Late Extra: Shed the Maharaja Syndrome: laziness costs money

The normal refrain of most Indians these days is "I have no time, I am so busy." I am sure this is heard in most other parts of the world, too, but in India while this refrain was earlier endemic it is now becoming an epidemic.

There is nothing wrong with being busy and suffering from a lack of time. But for Indians it is high time investors took time off from their schedules to attend to their financial management themselves - at least to the extent of making sure they append their signatures on any financial instrument they buy.

This applies to non-resident Indians, too, especially when investing in India.

Laziness is described on the vast Indian sub-continent by various names; if in Lucknow, it is known as 'Nawab Syndrome', in New Delhi it is dubbed as the 'Koi Hai' or 'is somebody there' syndrome. Forget the long list of names for laziness in the various parts of India and let's just call it the 'Maharaja Syndrome'.

Having established that, let's proceed to illustrate how you could lose money. The universal thumb rule when entering any transaction, financial or otherwise, is that it is imperative to read the fine print.

The latter is easier said than done and even if one does go through that exercise, it is not guaranteed that you will be able decipher and fully understand the legalese and the financial jargon it is presented in. That is where you bite the bait and land on the shore gasping, having swallowed it hook, line and sinker.

I conducted a survey of how people go about investing their money, especially in these difficult times when interest rates are falling by the day, currencies are volatile and marketing executives of financial institutions are desperate to achieve their monthly targets.

In India and abroad, the most talked about financial instruments which promise the highest measure of security are the Reserve Bank of India Bonds (RBI). So the survey began at the RBI offices.

After being shunted from one desk to another after requesting for the requisite forms to apply for the bonds, one kind soul told me that the RBI does not directly deal with the bonds and that I should go to the State Bank of India (SBI).

At the SBI the officer in charge handed me two sets of forms and then began asking how much I wanted to invest. I evaded the question but he persisted. When I asked why he was being so insistent, he explained that he was only trying to help, adding that I would save a lot of time and running around and recommending that I get a broker to handle the formalities. Then he handed me a visiting card of a brokerage firm which incidentally is run by his son.

One look at the form and wisdom dawned.

The officer was not acting on his own but using the RBI's norms to generate clientele for his son. Lo and behold, the top of the form warns, "Please read the instructions carefully before filling in the form".

The next entries to be filled in block letters are as follows:

Broker's name; Code No.; Address. The next section is marked ' For Office Use only' and seeks information on:
Brokerage Paid RS.; Application No. And so on.

The investor's details come last in the form of a declaration.

Conclusion: it is "officially" assumed that one will hire the services of a broker. The reason as explained by one broker is that one can always complete the formalities oneself but the 'follow up' is essential and that is why brokers are essential.

So much for the RBI Bonds.

The next target of investigation is the General Post Office, which is the issuing authority of the National Savings Certificates (NSC).

The moment I began to walk towards the office at least 20 men and women swarmed around me asking if I wanted to buy NSCs.

Ignoring them, I reached the counter and asked for a form which was promptly given. It is then that I noticed a man crying in a corner. Surprisingly, before I could ask him what the trouble was, he told me his story.

In brief, he had bought some NSCs and they had matured, but when he went to encash them, the Post Office refused to pay. The reason was that the signatures on their ledgers did not match those on the redemption application.

This happened because he had bought the certificates through a broker while sitting comfortably at home.

The certificates bearing his name were handed to him. He was satisfied. What the broker did not tell him was that the signatures on the ledger were not the investor's but the broker's. That was the problem.

Eventually, I am told, after a lot of running around and paying a hefty penalty he got most of his money back.

The catch was that since the signatures did not match, the investor was in violation of the law and could have been charged with intent to defraud.

He had also run the risk of being done out of the entire amount if the broker had chosen to do so by simply asking the investor to keep warming his armchair and hand over the original certificates for encashment.

Yes, it does save one a lot of hassle by entrusting these tedious, time-consuming, energy sapping chores to the broker. However, a little laziness, especially in India, can cost you a lot of money, if you are lucky not to lose the entire amount invested in that particular instrument.

Lesson. Deal with transactions yourself and ask questions. Ensure that signatures in official records are yours and not your broker's. To do that you have to find the time, get out of that armchair and shed the 'Maharaja Syndrome'.

The author is India-based journalist.