Real Story about an Investor who Fought for 9 months with ICICI Bank

Posted on February 28, 2010August 21, 2019 by Jagoinvestor

Can you fight back ? Really ? If you were taken for granted as a customer by some Bank or any institution and you were forcibly sold some product by officials at some Organisation assuming you are a weak customer who will not raise his voice and fall in trap , What would you do ? Will you have the guts and energy for fighting back and getting what you deserve ? Here is a real life Story directly from the customer who faced lot of problems from his Bank when He wanted to shift his Home loan from One city to another . Lets see in this article in his own words and find out how Officials in these big banks take advantage of customers situation to make money for them selves . See other Force Selling Examples

How it all started

I have two home loans, one in Delhi and other one in Pune and I wanted to go for a home loan ROI switch (conversion of higher rate of interest to an existing rate of interest). My prevailing ROI was very high for both the home loans so wanted to reduce the ROI, of both, by paying the processing fees. ICICI bank has a process where-in one can go for ROI switch by paying the processing fee. First, I went to the Pune office, as I am in Pune, in March 2009 and then visited the Delhi ICICI branch in May 2009 for the loan switch.

March, 2009 : ICICI Bank, Shivaji Nagar, Pune – The officials asked me to buy a ULIP of 40K for the conversion. They changed my loan account number and took all the documents again as if I am applying for a fresh loan. They also took 1 month to process my loan switch.
May, 2009 : ICICI Delhi – The customer care executive asked me fill an agreement on a 50 rupee stamp paper, took the switch fee and all the formalities were done in record 80 minutes. He did not ask me for any other paper and my loan ROI was switched in 2 working days.

Read the process in detail here.

The ugly truth

ICICI Pune branch has forced me to buy a ULIP and took 1 month for the switch procedure where as Delhi has taken 80 minutes. ICICI home finance Pune in collaboration with ICICI Pru is duping customers. ICICI Pru people are simply forcing their policies on ignorant home loan customers. This is how ICICI Pru executives are achieving their monthly targets.

Just imagine if I would have only one housing loan and that too in Pune, I would have been blissfully unaware of this racket. They must have done it with many home loan customers in Pune.c

The Confrontation

I sent my first complaint letter to ICICI Pune, heard nothing for weeks. Sent many letters to all the 3 level of escalation as described on ICICI website, still no response. Finally, I complained the banking ombudsman (See How to complain to Banking Ombudsman) View the full complaint timeline Below .

The Result

Due to the Ombudsman intervention I got my 40K ULIP premium back, but ICICI evaded the answers of my other questions and no action was taken against the two officers involved. I realized that ICICI is capable of dragging this to eternity so I created this blog and uploaded all the conversation which I had/ was having with ICICI. My blog created a lot of noise and after 9+ months few senior folks from ICICI finally decided to extend the support. Finally my queries were answered and Interest loss was credited back in my savings account. I was happy to find the answers but also sad as it took 9+ months for ICICI to respond. I have sent a letter of appreciation to ICICI in the same regard.

The Lesson Learned

Never trust any bank official as they have hidden agendas behind their suggestions and make it a point to read all the documents carefully.
Never do something which is being pushed upon, always take your time. Remember if they are rushing you and want everything today, take your sweet time and do a research.

How to avoid such scenarios

If you have been asked to buy a ULIP for any loan related process, use any of the method below to get back your money.

Option 1 :

Resolution Duration : 9+ months
Pain, mental trauma, stress and harassment : High

Send ICICI a complaint mail with all the relevant docs photocopy (I maintained the correspondence on a blog which served dual purpose)

Send a mail to all the three level of escalations mentioned at ICICI website – this is just a formality as u need to give a proof of ur complaint before sending a mail to Banking Ombudsman. dont expect anything from ICICI as it is a sheer waste of time but you have to do it.

Now send a mail to ICICI ombudsman with all complaint letter attached. Make sure you provide the complaint in the desired format.

Send a mail to ICICI Pru Bombay, thru post and online, the ICICI Pru is very fast in resolving any dispute.

Keep sending stinker mails to ICICI, well they not budge but you will feel good and light

Summary : Online blog will help u maintain the flow of sequence and the best part is that u will learn how to blog :-). Keep on following and one day someone will respond, in my case it took them 9+ months…..

Option 2:

Resolution Duration : 15 days to 1 month max
Pain, mental trauma, stress and harassment : NIL

Go to the bank and agree to buy the ULIP in return of you loan related process.

Give them ULIP premium cheque, get a photocopy of the ULIP docs/forms and the check.

Take the visiting card of all the people who were involved in ur case (this is very important, if no visiting card atleast take their name, designation and mobile no.)

Ater u have agreed to their demand of ULIP now make sure you get ur work done ASAP. Don’t give them any time get ur work done at the earlier. Be firm and be rude.

Wait for the ULIP welcome kit

Once you receive ur ULIP welcome kit, write a strong complaint letter to ICICI Pru telling them about the forced ULIP, the names of the people involved and your request of cancelling the ULIP. In all the insurance firms there is a freelook period of 15 days to 1 month during which u can refund the policy without providing any reason (but you must cite your reason in this case).

Make sure your complaint mail is very strong. ICICI don’t respond to polite mails, they simply ignore them.

Your ULIP money will be refunded.

Summary : This is a very simple way of getting ur work done smartly by complying to all the stupid rules set by ICICI or any other bank for that matters. Just agree to their demands and cancel the ULIP during the free look period.

Good luck and have a safe banking .

How Much Home Loan can you afford (please vote , Data will be used for future Article)

Comments , What do you think can be done to avoid these situations ? Are you aware of any thing like this in your real life ? Lets share our views on what are the different preventive and corrective measures which can be taken to avoid these kind of situation . Dont forget to praise the efforts made by this Guest 🙂

Note : Though utmost care has been taken while taking the information , Jagoinvestor do not take any responsibility about the information provided above.

Review of BankBazaar.com , Excellent User Interface

Posted on August 26, 2009August 21, 2019 by Jagoinvestor

BankBazaar.com is an excellent one stop destination for all your loans and insurance products Needs . BankBazaar is partner’s with India’s leading financial institutions and insurance firms, and provide all information at one single place in a very user friendly manner .

Lets see in detail what all it has to provide a retail investor like you and me in India .

BankBazaar.com

If you are a Fan of Jagoinvestor , Fill the Fan book to tell how much you like it

What can you compare at BankBazaar.com

Home Loans
Personal Loans
Home Loan Transfers
Loan Against Property
Credit Cards

Home loans section is my favorite and I am really amazed by the level of detail they ask and based on that they suggest you the best Bank suitable for you .

Anyone going to take a home loan should first go thorugh this to get an idea about it . The best part I like in BankBazaar is cool Scale type Amount and Duration Selector .Also check out there amazing EMI Calcualtor . Read an article explaining how to choose best Fixed Deposit for you .

Personal Loan is another section I like , You can find same kind of comparision calculator at many sites , but bankBazaar really goes in detail and takes care of all the details which your Bank will ask anyways at the time of Application .

Home Loan Transfer gives you information about the Bank with lowest interest rate when you transfer your existing home loan . Read an article on How Home loan EMI is calculated .

Loan Against Property This Calculator will take all your inputs and let you know how much amount are you eligible for taking Loan and for how much tenure . It will give the list of Banks which will provide the least interest to you .

Credit Cards This is for getting the best Credit card offer for you.

Are you on Facebook ? Join Jagoinvestor Community on Facebook

Overall I think its the best place at the moment to get information on best products available on Home Loans. I hope to see many other things on Bankbazaar over time .

How to find out Best Fixed Deposit?

Posted on June 23, 2009August 21, 2019 by Jagoinvestor

Searching for the best FD?

In this short article, we will see a very useful website which gives you all the information on Fixed Deposits and Banks in India

FD is a tool of saving some part of your income in a fixed account for a fixed time period and earning some interest on that amount. It is a traditional way of saving and we observed our parents taking advantage of Fixed Deposit account for investment purpose since our childhood.

Different banks offer different rate of interest on FD accounts. If you want to invest your income in this traditional tool then you should search for the best bank with best interest rate before investing your money.

Let’s take an example..

Person ‘A’ says: “I want to invest Rs 1,00,000 in a Fixed Deposit for 2 yrs in a public Sector Bank. I come in 30.9% Tax bracket. Which is the best Bank for me that will provide the maximum return?”

He again says: “I also wan to get all the information on the Bank in India at a single place; Which is the website I should checkout?”

How do you answer this question?

You will find the solution for these questions once you read this complete article. Let’s go for this step by step….

How to find out Best Fixed Deposit?

FD accounts are offered by banks and NBFC’s (Non-Banking Financial Companies). NBFC’s offers higher interest rates to attract more accounts and raise capital.

If you want a safe FD then banks are the best option. If you want to invest in companies then before investing you should search for the company details before investment. You can see the criteria and schemes of top companies here.

Have a look at http://www.way2goals.com/Project2/chooseBank.html. This website gives excellent information on Fixed Deposits based on different parameters given by you.

So if you want to invest Rs 1,00,000 for 2 yrs and 3 months in a Public Sector Bank and you belong to 30.9% Bracket, it will filter out the the list of best Banks that suit your needs and provides best return.

It will also tell you what will be your final profit after paying tax and what will be your gain after factoring in Inflation (based on your expectation of inflation percentage).

See the following screenshot for the above figures. (click to enlarge)

In current time there are two banks which are offering higher interest rates on FD. These banks are ING Vysya Bank and Lakshmi Vilas Bank. The rate of interest they are providing is 9.25%.

Maturity amount
Interest Earned
Interest After Tax
Gain After Inflation

Currently The information on the website is updated twice a week.

Information about a particular Bank

The interest rate is different for each bank. So if you want to open your FD account in a bank, you should check for the interest rates offered by different banks.

If you go to http://www.way2goals.com/Project2/interestRatesByBank.html#. You can get all the basic information about a particular Bank at one place . It will give you information about

Website of the Bank
Contact
Interest Rates information for Different Tenures

Also checkout this link to learn some basic stuff . Way2Goals Software India Pvt Ltd is the company behind http://www.way2goals.com/ .

Conclusion

This is an excellent tool dedicated to Banking Information especially information on Fixed Deposits. Way2Goals is one stop destination for any information on Banking Sector. There is scope of adding lots of things, but I believe it will come with time as any other thing in Life. Great tool!!

If you come up with tools like these please share it with others here :).

Everything you want to know about CRR and Repo rate – How they help !!

Posted on October 30, 2008February 6, 2019 by Jagoinvestor

Today we will see what is CRR and Repo rate and how they help in combating Inflation and other monitory issues of Economy. CRR and Repo rate are nothing but the tools available in the hands of RBI to maintain the liquidity and growth.

You might know what is CRR and Repo Rate, but may not know what is there significance and how they help. Read whole article to understand.

What is CRR Rate ?

Each Commercial Bank has to keep certain percentage from their deposit amount in the current account with the Central Bank of India i.e. RBI. This amount is called as CRR i.e. Cash Reserve Ratio. It is the ratio of deposits which banks have to keep with RBI.

Banks do not have access over this amount for any economic or commercial activity. It means Bank can’t invest the whole deposit and they can’t use the CRR money for any lending or investing purpose.

Let’s see an example – When you deposit Rs.100 to your bank, bank gets Rs.100 and now can use this money to lend others, but they have to put some part of it with RBI, if CRR is 8%, they will have to deposit 8 with RBI and they are left with Rs.92.

CRR

So when CRR is decreased, Banks are left with more money to lend and when its increased they are left with less, even though 1% decrease in CRR leaves bank with 93 instead of 92, this Rs.1 is big enough thing.

What is Repo Rate?

When we need money, what do we do? We take loan from particular bank. And when we pay back that loan bank charges some interest on principle amount. This is called cost of credit.

Similarly, when banks need money they borrow it from RBI and the rate of interest which RBI charges on that loan on Banks is called Repo Rate or Repurchase Rate.

Repo rate

So if repo rate is 9%, and some bank takes loan of Rs.100 from RBI, they will pay interest of Rs.9 to RBI. This is a short term loan i.e. upto 1 to 2 weeks.

Higher the Repo Rate higher the cost of short-term money, Lower the Repo rate lower the cost of short-term money. This means at higher Repo Rate the economic growth will slow down and at lower Repo Rate economic growth will enhance.

How is Repo Rate linked to the interest we pay for loans from Bank ?

Simple, Banks need to charge more interest than they are paying, so if repo rate is 8%, they will charge more than 8% for loans which they give, If Repo rate comes down, banks’ may also consider the interest rate they charge us.

That’s the reason why with this latest Repo rate cut, people are talking about home loans rates coming down, so what will happen is that Bank need to pay less interest for the loan they take from RBI, now because they are paying less, they may think of charging us less on the interest for the loans which we have taken from them.

What is Money Creation ?

How does money get created? When A gives 100 to B, Rs.100 is created for B , then when he gives this to C, 100 is again created for C, this way money creation happens for different people from that same 100.

How does CRR help ?

Suppose CRR is 8% you had 100, which you deposit to bank, now bank will Deposit 8 to RBI and lend this 92 to some one, This 92 will be another money which is created for someone, now this 92 will exchange hands and then come back to bank somehow, out of this 92 again bank will deposit 7.36 to RBI and then lend the rest of it to someone … and it goes on like this.

The money creation from this 100 is :

100 + 92 + 84.64 … (100 + 100*.92 + 100*.92*.92 + 100 *.92 * .92 * .92 …)
= 100 *( 1+ .92^1 + .92^2 + .92^3 …)
= 100 * (1/(1-.92)) (because 1 + x + x^2 + x^3 … infinite times = 1/(1-x) for x<1) 08 =”1250″

CRR(C) = M/C

It means that this 100 actually generates 1250 in the economy indirectly. What will happen if CRR is increased by 1%, from 8% to 9%. though it may looks like that this is a small change and it would affect a lot.

Lets see what happens now . . .

How much money will 100 create now?

Ans = 100/.09 = 1111 (approx)

So the same money is now generating 1111 instead of 1250, that’s 139 less or 11.12% less money in the market.

How does Repo Rate and CRR help to ease Inflation?

Repo Rate:

When Repo Rate increases, the banks have to pay higher interest to the RBI and thus Banks also charge higher rate of interest to the common public who borrows loan from bank. Due to this people gets discouraged to take more credit from banks, because of which there is less supply of money in system and there is less Liquidity.

So on one hand Inflation is under control as there is less money to spend and on other hand growth will slow down as companies or people avoids taking loans at such a higher interest rate.

CRR:

It’s easy, if CRR is increased, banks have to deposit more money with RBI and banks will have less money to invest. So now bank will increase the interest rate on the loans which they will lend to other people.

People will avoid taking loan because of higher interest rate and it results in less money creation in economy, and hence people have less money to buy things and they will think twice before paying higher price for something. Due to this prizes will fall because of low demand.