What does the new bank locker guidelines mean

What does the new bank locker guidelines mean

What does the new bank locker guidelines mean

bank Locker

The RBI has announced a few changes in the starting and keeping a bank locker. As the news guidelines are going to be affected from January 1, 2022, let us take a quick look of what it necessitates. 

Subas Tiwari

Under the new guidelines, the liability of the bank towards locker in case of fire, theft, building collapse and fraud by bank employees will be limited to 100 times of its annual rent. The revised locker guidelines will come into effect from January 1, 2022. Banks will have to include a provision in the locker agreement under which the person renting the locker will not be able to keep any illegal or dangerous goods in it.

The Reserve Bank said that on the basis of various developments in the banking and technology sectors, nature of consumer complaint and information provided by banks and Indian Banks’ Association (IBA), it has decided to “deposit lockers/safe custody items provided by banks” facility’ is reviewed.

Let us know here about the new rules and how they are going to affect you.

  1. The responsibility of the banks will be fixed

According to the new RBI guidelines, banks will have to implement a board approved policy, in which their responsibility can be fixed for the goods kept in the locker due to negligence. According to the rules, the bank will not be responsible for any loss in case of natural calamity or ‘Act of God’ i.e. earthquake, flood, lightning and storm.

  1. If theft, fraud happens, the bank will give compensation

But this does not mean that the bank is free from its responsibilities. Banks will have to ensure proper arrangements to protect their premises from such calamities. Apart from this, the entire responsibility of the security of the premises where there are safe deposit lockers will be with the bank itself. According to the new rules of the Reserve Bank, in case of fire, theft, building collapse or fraud on the part of bank employees, the liability of banks will be limited to 100 times of their annual rent.

  1. If payment is not made

If the rent for the locker has not been paid by the customer for three consecutive years, then the bank can take action on it and can open any locker following the due process.

  1. Cannot store illegal goods

According to the RBI new rules, banks will have to include a provision in the locker agreement, under which the locker rental customer will not be able to keep any illegal or dangerous goods in the locker.

  1. Waiting list number will be released

According to the new rules, it will be necessary for banks to send SMS and email of locker operations to the customers. Banks will have to provide receipt for all applications for locker allotment. If the locker is not available, the banks will have to give the number of the waiting list to the consumers. The branch wise locker allotment information and waiting list of banks will be linked to Core Banking System (CBS) or any other computerized system compliant with cyber security framework.

  1. These customers will also get the facility

As per the new guidelines, the existing customers of the bank who have applied for locker facility and who are fully compliant with CDD (Customer Due Diligence) norms can be given the facility of Safe Deposit Locker/Safe Custody Article. According to the new rule, the facility of Safe Deposit Locker/Safe Custody Article can be given to the customers who do not have any other banking relation with the bank.

  1. Shifting of lockers

Banks will be able to shift the locker from one place to another only after informing the customer. Term deposit can be used as locker rent. The bank will have to take adequate steps to protect the strong room/vault. It will be necessary to keep the CCTV footage of entry and exit for at least 180 days.

Why a common man needs bank lockers?

In the earlier centuries, people went to the banks demanding a personal locker facility in view of a spate of robberies which were happening in their households. Their take that banks usually are safe havens with high-end security systems in place, security guards, alarms, etc-so banks were the safest places on earth to keep one’s valuables such as gold ornaments. But this high-end security systems in banks have spurred a burning question nowadays!

Everyone is reviewing their decision to continue to hold a locker in a bank in the light of recent incident of stealing of contents of bank lockers in Haryana by burglars. Readers might also remember the 2014 fire which engulfed one of India’s leading banks in Chennai (fortunately, the locker cabinets escaped the fire) which stoked media discussion about the safety of bank lockers under these circumstances.

So, we venture here to try and understand the way to go about hiring a bank locker and the responsibilities which come with being a locker hirer and the limited uses of this service which are offered by banks under public utility services 

Why banks hire out lockers?

During earlier times, banks were letting out lockers as a favor to high-end customers who were even otherwise dealing with the bank in the matters of deposit/loans/remittances. However, during the latter part of 1970s, after nationalisation of private banks, banks were looking to increase their customer base while looking into ways of accruing non-fee- based income to boost profits. This hunger for additional business threw a slew of public utility services such as issuance of letter of credits, guarantees and of course hiring out bank lockers.

How does one hire a locker?

It is as easy as opening a bank account. Request in writing for a bank locker of the size you need; request for a free personal look-in to the locker cabinets to know the depth of the locker you wish to hire; sign an agreement for locker-hiring; open a bank savings account to deposit locker rent and locker deposit; obtain the key to your allotted locker and come some other day or same day to keep the contents in the hired locker. You would also have to sign the locker visit register to mark your presence.

Locker operation conditions

  • Banks recognise you only by your signature; so, make sure you sign as normally as you always do
  • Locker deputy’s signature would also have to be affixed in the allotted page of the locker register (in case you appoint one)
  • Locker agreement provides for repaying the contents of the locker to you or your nominee (in case of the deceased of the locker-hirer) or either-or survivor clause in case the locker is hired jointly (with a blood relative) or against all the locker-hirers jointly
  • Some banks insist on a declaration from one other person accompanying you (non-locker-hirer) to request for bank’s permission to enter the locker room along with the locker-hirer
  • Quite a few banks are also obtaining a declaration to the effect from the locker-hirer that he/she has personally verified that the locker allotted to him/her has been safely secured with the locker key, after completing the operation of the locker

Benefits of a bank locker

  • In spite of the hullabaloo created in the media questioning/debating on the safety of bank lockers, it is still the safest place to keep your valuables, till some other alternatives come to replace them
  • Banks still provide a secured environment by providing bank lockers which are made of high-quality steel plates with MS screws fitted on them and difficult to penetrate
  • Bank lockers come cheap for the space you hire, which is incomparable with any other alternative system
  • Bank lockers are secured by insurance cover against fire and other hazards and nowadays are backed by internal circuit TV (CCTV)
  • Locker-hirer(s) can nominate/appoint a locker deputy to operate the locker in his/her absence (which acts as a Mandate as in a deposit account as POA holder)
  • Bank officials do not see as to what is being kept in the bank locker; they at best take a declaration that the locker contents are not opposed to public policy. So the secrecy of the customer is maintained

 Disadvantages/drawbacks of a bank locker

  • One can operate the bank locker only during the time the business hours

of a bank which severely restricts the freedom to get the locker contents in case of an emergent situation; incidentally, bank holidays in an area often coincides with a religious public holiday, thereby denying access to bank lockers (to enable the locker-hirer to take out the ornaments for wearing on such important occasions)

  • Normally, banks charge locker rent in advance for a specific period (eg., say for 1 year) and in case the locker-hirer vacates the locker in the middle of the year, banks mostly do not refund the locker rent for the unexpired (broken) period to the detriment of the customer
  • Banks usually insist, albeit orally, on depositing a sizeable sum as fixed deposits to be held with them for a longer period for letting out a locker
  • Lockers are not available at small/medium-sized branches in urban/semi-urban and rural centres where the fear of theft is the maximum due to the of the remoteness of the place
  • The RBI has recently come out with a response to an RTI filed wherein it has clarified that bank locker hirer in India  is that of  a lessee (tenant for that space he hired) while the bank acts in the position of  a lessor (landlord-the owner of the bank locker which is let out for hiring). So in case of a locker theft where the contents were removed without the connivance of the bank officials, the bank is under NO LIABILITY FOR LOSS OF VALUABLES IN LOCKERS.

Do insurance companies give locker insurance?

Insurance companies dealing with non-life (general) insurance products do not cover bank lockers for the purposes of extending insurance cover under a household package policy. However, in case one wishes to have insurance cover on the jewellery items (such as ornaments in gold, silver, platinum; precious stones, diamonds, etc)  and/or currency notes kept in bank locker(s), insurance cover under Jewellery Block Insurance Policy (as a part of the Household Package Policy) is being made available by most of the insurance companies in India.

However, this insurance cover is only for ornaments and other pieces of jewellery as well as cash. Also, one may have to show supporting receipts for having purchased them with their purchase value (other than what was acquired from marriage gifts).

A handy guide to start a term insurance plan

A handy guide to start a term insurance plan

A handy guide to start a term insurance plan

Health Insurance

Term insurance plans work as recourse to face different uncertainties. If you are planning to take term insurance plan, make sure to gather information about the cover amount, policy term, premium etc. The following article gives you an in -depth coverage of all things essential to start a term insurance plan. 

Subas Tiwari

Term insurance brings additional benefits such as posthumous family financial protection, tax savings, critical illness, accidental death etc. If we talk about the types of term plans, then there are pure term plans, return on premium term plans and term plans with income benefits. But first, let us understand what is a term insurance policy. 

What is term insurance?

One of the most misunderstood financial products in India is “Term Insurance”. In fact, “Insurance” in itself is not understood or appreciated enough. Most people consider insurance as just another form of savings or tax savings instrument, which can earn them safe, stable returns over the long run. Some products in the insurance space do provide this regular saving facility, but that is not the purest form of insurance.

The true and simplest meaning of insurance is – protection against risk. Now this risk may be to life or property or many other things. But in this article, let’s focus on life insurance, and specifically term insurance. It’s a policy where you pay premiums in return for a benefit to your family in case you die, and you get nothing if you survive the insurance period.

Tell this to people and most will ask, “Why should I pay annually for a product if I am not going to get anything back?” Very few understand that you pay premiums because there is a guarantee that if something happens to you, your family will be paid the pre-decided amount. Therefore, you have the peace of mind that even if you are not there; your loved ones will not have to bear a financial loss as well.

Just consider this – in the unfortunate event of one’s death, the immediate family will receive sufficient amount to maintain their standard of living. This payout can also fund their child’s education, help pay off dues and even provide capital in case the spouse wants to start a business to support the family. This is the reason term insurance is also known as a “pure risk” plan – simply because it mitigates the risk of you not being there to provide financial support to your family.

Term insurance is the oldest form of insurance and is the least expensive plan to cover the risk of death. Term plan is a no-return plan just like your medi-claim or car insurance cover. If claim is made within the insured period, the nominee will get the full sum assured as otherwise there is no maturity value or cash value for this plan. It provides coverage for a specific period or term say 10 to 30 years. Term insurance plan is a must for a person who has dependents or a family of which he is the sole bread-earner. If you have family members dependent on your income, you need term insurance.

It’s a hedge for the protection

One should not make the mistake of taking term insurance premium as an expense but treat this as a hedge for the protection and security of your loved ones. You need to compare the premiums before selecting the right company and also have to go through the exclusions in the plan. This will help you in selecting the right term plan. Looking at all the facts available, term insurance is the obvious choice for insurance for life.

Term insurance is the simplest or the purest form of life insurance. In this case, there is a provision that in the event of the demise of the insured person, the family of the deceased is paid a pre-determined amount as part of the coverage.
For example, a person bought a term insurance plan for a sum of Rs 30 lacs. The tenure or the term of the policy is 20 years. So, if the insured person passes away in the duration when the policy is valid, the family (the nominee or the legal heirs as the case may be) will be paid a sum of Rs 30 lacs.
Another important aspect of term life insurance is to ascertain the safety net which the family of the insured will require in the event of the demise of the insured. The calculation is done by keeping a view on the existing standard of living of the family and the funds that would be required in order to continue to live with the same standard of living. Also, to be considered are the various important events like marriages, higher education etc; and the debt that the deceased must have left behind to the legal heir(s). 

After the calculation of the aforementioned future expenses, the person can come to a definite number or the coverage which he/she may require in order to provide for the family or dependents so they can continue their existing standard of living. 
But one thing is very clear. The earlier the insured takes this policy to benefit his family after the unexpected death, the lesser is the cost of premium he/she has to pay to keep the policy alive.   

One should look at the best term insurance plan in India depending on age, income and life insurance need. The online premiums are cheaper than off-line term plans and are quite easy to avail also. In the recent past, online term plans have gained immense popularity due to their easy access. 
Some of the insurance companies are offering discounts on online purchase of term plan policies, because it saves the companies a lot of labour and man-hours trying to sift through hordes of paper/documents, which can be easily viewed online and preserve it for future use without much difficulty.
We have brought out the salient features and workings of term plan insurance online in this article (SEE BOX) for the information of our readers.

Advantages/benefits of term plan insurance

  • Term insurance is the cheapest form of insurance.
  • It’s simple to understand.
  • Select the length of the term for which you would like coverage, say up to 35 years. So, payments are fixed and do not increase during your term period.
  • During the early years of a term policy, the premium will usually be significantly lower than for cash value life insurance.
  • In case of an untimely death, dependents will receive the benefit amount specified in the insurance agreement directly on filing the claim with supporting documents.
  • You can customise term life insurance with the addition of riders, such as Child Benefit or Accidental death.
  • Another popular feature of term insurance is the return of the premium. They may give the benefit of returning 100 per cent of whatever you have paid.  


  • There is a downside in that, if the insured person happens to outlive the tenure of the policy, all the amount paid in the form of premiums will be forfeited by the insurance company without any benefits to the insured or to his/her family. Essentially all the premium will go down the drain, except for tax benefits he/she would have availed on the amount paid as term insurance premium.
    • There is one major hurdle that prevents people from purchasing a term insurance plan; it tends to create a mental block as it deals with the death of the person taking a policy. But it is morbid, as the rationale behind buying car insurance is exactly the same as buying a term insurance plan. 
      If a person meets with an unfortunate car accident while driving, he/she has to pay damage charges to the other party or the insurance provider will compensate him/her. On the other hand, if the person is a relatively safe driver and avoids any accident, the premium acts more like a hedge (cover) against any event which might/might not occur.
  • Consumers resort to consulting their agent as they either do not have the time to go through the brochure of this product or they believe that the agent is in the trade and hence should know more of the product- so it is easy to ask him questions and get answers from him without counter-verifying with the insurer. Unless one is aware of the features of the insurance plan himself/herself, do not expect the agent to explain the plan in detail (some of the agents do not give proper advice to their clients and run behind commissions).
    • Term insurance provides coverage only for a limited period of time.
    • Premium rates are guaranteed only until the end of the term. Depending on the policy, premiums may be level for a period of 1, 5, 10, 15, 20, 25, or 30 years and then cease without any renewal option, or offer a fresh cover at the end of the plan period at a higher premium rate.
  • Deteriorating health can trap you in a policy with rapidly increasing premiums.
  • No insurance company offers term plan insurance over 75 years of age, which means it is not very beneficial to the insured after attaining 75 years. 

Tips to get on a term insurance plan

First decide the cover amount

Choosing the cover amount is the most important thing to do before buying a term insurance policy. It depends on the individual, how much minimum cover he needs. Going by the thumb rule, salaried people should take a cover of 10 times of their annual income and at the same time keep increasing it with increasing income. You can also calculate the cover amount online. There are many online tools available in which you can calculate the cover amount as per your income and profession.

Deciding policy term is very important

Selecting the term of the policy is the second most important task in the selection of a term plan. If you are taking the policy at a young age, then choose the longest-term policy. This will also give you an opportunity to buy the policy at a lower premium.

Online or offline?

You can buy the term policy through an agent or online. You may also have to pay a lower premium if you do it directly through the company’s website or aggregator website. At the same time, if you take it from the agent, you will have to pay a higher premium.

Choosing the company

Choosing a good company is very important before buying a term insurance policy. Before taking a policy from any company, check its claim record ratio. Along with this, also know the financial position of that company and keep in mind the company’s service, method of payment, etc.

Choice of rider

Even after a term plan, there is also a possibility that the policyholder may become a victim of disability due to an accident or he may lose his hearing. In such a case, a rider should also be taken for financial security. However, for this you have to pay an additional premium.

Some more important aspects of term insurance

The public, consisting of the common man, the office-goer, the professional are mostly aware of life insurance products in the insurance sector. But many don’t know or aware, is the topic of discussion in this article. May be, the professionals and the babus in the corridors of power, will have the benefit of knowing this product, which is term plan insurance.

Most of us know that there are 24 life insurance companies operating in India out of which Life Insurance Corporation of India corners almost 70 per cent of the total life insurance business. There is no best investment product anywhere; the answer is a relatively better product based on offering benefits with reasonable costs. 

Types of term insurance plans

There are basically three types of insurance plans available in the market. They are:

(1) Traditional or conventional plans

Traditional plans are mostly saving products and give guarantee of sum assured and also give bonus every year depending on the profitability of the company. The investment options are with the insurer and they take a call where to invest on the plans available in the market.

(2) Unit linked insurance plans  

ULIP plans are market-related and the risk of investment is borne by the policyholders. Policyholders have the right to choose the investment option available in the plan i.e. from 100 per cent in debt to 100 per cent in equity.  ULIP products are more complex than traditional plans.

(3) Term insurance plans

First, think about why you want to buy a term insurance plan? Of course, like everyone else, you also believe that nothing will happen to you. We, too, would wish the same for you. But the harsh truth is that this life is highly uncertain. There is always an element of concern or risk which leads you to ask the “What if?” question. You must buy term insurance to answer this very question as the entire financial trauma arising out of that question will remain unanswered.

Have you ever realized the value of a term insurance plan? Don’t just take a term plan just because everyone is going for that or that you might be considered as a prudent wise man! But do a cross- check whether your family can be benefited easily if required so in future. So, feel the necessity and then proceed further to choose the best product.

What is claim settlement ratio?

This gives us an idea about the claim solving ability of the insurance company. If claims are intimated and the insurance company settles those, claim settlement ratio would be good. In simple words, claim settlement ratio is the number of claims settled by the insurance company out of every 100 claims it has received. Higher claim settlement ratio implies that majority of claims are getting settled. Higher the claim settlement ratio for the company, the better rated the company is in the eyes of the public.

Claim settlement ratio 

One should go with the company who has a better claim settlement ratio and a good reputation. So that after the death of the insured, his family does not have to face much trouble to get the money. In simple words, with better claim settlement ratio, you can understand the ability of the company to pay the amount to insurer’s family. How many policies were settled successfully and if company denied paying the amount showing some reason, then you will ask in how many policies and claim amount was done? So, it’s better to stay with the company who generally or mostly paid out all insurance claims.

Care to be taken while taking a term plan policy

Generally, 99 per cent of insurance business are canvassed by agents only- mostly by our uncle, aunty and relatives, etc. Don’t believe any one while filling the form. Most of the time people just sign the policy document and then leaves the rest of the details to be filled in by the insurance agent. You are the best person to fill up your personal details. Any wrong information which you might think as a negligible factor can be pointed out later by the insurer to your family to find a reason for rejection of claim in favour of the nominee/legal heirs.

How online term insurance plan works?

The latest buzz in term plan industry is the online term plans. You can simply provide the data online and subscribe to your term plan instantly with a lower premium. The insurance companies extend cheaper premiums on on-line term policies as it saves them a lot of paperwork and physical labour of verifying the documents. But the problem here is, most of the term plans do not involve a proper procedure to check individual’s health condition and other factors. Due to that, it is very risky to subscribe to a term plan although the premium is lowest. Your family might be in trouble in future. So, it’s better to pay the premiums and subscribe the same term plan through agent/sales officers by following every procedure clearly. Companies can have a better and clear record about your insurance to track in future.

One can go online and calculate the premium, then can start the process of buying the policy and submit details such as name, age, tenure, sum assured and medical information which can affect the premium. After all this, one gets a premium quote and then it is paid online. 

After the premium is paid, there are few things which are yet to be completed. The proposer will get a mail from company or get a call from company that some representative of the insurance company will come to the residence and collect the important documents; the documents are also required for Know Your Customer (KYC). Based on the age and given information, the insurer can decide if one will have to appear for medical test or not. If there is anything wrong in medical examination which can affect the premium (and consequently can increase company’s risk of insuring), then they can increase the premium (loading) or choose not to offer the policy. One can then decide to continue with them by paying the additional premium or cancel the policy.

Supreme Court asks for impact study of Consumer Protection Act, 2019

Supreme Court asks for impact study of Consumer Protection Act, 2019

Supreme Court asks for impact study of Consumer Protection Act, 2019

Health Insurance

Inaction of the governments in appointing president and members/staff of districts and state consumer disputes redressal commission and inadequate infrastructure across India has led Supreme Court to direct centre to conduct legislative impact study of Consumer Protection Act 2019.

Ankur Saha

The legislative intent behind the Consumer Protection Act, 2019 is empowerment of the consumers. However, the ground reality is quite different as there is little endeavor to translate this legislative intent into an administrative infrastructure with requisite facilities, members and staff to facilitate the decision on the consumer complaints.  Statistics can be deceptive but sometimes statistics reveal the truth. The position prevalent in the State Consumer Forums and the District Consumer Forums is best reflected by the statistics of existing vacancies, insofar as the chairman and the members are concerned.”

The Bench was addressing the inaction of the governments in appointing president and members/staff of districts and the State Consumer Disputes Redressal Commission and inadequate infrastructure across India. 

On failure of State Governments/UTs to notify rules

Observing the lackadaisical attitude of governments with regard to notifying rules under the Section 44 of the Consumer Protection Act, 2019, the Bench issued directions to all the states and union territories qua the issue of appointment of chairman and members of the state and district commissions and notify the rules within two weeks. The Bench made it clear that where the states still dilly dally on the issue of notifying the rules, the model rules framed by the Government of India will automatically kick off and apply to the concerned states and union territories i.e. Consumer Protection and (salary, allowances and conditions of service of president and members of the state commission and district commission) Model Rules, 2020.

Non-constitution of selection committees

Regarding the large number of existing vacancies, the Bench directed that all the existing and potential vacancies should be advertised, if not already advertised, within a period of two weeks. Noticing that some of the States and UTs had not constituted the selection committees in terms of Rule 6(1) of the Consumer Protection (Qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of the President and members of the State Commission and District Commission) Rules, 2020 (“2020 Rules”), a direction was issued to the states/UTs concerned to constitute the selection committees within four weeks.

On vacant posts of president/members in consumer forums

Considering the excuse given by some states that the of selection was being held up because the number of posts had not been prescribed/sanctioned in consultation with the Central Government as mandated under Section 42(3)(b) of the said Act, the Bench stated that the mandate is of each State Commission to consist of a President and not less than four members i.e. insofar as the president and four members are concerned; it is only if the number of members have to be more than four, that such number of members may be prescribed in consultation with the Central Government. Therefore, the Bench stated that if the states feels that the numbers of members have to be more than four, that process of discussion cannot derail the process of appointment of president and four members in any case.

Accordingly, the Bench directed that all the vacancies whether for the post of president or members should be finally filled up by the 30 states and union territories within a maximum period of eight weeks.

On last minute filing of affidavits

Noticing that usually, most of the affidavits had been filed at the last minute resulting in the inability of the Amicus Curiae in presenting the appropriate picture before the Court, the Bench expressed that such last-minute rush of affidavits which derails the effective hearing before the Court could not be countenanced. The Bench came down heavily on the administration stating that the Court was spending time on aspects which administration should be doing. The Bench directed, “The States should give their inputs in time so that a picture up to date is presented before us by the Amicus Curiae and last-minute filing of the affidavits by the states is not acceptable.” Accordingly, the states and UTs were directed that updated position should be furnished to the Amicus within two weeks.

Lack of infrastructure and man power

So far as the aspect of infrastructure and man power was concerned, the Bench directed that wherever the Amicus Curiae requires the response in a particular format, the states are bound to respond in that format. Regarding the vacancies in NCDRC, the Bench was of the view that there was no reason why the Central Government should take more time to fill up the vacancies and thus, the schedule laid down for the State Governments to fill the vacancies was held to be applicable of Central Government as well. The information was also sought with regard to infrastructure as to whether the premises were rented or owned by the Government. If rented, the location of the rented premises.

Legislative impact study

On the issue of a Legislative Impact Study and whether the same was undertaken before the new Act of 2019 came into place, the Bench observed that through the new Act expanded the jurisdiction of the consumer forums which would result in the litigation shifting to the Consumer Tribunals apart from the aspect of the variation in the pecuniary jurisdiction by increasing the jurisdiction of the District and State forums, no legislative impact study had been done to ascertain how many more cases would arise in these foras to make necessary arrangements for infrastructure and man power.

The Central Government was stated to be assisting the States by a Scheme titled as, Computerization and Computer Networking of Consumer Commissions” (CONFONET) which provided the ICT infrastructure to Consumer Commissions and replaced old infrastructure, provided HR support by deployment of technical man power to enable/monitor computer based system in each and every Consumer Commission in India; provided an online module of case monitoring system, facilitated reporting and monitoring at all levels, strengthened transparency and accountability in judicial system etc. The scheme was stated to be fully funded by the Central Government and was being implemented through the NIC. The Court asked the states whether they had utilized the opportunity and the funding provided by the Central Government and in what manner.

The states were directed to furnish the information to the National Commission within two weeks about position of vacancies so the same could be uploaded on the website of the National Commission failing to which they will be treated as in breach of the Court’s directions. In order to ensure that all the aforesaid directions are complied with, the Bench directed that the concerned Chief Secretaries of the States in case of non-compliance within the time frame stipulated will attend the virtual Court proceedings and so would be the position for Union of India where the concerned secretary would be the Secretary, Consumer Affairs.


Things you should know about Application Supported by Blocked Amount (ASBA)

Things you should know about Application Supported by Blocked Amount (ASBA)

Things you should know about Application Supported by Blocked Amount (ASBA)


With the Zomato IPO in the headlines, you might want to know how to subscribe an issue in the Initial Public Offering or IPO. If you’re so, we suggest you to understand what is an Application Supported by Blocked Amount (ASBA). It is a process developed by India’s Stock Market Regulator SEBI for applying to IPOs, Rights issue, FPS etc. In ASBA, an IPO applicant’s bank account doesn’t get debited until shares are allotted to them. Let us understand what it entails here and what a consumer needs to go though. 

Subas Tiwari

ASBA facility is adopted for application of Initial Public Issue IPO and Follow-on Public Offer (FPO). It is a SEBI based facility on your bank account which was launched in May 2010. It is a process by which retail investors block the relevant amount in their savings account till the shares are allotted, to apply for investment in an IPO or FPO. If shares are allotted to you then this amount is deducted from your bank account otherwise it is unblocked after the allotment process is completed. It can also be understood that if the investor has subscribed for the IPO, then under the process money will not be deducted from the investor’s account until he gets the IPO issue.

ASBA or Application Supported by Blocked Amount is an application containing an authorization to block the application money in the bank account, for subscribing to an issue.

If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalised, or the issue is withdrawn/failed.  

Detailed procedure of applying in IPO through ASBA

Under ASBA facility, investors can apply in any public/rights issues by using their bank account. Investor submits the ASBA form (available at the designated branches of the banks acting as Self-Certified Syndicate Banks) after filling the details like name of the applicant, PAN number, de-mat account number, bid quantity, bid price and other relevant details, to their banking branch by giving an instruction to block the amount in their account. In turn, the bank will upload the details of the application in the bidding platform. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected.

Who can apply through ASBA facility?

SEBI has been specifying the investors who can apply through ASBA. In public issues with effect from May 1, 2010, all the investors can apply through ASBA.  

In rights issues, all shareholders of the company as on record date are permitted to use ASBA for making applications provided he/she/it:

  • is holding shares in dematerialised form and has applied for entitlements or additional shares in the issue in de-materialised form;
  • has not renounced its entitlements in full or in part;
  • is not a renounce;
  • who is applying through blocking of funds in a bank account with the Self Certified Syndicate Bank (SCSB).  

Applying through ASBA vis‐à‐vis applying with a cheque

Applying through ASBA facility has the following advantages:

  1. The investor need not pay the application money by cheque; rather the investor submits ASBA which accompanies an authorisation to block the bank account to the extent of the application money.
  2. The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalised.
  3. The investor continues to earn interest on the application money as the same remains in the bank account, which is not the case in other modes of payment.
  4. The application form is simpler.
  5. The investor deals with the known intermediary i.e. its own bank.

Is it mandatory for investors eligible for ASBA, to apply through ASBA only?

No, it is not mandatory. An investor, who is eligible for ASBA, has the option of making the application through ASBA or through the existing facility of applying with cheque.  

Can I make application through ASBA facility in all issues?

Yes, you can make application through ASBA facility in all the issues (i.e. public and rights. List of Self Certified Syndicate Banks (SCSBs) and their designed branches i.e. branches where ASBA application form can be submitted, is available on the websites of BSE (www.bseindia.com) and NSE (www.nseindia.com) and on the website of SEBI (www.sebi.gov.in). The list of SCSBs would also be printed in the ASBA application form. 

Self-certified Syndicate Bank (SCSB)

SCSB is a bank which is recognised as a bank capable of providing ASBA services to its customers. Names of such banks would appear in the list available on the website of SEBI. No, ASBA can be submitted to the SCSB with which the investor is holding the bank account.  Five (5) applications can be made from a bank account per issue.  

You can either fill up the physical ASBA form available with SCSB and submit the same to the SCSB or apply electronically/online through the internet banking facility (if provided by your SCSB).  

Can I use the existing application form for public issues?

Investor is requested to check the form carefully. In case of public issue, the application form for ASBA will be different from the existing application form for public issues. The application forms will be available with designated branches of

SCSB. In case of rights issue, there will not be a separate form for ASBA. The investor has to apply by selecting ASBA option in Part A of the Composite Application Form. 

How to withdraw my ASBA bids

During the bidding period you can approach the same bank to which you had submitted the ASBA and request for withdrawal through a duly signed letter citing your application number, TRS number, if any. After the bid closure period, you may send your withdrawal request to the Registrars before the finalisation of basis of allotment, who will cancel your bid and instruct SCSB to unblock the application money in the bank account after the finalisation of basis of allotment.  

What to do when application gets rejected

You have to approach the concerned SCSB for any complaints regarding your ASBA applications. SCSB is required to give reply within 15 days. In case, you are not satisfied, you may write to SEBI thereafter.

It is to keep in mind that in ASBA, the entire bank account does not get blocked. Only the amount to the extent of application money authorised in the ASBA will be blocked in the bank account. The balance money, if any, in the account can still be used for other purposes.

If the withdrawal is made during the bidding period, the SCSB deletes the bid and unblocks the application money in the bank account. If the withdrawal is made after the bid closure date, the SCSB will unblock the application money only after getting appropriate instruction from the registrar, which is after the finalisation of basis of allotment in the issue.     

And investors need not necessarily have their DP account with the SCSB, where they are submitting the ASBA form. One is required to submit ASBA to the SCSBs only.  

An investor can apply either through ASBA or through existing system of payment through cheque. If an applicant applies through both, ASBA as well as non‐ASBA then both the applications having the same PAN, will be treated as multiple application and hence will be rejected.

The bids received through ASBA mode gets reflected in the demand graphs displayed in the website of stock exchanges. In case there is an error by SCSB in entering the data in the electronic bidding system of the stock exchanges, the SCSB shall be responsible.

The SCSB shall give a counterfoil as an acknowledgement at the time of submission of ASBA and also the order number, generated at the time of uploading the application details, if sought by the investors in case of need.

ASBA forms need to be treated similar to the non‐ASBA forms while finalising the basis of allotment. In case the issue fails/withdrawn the SCSB shall unblock the application money from the bank accounts upon receiving instructions from the registrar.

In case of any complaints, the investor shall approach the bank, where the application form was submitted or the registrars to the issue.

This can be done provided that your bank have core banking facility and the ASBA form is submitted at a branch which is identified as designated branch by the bank.

The chance of getting allotment is same for all the applicants whether application is made through ASBA or non‐ASBA. ASBA is a simple, easy and smart way of applying in public issues. There are many advantages of applying through ASBA like money does not go out of investors’ account, no hassle of refund, investor keep earning interest on the blocked amount as banks have started paying interest on daily basis w.e.f April 1, 2010 and it gives better opportunity for utilisation of money.

ASBA forms can be submitted only at the SCSBs. In case investor does not have an account with any of the SCSBs, then he cannot make use of the ASBA.

                                                                         (Source: SEBI)


Is salt good or bad for you? Its’ both!

Is salt good or bad for you? Its’ both!

Is salt good or bad for you? Its’ both!


A simple yet very important ingredient like salt these days is available in different variations including iodized, low-sodium, rock salt, double fortified salt, etc. What is their significance? Is rock salt healthier than the normal salt? Will reducing salt make you iodine deficient? Does salt have only culinary and taste purposes or is it important for your health as well? Learn about these and much more in this article.

Richa Pande

Salt has been an integral part of our lives since time immortal. It enhances the flavour of our recipe, making it more palatable. Salt has also been used extensively and effectively used for food preservation. Salt can prevent growth of the bacteria in food preventing food spoilage. Therefore, pickles last so long. Historically, salt has always been accorded high value. This is why salt was taxed extensively throughout the world and high taxations on salt have caused revolts like that against Gabelle Tax in France in 1789 and the Salt Satyagrah led by Gandhiji in 1930 in India.

So does salt, have any health utility? Let’s try to understand.

Salt contains 40 per cent sodium ion(Na +) and 60 per cent chloride ion(Cl), by weight. Now why are these important for human body? Salt is the biggest contributor of sodium in our diet. Therefore, many times we use sodium as a synonym for common salt. Sodium and Chlorine are essential minerals required for fluid-electrolyte balance in our body. This is why we feel dehydrated or need to replace the electrolyte loss immediately when we sweat excessively or experience retching/diarrhoeal episodes. These electrolytes are also involved in aiding muscles and nerves to function well. Some studies have also linked low sodium diets with increased insulin resistance as well, but sodium deficiency is very rare due to presence of sodium in a lot of processed foods we eat daily. Salt is a common ingredient used in every household; it has been successfully used for decades for iodine fortification. Salt fortification has played a major role in reduction of iodine deficiency disorder in many counties worldwide.

However, we all know that excessive salt consumption can increase our chances of getting high blood pressure (hypertension), and other cardiovascular diseases. High salt intakes may also increase the growth of Helicobacter Pylori bacteria in our stomach and that can cause inflammation and gastric ulcers. Eating too much salt can also cause calcium deficiency. Therefore, the WHO recommends that adults should not consume more than 2300 mg of sodium, equivalent to 5 grams (1 teaspoon) of salt every day. Interestingly, as per a WHO report, Indians, on an average, consume almost 10 grams of salt every day.

It is therefore essential that we cut the amount of salt in our diet. We need to control our urge to add excessive salt to our recipes, avoid adding table salt to our preparations at home, and distance ourselves from food items with added salt like biscuits, chips, bakery foods, papads, etc. We can refer to food labels on packed products to ascertain how much sodium these items contain and keep 2300 mg of sodium as the upper limit for our daily consumption.

But if we cut the salt intake, will we become deficient in iodine? Again, let’s try to understand.

It is common knowledge that Iodine is an essential mineral and it’s deficiency can cause several health disorders. Salt is a major source of iodine in our diet. Can our attempts to reduce salt intake make us iodine deficient? As per the National Institutes of Health Factsheet on iodine, 3 grams of salt i.e. a bit more than half a teaspoon of iodized salt is sufficient to meet our iodine needs. If someone wishes to cut the salt beyond this limit, then they can still get iodine from other dietary sources such as- seaweed, eggs, dairy products and dried plums, also known as prunes. One must also note that too much consumption of iodine (from iodized salts and other dietary sources) can push someone to develop hyperthyroidism and could worsen it if the person already has hyperthyroidism.

Now let’s know more about different salt varieties in market-

How is Rock Salt & Black Salt different from regular table salt?

Rock salt is known as ‘sendha namak’ in India. Black Salt is a type of rock salt. It is known as Kala Namak in India. Rock Salts contain fewer additives than the regular table salt. For example, it does not contain anti-caking agents which are added in normal salt to prevent forming of lumps in the presence of moisture in the air.

These days some rock salts are combined with sodium and iodine sulphates as well and mixed with charcoal and then heated. If you are looking exclusively for natural salts, check the ingredients list on food labels of the pack.

How is Sea Salt different from regular table salt?

Sea salt is most commonly manufactured by directly evaporating the seawater. Salts labelled as ‘Sea Salt’, these days usually do not undergo any processing or are minimally processed. The good thing about unprocessed sea salt is that it has traces of some minerals like magnesium, potassium, calcium, etc. in it. But it has some health concerns as well.  Some studies reveal that sea salts can be contaminated with microplastics. Sea salt has also been found to be contaminated by fungi. This can cause food spoilage and could be toxic as well. Table salt on the other hand is processed for iodine fortification and also with the objective of making it free flowing in nature.

What is double fortified salt?

Double fortified salt is available in market these days that contains both iodine and iron. It could be used by anaemics and people desiring to prevent iron deficiency. It must be kept in mind that if you are already taking a lot of iron in your diet from other sources, you should avoid it or use it in rotation with other salts.

What is Low Sodium Salt & Can you use it?

Low -Sodium Salts are also known as salt substitutes. These salts have lower sodium levels which is usually substituted by potassium. These salts are recommended for hypertensive people and research confirms that its consumption could be helpful in lowering systolic and diastolic blood pressure in people with high blood pressure. Based on present evidence, it can be recommended only for pre-hypertensive and hypertensive people. However, more research is needed to establish this viewpoint.

Choose any salt as per your preference but with this cautionary note that it’s best to consume salt in moderation regardless of the type you choose. And if you are planning to switch to rock salt completely, seek a dietitian’s help to include iodine rich sources in your meals because remember iodine is essential for you.


Equity Linked Saving Scheme (ELSS Mutual Fund)

Equity Linked Saving Scheme (ELSS Mutual Fund)

Equity Linked Saving Scheme (ELSS Mutual Fund)

Mutual Funds

How good it would be if with the accumulation of money, there is a bumper exemption on tax as well. Tax exemption also means a kind of savings. This savings money can be put to good use elsewhere. There is a scheme named Equity Linked Saving Scheme or ELSS, with the help of which one can save up to Rs. 46,800. Let’s check it out here.

Subas Tewari

Compared to Fixed Deposit or NPS, ELSS offers many tax saving facilities along with giving higher returns. Mutual funds earn more than FDs or NPS. Therefore, people who invest in ELSS funds or equities consider ELSS to be more effective. ELSS is such a fund which gives maximum returns with minimum lock-in period. ELSS is actually a combination of large and medium size stocks. This fund has been designed in such a way that it is easy for the person taking it to save tax. If you hold this fund for a longer period, there are many possibilities of growth and higher returns. There are many features of this fund. For example, you can start it by investing at least Rs 500. Investment facility is also available in this through SIP. The minimum lock-in period of 3 years is available in this fund. That is, after 3 years, you can easily leave this fund and withdraw your money. The biggest feature is that with the help of this fund, a taxpayer can save up to Rs 46,800.

Fund’s salient features

There is a limit on the minimum deposit amount in this fund to save tax. In this fund, you get a minimum deposit of Rs 500 and a maximum of Rs 1,50,000. How much you will earn from this fund depends on your deposit amount and market conditions. If we look at the track record of the last one year, then the situation is satisfactory because mutual funds along with shares etc. have also given good returns.

Multiple benefits with single investment

Actually, ELSS fund is a type of tax saving fund in which most of the funds are deposited in equity schemes. Equity funds are such schemes in which money is invested in the shares of companies. Companies are decided under equity according to the capital in the market and are invested in them. If a person deposits Rs 1.5 lakh in ELSS every year, then one can save tax of Rs 46,800 under section 80C of Income Tax. Also, it is allowed to invest more than Rs 1.5 lakh.

Why invest in ELSS?

ELSS is considered to be much better than those who follow the traditional methods of tax saving. Compared to Fixed Deposit or NPS, ELSS offers many tax saving facilities along with giving higher returns. Mutual funds earn more than FDs or NPS. Therefore, people who invest in ELSS funds or equities consider ELSS to be more effective. The biggest thing is that the lock-in period of ELSS is very less as compared to FD or NPS. That is, the possibility of high returns in a short time can be found in ELSS.

Who can invest?

ELSS can be invested by any person who wants to reduce his income tax under section 80C by investing money in tax saving scheme. It is an equity investment, so those who invest money for a long term and expect returns, who are less concerned about market risk, can make the most of this fund. Since ELSS has a lock-in period of 3 years, the fund is taxed on the basis of long-term gains. If earning more than Rs 1 lakh then interest of 10 per cent will have to be paid.

More work with less investment

There is no need to deposit a lot of money in this fund at once. That is, you do not need to take the tension that you will deposit a lot of money, only then you will be able to take advantage of this tax saving scheme. You can enter this scheme with very little money. By taking out the average of this fund every year, you can start investing with the same money. There is no need to make huge payments for each unit of the fund. If you want, you can start investing from 500 rupees. This also gives you discipline in investing.

What are ELSS funds?

ELSS is a mutual fund scheme and is quite similar to diversified equity fund of Mutual Fund. As the name suggests, the scheme primarily invests in equity market by buying equity stocks of companies listed on the stock exchanges. The units of the scheme are offered at the NAV (Net Asset Value). The NAV is announced for all business days and keeps changing primarily depending upon the movement in the prices of stocks held in the portfolio of the scheme in relation to market fluctuations. Mutual Fund ELSS is a good tax-saving instrument but still is not invested in large numbers by tax-savers. So, this article is just to wake them up and take notice of this tax-saving investing option so that there is maximum participation of the public from all walks of life.

What is the urgency to invest in ELSS?

It is most likely that the Direct Tax Code (DTC) proposed by the Government will come into effect (sooner than later), and your most dependable tax saving section – Section 80C of the Income Tax Act would undergo amendments. While the DTC includes a proposal to increase the eligible deduction under Section 80 C, Equity Linked Savings Schemes (ELSS) -also known as “tax saving mutual funds”, would no longer continue to be a part of eligible tax saving instruments, thus leaving you with fewer market-linked investment options to accelerate the process of wealth creation.

Who are advised to invest in ELSS?

YES. This is an important aspect of tax-planning especially when you look at ELSS as a tax-saving option. The following are the factors that could be considered. 

Those who have clear and focused financial goals

If you have financial goals set in your life, the same too should influence the way you do your tax planning and invest in tax saving instruments. So, say for example your goal is retiring from work 5 years from now, then your tax saving investment portfolio should be less tilted towards market-linked tax saving instruments, as you are quite near to your goal and your regular income will cease. Likewise, if you are many years away from the financial goal, you should ideally allocate maximum to market-linked tax saving instruments and less towards those instruments (tax saving) which provide you assured returns.

Those who have risk appetite

It refers to your ability to take risk while investing, and it is totally dependent on your age, income, expenses, and nearness to your goal. So, if your willingness to take risk is high (aggressive), you can tilt your tax saving investment portfolio more towards the market-linked instruments such as ELSS. But if you have a moderate-risk profile, then you can take a mix of 60:40 into market-linked tax saving instruments and assured return tax saving instruments respectively.

Thus, now if you are young, income is higher, and therefore willingness to take risk is highest along with your financial goals being far away; you may look at ELSS mutual funds to avail a tax benefit under Section 80C. Please note that ELSS mutual funds are 100 per cent diversified equity funds and a distinguishing feature about them is the compulsory lock-in period of 3 years brings in financial discipline towards holding one’s investments for the long-term. For investment in ELSS, there is a minimum investment amount of Rs. 500 which is unlike the other equity-oriented funds (which generally demand Rs. 5,000 as the minimum investment amount).

What should be the income bracket to enter investing?

It is said that if your income is high, your willingness to take risk is generally high. This can work in your favour, as you can allot your portfolio more towards equity-related instruments such as ELSS, and make your portfolio appear more aggressive. Similarly, if your income is not high enough, you can invest in other tax-saving instruments which provide you assured returns.

What age to enter investing?

Your age should determine your asset allocation. If you are young, you can take more risk and vice-versa. Hence, for prudent tax planning too, if you are young, you should allocate more towards market-linked tax saving instruments such as ELSS. Moreover, you would also enjoy the advantage of greater investment tenure which would enable you make more aggressive investments and create wealth over the long-term to meet your financial goals.

How to select ELSS funds?

Ideally while evaluating ELSS mutual funds, one should assess their performance over a 3-Yr time frame, as this would enable you to judge whether they have created wealth for your post- lock-in period.

Moreover, the Fund has to ensure to its investors to fairly low-risk, but should provide risk-adjusted returns thereby making it a low risk-high return investment proposition in the category.

Also, the returns should have been achieved by the Fund without indulging in much portfolio churning.

What are the benefits of ELSS MF?

Tax benefit on the investment

You can get full tax benefit of investment under section 80 C of Income Tax Act. Maximum taxable limit is Rs. 1, 50, 000 for the current Assessment Year.

Shortest lock-in period (period during which payment will not be made if you go in for tax benefit)

Lock-in period of ELSS is 3 years which is shortest in comparison to any other tax saving investment. This lock-in period is the only difference between diversified equity mutual funds and ELSS. When compared to bank tax-saving FDs, ELSS scores over them as bank FDs have a lock-in period of 5 years.

Tax-free returns

Any profit/ capital gain you have from ELSS is completely tax free. If you compare the returns from NSC and Tax-Shield Bank FDs, these are completely taxable and paid interest is added to your income for tax computation. So, you end up paying tax on interest received. Only PPF Offers tax- free returns but it has a maturity period of 15 years.

Tax free dividends

ELSS schemes give dividends on regular intervals and the dividend you receive is tax free.

No entry loads

Say if you invest Rs. 15, 000 in ELSS Scheme, your Rs. 15, 000 is invested in ELSS Mutual Fund. You have to decide how much do you want to pay your financial advisor. Take a word of caution: some insurance agents sell ULIPS as Mutual Fund + Insurance with lots of ‘load’ expenses.

High growth

Equity funds can be volatile in the short run, but have been known to beat inflation and create wealth over the long run. If you are looking at investing some money that you won’t need in future, and are willing to stand atop the ups and downs of the market, you may find ELSS an ideal tax saving option.

Systematic Investment Plan (SIP) in ELSS

In SIP, you invest a certain amount each month in a fund. It’s an effective way of investing in ELSS as the concept of rupee cost-averaging and the power of compounding works well. Even if you have done your tax planning for this year, start from 1st AUGUST, 2015.

Comparison with Unit-Linked Insurance Plan

The investors and tax-saving public sometimes think of ELSS funds and ULIPs as alternatives. This is a mistake as functionally, there is nothing common between ELSS funds and ULIPs. It’s a basic rule of saving not to mix insurance with investments. ELSS and ULIPs are two different products that serve different purposes.

ELSS is an equity fund in the marketULIP is a mix of life insurance and investment offered by life insurance companies
ELSS have predictable cost, and easily understandable returns and are transparent about how the fund operates and what it invests inFrom the premium paid, the insurer deducts charges towards life insurance (mortality charges), administration expenses and fund management fees. So only the balance amount is invested
Only payment of Fund Management Charge (as expenses) per year is applicableULIPs have high first year charges towards acquisition (including agents' commissions)
The total investment under ELSS is in Equity Funds onlyIn a ULIP, the mix of investment and insurance prevents savers from having a clear cost-vs-benefit understanding of either of the two components
In ELSS there in no fixed period of maturity except for the lock-in period as the Fund is open-endedWith an ULIP, you have to block your money for long periods of time. So you sacrifice on transparency and liquidity.
ELSS has a 3 years lock-in periodULIPs have 5 years lock-in
ELSS has no switching facility of funds as it is controlled by the Fund ManagerULIPs provide for ‘switch’ from one fund to another

Where do ELSS stand as a preferred fund for investment?

ELSS is one of the popular tax saving option for savvy investors, as not only that ELSS is a diversified equity mutual fund which has a majority of the corpus invested in equities, but also that it has a lock-in period of 3 years from the date of investment. The returns from investment in ELSS are based on schemes from equity markets. Returns from ELSS schemes are also tax-free.

Based on previous years’ returns, some of these funds have grown 3 times in 5 years. There is also no limit on investment in ELSS funds, but you can claim tax deduction of up to Rs.1,50,000 under Section 80C of the Income Tax Act.

ELSS is always better to invest-

  • Via SIP mode rather than lump-sum (for cost-averaging)
  • In GROWTH options (for wealth accumulation)
  • In DIRECT Plan (to save costs & higher returns)
  • Compare ELSS with other investment options and see the difference.


Tenure15 years6 years3 years
Returns(Compounded Annually)
8.80 % ^
8.60 to 8.90 % ^
Not assured dividends/ returns
Minimum investmentsRs.500Rs. 100Rs. 500
Maximum investmentsRs.1,50,000No limit*No limit*
Amount eligible for
deduction under Section 80C
Taxation for interestTax freeTaxableDividends and capital gain tax free
Safety/ Rating Highest HighestHigh Risk