Gold price hike temporary
K. S. Chawla

THE age old traditions of investing money in the buying of gold to meet emergencies in life is also witnessing a change. At one time, the rich people used to spend in the real estate and this trend is also on the decline now. This is primarily because of the slump in the economy. There is very little flow of easy money with the industry and the business which has restricted the generation of unaccounted money.

People with little extra money have been investing in the purchase of gold as gold is considered secret and can be used to meet any emergency. There is decline in the trend to buy gold despite the failure of share market and UTI scam.

Mr Amrit Nagpal of Tanishq Jewellers, Ludhiana says that gold has very bleak future in the world as no nation is keeping gold against currency. Rather many nations are selling gold and as many as 100 tonnes of gold has been sold by some of the western nations including France and the UK. For them gold has become irrelevant.

However, the industrially advanced nations are using gold in electronic goods like computers and other hi-tech goods, says Mr Nagpal. In view of such a situation, there is no scope for increase in the prices of gold in the world market. The spurt in the gold prices due to the attack on the USA is a temporary phase.

Only India is the consumer of gold and it will remain so, maintains Mr Nagpal. Gold is given at all types of social functions, including the birth of a child and death of a person.

Slump in gold buying

He admits there is overall slump in the gold buying in the country and this is because of the economic slowdown. The buying of gold last year was less because the number of days for marriages was less. This year the number of marriage days will be normal and the gold buying will also be normal.

Mr Nagpal says that there is a trend for buying diamonds among the upper segment of the society.

Ludhiana town, which has a number of good jeweller shops being the industrial hub of the state, also has four machines known as “karat meter machine for testing the purity of gold. These machines are also known as “gold assaying machines.”

With the growth of the town and coming up of major commercial centres in the Civil Lines, the major gold jewellers have also shifted their business premises to the new commercial centres on the Mall Road, College Road and around Fountain Chowk (Fawara Chowk).

Traditionally the jewellers shops were located in the Sarafan Bazar in the congested parts of the town. The Sarafan Bazar continues to do a handsome business, but the major showrooms are now located in the new posh colonies.

To quote Mr Hira Lal Jain of Nikka Mal Jewellers, leading jewellers there is almost 50 per cent fall in the gold buying among the people. He says that there is not much difference in the prices of gold in India and the international market. The prices of gold have remained almost static during the past one year. The government has removed all restrictions on the buying of gold by the NRIs and one can bring any quantity of gold by paying the duty fixed by the Government. The prices have been ranging around Rs 4450 for 10 gram of 24 carat. There is a fluctuation of Rs 25 to 50 per 10 gram.

The highest price gold witnessed was Rs 5500 for 10 grams two years ago. There is lately trend for buying diamonds but this is with the higher strata of the society. Artificial jewellery is also becoming popular.

Mr S.P. Oswal, Chairman, Vardhman Spinning Mills says that diamond has only perception value and it is for possession only. Even gold buying has become lack-luster, he maintains.

Gold bars

The State Bank of India Civil Lines, Ludhiana branch sells gold bars (biscuits) and has setup a special counter for this purpose. The sale of gold bars is also not very high these days.

According to Mr A.S. Kumaria, Chief Manager, SBI, Civil Lines there is slow trend of buying gold bars these days as there is some rise in the price of the same in the international market for the past one week.

The gold bars are being quoted at $ 276-277 Troyounce-Troyounce. Sales pickup during the festival season. The bank makes booking of minimum of 100 gold bars of 10 tolas each.

Despite the UTI Scam and failure of share market, the deposits in the banks have not shown any steep rise. The banks authorities claim that normal growth of deposits is taking place.

CHECK-OUT

Chit funds too come under CP Act
Pushpa Girimaji

EIGHT years ago, when non-banking financial companies argued that they were not answerable to consumer courts and consumer disputes redressal forums at the district and the state level agreed, the apex consumer court commented that it was not correct to take a hyper-technical view while interpreting the provisions of a social welfare legislation. This view of the National Consumer Disputes Redressal Commission in the case of Neela Vasantraje vs Amogh Industries (RP no. 409 of 1992) eventually opened the doors of the consumer courts to thousands of small depositors.

Now once again, the apex consumer court has reiterated this point and held that disputes pertaining to chit funds too come under the provisions of the CP Act. Rejecting the contention of a chit fund company that the consumer courts were prohibited from taking cognizance of any dispute arising under the Chit Fund Act, 1982, and that such disputes could be entertained only by the Registrar under the Act, the Commission said. “The Act (CP Act) is a benevolent legislation and its provisions are to be given liberal consideration. We cannot put restriction on the jurisdiction of the forum established under the Act not to decide disputes arising under the Chit Fund Act, 1982...” (Narinder Kumar and others vs Sanjiv Kumar, RP no. 299 of 2000).

This is an important order from the point of view of consumers because this is the first time that the court has gone into the question of whether disputes pertaining to chit funds come under the purview of consumer courts. Even though some years ago the National Commission had in the case of Dwarkadhish Chits Private Ltd vs Sanju Ram Aggarwal, upheld the order of the State Commission directing the chits fund company to refund Rs 52,500 with interest, it had not gone into the basic question of the jurisdiction of the courts over such disputes. Pointing this out, a lone member of the commission in his dissenting judgement had said that a “prized subscriber” of a chit fund cannot to deemed to be a consumer of any goods or services and the chit fund rendered no service to the prized subscriber. Consumer courts, therefore, could not adjudicate over such cases, he had said.

Now in the case of Narinder Kumar, the Commission has addressed the question of consumer courts’ jurisdiction in such cases, with specific pointer to Section 64 of the Chit Fund Act, which provides for reference of any dispute touching the management of a chit business to the Registrar of chit funds for arbitration. It says: “Notwithstanding anything contained in any other law for the time being in force, any dispute touching the management of a chit fund business will be referred to by any of the parties to the dispute, to the Registrar for arbitration....” It also says that no civil court will have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in the Act.

The dispute in this case was over the chit fund company’s refusal to pay the complainant, the maturity amount. His contention was that even though he had paid 25 installments of Rs 5,000 each, the company was not paying Rs 1,25,000 due to him on the ground that it was adjusted towards a loan taken by his father, who was also a member of the chit fund. While the District Forum dismissed the complaint on the ground that the complaint was not maintainable under the Consumer Protection Act, the State Commission disagreed and said the Chit Fund Act did not prevent consumer courts from hearing the complaint. It then asked the chit fund company to pay the complainant Rs 1,25,000 with 18 per cent interest from the date of maturity till the date of payment. Cost of Rs 2,000 was also awarded.

The national commission before which the chit fund company filed a revision petition, agreed with the State Commission’s view that the complainant was wrongfully denied the amount that was due to him and the amount could not have been adjusted against the loan taken by his father in his own name and in the name of Highway Goods Carrier of which he (the father) was the proprietor.

HOW I INVEST

RBI relief bonds a good option

MR Iqbal Singh, Investment Adviser, HDFC Bank , Chandigarh, is one of the 12 outstation advisers the bank has throughout the country . The bank, which is the only one in the region to provide complete investment advice to the customer, charges annual fee for this service from the clients who opt for it. Mr Iqbal Singh suggests investment strategies in the current market scenario .

After the share market has crashed and the investors’ confidence shaken following the UTI crisis, investment options have to be exercised even more judiciously. Following the US disaster, market experts have become even more sceptical . However, some hope still remains and options — share market, mutual funds, bonds, insurance schemes etc can prove to be good investment options if the planning is right.

Where to invest

It entirely depends upon one’s portfolio- risk appetite, expected returns and liquidity requirement. If you don’t want to take higher risks and also want to save on tax element, one good option these days is RBI relief bonds . However, one has to invest in these for atleast five years and it offers 8.5 per cent tax free interest. This would be a good option if one can afford to lock his money for long run.

More liquid funds

Liquid funds are definitely a better option today . One can go in for HDFC or ICICI liquid funds and past performance shows that they have been giving around 8 per cent return regularly to the investors. There is no time constraint and one can opt any of the two — those offering dividend payout or dividend reinvested. These are also good from tax saving point of view.

High-risk investors

After the US disaster, the global market scenario is very gloomy and investment in shares is not recommended at all. Nasdaq closed at a low of 1695 points and after it opens on Monday, the impact on Indian markets will be visible only a day after. If one is a very high risk investor and wants to invest in shares he must do a careful — fundamental and technical analysis, return on equity offered by the company and future prospects need to be studied well before making any investment. Since equity can always pay off in the longer run, this is not the right time to invest in shares.

Plan it from the beginning

Investment planning should start right from the time one gets employed. At this time, one can afford higher risks and may even invest more than 50 per cent of his savings in shares or equity linked funds. The investment in equities, however, should always be done for a longer period as these may outperform in the long run. At this stage if one is in a higher tax bracket (income per month is say Rs 15, 000) some portion of investment should be done in tax saving instruments. Debt related funds are also a good option as these offer good returns, though the return has considerably fallen and it would not be as high as it has remained earlier.

Your money in bank

Interest rates are moving southwards. In developed countries the rates have already fallen from 6.5 per cent to around 3.5 per cent. Due to the ongoing recession, the banks may have a flush of liquidity in their hands (big corporates are not expanding). For liquidity purposes, there is no harm in putting some money in the bank, but an investor who is also looking for higher returns and is willing to invest his money for a longer duration, Fixed Deposit (FD) would not be a very attractive offer. In future, though nothing can be accurately predicted, a slight increase in the rates can be expected only in case the government borrowings put a pressure on the interest rates or if the recessionary trend is reversed. However, in present conditions, the probability that the interest rates would increase is very low. Right now, safety and liquidity should be the top priorities. RBI Relief bonds offer the maximum security right now.

(As told to Shveta Pathak — Tribune News Service)

REAL ESTATE

Seller sick of paper work
R. P. Malhotra

BEFORE selling a freehold and transferable property in Chandigarh, Mohali and Panchkula, the seller is required to obtain (a) NOC — No objection certificate from the revenue authorities and (b) ITC — income tax clearance certificate (Form 37-1) (applicable to properties worth more than Rs 20 lakh situated in Chandigarh)

The NOC is not mandatory before selling a freehold property as per the Registration Act as well as according to a recent high court verdict; rather it is obligatory on the part of the Registrar to register the sale documents submitted before him without an NOC. As per the prevailing practice, the sale deed of agricultural land and residential properties in old and small towns are straightway registered without any NOC and the papers are, thereafter, submitted for mutation with revenue authorities.

This document is accepted as a safety deterrence against any fraudulent transaction by ensuring that the property put for sale has a clear ownership title and there is no financial liability such as mortgage, lien, charges, encumbrances etc and there is nothing due against the property to be paid to the department towards installment, payment of enhanced area, if any, and interest thereupon.

But it is not as simple as said. The seller, while applying for an NOC, has to attach a number of documents with the application. Apart from an indemnity bond indemnifying the officials and the staff of the Estate Office against any loss incurred due to any lapse and mishandling while issuing an NOC.

The department also requires a liability affidavit from the intending purchaser to declare that the property he intends to buy is free from all sorts of encumbrances, lien, charges and that there is no litigation pending in any court against the property.

Shouldn’t it be justified, instead, to allow the seller to seek NOC before he starts the hunt for a prospective purchaser? There should not be any need to mention the details of the intending purchaser at the initial stage of applying the NOC. Once the NOC in hand the seller should have the option to sell his property to the purchaser of his choice. The transferee may be asked to submit the required undertaking later at the time of final transfer after the execution of sale deed.

The NOC is also being linked with the occupation certificate. Till 1991, when a policy of charging extension fee, for allowing extension in time limit for the plots lying vacant till then or after the fifth year of allotment, was introduced, there existed no practice of obtaining occupation certificate after completing the building. Under the normally adopted practice, an application for the grant of a sewerage connection was submitted and the building was considered to be complete in all respects after obtaining the permission to connect to the sewerage line.

In January 1993, the Chandigarh Administration, however, relaxed the condition of extension fee for the buildings completed before 22-01-93 subject to the production of a copy of the letter granting sewerage connection. Since then the document has become vital source of corruption and a tool for harassing the public. The owners, who do not posses the letter of sewerage, though had obtained the sewerage connection, have either to cough up extension fee to the tune of thousands of rupees to regularise their cases or have to adopt other means to procure the copy of the sewerage connection from the government records.

A process of allowing the old house owners having ample proof of living there since long, to obtain occupation certificates, should be started after furnishing the proof of completion by showing a permanent electric connection, a bank account, water and/or telephone connection, ration and/or 1-card etc. Even the age of the building could be verified technically. However, violations, if there are any, may be regularised after charging the compounding fee or demolishing the objectionable structure as the case may be. The blanket imposition of extension fee on the house owners not possessing the sewerage connection certificate is totally unjustified.

Raising of piecemeal objections while issuing the NOC is a normal practice with the estate offices. It defeats the very purpose of fixed-time schedule for issuing the document, as each time for each subsequent objection the same fixed time schedule (45 days in Chandigarh) is applicable. Objection/objections, if any, that too in rare cases should be intimated to the applicant well before the expiry of the time schedule, that too in one go. The complete set of documents should be scrutinised at the time of submission at the single window to avoid raising subsequent objections. In case of no communication from the department within the stipulated time schedule, the NOC should be treated as having been issued.

Although applying for an NOC in Chandigarh is free of cost the revenue authorities in Panchkula and Mohali consider the issuance of NOC as a value added service and are charging the public Rs 5,000 and Rs 1,000 respectively. The practice is against the very aim of serving the public.

INVESTMENT TIPS

by Lalit Batra

BIZ BRIEFS

Inflation dips
New Delhi, September 16
Inflation rate dipped by 0.28 percentage points to 4.99 per cent in the week ended September 1, due to fall in prices of some manufactured products. The point-to-point annual inflation rate based on wholesale price index (WPI) for all commodities (base: 1993-94=100), was on the rise in the previous three weeks to touch 5.27 per cent on week ended August 25. PTI

Corpn Bank
Apropos article “Think before purchasing your dream house” published on “Your Money” page in The Tribune dated August 27, the Corporation Bank’s actual rate of interest on housing loans are: upto Rs 10 lakh 12.25%, above Rs 10 lakh to 25 lakh 12.50%, and above Rs 25 lakh to 50 lakh 12.75% in place of Rs 3 lakh to 5 lakh 12.25%, Rs 5 lakh to 8 lakh 12.25%, Rs 10 lakh to 15 lakh 12.75% and Rs 15 lakh and above 12.75%.