The biggest cheating in the Financial Services business is done by the Government of India. No I am not talking about Income tax. I am talking about LIC.
The government runs LIC and to help LIC it created a section 80C. Most people have got addicted to this section and to this product. So people invest in LIC’s products and the government makes LIC buy government securities, and government equities so that it can invest the premium money. People are told not to worry because it is government guaranteed. So LIC which is NOT a very efficiently run organisation can afford a huge infra, takes the money mismanages it (thanks to political interference) and gives the policy holders sub-optimal returns. This story has been played out a million times. Or more.
So LIC has ton loads of PSU stocks, psu debentures, and tons of government debt. There is a very good chance that many issues will not be subscribed to. Like any PSU investment arm the choices of equities leaves a lot to desired. You see some shares in the portfolio and keep wondering how it could have entered the portfolio!!
The products are themselves sold by a dedicated agency force and most of the products are opaque and expensive. The end user has no clue about the bundled product. The structure of the product, the cost break up etc. are not known to anybody.
However the government has nicely made the ‘Investment rules’ for the non government life insurance companies also. Again it contains a lot of Gsecs, So the yield that the poor investor (let us call him saver, he can feel better) gets is pathetic …
Before the government appoints committees on how the ‘cheating’ agent is misselling a great product, let us create a committee of independent fund managers to see / comment on the way the LIC money has been manhandled by successive governments.
The poor Rs. 200,000 per annum typical agent can only sell a product. Let us see what the people creating the products are doing. Of course other than sitting on committees to over see how the ‘bali ka bakra’ is cheating the ‘bali ka bakra’. The agent and the clients are the weakest link. ‘Kamjor kadi’ as they are called.
Let us see what the elephant, bison, lion, tiger, hippo and rhino are doing.
Sick of such committees and suggestions. Stop blaming the sheep. Poor thing!! If all agents were so scheming and smart, why are they not in Porsche, Merc and Audi?
Yes some of them are, but they are one in a million.
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