The Citi has been Sleeping-Part II

Following the earlier post let me continue to narrate some simple steps that I have started to take after the incident with the Relationship Manager of the bank. Mind you none of them is rocket since or some thing new, I am sure each one of you know them but it is a matter of practice to implement them:

1. Never ever sign blank forms. No matter how busy you are, signing blank forms is not very different from signing blank checks.
2. Always keep a photocopy of the documents you are signing. If a photocopier is not handy take pictures of the forms with your phone camera. The pictures will not win any award but will still be better than not having any photocopy of the forms you have signed.
3. Always keep the number of the supervisor of the person you are dealing with handy so that you can speak to the next level in case of any issue.
4. All the checks should always be given in names of the Asset management company/scheme you are investing in and should be crossed across.
5. Never ever give cash. All investments should be done using checks and only checks or electronic transfers if you are tech savvy.
6. Keep a photocopy of the checks along with the signed and filled forms for your records.
7. Once you have given the papers to the RM/bank employee follow it with an email to the employee, his /her supervisor and the customer service email box, mentioning the date, amount and the scheme you are investing in. This will ensure that people other than the person who is collecting forms from you are aware that the RM has collected checks from you. This will also scare away any body planning fraud as they would not like to mess up with somebody keeping records meticulously.
8. If you do not get your statement within the promised time period immediately follow it up with the banks RM and if he does not return your calls immediately escalate.
9. Most new accounts require copies of your PAN card or address proof etc. Always sign these photocopies and also write what you are giving them for. E.g if it is for opening a mutual fund account. Next to your signature mention that : Photocopy being given for MF account for XYZ company. This way nobody will be able to make further photocopies and use the same for opening a fraudulent account in your name. ( ID theft is a big problem in US)

Relationship managers are assigned to privileged customers of the bank and most of them are very decent people, unfortunately their goal is to sell, sell and sell some more to you. It is not always that there goal and your goals are aligned to each other. I was ok with a smooth talking sales man trying to sell me for his commission but what has happened in Citi bank's case is a pure case fraud where money from an investors account has been taken out.

SEBI has now mandated that a third party check cannot be accepted for a Mutual fund transaction, so this will reduce the element of fraud to some extent, but you never know.

So in order to protect our own interest it is important that we be more vigilant with our own money and very careful what we sign or not sign.

Are you KYCed

Long ago for most of us the only proof of Identity issued by government was ration card. Then came a time when in most of the towns and villages there were more ration cards than the actual number of residents.

Then the Income tax department introduced the PAN or Permanent Account Number that was supposed to keep track of all tax paying individuals. Then the Election commission decided to introduce voters ID card that would prove that you are a bonafide voter of a constituency and also as your proof of address. Then AMFI decided that all mutual fund investors need to have a MIN mutual fund identification number. This was some years ago but the project was aborted as no body came forward to claim paternity for the same. We also have a Directors Identification number that all directors of public and private companies need to have. Now a BAAP of all the numbers UIN is on the cards which is suppose to be something similar to SSN of USA.

The reason l have written the above paragraph is because the AMFI has again come up with guidelines that all investors need to have a KYC done before they can invest in the mutual funds this will be applicable from January 1 2011. Till date only if you were investing more than INR 50K in a mutual fund in one go you had to get yourself KYCed, any thing less than that you were ok. So most of us would invest less than 50 K in one go and not worry about the KYC process. Now with the rules changed each one of us needs to get ourselves KYCed ( I just coined a new word). While I have got myself KYCed some time back here is the funny part:

In order to be KYCed or KYC compliant you need to fill a form and send the photocopy of the following :

1. PAN CARD
2. Any address proof that varies from Driving licence to bank passbook etc.

What tickles me is that PAN card and any address proof needs to be self attested with a photo graph and need to be sent to CDSL through a point of sales. Which can be your Mutual Fund, your bank etc.

Now my question is when the mutual fund or the bank account were opened these documents were already provided to them now the same documents need to be provided again to become KYCed.

I am sure whosoever thought about this scheme has either lost their ability to think straight or has some vested interest in this whole thing. Other wise there is no reason to ask for the same documents again that were provided at the time of opening the bank account or the mutual fund account.

Any ways since we don’t have a choice this is where you can get the KYC Form

Here are the FAQs that you may want to be answered for KYC process.

The coming New Year is when the new guidelines come in force, so you better hurry up.

Thanks for reading do leave a comment.

Mutual Funds as Gift

As any self professed finance writer would profess his love for all things Buffet, same goes for me. In one of the earlier books that I read about the master was that when his tribe multiplied and they had occasions to celebrate he would give them unique gifts. The gifts were unique because the master was most likely to give stock certificates to his near and dear ones as gifts. Now since he is the best we have got out there I am sure each one of the gifts he showered on his flock would have multiplied many times.

I remembered this and was waiting for the occasion when I can give stocks or mutual funds as gift to my near and dear ones. The good thing about great masters is that you can follow the path shown by them even if you do not understand it completely.

So about a 1.5 years ago when my younger sister got married I decided to follow the footsteps of the great master and gifted her units in 3 different equity mutual funds in growth option. This was in middle of 2009 and while some of the gifts that she received have already become obsolete or further passed to some body else the units in the mutual funds have already grown by more than 40% on average. While she was not very happy at the time to receive the gift in form of mutual fund units as she felt that they were too impersonal and cold. Today when she looks at the bigger number in the unit statement she is sure proud of her brother.

Yesterday I received a call from a colleague and he wanted to know what gift he should give to the daughter of his brother who will be one year old around Christmas and my answer was units in a good equity mutual fund. My colleague was a little surprised at my answer but when I showed him my calculations and logic he agreed to my suggestion and is working on the formalities for the same.

Thanks for reading do leave a comment.

Investment group

I have been trying to gather a group of like minded people who will collaborate on good stock ideas which will in long run give good returns. As it is difficult to articulate what I am trying to do let me give what I do not intend to do:

• Form a group of day trader
• Technical Analysis
• Predict the future
• Work on multi level marketing scam
• Ponzi schemes

You see I am not much of a day trader, hell I am not much of a monthly or even yearly trader. My only trade in 2009 till date ( May 15, 2009) have been selling some stocks at loss, not because I do not believe in these companies any more but more because I needed money to take possession for that long awaited apartment ( this is another blog post some time in future). I did not see these stocks going up before 31st March 09 so decided to book some capital losses to square them off against future gains ( Please check my blog: Make lemonade when you have got lemons).

So I do not have much interest in day trading, don’t understand technical analysis at all and certainly I cannot predict the future because if I could I would not be writing this blog but would be buying the next hot internet or biotechnology startup (food for thought). I don’t think I want to say anything about MLM scams and Ponzi schemes. (More about them in some other post in future).

Unfortunately my attempts to form a group of such investors who are interested in forming such a group have gone in vain. There have been many challenges to the same. While most people like the idea they all want to begin with asking for the next hot tip. This was more prevalent during the bull run when every second person you met wanted to know the next stock that was going to double in next 10 days. Those who did not want a tip were more than eager to offer a tip which has been given to them by a good friends cousin who is close to a CA who is very close to a guy in Kolkota whose wife’s best friends husband travels to Mumbai every week for work where he frequents a dance bar where he met a girl who is mistress of a big broker in BSE who has been cornering this particular hot stock ( got it? Neither did I ).
Surprisingly people are willing to buy on such hot tips from dubious sources than do some research of their own. Man you will ask 20 people, visit 10 showrooms and haggle for hours to buy a 10K TV but you will put 50K in a stock you have never heard about till 5 minutes ago. Sounds crazy to me. Well crazy people loose their money quickly confirming the old saying: A fool and his money are soon parted.

So here I invite all like minded people to do some serious brain storming to find the next Infosys or ICICI bank or Airtel. No tipping etc will be encouraged.