Friday, 29 July 2011

Private Banks, Money Laundering and Frauds

Sri K. Kashivishwanath did not know that he owned a mining company. He was unaware of the continuous transactions of crore of Rupees taking place in his bank accounts. Lokayukta reports read "it has been observed that crores of rupees have been deposited in banks and also withdrawn in cash from these accounts. Such illegal money transactions have been further trailed/proceed to accounts in bank of various persons/companies/firms and others."

The same banks which creates an image that they follow a strict KYC norms by asking tens of documents for changing correspondence address legally supports illegal money laundering. One of such bank, without which this article goes incomplete is Axis Bank. Is it possible to do such transactions without the support from the bank? Definitely impossible. The banks named by the Lokayukta report are Hospet and Bellary branches of Axis Bank and
Lakshmi Vilas Bank. Times of India repor
ted "Trail of the company's Axis Bank (Bellary) accounts points to large number of suspicious cash withdrawals in denomination of Rs 9 lakh in the names of persons suspected to be benami"

Couple of years back the same leading private bank had a client Shree Om Sai Nath Car On Rent Pvt ltd. This was a chain market company, which collected a huge amount from the public. Initially cheques were duly paid by the bank. Within a year the account was freezed by the court. The bank could have shown social responsibility and could have saved hard earned money of poor people.

The similar cases also been reported by Belgaum. Sri Sai Multi Service (SMS) was another fraud company involved in the chain marketing with a full banking support from the Axis Bank, collected a huge amount from the public through its account DDs and wannabe fraudster company was raided.

I hope you have not forgotten fraud happened in City Bank in Gurgaon. The main accused of the City Bank Fixed deposit scam Sanjay Gupta of Hero Corporate Services owned two firms G2S and BG finance company. These companies were registered as consulting firms but did not have any offices. Even then these companies had accounts with Axis Bank. Police seized Rs 20 Crores from their Axis Bank account. A company no needs to have an office to open an account with Axis Bank! Finally the state run SBI officials helped the police to find the kingpin of the scam

The fraudster’s relationship with the Axis Bank does not end here. A single google search will though a lot of news of fraud companies having accounts with the Axis Bank. Kadri Police of Mangalore arrested Pravin Shetty who is said to be partner of Global Index Investment Company and seized the account with the Axis Bank. The bank which opened the account of the fraudster company was mentioned and forgotten

These banks are target driven. The top executive put immense pressure on the sales executive. Sales personals bring such customers and accounts of the fraud companies get open in the bank based on the documents submitted by them. They even satisfy the KYC norms according to the present regulation. The will power of the banker to show some social responsibility and serve the society against such frauds can only prevent such fraud accounts. In don’t think you can expect it from private banks that are running behind the numbers.

Note: This article is supported by the various news reports and the author is not influenced to write against the institutions mentioned.

Wednesday, 27 July 2011

Engineering- the cheapest graduation!

There was a funny line on Malayalis- every corner of the world you can see a Malayali Chai (Tea) Shop. It is no more a funny line. Now you can also see sales persons, every corner of the road, sitting under a big umbrella, giving SIM cards for free with free talk time. I was thinking who would be the next to sell their products like this?

Engineering colleges are all set to sell the degrees at cheap rates! Some institutions have already started selling their cheap products both in quality and price. Offering management seats to candidates from CET quota at the reduced price of Rs 35,000/- supports this. Even then unfilled seats increased from 9,000 in 2010 to 15,000 in 2011. There are more than half of the seats in many new colleges were unfilled when I verified the Karnataka Examination Authority website.

The Hindu had reported that the COMEDK sources said that more than 30 colleges had zero admission in management seats, these colleges have slashed their fees by 50%-60% to attract the students. Even then they failed to fill the vacant seats.

The promotion mix used by these colleges is full of false messages. They have also employed paid survey agencies to give a good rating for their colleges. I have recently seen an advertisement of Reva Institute of Technology, Bangalore claiming it is the Best Private Engineering College in India and the Best Engineering College in Bangalore. Education Expo TV has done this rating from Gurgaon. I can definitely tell my readers that this is not even the best college in its area of 10 km. radius. Another similar college is claiming it is the best college for Entrepreneurship education and also it has 100% placement record. Can both coincide?

I have never seen good college advertising during CET counseling to mislead the students like this. You can see People Education Society advertising its Shimoga college but never PESIT, Bangalore. Mangaloreans listen to the ads of SDM College of Engineering Ujire ‘synonymous for 100% result’, which is a very new college, and only one batch is passed out. But people of Dharwad won’t to SDMIT which is much superior to former one.

Remember, cheap (in quality) engineering degrees won’t stand when you come out of the colleges!

Monday, 11 July 2011

How Reward Points Turn Costly for You?

Loyalty programs or reward points is the practice of providing discounts, prizes, or other incentives to encourage continued patronage of a business as per the definition in the web. Loyalty programs are designed to give you perks for sticking to the same product.

They are the common promotion tactics used by many debit/credit card issuers now a days. They tie up with some sellers and ask cardholders to stick to them while making any purchase. There are also independent reward programs like imint in India. There was a reward program by Times of India group called Times Reward, which failed within no time of its launch despite of huge publicity, due to non-support from the sellers.

The main idea behind the reward points is to trap the customer to be loyal to the product or the seller in the long run. They say he will be rewarded for being loyal to their products. The customer starts accumulating the reward points for the every purchase he makes from the same seller. At certain point when he reaches the specified reward points he can redeem the points to the discount or gifts, and in some situations to monetary benefits.

What is the benefit to the seller? The customer, who looks at the reward point every time when he makes purchase decision, visits the same shop. He does not even bother to pay little more as he is getting the reward point, which he thinks he can redeem later. So usually customer ends in paying more as he stops comparing the price and products with competitors.

As you come near the required loyal or reward points to get a gift or discount coupon, as studied by the psychologists, we tend to spend more to get that as soon as possible. We are willing to spend more money in the name accumulating the reward points. We may end up in buying unnecessary items in the name of loyal points.

Usually, the reward program keeps the reward redeem options little higher, so that the majority of the reward card holders gets an illusion that he reaches it soon by spending more. But most of the time it does not happen. When more and more reward card holders reaches that level the offers will be revised. It makes customer to purchase more, to be more loyal.

I am not against the reward programs or completely oppose holding a reward point options. I have reward point options enabled for all my credit/debit cards. I also have a few loyalty cards of super markets. But I never allowed these to influence my purchase decision. If I come up with a decision to buy a product, which has rewards attached with, ok, I am happy. I strongly believe making purchase decision based on reward points will costs you more in long run.

Tuesday, 5 July 2011

MOTHER

Once her son told "My mother is like my friend. I can freely share my feelings with her". She corrected, "To know her son, a mother need not be a friend. She has to be his mother and it is the toughest job. In our culture mother is like the universe. Expecting her to be just a friend is like insulting her." For him his mother is just mother and mother is every thing.

Even at his 25 years he calls her "Mother India" as these two words are precious for him. His mother always wanted him to love India and this patriotism could be inherited from her patriotic grand parents who participated in Indian Freedom Fight. She made his son to read works of Swami Vivekananda, Sri Arabindo etc at the age of 5. She wanted him to be a nationalist. But when he started thinking like the extremists to find the short cuts she warned him “I wanted my son to be a Citizen of the world. I taught you how to be a ‘Vishwa Maanav’. He became Hindu Nationalist and still he is, she accepted it.

After reading the books one after the other, histories inspired her son in his childhood. He wanted to conquer the world well before the age in which Alexander did. He liked ‘The Alexander’, and ‘The Ashoka’ . He wanted to achieve everything with the short cuts available to see smile on his mother’s face. She told him short cuts would end in miseries. What one wins should be sustained without making anyone sad.

Being a lower middleclass working lady during his childhood she taught him the importance of money. She did not give cash when he asked for. She gave him a cheque in his name when he was 12 years, he experienced how difficult is to encash it. She also taught him relationship is more valued than money. Once he asked her mother ‘what you want me to be when I grow up?’ She knew he has big dreams and his dreams will be constantly upgraded and changed at times, he needed an ultimate goal. She told him ‘I don’t ask you to be an engineer or a doctor or a businessman. Be a good citizen of this country. I can’t tolerate if people blame me for being mother of a criminal/corrupt/cheat’ Being good citizen is now on the top of his goals.

She dedicated her entire life for her son. She stopped watching her favorite serials when he was in 10th and +2. Her TV timings were restricted to half an hour a day that too for the national news. She stayed in small village where she spent more than 30 years, that too in a poor infrastructured house. She waited for years to build an own house until her son gets a job, which satisfies him and gives opportunities to achieve his goals.

They even fight every now and then the reasons are so stupid for those who listen to it. One of a such recent fight was about the corruption and black money. She argued as problem is increasing. He countered as it is getting solved. People who interfered between them went mad.

On the eve of my mother’s 60th birthday I can’t stop myself writing this. "Happy birthday Amma".

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