Money & Banking
HDFC Bank charges Rs100 per quarter for accessing 'by-invite-only' feature!
Several customers are venting their ire over what they call as 'unethical' banking by HDFC Bank, India's largest private sector lender by assets. Karthik Srinivasan, an old customer of the Bank highlighted the issue in his blog post, which has gone viral on the social media. Karthik and other HDFC Bank customers are opposing the invite only program that they claim, "unethically assumes that you are already in and are willing to pay for it". Unless a customer reads the entire mail and opts out from this offer, she would be charged Rs100 per quarter for availing the Virtual Relationship Manager (VRM) feature. 
 
UPDATED on 10 Feb 2017 to add response from HDFC Bank to Karthik (in the end)
 
Here is what Karthik wrote in his blog post (http://beastoftraal.com/2017/02/01/hdfc-banks-invite-only-program-that-unethically-assumes-you-are-already-in-and-are-willing-to-pay-for-it/)...
 
My first salary was credited to a HDFC bank account. In New Delhi. I have since had HDFC accounts—salary, personal, home loan, car loan, you name it—for over 2 decades.
 
Now, I’m not adding these details to sentimentalize this post. (Oh well, that first salary part is a bit maudlin, I accept!). The point is, there’s way too much banking between me and HDFC that I can’t wash them off if the need arises and move to another bank, without a lot of wasted time and effort.
 
Let me explain what the problem is, first.
 
I received a mail from HDFC Bank on January 30th. The subject said, “Dear Karthik Srinivasan, Welcome to HDFC Bank Preferred Banking Programme!”
 
I get at least 2-3 emails from HDFC every week. All of them ensure that they call me a ‘preferred’ banking customer. This has been going on for over 2-3 years, if I recall right. Now, I have no idea what this ‘preferred’ banking entails. I’m totally open to the possibility that I was shown a laundry list of fine print when this account was opened and I may have signed it too.
 
Anyway, I opened the mail curiously, to know why I’m being welcomed into something that I’m adequately a part of. This was the entirety of that mail.
 
 
Crux: an invite-only virtual relationship manager has been assigned to me.
 
My first thought: Oh great! The once-every-2-years that I actually call someone from HDFC bank can be slightly more easier now!
 
Then, I notice this.
 
 
What?
 
Let me deconstruct that.
 
I was enrolled into this ‘program’ in January 2016. After a year of being in the program that I did not ask to be enrolled into and have no recollection of being in (I did check my emails from 2015, in December, and 206, in January and February, as also emails from HDFC when I had opened this account), I will, from now on, be charged Rs.100 per quarter to be in this program.
 
And, service tax extra.
 
What cheesed me off is not the nominal amount. It was,
 
 
This is an opt-out program.
 
So, I clicked on the link and performed the 2 actions needed to unenroll myself out of this invite-only program that presumes I’m already in.
 
 
 
In simple terms it means, HDFC depends on a customer’s action to not charge him/her. The usual, sane and honest method is, ‘HDFC depends on a customer’s action to charge him/her’. It means HDFC seeks consent to charge a customer. What they are doing is seeking consent to not charge a customer.
 
In other words, HDFC depends on the customer to,
1. open the mail,
2. read through the contents,
3. notice a way to opt-out,
4. click the opt-out link,
5. choose ‘No’ as confirmation and
6. submit the form
… to not charge him/her.
 
If the customer doesn’t perform even one of the above 6 tasks, he/she will be charged.
 
To make it even more explicit, HDFC presented me with the following:
“I, Karthik Srinivasan, agree to pay Rs.100 (plus service tax) per quarter towards the Virtual Relationship Management Programme. Unless I click on the button below to indicate my preference not to be part of this program, I’d be charged for this service.”
 
This is clearly unethical and devious.
 
It particularly hits home for me because I was in Flipkart, handling their corporate communications when they faced a similar issue. Back in 2012, when Flipkart launched the ‘save credit card’ feature (where customers have an option of saving their credit card details for easy payment in the future) after getting a PCI-DSS certification, they rolled out the feature where the check-box for saving the card is checked, by default. This is a classic opt-out tactic that is known to increase sign-ups/uptake of whatever program you are running.
 
It means, customers, who are previously unaware that Flipkart had a ‘save-card’ feature now need to take note of this feature and uncheck that box to opt out of this feature. In other words, Flipkart had pre-decided that customers want to be a part of it. And unless a customer explicitly asks not be part of it (by unchecking the box), they will continue to be part of this.
 
After this service was launched, there was a lot of hue and cry about Flipkart’s unethical practice in rolling out this feature. What was truly admirable, back then, was the fact that Flipkart not only acknowledged this error in judgement and set right the process (to opt-in; that is, give customers an unchecked box and let them exercise the option to be a part of this program, or not), but they also blogged about both the error and the reason why they changed it. Here is the blog, from 2012.
 
HDFC is treading a far more dangerous ground. Flipkart did not charge money from people who forgot to opt out. They merely saved some data without explicit consent. HDFC, in this case, is going to take money from people who may have either ignored the mail, or forgotten to see the message about opting out in the mail. I’m fairly sure there are RBI guidelines that determine that any charge levied on the customer should be done after seeking explicit permission to do so. That is, after explaining to the customer that they are going to be charged for specific services. And not merely inform a customer that they’d be charged from now on for a service and only if they choose not to be part of it, will they be left alone without a charge.
 
The irony is that this HDFC mail starts by calling it an ‘invite-only’ service. The crucial point is that my option to decline the invite hinges on my opening and reading this email fully, and taking appropriate action.
 
I emailed HDFC Bank asking them why this is an opt-out and not an opt-in. I tweeted to them too. I got the following response after 2 days.
 
 
They have merely reiterated the status quo to me – that this is what it is, but hey, we did give you an option to get out of this scheme and about being charged. Tough luck if you didn’t read the mail.
 
You could ask me a question based on ‘caveat emptor’ (buyer beware), which says, ‘that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made’. The argument could be, I, as a customer, should be vigilant and alert enough to go through all communication from my bank and take note of the charges proposed to be levied on me and communicate my intent to agree or disagree appropriately. This is a fair argument, but let me present how it may look like, in the real world.
 
You enter your favorite, and usual cloth store. You try out 3-4 clothes and decide that you don’t like the fit and decide to try another store. As you walk out, the sales guy calls you back and says that you need to buy them. You ask him why. He says that the price tags in each of the clothing pieces you tried have a fine print that if you try them, you’d need to buy them too. That your trial amounts to a legal contract between the seller and buyer. This is opt-out. If it was opt-in, before you enter the trial room, a store person would have told you the rules and sought your consent.
 
If you have got this email, or recall being in something called ‘Virtual Relationship Management Programme’, please do check your email and take action based on your interest and intent.
 
So, considering all this, and the effort it’d take for me to close *all* my HDFC accounts and move to another bank, I’m not going that route. Instead, I’m going to try another route, to try and make HDFC take responsibility for this lapse in ethics and apologize, not just to me, but in public, to all their customers.
 
I’m going to share this blog every single day for the rest of the year – one day in the morning and the next, in the evening (and so on) on Twitter. And once every week on Facebook and LinkedIn for the rest of the year. I’ll tag relevant people to each tweet/post as necessary to ensure that it is read and understood by as many people as possible.
 
I’m very curious to see if my bank has an ethical stand on this issue at all.
 
UPDATE: The response sent by HDFC Bank to Karthik...
 
Dear Mr. Srinivasan,

Thanks for giving us the opportunity to clarify and apologies for the delay in responding.

With regard to your query, we'd like to humbly submit that the bank has been fair and transparent in the following:
a) giving the customer the opportunity to test the service for free for a year before levying any charges.
b) providing an opt-out facility for those who do not wish to avail of these services, which is in compliance with all regulatory requirements.
c) communicating the charges to customers at regular intervals, in the welcome letter and subsequently in their monthly statements.

You will also appreciate that the benefits of the programme far outweigh the nominal fee of Rs100 per quarter, which is in line with similar premium programmes available in the market. Here are some of the key benefits listed below:

1) A lifetime waiver on locker rentals
2) Preferential pricing for forex, loans and deposits
3) Waiver of non-maintenance charge of average monthly balance (AMB)
4) A dedicated Personal Banker (PB) / Relationship Manager (RM)
5) Unlimited usage of ATMs, both own and other bank
6) Free subscription to in-house e-magazine AAG, a specialised advisory on investments and stock reports
7) VRM- A platform to enhance customer experience and engagement through a 24*7 access to a Virtual Relationship Manager (VRM).

Trust, we have been able to clarify our stand adequately. Needless to say, the bank remains committed to the highest standards of ethics and business conduct.

User

COMMENTS

Pradeep Kumar M Sreedharan

5 days ago

We as customers have no say in the way the system is constructed, and RBI & Govt exists not blunt our protests, but to kill it by eliminating any actionable forum. That this should happen in the digital age is their powerful statement

B. Yerram Raju

6 days ago

Customer is one who pays when he/she gets into the bank either physically or through internet and not who demands a service he wants!! This is how the Banks redefine their customers post computerization. You call the Bank for a service or enquiry, you are charged! If you ignore the charges first time every second time you avail such service or call you are slapped with the charges. HDFC Bank is not so different from others in this regard. There are 25 types of charges you are debited if you have an account with a PSB and a few more with the private sector newgen banks like the HDFC Bank. Technology should have made banking easy and cheap. Banks should have recovered their investment on technology during th e last fifteen years and yet the customers are fleeced and for not doing a service that they promise. There is no cognizable punishment for non-delivery of a service for which payment is made and so the case even with those services that get into their list. Your complaints, if made only on their template, will get a stereo typed response that if you do not get response within 48 hours, you may get in touch with their customer relations manager. Did you not hear the encomiums paid by the PM, FM, and the RBIto the banks for the excellent service they rendered during the demonetisation drive?

Suketu Shah

6 days ago

In Feb 2013 I gave all papers to close my account permanently.Under some excuse their head of Western region Wealth Management via his influences kept delaying closing of my account.Even after submitting all papers my account was finally closed 1 month later on 1 March 2013.What has been mentioned is correct -this bank makes it almost impossible to close the account via sheer harassment.Think several times before opening an account with them and if you already have an account with them God help you.

Jagadish Kota

2 weeks ago

I am going to close my account if they don't revert the charges.

REPLY

Pradeep Kumar M Sreedharan

In Reply to Jagadish Kota 1 week ago

Fight from within, don't quit please

Jagadish Kota

2 weeks ago

I am going to close my account if they don't revert the charges.

Hemal Mehta

2 weeks ago

Charging for a opt-out scheme is a day light robbery.
I have closed my wife's account and will be closing my mother's account pretty soon.
RBI should make a rule that not a single rupee be deducted from bank account for any bank charges unless, the bank has a written communication from the customer. Auto debit for new charges should be banned.
The money in the bank account is of the customer and not of the bank.

Shobhit

2 weeks ago

This is a CLASSIC case of daylight robbery by a so called CLASSIC Bank. How can someone steal my money from my bank account with a frivolous OPT OUT OPTION.

Chirpy

2 weeks ago

I closed my account when HDFC Bank did this sometime last year ( if I remember right ) ... don't have the patience or the time for a bank that one cannot trust.

REPLY

Pradeep Kumar M Sreedharan

In Reply to Chirpy 2 weeks ago

I took an alternate bank account and is fighting HDFC from within. If I am unsuccessful, at least, it proves that the system is rotten - including the Govts.

Om Prakash Arora

2 weeks ago

I also received similar mail for being in their Classic program.When I decide to opt out after clicking on the link in the mail and to be doubly sure, also talking to personal banker,who advised me to record objection on line after logging in .Thereafter I received a call from personal banker asking for reason of opting out. When I said that I do not want to pay for the service that I do not need ,she agreed to reverse the charge when levied.I wanted it confirmed over e mail and to be valid for all times in future. I have now received the confirmation.
The experience which caused lot of waste of time n leaving an impression that Bank wanted to fleece .
Few years back they has a similar charge levied on the ISA account opened for the customers which was free to begin with.

Vidya

2 weeks ago

In my case also hdfc bank charged Rs.100 per account (I had 5 account) ie 500 per quarter as Programme Management fees for imperia programme which they registered me. I had follow up with them to finally get charges reversed. Most people do follow for such unethical charges and bank benefits and continue do such unethical things. It is clear case of cheating customers who are not alert.

Pradeep Kumar M Sreedharan

2 weeks ago

Wearing down the customer at CRM level and swindling the less alert (eternal alertness is impossible for the common man, for unlike the Bankers, our lives aren't centered around banking) is modus operandi of the swindlers, the system being installed employing behavioural economics studies obviously.

REPLY

M S Prabhakar

In Reply to Pradeep Kumar M Sreedharan 2 weeks ago

Can you translate your comment to English?

Suketu Shah

2 weeks ago

They charged Mutual charges twice also to us in 2011(a significant amount) thinking we wl not notice.We got it reversed and there was no apology also.This is a standard modus operandi in hdfc bank.It is clear this banks best days are behind them.The atmosphere in the bank is so vicious that their employees of hdfc bank strongly dislike each other and make fun of each other rather than working as a team.

Best to avoid hdfc bank and also axis bank.There are better private banks like Yes Bank and ICICI Bank.

Shirish Sadanand Shanbhag

2 weeks ago

This is cheating by HDFC Bank.
RBI Should immediately act on this act, and stop such malpractice immediately.

REPLY

MOHAN SIROYA

In Reply to Shirish Sadanand Shanbhag 2 weeks ago

Sorry Sir, RBI is deaf and dumb in respect of Bank Service charges.The Regulator has assigned its responsponsibility to the Bankers Association . They sow and they only reap.

Shirish Sadanand Shanbhag

In Reply to MOHAN SIROYA 2 weeks ago

I have seen Indian Bankers' Association do not entertain any complaints of private Indian banks like, HDFC, ICICI Banks or foreign Banks, like Bank of America. To complain against services of such banks, we have to take our complaint directly to RBI. To deal with such private Indian Banks and foreign banks, RBI has a separate office, earlier it was situated at World Trade Centre, Cuff Parade, Colaba, Mumbai-400005.
ICICI Bank was charging Rs.250 for fall in minimum balance in the savings bank. Any other Nationalised Banks, for fall in minimum balance they were charging some nominal amount of Rs.10/- per month. However, ICICI Bank, for fall in minimum balance on one month charged ten times Rs.250/- each, which was wrong.
First of all, Rs.250/- charge for fall in minimum balance was wrong. Then ICICI Bank was having lending rate at 12% per year. In savings bank, minimum balance was Rs.5000/-. If balance falls below this amount, assuming whole of Rs.5,000/- is withdrawn for a month, lending interest would be only Rs.50/-. When I argued with them, they said Rs.250/- is decided by the management, which was unethical.
Again I asked them why you charge Rs.250/- every time in same month when balance falls minimum balance of Rs.5,000/- in a month. bank's answer was it is computer programming by the bank, and customer has to pay for it. How different and unethical, that for faulty charges and faulty programme of the Bank's computer, a customer has to shell out dearly.

MOHAN SIROYA

In Reply to Shirish Sadanand Shanbhag 6 days ago

With due respect to Mr.Shanbhag, what he mentioned a bout the special RBI cell at Cuffe parade, he apparently did not receive any relief any Icici bank charge. In any event, for last 3 years, the position is changed. Even under RTI applications both regulators viz; RBI and BCSBI both categorically assert that not only to fix the service charges , the responsibility is delegated to the eIndian banks association but even to determine or decide if such charge is REASONABLE or not , responsibility is also abdicated by RBI or BCSBI . This was made amply clear by the then Dy. Governor of RBI Mr.K C Chakravorty , who accepted the position in the especially arranged Seminar by Moneylife Foundation about 3 years back.

MOHAN SIROYA

2 weeks ago

Any charge ,other than the banking Service charges applicable for the category of account, no other charge can be levied by the bank without the explicit prior consent of the account holder.
But here if we forget the consumer right to choose, and if we believe in the letter of HDFC bank , then the VRM scheme members are getting much more benefits compared to the quarterly charge of Rs. 100, or Rs. 400 in a year.
Benefits like FOR LIFETIME NO LOCKER RENT , preferential pricing for loans, deposits, waiver of AMB etc etc. are more attractive to remain as VRM member. If I am wrong, Mr. Srinivasan or other HDFC account holders can tell me.

REPLY

Manohar Vaidya

In Reply to MOHAN SIROYA 2 weeks ago

I agree with Mohan Siroya - Given the benefits that HDFC is providing for the service and given the fact that it is 1 year free service before the charges are levied, I don't think HDFC is resorting to any unethical practices. Yes, it would have been much better to state the charges upfront - However, as long as there are benefits that are commensurate with the charges levied, this should be fine. This fact seems to be completely lost in the chorus of the angst against the moral stand that they charges should be communicated up-front. This issue should be seen in context of the services provided. I don't think any court or RBI for that matter will take up this issue given the reply provided by HDFC. I am all for charges being communicated up-front, but let us not set aside, nay ignore the benefits that come with the amount levied.

M S Prabhakar

In Reply to Manohar Vaidya 2 weeks ago

Customer NOT disagreeing ≠ Customer agreement

I will give you a "free" service for a year and provide free advice on how to protect your account, how to set and passwords, etc. After 1 year, I'll charge 1% of your AQB as my charges. Is it fair?

Piyush Gupta

2 weeks ago

Hdfc bank the biggest chor. I was forced to open salary account in hdfc bank in one of my previous company. They ripped me off every qtr on the pretext of non maintainence of annual qt ly balance. The biggest problem with them is that they think no end of themselves.

It Takes Two To Do a Legal Tango
It takes two to fight. WWF bouts add a few more, going by the saying, ‘the more, the merrier’. Besides, it is obvious that no one will come to see a match where only one guy shows up. Walkovers are a damp squib. If, now, we were to extend that scenario to a court of law, what would be the outcome? Many possibilities, as various permutations and combinations are possible. We list two here.
 
Imagine a firm, Bapoo Malcolm & Associates; or a company, Bapoo Malcolm Ltd. One Mr X finds fault with the Malcolm entity. He files a suit, Mr X vs Bapoo Malcolm & Associates (or Ltd). He has a legitimate grievance, one that the court could uphold. Yet, he gets nothing. What happened?
 
In another case, three pension funds sued a company for certain amounts. The defendants were named ‘L & R Group of Companies’. However, no such company existed. It had so happened that a firm, System Parking, Inc, had changed its name to LR Sys Inc. The next month all its assets and liabilities were acquired by LR System Parking. On whom does one serve the papers? On ‘Group of Companies’?
 
One of the abiding virtues of our legal system, without which we could never be called civilised, is ‘audi alteram partem’. It means ‘Hear the other side’. No decision can be given against someone without hearing him. This is a commandment that is more important than all the other 10 put together. Surprisingly, Moses missed out on it!
 
The process for determining legal matters is fairly straightforward, legal jargon notwithstanding. Mr X files a case. He is the plaintiff, the one who is plaintively complaining. He is asking the court for some relief. He feels he has got the short end of the stick; and someone else is to blame for that. That someone else must be made to pay.
 
If the other party is an individual, or individuals, they can be named. If found to be at fault, they would have to pay, make good. An individual can be identified, nabbed, put away. If, however, the other side is a company, can it be nabbed, made to pay, put away? It is a legal entity but without a soul of its own. It is a puppet; the strings are in the hands of the managers. It is, then, the puppeteers who must be brought to book. Herein lies the rub. Along with the company named, one must list, as the defendants, the men behind it; those who run it. It is they who will pay, even as they sign the company’s cheques; the ones in the other corner.
 
This lacuna often occurs when people conduct their own cases. They forget to name the office-bearers. Revision is a waste of time and energy, litigants must remember. Having said that, we need to go back to the cases mentioned above.
 
You be the judge. How would you decide the L& R Group of Companies case? 
 
The matter went to the appellate court which said: “The odd name ‘L&R Group of Companies’,  which the opening brief on appeal described as ‘not a corporation’ with no further detail, led us to wonder whether it might  be a partnership, a holding company organised as a trust, or perhaps a membership  organisation…”
 
Quoting a case where Fortune magazine was made the defendant, the court declared that there must be ‘a party in interest’. In short, a person whom one can collar. It went on: “You can’t sue a ‘rubric’ any more than you could sue the Chicago River or the Magnificent Mile as a proxy for the City of Chicago… a rubric does not have a bank account.”  
 
It then directed that the proper parties be named and the case retried. One must have an identifiable opponent who can be brought to court and stand trial. 
 
So, if you want to sue Bapoo Malcolm Ltd, make sure that all the directors are properly named. Even if Bapoo is no longer one of them. 

User

COMMENTS

Bapoo Malcolm

2 weeks ago

Thanks, Mr. Shenoy. Space constraints do not allow me to elaborate on such cases, especially in Consumer Fora. It is believed that one can save costs by not appointing lawyers. Maybe; but at what cost? Losing a case is definitely not an option. At least, seek advice. Courts, even for consumer matters, have to follow rules. Let us have cases where people have lost; so that we can find the REAL reasons. It could be an interesting exercise.

REPLY

Arunkumar A Vijayan

In Reply to Bapoo Malcolm 2 weeks ago

yes sir, would like to hear more of such situations. Nice article. Thanks

SRINIVAS SHENOY

2 weeks ago

Excellent write up, indicating clearly the importance, that the proper parties should be named in a litigation.

Chore Monster: Get the Kids Hooked to Chores
With kids busy on Smartphones, it can be a pain to get them to do household chores. With Chore Monster, kids will beg to do their bit.
 
You create chores with point values for each chore. When a chore is done, the child gets the points. Once the target points are reached, the reward is given, whether it is a favourite food, an outing or a gift.
 
The kids get to see and review the points, the available rewards and how many points they will need to achieve them.  Along the way, they also get to collect random monsters, for added fun. Now that you know how to get the chores done by your kids, try it on your husband—after all, we are all kids at heart!
 
 

User

COMMENTS

SRINIVAS SHENOY

2 weeks ago

An excellent idea. Hope it works with our modern day kids, who are generally smartphone addicts.

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