Don’t deposit your hard-earned money only to withdraw unfair excuses
What the agent says:
“Sir, Bank FD!!?? How much will you make… 7%, 8%? Post-tax that is only 4 to 5%!! Don’t let go off that extra 2% because that is the difference between you and everyone out there. Others can’t even beat inflation. Sir, don’t think too much, just take action… I am there na!”
What he actually means:
“Sir (my respect for you is as deep as your pocket), Bank FD!!?? (creating an illusion that it’s the worst form of investment, despite my own money parked right there) How much will you make… 7%, 8%? Post-tax that is only 4 to 5%!! Don’t let go off that extra 3% because that is the difference between you and everyone out there (I can’t fool everyone together, but I will one person at a time). Others can’t even beat inflation (although it’s better to lose against inflation than to lose 100% of your capital). Sir, don’t think too much (because if you do, you would never listen to me), just take action… I am there na (but I will never bear your loss)!”
Consider this, you have set-aside decent amount of your money, your hard-earned and well-deserved money, for you to invest. The next question is what options do you have for investing this money? Buy shares, park it in fixed deposits, invest in Mutual Funds.
Don’t you think that this money you earn and save, deserves as much care as any other asset you purchase, be it a swanky new car, or a perfectly hand-crafted luxurious bag? When you save money for a future plan or contingency, don’t you think it should actually be available to you at that point in time?
Highway to hell…
People are rushing to put their money into high-interest company fixed deposits that probably yield 2-5% more than regular bank fixed deposits. Infact, many brokers, agents, or whatever they call themselves, induce you to invest your money in these ‘safe’ and ‘high yielding’ company fixed deposits. What they don’t tell you is – well-known companies like Elder Pharmaceuticals, Helios & Matheson, Jaiprakash Associates, Unitech, Plethico Pharmaceuticals, Bilcare, Ind Swift, Tricom India, Yash Birla Group of Companies, Jaypee Group, Jindal Cotex, Lyka Labs, Avon Corp, Micro Technologies, Asian Electronics, among many others have delayed or defaulted in repayment of interest or principal or both, of their corporate FDs.
These depositors refer to lakhs of investors, including thousands of senior citizens, retirees and housewives who are stuck with fixed deposits, made with their life-savings, in companies that are neither refunding their principal nor paying interest. Out of this multitude of investors, only few have complained to the authorities, out of which only a shocking 2% of the cases have been resolved. The remaining money has basically… vanished!
So what can you do?
It’s actually not that difficult to ensure the safety of your money:
- Company FDs require more due diligence than Bank FDs. This is because Bank FDs are insured by Deposit Insurance and Credit Guarantee Corporation (‘DICGC’) upto Rs. 1 lakh. Although now, the new company law gives due importance to investor interest.
- Look at the credit rating provided by companies like CRISIL. Look for ‘AAA’ rated ones. AAA rated FDs usually give lower interest rate. Under the new company law, it is mandatory for companies to get rated if they want to accept public deposits.
- Google the company’s name and names of management personnel alongwith words like ‘illegal’, ‘money laundering’, ‘fraud’, ‘default’, ‘mismanagement’, ‘siphoning’ and go through relevant articles if any.
- Visit forums like www.mouthshut.com or www.consumercomplaints.in to find out whether there are any complaints regarding the company.
Check www.watchoutinvestors.com to verify if the company is involved in any illegal activity. It is a government-sponsored website.
- Go through the company’s financials available on its website or www.moneycontrol.com to check timely payment of dividend, default in repayment of loans, losses, or other important factors.
- Always retain important documents like the fixed deposit receipt, copy of the application form, term and conditions, any correspondence with the company.
But what if you already fell for the trap?
If a company is unable to repay your money:
- Call the company on the phone number mentioned in the application form. Additionally or alternatively, send e-mails or letters by registered post to the addresses given on the application form.
- Depending on the type of the company, you can lodge complaints, either online or in the prescribed form, with the Ministry of Corporate Affairs (‘MCA’), the Reserve Bank of India (‘’RBI’), the Company Law Board (‘CLB’) / the National Company Law Tribunal (‘NCLT’), the Economic Offences Wing (‘EOW’) or the Securities and Exchange Board of India (‘SEBI’).
- You can file a complaint against the company under Section 12 of the Consumer Protection Act, 1986. You do not need a lawyer to file a case. Visit www.cgsiindia.org for the steps you should follow if you want to file a complaint in the consumer court. Many non-profit bodies can help you file a case at nominal costs.
If repayment is still not in sight… remember, NEVER. LOSE. HOPE.
AS AN INVESTOR – Have you faced this problem or have you solved it? Share your story with us and join the movement!
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