InsureRelaxInfo: November 2014

letter to finance minister regading Deduction of Income Tax

LIAFI-SG/CG-082/14 26 November 2014

Shri. Arun Jaitely,

Minister of Finance,

134, North Block,

NEW DELHI-110 001

Respected Sir,

Sub: Deduction of Income Tax at source from Sum Payable under the Life Insurance Policy in terms of section 194 DA of the Finance Act 2014.

We would like to draw your kind attention on the cited subject for your kind perusal and necessary action.

Ø Any sum over thresh hold limit of Rs, One lakh received including bonus under Life Insurance policies which are not exempted under Section 10 (10-D) of IT Act 1961 would now be subject to “Deduction of Tax at Source” w.e.f 1-10-2014 @ 2% if policyholder provide PAN, otherwise it will be 20% on gross amount.

Ø Sum Assured depends on the premium payable during the term of the policy. This premium is deposited from “post tax income” of the tax payee policyholder or from “non-taxable income” of the non tax payee policyholder.

Ø Premium accumulated for years in case of regular premium policy and single premium in case of single premium policy form the sum assured. In other words, premium paid during the term of the policy constitutes the principal i.e., sum assured which should not come under the “head of Income” and does not chargeable to tax.

Ø What is the provision of the Constitution of India to levy Income Tax?

“The Central Government has been empowered by entry 82 of the Union list of Schedule VII of the Constitution of India to levy tax on all income other than agricultural income (subject of Section 10 (1)”.

Ø The Govt. of India imposes tax on taxable income of all persons including individuals, HUF, Companies, and Firms etc. The levy is governed by the Income Tax Act 1961.

-2-

We desire to know whether the following four points are considered before introducing section 194 DA?

i. Why Tax is levied on Sum Payable (Principal) of L.I.C. Policy? Is it not a contradiction of entry 82 of the Schedule VII of the Constitution of India?

ii. Why the deposits in Banks are not chargeable to tax in contradiction of TDS in LICI?

iii. Why Form 15H / G will not be accepted by LIC discriminating the provision in vogue for exemption of TDS by Banks?

iv. How can section 194 DA of Finance Act 2014 be effective with retrospective date of the commencement of policy from 01-04-2003 or 01-04-2012 as the case may be?

· People take Life Insurance Policy sacrificing their present comfort to make provision for their old age, children education and marriage etc. Many of them do not fall under tax bracket requiring filing of IT returns. They may not have PAN Card. How many persons in Rural India have PAN Cards? Now they are compelled to engage consultants paying fees to them to realize the amount deducted at source by LICI. Is not injustice?

· Moreover if Section 194 DA would not be effective from the retrospective date of commencement of policy they could opt for not taking policy as was in the case of “Jeevan dhara” an annuity policy (Plan-96). Annuity of any Annuity policy and Surrender Value of this policy are subjected to tax. When 100% tax relief up to yearly Rs.30000/- premium under Jeevandhara annuity policy was withdrawn the Government had granted an option, if these policies were surrendered within a stipulated time no tax would chargeable on the Surrender Value.

· Introduction of Sec. 194 DA allows us to believe that the Government discourages people from taking Life Insurance as security. We feel that popular Government should not do so.

Sir, we expect a serious thought would be give non this subject and necessary steps will be taken to encourage Life Insurance market.

Thanking you, Sir

Sincerely yours,

For Life Insurance Agents Federation of India

Secretary General

letter to Sri Arunjaitly (Finance minister) regarding ST

LIAFI-SG/CG-083/14 26 November 2014

Shri. Arun Jaitely,

Minister of Finance,

134, North Block,

NEW DELHI-110 001

Respected Sir,

Sub: Imposition of Service Tax on L.I.C. Policies-Reg

We would like to bring to your kind consideration the following few lines which would give an insight of the fact that imposing Service Tax on LIC Policies is not justified.

Life Insurance Policies are never bought in India, even today they are sold. Hence it is termed that “Life Insurance is a hard sale”. It is an overall feeling in the society that the premia paid are treated as an investment rather than risk cover. Though the insurance industry is opened a decade back the penetration of life insurance cover is hardly 20% of insurable population of India. This very fact indicates that life insurance selling is most difficult and life insurance cover is never a priority for Indian public.

The awareness of insurance in India is very low. Indian public purchase insurance policies purely on the basis of its returns than the risk cover. When compared to other investments the return on life insurance policies is very low. It is becoming difficult for the Agents to close a sale with the low returns. When such is the position of life insurance market the imposition of Service Tax further affects the returns to policyholders on their savings. The net maturity value and the returns are much less when compared to Bank deposits. Service Tax is not imposed for Bank deposits.

We opine that the LIC Policyholder is taxed twice. The GOI is taking 10% of the surplus generated by LIC every year. This is the money of policyholders only. Added to this they are paying Service Tax. The GOI is not receiving any amount from the premia collected by the private players. LIC is burdened with social responsibility of building India. This amount also belongs to policyholders.

We request you to remove collection of Service Tax on LIC policies for the overall benefit of LIC Policyholders in particular and our Nation in general.

Thanking you, Sir

Sincerely yours,

For Life Insurance Agents Federation of India

Secretary General

when i visited Darjeeling, japan temple photo

BUDHAM SARANAM GACHAMI!
DHARMAM SARANAM GACHAMI!
SANGHAM SARANAM GACHAMI !

vinay mohanty

LIC agents to go on agitation against Insurance Bill

Opposing the Insurance Laws (Amendment) Bill, which was due to come up for discussion before a Parliamentary Standing Committee on Wednesday, Agents of the Life Insurance Corporation (LIC) will be staging an agitation in front of their division office at Salt Lake in north-eastern Kolkata on Thursday.

The Insurance Bill seeks to bring the rate of foreign direct investment into the insurance sector to 49 per cent from the present 26 per cent. LIC agents have opposed to other amendments which seemingly curbs their power.

“Currently, the IRDA [Insurance Regulatory and Development Authority] decides on the percentage of commission that agents can receive. If the Bill is passed, insurance companies will get the power of deciding the percentage which might set unattainable targets for us,” assistant secretary of the LIC Agents Organisation of India Amit Bhattacharya told The Hindu .

The Bill also seeks to stop the Hereditary Commission which enables an agent’s nominee to enjoy his/her benefits following the agent’s death, Mr. Bhattacharya said.

“A section of the Bill seeks to alter the Sovereign Guarantee, whereby a policy holder’s return will be decreased but will increase the dividend of the Central Government,” he said.

About 2,000 LIC agents and investors are expected to participate in Thursday’s agitation, Mr. Bhattacharya said and added that a similar protest was being planned in Mumbai.

Bill to boost US business: Trinamool

The Bill was scheduled to come up for a meeting before a 13-member Select Committee on Wednesday but was cancelled.

All India Trinamool Congress’s Chief Whip in the Rajya Sabha and member of the Standing Committee Derek O’Brien said in a statement that the Bharatiya Janata Party at the Centre “sought to bulldoze it [the Bill] through Parliament in the Budget Session so that the Prime Minister [Narendra Modi] could have a lollypop to carry to America.”

“The government’s orders to the BJP members of the Select Committee were to rush through with the proceedings and get the Bill ready for the Winter Session, which begins on November 24… We’ve done about 10 meetings and there was an important one coming up on Wednesday,” Mr. O’Brien stated in a e-mailed statement.

The meeting was called off as Standing Committee members J.P. Nadda and Mukhtar Abbas Naqvi were inducted into the Union Ministry, losing their powers to be members of the Committee.

the hindu 18 11 2014

vinay mohanty

HYDERABAD, AUG 4:

The proposed Insurance Laws (Amendment) Bill 2008 will be detrimental to the interests of agents, according to Life Insurance Agents Federation of India (LIAFI).

“We have staged peaceful demonstrations all over the country and are working on an action plan to intensify the agitation,” SB Sreenivasachary, president of LIAFI told BusinessLine in an interaction here on Monday.

LIC agents had staged demonstrations at branches in Delhi, Chandigarh, Kolkata, Jammu & Kashmir, Hyderabad, Chennai and Bangalore, he added.

LIAFI has over 11.78 lakh agents as its members, accounting for more than half of the total life insurance agents in the country.

There are about nine lakh agents working for private life insurers. The agents claim that some of the provisions in the Amendment Bill are detrimental to their interests.

“If implemented in totality, the persistency of the policies and an agent’s career would get adversely impacted. They will lose the statutory protection accorded to them by the Insurance Act, 1938,” Chary said.

For example, Section 40 of the existing Act deals with the limits on commission payable to the agents on the first year and renewal premium procured. “But the Amendment Bill has no specific substitute section on commission limits,” he said

Further, the amendment proposes to do away with prohibition of cessation of payments of commissions for agents.

“Removal of this section will cause irreparable damage to the family of the deceased agent as there are no terminal benefits for insurance agents,” the functionary said.

The association had also staged major protests last year against the Bill in Delhi and other big centres. “Incidentally, it was the then BJP chief and present Home Minister Rajnath Singh who pledged his support to us,” said Chary.

Now, it remains to be seen how the Government reacts to the demands of the agents.

(This article was published on August 4, 2014)

re-introducing of KVP(kisanvikaspatra) time for dable 100 manths

NEW DELHI, NOVEMBER 18:

The Finance Ministry has said that there will not be requirement of Permanent Account Number or PAN in puttig money in relaunched Kisan Vikas Patra. There will also not be any upper limit on investment.

The Finance Minister Arun Jaitley and Communication Minister Ravi Shankar Prasad relaunched KVP on Tuesday 18-11-2014. The scheme aims to boost saving and use them for long term capital requirement. "This will be a bearer instrument just like currency and easy to encash," he said.

In view of the popular demand and to revitalize Small Savings, the Finance Minister in his Budget Speech announced that KVP a very popular instrument among small savers will be reintroduced. The instrument will encourage people, who may have banked and unbanked savings to invest”. KYC norms regarding all National Savings Schemes (NSS) are now applicable in post offices and banks w.e.f. January, 2012.

It will be available to the investors in the denomination of Rs. 1000, Rs. 5,000, Rs. 10,000 and Rs. 50,000, with no upper ceiling on investment. The certificates can be issued in single or joint names and can be transferred from one person to any other person / persons, multiple times. The facility of transfer from one post office to another anywhere in India and of nomination will be available. The certificate can also be pledged as security to avail loans from the banks and in other case where security is required to be deposited.

Initially the certificates will be sold through post offices, but the same will soon be made available to the investing public through designated branches of nationalised banks. An investor can encash his certificates after the lock-in period of 2 years and 6 months and thereafter in any block of six months on pre-determined maturity value. The investment made in the certificate will double in 100 months.

The scheme will also safeguard small investors from fraudulent schemes. With a maturity period of 8 years 4 months, the collections under the scheme will be available with the Government for a fairly long period to be utilized in financing developmental plans of the Centre and State Governments and will also help in enhancing domestic household financial savings.

Earlier, it was launched by the Government on April 1, 1988. The scheme provided facility of unlimited investment by way of purchase of certificates from post offices in various denominations. The maturity period of the scheme when launched was 5 ½ years and the money invested doubled on maturity.

The scheme was very popular among the investors and the percentage share of gross collections secured in KVP was in the range of 9 per cent to 29 per cent against the total collections received under all National Savings Schemes in the country.

Gross collections under the scheme in the year 2010-11 were Rs. 21,631.16 crore which was 9 per cent of the total gross collections during the year. In the year of its closure, the scheme secured gross collections of Rs. 7,575.95 crore (April 2011 to November 2011).

(This article was published on November 18, 2014)

vinay mohanty

Online insurance sales to touch Rs 15,000 crore by 2020: Report

MUMBAI: The insurance industry expects online sales to grow by around 20 times to Rs 15,000 crore by 2020, according to a study.

"Digitalisation influence is quite high in the country with the Internet access is growing at a phenomenal pace and rising smart phone penetration. We are expecting sales in the insurance sector to grow by 20 times to Rs 15,000 crore by 2020 through the digital medium," Boston Consulting Group Principal Amit Kumar said, explaining the 'Insurance @Digital -20X by 2020' report.

Online insurance sales market in India would be around Rs 3,500-Rs 6,000 crore for life insurance and Rs 11,000-Rs 15,000 crore for non-life insurance, the report said.

The online insurance market is now is over Rs 700 crore, in which life insurance sales contributed Rs 300 crore, motor insurance around Rs 250 crore and other segments like health and travel make up for about Rs 150 crore.

Even though online purchases are a small component of commercial activity today, it is growing rapidly, the report said, adding that the impact of digital sales would be felt beyond just online sales.

It has been estimated that by 2020, three in every four insurance policies would be influenced by digital channels during either the pre-purchase stage, purchase or renewal stages, the report said.

In insurance, term life plans and travel insurance have already picked up substantially in the last few years, the report said.

The report explained that Google's Consumer Barometer 2013 showed that since 2008 search queries for motor insurance has grown six times, that of health insurance has grown by 4.5 times and life insurance queries have grown by 4.5 times.

5 reasons why Financial Life begins at 30 – A wake-up call for all YOUNG investors

Now, when you step into your 30’s the entire scene changes. Some kind of short circuit happens in your head and you suddenly become serious about your hard earned MONEY. You start to gather personal finance knowledge from different sources, look for information, advice on internet and you start to read about personal finance (even if you struggle to understand it)

The Student in YOU is STILL alive

When you were a student I am sure you never started studying on the very first day of your college. Like majority of students you would have waited for the exam dates to get announced and when the exams get extremely close you would have purchased or opened your books (got notes photo copied) and started to prepare for your exams. The last 7-10 days were the most crucial days for you. In such situation passing or scoring good marks turns into a mission.

Now, this is exactly what most people are still doing in their financial life; they are waiting for the last moment to arrive. They are waiting for the right amount of pressure to get build.

In your 20’s the pressure is least, in your 30’s it starts to build and in your 40’s or 50’s it turns into a do or die situation. Most of you don’t start your investments with the first salary you receive and so I made the statement that the student in you is still alive (If you are an exception I congratulate you)

Top 5 Moments of Transformation that makes you serious about your hard earned money

1. When you experience Ants in Your Pants

In your 30’s when you get face to face with your net worth the question that hits your mind is, where did it all go?

You realize that you have been slogging 13 hours a day from last 7-10 years and your net worth is not satisfactory at all. This moment is extremely confronting and it makes you feel uncomfortable but at the same time this is the moment of transformation. In such moment you become serious about your financial resources and your financial life. Some people start to write budget, some hire a financial planner and some write their situation to bloggers like Nandish and Manish. (Every day we get one such mail from some or the other investor and we start our rescue operation)

Hello Manish,

To start with I am one among very few people who practically is broke I must say. I took things for granted as most of us do and realized what deep shit I have got into. I am 31 years and believe me I don’t have savings worth my age as well.

Your blog woke me up from that undisturbed sleep that made me feel everything is okay. Swear to God it is not. Considering the things I have been to in the past. Lived the American way like there is no Tomorrow. Paid the biggest price ever Sir.

Not anymore, after reading you first book on personal finance I made a promise to myself that enough is enough. Not anymore and made couple of promises to myself that I am sure will keep.

Also would like to use your paid services sir, I never found a number that I can call on on the blog sir. Please provide with a number or advice how to start with considering I am in deep mess, I guess I need to recover all those years I’ve spent without savings.

Lost those early years sir and planning to recover them somehow.

Regards,

Stuck investor

Get this clear, it is not about this investor/person because many of you are sailing in the same boat in the area of personal finance

2. When Goals starts to Appear Scary

Most of the investors become serious about their finances when they do some calculations around their goals. Goals like buying house, children education, children marriage and retirement are considered to be the scariest amongst all other financial goals. If you want you can test it, do some calculations and then look at your current savings and bank balance. The thought that will strike your mind will be “It’s high time I start doing something about my finances”. This particular moment is again moment of transformation.

In this very moment you start to become serious about wealth creation and you start taking actions in your financial life. By the way in reality no financial goal is scary, if you mismanage money the goals starts to appear scary. (You are one who makes them scary)

3. When you Experience Personal Earth Quake

Imagine a strange situation in which you experience personal earth quake right under your chair (Others are fine only your chair is shaking). We can say this from our experience of working and interacting with investors that such situations make’s a person serious about their financial future. In your world you think you have made all the right investment choices but on one fine day you land on a blog like jagoinvestor and you discover that you have made all wrong choices and you are a victim of mis selling.

This personal earth quake moment shakes you, wakes you and in a way shatters your financial world. In this very moment you start doing required home work in your financial life, before putting blind signatures you will take out time to read the brochures of different financial products. From this very day you stop trusting all the uncles and relatives who supplied you free dose of advice.

4. Real life experiences causes transformation

Reality is the best teacher you will ever encounter in your life. We have come across numerous cases which brought drastic change into people’s overall attitude towards money management. One of our clients lost his elder brother at a very young age and this event made him very serious about life protection and how important it is to keep things organized. A lot of people after one of their family member gets hospitalized they become serious about health cover. My invitation is do not wait to take actions in your financial life. You don’t have to wait for some accident to take place before you start wearing helmet. Look around you and learn from some real life experiences as they are of the biggest source of transformation you will ever find.

5. Breakdown in Career

It is said that “Man proposes and god disposes”. In my book “11 principles to achieve financial freedom” we have a chapter called “Your plan vs. God’s plan for you”. It is a fun and insightful chapter that helps you to think beyond making plans in your mind. We have coached many investors who had some kind of career breakdown and we could see how it made them extremely serious about their finances. Somewhere you start to value money most in your bad times.

Most of people in their 30’s take major career decisions, they are clear that their idea is going to get them all the success that they are looking for. I am not saying doing business is risky or one should not experiment. All I am saying is such situation leads to personal transformation into an investor’s financial journey.

Some final wake-up words to engage with

Do not wait for a kick on your ass or for some unpleasant situation to occur before you get serious about money management. We wrote this article because majority of our clients for financial planning and financial coaching are in their 30’s. Something happens when you step into your 30’s and you need to acknowledge the moment or event that got you serious as an investor. Whatever is your age right now just start taking actions in your financial life. Also, in the comments section share the moment that made you serious as an investor and what would you say to those who are yet not serious when it comes to money management?

financialplaning is not about securing future, it is designing your present

8 insights about Financial Planning

Now We will share with you 8 insights about how to perceive financial planning in a new way. We feel a big number of investors and financial advisors have a very narrow view about “financial planning” and its potential. We simply want you to see Financial Planning tool with fresh pair of eyes. May be it’s time to question our perception about what financial planning is all about. Here are those 8 insights below.

1. It is not about securing future, it is designing your present

A lot of investors and advisors think that financial planning is about future, in our view it is not about future. Financial Planning is an exercise that helps you to design your present as an investor. Future is an illusion and it just does not exist in reality. You have to use financial plan as a tool to make each day/week/month and year your best financial year. A lot of investors think with the help of financial plan I am going to secure my future, but in reality it is about learning to play fully in this very moment.

Let me share an example with you – All the investors who drop a financial planning inquiry on our services page – we usually ask them why they want to go for financial planning and what financial planning means to them ? And the most common answer we here is, “I want to do financial planning, so that I can secure my long term financial goals like children goals, retirement etc.”

They think financial planning can help them to be more secured. We ask them to stop over focusing about future and look at what best they can do right now with their financial resources.

2. Financial Plan is not about “Financial Goals”, it is about Financial commitment

A lot of people think financial planning is only and only about financial goals. May be financial goal is one small part of the whole financial planning exercise, but surely its not only about financial goals.

In our view it is about strongly announcing your financial commitment and what you are going to do now on-wards in your financial life and then sticking to your commitment. We encourage all our clients to announce their monthly financial commitments. Setting financial goals is extremely easy, but sticking to your monthly financial commitments is where the rubber meets the road.

Let me share with you something about our clients, what we do with our clients – When we get on call with any investor clients of ours, they bring all their WANTS on table (difference between Needs vs Wants here) . Wants like second home, A lot of clients want to even plan for the kid who is not yet born. Now, the moment we start the commitment conversation the goal list starts to shrink. Commitment is doing what is required to get what you want and not allowing anything to get in your way.

3. Financial planning is NOT about bringing Certainty

As human beings we are always attracted to Certainty. Most investors want to know whether they will be able to achieve their financial goals or not ? This is the core reason why they hire a financial planner! . In our view the best thing about life is that it is mysterious and uncertain. If we pull uncertainty out of future then it is no longer the future; It is present – which is projected forward and nothing else.

We want investors to hire a financial planner not only with core focus of bringing certainty, but to building financial muscle, to face every kind of situation that life throws at you, to bring more completeness in various areas of financial life, to get an external opinion about your financial life.

We have seen this happening with many investors – No matter how much they plan, life turns out the way it turns out. Now this does not mean you should not plan, but you should develop your mind that is constantly planning in face of what happens.

4. It is NOT about financial plan, it is about the Journey

We find so many investors and financial planners – who are totally attached to the document called “Financial Plan”. They pick small small things from the PDF document given to them and over focus on them, it might be some number , some fund name or some assumption taken.

In our view the real results are not inside of a financial plan, they are located outside of a financial plan. We ask our clients to draw key learning’s from the financial plan and then throw away the plan. Every investor is on some journey and it is important to enjoy the journey. If you are not enjoying the wealth creation journey, you will never enjoy the so called destination.

We have seen people who after reaching the age of 55 or 60 years of age, tell us that it is the financial journey that matters at the end and nothing else. When we work with investors we just do one thing, we simply ask them to enjoy the process of wealth creation. This eliminates all the worries from your head and helps you to take proactive actions in your financial life.

5. It is NOT about picking perfect financial products

In our view financial planning is not an exercise to pick right or perfect financial products. A lot of investors spend maximum time in “Which Mutual Fund is Best?” or “Which Health Insurance policy premium is lowest?” and similar points. While that’s important to some level, but finally wealth creation is all about testing and exploring.

A lot of investors fail to create wealth because they stop testing and exploring. A good financial planner will always encourage their clients when it comes to testing and exploring new things. He/she will educate you in a way, such that you are motivated to test new things in your financial journey.

A good planner will always say “Don’t’ worry I won’t let you fail but I want you to test new things as an investor”

When we work with our clients – we ask them to test new and unknown territories. We once asked one of our client to think about creating an alternate income even though he was working in a software company. We asked him to cross his mental barriers and keep looking at opportunities. Few months later, In one of the offices, there was a food counter in cafeteria space, which he setup and hired a worker and it was doing well , The question is not what happened later, but the main thing is that he explored some new ways of earning money.

Then there are so many investors who never ever invested in mutual funds thinking it is a risk proposition. We ask them to test this new route and we become their guide. We helped them clear their myths about equity products and once they become comfortable, they started exploring it.

6. Financial plan is not about products, calculations and returns, it is about YOU

The number one expectation an investor holds in his mind is to find a financial advisor who helps him/her to get more returns. “A Financial Plan is not about products, returns and calculations, it is about YOU” – This line is from my book “11 principles to achieve financial freedom”. This entire book has no numbers and calculations in it, it teaches an investor to develop right kind of mindset in the area of money. Financial planning is an opportunity to be 100% honest in the area of money so that you can work on your discipline level and can make corrections as an investor.

Let me share an small experience here. I was working with a client who told me – “I have no idea why my financial life is not good”.

I simply asked him to get the truth on table, I asked him to search inside him to get real answer. He finally agreed and owned all his mistakes and took entire responsibility of his financial situation. It was painful for our client, but things started to shift when the truth got on table. This realization and acceptance gave him a lot of power to change things. It was all about HIM and not about situations and circumstances.

7. Financial planning is NOT about advice, it is about ACTION

The old definition says that financial planning is process where two people connect, number crunching takes place and advice is imparted on what needs to done.

Giving or taking advice is just 20% of the job done, because the rest 80% is all about taking actions. More and more investors will make the most of financial planning tool when they will take actions, because at the end only action produces results and nothing else. As an investor check, how action oriented your advisor is or how action oriented you are as an investor?

A lot of readers write to us and say – “Can you advice me on so and so issue ?” . We say – “NO , We will help you to gain insights along with giving advice so that you are empowered to take actions”

We ask our existing clients to report their weekly personal finance actions to us. This is how things start to shift in their financial world. In our facebook bootcamps, we focus on taking actions for 6 weeks and we have helped more than 250+ investors to make their financial lives awesome till now (5 bootcamps are over, register for the next bootcamp) .

8. Financial plan has to be a LONG document

Who the hell says financial plan has to be a long and lengthy document. You won’t believe, but there are many softwares which financial planners use and all these softwares are in the race of 30-50-100 page financial plans. Even a lot of financial planners believe that longer the document they give to client, they can showcase the work done by them and all the “analysis” they did. They feel that can justify their “work-hours” put in the financial planning exercise and help them to charge more fees.

But, almost all the investors we have talked to till date are not looking for a lengthy plan; All they want to learn is how to get in control of their financial life. Lengthy documents just confuse the clients. After looking at number of pie charts and heavy graphs and complex calculation tables in the financial plan, investors get more frustrated.

Why not give a financial plan that the investor can own and implement, why not give a one page plan or may be something which is short and sweet. A short plan, which only has something which really matters to clients and makes it easy for them to understand their own financial lives.

We once gave an option to one of our clients – “Do you want a 15 page financial plan or a 1 page plan?”. He said, “I will be thankful if you can give me a 1 page plan”. And we gave him a one page plan, which was sufficient for him to take important actions in his financial life.

Conclusion

Now, you have a whole new perspective on how to look at financial planning and you also know how not to look at financial planning. Share what is it that stops you from getting a financial plan, what stopped you till date? Is it about your lack of understanding, lack of belief in financial planning or something else? Do share your views on today’s article, I have not been very active on writing articles but from now on I will see that I share my views from time to time.

vinay mohanty

An NOC or No Objection Certificate is a legal document provided by the lender

What is NO Objection Certificate (NOC) ?

With reference to loans, An NOC or No Objection Certificate is a legal document provided by the lender which states that the loan has been complete and their is no outstanding to be paid by the customer as on a specific date. Whenever a person pays off a loan, its important to take this NOC document from your lender.

How to get the NOC ?

Generally, all the lenders dispatch the NOC document to your registered address once your loan is complete. However at times, people do not pay attention to it and loose out on it for some or the other reason. Also if the registered address with lender is your old address (suppose you changed the address in between the loan) , then also you will miss the NOC document.

So if you do not get the NOC, better contact your lender and ask for it specifically.

What kind of problems can happen if you dont have NOC ?

A lot of people think that just because the EMI’s are paid off fully, the job is done. However its extremelly important to have a legal document with you which clearly states that you do not owe anything more to then lender. This way you are protected legally and if someone claims later in life that you owe more to the lender, you can produce the NOC if required. I would like you to have a look at the incident below which create some issue for one of the loan customer, who had paid off the loan, but didnt have the NOC with him

Hi Manish,

I have taken a personal loan from Bajaj Finance in the year 2004. All along, I have been thinking that I have paid the loan. To this effect, Cibil report also says, there is no balance outstanding and the account is closed on 31.12.2008. I don’t have NOC. Today, I have received a call from a Lawyer saying that he has a summons to arrest me and I need to pay the balance amount of Rs.3750/- and that too I need to pay before 3 pm.

Could you please responds me as to what should I do. My question is will he really have Summons or just he is threatening. I can pay, but he is asking me to pay beofre 3 pm. That’s what I am not able
understand.

Here is another incident where Rahul settled his outstanding credit card dues with Standard Chartered bank and didnt collect the NOC . Then after many years he got a notice from the bank to pay 7.7 lacs. Here are his comments

Its been 12 years now, and I dont have the copy of NOC (or No Dues Certificate) with me. How do I prove my case as SCB isin’t ready to check me credit card history to see where the problem was. They just keep saying “they can’t retreive the information as they have sold those accounts to saha finlease.

And what about the notice they sent me asking me to attend conciliation camp to be held on 11th November?

Read the full incident on our forum

How NOC can help you in future if some problem arise

NOC is a legal document which has weightage . It proves that you really have paid off the loan fully and if there is any confusion, then NOC solves it.

Read these two incidents which were shared on our forum and you will understand its importance

Dear Manish,
Same problem as Sandesh I had with Indus Ind Bank Kolkata recently. They told me that my score is very low so they are not considering me. However, I submitted them my CIBIL Report which clearly says 763. There was an issue with a credit card which I cleared 1 year back. I submitted them the NOC too. The HR here told me that she has forwarded the details to her central office. Now I am waiting to hear from them.

(Source)

Dear Ravish,

If you have the NOC issued by the bank, saying all dues have been cleared and there is nothing pending, you can get a loan. But as Dear Ashal has suggested file dispute with CIBIL and wait for 2-3 months to get it rectified.

I had the same experience about 3 years back and credit card in question was issued by HSBC. I got the NOC issued by HSBC and applied for loan with HDFC, while submitting the application I informed HDFC about the HSBC story. Later on, HDFC asked for the NOC and cleared my loan.

(Source)

Go get your NOC right now

So now, if you had any loan in past which you have completed and paid off, make sure you have applied for the NOC and keep it safely in your records

vinay mohanty

happy 54th birth day to vinay mohanty (5th november)

THE CUSTODIAN OF A MILLION DREAMS

vinay mohanty