given by investors for not hiring a financial planner for themselves. It’s their decision based on their beliefs, but deep down you are making some choices …
You are choosing to still do trial and error and play with your financial life
You are choosing to not organize your self and get into a dedicated structure which can improve your financial life
You are choosing to focus on what you will spend rather than what you will get out of the whole exercise.
You are choosing to delay your actions and rely on yourself for taking actions and get disciplined which most fails most of the times
6. Over spending right now like there is no tomorrow
“Life happens NOW”, “If I don’t spend, whats the point of earning well”,“I will earn more in future, let me enjoy today” – These are the top most things you will hear people saying who over spend (more than they should). One can comment easily if it’s right or wrong, but let’s not get into it, it’s their decision and there is nothing wrong in it, just that these people need to understand the choices they are making without realizing them
They are choosing to have a struggling financial life in future in case tomorrow does not turn out to be like what they imagined
They are choosing to have a better today at the cost of tomorrow
They are choosing to be working for more years in future, because they will not have wealth when they are old.
They are choosing to have a less comfortable life later in life, when responsibilities increase and opportunities decrease
Conclusion
At the end of the day, you always choose something in your life out of the decision you make. This is true for all the aspects of life, including your financial life. So understand that you are fully responsible for what you get.
Can you share your story in short and share what choices have you made in your financial life ?
Do you have any idea about your income tax refund status ? Have you filed your Income tax return long back, but have no idea when will you get your tax fund?
This is one issue faced by millions of tax payers in India. They file an income tax return where they claim back their income tax refund, but have no idea what happens to their cases after that!
For months and years, they keep waiting for the refund status, but they have no idea when they will get their money back. Ideally they should get it back in few months, but in many cases they wait for as long as 3-4 yrs.
In this article, we will see how you can find out your income tax refund status online and how you can use RTI application to find out the status of your tax refund and speed up the process of getting it back.
How to find income tax refund status online
If you have filed income tax return asking for your tax refund, and you have no clue about the current status, the first thing you do is track its status online. All you need is your PAN number and assessment year for which you have applied for refund. Here is what you need to do
You can also track your income tax refund status by contacting the help desk of SBI at 080-26599760 or contacting the Aaykar Sampark Kendra at 0124 2438000
File RTI application for income tax refund status
If you are not able to do much and you feel that just finding out online status is not helping you and you want to now get 100% clarity about your tax refund status, the next step is to file RTI application against income tax department.
We have earlier seen how one can use RTI to find EPF withdrawal or transfer status and how their issues were solved within weeks and months of filing a RTI against EPFO. So your next step is to file RTI in your tax refund case also. But you should wait for at least a year before you file for RTI against the income tax department.
Note that the RTI application has to be addressed to CPIO officer. Now the next question is how to find out the CPIO information. It’s actually not organized in a clean manner, but you need to start by going to this website https://www.incometaxindia.gov.in and then on that page you need to choose your state (your jurisdiction) from the drop down and click on “go.”
It will take you to the next page where you need to click on “CPIO/CAPIO” and play around to find out the exact place where they have dumped all that information. Below you can find a RTI template which you can use.
You should ask for name and designation of the officer who is supposed to process your income tax refund claim
Also ask for the officer official address and his contact number
Also ask for how long the refund is pending with the officer and the reason for the delay
Ask if some senior authority has instructed for delay and the certified copies if any
Also ask for the name, telephone number and address of the higher officer with whom you can file the first appeal
These above mentioned 5 things if asked in RTI, will be enough to move the earth below the concerned authorities feet and they might act faster on your case, because in most of the cases there are no valid reasons for delay. The delay is created just because of lethargy and at times in expectation that someone will visit them and bribe them to process the request!
Note that only the concerned person can file the RTI, no one else on his behalf can file it. In case you have tax refund for different years, better file separate RTIs for each. Do not mix them into one.
Tips while filing for Income Tax Refund
There are few well known mistakes people do while filing returns, because of which income tax refund delays happen. Let’s see those points and make sure you don’t do them.
1.Make sure your give permanent Address
A lot of salaried people, who live on rent, give their present temporary addresses while claiming tax refund, and when after 1-2 years their tax refund cheque arrives, in many cases the person has moved out of the current location. This causes the cheque to return back and the person is not there on the given address.
So make sure you always give the permanent address where you or your family lives and there are almost no chances of cheque returning back.
2. Give accurate Account Details, IFSC code
There have been cases where the account number given was inaccurate by 1-2 digits or the IFSC code was wrong, and that created the problem. This small thing can result in lot of frustration later, so double-triple check these details.
3. Try to do E-filing of your tax returns, if possible
As far as possible, try to file your income tax returns online and apply for tax refund, because the tax refund is much faster if e-filing was done. In case you are filing offline manually, make sure you fill form 30, contact your CA if you want to delegate this totally to someone else!
Conclusion
If you have been waiting for your tax refund from years, it’s the time to file a RTI application for it and find out why your income tax refund has been delayed for so long.
Are you leaving India in next few months or planning to move abroad sometime in future? Then you should be clear with a few points you should complete before you become an NRI. A lot of NRI readers come up with various issues they face, because they never thought about completing few tasks which could have saved them from lots of worries and paperwork. Lets look at 10 things which a person should complete before he/she becomes a NRI (Non resident Indian)
10 things to complete before you become NRI and Leave India
1. Take a Term Insurance
One of the big issues NRI’s face is taking a term plan through a Indian insurance company. It’s always a good idea to take a term plan and then leave the country, otherwise later it gets really tough to get a term plan, for which you will have to visit India and also it also gets quite difficult to opt for online term plan.
So before you become a NRI (Non Resident Indian) , complete this step. The premiums you will pay will be lower.
2. Take Health Insurance
Just like term plans, it’s tough to get health insurance once you become a NRI. After becoming a NRI, you will have to visit India for health checkups and there is more documentation and hassles in the process. Health Insurance is something, you should take anyways , so why wait? Just take it anyway.
3. Open PPF Account
NRIs cant open a fresh PPF account, so before you become a NRI and leave India, open a PPF account. You can open PPF account in ICICI bank, SBI bank or at the Post office. NRI’s can always invest money in their existing PPF account which was already opened by them before leaving India.
4. Convert your Saving bank account into NRO account
A lot of people leave India only to realize later, that they need to open a NRO account in India, and then get into the whole process. Rather than doing it later, why not convert your existing saving bank account into NRO account just before leaving India? NRIs can deposit all the Indian income into their NRO account and also make payments like EMI payments, and other kind of investments from their NRO account. All it takes is 2 photographs, and a copy of your passport and visa.
5. Connect your Loan Account with your banking account for online payment
A lot of people who become NRI (Non Resident Indian), have a home loan running, for which they have to still pay EMI’s . At times, they want to prepay home loan as fast as possible, because they earn more money outside India. But then the issue is – how to make prepayment when they are outside India? The best option here, is to connect your home loan account with your bank account, so that you can make prepayment to your home loan using NEFT transfer. Its a good idea to do this before your leave India and try some prepayment just to make sure it works. It might happen that you might need to visit the bank for this, so better complete this before you leave India.
6. Prepare a Power of Attorney
There can be many things which require your presence in India after you have become an NRI, like if you want to make any real estate transaction or want to operate your bank account etc. It’s always a good idea to have a bit of foresight and see if you might want to prepare a power of attorney. Power of attorney is a legal way of giving power to someone to act on your behalf. Just choose some trusted family person or a friend. You can also make a power of attorney which expires at some stipulated time.
7. Make your mutual funds accounts online
A lot of people still want to transact in mutual funds after they become NRI, but they have no easy way out at that time. It’s always a great idea to make sure that you open a online account for mutual fund investing while you are in India. For this, you can open a online account with Jagoinvestor team and have all your transaction online
8. Open a NRE account
If you want to invest your earnings into India and want to get it back in the foreign country (repatriation) , then you would need a NRE account. You can not deposit the local money like interest from FD, rental income etc into the NRE account. So if you have this kind of requirement, then better open a NRE account. The Fixed Deposits rates on NRE accounts are quite attractive in Indian Banks.
9. Sell your shares and open a new NRI demat account
Once you become an NRI, you will not be able to sell off your existing demat account shares which you bought before becoming a NRI. You can open & operate a NRI demat account. So before you become an NRI, a good idea is to sell off the existing shares and take back the money or the another option is to open a NRI demat account and transfer your existing stocks to this new account.
10. Update your KYC
There are different processes for residents and NRIs for various kind of financial products. Like, if you become an NRI and want to do something with banks, mutual funds, life insurance policies (traditional or ULIPs), you will first have to update your KYC and only then can you do something. So its always a good idea to update your KYC, before you become an NRI. This will save you with lots of hassles.
Conclusion
If you follow these 10 things before you become an NRI, you will have a really peaceful time abroad and will not have to get involved into the mess of completing the things, most NRIs miss. While you might be excited to go abroad, better not miss out on these points.
Are you planning to leave India and become NRI Soon ?
One of the most used financial products is the Credit card. We all spend so much time to get best credit card, but I have never seen someone, who has spend his time to fully understands the importance of the CVV number, One time password, Signatures on the back of credit card or how secure their credit card is overall ! .
There are so many credit card frauds going on, and yet each of us thinks, that our credit cards are fully secure and it cant happen with us. However, this is really far from the truth, because of the 4 big myths people have about their credit cards and we will bust them today for you, so that you become a more powerful and informed investor!
Myth 1 – My Credit Card is secure, because no one knows my PIN/Password
When you make a transaction through a credit card in India, at the end of the transaction, you are asked to enter one more final PIN number, which makes your transaction more secure and gives you an additional layer of security. RBI had come up with this additional password requirement just last year. While you needed credit card number, expiry date and your CVV number to make a transaction earlier, now as an extra security layer, you need this additional PIN too.
However note that this is limited to online transactions on Indian websites only. When you make a transaction outside India, this additional step is not compulsory. This means that someone having every other detail of your credit card other than your PIN can also do transactions even if he does not know your PIN . You must have realized this yourself, if you have done any transaction outside India.
Myth 2 – No one knows my CVV number, so I am secure
One of the biggest myths about credit card is that, if no one knows your CVV number, its impossible to do the transaction. Take a small breath, while I tell you this.
“CVV is not always mandatory on all websites to make an online transaction.”
Yes, you heard right!. You can make a online transaction on few websites out of India with only the Credit Card number, the expiry date and obviously the name of the credit card holder. If you don’t believe me, here’s a small example.
Try to book a domain name at godaddy.com. I was almost numb, when I booked a domain name some time back, only to realize that the domain name was booked, but the site never asked me my credit card CVV number and I was like – “What ?! Seriously ?!” . I then found out, that asking for CVV number is just optional for credit card merchants. While some countries make it mandatory, others don’t. It’s just a choice!
So make sure you are safe, do this
Scratch your CVV number on the back of your credit/debit card
Always make sure the swiping happens in front of your eyes! , I know, it can be a little embarrassing for you, but its just an extra mile security, see if its possible for you
Better do not use Credit Card at all , use Debit card instead!
Myth 3 – My credit card can’ t be duplicated.
Yes, your credit card can be duplicated and it happens in India. A card (credit or debit) might be using something like EMV chips or Magnetic strips, and that’s where the problem is at. While EMV chips are more secure, the magnetic strips are not!. If your card has magnetic strips, it can be duplicated.
Here is how it works …
Your card has a lot of data inside it and it sits on the magnetic strip. When the card is swiped, all the data is extracted from it, for verification purposes. Now some expert hacker with bad intentions, can extract all this data from the swipe machine and make a new card using a technique called Cloning. There are machines called “skimmers” , which helps in extracting the data from the swiping machines to a new card. If you are still wondering if this all happens in India, here is a story excerpt from Hindu website
According to the police, the machines were used to swipe cloned cards by one Rahul. The cloned cards were arranged by Pankaj Deewan, Yogesh Mahajan and Yasin through their contacts. The amount transferred to Dheeraj alias Rohit’s account was shared by the machine holder and cloned cards holder at 40:60 ratio respectively.
Following this, the police launched a hunt and subsequently arrested Dheeraj, Pankaj, Yogesh and Yasin. They purportedly told the police that the domestic cards were cloned by one Kamal and international cards by Devender Chauhan of Agra with the help of a professional hacker. The cards were cloned by obtaining information of genuine customers and then copying the same on a plain card having a magnetic strip. According to the police, the accused used skimmer (a device used to copy data from credit/debit card) for the same.
And if you still don’t believe all this, here is a video you might want to spend time on
Myth 4 – The signature on the back on credit card does not matter much
One of the most misunderstood and unknown facts about credit cards is the signature on the back of the card. Let’s understand the rule today and lay this to matter to rest. If a credit card does not have a signature on the back, it’s an invalid card. As per the agreement between card issuer and merchant (the shops and hotels which give you the facility to swipe the cards), the merchant is supposed to check the signature on the back of card with the signature on the bill, and only if they match, the merchant should allow the card to be swiped.
However almost all the merchants avoid checking it, as if it does not matter at all. This is violation of terms and conditions and if you have lost a credit card which was SIGNED, and some transaction takes place, you are not suppose to be charged, because the merchant should have checked the signatures on card with the signature on the bill. What this means is that if there has been ever a fraud on your credit card, and you are asked to pay the money (Like this Incident) , just ask your card issuer to check the signature on the bill with your specimen signatures with them and if they do not match, they are not suppose to pay the merchant at all and let merchant take the loss for not doing their duty of checking the signatures.
This explains why you should sign your cards on the back and not leave them blank, because if someone steals your card and puts his signature on the back, then the transaction can be done successfully even if the merchant does his duty of checking the bill signature with the signature on card and in that case you are bound to pay the money to card issuer.
MYTH 5 – By paying minimum balance, I do not have to pay Interest
As you have used your credit card and now it’s time to pay your bills of Rs 15000. But you don’t have money to pay back the bill. You are in tension because if you don’t pay your bill you will be charged penalty. So to avoid penalty you pay minimum balance of Rs 3000 and now you will not be charged penalty. So now the left over bill amount is Rs 12000.
You must be happy that you will have to pay Rs 12000 only but let me tell you that you will have to pay Interest of 3 to 4% on this 12000. So even if you pay your minimum balance to avoid penalty but you cannot avoid the interest charged on the left over amount.
MYTH 6 – Too many credit card will improve my credit score
Many people think that if they opt for more than one credit card then there credit score will increase eventually. But this is other way round. If you opt for too many credit cards you won’t improve your credit score but you end up being more dependent on these credit cards, which is not a good sign. Managing too many credit card becomes burdensome.
Tips to Secure your Credit Card
I hope, now that these myths are busted, you are a more informed and powerful person who the rules of the game of credit cards . To summarize, lets put out some tips to secure your credit card
Do not share your one time credit card password (IVR) with anyone ever
Scratch your CVV number and remember it in your head !
While making any online transaction, make sure the website starts with https://
While making any transaction offline like on petrol pumps , hotels etc, make sure its swiped in front of you as far as possible.
Make sure the card is swiped on a machine which is issued by authorized banks and not some machine which looks suspicious , it can be a “Skimmer” machine which steals your data.
Put a signature on the back of your credit and debit card, so that unauthorized transactions are not done and you are protected a card holder
If possible, better use a credit card which has a small limit like 10k or 20k for shopping.
There are virtual credit cards these days, you can use them for online transactions
If you ever had any incident that was mentioned here, please share it with others and if you have some thing to teach others, please share it here with everyone.
Do you know that only 1% of world wealth is owned by women , while women constitute 40% of the global workforce ? – World Bank . This is a little disturbing fact, and question now is, when women are working so much, giving a lot, have equal capability, then why they have so much less owned on their name ? When it comes to the area of money, Men are so much involved in personal finance, but women are not and that creates a big imbalance. Here is a small example to show how women suffers in her financial life because of this imbalance in understanding and knowledge of money
We at jagoinvestor want to start our 2013 with a vision of increasing financial literacy among women in India and we are looking at how we can reach 1 million women and teach them importance of financial literacy in their life. Now how is this related to you ? When we say “women” here, it also includes your wife, sister, mother, daughters and if you want to increase your financial life quality, you need to make sure that they learn about money. 2 years back, when I wrote about women and their personal finance knowledge, it was shocking to learn that 84% of educated, urban women dont have any knowledge or very minimal understanding of personal finance concepts.
Lets see why Women are not interested in personal finance matters
From decades and generations, it has been dominated by men and only men, women are not even consulted or informed ever
Women feel that their income is secondary to men, hence whats the use of managing it
Women are so involved with children, cooking and other household work , that they don’t get time
Women feel personal finance is complex and do not like numbers
But what happens when Men is not around ?
The best way to make you imagine what happens to women life if she does not have any idea about managing money is to ask you to imagine about your own case, Just imagine in your absence what is going to be the scene ? You have never encouraged women at your home to learn about money , neither they took any interest, but someday they might have to take charge and that day it will be very frustrating experience for them. We are trying to do some work in the area of financial literacy for Women and once we create something useful for women investors, we would like to share it with you all, so that women at your home can use it and take the first step towards financial literacy, but we need some help from you on this.
We have created a small survey which needs inputs by women, we want to know what they feel about this subject, how much ready are they and what is stopping them to learn about money. If you are a women reader of this blog, please fill up the survey. However if you are a male reader, we need your support, please ask your wife, mother, sister and daughter to take up the survey and spend 5 min on this, tell them they have to do it for you and their future. Just carry your laptop to them and insist them to spend 5 minutes and complete the survey. And if they complete take them out for dinner on our behalf (Bill paid by you of course) … Following is the survey questions
If I ask you to fill an application form that has 10 Objective questions and 10 subjective questions, would you consider filling it up yourself? NOPE!
Similarly, while taking a life insurance or health insurance policy (term plan, ULIP, Endowment, Health Insurance), we are lazy to fill up the form ourselves. Why? Obviously because it’s too much of work . So, agents take up the task of filling up the form and now the power is in their hands. Some agents, whose whole focus is on their commissions, make sure that no information is disclosed which can lead to policy application rejection or increase in premium etc. just to make sure the policy is issued quickly (hassle free). They will chose ‘NO’ in for all the questions like “are you a smoker?” -NO, “Do you have any illness?” NO, “Did your parent die because of any serious illness” NO, etc etc… and you don’t even bother to check it out. You just put your signature as you are already in hurry to submit the documents for tax claim in your office.
Claim Rejection due to wrong Information in Form
This is a serious issue and your claim will be rejected because the information provided in the proposal form is wrong, because you never followed the procedure to buy insurance properly. So make sure that you fill up the form yourself or in worst case let your agent fill it up, but check each and every point before submitting it to the insurance company or let your agent fill it one by one and tell him what to fill at each place i.e. dictate your answers.
Let me share with you some cases where agents filled up the form and what were the experiences of different people
Case 1 : I have sbi life saral shield term insurance plan of 15L for 30 yrs term for which i m paying 4953/- premium. After reading this article, i have gone through my policy document in which they have given scanned copy of filled up form. actually agent has filled up the form. i m a smoker but in the form it shows non-smoker. – Alpesh
Case 2 : Recently, I tried to purchase a term plan through an LIC Direct Marketer. He wouldn’t let me fill the form and insisted that I just sign at various points on the form. When it came to filling up the information about family, his comment was: “Let’s just say old age as the reason for your parents’ demise. LIC won’t bother to check if the age is 60 and beyond.” That comment broke the deal. I didn’t buy the policy. – Vinaya
Case 3 : Funny thing. I just signed up for a term policy today with Kotak. The agent filled in the form on his own. And then was hesitant to correct it when i pointed out that my parents have high BP. Also, I’m in between jobs right now. But the agent insisted on writing my previous employers name & address under “current employer” – saying that he cant write it as ‘in between jobs’ or ‘unemployed’. – Richa
You can see that in all these cases, the agent tried to fill up information without even discussing it with client. May be they are used to it and are very sure that even clients don’t pay any attention to it, but at some point of time it’s going to hurt you very badly.
How many of you have/did not fill your proposal form or never checked your proposal form and what information was given in that? Note that it’s your proposal form, so whatever is mentioned there is given by you and only you, irrespective of who filled it.
IDFC foundation has released a small 30 minutes movie called “One Idiot” to spread financial literacy for today’s generation which feels that life is all about spending and looking “cool”. The movie is directed by Amol Gupte, who had also directed the movie “Taare Zameen Par”. The movie ‘One Idiot’, shows how a bunch of students who are in their early 20’s make fun of a guy who looks dumb and does not believe in showing off, only to find out later one day that he is actually a multi millionaire, living and enjoying his life. The overall message of the movie is that you have to be prudent and responsible when it comes to money and start your systematic investments however small they are and over a long term, you will be on path of financial freedom.
Direct link to Movie
I watched the movie few months back when someone from IDFC had asked for my comments on the movie. Overall I think you should watch this movie and also share it with your children who are in school and going to enter their working life. Watch the movie and share what you liked about the movie ? Do you think its able to give that message of “saving and investing that money is important from starting” .
Have you even seen cases where when a person wants to get a home loan, and the bank or the lender says that taking some kind of ULIP policy or some other kind of insurance product is mandatory if you want the loan to be approved? Most of times, banks impose this restriction in the final stages of loan approval process because that’s the time when most of the customer will not reject the option and will forcefully go for it, because they don’t want to lose the home loan for this tiny roadblock.
If you are thinking about 50 lacs of home loan, you will not get stopped by this 40,000 per annum premium policy. Here is a case which was discussed on our jagoinvestor forum.
I recently planned to buy a home. So, after market research I approached SBI bank. But the manager informed by saying that ‘I need to take SBI Insurance along with home loan’ else will not sanction SBI home loan. Please let me know whether is it the case with SBI home loans?
Cross Selling is Unfair – IRDA
Some customers falls for these kind of gimmicks, but in reality there is no compulsion to buy any kind of product with home loan. It’s just a marketing gimmick and a way to exploit people. IRDA itself has clarified in its circular that this kind of bundling or forced selling is not fair and should be stopped. However banks still continue to ask customers to buy the insurance along with home loans and ill treat them.
Tying is defined as two or more products packaged together where at least one of the products is not sold separately while Bundling occurs when products are packaged but are also available separately. There could be various issues of concern for the consumer that arise from cross-selling. Packaging two or more products could become unfair to the consumer when it impedes his or her choice or makes price comparisons difficult or impossible.
One of the major concerns is bringing in transparency to prevent unfair commercial practices. At the same time, cross-selling facilitates service providers to use existing channels to reach out to those who are looking to buy insurance products. It is, however, necessary to ensure that the consumer is not put to any kind of disadvantage because of the packaging.
J. HARI NARAYAN
CHAIRMAN (IRDA)
So what’s the way out? It might be, that if you are careless on documentation front, the bank might sell you the policy and you come to know about it very late; like it happened in this case where Axis bank sold life insurance along with home loan to this guy. While you always have an option to go to consumer court over the issue, that comes a little later.
What way you can settle this at the bank level itself? The main idea is to communicate to bank officials that you are not a easy bait and are an informed investor who knows his rights as a customer. Below are a few things you can do in a situation when bank tells you “Sir – Insurance is compulsory along with home loan, else it will not be processed”
What to do when forced to buy insurance along with home loan ? Lets see 4 tips which you can use when you are told by your lender that some kind of policy is mandatory to buy along with home loan.
Option 1 – Directly tell them, you know the rules
One of the simple things you can do is tell them straight forward that you know the rules on this, you are aware about the RBI circular that these practices are not fair and ask the bank for an explanation on how they are still doing it. Also tell them, that you have yourself helped another friend of yours to get a home loan without the bundled insurance when XYZ bank asked for it. You can tell them that you have already filed for RTI to IRDA and asked for this, if they want you can bring the RTI reply from IRDA. This first tip itself should be enough for your home loan provider to come to the right path.
Option 2 – Reject the Offer and Wait – They will come back
When you show desperation, they know you will do anything for getting a home loan and that’s one reason why they put forward such idiotic restrictions of taking policies. Another thing you should do in these kind of situations is that you can just reject the offer totally and tell them that you really are not so desperate to get the home loan, you can wait for some months or you already know other bank officials who have not put forward such kind of restrictions . In all probabilities, they will just come on track or if not that time, they will be back to you later saying – “Sorry Sir, we take back that restriction .. blah blah… ” This is exactly what happened with Muthu Krishnan which he shared on this blog some time back
IDBI tried to con me in similar manner. I told them that I don’t need their loan. After two days, they called back and offered loan without insurance which i accepted. Though you are absolutely desperate for loan, do not show it to the banks. The banks are very desperate to disburse loans as it is their livelihood and not ours. They will come around to our terms.
Option 3 – Ask them to give it in writing
The next option is to look at the bank official and ask him to give in writing that “Buying the Policy is mandatory along with Home Insurance” and also tell them you are thinking of inquiring about this with banking ombudsman because you have already filed a case for your friend and got compensation for this. If they are not ready to give it in writing, tell them that you don’t need home loan from them anyways, but you will still file a complaint with Banking Ombudsman to see what can happen and politely ask the official if he can also share his Name, designation and Employee id for additional information.
Option 4 – Take the Policy and return back in Free Lookup period
This is the last option, but if you feel that other options are great but you are victim of family pressure and at this time just need to go ahead even though you are disgusted by this force game, just go ahead with policy and pay the premium for first year. Then be a little alert and make sure the moment you get policy documents, just initiate the process of returning back the policy within the 15 day free look-up period . For those who do not know, the free look up period starts from the day you get the policy in your hands, not from the day you bought the policy. This helpful tip was shared by one of the person who shared his case with ICICI mis selling.
Conclusion
Any kind of loan should not be bundled with other products. Most of the bank officials try to pressurize the customers just to meet their deadlines and targets. So do not fall for forced selling and act like an informed and powerful customer.
Have you come across a situation like this? Can you share?
We have already done an article on how to use RTI for any kind of EPF related issues because EPFO is an govt organisation and comes under the purview of RTI . But a lot of people do not know that even PSU Banks come under RTI and if you have any issues with them, you can always file a RTI against them and get any kind of information you want.
So that means SBI, Bank of Baroda, Union Bank of India, Punjab national Bank, Carana Bank, Vijaya Bank, Bank of Maharashtra and all other PSU banks (govt owned) will come under RTI . So the next question is what kind of situations can arise, when a person can file a RTI application. Lets see this – Prashant from Agra, had an issue with Canara Bank over the bank locker
My brother’s bank account is at canara bank, and he had taken a LOCKER there. He made his wife as joint account holder and with attorney. Now when she took locker keys to her home without informing we gave the manager an application that in case locker is secretly opened plz inform us. But after few days the lady mailed him(to manager) some application/or anything on his email.
when my brother n mother went to operate he stopped us.. and shouted at us in front of everyone as if we are thieves(account is in name of my brother). Manager is even not ready to show that email or copy of the same. Neither did he informed any of the 3 phone numbers given in application by us previously (he assured us to do the same). He yelled us out of bank(account is 12 year old in same branch) saying that he will FREEZE LOCKER. My brother the rightful owner wants to open his own account having keys to the locker yet not allowed.
Now in this issue, you can see that bank has not treated Prashant well and also not giving him the information properly. The bank people are also mishandling his locker. At this moment, Prashant can just file a RTI application and ask all those queries which he wanted to know. And within next 30-35 days , he should get the reply from the bank.
Let me share with you all 2 more real life incidents on how people used RTI against their PSU banks and got their work done !
1. How Kranti Used RTI against his Bank
My ATM is locked due to some unknown reason. As usual customer-care directed me to contact branch. In branch a lady checks some info and said that this can not happen here, ATM will be unlocked by Mumbai main branch and advice me for new ATM card. At this time I have questioned them that in this case you will deduct charges from my saving account. Reply of lady was awesome, she simple blast on me and said that you people want everything free of cost. At that time I feel that there is no point in arguing with that lady and way back to my home.
After one week of try,suddenly I thought of applying RTI on this issue. I have met the branch manager and ask for how to apply RTI on this issue. Suddenly after listening name of RTI, bank manager came into action and directed same lady to solve this issue asap and said that if his issue is not resolved, he will file RTI. Surprisely my ATM is unlocked within minutes of action. In my case only name of RTI works wonder:)
2. How Elahi used RTI against SBi
RTI is very powerful and highly useful tool. Here is my experience with SBI. I have housing loan with SBI and they had charged extra interest of Rs. 73000 to me. So I filed RTI to get the detailed information of change in interest rates and to conform that my housing loan interest rate will be (SBAR – % concession.) After getting this information, I filed complaint with Branch and RACPC pune, giving them detailed interest calculations of interest for 4 years and asked them to refund my money. Waited for 3 weeks. SBI customer charted says that “Branch has to solve the problem withing 3 weeks elase wive written reply to customer telling why it is not solved and how much additional time is needed.”
After 3 weeks I pointed SBI to this clause ans asked for explaination through email. Then wheels started moving faster. Got my cresit within 2 hours. But it was not as per my calculation. I again explained them my claculations and after 3 credits they got their calculation right ! I got my money back completely. RTI works wonder. And every government and semi-govt. organisations have citizens charter. Use it for your purpose.
Note that Right to information (RTI) will only help a person get some information, after that he will have to follow up on that matter, but in today’s world, even if you get the correct data about something, its a big thing.
When to use RTI against PSU bank ?
When the bank is not giving you correct information about your home loan related items like interest rates, prepayment, documentation issues.
When you are not satisfied by bank behaviour, its service, the terms and conditions etc
When bank asks you some unjustified things like opening a FD for locker, buying some policy before locker can be opened !
When you feel that bank has done something against their own terms and conditions and is not entertaining you.
When you need any information from bank which you cant get directly !
Below is a video on RTI done by Sailesh Gandhi for Moneylife. Have a look at these video’s and understand how to effectively use Right to information in your life.
Branch Heads are also the CPIO’s !
When you file a RTI letter, it has to be addressed to Central Public Information Officer (CPIO) or Central Assistant Public Information Officer (CAPIO). Now all the major branch heads of PSU Banks are also CPIO’s and you can directly write the RTI letter to the branch head, but address them as CPIO’s . So in the place of address, mention the branch name and the name of the bank with full address. Some of the PSU banks also allow giving the RTI applications by hand to the Branch heads, but I would suggest try it on your own risk, sending the letter by registered post will be much better.
Steps for writing the RTI application against Bank
3. Write down all the other details like name, address, email, phone and other details if any.
4. Put the information required at the appropriate place in the template. Make sure the question is brief and too the point.
5. Buy a postal order for Rs 10 , favoring to CPIO, Branch name, address (this you need to fill yourself).
6. Make sure you write the postal order number in the RTI letter, change it with your order number.
7. Take a print out and send the RTI letter via registered post or Speed post to the same address as Bank branch.
8. Wait for next 30-60 days for the reply and if you dont get it , escalate it further !
Note : You can also watch a detailed video course called “How to Use RTI in your financial life” (4 part video series , 19 min total running time) under our courses section of Jagoinvestor Wealth Club, incase you are a member.
Conclusion
So in this article, you have learned how you can also file RTI applications against a Public sector Bank in India and get all those information which you are not getting in proper manner otherwise.
