LETTER FROM THE EDITOR 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 15 th 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 Happy Anniversary! ISSUE CONTENTS 7 February 2013 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. MONEYLIFE | 7 February 2013 | 4 Cover Story 24 SEBI vs Investors 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 13 Baggage Snafu: Lufthansa to pay Rs50,000; LPG Portability: Consumers can now switch their dealers; SEBI imposes Rs7.5 lakh fine on sub-broker Your Interest Current Account 18 Moneylife Quiz Different Strokes 16 Mandating mindless reporting and training rules to ensure good governance is not a substitute for effective enforcement Lead by Example: SEBI & Disclosures; Consensual Suppression: Orders To Hide Transgressions; Good Governance: Outsiders Can’t Be Insiders; Burying Scams: Compromised Investigators 14 CONTENTS 44 Insurance Trends – Pension: ICICI Pru Shubh Retirement – Pension: LIC Jeevan Nidhi – Endowment: Edelweiss Tokio Life- Save n Grow & Life-MultiGain – ULIP: LIC Flexi Plus – Fine Print INSURANCE 57 SEBI’s New Ideas SEBI’s consultative paper on corporate governance redefines the role of independent directors LEGALLY SPEAKING Direct Plans & Pass-backs 33 Commission-free ‘Direct Plans’ for mutual funds may turn out to be less attractive than they appear SMART MONEY Your Money 20 Mutual Funds: MFs Line Up for RGESS Offers; SEBI Notifies Norms To Monitor Mutual Fund Distributors; PSU ETF; As the Market Rose, Investors Exited, Banking: Banking Ombudsman Scheme May Be Widened Do Liquid Schemes Beat Bank FDs? 22 An analysis of liquid schemes versus bank deposits over a period spanning more than 10 years. Which delivers better post-tax returns? MUTUAL FUNDS POINTERS Letters ............................ 8 Book Review ....................60 Money Facts ....................63 DEPARTMENTS STOCKS Amara Raja Batteries shot up 15%, Yes Bank jumped 7% while Marico ended flat 39 Long Term 40 Value Picks Earnings Season Is the bull market maturing or consolidating? 38 Which Way 36 Street Beat – Elgi Equipments – Unquoted: KCCL Plastic Tinted Windows 46 AUTO The bus where the gang-rape took place had tinted windows. The Supreme Court has banned it but VIPs still use it HEALTH High Pressure Drug Sales 52 Hypertensive drugs can be harmful, as shown by some studies – Pulse Beat: Medical developments from around the world Saritsa Foundation assists people with disabilities caused by disasters 66 Helping Those Disabled by Disasters BEYOND MONEY 48 Cost of Energy Ef ciency 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 ALERT 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 58 Value Works – Buffett Was Wrong – Hi IQ, Lo Cost EARNING CURVE 59 “UID is conceptually awed, dangerously structured and ignorantly applied” Moneylife Foundation held an exclusive session on how UID is creeping into our lives and compromising our rights ML FOUNDATION EVENTS TRAVEL 54 Sri Lanka: Stunning Surprise Naveena Israni explores the beaches and the wild side of this island nation
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LETTERFROM THE
EDITOR
Our 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
Happy Anniversary!
I S S U E C O N T E N T S
7 February 2013
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.
MONEYLIFE | 7 February 2013 | 4
Cover Story24SEBI vs InvestorsSEBI, 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
13Baggage Snafu: Lufthansa to pay Rs50,000; LPG Portability: Consumers can now switch their dealers; SEBI imposes Rs7.5 lakh fine on sub-broker
Your Interest
Current Account18
Moneylife Quiz
Different Strokes16
Mandating mindless reporting and training rules to ensure good governance is not a substitute for effective enforcement
Lead by Example: SEBI & Disclosures; Consensual Suppression: Orders To Hide Transgressions; Good Governance: Outsiders Can’t Be Insiders; Burying Scams: Compromised Investigators
14
Content.indd 2 1/19/2013 2:46:23 PM
CONTENTS
44 Insurance Trends
– Pension: ICICI Pru Shubh Retirement
– Pension: LIC Jeevan Nidhi– Endowment: Edelweiss Tokio Life-
Save n Grow & Life-MultiGain– ULIP: LIC Flexi Plus– Fine Print
INSURANCE
57 SEBI’s New Ideas
SEBI’s consultative paper on corporate governance redefines the role of independent directors
LEGALLY SPEAKING
Direct Plans & Pass-backs33
Commission-free ‘Direct Plans’ for mutual funds may turn out to be less attractive than they appear
SMART MONEY
Your Money20
Mutual Funds: MFs Line Up for RGESS Offers; SEBI Notifies Norms To Monitor Mutual Fund Distributors; PSU ETF; As the Market Rose, Investors Exited,
Banking: Banking Ombudsman Scheme May Be Widened
Do Liquid Schemes Beat Bank FDs?22
An analysis of liquid schemes versus bank deposits over a period spanning more than 10 years. Which delivers better post-tax returns?
MUTUAL FUNDS POINTERS
Letters ............................ 8
Book Review ....................60
Money Facts ....................63
DEPARTMENTS
STOCKS
Amara Raja Batteries shot up 15%, Yes Bank jumped 7% while Marico ended flat
39 Long Term
40 Value PicksEarnings Season
Is the bull market maturing or consolidating?
38 Which Way
36 Street Beat – Elgi Equipments– Unquoted: KCCL Plastic
Tinted Windows46
AUTO
The bus where the gang-rape took place had tinted windows. The Supreme Court has banned it but VIPs still use it
HEALTH
High Pressure Drug Sales52
Hypertensive drugs can be harmful, as shown by some studies
– Pulse Beat: Medical developments from around the world
Saritsa Foundation assists people with disabilities caused by disasters
66 Helping Those Disabled by Disasters
BEYOND MONEY
48 Cost of Energy Ef ciency
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 ALERT
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
58 Value Works
– Buffett Was Wrong– Hi IQ, Lo Cost
EARNING CURVE
59 “UID is conceptually awed, dangerously structured and ignorantly applied”
Moneylife Foundation held an exclusive session on how UID is creeping into our lives and compromising our rights
ML FOUNDATION EVENTS
TRAVEL
54 Sri Lanka: Stunning Surprise
Naveena Israni explores the beaches and the wild side of this island nation
Content.indd 4 1/19/2013 2:46:46 PM
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