Dinosaurs were quoted that humans hunted 2 million years ago

Let’s start this week’s links with a post from the Scientific American that tells you why you can’t roll down Airplane windows. While the answer is obvious, there were a few things there that I didn’t know of and I found the article very useful.

Now, how they came about writing this article is quite a story. Apparently, Mitt Romney, who will be running against Obama in the presidential elections was quoted saying he doesn’t understand why planes don’t have roll down window. Most media outlets picked this up and ran stories on how he doesn’t even understand how a plane works and if you read the comments, you’ll see people’s horror on this person potentially becoming the president of the United States.

Buried deep under all these stories is the fact that when you read his comment in its proper context, it’s clear that he was just joking. But of course, if he was just joking then how do you make ridiculous headlines and sell page-views?

Scott Adams wrote about this topic on his blog a few days ago about how a lot of celebrity quotes either get taken out of context entirely, or sometimes just manufactured for the sake of selling news.

Indian Express has a good story on how Sonia Gandhi was persuaded to back economic reforms.

NYT has a great article on research that shows reformers do win elections in India.

PC Magazine explains the difference between 3G and 4G.

Finally, there seems to be evidence that humans hunted for meat two million years ago.

Enjoy your weekend!

The one big risk of directly investing in stocks

Nifty is up about 20% so far this year, and that means people are slowly getting back to talking about stocks. I see it on my Twitter, Facebook, personal circle and then of course the blog.

I saw an interesting comment from Mr. Ramamurthy the other day, and I thought I’d do a small post on the topic.

First, the comment.

Ramamurthy September 22, 2012 at 7:17 am [edit]

Many times I hear the argument that investing in Equity direct requires research and analysis. It may be necessary for a trader. But, for the long term investor, I don’t think it is. The theory is if do not have the required expertise, invest through mutual funds and avoid direct investing. I am a long term investor and I don’t do any technical analysis or detailed research before choosing the company to invest.I choose big companies with long history behind it. I choose the sector with which I am familiar with. This does not require much research. So far (last 8-10 years), this tactic has been good to me. I did investment through MF also. I withdrew from them after looking at their pathetic performance and after giving the a long rope (5 Years). Expertise of MF managers?

As I’ve written before, I am a retail investor who invests in stocks directly too, so I obviously don’t buy into the argument that small investors shouldn’t invest in stocks directly.

But I do believe that you run considerable risk when you buy individual stocks. If you buy a few mutual funds then probably the maximum exposure to any single stock is 6 or 7 percent, but if you own individual stocks then you may just own 10 or 15 and within those, you may be concentrated in a few companies. If that’s the case and something happens to one of your companies then your portfolio can take a big hit.

You can reduce this risk to some extent by investing in big companies with long histories but then we all know of big companies that have failed too. And even otherwise, often stocks fall 10 – 20 percent in day like IFCI fell yesterday so that will have a big effect on your portfolio if you owned such a stock.

If you’re at a stage in your life that you already have a huge corpus invested and you take a huge hit like the one I spoke of earlier then that can be devastating to your portfolio.

There are a few ways to get away from this risk (albeit not completely).

You can diversify this risk by owning a number of stocks and limiting your exposure to any single one by less than 5%.

Holding cash so you can invest in times of crisis like last year also helps alleviate this risk because you will be able to buy stocks at a low price. This also helps when there is an eventual rebound in the market because at that time you are inevitably sitting on gains.

Another way to alleviate the risk is to be invested in fundamentally strong companies which have little debt, no promoter pledges and a good track record with disclosure and governance. This also means you stay away from penny stocks and other shady companies.

However, at the end of the day there are risks that come from investing in equities directly, and you can only diversify them so much. If you are going to invest in stocks then know that things can always go wrong, and when they do, it’s your responsibility and no one else’s.

Plan for Disabled – Jeevan Adhaar and Jeevan Vishwas

Jitendra P.S.Solanki is a CFP and the Founder of JS Financial Advisors, based at Delhi/NCR. A management graduate from IIT Roorkee, he has 10 years of experience in financial services and started his Financial Planning Practice after becoming a CFP in 2010.Along with services on Financial Planning for masses, he has recently started services for families with special children’s in association with professionals from the specific field. Link to page with about special needs financial planning. He blogs at Your Pocket Money.

Plan for Disabled- Jeevan Adhaar & Jeevan Vishwas

In an episode of Satyamev Jayate, the plight of disabled in India was highlighted. It showed how these people are neglected in providing even the basic amenities. Although there are stories where one has fought to regain a common man life in India, the situation is highly critical. At present in India, there are approximately 4-8% of total population disabled as per a world bank report in 2007.

Worldwide life insurance companies also works for the benefit of special needs. Companies like Met Life USA have dedicated advisors who specialize in advising such families. However, India has to go very far. Nevertheless, LIC made a good start in 1996 by launching Jeevan Adhar –a life insurance plan for disabled dependents. Later the company came out with Jeevan Vishwas for the benefits of families not able to take advantage from Jeevan Aadhar. With an objective to provide regular income for meeting the disabled needs, these plans are the only options in our country today.

Here is a brief review of these two products:

Features of the Policies

Type Jeevan Adhar-Whole life Jeevan Vishwas- Endowment Assurance
Who can take Any person between 22-65 years of age Any person between 20-65 years of age
SA Min-50000, Max- No limit Min-50000, Max-No limit
Premium paying term 10,15,20,25,30,35 or till the earlier death. Single premium option is also available The term of the policy or single premium.
Guaranteed Additions Rs 100 per thousand p.a. up to age 65 of life assured or death if earlier Rs 60 per thousand p.a. for term of policy or death if earlier
Variable Additions Terminal Additions are applicable if minimum 10 years premium have been paid. The rates depend on the future experience of the company On the life assured surviving the date of maturity, or on earlierdeath after five years, Loyalty addition, if any may be paid at such rates and on

such terms as may be declared by the Corporation

Benefits On death of life assured 20% of NCO (SA+Guaranteed Bonus+Terminal Bonus if any) is paid as a lumpsum and rest 80% is utilized to pay annuity for 15 years and life thereafter, based  on the age of handicapped dependent On maturity of policy 20% of NCO (SA+Guaranteed Bonus+Terminal Bonus if any) is paid as a lump-sum and rest 80% is utilized to pay annuity as per the chosen options, based  on the age of handicapped dependent
Supplementary/Extra Benefits These are the optional benefits that can be added to the basic plan for extra protection/option.  An additional premium is required to be paid for these benefits These are the optional benefits that can be added to the basic plan for extra protection/option.  An additional premium is required to be paid for these benefits
Surrender Value No SV Guaranteed or Special SV as applicable in endowment plans
To whom benefits Is payable The benefit is payable to the nominee under the policy. The nominee can be either the handicapped dependent or any other person or trust. Proceeds from the policy has to be utilized  for the benefit of the handicapped dependent The benefit is payable to the nominee under the policy. The nominee can be either the handicapped dependent or any other person or trust. Proceeds from the policy has to be utilized  for the benefit of the handicapped dependent
Income tax benefit Under section 80DD of IT act Under section 80C of IT act
Is disability certificate required Yes-from govt. hospital Only  parents declaration is required
Special Provisions In the event of the handicapped dependent predeceasing the life assured the contract ceases and the life assured will have the option of keeping the policy for a reduced paid up or receive refund of premiums paid In the event of the handicapped dependent predeceasing the life assured the life assured will have the option to surrender the policy or keep it in force by regularly paying the premium and will have the option f taking the benefits in lump-sum or bifurcating it in 20-80 ratio as enumerated above


Why Two Policies?

Initially LIC launched Jeevan Adhar policy but the rules were very stringent. The criteria for disability was under rule 11A of income tax rules, which eventually didn’t catered to the needs of handicapped dependent whose degree of handicap was lower. To bridge this gap the company introduced Jeevan Vishwas where the guardian can provide benefits to their handicapped dependent whose degree of disability does not meet the criteria in Jeevan Adhar.

The Difference

There are many benefits introduced in Jeevan Vishwas in comparison to Jeevan Adhar. Firstly, it has a maturity value which assures the payment within a specified period. Secondly, annuity in Jeevan Vishwas has many options now. One can select on the basis of his/her dependent requirement. However, the guaranteed bonus in Jeevan Vishwas is much lower than Jeevan Adhar policy.


Jeevan Adhar has very high returns when you compare with any traditional plans. However, the age restriction of 65 years to receive guaranteed bonus lowers the return of the policy as you live beyond this term. In Jeevan Vishwas the bonus rates are higher than other traditional plans but lower than Jeevan Adhar.

Here is a snapshot of returns these two policies generate at different stages of life. (Based on Illustration as per LIC website)

Jeevan Aadhar

This is an illustration of a parent of age 35 years having a special child of age 5 years. The premium is Rs 4095 for Rs 1 lakh SA and paid for 15 years.

Age at Death Total Premium Paid (Rs) Guaranteed Additions (Rs) Variable Additions (Rs) IRR
45 40950 190000 0 27%
50 61425 240000 0 15.76%
55 61425 291000 1000 11.74%
65 61425 390000 33000 8.46%
75 61425 400000 140000 6.68%


Jeevan Vishwas

This is an illustration of a parent of age 35 years having a special child of age 5 years. The premium is Rs 4008 for Rs 1 lakh SA and paid for the term of policy or earlier death.

Ageat Death/Maturity Total Premium Paid (Rs) Guaranteed Additions (Rs) Variable Additions (Rs) IRR
45 40080 154000 0 23.64%
50 60120 184000 1000 13.12%
55 80160 214000 10000 9.02%
65 120240 280000 31000 5.58%



There are two major drawbacks in these policies:

  1. Bonus till 65: Jeevan Adhar is a whole life policy and so there is no maturity. The proceeds go to the beneficiary only after the death of the policyholder. There is always a high probability that you may outlive the term of the bonus declaration.
  2. Annuity:  The benefit in both the policy is partly in lump-sum and majorly as annuity. In India the annuity rates has been very low and not inflation indexed. A fixed annuity is a deterrent to the beneficiary since the expenses grows every year. Thus, although annuity is paid for the life time the money received may fall short in the future.

Should Parents of Disabled Dependent Consider

The risk of dying too early is always there but not certain. However, families with disabled dependents look products which can give fixed income to meet the regular needs in their absence. The product suits in the requirement but cannot be entirely relied upon. Combined with a term insurance it can work for the objective since it guarantees a fixed income to the beneficiary.

SREI Infrastructure Finance Limited NCD Review

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

SREI Infrastructure Finance Limited is the latest company to join the bandwagon of non-convertible debentures (NCDs) and without making much noise about it, the issue has already been launched by the company on September 20th. Though SREI Infra issued tax-saving infrastructure bonds last financial year, this is the first public issue of NCDs by the company.

This is a relatively small size issue of Rs. 150 crore only, including the option to retain Rs. 75 crore in case of oversubscription. The company plans to use the proceeds for various financing activities, to repay its existing loans, for capital expenditures and other working capital requirements.

About SREI Infrastructure Finance Limited

SREI Infrastructure Finance Limited is primarily engaged in providing infrastructure financing for the development of power, roads, urban infrastructure, telecom, SEZs and industrial parks etc. It is also engaged in equipment leasing, rentals & auctioning, project financing, project development, advisory and fund management. The company has also been granted the status of Infrastructure Finance Company (IFC) by the RBI, which makes it one among very few companies which have been given this status.

Financials of the company

SREI reported total income of Rs. 2,446 crore for the year ended March 31, 2012, as against Rs. 1,638 crore it generated for the year ended March 31, 2011, an increase of 49%. But, the company reported a decline of 38% in its net profit, which stood at Rs. 111 crore in FY12 as compared to Rs. 179 crore in FY11.

Gross NPAs and Net NPAs of the company stood at 1.25% and 1.12% respectively as on March 31, 2012. The company had zero NPAs till March 31, 2011. Debt Equity Ratio of the company stands at 1.54 times before this issue and will result in 1.60 times after this issue.

Here is the link to check the latest audited financial results of the company ending March 31, 2012 –

About the NCD Issue

These NCDs would be secured in nature and carry a maturity period of 7 years under all its options. These NCDs also offer a “Put Option” to the individual investors, which gives them the authority to redeem these bonds after 60 months from the date of allotment.

40% of the issue is reserved for the individual category portion, 40% of the issue is for the non-institutional investors and the remaining 20% of the issue is for the institutional investors. In this issue, there is no differentiation between the retail individual investors, including the HUFs, investing less than Rs. 5 lakhs and high-networth individuals (HNIs), investing more than Rs. 5 lakhs. The allotment will be made on a first-come-first-serve basis.

Category I – institutional investors and Category II – non-institutional investors are not allowed to subscribe for Series I – monthly interest option and Series II – quarterly interest option, whereas individual category investors can subscribe to any series of these NCDs.

Series I II III IV
Tenor 7 Years 7 Years 7 Years 7 Years
Frequency of Interest Monthly Quarterly Annual Cumulative
Category of Investors Individual Individual All All
Minimum Investment Rs. 1,00,000 Rs. 1,00,000 Rs. 10,000 Rs. 10,000
Coupon 9.84% 9.92% 10.30% N.A.
Effective Yield 10.30% 10.30% 10.30% 10.41%
Redemption Amount Rs. 1,000 Rs. 1,000 Rs. 1,000 Rs. 2,000
Put Option Yes; After 60M Yes; After 60M Yes; After 60M Yes; After 60M

There are many features in this issue which make it quite unattractive for the investors. Firstly, the interest rate is quite low as compared to the other issues. The company is offering these interest rates under four different series – payable monthly, payable quarterly, payable annually and cumulative annually, offering 9.84%, 9.92%, 10.30% and 10.41% per annum respectively. There is very little additional incentive for the retail investors in this issue.

These NCDs have been packaged in such a manner that the effective yield to the individual investors would be either 10.30% p.a. or 10.41% p.a. at the most. Under the cumulative interest option, the individual investors will get Rs. 2,000 and the institutional and non-institutional investors will get Rs. 1,980 at the time of maturity against Rs. 1,000 invested. The company will not deduct any TDS on the NCDs taken in the demat form.

Secondly, the company has decided to keep the minimum investment requirement of Rs. 1 lakh (or 100 NCDs of face value Rs. 1,000), if an individual investor opts for the monthly or quarterly interest option. I think this amount is too high to be the minimum investment from the small retail investors’ point of view.

Moreover, these NCDs are going to get listed only on the BSE and as the issue size is relatively small, this might create a liquidity problem in future.

It is not mandatory to have demat account to invest in this issue as the investors have the option to apply these bonds in physical form also. NRIs and foreign nationals among others are not eligible to invest in this issue.

The issue has been rated ‘CARE AA’ by CARE and ‘BWR AA’ by Brickwork Ratings and closes on October 25, 2012.

Like Muthoot Finance NCDs, I don’t find any single reason for me to invest in this issue as well. I think SREI Infra wants to test the water of the NCDs market with this issue, keeping the rate of interest below 10%. It is not going to attract great interest from either the institutional investors or the retail individual investors and should ideally remain undersubscribed even with the issue size of Rs. 75 crore only.

Muthoot Finance NCD Details

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Muthoot Finance Limited will be the next company to come out with its issue of non-convertible debentures (NCDs) this month from September 17th. This issue will be the fourth issue from the company’s shelf in just over one year’s time.

Muthoot collected Rs. 1,413 crore through its previous three issues – Rs. 693 crore from Series I, Rs. 460 crore from Series II and Rs. 260 crore from Series III. The size of this NCD issue is Rs. 500 crore including a green-shoe option of Rs. 250 crore.

The company plans to use the proceeds for various financing activities including lending and investments, to repay existing loans, for capital expenditures and other working capital requirements.


About Muthoot Finance Limited


Muthoot Finance Limited, a flagship company of the Muthoot group, is primarily into the gold financing business which constitutes 99% of its total advances. It is also the largest gold loan company in India. Muthoot started its lending business in 2001 after getting RBI’s registration to function as an NBFC and currently it has a network of 3,780 branches all over India. The company till date has no major plans to diversify its business from gold loans to any other streams of financing.

Financials of the company

During the year ended March 31, 2012, the loan book of the company stood at Rs. 21,338 crore as against Rs. 11,682 crore during the year ended March 31, 2011, an increase of approximately 83%. Assets under management (AUM) stood at 26,707 crore in FY12 vs. 18,152 crore in FY11.

Muthoot reported revenues of Rs. 4,549 crore in FY12 as against Rs.2,316 crore in FY11, a jump of almost 96%. Net profit of the company increased by a massive 81% from 494 crore in FY11 to 892 crore in FY12.

Gross NPAs and Net NPAs of the company stood at 0.56% and 0.57% respectively as on March 31, 2012 as against 0.29% and 0.33% respectively as on March 31, 2011. Debt Equity Ratio of the company stands at 6.63 times before this issue and will result in 6.80 times after this issue.

Here is the link to check the latest audited financial results of the company ending March 31, 2012.

About the NCD Issue

This issue has seen a cut of 1.50% or 1.25% per annum in its interest rates across the board vis-a-vis its last two issues which the company came out with during December 2011 and March 2012 respectively. I do not understand the rationale behind this massive rate cut as the fundamentals of the company or the fortunes of the gold loan business have only deteriorated since then, as the Reserve Bank of India (RBI) has become stricter with the gold financing norms. Competition from the banks and other gold financing companies has also increased quite considerably.

I think the reason for this cut could only be attributed to the fact that during the previous two issues, the investors were not in a mood to invest any money in Muthoot NCDs after a severe beating all the listed NCDs suffered last year. Also, during that period, there was a flood of tax-free bonds and tax saving infrastructure bonds, which was keeping all the investors busy and ignorant to the Muthoot NCDs. In fact the company had decided to extend the closing date of its last issue from March 17th to April 9th and still the issue closed undersubscribed after remaining open for 39 days from March 2nd. So, I think the rate cut is not justifiable.

Here is the link to check the list of all previous Muthoot Finance NCD issues.

Though Muthoot’s loan portfolio has only one component in the form of gold loans but as far as the interest rates and maturity periods are concerned, the company always offer a bucketful of options. This year also they have many options – 2 Year NCDs, 3 Year NCDs, 5 Year NCDs and 6 Year NCDs offering 11.50%, 11.75%, 12% and 12.25% per annum respectively. “Option V” this year offers to double your money in 6 years, which was 5.5 years in the last two issues. Religare Finvest NCDs are promising to do the same for you in 70 months i.e. 5 years and 10 months, 2 months earlier than Muthoot. There is an option of monthly interest also but that is there only in the 5 year option with 11.75% p.a. rate of interest.

Option I II III IV V
Tenor 2 Years 3 Years 5 Years 5 Years 6 Years
Coupon – 2012 11.50% 11.75% 11.75% 12% 12.25%
Interest Payment Frequency Annual Annual Monthly Annual Cumulative
Redemption Amount Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000 Rs. 2000
Coupon FY2011 – I 12% 12.25% N.A. 12.25% N.A.
Coupon FY2011 – II 13% 13.25% N.A. 13.25% 13.43%
Coupin FY2011 – III 13% 13.25% N.A. 13.25% 13.43%
Market Price FY2011 – I Rs. 1000 Rs. 980.2 N.A. Rs. 965.8 N.A.
Market Price FY2011 – II Rs. 1076.8 Rs. 1067 N.A. Rs. 1080 Rs. 1091
Market Price FY2011 – III Rs. 1036 Rs. 1053 N.A. Rs. 1050 Rs. 1058

* Tenor for 2nd and 3rd issue in FY 2011 under Option V was 5.5 years instead of 6 years.
** Interest Payment Dates: Issue I – September 14 every year, Issue II – January 18 every year, Issue III – April 18 every year
*** Data as on September 13, 2012

The interest earned will be taxable as per the tax slab of the investor but the company will not deduct any TDS on the NCDs taken in the demat form. The company has decided to keep the minimum investment requirement of Rs.10,000 (or 10 bonds of face value Rs. 1,000) which is on a higher side as compared to Rs. 5,000 which was there with the NCD issues of IIFFL and Shriram City Union Finance Limited (SCUF).

50% of the issue is reserved for the retail investors i.e. for individual or HUF investors investing up to Rs. 5 lakhs, 35% of the issue is reserved for the non-institutional investors and HNIs and the remaining 15% of the issue is reserved for the institutional investors. Again, NRIs and foreign nationals among others are not eligible to invest in this issue. The allotment will be made on a “first-come-first-served” basis.

These bonds will also list on both the stock exchanges – NSE and BSE. Investors will have the option to apply these bonds in physical form also except the “Option V” bonds which are available only in the demat mode. The issue has been rated ‘AA-/Stable’ by CRISIL and ‘[ICRA] AA-(Stable)’ by ICRA.

Performance of the bonds issued last year

Most of the NCDs issued by Muthoot during January and April this year, offering 13% coupon or more, are still trading at a yield of 13% or more. NCDs with coupon 13% for 2 years in the second issue last year are trading at Rs. 1076.80, yielding 13.53% and NCDs with coupon 13.25% for 3 years in the same issue are trading at Rs. 1067, yielding 14.17%. You can check the prices of last year’s NCDs in the pasted table here.

I have a view that it is the most unattractive issue of this financial year. With other issuers offering better rates than Muthoot and its previous issues quoting at a yield of 13% plus, I find no single reason for me or for any of my family members or clients to invest in this NCD issue of Muthoot Finance. The issue gets closed on October 5, 2012.

Now almost all the companies, which issued their NCDs last year, have offered their first round of NCDs this year again. Only one out of all these issues, NCD issue of Shriram Transport Finance, has got listed and that is currently trading at a marginal discount to its issue price. It would be very interesting to observe how these NCDs list after RBI comes out with its monetary policy on 17th of this month. If we see a rate cut from RBI this time around, then there should be a rise in the prices of all the listed NCDs and bonds. Let’s see what RBI does after a very long awaited diesel price hike has happened.

CIBIL Dispute Resolution Process – Rectification of Discrepancies in Credit Report

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

To err is human. Sometimes we make mistakes and we suffer. Sometimes others make mistakes and again we suffer. When we suffer due to our own mistakes, it is perfectly acceptable. But why is it so that we always need to suffer even when others commit mistakes or errors? That is where CIBIL Dispute Resolution process comes into the picture to help us.

A few days back, Paul and R Srinivas, two of the readers of OneMint, posted their comments/queries on one of the previous CIBIL posts. While Paul wanted somebody to take proactive steps to create more awareness about CIBIL credit score and Credit Information Report (CIR), he also pointed out something which constitute mistakes that we commit. This is what Paul had to say about it:

The people who have credit are also not aware of a credit score – especially even people working in IT/Post Graduates – they seems so detached from all these. They spend on credit cards, never pay back, switch jobs, cut cards without paying up – and finally end up with the worst credit score.

R Srinivas has been suffering due to mistakes committed by others i.e. the banking staff. Probably the banking staff did not send its report for CIBIL to update Srinivas’ records.

I have taken the CIR Report online and see that I have some settlements which were done 2-3 years back. I have all the letters provided by the Banks. They were around 5 Credit Cards and 1 PL. Due to some issues, I could not pay on time. But I have cleared all of them and have been provided with Settlement letters and in some has been mentioned that it will be updated in CIBIL report in 45-60 days. But it has already past 1 year and nothing has happened. Now if I apply for a loan it is getting rejected.

Could you please guide me how I can get my name cleared in CIBIL. I have been maintaining my bank accounts very well and my 2-wheeler loans as well. I assume that the score need for a Loan is above 750. Is that Correct.

Also can I contact Bank Ombudsman. Will they be able to clear my Name ?

CIBIL cannot be a party to all kinds of disputes. We need to understand that CIBIL is just a repository of credit information of all the customers of CIBIL’s members which include banks, financial institutions, non-banking financial institutions (NBFCs), housing finance companies (HFCs) and credit card companies.

CIBIL is not the owner of customers’ credit information i.e. it just collects this information from all its members and provides all the collected information to the same members whenever they require it. CIBIL cannot correct or make changes to these records on its own except the changes which fall in its purview. CIBIL makes changes to your credit information only when it is confirmed by the respective lending institution(s).

There can be more than one reason for these kind of mistakes/errors and some of them are:

1) Disputes where CIBIL Dispute Resolution process can help:

Data entry errors either by the bank or CIBIL – Rectification of CIR is required:  There are human errors in which either some of your personal information is inaccurate or some of your account details are wrong. The fields that can be rectified are – * Name * Date of Birth * Gender * Income Tax ID * Passport Number * Voter’s ID * Telephone Number(s) * Address * State * PIN * Account / Loan Type * Account Status * Ownership Type * Date of Last Payment * Date Opened * Date Closed * Sanctioned Amount / High Credit * Current Balance * Amount Overdue * DPD / Asset Classification

Non-updation of data either by the bank or CIBIL – Updation of CIR is required – Sometimes the staff of a bank or CIBIL just skip to update the data of settlement of a disputed credit facility, probably like how it happened in Srinivas’ case. In these cases, you can raise a dispute with CIBIL to get the data updated.

Updation in your personal identification information – Ensure that you have provided updated and accurate documents to the bank or CIBIL – When there is some updation in your own personal information, you should get it updated in CIBIL’s records as well, submitting your relevant documents.

Ownership mismatch of an account or Duplicate account – Rectification of CIR is required – If you find that some personal details or one or more account(s) on your CIBIL report do not belong to you or one or more account(s) are getting reflected more than once on the report, you can initiate a dispute request. CIBIL will look into the matter and update the information if required.

2) Disputes where CIBIL Dispute Resolution process cannot help:

Non-payment of outstanding amount on your loan or credit card including penalty charges – If you have a dispute with a lender itself regarding the outstanding amount on your loan or any other such matter, to which neither of the party is getting agreed, in that case, CIBIL will not be able to raise your request.

Non-updation of data within 45 days of making a payment – Lenders report information to CIBIL on a monthly basis, which would mean that the latest payment, which the lender is still to report, will not reflect on your CIBIL credit report.

Non-payment of outstanding amount on an “add-on” card – If an add-on card has been issued in your name to make you an authorised user of that card, then you are not liable to make payments against the outstanding amount. The primary card holder is responsible for payments on both the cards, primary as well as add-on credit card. But the fun ends here. If the primary card holder defaults on the payments for the add-on card, this will get reflected as a default on the CIBIL reports of both primary and add-on card holders. CIBIL will not be able to rectify your report, even if it was not your responsibility to pay for it.

Details of a closed account – CIBIL need to maintain all the accounts, delinquent accounts as well as good standing accounts, for a minimum period of 7 years from the date the account was last reported. CIBIL will not remove these details, even if you desire so.

Understanding CIBIL Dispute Resolution Process

It usually takes 30 days for a dispute to be resolved through CIBIL’s online dispute redressal mechanism. The process might test your patience as CIBIL depends on the concerned lending institution for this updation/rectification. Once a dispute request is raised, CIBIL will route your request to the CIBIL Dispute Resolution Department for analysis which will try to resolve the complaint itself, if that is possible without approaching the lender. Most of the times, the mistakes are not from the CIBIL’s end but are from the lender’s end.

If the updation/rectification falls beyond CIBIL’s purview, then it will send the dispute request to the relevant lending institution for resolution in whose purview the matter falls. Once the lender checks its records and responds back to CIBIL, either positively or negatively, CIBIL will then update its records. You will receive an email notification informing you of the results of the dispute request. To get your updated CIBIL report, you will again have to shell out Rs. 470 to purchase it.

How to raise Dispute Request

The easiest way to initiate a dispute request is by submitting a duly completed On-Line Dispute Form. You need to identify the erroneous information and mention a brief description of the error in this form. You will also be required to provide your personal details which must be accurate for CIBIL to initiate the dispute process and communicate the process outcome to you.

A dispute request can be raised based on a CIBIL report having a unique 9 digit “Control Number”. This number is displayed on the top right hand side of every report and it would be a new number whenever a fresh report is generated. This number and the date on which the CIBIL report got generated are mandatory inputs for you to submit your request as it helps CIBIL to identify the report on which you would like to ‘dispute’ information. You can ask the lender to provide you with this control number in case A unique Dispute ID would get generated once you submit the form.

I hope it must be clear to all of us by now how to raise a dispute request when there are mistakes/errors in our CIBIL report. It is the duty of CIBIL to help you resolve your dispute request and most importantly, the process is very simple.

How do I know that I’m invested in the wrong mutual fund?

Sorabh had posted a fairly lengthy comment a few days ago, and I really don’t know the answer to all his questions or even the primary one which was how you go about reviewing your mutual fund portfolio but I do have some thoughts (which are probably fairly obvious to everyone) on how to identify a mutual fund that you should get out of.

First, here is the comment (edited) for context:

Sorabh September 2, 2012 at 12:06 am [edit]

Hi Manshu,
Can you do a write up or invite someone to do a write up on “How to Review your Mutual Fund Portfolio”, the standard statement that I read and listen to is invest in MFs and review your portfolio in every 6 months. I am not sure how do I go about reviewing it.

For example, it’s now two years that invested in SIPs in certain funds, some of the funds were giving a return of 30% few months back but i didn’t do anything about it. In fact I am not sure what to do, do I just shave off the profit only?

Then do what with that profit, put it in a debt fund? Or put that profit in my worst performing fund? or do I completely sell off that fund, then what do I do with a lump sum?

I don’t want to invest the whole sum in another MF, as I may be getting a bad deal at that time. Do I use SWP? When do I use SWP? When do i kick out a fund?

They say when its performing below its index average…OK in what time? 3 or 6 months? also don’t I lose in getting the fund taxed if i pull the plug before 1 year?
So I am looking for you assistance to basically reveal some “MF juggling strategies” to make money in the long run. Because today after 2 years I see my whole mutual fund portfolio giving me 5% return, some of the funds in it are 30% profit , while some which were 20% profit 6 months back are at  a 5% loss today. I am really banking on these mutual funds to help me retire. I don’t want to be disappointed when I am 60 because when you look in retrospect, investing a lump-sum 10 years ago in a fund is a better deal than a SIP in the same fund (we discussed this a while ago) so I am not sure about the strategy, with my broker taking 1.6% (ICICI Direct) my returns are in fact 3.5% today.


Can you do a post on this?

The one specific question that I have some thoughts and experience is which mutual fund I want to get out of, so I’ll take that up in this post.

When you invest in a mutual fund or ETF – there are broadly two decisions that you’re taking – first one is that you want to invest in this particular asset class so you could say that I believe that PSUs are going to do well, or I believe that blue chips are going to do well, or just that index stocks are going to do well, and that’s the first decision you take.

The second decision is within this space, which fund should you invest in and that question is a lot harder than the first one.

So let’s take the second question first.

In my mind, the first reason for dumping a fund is when it doesn’t track its underlying asset correctly. So, if you bought an infrastructure mutual fund which is doing much worse than the infrastructure index because they own a lot of banks, that’s one reason to get rid of the fund. It is not doing what it is expected to do and you want to get into something that is doing what it’s expected to do.

When thinking about this it’s important to understand that the fund should track its underlying index not what you think its underlying index is. I’ve seen a few comments that say something like my real estate funds are bad because they are worse than the index, but the real estate funds aren’t supposed to track the index; index funds are supposed to track the index. You chose real estate funds to track real estate so it’s the first decision that needs reviewing, not the second decision.

The second reason I think is when other cheaper funds come in the market, and you have more options than before. Gold ETFs are a good example of this where for some years GoldBees was the cheapest and had good volumes, but now there are many more with low expenses which had similar performance. So now there is no reason to just stick with GoldBees and you can look at owning other names as well.

If you bought an expensive, under performing fund to begin with then you can think of switching to something else. You may have not known about this factor earlier, but now that you know, you can get into something better.

Another reason is if you find something about the fund manager that changes your opinion of the fund and makes you uncomfortable, that’s a reason to dump the fund.

If I bought into a NFO and find that the fund never gathered much popularity and has low assets under management, I’d like to get out of such funds as it’s not likely that it will get much attention from the fund house and may be merged with another scheme.

I have written about all these factors earlier as well in my post on under performing funds, and my belief from that time hasn’t changed that the gains you will make from your mutual funds will be because the market did well, and that’s an assumption that you are making – that the market will do well over long periods of time. If you weren’t making that assumption then 100% of your money would be in equities (which I assume it’s not) and there’s just no way to get around this fact.

You may look at your mutual funds in despair if they have returned only 3.5% in two years but if the market has also returned only that much then what else could an equity mutual fund do? It’s not the fault of the mutual fund in that case, and I don’t see a lot of point in churning funds.

The time frame also needs to be longer, if you look at time to retirement, that’s probably 30 years, but you want to make a decision on the fund in 3 months – that’s a bit lopsided. You need to see the funds at least for a year to get any sense of what they’re doing.

My own opinion on this is it is neither practical nor possible to zero in on the best fund year after year in a category and if you have something which is close to the underlying index then that’s good. Most of your gains will come in by being in that asset class and not because you own the best fund in that category. Of course, it’d be great to be in the best fund, but then how do you do that?

Now, to the first question – which is should I be in this asset class at all? That’s up to the reason of why you invested in those assets in the first place, and have those reasons changed. If they have changed, then you change, else stick with it.

This post is from the Suggest a Topic page.

Religare Finvest NCD Issue Details

Religare Finvest which is a fully owned subsidiary of Religare is also coming out with a NCD issue shortly, and this is about the same time when they issued NCDs last year.

I’m going to talk about some key points that people looking to invest in NCDs are looking for and then move on to some general aspects.

Issue Open and Close Date: The NCD open date is on September 14 2012 and the close date is on September 27 2012.

Issue Available to NRIs: NRIs can invest in these NCDs on a non – repatriable basis.

Minimum Investment Amount and Listing: There will be 5 series and the minimum for applying in any series is Rs. 10,000. There will be 4 categories of investors and like the other issues, retail investors will get a slightly higher rate than others. Here are the 4 categories of investors:

  • Institutional
  • Non Institutional
  • Non Reserved Individual Investors: Individual investors who invest more than Rs. 5 lakhs.
  • Reserved Individual Investors: Individual investors who invest less than Rs. 5 lakhs.

Here is a chart that shows the terms and conditions of the 5 series.


Religare Finvest 2012 NCD Issue
Religare Finvest 2012 NCD Issue


Interest Payment and Record Date: Interest will be paid on 1st April every year wherever applicable, and the record date is going to be 10 days prior to the interest payment date.

Secured or Unsecured: This is a secured issue; this doesn’t however mean that your money is guaranteed by anyone and if you’re unsure of what this means then please leave a comment.

Credit Rating: The issue has been rated “CARE AA-” by CARE and “ICRA AA-” by ICRA. Both of these are good ratings.

Other Things to Consider

These yields are certainly better than the Shriram City Union NCD that came out before this one, and at over 12% for all maturities I think this is pretty decent. Whether you should invest or not of course depends on where else have you invested and if this issue fits in with your other goals or not.

One thing I have always said in the past and want to repeat here is that it is not possible for most retail investors or even auditors to sniff out trouble in a company till it’s very late, and in absence of that, the best bet is to spread your money around and be safe in case something goes wrong.

This post is from the Suggest a Topic page.

Currency Composition of India’s External Debt

I wrote about India’s external debt over a year ago, and the Ministry of Finance has released a new report on India’s external debt that gives a good opportunity to revisit the topic, and look at some numbers again.

For a short period earlier this year, falling Rupee, declining forex reserves and rising external debt made some articles talk about an Indian sovereign debt default but that didn’t last long and it’s largely because government’s debt is only a small portion of the overall external debt.

Out of the total debt of $345.8 billion, government’s share was $81.9 billion and the remaining $ 263.9 was others.

India External Debt: Sovereign and Others
India External Debt: Sovereign and Others

This total external debt has increased from $305.9 billion from March 2011 and growth has been driven by a rise in external commercial borrowings and NRI deposits.

RBI took several measures to arrest the Rupee slide, and freeing NRO and NRE interest rates were some of those steps, so in a way that debt increased due to NRI deposits is a good thing.

The interesting thing about NRI deposits and their contribution to external debt is that they make Rupee the second most dominant currency in India’s external debt. I was really surprised to discover this last year, and seeing INR in the list of currencies in which India owes money to foreigners was the last thing I expected.

Here is the currency composition of India’s external debt as at March 2012.

India External Debt Currency Composition
India External Debt Currency Composition

I think the Rupee being a big part of the external debt is a pretty significant thing and if you look at how NRIs open their NRE / NRO fixed deposits — a lot of them don’t have the intention to convert this back to a foreign currency, and need to use this money in India itself. Not all of the INR debt is NRI deposits though, from last year’s numbers I know that about 30% of this is FII money that’s invested in government treasuries and corporate debt, and that has a higher probability of going out of the country one day.

From whatever little I understand, it seems to me that worrying about external default should feature pretty low in the long list of things that India has to worry about and tackle more quickly like a big fiscal deficit, stalled reforms, corruption, lack on infrastructure investments, land reforms, labor reforms and even the depreciating Rupee.



Now Get Live Subscription Numbers for IPOs of NCDs and Tax-Free Bonds

 This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Markets for corporate non-convertible debentures (NCDs), mostly issued by NBFCs, and tax-free bonds issued by public sector undertakings (PSUs) like NHAI, PFC, REC, IRFC and HUDCO have been expanding at a very rapid pace. With more and more awareness spreading about them, investors are getting interested in these instruments as equity markets are taking very long to come out of the woods.

But, as these securities are relatively new to many of the retail investors, they are finding it difficult to get reliable information about these securities. Accurate, relevant, and timely information is the key to good decision making. Realizing this and to keep the market participants, including the investors, well informed, SEBI has made it mandatory in the public issues of debt securities to bid for all the applications before submitting it to the collection banks.

This process for the public issues of debt securities like NCDs or tax-free bonds is very much similar to the IPO process of equity offerings. Earlier the investors used to remain clueless about the subscription figures of these issues, hunt for various sources for this info and seek help from their respective brokers, sub-brokers, agents or forums like OneMint. Lack of information or delayed information was making them indecisive to invest in these issues as they did not want to block their money without getting the bonds allotted.

Now with the information running Live on the exchange(s) where the issuer has proposed to list its debt securities, anybody can check the investors’ response to the issue online very quickly.

What was happening earlier?

Earlier the investors or the intermediaries assisting the investors were not required to visit any of the bidding centers in order to submit their applications. They used to visit the collection banks and submit the applications directly along with the cheque/demand draft and other necessary documents. The collection banks used to realize the payments for these applications in the Escrow Account of the issuer, punch the data into their systems by the evening and report the details of the same to the Registrar.

The application forms were then getting forwarded to Registrar for procurement analysis and resolution of investor grievances. As there were no bidding provisions, data was not getting updated on a real time basis and the subscription figures of the issue were getting updated very late in the day or in the morning of the next day. This was making the investors and the intermediaries unaware of the subscription figures.

What will happen now onwards post SEBI circular dated July 27, 2012

SEBI vide its circular no. CIR/IMD/DF-1/20/2012 dated July 27, 2012 has directed to the stock exchanges to put in place necessary systems and infrastructure to facilitate making applications to public issue of debt securities. The bidding process has also been made mandatory to put in place such systems. Now, because of this, the investors or the intermediaries assisting the investors will be required to visit the bidding centers of the syndicate members/trading members of the stock exchanges to submit their applications, which in turn will upload all the details of these applications on the online platform of the stock exchanges. This will be made Live by these exchanges on real time basis on their respective websites for market participants’ reference.

Now it will be the responsibility of these syndicate members/trading members to submit your applications along with the cheque/demand draft to the collection banks. The collection banks will continue to realize the payments for these applications in the Escrow Account of the issuer and forward these applications to the Registrar for procurement analysis and resolution of investor grievances.

India Infoline Finance Limited (IIFFL) has become the first company for which this system has been implemented by both the exchanges, BSE and NSE, where its NCDs are proposed to be listed. Here are their respective links to check the latest data for this issue’s subscription figures:


You can check the break-up of the subscription figures by each category of investors and their respective sub-categories of investors from this page of NSE.

Here is the graphical display of all the bids received in the issue cumulatively on BSE and NSE –

“Total Issue Size” shows the number of NCDs the company is offering in the issue without the green-shoe option, which is 25,00,000 (or 25 lakhs).

“Total Bids Received” shows the number of NCDs for which the bids have been received by both the exchanges collectively. This figure stands at 61,74,680 by the closing hours on September 6, 2012. Out of these 61,74,680 NCD bids, Series 1 (Monthly Interest Option) got the maximum number of bids for around 48,86,900 NCDs, Series 2 (Annual Interest Option) got bids for around 6,93,500 NCDs and Series 3 (Cumulative Interest Option) got bids for around 5,94,300 NCDs.

“No. of times issue is subscribed” is a figure which is derived by dividing Total Bids Received by Total Issue Size i.e. 61,74,680/25,00,000 = 2.47 Times.

I think this is a good step taken by the market regulator SEBI to keep us updated with the subscription figures of debt securities online. But, at the same time, it will cause some inconvenience to the investors who were earlier getting their applications submitted themselves with the collection banks. Now they will need to approach the syndicate members/trading members for bidding first and these members might insist the investors to use their applications before accepting them. SEBI need to appoint neutral participants to play the role of bidding centers. Lets see what happens!