GOT grievances? Knock on the right door :: Business Line

Please Share::


�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->

As an investor, your grievances could be about money swindled or unpaid interest. Whatever the nature of your problem, here’s how you get it addressed

Getting an overdose of news about the Saradha and Sahara scams? For each of these swindlers who work out master schemes to part you from your money, there are several others who hoodwink you through ‘safer’ investments such as fixed deposits.

Some entities may not pay interest on your deposits as promised; others may not pay you dividends or redemption amounts of your debenture on time, while yet others may solicit funds from you, promising high returns, without obtaining necessary regulatory approvals. As an investor, what is the recourse you have? Better still, before committing the money, what due diligence can you do?

Here’s answering these two questions for some common investments.

Filters for fixed deposits

Fixed deposits are the haven for all those who wish to save money without having their hearts skip a beat over the volatility of the stock market. But did you know that not all fixed deposit investments are safe? Public and private sector bank deposits are generally considered the safest. Even if something goes wrong with the bank, deposits up to ₹1 lakh (principal and interest) are covered by deposit insurance.

But other entities such as non-banking finance companies (NBFCs), housing finance companies, manufacturing companies or even unlisted companies offer FDs. To begin with, none of these is backed by insurance coverage. Moreover, while all banks can raise deposits, only NBFCs registered with the RBI and authorised to accept public deposits can do so. A list of such NBFCs is available athttp://rbi.org.in/scripts/NBFC_Pub_lic.aspx Even then, the RBI doesn’t guarantee repayment of your deposits and they remain unsecured.

Besides, don’t let promises of high returns tempt you. Know that there is something fishy with the NBFC if an interest rate of more than 12.5 per cent per annum (current ceiling, which can be changed from time to time) is offered, if the tenure doesn’t range between 12 and 60 months and if you are offered gifts/incentives for enrolling into the deposit scheme. None of this is permitted by the RBI. Finally, check for a credit rating from any of the agencies, such as CRISIL, CARE, ICRA, FITCH or Brickwork, which is compulsory for public deposits. The higher the rating, better the company’s standing vis-à-vis your deposits, among other aspects.

Housing finance companies too can raise deposits from the public. But they fall under the purview of the National Housing Bank (NHB), whose regulations relating to public deposits are close to that of the RBI’s. A similar list of housing finance companies permitted to accept public deposits is given athttp://www.nhb.org.in/Regulation/Registered Companies.php

Manufacturing companies that accept deposits are governed by the Ministry of Corporate Affairs (MCA). The Companies Act 2013 lays down several rules for company deposits, applicable from April 1, 2014. These include issuance of deposits only for tenures of 6-36 months, ceiling on interest rates at the level specified by the RBI, mandatory disclosure of credit rating, details of whether the deposits are secured or not and details of defaults in payments by the company.

Companies interested in raising deposits from the public also have to submit to the Registrar of Companies a copy of the advertisement in the prescribed format, with relevant details. The MCA website has an updated list of such companies at http://www.iepf.gov.in/IEPF/pdf/GNL2_Filings.pdf The copy of the advertisement may also be available on the website, if any, of the company. If not, you can register on the MCA website to view this document online on payment of a nominal fee.

The link above will guide you through the registration to the website too. It indeed pays to run company deposits through these checks before you put in your money.

Where to go

If you, unfortunately, get stuck, your first move should be to approach the grievance redressal department/officer of the bank or company concerned. If it is not resolved satisfactorily at this level, you can move to the Banking Ombudsman (FAQs at http://www.rbi.org.in/scripts/FAQView.aspx?Id=24) for grievances pertaining to bank deposits. You can file a complaint with the BO under whose jurisdiction the branch/office complained against falls. There is a listing of the addresses and areas of operation of the different BOs on the RBI website along with hyperlinks to mail your complaints to them. You can either click on these links and e-mail the BO directly or fill up the online complaint form on the RBI website. A written complaint can also be filed.

For NBFCs, there is no ombudsman. The second level of contact could be the nearest office of the RBI itself or the Company Law Board. Depositors can approach the appropriate bench of the Company Law Board, based on the territorial jurisdiction of the deposit-taking company. The co-ordinates of the regional offices of the CLB are available at http://www.rbi.org.in/scripts/FAQView.aspx?Id=71

If you are aggrieved over a deposit with a housing finance company, you can complain to the NHB either in the physical mode or electronically. Complaints can be mailed to crcell@nhb.org or registered online at https://grids.nhbonline.org.in

Depositors with manufacturing companies can move to the MCA for redressal. Once you login as a registered user at http://www.mca.gov.in/

DCAPortalWeb/ you can file and track a complaint online by choosing the ‘Create investor complaint’ option under the MCA Services tab on the home page. You can expect the matter to be resolved within 30 working days.

Knocking on SEBI’s doors

Apart from FDs, non-convertible debentures (NCDs) as an investment option on the debt side have become popular in recent times. In most cases, they are credit-rated, come with various tenures and interest payment options, and are listed and traded on stock exchanges. These listed securities fall under the purview of the Securities and Exchange Board of India (SEBI). Besides, NCDs issued by NBFCs are monitored by the RBI.

If you plan to subscribe to any public issue of NCDs, look for a credit rating. The higher the rating, lower the risk. The RBI tightened rules in 2013 for NCD issues by NBFCs where all issues — private placement or public — have to be ‘secured’ on the assets of the company.

Earlier, NBFCs issuing unsecured NCDs would make it attractive for investors by offering relatively high interest rates.

In June this year, SEBI did its own tightening by laying down rules relating to floor size for NCD issues, the need to obtain minimum subscription before they list on an exchange, and making greater disclosures on the reasons for raising the money, among others. But fancy NCDs, hybrid (convertible debt instruments) or redeemable preference share issues from unlisted companies is where more trouble lies.

They have been the centre of attention in recent times after the Sahara case, in which its group company issued ‘optionally fully convertible debentures’ to the public at large, but used the loopholes of the law to call it a ‘private placement’, and tried to escape the SEBI net. After this fiasco, SEBI has held that any issue made to more than 49 persons amounts to a public issue and must follow the disclosure and procedural requirements of the Companies Act and SEBI pronouncements and rules. All such instruments should also be mandatorily listed on a stock exchange.

So, if you are approached by agents for subscriptions to too-good-to-be-true instruments from unlisted companies, do a round of due diligence.

Logging in as a registered user on the MCA website, you can access the ‘company master data’ which gives all the necessary information regarding the structure of the company, its registration details, etc.

Using this information you can view public documents of unlisted companies online by paying a small fee. This gives you insight into their business and financial position.

Yet, if you have been wronged by such deceptive companies or if you even face simpler issues such as non-payment of interest, transfer/transmission/redemption hiccups, or problems with other bonds such as tax-free bonds that you have subscribed for, you can complain to the RBI (for NBFCs)/NHB (for Housing Finance Companies)/MCA/SEBI. You can even complain with more than one regulator, if applicable.

SEBI is also the place to go to if you have unresolved grievances at the company level related to shares or mutual fund units you own.

SEBI’s redressal mechanism

Be it complaints against listed companies, brokers, depository participants, stock exchanges, fund houses, investment advisors or other intermediaries, you can lodge your grievance with SCORES (SEBI Complaints Redress System) at http://www.scores.gov.in/ after obtaining a user registration.

An exhaustive list of institutional categories and grounds on which you can complain is available when you click on the ‘Complaints Registration’ tab on the SCORES home page. You can choose appropriately and proceed with filing your complaint.

Once done, you can view your complaint status and send reminders too. If you don’t have the facility to do it online, send your complaint through post to any of SEBI’s offices whose addresses are given under the menu ‘Contact Us’. There is also a toll-free helpline - 1800 22 7575 or 1800 266 7575.

The entity you have complained against is expected to send a written reply to you and also file an Action Taken Report with SCORES within 30 days of the receipt of the complaint. Complaints in all these cases can also be made with consumer courts, which will then direct the appropriate authority to act. This apart, you can take the case forward to regular courts or for arbitration as well.