Plainspeak | Swami Sharma


5 New-Age Features Of Health Insurance Plans To Know

Of late, more and more people have started leading a healthy lifestyle, backing it up with wellness programmes. This certainly helps but does not remove the risk of being hospitalised due to unforeseen events. The need for adequate health cover is increasingly becoming critical and consequently choosing the right health insurance plan has become very important. Let’s look at few important features that could help you take a more informed decision.

Lifetime Renewability: As per IRDAI regulations, insurers are mandatorily required to offer health insurance for an entry age of up to 65 years. Most private insurers however, do not have such age-limits in their health plans while most state-owned general insurers cap the entry age at 65. As per rules all policies have to offer lifetime renewability. Naval Goel, Founder & CEO,, says, “If you fail to renew the plan, then at the time of making the claim (in any new policy), you will also lose the existing benefits of the lapsed policy.” Once the policy is issued, the policyholder has the right to continue renewing it lifelong. Lifetime renewability would be available even if there is a claim made in the previous year. Insurer cannot deny renewal on arbitrary grounds and has to furnish cogent reasons in writing if it does so.

Pre-existing ailments: All health insurance plans cover pre-existing ailments but after a period of 48 months. Some plans cover pre-existing ailments even after 36 months or waiting periods lesser than this. However, this coverage of pre-existing diseases is conditional upon the buyer honestly making all medical disclosures at the time of buying the policy. This means that in case a person actually suffers from a disease at the time of buying the policy but is unaware of the fact and therefore declares himself as medically fit then the insurance company would honour the pre-existing disease related claim after 48 months / the predefined waiting period.

However, in case the insurer suspects that the buyer was aware of the pre-existing disease at the time of buying the policy then the company may refuse to honour the claim. This is the reason why it is important to disclose any pre-existing ailment at the time of buying for a smooth claims settlement process later on. Further, coverage of certain defined and specific ailments have a ‘waiting period’ of 12 or 24 months, post which they are covered for claim. Swami Saran Sharma, CEO, says, “Since most individual insurance policies do have a pre-existing diseases exclusion clause ranging from two to four years, one should be very cautious while changing the insurers. Every time you change the insurer, pre-existing period condition will start from zero unless the policy is properly ported to the new insurer by giving a due notice to the existing insurer.”


Sub-limit: In today’s times, sub-limits in health insurance plans have become an important feature to keep an eye on. The total medical cost during a hospitalisation would typically include doctor’s fees, room-rent, surgery fees, operation charges and cost of medicine amongst various such other cost-heads. Sub-limit refers to limiting re-imbursement under each or some of such cost-heads to a pre-defined level. For example, reimbursement of room-rent may be capped at 1 per cent of the sum insured. So, irrespective of the total sum insured under the policy, one may have to pay some portion of the hospital bills unless one sticks to the limit. Some health plans do not have any such sub-limits while few others offer an option to reduce premium payable by including sub-limits at the time of buying the plan.

Day-care and OPD expenses: Normally, the most important requirement for a health insurance claim is the minimum hospitalisation of 24 hours. However, with technological advancements, certain surgeries and procedures require less time. Therefore, many health insurance plans have started covering claims for day-care expenses such as dialysis, chemotherapy, eye surgery and lithotripsy, among others. Generally, up to 140 such surgeries are covered by most insurers, with or without any restrictions. Certain hospital procedures, such as dental care, neither fall under day-care and nor do they require 24-hour hospitalisation. They are referred to as out-patient procedures and few plans have started offering claim on out-patient expenses as well but with restrictions.

Naval informs, “The basic difference between OPD and day care expenses are the types of procedures that they cover. OPD includes small time medical expenses like dental treatment etc while day care treatments involve larger expenses like a catarct surgery or radiation therapy which may include hospitalization for less than 24 hours.”

No medical tests upto age 45: Insurers, before issuing policies, evaluate the policy applicant’s health as per disclosures made in the application form and also through certain medical tests. Most insurers do not require policy buyers below 45 years of age to undergo medical tests unless the buyer has an adverse medical history. The buyer should, however, make all required medical disclosures including existing medical treatment or any taken in the past. For easier claim settlement, one may voluntarily undergo a medical check-up/test and submit the reports to the insurer.


Conclusion: While choosing a health cover, one should ideally start by comparing plans from 2-3 preferred insurers. Take a close look at the inclusions and exclusions in the most basic plan being offered by them. Do not base your decision solely on the premium, instead look for simple plans with less conditions and restrictions in them. Also remember, every member of the family needs health insurance cover to tide over any unforeseen medical exigencies in future.

Source: Economic Times

Cash Pile at Infosys

Although there is a lot of noise about corporate governance, the poor utilisation of assets is a bigger issue

Sometime in the early 1990s, I read an interview of the then CFO of Disney, Gary Wilson, where he said that he considered it his function to implement the company’s overall strategy to maximise shareholders value. As a young chartered accountant then his statement had left a very strong impression on me. I have my own practice and have advised several companies, but the foundation of the advice rests on shareholders’ value. So, when last week I read about former Infosys CFOs bicker over corporate governance issues and voice their concerns over shareholders values, I was intrigued.

Swami Saran Sharma

With a key on reading balance sheets, I have been vocal about the poor money management at Infosys. Yes, the IT behemoth which has for long been the bellwether IT Company in India has not been as good at managing its finances as it would like several people to believe. A detailed insight into their annual report a couple of years back indicated that they had about Rs 6,500 crore as balance in bank accounts alone! This meant that this much amount was not even parked in mutual funds. Their last balance sheet shows that they have close to Rs 24,000 crore in the bank in the form of FDRs and deposits, which is again a very inefficient way of handling cash, especially when there are safe and more tax efficient ways to manage cash.

What Corporate Governance?For a company that takes pride in having introduced several best practices, such as declaring forward looking statement and earnings guidance, not handling cash efficiently does not bode well. The recent imbroglio over the founders raising their concerns over the quantum of severance package to a former CFO looks a trivial matter when I see the quantum of opportunity loss for the investors in the company who could have otherwise earned better returns.

It surprises me that even institutional investors are quiet about the cash pile, which has only been growing each year and not being deployed for acquisition or growth. In fact, the company could very well pay dividends to investors than former CFOs harping about buybacks.

If the argument is that auditors have not raised questions on the way the cash is being managed, I would like to remind people about how the same level of auditors had signed on the Satyam balance sheets, which had grossly inflated revenues and profits, which boosted the company’s valuations and share prices. At Infosys, the promoters, despite staying away from the day-to-day management from time-to-time step in with some allegation or concern, which mars their interests in the company.

Opportunity loss

Yes, the promoters of Infosys also created several millionaire workers in their company, but they have not been that magnanimous when it comes to distributing money by way of dividends to shareholders and sit on cash reserves with no clear plans on how this will be used in the future. They could take a leaf out of the PSUs, which tend to pay dividends and share the wealth than just sit on cash.

Assuming the interest on FDRs and money in the bank earns about 4.8 per cent after tax annually, it pales in comparison to the Earning Per Share (EPS) of over 11 times on the face value of shares. Even if I were to look into the severance package of former CFO Rajiv Bansal, it does not seem to be much. In fact, the two former visible CFOs Mohandas Pai and V Balakrishnan were party to this high cash being kept in banks and have no moral rights to raise concerns over governance issues at this moment, when they themselves did not work towards the maximization of shareholders wealth.

To me, keeping idle cash is the biggest financial crime being committed at Infosys, and it is not being addressed. It would be in the interest of investors if the board looks into transparency issues with its cash deployment than spend time over a board decision on a severance package and reacting concerns aired in the media by the promoters. Going back to Gary Wilson he took Disney from a $2 billion to $20 billion company and continues to preach that the role of the CFO is to create value for shareholders aside from crunching numbers and analysing cash flow.

To borrow from Wilson a good CFO brings intangible assets to his company. Company image and customer satisfaction are all intangible factors that eventually impact the bottom line. When CFOs understand this, they can play a much more pivotal role in their organisation. I wish the current CFO of Infosys takes Wilson’s advice and puts it to practice.

Source : OutLookMoney

How Can The Government Rest The Advantage Gained By Demonetization?

With the announcement of demonetization of high denominated currency notes by the Prime Minister on 8th November, 2016, the banned currency had just one way to go which was deposit in banks.

With the progress of deposit of money in the banks, it is evident that most of the demonetized currency is likely to find its way back to the bank. Although, let there be no mistake in understanding that money deposited is not equal to white money but it is also clear that the hoarders of black money have taken the route of depositing small money in a number of accounts belonging to the poor. The intention is to force the account holder to withdraw the new currency and thus the hoarders will get their cash back. The outcome of various raids carried out by tax authorities has revealed that the big time defaulters have managed to convert their cash. If the hoarders are able to have their way, Government will not be able to achieve their objective of eradicating the black money.
Then what can the government do?? In my opinion they should do the following:
Put a restriction on holding cash in hand by households and the business entities like the limits they have introduced on personal gold.
Fixing a lower limit on the cash transactions.
After implementing the above two provisions, Government should once again demonetize the high denominated currency recently introduced and can even gradually change the lower denominated notes.


A couple of months back when decks were cleared by the law makers for introduction of GST, I thought that the event will go down in the history as one of the biggest reforms in the Indian economy. But the demonetization of 87% of Indian currency at a four hour notice made the historic GST reform look pale.

Successive Indian governments were always faced with the arduous task of dealing with black money. For want of collection of adequate taxes, budgets had to be balanced by invoking deficit financing. The existence of parallel black economy was openly acknowledged by one and all. Corruption was one of the major contributors to the black economy. Governments after governments meekly surrendered to this phenomenon so much so that even some of the past Prime Ministers admitted that only 10 to 20% of the total spend on government welfare schemes, actually reached real beneficiaries and the remaining was making its way to the corrupt system. A large majority of say 95% honest citizens were extremely unhappy with the situation but could not do anything against the might of say 5% corrupt. Situation was hopeless.

To overcome this menace, demonetization of currency was suggested by experts in the past also. UPA Government made a feeble attempt to demonetize one series of Rupees five hundred notes. Enough time was given to public for exchange. Government kept extending the dead line dates but ultimately nothing happened. Even one series of notes could not be demonetized. Taking the cue from past experience, the present government went ahead with demonetization without any notice whatsoever.

Now since the government has bitten the bullet, I feel that this step has the potential to put Indian economy on a very strong growth path. We can expect the budget deficit to go down. The government may net close to Rs. 4 lac crore out of this exercise either in terms of cancellation of currency or recovery of taxes. In addition to this, lacs of crores will be available for investments. To make best use of this opportunity, post 30thDecember, the onus will be on the government to give proper direction to the economy so that the money is gainfully deployed to generate employment, develop infrastructure and bring tax reforms so that the tax base thus created is not lost.

By far there were two major blocks in the progress of Indian economy, one the collection of taxes was very low and the other was that the availability of credit was very limited. With lots of funds flowing into the system, hopefully, India will do better on both counts in future.

Interest rates are bound to come down which is a good news for the enterprises. From my experience as a practicing chartered accountant, I can say that Indian businesses on an average operate on a debt to equity ratio of 2.5 : 1 which means that if an enterprise has an owned capital of Rs. One crore, it is likely to have a debt of Rs. 2.5 crore. Because of this reason, even one percent drop in interest rates will favorably impact the equity by two and a half times. If the business gets an advantage of this kind, they will be willing to expand leading to increased employment. Increased employment will lead to more demand and hence will give further boost to the production. A white economy will also encourage the foreign investment into the country.

All in all theoretically, demonetization at this stage in India especially before the implementation of Good and Services Tax looks like a great move. For its complete success, reaching out to the poorest of the poor will be the key otherwise it may become anti financial inclusion drive of the government.


Curbing Mis-selling

The way companies pay commission to agents needs to change for

a complete overhaul of how they impart advice.

I have been associated with the insurance industry for over three decades and have witnessed both the pre- and post-liberalisation phase of the industry. Yes, the opening of the sector about 15 years ago was a welcome step, but inadvertently it also opened the doors to practices by insurance companies that have left a rather poor image of all insurers. The issue of mis-selling policies tops the list.

It is common for people to complain on how they were sold a policy, which either does not match their needs or better still, does not suit their needs. Broadly, the problem they face can be categorised into three areas—policies that they do not understand, policies that they feel are not doing what they want them to and lastly, polices where they feel the cost is higher than what they had envisaged. The answer to ensuring that you buy the right policy rests within these three buckets—look for a policy that you need, understand what it does and figure what it would cost you and for how long.

The buyer-beware has always been the case when it comes to financial instruments, which is slowly changing towards a seller beware format thanks to changing regulations. Given the fact that insurance is sold and not bought, the tendency of the seller is to push the product at all costs. Add to it, the incentive that is there for taking on sale of insurance policies is a significant reason to push a policy.

For instance, the first year commission on policies varies from 10 per cent to 40 per cent. This alone is a big driver for agents to complete a sale. Moreover, there are intermediaries at banks and other institutions who have ample details on people and their finance to smartly suggest policies, where the incentive on sale is to their advantage.

Every insurer knows that there is a huge loss if a policy is not continued through its tenure and I disagree that they intentionally encourage sales knowing very well that the policy will not continue beyond the lock-in or in many cases before it reaches the lock-in.

The best way to check on such mis-selling is to make sure that the incentives are paid only towards the end of the policy tenure or after the mandatory lock-in. This way, the onus will be equally on the agent to ensure that not only does he sell right, he should also ensure that the policy is serviced in such a manner that the policyholder will continue the policy till maturity.

As for the regulator, they can introduce surrender charges, however small it may be on policies that are discontinued after a year. This way, the first year commission will automatically go down as well. Such an approach will also benefit the agents as they will be well-rewarded in the future for a good deed done today.

Instead of focusing on impractical ways to curb on misselling, here is a model which works in favour of the policyholder, agent as well as the insurer. Wonder why the regulator is not looking for simple ways to curb mis-selling.

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Theft Protection

The rate at which vehicle population is exploding, it is high time one considers steps to check their rise, lest we find there are more vehicles than people in this country. Tales of hour-long traffic jams on expressway and freeways are a common sight and indicate the kind of troubles we face. Naturally, expecting safe parking in cities is, rather, too much a luxury that very few can actually manage. For protection of Vehicles, the mandatory third party or liability cover that motor vehicles need to ply on the roads exists, and so does the own damage cover.

As the vehicle ages, it is not uncommon for most people to stick to the mandatory liability cover. The reason for such an act is to save on the premiums because with depreciation kicking in, you land up paying significant money in case of a claim, which makes the purpose of own-damage cover less relevant. At the same time, you would like to protect yourself against car theft, for which insurance cover is mostly sold along with the own-damage cover only.

I know of people who stay abroad or in a different city for long stretches, and have cars that are infrequently used. These people will be more than happy to have a theft
cover with the mandatory liability-only cover. The insurance regulation allows for theft to be covered independent of the own damage and you will be surprised that the premiums on the theft-only cover are just 25 per cent of what the own-damage cover will be.
It is a different matter that the majority of insurers do not propagate this cover.
Having read this column, you should ask for a theft cover to alleviate your fears of losing your car when you are away or even when it is parked by the roadside for lack of safe parking.
policy, as after a break any policy that you buy will be considered as a fresh one and
the benefits of continuity will be lost,” cautions Saxena. Remember, renewal is always
the obligation of the policyholder and not the responsibility of insurer. In case of life insurance, remember that surrender comes in only after the lock-in. Says Aalok Bhan, director and head-product solutions and customer marketing, Max Life Insurance: “Ulips have a lock-in period of five years post which the policyholder can withdraw the entire fund value with no surrender charges.” The surrender in case of traditional plans varies from two to three years depending on the type of policy and the premium one pays on the policy. When it comes to insurance, like any other contract, you get what you have paid for and no more.
The most important thing is to read the policy document completely and understand what is covered, check for entry age, renewal conditions, exclusions and waiting period, even if you have several insurance policies. It’s in your interest to spend time and fill forms than just sign blank forms. Also, make payments by cheques in favour of the insurance company and no one else.
In addition, as part of your policyholder rights, insist on receipt against premium
paid and, in case of loss of policy document, inform the insurer and get a duplicate
policy. The best way to insure your interests is to check everything till you are satisfied than rush, only to find yourself stranded despite holding an insurance policy.

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The Independence Of Being A Consultant Over An Employee Comes With Its Share Of Risks

Freedom of Choice

In my 30 years of practice as a tax consultant dealing with corporate entities, professionals and the salaried, one point to which most conversations meander to is tax savings. Of the lot, the salaried individual is the most harried taxpayer, who is forever crying foul over high taxes that he has to pay and the little savings that
he is left with at the end of the year. While the usual taxsaving options under Section 80C exist, most often, one is looking at ways to reduce his or her tax outgo to as close as nil and have more money in his or her hands.

Yes, the salaried class ends up being burdened by income tax a lot more than others. The difference is stark when you compare the tax liability of a salaried individual to someone who acts as a consultant, but does the same job as that of the salaried individual. The reason for this anomaly exists because the way
the tax laws are applicable to them. In case of the salaried individual, tax is withheld by the employer every month at an average rate applicable to them. But for professionals, a company using their services deducts tax at a flat rate of 10 per cent from the consultancy fee at the time of payment.

The discrepancy sets at this level itself because the salaried spends from what they receive post the applicable tax. In contrast a professional first earns, then
spends and finally pays taxes on what is left after the expenses. Let me explain this with an example: Suppose A earns `10 lakh as salary excluding the deductions,
he will be liable to pay tax of around `1.3 lakh. Now, if A were to convert his employment to that of a consultant and continue to provide the same services to the organisation for the same remuneration, he will be entitled to charge all his profession-related expenses to the income and pay tax on the remaining income.

The advantages are immense. For instance, whether you are salaried, or, a consultant, you might be using a car to drive to work and pay a parking fee for the whole day while you work. The beauty of being a consultant is that you can claim for not only the expenses you incur when travelling to work, you can additionally claim for depreciation of the car, its maintenance, insurance, driver’s salary and also the parking fee that you pay. These expenses are deducted from the income you earn.

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Compliance Effect

Compliance effect Even as PM Modi Hard Sells
brand India abroad, US and Canada-based NRIs find
themselves barred from investing in many Indian MFs

Prime Minister Narendra Modi’s recent trip to the US is expected to pave way for
investments worth $41 billion in the next few years. ‘Come to India, it’s a win-win situation’ was one of the biggest messages communicated to not just global business leaders in the US, but also to the vast Indian- American community.
But as always, when big things are in focus, small things lose out. This time, the impact will be felt by the US- and Canada-based NRIs investing in India and the Indian mutual fund industry. You would have heard from your NRI friends and relatives how large fund houses have barred them from investing in their schemes in India.

Since April this year, under US law, it has become extremely difficult for any financial institution around the world to deal with ‘US persons’, which includes US citizens and green card holders. The new law, the Foreign Account Tax Compliance Act (FATCA), makes it compulsory for all financial institutions in the world to report to the US government, comprehensive details of all transactions involving these ‘US persons’.
The US has roped in foreign governments for cooperation and India, too, agreed to ensure compliance in April 2014. The reason for this change in law is to ensure non-evasion of taxes by US citizens. Tax residency is the base for charging income tax by
governments across the world.
For instance, if an Australian citizen works in India for more than six months in a financial year, all his income earned anywhere in the world, including Australia,
will be subjected to Indian tax laws. However, to avoid double taxation, he will get a credit of the actual amount of tax paid by him in Australia as deduction from the total tax calculated as per his world income.
The US routinely faces such a situation. Most Indians working in the US will have some income in India in the form of interest or rent, through existing bank accounts and real estate. Simply put, the aim of the new law is to curb tax evasion. At the face of it, there are murmurs about this from several financial distributors and intermediaries who with their great jugad skills have managed the money for NRIs without thinking of compliance I do not blame them, the money they earn from this source as fee and commission is very attractive and such clients are also less of a hassle than the average demanding Indian investor.
The Securities and Exchange Board of India (Sebi) has also asked fund houses to register with US authorities and obtain a Global Intermediary Identification Number (GIIN) as part of the FATCA regulations by 31 December 2014.
Effectively, Indian financial institutions may have to withhold tax at 30 per cent from taxpayers who do not comply with the FATCA rules. While compliance-resisting intermediaries are crying foul, I feel the big picture is being missed. This is a very good and progressive move which ensures compliance when NRIs invest in India.

At the moment, many do so with trepidation, which will go away the moment compliance comes in. It is in the government’s interest that this compliance is expedited to make Modi’s vision come true.
The upside is that the money invested will be like a permanent capital in India. This could well pave the way for more NRI money to find its way into India, contributing
to a source other than the institutional promise of $41 billion. Given the growth prospects in India, such investors would get a bang for their buck.

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A Roof Over My Head

The Hindi phrase Roti, Kapda aur Makaan has been popular
for a long time, with the quest for a house still resonating

One of the most sought after investments or assets by Indians is a house of their own. The desire to own a house has been well entrenched in films from the 60s and 70s. Recently, the 2009 blockbuster 3 Idiots had Chatur rattle about his house in the US, while the other ‘idiots’ mention their homes too.

real estate

From what I have heard and read, Arun Jaitely watches films regularly and no doubt got inspired by Indians’ hunt for house and focused his budget to make housing more accessible to all. The Budget gave indirect benefits to taxpayers by raising individual income tax exemption limit from `2 lakh to `2.5 lakh. This will increase disposable income. Next, the Budget announced an increase in income tax deduction limits under Section 80C, of which re-payment of principal on housing loans is a component. This limit has been raised from `1 lakh to `1.5 lakh. The Budget has increased the deduction limit on interest payment for housing loans from `1.5 lakh to `2 lakh.

The dual benefit of higher disposable income and higher tax benefits when taking home loans will see several people buying homes and have positive implications on those already servicing a home loan. Further push. For those who owned a house and wanted to divide their real estate, the government

provided capital gains exemption for investment in a residential house under Section 54 on properties held for more than three years. In effect, those who sold a house could buy more than one house to

claim long-term capital gains tax exemption. Now, the explanatory memorandum to the Finance Bill states that the benefit of long-term capital gains tax exemption can be availed only for re-investment in one residential house, and that too has to be purchased in the country.

Likewise, Section 54EC provisions, under which the Income Tax Act provided deduction from long-term capital gains if the amount of gains from selling capital assets were invested in certain bonds issued by the National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC) within six months from the day of the sale. Earlier, one could utilise the six month window by selling their real estate holdings in October of a year and use the six month window to claim deductions of `1 crore spreading over two financial years. This lacuna has been set right with a cap of `50 lakh total deduction. Forward looking.

The move that could change the complexion of the sector is the clarity on the Real Estate Investment Trusts (REIT), which would be given a tax pass-through status to avoid double taxation. This will benefit developers who are cash strapped and small investors who otherwise have no way to invest in real state at present. The cumulative effect of these initiatives will boost several quarters of the economy, by creating employment and having a trickledown effect on sectors like steel, cement, sanitary ware, paints, consumer durables, electrical wires and more.

However, my concern rests with not getting faster clearance on the real estate regulatory bill, which once implemented will help in regulating a sector that at present has no checks and balances and therefore, leaves scores of people who wish to realise their dreams in lurch and disappointment.

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Smelling A Scam

Financial scams have only one outcome—money is lost by the masses
who get conned and there is no recourse to compensate their loss

The recent frenzy over the arrest of the Sharada, group promoter reminded me of the famous line: Operation successful, patient dead. Yes, the police managed to arrest Sudipta Sen, there were scores of debates on TV channels,reams of paper went into chronicling the misdeed. For those who recollect, I had written about Shivraj Puri and the Citibank scam in 2011. If you Google, you will find a new financial scam in thecountry every few years.

Some get the name of chit fund, some of alternate investments and there are the multilevel pyramid structure scams. In all these scams, the perpetrator is caught, but the victims never recover fully. This magazine had recently done a story on the recourse available to victims of fraud, however, none of the options clearly
spell out if the victim is fully compensated and there is no clarity on how to recover the lost money.
Before you get going about Mamta Banerjee’s announcement on setting up a `500-crore fund to pay out the Sharada scam, be warned—that is the taxpayer’s money and not the money recovered from the scam kingpin. There is no tough law to check the scamsters and all they manage to do is earn notoriety; many become more famous with films these days chronicling their masterminds.
There is no harsh enough punishment that goes beyond putting these people behind bars or dragging cases to courts. The case of the Sahara group and its activities is well documented, yet there is nothing that has been done to stop them or others like them, nor have all the investors been paid back.The common caveat of buyer beware does not hold good when it comes to finances. Because, unlike most other goods, here the buyer does not go out looking for a product.
There are a few people who walk in asking for an insurance policy or a mutual fund. On most occasions he is sold a financial product of which he has very little knowledge
and awareness. Most policymakers and financial institutions take umbrage when it is pointed out that they have not been able to increase financial awareness. But, in a country where general literacy is poor, there is little done by the institutions to
facilitate financial inclusion, despite tall claims of working towards it.
The recent Cobrapost expose are indicative of the lax attitude of our financial institutions and the loopholes in the system. The way out. Rather than working towards an ambitious and grandiose financial literacy programme, it is time a policy comes into play the moment someone is into money collection activity of any kind. It is also important for people to complain about the friendly neighbour or a distant relative who arrives with mind-boggling moneymaking advice. After all, even in remote places, a para-banking agent will have an identity card to prove whom he represents. As for the insurance, mutual fund and even chit fund industry they are registered agents with licences that allow them to do such business. Anyone soliciting any other financial product without any veracity of their wealth creation schemes are nothing but cheats and crooks. They deserve only one treatment—a trip to the jail.
This way, scams will be checked at the first level and not get into an unwieldy loop and size, which is beyond easy management. As always, the government machinery and regulators arrive the way they do in a Bollywood film—after the deed has been done.
Politicians and activists are back to their business of playing the blame game. Arresting Sen does not solve the problem faced by the victims. Even if he confesses to cheating, the thousands who put in their life’s savings are unlikely to get anything back.

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