CONTENTS
LETTER
ISSUE CONTENTS
24 January 2013
FROM THE
EDITOR Scoring a Zero
T
he credit information business in India is over a decade old. Credit bureaus, which take individual information from lenders and collate it to rate borrowers’ creditworthiness, are supposed to help lenders better understand their borrowers and simultaneously help borrowers get loans on better terms. Everyone advises you to make sure that your credit record is kept clean because a bad record could make things difficult for you. While that advice is correct, the credit bureaus are in a big mess. Although your credit information is the same, different credit bureaus will give you different reports (if they give a report at all) and this will only further confuse you. Of course, you have to pay for this information which, more often than not, is useless. We found all this while conducting a credit information camp. Four bureaus have been licensed by the Reserve Bank of India (RBI). One is already running out of money. Read our eyeopening Cover Story to understand the mess that RBI needs to clean up with urgency. Most media reports contain platitudes about credit bureaus. We throw light on the real story. Sucheta, who wrote the Cover Story, also dissects how the mess of credit bureaus is really symptomatic of a deeper malaise. Unless we get together and demand action, we have only to blame ourselves for the way various regulators treat us. She questions whether SEBI supplied the correct information to the minister of state in response to Rajya Sabha member Rajeev Chandrashekar’s query about misuse of power of attorney. Moneylife had reported on how retired Wing Commander Mohan Raj got ripped off by Motilal Oswal and got a short shrift from SEBI. In our Fund Pointer section, we review how sector funds have performed in 2012. We also have a table which lists three best and worst performing funds in each category. As you would expect, our calculations of returns are different from others and, we believe, more accurate. Beginning this issue, we bring you a much larger and regular section of articles focused on spending. This issue’s piece talks of how e-tailers could be taking you for a ride. Given how e-tailers have proliferated, this is one article you cannot afford to miss. Debashis Basu MONEYLIFE | 24 January 2013 | 10
28 Cover Story
Credit Scores Are a Big Zero The credit information business is in a big mess. You will get different information from different bureaus and your scores may vary widely. Yet, credit information and credit scores are being used as revenue-generating opportunities by the industry, even as customers are sold questionable data. An investigation by Sucheta Dalal
13 Your Interest Tax waiver for ICC: I-T department told to disclose file notings; VIP defaulters in Delhi still owe Rs6.32 crore; SEBI asked to provide free information to under-trial prisoner
14 Your Money Credit card: Complaints Reduce; E-payments: Online Shopping Touches $14 billion; Insurance: Claim Frauds Detection System Soon: IRDA, No-jargon Policies in Regional Languages, Grievances Down 26%; Loans: Lower Car Loan Rates, SBI Ties Up with CIBIL for Online Home Loans, Mutual funds: Mutual Fund Schemes in e-format; Banking: SBI’s Mobile Wallet
16 Current Account Jakarta Most Twitter-happy
17 Loose Change Moneylife Quiz; Sound Bites: Jim Rogers, investor; Yuvraj Singh, cricketer; Mamata Banerjee, Chief Minister, West Bengal; Javed Miandad, ex-cricketer, related to Dawood Ibrahim by marriage 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.
DIFFERENT STROKES
MUTUAL FUNDS POINTERS
HEALTH
18 Discredit Bureaus
Schemes: 24 Sector Winners & Losers
Milk 54 IsHarmful?
Credit-tracking system is in a mess and can cripple your financial life for no fault of your own. The RBI remains remote and inaccessible
Banking did the best, technology the worst in 2012
Humans don’t even have the enzyme to digest milk. And now, milk carries carcinogens
20
& Worst 26 Best Fund Schemes
SEBI’s Grievance Redress: Lying about facts; $5-bn Bond Haul: Fakes expose poor regulation; Social Media Restraints: Legal changes planned?
The best three and the worst three schemes over the past three years, under different categories. Schemes ranked by their quarterly rolling returns; plus 1-year and 3-year returns
SMART MONEY
FUND FACTS
INSURANCE
a 22 Getting Helping Hand
46
Do you need a financial advisor? If so, here’s how to select one
– Interview: “RGJAY society physicians can overrule TPA’s doctors” – Health Insurance: Chola Tax Plus Healthline for 80D; Future Generali Revises Health Suraksha – Fine Print
STOCKS
36 Value Picks Year-end Shuffle
38 Street Beat – Gandhi Special Tubes – Unquoted: Quantum Digital Vision
40 Medium Term Chettinad Cement rose 9%, Colgate-Palmolive went up 3%, while HCL Technologies ended flat
41 Long Term Berger Paints shot up 6%, Bajaj Auto crept up 5%, while Godrej Consumer Products fell 3%
42 Popular Picks Wearing Thin
43 Which Way High Hopes
Insurance Trends
– Pulse Beat: Medical developments from around the world LEGALLY SPEAKING
Heavy Fines 56 Impose on Flippant Appeals Legal processes are often misused and offenders get away with only light fines ML FOUNDATION EVENTS
a Will is not 57 “Making just a legal but an emotional exercise”
CONSUMER ALERT
of 48 Web Lies Many e-retailers make deceitful claims to coax you into taking snap decisions. Here is what you should know and guard against – Consumer Interest: HUDA Fined for Harassing Consumer; No Claim after Wilful Acceptance of Settlement; Bureaucracy No Excuse for Delay in Filing Appeal AUTO
Old 52 New Peugeot Will Peugeot be fair to existing customers who are yet to receive their refunds?
Moneylife Foundation ended 2012 with a seminar on Wills and Nominations by Dr SD Israni who explained the complex topic citing many real-life examples EARNING CURVE
Is 60 Trust Everything – How Nudge Can Work Wonders – Global Learning Life Insurance Gaps; Will You Have Enough after Retirement? BEYOND MONEY
Humanism 66 From to Social Service Dr Nita Mukherjee narrates how an ashram has put its philosophy to work
DEPARTMENTS Letters............................. 4 Book Review.....................58 Money Facts.....................63