Know Your Financial Duties & Rights this Republic Day

July 21, 2021

Republic day in India is celebrated every year on 26th January, as it marks the moment when the Constitution of India came into force. This year, India is celebrating its 69th Republic Day. On 26th January 1950, with the adoption of the constitution, India became a republic country. The Constitution of India specifies the Fundamental Rights, Directive Principles of State Policy and Fundamental Duties, which dictates the duties and the rights of the citizens to the state and the fundamental obligations of the state to its citizens. Nobody in the country can deny you the Fundamental Rights, as specified under the Constitution of India.

Know Your Financial Rights

In case, you do a financial transaction, such as open a bank account, get a new credit card, take a loan, buy an insurance policy, etc. it all comes with a set of rights and responsibilities for you and the financial institution. Financial literacy is extremely low in India and due to this lack of financial knowledge, financial agents and distributors at times cheat people for the sake of their own profit.

On this Republic Day, we are focusing on key financial rights & duties, which are good to know for better financial planning and decisions.

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  • Right to know the Commission Paid

    When you buy any financial product such as an insurance policy or mutual fund through an agent or any other intermediary, he/she earns a commission for sourcing that financial product to you. You have the right to know about the agent’s commission for the financial product/s sold to you. For insurance products, the commission earned is a part of the premiums you pay. Your insurance agent needs to provide the details regarding the commission earning, before selling you the policy. The commission under a ULIP policy is displayed in the benefit illustration along with the proposal form. A mutual fund agent’s commission is disclosed in your account statement.You may ask IRDAI for insurance related products and SEBI for securities-related trading, in case you are not provided with the information by the respective financial institution.

  • Right to get a Life Insurance Claim

    A life insurance company has 3 years from the date of policy issuance, to ascertain you have provided the right material information and don’t commit a fraud. If there is fraud, mis-statement or non-disclosure by the policyholder, the insurance company may discover and act on it within the three-year deadline. After that, the policy cannot be called into question as per Section 45 of the Insurance Act. After completion of 3 years, the life insurer cannot deny your claim and has to pay the claim amount to you or your nominee.

  • Right to return an Insurance Policy

    Some agents who deal in selling the financial products are inclined to mis-selling of products. They usually sell products which you really don’t need by keeping the certain details hidden such as its fees or charges, with an only intention to earn commissions.In case, you are a victim of mis-selling and bought an insurance policy that you don’t need or does not suit your financial goals, you have the right to return the policy within the free look period (15 days of receiving the policy document), for all life and health insurance policies having a term of 3 years or more.

  • Right to possess a Bank Locker

    You have the right to open a bank locker, even if you don’t have to have a savings account with a bank. As per RBI guidelines, banks can only ask you to open a fixed deposit worth the amount that covers 3 year’s rent and associated charges for availing bank locker facility.A bank can’t ask you to invest in any of its products. If the bank forces you to do so, you can complain to the bank’s grievance cell. If the issue still prevails, you may approach the bank ombudsman or RBI.

  • Right not to pay for the Card Frauds

    If you had an unauthorized transaction on your debit/credit card and has sufficient credentials to ascertain that you have not made the transaction, you have the right not to pay for such transactions. You need to report an unauthorized transaction straight away to your bank. You can also block your card to prevent further misuse. In case of card fraud, you can also file an FIR. You may opt for cards that are available with a zero liability feature that protects you against the card frauds.

  • Right to get a Tax Refund

    You have filed your income tax return, then it is your financial right to receive your income tax refund within 90 days from the date of its filing. In case, it gets delayed for more than 90 days, you are entitled to receive 0.5% interest every month for the refund amount. If you don’t receive the tax refund during this specified duration, you are free to raise your concern to the income tax assessing officer in your jurisdiction or raise your concern over the IT website.

  • Right to get Possession of Property on time

    When you buy a property, you also have the right to get its possession within the specified time frame, as promised by the builder. If the possession is delayed, you can ask the builder for a refund of the entire amount you have paid along with the interest. The builder is legally bound to pay this amount within 45 days. In case of any issues regarding delayed possession, you can contact the Real Estate Regulatory Authority (RERA) of your state, which shall settle your complaint within 60 days.

Fundamental Financial Duties

In addition to the financial rights, you have some financial duties as well to adhere to.

  • Pay dues on time

    Late payment of your loan installments or credit card dues attracts hefty charges and the interest amount will then be payable on the due amount. It’s thus your duty to pay your dues on-time and get away from financial fuss.

  • Duty to pay your Taxes

    It’s our one of the most fundamental financial duties to pay taxes, as it is used by the government towards nation building. As per figures, only 1% of the population in the country pay tax. Evading taxes attracts severe penalties, so you should ensure that you pay taxes for all your income during a financial year.

  • Duty to be truthful in furnishing your Material Details

    Application forms for buying the insurance policy or any other financial product should be filled by you ideally. The details asked on the proposal form forms the basis to offer you the financial product like life insurance. Hence, it becomes imperative to disclose the material facts and does not misrepresent any information asked in the proposal forms to avoid any kinds of claim rejection later.

  • Not sign a Blank Form

    It is your financial responsibility not to put your signature on a blank paper. You are advised to fill out the form by yourself or if an agent is filling the form, get it done in your presence. You should provide self-attested documents to avoid its misuse.

  • Nominate family members

    Don’t forget to add nominees in insurance policies and investment documents. Not having nomination for your investments may lead to family or legal disputes and delay in claim payout.

Final Words

Along with fundamental rights & duties it is imperative to be financially aware about your rights & duties. Financial awareness will enable you to take right and apt financial decisions to get better financial products for the right purpose. It is important not to follow or act blindly to avoid financial troubles or hassles later. Be aware of your financial rights and be ready to perform your financial duties as well. Financial enlightenment will enable you to make the right financial plan for your better tomorrow.

Happy Republic Day!

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