Month: April 2014

Conned Indian Financial Consumer

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As these examples from Moneylife Foundation’s Helpline show, the consumer has little chance of being treated fairly by companies, regulators and intermediaries

Mr Mallick from Sambalpur in Orissa runs an NGO. He has 17 insurance policies, sold to him by eight banks through their Bankassurance partners, with large premiums. He claims to have borrowed funds from various banks for a project (which we gather involves lending to the rural poor like a banking correspondent) and was persuaded to buy insurance policies. Since Mr Mallick’s English is poor, it is not clear if there was coercion; he alleges ‘gross mis-selling’.

The real question is: Why would anyone, in his right senses, buy 17 insurance policies and commit to the payment of such high premiums? We believe he was made false promises by his bankers, taking advantage of his financial illiteracy. Like Suchitra Krishnamoothi, he too made the mistake of trusting his bankers and did not suspect that they would mislead him.

Moneylife Foundation took up the issue of mis-selling of third-party financial products with RBI governor, Dr Raghuram Rajan. We are most upbeat that Dr Rajan, once he applies his mind to the issue, will begin to see how people’s finances are decimated by bankers who prey on their ‘trust’.

We are especially heartened by the speed with which he has directed banks not to levy penalties for failure to maintain minimum balances on inoperative accounts. He has also implemented the long-pending demand to scrap foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, through a directive.

Click Here to read the full article by Sucheta Dalal.

 

F.S.I. under different schemes

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F.S.I. under different schemes

vinod sampatBy Accommodation Times News Service

By Adv. Vinod Sampat and Adv. Dharmin Vinod Sampat

Q. Please give an idea of the FSI available under different schemes?

Ans: The FSI granted is as under.

Sr. No DCR Details                                   F.S.I
 Island city Suburbs
1 33(4) Starred category residential hotels:-1 To 3 Starred category hotels.4 Starred category hotels.5 Starred category hotels. 3.004.005.00 3.00 + 0.50TDR3.00 + 0.50TDR3.00 + 0.50 TDR
2  33(5) Development/ Redevelopment of Housing scheme of Maharashtra housing and Area Development Authority.

The notification issued by the Urban Development Department dated 8.11.2013 states that for any particular land which is above 4,000 Square Meters and being used for residential purpose shall have to provide for economically weaker section or lower income groups, a housing or plot size or leave an incentive or equivalent area of 20% of the net plot area for constructing EWS/LIG tenants or tenements which will subsequently be handed over to the MHADA. This is applicable for any plots and under any regulation as of now. This will result in increase to burden of purchasers and builders. Common Amenities like car parking, open space will be severely effected.

 

 2.5(Incentive F.S.I of 50% will be given to area up to  4000 Sq.mt. and 60% for above 4000 Sq.mt)+ TitBit F.S.I + Entire Layout F.S.I + Fungible F.S.I 2.5(Incentive F.S.I of 60% will be given to area up to  4000 Sq.mt. and 75% for above 4000 Sq.mt)+ TitBit F.S.I + Entire Layout F.S.I + Fungible F.S.I. 

 
3 33(6) Reconstruction of building destroyed by fire or which have collapsed or which have been demolished  F.S.I in New Building not to exceed that of Original Building.
4 33(7) ReconstructionorRedevelopmentofCessed building in the IslandCitybyCo-opHsg. Society or of old building to corporation or of old building belonging to police department.

This is the pet scheme of many architects. If there are certain members who are objecting the fsi of such members will be subtracted. The catch is members/tenants cannot sell the premises for a period of three years since they get the possession of the flat.

 

 F.S.I of more than 3.00 for chawls/ building constructed before 1940 and additional incentive F.S.I of 50% for utilized area for rehabilitating existing Tenants NIL

Be blunt and ask the builder under which scheme he will develop the property and what is the total area that would be constructed by him.

 
33(7) In many buildings FSI is consumed to the tune of 2 to 2.40. I have been given to understand that Oberoi hotels has been granted 9 fsi. If one presumes that the FSI which is consumed is 2.40. The fungible fsi would be .35% approx. The Rehab component with lift and other available incentives can result in fsi up to 4.If there are three or more plots incentive fsi of up to 70% is permissible. Gross construction area of up to 8 is possible.It is advisable to ask for a feasibility report as regards the construction that would be done by the builder. Your agreement should be drafted in such a way that you are adequately protected preferably by a professional who is aware of the ground realities.
5 33(8) Construction for housing of Dishoused. 4.00 4.00
6 33(9) Reconstruction or redevelopment of cessed building,  urban schemes on extensive area 4.00 + Incentive F.S.I for rehabilitation of existing tenants
7 33(10) Slum Redevelopment Scheme 2.5 + discretionary F.S.I for difficult area
8 33(13) Development for project affected persons of slum Dwellers/ Pavement Dwellers 2.5 2.5
9 33(9) Provision relating to Transit Camp Tenement for Slum Rehabilitation Scheme. 2.33 2.50

Why property redevelopment on BMC LAND in Sion / Matunga is not taking place.

  • Lease period is reduced from 60 years or higher to 30 years.
  • Lease rent is very high.
  • Premiums have to be paid in advance by developer.
  • Compulsory open space to be left.
  • Corpus fund does not take care of the increased maintenance costs.
  • Getting consent from tenants is not easy.
  • There are some tenants who create nuisance value.
  • Property card is not in the name of the legal entity.
  • There are disputes amongst legal heirs.
  • Properties with clear and marketable title are a scarce commodity.
  • If it is a CHS the court fee that has to be paid could be Rs. 3 Lakhs which adds to the budget of the builder plus approx. 5 Lakhs lawyers fee accompanied by uncertainty as regards the quantum of time that would be taken.

 POINTS TO BE TAKEN INTO CONSIDERATION BY TENANT/CHS BEFORE ENTERING INTO AN AGREEMENT WITH LANDLORD / DEVELOPER WHEN BUILDING IS GOING FOR REDEVELOPMENT

  • ACCEPTANCE OF LANDLORD OF TENANTS RIGHTS
  • AGREEMENT SUPERCEDES EARLIER OFFERS
  • AMOUNTS PAID BY DEVELOPER TOWARDS LEGAL FEES OF TENANTS ADVOCATE
  • ARBITRATION AND COST OF ARBITRATION TO BE BORNE BY DEVELOPER
  • ASSIGNMENT OF RIGHTS BY TENANTS
  • BENEFITS IN EXTRA FSI/TDR
  • CAR PARKING
  • CAR PARKING RIGHTS
  • CARPET AREA & AMENITIES OFFERED BY DEVELOPER TO TENANT
  • CARRYING OUT FURNITURE WORK IN PREMISES BEFORE TAKING POSSESSION
  • CERTIFIED SOFT COPY TO TENANTS ADVOCATE
  • COMMON UTILITIES TO BE PROVIDED
  • COMPLETION OF THE PROJECT BY TENANT IF THERE IS DELAY BY DEVELOPER
  • COMPLIANCE OF RULES AND REGULATIONS OF STATUTORY AUTHORITY
  • CONSENT OF TENANTS FOR BECOMING MEMBERS OF C.H.S LTD
  • CONTRIBUTION BY TENANT WHEN HE ACQUIRES FLAT AS OWNER TOWARDS SOCIETY FORMATION,VAT SERVICE TAX
  • CORPUS FUND PAYABLE BY DEVELOPER TO TENANT
  • COVENANTS BY TENANT
  • DAMAGES TO BE ADJUSTED AGAINST AMOUNT PAYABLE BY TENANT TO DEVELOPER
  • DEBRIS OF BUILDING
  • DEVELOPER NOT TO CREATE THIRD PARTY RIGHTS
  • DEVELOPER TO BEAR ENTIRE COST RELATED TO REDEVELOPMENT
  • DEVELOPERS DECLARATION WITH REGARDS TO PARTNERS
  • ENCUMBRANCES AND CLEAR TITLE OF PROPERTY
  • EXCLUSIVE RIGHT OF TENANT WITH REGARDS TO FLAT
  • EXECUTION OF FURTHER DOCUMENTS
  • FLAT PURCHASER LIABLE TO PAY OUTGOING OF THE SAID FLAT
  • FORMATION OF COOPERATIVE SOCIETY
  • HANDING OVER OF DOCUMENTS TO LEGAL ENTITY BY DEVELOPER
  • HANDING OVER OF FLAT
  • HANDING OVER POSSESSION OF FLAT WITH OCCUPATION CERTIFICATE
  • HEIGHT OF FLAT
  • LIEN FOR PERFORMANCE OF DEVELOPERS OBLIGATION
  • MODE OF COMPENSATION FOR ALTERNATE ACCOMMODATION
  • MOF ACT APPLICABILITY
  • OBJECTIONS FROM REPRESENTATIVE OF TENANT WITH REGARDS TO TENANTED PREMISES
  • PAYMENT BY TENANT TO DEVELOPER FOR ADDITIONAL AREA
  • PLANS AND OTHER DOCUMENTS TO BE GIVEN TO TENANTS ADVOCATE
  • PLANS TO BE SUBMITTED TO MUNICIPAL AUTHORITIES TO BE SHOWN TO TENANTS
  • POSSESSION OF FLAT FIRST TO BE OFFERED TO TENANT
  • POSSESSION TO BE HANDED OVER TO LEGAL HEIR ON DEMISE OF TENANT
  • PROPERTY TAX ASSESSMENT
  • RAISING OF LOAN BY TENANT FOR PURCHASE OF EXTRA AREA
  • REDEVELOPMENT AND INCIDENTAL EXPENSES TO BE BORNE BY DEVELOPER
  • RENT NOT PAYABLE BY TENANT FROM THE DATE OF VACATING PREMISES
  • REPAIRS AND MAINTENANCE OF THE BUILDING
  • SIGNING OF NOC AND OTHER DOCUMENTS
  • SIMILAR AMENITIES TO EXISTING TENANTS AND NEW FLAT PURCHASER
  • STAMP DUTY AND REGISTRATION FEE
  • TENANT MONTHLY TENANT AS REGARDS FLAT NO._______
  • TENANT TO VACATE PREMISES AND SHIFTING TO ALTERNATE ACCOMMODATION WITH RENT PAYABLE BY DEVELOPER IN ADVANCE
  • TENANT UNDERTAKES TO COOPERATE WITH DEVELOPER
  • TENANTS NOT TO DAMAGE THE STRUCTURE OF THE BUILDING
  • TENANTS RIGHTS GET CONVERTED AS OWNERSHIP RIGHTS IN FLATS
  • TERRACE OWNERSHIP AND HOARDING RIGHTS
  • THIRD PARTY RIGHTS IN FREE SALE COMPONENT BY DEVELOPER
  • TIME FOR SANCTION OF PLANS
  • TIME LIMIT FOR VACATION OF PREMISES AFTER RECEIPT OF IOD
  • TIME LIMIT WITHIN WHICH PREMISES WILL BE HANDED OVER TO TENANT AND DAMAGES FOR DELAY
  • TRANSFER OF TENANCY RIGHT NOT TO BE EFFECTED ON VACATING THE PREMISES
  • USE OF PREMISES
  • WAIVER OR BREACH 

APPROXIMATE TIME TAKEN FOR DIFFERENT STAGES OF CONSTRUCTION

Q.:       Please give an idea as regards the approximate time taken for different stages of construction.

Ans.:   The approximate time that is taken for different stages of construction could range between 2 to 3 years. It would depend on the number of floors. The modalities pertaining to the same are as under:

The first stage i.e. Intimation of Disapproval takes approximately 4 months. In these particular stage elementary calculations pertaining to the property is done. This includes looking at the potential as regards development of the property. Basic calculation being to the size of the plot, permitted construction thereon, Once this stage is over one has to go to the second stage. The second stage is Commencement Certificate up to plinth level. The Commencement Certificate up to plinth level is given when the premises have been vacated by all. The existing structure is demolished. There is no construction on the site. In this particular stage, before granting permission, N.O.C. from various departments and other documents have to be submitted like Garden N.O.C., Structural R.C.C. Plans and calculations, Traffic N.O.C., Fire N.O.C. Joint inspection by the Municipal authorities and the Architect is undertaken. For obtaining Commencement Certificate up to plinth level the approximate time is 1 month from the date of joint inspection.

Further C.C. is obtained normally within 15 days from inspection. Eg. Gr plus 4 floors. Further CC is given if the necessary compliances up to the relevant floor is obtained. When the building is fit for occupation up to a particular floor part occupation certificate may be granted. Normally builders take occupation certificate as the procedure for obtaining building completion certificate is tedious and expensive.  Once the entire building is completed in all aspects then only full C.C. is obtained.

 http://accommodationtimes.com/index.php/f-s-i-under-different-schemes/

 

Reliance Life’s murky business alliances and practices

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Moneylife » Reliance Life’s murky business alliances and practices

Multi level marketing, business from unlicensed entities, dubious corporate agents, licensed advisor signatures forged, foreign tour packages, huge payments for contests, lead generation agreement violation, excessive payments for dissemination of information and much more in IRDA order

Reliance Life Insurance Company (Reliance Life) is facing the heat from Insurance Regulatory and Development Authority (IRDA) for several violations leading to Rs1.77 crore penalty. IRDA order has 47 charges along with decision on each one, but there is no mention about the glaring corporate agent AB Capital fraud selling of policies with “interest free loan of 10 times premium”. IRDA did come up with charges which showcase Reliance Life’s murky business alliances, payouts and dubious business practices. IRDA order shows serious lapses in Reliance Life and hence the insurer cannot claim to be a victim of fraudulent selling.

Moneylife has consistently maintained that insurance policies are logged by valid entities and hence insurer needs to trace the relation between fraudulent sellers and the valid entity logging the sale.

Here are highlights of IRDA order:

Multi level marketing and unlicensed entities: Business is sourced from unlicensed entities through Multi Level Marketing (MLM) and was logged into the code of licensed entities. Business was procured by forged signatures/without signatures at the space specified in the agents confidential report column. There are instances wherein signature of IRDA licensed advisor specified persons is either forged or not available. There are cases of business being sourced through unlicensed entities but booked under broker code of Net ambit Insurance Broking India Ltd.

Life Insurer is associated with V-Care Life involved in MLM and is getting business logged in the name of some of the agents. It was also observed that some of the Channel Development Associates (CDAs) are indulging in MLM through the agents mapped to them and no systems are in place to verify the details of agents that sourced the proposals. Mutyala Getwin Online Marketing Private Limited is doing insurance business in multilevel marketing model.

Leads obtained and payments are made to the various corporate agents based on agreements and in the process unlicensed entities solicited insurance business was logged into various code numbers of ‘Reliance Third Party Distribution Channel’ which is one of the new business verticals of the insurer.

Corporate agent Pinnacle Insurance Agency is engaged in MLM activities. They offer high value gifts to its distributors and the criteria for award winning are also published on their website. Corporate agent admitted to involvement of two of its employees in the multi level marketing activities. IRDA observed that the life insurer has failed to monitor the activities of the corporate agent. This is considered as a serious lapse and hence Reliance Life is told to investigate into the manner in which the corporate agent is soliciting the insurance business and submit actions initiated within 30 days from the date of the order.

Reliance Life’s drive against fraud callers – Will it take action against its corporate agent AB Capital?

Is Reliance Life’s corporate agent AB Capital involved in fraudulent “interest-free loan” offers? Will Reliance or the regulators initiate action?

Contests and foreign tour packages: Extra payouts were made towards contests, apart from commission, to some individual agents. Instances are noticed where payments other than eligible commission/ brokerage were made to corporate agents and brokers in the name of contests and other related activities. Further expenses towards foreign tour packages were also incurred, Rs71 lakh during 2010-11 and Rs1.03 crore during 2011-12, on some of the brokers and corporate agents. During 2010-11, huge payments of Rs12.82 crore were made towards “Referral Fees –Contests” against referral fee of Rs1.27 crore.

Lead generation agreement violation: An amount of Rs168.70 crores during 2010-11 and Rs45.21 crores during 2011- 12 (up to Dec 2011) were paid to various entities towards marketing and publicity. Significant amounts were paid to various entities towards “Marketing Activities”, “Dissemination of information” and “Generation of Leads” during the years 2010-11 and 2011-12. Dissemination charges of Rs74.89 crores were paid to about 641 entities during 2010-11and Rs35.31 crores to about 131 entities during 2011-12 (up to December 2011). Service Agreements entered revealed that these entities were engaged for lead generation and dissemination of information. IRDA order states that entering into service level agreements and making payments for lead generation and dissemination of information is not permitted even before IRDA (Sharing of Database) Regulations, 2010. Only Banks were allowed to be entered into referral agreements. Payment of significant monies for an unskilled job of distribution of publicity material under the guise of ‘Dissemination of Information’ is questionable.

Advertisements violation: In respect of product Reliance Premier Life, instances (Unique Ad id No: Mktg/sales pitch/version 1.0/August 2009, Mktg/poster/version 1.0/August 2009 and Mktg/hoarding/version 1.0/August 2009) were found where Advertisements filed with IRDA are different from that were issued to the public.

The advertisements bearing numbers Mktg/RTSIAP – Brochure/ version1.0/ November 2009, Mktg/RTSIAP-Brochure/version 1.1/April 2010 were not filed with the authority and are also not appearing in the advertisement register.

Anantha NarayananSivaraman Anant Narayan

RAJ PRADHAN | 17/04/2014 06:09 PM

Read more and links at :

http://www.moneylife.in/article/reliance-lifes-murky-business-alliances-and-practices/37096.html

Tatas spent Rs 1k cr on CSR activities in FY14

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Tatas spent Rs 1k cr on CSR activities in FY14
Reeba Zachariah &Namrata Singh

ePaper, The Times of India, Bombay, Tuesday, July 16 2014, Page 23:
In what could be the highest CSR spend by an Indian conglomerate,theTata Group spent Rs 1,000 crore on Corporate Social Responsibility (CSR) in 2013-14. If one were to exclude the salt-to-software enterprise’s philanthropic trusts,theTata Group companies spent Rs 660 crore on CSR in the just ended fiscal. The diversified Indian multinational’s CSR spend was well above 2% of its net profit, a minimum requirement for an Indian company under the Companies Act.A significant amount of the total CSR spend by theTata Group has gone into skill development, health and education, withTata Steel emerging as the biggest spender within the group. Among other Indian conglomerates, the $40-billion AdityaBirla Group spent Rs 200 crore on CSR in fiscal 2014, which is a little over 2% of the net profit from India.Under the new law, all companies with at least     Rs 5-crore net profit or Rs 1,000-crore turnover will have to spend 2% of their annual net profit on CSR activities — which include slum redevelopment, road safety awareness and consumer protection services — with effect from April 1, 2015.While some Tata companies spend more than 2% of their profits on CSR, others like Tata Consultancy Services (TCS) are yet to meet the requirement. In fiscal 2014, the outsourcing giant’s CSR expenditure was Rs 93 crore, which was 0.48% of its profits. At TCS’ annual general meeting last month, chairman Cyrus Mistry informed shareholders on TCS’ intent to do more on CSR.

“Over the last decade, our spend on CSR activities, between the Tata trusts and the Tata companies, has been in excess of Rs 8,000 crore. In the last three years, we have been trending at an average of         Rs 1,000 crore per annum between the trusts and our companies, typically in a 60:40 ratio between the companies and the trusts,“ said Mukund Govind Rajan, member-group executive council and brand custodian, Tata Sons, the holding company of the $100-billion group.

The Tata trusts hold 66% of Tata Sons, which in turn has holdings across group companies.

The Aditya Birla Group, which has a presence in cement, telecom, carbon black and financial services, spent Rs 150 crore on CSR in 2012-13. The CSR spend has risen in 2013-14 with growth in profits.

The group’s CSR initiatives are led by Aditya Birla Centre for Community Initiatives and Rural Development.

The Godrej Group is also among conglomerates that run their philanthropic activities through trusts. About 25% of the shares of the Godrej Group’s holding company Godrej & Boyce are held in a trust that supports initiatives in education, healthcare and environmental sustainability.

Apart from the trust, Godrej Group companies spent around Rs 18 crore on CSR under the ‘Good and Green’ initiative, which is more than 2% of the profits.

Around 8,000 companies are expected to come under the ambit of the new CSR regulations. The annual CSR funding by companies is expected to be in the range of Rs 15,000-20,000 crore, according to industry estimates.

Andheri residents drag builder to court over building redevelopment

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Miffed that the redevelopment of their building has not been completed on schedule, residents of Ashtavinayak cooperative housing society at DN Nagar in Andheri (West) have decided to drag the developer to court.

In a press conference on Monday, former Mhada chairman Chandrashekhar Prabhu said, “Ashtavinayak is not the only society facing this problem. There are over 3,000 in city whose redevelopment has been stuck for the last several years due to various reasons. The main culprits are the builders who are exploiting the people with the help of government officials. They are threatening genuine residents and not even giving them possession of their legitimate houses on schedule. The state needs to take this issue seriously… Families have been harassed and disturbed by developers and their goons.”

A housing activist, Prabhu said he gets over 200 phones calls and 50 e-mails every day regarding housing issues. “I do my best to help all of them. But the problem is more chronic and bigger… It should be addressed at a higher level. We need to break the nexus between developers and government officials. Genuine residents should not be deprived of their right to get their homes back. In redevelopment, many people have been rendered homeless due to developers’ greed,” he added.

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The Whistle Blowers Protection Act, 2011

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Please view attached copy of The Whistle Blowers Protection Act, 2011
 
Public Interest Disclosure-key features 
  1. Any public servant or any other person including a non-governmental organization may make a public interest disclosure to a Competent Authority (defined as the Central or State Vigilance Commission). 
  2. “Disclosure” is defined as any complaint made in writing or electronic mail against a public servant on matters related to 
  3. (a) attempt to or commission of an offence under the Prevention of Corruption Act, 1988; 
  4. (b) wilful misuse of power which leads to demonstrable loss to the government or gain to the public servant; or 
  5. (c) attempt or commission of a criminal offence by a public servant.
  6. A “public servant” is any person who is an employee of the central government or the state government or any company or society owned or controlled by the central or state government. However, no public interest disclosure shall be accepted against defence, police and intelligence personnel. 
  7. Each disclosure shall be accompanied by full particulars and supporting documents. 
  8. The Vigilance Commission shall not entertain anonymous complaints. 

Whistle Blowers Protection Act, 2011

 

Courtesy : Prashant Uikey <prashant.vikey@gmail.com>