My wife had a salary account with a private sector bank – and so the demat account, the trading account are all with the same bank.

One day I get cornered by her Relationship Manager ..saying “We need not tell you what you can do…please shift YOUR primary account with us….” the general gyaan.

Now let me take some time to explain some options. It is very rare to see the balance in my wife’s account to dip below a particular level – and that excited the RM.

So he said:

– why do you not put the money in an arbitrage fund (debt returns but equity treatment!) you will improve the returns from 2.8% to about 8.2% p.a.

– why not some liquid funds, blah blah

I said I have a better option…Why do you not activate my brokerage account so that I can do what I want through that account?

For me a simpler thing to do was to buy ETF units of a liquid fund and sell it when I needed liquidity.

I spoke to somebody very senior in the bank. She said -“Subra, he will NOT CALL YOU at all.

Exactly that is what happened.

The Relationship Manager HAS NO INCENTIVE to activate my brokerage account. He has AUM TARGETS in mutual funds, Unit linked plans, etc where he thinks life is easier.

He has NO incentive to call me.

And all this after giving me a lecture on how his bank has changed from MORE REVENUe to CUSTOMER SATISFACTION.

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  1. i bank with 3 private sector banks and 3 public sector banks…keep guessing, if i wanted to name the bank I would have. Right?

  2. Recently My RM gave me a overseas call. The call went like this.

    Sir, why don’t you liquidate your NRE FDs which are booked at lower interest rate for a period of 5 yrs and re-book them for 1 yr. We are giving higher interest (0.25% more ) for 1 yr duration.

    Me: Why should I do that.

    RM : As you have big value deposits, 0.25% makes difference.

    Me : Does bank charge any penalty for pre-mature liquidation of FD?

    RM : No charges applicable for NRE FDs of more than one year.

    Me: You are giving wrong info. Last month, bank charged me penalty for liquidation of 3 yrd old NRE FD.

    RM: It can’t be.

    Me : Here are the details (FD #, FD amount before and after, timeframe) and take a look at it. It is not happened to one FD, infact happened to three FDs.

    RM : Really am shocked. Let me look into this but am busy now because of year end (31st Mar’14). He then went on leave before year end.

    Bottom line : In the compounding FD, the interest that I get in 3rd year of my existing FD is more than the banks interest in the first year. Also there is a re-investment risk should Rajan revises the RBI rates owing to downward inflation. When countered, RM wanted to quickly escape.

    In India, lot of staff come forward like ‘ may I help you’ with out knowing their own organization rules and procedures. If you dig deeper, they would not come back or mislead you and many instances might ignore you.

  3. Subra Ji,

    About Arbitrage Funds, I know that there are 2 types…
    1. Pure Arbitrage – with hedging
    2. Mixed Arbitrage – Without Hedging sometimes.

    Can you please throw some light on which are the funds which fall into either category..
    I haven’t got this info from the websites like Valueresearch, Morningstar and moneycontrol.

    Regards,
    Preetam

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