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Open PPF account in ICICI Bank – Few Points you can’t miss !

Posted on by Jagoinvestor

Do you want to open PPF account in ICICI Bank ? Yes It’s possible now. Few months back, ICICI started the facility of PPF account. The way it was advertised was “Online PPF” , but it mainly meant that you can deposit and maintain your account online. While you can also apply for the PPF account online, still you need to provide them the documents physically. In this article we will look at how to open Public Provident Fund account in ICICI Bank.

Open PPF account in ICICI Bank

Can you open PPF account in any ICICI Branch ?

No , you can not open PPF account in any ICICI Branch . For each city, there are special designated branches for opening PPF account. You will have to open the PPF account there, here is the list of those designated braches . Note that you need to have a ICICI Bank account before you open the PPF account in ICICI, however the account can be in any branch of ICICI .

Documents required for opening the PPF account in ICICI Bank ?

Case 1 : For customers who have a relationship with ICICI Bank that is < 5 years.

  • Form A
  • Passport size photograph
  • Copy of PAN card

Case 2 : For customers who have a relationship with ICICI Bank that is > 5 years

  • Form A
  • Passport size photograph
  • Copy of PAN card
  • Residence proof – Passport/ Electricity Bill

In case 2 , the additional Residence Proof must be required mostly because if the customer is quite old, his address must have got changed. Note that if you do not have a ICICI Bank account already, you will have to first open an account , in which case you will fall into case 1

How to transfer your existing PPF account to ICICI Bank account ?

As per the PPF scheme of the Government, subscribers can transfer their PPF account from one authorised bank or Post office to another (Check detailed article on how to transfer a PPF account from Post Office to SBI bank) . In such a case, the PPF account will be considered as a continuing account. To enable customers to transfer their existing PPF accounts to ICICI Bank, the following process must be followed.

  • The customer approaches the bank or the Post office where his current PPF account is held and makes an application for transfer of PPF account to ICICI Bank’s branch.
  • Once the application is processed, the existing bank/Post office arrange to send the original documents such as a certified copy of the account, the account opening application, nomination form, specimen signature etc. to ICICI Bank branch address provided by the customer, along with a cheque/DD for the outstanding balance in the PPF account.

Once transfer in documents are received at ICICI Bank branch, customers are required to submit fresh PPF account opening form (Form A) and Nomination form (Form E/ Form F in case of change of nomination), along with their original passbook . Also customer is required to submit a fresh set of KYC documents.

You will not get PPF passbook in ICICI bank by default

This is something interesting I found which was getting discussed on our jagoinvestor forum . Looks like by default ICICI bank does not provide a PPF passbook when you open it. If you really need it, you will have to give a written request and only after its processed it will be given. Under its PPF terms and conditions its mentioned that

 3.3. Passbook shall not be made available to the Customer/s for PPF Account/s which are applied for and operated through ICICI Bank Internet Banking Services. However, the Customer shall be able to view his/her transactions through his/her statement of accounts available online on the Website. In the event, i Customer wishes to have a passbook for the PPF Account applied for through ICICI Bank Internet Banking Services, he/she shall be required to put in a written request for the same at the designated base branch where PPF Account is/has been opened as per ICICI Bank’s policy / process/Primary Terms.

However, if you mostly do all the transactions online, the Passbook point is not that big thing to reject the idea of opening PPF account in ICICI bank.

Conclusion

PPF account was always opened at SBI bank or Post Office by maximum people and ICICI bank is the new player in this field. Only time will tell about their services and how they handle this PPF service. However overall for netsavvy investors who already have a ICICI bank account, seems like its a good option and which can be acted upon faster. Now you need to take your decision. Let us know if you will open a PPF account in ICICI bank or not ?

Cheque Truncation System – New Benchmark for Cheques in Banks

Posted on by Jagoinvestor

It might happen that your cheque’s start bouncing and do not get accepted from Jan 1, 2013 . There is a new standard in banking called as Cheque Truncation System or CTS 2010 , which all the banks have to follow now. RBI has issued a circular telling all banks that they should only process and accept those cheques which follow CTS guidelines.

What is Cheque Truncation System or CTS ?

Its just a new improved structure for chqeues and a set of guidelines which will change the way cheques are being processed and cleared. Right now, all the cheques are sent directly physical to the other bank for clearance, but with this new Cheque Truncation System guidelines, the banks will send the digital version of cheques (read scanned image) to the other bank and the clearance will happen almost same day or very fast. Some of the features of CTS cheques would be

  • It would have the wordings “please sign above this line” at right bottom
  • All CTS-2010 cheques will have a watermark with the words “CTS INDIA”, which can be seen against a light
  • A bank logo will be on cheque with a Ultra Violet Ink , which can be seen only under UV Scanners.
  • The Cheque Truncation System 2010 enabled cheques will not allow any alterations. If there is any mistakes, the cheque will be invalid
  • “payable at par at all branches of the bank in India” text will be at the bottom of all the cheques
  • There will be IFSC and MICR code on the cheque
  • You will have to sign the cheque will a darker ink, so that your signatures are valid for scanning.

If you look at these features, you can simply see that these are required for digital processing and once these Cheque Truncation System enabled cheques arrive , the whole banking system will start clearing the cheques in a must faster time. This will improve banking and save paper 🙂 . Below is a sample of cheque which fulfil CTS criteria’s.

Cheque Truncation System CTS cheque sample

SBI has already told all its customers to get new cheques because all the old cheques will become invalid , In the same way HDFC bank and ICICI bank have also told their customers to get new cheque books.

What you must do ?

1. Replace your Post Dated Cheques

If you have given any post dated cheques to someone like for your home loan payments or for some other kind of payment, then its the time to replace them with fresh cheques else it will just bounce and you might have to pay the bounce charges

Deposit any Old Cheque now

At times, we accumulate old cheques and deposit them for clearing only after many days or weeks. If you have any cheque which is to be cleared, better deposit it and encash !

A lot of banks have also asked its customers to give return back the old invalid cheques at their branch and collect new cheques, not sure why they need old cheques , why cant they issue the new cheques directly ? Also note that the cheques will be sent to the last updated address only. Learn more about CTS here .

You already have CTS-2010 compliant cheque books ?

Note that RBI has directed all banks to issue Cheque Truncation System 2010 enabled cheque books already from last many months. So it might happen that your cheque books are already complaint with those standards . So please check it once and dont rush to bank to issue you new cheque books . Like one of the reader found out that he already has the right cheque’s .

Banks like ICICI Bank and Axis Bank had already started issuing CTS-2010 compliant cheque books since last year. So please verify whether cheque book you have a already CTS-2010 before rushing to bank to get a new one. After I placed a request for new cheque book, I found that my existing cheque book issued to me in Mar-2012 was already a CTS-2010 one.

I hope you are clear about Cheque Truncation System (CTS) and how your cheques will become invalid from Jan 1,2013

How a newcomer should start his financial life – 4 steps

Posted on by Jagoinvestor

Today we will talk about how a newcomer or a fresh investor start his investment journey. We will see 4 steps which a newcomer can follow to start his invstments. I see a lot of new people on the blog asking things like

Hey Manish

I am totally new to this world of investing, I just joined job 3 months back and it seems like I have no idea how to start. I can see my friends who have been in job already, but they have messed up so much in their financial life. I do not want to be that way and want to do best. Can you tell me where should I invest?

In today’s world of over communication and an environment where things look complex it’s no wonder, a new person is confused. While there cant be a one strategy that fits everyone, we can still propose a generic 4 step rule, which can help most of the fresh candidates and these 4 steps becomes more important these days because most of the people mess up hugely in the first 5 yrs of their financial life and they have no idea how important starting years are in financial life. So today, here’s a look at the 4 steps, I feel will be applicable for most of the people.

How a New investor can invest

Step 1. Enjoy for the first year – Spend !

Almost everyone who starts a new job has this feeling for a long time  – “Once I start earning, I will buy things for my parents! I will buy a bike! I will roam places! . I will buy that awesomely cool mobile which I could not afford when I was a student! . I will do this! . I will do that! I will go here! I will go there!” . Everyone goes through that feeling and when I started my first job, even I had those same kind of excitement.

You know what? This is totally acceptable and a 100% correct!

The moment we enter the world, we become the part of the rat race (remember 3 Idiots?)  We get good grades, we get into best school, study hard to get into college, and then finally land at job, assuming its the end of the race. At this point, if someone tells you – “Start Investments Early!”, what would be your reaction ? I would say that as a statement, its a great thought, but to a young guy (or girl), who is yet to get comfortable with the environment, it’s a foolish statement, distant from reality and kinda crushing the emotional side for their ‘desire to spend’ .

The only thing which makes sense at this point is to let all those wishes come true! Let the guy spend!. Let him or her spend on those things which he or she ever wanted. Let them splurge! . Buy things which they dreamt about for years . Let them travel! . Buy gadgets! . Shop for clothes and phones and whatever they wish to! .

I’d say, go for it!. Let it happen for the full 1 year in the start. After a year, the person should have done most of what he or she wanted, in that time, he or she should be more settled in the first job. He/she would have got a taste of “earning money” . Now! This is the good time to talk to him about finances.

Step 2. Start a Recurring Deposit and Start learning

The next step is to get started, to get into the process… The biggest issue which I feel with newcomers is that they do not have this habit of “regular investing” . Lots of people, when they start their financial life, want amazing returns immediately! . They hear about SIP from media, they hear about stock markets and real estate markets and suddenly the only thing that plays in their mind is “high returns”.

First, they need to work on their “habit of investing.” They should first understand, what it means to save regularly, they should first get a feel of how money grows over time. A person is mostly raw  in the beginning and needs some serious understanding of basic concepts and how everything works!  The need of the hour is “habit” and “education”. For anyone new to investing and who has just started his career, should read my first book “Jagoinvestor” where I talk about few fundamental principles of personal finance. From most of the people who have read it, they told me that it was an eyeopenor for them. If you want to get a understanding of what it looks like download this sample 1st chapter of my book and read it . It also has tons of reviews from other people who have read it already.

So coming to the point, what can this new investor do at this step once he is ready to take the plunge ?

I can think about 3 things here.

a) First, open a Recurring Deposit in your bank for a big amount which you can save. It can be 10,000 , 20,000 or even 50,000 depends on how much are you saving! . This will make sure that a part of your salary is now getting invested in a Recurring Deposit on a regular basis for next few months atleast. You can see some money regularly invested and get a feel of how money grows over some months. The money will also be safe.

b) This is also a serious time to start exploring and learning about the other kind of investment options. You can learn from all kind of websites, blogs and books written on personal finance and more. Ask questions if you have any doubts on our Q&A platform (we already have 4,000 questions and 20,000 answers on it). This phase will act like the preparation for rest of your life. The clearer the concepts and fundamentals to you, better it is. At this point, you should concentrate on learning things. Your money is getting accumulated anyway in the recurring deposit and is safe. So nothing to worry about there.

c) Apart from the above points, you can also start the background documentation & processes which will be required in the future. You can apply for your PAN Card incase you dont have, start a demat account, get your KYC done for mutual funds investing. If some document is missing, apply for it, & open more bank accounts if you think you would need them. It’s like, you’re getting all your weapons ready for the future.

For those newcomers who like to learn through Video’s – we have a 37 min course called Basic Concepts of Personal Finance on our Jagoinvestor Welath Club.

Step 3. Complete Most Important and Primary Tasks First

Now, you are ready & educated, have a good understanding of everything, gotten a taste of investing money and are ready for the next step. Now in any financial journey, there are few steps which you should take right at the beginning. These are like the “first things first” tasks. I see people on this blog, who have not completed these important early tasks even after 5-10 years of their first job. There are few things like

These are mostly one time tasks. Once you complete them, They are complete ! . You might have to pay a regular premium for few products, but the main task of taking actions in those areas are complete, which most of the people struggle with. Understand that, if you delay these most important tasks, they will just get pushed for “future” and it will take ages to complete those when you actually need them.

Remember, these one time activities complete a major part of your financial life. After this, you mainly have to just review these each year from time to time, and mostly concentrate on your “investments part”.  After you have completed these tasks, your primary objective is wealth creation. A lot of people I see are still lost in these primary, first level tasks even after years and years , just because they didnt do it in start and now when its time for concentrating on their wealth creation, they are still stuck in these primary level tasks.

By this time, you will be more comfortable investing in new avenues like Equity mutual funds, Real estate, ETFs, Stocks, and other investments. To start with and to get a taste of mutual fund investing, start SIPs in a a balanced fund like HDFC Prudence or HDFC Balanced or if you are too risk averse, you can also start SIP in Montly income plans (MIP’s) or some debt mutual fund.

4. Design your financial life and explore more

In the end, after  you’ve completed the 3 steps mentioned above, you can see, how easy it would be to extend your actions. I’d say the above 3 steps will take anywhere around 2-3 years depending on what kind of person you are and your circumstances. In those 2-3 years, you must have accomplished these things

  • You must have done a good amount of spending and fulfilled most of your wishes
  • You must be educated well about financial matters and have good clarity about your future.
  • You must have completed the primary level of basic tasks which any financial life needs
  • You must have saved a respectable amount through recurring deposits and other investments.

At this moment, you can plan the next 5-10 years of your financial life. Clearly define and prioritize your financial goals in life, and start investing aggressively for your wealth creation. Even if you feel like applying for a loan to buy home or car, you should be able to handle it in a much better way after the first 3 steps. Because you know about his future premiums outgo, & your aspirations more clearly. At this step, if you feel you need some kind of external help to get a better clarity, you can also hire a financial planner for yourself and work with him to get more clarity. A small investment for your financial life can prove to be worth.

You can see that with these 4 steps, the actions one will take will be more defined and realistic, rather than the random events, that push you & which gives an unwanted shape to your financial life.

Conclusion

You can see that these 4 steps are just about giving more meaning and a better shape to any financial life. It focuses on slowing down and then slowly moving forward in your financial life. Any new person is very excited about his life ahead and there are great chances to mess up. These 4 steps will help a person to move forward in his financial life. Good luck!

Yes ! – You can withdraw your EPF without Employer Signature

Posted on by Jagoinvestor

Do you know how to withdraw your EPF without Employer Signature ? Do you think if its possible at all ? Is your previous employer not signing your EPF Withdrawal documents? Have you left your company long back and now you can not take your past employer signatures ? Or is your EPF company stuck because your employer is not supporting you or helping you in withdrawal procedure ? Or it might happen that your employer relations with you mess up for some reason and now they are not ready to cooperate in the EPF withdrawal procedure and threatening you? Here are 2 real life examples of these kind of situation

Case 1 : Priyanka was also stuck with a company which was shut down and her PF was stuck

The last company i was working with has been shut down. Now I need to withdraw my EPF, however I am not getting any help from the company. I have tried to contact the GM – HR and the CA but no response. As the sum is huge, I am worried if I will be able to withdraw the amount without company’s approval or authorized signature. The full and final settlement has been closed and relieving letter has been issued by the company. Please advise how should i go about in this case.

Case 2 : Ramz was also facing similar issue but here employer was not supporting the employee for EPF withdrawal

One of my friend was in a similar situation few months back. I have pay slip but no relieving letter. When contacted with the finance dept, I was told that I cannot get the epf amount as I have not got the relieving letter. The amount will not be released by them even though an epf amount is mentioned in pay slip. He was asked to pay the amount for serving period of two months and then get relieving certificate and later only will they release the funds for epf account.

Now the question. Can one withdraw his EPF without the support of his past employer signatures or support ? Yes ! – There is a solution! .

Today we will discuss, how you can withdraw your Employee Provident Fund money without your past employer’s help. A lot of people feel that it’s not possible without employer involvement, but it’s not true! Let me start by sharing a bit about this.

Withdraw Employee Providend Fund without Employer Intervention

Employer can not control EPF money

Each month employer takes the EPF part, out of your salary and along with their contribution, deposit it into your EPF account with the EPFO organisation. Once they deposit it with EPF office, then it’s just your money and no one else’s. Your employer can not control it. However note, that your employer’s signatures are required on the EPF withdrawal form, to certify that you are not employed with them anymore and now you can withdraw the EPF.

A lot of people leave their jobs without serving the notice period or because of some other issue and employers do not help them to claim their Provident Fund money. Here is one instance on our Jagoinvestor Forum

I worked in a company in 2009 for few months. I had some issues with them and resigned from that company. I did not get any relieving order. All I have is my salary slip which has PF account no. Is it possible to get back the PF amount without the permission/notice to the previous employer which I worked ?

3 steps to withdraw your EPF without Employer Signature

Here are 3 steps you need to do to successfully withdraw your EPF without previous employer signatures.

Step 1

First download and fill up Form 19 (for EPF withdrawal) and  Form 10C (for EPS Withdrawal)

Step 2

Get it attested by any one of the following

  • Manager of a bank (PSU preferred)
  • By any gazetted officer.
  • Magistrate / Post / Sub Post Master / Notary

Step 3

Write down a letter addressing the regional PF commissioner, stating the reason why you have to get it attested and how you are facing issues with your employer. In case you have any proof of  unsupportive behaviour from your employer, better attach it. (This step is optional, and not mandatory)

Step 4

If you are unemployed, you will have to make an affidavit that proves that you are unemployed. Download this Affidavit Sample and get it printed on a Rs. 100 stamp paper with a notary or any gazetted officer signature on it (This Affidavit is part of our Jagoinvestor Wealth Club) . This is required because you need to be unemployed if you want to withdraw your EPF . If you are employed, you can transfer your EPF to your new employer.

Step 5

Send these forms to your regional EPF office and wait for next few months for some kind of action.

Step 6

Once your application is processed, the EPF withdrawal request will be honoured and you will be paid. If you still don’t see any action or response, then its time to File an RTI application to EPF Department for finding out the exact Status.

Legal Action against your past employer

Note that Employee provident fund money is totally yours and no matter what the situation, your past employer should be helping you in withdrawing it. It can be some issue your employer or you might have.., your employer can not say that they will not give signatures and create issues in your EPF Withdrawal.

If that’s the case, it might be time to teach them a lesson.

If you are 100% sure that you are correct and it’s a case of harassment, just collect all the documents which proves the harassment and then inform your regional Provided Fund officer about this. He will carry out an enquiry, contact the employer and if he finds them guilty, there can be legal action against the company and might even amount to imprisonment. It’s the Employer’s duty to keep records as per the law and also maintain the terms and conditions, failing which employer can get a notice under a section 7A, which lays the guidelines of strict actions against the employer. I got this from one of the RTI related websites 

Normally, the EPFO which maintained your EPF account should have settled the claim based on the signature of the Bank Manager since you find it difficult to get the form attested by your previous employer. They should not have sent it back to you telling to get the signature of the previous employer. The fact appears to be that the employer is not willing to sign the form for some reason or the other. (I presume the establishment is not closed but is still working). It is the duty of the employer to sign the settlement form. If he fails to do so the Regional Provident Fund Commissioner (RPFC) concerned can take action against him. You can make a complaint to the RPFC pointing this out and urging him to either settle the claim as it is or to get the claim signed by the employer and in case the employer declines to sign to take appropriate action against him instead of harassing you by not settling the claim. Please send this complaint by registered post and keep copy. After about a month if no action is taken file an application under RTI and ask what action has been taken on your complaint,people responsible for not taking action etc. Your claim will automatically be settled.

Conclusion

It’s possible to withdraw your EPF money without the help of your past employer. You just need to know the right steps and should also have the energy and motivation to follow up on the matter. Let us know what did you learn out of this article. Do you think this is something useful for you? From this article, did you understand properly how you can withdraw your EPF without Employer Signature ?

Real Estate Cheating by IndiaBulls Greens, Chennai

Posted on by Jagoinvestor

Are you a real estate expert ! ? If yes, please help a fellow reader Yakgna Kumar, who has been suffering due to his mistake by investing in a real estate project in Chennai . He wants a right direction and hence he is asking everybody help to guide him. Below is his story from our questions and answers forum

Yakgna story of Builder Cheating him !

We booked IB Greens apartment in chennai Oct 2010, Initial booking was made with promises that are not being fulfilled by IB now. They dragged the agreement signing for 2 years quoting various reasons and until now they are not clear on number of floors, UDS. Now that, they have come up with new agreement – completely one sided and no clear indication of number of floor, UDS, SBA Increase, change in carpet area/floor plan, shared club house for different phases as against separate club house and many other issues. This is clearly a Cheating case !

We have now applied for cancellation of the booking and asking IB to refund the complete amount paid for booking the apartment, IB is not responding on the details of refund but when we call customer care, they are quoting that we need to pay penalty of 5% of total sale price ! – this is mentioned in the Booking Agreement, the booking agreement also says, that agreement should be made within 1 year of the booking, if the booking is not made within 1 year of the booking IB will have to pay 9% interest … in addition to this, they have added few clauses that cancellation should not be intitiated by buyers. Now IB is asking us to sign a cancellation process which makes us to agree for penalty as per booking agreement.

With our little knowledege on real estate, we understand

1. The booking agreement is not an agreement and and just provisional booking form.

2. its been more than 2 years old and when exceeds 6 months it will become null and void.

3. As per the CCI(competation commission of India) any terms and conditions which is one sided is not acceptable and considered as Void.

4. Our refund request is not our own and because of IB failure to deliver the project intime. Till date they are not clear it will be 7 floor or 19 floor. During booking they informed 7 floors and if 19 floor your UDS is almost nil which is deviation from the booking terms.

Questions

1) what should be our step to get the refund, have you seen customers approaching with this kind of problems and how they have handled it?. we have lost 2 years since then the real estate prices have gone up, IB can cancel our booking and sell with latest price and making profit. we have already went through too much stress because of IB attitude towards us and IB billing department asking to pay the first installment without even signing the agreement and also penalty of 18% for delay in payments . we had multiple meeting with IB staff without any change in IB stand on the agreement and so we are planning to cancel. I am attaching the booking agreement snip related to the cancellation/refund from booking agreement. We are a team of buyers, we got introduced yourself after forming a google group when we had to face the problems from IB. We are stuck now, we need correct plan of action and without any further delay and stress for us. Based on your expertise, i would request you to let us know the next steps for us.

2) Will we be able to get our monies back based on the booking agreement? .. is the booking agreement considered at all after 2 years ?

3) We also think, the IB Higher Management may not be aware of the staff and local management’s attitude to customers, if there a way to escalate our issues?

Appreciate your time on reading this long mail. thanks for your support.

Please share your thoughts and Help

What do you think about this case ? Can you share what do you think about this cheating case and how this guy should move ahead, what should be his next actions ?

Download this Free Audio Conversation – Slow Down & Grow Rich

Posted on by Jagoinvestor

We are giving away a Free audio on Slowing Down and Grow Rich which we created for our Jagoinvestor Wealth Club last week. The Audio is totally FREE for all our blog readers.

Slow Down & Grow Rich

For a moment look around and see you will find everyone is in RUSH (including you). You rush to reach office, you rush to meet your deadlines, and most people do the same when it comes to producing wealth. Everyone wants to make a lot of money as fast as they can. The truth is that Human beings are CRAZY for money. But tell me! . Will an artist who is in rush be able to create the best painting of his life? Will a chef, who is in rush be able to prepare the best dish of his life? Will a doctor who is in rush be able to perform his life’s most critical surgery?

The answer is NO.

Similarly, an investor who is in rush, is unable to produce desired wealth in his lifetime. Speed has become like an operating system that is installed in the machine called “Human Being”.  But Wealth is not a function of speed it is a function of depth. It is about how deep you engage yourself with the process of wealth creation.

Today, we have an Audio GIFT to share with you which is exclusively made for our Jagoinvestor Wealth Club members. With the help of this audio we want you to learn the principle of slowing down and apply it to your financial life. (Every month you get such audio files as club member and more stuff!). Wealth club material is priceless, still we have priced it in a way that anyone can become a member. We want every investor who gets in touch with us to slow down and to have an awesome financial life.

Download Audio

Cashflow/Networth Analyzer Tool

We have also released a nice calculator, which is going to help you understand your income/expenses and assets/liabilities in a much better way. It does some number crunching and based on your current numbers, gives you some detailed insights on your current situation. This calculator tries to give you insights on different parameters of your financial life and marks them as red, yellow and green, which represents “Bad” , “Average” and “Good” . So instantly you can see how well you are doing on various parameters. Watch the Video below to learn more about the calculator. In past we have also released Financial Freedom Calculator for our members.

Get this Calculator

Let us know if you listened to the audio and if you liked what you heard ? Are you also rushing in your financial life ? Do you think slowing down a bit and carefully moving ahead will help you to grow rich ?

Why you should do background check for small real estate builders

Posted on by Jagoinvestor

Should you buy real estate properties from small builders ? While you keep hearing about big real estate projects, there are tons of buildings and buildings and apartments build by small builders also and they are quite high in number. Today I want to share 3 instances of dealing with small builders.

Builders Background check

Case 1 : Real life case of Real Estate Fraud

One of the readers had invested in a property with a small size builder , but now he found out that the builder is arrested for fraud. He is now stuck with the investment and paying the EMI for the property whose future he is not sure about. Here is the full case

In Jan 2011 i have booked,Registered and stamp duty paid property located at Navi Mumbai(CIDCO property)and all the required documents are submitted to HDFC for under construction property.After verification and search report the Loan sanctioned. The payments are made according to Demands and Work completion by developer on time to time basis.Till the 70% of work completion all the payments are made(April 2012),but after that 19th July 2012 the developer has arrested by local police for cheating and fruad registration(Double registration) on his running projects.

In this issue he was arrested and the news spread across through all the media news papers that Customers are Cheated for Crores of rupees by Navi Mumbai Developer since May 2012.In this case on his arrest i have also made police complaint that, “The construction work has stopped since last two months and Developer has shut his office and mobile.According to media news i am also feeling that i was cheated and the home loan EMI are still there.”Now the developer and Police is also asking me to take back my complaint otherwise developer will sell that property to others and only give me the money which i have paid till the date. When i asked my bank about this to kinldy hold my EMI till the issue will solved.How do i pay EMI of the loan which i took for my Home and without getting home how do i proceed further for EMI?Bank said,”We have given a Loan to you not developer,even though all the documents are clear from Developer according to procedure.And my registration documents are Mortgage with the bank.So i have pay the EMI for the 70% Loan amount which i took from bank till the 70% work completion by developer.”Now i am paying EMI’s without getting Home. So guys pls think 100 of times before proceeding for Under-construction property.It doesnot matter whether it is a branded or Unbranded(Known/unknown Builder)

Case 2 : Unathorised Floor in the Project

One of the readers shared on our jagoinvestor forum that he has invested in a real estate project by a small builder, but the builder has violated rules and added another floor without approval. Now his money is stuck with the builder and he is not able to take any concrete decision

Recently I have booked a flat in bangalore with a small time builder. The catch is he has got approval (BBMP approval) for G+4 floors but he built an extra floor (My flat is on 4th floor). Does SBI approves the loan for apartment in such project? The builder is saying that there are 20+ loan approved from SBI (total 120 flats in project) and he will get my loan approved as well. He is also saying this is quite common practice now a days in Bangalore and he will keep this floor for renting purpose only.

Even if SBI approves my loan, should I buy this flat? What are the complications, I would face in future if selling off this flat (or will live in that flat). I have given 20% of the money as booking amount.
What are your suggestions in my case?

Case 3 : Builder not replying to many queries

I had a terrifying experience with a small builder, who projects himself as a Mid size builder(He completed one small project, of 20-30 flats and he himself given promotion as midsize builder and compares himself with some reputed mid size builders in Chennai).

I got all the documents from builder in a professional way(he gave all documents in set saying these are the documents required for legal verification) and gone for a lawyer verification(its my mistake not to wait for lawyer opinion) and he gave me enough evidences that he applied for a project approval form SBI( I told him, i will get HL only form SBI, after reading articles in Jagoinvester, Thanks to Jagoinvester for their precious articles) i believed him because he behaved very professionally(He is educated and worked for a consulting firm for more then a decade, making me believing he is professional) and i overshoot-ed the lawyers advice( i didn’t receive it for 15 working days) and made agreement and paid 20% of the property cost and then got a call form lawyer(actually lawyer couriered me the docs, but I didn’t receive them) saying courier was returned and he asked me to make a personal visit to his office.

The facts came into the picture with 10 queries( all of them are so simple like EC patta and couple of explanations) and i sent the same list to my builder and got promised, those silly queries will be answered in 5 days, and i waited for 15 days but no reply to lawyer from builder and after repeated follow-ups’(not with Mr. Professional, but with a staff in builders office) finally she went with answers and from my side i too gave the agreement copy for further evaluation and final advice from lawyer( as he is empanelled with SBI, it can be submitted for loan processing). The horrifying truths came out, he further raised additional queries and a builder cheating was projected. There are multiple problems in the land (it is total of 1.5 Acer).

1. Some part of the land was amortized with a PSU (not SBI) for 50L and he paid the amount in the month of July and obtained NOC (still the documents are under encumbrance) and attached the NOC with the documents and he is giving for customers for property verification. But when my lawyer made a background verification( as he has good networking with many bankers), it came to the limelight that he obtained loan again for 50L in the same bank after a month of time.

2. some part of this land is hereditary(legal heirs are 2 brothers and one sister) , sister didn’t sign the document and her brothers sold(here it is JV) the land to the developer, got her signature as witness.After some time she can go and fight legally for her rights on the property, and lawyer requested for a rectification deed and he objected and told he can provide a NOC(generally NOC is valid for 6 months of time, i really don’t know how NOC is valid in this contest)

3. DTCP approval is not obtained

4. There is difference in land available as per patta and land showing in project documents

5. Parent documents before 2004 are missing and told those can’t be retrieved

After presenting all the above(only critical are mentioned) queries, he tried to convince me and get my loan from some other financiers(of course i have a option to choose form PSU and NON-PSU), and offered some gifts (as he is planning to market his flats in Diwali offer such as free modular kitchen,( he increased the price of the flat by rs.200, but not for my booking, as I have done it earlier. Just to hold my booking he offered me this Diwali gifts)) and some other junk promises. I demanded for immediate cancellation of booking and refund all amount on the same day. However, I am in confusion state. If he clears all the above queries it is a great deal in that area and the price I paid was killer price.
I requested him to put all his words in a piece of paper (of course it is a judicial stamp paper of Rs.20, again Kudus to Jagoinvester for education me how to deal in such cases, especially with builders)Got a concrete promise to fix the queries in 15 working days else the entire amount will be refunded. 15 days passed and I have no communication from builder or from his office.On the final day I gave a call, asked him the status, and got a horrifying answer that he is still fixing the problems and when questioned deeply, got the terror answer that he did not start anything until date. Moreover, requesting me to wait for another 2 weeks.

I rejected his request and told him to arrange for cancellation deed and check, for the amount, and he rejected saying he will deduct rs.25 as per agreement. I initially rejected his check and told him I will collect the amount what ever after presenting the issue in front of consumers forum. Moreover, after short conversation he realized that I would make mess( i searched this property in internet and he also told me 70% of his customers are thru internet) if the total amount were not refunded. So guys please be aware and do a lot of background checking before investing your hard earned money.

Vultures are all around us in the form of builders, relaters and especially mediates or brokers or agents or what ever it is… (via)

Background Check of Builders before you purchase Property

It would not be fair to say that one should avoid small builders, but one has to be more cautious with the small builders compared to bigger ones. Here are the 5 things one should always check before they deal with a builder – small or big. This checklist will make sure that your pain is reduced later and the chances of getting in trouble will be minimised.

1. Enquire about their previously Completed Projects

You should always ask them directly about the previous projects they have completed. Better visit them too, and ask the locals and people living there about delays if any and the issues they faced. You should also search about those projects on internet and watch out for any grievances and complaints.

2. Check if they are part of some builders association

There are few associations and groups for builders community and there are codes of conduct defined for builders. Some of those associations are “Builders’ Association of India” (BAI) and “Confederation of Real Estate Developers Association of India” (CREDAI). Its always a good idea to watch out if the builder you are dealing with is a part of those associations or not. While you can’t say that not being a member is always a wrong thing, but you can always ask him why he is not a member. I would say a builder who is part of those association would be more serious and professional compared to other small time builder.

3. Check the rules incase of Delay or Cancellation of Project

You should always ask for the rules and terms and condition which will apply incase of delay or cancellation of the project. Ask them for an agreement copy even before paying the booking amount. Do not get too impulsive with the project and hurry. Watch “Compensation clause” which talks about the compensation paid to the buyer in case of any issues.

4. Search on internet for his review and past

Always do a thorough research about the builder and his quality of work on internet and different forums. While in general all the builders have some or the other bad reviews from someone, watch out that the internet should not be filled with bad reviews totally! In case you do not find any information or very little information about the builder, then you are mostly dealing with some new guy in town, who might be truly unprofessional. Avoid it.

Do you know someone who had dealt with small builder and was stuck with the situation or faced any issue? This can even happen with big builders. Share your experiences in comments section…

How Multi Level Marketing (MLM) schemes with Pyramid Structure works ?

Posted on by Jagoinvestor

Today we are going to talk about MLM or Multi Level Marketing Schemes which have a pyramid kind of model. For years and decades, these kind of schemes are active and a lot of people get trapped in these Pyramid Schemes and lose their hard earned money. In this article, we will see the common mechanism they work on and their characteristics. We will also create a dummy Pyramid scheme to show you the traps & pitfalls. Before we move ahead, get this fact that we are talking about those pyramid schemes which also have different levels of people one on top of other and where one guy pays money which gets passed on as reward to another.

Multi Level Marketing Plans

How Multi Level Marketing schemes work?

Multilevel marketing schemes are generally network based marketing schemes, in which a person has to add more people under him. The people obviously pay some money to “join” the business and then they add more people under them. In almost all the schemes, the person is incentivized for adding more people under them.

You all must have heard about the AMWAY business model, which is nothing, but a great example of Multi Level Marketing, while the business is legitimate and there is no fraud in it, still it also falls under a pyramid model. Even I have attended its meetings once when I was novice child :). The business model looked so easy, just pay Rs 5,000 to join the business and then keep adding more people to “business” and you get some percentage from the entire sales under your Tree. There are various ranks like Silver, Gold , Diamond etc., and the higher your rank, the more you make. Lot of people make money in it through legal way, and more you work harder , the money you can earn, but the point is , people who get in early make more money and the people at bottom struggle a lot.

Why most people lose money in Fraud Pyramid Schemes?

Guess what?!  A lot of people make money in these Multi Level Marketing business models, and they become the ambassadors of the business. They flaunt the cheques and the money they make and believe me, some of them are real!. They really do make money and we will quickly see more on that, but the point is, that the majority of the people lose lot of money and struggle in these kind of get rich quick pyramid schemes. And that happens, because there is a limit to adding people. You can’t add more people in the tree after a certain point and when the tree becomes bigger, than it’s trouble point, it’s reaches a  kind of saturation level when the biggest chunk of people who are at bottom lose all the money. Here is an example graph which will give you a good idea of what I am talking about.

How MLM or Pyramid Scheme Works

Example of SpeakAsia

You must have heard about the latest craze called Speak Asia Online! I will really not be surprised if you tell me that you were part of it! I will not be even surprised if you tell me you made lot of money too! That might happen if you started earlier! Because then, the scam was still in the making! If you joined at the end, you were at the bottom of the tree you lost your money. This is how it worked!

A person can join SpeakAsia by paying Rs 11,000 and becomes a “panelist.” He then starts getting 2 surveys per week and getting Rs 500 for filling up each of them. That’s around Rs 4,000 per month and 48,000 per year and that was how Speakasia was promoted by its member to lure other members. This was at the start and though the amount of money  coming IN was less than the amount of money which went OUT, and the whole model was unsustainable in long run, it was definitely sustainable in short term. Just think about it! Is it not easy to pay 10 smaller bakras if 100 bigger bakras join the next batch?

And after all that, it crashed! But still there are innocent people out there who claim that it was genuine and it worked for them. They are not wrong! It really worked for them and they made money, but that was part of the game. They wanted you to make lots of money so that you can bring more people in and then one fine day when they make a really big pile money that they can just vanish! Poof!

Breaking Relationships !

The biggest other bad thing about these pyramid schemes are how the relationships become sour and messed up when the person who is part of MLM tries to add all their friends and relatives into the MLM, suddenly they start looking at humans as “targets” , Here is one incident which happened with Shantanu 

I know about this as I faced these offers couple of times from my very close friends and relatives. And I know how hard it was for me to tell them “I am not interested”. Those who is a very extrovert in nature and also convince people more, like insurance agents can get success. But most people are in the other side only. In fact one of relative faced very tough challenge later on when people found his scheme a scam. Anyway, I think after such articles also these schemes will come in future and again many will trap in them also.

In one other incident, one of the Fraud scheme called as “Japan Life” made someone lose his girlfriend

Long time back in 2000, my girlfriend got stuck up in a similar scheme called “Japan Life”. They used to take 80,000 Rs. and will give you a magnetic mattress. She tried to get me in as well and I was almost about to get trapped but sanity prevailed and I escaped, however since I did not join, I lost my girlfreind forever. I remember this fraud came up in Star News and I could see so many people getting cheated. This was around New Delhi and surrounding areas

Some other popular Multi Level Marketing and Pyramid businesses which were actually a scam were GoldQuest, StockGuru , UniPay2U etc etc (add more name in comments section if you are aware about them). Moneylife has also done this story on Multi Level Marketing companies in Forex trading, Have a look at it.

Jagoinvestor MLM Scheme – Lets create a SCAM Plan right now

Let me know you how simple it is to create a pyramid scheme and it will look so attractive . You all know I have written a Personal Finance Book called “Jagoinvestor – Change your Relationship with Money.”

Now here is a scheme

  • Pay Rs 1,000 and become a member of the scheme
  • You get the book FREE on signup
  • Make a person join the pyramid scheme and get Rs 250 for each person
  • You can add any number of people to this scheme

You realize that if you add 4 people to the group, you will get a 1,000 bucks and a Free Book! So it’s extremely easy for you if you join the scheme early.

Let’s say 10 people join under me.

Level 1 – Add 10 people

So 10 people will pay 1,000 each and I will make Rs 10,000 total , and I will send back a FREE book to all the 10 people. I incur Rs 5,000 expenses and make a cool profit of Rs 5,000.

Level 2 – Add 100 people 

Now let’s see… Each of these 10 people persuade 10 more people under them, and 100 more people join the scheme. They will pay Rs 1,000 each to me;, that means Rs 1,00,000. I will spend Rs 50,000 for the 100 books , and I will be left with Rs 50,000. But out of this 50,000, I need to give a share to each member at level 1, for 1 person the incentive is Rs 250 , so for 10 people, the incentive is Rs 2,500 for each person at level 1, and because there are 10 people at level 1, I will have to pay Rs 2,500 to each at level 1, and I will have to share 50% out of 50,000, that’s Rs 25,000. But I still keep Rs 25,000 with me.

So now you can see, I made a total 5,000 from 10 people at level 1 and Rs 25,000 from 100 people at level 2. And each of the 10 person at level 1 made cool 2,500 from 10 people they added under them, they not only recovered their 1,000 back, but also got extra Rs 1,500 and a FREE book! Wow! This business model is amazing!

Level 3 – Add 1000 people 

So the business is expanding and the word is spreading and my book ambassadors are in the market advertising this scheme and showing the kind of money they are making and the free book they get! Dude! They also have a valid cheque with them! No fraud! . So the word has spread like wildfire now and everyone wants to join this business.

Now, lets say each person at level 2 adds 10 more people under them again, because the word is spreading about this awesome business. There will be 1,000 people at level 3, paying 10 lacs to me and I will incur 5,00,000 expenses. I will pay 2,500 to each person at level 3,  that means 2.5 lacs in total, but I will still keep 2.5 lacs with me.

Level 4 + 5 + 6 

Can you see, how it’s growing? And how people are making money? From 1 person to 10 people, and from 10 to 100 and them from 100 to 1,000? But what next? Level 4? Level 5? Level?

When this reaches level 6 , there will be 10 lakh people under this scheme and they will be paying 100 crores to me! . You guys are going to hate me at that level! . Because you will never see me again! . Neither will I send any more books to anyone!, Nor will I send any share to anyone. I will just run away and you wont be able to trace me! . Any person who would have joined in at the start would find it easy to grow and spread the business. But people at bottom will just not be able to do anything, they are the last batch of fools!

Real Life Examples related to Fraud Schemes

Krishna shares

During my College days there were 2 such schemes ( 7000/- & 1200/- each) introduced to me by my friends & asked me to join them. I explained them that they are highly unsustainable by using simple exponential formula (2^e). But still they thought i am a fool & not making money out of this wonderful Golden “Pyramid”. Thanks to God for that!!!. I just want to say that “User Pure Maths” before entering or dealing with any thing with your hard earned money. Be on your foot not on air.

Sam shares

In 2007, one of my good friend called me when i was out of station. “Sam, i have something great to share with you, when are u coming back? i cant wait to meet you etc etc”. I was kinda surprised and was very curious what he is gonna talk about. He took me to this office where many others showed cheques explained business model, asked me to buy some product and become a member. People were so promising that they will help me , let me grow & earn lots of money and all.. It was ‘Gold Quest International’. That day i made the biggest mistake of my financial life. They made me buy some Gold & Silver coin for Rs.38000 rupees using my credit card. After i joined i tried to reach out to some people in my circle and most of them are already part of it & others are not interested. To pay this credit card bill, i had to take a small personal loan. It was the initial days when i got into job and all these incidents made my financial position worst.

Sachin Shares

I lost 20 K in this MLM bullshit … it was with the name Cossets in Delhi . They arranged a huge pomp show in Siri Fort to show off the happiness of the people who had made money and became millionaires. There were multiple stores in Delhi where u cud purchase if u were a member Then some Ex army also got fooled joined in and invested smthng like 4-5 Lakhs his life savings got duped and then he made a case on the company . Phew Cossets was like GAYAB.

Suhas Shares

My brother was a victim of it late in 2002 in scheme(scam) called netkhazana.He lost around 17k at that time.And from that time I have got recommendations from freinds(?) and relatives(?) in to hell lot of schemes but never got into any because of the first bitter expereince. I suppose this schemes are gr8 if you have selfless people involved but that does not happen as the corpus grows to crores of rupees and people at top tempt to cut the goose.

Other Models of Scam

There are many other multi level marketing scams, which are not in a pyramid model, but they ask for money for some awesome investment based on some logic and then they really give back awesome returns to handful of investors, who spread the word about the scheme and them more and more people join the investment scheme and once it becomes very big, the person who started that scheme vanishes. The Govt is going to take some tough measures on these kind of fraudulent schemes. Here is a nice video which explains more about this.

Beware of these Get Quick Rich models

There are a hell of a lot of schemes and businesses running which show promises of making awesome returns from gold, stock market, real estate and many other kind of investments. They mostly will look really attractive and credible, but always remember that if someone is offering you anything better than bank fixed deposits, there is no doubt that there is some of the other risk involved. The bigger the potential return, bigger the risk.

Disclaimer : Note that we have just discussed how Network Marketing works and the basic mechanism. There might be various businesses and models which are making money, and might be good. This article just wants to bring awareness among people on the concept of pyramid schemes and they fool and loot majority of people in our country .

If you come across any Business like this, first make sure you check that its a member of India Direct Selling Association, which kind of gives a legitimate name and also they follow certain code of ethics. If its not part of this, I would say better stay away from it. Amway is part of it. So, not all Multi level marketing models are fraud, a lot of them are genuine also. Here is what Sunil shares about this

A Multi Level Marketing is different from Direct selling. Any company selling directly to the customer, removing all the supply chain management commissions behind, will be governed by Indian direct selling association, http://www.idsa.co.in (within India) and world federation for direct selling association, http://www.wfdsa.org . There are many companies like Avon Cosmetics, Amway, Oriflame, Herbalife, Tupperware etc.. registered under these federations. These companies work under the ethics defined by the IDSA or WFDSA and are very harsh on the people who dont adhere to these ethics. Many people reading this article will agree that the quality of the products they produce are amongst the best in the world. Many people are under the impression that these companies are similar to the other ponzi schemes.

Let us know what do you think about the concept of Multi Level Marketing and associated businesses. What is the biggest reason you think people fall for them and get trapped?

Best bank in India – With survey & Customer reviews

Posted on by Jagoinvestor

Which is the best bank in India? Is it yours ? In this article, we will look at the top 6 parameters which define a good bank and look at various Indian banks and how they fared on those parameters. The best way to find out how good a bank is to ask the existing account holders. So I ran a big survey on the topic of “Which is the best bank in India?” and a huge 2,418 people took that survey!

In the survey we counted how many people had a particular bank account and it was not a surprise that 76% of the market share was from the top 4 banks which were State Bank of India (SBI bank) , ICICI bank, HDFC Bank and Axis Bank . Rest 24% consisted of all the other banks combined. Other than this, we had also asked how long were their bank accounts . 77% of the bank accounts were at least 3 yrs old, which means that a person taking the survey had a fair understanding of his/her bank. Below is the graph showing the exact numbers

Indian banks market share

6 parameters of a Great bank

Banking is the core financial service any individual uses. There are hundreds of bank in India with millions of bank accounts and a person might have no other financial product or investment, but he will always have a bank account. One has to deal with banks all the time, be it credit card, home loan (Read Best Bank for Home Loan), auto loan, personal loans or any normal banking service, so one can not escape banking.

So its very crucial that one has a great bank that treats it’s customers well. So what defines a great bank? What we did, is define 6 parameters on which a bank can be judged.

1. Customer Care of the bank

For any issue we call our bank customer care, the quality of a bank customer care shows how much care a bank wants to take of their customers. Customer care is what you would need a lot of times and it’s of great importance in choosing a bank. This is where the maximum number of interactions happen.

2. Core/Basic Banking services provided by the bank

Core banking means the real banking services which are the base services. Facilities like cheque issue, money transfer from one account to another, Demand Drafts, Debit card issue, Interest paid on the account and other core activities. These are the services which have to be there no matter when, other advanced things are not present. These services form 90% of what you need from the bank. Ergo, these banking services are a must.

3. Advanced Banking services provided by the bank

Advanced services are those banking services which are over and above the core banking services. There are the latest technologies which the bank could have adopted. Some of the examples of these are providing IMPS money transfer service, Prepaid recharge and various other such add-on like services. They are “good to have” services, but not must have services. In this era of technology, it’s a prudent thing to have a bank which offers these kinds of services.

4. Online Facilities provided by the bank

The face of banking is changing, A lot of bank customers have totally shifted to online services. Its only the in the worst case scenarios that one visits the bank physically. Else, everything is done online . So do go look at the bank’s online facilities. For example, when I needed a Demand Draft for some purpose, all I did was to put a request to create the DD in my ICICI Bank through net banking and opted to collect it from the branch in next 2-3 days. I got a notification on sms and on email when the DD was ready and I could go collect it anytime. So the next time I passed by my bank, it took me just 10 min to collect it. No time wasted! There was also an option to get it delivered at my home at nominal charge. Its generally said that HDFC Netbanking and ICICI Netbanking is one of the best among banks in India. Things like these matter a lot in today’s fast paced world where you dont have much time to go to bank physically.

5. Transparency maintained by the bank

This is a crucial aspect. How transparent is your bank to you when it comes to charges, facilities, penalties and the offers it gives you on some services? Is your bank too opaque? Does it make life easy for you or tough? One simple example that comes to mind is regarding opening of a PPF account in SBI. There have been so many instances where the SBI bank officials have not been very transparent regarding the rules. Then there was one instance where Axis bank was not very transparent to one of our readers when taking a home loan and actually sold him a policy without his permission. So it really is a big parameter to look at, in a bank.

6. Overall Attitude of the bank towards its customers

And finally, at the end of the day, you have to look at your bank attitude towards you as customer. Does it really treat you as king or trash? How do you get treated when you walk inside the bank? How are you treated on phone with customer care? Does you bank understand that your time is precious and tries to help you, or just looks at you as just another target?

Which is the best bank in India & their rankings ?

In the survey, we had asked from people the 3 things

  • Name of their bank
  • How old is their banking relationship
  • How do they rank their bank on these above 6 parameters

Based on the 2418 answers in the survey, we have created the following result table which shows you how well each bank fared on each parameter. We will look at total 25 banks , the top 10 banks in India and then next 15 banks . “Very Bad” equals 1 and “Very good” equals 5 marks.  The table shows the average marks obtained by a particular bank . At some places you can see the green background which shows that the bank was in top 5 position. This is done for top 10 banks and next 15 banks also .

Best Banks in India

Top Indian Banks as per Survey

If you look at the above table, and look at the banks which have got the average of more than 4 marks as total, we get total 14 banks with more than 4 marks. Note that the names are considered as per survey results only and based on real feedback.

  • ICICI Bank
  • HDFC Bank
  • Axis Bank
  • CitiBank
  • IDBI Bank
  • Kotak Bank
  • Corporation Bank
  • Oriental Bank of Commerce
  • Syndicate Bank
  • Andhra Bank
  • Yes Bank
  • Standard Chartered Bank
  • Karnataka Bank
  • HSBC Bank

15 Real life Experiences from Bank Customers

Here are some of the comments made by people on their banks in the survey. I am putting some of them here for you to read.

Rakesh say’s – “I observed that most of the times in ICICI Bank, customers are taken for granted…I dont see it as an attitude problem with the individuals working there…it has happened in many of the branches I visited…Infact their Bank by Phone assistance is more courteous than the actual working class”

Aditya Karnik says – “One of the branch of HDFC Bank in Nashik city was having some issues with system and hence all cash transactions were stopped. Executives at the counter couldn’t give satisfactory answers as to what led to the issue and rudely asked customers to go to some other branch within city to transact. Well I can understand systemic issue but communication could have been better.”

Mahesh says – “Once my mother, aged 50, had gone to Union Bank of India, Chembur Branch for submitting a form for FD and by mistake she had signed below the dotted line. For that one of the lady staff over there humiliated my mother in front of everyone. My mother came home with a teary eye. We were so pissed off by the way they treated such an elderly woman that we shifted our account to another branch. Some one from the bank said that everyone in the bank is fed up of her temperament and irrational behavior.”

Arindam says – “A recent incident occurred when I need my new address to be updated. Normally, Customers are asked to visit the Bank to update all the records (In the year 2012). However, in this case, I was asked to raise a Service Request through online net banking and the issue has been resolved within 24 hours and I have received my current month’s e-statement with the new address. That’s a fabulous support by ICICI Bank.”

Pradeep says – “I asked for Home loan amortization through e-mail. They did not reply. After 2-3 e-mails, I wrote a strong e-mail to DGM and then got a reply from SBI. Most staff do not know simple rules and regulation on Home loan prepayment. They are also ignorant of latest decisions. This is terrible.”

Nilufer says – “Whenever we need to contact the servicing branch of HDFC Bank, their numbers are connected to the customer care numbers, where 8 out of 10 times there is only a machine talking to you.. There is no one in person who one can talk to about an urgent query.. this pisses me off no end… At-last i had to call one of my previous contacts (who has now got transferred from my branch) on his cell, to get the info on my query. In an emergency, only a machine talking to you, is no 24×7 service which these banks claim to give.. Forget after office hours, even during office hours we dont get a human being taking care of us on those lines.. atlast i had to call the branch manager on his cell to get things sorted out… pathetic customer care service where only a machine is left to service its customers with that no ending options that it keeps blabbing out…” 

Subradas says – “Whenever I talk to bank officials they try to bullie. Either they knowingly do it or because of their ignorance but they do it. They try to bluff at the first go. It seems that Kotak Bank has recruited the worst manpower of the industry. They have tried to shift/do most of the work on back end making the process time consuming. They have delegated hardly any power to their executives sitting in the branch. To close an account it may take 7 days to more than a month where as it takes less than an hour in most of the PSU banks.”

Devendra says – “While my son was proceeding to the United States for higher education, I wanted a certificate from SBI that i could meet more than Rs. 8 lakhs for his studies. Since I was earning more than this amount and also had money in my account, I thought it was quite easy task. Yet the bank refused to issue the  certificate. I then approached Corporation Bank and got the certificate.”

Sumit says – “They had called me to give free Financial Planning advice from a CFP. The fixed a time for meeting and the adviser did not appeared on that day. I did not expected this from a bank like HDFC. Post that, there has been few more appointments taken and shuffled and I haven’t met any adviser yet. (incident took 1 month back.)”

Rahul says – “I wanted to prepay the Education loan taken from Andhra bank, Howrah branch. I had to travel to the branch more than 10 times to get my loan account closed even after making the full payment. The total process took me over 3 months.On the last day, i sent my brother with an authorized letter to collect the hypothetical LIC policies. They confirmed earlier that they would deliver it to him but denied on the spot. Ultimately, i had to rush to the bank in high fever to get those documents. I literally scolded them at this behavior. Another big dismay was the interest rebate- The loan policy document mentioned that a 50 bps rebate in overall interest would be allowed if interest payments are regular. To regularize interest payments, i opened another savings a/c in the bank through which they can collect interest payments every month.

I also gave written application for direct debit from my savings a/c to loan a/c and ensured that there was adequate balance in the savings a/c at all times. Yet, i was not given any rebate in interest. As mentioned earlier, i had to scold them on the last day- you can easily understand the scene at that point of time. I preferred to get the a/c closed asap irrespective of the interest rebate. Meanwhile the banks Branch manager and Loan dept. staff was changed twice and the position remained empty for more than 6 months.

Anand says – “I required a locker, hence requested my Banker (BOB) for the same which they ensured to allot as soon as they get any vacancy. Within a few days i got a call from them confirming the availability of the locker and asked me to come to Bank for fulfilling the formalities and accordingly allotted me the same forthwith.I was really happy with their promptness.”

Gopal says – “Citibank gives you update almost immediately regarding the tranactions taking place in your bank account. Once my cheque was dishonored due to the year I placed on the cheque. The concerned branch immediately called me and I made the payment to the party by other channel.”

Ravindra says – “Several years ago, the then Manager of the IDBI Bank branch, where I have my account was habitually rude with his staff. He used to rebuke them within the hearing of customers. Naturally, this caused us considerable discomfort, as would have to deal with these staff within minutes after being forced to overhear the unpleasantness. I sent an email to the then MD, who sent a senior officer to enquire into the issue. The Manager was more discreet after that, and the staff worked better when the stress and tension was reduced.”

Ramprasad says – “Karnataka Bank is a good bank, but their customer service at the branch level or over phone is among the worst. I had a problem with using the Internet Banking Service and had to reapply for the passwords but even after i was charged Rs50 for internet banking password re-issuance the passwords never reached me or the bank branch. They told me to reapply once again, and the branch was very non-cooperative in their service including the branch manager.”

Karthik says – “Most of the times I didn’t have to approach their customer care. The times I had to, they were extremely courteous and quick in resolution. My first card was rejected because I didn’t have a CIBIL score then, having come fresh out of college. I was able to speak and reason with their Regional Manager, Credit and get my application application approved. Very progressive and sensible rules! at CitiBank”

Conclusion and Disclaimer

The above survey will help you take a better decision in choosing the best bank for your banking needs. Note that the above survey was taken by 2418 people who are the readers of this blog. This survey only represents the net savvy population of the country and it should not be taken as a representation of the whole country. The views of people outside this blog might clash with the findings of this survey. Also the above survey only focuses on the banking aspects and not things like home loan, personal loan etc.

Here’s a crucial aspect of the survey you need to understand. The above results are average of many views, hence its natural that there are many bad experiences with the banks which are considered best in the category and there can be many good experiences for those banks which are not part of these top banks in India.

We are soon going to add a full video course on banking in our jagoinvestor wealth club. Incase you feel you need to understand banking terms and terminologies, you should join the club.

What do you think about this survey? Do you agree with the results or not? Was it useful for you ? Do you feel that yours is the best bank in India ?

CIBIL Score 2.0 – An Improved version of Credit Scoring

Posted on by Jagoinvestor

CIBIL has recently come up with Cibil Transunion Score 2.0 which it calls an improved version of the CIBIL Credit Score. This new Credit Score will help in a better identification of new borrowers (having credit history of less than 6 months) and help classify them into risky and not-risky categories.

More about CIBIL Score 2.0

The biggest change here is that the CIBIL Score 2.0 is for new borrowers who have a short credit history, i.e. 6 months. So now there will be two classes of borrowers

1. Less than 6 months of credit history 

Any borrower having less than 6 months of credit history earlier used to get a score of 0. But with CIBIL 2.0 , they will get a score in between 1 to 5, where 1 represents high risk of default and 5 denotes least risk of default. This score between 1-5 will depend on parameters like 90 days overdue in any given month (for last 24 months), credit seeking activity (number of loan enquiries you make), type of credit (secured or unsecured) and the demographic (age , location etc.)

This move is going to help a lot of people who are very new to credit and have recently taken credit cards or have taken some kind of loan and need another loan. There have been instances that due to their short credit tenure, they didn’t have any credit score and a lot of bank rejected their applications for loan just because they didnt have one.

2. More than 6 months of credit history 

For those who have more than 6 months of credit of any kind, for them the credit score will be in range of 300 to 900 score, just like earlier. However, it seems like this scoring method will consider only higher scores like 800+ as the better score. As per this firstpost article, it says that an old score of 751-800 will now be equivalent to something like 662-697 in the new score version .

For borrowers with more than six months of credit history, the old scoring criteria 300-900 remains, but for the lower score you get. For instance, the old score of 751-800 will be equal to 662-697 in the present one.

The newer version is initially made available only for CIBIL’s 862 member banks and financial institutions, after which it will be available for the customers as well, he said, without giving an exact timeline for the completion of the process.

Cibil Score 2.0 is a better Score

This new CIBIL score is said to be a better indicator of someone repayment capability. It has been designed keeping in mind the Indian market and the way consumer behavior is changing from last some years.

 “CIBIL TransUnion Score 2.0 predicts risk more powerfully as this scoring model has been customized for the changing Indian market and consumer behavior. This scoring model will enable banks to better identify good customers, thereby enabling them to provide credit to more consumers and increase credit penetration and financial inclusion in the country.”

– said Mr. Arun Thukral, Managing Director, CIBIL

The new CIBIL score is tested by the company old random data and it seems to identify the risky customers in a more better way. Here is a snapshot of results I found out on transunion website. You don’t really need to understand this graph, just get that this identifies risky customers in an improved manner.

Old vs New CIBIL Score 2.0

Now, The credit institutions that have adopted the new scoring model will decide on customer’s loan application based on this new score. So it would be interesting to watch out the credit score banks ask for giving loans .

What do you think about this new cibil score 2.0 and the changes which has taken place ?

We are happy to share that we have got a great response to our newly launched Jagoinvestor Wealth Club some days back . There are already 140 members and we are giving the discounted pricing to only 300 people . We are excited to share that we are moving towards our vision of creating a great dedicated closed community. Join the club if you feel you need to be present there.