CONTENTS
LETTER
ISSUE CONTENTS
19 April 2012
FROM THE
EDITOR
A
Debashis Basu MONEYLIFE | 19 April 2012 | 10
SAVING AND INVESTING
54 Earning Curve
Coal-gate Scam: Obtuse policies? Bank of Rajasthan: SEBI’s dubious logic; Madhavpura Bank: Facing liquidation; #adswedontbuy: Speak up, says Shekhar Kapur
Misleading Savers mitabh Bachchan, Sachin Tendulkar and Irfan Khan, representing insurance companies, assure us every day that it takes only a few minutes to ensure the safe and secure financial future of our loved ones. Often, the reality is that we are sold products we don’t need and, at such times, the insurance company is quick to blame the agent. But what about misselling by insurance companies themselves? Our Cover Story by Sucheta Dalal and Raj Pradhan presents the chilling reality of what can happen when a gullible customer walks into an insurance company’s office. We hope our readers will be more aware of insurance mishaps after reading this piece. In the Different Strokes section, Sucheta highlights how our regulators aren’t doing what is required to protect savers, especially like the victims mentioned in the Cover Story. In the Crosshairs section, she talks about the ‘coal-gate’ scam, SEBI’s leniency with Bank of Rajasthan and the Ketan Parekh scam. In our Fund Pointer section, we highlight how adding gold to create hybrid mutual fund products has not really led to great performance, as we had suspected. Veeresh Malik, our auto expert, highlights the discounts available on luxury vehicles, the helmet rule and the things about your car you should be concerned with, in the coming summer. Another columnist, V Raghunathan points out that in their zeal to launch new products, foreign car manufacturers are not paying attention to standardisation (or homologation). In his health column, Prof Dr BM Hegde laments how health continues to get short shrift in Union Budgets and also shares the latest updates on health. BV Gokhale highlights how chelation as a treatment for heart diseases is a better option than medicines, stents and bypass surgery, in many cases. Moneylife Foundation continues to grow by leaps and bounds and has reached the milestone of 10,000 members. We thank our readers for being a part of this wonderful journey. We encourage you to spread the word and bring your friends and relatives to be a part of this family. A major event hosted by the Foundation last fortnight was an address by India’s chief election commissioner Dr SY Quraishi on democracy and fair elections. He spoke to an auditorium packed to capacity with voluntary groups and citizen activists. You can watch this and all other major programmes on www.youtube.com/moneylifetv
20
If two mutual funds offer widely different asset allocation, what is a saver supposed to do?
DIFFERENT STROKES
22
Regulation Vs Savers: Fuzzy Logic
Regulators in the financial markets still don’t get what savers really need SMART MONEY
28 Cover Story This Can Happen to You!
Vs Bond 24 Bonds Funds Is it better to invest directly in bonds?
26 Hybrid Funds
13 Your Interest
Adding gold to mutual fund displays herd instinct, with random results
14 Your Money Small investors: Come back; PPF interest rates go up; Yatra.com’s new card; ICICI Bank Sapphiro; SBI: Customers can switch to lower rates; Money order losing charm; No need for signature attestation; Cheques valid for 3 months; Locate inoperative account holders; ELSS better than PPF, NSC; RBI cancels co-op bank’s licence; Taurus Twin Advantage Fund; AI’s mobile phone booking service; Federal Bank’s real-time fund transfer service
18
Current Account
Mamata Banerjee: Deranged Utopia
19 LOOSE CHANGE Moneylife Quiz; Soundbites 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.
Medium Term
Supreme Infra gained 13%, FAG Bearings rose 6%, while Carborundum Universal ended flat
58 Moneylife Foundation Events – A seminar on electoral reforms crucial for free & fair elections addressed by chief election commissioner Dr SY Quraishi
Long Term
Godrej Consumer increased 7%; Hindustan Unilever rose 5%, whereas Automotive Axles ended flat
FUNDS
Many people implicitly trust insurance companies. Sucheta Dalal & Raj Pradhan present you the chilling reality of what can happen when a gullible customer walks into an insurance office
Delhi HC summons telecom companies; Poor state of education; Water wars by 2040; File FIR online, soon; Facebook whip cracks on employers
STOCKGRADER 42
EVENTS
STOCKS
38 Street Beat Britannia Industries: Healthy sales; Jubilant FoodWorks: Good spread WHICH WAY
41 Grinding On Budget 2012 has ensured that bulls and bears will continue to fight it out without much success INSURANCE
44
Insurance Trends
– Many products fail the tax test – Budget cheer for healthcare – Vatsalya Jeevan Bima – New Moneyback insurance plans – Fine Print: Service tax impact on life insurance plans; IRDA draft guidelines on orphan policy; Are insurance personal details being sold?
AUTO
46 Discounts Galore The effect of the Budget on automobiles has been discussed in other forums but here is the buzz on the street and in dealer stockyards
– A seminar to understand how Budget 2012 will affect business & personal taxes
OPINION AIR TRAVEL
48 Plane Truths Without a sensible transport policy, aviation industry faces stunted growth, argues AJ LEGALLY SPEAKING
Homologation, 61 Better Please Foreign car companies must be asked to make all aspects of cars as per exact Indian driving standards, known as homologation BEYOND MONEY
Cheer for 50 Little Senior Citizens
for 66 Toys all children
The Budget is not merely an income and expenditure statement, but much more than that
Started in a small restaurant in Mumbai, Toybank aims to provide toys to under privileged children, Alekh Angre reports
HEALTH
Works 51 What Better – Heart disease therapy – Union Budget & health – Medical developments from around the world
DEPARTMENTS Letters............................. 4 Book Review.....................56 Living .............................62 Money Facts.....................63