[Discussion] Mahindra Finance Fixed Deposit

[dvader]

My uncle just asked me about Mahindra Finance FDs (I wouldn't touch an NBFC with a 10-foot pole). My question is why the hell are NBFCs allowed to call their investment product "Fixed Deposit". This is completely deceptive and will be missold like hell to less Finance/tech-savvy people. I suppose it's not insured with DICGC which makes it like a lock in mutual fund, cuz I wouldn't trust a single thing these NBFCs say.

Is there any law against calling these investments Fixed Deposit? or is it the lack of a law that these NBFCs are exploiting to loot common people?

 

[dvader]

You are wrong in assuming that it is totally correct to call TERM DEPOSITS as Fixed Deposits. They are not Fixed in the true sense. A Bank FD (as you call a Term Deposit) is exactly not a fixed one - it can be withdrawn - prematurely - by losing some agreed interest.

However, the deposits with these NBFCs are TRULY FIXED DEPOSITS. No premature withdrawals or no loans/overdraft given against them.

DICGC coverage is mandatory for bank deposits - but not so for NBFCs - generally speaking.

Of late, NBFCs are also offering some hybrid models - loans against FDs, Credit/Debit cards against FDs - which work on ATMs,.....

Having worked extensively in Rural, Semi-urban, Urban, Metro n Specialized branches - for close to 40 yrs - be rest assured that the bank customers are well informed - more so - the TDR/STDR customers.

And, despite better rates offered by NBFCs, they find it difficult to get customers for their FDs. And, banks have reached almost every nook n corner - unlike NBFCs.

Well informed n risk taking investors (like me) also invest in NBFC FDs - like any other alternatives like NCDs, PCDs, Shares, TF Bonds, G-Secs, Gold Bonds....

As you are aware none of these have any insurance cover - some have Govt guarantees.

Fixed deposit can be bigfoot's left toenail. The point is not what they are, the point is how they are perceived by a common man. Again as a well informed citizen, it's nice you are making sound financial decision. But that's your personal prerogative.

"Be rest assured that customers are well informed" : Really !!! that is such an obnoxious statement. You understand the entire Indian Population? their minds, predisposition, emotions, conditions, etc etc?

Let me guess, you are or were a PSU Bank employee. 😂

 

[RAMESH BABU N]

Fixed deposit can be bigfoot's left toenail. The point is not what they are, the point is how they are perceived by a common man. Again as a well informed citizen, it's nice you are making sound financial decision. But that's your personal prerogative.

"Be rest assured that customers are well informed" : Really !!! that is such an obnoxious statement. You understand the entire Indian Population? their minds, predisposition, emotions, conditions, etc etc?

Let me guess, you are or were a PSU Bank employee. 😂

At least I have 40 yrs of experience in Financial markets n banking sector and having worked in 5 different states...

What about you ?

 

[dvader]

At least I have 40 yrs of experience in Financial markets n banking sector and having worked in 5 different states...

What about you ?

Well I have common sense, humility and decency to respect everyone's life experiences, choices and conditions, Instead of trying to force my personal life experience on everyone else.

I can bet a thousand rupee that you worked at SBI.

And with due respect Sir Ji, I am 26 and I am sure as hell that at least I wont be an obnoxious jerk to younger generation when I grow old.

 

[RAMESH BABU N]

Commenting on the GoI's elaborate systems n procedures, RBI's role, responsibility n efficacy, or the DICGC or the capability n the gamut of operations of the Ministry of Finance.... And, commenting without reading/knowing about the BRAct or the impact of atleast 30+ Acts which are in operation in the Financial sector n Banks n NBFCs and other financial intermediaries...

Is it correct ? Neither qualified nor experienced nor certified nor proved to find faults n suggest changes.

And calling them with bad words....

It is not proper.

Better you spend a lot of time to read, study, analyze n then do a proper job.

 

[RAMESH BABU N]

There is no point to discuss policy issues who is not even aware of anything.

All the best. Start reading....

 

[dvader]

Commenting on the GoI's elaborate systems n procedures, RBI's role, responsibility n efficacy, or the DICGC or the capability n the gamut of operations of the Ministry of Finance.... And, commenting without reading/knowing about the BRAct or the impact of atleast 30+ Acts which are in operation in the Financial sector n Banks n NBFCs and other financial intermediaries...

Is it correct ? Neither qualified nor experienced nor certified nor proved to find faults n suggest changes.

And calling them with bad words....

It is not proper.

Better you spend a lot of time to read, study, analyze n then do a proper job.

Guys is this man for real or just trolling !!!

Baking sector is not perfect and will never be. Forget India, Ministries and Central banks of Developed countries are far from perfect. You are assuming thay our system is perfect ! what...why....why would you say all this? You know this is gonna be here for everyone to see right?

 

[Deleted member 11974]

Guys is this man for real or just trolling !!!

Baking sector is not perfect and will never be. Forget India, Ministries and Central banks of Developed countries are far from perfect. You are assuming thay our system is perfect ! what...why....why would you say all this? You know this is gonna be here for everyone to see right?

the beauty lies in the imperfection
to maintain financial stability there would be bailouts on the other hand as which was noticed by yes bank and pmc bank
so i am pretty sure somebody would be there for nbfcs in the worst case scenario not that the credit cycle has peaked or asset quality is showig signs of detoriation

 

[Tejo]

Well informed n risk taking investors (like me) also invest in NBFC FDs - like any other alternatives like NCDs, PCDs, Shares, TF Bonds, G-Secs, Gold Bonds....

NCD, PCD means ?

 

[dvader]

the beauty lies in the imperfection
to maintain financial stability there would be bailouts on the other hand as which was noticed by yes bank and pmc bank
so i am pretty sure somebody would be there for nbfcs in the worst case scenario not that the credit cycle has peaked or asset quality is showig signs of detoriation

Somebody will be there !!!! That's us man that's public money. Again 2008 bailouts.....only one banker went to jail and this guy claims it's all rainbows and common is well aware.

 

[dvader]

NCD, PCD means ?

Non and Partial convertible debentures. Google out the rest

 

[Tejo]

Why are you repeating same?

That's us man money.

You too wasting someone ₹₹₹₹ for such useless arguments.

 

[Deleted member 11974]

Somebody will be there !!!! That's us man that's public money. Again 2008 bailouts.....only one banker went to jail and this guy claims it's all rainbows and common is well aware.

what do you expect then
somebody will become anil kapoor and change the system in one day?
no the system had flaws 10 years ago,there will be flaws 10 years laters.
nothing is imperfect especially a system that caters to such huge individuals
you want to see changes go and advocate and fight for it at the right places.
and yes the common is well aware that the system is flawed but the bigger thing they are well aware of is that they have no other option than to adjust and adapt because they cant afford to leave their job and start advocating for change

 

[dvader]

Why are you repeating same?

You too wasting someone ₹₹₹₹ for such useless arguments.

It's your prerogative to be on any side of an argument. But if you think an argument is useless, you have the choice of not being a part of it.

And on wasting money. I make enough to take care of myself and my loved ones.

 

[dvader]

what do you expect then
somebody will become anil kapoor and change the system in one day?
no the system had flaws 10 years ago,there will be flaws 10 years laters.
nothing is imperfect especially a system that caters to such huge individuals
you want to see changes go and advocate and fight for it at the right places.
and yes the common is well aware that the system is flawed but the bigger thing they are well aware of is that they have no other option than to adjust and adapt because they cant afford to leave their job and start advocating for change

Ofcourse I dont expect that. It's more of a rant+concern. All I am saying is if we can not afford to do somtbing, at least be aware of this bad faith and distrust, instead of just expecting it as is. The feeling you had while writing this comment is what I felt expressing mine.

 

[Deleted member 11974]

i wouldnt say that wxcepting it as it is.
I have had a heated arguement with someone in this forum on someother thread relating to income tax.
The point is after a while you feel that there is no point in fighting because it drains yor energy
so the only smart thing to do is improvise adapt and overcome and manage accordingly

 

[dvader]

i wouldnt say that wxcepting it as it is.
I have had a heated arguement with someone in this forum on someother thread relating to income tax.
The point is after a while you feel that there is no point in fighting because it drains yor energy
so the only smart thing to do is improvise adapt and overcome and manage accordingly

Yup that's what I have been doing at least with people around me. Ranting here/reddit/other forums helps have a discussion with like minded people......Helps me keep my sanity. Anyway peace ✌️

 

[CARDBITRAGE]

Yeah, absolutely correct. That's why I said, why not make solid laws regarding the use of certain terms known to the masses? There are just 4-5 such terms. One bill could save the life savings of an old man or a mother saving money for her daughter's marriage etc etc.

"Fixed deposit" is technically right to use. The bill can easily be contested and will just fail to be passed. This is utterly ridiculous, as they are not falsely marketing anything here. You can't seek different terminologies for banks and NBFCs.
Though it is cheaper to raise capital from public deposits, it is a painstaking task to comply with the LARGE number of regulations set by the RBI. That's why there are very few NBFCs that can offer FDs to the masses. Most of them just raise money by issuing bonds or borrowing from other financial institutions.

I am not talking about financial literacy, I don't trust any govt to do even basic things, forget about financial literacy. That's why a bill to save the public from the distrustful use of common terms.

This is a very debatable topic. Ideally, governments everywhere would want people to be financially illiterate, so that people can spend all their money and they can consistently earn tax revenue. Just like with any type of education, it is our responsibility to always self educate and constantly keep ourselves updated with information.

My Driver lost INR 50000 in 2009 (saved for her daughter's marriage, 3 daughters), in a scheme that was basically an Endowment plan but sold as Fixed Deposit.

This has nothing to do with NBFCs using the term "fixed deposits". ULIPS and endowment plans are the most profitable insurance products for banks thus far. This is because of the ridiculously high commission and fees associated with this product. So naturally, most agents will try to sell this crap to earn some decent cash. Unfortunately, people with limited resources often fall prey to these rascal agents who falsely promise an "unbelievably high ROI" and I wish it were not the case. This is not something the government or RBI can solve, but companies should set stricter ethical standards and heavily penalise those who do not conform to these standards. But in times like these, when profits take precedence to everything, little change can be expected.

I think one can make a fair assumption that the RBI knows of this practice. For years, I might add. It has chosen not to act. You know who to blame.

RBI knows of this heinous practice, and that is why they introduced a "freelook period" so that people have the option to cancel the policy in case they have been subject to misselling.

 

[ssnthegenius]

My uncle just asked me about Mahindra Finance FDs (I wouldn't touch an NBFC with a 10-foot pole). My question is why the hell are NBFCs allowed to call their investment product "Fixed Deposit". This is completely deceptive and will be missold like hell to less Finance/tech-savvy people. I suppose it's not insured with DICGC which makes it like a lock in mutual fund, cuz I wouldn't trust a single thing these NBFCs say.

Is there any law against calling these investments Fixed Deposit? or is it the lack of a law that these NBFCs are exploiting to loot common people?

What about NCDs?

 

[Deleted member 11974]

What about NCDs?

the only difference between NCDs and FDs on an NBFC level are that NCDs can be traded on the exchanges

 

[j_s]

the only difference between NCDs and FDs on an NBFC level are that NCDs can be traded on the exchanges

Not necessarily. You can issue unlisted NCDs as well.