CONTENTS
LETTER
ISSUE CONTENTS
27 December 2012
FROM THE
EDITOR
Tax-Free
A Different Bond
Bonds
T
ax-free bonds are back on offer. As many as 10 government companies have been authorised to raise a total of Rs53,500 crore by way of tax-free bonds in FY12-13 compared to Rs30,000 crore issued last fiscal. These issues will be in the market up to March 2013. Although the coupon rate is lower this year, they offer a good investment opportunity for those in highest tax bracket and possibly to those in the 20% bracket as well. For those in the 30% tax bracket, post-tax returns on tax-free bonds would be higher by approximately 1.5%pa compared with bank long-term FDs. Apart from tax-free bonds, if you’re simply looking to stack your cash for the time being, until you find a suitable opportunity, you could consider liquid funds or ultra-short term schemes; in our Fund Pointer section, we analyse the best options. In her Crosshairs section, Sucheta Dalal talks about how SEBI’s effort to reign in Sahara group have been in vain with the Supreme Court’s surprise decision to give more breathing room to Sahara. The bizarre financial claims of the Sahara group, just before the Court hearing, appearing as a double-spread advertisement in every major newspaper has escaped the apex court’s attention. In her Different Strokes section, she questions whether or not the government of India should throw its weight behind Indian corporates doing business abroad in the light of the GMR group’s debacle in Maldives. Consumers in India are lucky if they get away without being taken for a ride. V Raghunathan writes about a harrowing reallife story of an elderly woman in Bengaluru whose land has been taken away by the state; Dr Hegde recounts the tale of a rapacious hospital in Chennai that extracted money from a hapless patient by scaremongering. Moneylife Foundation commemorated the birth anniversary of the late Dr Verghese Kurien at an event that had eminent personalities talk about positive social change to a packed house. The Foundation also hosted yet another successful event at Mangalore. We have a hectic schedule slated for this winter season: more RTI workshops, a session on the draconian IT Act and implications for free speech, a session on wills & nomination and many others. Debashis Basu MONEYLIFE | 27 December 2012 | 10
SHOULD YOU GO FOR IT?
30 Cover Story
Tax-free Bonds – Should You Go for It? Government companies are coming out with Rs53,500 crore worth of tax-free bond issues. While the rate will be lower than what was offered last year, should you still go for it instead of relying on bank FDs?
20 Supreme Court Shocker: Sahara Gets another Two Months; Tall Claims: Sahara Group’s Bizarre Allegations; Property Prices: Is RBI Serious about Forcing Prices Down? DIFFERENT STROKES
HDFC Bank To Pay Rs55,000 as Compensation; Section 66(A) To Be Used Carefully; Launch of E-court Fee Payment System; Big Brother Is Watching You; Railways To Pay Rs60,000 for Theft of Passenger’s Purse
14 Your Money Provident Fund: EPFO’s e-Passbook; Mutual Funds: New KYC Norms; Insurance: Housewives as Reliance Insurance Agents!; Equity: RGESS Notified; Banking: Dial *99# To Check Balance, Two-thirds of Bank Deposits Have No Insurance Cover, Signature Mismatch on Your Cheque an Offence; Loans: Festival Offer Extended
16 Current Account Focus Is the Key: Multi-tasking does not really work
17
Loose Change
Moneylife Quiz; Sound Bites: Vijay Kamble, senior leader NCP; Press Council of India chairperson Markandey Katju; Kapil Sibal, minister; Sushma Swaraj, leader of opposition Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.
LEGALLY SPEAKING
& Worst Fund 26 Best Schemes
Court Corrects 54 Supreme Itself after 14 Years
The best three and the worst three schemes over the past three years, under different categories
In 1998, the court had held that you could not file a case on second dishonour of a cheque, if you had not acted on the first default. A new SC order changes this
INSURANCE
s 22 India’ Enrons?
27 Insurance Trends
Will cronyism dictate our attitude to our tiny neighbours, while we are pressured by rich nations to open up our markets?
– ULIP: Bajaj Allianz Life Assure – Travel Insurance: ICICI Lombard International Travel Insurance – Complaints: Reliance Life Tops the List
EARNING CURVE
for 56 Lessons Believers Trust in equity markets is low. What should investors do?
MUTUAL FUNDS POINTERS
Short-term or 24 Ultra Liquid Schemes? Looking to stash your cash for a short period? Jason Monteiro explains the choices STOCKS
13 Your Interest
FUND FACTS
36 Street Beat – Aditya Birla Chemicals – Rural Electrification Corp STOCK PERFORMANCE: Our Report Card
SMART MONEY
To Pick 28 How Stocks Better Some commonsense ideas for the patient long-term investor AUTO
48 Track Me Vehicle tracking devices enable consumers to ensure security and track cars in case of theft
Wait & Watch
42 Popular Picks
Hospitals often diagnose fake critical illness or serious injuries just to loot hapless patients
Unstable Foundations
43 Which Way Market looks ahead but how far?
46 Medium Term Atul Auto rocketed 19%, Colgate-Palmolive went up 9%, while Supreme Infrastructure tanked 7%
– Pulse Beat: Medical developments from around the world
GSK Consumer Healthcare zoomed 25%, Crisil shot up 11%, Gujarat State Fertilizers & Chemicals dipped 1%
– After successful seminars conducted across India, Moneylife Foundation, with the support of Indiabulls, conducts its flagship event in Mangalore – The star-studded event commemorated the birth anniversary of Dr Verghese Kurien with lively interactions
– 2nd RTI Workshop for Beginners
CONSUMER ALERT
52 Property Rights Mirage The harrowing story of an elderly woman highlights how easy it is for a genuine owner to be looted and that too by the State! AIR TRAVEL
47 Long Term
58 Moneylife Foundation Events
HEALTH
50 Fakery Syndrome
40 Value Picks
EVENTS
53 Meals in the Air Meals on a plane were once a norm. Not anymore. A lowdown on how you can get one
BEYOND MONEY
through 66 Empower Education Udaan India Foundation believes in providing equal opportunity through education to children from disadvantaged backgrounds
DEPARTMENTS Letters............................. 4 Book Review.....................57 Money Facts.....................63