While many appreciate the progress from ATM cards to debit cards, there are many bank customers out there who do not see any real reason for shelling out a hundred rupees every year as annual fees
The banking industry has come a long way and today we are almost at a stage where everyone has a bank account. Those of us living in cities could have two and those living in metros could have even three to five accounts. I remember reading somewhere that the upper middle class has at least six bank accounts per family. From being a privilege for the wealthy and for those working in the Government services, banking has become a basic necessity of life. In fact, most parents get a bank account in the name of their as soon as they get him/her into school. How could they not? After all, a whole bunch of bankers run around them explaining the advantages of opening a child account, how it could help the kid become responsible, how it will help in education, and so on. The moment you open a bank account, a recurring deposit in the name of the kid and a life insurance policy are up next. That's okay. After all, the world is growing.
Banks want to have their cake and eat it too. Guess what, they have been successful at it.
Over the last many years, I have been looking at the changes happening in the banking sector. After computerization of the banking industry, banking has more to do with marketing than with calculations. The computers and software take care of all the calculations and thus, the banks are now better positioned to use human resources to generate revenue. Not so long ago, a bank employee would spend majority of his time in accepting deposits and making payments across the cash counter, making him a cost centre for the bank. Modern bankers (like ICICI Bank, HDFC Bank, etc) aggressively market their products by showcasing their services like ATMs, Internet Banking, Phone Banking, etc, making them a revenue centre.
Inter-bank fund transfers through internet banking attract charges too. Internet banking was supposed to benefit the bank by reducing the cheque clearing work, thereby leaving behind a lot of time for bank employees to work on other fronts. Its a different story that phone banking, which was supposed to help customers on a toll free number, is now offered on a paid line. So, all these services that came up to help customers have helped the banks more than the customers. Of course, no one can deny the many conveniences we enjoy today. The point I want to make is that all that was free, now comes at a cost.
Even an SMS sent to customers are subject to charges now. The SMS initiative came as a measure to ensure safe banking and now it costs the customers to ensure that he banks safely. Somehow, it doesn't convince me that my bank account is not safe with the banks with this paid SMS facility.
Debit Card Annual Fees - A trap?
Before declaring charges for their SMS facility, the banks introduced annual fees for debit cards. This one is perhaps the most annoying charge that today's customers pay. I personally had nearly 10 debit cards on my name up till some time ago (the side effects of working in the banking and financial services industry). One fine day, I realised that I had been paying a lot of money in the name of 'Debit card annual fees'. At Rs110 per card, I had been paying almost Rs100 a month. Since I would hardly use those cards I started closing those accounts one by one and yet, I was left with five of them. I was still stuck with paying Rs500 plus taxes for no sensible reason whatsoever.
Banks benefit more in terms of time and cost than the customers
Banks came up with the idea of ATMs in order to save time for customers and more importantly, for themselves. While customers do benefit from these cards, the banks benefit far more. Imagine the bankers sitting around and processing cash withdrawals of Rs100-1,000 to thousands of customers everyday in today's world.
A large number of customers still do not extensively use cards
It is a well known fact that a large number of customers who possess these cards, especially the ones in rural areas or the ones in business, seldom use these cards. Sole proprietors and, to some extent, Partnership firms have cash on hand, which they use for their daily expenses and this cash is received by them in the course of daily business. Most of their withdrawals are in the form of payments to third parties by cheques or transfers. So, the card lies in their pockets or lockers and they keep paying the annual fees.
Use of debit cards for shopping is very low
Banks promoted debit cards saying that these cards can be used at ATMs of other banks as well as be swiped at merchant terminals. However, the number of customers using debit cards for shopping is very low. Most customers who have a credit card would prefer swiping their credit card, thereby getting more than a month's time to pay the amount, rather than swiping a debit card where the amount goes off immediately. It is only when there are some offers, discounts, cash backs, etc that customers consider swiping their debit cards.
Five transactions only
The banks' promotion of debit cards quoting that these can be used to withdraw cash from any ATM doesn't appeal anymore. After all, only 5 such transactions in a month are free and the customer has to pay for the 6th transaction. However, banks have continued to offer unlimited transactions at their own ATMs even today.
Banks should bring back the ATM card
While adapting to technology should be encouraged, banks should also provide for such customers who do not want to use technology that doesn't help them. Its like asking a banker to learn Hadoop or Big Data, as they are the latest technologies. There are some banks who are still issuing ATM cards on request. In fact, I got an ATM card from one of the leading private sector bank on placing a request for the same.
There was absolutely no need for the bankers to do away with an ATM card and make the customers opt compulsorily for debit cards. An ATM card is a boon for those customers who do not use the ATM often or do not intend to shop with it. Banks are making big bucks with these charges but it is time they realize that they focus on tailored solutions instead of making generic products. While many appreciate the progress from ATM cards to debit cards, there are many customers out there who do not see any real reason in shelling out a hundred rupees every year. In fact, there are awkward situations when such charges result in a drop in balance, and such a drop results in a cheque bounce. Online consumer forums are full of such complaints.
Reintroducing ATM cards would be a friendly step to help customers who have too many debit cards, or those who seldom use them. Levying an annual fee on all cardholders could be legally permissible but when you look at it from the ethical or customer service perspective, it may not fly well with customers. Although, abolition of the annual fees in totality would be more of a dream for customers.
While the RBI may have indicated the end of its rate hike cycle, Nomura says it sees no scope for rate cuts any time soon and expects policy interest rates to remain on a prolonged pause until 2015
The Reserve Bank of India (RBI) left its repo rate unchanged at 8.00% as was widely expected, as CPI inflation seems to be panning out in line with its target of 8% by January 2015, while risks to the target remain broadly balanced. The RBI cut the statutory liquidity ratio (SLR) by 50 basis points to 22.5% to allow banks to expand credit to the non-government sector, in line with the Urjit Patel committee recommendations. RBI's forward guidance has become neutral to slightly dovish from hawkish up until the previous policy statement, which has fuelled expectations of rate cuts.
While the RBI may have indicated the end of its rate hiking cycle, Nomura says in its view, rate cuts are still contingent on the inflation trajectory and the RBI's estimate of what the real policy rate should be.
"We see no scope for rate cuts any time soon and expect policy interest rates to remain on a prolonged pause until 2015. No doubt, inflation will at times undershoot the RBI projections owing to base effects, but they would have to be sustainably below 8% by January 2015 and 6% by January 2016 for the RBI to start easing policy rates, given that the RBIs credibility hinges on meeting these targets," Nomura said in a research note.
Nomura said, CPI inflation, currently at 8.6% year-on-year (y-o-y) in April 2014, is likely to moderate sharply in second half on base effects, rise back closer to 8% in Q1 2015 and then moderate again towards 6% by January 2016. This assumes an 8% repo rate, 5% per annum increase in minimum support prices (MSP) and steady moderation in nominal rural wages for the forecast horizon of the next 18 months. "If the RBI starts cutting rates, then reaching 6% in 2016 will be difficult unless MSP and rural wages fall even more sharply, which we don't expect," it added.
The RBI replaced the export-credit refinance (ECR) facility with a special term repo. It reduced the liquidity provided under the ECR facility from 50% of eligible export credit outstanding to 32% and also introduced a special term repo facility of 0.25% of aggregate deposits. RBI also reduced the statutory liquidity ratio (SLR) by 50bp from 23% to 22.5%. "Overall," Nomura said,"these two steps are liquidity neutral. We note that the banking system is running an excess SLR of as much as 28% of aggregate deposits, so reducing the mandatory requirement from 23% to 22.5% – especially in the current low credit growth environment – should have hardly any impact from a bond demand perspective. However, steps such as an SLR cut will gain relevance when credit growth picks up at some stage down the line."
Other than improving liquidity, Nomura said it sees the current change in the RBI's policy stance as another factor that should be supportive for rates. "Given the RBI's policy stance has become more dovish, we believe the probability has increased that the next step –whenever it comes – will be a cut rather than hike. This was the main reason why the swap rates and bond yields fell on Tuesday. Put it another way, the market removed the probability of a hike as the next step and introduced some probability of a rate cut as the next step leading to a fall in yields. The 5-year swap rate fell 14bp and 10-year bond yields fell by 6bp on the day. We expect this fall in rates to be sustained as the market will find it difficult to price in the probability of a hike over the coming months, given the central bank's current stance. With that assumption, we expect 5-year swaps to hover in a range of 7.90% to 8.10%. We also expect 10-year bond yields to be in the range of 8.45% to 65%," Nomura added.
A New York City Department of Investigation report documents a shocking coziness between the two top law enforcement officials in Brooklyn
The correspondence between the senior Brooklyn judge and the long time district attorney is remarkable even for the often troubled world of Brooklyn politics. On a near daily basis, the judge advised the district attorney—on how to get re-elected, on how to deal with his own legal problems, and, perhaps most importantly, on how to manage any damage from an investigation into possibly wrongful convictions won by the district attorney's office over the years.
The judge is Barry Kamins, the man who during the correspondence was in charge of all criminal courts in Brooklyn. The district attorney is Charles J. Hynes, who served as the top prosecutor in Brooklyn for 24 years before, despite Kamins's campaign advice, he lost his bid for a seventh term last fall. Their communications became public Monday when the New York City Department of Investigation issued a damning 27-page report into how Hynes financed and conducted his 2013 re-election campaign.
Kamins, who had recently been promoted to an even more senior job in the New York State court system, has been relieved of his duties, and it is possible he will ultimately retire. Hynes could face criminal charges, and the office he once ran could find itself the target of more investigations.
ProPublica has spent more than a year examining the question of prosecutorial misconduct, and much of our focus has been on the office Hynes ran in Brooklyn for more than two decades. Hynes has been accused in one prominent lawsuit of having overseen an office where misconduct was condoned, and ProPublica has indeed found instances in which prosecutors working for Hynes violated their legal obligations but suffered no serious consequences.
The emerging information about Hynes' relationship with Brooklyn's top judge adds to the picture of a judicial system with few checks and balances.
One thing seems certain: No one interested in Brooklyn politics—those newly intrigued or those familiarly appalled—will soon forget the frank 2013 email exchanges between two of the most powerful law enforcement officials in Brooklyn.
"Judge Kamins appears to have, among other things, regularly advised Hynes regarding advantageous political endorsements, provided feedback on Hynes' public statements, assisted Hynes in his preparation for televised debates, and communicated with other individuals on Hynes' behalf regarding campaign-related activity," the report said by way of summary.
Kamins' input could be as mundane as a copyediting suggestion on a campaign announcement or as grave as how Hynes could best deal with a crisis wracking the office during the campaign: the possibility that the district attorney's office had sent innocent people to prison based in part on the flawed work of an apparently rogue police detective.
Those exchanges about wrongful convictions take place in late May 2013, weeks after Hynes had agreed to release a convicted murderer after 23 years in prison because of concerns about the honesty of the detective who had helped make the original case.
Hynes, facing an onslaught of unflattering news articles and editorials, had subsequently agreed to have some 50 murder cases involving the detective reviewed by his office. He informed Kamins that he wanted to appoint a panel of purportedly independent legal figures to, in effect, review his office's review.
"I don't agree with a board to 'review' findings," Kamins wrote to Hynes. "If this group should find fault with the work of the office that puts you in a worse situation. What do you do then? Go back and start over? It could be a disaster."
Kamins, in addition to suggesting people to serve on the panel, proposes allowing its members to participate in the actual review.
"That way," he wrote, "the final product will not be subject to further review and will have the appearance of independent judgment."
The Department of Investigation's findings were first reported by the New York Times.
Kamins and Hynes have long been both personal friends and major players in Brooklyn's legal world.
Kamins in the 1970s served in the district attorney's office, later became a defense lawyer, went on to head the New York City Bar Association, and was eventually made a judge. While a defense lawyer, Kamins had been a regular campaign contributor to Hynes, and a New York Times article in 1994 reported that he had benefited from what struck many as a kind of legal patronage: regular, paid appointments to serve as a special prosecutor in cases where Hynes, as district attorney, had a conflict of interest. Kamins has taught at two of the city's better law schools and in the last few months was named by the state's chief judge to serve as head of policy and planning for New York's court system.
A senior New York court official said it did not appear Kamins had broken any laws. His future, then, could well be decided by the Commission on Judicial Conduct, which has the power to remove him from his job and perhaps sanction him further.
"Joe Hynes and Barry Kamins have been friends for 40 years and have talked politics most of that time," said Paul Shechtman, Kamins' lawyer. "And the great bulk of this was Judge Kamins listening to Joe's gripes about a campaign that turned out to be much more closely contested than he ever imagined. But the Judge did nothing to influence the course of any case. He never favored Joe in the courtroom and he never would."
The Department of Investigation, having been quietly alerted to potential misconduct by Hynes and Kamins late last year, found that Hynes had misused hundreds of thousands of dollars of the office's money to pay for his campaign, and had improperly enlisted the help of his senior staff to participate in his re-election effort.
Hynes has not responded publicly to the findings.
One person who knows Kamins well said it was possible the judge still was not cognizant of how serious his misconduct was. Certainly, much about the exchanges with Hynes seems bafflingly casual. They each talked about keeping communications secret, but both used their government email accounts. Hynes even shared his communications with Kamins with other people in his own office.
"You are the new David Garth," Hynes wrote to Kamins in one email, invoking the legendary New York political consultant.
"Yes. I charge very little to be a consultant," Kamins responded, foreseeing a triumph for Hynes and a joyous election night with the district attorney and his wife. "My only request: standing next to you and Pat at the victory speech."
Kamins, the emails make clear, played a role in trying to get a fair hearing and good press for Hynes at The New York Times, the New York Law Journal and other publications. He claimed that he tried to "pump" the president of the Brooklyn Bar Association for information about what might come up in a looming campaign debate Hynes was to have with the man who ultimately defeated him, former federal prosecutor Kenneth Thompson. He even reviewed the opening statement Hynes was to give at the start of one debate with Thompson.
"Very good," Kamins wrote, "except do you want to go negative right away?"
Near the end of the Department of Investigation report, investigators relate two episodes in which Kamins offered actual, concrete legal advice to Hynes—on the merits of a lawsuit brought by a political rival of Hynes to prevent CBS from broadcasting a program featuring the Brooklyn District Attorney's office and on the question of whether a newspaper article that upset Hynes might be libelous.
The report concludes by listing a dozen roughly aspects of the judicial code of conduct that Kamins might have broken.
Joel Rudin, the lawyer who has sued Hynes office for a range of misconduct, is mentioned unflatteringly by Kamins in the emails.
"I've always had a deeply felt regard for Barry Kamins, and it's very painful to see how he completely lost perspective about what he was doing and who he was," Rudin said. "And I feel sorry for him."
It is unclear how long it will take the Commission on Judicial Conduct to review Kamins' behavior.
But one future event Kamins and Hynes jokingly discussed is not apt to take place. In one email, Hynes said he looked forward to the day Kamins would swear him in as a judge.
Kamins wrote back optimistically:
"My fondest wish."
Joaquin Sapien contributed reporting.