Banking
Cartelisation, not competition, decides banking service charges

RBI deputy governor Dr KC Chakrabarty said that the decision on various charges levied by banks has been left to their respective board of directors and the Indian Banks Association oversees the reasonableness aspect and can suggest a cap on the charges. This policy prevents the RBI from interfering with the various charges levied by banks and customers who found them unreasonable would do well to switch banks

Unreasonably high and ever-increasing services charges was an issue that was strongly raised by consumer groups at the "Open House with Dr KC Chakrabarty" organised by Moneylife Foundation. Variable and vastly differing charges are also a matter of concern, since ordinary customers are unable to take a call on what is a fair and reasonable charge and what is extortionate.   

Mohan Siroya, chairperson of Consumer Complaints Cell (CCC) said, "The 'greatest wrong' the Reserve Bank of India (RBI) has committed is by disowning its responsibility to supervise the 'exploitation' of bank customers. RBI has given the full liberty to each bank to levy 'service charges' as per their wish. It has become an open market. Now it has come to the light from the Banking Codes and Standards Board of India (BSCBI) that the Indian Banks' Association (IBA) has been given an authority to put a 'cap' on such charges, thus fully abdicating its own duty as a statutory regulator. How is such a body expected to control the greed of making more and more money by its own members?"
 
"As a consumer I'm ready to pay the prescribed service charges, but one bank is charging Rs100 for a particular service whereas another bank is charging Rs10 for the same service. What does the consumer do then?" he said.
 
Mr Siroya also spoke about his Right to Information (RTI) initiative to figure out how these charges are decided; it led to the conclusion that individual banks are free to decide their own charges. It took the CC Cell and Mr Siroya three years to just know that it is the BSCBI that had the mandate to monitor reasonableness of banking charges.
 
In an oligopolistic set up, players get together and decide on the price of a product. On the other hand, healthy competition actually reduces the prices of goods and services which is good for the consumer. However, despite so many banks offering competitive products, the charges are increasing. Competition between banks was supposed to keep service charges in check in a liberalised economic environment, but this is not happening Mr Chakrabarty holds the view that the absence of fair competition because of entry barriers to new banks is one reason why competition has failed to work.
 
There are more than 150 banking entities in India, which includes public, private, foreign and cooperatives. To most consumers, this seems a large enough number to ensure a competitive environment. Why is competition not working? The view of consumer organisations is rather different. All banks listed on stock exchanges are under pressure to show higher profits. While they have not been able to keep the non- performing assets (NPAs) in check through prudent lending, any increase in service charges goes straight to the bottomline. Hence, all banks are happy to follow the lead of foreign and private banks in increasing service charges, although nationalised banks, probably conscious about their ownership, will remain a step behind.

Adding to Mr Siroya's view, Sucheta Dalal, trustee of Moneylife Foundation said, "The IBA operates in a particular pattern. When one bank decides to charge Rs500 for a debit card, the others, especially nationalised banks, follow its lead and say; okay we will charge only Rs250. This is how banking charges increase every time. Competition does not work because IBA has become a cartel. When was the last time that IBA spoke to any consumer organization or sought the consumers' views?"

Ashok Ravat of All India Bank Depositors Association (AIBDA) and Vasundhara Deodhar from Mumbai Grahak Panchayat (MGP) also raised questions on the reasonableness of banking charges. Both requested the banking regulator to determine reasonable service charges.

Dr Chakrabarty, responded by saying that the decision to prescribe service charges has been left to board of directors of the individual bank. "We said the board should decide (on banking charges) and if the board has given the mandate to the IBA, then we cannot take any action against the Association". On the charge that IBA operates like a cartel he said the RBI cannot intervene. "At best you can approach the Competition Commission, if you feel this is cartelisation," he said.

Referring to Dr Chakrabarty's suggestion to switch banks in case the customer was not satisfied with the bank services, Mr Siroya asked, "How often can a consumer jump from one bank to another on the basis of charges and not to mention the endless KYC hassles each time it is done?"

Initially, bank charges were under the domain of BCSBI, an independent and autonomous body and were supposed to protect banking consumers. It is not a compensation mechanism and looks into an individual complaint only to the extent it points to any systemic compliance failure. It had published a "Code of Conduct" for banks to follow in order to protect consumers' interest, as well as adopt transparent and fair practices.
Dr Chakrabarty, responding to demand for looking into this matter said, "I have no problem with your demand, however, I will not be able to satisfy you within the current framework."

Mr Siroya said, "Under the current rules if customers are penalised or have paid heavy 'service charges' even for a technical fault or being unaware of the repercussion, the bank also must be equally held liable to compensate the customer for 'any deficiency in service' by way of delay or even any technicality."

Replying to the question on penalising banks, the RBI deputy governor said, "If we become too stringent and as you say, we put very high penalty on the bank, no bank is going to pay from its pocket, it will simply increase your charges more. Our purpose is to stabilize banking system. It is not that we cannot penalize, but this way it won't work."

"Customer is the most important part of a banking system and it is necessary that the bankers do not 'squeeze' customers. However, after saying this, we must understand that banking is not just a service but it is also a business and banks need to levy charges on services in order to survive", Dr Chakrabarty added. He also said that some of the banks that attract a lot of complaints also tend to sweep the "best bank" awards handed out by many organisations.

Further in the discussion, Moneylife Foundation also made the point that a customer has no way to judge which is a good bank, in terms of service quality and costs. It was pointed out that in 2006, one Delhi based NGO had conducted a survey on service quality. Many banks were unhappy with the findings and it was decided that the IBA or the BCSBI would conduct such surveys. Nothing has been done in that direction since then. In the absence of such a survey, how are consumer supposed to know that the bank that they switch to would be any better than the previous one?

Clearly, there are a lot of questions that need answers. From the consumer's perspective, the most positive aspect is that the RBI is now willing to engage with customers directly, hear their issues first hand and offer to examine the merits of each demand. This was evident from the fact that although Dr Chakrabarty personally took all the questions during the open house, the programme was attended by all those who would interact with the consumer.

Present at the meeting were AC Mahajan, chairman of BCSBI and Mr Narayana Raja its chief executive. Dr Deepali Pant Joshi, executive director of the RBI, Supriya Pattnaik, chief general manager (CGM) of RBI, Rosemary Sebastian, Banking Ombudsman of Mumbai, M Balachandran, director of National Payments Corporation of India (NPCI) as well as former CGMs in charge of customer services-Kaza Sudhakar and Jagan Mohan Rao. DG Kale, general manager in the Consumer Services department at RBI was also present.

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COMMENTS

Michael Mason-Mahon

4 years ago

Open letter to the major shareholders and the Board of Directors of HSBC Holdings Plc


Should the major shareholders of HSBC Holdings Plc pick up the bill for restoring the reputation of the HSBC Group?

Why have the Major shareholders not forced any changes to the Board of Directors of HSBC Holdings Plc?

If the world is to believe the statements of Mr Flint, Chairman, Mr Gulliver, CEO, that they are truly sorry for the illegal and criminal behaviour of HSBC Group, let the Board of Directors show the world how really sorry the HSBC Group is.

Is the HSBC Group willing to make an act of Attrition for their illegal and criminal behaviour around the world?

Is the HSBC Group truly sorry and wanting to atone for their illegal and criminal behaviour around the world? Are they willing to pay the Price?

Is Mr Flint, Chairman, Mr Gulliver, CEO and the Board of Directors of HSBC Holdings Plc very serious about restoring the reputation of HSBC around the world?

A good start would be to show society that the HSBC Group is not only willing to atone for the past and that the HSBC Group is willing to be a great Corporate Citizen of the world.

The cost is to help the world, the hungry, the poor, the uneducated, the homeless and the sick children of the world.

The HSBC Group is willing to announce in the next 30 days that the HSBC Group will donate £3 billion to help the world and for the next ten years donate £5 hundred million every year. The £3 billion donation will be made within six months of the announcement.

Some ideas for HSBC Group.

India £ 762 Million, then for the next tens years £51 Million.

Africa £ 823 Million, then for the next tens years £56 Million.

South America £ 514 Million then for the next tens years £43 Million.

Middle East, Syria and the Lebanon 370 Million then for the next tens years £46 Million

China £ 236 Million, then for the next tens years £79 Million

The rest of the world £ 210 Million, then for the next tens years £205 Million.

Costs £ 20 Million per year.

Have the HSBC Group paid over $2 billion in fines and settlements in the USA in the last four months?

This may be too high a price for the HSBC Group to pay to restore their reputation?

By helping the world maybe, just maybe, the citizens of the world, may be able to start to forgive the shameful behaviour of the HSBC Group and the behaviour of Board of Directors of HSBC Holdings Plc that were Board members while this illegal and criminal behaviour was going on.

Concerned shareholder

Regards
Michael Mason-Mahon
Mobile: 0044 7834763544
Mobile: 0044 7448770801
E-mail: [email protected]

"First they ignore you, then they ridicule you, then they fight you, and then you win."

Michael Mason-Mahon

4 years ago

Open letter to the major shareholders and the Board of Directors of HSBC Holdings Plc


Should the major shareholders of HSBC Holdings Plc pick up the bill for restoring the reputation of the HSBC Group?

Why have the Major shareholders not forced any changes to the Board of Directors of HSBC Holdings Plc?

If the world is to believe the statements of Mr Flint, Chairman, Mr Gulliver, CEO, that they are truly sorry for the illegal and criminal behaviour of HSBC Group, let the Board of Directors show the world how really sorry the HSBC Group is.

Is the HSBC Group willing to make an act of Attrition for their illegal and criminal behaviour around the world?

Is the HSBC Group truly sorry and wanting to atone for their illegal and criminal behaviour around the world? Are they willing to pay the Price?

Is Mr Flint, Chairman, Mr Gulliver, CEO and the Board of Directors of HSBC Holdings Plc very serious about restoring the reputation of HSBC around the world?

A good start would be to show society that the HSBC Group is not only willing to atone for the past and that the HSBC Group is willing to be a great Corporate Citizen of the world.

The cost is to help the world, the hungry, the poor, the uneducated, the homeless and the sick children of the world.

The HSBC Group is willing to announce in the next 30 days that the HSBC Group will donate £3 billion to help the world and for the next ten years donate £5 hundred million every year. The £3 billion donation will be made within six months of the announcement.

Some ideas for HSBC Group.

India £ 762 Million, then for the next tens years £51 Million.

Africa £ 823 Million, then for the next tens years £56 Million.

South America £ 514 Million then for the next tens years £43 Million.

Middle East, Syria and the Lebanon 370 Million then for the next tens years £46 Million

China £ 236 Million, then for the next tens years £79 Million

The rest of the world £ 210 Million, then for the next tens years £205 Million.

Costs £ 20 Million per year.

Have the HSBC Group paid over $2 billion in fines and settlements in the USA in the last four months?

This may be too high a price for the HSBC Group to pay to restore their reputation?

By helping the world maybe, just maybe, the citizens of the world, may be able to start to forgive the shameful behaviour of the HSBC Group and the behaviour of Board of Directors of HSBC Holdings Plc that were Board members while this illegal and criminal behaviour was going on.

Concerned shareholder

Regards
Michael Mason-Mahon
Mobile: 0044 7834763544
Mobile: 0044 7448770801
E-mail: [email protected]

"First they ignore you, then they ridicule you, then they fight you, and then you win."

Michael Mason-Mahon

4 years ago

Please allow me to say a very big thank you to everyone at Moneylife, the fighter for the citizens of India and for making people's lives a lot better.

May I also thank them for allowing me to participate and comment on articles, I do thank them for letting me write an article.

One lone voice will shout in the dark, until the lone voice is heard then there is light, for once there is one listening others will come.

In India to many people shout without being heard, because they do not know where their voice can be heard.

Until people come together and the one's becomes hundreds and the hundreds becomes Lak's, then Crore's only then will the Government and regulators be concerned.

This problem is not of the few, it is the problem for every citizen of India.

What is the real truth about what The Hongkong and Shanghai Banking Corporation Limited in India has and is doing to the citizen's of India?

You only have to look at what the HSBC Group have done in the rest of the world and do you think that their behaviour would be better in India?

Michael Mason-Mahon

4 years ago

Please allow me to say a very big thank you to everyone at Moneylife, the fighter for the citizens of India and for making people's lives a lot better.

May I also thank them for allowing me to participate and comment on articles, I do thank them for letting me write an article.

One lone voice will shout in the dark, until the lone voice is heard then there is light, for once there is one listening others will come.

In India to many people shout without being heard, because they do not know where their voice can be heard.

Until people come together and the one's becomes hundreds and the hundreds becomes Lak's, then Crore's only then will the Government and regulators be concerned.

This problem is not of the few, it is the problem for every citizen of India.

What is the real truth about what The Hongkong and Shanghai Banking Corporation Limited in India has and is doing to the citizen's of India?

You only have to look at what the HSBC Group have done in the rest of the world and do you think that their behaviour would be better in India?

gcmbinty

4 years ago

It is a wonderful dialogue with the regulator of the providers of banking services in India, initiated by Moneylife Foundation which I could not join personally because of the reach - distant locations. But Moneylife Foundation deserve pat for organising such a programme. The inputs on behalf of consumers have been very well articulated by discussants like Mr. Siroya and others. This discussion needs to be taken further to the consumers far and wide for which I had in a way tried to coordinate with BO-Delhi, but failed.

It is correct that the banking serice is a business operation and is subject to competition. At the same time the nationalised banks are also expected to follow socialistic pattern in it services. Nationalised Banks are in competition with private banks and being in public sector they are not expected to be exploitative with such wide and wild range of charges for the same type of service as the example quoted in the dialogue.
It cannot be ignored that public sector banks are intended to give better placed to extend services to all segments of economic status of society.
In fact, it is my view, the public sector banks should be put to audit by an institution like CAG instead of the members of the Institute of Chartered Accountants to better plug the loop holes in their operations and point the areas of making profits. These banks must first of all work out the maximum cost of running administration at different stations of locations and charge not more than 10-15% of the administrative cost covered in the service charges folders.
IBA is more the spokesperson for the Banks and is not a regulator of any variety. Therefore, it will be wrong for the RBI to leave the matter of fixing service charges.
There is wide range of discriminatory use of powers of lending and taking deposits. The Regional and Branch managers have often been seen abusing their discretionary power.
I must appreciate the perspective of the meeting with Dy RBI Governor put up by Moneylife Foundation and thanks to Mr. Siroya for its circulation. It is a feast to the eyes and mind to read the same.
G. C. Mathur

REPLY

MOHAN SIROYA

In Reply to gcmbinty 4 years ago

Thanks a ton GCM for appropriate inputs and liking the discussion arranged by Moneylife Foundation.
In fact now is the time when all Consumer organizations have to come in UNISON on one common platform and demand the 'Restoration of Consumer rights' from RBI or other such Regulators. For the lopsided thinking of RBI ,even the Financial Services Secretary of the Finance Ministry has openly criticised its working.

Mohan Siroya

GVN ROJARAO

4 years ago

this very good decision to bank customers thanks to dr K,C,Chakarvarthy garu. G.V.N.ROJARAO.

MOHAN SIROYA

4 years ago

I have already put my comments on the updat4e published din MONEYLIFE on 3 rd June that "Bank Service Charge is not Negotiable". Thanks to Moneylife for publishing my views and other activists views here on the scourge of "Bank Service Charges".
Those of he readers who may have missed that comment, I re-produce here :
The Bank customers have become a ‘PUNCHING BAG’ not only for the banks but even for the Regulator RBI .

I am sorry for the above blunt statement , but it becomes real when in the OPEN HOUSE an authority no less than the DY. Governor of Reserve Bank of India ( RBI) says that there can not be any effective redressal from the regulator to the legitimate grievance of a Bank customer as for as the ‘Service charges’ charged by the banks for various services are concerned. He had even declared that the issue of service charge in not “Negotiable”. This makes the Consumer as the “Punching Bag” vulnerable to exploitation and victimization.
This is, to say the least, open example of abdication of duty and non-deliverance by the authority who is accountable to regulate and protect the Interest of banking service ‘Customers’ who are consumers and entitled to protection from ‘Unreasonable, exploitative and unfair charges’ under the law of the land. Let us analyse his argument rationally that ‘Because Banking to day is not a service, but a Business/ commercial activity’, the protection to users on charges is not ‘Negotiable’. This interpretation is wholly misplaced. In fact RBI itself defines that ‘The current account’ transactions are in the category of “Commercial” but small and SB account operation is a part of ‘Service’. On this reckoning itself SB account holders can not come under’ Commercial service’ .Further this analogy can be applied to all other sectors too viz; Insurance , Telecom, Reality , commodity selling etc. But then Government has framed the Regulations for Redressal of Consumer Grievances, appointed the Statutory Regulators to protect the interests of the consumers even for such commercial services.
As a part of its ‘Financial Services’, RBI under the policy framed in 2006-07, a working group was especially constituted to frame a code for ‘Fair Practices’ to be adopted by the banks for various banking services . These recommendations were accepted by the RBI and another statutory body to effectively implement and monitor this fair practices code was constituted named as “Banking Codes and Standards Board of India ( BCSBI) . Although the RBI did not frame any “Time Bound” grievance redressal system , the power to monitor the ‘Reasonableness’ of any service charge’ levied by the bank was vested in it. Lately for some unknown reasons , the Power to monitor Reasonableness of any service charge was delegated to the ‘Indian Banks Association’(IBA). Now imagine the plight of the consumer . Every bank has the liberty to levy any amount of service charge for any service’ rendered or even not rendered’ to the customer . There is no transparency in applying this charge on the criteria of service-vs. the cost to the bank. It is pure and simple ‘Business’ of money making’ from the hapless customers. If someone had the courage to ‘Protest’ against any such service-or non-service charge , the consumer has to first spend his own ‘Airtime’ or paper/postage/transporting expenses to lodge such complaint . RBI has not even asked all banks for a ‘Mandatory and TOLL FREE, consumer help-line’. Needless to mention that the concerned bank will maintain that the charge is reasonable . Then to decide whether it is indeed ‘Reasonable or not’ you approach the IBA. IBA is not ‘duty bound or time bound ‘ to even acknowledge such ‘Appeals and Requests’. And when it replies, it is invariably in favour of ‘Holding Fair’ what the concerned bank has done . And that is ‘The End’ for the consumer ,unless he/she has enormous, patience resources and undying will to approach the HC in a writ petition on any trifle issue to make the RBI ACT or go to the Consumer For a to claim compensation for deficiency in service ,which will take years . So in reality this is what the Dy. Governor of RBI had meant.
In this scenario, therefore, the poor Indian banking Consumer will remain a ‘Punching Bag’ to go on receiving blows of financial losses , mental torture, and harassment for any transaction ,even expressly for the mistake or ‘Non-deliverance ‘ of the banks due to either human error or IT failure. In an well analysed article on wrongful “TDS’ deduction and refusing to credit back the same by the wrongdoer banks, shri GURUPUR in another issue of ‘Moneylife’ had asked for some ‘Penalties’ to be levied on the defaulter banks. But in this bleak and anti consumer stance taken by the Regulator, the demand will only remain on paper as a Day Dream. As long as RBI does not change its stance to become “Consumer Centric , from the present ‘Bank Centric’; deliverance in the ‘Financial Services sector’ will continue to remain a grim reality .
To end my comments, I would like to quote what Mr. Rajiv Takru , Secretary ,Financial Services ,Ministry of Finance Govt. of India had stated a couple of days back for prevailing stance of RBI.
“ You must understand , no institution is an island . RBI is not an Island . We must understand that it is extremely important to have some apex body which sits down and deliberates.” But when the RBI authority declares ‘Bank Service charges are non negotiable, no deliberation is possible.

Now the ball is in the court of Consumer Activists, NGOs and Forums either to fight for the “Restoration of Rights of the Consumers” or remain as silent spectators
--Mohan Siroya
Consumer Activist and Chairperson of Consumer Complaints Cell.



REPLY

Michael Mason-Mahon

In Reply to MOHAN SIROYA 4 years ago

Dear Mohan Siroya
I applaud your fight and congratulate you on your article and many others who try and get Justice for the innocent victims of the Banks behaviour.

It is true that in life you cannot make a person see the truth if that the person wants to be blind.

Any excuse from the regulators, is just an excuse nothing more an excuse.

Perhaps the Regulator should look around the world and see what of Regulators are doing, they may learn a lesson or have better ideas for their own citizens.

Reasonable One of the most important words in Law, the RBI should look at the UK. In the UK Banks were charging excessive Bank charges and the regulators stepped in, result the Banks had to reduce their charges. I am not saying that the UK has the best system.

What the RBI can and should do is to look at how other countries deal with these problem and then come up with a better way of protecting their citizens.

It is so easy for the Regulators to say we cannot do anything, the Regulators can do an awful lot, only if they are willing to do it.

With all the problems India is still one of the greatest countries I have had the pleasure to visit, problems can be resolved only if one want to solve the problem. If not the problem only gets bigger.

Kindregards

Michael Mason-Mahon
Mobile: 0044 7834763544
Mobile: 0044 7448770801
E-mail: [email protected]

"First they ignore you, then they ridicule you, then they fight you, and then you win."

MOHAN SIROYA

In Reply to Michael Mason-Mahon 4 years ago

Dear Michael

I absolutely agree with you .You also accept my compliments for calling spade a spade, without mincing words.
Regards
Mohan Siroya

Michael Mason-Mahon

In Reply to MOHAN SIROYA 4 years ago

Dear Mohan Siroya
I applaud your fight and congratulate you on your article and many others who try and get Justice for the innocent victims of the Banks behaviour.

It is true that in life you cannot make a person see the truth if that the person wants to be blind.

Any excuse from the regulators, is just an excuse nothing more an excuse.

Perhaps the Regulator should look around the world and see what of Regulators are doing, they may learn a lesson or have better ideas for their own citizens.

Reasonable One of the most important words in Law, the RBI should look at the UK. In the UK Banks were charging excessive Bank charges and the regulators stepped in, result the Banks had to reduce their charges. I am not saying that the UK has the best system.

What the RBI can and should do is to look at how other countries deal with these problem and then come up with a better way of protecting their citizens.

It is so easy for the Regulators to say we cannot do anything, the Regulators can do an awful lot, only if they are willing to do it.

With all the problems India is still one of the greatest countries I have had the pleasure to visit, problems can be resolved only if one want to solve the problem. If not the problem only gets bigger.

Kindregards

Michael Mason-Mahon
Mobile: 0044 7834763544
Mobile: 0044 7448770801
E-mail: [email protected]

"First they ignore you, then they ridicule you, then they fight you, and then you win."

Michael Mason-Mahon

4 years ago

Dear Dr KC Chakrabarty

With the greatest of respect Sir, I am no Banker but I think you are just to trusting of the Banks. Big fines may not work, the one thing they do is attract media attention, with this attention people will know what type of Bank the are dealing with.

Allowing individual banks are free to decide their own charges is a recipe for disaster for the customer.

As for the problem of a cartel being formed, it would have much more meaning if the RBI asked the Competition Commission to inquire. The RBI could refer this to the Minister of Finance

You may like to google complaints HSBC India and see what HSBC have been doing in India for years.

Look at what Banks have been doing in the rest of the world and their illegal behaviour around the world.

Is it not the responsibility of every Government and the Regulators of that Country to protect their citizens above all else. No Bank can have more rights than a citizen, no Bank can have more protection than the citizen.

A Bank's profit cannot be at the cost of the citizen's rights. If this happens are not the Government and the Regulators of that Country being negligent in their duty to protect their citizen's?

The amount of complaints against Banks and about their behaviour is not only shocking for the reader of their complaints, it must be a thousand time worse for the individual or family's going through this.

This is why I have help many people in India with their complaints against HSBC.

Only recently I have discovered that Mr Lewis the Head of Customer Relation had written to the Financial Conduct Authority in London,saying I may make a complaint about HSBC forcing me to close my account, did he tell the truth, the whole truth and nothing but the truth? No way.

Is HSBC trying to discredit with the FCA and with the RBI?

Have HSBC made fools of the FCA?

Senior staff have stated HSBC was writing to the RBI, will HSBC make fools of the RBI?

I have helped many people in India against HSBC and resolved every case to the satisfaction of the customer and no of HSBC, what has the RBI done about the illegal behaviour of HSBC?

I have written to the Prime Minster of India to the Finance Minister of India, the RBI the Bank of England and the Treasury Select Committee trying to get an investigation into the illegal behaviour of HSBC and what action have they taken against HSBC?

Has HSBC seen Indian citizens as easy prey, how many innocent victims are there?

What is the duty of the RBI to the citizens of India?

Kind regards

Michael Mason-Mahon

Mobile: 0044 7834763544

Mobile: 0044 7448770801

E-mail: [email protected]



"First they ignore you, then they ridicule you, then they fight you, and then you win."

Michael Mason-Mahon

4 years ago

Dear Dr KC Chakrabarty

With the greatest of respect Sir, I am no Banker but I think you are just to trusting of the Banks. Big fines may not work, the one thing they do is attract media attention, with this attention people will know what type of Bank the are dealing with.

Allowing individual banks are free to decide their own charges is a recipe for disaster for the customer.

As for the problem of a cartel being formed, it would have much more meaning if the RBI asked the Competition Commission to inquire. The RBI could refer this to the Minister of Finance

You may like to google complaints HSBC India and see what HSBC have been doing in India for years.

Look at what Banks have been doing in the rest of the world and their illegal behaviour around the world.

Is it not the responsibility of every Government and the Regulators of that Country to protect their citizens above all else. No Bank can have more rights than a citizen, no Bank can have more protection than the citizen.

A Bank's profit cannot be at the cost of the citizen's rights. If this happens are not the Government and the Regulators of that Country being negligent in their duty to protect their citizen's?

The amount of complaints against Banks and about their behaviour is not only shocking for the reader of their complaints, it must be a thousand time worse for the individual or family's going through this.

This is why I have help many people in India with their complaints against HSBC.

Only recently I have discovered that Mr Lewis the Head of Customer Relation had written to the Financial Conduct Authority in London,saying I may make a complaint about HSBC forcing me to close my account, did he tell the truth, the whole truth and nothing but the truth? No way.

Is HSBC trying to discredit with the FCA and with the RBI?

Have HSBC made fools of the FCA?

Senior staff have stated HSBC was writing to the RBI, will HSBC make fools of the RBI?

I have helped many people in India against HSBC and resolved every case to the satisfaction of the customer and no of HSBC, what has the RBI done about the illegal behaviour of HSBC?

I have written to the Prime Minster of India to the Finance Minister of India, the RBI the Bank of England and the Treasury Select Committee trying to get an investigation into the illegal behaviour of HSBC and what action have they taken against HSBC?

Has HSBC seen Indian citizens as easy prey, how many innocent victims are there?

What is the duty of the RBI to the citizens of India?

Kind regards

Michael Mason-Mahon

Mobile: 0044 7834763544

Mobile: 0044 7448770801

E-mail: [email protected]



"First they ignore you, then they ridicule you, then they fight you, and then you win."

Dekho ji.com

4 years ago

Looks like its time to seriously think about free market economies. Free market means profit, profit and ever increasing profits. Does not matter whether the profit is 10% or 1500%, profit must be made at all costs to please the "stock market investors" that their company is making more profits every quarter. What these stock market investors dont understand is that huge profits means its going from the customer's pockets in one way or another. So, a company will give Rs 50 dividend and in return, your petrol prices will increase by 5 Rs. Now, you decide for yourself, you want to enjoy your earnings of Rs 50 per share of this company or be sad about spending 1000s of more money on your petrol expenses. This same thing applies to all private companies in today's free market madness. So, whenever you see a company paying dividend or making huge profits, be sure that inflation will continue to rise and your money's value will keep going down. When will people realise stock markets DONOT represent country's growth, it only represents COMPANIES MANAGEMENT PEOPLE's growth. Companies reduce their employee's salary and then show profits. Who benefits ? A few corporate honchos and their families. What about the rest ? Their salary remains miniscule. 1% richer vs 99% poorer.

ABHA CHAWLA MOHANTY

4 years ago

IS RBI SERIOUS ON GOVERNANCE ISSUES??.....OR,BURY THE HATCHET ,,,,,????

Babubhai Vaghela

4 years ago

Manmohan Singh gone mad deploy mad Banker as Dy Governor RBI.

How CIBIL goofs up credit records, resulting in denial of loan

A consumer was denied home loan because CIBIL mixed up his credit history or record with someone else. Another was denied a loan due to gender mismatch. This could happen to you as well

Moneylife and Moneylife Foundation have been continuously raising question on the quality of credit reports and data in India. Here is a shocking case of Umesh Dhawan, who was denied a home loan of Rs5 lakh because his credit history or record data was mixed up with someone else, who was a defaulter. Mr Dhawan has been wrongly blaming ICICI Bank for the problem, while Credit Information Bureau (India) (CIBIL) was at fault.

 

CIBIL, the credit bureau while accepting its mistake in merging the credit record of Mr Dhawan with another person, has issued an apology and sent a fresh credit report to him, after a mail from Moneylife and strong intervention by ICICI Bank to which we forwarded the customer’s complaint. Even then, CIBIL provided ICICI Bank with an apology meant for the customer and not directly to Mr Dhawan. An explanation was forthcoming only when Moneylife wrote to CIBIL.

 

While Mr Dhawan’s record would be cleared, there may be several such cases where a person's credit record or data is mixed up with someone else. In a similar case, a senior financial consultant, DM Mahalaxmi also had to go through the same trauma. The question therefore is who will compensate for the loss of repute and trauma experienced by Mr Dhawan and Ms Mahalaxmi.

 

“Credit information submitted to CIBIL pertained to Umesh Uhawan who had taken a joint loan with Rahul Biswas. Since information pertaining to Umesh Uhawan and Umesh Dhawan were similar, the system matched the details pertaining to Umesh Uhawan with Umesh Dhawan,” CIBIL said in an email to Moneylife.

 

However, this raises bigger question on the credibility of credit bureaus, their data and ability to crunch the data. Matching data fields like name, date of birth, address, telephone numbers and identifiers like PAN, passport number and voter ID card is a challenge, especially in a country like India. However, over the years credit bureaus like CIBIL have developed an algorithm that is supposed to consider several fields before making a match.

 

When information in relation to a person whose credit information report (CIR) is to be obtained is fed into the system, a best possible CIR is generated based on the match rules with the available data. When sufficient data elements between two sets of personal data overlap, the information of two different accounts are merged in the CIR, CIBIL said.

 

In the case of Mr Dhawan, CIBIL said, “Based on the dispute raised by the consumer, we had done an in-depth analysis, it was observed based on the data submitted to us and our match riles, the CIR generated for the consumer had details of another individual mixed in the consumer’s report. We have immediately taken corrective action to separate the information.”

 

This is a verbatim of the reply received by Ms Mahalaxmi from CIBIL. There may be several such cases, but the credit bureau has refused to divulge the numbers. It said, "The rate at which incorrect merges occur at CIBIL is very low, and is competitive with bureaus of similar size and maturity globally.” Strangely, CIBIL is not answerable to the public as it continues to have a near monopoly on customer credit data or records.

 

CIBIL is also silent on the exact number of fields that are matched before deciding to merge data of two persons and creating a single CIR. “When enough data elements between two sets of personal data overlap, the information for the two subjects is merged together. The rules, which decide when enough data has overlapped to trigger a merge have evolved over the lifetime of CIBIL, based on annual analysis of the overall consumer dataset. In order to present the consolidated credit history of a person in a credit information report there are a few sets of match rules. The CIR is generated only when such rules are satisfied,” it said.

 

In the case of Mr Dhawan, were the fields like date of birth, address, PAN number, matched? Looks unlikely. This also means there is something wrong in the process itself.

 

Moneylife has been raising the issue of credit tracking system, which the above mentioned incidents show, is still in a mess and crippling financial life for no fault of the consumer.

 

According to sources, following the letter from Moneylife Foundation to Reserve Bank of India (RBI) governor D Subbarao on 13 December 2012, there has been quite some progress on the issues. The RBI has also set up a task force address some of the data parity problems between credit bureaus and lenders, the sources said.

 

Earlier, following the complaint letter, the RBI has asked banks and financial institutions (FIs) to share historical data with new credit bureaus, of which they had become members.

 

The financial literacy initiative of Moneylife Foundation, has led to the discovery that credit-tracking remains faulty in several ways. The Foundation also discovered that licensing of four credit bureaus without a level playing field, in terms of access to credit information and historical data, has created a system that is not functioning as it was supposed to.

 

Moneylife Foundation, through a day-long workshop and counselling on credit reports and issues and through few case studies, also discovered that most of the lenders only look at CIBIL data while others do not even bother to look at a credit report at all before making lending decisions.

 

There has been much discussion over the accuracy of the data in consumer reports. In general, industry participants maintain that the data in credit reports is very accurate. The credit bureaus point to their own study of 52 million credit reports to highlight that the data in reports is very accurate. The Consumer Data Industry Association testified before the US Congress that less than 2% of those reports that resulted in a consumer dispute had data deleted because it was in error. Nonetheless, there is widespread concern that information in credit reports is prone to error. Thus, the Congress has enacted a series of laws aimed to resolve both the errors and the perception of errors.

 

However, the goof up in the above mentioned two examples of Mr Dhawan and Ms Mahalaxmi, clearly highlights the need for audits and scrutiny of credit bureaus as well.

 

NOTE: If you are facing similar issue, you may want to get help from Moneylife Foundation's free Credit Helpline http://www.freecredithelp.in/

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COMMENTS

Amit Sharma

3 days ago

Hi, great article. I read recently that cibil identity theft has become common these days. This scares me a lot, is there a way to avoid them?

Ravindra Hulsure

4 weeks ago

Hi , i had settlement of my crdit card in 2007 of ABN AMRO bank,hsbcbank & detushce also detusche bank convert in Indusind bank may in 2007 i already settled with detusche bank after that again same settled with indusind bank,that reflected in my cibil report pl. request you to my cibil report at liberty to withdraw, pl. give us contact number and contact person name

Ravindra Hulsure

4 weeks ago

Hi , i had settlement of my crdit card in 2007 of ABN AMRO bank,hsbcbank & detushce also detusche bank convert in Indusind bank may in 2007 i already settled with detusche bank after that again same settled with indusind bank,that reflected in my cibil report pl. request you to my cibil report at liberty to withdraw, pl. give us contact number and contact person name

creditloan

1 year ago

Hi friends if you want to improved your cibil score or if you have any issues about your cibil score then call to prisha 7208205581, She is a expert from Credit 4 Loan who helped me too improve my score very well or visit them at credit4loan.com

Mahesh

1 year ago

I have been a victim of CIBIL, standard chartered and shaha finlease. i had closed my loans way back in 2001 but scb showed an overdue 0f 1.99 lac & shaha finlease showed 17.8 lac for the same account. finally i closed the account with shaha for 37k out of which 12k went to credit sudhar.i dont know what to do inspite of clearing it my score has not been updated. common people like me are suffering bcoz of these people and Rs. 1.14 Lakh Crore Of Bad Debts Written Off Using Public Money statement was given by these banks.v r small people & v need small loans which v pay promptly but still v r the ones whop r suffering whereas big people can take big loan and live happily

Suresh Naik

2 years ago

On receiving CIBIL report shocked to see so my entries in my name

Date of Birth mentioned in the report as “11-02-1965” whereas my date of birth is “17-03-1967”.



1 Out of 33 loan accounts listed in CIBIL report , after Cross checking with 11 banks to get this verified, only 8 belongs to me and which don't have any outstanding , remaining all the accounts belongs to P. Satyanarayana of Hyderabad which has large outstanding and written off entries.




Don't understand on why the entries of other customer is appearing against my name who is no way related to me.What kind of IT systems are used by CIBIL. can we highlight this case of RBI

Suresh S Naik

REPLY

Santosh

In Reply to Suresh Naik 2 years ago

Hello Suresh,

I am also in similar situation when i received my CIBIL report as you had. did you get any resolution on the disputed account.
Please provide me you contact email so i could get some suggestions on this.

MDT

In Reply to Suresh Naik 2 years ago

Thanks for your comment Mr Naik.
We suggest you to immediately send your query to Moneylife Foundation's Free Credit Helpline so that our experts can advise you properly.
http://www.freecredithelp.in/
Thanks,
MDT

SHASHANK UPASANI

3 years ago

Last year I too faced a similar situation wherein I was made to run between ICICI Bank and CIBIL.
I discovered that CIBIL can commit a crime and get away Scot free for it as rightly pointed out by you they are not accountable to anybody!!
I fail to understand why RBI cannot intervene and make them accountable for the serious lapses made by them.
My query to them has remained unanswered :
How is a OD account against securities a liability ? How and when does the same become a default if you are meeting the regular interest payments ? I am still seeking answers, both the financial institutes never bothered to reply. Complaining to the banking ombudsman also drew a blank. Hope the RBI governor takes up this very serious issue or will they address it only when a cabinet minister falls victim to a defective CIBIL report?

Tapas Bhaduri

3 years ago

Quality of CIBIL report in INDIA is very bad.False or wrong credit score from CIBIL destroying hopes of common people in many cases.Banks and other financial institutions should avoid these wrong reports to help common people.

Ashish Mishra

3 years ago

I recently found that my CIBIL report contains 9 credit accounts of which I actually own only one.

Due to bad 9 accounts, my request for car loan has been denied by two banks.

I am not whether this is also one of the data merge issues. Also if moneylife could help me resolve this.

Amit Kothari

3 years ago

I remember since the year 2007 by gods grace I have not contacted any banks for any kinds of loan still i see 8 enquirers starting from some HARI INVESTMENTS to RANK (Are they even financial insitutes?) mounting for 72 lakhs!!!! If these guys are getting paid salaries then this is the worst phase of humanity!!!!!

Amit Kothari

3 years ago

I happened to check my cibil report today and see that in the year 2006 Standard Chartered bank has an enquiry for an auto loan in my account for 5.25 crores! Are you serious! I am an ordinary salaried guy and it seems like 56923610 (exact loan amount) is my old office landline number. What a joke!

REPLY

Sucheta Dalal

In Reply to Amit Kothari 3 years ago

Please do not take this lightly. If you account is compromised with wrong information, get it rectified. write to CIBIL, demand details and get it corrected. Challenge them about the source.

It could mean that y our account has been mixed up with another person of the same name. God forbid if that person defaults! best

Manoj Kumar

In Reply to Sucheta Dalal 2 years ago

Dear Ma'am,

My record has also been mixed up with some other person with same name. I got the shocker when i applied for the home loan. This person has already sanctioned loan amounting to 17 lakhs. I have already deposited 10 lacs to builder and now i am being denied for the loan. I have raised the dispute with CIBIL on 31st October 2014 and still there is no word from them. They just say they are in process of getting the confirmation from banks.
I am very much tensed and don't know what to do as there is no one who could help me out.

Please guide.
Manoj Kumar
[email protected]

Rakesh Choudhary

In Reply to Sucheta Dalal 3 years ago

When all the banks refused me Credit Card without assigning any reason, a banker friend suggested me to check my CIBIL score.
It was completely goofed up. It took me 5 rounds of corrections and pointing out even clerical mistakes (like DOB, in last round), that I finally have a clean score.
Only God knows their algorithm and data source. I had some bike loan, some loan from individual, some credit cards all reported and captured by CIBIL, which in my real life never existed.
Lot of transparency is required in their functioning.

santosh pathak

3 years ago

wrong information

A Srinivas Rao

3 years ago

My Self Srinivas from Hyderabad. Last week when i applied to Axis Bank for personal loan, they rejected my loan application saying that i have defaulted loan & the CIBIL score is low. When i purchased the CIBIL & saw the account loan account number is not at all related to me. Only name is matching. With the same loan account number it was happened to me 2011 also. That time also i have put lot of efforts to prove my innocence. That time Indian Bank & CIBIL issued communication that the loan is not belongs to me. Now with the same loan account number the data is added to my CIBIL data in Nov'13.
I don't know in what parameters CIBIL is deciding common man data.
The severely damaged my credit history.
Please help me how to tackle these people.
I have already spoke with Indian Bank people as well as CIBIL. Yesterday i got a letter from Indian Bank branch where the loan is defaulted that the loan is not belongs to me. I have already wrote a mail to nodal officer of Indian bank with a copy marked to Chairman of Indian Bank & CIBIL with attachment of the letter issued by Indian Bank

REPLY

Vishrut Patel

In Reply to A Srinivas Rao 3 years ago

You can solve this issue by concerning your bank as, CIBIL does not make any changes directly to your Credit Information Report (CIR). Only once the change is authorized and provided by the concerned Bank or financial institute, then CIBIL update your CIR. You already got letter from Indian Bank regarding the loan which defaulted is not belongs to you, you can visit your bank and ask them further to update your credit record with CIBIL. All you need to do is, to fill-in details in ON-LINE DISPUTE FORM (https://www.cibil.com/online/file-consumer-dispute.do) and submit your dispute to CIBIL. You can access more information on the Dispute Resolution Process on CIBIL site : https://www.cibil.com/credit-connect/how...

Ajith Kumar M

4 years ago

First & fore most cibil code should be available free. Then a individual will definitely try to correct himself.

SHASHANK UPASANI

4 years ago

I too am a victim of the callous collusion of CIBIL and ICICI Bank.

I would like to know if RBI has come out with a grievance redressal procedure for the consumers against the Banks and CIBIL if they both deny the correct CIR to the consumers.

Who is responsible the BanK or CIBIL if a wrong credit details has been uploaded on the CIR?

REPLY

Sucheta Dalal

In Reply to SHASHANK UPASANI 4 years ago

As we have been telling many who ask us... it is a long and tough battle. Since you have discovered moneylife, please also look at Disha Financial Counselling and seek help. Better still, if you want the issue take up write to [email protected] If you understand the nature of CIBIL's business, you will realise that no collusion is possible. But YES, thanks to the Reserve Bank of India turning a blind eye to the problem, the brunt of CIBIL's mistakes are borne by the customer. We have been fighting this, but it is not an easy battle. It needs more people who are affected to join in.

ASCI to suspend ads pending investigation

The initiative from ASCI will go a long way in getting seriously offending ads removed immediately before they cause any damage to the consumers and society in general

Advertisements which breach the ASCI (Advertising Standards Council of India) code either by being grave obscene, indecent, vulgar or which are against public interest will now have to be withdrawn immediately pending decision of its Consumer Complaint Council (CCC). ASCI has recently amended its Articles of Association to provide for Suspension Pending Investigation. This is similar to the codes of some of the other SROs like the Advertising Standards Authority of the UK. The new Article on Suspension pending Investigation states as follows: 

 

“In exceptional circumstances, when it appears prima facie that an advertisement is in serious breach of the Code and it’s continued transmission on/ through/ by any medium causes or has the effect of causing public harm and/or injury or its continuation is against public interest, then ASCI would, pending investigation and decision by CCC, forthwith require the advertiser/ the advertising agency/ the media buying agency and the media concerned to immediately suspend the release of advertisement.

 

In the event of suspension of any advertisement in the manner, the CCC shall at the earliest and not later than 30 days from the date of the suspension, adjudicate whether or not the advertisement is in breach of the Code and pass appropriate order accordingly after giving a reasonable opportunity to hear to the advertiser whose advertisement has been suspended. This decision of the suspension is to be taken by the chairman (or, in his absence, the vice-chairman) of ASCI, in consultation with two members of the CCC.”

 

Commenting on this initiative Arvind Sharma, ASCI chairman said, “Suspension Pending Investigation is an important landmark for ASCI. It will ensure immediate action against advertisements that are clearly seen as against public interest. This initiative will go a long way in getting seriously offending ads removed immediately before they cause any damage to the consumers and society in general. We expect the advertising sector consisting of advertisers, ad agencies and media to support this very important initiative wholeheartedly to protect the interests of Indian consumers and general public.”

 

 Advertising Standards Council of India (ASCI) is an industry body set up to voluntarily self-regulate advertising content. ASCI & its Consumer Complaints Council (CCC) deal with complaints received from consumers, industry and NAMS, against advertisements which are considered as false, misleading, indecent, illegal, leading to unsafe practices, or unfair to competition, and are consequently in contravention of the ASCI Code and Guidelines for Self-Regulation in Advertising. ASCI has recently taken other initiatives to speed up its decision making process.

 

ASCI has also introduced the Fast Track Complaint Redressal process which will provide decisions related to the intra industry complaints within seven days.

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