CONTENTS
LETTER
ISSUE CONTENTS
7 February 2013
FROM THE
EDITOR
Mutual Funds: MFs Line Up for RGESS Offers; SEBI Notifies Norms To Monitor Mutual Fund Distributors; PSU ETF; As the Market Rose, Investors Exited,
Happy Anniversary!
Banking: Banking Ombudsman Scheme May Be Widened
O
ur Cover Story by Sucheta Dalal is about a topic that is rarely discussed in the mainstream media—the poor handling of investor complaints by the market regulator Securities Exchange Board of India (SEBI). As usual, we have comprehensive treatment of the topic, with real-life cases where investors have been given the short shrift by the regulator along with a detailed analysis of what is really wrong with the system and a survey of investors who have used SEBI’s grievance redress system. You will be startled with the regulator’s apathy. Touching upon the theme of regulation, or the lack of it, Sucheta explores further in her Crosshairs section the poor quality of disclosures by the regulator itself, when it has been preaching the virtues of disclosure-based regulation. It refuses to reply to RTI queries easily and was suspiciously keen to hide the names of those involved in the insider trading of Reliance Industries’ scrip. For investors, a fixed deposit is the most preferred option to keep their capital safe. However, there’s a financial instrument that does a better job—liquid schemes from mutual funds. Most investors are oblivious to their superior post-tax returns. Liquid schemes are also more flexible, as they have no lock-in period. Turn to page 22 to find out what our research says. Moneylife Foundation will cross a new milestone—it will complete three wonderfully active years during which it conducted 148 seminars and events and registered over 19,000 members, making it one of the fastest-growing NGOs in the country. It is now the largest investor organisation in India, by membership and area of activity. To commemorate this landmark, the Foundation is hosting Vinod Rai, Comptroller & Auditor General of India, who will talk about accountability in government. We would appreciate your presence on this special occasion on 15th February. The best part is that it’s free! Do register before it’s too late! You have probably noticed that we have made several changes to our magazine. We have a three-page section on consumer issues and a section on stocks with a sharper focus. We’d love to know your response to these changes. Debashis Basu MONEYLIFE | 7 February 2013 | 4
20
Your Money
INSURANCE
44 Insurance Trends
s 57 SEBI’ New Ideas
– Pension: ICICI Pru Shubh Retirement – Pension: LIC Jeevan Nidhi – Endowment: Edelweiss Tokio LifeSave n Grow & Life-MultiGain – ULIP: LIC Flexi Plus – Fine Print
SEBI’s consultative paper on corporate governance redefines the role of independent directors
MUTUAL FUNDS POINTERS
22
Do Liquid Schemes Beat Bank FDs?
24 Cover Story SEBI, the market watchdog, displays frigid apathy in addressing investors’ complaints. It pays no attention to serious allegations and gives little time to the investor associations it has accredited. When questions are asked, it covers up information and protects everyone but the common investor it was created to protect. Whose side is it really on, asks Sucheta Dalal
An analysis of liquid schemes versus bank deposits over a period spanning more than 10 years. Which delivers better post-tax returns?
SMART MONEY
13 Your Interest Baggage Snafu: Lufthansa to pay Rs50,000; LPG Portability: Consumers can now switch their dealers; SEBI imposes Rs7.5 lakh fine on sub-broker
14 16 Different Strokes Mandating mindless reporting and training rules to ensure good governance is not a substitute for effective enforcement
18
Plans & 33 Direct Pass-backs Commission-free ‘Direct Plans’ for mutual funds may turn out to be less attractive than they appear
STOCKS
Lead by Example: SEBI & Disclosures; Consensual Suppression: Orders To Hide Transgressions; Good Governance: Outsiders Can’t Be Insiders; Burying Scams: Compromised Investigators
AUTO
46
Tinted Windows
The bus where the gang-rape took place had tinted windows. The Supreme Court has banned it but VIPs still use it
SEBI vs Investors
36 Street Beat – Elgi Equipments – Unquoted: KCCL Plastic
38 Which Way Is the bull market maturing or consolidating?
CONSUMER ALERT
Moneylife Quiz 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.
Amara Raja Batteries shot up 15%, Yes Bank jumped 7% while Marico ended flat
40 Value Picks Earnings Season
EARNING CURVE
58 Value Works – Buffett Was Wrong – Hi IQ, Lo Cost
ML FOUNDATION EVENTS
is conceptually 59 “UID awed, dangerously structured and ignorantly applied”
of Energy 48 Cost Efciency Only heavy users of ACs are sure to recover the extra money they shell out for an AC with a 5-star energy rating Consumer Interest: – Trai’s recommendations on de-activation of unused SIMs by March – Diagnostic centre fined for wrongful HIV+ diagnosis – NCDRC agrees that insurer must pay for ‘non-surgical’ procedure
HEALTH
Pressure 52 High Drug Sales Hypertensive drugs can be harmful, as shown by some studies – Pulse Beat: Medical developments from around the world
39 Long Term Current Account
LEGALLY SPEAKING
TRAVEL
Lanka: 54 SriStunning Surprise Naveena Israni explores the beaches and the wild side of this island nation
Moneylife Foundation held an exclusive session on how UID is creeping into our lives and compromising our rights
BEYOND MONEY
Those 66 Helping Disabled by Disasters Saritsa Foundation assists people with disabilities caused by disasters
DEPARTMENTS Letters ............................ 8 Book Review ....................60 Money Facts ....................63