Thursday, 16 March 2017


Private Sector Banks (PSB’s) have been robbing customers in broad daylight and despite persistent complaints the PSB’s arrogant statements clearly imply that they are going to continue doing the same.
1.       The Reserve Bank of India (RBI) regulations are very weak, unfair and inadequate to address this issue. RBI has miserably failed to protect the customers from the continuous onslaught of arbitrary charges from these banks.

2.       Miss-selling is rampantly practiced by PSB’s. The “free” services offered are charged for after a specific time period, which is usually stipulated in such a manner that even an ordinary literate individual is not able to adequately ascertain as to where and how these stipulations were stated.

3.       How come banks are unilaterally allowed to deduct money from our account? Although it is clearly stated in almost every bank document that the bank reserves such a right to deduction of charges,such practices should be curtailed. Since a consumer gives his consent for deductions at the time of signing any document pertaining to the bank, ethically this one-time consent cannot be upheld for every rampant deduction. The issue worsens when these charges, fines and penalties increase every year without the knowledge of the customers and as usual RBI has not corrected this malpractice.

4.       Banks charge consumers for availing debit cards and credit cards. Banks charge vendors for machine usage to accept these debit and credit cards, which the vendors pass on to the same consumers. Ultimately, the consumer bears the transactional cost for availing one service (i.e., plastic money) twice. The RBI, pushing its efforts to reduce double taxation on incomes and indirect taxes, has never acknowledged this issue of double transactional cost.

5.       Satisfying an existing liability is a simple right of every consumer which should not attract any transactional cost. However, pre-payment of loan attracts heavy charges and this practice has made its way into mainstream banking to the point that it is now unilaterally accepted everywhere. Till date RBI has not issued any clarification on this.

6.       PSB’s, despite functioning on a central system to provide ‘ease of access’ to consumers, still use the term ‘Home Branch’ to deduct charges for any transactions initiated or conducted in other branches.

7.       Timely supervision and warning is never given by RBI leading to many co-operative banks going down. Co-operative banks are declared insolvent and non-functional only after its assets are eroded to the point that all the consumers have lost their money. Although technically and legally sound, it defeats the core jurisprudence, i.e., saving consumers money. RBI has still not acted upon this draconian law.
PSB’s used to charge customers for the aforementioned transactions and practices to cover for their overheads. However, the advent of technology has reduced these overheads but the charges remain. The RBI can be expected to require the banks to declare income from such arbitrary deductions so as to understand the volume and quantum of these funds that are an overhead transactional cost for every citizen.

Consumers need to wake up and force the banking authorities hand to acknowledge and address these issues. A digital India cannot mean accepting the repression and autocracy of the banking sector.

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