Dr Rajan, will RBI look after consumer protection finally?

Reserve Bank of India (RBI) governor Raghuram Rajan presented his second credit policy on Tuesday, 29 October 2013. While most of the attention is on the macro part that deals with rising interest rates and such like, I was more keen to read in detail an item much lower down in the statement (you can read the second quarter review of 2013-14 here: http://goo.gl/dbLraB ). Tucked away under item V, point 43 says: “It is proposed to implement the following recommendations of the *FSLRC pertaining to consumer protection and capacity building:

Read more

 

Financial literacy—a regulatory cop-out

Expense Account, Mint

After I finished a masters in economics from the much venerated Delhi School of Economics where we worked on complicated three-page equations that would solve the economic problems of the world, I realized I was financially illiterate. I couldn’t sign a check nor manage my bank accounts properly. It took some hefty fines for going below the minimum threshold for me to push myself to understand basic banking. Now, 20 years later, I consider myself “financially literate” but the transformation has been facilitated by the work that I do. If I were teaching geography, for instance, or cutting open people for a living, would I have spent entire days poring over insurance policy brochures trying to work out costs and benefits? Never!

Read more

What ‘Ashani Sanket’ and Bob Shiller have in common

Expense Account, Mint

The date is 5 October, 2011. Bob Shiller arrives 15 minutes late to class. He’s teaching his signature Behavioural Economics course and it’s the Fall Semester at Yale. I’m sitting in the class as one of the several World Fellows who’ve taken the course as part of our work during the semester we spend at the University.

The buzz about him that year was that he was up for the Nobel prize in economics—it took him two more years to win it, sharing it with Eugene Fama and Lars Peter Hansen—and I must admit I was a bit intimidated the first day I’d entered the lecture theatre a month earlier. I was course shopping then and had been in some classes of extreme alpha professors who ensured that the whole class knew it. It’s possible that all the sabre rattling impresses young undergrads, but mid-career such antics are just irritating. So it was a delight to find Shiller, the quintessential academic, with the air of being not always there, the last minute rush into class with dishevelled hair, the uncoordinated hunt for the mike, the look of perplexed anxiety when the slides wouldn’t come alive when they should. So he’s late. He complains about having a late morning. About not having enough self control to finish what he should have done the evening before. And then links it to the irrationality of human beings and the course that he teaches where ‘animal sprits’ matter more than equations that bind the world in rigid models. Models that, we’ve found, fail. More importantly, for me, Shiller was a reaffirmation about my views on finance. That finance’s role was to facilitate the workings of the world and not the other way around.

Read more

Belafonte was right. The woman is smarter than you think

Expense Account, Mint

Talk about money management to most women and you get the eye roll, the head shake and the disparaging half laugh that says—what, me, manage money? I get a variety of responses when I’m introduced as a personal finance writer. I get the self-deprecating confession: Oh, I know nothing about it—I simply don’t have a head for numbers. Or the smart answer: I leave it to the husband—let him make himself useful, na? Anyway I just spend it. Or the I’m-too-cool-to-bother-about-such-things answer: I don’t have the money, my dear, what to talk of its management! It is almost as if women pride themselves with not being able to deal with all things money and play the helpless feminine stereotype of being too brainless to deal with complicated things like money.

Read more

 

Regulators need to forget where they came from

Expense Account, Mint

When I met the head of one of the largest private sector life insurance companies last week in Mumbai, he was clear that the 1 October 2013 deadline to re-engineer the traditional (money-back, endowment, whole life) plans in life insurance would at most be breached by two weeks to a month. (Market-linked plans, the unit-linked insurance plans, or Ulips, got a makeover in 2010). He said that most private sector companies he knew had their basic product suites in place and were ready to bring the new products to the market by 1 October. He said that the regulator had been working hard to approve at least one product in each category for every company in the industry. Mint Money spoke to several other private sector life insurance companies which said the same thing: we are ready. So what happened that the industry has been given a three-month extension when most companies were ready to go?

Read more