This is an awesome Bank-Customer Relationship story…
A client of a bank had about Rs. 7-8 lakhs in the savings account. The Relationship manager moved it into a mix of mutual funds – equity about Rs. 1L and debt funds about Rs. 7Lakhs.
After sometime this man wanted to buy a car and also needed a small personal loan. Obviously they gave him a car loan for 4 years and a Personal Loan for about 18 months.
I met him – and actually laughed – and imagine he said ‘I also thought why am I investing while I am borrowing’ but he kept quiet.
I said break your Income funds and repay the loan. HE DID NOT.
After a couple of years I found that the bank had sold him a very very expensive ULIP with an annual premium of Rs. 4 lakhs…and he had paid for year one. In this he had about 65% debt and 35% equity.
WORSE they sold him another ULIP – a pension plan. He paid the premia for 2 years and then the policy lapsed for non payment of premia – at a time when there was about Rs. 4 lakhs sitting in his bank account. Amount LOST due to bank’s negligence? Rs. 2.8Lakhs. When the client asked the bank, they said ‘what can we do the insurance company has forfeited the plan’. LOL.
Then after some time the bank had sold him 2 ‘Savings Insurance Plans’ (single premium of Rs. 12L).
He also had by now got tons of mutual fund schemes – which he was regularly withdrawing to pay the annual premium of the ULIP.
What is the story?
Circa 1998-9 I met this person who was banking with a big foreign bank (I am not saying India based foreign owned or foreign based foreign owned bank – it does not matter.
At every stage I had told him that the bank was selling him a lemon. He said he did not have a choice of banks. His employer was choosing the bank.
I guess when clients (friends, relatives, colleagues) choose to operate at financial literacy of zero, WHY THE ………….are bloggers, media people, regulators bothered about it?
I think over paid people can afford to buy over-priced products so that over paid bank managers can buy over priced cars, eat in over priced hotels, and pay salaries to over paid people in the BFSI space.
Ouch, who is cribbing?
Well, well, the client should get financially literate to start a SIP but not so literate to question these brilliant managers in the BFSI space. God bless.
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