Vidhata is now the owner of his own restaurant on the station road. He is usually successful with his investment decisions. As we saw before, he was a cautious investor and would check various sources of information, make sure that he understood every aspect of the product and only then invest. As a result, all his friends at the restaurant used to look up to him as an investment advisor. He is always willing to share with them his experience with investments.
As they say, “Prevention is always better than cure”, it is best to be careful while investing so that we do not face problems. Here are a few pieces of advice that Vidhata gives his friends:
Many things can go wrong while investing. But that does not mean that you have to get discouraged. All formal investment products are well regulated either by a government regulator or self governed by an association of companies. They try to make sure that the investment process is simple and beneficial to you and also that you do not get cheated.
Equity markets are strictly monitored and regulated by The Securities Contracts (Regulation) Act, 1956, The Securities and Exchange Board of India (SEBI) Act 1992, The Depositories Act, 1996 and The Companies Act, 1956. Stock exchanges also have a set of stringent rules and regulations.
Mutual funds are overseen by the Association of Mutual Funds of India (AMFI) and the insurance sector is regulated by the Insurance Regulatory and Development Authority of India (IRDA). All these organisations are dedicated to investor protection.
There are other institutions that have been set up specifically to take care of your complaints. These may include an ombudsman and investor protection or investor grievance cell.
An ombudsman is a person who tries to solve issues between the general public and an organization. The organization could be a government institution, a private company, a large society, etc. There are ombudsmen appointed for specific sectors or even by large companies themselves. For example, there are ombudsmen for banks, life insurance, mutual funds, etc. Each ombudsman is in a position to look into complaints made against organizations that it represents. For example, if you have a complaint against a bank, you will have to approach the bank ombudsman. All ombudsman bodies are governed by the Right to Information Act (RTI act of 2005). They are legally bound to reply to any complaints that they receive. They try to sort out an investor complaint keeping in mind the rules.
Product: Banking Operations and Credit Cards
Product: Mutual Funds and Stock Market Related
Vidhata once applied for bonds of a state government power company. He attached a cheque for the required amount with his application from. His cheque was passed and the amount was debited from his bank account. He was expecting the bonds to reach him within two weeks. He regularly read in the newspapers about the status of the state power company’s bond issue. He read that it was concluded successfully. He also read that it was fully subscribed, which meant that the company collected as much money as it set out to collect. But there was no sign of his bonds!
He did not panic. He wrote a letter to the company, giving them all the details of his application and the cheque payment. Once he did not receive a reply from them, he wrote to SEBI’s investor protection cell. They promptly sent a mail to the company requesting them to explain why the bonds had not reached Vidhata even through the cheque had been debited. They sent a copy of this letter to Vidhata.
Within a week, the company replied to both SEBI and Vidhata. It explained that the bonds had been dispatched to his residence but they were returned twice as there was no one to take the delivery. It was then that Vidhata remembered that he and his mother had made a trip to his sister’s place as she had just delivered a baby. They had stayed for three days and perhaps the bonds had reached his home at that time.
The shares were dispatched once more and this time, Vidhata received them.
Source: Portal Content Team
Last Modified : 2/21/2020
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