Banking
Are Bank charges going haywire? Has the regulator abdicated its role?
Over the past few days a storm of protest has erupted on social media over the ever-increasing charges levied by banks on depositors and borrowers. The most recent of these is the hefty cash handling charge that many banks plan to levy on customers who deposit or withdraw cash more than a specified number of times. The bankers think that this is fully justified.
 
In an interview to The Economic Times, Mr Aditya Puri, CEO and Managing Director of HDFC Bank, was quoted as saying that “customers need to pay for better service” to justify the charges levied by the bank. In a comparison that got people’s goat, he says, “You don’t go to Oberoi Hotel and ask for Mahesh Lunch Home rates”. This, in turn, triggered another storm of anger over the quality of HDFC Bank’s services to the average customer. 
 
Almost on cue, Ms Arundhati Bhattacharya, chairman of State Bank of India, went to the media to justify a proposed re-introduction of a charge for failing to maintain average monthly balances, pegged at a high Rs5,000 for urban branches and Rs2,500 for rural ones. She tried to justify it saying the bank has 11 crore Jan Dhan accounts to ‘manage’. 
 
One the one hand, the government wants everybody to have a bank account and salaries to be paid by cheque. How does it expect those in lower pay jobs, such as office assistants/peons, to maintain an average monthly balance of Rs5,000 in metropolitan cities, where costs are high? These charges are a double blow that will punish those who earn less. Depositors are beginning to chafe at the frequent levy of unexplained and unjustified bank charges, especially cash handling charges, although the government has been clear way back in 2010, when cash handling charges were first proposed, that they need to be reasonable and not out of line with the average cost of providing these services. 
 
Here are a few issues that have angered bank customers and led to a demand for bank account portability, which is important since it is no longer easy to shut down an account and move to another bank when electronic clearance service (ECS) mandates for payment of utility bills as well as credit cards, tax payments, demat accounts, mutual fund systematic investment plans (SIP) and equated monthly instalments (EMI) on loans are linked to an account. Banks know this and are taking advantage of the situation. 
 
Reset Charge on Mortgages: A huge pain point is the manner in which borrowers, especially those with floating rate mortgages, are being charged hefty sums (which differ from one bank to another) to have their interest rates revised downwards. Firstly, while every upward revision happens automatically, customers are not told about the possibility of lowering interest rates, and that too is linked to a mandatory fee. Read ‘Beware Your Bank may be ripping you off’
 
No protection on Digital Transactions: While the government is pushing consumers into digital transactions, India has not adopted global best practices to protect consumers. All over the world, a consumer gets the benefit of the doubt when a bank account or website is hacked and her money is protected, unless the consumer’s own fault is established. Not so in India. Please read: On The Digital Highway Without A Seat Belt. The RBI is still to issue a notification protecting consumers, despite the massive push towards digital transactions post demonetisation. Moneylife Foundation has sent a letter to the RBI governor urging him to issue the notification for limiting liability of customers in unauthorised electronic banking transactions and are waiting for suitable action http://foundation.moneylife.in/memorandums/
 
Opt-in/opt-out controversy:  The issue of levying a charge unless a customer chooses to opt out of a service has been a matter for anger since the 1990s, when Citibank began to charge a small fee for providing an un-asked for insurance cover (Citibank Suraksha). The bank made millions of rupees through this trick, even through a controversy raged in the media for months. Cosnumers are discovering that HDFC Bank has been using the same trick to levy a fee of Rs 100 per quarter for a 'by-invite-only' feature that most customers do not need. http://www.moneylife.in/article/hdfc-bank-charges-rs100-per-quarter-for-accessing-by-invite-only-feature/49700.html
 
Whose Side is RBI On?
The RBI’s silence is the most worrying factor regarding these anti-consumer developments. A consumer charter was issued by the Reserve Bank on 3 December 2014, which would have protected some of our rights. However, it remains a meaningless notification because the bank has made no attempt to prescribe redress, penalties or compensation for treating consumers badly. The previous RBI Governor , Dr Raghuram Rajan, despite his star status, did nothing to implement the charter for nearly 22 months of his tenure. He also made some noises about asking each bank to set up its own ombudsman, which needlessly weakens the Consumer Charter concept, but did not implement that either. Please see Moneylife’s memorandum to the RBI governor, Dr Urjit Patel, seeking the implementation of the charter: http://foundation.moneylife.in/memorandums/
 
Most banks are flush with funds on account of demonetisation, but their self-created problem of colossal bad loans has hobbled their lending operations. It appears as if banks want to protect their profits by extracting higher charges and fees from consumers. 
 
On Saturday, 18th March, several NGOs and activists will meet at Moneylife Foundation to discuss the situation and send a joint memorandum to the government and the RBI Governor. Those individuals or organisations who wish to contribute to the effort by pointing out to us specific issues, or join the discussion in person, may please write to [email protected]
 

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COMMENTS

Rajan Vaswani

5 months ago

What an irony! (Demon)-itisation was supposedly to suck out black money. Some of the black money got into Jan Dhan accounts, and now the honest bank account holders are supposedly being compelled to keep Rs.5000 minimum balance to support banks to keep those Jan Dhan accounts hosting the ill-gotten gains, which have 0 minimum balance condition.

jaideep shirali

5 months ago

Mr Aditya Puri seems to have forgotten that HDFC Bank exists because of his customers, not the other way around. HDFC Bank's level of ethics must be far lower than a roadside vendor, because they mis-sell products merrily, ULIPs was one classic case and even today, I doubt HDFC can really be called as being on the customer's side at all times. In terms of service, Mr Puri's bank may be lower than the so called Mahesh Lunch Home, but the charges are at the Oberoi level. Wake up Mr Puri, your customers may decide they do not need your bank's arrogance, there are other options for them.

Vaibhav Dhoka

5 months ago

All Indian regulators in India are semi DEAF & DUMB.They hear only things they are interested. They act only for few privileged persons,let it be RBI or SEBI or IRDA or any other regulator .The saying goes "Robbing Peter to pay Paul"suits our regulators.What punishment RBI has served on erring bankers like Axis Bank,Bank of Maharashtra to name few who helped exchange of notes thus causing hardship to common man and senior citizens.Until accountability is established on failure of regulators one day public uproar will be there and it will be difficult to hold them then.Our regulators enjoy Fat pay but no accountability.

Govinda Warrier

5 months ago

In the long term portability of accounts among same or similar types of banks may be of some advantage to customers. The banks, especially the big ones both in public sector and private sector have different approaches to Government and big account holders a "yours obediently" and "May I help you?" approach and when it comes to smaller accounts (including JanDhan, Pension, several accounts opened for crediting 'benefits' an approach of "take it or leave it... come when we're free... We're doing a favour to you, because Government wants us to do...".
If cost benefit analysis is the guiding factor, Government should compensate Banks for losses and "tax" Banks' income in other areas to fund the outgo. If regulating Interest rates and service charges is the only language Banks will understand, RBI should not hesitate to go back to the pre deregulation days.

S SRINIVASA RAJAN

5 months ago

It is deplorable that bankers are finding newer means to fleece their customers and RBI under Dr. Urjit Patel is turning a blind eye to these charges. While Government and especially PM are trying their best to move from a predominantly cash based economy to cashless economy bankers have found this a great opportunity to loot the general public. As correctly observed it is not easy to close the bank accounts since they are linked to various other activities like ECS linked SIP, utility bill payments, receipt of dividends etc. Our Members of Parliament continuously keep talking of common man and I wonder why PAC is not raising these issues with RBI and minisry.

MOHAN SIROYA

5 months ago

Protection for any digitize transaction is completelhy absent. We read many stories of how use of Debit/ATM cards are risky. In my area there are a number of ATMs whihc are just installed in shops and anyone drwaing money thru' ATM is at grave risk. There is no gaurd,no enclosure and even no CCTV camera.When this is pointed out to RBI and action demanded as per theri own rules of custoemr data safety or ATM, operations. RBI keeps silent. When asked under RTI what has been done or envisged to be done as a regulator by RBI, it discards info. saying "This does not fall under the definition of "Information". So the ATM card users will always remain vulnerable to frauds adn leakages.

SuchindranathAiyerS

5 months ago

As the saying goes, "If you have a gun, you can rob a bank, but if you own a bank, you can rob anyone".

Arundhati Bhatacharya, Urjit Patel, Arun Jaitley and the Chairmen and Boards of Indian Public Sector Banks seem to have learned banditry without going to Harvard. By dint of sheer aardvark.

Anuj Kapila

5 months ago

I made the shift to my local Post Office Bank last year. It meets all my basic needs such as debit card, Mutual Funds, FD/RD etc and staff is very courteous with no pushing of products in your face. Guess its time to revert to the good ol days of doing business over a cup of tea with the Manager.

REPLY

Arunkumar A Vijayan

In Reply to Anuj Kapila 5 months ago

It is also said that you get a postal ATM card in 15 days after opening a postal savings account. The ATM card can be used in any bank ATM or postal ATM and there is no charges for any number of transactions done by the ATM card. I too think its high time that we all shift to Postal banking.

Arunkumar A Vijayan

In Reply to Arunkumar A Vijayan 5 months ago

http://www.thehindu.com/news/cities/chennai/use-bank-debit-cards-to-withdraw-cash-from-postal-atms/article17419569.ece

https://www.indiapost.gov.in/Financial/Pages/Content/Savings-Account.aspx

please see the above two links. The minimum balance required is also very small and cheque facility can also be availed.

MOHAN SIROYA

5 months ago

Your points are all correct and applicable. I am not Anti "Modi or BJP" who have so far displayed a BAD Governance. If now I sound anti Modi, let that be but none can suppress my right to expression .
In the guise of "Acche Din" Modiji is bringing the "Bure Din" for Indians at large.
Forget the owes after NOTEBANDI. In every sphere we are suffering and the most affected class is of aged and poor citizens. The aim to effect demonetization was to punish the Black money hoarders and bring back the huge booty to economy, eliminate the Corruption from the sysytem and break the chain of Terrorism thriving on black or duplicate currency. Oppsition and intellectuals cried hourse to know from the Prime MInister or RBI to give us figures as to how much BLACK MONEY the nation has recoverd and from whom ? No answer. Just a week back a report of Transparency International compiled in Jan 2017 revealed that India tops on the corruption Index amongst Asian Nations. And the terrorism is unaffected . Thus having failed to achieve aim of demonetization , the Government and the machinery manning Indian economy has adopted such measures which are putting the lives of common man in more stress. By writing of a huge NPA of 9000 crore plus of BAD debts of the big, mediem or small Industrialists, the Government failed to improve the financial health of the Banks. In last 6 months almost another NPA to the tune of Rs. 5000 crores is again created in banks becasue of the Government's open policy to encourage any tom and dick to take loan from the bank for starting any enterprise in order to create some emplyment avenues for the youths. That proved a day dream. Now the unemplyment index is much more than what it was till June 2016.
The Sixth Pay Commission have made the huge working class poulation of Government and Semi Govenment Organizations flush with funds . They have now become more bold to accept any bribe opnely in New Currency as they are now economiclly empowered to defend any charge of corruption in the courts. Now further the Government is envisaging to enhance their DA because the CPI has increased due to all round price spirall. The petroleum products , household consumption items, school education have become costlier, services had also been affected due to service tax rise to all time highof 15 percent now. The milk prices , drug prices, Travel cost ( including AC trains, Air and fuel cost)have all been hiked,Courier service which used to cost Rs. 20 for local is now costing Rs. 35 /- Bank emplyees ,in spite of inudlging in malpractices during Note Bandi trial period have siffoned out millions of new currency to hoardrs which was recovered by I T or Enforcement agency raids but instead of punishing such greedy criminals, the system is rewarding them . Hence, to continue to retain banks in good economic health the RBI had no remedy but to abdicate its regulating accountability to deny the banks to raise Bank charges arbitrarily and recover from the common man. Modi Government first foreced the common man to be digital and cashless thru' bank and now they are forced to pay thru' their noses for availing these services . These are "Acche Din" why we should grumble ?
As far the Gold seniors or Octagenrians, they do not exist in the eyes of this Government. Millions of such aged persons who are not lucky pensioners were barely surviving at 8% interest with Bank FDs on their life long savings . Since the FD rates have been reducing to a level which cause penury in interst income from a manageable sum to a pathetic peanut income, the Government wants them to block the money in 10 or 15 year bonds ,if they want 8 percent returns. Now can Modi Ji guarantee if an ailing gold senior will survivie even for one more year , due to sky rocketing cost of health care and reduced income? Why grumble ,just suffer is the Mantra to day for the 'moony promise' of better tomorrow.

V ganesan

5 months ago

main job of bank is lending and borrowing in a organised manner and in a regulated manner.LET them allow all account holders to have zero balance axccount .And they make profit by way of spread in interest. all banks in india not withdrawing these charges i am planning a big darna infront of RBI IN CHENNAI.wHY THESE PEOPLE ARE LOOTING MONEY FROM COMMON MAN AND PAYING IT TO BIG CORPORATES IN THE NAME OF BIG NPA.APART FROM THAT THEY ARE MISSELLING MUTUALFUNDS AND INSURANCE.If this trend continues people in INDIA WILL NOT TOLERATE ANY MORE.Banks are only to serve people. Not to loot money from the public.Otherwise ban all banks in india and allow only cash transaction or allow barter system

V ganesan

5 months ago

main job of bank is lending and borrowing in a organised manner and in a regulated manner.LET them allow all account holders to have zero balance axccount .And they make profit by way of spread in interest. all banks in india not withdrawing these charges i am planning a big darna infront of RBI IN CHENNAI.wHY THESE PEOPLE ARE LOOTING MONEY FROM COMMON MAN AND PAYING IT TO BIG CORPORATES IN THE NAME OF BIG NPA.APART FROM THAT THEY ARE MISSELLING MUTUALFUNDS AND INSURANCE.If this trend continues people in INDIA WILL NOT TOLERATE ANY MORE.Banks are only to serve people. Not to loot money from the public.Otherwise ban all banks in india and allow only cash transaction or allow barter system

The Tussle over Mumbai’s Development Plan
The revised Development Plan (DP) for MCGM (Municipal Corporation of Greater Mumbai) i.e. BMC (BrihanMumbai Municipal Corporation), DP2034/2017, was presented to the Corporation on 6 March 2017. This revised version came about because the first version, DP2034/2015, was felt to have had many errors. Political exigencies necessitated the State government to initially to get the errors rectified and, subsequently, perhaps under pressure from developer lobbies, have it completely scrapped, and a fresh DP prepared. 
 
The revised DP too is not without flaws. Although there is plenty to say about the FSI issue, Coastal Road issue, the Metro Rail issues and non-consideration of the Bus Rapid Transit System (BRTS) issue, only a viewpoint on the provisions of development plan for the Aarey Area will be presented here. Prima facie all does not seem to be lost, especially in connection with Aarey areas, but a campaign seems to be brewing to oppose the placing of Metro Rail III car shed here. 
 
Mumbai hitherto had areas, where normal development could take place, and the Non-Development Zone (NDZ) areas. The NDZ has now been recategorised as  Special Development (SDZ) Zone I and Zone II, paving the way for development of what was NDZ. The Ministry of Environment, Forests and Climate Change (MoEFCC) expressed no objections to development of salt pans and marshy lands, thus releasing lands for affordable housing and public amenities. However, to preserve “the only lung space” of the city, the Revised DP2034/2017 has identified the hitherto NDZ of Aarey Area into the now designated Green Area. The breakup of the 930Ha of Aarey area is 30Ha for Metro III Car Shed, 113Ha for zoo-cum-botanical garden and 787Ha as Green. Prima facie this is on the lines of the first draft DP2034/2015.
 
At this point it may be noted that Mumbai is blessed with plenty of trees of different varieties, all along its roads and streets. In fact, this is its lung and needs to be preserved at all costs. Development Control Rules of the DP2034/2017 hopefully takes this into consideration.
 
The Metro III Car shed of 30Ha occupies the edge of the Aarey area, adjacent to the Jogeshwari Vikhroli Link Road (JVLR), just after the SEEPZ flyover. Thankfully, the Mumbai Metro Rail Corporation (MMRC) has included a railway station too in the Aarey area, allowing access to citizens to reach the zoo-cum-botanical garden and the other green space more easily than currently possible.
There are various views among some Non-Government Organisations (NGOs) and individual activists who concentrate their attention on environment and ecology. While what they do is laudable, they also unfortunately equate short-term loss with long-term loss and create public opinion detrimental to the majority.
 
First of all, it would not be proper not to include human population as part and parcel, and that too an important one, of the environment and ecology. Secondly, maintaining biodiversity in large parcels of lands is important. Today, techniques have been evolved to create such growth, that too rapidly.
 
In the early developmental years of Greater Bombay, Aarey was developed mainly as a Milk Colony, where fodder was grown to feed the dairy animals. With no record of water shortage, fodder development was an assured activity and milk supply to Mumbai did not get hindered. It needs to be understood that while large lands cultivated fodder, only access roads or pathways had trees and small areas adjoining it. Thus, the Aarey area was never a forest per say. Mumbai itself has more trees than the entire Aarey area. Of course, that does not mean that trees be chopped in Aarey area indiscriminately, which the plan does not, a point to be kept in mind. 
 
The Aarey area borders the Borivli National Park and is adjacent to it towards south. Traveling on these internal Aarey roads does give one the impression that one is in a forest, but a satellite image of the area tells us the true situation.
 
  
IIT Bombay was founded in 1959 on near barren land between Powai and Vihar Lakes and the current JVLR. The formal tree plantation activity started in the early 1970s. By 1995, there was considerable growth of trees and some kind of forest evolved and continues to exist in 2017, despite a three to four-fold increase in human population within the campus. It would be wrong to say that there is no bio-diversity. There is plenty of variety of flora and fauna in the campus of about 450 acres. This happened because of an institution coming there which allowed growth of nature in the campus and ensured that the greenery was well maintained. The variety of birds in the campus can be seen on YouTube.
 
 
 
 
There is no need for citizens/activists to feel that the 787Ha of land in the Aarey area, designated to remain green, will be grabbed by land sharks and Mumbai will be denied its “only breathing space” that can double up for recreational activities for  Mumbai residents. In the present state, while the Aarey area has some trees and plenty of fodder cultivation, it is being used as recreational area in a very limited way. One of the reasons for its limited use as a recreation area is that it is not easily accessible from different parts of Mumbai. With the development of the zoo-cum botanical-garden in the Aarey area, easy access to it by, Metro III and with proper public transport, more people would be able to benefit out of this “new enhanced lung space.”
 
It is well known that IIT Bombay has very good international standing as an institution of learning and research. But so long as it restricts itself to conventional engineering research, it will begin to slide down in world rankings. Today’s medical sciences are highly dependent on emerging technologies and hence an institution of IIT-B’s standing must get on to having medical research arenas opened up. What better place than a reasonably close vicinity to the present campus at Powai? It is this vision that needs to be nurtured for the benefit of science, on the one hand, and on the other, for the average Mumbai resident who then can have not only access to green areas  but also enjoy cooler temperatures.
 
It would be a wise decision to continue dairying activity here in Mumbai, given the record of zero failure of rainfall over a century. Perhaps some more crop varieties for fodder could be grown. It is understood that the drumstick plant is grown in Cuba mainly as fodder, the knowledge having been imported from India. The drumstick plant grows rapidly and is rich in iron. Considerable research and many experiments have been done in the agricultural and horticultural fields to work out productive schemes.
 
While a repeat of the 2005 flooding is to be avoided by all means, attributing the flooding to mere indiscriminate urban development is wrong. On 25 July 2005, it rained 840 mm incessantly for ten hours and touched 1000 mm plus mark in 24 hours in the Powai region. This is four times the once-a-season 24-hour heavy downpour. Disaster Mitigation and Management concepts were absent in 2005 but, under the DP, we have an opportunity to work on it.
 
There are some who think that Mumbai needs to be decongested. It is easier said than done. Intercity high speed trains are one of the things being suggested. Are the numbers that high and, if so, is it even necessary to have this commute made possible at all? The problem that needs to be attended to is how to decongest the current mass rapid transits in Mumbai, which is is the suburban railway system, and reduce fatalities. While Metro Rail may provide additional hourly capacities, what is planned by Mumbai Metropolitan Region Development Authority (MMRDA) and MMRC is a mere 98,000 persons per hour (PPH), while what is required is 1,80,000 PPH. 
 
Another point to note is why should a city like Pune and Nashik take in migrants from Mumbai in such large numbers? Transportation and urban development itself is a vast subject and, for now, it suffices to know that by declaring Aarey area as Green Area, the DP2034/2017 lays the basis for addressing the issue of creating and maintaining the “breathing space” or the ”lung space” of Mumbai.
 
(Sudhir Badami is a civil engineer and transportation analyst. He is on Government of Maharashtra’s Steering Committee on BRTS for Mumbai and Mumbai Metropolitan Region Development Authority’s Technical Advisory Committee on BRTS for Mumbai. He is also member of Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority. He was member of Bombay High Court appointed erstwhile Road Monitoring Committee (2006-07). While he has been an active campaigner against Noise for more than a decade, he is a strong believer in functioning democracy. He can be contacted on email at sudhirbadami@gmail.com )
 
Facebook: sudhir.badami     Twitter:  @sudhirbadami
 

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Fake news: British newspapers want Google, Facebook probed
Britain's newspaper industry has called for an investigation into Google and Facebook's role in the spread of fake news, media reported.
 
Amid fears of fake news undermining democracy, a group of cross-party MPs in Britain launched an inquiry into the rise of the phenomenon earlier in 2017. 
 
In a recommendation to the Culture, Media and Sport Committee's fake news inquiry, the News Media Association (NMA), which represents national and local publishers, advised the MPs to probe the role of Google and Facebook in the rise of fake news.
 
The media body said that the digital advertising supply chain which favours fake news and helps it to thrive was "murky at best, fraudulent at worst", Belfast Telegraph reported on Thursday.
 
The body called for an "urgent investigation" by regulators such as Ofcom and the Competition and Markets Authority into its impact on Google and Facebook.
 
Fake news is more likely to be spread on sites such as Facebook due to an algorithm which measures stories' worth based on virality, Lucy Gill, legal policy and regulatory affairs adviser at the NMA, was quoted as saying. 
 
In the digital platforms, fake news stories may emerge more profitable than real news in terms of clicks and advertising revenue because they are more likely to go viral.
 
Fake news "farms" deprive real news publishers of valuable advertising revenue as well as profiting because they do not incur the same costs, including paying professional journalists, the media body suggested.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Carlos De Souza

5 months ago

I think the MSM & press are the FAKE NEWS. They are hand in glove with the so called liberal progressive globalists like Soros, etc . In fact, social media is proving to be an effective counter to the biased thrash that papers like the NYT, Washington Post, etc, etc put out on a daily basis.

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