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As a customer, if you have any complaint against your bank and are not satisfied with the bank’s response, there are various options available

Last week, the Reserve Bank of India (RBI) asked banks to be more responsive in protecting customers from fraudulent transactions. In a notification on customer protection, the apex bank stated the guidelines and timelines for banks to resolve grievances regarding online frauds.

As a customer, if you have any complaint against your bank, the first step is to contact the bank and register a complaint. Grievances such as unauthorized electronic transactions, mis-selling of insurance and mutual fund products, loan and deposit, and mobile banking transactions can be raised at your bank.

But what if you are not satisfied with your bank’s response? In that case, you have two options: you can go to the banking ombudsman or take the bank to court.

Banking Ombudsman
If you get an unsatisfactory response from your bank and want to escalate the issue, you can approach the banking ombudsman. It is appointed by the RBI to resolve customers’ complaints regarding banking services. Currently, there are 20 banking ombudsman centres in India. To file a complaint with them, you need to have proof that you have already filed the complaint with your bank. Also, you must reach out to the ombudsman within 1 year of the action taken by your bank. The service is free of charge. 

The RBI has suggested a format in which to file the complaints. However, a complaint can be filed with the ombudsman in any format as long as all the relevant information is mentioned. You don’t have to adhere to the RBI’s format. But, what do you do if you are not satisfied with the ombudsman’s decision as well? Then, you have 45 days to appeal before an appellate authority, which in this case is an RBI deputy governor. 

Consumer Court
You can also approach a court against the bank. Here too, you need to have proof that you had raised the matter with your bank. If you had approached a banking ombudsman, you need to have the related documents too. Depending on the amount of financial damage, you can file the complaint before a District Consumer Disputes Redressal Forum, a State Consumer Disputes Redressal Commission or the National Consumer Disputes Redressal Commission. When you approach a court, ensure that you have evidence against the bank. The complaint must be clear and precise. You can fight the case with or without a lawyer. And unlike with an ombudsman, a fee is charged here depending on the amount in dispute. 

Source: LiveMint

Keep in mind the interest rate, remaining tenure and tax benefit before deciding if it makes sense to repay the loan principal amount

If you are continuing to pay equated monthly installments (EMIs) on a home loan and wondering if it makes sense to repay the principal rather than continuing it, keep in mind these three checks before making a choice.

Interest Rate
As a thumb rule, continuing a loan makes sense if your interest rate is lower than the potential return on investment for the lump sum. Let’s say, you have Rs10 lakh left to repay. If you use this for repayment, you save on an annual interest cost of say 8.5%. Now, if you don’t repay the loan, you can invest the Rs10 lakh in other securities. If there is an investment opportunity where you can earn more than 8.5% per annum, assume 10%—it will make more sense to utilize the corpus towards the investment rather than repayment. By doing so, your net result is a gain; in this case, it’s an annualized gain of 1.5%. You earn 10% on the corpus and utilize 8.5% out of that for the EMI; rest is yours. By repaying the loan in full, you miss the opportunity for higher returns.

Remaining Tenure
If the loan has less than 5 years to finish, chances are that you are repaying more principal with each installment rather than interest. Interest proportion in an equated monthly payment is on reducing balance. The question of early repayment is more relevant when your interest component is high. Also, it could be that the alternative investment you want to make with the lump sum is in equity or a combination of equity and debt to earn more than the interest you pay. However, equity-linked returns are usually not linear, which means you are likely to see desired annualized return only if you remain invested for at least 5-7 years. Hence, don’t substitute such an investment instead of the repayment if time to repayment is only a few years.

Tax benefit
A housing loan gives you a tax benefit on the principal repayment and on the interest repayment (if you have the possession). To that extent, if you are claiming tax benefit, your net annual cost of the loan is lower. Make this calculation and then assess if you will be able to earn more per annum by investing the lump sum; if not then it makes sense to repay. Other than these above considerations, consider pre-payment fee or cost if any.

Source: LiveMint

Let’s smash some of the excuses that people give for not saving and investing and talk about how to become financially independent

The biggest hurdle to financial security is your reluctance to start saving and investing. Here are some common justifications people use to explain the delay. Identify your excuses and see how you can work around them so that you don’t put your goals and needs at risk.

“It is complicated”
Investing may seem to be a complicated process, with many formalities for each type of investment or service. But when you break it down, broadly the same set of formalities have to be followed: you need to establish your identity and provide proof of address, provide your bank account details to route payments and receive investment proceeds and fill up the application form related to the investment or financial service. The central Know Your Customer (KYC) process to establish the identity and address of investors makes complying with the KYC norms a one-time exercise across the financial sector. Application forms typically require standard information to be provided and include details such as name, address and contact details, age, status, bank information and such. Compile this information as a one-time exercise and you are all set to make investments.

”I don’t have the skills”
The need to identify, evaluate and select investments and financial service providers may be a barrier to people with limited skills and information in this area. But it is possible to keep it simple so that this does not become an obstacle to investing. Use the goal horizon to decide how your investments should be distributed between equity, debt, real estate, gold and other assets for growth, income and liquidity. Once you determine the asset allocation, select simple vanilla products where the evaluation needs are minimal in each category. Go with bank deposits and savings schemes of the government, and bonds with superior credit rating for debt products. For equity investments, stay with lower-cost index products where you earn returns in line with the market without the risk of selection and expectations. Sovereign Gold Bonds issued by the Government of India are a convenient way to invest in gold without the storage risks associated with holding physical gold. The bonds have a fixed tenure (the 2017-18 Series I had a tenure of 8 years) and are denominated in multiples of grams of gold with a basic unit of 1 gram. The price at which gold bonds are issued and redeemed reflect the prevalent market price and the bonds also carry a nominal coupon paid twice a year. Limit real estate to residential needs and postpone investment in it till the finances are more secure. Make changes to the asset allocation to reflect changes in the needs and goal horizons, and don’t let recent return numbers or market movements influence you. Stay with the basic products till you become better acquainted with the risks and returns in investments. After that, move to managed investments such as mutual funds for better returns. One way to make better investments, without the long process described above, is to use the services of a financial adviser: to make your financial and investment plans.

“My savings are insignificant”
If your goals are important to you then you need better control over your expenses and income. Start with a budget and assign at least 10% of your take home income to savings before you meet expenses. Stay with the budget. Even if you fail initially, build the discipline to live within your means. No savings is too small to invest. Most investments—including deposits with banks and the post office, small savings schemes, mutual fund investments and stock market investments—can be made with amounts as low as Rs1,000. Apart from reducing expenses, also explore options to increase your income. Use the skills and talent you may have to generate additional income in your spare time. Start small and set targets to increase savings at steady intervals.

“I have outstanding debt”
Debt and investments both have claims on your income. You need to deal with the debt because it can corrode your financial situation. But ignoring investments will leave you unprepared to meet the future. Balance and prioritize between the two. First, contribute to mandatory savings such as the provident fund and retirement account to the maximum extent possible. Next, deal with high-cost debts such as credit card debt and personal loans on an emergency basis. For other debts, especially lower-cost loans with tax benefits, such as home loans and educational loans, focus on meeting repayment obligations rather than on closing them early to have money for investments. Along with meeting debt obligation, assign savings and lump sum funds such as bonus to build an emergency fund. Stay up-to-date on servicing your debt and don’t add to it. As your income expands, increase the allocation to investments to catch up on the time lost when you had to focus on debt.

“Investments can wait”
This excuse can cost you a lot. Even when some goals are way into the future, postponing savings and investments may mean that your contribution to the goal from savings will have to be much larger than what it would be if you had started early. For example, if you delayed saving for retirement by 10 years, then your monthly contribution to reach the same goal value will be three times higher because, over time, compounding accounts for a significant portion of the corpus. And there is no way to recover lost time. You may have to settle for less if you are not able to make higher contribution to your goals and needs. To give your investments the benefit of time and compounding, start saving early. Maximize your contributions to mandatory savings schemes, which remain invested for the long term. Don’t let funds remain idle in low-earning accounts such as savings accounts. Set up systems to regularly invest surpluses, such as by signing up for systematic investment plans and other facilities offered by banks to move the surplus over a set limit to higher-earning products. Build an emergency fund so that you do not have to break into your long-term investments to meet urgent needs. Recognise what is holding you back from your investment goals. Once you identify the problem, take simple doable steps to correct it and make it a habit. Over time, you will develop the financial discipline that prevents poor habits and beliefs from affecting your financial security.

Source: LiveMint
The new definition makes it clear that in order to register a complaint, a person needs to give it in writing

The 2017 notification on protection of policyholders’ interests has defined an ‘insurance complaint’. As per the notification, a ‘complaint’ or a ‘grievance’ means a written expression (even in electronic mode) of dissatisfaction made by the complainant against an entity—such as insurer, about an action or lack of action about the standard of service or deficiency of service.  Till now the definition of a complaint also included verbal communication, but now that is no longer the case. The new definition makes it clear that in order to register a complaint, a person needs to give it in writing. We tell you how to register a complaint with the insurer, or directly with the regulator.

With The Insurer 
You can ask your agent or bank to help you file a complaint and you can also approach the insurer directly. Every insurer is now mandated to feature its grievance redressal policy on its website, which should have information on how to file complaints and contact details of the grievance redressal officer or office. Some of the websites we saw, had their grievance redressal policy under the ‘customer support’ section. This policy will have email IDs, other contact details and addresses to which you need to send your complaint. You can also call their call centre to register your complaint. However, that will need to be followed up by a letter or an email. Insurers need to acknowledge the complaint within 3 days of receiving it. 

Directly To IGMS
You have the option of registering your complaint with Insurance Regulatory and Development Authority of India (Irdai) using the Integrated Grievance Management System (IGMS). IGMS is a central repository of all consumer complaints received by life insurance and non-life insurance companies. It is an online registration system created by Irdai to which all insurers have integrated their online complaint logging systems. So, when a complaint is logged into the insurer’s system, it automatically flows into the IGMS. With the help of IGMS, the regulator can ensure speedy disposal of complaints and also track the nature of complaints and timelines for resolution. You can directly tap into this system too by going to www.igms.irda.gov.in or by calling its toll free number 155255 or 1800-4254-732. You can also email to complaints@irda.gov.in. This complaint then flows into the insurer’s system for resolution. Insurers need to resolve the complaint in 15 days. A complaint is considered closed if you don’t respond within 8 weeks of the insurer’s written response. Also, if the grievance is not resolved in your favour, the insurer needs to inform you about approaching an insurance ombudsman. 

Source: LiveMint
Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to webmaster@samirkotak.in .
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. samirkotak.in and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. samirkotak.in, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.