Credit Cards: SBI To Pay Rs1 lakh for Illegal Demand of Dues

State Bank of India has been directed by The East District Consumer Disputes Redressal Forum (New Delhi) to pay Rs1 lakh to a man for raising a demand of over Rs3 lakh from him towards credit card dues even though he had not availed the facility. The Forum noted that the Bank acted ‘irresponsibly’ by raising the illegal demand and putting the name of the complainant in CIBIL’s defaulter list which, in turn, resulted in denial of a housing loan to him, apart from tarnishing his reputation.


Is it time for members of Dr Chakrabarty Financial Inclusion Committee to resign en masse?

Does the second financial inclusion committee appointed on 23rd September render the Dr Chakrabarty Committee practically irrelevant and redundant?

I had previously argued that the Reserve Bank of India (RBI) should disband the new committee on financial inclusion, that was appointed on 23 September 2013, for various reasons outlined in previous Moneylife articles. It is also a month since the first Moneylife article came out, and there has neither been any clarification from the RBI nor any action on the lines that Moneylife had suggested.


When the country is struggling for resources, I am not sure that it is a great idea to have two independent committees on the same topic of financial inclusion at the same institution, especially when the larger mandate and the terms of reference of both committees are very similar. After all, the job needs to be done and it does not matter which committee does the work, so long as the mandate is achieved! In fact, imagine the spectre of two different committees on financial inclusion at RBI coming out with very contradictory recommendations—it would become totally counterproductive and an administrative nightmare on whose recommendations to accept and why!


So, I feel that the time is now ripe for the Dr KC Chakrabarty headed financial inclusion committee (appointed in 11 October 2012) to resign en masse so that the Dr Nachiket Mor chaired concurrent financial inclusion committee (appointed on 23 September 2013) gets a free reign to pursue its mandate in a comprehensive manner. I am sure that the respected governor of the RBI, the deputy governors’ and independent board members of the RBI will agree on the need to save scare resources (at a time of economic crisis such as this) and not have two high powered committees on the financial inclusion working concurrently at the RBI!


Two other points deserve mention.


First, the Dr KC Chakrabarty Committee consists of several members of the Central Board of Directors of the RBI – namely, YH Malegam, Prof Dipankar Gupta, Ela Ramesh Bhatt, along with well known experts like Prof MS Sriram (independent researcher & adjunct professor, Indian Institute of Management, Ahmedabad and Indian Institute of Management, Indore), RS Sharma (director general, Unique Identification Authority of India—UIDAI), B Sambamurthy (director, Institute of Development & Research in Banking Technology -IDRBT), Rama Vedashree (vice president, NASSCOM and member of NABARD's advisory board on Financial Inclusion Fund and Financial Inclusion Technology Fund) apart from the chairman, Indian Banks' Association and secretary, Department of Financial Services, Government of India. This certainly makes the Dr Chakrabarty Committee a very high powered committee.


And the above composition of the Dr Chakrabarty Financial Inclusion Committee raises some very interesting issues for corporate governance at RBI, which I leave to the Moneylife readers and general public, RBI board and the committee members and other stakeholders to ponder:

  1. What do the independent directors from the central board of the RBI – namely—Mr Malegam, Prof Gupta and Ela Ramesh Bhatt—think of the present practice of having two high powered concurrent committees at RBI on the same topic of financial inclusion?
  2. Do they concur with this practice, especially because the second financial inclusion committee appointed on 23rd September renders the Dr Chakrabarty Committee (in which they are all members) practically irrelevant and redundant?
  3. Did the board of the RBI meet and endorse this decision of appointing a second financial inclusion committee when there was already such a very high powered financial inclusion committee—with several RBI board members and renowned experts—live and functioning under Dr KC Chakrabarty? It should be noted that the Dr Chakrabarty Committee has (apparently) met three times during its brief tenure and started work in right earnest!
  4. If the board of the RBI did not meet and endorse this decision, have the independent non-executive members of the board of the RBI found out who made this decision, why and in whose interest? Is it not their duty, as independent non-executive directors to do so from an accountability and corporate governance perspective?

Let us set the record straight. The matter concerned is not something that can be treated lightly. A very high powered LIVE committee chaired by a very senior deputy governor of the RBI and comprising of several RBI board members, secretary of the Department of Financial Services and renowned outside experts has been effectively sidelined!

  1. What can be said about existing practices at the RBI with regard to the appointment of such very high powered committees?
  2. Should not the board of the RBI (and especially, the independent non-executive members on the board) look into the corporate governance implications of the same?

And without any doubt, if the independent non-executive members of the RBI board keep quiet and ignore this serious matter, then, one would have no option but to come to the (disastrous) conclusion that the board of the RBI is indeed a rubber stamp board with very little independent thinking!


A second and final point is also in order. Given that the Dr Chakrabarty Financial Inclusion Committee comprises of legitimate stalwarts in several respective fields, I wonder whether any of them felt a genuine need to resign voluntarily from the Dr Chakrabarty Financial Inclusion Committee that has become completely redundant NOW!


(Ramesh S Arunachalam has over two decades of strong grass-roots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural and urban development and urban poverty alleviation across Asia, Africa, North America and Europe. He has worked with national and state governments and multilateral agencies. His book—Indian Microfinance, The Way Forward—is the first authentic compendium on the history of microfinance in India and its possible future.)



Yerram Raju Behara

3 years ago

You are right in pointing out the multiple committees and trifle action. On Customer Services, Talwar Committee of the 1970s to Damodaran Committee, there have been several recommendations hibernating in the cupboards of the RBI and the customers suffer in silence. RBI issues instructions and does not monitor. For example, all commercial banks are supposed to display the facilitation for MSMEs in the banking halls and even their electronic display boards do not carry them!! Second, these institutions are supposed to grant collateral-free advances to those MSEs whose loan requirements are below Rs.10lakhs. A couple of days back when I interacted with a group of entrepreneurs, they were mentioning that even SBI insisted on collateral or guarantee for a loan of Rs.1.50 lakhs from a rural entrepreneur!! The banks display only the rates of interest on deposits and the changes that occur while the interest on small loans for various purposes do not feature.
The Banks and the RBI talk of financial inclusion eloquently in public. Financial Inclusion Technology Fund in the hands of NABARD needs a thorough review and even inquiry.

nagesh kini

3 years ago

You are bang on Mr. Arunachalam, it is now apparent that the left hand of the RBI Board is not aware what the right is doing - it is simply a rubber stamp devoid of independent thinking as you have so rightly put it. It is high time another MORE HIGHER Level Committee is immediately set up to ascertain how Committees have been setup from time to time so far and how many of their recommendations really implemented. I'm curious to know the status of the recommenations of the Damodaran Committee on Customer Services that went on a Bharat Darshan to ascertain views of bank customers! Now we simply cannot afford two committees one headed by Dr. Chakrabarty and the other by Dr. Mor to deliberate on the very same matters - spend hours writing the minutes. The Damodaran Committee report was in cold storage for long with the Chairman reluctant to affix his signature and a RTI query was required to defreeze it!


Ramesh S Arunachalam

In Reply to nagesh kini 3 years ago

Thanks sir and I am completely agree on the fact that there are too many committees and too little actual work. Hope things change sir. Your comments on the Damondaran committee are very useful sir and they put in perspective on how committees may work, when the deliberations are not in tune with the expected line. Sometimes, I also wonder whether some committees exist just to give a stamp of approval to a thought that is already there!

Home-buyers use Facebook, Twitter To Complain

Home-buyers in the country are taking to Facebook and Twitter to deal with errant builders in issues ranging from delay in possession to mismanagement, to good effect, reports The Economic Times. In one case, 1,200 home-buyers in DLF’s New Town Heights project in Gurgaon got together through a Facebook page to protest against the delay in possession of their homes. Three protests later, the builder agreed for 20% discount on each apartment and also doubled the compensation for the delay. Aggrieved home-buyers across Indian cities have set up Facebook pages and Twitter handles to protest against builders—against delays in possession, or quality of work, or even poor maintenance of the properties.


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